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                  FBR ASSET INVESTMENT CORPORATION, as Lender,


                                       and


                 BROOKDALE LIVING COMMUNITIES, INC., as Borrower



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                                 LOAN AGREEMENT


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                                January 25, 1999




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<PAGE>


                                 LOAN AGREEMENT

         This Loan Agreement (this "Agreement") is entered into this 25th day of
January  1999, by and between  Brookdale  Living  Communities,  Inc., a Delaware
corporation (the "Borrower"),  and FBR Asset Investment Corporation,  a Virginia
corporation (the "Lender"), and the parties hereto agree to the following:

         WHEREAS, the Borrower wishes to obtain a $5,000,000 unsecured loan as a
source of funds from the Lender to be used solely for the purposes  described in
Schedule 3.03A, and the Lender wishes to extend a short-term  $5,000,000 loan to
the Borrower subject to the terms and conditions set forth herein; and

         NOW,  THEREFORE,  in  consideration  of the foregoing and of the mutual
covenants   and  promises   made  herein,   and  for  other  good  and  valuable
consideration,  the receipt and  sufficiency  of which are hereby  acknowledged,
intending to be legally bound, the parties hereto agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         Section 1.01.   Definitions.  Unless otherwise specified, the following
terms shall have the meanings assigned to them in this Section 1.01 when used in
this Agreement.

         "Accrual Period" means, (a) with respect to the initial Accrual Period,
the period commencing on the Closing Date and ending at the close of business on
the next 24th day of a month and,  (b) with  respect to any  subsequent  Accrual
Period,  the  period  commencing  on the  25th day of the  month  in  which  the
preceding  Accrual  Period  ended and ending on the  earlier of (i) the close of
business on the 24th day of the following month or (ii) the Maturity Date.

         "Affiliate"  means  any  Person:   (a)  which  directly  or  indirectly
controls, or is controlled by, or is under common control with, such Person; (b)
which  directly or  indirectly  beneficially  owns or holds ten percent (10%) or
more of the voting  securities of such Person;  or (c) ten percent (10%) or more
of the voting  stock of which is directly or  indirectly  beneficially  owned or
held by such  Person.  The term  "control"  means the  possession,  directly  or
indirectly,  of the power to direct or cause the direction of the management and
policies of a Person,  whether  through the ownership of voting  securities,  by
contract or otherwise.

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<PAGE>

         "Balance  Sheet"  means  the  balance  sheet  of the  Borrower  and its
consolidated  subsidiaries  as of September  30, 1998 which has been supplied to
the Lender as described in Section 3.03(b).

         "Borrower"  means  Brookdale  Living  Communities,   Inc.,  a  Delaware
corporation.

         "Business Day" means any day, other than a Saturday or Sunday,  that is
neither a legal holiday,  nor a day on which banking institutions are authorized
or required by Law or regulation to close,  in the  Commonwealth  of Virginia or
the city of Chicago, Illinois.

         "Closing Date" means January 25, 1999.

         "Commitment  Fee"  shall  have the  meaning  assigned  to such  term in
Section 2.01(b) hereof.

         "Default" means a Monetary Default, a Non-Monetary  Default,  or any of
the other events described in Section 7.01 hereof,  which may become an Event of
Default in accordance with Section 7.01.

         "Default Rate" means 25.00% per annum.

         "Event of Default" has the meaning set forth in Section 7.01 hereof.

         "GAAP" means  generally  accepted  accounting  principles in the United
States, consistently applied.

         "Governmental  Authority" means any nation or government,  any state or
other  political  subdivision  thereof,  and any  entity  exercising  executive,
legislative,  judicial,  regulatory or administrative functions of or pertaining
to government.

         "Indemnified Party" has the meaning ascribed thereto in Section 6.01(a)
of this Agreement.

         "Interest Rate" means,  with respect to the first two Accrual  Periods,
12.00% per annum,  and,  with  respect  to the third and final  Accrual  Period,
15.00% per annum.

         "Law" means any federal, state or local statute, law, rule, regulation,
ordinance,  order,  code,  policy or rule of common  law,  now or  hereafter  in
effect,  and in  each  case  as  amended,  and any  judicial  or  administrative
interpretation thereof by a Governmental  Authority or otherwise,  including any
judicial or administrative order, consent, decree or judgment.

         "Lender"   means  FBR  Asset   Investment   Corporation,   a   Virginia
corporation, its successors in interest and its permitted assigns.

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         "Loan" means the $5,000,000  loan loaned by the Lender to the Borrower,
together with accrued and unpaid interest thereon.

         "Material  Adverse  Effect" means a material  adverse effect on (a) the
financial  condition or business operations of the Borrower and its subsidiaries
taken as a whole or (b) the ability of the  Borrower to perform its  obligations
under, or the validity or enforceability of, this Agreement or the Note.

         "Maturity  Date"  means the  earlier to occur of (i) April 26,  1999 or
(ii) the date of any  declaration  of  acceleration  by the Lender  pursuant  to
Section 7.02.

         "Monetary  Default" means a failure by the Borrower to pay interest due
on any Payment  Date or the Maturity  Date or principal or other  amounts due on
the Maturity Date.

         "Non-Monetary  Default"  means a breach of any of the  representations,
warranties,  covenants  or  other  agreements  contained  herein,  other  than a
Monetary Default.

         "Note" has the meaning set forth in Section 2.06.

         "Obligations"   means  any  and  all   indebtedness,   obligations  and
liabilities  of the  Borrower to the Lender  (whether  now existing or hereafter
arising,  voluntary  or  involuntary,  regardless  of whether  jointly owed with
others, direct or indirect, absolute or contingent,  liquidated or unliquidated,
and regardless of whether from time to time decreased or extinguished  and later
increased,  created or incurred), arising out of or related to this Agreement or
the Note or the indebtedness evidenced hereby or thereby.

         "Payment Date" means, with respect to any Accrual Period,  the 24th day
of the month in which such Accrual Period ends; provided that if such day is not
a Business  Day,  then such Payment  Date shall be the Business Day  immediately
following such day.

         "Person" means an individual, general partnership, limited partnership,
limited liability partnership, corporation, business trust, joint stock company,
limited liability company,  trust,  unincorporated  association,  joint venture,
Governmental Authority, or other entity of whatever nature.

         "subsidiary" of a Person means (a) any corporation more than 50% of the
outstanding  securities  having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
subsidiaries or by such Person and one or more of its  subsidiaries,  or (b) any
partnership,  limited liability company,  association,  joint venture or similar
business  organization more than 50% of the ownership  interests having ordinary
voting  power of which  shall  at the  time be so  

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owned or controlled by such Person.  Unless otherwise  expressly  provided,  all
references to a "subsidiary" shall mean a subsidiary of the Borrower.



                                   ARTICLE II

                                    THE LOAN

         Section 2.01.   The Loan; Commitment Fee.

         (a)  Subject to the terms and conditions of this Agreement,  the Lender
agrees to make a loan (the "Loan") in the  principal  amount of up to $5,000,000
to the Borrower on the Closing Date.

         (b)  To  compensate  the  Lender for  making  the Loan  hereunder,  the
Borrower  shall  pay  to  the  Lender,   contemporaneously   with  the  Lender's
disbursement of the Loan, a commitment fee (the "Commitment  Fee") equal to 0.5%
of the amount of the Loan, or $25,000.

         Section 2.02.   Loan Conditions  Precedent.  The Lender's obligation to
make and disburse the Loan on the Closing Date is subject to the  fulfillment to
the  Lender's  satisfaction,  on or  before  the  Closing  Date,  of  all of the
following conditions:

         (a)  the Borrower shall have executed this Agreement and the Note;

         (b)  the  Lender  shall  have  received  a  certificate  of the  proper
officers of the Borrower certifying (i) a copy of the Borrower's  organizational
documents and (ii) a copy of minutes of a meeting or a unanimous written consent
of the executive committee of the Borrower's board of directors  authorizing the
Borrower to enter into this Agreement;

         (c)  the  Lender  shall  have  received  an  opinion  of counsel to the
Borrower in form and substance satisfactory to the Lender;

         (d)  all of the  representations and warranties of the Borrower in this
Agreement  shall be true and correct in all material  respects as of the Closing
Date; and

         (e)  no  Default  or  Event  of  Default  shall  have  occurred  and be
continuing.

         Section 2.03.   Interest Payments.

         (a)  Interest shall accrue daily on each day during each Accrual Period
on the outstanding  principal balance of the Loan (the "Loan Principal Balance")
from and 

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including the Closing Date at a rate equal to the product of (i) 1/365, (ii) the
Interest  Rate,  and (iii) the Loan  Principal  Balance at the beginning of such
day.  Such accrued  interest for any Accrual  Period shall be due and payable on
the related Payment Date and the Borrower shall pay such interest on such date.

         (b)  If any payment of principal  or interest  with respect to the Loan
which is due under the terms of this  Agreement  is not paid when due, or if any
Event of Default has occurred  hereunder,  then all interest  that accrues under
this  Agreement  from and including the day such payment was due but not made or
on which such Event of Default occurs and continuing  until the day such payment
is finally made or the Event of Default is waived or all  Obligations  have been
paid in full,  shall be  calculated at the Default Rate rather than the Interest
Rate.

         (c)  It is intended  that the rate of  interest  on the Loan  hereunder
shall never exceed the maximum  rate,  if any,  which may be legally  charged on
this Loan, and if the provisions for interest  hereunder  would result in a rate
higher than such maximum rate,  interest shall  nevertheless  be limited to such
maximum rate and any amounts which may be paid toward interest in excess of such
maximum rate shall be applied to the reduction of  principal,  or, at the option
of the Lender, returned to the Borrower.

         Section 2.04.   Principal Payments.

         (a)  The Loan shall mature and the outstanding principal balance of the
Loan shall be due and payable, together, without duplication,  with all interest
accrued and unpaid  thereon,  on the Maturity  Date,  and the Borrower shall pay
such principal and interest on such date.

         (b)  In the event that the outstanding principal balance of the Loan is
not repaid in full on the Maturity Date, the  outstanding  principal  balance of
the Loan shall  immediately  become due and payable and the Lender may  exercise
all rights and remedies available to it under applicable Law.

         (c)  The  Borrower  may prepay the Loan in whole or in part at any time
and from time to time prior to the Maturity Date without premium or penalty.

         Section  2.05.  Application  of  Payments.  Any payment made under this
Agreement shall, unless otherwise specified herein, be applied (i) first, to pay
any unpaid fees, costs,  expenses or obligations (A) which arise hereunder,  (B)
which are to be paid by the  Borrower,  and (C) which are due and payable,  (ii)
second,  to pay any accrued and unpaid  interest on the Loan pursuant to Section
2.03 which is due and payable on or prior to the date of such payment, and (iii)
finally, to reduce the outstanding principal balance of the Loan.

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<PAGE>

         Section 2.06.   Note. The Borrower's  Obligations shall be evidenced by
the  promissory  note of the Borrower  (the "Note") dated as of the date of this
Agreement and  substantially in the form of Exhibit A attached hereto.  The term
"Note" shall include all extensions,  renewals and modifications of the Note and
all substitutions  therefor.  All terms and provisions of the Note are expressly
incorporated into this Agreement.

         Section 2.07.   Transfer of Debt.

         (a)  The  Borrower  may  neither  assign its rights  nor  delegate  its
obligation under this Agreement without the prior written consent of the Lender.

         (b)  The Lender may assign  its  rights and  delegate  its  obligations
under this  Agreement to an Affiliate of the Lender or to a third party  without
the consent of the Borrower.

                                   ARTICLE III

                     BORROWER REPRESENTATIONS AND WARRANTIES

         The Company makes the following  representations and warranties,  as of
the date of this Agreement,  as of the Closing Date, and continually  throughout
the term of this Agreement.

         Section 3.01.   Organization,   Standing,   Capitalization,   etc.  The
Borrower is a corporation duly organized,  validly existing and in good standing
under the laws of the State of Delaware and has all  requisite  corporate  power
and  authority  to own and operate its  properties  and to carry on the business
described in the Borrower's  Report on Form 10-Q for the quarter ended September
30, 1998 ("Form 10-Q"),  and to enter into this  Agreement.  Attached  hereto as
Schedule  3.01A is a complete and correct copy of the  Restated  Certificate  of
Incorporation of the Borrower, and all amendments thereto,  substantially as the
Restated  Certificate  of  Incorporation,  as amended,  will be in effect at the
Closing Date,  and attached  hereto as Schedule  3.01B is a complete and correct
copy of the  Amended  and  Restated  Bylaws of the  Borrower  as they will be in
effect at the Closing Date.

         Section 3.02.   Qualification.   The   Borrower   and   each   of   its
subsidiaries  is duly  qualified and in good  standing as a foreign  corporation
authorized to transact  business in each  jurisdiction  where the conduct of its
business or the ownership of its properties requires such qualification,  or, if
not so  qualified,  the failure so to qualify  will not have a Material  Adverse
Effect and will not materially and adversely impair the right of the Borrower or
the  applicable  subsidiary  to enforce any material  agreement to which it is a
party.

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<PAGE>

         Section 3.03.   Financial  Statements;  Use of Proceeds;  Indebtedness.
The Borrower has furnished to the Lender the following financial statements:

         (a)  balance sheets of the Borrower and its  consolidated  subsidiaries
as of December  31, 1997,  and  statement  of  operations  and cash flows of the
Borrower and its consolidated  subsidiaries for the period  commencing on May 7,
1997 and ending on December 31, 1997,  and the combined  statement of operations
of the "Predecessor Properties" for the period commencing on January 1, 1997 and
ending on May 6, 1997, with all appropriate footnotes, audited by the Borrower's
certified public accountants; and

         (b)  balance sheets of the Borrower and its  consolidated  subsidiaries
as of September 30, 1998 and 1997,  and  statements of operations and cash flows
of the Borrower and its  consolidated  subsidiaries  for the  nine-month  period
ended September 30, 1998 and the period  commencing on May 7, 1997 and ending on
September 30, 1997, and the combined statement of operations of the "Predecessor
Properties" for the period commencing on January 1, 1997 and ending May 6, 1997,
with  all  appropriate  footnotes,  certified  by the  President  and the  chief
financial officer of the Borrower.

         Such balance sheets of the Borrower fairly present the condition of the
Borrower and its consolidated subsidiaries as at the respective dates indicated,
and in each case,  to the extent  required  by GAAP,  reflect  all  liabilities,
contingent or other, as at the respective  dates  indicated.  All such financial
statements have been prepared in accordance with GAAP.

         Attached  hereto  as  Schedule  3.03A is a  detailed  statement  of the
purposes,  including dollar amounts, to which the Borrower proposes to apply the
proceeds of the Loan.  The  Borrower  shall use the Loan  proceeds  only for the
purposes identified on such Schedule 3.03A.

         Attached  hereto as Schedule  3.03B is a detailed and complete  list of
all material  indebtedness  for borrowed  money of the  Borrower,  contingent or
otherwise, and any subsidiary of the Borrower for which the related creditor has
recourse to the Borrower.

         Section 3.04.   Changes,  etc. Since September 30, 1998, there has been
no material adverse change in the business  operations or financial condition of
the Borrower and its consolidated subsidiaries.

         Section 3.05.   Authorization;  No Conflicts.  All corporate  action on
the part of the  Borrower,  its  directors  and  stockholders  necessary for the
authorization,  execution,  delivery  and  performance  by the  Borrower of this
Agreement and the Note and the  consummation  of the  transactions  contemplated
herein and therein has been taken.  Each of this  Agreement  and the Note is the
valid and binding obligation of the Borrower, enforceable in accordance with its
terms,  subject to applicable  bankruptcy and other laws 

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affecting the rights of creditors generally, and rules of law governing specific
performance,  injunctive  relief or other  equitable  remedies.  The  execution,
delivery  and  performance  by the Borrower of this  Agreement  and the Note and
compliance herewith and therewith,  will not result in any violation of and will
not conflict with, or result in a breach of any of the terms of, or constitute a
default  under,  any  provision of federal or state law to which the Borrower or
any of its  subsidiaries  is subject,  the  Borrower's  Restated  Certificate of
Incorporation,  the  Borrower's  Amended and  Restated  Bylaws or any  mortgage,
indenture, agreement, instrument, judgment, decree, order, rule or regulation or
other restriction to which the Borrower or any of its subsidiaries is a party or
by which it is bound or result in the creation of any  mortgage,  pledge,  lien,
encumbrance  or charge upon any of the  properties  or assets of the Borrower or
any of its subsidiaries pursuant to any such term.

         Section  3.06.  Governmental   Approval.   No   consent,   approval  or
authorization of or qualification,  designation,  declaration or filing with any
governmental  authority on the part of the  Borrower or any of its  subsidiaries
which has not been  obtained or  completed  is required in  connection  with the
execution,  delivery and  performance  by the Borrower of this  Agreement or the
Note or the  consummation  of any  other  transactions  contemplated  hereby  or
thereby.

         Section 3.07.   Title  to   Properties;   Liens.   The  Borrower  or  a
subsidiary  of  the  Borrower  has  good  and  marketable  title  to  all of its
respective properties and assets,  including all properties and assets reflected
in the Balance Sheet, subject only to (i) liens securing indebtedness  reflected
on the Balance Sheet,  (ii) liens securing the liability of  subsidiaries of the
Borrower  under  financing  lease or so-called  "synthetic  lease"  transactions
entered into by subsidiaries of the Borrower which do not constitute liabilities
on the Balance  Sheet,  and (iii) other liens that do not  adversely  affect the
value of the properties  and assets.  Neither the Borrower nor any subsidiary is
in violation of any law, regulation or ordinance (including laws, regulations or
ordinances relating to building, zoning, environmental,  city planning, land use
or similar  matters)  relating to its property or assets which  violation  would
have a Material Adverse Effect. All personal property and assets material to the
business,   operations   or   financial   condition  of  the  Borrower  and  its
subsidiaries, and all buildings,  structures and fixtures used by any of them in
the conduct of their business, are in good operating condition and repair.

         Section  3.08.  Litigation,  etc.  There is no  action,  proceeding  or
investigation  pending or, to the  knowledge of the Borrower,  threatened,  that
questions the validity of this  Agreement or the Note, or any action taken or to
be taken pursuant hereto or contemplated hereby, or that is reasonably likely to
result,  either in any case or in the aggregate,  in a Material  Adverse Effect.
The foregoing  includes,  without  limiting its  generality,  actions pending or
threatened  involving the previous  employment  of any employees or  prospective
employees or their use in  connection  with the business of the 

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Borrower  and  its  subsidiaries  of any  information  or  techniques  allegedly
proprietary to their former employer(s).

         Section  3.09.  Compliance  with other  Instruments,  etc.  Neither the
Borrower nor any subsidiary is in violation of any provision of its  certificate
of incorporation or bylaws, or of any loan agreement or other material agreement
to which it is a party.  Neither the Borrower nor any subsidiary is in violation
of any  instrument,  judgment,  decree,  order,  statute,  rule or  governmental
regulation  applicable to it,  including  without  limitation,  federal or state
securities laws, zoning laws and ordinances, federal labor laws and regulations,
the federal Occupational Safety and Health Act and regulations  thereunder,  the
federal Employees  Retirement Income Security Act, and federal,  state and local
environmental protection laws and regulations,  the violation of which will have
a Material Adverse Effect.

         Section  3.10.  Tax  Returns and  Payments.  All of the tax returns and
reports of the  Borrower and its  subsidiaries  required by Law to be filed have
been  accurately  prepared  and timely  filed and all taxes shown as due thereon
have been paid or adequately  reserved on the Borrower's  books and reflected on
the Balance Sheet.

         Section 3.11.   Disclosure.  None of (a) the Borrower's  Report on Form
10-K for the period ended December 31, 1997,  (b) the Borrower's  Report on Form
10-Q for the quarter  ended  September  30,  1998,  (c) this  Agreement  and any
Schedule  hereto or (d) any certificate or other document  referenced  herein or
therein  and  furnished  to the  Lender  by the  Borrower  contains  any  untrue
statement  of a material  fact or omits to state a material  fact  necessary  in
order  to make the  statements  contained  therein  or  herein,  in light of the
circumstances  under which they were made, not misleading.  There is no material
fact  known to the  Borrower  relating  to the  business,  affairs,  operations,
condition or prospects of the Borrower  that  materially  adversely  affects the
same and that has not been disclosed to the Lender in writing by the Borrower.

         Section 3.12.   Brokers, Intermediaries and Finder's Fees. The Borrower
(i)  represents  that no  finder,  broker,  agent,  financial  adviser  or other
intermediary  has acted on behalf of the Borrower in connection with the Loan or
the  negotiation or  consummation  of this Agreement or any of the  transactions
contemplated  hereby, and (ii) hereby agrees to indemnify and to hold the Lender
harmless of and from any liability for commission or  compensation in the nature
of a  finder's  fee to any  broker  or  other  person  or firm  representing  or
allegedly  representing  the  Borrower  in this  transaction  and the  costs and
expenses of defending  against such liability or asserted  liability,  for which
the Borrower, or any of its employees or representatives, are responsible.

         Section  3.13.  Insurance.  The  Borrower  and  its  subsidiaries  have
commercial  general  liability  insurance,   products  liability  insurance  (if
applicable)  and  workers'  

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compensation  insurance  in such  amounts  as are  commercially  reasonable  for
businesses  of a  similar  type  and  size  as the  Borrower  or the  applicable
subsidiary.  The Borrower and each subsidiary  have fire and casualty  insurance
policies with  extended  coverage  sufficient  in amount  (subject to reasonable
deductibles)  to allow it to replace any of its properties that might be damaged
or destroyed.

         Section 3.14.   Commercial  Loan. The proceeds of the Loan will be used
solely for business and commercial purposes; accordingly, the Note evidences the
Borrower's  obligation  to repay a loan  made  solely to  acquire  or carry on a
business or commercial enterprise.

         Section 3.15.   Survival  of   Representations   and  Warranties.   The
Borrower agrees and acknowledges that each of the representations and warranties
set forth in subsections 3.01 through 3.14 hereof (i) is important to the Lender
and being relied upon by the Lender, (ii) is true in all respects as of the date
of this  Agreement,  and (iii) shall  survive  the  execution,  termination  and
expiration of this Agreement.

                                   ARTICLE IV
             
             ACCOUNTING; FINANCIAL STATEMENTS AND OTHER INFORMATION

         Section  4.01.  Accounting.  The  Borrower  will  maintain  a system of
accounting  established and  administered  in accordance with GAAP  consistently
followed,  and will set aside on its books all such proper  reserves as shall be
required by GAAP.

         Section 4.02.   Financial  Statements.  For so long as the Lender holds
the Note, the Borrower will deliver to the Lender:

         (a)  within 45 days after the end of each of the first three  quarterly
fiscal periods in each fiscal year of the Borrower,  (i) a consolidated  balance
sheet of the Borrower and its  consolidated  subsidiaries  as at the end of such
period and consolidated  statements of operations and cash flows of the Borrower
and its consolidated subsidiaries for each period and, in the case of the second
and third  quarterly  periods,  for the period  from the  beginning  of the then
current fiscal year to the end of such quarterly  period,  setting forth in each
case in  comparative  form  the  figures  for the  corresponding  period  of the
previous fiscal year, all in reasonable detail and certified, subject to changes
resulting from normal  year-end audit  adjustments and (ii) a certificate of the
President or chief financial officer stating that, to the best knowledge of such
Person after  reasonable  investigation,  the Borrower is in compliance with the
covenants set forth in Article V herein;

         (b)  promptly upon the filing thereof,  all reports and statements,  if
any, filed by the Borrower with the  Securities and Exchange  Commission (or any
governmental authority 

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<PAGE>

succeeding to any of its functions)  (the  "Commission")  or with any securities
exchange; and

         (c)  with reasonable  promptness,  such other information and data with
respect to the Borrower and its  consolidated  subsidiaries as from time to time
may be reasonably requested by Lender.

                                    ARTICLE V
              
                                 OTHER COVENANTS

         Section 5.01.   Other  Covenants.  The Borrower  further  covenants and
agrees that, so long as any Obligations are outstanding :

         (a)  The Borrower  shall and shall cause each of its  subsidiaries  (as
applicable) to:

                  (1)  promptly make all payments or accruals of interest on the
          Note and under this  Agreement  when due,  and  comply  with the other
          provisions hereof and the provisions of the Note;

                  (2)  comply with all applicable federal, state and local Laws,
          ordinances  and  regulations,  to the  extent  failure  to do so has a
          Material Adverse Effect;

                  (3)  conduct its business in the usual and ordinary course;

                  (4)  maintain its  corporate  existence  and right to carry on
          its business and duly procure all  necessary  renewals and  extensions
          thereof and use, its best efforts to maintain,  preserve and renew all
          such rights, powers,  privileges and franchises, to the extent failure
          to do so has a Material Adverse Effect;

                  (5)  keep  and  maintain  all  buildings,   plants  and  other
          property owned by Borrower or any  subsidiary in such good  condition,
          repair,  and  working  order  and  supplied  with all  such  necessary
          equipment  as in the  judgment of its Board of  Directors or executive
          officers  may  be  necessary,  so  that  the  business  carried  on in
          connection  therewith may be properly and advantageously  conducted at
          all times; provided, however, that nothing in this paragraph (5) shall
          prevent the Borrower or its subsidiaries  from selling,  abandoning or
          otherwise disposing of any building, plant or property whenever in the
          opinion of their respective Boards of Directors or executive  officers
          the retention thereof is inadvisable or not necessary to its business;

                                       11

<PAGE>

                  (6)  pay and  discharge  promptly,  or  cause  to be paid  and
          discharged promptly,  all taxes,  assessments and governmental charges
          or levies imposed upon it or upon its income or upon any part thereof,
          as well  as all  claims  of any  kind  (including  claims  for  labor,
          materials and supplies) that, if unpaid, might by law become a lien or
          charge  upon its  property  or would have a Material  Adverse  Effect;
          provided,  however, that neither the Borrower nor any subsidiary shall
          be required to pay any such tax, assessment,  charge, levy or claim if
          the amount,  applicability  or validity  thereof shall be contested in
          good faith by appropriate  proceedings  and if it shall have set aside
          on its books  reserves  (segregated  to the extent  required  by sound
          accounting practice) deemed by it adequate with respect thereto;

                  (7)  provide or cause to be  provided  for  itself  commercial
          general  liability   insurance,   products  liability   insurance  (if
          applicable) and workers' compensation insurance in such amounts as are
          commercially reasonable for businesses of similar type and size as the
          Borrower  and fire  and  casualty  insurance  policies  with  extended
          coverage  sufficient in amount (subject to reasonable  deductibles) to
          allow it to  replace  any of its  properties  that might be damaged or
          destroyed;

                  (8)  notify the Lender in writing promptly upon the occurrence
          of any Event of Default as  hereafter  defined or any event that would
          become an Event of Default upon notice or the lapse of time,  or both;
          and

                  (9)  permit the Lender or any  authorized  representatives  of
          the Lender, at the Lender's  expense,  to visit and inspect any of the
          properties of the Borrower including its books of account (and to make
          copies  thereof  and to take  extracts  therefrom)  and to discuss its
          affairs,  finances  and  accounts  with  its  officers,  all  at  such
          reasonable  times and upon reasonable prior notice and as often as may
          be  reasonably  requested.  The  rights  set  forth  herein  shall  be
          exercised  solely in furtherance of the proper interests of the Lender
          as a Lender to the Borrower,  and the Lender  exercising its rights of
          inspection hereunder shall maintain, and shall procure that its agents
          and representatives maintain, the confidentiality of all financial and
          other  confidential  information  of the Borrower  acquired by them in
          exercising such rights.

         (b)  For so long as there  are  Obligations  outstanding,  without  the
Lender's prior written consent;

                  (i)  the  Borrower  shall  not  declare,  pay or set aside for
          payment any dividend or other  distribution with respect to its common
          stock or any other  class 

                                       12

<PAGE>

          of  securities,  or purchase or otherwise  acquire any common stock or
          any other  class of  securities,  or  contract  for such  purchase  or
          acquisition; and

                  (ii) neither the Borrower nor any  subsidiary  of the Borrower
         shall incur, assume, guarantee or otherwise become obligated for in any
         way any  indebtedness  for  borrowed  money for which the  creditor has
         recourse to the Borrower except as set forth in Schedule 3.03B.



                                   ARTICLE VI

                                 INDEMNIFICATION

         Section 6.01.   Indemnification by the Borrower.

         (a)  If, in  connection  with the matters  that are the subject of this
Agreement,  the Lender becomes  involved in any capacity in, or incurs any cost,
damage, expense or liability in connection with, any action or legal proceeding,
actual or threatened,  involving claims by any third party, or to enforce any of
the  Lender's  rights  under this  Agreement or to collect any amount under this
Agreement,  the Borrower  shall  reimburse the Lender,  its Affiliates and their
respective directors, officers, employees, agents and controlling persons (each,
an "Indemnified  Party")  promptly upon request for all expenses  (including the
reasonable fees and  disbursements  of legal counsel,  the allocated  reasonable
costs of in-house  counsel  acting as  litigators,  and the  reasonable  cost of
investigation  and  preparation) in connection with or related to such action or
legal proceedings as they are incurred.

         The Borrower shall indemnify and hold each  Indemnified  Party harmless
against  all  losses,  claims,  damages  or  liabilities  of any kind,  joint or
several,  to which such Indemnified Party may become subject in connection with,
or  relating  to,  or  arising  out  of,  this  Agreement  or the  Note,  or any
transactions contemplated hereby; provided, however, that the Borrower shall not
be liable under the foregoing indemnity agreement in respect of any loss, claim,
damage or liability to the extent that a court  having  jurisdiction  shall have
determined by a final  judgment (not subject to further  appeal) that such loss,
claim,  damage or liability  resulted  primarily  and directly  from the willful
misconduct or gross  negligence  of such  Indemnified  Party.  The Borrower also
shall  reimburse the Lender for all the Lender's costs and expenses  incurred in
connection with the enforcement or the preservation of the Lender's rights under
this Agreement and the Note, including,  without limitation, the reasonable fees
and disbursements of its counsel and additional due diligence  expenses incurred
after the  occurrence of an Event of

                                       13

<PAGE>

Default or in connection with any action,  claim or proceeding described in this
subsection for which the Lender is entitled to indemnification.

         (b)  The  agreements  of the  Borrower  in this  Article VI shall be in
addition to any liabilities that the Borrower may otherwise have and shall apply
whether or not the Lender or any other  Indemnified  Party is a formal  party to
any lawsuit,  claim or other  proceeding.  Solely for purposes of enforcing such
agreements,  the Borrower hereby consents to personal jurisdiction,  service and
venue in any  court in  which  any  claim or  proceeding  which  relates  to the
services or matters that are the subject of this  Agreement  is brought  against
the Lender or other Indemnified Party.

                                   ARTICLE VII
               
                                EVENTS OF DEFAULT

         Section 7.01.   Occurrence  of  an  Event  of  Default.  An  "Event  of
Default" shall occur:

         (a)  immediately upon the occurrence of a Monetary  Default;  provided,
however,  that if the Borrower fails to pay the interest due on any Payment Date
or fails to make a payment  required  under  Section 2.04, an "Event of Default"
shall occur only if the  Borrower  has not paid such  interest or other  payment
within one  Business  Day  following  such Payment Date or the date on which the
obligation to make such payment arose provided further,  that as to any monetary
obligation other than the payment of principal or interest on the Loan, an Event
of Default shall occur if the Borrower has not made such payment within five (5)
Business Days of the date on which such payment was demanded by the Lender;

         (b)  except as otherwise specifically provided in this Section 7.01, 10
days after the  receipt by the  Borrower  of  written  notice of a  Non-Monetary
Default which is not cured within such 10-day period; provided, however, that if
it is not possible or practicable  within 10 days to cure a particular  material
Non-Monetary  Default, an "Event of Default" shall be deemed to have occurred on
the tenth (10th) day after the occurrence of such Non-Monetary  Default;  except
that,  if,  during such 10-day  period,  the Borrower has commenced to cure such
Non-Monetary  Default,  is  proceeding  diligently  to  cure  such  Non-Monetary
Default,  has  informed  the  Lender  of any  steps it is  taking  to cure  such
Non-Monetary  Default and a likely date of cure,  the Lender may consider in its
sole and absolute discretion an extension of such 10-day cure period.

         (c)  immediately  upon, and  simultaneously  with, the occurrence of an
event of default  (meaning  a default or breach and the  passage of any grace or
cure period provided 

                                       14

<PAGE>

in such  agreement  without  the  default  having  been  cured or waived) by the
Borrower under any agreement or other document  relating to any indebtedness for
borrowed  money of the Borrower or subsidiary of the Borrower or under any other
material agreement of the Borrower or subsidiary of the Borrower;

         (d)  immediately upon the Borrower's breach of a covenant  described in
Section 5.01(b);

         (e)  the occurrence of any Material Adverse Effect;

         (f)  immediately  upon  the  appointment  of a  receiver,  conservator,
liquidator,   assignee,  custodian,  trustee,  sequestrator  (or  other  similar
official)  of the  Borrower  or of any  substantial  part of its  property,  the
ordering of the  winding-up  or  liquidation  of its affairs,  or the entry of a
decree or order for relief by a court  having  jurisdiction  in the  premises in
respect of the Borrower in any involuntary case under any applicable bankruptcy,
insolvency  or other  similar law now or  hereafter  in effect  which such order
remains undischarged or unstayed, as the case may be, for 45 days;

         (g) immediately  upon  commencement by the Borrower of a voluntary case
under  any  applicable  bankruptcy,  insolvency  or  other  similar  law  now or
hereafter in effect, or the consent by the Borrower to the entry of an order for
relief in an  involuntary  case under any such law or to the  appointment  of or
taking  possession  by a receiver,  liquidator,  assignee,  trustee,  custodian,
sequestrator  (or other similar  official) of the Borrower or of any substantial
part of the  Borrower's  property,  or the making by the Borrower of any general
assignment  for  the  benefit  of  creditors,  or the  failure  of the  Borrower
generally  to pay its debts as such debts become due, or the taking of action by
the Borrower in furtherance of any of the foregoing; or

         (h)  this  Agreement or the Note shall be  terminated or cease to be in
full force and effect in any material  respect  (other than upon the  expiration
thereof in accordance  with the terms thereof or  termination by the Borrower in
accordance  with the terms  thereof),  or the  enforceability  thereof  shall be
challenged by the Borrower or any Affiliate of the Borrower.

         Section 7.02.  Effect of Event of Default.

         (a)  If any such Event of Default  shall occur and be  continuing,  the
Lender  may, at the  Lender's  option,  declare the Note to be due and  payable,
whereupon  the  maturity  of the  then  unpaid  balance  of the  Note  shall  be
accelerated  and the principal and all interest  accrued thereon shall forthwith
become due and payable  without  presentment,  demand,  protest or notice of any
kind, all of which are hereby expressly waived,  anything contained herein or in
the Note to the contrary notwithstanding,  and the Lender may exercise and shall
have any and all remedies accorded the Lender by applicable Law.

                                       15

<PAGE>

         (b)  In case any one or more  Events  of  Default  shall  occur  and be
continuing, the Lender may proceed to protect and enforce its rights or remedies
either by suit in equity or by action at law, or both,  whether for the specific
performance of any covenant,  agreement or other provisions contained herein, in
the Note or in any document or instrument  delivered pursuant to this Agreement,
or proceed to enforce the payment of the Note or any other  legal,  equitable or
statutory right or remedy.

         (c)  No right or remedy herein conferred upon the Lender is intended to
be exclusive of any other right or remedy  contained  herein,  therein or in any
instrument  or  document  delivered  in  connection  with  or  pursuant  to this
Agreement, and every such right or remedy contained herein and therein or now or
hereafter  existing  at law or in  equity  or by  statute  or  otherwise  may be
exercised separately or in any combination.

         (d)  No course of dealing  between the  Borrower  and the Lender or any
failure or delay on the  Lender's  part in  exercising  any  rights or  remedies
hereunder  shall  operate as a waiver of any of the Lender's  rights or remedies
and no single or partial  exercise  of any rights or  remedies  hereunder  shall
operate as a waiver or preclude  the  exercise  of any other  rights or remedies
hereunder.

                                  ARTICLE VIII

                               GENERAL PROVISIONS

         Section 8.01.   Cooperation, Confidentiality, Etc.

         (a)  Upon reasonable  notice the Borrower shall furnish the Lender with
all information  and data reasonably  requested by the Lender in connection with
its  activities  on the  Borrower's  behalf  to  carry  out  the  terms  of this
Agreement,  and shall  provide the Lender  reasonable  access to the  Borrower's
officers, directors, employees and professional advisers.

         (b)  Subject to Section  8.01(c)  below,  the Borrower  recognizes  and
confirms  that  the  Lender  in  acting  pursuant  to  this  Agreement  may  use
information  in reports and other  information  provided  by others,  including,
without limitation,  information  provided by the Borrower,  and that the Lender
does  not  assume   responsibility  for  and  may  rely,   without   independent
verification,  on  the  accuracy  and  completeness  of  any  such  reports  and
information.  The Borrower agrees that any advice or information rendered by the
Lender in  connection  with this  Agreement is for the  confidential  use of the
Borrower only and,  except as otherwise  required by Law, the Borrower will not,
and will not permit any third party to,  disclose such advice or  information to
others or  summarize or refer to such 

                                       16

<PAGE>

advice or information or to the Lender's role hereunder  without,  in each case,
the Lender's prior written consent.

         (c)  Each  party  shall use  commercially  reasonable  efforts  to keep
confidential  the  existence and terms of this  Agreement  and the  transactions
contemplated  hereby  except (1) such  written or oral  information  as shall be
consistent with information  approved by the other parties hereto as permissible
to be so  communicated  or  information  that has become  public  through  other
disclosure,  (2) oral or written  information to the disclosing party's lawyers,
accountants,  lenders and other Persons with a need to know such  information by
reason of their  relationship  or  prospective  relationship  to the  disclosing
party, (3) to the extent disclosure  thereof is required by court order or other
legal process or by law (provided that, prior to disclosure  pursuant to such an
order or legal  process,  the  disclosing  party shall notify the other  parties
hereto so that such other parties may pursue a protective  order with respect to
such  information),  and (4) to the extent  disclosure  thereof is  required  in
conjunction with the filing of applications,  responses,  reports, statements or
other documents and compilations with any governmental  entities,  including the
Securities and Exchange Commission.

         Section  8.02.  Waiver of Trial by Jury.  Each party hereto  waives the
right to trial by jury in any action,  suit,  proceeding or  counterclaim of any
kind arising out of or related to this  Agreement.  In the event of  litigation,
this Agreement may be filed as a written consent to a trial by the court.

         Section 8.03.   Amendment;  Waivers. This Agreement may be amended from
time to time only by written agreement of the parties. No failure on the part of
the Lender to exercise, and no delay in exercising,  any right, power, or remedy
under this Agreement shall operate as a waiver thereof;  nor shall any single or
partial exercise of any right under this Agreement preclude any other or further
exercise  thereof or the  exercise of any other  right.  No term or provision of
this Agreement may be waived or modified  unless such waiver or  modification is
in writing and signed by the party against whom such waiver or  modification  is
sought to be enforced.

         Section 8.04.   Other Transactions.  The Borrower acknowledges that the
Lender and its Affiliates  may now or in the future have business  dealings with
parties other than the Borrower, which parties compete,  directly or indirectly,
with the Borrower.  Although the Lender and its Affiliates  may, in their normal
course of business,  acquire  information  about the housing market,  particular
transactions  or such other  parties,  the Lender  shall have no  obligation  to
disclose such information to the Borrower.  The Borrower  acknowledges  that the
Lender and its Affiliates may engage in their  businesses and otherwise  compete
with  the  Borrower  without  regard  to  their  relationship  to  the  Borrower
hereunder.

                                       17

<PAGE>

         Section 8.05.   Costs and Expenses.  The Borrower  will be  responsible
for and bear all of the reasonable fees and expenses incurred in connection with
the preparation,  negotiation,  and execution of this Agreement and the Note and
any amendments  thereof and any reasonable  expenses incurred in the enforcement
hereof or thereof and the transactions contemplated thereby, including,  without
limitation reasonable fees and expenses of legal counsel for the Lender.

                                   ARTICLE IX

                                  CONSTRUCTION

         Section 9.01.   Entire  Agreement.  This  Agreement,  together with the
Note,  including  the Exhibits  and the  Schedules  hereto,  contains the entire
agreement  of the parties  with  respect to the  subject  matters  thereof,  and
supersedes all prior agreements  between them,  whether oral or written,  of any
nature whatsoever with respect to the subject matter hereof.

         Section  9.02.  Severability  Clause.  Any  part or  provision  of this
Agreement that is prohibited or that is held to be void or  unenforceable  shall
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof.  Any part or provision of this
Agreement  that  is  prohibited  or  unenforceable  or is  held  to be  void  or
unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction,
to the extent of such prohibition or unenforceability  without  invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other  jurisdiction.  To the extent  permitted  by  applicable  Law, the parties
hereto  waive  any   provision  of  Law  that   prohibits  or  renders  void  or
unenforceable  any provision  hereof. If the invalidity of any part or provision
of this Agreement shall deprive any party of the economic benefit intended to be
conferred by this  Agreement,  the parties shall  negotiate,  in good-faith,  to
develop a structure, the economic effect of which is as close as possible to the
economic effect of this Agreement, without regard to such invalidity.

         Section 9.03.   Counterparts.    This   Agreement   may   be   executed
simultaneously  in any number of counterparts.  Each counterpart shall be deemed
to be an original,  and all such counterparts  shall constitute one and the same
instrument.

         Section  9.04.  Governing  Law;  Consent  to  Forum;  Immunities.  This
Agreement and the Note shall be governed by and construed in accordance with the
Laws of the  Commonwealth of Virginia,  without giving effect to the conflict of
laws rules therein. The parties hereto hereby consent and agree that the Circuit
Court of Arlington  County,  Virginia,  or, at the Lender's  option,  the United
States District Court for the Eastern 

                                       18

<PAGE>

District of Virginia,  shall have exclusive  jurisdiction  to hear and determine
any claims or disputes  between the parties hereto  pertaining to this Agreement
and the Note or to any matter  arising out of or related to this  Agreement  and
the Note.  The parties  hereto  expressly  submit and consent in advance to such
jurisdiction in any action or suit commenced in any such court, and hereby waive
any  objection  which it may have  based  upon  lack of  personal  jurisdiction,
improper  venue or forum non  conveniens  and hereby  consent to the granting of
such legal or  equitable  relief as is deemed  appropriate  by such court.  Each
party hereto  irrevocably  consents to the service of process by  registered  or
certified mail, postage prepaid,  to it at its address given pursuant to Section
10.01 hereof.  Nothing in this  Agreement or the Note shall be deemed or operate
to affect the right of the  Lender to serve  legal  process in any other  manner
permitted by applicable Law, or to preclude the enforcement by the Lender of any
judgment or order  obtained in such forum or the taking of any action under this
Agreement  or the  Note  to  enforce  same in any  other  appropriate  forum  or
jurisdiction.

         To the  extent  that the  Borrower  has or may  hereafter  acquire  any
immunity from the  jurisdiction of any court or from any legal process  (whether
through service or notice,  attachment  prior to judgment,  attachment in aid of
execution,  execution  or  otherwise)  with  respect  to  the  Borrower  or  the
Borrower's  property,  the Borrower hereby  irrevocably  waives such immunity in
respect of its obligations under this Agreement.

         To  the  extent   permitted  by  applicable   Law,  each  party  hereto
irrevocably  waives any right such party may have to  consequential  or punitive
damages from any other party and hereby  agrees not to assert any claim for such
damages.

         Section 9.05.   No Agency;  No Partnership;  No Joint Venture.  Neither
the Lender nor the  Borrower is the agent or  representative  of the other,  and
nothing in this  Agreement  shall be  construed to make either the Lender or the
Borrower liable to any third party for services performed by such third party or
for debts or claims  accruing to such third party  against  either the Lender or
the Borrower.  This  Agreement is intended by the parties hereto to constitute a
loan agreement and nothing  contained  herein nor the acts of the parties hereto
shall be construed to create a partnership,  agency,  equity investment,  profit
sharing agreement,  joint venture or sale of receivables  between the Lender and
the Borrower.  The parties  agree that they will not file any federal,  state or
local income tax return that is inconsistent with such intended treatment.

         Section  9.06.  Judicial  Interpretation.  Should any provision of this
Agreement or the Note require judicial interpretation, it is agreed that a court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against any Person by reason of the rule
of  construction  that a document is to be construed  more strictly  against the
Person who itself or through its agent  prepared the 

                                       19

<PAGE>

same,  it being  agreed that all the parties  hereto  have  participated  in the
preparation of this Agreement.

         Section 9.07.   Recitals.  The  recitals  of  this  Agreement  are  not
intended to constitute substantive provisions hereof.

         Section 9.08.   Rules of Interpretation.  Except as otherwise expressly
provided in this Agreement, the following rules shall apply hereto:

         (a)  the  singular  includes  the plural and the  plural  includes  the
singular;

         (b)  "include" and "including" are not limiting;

         (c)  a reference to any agreement or other contract includes  permitted
supplements, amendments and other modifications;

         (d)  a  reference  to  a  law  (or  Law)   includes  any  amendment  or
modification  of  such  law  (or  Law)  and  the  rules  or  regulations  issued
thereunder;

         (e)  a reference to a Person  includes  its  permitted  successors  and
assigns in the applicable capacity;

         (f)  a reference  in this  Agreement  to an Article,  Section,  clause,
recital or Exhibit is to the  Article,  Section,  clause,  recital or Exhibit of
this Agreement unless otherwise expressly provided;

         (g)  words such as "hereunder",  "hereto",  "hereof",  and "herein" and
other words of like import shall,  unless the context  clearly  indicates to the
contrary,  refer  to the  whole  of this  Agreement  and  not to any  particular
Article, Section or clause hereof;

         (h)  any right in this  Agreement may be exercised at any time and from
time to time in accordance with the terms of this Agreement;

         (i)  the headings of the Articles and Sections are for  convenience and
shall not affect the meaning of this Agreement; and

         (j)  time is of the essence in performing all obligations.

                                       20

<PAGE>

                                    ARTICLE X

                                  MISCELLANEOUS

         Section 10.01. Notices. All demands,  notices, requests for consent and
other  communications  hereunder  shall be in writing and personally  delivered,
mailed by certified mail, return receipt requested, and telecopied, and shall be
deemed to have been duly given upon transmission and confirmation of receipt;

                  if to the Borrower:

                  Brookdale Living Communities, Inc.
                  77 West Wacker Drive
                  Suite 4400
                  Chicago, Illinois  60601
                  Attn:  Mr. Darryl W. Copeland, Jr.
                  Executive Vice President
                  and Chief Financial Officer
                  Telephone Number:  (312) 977-3692
                  Telecopier Number:  (312) 977-3699

                  with a copy to:

                  Brookdale Living Communities, Inc.
                  77 West Wacker Drive
                  Suite 4400
                  Chicago, Illinois  60601
                  Attn:  Mr. Robert J. Rudnik
                  Telephone Number:  (312) 977-3760
                  Telecopier Number:  (312) 977-3769

                  and to:

                  Winston & Strawn
                  35 West Wacker Drive
                  Chicago, Illinois 60601
                  Attn:  Wayne D. Boberg
                  Telephone Number:  (312) 558-5882
                  Telecopier Number:  (312) 558-5700

                  if to the Lender:

                                       21

<PAGE>

                  FBR Asset Investment Corporation
                  Potomac Tower
                  1001 Nineteenth Street North, 18th Floor
                  Arlington, VA  22209
                  Attention:  Ms. Elaine M. Clancy
                  Telephone Number:  (703) 312-9627
                  Telecopier Number:  (703) 312-9602

                  with a copy to:

                  Thomas Y. Hiner, Esq.
                  Hunton & Williams
                  Riverfront Plaza - East Tower
                  951 East Byrd Street
                  Richmond, VA  23219
                  Telephone Number:  (804) 788-8279
                  Telecopier Number:  (804) 788-8218

or, as to any  party,  at such  other  address  or  telecopy  number as shall be
designated by such party in a written notice to each other party.

         Section  10.02. Further  Agreements.  The  Borrower and the Lender each
agree to execute and deliver to the other such additional documents, instruments
or agreements as may be necessary or  appropriate  to effectuate the purposes of
this Agreement.

         Section 10.03.  Third-Party Rights. This Agreement is for the exclusive
benefit of the parties  hereto and their  respective  successors and assigns and
shall not be deemed to give any legal or equitable right to any other Person.

         Section  10.04. Advice from  Independent  Counsel.  The parties  hereto
understand that this Agreement and the Note are legally binding  agreements that
may affect such party's rights.  Each party  represents to the other that it has
received legal advice from counsel of its choice regarding the meaning and legal
significance  of this  Agreement and the Note and that it is satisfied  with its
legal counsel and the advice received from it.

         Section  10.05. Reproduction  of  Documents.  This  Agreement  and  all
documents relating thereto, including, without limitation, (a) consents, waivers
and modifications which may hereafter be executed, (b) documents received by any
party at the  closing,  and (c)  financial  statements,  certificates  and other
information  previously  or  hereafter  furnished,  may  be  reproduced  by  any
photographic,  photostatic,  microfilm,  micro-card,  miniature  photographic or
other similar  process.  The parties agree that any such  

                                       22

<PAGE>

reproduction  shall be  admissible  in  evidence as the  original  itself in any
judicial  or  administrative  proceeding,  whether  or not  the  original  is in
existence  and  whether  or not  such  reproduction  was  made by a party in the
regular  course of  business,  and that any  enlargement,  facsimile  or further
reproduction of such reproduction shall likewise be admissible in evidence.





                            [signature page follows]



<PAGE>


         IN WITNESS  WHEREOF,  the parties have caused this Agreement to be duly
executed and delivered as of the day and year first written above.


THE BORROWER:                      BROOKDALE LIVING COMMUNITIES, INC.


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


THE LENDER:                        FBR ASSET INVESTMENT CORPORATION


                                   By: /s/ Elaine M. Clancy
                                       ------------------------------------
                                   Name:  Elaine M. Clancy
                                   Title: Chief Financial Officer

                                       24

<PAGE>


                             EXHIBITS AND SCHEDULES


Exhibit A         Note
Schedule 3.01A    Restated Certificate of Incorporation
Schedule 3.01B    Amended and Restated Bylaws
Schedule 3.03A    Use of Loan Proceeds
Schedule 3.03B    Indebtedness