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                                                                  EXHIBIT 10.70



                            EMPLOYMENT AGREEMENT
                            --------------------

     THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of April
7, 1997, between Ambassador Apartments, Inc., a Maryland corporation
("Employer") and the sole general Partner of Ambassador Apartments, L.P., a
Delaware limited partnership (the "Operating Partnership" and, together with
Employer and its other subsidiaries, the "Company"), and Debra A. Cafaro, an
individual domiciled in the State of Illinois ("Executive").


                                  RECITALS

     A. The Company is engaged primarily in the acquisition, development,
construction, renovation, leasing, ownership and management of multifamily
apartment properties throughout the United States.

     B. Employer believes that it would benefit from the application of
Executive's particular and unique skill, experience and background to the
management and operation of the Company.

     C. Employer considers the establishment and maintenance of a sound and
vital management to be essential to protecting and enhancing the best interests
of Employer and its stockholders.  Accordingly, the Board of Directors of
Employer has determined that appropriate steps should be taken to reinforce and
encourage the attention and dedication of members of the Company's management,
including Executive, to their assigned duties without distraction.  In order to
induce Executive to enter the employ of Employer, among other things, this
Agreement sets forth certain benefits Executive shall receive in the event
there is a change of control of Employer under the circumstances described
herein.

     D. Executive wishes to commit herself to serve Employer in the position
set forth herein on the terms herein provided.

     E. The parties wish by this Agreement to set forth the terms and
conditions of the employment relationship between Employer and Executive.

     Employer and Executive hereby agree as follows:

     1. EMPLOYMENT AND DUTIES.  During the Employment Term (as defined in
Section 2), Employer agrees to employ Executive, and Executive agrees to be
employed by Employer, as President of Employer on the terms and conditions
provided in this Agreement.







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Executive shall conduct, operate, manage and promote the business of the
Company, and exercise such other powers and authority as are customarily
inherent in a similar position in a comparable publicly-held entity or as
provided by the By-laws of Employer (the "By-laws").  The Board of Directors of
Employer (the "Board") may from time to time further define and clarify
Executive's duties and services hereunder or under the By-laws in a manner
consistent with the office of President and the scope of work set forth herein.
Executive agrees to devote her best efforts and substantially all of her
business time, attention, energy and skill to performing her duties to Employer
under this Agreement.  Employer also agrees during the Employment Term to take
all reasonably necessary or desirable actions within its control to cause
Executive to continuously serve as a member of the Board, including, without
limitation, nominating Executive as a director of Employer for purposes of the
periodic election of directors by Employer's stockholders, and including
Executive in such proxy materials, annual reports and other documents in which
directors of Employer are appropriately included, whether for purposes of
election or otherwise.  Pending the upcoming annual meeting of stockholders of
Employer, Executive has, as of the date hereof, become a member of the Board
through the appropriate vote of the members of the Board, having been appointed
to fill the vacancy created by the resignation of Richard F. Cavenaugh.

     2. TERM.  Unless terminated earlier pursuant to the provisions of Section
5, the initial term of this Agreement (the "Initial Term") shall commence on
April 4, 1997 (the "Effective Date") and expire on December 31, 1999 (the
"Scheduled Termination Date"), provided, however, that this Agreement shall
extend automatically for one-year terms following the Initial Term (each a
"Renewal Term" and, together with the Initial Term, the "Employment Term"),
unless either party shall give the other party, prior to 180 days before the
end of the Initial Term or respective Renewal Term, written notice of its
intention to terminate the Employment Term.

     3. COMPENSATION AND RELATED MATTERS.

     (a) BASE SALARY.  As compensation for performing the services required by
this Agreement, and during the Employment Term, Employer shall pay to Executive
a salary at a rate of no less than $225,000 per year in the period from the
Effective Date until December 31, 1997, $247,500 in the year thereafter (i.e.,
calendar 1998), $272,250 in the year thereafter (i.e., calendar 1999), and in
each year thereafter an amount no less than 110% of the prior year minimum
amount ("Base Compensation"), payable in accordance with the general policies
and procedures for payment of salaries to its executive personnel implemented
by Employer







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(but no less frequently than monthly), subject to withholding for applicable
federal, state and local taxes.  Increases in Base Compensation above that
provided for in this Section 3(a), if any, shall be determined by the Board, or
the Compensation and Benefits Committee of the Board or such other committee of
the Board then performing such function (the "Committee") based on periodic
reviews of Executive's performance conducted on at least an annual basis.

     (b) BONUS.  In addition to Base Compensation, the Board or the Committee,
as applicable, in its sole and absolute discretion may, but shall in no event
be obligated to, authorize the payment of a bonus to Executive, payable in cash
or shares of Common Stock of Employer ("Common Stock"), based upon achievement
of corporate and individual performance objectives established by the Board or
the Committee, as applicable.  Notwithstanding the foregoing, provided that
Executive remains employed by Employer through December 31, 1997, for the
period from the Effective Date until December 31, 1997, Executive shall receive
a bonus in an amount not less than 90% of the bonus received by the Chief
Executive Officer of Employer for the year ended December 31, 1997, payable at
the time and in the manner as the bonus for the Chief Executive Officer of
Employer (with no reduction or proration for a partial year).

     (c) BENEFITS.  During the Employment Term and subject to the limitations
and alternative rights set forth in this Section 3(c), Executive and her
eligible dependents shall have the right to participate in any retirement,
pension, insurance, health or other benefit plan or program that has been or is
hereafter adopted by Employer (or in which Employer participates) according to
the terms of such plan or program with all the benefits, rights and privileges
as are enjoyed by any other senior executive officer of Employer.  If the
participation of Executive would adversely affect the qualification of a plan
intended to be qualified under Section 401(a) of the Internal Revenue Code of
1986, as the same may be amended from time to time (the "Code"), Employer shall
have the right to exclude Executive from that plan or limit Executive's
participation in that plan to the extent required to maintain such
qualification; provided that Executive shall be treated with respect to such
plan no less favorably than the Chief Executive Officer of the Company.

     (d) VACATION AND LEAVES OF ABSENCE.  Executive shall be entitled to four
weeks of paid vacation leave during each 12-month period and paid holidays in
accordance with Employer's established policies.  In addition to the foregoing,
Executive may be granted leaves of absence with or without pay as shall be
mutually agreed upon by the Board and Executive.







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     (e) EXPENSES.  Executive shall be reimbursed, subject to the Company's
receipt of invoices or similar records as the Company may reasonably request in
accordance with its generally applicable policies and procedures, for all
reasonable and necessary expenses incurred by Executive in the performance of
her duties hereunder.

     (f) OPTIONS.  During the Employment Term, Executive shall have the right
to participate in Employer's 1994 Stock Incentive Plan, 1996 Stock Incentive
Plan, 1997 Long Term Incentive Plan and any similar plan adopted by Employer;
provided, however, all grants of stock options with respect to such plans, and
the terms of such options, shall be in the sole and absolute discretion of the
Board or the Committee, as applicable.  Notwithstanding the foregoing, Employer
shall on the date of this Agreement, but subject to approval of Employer's 1996
Stock Incentive Plan by its stockholders, at its forthcoming annual meeting of
stockholders to be held on May 15, 1997 (which approval is being requested in
Employer's proxy statement with respect to such meeting), grant to Executive
stock options to purchase a number of shares of Common Stock equal to 80,000
minus the number of Common Units purchased by Executive pursuant to Section
3(g), and one-fourth of such options shall vest on each of the dates six
months, twelve months, eighteen months and twenty-four months after the
Effective Date, with all such options vesting and becoming immediately
exercisable upon a Change of Control or the Termination of Employment of
Executive as a result of Executive's death, by Employer for Disability or not
for Cause, or by Executive for Good Reason, and shall have an exercise price
equal to the Fair Market Value (as defined in Employer's 1996 Stock Incentive
Plan of the Common Stock on the date of such grant (i.e., the Effective Date
hereunder, such price being listed on Exhibit B hereto), and a term of 10
years; provided, however, in the event of Executive's Termination of Employment
for Cause, any outstanding options (whether or not vested and exercisable)
shall be forfeited and shall terminate immediately on the date of such
Termination of Employment; and provided further that any outstanding
exercisable options shall be exercisable following the Termination of
Employment of Executive only for a period of 12 months following such
termination if such termination is due to death, Disability or Retirement and
only for a period of 3 months if such termination is for any other reason other
than for Cause (in the case of for Cause, the options are immediately forfeited
and are not exercisable).  For purposes of this Section 3(f), the terms Cause,
Change of Control, Disability, Good Reason, Retirement and Termination of
Employment shall have the meanings assigned to such terms in Employer's 1996
Stock Incentive Plan.







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     (g)  LOAN.  The Company shall lend to Executive $700,000 (the "Loan"),
which, together with $100,000 of Executive's own funds, shall be used to
purchase Common Units in the Operating Partnership at a price equal to the
closing price of the Common Stock on the New York Stock Exchange on the date of
such purchase, to be the date hereof, and such price being listed on Exhibit B
hereto.  The Loan shall bear interest, payable quarterly, at the applicable
federal rate, have (subject to the next sentence hereof) a maturity date of the
earlier of June 30, 2000, and the date 6 months after the termination of
Executive's employment with the Company, shall be secured by a pledge of all of
the Common Units purchased and shall be non-recourse to Executive's assets
other than the pledged Common Units.  Notwithstanding the preceding sentence,
the June 30, 2000, maturity date of the Loan shall not be accelerated by any
termination of the Employment Term pursuant to Sections 5(a)(i), 5(a)(iii),
5(b)(i) (other than pursuant to clause (z) of the definition of Good Reason) or
5(c) of this Agreement.  In addition, the accelerated maturity date applicable
to any other termination of the Employment Term (i.e., the date which is 6
months following such termination) shall be extended by the duration of and for
so long as there shall exist any blackout period or other condition not in the
control of Executive which becomes operative during the period following such
termination and which prohibits the conversion of the Common Units pledged in
connection with the Loan into Common Stock, or a delay not in the control of
Executive in registering the Common Stock received upon conversion of such
Common Units for sale, either due to the pendency of a registration blackout or
caused by the unavailability of such a registration statement or a prospectus
as may be necessary for such sale to be effectuated.  The intent of the
foregoing extensions of the accelerated maturity date is to afford Executive
the full benefit of a "normal" six-month period following termination of the
Employment Term in which to convert such Common Units and to sell such Common
Stock, so as to be able to repay the Loan.

     (h) PARKING.  During the Employment Term, Employer shall provide Executive
with parking privileges equal to those provided by Employer to the Chief
Executive Officer of Employer.

     (i)  SCHEDULE OF EXERCISE AND PURCHASE PRICE.  The exercise price for the
options granted hereunder and the purchase price for the Common Units to be
purchased on the date hereof, having been determined as of the date hereof, are
listed on Exhibit B hereto, as are the respective numbers of options and units
granted and to be sold.








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     4. CHANGE OF CONTROL COMPENSATION.  On only one occasion, in the event of
a Change of Control of Employer during the Employment Term or within 6 months
after a termination of the Employment Term by Employer pursuant to Sections
5(a)(i) or 5(a)(iii) in contemplation of such Change of Control or by Executive
pursuant to Section 5(b)(i), Employer shall pay to Executive, within 30 days
after the date of such Change of Control, in one lump sum, subject to
withholding for applicable federal, state and local taxes, an amount equal to
(a) if the Change of Control occurs before December 31, 1997, $700,000 and (b)
if the Change of Control occurs after December 31, 1997, two times the sum of
Executive's Base Compensation for the prior calendar year and Executive's Bonus
with respect to the prior calendar year, in each case, annualized if the
Employment Term was less than a full year in such year ("Change of Control
Compensation"); provided, however, Executive may, at her election, and only at
her election, (i) extend the otherwise effective duration of the covenants
under Section 6(b) (excluding those relating to the private practice of law) by
up to an additional 24 months, in exchange for a payment to her by Employer of
$24,000 per month with respect to the first 12 months of such extension and
$12,000 per month with respect to the next 12 months of such extension, payable
in the same manner and at the same time as the Change of Control Compensation;
and provided further that Executive agrees to and accepts an offsetting
reduction, on a dollar-for-dollar basis, in the Change of Control Compensation
and in no event shall the aggregate amount of such additional payments exceed
the amount by which the Change of Control Compensation is so reduced or, in the
alternative, (ii) elect to terminate the Employment Term pursuant to Section
5(b)(i), whereby the Termination Compensation payable in respect thereto shall
reduce the Change of Control Compensation on a dollar-for-dollar basis by the
amount of the Termination Compensation received by her.  Any such election by
Executive shall be made within thirty days after a Change of Control.

     For purposes of this Agreement, a "Change of Control" shall be deemed to
have occurred if:

     (a) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than
(i) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company, (ii) a corporation owned directly or indirectly by the
stockholders of Employer in substantially the same proportions as their
ownership of stock of Employer, or controlled directly or indirectly by the
stockholders of Employer, or (iii) David M. Glickman or any of his affiliates
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or







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indirectly, of securities of Employer representing 50% or more of the total
voting power represented by Employer's then outstanding securities which vote
generally in the election of directors (referred to herein as "Voting
Securities"); or

     (b) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board and any new directors whose
election by the Board or nomination for election by Employer's stockholders was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority of the Board; or

     (c) the stockholders of Employer approve a merger or consolidation of
Employer with any other corporation, other than a merger or consolidation which
would result in the Voting Securities of Employer outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at least 50% of the
total voting power represented by the Voting Securities of Employer or such
surviving entity outstanding immediately after such merger or consolidation,
and such transaction is consummated; or

     (d) the stockholders of Employer approve a plan of complete liquidation of
Employer or an agreement for the sale, assignment, conveyance, transfer, lease
or other disposition by Employer of (in one transaction or a series of
transactions) all or substantially all of Employer's assets, and such
transaction is consummated.

     5. TERMINATION AND TERMINATION BENEFITS.

     (a) TERMINATION BY EMPLOYER.  (i)  WITHOUT CAUSE.  Employer may terminate
the Employment Term and Executive's employment at any time for any reason or
for no reason at all upon two weeks' prior written notice to Executive.
Employer may elect to require Executive to continue her employment under this
Agreement for a period up to 60 days, subject to the definition of duties set
forth in Section 1.  In connection with the termination of Executive's
employment pursuant to this Section 5(a)(i), Executive shall (A) be paid her
Base Compensation and any bonus otherwise payable to her in accordance with
Sections 3(a) and 3(b) and be entitled to the benefits set forth in Sections
3(c), 3(d), 3(e) and 3(h) up to the effective date of such termination and such
other benefits as are required by law and (B) receive the Termination
Compensation specified in Section 5(d).








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             (ii) WITH CAUSE.  Employer may terminate the Employment Term with
Cause immediately with written notice to Executive.  Employer may elect to 
require Executive to continue to perform her duties under this Agreement for a
period up to 30 days following notice of termination, subject to the definition
of duties set forth in Section 1.  In connection with the termination of
Executive's employment pursuant to this Section 5(a)(ii), Executive shall (A)
be paid her Base Compensation up to the effective date of such termination, (B)
forfeit her entitlement to any bonus otherwise payable to her in accordance
with Section 3(b) (other than bonuses previously awarded for prior years and
remaining unpaid, and with nonforfeiture of any cash or stock previously
transferred to Executive in payment of bonuses for prior years) and (C) be
entitled to the benefits set forth in Sections 3(c), 3(d), 3(e) and 3(h) up to
the effective date of such termination and such other benefits as are required
by law.  For purposes of this Agreement, "Cause" shall mean a finding by the
Board:

                  (1) that Executive has materially harmed Employer or the
      Operating Partnership through an act of dishonesty or material
      conflict of interest which relates to the performance of
      Executive's duties hereunder,

                  (2) that Executive was convicted of a felony, or

                  (3) that Executive has failed to perform in any material
      respect the duties required by this Agreement (other than a
      failure due to disability) after written notice specifying the
      failure and a reasonable opportunity to cure (it being understood
      that if Executive's failure to perform is not of a type requiring
      a single action to fully cure, then Executive may commence the
      cure promptly after such written notice and thereafter diligently
      prosecute such cure to completion).

             (iii)  DISABILITY.  If due to illness, physical or mental 
disability, or other incapacity, Executive shall fail during any four 
consecutive months to perform in any material respect the duties required by 
this Agreement, Employer may terminate the Employment Term upon 30 days' 
written notice to Executive. In connection with the termination of Executive's 
employment pursuant to this Section 5(a)(iii), Executive shall (A) continue to 
receive her Base Compensation payable to her in accordance with Section 3(a) 
and be entitled to the benefits set forth in Sections 3(c) (or the after-tax 
cash equivalent







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thereof), 3(d), 3(e) and 3(h) up to the effective date of such termination, (B)
be paid any bonus otherwise payable to her in accordance with Section 3(b) and
(C) receive the Termination Compensation specified in Section 5(d).  This
Section 5(a)(iii) shall not limit the entitlement of Executive, her estate or
beneficiaries to any disability or other benefits available to Executive under
any disability insurance or other benefits plan or policy which is maintained
by Employer for Executive's benefit.

     (b) TERMINATION BY EXECUTIVE.  (i)  WITH GOOD REASON.  Executive may
terminate this Agreement with Good Reason upon written notice to Employer.  At
the election of Employer, Executive shall continue her employment under this
Agreement, subject to the definition of duties set forth in Section 1, for a
period up to 30 days following notice of termination.  In connection with the
termination of Executive's employment pursuant to this Section 5(b)(i),
Executive shall (A) be paid her Base Compensation and any bonus otherwise
payable to her in accordance with Sections 3(a) and 3(b) and be entitled to the
benefits set forth in Sections 3(c), 3(d), 3(e) and 3(h) up to the effective
date of such termination and (B) receive the Termination Compensation specified
in Section 5(d).

     For purposes of this Agreement, "Good Reason" shall mean (x) the material
breach by Employer of its obligations hereunder and the failure of Employer to
cure such breach within 30 days after receipt by Employer of a written notice
from Executive specifying in reasonable detail the nature of the breach, or (y)
any material diminution in the scope of Executive's responsibilities and
duties, or (z) if and only if Executive makes an election following a Change of
Control to receive Termination Compensation and a corresponding reduction in
the Change of Control Compensation as specified in Section 4 and under no other
circumstances following a Change of Control.

             (ii) WITHOUT GOOD REASON.  Executive may terminate the Employment 
Term at any time for any reason or for no reason at all upon 60 days' written 
notice to Employer, during which period Executive shall, subject to the 
definition of duties set forth in Section 1, continue to perform her duties 
under this Agreement if Employer so elects, provided, however, that, by written
notice to Executive, Employer shall have the right to accelerate the effective 
date of such termination to any date following Executive's notice of termination
(including the day on which such notice is given).  In connection with the
termination of Executive's employment pursuant to this Section 5(b)(ii),
Executive shall be paid her Base Compensation and any bonus otherwise payable
to her in accordance with Sections 3(a) and







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3(b) and be entitled to the benefits set forth in Sections 3(c), 3(d), 3(e) and
3(h) up to the effective date of termination.

     (c) DEATH.  Notwithstanding any other provision of this Agreement, the
Employment Term shall terminate on the date of Executive's death.  In
connection with the termination of Executive's employment pursuant to this
Section 5(c), Executive shall be paid her Base Compensation and any bonus
otherwise payable to Executive by reason of Executive's performance up to the
date of Executive's death in accordance with Sections 3(a) and 3(b).  This
Section 5(c) shall not limit the entitlement of Executive under any insurance
or other benefits plan or policy which is maintained by Employer for
Executive's benefit.

     (d) TERMINATION COMPENSATION.  In the event of a termination of the
Employment Term pursuant to Section 5(a)(i), 5(a)(iii) or 5(b)(i), Employer
shall pay to Executive, within 30 days of termination, in one lump sum, subject
to withholding for applicable federal, state and local taxes, an amount equal
to (i) if the termination occurs after the Effective Date but prior to December
31, 1997, $375,000 and (ii) if the termination occurs after December 31, 1997,
the greater of (A) 50% of Executive's annual Base Compensation as of the
effective date of termination or (B) 50% of the product of (1) Executive's
annual Base Compensation as of the effective date of termination times (2) a
fraction, the numerator of which is the number of days between such date of
termination and expiration of the Employment Term and the denominator of which
is 365 ("Termination Compensation"); provided, however, if there shall have
been a Change of Control such that Executive has received or within the
six-month plus 30-day period after the date of such termination receives the
Change of Control Compensation provided for in Section 4, then the amount of
the Termination Compensation shall be zero unless Executive shall have made an
election following a Change of Control to receive the Termination Compensation
and a corresponding reduction in the Change of Control Compensation as
specified in Section 4, in which case the amount of the Termination
Compensation shall not be reduced.

     6. COVENANTS OF EXECUTIVE.

     (a) NO CONFLICTS.  Executive represents and warrants that she is not
personally subject to any agreement, order or decree which restricts her
entering into this Agreement and performing her duties with Employer hereunder.

     (b) RESTRICTIVE COVENANT;.  (i)  During the Employment Term and for a
period of one year following the termination of the







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Employment Term (the "One Year Period" and, together with the Employment Term,
the "Restrictive Period"), except for Passive Investments and except for
investments held as of the date hereof and identified on Exhibit A and except
for the Permitted Practice of Law (as defined below) during the One Year
Period, Executive shall not engage in, directly or indirectly, or be interested
in (as owner, partner, shareholder, employee, director, officer, agent,
consultant or otherwise), with or without compensation, in a profit-making
activity involving the acquisition, development, construction, renovation,
leasing, ownership or management of multifamily apartment properties in the
Territory; provided, however, notwithstanding the foregoing, Executive shall
not be prohibited during the One Year Period from practicing law, either in
private practice or as an employee of an entity, so long as she does not
participate in the representation or counseling of any Competitor (as defined
below) or receive a special benefit as a result of the representation or
counseling of such Competitor by another person (such practicing of law,
including such restriction, is herein referred to as "Permitted Practice of
Law").  The term Competitor shall mean a business enterprise that, as a
significant component of its activities, and not merely incidental to an
unrelated business, engages on an ongoing basis in the acquisition,
development, construction, renovation, leasing, ownership or management of
multifamily apartment properties in the Territory.

                  (ii)  Unless Executive has elected following a Change of 
Control pursuant to Section 4 to extend the period of the restrictions 
contained in this Section 6(b), a termination of the Employment Term pursuant 
to Sections 5(a)(i), 5(a)(iii) or 5(b)(i) (other than pursuant to clause (z) of
the definition of Good Reason) shall automatically and ipso facto terminate 
the restrictions contained in Section 6(b)(i) as of the date of such 
termination, and in addition a failure by either party to extend this 
Agreement pursuant to Section 2 shall, notwithstanding any other provision of 
this Agreement to the contrary, allow Executive as of the termination of the 
Employment Term to engage in the practice of law in any capacity except 
directly or indirectly as general counsel of a Competitor.  If the restrictions
contained in Section 6(b)(i) have been terminated pursuant to this 
Section 6(b)(ii), and Executive thereafter makes an election to extend the 
duration of such restrictions pursuant to Section 4, such restrictions shall 
be reinstated as of the date of and for the period requested in such election, 
except that thereafter Executive shall be permitted to engage in the private 
practice of law in any capacity except directly or indirectly as general 
counsel of a Competitor.

             (iii)  Executive may reduce the duration of the







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restrictions contained in this Section 6(b) during the one year period
following the termination of her employment (but as to no portion of the
Restrictive Period occurring prior to such termination) by as many as 10 months
(the duration of an extension by Executive following a Change of Control and
pursuant to Section 4, if any, to be added to the end of such reduced period),
in exchange for a lump sum payment by her to Employer in an amount equal to
$36,000 times the number of months by which the term of such covenants are to
be reduced, such amount to be paid in cash at the time of election or offset
against sums otherwise due Executive from Employer in respect of the
termination.  In addition, Executive may, at any time, terminate an extension
by Executive pursuant to Section 4, if any, in which case Employer shall be
relieved of its obligation to make the payments required as a result of such
extension allocable to the period after the termination of the extension and
Executive shall reimburse Employer for any payment thereof previously made to
Executive allocable to the period after the termination of the extension.  In
each case, such election shall be by written notice prior to the date of such
election.

           (iii)  For purposes of this Agreement,

      (A)  a "Passive Investment" is an investment where
           (1) Executive beneficially holds an equity interest in
           such investment which is no greater than 5% of all
           equity interests in such entity or venture, whether or
           not such entity or venture is subject to the reporting
           requirements of the Exchange Act and (2) Executive's
           federal income tax return is based in all material
           aspects upon the money or other assets invested and as
           to which no services are provided;

      (B)  a "Principal Market" is a geographic market area
           in which the Company, directly or indirectly through
           the Operating Partnership or any of their respective
           subsidiaries or affiliates (collectively, the "Group"),
           during the Employment Term and, for purposes of the
           Restrictive Period following the termination of the
           Employment Term, on the last day of the Employment
           Term, owns or manages more than 1,000 apartment units;
           and

      (C)  "Territory" means (1) during the Employment Term, anywhere in
           the United States of America, and (2) during the Restrictive Period
           following the termination







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         of the Employment Term, the Principal Markets.

     (c) NO SOLICITATION.  During the Restrictive Period, Executive shall not,
directly or indirectly, solicit or contact any employee of any member of the
Group with a view to inducing or encouraging such employee to leave the employ
of the Company or such other person for the purpose of being hired by
Executive, an employer affiliated with Executive or any competitor of any
member of the Group.

     (d) NON-DISCLOSURE.  Executive shall not disclose or use, during the
Restrictive Period or any time thereafter, except in the pursuit of the
business for or on behalf of the Group, any Trade Secret of the Group, whether
such Trade Secret is in Executive's memory or embodied in writing or other
physical form.

     For purposes of this Agreement, "Trade Secret" means any information which
derives independent economic value, actual or potential, with respect to the
Group from not being generally known to, and not being readily ascertainable by
proper means by, other persons who can obtain economic value from its
disclosure or use and is the subject of efforts to maintain its secrecy that
are reasonable under the circumstances, including, but not limited to, trade
secrets, tenant lists and other proprietary commercial information.  However,
the term "Trade Secrets" shall not include general "know-how" information
acquired by Executive during the course of her employment which could have been
obtained by her from public sources without the expenditure of significant
time, effort and expense which does not relate to the Group.

     (e) RETURN OF DOCUMENTS.  Upon termination of employment, Executive shall
return all originals and copies of books, records, documents, customer lists,
sales materials, tapes, keys, credit cards and other property of the Company
within Executive's possession or under her control, but specifically excluding
personal effects of Executive such as her personal rolodex, diary and files,
whether in written or electronic form, including computer files.

     (f) ACKNOWLEDGMENT.  Each of Employer and Executive acknowledges that
Executive will be directly and materially involved as a senior executive
officer in important policy and operational decisions of Employer and other
members of the Group.  Executive further acknowledges that the scope of the
foregoing restrictions has been specifically  bargained between Employer and
Executive, each being fully informed of all relevant facts.  Accordingly,
Executive acknowledges that the foregoing restrictions of this Section 6 are
fair and reasonable, are the







                                     - 13 -


<PAGE>   14





minimum necessary to protect Employer, other members of the Group, the
stockholders of Employer and the public from the unfair actions, direct or
indirect, of Executive who, as a result of her employment with Employer, will
have had unlimited access to the most confidential and important information of
Employer, other members of the Group, and the business and future plans of the
Group.

     7. PRIOR AGREEMENT.  This Agreement supersedes and is in lieu of any and
all other employment arrangements between Executive and the Company and any and
all such employment agreements and arrangements are hereby terminated and
deemed of no further force or effect.

     8. ASSIGNMENT.  Neither this Agreement nor any rights or duties of
Executive hereunder shall be assignable by Executive and any such purported
assignment by her shall be void.  Employer may assign all or any of its rights
hereunder to any member of the Group (which in itself shall not constitute a
Change of Control), in which case, the term Employer as used in the definition
of Change of Control shall continue to refer to Ambassador Apartments, Inc.,
and Employer may assign all or any of its rights hereunder to any other person
provided that substantially all of the assets of the Company are also
transferred to such other person (which in itself may or may not constitute a
Change of Control and which will in any event not otherwise affect the Change
of Control provisions hereof), in which case, after such assignment the term
Employer shall refer to such other person,  and provided further that Employer
complies with Section 9.

     9. SUCCESSOR TO EMPLOYER.  Employer will require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all the business or assets of Employer, as the case may
be, expressly, absolutely and unconditionally to assume and agree to perform
this Agreement in the same manner and to the same extent that Employer would be
required to perform it if no such succession or assignment had taken place.
Any failure of Employer to obtain such agreement prior to the effectiveness of
any such succession or assignment shall be a material breach of this Agreement.
This Agreement shall inure to the benefit of and be enforceable by Executive's
personal and legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.  If Executive should die while any
amounts are still payable to Executive hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee or other designee or, if there be no
such designee, to







                                     - 14 -


<PAGE>   15

Executive's estate.

     10. NOTICES.  Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered personally, by overnight courier service, or by facsimile
transmission, in any case with receipt acknowledged, or three days after being
sent by registered or certified mail, return receipt requested, postage
prepaid, to the following addresses (or to any other address that any party may
designate by notice to the other parties hereto):

     (a) if to Executive, to:

         Debra A. Cafaro
         248 South Avenue
         Glencoe, IL  60022

         With a copy to:
         --------------
         Barack Ferrazzano Kirschbaum Perlman & Nagelberg
         333 W. Wacker Drive, Suite 2700
         Chicago, IL  60606
         Attention: Howard A. Nagelberg
         Telephone:  (312) 984-3198
         Facsimile:  (312) 984-3150

     (b) if to Employer, to:

         Ambassador Apartments, Inc.
         77 West Wacker Drive, Suite 4040
         Chicago, IL 60601
         Attention:  Chief Executive Officer
         Telephone:  (312) 917-1600
         Facsimile:  (312) 917-9910

         With a copy to:
         --------------
         Kirkland & Ellis
         200 East Randolph Drive
         Chicago, IL  60601
         Attention:  Robert S. Osborne, P.C.
         Telephone:  (312) 861-2368
         Facsimile:  (312) 861-2200

     11. AMENDMENT.  This Agreement may not be changed, modified or amended
except in writing signed by both parties hereto.

     12. WAIVER OF BREACH.  The waiver by either party of the breach of any
provision of this Agreement shall not operate or be







                                     - 15 -


<PAGE>   16




construed as a waiver of any subsequent breach by either party.

     13. SEVERABILITY.  Employer and Executive each expressly agree and
contract that it is not the intention of either party to violate any public
policy, statutory or common law, and that if any sentence, paragraph, clause or
combination of the same of this Agreement is in violation of the law of any
state where applicable, such sentence, paragraph, clause or combination of the
same shall be void in the jurisdictions where it is unlawful, and the remainder
of this Agreement shall remain binding on the parties to make the covenants of
this Agreement binding only to the extent that it may be lawfully done under
the existing applicable laws.  In the event that any part of any covenant of
this Agreement is determined by a court of competent jurisdiction to be overly
broad thereby making the covenant unenforceable, the parties hereto agree, and
it is their desire that such court shall substitute a judicially enforceable
limitation in its place, and that as so modified the covenant shall be binding
upon the parties as if originally set forth herein.

     14. OPPORTUNITY TO EMPLOY COUNSEL.  Executive acknowledges receipt of a
copy of this Agreement prior to its execution by her and also acknowledges that
she has had ample time and opportunity to employ counsel of her choice to
provide advice concerning the terms and conditions of this Agreement and
Executive's prospective employment with Employer.

     15. EQUITABLE RELIEF; LIMITATIONS ON RELIEF.  In the event of any breach
by either party of any of the covenants contained in this Agreement, including,
without limitation, any covenant contained in Section 6, it is specifically
understood and agreed that the other party shall be entitled, in addition to
any other remedy which it may have, to equitable relief by way of injunction,
an accounting or otherwise and, in the case of Employer, to notify any employer
or prospective employer of Executive as to the terms and conditions hereof.

     16. INDEMNIFICATION.

     (a)  INDEMNIFICATION BY EMPLOYER.  To the extent permitted by applicable
law, Employer shall indemnify Executive to no lesser extent than as provided in
its Articles of Incorporation and Bylaws as of the date of this Agreement.

     (b)  INDEMNIFICATION BY EXECUTIVE.  Executive shall indemnify the Company
for any and all damages, costs and expenses resulting from any of her acts or
omissions that cause harm to the Company, its business or its reputation, but
only if and to







                                     - 16 -


<PAGE>   17





the extent that Employer is not required to indemnify Executive therefor
pursuant to Section 16(a).

     (c)  INSURANCE.  Executive shall be entitled to the same benefits under
Employer's director's and officer's liability insurance policy as are provided
to the other members of the Board and senior executive officers of Employer.

     (d)  TAXES.  All payments under this Agreement shall be net of any income
or other taxes imposed on Executive that the Company is required to withhold.
If it is determined that the Company is liable for any tax (or any interest,
penalty or additional amount with respect to such tax) as a result of any
failure to withhold any income or other taxes with respect to any amounts
received by Executive in connection with Sections 3(g), 4, 5(d) or 6, Executive
shall indemnify and hold harmless the Company against such taxes, interest,
penalties and additional amounts.

     17. GOVERNING LAW.  This Agreement shall be governed by, and construed,
interpreted and enforced in accordance with the laws of the State of Illinois,
exclusive of the conflict of laws provisions of the State of Illinois.

     18. NOTICE OF FUTURE EMPLOYMENT.  Executive agrees that during the period
that Executive is subject to the restrictions contained in Section 6(b),
Executive will within 14 days of each instance of new employment, notify
Employer in writing of the identify of her new employer and the job title
associated with such employment.

     19. OPERATING PARTNERSHIP AND RELATED AGREEMENTS.  Employer shall take all
reasonably necessary or desirable actions within its control to cause the
Operating Partnership to effectuate the purpose and intent of this Agreement.
Employer shall also take all reasonably necessary or desirable actions within
its control to cause Executive to become a party to, and beneficiary of, the
Exchange Rights Agreement and the Registration Rights Agreement to which other
senior executives of Employer are parties, it being intended that the Common
Units to be acquired by Executive in connection with this Agreement and the
Common Stock issuable upon exchange of such Common Units be subject to the
benefits and burdens of such agreements; provided, however, in the event that
Executive is unable to become a party to and beneficiary of such agreement,
Employer and Executive agree to negotiate in good faith to reach mutually
acceptable arrangements that provide for benefits and burdens as close to those
contained in such agreements as is possible so as to provide Executive with the
practical substantive equivalents of the exchange rights with







                                     - 17 -


<PAGE>   18





respect to her Common Units and registration rights with respect to the Common
Stock received upon exchange thereof that are held by the Chief Executive
Officer of Employer.

     20. COVENANTS OF EMPLOYER.  Employer represents that it is duly authorized
to enter into this Agreement; and that effect as of the execution of this
Agreement Executive has been duly elected, on an interim basis, to the Board by
valid Board action.

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

                                      AMBASSADOR APARTMENTS, INC.


                                      By: _________________________
                                          Name:
                                          Title:



                                      ______________________________
                                      Debra A. Cafaro







                                     - 18 -


<PAGE>   19







                                  EXHIBIT A
                                     to
                            EMPLOYMENT AGREEMENT

                                    None.











<PAGE>   20








                                  EXHIBIT B
                                     to
                            EMPLOYMENT AGREEMENT

Fair Market Value of Common Stock as of Effective Date of April 7, 1997,
determined by the closing price of Common Stock as of that date: $24.25 per
share.


Resulting Option Exercise Price: $24.25 per share

Resulting Common Unit Purchase Price: $24.25 per share

Resulting Number of Options: 47,010

Resulting Number of Common Units: 32,990