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                                                                   Exhibit 10.39

                            Resignation and Release

         This Agreement is entered into on December 20, 1996, between Richard
F. Cavenaugh ("Executive") and Ambassador Apartments, Inc., a Maryland
corporation (the "Company").

         WHEREAS, Executive and the Company are parties to that certain
Employment Agreement, dated August 23, 1994 (the "Employment Agreement"); and

         WHEREAS, Executive and the Company mutually desire to resolve all
matters based upon, relating to or arising from the creation, existence or
termination of the "employer/employee" relationship between them, including
pursuant to the Employment Agreement.

         Accordingly, Executive and the Company mutually agree as follows:

         1.  Resignation.  Executive hereby confirms his resignation, effective
as of the close of business on the date hereof (the "Termination Date"), of his
employment with the Company and from any and all positions that he holds as an
officer of the Company (including, but not limited to, the offices of President
and Chief Operating Officer), as a member of the Board of Directors of the
Company, as a member of any management or Board committee of the Company, as a
trustee, representative, agent, signatory or other similar position in
connection with or for the benefit of the Company, and as an officer, director,
member of any committee, trustee, representative, agent, signatory or other
similar position of any and all subsidiaries and affiliates of the Company,
provided, however, in the event that Executive may not resign from such
position until a successor has been appointed, Executive's resignation from any
such position shall be effective on the date of such appointment.  The Company
hereby confirms its acceptance of such resignation, and the Company shall use
its best efforts (and Executive will cooperate with the Company) to make any
required appointments and to remove Executive as a trustee, agent,
representative, signatory or other similar position, as quickly as possible
after the Termination Date.

         2.  Termination and Post-Termination Benefits.

         (a)  On the Termination Date, the Company will pay Executive by check
an amount equal to the sum of (i) $75,000 and (ii) all accrued and unpaid
salary at his current annual rate through the Termination Date, subject to
customary withholding for applicable federal, state and local taxes.

         (b)  On January 2, 1997, not later than 2 p.m. local time, the Company
will pay Executive $100,000 by wire transfer of immediately available funds to
an account designated by Executive, subject to customary withholding for
applicable federal, state and local taxes.

         (c)  On or within the applicable period following the Termination
Date, Executive shall be provided with a notice and election form for purposes
of electing continuation coverage under the Company's group health plan in
accordance with Section 4980B of the Internal Revenue





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Code of 1986, as amended, and Executive will be responsible for payment of the
required premium on a timely basis and shall be permitted to select coverage
per the Company's then existing procedures with respect to such plan; provided
that 10 days prior to any cancellation of Executive's coverage, the Company
shall give Executive notice of such intended cancellation and the reasons
therefore, and shall for such 10 day period give Executive the right to cure
such cancellation if it is for nonpayment of the required premium.

         (d)  The Company will reimburse Executive for reasonable and necessary
business expenses incurred by him in the course of performing his duties as an
officer of the Company through the Termination Date upon receiving appropriate
documentation in accordance with the Company's normal policies and subject to
reasonable approval by the Chief Executive Officer of the Company.

         (e)  To the extent permitted by the terms of such plan and applicable
law, the Company shall contribute to Executive's account under the Company's
401(k) plan, the pro rata portion that Executive would have otherwise received
but for the termination of his employment with the Company of any contribution
made by the Company, in its sole and absolute discretion, pursuant to the
profit sharing features of such plan in February 1997, and such amount shall
vest in accordance with, and for all purposes other than the contribution set
forth in this Section 2(e), be subject to the terms of such plan taking into
account the fact that Executive's employment with the Company terminated on the
date hereof.

         (f)  For a period of six months after the Termination Date, the
Company will forward all personal mail and items (including e-mail) received at
the offices of the Company to such address as shall be designated by Executive
and provided any callers with the phone number designated by Executive as a
forwarding number.

         (g)  The Company shall supply Executive with required tax information
with respect to Ambassador Apartments, L.P., a Delaware limited partnership
(the "Partnership"), at the same time such information is distributed to the
other partners of the Partnership.

         (h)  The Company will issue a press release concerning the termination
of Executive's employment in substantially the form of the attached Exhibit A
(the "Press Release") and will respond to any inquiries concerning the
circumstances of the termination of Executive's employment (including reference
checks from prospective employers of Executive) by referring the person making
the inquiry to the Press Release and advising such person that it is the
Company's policy not to comment beyond the text of Press Release and confirming
dates of employment.

         4.  Stock Options.  Notwithstanding any provisions to the contrary
contained in the Employment Agreement or the stock option agreements pursuant
to which such stock options were granted, the 90,000 stock options granted to
Executive in August, 1994 and the 25,000 stock options granted to Executive in
January, 1996 shall be fully vested and exercisable on the Termination Date and
shall be exercisable for a period of 90 days thereafter.  Executive
acknowledges that such stock options will not be exercisable by Executive after
such 90 day period.



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         5.  Employment Agreement.

         (a)  For all purposes of the Employment Agreement, the Employment Term
shall end on the Termination Date.

         (b)  The Company waives Executive's compliance with the provisions of
Section 6(b) of the Employment Agreement, and Executive acknowledges and
confirms that the other provisions of Section 6 of the Employment Agreement
remain in full force and effect and are binding on Executive in accordance with
their terms.

         6.  Partnership Agreement Indemnification.  The Company, on its own
behalf and as the General Partner of the Partnership, releases Executive and LG
Trust from their respective indemnification obligations pursuant to Article XII
of the Amended and Restated Agreement of Limited Partnership of the
Partnership, other than in connection with fraud or a criminal act by such
person.  The Company shall indemnify and hold harmless, Executive and LG Trust
from and against  all claims, obligations, demands, damages, costs,
liabilities, losses, fees and expenses that Executive or LG Trust may suffer
resulting from, arising out of, relating to, in the nature of or caused by any
failure of Executive or LG Trust to be released from the indemnification
obligations as set forth in the prior sentence.

         7.  Indemnity by the Company.  The Company shall indemnify, to the
fullest extent permitted by Maryland law, as applicable from time to time,
Executive, his heirs, successors and assigns, LG Trust and the Cavenaugh Family
Trust against any judgments, penalties, fines, settlements and reasonable
expenses and any other liabilities arising in connection with any action, suit,
or proceeding (whether civil, criminal, administrative or investigative) in
which such person is or was made a party to, or is threatened to be made a
party to, or is or was involved in because of any action alleged to have been
taken or omitted in by Executive in his capacity as a director or officer or
agent of the Company or any of its affiliates or subsidiaries (for whatever
reason, including without limitation, insurance claims, litigation, casualty
losses, director's and officer's liability, or securities laws), and the
Company shall pay or reimburse all reasonable expenses incurred by such person
in connection with any threatened, pending or completed action, suit or
proceeding (whether civil, criminal, administrative or investigative) in which
such person is a party because of any action alleged to have been taken or
omitted by Executive in his capacity as a director or officer or agent of the
Company or any of its affiliates or subsidiaries (for whatever reason,
including without limitation, insurance claims, litigation, casualty losses,
director's and officer's liability, or securities laws), in advance of the
final disposition of the proceeding, to the fullest extent permitted by, and in
accordance with the applicable requirements of, Maryland law, as applicable
from time to time, in each case, other than in connection with fraud or a
criminal act by Executive.  In addition, the Company irrevocably and
unconditionally releases and discharges Executive, his heirs, successors and
assigns, LG Trust and the Cavenaugh Family Trust (separately and collectively
"Executive Released Parties"), jointly and individually, from any and all
claims, obligations, demands, damages, and causes of action of any nature or
kind whatsoever, known or unknown, which the Company, its affiliates, related
companies or entities, successors and assigns have or may have against the
Executive Released Parties based upon, relating to, or arising from the any
action taken by Executive by and within the scope of his authority as a
officer, director, employee or other agent of the Company or any of its
subsidiaries or affiliates during the period of his employment with the





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Company (other than in connection with fraud or a criminal act by Executive).
It being understood that the foregoing release will not release Executive, his
heirs, successors and assigns, LG Trust and the Cavenaugh Family Trust from any
current or future obligation under the terms of any written agreement that
survives the execution of this Agreement to which such person is bound or has
enter other than by and within the scope of Executive's authority as an
officer, director, employee or other agent of the Company.

         8.  Sales of Securities.  Other than the exercise of the stock options
described in Section 4, Executive will not, for a period of two full business
days after the publication of the Press Release, purchase or sell, or contract
to purchase or sell, directly or indirectly, any shares of Common Stock, par
value $.01 per share, of the Company (the "Common Stock") or any right to
acquire or dispose of Common Stock.

         9.  Release by Executive.  As consideration for the Company's
agreements contained herein, Executive irrevocably and unconditionally releases
and discharges the Company, its officers, directors, shareholders, agents,
employees, affiliates, related companies or entities, successors and assigns
(separately and collectively "Company Released Parties"), jointly and
individually, from any and all claims, obligations, demands, damages, and
causes of action of any nature or kind whatsoever, known or unknown, which
Executive, his heirs, successors or assigns have or may have against the
Company Released Parties based upon, relating to, or arising from the creation,
existence or termination of the "employer/employee" relationship, including but
not limited to claims under the Employment Agreement, or claims of
discrimination under any federal state or local law, rule or regulation,
whether those claims are past or present, whether they arise from equity,
common law, or statute, whether they arise from labor laws or discrimination
laws, such as the Age Discrimination in Employment Act, Title VII of the Civil
Rights Act of 1964, as amended, or any other law, rule or regulation.  This
release is for any relief, no matter how called, including but not limited to
wages, backpay, frontpay, compensatory damages, punitive damages or damages for
pain or suffering, or attorney fees.  Further, Executive agrees he will not be
entitled to any benefit from any claim or proceeding filed by him or on his
behalf with any agency or court which is within the scope of this Agreement.
It being understood that the foregoing release will not release Company, its
affiliates, related companies or entities, successors and assigns from any
current or future obligation under the terms of any written agreement that
survives the execution of this Agreement to which such person is bound or has
enter other than the Employment Agreement.

         10.  Settlement of Claims.  The Company and Executive agree that the
execution of this Agreement is in compromise and final settlement among the
parties of all matters, constitutes full satisfaction of all claims made or
which could be made based upon, relating to or arising from the creation,
existence or termination of the "employer/employee" relationship, and does not
in any way admit liability or wrongdoing by any party.

         11.  Understanding of Agreement.   Executive acknowledges that he has
carefully read and fully understands this Agreement, including the release
included herein, that he has had the opportunity to have an attorney explain to
him the terms of the foregoing, and that he knows and understands the contents
of the foregoing, that he executes this Agreement knowingly and voluntarily as
his own free act and deed and that this Agreement was freely negotiated and
entered into without fraud, duress or coercion and with full knowledge of its
significance, effects and consequences.





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         12.  Entire Agreement.  This Agreement (including the documents
referenced herein) is the complete agreement between the parties, and there are
no written or oral understandings, promises or agreements directly or
indirectly related to this Agreement that are not incorporated herein in full.

         13.  Interpretation.  Section headings used in this Agreement are for
ease of reference only and are not intended as substantive terms hereof.  This
Agreement shall be governed by and interpreted under the laws of the State of
Illinois without giving effect to the conflict of laws provisions thereof.

         In witness whereof, the parties have executed and delivered this
Agreement on and as of the date first written above.



                                      /s/ Richard F. Cavenaugh
                                      ---------------------------
                                      Richard F. Cavenaugh


                                      AMBASSADOR APARTMENTS, INC.


                                      By:    /s/ David M. Glickman
                                             -------------------------
                                             David M. Glickman
                                             Chairman of the Board and
                                             Chief Executive Officer





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