<PAGE>   1

                                                                   Exhibit 10.16

FINOVA

                               SCHEDULE TO MASTER

                           LOAN AND SECURITY AGREEMENT


BORROWER:             BERKSHIRE RENOVATION, LLC
                      ENCINO RENOVATION, LLC
                      ROSSMORE RENOVATION, LLC

ADDRESS:              C/O ARV ASSISTED LIVING, INC.
                      245 FISCHER AVENUE, D-1
                      COSTA MESA, CALIFORNIA  92626


TAX I.D. NO.:         SEE SECTION 9.16

DATED AS OF:          OCTOBER 30, 1998

This Schedule forms an integral part of the Master Loan and Security Agreement
between the above Borrowers and FINOVA Capital Corporation dated the above date,
and all references herein and therein to this "Agreement" shall be deemed to
refer to said Agreement and to this Schedule.


================================================================================
TOTAL FACILITY (SECTION 1.1):
                      $26,000,000, allocated as follows:
                      (a)Berkshire - $5,500,000, including an Allocated Interest
                         Reserve Amount of  $556,280;
                      (b)Encino - $4,700,000, including an Allocated Interest
                         Reserve Amount of $285,551; and
                      (c)Rossmore - $15,800,000, including an Allocated Interest
                         Reserve Amount of $2,234,894.


================================================================================
LOANS AND BORROWING TERM (SECTION 1.2):

     The proceeds of the Loan shall be funded to Borrowers, up to the amounts
set forth in Section 1.1 above, and together with equity to be contributed by
the members of Borrowers, shall be used (i) to finance the



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acquisition and renovation of following facilities: (A) the Encino Hills Terrace
in Encino, California, by Encino; (B) the Rossmore House in Los Angeles,
California, by Rossmore; and (C) the Berkshire in Berkeley, California, by
Berkshire; and (ii) to pay closing costs, loan fees and other costs incurred in
connection with the Loan including, without limitation, architectural and
engineering reports, appraisal fees, and attorneys' fees and expenses. The Loan
shall include a reserve for capitalized interest (in the aggregate, the
"Interest Reserve," and as to each Borrower, the "Allocated Interest Reserve
Amount") in the amounts set forth in Section 1.1 above. Total Advances of the
Loan shall be subject to the further limitation that in no event shall the total
fundings made to any individual Borrower exceed 65.0% of the total acquisition,
construction and renovation costs applicable to the particular Facility to be
owned and operated by such Borrower. The Borrowers shall be required to have
acquired each of the foregoing Facilities by a date not later than thirty (30)
days following the execution of this Agreement. Each of the Borrowers shall
thereafter be permitted to request Advances of the Loan proceeds allocated to
such Borrower during a term of up to twelve (12) months (as to Encino and
Berkshire) from the Closing Dates applicable to Encino and Berkshire, and up to
twenty (20) months (as to Rossmore) from the Pre-Closing Date.


================================================================================
CONDITIONS PRECEDENT (SECTION 2.1):

        The obligation of FINOVA to make the initial Advance of any Loan
        hereunder is subject to the fulfillment, to the satisfaction of FINOVA
        and its counsel, of each of the following conditions, in addition to the
        conditions set forth in Section 2.1 above. To the extent individual
        items relate to the Facilities or the Collateral, such items shall be
        interpreted to refer solely to the individual Facility to be acquired by
        an individual Borrower and the other Collateral to be provided by such
        Borrower, on a Borrower by Borrower basis. Such conditions are
        designated with an "*":

                        A. Appraisal.* FINOVA has received and approved an MAI
                stabilized fair market value appraisal of each Facility, in a
                form and from an appraiser satisfactory to FINOVA in its
                Permitted Discretion, which shall support a loan to value ratio
                of not greater than eighty-five percent (85%), as determined by
                reference to that portion of the Loan which as has been
                allocated to the applicable Borrower. All such appraisals must
                be satisfactory to FINOVA, and shall be dated not more than
                thirty (30) days prior to the Closing Date applicable to the
                particular Borrower;

                        B. Management Agreements. FINOVA has received and
                approved the Management Agreements. Without limiting the
                generality of the foregoing, the amount of management fees
                payable to ARV by each Borrower shall be subject to FINOVA's
                approval (such management fees as are approved by FINOVA being
                referred to herein as the "Permitted Management Fees"). In
                addition, ARV shall have entered into the Subordination
                Agreements with FINOVA, in form and substance satisfactory to
                FINOVA, subordinating payment of the Permitted Management Fees
                to repayment of the Borrower's Obligations to FINOVA, and
                providing for a suspension of remedies on the part of ARV for
                periods during which an Event of Default under the Loan
                Documents is in existence.

                        C. Food Plain/Earthquake.* FINOVA has received
                satisfactory evidence that the Real Property is not located
                within a flood plain or earthquake zone or that Borrower has
                federal flood insurance and earthquake insurance in an amount,
                form and issuer acceptable to FINOVA.

                        D. Material Agreements and Licenses. FINOVA's
                satisfactory review of:

                             (i)   Equipment Leases and Operating/Capital
                                   Leases;
                             (ii)  Most current financial statements with
                                   comparable from prior year; and
                             (iii) Three (3) years of projected operating
                                   budgets.

                        E. Cash Shortfall Protection. ARV shall have undertaken,
                for the benefit of each Borrower and FINOVA, to bear the risk of
                (i) cost overruns during the construction/renovation phase in
                excess of budgeted amounts and (ii) operating losses in excess
                of projected operating



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                losses, in each case as detailed in the Budget and projections
                to be attached to the applicable Loan Documents (all such
                amounts as may hereafter arise being referred to as the
                "Projected Cash Shortfalls"). ARV's assurance in this regard
                (the "Projected Cash Shortfall Protection") shall be in form and
                substance satisfactory to FINOVA and shall be specifically
                enforceable by FINOVA as a named third party beneficiary
                thereof. ARV shall assure against Projected Cash Shortfalls in
                an aggregate amount of up to $4,000,000. The foregoing amount
                will not be segregated among Borrowers, such that each Borrower
                shall have the right to receive payments thereunder until the
                full amount of ARV's assurance has been exhausted. Without
                limiting the generality of FINOVA's right to be satisfied with
                the terms and conditions of the Projected Cash Shortfall
                Protection, the Projected Cash Shortfall Protection shall
                specifically provide that, if there exists any Event of Default
                under the Loans, any payments owed by ARV shall be paid directly
                to FINOVA.

                        F. Additional Enhancement Applicable to Rossmore
                Facility. In addition to the Projected Cash Shortfall Protection
                described in Section 2.1(E) above, ARV and Vintage ABR Hillsdale
                shall provide additional credit enhancement, in form and
                substance satisfactory to FINOVA, to support all operating cash
                flow deficits which may be incurred by Rossmore and to provide
                protection regarding the repayment of any deficiency resulting
                from a sale or other disposition of the Facility owned by
                Rossmore for an amount which generates insufficient proceeds to
                pay in full that portion of the Loan allocated to Rossmore. Such
                additional credit enhancement shall be in the form of an
                Operating Deficit and Deficiency Payment Agreement from ARV and
                Vintage ABR Hillsdale in favor of FINOVA, the final form of
                which shall be determined by FINOVA and agreed upon by ARV and
                Vintage ABR Hillsdale prior to the Closing Date applicable to
                Rossmore.

                        G. Interest Reserve. Evidence satisfactory to FINOVA
                that the amount budgeted for the Interest Reserve shall be
                sufficient to pay interest, at the Interest Rate, on amounts
                outstanding from time to time from the date of the first
                disbursement of the proceeds of the Loan through the projected
                Conversion Date. FINOVA's acceptance and approval of each
                Borrower's budget for the construction period, if such budget
                supports the sufficiency of the Interest Reserve, shall be
                sufficient to satisfy this condition.

                        H. Equity Structure. FINOVA shall have reviewed and
                approved Borrower's organizational documents and the ownership
                structure of Borrower.

                        I. Pending Litigation. FINOVA and its counsel shall have
                reviewed and found satisfactory the status of any and all
                litigation matters affecting any individual Borrower, one or
                more Borrowers as a group, ARV, or Vintage. Without limiting the
                generality of the foregoing, ARV shall have provided FINOVA
                current status reports with respect to its pending litigation
                with Emeritus Corporation (the "Emeritus Litigation") and with
                respect to the matter of ARV Assisted Living, Inc. v. Lazard
                Freres Real Estate Investors LLC, et al., Case Number 794211,
                Superior Court of the State of California for Orange County (the
                "Lazard Litigation"). The status of all remaining matters as to
                the Lazard Litigation and the Emeritus Litigation shall be
                satisfactory to FINOVA and its counsel in all respects.

                        J. Other Indebtedness. No Borrower shall have any other
                outstanding Indebtedness, other than in connection with trade
                payables incurred in the ordinary course of business and not
                past due.

                        K. Relocation of Residents. Rossmore shall not commence
                the renovation phase on the Rossmore House until all existing
                residents of such Facility have been relocated to other
                premises, unless FINOVA has reviewed and approved Rossmore's
                plan for assuring the continued safety and care of residents who
                may be remaining in the Facility during renovation.

                        L. Contribution of Equity. The members of each Borrower
                shall have contributed the necessary equity to provide
                sufficient funding for such Borrower to have adequate resources



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                (together with Loan proceeds) to pay for all items as shown on
                the Budgets. The required equity for each Borrower, and for all
                Borrowers together, shall have been contributed on or before the
                first Closing Date applicable to any Borrower (except to the
                extent set forth below with respect to Rossmore). The required
                equity contributions for each of the Borrowers shall be not less
                than 35% of the total acquisition, construction and renovation
                costs applicable to the particular Facility to be owned and
                operated by such Borrower. The total equity required to be
                contributed to Rossmore shall be contributed at such time as
                Rossmore has obtained all necessary permits and approvals to
                renovate the Rossmore House, but in no event subsequent to the
                Closing Date applicable to Rossmore. All required equity
                contributions shall be in cash; provided, however, that Vintage
                shall be permitted to receive credit for the contribution of its
                development fee with respect to the various Facilities (i.e.,
                Vintage may allocate such fee directly to the various Borrowers
                as its equity contribution, rather than being paid such fee in
                cash), in an amount as to each Borrower to be approved by
                FINOVA, but in no event shall the total equity contributed to
                all Borrowers in a non-cash form exceed, in the aggregate,
                $1,050,000.

                        M. Current Financial Statements and Projections.* Each
                Borrower shall provide FINOVA with updated copies of such
                Borrower's operating budgets for the first three (3) years of
                the term of the Loan, and Borrower's pro forma balance sheet as
                of the Closing of such Borrower's allocated portion of the Loan.
                Without limiting the generality of the foregoing, each set of
                projections shall include a detailed analysis of "lease-up"
                period applicable to the particular Facility and the anticipated
                point at which such Facility shall achieve a level of Operating
                Cash Flow sufficient to satisfy the Debt Service Coverage
                Covenant and Debt Service After Management Fee Coverage
                Covenant, each as set forth in Section 10.14 herein.

                        N. Regulatory Matters.* Review and approval of the
                regulatory scheme having jurisdiction over assisted living
                communities in the states in which the Facilities are located or
                are to be located, including FINOVA's review and approval of
                FINOVA's ability to obtain a lien on Borrower's licenses
                necessary for the operation of each of the Facilities as an
                assisted living community or confirmation satisfactory to FINOVA
                that FINOVA will not need a lien on the aforementioned license
                in order to operate any Facility for its intended purposes
                through a licensed designee acceptable to FINOVA.

                        O. ARV's Financial Information. ARV shall provide FINOVA
                with copies of its federal income tax returns for the years
                ended March 31, 1996, and March 31, 1997 (including all
                schedules and attachments thereto), its most recent audited
                financial statements dated no later than December 31, 1997, and
                its interim unaudited financial statements for the six month
                period ending June 30, 1998 (together with comparable
                information for the same portion of ARV's immediately preceding
                fiscal year). Such information may be provided by ARV through
                delivery of copies of ARV's most recent filings made with the
                SEC.

                        P. Residency Agreements. Satisfactory review and
                approval by FINOVA of the form of residency agreement which
                Borrowers shall use in the operation of the Facilities.

                        Q. Market Feasibility Studies.* Satisfactory review and
                approval by FINOVA of a market feasibility study with respect to
                each Facility, which shall indicate a need for the capacity
                represented by such Facility in its relevant geographic market.
                Without limiting the generality of the foregoing, each market
                feasibility study shall address, in addition to all competing
                projects currently in operation, those competing projects under
                construction or otherwise in a development stage and known to
                the public.

        Borrower shall cause all of the conditions precedent set forth in
        Section 2.1 of this Agreement and set forth above in this Schedule to be
        satisfied on or before the Closing Date applicable to each Borrower.

================================================================================
INTEREST AND FEES (SECTION 3.1):



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        1. Interest Rate. Interest shall accrue on the Loan at a variable rate
        per annum equal to the Prime Rate plus one-half of one percent (0.50%)
        (the "Interest Rate"). The Prime Rate shall mean that rate of interest
        publicly announced by Citibank, N.A., in New York, New York, as
        Citibank's base lending rate to its most creditworthy commercial
        customers, notwithstanding the fact that some persons may borrow at
        rates of interest less than the announced Prime Rate. Changes in the
        Interest Rate shall take effect immediately upon any change in the Prime
        Rate.

        2. Loan Fees. Each Borrower shall have paid to FINOVA a loan fee for the
        Loan in the amount of one percent (1%) of the total Loan proceeds as are
        allocated to such Borrower, as set forth in Section 1.1 above (the "Loan
        Fee"). Borrowers acknowledge that the Loan Fee has been fully earned and
        is nonrefundable. Payment of the Loan Fee shall be made concurrently
        with the execution and delivery of this Agreement (provided, however,
        that in the event Rossmore has not yet obtained all permits and
        approvals necessary to renovate the Rossmore House, payment by Rossmore
        of that portion of the Loan Fee attributable to Rossmore based upon the
        total Loan proceeds which are committed to Rossmore, as set forth in
        Section 1.1 above, shall be deferred until such time as all such permits
        and approvals have been obtained).

        3. Conversion Fees. Each Borrower shall pay to FINOVA a fee (herein, the
        "Conversion Fees") in the amount of one percent (1%) of the sum of (i)
        total actual fundings to or for the benefit of such Borrower up through
        and including the Conversion Date plus (ii) any remaining undisbursed
        portion of such Borrower's Allocated Interest Reserve Amount, in
        consideration for FINOVA's agreement to provide financing following
        completion of the construction phase, which fees shall be payable by
        each such Borrower on the Conversion Date applicable to its particular
        portion of the Loan. The Conversion Fees are compensation to FINOVA in
        consideration of its agreement to fund the Loans during and after the
        construction phases applicable thereto, and shall not be applied against
        the outstanding principal, accrued interest, or any other amounts owing
        to FINOVA with respect to the Loans.

        4. Prepayment.

                4.1 Voluntary, Full Prepayment. The Prepayment Premium shall be
        computed as follows:

<TABLE>
<CAPTION>
                                    Percent of the outstanding principal balance
                      Period                of the Loan as of the Notice Date
                      ------                ---------------------------------
<S>                                 <C>
                 First Loan Year                           5%
                 Second Loan Year                          4%
                 Third Loan Year                           3%
                 Fourth Loan Year                          1%
                  and thereafter
</TABLE>

                4.2 Prepayment Upon Default. The Prepayment Premium payable in
        the case of a prepayment upon an Event of Default and acceleration by
        FINOVA shall be as set forth above.

                4.3 Reduced Prepayment Events. Notwithstanding the provisions of
        Paragraph 4.1 above, in the event that either (i) that portion of the
        Loan which is allocated and funded to Encino and Berkshire is prepaid in
        full on or after the third anniversary of the last Closing Date
        applicable to Encino and Berkshire, or (ii) that portion of the Loan
        allocated and funded to Rossmore is prepaid in full on or after the
        third anniversary of the Closing Date applicable to Rossmore, and such
        prepayments occur through the proceeds of long-term mortgage financing
        which the applicable Borrowers or their affiliates have obtained from
        FINOVA Realty Capital, Inc., or one or



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        more of its affiliates, then the Prepayment Premium shall be reduced
        from the amount set forth in Paragraph 4.1 above to one-half of one
        percent (0.50%) of the principal amount being prepaid.

                4.4 Limited Waiver of Prepayment Premium. In the event that any
        of the Facilities, or the outstanding ownership interests in any
        Borrower, are acquired by ARV (or an affiliate of ARV provided that such
        affiliate has the same or greater financial strength and wherewithal as
        ARV) pursuant to those terms and conditions in such Borrower's Articles
        of Organization (or in agreements entered into directly between ARV and
        Vintage ABR Hillsdale) which provide ARV with certain rights to acquire
        the Borrower or its Facility, no Prepayment Premium required by
        Paragraph 4.1 above shall be payable in connection with any such sale if
        either (x) ARV (or its affiliate) is able to prepay that portion of the
        Loan as has been allocated to the applicable Borrower from ARV's (or
        such affiliate's) available cash resources, without obtaining new
        financing secured by the Facility owned by such Borrower (in which event
        the condition set forth above requiring that such affiliate have the
        same or greater financial strength and wherewithal as ARV shall be
        deemed satisfied), or (y) ARV (or its affiliate) either (i) continues
        the existing financing with respect to the Loans, (ii) obtains new
        financing through FINOVA or one of FINOVA's affiliates, or (iii) gives
        FINOVA a first right of refusal to provide new financing as follows:

                        If ARV or its affiliate has received a bona fide offer
                from a third party for such financing which ARV or its affiliate
                wishes to accept, ARV or its affiliate shall give FINOVA written
                notice of such offer together with a copy of a written bona-fide
                proposal for such financing from the prospective third party
                lender. FINOVA shall have five (5) business days from the
                receipt of such notice and proposal to issue a financing
                proposal to ARV or its affiliate to extend such financing upon
                terms substantially equivalent to or better than those contained
                in the proposal from the third party lender (it being understood
                however that FINOVA has no obligation to issue such proposal).
                The failure of FINOVA to issue a proposal within the foregoing
                five (5) business day period shall be deemed an election by
                FINOVA not to extend such financing. Following ARV or its
                affiliate's acceptance of the financing proposal issued by
                FINOVA, FINOVA shall have fifteen (15) business days thereafter
                within which to issue a commitment to ARV or its affiliate for
                such financing (it being understood however that FINOVA has no
                obligation to issue such commitment). The failure of FINOVA to
                issue such commitment within the foregoing fifteen (15) business
                day time period shall be deemed an election by FINOVA not to
                extend such financing. In addition, in the event FINOVA
                determines prior to the expiration of said fifteen (15) business
                day period that FINOVA does not wish to commit to provide such
                financing, FINOVA shall promptly notify ARV to that effect. If
                FINOVA elects not to extend such financing, ARV or its affiliate
                shall have the right to accept the financing proposal from the
                third party lender and close such financing on terms which are
                in no material respect more favorable to the third party lender
                than those contained in its proposal. ARV or its affiliate shall
                not however have the right to close such financing with the
                third party lender on terms materially more favorable to the
                third party lender than those contained in the proposal from
                such third party lender, and be relieved of the Prepayment
                Premium obligation, unless FINOVA is first given the right to
                provide ARV or its affiliate with financing on terms
                substantially equivalent to or better than those offered by such
                third party lender, as more fully provided above.

                4.5 Release Provision. Upon payment by any Borrower to FINOVA of
        all amounts due and owing to FINOVA by such Borrower, as allocated to
        such Borrower in the final Loan Documents (including, without
        limitation, any applicable Prepayment



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        Premium as required by this Paragraph 4 of this Section 3.1), such
        Borrower shall be entitled to a release of such Borrower's Facility and
        of all other Collateral which has been encumbered by such Borrower from
        the lien of FINOVA's security interest in such assets.

        5. Construction Monitoring Fee. Each Borrower shall pay FINOVA a
        construction monitoring fee equal to $2,000 per month for the period
        commencing with the Closing Date applicable to such Borrower and ending
        on such Borrower's Conversion Date.

        6. Interest Payments. During the construction/renovation phase
        applicable to each of the Facilities, and for a period of twelve (12)
        months after the completion of the renovation/construction phase for
        each Facility, interest on the outstanding balance of the Loan shall be
        payable monthly on the first day of each calendar month following the
        first disbursement of proceeds under the Loan, calculated at the
        Interest Rate. The construction/renovation phase applicable to each
        Borrower shall commence on such Borrower's Closing Date and shall run
        until the earlier to occur of the date construction is actually
        completed and the last disbursement of either Basic Retainage or
        Additional Retainage (as described in Section 2.3(c) hereof) occurs or
        the Required Completion Date. The earlier of such events shall be
        referred to herein as the "Conversion Date." Prior to the Conversion
        Date, interest on the outstanding balance of the Loan shall be payable
        by each Borrower through advances made from such Borrower's Allocated
        Interest Reserve Amount, so long as (i) no Event of Default exists and
        is continuing and (ii) such Borrower's Allocated Interest Reserve Amount
        has not been fully drawn upon. Following the Conversion Date, interest
        accruing during Borrower's twelve month interest-only period shall be
        payable by Borrower first from Operating Cash Flow, and thereafter from
        any remaining amounts in the such Borrower's Allocated Interest Reserve
        Amount, to the extent such Borrower has experienced an Available
        Operating Cash Flow Shortfall.

        7. Principal Payments. Following completion of the foregoing
        interest-only period, the principal balance of the Loan and all accrued
        interest shall be paid in that number of monthly installments which is
        equal to forty-eight (48) minus the number of monthly installments of
        interest only which were paid through and including the Conversion Date
        (with the result that the total term of the Loan applicable to each
        Borrower shall be sixty (60) months). The final (i.e., sixtieth) monthly
        installment date with respect to each Borrower shall be referred to
        herein as such Borrower's "Maturity Date." Each installment of principal
        and interest shall be referred to herein as a "Permanent Loan
        Installment." The Permanent Loan Installments under the Loan shall
        commence on the due date of the thirteenth (13th) monthly installment
        following the Conversion Date (which date shall be referred to herein as
        the "Amortization Date"), and shall continue on the first day of each
        month thereafter, through but excluding the Maturity Date. Other than
        for the Permanent Loan Installment due on the Maturity Date, each of the
        Permanent Loan Installments shall be in an amount equal to the sum of
        (i) interest calculated at the Interest Rate, plus (ii) a principal
        component equal to the principal portion of a two hundred forty (240)
        month amortization schedule, calculated based upon the Interest Rate and
        the principal balance of the Loan outstanding on the Amortization Date.
        On the Maturity Date, all remaining unpaid principal and any other sums
        due and owing pursuant to each Borrower's obligations to FINOVA in
        respect of the Loan, plus all unpaid accrued interest on the Loan, if
        not sooner paid, shall be due and payable in full. The Closing Date,
        Conversion Date, Amortization Date, Start Date, and Maturity Date
        applicable to each Borrower shall be separate and distinct, and shall be
        determined solely by reference to such Borrower's acquisition of its
        individual Facility and the construction schedule resulting from its
        renovation thereof. Effective as of the Amortization Date applicable to
        each Borrower, no further Advances from such Borrower's Allocated
        Interest Reserve Amount shall be made.



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<PAGE>   8

================================================================================
REPORTING REQUIREMENTS (SECTION 5.2):

                        1. Borrower shall provide FINOVA with annual operating
                        budgets (including income statements, balance sheets and
                        cash flow statements, by month) for the upcoming fiscal
                        year of Borrower within ninety (90) days prior to the
                        end of each fiscal year of Borrower.

                        2. Borrower shall provide FINOVA with copies of any
                        notices from any public or private entity having
                        jurisdiction over the lawful operation of the
                        Facilities, within five (5) Business Days after receipt
                        of same.

                        3. Borrower shall provide FINOVA with copies of any
                        notices received from any applicable licensure or
                        certification authority with respect to the compliance
                        or non-compliance of the Facilities under applicable
                        state or federal law, including any notices of the
                        pendency of any de-certification, de-licensure,
                        non-renewal of licensure or certification or any similar
                        proceedings immediately upon receipt.

                        4. Borrower shall provide FINOVA with copies of any
                        notices, submissions or other filings made by or on
                        behalf of Borrower to the healthcare regulatory agency
                        for the state in which the Facilities are located or to
                        any municipal public health or safety agency pursuant to
                        any applicable law, regulation or ordinance with respect
                        to operation of the Facilities as assisted living
                        communities.

                        5. Borrower shall provide FINOVA with comparisons
                        showing Borrower's actual operating results achieved for
                        the then current fiscal year compared against results
                        projected in the last annual operating budget provided
                        to FINOVA pursuant to Paragraph 1 above.

                        6. Borrower shall provide promptly to FINOVA, or shall
                        cause ARV to provide directly to FINOVA, copies of all
                        reports concerning the operation of the Facilities which
                        are prepared by ARV in accordance with the terms of the
                        Management Agreements.

                        7. Borrower shall provide to FINOVA copies of Borrower's
                        federal income tax returns (including all schedules and
                        attachments thereto) concurrently with the filing of
                        each such return (but in no event later than the 15th
                        day of the seventh calendar month following the end of
                        Borrower's fiscal year). In the event Borrower files an
                        extension for the time in which to file its federal
                        income tax return, Borrower shall provide to FINOVA a
                        copy of such extension request.

================================================================================
PERMITTED ENCUMBRANCES (SECTION 9.8):

Permitted Encumbrances shall mean:

                        1. Liens, security interests or other encumbrances for
                        taxes, assessments and other governmental charges or
                        levies arising by operation of law in the ordinary
                        course of business for sums which are not yet due and
                        payable, or such liens the enforcement of which are, at
                        all times, effectively and fully stayed and are being
                        contested in good faith by appropriate proceedings
                        diligently conducted, and for which reserves as required
                        under GAAP shall have been established;

                        2. Liens arising in the ordinary course of business in
                        respect of claims or demands of landlords, carriers,
                        warehousemen, vendors, mechanics, laborers, materialmen,
                        workers, repairmen and other similar Persons, whether
                        arising by operation of law, contractually or otherwise,
                        provided that the amounts



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                        respectively secured thereby are not past due or if past
                        due, the enforcement of any such liens are at all times
                        stayed, and such liens are being contested in good faith
                        by appropriate proceedings diligently conducted and
                        reserves as required under GAAP shall have been
                        established therefor;

                        3. Liens in favor of FINOVA; and

                        4. Those matters set forth on the attached Exhibit B.

================================================================================
BORROWER INFORMATION (SECTION 9):

<TABLE>
<S>                                                <C>
ROSSMORE RENOVATION, LLC

Borrower's State of Organization (Section 9.1):    Delaware

Fictitious Names/Prior Names  (Section 9.2):       Rossmore House

Borrower Locations (Section 9.16):                 See attached List of Collateral Locations

Pending Litigation:                                See attached Schedule of Pending Litigation

Federal Employer ID No.:                           33-0824707

Fiscal Year End:                                   December 31


ENCINO RENOVATION, LLC

Borrower's State of Organization (Section 9.1):    Delaware

Fictitious Names/Prior Names  (Section 9.2):       Encino Hills Terrace

Borrower Locations (Section 9.16):                 See attached List of Collateral Locations

Pending Litigation:                                See attached Schedule of Pending Litigation

Federal Employer ID No.:                           33-0824702

Fiscal Year End:                                   December 31


BERKSHIRE RENOVATION, LLC

Borrower's State of Organization (Section 9.1):    Delaware

Fictitious Names/Prior Names  (Section 9.2):       The Berkshire

Borrower Locations (Section 9.16):                 See attached List of Collateral Locations

Pending Litigation:                                See attached Schedule of Pending Litigation

Federal Employer ID No.:                           33-0824698

Fiscal Year End:                                   December 31
</TABLE>



                                       9
<PAGE>   10

================================================================================
FINANCIAL COVENANTS  (SECTION 10.14):

Borrower shall comply with all of the following covenants. Compliance shall be
determined as of the end of each quarter.

Debt Service Coverage Ratio: Maintain a ratio (the "Debt Service Coverage
Ratio") of Operating Cash Flow to Contractual Debt Service of no less than 1.25
to 1.0 (the "Debt Service Coverage Covenant"). The foregoing covenant shall be
tested quarterly commencing with the first calendar quarter following the "Start
Date" (as hereafter defined). The Start Date shall be the first day of the first
calendar month following the month in which the earlier of the following two
events occurs: (i) a Facility attains an occupancy level of ninety-two percent
(92%) or greater or (ii) a Borrower's actual operating results have achieved a
Debt Service Coverage Ratio at least equal to 1.25:1.0; provided, however, that
in the event the Start Date has not previously occurred, each of the following
shall become the Start Date for the applicable Borrowers: for Berkshire, January
1, 2000; for Encino, January 1, 2000; and for Rossmore, October 1, 2001. For the
first twelve (12) months following the Start Date, the foregoing covenant shall
be tested for the period from the Start Date through the end of the relevant
quarter. Thereafter, the Debt Service Coverage Covenant shall be tested on a
rolling and trailing 12-month basis.

Debt Service After Management Fee Coverage Ratio: Maintain a ratio (the "Debt
Service After Management Fee Coverage Ratio") of Post Management Fees Cash Flow
to Contractual Debt Service at all times equal to at least 1.15 to 1.0 (the
"Debt Service After Management Fee Coverage Covenant"). The foregoing covenant
shall be tested from and after the Start Date, with the same frequency, and in
the same manner, as the Debt Service Coverage Covenant.

Net Worth: Each Borrower shall maintain Net Worth in an amount not less than the
following amounts: Berkshire - $2,200,000; Encino - $2,000,000; and Rossmore -
$____________. The foregoing covenant shall be tested at the end of each fiscal
quarter of Borrower.


================================================================================
NEGATIVE COVENANTS (SECTION 11):

Capital Expenditures:         No Borrower shall make or incur any capital
                              expenditure if, after giving effect thereto, the
                              aggregate of all capital expenditures made by such
                              Borrower in any fiscal year will exceed One
                              Hundred Thousand Dollars ($100,000), provided,
                              that to the extent any Borrower makes any capital
                              expenditures which are paid for through additional
                              invested equity, such expenditures shall not be
                              counted against the foregoing annual limit. The
                              foregoing covenant shall be tested annually, on a
                              fiscal year basis, commencing with the period
                              following the Conversion Date. Testing of the
                              foregoing covenant for the fiscal year in which
                              the Conversion Date occurs shall disregard the
                              period prior to the Conversion Date, and shall
                              prorate the foregoing amount for the remaining
                              portion of such fiscal year. All capital
                              expenditures made by Borrower shall be made only
                              out of Borrower's internally generated funds or
                              additional equity invested.

Management Fees:              Borrower shall not, during the term of the Loan,
                              pay management fees in excess of the Permitted
                              Management Fees during any fiscal year.

Distributions:                No Borrower shall be permitted to pay dividends,
                              management fees (except for Permitted Management
                              Fees), capital distributions or other payments to
                              its members or other Persons (all of the
                              foregoing, collectively "Distributions") during
                              the term of the Loan without FINOVA's prior
                              written consent, until the first month in which
                              such Borrower first achieves compliance with the
                              Debt Service Coverage Covenant. Thereafter,
                              dividends and capital distributions may be made
                              quarterly in an amount not in excess of the
                              balance obtained when Operating Cash Flow is
                              reduced by the sum of Permitted Management Fees
                              and



                                       10
<PAGE>   11

                              one hundred fifteen percent (115%) of Contractual
                              Debt Service, as pertaining to such Borrower and
                              such Facility. It shall however be a condition to
                              the making of such dividend or distribution, that
                              before and after taking into account the payment
                              of such dividend or distribution there does not
                              exist an Event of Default or Incipient Default.
                              The foregoing restrictions on dividends and
                              distributions shall apply to all equity
                              contributed as capital, whether contributed in the
                              form of cash or as foregone development fees.

                              The foregoing notwithstanding, each Borrower shall
                              be permitted to make quarterly Distributions ("Tax
                              Distributions") to its members in an amount
                              sufficient for the payment of federal and state
                              income taxes payable by such members resulting
                              from the inclusion in such members' taxable income
                              of the members' pro rata share of the income of
                              the Borrower, subject to reasonable assumptions as
                              to the marginal tax bracket to which the members
                              of the Borrower generally are subject. If, at the
                              end of the Borrower's fiscal year, there exists a
                              tax credit as a result of overestimated quarterly
                              distributions having been made (i.e.,
                              distributions in excess of the amount ultimately
                              required for such members, on an aggregate basis,
                              to pay the tax due as a result of the inclusion in
                              such members' taxable income of the members' pro
                              rata share of the income of the Borrower), future
                              quarterly tax distributions shall cease until such
                              credit has been fully recaptured, unless the
                              Borrower's Articles of Organization provide for
                              refund of excess distributions or earlier
                              recapture of such amounts. The Borrower shall
                              provide to FINOVA an annual reconciliation of all
                              quarterly tax distributions compared against
                              Borrower's final annual taxable income and the
                              final tax distributions determined therefrom, no
                              later than thirty (30) days after the final
                              determination of the Borrower's taxable income is
                              made; and

Additional Indebtedness:      Without the prior written consent and approval of
                              FINOVA, Borrower shall not modify the terms and
                              conditions of any existing or future debt or incur
                              any debt other than (i) unsecured trade debt
                              incurred in the ordinary course of business and
                              (ii) purchase money financing incurred in the
                              ordinary course of business which purchase money
                              financing shall not exceed Fifty Thousand Dollars
                              ($50,000) in any one fiscal year.

================================================================================

CONSTRUCTION-RELATED COVENANTS, REPRESENTATIONS AND WARRANTIES:

                1. Construction Loan Amount. FINOVA hereby agrees to make the
        Advances to each Borrower in a principal sum not to exceed the amounts
        set forth in Section 1.1 above, provided Borrower has complied with, and
        subject to the terms and conditions of, this Agreement and all other
        Loan Documents. Unless FINOVA, in its Permitted Discretion, agrees in
        writing with Borrower to make such Advances thereafter on terms and
        conditions satisfactory to FINOVA, Borrower shall not be entitled to
        obtain Advances after the expiration of the Borrowing Term.

                2. Use of Proceeds. Borrower shall use Advances (after the
        initial Advance) only for payment of and reimbursement for hard and soft
        construction costs and interest reserve set forth in the Budget and
        designated as costs to be paid from the Loan proceeds. All Advances
        shall be subject to the conditions and limitations of Sections 2.2 and
        2.3 of the Agreement.

                3. Initial Advance. The proceeds of the initial Advance shall be
        disbursed by FINOVA on the Closing Date to or for the benefit of
        Borrower for use in strict accordance with the Initial Advance
        Disbursement Schedule attached hereto as Exhibit G.

                4. No Prior Work. Borrower represents and warrants to FINOVA
        that no services, work, equipment or materials of any kind that may give
        rise to any mechanics or similar statutory lien, including, without
        limitation, site work, clearing, grubbing, draining or fencing of the
        Real Property has been



                                       11
<PAGE>   12

        performed or commenced on the Real Property or otherwise provided in
        connection with the Work, except to the extent that such services, work,
        equipment, materials have been fully disclosed in writing to FINOVA and
        Title Company and the Title Policy insures the priority of the Mortgage
        over all mechanics and similar liens.

                5. Utilities. Borrower represents and warrants to FINOVA that
        all utility services (including water, storm and sanitary sewer, gas,
        electric and telephone facilities and garbage removal) necessary for the
        Completion of the Work and the intended use of each of the Facilities as
        an assisted living community are available to the Real Property (or will
        be upon Completion); the suppliers of such utilities have the capacity
        to serve the Real Property and are committed to supply such utilities in
        such amounts as are required upon Completion; and all fees and deposits
        due to the suppliers of such utilities have been paid current or amounts
        adequate for such purposes have been reserved in the Budget.

                6. FINOVA's Inspector. FINOVA shall employ an independent
        architect or engineer ("FINOVA's Inspector") to: (a) review the Plans,
        the Budget and the Construction Contracts; (b) make periodic inspections
        of the Real Property and Work so that FINOVA may monitor whether
        Borrower is in compliance with the terms and conditions of this
        Agreement with respect to completion of the Work; and (c) review and
        approve the monthly draw request, perform an analysis of the anticipated
        cost of the Work, and certify that each Work-Related Advance Request is
        not in excess of the Work completed and the amount to which Borrower is
        entitled under the terms and conditions of this Agreement. The cost of
        retaining FINOVA's Inspector shall be borne by Borrower.

                        6.1 FINOVA may require an inspection of the Work by
                FINOVA's Inspector (a) prior to each Work-Related Advance; (b)
                monthly or more frequently if deemed necessary by FINOVA during
                the course of construction of the Work; (c) upon Completion of
                the Work; and (d) at such other time as FINOVA may deem
                necessary due to actual or suspected non-compliance with the
                Plans, Construction Contract(s), the Loan Documents, any law,
                regulation or private restriction, sound architectural,
                engineering or construction principles or commonly accepted
                safety standards or Borrower's failure to satisfy the
                requirements of the Loan Documents.

                        6.2 FINOVA shall have no duty to supervise or to review
                and inspect the Plans, the Construction Contract(s), any budget
                proposed to be the Budget, the construction of the Work, or any
                books and records pertaining thereto. Any inspection made by
                FINOVA shall be for the sole purpose of determining whether the
                Obligations are being performed and preserving FINOVA's rights
                under the Loan Documents. If FINOVA, or FINOVA's Inspector
                acting on behalf of FINOVA, should review or inspect the Plans,
                the Construction Contract(s), the Budget, the construction of
                the Work or any books and records pertaining thereto, FINOVA and
                FINOVA's Inspector shall have no liability or obligation to
                Borrower or any third person arising out of such inspection; and
                neither Borrower nor any third person shall be entitled to rely
                upon any such inspection or review. Inspection not followed by
                notice of default shall not constitute (a) a waiver of any
                default then existing; (b) an acknowledgment or representation
                by FINOVA or FINOVA's Inspector that there has been or will be
                compliance with the Plans, the Construction Contract(s), the
                Budget, the Loan Documents, applicable laws, regulations and
                private restrictions, sound construction, engineering or
                architectural principles or commonly accepted safety standards,
                or that the construction is free from defective materials or
                workmanship; or (c) a waiver of FINOVA's right to insist that
                Completion of the Work occur in accordance with the Plans,
                Construction Contract(s), the Budget, Loan Documents, applicable
                laws, regulations and restrictions of record, sound
                construction, engineering or architectural principles or
                commonly safety standards and free from defective materials and
                workmanship. FINOVA and FINOVA's Inspector owe no duty of care
                to Borrower or any third person to protect against, or inform
                Borrower or any third person of, the existence of negligence,
                faulty, inadequate or defective design or construction of the
                Work.

                        6.3 To the extent that any construction with respect to
                any Facility is funded by sources other than the Loan
                contemplated herein (including Borrower's equity), Borrower
                shall



                                       12
<PAGE>   13

                allow FINOVA's Inspector (at Borrower's expense) to review and
                inspect such construction work and such construction work must
                meet FINOVA's standards and specifications.

                7. Enforcement of Contracts. Borrower shall strictly enforce all
        material provisions of the Construction Contract, the Architect/Engineer
        Agreement and all other contract(s) for the construction of the
        Improvements to ensure that the other parties thereto are required to
        promptly and diligently perform all of its obligations thereunder and in
        such a manner as to preserve FINOVA's security in the Collateral and the
        Facilities. Borrower shall timely perform all its obligations under the
        aforementioned agreements and contracts. No material change, amendment
        or modification shall be made to such contract(s) without the prior
        written consent of FINOVA.

                8. No Other Encumbrances. No materials, equipment, fixtures or
        any other part of the Improvements, or articles of personal property
        placed in the Facilities, shall be purchased or installed under any
        security agreement or other arrangements wherein the seller reserves or
        purports to reserve the right to remove or to repossess any such items
        or to consider them personal property after their incorporation into the
        Facilities.

                9. Construction Commencement and Completion. Borrower shall
        commence construction of the Improvements within 45 days following the
        Closing Date, and shall continue the Work without material interruption,
        and shall cause Completion on or before the Required Completion Date.
        Borrower shall (a) permit no material deviations to occur in the
        progress, timing or completion of construction of the Improvements; (b)
        cause the Improvements to be constructed in accordance with the Budget;
        (c) otherwise abide by the Work Progress Schedule and Budget in all
        respects; and (d) cause the Completion of the Work in a good and
        workmanlike manner substantially according to the Plans, free from all
        legal charges, encumbrances and rights of third parties (other than the
        Permitted Encumbrances), and in accordance with all applicable
        ordinances and statutes, including zoning laws, all covenants,
        conditions and restrictions running with the land, and all regulations
        and building codes of any governmental or municipal agency having
        jurisdiction over the Real Property.

                10. Assurances. Borrower shall pay when due all costs, expenses
        and claims pertaining to the Work and deliver to FINOVA during the
        course of the Work in order to monitor and/or provide assurance that the
        Work is proceeding lien free in accordance with the requirements of this
        Agreement: bills of sale, conveyances and paid invoices pertaining to
        the Work; all waivers and releases of lien or claims on the Real
        Property and/or the Improvements on account of the Work FINOVA may deem
        necessary or may request for its protection; and from persons acceptable
        to FINOVA, additional engineering or architectural studies and reports
        as FINOVA or FINOVA's Inspector may require.

                11. Plans and Specifications. The Work shall be completed
        substantially in accordance with the final drawings, plans and
        specifications which have been approved by FINOVA (the "Plans") prepared
        by the Architect(s)/Engineer(s), as approved by FINOVA, Construction
        Contract(s), applicable laws, regulations and private restrictions, the
        Loan Documents, sound construction, engineering and architectural
        principles and commonly accepted safety standards and free from
        defective materials and workmanship. No material changes, alterations or
        modifications shall be made in the Plans or in any of the other
        Principal Work-Related Items without FINOVA's prior written approval.
        The foregoing notwithstanding, Borrower shall be permitted to make
        changes in the Plans to the extent that such change order (a) does not
        increase the cost of the Work by more than Ten Thousand Dollars
        ($10,000) or, with all other changes, does not increase the cost of the
        Work by more than One Hundred Thousand Dollars ($100,000), and (b) does
        not materially affect the design, structural integrity or quality of the
        Improvements. Borrower shall deliver to FINOVA, immediately upon
        execution thereof, all change orders with respect to the Work including
        those within the scope of clauses (a) and (b) above.

                12. Other Contracts. Borrower shall not enter into any
        Architect/Engineer Agreement or Construction Contract (other than those
        contracts and agreements which FINOVA approved prior to the Closing
        Date) with respect to the Work except upon terms and with such parties
        as FINOVA may approve in writing.



                                       13
<PAGE>   14

                13. Notice of Commencement. Borrower shall record all notices of
        commencement/completion and similar notices permitted by applicable laws
        and regulations which have the effect of shortening periods within which
        mechanics and similar liens may be filed.

                14. Delivery of Contracts. Borrower shall deliver to FINOVA true
        and complete copies of all Principal Work-Related Items and all other
        Contracts, Intangibles, Licenses and Permits.

                15. Borrower's Performance. Borrower shall perform all its
        obligations and preserve its rights under the Principal Work-Related
        Items in force and secure the performance of the other parties to the
        Principal Work-Related Items and all other Contracts, Intangibles,
        Licenses and Permits.

                16. Endorsements. Borrower shall deliver to FINOVA prior to or
        concurrently with each Work-Related Advance, a date down endorsement in
        a form acceptable to FINOVA issued by the Title Company insuring that
        the Mortgage at the time of each Work-Related Advance, constitutes a
        valid first lien upon the Real Property or title, subject only to the
        Permitted Encumbrances; upon construction of the foundation for any
        building comprising part of the Improvements deliver to FINOVA an
        endorsement ("foundation endorsement") insuring that the foundations, as
        constructed, are located within all set-back and boundary lines of the
        Real Property and do not encroach upon any easements, rights of way
        (public or private) or upon any other adjoining landowner's property;
        and upon the final advance of the retainage, Borrower shall deliver, or
        cause Title Agent to deliver, to FINOVA a date down endorsement or a
        re-issued title policy ("Re-Issued Title Policy") meeting the
        substantive requirements set forth above.

                17. Cost Overruns. Borrower shall notify FINOVA in writing if
        and when the unpaid costs of Completion of the Work exceeds or appears
        likely to exceed the undisbursed portion of the Loan and any undisbursed
        Required Completion Assurance Deposit(s) held by FINOVA.

                18. Additional Surveys. Borrower shall deliver to FINOVA
        promptly after the completion of the foundation and, if required by
        FINOVA, after the pouring of a street, curbstone or concrete slab on the
        Real Property, a survey prepared in accordance with the requirements of
        Section 2.1(m) of the Agreement, showing such Improvements, their
        location within Real Property lines and set back lines and a lack of
        encroachments, and deliver to FINOVA promptly upon the Completion, a
        survey which is certified to FINOVA, showing the "as-built" Improvements
        and showing all easements and other matters affecting the Real Property,
        and otherwise satisfying the requirements of Section 2.1(m) of the
        Agreement;

                19. Defects in Work. Borrower shall, after obtaining knowledge
        or receiving notice thereof, correct or cause to be corrected (a) any
        material defect in the Work, (b) any material departure in the
        completion of the Work from the Plans and the Construction Contract(s)
        unless expressly permitted in this Agreement or consented to in writing
        by FINOVA, (c) any failure of the Work to comply with applicable laws,
        regulations or restrictions of record, sound construction, engineering
        or architectural principles or commonly accepted safety standards or (d)
        any encroachment of any part of the Improvements on any set-back or
        boundary line, easement, or other restricted area.

                20. Notice of Defects. Borrower shall promptly deliver to FINOVA
        any and all notices received by Borrower that it is not complying with
        applicable laws, regulations and private restrictions pertaining to the
        Work or that the Work is not being completed in accordance with the
        Plans, the Construction Contract(s), sound construction, engineering and
        architectural principles and commonly accepted safety standards.

                21. Safeguarding Materials. Borrower shall cause all materials
        supplied for or intended to be utilized in the Completion of the Work,
        but previously not affixed to or incorporated into the Improvements, to
        be stored on the Real Property with adequate safeguards, to prevent
        loss, theft, damage or commingling with other materials.

                22. Building Permits. Borrower shall, promptly after receipt by
        Borrower, deliver to FINOVA copies of all building permits and
        certificates of acceptance and/or occupancy relating to the Work.



                                       14
<PAGE>   15

                23. Required Completion Assurance Deposit Assurances. If at any
        time the remaining costs which must be incurred before Completion can
        occur ("Completion Costs") are more than the committed and undisbursed
        portion of the Loan, and in any event within ten (10) days after
        FINOVA's demand that it do so, Borrower shall deliver to FINOVA cash
        deposits equal to the shortfall (the "Required Completion Assurance
        Deposits"). In the event of any dispute, the necessity for an amount of
        any Required Completion Assurance Deposit shall be determined by FINOVA
        in its Permitted Discretion based upon the approved Budget and the
        advice of FINOVA's Inspector. The Required Completion Assurance Deposits
        shall be deposited in a separate interest bearing account for the
        benefit of Borrower. FINOVA shall disburse the Required Completion
        Assurance Deposits to pay and/or reimburse Borrower for the cost of the
        Work prior to any further disbursement of Loan proceeds for such
        purposes, but subject to the terms and conditions of the Loan Documents.

================================================================================
ADDITIONAL PROVISIONS:

1.      Intermediaries. Borrower represents and warrants to FINOVA that it has
        not engaged or dealt in any way with any broker in connection with the
        transactions contemplated by this Agreement. Borrower shall pay, and
        FINOVA shall have no liability for and shall be held harmless by
        Borrower against any liabilities in respect of, any commission or other
        amounts claimed by or payable to any broker. The terms of this paragraph
        shall survive the Closing and any termination of this Agreement.



          SCHEDULE TO MASTER LOAN AND SECURITY AGREEMENT SIGNATURE PAGE



Borrower:

                                      ROSSMORE RENOVATION, LLC,
                                      a Delaware limited liability company

WITNESS:                              By: ARV Assisted Living, Inc., a Delaware
                                          corporation, Manager

/s/ Bernard Wheeler-Medley                By: /s/ Sheila M. Muldoon
----------------------------------           -----------------------------------
Name:  Bernard Wheeler-Medley                Sheila M. Muldoon

                                               Senior Vice President

WITNESS:                                    By: Vintage/ABR (Hillsdale), LLC, a
                                                Delaware limited liability
                                                company, Manager

/s/ Todd J. Deltufo                       By: /s/ Thomas R. Burton         
----------------------------------           -----------------------------------
Name: Todd J. Deltufo                        Thomas R. Burton
                                             Manager

/s/ Bernard Wheeler-Medley                By:    /s/ Eric K. Davidson         
----------------------------------           -----------------------------------
Name:_Bernard Wheeler-Medley                   Eric K. Davidson
                                               Manager


THE STATE OF California              )
                                     )
COUNTY OF Orange                     )

        On this 30th day of October, 1998, before me, the undersigned notary
public, duly commissioned and sworn, personally appeared Sheila M. Muldoon,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person that executed the within instrument and acknowledged to me that
he or she



                                       15
<PAGE>   16




                executed the same in his or her authorized capacity and that by
his or her signature in the instrument the person, or the entity on behalf of
which the person acted, executed the instrument.

               In witness whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                               /s/ Karen Gerner
                                            ------------------------------------
                                            Notary Public
(SEAL)

My Commission Expires:

----------------------------------



                                       16
<PAGE>   17




THE STATE OF Maryland             )
                                  )
COUNTY OF Baltimore               )

               On this 30th day of October, 1998, before me, the undersigned
notary public, duly commissioned and sworn, personally appeared Thomas R.
Burton, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person that executed the within instrument and acknowledged
to me that he or she executed the same in his or her authorized capacity and
that by his or her signature in the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.

               In witness whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                               /s/ Patricia L. Baxivanos
                                            ------------------------------------
                                            Notary Public
(SEAL)
My Commission Expires:

        10/1/99
----------------------------------

THE STATE OF California              )
                                     )
COUNTY OF Orange                     )

               On this 30th day of October, 1998, before me, the undersigned
notary public, duly commissioned and sworn, personally appeared Eric K.
Davidson, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person that executed the within instrument and acknowledged
to me that he or she executed the same in his or her authorized capacity and
that by his or her signature in the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.

               In witness whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                               /s/ Karen Gerner
                                            ------------------------------------
                                            Notary Public
(SEAL)
My Commission Expires:


----------------------------------

                                      ENCINO RENOVATION, LLC,
                                      a Delaware limited liability company

WITNESS:                              By:   ARV Assisted Living, Inc., a
                                            Delaware corporation, Manager

/s/ Bernard Wheeler-Medley               By: /s/ Sheila M. Muldoon           
----------------------------------           -----------------------------------
Name: Bernard Wheeler-Medley                   Sheila M. Muldoon
                                               Senior Vice President

WITNESS:                                    By:    Vintage/ABR (Hillsdale), LLC,
                                            a Delaware limited liability
                                            company, Manager

/s/ Todd J. Deltufo                      By: /s/ Thomas R. Burton
----------------------------------           -----------------------------------



                                       17
<PAGE>   18

Name: Todd J. Deltufo                         Thomas R. Burton
----------------------------------            Manager

/s/ Bernard Wheeler-Medley                By: /s/ Eric K. Davidson
----------------------------------           -----------------------------------
Name: Bernard Wheeler-Medley                 Eric K. Davidson
                                             Manager

THE STATE OF California              )
                                     )
COUNTY OF Orange                     )

               On this 30th day of October, 1998, before me, the undersigned
notary public, duly commissioned and sworn, personally appeared Sheila M.
Muldoon, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person that executed the within instrument and acknowledged
to me that he or she executed the same in his or her authorized capacity and
that by his or her signature in the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.

               In witness whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                               /s/ Karen Gerner
                                            ------------------------------------
                                            Notary Public
(SEAL)

My Commission Expires:

----------------------------------



                                       18
<PAGE>   19

THE STATE OF Maryland                )
                                     )
COUNTY OF Baltimore                  )

               On this 30th day of October, 1998, before me, the undersigned
notary public, duly commissioned and sworn, personally appeared Thomas R.
Burton, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person that executed the within instrument and acknowledged
to me that he or she executed the same in his or her authorized capacity and
that by his or her signature in the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.

               In witness whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                               /s/ Patricia L. Baxivanos
                                            ------------------------------------
                                            Notary Public
(SEAL)
My Commission Expires:

        10/1/99
-----------------------------


THE STATE OF California              )
                                     )
COUNTY OF Orange                     )

               On this 30th day of October, 1998, before me, the undersigned
notary public, duly commissioned and sworn, personally appeared Eric K.
Davidson, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person that executed the within instrument and acknowledged
to me that he or she executed the same in his or her authorized capacity and
that by his or her signature in the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.

               In witness whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                               /s/ Karen Gerner
                                            ------------------------------------
                                            Notary Public
(SEAL)
My Commission Expires:


-----------------------------

                                       19
<PAGE>   20

                                      BERKSHIRE RENOVATION, LLC,
                                      a Delaware limited liability company

WITNESS:                              By:   ARV Assisted Living, Inc., a
                                            Delaware corporation, Manager

/s/ Bernard Wheeler-Medley                  By: /s/ Sheila M. Muldoon           
----------------------------------             ---------------------------------
Name: Bernard Wheeler-Medley                   Sheila M. Muldoon
                                               Senior Vice President

WITNESS:                                    By: Vintage/ABR (Hillsdale), LLC, a
                                            Delaware limited liability company,
                                            Manager

 /s/ Todd J. Deltufo                        By: /s/ Thomas R. Burton         
----------------------------------             ---------------------------------
Name: Todd J. Deltufo                          Thomas R. Burton
                                               Manager

 /s/ Bernard Wheeler-Medley                 By:    /s/ Eric K. Davidson         
----------------------------------             ---------------------------------
Name: Bernard Wheeler-Medley                   Eric K. Davidson
                                               Manager

THE STATE OF California              )
                                     )
COUNTY OF Orange                     )

               On this 30th day of October, 1998, before me, the undersigned
notary public, duly commissioned and sworn, personally appeared Sheila M.
Muldoon, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person that executed the within instrument and acknowledged
to me that he or she executed the same in his or her authorized capacity and
that by his or her signature in the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.

               In witness whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                               /s/ Karen Gerner
                                            ------------------------------------
                                            Notary Public
(SEAL)

My Commission Expires:

----------------------------------



                                       20
<PAGE>   21

THE STATE OF Maryland                )
                                     )
COUNTY OF Baltimore                  )

               On this 30th day of October, 1998, before me, the undersigned
notary public, duly commissioned and sworn, personally appeared Thomas R.
Burton, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person that executed the within instrument and acknowledged
to me that he or she executed the same in his or her authorized capacity and
that by his or her signature in the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.

               In witness whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                               /s/ Patricia L. Baxivanos
                                            ------------------------------------
                                            Notary Public
(SEAL)
My Commission Expires:

        10/1/99
-----------------------------


THE STATE OF California              )
                                     )
COUNTY OF Orange                     )

               On this 30th day of October, 1998, before me, the undersigned
notary public, duly commissioned and sworn, personally appeared Eric K.
Davidson, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person that executed the within instrument and acknowledged
to me that he or she executed the same in his or her authorized capacity and
that by his or her signature in the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.

               In witness whereof, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                               /s/ Karen Gerner
                                            ------------------------------------
                                            Notary Public
(SEAL)
My Commission Expires:


-----------------------------


                                       21
<PAGE>   22

FINOVA:
        FINOVA CAPITAL CORPORATION,
        a Delaware corporation


        By:    /s/ Anne M. McNeil
           ----------------------------
               Vice President



                                       22
<PAGE>   23




                                       23
<PAGE>   24

                           SCHEDULE TO LOAN AND SECURITY AGREEMENT


                                 LIST OF COLLATERAL LOCATIONS



<PAGE>   25

                         SCHEDULE TO THE LOAN AND SECURITY AGREEMENT


PENDING LITIGATION MATTERS:


BERKSHIRE - NONE

ENCINO - NONE

ROSSMORE - NONE



<PAGE>   26

                                    EXHIBIT A

                                  REAL PROPERTY



                                       3
<PAGE>   27

                                   EXHIBIT A-1

                          LEGAL DESCRIPTION OF PROPERTY

                           (BERKSHIRE RENOVATION, LLC)


CITY OF BERKELEY

PORTION OF BLOCK 2, AS SAID BLOCK IS SHOWN ON THE "MAP SHOWING THE PROPERTY AND
LOCATION OF THE SPAULDING TRACT AT BERKELEY", FILED AUGUST 7, 1876; IN BOOK 2 OF
MAPS, PAGE 62, IN THE OFFICE OF THE COUNTY RECORDER OF ALAMEDA COUNTY, DESCRIBED
AS FOLLOWS:

BEGINNING AT THE INTERSECTION OF THE WESTERN LINE OF SPAULDING AVENUE, WITH THE
NORTHERN LINE OF BANCROFT WAY, AS SAID AVENUE AND WAY ARE SHOWN ON THE "MAP OF
BANCROFT WAY OPENING, BERKELEY, CALIFORNIA" FILED NOVEMBER 20, 1916 IN BOOK 22
OF MAPS, PAGE 87, IN THE OFFICE OF THE COUNTY RECORDER OF ALAMEDA COUNTY AND
RUNNING THENCE ALONG SAID LINE OF BANCROFT WAY, WESTERLY 192.92 FEET; THENCE
TANGENT WITH THE LAST NAMED COURSE WESTERLY AND NORTHERLY ON A CURVE TO THE
RIGHT, WITH A RADIUS OF 15 FEET A DISTANCE OF 22.40 FEET TO THE SOUTHERN LINE OF
LOT 39, IN SAID BLOCK 2; THENCE ALONG THE LAST NAMED LINE WESTERLY, 0.20 OF A
FOOT TO THE EASTERN LINE OF SACRAMENTO STREET, AS SAID STREET NOW EXISTS; THENCE
ALONG THE LAST NAMED LINE NORTHERLY 253.12 FEET TO THE NORTH LINE OF LOT 34, IN
BLOCK 2; THENCE ALONG THE LAST NAMED LINE AND ALONG THE NORTHERN LINE OF LOT 33,
IN BLOCK 2, EASTERLY 208.25 FEET TO SAID LINE OF SPAULDING AVENUE; AND THENCE
ALONG THE LAST NAMED LINE SOUTHERLY, 248.96 FEET TO THE POINT OF BEGINNING.



                                       4
<PAGE>   28

                                   EXHIBIT A-2

                          LEGAL DESCRIPTION OF PROPERTY

                            (ENCINO RENOVATION, LLC)


PARCEL 1:

THOSE PORTIONS OF LOTS 3 AND 4 IN BLOCK 25 OF TRACT NO. 2955, IN THE CITY OF LOS
ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK
31 PAGES 62 TO 70 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY, DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT IN THE SOUTHERLY LINE OF SAID LOT 4, DISTANT SOUTH 80
DEGREES 39 MINUTES EAST 186.49 FEET FROM THE SOUTHWESTERLY CORNER OF SAID LOT 4;
THENCE NORTH 0 DEGREES 03 MINUTES 30 SECONDS WEST 435.60 FEET; THENCE SOUTH 80
DEGREES 39 MINUTES EAST 101.36 FEET; THENCE SOUTH 0 DEGREES 03 MINUTES 30
SECONDS EAST 435.60 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID LOT 3 IN THE
NORTHERLY LINE OF VENTURA COUNTY ROAD; THENCE ALONG SAID ROAD, NORTH 80 DEGREES
39 MINUTES WEST 101.36 FEET TO THE POINT OF BEGINNING.

EXCEPT THEREFROM THE NORTH 185.00 FEET THEREOF.

PARCEL 2:

AN EASEMENT FOR DRAINAGE PURPOSES OVER THE EASTERLY 5 FEET OF THE NORTH 185.00
FEET OF THOSE PORTIONS OF LOTS 3 AND 4 IN BLOCK 25 OF TRACT NO. 2955, IN THE
CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP
RECORDED IN BOOK 31 PAGES 62 TO 70 INCLUSIVE OF MAPS, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT IN THE SOUTHERLY LINE OF SAID LOT 4, DISTANT SOUTH 80
DEGREES 39 MINUTES EAST 186.49 FEET FROM THE SOUTHWESTERLY CORNER OF SAID LOT 4;
THENCE NORTH 0 DEGREES 03 MINUTES 30 SECONDS WEST 435.60 FEET; THENCE SOUTH 80
DEGREES 39 MINUTES EAST 101.38 FEET; THENCE SOUTH 0 DEGREES 03 MINUTES 30
SECONDS EAST 435.60 FEET TO A POINT IN THE SOUTHERLY LINE OF SAID LOT 3 IN THE
NORTHERLY LINE OF VENTURA COUNTY ROAD; THENCE ALONG SAID ROAD, NORTH 80 DEGREES
39 MINUTES WEST 101.36 FEET TO THE BEGINNING.



                                       5
<PAGE>   29

                                   EXHIBIT A-3

                          LEGAL DESCRIPTION OF PROPERTY

                           (ROSSMORE RENOVATION, LLC)




THAT PORTION OF LOT 7 OF TRACT NO. 215, IN THE CITY OF LOS ANGELES, COUNTY OF
LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 14 PAGES 42 AND 43
OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS
FOLLOWS:

BEGINNING AT A POINT IN THE SOUTH LINE OF ROSEWOOD AVENUE, AS SHOWN ON MAP OF
TRACT NO. 3345, AS PER MAP RECORDED IN BOOK 42 PAGES 63 AND 64 OF MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, SAID POINT BEING IN THE WESTERLY
END OF CURVE OF THE PROPERTY LINE CURVE, AT THE SOUTHWEST CORNER OF ROSEWOOD
AVENUE, AND ROSSMORE AVENUE; THENCE SOUTH 89 DEGREES 57 MINUTES 45 SECONDS WEST
244.85 FEET; THENCE SOUTH 0 DEGREES 14 MINUTES 46 SECONDS WEST 150 FEET TO THE
BEGINNING OF A TANGENT CURVE CONCAVE TO THE NORTHEAST HAVING A RADIUS OF 99.51
FEET; THENCE SOUTHEASTERLY ALONG SAID CURVE, 156.80 FEET TO THE END OF SAME;
THENCE SOUTH 0 DEGREES 14 MINUTES 45 SECONDS WEST 85 FEET; THENCE NORTH 89
DEGREES 57 MINUTES 45 SECONDS EAST 175 FEET TO THE WEST LINE OF ROSSMORE AVENUE;
THENCE NORTH 0 DEGREES 14 MINUTES 15 SECONDS EAST ALONG THE WEST LINE OF
ROSSMORE AVENUE, 304.85 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE TO THE
SOUTHWEST, HAVING A RADIUS OF 30 FEET; THENCE NORTHWESTERLY ALONG SAID CURVE,
47.27 FEET TO THE POINT OF BEGINNING.




                                       6
<PAGE>   30

                                    EXHIBIT B

                             PERMITTED ENCUMBRANCES



                                       7
<PAGE>   31

                       LIST OF CONSTRUCTION LOAN EXHIBITS



               Exhibit C      Budget

               Exhibit D     Work Progress Schedule

               Exhibit E     Standard Construction Loan and Administrative
                             Procedures
                             (Work-Related Advance)

               Exhibit F-1   AIA 702 and 703 Forms

               Exhibit F-2   Affidavit of Borrower

               Exhibit F-3   Waiver of Liens

               Exhibit F-4   Change Order Approval Request (AIA Document G713)

               Exhibit G     Initial Advance Disbursement Schedule



                                       8
<PAGE>   32

                                    EXHIBIT C

                                     Budget



<PAGE>   33

                                    EXHIBIT D

                             Work Progress Schedule



<PAGE>   34

                                    EXHIBIT E


                      FINOVA CAPITAL CORPORATION ("Lender")
                           STANDARD CONSTRUCTION LOAN
                            ADMINISTRATIVE PROCEDURES

                       INITIAL AND SUBSEQUENT LOAN ADVANCE
                             REQUIREMENTS AND EVENTS


               A.     With each Work-Related Advance Request Borrower must
complete, execute and deliver to Lender:

                      1.     An Application and Certificate For Payment (AIA
                             Document G702) and Continuation Sheet(s) (AIA
                             Document G703) for all direct costs (Exhibit F-1).

                      2.     Affidavit of Borrower for Advance (Exhibit F-2).

                      3.     Waiver of Liens (Exhibit F-3) or such form as is
                             required by law for previous payment.

                      4.     Change Order Approval Request (AIA Document G713)
                             when applicable (Exhibit F-4).

                      5.     Invoices supporting all amounts shown in columns E
                             and F of AIA Document G702 and G703.

                      6.     Any required surveys.

                      7.     Such other items as Lender requests which are
                             necessary to evaluate the request for the
                             Work-Related Advance and the satisfaction of the
                             conditions precedent thereto.

               B. The following events must take place prior to each
Work-Related Advance:

                      1.     Contractor requests site inspection from Lender's
                             Inspector.

                      2.     Contractor provides Lender's Inspector with a copy
                             of the AIA Document G702 and G703.

                      3.     Lender's Inspector will perform a physical
                             inspection to review the work in place and make a
                             certification and recommendation to Lender.
                             Lender's Inspector forwards his report,
                             certification and recommendation to Lender.

                      4.     Lender will request that the Title Agent review the
                             public records, advise Lender of the same, and
                             forward to Lender endorsement(s) as required
                             pursuant to the Loan and Security Agreement
                             (herein, the "Loan Agreement"), such endorsements
                             to be dated as of the date of Work-Related Advance.

                      5.     Lender will review the Work-Related Advance Request
                             and input of Lender's Inspector of the Title Agent.
                             The Work-Related Advance Request must be
                             appropriate, complete and in proper order. The
                             order of the Work-Related Advance Request package
                             will determine the processing time needed.



<PAGE>   35

                      6.     Borrower shall have all applicable licenses,
                             permits and certificates for all Work under
                             construction at the time the Work-Related Advance
                             was requested.

                      7.     All other conditions of the Loan Documents are
                             satisfied.

               C. Upon receipt from Lender (or Title Agent, if applicable),
Borrower will execute and deliver to Lender a funding letter in connection with
the Work-Related Advance.

               D. All items, except for the escrow funding letter required to be
delivered to Lender pursuant to this Exhibit shall be delivered to Lender and
Lender's Inspector at least ten (10) Business Days prior to the requested
Work-Related Advance.



                                       2
<PAGE>   36

                                   EXHIBIT F-1

                              AIA 702 and 703 Forms



<PAGE>   37

                                   EXHIBIT F-2


                        BORROWER'S AFFIDAVIT FOR ADVANCE


Borrower:      ___________________________________          Date:_______________

Project:       ___________________________________

Request No.:_________________

Loan No.:_____________________Period________________to__________________

Amount:______________________

        In connection with and in order to induce FINOVA Capital Corporation
("Lender"), to advance the amount requested above, Borrower hereby represents,
warrants and stipulates as follows:

        1. The work listed in this Work-Related Advance Request Package
("Request") has been completed in accordance with the Loan and Security
Agreement dated ___________ between the undersigned and Lender (with any
amendments, the "Loan Agreement"); all obligations for work submitted and
received on previous Borrower's Work-Related Advance Request have now been paid
in full (except for retainage); the funds requested at this time shall be
applied only to the obligations for work set forth in this Request and that all
insurance policies (including without limitation, Builder's Risk and General
Liability Coverage policies) required by the Loan Agreement are in full force
and effect.

        2. Attached hereto are the names of all contractors, subcontractors,
suppliers and materialmen who have performed or who will be performing Work and
whose names have not been previously delivered to Lender in writing. Copies are
attached hereto of contracts with all such contractors, subcontractors,
suppliers and materialmen whose contracts are required to be, but have not yet
been, delivered to Lender pursuant to the terms of the Loan Agreement.

        3. All Work performed is in substantial accordance with the approved
Plans and no changes have been made in the approved Plans, except as are
permitted pursuant to the Loan Agreement or have been previously approved in
writing by Lender.

        4. The amounts and percentages set forth on the attached schedules,
along with supporting documentation for each budgeted item and the Balance To
Finish in accordance with the AIA Document G702 and G703 are true and correct to
the best of Borrower's knowledge.

        5. The following are included as part of this Request:

               Application and Certificate for Payment (AIA G702)
               Continuation Sheets (AIA G703)
               Request for Advance - Indirect Costs
               Check Sheet Form

        6. No material adverse change has occurred in the Improvements or, since
the date of the latest financial statements given by or on behalf of Borrower to
Lender, in the financial condition of Borrower or in Borrower's business or
operations.

        7. All representations and warranties by Borrower contained in the Loan
Documents are true and correct as of the date hereof.



<PAGE>   38

        8. No Event of Default, or no act or event which after notice and/or
lapse of time would constitute an Event of Default, has occurred and is
continuing.

        9. Borrower has complied with all other agreements or conditions
required by the Agreement to be performed or complied with prior to or at the
date of the requested Advance.

        10. Capitalized terms not otherwise defined herein shall have the
meaning given to them in the Loan Agreement.

                                            Very truly yours,




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



                                       5
<PAGE>   39

                                   EXHIBIT F-3

                                 Release of Lien

        KNOW ALL MEN BY THESE PRESENTS, that the undersigned ___________________
for and in consideration of the sum of __________ Dollars (US $___________)
lawful money of the United States of America, to the undersigned in hand paid,
the receipt whereof is hereby acknowledged, does hereby waive, release, remise
and relinquish the undersigned'/s right to claim, demand, impress or impose a
lien or liens in the sum of __________ Dollars ($__________) for materials
furnished (or any other kind or class of lien whatsoever) up to the _____ day of
__________________, 199__, on the following described property:



                               [Legal Description]


        Dated this ______ day of _________,  199__, at _____________  County,
California.


                                            LIENOR'S NAME



                                            By:_______________________________
                                               Authorized Representative



<PAGE>   40

                                   EXHIBIT F-4

                     Change Order Approval Request AIA G713



<PAGE>   41

                                    EXHIBIT G

                      Initial Advance Disbursement Schedule