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FINOVA                                               LOAN AND SECURITY AGREEMENT
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                                                                   Exhibit 10.15

FINOVA

                                   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 ID NO.:           SEE SCHEDULE, SECTION 9.16
DATED AS OF:          OCTOBER 30, 1998

THIS MASTER LOAN AND SECURITY AGREEMENT ("Agreement") dated the date set forth
above, is entered into by and between the borrowers named above (individually, a
"Borrower," and collectively, the "Borrowers"), whose primary addresses are as
set forth on the Schedule, and who may be given notice at the address set forth
above, and FINOVA CAPITAL CORPORATION ("FINOVA"), whose address is 311 South
Wacker Drive, Suite 4400, Chicago, Illinois 60606, for the purpose of financing
the acquisition by each of the above Borrowers of an assisted living community
(hereinafter referred to collectively as the "Facilities") and the construction
of certain improvements and upgrades to each Facility's physical plant. As used
herein, the terms "Borrower" and "Borrowers" shall mean and apply to each of the
above-referenced entities, both individually and collectively. As a result, any
provision of this Agreement which imposes an affirmative obligation on Borrower
or Borrowers to perform some duty or obligation shall apply equally to all
entities comprising Borrower, and each provision hereof imposing a negative
restriction obligating Borrower or Borrowers to avoid or refrain from a
specified activity or conduct shall be construed to apply equally to each entity
comprising Borrower.

1.      LOANS.

        1.1 Total Facility. Upon the terms and conditions set forth herein and
provided that no Event of Default or Incipient Default shall have occurred and
be continuing, FINOVA shall, upon Borrower's request and subject to the other
terms and conditions of this Agreement, make advances to Borrower in an
aggregate outstanding principal amount not to exceed the Total Facility amount
(the "Total Facility") set forth on the schedule hereto (the "Schedule"). The
Schedule is an integral part of this Agreement and all references to "herein",
"herewith" and words of similar import shall for all purposes be deemed to
include the Schedule.

        1.2 Loans. Advances under the Total Facility (the "Loans" and
individually, a "Loan") shall be comprised of the amounts shown on the Schedule.

        1.3 Loan Account. All Advances made hereunder shall be added to and
deemed part of the Obligations when made. FINOVA may from time to time charge
all Obligations of Borrower to Borrower's loan account with FINOVA.

2.      CONDITIONS PRECEDENT.

        2.1 Initial Advance. The obligation of FINOVA to make the initial
Advance hereunder is subject to the fulfillment, to the satisfaction of FINOVA
and its counsel, of each of the following conditions on or prior to the date set
forth on the Schedule. To the extent individual items below relate to the
Facilities or the Collateral, such items shall be interpreted to refer solely to
the individual Facility to be acquired or developed 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) Loan Documents. FINOVA shall have received (i) each of the
        Loan Documents, executed by each of the parties thereto and, if
        applicable, duly acknowledged for


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FINOVA                                               LOAN AND SECURITY AGREEMENT
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        recording or filing in the appropriate governmental offices; and (ii)
        such other documents, instruments and agreements in connection herewith
        as FINOVA shall reasonably require, executed, certified and/or
        acknowledged by such parties as FINOVA shall designate. Except to the
        extent specifically required under this Agreement, the Loan Documents
        shall be delivered by each of the individual Borrowers separately, in
        connection with the individual Closing applicable to such Borrower with
        respect to its particular Facility. In addition to this Agreement and
        the Schedule, which shall be executed and delivered by all Borrowers
        collectively, the Projected Cash Shortfall Protection and the Operating
        Deficit and Deficiency Payment Agreement shall be executed and delivered
        by ARV, or jointly by ARV and Vintage ABR Hillsdale, respectively,
        concurrently with the execution and delivery of this Agreement;

                (b) Termination By Existing Lender. Borrower's existing
        lender(s) shall have executed and delivered UCC Termination Statements
        and other documents evidencing the termination of its liens and security
        interest in the assets of Borrower;

                (c) Charter Documents. FINOVA shall have received copies of
        Borrower's, ARV's, and Vintage ABR Hillsdale's Articles of Organization,
        as amended, modified, or supplemented to the Closing Date, certified by
        the Secretary of Borrower;

                (d) Good Standing. FINOVA shall have received a certificate of
        standing with respect to Borrower and, if required by FINOVA, with
        respect to the other Loan Parties, dated within ten (10) Business Days
        of the Closing Date, by the Secretary of State of the state of
        organization of Borrower or such Loan Party (other than a Borrower's
        general contractor, architect, and/or engineer), which certificate shall
        indicate that Borrower or such Loan Party is in good standing in such
        state;

                (e) Foreign Qualification. FINOVA shall have received
        certificates of foreign qualification with respect to Borrower, dated
        within ten (10) Business Days of the Closing Date, issued by the
        secretary of state of each state in which Borrower's failure to be duly
        qualified or licensed will have a material adverse affect on the
        financial condition or assets of Borrower, indicating that Borrower is
        in good standing;

                (f) References and Searches. Satisfactory customer, vendor,
        credit and bank reference checks and satisfactory UCC, tax lien,
        judgment and litigation searches on each Borrower and on each of ARV,
        Vintage ABR Hillsdale, and Vintage ABR Development, all to be performed
        or obtained by FINOVA at Borrower's expense. With respect to any such
        entity which is newly formed, FINOVA agrees to coordinate with Borrowers
        relative to the appropriate scope of searches to be requested, and to
        consider alternate methods of obtaining assurance that such entities
        have not incurred debt or other liabilities, and have not become subject
        to any liens, subsequent to their formation. With respect to any entity
        which is a reporting company to the Securities and Exchange Commission
        (the "SEC"), FINOVA agrees to accept copies of such entity's SEC reports
        in lieu of conducting searches, to the extent such reports set forth in
        reasonable detail comparable information to that being sought by FINOVA.
        Without limiting the scope of the bank reference checks described above,
        FINOVA shall be satisfied that ARV has not been in monetary default with
        respect to its existing lending arrangements, and that no covenant
        defaults which may have occurred were formally declared as such by the
        applicable lending institution;

                (g) Authorizing Resolutions and Incumbency. FINOVA shall have
        received a certificate from the managing members of Borrower attesting
        to (i) the adoption of resolutions by Borrower's members authorizing the
        borrowing of money from FINOVA and execution and delivery of this
        Agreement and the other Loan Documents to which Borrower is a party, and
        authorizing specific officers of Borrower to execute same, and (ii) the
        authenticity of original specimen signatures of such officers;

                (h) Insurance.* FINOVA shall have received the insurance
        certificates and certified copies of policies required by Section 4.4
        hereof, in form and substance reasonably satisfactory to FINOVA and its
        counsel;

                (i) No Material Adverse Changes. Prior to the Closing Date,
        there shall have occurred no material adverse change in the financial
        condition of Borrower, the Facilities, ARV, or Vintage from that shown
        on the financial statements for Borrower, ARV, or Vintage, as
        applicable, most recently delivered to FINOVA prior to the date hereof
        (which shall not be dated earlier than forty-five (45) days prior to the
        Closing) or in the Collateral from the date the Collateral was last
        inspected by FINOVA. At the closing, Borrower shall deliver to FINOVA an
        officer's certification confirming that Borrower is unaware of the
        existence of any such material adverse change in Borrower's financial
        condition;

                (j) Searches; Certificates of Title.* FINOVA shall have received
        searches reflecting the filing of its financing statements and fixture
        filings in such jurisdictions as it shall determine;

                (k) Governmental Approvals.* Borrower shall deliver to FINOVA,
        and FINOVA shall be satisfied with all certificate(s) of occupancy for
        the Facilities, any environmental licenses or approvals for operation
        within or on the Real Property, if any; and any other applicable
        governmental permits, approvals, consents, licenses and certificates for
        the use and operation of the Property or which may affect the value of
        the Collateral, including without limitation any and all Licenses.
        FINOVA shall have reviewed and approved the regulatory scheme having
        jurisdiction over assisted living communities in the states in which the
        Facilities are located;

                (l) Title Insurance Commitment.* Borrower shall deliver to
        FINOVA a commitment (the "Title Commitment") to issue an ALTA extended
        coverage lender's policy of title insurance or equivalent form
        acceptable to FINOVA (the "Title Policy") underwritten by a title
        company acceptable to FINOVA (the "Title Company") in an amount not less
        than the amount of the Loan and insuring the lien of the Mortgage to be
        a first priority lien on the Real Property, subject only to the
        Permitted Encumbrances and including such reasonable endorsements and
        co-insurance as FINOVA requires in its discretion. The Title Policy
        shall contain no exception for mechanics' or materialmen's liens and
        shall otherwise be satisfactory in form and substance to FINOVA;

                (m) Survey.* Borrower shall deliver to FINOVA an ALTA/ACSM
        survey (or a survey prepared in accordance with equivalent state
        standards acceptable to FINOVA) of the Real Property by a licensed
        surveyor acceptable to FINOVA and the Title Company dated not more than
        sixty (60) days prior to the Closing Date and certified in favor of
        Borrower, FINOVA, and the Title Company (which certification shall be in
        a form acceptable to FINOVA and the Title Company) showing, without
        limitation, the location of any existing improvements contained in the
        Facilities, means of ingress and egress to a public right of way, and
        all easements and other title exceptions able to be located thereon;

                (n) Taxes.* Borrower shall provide evidence that all taxes and
        assessments levied against or affecting Borrower or the Collateral
        (including payroll taxes) have been paid current; or in the event
        Borrower has commenced a legal or administrative challenge to any such
        tax or assessment, evidence that such liability has been bonded over, or
        that funds for the payment thereof (in the amount of the original
        assessment) have been escrowed with an independent third party with
        provisions for the payment thereof satisfactory to FINOVA;

                (o) Fees. Borrower shall have paid all fees payable by it on the
        Closing Date pursuant to this Agreement; 

                (p) Opinion of Counsel. FINOVA shall have received an opinion of
        Borrower's counsel covering such matters as FINOVA shall determine in
        its sole discretion;


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FINOVA                                               LOAN AND SECURITY AGREEMENT
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                (q) Officer's Closing Certificate.* FINOVA shall have received a
        certificate from the managing members of each Borrower, attesting to the
        accuracy of each of the representations and warranties of Borrower set
        forth in this Agreement, the fulfillment of all conditions precedent to
        the initial Advance hereunder and the compliance with all covenants;

                (r) Solvency Certificate.* If requested by FINOVA, a signed
        certificate of the Borrower's managing members concerning the solvency
        and financial condition of Borrower, in a form acceptable to FINOVA;

                (s) Mortgage Banker. FINOVA has received and approved evidence
        that any fee due to any broker or mortgage banker retained by Borrower
        to arrange the Loan has been paid or shall be paid at Closing. In any
        event, all such fees are to be borne solely by Borrower, and Borrower
        shall indemnify and hold FINOVA harmless from any liability for the
        payment of such brokerage fees.

                (t) Hazardous Waste; Structural and Mechanical.* Borrower shall
        provide to FINOVA, at Borrower's sole cost and expense, a structural
        inspection report and mechanical inspection report covering the real and
        personal property components of the Collateral prepared by a
        construction consultant or engineer either selected or recommended by
        FINOVA or otherwise reasonably acceptable to FINOVA. To the extent that
        such report requires the making of any Capital Expenditures, Borrower
        shall include such Capital Expenditures in its Budget, and FINOVA's
        inspector shall have reviewed and approved the Budget. Borrower shall
        also provide to FINOVA, at Borrower's sole cost and expense, a Phase I
        Environmental Site Assessment of the Property (the "Site Assessment").
        The results of such Site Assessment and structural and mechanical
        inspections must be satisfactory to FINOVA. FINOVA has the right to
        require Borrower to retain the services of an environmental engineer
        and/or structural/mechanical engineer either selected or recommended by
        FINOVA, or otherwise reasonably acceptable to FINOVA, to perform such
        additional structural and mechanical assessments and/or any additional
        environmental investigations as may be required by FINOVA, in its
        discretion. Such investigations may include but are not limited to soil
        and ground water testing to fully identify the scope of any
        environmental issues impacting the Real Property and/or an assessment of
        the mechanical and structural fitness of the improvements located on the
        Real Property. All costs incurred in performing any additional
        investigation, whether environmental, structural or mechanical, shall be
        borne by Borrower. If any environmental, structural and/or mechanical
        issues exist prior to the closing of the Loan, FINOVA reserves the
        right, in its discretion, to terminate this Agreement if FINOVA in good
        faith believes that such issues materially and adversely effect either
        the applicable Real Property, the Facility located thereon, or both.
        However, if FINOVA determines, that known environmental, structural
        and/or mechanical problems with respect to the Real Property are capable
        of being resolved at a reasonable cost, FINOVA may proceed with the
        closing and funding of the Loan provided that sufficient funds, as
        determined by FINOVA, are held back from the Loan proceeds and deposited
        into an escrow account for the purpose of securing all aspects of
        correcting the subject environmental, structural and/or mechanical
        problems. Release of such escrowed funds will be controlled exclusively
        by FINOVA;

                (u) Zoning.* Borrower shall provide evidence satisfactory to
        FINOVA that the Real Property is properly zoned for its present and
        contemplated use and that any and all zoning stipulations have been
        complied with, together with evidence that Borrower has obtained a
        special use permit and any other permits or approvals necessary, under
        applicable zoning regulations, to use each of the Facilities for their
        intended purpose;

                (v) Access, Parking and Common Areas.* FINOVA shall be satisfied
        that all easements and other agreements providing for public access to,
        adequate parking for, and the maintenance of any and all common areas
        related to the Facilities are in effect, fully enforceable, and fully
        assignable to FINOVA as part of its collateral for the Loan and that the
        Property has legal access to publicly dedicated streets. In that regard,
        FINOVA shall have received satisfactory evidence that the ratio of
        parking spaces to number of residents for each of the Facilities is in
        compliance with all applicable codes and regulations;

                (w) Utilities.* Borrower shall provide evidence satisfactory to
        FINOVA that all utilities, including without limitation, water, sewer,
        gas and electricity, are available to the Facilities in amounts
        necessary for its present and contemplated use;

                (x) Construction Information.* Borrower shall provide FINOVA
        with legible copies of all ongoing construction agreements for any and
        all construction on the Real Property (and all permits therefor),
        as-built plans and specifications for the buildings (to the extent
        available), any warranties for building systems and all service
        contracts for building systems affecting the Facilities;

                (y) Review and Approval of Property-Related Documentation.*
        Borrower shall have provided to FINOVA, and FINOVA shall have reviewed
        and approved all documentation deemed material by FINOVA to the
        operation and present and contemplated use of the Facilities. Such
        material shall include, without limitation, all license or franchise
        agreements; employment or management agreements; warranties; service
        and/or support maintenance agreements; reservation system agreements;
        service contracts; parking, common area and common wall easement
        agreements and management agreements currently in effect. Borrower shall
        further have provided evidence satisfactory to FINOVA that the
        Management Agreement has been amended to provide for the payment of
        management fees in an amount no greater than that set forth in the
        Negative Covenants section of the Schedule;

                (z) Equipment Leases.* FINOVA shall have reviewed and approved
        such leases and financing agreements covering furniture, fixtures,
        equipment and other personal property used on the Property (the
        "Equipment Leases") as FINOVA requests to review. The obligations under
        the Equipment Leases shall be considered "indebtedness for borrowed
        money", "debt" and "expense" of Borrower for purposes of this Agreement.
        In addition, Borrower shall use its best efforts to provide to FINOVA
        written agreements from each of the equipment lessors or financiers
        under such Equipment Leases as FINOVA deems material granting to FINOVA
        rights to notice and cure upon any default by Borrower under such
        Equipment Leases;

                (aa) Title Insurance Policy.* Borrower shall have provided to
        FINOVA the Title Policy as defined in Section 2.1(l) hereof together
        with evidence that the liens and security interests to be granted to
        FINOVA have been duly perfected as first and prior liens and security
        interests, and that there are no other financing statements or liens
        filed against Borrower, or the property of Borrower except for the
        Permitted Encumbrances. In lieu of the Title Policy, Borrower may
        deliver an irrevocable commitment from the Title Company to insure the
        Mortgage as a first and prior mortgage subject only to the Permitted
        Encumbrances;


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FINOVA                                               LOAN AND SECURITY AGREEMENT
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                (bb) Pro Forma Financial Statements.* FINOVA has received and
        approved a pro forma balance sheet and cash flow projections of Borrower
        effective as of the Loan Closing and assuming an advance of the full
        amount of the Loan has been made. Such balance sheets and cash flow
        projections shall show that the Borrower will have a tangible net worth
        in a minimum amount to be considered solvent immediately following
        initial funding of the Loan, that the Borrower will have reasonably
        sufficient capital for the conduct of its business following initial
        funding of the Loan, and that the Borrower will not incur debts beyond
        its ability to pay such debts as they mature;

                (cc) ADA Compliance.* As of the Closing Date, the Facilities and
        the applicable Borrower's employment practices shall be in compliance
        with the Americans with Disabilities Act of 1990 ("ADA"), or, if any
        renovations of Borrower's facilities or modifications of Borrower's
        employment practices shall be required to bring them into compliance
        with the ADA, review and approval by FINOVA of Borrower's proposed plan
        to come into such compliance. Borrower shall deliver representations and
        warranties to FINOVA concerning Borrower's compliance with the ADA, and
        no evidence shall have come to the attention of FINOVA indicating that
        Borrower is not in compliance with the ADA (except to the extent that
        FINOVA has reviewed and approved Borrower's plan to come into
        compliance);

                (dd) Disclosure. There shall not have occurred any determination
        by FINOVA that Borrower has failed to disclose any material fact or
        misrepresented any material fact reasonably relied upon by FINOVA in
        issuing the Commitment;

                (ee) Events of Default. No Event of Default and no Incipient
        Default shall have occurred and be continuing.

                (ff) Schedule Conditions. Borrower shall have complied with all
        additional conditions precedent as set forth in the Schedule attached
        hereto; and

                (gg) Other Matters. All other documents and legal matters in
        connection with the transactions contemplated by this Agreement shall
        have been delivered, executed and recorded and shall be in form and
        substance satisfactory to FINOVA and its counsel.

        2.2 Construction Term Advances - General Conditions. The obligation of
FINOVA to make Advances of the Loan 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 above and set forth in Section 2.1 above:

               (a) Borrower shall have provided to FINOVA and FINOVA shall have
approved in all respects:

                    (i) The general Construction Contract with the General
                Contractor, covering the Work (as the same may be modified from
                time to time with FINOVA's prior written consent, the "General
                Contract"), which shall be a "stipulated sum" (i.e., guaranteed
                maximum price) contract reflecting a total cost of construction
                in an amount not greater than the construction costs reflected
                in the Budget, and which shall provide, without limitation (a)
                terms regarding the timing and manner of payments to the General
                Contractor acceptable to FINOVA; (b) that the Work shall be
                fully completed for the guaranteed fixed or maximum price (as
                approved by FINOVA); (c) that the General Contractor must begin
                and complete construction by certain specified dates in
                accordance with the Loan Documents; (d) each Borrower must have
                committed to an acceptable schedule of construction prior to the
                first Advance made with respect to such Borrower; and (e) change
                orders will be permitted only up to amounts of Ten Thousand
                Dollars ($10,000) for any single occurrence and up to One
                Hundred Thousand Dollars ($100,000) in the aggregate;

                    (ii) Consent from the General Contractor and any other
                Contractor to the assignment of their contracts to FINOVA; and
                such certificates and financial information as FINOVA may
                request from the General Contractor and any other direct
                Contractors regarding their financial viability, the adequacy of
                the Budget and such other matters as FINOVA may deem
                appropriate;

                    (iii) A list of all Contractors and major sub-Contractors
                who will perform work (including a summary of trades for which
                each such sub-Contractor shall be responsible) and a resume and
                client references for the General Contractor and major
                sub-Contractors. FINOVA shall have reviewed and approved the
                financial statements, client and project list, and client
                references with respect to the General Contractor and such major
                sub-contractors. Without limiting the generality of the
                foregoing, FINOVA must be satisfied with the financial strength
                and qualifications of the General Contractor and all major
                sub-contractors;

                    (iv) The Architect/Engineer Agreement and consent to the
                assignment of that agreement to FINOVA; such certificates as
                FINOVA may require from the Architect/Engineer regarding the
                adequacy of the Plans (including, without limitation, their
                compliance with the Americans With Disabilities Act and all
                other applicable laws and regulations) and the Budget and such
                other matters as FINOVA may deem pertinent;

                    (v) The Plans which shall indicate that they have been
                approved by all necessary governmental authorities;

                    (vi) The Budget;

                    (vii) A detailed draw schedule;

                    (viii) The Work Progress Schedule;

                    (ix) All other Principal Work-Related Items and all other
                Contracts, Intangibles, Licenses and Permits;

                    (x) A payment and performance bond or bonds which is/are
                issued by a surety satisfactory to FINOVA and in a form
                satisfactory to FINOVA, covering contracts for the Improvements
                and naming FINOVA as co-obligee;

                    (xi) A soils test report with respect to the suitability of
                the soils on the Real Property for purposes of constructing the
                Work;

                    (xii) If required by FINOVA, a traffic study with respect to
                the impact of existing and anticipated traffic upon the
                Facilities;

                    (xiii) A flood and drainage study with respect to the Real
                Property and the Improvements;

                    (xiv) Financial statements for the last two (2) years and
                federal employer tax identification numbers for the General
                Contractor, any other direct Contractors, and, if required by
                FINOVA, the major sub-Contractors; and

                    (xv) Copies of all other direct contracts with Contractors
                and all major sub-Contracts all of which shall be acceptable to
                FINOVA.

               (b) FINOVA's representatives shall have completed an inspection
of each Facility and shall be satisfied in their Permitted Discretion with the
findings of such inspection. FINOVA shall have received a satisfactory report
from FINOVA's Inspector.

               (c) FINOVA shall have received satisfactory evidence that
Borrower has obtained all necessary approvals and permits of governmental
agencies having jurisdiction over each Facility for the construction of the
Improvements.

               (d) FINOVA shall have approved the manner in which construction
costs will be paid.

               (e) Borrower shall not have commenced any Work on the Real
Property prior to recordation of the Mortgage, if it would affect priority of
the Mortgage.

               (f) Adverse Events Affecting ARV. In the event that, during the
construction phase of the Facilities, ARV goes into material default with
respect of its lending arrangements, FINOVA shall have the right, at FINOVA's
option, to withdraw FINOVA's commitment to fund the acquisition and development
of the Facility by any Borrower as to which such Borrower's Closing has not yet
occurred (but without such event giving rise to an Event of Default under any
portion of the Loan as to which a Closing has occurred unless such event would
independently constitute an Event of Default under the Projected Cash Shortfall
Protection). For purposes hereof, the term "Material Default" means a monetary
default resulting


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FINOVA                                               LOAN AND SECURITY AGREEMENT
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either from the failure of ARV to make one or more then due payments aggregating
in excess of $250,000 (including, without limitation, any failure to pay
Indebtedness in excess of $250,000 which has become due pursuant to an
acceleration of the maturity of such Indebtedness), an event of insolvency or
bankruptcy, or any default pursuant to which the lender under such lending
arrangement gives ARV a default notice.

        2.3 Conditions Specific to Individual Construction Term Advances. In
addition to all other terms and conditions set forth herein, each Advance shall
be subject to satisfaction of all of the following conditions and limitations:

               (a) Advances shall be made no more frequently than monthly as the
Work progresses and each such monthly disbursement shall be based upon actual
completed work in place rather than upon percentage of completion. Each Advance
shall be in an amount not to exceed ninety percent (90%) of expenditures for
labor performed and materials supplied in connection with the construction of
the Improvements for the period immediately proceeding that particular Advance
(provided that FINOVA may, but shall not be obligated to, advance more than
ninety percent (90%) of the costs of certain materials, if deemed appropriate by
FINOVA in its sole discretion, exercised in good faith,).

               (b) FINOVA shall have no obligation to make an Advance
(including, without limitation, the initial Advance) if the undisbursed portion
of the Loan (or, in reference to the initial Advance, the full Loan amount) is
less than the remaining Completion Costs, as defined in Section 23 of the
Construction Covenants Section, until Borrower has deposited the Required
Completion Assurance Deposits.

               (c) FINOVA shall withhold from each Work-Related Advance an
amount equal to ten percent (10%) of such costs (the "Basic Retainage") or such
greater amount as is provided for in the General Contract or any other
Construction Contract for the Work (such greater amount being referred to herein
as the "Additional Retainage"). The Basic Retainage shall be funded by FINOVA
to, or at the direction of, Borrower upon Borrower's written certification to
FINOVA that all "punch list items" have been resolved to Borrower's
satisfaction, accompanied by a certificate from the Borrower's
Architect/Engineer and FINOVA's Inspector certifying to the same, and subject to
FINOVA's approval of such items. The Additional Retainage shall be released at
the times specified in the applicable Construction Contract;

               (d) Each Work-Related Advance shall be conditioned upon FINOVA's
receipt and approval of all items required to be delivered by Borrower pursuant
to Exhibit E hereof.

               (e) Advances shall be subject to the receipt of the Title Policy,
Title Policy endorsements required pursuant to Section 16 of the Construction
Covenants Section , trailing mechanics' and materialmen's lien waivers on a
thirty (30) day basis and any surveys required pursuant to Section 18 of the
Construction Covenants Section.

               (f) FINOVA will make the initial Advance and the final Advance
directly to the Title Agent. Other Advances may, at Borrower's election, be made
directly to Borrower provided that all conditions precedent to the making of an
Advance have been satisfied.

               (g) FINOVA shall have the right to approve or disapprove
disbursements for stored or ordered goods. Without limiting the generality of
such right, FINOVA may condition its approval of disbursements of the Loan for
payments of or deposits upon stored or ordered goods upon FINOVA's prior receipt
of the following:

                    (i) Evidence satisfactory to FINOVA that such goods are
                covered by the insurance policies required to be delivered
                pursuant to the Loan Agreement;

                    (ii) Evidence satisfactory to FINOVA from the vendor of such
                goods that, upon full payment to the vendor, ownership of such
                goods will vest in the name of Borrower free and clear of any
                liens or claims of the vendor or any other third party;

                    (iii) (a) Evidence satisfactory to FINOVA that the goods are
                and upon disbursement shall be stored upon the Real Property in
                a manner which is adequate to protect the goods against theft
                and damage and otherwise satisfactory to FINOVA; or

                          (b) if the goods will not be stored upon the Real
                    Property at disbursement, evidence (including the original
                    warehouse receipt) satisfactory to FINOVA that the goods are
                    being fabricated or sold by a reputable and creditworthy
                    vendor, that the goods are being or will be stored in a
                    bonded warehouse or storage yard unless the goods are still
                    being fabricated and that the warehouse or storage yard has
                    been notified of FINOVA's security interest.

               (h) FINOVA shall have been provided with paid invoices relating
to the construction of Improvements for all Work through the date of the
previous Advance.

               (i) No intervening matters shall have affected the priority of
FINOVA's Mortgage.

               (j) FINOVA shall have been provided with a certification by
Borrower, Borrower's supervising architect, the General Contractor and FINOVA's
Inspector that: (a) all Work was performed in substantial accordance with the
Plans; (b) all governmental licenses and permits required for the Improvements
as then completed have been obtained; (c) the Improvements as then completed do
not violate and if further completed in accordance with the Plans will not
violate any law, ordinance, rule or regulation or any covenant, condition or
restriction affecting the Facility; (d) the remaining undisbursed proceeds of
the Loan are sufficient to pay for the completion of the Improvements; and (e)
the Advance is in an amount not in excess of the value of the Work and materials
for which the Advance is requested.

               (k) FINOVA shall have been provided with evidence that any
inspections required by any governmental authority having jurisdiction over the
Facility have been completed with results satisfactory to that authority.

               (l) There shall exist no Event of Default or Incipient Default,
and FINOVA shall have been provided with a certification to that effect from
Borrower.

3.      INTEREST RATE AND OTHER CHARGES.

        3.1 Interest; Fees. Borrower shall pay FINOVA interest on the daily
outstanding balance of Borrower's loan account at the per annum rate set forth
on the Schedule. Borrower shall also pay FINOVA the fees set forth on the
Schedule.

        3.2 Default Interest Rate. Upon the occurrence and during the
continuation of an Event of Default, Borrower shall pay FINOVA interest on the
daily outstanding balance of Borrower's loan account at a rate per annum (the
"Default Rate") which is two percent (2%) in excess of the rate which would
otherwise be applicable thereto pursuant to the Schedule.

        3.3 Inspection Costs. Borrower shall pay FINOVA's reasonable travel
expenses and other out-of-pocket expenses incurred in inspecting the Facilities
on a periodic basis throughout the term of the Loan. Such inspections shall
occur no less frequently than monthly during the period of construction of the
improvements, and no less frequently than annually following the Conversion
Date. With respect to annual inspections following the Conversion Date, the
aggregate cost of such inspections which is required to be borne collectively by
Borrowers hereunder and by the Loan B Borrowers (in the absence of any Event of
Default) shall not exceed $12,000. At any time during the continuance of an
Event of Default, all costs of inspection shall be borne by Borrowers without
regard to the preceding limitation.

        3.4 Excess Interest.

                (a) The contracted for rate of interest of the loan contemplated
        hereby, without limitation, shall consist of the following: (i) the
        interest rate set forth on the Schedule, calculated and applied to the
        principal balance of the Obligations in accordance with the provisions
        of this Agreement; (ii) interest after an Event of Default, calculated
        and applied to the amount of the Obligations in accordance with the
        provisions hereof; and (iii) all Additional Sums (as herein defined), if
        any. Borrower agrees to pay an effective contracted for rate of interest
        which is the sum of the above-referenced elements. The examination fees,
        attorneys' fees, expert witness fees, letter of credit fees, collateral
        monitoring fees, closing fees, loan fees, facility fees, prepayment
        premiums, other charges, goods, things in action or any other sums or
        things of value paid or payable by Borrower (collectively, the
        "Additional Sums"), whether pursuant to this Agreement or any other
        documents or instruments in any way pertaining to this lending
        transaction, or otherwise with respect to this lending transaction, that
        under any applicable law may be deemed to be interest with respect to
        this lending transaction, for the purpose of any applicable law that may
        limit the maximum amount of interest to be charged with respect to this
        lending transaction, shall be payable by


                                       5


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FINOVA                                               LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

        Borrower as, and shall be deemed to be, additional interest and for such
        purposes only, the agreed upon and "contracted for rate of interest" of
        this lending transaction shall be deemed to be increased by the rate of
        interest resulting from the inclusion of the Additional Sums.

                (b) It is the intent of the parties to comply with the usury
        laws of the State of Arizona (the "Applicable Usury Law"). Accordingly,
        it is agreed that notwithstanding any provisions to the contrary in this
        Agreement, or in any of the documents securing payment hereof or
        otherwise relating hereto, in no event shall this Agreement or such
        documents require the payment or permit the collection of interest in
        excess of the maximum contract rate permitted by the Applicable Usury
        Law (the "Maximum Interest Rate"). In the event (a) any such excess of
        interest otherwise would be contracted for, charged or received from
        Borrower or otherwise in connection with the loan evidenced hereby, or
        (b) the maturity of the Obligations is accelerated in whole or in part,
        or (c) all or part of the Obligations shall be prepaid, so that under
        any of such circumstances the amount of interest contracted for, shared
        or received in connection with the loan evidenced hereby, would exceed
        the Maximum Interest Rate, then in any such event (1) the provisions of
        this paragraph shall govern and control, (2) neither Borrower nor any
        other person or entity now or hereafter liable for the payment of the
        Obligations shall be obligated to pay the amount of such interest to the
        extent that it is in excess of the Maximum Interest Rate, (3) any such
        excess which may have been collected shall be either applied as a credit
        against the then unpaid principal amount of the Obligations or refunded
        to Borrower, at FINOVA's option, and (4) the effective rate of interest
        shall be automatically reduced to the Maximum Interest Rate. It is
        further agreed, without limiting the generality of the foregoing, that
        to the extent permitted by the Applicable Usury Law; (x) all
        calculations of interest which are made for the purpose of determining
        whether such rate would exceed the Maximum Interest Rate shall be made
        by amortizing, prorating, allocating and spreading during the period of
        the full stated term of the loan evidenced hereby, all interest at any
        time contracted for, charged or received from Borrower or otherwise in
        connection with such loan; and (y) in the event that the effective rate
        of interest on the loan should at any time exceed the Maximum Interest
        Rate, such excess interest that would otherwise have been collected had
        there been no ceiling imposed by the Applicable Usury Law shall be paid
        to FINOVA from time to time, if and when the effective interest rate on
        the loan otherwise falls below the Maximum Interest Rate, to the extent
        that interest paid to the date of calculation does not exceed the
        Maximum Interest Rate, until the entire amount of interest which would
        otherwise have been collected had there been no ceiling imposed by the
        Applicable Usury Law has been paid in full. Borrower further agrees that
        should the Maximum Interest Rate be increased at any time hereafter
        because of a change in the Applicable Usury Law, then to the extent not
        prohibited by the Applicable Usury Law, such increases shall apply to
        all indebtedness evidenced hereby regardless of when incurred provided
        that once the entire amount of interest that would have otherwise been
        collected is collected, FINOVA will charge the lesser of the Maximum
        Interest Rate and the interest rate set forth on the Schedule; but,
        again to the extent not prohibited by the Applicable Usury Law, should
        the Maximum Interest Rate be decreased because of a change in the
        Applicable Usury Law, such decreases shall not apply to the indebtedness
        evidenced hereby regardless of when incurred.

4.      COLLATERAL.

        4.1 Security Interest in the Collateral. To secure the payment and
performance of the Obligations when due, Borrower hereby (i) grants to FINOVA a
first priority security interest in all of Borrower's now owned or hereafter
acquired or arising Receivables, Inventory, Equipment, Trademarks and Licenses
and Patents, and General Intangibles, including, without limitation, all of
Borrower's Deposit Accounts, Investment Property (as defined in Section 9-115 of
the Code), real estate (including the Real Property), money, any and all
property now or at any time hereafter in FINOVA's possession (including claims
and credit balances), and all proceeds (including proceeds of any insurance
policies, proceeds of proceeds and claims against third parties), all products
and all books and records and computer data related to any of the foregoing, and
(ii) assigns, transfers and sets over to FINOVA all of its right, title and
interest, powers, privileges and other benefits of all leases, rental agreements
and related documents entered into by Borrower with respect to any Equipment
leased by Borrower, together with all income, proceeds and other benefits
thereof (all of the foregoing, together with all other property in which FINOVA
may be granted a lien or security interest, is referred to herein, collectively,
as the "Collateral"). In addition, each Borrower hereby grants to FINOVA a first
priority security interest in all of Borrower's now owned or hereafter acquired
or arising Collateral, for purposes of securing the payment and performance of
all obligations owed by the Loan B Borrowers to FINOVA with respect to Loan B.

        4.2 Perfection and Protection of Security Interest. Borrower shall, at
its expense, take all actions reasonably requested by FINOVA at any time to
perfect, maintain, protect and enforce FINOVA's first priority security interest
and other rights in the Collateral and the priority thereof from time to time,
including, without limitation, (i) executing and filing financing or
continuation statements and amendments thereof and executing and delivering such
documents and titles in connection with motor vehicles as FINOVA shall require,
all in form and substance satisfactory to FINOVA, (ii) maintaining an accounting
system satisfactory to FINOVA and complete and accurate stock records, (iii)
placing notations on Borrower's books of account to disclose FINOVA's security
interest therein and (iv) delivering to FINOVA all letters of credit on which
Borrower is named beneficiary. If FINOVA requests Borrower's execution of a
financing statement and Borrower does not execute such financing statement(s)
within three (3) Business Days of such request, FINOVA may file, without
Borrower's signature, one or more financing statements disclosing FINOVA's
security interest under this Agreement. Borrower agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement. From time to time,
Borrower shall, upon FINOVA's request, execute and deliver confirmatory written
instruments pledging the Collateral to FINOVA, but Borrower's failure to do so
shall not affect or limit FINOVA's security interest or other rights in and to
the Collateral. Until the Obligations have been fully satisfied and FINOVA's
obligation to make further advances hereunder has terminated, FINOVA's security
interest in the Collateral shall continue in full force and effect.

        4.3 Preservation of Collateral. After an Event of Default or if FINOVA
requests Borrower to take such action and Borrower does not take such action
within five (5) Business Days of such request (provided, however, that FINOVA
shall be permitted to take action more quickly in the event there exists a
threat of imminent damage to or loss of the Collateral), then FINOVA may in its
Permitted Discretion, at any time discharge any lien or encumbrance on the
Collateral or bond the same, pay any insurance, maintain guards, pay any service
bureau, obtain any record or take any other action to preserve the Collateral
and charge the cost thereof to Borrower's loan account as an Obligation.

        4.4 Insurance. Borrower will maintain and deliver evidence to FINOVA of
such insurance as is required by FINOVA, written by insurers, in amounts, and
with mortgagee's and lender's loss payee and other endorsements, reasonably
satisfactory to FINOVA. All premiums with respect to such insurance shall be
paid by Borrower as and when due. Accurate certificates evidencing such
policies, together with supporting endorsements satisfactory to FINOVA, shall be
delivered by Borrower to FINOVA. If requested by FINOVA, Borrower shall deliver
complete copies of its insurance policies to FINOVA. If Borrower fails to comply
with this Section, FINOVA may (but shall not be required to) procure such
insurance at Borrower's expense and charge the cost thereof to Borrower's loan
account as an Obligation.

5.      EXAMINATION OF RECORDS; FINANCIAL REPORTING.

        5.1. Examinations. FINOVA shall at all reasonable times and during
normal business hours (absent the occurrence of an Event of Default) have full
access to and the right to examine, audit, make abstracts and copies from and
inspect Borrower's records, files, books of account and all other documents,
instruments and agreements relating to the Collateral and the right to check,
test and appraise the Collateral. Borrower shall deliver to FINOVA any
instrument necessary for FINOVA to obtain records from any service bureau
maintaining records for Borrower. All instruments and certificates prepared by
Borrower showing the value of any of the Collateral shall be accompanied, upon
FINOVA's request, by copies of related purchase orders and invoices. FINOVA may,
at any time after the occurrence of an Event of Default, remove from Borrower's
premises Borrower's books and records (or copies thereof) or require Borrower to
deliver such books and records or copies to FINOVA. FINOVA may, without expense
to FINOVA, use such of Borrower's personnel, supplies and premises as may be
reasonably necessary for maintaining or enforcing FINOVA's security interest.

        5.2. Reporting Requirements. (a) Each Borrower shall furnish FINOVA,
upon request, such information and statements as FINOVA shall request from time
to time regarding Borrower's business affairs, financial condition and the
results of its operations. Without limiting the generality of the foregoing,
Borrower shall provide FINOVA with: (i) within


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FINOVA                                               LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

thirty (30) days after the end of each month, unaudited financial statements for
Borrower with respect to the prior month prepared on a basis consistent with
such statements prepared in prior months and otherwise in accordance with GAAP;
(ii) annual audited financial statements for each Borrower, prepared in
accordance with GAAP applied on a basis consistent with the most recent Prepared
Financials provided to FINOVA by Borrower, including balance sheets, income and
cash flow statements, accompanied by the unqualified opinion thereon of
independent certified public accountants acceptable to FINOVA, as soon as
available, and in any event, within ninety (90) days after end of each of
Borrower's fiscal years, together with any management letters which may be
delivered by Borrower's accountants to management; (iii) the financial
information and reports required pursuant to the Schedule; (iv) a monthly
certificate from the managing members of Borrower delivered concurrently with
Borrower's monthly financial statements stating that such financial statements
are true, correct and complete; (v) together with each set of financial
statements provided at the end of a fiscal quarter of Borrower, a certificate
from the managing members of Borrower showing Borrower's compliance with each of
the financial covenants set forth in this Agreement, and stating whether any
Event of Default or Incipient Default has occurred, and if so, the steps being
taken to prevent or cure such Event of Default or Incipient Default; and (vi)
such certificates relating to the foregoing as FINOVA may request.

               (b) Borrowers shall cause ARV to furnish to FINOVA within ninety
(90) days after the end of each fiscal year of ARV, a copy of ARV's current
financial statements. Such financial statements shall contain a (a) statement of
profit and loss, (b) balance sheet, (c) statement of cash flows, and (d)
statement of retained earnings, as of the end of such annual period (together,
in each case, with the comparable figures for the immediately preceding
corresponding period), all in reasonable detail and prepared in accordance with
GAAP. The annual financial statements of ARV shall be audited and certified by a
recognized firm of independent certified public accountants satisfactory to
FINOVA and shall contain an unqualified opinion from such accountants. In
addition to the foregoing, Borrowers shall cause ARV to provide to FINOVA a copy
of each quarterly report on Form 10-Q and each annual report on Form 10-K, as
filed with the SEC, together with copies of any other reports filed with the
SEC, concurrently with the filing of such reports.

6.             PRINCIPAL PAYMENTS; PROCEEDS OF COLLATERAL.

        6.1 Principal Payments. The Loan shall be repayable by each Borrower as
set forth in the Note delivered by such Borrower.

        6.2 Collections. Borrower may make collection of all Receivables,
provided, however, that following the occurrence and during the continuance of
an Event of Default, at the request of FINOVA, Borrower shall deliver all
payments to FINOVA in their original form as set forth below, duly endorsed in
blank. FINOVA or its designee may, at any time after the occurrence of an Event
of Default, notify account debtors that the Receivables have been assigned to
FINOVA and of FINOVA's security interest therein, and may collect the
Receivables directly and charge the collection costs and expenses to Borrower.
FINOVA shall not be required to credit Borrower's account for the amount of any
item of payment which FINOVA is unable to negotiate in the ordinary course of
business, and FINOVA may charge Borrower's account for the amount of any item of
payment which is returned to FINOVA unpaid.

        6.3 Payments Without Deductions. Borrower shall pay principal, interest,
and all other amounts payable hereunder, or under any related agreement, without
any deduction whatsoever, including, but not limited to, any deduction for any
setoff or counterclaim.

        6.4 Application of Payments. The amount of all payments or amounts
received by FINOVA with respect to the Loan shall be applied to the extent
applicable under this Agreement; (i) first, to accrued interest then due and
payable through the date of such payment, including any Default Interest; (ii)
then, to any late fees, construction monitoring fees, collection fees and
expenses and any other fees and expenses due to FINOVA hereunder; and (iii)
last, the remaining balance, if any, to the unpaid principal of the Loan then
due and payable; provided, however, while an Event of Default exists, each
payment hereunder shall be applied to amounts owed to FINOVA by Borrower as
FINOVA in its sole discretion may determine. In calculating interest and
applying payments as set forth above: (a) interest shall be calculated and
collected through the date payment is actually received by FINOVA; (b) interest
on the outstanding balance shall be charged during any grace period permitted
hereunder; (c) at the end of each month, all accrued and unpaid interest and
other charges provided for hereunder that are then due but remain unpaid shall
be added to the principal balance of the Loan; and (d) to the extent that
Borrower makes a payment or FINOVA receives any payment or the proceeds of any
Collateral for Borrower's benefit that is subsequently invalidated, set aside or
required to be repaid to any other person or entity, then, to such extent, the
Obligations intended to be satisfied shall be revived and continue as if such
payment or proceeds had not been received by FINOVA, and FINOVA may adjust the
Loan balances as FINOVA, in its sole discretion, deems appropriate under the
circumstances.

7.      EQUIPMENT.

        Borrower shall keep and maintain the Equipment in good operating
condition and repair and make all necessary replacements thereto to maintain and
preserve the value and operating efficiency thereof at all times consistent with
Borrower's past practice, ordinary wear and tear excepted.

8.      OTHER LIENS, NO DISPOSITION OF COLLATERAL.

        Borrower represents, warrants and covenants that (a) all Collateral is
and shall continue to be owned by it free and clear of all liens, claims and
encumbrances whatsoever (except for FINOVA's security interest, Permitted
Encumbrances, and such other liens, claims and encumbrances as may be permitted
by FINOVA in its sole discretion from time to time in writing), and (b) Borrower
shall not, without FINOVA's prior written approval, sell, encumber or dispose of
or permit the sale, lease, encumbrance or disposal of any Collateral or any
interest of Borrower therein, except for the sale of Inventory in the ordinary
course of Borrower's business. In the event FINOVA gives any such prior written
approval, the same may be conditioned on the sale price being equal to, or
greater than, an amount acceptable to FINOVA. The proceeds of any such sales
shall be remitted to FINOVA pursuant to this Agreement for application to the
Obligations.

9.      GENERAL REPRESENTATIONS AND WARRANTIES.

        Each Borrower represents and warrants that:

        9.1 Due Organization. It is a limited liability company duly organized,
validly existing and in good standing under the laws of the State set forth on
the Schedule, is qualified and authorized to do business and is in good standing
in all states in which such qualification and good standing are necessary in
order for it to conduct its business and own its property, and has all requisite
power and authority to conduct its business as presently conducted, to own its
property and to execute and deliver each of the Loan Documents to which it is a
party and perform all of its Obligations thereunder, and has not taken any steps
to wind-up, dissolve or otherwise liquidate its assets;

        9.2 Other Names. Borrower has not, during the preceding five (5) years,
been known by or used any other organizational or fictitious name except as set
forth on the Schedule, nor has Borrower been the surviving entity of a merger or
consolidation or acquired all or substantially all of the assets of any person
during such time;

        9.3 Due Authorization. The execution, delivery and performance by
Borrower of the Loan Documents to which it is a party have been authorized by
all necessary action and do not and shall not constitute a violation of any
applicable law or of Borrower's Articles of Organization or any other document,
agreement or instrument to which Borrower is a party or by which Borrower or its
assets are bound;

        9.4 Binding Obligation. Each of the Loan Documents to which Borrower is
a party is the legal, valid and binding obligation of Borrower enforceable
against Borrower in accordance with its terms;

        9.5 Intangible Property. Borrower will possess on the Closing Date
adequate assets, licenses, patents, patent applications, copyrights, trademarks,
trademark applications and trade names for the present and planned future
conduct of its business without any known conflict with the rights of others,
and each is valid and has, if necessary, been duly registered or filed with the
appropriate governmental authorities;

        9.6 Capital. As of the Closing Date, Borrower has capital sufficient to
conduct its business, is able to pay its debts as they mature, and owns property
having a fair salable value greater than the amount required to pay all of its
debts (including contingent debts);

        9.7 Material Litigation. Except as described in the Schedule, Borrower
has no pending or overtly threatened litigation, actions or proceedings which
would materially and adversely affect its business, assets, operations,
prospects or condition, financial or otherwise, or the Collateral or any of
FINOVA's interests therein;

        9.8 Title; Security Interests of FINOVA. On the Closing Date, Borrower
will have good, indefeasible and merchantable title to the personal property
Collateral and good and marketable title to the Real Property and, upon the
execution and delivery of the Loan Documents, and the filing of UCC-1 Financing
Statements in the appropriate offices, this Agreement and such documents shall
create valid and perfected first priority liens in the Collateral, subject only
to Permitted Encumbrances;

        9.9 Restrictive Agreements; Labor Contracts. Borrower is not a party or
subject to any contract or subject to any charge, restriction, judgment, decree
or order materially and adversely affecting its business, assets, operations,
prospects or condition, financial or otherwise, or which restricts its right or
ability to incur Indebtedness, and it is not party to any labor dispute. In
addition, no labor contract is scheduled to expire during the Initial Term of
this Agreement, except as disclosed to FINOVA in writing prior to the date
hereof;


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FINOVA                                               LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

        9.10 Laws. Borrower is not in violation of any applicable statute,
regulation, ordinance or any order of any court, tribunal or governmental
agency, in any respect materially and adversely affecting the Collateral or its
business, assets, operations, prospects or condition, financial or otherwise.
Without limiting the generality of the foregoing, Borrowers and each of the
Facilities are in compliance with the ADA in all material respects, and upon
completion of all construction/renovation to the Facilities and the Real
Property, shall be in full compliance thereunder;

        9.11 Consents. On the Closing Date Borrower will have obtained or caused
to be obtained or issued any required consent on behalf of Borrower of a
Governmental Authority or other Person in connection with the financing
contemplated hereby;

        9.12 Defaults. Borrower is not in default with respect to any note,
indenture, loan agreement, mortgage, lease, deed or other agreement to which it
is a party or by which it or its assets are bound, nor has any event occurred
which, with the giving of notice or the lapse of time, or both, would cause such
a default;

        9.13 Financial Condition. The Prepared Financials will fairly present
Borrower's financial condition and results of operations and those of such other
Persons described therein as of the date thereof; there will be no material
omissions from the Prepared Financials or other facts or circumstances not
reflected in the Prepared Financials; and there will be no material and adverse
change in such financial condition or operations since the date of the initial
Prepared Financials delivered to FINOVA hereunder;

        9.14 ERISA. None of Borrower, any ERISA Affiliate, or any Plan is or has
been in violation of any of the provisions of ERISA, any of the qualification
requirements of IRC Section 401(a) or any of the published interpretations
thereunder, nor has Borrower or any ERISA Affiliate received any notice to such
effect. No notice of intent to terminate a Plan has been filed under Section
4041 of ERISA, nor has any Plan been terminated under ERISA. The PBGC has not
instituted proceedings to terminate, or appointed a trustee to administer, a
Plan. No lien upon the assets of Borrower has arisen with respect to a Plan. No
prohibited transaction or Reportable Event has occurred with respect to a Plan.
Neither Borrower nor any ERISA Affiliate has incurred any withdrawal liability
with respect to any Multiemployer Plan. Borrower and each ERISA Affiliate have
made all contributions required to be made by them to any Plan or Multiemployer
Plan when due. There is no accumulated funding deficiency in any Plan, whether
or not waived;

        9.15 Taxes. Borrower has filed all tax returns and such other reports as
it is required by law to file and has paid or made adequate provision for the
payment on or prior to the date when due of all taxes, assessments and similar
charges that are due and payable;

        9.16 Locations; Fiscal Period and Federal Tax ID No. Borrower's chief
executive office and the offices and locations where it keeps the Collateral
(except for Collateral in transit) are at the locations set forth on the
Schedule, except to the extent that such locations may have been changed after
notice to FINOVA in accordance with Section 13.5 below. Borrower's fiscal year
and federal tax identification number are as shown on the Schedule;

        9.17 Business Relationships. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Borrower and any significant client or any
group of significant clients whose unpaid claims individually or in the
aggregate are material to the business of Borrower, or with any material
supplier, and there exists no present condition or state of facts or
circumstances which would materially and adversely affect Borrower or prevent
Borrower from conducting such business after the consummation of the
transactions contemplated by this Agreement in substantially the same manner in
which it has heretofore been conducted;

        9.18 Utilities. All utilities, including without limitation, water,
sewer, gas and electricity, necessary for the present and future operation of
the Real Property are available for the use of the Real Property and the
residents of the Real Property, and Borrower has obtained all necessary permits
and permissions required from all governmental authorities for access to and use
of such services in the amounts required for the current operation of the Real
Property, and all fees and deposits due to the providers of such utilities have
been paid current;

        9.19 Legal Access. The Real Property has legal access to publicly
dedicated streets;

        9.20 No Joint Venture. The relationship of Borrower and FINOVA is that
of debtor and creditor, and it is not Borrower's intention by this Agreement or
any other instrument being executed in connection with the Loan to establish a
partnership, and the parties hereto shall not under any circumstances be
construed to be partners or joint venturers;

        9.21 Year 2000. Borrower has taken all action necessary to assure that
there will be no material adverse change to Borrower's business by reason of the
advent of the year 2000, including without limitation that all computer-based
systems, embedded microchips and other processing capabilities effectively
recognize and process dates after April 1, 1999; and

        9.22 Survival of Representations and Warranties. Each of the
representations and warranties made by Borrower in this Loan Agreement shall be
considered and determined to have been made by Borrower at the time of its
execution of this Agreement and to have been made again at the time of the Loan
Closing and shall survive funding of the Loan, and shall survive the Closing
Date.

10.     AFFIRMATIVE COVENANTS.

        Borrower covenants that, so long as any Obligation remains outstanding
and this Agreement is in effect, it shall:

        10.1 Expenses. Promptly reimburse FINOVA for all costs, fees and
expenses incurred by FINOVA in connection with the negotiation, preparation,
execution, delivery, administration and enforcement of each of the Loan
Documents, including, but not limited to, the attorneys' and paralegals' fees of
in-house and outside counsel, expert witness fees, lien, title search and
insurance fees, appraisal fees, all charges and expenses incurred in connection
with any and all environmental and structural inspection reports and
environmental remediation activities, and all other costs, expenses, recording
taxes and filing or recording fees payable in connection with the transactions
contemplated by this Agreement, including without limitation all such costs,
fees and expenses as FINOVA shall incur or for which FINOVA shall become
obligated in connection with (i) any inspection or verification of the
Collateral, (ii) any proceeding relating to the Loan Documents or the
Collateral, (iii) actions taken with respect to the Collateral and FINOVA's
security interest therein, including, without limitation, the defense or
prosecution of any action involving FINOVA and Borrower or any third party, (iv)
enforcement of any of FINOVA's rights and remedies with respect to the
Obligations or Collateral, and (v) consultation with FINOVA's attorneys and
participation in any workout, bankruptcy or other insolvency or other proceeding
involving any Loan Party or any Affiliate, whether or not suit is filed.
Borrower shall also pay all FINOVA charges in connection with bank wire
transfers, forwarding of loan proceeds, deposits of checks and other items of
payment, returned checks, establishment and maintenance of lockboxes and other
Blocked Accounts, and all other bank and administrative matters, in accordance
with FINOVA's schedule of bank and administrative fees and charges in effect
from time to time;

        10.2 Taxes. File all tax returns and pay or make adequate provision for
the payment of all taxes, assessments and other charges on or prior to the date
when due;

        10.3 Notice of Litigation. Promptly notify FINOVA in writing of any
litigation, suit or administrative proceeding which may materially and adversely
affect the Collateral or Borrower's business, assets, operations, prospects or
condition, financial or otherwise, whether or not the claim is covered by
insurance;

        10.4 ERISA. Notify FINOVA in writing (i) promptly upon the occurrence of
any event described in Paragraph 4043 of ERISA, other than a termination,
partial termination or merger of a Plan or a transfer of a Plan's assets and
(ii) prior to any termination, partial termination or merger of a Plan or a
transfer of a Plan's assets;

        10.5 Change in Location. Notify FINOVA in writing forty-five (45) days
prior to any change in the location of Borrower's chief executive office or the
location of any Collateral, or Borrower's opening or closing of any other place
of business;

        10.6 Existence. Maintain its existence and its qualification to do
business and good standing in all states necessary for the conduct of its
business and the ownership of its property and maintain adequate assets,
licenses, patents, copyrights, trademarks and trade names for the conduct of its
business;

        10.7 Labor Disputes. Promptly notify FINOVA in writing of any labor
dispute to which Borrower is or may become subject and the expiration of any
labor contract to which Borrower is a party or bound;

        10.8 Violations of Law. Promptly notify FINOVA in writing of any
violation of any law, statute, regulation or ordinance of any governmental
entity, or of any agency thereof, applicable to Borrower which may materially
and adversely affect the Collateral or Borrower's business, assets, prospects,
operations or condition, financial or otherwise;

        10.9 Defaults. Notify FINOVA in writing within five (5) Business Days of
Borrower's default under any note, indenture, loan agreement, mortgage, lease or
other agreement to which Borrower is a party or by which Borrower is bound, or
of any other default under any Indebtedness of Borrower;

        10.10 Capital Expenditures. Promptly notify FINOVA in writing of the
making of any Capital Expenditure in excess of One Hundred Thousand Dollars
($100,000), in the aggregate, in any fiscal year;

        10.11 Books and Records. Keep adequate records and books of account with
respect to its business activities in which proper entries are made in
accordance with GAAP consistently applied, reflecting all of its financial
transactions;

        10.12 Year 2000. Borrower shall take all action necessary to assure that
there will be no material adverse change to Borrower's business by reason of the
advent of the year 2000, including without limitation that all computer-based
systems, embedded microchips and other processing capabilities effectively
recognize and process dates after April 1, 1999. At FINOVA's request, Borrower
shall provide to FINOVA assurance reasonably acceptable to FINOVA that
Borrower's computer-based systems, embedded microchips and other processing
capabilities are year 2000 compatible;


                                       8


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FINOVA                                               LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

        10.13 Additional Documents. At FINOVA's request, promptly execute or
cause to be executed and delivered to FINOVA any and all documents, instruments
or agreements deemed necessary by FINOVA to facilitate the collection of the
Obligations or the Collateral or otherwise to give effect to or carry out the
terms or intent of this Agreement or any of the other Loan Documents;

        10.14 Financial Covenants. Comply with the financial covenants set forth
on the Schedule;

        10.15 Subordination of Debt to Affiliates. Borrower shall obtain and
deliver to FINOVA subordination and standstill agreements (collectively, the
"Subordination Agreements") in form and substance satisfactory to FINOVA, from
all Affiliates of Borrower subordinating any and all obligations now or
hereafter owing to such subordinating party by Borrower (including, without
limitation, all management fees and salaries) (the "Subordinated Debt") to
Borrower's obligations to FINOVA under the Loan Documents; evidencing such
subordinating party's agreement to not exercise any remedies against Borrower
with respect to such obligations so long as the Loan is outstanding; evidencing
the Subordinating Parties' agreement not to accept and the Borrower's agreement
not to make any payment of any indebtedness subject to a Subordination Agreement
except as Permitted Management Fees pursuant to the Schedule; prohibiting the
Subordinating Parties from accepting and the Borrower from making any payment of
the Subordinated Debt upon the occurrence and during the continuance of an
Incipient Default or Event of Default; and prohibiting the taking of any lien on
or security interest in the assets of Borrower to secure the Subordinated Debt;

        10.16 Annual Recertification Regarding Environmental Matters. Borrower
shall, on each anniversary of the Loan Closing, throughout the term of the Loan,
provide to FINOVA a written statement signed by an officer of Borrower
certifying that all representations and warranties set forth in the
Environmental Certificate executed by Borrower on the Loan Closing remain, as of
such anniversary date, true, correct and complete in all material respects,
together with a detailed explanation of any exceptions to such certification;


        10.17 Maintenance of Licenses, etc. Borrower shall maintain in force at
all times, and apply in a timely manner for renewal of, all licenses, patents,
approvals, permits, authorizations, privileges, franchises, trademarks,
tradenames and other agreements including without limitation, the Licenses,
necessary to operate an assisted living community at each of the Facilities and
shall give FINOVA at least twenty (20) days prior written notice of the proposed
amendment of any of such licenses, patents, permits, authorizations, privileges,
franchises, trademarks, tradenames and other agreements. Borrower further
covenants that all such licenses, patents, approvals, permits, authorizations,
privileges, franchises, trademarks, tradenames and other agreements (a) have not
been and will not be transferred to any facility other than the Facilities, (b)
have not and will not be pledged as collateral security for any other loan or
indebtedness, (c) are held free from restrictions or known conflicts which would
materially impair the use and operation of the Facilities as intended, and (d)
are not provisional, probationary or restricted. Borrower shall not rescind,
withdraw, revoke, amend, modify, supplement, or otherwise alter the nature,
tenor or scope of such licenses, permits and approvals for the Facilities. The
Borrower shall continuously operate or cause to be operated the Facilities as
assisted living communities and shall comply in all material respects with all
applicable requirements of state and federal law, and regulations, together with
all zoning, land use and environmental laws, applicable to the ownership and/or
operation of the Real Property;

        10.18 Acquisition of the Facilities. Each Borrower shall acquire the
Facility to be owned by it by a date not later than thirty (30) days following
the date of this Agreement. As of the date of this Agreement, ARV has acquired
both the Rossmore House and the Berkshire, and Encino has acquired the Encino
Hills Terrace (using the proceeds of funds advanced to Encino by ARV). Upon
satisfaction of all applicable conditions precedent to Closing, each of Rossmore
and Berkshire shall be permitted to acquire the applicable Facilities from ARV
at a cost no greater than ARV's direct acquisition cost plus any budgeted
renovation/construction expenses which ARV has, at that time, funded, less any
portion of such funded costs which ARV is required to contribute as equity to
such Borrower, and Encino shall be permitted to reimburse ARV for the amount of
direct acquisition costs plus any budgeted renovation/construction expenses
which Encino has at that time paid out of funds borrowed from ARV, less the
portion of any such funds which ARV is required to contribute as equity to
Encino;

        10.19 Maintenance of Insurance. Throughout the term of the Loan,
Borrower shall maintain or cause to be maintained at all times in full force and
effect such insurance as FINOVA may require, written by insurers and in amounts
and forms reasonably satisfactory to FINOVA; and

        10.20 Reserve Account. Commencing with the Start Date applicable to each
Borrower, such Borrower shall maintain a segregated account (the "Reserve
Account") with a federally insured bank approved by FINOVA for a reserve for the
replacement of capital items for the Facility owned by such Borrower. Such bank,
Borrower and FINOVA shall enter into a Collateral Assignment, Security Agreement
and Account Agreement (the "Account Agreement") acceptable to FINOVA, which
includes the bank's waiver of any right of set off and grants to FINOVA the
exclusive right to withdraw all funds in the account upon an event of default
under the Loan Documents. Borrower shall deposit into such account the required
Replacement Reserve amounts. If there is no Event of Default, Borrower shall
have the right to use, from time to time, funds from the Reserve Account for
replacement of capital items so long as Borrower promptly provides FINOVA with
copies of all receipts for such expenditures and any other related documents,
lien waivers and invoices which FINOVA may request.

        10.21 Post-Closing Requirements. Within thirty (30) days following the
Closing Date, Berkshire shall cause National Elevator Company, or another
responsible service provider, to have repaired the seals to the elevator located
in the maintenance room of the Berkshire Facility, and to have cleaned up all
residual oil. Within ten (10) days following the completion of such tasks,
Berkshire shall deliver or cause to be delivered to FINOVA evidence reasonably
satisfactory to FINOVA verifying the completion of such work. Borrowers
acknowledge that, because the Closing Date for that portion of the Loan
allocated to Rossmore shall be deferred for some period of time following the
Pre-Closing Date, on or before the Closing Date applicable to Rossmore,
Borrowers and FINOVA may enter into a side letter agreement to evidence any
post-Closing requirements which FINOVA may have in connection with the funding
of that portion of the Loan allocated to Rossmore, including, without
limitation, environmental and credit enhancement matters.

11.     NEGATIVE COVENANTS.

        Without FINOVA's prior written consent, which consent FINOVA may
withhold in its sole discretion (except as otherwise set forth herein), so long
as any Obligation remains outstanding and this Agreement is in effect, no
Borrower shall:

        11.1 No Change of Control. Without FINOVA's prior written consent: (a)
sell, lease, transfer or dispose of all or substantially all of its assets to
another entity (except for the sale of used furniture, fixtures and equipment
which is being replaced with items of similar quality in the ordinary course of
business, provided that if such sold items are replaced, FINOVA retains a first
priority security interest in such items); (b) consolidate with or merge into
another entity, permit any other entity to merge into it or consolidate with it,
permit any transfer of the ownership of or power to control Borrower, or in any
way change or alter its organizational structure (provided, however, Borrower
shall not be required to obtain FINOVA's consent to transfers of the ownership
interests of Borrower between the then existing members of Borrower), (c)
redeem, retire,


                                       9


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FINOVA                                               LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

purchase or repurchase, or otherwise acquire, directly or indirectly, any
ownership interest now or hereafter outstanding; (d) acquire or organize,
directly or indirectly, any subsidiary corporation or limited liability company,
or own stock or any other equity interest in or assets of any other business
entity, (e) further encumber the Collateral, or (f) make any other material
change in its capital structure or in its business or operations which might
adversely affect the repayment of the Obligations;

        11.2 Loans. Make advances, loans or extensions of credit to, or invest
in, any Person; provided, however, that each of Berkshire and Encino shall be
permitted to make loans to the other if all of the following conditions have
been met (for purposes of this Section 11.2, the Borrower which is making such
intra-Borrower loan shall be referred to as the "Under-Budget Borrower," and the
Borrower which is receiving such intra-Borrower loan shall be referred to as the
"Over-Budget Borrower"): (a) there shall not exist any Event of Default or
Incipient Default at the time such loan is made; (b) the Under-Budget Borrower
shall have completed construction/renovation of its applicable Facility and
shall have received a Certificate of Occupancy therefor; (c) there shall remain
some portion of the Loan proceeds that were allocated to the Under-Budget
Borrower pursuant to Section 1.1 on the Schedule which the Under-Budget Borrower
did not have to borrow in order to complete its Facility (such amount being
referred to as the "Under-Budget Amount"); (d) the amount of such loan shall not
exceed the least of the following: (i) $250,000, (ii) the Under-Budget Amount,
(iii) that amount which, when added to the Loan proceeds advanced to the
Under-Budget Borrower, shall cause total advances to the Under-Budget Borrower
to equal 65.0% of the total acquisition, construction and renovation costs
applicable to the Under-Budget Borrower's Facility; or (iv) that amount which,
when added to the Loan proceeds allocated to the Over- Budget Borrower, shall
cause total advances to the Over- Budget Borrower to equal 65.0% of the total
acquisition, construction and renovation costs applicable to the Over- Budget
Borrower's Facility; (e) the Over-Budget Borrower shall demonstrate its ability,
after giving effect to the intra-Borrower loan, to be in compliance with the
Debt Service Coverage Ratio required by Section 10.14 on the Schedule; and (f)
any such loan (i) shall be evidenced by a promissory note from the Over-Budget
Borrower in favor of the Under- Budget Borrower, which note shall be pledged and
endorsed to FINOVA pursuant to a Note Pledge Agreement in form and substance
satisfactory to FINOVA, and (ii) shall be secured by a junior deed of trust on
the Real Property owned by the Over-Budget Borrower, together with appropriate
UCC-1 financing statements from the Over-Budget Borrower as "debtor" in favor of
the Under- Budget Borrower as "secured party," which deed of trust and UCC
financing statements shall be assigned to FINOVA;

        11.3 Dividends and Capital Distributions. Declare or pay cash dividends
upon any of its outstanding ownership interests or distribute any of its
property or redeem, retire, purchase or acquire directly or indirectly any of
its outstanding ownership interests;

        11.4 Adverse Transactions. Enter into any transaction which would
materially and adversely affect the Collateral or the Borrower's ability to
repay the Obligations in full as and when due;

        11.5 Indebtedness of Others. Become directly or contingently liable for
the Indebtedness of any Person, except by endorsement of instruments for
deposit;

        11.6 Material Business Changes. Without the prior written consent of
FINOVA, Borrower shall not be permitted to sell, lease, transfer, assign, or
otherwise dispose of any or all of Borrower's property, including, without
limitation, the Facilities or any of the other Collateral. This provision shall
not prohibit Borrower from selling or disposing of furniture, fixtures or
equipment relating to the operation of the Facilities in the ordinary course of
business provided that if such sold or disposed of items are replaced, FINOVA
obtains a first priority security interest in such items;

        11.7 Name. Use any fictitious name other than its name as set forth in
its Articles of Organization on the date hereof or as set forth on the Schedule;

        11.8 Prepayment. Prepay any Indebtedness other than trade payables and
other than the Obligations pursuant to Section 13.1 hereof;

        11.9 Capital Expenditure. Make or incur any Capital Expenditure if,
after giving effect thereto, the aggregate amount of all Capital Expenditures by
Borrower in any fiscal year would exceed the amount set forth on the Schedule;

        11.10 Indebtedness. Create, incur, assume or permit to exist any
Indebtedness (including Indebtedness in connection with Capital Leases) in
excess of the amount set forth on the Schedule, other than (i) the Obligations,
(ii) trade payables and other contractual obligations to suppliers and customers
incurred in the ordinary course of business, and (iii) other Indebtedness
existing on the date of this Agreement and reflected in the Prepared Financials
(except Indebtedness paid on the date of this Agreement from proceeds of the
initial Advances hereunder),

        11.11 Affiliate Transactions. Except as set forth below, sell, transfer,
distribute or pay any money or property to any Affiliate, or invest in (by
capital contribution or otherwise) or purchase or repurchase any stock or other
ownership interests in, or Indebtedness or any property of, any Affiliate, or
become liable on any guaranty of the indebtedness, dividends or other
obligations of any Affiliate. Notwithstanding the foregoing, Borrower may pay
compensation to employees who are Affiliates and, if no Event of Default has
occurred, Borrower may (i) engage in transactions with Affiliates in the normal
course of business, in amounts and upon terms which are fully disclosed to
FINOVA and which are no less favorable to Borrower than would be obtainable in a
comparable arm's length transaction with a Person who is not an Affiliate, and
(ii) make payments to a Subordinating Creditor that is an Affiliate, subject to
and only to the extent expressly permitted in the Subordination Agreement
between such Subordinating Creditor and FINOVA;

        11.12 Nature of Business. Enter into any new business or make any
material change in any of Borrower's business objectives, purposes or
operations;

        11.13 FINOVA's Name. Use the name of FINOVA in connection with any of
Borrower's business or activities, except in connection with internal business
matters or as required in dealings with governmental agencies and financial
institutions or with trade creditors of Borrower, solely for credit reference
purposes;

        11.14 Margin Security. At any time that the Loan has an outstanding
balance, own, purchase or acquire (or enter into any contract to purchase or
acquire) any "margin security" as defined by any regulation of the Federal
Reserve Board as now in effect or as the same may hereafter be in effect;

        11.15 Limitation on Management Contract. Pay management fees in excess
of those permitted by the Schedule. Any management fees paid to Affiliates of
Borrower shall be subordinated to Borrower's obligations to FINOVA, pursuant to
a Subordination Agreement. Any Management Agreement entered into in connection
with the Facilities shall be reviewed by, and be acceptable to, FINOVA, and
Borrower shall not modify, amend or extend the term of any Management Agreement
approved by FINOVA without the prior written consent of FINOVA;

        11.16 Prohibition on Payment of Certain Fees. Until the Conversion Date
applicable to each Borrower, such Borrower shall be prohibited from paying any
development fees or any management fees (including, without limitation, the
Permitted Management Fees), provided, however, that (i) partial payments of
Permitted Management Fees may be allowed, with the consent of FINOVA, to the
extent that an applicable Facility remains occupied or partially occupied during
the course of all or part of the renovation phase, and (ii) the payment of
certain fees to ABR, as disclosed in the Budgets approved by FINOVA, shall be
allowed. In particular, no development fee (which does not include that portion
of any development fee contributed as equity in accordance with Section 2.1(L)
on the Schedule), shall be paid until the issuance of a certificate of occupancy
for the applicable Facility (or, with respect to those Facilities which
previously obtained a certificate of occupancy, when such Facility receives the
comparable form of regulatory approval confirming that the renovation of such
Facility has been completed). The foregoing notwithstanding, Vintage shall be
entitled to the payment of a development fee in an amount not in excess of Two
Million One Hundred Thousand Dollars ($2,100,000) over the course of
construction and renovation of the Facilities, ninety percent (90%) of which
shall be payable during such construction and renovation and ten percent (10%)
of which shall be payable pro rata as to each Facility, when each Facility
obtains its certificate of occupancy (or, with respect to those Facilities which
previously obtained a certificate of occupancy, when such Facility receives the
comparable form of regulatory approval confirming that the renovation of such
Facility has been completed). In no event however shall the aforementioned
development fee be in excess of the actual bona fide out-of-pocket costs and
expenses incurred by Vintage in the construction and renovation of the
Facilities and such development fee shall not include any "developer fee" or
"profit";

        11.17 ARV Management Agreement. Amend the Management Agreement between
such Borrower and ARV without FINOVA's prior written consent, which consent
shall not unreasonably be withheld. Each Borrower shall have the right to
terminate its applicable Management Agreement with ARV in accordance with the
termination provisions set forth in such Management Agreement, without FINOVA's
consent. If any Borrower decides to terminate ARV, such Borrower must notify
FINOVA in writing at least thirty (30) days in advance of such termination.
Borrower and FINOVA shall thereafter have thirty (30) days to mutually agree
upon a replacement manager and the terms of any replacement management
agreement. FINOVA shall have the right to approve both any replacement manager
and the terms of any replacement management agreement, which approval shall not
be unreasonably withheld or unduly delayed. If Borrower and FINOVA fail to have
agreed on a replacement manager and replacement management agreement within said
30-day period, ARV's termination as manager will be delayed until a replacement
manager has been agreed upon and a replacement management contract approved by
FINOVA and entered into between such Borrower and the replacement manager. Any
such replacement management agreement shall be required to satisfy the
conditions relative to subordination of management fees as set forth in Section
10.15; and

        11.18 Compliance with ERISA. (a) Terminate or take any other action with
respect to, or permit any member of a controlled group (within the meaning of
Section 4001(a)(14) of ERISA) that includes Borrower (a "Controlled Group
Member") to terminate or take any other action with respect to, any employee
pension benefit plan subject to Title IV of ERISA ("Plan"), including without
limitation, a substantial cessation of operations within the meaning of Section
4068(f) of


                                       10


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FINOVA                                               LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

ERISA, which would result in any material liability of Borrower to the Pension
Benefit Guaranty Corporation ("PBGC") or any successor thereof, or to any Plan,
or (b) permit the occurrence of any "Reportable Event" (within the meaning of
Section 4043 of ERISA) or any other event or condition that would be the basis
under Section 4042 of ERISA for the PBGC to institute steps to terminate a Plan
maintained by Borrower or a Controlled Group Member, or (c) permit the present
value of all benefit liabilities under any Plan maintained by Borrower or a
controlled Group Member to exceed by a material amount the current value of the
assets of such Plan allocable to such benefit liabilities, or (d) permit with
respect to any Plan maintained by Borrower or a Controlled Group Member any
material unfunded benefit liabilities within the meaning of Section 4001(a)(18)
of ERISA allocable to Borrower or the Controlled Group Member. For the purpose
of this paragraph, "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, (or any successor statute thereto) and the rules and
regulations issued thereunder.

12.     ENVIRONMENTAL MATTERS.

        The Environmental Certificate is incorporated herein for all purposes as
if fully stated in this Agreement.

13.     PREPAYMENT.

        13.1 Voluntary, Full Prepayment. Berkshire and Encino jointly, and
Rossmore individually, shall have the right to prepay all (but not, except as
expressly provided herein, a portion) of the Loan allocated to such Borrower or
Borrowers, provided that FINOVA first receives from Borrower(s) no less than
thirty (30) days prior written notice (which notice shall be irrevocable) of
Borrower's intent to prepay the Loan (the "Notice Date"), and provided
Borrower(s) pay, in addition to the full outstanding principal balance of the
Note or Notes delivered by such Borrower(s) in favor of FINOVA, all accrued but
unpaid interest, all fees or other charges then outstanding, all reasonable
out-of-pocket fees and costs incurred by FINOVA in the preparation of any
documentation required in connection with such prepayment, and a Prepayment
Premium in the amount set forth on the Schedule hereto.

        13.2 Unpermitted Partial Prepayment. In the event Borrower makes any
partial prepayment(s) of principal not permitted hereunder, such prepayment(s)
shall be deemed a payment(s) of the principal as of the Maturity Date, and
interest shall continue to accrue on the outstanding principal balance of the
Note, without giving effect to such prepayment(s) until the Maturity Date

        13.3 Prepayment Upon Default. Upon (a) the occurrence of an Event of
Default hereunder or under any of the other Loan Documents at any time during
the term of the Loan which results in FINOVA's acceleration of all amounts due
under the Note, or (b) any sale of the Collateral, a Prepayment Premium in the
amount set forth on the Schedule as of such event shall be assessed and shall be
fully due and payable upon such sale or acceleration. Any such sale shall in all
events remain subject to the due on sale provisions of this Agreement and the
Mortgage.

14.     DEFAULT.

        14.1 Events of Default. Any one or more of the following events shall
constitute an Event of Default under this Agreement:

                (a) Borrower fails to pay when due and payable any portion of
        the Obligations at stated maturity, upon acceleration or otherwise, and
        such failure continues for a period of five (5) days after the due date
        thereof;

                (b) Borrower or any other Loan Party fails or neglects to
        perform, keep or observe any Obligation including, but not limited to,
        any term, provision, condition, covenant or agreement contained in any
        Loan Document to which Borrower or such other Loan Party is a party,
        which failure: (i) if a failure to comply with the provisions of Section
        5.1 and there does not then exist any other Event of Default, shall
        continue unremedied for a period of three (3) Business Days; or (ii) if
        a failure to provide financial reporting as required by Section 5.2,
        shall continue unremedied for a period of ten (10) days thereafter; or
        (iii) for any other default described by this Section 14(b), remains
        unremedied for a period of thirty (30) days thereafter unless, if such
        failure cannot reasonably be remedied within such thirty-day period,
        Borrower begins to remedy such failure within such thirty-day period and
        thereafter diligently pursues such remedy to completion;

                (c) Any material adverse change occurs in Borrower's business,
        assets, operations, prospects or condition, financial or otherwise;

                (d) The prospect of repayment of any portion of the Obligations
        or the value or priority of FINOVA's security interest in the Collateral
        is materially impaired;

                (e) Any material portion of Borrower's assets is seized,
        attached, subjected to a writ or distress warrant, is levied upon or
        comes into the possession of any judicial officer;

                (f) Borrower shall generally not pay its debts as they become
        due (as demonstrated by some extrinsic evidence which FINOVA, in good
        faith, believes to be credible) or shall enter into any agreement
        (whether written or oral), or offer to enter into any agreement, with
        all or a significant number of its creditors regarding any moratorium or
        other indulgence with respect to its debts or the participation of such
        creditors or their representatives in the supervision, management or
        control of the business of Borrower;

                (g) Any bankruptcy or other insolvency proceeding is commenced
        by Borrower, or any such proceeding is commenced against Borrower and
        remains undischarged or unstayed for forty-five (45) days;

                (h) Any notice of lien, levy or assessment is filed of record
        with respect to any of Borrower's assets other than the Permitted
        Encumbrances;

                (i) Any judgments are entered against Borrower in an aggregate
        amount exceeding Twenty-Five Thousand Dollars ($25,000) in any fiscal
        year that are not covered by insurance and all such judgments shall not
        have been satisfied or bonded pending appeal within thirty (30) days
        from the entry thereof and all rights of action by such judgment
        creditor against the Collateral have been stayed.

                (j) Any default shall occur under any material agreement between
        Borrower and any third party which default would result in a right by
        such third party to accelerate the maturity of any Indebtedness of
        Borrower to such third party;

                (k) Any representation or warranty made or deemed to be made by
        Borrower, any Affiliate or any other Loan Party in any Loan Document or
        any other statement, document or report made or delivered to FINOVA in
        connection therewith shall prove to have been incorrect or misleading in
        any material respect;

                (l) Any Prohibited Transaction or Reportable Event shall occur
        with respect to a Plan which could have a material adverse effect on the
        financial condition of Borrower; any lien upon the assets of Borrower in
        connection with any Plan shall arise; Borrower or any of its ERISA
        Affiliates shall fail to make full payment when due of all amounts which
        Borrower or any of its ERISA Affiliates may be required to pay to any
        Plan or any Multiemployer Plan as one or more contributions thereto;
        Borrower or any of its ERISA Affiliates creates or permits the creation
        of any accumulated funding deficiency in excess of Twenty-Five Thousand
        Dollars ($25,000), whether or not waived;

                (m) Any transfer, without FINOVA's prior written consent, to a
        Person, who is not as of this date, a member of Borrower or a relative
        of such a member of more than ten percent (10%), in the aggregate, of
        the issued and outstanding membership interests or other evidence of
        ownership of Borrower; (n) Borrower has transferred responsibility for
        its day-to-day management to any Person other than ARV, except in
        accordance with Section 11.17 hereof; or


                                       11


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FINOVA                                               LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

                (o) An order or decree has been entered by any court of
        competent jurisdiction enjoining the intended use of the Real Property
        as an assisted living community and judgment is not vacated within
        thirty (30) days after Borrower has obtained knowledge or notice
        thereof;

                (p) If any Borrower has its license to operate its Facility
        revoked, suspended or not renewed by the applicable state or federal
        authority, and said revocation, suspension or non-renewal is not stayed
        pending an appeal thereof and is not reversed on appeal;

                (q) If a ban on the admission of residents to any Facility shall
        remain in the effect for a period of more than thirty (30) days; or

                (r) Immediately upon (a) Borrower's failure to cause Completion
        to occur on or before the Required Completion Date, or (b) at any time
        prior to Completion of the Work, if (i) Borrower abandons the Work or
        (ii) Borrower delays construction of the Improvements for any period of
        time, for any reason whatsoever not covered by clause (i) above which in
        the reasonable judgment of FINOVA will prevent Completion of the Work in
        the ordinary course of construction on or before the Required Completion
        Date.

        14.2 Remedies. (a) At any time upon the occurrence of an Event of
Default, FINOVA may, at its option and in its sole discretion and in addition to
all of its other rights under the Loan Documents, terminate this Agreement and
declare all of the Obligations to be immediately payable in full. Borrower
agrees that FINOVA shall also have all of its rights and remedies under
applicable law, including, without limitation, the default rights and remedies
of a secured party under the Code. Upon the occurrence of an Event of Default
Borrower hereby consents to the appointment of a receiver by FINOVA in any
action initiated by FINOVA pursuant to this Agreement and to the jurisdiction
and venue set forth in Section 16.7 hereof, and Borrower waives notice and
posting of a bond in connection therewith. Further, FINOVA may, at any time,
take possession of the Collateral and keep it on Borrower's premises, at no cost
to FINOVA, or remove any part of it to such other place(s) as FINOVA may desire,
or Borrower shall, upon FINOVA's demand, at Borrower's sole cost, assemble the
Collateral and make it available to FINOVA at a place reasonably convenient to
FINOVA. FINOVA may sell and deliver any Collateral at public or private sales,
for cash, upon credit or otherwise, at such prices and upon such terms as FINOVA
deems advisable, at FINOVA's discretion, and may, if FINOVA deems it reasonable,
postpone or adjourn any sale of the Collateral by an announcement at the time
and place of sale or of such postponed or adjourned sale without giving a new
notice of sale. Borrower agrees that FINOVA has no obligation to preserve rights
to the Collateral or marshall any Collateral for the benefit of any Person.
FINOVA is hereby granted a license or other right to use, without charge,
Borrower's labels, patents, copyrights, name, trade secrets, trade names,
trademarks and advertising matter, or any similar property, in completing
production, advertising or selling any Collateral and Borrower's rights under
all licenses and all franchise agreements shall inure to FINOVA's benefit. Any
requirement of reasonable notice shall be met if such notice is mailed postage
prepaid to Borrower at its address set forth in the heading to this Agreement at
least five (5) Business Days before sale or other disposition. The proceeds of
sale shall be applied, first, to all attorneys' fees and other expenses of sale,
and second, to the Obligations in such order as FINOVA shall elect, in its sole
discretion. FINOVA shall return any excess to Borrower and Borrower shall remain
liable for any deficiency to the fullest extent permitted by law.

        (b) Upon the occurrence of an Event of Default at any time prior to
Completion of the Work, FINOVA may, at its option, take one or more of the
following actions in connection with the construction of the Improvements: (a)
use any funds of Borrower, including without limitation, any Required Completion
Assurance Deposit then existing, and any sums which may remain unadvanced
hereunder, to continue and/or cause Completion of the Work (b) demand and
receive performances due under the Principal Work-Related Items and the other
Contracts, Intangibles, Permits and Licenses; (c) make such changes to the scope
of the Work and to the Principal Work-Related Items and other Contracts,
Intangibles, Permits and Licenses as FINOVA may deem necessary or desirable in
its sole and absolute judgment; (d) file claims, institute enforcement actions
and otherwise prosecute and defend all actions or proceedings relating to the
Work, the Principal Work-Related Items and the other Contracts, Intangibles,
Permits and Licenses as FINOVA may deem necessary or desirable in its sole and
absolute judgment; (e) pay, settle or compromise all existing bills and claims
which are or may be legal charges against the Collateral or any Contracts,
Intangibles, Permits and Licenses, or may be necessary or desirable for the
continuance or Completion of the Work related thereto or the clearance of title,
all without notice to Borrower; (f) execute in Borrower's name all applications,
certificates, notices and other instruments and give all instructions and
communications which may be required or permitted by the Principal Work-Related
Items, other Contracts, Intangibles, Permits and Licenses, as determined by
FINOVA in its sole and absolute judgment; (g) do any and every act with respect
to the Completion of the Work, the Principal Work-Related Items and the other
Contracts, Intangibles, Permits and Licenses which Borrower may do in its
behalf; (h) employ such contractors, subcontractors, suppliers, agents,
attorneys, architects, accountants, appraisers, security guards and inspectors
as FINOVA may in its sole and absolute judgment deem necessary or desirable to
accomplish any of the above purposes; and (i) receive, collect, open and read
all mail of Borrower for the sole purpose of obtaining all items pertaining to
the Work, the Principal Work-Related Items and the other Contracts, Intangibles,
Permits and Licenses.

        14.3 Standards for Determining Commercial Reasonableness. Borrower and
FINOVA agree that the following conduct by FINOVA with respect to any
disposition of Collateral shall conclusively be deemed commercially reasonable
(but other conduct by FINOVA, including, but not limited to, FINOVA's use in its
sole discretion of other or different times, places and manners of noticing and
conducting any disposition of Collateral shall not be deemed unreasonable): any
public or private disposition: (i) as to which on no later than the fifth
Business Day prior thereto written notice thereof is mailed or personally
delivered to Borrower and, with respect to any public disposition, on no later
than the fifth Business Day prior thereto notice thereof describing in general
non-specific terms, the Collateral to be disposed of is published once in a
newspaper of general circulation in the county where the sale is to be conducted
(provided that no notice of any public or private disposition need be given to
Borrower or published if the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market); (ii)
which is conducted at any place designated by FINOVA, with or without the
Collateral being present; and (iii) which commences at any time between 8:00
a.m. and 5:00 p.m. Without limiting the generality of the foregoing, Borrower
expressly agrees that, with respect to any disposition of accounts, instruments
and general intangibles, it shall be commercially reasonable for FINOVA to
direct any prospective purchaser thereof to ascertain directly from Borrower any
and all information concerning the same, including, but not limited to, the
terms of payment, aging and delinquency, if any, the financial condition of any
obligor or account debtor thereon or guarantor thereof, and any collateral
therefor.

        14.4 Right to Cure. If Borrower shall fail to comply with or fully
perform any of its obligations under the Loan Documents, regardless of whether
an Event of Default shall then exist, FINOVA may (but shall not be obligated
to), without further demand upon Borrower and without waiving or releasing
Borrower from any such obligation, remedy such defaults. All such sums, together
with interest thereon at the Default Rate, shall become additional indebtedness
secured by the Collateral. No such payment by FINOVA shall be deemed to relieve
Borrower from any default or Event of Default under any of the Loan Documents.

        14.5 Power of Attorney. (a) For the purposes set forth under Sections
14.2 and 14.4, Borrower hereby irrevocably appoints FINOVA as Borrower's true
and lawful attorney-in-fact, with full power of substitution, to operate the
Facilities and to take such action and require such performance as it deems
necessary. Borrower hereby empowers FINOVA, as such attorney-in-fact, as
follows:

        a. To take all actions reasonably necessary in connection therewith for
the purpose of operating the Facilities;

        b. To employ such management companies as shall be convenient for said
purposes; and

        c. To pay, settle, or compromise all existing or future bills and claims
which are or may be liens against the Real Property or may be reasonably
necessary or desirable for the operation of the Facilities.

        (b) Borrower hereby ratifies and approves all acts of FINOVA as such
attorney-in-fact. Neither FINOVA nor any of its designees shall be liable for
any acts or omissions nor for any error of judgment or mistake of fact or law
while acting as Borrower's attorney, other than FINOVA's gross negligence or
willful misconduct. This power, being coupled with an interest, is irrevocable
until the Obligations have been fully satisfied and FINOVA's obligation to
provide loans hereunder shall have terminated.

15.     DEFINITIONS.

        15.1 Defined Terms. As used in this Agreement, the following terms have
the definitions set forth below:

        "ABR" means Alex Brown Realty, Inc., a Maryland corporation.

        "Account Agreement" shall have the meaning set forth in Section 10.20.

        "ADA" has the meaning set forth in Section 2.1(cc) hereof.

        "Additional Retainage" has the meaning set forth in Section 2.3(c).

        "Additional Sums" has the meaning set forth in Section 3.4(a) hereof.

        "Advance" means any disbursement of a portion of the Loan, subject to
the terms and upon the conditions contained in this Agreement.

        "Affiliate" means any Person controlling, controlled by or under common
control with Borrower. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause direction of
the management and policies of any Person, whether through ownership of common
or preferred stock or other equity interests, by contract or otherwise. Without
limiting the generality of the foregoing, each of the following shall be an
Affiliate: any member, officer, director, employee or other agent of Borrower,
any equity owner or subsidiary of Borrower, and any other Person with whom or
which Borrower has common members, shareholders, officers or directors.


                                       12


<PAGE>   13
FINOVA                                               LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

        "Allocated Interest Reserve Amount" has the meaning set forth in Section
1.2 on the Schedule.

        "Amortization Date" has the meaning set forth in Paragraph 7 of Section
3.1 on the Schedule.

        "Applicable Usury Law" has the meaning set forth in Section 3.4(b)
hereof.

        "Architect/Engineer" means an architect or engineer employed by Borrower
to perform architectural or engineering services.

        "Architect/Engineer Agreement" means a contract (written or oral, now or
hereafter in effect) between Borrower and an Architect/Engineer for the
performance of architectural or engineering services, as approved by FINOVA in
writing and modified from time to time with FINOVA's prior written consent.

        "Articles of Organization" shall mean the charter, articles, operating
agreement, partnership agreement, by-laws and any other written documents
evidencing the formation, organization, governance and continuing existence of
an entity.

        "ARV" means ARV Assisted Living, Inc., a Delaware corporation.

        "Assignment" shall mean an Assignment of Contracts, Intangibles,
Licenses and Permits assigning to FINOVA as security for the Loan (to the extent
assignable under applicable law), all contracts, intangible property rights,
licenses and permits in which Borrower has an interest and which are used in the
operation, management and/or maintenance of the Real Property, and all
construction, engineering and architectural contracts, plans or specifications
relating to the Real Property, and all franchise agreements, reservation system
agreements, equipment leases; together with such consents from third parties
under such contracts as FINOVA deems necessary upon its review of such
contracts.

        "Available Operating Cash Flow Shortfall" shall mean, as to any
Borrower, any negative amount resulting from the following formula: such
Borrower's Operating Cash Flow generated on a fiscal year-to-date basis, plus
any amounts funded from the Interest Reserve during such fiscal year-to-date for
the payment of interest installments coming due during such period, less such
Borrower's Contractual Debt Service during the same period.

        "Basic Retainage" has the meaning set forth in Section 2.3(c).

        "Berkshire" means Berkshire Renovation, LLC, a Delaware limited
liability company and one of the Borrowers.

        "Berkshire Facility" means The Berkshire, an assisted living community
located at 2235 Sacramento Street, Berkeley, California, which Facility shall be
acquired by Berkshire.

        "Borrowing Term" means the period of time during which FINOVA is
committed to make Advances, which commitment shall terminate, as to each
Borrower, on the date described in Section 1.2 on the Schedule.

        "Budget" means a detailed "all-in" construction budget and cost
itemization prepared by Borrower with respect to construction of the Work, and
approved in writing by FINOVA, supported by firm, fixed price contracts or
purchase orders, including the contingency reserve and all hard and soft costs
to be incurred in the construction and Completion of all Improvements to be
constructed with respect to the applicable Facility, which specifies by item the
cost, source of payment and draw schedule of (a) all labor, materials and
services necessary for Completion of the Work; and (b) all other expenses
incidental to the Completion of the Work. The Budget shall include a ten percent
(10%) basic retainage and an interest reserve and contingency reserve acceptable
to FINOVA in its Permitted Discretion. In addition to the foregoing, the Budget
shall project on a monthly basis costs incurred and anticipated Advances under
the Loan throughout the term of construction. The Budget is attached to the
Schedule as Exhibit C and is incorporated herein by reference.

        "Business Day" means any day on which commercial banks in all of Los
Angeles, California, Chicago, Illinois, and Phoenix, Arizona are open for
business.

        "Capital Expenditures" means all expenditures made and liabilities
incurred, other than as provided for in the Budgets, for the acquisition of any
fixed asset or improvement, replacement, substitution or addition thereto which
has a useful life of more than one year and including, without limitation, those
arising in connection with Capital Leases.

        "Capital Lease" means any lease of property by Borrower that, in
accordance with GAAP, should be capitalized for financial reporting purposes and
reflected as a liability on the balance sheet of Borrower.

        "Certificate of Completion" means, with respect to the Work, a
certificate issued by the governmental authority having jurisdiction over the
Work when all of the Work has been completed, allowing the use of the
Improvements by Borrower for their intended purpose.

        "Closing" means, as to each individual Borrower, the first Advance of
funds by FINOVA for the purpose of permitting such Borrower to acquire the
Facility to be operated by it (or in the case of Encino, to permit Encino to
reimburse ARV for funds previously loaned to Encino for purposes of
accomplishing such acquisition).

        "Closing Date" means, as to each Borrower, the date upon which the
Closing applicable to such Borrower occurred.

        "Code" means the Uniform Commercial Code as adopted and in effect in the
State of Arizona from time to time.

        "Collateral" has the meaning set forth in Section 4.1 above.

        "Commitment" means that certain Commitment Letter from FINOVA addressed
to Messrs. Brian Flornes and Eric Davidson dated August 25, 1998, as accepted by
ARV, ABR, and Messrs. Flornes and Davidson on behalf of the Borrowers, on August
26, 1998.

        "Completion" or "Completion of the Work" means completion of the Work
(excluding certain "punch-list" items which are not necessary for the full
operation of the Facility), substantially in accordance with the Plans, the
Construction Contract, all applicable, zoning, building and other governmental
laws, regulations and private restrictions, the Loan Documents, sound
construction, engineering and architectural principles and commonly accepted
safety standards, and free of rights of third parties and free of defective
materials and workmanship; and receipt by FINOVA of the following in form and
substance satisfactory to it:

               (a) A certificate of completion from Borrower and its
Architect/Engineer and, if FINOVA elects, from FINOVA's Inspector, certifying
that the Work has been so completed in accordance with the Loan Documents
including, without limitation, the Construction Contract, in a good and
workmanlike manner, all utilities necessary to serve the Property have been
connected and are operating, and the Improvements are ready for occupancy;

               (b) A Certificate of Completion;

               (c) The "as-built survey" required pursuant to Section 18 of the
Construction Covenant Section and "as built plans" for the Property; ----------

               (d) All licenses or approvals for operation within or on the
Facility if any; and any other applicable governmental permits, approvals,
consents, licenses and certificates for the use and operation of the Facilities
as assisted living communities;

               (e) Evidence satisfactory to FINOVA that there are no material
judgments or pending litigation or, to the best of Borrower's knowledge,
threatened litigation of a material nature outstanding against the Borrower, or
the Real Property, including but not limited to litigation or judgments which
may affect title or FINOVA's lien position with respect to any of the Collateral
or any litigation or judgment which might materially affect the ability of
Borrower to perform its Obligations;

               (f) If applicable laws provide that the recording of a notice of
completion for the Work will cause the expiration upon a date certain of the
statutory period within which mechanics' and similar liens can be filed,
verification of the recording of such notice in the manner prescribed by such
laws;

               (g) The Re-Issued Title Policy required pursuant to Section 16 of
the Construction Covenants Section; and

               (h) Final lien waivers (which may be conditional on payments only
with respect to the work, material, equipment, or services to be paid from
proceeds of the final Advance).

        "Construction Contract" means a contract (written or oral, now or
hereafter in effect) between Borrower and a Contractor, or between any
Contractor and any other person or entity relating in any way to the Completion
of the Work, including the performing of labor and the furnishing of equipment,
materials or services (other than architectural or engineering services), as
approved by FINOVA in writing and modified from time to time with FINOVA's prior
written consent.

        "Construction Covenants Section" means the Construction-Related
Covenants, Representations and Warranties section of the Schedule.

        "Contractual Debt Service" means, for any given accounting period, all
regularly scheduled principal and interest payments due under the Note and any
other Indebtedness approved by FINOVA.

        "Contractor" means a contractor employed by Borrower to provide labor
and/or to furnish equipment, materials or services for any portion of the Work.

        "Contracts, Intangibles, Licenses and Permits" means those property
rights which are the subject matter of the Assignment.

        "Conversion Date" has the meaning set forth in Paragraph 6 of Section
3.1 on the Schedule.


                                       13


<PAGE>   14
FINOVA                                               LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

        "Current Assets" at any date means the amount at which the current
assets of Borrower would be shown on a balance sheet of Borrower as at such
date, prepared in accordance with GAAP, provided that amounts due from
Affiliates and investments in Affiliates shall be excluded therefrom.

        "Current Liabilities" at any date means the amount at which the current
liabilities of Borrower would be shown on a balance sheet of Borrower as at such
date, prepared in accordance with GAAP.

        "Debt Service After Management Fee Coverage Covenant" has the meaning
set forth in Section 10.14 on the Schedule.

        "Debt Service After Management Fee Coverage Ratio" has the meaning set
forth in Section 10.14 on the Schedule.

        "Debt Service Coverage Covenant" has the meaning set forth in Section
10.14 on the Schedule.

        "Debt Service Coverage Ratio" has the meaning set forth in Section 10.14
on the Schedule.

        "Default Rate" shall mean the Default Rate of interest more fully
described and set forth in Section 3.2 hereof.

        "Deposit Accounts" has the meaning set forth in Section 9-105 of the
Code.

        "Distributions" shall have the meaning set forth in the Negative
Covenants section of this Schedule.

        "Encino" means Encino Renovation, LLC, a Delaware limited liability
company and one of the Borrowers.

        "Encino Facility" means the Encino Hills Terrace located at 16025
Ventura Boulevard, Encino, California, which Facility is owned by Encino.

        "Environmental Certificate" shall mean an Environmental Certificate with
Representations, Covenants and Warranties executed by Borrower and such other
Loan Parties as required by FINOVA, as it may be from time to time renewed,
amended, restated or replaced.

        "Equipment" means all of Borrower's present and hereafter acquired
equipment, durable and non-durable medical equipment, machinery, furniture,
furnishings, fixtures, trade fixtures, motor vehicles, tools, parts, goods and
other tangible personal property (other than Inventory) of every kind and
description used in Borrower's operations or owned by Borrower and any interest
in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.

        "ERISA" means the Employment Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.

        "ERISA Affiliate" means each trade or business (whether or not
incorporated and whether or not foreign) which is or may hereafter become a
member of a group of which Borrower is a member and which is treated as a single
employer under ERISA Section 4001(b)(1), or IRC Section 414.

        "Event of Default" means any of the events set forth in Section 14.1 of
this Agreement.

        "Facility/ies" means, individually, each of the Berkshire Facility, the
Encino Facility, and the Rossmore Facility, and collectively, all of the
Berkshire Facility, the Encino Facility and the Rossmore Facility. As the
context requires, references to an individual Facility applicable to a
particular Borrower, or to an individual Borrower generally, shall refer to the
Facility to be owned and operated by such Borrower.

        "FINOVA's Inspector" has the meaning set forth in Section 6 of the
Construction Covenants Section.

        "Force Majeure Event" means any "Act of God," governmental moratorium,
civil commotion, enemy action, fire, strike, casualty, or governmental order, or
injunction issued by a court of competent jurisdiction, which are entered for
reasons other than for Borrower's acts or omissions which would constitute a
default under this Agreement, or similar occurrences beyond Borrower's control.

        "GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time as set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Boards which are applicable to the circumstances
as of the date of determination consistently applied, except that, for the
financial covenants set forth in this Agreement, GAAP shall be determined on the
basis of such principles in effect on the date hereof and consistent with those
used in the preparation of the audited financial statements delivered to FINOVA
prior to the date hereof.

        "General Contract" has the meaning set forth in Section 2.2(A)(i).

        "General Contractor" means the Persons to be designated on Exhibit 1
hereto as to each Facility.

        "General Intangibles" means all general intangibles of Borrower, whether
now owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other business
records, Deposit Accounts, inventions, designs, drawings, blueprints, patents,
patent applications, trademarks and the goodwill of the business symbolized
thereby, names, trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, customer lists, security and other deposits, rights in all
litigation presently or hereafter pending for any cause or claim (whether in
contract, tort or otherwise), and all judgments now or hereafter arising
therefrom, all claims of Borrower against FINOVA, rights to purchase or sell
real or personal property, rights as a licensor or licensee of any kind,
royalties, telephone numbers, proprietary information, purchase orders, and all
insurance policies and claims (including without limitation credit, liability,
property and other insurance) tax refunds and claims, computer programs, discs,
tapes and tape files, claims under guaranties, security interests or other
security held by or granted to Borrower to secure payment of any of the
Receivables by an account debtor, all rights to indemnification and all other
intangible property of every kind and nature (other than Receivables).

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

        "Improvements" means all improvements to be constructed upon the Real
Property as part of the Work, together with any off-site improvements which must
be completed in connection therewith, all as set forth in the Plans and the
Construction Contract(s) and as described in the Budget.

        "Incipient Default" means an act or event which with notice, passage of
time or both would constitute an Event of Default.

        "Indebtedness" means all of Borrower's present and future obligations,
liabilities, debts, claims and indebtedness, contingent, fixed or otherwise,
however evidenced, created, incurred, acquired, owing or arising, whether under
written or oral agreement, operation of law or otherwise, and includes, without
limiting the foregoing (i) the Obligations, (ii) obligations and liabilities of
any Person secured by a lien, claim, encumbrance or security interest upon
property owned by Borrower, even though Borrower has not assumed or become
liable therefor, (iii) obligations and liabilities created or arising under any
lease (including Capital Leases) or conditional sales contract or other title
retention agreement with respect to property used or acquired by Borrower, even
though the rights and remedies of the lessor, seller or lender are limited to
repossession, (iv) all unfunded pension fund obligations and liabilities, and
(v) deferred taxes.

        "Interest Reserve" means that portion of the Loan, in the total amount
of $3,076,725, as referenced in Section 1.2 on the Schedule, which has been
allocated for the payment of interest from the Closing Date through the
Amortization Date. The portion of the Interest Reserve allocated to each
Borrower is the Allocated Interest Reserve Amount, as specified in Section 1.2
on the Schedule.

        "Inventory" means all of Borrower's now owned and hereafter acquired
goods, merchandise or other personal property, wherever located, including all
raw materials, supplies, building materials, and other items which are to be
incorporated into the Improvements, whether in transit to the Real Property or
located upon the Real Property, and regardless of the state of incorporation of
such items into the Improvements. Following the Completion of the Work,
Inventory shall include all goods, merchandise or other personal property,
wherever located, used or consumed by Borrower in the operation of each of the
Facilities as an assisted living community.

        "IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.

        "Lease Assignment" shall mean an Assignment of Leases and Rents
assigning to FINOVA as security for the Loan (to the extent assignable under
applicable law) the Leases and all rents arising from the Real Property or any
portion thereof.

        "Leases" shall mean all of the leases of the Real Property or any
portion thereof together with any and all other existing or future leases or
other agreements for the use and/or occupancy of the Real Property or any
portion thereof by Borrower as landlord, as the same may from time to time be
modified or amended.

        "Licenses" means, collectively, the certificate of need for any Facility
issued by the healthcare regulatory agency of the state in which the Facility is
located and any other licenses or permits necessary or appropriate for the
operation of the Facility as an assisted living community.

        "Loan B" means that certain loan, in the principal amount of up to
$51,000,000 to be made by FINOVA to the Loan B Borrowers for purposes of the
construction and development of the Loan B Facilities.

        "Loan B Borrowers" means, individually and collectively, each of
Lynnbrooke - Irvine, LLC, a Delaware limited liability company, Laurel Ridge
Development, LLC, a Delaware limited liability company, Inn at Lakewood
Development, LLC, a Delaware limited liability company, and Bay Spring Village,
LLC, a Delaware limited liability company, all of which are Affiliates of ARV,
ABR, and Vintage.


                                       14


<PAGE>   15
FINOVA                                               LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

        "Loan B Facilities" means, individually and collectively, each of the
facilities located in Irvine, California, Highlands Ranch, Colorado, Lakewood,
Colorado, and Barrington, Rhode Island, to be developed by the Loan B Borrowers
with the proceeds of Loan B.

        "Loan Documents" shall mean, collectively, this Agreement, the Notes,
the Mortgages, the Projected Cash Shortfall Protection, the Operating Deficit
and Deficiency Payment Agreement, the Assignments, the Account Agreements, the
Environmental Certificates, the Subordination Agreements, UCC-1 Financing
Statements for filing and recording as required to perfect all of the security
interests granted or created pursuant to the Loan Documents, the Lease
Assignment, and any other agreement entered into in connection with this
Agreement or evidencing, securing or otherwise ancillary to the Loan as more
fully described in the Schedule together with all alterations, amendments,
changes, extensions, modifications, refinancings, refundings, renewals,
replacements, restatements, or supplements, of or to any of the foregoing.

        "Loan Party" means Borrower, ARV, Vintage ABR Hillsdale, each
Subordinating Creditor and each other party (other than FINOVA) to any Loan
Document.

        "Loan" has the meaning set forth in Section 1.2 hereof.

        "Loan Year" means each twelve (12) month period commencing on the
Closing Date.

        "Management Agreements" mean those certain Management Agreement between
Borrower and ARV governing the management of the Facilities.

        "Maturity Date" shall mean, for each Borrower, the date upon which the
sixtieth (60th) monthly installment payable by such Borrower, as described in
Paragraph 7 of Section 3.1 on the Schedule, shall become due and payable.

        "Maximum Interest Rate" has the meaning set forth in Section 3.4(b)
hereof.

        "Mortgage" shall mean the deed of trust (if available under applicable
state law) or mortgage securing the Note and all of Borrower's obligations under
the Loan Documents, and constituting: (a) a first and prior lien on the fee
title to the Real Property, including all buildings and improvements now or
hereafter located on the Real Property, and all fixtures and attachments of and
to the buildings now on the Real Property, if any, and those to be erected on
the Real Property and all rights and interest appurtenant thereto; and (b) a
first priority assignment of all Borrower's interest in and to the Leases
including without limitation all rents, issues or profits therefrom.

        "Multiemployer Plan" means a "multiemployer plan" as defined in ERISA
Sections 3(37) or 4001(a)(3) or IRC Section 414(f) which covers employees of
Borrower or any ERISA Affiliate.

        "Net Worth" at any date means a Borrower's net worth as determined in
accordance with GAAP, consistently applied.

        "Note(s)" shall mean the promissory note or notes of Borrower evidencing
the Loan.

        "Notice Date" has the meaning set forth in Section 13.1.

        "Obligations" means all present and future loans, advances, debts,
liabilities, obligations, covenants, duties and indebtedness at any time owing
by Borrower to FINOVA, whether evidenced by this Agreement, any note or other
instrument or document, whether arising from an extension of credit, opening of
a letter of credit, banker's acceptance, loan, guaranty, indemnification or
otherwise, whether direct or indirect (including, without limitation, those
acquired by assignment and any participation by FINOVA in Borrower's debts owing
to others), absolute or contingent, due or to become due, including, without
limitation, all interest, charges, expenses, fees, attorney's fees, expert
witness fees, examination fees, letter of credit fees, collateral monitoring
fees, closing fees, facility fees, loan fees, prepayment premiums, and any other
sums chargeable to Borrower hereunder or under any other agreement with FINOVA.

        "Operating Cash Flow" means, for any period, Borrower's net income or
loss (excluding the effect of any extraordinary gains or losses), determined in
accordance with GAAP, plus each of the following items, without duplication, to
the extent deducted from the revenues of Borrower in the calculation of net
income or loss: (i) depreciation; (ii) amortization and other non-cash charges;
and (iii) interest expense paid or accrued, including, without limitation,
interest on Capital Leases imputed in accordance with GAAP; less, without
duplication, each of (a) Tax Distributions actually paid during such period; and
(b) the Replacement Reserve.

        "Operating Deficit and Deficiency Payment Agreement" means those certain
credit enhancements to be provided by ARV and Vintage ABR Hillsdale in favor of
FINOVA and Rossmore pursuant to Section 2.1(F) on the Schedule.

        "PBGC" means the Pension Benefit Guarantee Corporation.

        "Permanent Loan Installment" has the meaning given in Paragraph 7 under
Section 3.1 on the Schedule.

        "Permitted Discretion" means FINOVA's judgment exercised in good faith
based upon its consideration of any factor which FINOVA believes in good faith:
(i) will or could adversely affect the value of any Collateral, the
enforceability or priority of FINOVA's liens thereon or the amount which FINOVA
would be likely to receive (after giving consideration to delays in payment and
costs of enforcement) in the liquidation of such Collateral; (ii) suggests that
any collateral report or financial information delivered to FINOVA by any Person
on behalf of the Borrower is incomplete, inaccurate or misleading in any
material respect; (iii) materially increases the likelihood of a bankruptcy,
reorganization or other insolvency proceeding involving the Borrower, any Loan
Party or any of the Collateral; or (iv) creates or reasonably could be expected
to create an Event of Default. In exercising such judgment, FINOVA may also take
into consideration the financial and business climate of the Borrower's industry
and general macroeconomic conditions affecting Borrower. The burden of
establishing lack of good faith hereunder shall be on the Borrower.

        "Permitted Encumbrance" means each of the liens, mortgages and other
security interests set forth on Exhibit B to the Schedule and incorporated
herein by this reference.

        "Permitted Management Fees" means those management fees which are
payable to ARV (or any permitted successor manager) pursuant to Management
Agreements that have been reviewed and approved by FINOVA.

        "Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.

        "Plan" means any plan described in ERISA Section 3(2) maintained for
employees of Borrower or any ERISA Affiliate, other than a Multiemployer Plan.

        "Plans" has the meaning set forth in Section 11 of the Construction
Covenants Section.

        "Post Management Fees Cash Flow" means, for any period, a Borrower's
Operating Cash Flow minus Permitted Management Fees paid by Borrower during such
period.

        "Prepared Financials" means the balance sheets of Borrower as of the
date set forth in the Schedule, and as of each subsequent date on which audited
balance sheets are delivered to FINOVA from time to time hereunder, and the
related statements of operations, changes in members' equity and changes in cash
flow for the periods ended on such dates.

        "Prepayment Premium" has the meaning set forth in Paragraph 4 of Section
3.1 on the Schedule.

        "Prime Rate" means 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. In the event
that Citibank, N.A., ever ceases to publish the Prime Rate, FINOVA shall
designate a substitute comparable rate to be used as the benchmark for
determining the Interest Rate from among the applicable prime rate or other
reference rates published by one of the ten largest commercial lending
institutions based in the United States, or alternatively shall select a rate
based upon a composite of the standard reference rates published by such
institutions.

        "Principal Work-Related Items" means the Plans and all agreements
between Borrower and third parties pertaining to the Work, including, without
limitation, the Construction Contract(s) and the Architect/Engineer
Agreement(s), as approved by FINOVA in writing and modified from time to time
with FINOVA's prior written consent.

        "Prohibited Transaction" means any transaction described in Section 406
of ERISA which is not exempt by reason of Section 408 of ERISA, and any
transaction described in Section 4975(c) of the IRC which is not exempt by
reason of Section 4975(c)(2) of the IRC or otherwise exempt from section 406 of
Erisa of 4975(c) of the IRC pursuant to an administrative or personal exemption.

        "Projected Cash Shortfall Protection" means those certain credit
enhancements to be provided by ARV in favor of FINOVA and the individual
Borrowers pursuant to Section 2.1(E) on the Schedule.

        "Projected Cash Shortfalls" has the meaning set forth in Section 2.1(E)
on the Schedule.

        "Project Documents" shall mean all management, shared use, access,
engineering, marketing, construction, operating, owners' association and other
agreements relating to the use, ownership, or operation of the Facilities and
all of Borrower's rights, as a "declarant", "developer", "owner" and/or
otherwise under the governing documents and restrictive covenants affecting the
Real Property, including, without limitation, the deed or declaration of
division, owners' association charters or articles or certificates of
incorporation, bylaws and rules and regulations relating thereto whether now
existing or hereafter created.


                                       15


<PAGE>   16
FINOVA                                               LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

        "Real Property" shall mean the parcels of real property legally
described on Exhibits A-1, A-2, and A-3 attached to the Schedule and
incorporated herein by this reference, upon which the Facilities are located,
and all improvements and additions thereto, and all mineral rights, easements
and other rights appurtenant thereto, all as more fully described in the
Mortgages.

        "Receivables" or "Receivable" means all of Borrower's now owned and
hereafter acquired accounts (whether or not earned by performance), proceeds of
any letters of credit naming Borrower as beneficiary, contract rights, chattel
paper, instruments, documents and all other forms of obligations at any time
owing to Borrower, all guaranties and other security therefor, whether secured
or unsecured, and all rights of stoppage in transit and all other rights or
remedies of an unpaid vendor, lienor or secured party. Receivables includes all
accounts and general intangibles, all rights, remedies, guaranties, security
interests and liens, all records (other than medical records, unless patient
consents with respect thereto have been received) and other property evidencing
any and all proceeds which relate to or are associated with such Receivables,
subject to confidentiality rights under applicable law and under rights and
rules of the Joint Commission for the Accreditation of Healthcare Organizations
("JCAHO").

        "Replacement Reserve" means a reserve for Capital Expenditures, in an
amount equal to the following: (i) $350 per unit for Rossmore and (ii) $250 per
unit for each of Encino and Berkshire for the one year period commencing upon
the Conversion Date and $350 per unit at all times thereafter; provided,
however, that Borrowers shall only be required to maintain the Replacement
Reserve, and the Replacement Reserve shall only be deducted in determining
Operating Cash Flow, for the period commencing with the Start Date applicable to
such Borrower.

        "Reportable Event" means a reportable event described in Section 4043 of
ERISA or the regulations thereunder, a withdrawal from a Plan described in
Section 4063 of ERISA, or a cessation of operations described in Section 4068(f)
of ERISA.

        "Required Completion Assurance Deposits" shall mean all amounts
deposited by Borrower with FINOVA pursuant to Section 23 of the Construction
Covenants Section.

        "Required Completion Date" shall mean, with respect to Encino and
Berkshire, the date which is twelve (12) months after the applicable Closing
Date, subject to Force Majeure Events not exceeding sixty (60) days in the
aggregate, and, with respect to Rossmore, the date which is twenty (20) months
after the Pre-Closing Date, subject to Force Majeure Events not exceeding sixty
(60) days in the aggregate.

        "Reserve Account" shall have the meaning set forth in Section 10.20.

        "Rossmore" means Rossmore Renovation, LLC, a Delaware limited liability
company and one of the Borrowers.

        "Rossmore Facility" means the Rossmore House located at 445 North
Rossmore, Los Angeles, California, which Facility is to be acquired and operated
by Rossmore.

        "Schedule" has the meaning set forth in the preamble.

        "Start Date" has the meaning set forth in Section 10.14 on the Schedule.

        "Subordinated Debt" means liabilities of Borrower the repayment of which
is subordinated, to the payment and performance of the Obligations, pursuant to
a subordination agreement acceptable to FINOVA.

        "Subordination Agreement" shall have the meaning set forth in Section
10.15 hereof.

        "Subordinating Creditor" means each of the members of Borrower and ARV.

        "Tax Distributions" shall have the meaning set forth in the Negative
Covenants, Section 11 of the Schedule.

        "Title Agent" shall mean Fidelity National Title Insurance Company.

        "Title Company" shall mean Fidelity National Title Insurance Company.

        "Title Policy" shall have the meaning set forth in Section 2.1(l) of the
Loan Agreement

        "Total Facility" has the meaning set forth on the Schedule.

        "Trademarks, Licenses and Patents" means all of Borrower's right, title
and interest in and to: (i) trademarks, trademark registrations, trade names,
trade name registrations, and trademark or trade name applications, including
without limitation such as are listed on the Schedule as the same may be amended
from time to time, and (a) renewals thereof, (b) all income, royalties, damages
and payments now and hereafter due and/or payable with respect thereof,
including, without limitation, damages and payments for past or future
infringements thereof, (c) the right to sue for past, present and future
infringements thereof, (d) all rights corresponding thereto throughout the
world, and (e) the goodwill of the business operated by assignor connected with
and symbolized by any trademarks or trade names; (ii) license agreements,
including without limitation such as are listed on the Schedule and the right to
prepare for sale, sell, and advertise for sale any Inventory now or hereafter
owned by Assignor and now or hereafter covered by such licenses; and (iii)
patents and patent applications, registered or pending, including without
limitation such as are listed on the Schedule, attached hereto, together with
all income, royalties, shop rights, damages and payments thereto, the right to
sue for infringements thereof, and all rights thereto throughout the world and
all reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof, and all goodwill of the business connected with
the use of and symbolized by such patents.

        "Uncovered Cost of the Work" shall mean the amount equal to the excess
(if any) of (a) the remaining unpaid costs of Completion of the Work over (b)
the committed and undisbursed portion of the Loan and any Required Completion
Assurance Deposits held by FINOVA.

        "Vintage" means Vintage Senior Housing, LLC, a California limited
liability company and an Affiliate of each Borrower.

        "Vintage ABR Development" means Vintage/ABR (Development), LLC, a
Delaware limited liability company and, indirectly, the minority owner of each
Loan B Borrower.

        "Vintage ABR Hillsdale" means Vintage/ABR (Hillsdale), LLC, a Delaware
limited liability company and the minority member of each Loan A Borrower.

        "Vintage/Davidson " means Vintage/Davidson, LLC, a California limited
liability company.

        "Work" means the construction of the Improvements with respect to each
of the Facilities and the installation of any and all furniture, furnishings,
fixtures and/or equipment required by this Agreement or shown as costs on the
Budget, the Plans or the Construction Contract(s) for the Improvements.

        "Work Progress Schedule" shall mean a schedule showing that planned
timing, progress of construction and completion date for the development and the
construction of the Improvements with respect to each of the Facilities in the
form attached to the Schedule as Exhibit D.

        "Work-Related Advance" means any Advance made for the purpose of paying
or reimbursing Borrower for the costs of the Work.

        "Work-Related Advance Request" means the written application of Borrower
on FINOVA's standard forms made by Borrower specifying by name and amount all
parties to whom Borrower is obligated for labor, materials, equipment or
services supplied for the Completion of the Work whether or not specified in the
Budget, and requesting a Work-Related Advance for payment of such items,
accompanied by an Affidavit of Borrower and such schedules, affidavits,
releases, waivers, statements, invoices, bills and other documents as FINOVA may
request.

        15.2 Other Terms. All accounting terms used in this Agreement, unless
otherwise indicated, shall have the meanings given to such terms in accordance
with GAAP, consistently applied. All other terms contained in this Agreement,
unless otherwise indicated, shall have the meanings provided by the Code, to the
extent such terms are defined therein.


16.     MISCELLANEOUS.

        16.1 Recourse to Security; Certain Waivers. All Obligations shall be
payable by Borrower as provided for herein and, in full, at the termination of
this Agreement; recourse to security shall not be required at any time. Borrower
waives presentment and protest of any instrument and notice thereof, notice of
default and, to the extent permitted by applicable law, all other notices to
which Borrower might otherwise be entitled.

        16.2 No Waiver by FINOVA. Neither FINOVA's failure to exercise any
right, remedy or option under this Agreement, any supplement, the Loan Documents
or other agreement between FINOVA and Borrower nor any delay by FINOVA in
exercising the same shall operate as a waiver. No waiver by FINOVA shall be
effective unless in writing and then only to the extent stated. No waiver by
FINOVA shall affect its right to require strict performance of this Agreement.
FINOVA's rights and remedies shall be cumulative and not exclusive.

        16.3 Binding on Successor and Assigns. All terms, conditions, promises,
covenants, provisions and warranties shall inure to the benefit of and bind
FINOVA's and Borrower's respective representatives, successors and assigns.

        16.4 Severability. If any provision of this Agreement shall be
prohibited or invalid under applicable law, it shall be ineffective only to such
extent, without invalidating the remainder of this Agreement.

        16.5 Amendments; Assignments. This Agreement may not be modified,
altered or amended, except by an agreement in writing signed by Borrower and
FINOVA. Borrower may not sell, assign or transfer any interest in this Agreement
or any other Loan Document, or any portion thereof, including, without
limitation, any of Borrower's rights, title, interests,


                                       16


<PAGE>   17
FINOVA                                               LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

remedies, powers and duties hereunder or thereunder. Borrower hereby consents to
FINOVA's participation, sale, assignment, transfer or other disposition, at any
time or times hereafter, of this Agreement and any of the other Loan Documents,
or of any portion hereof or thereof, including, without limitation, FINOVA's
rights, title, interests, remedies, powers and duties hereunder or thereunder.
In connection therewith, FINOVA may disclose all documents and information which
FINOVA now or hereafter may have relating to Borrower or Borrower's business. To
the extent that FINOVA assigns its rights and obligations hereunder to a third
party, FINOVA shall thereafter be released from such assigned obligations to
Borrower and such assignment shall effect a novation between Borrower and such
third party.

        16.6 Integration. This Agreement, together with the Schedule (which is a
part hereof) and the other Loan Documents, reflect the entire understanding of
the parties with respect to the transactions contemplated hereby.

        16.7 Governing Law; Waivers. THIS AGREEMENT SHALL BE INTERPRETED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE CONFLICT OF LAWS RULES) OF THE
STATE OF ARIZONA GOVERNING CONTRACTS TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE COUNTY OF MARICOPA IN THE STATE OF ARIZONA OR, AT THE
SOLE OPTION OF FINOVA, IN ANY OTHER COURT IN WHICH FINOVA SHALL INITIATE LEGAL
OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE
MATTER IN CONTROVERSY. BORROWER WAIVES ANY OBJECTION OF FORUM NON CONVENIENS AND
VENUE. BORROWER FURTHER WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT,
AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE IN THE MANNER SET FORTH IN
SECTION 16.12 HEREOF FOR THE GIVING OF NOTICE. BORROWER FURTHER WAIVES ANY RIGHT
IT MAY OTHERWISE HAVE TO COLLATERALLY ATTACK ANY JUDGMENT ENTERED AGAINST IT.

        16.8 Survival. All of the representations and warranties of Borrower
contained in this Agreement shall survive the execution, delivery and acceptance
of this Agreement by the parties. No termination of this Agreement or of any
guaranty of the Obligations shall affect or impair the powers, obligations,
duties, rights, representations, warranties or liabilities of the parties hereto
and all shall survive such termination.

        16.9 Evidence of Obligations. Each Obligation may, in FINOVA's
discretion, be evidenced by notes or other instruments issued or made by
Borrower to FINOVA. If not so evidenced, such Obligation shall be evidenced
solely by entries upon FINOVA's books and records.

        16.10 Collateral Security. The Obligations shall constitute one loan
secured by the Collateral. FINOVA may, in its sole discretion, (i) exchange,
enforce, waive or release any of the Collateral, (ii) apply Collateral and
direct the order or manner of sale thereof as it may determine, and (iii)
settle, compromise, collect or otherwise liquidate any Collateral in any manner
without affecting its right to take any other action with respect to any other
Collateral.

        16.11 Application of Collateral. FINOVA shall have the continuing and
exclusive right to apply or reverse and re-apply any and all payments to any
portion of the Obligations in such order and manner as FINOVA shall determine in
its sole discretion. To the extent that Borrower makes a payment or FINOVA
receives any payment or proceeds of the Collateral for Borrower's benefit which
is subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, debtor in possession, receiver or
any other party under any bankruptcy law, common law or equitable cause, then,
to such extent, the Obligations or part thereof intended to be satisfied shall
be revived and continue as if such payment or proceeds had not been received by
FINOVA.

        16.12 Notices. Any notice required hereunder shall be in writing and
addressed to Borrower and FINOVA at their addresses set forth at the beginning
of this Agreement. Notices hereunder shall be deemed received on the earlier of
receipt, whether by mail, personal delivery, facsimile, or otherwise, or three
(3) Business Days following deposit in the United States mail, postage prepaid.

        16.13 Brokerage Fees. Borrower represents and warrants to FINOVA that,
with respect to the financing transaction herein contemplated, no Person is
entitled to any brokerage fee or other commission, and Borrower agrees to
indemnify and hold FINOVA harmless against any and all such claims. Borrowers
and FINOVA each hereby confirm that no broker or mortgage banker has been
engaged, or is entitled to any commission or brokerage fees, in connection with
the transactions contemplated by this Agreement.

        16.14 Disclosure. No representation or warranty made by Borrower in this
Agreement, or in any financial statement, report, certificate or any other
document furnished in connection herewith contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact known to Borrower
or which reasonably should be known to Borrower which Borrower has not disclosed
to FINOVA in writing with respect to the transactions contemplated by this
Agreement which materially and adversely affects the business, assets,
operations, prospects or condition (financial or otherwise), of Borrower.

        16.15 Publicity. FINOVA is hereby authorized to issue appropriate press
releases and to cause a tombstone to be published announcing the consummation of
this transaction and the aggregate amount thereof. Borrower shall it its
expense, erect a sign upon the Real Property within thirty (30) days following
the Closing Date indicating that FINOVA is the source of the financing of the
construction of the Improvements with such sign to contain FINOVA's "logo" and
be subject to the reasonable approval of FINOVA. FINOVA agrees to supply
Borrower with "camera-ready" artwork for inclusion with such sign.

        16.16 Captions. The Section titles contained in this Agreement are
without substantive meaning and are not part of this Agreement.

        16.17 Injunctive Relief. Borrower recognizes that, in the event Borrower
fails to perform, observe or discharge any of its Obligations under this
Agreement, any remedy at law may prove to be inadequate relief to FINOVA.
Therefore, FINOVA, if it so requests, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.

        16.18 Counterparts. This Agreement may be executed in one or more
counterparts, each of which taken together shall constitute one and the same
instrument.

        16.19 Construction. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments
or exhibits hereto.

        16.20 Time of Essence. Time is of the essence for the performance by
Borrower of the Obligations set forth in this Agreement.

        16.21 Limitation of Actions. Borrower agrees that any claim or cause of
action by Borrower against FINOVA, or any of FINOVA's directors, officers,
employees, agents, accountants or attorneys, based upon, arising from, or
relating to this Agreement, or any other present or future agreement, or any
other transaction contemplated hereby or thereby or relating hereto or thereto,
or any other matter, cause or thing whatsoever, whether or not relating hereto
or thereto, occurred, done, omitted or suffered to be done by FINOVA, or by
FINOVA's directors, officers, employees, agents, accountants or attorneys,
whether sounding in contract or in tort or otherwise, shall be barred unless
asserted by Borrower by the commencement of an action or proceeding in a court
of competent jurisdiction by the filing of a complaint within the applicable
statute of limitations, which begins on the date upon which Borrower, in the
exercise of reasonable diligence should have discovered the first act,
occurrence or omission upon which such claim or cause of action, or any part
thereof, is based and service of a summons and complaint on an officer of FINOVA
or any other person authorized to accept service of process on behalf of FINOVA,
within thirty (30) days thereafter. Borrower agrees that such statute of
limitations period of time is a reasonable and sufficient time for Borrower to
investigate and act upon any such claim or cause of action. The statute of
limitations period provided herein shall not be waived, tolled, or extended
except by a specific written agreement of FINOVA. This provision shall survive
any termination of this Loan Agreement or any other agreement.

        16.22 Liability. Neither FINOVA nor any FINOVA Affiliate shall be liable
for any indirect, special, incidental or consequential damages in connection
with any breach of contract, tort or other wrong relating to this Agreement or
the Obligations or the establishment, administration or collection thereof
(including without limitation damages for loss of profits, business
interruption, or the like), whether such damages are foreseeable or
unforeseeable, even if FINOVA has been advised of the possibility of such
damages. Neither FINOVA, nor any FINOVA Affiliate shall be liable for any
claims, demands, losses or damages, of any kind whatsoever, made, claimed,
incurred or suffered by Borrower through the ordinary negligence of FINOVA, or
any FINOVA Affiliate. "FINOVA Affiliate" shall mean FINOVA's directors,
officers, employees, agents, attorneys or any other person or entity affiliated
with or representing FINOVA.

        16.23 Notice of Breach by FINOVA. Borrower agrees to give FINOVA written
notice of (i) any action or inaction by FINOVA or any attorney of FINOVA in
connection with any Loan Documents that may be actionable against FINOVA or any
attorney of FINOVA or (ii) any defense to the payment of the Obligations for any
reason, including, but not limited to, commission of a tort or violation of any
contractual duty or duty implied by law. Borrower agrees that unless such notice
is fully given as promptly as possible (and in any event within thirty (30)
days) after Borrower has knowledge, or with the exercise of reasonable diligence
should have had knowledge, of any such action, inaction or defense, Borrower
shall not assert, and Borrower shall be deemed to have waived, any claim or
defense arising therefrom.

        16.24 MUTUAL WAIVER OF RIGHT TO JURY TRIAL. FINOVA AND BORROWER EACH
HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO: (I) THIS AGREEMENT; (II) ANY OTHER
PRESENT OR FUTURE


                                       17


<PAGE>   18
FINOVA                                               LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------

INSTRUMENT OR AGREEMENT BETWEEN FINOVA AND BORROWER; OR (III) ANY CONDUCT, ACTS
OR OMISSIONS OF FINOVA OR BORROWER OR ANY OF THEIR MEMBERS, DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH FINOVA OR
BORROWER; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT
OR OTHERWISE.

        16.25 Indemnification. Borrower shall indemnify, defend and hold FINOVA
harmless from and against all claims, costs, expenses, actions, suits,
proceedings, losses, damages, and liabilities of any kind whatsoever, including
but not limited to, attorneys' fees and expenses, arising out of any matter
relating to the Loan or to the ownership, development, construction, sale,
rental or financing of the Real Property and whether resulting from internal
disputes of Borrower, disputes between Borrower and any Affiliate or whether
involving other third persons or entities, or out of any other matter whatsoever
related to this Agreement, any of the Loan Documents or any property encumbered
thereby; excluding, however, claims, costs, expenses, actions, suits,
proceedings, losses, damages and liabilities of any kind whatsoever which result
from FINOVA's gross negligence or willful misconduct. This indemnity provision
shall continue in full force and effect and shall survive not only the making of
the Loan and all advances thereof but shall also survive the repayment of the
Loan and the performance of all of Borrower's other Obligations under this
Agreement.

        16.26 Additional Documents. Borrower shall execute and deliver any and
all documents which may reasonably be requested by FINOVA in order to effectuate
the purposes of this Agreement.

        16.27 No Third-Party Beneficiary. This Agreement is made solely between
Borrower and FINOVA. No other person shall have any right of action hereunder.
Borrower and FINOVA expressly agree that no person shall be a third-party
beneficiary to this Agreement.

        16.28 Incorporation. The Recitals and all of the exhibits attached
hereto are an integral part hereof and are fully incorporated herein by this
reference.

        16.29 No Joint Venture. Under no circumstances shall FINOVA and Borrower
be deemed partners and/or joint venturers with respect to the Real Property, the
Facilities, the Loan, or any other agreement between the parties.


                           [SIGNATURE PAGE TO FOLLOW]

        SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT



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 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)


                                       18


<PAGE>   19
My Commission Expires:

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


                                       19


<PAGE>   20
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:


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


                                       20


<PAGE>   21
                                      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         
-------------------------------          -------------------------------
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:


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


                                       21


<PAGE>   22
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:


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


                                       22


<PAGE>   23
                                      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:


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


                                       23


<PAGE>   24
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:


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


FINOVA:
FINOVA CAPITAL CORPORATION,
a Delaware corporation


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



                                       24