Document:

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                                                                    EXHIBIT 10.4

                                    TERM NOTE

Lender: LFSRI II Assisted Living LLC                    New York, New York
Principal Amount:  $10,000,000.00                       April 24, 2000

                  FOR VALUE RECEIVED, the undersigned ARV Assisted Living Inc.,
a Delaware corporation (the "Borrower"), hereby promises to pay to the order of
the Lender set forth above or its assigns or transferees (the "Holder") the
Principal Amount set forth above, or, if less, the aggregate unpaid principal
amount of the Term Loans (as defined in the Loan Agreement referred to below)
owing to the Holder, payable at such times, and in such amounts, as are
specified in the Loan Agreement.

                  The Borrower promises to pay interest on the unpaid principal
amount of the Term Loans from the date made until such principal amount is paid
in full, at such interest rates, and payable at such times, as are specified in
the Loan Agreement.

                  Both principal and interest are payable in Dollars to the
Holder, at LFSRI II Assisted Living, L.L.C., c/o Lazard Freres Real Estate
Investors, L.L.C., 30 Rockefeller Plaza, New York, NY 10020, Attention: Chief
Financial Officer and General Counsel, or any other address indicated in writing
by the Holder to the Borrower, in immediately available funds.

                  This Note is entitled to the benefits of the Term Loan
Agreement, dated as of April 24, 2000 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Loan Agreement"),
among the Borrower and the Lender. Capitalized terms used herein and not defined
herein are used herein as defined in the Loan Agreement.

                  The Loan Agreement, among other things, (i) provides for the
making of Term Loans by the Lender to the Borrower in an aggregate principal
amount not to exceed $10,000,000, the indebtedness of the Borrower resulting
from such Term Loans being evidenced by this Note and (ii) contains provisions
for acceleration of the maturity of the unpaid principal amount of this Note
upon the happening of certain stated events and also for prepayments on account
of the principal hereof prior to the maturity hereof, upon the terms and
conditions therein specified.

                  Demand, diligence, presentment, protest and notice of
non-payment and protest are hereby waived by the Borrower.

                  This Note shall be governed by, and construed and interpreted
in accordance with, the law of the State of New York.

                  IN WITNESS WHEREOF, the Borrower has caused this Note to be
executed and delivered by its duly authorized officer as of the day and year and
at the place set forth above.

                                            ARV Assisted Living, Inc., a
                                            Delaware corporation

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

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For value received, [          ] ("           ")
hereby assigns, sells and conveys to ______________ all of its
right, title and interest in and to the
Term Note of ______ dated as of ______, 2000, payable to the
order of ________ or its assigns and transferees ______, ________________

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

<PAGE>   3

                       LOANS AND REPAYMENTS OF TERM LOANS

<TABLE>
<CAPTION>
                       Amount of Term      Amount of Principal of          Unpaid Principal Balance
         Date              Loans              Term Loans Repaid                  of Term Loans              Notation Made By
         ----              -----              -----------------                  -------------              ----------------
<S>                    <C>                 <C>                             <C>                              <C>
</TABLE><PAGE>   1

                                                                    EXHIBIT 10.5

                                     WAIVER

         WAIVER dated as of April 24, 2000 (this "Waiver") to the Settlement
Agreement among ARV Assisted Living, Inc. ("ARV"), Prometheus Assisted Living
LLC, Lazard Freres Real Estate Investors L.L.C., LF Strategic Realty Investors
II L.P., LFSRI II Alternative Partnership L.P., LFSRI II - CADIM Alternative
Partnership L.P., Atria Communities, Inc., and Kapson Senior Quarters Corp. (the
"Parties") dated as of September 29, 1999 (the "Settlement Agreement").

                              W I T N E S S E T H :

          WHEREAS, the Parties desire to clarify the application of certain
provisions in the Settlement Agreement in connection with the Warrant to
purchase common stock of ARV dated as of the date hereof issued by ARV to LFSRI
II Assisted Living LLC (the "Warrant");

         NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:

II. Waiver of Provisions of the Settlement Agreement. Notwithstanding any
provisions of the Settlement Agreement to the contrary, the parties agree that
the provisions of Section 3.01 and Section 3.02 of the Settlement Agreement
shall not apply to the issuance of the Warrant or the issuance of shares of
Common Stock upon exercise of the Warrant. ARV expressly waives compliance by
"Investor" or "Investor Affiliates" (as such terms are defined in the Settlement
Agreement) with Section 3.01, and Investor and each Investor Affiliate expressly
waive compliance by ARV with Section 3.02, of the Settlement Agreement with
respect to the issuance by ARV of the Warrant and Warrant Stock thereunder.

III. Representations and Warranties. Each of the parties hereto hereby
represents and warrants that (i) it has the power and authority and the legal
right to make, deliver and perform this Waiver, (ii), it has taken all necessary
actions to authorize the execution, delivery and performance of this Waiver and
(iii) the signatory hereto on behalf of such party is duly authorized to execute
this Waiver on behalf of such party.

IV. Continuing Effect. Except as expressly waived or otherwise agreed hereby,
the Settlement Agreement shall continue to be and shall remain in full force and
effect in accordance with its terms. The waiver and other agreements contained
herein shall not constitute a waiver or amendment of any other term, condition
or provision of the Settlement Agreement.

V. Governing Law. This Waiver shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Delaware.

VI. Counterparts. This Waiver may be executed by the parties hereto on any
number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.

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                  IN WITNESS WHEREOF, the parties hereto have caused this Waiver
to be duly executed and delivered by their properly and duly authorized officers
as of the day and year first above written.

                                      ARV Assisted Living, Inc.

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

                                      Prometheus Assisted Living LLC
                                      By LF Strategic Realty Investors II L.P.
                                      Its Managing Member
                                      By Lazard Freres Real Estate Investors
                                      L.L.C.  Its General Partner

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

                                      Lazard Freres Real Estate Investors L.L.C.

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

                                      LF Strategic Realty Investors II L.P.
                                      By Lazard Freres Real Estate Investors
                                      L.L.C.  Its General Partner

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

                                      LFSRI II Alternative Partnership L.P.
                                      By Lazard Freres Real Estate Investors
                                      L.L.C.  Its General Partner

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

                                      LFSRI II - CADIM Alternative
                                                 Partnership L.P.

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                                      By Lazard Freres Real Estate Investors
                                      L.L.C.  Its General Partner

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

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