Document:

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                                                                   EXHIBIT 10.82

                                    DEED OF TRUST

                            With Assignment of Rents

        THIS DEED OF TRUST, made into this 5th day of December, 2000, by and
between ARV CAMPBELL, L.P., a California limited partnership, with offices at
245 Fischer Avenue, Suite D-1, Costa Mesa, California 92626, herein called
Trustor, and FIDELITY NATIONAL TITLE INSURANCE COMPANY, a California
corporation, Trustee(s), and RED MORTGAGE CAPITAL, INC., an Ohio corporation,
with offices at 150 East Gay Street, 22nd Floor, Columbus, Ohio 53215, herein
called Beneficiary.

        WITNESSETH: That Trustor grants, transfers, and assigns to Trustee in
trust, upon the trusts, covenants, conditions and agreements and for the uses
and purposes hereinafter contained, with power of sale, all that real property
situate, lying and being in Santa Clara County, State of California, described
as follows:

                         SEE EXHIBIT "A" ATTACHED HERETO
                             AND MADE A PART HEREOF.

        Together with the rents, issues, and profits thereof, SUBJECT, HOWEVER,
to the right, power, and authority hereinafter given to and conferred upon
Beneficiary to collect and apply such rents, issues, and profits; and together
with all buildings and improvements of every kind and description now or
hereafter erected or placed thereon, and all fixtures, including but not limited
to all gas and electric fixtures, engines and machinery, radiators, heaters,
furnaces, heating equipment, laundry equipment, steam and hot-water boilers,
stoves, ranges, elevators and motors, bath tubs, sinks, water closets, basins,
pipes, faucets and other plumbing and heating fixtures, mantels, cabinets,
refrigerating plant and refrigerators, whether mechanical or otherwise, cooking
apparatus and appurtenances, and all shades, awnings, screens, blinds and other
furnishings, it being hereby agreed that all such fixtures and furnishings shall
to the extent permitted by law be deemed to be permanently affixed to and a part
of the realty; and

        Together with all building materials and equipment now or hereafter
delivered to said premises and intended to be installed therein; and

      Together with all articles of personal property now or hereafter attached
to or used in and about the building or buildings now erected or hereafter to be
erected on the lands described which are necessary to the complete and
comfortable use and occupancy of such building or buildings for the purposes for
which they were or are to be erected, including all other goods and chattels and
personal property as are ever used or furnished in operating a building, or the

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activities conducted therein, similar to the one herein described and referred
to, and all renewals or replacements thereof or articles in substitution
therefor, whether or not the same are, or shall be attached to said building or
buildings in any manner, and said Trustor agrees to execute a Security Agreement
covering the aforesaid fixtures and articles of personal property, at the time
of placing such personal property or any part thereof in the building or
buildings to be erected on the lands herein described in the manner and form
required by law, at its expense and satisfactory to the Beneficiary.

        To have and to hold the property hereinbefore described together with
appurtenances to the Trustee, its or his successors and assigns forever.

        FOR THE PURPOSE of securing performance of each agreement of Trustor
herein and payment of a just indebtedness of the Trustor to the Beneficiary in
the principal sum of ONE MILLION SEVEN HUNDRED EIGHTY-NINE THOUSAND SEVEN
HUNDRED AND NO/100THS DOLLARS ($1,789,700.00), evidenced by its Note of even
date herewith, bearing interest from date on outstanding balances at Eight and
three-hundredths percent (8.03%) per annum, said principal and interest being
payable in monthly installments as provided in said Note with a final maturity
of January 1, 2036, which Note is identified as being secured hereby by a
certificate thereon. Said Note and all of its terms are incorporated herein by
reference and this conveyance shall secure any and all extensions thereof,
however evidenced.

AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES:

        1. That it will pay the Note at the times and in the manner provided
therein;

        2. That it will not permit or suffer the use of any of the property for
any purpose other than the use for which the same was intended at the time this
Deed of Trust was executed;

        3. That the Regulatory Agreement, if any, executed by the Trustor and
the Secretary of Housing and Urban Development, acting by and through the
Federal Housing Commissioner, which is being recorded simultaneously herewith,
is incorporated in and made a part of this Deed of Trust. Upon default under the
Regulatory Agreement and upon the request of the Secretary of Housing and Urban
Development, acting by and through the Federal Housing Commissioner, the
Beneficiary, at its option, may declare the whole of the indebtedness secured
hereby to be due and payable;

        4. That all rents, profits and income from the property covered by this
Deed of Trust are hereby assigned to the Beneficiary for the purpose of
discharging the debt hereby secured. Permission is hereby given to Trustor so
long as no default exists hereunder, to collect such rents, profits and income
for use in accordance with the provisions of the Regulatory Agreement;

           That the Trustor grants to the holder or holders of the Note
secured hereby the right and power to appoint a substitute Trustee or Trustees
hereunder for any reason whatsoever by instrument of appointment duly executed
and acknowledged by the holder or holders of the Note and to be filed for record
in the office wherein this Deed of Trust is recorded. Such power of

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appointment may be exercised as often as deemed necessary by the holder or
holders of the Note. Upon such appointment, the substitute Trustee or Trustees
shall be vested with all the rights, powers, authority and duties vested in the
Trustee hereunder;

        5. That upon default hereunder or under the aforementioned Regulatory
Agreement, Beneficiary shall be entitled to the Appointment of a receiver by any
court having jurisdiction, without notice, to take possession and protect the
property described herein and operate same and collect the rents, profits and
income therefrom;

        6. That at the option of the Trustor the principal balance secured
hereby may be reamortized on terms acceptable to the Secretary of Housing and
Urban Development, acting by and through the Federal Housing Commissioner if a
partial prepayment results from an award in condemnation in accordance with
provisions of Paragraph 21 herein, or from an insurance payment made in
accordance with provisions of Paragraph 7 herein, where there is a resulting
loss of project income;

        7. That the Trustor will keep the improvements now existing or hereafter
erected on the deeded property insured against loss by fire and such other
hazards, casualties, and contingencies, as may be stipulated by the Secretary of
Housing and Urban Development, acting by and through the Federal Housing
Commissioner upon the insurance of the Deed of Trust and other hazards as may be
required from time to time by the Beneficiary, and all such insurance shall be
evidenced by standard fire and extended coverage insurance policy or policies,
in amounts not less than necessary to comply with the applicable Coinsurance
Clause percentage, but in no event shall the amounts of coverage be less than 80
percent of the Insurable Values or not less than the unpaid balance of the
insured Deed of Trust, whichever is the lesser, and in default thereof the
Beneficiary shall have the right to effect insurance. Such policies shall be
endorsed with standard Mortgagee clause with loss payable to the Beneficiary and
the Secretary of Housing and Urban Development as their interests may appear,
and shall be deposited with the Beneficiary; The insurance carrier providing the
insurance shall be chosen by Trustor, subject to approval by Beneficiary,
provided that such approval shall not be unreasonably withheld.

               That if the premises covered hereby, or any part thereof, shall
be damaged by fire or other hazard against which insurance is held as
hereinabove provided, the amounts paid by any insurance company in pursuance of
the contract of insurance to the extent of the indebtedness then remaining
unpaid, shall be paid to the Beneficiary, and, at its option, may be applied to
the debt or released for the repairing or rebuilding of the premises. Any
unexpired insurance shall inure to the benefit of, and pass to, the purchaser of
the property covered thereby at any Trustee's sale held hereunder;

        8. Together with and in addition to the monthly payments of interest or
of principal and interest payable under the terms of said Note, to pay to
Beneficiary monthly until said Note is fully paid, beginning on the first day of
the first month after the date hereof, the following sums:

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               (a) An amount sufficient to provide the Beneficiary with funds to
               pay the next mortgage insurance premium if this instrument and
               the Note secured hereby are insured, or a monthly service charge,
               if they are held by the Secretary of Housing and Urban
               Development, as follows:

                        (I) If and so long as said Note of even date and this
                        instrument are insured or are reinsured under the
                        provisions of the National Housing Act, an amount
                        sufficient to accumulate in the hands of the Beneficiary
                        one month prior to its due date the annual mortgage
                        insurance premium, in order to provide such Beneficiary
                        with funds to pay such premium to the Secretary of
                        Housing and Urban Development, pursuant to the National
                        Housing Act, as amended, and applicable Regulations
                        thereunder, or

                        (II) Beginning with the first day of the month following
                        an assignment of this instrument and the Note secured
                        hereby to the Secretary of Housing and Urban
                        Development, a monthly service charge which shall be an
                        amount equal to one-twelfth of one-half percent (1/12 of
                        1/2%) of the average outstanding principal balance due
                        on the Note computed for each successive year beginning
                        with the first of the month following such assignment,
                        without taking into account delinquencies or
                        prepayments.

               (b) A sum equal to the ground rents, if any, next due, plus the
               premiums that will next become due and payable on policies of
               fire and other property insurance covering the premises covered
               hereby, plus water rates, taxes and assessments next due on the
               premises covered hereby (all as estimated by the Beneficiary)
               less all sums already paid therefor divided by the number of
               months to elapse before one month prior to the date when such
               ground rents, premiums, water rates, taxes and assessments will
               become delinquent, such sums to be held by Beneficiary in trust
               to pay said ground rents, premiums, water rates, taxes, and
               special assessments.

               (c) All payments mentioned in the two preceding subsections of
               this paragraph and all payments to be made under the Note secured
               hereby shall be added together and the aggregate amount thereof
               shall be paid each month in a single payment to be applied by
               Beneficiary to the following items in the order set forth:

                        (I) premium charges under the Contract of Insurance with
                        the Secretary of Housing and Urban Development, acting
                        by and through the Federal Housing Commissioner or
                        service charge;

                        (II) ground rents, taxes, special assessments, water
                        rates, fire and other property insurance premiums;

                        (III) interest on the Note secured hereby;

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                        (IV) amortization of the principal of said Note.

        9. Any excess funds accumulated under paragraph (b) above remaining
after payment of the items therein mentioned, shall be credited to subsequent
monthly payments of the same nature required thereunder; but if any such item
shall exceed the estimate therefor, the Trustor shall without demand forthwith
make good the deficiency. Failure to do so before the due date of such item
shall be a default hereunder. In case of termination of the Contract of Mortgage
Insurance by prepayment of the mortgage in full, or otherwise (except as
hereinafter provided), accumulations under paragraph (a) above not required to
meet payments due under the Contract of Mortgage Insurance, shall be credited to
the Trustor. If the property is sold under foreclosure or is otherwise acquired
by the Beneficiary after default, any remaining balance of the accumulations
under paragraph (b) above shall be credited to the principal of the debt as of
the date of commencement of foreclosure proceedings or as of the date the
property is otherwise acquired; and accumulations under paragraph (a) above
shall be similarly applied unless required to pay sums due to the Secretary of
Housing and Urban Development, acting by and through the Federal Housing
Commissioner under the Contract of Mortgage Insurance;

        10. To keep said property in good condition and repair, not to remove or
demolish any buildings thereon; to complete or restore promptly and in good and
workmanlike manner any building which may be constructed, damaged, or destroyed
thereon and to pay when due all claims for labor performed and materials
furnished therefor; to comply with all laws affecting said property or requiring
any alterations or improvements to be made thereon; not to commit or permit
waste thereof; not to commit, suffer or permit any act upon said property in
violation of law and/or covenants, conditions and/or restrictions affecting said
property; not to permit or suffer any alterations of or addition to the
buildings or improvements hereafter constructed in or upon said property without
the consent of the Beneficiary;

        11. To appear in and defend any action or proceeding purporting to
affect the security hereof or the rights or powers of Beneficiary or Trustee,
and to pay all costs and expenses, including cost of evidence of title and
attorney's fees in a reasonable sum, in any such action or proceeding in which
Beneficiary or Trustee may appear;

        12. Should Trustor fail to make any payment or do any act as herein
provided, then Beneficiary or Trustee, but without obligation so to do and
without notice to or demand upon Trustor and without releasing Trustor from any
obligation hereof, may make or do the same in such manner and to such extent as
either may deem necessary to protect the security hereof, Beneficiary or Trustee
being authorized to enter upon said property for such purposes; may commence,
appear in and/or defend any action or proceeding purporting to affect the
security hereof or the rights or powers of Beneficiary or Trustee; may pay,
purchase, contest, or compromise any encumbrance, charge, or lien which in the
judgment of either appears to be prior or superior hereto; and, in exercising
any such powers, may pay necessary expenses, employ counsel, and pay his
reasonable fees;

        13. The Beneficiary shall have the right to pay mortgage insurance
premiums or fire and other property insurance premiums when due to the extent
that monthly payments made

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hereunder for the purpose of meeting same are insufficient. All such payments
made by the Beneficiary shall be added to the principal sum secured hereby;

        14. To pay immediately and without demand all sums so expended by
Beneficiary or Trustee, under permission given under this Deed of Trust, with
interest from date of expenditure at the rate specified in said Note;

        15.

        16. The Trustor further covenants that it will not voluntarily create,
suffer, or permit to be created against the property subject to this Deed of
Trust any lien or liens inferior or superior to the lien of this Deed of Trust
and further that it will keep and maintain the same free from the claim of all
persons supplying labor or materials which will enter into the construction of
any and all buildings now being erected or to be erected on said premises;

        17. That the improvements upon the premises, covered by the Deed of
Trust, and all plans and specifications comply with all municipal ordinances and
regulations and all of other regulations made or promulgated, now or hereafter,
by lawful authority, and that the same will comply with all such municipal
ordinances and regulations and with the rules of the applicable fire rating or
inspection organization, bureau, association or office;

        18. That so long as this Deed of Trust and the said Note secured hereby
are insured under the provisions of the National Housing Act, or held by the
Secretary of Housing and Urban Development, it will not execute or file for
record any instrument which imposes a restriction upon the sale or occupancy of
the mortgaged property on the basis of race, color, creed or national origin.

ABOVE IT IS MUTUALLY AGREED THAT:

        19. Trustor herein agrees to pay to Beneficiary or to the authorized
loan servicing representative of the Beneficiary a charge not to exceed $15 for
providing a statement regarding the obligation secured by this Deed of Trust as
provided by Section 2954, Article 2, chapter 2, Title 14, Part 4, Division 3, of
the Civil Code of the State of California.

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        20.

        21. Should the property or any part thereof be taken or damaged by
reason of any public improvement or condemnation preceding, or damaged by fire,
or earthquake, or in any other manner, the Beneficiary shall be entitled to all
compensation, awards, and other payments or relief therefor, and shall be
entitled at its option to commence, appear in and prosecute in its own name any
action to proceedings, or to make any compromise or settlement in connection
with such taking or damage. All awards of compensation in connection with
condemnation for public use of or a taking of any of that property, shall be
paid to the Beneficiary to be applied to the amount due under this Note secured
hereby in (1) amounts equal to the next maturing installment or installments or
principal and (2) with any balance to be credited to the next payment due under
the Note. All awards of damages in connection with any condemnation for public
use of or injury to any residue of that property shall be paid to the
Beneficiary to be applied to a fund held for and on behalf of the Trustor which
fund shall, at the option of the Beneficiary, and with the prior approval of the
Secretary of Housing and Urban Development, either be applied to the amount due
under the Note as specified in the preceding sentence, or be disturbed for the
restoration or repair of the damage to the residue. No amount applied to the
reduction of the principal amount due in accordance with (1) shall be considered
an optional prepayment as the term is used in this Deed of Trust and the Note
secured hereby, nor relieve the Trustor from making regular monthly payments
commencing on the first day of the first month following the date of receipt of
the award. The Beneficiary is hereby authorized in the name of the Trustor to
execute and deliver valid acquittances for such awards and to appeal from such
award;

        22. Upon default by Trustor in making any monthly payment provided for
herein or in the Note secured hereby, and if such default is not made good prior
to the due date of the next such installment, or if Trustor shall fail to
perform any covenant or agreement in this Deed of Trust, all sums secured hereby
shall, at the option of the Beneficiary, be deemed to have become immediately
due and payable, and shall thereupon be collectable by foreclosure of this Deed
of Trust. In the event of default, Trustee hereunder shall be, and is authorized
and empowered when given notice to do so by Beneficiary after such default, to
cause the property to be sold, which notice Trustee shall cause to be duly filed
for record.

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        23. After the lapse of such time as may then be required by law
following the recordation of said notice of defaults, and notice of sale having
been given as then required by law, Trustee, without demand on Trustor, shall
sell said property at the time and place fixed by it in said notice of sale,
either as a whole or in separate parcels, and in such order as it may determine
at public auction to the highest bidder for cash in lawful money of the United
States, payable at time of sale. Trustee may postpone sale of all or any portion
of said property by public announcement at the time and place of sale, and from
time to time thereafter may postpone the sale by public announcement at the time
fixed by the preceding postponement. Trustee shall deliver to the purchaser its
Deed conveying the property so sold, but without any covenant or warranty,
express or implied. The recitals in the Deed of any matters or facts shall be
conclusive proof of the truthfulness thereof. Any person, including Trustor,
Trustee, or Beneficiary, may purchase at the sale. The Trustee shall apply the
proceeds of sale to payment of (1) the expenses of such sale, together with the
reasonable expenses of this trust including therein reasonable Trustee's fees or
attorney's fees for conducting the sale, and the actual cost of publishing,
recording, mailing and posting notice of the sale; (2) the cost of any search
and/or other evidence of title procured in connection with such sale and revenue
stamps on Trustees' Deed; (3) all sums expended under the terms hereof, not then
repaid, with accrued interest at the rate specified in said Note; (4) all other
sums then secured hereby; and (5) the remainder, if any, to the person or
persons legally entitled thereto;

        24. Beneficiary may from time to time substitute a successor or
successors to any Trustee named herein or acting hereunder to execute this
Trust. Upon such appointment, and without conveyance to the successor trustee,
the latter shall be vested with all title, powers, and duties conferred upon any
Trustee herein named or acting hereunder. Each such appointment and substitution
shall be made by written instrument executed by Beneficiary, containing
reference to this Deed and its place of record which, when duly recorded in the
proper office of the county or counties in which the property is situated, shall
be conclusive proof of proper appointment of the successor trustee. In the event
of default, Trustee hereunder shall be, and is authorized and empowered when
given notice to do so by Beneficiary after such default to cause the property to
be sold, which notice Trustee shall cause to be duly filed for record.

        25. The pleading of any statute of limitations as a defense to any and
all obligations secured by this Deed is hereby waived to the full extent
permissible by law;

        26. Upon written request of Beneficiary stating that all sums secured
hereby have been paid, and upon surrender of this Deed of Trust and said Note to
Trustee for cancellation and retention and upon payment of its fees, Trustee
shall reconvey, without warranty, the property then held hereunder. The recitals
in such reconveyance of any matters or fact shall be conclusive proof of the
truthfulness thereof. The grantee in such reconveyance may be described as "the
person or persons legally entitled thereto;"

        27. The trust created hereby is irrevocable by Trustor;

        28. This Deed of Trust applies to, inures to the benefit of, and binds
all parties hereto, their heirs, legatees, devisees, administrators, executors,
successors, and assigns. The term

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"Beneficiary" shall include not only the original Beneficiary hereunder but also
any future owner and holder including pledgees, of the Note secured hereby. In
this Deed, whenever the context so requires, the masculine gender includes the
feminine and/or neuter, and the singular number includes the plural. All
obligations of each Trustor hereunder are joint and several;

        29. Trustee accepts this Trust when this Deed of Trust, duly executed
and acknowledged, is made public record as provided by law. Except as otherwise
provided by law the Trustee is not obligated to notify any party hereto of
pending sale under this Deed of Trust or of any action of proceeding in which
Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee;

        30. The Undersigned TRUSTOR REQUESTS that a copy of any notice of
default and of any notice of sale hereunder be mailed to him at the mailing
address opposite his name hereto. Failure to insert such address shall be deemed
a waiver of any request hereunder for a copy of such notices.

                          Mailing Address for Notices

                          245 Fischer Avenue, Suite D-1
                          Costa Mesa, California 92626

        31. Notwithstanding any other provision contained herein or in the Note,
hereinabove referred to, it is agreed that the execution of the Note shall
impose no personal liability upon the Trustor for payment of the indebtedness
evidenced thereby and in the event of a default, the Beneficiary, as holder of
the Note, shall look solely to the property subject to this Deed of Trust and to
the rents, issues and profits thereof in satisfaction of the indebtedness
evidenced by the Note and will not seek or obtain any deficiency or personal
judgment against the Trustor except such judgment or decree as may be necessary
to foreclose or bar its interest in the property subject to this Deed of Trust
and all other property mortgaged, pledged, conveyed or assigned to secure
payment of the Note; provided, that nothing in this condition and no action so
taken shall operate to impair any obligation of the Trustor under the Regulatory
Agreement herein referred to and made a part hereof.

      32. Notwithstanding any other provision contained herein or in the Note,
hereinafter referred to, it is agreed that the execution of the Note shall
impose no personal liability upon the Trustor (or any of its present or future
limited and general partners) for payment of the indebtedness evidenced thereby
and in the event of a default, the Beneficiary, as holder of the Note, shall
look solely to the property subject to this Deed of Trust and to the rents,
issues and profits thereof in satisfaction of the indebtedness evidenced by the
Note and will not seek or obtain any deficiency or personal judgment against the
Trustor (or any of its present or future limited and general partners) except
such judgment or decree as may be necessary to foreclose or bar its interest in
the property subject to this Deed of Trust and all other property mortgaged,
pledged, conveyed or assigned to secure payment of the Note; provided, that
nothing in this

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condition and no action so taken shall operate to impair any obligation of the
Trustor under the Regulatory Agreement herein referred to and made a part
hereof.

        IN WITNESS WHEREOF the Trustor has caused its name to be hereunto
subscribed by its duly authorized General Partner as of the day and year herein
first above written.

                             ARV CAMPBELL, L.P.
                             a California limited partnership

                             By:    American Retirement Villas Properties II
                                    a California limited partnership
                                    General Partner

                                    By:     ARV Assisted Living, Inc.
                                            a Delaware corporation
                                            General Partner

                                            By:    ____________________________
                                                   Abdo H. Khoury
                                                   Senior Vice President<PAGE>   1

                                                                   EXHIBIT 10.83

REGULATORY AGREEMENT FOR                              U.S. Department of Housing
MULTIFAMILY HOUSING PROJECTS                          and Urban Development
             OFFICE OF HOUSING
             FEDERAL HOUSING COMMISSIONER

--------------------------------------------------------------------------------
Under Sections 207,220,221(d)(4), 231 and 232, Except Nonprofits

                            Project No. 121-22028-ALF

Mortgagee: RED MORTGAGE CAPITAL, INC.

Amount of Mortgage Note: $1,789,700.00             Date: December 5, 2000

Mortgage:      Recorded:      State: California     County: Santa Clara
Date: December ____, 2000
Concurrently Herewith    Book __ Page __

        Originally endorsed for insurance under Section 232 pursuant to Section
223(f) of the National Housing Act, as amended.

        This Agreement entered into this 5th day of December, 2000, between ARV
CAMPBELL, L.P., a California limited partnership whose address is 245 Fischer
Avenue, Suite D-1, Costa Mesa, California 92626, their successors, heirs, and
assigns (jointly and severally, hereinafter referred to as Owners) and the
undersigned SECRETARY OF HOUSING AND URBAN DEVELOPMENT and his successors
(hereinafter referred to as Secretary).

        In consideration of the endorsement for insurance by the Secretary of
the above described note or in consideration of the consent of the Secretary to
the transfer of the mortgaged property or the sale and conveyance of the
mortgaged property by the Secretary, and in order to comply with the
requirements of the National Housing Act, as amended, and the Regulations
adopted by the Secretary pursuant thereto, Owners agree for themselves, their
successors, heirs and assigns, that in connection with the mortgaged property
and the project operated thereon and so long as the contract of mortgage
insurance continues in effect, and during such further period of time as the
Secretary shall be the owner, holder or reinsurer of the mortgage, or during any
time the Secretary is obligated to insure a mortgage on the mortgage property:

        1.      Owners, except as limited by paragraph 17 hereof, assume and
                agree to make promptly all payments due under the note and
                mortgage.

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        2.      (a) Owners shall establish or continue to maintain a reserve
                fund for replacements by the allocation to such reserve fund in
                a separate account with the mortgagee or in a safe and
                responsible depository designated by the mortgagee, concurrently
                with the beginning of payments towards amortization of the
                principal of the mortgage insured or held by the Secretary of an
                amount equal to $3,078.92 per month unless a different date or
                amount is approved in writing by the Secretary. Said monthly
                deposit consists of $1,880.50 for Realty and $1,198.42 for
                Non-Realty. In addition, the Owner has made an initial deposit
                to the fund of $117,869.00. Such fund, whether in the form of a
                cash deposit or invested in obligations of, or fully guaranteed
                as to principal by, the United States of America shall at all
                times be under the control of the mortgagee. Disbursements from
                such fund, whether for the purpose of effecting replacement of
                structural elements and mechanical equipment of the project or
                for any other purpose, may be made only after receiving the
                consent in writing of the Secretary. In the event that the owner
                is unable to make a mortgage note payment on the due date and
                that payment cannot be made prior to the due day of the next
                such installment or when the mortgagee has agreed to forgo
                making an election to assign the mortgage to the Secretary based
                on a monetary default, or to withdraw an election already made,
                the Secretary is authorized to instruct the mortgagee to
                withdraw funds from the reserve fund for replacements to be
                applied to the mortgage payment in order to prevent or cure the
                default. In addition, in the event of a default in the terms of
                the mortgage, pursuant to which the loan has been accelerated,
                the Secretary may apply or authorize the application of the
                balance in such fund to the amount due on the mortgage debt as
                accelerated.

                (b) Where Owners are acquiring a project already subject to an
                insured mortgage, the reserve fund for replacements to be
                established will be equal to the amount due to be in such fund
                under existing agreements or charter provisions at the time
                Owners acquire such project, and payments hereunder shall begin
                with the first payment due on the mortgage after acquisition,
                unless some other method of establishing and maintaining the
                fund is approved in writing by the Secretary.

        3.      Real property covered by the mortgage and this agreement is
                described in Exhibit A attached hereto.

                (This paragraph 4 is not applicable to cases insured under
                Section 232).

<PAGE>   3

        5.      (a) If the mortgage is originally a Secretary-held purchase
                money mortgage, or is originally endorsed for insurance under
                any Section other than Sections 231 or 232 and is not designed
                primarily for occupancy by elderly persons, Owners shall not in
                selecting tenants discriminate against any person or persons by
                reason of the fact that there are children in the family.

                (b) If the mortgage is originally endorsed for insurance under
                Section 221, Owners shall in selecting tenants give to displaced
                persons or families an absolute preference or priority of
                occupancy which shall be accomplished as follows:

                        (1)     For a period of sixty (60) days from the date of
                                original offering, unless a shorter period of
                                time is approved in writing by the Secretary,
                                all units shall be held for such preferred
                                applicants, after which time any remaining
                                unrented units may be rented to non-preferred
                                applicants;

                        (2)     Thereafter, and on a continuing basis, such
                                preferred applicants shall be given preference
                                over non-preferred applicants in their placement
                                on a waiting list to be maintained by the
                                Owners; and

                        (3)     Through such further provisions agreed to in
                                writing by the parties.

                (c) Without the prior written approval of the Secretary not more
                than 25% of the number of units in a project insured under
                Section 231 shall be occupied by persons other than elderly
                persons.

                (d) All advertising or efforts to rent a project insured under
                Section 231 shall reflect a bona fide effort of the Owners to
                obtain occupancy by elderly persons.

        6.      Owners shall not without the prior written approval of the
                Secretary:

                (a) Convey, transfer, or encumber any of the mortgaged property,
                or permit the conveyance, transfer or encumbrance of such
                property.

                (b) Assign, transfer, dispose of, or encumber any personal
                property of the project, including rents, or pay out any funds
                except from surplus cash, except for reasonable operating
                expenses and necessary repairs.

                (c) Convey, assign, or transfer any beneficial interest in any
                trust holding title to the property, or the interest of any
                general partner in a partnership owning the property, or any
                right to manage or receive the rents and profits from the
                mortgaged property.

                (d) Remodel, add to, reconstruct, or demolish any part of the
                mortgaged property or subtract from any real or personal
                property of the project.

                (e) Make, or receive and retain, any distribution of assets or
                any income of any kind of the project except surplus cash and
                except on the following conditions:

<PAGE>   4

                        (1)     All distributions shall be made only as of and
                                after the end of a semiannual or annual fiscal
                                period, and only as permitted by the law of the
                                applicable jurisdiction;

                        (2)     No distribution shall be made from borrowed
                                funds, prior to the completion of the project or
                                when there is any default under this Agreement
                                or under the note or mortgage;

                        (3)     Any distribution of any funds of the project,
                                which the party receiving such funds is not
                                entitled to retain hereunder, shall be held in
                                trust separate and apart from any other funds;
                                and

                        (4)     There shall have been compliance with all
                                outstanding notices of requirements for proper
                                maintenance of the project.

                (f) Engage, except for natural persons, in any other business or
                activity, including the operation of any other rental project,
                or incur any liability or obligation not in connection with the
                project.

                (g) Require, as a condition of the occupancy or leasing of any
                unit in the project, any consideration or deposit other than the
                prepayment of the first month's rent plus a security deposit in
                an amount not in excess of one month's rent to guarantee the
                performance of the covenants of the lease. Any funds collected
                as security deposits shall be kept separate and apart from all
                other funds of the project in a trust account the amount of
                which shall at all times equal or exceed the aggregate of all
                outstanding obligations under said account.

                (h) Permit the use of the dwelling accommodations or nursing
                facilities of the project for any purpose except the use which
                was originally intended, or permit commercial use greater than
                that originally approved by the Secretary.

        7.      Owners shall maintain the mortgaged premises, accommodations and
                the grounds and equipment appurtenant thereto, in good repair
                and condition. In the event all or any of the buildings covered
                by the mortgage shall be destroyed or damaged by fire or other
                casualty, the money derived from any insurance on the property
                shall be applied in accordance with the terms of the mortgage.

        8.      Owners shall not file any petition in bankruptcy or for a
                receiver or in insolvency or for reorganization or composition,
                or make any assignment for the benefit of creditors or to a
                trustee for creditors, or permit an adjudication in bankruptcy
                or

<PAGE>   5

                the taking possession of the mortgaged property or any part
                thereof by a receiver or the seizure and sale of the mortgaged
                property or any part hereof under judicial process or pursuant
                to any power of sale, and fail to have such adverse actions set
                aside within forty-five (45) days.

        9.      (a) Any management contract entered into by Owners or any of
                them involving the project shall contain a provision that, in
                the event of default hereunder, it shall be subject to
                termination without penalty upon written request by the
                Secretary. Upon such request Owners shall immediately arrange to
                terminate the contract within a period of not more than thirty
                (30) days and shall make arrangements satisfactory to the
                Secretary for continuing proper management of the project.

                (b) Payment for services, supplies, or materials shall not
                exceed the amount ordinarily paid for such services, supplies,
                or materials in the area where the services are rendered or the
                supplies or materials furnished.

                (c) The mortgaged property, equipment, buildings, plans,
                offices, apparatus, devices, books, contracts, records,
                documents, and other papers relating thereto shall at all times
                be maintained in reasonable condition for proper audit and
                subject to examination and inspection at any reasonable time by
                the Secretary or his duly authorized agents. Owners shall keep
                copies of all written contracts or other instruments which
                affect the mortgaged property, all or any of which may be
                subject to inspection and examination by the Secretary or his
                duly authorized agents.

                (d) The books and accounts of the operations of the mortgaged
                property and of the project shall be kept in accordance with the
                requirements of the Secretary.

                (e) Within sixty (60) days following the end of each fiscal year
                the Secretary shall be furnished with a complete annual
                financial report based upon an examination of the books and
                records of mortgagor prepared in accordance with the
                requirements of the Secretary, prepared and certified to by an
                officer or responsible Owner and, when required by the
                Secretary, prepared and certified by a Certified Public
                Accountant, or other person acceptable to the Secretary.

                (f) At the request of the Secretary, his agents, employees, or
                attorneys, the Owners shall furnish monthly occupancy reports
                and shall give specific answers to questions upon which
                information is desired from time to time relative to

<PAGE>   6

                income, assets, liabilities, contracts, operation, and condition
                of the property and the status of the insured mortgage.

                (g) All rents and other receipts of the project shall be
                deposited in the name of the project in a financial institution,
                whose deposits are insured by an agency of the Federal
                Government. Such funds shall be withdrawn only in accordance
                with the provisions of this Agreement for expenses of the
                project or for distributions of surplus cash as permitted by
                paragraph 6(e) above. Any Owner receiving funds of the project
                other than by such distribution of surplus cash shall
                immediately deposit such funds in the project bank account and
                failing so to do in violation of this Agreement shall hold such
                funds in trust. Any Owner receiving property of the project in
                violation of this Agreement shall hold such funds in trust. At
                such time as the Owners shall have lost control and/or
                possession of the project, all funds held in trust shall be
                delivered to the mortgagee to the extent that the mortgage
                indebtedness has not been satisfied.

                (h) If the mortgage is insured under Section 232:

                1.      The Owners or lessees shall at all times maintain in
                        full force and effect from the state or other licensing
                        authority such license as may be required to operate the
                        project as a nursing home and shall not lease all or
                        part of the project except on terms approved by the
                        Secretary.

                2.      The Owners shall suitably equip the project for nursing
                        home operations.

                3.      The Owners shall execute a Security Agreement and
                        Financing Statement (or other form of chattel lien) upon
                        all items of equipment, except as the Secretary may
                        exempt, which are not incorporated as security for the
                        insured mortgage. The Security Agreement and Financing
                        Statement shall constitute a first lien upon such
                        equipment and shall run in favor of the mortgagee as
                        additional security for the insured mortgage.

                (i)     If the mortgage is insured under Section 231, Owners or
                        lessees shall at all times maintain in full force and
                        effect from the state or other licensing authority such
                        license as may be required to operate the project as
                        housing for the elderly.

        10.     Owners will comply with the provisions of any Federal, State, or
                local law prohibiting discrimination in housing on the grounds
                of race, color, religion or creed, sex, or national origin,
                including Title VIII of the Civil Rights Act of 1968

<PAGE>   7

                (Public Law 90-284; 82 Stat. 73), as amended, Executive Order
                11063, and all requirements imposed by or pursuant to the
                regulations of the Department of Housing and Urban Development
                implementing these authorities (including 24 CFR Parts 100, 107
                and 110, and Subparts I and M of Part 200).

        11.     Upon a violation of any of the above provisions of this
                Agreement by Owners, the Secretary may give written notice
                thereof, to Owners, by registered or certified mail, addressed
                to the addresses stated in this Agreement, or such other
                addresses as may subsequently, upon appropriate written notice
                thereof to the Secretary, be designated by the Owners as their
                legal business address. If such violation is not corrected to
                the satisfaction of the Secretary within thirty (30) days after
                the date such notice is mailed or within such further time as
                the Secretary determines is necessary to correct the violation,
                without further notice the Secretary may declare a default under
                this Agreement effective on the date of such declaration of
                default and upon such default the Secretary may:

                (a)     (i)     If the Secretary holds the note - declare the
                                whole of said indebtedness immediately due and
                                payable and then proceed with the foreclosure of
                                the mortgage;

                        (ii)    If said note is not held by the Secretary -
                                notify the holder of the note of such default
                                and request holder to declare a default under
                                the note and mortgage, and holder after
                                receiving such notice and request, but not
                                otherwise, at its option, may declare the whole
                                indebtedness due, and thereupon proceed with
                                foreclosure of the mortgage, or assign the note
                                and mortgage to the Secretary as provided in the
                                Regulations;

                (b) Collect all rents and charges in connection with the
                operation of the project and use such collections to pay the
                Owners' obligations under this Agreement and under the note and
                mortgage and the necessary expenses of preserving the property
                and operating the project.

                (c) Take possession of the project, bring any action necessary
                to enforce any rights of the Owners growing out of the project
                operation, and operate the project in accordance with the terms
                of this Agreement until such time as the Secretary in his
                discretion determines that the Owners are again in a position to
                operate the project in accordance with the terms of this
                Agreement and in compliance with the requirements of the note
                and mortgage.

<PAGE>   8

                (d) Apply to any court, state or Federal, for specific
                performance of this Agreement, for an injunction against any
                violation of the Agreement, for the appointment of a receiver to
                take over and operate the project in accordance with the terms
                of the Agreement, or for such other relief as may be
                appropriate, since the injury to the Secretary arising from a
                default under any of the terms of this Agreement would be
                irreparable and the amount of damage would be difficult to
                ascertain.

        12.     As security for the payment due under this Agreement to the
                reserve fund for replacements, and to secure the Secretary
                because of his liability under the endorsement of the note for
                insurance, and as security for the other obligations under this
                Agreement, the Owners respectively assign, pledge and mortgage
                to the Secretary their rights to the rents, profits, income and
                charges of whatsoever sort which they may receive or be entitled
                to receive from the operation of the mortgaged property,
                subject, however, to any assignment of rents in the insured
                mortgage referred to herein. Until a default is declared under
                this Agreement, however, permission is granted to Owners to
                collect and retain under the provisions of this Agreement such
                rents, profits, income, and charges, but upon default this
                permission is terminated as to all rents due or collected
                thereafter.

        13.     As used in this Agreement the term:

                (a) "Mortgage" includes "Deed of Trust", "Chattel Mortgage",
                "Security Instrument", and any other security for the note
                identified herein, and endorsed for insurance or held by the
                Secretary;

                (b) "Mortgagee" refers to the holder of the mortgage identified
                herein, its successors and assigns;

                (c) "Owners" refers to the persons named in the first paragraph
                hereof and designated as Owners, their successors, heirs and
                assigns;

                (d) "Mortgaged Property" includes all property, real, personal
                or mixed, covered by the mortgage or mortgages securing the note
                endorsed for insurance or held by the Secretary;

                (e) "Project" includes the mortgaged property and all its other
                assets of whatsoever nature or wheresoever situate, used in or
                owned by the business conducted on said mortgaged property,
                which business is providing housing and other activities as are
                incidental thereto;

<PAGE>   9

                (f) "Surplus Cash" means any cash remaining after:

                        (1)     the payment of:

                                (i)     All sums due or currently required to be
                                        paid under the terms of any mortgage or
                                        note insured or held by the Secretary;

                                (ii)    All amounts required to be deposited in
                                        the reserve fund for replacements;

                                (iii)   All obligations of the project other
                                        than the insured mortgage unless funds
                                        for payment are set aside or deferment
                                        of payment has been approved by the
                                        Secretary; and

                        (2)     the segregation of:

                                (i)     An amount equal to the aggregate of all
                                        special funds required to be maintained
                                        by the project; and

                                (ii)    All tenant security deposits held.

                (g) "Distribution" means any withdrawal or taking of cash or any
                assets of the project, including the segregation of cash or
                assets for subsequent withdrawal within the limitations of
                Paragraph 6(e) hereof, and excluding payment for reasonable
                expenses incident to the operation and maintenance of the
                project.

                (h) "Default" means a default declared by the Secretary when a
                violation of this Agreement is not corrected to his satisfaction
                within the time allowed by this Agreement or such further time
                as may be allowed by the Secretary after written notice;

                (i) "Section" refers to a Section of the National Housing Act,
                as amended.

                (j) "Displaced persons or families" shall mean a family or
                families, or a person, displaced from an urban renewal area, or
                as the result of government action, or as a result of a major
                disaster as determined by the President pursuant to the Disaster
                Relief Act of 1970.

<PAGE>   10

                (k) "Elderly person" means any person, married or single, who is
                sixty-two years of age or over.

        14.     This instrument shall bind, and the benefits shall inure to, the
                respective Owners, their heirs, legal representatives,
                executors, administrators, successors in office or interest, and
                assigns, and to the Secretary and his successors so long as the
                contract of mortgage insurance continues in effect, and during
                such further time as the Secretary shall be the owner, holder,
                or reinsurer of the mortgage, or obligated to reinsure the
                mortgage.

        15.     Owners warrant that they have not, and will not, execute any
                other agreement with provisions contradictory of, or in
                opposition to, the provisions hereof, and that, in any event,
                the requirements of this Agreement are paramount and controlling
                as to the rights and obligations set forth and supersede any
                other requirements in conflict therewith.

        16.     The invalidity of any clause, part or provision of this
                Agreement shall not affect the validity or the remaining
                portions thereof.

        17.     The following Owners: ARV Campbell, L.P., a California limited
                partnership, and all present and future limited and general
                partners thereof, do not assume personal liability for payments
                due under the note and mortgage, or for the payments to the
                reserve for replacements, or for matters not under their
                control, provided that said Owners shall remain liable under
                this Agreement only with respect to the matters hereinafter
                stated; namely:

                (a) for funds or property of the project coming into their hands
                which, by the provisions hereof, they are not entitled to
                retain; and

                (b) for their own acts and deeds or acts and deeds of others
                which they have authorized in violation of the provisions
                hereof.

(To be executed with formalities for recording a deed to real estate)

<PAGE>   11

        All references herein to the terms "nursing home" or nursing homes"
shall mean and include the terms "assisted living facility" and "assisted living
facilities."

        See Rider I attached hereto and made a part hereof.

        IN WITNESS WHEREOF, the parties hereto have set their hands and seals on
the date first hereinabove written.

                               ARV CAMPBELL, L.P.
                               a California limited partnership

                               By:     American Retirement Villas Properties II
                                       a California limited partnership
                                       General Partner

                                       By:    ARV Assisted Living, Inc.
                                              a Delaware corporation
                                              General Partner

                                       By:    ____________________________
                                              Abdo H. Khoury
                                              Senior Vice President

                                       December 5, 2000

                               SECRETARY OF HOUSING AND URBAN
                               DEVELOPMENT ACTING BY AND
                               THROUGH THE FEDERAL HOUSING
                               COMMISSIONER

                               By:     ________________________________
                                       Authorized Agent

                               December 5, 2000

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