AMERICAN RETIREMENT CORP
AMERICAN RETIREMENT CORPORATION EXHIBIT 10.4
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>6
<FILENAME>a4509200ex104.txt
<DESCRIPTION>AMERICAN RETIREMENT CORPORATION EXHIBIT 10.4
<TEXT>
                                                              [Denver, Colorado]
                                                               [Tucson, Arizona]
                                                             [Fort Worth, Texas]
                                                                 [Austin, Texas]

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












               CONTRACT OF ACQUISITION AND AGREEMENT TO MAKE LOAN


                                     between


                      HEALTH CARE PROPERTY INVESTORS, INC.,
                                    as Buyer


                                       and


                              ARCPI HOLDINGS, INC.,
                                    as Seller


                         Dated as of September 23, 2003













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

<PAGE>
               CONTRACT OF ACQUISITION AND AGREEMENT TO MAKE LOAN

     This Contract of Acquisition and Agreement to Make Loan (this  "Agreement")
is dated as of September 23, 2003 between HEALTH CARE PROPERTY INVESTORS,  INC.,
a  Maryland  corporation  ("Buyer"),   and  ARCPI  HOLDINGS,  INC.,  a  Delaware
corporation ("Seller").

                                    RECITALS
                                    --------

     A. Prior to the  transactions  contemplated by this Agreement,  Seller owns
90.2% of the outstanding membership interests in each of ARC SC Holdings, LLC, a
Delaware limited liability company ("SC Holdings"),  and Fort Austin Real Estate
Holdings, LLC, a Delaware limited liability company ("Fort Austin").  Buyer owns
9.8% of the outstanding  membership interests in SC Holdings.  Buyer's Affiliate
(as defined  below),  Texas HCP Holding,  L.P., a Delaware  limited  partnership
("Texas HCP"), owns 9.8% of the outstanding membership interests in Fort Austin.


     B. SC Holdings,  through its  wholly-owned  subsidiary,  ARC Santa Catalina
Real Estate  Holdings,  LLC, a Delaware  limited  liability  company ("ARC Santa
Catalina") owns the Tucson Facility (as defined below), and Fort Austin owns the
Denver Facility,  the Austin Facility and the Fort Worth Facility (as such terms
are defined below).


     C.  Phase II  Lessors  and Phase II Lessees  are  parties  to that  certain
Existing  Phase II Master Lease (as such terms are defined  below).  Each of the
Phase II Lessors and Phase II Lessees are Affiliates of Seller.


     D. In accordance  with the terms of the Existing  Phase II Master Lease and
immediately prior to the Closing (as defined below),  Phase II Lessors desire to
(i)  separate  and remove the Tucson  Facility,  Austin  Facility and Fort Worth
Facility  from the  Existing  Phase II Master  Lease and require the  applicable
Phase II Lessees to execute  and  deliver  the New  Separated  Lease (as defined
below) with respect to such Facilities, and (ii) terminate the Existing Phase II
Master Lease with respect to the Denver Facility.


     E.  Subsequent to the  termination of the Denver Facility from the Existing
Phase II Master Lease and the separation of the Tucson Facility, Austin Facility
and Fort  Worth  Facility  from the  Existing  Phase II  Master  Lease but still
immediately  prior to the  Closing  hereunder,  (i) ARC Santa  Catalina  will be
making a liquidating  distribution to SC Holdings, and (ii) both SC Holdings and
Fort Austin will be making liquidating  distributions to Buyer, Seller and Texas
HCP,  as  applicable,  all as more  particularly  set forth in the  Distribution
Agreements (as defined below).


     F. In connection  with such  distributions,  (i) ARC Santa Catalina will be
assigning  all of its  interests  as "Lessor" in the New  Separated  Lease to SC
Holdings,  and (ii) SC Holdings and Fort Austin will be  assigning  all of their
respective  interests as "Lessor" in the New Separated Lease to Buyer, Texas HCP
and Seller, all as more particularly described in the Distribution Agreements.

<PAGE>

     G. As a result,  Seller and Buyer will  respectively own (i) a 92.52% and a
7.48%   tenancy-in-common   interest  in  the  Tucson  Facility  (including  the
correlating  respective  interests (A) as "Lessor" under the New Separated Lease
for  the  Tucson  Facility  and (B) of the  outstanding  principal  and  accrued
interest under the GMAC Loan), (ii) Seller and Texas HCP will respectively own a
91.56% and a 8.44% tenancy-in-common  interest in the Denver Facility (including
the correlating  respective  interests of the outstanding  principal and accrued
interest under the GECC Loan), and (iii) Seller and Texas HCP will  respectively
own a  91.56%  and a 8.44%  tenancy-in-common  interest  in  each of the  Austin
Facility  and the Fort Worth  Facility  (including  the  correlating  respective
interests  (A) as  "Lessor"  under the New  Separated  Lease  for the Ft.  Worth
Facility  and the  Austin  Facility  and (B) of the  outstanding  principal  and
accrued interest under the GECC Loan).


     H. Seller desires to transfer to Buyer, and Buyer and/or Buyer's  Affiliate
desires to acquire, Seller's respective  tenancy-in-common  interests ("Seller's
Applicable  Interest") in the Properties (as  hereinafter  defined),  which such
transfer(s) may be effectuated by Seller executing and delivering deeds for such
interest in the Properties,  or one or more portions thereof,  bills of sale and
assignments  with  respect to the Seller's  Applicable  Interest in the Personal
Property (as hereinafter defined) for each such Property,  and an assignment and
assumption  agreement  with respect to Seller's  Applicable  Interest in the New
Separated Lease;


     I. Concurrently  therewith,  Buyer and/or Buyer's designee will be entering
into that  certain  Master  Lease with  respect to the  Denver  Facility  by and
between Buyer and/or Buyer's designee,  as lessor,  and Park Place  Investments,
LLC, a Kentucky limited liability company, as lessee (the "Denver Lease"); and

     J. In addition,  Buyer or its Affiliate  desires to make and Seller desires
to  receive a loan,  which is to be  secured by a deed of trust on the Land Loan
Secured Property (as defined below).

              NOW, THEREFORE, the parties hereto agree as follows:

                                   Article 1.

                                   DEFINITIONS
                                   -----------

     For all purposes of this Agreement,  except as otherwise expressly provided
herein or unless the context otherwise  requires,  (i) the terms defined in this
Article  have the  meanings  assigned  to them in this  Article  and include the
plural as well as the singular;  (ii) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with generally  accepted
accounting  principles as at the time  applicable;  (iii) all references in this
Agreement to designated "Articles," "Sections" and other subdivisions are to the
designated Articles, Sections and other subdivisions of this Agreement; (iv) the
word "including" shall have the same meaning as the phrase  "including,  without
limitation,"  and other phrases of similar  import;  and (v) the words "herein,"
"hereof"  and  "hereunder"  and  other  words of  similar  import  refer to this
Agreement  as a whole  and  not to any  particular  Article,  Section  or  other
subdivision.

     1031 Exchange: As defined in Article VIII.


                                       2
<PAGE>


     Affiliate: As defined in the Existing Phase II Master Lease.

     Am South: AmSouth Bank, an Alabama banking corporation.

     Am South Loan:  The first mortgage loan made by Am South and secured by the
Land Loan Secured Property.

     Applicable Rate: As defined in Section 2.8.

     ARC: American Retirement Corporation, a Tennessee corporation.

     ARC Santa Catalina: As defined in the Recitals.

     Assignment and Assumption of Lease: That certain  Assignment and Assumption
of Lease dated of even date  herewith by and between  Seller,  as assignor,  and
Buyer,  as assignee,  pursuant to which Buyer will assume all of Seller's right,
title and obligations  under the New Separated  Lease, as more  particularly set
forth therein.

     Austin  Facility:  The  land and all  related  improvements,  fixtures  and
appurtenances of the continuing care retirement  community facility comprised of
149  independent  living units,  30 assisted living units and 90 skilled nursing
beds,  located at 1034 Liberty Park Drive in Austin,  Texas,  which land is more
particularly described on Exhibit A-1 attached hereto.

     Beneficiary Demand  Statements:  The statements from the applicable lenders
setting forth the amount  necessary  (including  prepayment  expenses) to pay in
full all amounts owing under the GMAC Loan,  the GECC Loan or the Am South Loan,
as the case may be.

     Bill of Sale  and  Assignment:  Each  bill of sale and  general  assignment
substantially in the form attached hereto as Exhibit B conveying all of Seller's
rights,  title and obligations in and to the Personal  Property of each Property
to Buyer.

     Buyer's   Legal  Costs:   Collectively,   the  legal  fees,   expenses  and
disbursements  to counsel  incurred by Buyer in connection  with the preparation
and  negotiation  of this  Agreement,  the other  Transaction  Documents and the
Exhibits hereto and thereto,  the review of diligence  materials,  documents and
other  information  relating  to  each  Property  and  the  consummation  of the
transactions  contemplated  hereunder and the Exhibits  hereto.  As used herein,
legal fees and expenses  shall  include both outside  legal fees and expenses as
well as legal fees and expenses of Buyer's in-house counsel. For purposes of the
foregoing,  outside  legal fees for attorney  time shall be billed at the normal
hourly rate charged by Buyer's counsel and legal fees for in-house attorney time
shall not be in excess of $375.00 per hour.

     Buyer's Transaction Costs: Collectively,  Buyer's Legal Costs and the other
fees and  expenses of and  disbursements  made by Buyer in  connection  with the
transactions  contemplated  hereby,  the  Exhibits  hereto  and the  Transaction
Documents,  including appraisal costs,  engineering fees,  accountants and other
professional fees, environmental audits and travel expenses.


                                       3
<PAGE>

     Closing: The transactions taking place on the Closing Date.

     Closing  Date:  The date on which  Buyer or Texas HCP,  as the case may be,
receives  conveyance of good and marketable title to Seller's rights,  title and
interest in and to the Properties,  and after giving effect to the  transactions
contemplated by the Distribution Agreements, free and clear of all liens, claims
and encumbrances  (except Permitted  Exceptions),  which date is estimated to be
September 23, 2003.

     Code: The Internal Revenue Code of 1986, as amended.

     Commencement Date: As defined in the New Separated Lease.

     Commercial Occupancy  Arrangement:  With respect to the Denver Facility, as
defined in the  Denver  Lease.  With  respect  to the  Tucson  Facility,  Austin
Facility or Fort Worth Facility, as defined in the New Separated Lease.

     Commitment    Fee   Deposit:    As   defined   in   Section   2.6   herein.

     Commitment  Letter:  The letter of intent and agreement dated July 18, 2003
between Buyer and American  Retirement  Corporation  setting forth the terms and
conditions  of  certain   proposed   transactions,   including  the  transaction
contemplated herein.

     Condemnation: With respect to the Denver Facility, as defined in the Denver
Lease.  With  respect  to the Tucson  Facility,  Austin  Facility  or Fort Worth
Facility, as defined in the New Separated Lease.

     Deed:  Each Warranty  Deed,  as  applicable,  in form  acceptable to Buyer,
conveying Seller's Applicable Interest in the applicable Property to Buyer.

     Denver Consent  Agreement:  That certain Security  Agreement and Consent to
Management  Engagement dated of even date herewith by and between Denver Lessee,
Buyer and Denver Manager.

     Denver  Facility:  The  land and all  related  improvements,  fixtures  and
appurtenances of the continuing care retirement  community facility comprised of
176 independent  living units, 43 assisted living units and 17 Alzheimer's  care
beds,  located at 111  Emerson  Street in Denver,  Colorado,  which land is more
particularly described on Exhibit A-2 attached hereto.

     Denver  Guaranty:  That  certain  Guaranty  of  Obligations  of  even  date
herewith,  to be executed by Randall J. Bufford, with respect to the obligations
of Denver Lessee under the Denver Lease.

     Denver Lease:  That certain Master Lease dated of even date herewith by and
between Buyer, as lessor, and Fort Austin Operator,  as lessee,  relating to the
Denver Facility.

     Denver Lessee:  Park Place  Investments,  LLC, a Kentucky limited liability
company.


                                       4
<PAGE>

     Denver Management  Agreement:  That certain  Management  Agreement dated of
even date herewith by and between  Denver Lessee and Denver Manager with respect
to the Denver Facility.

     Denver  Manager:   Fort  Austin  Limited   Partnership,   a  Texas  limited
partnership.

     Denver Transaction Documents:  Collectively,  the Denver Consent Agreement,
Denver Guaranty,  Denver Lease and [Denver Management Agreement],  together with
all  other  agreements,  documents  and/or  instruments  to be  executed  and/or
delivered pursuant to and in connection therewith.

     Distribution  Agreements:   Collectively,  (i)  that  certain  Distribution
Agreement  of even  date  herewith  by and  between  ARC Santa  Catalina  and SC
Holdings,  (ii) that certain Distribution Agreement of even date herewith by and
between SC  Holdings,  Buyer and  Seller,  and (iii) that  certain  Distribution
Agreement  of even date  herewith  by and  between  Fort  Austin,  Texas HCP and
Seller. Facilities:  Collectively, the Denver Facility, the Tucson Facility, the
Fort Worth Facility and the Austin Facility (each, a "Facility").

     Existing Phase II Master Lease:  That certain Master Lease dated  September
30, 2002 by and among the Phase II Lessors, as Lessors and the Phase II Lessees,
as Lessees, together with all amendments thereto.

     First  Amendment to Existing  Phase II Master  Lease:  That  certain  First
Amendment to Master Lease among Fort Austin,  ARC Santa  Catalina,  ARC Richmond
Place Real Estate Holdings,  LLC, ARC Holland Real Estate Holdings, LLC, ARC Sun
City Center Real Estate  Holdings,  LLC,  ARC Lake  Seminole  Square Real Estate
Holdings, LLC and ARC Brandywine Real Estate Holdings, LLC, as Lessors, and Fort
Austin Limited Partnership,  ARC Santa Catalina, Inc., ARC Richmond Place, Inc.,
Freedom Village of Holland,  Michigan, Freedom Village of Sun City Center, Ltd.,
Lake Seminole Square  Management  Company,  Inc.,  Freedom  Group-Lake  Seminole
Square, Inc., and ARC Brandywine, LLC as Lessees dated as of the date herewith.

     Flood Hazard Area: An area designated by the Federal  Emergency  Management
Agency and/or the Secretary of Housing and Urban  Development  as having special
flood hazards.

     Fort Austin: As defined in the Recitals.

     Fort Austin  Operator:  Fort Austin  Limited  Partnership,  a Texas limited
partnership.

     Fort Austin Secured Lender: The holder of the GECC Loan.

     Fort Worth Facility:  The land and all related  improvements,  fixtures and
appurtenances of the continuing care retirement  community facility comprised of
214  independent  living units, 40 assisted living units and 122 skilled nursing
beds,  located at 5301


                                       5
<PAGE>

Bryant Road in Fort Worth,  Texas, which land is more particularly  described on
Exhibit A-3 attached hereto.

     GECC  Loan:  The first  mortgage  loan  made by  General  Electric  Capital
Corporation  in favor of Fort  Austin and Fort  Austin  Operator,  which loan is
secured by a deed of trust or  mortgage on the Fort Worth  Facility,  the Austin
Facility and the Denver Facility.

     GMAC  Loan:  The  first  mortgage  loan  made by GMAC  Commercial  Mortgage
Corporation  in favor of ARC  Santa  Catalina  and SC  Operator,  which  loan is
secured by a deed of trust or mortgage on the Tucson Property.

     Governmental  Authority:  The  United  States,  the state or  commonwealth,
county, parish, city and political subdivisions in which the applicable Property
is located  or which  exercise  jurisdiction  over such  Property  or use of the
respective  Facility  thereon for all uses  contemplated  by the Lease,  and any
court  administrator,   agency,   department,   commission,   board,  bureau  or
instrumentality  or any of them which exercises  jurisdiction over such Property
or the  construction  or use of such Property for all uses  contemplated  by the
Existing Phase II Master Lease,  the New Separated Lease or the Denver Lease, as
applicable.

     Governmental  Requirement:  Any law,  ordinance,  order, rule,  regulation,
decree or similar edict of a Governmental Authority.

     Guaranty:  That certain Guaranty of Obligations of even date herewith to be
executed by Guarantor,  with respect to the  obligations of Fort Austin Operator
and SC Operator under the New Separated Lease.

     Guarantor: ARCPI Holdings, Inc.

     Hazardous  Substances:  With respect to the Denver Facility,  as defined in
the Denver Lease.  With respect to the Tucson Facility,  Austin Facility or Fort
Worth Facility, as defined in the New Separated Lease.

     HCPI Loan Agreement:  That certain Loan Agreement dated August 14, 2002, as
amended, pursuant to which Health Care Property Investors, Inc., as lender, made
a loan to ARCPI Holdings, Inc., as borrower, in the original principal amount of
One Hundred Twelve Million Seven Hundred Fifty Thousand Dollars  ($112,750,000),
together with all amendments thereto.

     HCPI  Loan  Amendment:  That  certain  Second  Amendment  to the HCPI  Loan
Agreement dated of even date herewith by and between Buyer and Seller.

     Health Care Licenses: As defined in Section 3.10.

     Intangible  Property:  All  Permits  and other  intangible  property or any
interest  therein  now or on the  Closing  Date  owned  or  held  by  Seller  in
connection  with a Property,  including all rights of Seller in and to all Plans
and  Specifications,  leases,  contract  rights,  agreements,  water  rights and
reservations,  zoning  rights,  business  licenses,  warranties


                                       6
<PAGE>

and guaranties  (including  those relating to construction  and/or  fabrication)
related to a Property, or any part thereof.

     Issuing Agencies: As defined in Section 3.10.

     Land Loan: As defined in Section 2.9.

     Land Loan Deed of Trust: As defined in Section 2.9(a).

     Land Loan Note: As defined in Section 2.9(a).

     Land Loan Secured  Property:  Those parcels of unimproved land set forth in
Exhibit F attached hereto and incorporated herein by this reference.

     Land Loan Transaction Documents: Collectively, the Land Loan Deed of Trust,
Land Loan Note and  Restrictive  Covenant,  together with all other  agreements,
documents and/or  instruments to be executed and/or delivered pursuant to and in
connection therewith.

     Net Wire:  Any wire transfer by Buyer to Title  Insurer,  Seller,  or other
appropriate  party designated by Seller and Buyer for purposes of funding all or
a portion of the acquisition of the Properties, or any of them, hereunder.

     Net Wire Date: The date of any Net Wire.

     New Separated Lease:  That certain Master Lease dated of even date herewith
by and between ARC Santa Catalin and Fort Austin,  collectively,  as lessor, and
SC Operator and Fort Austin Operator, collectively and jointly and severally, as
lessee,  with  respect to the Tucson  Facility,  Fort Worth  Facility and Austin
Facility.

     Officer's  Certificate:  A  certificate  of  Seller  signed  by an  officer
authorized  to so sign by its board of  directors  or by-laws  or by  equivalent
governing documents or managers.

     Organizational  Documents:  Collectively,  as  applicable,  the articles or
certificate of incorporation,  certificate of limited partnership or certificate
of limited liability company, by-laws, partnership agreement,  operating company
agreement, trust agreement,  statement of partnership,  fictitious business name
filings  and  all  other  organizational  documents  relating  to the  creation,
formation and/or  existence of a business  entity,  together with resolutions of
the board of  directors,  partner  or  member  consents,  trustee  certificates,
incumbency  certificates  and all other  documents or  instruments  approving or
authorizing the transactions contemplated hereby and the Exhibits hereto.

     Permits:  All  permits,   licenses,   approvals,   entitlements  and  other
authorizations  issued  by  Governmental  Authorities  relating  to  a  Facility
including  certificates  of occupancy,  those  required in  connection  with the
ownership,   planning,   development,   construction,   use,   operation  and/or
maintenance of such Facility for its Primary  Intended Use, and all  amendments,
modifications,  supplements,  general conditions and addenda thereto, other than
any licenses or permits included within the definition of Excluded Property.


                                       7
<PAGE>

     Permitted Exceptions:  Collectively,  (i) liens for taxes,  assessments and
governmental  charges not yet past due and payable or  delinquent  and (ii) such
other  title  exceptions  as  Buyer  may  approve,  in  its  sole  and  absolute
discretion.

     Personal Property: Collectively,  Lessor's Personal Property (as defined in
the Existing  Phase II Master  Lease),  together  with those  specific  items of
tangible personal property for each Facility described  respectively on Exhibits
E-1 through E-4 attached hereto.

     Phase II Lessees:  Collectively,  and jointly  and  severally,  Fort Austin
Limited Partnership, ARC Santa Catalina, Inc., ARC Richmond Place, Inc., Freedom
Village of Holland,  Michigan,  Freedom  Village of Sun City Center,  Ltd., Lake
Seminole Square Management  Company,  Inc., Freedom Group-Lake  Seminole Square,
Inc., and ARC Brandywine, LLC.

     Phase II  Lessors:  Collectively,  as their  interests  may  appear  in the
Existing Phase II Master Lease, Fort Austin Real Estate Holdings, LLC, ARC Santa
Catalina Real Estate  Holdings,  LLC, ARC Richmond  Place Real Estate  Holdings,
LLC,  ARC Holland  Real Estate  Holdings,  LLC,  ARC Sun City Center Real Estate
Holdings,  LLC,  ARC Lake  Seminole  Square  Real Estate  Holdings,  LLC and ARC
Brandywine Real Estate Holdings, LLC.

     Plans and  Specifications:  All  drawings  (including  final  and  complete
"as-builts"),  plans,  specifications,  blueprints,  maps,  studies,  structural
reviews,   surveys  (including  "as-built")  and  engineering,   soil,  seismic,
geologic, architectural and other reports relating to a Property.

     Primary  Intended Use: With respect to the Denver  Facility,  as defined in
the Denver Lease.  With respect to the Tucson  Facility,  Austin Facility or the
Fort Worth Facility, as defined in the New Separated Lease.

     Properties:  The Facilities or, where applicable,  the Facilities  together
with the Personal Property (each, a "Property").

     Purchase  Price:  One Hundred Forty Eight  Million Two Hundred  Thirty Five
Thousand Four Hundred Twelve and 00/100 Dollars ($148,235,412.00).

     Release: A release and such other documents as necessary to cause the deeds
of trust or  mortgages  securing  the GECC Loan,  the GMAC Loan and the Am South
Loan to be fully released and/or reconveyed of record.

     Restrictive Covenant:  That certain Declaration of Restrictive Covenants to
be to be executed by Seller and recorded against the Land Loan Secured Property.

     SC Holdings: As defined in the Recitals.

     SC Holdings Secured Lender: The holder of the GMAC Loan.

     SC Operator: ARC Santa Catalina, Inc., a Tennessee corporation.

     Seller's Applicable Interest: As defined in the Recitals.


                                       8
<PAGE>

     State:   With  respect  to  each  Property  and  Facility,   the  State  or
Commonwealth in which such Property and Facility is located.

     Third  Amendment to Phase I Master Lease:  That certain Third  Amendment to
Phase I Master Lease by and among Buyer and Texas HCP, as Lessors,  ARC Richmond
Heights, LLC, ARC Boynton Beach, LLC, ARC Delray Beach, LLC, ARC Victoria, L.P.,
ARC Carriage Club of  Jacksonville,  Inc.,  ARC Shavano,  L.P. and ARC Post Oak,
L.P., as Lessees, dated as of even date herewith.

     Title Insurer: Land America National Commercial Services.

     Title Policy: As defined in Section 3.5.

     Transaction  Documents:  This Agreement,  the Denver Transaction Documents,
Distribution  Agreements,  First  Amendment to Existing  Phase II Master  Lease,
Guaranty, HCPI Loan Amendment, Land Loan Transaction Documents,  Third Amendment
to Phase I Master  Lease,  New Separated  Lease,  Assignment  and  Assumption of
Leases,  together  with  all  agreements,  documents  and/or  instruments  to be
executed  and/or  delivered  pursuant to and in connection  with this  Agreement
and/or the Exhibits hereto.

     Tucson  Facility:  The  land and all  related  improvements,  fixtures  and
appurtenances of the continuing care retirement  community facility comprised of
162 independent  living units, 70 assisted living units, 42 skilled nursing beds
and 15  Alzheimer's  care beds,  located at 7500 N. Calle Sin Envidia in Tucson,
Arizona,  which land is more  particularly  described  on Exhibit  A-4  attached
hereto.

                                   Article 2.

                  PURCHASE AND SALE OF PROPERTIES AND LAND LOAN
                  ---------------------------------------------

     Section 2.1 Sale.  On the Closing Date,  subject to the  conditions of this
Agreement,  Seller agrees to convey or cause to be conveyed, and Buyer agrees to
acquire Seller's  Applicable  Interest in and to the Properties for the Purchase
Price.  The Purchase  Price shall be allocated to each  Facility as set forth on
Exhibit C attached hereto, and shall be paid by Buyer on behalf of Seller as set
forth in Section 2.11 below.

     Section 2.2 Closing.  The Closing  shall be held at the offices of Latham &
Watkins LLP, 650 Town Center  Drive,  Costa Mesa,  California,  or at such other
location  as Buyer and Seller may agree upon or through an escrow or  sub-escrow
with Title  Insurer.  In the event that the Closing is to take place  through an
escrow or sub-escrow,  the parties shall  mutually  execute and deliver to Title
Insurer, as escrow holder, joint escrow and/or recording instructions consistent
with  this  Agreement  on or  prior to the  Closing  Date.  In the  event of any
conflict  between the  provisions  of this  Agreement or any such escrow  and/or
recording  instructions or any general instructions required by Title Insurer to
be executed by Buyer and Seller in connection therewith,  the provisions of this
Agreement  shall  control.  If the  Closing  does not take  place on or prior to
September 30, 2003,  Buyer may terminate this Agreement in its sole and absolute
discretion.


                                       9
<PAGE>

     Section  2.3  Conveyance.  On the  Closing  Date,  subject to the terms and
conditions of this  Agreement,  Seller shall deliver,  or cause to be delivered,
for the  applicable  Property,  the Deed, the Bill of Sale and  Assignment,  the
Assignment  and  Assumption  of Leases  and such other  instruments  as shall be
necessary  to  convey,  assign or grant to Buyer  good and  marketable  title to
Seller's  Applicable  Interest  in such  Property,  free and clear of all liens,
claims and encumbrances (except for Permitted Exceptions). Each party shall also
execute and deliver, or cause to be executed and delivered, such instruments and
take such actions as either party may reasonably  request in order to effectuate
the purposes of this Agreement, including the following:

          (a)  With respect to each  Property,  the Deed shall (i) be sufficient
               to convey  good and  indefeasible  fee simple  title to  Seller's
               Applicable  Interest in the  Property  (other  than the  Personal
               Property),  and  shall  be  duly  executed,  acknowledged  and in
               recordable  form,  (ii) include (if  applicable)  the appropriate
               State and/or county real estate  transfer tax declaration of real
               estate value or other affidavit as to the tax due on gross income
               derived  from the  sale,  and  (iii) be  deemed  to  include  all
               appurtenances  to the Property  conveyed  thereby,  including all
               right,  title and interest,  if any, of the grantor in and to any
               land lying in the bed of any street  adjoining  such  Property to
               the center line thereof, and any existing improvements located on
               such Property.

          (b)  With respect to each  Property,  the Bill of Sale and  Assignment
               shall be sufficient to convey good and marketable title to all of
               Seller's  right,  title  and  interest  in and  to  the  Personal
               Property and shall be duly  executed.  In  addition,  Seller will
               execute or obtain and  deliver to Buyer on the  Closing  Date all
               other proper instruments for the conveyance of such title to such
               Personal Property.

          (c)  Seller and Buyer shall enter into,  and Seller will cause each of
               its applicable  Affiliates to enter into, each of the Transaction
               Documents to  effectuate  the  transactions  contemplated  by the
               Recitals hereto.

          (d)  Seller  shall  deliver  (i) a  "FIRPTA"  certificate  in form and
               substance  satisfactory to Buyer and in conformance  with Section
               1445(b)(2)  of the  Code,  to the  effect  that  Seller  is not a
               foreign person and (ii) such other  affidavits or certificates as
               may be  reasonably  required by Buyer to determine  that Buyer is
               not required to withhold  taxes from the payment of sale proceeds
               to Seller under any other applicable State,  commonwealth,  local
               or other tax laws.

          (e)  With  respect to each  Property,  Buyer or Texas HCP, as the case
               may be, and Seller shall execute a closing  settlement  statement
               in form and substance satisfactory to Buyer and Seller.

     The parties  acknowledge  that,  at the request of Seller,  Fort Austin and
Santa Catalina shall,  concurrently with the liquidating distributions described
in the Recitals hereto,  execute a deed directly conveying  Seller's  Applicable
Interest in the Properties to Buyer or Buyer's designee.

     Section 2.4  Prorations.  With respect to each Property,  there shall be no
adjustment of taxes,  assessments,  water  charges,  utilities,  receivables  or
rents, if any,  premiums


                                       10
<PAGE>

on existing  insurance  policies,  if any,  or any other items  relating to such
Property,  it being  understood  by the parties that SC Operator and Fort Austin
Operator,  as lessee under the New Separated Lease, and Denver Lessee, as lessee
under the  Denver  Lease,  shall be  obligated  to pay the same  under the terms
thereof from and after the Closing Date.

     Section 2.5 Costs.

          2.5.1 Seller's Costs. Seller shall pay:

          (a)  any and all  State,  municipal  or other  documentary,  transfer,
               stamp, sales, use or similar taxes payable in connection with the
               delivery  of  any   instrument   or   document   provided  in  or
               contemplated by this Agreement,  the other Transaction Documents,
               or the Exhibits  hereto and thereto,  any agreement or commitment
               described or referred to herein or the transactions  contemplated
               herein together with interest and penalties, if any, thereon;

          (b)  all expenses of or related to the issuance of the title insurance
               commitment and policy (including the costs of any survey required
               by Buyer and the Title Insurer),  chain of title reports, and all
               escrow fees and charges;

          (c)  the charges for or in connection with the recording and/or filing
               of any instrument or document  provided herein or contemplated by
               this Agreement, the other Transaction Documents, or any agreement
               or document described or referred to herein;

          (d)  any and all  broker's  fees or similar  fees claimed by any party
               acting  by  or  on  behalf  of  Seller  in  connection  with  the
               transactions contemplated herein;

          (e)  Seller's  or  its   Affiliates'   legal,   accounting  and  other
               professional  fees and expenses  and the cost of all  instruments
               and  documents  required to be  delivered,  or to be caused to be
               delivered,  by Seller or its  Affiliates  hereunder  or under the
               other Transaction Documents;

          (f)  Buyer's Transaction Costs; and

          (g)  all other  costs and  expenses  incurred in  connection  with the
               transactions contemplated hereunder and the Exhibits hereto.

     Section  2.6  Buyer's  Costs.  Buyer  shall  pay  (a)  $929,544.00  of  the
prepayment  fees due in  connection  with the  prepayment  of the GECC  Loan and
$91,257.78 of the prepayment  fees due in connection  with the prepayment of the
GMAC Loan, (b) $60,000 of Seller's  Transaction  Costs,  and (c) any amounts set
forth on the Beneficiary Demand Statements  delivered by the Fort Austin Secured
Lender and the SC Holdings Secured Lender, less any amounts to be paid by Seller
pursuant to Sections 2.11(a) and (b).

     Section 2.7 Commitment Fee;  Reimbursement  of Buyer's  Transaction  Costs.
Pursuant to the Commitment Letter,  Seller has paid to Buyer a commitment fee of
One Hundred Thousand Dollars  ($100,000.00)  (the "Commitment Fee Deposit").  If
the transactions


                                       11
<PAGE>

contemplated hereunder and the Exhibits hereto do close, or do not close for any
reason  other  than by  reason  of (a) a breach  by  Seller  of its  obligations
hereunder,  or (b) Seller  selling its interest in the Properties (or any one of
them) to another  buyer,  the  Commitment  Fee Deposit  will be applied  against
Buyer's  Transaction  Costs and the balance shall be refunded to Seller.  If the
transactions  do not  close by  reason of the  occurrence  of any of the  events
described  in clauses  (a) or (b)  above,  then  Buyer  shall  retain the entire
Commitment Fee Deposit.

     Section 2.8 Nature of Buyer's Interest.  Buyer is only purchasing  Seller's
Applicable  Interest  in  the  applicable  Property(ies)  and  is  acquiring  no
interest,  other than as a lessor pursuant to the New Separated Lease and Denver
Lease (and including any security  interest  granted pursuant  thereto),  in the
trade or  business  operated or to be  operated  by Seller or any  Affiliate  of
Seller with respect to the Properties.

     Section 2.9 Early Net Wire. If, at the written  request of Seller,  the Net
Wire Date precedes the Closing Date,  the Net Wire amount shall accrue  interest
at Nine and One Half Percent (9.5%) (the "Applicable  Rate") from and after, and
including,  the Net Wire Date. If the Closing shall occur, such accrued interest
on such Net Wire  amount at the  Applicable  Rate  through,  but  excluding  the
Commencement  Date of the New  Separated  Lease with  respect to the  Properties
shall be treated as an Additional Charge under the New Separated Lease and shall
be paid with the first rent payment by SC Operator and Fort Austin Operator,  as
lessee, under the New Separated Lease. If the Closing shall not occur,  interest
at the Applicable Rate shall continue to accrue on the Net Wire amount until the
Net Wire amount  together with all accrued  interest at the  Applicable  Rate is
paid to Buyer,  which shall occur upon demand.  The parties shall instruct Title
Insurer  or  other  applicable  party to  invest  the Net  Wire  amount  into an
interest-bearing account as directed by Seller until the Closing.  Provided that
the Closing shall occur,  all such accrued interest earned on such account shall
be payable to Seller.  If the Closing does not occur,  then the Net Wire amount,
together with all such accrued  interest earned on such account shall be paid to
Buyer,  and Seller shall pay to Buyer on demand the shortfall,  if any,  between
the amount of such  accrued  interest  earned on such  account and the  interest
which has  deemed to have  accrued  as herein  provided  on the Net Wire  amount
computed at the Applicable Rate.

     Section 2.10 Land Loan.

          (a)  The Land Loan Note.  The Land Loan shall be  evidenced  by a note
               (the "Land Loan  Note") in an initial  principal  amount of Seven
               Million  Dollars  ($7,000,000)  (the "Land  Loan"),  and shall be
               secured  by each of the Deeds of Trust  (collectively,  the "Land
               Loan Deed of  Trust")  recorded  against  the Land  Loan  Secured
               Property.

          (b)  Funding the Land Loan.  Upon  fulfillment  of the  conditions set
               forth herein,  and upon  satisfaction of the conditions set forth
               in the Land Loan Note and Land  Loan Deed of Trust,  Buyer  shall
               disburse  the  proceeds  of the Land Loan at the  Closing  as set
               forth in Section 2.11 below.


                                       12
<PAGE>

     Section 2.11  Disbursement of Proceeds of Land Loan and Purchase Price. The
proceeds  of the Land Loan and  Purchase  Price  shall be paid or  disbursed  to
Seller as follows:

          (a)  An amount  equal to Seller's  Applicable  Interest in all amounts
               owing as set forth in the Beneficiary Demand Statement  delivered
               by the Fort Austin Secured Lender  pursuant to Section 3.21 shall
               be paid in full;

          (b)  An amount  equal to Seller's  Applicable  Interest in all amounts
               owing as set forth in the Beneficiary Demand Statement  delivered
               by the SC Holdings  Secured Lender pursuant to Section 3.21 shall
               be paid in full;

          (c)  All amounts owing in the Beneficiary  Demand Statement  delivered
               by Am South in  connection  with the Am South  Loan  pursuant  to
               Section 3.21 shall be paid in full;

          (d)  An  aggregate  amount  equal to Fifty One Million  Eight  Hundred
               Twenty Five Thousand Nine Hundred Fifty Six Dollars ($51,825,956)
               shall be paid by wire transfer or immediately  available funds on
               behalf of Seller to Buyer to be applied  towards the repayment of
               a portion of the accrued and unpaid  interest and principal  owed
               by Seller under the HCPI Loan Agreement as more  particularly set
               forth in the HCPI Loan Amendment; and

          (e)  All amounts remaining following the distribution of the Land Loan
               proceeds  and  the  Purchase  Price  as  set  forth  in  Sections
               2.11(a)-(d)  above,  less any closing  costs for which  Seller is
               responsible as provided in Section 2.5.1,  shall be paid by Buyer
               to Seller by wire  transfer  or  immediately  available  funds at
               Closing.

                                   Article 3.

                 CONDITIONS TO THE OBLIGATION OF BUYER TO CLOSE
                 ----------------------------------------------

     The  obligations  of Buyer  hereunder  are subject to the  satisfaction  or
waiver by Buyer of the  conditions  set forth below.  Should any  condition  set
forth in this  Article 3 not be  fulfilled  or waived on the Closing Date to the
satisfaction  of Buyer,  Buyer may,  at its option,  without  waiving any rights
provided in this  Agreement,  terminate this  Agreement by delivering  notice of
such  termination to Seller prior to Closing,  and thereafter be relieved of all
obligations  hereunder.  If Buyer fails to  terminate  this  Agreement  prior to
Closing,  all conditions set forth in this Article 3 will be deemed to have been
satisfied  or waived by Buyer;  provided,  however,  in no event  shall any such
deemed  satisfaction  or waiver be deemed to limit or release Seller or from any
damages or liabilities  resulting from a breach of any express  representations,
warranties or covenants of Seller or any Affiliate of Seller  hereunder or under
the other Transaction Documents.

     Section 3.1  Performance.  Seller,  and its Affiliates shall have performed
each and all of the covenants and  obligations  required to be performed by them
hereunder or under the other Transaction Documents on or prior to the Closing.


                                       13
<PAGE>

     Section 3.2 Representations and Warranties;  Officer's  Certificates.  Each
and all of the  representations and warranties of Seller hereunder and under the
other  Transaction  Documents shall be true and correct on and as of the Closing
Date, as though given as of the Closing Date, and Seller shall have delivered to
Buyer officers' certificates to that effect.

     Section 3.3 Default.  No event shall have occurred that would  constitute a
default  under (a) the  Existing  Phase II Master Lease by the Phase II Lessees,
(b) the Guaranty by  Guarantor,  or (c) the HCPI Loan  Agreement  by Seller,  or
which with notice or the lapse of time, or both, would constitute such a default
by  either  the  Phase II  Lessees  under the  Existing  Phase II Master  Lease,
Guarantor under the Guaranty or Seller under the HCPI Loan Agreement.

     Section 3.4 Recordation and Costs.  Seller shall (a) have made arrangements
for each  Deed and the  Uniform  Commercial  Code  financing  statements  and/or
fixture filings,  to be recorded or filed for recordation in the manner required
by the laws of the State or any other applicable  state, and (b) pay, or arrange
to be paid, all costs and fees to be paid by Seller pursuant to Section 2.5, and
such  arrangements  shall  be  satisfactory  to  Buyer  and its  counsel  in all
respects.

     Section 3.5 Title Insurance.

          (a)  With  respect  to each  Property,  Buyer  shall  have  received a
               commitment  from  Title  Insurer  satisfactory  to Buyer  and its
               counsel  for  a  policy  of  title  insurance  showing  good  and
               indefeasible  title  to 100% of the  undivided  interest  in such
               Property in fee simple vested in Buyer as of the Closing, subject
               only  to  the  Permitted  Exceptions.  Such  policy  (the  "Title
               Policy"), when issued, shall:

               (i)  be in  current  ALTA  extended  coverage  owner's  form (but
                    without a general exception for creditors' rights);

               (ii) be  issued in an amount  equal to the  amounts  set forth on
                    Exhibit G attached  hereto  allocated to such Property (less
                    the amount  allocated to Personal  Property of such Facility
                    as provided in Section 2.1 and Exhibits E-1 through E-4);

               (iii)include endorsements 100 (no violations,  etc., modified for
                    an owner),  103.7 (access),  116.1 (survey accuracy),  123.2
                    (zoning-improved   property),  or  the  equivalents  thereof
                    available   in  the   applicable   State,   and  such  other
                    endorsements as Buyer may reasonably require; and

               (iv) insure (i) that any conditions,  covenants and  restrictions
                    affecting  such  Property  have not been violated and that a
                    future violation  thereof will not result in a forfeiture or
                    reversion  of title;  (ii) if  obtainable,  that all streets
                    adjoining such Property have been  completed,  dedicated and
                    accepted for public  maintenance  and use by the appropriate
                    governmental  authorities and that such Property have access
                    to public  streets;  (iii)  that  local  zoning  ordinances,
                    general plans and all other  applicable land use regulations
                    and all private covenants,  conditions and restrictions,  if
                    any,  permit  the  transfer  and use of such  Property  (and
                    reconstruction and resumption of use of such


                                       14
<PAGE>

                    Property  in the event of damage or  destruction  thereof or
                    cessation of use thereof) for all uses  contemplated  by the
                    New  Separated  Lease and Denver  Lease as a matter of right
                    for an unlimited time period, and specifically not merely as
                    a legal  non-conforming  use or any other legal status which
                    would by its terms or by operation of law limit the duration
                    of such use or the right to  rebuild  and resume use of such
                    Property  for all  uses  contemplated  by the New  Separated
                    Lease and Denver  Lease in the event of damage,  destruction
                    or  cessation of use of such  Property  for any reason;  and
                    (iv) over and against all parties in  possession  except the
                    current occupants thereof.

          (b)  With respect to the Land Loan Secured Property,  Buyer shall have
               received  an  unconditional  commitment  and pro  forma for title
               insurance  issued by Title Insurer showing good and  indefeasible
               title to the Land Loan  Secured  Property  vested in Seller as of
               the Closing Date,  in the  principal  amount of the Land Loan and
               insuring the continued validity and priority of the deed of trust
               of Buyer upon the Land Loan Secured Property and other collateral
               described  in the Land Loan Deed of Trust,  subject  only to such
               exceptions  as are  acceptable  to Buyer in its sole and absolute
               discretion. The policy, when issued, shall:

               (i)  be in current ALTA extended  coverage lender's form (without
                    a creditors right exception); and

               (ii) include,  to the  extent  available,  endorsements  100  (no
                    violations,   etc.),   103.7   (access)  and  116.1  (survey
                    accuracy), and such other endorsements as Buyer may require.

     Section 3.6 Survey.

          (a)  With respect to the Property, evidence satisfactory to Buyer that
               there has been no physical  change to the Property  from that set
               forth in the current  ALTA survey of the  Property  certified  to
               Buyer pursuant to the HCPI Loan Agreement.

          (b)  With respect to each Land Loan Secured Property, Buyer shall have
               received and approved either (a) an ALTA survey of such Land Loan
               Secured  Property   completed  in  accordance  with  the  Minimum
               Standard  Detail  requirements  for ALTA/ACSM Land Title Surveys,
               with additional Title A survey requirements,  jointly established
               and  adopted by ALTA and ACSM in 1999 that meet the  requirements
               of a Class A Survey as defined  therein,  certified within thirty
               (30) days of the  Closing  Date or (b) such  other  form of title
               survey which is in form and  substance  satisfactory  to Buyer in
               its sole discretion.  Such survey shall (i) be certified to Buyer
               and the Title  Insurer  as being  true and  accurate,  which such
               certification shall include the acreage of such Land Loan Secured
               Property and a statement that such Land Loan Secured  Property is
               not located in a Flood Hazard  Area;  (ii)  identify  thereon all
               telephone,  water,  sewage,  electricity,  gas and other  utility
               facilities  to the  points  of  connection;  and  (iii)  show  no
               encroachments  onto or conflicts with any adjacent property other
               than pursuant to easements  appurtenant to such Land Loan Secured
               Property or such other  agreements  with the  affected  landowner
               approved by Buyer and which are, in turn, insured under the Title
               Policy.


                                       15
<PAGE>

     Section 3.7  Utilities  and Access.  With respect to each  Property,  Buyer
shall have  satisfied  itself that (a) all  utilities  serving such Property are
adequate for the Primary  Intended Use of the applicable  Facility;  and (b) all
means of ingress  and egress,  parking,  access to public  streets and  drainage
facilities  are or will be available  to such  Property and are adequate for the
Primary Intended Use of the applicable Facility.

     Section 3.8 Site  Visits.  Buyer  shall have  completed  satisfactory  site
visits of each Property.

     Section 3.9  Environmental  Report.  With respect to each Property and Land
Loan  Secured  Property,  Buyer  shall  have  received a written  report  from a
qualified   geotechnical   or  engineering   firm  acceptable  to  and  retained
specifically by Buyer, in form and substance  satisfactory to Buyer,  concerning
the presence, handling, treatment and disposal of Hazardous Substances on, in or
under such Property or Land Loan Secured Property and disclosing (a) the results
of a  review  of prior  uses of such  Property  or Land  Loan  Secured  Property
disclosed  by local public  records,  including a chain of title report from the
Title Insurer, in form and substance satisfactory to Buyer, showing all previous
owners and lessees of such  Property or Land Loan Secured  Property from 1940 to
the present;  (b) contacts with local officials to determine whether any records
exist with respect to the disposal of Hazardous  Substances  on such Property or
Land  Loan  Secured  Property;   (c)  if  recommended  by  such  engineering  or
geotechnical  firm or required by Buyer,  soil samples and  groundwater  samples
consistent with good engineering practice; and (d) reasonable evaluations of the
surrounding areas for sensitive  environmental  receptors such as drinking water
wells or aquifers,  hospitals and schools, and evidence regarding the use and/or
historical use of such areas.

     Section 3.10 Entitlements.  With respect to each Property, Buyer shall have
received and approved with respect to such Property (a) copies of the applicable
zoning  ordinances  and map marked to show the  location  of such  Property  and
certified by an appropriate  Governmental Authority to be complete and accurate;
(b) evidence that such zoning  ordinances and the general  plans/specific  plans
and all other land use regulations of the applicable municipal jurisdictions and
all covenants,  conditions  and  restrictions,  if any,  affecting such Property
permit the transfer of such  Property  and use thereof for its Primary  Intended
Use and for all other uses (if any)  contemplated  under the New Separated Lease
or Denver Lease, as applicable (and  reconstruction and resumption of use in the
event of damage,  destruction,  or cessation of use) as a matter of right for an
unlimited time period and not merely as a legal  non-conforming  use; (c) copies
of all licenses, certificates, approvals and authorizations, including plot plan
and  subdivision  approvals,  zoning  variances,  sewer,  building,  foundation,
grading and other permits and all other authorizations  required by Governmental
Authorities or by any applicable covenants,  conditions and restrictions for the
use and  operation  of such  Property  for its Primary  Intended Use and for all
other uses (if any) contemplated under the New Separated Lease and Denver Lease,
in each instance in accordance  with all applicable  Governmental  Requirements;
and (d) evidence  satisfactory  to it that (i) such Property and/or lessee holds
all licenses,  permits,  accreditations,  authorizations and certifications from
all applicable  Governmental  Authorities required for the operation thereof for
its Primary Intended Use and for all other uses (if any) contemplated  under the
Denver Lease or New Separated  Lease,  as  applicable,  including the applicable
licenses  (collectively,  the  "Health  Care  Licenses")  from the  Texas  State
Department  of Health (for the Fort Worth and Austin  Facilities),  the Colorado
Department  of  Public  Health


                                       16
<PAGE>

(for the Denver Facility),  and the Arizona Department of Health (for the Tucson
Facility)  (collectively,  the "Issuing  Agencies");  (ii) such  Property is not
subject to, or threatened  with,  any hold on  admissions or other  sanction and
there are no outstanding,  or threatened,  notices of deficiency  resulting from
any  survey of such  Property  which have not been  fully  responded  to with an
acceptable  plan of  correction  with which such  Property is being  operated in
compliance;  (iii) to the extent  necessary  to operate  such  Property  for its
Primary  Intended  Use  and  to  receive   governmental   and/or  private  payor
reimbursements,  such  Property is fully and  unconditionally  accredited by the
Joint Commission on Accreditation  of Health Care  Organizations;  and (iv) such
Property  and/or lessee is, to the extent  applicable,  (A) duly  certified as a
provider  under the Medicare and Medicaid  programs and (B) in compliance in all
material  respects  with all  Governmental  Requirements,  including  rules  and
regulations  relating to  Medicare/Medicaid  fraud and abuse practices,  and all
insurance requirements.

     Section 3.11 Physical  Inspections.  With respect to each  Property,  Buyer
shall have  received  and  approved  the  physical  condition  of such  Property
including the improvements and the HVAC, electrical, plumbing and other systems,
and shall  have  received,  at  Buyer's  expense,  written  reports  in form and
substance  satisfactory  to Buyer from one or more qualified  engineering  firms
approved  by Buyer or any  engineer  employed  by Buyer to the  effect  that the
improvements  on such Property have been  constructed  in compliance  with,  and
currently are in compliance with, all Governmental  Requirements,  including the
Americans With  Disabilities Act, and with all restrictions of record applicable
thereto which affect the use of such  Property for its Primary  Intended Use and
for all uses contemplated under the New Separated Lease and Denver Lease.

     Section 3.12  Condemnation;  Casualty.  No Condemnation shall be pending or
threatened  with respect to any  Property or Land Loan  Secured  Property and no
casualty shall have occurred with respect to any Property, any Land Loan Secured
Property or any portion thereof.

     Section 3.13 Financial Condition.

             3.13.1  Buyer  shall have  received  and  approved  (a)  audited
financial  statements  for ARC and its  Affiliates  for the most recent year for
which such  statements are  available;  (b) unaudited  financial  statements for
Seller and its  Affiliates for the period ended June 30, 2003; and (c) unaudited
operating statements for each Facility for the period ended June 30, 2003;

             3.13.2  Buyer  shall  have  received  evidence  satisfactory  to it
that no  material  adverse  change  in the  financial  condition,  business,  or
prospects  of (a) Seller and its  Affiliates  has  occurred  from June 30,  2003
through the Closing or (b) each Facility has occurred from June 30, 2003 through
the Closing;

             3.13.3 Buyer shall have received and approved UCC searches  against
Seller  showing no liens on any  Property or Land Loan Secured  Property,  other
than the liens securing the HCPI Loan and any liens securing the GMAC Loan, GECC
Loan or AmSouth Loan, each of which shall be released prior to Closing; and


                                       17
<PAGE>

             3.13.4 Buyer shall have  received  and  approved all pending or
threatened litigation or governmental  proceedings seeking to enjoin,  challenge
or collect material damages in connection with Seller,  any Property or the Land
Loan Secured Property.

     Section  3.14  Proceedings.  Buyer shall have  reviewed  and  approved  all
corporate, partnership and other proceedings to be taken by Seller in connection
with the  transactions  contemplated  hereunder and the Exhibits  hereto and all
documents  and  certificates  incident  thereto,  including  the  Organizational
Documents of Seller and its Affiliates and such other documents and certificates
as Buyer or its counsel shall reasonably request.

     Section  3.15  Records.  With  respect to each  Property,  Buyer shall have
reviewed,  to the extent in the possession and control of Seller,  originals (or
copies  thereof  certified  to  Buyer)  of all  documents  or other  instruments
relating  to the  Intangible  Property,  all  operating  reports  and such other
records pertaining to such Property as Buyer shall reasonably request.

     Section 3.16  Insurance.  With respect to each  Property,  Buyer shall have
received  certificates  with  respect  to,  and copies of the  policies  of, the
insurance  required  to be  carried  by lessee  under the  Denver  Lease and New
Separated  Lease,  as applicable,  together with evidence  satisfactory to Buyer
that the premiums therefor due on or prior to the Closing Date have been paid in
full.

     Section 3.17 [Reserved].

     Section 3.18 Transaction Documents. On or prior to the Closing Date, Seller
shall  deliver  or  caused  to be  delivered  to  Buyer  each  of the  following
documents:

          (a)  Distribution Agreements, in each case duly executed by Seller, SC
               Holdings and Fort Austin, as applicable;

          (b)  Land Loan Documents,  in each case duly executed and acknowledged
               where applicable by Seller;

          (c)  HCPI Loan Amendment, duly executed by Seller;

          (d)  New Separated Lease, duly executed by Fort Austin Operator and SC
               Operator, as lessees;

          (e)  Assignment and Assumption of Lease, duly executed by Fort Austin,
               SC Holdings and Seller;

          (f)  Guaranty, duly executed by Guarantor;

          (g)  First Amendment to Existing Phase II Master Lease,  duly executed
               by the lessors and lessees named therein;

          (h)  Second  Amendment to Phase I Master  Lease,  duly executed by the
               lessors and lessees named therein;


                                       18
<PAGE>

          (i)  Denver  Transaction  Documents,  duly executed by Fort Austin and
               Denver Lessee;

          (j)  Beneficiary  Demand  Statements  from  the  SC  Holdings  Secured
               Lender,  the Fort Austin  Secured  Lender and Am South,  together
               with applicable Releases; and

          (k)  Deeds, in each case duly executed and notarized by Seller; and

          (l)  Bills of Sale, in each duly executed by Seller.

     Section 3.19 Opinion of  Counsel(a) . Buyer shall have  received an opinion
or opinions of counsel to Seller and Denver  Lessee dated as of the Closing Date
and  addressed to Buyer  covering such opinion  matters as Buyer may  reasonably
require and otherwise in form and substance satisfactory to Buyer.

     Section 3.20 Board of  Directors  Approval.  All of the terms  contained in
this Agreement and the Exhibits  hereto shall have been ratified by the Board of
Directors or the  Investment  Committee of the Board of Directors of Buyer.  The
Board of  Directors  or the  Investment  Committee  of the Board of Directors of
Buyer may require  other terms and  conditions  when  considering  the financial
condition and prospects of Seller, each Facility, and other relevant matters.

     Section 3.21  Beneficiary  Demand  Statements.  Seller shall have delivered
Beneficiary  Demand  Statements from the SC Holdings  Secured  Lender,  the Fort
Austin Secured Lender and Am South together with applicable Releases.

     Section 3.22 Tax Counsel Approval.  Buyer's tax counsel shall have reviewed
and approved the terms of this Agreement,  the other  Transaction  Documents and
any other instrument,  document or agreement executed in connection  herewith or
therewith.

     Section 3.23 [Reserved].

     Section 3.24 Appraisal. Buyer shall have received and approved an appraisal
of each Property from an appraisal  firm and in form and substance  satisfactory
to Buyer.

     Section 3.25 Due Diligence. Buyer shall be satisfied with the completion of
such other due diligence items as are customary in a transaction of this type.

     Section 3.26 Health Care Licenses. Seller shall file, or cause to be filed,
all applications  and other documents  necessary to effect a change of ownership
of such Health Care Licenses,  if  applicable,  and shall deliver copies of such
applications and other documents to Buyer.


                                       19
<PAGE>

                                   Article 4.

                 CONDITIONS TO THE OBLIGATION OF SELLER TO CLOSE
                 -----------------------------------------------

     The  obligations  of Seller  hereunder are subject to the  satisfaction  or
waiver by Seller of the  conditions  set forth below.  Should any  condition set
forth in this  Article 4 not be  fulfilled  or waived on the Closing Date to the
satisfaction of Seller,  Seller may, at it's option,  without waiving any rights
provided in this  Agreement,  terminate this  Agreement by delivering  notice of
such  termination  to Buyer prior to Closing,  and thereafter be relieved of all
obligations  hereunder.  If Seller fails to terminate  this  Agreement  prior to
Closing,  all conditions set forth in this Article 4 will be deemed to have been
satisfied  or waived by Seller;  provided,  however,  in no event shall any such
deemed  satisfaction  or waiver be deemed  to limit or  release  Buyer  from any
damages or liabilities  resulting from a breach of any express  representations,
warranties  or  covenants  of Buyer  hereunder  or under the  other  Transaction
Documents.

     Section 4.1  Performance.  Buyer shall have  performed  each and all of the
covenants  and  obligations  required to be  performed  by it on or prior to the
Closing;

     Section  4.2   Representations   and  Warranties.   Each  and  all  of  the
representations  and warranties of Buyer  hereunder shall be true and correct on
and as of the Closing Date, as though given as of the Closing Date; and

     Section 4.3  Transaction  Documents.  Buyer  shall  deliver or caused to be
delivered to Seller each of the following documents:

          (a)  Distribution  Agreements,  in each case duly executed by Buyer or
               Texas HCP, as applicable;

          (b)  HCPI Loan Amendment, duly executed by Buyer;

          (c)  Assignment  and  Assumption of Leases,  duly executed by Buyer or
               Texas HCP, as applicable; and

          (d)  Denver Transaction Documents, duly executed by Buyer.

                                   Article 5.

                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

     Section 5.1 By Seller and its Applicable Affiliates.  Seller represents and
warrants as follows on behalf of itself and its  Affiliates  that are a party to
the Transaction Documents (collectively, "Applicable Affiliates"):

         5.1.1  Each of Seller  and its  Applicable  Affiliates  is duly
organized,  validly  existing  and, to the extent  applicable,  in good standing
under  the  laws of its  state of  organization/formation,  is  qualified  to do
business and, to the extent  applicable,  in good standing in the State in which
it owns and/or operates  property and has full power,  authority and legal right
to execute  and  deliver  and to perform  and  observe  the  provisions


                                       20
<PAGE>

of this Agreement,  the other  Transaction  Documents and all other  instruments
provided  for  herein  and the  Exhibits  hereto  to which  it is a  party,  and
otherwise carry out the transactions contemplated hereunder and thereunder;

         5.1.2  this  Agreement  has  been,  and  on the  Closing  Date,  the
other Transaction  Documents and all other documents to be executed by Seller or
its Applicable  Affiliates  hereunder will have been, duly authorized,  executed
and delivered by Seller or its Applicable  Affiliates and  constitutes  and will
constitute  the valid and  binding  obligations  of  Seller  and its  Applicable
Affiliates enforceable against it in accordance with their respective terms;

        5.1.3 Seller is solvent,  has timely and  accurately  filed all tax
returns  required to be filed by it, and is not in default in the payment of any
taxes  levied or  assessed  against it or any of its  assets,  or subject to any
judgment,  order, decree, rule or regulation of any Governmental Authority which
would,  in each  case  or in the  aggregate,  adversely  affect  its  condition,
financial or otherwise,  or its prospects,  the  Properties or the  transactions
contemplated hereunder or the Exhibits hereto;

         5.1.4 no consent,  approval  or other  authorization  of, or
registration, declaration or filing with, any Governmental Authority is required
for  the  due  execution  and  delivery  of  this  Agreement,  any of the  other
Transaction  Documents  or any other  documents  to be executed by Seller or its
Applicable  Affiliates  hereunder,  or for the performance by or the validity or
enforceability  thereof against Seller or its Applicable Affiliates , other than
the recording or filing for recordation of the Deed;

         5.1.5  there  are no  actions,  proceedings  or  investigations,
including  Condemnation  proceedings  or tax  audits,  pending  or, to  Seller's
knowledge or the knowledge of its Applicable Affiliates,  threatened, against or
affecting  Seller,  its Applicable  Affiliates,  or the  Properties,  seeking to
enjoin,  challenge  or  collect  damages  in  connection  with the  transactions
contemplated  hereunder or under any of the other Transaction Documents or which
could  reasonably be expected to materially  and adversely  affect the financial
condition or operations of Seller, its Applicable Affiliates,  or the Properties
or the  ability  of  Seller  or its  Applicable  Affiliates,  to  carry  out the
transactions   contemplated  hereunder  or  thereunder,  or  which  in  any  way
challenge,  affect or would  challenge or affect the ownership of the Properties
or lease of the Facilities pursuant to this Agreement or the New Separated Lease
and Denver Lease;

         5.1.6 the execution and delivery of this Agreement,  the other
Transaction  Documents  and all other  documents to be executed by Seller or its
Applicable  Affiliates  hereunder,  compliance  with the  provisions  hereof and
thereof and the  consummation  of the  transactions  contemplated  hereunder and
thereunder  will  not  result  in (a) a  material  breach  or  violation  of any
Governmental  Requirement applicable to Seller, or the Properties now in effect;
(b) a breach or violation of (i) the  Organizational  Documents of Seller or its
Applicable Affiliates, as the case may be; (ii) any judgment, order or decree of
any Governmental Authority binding upon Seller or its Applicable Affiliates,  as
the case may be; or (iii) any  agreement or instrument to which either Seller or
its  Applicable  Affiliates  is a  party  or by  which  it  is  bound;  (c)  the


                                       21
<PAGE>

acceleration  of any obligation of Seller or its Applicable  Affiliates,  as the
case may be;  or (d) the  creation  of any  lien,  encumbrance  or other  matter
affecting  title  (other than the New  Separated  Lease and Denver Lease and the
Permitted Exceptions) to the Properties;

             5.1.7 current local zoning  ordinances,  general plans and other
applicable  land use  regulations  and all  private  covenants,  conditions  and
restrictions,  if any,  affecting  the  Properties,  permit the  transfer of the
Properties  and the use of the  Facilities  for its  Primary  Intended  Use (and
reconstruction  and  resumption of use in the event of damage,  destruction,  or
cessation  of use) as a matter of right for an  unlimited  time  period  and not
merely as a legal non-conforming use;

             5.1.8 all material consents, permits, licenses, approvals or
authorizations  have been obtained from Governmental  Authorities or other third
parties  which are  necessary  to permit the  conveyance  of the  Properties  in
accordance with the provisions of this Agreement and the  Transaction  Documents
and the use of each  Property  for its  Primary  Intended  Use and for all  uses
contemplated under the New Separated Lease and Denver Lease (if any),  including
the applicable Health Care Licenses from the Issuing Agencies,  all of which are
in full force and effect;

        5.1.9 each  Property is in  compliance  in all material  respects  with
all applicable zoning ordinances and the Permitted Exceptions;

         5.1.10 to the  extent  necessary  to  operate a  Facility  for its
Primary  Intended  Use  and/or to  receive  governmental  and/or  private  payor
reimbursements,  such  Facility is (a) duly  certified  as a provider  under the
Medicare and Medicaid programs,  (b) in compliance in all material respects with
all  Governmental  Requirements,  including  rules and  regulations  relating to
Medicare/Medicaid fraud and abuse practices,  and all insurance requirements and
(c) not subject to, or threatened with, any hold on admissions or other sanction
and there are no  outstanding  or  threatened  notices of material  deficiencies
resulting from any survey of such Facility  which have not been fully  responded
to with an  acceptable  plan of  correction  under which such  Facility is being
operated in compliance;

        5.1.11 The applicable Phase II Lessees' Medicare and Medicaid
participation agreements for each Facility, if any, are in full force and effect
and no action has been taken to  revoke,  cancel,  suspend or modify any of such
agreements; Seller's material provider contracts, if any, including managed care
contracts,  are in full force and effect and no action has been taken to revoke,
cancel,  suspend or modify any such  agreement,  nor is there any basis for such
action;  and reimbursement  pursuant to the Medicare and Medicaid  participation
agreements,  if any, and any material  provider  contract  will not be adversely
affected as a result of the  transactions  contemplated  hereby and the Exhibits
hereto;

        5.1.12 (a) there are no  underground  tanks located on the Property;
there are no Hazardous  Substances  currently located on any Property (except to
the extent the  existence  thereof  does not  violate  applicable  Environmental
Laws),  and, to the knowledge of Seller or its  Applicable  Affiliates,  no such
tanks have ever been located on


                                       22
<PAGE>

any  Property  and no  such  Hazardous  Substances  (except  to the  extent  the
existence thereof does not violate applicable Environmental Laws) have ever been
present, used, stored, treated, released from or disposed of or on any Property;
(b) no enforcement, cleanup, removal or other governmental or regulatory actions
have, at any time, to the knowledge of Seller or its Applicable Affiliates, been
instituted or threatened  with respect to any Property;  (c) there is no current
or,  to the  best of  Seller's  knowledge  or the  knowledge  of its  Applicable
Affiliates, prior violation or state of noncompliance with any environmental law
relating to Hazardous  Substances  with respect to any  Property;  (d) no claims
have been made or, to the best of Seller's  knowledge  or the  knowledge  of its
Applicable  Affiliates,  threatened  by any  third  party  with  respect  to any
Property relating to damage, contribution, cost recovery,  compensation, loss or
injury resulting from or related to any Hazardous Substance; and (e) to the best
of Seller's knowledge or the knowledge of its Applicable  Affiliates,  there are
no current,  and have been no, businesses  engaged in the storage,  treatment or
disposal of Hazardous  Substances  (except to the extent the  existence  thereof
does not violate applicable  Environmental Laws) on any property adjacent to any
Property;

         5.1.13 no Property is located  within an area of special  risk with
respect to natural or man-made disasters or hazards,  including any Flood Hazard
Area;

         5.1.14 there are no adverse  geological  or soil  conditions  affecting
any Property;

         5.1.15 all public  utilities,  including  telephone,  gas,  electric
power,  sanitary and storm sewer and water,  are available for connection at the
boundaries  of each  Property;  such  utilities  are  adequate  for the  Primary
Intended  Use of each  Facility;  and the means of ingress and egress,  parking,
access to public  streets and drainage  facilities  are adequate for the Primary
Intended Use of each Facility;

          5.1.16 each Property is a legal lot or parcel which for all purposes
may be  mortgaged,  conveyed and otherwise  dealt with as a separate  parcel and
taxed as a separate lot or parcel;

         5.1.17  no  exception  to title to and no  interest  in any  Property
will interfere with the use of the Leased Property for its Primary  Intended Use
in accordance with the New Separated Lease or Denver Lease or cause the value of
such Property to be materially less than the Purchase Price allocated thereto as
provided in Exhibit C;

         5.1.18  Seller has  delivered to Buyer (a) copies of the audited
financial  statements for ARC and its Applicable  Affiliates for the most recent
year for which such statements are available, (b) unaudited financial statements
for ARC and its  Applicable  Affiliates  for the period ended June 30, 2003, and
(c) unaudited  operating  statements for each Facility for the period ended June
30, 2003, and such financial and/or operating  statements are true,  correct and
complete in all material  respects,  have been  prepared  from and in accordance
with the books and records of ARC, its Applicable  Affiliates and each Facility,
as applicable, and fairly present the financial position and results of


                                       23
<PAGE>

operations of ARC, its Applicable Affiliates and each Facility, respectively, at
the date(s) and for the period(s) indicated;

         5.1.19 since June 30, 2003,  there has been no material  adverse
change in the financial condition of ARC or its Applicable  Affiliates and since
June 30,  2003,  there has been no  material  adverse  change  in the  financial
condition of any Facility from that disclosed in the operating statements;

         5.1.20  Seller has  delivered to Buyer copies of all of the
Organizational  Documents  of  Seller  and its  Applicable  Affiliates  that are
parties to the Transaction  Documents.  Such Organizational  Documents are true,
correct and complete in all material respects;

         5.1.21  neither  this  Agreement  nor any  certificate,  statement or
other  document  furnished or to be furnished to Buyer by or on behalf of Seller
in  connection  with the  transactions  contemplated  hereunder and the Exhibits
hereto contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact  necessary in order to make the statements
contained herein or therein not misleading;

         5.1.22  Buyer is not  required to  withhold  taxes from the payment of
sale  proceeds to or on behalf of Seller under the Internal  Revenue Code or any
applicable state, commonwealth, local or other tax laws;

          5.1.23  Seller is not a foreign  person for purposes of Section 1445
of the Internal Revenue Code;

         5.1.24 each Property is free and clear of all liens and other
encumbrances other than the Permitted Exceptions;

         5.1.25  neither  Seller,  nor any  Affiliate  of  Seller is  retaining
any contiguous or adjacent property to any Property;

         5.1.26 the real property tax assessor's parcel numbers for each
Property is as set forth on Exhibit D;

         5.1.27  except as set  forth on  Exhibit H  attached  hereto,  there
are no  Commercial  Occupancy  Arrangements  affecting  the  Properties  (or any
portion thereof), and there is no other Person in possession or occupancy of the
Properties  (or any portion  thereof),  except for  patients or residents of the
Facility;

         5.1.28 the Purchase Price  represents fair and adequate  consideration
for Seller's Applicable Interest in the Properties;

         5.1.29 the sale of Seller's  Applicable  Interest in the  Properties on
the terms and  conditions set forth in this  Agreement,  together with the other
transactions  contemplated  herein,  are the result of arms length  transactions
between Seller and Buyer and/or their respective Applicable Affiliates; and


                                       24
<PAGE>


         5.1.30 Seller owns all of the specific items of tangible  personal
property for each Facility  described  respectively  on Exhibits E-1 through E-4
attached hereto.

     Section 5.2 By Buyer. Buyer represents and warrants as follows:

            5.2.1 Buyer is duly formed, validly existing and, to the extent
applicable,   in  good   standing   under   the   laws  of  the   state  of  its
organization/formation;  is, or will be on the Closing Date,  duly qualified and
authorized  to do  business  in  the  State  of  Maryland,  to the  extent  such
qualification  is  required to perform its  obligations  hereunder  or under any
Transaction  Document;  and has or will have on the  Closing  Date,  full power,
authority  and legal right to execute and deliver and to perform and observe the
provisions  of this  Agreement  and  the  New  Separated  Lease  and  all  other
instruments  provided for herein to which it is a party, and otherwise carry out
the transactions contemplated hereunder and the Exhibits hereto; and

          5.2.2 this Agreement has been, and on the Closing Date all other
documents to be delivered by Buyer  pursuant to this  Agreement  will have been,
duly  authorized,  executed  and  delivered  by Buyer and  constitute,  and will
constitute,  the valid and binding  obligations  of Buyer,  enforceable  against
Buyer in accordance with their respective terms.

         5.2.3 Buyer has not authorized any action in its capacity as
Administrative  Member of each of Fort  Austin and SC  Holdings  to cause any of
Seller's representations and warranties in Section 1.5 above to be untrue.

                                   Article 6.

                   COVENANTS OF THE PARTIES AND OTHER MATTERS
                   ------------------------------------------

     Section 6.1 Covenants of Seller. Prior to the Closing Date, Seller shall:

          (a)  not  amend  or  permit  to be  amended  any  agreement  or  other
               instrument related to any Property or Seller's business;

          (b)  timely pay or cause to be paid all  income,  property,  sales and
               withholding  taxes and all ad valorem and other taxes,  liens and
               charges upon each Property and business  operated thereon as they
               become due;

          (c)  not  dispose  of  or  encumber  or  permit  the   disposition  or
               encumbrance of any Property or any portion thereof;

          (d)  not enter into or assume or permit to be entered  into or assumed
               any contract, agreement, obligation, lease, license or commitment
               related to any Property except as contemplated hereunder or under
               the other Transaction Documents or the Exhibits hereto or thereto
               and except for residency  and/or patient  occupancy  arrangements
               entered into in the ordinary course of Seller's business;


                                       25
<PAGE>

          (e)  not do any act or omit any act which  would cause a breach of any
               contract,  commitment or  obligation  which would have an adverse
               effect on any Property or the business conducted thereon;

          (f)  promptly  advise  Buyer in writing of any  adverse  change in the
               financial   position,   assets  or  earnings  of  Seller  or  its
               Affiliates,  or in the financial position,  assets or earnings of
               any Property;

          (g)  not amend, terminate or waive or permit to be amended, terminated
               or waived  any right  related  to any  Property  or the  business
               conducted thereon;

          (h)  not to make  or  permit  to be made  any  Capital  Additions  (as
               defined in the  Existing  Phase II Master  Lease) to any Property
               without the written approval of Buyer,  other than renovations to
               the  Facility  which have been  disclosed in writing to Buyer and
               which are to be completed prior to the Closing Date;

          (i)  afford the officers, attorneys, accountants, and other authorized
               representatives  of Buyer access during normal  business hours to
               the  Properties  and to the  books  and  records  related  to the
               Properties and the business  conducted thereon in order to afford
               Buyer such opportunity of review,  examination and  investigation
               as Buyer shall  desire with  respect to the same and permit Buyer
               to make extracts from, and take copies of, such books and records
               as may be reasonably necessary for such purposes;

          (j)  give all notices to Governmental  Authorities required by law for
               the transfer of each Property; and

          (k)  take all action as may be necessary to comply  promptly  with any
               and all Governmental Requirements affecting each Property and all
               orders of any board of fire  underwriters or other similar bodies
               in  connection  with the making of repairs and  alterations,  and
               promptly,  and in no event later than twenty-four (24) hours from
               the time of its receipt, notify Buyer of any failure of Seller to
               comply with the same.

     Section 6.2 Notification of Changes. At any time at or prior to the Closing
Date,  Seller shall promptly  notify Buyer of (a) any change in the condition of
any  Property  or any  contiguous  or  neighboring  property  which could have a
material adverse effect on any Property,  Seller,  or Buyer, or (b) any event or
circumstance  of which Seller  becomes aware which makes any  representation  or
warranty of Seller contained herein untrue or misleading, or any covenant of (i)
Buyer  or  Seller  under  this  Agreement,  (ii) of the  lessees  under  the New
Separated Lease or Denver Lease or (iii) of Guarantor in the Guaranty  incapable
or less likely of being  performed,  it being  understood that the obligation to
provide  notice to Buyer under this  Section  shall in no way relieve  Seller or
Guarantor of any liability for a breach by Seller of any of its representations,
warranties or covenants  contained  herein,  in the New Separated Lease,  Denver
Lease or Guaranty, as applicable.

     Section 6.3 Effect Transaction.  Seller shall take all actions necessary or
desirable to effect the transactions contemplated herein.


                                       26
<PAGE>

     Section 6.4 Indemnification.

          (a)  Seller unconditionally and irrevocably indemnifies,  protects and
               agrees to defend and hold harmless Buyer from and against any and
               all loss, cost or expense,  including reasonable attorneys' fees,
               arising from (i) the breach or violation of any representation or
               warranty of Seller contained  herein;  (ii) the failure of Seller
               to satisfy or perform any covenant or other  provision  contained
               herein;  (iii)  any  violation  of  any  covenant,  condition  or
               restriction  affecting any  Property;  (iv) any  encroachment  of
               buildings  or other  improvements  onto  adjoining  lands or onto
               easements  or licenses or  rights-of-way  located on any Property
               which is not a Permitted Exception; (v) the presence or existence
               of any Hazardous Substance on, in or under any Property; and (vi)
               any claims made against  Buyer by any third party  arising out of
               the  transactions  contemplated in this Agreement or the Exhibits
               hereto.  Payment  shall not be a condition  precedent to recovery
               under the foregoing indemnification provision.

          (b)  Buyer  hereby   unconditionally   and  irrevocably   indemnifies,
               protects and agrees to defend and hold  harmless  Seller from and
               against any and all loss,  cost or expense,  including  costs and
               reasonable legal fees,  incurred after the Closing by Seller as a
               result  of the  breach  or  violation  of any  representation  or
               warranty  of Buyer  hereunder.  Payment  shall not be a condition
               precedent  to  recovery   under  the  foregoing   indemnification
               provision.

                                   Article 7.

                                  MISCELLANEOUS
                                  -------------

     Section 7.1 Survival. All covenants, representations and warranties made by
Seller and Buyer hereunder or in any certificates or other instruments delivered
pursuant to this  Agreement  shall  survive the  execution  and delivery of this
Agreement and recordation of the Deed.

     Section 7.2  Brokers.  Seller  warrants  that it has not had any contact or
dealings  with any Person or real  estate  broker  which  would give rise to the
payment of any fee or brokerage  commission in connection  with this  Agreement,
and Seller shall  indemnify,  protect,  hold  harmless and defend Buyer from and
against any liability  with respect to any fee or brokerage  commission  arising
out of any act or omission  of Seller.  Buyer  warrants  that it has not had any
contact or dealings  with any Person or real estate broker which would give rise
to the  payment  of any fee or  brokerage  commission  in  connection  with this
Agreement,  and Buyer shall indemnify,  protect, hold harmless and defend Seller
from and against any liability  with respect to any fee or brokerage  commission
arising out of any act or omission of Buyer.

     Section  7.3  Notices.  Any  notice,  consent,  approval,  demand  or other
communication  required or permitted to be given  hereunder (a "notice") must be
in writing and may be served personally or by U.S. Mail. If served by U.S. Mail,
it shall be addressed as follows:


                                       27
<PAGE>

          If to Buyer:                     Health Care Property Investors, Inc.
                                           4675 MacArthur Court, Suite 900
                                           Newport Beach, California 92660
                                           Phone:     (949)  221-0600
                                           Fax:       (949) 221-0607
                                           Attn:      Legal Department

          with a copy to:                  Latham & Watkins LLP
                                           650 Town Center Drive, Suite 2000
                                           Costa Mesa, California 92626
                                           Phone:     (714) 540-1235
                                           Fax:       (714) 755-8290
                                           Attn:      David C. Meckler, Esq.

          If to Seller:                    ARCPI Holdings, Inc.
                                           111 Westwood Place, Suite 200-AA
                                           Brentwood, Tennessee 37027
                                           Phone:     (615) 221-2250
                                           Fax:       (615) 221-2272
                                           Attn:      W.E. Sheriff

          with a copy to:                  Bass, Berry & Sims PLC
                                           AmSouth Center
                                           315 Deaderick Street, Suite 2700
                                           Nashville, Tennessee 37238-0002
                                           Phone:     (615) 742-6258
                                           Fax:       (615) 742-2757
                                           Attn:      D. Mark Sheets, Esq.

Any  notice  which is  personally  served  shall be  effective  upon the date of
service;  any notice given by U.S. Mail shall be deemed  effectively  given,  if
deposited in the United States Mail, registered or certified with return receipt
requested,  postage  prepaid and  addressed  as provided  above,  on the date of
receipt,  refusal or non-delivery  indicated on the return receipt. In addition,
either  party  may send  notices  by  facsimile  or by a  nationally  recognized
overnight  courier  service which  provides  written proof of delivery  (such as
U.P.S. or Federal Express). Any notice sent by facsimile shall be effective upon
confirmation  of receipt in legible  form,  and any notice sent by a  nationally
recognized  overnight  courier shall be effective on the date of delivery to the
party at its  address  specified  above as set forth in the  courier's  delivery
receipt.  Either  party  may,  by notice  to the other  from time to time in the
manner herein provided, specify a different address for notice purposes.

     Section 7.4 Attorneys'  Fees. If Buyer or Seller brings an action at law or
other  proceeding  against the others to enforce any of the terms,  covenants or
conditions hereof or any instrument  executed pursuant to this Agreement,  or by
reason of any breach or default hereunder or thereunder, the party prevailing in
any such action or proceeding and any appeal  thereupon shall be paid all of its
costs and attorneys' fees.


                                       28
<PAGE>

     Section 7.5 Successors.  This Agreement shall be binding upon Buyer, Seller
and their respective successors and assigns.  Notwithstanding the foregoing, the
rights and  obligations  of Seller  under  this  Agreement  may not be  assigned
without  the prior  written  consent  of Buyer,  which  consent  may be given or
withheld  in the sole and  absolute  discretion  of Buyer.  Buyer may,  however,
assign its rights and obligations hereunder without the consent of Seller.

     Section  7.6  Waiver.  No delay in  exercising  any right or  remedy  shall
constitute a waiver thereof, and no waiver by Buyer or Seller of a breach of any
covenant of this  Agreement  shall be construed as a waiver of any  preceding or
succeeding  breach  of the  same or any  other  covenant  or  condition  of this
Agreement.

     Section  7.7  Invalidity.  In the event  any one or more of the  provisions
contained  in this  Agreement  shall,  for any  reason,  be held to be  invalid,
illegal  or  unenforceable  in  any  respect,  such  invalidity,  illegality  or
unenforceability shall not affect any other provision of this Agreement.

     Section 7.8  Governing  Law.  EXCEPT WHERE  FEDERAL LAW IS  APPLICABLE  AND
UNLESS OTHERWISE EXPRESSLY PROVIDED HEREIN, THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE  WITH, THE LAWS OF THE STATE OF CALIFORNIA  (WITHOUT
REGARD OF PRINCIPLES OR CONFLICTS OF LAW).

     Section 7.9 Bulk Sales.  Buyer and Seller hereby waive  compliance with the
notice provisions of any bulk sales statute in effect in the State. Seller shall
indemnify,  defend and hold harmless  Buyer from and against any and all claims,
losses,  damages,  liabilities,  costs and expenses (including  reasonable legal
fees and expenses) paid or incurred by Buyer and arising  directly or indirectly
out of noncompliance with bulk sales statutes.

     Section 7.10 Counterparts.  This Agreement may be executed in any number of
counterparts,  each of which shall be a valid and binding  original,  but all of
which together shall constitute one and the same instrument.

     Section 7.11 Entire  Agreement.  This  Agreement,  together  with the other
Transaction Documents,  the Exhibits hereto and thereto and such other documents
as are contemplated hereunder or thereunder,  constitute the entire agreement of
the parties in respect of the subject matter  hereof,  and may not be changed or
modified except by an agreement in writing signed by the parties.

                                   Article 8.

                        BUYER'S ELECTION OF 1031 EXCHANGE

     Notwithstanding anything to the contrary in this Agreement, Buyer may elect
to purchase  the  Property in the form of a  tax-deferred  exchange  pursuant to
Section 1031 of the Code ("1031 Exchange"), either as a simultaneous exchange or
a  non-simultaneous  (i.e.,  either a so-called "Starker deferred exchange" or a
"reverse  Starker deferred  exchange").  In the event that Buyer shall so elect,
Buyer shall give written  notice to Seller and Title Insurer of such election at
least two (2) days prior to the  scheduled  Closing  Date.  Seller  shall  fully
cooperate


                                       29
<PAGE>

with any such 1031  Exchange,  including  executing  and  delivering  additional
documents  requested  or approved by Buyer;  provided,  that Seller shall not be
required to incur any additional costs or liabilities or financial obligation as
a consequence of any of the foregoing  exchange  transactions nor shall the same
delay the Closing.

                            [Signature Page Follows]


                                       30
<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed effective as of the day and year first above written.

           "BUYER"                                      "SELLER"

HEALTH CARE PROPERTY INVESTORS, INC.,           ARCPI HOLDINGS, INC., a Delaware
INC., a Maryland corporation                    corporation
By:                                             By:
      ---------------------------------------         --------------------------
      Edward J. Henning                         Title:
      Senior Vice President,                          --------------------------
      General Counsel and Corporate Secretary


<PAGE>
<TABLE>
<CAPTION>

                                TABLE OF CONTENTS
                                -----------------

                                                                                                               Page
                                                                                                               ----
<S>     <C>                                                                                                      <C>
Article 1. DEFINITIONS............................................................................................2


Article 2. PURCHASE AND SALE OF PROPERTIES and land loan..........................................................9

         Section 2.1       Sale...................................................................................9
         Section 2.2       Closing................................................................................9
         Section 2.3       Conveyance............................................................................10
         Section 2.4       Prorations............................................................................10
         Section 2.5       Costs.................................................................................11
         Section 2.6       Buyer's Costs.........................................................................11
         Section 2.7       Commitment Fee; Reimbursement of Buyer's Transaction Costs............................11
         Section 2.8       Nature of Buyer's Interest............................................................12
         Section 2.9       Early Net Wire........................................................................12
         Section 2.10      Land Loan.............................................................................12
         Section 2.11      Disbursement of Proceeds of Land Loan and Purchase Price..............................13

Article 3. CONDITIONS TO THE OBLIGATION OF BUYER TO CLOSE........................................................13

         Section 3.1       Performance...........................................................................13
         Section 3.2       Representations and Warranties; Officer's Certificates................................14
         Section 3.3       Default...............................................................................14
         Section 3.4       Recordation and Costs.................................................................14
         Section 3.5       Title Insurance.......................................................................14
         Section 3.6       Survey................................................................................15
         Section 3.7       Utilities and Access..................................................................16
         Section 3.8       Site Visits...........................................................................16
         Section 3.9       Environmental Report..................................................................16
         Section 3.10      Entitlements..........................................................................16
         Section 3.11      Physical Inspections..................................................................17
         Section 3.12      Condemnation; Casualty................................................................17
         Section 3.13      Financial Condition...................................................................17
         Section 3.14      Proceedings...........................................................................18
         Section 3.15      Records...............................................................................18
         Section 3.16      Insurance.............................................................................18
         Section 3.17      [Reserved]............................................................................18
         Section 3.18      Transaction Documents.................................................................18
         Section 3.19      Opinion of Counsel....................................................................19
         Section 3.20      Board of Directors Approval...........................................................19
         Section 3.21      Beneficiary Demand Statements.........................................................19
         Section 3.22      Tax Counsel Approval..................................................................19
         Section 3.23      [Reserved]............................................................................19
         Section 3.24      Appraisal.............................................................................19
         Section 3.25      Due Diligence.........................................................................19
         Section 3.26      Health Care Licenses..................................................................19

                                       i
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                                                                                               Page
                                                                                                               ----

<S>     <C>                                                                                                     <C>
Article 4. CONDITIONS TO THE OBLIGATION OF SELLER TO CLOSE.......................................................20

         Section 4.1       Performance...........................................................................20
         Section 4.2       Representations and Warranties........................................................20
         Section 4.3       Transaction Documents.................................................................20

Article 5. REPRESENTATIONS AND WARRANTIES........................................................................20

         Section 5.1       By Seller and its Applicable Affiliates...............................................20
         Section 5.2       By Buyer..............................................................................25

Article 6. COVENANTS OF THE PARTIES AND OTHER MATTERS............................................................25

         Section 6.1       Covenants of Seller...................................................................25
         Section 6.2       Notification of Changes...............................................................26
         Section 6.3       Effect Transaction....................................................................26
         Section 6.4       Indemnification.......................................................................27

Article 7. MISCELLANEOUS.........................................................................................27

         Section 7.1       Survival..............................................................................27
         Section 7.2       Brokers...............................................................................27
         Section 7.3       Notices...............................................................................27
         Section 7.4       Attorneys' Fees.......................................................................28
         Section 7.5       Successors............................................................................29
         Section 7.6       Waiver................................................................................29
         Section 7.7       Invalidity............................................................................29
         Section 7.8       Governing Law.........................................................................29
         Section 7.9       Bulk Sales............................................................................29
         Section 7.10      Counterparts..........................................................................29
         Section 7.11      Entire Agreement......................................................................29

Article 8. buyer's election of 1031 exchange.....................................................................29

</TABLE>

EXHIBITS

Exhibit A        -         Legal Description of the Land
Exhibit B        -         Form of Bill of Sale and Assignment
Exhibit C        -         Allocation of Base Purchase Price
Exhibit D        -         Real Property Tax Assessor's Parcel Numbers
Exhibit E        -         Itemized List of Personal Property
Exhibit F        -         Legal Descriptions of Land Loan Secured Property
Exhibit G        -         Allocated Amounts for Title Insurance
Exhibit H        -         List of Commercial Occupancy Arrangements

                                       ii

</TEXT>
</DOCUMENT>
