AMERICAN RETIREMENT CORP
CONTRIBUTION AGREEMENT
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>4
<FILENAME>g77842exv10w2.txt
<DESCRIPTION>CONTRIBUTION AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.2
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                             CONTRIBUTION AGREEMENT



                                 BY AND BETWEEN

                              ARCPI HOLDINGS, INC.,
                             A TENNESSEE CORPORATION

                                       AND

                        FORT AUSTIN LIMITED PARTNERSHIP,
                           A TEXAS LIMITED PARTNERSHIP

                            ARC SANTA CATALINA, INC.,
                             A TENNESSEE CORPORATION

                            ARC RICHMOND PLACE, INC.,
                             A DELAWARE CORPORATION

                      FREEDOM VILLAGE OF HOLLAND, MICHIGAN,
                         A MICHIGAN GENERAL PARTNERSHIP

                    FREEDOM VILLAGE OF SUN CITY CENTER, LTD.,
                          A FLORIDA LIMITED PARTNERSHIP

                 LAKE SEMINOLE SQUARE MANAGEMENT COMPANY, INC.,
                             A TENNESSEE CORPORATION

                    FREEDOM GROUP-LAKE SEMINOLE SQUARE, INC.,
                             A TENNESSEE CORPORATION

                              ARC BRANDYWINE, LLC,
                      A TENNESSEE LIMITED LIABILITY COMPANY

                                       AND

                      HEALTH CARE PROPERTY INVESTORS, INC.,
                             A MARYLAND CORPORATION



                             DATED: AUGUST 14, 2002


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<PAGE>


                                TABLE OF CONTENTS


<TABLE>
<S>                                                                                                              <C>
1.       Contribution by HCPI and Redemption of the Contributing Subsidiaries.....................................2
         1.1      Contribution....................................................................................2
         1.2      Payment of the Contribution Amount..............................................................2
         1.3      Redemption......................................................................................2

2.       Closing..................................................................................................2

3.       Effective Date Opinion...................................................................................3

4.       Closing Deliveries.......................................................................................3
         4.1      Documents to be Delivered by ARCPI, the Contributing Subsidiaries and the Subject Companies.....3
         4.2      Documents and Monies to be Delivered by HCPI....................................................4

5.       Conditions to Closing....................................................................................5
         5.1      Conditions to Obligation of HCPI to Close.......................................................5
         5.2      Conditions to Obligation of ARCPI and the Contributing Subsidiaries to Close....................6

6.       Admission of HCPI as Member of Each Subject Company and Subsequent Redemption............................6

7.       Gross Asset Value, Net Asset Value and Capital Account Adjustments.......................................6

8.       Continuation.............................................................................................7

9.       Representations and Warranties of ARCPI and the Contributing Subsidiaries................................7
         9.1      Organization, Good Standing and Qualification...................................................7
         9.2      Power and Authority.............................................................................7
         9.3      Outstanding Membership Interests of the Subject Companies.......................................7
         9.4      Ownership.......................................................................................8
         9.5      Due Authorization, Execution and Delivery; Binding Obligations..................................8
         9.6      No Violation....................................................................................8
         9.7      No Defaults.....................................................................................9
         9.8      Conditions of HCPI Loan Agreement...............................................................9
         9.9      Books and Records...............................................................................9
         9.10     Business of the Subject Companies...............................................................9
         9.11     Subsidiaries....................................................................................9
         9.12     Consents........................................................................................9
         9.13     Brokers.........................................................................................9
         9.14     Taxes...........................................................................................9
         9.15     Litigation.....................................................................................10
         9.16     Legal Compliance...............................................................................10
         9.17     Undisclosed Liabilities........................................................................10
         9.18     Investment Company.............................................................................10
         9.19     Related Party Transactions.....................................................................10
</TABLE>

                                       i

<PAGE>


<TABLE>
<S>      <C>                                                                                                    <C>
         9.20     Full Disclosure................................................................................11
         9.21     Compliance with REIT Protections...............................................................11

10.      Representations and Warranties of HCPI..................................................................11
         10.1     HCPI's Organization............................................................................11
         10.2     Authorization of Agreement.....................................................................11
         10.3     No Violation...................................................................................11
         10.4     Litigation.....................................................................................12
         10.5     Investment Intent..............................................................................12

11.      Further Agreements of the Parties.......................................................................12
         11.1     Notices........................................................................................12
         11.2     Expenses.......................................................................................12

12.      Indemnification and Related Matters.....................................................................12
         12.1     Indemnification................................................................................12

13.      Miscellaneous...........................................................................................13
         13.1     Survival of Representations and Warranties and Covenants.......................................13
         13.2     Entire Agreement...............................................................................13
         13.3     GOVERNING LAW..................................................................................13
         13.4     WAIVER OF JURY TRIAL...........................................................................14
         13.5     Confidentiality................................................................................14
         13.6     Public Disclosure..............................................................................14
         13.7     Headings.......................................................................................15
         13.8     Notices........................................................................................15
         13.9     Separability...................................................................................16
         13.10    Attorneys' Fees................................................................................16
         13.11    Waiver.........................................................................................16
         13.12    Binding Effect; Assignment.....................................................................16
         13.13    Counterparts...................................................................................16
         13.14    No Third-Party Beneficiary.....................................................................16
         13.15    Exhibits 17
         13.16    Miscellaneous..................................................................................17
         13.17    Waiver.........................................................................................17
         13.18    Additional Acts................................................................................17
         13.19    No Presumption.................................................................................17
         13.20    Facsimile Signatures...........................................................................17
</TABLE>


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<PAGE>


                             CONTRIBUTION AGREEMENT

                  This CONTRIBUTION Agreement (this "Agreement") is made and
entered into as of August 14, 2002 (the "Effective Date") between ARCPI
Holdings, Inc., a Tennessee corporation ("ARCPI"), ARCPI's direct and indirect
subsidiaries as set forth on Schedule A attached hereto (individually, a
"Contributing Subsidiary" and collectively the "Contributing Subsidiaries") and
Health Care Property Investors, Inc., a Maryland corporation ("HCPI").

                                    RECITALS

                  A.       Pursuant to a restructuring of ARCPI and its
subsidiaries, each Contributing Subsidiary will transfer certain real property
together with the improvement thereon and personal property associated therewith
(each, a "Property"), as set forth and described on Schedule A to a limited
liability company also set forth on Schedule A attached hereto (individually, a
"Subject Company" and collectively the "Subject Companies"), which Subject
Companies are currently formed or are anticipated to be formed by ARCPI. In
exchange for the transfer of the Property from a Contributing Subsidiary to a
Subject Company, each Subject Company will issue to the applicable Contributing
Subsidiary a membership interest in such Subject Company. Following the
Contributing Companies' receipt of the membership interests in the Subject
Companies, ARCPI will own One percent (1%) of the membership interests in the
Subject Companies. Thereafter, the Contributing Subsidiaries will distribute
Eighty-Nine and 2/10ths percent (89.2%) of such interests to ARCPI, such that
following such distribution, ARCPI will own Ninety and 2/10ths percent (90.2%)
of each Subject Company. Upon completion of the restructuring, ARCPI, together
with the applicable Contributing Subsidiary will be the sole members of each
Subject Company. The members' interests in each Subject Company, including,
without limitation, the members' interests in the profits and losses in each
Subject Company, the members' capital account in each Subject Company and the
members' rights, title, interests and obligations as the members in each Subject
Company shall be referred herein with respect to each Subject Company as the
"Membership Interests."

                  B.       HCPI desires to make a contribution to each Subject
Company in exchange for the issuance of the HCPI Membership Interest (as defined
below) in each Subject Company (the "Contribution"), as more particularly set
forth herein.

                  C.       Immediately following the Contribution, each
Contributing Subsidiary desires to have its entire Membership Interests in the
Subject Companies redeemed by the applicable Subject Company (the "Redemption").

                  D.       ARCPI and each Contributing Subsidiary will cause
each of the Subject Companies to accept HCPI's Contribution and to use only the
proceeds of the Contribution to fund the Redemption of the Contributing
Subsidiaries' entire Membership Interests.

                  E.       Upon receipt of the HCPI Membership Interest by HCPI
in each of the Subject Companies as set forth herein, HCPI desires to become a
member of each of the Subject Companies.

                  F.       In connection with the receipt of the HCPI Membership
Interest by HCPI in each of the Subject Companies, and effective immediately
following the Redemption, HCPI



<PAGE>


and ARCPI desire to amend and restate the limited liability company operating
agreements of each of the Subject Companies (each, an "Amended and Restated
Operating Agreement") to reflect, among other things, the admission of HCPI as a
member to each of the respective Subject Companies, a restatement of the
Adjusted Gross Asset Value (as defined below) of each of the Subject Companies'
assets for the purpose of maintaining capital accounts under the respective
Amended and Restated Operating Agreements, and an adjustment in the capital
accounts of ARCPI and HCPI in each of the Subject Companies to reflect such
restatement as a result of HCPI's Contribution and the Redemption.

                  G.       ARCPI is also the borrower and HCPI is also the
lender pursuant to that certain Loan Agreement of even date herewith (the "HCPI
Loan Agreement") pursuant to which HCPI, as lender, has agreed to make a loan
(the "HCPI Loan") to ARCPI in the original principal amount of One Hundred
Twelve Million Seven Hundred Fifty Thousand Dollars ($112,750,000) upon and
subject to the terms in the HCPI Loan Agreement and the other Loan Documents (as
defined in the HCPI Loan Agreement).

                                    AGREEMENT

         1.       Contribution by HCPI and Redemption of the Contributing
Subsidiaries.

                  1.1      Contribution. Subject to the terms and conditions of
this Agreement, at the Closing (as defined below), HCPI will contribute and
deliver to the Subject Companies, an amount in aggregate of Twelve Million Two
Hundred Fifty Thousand Dollars ($12,250,000) (the "Contribution Amount"). In
exchange for the Contribution Amount, ARCPI and the appropriate Contributing
Subsidiary will cause the appropriate Subject Company to issue, convey and
deliver to HCPI a Membership Interest in each Subject Company such that
immediately following the Redemption, HCPI will hold a Nine and 8/10ths percent
(9.8%) Membership Interest (the "HCPI Membership Interest") in each Subject
Company and ARCPI will hold a Ninety and 2/10ths percent (90.2%) Membership
Interest in each Subject Company, all subject to the terms of the Amended and
Restated Operating Agreements.

                  1.2      Payment of the Contribution Amount. The Contribution
Amount shall be paid at the Closing by wire transfer of immediately available
funds to accounts designated by ARCPI.

                  1.3      Redemption. Immediately following the Contribution by
HCPI, ARCPI, each Contributing Subsidiary and HCPI agree to cause each Subject
Company to use the portion of the Contribution Amount received by each Subject
Company to redeem each Contributing Subsidiary's entire Membership Interest in
the applicable Subject Company in full.

         2.       Closing. The contribution of the Contribution Amount,
Redemption and issuance of the HCPI Membership Interest in each Subject Company
shall occur in immediate succession (the "Closing") and shall take place at the
offices of Latham & Watkins, 650 Town Center Drive, 20th Floor, Costa Mesa,
California 92626 (or at such other place as the parties may agree in writing) on
the Funding Date (as defined in the HCPI Loan Agreement), and shall occur, if at
all, immediately prior to the funding of the HCPI Loan and at such time as all
conditions to the funding of the HCPI Loan have been satisfied. The date on
which the Closing is held is referred


                                       2

<PAGE>


to in this Agreement as the "Closing Date." At the Closing, the parties shall
execute and deliver the documents referred to in Section 4.

         3.       Effective Date Opinion. On the Effective Date, counsel for
ARCPI shall deliver an opinion, subject to customary qualifications and
limitations, as to (i) the power and authority of ARCPI and to execute and
deliver this Agreement and perform their obligations hereunder, (ii) the due
authorization, execution and delivery of this Agreement by ARCPI and (iii) the
enforceability of this Agreement against ARCPI.

         4.       Closing Deliveries.

                  4.1      Documents to be Delivered by ARCPI, the Contributing
Subsidiaries and the Subject Companies. At the Closing, ARCPI and the
Contributing Subsidiaries shall deliver, and shall cause the Subject Companies
to deliver, to HCPI the following:

                           (a)      an Amended and Restated Operating Agreement
for each Subject Company, in a form and substance reasonably acceptable to HCPI
and duly executed by ARCPI;

                           (b)      a certificate, dated as of the Closing Date,
executed by an officer of ARCPI certifying true, complete and effective copies
of (i) the resolutions of the board of directors of ARCPI, authorizing the
execution, delivery and performance of this Agreement and all agreements,
documents and instruments to be delivered pursuant to this Agreement (the
"Transaction Documents") to which ARCPI is a party, (ii) ARCPI's Articles of
Incorporation, (iii) ARCPI's Bylaws and (iv) resolutions of the board of
directors of ARCPI authorizing ARCPI in its capacity as a member of each of the
Subject Companies to approve the (y) issuance of the HCPI Membership Interests
and (z) the Redemption, by each of the Subject Companies;

                           (c)      certificates, dated as of the Closing Date,
executed by an officer, manager or general partner, as the case may be, of each
Contributing Subsidiary certifying true, complete and effective copies of the
(i) resolutions of the board of directors, management or general partners, as
the case may be, of such Contributing Subsidiary authorizing the execution,
delivery and performance of this Agreement and the Transaction Documents to
which the Contributing Subsidiary is a party, (ii) the applicable charter
documents of the Contributing Subsidiary and (iii) resolutions of the applicable
authorizing body of each of the Contributing Subsidiaries authorizing each of
the Contributing Subsidiaries in its capacity as a member of each of the
appropriate Subject Companies to approve (y) the issuance of the HCPI Membership
Interests and (z) the Redemption, by such Subject Company.

                           (d)      a certificate, dated as of the Closing Date,
executed by ARCPI in its capacity as a member of each Subject Company,
certifying true, complete and effective copies of (i) each Subject Company's
Articles of Organization and (ii) each Subject Company's Operating Agreement in
effect immediately prior to the Closing;

                           (e)      evidence reasonably satisfactory to HCPI
that the person or persons executing this Agreement, the Amended and Restated
Operating Agreement or any of the other Transaction Documents to be delivered by
or on behalf of ARCPI or the Contributing Subsidiaries at the Closing have full
right, power and authority to do so;


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<PAGE>


                           (f)      a certificate dated as of the Closing Date,
executed by officers of ARCPI and each of the Contributing Subsidiaries
certifying that the representations and warranties of ARCPI and the Contributing
Subsidiaries provided under Section 9 are true and correct and that ARCPI and
the Contributing Subsidiaries have performed and observed, in all material
respects, all covenants and agreements to be performed and observed by it under
this Agreement or any other Transaction Document as of the Closing Date;

                           (g)      an additional opinion of counsel to ARCPI
and the Contributing Subsidiaries subject to customary qualifications and
limitations, as to the matters set forth in Sections 9.1, 9.2 , 9.3, 9.4, 9.5
and, 9.6 in form and substance acceptable to HCPI;

                           (h)      date down certificates of good standing
dated as of the Closing Date for ARCPI, each Contributing Company and each
Subject Company and date down qualifications to do business, dated as of the
Closing Date, for each Subject Company in each jurisdiction in which such
Subject Company is qualified to do business or owns real property;

                           (i)      a schedule, acceptable to HCPI, designating,
with respect to each of the Subject Companies, the Adjusted Gross Asset Value,
the Adjusted Net Asset Value, HCPI's Adjusted Capital Account and ARCPI's
Adjusted Capital Account pursuant to Section 7 of this Agreement; and

                           (j)      an affidavit from each Contributing
Subsidiary, stating under penalty of perjury, such Contributing Subsidiary's
United States taxpayer identification number and that such Contributing
Subsidiary is not a foreign person pursuant to Section 1445(b)(2) of the
Internal Revenue Code of 1986, as amended (the "Code") and a comparable
affidavit satisfying applicable state and any other withholding requirements.

                  4.2      Documents and Monies to be Delivered by HCPI.  At the
Closing, HCPI shall deliver to ARCPI and the Contributing Subsidiaries the
following:

                           (a)      an Amended and Restated Operating Agreement
for each Subject Company, in form and substance reasonably acceptable to ARCPI
and the Contributing Subsidiaries and duly executed by HCPI;

                           (b)      a certificate, dated as of the Closing Date,
executed by an officer of HCPI certifying true, complete and effective copies of
(i) the resolutions of the board of directors of HCPI authorizing the execution,
delivery and performance of this Agreement and all Transaction Documents to
which HCPI is a party, (ii) HCPI's Articles of Restatement and (iii) HCPI's
Bylaws;

                           (c)      evidence reasonably satisfactory to ARCPI
that the person or persons executing this Agreement, the Amended and Restated
Operating Agreement or any of the other Transaction Documents to be delivered by
or on behalf of HCPI at the Closing have full right, power and authority to do
so;

                           (d)      a certificate dated as of the Closing Date,
executed by an officer of HCPI certifying that the representations and
warranties of HCPI provided under Section 9 are true and correct; and


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<PAGE>


                           (e)      the Contribution Amount, which amount shall
be paid by wire transfer of immediately available funds to accounts designated
by ARCPI.

         5.       Conditions to Closing.

                  5.1      Conditions to Obligation of HCPI to Close.

                           (a)      HCPI Loan.  All Conditions to the funding of
the HCPI Loan Agreement as set forth in Article III of the HCPI Loan Agreement
shall have been satisfied and the Funding Date shall be set to occur immediately
following the Closing hereunder.

                           (b)      Reformation of Subject Companies.  Each of
the Subject Companies shall have been reformed and organized as a limited
liability company under the laws of the State of Delaware to the extent not
already so organized, and shall be in good standing as a limited liability
company in the State of Delaware, and qualified to do business in each
jurisdiction in which it owns real property.

                           (c)      No Default. No event or circumstance shall
have occurred that would constitute by itself or with notice or lapse of time,
or both, an event of default by ARCPI or any affiliate of ARCPI under any lease,
agreement or other instrument now or hereafter made with or in favor of HCPI or
an affiliate of HCPI, including, without limitation, the HCPI Loan Agreement.

                           (d)      Performance and Delivery of Documents at
Closing. Each of ARCPI, the Contribution Subsidiaries and the Subject Companies
shall have performed each and all of the covenants and obligations required to
be performed by it and shall have delivered all documents required to be
delivered pursuant to Section 4.1 on or prior to the Closing.

                           (e)      UCC Search. HCPI shall have received and
approved UCC searches and real property lien searches against ARCPI, each
Contributing Company and each Subject Company showing no liens on any of ARCPI's
or the Contributing Companies' property or assets relating to the Subject
Companies and no liens on the Subject Companies' property other than as
disclosed in, or permitted by, the HCPI Loan Agreement or the schedules thereto.

                           (f)      Redemption. All conditions to the Redemption
shall have been satisfied and the Redemption shall be set to occur immediately
following the Closing herein.

                           (g)      REIT Protections. HCPI shall be satisfied in
its reasonable discretion that HCPI's ownership of the HCPI Membership Interest
in each of the Subject Companies would not adversely affect HCPI's ability to
qualify as a real estate investment trust ("REIT") qualifying under the Internal
Revenue Code of 1986, as amended (the "Code") Section 856, et seq.

                           (h)      Representations and Warranties; Officer's
Certificates. Each and all of the representations and warranties of ARCPI and
the Contributing Subsidiaries hereunder shall be true and correct on and as of
the Closing Date, as though given as of the Closing Date and ARCPI and the
Contributing Subsidiaries, pursuant to Section 4.1(f), shall have delivered to
HCPI an officer's certificate to that effect.


                                       5

<PAGE>


                  5.2      Conditions to Obligation of ARCPI and the
Contributing Subsidiaries to Close.

                           (a)      HCPI Loan. All Conditions to the HCPI Loan
Agreement as set forth in Article III of the HCPI Loan Agreement shall have been
satisfied and the Funding Date shall be set to occur immediately following the
Closing hereunder.

                           (b)      Performance and Delivery of Documents at
Closing. HCPI shall have performed each and all of the covenants and obligations
required to be performed by it and shall have delivered all documents required
to be delivered pursuant to Section 4.2 on or prior to the Closing.

                           (c)      Representations and Warranties; Officer's
Certificates. Each and all of the representations and warranties of HCPI
hereunder shall be true and correct on and as of the Closing Date, as though
given as of the Closing Date, and HCPI, pursuant to Section 4.2(d), shall have
delivered to ARCPI and the Contributing Subsidiaries an officer's certificates
to that effect.

         6.       Admission of HCPI as Member of Each Subject Company and
Subsequent Redemption.

                           (a)      Immediately upon receipt of the Contribution
Amount each of ARCPI and the Contributing Subsidiaries will cause the applicable
Subject Company to issue the HCPI Membership Interest and admit HCPI as a Member
to the applicable Subject Company.

                           (b)      Immediately following the contribution of
the Contribution Amount by HCPI, ARCPI, each Contributing Subsidiary and HCPI
agree to cause each Subject Company to redeem the Membership Interest of the
applicable Contributing Subsidiary using only the portion of the Contribution
Amount received by such Subject Company and, immediately following the
Redemption, cause each Contributing Subsidiary will withdraw as a member from
the applicable Subject Company.

                           (c)      HCPI and ARCPI will be the sole Members of
each Subject Company following the Redemption.

         7.       Gross Asset Value, Net Asset Value and Capital Account
Adjustments. For the purposes of maintaining capital accounts under the Amended
and Restated Operating Agreement for each Subject Company:

                           (a)      Immediately following the Redemption, the
Gross Asset Value (as defined in each Subject Company's respective operating
agreement) of each Subject Company's assets shall be adjusted as of the Closing
Date to cause the net asset value of such Subject Company's assets to be as set
forth in Section 7(b) below (the "Adjusted Gross Asset Value").

                           (b)      Immediately following the Redemption, the
aggregate net asset value (which is the Gross Asset Value after taking into
account each of the Subject Company's liabilities and secured debt) shall be One
Hundred and Twenty-Five Million Dollars ($125,000,000) and shall be allocated
among the Subject Companies as reasonably agreed by the


                                       6

<PAGE>


parties (the "Adjusted Net Asset Value"). For the purpose of maintaining capital
accounts under the respective Amended and Restated Operating Agreements of the
Subject Companies, the Contribution Amount shall be allocated among the HCPI
Membership Interests in the Subject Companies in proportion to the allocation of
Adjusted Net Asset Value among the Subject Companies.

                           (c)      Immediately following the Redemption, HCPI
and ARCPI agree that the capital accounts in each Subject Company shall be
correspondingly adjusted in accordance with Section 1.704-1(b)(2)(iv)(f) of the
Treasury Regulations promulgated under the Code in order that HCPI's capital
account shall be equal to an amount equivalent to Nine and 8/10ths Percent
(9.8%) of the Adjusted Net Asset Value of such Subject Company and ARCPI's
capital account shall be equal to an amount equivalent to Ninety and 2/10ths
Percent (90.2%) of the Adjusted Net Asset Value of such Subject Company (the
"Adjusted Capital Account").

         8.       Continuation. HCPI, ARCPI and the Contributing Subsidiaries
hereto agree that following the Closing each Subject Company is authorized to
and shall continue its business without dissolution.

         9.       Representations and Warranties of ARCPI and the Contributing
Subsidiaries. Except as disclosed in the disclosure schedule attached herewith
(the "Disclosure Schedule") by reference to the paragraph(s) below to which the
disclosure pertains (and not by reference to a specific subparagraph therein to
which a disclosure pertains), ARCPI and the Contributing Subsidiaries jointly
and severally represent and warrant to HCPI that the following statements are
and shall be true and correct on and as of the Effective Date and on and as of
the Closing Date (except as otherwise expressly set forth below):

                  9.1      Organization, Good Standing and Qualification. ARCPI
is duly incorporated, validly existing and in good standing under the laws of
the State of Tennessee. As of the Closing Date, ARCPI will be validly existing
and in good standing under the laws of the State of Delaware. Each of the
Contributing Subsidiaries and each of Subject Companies that has been formed, is
duly organized, validly existing and in good standing under the laws of its
state of organization. ARCPI, each Contributing Subsidiary and each Subject
Company is, or upon formation will be, qualified to do business in each
jurisdiction in which the nature of its business or the properties owned or
leased by it requires such qualification. As of the Closing Date each Subject
Company shall be duly organized, validly existing and in good standing under the
laws of the State of Delaware and shall be qualified to do business in each
jurisdiction where it owns real property.

                  9.2      Power and Authority. ARCPI, each of the Contributing
Subsidiaries and each of the Subject Companies have, or, with respect to the
Subject Companies, upon formation will have, the corporate or other
organizational power: (i) to carry on its business as now being conducted and as
proposed to be conducted by it; (ii) to execute, deliver and perform this
Agreement and the Transaction Documents to which it is a party; and (iii) to
take all action as may be necessary to consummate the transactions contemplated
hereunder or thereunder.

                  9.3      Outstanding Membership Interests of the Subject
Companies. All of the outstanding Membership Interests of the Subject Companies
have been, or upon formation of the


                                       7


<PAGE>


applicable Subject Company will be, duly authorized for issuance, validly issued
and not subject to pre-emptive rights. Except for this Agreement, there are no
outstanding options or rights of any kind to acquire any Membership Interests or
any securities convertible into any Membership Interests of the Subject
Companies, nor are there any obligations to issue any such options, rights or
securities. There are no restrictions of any kind on the transfer of membership
interest, except as may be imposed by applicable Federal and state securities
laws, the operating agreements of each of the Subject Companies and by the First
Mortgage Loan Documents (as defined in the HCPI Loan Agreement). HCPI and ARCPI
will be the sole Members of each Subject Company following the Redemption.

                  9.4      Ownership. All of the outstanding Membership
Interests are held free and clear of all restrictions on transfer, liens,
encumbrances, claims, security interests, warrants, purchase rights, options,
taxes and charges created by or under ARCPI, any Contributing Subsidiary or any
Subject Company or any of their affiliates or predecessors in interest. Neither
ARCPI, its Subsidiaries (as defined in the HCPI Loan Agreement), any
Contributing Subsidiary nor any of the Subject Companies is a party, or subject
to, any agreement or commitment, written or oral, granting any rights (voting or
otherwise) or options in or to such Membership Interests or any interest therein
or (except as set forth in the First Mortgage Loan Documents) imposing any
restrictions thereon. On the Closing, the HCPI Membership Interests shall be
conveyed to HCPI free and clear of all restrictions on transfer (except as set
forth in the First Mortgage Loan Documents or to be set forth in the Amended and
Restated Operating Agreement for each Subject Company), liens, encumbrances,
claims, security interests, warrants, purchase rights, options, taxes and
charges of any kind.

                  9.5      Due Authorization, Execution and Delivery; Binding
Obligations. This Agreement and the Transaction Documents have been duly
authorized, executed and delivered by ARCPI and the Contributing Subsidiaries.
This Agreement and the Transaction Documents are the legal, valid and binding
obligations of ARCPI and each of the Contributing Subsidiaries party thereto,
enforceable against ARCPI and each of the Contributing Subsidiaries party
thereto, in accordance with their respective terms except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or conveyance or similar law, relating to or limiting creditors' rights
generally or by equitable principles relating to enforceability and except as
rights of indemnity or contribution may be limited by Federal or state
securities or other law, or the public policy underlying such laws.

                  9.6      No Violation. The execution, delivery and performance
by ARCPI and each of the Contributing Subsidiaries of this Agreement and the
Transaction Documents, the issuance and delivery of the HCPI Membership
Interests, and the consummation of the transactions contemplated hereby and
thereby do not (i) violate or conflict with the Articles of Incorporation or
Bylaws, operating agreements or other charter or organization documents of
ARCPI, the Contributing Subsidiaries or the Subject Companies, (ii) as of the
Closing Date, conflict with, or result in the breach of, or termination of, or
constitute a default under (whether with notice or lapse of time or both), or
accelerate or permit the acceleration of the performance required by, any
indenture, loan or credit agreement, note, bond, mortgage, lien, lease,
agreement, commitment, permit, concession, franchise, or license or other
instrument, or any order, judgment or decree, to which ARCPI, the Contributing
Subsidiaries or any Subject Company is a party or by which ARCPI, the
Contributing Subsidiaries or any Subject Company


                                       8


<PAGE>


or any of their respective properties are bound, (iii) violate any material law,
rule, regulation or ordinance applicable to ARCPI, the Contributing Subsidiaries
or the Subject Companies (iv) violate any order, ruling, judgment or decree of
any court or other governmental agency binding on ARCPI, the Contributing
Subsidiaries or any Subject Company or the Membership Interests, or (v) result
in the creation of any lien, charge or encumbrance upon the Membership
Interests, properties or assets of ARCPI, the Contributing Subsidiaries or any
Subject Company.

                  9.7      No Defaults. As of the Closing Date, no event or
circumstance will have occurred that would constitute by itself or with notice
or lapse of time, or both, an event of default by ARCPI or any affiliate of
ARCPI, any Contributing Subsidiary or any Subject Company under any lease,
agreement or other instrument now or hereafter made with or in favor of HCPI or
an affiliate of HCPI, including, without limitation, the HCPI Loan Agreement.

                  9.8      Conditions of HCPI Loan Agreement. As of the Closing
Date, all Conditions to the funding of HCPI Loan Agreement as set forth in
Article III of the HCPI Loan Agreement will have been satisfied.

                  9.9      Books and Records. The Subject Companies' books and
records contain complete and accurate records in all material respects of all
meetings and other organizational actions of its members and committees thereof.

                  9.10     Business of the Subject Companies. The only activity
of Subject Companies has been the ownership and leasing of the Leased Property
(as defined in the HCPI Loan Agreement) and the activities related or incidental
thereto and (ii) the Subject Companies have no and never have had any employees.

                  9.11     Subsidiaries. With the exception of ARC Santa
Catalina Real Estate Holdings, LLC, which is a direct subsidiary ARC SC
Holdings, LLC, a Subject Company, there are no direct or indirect Subsidiaries
of any Subject Company and no Subject Company has any ownership interest, either
of record or beneficially, of any other person or entity.

                  9.12     Consents. The execution and delivery by ARCPI and
each Contributing Subsidiary of this Agreement, the sale, transfer and delivery
of the HCPI Membership Interests, and the consummation of the transactions
contemplated hereby, do not require any authorization, registration or filing
with, or consent or approval of, any Federal, state or other political
subdivision thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, or any
other person or entity, other than such authorization, consent or approval which
has been received by ARCPI and Contributing Subsidiaries prior to the Closing.

                  9.13     Brokers. With the exception of Cohen & Steers,
neither ARCPI nor the Contributing Subsidiaries has employed or utilized the
services of any broker or finder in connection with this Agreement, any of the
Transaction Documents or the transactions contemplated hereby or thereby. HCPI
and the Subject Companies shall have no liability for any fees due, any broker
or finder in connection with this Agreement, any of the Transaction Documents or
the transactions contemplated hereby or thereby.

                  9.14     Taxes.

                                       9

<PAGE>


                           (a)      ARCPI, the Contributing Subsidiaries and the
Subject Companies have timely and accurately filed all federal income tax
returns and all other tax returns required to be filed by each of them and have
timely paid all taxes and assessments payable by each of them which have become
due except to the extent that such taxes or assessments are being contested in
good faith by appropriate proceedings diligently pursued, and as to which ARCPI,
the Contributing Subsidiaries and the Subject Companies, as the case may be,
have established reserves acceptable to HCPI.

                           (b)      The Subject Companies are taxable as
partnerships for United States federal tax purposes and have not elected and
will not elect to be taxable as corporations for United States federal tax
purposes.

                  9.15     Litigation. There are no judicial or administrative
actions, proceedings or investigations pending that question the validity of
this Agreement or any action taken or to be taken by ARCPI, the Contributing
Subsidiaries or the Subject Companies in connection with this Agreement. There
is no litigation, proceeding or governmental investigation pending or any order,
injunction or decree outstanding, against ARCPI, the Contributing Subsidiaries
or the Subject Companies that, if adversely determined, would have a material
adverse effect upon ARCPI, the Contributing Subsidiaries or the Subject
Companies' ability to perform its obligations under this Agreement, under the
Loan Documents or under the Master Lease (as defined in the HCPI Loan
Agreement).

                  9.16     Legal Compliance. No action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
delivered or served against any Subject Company alleging any failure by the
Subject Company to comply with any laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder)
of federal, state, local, and foreign governments (and all agencies thereof)
applicable to the Subject Company or its properties and there is no reasonable
basis for any suit, action, such proceeding, hearing, investigation, charge,
complaint, claim, demand or notice against any Subject Company based on such
non-compliance.

                  9.17     Undisclosed Liabilities. No Subject Company has any
liability or obligation (and, to the knowledge of ARCPI or any Contributing
Subsidiary, there is no reasonable basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any Subject Company giving rise to any liability or obligation), except for
liabilities or obligations (i) described in, or permitted by Section 4.1(f) as
scheduled on Schedule 4.1(f) of the HCPI Loan Agreement, (ii) described in a
policy of title insurance delivered to HCPI relating to the Subject Company's
real property, or (iii) under the Master Lease (as defined in the HCPI Loan
Agreement).

                  9.18     Investment Company.  Neither ARCPI, the Contributing
Subsidiaries nor any of the Subject Companies are an "investment company" or a
company "controlled" by and "investment company" within the meaning of the
Investment Company Act of 1940, as amended.

                  9.19     Related Party Transactions. Except for the Master
Lease (as defined in the HCPI Loan Agreement) and as permitted by the terms of
the HCPI Loan Agreement, the Subject


                                       10

<PAGE>


Companies are not a party to any transaction or arrangement with ARCPI, the
Contributing Subsidiaries or with any of the Subject Companies' members,
officers or directors, or any entity controlled by any of them, which relates to
or affects the ownership, lease or use or disposition of any assets, properties
or the operations of the Subject Companies or the sale, lease or use of goods or
services, or the loan of money or any extension of credit or guaranty, by or to
the Subject Companies.

                  9.20     Full Disclosure. None of the representations or
warranties made by ARCPI or the Contributing Subsidiaries in the Transaction
Documents as of the date such representations and warranties is made or deemed
made, and none of the statements contained in any exhibit, report, statement or
certificate furnished by or on behalf of ARCPI or the Contributing Subsidiaries
in connection with the Transaction Documents and none of the representations and
warranties in the HCPI Loan Agreement, contains any untrue statement of a
material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or delivered.

                  9.21     Compliance with REIT Protections. None of the Subject
Companies hold any assets other than "real estate assets" as defined in Section
856(c)(5)(B) of the Code, the incidental personal property associated with the
applicable "real estate assets," cash and cash items (including receivables) or
generate or expect to generate any material amount of income which would not
qualify under Sections 856(c)(3) and 856(d) of the Code.

         10.      Representations and Warranties of HCPI. HCPI represents and
warrants to ARCPI as follows:

                  10.1     HCPI's Organization. HCPI is a corporation duly
organized, validly existing and in good standing under the laws of Maryland and
has the full corporate power and authority to enter into and to perform this
Agreement.

                  10.2     Authorization of Agreement. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby by HCPI have been duly authorized by all necessary corporate
action of HCPI and this Agreement constitutes the valid and binding obligation
of HCPI enforceable against it in accordance with its terms, except to the
extent enforceability may be limited by bankruptcy, insolvency reorganization,
moratorium, fraudulent transfer or conveyance or similar law, relating to or
limiting creditors' rights generally or by equitable principles relating to
enforceability and except as rights of indemnity or contribution may be limited
by Federal or state securities or other law, or the public policy underlying
such laws.

                  10.3     No Violation. The execution, delivery and performance
of this Agreement by HCPI will not (i) violate or conflict with the articles of
restatement, bylaws or other constitutional documents of HCPI ; (ii) as of the
Closing Date, conflict with, or result in the breach or termination of, or
constitute a default under (whether with notice or lapse of time or both), or
accelerate or permit the acceleration of the performance required by, any
indenture, loan or credit agreement, note, bond, mortgage, lien, lease,
agreement, commitment or other instrument or any order, judgment or decree, to
which HCPI is a party or by which it or its


                                       11

<PAGE>


properties are bound; or (iii) constitute a violation of any material law, rule,
regulation, ordinance applicable to HCPI or (iv) violate any order, ruling,
writ, judgment or decree of any court or other governmental agency binding on
HCPI. No consent, approval or authorization of any governmental agency is
required on the part of HCPI in connection with the execution, delivery and
performance of this Agreement other than such consents, approval and
authorizations as have been obtained by HCPI on or prior to the Closing.

                  10.4     Litigation. There are no judicial or administrative
actions, proceedings or investigations pending that question the validity of
this Agreement or any action taken or to be taken by HCPI in connection with
this Agreement. There is no litigation, proceeding or governmental investigation
pending or any order, injunction or decree outstanding, against HCPI that, if
adversely determined, would have a material adverse effect upon HCPI's ability
to perform its obligations under this Agreement.

                  10.5     Investment Intent.  HCPI is acquiring the HCPI
Membership Interests for investment for its own account, not as a nominee or
agent, and not with the view to, or for resale in connection with, any
distribution thereof.

         11.      Further Agreements of the Parties.

                  11.1     Notices. Each party shall promptly notify the other
party in writing of, and furnish to such party any information that such party
may reasonably request with respect to, the occurrence of any event or the
existence of any state of facts that would (a) result in the party's
representations and warranties not being true, or (b) impair the party's ability
to perform its obligations under this Agreement.

                  11.2     Expenses. ARCPI and the Contributing Subsidiaries,
jointly and severally agree to pay on demand all costs and expenses of HCPI in
connection with the preparation, execution, delivery, modification and amendment
of this Agreement or any other Transaction Documents and the other documents to
be delivered under the Transaction Documents, including the fees and
out-of-pocket expenses of counsel for HCPI actually incurred with respect
thereto and with respect to advising HCPI as to its rights and responsibilities
under this Agreement or any other Transaction Document. In addition, ARCPI and
the Contributing Subsidiaries shall, jointly and severally pay any and all stamp
and other taxes payable or determined to be payable in connection with the
execution, delivery, filing and recording of the this Agreement or any
Transaction Document and the other documents to be delivered under this
Agreement or any other Transaction Document.

         12.      Indemnification and Related Matters.

                  12.1     Indemnification.

                           (a)      ARCPI and the Contributing Subsidiaries
agree to, jointly and severally indemnify and hold HCPI and its affiliates,
successors and any assigns of substantially all of their rights under this
Agreement (and their respective officers, directors, employees and agents)
harmless from and against all liabilities, losses, actions, suits, proceedings,
claims, demands, assessments, judgments, penalties, fines, damages, losses,
costs and expenses,

                                       12

<PAGE>


including reasonable consulting costs and attorneys' fees ("Damages") arising or
resulting from the following:

                                    (i)     a breach of any representation or
warranty on the part of ARCPI or the Contributing Subsidiaries under the terms
of this Agreement or any other Transaction Document to which it is a party;

                                    (ii)    nonfulfillment of or failure to
comply with, any agreement or covenant on the part of the Subject Companies,
ARCPI and/or the Contributing Subsidiaries under the terms of this Agreement or
any other Transaction Document to which they are a party and required to be
fulfilled or complied with by such parties after the Closing Date; and

                                    (iii)   for fees payable to Cohen & Steers
in connection with advisory services provided to ARCPI or the Contributing
Subsidiaries relating to the preparation, execution and delivery of this
Agreement or any other Transaction Document.

                           (b)      HCPI, agrees to indemnify and hold ARCPI and
the Contributing Subsidiaries and their affiliates, successors (and their
respective officers, directors, employees and agents) harmless from and against
all Damages arising or resulting from the following:

                                    (i)     a breach of any representation or
warranty on the part of HCPI under the terms of this Agreement or any other
Transaction Document to which HCPI is a party; and

                                    (ii)    non-fulfillment of or failure to
comply with, any agreement or covenant on the part of HCPI under the terms of
this Agreement or any other Transaction Document to which HCPI is a party and
required to be fulfilled or complied with by HCPI after the Closing Date.

         13.      Miscellaneous.

                  13.1     Survival of Representations and Warranties and
Covenants. All of the respective representations and warranties of ARCPI or the
Contributing Subsidiaries, on the one hand, and of HCPI, on the other hand, set
forth in this Agreement, the Transaction Documents or in such party's disclosure
schedule, or in any certificates delivered by such party on the Closing Date
pursuant hereto shall survive the Closing. The covenants of any party hereto
that cannot be or are not fully performed by such party on or prior to the
Closing Date shall survive the Closing until fully and finally performed.

                  13.2     Entire Agreement. This Agreement (with its Schedules
and Exhibits) and the other Transaction Documents contain, and is intended as, a
complete statement of all of the terms of the arrangements between the parties
with respect to the matters provided for, supersedes any previous agreements and
understandings between the parties with respect to those matters, and cannot be
changed or terminated orally.

                  13.3     GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS


                                       13


<PAGE>


AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH OF ARCPI AND THE CONTRIBUTING SUBSIDIARIES AND HCPI
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF
THOSE COURTS. EACH OF ARCPI AND THE CONTRIBUTING SUBSIDIARIES AND HCPI
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS MAY BE MADE BY ANY MEANS PERMITTED BY NEW YORK LAW.

                  13.4     WAIVER OF JURY TRIAL. ARCPI, THE CONTRIBUTING
Subsidiaries AND HCPI WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE, AND AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH
PARTY FURTHER AGREES THAT ITS RIGHT TO A TRIAL BY JURY IS HEREBY WAIVED AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE TRANSACTION DOCUMENTS.

                  13.5     Confidentiality. HCPI agrees that material,
non-public information regarding ARCPI, its Subsidiaries, operations, assets,
and existing and contemplated business plans shall be treated by HCPI in a
confidential manner, and shall not be disclosed by it to persons who are not
parties to this Agreement, except: (i) to counsel for and other advisors,
accountants, and auditors to HCPI ; (ii) as may be required by statute,
decision, or judicial or administrative order, rule, or regulation; (iii) as may
be agreed to in advance by ARCPI; (iv) as to any such information that is
generally available to the public; and (v) in connection with any assignment,
prospective assignment, sale, prospective sale, participation or prospective
participation of HCPI's interests hereunder.

                  13.6     Public Disclosure. Prior to and after the Closing,
any release to the public of information with respect to the sale contemplated
herein or any matters set forth in this Agreement or the Transaction Documents
will be made only in the form approved by HCPI except to the extent required by
applicable law or regulation. The provisions of this Section 13.6 shall survive
the Closing or any termination of this Agreement.


                                       14

<PAGE>


                  13.7     Headings. The section headings of this Agreement and
titles given to Schedules to this Agreement are for reference purposes only and
are to be given no effect in the construction or interpretation of this
Agreement.

                  13.8     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:

                           If to ARCPI or the Contributing Subsidiaries:

                                            ARCPI Holdings, Inc.
                                            111 Westwood Place, Suite 200
                                            Brentwood, Tennessee 37027
                                            Attn:    Bill Sheriff, CEO
                                            Fax:     (615) 221-5284

                           with a copy to:

                                            Bass, Berry & Sims PLC
                                            AmSouth Center
                                            315 Deaderick Street, Suite 2700
                                            Nashville, Tennessee 37238-0002
                                            Attn:    T. Andrew Smith, Esq.
                                            Fax:     (615) 742-2760

                           If to HCPI:

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

                           with a copy to:

                                            Latham & Watkins
                                            650 Town Center Drive, Suite 2000
                                            Costa Mesa, California  92626
                                            Attn:    David C. Meckler, Esq.
                                            Fax:     (714) 755-8290

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 lieu of
notice by U.S. Mail, 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


                                       15

<PAGE>


Express). Any notice sent by facsimile shall be effective upon confirmation of
receipt in legible form, provided that an original of such facsimile is also
sent to the intended addressee by another method approved in this Section 13.8,
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. It is understood that to the extent a Contributing
Subsidiary has a separate address from ARCPI, such Contributing Subsidiary will
provide written notice of such address to HCPI in accordance with the notice
provisions of this Section 13.8.

                  13.9     Separability. In the event that any provision hereof
would, under applicable law, be invalid or unenforceable in any respect, such
provision shall be construed by modifying or limiting it so as to be valid and
enforceable to the maximum extent compatible with, and permissible under,
applicable law. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement which shall remain in full force and effect.

                  13.10    Attorneys' Fees. If HCPI, ARCPI, or any of the
Contributing Subsidiaries 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 by the other party to the proceeding.

                  13.11    Waiver. No delay in exercising any right or remedy
shall constitute a waiver thereof, and no waiver by HCPI, ARCPI, or any of the
Contributing Subsidiaries 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.

                  13.12    Binding Effect; Assignment. This Agreement shall
become effective when it shall have been executed by ARCPI, the Contributing
Subsidiaries and HCPI and thereafter shall be binding upon and inure to the
benefit of ARCPI, the Contributing Subsidiaries and HCPI and their respective
successors and assigns, except that ARCPI and the Contributing Subsidiaries
shall not have the right to assign any of their rights hereunder or any interest
herein without the prior written consent of HCPI (which consent may be withheld
or granted in HCPI's sole and absolute discretion).

                  13.13    Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but which together shall
constitute one and the same Agreement.

                  13.14    No Third-Party Beneficiary. Except for the
indemnified parties pursuant to Section 12.1, the provisions of this Agreement
and the Transaction Documents to be executed and delivered at Closing are and
will be for the benefit of HCPI, ARCPI and the Contributing Subsidiaries only
and are not for the benefit of any third party; and, accordingly, no third party
shall have the right to enforce the provisions of this Agreement or the
Transaction Documents except, that the indemnified parties shall have the right
to enforce the provisions of Section 12.1 that are given in their favor.


                                       16

<PAGE>


                  13.15    Exhibits. The exhibits attached hereto are
incorporated herein by this reference for all purposes.

                  13.16    Miscellaneous. The headings inserted at the beginning
of each section of this Agreement are inserted for convenience only and do not
add to or subtract from the meaning of the contents of each section. All rights,
powers, and privileges conferred hereunder upon the parties shall be cumulative
but not restrictive to those given by law. Pronouns, wherever used herein, and
of whatever gender, shall include natural persons and corporations and
associations of every kind and character, and the singular shall include the
plural wherever and as often as may be appropriate. Time is of the essence of
each provision of this Agreement in which time is an element.

                  13.17    Waiver. Any party hereto may specifically waive any
breach of this Agreement or the Transaction Documents by any other party, but no
such waiver shall constitute a continuing waiver of similar or other breaches. A
waiving party may at any time, upon notice given in writing to the breaching
party, direct future compliance with the waived term or terms of this Agreement,
in which event the breaching party shall comply as directed from such time
forward.

                  13.18    Additional Acts. In addition to the acts contemplated
to be performed, executed and delivered by ARCPI, the Contributing Subsidiaries,
any Subject Company or HCPI pursuant to this Agreement, ARCPI, the Contributing
Subsidiaries and HCPI hereby agree to perform, execute and deliver or cause to
be performed, executed and delivered at or following the Closing any and all
further acts, deeds and assurances as HCPI, ARCPI or the Contributing
Subsidiaries may reasonably require to (i) evidence and vest in HCPI the
ownership of the HCPI Membership Interests, and (ii) consummate the transactions
contemplated hereunder and under the Transaction Documents.

                  13.19    No Presumption. HCPI, ARCPI and the Contributing
Subsidiaries and their attorneys have had full opportunity to review and
participate in the drafting of the final form of this Agreement and the
Transaction Documents. Accordingly, this Agreement and each Transaction Document
shall be construed without regard to any presumption or other rule of
construction against the party causing the agreement to be drafted.

                  13.20    Facsimile Signatures. In order to expedite the
transaction contemplated herein, telecopied signatures may be used in place of
original signatures on this Agreement or any Transaction Document. ARCPI, the
Contributing Subsidiaries and HCPI intend to be bound by the signatures on the
telecopied document, are aware that each other party will rely on the telecopied
signatures, and hereby waive any defenses to the enforcement of the terms of
this Agreement or any Transaction Document based on the form of signature.
Following any facsimile transmittal, each party shall promptly deliver the
original instrument by reputable overnight courier in accordance with the notice
provisions of this Agreement.


                                       17

<PAGE>


                IN WITNESS WHEREOF, this Contribution Agreement has been duly
executed by the parties as of the date first set forth above.


                                 ARCPI HOLDINGS, INC., a Tennessee corporation




                                 By: /s/ H. Todd Kaestner
                                    -------------------------------------------
                                    Name: H. Todd Kaestner
                                    Title: Executive Vice President



                                 THE CONTRIBUTING SUBSIDIARIES


                                 Fort Austin Limited Partnership, a
                                 Texas limited partnership


                                 By:      ARC Fort Austin Properties, Inc.,
                                          its General Partner



                                          By: /s/ H. Todd Kaestner
                                             ----------------------------------
                                             Name: H. Todd Kaestner
                                             Title: Executive Vice President


                                 ARC Santa Catalina, Inc., a Tennessee
                                 corporation



                                 By: /s/ H. Todd Kaestner
                                    -----------------------------------------
                                    Name: H. Todd Kaestner
                                    Title: Executive Vice President

<PAGE>

                                ARC Richmond Place, Inc., a Delaware corporation


                                By: /s/ H. Todd Kaestner
                                   --------------------------------------------
                                   Name: H. Todd Kaestner
                                   Title: Executive Vice President


                                FREEDOM VILLAGE OF HOLLAND,
                                MICHIGAN, a Michigan general partnership

                                By:  ARC Holland, Inc.,
                                     its General Partner


                                     By: /s/ H. Todd Kaestner
                                        ---------------------------------------
                                        Name: H. Todd Kaestner
                                        Title: Executive Vice President

                                By:  ARC Freedom, Inc.,
                                     its General Partner


                                     By: /s/ H. Todd Kaestner
                                        ---------------------------------------
                                        Name: H. Todd Kaestner
                                        Title: Executive Vice President


<PAGE>


                                 FREEDOM VILLAGE OF SUN CITY CENTER,
                                 LTD., a Florida limited partnership

                                 By:  ARC Freedom, Inc.,
                                      its General Partner

                                 By:  /s/ H. Todd Kaestner
                                      ----------------------------------------
                                      Name: H. Todd Kaestner
                                      Title: Executive Vice President


                                 LAKE SEMINOLE SQUARE MANAGEMENT
                                 COMPANY, INC., a Tennessee corporation


                                 By: /s/ H. Todd Kaestner
                                    ------------------------------------------
                                    Name: H. Todd Kaestner
                                    Title: Executive Vice President


                                 FREEDOM GROUP-LAKE SEMINOLE
                                 SQUARE, INC., a Tennessee corporation


                                 By: /s/ H. Todd Kaestner
                                    -------------------------------------------
                                    Name: H. Todd Kaestner
                                    Title: Executive Vice President


                                 ARC BRANDYWINE, LLC, a Tennessee limited
                                 liability company


                                 By: /s/ H. Todd Kaestner
                                    -------------------------------------------
                                    Name: H. Todd Kaestner
                                    Title: Executive Vice President


                                 HEALTH CARE PROPERTY INVESTORS, INC.,
                                 a Maryland corporation


                                 By: /s/ James G. Reynolds
                                    -------------------------------------------
                                    Name: James G. Reynolds
                                    Title: Executive Vice President



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                                   SCHEDULE A
            CONTRIBUTING SUBSIDIARIES, SUBJECT COMPANIES AND PROPERTY


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<CAPTION>
      CONTRIBUTING SUBSIDIARY                           PROPERTY                              SUBJECT COMPANY
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<S>                                   <C>                                           <C>
Fort Austin Limited Partnership, a    1.   Retirement Center located in Austin,     Fort Austin Real Estate Holdings,
Texas limited partnership             Texas, consisting of 30 assisted living       LLC, a Tennessee limited liability
                                      facility units, 149 independent living        company
                                      units and 90 skilled nursing beds commonly
                                      known as "Summit at Westlake Hills."

                                      2. Retirement Center located in Denver,
                                      Colorado, consisting of 43 assisted living
                                      facility units, 176 independent living
                                      units and 17 memory enhanced (Alzheimers)
                                      units commonly known as "Park Place."

                                      3. Retirement Center located in Ft. Worth,
                                      Texas, consisting of 40 assisted living
                                      facility units, 214 independent living
                                      units and 122 skilled nursing beds
                                      commonly known as "Broadway Plaza."

ARC Santa Catalina, Inc., a           ARC SC Holdings, LLC (Subject Company) is       ARC SC Holdings, LLC, a Delaware
Tennessee corporation                 the sole member of ARC Santa Catalina Real      limited liability company
                                      Estate Holdings, LLC a Delaware limited
                                      liability company. ARC Santa Catalina,
                                      Inc, has transferred or will be
                                      transferring the following property to ARC
                                      Santa Catalina Real Estate Holdings, LLC:

                                      Retirement Center located in Tucson,
                                      Arizona, consisting of 70 assisted living
                                      facility units, 162 independent living
                                      units, 15 memory enhanced (Alzheimer's)
                                      units and 42 skilled nursing beds commonly
                                      known as "Santa Catalina."
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                                      A-1


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<TABLE>
<S>                                   <C>                                             <C>
ARC Richmond Place, Inc., a           Retirement Center located in Lexington,         ARC Richmond Place Real Estate
Delaware corporation                  Kentucky, consisting of 60 assisted living      Holdings, LLC, a Tennessee
                                      facility units, 178 independent living          limited liability company
                                      units and 20 memory enhanced (Alzheimer's)
                                      units commonly known as "Richmond Place."

Freedom Village of Holland,           Retirement Center located in Holland,           ARC Holland Real Estate Holdings,
Michigan, a Michigan general          Michigan, consisting of 74 assisted living      LLC, a Tennessee limited
partnership                           facility units, 332 independent living          liability company
                                      units, 29 memory enhanced (Alzheimer's),
                                      and 15 skilled nursing beds commonly known
                                      as "Freedom Village Holland."

Freedom Village of Sun City Center,   Retirement Center located in Sun City,          ARC Sun City Center Real Estate
Ltd., a Florida limited partnership   Florida, consisting of 26 assisted living       Holdings, LLC, a Tennessee
                                      facility units, 428 independent living          limited liability company
                                      units and 108 skilled nursing beds
                                      commonly known as "Freedom Plaza Florida."

Lake Seminole Square Management       Retirement Center located in Seminole,          ARC Lake Seminole Square Real
Company, Inc., a Tennessee            Florida, consisting of 33 assisted living       Estate Holdings, LLC, a Tennessee
corporation and Freedom Group-Lake    facility units and 306 independent living       limited liability company
Seminole Square, Inc., a Tennessee    units commonly known as "Lake Seminole
corporation                           Square."

ARC Brandywine, LLC, a Tennessee      Retirement Center located in Brandywine,        ARC Brandywine Real Estate
limited liability company             Pennsylvania, consisting of 15 assisted         Holdings, LLC, a Tennessee
                                      living facility units, 292 independent          limited liability company
                                      living units, 18 memory enhanced
                                      (Alzheimer's) units, and 47 skilled nursing
                                      beds, commonly known as "Freedom Village
                                      Brandywine."
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