ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

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PSYCHIATRIC SOLUTIONS INC | BRENTWOOD HEALTH MANAGEMENT OF MS, LLC | TURNER-WINDHAM OF MISSISSIPPI, LLC

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Title: ASSET PURCHASE AGREEMENT
Governing Law: Tennessee Date: 3/3/2004
Industry: Healthcare Facilities Law Firm: Davidson, Jones & Summers, APLC; Bass, Berry & Sims PLC Sector: Healthcare

ASSET PURCHASE AGREEMENT, Parties: psychiatric solutions inc , brentwood health management of ms llc , turner-windham of mississippi llc

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Exhibit 2.2

ASSET PURCHASE AGREEMENT

BY AND AMONG

PSYCHIATRIC SOLUTIONS, INC.,

BRENTWOOD HEALTH MANAGEMENT OF MS, LLC,

AND

TURNER-WINDHAM OF MISSISSIPPI, LLC

FEBRUARY 23, 2004

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TABLE OF CONTENTS

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AGREEMENT........................................................................................................ 2

ARTICLE 1. PURCHASE OF ASSETS................................................................................... 2

1.1. Assets............................................................................................. 2

1.2. Excluded Assets.................................................................................... 4

1.3. Assumed Liabilities................................................................................ 5

1.4. Excluded Liabilities............................................................................... 5

1.5. Purchase Price..................................................................................... 7

1.6. Calculation of Working Capital..................................................................... 9

ARTICLE 2. CLOSING.............................................................................................. 10

2.1. Closing............................................................................................ 10

2.2. Actions of Sellers at Closing...................................................................... 10

2.3. Actions of Buyer at Closing........................................................................ 12

ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF SELLERS............................................................ 12

3.1. Existence and Capacity............................................................................. 12

3.2. Powers; Governmental Consents; Absence of Conflicts With Other Agreements, Etc..................... 13

3.3. Binding Agreement.................................................................................. 13

3.4. Financial Statements............................................................................... 13

3.5. Certain Post-Balance Sheet Results................................................................. 14

3.6. Licenses........................................................................................... 15

3.7. Certificates of Need............................................................................... 15

3.8. Medicare Participation; Accreditation.............................................................. 16

3.9. Regulatory Compliance.............................................................................. 16

3.10. Equipment.......................................................................................... 16

3.11. Real Property...................................................................................... 17

3.12. Title.............................................................................................. 19

3.13. Employee Benefit Plans............................................................................. 19

3.14. Litigation or Proceedings.......................................................................... 20

3.15. Environmental Laws................................................................................. 20

3.16. Hill-Burton and Other Liens........................................................................ 21

3.17. Taxes.............................................................................................. 21

3.18. Employee Relations................................................................................. 22

3.19. Agreements and Commitments......................................................................... 22

3.20. Contracts.......................................................................................... 23

3.21. Supplies........................................................................................... 24

3.22. Insurance.......................................................................................... 24

3.23. Third Party Payor Cost Reports..................................................................... 24

3.24. Medical Staff Matters.............................................................................. 25

3.25. Condition of Assets................................................................................ 25

3.26. Intellectual Property; Computer Software........................................................... 25

3.27. Accounts Receivable................................................................................ 25

3.28. Compliance Program................................................................................. 25

3.29. HIPAA Compliance................................................................................... 26

3.30. Full Disclosure.................................................................................... 26

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ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER.............................................................. 27

4.1. Existence and Capacity............................................................................. 27

4.2. Powers; Governmental Consents; Absence of Conflicts

With Other Agreements, Etc......................................................................... 27

4.3. Binding Agreement.................................................................................. 27

4.4. Availability of Funds for Purchase................................................................. 28

ARTICLE 5. COVENANTS OF SELLERS PRIOR TO CLOSING................................................................ 28

5.1. Information........................................................................................ 28

5.2. Operations......................................................................................... 28

5.3. Negative Covenants................................................................................. 29

5.4. Governmental Approvals............................................................................. 29

5.5. Additional Financial Information................................................................... 30

5.6. No-Shop Clause..................................................................................... 30

5.7. Title Commitment and Survey; UCC Searches; Defects and Cure........................................ 30

5.8. Insurance Ratings.................................................................................. 32

5.9. Medical Staff Disclosure........................................................................... 33

ARTICLE 6. COVENANTS OF BUYER PRIOR TO CLOSING.................................................................. 33

6.1. Governmental Approvals............................................................................. 33

6.2. Inspection of Improvements, Systems, and Equipment; Limitation of Post-Closing

Warranties of Condition............................................................................ 33

ARTICLE 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER......................................................... 33

7.1. Representations/Warranties......................................................................... 33

7.2. Pre-Closing Confirmations.......................................................................... 34

7.3. Title Policy....................................................................................... 34

7.4. Actions/Proceedings................................................................................ 34

7.5. Adverse Change..................................................................................... 35

7.6. Insolvency......................................................................................... 35

7.7. Opinion of Counsel to Sellers...................................................................... 35

7.8. Vesting/Recordation................................................................................ 35

7.9. Delivery of Certain Documents...................................................................... 35

7.10. Simultaneous Closing............................................................................... 35

7.11. Due Diligence...................................................................................... 35

7.12. Interim Management Agreement....................................................................... 35

7.13. Insurance.......................................................................................... 35

7.14. Extensions of Certain Leases....................................................................... 35

ARTICLE 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS....................................................... 36

8.1. Representations/Warranties......................................................................... 36

8.2. Buyer's Governmental Approvals..................................................................... 36

8.3. Actions/Proceedings................................................................................ 36

8.4. Insolvency......................................................................................... 36

8.5. Opinion of Counsel to Buyer........................................................................ 36

8.6. Interim Management Agreement....................................................................... 36

8.7. Delivery of Certain Documents...................................................................... 36

8.8. Simultaneous Closing............................................................................... 37

ARTICLE 9. SELLERS' POST CLOSING COVENANTS...................................................................... 37

9.1. Covenant Not to Compete; Non-solicitation.......................................................... 37

9.2. Allocation of Purchase Price....................................................................... 37

9.3. Post Closing Access to Information................................................................. 38

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9.4. Preservation and Access to Records After the Closing............................................... 38

9.5. Cooperation on Tax Matters......................................................................... 38

9.6. Cost Reports....................................................................................... 39

9.7. Misdirected Payments, Etc.......................................................................... 39

9.8. Use of Controlled Substance Permits................................................................ 39

9.9. Loss Experience.................................................................................... 40

9.10. Net Worth Covenant................................................................................. 40

9.11. Option to Purchase Additional Assets............................................................... 40

ARTICLE 10. ADDITIONAL AGREEMENTS............................................................................... 40

10.1. Termination Prior to Closing....................................................................... 40

10.2. CON Disclaimer..................................................................................... 41

10.3. Tax and Medicare Effect............................................................................ 41

10.4. Reproduction of Documents.......................................................................... 41

10.5. Employee Matters................................................................................... 41

10.6. Insurance.......................................................................................... 42

ARTICLE 11. INDEMNIFICATION..................................................................................... 42

11.1. Indemnification by Buyer........................................................................... 42

11.2. Indemnification by Sellers......................................................................... 43

11.3. Limitations........................................................................................ 43

11.4. Notice and Control of Litigation................................................................... 43

11.5. Notice of Claim.................................................................................... 44

ARTICLE 12. MISCELLANEOUS....................................................................................... 45

12.1. Schedules and Other Instruments.................................................................... 45

12.2. Additional Assurances.............................................................................. 45

12.3. Consented Assignment............................................................................... 45

12.4. Consents, Approvals and Discretion................................................................. 46

12.5. Legal Fees and Costs............................................................................... 46

12.6. Choice of Law...................................................................................... 46

12.7. Benefit/Assignment................................................................................. 46

12.8. No Brokerage....................................................................................... 46

12.9. Cost of Transaction................................................................................ 46

12.10. Confidentiality.................................................................................... 47

12.11. Public Announcements............................................................................... 47

12.12. Waiver of Breach................................................................................... 47

12.13. Notice............................................................................................. 47

12.14. Severability....................................................................................... 48

12.15. Gender and Number.................................................................................. 48

12.16. Divisions and Headings............................................................................. 48

12.17. Survival........................................................................................... 48

12.18. Affiliates......................................................................................... 49

12.19. Knowledge.......................................................................................... 49

12.20. Resolution of Disputes............................................................................. 49

12.21. Accounting Date.................................................................................... 50

12.22. No Inferences...................................................................................... 50

12.23. No Third Party Beneficiaries....................................................................... 50

12.24. Enforcement of Agreement........................................................................... 50

12.25. Entire Agreement; Amendment........................................................................ 51

12.26. Risk of Loss....................................................................................... 51

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12.27. Other Owners of Assets............................................................................. 51

12.28. Transfer, Sales and Other Taxes.................................................................... 51

12.29. Prorations......................................................................................... 51

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EXHIBITS

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DESCRIPTION EXHIBIT

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The Facilities....................................................................................... A

Buyer Entities....................................................................................... B

Escrow Agreement..................................................................................... C

Opinion of Counsel to Sellers........................................................................ D

Opinion of Counsel to Buyer.......................................................................... E

Limited Power of Attorney............................................................................ F

Interim Management Agreement......................................................................... G

Form of Guaranty..................................................................................... H

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SCHEDULES

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DESCRIPTION SCHEDULE

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Real Property........................................................................................ 1.1(a)

Tangible Personal Property........................................................................... 1.1(b)

Contracts............................................................................................ 1.1(i)

Excluded Assets...................................................................................... 1.2

Capital Lease Obligations............................................................................ 1.3(c)

Excluded Liabilities................................................................................. 1.4

EBITDA Example Calculation........................................................................... 1.5(c)

Working Capital as of December 31, 2003.............................................................. 1.6

Powers; Governmental Consents; Absence of Conflicts with Other Agreements, Etc....................... 3.2

Financial Statements................................................................................. 3.4

Certain Post-Balance Sheet Results................................................................... 3.5

Licenses............................................................................................. 3.6

Certificates of Need................................................................................. 3.7

Medicare Participation; Accreditation................................................................ 3.8

Regulatory Compliance................................................................................ 3.9

Equipment............................................................................................ 3.10

Real Property ....................................................................................... 3.11

Employee Benefit Plans............................................................................... 3.13

Litigation or Proceedings............................................................................ 3.14

Environmental........................................................................................ 3.15

Taxes................................................................................................ 3.17

Employee Relations................................................................................... 3.18

Supplies............................................................................................. 3.21

Insurance............................................................................................ 3.22

Third Party Payor Cost Reports....................................................................... 3.23

Medical Staff Matters................................................................................ 3.24

Intellectual Property; Computer Software............................................................. 3.26

Compliance Program................................................................................... 3.28

Buyer Absence of Conflicts with Other Agreements, Etc................................................ 4.2(c)

Allocation of Purchase Price......................................................................... 9.2

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GLOSSARY OF DEFINED TERMS

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DEFINED TERM SECTION

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Accessibility Laws...................................................................... 3.11(d)

Accrued PTO............................................................................. 1.3(d)

Affiliate............................................................................... 12.18

Agreement............................................................................... Introduction

Applications............................................................................ 3.7

Assets.................................................................................. 1.1

Asset Defect............................................................................ 6.2

Assignment and Assumption Agreement..................................................... 2.2(c)

Assumed Liabilities..................................................................... 1.3

Balance Sheet Date...................................................................... 3.4(a)

Benefit Plans........................................................................... 3.13

Business Associates..................................................................... 3.29

Buyer................................................................................... Introduction

Buyer Entities.......................................................................... Recital G

Buyer Indemnified Parties............................................................... 11.2

CERCLA.................................................................................. 3.15

Certificate of Need..................................................................... 3.7

Closing................................................................................. 2.1

Closing Balance Sheet................................................................... 1.6

Closing Date............................................................................ 2.1

Closing Documents....................................................................... 3.30

Code.................................................................................... 3.13

Compliance Program...................................................................... 3.28

Contracts............................................................................... 1.1(i)

Control................................................................................. 12.18

Covered Entity.......................................................................... 3.29

Defects................................................................................. 5.7(d)

EBITDA.................................................................................. 1.5(c)

Environmental Laws...................................................................... 3.15

ERISA................................................................................... 3.13

Excluded Assets......................................................................... 1.2

Excluded Liabilities.................................................................... 1.4

Exemption Certificate................................................................... 3.7

Facilities.............................................................................. Recital E

Financial Statements.................................................................... 3.4

GAAP.................................................................................... 3.4

Government Entity....................................................................... 3.9

Government Patient Receivables.......................................................... 1.2(f)

Government Patient Receivables Amount................................................... 1.1(f)

Guarantor............................................................................... Introduction

Guarantors.............................................................................. Introduction

HIPAA................................................................................... 3.30

Indemnified Party....................................................................... 11.4

Indemnifying Party...................................................................... 11.4

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Intellectual Property................................................................... 3.26

Interim Statements...................................................................... 5.5

JCAHO................................................................................... 3.8

Knowledge............................................................................... 12.19

Other Purchase Agreement................................................................ Recital H

Permitted Encumbrances.................................................................. 3.11

Privacy Standards....................................................................... 3.29

Proposed Amendment...................................................................... 9.11

Purchase Price.......................................................................... 1.5

RCRA.................................................................................... 3.15

Real Estate Taxes....................................................................... 12.29

Real Property........................................................................... 1.1(a)

Real Property Leases.................................................................... 3.11(k)

Records................................................................................. 10.4

Restricted Area......................................................................... 9.1

Seller.................................................................................. Introduction

Sellers................................................................................. Introduction

Seller Cost Reports..................................................................... 10.9

Seller Indemnified Parties.............................................................. 11.1

Seller Representative................................................................... 1.5(c)

State Health Agency..................................................................... 3.6

Surveys................................................................................. 5.7(b)

Tax Excess.............................................................................. 12.29

Tax Refund.............................................................................. 12.29

TCS Standards........................................................................... 3.29

Threshold Amount........................................................................ 11.3

Title Commitment........................................................................ 5.7(a)

Title Company........................................................................... 5.7(a)

Title Evidence.......................................................................... 5.7(d)

Title Policy............................................................................ 5.7(a)

U.C.C. Searches......................................................................... 5.7(c)

WARN Act................................................................................ 10.11

Working Capital......................................................................... 1.5(b)

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ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (the "AGREEMENT") is made and entered

into as of February 23, 2004, by and among Brentwood Health Management of MS,

LLC, a Mississippi limited liability company, Turner-Windham of Mississippi,

LLC, a Louisiana limited liability company (each as a "SELLER" and collectively

as "SELLERS"), and Psychiatric Solutions, Inc., a Delaware corporation

("BUYER").

RECITALS

A. Turner-Windham of Mississippi, Inc. owns all of the real

property and certain of the personalty to be transferred to Buyer.

B. Brentwood Health Management of MS, LLC is the operator of the

hospital facility and employs substantially all of the employees at the

facility.

C. John S. Turner, Jr. and William C. Windham (through Brentwood

Health Management, L.L.C., a Louisiana limited liability company), James M.

Eidson, Jr., and Barry E. Hancock collectively own 100% of the membership

interest of Brentwood Health Management of MS, LLC.

D. John S. Turner, Jr. and William C. Windham (through Pine Creek

Corporation, a Louisiana corporation), James M. Eidson, Jr., and Barry E.

Hancock collectively own 100% of the membership interest of Turner-Windham of

Mississippi, L.L.C.

E. The Sellers directly and/or indirectly own and operate the

hospital and the medical office building set forth on Exhibit A attached hereto

(collectively, the "FACILITIES").

F. Sellers desire to sell to Buyer and Buyer desires to purchase

substantially all of the assets of Sellers (inclusive of the Facilities), their

ancillary services and other licensed healthcare facilities (more fully set

forth below as the Assets), on the terms and conditions set forth in this

Agreement.

G. Buyer intends to organize the wholly owned, direct or indirect

subsidiaries listed on Exhibit B attached hereto (collectively, the "BUYER

ENTITIES") to purchase the Facilities from the Sellers.

H. Simultaneous herewith, Buyer and certain of Sellers and their

Affiliates have entered into an asset purchase agreement for the purchase and

sale of a hospital facility, medical office building, and certain other

operations located in Shreveport, Louisiana (the "OTHER PURCHASE AGREEMENT").

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AGREEMENT

NOW, THEREFORE, for and in consideration of the premises and the

agreements, covenants, representations, and warranties hereinafter set forth and

other good and valuable consideration, the receipt and adequacy of which are

forever acknowledged and confessed, the parties hereto agree as follows:

ARTICLE 1

PURCHASE OF ASSETS

1.1. ASSETS. Subject to the terms and conditions of this Agreement,

as of the Closing (as defined in Section 2.1 hereof), Sellers agree to sell,

convey, transfer and deliver to the Buyer Entities designated by Buyer, and

Buyer agrees to cause the Buyer Entities to purchase, all of the assets owned or

used by the Sellers in connection with the operation of the Facilities, other

than the Excluded Assets (hereinafter defined), which included assets shall

include, without limitation, the following (the "ASSETS"):

(a) fee simple and/or leasehold title to all real

property described and designated as such on Schedule 1.1(a) hereto,

together with all improvements, any construction in progress, any other

buildings and fixtures thereon, and all rights, privileges,

hereditaments and easements appurtenant thereto, including without

limitation, all sewer and water discharge capacity, if any, allocated

or reserved thereto and all development rights with respect thereto

(collectively, the "REAL PROPERTY");

(b) all tangible personal property owned by the Sellers

and used in connection with the operation of the Facilities, including,

without limitation, all major, minor or other equipment, vehicles,

furniture and furnishings, the current list and general location of

which are set forth on Schedule 1.1(b) hereto;

Facilities;

(d) assumable deposits and prepaid expenses;

(e) all accounts receivable (other than receivables from

governmental third-party payors which by law may not be assigned)

arising from the rendering of services to patients at the Facilities,

billed and unbilled, recorded or unrecorded, with collection agencies

or otherwise, accrued and existing in respect of services prior to the

Closing;

(f) the right to receive an amount equal to the value of

all patient receivables collected related to Medicare, Medicaid and

other third-party patient claims of the Sellers due from governmental

third-party payors arising from the rendering of services to patients

at the Facilities, billed and unbilled, recorded or unrecorded, with

collection agencies or otherwise, accrued and existing in respect of

services prior to the Closing which by law may not be assigned

(excluding settlement accounts relating to Sections 1.2(c) and 1.4(e)),

less any applicable overpayments, refunds, offsets, credit balances or

other proper adjustments (the "GOVERNMENT PATIENT RECEIVABLES AMOUNT");

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(g) all claims, causes of action, and judgments in favor

of the Sellers relating to the Assets and, to the extent assignable by

the Sellers, all warranties (express or implied) and rights and claims

assertable by (but not against) the Sellers related to the Assets;

(h) all financial, patient, medical staff records and

personnel records (as required for accreditation purposes) relating to

the Facilities (including, without limitation, all equipment records,

medical administrative libraries, medical records, documents, catalogs,

books, records, files, operating manuals and current personnel

records);

(i) all rights and interests of the Sellers in the

contracts, commitments, leases and agreements listed on Schedule 1.1(i)

hereto (collectively, the "CONTRACTS");

(j) all licenses, certificates of need (including

Mississippi certificates of need #R-0076 and #R-87029), franchises,

accreditations, registrations, and other permits, to the extent

assignable, held by the Sellers relating to the Facilities (including,

without limitation, any pending or approved governmental approvals);

(k) all names, trade names, trademarks and service marks

(or variations thereof) associated with the Facilities, all goodwill

associated therewith, and all applications and registrations associated

therewith;

(l) all assets reflected on the Financial Statements (as

defined in Section 3.4), and any additions thereto up through Closing

less deletions therefrom of assets sold or consumed in the ordinary

course of business;

(m) all goodwill associated with the Facilities and the

Assets;

(n) to the extent assignable, all provider contracts (and

numbers) between the Facilities and Medicare, Medicaid, TRICARE or

other third party payors;

(o) all insurance proceeds arising in connection with

property damage to the Assets occurring prior to the Closing Date, to

the extent not expended on the repair or restoration of the Assets;

(p) all computers, data processing equipment and

software, to the extent transferable, held or used directly in the

business or operation of the Facilities;

(q) the assets owned by Affiliates of Sellers which are

used directly in connection with the operation of the Facilities;

(r) all other property, other than the Excluded Assets,

of every kind, character or description owned by Sellers or their

Affiliates and used or held for use directly in the business of the

Facilities or the Assets, whether or not reflected on the Financial

Statements, wherever located and whether or not similar to the items

specifically set forth above, and all other businesses and ventures

owned by the Sellers in connection with the operations of the

Facilities or the Assets; and

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(s) the interests of the Sellers in all property of the

foregoing types, arising or acquired in the ordinary course of the

business of the Sellers in respect of the Facilities between the date

hereof and the Closing Date.

(t) To the extent not received by Sellers prior to the

Closing, the Sellers' right to the refund pending from the Mississippi

Medicaid program in the approximate amount of $2,019,038.

The Sellers shall convey, subject to the limitations set forth in Section 2.2(a)

and (b), good and marketable title to the Assets and all parts thereof to Buyer

free and clear of all claims, assessments, security interests, liens,

restrictions and encumbrances, other than the Permitted Encumbrances

(hereinafter defined) and the Assumed Liabilities (hereinafter defined).

1.2. EXCLUDED ASSETS. Those assets of the Sellers described below,

together with any assets described on Schedule 1.2 hereto, shall be retained by

the Sellers (collectively, the "EXCLUDED ASSETS") and shall not be conveyed to

Buyer:

(a) cash and cash equivalents;

(b) board-designated, restricted and trustee-held or

escrowed funds (such as funded depreciation, debt service reserves,

working capital trust assets, and assets and investments restricted as

to use) and accrued earnings thereon;

third party payors pursuant to retrospective settlements (including,

without limitation, pursuant to Medicare, Medicaid and TRICARE cost

reports filed or to be filed by the Sellers for periods prior to

Closing) and any tax refunds, rebates or payments payable to the

Sellers;

(d) all of Sellers' records relating to the Excluded

Assets and Excluded Liabilities (as defined below) to the extent that

Buyer does not need the same post-Closing in connection with the

ongoing activities of the Facilities, the Assets or the Assumed

Liabilities (as defined below), as well as all records which by law the

Sellers are required to maintain in their possession;

(e) any prepaid expenses related to the Excluded Assets

and Excluded Liabilities (such as prepaid legal expenses or insurance

premiums);

(f) all patient receivables related to Medicare, Medicaid

and other third party patient claims of the Sellers due from

governmental third party payors arising from the rendering of services

to patients at the Facilities, billed and unbilled, recorded or

unrecorded, accrued and existing in respect of services prior to the

Closing which by law may not be assigned ("GOVERNMENT PATIENT

RECEIVABLES");

(g) all supplies, drugs, food and other disposables and

consumables disposed of by the Sellers in the ordinary course of

business prior to Closing consistent with past practices of Sellers;

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(h) all policies of casualty, liability or other

insurance maintained by Sellers with regard to the Facilities and

Assets and any refund of premium due therefrom; and

(i) Mississippi certificates of need #R-0077 and #R-0134.

1.3. ASSUMED LIABILITIES. In connection with the conveyance of the

Assets to Buyer, Buyer agrees to assume, as of the Closing, the future payment

and performance of the following liabilities (the "ASSUMED LIABILITIES") of the

Seller Entities:

(a) All trade accounts payable and accrued expenses of

Sellers in respect of the business of the Facilities existing as of the

Balance Sheet Date (hereinafter defined) but only if and to the extent

that the same are accrued or reserved for on the Balance Sheet Date and

remain unpaid and undischarged on the Closing Date, and all trade

accounts payable and accrued expenses of Sellers arising in the regular

and ordinary course of the business of the Facilities between the

Balance Sheet Date and the Closing Date, to the extent and that the

same remain unpaid and undischarged on the Closing Date and are accrued

or reserved for on the balance sheet as of the Closing Date and, with

respect to Balance Sheet Date payables and expenses and those accrued

subsequent thereto, as are included in the Working Capital (defined

below) calculation set forth in Section 1.5 hereof, exclusive of

prorations applicable to Sellers as set forth in Section 12.29;

(b) all obligations accruing after, and with respect to

the period after, the Closing with respect to the Contracts, including

the provider contracts (and numbers) between the Facilities and

Medicare, Medicaid, TRICARE or other third party payors;

Schedule 1.3(c) hereto; and

(d) obligations and liabilities as of the Closing Date in

respect of accrued but unused paid time off (the "ACCRUED PTO") of

employees of the Sellers who are hired by Buyer as of the Closing Date,

all as set forth in (a) above, and employee sick time obligations as

set forth on Schedule 3.18.

Buyer shall not be liable for (i) any claims (other than the stated

Assumed Liabilities) arising from Sellers' assignment and Buyer's assumption of

the Assumed Liabilities; (ii) uncured defaults in the performance of the Assumed

Liabilities for periods prior to the Closing; (iii) unpaid amounts in respect of

the Assumed Liabilities that are due as of the Closing (which are not reflected

in Working Capital or on Schedule 3.18, as described in Section 1.3(d)) and/or

(iv) rights or remedies claimed by third parties under any of the Assumed

Liabilities which broaden or vary the rights and remedies such third parties

would have had against any of the Sellers if the sale and purchase of the Assets

were not to occur.

1.4. EXCLUDED LIABILITIES. Except for the Assumed Liabilities,

Buyer and Buyer Entities shall not assume and under no circumstances shall Buyer

or Buyer Entities be obligated to pay or assume, and none of the assets of Buyer

or Buyer Entities shall be or become liable for or subject to any liability,

indebtedness, commitment, or obligation of Sellers, or their respective

Affiliates, whether known or unknown, fixed or contingent, recorded or

unrecorded, currently

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existing or hereafter arising or otherwise (collectively, the "EXCLUDED

LIABILITIES"), including, without limitation, the following Excluded

Liabilities:

(a) any debt, obligation, expense or liability that is

not an Assumed Liability;

(b) claims or potential claims for medical malpractice or

general liability relating to events asserted to have occurred prior

to the Closing;

Schedule 1.4 hereto;

(d) any liabilities or obligations associated with or

arising out of any of the Excluded Assets;

(e) liabilities and obligations of Sellers or their

respective Affiliates or predecessors, regardless of when imposed, in

respect of periods prior to the Closing Date arising under the terms of

the Medicare, Medicaid, TRICARE, Blue Cross, or other third party payor

programs (provided, however, that this clause (e) shall not apply to

any and all Assumed Liabilities under Section 1.3(a) hereof);

(f) federal, state or local tax liabilities or

obligations of Sellers or their respective Affiliates in respect of

periods prior to the Closing including, without limitation, any income

tax, any franchise tax, any tax recapture, any state and local

recording fees and taxes (excluding those contemplated in Section

12.29) which may arise upon the consummation of the transactions

contemplated herein (exclusive of any financing transactions engaged in

by Buyer or its Affiliates, which shall be the obligation of Buyer),

and any FICA, FUTA, workers' compensation, and any and all other taxes

or amounts due and payable as a result of the exercise by the employees

at the Facilities of any such employee's right to vacation, sick leave,

and holiday benefits accrued while in the employ of the Sellers or

their Affiliates (provided, however, that this clause (f) shall not

apply to any and all taxes payable with respect to any employee

benefits constituting Assumed Liabilities under Section 1.3(d) hereof);

(g) liability for any and all claims by or on behalf of

employees or independent contractors of Sellers or their respective

Affiliates relating to periods prior to the Closing including, without

limitation, liability for any pension, profit sharing, deferred

compensation, or any other employee health and welfare benefit plans,

liability for any EEOC claim, ADA claim, FMLA claim, wage and hour

claim, unemployment compensation claim, or workers' compensation claim,

and any liabilities or obligations to former employees of Sellers or

their respective Affiliates under the Consolidated Omnibus Budget

Reconciliation Act of 1985, as amended (provided, however, that this

clause (g) shall not apply to any and all employee benefits

constituting Assumed Liabilities under Section 1.3(d) hereof);

(h) any obligation or liability accruing, arising out of,

or relating to any federal, state or local investigations of, or claims

or actions against, Sellers or their respective Affiliates or

predecessors or any of their employees with respect to acts or

omissions prior

<PAGE>

to the Closing;

(i) any civil or criminal obligation or liability

accruing, arising out of, or relating to any acts or omissions of

Sellers, any of their respective Affiliates or predecessors or their

directors, officers, employees and agents claimed to violate any

constitutional provision, statute, ordinance or other law, rule,

regulation, interpretation or order of any governmental entity;

(j) liabilities or obligations arising as a result of any

breach by Sellers or their respective Affiliates or predecessors at any

time of any contract or commitment that is not assumed by Buyer or

Buyer Entities;

(k) liabilities or obligations arising out of any breach

by Sellers or their respective Affiliates or predecessors of any

Contract, or amounts due and payable, accruing or occurring prior to,

or with respect to the period before, the Closing;

(l) any obligation or liability asserted under the

federal Hill-Burton program or other restricted grant and loan programs

with respect to the ownership or operation of the Facilities or the

Assets prior to the Closing;

(m) any debt, obligation, expense, or liability of

Sellers and their respective Affiliates or predecessors arising out of

or incurred solely as a result of any transaction of Sellers or their

respective Affiliates occurring after the Closing, or for any violation

by Sellers or their respective Affiliates or predecessors of any law,

regulation, or ordinance at any time (including, without limitation,

those pertaining to fraud, environmental, healthcare regulatory and

ERISA matters);

(n) all liabilities and obligations relating to an oral

agreements, oral contracts or oral understandings with any referral

sources including, but not limited to, physicians, unless reduced to

writing and expressly assumed as part of the Contracts (Sellers

expressly deny the existence of any such oral agreements, contract or

understandings);

(o) any liability associated with Mississippi

certificates of need #R-0077 and #R-0134; and

(p) any liability (other than any Assumed Liability)

arising out of the act of assignment by Sellers at the Closing of any

Contract.

1.5. PURCHASE PRICE. The purchase price for the Assets shall

consist of:

(a) FOURTEEN MILLION NINE HUNDRED SIXTY-ONE THOUSAND ONE

HUNDRED NINETY-FOUR DOLLARS ($14,961,194) payable in cash at closing

(subject to escrow allocation and subparagraph (b) below);

(b) the above consideration is subject to a dollar for

dollar adjustment to the extent Working Capital (as defined below)

exceeds or is less than $2,000,000 on a

<PAGE>

consolidated basis with the Facilities acquired under the Other

Purchase Agreement. Buyer shall pay to Sellers an amount equal to the

difference between the estimated Working Capital and $2,000,000

provided the estimated amount exceeds $2,000,000, and in the event the

estimated Working capital is less than $2,000,000, the Buyer will

reduce the Purchase Price paid at Closing between this Agreement and

the Other Purchase Agreement as follows: each $1.00 of reduction -

$0.25 applicable to this Agreement and $0.75 to the Other Purchase

Agreement. "WORKING CAPITAL" is defined herein as Sellers' accounts

receivable (inclusive of rights as set forth in Section 1.1(f)) plus

inventories plus other current assets, transferred to Buyer or Buyer

Entities, less accounts payable and accrued expenses, assumed by Buyer

and/or Buyer Entities, all as set forth on the consolidated balance

sheet of the Sellers and the Sellers under the Other Purchase Agreement

as of the Closing Date;

interest, taxes, depreciation and amortization, as calculated in

accordance with generally accepted accounting principles and consistent

with past practice ("EBITDA"), earned by the Facilities and the

Facilities under the Other Purchase Agreement (collectively) on a

consolidated basis for the year ended December 31, 2004 in excess of

$4,500,000, Sellers shall earn an additional ten dollars ($10), up to

maximum earnout consideration of $5,000,000. As an example, if the

Facilities and the Facilities under the Other Purchase Agreement

collectively generate 2004 EBITDA of $4,800,000, Sellers shall receive

an additional payment of $3,000,000. Notwithstanding any provision

herein or in the Other Purchase Agreement, the maximum aggregate

earnout payments under this Agreement and the Other Purchase Agreement

shall be $5,000,000. The parties hereto agree that EBIDA will be

adjusted for prior year cost report settlements or prior year rate

adjustments for services rendered prior to January 1, 2004, and to

include expenses related to consulting agreements entered into as part

of this Agreement. The parties hereto agree that Buyer's or its

affiliate's (i) intracompany management fees charged to the Facilities;

(ii) rent for the Real Estate; and (iii) executive office overhead,

administrative and management salaries and expenses (exclusive of

operating expenses set forth in the following sentence) allocated to

the Facilities, shall not be deducted as expenses in determining the

Facilities EBITDA. Operating costs which are incurred at Buyer's parent

level for the benefit of the Facilities and allocated to the Facilities

and other hospital facilities operated by Buyer or its affiliates and

subsidiaries, may be charged as expenses of the Facilities insofar as

the allocation is fair and equitable, consistent with past practices at

the Facilities and in accordance with GAAP, and based upon a reasonable

methodology which does not discriminate against the Facilities.

The calculation of 2004 EBITDA shall be prepared by Buyer and

shall be presented to Sellers within 90 days of the end of the calendar

year 2004. Sellers, acting through the seller representative William C.

Windham (or his designee) (the "SELLER REPRESENTATIVE"), will have

thirty (30) calendar days to accept or protest the calculation of 2004

EBITDA. If the Seller Representative, on behalf of the Sellers,

protests the calculation, the parties hereto shall use their good faith

efforts to seek to resolve such protest within 30 calendar days. Upon

agreement, if Sellers are entitled to all or a portion of the earnout

consideration pursuant to subparagraph (c) above, Buyer will make

<PAGE>

payment pursuant to subparagraph (c) above within five (5) business

days of receipt of written acknowledgement of the calculation by the

Seller Representative. If the parties do not agree upon a calculation

of 2004 EBITDA following the 30 day period, the parties shall mutually

select an accounting firm of national recognition, which shall not be

the accounting firm of record for Buyer or Sellers (or their respective

affiliates), which shall calculate the 2004 EBITDA and such calculation

shall be binding on all parties hereto. By way of example only, the

parties hereto agree with the 2003 EBITDA methodology and calculation

as set forth on Schedule 1.5(c).

Collectively, the net payments of (a), (b) and (c) above shall constitute the

"PURCHASE PRICE". Buyer shall pay the Purchase Price (with respect to

subparagraph (a) and subparagraph (b) (subject to the post closing adjustment

provided for in Section 1.6 hereof) to Sellers at the Closing by wire transfer

of immediately available funds to an account designated by Sellers. The Buyer or

Sellers shall make such payment adjustment as contemplated in subparagraph (b)

above in accordance with Section 1.6 (which adjustment shall increase the

Purchase Price if paid by Buyer and shall reduce the Purchase Price if paid by

Sellers). The Buyer will pay the Purchase Price with respect to subparagraph

(c), as applicable, to Sellers by wire transfer of immediately available funds

to an account designated by Sellers at such time as set forth in subparagraph

(c).

At the Closing, $550,000 of the Purchase Price shall be paid by wire

transfer into escrow at AmSouth Bank, N.A., pursuant to the terms of the Escrow

Agreement in substantially the form set forth as Exhibit C hereto (subject to

review and comment by the Escrow Agent).

1.6. CALCULATION OF WORKING CAPITAL. Not less than seven (7) days

prior to Closing, Sellers shall prepare and provide to Buyer a certificate

setting forth an estimate of the anticipated Closing Date Working Capital. Buyer

shall have five (5) days to review and confirm the basis for Sellers' estimated

Closing Date Working Capital. Sellers' calculation of the estimated Closing Date

Working Capital shall be made in good faith and in a manner consistent with the

calculation of Working Capital as of December 31, 2003 attached hereto as

Schedule 1.6.

Not later than sixty (60) days after the Closing Date, Sellers shall

cause to be prepared the consolidated balance sheet of Sellers as of the Closing

Date (such balance sheet being referred to as the "CLOSING BALANCE SHEET"), in

accordance with generally accepted accounting principles consistently applied by

Sellers in accordance with past practice for the financial statements described

in Section 3.4 hereof. Such Closing Balance Sheet shall specifically identify

any assets reflected thereon which are not included in the Assets and all

liabilities reflected thereon which are not assumed by Buyer hereunder.

Sellers shall cause an independent public accounting firm selected by

Sellers (with the consent of Buyer, such consent not to be unreasonably

withheld), to review such Closing Balance Sheet and to issue, as soon as

practicable but in any event not later than sixty (60) days after the Closing

Date, an agreed procedures report to Sellers and Buyer as to the calculation of

Working Capital transferred to Buyer or the Buyer Entities; provided that such

accounting firm's report will not require the audit of Sellers' accounts for

such purpose. Sellers will permit Buyer and/or Buyer's auditor (or other

accounting firm as designated by the Buyer) at the earliest practicable

<PAGE>

date to review the certificate, including all work papers, schedules and

calculations related thereto, prior to the issuance thereof.

Any dispute which may arise between Sellers and Buyer as to the Working

Capital calculation shall be resolved in the following manner:

(a) Buyer, if it disputes the calculation of Working

Capital, shall notify Sellers in writing within thirty (30) days after

the issuance of the certificate pursuant hereto that Buyer disputes the

calculation of Working Capital, and such notice shall specify in

reasonable detail the nature of the dispute;

(b) during the 30-day period following the date of such

written notice for Buyer, Sellers and Buyer shall attempt in good faith

to resolve such dispute; and

subsection (b) above, Sellers and Buyer shall have failed to reach an

agreement with respect to such dispute, the matter shall be referred to

PricewaterhouseCoopers, independent certified public accountants, which

shall act as an expert and shall issue its certificate as to the

calculation of Working Capital within sixty (60) days after such

dispute is referred thereto. Each of the parties hereto shall bear all

costs and expenses incurred by it in connection with such third party

review, except that the fees and expenses of PricewaterhouseCoopers

hereunder shall be borne equally by Sellers and Buyer. This provision

shall be specifically enforceable by the parties, the decision of

PricewaterhouseCoopers in accordance with the provisions hereof shall

be final and binding and there shall be no right to appeal therefrom.

Upon agreement (or calculation as set forth in subparagraph (c) above) as to the

Closing Date Working Capital: (i) to the extent the Closing Date Working Capital

exceeded the estimated Closing Date Working Capital, Buyer shall promptly pay

(within five (5) days) to Seller's account such additional amount and (ii) to

the extent the Closing Date Working Capital is less than the estimated Closing

Date Working Capital, Seller shall promptly pay (within five (5) days) to Buyer

such amount equal to the difference between the Closing Date Working Capital and

the estimated Closing Date Working Capital.

ARTICLE 2.

CLOSING

2.1. CLOSING. Subject to the satisfaction or waiver by the

appropriate party of all of the conditions precedent to Closing specified in

Articles 7 and 8 hereof, the consummation of the transactions contemplated by

and described in this Agreement (the "CLOSING") shall take place at the offices

of Davidson, Jones & Summers, Suite 800, 509 Market Street, Shreveport,

Louisiana, at 10:00 a.m. local time, on or before March 1, 2004, or on such

other date or at such other location as the parties may mutually designate in

writing (the date of consummation is referred to herein as the "CLOSING DATE").

Closing shall be effective as set forth in Section 12.21.

2.2. ACTIONS OF SELLERS AT CLOSING. At the Closing and unless

otherwise waived in writing by Buyer, Sellers shall deliver to Buyer the

following:

<PAGE>

(a) Deeds containing special warranty of title, fully

executed by appropriate Sellers in recordable form, conveying to Buyer

good and marketable fee title to the Real Property described in

Schedule 1.1(a), and/or Assignments, fully executed by Sellers or one

of its Affiliates in recordable form, assigning to Buyer good and valid

leasehold title to any Real Property which is a leasehold estate,

subject in each instance only to the Permitted Encumbrances;

(b) A General Assignment, Conveyance and Bill of Sale,

containing special warranty of title, fully executed by each Seller,

conveying to Buyer good and marketable title to all tangible assets

which are a part of the Assets and valid title to all intangible assets

which are a part of the Assets, free and clear of all liabilities,

claims, liens, security interests and restrictions other than the

Assumed Liabilities;

"ASSIGNMENT AND ASSUMPTION AGREEMENT"), fully executed by each Seller,

conveying to Buyer such Seller's interest in the Contracts;

(d) Copies of resolutions duly adopted by the Board of

Directors and/or member(s) and shareholders of each of the Sellers,

authorizing and approving their respective performance of the

transactions contemplated hereby and the execution and delivery of this

Agreement and the documents described herein, certified as true and of

full force as of the Closing, by the appropriate officers of each

Seller;

(e) Certificates of the President or Managing Member of

each Seller, certifying that each covenant and agreement of such

Seller, respectively, to be performed prior to or as of the Closing

pursuant to this Agreement has been performed and each representation

and warranty of each Seller is true and correct, as if made on and as

of the Closing;

(f) Certificates of incumbency for the respective

officers of each Seller executing this Agreement and any other

agreements or instruments contemplated herein or making certifications

for the Closing dated as of the Closing Date;

(g) Certificates of existence and good standing of each

Seller from the state in which it is incorporated, dated the most

recent practical date prior to the Closing;

(h) The opinion of counsel to Sellers as provided by

Section 7.7 hereof;

(i) All original Contracts, all Certificates of Title and

other documents evidencing an ownership interest conveyed as part of

the Assets;

(j) The duly executed guaranty agreement by one or more

Sellers or designees as set forth in Section 9.10 hereof on such terms

and conditions as substantially set forth in the form of guaranty

agreement attached hereto as Exhibit H; and

(k) Such other instruments and documents as Buyer

reasonably deems necessary to effect the transactions contemplated

hereby.

<PAGE>

2.3. ACTIONS OF BUYER AT CLOSING. At the Closing and unless

otherwise waived in writing by Sellers, Buyer shall deliver to Sellers the

following:

(a) An amount equal to the Purchase Price contemplated by

subparagraphs (a) and (b) (prior to the post closing adjustment) of

Section 1.5 hereof in immediately available funds;

(b) The Assignment and Assumption Agreement, fully

executed by Buyer or Buyer Entities, pursuant to which Buyer or one or

more Buyer Entities shall assume the future performance of the

Contracts as to the period after Closing, as herein provided;

Directors of Buyer authorizing and approving its performance of the

transactions contemplated hereby and the execution and delivery of this

Agreement and the documents described herein, certified as true and in

full force as of the Closing, by the appropriate officers of Buyer;

(d) Certificates of the President or a Vice President of

Buyer, certifying that each covenant and agreement of Buyer to be

performed prior to or as of the Closing pursuant to this Agreement has

been performed and each representation and warranty of Buyer is true

and correct, as if made on and as of the Closing;

(e) Certificates of incumbency for the respective

officers of Buyer executing this Agreement or making certifications for

the Closing dated as of the Closing Date;

(f) Certificate of existence and good standing of Buyer

from the state in which it is incorporated, dated the most recent

practical date prior to Closing;

(g) The opinion of counsel to Buyer as provided by

Section 8.5 hereof;

(h) The duly executed guaranty agreement by Buyer (or a

Buyer entity) in substantially the form of Exhibit H; and

(i) Such other instruments and documents as Sellers

reasonably deem necessary to effect the transactions contemplated

hereby.

ARTICLE 3.

REPRESENTATIONS AND WARRANTIES OF SELLERS

As of the date hereof, and, subject to such qualifications and

exceptions as set forth in the Schedules (which have been updated in accordance

with the provisions of Section 12.1 hereof, as of the Closing Date), Sellers

represent and warrant to Buyer the following:

3.1. EXISTENCE AND CAPACITY. Each Seller is a limited liability

company or

<PAGE>

corporation, duly organized and validly existing in good standing under the laws

of its state of organization. Each of Sellers has the requisite power and

authority to enter into this Agreement and to perform its obligations hereunder.

Each Seller has the requisite power and authority to conduct its business as it

is now being conducted.

3.2. POWERS; GOVERNMENTAL CONSENTS; ABSENCE OF CONFLICTS WITH OTHER

AGREEMENTS, ETC. The execution, delivery, and performance of this Agreement by

Sellers and all other agreements referenced herein, or ancillary hereto, to

which Sellers are a party, and the consummation by the Sellers of the

transactions contemplated by this Agreement and the documents described herein,

as applicable:

(a) are within its limited liability company or corporate

powers, respectively, subject to compliance with Section 5.4 are not in

contravention of law or of the terms of its organizational documents,

and have been duly authorized by all appropriate limited liability

company or corporate action;

(b) except as provided in Section 5.4 below or as set

forth on Schedule 3.2, do not require any approval or consent of, or

filing with, any governmental agency or authority bearing on the

validity of this Agreement which is required by law or the regulations

of any such agency or authority;

violate, nor result in any breach of, or the creation of any material

lien, charge, or encumbrance under, any indenture, agreement, lease,

instrument or understanding to which it is a party or by which it is

bound;

(d) subject to compliance with Section 5.4, will not

violate any statute, law, rule, or regulation of any governmental

authority to which it or the Assets may be subject; and

(e) will not violate any judgment, decree, writ or

injunction of any court or governmental authority to which it or the

Assets may be subject.

3.3. BINDING AGREEMENT. This Agreement and all agreements to which

Sellers or any of their Affiliates will become a party pursuant hereto are and

will constitute the valid and legally binding obligations of such party and are

and will be enforceable against it in accordance with the respective terms

hereof or thereof, except insofar as such enforceability may be limited by

bankruptcy, insolvency or other similar laws affecting the enforcement of

creditors rights generally and general principles of equity.

3.4. FINANCIAL STATEMENTS. Sellers delivered to Buyer copies of the

following consolidated financial statements of or pertaining to the Facilities

("FINANCIAL STATEMENTS"), which Financial Statements are maintained on an

accrual basis, and copies of which are attached hereto as Schedule 3.4:

<PAGE>

(a) Unaudited Consolidated Balance Sheet dated as of

December 31, 2003 (the "BALANCE SHEET DATE");

(b) Unaudited Consolidated Income Statement for the 12

months ended on the Balance Sheet Date; and

Statements for the fiscal years ended December 31, 2002 and 2001.

Such Financial Statements have been prepared in accordance with generally

accepted accounting principles applied on a consistent basis throughout the

periods indicated ("GAAP"), except as set forth in Schedule 3.4 and the absence

(or lack of GAAP compliance) of footnotes to such statements. Such Balance

Sheets present fairly in all material respects the financial condition of the

Facilities as of the dates indicated thereon, and such Income Statements present

fairly in all material respects the results of operations of the Facilities for

the periods indicated thereon. Except for (i) liabilities that are disclosed in

this Agreement, agreements entered into in connection herewith and Schedules and

Exhibits hereto and thereto, and (ii) liabilities that were incurred after the

Balance Sheet Date in the ordinary course of business, as of the date hereof,

there are no liabilities of the Sellers or their Affiliates relating to the

Facilities or the other Assets and Assumed Liabilities required in accordance

with GAAP to be disclosed on the Financial Statements, except as set forth in

the Financial Statements or, as otherwise specified on Schedule 3.4.

3.5. CERTAIN POST-BALANCE SHEET RESULTS. Except as set forth in

Schedule 3.5 hereto, since the Balance Sheet Date there has not been any:

(a) damage, destruction, or loss in excess of $25,000

(whether or not covered by insurance) affecting the Facilities or the

Assets;

(b) material adverse changes in the condition, financial

or otherwise, of the Assets, the business of, or in the results of

operations of, the Facilities;

dispute pertaining to the Facilities;

(d) sale, assignment, transfer, or disposition of any

item of property, plant or equipment included in the Assets having a

book value in excess of $5,000 (other than supplies), except in the

ordinary course of business consistent with past practices of Sellers;

(e) increases in the compensation payable to any

employees of the Facilities or any increase in, or institution of, any

bonus, insurance, pension, profit-sharing or other employee benefit

plan, remuneration or arrangements made to, for or with such employees

(other than in the ordinary course of business consistent with Sellers'

past practices);

(f) dividends, distributions or extraordinary payments by

any Seller;

<PAGE>

(g) changes in the composition of the medical staff of

the Facilities, other than normal turnover occurring in the ordinary

course of business consistent with Sellers' past practices;

(h) changes in the rates charged by the Facilities for

their services, other than those made in the ordinary course of

business consistent with Sellers' past practices;

(i) material adjustments or write-offs of accounts

receivable or reductions in reserves for accounts receivable outside

the ordinary course of business consistent with Sellers' past

practices;

(j) changes in the accounting methods or practices

employed by Sellers or changes in depreciation or amortization

policies;

(k) transaction pertaining to the Facilities by any Seller

outside the ordinary course of business consistent with each Seller's

past practices; or

(l) institution or settlements of any litigation,

investigation, audit, inquiry, action or proceeding before or involving

any court or governmental body relating to any of the Sellers, their

business or the Assets.

3.6. LICENSES. The Facilities are duly licensed as required

pursuant to the applicable laws of the state in which it is located with each

such license set forth on Schedule 3.6. The ancillary departments located at the

Facilities or operated for the benefit of the Facilities which are required to

be specially licensed are duly licensed by the appropriate state agency (the

"STATE HEALTH AGENCY"). The Sellers have all other licenses, registrations,

permits, and approvals which are needed or required by law to operate the

business related to or affecting the Facilities or any ancillary services

related thereto. Sellers have delivered to Buyer an accurate list and summary

description (Schedule 3.6) of all such licenses, registrations and permits held

by the Sellers relating to the ownership, development, or operation of the

Facilities or the Assets, all of which are now and as of the Closing shall be in

good standing.

3.7. CERTIFICATES OF NEED. Except as set forth on Schedule 3.7

hereto, no application for any Certificate of Need, Exemption Certificate (each

as defined below) or declaratory ruling has been made by any Seller with the

State Health Agency or other applicable agency which is currently pending or

open before such agency, and no such application (collectively, the

"APPLICATIONS") filed by any Seller within the past three (3) years has been

ultimately denied by any commission, board or agency or withdrawn by any Seller.

Except as set forth on Schedule 3.7 hereto, no Seller has prepared, filed,

supported or presented opposition to any Applications filed by another hospital

or health agency within the past three (3) years. Except as set forth on

Schedule 3.7 hereto, no Seller has any Applications pending or any approved

Applications which relate to projects not yet completed. Each Seller has

properly filed all required Applications which are complete and correct in all

material respects with respect to any and all material improvements, projects,

changes in services, zoning requirements, construction and equipment purchases,

and other changes for which approval is required under any applicable federal or

state law, rule or regulation. As used herein, "CERTIFICATE OF NEED" means a

written statement issued

<PAGE>

by the State Health Agency evidencing community need for a new, converted,

expanded or otherwise significantly modified health care facility, health

service or hospice, and "EXEMPTION CERTIFICATE" means a written statement from

the State Health Agency stating that a health care project is not subject to the

Certificate of Need requirements under applicable state law.

3.8. MEDICARE PARTICIPATION; ACCREDITATION. Each Facility

participating in the Medicare Program, one or more Medicaid programs or the

TRICARE program is set forth on Schedule 3.8. Each such Facility has a current

and valid provider contract with the programs as set forth on Schedule 3.8, and

is in compliance with the conditions of participation in such programs, if

applicable, and has received all approvals or qualifications necessary for

capital reimbursement for the Facilities. Each Facility is duly accredited, with

no contingencies (except as set forth on Schedule 3.8), by the Joint Commission

on Accreditation of Healthcare Organizations ("JCAHO") for the three (3) year

period set forth on Schedule 3.8. A copy of the most recent accreditation letter

from the JCAHO pertaining to each Facility has been made available to Buyer. All

billing practices of the Sellers with respect to the Facilities to all third

party payors, including the Medicare, Medicaid and TRICARE programs and private

insurance and managed care companies, have been in compliance with all

applicable laws, regulations and policies of such third party payors and the

Medicare, Medicaid and TRICARE programs and none of the Sellers nor the

Facilities have billed or received any payment or reimbursement in excess of

amounts allowed by law. No Seller nor any of their respective officers,

directors, managing employees, or controlling members are excluded from

participation in the Medicare, Medicaid or TRICARE programs, nor, to the

knowledge of Sellers, is any such exclusion threatened. Except as set forth on

Schedule 3.8, no Seller has received any written notice from any of the

Medicare, Medicaid or TRICARE programs, or any other third party payor programs

of any pending or threatened investigations or surveys.

3.9. REGULATORY COMPLIANCE. Except as set forth on Schedule 3.9

hereto, the Facilities are in compliance in all material respects with all

applicable statutes, rules, regulations, and requirements of the Government

Entities having jurisdiction over the Facilities and the operations of the

Facilities or their related ancillary services. As used herein, "GOVERNMENT

ENTITY" means any government or any agency, bureau, board, directorate,

commission, court, department, official, political subdivision, tribunal or

other instrumentality of any government, whether federal, state or local. Except

as set forth on Schedule 3.9, the Sellers have timely filed all reports, data,

and other information required to be filed with the Government Entities. None of

the Sellers nor any of their officers, members, directors, agents or employees,

has committed a violation of federal or state laws regulating health care fraud,

including but not limited to the federal Anti-Kickback Law, 42 U.S.C. 1320a-7b;

the Stark I and II Laws, 42 U.S.C. 1395nn, as amended, and their associated

regulations; and the False Claims Act, 31 U.S.C. 3729, et seq.

3.10. EQUIPMENT. Sellers have delivered to Buyer an accurate and

complete depreciation schedule as of the Balance Sheet Date (Schedule 3.10)

which takes into consideration all the material equipment associated with, or

constituting any part of, the Facilities and the Assets. Since the Balance Sheet

Date, no Seller has sold or otherwise disposed of any item of equipment having a

value in excess of $500 associated with, or constituting any part of, the

Facilities or the Assets.

<PAGE>

3.11. REAL PROPERTY. Turner-Windham of Mississippi, LLC owns good,

marketable, and insurable fee simple title, as the case may be, to the Real

Property, together with all buildings, improvements, and component parts thereon

and all appurtenances and rights thereto. The Real Property will be conveyed to

Buyer free and clear of any and all liens, encumbrances or other restrictions

except those more particularly described in Schedule 1.1(a) hereto, usual and

customary utility and street easements or rights of way which do not materially

interfere with the use and enjoyment of the Real Property by Sellers, and such

other matters as may be approved by Buyer (the "PERMITTED ENCUMBRANCES"). With

respect to the Real Property:

(a) No Seller has received notice from any Governmental

Entity of a violation of any applicable ordinance or other law, order

or regulation, and no Seller has received notice of any condemnation,

lien, assessment, or the like relating to any part of the Real Property

or the operation thereof;

(b) To the Knowledge of Sellers, the Real Property and

its operation are in compliance with all applicable zoning, land use,

public health, fire safety, building code or other similar laws,

ordinances and regulations applicable thereto or to the ownership or

operation thereof. The consummation of the transactions contemplated

herein will not result in a violation of any applicable zoning

ordinance or the termination of any applicable zoning variance,

conditional use permit or waiver now existing, and the buildings and

improvements constituting the Real Property comply in all material

respects with all public health, fire safety or building codes and

regulations;

subject to no easements, restrictions, ordinances, or such other

limitations on title so as to make such property unusable for its

current use or the title uninsurable or unmarketable or which restrict

or impair the use, marketability or insurability of the Real Property;

(d) All of the Real Property is in compliance in all

material respects with the applicable provisions of the Rehabilitation

Act of 1973, Title III of the Americans with Disabilities Act, and the

provisions of any comparable state statute relative to accessibility

(these laws are referred to, collectively, as the "ACCESSIBILITY

LAWS"), and there is no pending or noticed, or to the knowledge of any

Seller, threatened litigation, administrative action or complaint

(whether from state, federal or local government or from any other

person, group or entity) relating to compliance of any of the Real

Property with the Accessibility Laws;

(e) Except for patients, there are no tenants or other

persons or entities occupying any space in the Real Property, other

than pursuant to tenant leases described in Schedule 1.1(a) or (i) or

listed as an Excluded Asset/Excluded Liability or, to the knowledge of

any Seller, claiming any possession, adverse or not, to or other

interest in any portion of the Real Property;

(f) None of the Sellers have received, during the past

five (5) years, any written notice from any Governmental Entity of,

and, to the knowledge of any Seller, no part of the Real Property is

subject to, any existing, proposed or contemplated plans to

<PAGE>

modify or realign any street or highway or any existing, proposed or

contemplated eminent domain proceeding that would result in the taking

of all or any part of the Real Property or that would adversely affect

the current use of any part of the Real Property. There are no existing

or to any Seller's knowledge contemplated public impro

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