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Thomas O. Kolb Matthew S. Heiter Irene Graves Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Suite 1600 420 20th Street North Birmingham, Alabama 35203 (205) 328-0480

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	•	We were formed in August 2003 and have a limited operating history; our management has a limited history of operating a REIT and a public company and may therefore have difficulty in successfully and profitably operating our business.
	•	We may be unable to acquire or develop the facilities we have under letter of commitment or contract or facilities we have identified as potential candidates for acquisition or development as quickly as we expect or at all, which could harm our future operating results and adversely affect our ability to make distributions to our stockholders.
	•	Our real estate investments are concentrated in net-leased healthcare facilities, making us more vulnerable economically than if our investments were more diversified across several industries or property types.
	•	Our facilities and properties under development are currently leased to eight tenants, five of which were recently organized and have limited or no operating histories, and the failure of any of these tenants to meet its obligations to us, including payment of rent, payment of commitment and other fees and repayment of loans we have made or intend to make to them, would have a material adverse effect on our revenues and our ability to make distributions to our stockholders.
	•	Development and construction risks, including delays in construction, exceeding original estimates and failure to obtain financing, could adversely affect our ability to make distributions to our stockholders.
	•	Reductions in reimbursement from third-party payors, including Medicare and Medicaid, could adversely affect the profitability of our tenants and hinder their ability to make rent or loan payments to us.
	•	The healthcare industry is heavily regulated and existing and new laws or regulations, changes to existing laws or regulations, loss of licensure or certification or failure to obtain licensure or certification could result in the inability of our tenants to make lease or loan payments to us.
	•	Loss of our tax status as a REIT would have significant adverse consequences to us and the value of our common stock.
	•	Our loans to Vibra could be recharacterized as equity, in which case our rental income from Vibra would not be qualifying income under the REIT rules and we could lose our REIT status.
	•	Common stock eligible for future sale, including up to 25,411,039 shares of common stock that may be resold by our existing stockholders upon effectiveness of the resale registration statement of which this prospectus is a part, may result in increased selling which may have an adverse effect on our stock price.

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SUMMARY			1
Our Company			1
Our Portfolio			2
Competitive Strengths			7
Summary Risk Factors			8
Market Opportunity			9
Our Target Facilities			10
Our Formation Transactions			11
Our Structure			12
Registration Rights Agreement and Resale Blackout Periods			13
Restrictions on Ownership of Our Common Stock			13
Distribution Policy			13
Tax Status			13
Summary Financial Information			14
RISK FACTORS			17
Risks Relating to Our Business and Growth Strategy			17
Risks Relating to Real Estate Investments			26
Risks Relating to the Healthcare Industry			30
Risks Relating to Our Organization and Structure			33
Tax Risks Associated With Our Status as a REIT			37
Risks Relating to an Investment in Our Common Stock			39
A WARNING ABOUT FORWARD LOOKING STATEMENTS			41
USE OF PROCEEDS			42
CAPITALIZATION			43
DISTRIBUTION POLICY			44
SELECTED FINANCIAL INFORMATION			45
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			47
OUR BUSINESS			57
Our Company			57
Market Opportunity			59
Our Target Facilities			61
Underwriting Process			62
Asset Management			63
Our Formation Transactions			63
Our Operating Partnership			64
MPT Development Services, Inc.			65
Depreciation			66
Our Leases			66
Environmental Matters			66
Competition			67
Healthcare Regulatory Matters			67
Insurance			73
Employees			73
Legal Proceedings			73
OUR PORTFOLIO			73
Our Current Portfolio			73
Our Current Loan			98
Our Pending Acquisition			99
Our Acquisition and Development Pipeline			101
MANAGEMENT			104
Our Directors and Executive Officers			104
Corporate Governance — Board of Directors and Committees			106
Director Compensation			109
Executive Compensation			110
Employment Agreements			110
Benefit Plans			113
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION			115
MARKET PRICE OF OUR COMMON STOCK			115
PRINCIPAL STOCKHOLDERS			116
SELLING STOCKHOLDERS			117
REGISTRATION RIGHTS AGREEMENT			128
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			129
INVESTMENT POLICIES AND POLICIES WITH RESPECT TO CERTAIN ACTIVITIES			132
DESCRIPTION OF CAPITAL STOCK			136
Authorized Stock			136
Common Stock			136
Preferred Stock			137
Power to Increase Authorized Stock and Issue Additional Shares of Our Common Stock and Preferred Stock			137
Restrictions on Ownership and Transfer			137
Transfer Agent and Registrar			139
MATERIAL PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS			140
The Board of Directors			140
Business Combinations			140
Control Share Acquisitions			141
Maryland Unsolicited Takeovers Act			142
Amendment to Our Charter			142
Dissolution of Our Company			142
Advance Notice of Director Nominations and New Business			142
Indemnification and Limitation of Directors’ and Officers’ Liability			143
PARTNERSHIP AGREEMENT			145
Management of Our Operating Partnership			145
Transferability of Interests			145
Capital Contribution			146
Redemption Rights			146
Distributions			147
Allocations			148
Term			148
Tax Matters			148
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS			149
Taxation of Our Company			149
Requirements for Qualification			150
Other Tax Consequences			165
Income Taxation of the Partnerships and Their Partners			166
PLAN OF DISTRIBUTION			168
LEGAL MATTERS			170
EXPERTS			171
WHERE YOU CAN FIND MORE INFORMATION			171
INDEX TO FINANCIAL STATEMENTS			F-1
EX-10.65 LEASE AGREEMENT
EX-10.66 PURCHASE AND SALE AGREEMENT
EX-10.67 LOAN AGREEMENT
EX-10.68 PROMISSORY NOTE
EX-10.69 PURCHASE AND SALE AGREEMENT
EX-10.70 LEASE AGREEMENT
EX-23.1 CONSENT OF KPMG LLP
EX-23.2 CONSENT OF PARENTE RANDOLPH, LLC

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	•	private investors;
	•	healthcare providers, including physicians;
	•	other REITs;
	•	real estate partnerships;
	•	financial institutions; and
	•	local developers.

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	•	we may have to compete for suitable development sites;
	•	our ability to complete construction is dependent on there being no title, environmental or other legal proceedings arising during construction;
	•	we may be subject to delays due to weather conditions, strikes and other contingencies beyond our control;
	•	we may be unable to obtain, or suffer delays in obtaining, necessary zoning, land-use, building, occupancy healthcare regulatory and other required governmental permits and authorizations, which could result in increased costs, delays in construction, or our abandonment of these projects;
	•	we may incur construction costs for a facility which exceed our original estimates due to increased costs for materials or labor or other costs that we did not anticipate; and
	•	we may not be able to obtain financing on favorable terms, which may render us unable to proceed with our development activities.

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	•	changes in the national, regional and local economic climate, including but not limited to changes in interest rates;
	•	local conditions such as an oversupply of, or a reduction in demand for, rehabilitation hospitals, long-term acute care hospitals, ambulatory surgery centers, medical office buildings, specialty hospitals, skilled nursing facilities, regional and community hospitals, women’s and children’s hospitals and other single-discipline facilities.
	•	attractiveness of our facilities to healthcare providers and other types of tenants; and
	•	competition from other rehabilitation hospitals, long-term acute care facilities, medical office buildings, outpatient treatment facilities, ambulatory surgery centers and specialty hospitals, skilled nursing facilities, regional and community hospitals, women’s and children’s hospitals and other single-discipline facilities.

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	•	changes in the demand for and methods of delivering healthcare services;
	•	changes in third-party reimbursement policies;
	•	significant unused capacity in certain areas, which has created substantial competition for patients among healthcare providers in those areas;
	•	continuing pressure by private and governmental payors to reduce payments to providers of services; and
	•	increased scrutiny by federal and state authorities of billing, referral and other practices.

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	•	“business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as a person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter imposes special appraisal rights and special stockholder voting requirements on these combinations; and
	•	“control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of the holders of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

	•	issue up to 10,000,000 shares of preferred stock, having preferences, conversion or other rights, voting powers, restrictions, limitations as to distribution, qualifications, or terms or conditions of redemption as determined by the board;
	•	amend the charter to increase or decrease the aggregate number of shares of capital stock or the number of shares of stock of any class or series that we have the authority to issue;
	•	cause us to issue additional authorized but unissued shares of common stock or preferred stock; and

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	•	classify or reclassify any unissued shares of common or preferred stock by setting or changing in any one or more respects, from time to time before the issuance of such shares, the preferences, conversion or other rights and other terms of such classified or reclassified shares, including the issuance of additional shares of common stock or preferred stock that have preference rights over the common stock with respect to dividends, liquidation, voting and other matters.

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	•	we would not be allowed a deduction for distributions to stockholders in computing our taxable income; therefore we would be subject to federal income tax at regular corporate rates and we might need to borrow money or sell assets in order to pay any such tax;
	•	we also could be subject to the federal alternative minimum tax and possibly increased state and local taxes; and
	•	unless we are entitled to relief under statutory provisions, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify.

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	•	85% of our ordinary income for that year;
	•	95% of our capital gain net income for that year; and
	•	100% of our undistributed taxable income from prior years.

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	•	actual or anticipated variations in our quarterly operating results or distributions;
	•	changes in our funds from operations or earnings estimates or publication of research reports about us or the real estate industry;
	•	increases in market interest rates that lead purchasers of our shares of common stock to demand a higher yield;
	•	changes in market valuations of similar companies;
	•	adverse market reaction to any increased indebtedness we incur in the future;
	•	additions or departures of key management personnel;
	•	actions by institutional stockholders;
	•	speculation in the press or investment community; and
	•	general market and economic conditions.

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	•	our business strategy;
	•	our projected operating results;
	•	our ability to acquire or develop net-leased facilities;
	•	availability of suitable facilities to acquire or develop;
	•	our ability to enter into, and the terms of, our prospective leases;
	•	our ability to use effectively the proceeds of our initial public offering;
	•	our ability to obtain future financing arrangements;
	•	estimates relating to, and our ability to pay, future distributions;
	•	our ability to compete in the marketplace;
	•	market trends;
	•	projected capital expenditures; and
	•	the impact of technology on our facilities, operations and business.

	•	the factors referenced in this prospectus, including those set forth under the sections captioned “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations;” “Our Business” and “Our Portfolio;”
	•	general volatility of the capital markets and the market price of our common stock;
	•	changes in our business strategy;
	•	changes in healthcare laws and regulations;
	•	availability, terms and development of capital;
	•	availability of qualified personnel;
	•	changes in our industry, interest rates or the general economy; and
	•	the degree and nature of our competition.

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	•	our actual capitalization as of September 30, 2005; and
	•	our pro forma capitalization, as adjusted to give effect to (i) a distribution of $0.18 per share declared on November 18, 2005 and payable on January 19, 2006 to stockholders of record on December 15, 2005; and (ii) a loan funded through the Company’s revolving credit facility which was entered into in October 2005.

					As of
					September 30, 2005
									Pro Forma,
					Historical				As Adjusted
Long term debt					$	40,366,667			$	80,366,667
Minority interests						2,137,500				2,137,500
Stockholders’ equity:
	Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding					—				—
	Common stock, $0.001 par value, 100,000,000 shares authorized; 39,292,885 shares issued and outstanding at September 30, 2005					39,293				39,293	(1)
		Additional paid in capital				359,866,949				359,866,949
		Accumulated deficit				(2,584,400	)			(9,778,832	)
			Total stockholders’ equity			357,321,842				350,127,410
			Total capitalization		$	399,826,009			$	432,631,577

(1)

Excludes (i) 79,500 shares of restricted common stock awarded to one of our executive officers and employees in April 2005, 106,000 shares of restricted common stock awarded to our founders in July 2005 and 490,680 shares of restricted common stock awarded to our executive officers and directors in August 2005, all such awards under our equity incentive plan; (ii) 100,000 shares of common stock issuable upon the exercise of stock options granted to our independent directors under our equity incentive plan, options for 46,664 shares of which are vested; (iii) 5,000 shares of common stock issuable in October 2007, 7,500 shares of common stock issuable in March 2008 and 10,000 shares of common stock issuable in October 2008 pursuant to deferred stock units awarded under our equity incentive plan to our independent directors; and (iv) 3,891,831 shares of common stock available for future awards under our equity incentive plan.

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	•	our actual results of operations;
	•	the rent received from our tenants;
	•	the ability of our tenants to meet their other obligations under their leases and their obligations under their loans from us;
	•	debt service requirements;
	•	capital expenditure requirements for our facilities;
	•	our taxable income;
	•	the annual distribution requirement under the REIT provisions of the Code; and
	•	other factors that our board of directors may deem relevant.

						Distribution per Share
Declaration Date		Record Date		Date of Distribution		of Common Stock
November 18, 2005		December 15, 2005		January 29, 2006		$	0.18
August 18, 2005		September 15, 2005		September 29, 2005		$	0.17
May 19, 2005		June 20, 2005		July 14, 2005		$	0.16
March 4, 2005		March 16, 2005		April 15, 2005		$	0.11
November 11, 2004		December 16, 2004		January 11, 2005		$	0.11
September 2, 2004		September 16, 2004		October 11, 2004		$	0.10

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				For the Nine Months Ended								For the Year Ended
				September 30, 2005								December 31, 2004
				Pro Forma				Historical				Pro Forma				Historical
Operating information:
	Revenues
		Rent income		$	26,273,517			$	18,364,389			$	32,808,106			$	8,611,344
		Interest income from loans			6,368,607				3,562,857				9,037,049				2,282,115
		Total revenues			32,642,124				21,927,246				41,845,155				10,893,459
	Operating expenses
		Depreciation and amortization			4,645,242				2,986,790				6,193,653				1,478,470
		General and administrative			5,595,416				5,595,416				5,057,284				5,057,284
		Total operating expenses			10,357,499				8,699,047				12,023,286				7,214,601
		Operating income			22,284,625				13,228,199				29,821,869				3,678,858
		Net other income (expense)			(2,132,363	)			(32,363	)			(1,902,509	)			897,491
	Net income				20,152,262				13,195,836				27,919,360				4,576,349
	Net income per share, basic				0.67				0.44				1.45				0.24
	Net income per share, diluted				0.67				0.44				1.45				0.24
	Weighted average shares outstanding — basic				29,975,971				29,975,971				19,310,833				19,310,833
	Weighted average shares outstanding — diluted				29,999,381				29,999,381				19,312,634				19,312,634

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											As of
			As of September 30, 2005								December 31, 2004
			Pro Forma				Historical				Historical
Balance Sheet information:
	Gross investment in real estate assets		$	328,342,475			$	266,106,299			$	151,690,293
	Net investment in real estate			323,877,215				261,641,039				150,211,823
	Construction in progress			78,435,280				78,484,104				24,318,098
	Cash and cash equivalents			36,896,094				100,826,702				97,543,677
	Loans receivable			86,895,611				52,895,611				50,224,069	(1)
	Total assets			463,898,155				431,592,587				306,506,063
	Total debt			80,366,667				40,366,667				56,000,000
	Total liabilities			111,633,245				72,133,245				73,777,619
	Total stockholders’ equity			350,127,410				357,321,842				231,728,444
	Total liabilities and stockholders’ equity			463,898,155				431,592,587				306,506,063

				For the Nine Months Ended								For the Year Ended
				September 30, 2005								December 31, 2004
				Pro Forma				Historical				Pro Forma				Historical
Other information:
	Funds from operations(2)			$	24,797,504			$	16,182,626			$	34,113,013			$	6,054,819
	Cash Flows:
		Provided by operating activities							16,094,005								9,918,898
		Used for investing activities							(107,692,381	)							(195,600,642	)
		Provided by financing activities							94,881,401								283,125,421

(1)	Includes $1.5 million in commitment fees payable to us by Vibra.
(2)	Funds from operations, or FFO, represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization (excluding amortization of loan origination costs) and after adjustments for unconsolidated partnerships and joint ventures. Management considers funds from operations a useful additional measure of performance for an equity REIT because it facilitates an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, we believe that funds from operations provides a meaningful supplemental indication of our performance. We compute funds from operations in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT, in its March 1995 White Paper (as amended in November 1999 and April 2002), which may differ from the methodology for calculating funds from operations utilized by other equity REITs and, accordingly, may not be comparable to such other REITs. FFO does not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions. Funds from operations should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as indicators of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.

	The following table presents a reconciliation of FFO to net income for the nine months ended September 30, 2005 and for the year ended December 31, 2004 on an actual and pro forma basis.

		For the Nine Months								For the Year Ended
		Ended September 30, 2005								December 31, 2004
		Pro Forma				Historical				Pro Forma				Historical
Funds from operations:
Net income		$	20,152,262			$	13,195,836			$	27,919,360			$	4,576,349
Depreciation and amortization			4,645,242				2,986,790				6,193,653				1,478,470
Funds from operations — FFO		$	24,797,504			$	16,182,626			$	34,113,013			$	6,054,819

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	•	the historical and prospective operating margins (measured by a tenant’s earnings before interest, taxes, depreciation, amortization and facility rent) of each tenant and at each facility;
	•	the ratio of our tenants’ operating earnings both to facility rent and to facility rent plus other fixed costs, including debt costs;
	•	trends in the source of our tenants’ revenue, including the relative mix of Medicare, Medicaid/ MediCal, managed care, commercial insurance, and private pay patients; and
	•	the effect of evolving healthcare regulations on our tenants’ profitability.

	•	trends in the cost and availability of capital, including market interest rates, that our prospective tenants may use for their real estate assets instead of financing their real estate assets through lease structures;
	•	unforeseen changes in healthcare regulations that may limit the opportunities for physicians to participate in the ownership of healthcare providers and healthcare real estate;
	•	reductions in reimbursements from Medicare, state healthcare programs, and commercial insurance providers that may reduce our tenants’ profitability and our lease rates, and;
	•	competition from other financing sources.

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		Original				Cost				Remaining
		Commitment				Incurred				Commitment
North Cypress community hospital		$	64.0			$	12.2			$	51.8
West Houston community hospital and medical office building			64.0				54.2				9.8
Bucks County women’s hospital and medical office building			38.0				11.4				26.6
Monroe County community hospital			35.5				0.2				35.3
Total		$	201.5			$	78.0			$	123.5

	Financing Activities

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	Investing Activities

	Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004

		2005								2004								Change
Base rents		$	5,320,454				64.8	%		$	2,874,033				57.0	%		$	2,446,421
Straight-line rents			1,007,062				12.3	%			1,142,186				22.7	%			(135,124	)
Percentage rents			643,757				7.9	%			—				—				643,757
Interest from loans			1,218,785				14.8	%			1,022,853				20.3	%			195,932
Fee income			14,883				0.2	%			—				—				14,883
Total revenue		$	8,204,941				100.0	%		$	5,039,072				100.0	%		$	3,165,869

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	Nine Months Ended September 30, 2005 Compared to the Nine Months Ended September 30, 2004

		2005								2004								Change
Base rents		$	12,936,876				59.0	%		$	2,874,033				57.0	%		$	10,062,843
Straight-line rents			3,784,801				17.3	%			1,142,186				22.7	%			2,642,615
Percentage rents			1,642,712				7.5	%			—				—				1,642,712
Interest from loans			3,463,894				15.8	%			1,022,853				20.3	%			2,441,041
Fee income			98,963				0.4	%			—				—				98,963
Total revenue		$	21,927,246				100.0	%		$	5,039,072				100.0	%		$	16,888,174

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		For the Three Months								For the Nine Months
		Ended September 30,								Ended September 30,
		2005				2004				2005				2004
Net income		$	5,256,091			$	2,628,938			$	13,195,836			$	1,065,322
Depreciation and amortization			1,170,387				928,356				2,986,790				928,356
Funds from operations — FFO		$	6,426,478			$	3,557,294			$	16,182,626			$	1,993,678

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		For the Three								For the Nine
		Months Ended								Months Ended
		September 30,								September 30,
		2005				2004				2005				2004
Net income		$	.14			$	.10			$	.44			$	.06
Depreciation and amortization			.03				.04				.10				.06
Funds from operations — FFO		$	.17			$	.14			$	.54			$	.12

Declaration Date		Record Date		Date of Distribution				Distribution per Share
August 18, 2005		September 15, 2005			September 29, 2005			$	.17
May 19, 2005		June 20, 2005			July 14, 2005			$	.16
March 4, 2005		March 16, 2005			April 15, 2005			$	.11
November 11, 2004		December 16, 2004			January 11, 2005			$	.11

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	•	First, in our experience, financial arrangements such as bond financing gave non-profit healthcare providers access to inexpensive capital, usually at 100% of the building cost. However, budget constraints on local governments and tighter underwriting standards have greatly reduced the availability of this very inexpensive capital.
	•	Second, in our experience, healthcare providers were reimbursed on cost-based reimbursement plans (calculated in part by reference to a provider’s total cost in plant and equipment) which provided no incentive for healthcare providers to make efficient use of their capital. With the evolution of the prospective payment reimbursement system, which reimburses healthcare providers for specific procedures or diagnoses and thus rewards the most efficient providers, healthcare providers are no longer assured of returns on investments in non-revenue producing assets such as the real estate where they operate. Accordingly, in recent years, healthcare providers have begun to convert their owned facilities to long-term lease arrangements thereby accessing substantial amounts of previously unproductive capital to invest in high margin operations and assets.

	•	Decentralization: We believe that healthcare services are increasingly delivered through smaller, more accessible facilities that are designed for specific treatments and medical conditions and that are located near physicians and their patients. Based upon our experience, more healthcare services are delivered in specialized facilities than in acute care hospitals.

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	•	Specialization: In our experience, the percentage of physicians and other healthcare professionals who practice in a recognized specialty or subspecialty has been increasing for many years. We believe that this creates opportunities for development of additional specialized healthcare facilities as advances in technologies and recognition of new practice specialties result in new treatments for difficult medical conditions.
	•	Convenient Patient Care: We believe that healthcare service providers are increasingly seeking to provide specific services in a single location for the convenience of both patients and physicians. These single-discipline centers are primarily located in suburban areas, near patients and physicians, as opposed to the traditional urban hospital setting.
	•	Aging Population: We believe that demographic trends in the United States, including in particular an aging population, will result in continued growth in the demand for healthcare services, which in turn will lead to an increasing need for a greater supply of modern healthcare facilities.
	•	Use of Capital: We believe that healthcare operators increasingly prefer to conserve their capital for investment in their operations and for new technologies rather than investing it in real estate.

	•	Rehabilitation Hospitals: Rehabilitation hospitals provide inpatient and outpatient rehabilitation services for patients recovering from multiple traumatic injuries, organ transplants, amputations, cardiovascular surgery, strokes, and complex neurological, orthopedic, and other conditions. In addition to Medicare certified rehabilitation beds, rehabilitation hospitals may also operate Medicare certified skilled nursing, psychiatric, long-term, or acute care beds. These hospitals are often the best medical alternative to traditional acute care hospitals where under the Medicare prospective payment system there is pressure to discharge patients after relatively short stays.
	•	Long-term Acute Care Hospitals: Long-term acute care hospitals focus on extended hospital care, generally at least 25 days, for the medically-complex patient. Long-term acute care hospitals have arisen from a need to provide care to patients in acute care settings, including daily physician observation and treatment, before they are able to move to a rehabilitation hospital or return home. These facilities are reimbursed in a manner more appropriate for a longer length of stay than is typical for an acute care hospital.
	•	Regional and Community Hospitals: We define regional and community hospitals as general medical/surgical hospitals whose practicing physicians generally serve a market specific area, whether urban, suburban or rural. We intend to limit our ownership of these facilities to those with market, ownership, competitive and technological characteristics that provide barriers to entry for potential competitors.
	•	Women’s and Children’s Hospitals: These hospitals serve the specialized areas of obstetrics and gynecology, other women’s healthcare needs, neonatology and pediatrics. We anticipate substantial development of facilities designed to meet the needs of women and children and their physicians as a result of the decentralization and specialization trends described above.
	•	Ambulatory Surgery Centers: Ambulatory surgery centers are freestanding facilities designed to allow patients to have outpatient surgery, spend a short time recovering at the center, then return home to complete their recoveries. Ambulatory surgery centers offer a lower cost alternative to general hospitals for many surgical procedures in an environment that is more convenient for both patients and physicians. Outpatient procedures commonly performed include those related to

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		gastrointestinal, general surgery, plastic surgery, ear, nose and throat/audiology, as well as orthopedics and sports medicine.
	•	Other Single-Discipline Facilities: The decentralization and specialization trends in the healthcare industry are also creating demands and opportunities for physicians to practice in hospital facilities in which the design, layout and medical equipment are specifically developed, and healthcare professional staff are educated, for medical specialties. These facilities include heart hospitals, ophthalmology centers, orthopedic hospitals and cancer centers.
	•	Medical Office Buildings: Medical office buildings are office and clinic facilities occupied and used by physicians and other healthcare providers in the provision of outpatient healthcare services to their patients. The medical office buildings that we target generally are or will be master-leased and adjacent to or integrated with our other targeted healthcare facilities.
	•	Skilled Nursing Facilities: Skilled nursing facilities are healthcare facilities that generally provide more comprehensive services than assisted living or residential care homes. They are primarily engaged in providing skilled nursing care for patients who require medical or nursing care or rehabilitation services. Typically these services involve managing complex and serious medical problems such as wound care, coma care or intravenous therapy. They offer both short and long-term care options for patients with serious illness and medical conditions. Skilled nursing facilities also provide rehabilitation services that are typically utilized on a short-term basis after hospitalization for injury or illness.

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	•	We were formed as a Maryland corporation on August 27, 2003 to succeed to the business of Medical Properties Trust, LLC, a Delaware limited liability company, which was formed by certain of our founders in December 2002. In connection with our formation, we issued our founders 1,630,435 shares of our common stock in exchange for nominal cash consideration, the membership interests of Medical Properties Trust, LLC were transferred to us and Medical Properties Trust, LLC became our wholly-owned subsidiary. Upon its formation in September 2003, our operating partnership assumed certain obligations of Medical Properties Trust, LLC. Upon completion of our private placement in April 2004, 1,108,527 shares of the 1,630,435 shares of common stock held by our founders were redeemed and they now collectively hold 1,047,088 shares of our common stock. Our founders agreed to the redemption of a portion of their shares of our common stock for nominal consideration primarily in order to facilitate the completion of our April 2004 private placement.
	•	Our operating partnership, MPT Operating Partnership, L.P., was formed in September 2003. Through our wholly-owned subsidiary, Medical Properties Trust, LLC, we are the sole general partner of our operating partnership. We currently own all of the limited partnership interests in our operating partnership.
	•	MPT Development Services, Inc., a Delaware corporation that we formed in January 2004, operates as our wholly-owned taxable REIT subsidiary.
	•	In April 2004 we completed a private placement of 25,300,000 shares of common stock at an offering price of $10.00 per share. Friedman, Billings, Ramsey & Co., Inc. acted as the initial

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		purchaser and sole placement agent. The total net proceeds to us, after deducting fees and expenses of the offering, were approximately $233.5 million.
	•	On July 13, 2005, we completed an initial public offering of 12,066,823 shares of common stock, priced at $10.50 per share. Of these shares of common stock, 701,823 shares were sold by selling stockholders and 11,365,000 shares were sold by us. Friedman, Billings, Ramsey & Co., Inc. served as the sole book-running manager and J.P. Morgan Securities Inc. served as co-lead manager for the offering. Wachovia Capital Markets, LLC and Stifel, Nicolaus & Company, Incorporated served as co-managers for the offering. The underwriters exercised an option to purchase an additional 1,810,023 shares of common stock to cover over-allotments on August 5, 2005. We raised net proceeds of approximately $125.7 million pursuant to the offering after deducting the underwriting discount and offering expenses.
	•	The net proceeds of our private placement and initial public offering, together with borrowed funds, have been or will be used to acquire our current portfolio of 17 facilities. Thus far, we have spent approximately $234.6 million for the 12 existing facilities that we acquired, and funded approximately $56.0 million of a projected total of $63.1 million of development costs for the West Houston Facilities, approximately $9.6 million of a projected total of $38.0 million of development costs for the Bucks County Facility, approximately $11.1 million of a projected total of $35.5 million of development costs for the Monroe Facility and approximately $18.7 million pursuant to the North Cypress construction loan. In addition, we have loaned approximately $47.6 million to Vibra to acquire the operations at the Vibra Facilities and for working capital purposes, $6.2 million of which has been repaid.

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	•	amend the partnership agreement in a manner that would:

	•	adversely affect the financial or other rights of the limited partners who are not affiliates of the general partner or positively affect the financial rights or other rights of the general partner or reduce the general partner’s obligations and responsibilities under the limited partnership agreement;
	•	impose on the limited partners who are not affiliates of the general partner any obligation to make additional capital contributions to the partnership;
	•	adversely affect the rights of certain limited partners without similarly affecting the rights of other limited partners;

	•	merge, consolidate or combine with another entity; or
	•	determine the terms and the amount of consideration payable for any issuances of additional partnership units to our operating partnership, the general partner or any of their respective affiliates.

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	•	we may have less knowledge than our competitors of certain markets in which we seek to purchase or develop facilities;
	•	many of our competitors have greater financial and operational resources than we have; and
	•	our competitors or other entities may determine to pursue a strategy similar to ours.

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																							Gross
Operating Facilities															2005				2006				Purchase
											2004				Contractual				Contractual				Price or
							Number of				Annualized				Base				Base				Development				Lease
Location			Type		Tenant		Beds(1)				Base Rent				Rent(2)				Rent(2)				Cost(3)				Expiration
Houston, Texas			Community hospital		Stealth, L.P.			105	(4)		$	—			$	—	(5)		$	4,749,005	(5)		$	43,099,310	(6)			November 2020(7)
Bowling Green, Kentucky			Rehabilitation hospital		Vibra Healthcare, LLC(8)			60				3,916,695				4,294,990				4,790,113				38,211,658				July 2019
Marlton, New Jersey(9)			Rehabilitation (10) hospital		Vibra Healthcare, LLC(8)			76				3,401,791				3,730,354				4,160,390				32,267,622				July 2019
Victorville, California(11)			Community hospital/medical office building		Desert Valley Hospital, Inc.			83				—				2,341,005				2,856,000				28,000,000				February 2020
New Bedford,
	Massachusetts		Long-term acute care hospital		Vibra Healthcare, LLC(8)			90				2,262,979				2,426,320				2,767,624				22,077,847				August 2019
Chino, California			Community hospital		Veritas Health Services, Inc.			126				—				180,753				2,103,682				21,000,000				November 2020
Houston, Texas			Medical office building		Stealth, L.P.			n/a				—				503,130	(5)			2,049,415	(5)			20,855,119	(6)			October 2015 (7)
Redding, California(12)			Rehabilitation hospital		Vibra Healthcare, LLC(8)			88				—				950,250	(13)			1,913,949	(13)			20,750,000				June 2020
Sherman Oaks, California			Community hospital		Prime Healthcare Services II, LLC			153				—				—				2,100,000				20,000,000				December 2020
Fresno, California			Rehabilitation hospital		Vibra Healthcare, LLC(8)			62				1,914,829				2,099,773				2,341,835				18,681,255				July 2019
Covington, Louisiana			Long-term acute care hospital		Gulf States Long-Term Acute Care of Covington, L.L.C.			58				—				674,188				1,207,500				11,500,000				June 2020
Thornton, Colorado			Rehabilitation		Vibra
			hospital		Healthcare,
					LLC(8)			117				870,377				933,200				1,064,471				8,491,481				August 2019
Kentfield, California			Long-term		Vibra
			acute care		Healthcare,
			hospital		LLC(8)			60				783,339				858,998				958,024				7,642,332				July 2019

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																						Gross
Operating Facilities														2005				2006				Purchase
										2004				Contractual				Contractual				Price or
						Number of				Annualized				Base				Base				Development				Lease
Location		Type		Tenant		Beds(1)				Base Rent				Rent(2)				Rent(2)				Cost(3)				Expiration
Denham Springs, Louisiana		Long-term acute care hospital		Gulf States Long Term Acute Care of Denham Springs, L.L.C.			59				—				150,000				645,750				6,000,000				October 2020
		—		—			1,137			$	13,150,010			$	19,097,961			$	33,707,758			$	298,576,624				—
Total

	(1)	Based on the number of licensed beds.
	(2)	Based on leases in place as of the date of this prospectus.
	(3)	Includes acquisition costs.
	(4)	Seventy-one of the 105 beds will be acute care beds operated by Stealth, L.P. and the remaining 34 beds will be long-term acute care beds operated by Triumph Southwest, L.P.
	(5)	Based on leases in place as of the date of this prospectus and estimated total development costs. Does not include rents that accrued during the construction period and are payable over the remaining lease term following the completion of construction.
	(6)	Estimated total development costs.
	(7)	At any time during the term of the lease, the tenant has the right to terminate the lease and purchase the facility from us at a purchase price equal to the greater of (i) that amount determined under a formula which would provide us an internal rate of return of at least 18% or (ii) appraised value assuming the lease is still in place.
	(8)	The tenant in each case is a separate, wholly-owned subsidiary of Vibra Healthcare, LLC.
	(9)	Our interest in this facility is held through a ground lease on the property. The purchase price shown for this facility does not include our payment obligations under the ground lease, the present value of which we have calculated to be $920,579. The calculation of the base rent to be received from Vibra for this facility takes into account the present value of the ground lease payments.

(10)	Thirty of the 76 beds are pediatric rehabilitation beds operated by HBA Management, Inc.
(11)	At any time after February 28, 2007, the tenant has the option to purchase the facility at a purchase price equal to the sum of (i) the purchase price of the facility, and (ii) that amount determined under a formula that would provide us an internal rate of return of 10% per year, increased by 2% of such percentage each year, taking into account all payments of base rent received by us.
(12)	Our interest in this facility is held in part through a ground lease on the property. During the term of the ground lease, the tenant will pay the ground lease rent directly to the ground lessor or, at our request, directly to us.
(13)	Of the $20,750,000 million purchase price for this facility, payment of $2.0 million is being deferred pending completion, to our satisfaction, of a conversion of certain beds at the facility to long-term acute care beds and an additional $750,000 of the purchase price is being deferred and will be paid out of a special reserve account to cover the cost of renovations. The 2005 contractual base rent and the 2006 contractual base rent are calculated based on a purchase price of $18.0 million.

										2004
						Number of				Annualized
Location		Type		Tenant		Beds(1)				Base Rent
Houston, Texas		Community hospital		North Cypress Medical Center Operating Company, Ltd.			64			$	—
Bensalem, Pennsylvania		Women’s hospital/medical office building (5)		Bucks County Oncoplastic Institute, LLC			30				—
Bloomington, Indiana		Community hospital(8)		Monroe Hospital, LLC			32				—	(9)
Total		—		—			126			$	—

[Additional columns below]

[Continued from above table, first column(s) repeated]

		2005				2006				Projected
		Contractual				Contractual				Development				Lease
Location		Base Rent				Base Rent				Cost(2)				Expiration
Houston, Texas		$	—	(3)		$	—	(3)		$	64,028,000				—	(4)
Bensalem, Pennsylvania			—	(6)			1,627,820	(6)			38,000,000				August 2021(7)
Bloomington, Indiana			—	(9)			954,063				35,500,000				October 2021(10)
Total		$	—			$	2,581,883			$	137,528,000				—

(1)	Based on the number of proposed beds.
(2)	Includes acquisition costs.
(3)	During construction of the North Cypress Facility, interest will accrue on the construction loan at a rate of 10.5%. The interest accruing during the construction period will be added to the principal balance of the construction loan. In addition, during the term of the ground sublease, North Cypress will pay us monthly ground sublease rent in an annual amount equal to our ground lease rent plus 10.5% of funds advanced by us under the construction loan.
(4)	Expected to be completed in December 2006. If we purchase this facility upon completion of construction, we will lease it back to North Cypress for an initial term of 15 years.
(5)	Expected to be completed in October 2006.
(6)	Based on the lease in place as of the date of this prospectus, estimated total development costs and estimated date of completion. Assumes completion of construction in October 2006.
(7)	Following completion, the lease term will extend for a period of 15 years.

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(8)	Expected to be completed in October 2006.
(9)	Based on the lease in place as of the date of this prospectus, estimated total development costs and estimated date of completion. Assumes completion of construction in October 2006.

(10)	Following completion, the lease term will extend for a period of 15 years.

	Vibra Facilities and Loans

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										Depreciation
		Federal Tax Basis																				2004 Real Estate
										Annual
		Land				Buildings				Rate				Method				Life in Years				Taxes				Rate
Bowling Green, KY		$	3,070,000			$	35,141,658				2.5	%			Straight-line				40			$	24,750				0.07	%
Thornton, CO			2,130,000				6,361,481				2.5	%			Straight-line				40				186,188				2.18	%
Fresno, CA			1,550,000				17,131,255				2.5	%			Straight-line				40				102,359				0.61	%
Kentfield, CA			2,520,000				5,122,332				2.5	%			Straight-line				40				91,201				1.28	%
Marlton, NJ			—				32,267,622				2.5	%			Straight-line				40				321,903				1.00	%
New Bedford, NJ			1,400,000				20,677,847				2.5	%			Straight-line				40				251,476				1.14	%

	Bowling Green, Kentucky

	Marlton, New Jersey

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	Fresno, California

	Thornton, Colorado

	New Bedford, Massachusetts

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	Kentfield, California

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		Estimated																				Estimated
		Federal Tax Basis								Depreciation												2005 Real Estate
		Land				Buildings				Annual Rate				Method				Life in Years				Taxes				Rate
West Houston Hospital		$	8,400,000			$	34,200,000				2.5	%			Straight-line				40			$	1,324,860				3.11	%
West Houston MOB			1,800,000				18,700,000				2.5				Straight-line				40				637,550				3.11

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		Federal Tax Basis								Depreciation												2004 Real Estate
																		Life
		Land				Buildings				Annual Rate				Method				in Years				Taxes				Rate
Chino, California		$	2,220,000			$	18,780,000				2.5	%			Straight-line				40			$	103,927				1.05	%

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		Federal Tax Basis								Depreciation												2004 Real Estate
																		Life
		Land				Buildings				Annual Rate				Method				in Years				Taxes				Rate
Redding, California		$	—			$	20,750,000				2.5	%			Straight-line				40			$	49,681				1.1	%

	Sherman Oaks Facility

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		Federal Tax Basis								Depreciation												2005 Real Estate
																		Life
		Land				Buildings				Annual Rate				Method				in Years				Taxes				Rate
Sherman Oaks, California		$	1,785,714			$	18,214,286				2.5	%			Straight-line				40			$	210,200				1.05	%

	Desert Valley Facility

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		Federal Tax Basis								Depreciation												2004 Real Estate
																		Life
		Land				Buildings				Annual Rate				Method				in Years				Taxes				Rate
Victorville, California		$	2,000,000			$	26,000,000				2.5	%			Straight-line				40			$	289,905				1.07	%

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		Federal Tax Basis								Depreciation												2004 Real Estate
																		Life
		Land				Buildings				Annual Rate				Method				in Years				Taxes				Rate
Covington, Louisiana		$	821,429			$	10,678,571				2.5	%			Straight-line				40			$	36,625				0.32	%

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		Federal Tax Basis								Depreciation												2004 Real Estate
																		Life
		Land				Buildings				Annual Rate				Method				in Years				Taxes				Rate
Denham Springs, Louisiana		$	428,571			$	5,571,429				2.5	%			Straight-line				40			$	24,720				0.41	%

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	Bensalem, Pennsylvania

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	Our Pending Acquisition

	Operating Facility

Year One

Number of

Contractual

Loan

Lease

Location

Type

Tenant

Beds(1)

Interest

Amount

Expiration

Hammond, Louisiana*(2)

Long-term acute care hospital

Hammond Rehabilitation Hospital, LLC

40

$

840,000

(3)

$

8,000,000

June 2021

	*	Under letter of commitment.

(1)	Based on the number of licensed beds.
(2)	On April 1, 2005, we entered into a letter of commitment with Hammond Healthcare Properties, LLC, or Hammond Properties, and Hammond Rehabilitation Hospital, LLC, or Hammond Hospital, pursuant to which we have agreed to lend Hammond Properties $8.0 million and have agreed to a put-call option pursuant to which, during the 90 day period commencing on the first anniversary of the date of the loan closing, we expect to purchase from Hammond Properties a long-term acute care hospital located in Hammond, Louisiana for a purchase price between $10.3 million and $11.0 million. If we purchase the facility, we will lease it back to Hammond Hospital for an initial term of 15 years. The lease would be a net lease and would provide for contractual base rent and, beginning January 1, 2007, an annual rent escalator.
(3)	Based on one year contractual interest at the rate of 10.5% per year on the $8.0 million mortgage loan to Hammond Properties. We expect to exercise our option to purchase the Hammond Facility in 2006. For the one year period following our purchase of the facility, contractual base rent would equal $1,079,925, based on 10.5% of an estimated purchase price of $10,285,000.

	Hammond, Louisiana

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	Diversified Specialty Institutes, Inc. Acquisition and Development Funding

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	Additional Arrangements

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Name		Age				Position
Edward K. Aldag, Jr.			41			Chairman of the Board, President and Chief Executive Officer
R. Steven Hamner			48			Director, Executive Vice President and Chief Financial Officer
William G. McKenzie			47			Vice Chairman of the Board
Emmett E. McLean			50			Executive Vice President, Chief Operating Officer, Treasurer and Assistant Secretary
Michael G. Stewart			50			Executive Vice President, General Counsel and Secretary
Virginia A. Clarke			46			Director
G. Steven Dawson			47			Director
Bryan L. Goolsby			54			Director
Robert E. Holmes, Ph.D.			63			Director*
L. Glenn Orr, Jr.			65			Director

*		Mr. Holmes has been designated as our lead independent director.

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	•	has sole authority to appoint or replace our independent auditors;
	•	has sole authority to approve in advance all audit and non-audit services by our independent auditors;
	•	monitors compliance of our employees with our standards of business conduct and conflict of interest policies; and
	•	meets at least quarterly with our senior executive officers, internal audit staff and our independent auditors in separate executive sessions.

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	•	evaluate the performance of our executive officers;
	•	review and approve the compensation for our executive officers;
	•	review and make recommendation to the board with respect to our incentive compensation plans and equity-based plans; and
	•	administer our equity incentive plan.

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															Other Annual				All Other
Name and Position			Year				Salary				Bonus				Compensation				Compensation
Edward K. Aldag, Jr.				2004			$	350,000			$	350,000			$	50,462	(1)		$	30,769	(2)
	Chairman, Chief Executive			2003				145,833	(3)			145,833				10,492	(4)			9,249	(5)
	Officer and President
Emmett E. McLean				2004			$	250,000			$	250,000			$	24,385	(6)		$	15,385	(2)
	Executive Vice President,			2003				104,167	(3)			104,167				—				10,896	(7)
	Chief Operating Officer, Treasurer and Assistant Secretary
R. Steven Hamner				2004			$	250,000			$	250,000			$	24,385	(6)		$	15,385	(2)
	Executive Vice President			2003				104,167	(3)			104,167				—				5,918	(8)
	and Chief Financial Officer
William G. McKenzie				2004			$	175,000			$	175,000			$	—			$	—
	Vice Chairman of the Board			2003				72,917	(3)			72,917				—				—
Michael G. Stewart				2004			$	43,527	(9)		$	42,188			$	1,700	(10)
	Executive Vice President,			2003				—				—				—				—
	Secretary and General Counsel

(1)	Represents a $12,000 automobile allowance and $25,000 payable to Mr. Aldag to reimburse him for the cost of tax preparation and financial planning services and $13,462 to reimburse Mr. Aldag for his tax liabilities associated with such payment.
(2)	Represents reimbursement for life insurance premiums of $20,000 for Mr. Aldag and $10,000 for each of Messrs. McLean and Hamner and reimbursement of $10,769 for Mr. Aldag and $5,385 for each of Messrs. McLean and Hamner for tax liabilities associated with such premium reimbursements, but does not include any matching contributions under the 401(k) plan that we adopted in 2005.
(3)	For the partial year period from our inception in August 2003 until December 31, 2003.
(4)	Represents a $7,000 automobile allowance and $3,492 payable to Mr. Aldag to reimburse him for the cost of tax preparation and financial planning services.
(5)	Represents reimbursement for life insurance premiums of $9,249.
(6)	Represents a $9,000 automobile allowance and $10,000 for the named executive officers to reimburse them for the cost of tax preparation services and $5,385 for the named executive officers to reimburse them for their tax liabilities associated with such tax preparation cost reimbursement.
(7)	Represents reimbursement for life insurance premiums of $10,896.
(8)	Represents reimbursement for life insurance premiums of $5,918.
(9)	For the partial year period from October 25, 2004, Mr. Stewart’s date of hire, to December 31, 2004. Had Mr. Stewart been employed for the full year 2004, he would have been entitled to a base salary of $225,000 during 2004. Mr. Stewart’s employment agreement was amended effective April 28, 2005. The amended employment agreement provides for an annual base salary of $250,000.

(10)	Represents automobile allowance.

	•	conviction of, or the entry of a plea of guilty or nolo contendere to, a felony (excluding any felony relating to the negligent operation of a motor vehicle or a conviction or plea of guilty or nolo contendere arising under a statutory provision imposing per se criminal liability due to the position

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		held by the executive with us, provided the act or omission of the executive or officer with respect to such matter was not taken or omitted to be taken in contravention of any applicable policy or directive of the board of directors);
	•	a willful breach of the executive’s duty of loyalty which is materially detrimental to us;
	•	a willful failure to perform or adhere to explicitly stated duties that are consistent with the executive’s employment agreement, or the reasonable and customary guidelines of employment or reasonable and customary corporate governance guidelines or policies, including, without limitation, the business code of ethics adopted by the board of directors, or the failure to follow the lawful directives of the board of directors provided such directives are consistent with the terms of the executive’s employment agreement, which continues for a period of 30 days after written notice to the executive; and
	•	gross negligence or willful misconduct in the performance of the executive’s duties.

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	•	if a person, entity or affiliated group (with certain exceptions) acquires more than 50% of our then-outstanding voting securities;
	•	if we merge into or complete a share exchange, consolidation or other business combination transaction with another entity unless the holders of our voting stock immediately prior to the merger have at least 50% of the combined voting power of the securities in the merged entity or its parent; or
	•	upon the liquidation, dissolution, sale or disposition of all or substantially all of our assets such that after that transaction the holders of our voting stock immediately prior to the transaction own less than 50% of the voting securities of the acquiror or its parent.

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	Annual Incentive Bonus Policy

	401(k) Plan

	Equity Incentive Plan

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		High Sales				Low Sales
		Price				Price
July 8, 2005 to September 30, 2005		$	11.20			$	9.62
October 1, 2005 to December 28, 2005		$	10.09			$	7.60

		High Sales				Low Sales
		Price				Price
April 6, 2004 to June 30, 2004		$	10.50			$	10.00
July 1, 2004 to September 30, 2004			10.00				10.00
October 1, 2004 to December 31, 2004			10.25				10.00
January 1, 2005 to March 31, 2005			10.25				10.00
April 1, 2005 to May 25, 2005			10.25				10.00

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							Percentage of
			Number of Shares				All Shares of
Name of Beneficial Owner			Beneficially Owned				Common Stock(1)
Edward K. Aldag, Jr				499,022	(2)			1.25	%
R. Steven Hamner				199,022	(3)			*
William G. McKenzie				150,022	(4)			*
Emmett E. McLean				199,022	(5)			*
Michael G. Stewart				50,000	(6)			*
Virginia A. Clarke				24,166	(7)			*
G. Steven Dawson				50,833	(8)			*
Bryan L. Goolsby				24,166	(7)			*
Robert E. Holmes, Ph.D.				31,833	(8)			*
L. Glenn Orr, Jr.				24,166	(7)			*
	All executive officers and directors as a group (10 persons)			1,300,752	(9)			3.25	%
Jeffrey L. Feinberg				2,399,300	(10)			6.00	%
c/o JLF Asset Management, L.L.C.
2775 Via de la Valle, Suite 204
Del Mar, CA 92014

	*	Represents less than 1% of the number of shares of common stock outstanding.

(1)	Based on 39,969,065 shares of common stock outstanding as of November 30, 2005. Shares of common stock that are deemed to be beneficially owned by a stockholder within 60 days after November 30, 2005 are deemed outstanding for purposes of computing such stockholder’s percentage ownership but are not deemed outstanding for the purpose of computing the percentage ownership of any other stockholder.
(2)	Includes 217,805 shares of restricted common stock.
(3)	Includes 125,218 shares of restricted common stock.
(4)	Includes 52,342 shares of restricted common stock.
(5)	Includes 93,815 shares of restricted common stock.
(6)	Includes 50,000 shares of restricted common stock.
(7)	Includes 6,666 shares of common stock issuable upon exercise of a vested stock option and 17,500 shares of restricted common stock.
(8)	Includes 13,333 shares of common stock issuable upon exercise of a vested stock option and 17,500 shares of restricted common stock.
(9)	See notes (1)-(8) above.

(10)

Based on a Schedule 13G filed on July 25, 2005. Includes shares of common stock held by Jeffrey L. Feinberg, individually, JLF Partners I., L.P., JLF Partners II, L.P. and JLF Offshore Fund, Ltd. to which JLF Asset Management, L.L.C. serves as the management company and/or investment manager. Jeffrey L. Feinberg is the managing member of JLF Asset Management, L.L.C. Jeffrey L. Feinberg and JLF Asset Management, L.L.C. share investment and voting power over these shares of common stock.

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Maximum

Beneficial Ownership

Number of

Percentage of

After Resale of Shares

Number of

Shares of

All Shares of

of Common Stock(1)

Shares of

Common Stock

Common Stock

Common Stock

Offered by This

Beneficially

Number of

Beneficially

Prospectus for

Owned Before

Shares of

Selling Stockholder

Owned

Resale

Resale(2)

Common Stock

Percentage

Unaffiliated(3)

3M(4)

265,225

265,225

*

0

*

Aetna Services, Inc. Small Cap Equity (5)

25,800

25,800

*

0

*

AG Arb Partners, L.P.(6)(7)

88,000

88,000

*

0

*

AG CNG Fund, L.P.(6)(7)

45,000

45,000

*

0

*

AG Funds, L.P.(6)(7)

50,000

50,000

*

0

*

AG MM, L.P.(6)(7)

28,000

28,000

*

0

*

AG Princess, L.P.(6)(7)

22,000

22,000

*

0

*

AG Super Fund, L.P.(6)(7)

275,000

275,000

*

0

*

Allan Rothstein

5,000

5,000

*

0

*

Atlas Capital(8)

150,000

150,000

*

0

*

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						Maximum								Beneficial Ownership
						Number of				Percentage of				After Resale of Shares
		Number of				Shares of				All Shares of				of Common Stock(1)
		Shares of				Common Stock				Common Stock
		Common Stock				Offered by This				Beneficially				Number of
		Beneficially				Prospectus for				Owned Before				Shares of
Selling Stockholder		Owned				Resale				Resale(2)				Common Stock				Percentage
Anita U. Schorsch(6)			1,000				1,000				*				0				*
Alpha US Sub Fund I, LLC(10)			8,254				8,254				*				0				*
Anthony Bruno and Kathleen Bruno JTWROS			1,000				1,000				*				0				*
Anthony V. Bruno and Christina S. Bruno JTWROS			1,000				1,000				*				0				*
Arkansas Teachers Retirement System (5)			45,000				45,000				*				0				*
Augustus V.L. Brokaw III TTEE Augustus V.L. Brokaw III Revocable Trust Dated 10/14/1993(13)			1,300				1,300				*				0				*
Australian Retirement Fund — Global Small Companies Portfolio(9)			42,300				42,300				*				0				*
Axia Offshore Partners, Ltd.(10)			31,874				31,874				*				0				*
Axia Partners, L.P.(10)			16,460				16,460				*				0				*
Axia Partners Qualified, L.P.(10)			66,412				66,412				*				0				*
Bel Air Opportunistic Fund, L.P.(11)			40,000				40,000				*				0				*
Bert Fingerhut Roth IRA(12)			5,000				5,000				*				0				*
Bill Ham(13)			20,000				20,000				*				0				*
Bill Ham — IRA Rollover(13)			8,000				8,000				*				0				*
Black Foundation(13)			1,800				1,800				*				0				*
Bonnie Paley Minzer Revocable Trust (14)			1,000				1,000				*				0				*
Brian C. Porter(15)			334				334				*				0				*
Brunswick Master Trust(4)			33,150				33,150				*				0				*
Burke F. Hayes(15)			334				334				*				0				*
Caroline Hicks Roth IRA(16)			2,500				2,500				*				0				*
Carrhae & Co.(19)			36,250				36,250				*				0				*
Case Western Reserve University(9)			16,200				16,200				*				0				*
Central States Southeast & Southwest Areas Pension Fund(19)			57,250				57,250				*				0				*
Charles Affron and Mirella Affron JTWROS			1,000				1,000				*				0				*
Charles F. Wedel			2,000				2,000				*				0				*
Clearpond & Co.(18)			525,500				525,500				1.3	%			0				*
Connection Machine Services, Inc.(11)			4,000				4,000				*				0				*
Continental Casualty Company(6)(20)			100,000				100,000				*				0				*
Cotran Investments, Ltd.(21)			50,000				50,000				*				0				*
Cynthia Rothstein			5,000				5,000				*				0				*
Daniel W. Huthwaite & Constance R. Huthwaite			2,250				2,250				*				0				*
David M. Golush			4,600				4,600				*				0				*
David A. Todd(13)			5,200				5,200				*				0				*

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						Maximum								Beneficial Ownership
						Number of				Percentage of				After Resale of Shares
		Number of				Shares of				All Shares of				of Common Stock(1)
		Shares of				Common Stock				Common Stock
		Common Stock				Offered by This				Beneficially				Number of
		Beneficially				Prospectus for				Owned Before				Shares of
Selling Stockholder		Owned				Resale				Resale(2)				Common Stock				Percentage
Delaware Dividend Income Fund, a Series of Delaware Group Equity Funds(6)(17)			19,700				19,700				*				0				*
Delaware Investments Dividend and Income Fund, Inc.(6)(17)			35,000				35,000				*				0				*
Delaware Investments Global Dividend and Income Fund, Inc.(6)(17)			9,400				9,400				*				0				*
Dennis M. Langley			50,000				50,000				*				0				*
DNB NOR Globalspar (I)(22)			172,105				172,105				*				0				*
DNB NOR Globalspar (II)(22)			481,895				481,895				1.2	%			0				*
Donald P. and Jean M. McDougall			2,250				2,250				*				0				*
Dorothy S. Rasplicka			2,450				2,450				*				0				*
Douglas Woloshin			2,000				2,000				*				0				*
Emergency Services Superannuation Board — Global Smaller Companies Portfolio(9)			29,300				29,300				*				0				*
Emerson Electric(4)			45,500				45,500				*				0				*
Emily L. Todd(13)			6,500				6,500				*				0				*
Endeavor Capital Offshore Fund, Ltd. (18)			180,700				180,700				*				0				*
Endeavor Capital Partners, L.P.(18)			60,700				60,700				*				0				*
Endeavor Capital Partners II, L.P. (18)			12,300				12,300				*				0				*
Eric J. Gaaserud(15)			334				334				*				0				*
Evan L. Julber			14,900				14,900				*				0				*
Evelyn Berry Spousal Rollover IRA(19)			1,525				1,525				*				0				*
First Financial Fund, Inc.(9)			419,500				419,500				1.0	%			0				*
Francesca V. Ozdoba Pension & Profit Sharing Plan(23)			1,000				1,000				*				0				*
Francis and Cynthia O’Connor(15)			7,214				7,214				*				0				*
Fred G. Neuwirth			2,500				2,500				*				0				*
Friedman, Billings, Ramsey & Co., Inc.(24)			52,388				52,388				*				0				*
FBR Ashton Income Fund, LLC(25)			50,000				50,000				*				0				*
FBR Ashton Limited Partnership(25)			500,000				500,000				1.25	%			0				*
FBR Ashton Special Situations Fund, L.P.(25)			445,000				445,000				1.11	%			0				*
Friedman Billings Ramsey Group, Inc. (25)			1,795,571				1,795,571				4.5	%			0				*
Frorer Partners, L.P.(26)			25,000				25,000				*				0				*
GLG North American Opportunity Fund (27)			300,000				300,000				*				0				*
GLG Partners (Financials Fund)(28)			290,000				220,000				*				70,000				*
GMI Investment Trust(4)			47,075				47,075				*				0				*

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						Maximum								Beneficial Ownership
						Number of				Percentage of				After Resale of Shares
		Number of				Shares of				All Shares of				of Common Stock(1)
		Shares of				Common Stock				Common Stock
		Common Stock				Offered by This				Beneficially				Number of
		Beneficially				Prospectus for				Owned Before				Shares of
Selling Stockholder		Owned				Resale				Resale(2)				Common Stock				Percentage
Goldman Sachs Asset Management Foundation(19)			3,175				3,175				*				0				*
Goldman Sachs Asset Management, L.P. (9)			112,000				112,000				*				0				*
Goldman Sachs JB Were Investment Management Pty., Ltd.(9)			3,000				3,000				*				0				*
Greenlight Capital, L.P.(29)			165,600				165,600				*				0				*
Greenlight Capital Offshore, Ltd.(29)			598,000				598,000				1.5	%			0				*
Greenlight Capital Qualified, L.P. (29)			469,600				469,600				1.2	%			0				*
Greenlight Reinsurance, Ltd.(29)			185,000				185,000				*				0				*
Guggenheim Portfolio Company III, LLC (6)(18)			33,100				33,100				*				0				*
Henry Ripp IRA(30)			2,000				2,000				*				0				*
Hillel & Elaine Weinberger			10,000				10,000				*				0				*
Indiana State Teachers Retirement Fund (5)			41,900				41,900				*				0				*
Iprofile — US Equity Pool(5)			1,500				1,500				*				0				*
Institutional Benchmarks Master Fund, Ltd.(31)			3,562				3,562				*				0				*
Invesco Perpetual Asset Management (32)			220,000				220,000				*				0				*
Investors of America, L.P.(33)			301,400				301,400				*				0				*
J&S Black F.L.P.(13)			5,900				5,900				*				0				*
J. Rock Tonkel, Jr.(15)			1,666				1,666				*				0				*
JB Were Global Small Companies Fund (9)			203,500				203,500				*				0				*
Jack Sear Revocable Trust(34)			1,000				1,000				*				0				*
Jack Barish			5,000				5,000				*				0				*
James V. Kimsey			10,000				10,000				*				0				*
James Locke and Susan Locke Tenants by their Entirety			8,000				8,000				*				0				*
James C. Neuhauser(15)			1,666				1,666								0				*
Jay Rasplicka			5,450				5,450				*				0				*
Jean C. Brokaw Revocable Trust Dated 10/14/1993(13)			1,300				1,300				*				0				*
Jed Hart			2,500				2,500				*				0				*
Jeffrey & Stacey Feinberg(35)			354,000				354,000				*				0				*
Jeffrey C. Kahn			500				500				*				0				*
Jeffry L. Lacy(13)			1,800				1,800				*				0				*
Jody Irwin, Separate Property(13)			2,600				2,600				*				0				*
JLF Partners I, L.P.(35)			697,901				697,901				1.7	%			0				*
JLF Partners II, L.P.(35)			45,279				45,279				*				0				*
JLF Offshore Deferred Account(35)			300,000				300,000				*				0				*
JLF Offshore Fund, Ltd.(35)			1,002,120				1,002,120				2.5	%			0

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						Maximum								Beneficial Ownership
						Number of				Percentage of				After Resale of Shares
		Number of				Shares of				All Shares of				of Common Stock(1)
		Shares of				Common Stock				Common Stock
		Common Stock				Offered by This				Beneficially				Number of
		Beneficially				Prospectus for				Owned Before				Shares of
Selling Stockholder		Owned				Resale				Resale(2)				Common Stock				Percentage
John A. Hartford Foundation Inc.(19)			11,250				11,250				*				0				*
John A. Johnston & Robin L. Johnston			1,000				1,000				*				0				*
AG Sav & Inv Plan FBO Jed A. Hart(7)			2,500				2,500				*				0				*
John Black, IRA Rollover(13)			3,800				3,800				*				0				*
John William Edgemond			3,000				3,000				*				0				*
John F. Syburg			1,000				1,000				*				0				*
Judith S. Roth			5,000				5,000				*				0				*
John M. Weaver			3,000				3,000				*				0				*
Julian E. Gillespie and Heather A. Gillespie(15)			4,000				4,000				*				0				*
Kayne Anderson REIT Fund, L.P.(6)(36)			125,000				125,000				*				0				*
Kristin Junkin IRA(37)			1,500				1,500				*				0				*
Lawrence Chimerine			400				400				*				0				*
LG&E Energy Corp.(5)			12,300				12,300				*				0				*
Liebro Partners LLC(38)			3,000				3,000				*				0				*
Louis Scowcroft Peery Charitable Foundation(13)			1,800				1,800				*				0				*
Loyola University Endowment(4)			11,870				11,870				*				0				*
Loyola University Retirement(4)			11,750				11,750				*				0				*
Lucie Wray Todd(13)			10,000				10,000				*				0				*
Lupa Family Partners, L.P.(39)			38,910				38,910				*				0				*
Lyxor/ Third Point Fund Limited(40)			109,128				109,128				*				0				*
M&M Arbitrage LLC(31)			19,973				19,973				*				0				*
M&M Arbitrage Fund II, LLC(31)			21,520				21,520				*				0				*
M&M Arbitrage Offshore Ltd.(31)			53,122				53,122				*				0				*
Magnolia Charitable Trust, Emily L. Todd and David A. Todd, TTEEs(13)			4,300				4,300				*				0				*
Marcy A. Newberger Revocable Trust (41)			2,250				2,250				*				0				*
Mary L.G. Theroux, Trustee Mary L.G. Theroux Charitable Remainder Unitrust 5-14-96(13)			6,200				6,200				*				0				*
Mary L.G. Theroux, TTEE of the Mary L.G. Theroux Revocable Living Trust U/A 9/30/68(13)			4,800				4,800				*				0				*
Maritime Life Discovery Fund(9)			40,600				40,600				*				0				*
Mark Bruno and Martha Bruno JTWROS			1,000				1,000				*				0				*
Mark J. Roach			1,000				1,000				*				0				*
Martin Hirschhorn			10,000				10,000				*				0				*
Massachusetts Pension Reserves Investment Management Board REIT Portfolio(9)			103,900				103,900				*				0				*

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						Maximum								Beneficial Ownership
						Number of				Percentage of				After Resale of Shares
		Number of				Shares of				All Shares of				of Common Stock(1)
		Shares of				Common Stock				Common Stock
		Common Stock				Offered by This				Beneficially				Number of
		Beneficially				Prospectus for				Owned Before				Shares of
Selling Stockholder		Owned				Resale				Resale(2)				Common Stock				Percentage
Mavian, LLC(19)			575				575				*				0				*
Mercury Real Estate Advisors LLC(42)			34,000				34,000				*				0				*
Miami University Endowment(19)			1,675				1,675				*				0				*
Miami University Foundation(19)			2,000				2,000				*				0				*
Michael A. Claggett, IRA Rollover(13)			1,000				1,000				*				0				*
Michael C. Bruno			5,000				5,000				*				0				*
Millennium Partners, L.P.(6)(43)			2,200,000				1,500,000				5.5	%			700,000				1.8	%
Murray Gorin			5,000				5,000				*				0				*
Munder Micro-Cap Equity Fund(6)(44)			190,600				190,600				*				0				*
Munder Real Estate Equity Investment Fund(6)(44)			104,400				104,400				*				0				*
Mutual of America Institutional Funds, Inc. All American Fund(6)(45)			3,940				3,940				*				0				*
Mutual of America Institutional Funds, Inc. Aggressive Equity Fund(6)(45)			5,740				5,740				*				0				*
Mutual of America Investment Corporation All American Fund(6)(45)			34,720				34,720				*				0				*
Mutual of America Investment Corporation Aggressive Equity Fund (6)(45)			130,600				130,600				*				0				*
NCR Pension Trust-REIT Concentrated Sector Portfolio(9)			45,400				45,400				*				0				*
Neese Family Equity Investments Ltd. (19)			2,250				2,250				*				0				*
Nutmeg Partners, L.P.(6)(7)			60,000				60,000				*				0				*
Optimix Investment Management Limited (9)			17,000				17,000				*				0				*
Pacific Credit Corp.(11)			8,000				8,000				*				0				*
Pennant Offshore Partners Ltd.(46)			374,850				374,850				*				0				*
Pennant Onshore Partners, L.P.(46)			80,080				80,080				*				0				*
Pennant Onshore Qualified, L.P.(46)			245,070				245,070				*				0				*
Peter A. Gallagher			2,250				2,250				*				0				*
Peter A. Kirsch			300				300				*				0				*
Phillip Caplan(15)			3,667				3,667				*				0				*
PHS Bay Colony Fund, L.P.(6)(7)			22,000				22,000				*				0				*
PHS Patriot Fund, L.P.(6)(7)			10,000				10,000				*				0				*
Pinnacle Oil Company(47)			10,000				10,000				*				0				*
Pitney Bowes Pension Plan(5)			16,700				16,700				*				0				*
Producer-Writers Guild(4)			16,350				16,350				*				0				*
Prudential Real Estate Securities Fund (9)			36,100				36,100				*				0				*
Public Employees’ Retirement System of Mississippi-REIT Portfolio(9)			33,500				33,500				*				0				*

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						Maximum								Beneficial Ownership
						Number of				Percentage of				After Resale of Shares
		Number of				Shares of				All Shares of				of Common Stock(1)
		Shares of				Common Stock				Common Stock
		Common Stock				Offered by This				Beneficially				Number of
		Beneficially				Prospectus for				Owned Before				Shares of
Selling Stockholder		Owned				Resale				Resale(2)				Common Stock				Percentage
PWB Value Partners, L.P.(48)			387,666				387,666				*				0				*
Quota Rabbico N.V.(39)			48,424				48,424				*				0				*
Ralph Pasture Pension Plan(49)			2,000				2,000				*				0				*
Raytheon Master Pension Trust—Real Estate Hedged Portfolio(9)			60,500				60,500				*				0				*
The Real Estate Investment Trust Series(6)(17)			849,735				425,935				2.1	%			423,800				1	%
The Real Estate Investment Trust Portfolio(6)(17)			587,165				293,865				1.5	%			293,300				*
The Real Estate Investment Trust II Portfolio(6)(17)			66,800				33,900				*				32,900				*
Realty Enterprise Fund LLC(6)(50)			30,000				30,000				*				0				*
Retail Employees Superannuation Trust (9)			55,100				55,100				*				0				*
Retirement Plan for Hospital Employees (5)			10,000				10,000				*				0				*
Richard Feinberg			7,500				7,500				*				0				*
Robeco Boston Partners All Cap Value Fund(4)			2,225				2,225				*				0				*
Robeco Boston Partners Small Cap II Value Fund(4)			195,900				87,500				*				108,400				*
Robert Feinberg			5,000				5,000				*				0				*
Richard A. Kraemer & Gail G. Kraemer — TIC			10,000				10,000				*				0				*
Richard J. Hendrix(15)			5,333				5,333				*				0				*
Ron Clarke, IRA Rollover(13)			500				500				*				0				*
Royal Capital Management/Seneca Capital Managed Account(51)			7,900				7,900				*				0				*
Royal Capital Value Fund, Ltd.(51)			220,700				220,700				*				0				*
Royal Capital Value Fund, LP(51)			52,200				52,200				*				0				*
Royal Capital Value Fund (QP), LP(51)			504,200				504,200				1.3	%			0				*
SAC Strategic Investments, LLC(18)			73,200				73,200				*				0				*
Sarah P. Fleischer Family Trust No. 1(52)			2,500				2,500				*				0				*
Satellite Fund I, L.P.(53)			1,770				1,770				*				0				*
Satellite Fund II, L.P.(53)			23,230				23,230				*				0				*
Savannah ILA(4)			14,375				14,375				*				0				*
SCCM Financial Inc.(54)			3,000				3,000				*				0				*
SEI Institutional Trust Small Cap Fund(9)			55,500				55,500				*				0				*
SEI Institutional Investments Trust Small Cap Fund(9)			128,000				128,000				*				0				*
SEI Institutional Managed Trust Real Estate Fund(9)			11,400				11,400				*				0				*

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						Maximum								Beneficial Ownership
						Number of				Percentage of				After Resale of Shares
		Number of				Shares of				All Shares of				of Common Stock(1)
		Shares of				Common Stock				Common Stock
		Common Stock				Offered by This				Beneficially				Number of
		Beneficially				Prospectus for				Owned Before				Shares of
Selling Stockholder		Owned				Resale				Resale(2)				Common Stock				Percentage
SEI Institutional Managed Trust Small Cap Growth Fund(9)			169,000				169,000				*				0				*
SEI Institutional Managed Trust Small Cap Value Fund(9)			39,400				39,400				*				0				*
SEI US Small Companies Fund(9)			14,700				14,700				*				0				*
Seligman Global Fund Series, Inc.-Global Smaller Companies Fund(9)			73,200				73,200				*				0				*
Sisters of St. Joseph Carondelet(4)			6,675				6,675				*				0				*
Small Capitalization Equity Fund(5)			9,000				9,000				*				0				*
Small Capitalization Equity Fund Collective Trust(5)			41,600				41,600				*				0				*
Steven H. Goldberg(15)			2,214				2,214				*				0				*
Steven Rothstein			5,000				5,000				*				0				*
Steven Vartan			500				500				*				0				*
SVS Asset Management, LLC(19)			1,275				1,275				*				0				*
TALVEST Global Small Cap Fund(9)			24,400				24,400				*				0				*
Telstra Super Pty LTD-Super Global Smaller Companies(9)			35,600				35,600				*				0				*
Terrebonne Investors (Bermuda) L.P. (9)			21,300				21,300				*				0				*
Terrebonne Partners, L.P.(9)			18,600				18,600				*				0				*
Texas County and District Retirement System-REIT(9)			182,300				182,300				*				0				*
The Church Pension Fund — Real Estate Securities Portfolio(9)			30,900				30,900				*				0				*
Third Point Partners, L.P.(40)			174,945				174,945				*				0				*
Third Point Ultra, Ltd.(40)			48,634				48,634				*				0				*
Third Point Offshore Fund Ltd.(40)			357,208				357,208				*				0				*
Third Point Resources Ltd.(40)			32,320				32,320				*				0				*
Third Point Resources L.P.(40)			27,765				27,765				*				0				*
Thomas B. Parsons			1,000				1,000				*				0				*
Timothy B. Matz and Jane F. Matz JTWROS(6)			5,000				5,000				*				0				*
Timothy P. O’Brien(15)			3,334				3,334				*				0				*
Thomas D. & Elizabeth G. Eckert			20,000				20,000				*				0				*
Tombstone Limited Partnership(55)			20,000				20,000				*				0				*
United Capital Management, Inc.(56)			20,000				20,000				*				0				*
University of Delaware(9)			18,600				18,600				*				0				*
University of Richmond Endowment(4)			14,725				14,725				*				0				*
University of Southern California Endowment(4)			32,375				32,375				*				0				*
Vantagepoint Aggressive Opportunities Fund(9)			176,000				176,000				*				0				*

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						Maximum								Beneficial Ownership
						Number of				Percentage of				After Resale of Shares
		Number of				Shares of				All Shares of				of Common Stock(1)
		Shares of				Common Stock				Common Stock
		Common Stock				Offered by This				Beneficially				Number of
		Beneficially				Prospectus for				Owned Before				Shares of
Selling Stockholder		Owned				Resale				Resale(2)				Common Stock				Percentage
Verizon Investment Management Corp. (4)			174,955				172,555				*				2,400				*
Vestal Venture Capital(57)			63,000				63,000				*				0				*
Wellington Management Portfolios (Dublin)-Global Smaller Companies Equity(9)			36,000				36,000				*				0				*
Wichita Retirement Systems(5)			9,900				9,900				*				0				*
Wildlife Conservation Society(4)			8,150				8,150				*				0				*
William A. Hazel Revocable Trust(58)			4,500				4,500				*				0				*
William & Flora Hewlette Foundation-Real Estate Securities Portfolio(9)			23,800				23,800				*				0				*
William S. McLeod BSSC Master Def. Contrib. P/ S Plan(54)			2,000				2,000				*				0				*
Wray & Todd Interests, Ltd.(13)			15,000				15,000				*				0				*
WTC-CIF Real Asset Portfolio(9)			49,200				49,200				*				0				*
WTC-CTF Real Asset Portfolio(9)			153,600				153,600				*				0				*
Y&H Soda Foundation(19)			5,475				5,475				*				0				*
Yaupon Fund LTD(60)			5,042				5,042				*				0				*
Yaupon Partners LP(60)			19,958				19,958				*				0				*
York Capital Management, L.P.(61)			24,452				24,452				*				0				*
York Credit Opportunities Fund, L.P. (61)			90,000				90,000				*				0				*
York Investment Limited(61)			195,548				195,548				*				0				*
Subtotal:			22,246,102				20,615,302				54	%			1,630,800				4	%
Affiliated Stockholders
Charles Carpenter and Laura L. Pitts			2,000				2,000				*				0				*
Edward K. Aldag, Jr.(62)			499,022				281,217				*				217,805				*
Emmett E. McLean(63)			199,022				105,207				*				93,815				*
G. Steven Dawson(64)			50,833				20,000				*				30,833				*
Keith T. Ghezzi			5,000				5,000				*				0				*
Michael G. Stewart(65)			50,000				30,000				*				20,000				*
Patricia W. Green			1,000				1,000				*				0				*
Richard S. Hamner — IRA Rollover (66)			2,000				2,000				*				0				*
R. Steven and Glenda R. Hamner JTWROS (66)			199,022				71,804				*				127,218				*
Robert E. Holmes, PhD.(64)			31,833				1,000				*				30,833				*
William G. McKenzie(67)			150,022				97,680				*				52,342				*
Subtotal:			1,189,754				616,908				1.5	%			572,846				1.43	%
Other Selling Stockholders(68)			(70	)			4,178,829				8.3	%			0				*
Total:			23,435,856				25,411,039				57.8	%			2,203,646				5.5	%

*	Holdings represent less than 1% of all shares of common stock outstanding.

	(1)	Assumes that each named selling stockholder sells all of the shares of our common stock that it holds that are covered by this prospectus and neither acquires nor disposes of any other shares of common stock, or right to purchase other shares of common stock subsequent to the date as of which it provided information to us regarding its holdings. Because the selling stockholders

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		are not obligated to sell all or any portion of the shares of our common stock shown as offered by them, we cannot estimate the actual number of shares of our common stock that will be held by any selling stockholder upon completion of this offering.
	(2)	Based on 39,969,065 shares of common stock outstanding as of November 30, 2005.
	(3)	Except as otherwise indicated in Note 14, holders of our shares of common stock that are unaffiliated with us were subject to lock-up agreements that expired on September 6, 2005.
	(4)	This selling stockholder represented to us that Boston Partners Asset Management, LLC serves as its investment adviser, and that Harry Rosenbluth and David Dabora exercise voting and investment power over these shares.
	(5)	This selling stockholder represented to us that ING Investment Management Co. has sole voting power and sole investment power over the shares of common stock held by this stockholder, and that William E. Bartol is a Vice President of ING Investment Management Co., and in that role exercises voting and investment power over the shares of common stock held by this stockholder.
	(6)	This selling stockholder is an affiliate of a broker-dealer. The selling stockholder represented that it purchased the shares in the ordinary course of business and, at the time of purchase of the shares to be resold, the selling stockholder did not have any agreement or understandings, directly, or indirectly, with any person to distribute the shares.
	(7)	This selling stockholder represented to us that Angelo, Gordon & Co., L.P. serves as its investment manager, and that John M. Angelo and Michael L. Gordon, as Partners of Angelo, Gordon & Co., L.P. have voting and investment authority over these shares.
	(8)	This selling stockholder represented to us that Atlas Capital Management, L.P. is the general partner of Atlas Capital (QP) L.P. Atlas Capital, LP. and Atlas Capital Offshore Fund, Ltd. are the general partners of Atlas Capital Master Fund, L.P. The shares of common stock held by Atlas Capital (QP) L.P. and Atlas Capital Master Fund, L.P. are being presented on a group basis. Robert Alpert exercises voting and investment power over these shares.
	(9)	This selling stockholder represented to us that Wellington Management Company, LLP is an investment adviser registered under the Investment Advisers Act of 1940, as amended (“Wellington”), and that in its capacity as an investment adviser, Wellington is deemed to share beneficial ownership over the shares of common stock held by this stockholder.

(10)	This selling stockholder represented to us that Axia Capital Management serves as its investment manager, and that Raymond Garea, as Chief Executive Officer of Axia Capital Management, has voting and investment authority over these shares.
(11)	This selling stockholder represented to us that Bel Air Investment Advisors LLC has sole voting power and sole investment power with respect to the shares of common stock held by this stockholder, and that Michael Powers is a Portfolio Manager of Bel Air Investment Advisors LLC, and in that role exercises voting and investment power over the shares of common stock held by this stockholder.
(12)	This selling stockholder represented to us that Bert Fingerhut has voting and investment authority over these shares.
(13)	This selling stockholder represented to us that Roger E. King, President of King Investment Advisors, Inc. is the investment advisor for this stockholder and has voting power over the shares of common stock held by this stockholder.
(14)	This selling stockholder represented to us that Bonnie Paley Minzer has voting and investment authority over these shares.
(15)	This selling stockholder is an employee of Friedman, Billings, Ramsey & Co., Inc., a broker-dealer. The selling stockholder represented to us that it obtained the shares in the ordinary course of business and, at the time of purchase of the shares to be resold, the selling stockholder did not have any agreement or understandings, directly, or indirectly, with any person to distribute the shares. Friedman, Billings, Ramsey & Co., Inc. served as the initial purchaser and placement agent for our April 2004 private placement. In addition, Friedman, Billings, Ramsey & Co., Inc. served as the sole book-running manager of our initial public offering.
(16)	This selling stockholder represented to us that Caroline Hicks has voting and investment authority over these shares.
(17)	This selling stockholder represented to us that Damon Andres has investment discretion and voting authority over these shares.
(18)	This selling stockholder represented to us that Endeavour Capital Advisors has investment discretion over the shares of common stock held by this stockholder, and that Laurence Austin and Mitchell Katz exercise voting and investment power over the shares of common stock held by this stockholder.
(19)	This selling stockholder represented to us that Wasatch Advisors has sole voting power and sole investment power over the shares of common stock held by this stockholder, and that John Mazanec is a Portfolio Manager of Wasatch Advisors, and in that role exercises voting and investment power over the shares of commons stock held by this stockholder.
(20)	This selling stockholder represented to us that Dennis Hemme has voting and investment authority over these shares.
(21)	This selling stockholder represented to us that Camille Cotran has voting and investment authority over these shares.
(22)	This selling stockholder represented to us that Oyvind Birkeland has voting authority over these shares, and that Espen Lundstrom and Kjell Morten Hamre have investment authority over these shares.
(23)	This selling stockholder represented to us that Francesca V. Ozdoba has voting and investment authority over these shares.
(24)	This selling stockholder is a registered broker-dealer, and received these shares as compensation for financial advisory services. Friedman, Billings, Ramsey & Co., Inc. served as the initial purchaser and placement agent for our April 2004 private placement. In addition, Friedman, Billings, Ramsey & Co., Inc. served as the sole book-running manager of our initial public offering. Eric Billings is the Chairman and Chief Executive Officer of Friedman, Billings, Ramsey & Co., and in that role exercises voting and investment power over the shares of common stock held by this stockholder.
(25)	This selling stockholder is an affiliate of a broker-dealer. The selling stockholder represented to us that it purchased the shares in the ordinary course of business and, at the time of purchase of the shares to be resold, the selling stockholder did not have any agreement or understandings, directly or indirectly, with any person to distribute the shares. Eric Billings is the Chairman and Chief Executive Officer of Friedman Billings Ramsey Group, Inc., and in that role exercises voting and investment power over the shares of common stock held by this stockholder.
(26)	This selling stockholder represented to us that Peter Frorer is the general partner of Frorer Partners, L.P., and has sole voting power and sole investment power with respect to the shares of common stock held by Frorer Partners, L.P.
(27)	This selling stockholder represented to us that John Gisond has voting and investment authority over these shares.
(28)	This selling stockholder represented to us that Robert Murphy has voting and investment authority over these shares.
(29)	This selling stockholder represented to us that Greenlight Capital, Inc. serves as its investment manager, and that David Einhorn, as President of Greenlight Capital, Inc., has voting and investment authority over these shares.

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(30)	This selling stockholder represented to us that Henry Ripp has voting and investment authority over these shares.
(31)	This selling stockholder represented to us that sole voting and investment power is held by Mangan & McColl Partners, LLC, and that John F. Mangan, Jr. role exercises voting and investment power over the shares of common stock held by this stockholder.

(34)	This selling stockholder represented to us that Jack Sear has voting and investment authority over these shares.
(35)	This selling stockholder represented to us that JLF Asset Management, L.L.C. serves as the management company and/or investment manager to JLF Partners I, L.P., JLF Partners II, L.P. JLF Offshore Deferred Account and JLF Offshore Fund, Ltd. Jeffrey L. Feinberg is the managing member of JLF Asset Management, L.L.C., and has voting and investment authority over these shares.
(36)	This selling stockholder represented to us that Richard Kayne has voting and investment authority over these shares.
(37)	This selling stockholder represented to us that Kristen Junkin has voting and investment authority over these shares.
(38)	This selling stockholder represented to us that Ronald Liebowitz has voting and investment authority over these shares.
(39)	This selling stockholder represented to us that Blavin & Company, Inc. has sole voting power and sole investment power over the shares of common stock held by this stockholder. Paul Blavin is the Chief Executive Officer of Blavin & Company, Inc., and in that role exercises voting and investment power over the shares of common stock held by this stockholder.
(40)	This selling stockholder represented to us that Third Point LLC is the investment manager for Third Point Partners, L.P., Third Point Ultra, Ltd., Third Point Offshore Fund Ltd., Third Point Resources Ltd., Third Point Resources, L.P. and Lyxor/ Third Point Fund Limited. Daniel S. Loeb is the Managing Member of Third Point LLC, and in that role exercises voting and investment power over the shares of common stock held by this stockholder.
(41)	This selling stockholder represented to us that Marcy A. Newberger has voting and investment authority over these shares.
(42)	This selling stockholder represented to us that David R. Jarvis and Malcolm F. MacLean have voting and investment authority over these shares.
(43)	This selling stockholder represented to us that the 2,200,000 shares of common stock beneficially owned by this stockholder includes 700,000 shares of common stock held by its affiliate, Millenco, L.P. The general partner of this stockholder is Millennium Management, L.L.C., a Delaware limited liability company (“Millennium Management”). Millennium Management may be deemed to have voting control and investment discretion over securities owned by this stockholder. Israel A. Englander is the managing member of Millennium Management, and exercises voting and investment authority over these shares, and may be deemed to be the beneficial owner of any shares deemed to be owned by Millennium Management. This stockholder has advised us that the foregoing should not be construed as an admission by either Millennium Management or Mr. Englander as to beneficial ownership of the shares of common stock owned by this stockholder.
(44)	This selling stockholder represented to us that Munder Capital Management, an affiliate of Comerica Securities, Inc., is the investment adviser to Munder Real Estate Equity Investment Fund and Munder Micro-Cap Equity Fund. The Munder Capital Management Proxy Committee exercises voting and investment authority over these shares. The Munder Capital Management Proxy Committee consists of the following members: Mary Ann Shumaker (non-voting), Andrea Leistra, Debbie Leich, Thomas Mudie and Stephen Shenkenberg (non-voting).
(45)	This selling stockholder represented to us that Stephen Rich has voting and investment authority over these shares.
(46)	This selling stockholder represented to us that Pennant Capital Management, LLC serves as the management company to Pennant Onshore Partners, L.P., Pennant Offshore Partners, Ltd, and Pennant Onshore Qualified, L.P. Alan Fournier is the Managing Member of Pennant Capital Management, and in that role exercises voting and investment power over the shares of common stock held by this stockholder.
(47)	This selling stockholder represented to us that Guy Dove has voting and investment authority over these shares.
(48)	This selling stockholder represented to us that Michael Spalter has voting and investment authority over these shares.
(49)	This selling stockholder represented to us that Ralph Pasture has voting and investment authority over these shares.
(50)	This selling stockholder represented to us that John Wells has voting and investment authority over these shares.
(51)	This selling stockholder represented to us that Yale M. Fergang has voting and investment authority over these shares.
(52)	This selling stockholder represented to us that James S. Fleischer has voting and investment authority over these shares.
(53)	This selling stockholder represented to us that the General Partner of each of Satellite Fund I, L.P. and Satellite Fund II, L.P. is Satellite Advisors, L.L.C. (“Advisors”). The senior members of Advisors are Lief Rosenblatt, Gabriel Nechamkin and Mark Sonnino, each have voting and investment authority over the shares held by this selling stockholder. Each of Advisors and Messrs. Rosenblatt, Nechamkin and Sonnino disclaim beneficial ownership of these shares..
(54)	This selling stockholder represented to us that Robert Slayton has voting and investment authority over these shares.
(55)	This selling stockholder represented to us that Nathan Brand has voting and investment authority over these shares.
(56)	This selling stockholder represented to us that James A. Lustig has voting and investment authority over these shares.
(57)	This selling stockholder represented to us that Allan R. Lyons has voting and investment authority over these shares.
(58)	This selling stockholder represented to us that William A. Hazel has voting and investment authority over these shares.
(59)	This selling stockholder represented to us that William S. McLeod has voting and investment authority over these shares.
(60)	This selling stockholder represented to us that Robert Lietzow has voting and investment authority over these shares.
(61)	This selling stockholder represented to us that James G. Dinen has voting and investment authority over these shares.
(62)	Mr. Aldag is our Chairman, President and Chief Executive Officer.
(63)	Mr. McLean is our Executive Vice President, Chief Financial Officer and Treasurer.
(64)	Mr. Dawson and Mr. Holmes are members of our board of directors.
(65)	Mr. Stewart is our Executive Vice President, General Counsel and Secretary.
(66)	Mr. Hamner is our Executive Vice President and Chief Financial Officer and a member of our board of directors.

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(67)	Mr. McKenzie is our Vice Chairman of the Board of Directors.
(68)	The number of shares of common stock included in these columns represents shares of common stock owned by stockholders who have not yet been specifically identified. Only those selling stockholders specifically identified above may sell their shares pursuant to this prospectus. Information concerning other stockholders who wish to become selling stockholders will be set forth in post-effective amendments to the registration statement of which this prospectus forms a part from time to time, if and when required.

	•	that the offer or sale of any registrable shares would materially impede, delay or interfere with any material proposed acquisition, merger, tender offer, business combination, corporate reorganization, consolidation or similar material transaction;

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	•	after the advice of counsel, sale of the registrable shares would require disclosure of non-public material information not otherwise required to be disclosed under applicable law; and
	•	disclosure would have a material adverse effect on us or on our ability to close the applicable transaction.

	•	including in the registration statement any prospectus required under Section 10(a)(3) of the Securities Act;
	•	reflecting any facts or events arising after the effective date of the registration statement that represents a fundamental change in information set forth therein; or
	•	including any material information with respect to the plan of distribution or change to the plan of distribution not set forth therein.

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	•	the material facts relating to the common directorship or interest and as to the transaction are disclosed to our board of directors or a committee of our board, and our board or committee authorizes, approves or ratifies the transaction or contract by the affirmative vote of a majority of disinterested directors, even if the disinterested directors constitute less than a quorum;
	•	the material facts relating to the common directorship or interest and as to the transaction are disclosed to our stockholders entitled to vote thereon, and the transaction is authorized, approved or ratified by a majority of the votes cast by the stockholders entitled to vote (other than the votes of shares owned of record or beneficially by the interested director); or
	•	the transaction or contract is fair and reasonable to us at the time it is authorized, ratified or approved.

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	•	as our financial advisor with respect to any future mergers, acquisitions or other business combinations;
	•	as the sole book running and lead underwriter or sole placement agent in connection with any public or private offering of equity or any public offering of debt securities; and
	•	as our agent in connection with the exercise of our warrants or options, other than warrants or options held by management or by Friedman, Billings, Ramsey & Co., Inc.

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	•	Integral Healthcare Real Estate: We acquire and develop net-leased healthcare facilities providing state-of-the-art healthcare services. In our experience, healthcare service providers, including physicians and hospital operating companies, choose to remain in an established location for relatively long periods since changing the location of their physical facilities does not assure that other critical components of the healthcare delivery system, such as laboratory support, access to specialized equipment, patient referral sources, nursing and other professional support, and patient convenience, will continue to be available at the same level of quality and efficiency. Consequently, we believe market conditions will remain favorable for long-term net-leased healthcare facilities, and we do not presently expect high levels of tenant turnover. Moreover, we believe that our partnering approach will afford us the opportunity to play an integral role in the strategic planning process for the financing of replacement facilities and the development of alternative uses for existing facilities.
	•	Net-lease Strategy: Our healthcare facilities are leased to healthcare operators pursuant to long-term net-lease agreements under which our tenants are responsible for virtually all costs of occupancy, including property taxes, utilities, insurance and maintenance. We believe an important investment consideration is that our leases to healthcare operators provide a means for us to participate in the anticipated growth of the healthcare sector of the United States economy. Our leases generally provide for either contractual annual rent increases ranging from 1.0% to 3.0% and, where feasible and in compliance with applicable healthcare laws and regulations, percentage rent. We expect that such rental rate adjustments will provide us with significant internal growth.
	•	Diversified Investment Strategy: Our facilities and the Pending Acquisition Facility are diversified geographically, by service type within the healthcare industry and by types of operator. We have invested and intend to invest in a portfolio of net-leased healthcare facilities providing state-of-the-art healthcare services. Our facilities and Pending Acquisition Facility include new and established facilities, both small and large facilities, including rehabilitation hospitals, long-term acute care hospitals, ambulatory surgical centers, regional and community hospitals, medical office buildings, skilled nursing facilities and specialized single-discipline facilities. Our facilities are and we expect will continue to be located across the country. In addition, our tenants and prospective tenants are diversified across many healthcare service areas. Because of the expected diversity of our facilities in terms of facility type, geographic location and tenant, we believe that our financial performance is less likely to be materially affected by changes in reimbursement or payment rates by private or public insurers or by changes in local or regional economies.
	•	Financing Strategy: We intend to employ leverage in our capital structure in amounts we determine from time to time. At present, we intend to limit our debt to approximately 50-60% of the aggregate costs of our facilities, although we may temporarily exceed that level from time to

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		time. We expect our borrowings to be a combination of long-term, fixed-rate, non-recourse mortgage loans, variable-rate secured term and revolving credit facilities, and other fixed and variable-rate short to medium-term loans.

	•	increase in our stock value through increases in the cash flows and values of our facilities;
	•	achievement of long-term capital appreciation, and preservation and protection of the value of our interest in our facilities; and
	•	providing regular cash distributions to our stockholders, a portion of which may constitute a nontaxable return of capital because it will exceed our current and accumulated earnings and profits, as well as providing growth in distributions over time.

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	•	any person from actually or constructively owning shares of our capital stock that would result in us being “closely held” under Section 856(h) of the Code; and
	•	any person from transferring shares of our capital stock if such transfer would result in shares of our stock being beneficially owned by fewer than 100 persons (determined without reference to any rules of attribution).

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	•	any person who beneficially owns 10% or more of the voting power of the corporation’s voting stock; or
	•	an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding voting stock of the corporation.

	•	80% of the votes entitled to be cast by holders of the then outstanding shares of voting stock; and
	•	two-thirds of the votes entitled to be cast by holders of the voting stock other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or shares held by an affiliate or associate of the interested stockholder.

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	•	provide that a special meeting of the stockholders will be called only at the request of stockholders entitled to cast at least a majority of the votes entitled to be cast at the meeting;
	•	reserve for itself the right to fix the number of directors;
	•	provide that a director may be removed only by the vote of the holders of two-thirds of the stock entitled to vote;
	•	retain for itself sole authority to fill vacancies created by the death, removal or resignation of a director; and
	•	provide that all vacancies on the board of directors may be filled only by the affirmative vote of a majority of the remaining directors, in office, even if the remaining directors do not constitute a quorum for the remainder of the full term of the class of directors in which the vacancy occurred.

	•	with respect to an annual meeting of stockholders, the only business to be considered and the only proposals to be acted upon will be those properly brought before the annual meeting:

	•	pursuant to our notice of the meeting;

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	•	by, or at the direction of, a majority of our board of directors; or
	•	by a stockholder who is entitled to vote at the meeting and has complied with the advance notice procedures set forth in our bylaws;

	•	with respect to special meetings of stockholders, only the business specified in our company’s notice of meeting may be brought before the meeting of stockholders unless otherwise provided by law; and
	•	nominations of persons for election to our board of directors at any annual or special meeting of stockholders may be made only:

	•	by, or at the direction of, our board of directors; or
	•	by a stockholder who is entitled to vote at the meeting and has complied with the advance notice provisions set forth in our bylaws.

	•	the act or omission of the director or officer was material to the cause of action adjudicated in the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty;
	•	the director or officer actually received an improper personal benefit in money, property or services; or
	•	with respect to any criminal proceeding, the director or officer had reasonable cause to believe his or her act or omission was unlawful.

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	•	a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation; and
	•	a written undertaking by the director or on the director’s behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the director did not meet the standard of conduct.

	•	any present or former director or officer who is made a party to the proceeding by reason of his or her service in that capacity; or
	•	any individual who, while a director or officer of our company and at our request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or any other enterprise as a director, officer, partner or trustee of such corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made a party to the proceeding by reason of his or her service in that capacity.

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	•	we receive the consent of limited partners holding more than 50% of the partnership interests of the limited partners, other than those held by our company or its subsidiaries;
	•	as a result of such transaction, all limited partners will have the right to receive for each partnership unit an amount of cash, securities or other property equal in value to the greatest amount of cash, securities or other property paid in the transaction to a holder of one share of our common stock, provided that if, in connection with the transaction, a purchase, tender or exchange offer shall have been made to and accepted by the holders of more than 50% of the outstanding shares of our common stock, each holder of partnership units shall be given the option to exchange its partnership units for the greatest amount of cash, securities or other property that a limited partner would have received had it (i) exercised its redemption right (described below) and (ii) sold, tendered or exchanged pursuant to the offer shares of our common stock received upon exercise of the redemption right immediately prior to the expiration of the offer; or
	•	we are the surviving entity in the transaction and either (i) our stockholders do not receive cash, securities or other property in the transaction or (ii) all limited partners receive for each partnership unit an amount of cash, securities or other property having a value that is no less than the greatest amount of cash, securities or other property received in the transaction by our stockholders.

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	•	result in any person owning, directly or indirectly, common stock in excess of the stock ownership limit in our charter;
	•	result in our shares of stock being owned by fewer than 100 persons (determined without reference to any rules of attribution);
	•	result in our being “closely held” within the meaning of Section 856(h) of the Code;

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	•	cause us to own, actually or constructively, 10% or more of the ownership interests in a tenant of our or the partnership’s real property, within the meaning of Section 856(d)(2)(B) of the Code; or
	•	cause the acquisition of common stock by such redeeming limited partner to be “integrated” with any other distribution of common stock for purposes of complying with the registration provisions of the Securities Act.

	•	a limited partner may not exercise the redemption right for fewer than 1,000 partnership units or, if such limited partner holds fewer than 1,000 partnership units, the limited partner must redeem all of the partnership units held by such limited partner;
	•	a limited partner may not exercise the redemption right for more than the number of partnership units that would, upon redemption, result in such limited partner or any other person owning, directly or indirectly, common stock in excess of the ownership limitation in our charter; and
	•	a limited partner may not exercise the redemption right more than two times annually.

	•	all expenses relating to our continuity of existence;
	•	all expenses relating to offerings and registration of securities;
	•	all expenses associated with the preparation and filing of any of our periodic reports under federal, state or local laws or regulations;
	•	all expenses associated with our compliance with laws, rules and regulations promulgated by any regulatory body; and
	•	all of our other operating or administrative costs incurred in the ordinary course of business on behalf of the operating partnership.

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	•	our bankruptcy, dissolution, removal or withdrawal, unless the limited partners elect to continue the partnership;
	•	the passage of 90 days after the sale or other disposition of all or substantially all the assets of the partnership; or
	•	an election by us in our capacity as the owner of the sole general partner of the operating partnership.

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	•	We are subject to the corporate federal income tax on taxable income, including net capital gain, that we do not distribute to stockholders during, or within a specified time period after, the calendar year in which the income is earned.
	•	We are subject to the corporate “alternative minimum tax” on any items of tax preference that we do not distribute or allocate to stockholders.
	•	We are subject to tax, at the highest corporate rate, on:

	•	net income from the sale or other disposition of property acquired through foreclosure (“foreclosure property”) that we hold primarily for sale to customers in the ordinary course of business, and
	•	other non-qualifying income from foreclosure property.

	•	We are subject to a 100% tax on net income from sales or other dispositions of property, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business.
	•	If we fail to satisfy the 75% gross income test or the 95% gross income test, as described below under “— Requirements for Qualification — Gross Income Tests,” but nonetheless continue to qualify as a REIT because we meet other requirements, we will be subject to a 100% tax on:

	•	the greater of (i) the amount by which we fail the 75% test, or (ii) the excess of 90% (95% for taxable years beginning on and after January 1, 2005) of our gross income over the amount of gross income attributable to sources that qualify under the 95% test, multiplied by
	•	a fraction intended to reflect our profitability.

	•	If we fail to distribute during a calendar year at least the sum of: (i) 85% of our REIT ordinary income for the year, (ii) 95% of our REIT capital gain net income for the year, and (iii) any undistributed taxable income from earlier periods, then we will be subject to a 4% excise tax on the excess of the required distribution over the amount we actually distributed.
	•	If we fail to satisfy one or more requirements for REIT qualification during a taxable year beginning on or after January 1, 2005, other than a gross income test or an asset test, we will be required to pay a penalty of $50,000 for each such failure.
	•	We may elect to retain and pay income tax on our net long-term capital gain. In that case, a United States stockholder would be taxed on its proportionate share of our undistributed long-term capital gain (to the extent that we make a timely designation of such gain to the stockholder) and would receive a credit or refund for its proportionate share of the tax we paid.
	•	We may be subject to a 100% excise tax on certain transactions with a taxable REIT subsidiary that are not conducted at arm’s-length.
	•	If we acquire any asset from a “C corporation” (that is, a corporation generally subject to the full corporate-level tax) in a transaction in which the basis of the asset in our hands is determined by reference to the basis of the asset in the hands of the C corporation, and we recognize gain on the disposition of the asset during the 10 year period beginning on the date that we acquired the asset, then the asset’s “built-in” gain will be subject to tax at the highest regular corporate rate.

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	(1) it is managed by one or more trustees or directors;
	(2) its beneficial ownership is evidenced by transferable stock, or by transferable certificates of beneficial interest;
	(3) it would be taxable as a domestic corporation, but for its election to be taxed as a REIT under Sections 856 through 860 of the Code;
	(4) it is neither a financial institution nor an insurance company subject to special provisions of the federal income tax laws;
	(5) at least 100 persons are beneficial owners of its stock or ownership certificates (determined without reference to any rules of attribution);
	(6) not more than 50% in value of its outstanding stock or ownership certificates is owned, directly or indirectly, by five or fewer individuals, which the federal income tax laws define to include certain entities, during the last half of any taxable year; and
	(7) it elects to be a REIT, or has made such election for a previous taxable year, and satisfies all relevant filing and other administrative requirements established by the IRS that must be met to elect and maintain REIT status.

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	•	rents from real property;
	•	interest on debt secured by mortgages on real property, or on interests in real property;
	•	dividends or other distributions on, and gain from the sale of, shares in other REITs;
	•	gain from the sale of real estate assets;
	•	income derived from the temporary investment of new capital that is attributable to the issuance of our shares of common stock or a public offering of our debt with a maturity date of at least five years and that we receive during the one year period beginning on the date on which we received such new capital; and
	•	gross income from foreclosure property.

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	•	are fixed at the time the leases are entered into;
	•	are not renegotiated during the term of the leases in a manner that has the effect of basing rent on income or profits; and
	•	conform with normal business practice.

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	•	on which a lease is entered into for the property that, by its terms, will give rise to income that does not qualify for purposes of the 75% gross income test, or any amount is received or accrued, directly or indirectly, pursuant to a lease entered into on or after such day that will give rise to income that does not qualify for purposes of the 75% gross income test;
	•	on which any construction takes place on the property, other than completion of a building or any other improvement, where more than 10% of the construction was completed before default became imminent; or
	•	which is more than 90 days after the day on which the REIT acquired the property and the property is used in a trade or business which is conducted by the REIT, other than through an independent contractor from whom the REIT itself does not derive or receive any income. For this purpose, in the case of a qualified healthcare property, income derived or received from an independent contractor will be disregarded to the extent such income is attributable to (i) a lease of property in effect on the date the REIT acquired the qualified healthcare property (without regard to its renewal after such date so long as such renewal is pursuant to the terms of such lease as in effect on such date) or (ii) any lease of property entered into after such date if, on such date, a lease of such property from the REIT was in effect and, under the terms of the new lease, the REIT receives a substantially similar or lesser benefit in comparison to the prior lease.

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	•	our failure to meet these tests is due to reasonable cause and not to willful neglect;
	•	we attach a schedule of the sources of our income to our tax return; and
	•	any incorrect information on the schedule is not due to fraud with intent to evade tax.

	•	our failure to meet those tests is due to reasonable cause and not to willful neglect, and
	•	following our identification of such failure for any taxable year, a schedule of the sources of our income is filed in accordance with regulations prescribed by the Secretary of the Treasury.

	•	cash or cash items, including certain receivables;
	•	government securities;
	•	real estate assets, which includes interest in real property, leaseholds, options to acquire real property or leaseholds, interests in mortgages on real property and shares (or transferable certificates of beneficial interest) in other REITs;
	•	stock in other REITs; and
	•	investments in stock or debt instruments attributable to the temporary investment (i.e., for a period not exceeding 12 months) of new capital that we raise through equity offerings or offerings of debt with at least a five year term.

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	•	“Straight debt,” defined as a written unconditional promise to pay on demand or on a specified date a sum certain in money if (i) the debt is not convertible, directly or indirectly, into stock, and (ii) the interest rate and interest payment dates are not contingent on profits, the borrower’s discretion, or similar factors. “Straight debt” securities do not include any securities issued by a partnership or a corporation in which we or any controlled TRS (i.e., a TRS in which we own directly or indirectly more than 50% of the voting power or value of the stock) holds non-“straight debt” securities that have an aggregate value of more than 1% of the issuer’s outstanding securities. However, “straight debt” securities include debt subject to the following contingencies:

	•	a contingency relating to the time of payment of interest or principal, as long as either (i) there is no change to the effective yield of the debt obligation, other than a change to the annual yield that does not exceed the greater of 0.25% or 5% of the annual yield, or (ii) neither the aggregate issue price nor the aggregate face amount of the issuer’s debt obligations held by us exceeds $1 million and no more than 12 months of unaccrued interest on the debt obligations can be required to be prepaid; and
	•	a contingency relating to the time or amount of payment upon a default or prepayment of a debt obligation, as long as the contingency is consistent with customary commercial practice;

	•	Any loan to an individual or an estate;
	•	Any “section 467 rental agreement,” other than an agreement with a related party tenant;
	•	Any obligation to pay “rents from real property”;
	•	Any security issued by a state or any political subdivision thereof, the District of Columbia, a foreign government of any political subdivision thereof, or the Commonwealth of Puerto Rico, but only if the determination of any payment thereunder does not depend in whole or in part on the profits of any entity not described in this paragraph or payments on any obligation issued by an entity not described in this paragraph;
	•	Any security issued by a REIT;
	•	Any debt instrument of an entity treated as a partnership for federal income tax purposes to the extent of our interest as a partner in the partnership;
	•	Any debt instrument of an entity treated as a partnership for federal income tax purposes not described in the preceding bullet points if at least 75% of the partnership’s gross income, excluding income from prohibited transactions, is qualifying income for purposes of the 75% gross income test described above in “— Requirements for Qualification — Income Tests.”

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	•	we satisfied the asset tests at the end of the preceding calendar quarter; and
	•	the discrepancy between the value of our assets and the asset test requirements arose from changes in the market values of our assets and was not wholly or partly caused by the acquisition of one or more non- qualifying assets.

	•	the sum of:

	•	90% of our “REIT taxable income,” computed without regard to the dividends-paid deduction or our net capital gain or loss, and
	•	90% of our after-tax net income, if any, from foreclosure property,

	•	minus

	•	the sum of certain items of non-cash income.

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	•	85% of our REIT ordinary income for the year;
	•	95% of our REIT capital gain income for the year; and
	•	any undistributed taxable income from prior periods.

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	•	a citizen or resident of the United States;
	•	a corporation or partnership (including an entity treated as a corporation or partnership for United States federal income tax purposes) created or organized under the laws of the United States or of a political subdivision of the United States;
	•	an estate whose income is subject to United States federal income taxation regardless of its source; or
	•	any trust if (i) a United States court is able to exercise primary supervision over the administration of such trust and one or more United States persons have the authority to control all substantial decisions of the trust or (ii) it has a valid election in place to be treated as a United States person.

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	•	is a corporation or comes within certain other exempt categories and when required, demonstrates this fact; or

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	•	provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with the applicable requirements of the backup withholding rules.

	•	the percentage of our dividends which the tax-exempt trust must treat as unrelated business taxable income is at least 5%;
	•	we qualify as a REIT by reason of the modification of the rule requiring that no more than 50% of our shares of common stock be owned by five or fewer individuals, which modification allows the beneficiaries of the pension trust to be treated as holding shares in proportion to their actual interests in the pension trust; and
	•	either of the following applies:

	•	one pension trust owns more than 25% of the value of our shares of common stock; or
	•	a group of pension trusts individually holding more than 10% of the value of our shares of common stock collectively owns more than 50% of the value of our shares of common stock.

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	•	a lower treaty rate applies and the non-United States stockholder files an IRS Form W-8BEN evidencing eligibility for that reduced rate with us; or
	•	the non-United States stockholder files an IRS Form W-8ECI with us claiming that the distribution is effectively connected income.

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	•	the gain is effectively connected with the conduct of the non-United States stockholder’s United States trade or business, in which case the non-United States stockholder will be subject to the same treatment as United States stockholders with respect to the gain; or
	•	the non-United States stockholder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and has a “tax home” in the United States, in which case the non-United States stockholder will incur a 30% tax on capital gains.

	•	is treated as a partnership under the Treasury regulations relating to entity classification (the “check-the-box regulations”); and
	•	is not a “publicly traded” partnership.

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	•	the amount of cash and the basis of any other property we contribute to the partnership;
	•	increased by our allocable share of the partnership’s income (including tax-exempt income) and our allocable share of indebtedness of the partnership; and

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	•	reduced, but not below zero, by our allocable share of the partnership’s loss, the amount of cash and the basis of property distributed to us, and constructive distributions resulting from a reduction in our share of indebtedness of the partnership.

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	•	fixed prices;
	•	prevailing market prices at the time of sale;
	•	prices related to the prevailing market prices; or
	•	otherwise negotiated prices.

	•	ordinary brokerage transactions and transactions in which a broker-dealer solicits purchasers;
	•	block trades (which may involve crosses or transactions in which the same broker acts as an agent on both sides of the trade) in which a broker-dealer may sell all or a portion of such shares as agent but may position and resell all or a portion of the block as principal to facilitate the transaction;
	•	purchases by a broker-dealer as principal and resale by the broker-dealer for its own account pursuant to this prospectus;
	•	a special offering, an exchange distribution or a secondary distribution in accordance with applicable rules promulgated by the National Association of Securities Dealers, Inc. or stock exchange rules;
	•	sales “at the market” to or through a market maker or into an existing trading market, on an exchange or otherwise, for the shares;
	•	sales in other ways not involving market makers or established trading markets, including privately-negotiated direct sales to purchasers;
	•	any other legal method; and
	•	any combination of these methods.

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	•	the name of the selling stockholders and of participating brokers and dealers;
	•	the number of shares involved;
	•	the price at which the shares are to be sold;
	•	the commissions paid or the discounts or concessions allowed to the broker-dealers, where applicable;
	•	that the broker-dealers did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus; and
	•	other facts material to the transaction.

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
Medical Properties Trust, Inc. and Subsidiaries
	Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2005		F-3
	Unaudited Pro Forma Consolidated Statement of Operations for the Nine Months Ended September 30, 2005		F-4
	Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2004		F-5
	Notes to Unaudited Pro Forma Consolidated Financial Statements		F-6
HISTORICAL FINANCIAL INFORMATION
Medical Properties Trust, Inc. and Subsidiaries
	Consolidated Balance Sheets as of September 30, 2005 and December 31, 2004		F-16
	Consolidated Statements of Operations for the Three Months Ended September 30, 2005 and September 30, 2004 and the Nine Months Ended September 30, 2005 and 2004		F-17
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2005 and 2004		F-18
	Notes to Consolidated Financial Statements		F-19
	Report of Independent Registered Public Accounting Firm		F-24
	Consolidated Balance Sheets as of December 31, 2004 and December 31, 2003		F-25
	Consolidated Statements of Operations for the Year Ended December 31, 2004 and for the Period from Inception (August 27, 2003) through December 31, 2003		F-26
	Consolidated Statements of Cash Flows for the Year Ended December 31, 2004 and for the Period from Inception (August 27, 2003) through December 31, 2003		F-27
	Consolidated Statements of Stockholders’ Equity (Deficit) for the Year Ended December 31, 2004 and for the Period from Inception (August 27, 2003) through December 31, 2003		F-28
	Notes to Consolidated Financial Statements		F-29
Schedule III — Real Estate and Accumulated Depreciation			F-40
Vibra Healthcare, LLC
	Consolidated Balance Sheet as of September 30, 2005 and December 31, 2004		F-41
	Consolidated Statements of Operations and Changes in Partners’ Deficit for the Three Months Ended September 30, 2005 and September 30, 2004, for the Nine Months Ended September 30, 2005 and for the Period May 14, 2004 (Date of Inception) to September 30, 2004		F-42
	Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2005 and for the Period May 14, 2004 (Date of Inception) to September 30, 2004		F-43
	Notes to Consolidated Financial Statements		F-44
	Report of Independent Registered Public Accounting Firm		F-54
	Consolidated Balance Sheet as of December 31, 2004		F-55
	Consolidated Statements of Operations and Changes in Partner’s Capital for the Period from Inception (May 14, 2004) through December 31, 2004		F-56
	Consolidated Statement of Cash Flows for the Period from Inception (May 14, 2004) through December 31, 2004		F-57
	Notes to Consolidated Financial Statements		F-58

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	•	the historical financial information derived from our audited consolidated financial statements for the year ended December 31, 2004 and the nine months ended September 30, 2005 as adjusted to:

	•	give effect to acquisition of our facilities acquired and leased to Vibra, Desert Valley, Gulf States and Veritas as if we owned them from the inception of each period presented;
	•	give effect to our loans made to Vibra;
	•	give effect to our probable acquisitions;
	•	give effect to our initial public offering; and

	•	our pro forma, unaudited consolidated balance sheet as of September 30, 2005 as adjusted for the effect of dividends, to give effect to our initial portfolio and our probable acquisition.

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																																	Probable
									Dividends				Completed Acquisition Transactions																Pro Forma				Acquisition
									Declared in																				Effect of				Transaction
									November				Gulf States-				Desert Valley-								Desert Valley-				Completed				Gulf States-				Company Pro
					Historical				2005				Denham				Chino				Alliance				Sherman Oaks				Transactions				Hammond				Forma
Assets
	Real estate assets
		Land			$	13,491,429			$	—			$	428,571	(2)		$	2,220,000	(3)		$	—			$	1,785,714	(5)		$	17,925,714			$	734,643	(6)		$	18,660,357
		Buildings and improvements				166,572,054				—				5,339,532	(2)			18,027,131	(3)			—				22,263,508	(5)			212,202,225				9,152,846	(6)			221,355,071
		Construction in progress				78,484,104				—				(34,268	)(2)			(14,556	)(3)			—				—				78,435,280				—				78,435,280
		Intangible lease assets				7,558,712				—				231,897	(2)			752,869	(3)			—				950,778	(5)			9,494,256				397,511	(6)			9,891,767
			Gross investment in real estate assets			266,106,299				—				5,965,732				20,985,444				—				25,000,000				318,057,475				10,285,000				328,342,475
		Accumulated depreciation and amortization				(4,465,260	)			—				—				—				—				—				(4,465,260	)			—				(4,465,260	)
			Net investment in real estate assets			261,641,039				—				5,965,732				20,985,444				—				25,000,000				313,592,215				10,285,000				323,877,215
	Cash and cash equivalents					100,826,702				(7,194,432	) (1)			(465,732	) (2)			(20,985,444	) (3)			—				(25,000,000	) (5)			47,181,094				(10,285,000	) (6)			36,896,094
	Interest and rent receivable					1,273,472				—				—				—				—				—				1,273,472				—				1,273,472
	Unbilled rent receivable					9,979,241				—				—				—				—				—				9,979,241				—				9,979,241
	Loans					52,895,611				—				(6,000,000	) (2)			—				40,000,000	(4)			—				86,895,611				—				86,895,611
	Other assets					4,976,522				—				—				—				—				—				4,976,522				—				4,976,522
			Total Assets		$	431,592,587			$	(7,194,432	)		$	(500,000	)		$	—			$	40,000,000			$	—			$	463,898,155			$	—			$	463,898,155
Liabilities and Stockholders’ Equity
	Liabilities
		Debt			$	40,366,667			$	—			$	—			$	—			$	40,000,000	(4)		$	—			$	80,366,667			$	—			$	80,366,667
		Accounts payable and accrued expenses				11,537,838				—				—				—				—				—				11,537,838				—				11,537,838
		Deferred revenue				8,465,676				—				—				—				—				—				8,465,676				—				8,465,676
		Obligations to tenants				11,763,064				—				(500,000	) (2)			—				—				—				11,263,064				—				11,263,064
			Total liabilities			72,133,245				—				(500,000	)			—				40,000,000				—				111,633,245				—				111,633,245
	Minority interest					2,137,500				—				—				—				—				—				2,137,500				—				2,137,500
	Stockholders’ equity
		Preferred stock,				—				—				—				—				—				—				—				—				—
		Common stock,				39,293				—				—				—				—				—				39,293				—				39,293
		Additional paid in capital				359,866,949				—				—				—				—				—				359,866,949				—				359,866,949
		Accumulated deficit				(2,584,400	)			(7,194,432	) (1)			—				—				—				—				(9,778,832	)			—				(9,778,832	)
			Total stockholders’ equity			357,321,842				(7,194,432	)			—				—				—				—				350,127,410				—				350,127,410
			Total Liabilities and Stockholders’ Equity		$	431,592,587			$	(7,194,432	)		$	(500,000	)		$	—			$	40,000,000			$	—			$	463,898,155			$	—			$	463,898,155

F-3

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Table of Contents

										Completed Acquisition Transactions																																Probable
																																										Acquisition
																						Gulf												Desert				Pro Forma				Transaction
										Desert				Gulf								States-				Desert								Valley-				Effect of				Gulf States
										Valley-				States-				Vibra-				Denham				Valley-								Sherman				Completed				Health-				Company
						Historical				Victorville				Covington				Redding				Springs				Chino				Alliance				Oaks				Transactions				Hammond				Pro Forma
Revenues
	Rent income					$	18,364,389			$	524,069	(7)		$	643,278	(8)		$	1,123,098	(9)		$	564,856	(10)		$	1,815,809	(11)		$	—			$	2,269,761	(13)		$	25,305,260			$	968,257	(14)		$	26,273,517
	Interest income from loans						3,562,857				—				—				—				(194,250	) (10)			—				3,000,000	(12)			—				6,368,607				—				6,368,607
		Total revenues					21,927,246				524,069				643,278				1,123,098				370,606				1,815,809				3,000,000				2,269,761				31,673,867				968,257				32,642,124
Expenses
	Depreciation and amortization						2,986,790				115,315	(7)			124,896	(8)			274,405	(9)			111,711	(10)			375,652	(11)			—				464,980	(13)			4,453,749				191,493	(14)			4,645,242
	Property expenses						116,841				—				—				—				—				—				—				—				116,841				—				116,841
	General and administrative						5,595,416				—				—				—				—				—				—				—				5,595,416				—				5,595,416
		Total operating expenses					8,699,047				115,315				124,896				274,405				111,711				375,652				—				464,980				10,166,006				191,493				10,357,499
				Operating income			13,228,199				408,754				518,382				848,693				258,895				1,440,157				3,000,000				1,804,781				21,507,861				776,764				22,284,625
Other income (expense)
	Interest income						1,509,903				—				—				—				—				—				—				—				1,509,903				—				1,509,903
	Interest expense						(1,542,266	)			—				—				—				—				—				(2,100,000	) (12)			—				(3,642,266	)			—				(3,642,266	)
		Net other expense					(32,363	)			—				—				—				—				—				(2,100,000	)			—				(2,132,363	)			—				(2,132,363	)
			Net income			$	13,195,836			$	408,754			$	518,382			$	848,693			$	258,895			$	1,440,157			$	900,000			$	1,804,781			$	19,375,498			$	776,764			$	20,152,262
			Net income per share — basic			$	0.44																																							$	0.67
			Net income per share — diluted			$	0.44																																							$	0.67
			Weighted average shares outstanding — basic				29,975,971																																								29,975,971
			Weighted average shares outstanding — diluted				29,999,381																																								29,999,381

F-4

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Table of Contents

									Completed Acquisition Transactions
													Desert
									Vibra				Valley-				Gulf States-				Vibra-
					Historical				Facilities				Victorville				Covington				Redding
Revenues
	Rent income				$	8,611,344			$	9,774,139	(15)		$	3,228,104	(16)		$	1,443,520	(17)		$	2,259,422	(18)
	Interest income from loans					2,282,115				2,754,934	(15)			—				—				—
		Total revenues				10,893,459				12,529,073				3,228,104				1,443,520				2,259,422
Expenses
	Depreciation and amortization					1,478,470				1,660,526	(15)			691,894	(16)			285,484	(17)			552,166	(18)
	Property expenses					93,502				93,502	(15)			—				—				—
	General and administrative					5,057,284				—				—				—				—
	Costs of terminated acquisitions					585,345				—				—				—				—
		Total operating expense				7,214,601				1,754,028				691,894				285,484				552,166
			Operating income			3,678,858				10,775,045				2,536,210				1,158,036				1,707,256
Other income (expense)
	Interest income					930,260				—				—				—				—
	Interest expense					(32,769	)			—				—				—				—
		Net other income				897,491				—				—				—				—
			Net income		$	4,576,349			$	10,775,045			$	2,536,210			$	1,158,036			$	1,707,256
			Net income per share — basic		$	0.24
			Net income per share — diluted		$	0.24
			Weighted average shares outstanding — basic			19,310,833
			Weighted average shares outstanding — diluted			19,312,634

[Additional columns below]

[Continued from above table, first column(s) repeated]

					Completed Acquisition Transactions																				Probable
																					Pro Forma				Acquisition
					Gulf States-				Desert								Desert				Effect of				Transaction
					Denham				Valley-								Valley-				Completed				Gulf States-				Company
					Springs				Chino				Alliance				Sherman Oaks				Transactions				Hammond				Pro Forma
Revenues
	Rent income				$	753,141	(19)		$	2,421,079	(20)		$	—			$	3,026,348	(22)		$	31,517,097			$	1,291,009	(23)		$	32,808,106
	Interest income from loans					—				—				4,000,000	(21)			—				9,037,049				—				9,037,049
		Total revenues				753,141				2,421,079				4,000,000				3,026,348				40,554,146				1,291,009				41,845,155
Expenses
	Depreciation and amortization					148,948	(19)			500,869	(20)			—				619,973	(22)			5,938,330				255,323	(23)			6,193,653
	Property expenses					—				—				—				—				187,004				—				187,004
	General and administrative					—				—				—				—				5,057,284				—				5,057,284
	Costs of terminated acquisitions					—				—				—				—				585,345				—				585,345
		Total operating expense				148,948				500,869				—				619,973				11,767,963				255,323				12,023,286
			Operating income			604,193				1,920,210				4,000,000				2,406,375				28,786,183				1,035,686				29,821,869
Other income (expense)
	Interest income					—				—				—				—				930,260				—				930,260
	Interest expense					—				—				(2,800,000	) (21)			—				(2,832,769	)			—				(2,832,769	)
		Net other income				—				—				(2,800,000	)			—				(1,902,509	)			—				(1,902,509	)
			Net income		$	604,193			$	1,920,210			$	1,200,000			$	2,406,375			$	26,883,674			$	1,035,686			$	27,919,360
			Net income per share — basic																										$	1.45
			Net income per share — diluted																										$	1.45
			Weighted average shares outstanding — basic																											19,310,833
			Weighted average shares outstanding — diluted																											19,312,634

F-5

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Table of Contents

Shares of common stock outstanding at September 30, 2005			39,292,885
Restricted shares issued to employees in April 2005			676,180
Total shares			39,969,065
Cash distribution per share		$	0.18
Total cash distribution		$	7,194,432

		Cost
Land		$	428,571
Building			5,339,532
Intangible lease assets			231,897
Total cost		$	6,000,000

		Cost
Land		$	2,220,000
Building			18,027,131
Intangible lease assets			752,869
Total cost		$	21,000,000

Mortgage loan amount		$	40,000,000

		Cost
Land		$	1,785,714
Building			22,263,508
Intangible lease assets			950,778
Total cost		$	25,000,000

F-6

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Table of Contents

		Gulf States Health —
		Hammond
Land		$	734,643
Building			9,152,846
Intangible lease assets			397,511
Total cost		$	10,285,000

		Rent
Annual rent income		$	3,228,104
Rent income for nine months of the first year			2,421,078
Historical rent for the period February 28 - September 30, 2005			(1,897,009	)
Pro forma rent income		$	524,069

														Historical
														Depreciation and
						Annual				Depreciation and				Amortization for				Pro Forma
						Depreciation and				Amortization for				February 28 -				Depreciation and
		Cost				Amortization				Nine Months				September 30, 2005				Amortization
Land		$	2,000,000			$	—			$	—			$	—			$	—
Buildings			24,994,553				624,864				468,648				364,504				104,144
Intangible lease assets			1,005,447				67,030				50,273				39,102				11,171
		$	28,000,000			$	691,894			$	518,921			$	403,606			$	115,315

		Rent
Annual rent income		$	1,443,520
Rent income for nine months of the first year			1,082,640
Historical rent from June 9 to September 30, 2005			(439,362	)
Pro forma rent income		$	643,278

F-7

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Table of Contents

														Historical
														Depreciation and
														Amortization for				Additional
						Annual				Depreciation and				June 9-				Pro Forma
						Depreciation and				Amortization for				September 30,				Depreciation and
		Cost				Amortization				Nine Months				2005				Amortization
Land		$	821,429			$	—			$	—			$	—			$	—
Buildings			10,234,101				255,853				191,890				78,210				113,680
Intangible lease assets			444,470				29,631				22,223				11,007				11,216
		$	11,500,000			$	285,484			$	214,113			$	89,217			$	124,896

Annual rent income		$	2,259,422
Rent income for nine months of the first year			1,694,567
Historical rent from June 30 to September 30, 2005			(571,469	)
Pro forma rent income		$	1,123,098

														Historical
														Depreciation and
														Amortization for
						Annual				Depreciation and				June 30, 2005-				Pro Forma
						Depreciation and				Amortization for				September 30,				Depreciation and
		Cost				Amortization				Nine Months				2005				Amortization
Land		$	—			$	—			$	—			$	—			$	—
Buildings			19,948,022				498,701				374,026				126,087				247,939
Intangible lease assets			801,978				53,465				40,099				13,633				26,466
		$	20,750,000			$	552,166			$	414,125			$	139,720			$	274,405

		Annual Rent				Nine Months Rent
Rent income		$	753,141			$	564,856

F-8

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Table of Contents

Historical interest income from June 9 — September 30, 2005		$	194,250

						Annual				Depreciation and
						Depreciation and				Amortization for
		Cost				Amortization				Nine Months
Land		$	428,571			$	—			$	—
Building			5,339,532				133,488				100,116
Intangible lease assets			231,897				15,460				11,595
		$	6,000,000			$	148,948			$	111,711

		Annual Rent				Nine Months Rent
Rent income		$	2,421,079			$	1,815,809

						Annual				Depreciation and
						Depreciation and				Amortization for
		Cost				Amortization				Nine Months
Land		$	2,220,000			$	—			$	—
Building			18,027,131				450,678				338,009
Intangible lease assets			752,869				50,191				37,643
		$	21,000,000			$	500,869			$	375,652

Mortgage loan amount		$	40,000,000
Annual interest rate			10.00	%
Annual interest income		$	4,000,000
Interest income for nine months		$	3,000,000
Revolving credit line borrowing		$	40,000,000
Annual interest rate			7.00	%
Annual interest expense		$	2,800,000
Interest expense for nine months		$	2,100,000

F-9

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Table of Contents

		Annual Rent				Nine Months Rent
Rent income		$	3,026,348			$	2,269,761

						Annual				Depreciation and
						Depreciation and				Amortization for
		Cost				Amortization				Nine Months
Land		$	1,785,714			$	—			$	—
Building			22,263,508				556,588				417,441
Intangible lease assets			950,778				63,385				47,539
		$	25,000,000			$	619,973			$	464,980

		Annual Rent				Nine Months Rent
Rent income		$	1,291,009			$	968,257

						Annual				Depreciation and
						Depreciation and				Amortization for
		Cost				Amortization				Nine Months
Land		$	734,643			$	—			$	—
Buildings			9,152,846				228,822				171,617
Intangible lease assets			397,511				26,501				19,876
		$	10,285,000			$	255,323			$	191,493

F-10

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Table of Contents

			Annual Rent
Bowling Green			$	5,471,964
Fresno				2,675,182
Kentfield				1,094,393
Marlton				4,752,598
New Bedford				3,171,528
Denver				1,219,818
	TOTAL			18,385,483
Historical rent income for July 1 – December 31, 2004				(8,611,344	)
Pro forma rent income			$	9,774,139

							Annual Interest
			Loans				Income
Bowling Green			$	11,771,389			$	1,206,567
Fresno				6,561,308				672,534
Kentfield				5,422,387				555,795
Marlton				11,203,366				1,148,345
New Bedford				8,361,930				857,098
Denver				5,821,564				596,710
	TOTAL		$	49,141,944				5,037,049
Historical interest income for July 1 – December 31, 2004								(2,282,115	)
Pro forma interest income							$	2,754,934

F-11

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Table of Contents

											Total
			Annual				Annual				Depreciation and
			Depreciation				Amortization				Amortization
Bowling Green			$	839,268			$	104,736			$	944,004
Fresno				409,080				51,204				460,284
Kentfield				119,124				23,808				142,932
Marlton				772,572				90,972				863,544
New Bedford				494,304				60,384				554,688
Denver				150,324				23,220				173,544
	TOTAL			2,784,672				354,324				3,138,996
Historical depreciation and amortization for July 1 – December 31, 2004				1,311,757				166,713				1,478,470
Pro forma depreciation and amortization			$	1,472,915			$	187,611			$	1,660,526

		Annual Rent
Desert Valley — Victorville		$	3,228,104

						Annual
						Depreciation and
		Cost				Amortization
Land		$	2,000,000			$	—
Buildings			24,994,553				624,864
Intangible lease assets			1,005,447				67,030
		$	28,000,000			$	691,894

		Annual Rent
Gulf States — Covington		$	1,443,520

F-12

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						Annual
						Depreciation and
		Cost				Amortization
Land		$	821,429			$	—
Buildings			10,234,101				255,853
Intangible lease assets			444,470				29,631
		$	11,500,000			$	285,484

		Annual Rent
Vibra — Redding		$	2,259,422

						Annual
						Depreciation and
		Cost				Amortization
Buildings		$	19,948,022			$	498,701
Intangible lease assets			801,978				53,465
		$	20,750,000			$	552,166

		Annual Rent
Gulf States — Denham Springs		$	753,141

						Annual
						Depreciation and
		Cost				Amortization
Land		$	428,571			$	—
Buildings			5,339,532				133,488
Intangible lease assets			231,897				15,460
		$	6,000,000			$	148,948

F-13

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		Annual Rent
Desert Valley — Chino		$	2,421,079

						Annual
						Depreciation and
		Cost				Amortization
Land		$	2,220,000			$	—
Buildings			18,027,131				450,678
Intangible lease assets			752,869				50,191
		$	21,000,000			$	500,869

Mortgage loan amount		$	40,000,000
Annual interest rate			10.00%
Annual interest income		$	4,000,000
Revolving credit line borrowing		$	40,000,000
Annual interest rate			7.00%
Annual interest expense		$	2,800,000

		Annual Rent
Desert Valley — Sherman Oaks		$	3,026,348

F-14

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						Annual
						Depreciation and
		Cost				Amortization
Land		$	1,785,714			$	—
Buildings			22,263,508				556,588
Intangible lease assets			950,778				63,385
		$	25,000,000			$	619,973

		Annual Rent
Gulf States — Hammond		$	1,291,009

						Annual
						Depreciation and
		Cost				Amortization
Land		$	734,643			$	—
Buildings			9,152,846				228,822
Intangible lease assets			397,511				26,501
		$	10,285,000			$	255,323

F-15

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Table of Contents

				September 30, 2005				December 31, 2004
				(Unaudited)
Assets
Real estate assets
	Land			$	13,491,429			$	10,670,000
	Buildings and improvements				166,572,054				111,387,232
	Construction in progress				78,484,104				24,318,098
	Intangible lease assets				7,558,712				5,314,963
		Gross investment in real estate assets			266,106,299				151,690,293
	Accumulated depreciation				(3,969,062	)			(1,311,757	)
	Accumulated amortization				(496,198	)			(166,713	)
		Net investment in real estate assets			261,641,039				150,211,823
Cash and cash equivalents					100,826,702				97,543,677
Interest and rent receivable					1,273,472				419,776
Straight-line rent receivable					9,979,241				3,206,853
Loans receivable					52,895,611				50,224,069
Other assets					4,976,522				4,899,865
Total Assets				$	431,592,587			$	306,506,063
Liabilities and Stockholders’ Equity
Liabilities
	Debt			$	40,366,667			$	56,000,000
	Accounts payable and accrued expenses				11,537,838				10,903,025
	Deferred revenue				8,465,676				3,578,229
	Obligations to tenants				11,763,064				3,296,365
		Total liabilities			72,133,245				73,777,619
Minority interests					2,137,500				1,000,000
Stockholders’ equity
	Preferred stock, $0.001 par value. Authorized 10,000,000 shares; no shares outstanding				—				—
	Common stock, $0.001 par value. Authorized 100,000,000 shares; issued and outstanding — 39,292,885 shares at September 30, 2005, and 26,082,862 shares at December 31, 2004				39,293				26,083
	Additional paid in capital				359,866,949				233,626,690
	Accumulated deficit				(2,584,400	)			(1,924,329	)
		Total stockholders’ equity			357,321,842				231,728,444
Total Liabilities and Stockholders’ Equity				$	431,592,587			$	306,506,063

F-16

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Table of Contents

					For the Three Months Ended								For the Nine Months Ended
					September 30,								September 30,
					2005				2004				2005				2004
Revenues
	Rent billed				$	5,964,211			$	2,874,033			$	14,579,588			$	2,874,033
	Straight-line rent					1,007,062				1,142,186				3,784,801				1,142,186
	Interest income from loans					1,233,668				1,022,853				3,562,857				1,022,853
		Total revenues				8,204,941				5,039,072				21,927,246				5,039,072
Expenses
	Real estate depreciation and amortization					1,170,387				928,356				2,986,790				928,356
	General and administrative					1,990,971				1,631,600				5,109,854				3,329,559
	Stock-based compensation					555,409				—				602,403				—
	Costs of terminated acquisitions					—				14,199				—				350,923
		Total operating expenses				3,716,767				2,574,155				8,699,047				4,608,838
			Operating income			4,488,174				2,464,917				13,228,199				430,234
Other income (expense)
	Interest income					767,917				188,568				1,509,903				667,857
	Interest expense					—				(24,547	)			(1,542,266	)			(32,769	)
		Net other (expense) income				767,917				164,021				(32,363	)			635,088
			Net income		$	5,256,091			$	2,628,938			$	13,195,836			$	1,065,322
Net income per share, basic					$	0.14			$	0.10			$	0.44			$	0.06
Weighted average shares outstanding — basic						37,606,480				26,082,862				29,975,971				17,033,911
Net income per share, diluted					$	0.14			$	0.10			$	0.44			$	0.06
Weighted average shares outstanding — diluted						37,654,576				26,085,312				29,999,381				17,035,494

F-17

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Table of Contents

					For the Nine Months Ended
					September 30,
					2005				2004
Operating activities
	Net income				$	13,195,836			$	1,065,322
		Adjustments to reconcile net income to net cash provided by operating activities
			Depreciation and amortization			3,104,131				934,548
			Amortization of deferred financing costs			687,730				—
			Straight-line rent revenue			(3,784,801	)			(1,142,186	)
			Share-based payments			684,085				—
			Other adjustments			(139,015	)			24,500
		Increase in:
			Interest and rent receivable			(703,903	)			(383,413	)
			Other assets			(1,279,962	)			(164,648	)
		Increase in:
			Accounts payable and accrued expenses			3,503,928				1,812,503
			Deferred revenue			703,750				—
			Obligations to tenants			122,226				—
	Net cash provided by operating activities					16,094,005				2,146,626
Investing activities
		Real estate acquired				(56,513,944	)			(127,372,195	)
		Principal received on loans receivable				7,725,958				—
		Investment in loans receivable				(4,934,772	)			(42,317,079	)
		Construction in progress				(53,834,985	)			(15,059,606	)
		Equipment acquired				(134,638	)			(492,762	)
	Net cash used for investing activities					(107,692,381	)			(185,241,642	)
Financing activities
		Addition to debt				19,000,000				—
		Proceeds from loan payable				—				200,000
		Payment of loan payable				—				(300,000	)
		Payments of debt				(34,633,333	)			—
		Deferred financing and offering costs				(47,103	)			(190,245	)
		Repurchase of deferred stock units				(75,000	)			—
		Distributions paid				(16,725,022	)			—
		Proceeds from sale of common shares, net of offering costs				126,224,359				233,703,474
		Sale of partnership units				1,137,500				—
	Net cash provided by financing activities					94,881,401				233,413,229
		Increase in cash and cash equivalents for period				3,283,025				50,318,213
			Cash and cash equivalents at beginning of period			97,543,677				100,000
Cash and cash equivalents at end of period					$	100,826,702			$	50,418,213
Interest paid, including capitalized interest of $1,918,458 in 2005					$	2,772,994			$	—
Supplemental schedule of non-cash investing activities
	Straight-line rent receivables recorded as deferred revenue					3,137,380				—
	Real estate and loans receivable recorded as obligations to tenants					8,338,837				3,296,365
	Real estate and loans receivable recorded as deferred revenue					1,110,280				2,610,441
	Construction and acquisition costs charged to loans and real estate					209,259				—
Supplemental schedule of non-cash financing activities:
	Deferred costs charged to proceeds from sale of common stock				$	579,975			$	—
	Distributions declared, unpaid					—				2,608,286
	Minority interest granted for contribution of land to development project					—				1,000,000

F-18

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1.	Organization

2.	Summary of Significant Accounting Policies

F-19

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Table of Contents

3.	Real Estate and Lending Activities

F-20

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Land		$	2,821,429
Buildings			55,184,822
Intangible lease assets			2,243,749
Construction in progress			54,166,006
		$	114,416,006

4.	Debt

F-21

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Table of Contents

2006		$	3,750,000
2007			3,750,000
2008			32,866,667
		$	40,366,667

5.	Stock Awards

F-22

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6.	Earnings Per Share

		For the Three Months Ended								For the Nine Months Ended
		September 30								September 30
		2005				2004				2005				2004
Weighted average number of shares issued and outstanding			37,593,311				26,082,862				29,961,841				17,033,911
Vested deferred stock units			13,169				—				14,130				—
Weighted average shares — basic			37,606,480				26,082,862				29,975,971				17,033,911
Common stock warrants and options			48,096				2,450				23,410				1,583
Weighted average shares — diluted			37,654,576				26,085,312				29,999,381				17,035,494

7.	Initial Public Offering and Issuance of Common Stock

Gross proceeds		$	138,337,742
Underwriters’ commission			(9,851,291	)
Expenses			(3,167,567	)
Net proceeds		$	125,318,884

8.	Commitments and Contingencies

F-23

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	/s/ KPMG LLP

F-24

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Table of Contents

				December 31, 2004				December 31, 2003
Assets
Real estate assets
	Land			$	10,670,000			$	—
	Buildings and improvements				111,387,232				—
	Construction in progress				24,318,098				166,301
	Intangible lease assets				5,314,963				—
		Gross investment in real estate assets			151,690,293				166,301
	Accumulated depreciation				(1,311,757	)			—
	Accumulated amortization				(166,713	)			—
		Net investment in real estate assets			150,211,823				166,301
Cash and cash equivalents					97,543,677				100,000
Interest receivable					419,776				—
Unbilled rent receivable					3,206,853				—
Loans receivable					50,224,069				—
Other assets					4,899,865				201,832
Total Assets				$	306,506,063			$	468,133
Liabilities and Stockholders’ Equity (Deficit)
Liabilities
	Long-term debt			$	56,000,000			$	—
	Accounts payable and accrued expenses				10,903,025				1,389,779
	Deferred revenue				3,578,229				—
	Lease deposit				3,296,365				—
	Loan payable				—				100,000
		Total liabilities			73,777,619				1,489,779
Minority interest					1,000,000				—
Stockholders’ equity (deficit)
	Preferred stock, $0.001 par value. Authorized 10,000,000 shares; no shares outstanding				—				—
	Common stock, $0.001 par value. Authorized 100,000,000 shares; issued and outstanding  — 26,082,862 shares at December 31, 2004 and 1,630,435 shares at December 31, 2003				26,083				1,630
	Additional paid in capital				233,626,690				—
	Accumulated deficit				(1,924,329	)			(1,023,276	)
		Total stockholders’ equity (deficit)			231,728,444				(1,021,646	)
Total Liabilities and Stockholders’ Equity (Deficit)				$	306,506,063			$	468,133

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					Year Ended				Period from Inception
					December 31,				(August 27, 2003)
					2004				through December 31, 2003
Revenues
	Rent billed				$	6,162,278			$	—
	Unbilled rent					2,449,066				—
	Interest income from loans					2,282,115				—
		Total revenues				10,893,459				—
Expenses
	Real estate depreciation					1,311,757				—
	Amortization of intangible lease assets					166,713				—
	Other property expenses					93,502				—
	General and administrative					5,057,284				992,418
	Costs of terminated acquisitions					585,345				30,858
		Total operating expenses				7,214,601				1,023,276
			Operating income (loss)			3,678,858				(1,023,276	)
Other income (expense)
	Interest income					930,260				—
	Interest expense					(32,769	)			—
		Net other income				897,491				—
			Net income (loss)		$	4,576,349			$	(1,023,276	)
			Net income (loss) per share, basic		$	0.24			$	(0.63	)
			Weighted average shares outstanding, basic			19,310,833				1,630,435
			Net income (loss) per share, diluted		$	0.24			$	(0.63	)
			Weighted average shares outstanding, diluted			19,312,634				1,630,435

F-26

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									Period from Inception
					Year Ended				(August 27, 2003) through
					December 31, 2004				December 31, 2003
Operating activities
	Net income (loss)				$	4,576,349			$	(1,023,276	)
		Adjustments to reconcile net income (loss) to net cash provided by operating activities
			Depreciation and amortization			1,517,530				—
			Unbilled rent revenue			(2,449,066	)			—
			Warrant issued to lender			24,500				—
			Deferred stock units issued to directors			125,000				—
		Increase in:
			Interest receivable			(419,776	)			—
			Other assets			(309,769	)			—
		Increase in:
			Accounts payable and accrued expenses			6,644,130				1,391,409
			Deferred revenue			210,000				—
	Net cash provided by operating activities					9,918,898				368,133
Investing activities
		Real estate acquired				(127,372,195	)			—
		Loans receivable				(44,317,263	)			—
		Construction in progress				(23,151,797	)			(166,301	)
		Equipment acquired				(759,387	)			—
	Net cash used for investing activities					(195,600,642	)			(166,301	)
Financing activities
		Addition to long-term debt				56,000,000				—
		Proceeds from loan payable				200,000				100,000
		Payment of loan payable				(300,000	)			—
		Deferred financing costs				(3,869,767	)			(201,832	)
		Distributions paid				(2,608,286	)			—
		Sale of common stock, net of offering costs				233,703,474				—
	Net cash provided by (used for) financing activities					283,125,421				(101,832	)
	Increase in cash and cash equivalents for period					97,443,677				100,000
		Cash at beginning of period				100,000				—
Cash and cash equivalents at end of period					$	97,543,677			$	100,000
Supplemental schedule of non-cash investing activities:
	Additions to unbilled rent receivables recorded as deferred revenue				$	757,787			$	—
	Additions to loans receivable recorded as lease deposits and deferred revenue					5,906,807				—
Supplemental schedule of non-cash financing activities:
		Minority interest granted for contribution of land to development project				1,000,000				—
		Distributions declared, not paid				2,869,116				—
		Deferred offering costs charged to proceeds from sale of common stock				201,832				—
		Additional paid in capital from deferred stock units issued to directors				125,000				—
		Conversion of accounts payable and accrued expenses to common stock				—				1,630
Interest expense paid						32,769				—

F-27

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Table of Contents

			Preferred								Common																Total
																			Additional Paid				Accumulated				Stockholders’
			Shares				Par Value				Shares				Par Value				in Capital				Deficit				Equity
Balance at inception (August 27, 2003)				—			$	—				—			$	—			$	—			$	—			$	—
	Issuance of common stock			—				—				1,630,435				1,630				—				—				1,630
	Net loss			—				—				—				—				—				(1,023,276	)			(1,023,276	)
Balance at December 31, 2003				—				—				1,630,435				1,630				—				(1,023,276	)			(1,021,646	)
	Redemption of founders’ shares			—				—				(1,108,527	)			(1,108	)			1,108				—				—
	Issuance of common stock in private placement (net of offering costs)			—				—				25,560,954				25,561				233,476,082				—				233,501,643
	Value of warrants issued			—				—				—				—				24,500				—				24,500
	Deferred stock units issued to directors			—				—				—				—				125,000				—				125,000
	Distributions declared ($.21 per common share)			—				—				—				—				—				(5,477,402	)			(5,477,402	)
	Net income			—				—				—				—				—				4,576,349				4,576,349
Balance at December 31, 2004				—			$	—				26,082,862			$	26,083			$	233,626,690			$	(1,924,329	)		$	231,728,444

F-28

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Table of Contents

1.	Organization

2.	Summary of Significant Accounting Policies

F-29

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F-30

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F-31

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Table of Contents

Buildings and improvements			40 years
Tenant origination costs			Remaining terms of the related leases
Tenant improvements			Term of related leases
Furniture and equipment			3-7 years

F-32

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F-33

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F-34

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2005		$	2,566,663
2006			2,799,996
2007			50,633,341
		$	56,000,000

F-35

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2005		$	275,106
2006			339,570
2007			346,158
2008			352,746
2009			359,334
Thereafter			2,133,005
		$	3,805,919

		Shares				Exercise Price
Outstanding at January 1, 2004			—				—
Granted			100,000			$	10.00
Exercised			—				—
Forfeited			—				—
Outstanding at December 31, 2004			100,000			$	10.00
Options exercisable at December 31, 2004			33,333			$	10.00
Weighted-average grant-date fair value of options granted		$	1.21

F-36

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Table of Contents

				Options				Options				Average Remaining
Exercise Price				Outstanding				Exercisable				Contractual Life (years)
$	10.00				100,000				33,333				9.6

2005		$	14,343,635
2006			16,082,461
2007			16,484,523
2008			16,896,636
2009			17,319,052
Thereafter			188,238,038
		$	269,364,345

F-37

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		December 31, 2004								December 31, 2003
		Book Value				Fair Value				Book Value				Fair Value
Cash and cash equivalents		$	97,543,677			$	97,543,677			$	100,000			$	100,000
Interest receivable			419,776				419,776				—				—
Unbilled rent receivable			3,206,853				1,679,450				—				—
Loans			50,224,069				50,646,695				100,000				100,000
Long-term debt			56,000,000				56,000,000				—				—
Accounts payable and accrued expenses			10,903,025				10,903,025				1,389,779				1,389,779

Net income as reported		$	4,576,349
Less: Net income of the taxable REIT subsidiary			(63,905	)
Net income from REIT operations			4,512,444
Unbilled rent receivable			(2,449,066	)
GAAP depreciation and amortization in excess of tax depreciation			198,266
Expenses deductible in future tax periods			2,434,535
Other			289,759
Taxable income subject to REIT distribution requirements		$	4,985,938

F-38

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		2004				2003
Weighted average number of shares issued and outstanding			19,308,511				1,630,435
Vested deferred stock units			2,322				—
Weighted average shares — basic			19,310,833				1,630,435
Common stock warrants			1,801				—
Weighted average shares — diluted			19,312,634				1,630,435

			Basic				Diluted
Pro forma weighted average shares for the year ended December 31, 2004:
	Historical from above			19,310,833				19,312,634
	Pro forma effect of assumed additional shares			648,718				648,718
	Pro forma weighted average shares			19,959,551				19,961,352
Pro forma earnings per share			$	0.23			$	0.23

F-39

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Table of Contents

														Additions Subsequent to
						Initial Costs								Acquisition
Location		Type of Property				Land				Buildings				Improvements				Carrying Costs
Bowling Green, KY		Rehabilitation hospital				$	3,070,000			$	33,570,541			$	—			$	—
Thornton, CO		Rehabilitation hospital					2,130,000				6,013,142				—				—
Fresno, CA		Rehabilitation hospital					1,550,000				16,363,153				—				—
Kentfield, CA		Long term acute care hospital					2,520,000				4,765,176				—				—
Marlton, NJ		Rehabilitation hospital					—				30,903,051				—				—
New Bedford, NJ		Long term acute care hospital					1,400,000				19,772,169				—				—
			TOTAL			$	10,670,000			$	111,387,232			$	—			$	—

		Cost at December 31, 2004
														Accumulated				Date of				Date				Depreciable
Location		Land				Buildings(1)				Total				Depreciation				Construction				Acquired				Life (Years)
Bowling Green, KY		$	3,070,000			$	33,570,541			$	36,640,541			$	419,634				1992				July 1, 2004				40
Thornton, CO			2,130,000				6,013,142				8,143,142				56,371				1962, 1975				August 17, 2004				40
Fresno, CA			1,550,000				16,363,153				17,913,153				204,540				1990				July 1, 2004				40
Kentfield, CA			2,520,000				4,765,176				7,285,176				59,562				1963				July 1, 2004				40
Marlton, NJ			—				30,903,051				30,903,051				386,286				1994				July 1, 2004				40
New Bedford, NJ			1,400,000				19,772,169				21,172,169				185,364				1962, 1975, 1992				August 17, 2004				40
TOTAL		$	10,670,000			$	111,387,232			$	122,057,232			$	1,311,757

					December 31, 2004				December 31, 2003
COST
	Balance at beginning of period				$	—			$	—
		Additions during the period
			Acquisitions			122,057,232				—
	Balance at end of period				$	122,057,232			$	—

					December 31, 2004				December 31, 2003
ACCUMULATED DEPRECIATION
	Balance at beginning of period				$	—			$	—
		Additions during the period
			Depreciation			1,311,757				—
	Balance at end of period				$	1,311,757			$	—

(1)	The gross cost for Federal income tax purposes is $116,702,195.

F-40

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Table of Contents

				September 30, 2005				December 31, 2004*
				(Unaudited)
Assets
Current assets:
	Cash and cash equivalents			$	2,266,306			$	2,280,772
	Patient accounts receivable, net of allowance for doubtful collections of $1,499,000 at September 30, 2005 and $303,000 at December 31, 2004				25,606,710				17,319,154
	Third party settlements receivable				400,000				346,141
	Prepaid insurance				1,550,765				719,480
	Deposit for workers’ compensation claims				—				1,375,000
	Other current assets				846,422				518,650
		Total current assets			30,670,203				22,559,197
Restricted investment					100,000				—
Property and equipment, net					17,682,999				2,662,546
Goodwill					24,650,801				24,510,296
Intangible assets					5,140,000				4,260,000
Deposits					4,252,756				3,485,387
Deferred financing and lease costs					1,926,899				1,543,424
		Total assets		$	84,423,658			$	59,020,850
Liabilities and Partners’ Deficit
Current liabilities:
	Current maturities of long-term debt			$	57,410			$	—
	Current maturities of obligations under capital leases				443,212				—
	Accounts payable				5,720,881				5,142,345
	Accounts payable — related parties				478,651				262,144
	Accrued liabilities				5,094,372				4,387,292
	Accrued insurance claims				2,785,610				1,441,516
		Total current liabilities			14,580,136				11,233,297
Deferred rent					5,827,972				2,460,308
Long-term debt					54,319,257				49,141,945
Long-term obligations under capital leases					17,919,203				—
		Total liabilities			92,646,568				62,835,550
Partners’ deficit					(8,222,910	)			(3,814,700	)
		Total liabilities and partners’ deficit		$	84,423,658			$	59,020,850

*	Derived from December 31, 2004 audited financial statements.

F-41

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Table of Contents

													For the				For the Period
					For the Three Months Ended								Nine Months				May 14, 2004
													Ended				(Date of Inception)
					Sept. 30, 2005				Sept. 30, 2004				Sept. 30, 2005				to Sept. 30, 2004
					(Unaudited)
Revenue:
	Net patient service revenue				$	35,253,794			$	20,845,836			$	95,170,217			$	20,845,836
Expenses:
	Cost of services					24,882,413				14,738,667				66,440,648				14,738,667
	General and administrative					4,140,760				2,487,925				11,165,130				2,487,925
	Rent expense					5,322,799				4,175,678				15,786,936				4,175,678
	Interest expense					1,724,801				1,025,177				4,283,100				1,025,177
	Management fee — Vibra Management, LLC					721,188				444,933				1,965,247				444,933
	Depreciation and amortization					458,244				155,703				873,219				155,703
	Bad debt expense					376,787				123,185				722,451				123,185
		Total expenses				37,626,992				23,151,268				101,236,731				23,151,268
			Loss from operations			(2,373,198	)			(2,305,432	)			(6,066,514	)			(2,305,432	)
	Non-operating revenue					610,551				584,426				1,658,304				584,426
			Net loss			(1,762,647	)			(1,721,006	)			(4,408,210	)			(1,721,006	)
	Partners’ deficit — beginning					(6,460,263	)			—				(3,814,700	)			—
	Partners’ deficit — ending				$	(8,222,910	)		$	(1,721,006	)		$	(8,222,910	)		$	(1,721,006	)

F-42

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Table of Contents

					For the				For the Period
					Nine Months				May 14, 2004
					Ended				(Date of Inception)
					Sept. 30, 2005				to Sept. 30, 2004
					(Unaudited)
Operating activities:
	Net loss				$	(4,408,210	)		$	(1,721,006	)
		Adjustments to reconcile net loss to net cash used in operating activities:
			Depreciation and amortization			873,219				155,703
			Provision for bad debts			722,451				123,185
Changes in operating assets and liabilities, net of effects from acquisition of business:
			Patient accounts receivable including third party settlements			(9,204,371	)			(2,713,071	)
			Prepaids and other current assets			(1,059,681	)			(1,061,467	)
			Deposits			1,080,131				55,353
			Accounts payable			794,643				1,191,780
			Accrued liabilities			2,051,174				43,367
			Deferred rent			3,367,664				1,151,559
Net cash used in operating activities						(5,782,980	)			(2,774,597	)
Investing activities:
			Purchase of restricted investment			(100,000	)			—
			Purchases of property and equipment			(841,860	)			(52,095	)
			Assets acquired in business acquisition			(284,292	)			—
			Cash acquired in business acquisition			—				201,280
Net cash (used in) provided by investing activities						(1,226,152	)			149,185
Financing activities:
			Borrowings under revolving credit facility			82,610,497				—
			Repayments of revolving credit facility			(69,929,295	)			—
			Borrowings under capital leases			2,181,898				—
			Repayment of capital leases			(56,389	)			—
			Borrowings under other long-term debt			99,000				4,050,458
			Repayment of long-term debt			(7,741,082	)			—
			Payment of deferred financing costs			(169,963	)			—
Net cash provided by financing activities						6,994,666				4,050,458
Net increase (decrease) in cash and cash equivalents						(14,466	)			1,425,046
Cash and cash equivalents — beginning						2,280,772				—
Cash and cash equivalents — ending					$	2,266,306			$	1,425,046
Supplemental cash flow information:
			Cash paid for interest		$	4,283,100			$	629,028
Non-cash transactions:
			Deferred financing costs funded by MPT notes payable revolving credit facility and MPT capital lease		$	352,627			$	1,500,000
			Business acquisition adjustment of goodwill		$	140,505			$	—
			Building and equipment acquisition funded by MPT capital lease		$	14,270,000			$	—
			License acquisition funded by MPT capital lease		$	880,000			$	—
			Lease deposit funded by MPT capital lease		$	472,500			$	3,296,365
			Equipment purchases funded by capital leases		$	457,381			$	—
			Notes issued relating to acquisition		$	—			$	38,093,842

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Table of Contents

1.	Basis of Presentation

2.	Organization and Summary of Significant Accounting Policies

	Organization

Subsidiaries		Location
92 Brick Road Operating Company LLC			Marlton, NJ
4499 Acushnet Avenue Operating Company LLC			New Bedford, MA
1300 Campbell Lane Operating Company LLC			Bowling Green, KY
8451 Pearl Street Operating Company LLC			Denver, CO
7173 North Sharon Avenue Operating Company LLC			Fresno, CA
1125 Sir Francis Drake Boulevard Operating Company LLC			Kentfield, CA
Northern California Rehabilitation Hospital, LLC			Redding, CA

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Table of Contents

	Use of Estimates

	Property and Equipment

Building under capital lease		Lesser of 15 years or remaining lease term
Leasehold improvements		Lesser of 15 years or remaining lease term
Furniture and equipment		2-7 years

	Intangible Assets

Goodwill			Indefinite
Certificates of Need/ Licenses			Indefinite

3.	Acquisitions

	Year Ended December 31, 2004

F-45

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Table of Contents

Location

Type

Beds

Acquisition Date

Marlton, NJ

IRF

46

(1)

July 1, 2004

Bowling Green, KY

IRF

60

July 1, 2004

Fresno, CA

IRF

62

July 1, 2004

Kentfield, CA

LTACH

60

July 1, 2004

New Bedford, MA

LTACH

90

August 17, 2004

Thornton, CO

IRF

117

(2)

August 17, 2004

(1)	Vibra subleases a floor of the Marlton building to an unaffiliated provider which operates 30 pediatric rehabilitation beds which are in addition to the 46 beds operated by Vibra.
(2)	Includes beds licensed as skilled nursing and beds licensed as psychiatric.

Notes issued, net of cash acquired			$	38,093,842
Liabilities assumed				7,477,988
				45,571,830
Fair value of assets acquired:
	Accounts receivable			(13,640,825	)
	Property and equipment			(2,749,840	)
	CONs/ Licenses			(4,260,000	)
	Other			(410,869	)
Cost in excess of fair value of net assets acquired (goodwill) at December 31, 2004			$	24,510,296

	Nine Months Ended September 30, 2005

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Capital lease			$	18,000,000
Cash paid by Vibra for the building				185,316
Cash paid by Vibra for the inventory				98,976
			$	18,284,292
Less other assets arising from transaction:
	Cash to Vibra			(2,181,898	)
	Lease deposit funded			(472,500	)
	Deferred financing costs			(195,602	)
Fair value of assets acquired			$	15,434,292
Fair value of assets acquired:
	Building		$	14,087,816
	Furniture and equipment			367,500
	Licenses			880,000
	Inventory			98,976
			$	15,434.292

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4.	Property and Equipment

		September 30, 2005
		Direct Ownership				Under Capital Leases				Total
Building		$	40,584			$	14,087,816			$	14,128,400
Leasehold improvements			351,379				—				351,379
Furniture and equipment			3,727,314				465,209				4,192,523
Less: accumulated depreciation and amortization			(737,627	)			(251,676	)			(989,303	)
Total		$	3,381,650			$	14,301,349			$	17,682,999

5.	Intangible Assets

		September 30, 2005
Goodwill		$	24,650,800
CONs/ Licenses		$	5,140,000

6.	Deposits

		September 30, 2005
MPT lease deposits		$	3,768,865
Other deposits			483,891
Total		$	4,252,756

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7.	Long-Term Debt

		September 30, 2005
MPT 10.25% hospital acquisition note		$	41,415,988
Merrill Lynch $17 million revolving credit facility			12,876,804
Other			83,875
		$	54,376,667
Less: current maturities			(57,410	)
		$	54,319,257

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September 30
		(In thousands)
2006		$	57,410
2007			471,823
2008			14,776,352
2009			2,103,662
2010			2,329,711
Thereafter			34,637,709
		$	54,376,667

8.	Obligations Under Capital Leases

		Fixed Charge				Lease Payment
12 Month Period Ending		Coverage Required				Coverage Required
June 30, 2006			40%				50%
September 30, 2006			40%				50%
December 31, 2006			40%				50%
March 31, 2007			60%				75%
June 30, 2007			100%				120%
September 30, 2007 and thereafter			125%				150%

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		MPT
Sept. 30		Redding Lease				Other				Total
2006		$	1,925,438			$	152,598			$	2,078,036
2007			1,973,573				143,883				2,117,456
2008			2,022,913				116,175				2,139,088
2009			2,073,486				97,185				2,170,671
2010			2,125,323				20,680				2,146,003
Thereafter			23,486,041				—				23,486,041
Total minimum lease payments			33,606,774				530,521				34,137,295
Less amount representing interest (imputed rate 9%)			(15,676,218	)			(98,662	)			(15,774,880	)
Present value of net minimum lease payments		$	17,930,556			$	431,859			$	18,362,415

9.	Related Party Transactions

10.	Commitments and Contingencies

	Litigation

F-51

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Table of Contents

	California Medicaid

	California Seismic Upgrade

11.	Segment Information

		For the Nine Months Ended Sept. 30, 2005
		IRF				LTACH				Other				Total
Net patient service revenue		$	45,508,866			$	49,661,351			$	—			$	95,170,217
Net loss from operations			(5,408,996	)			(239,049	)			(418,469	)			(6,066,514	)
Interest expense			2,600,746				1,682,354				—				4,283,100
Depreciation and amortization			542,011				271,249				59,959				873,219
Deferred rent			4,137,137				1,690,835				—				5,827,972
Total assets			52,290,934				30,900,543				832,181				84,023,658
Purchases of property and equipment			300,813				536,046				5,001				841,860
Goodwill			16,409,877				8,240,924				—				24,650,801

		For the Three Months Ended Sept. 30, 2005
		IRF				LTACH				Other				Total
Net patient service revenue		$	17,544,000			$	17,709,794			$	—			$	35,253,794
Net income (loss) from operations			(2,527,458	)			334,340				(180,080	)			(2,373,198	)
Interest expense			1,103,319				621,482				—				1,724,801
Depreciation and amortization			348,443				96,427				13,374				458,244

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		For the Three Months Ended September 30, 2004, and the
		Period May 14, 2004 (Date of Inception) to September 30, 2004
		IRF				LTACH				Other				Total
Net patient service revenue		$	12,074,611			$	8,771,224			$	—			$	20,845,835
Net loss from operations			(1,519,116	)			(747,580	)			(38,736	)			(2,305,432	)
Interest expense			724,882				300,295				—				1,025,177
Depreciation and amortization			97,048				58,655				—				155,703

12.	Subsequent Event

F-53

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	/s/ Parente Randolph, LLC

F-54

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Table of Contents

Assets
Current assets:
	Cash and cash equivalents			$	2,280,772
	Patient accounts receivable, net of allowance for doubtful collections of $302,988				17,319,154
	Third party settlements receivable				346,141
	Prepaid insurance				719,480
	Deposit for workers’ compensation claims				1,375,000
	Other current assets				518,650
		Total current assets			22,559,197
Property and equipment, net					2,662,546
Goodwill					24,510,296
Intangible assets					4,260,000
Deposits					3,485,387
Deferred financing and lease costs					1,543,424
		Total assets		$	59,020,850
Liabilities and Partner’s Capital
Current liabilities:
	Accounts payable			$	5,142,345
	Accounts payable — related parties				262,144
	Accrued liabilities				4,387,292
	Accrued insurance claims				1,441,516
		Total current liabilities			11,233,297
Deferred rent					2,460,308
Long-term debt, net of current maturities					49,141,945
Total liabilities					62,835,550
Partner’s capital					(3,814,700	)
		Total liabilities and partner’s capital		$	59,020,850

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Revenue:
	Net patient service revenue				$	48,266,019
Expenses:
	Cost of services					34,528,924
	General and administrative					5,631,229
	Rent expense					8,859,233
	Interest expense					2,293,402
	Management fee — Vibra Management, LLC					982,668
	Depreciation and amortization					302,194
	Bad debt expense					776,780
		Total expenses				53,374,430
			Loss from operations			(5,108,411	)
	Non-operating revenue					1,293,711
			Net loss			(3,814,700	)
	Partner’s capital — beginning					—
	Partner’s capital — ending				($	3,814,700	)

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Operating activities:
	Net loss				$	(3,814,700	)
		Adjustments to reconcile net loss to net cash used in operating activities:
			Depreciation and amortization			302,194
			Provision for bad debts			776,780
Changes in operating assets and liabilities, net of effects from acquisition of business:
			Accounts receivable including third party settlements			(4,801,250	)
			Prepaids and other current assets			(2,257,611	)
			Deposits			(133,671	)
			Accounts payable			1,884,531
			Accounts payable — related party			262,144
			Accrued liabilities			1,608,634
			Deferred rent			2,460,308
Net cash used in operating activities						(3,712,641	)
Investing activities:
			Purchases of property and equipment			(167,900	)
			Cash acquired in business acquisition			201,280
Net cash provided by investing activities						33,380
Financing activities:
			Proceeds of notes payable			6,050,458
			Payment of deferred financing costs			(90,425	)
Net cash provided by financing activities						5,960,033
Net increase in cash and cash equivalents						2,280,772
Cash and cash equivalents — beginning						—
Cash and cash equivalents — ending					$	2,280,772
Supplemental cash flow information:
			Cash paid for interest		$	2,293,402
Non-cash transactions:
			Notes issued relating to acquisition		$	38,093,842
			Lease deposits funded by notes payable		$	3,296,365
			Deferred financing costs funded by notes payable		$	1,500,000

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Subsidiaries		Location
92 Brick Road Operating Company LLC		Marlton, NJ
4499 Acushnet Avenue Operating Company LLC		New Bedford, MA
1300 Campbell Lane Operating Company LLC		Bowling Green, KY
8451 Pearl Street Operating Company LLC		Denver, CO
7173 North Sharon Avenue Operating Company LLC		Fresno, CA
1125 Sir Francis Drake Boulevard Operating Company LLC		Kentfield, CA

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Leasehold improvements		15 years
Furniture and equipment		2-7 years

Goodwill		Indefinite
Certificates of Need/Licenses		Indefinite

F-59

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F-60

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Location

Type

Beds

Acquisition Date

Marlton, NJ

IRF

46

(1)

July 1, 2004

Bowling Green, KY

IRF

60

July 1, 2004

Fresno, CA

IRF

62

July 1, 2004

Kentfield, CA

LTACH

60

July 1, 2004

New Bedford, MA

LTACH

90

August 17, 2004

Thornton, CO

IRF

117

(2)

August 17, 2004

(1)	Vibra subleases a floor of the Marlton building to an unaffiliated provider which operates 30 pediatric rehabilitation beds which are in addition to the 46 beds operated by Vibra.
(2)	Includes beds licensed as skilled nursing and beds licensed as psychiatric.

Notes issued, net of cash acquired			$	38,093,842
Liabilities assumed				7,477,988
				45,571,830
Fair value of assets acquired:
	Accounts receivable			(13,640,825	)
	Property and equipment			(2,749,840	)
	CONs/ Licenses			(4,260,000	)
	Other			(410,869	)
Cost in excess of fair value of net assets acquired (goodwill)			$	24,510,296

Leasehold improvements		$	48,055
Furniture and equipment			2,869,685
			2,917,740
Less: accumulated depreciation and amortization			255,194
Total		$	2,662,546

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MPT lease deposits		$	3,296,365
Other deposits			189,022
Total		$	3,485,387

		(In thousands)
December 31, 2005		$	—
2006			—
2007			902
2008			9,675
2009			2,158
Thereafter			36,407
		$	49,142

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	Leases

F-63

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Table of Contents

		MPT Rent				Outpatient
		Obligation				Clinics				Total
December 31, 2005		$	14,344			$	205			$	14,549
2006			16,082				122				16,204
2007			16,485				84				16,569
2008			16,897				55				16,952
2009			17,319				—				17,319
Thereafter			188,465				—				188,465
		$	269,592			$	466			$	270,058

December 31, 2005		$	1,119
2006			1,144
2007			1,170
2008			1,197
2009			1,223
Thereafter			4,614
		$	10,467

	Litigation

	California Medicaid

F-64

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	California Seismic Upgrade

9.	Retirement Savings Plan

10.	Segment Information

		For the Period from Inception (May 14, 2004) through
		December 31, 2004
		IRF				LTACH				Other				Total
Net patient service revenue		$	24,741,573			$	23,524,446			$	—			$	48,266,019
Net operating loss			(3,649,867	)			(1,395,339	)			(63,205	)			(5,108,411	)
Interest expense			1,493,279				800,123				—				2,293,402
Depreciation and amortization			185,746				116,448				—				302,194
Deferred rent			1,833,216				627,092				—				2,460,308
Total assets			32,175,207				26,702,535				143,108				59,020,850
Purchases of property and equipment			75,582				92,318				—				167,900
Goodwill			16,664,491				7,845,805				—				24,510,296

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11.	Subsequent Event

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Table of Contents

Summary			1
Risk Factors			17
A Warning About Forward Looking Statements			41
Use of Proceeds			42
Capitalization			43
Distribution Policy			44
Selected Financial Information			45
Management’s Discussion and Analysis of Financial Condition and Results of Operations			47
Our Business			57
Our Portfolio			73
Management			104
Compensation Committee Interlocks and Insider Participation			115
Market Price of Our Common Stock			115
Principal Stockholders			116
Selling Stockholders			117
Registration Rights Agreement			128
Certain Relationships and Related Transactions			129
Investment Policies and Policies with Respect to Certain Activities			132
Description of Capital Stock			136
Material Provisions of Maryland Law and of our Charter and Bylaws			140
Partnership Agreement			145
United States Federal Income Tax Considerations			149
Plan of Distribution			168
Legal Matters			170
Experts			171
Where You Can Find More Information			171
Index to Financial Statements and Financial Statement Schedules			F-1

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Table of Contents

Item 31.	Other Expenses of Issuance and Distribution.

		Amount To Be Paid
SEC registration fee		$	28,832
Transfer agent and registrar fees			100,000
Legal fees and expenses			500,000
Accounting fees and expenses			165,000
Printing and mailing fees			115,000
Miscellaneous			10,000
Total			918,832

Item 32.	Sales to Special Parties.

Item 33.	Recent Sales of Unregistered Securities.

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Table of Contents

Item 34.	Indemnification of Directors and Officers.

	•	the act or omission of the director or officer was material to the cause of action adjudicated in the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty;
	•	the director or officer actually received an improper personal benefit in money, property or services; or
	•	with respect to any criminal proceeding, the director or officer had reasonable cause to believe his or her act or omission was unlawful.

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Table of Contents

Item 35.	Treatment of Proceeds from Stock Being Registered.

Item 36.	Financial Statements and Exhibits.

Exhibit
Number				Exhibit Title
	3	.1*		Registrant’s Second Articles of Amendment and Restatement
	3	.2**		Registrant’s Amended and Restated Bylaws
	3	.3****		Articles of Amendment to Second Amended and Restated Articles of Incorporation
	4	.1*		Form of Common Stock Certificate
	4	.2*		Registration Rights Agreement among Registrant, Friedman, Billings, Ramsey & Co., Inc. and certain holders of the Registrant’s common stock, dated April 7, 2004
	5	.1***		Opinion of Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C. with respect to the legality of the shares being registered
	8	.1***		Opinion of Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C. with respect to certain tax matters
	10	.1*		First Amended and Restated Agreement of Limited Partnership of MPT Operating Partnership, L.P.
	10	.2*		Amended and Restated 2004 Equity Incentive Plan
	10	.3*		Employment Agreement between the Registrant and Edward K. Aldag, Jr., dated September 10, 2003
	10	.4*		First Amendment to Employment Agreement between the Registrant and Edward K. Aldag, Jr., dated March 8, 2004
	10	.5*		Employment Agreement between the Registrant and Emmett E. McLean, dated September 10, 2003
	10	.6*		Employment Agreement between the Registrant and R. Steven Hamner, dated September 10, 2003
	10	.7*		Amended and Restated Employment Agreement between the Registrant and William G. McKenzie, dated September 10, 2003
	10	.8*		Lease Agreement between MPT West Houston MOB, L.P. and Stealth L.P., dated June 17, 2004
	10	.9*		Lease Agreement between MPT West Houston Hospital, L.P. and Stealth L.P., dated June 17, 2004
	10	.10*		Third Amended and Restated Lease Agreement between 1300 Campbell Lane, LLC and 1300 Campbell Lane Operating Company, LLC, dated December 20, 2004
	10	.11*		First Amendment to Third Amended and Restated Lease Agreement between 1300 Campbell Lane, LLC and 1300 Campbell Lane Operating Company, LLC, dated December 31, 2004
	10	.12*		Second Amended and Restated Lease Agreement between 92 Brick Road, LLC and 92 Brick Road, Operating Company, LLC, dated December 20, 2004
	10	.13*		First Amendment to Second Amended and Restated Lease Agreement between 92 Brick Road, LLC and 92 Brick Road, Operating Company, LLC, dated December 31, 2004

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Exhibit
Number				Exhibit Title
	10	.14*		Third Amended and Restated Lease Agreement between San Joaquin Health Care Associates Limited Partnership and 7173 North Sharon Avenue Operating Company, LLC, dated December 20, 2004
	10	.15*		First Amendment to Third Amended and Restated Lease Agreement between San Joaquin Health Care Associates Limited Partnership and 7173 North Sharon Avenue Operating Company, LLC, dated December 31, 2004
	10	.16*		Second Amended and Restated Lease Agreement between 8451 Pearl Street, LLC and 8451 Pearl Street Operating Company, LLC, dated December 20, 2004
	10	.17*		First Amendment Second Amended and Restated Lease Agreement between 8451 Pearl Street, LLC and 8451 Pearl Street Operating Company, LLC, dated December 31, 2004
	10	.18*		Second Amended and Restated Lease Agreement between 4499 Acushnet Avenue, LLC and 4499 Acushnet Avenue Operating Company, LLC, dated December 20, 2004
	10	.19*		First Amendment to Second Amended and Restated Lease Agreement between 4499 Acushnet Avenue, LLC and 4499 Acushnet Avenue Operating Company, LLC, dated December 31, 2004
	10	.20*		Third Amended and Restated Lease Agreement between Kentfield THCI Holding Company, LLC and 1125 Sir Francis Drake Boulevard Operating Company, LLC, dated December 20, 2004
	10	.21*		First Amendment to Third Amended and Restated Lease Agreement between Kentfield THCI Holding Company, LLC and 1125 Sir Francis Drake Boulevard Operating Company, LLC, dated December 31, 2004
	10	.22*		Loan Agreement between Colonial Bank, N.A., and MPT West Houston MOB, L.P., dated December 17, 2004
	10	.23*		Loan Agreement between Colonial Bank, N.A., and MPT West Houston Hospital, L.P., dated December 17, 2004
	10	.24*		Loan Agreement between Merrill Lynch Capital and 4499 Acushnet Avenue, LLC, 8451 Pearl Street, LLC, 92 Brick Road, LLC, 1300 Campbell Lane, LLC, Kentfield THCI Holding Company, LLC and San Joaquin Health Care Associates, LP, dated December 31, 2004
	10	.25*		Payment Guaranty made by the Registrant and MPT Operating Partnership, L.P. in favor of Merrill Lynch Capital, dated December 31, 2004
	10	.26*		Purchase Agreement among THCI Company, LLC, THCI of California, LLC, THCI of Massachusetts, LLC, THCI Mortgage Holding Company, LLC and MPT Operating Partnership, L.P., dated May 20, 2004
	10	.27*		Purchase and Sale Agreement among MPT Operating Partnership, L.P., MPT of Victorville, LLC, Prime A Investments, L.L.C., Desert Valley Health System, Inc., Desert Valley Hospital, Inc. and Desert Valley Medical Group, Inc., dated February 28, 2005
	10	.28*		Lease Agreement between MPT of Victorville, LLC and Desert Valley Hospital, Inc., dated February 28, 2005
	10	.29*		Purchase and Sale Agreement among MPT Operating Partnership, L.P., MPT of Bucks County Hospital, L.P., Bucks County Oncoplastic Institute, LLC, Jerome S. Tannenbaum, M.D., M. Stephen Harrison and DSI Facility Development, LLC, dated March 3, 2005
	10	.30*		Employment Agreement between the Registrant and Michael G. Stewart, dated April 28, 2005
	10	.31*		Letter of Commitment between MPT Operating Partnership, L.P. and Monroe Hospital Operating Hospital, dated February 28, 2005
	10	.32*		Letter of Commitment between MPT Operating Partnership, L.P., Covington Healthcare Properties, LLC and Denham Springs Healthcare Properties, LLC, dated March 14, 2005
	10	.33*		Letter of Commitment between MPT Operating Partnership, L.P. and North Cypress Medical Center Operating Partnership, Ltd., dated March 16, 2005
	10	.34*		Letter of Commitment between MPT Operating Partnership, L.P., Hammond Healthcare Properties, LLC and Hammond Rehabilitation Hospital, LLC, dated April 1, 2005
	10	.35*		Letter of Commitment between MPT Operating Partnership, L.P. and Diversified Specialty Institutes, Inc., dated March 3, 2005

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Table of Contents

Exhibit
Number				Exhibit Title
	10	.36*		Amendment to Letter of Commitment between MPT Operating Partnership, L.P. and Diversified Specialty Institutes, Inc., dated March 31, 2005
	10	.37*		Letter of Commitment between MPT Operating Partnership, L.P., MPT of Victorville, LLC and Desert Valley Hospital, Inc., dated February 28, 2005
	10	.38*		Amendment to Purchase and Sale Agreement among MPT Operating Partnership, L.P., MPT of Bucks County Hospital, L.P., Bucks County Oncoplastic Institute, LLC, DSI Facility Development, LLC, Jerome S. Tannenbaum, M.D., M. Stephen Harrison and G. Patrick Maxwell, M.D., dated April 29, 2005
	10	.39*		Sublease Agreement between MPT of North Cypress, L.P. and North Cypress Medical Center Operating Company, Ltd., dated as of June 1, 2005
	10	.40*		Net Ground Lease between North Cypress Property Holdings, Ltd. and MPT of North Cypress, L.P., dated as of June 1, 2005
	10	.41*		Purchase and Sale Agreement between MPT of North Cypress, L.P. and North Cypress Medical Center Operating Company, Ltd., dated as of June 1, 2005
	10	.42*		Contract for Purchase and Sale of Real Property between North Cypress Property Holdings, Ltd. and MPT of North Cypress, L.P., dated as of June 1, 2005
	10	.43*		Lease Agreement between MPT of North Cypress, L.P. and North Cypress Medical Center Operating Company, Ltd., dated as of June 1, 2005
	10	.44*		Net Ground Lease between Northern Healthcare Land Ventures, Ltd. and MPT of North Cypress, L.P., dated as of June 1, 2005
	10	.45*		Amendment to the First Amended and Restated Agreement of Limited Partnership of MPT Operating Partnership, L.P.
	10	.46*		Construction Loan Agreement between North Cypress Medical Center Operating Company, Ltd. and MPT Finance Company, LLC, dated June 1, 2005
	10	.47*		Purchase, Sale and Loan Agreement among MPT Operating Partnership, L.P., MPT of Covington, LLC, MPT of Denham Springs, LLC, Covington Healthcare Properties, L.L.C., Denham Springs Healthcare Properties, L.L.C., Gulf States Long Term Acute Care of Covington, L.L.C. and Gulf States Long Term Acute Care of Denham Springs, L.L.C., dated June 9, 2005
	10	.48*		Lease Agreement between MPT of Covington, LLC and Gulf States Long Term Acute Care of Covington, L.L.C., dated June 9, 2005
	10	.49*		Promissory Note made by Denham Springs Healthcare Properties, L.L.C. in favor of MPT of Denham Springs, LLC, dated June 9, 2005
	10	.50*		Purchase and Sale Agreement among MPT Operating Partnership, L.P., MPT of Redding, LLC, Vibra Healthcare, LLC and Northern California Rehabilitation Hospital, LLC, dated June 30, 2005
	10	.51*		Lease Agreement between Northern California Rehabilitation Hospital, LLC and MPT of Redding, LLC, dated June 30, 2005
	10	.52*		Ground Lease Agreement between National Medical Specialty Hospital of Redding, Inc. and Guardian Postacute Services, Inc., dated November 14, 1997
	10	.53*		Ground Lease Agreement between West Jersey Health System and West Jersey/Mediplex Rehabilitation Limited Partnership, dated July 15, 1993
	10	.54*		Amendment No. 1 to Ground Lease Agreement between National Medical Specialty Hospital of Redding, Inc. and Ocadian Care Centers, Inc., dated November 29, 2001
	10	.55*		Form of Indemnification Agreement between the Registrant and executive officers and directors
	10	.56***		Lease Agreement between Bucks County Oncoplastic Institute, LLC and MPT of Bucks County, L.P., dated September 16, 2005, as corrected.
	10	.57***		Development Agreement among DSI Facility Development, LLC, Bucks County Oncoplastic Institute, LLC and MPT of Bucks County, L.P., dated September 16, 2005.
	10	.58***		Funding Agreement among DSI Facility Development, LLC, Bucks County Oncoplastic Institute, LLC and MPT of Bucks County, L.P., dated September 16, 2005.

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Exhibit
Number				Exhibit Title
	10	.59***		Purchase and Sale Agreement among MPT Operating Partnership, L.P., MPT of Bloomington, LLC, Southern Indiana Medical Park II, LLC and Monroe Hospital, LLC, dated October 7, 2005.
	10	.60***		Lease Agreement between Monroe Hospital, LLC and MPT of Bloomington, LLC, dated October 7, 2005.
	10	.61***		Development Agreement among Monroe Hospital, LLC, Monroe Hospital Development, LLC and MPT of Bloomington, LLC, dated October 7, 2005.
	10	.62***		Funding Agreement between Monroe Hospital, LLC and MPT of Bloomington, LLC, dated October 7, 2005.
	10	.63***		First Amendment to Lease Agreement between MPT West Houston Hospital, L.P. and Stealth, L.P., dated September 2, 2005.
	10	.64*****		Credit Agreement dated October 27, 2005, among MPT Operating Partnership, L.P., the borrower, and Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services, Inc., as Administrative Agent and Lender, and Additional Lenders from Time to Time a Party thereto.
	10	.65		Lease Agreement among Veritas Health Services, Inc., Prime Healthcare Services, LLC and MPT of Chino, LLC, dated November 30, 2005.
	10	.66		Purchase and Sale Agreement among MPT Operating Partnership, L.P., MPT of Chino, LLC, Prime Healthcare Services, LLC, Veritas Health Services, Inc., Prime Healthcare Services, Inc., Desert Valley Hospital, Inc. and Desert Valley Medical Group, Inc., dated November 30, 2005.
	10	.67		Loan Agreement among MPT Operating Partnership, L.P., MPT of Odessa Hospital, L.P., Alliance Hospital, Ltd. and SRI-SAI Enterprises, Inc., dated December 23, 2005.
	10	.68		Promissory Note by Alliance Hospital, Ltd. In favor of MPT of Odessa Hospital, L.P., dated December 23, 2005.
	10	.69		Purchase and Sale Agreement among MPT Operating Partnership, L.P., MPT of Sherman Oaks, LLC, Prime A Investments, L.L.C., Prime Healthcare Services II, LLC, Prime Healthcare Services, Inc., Desert Valley Medical Group, Inc. and Desert Valley Hospital, Inc., dated December 30, 2005.
	10	.70		Lease Agreement between MPT of Sherman Oaks, LLC and Prime Healthcare Services II, LLC, dated December 30, 2005.
	21	.1*		Subsidiaries of the Registrant
	23	.1		Consent of KPMG LLP
	23	.2		Consent of Parente Randolph, LLC
	23	.3***		Consent of Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C. (included in Exhibits 5.1 and 8.1)
	24	.1***		Power of Attorney, included on signature page of the Registrant’s Form S-11 filed with the Commission on January 6, 2005
	24	.2***		Power of Attorney, included on signature page of the Registrant’s Amendment No. 1 to the Registrant’s Form S-11 filed with the Commission on July 26, 2005

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Item 37.	Undertakings.

	(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

	(i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
	(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
	(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

	(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
	(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

II-7

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Table of Contents

	Medical Properties Trust, Inc.

	By:	/s/ R. Steven Hamner

	R. Steven Hamner
	Executive Vice President,
	Chief Financial Officer and Director

Signature				Title		Date
* Edward K. Aldag, Jr.				Chairman of the Board, President and Chief Executive Officer		December 30, 2005
* Virginia A. Clarke				Director		December 30, 2005
* Bryan L. Goolsby				Director		December 30, 2005
/s/ R. Steven Hamner R. Steven Hamner				Executive Vice President, Chief Financial Officer and Director		December 30, 2005
* G. Steven Dawson				Director		December 30, 2005
* Robert E. Holmes, Ph.D.				Director		December 30, 2005
* William G. McKenzie				Vice Chairman of the Board		December 30, 2005
* L. Glenn Orr, Jr.				Director		December 30, 2005
*By:		/s/ R. Steven Hamner R. Steven Hamner Attorney-in-Fact				December 30, 2005

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Table of Contents

Exhibit
Number				Exhibit Title
	3	.1*		Registrant’s Second Articles of Amendment and Restatement
	3	.2**		Registrant’s Amended and Restated Bylaws
	3	.3****		Articles of Amendment to Second Amended and Restated Articles of Incorporation
	4	.1*		Form of Common Stock Certificate
	4	.2*		Registration Rights Agreement among Registrant, Friedman, Billings, Ramsey & Co., Inc. and certain holders of the Registrant’s common stock, dated April 7, 2004
	5	.1***		Opinion of Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C. with respect to the legality of the shares being registered
	8	.1***		Opinion of Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C. with respect to certain tax matters
	10	.1*		First Amended and Restated Agreement of Limited Partnership of MPT Operating Partnership, L.P.
	10	.2*		Amended and Restated 2004 Equity Incentive Plan
	10	.3*		Employment Agreement between the Registrant and Edward K. Aldag, Jr., dated September 10, 2003
	10	.4*		First Amendment to Employment Agreement between the Registrant and Edward K. Aldag, Jr., dated March 8, 2004
	10	.5*		Employment Agreement between the Registrant and Emmett E. McLean, dated September 10, 2003
	10	.6*		Employment Agreement between the Registrant and R. Steven Hamner, dated September 10, 2003
	10	.7*		Amended and Restated Employment Agreement between the Registrant and William G. McKenzie, dated September 10, 2003
	10	.8*		Lease Agreement between MPT West Houston MOB, L.P. and Stealth L.P., dated June 17, 2004
	10	.9*		Lease Agreement between MPT West Houston Hospital, L.P. and Stealth L.P., dated June 17, 2004
	10	.10*		Third Amended and Restated Lease Agreement between 1300 Campbell Lane, LLC and 1300 Campbell Lane Operating Company, LLC, dated December 20, 2004
	10	.11*		First Amendment to Third Amended and Restated Lease Agreement between 1300 Campbell Lane, LLC and 1300 Campbell Lane Operating Company, LLC, dated December 31, 2004
	10	.12*		Second Amended and Restated Lease Agreement between 92 Brick Road, LLC and 92 Brick Road, Operating Company, LLC, dated December 20, 2004
	10	.13*		First Amendment to Second Amended and Restated Lease Agreement between 92 Brick Road, LLC and 92 Brick Road, Operating Company, LLC, dated December 31, 2004
	10	.14*		Third Amended and Restated Lease Agreement between San Joaquin Health Care Associates Limited Partnership and 7173 North Sharon Avenue Operating Company, LLC, dated December 20, 2004
	10	.15*		First Amendment to Third Amended and Restated Lease Agreement between San Joaquin Health Care Associates Limited Partnership and 7173 North Sharon Avenue Operating Company, LLC, dated December 31, 2004
	10	.16*		Second Amended and Restated Lease Agreement between 8451 Pearl Street, LLC and 8451 Pearl Street Operating Company, LLC, dated December 20, 2004
	10	.17*		First Amendment to Second Amended and Restated Lease Agreement between 8451 Pearl Street, LLC and 8451 Pearl Street Operating Company, LLC, dated December 31, 2004
	10	.18*		Second Amended and Restated Lease Agreement between 4499 Acushnet Avenue, LLC and 4499 Acushnet Avenue Operating Company, LLC, dated December 20, 2004
	10	.19*		First Amendment to Second Amended and Restated Lease Agreement between 4499 Acushnet Avenue, LLC and 4499 Acushnet Avenue Operating Company, LLC, dated December 31, 2004

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Exhibit
Number				Exhibit Title
	10	.20*		Third Amended and Restated Lease Agreement between Kentfield THCI Holding Company, LLC and 1125 Sir Francis Drake Boulevard Operating Company, LLC, dated December 20, 2004
	10	.21*		First Amendment to Third Amended and Restated Lease Agreement between Kentfield THCI Holding Company, LLC and 1125 Sir Francis Drake Boulevard Operating Company, LLC, dated December 31, 2004
	10	.22*		Loan Agreement between Colonial Bank, N.A., and MPT West Houston MOB, L.P., dated December 17, 2004
	10	.23*		Loan Agreement between Colonial Bank, N.A., and MPT West Houston Hospital, L.P., dated December 17, 2004
	10	.24*		Loan Agreement between Merrill Lynch Capital and 4499 Acushnet Avenue, LLC, 8451 Pearl Street, LLC, 92 Brick Road, LLC, 1300 Campbell Lane, LLC, Kentfield THCI Holding Company, LLC and San Joaquin Health Care Associates, LP, dated December 31, 2004
	10	.25*		Payment Guaranty made by the Registrant and MPT Operating Partnership, L.P. in favor of Merrill Lynch Capital, dated December 31, 2004
	10	.26*		Purchase Agreement among THCI Company, LLC, THCI of California, LLC, THCI of Massachusetts, LLC, THCI Mortgage Holding Company, LLC and MPT Operating Partnership, L.P., dated May 20, 2004
	10	.27*		Purchase and Sale Agreement among MPT Operating Partnership, L.P., MPT of Victorville, LLC, Prime A Investments, L.L.C., Desert Valley Health System, Inc., Desert Valley Hospital, Inc. and Desert Valley Medical Group, Inc., dated February 28, 2005
	10	.28*		Lease Agreement between MPT of Victorville, LLC and Desert Valley Hospital, Inc., dated February 28, 2005
	10	.29*		Purchase and Sale Agreement among MPT Operating Partnership, L.P., MPT of Bucks County Hospital, L.P., Bucks County Oncoplastic Institute, LLC, Jerome S. Tannenbaum, M.D., M. Stephen Harrison and DSI Facility Development, LLC, dated March 3, 2005
	10	.30*		Employment Agreement between the Registrant and Michael G. Stewart, dated April 28, 2005
	10	.31*		Letter of Commitment between MPT Operating Partnership, L.P. and Monroe Hospital Operating Hospital, dated February 28, 2005
	10	.32*		Letter of Commitment between MPT Operating Partnership, L.P., Covington Healthcare Properties, LLC and Denham Springs Healthcare Properties, LLC, dated March 14, 2005
	10	.33*		Letter of Commitment between MPT Operating Partnership, L.P. and North Cypress Medical Center Operating Partnership, Ltd., dated March 16, 2005
	10	.34*		Letter of Commitment between MPT Operating Partnership, L.P., Hammond Healthcare Properties, LLC and Hammond Rehabilitation Hospital, LLC, dated April 1, 2005
	10	.35*		Letter of Commitment between MPT Operating Partnership, L.P. and Diversified Specialty Institutes, Inc., dated March 3, 2005
	10	.36*		Amendment to Letter of Commitment between MPT Operating Partnership, L.P. and Diversified Specialty Institutes, Inc., dated March 31, 2005
	10	.37*		Letter of Commitment between MPT Operating Partnership, L.P., MPT of Victorville, LLC and Desert Valley Hospital, Inc., dated February 28, 2005
	10	.38*		Amendment to Purchase and Sale Agreement among MPT Operating Partnership, L.P., MPT of Bucks County Hospital, L.P., Bucks County Oncoplastic Institute, LLC, DSI Facility Development, LLC, Jerome S. Tannenbaum, M.D., M. Stephen Harrison and G. Patrick Maxwell, M.D., dated April 29, 2005
	10	.39*		Sublease Agreement between MPT of North Cypress, L.P. and North Cypress Medical Center Operating Company, Ltd., dated as of June 1, 2005
	10	.40*		Net Ground Lease between North Cypress Property Holdings, Ltd. and MPT of North Cypress, L.P., dated as of June 1, 2005

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Exhibit
Number				Exhibit Title
	10	.41*		Purchase and Sale Agreement between MPT of North Cypress, L.P. and North Cypress Medical Center Operating Company, Ltd., dated as of June 1, 2005
	10	.42*		Contract for Purchase and Sale of Real Property between North Cypress Property Holdings, Ltd. and MPT of North Cypress, L.P., dated as of June 1, 2005
	10	.43*		Lease Agreement between MPT of North Cypress, L.P. and North Cypress Medical Center Operating Company, Ltd., dated as of June 1, 2005
	10	.44*		Net Ground Lease between Northern Healthcare Land Ventures, Ltd. and MPT of North Cypress, L.P., dated as of June 1, 2005
	10	.45*		Amendment to the First Amended and Restated Agreement of Limited Partnership of MPT Operating Partnership, L.P.
	10	.46*		Construction Loan Agreement between North Cypress Medical Center Operating Company, Ltd. and MPT Finance Company, LLC, dated June 1, 2005
	10	.47*		Purchase, Sale and Loan Agreement among MPT Operating Partnership, L.P., MPT of Covington, LLC, MPT of Denham Springs, LLC, Covington Healthcare Properties, L.L.C., Denham Springs Healthcare Properties, L.L.C., Gulf States Long Term Acute Care of Covington, L.L.C. and Gulf States Long Term Acute Care of Denham Springs, L.L.C., dated June 9, 2005
	10	.48*		Lease Agreement between MPT of Covington, LLC and Gulf States Long Term Acute Care of Covington, L.L.C., dated June 9, 2005
	10	.49*		Promissory Note made by Denham Springs Healthcare Properties, L.L.C. in favor of MPT of Denham Springs, LLC, dated June 9, 2005
	10	.50*		Purchase and Sale Agreement among MPT Operating Partnership, L.P., MPT of Redding, LLC, Vibra Healthcare, LLC and Northern California Rehabilitation Hospital, LLC, dated June 30, 2005
	10	.51*		Lease Agreement between Northern California Rehabilitation Hospital, LLC and MPT of Redding, LLC, dated June 30, 2005
	10	.52*		Ground Lease Agreement between National Medical Specialty Hospital of Redding, Inc. and Guardian Postacute Services, Inc., dated November 14, 1997
	10	.53*		Ground Lease Agreement between West Jersey Health System and West Jersey/Mediplex Rehabilitation Limited Partnership, dated July 15, 1993
	10	.54*		Amendment No. 1 to Ground Lease Agreement between National Medical Specialty Hospital of Redding, Inc. and Ocadian Care Centers, Inc., dated November 29, 2001
	10	.55*		Form of Indemnification Agreement between the Registrant and executive officers and directors
	10	.56***		Lease Agreement between Bucks County Oncoplastic Institute, LLC and MPT of Bucks County, L.P., dated September 16, 2005, as corrected.
	10	.57***		Development Agreement among DSI Facility Development, LLC, Bucks County Oncoplastic Institute, LLC and MPT of Bucks County, L.P., dated September 16, 2005.
	10	.58***		Funding Agreement among DSI Facility Development, LLC, Bucks County Oncoplastic Institute, LLC and MPT of Bucks County, L.P., dated September 16, 2005.
	10	.59***		Purchase and Sale Agreement among MPT Operating Partnership, L.P., MPT of Bloomington, LLC, Southern Indiana Medical Park II, LLC and Monroe Hospital, LLC, dated October 7, 2005.
	10	.60***		Lease Agreement between Monroe Hospital, LLC and MPT of Bloomington, LLC, dated October 7, 2005.
	10	.61***		Development Agreement among Monroe Hospital, LLC, Monroe Hospital Development, LLC and MPT of Bloomington, LLC, dated October 7, 2005.
	10	.62***		Funding Agreement between Monroe Hospital, LLC and MPT of Bloomington, LLC, dated October 7, 2005.

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Exhibit
Number				Exhibit Title
	10	.63***		First Amendment to Lease Agreement between MPT West Houston Hospital, L.P. and Stealth, L.P., dated September 2, 2005.
	10	.64*****		Credit Agreement dated October 27, 2005, among MPT Operating Partnership, L.P., the borrower, and Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services, Inc., as Administrative Agent and Lender, and Additional Lenders from Time to Time a Party thereto.
	10	.65		Lease Agreement among Veritas Health Services, Inc., Prime Healthcare Services, LLC and MPT of Chino, LLC, dated November 30, 2005.
	10	.66		Purchase and Sale Agreement among MPT Operating Partnership, L.P., MPT of Chino, LLC, Prime Healthcare Services, LLC, Veritas Health Services, Inc., Prime Healthcare Services, Inc., Desert Valley Hospital, Inc. and Desert Valley Medical Group, Inc., dated November 30, 2005.
	10	.67		Loan Agreement among MPT Operating Partnership, L.P., MPT of Odessa Hospital, L.P., Alliance Hospital, Ltd. and SRI-SAI Enterprises, Inc., dated December 23, 2005.
	10	.68		Promissory Note by Alliance Hospital, Ltd. In favor of MPT of Odessa Hospital, L.P., dated December 23, 2005.
	10	.69		Purchase and Sale Agreement among MPT Operating Partnership, L.P., MPT of Sherman Oaks, LLC, Prime A Investments, L.L.C., Prime Healthcare Services II, LLC, Prime Healthcare Services, Inc., Desert Valley Medical Group, Inc. and Desert Valley Hospital, Inc., dated December 30, 2005.
	10	.70		Lease Agreement between MPT of Sherman Oaks, LLC and Prime Healthcare Services II, LLC, dated December 30, 2005.
	21	.1*		Subsidiaries of the Registrant
	23	.1		Consent of KPMG LLP
	23	.2		Consent of Parente Randolph, LLC
	23	.3***		Consent of Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C. (included in Exhibits 5.1 and 8.1)
	24	.1***		Power of Attorney, included on signature page of the Registrant’s Form S-11 filed with the Commission on January 6, 2005
	24	.2***		Power of Attorney included on signature page of the Registrant’s Amendment No. 1 to the Registration Statement on Form S-11 filed with the Commission on July 26, 2005.

II-12

                                                                   EXHIBIT 10.65

                                                                       CHINO, CA

                                 LEASE AGREEMENT

                               MPT OF CHINO, LLC,
                      a Delaware limited liability company

                                     Lessor

                                       AND

                          VERITAS HEALTH SERVICES, INC.
                            a California corporation

                                     Lessee

                                       AND

                         PRIME HEALTHCARE SERVICES, LLC,
                     a California limited liability company

                                      Prime

                                    Property:

          One Hundred Twenty Six (126)-Bed Acute Care Hospital Facility
            (Commonly referred to as the Chino Valley Medical Center)
                               5451 Walnut Avenue
                 Chino, San Bernardino County, California 91710

                               November 30, 2005



                                Table of Contents



                                                                            Page
                                                                            ----
                                                                         
ARTICLE I         LEASED PROPERTY; TERM..................................     1
ARTICLE II        DEFINITIONS............................................     2
ARTICLE III       RENT...................................................    11
   3.1            Base Rent..............................................    11
   3.2            Additional Charges.....................................    12
   3.3            Absolute Net Lease.....................................    12
   3.4            Lease Deposit..........................................    12
   3.5            Adjustments............................................    12
   3.6            Rent and Payments under Parking Lot Lease..............    12
ARTICLE IV        IMPOSITIONS............................................    13
   4.1            Payment of Impositions.................................    13
   4.2            Adjustment of Impositions..............................    13
   4.3            Utility Charges........................................    13
   4.4            Insurance Premiums.....................................    13
ARTICLE V         NO TERMINATION.........................................    14
   5.1            Acknowledgement........................................    14
ARTICLE VI        OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY.....    14
   6.1            Ownership of the Leased Property.......................    14
   6.2            Lessee's Personal Property.............................    14
ARTICLE VII       CONDITION AND USE OF LEASED PROPERTY...................    15
   7.1            Condition of the Leased Property.......................    15
   7.2            Use of the Leased Property.............................    15
   7.3            Lessor to Grant Easements..............................    16
ARTICLE VIII      LEGAL AND INSURANCE REQUIREMENTS.......................    16
   8.1            Compliance with Legal and Insurance Requirements.......    16
   8.2            Legal Requirement Covenants............................    17
   8.3            Hazardous Materials....................................    17
   8.4            Healthcare Laws........................................    17
   8.5            Representations and Warranties.........................    18
   8.6            Single Purpose Entity..................................    18
   8.7            Organizational Documents...............................    18
ARTICLE IX        REPAIRS; RESERVE; RESTRICTIONS.........................    19
   9.2            Reserves for Extraordinary Repairs.....................    20
   9.3            Encroachments; Restrictions............................    20
ARTICLE X         CAPITAL ADDITIONS......................................    21
   10.1           Construction of Capital Additions to the Leased
                     Property............................................    21
   10.2           Capital Additions Financed by Lessee...................    21
   10.3           Capital Additions Financed by Lessor...................    22
   10.4           Salvage................................................    24
ARTICLE XI        LIENS..................................................    24
ARTICLE XII       PERMITTED CONTESTS.....................................    24



                                        i



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                                   (continued)



                                                                            Page
                                                                            ----
                                                                         
ARTICLE XIII      INSURANCE..............................................    25
   13.1           General Insurance Requirements.........................    25
   13.2           Additional Insurance...................................    27
   13.3           Waiver of Subrogation..................................    27
   13.4           Form of Insurance......................................    27
   13.5           Increase in Limits.....................................    28
   13.6           Blanket Policy.........................................    28
   13.7           No Separate Insurance..................................    28
ARTICLE XIV       FIRE AND CASUALTY......................................    29
   14.1           Insurance Proceeds.....................................    29
   14.2           Reconstruction in the Event of Damage or Destruction
                     Covered by Insurance................................    29
   14.3           Reconstruction in the Event of Damage or Destruction
                     Not Covered by Insurance............................    30
   14.4           Lessee's Personal Property.............................    30
   14.5           Restoration of Lessee's Property.......................    30
   14.6           No Abatement of Rent...................................    30
   14.7           Damage Near End of Term................................    30
   14.8           Termination of Right to Purchase.......................    30
   14.9           Waiver.................................................    31
ARTICLE XV        CONDEMNATION...........................................    31
   15.1           Definitions............................................    31
   15.2           Parties' Rights and Obligations........................    31
   15.3           Total Taking...........................................    31
   15.4           Partial Taking.........................................    31
   15.5           Restoration............................................    31
   15.6           Award Distribution.....................................    31
   15.7           Temporary Taking.......................................    32
ARTICLE XVI       DEFAULT................................................    32
   16.1           Events of Default......................................    32
   16.2           Events of Default in Financial Covenants...............    36
   16.3           Additional Expenses....................................    38
   16.4           Intentionally Omitted..................................    38
   16.5           Waiver.................................................    38
   16.6           Application of Funds...................................    38
   16.7           Notices by Lessor......................................    38
   16.8           Lessor's Contractual Security Interest.................    38
ARTICLE XVII      LESSOR'S RIGHT TO CURE.................................    40
ARTICLE XVIII     PURCHASE OF THE LEASED PROPERTY........................    40
ARTICLE XIX       HOLDING OVER...........................................    41
ARTICLE XX        INTENTIONALLY OMITTED..................................    41
ARTICLE XXI       INTENTIONALLY OMITTED..................................    41



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                                Table of Contents
                                   (continued)



                                                                            Page
                                                                            ----
                                                                         
ARTICLE XXII      RISK OF LOSS...........................................    41
ARTICLE XXIII     INDEMNIFICATION........................................    41
ARTICLE XXIV      ASSIGNMENT, SUBLETTING AND SUBLEASE SUBORDINATION......    42
   24.1           Assignment and Subletting..............................    42
   24.2           Sublease Limitations...................................    42
   24.3           Sublease Subordination and Non-Disturbance.............    43
ARTICLE XXV       OFFICER'S CERTIFICATES; FINANCIAL STATEMENTS; NOTICES
                     AND OTHER CERTIFICATES..............................    43
ARTICLE XXVI      INSPECTION.............................................    45
ARTICLE XXVII     NO WAIVER..............................................    45
ARTICLE XXVIII    REMEDIES CUMULATIVE....................................    45
ARTICLE XXIX      SURRENDER..............................................    45
ARTICLE XXX       NO MERGER OF TITLE.....................................    46
ARTICLE XXXI      TRANSFERS BY LESSOR....................................    46
ARTICLE XXXII     QUIET ENJOYMENT........................................    46
ARTICLE XXXIII    NOTICES................................................    47
ARTICLE XXXIV     APPRAISAL..............................................    48
ARTICLE XXXV      PURCHASE RIGHTS........................................    48
   35.1           Lessee's Option to Purchase............................    48
   35.2           Lessor's Option to Purchase Lessee's Personal
                     Property............................................    49
   35.3           Lessor's Put Option....................................    49
   35.4           Lessee Substitution for Parking Lot Property...........    49
ARTICLE XXXVI     INTENTIONALLY OMITTED..................................    50
ARTICLE XXXVII    FINANCING OF THE LEASED PROPERTY.......................    50
   37.1           Financing by Lessor....................................    50
ARTICLE XXXVIII   SUBORDINATION AND NON-DISTURBANCE......................    50
ARTICLE XXXIX     LICENSES...............................................    51
ARTICLE XL        COMPLIANCE WITH HEALTHCARE LAWS........................    52
ARTICLE XLI       LESSOR'S RIGHT TO SELL AND LESSEE'S RIGHT OF FIRST
                     REFUSAL.............................................    53
   41.1           Lessor's Right to Sell.................................    53
   41.2           Lessee's Right of First Refusal........................    53
ARTICLE XLII      MISCELLANEOUS..........................................    53
   42.1           General................................................    53
   42.2           Lessor's Expenses......................................    54
   42.3           Assets Purchased Pursuant to Purchase Options..........    54
   42.4           Entire Agreement; Modifications........................    54
   42.5           Lease Guaranty.........................................    54
   42.6           Future Financing.......................................    54
   42.7           Change in Ownership/Control............................    54
   42.8           Lessor Securities Offering and Filings.................    54
   42.9           Non-Recourse as to Lessor..............................    55



                                       iii



                                Table of Contents
                                   (continued)



                                                                            Page
                                                                            ----
                                                                         
   42.10          Management Agreements..................................    55
   42.11          Prime's Right to Exercise Purchase Options.............    55
   42.12          Governing Law..........................................    55
   42.13          Jurisdiction and Venue.................................    55
   42.14          Counterparts...........................................    56
ARTICLE XLIII     MEMORANDUM OF LEASE....................................    56



                                       iv



                                 LEASE AGREEMENT

     This LEASE AGREEMENT (the "Lease") is dated as of the 30th day of November,
2005, and is among MPT OF CHINO, LLC, a Delaware limited liability company
("Lessor"), having its principal office at 1000 Urban Center Drive, Suite 501,
Birmingham, Alabama 35242, VERITAS HEALTH SERVICES, INC., a California
corporation ("Lessee"), having its principal office at 5451 Walnut Avenue,
Chino, California 91710, and PRIME HEALTHCARE SERVICES, LLC, a California
limited liability company ("Prime"), having its principal office at 16850 Bear
Valley Road, Victorville, California 92392.

                                   WITNESSETH:

     WHEREAS, Lessor is the current owner of that certain real property located
in Chino, San Bernardino County, California, which real property is more
particularly described on EXHIBIT A attached hereto and incorporated herein by
reference, and all improvements located thereon;

     WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated
and delivered to Lessor as of the date hereof, whereby Prime assigned to Lessor,
and Lessor assumed from Prime, all of Prime's right, title and interest under
that certain Restated and Amended Lease (Parking Lot) dated April 7, 2001 (the
"Parking Lot Lease"), Lessor holds a leasehold interest in that certain real
property owned by Immanuel Lutheran Church (the "Parking Lot Lessor") more
particularly described in the Parking Lot Lease and on EXHIBIT B attached hereto
and incorporated herein by reference, and all improvements located thereon (the
"Parking Lot Property");

     WHEREAS, Lessor has agreed to grant to Prime the right and option to
exercise the purchase options granted to Lessee hereunder pursuant and subject
to the terms, provisions and conditions set forth herein; and

     WHEREAS, Lessor, Lessee and Prime desire to enter into this Lease on the
terms and conditions hereinafter provided.

     NOW, THEREFORE, the parties hereto hereby agree as follows:

                                    ARTICLE I

                              LEASED PROPERTY; TERM

     Lessor and Lessee acknowledge and agree that this Lease is subject to
Lessor's continued leasehold interest in the Parking Lot Property and Lessee
accepts, assumes and agrees to perform and observe all of the terms, conditions,
provisions, limitations and obligations contained in the Parking Lot Lease to be
performed on the part of the Lessor as lessee therein, including the payment of
Parking Lot Rent, except as expressly modified and limited herein. In the event
of termination of the Parking Lot Lease, by lapse of time or for any other
reason, prior to the cancellation or termination of this Lease, this Lease shall
terminate in accordance with and subject to the rights, terms and conditions of
Sections 35.3 and 35.4 below. Upon and subject to the foregoing and the terms
and conditions hereinafter set forth, and subject to the rights of any tenants,
subtenants, lessees or sublessees under any Existing Leases as described in
Section 24.1 below, Lessor leases to Lessee and Lessee rents from Lessor all of
Lessor's rights and interest in and to the following property (collectively, the
"Leased Property"):

          (a) the real property described on EXHIBIT A attached hereto (the
     "Land");

          (b) the Parking Lot Property including the real estate as described on
     EXHIBIT B attached hereto (subject to the terms, provisions and conditions
     of the Parking Lot Lease);


                                        1



          (c) the Facility and all buildings, structures, Fixtures (as
     hereinafter defined) and other improvements of every kind, alleyways and
     connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site
     and off-site), parking areas and roadways appurtenant to such buildings and
     structures presently or hereafter situated upon the Land (but specifically
     excluding the Power Generation Facility) and Capital Additions (as
     hereinafter defined) financed by Lessor (collectively, the "Leased
     Improvements");

          (d) all easements, rights and appurtenances relating to the Land and
     the Leased Improvements;

          (e) all site plans, surveys, soil and substrata studies, architectural
     drawings, plans and specifications, inspection reports, engineering and
     environmental plans and studies, title reports, floor plans, landscape
     plans and other plans relating to the Land and Leased Improvements; and

          (f) all permanently affixed non-medical equipment, machinery,
     fixtures, and other items of real and/or personal property, including all
     components thereof, now and hereafter located in, on or used in connection
     with, and permanently affixed to or incorporated into the Leased
     Improvements, including, without limitation, all furnaces, boilers,
     heaters, electrical equipment, heating, plumbing, lighting, ventilating,
     refrigerating, incineration, air and water pollution control, waste
     disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
     systems and fire and theft protection equipment, and built-in oxygen and
     vacuum systems, all of which, to the greatest extent permitted by law, are
     hereby deemed by the parties hereto to constitute real estate, together
     with all replacements, modifications, alterations and additions thereto,
     but specifically excluding the Power Generation Facility, and all items
     included within the category of Lessee's Personal Property as defined in
     Article II below (collectively the "Fixtures").

SUBJECT, HOWEVER, to the matters set forth on EXHIBIT C attached hereto (the
"Permitted Exceptions"); Lessee shall have and hold the Leased Property for a
fixed term (the "Fixed Term") commencing on the date hereof (the "Commencement
Date") and ending at midnight on the last day of the one hundred and eightieth
(180th) month period after the Commencement Date, unless sooner terminated as
herein provided.

     So long as Lessee is not in default, and no event has occurred which with
the giving of notice or the passage of time or both would constitute a default,
under any of the terms and conditions of this Lease, or under any of the terms
and conditions of the Other Leases (as hereinafter defined), Lessee shall have
the option to extend the Fixed Term of this Lease on the same terms and
conditions set forth herein for three (3) additional periods of five (5) years
each (each an "Extension Term"). Lessee may exercise each such option by giving
written notice to the Lessor at least three hundred sixty five (365) days prior
to the expiration of the Fixed Term or Extension Term, as applicable (the
"Extension Notice"). If during the period following the delivery of the
Extension Notice to Lessor, a default or breach by Lessee shall occur under this
Lease, or under any of the Other Leases, and such default or breach is not cured
within the applicable time periods as provided herein, Lessee shall be deemed to
have forfeited all Extension Options. If Lessee elects not to exercise its
option to extend, all subsequent options to extend shall be deemed to have
lapsed.

                                   ARTICLE II

                                   DEFINITIONS

     For all purposes of this Lease, except as otherwise expressly provided or
unless the context otherwise requires, (a) the terms defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular, (b) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with GAAP as at the time applicable,
(c) all references in this Lease to designated "Articles", "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease, and (d) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Lease as a whole and not to any particular
Article, Section or other subdivision:


                                        2



     ACMs: As defined in Section 8.3.

     Added Value Additional: As defined in Section 10.2.

     Additional Charges: As defined in Section 3.2.

     Adjustment Date: January 1 of each year commencing on January 1, 2007.

     Affiliate: When used with respect to any corporation, limited liability
company, or partnership, the term "Affiliate" shall mean any person,
corporation, limited liability company, partnership or other legal entity,
which, directly or indirectly, controls or is controlled by or is under common
control with such corporation, limited liability company, or partnership. For
the purposes of this definition, "control" (including the correlative meanings
of the terms "controlled by" and "under common control with"), as used with
respect to any person, corporation, limited liability company, partnership or
other legal entity, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
person, corporation, limited liability company, partnership or other legal
entity, through the ownership of voting securities, partnership interests or
other equity interests.

     Award: As defined in Section 15.1.

     Base Rent: As defined in Section 3.1.

     Business: The operation of the Facility and the engagement in and pursuit
and conduct of any business venture or activity related thereto.

     Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which money centers in the City of New York, New York are
authorized, or obligated, by law or executive order, to close.

     Capital Additions: One or more new buildings or one or more additional
structures annexed to any portion of any of the Leased Improvements, which are
constructed on any parcel or portion of the Land during the Term, including the
construction of a new wing or new story.

     Capital Addition Cost: The cost of any Capital Additions proposed to be
made by Lessee whether or not paid for by Lessee or Lessor. Such cost shall
include (a) the cost of construction of the Capital Additions, including site
preparation and improvement, materials, labor, supervision and certain related
design, engineering and architectural services, the cost of any fixtures, the
cost of construction financing and miscellaneous costs approved by Lessor, (b)
if agreed to by Lessor in writing in advance, the cost of any land contiguous to
the Leased Property purchased for the purpose of placing thereon the Capital
Additions or any portion thereof or for providing means of access thereto, or
parking facilities therefor, including the cost of surveying the same, (c) the
cost of insurance, real estate taxes, water and sewage charges and other
carrying charges for such Capital Additions during construction, (d) the cost of
title insurance, (e) reasonable fees and expenses of legal counsel, (f) filing,
registration and recording taxes and fees, (g) documentary stamp taxes, if any,
and (h) all reasonable costs and expenses of Lessor and any Lending Institution
which has committed to finance the Capital Additions, including, but not limited
to, (i) the reasonable fees and expenses of their respective legal counsel, (ii)
all printing expenses, (iii) the amount of any filing, registration and
recording taxes and fees, (iv) documentary stamp taxes, if any, (v) title
insurance charges, appraisal fees, if any, (vi) rating agency fees, if any, and
(vii) commitment fees, if any, charged by any Lending Institution advancing or
offering to advance any portion of the financing for such Capital Additions.

     Capital Improvement Reserve: As defined in Section 9.1(e).

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

     Combined EBITDAR: The combined EBITDAR of the Desert Valley Tenants as
reduced for any inter-company transactions.


                                        3



     Combined Fixed Charges: The sum of the combined Lease Payments and required
principal and interest payments of the Desert Valley Tenants pursuant to the
Total Debt as reduced for any inter-company transactions.

     Combined Lease Payments: The combined payments of Base Rent of the Desert
Valley Tenants required pursuant to this Lease and any other leases between the
Desert Valley Tenants and Lessor or any of Lessor's Affiliates.

     Commencement Date: The date hereof.

     Commitment Letter: The commitment letter between Lessor and Prime
Healthcare Systems, LLC (and their Affiliates) dated May 2, 2005, and executed
by Lessee on May 3, 2005, as amended.

     Condemnation, Condemnor: As defined in Section 15.1.

     Consolidated Net Worth: At any time, the sum of the following for
Guarantors or Lessee and their respective consolidated subsidiaries (excluding
PHS II) on a consolidated basis determined in accordance with GAAP.

          (a) the amount of capital or stated capital (after deducting the cost
     of any treasury shares), plus

          (b) the amount of capital surplus and retained earnings (or, in the
     case of a capital surplus or retained earnings deficit, minus the amount of
     such deficit), minus

          (c) the sum of the following (without duplication of deductions in
     respect of items already deducted in arriving at surplus and retained
     earnings): (i) unamortized debt discount and expense and (ii) any write-up
     in book value of assets resulting from a revaluation thereof pursuant to
     generally accepted accounting principles subsequent to the most recent
     Statements of Cash Flow prior to the date thereof, except any net write-up
     in value of foreign currency in accordance with GAAP; any write-up
     resulting from reversal of a reserve for bad debts or depreciation; and any
     write-up resulting from a change in methods of accounting for inventory.

     Consumer Price Index: The Consumer Price Index, all urban consumers, all
items, U.S. City Average, published by the United States Department of Labor,
Bureau of Labor Statistics, in which 1982-1984 equals one hundred (100). If the
Consumer Price Index is discontinued or revised during the term of this Lease,
such other governmental index or computation with which it is replaced shall be
used in order to obtain substantially the same result as would be obtained if
the Index had not been discontinued or revised.

     CPI: The Consumer Price Index.

     Credit Enhancements: All security deposits, security interests, letters of
credit, pledges, guaranties, prepaid rent or other sums, deposits or interests
held by Lessee, if any, with respect to the Leased Property, the Tenant Leases
or the Tenants.

     Date of Taking: As defined in Section 15.1.

     Desert Valley Tenants: The Lessee, the Guarantors and any of their
respective Affiliates who are also or who become tenants of Lessor or any of its
Affiliates; provided, however, Prime Healthcare Services II, LLC, as lessee
under the Sherman Oaks Lease (as hereinafter defined), shall not be included as
a Desert Valley Tenant for purposes of this Lease.

     EBITDAR: Earnings before the deduction of interest, taxes, depreciation,
amortization and rent, as determined in accordance with GAAP.


                                        4



     Encumbrances: As defined in Article XXXVII.

     Energy Services Agreement: That certain Energy Services Agreement dated as
of December 15, 2004, by and between U.S. Power Corporation and Veritas
Healthcare Services, Inc. d/b/a Chino Valley Medical Center.

     Equity Investment: The Purchase Price.

     Events of Default: As defined in Section 16.1 and Section 16.2.

     Existing Leases: As defined in Section 24.1.

     Extension Notice: As defined in Article I.

     Extension Term: As defined in Article I.

     Extraordinary Repairs: All repairs to the Facility of every kind and
nature, whether interior or exterior, structural or non-structural (including,
without limitation, all parking decks and parking lots) which are considered to
be extraordinary in nature (as opposed to being ordinary or normal in nature),
as Lessee and/or Lessor may determine to be necessary or appropriate from time
to time during the Term.

     Facility: The licensed one hundred twenty-six (126)-bed acute care hospital
facility and all improvements in connection therewith operated on the Land, but
specifically excluding the Power Generation Facility.

     Facility Instrument: A note (whether secured or unsecured), loan agreement,
credit agreement, guaranty, security agreement, mortgage, deed of trust or other
security agreement pursuant to which a Facility Lender has provided financing to
Lessor in connection with the Leased Property or any part thereof, or financing
provided to Lessee, if such financing is provided by Lessor or any Affiliate of
Lessor, to Lessee, and any and all renewals, replacements, modifications,
supplements, consolidations, spreaders and extensions thereof.

     Facility Lender: A holder (which may include any Affiliate of Lessor) of
any Facility Instrument.

     Fair Market Added Value: The Fair Market Value of the Leased Property
(including all Capital Additions) less the Fair Market Value of the Leased
Property determined as if no Capital Additions paid for by Lessee had been
constructed.

     Fair Market Value: The Fair Market Value of the Leased Property, including
all Capital Additions, (a) and shall be determined in accordance with the
appraisal procedures set forth in Article XXXIV or in such other manner as shall
be mutually acceptable to Lessor and Lessee, (b) and shall not take into account
any reduction in value resulting from any indebtedness to which the Leased
Property is subject and which encumbrance Lessee or Lessor is otherwise required
to remove pursuant to any provision of this Lease or agrees to remove at or
prior to the closing of the transaction as to which such Fair Market Value
determination is being made. The positive or negative effect on the value of the
Leased Property attributable to the interest rate, amortization schedule,
maturity date, prepayment penalty and other terms and conditions of any
Encumbrance on the Leased Property, which is not so required or agreed to be
removed shall be taken into account in determining such Fair Market Value.
Notwithstanding anything contained herein to the contrary, any appraisal of the
Leased Property shall assume the Lease is in place for a term of fifteen (15)
years, and based solely on the rents and other revenues generated and to be
generated pursuant to this Lease without any regard to the Lessee's operations.

     Fair Market Value Purchase Price: The Fair Market Value of the Leased
Property less the Fair Market Added Value.

     Fiscal Year: The fiscal year for this Lease shall be the twelve (12) month
period from January 1 to December 31.


                                        5



     Fixed Term: As defined in Article I.

     Fixtures: As defined in Article I.

     GAAP: Generally accepted accounting principles in the United States,
consistently applied.

     Governmental Entity: Any national, federal, regional, state, local,
provincial, municipal, foreign or multinational court or other governmental or
regulatory authority, administrative body or government, department, board,
body, tribunal, instrumentality or commission of competent jurisdiction.

     Guarantors: Jointly and severally, Prime Healthcare Services, LLC, a
California limited liability company, Prime Healthcare Services, Inc., a
Delaware corporation, Desert Valley Medical Group, Inc., a California
corporation, and Desert Valley Hospital, Inc., a California corporation.

     Hazardous Materials: Any substance, including without limitation, asbestos
or any substance containing asbestos and deemed hazardous under any Hazardous
Materials Law, the group of organic compounds known as polychlorinated
biphenyls, flammable explosives, radioactive materials, infectious wastes,
biomedical and medical wastes, chemicals known to cause cancer or reproductive
toxicity, pollutants, effluents, contaminants, emissions or related materials
and any items included in the definition of hazardous or toxic wastes, materials
or substances under any Hazardous Materials Laws.

     Hazardous Materials Laws: All local, state and federal laws relating to
environmental conditions and industrial hygiene, including, without limitation,
the Resource Conservation and Recovery Act of 1976 ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as
amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"),
the Hazardous Materials Transportation Act, the Federal Water Pollution Control
Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act,
the Safe Drinking Water Act, and all similar federal, state and local
environmental statutes, ordinances and the regulations, orders, or decrees now
or hereafter promulgated thereunder.

     Healthcare Laws: All rules and regulations under the False Claims Act (31
U.S.C. Section 3729 et seq.), the Anti-Kickback Act of 1986 (41 U.S.C. Section
51 et seq.), the Federal Health Care Programs Anti-Kickback statute (42 U.S.C.
Section 1320a-7a(b)), the Ethics in Patient Referrals Act of 1989, as amended
(Stark Law) (42 U.S.C. 1395nn), the Civil Money Penalties Law (42 U.S.C. Section
1320a-7a), or the Truth in Negotiations (10 U.S.C. Section 2304 et seq.), Health
Care Fraud (18 U.S.C. 1347), Wire Fraud (18 U.S.C. 1343), Theft or Embezzlement
(18 U.S.C. 669), False Statements (18 U.S.C. 1001), False Statements (19 U.S.C.
1035), and Patient Inducement Statute, and equivalent state statutes and any and
all rules or regulations promulgated by governmental entities with respect to
any of the foregoing.

     Impositions: Collectively, all civil monetary penalties, fines and
overpayments imposed by state and federal regulatory authorities, all taxes
(including, without limitation, all capital stock and franchise taxes of Lessor,
all ad valorem, sales and use, single business, gross receipts, transaction
privilege, rent or similar taxes), assessments (including, without limitation,
all assessments, charges and costs imposed under the Permitted Exceptions, all
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not to be completed within the
Term), ground rents, water, sewer or other rents and charges, excises, tax
levies, fees (including, without limitation, license, permit, inspection,
authorization and similar fees), and all other governmental charges, in each
case whether general or special, ordinary or extraordinary, or foreseen or
unforeseen, of every character in respect of the Leased Property and/or the Rent
(including all interest and penalties thereon due to any failure in payment by
Lessee), and all other fees, costs and expenses which at any time prior to,
during or in respect of the Term hereof may be charged, assessed or imposed on
or in respect of or be a lien upon (a) Lessor or Lessor's interest in the Leased
Property, (b) the Leased Property or any part thereof or any rent therefrom or
any estate, right, title or interest therein, or (c) any occupancy, operation,
use or possession of, sales from, or activity conducted on, or in connection
with, the Leased Property or the leasing or use of the Leased Property or any
part thereof; provided, however, nothing contained in this Lease shall be
construed to require Lessee to pay (1) any


                                        6



tax based on net income (whether denominated as a franchise or capital stock,
financial institutions or other tax) imposed on Lessor, or (2) any transfer or
net revenue tax of Lessor, or (3) any tax imposed with respect to the sale,
exchange or other disposition by Lessor of any portion of the Leased Property or
the proceeds thereof, or (4) except as expressly provided elsewhere in this
Lease, any principal or interest on any Encumbrance on the Leased Property,
except to the extent that any tax, assessment, tax levy or charge which Lessee
is obligated to pay pursuant to the first sentence of this definition and which
is in effect at any time during the Term hereof is totally or partially
repealed, and a tax, assessment, tax levy or charge set forth in clause (1) or
(2) is levied, assessed or imposed expressly in lieu thereof, in which case
Lessee shall pay.

     Initial Purchase Price: A price equal to the purchase price paid by Lessor
(and its Affiliates, including, without limitation, MPT Operating Partnership,
L.P.) for the Leased Property pursuant to the Purchase Agreement, plus all costs
and expenses incurred in association with the purchase and lease of such Leased
Property, including, but not limited to, legal, appraisal, title, survey,
environmental, seismic, engineering and other fees and expenses paid in
connection with the inspection of the Leased Property and site visits, and fees
paid to advisors and brokers, except to the extent such items are paid by
Lessee.

     Insurance Premiums: As defined in Section 4.4.

     Insurance Requirements: All terms of any insurance policy required by this
Lease and all requirements of the issuer of any such policy, and such additional
insurance which the Lessor may reasonably require.

     Land: As defined in Article I.

     Lease: As defined in the Preamble.

     Lease Assignment: That certain Assignment of Rents and Leases to be
effective the Commencement Date executed and delivered by Lessee to Lessor,
pursuant to the terms of which Lessee has assigned to Lessor each of the Tenant
Leases and Credit Enhancements, if any, as security for the obligations of
Lessee under this Lease (as this Lease may be amended, modified and/or restated
from time to time), the obligations of Guarantors under the Lease Guaranty and
any other obligations of Lessee to Lessor, any Guarantor or any Affiliate of
Lessee or any Guarantor to Lessor or any Affiliate of Lessor.

     Lease Guaranty: That certain Lease Guaranty to be effective on the
Commencement Date executed and delivered by Guarantors in favor of Lessor
contemporaneously herewith.

     Lease Year: A twelve (12) month period commencing on the Commencement Date
or on each anniversary date thereof, as the case may be.

     Leased Improvements; Leased Property: Each as defined in Article I.

     Legal Requirements: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting the Lessee's operation of its business on the
Leased Property, along with the Leased Property or the construction, use or
alteration thereof (including, without limitation, the Americans With
Disabilities Act and Section 504 of the Rehabilitation Act of 1973) whether now
or hereafter enacted and in force, including any which may (a) require repairs,
modifications, or alterations in or to the Leased Property, or (b) in any way
adversely affect the use and enjoyment thereof, and all permits, licenses,
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
known to Lessee (other than encumbrances created by Lessor without the consent
of Lessee), at any time in force affecting the Leased Property.

     Lending Institution: Any insurance company, federally insured commercial or
savings bank, national banking association, savings and loan association,
employees' welfare, pension or retirement fund or system, corporate
profit-sharing or pension trust, college or university, or real estate
investment trust, including any


                                        7



corporation qualified to be treated for federal tax purposes as a real estate
investment trust, having a net worth of at least Fifty Million Dollars
($50,000,000).

     Lessee: Veritas Health Services, Inc., a California corporation, and its
successors and permitted assigns, which, if required by Lessor, shall at all
times during the term of this Lease be a Single Purpose Entity created and to
remain in good standing as required hereunder for the sole purpose of leasing
and operating the Facility.

     Lessee's Personal Property: All of Lessee's machinery, equipment, medical
equipment (including all medical equipment affixed to the Leased Property),
furniture, furnishings, trailers, movable walls or partitions, computers, trade
fixtures, consumable inventory and supplies and all other personal property
currently owned or acquired after the execution of this Lease, and used or
useful in the operation of the Facility, including, without limitation, all
items of furniture, furnishings, equipment, supplies and inventory, and Lessee's
operating licenses, but excluding Lessee's accounts receivable and any items
included within the definition of Fixtures (excluding the Power Generation
Facility, unless Lessee purchases the Power Generation Facility as provided in
the Energy Services Agreement).

     Lessor: MPT of Chino, LLC, a Delaware limited liability company, and its
successors and assigns.

     Licenses: As defined in Article XXXIX.

     Management Agreement: Any contracts and agreements for the management of
any part of the Leased Property, including, without limitation, the real estate
and the Leased Improvements and the operations of the Facility.

     Management Company: Any person, firm, corporation or other entity or
individual who or which will manage any part of the Leased Property.

     Market Value of Desert Valley Tenants: An amount equal to the collective
EBITDAR of the Desert Valley Tenants, on a trailing twelve (12) months basis,
multiplied by four (4).

     Medicaid: The medical assistance program established by Title XIX of the
Social Security Act (42 U.S.C. Sections 1396 et seq.) and any statute succeeding
thereto.

     Medicare: The health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act (42 U.S.C. Sections 1395
et seq.) and any statute succeeding thereto.

     MPT: Medical Properties Trust, Inc., an Affiliate of Lessor.

     MPT Development Services: MPT Development Services, Inc., an Affiliate of
Lessor.

     Officer's Certificate: A certificate of Lessee signed by the Chairman of
the Board of Directors, the President, any Vice President or the Treasurer of
Lessee or another officer or representative authorized to so sign by the Board
of Directors or other governing body of Lessee, or any other person whose power
and authority to act has been authorized by delegation in writing by any of the
persons holding the foregoing offices.

     Option Price: As defined in Section 35.1.

     Other Leases: All other leases entered into between Lessor or any Affiliate
of Lessor, on the one hand, and Lessee, any Guarantor, or any of their
respective Affiliates, on the other hand, but specifically excluding the Sherman
Oaks Lease.

     Overdue Rate: On any date, a rate per annum equal to four percent (4%).


                                        8



     Parking Lot Interest: Lessor's leasehold interest in and to the Parking Lot
Property under the Parking Lot Lease. -

     Parking Lot Lease: The Parking Lot Lease as defined in the Recitals of this
Lease.

     Parking Lot Lessor: The Parking Lot Lessor as defined in the Recitals of
this Lease.

     Parking Lot Property: The property leased pursuant to the Parking Lot
Lease.

     Parking Lot Rent: All rent, additional rent and other costs and expenses
paid by Lessor or due and payable under the Parking Lot Lease.

     Payment Date: Any due date for the payment of the installments of Base
Rent, Additional Rent, or any other sums payable under this Lease.

     Permitted Exceptions: As defined in Article I.

     PHS II: Prime Healthcare Services II, LLC, a California limited liability
company.

     Power Generation Facility: The energy generation equipment and component
parts, supplies and other items used in connection therewith placed on and used
in connection with the operation of the Facility, as more particularly described
in the Energy Services Agreement.

     Primary Intended Use: As defined in Article VII.

     Prime: As defined in the Preamble.

     Prime's Personal Property: All of Prime's machinery, equipment, medical
equipment (including all medical equipment affixed to the Leased Property),
furniture, furnishings, trailers, movable walls or partitions, computers, trade
fixtures, consumable inventory and supplies and all other personal property
currently owned or acquired after the execution of this Lease, and used or
useful in the operation of the Facility, including without limitation, all items
of furniture, furnishings, equipment, supplies and inventory.

     Prime Rate: The annual rate announced by Citibank in New York, New York, to
be the prime rate for 90-day unsecured loans to its United States corporate
borrowers of the highest credit standing, as in effect from time to time.

     Purchase Agreement: That certain Purchase and Sale Agreement dated as of
November 30, 2005, by and among Lessor, Lessee, the Guarantors and MPT Operating
Partnership, L.P.

     Purchase Price: The Initial Purchase Price, plus all costs and expenses not
included in the Initial Purchase Price incurred or paid in connection with the
purchase and lease of the Leased Property, including, but not limited to, legal,
appraisal, title, survey, environmental, seismic, engineering and other fees and
expenses paid in connection with the inspection of the Leased Property, and paid
to advisors and brokers (except to the extent such items are paid by Lessee or
Prime), and shall include the costs of Capital Additions financed by Lessor (and
Lessor's Affiliates) as provided in Section 10.3 of this Lease (collectively the
"Purchase Price Adjustment").

     Purchase Price Adjustment: As defined in the above definition of "Purchase
Price."

     Put Event: As defined in Section 35.3.

     Put Notice: As defined in Section 35.3.

     Put Option: As defined in Section 35.3.


                                        9



     Real Estate Taxes: All real estate taxes, assessments and special
assessments and dues which shall be levied, or imposed upon the Leased Property
during the Term.

     Removal Notice: As defined in Section 16.2.

     Rent: Collectively, the Base Rent (as increased in accordance with the
provisions of Section 3.1(b) hereof) and the Additional Charges.

     Request: As defined in Section 10.3(a).

     Security Agreements: Those certain Security Agreements to be effective on
the Commencement Date executed and delivered by Lessee and Prime, individually,
to Lessor, pursuant to the terms of which Lessee and Prime have granted to
Lessor a first lien and security interest in all of Lessee's and Prime's rights
under this Lease (as this Lease may be amended, modified and/or restated from
time to time), to all of Lessee's Personal Property (excluding accounts
receivable) and certain of Prime's Personal Property, and to all of the
Licenses.

     Sherman Oaks Lease: Any lease agreement entered into or to be entered into
between any Affiliate of Lessor and any Affiliate of Lessee relating to that
certain healthcare facility located in Sherman Oaks, California.

     Single Purpose Entity: An entity which (i) exists solely for the purpose of
owning and/or leasing all or any portion of the Facility and conducting the
operation of the Business, (ii) conducts business only in its own name, (iii)
does not engage in any business other than the ownership and/or leasing all or
any portion of the Facility and the operation of the Business, (iv) does not
hold, directly or indirectly, any ownership interest (legal or equitable) in any
entity or any real or personal property other than the interest in the Facility
which it owns in the Facility and the other assets incident to the operation of
the Business, (v) does not have any debt other than as permitted by this Lease
or arising in the ordinary course of the Business and does not guarantee or
otherwise obligate itself with respect to the debts of any other person or
entity, other than as approved by Lessor, (vi) has its own separate books,
records, accounts, financial statements and tax returns (with no commingling of
funds or assets), (vii) holds itself out as being a company separate and apart
from any other entity, and (viii) maintains all corporate formalities
independent of any other entity.

     Statements of Cash Flow: For any fiscal year or other accounting period for
Lessee or Guarantors and their respective consolidated subsidiaries, statements
of earnings and retained earnings and of changes in financial position for such
period and for the period from the beginning of the respective Fiscal Year to
the end of such period and the related balance sheet as at the end of such
period, together with the notes thereto, all in reasonable detail and setting
forth in comparative form the corresponding figures for the corresponding period
in the preceding fiscal year, and prepared in accordance with GAAP.

     Substitute Property: As defined in Section 35.4.

     Taking: A taking or voluntary conveyance during the Term hereof of all or
part of the Leased Property, or any interest therein or right accruing thereto
or use thereof, as the result of, or in settlement of, any Condemnation or other
eminent domain proceeding affecting the Leased Property whether or not the same
shall have actually been commenced.

     Tenant: The lessees or tenants under the Tenant Leases, if any.

     Tenant Leases: All leases, subleases, pharmacy leases and other rental
agreements (written or verbal, now or hereafter in effect), if any, including,
without limitation, the Existing Leases as described in Section 24.1 hereof that
grant a possessory interest in and to any space in or any part of the Leased
Property, or that otherwise have rights with regard to the Leased Property, and
all Credit Enhancements, if any, held in connection therewith.

     Term: The actual duration of this Lease, including the Fixed Term and the
Extension Terms (if exercised by the Lessee) and taking into account any
termination.


                                       10



     Total Capitalization: Total Debt plus all capital account or stated capital
balances according to GAAP.

     Total Debt: All indebtedness which, in accordance with GAAP, will be
included in determining total liabilities as shown on the liability side of a
balance sheet, including any such indebtedness represented by obligations under
a lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP, but excluding any nonrecourse indebtedness and excluding
any current liabilities.

     Unavoidable Delays: Delays due to strikes, lockouts, inability to procure
materials, power failure, acts of God, governmental restrictions, enemy action,
civil commotion, fire, unavoidable casualty or other causes beyond the control
of the party responsible for performing an obligation hereunder, provided that
lack of funds shall not be deemed a cause beyond the control of either party
hereto unless such lack of funds is caused by the failure of the other party
hereto.

     Unsuitable for Its Use or Unsuitable for Its Primary Intended Use: As used
anywhere in this Lease, the terms "Unsuitable for Its Use" or "Unsuitable for
Its Primary Intended Use" shall mean that, by reason of damage or destruction,
or a partial Taking by Condemnation, the Facility cannot be operated on a
commercially practicable basis for its Primary Intended Use, taking into
account, all relevant factors, and the effect of such damage or destruction or
partial Taking.

     Victorville Lease: That certain Lease Agreement dated February 28, 2005, by
and among MPT of Victorville, LLC, as lessor, and Desert Valley Hospital, Inc.,
as lessee, whereby Desert Valley Hospital, Inc. leases the Victorville Property
from MPT of Victorville, LLC.

     Victorville Property: The land and all improvements thereon subject to the
Victorville Lease.

                                   ARTICLE III

                                      RENT

     3.1 BASE RENT. During the Term, Lessee shall pay to Lessor, in advance and
without notice, demand, set off or counterclaim, in lawful money of the United
States of America, at Lessor's address set forth herein or at such other place
or to such other person, firm or entity as Lessor from time to time may
designate in writing, Base Rent as follows:

          (a) BASE RENT: Subject to adjustment as provided herein, Lessee shall
     pay Lessor base rent (the "Base Rent") in a per annum amount equal to ten
     percent (10%) multiplied by the Purchase Price, which as of the date hereof
     is an annual amount of Two Million One Hundred Thousand and 00/100 Dollars
     ($2,100,000.00). Base Rent shall be payable in advance in equal,
     consecutive monthly installments on or before the tenth (10th) day of each
     calendar month during the Term, commencing on the Commencement Date
     (prorated as to any partial month).

          (b) ADJUSTMENT OF BASE RENT: Commencing on January 1, 2007, and on
     each January 1 thereafter (each an "Adjustment Date") during the term of
     this Lease, the Base Rent shall be increased, if any, by an amount equal to
     the greater of (A) two percent (2%) per annum of the prior year's Base
     Rent, or (B) the percentage by which the CPI on the Adjustment Date shall
     have increased over the CPI figure in effect on the immediately preceding
     January 1. If the previous year's Base Rent is for a partial year, Base
     Rent shall be annualized based on the highest annual rate effective during
     the preceding year. Notwithstanding anything contained herein to the
     contrary, the parties hereto acknowledge and agree that all calculations of
     Base Rent as specified herein have been made by multiplying the Initial
     Purchase Price by ten percent (10%) per annum. In the event the Initial
     Purchase Price is adjusted and increased by the Purchase Price Adjustment,
     then all calculations of Base Rent shall be adjusted accordingly.


                                       11



     3.2 ADDITIONAL CHARGES. In addition to the Base Rent (a) Lessee will also
pay and discharge as and when due and payable all other amounts, liabilities,
obligations and Impositions which Lessee assumes or agrees to pay under this
Lease, and all other amounts, liabilities, obligations and Impositions related
to the ownership, use, possession and operation of the Leased Property,
including, without limitation, the Parking Lot Rent, all costs of owning and
operating the Facility, all Real Estate Taxes, Insurance Premiums, maintenance
and capital improvements, all licensure violations, violations of and defaults
under any of the Permitted Exceptions, civil monetary penalties and fines, and
(b) in the event of any failure on the part of Lessee to pay any of those items
referred to in clause (a) above, Lessee will also promptly pay and reimburse
Lessor for all such amounts paid by Lessor and promptly pay and discharge every
fine, penalty, interest and cost which may be added for non-payment or late
payment of such items (the items referred to in clauses (a) and (b) above being
referred to herein collectively as the "Additional Charges"), and Lessor shall
have all legal, equitable and contractual rights, powers and remedies provided
in this Lease, by statute or otherwise, in the case of non-payment of the
Additional Charges, as in the case of the Base Rent. If any installment of Base
Rent or Additional Charges (but only as to those Additional Charges which are
payable directly to Lessor) shall not be paid within five (5) Business Days
after its due date, Lessee will pay Lessor on demand, as Additional Charges, a
late charge (to the extent permitted by law) computed at the Overdue Rate (or at
the maximum rate permitted by law, whichever is less) on the amount of such
installment, from the due date of such installment to the date of payment
thereof. To the extent that Lessee pays any Additional Charges to Lessor
pursuant to any requirement of this Lease, Lessee shall be relieved of its
obligation to pay such Additional Charges to the entity to which they would
otherwise be due. At any time during the Term, Lessor may require Lessee to pay
to Lessor or its Facility Lender estimates of Real Estate Taxes and Insurance
Premiums and Lessee shall pay to Lessor (or directly to a Facility Lender, if
requested by Lessor), upon written request from Lessor, such amounts as and when
required by Lessor (or the Facility Lender). All sums paid into escrow or
deposits shall not bear interest and may be commingled with Lessor's books,
accounts and funds; however, upon an Event of Default under this Lease, the
escrowed funds or deposits may be applied by Lessor (or the Facility Lender) to
all sums owed by Lessee to Lessor (or to sums owed to Facility Lender).

     3.3 ABSOLUTE NET LEASE. The Rent shall be paid absolutely net to Lessor, so
that this Lease shall yield to Lessor the full amount of the installments of
Base Rent and the payments of Additional Charges throughout the Term, but
subject to any other provisions of this Lease which expressly provide for
adjustment of Rent or other charges. Lessee further acknowledges and agrees that
all charges, assessments or payments of any kind due and payable without notice,
demand, set off or counterclaim under the Permitted Exceptions shall be paid by
Lessee as they become due and payable.

     3.4 LEASE DEPOSIT. Intentionally Omitted.

     3.5 ADJUSTMENTS. Lessor and Lessee acknowledge that to the extent Lessee
fails to reimburse to Lessor any costs and expenses which otherwise would be
included in the definition of Purchase Price, then the Lessor shall recalculate
the Purchase Price to include such unreimbursed costs and expenses and deliver
to Lessee a letter confirming the Base Rent to be paid hereunder and such letter
shall constitute an amendment to the provisions of this Lease.

     3.6 RENT AND PAYMENTS UNDER PARKING LOT LEASE. Lessee shall pay all Parking
Lot Rent directly to the Parking Lot Lessor as and when the Parking Lot Rent
becomes due and payable all as required under the Parking Lot Lease (a copy of
which has been provided to Lessee), and Lessee shall provide Lessor with
reasonable evidence of payment each month confirming that the Parking Lot Rent
has been timely paid or, at Lessor's request, Lessee shall pay the Parking Lot
Rent to Lessor at least five (5) business days prior to its due date under the
Parking Lot Lease.


                                       12



                                   ARTICLE IV

                                   IMPOSITIONS

     4.1 PAYMENT OF IMPOSITIONS. Subject to Article XII relating to permitted
contests, Lessee will pay, or cause to be paid, all Impositions before any fine,
penalty, interest or cost may be added for non-payment, such payments to be made
directly to the taxing or assessing authorities unless, in the case of escrows
and deposits required to be paid to Lessor or Facility Lender as provided in
Section 3.2 hereof, and Lessee will promptly, upon request, furnish to Lessor
copies of official receipts or other satisfactory proof evidencing such
payments. Lessee's obligation to pay such Impositions shall be deemed absolutely
fixed upon the date such Impositions become a lien upon the Leased Property or
any part thereof. If any such Imposition may, at the option of the Lessor,
lawfully be paid in installments (whether or not interest shall accrue on the
unpaid balance of such Imposition), Lessee may exercise the option to pay the
same (and any accrued interest on the unpaid balance of such Imposition) in
installments and, in such event, shall pay such installments during the Term
hereof (subject to Lessee's right of contest pursuant to the provisions of
Article XII; and subject to the requirement to pay the full amount of escrows
and deposits as required under Section 3.2 hereof) as the same respectively
become due and before any fine, penalty, premium, further interest or cost may
be added thereto. Lessor, at its expense, shall, to the extent permitted by
applicable law, prepare and file all tax returns and reports as may be required
by governmental authorities in respect of Lessor's net income, gross receipts,
franchise taxes and taxes on its capital stock, and Lessee, at its expense,
shall, to the extent permitted by applicable laws and regulations, prepare and
file all other tax returns and reports in respect of any Imposition as may be
required by governmental authorities. If any refund shall be due from any taxing
authority in respect of any Imposition paid by Lessee, the same shall be paid
over to or retained by Lessee if no Event of Default shall have occurred
hereunder and be continuing. Any such funds retained by Lessor due to an Event
of Default shall be applied as provided in Article XVI. Lessor and Lessee shall,
upon request of the other, provide such data as is maintained by the party to
whom the request is made with respect to the Leased Property as may be necessary
to prepare any required returns and reports. In the event governmental
authorities classify any property covered by this Lease as personal property,
Lessee shall file all personal property tax returns in such jurisdictions where
it may legally so file. Lessor, to the extent it possesses the same, and Lessee,
to the extent it possesses the same, will provide the other party, upon request,
with cost and depreciation records necessary for filing returns for any property
so classified as personal property. Where Lessor is legally required to file
personal property tax returns, Lessee will be provided with copies of assessment
notices indicating a value in excess of the reported value in sufficient time
for Lessee to file a protest. Lessee may, upon giving notice to Lessor, at
Lessee's option and at Lessee's sole cost and expense, protest, appeal, or
institute such other proceedings as Lessee may deem appropriate to effect a
reduction of real estate or personal property assessments and Lessor, at
Lessee's expense as aforesaid, shall fully cooperate with Lessee in such
protest, appeal, or other action. Billings for reimbursement by Lessee to Lessor
of personal property taxes shall be accompanied by copies of a bill therefor and
payments thereof which identify the personal property with respect to which such
payments are made.

     4.2 ADJUSTMENT OF IMPOSITIONS. Impositions imposed in respect of the
tax-fiscal period during which the Term terminates, unless Lessee purchases the
Leased Property pursuant to the purchase options expressly provided herein,
shall be adjusted and prorated between Lessor and Lessee, whether or not such
Imposition is imposed before or after such termination, and Lessee's obligation
to pay its prorated share thereof shall survive such termination.

     4.3 UTILITY CHARGES. Lessee will contract for, in its own name, and will
pay or cause to be paid when due all charges for electricity, power, gas, oil,
water and other utilities used in connection with the Leased Property during the
Term, including, without limitation, all impact and tap fees necessary for the
operation of the Facility.

     4.4 INSURANCE PREMIUMS. Lessee will contract for in its own name and will
pay or cause to be paid when due all premiums for the insurance coverage
required to be maintained pursuant to Article XIII during the Term (the
"Insurance Premiums"); provided, however, that if required by Lessor, such
premiums shall be paid as required under Section 3.2 hereof. At Lessor's option
and provided that the costs of such coverages collectively do


                                       13



not exceed the costs of such insurance obtained by Lessee, Lessor may obtain the
insurance coverages required herein and, in such event, Lessee shall reimburse
Lessor for the costs of such coverages immediately upon request by Lessor.

                                    ARTICLE V

                                 NO TERMINATION

     5.1 ACKNOWLEDGEMENT. The parties hereto understand, acknowledge and agree
that this is an absolute triple net lease. Lessee shall remain bound by this
Lease in accordance with its terms and shall neither take any action without the
consent of Lessor to modify, surrender or terminate the same, nor seek nor be
entitled to any abatement, deduction, deferment or reduction of Rent, or set-off
against the Rent, nor shall the respective obligations of Lessor and Lessee be
otherwise affected by reason of (a) any damage to, or destruction of, any Leased
Property or any portion thereof from whatever cause or any Taking of the Leased
Property or any portion thereof, (b) the lawful or unlawful prohibition of, or
restriction upon, Lessee's use of the Leased Property, or any portion thereof,
or the interference with such use by any person, corporation, partnership or
other entity, or by reason of eviction by paramount title; (c) any claim which
Lessee has or might have against Lessor or by reason of any default or breach of
any warranty by Lessor under this Lease or any other agreement between Lessor
and Lessee, or to which Lessor and Lessee are parties, (d) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceedings affecting Lessor or any assignee or transferee
of Lessor, or (e) for any other cause whether similar or dissimilar to any of
the foregoing other than a discharge of Lessee from any such obligations as a
matter of law. Lessee hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law to
(i) modify, surrender or terminate this Lease or quit or surrender the Leased
Property or any portion thereof, or (ii) entitle Lessee to any abatement,
reduction, suspension or deferment of the Rent or other sums payable by Lessee
hereunder, except as otherwise specifically provided in this Lease. The
obligations of Lessor and Lessee hereunder shall be separate and independent
covenants and agreements and the Rent and all other sums payable by Lessee
hereunder shall continue to be payable in all events unless the obligations to
pay the same shall be terminated pursuant to the express provisions of this
Lease or by termination of this Lease other than by reason of an Event of
Default.

                                   ARTICLE VI

               OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY

     6.1 OWNERSHIP OF THE LEASED PROPERTY. Lessee acknowledges that the Leased
Property is the property of Lessor (except for the Parking Lot Property with
respect to which Lessor holds a leasehold interest pursuant to the Parking Lot
Lease), and that Lessee has only the right to the possession and use of the
Leased Property upon the terms and conditions of this Lease and the Parking Lot
Lease.

     6.2 LESSEE'S PERSONAL PROPERTY. Lessee, at its expense, shall install,
affix, assemble and place on the Leased Property, the Lessee's Personal
Property, which Lessee's Personal Property shall be subject to the security
interests and liens as provided in Section 16.8 of this Lease. Lessee shall not,
without the prior written consent of Lessor (which consent may be withheld in
the event Lessee is in default hereunder) remove any of the Lessee's Personal
Property from the Leased Property. Lessee shall provide and maintain during the
entire Term all such Lessee's Personal Property as shall be necessary in order
to operate the Facility in compliance with all licensure and certification
requirements, in compliance with all applicable Legal Requirements and Insurance
Requirements and otherwise in accordance with customary practice in the industry
for the Primary Intended Use. If removal is authorized by Lessor as provided
herein, all of Lessee's Personal Property not removed by Lessee within seven (7)
days following the expiration or earlier termination of this Lease shall be
considered abandoned by Lessee and may be appropriated, sold, destroyed or
otherwise disposed of by Lessor without first giving notice thereof to Lessee,
without any payment to Lessee and without any obligation to Lessee to account
therefor. Lessee will, at its expense,


                                       14



restore the Leased Property and repair of all damage to the Leased Property
caused by the removal of Lessee's Personal Property, whether effected by Lessee,
Lessor, any Lessee lender, or any Lessor lender.

                                   ARTICLE VII

                      CONDITION AND USE OF LEASED PROPERTY

     7.1 CONDITION OF THE LEASED PROPERTY. Lessee acknowledges receipt and
delivery of possession of the Leased Property and that Lessee has examined and
otherwise has acquired knowledge of the condition of the Leased Property prior
to the execution and delivery of this Lease and has found the same to be in good
order and repair and satisfactory for its purpose hereunder. Lessee is leasing
the Leased Property "as is" in its present condition. Lessee waives any claim or
action against Lessor in respect of the condition of the Leased Property. Lessee
warrants and represents that (a) it has been in possession of the Leased
Property since approximately 2001, (b) the Leased Property is in compliance with
all of the requirements, restrictions and conditions as set forth in the
Permitted Exceptions, and (c) the use of the Leased Property for the Primary
Intended Use will not violate any of the Permitted Exceptions. LESSOR MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED
PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, SUITABILITY,
DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES THAT
THE LEASED PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS SATISFACTORY TO IT.

     7.2 USE OF THE LEASED PROPERTY.

          (a) Lessee covenants that it will obtain and maintain throughout the
     entire Term all approvals needed to use and operate the Leased Property and
     the Facility for the Primary Intended Use, as defined below, under
     applicable local, state and federal law, including but not limited to
     licensure approvals and Medicare and/or a Medicaid certifications, provider
     numbers, certificates of need, governmental approvals, and full
     accreditation from all applicable governmental authorities, if any, that
     are necessary for the operation of the Facility as a one hundred twenty-six
     (126) bed acute care hospital facility.

          (b) Beginning on the Commencement Date and during the entire Term,
     Lessee shall use the Leased Property and the improvements thereon only as a
     one hundred twenty-six (126) bed acute care hospital facility and for such
     other legal ancillary uses as may be necessary in connection with or
     incidental to such uses, subject to any covenants, restrictions and
     easements relating to the Facility (the "Primary Intended Use"). Lessee
     shall not use the Leased Property or any portion thereof for any other use,
     nor change the number or type of beds within the Facility, nor reconfigure
     or rearrange any portion of the Leased Property or the Facility without the
     prior written consent of Lessor, which consent Lessee agrees may be
     withheld in Lessor's sole discretion. No use shall be made or permitted to
     be made of the Leased Property and no acts shall be done which will cause
     the cancellation of any insurance policy covering the Leased Property or
     any part thereof, nor shall Lessee sell or otherwise provide to residents
     or patients therein, or permit to be kept, used or sold in or about the
     Leased Property any article which may be prohibited by law or by the
     standard form of fire insurance policies, any other insurance policies
     required to be carried hereunder, or fire underwriters regulations. Lessee
     shall, at its sole cost, comply with all of the requirements, covenants and
     restrictions pertaining to the Leased Property, including, without
     limitation, all of the Permitted Exceptions, and other requirements of any
     insurance board, association, organization or company necessary for the
     maintenance of the insurance, as herein provided, covering the Leased
     Property and Lessee's Personal Property.

          (c) Lessee covenants and agrees that during the Term it will
     continuously operate the Leased Property only as a provider of healthcare
     services in accordance with the Primary Intended Use and Lessee


                                       15



     shall maintain its certifications for reimbursement and licensure and all
     accreditations necessary to maintain its Medicare and Medicaid
     certifications.

          (d) Lessee shall not commit or suffer to be committed any waste on the
     Leased Property, or in the Facility, nor shall Lessee cause or permit any
     nuisance thereon.

          (e) Lessee shall neither suffer nor permit the Leased Property or any
     portion thereof, including any Capital Addition whether or not financed by
     Lessor, or Lessee's Personal Property, to be used in such a manner as (i)
     might reasonably tend to impair Lessor's (or Lessee's, as the case may be)
     title thereto or to any portion thereof, or (ii) may reasonably make
     possible a claim or claims of adverse usage or adverse possession by the
     public, as such, or of implied dedication of the Leased Property or any
     portion thereof.

          (f) Lessee agrees that during the entire term of this Lease, Lessor
     shall have the right and option to erect a sign on the Leased Property
     stating that the Leased Property is owned by the Lessor. Such sign shall be
     in a size, and shall be erected in a location, reasonably acceptable to
     Lessor and approved by Lessee, which approval shall not be unreasonably
     withheld, conditioned or delayed.

     7.3 LESSOR TO GRANT EASEMENTS. Lessor will, from time to time so long as no
default, and no event has occurred which with the giving of notice or the
passage of time or both would constitute a default, has occurred and is
continuing under this Lease, the Other Leases, at the request of Lessee and at
Lessee's cost and expense, but subject to the approval of Lessor (a) grant
easements and other rights in the nature of easements, (b) release existing
easements or other rights in the nature of easements which are for the benefit
of the Leased Property, (c) dedicate or transfer unimproved portions of the
Leased Property for road, highway or other public purposes, (d) execute
petitions to have the Leased Property annexed to any municipal corporation or
utility district, (e) execute amendments to any covenants and restrictions
affecting the Leased Property and (f) execute and deliver to any person any
instrument appropriate to confirm or effect such grants, releases, dedications
and transfers (to the extent of its interest in the Leased Property), but only
upon delivery to Lessor of an Officer's Certificate stating (and such other
information as Lessor may reasonably require confirming) that such grant,
release, dedication, transfer, petition or amendment is required for and not
detrimental to the proper conduct of the Primary Intended Use on the Leased
Property and does not reduce its value.

                                  ARTICLE VIII

                        LEGAL AND INSURANCE REQUIREMENTS

     8.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS. Subject to Article
XII relating to permitted contests, Lessee, at its expense, will promptly (a)
comply with all Legal Requirements and Insurance Requirements in respect of the
use, operation, maintenance, repair and restoration of the Leased Property,
whether or not compliance therewith shall require structural change in any of
the Leased Improvements or interfere with the use and enjoyment of the Leased
Property, and (b) procure, maintain and comply with all licenses, certificates
of need, Medicare and Medicaid provider agreements, accreditations and other
authorizations required for any use of the Leased Property and Lessee's Personal
Property then being made, and for the proper erection, installation, operation
and maintenance of the Leased Property or any part thereof, including without
limitation, any Capital Additions. Upon Lessor's request, Lessee shall deliver
copies of all such licenses, certificates of need, agreements and other
authorizations. Lessee hereby agrees to indemnify and defend, at Lessee's sole
cost and expense, and hold Lessor, its successors and assigns harmless from and
against, and to reimburse Lessor and its successors and assigns with respect to
any and all claims, demands, actions, causes of action, losses, damages,
liabilities, costs and expenses (including, without limitation, reasonable
attorneys' fees and court costs) of any and every kind or character, known or
unknown, fixed or contingent, asserted against or incurred by Lessor, its
successors and assigns, at any time and from time to time by reason or arising
out of any breach by Lessee of any of the representations and warranties set
forth in this Section 8.1.


                                       16



     8.2 LEGAL REQUIREMENT COVENANTS. Lessee covenants and agrees that the
Leased Property and Lessee's Personal Property shall not be used for any
unlawful purpose. Lessee shall use its best efforts to have tenants acquire and
maintain all licenses, certificates, permits, provider agreements and other
authorizations and approvals needed to operate the Leased Property and all
equipment and machinery used in or in connection with the Leased Property in its
customary manner for the Primary Intended Use and any other use conducted on the
Leased Property as may be permitted from time to time hereunder. Lessee further
covenants and agrees that Lessee's use of the Leased Property, the use of all
equipment and machinery used in connection with the Leased Property, and the
maintenance, alteration, and operation of the same, and all parts thereof, shall
at all times conform to all applicable local, state and federal laws,
ordinances, rules and regulations.

     8.3 HAZARDOUS MATERIALS. Except for Hazardous Materials generated in the
normal course of business regarding the Primary Intended Use (which Hazardous
Materials shall be handled and disposed of in compliance with all Hazardous
Materials Laws), no Hazardous Materials shall be installed, used, generated,
manufactured, treated, handled, refined, produced, processed, stored or disposed
of, or otherwise present in, on or under the Leased Property. No activity shall
be undertaken on the Leased Property which would cause (i) the Leased Property
to become a treatment, storage or disposal facility of hazardous waste,
infectious waste, biomedical or medical waste, within the meaning of, or
otherwise bring the Leased Property within the ambit of RCRA or any Hazardous
Materials Laws, (ii) a release or threatened release of Hazardous Material from
the Leased Property within the meaning of, or otherwise bring the Leased
Property within the ambit of, CERCLA or SARA or any Hazardous Materials Laws or
(iii) the discharge of Hazardous Material into any watercourse, surface or
subsurface of body of water or wetland, or the discharge into the atmosphere of
any Hazardous Material which would require a permit under any Hazardous
Materials Laws. No activity shall be undertaken with respect to the Leased
Property which would cause a violation or support a claim under RCRA, CERCLA,
SARA or any Hazardous Materials Laws. No investigation, administrative order,
litigation or settlement with respect to any Hazardous Material is, to the best
of the Lessee's knowledge, threatened or in existence with respect to the Leased
Property. No notice has been served on Lessee from any entity, governmental body
or individual claiming any violation of any Hazardous Materials Laws, or
requiring compliance with any Hazardous Materials Laws, or demanding payment or
contribution for environmental damage or injury to natural resources. Lessee has
not obtained and Lessee has no knowledge of any reason Lessee will be required
to obtain any permits, licenses, or similar authorizations to occupy, operate or
use the Improvements or any part of the Leased Property by reason of any
Hazardous Materials Laws. Lessee hereby agrees to indemnify and defend, at its
sole cost and expense, and hold Lessor, its successors and assigns, harmless
from and against and to reimburse Lessor with respect to any and all claims,
demands, actions, causes of action, losses, damages, liabilities, costs and
expenses (including, without limitation, reasonable attorney's fees and court
costs) of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by Lessor at any time and from time to
time by reason or arising out of any breach or violation of any Hazardous
Materials Laws. Lessee shall, at its sole cost, expense, risk and liability,
remove or cause to be removed from the Leased Property all Hazardous Materials
generated in connection with the Primary Intended Use and as found in hospital
and healthcare facilities, including, without limitation, all infectious waste
materials, syringes, needles and any materials contaminated with bodily fluids
of any type, character or description of whatsoever nature in accordance with
all Hazardous Materials Laws. Lessee shall not dispose of any such infectious
waste and Hazardous Materials in any receptacles used for the disposal of normal
refuse. Within thirty (30) days following the Commencement Date, Lessee shall
institute an operations and maintenance program designed by an environmental
consultant reasonably satisfactory to Lessor with respect to asbestos-containing
materials ("ACMs") consistent with Guidelines for Controlling
Asbestos-Containing Materials in Buildings (USEPA, 1985) and other relevant
guidelines. Such maintenance program shall continuously remain in effect during
the Term. Lessee shall inspect and maintain all ACMs on a regular basis and
ensure that all ACM's are maintained in a condition that prevents exposure to
the ACMs at all times.

     8.4 HEALTHCARE LAWS. Lessee warrants and represents that this Lease and all
subleases are, and at all times during the term of this Lease will be, in
compliance with all Healthcare Laws. Lessee agrees to add to all of its third
party agreements relating to the Leased Property, including, without limitation,
all subleases, that in the event it is determined that such agreement and/or
sublease is in violation of the Healthcare Laws, such agreement


                                       17



and/or sublease shall be renegotiated so that same are in compliance with all
Healthcare Laws. Lessee agrees promptly to notify Lessor in writing of receipt
of any notice of investigation of any alleged Healthcare Law violations. Lessee
hereby agrees to indemnify and defend, at Lessee's sole cost and expense, and
hold Lessor, its successors and assigns harmless from and against and to
reimburse Lessor and its successors and assigns with respect to any and all
claims, demands, actions, causes of action, losses, damages, liabilities, costs
and expenses (including, without limitation, reasonable attorneys' fees and
court costs) of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by Lessor, its successors and assigns,
at any time and from time to time by reason or arising out of any breach by
Lessee of any of the representations and warranties set forth in this Section
8.4.

     8.5 REPRESENTATIONS AND WARRANTIES. Lessee represents and warrants to
Lessor that as of the date hereof: (i) Lessee is a corporation duly organized
and existing under the laws of the State of California and is duly authorized to
enter into, deliver and perform this Lease and the other documents referred to
herein and such agreements constitute the valid and binding obligations of
Lessee, enforceable in accordance with their terms, (ii) neither the entering
into this Lease or the other documents referred to herein nor the performance by
Lessee of its obligations hereunder or under the other documents referred to
herein will violate any provision of law or any agreement, indenture, note or
other instrument binding upon Lessee, (iii) no authority from or approval by any
governmental body, commission or agency or consent of any third party is
required in connection with the making or validity of and the execution,
delivery and performance of this Lease or the other documents referred to
herein, (iv) there are no actions, suits or proceedings pending against or, to
the knowledge of Lessee, threatened against or affecting Lessee or any of its
Affiliates, in any court or before or by any governmental department, agency or
instrumentality, an adverse decision in which could materially and adversely
affect the financial condition, business or operations of Lessee or the ability
of Lessee to perform its obligations under this Lease or the other documents
referred to herein, (v) Lessee and each of its Affiliates is in compliance in
all material respects with all applicable laws, ordinances, rules, regulations
and requirements of governmental authorities, and (vi) Lessee has obtained and
delivered copies thereof to Lessor on the Commencement Date all certificates of
need, Medicare billing numbers, other licenses and agreements required for the
operation of the Facility.

     8.6 SINGLE PURPOSE ENTITY. Except as otherwise set forth on SCHEDULE 8.6,
Lessee represents, warrants, covenants and agrees that Lessee has always been,
is, and shall remain at all times during the term of this Lease, a Single
Purpose Entity created and to remain in good standing for the sole purpose of
leasing and operating the Facility in accordance with the terms of this Lease.
Simultaneously with the execution of this Lease, and as requested by Lessor at
other times during the term of this Lease, Lessee shall provide Lessor evidence
that Lessee is a Single Purpose Entity and is in good standing in the state of
its organization and in the state in which the Leased Property is located.

     8.7 ORGANIZATIONAL DOCUMENTS. Lessee shall not permit or suffer, without
the prior written consent of Lessor an amendment or modification of its
Organizational Documents (as defined below), or the organizational documents of
any constituent entity within the Lessee, which changes Lessee's status as a
single purpose entity, (ii) any dissolution or termination of its existence, or
(iii) change in its state of formation or incorporation or its name. Lessee has,
simultaneously with the execution of this Lease, delivered to Lessor a true and
complete copy of its articles of incorporation and bylaws creating Lessee, and
all other documents creating and governing the Lessee (collectively, the
"Organizational Documents"). Lessee warrants and represents that the
Organizational Documents (i) were duly executed and delivered, (ii) are in full
force and effect and binding upon and enforceable in accordance with their
terms, (iii) constitute the entire understanding among the shareholders,
partners and members of Lessee, and (iv) no breach exists under the
Organizational Documents and no act has occurred and no condition exists which,
with the giving of notice or the passage of time or both would constitute a
breach under the Organizational Documents.


                                       18



                                   ARTICLE IX

                         REPAIRS; RESERVE; RESTRICTIONS

     9.1 MAINTENANCE AND REPAIR.

          (a) Lessee, at its expense, will keep the Leased Property (including
     the Power Generation Facility) and all private roadways, sidewalks and
     curbs appurtenant thereto, and Lessee's Personal Property in good first
     class order and repair (whether or not the need for such repairs occurs as
     a result of Lessee's use, any prior use, the elements, the age of the
     Leased Property or any portion thereof) and, except as otherwise provided
     in Articles XIV and XV, with reasonable promptness, will make all necessary
     and appropriate repairs thereto of every kind and nature, whether interior
     or exterior, structural or non-structural, ordinary or extraordinary,
     foreseen or unforeseen or arising by reason of a condition existing prior
     to the commencement of the Term of this Lease (concealed or otherwise),
     including, without limitation, all required seismic repairs, replacements
     and upgrades. All repairs shall, to the extent reasonably achievable, be at
     least equivalent in quality to the original work. Lessee will not take or
     omit to take any action the taking or omission of which might materially
     impair the value or the usefulness of the Leased Property or any part
     thereof for the Primary Intended Use. Notwithstanding anything contained
     herein to the contrary, Lessee shall make additions, modifications and
     remodeling to the Leased Property which are not Capital Additions from time
     to time which are necessary for the Primary Intended Use and which permit
     the Lessee to comply fully with its obligations set forth in this Lease,
     provided that any such action will be undertaken expeditiously, in a
     workmanlike manner and will not significantly alter the character or
     purpose or detract from the value or operating efficiency of the Leased
     Property and will not significantly impair the revenue producing capability
     of the Leased Property or adversely affect the ability of the Lessee to
     comply with the provisions of this Lease. Such additions, modifications and
     remodeling shall, without payment by Lessor at any time, be included under
     the terms of this Lease and shall be the property of Lessor. Lessee shall
     notify the Lessor of any and all repairs, improvements, additions,
     modifications and remodeling made to the Leased Property in excess of
     Twenty Five Thousand and 00/100 Dollars ($25,000.00) and obtain consent
     from Lessor prior to making such repairs, improvements, additions,
     modifications and remodeling.

          (b) Lessor shall not under any circumstances be required to build or
     rebuild any improvements on the Leased Property, or to make any repairs,
     replacements, alterations, restorations, or renewals of any nature or
     description to the Leased Property, whether ordinary or extraordinary,
     structural or non-structural, foreseen or unforeseen, or to make any
     expenditure whatsoever with respect thereto in connection with this Lease,
     or to maintain the Leased Property in any way.

          (c) Nothing contained in this Lease and no action or inaction by
     Lessor shall be construed as (i) constituting the consent or request of
     Lessor, expressed or implied, to any contractor, subcontractor, laborer,
     materialman or vendor to or for the performance of any labor or services or
     the furnishing of any materials or other property for the construction,
     alteration, addition, repair or demolition of or to the Leased Property or
     any part thereof, or (ii) giving Lessee any right, power or permission to
     contract for or permit the performance of any labor or services or the
     furnishing of any materials or other property in such fashion as would
     permit the making of any claim against Lessor in respect thereof or to make
     any agreement that may create, or in any way be the basis for, any right,
     title, interest, lien, claim or other encumbrance upon the estate of Lessor
     in the Leased Property or any portion thereof.

          (d) Unless Lessor shall convey any of the Leased Property to Lessee
     pursuant to the provisions of this Lease, Lessee will, upon the expiration
     or prior termination of the Term, vacate and surrender the Leased Property
     to Lessor in the condition in which the Leased Property was originally
     received from Lessor, except as improved, repaired, rebuilt, restored,
     altered or added to as permitted or required by the provisions of this
     Lease and except for ordinary wear and tear (subject to the obligation of
     Lessee to


                                       19



     maintain the Leased Property in good order and repair during the entire
     Term of the Lease), damage caused by the gross negligence or willful acts
     of Lessor and damage or destruction described in Article XIV or resulting
     from a Taking described in Article XV which Lessee is not required by the
     terms of this Lease to repair or restore.

     9.2 RESERVES FOR EXTRAORDINARY REPAIRS. Commencing on the Commencement
Date, with respect to the initial payment, and on or before the last day of each
calendar quarter thereafter, beginning with the quarter ending March 31, 2006,
Lessee shall make quarterly deposits to a reserve (the "Reserve") at a financial
institution of the Lessor's choosing, provided, however, that the first such
deposit on the Commencement Date, shall be prorated. Subject to the immediately
preceding sentence, each deposit to be made pursuant to this Section 9.2 shall
be equal to the sum of Two Thousand Five Hundred and 00/100 Dollars ($2,500.00)
per bed per annum. For the period commencing on the Commencement Date and ending
on December 31, 2005, the number of beds shall be assumed to be one hundred
twenty-six (126). Beginning on January 1, 2006, and on each January 1
thereafter, the number of beds shall be determined by the actual number of beds
placed in service or certified to be available for use in the Facility, which
shall not be reduced without the prior written consent of Lessor. The account to
which such payments are made shall require the signature of an officer of Lessee
and Lessor to make withdrawals. Beginning on January 1, 2007, and on each
January 1 thereafter during the entire Lease Term, such payment into the Reserve
shall be increased by two percent (2%) per annum. Notwithstanding anything
contained herein to the contrary, Lessee shall pay into the Reserve any amounts
needed in excess of such required payments as provided herein. The amounts in
the Reserve, including interest, shall be used to pay for Extraordinary Repairs
on the Facility, or, in the event Lessee fails to make any required
non-Extraordinary Repairs, Lessor may use funds in the Reserve for that purpose
as well, without the necessity of obtaining the signature of an officer of
Lessee. Lessee shall replenish amounts drawn from the Reserve at the rate of
one-twelfth (1/12th) of the total amount withdrawn per month, until completely
replenished. Lessee hereby grants to Lessor a security interest in all monies
deposited into the Reserve and Lessee shall, within fifteen (15) days from the
Commencement Date, execute all documents necessary for Lessor to perfect its
security interest in the Reserve. Lessor and Lessee agree that the first dollars
of all expenditures for Extraordinary Repairs made in each year during the Term
shall be funded from the Reserve account to the full extent of such account;
provided, however, that if Lessor, in its reasonable discretion, determines at
any time that the balance then remaining in the Reserve account is insufficient
to pay in full for the present and future anticipated Extraordinary Repairs on
the Facility, Lessor shall retain funds in the Reserve account in an amount
sufficient to pay in full for Extraordinary Repairs and Lessee will deposit
additional sums into the account from time to time, upon the written request of
Lessor, in amounts equal to the difference between the then balance in the
Reserve account and the cost to complete the present and future Extraordinary
Repairs so that at all times there is an adequate amount in the Reserve account
to pay for such items on a going forward basis. So long as no default has
occurred under any of the terms hereof, and no event has occurred which with the
giving of notice or the passage of time or both would constitute a default
hereunder, any amounts remaining in the Reserve, after the payment of and the
reimbursement for the Extraordinary Repairs on the Facility, at the expiration
of this Lease shall be returned to Lessee. Lessee consents to Lessor's pledge of
the Reserve to any Facility Lender, subject to Lessor's obligation to return any
remaining amounts in the Reserve to Lessee pursuant to this Section 9.2.

     9.3 ENCROACHMENTS; RESTRICTIONS. If any of the Leased Improvements shall,
at any time, encroach upon any property, street or right-of-way adjacent to the
Leased Property, or shall violate the agreements or conditions contained in any
federal, state or local law, restrictive covenant or other agreement affecting
the Leased Property, or any part thereof, or shall impair the rights of others
under any easement or right-of-way to which the Leased Property is subject, then
promptly upon the request of Lessor, Lessee shall, at its expense, subject to
its right to contest the existence of any encroachment, violation or impairment,
(a) obtain valid and effective waivers or settlements of all claims, liabilities
and damages resulting from each such encroachment, violation or impairment,
whether the same shall affect Lessor or Lessee or (b) make such changes in the
Leased Improvements, and take such other actions, as Lessor in the good faith
exercise of its judgment deems reasonably practicable, to remove such
encroachment, or to end such violation or impairment, including, if necessary,
the alteration of any of the Leased Improvements, and in any event take all such
actions as may be necessary in order to be able to continue the operation of the
Facility without such violation, encroachment or impairment. Any such alteration
shall be made in


                                       20



conformity with the applicable requirements of Article X. Lessee's obligations
under this Section 9.3 shall be in addition to and shall in no way discharge or
diminish any obligation of any insurer under any policy of title or other
insurance and Lessee shall be entitled to a credit for any sums paid by Lessee
and recovered by Lessor under any such policy of title or other insurance.

                                   ARTICLE X

                                CAPITAL ADDITIONS

     10.1 CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED PROPERTY.

          (a) If no Event of Default shall have occurred or be continuing under
     this Lease, the Other Leases and the Tenant Leases, Lessee shall have the
     right, upon and subject to the terms and conditions set forth below, to
     construct or install Capital Additions on the Leased Property without the
     prior written consent of Lessor, provided, however, except as expressly
     provided in Section 10.2(d) hereof, Lessee shall not be permitted to create
     any Encumbrance on the Leased Property, in connection with such Capital
     Addition. Prior to commencing construction of any Capital Addition, Lessee
     shall, at Lessee's sole cost and expense (i) submit to Lessor in writing a
     proposal setting forth in reasonable detail any proposed Capital Addition,
     (ii) submit to Lessor such plans and specifications, certificates of need
     and other approvals, permits, licenses, contracts and other information
     concerning the proposed Capital Addition as Lessor may reasonably request,
     and (iii) obtain all necessary certificates of need, state licensure
     surveys and all regulatory approvals of architectural plans. Without
     limiting the generality of the foregoing, such proposal shall indicate the
     approximate projected cost of constructing such Capital Addition, and the
     use or uses to which it will be put.

          (b) Prior to commencing construction of any Capital Addition, Lessee
     shall first request Lessor to provide funds to pay for such Capital
     Addition in accordance with the provisions of Section 10.3. If Lessor
     declines or is unable to provide such financing on terms acceptable to
     Lessee, the provisions of Section 10.2 shall apply. Notwithstanding any
     other provision of this Article X to the contrary, no Capital Additions
     shall be made without the consent of Lessor, which consent shall not be
     unreasonably withheld or delayed, if the Capital Addition Cost of such
     proposed Capital Addition, when aggregated with the costs of all Capital
     Additions made by Lessee, would exceed twenty-five percent (25%) of the
     then Fair Market Value of the Leased Property or would diminish the value
     of the Leased Property. Furthermore, no Capital Addition shall be made
     which would tie in or connect the Leased Property and/or any Leased
     Improvements on the Leased Property with any other improvements on property
     adjacent to the Leased Property (and not part of the Land covered by this
     Lease) including, without limitation, tie-ins of buildings or other
     structures or utilities, unless Lessee shall have obtained the prior
     written approval of Lessor, which approval in Lessor's sole discretion may
     be granted or withheld. All proposed Capital Additions shall be
     architecturally integrated and consistent with the Leased Property.

     10.2 CAPITAL ADDITIONS FINANCED BY LESSEE. If Lessee provides or arranges
to finance any Capital Addition, this Lease shall be and hereby is amended to
provide as follows:

          (a) The above referenced proportion of the Fair Market Added Value of
     Capital Additions paid for by Lessee to the Fair Market Value of the entire
     Leased Property expressed as a percentage is referred to herein as the
     "Added Value Additional". The Added Value Additional determined as provided
     above for each Capital Addition financed or paid for by Lessee shall remain
     in effect until any subsequent Capital Addition.

          (b) There shall be no adjustment in the Base Rent by reason of any
     such Capital Addition.


                                       21



          (c) Upon the expiration or earlier termination of this Lease, except
     by reason of the default by Lessee hereunder, Lessor shall, if Lessee does
     not purchase the Leased Property as provided herein, compensate Lessee for
     all Capital Additions paid for or financed by Lessee in any of the
     following ways, determined in the sole discretion of Lessor:

               (i) By purchasing all Capital Additions paid for by Lessee from
          Lessee for cash in the amount of the Fair Market Added Value of all
          such Capital Additions paid for or financed by Lessee; or

               (ii) By purchasing such Capital Additions from Lessee by
          delivering to Lessee Lessor's purchase money promissory note in the
          amount of said Fair Market Added Value, due and payable not later than
          eighteen (18) months after the date of expiration or other termination
          of this Lease, bearing interest at the test rate applicable under
          Section 1272 of the Code or any successor section thereto ("Test
          Rate") or, if no such Test Rate exists, at the Prime Rate, which
          interest shall be payable monthly, and which note shall be secured by
          a mortgage on the Leased Property, subject to all mortgages and
          encumbrances on the Leased Property at the time of such purchase; or

               (iii) Such other arrangement regarding such compensation as shall
          be mutually acceptable to Lessor and Lessee.

          (d) Lessor and Lessee agree that Lessee's lender for Capital Additions
     shall have the right to secure its loan by a mortgage upon the Leased
     Property provided such mortgage (i) shall not exceed the cost of the
     Capital Additions being made with the proceeds of such loan, (ii) shall be
     subordinate to Lessor's acquisition cost and any Capital Additions paid for
     by the Lessor of the Leased Property, (iii) shall be subordinate to any
     mortgage or encumbrance now existing or hereinafter created, including,
     without limitation, Facility Instruments, (iv) the term of the loan shall
     not extend beyond the term of this Lease, (v) such lender executes all
     subordination and other documents and certificates reasonably required by
     the Facility Lenders, and (vi) shall be limited solely to Lessee's interest
     in the Leased Property.

     10.3 CAPITAL ADDITIONS FINANCED BY LESSOR.

          (a) Lessee shall request that Lessor provide or arrange financing for
     a Capital Addition by providing to Lessor such information about the
     Capital Addition as Lessor may request (a "Request"), including without
     limitation, all information referred to in Section 10.1 above. Lessor may,
     but shall be under no obligation to, obtain the funds necessary to meet the
     Request. Within thirty (30) days of receipt of a Request, Lessor shall
     notify Lessee as to whether it will finance the proposed Capital Addition
     and, if so, the terms and conditions upon which it would do so, including
     the terms of any amendment to this Lease. In no event shall the portion of
     the projected Capital Addition Cost comprised of land, if any, materials,
     labor charges and fixtures be less than ninety percent (90%) of the total
     amount of such cost. Lessee may withdraw its Request by notice to Lessor at
     any time before or after receipt of Lessor's terms and conditions.

          (b) If Lessor agrees to finance the proposed Capital Addition, Lessee
     shall provide Lessor with the following prior to any advance of funds:

               (i) all customary or other required loan documentation, if the
          Capital Addition is to be financed through the incurrence of debt;

               (ii) any information, certificates of need, regulatory approvals
          of architectural plans and other certificates, licenses, permits or
          documents requested by either Lessor or any lender with whom Lessor
          has agreed or may agree to provide financing which are necessary to
          confirm that


                                       22



          Lessee will be able to use the Capital Addition upon completion
          thereof in accordance with the Primary Intended Use, including all
          required federal, state or local government licenses and approvals;

               (iii) an Officer's Certificate and, if requested, a certificate
          from Lessee's architect, setting forth in reasonable detail the
          projected (or actual, if available) cost of the proposed Capital
          Addition;

               (iv) an amendment to this Lease, duly executed and acknowledged,
          in form and substance satisfactory to Lessor (the "Lease Amendment"),
          and containing such provisions as may be necessary or appropriate,
          including without limitation, any appropriate changes in the legal
          description of the Land, the Fair Market Value and the Rent, which
          shall be increased to take into account an adjustment to the Purchase
          Price in an amount equal to the equity contributed by Lessor to
          finance the Capital Addition or, in the case of debt financing, the
          principal and interest on the debt incurred by Lessor to finance the
          Capital Addition;

               (v) a grant deed conveying title to Lessor to any land acquired
          for the purpose of constructing the Capital Addition, free and clear
          of any liens or encumbrances except those approved by Lessor and, both
          prior to and following completion of the Capital Addition, an as-built
          survey thereof satisfactory to Lessor;

               (vi) endorsements to any outstanding policy of title insurance
          covering the Leased Property and any additional land referred to in
          subparagraph (v) above, or a supplemental policy of title insurance
          covering the Leased Property and any additional land referred to in
          subparagraph (v) above, satisfactory in form and substance to Lessor
          (A) updating the same without any additional exceptions, except as may
          be permitted by Lessor; and (B) increasing the coverage thereof by an
          amount equal to the Fair Market Value of the Capital Addition (except
          to the extent covered by the owner's policy of title insurance
          referred to in subparagraph (vii) below);

               (vii) if required by Lessor, (A) an owner's policy of title
          insurance insuring fee simple title to any land conveyed to Lessor
          pursuant to subparagraph (v), free and clear of all liens and
          encumbrances except those approved by Lessor and (B) a lender's policy
          of title insurance satisfactory in form and substance to Lessor and
          the Lending Institution advancing any portion of the Capital Addition
          Cost;

               (viii) if required by Lessor, prior to commencing the Capital
          Addition, an M.A.I. appraisal of the Leased Property indicating that
          the value of the Leased Property upon completion of the Capital
          Addition will exceed the Fair Market Value of the Leased Property
          prior thereto by an amount not less than one hundred percent (100%) of
          the Capital Addition Costs; and

               (ix) such other certificates (including, but not limited to,
          endorsements increasing the insurance coverage, if any, at the time
          required by Section 13.1), documents, contracts, opinions of counsel,
          appraisals, surveys, certified copies of duly adopted resolutions of
          the governing body of Lessee authorizing the execution and delivery of
          the Lease Amendment and any other instruments as may be reasonably
          required by Lessor and any Lending Institution advancing or
          reimbursing Lessee for any portion of the Capital Addition Cost.

          (c) Lessor and Lessee agree that Lessor shall have the right, in the
     exercise of its reasonable discretion and after consulting with Lessee, to
     designate the general contractor, developer, architect, construction
     company, engineer and other parties which will participate in the
     development of the Capital Addition. Lessor and Lessee further agree that
     Lessor shall control the preparation and negotiation of the


                                       23



     definitive agreements with such parties and Lessor will give Lessee an
     opportunity to review such definitive agreements prior to their execution.

          (d) Upon making a Request to finance a Capital Addition, whether or
     not such financing is actually consummated, Lessee shall pay or agree to
     pay, upon demand, all reasonable costs and expenses of Lessor and any
     Lending Institution which has committed to finance such Capital Addition
     which have been paid or incurred by them in connection with the financing
     of the Capital Addition, including, but not limited to, (i) the fees and
     expenses of their respective counsel, (ii) all printing expenses, (iii) the
     amount of any filing, registration and recording taxes and fees, (iv)
     documentary stamp taxes, if any, (v) title insurance charges, appraisal
     fees, if any, rating agency fees, if any, and (vi) commitment fees, if any,
     and (vii) costs of obtaining regulatory and governmental approvals,
     including but not limited to any required certificates of need, for the
     construction, operation, use or occupancy of the Capital Addition.

     10.4 SALVAGE. All materials which are scrapped or removed in connection
with the making of either Capital Additions permitted by Section 10.1 or repairs
required by Article IX shall be or become the property of Lessor.

                                   ARTICLE XI

                                      LIENS

     Subject to the provisions of Article XII relating to permitted contests,
Lessee will not directly or indirectly create or allow to remain and will
promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) the matters, if any, set forth in EXHIBIT C, (c) restrictions, liens
and other encumbrances which are consented to in writing by Lessor, or any
easements granted pursuant to the provisions of Section 7.3 of this Lease, (d)
liens for those taxes of Lessor which Lessee is not required to pay hereunder,
(e) liens for Impositions or for sums resulting from noncompliance with Legal
Requirements so long as (1) the same are not yet payable or are payable without
the addition of any fine or penalty or (2) such liens are in the process of
being contested as permitted by Article XII, (f) liens of mechanics, laborers,
materialmen, suppliers or vendors for sums either disputed or not yet due,
provided that (1) the payment of such sums shall not be postponed for more than
sixty (60) days after the completion of the action giving rise to such lien and
such reserve or other appropriate provisions as shall be required by law or
generally accepted accounting principles shall have been made therefor or (2)
any such liens are in the process of being contested as permitted by Article
XII, and (g) any liens which are the responsibility of Lessor pursuant to the
provisions of Article XXXVII of this Lease. Unless otherwise expressly provided
herein, Lessee shall not mortgage or grant any interest or security interest in,
or otherwise assign, any part of Lessee's rights and interests in this Lease,
the Leased Property, Lessee's Personal Property, or any permits, licenses,
certificates of need (if any) or any other approvals required to operate the
Leased Property during the Term without the prior written consent of Lessor,
which may be withheld at Lessor's sole discretion.

                                   ARTICLE XII

                               PERMITTED CONTESTS

     Lessee, on its own or on Lessor's behalf (or in Lessor's name), but at
Lessee's expense, after two (2) business days' prior written notice to Lessor,
may contest, by appropriate legal proceedings conducted in good faith and with
due diligence, the amount, validity or application, in whole or in part, of any
Imposition, Legal Requirement, Insurance Requirement, lien, attachment, levy,
encumbrance, charge or claim not otherwise permitted by Article XI, provided
that (a) in the case of an unpaid Imposition, lien, attachment, levy,
encumbrance, charge or claim, the commencement and continuation of such
proceedings shall suspend the collection thereof from Lessor and from the Leased
Property, (b) neither the Leased Property nor any Rent therefrom nor any part
thereof or interest therein would be in any immediate danger of being sold,
forfeited, attached or lost, (c) in the case of a Legal


                                       24



Requirement, Lessor would not be in any immediate danger of civil or criminal
liability for failure to comply therewith pending the outcome of such
proceedings, (d) in the event that any such contest shall involve a sum of money
or potential loss in excess of Fifty Thousand Dollars ($50,000), then, in any
such event, (i) provided the Consolidated Net Worth of Lessee and/or Guarantors
is then in excess of Fifty Million Dollars ($50,000,000), Lessee shall deliver
to Lessor an Officer's Certificate to the effect set forth in clauses (a), (b)
and (c), to the extent applicable, or (ii) in the event the Consolidated Net
Worth of Lessee and/or Guarantors is not then in excess of Fifty Million Dollars
($50,000,000), then Lessee shall deliver to Lessor and its counsel an opinion of
Lessee's counsel to the effect set forth in clauses (a), (b) and (c), to the
extent applicable, (e) in the case of a Legal Requirement and/or an Imposition,
lien, encumbrance or charge, Lessee shall give such reasonable security as may
be demanded by Lessor to insure ultimate payment of the same and to prevent any
sale or forfeiture of the affected portion of the Leased Property or the Rent by
reason of such non-payment or non-compliance; provided, however, the provisions
of this Article XII shall not be construed to permit Lessee to contest the
payment of Rent (except as to contests concerning the method of computation or
the basis of levy of any Imposition or the basis for the assertion of any other
claim) or any other sums payable by Lessee to Lessor hereunder, (f) in the case
of an Insurance Requirement, the coverage required by Article XIII shall be
maintained, and (g) if such contest be finally resolved against Lessor or
Lessee, Lessee shall, as Additional Charges due hereunder, promptly pay the
amount required to be paid, together with all interest and penalties accrued
thereon, or comply with the applicable Legal Requirement or Insurance
Requirement. Lessor, at Lessee's expense, shall execute and deliver to Lessee
such authorizations and other documents as may reasonably be required in any
such contest and, if reasonably requested by Lessee or if Lessor so desires,
Lessor shall join as a party therein. Lessee shall indemnify and save Lessor
harmless against any liability, cost or expense of any kind that may be imposed
upon Lessor in connection with any such contest and any loss resulting
therefrom.

                                  ARTICLE XIII

                                    INSURANCE

     13.1 GENERAL INSURANCE REQUIREMENTS. During the Term of this Lease, Lessee
shall at all times keep the Leased Property and all property located in or on
the Leased Property, including Lessee's Personal Property, insured against loss
or damage from such causes as are customarily insured against, by prudent owners
of similar facilities. Without limiting the generality of the foregoing, Lessee
shall obtain and maintain in effect throughout the Lease Term, the kinds and
amounts of insurance deemed necessary by the Lessor and as described below.
After prior written notice to Lessee, Lessor may, at Lessor's option, obtain the
insurance coverages required from Lessee herein (excluding coverages for
worker's compensation and professional liability) provided that (i) the
insurance coverages obtained by Lessee may be terminated without penalty or cost
to Lessee, (ii) the costs of such coverages obtained by Lessor collectively do
not exceed the costs of the insurance obtained by Lessee and (iii) the coverages
obtained by Lessor are comparable to that obtained or to be obtained by Lessee
hereunder. In the event Lessor obtains such insurance coverages, Lessee shall
reimburse Lessor for the costs of such coverages immediately upon request by
Lessor. The insurance shall be written by insurance companies (i) acceptable to
the Lessor, (ii) that are rated at least an "A-VII" or better by Best's
Insurance Guide and Key Ratings and a claim payment rating by Standard & Poor's
Corporation of A or better, and (iii) authorized, licensed and qualified to do
insurance business in the state in which the Leased Property is located.
Notwithstanding the foregoing or any other provision of this Article XIII,
Lessor acknowledges and agrees that the insurance coverages required under
subparagraphs (d), (h) and (e) of this Section 13.1 are being handled through a
captive insurance company, the identity of which has been disclosed to the
Lessee and Lessor. The aggregate amount of coverage by a single company must not
exceed five percent (5%) of the insurance company's policyholders' surplus. The
policies must name Lessor (and any other entities as Lessor may deem necessary)
as an additional insured and losses shall be payable to Lessor and/or Lessee as
provided in Article XIV. Each insurance policy required hereunder must (i)
provide primary insurance without right of contribution from any other insurance
carried by Lessor, (ii) contain an express waiver by the insurer of any right of
subrogation, setoff or counterclaim against any insured party thereunder
including Lessor, (iii) permit Lessor to pay premiums at Lessor's discretion,
and (iv) as respects any third party liability claim brought against Lessor,
obligate the insurer to defend Lessor as an additional insured thereunder. In
addition, the policies shall name as an


                                       25



additional insured any Facility Lender by way of a standard form of mortgagee's
loss payable endorsement. Any loss adjustment shall require the written consent
of Lessor and each affected Facility Lender. Evidence of insurance and/or
Impositions shall be deposited with Lessor and, if requested, with any Facility
Lender. If any provision of any Facility Instrument requires deposits of
insurance to be made with such Facility Lender, Lessee shall either pay to
Lessor monthly the amounts required and Lessor shall transfer such amounts to
such Facility Lender or, pursuant to written direction by Lessor, Lessee shall
make such deposits directly with such Facility Lender. The policies on the
Leased Property, including the Leased Improvements, the Fixtures and Lessee's
Personal Property, shall insure against the following risks:

          (a) All Risks or Special Form Property insurance against loss or
     damage to the building and improvements, including but not limited to,
     perils of fire, lightning, water, wind, theft, vandalism and malicious
     mischief, plate glass breakage, and perils typically provided under an
     Extended Coverage Endorsement and other forms of broadened risk perils, and
     insured on a "replacement cost" value basis to the extent of the full
     replacement value of the Leased Property. The policy shall include coverage
     for subsidence. The deductible amount thereunder shall be borne by the
     Lessee in the event of a loss and the deductible must not exceed Ten
     Thousand and 00/100 Dollars ($10,000.00) per occurrence. Further, in the
     event of a loss, Lessee shall abide by all provisions of the insurance
     contract, including proper and timely notice of the loss to the insurer,
     and Lessee further agrees that it will notify the Lessor of any loss in the
     amount of Twenty-Five Thousand and 00/100 Dollars ($25,000.00) or greater
     and that no claim at or in excess of Twenty-Five Thousand and 00/100
     Dollars ($25,000.00) shall be settled without the prior written consent of
     Lessor, which consent shall not be unreasonably withheld or delayed.

          (b) Flood and earthquake insurance shall be required only in the event
     that the Leased Property is located in a flood plain or earthquake zone.
     Such insurance to be in an amount equal to the Full Replacement Cost value
     of the Facility, subject to no more than a Twenty-Five Thousand Dollars
     ($25,000) per occurrence deductible and such policy shall include coverage
     for subsidence.

          (c) Insurance against loss of earnings in an amount sufficient to
     cover not less than twelve (12) months' lost earnings and written in an
     "all risks" form, either as an endorsement to the insurance required under
     subparagraph (a) above, or under a separate policy.

          (d) Worker's compensation insurance covering all employees in amounts
     that are customary for the Lessee's industry.

          (e) Commercial General Liability in a primary amount of at least Three
     Million and 00/100 Dollars ($3,000,000.00) per occurrence, bodily injury
     for injury or death of any one person and One Hundred Thousand and 00/100
     Dollars ($100,000.00) for Property Damage for damage to or loss of property
     of others, subject to a Ten Million and 00/100 Dollars ($10,000,000.00)
     annual aggregate policy limit for all bodily injury and property damage
     claims, occurring on or about the Leased Property or in any way related to
     the Leased Property, including but not limited to, any swimming pools or
     other rehabilitation and recreational facilities or areas that are located
     on the Leased Property otherwise related to the Leased Property. Such
     policy shall include coverages of a Broad Form nature, including, but not
     limited to, Explosion, Collapse and Underground (XCU), Products Liability,
     Completed Operations, Broad Form Contractual Liability, Broad Form Property
     Damage, Personal Injury, Incidental Malpractice Liability, and Host Liquor
     Liability.

          (f) Automobile and vehicle liability insurance coverage for all owned,
     non-owned, leased or hired automobiles and vehicles in a primary limit
     amount of One Million and 00/100 Dollars ($1,000,000.00) per occurrence for
     bodily injury; One Hundred Thousand and 00/100 Dollars ($100,000.00) per
     occurrence for property damage; subject to an annual aggregate policy limit
     of One Million and 00/100 Dollars ($1,000,000.00).


                                       26



          (g) Umbrella liability insurance in the minimum amount of Ten Million
     and 00/100 Dollars ($10,000,000.00) for each occurrence and aggregate
     combined single limit for all liability, with a Ten Thousand and 00/100
     Dollar ($10,000.00) self-insured retention for exposure not covered in
     underlying primary policies. The umbrella liability policy shall name in
     its underlying schedule the policies of professional liability, commercial
     general liability, garage keepers liability, automobile/vehicle liability
     and employer's liability under the workers compensation policy.

          (h) Professional liability insurance for any physician employed or
     other employee or agent of the Lessee providing services at the Leased
     Property in an amount not less than Three Million and 00/100 Dollars
     ($3,000,000.00) per individual claim and Ten Million and 00/100 Dollars
     ($10,000,000.00) annual aggregate.

          (i) A commercial blanket bond covering all employees of the Lessee,
     including its officers and the individual owners of the insured business
     entity, whether a joint-venture, partnership, proprietorship or
     incorporated entity, against loss as a result of their dishonesty. Policy
     limit shall be in an amount of at least One Million and 00/100 Dollars
     ($1,000,000.00) subject to a deductible of no more than Ten Thousand and
     00/100 Dollars ($10,000.00) per occurrence.

     The term "Full Replacement Cost" as used herein, shall mean the actual
     replacement cost thereof from time to time, including increased cost of
     construction endorsement, less exclusions provided in the normal fire
     insurance policy. In the event either Lessor or Lessee believes that the
     Full Replacement Cost has increased or decreased at any time during the
     Term, it shall have the right to have such Full Replacement Cost
     re-determined by the fire insurance company which is then providing the
     largest amount of fire insurance carried on the Leased Property,
     hereinafter referred to as the "impartial appraiser". The party desiring to
     have the Full Replacement Cost so re-determined shall forthwith, on receipt
     of such determination by such impartial appraiser, give written notice
     thereof to the other party hereto. The determination of such impartial
     appraiser shall be final and binding on the parties hereto, and Lessee
     shall forthwith increase, or may decrease, the amount of the insurance
     carried pursuant to this Article, as the case may be, to the amount so
     determined by the impartial appraiser. Lessee shall pay the fee, if any, of
     the impartial appraiser.

     13.2 ADDITIONAL INSURANCE. In addition to the insurance described above,
Lessee shall maintain such additional insurance, including, without limitation,
adequate loss of rents insurance with respect to casualty or condemnation events
to the extent the coverage set forth in Section 3.1(c) is not adequate, as may
be required from time to time by any Facility Lender and shall further at all
times maintain adequate worker's compensation insurance coverage for all persons
employed by Lessee on the Leased Property, in accordance with the requirements
of applicable local, state and federal law.

     13.3 WAIVER OF SUBROGATION. All insurance policies to be obtained by Lessee
as required hereunder, including, without limitation, insurance policies
covering the Leased Property, the Fixtures, the Facility, and/or Lessee's
Personal Property, including without limitation, contents, fire and casualty
insurance, shall expressly waive any right of subrogation on the part of the
insurer against the Lessor. Lessee shall obtain insurance policies which will
include such a waiver clause or endorsement regardless of whether same is
obtainable without extra cost, and in the event of such an extra charge Lessee
shall pay the same.

     13.4 FORM OF INSURANCE. All of the policies of insurance referred to in
this Section shall be written in form satisfactory to Lessor and by insurance
companies satisfactory to Lessor. Lessee shall pay all of the premiums therefor,
and shall deliver such original policies, or in the case of a blanket policy, a
copy of the original policy certified in writing by a duly authorized agent for
the insurance company as a "true and certified" copy of the policy, to the
Lessor effective with the Commencement Date and furnished annually thereafter
(and, with respect to any renewal policy, at least fifteen (15) days prior to
the expiration of the existing policy) and in the event of the failure of Lessee
either to obtain such insurance in the names herein called for or to pay the
premiums therefor, or to deliver


                                       27



such policies or certified copies of such policies (if allowed hereunder) to
Lessor at the times required, Lessor shall be entitled, but shall have no
obligation, to obtain such insurance and pay the premiums therefor, which
premiums shall be repayable to Lessor upon written demand therefor, and failure
to repay the same shall constitute an Event of Default within the meaning of
Section 16.1(c). Each insurer mentioned in this Section shall agree, by
endorsement on the policy or policies issued by it, or by independent instrument
furnished to Lessor, that it will give to Lessor sixty (60) days' prior written
notice (at Lessor's notice address as specified in this Lease (the "Lessor's
Notice Address")) before the policy or policies in question shall be altered,
allowed to expire or canceled. The parties hereto agree that all insurance
policies, endorsements and certificates which provide that the insurer will
"endeavor to" give notice before same may be altered, allowed to expire or
canceled will not be acceptable to Lessor. Notwithstanding anything contained
herein to the contrary, all policies of insurance required to be obtained by the
Lessee hereunder shall provide (i) that such policies will not lapse, terminate,
be canceled, or be amended or modified to reduce limits or coverage terms unless
and until Lessor has received not less than sixty (60) days' prior written
notice at the Lessor's Notice Address, with a simultaneous copy to MPT Operating
Partnership, LP, Attention: Its President, 1000 Urban Center Drive, Suite 501,
Birmingham, Alabama 35242, and (ii) that in the event of cancellation due to
non-payment of premium, the insurer will provide not less than ten (10) days'
prior written notice to the Lessor at the Lessor's Notice Address, with a
simultaneous copy to MPT Operating Partnership, LP, Attention: Its President,
1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242.

     13.5 INCREASE IN LIMITS. In the event that Lessor shall at any time in its
reasonable discretion deem the limits of the personal injury, property damage or
general public liability insurance then carried to be insufficient, the parties
shall endeavor to agree on the proper and reasonable limits for such insurance
to be carried and such insurance shall thereafter be carried with the limits
thus agreed on until further change pursuant to the provisions of this Section.
If the parties shall be unable to agree thereon, the proper and reasonable
limits for such insurance to be carried shall be determined by an impartial
third party selected by the parties. Nothing herein shall permit the amount of
insurance to be reduced below the amount or amounts required by any of the
Facility Instruments.

     13.6 BLANKET POLICY. Notwithstanding anything to the contrary contained in
this Section, Lessee's obligations to carry the insurance provided for herein
may be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Lessee provided that

          (a) Any such blanket policy or policies are acceptable to and have
     been approved by the Lessor;

          (b) Any such blanket policy or policies shall not be changed, altered
     or modified without the prior written consent of the Lessor; and

          (c) Any such blanket policy or policies shall otherwise satisfy the
     insurance requirements of this Article XIII (including the requirement of
     thirty (30) days' written notice before the expiration or cancellation of
     such policies as required by Section 13.4 hereof) and shall provide for
     deductibles in amounts acceptable to Lessor.

     13.7 NO SEPARATE INSURANCE. Lessee shall not, on Lessee's own initiative or
pursuant to the request or requirement of any third party, take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article to be furnished by, or which may reasonably be required
to be furnished by, Lessee, or increase the amounts of any then existing
insurance by securing an additional policy or additional policies, unless all
parties having an insurable interest in the subject matter of the insurance,
including in all cases Lessor and all Facility Lenders, are included therein as
additional insureds and the loss is payable under said insurance in the same
manner as losses are required to be payable under this Lease. Lessee shall
immediately notify Lessor of the taking out of any such separate insurance or of
the increasing of any of the amounts of the then existing insurance by securing
an additional policy or additional policies.


                                       28



                                   ARTICLE XIV

                                FIRE AND CASUALTY

     14.1 INSURANCE PROCEEDS. All proceeds payable by reason of any loss or
damage to the Leased Property, or any portion thereof, and insured under any
policy of insurance required by Article XIII of this Lease shall be paid to
Lessor and held by Lessor in trust (subject to the provisions of Section 14.7)
and shall be made available for reconstruction or repair, as the case may be, of
any damage to or destruction of the Leased Property, or any portion thereof, and
shall be paid out by Lessor from time to time for the reasonable cost of such
reconstruction or repair. Any excess proceeds of insurance remaining after the
completion of the restoration or reconstruction of the Leased Property (or in
the event neither Lessor nor Lessee is required or elects to repair and restore,
all such insurance proceeds) shall be retained by Lessor free and clear upon
completion of any such repair and restoration except as otherwise specifically
provided below in this Article XIV. All salvage resulting from any risk covered
by insurance shall belong to Lessor except that any salvage relating to Capital
Additions paid for by Lessee or to Lessee's Personal Property shall belong to
Lessee.

     14.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY
INSURANCE.

          (a) Except as provided in Section 14.7, if during the Term, the Leased
     Property is totally or partially destroyed from a risk covered by the
     insurance described in Article XIII and the Facility thereby is rendered
     Unsuitable for its Primary Intended Use, Lessee shall have the option, by
     giving written notice to Lessor within sixty (60) days following the date
     of such destruction, to (i) restore the Facility to substantially the same
     condition as existed immediately before the damage or destruction, or (ii)
     so long as Lessee is not in monetary or payment default of any kind, and no
     event has occurred which with the giving of notice or the passage of time,
     or both, would constitute such a default, under this Lease, the Other
     Leases and the Tenant Leases, purchase the Leased Property (including the
     Parking Lot Interest) from Lessor for a purchase price equal to the Option
     Price as defined in Section 35.1 (less the amount of any insurance proceeds
     held by Lessor), or (iii) so long as the damage or destruction was not
     caused by the negligence of Lessee, its agents, servants, employees or
     contractors, terminate this Lease and, in this event, Lessor shall be
     entitled to retain the insurance proceeds, and Lessee shall pay to Lessor
     on demand, the amount of any deductible or uninsured loss arising in
     connection therewith. In the event Lessee purchases the Leased Property
     pursuant to this Section 14.2(a), the terms set forth in Article XVIII
     shall apply and the sale/purchase must be closed within ninety (90) days
     after the date of the written notice from Lessee to Lessor of Lessee's
     intent to purchase, unless a different closing date is agreed upon in
     writing by Lessor and Lessee.

          (b) If during the Term, the Leased Improvements and/or the Fixtures
     are totally or partially destroyed from a risk covered by the insurance
     described in Article XIII, but the Facility is not thereby rendered
     Unsuitable for its Primary Intended Use, Lessee shall restore the Facility
     to substantially the same condition as existed immediately before the
     damage or destruction. Such damage or destruction shall not terminate this
     Lease; provided, however, if Lessee cannot within a reasonable time obtain
     all necessary governmental approvals, including building permits, licenses,
     conditional use permits and any certificates of need, after diligent
     efforts to do so, in order to be able to perform all required repair and
     restoration work and to operate the Facility for its Primary Intended Use
     in substantially the same manner as immediately prior to such damage or
     destruction, so long as Lessee is not in monetary or payment default of any
     kind, and no event has occurred which with the giving of notice or the
     passage of time or both would constitute such a default, under the terms of
     this Lease, the Other Leases and the Tenant Leases, Lessee shall have the
     option, by giving written notice to Lessor within sixty (60) days following
     the date of such damage or destruction, to purchase the Leased Property
     (including the Parking Lot Interest) for a purchase price equal to the
     Option Price as defined in Section 35.1 (less the amount of any insurance
     proceeds held by Lessor). In the event Lessee purchases the Leased Property
     pursuant to this Section 14.2(b), the terms set forth in Article XVIII
     shall apply and the sale/purchase must be closed within ninety (90) days
     after the date of the


                                       29



     written notice from Lessee to Lessor of Lessee's intent to purchase, unless
     a different closing date is agreed upon in writing by Lessor and Lessee.

          (c) If the cost of the repair or restoration exceeds the amount of
     proceeds received by Lessor from the insurance required under Article XIII,
     Lessee shall be obligated to contribute any excess amount needed to restore
     the Facility prior to use of the insurance proceeds. Such amount shall be
     paid by Lessee to Lessor (or a Facility Lender if required) to be held in
     trust together with any other insurance proceeds for application to the
     cost of repair and restoration.

          (d) In the event Lessee purchases the Leased Property, this Lease
     shall terminate upon payment of the Option Price (less the amount of any
     insurance proceeds held by Lessor) and Lessor shall remit to Lessee all
     insurance proceeds being held in trust by Lessor or the Facility Lender if
     applicable.

     14.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT COVERED BY
INSURANCE. Except as provided in Section 14.7 below, if during the Term, the
Facility is totally or materially destroyed from a risk not covered by the
insurance described in Article XIII but that would have been covered if Lessee
carried the insurance customarily maintained by, and generally available to, the
operators of reputable health care facilities in the region in which the
Facility is located, then, whether or not such damage or destruction renders the
Facility Unsuitable for its Use, Lessee shall, at its sole cost and expense,
restore the Facility to substantially the same condition it was in immediately
before such damage or destruction and such damage or destruction shall not
terminate this Lease. If such damage or destruction is not material, Lessee
shall restore the Leased Property at Lessee's expense.

     14.4 LESSEE'S PERSONAL PROPERTY. All insurance proceeds payable by reason
of any loss of or damage to any of Lessee's Personal Property or Capital
Additions financed by Lessee shall be paid to Lessor and Lessor shall hold such
insurance proceeds in trust to pay the cost of repairing or replacing the damage
to Lessee's Personal Property or the Capital Additions financed by Lessee.

     14.5 RESTORATION OF LESSEE'S PROPERTY. If Lessee is required or elects to
restore the Facility as provided in Sections 14.2 or 14.3, Lessee shall also
restore all alterations and improvements made by Lessee, Lessee's Personal
Property and all Capital Additions paid for by Lessee.

     14.6 NO ABATEMENT OF RENT. This Lease shall remain in full force and effect
and Lessee's obligation to make rental payments and to pay all other charges
required by this Lease shall remain unabated during any period required for
repair and restoration.

     14.7 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of Sections
14.2 or 14.3 to the contrary but subject to the option of Lessee to purchase the
Leased Property as provided in Section 35.1 by giving Lessor written notice
within sixty (60) days following the date of such damage or destruction, if
damage to or destruction of the Facility occurs during the last twenty-four (24)
months of the Term, and if such damage or destruction cannot be fully repaired
and restored within six (6) months immediately following the date of loss,
either party shall have the right to terminate this Lease by giving notice to
the other within sixty (60) days after the date of damage or destruction, in
which event Lessor shall be entitled to retain the insurance proceeds and Lessee
shall pay to Lessor on demand the amount of any deductible or uninsured loss
arising in connection therewith; provided, however, that any such notice given
by Lessor shall be void and of no force and effect if Lessee exercises an
available option to extend the Term for one Extended Term within thirty (30)
days following receipt of such termination notice.

     14.8 TERMINATION OF RIGHT TO PURCHASE. Any termination of this Lease
pursuant to this Article XIV shall cause any right to purchase under any other
provisions of this Lease granted to Lessee under this Lease to be terminated and
to be without further force and effect.


                                       30



     14.9 WAIVER. Lessee hereby waives any statutory or common law rights of
termination which may arise by reason of any damage or destruction of the
Facility.

                                   ARTICLE XV

                                  CONDEMNATION

     15.1 DEFINITIONS.

          (a) "Condemnation" means (i) the exercise of any governmental power,
     whether by legal proceedings or otherwise, by a Condemnor or (ii) a
     voluntary sale or transfer by Lessor to any Condemnor, either under threat
     of Condemnation or while legal proceedings for Condemnation are pending.

          (b) "Date of Taking" means the date the Condemnor has the right to
     possession of the property being condemned.

          (c) "Award" means all compensation, sums or anything of value awarded,
     paid or received on a total or partial Condemnation.

          (d) "Condemnor" means any public or quasi-public authority, or private
     corporation or individual, having the power of Condemnation.

     15.2 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is any
Taking of all or any part of the Leased Property or any interest in this Lease
by Condemnation, the rights and obligations of the parties shall be determined
by this Article XV.

     15.3 TOTAL TAKING. If there is a Taking of all of the Leased Property by
Condemnation, this Lease shall terminate on the Date of Taking.

     15.4 PARTIAL TAKING. If there is a Taking of a portion of the Leased
Property by Condemnation, this Lease shall remain in effect if the Facility is
not thereby rendered Unsuitable for its Primary Intended Use. If, however, the
Facility is thereby rendered Unsuitable for its Primary Intended Use, Lessee
shall have the option (a) to restore the Facility, at its own expense, to the
extent possible, to substantially the same condition as existed immediately
before the partial Taking, or (b) so long as Lessee is not in monetary or
payment default of any kind, and no event has occurred which with the giving of
notice or the passage of time or both would constitute such a default, under the
terms of this Lease, the Other Leases and the Tenant Leases to acquire the
Leased Property (including the Parking Property Interest) from Lessor for a
purchase price equal to the Option Price as defined in Section 35.1, in which
event this Lease shall terminate upon payment of the Option Price. Lessee shall
exercise its option by giving Lessor notice thereof within sixty (60) days after
Lessee receives notice of the Taking. In the event Lessee exercises the option
to purchase the Leased Property pursuant to this Section 15.4, the terms set
forth in Article XVIII shall apply and the sale/purchase must be closed within
thirty (30) days after the date of the written notice from Lessee to Lessor of
Lessee's intent to purchase, unless a different closing date is agreed upon in
writing by Lessor and Lessee.

     15.5 RESTORATION. If there is a partial Taking of the Leased Property and
this Lease remains in full force and effect pursuant to Section 15.4, Lessee
shall accomplish all necessary restoration.

     15.6 AWARD DISTRIBUTION. In the event Lessee exercises the purchase option
as described in clause (b) of Section 15.4, the entire Award shall belong to
Lessee provided no Event of Default is continuing and Lessor agrees to assign to
Lessee all of its rights thereto. In any other event, the entire Award shall
belong to and be paid to Lessor, except that, if this Lease is terminated, and
subject to the rights of the Facility Lender, Lessee shall be entitled to
receive from the Award, if and to the extent such Award specifically includes
such items, the following:


                                       31



          (a) A sum attributable to the Capital Additions for which Lessee would
     be entitled to reimbursement at the end of the Term pursuant to the
     provisions of Section 10.2(c) and the value, if any, of the leasehold
     interest of Lessee under this Lease; and

          (b) A sum attributable to Lessee's Personal Property and any
     reasonable removal and relocation costs included in the Award.

If Lessee is required or elects to restore the Facility, Lessor agrees that,
subject to the rights of the Facility Lenders, its portion of the Award shall be
used for such restoration and it shall hold such portion of the Award in trust,
for application to the cost of the restoration. Notwithstanding any provision of
this Lease to the contrary, any Award retained by Lessor and not used for
restoration shall be taken into account as an amount received by Lessor for
purposes of calculating the Option Price as defined in Section 35.1.

     15.7 TEMPORARY TAKING. The Taking of the Leased Property, or any part
thereof, by military or other public authority shall constitute a Taking by
Condemnation only when the use and occupancy by the Taking authority has
continued for longer than six (6) months. During any such six (6) month period
all the provisions of this Lease shall remain in full force and effect and the
Base Rent shall not be abated or reduced during such period of Taking.

                                   ARTICLE XVI

                                     DEFAULT

     16.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events (individually, an "Event of Default") shall constitute Events of Default
or defaults hereunder:

          (a) a default or event of default shall occur under any of the Other
     Leases that is not cured within the applicable cure period as provided
     therein, or

          (b) if Lessee shall fail to make a payment of the Rent or any other
     monetary payment due and payable by Lessee under this Lease when the same
     becomes due and payable, or

          (c) if Lessee shall fail to observe or perform any other term,
     covenant or condition of this Lease and such failure is not cured by Lessee
     within a period of thirty (30) days after receipt by Lessee of written
     notice thereof from Lessor (provided, however, in no event shall Lessor be
     required to give more than one (1) written notice per calendar year for a
     non-monetary default), unless such failure cannot with due diligence be
     cured within a period of thirty (30) days, in which case such failure shall
     not be deemed to continue if Lessee proceeds promptly and with due
     diligence to cure the failure and diligently completes the curing thereof
     within sixty (60) days after receipt by Lessee of Lessor's notice of
     default, or

          (d) if Lessee or any Guarantor shall:

               (i) admit in writing its inability to pay its debts generally as
          they become due,

               (ii) file a petition in bankruptcy or a petition to take
          advantage of any insolvency act,

               (iii) make an assignment for the benefit of its creditors,

               (iv) consent to the appointment of a receiver of itself or of the
          whole or any substantial part of its property, or


                                       32



               (v) file a petition or answer seeking reorganization or
          arrangement under the Federal bankruptcy laws or any other applicable
          law or statute of the United States of America or any state thereof,

          (e) if Lessee's license as defined in Article XXXIX or participation
     or certification in Medicare, Medicaid or other governmental payor programs
     is terminated, or

          (f) if Lessee admits in writing that it cannot meet its obligations as
     they become due; or is declared insolvent according to any law; or
     assignment of Lessee's property is made for the benefit of creditors; or a
     receiver or trustee is appointed for Lessee or its property; or the
     interest of Lessee under this Lease is levied on under execution or other
     legal process; or any petition is filed by or against Lessee to declare
     Lessee bankrupt or to delay, reduce or modify Lessee's capital structure if
     Lessee be a corporation or other entity (provided that no such levy,
     execution, legal process or petition filed against Lessee shall constitute
     a breach of this Lease if Lessee shall vigorously contest the same by
     appropriate proceedings and shall remove or vacate the same within thirty
     (30) days from the date of its creation, service or filing), or

          (g) the abandonment or vacation of the Leased Property by Lessee
     (Lessee's absence from the Leased Property for thirty (30) consecutive days
     shall constitute abandonment), or Lessee fails to continuously operate the
     Facility in accordance with the terms of this Lease, or

          (h) if the Lessee or any Guarantor shall, after a petition in
     bankruptcy is filed against it, be adjudicated a bankrupt or if a court of
     competent jurisdiction shall enter an order or decree appointing, without
     the consent of Lessee or such Guarantor, as the case may be, a receiver of
     Lessee or such Guarantor or of the whole or substantially all of its
     property, or approving a petition filed against it seeking reorganization
     or arrangement of Lessee or such Guarantor under the federal bankruptcy
     laws or any other applicable law or statute of the United States of America
     or any state thereof, and such judgment, order or decree shall not be
     vacated or set aside or stayed within ninety (90) days from the date of the
     entry thereof, or

          (i) if Lessee or any Guarantor shall be liquidated or dissolved, or
     shall begin proceedings toward such liquidation or dissolution, or shall,
     in any manner, permit the sale or divestiture of substantially all of its
     assets other than in connection with a merger or consolidation of Lessee or
     such Guarantor into, or a sale of substantially all of Lessee's or such
     Guarantor's assets to, another corporation, provided that if the survivor
     of such merger or the purchaser of such assets shall assume all of Lessee's
     obligations under this Lease by a written instrument, in form and substance
     reasonably satisfactory to Lessor, accompanied by an opinion of counsel,
     reasonably satisfactory to Lessor and addressed to Lessor stating that such
     instrument of assumption is valid, binding and enforceable against the
     parties thereto in accordance with its terms (subject to usual bankruptcy
     and other creditors' rights exceptions), and provided, further, that if,
     immediately after giving effect to any such merger, consolidation or sale,
     Lessee or such other corporation (if not the Lessee) surviving the same,
     together with Guarantors, shall have a Consolidated Net Worth not less than
     the Consolidated Net Worth of Lessee or Guarantors immediately prior to
     such merger, consolidation or sale, all as to be set forth in an Officer's
     Certificate delivered to Lessor within thirty (30) days of such merger,
     consolidation or sale, an Event of Default shall not be deemed to have
     occurred, or

          (j) if the estate or interest of Lessee in the Leased Property or any
     part thereof shall be levied upon or attached in any proceeding and the
     same shall not be vacated or discharged within the later of ninety (90)
     days after commencement thereof or thirty (30) days after receipt by Lessee
     of written notice thereof from Lessor (unless Lessee shall be contesting
     such lien or attachment in good faith in accordance with Article XII
     hereof), or

          (k) if, except as a result of damage, destruction or a partial or
     complete Condemnation, Lessee voluntarily ceases operations on the Leased
     Property for a period in excess of ninety (90) days, or


                                       33



          (l) if any of the representations or warranties made by Lessee or any
     of the Sellers named in the Purchase Agreement or in the certificates
     delivered in connection therewith are or become untrue in any material
     respect, and which is not cured within ten (10) days after notice from
     Lessor, or

          (m) a default shall occur under the Guaranty, or

          (n) a default or event of default shall occur under the Lease
     Assignment, Purchase Agreement, Assignment of Rents and Leases, Security
     Agreements or any other agreement between Lessor or any Affiliate of
     Lessor, on the one hand, and Lessee, any Guarantor, or any of their
     respective Affiliates, on the other hand, which is not cured within the
     cure period as provided therein, or

          (o) if Lessee defaults under the Tenant Leases or fails or refuses to
     enforce the terms and conditions of the Tenant Leases, or

          (p) if a payment default occurs with respect to any of Lessee's or any
     Guarantor's debt or other leases or is declared to be in material default
     by any of its lenders and such default is not cured within the applicable
     cure periods provided therefor.

Notwithstanding anything contained herein to the contrary, a default under the
Sherman Oaks Lease or a default under the guaranty executed by the guarantors
guaranteeing the obligations of the lessee under the Sherman Oaks Lease shall
not constitute a default under this Lease.

If an Event of Default shall have occurred, Lessor may pursue any one or more of
the remedies set forth in Sections 16.1A through D below and in Section 16.2
hereof, in addition to any remedies which may be permitted by law or by other
provisions of this Lease, without notice or demand, except as hereinafter
provided. Lessor may exercise these remedies at the time of an Event of Default
or at any time thereafter; provided, however, that if Lessor fails to exercise
any such remedy within six (6) months following the occurrence of such Event of
Default, Lessee may cure such default, provided such cure occurs prior to
Lessor's exercise of such remedy and, provided further, that any cure by Lessee
within such six (6) month period shall have no effect on Lessor's right to
exercise any such remedy within such six (6) month period.

     A. Without any notice or demand whatsoever, Lessor may take any one or more
of the actions permissible at law to insure performance by Lessee of Lessee's
covenants and obligations under this Lease. In this regard, it is agreed that if
Lessee deserts or vacates the Leased Property, Lessor may enter upon and take
possession of such Leased Property in order to protect it from deterioration and
continue to demand from Lessee the monthly rentals and other charges provided in
this Lease, without any obligation to relet; but that if Lessor does, at its
sole discretion, elect to relet the Leased Property, such action by Lessor shall
not be deemed as an acceptance of Lessee's surrender of the Leased Property
unless Lessor expressly notifies Lessee of such acceptance in writing pursuant
to subsection B of this Section 16.1, Lessee hereby acknowledging that Lessor
shall otherwise be reletting as Lessee's agent and Lessee furthermore hereby
agreeing to pay to Lessor on demand any deficiency that may arise between the
monthly rentals and other charges provided in this Lease and that are actually
collected by Lessor. It is further agreed in this regard that in an Event of
Default described in this Section 16.1, Lessor shall have the right to enter
upon the Leased Property without being liable for prosecution or any claim for
damages therefor, and do whatever Lessee is obligated to do under the terms of
this Lease; and Lessee agrees to reimburse Lessor on demand for any expenses
which Lessor may incur in thus effecting compliance with Lessee's obligations
under this Lease, and Lessee further agrees that Lessor shall not be liable for
any damages resulting to the Lessee from such action.

     B. Lessor may terminate this Lease by written notice to Lessee, in which
event Lessee shall immediately surrender the Leased Property to Lessor, and if
Lessee fails to do so, Lessor may, without prejudice to any other remedy which
Lessor may have for possession or arrearages in rent (including any interest
which may have accrued pursuant to Section 3.3 of this Lease), enter upon and
take possession of the Leased Property and expel or remove Lessee and any other
person who may be occupying the Leased Property or any part thereof without


                                       34



being liable of prosecution or any claim for damages therefor. Lessee hereby
waives any statutory requirement of prior written notice for filing eviction or
damage suits for nonpayment of rent. In addition, Lessee agrees to pay to Lessor
on demand the amount of all loss and damage which Lessor may suffer by reason of
any termination effected pursuant to this subsection B, said loss and damage to
be determined by:

               (i) The worth at the time of award of the unpaid rent which had
          been earned at the time of termination;

               (ii) The worth at the time of award of the amount by which the
          unpaid rent which would have been earned after termination until the
          time of award exceeds the amount of such rental loss that the Lessee
          proves could have been reasonably avoided;

               (iii) The worth at the time of award of the amount by which the
          unpaid rent for the balance of the term after the time of award
          exceeds the amount of such rental loss that the Lessee proves could be
          reasonably avoided; and

               (iv) Any other amount necessary to compensate the Lessor for all
          the detriment proximately caused by the Lessee's failure to perform
          its obligations under this Lease or which in the ordinary course of
          things would be likely to result therefrom, including, but not limited
          to, all reasonable legal expenses and other related costs incurred by
          Lessor following an Event of Default, all costs incurred by Lessor in
          recovering the Leased Property and restoring the Leased Property to
          good order and condition, and/or in remodeling, renovating or
          otherwise preparing the Leased Property for reletting, and all costs
          (including, without limitation, any brokerage commissions and
          reasonable attorneys' fees) incurred by Lessor in reletting the Leased
          Premises.

     The "worth at the time of award" of the amounts referred to in paragraphs
(i) and (ii) above is computed by allowing interest at a rate equal to the
lowest rate of capitalization (highest present worth) reasonably applicable at
the time of such determination and allowed by applicable law. The worth at the
time of award of the amount referred to in paragraph (iii) above is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%).

     C. In addition to other rights and remedies Lessor may have hereunder and
at law and in equity, if an Event of Default occurs under this Lease, (i) Lessee
is deemed to have assigned to Lessor, at Lessor's sole option, all service
agreements (including, without limitation, all medical director agreements);
(ii) to the extent permitted by law, Lessee is deemed, at Lessor's sole
discretion, to have transferred and assigned to Lessor all Licenses and
agreements, including, without limitation, all Medicare and Medicaid provider
numbers, and (iii) to the extent permitted by law, if required by Lessor,
transfer to the Lessor all of the Licenses, including, without limitation, all
Medicare and Medicaid provider numbers. In the event there are legal limitations
on any of the foregoing remedies, Lessee further hereby covenants and agrees
that it will take all actions necessary to orderly transfer the operations and
occupancy of the Leased Property to the Lessor, including cooperating with
respect to the transfer to Lessor of Licenses, provider numbers and other
agreements.

     D. In addition to the above remedies, in the Event of Default hereunder by
Lessee, Lessor, at its option, may have one or more of the following remedies in
addition to all other legal rights and remedies:

               (i) Lessor may serve upon Lessee notice that its Lease and the
          then unexpired term hereof shall terminate and become absolutely void
          on a date specified in such notice, which shall be the date of such
          notice or such later date as may be required by law, and the Lease,
          and well as the right, title, and interest of Lessee hereunder shall,
          except as to the rights and remedies of Lessor upon termination as
          provided herein, terminate and become void in the same manner and with
          the same force and effect as if the date filed in such notice were the
          date originally specified for the expiration of the Lease term; and
          Lessee shall then immediately quit and surrender to Lessor the Leased
          Property, including any and all buildings and improvements thereon,
          and Lessor may then


                                       35



          or at any time thereafter, without judicial proceedings of any kind,
          enter into and repossess the Leased Property, and may remove all
          occupants and any property thereon without being liable for any action
          or prosecution of any kind for such entry or the manner thereof, or
          loss of or damage to any property upon the Leased Property. In the
          event of any such termination of this Lease, and in addition to any
          other rights and remedies Lessor may have, Lessor shall have all of
          the rights and remedies of a Lessor provided by Section 1951.2 of the
          California Civil Code.

               (ii) In addition, Lessor shall have all the rights and remedies
          described in Section 1951.4 of the California Civil Code (Lessor may
          continue the Lease in effect after Lessee's breach and abandonment and
          recover rent as it becomes due, if Lessee has the right to sublease or
          assign subject only to reasonable limitations).

               (iii) Lessor may immediately terminate Lessee's right of
          possession of the Leased Property, but not terminate the Lease, and
          without notice or demand enter upon the Leased Property or any part
          thereof and take absolute possession of the same, and at Lessor's sole
          option may relet the Leased Property or any part thereof for such
          terms and such rents as Lessor may reasonable elect. In the event
          Lessor shall elect to so relet, then rent received by Lessor from such
          reletting shall be applied first, to the payment of any indebtedness
          other than Rent due hereunder from Lessee to Lessor, second, to the
          payment of any cost of such reletting, including, without limitation,
          refurbishing costs and leasing commissions, and third, to the payment
          of Rent due and unpaid hereunder, and Lessee shall satisfy and pay any
          deficiency upon demand therefor from time to time. Any entry into and
          possession of the Leased Property by Lessor shall be without liability
          or responsibility to Lessee and shall not be in lieu of or in
          substitution for any other legal rights of Lessor hereunder. Lessee
          further agrees that Lessor may file suit to recover any sums due under
          the terms of this Lease and that no recovery of any portion due Lessor
          hereunder shall be any defense to any subsequent action brought for
          any amount not therefore reduced to judgment in favor of Lessor.
          Reletting of the Leased Property shall not be construed as an election
          on the part of Lessor to terminate this Lease and, notwithstanding any
          such reletting without termination, Lessor may at any time thereafter
          elect to terminate this Lease for default.

     16.2 EVENTS OF DEFAULT IN FINANCIAL COVENANTS.

Compliance with financial covenants set forth in subparagraphs (a) and (b) of
this Section 16.2 below will be determined on a combined basis using the
combined financial statements and information of Desert Valley Tenants.

          (a) The failure or breach of any one or more of the following shall
constitute a default and breach of this Section 16.2 and the Lessor shall have
the rights and remedies provided for herein:

               (i) Combined EBITDAR shall equal or exceed one hundred
               seventy-five percent (175%) of Combined Fixed Charges;

               (ii) Total Debt of the Desert Valley Tenants shall not exceed
               fifty percent (50%) of the greater of (A) the Total
               Capitalization of the Desert Valley Tenants, or (B) the Market
               Value of Desert Valley Tenants;

               (iii) Combined EBITDAR shall equal or exceed two hundred fifty
               percent (250%) of Combined Lease Payments; or

               (iv) The Desert Valley Tenants shall not experience three (3)
               consecutive quarters with declines in net revenue and generate
               Combined EBITDAR of less than two hundred percent (200%) of
               Combined Lease Payments.


                                       36



     The covenants described in this Section 16.2(a) (i) -- (iv) shall first
become effective at the end of the first full calendar quarter subsequent to the
Commencement Date and shall be tested at the end of each subsequent calendar
quarter. Until the first anniversary of the Commencement Date, all operating
measures shall be calculated from the Commencement Date and on a trailing twelve
(12) month basis thereafter.

     Upon the occurrence of any of the items set forth in Section 16.1 or in
subparagraph (a) items (i) through (iv) of this Section 16.2(a), Lessor may, at
its option, upon five (5) days' written notice to Lessee (any such notice
requiring such termination being herein referred to as the "Removal Notice"),
require Lessee to terminate the engagement of any Management Company managing
the Facility and replace such Management Company with a manager chosen by Lessor
(or, if there is no Management Company managing the Facility at that time,
Lessor may require the Lessee to engage a Management Company acceptable to
Lessor and enter into a contract with such Management Company upon terms and
conditions acceptable to Lessor). In the event Lessor elects to require a change
in the management of the Facility, such exercise to change management shall be
subject to the right of Lessee to purchase the Leased Property (including the
Parking Lot Interest) on the terms described in Article XXXV herein, provided
Lessee gives Lessor written notice of its intention to exercise such purchase
right within five (5) days following receipt of the Removal Notice. In the event
Lessee exercises its right to purchase as allowed in this Section 16.2(a), such
purchase shall be closed within the time period and subject to the provisions
set forth in Article XXXV herein.

          (b) The failure or breach of any one or more of the following
covenants shall constitute a default and breach of this Section 16.2(b) and
Lessor shall have the rights and remedies provided for herein:

               (i) Total Debt of the Desert Valley Tenants shall not exceed
               eighty percent (80%) of the greater of (A) the Total
               Capitalization of the Desert Valley Tenants or (B) the Market
               Value of Desert Valley Tenants;

               (ii) The Desert Valley Tenants shall not experience six (6)
               consecutive quarters with declines in net revenue and generate
               Combined EBITDAR of less than two hundred percent (200%) of the
               Combined Lease Payments; or

               (iii) Neither Lessee nor any Guarantor shall be in payment
               default on any of its corporate debt or other leases or be
               declared to be in material default by any of its corporate
               lenders, unless such default is cured within the cure periods
               provided for therein.

     The covenants described in this Section 16.2(b) (i) - (iii) shall first
become effective at the end of the first full calendar quarter subsequent to the
Commencement Date and shall be tested at the end of each subsequent calendar
quarter. Until the first anniversary of the Commencement Date, all operating
measures shall be calculated from the Commencement Date and on a trailing twelve
(12) month basis thereafter.

     Upon the occurrence of any of the items set forth in Section 16.1 or in
subparagraph (b) items (i) through (iii) of this Section 16.2(b), Lessor may, at
its option, upon delivery of the Removal Notice, require Lessee to terminate the
engagement of the Management Company managing the Facility and replace such
Management Company with manager chosen by Lessor (or, if there is no Management
Company managing the facility at that time, Lessor may require the Lessee to
engage a Management Company acceptable to Lessor and enter into a contract with
such Management Company upon terms and conditions acceptable to Lessor), and
Lessor may, at its option, proceed with all other remedies Lessor deems
necessary, including, without limitation, terminating this Lease and pursuing
all other customary remedies available hereunder, at law and in equity;
provided, however, that in the event Lessor elects to require a change in the
management of the Facility, such exercise to change management shall be subject
to the right of Lessee to purchase the Leased Property (including the Parking
Lot Interest) on the terms described in Article XXXV herein, provided Lessee
gives Lessor written notice of its intention to exercise such purchase right
within five (5) days following receipt of the Removal Notice. In the event
Lessee


                                       37



exercises its right to purchase as allowed in this Section 16.2(a), such
purchase shall be closed within the time period and subject to the provisions
set forth in Article XXXV.

          (c) Notwithstanding any provision hereof, any breach of items (i)
     through (iv) of subparagraph (a) of this Section 16.2, or items (i) and
     (ii) of subparagraph (b) of this Section 16.2 shall not be deemed to be a
     default or breach permitting Lessor to exercise the remedies set forth in
     such subparagraphs if, within fifteen (15) days following the date of such
     breach, Lessee obtains and delivers to Lessor an unconditional and
     irrevocable letter of credit from a bank acceptable to Lessor (the "Letter
     of Credit") naming Lessor beneficiary thereunder, in a dollar amount which
     would result in the various EBITDAR coverage ratios set forth in such
     clauses being satisfied, or an amount which would adequately reduce the
     debt amount used in the calculation of the EBITDAR coverage ratios to
     satisfy such clauses, and upon terms, conditions and provisions acceptable
     to Lessor (including, without limitation, provisions allowing Lessor to
     assign all of its rights under such Letter of Credit to Lessor's lender).

          (d) The parties hereto agree, that if Desert Valley Hospital, Inc.
     ("DVH") exercises the option to purchase the Victorville Property, as
     contemplated by the Victorville Lease, then, notwithstanding that DVH may
     no longer satisfy all of the requirements to be included as a Desert Valley
     Tenant under this Lease, the net cash flow after capital costs from DVH's
     operation of the Victorville Property shall be taken into account in
     determining whether the various EBITDAR coverage ratios set forth in this
     Section 16.2 are or remain satisfied.

     16.3 ADDITIONAL EXPENSES. It is further agreed that, in addition to
payments required pursuant to subsections A and B of Section 16.1 above, Lessee
shall compensate Lessor for (i) all administrative expenses, (ii) all expenses
incurred by Lessor in repossessing the Leased Property (including among other
expenses, any increase in insurance premiums caused by the vacancy of the Leased
Property), (iii) all expenses incurred by Lessor in reletting (including among
other expenses, repairs, remodeling, replacements, advertisements and brokerage
fees), (iv) all concessions granted to a new tenant or tenants upon reletting
(including among other concessions, renewal options), (v) Lessor's reasonable
attorneys' fees and expenses, (vi) all losses incurred by Lessor as a direct or
indirect result of Lessee's default (including among other losses any adverse
action by mortgagees), and (vii) a reasonable allowance for Lessor's
administrative efforts, salaries and overhead attributable directly or
indirectly to Lessee's default and Lessor's pursuing the rights and remedies
provided herein and under applicable law.

     16.4 Intentionally Omitted.

     16.5 WAIVER. If this Lease is terminated pursuant to Section 16.1, Lessee
waives, to the extent permitted by applicable law, (a) any right of redemption,
re-entry or repossession, (b) any right to a trial by jury in the event of
summary proceedings to enforce the remedies set forth in this Article XVI, and
(c) the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt.

     16.6 APPLICATION OF FUNDS. Any payments otherwise payable to Lessee which
are received by Lessor under any of the provisions of this Lease during the
existence or continuance of any Event of Default shall be applied to Lessee's
obligations in the order which Lessor may reasonably determine or as may be
prescribed by the laws of the state in which the Facility is located.

     16.7 NOTICES BY LESSOR. The provisions of this Article XVI concerning
notices shall be liberally construed insofar as the contents of such notices are
concerned, and any such notice shall be sufficient if reasonably designed to
apprise Lessee of the nature and approximate extent of any default, it being
agreed that Lessee is in good or better position than Lessor to ascertain the
exact extent of any default by Lessee hereunder.

     16.8 LESSOR'S CONTRACTUAL SECURITY INTEREST. Subject to the Prior Lien of
Lessee's Primary Lender (as such terms are defined herein), to secure the
payment of all rent due and to become due hereunder and the faithful performance
of this Lease by Lessee and to secure all other indebtedness, obligations and
liabilities of Lessee to


                                       38



Lessor now existing or hereafter incurred, and all Obligations (as defined in
the Security Agreements), Lessee and Prime hereby give to Lessor an express
first and prior lien and security interest in all property (excluding the Power
Generation Facility, unless and until Lessee purchases the Power Generation
Facility at which time Lessee shall execute all documents necessary to grant
Lessor a first and prior lien and security interest in the Power Generation
Facility) which may be placed on the Leased Property (including all equipment
affixed therein, fixtures, equipment (including medical equipment whether or not
affixed to the Leased Property), chattels and merchandise and also upon all
proceeds of any insurance which may accrue to Lessee and/or Prime by reason of
destruction of or damage to any such property and also upon all of Lessee's
interest as lessee and Lessee's rights and options to purchase fixtures,
equipment and chattels placed on the Leased Property (in case of fixtures,
equipment and chattels leased to Lessee which are placed on the Leased
Property). All exemption laws are hereby waived in favor of such lien and
security interest and in favor of Lessor's statutory landlord lien. This lien
and security interest are given in addition to any statutory landlord lien and
shall be cumulative thereto. Except as limited in favor of the Primary Lender as
set forth in this Section 16.8, Lessor shall have at all times a valid security
interest to secure payment of all rentals and other sums of money becoming due
hereunder from Lessee, and to secure payment of any damages or loss which Lessor
may suffer by reason of the breach by Lessee or Prime of any covenant, agreement
or condition contained herein, upon all inventory, merchandise, goods, wares,
equipment (including medical equipment whether or not affixed to the Leased
Property), fixtures, furniture, improvements and other tangible personal
property of Lessee presently, or which may hereafter be, situated in or about
the Leased Property (excluding the Power Generation Facility, unless and until
Lessee purchases the Power Generation Facility), and all proceeds therefrom and
accessions thereto and, except as a result of sales made in the ordinary course
of Lessee's business, such property shall not be removed without the consent of
Lessor until all arrearages in rent as well as any and all other sums of money
then due to Lessor or to become due to Lessor hereunder shall first have been
paid and discharged and all the covenants, agreements and conditions hereof have
been fully complied with and performed by Lessee. Upon the occurrence of an
Event of Default by Lessee, Lessor may, in addition to any other remedies
provided herein, enter upon the Leased Property and take possession of any and
all inventory, merchandise, goods, wares, equipment, fixtures, furniture,
improvements and other personal property of Lessee and Prime situated in or
about the Leased Property (excluding the Power Generation Facility, unless
Lessee purchases the Power Generation Facility), without liability for trespass
or conversion, and sell the same at public or private sale, with or without
having such property at the sale, after giving Lessee and Prime reasonable
notice of the time and place of any public sale of the time after which any
private sale is to be made, at which sale the Lessor or its assigns may purchase
unless otherwise prohibited by law. Unless otherwise provided by law, and
without intending to exclude any other manner of giving Lessee and/or Prime
reasonable notice, the requirement of reasonable notice shall be met, if such
notice is given in the manner prescribed in this Lease at least seven (7) days
before the time of sale. Any sale made pursuant to the provision of this
paragraph shall be deemed to have been a public sale conducted in commercially
reasonable manner if held in the above-described premises or where the property
is located after the time, place and method of sale and a general description of
the types of property to be sold have been advertised in a daily newspaper
published in the county in which the property is located, for five (5)
consecutive days before the date of the sale. The proceeds from any such
disposition, less any and all expenses connected with the taking of possession,
holding and selling of the property (including reasonable attorney's fees and
legal expenses), shall be applied as a credit against the indebtedness secured
by the security interest granted in this paragraph. Any surplus shall be paid to
Lessee and/or Prime, as applicable, or as otherwise required by law; the Lessee
and/or Prime shall pay any deficiencies forthwith. Upon request by Lessor,
Lessee and Prime agree to execute (if required by law; provided, however, Lessor
shall have the right to file a UCC-1 financing statement (and all amendments,
modifications and extensions thereto) at any time as provided in the Security
Agreements) and deliver to Lessor a financing statement in form sufficient to
perfect the security interest of Lessor in the aforementioned property and
proceeds thereof under the provision of the Uniform Commercial Code (or
corresponding state statute or statutes) in force in the state in which the
Leased Property is located, as well as any other state the laws of which Lessor
may at any time consider to be applicable.

     As used herein, the term "Primary Lien of Lessee's Primary Lender" means
any first priority lien granted by Lessee or Prime in any of Lessee's or Prime's
machinery, equipment (including medical equipment whether or not affixed to the
Leased Property, but excluding the Power Generation Facility, unless Lessee
purchases the Power


                                       39



Generation Facility), furniture, furnishings, tools, movable walls or
partitions, computers, signage, trade fixtures, supplies, inventory, or any
other tangible personal property placed on the Leased Property and used or
useful in Lessee's business conducted at or on the Leased Property (the
"Collateral"), which may be given in connection with Lessee's or Prime's lender
(the "Primary Lender") providing financing for Lessee and Prime to purchase such
items of Collateral or in connection with the refinancing of any such items of
Collateral. In the event Lessee and/or Prime obtains financing from a Primary
Lender or refinances such items of Collateral, Lessee and/or Prime shall use
commercially reasonable efforts to obtain from its Primary Lender a consent to a
secondary lien on such Collateral in favor of Lessor, in form and content
reasonably acceptable to the Primary Lender and the Lessor. Lessee and Prime, as
applicable, covenant and agree not to place or allow any other liens to be
placed on the Collateral. Lessee and Prime, as applicable, covenant and agree
that all indebtedness (except for the indebtedness owed to the Primary Lender)
owed by Lessee and/or Prime under all agreements executed in connection with the
Lessee's and/or Prime's financing of Lessee's Personal Property and Prime's
Personal Property to be used in connection with the operation of the Facility
shall be subordinate to all monetary obligations under this Lease and Lessee and
Prime shall not to place or allow any other liens to be placed on the Lessee's
Personal Property or Prime's Personal Property, respectively. At the request of
Lessor from time to time, Lessee and/or Prime shall execute and shall obtain
from all parties to such financing arrangements executed written confirmation of
such subordination (in form and content as is acceptable to Lessor), which shall
be delivered to Lessor within ten (10) days from Lessor's request.

                                  ARTICLE XVII

                             LESSOR'S RIGHT TO CURE

     If Lessee shall fail to make any payment, or to perform any act required to
be made or performed under this Lease and to cure the same within the relevant
time periods provided in Section 16.1, Lessor, without waiving or releasing any
obligation or Event of Default, may (but shall be under no obligation to) at any
time thereafter make such payment or perform such act for the account and at the
expense of Lessee, and may, to the extent permitted by law, enter upon the
Leased Property for such purpose and take all such action thereon as, in
Lessor's opinion, may be necessary or appropriate therefor. No such entry shall
be deemed an eviction of Lessee. All sums so paid by Lessor and all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses, in each case, to the extent permitted by law) so incurred, together
with a late charge thereon (to the extent permitted by law) at the Overdue Rate
from the date on which such sums or expenses are paid or incurred by Lessor,
shall be paid by Lessee to Lessor on demand. The obligations of Lessee and
rights of Lessor contained in this Article shall survive the expiration or
earlier termination of this Lease.

                                 ARTICLE XVIII

                         PURCHASE OF THE LEASED PROPERTY

     18.1 In the event Lessee purchases the Leased Property from Lessor pursuant
to any of the terms of this Lease, including, without limitation Section 35.1,
Lessor shall, upon receipt from Lessee of the applicable purchase price,
together with full payment of any unpaid Rent due and payable with respect to
any period ending on or before the date of the purchase, deliver to Lessee an
appropriate special warranty deed, assignment agreement or other instrument of
conveyance conveying the entire interest of Lessor in and to the Leased Property
to Lessee in the condition as received from Lessee and/or Prime, free and clear
of all encumbrances other than (a) those that Lessee has agreed hereunder to pay
or discharge, (b) those mortgage liens, if any, which Lessee has agreed in
writing to accept and to take title subject to, (c) any other Encumbrances
permitted to be imposed on the Leased Property under the provisions of Article
XXXVII which are assumable at no cost to Lessee or to which Lessee may take
subject without cost to Lessee, and (d) any matters affecting the Leased
Property on or as of the Commencement Date. The difference between the
applicable purchase price and the total of the encumbrances assigned or taken
subject to shall be paid in cash to Lessor, or as Lessor may direct, in federal
or other immediately available funds except as otherwise mutually agreed by
Lessor and Lessee. The closing of any such sale shall be contingent upon and
subject to Lessee obtaining all required governmental consents and approvals for
such transfer and if such sale


                                       40



shall fail to be consummated by reason of the inability of Lessee to obtain all
such approvals and consents, any options to extend the Term of this Lease which
otherwise would have expired during the period from the date when Lessee elected
or became obligated to purchase the Leased Property until Lessee's inability to
obtain the approvals and consents is confirmed shall be deemed to remain in
effect for thirty (30) days after the end of such period. All expenses of such
conveyance, including, without limitation, the cost of title examination or
standard coverage title insurance, survey, attorneys' fees incurred by Lessor in
connection with such conveyance, transfer taxes, prepayment penalties and any
other fees with respect to any Facility Instrument, recording fees and similar
charges shall be paid for by Lessee.

                                  ARTICLE XIX

                                  HOLDING OVER

     If Lessee shall for any reason remain in possession of the Leased Property
after the expiration of the Term or any earlier termination of the Term hereof,
such possession shall be as a tenancy at will during which time Lessee shall pay
as rental each month, one and one-half times the aggregate of (a) one-twelfth of
the aggregate Base Rent and Percentage Rent payable with respect to the last
complete Lease Year prior to the expiration of the Term; (b) all Additional
Charges accruing during the month and (c) all other sums, if any, payable by
Lessee pursuant to the provisions of this Lease with respect to the Leased
Property. During such period of tenancy, Lessee shall be obligated to perform
and observe all of the terms, covenants and conditions of this Lease, but shall
have no rights hereunder other than the right, to the extent given by law to
tenancies at will, to continue its occupancy and use of the Leased Property.
Nothing contained herein shall constitute the consent, express or implied, of
Lessor to the holding over of Lessee after the expiration or earlier termination
of this Lease.

                                   ARTICLE XX

                              INTENTIONALLY OMITTED

                                  ARTICLE XXI

                              INTENTIONALLY OMITTED

                                  ARTICLE XXII

                                  RISK OF LOSS

     During the Term of this Lease, the risk of loss or of decrease in the
enjoyment and beneficial use of the Leased Property in consequence of the damage
or destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise, or in consequence of foreclosures, attachments, levies or executions
(other than by Lessor and those claiming from, through or under Lessor) is
assumed by Lessee and, Lessor shall in no event be answerable or accountable
therefor nor shall any of the events mentioned in this Section entitle Lessee to
any abatement of Rent except as specifically provided in this Lease.

                                  ARTICLE XXIII

                                 INDEMNIFICATION

     NOTWITHSTANDING THE EXISTENCE OF ANY INSURANCE OR SELF INSURANCE PROVIDED
FOR IN ARTICLE XIII, AND WITHOUT REGARD TO THE POLICY LIMITS OF ANY SUCH
INSURANCE OR SELF INSURANCE, LESSEE WILL PROTECT, INDEMNIFY,


                                       41



SAVE HARMLESS AND DEFEND LESSOR FROM AND AGAINST ALL LIABILITIES, OBLIGATIONS,
CLAIMS, DAMAGES, PENALTIES, CAUSES OF ACTION, COSTS AND EXPENSES (INCLUDING,
WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES AND EXPENSES), TO THE EXTENT
PERMITTED BY LAW, IMPOSED UPON OR INCURRED BY OR ASSERTED AGAINST LESSOR BY
REASON OF: (A) ANY ACCIDENT, INJURY TO OR DEATH OF PERSONS OR LOSS OF PERCENTAGE
TO PROPERTY OCCURRING ON OR ABOUT THE LEASED PROPERTY OR ADJOINING SIDEWALKS,
INCLUDING WITHOUT LIMITATION ANY CLAIMS OF MALPRACTICE, (B) ANY USE, MISUSE, NO
USE, CONDITION, MAINTENANCE OR REPAIR BY LESSEE OF THE LEASED PROPERTY, (C) ANY
IMPOSITIONS (WHICH ARE THE OBLIGATIONS OF LESSEE TO PAY PURSUANT TO THE
APPLICABLE PROVISIONS OF THIS LEASE), (D) ANY FAILURE ON THE PART OF LESSEE TO
PERFORM OR COMPLY WITH ANY OF THE TERMS OF THIS LEASE, AND (E) THE
NON-PERFORMANCE OF ANY OF THE TERMS AND PROVISIONS OF ANY AND ALL EXISTING AND
FUTURE SUBLEASES OF THE LEASED PROPERTY TO BE PERFORMED BY THE LANDLORD (LESSEE)
THEREUNDER. ANY AMOUNTS WHICH BECOME PAYABLE BY LESSEE UNDER THIS SECTION SHALL
BE PAID WITHIN FIFTEEN (15) DAYS AFTER LIABILITY THEREFOR ON THE PART OF LESSOR
IS DETERMINED BY LITIGATION OR OTHERWISE AND, IF NOT TIMELY PAID, SHALL BEAR A
LATE CHARGE (TO THE EXTENT PERMITTED BY LAW) AT THE OVERDUE RATE FROM THE DATE
OF SUCH DETERMINATION TO THE DATE OF PAYMENT. LESSEE, AT ITS EXPENSE, SHALL
CONTEST, RESIST AND DEFEND ANY SUCH CLAIM, ACTION OR PROCEEDING ASSERTED OR
INSTITUTED AGAINST LESSOR OR MAY COMPROMISE OR OTHERWISE DISPOSE OF THE SAME AS
LESSEE SEES FIT. NOTHING HEREIN SHALL BE CONSTRUED AS INDEMNIFYING LESSOR
AGAINST ITS OWN NEGLIGENT ACTS OR OMISSIONS OR WILLFUL MISCONDUCT. LESSEE'S
LIABILITY FOR A BREACH OF THE PROVISIONS OF THIS ARTICLE XXIII SHALL SURVIVE ANY
TERMINATION OF THIS LEASE.

                                  ARTICLE XXIV

                ASSIGNMENT, SUBLETTING AND SUBLEASE SUBORDINATION

     24.1 ASSIGNMENT AND SUBLETTING. Lessee shall not assign this Lease or
sublease any portion of the Leased Property without Lessor's prior written
consent. Lessor shall not unreasonably withhold its consent to any subletting or
assignment, provided that (a) in the case of a subletting, the sublease and the
sublessee shall comply with the provisions of this Article XXIV, (b) in the case
of an assignment, the assignee shall assume in writing and agree to keep and
perform all of the terms of this Lease on the part of Lessee to be kept and
performed and shall be and become jointly and severally liable with Lessee for
the performance thereof, (c) an original counterpart of each such sublease and
assignment and assumption, duly executed by Lessee and such sublessee or
assignee, as the case may be, in form and substance satisfactory to Lessor,
shall be delivered promptly to Lessor, and (d) in case of either an assignment
or subletting, Lessee shall remain primarily liable, as principal rather than as
surety, for the prompt payment of the Rent and for the performance and
observance of all of the obligations, covenants and conditions to be performed
by Lessee hereunder and under all of the other documents executed in connection
herewith. Notwithstanding anything contained herein to the contrary, Lessor and
Lessee acknowledge that there currently exists certain leases or subleases on
the Leased Property as described on EXHIBIT D attached hereto (collectively the
"Existing Leases"). Any modifications, amendments and restatements of the
Existing Leases must be approved by Lessor in accordance with this Article XXIV.
Notwithstanding anything contained herein to the contrary, any proposed assignee
of Lessee and any proposed sublessee or subtenant must each have an equal or
stronger credit rating than the Lessee on the Commencement Date. Lessor's
failure or refusal to approve an assignment to an assignee or a subletting to a
sublessee or subtenant without the required credit rating shall be reasonable.
Within ten (10) business days following the Commencement Date, Lessor shall
obtain from the sublessees under the Existing Leases estoppel certificates in
form and substance acceptable to Lessor.

     24.2 SUBLEASE LIMITATIONS. In addition to the sublease limitations as set
forth in Section 24.1 above, anything contained in this Lease to the contrary
notwithstanding, Lessee shall not sublet the Leased Property on any basis such
that the rental to be paid by the sublessee or subtenant thereunder would be
based, in whole or in part, on either (a) the income or profits derived by the
business activities of the sublessee or subtenant, or (b) any other formula such
that any portion of the sublease rental received by Lessor would fail to qualify
as "rents from real property" within the meaning of Section 856(d) of the Code,
or any similar or successor provision thereto. Provided also, Lessee shall not
sublet any portion of the Leased Property for a term extending beyond the Fixed
Term hereof without the express consent of Lessor. In addition, all subleases
shall comply with the Healthcare Laws. Lessor and Lessee acknowledge and agree
that all subleases entered into relating to the Leased Property, whether or not


                                       42



approved by Lessor, shall not, without the prior written consent of Lessor, be
deemed to be a direct lease between Lessor and any sublessee or subtenant.
Lessee agrees that all subleases submitted for Lessor approval as provided
herein must include provisions to the effect that (a) such sublease is subject
and subordinate to all of the terms and provisions of this Lease, to the rights
of Lessor hereunder, and to all financing documents relating to any Lessor
financing in connection with the Facility, (b) in the event this Lease shall
terminate or be terminated before the expiration of the sublease, the sublessee
or subtenant will, at Lessor's option, attorn to Lessor and waive any right the
sublessee or subtenant may have to terminate the sublease or to surrender
possession thereunder, as a result of the termination of this Lease, (c) at
Lessor's option, the sublease may be terminated or left in place by Lessor in
the event of a termination of this Lease, (d) the obligations and performance of
the sublessee or subtenant must be guaranteed by guarantors acceptable to
Lessor, (e) sublessee or subtenant shall from time to time upon request of
Lessee or Lessor furnish within ten (10) days from request an estoppel
certificate in form and content acceptable to Lessor or its lender relating to
the sublease, (f) in the event the sublessee or subtenant receives a written
notice from Lessor or Lessor's assignees, if any, stating that Lessee is in
default under this Lease, the sublessee or subtenant shall thereafter be
obligated to pay all rentals accruing under said sublease directly to the party
giving such notice, or as such party may direct (all rentals received from the
sublessee by Lessor or Lessor's assignees, if any, as the case may be, shall be
credited against the amounts owing by Lessee under this Lease), (g) and that
such sublease shall at all times be subject to the obligations and requirements
as set forth in this Article XXIV, and (h) sublessee or subtenant shall provide
to Lessor upon written request such officer's certificates and financial
statements as Lessor may request from time to time.

     24.3 SUBLEASE SUBORDINATION AND NON-DISTURBANCE. Within ten (10) days after
request by Lessor, Lessee shall cause any subtenant or sublessee to execute and
deliver to Lessor a subordination agreement relating to the sublease of such
subtenant or sublessee, which subordination agreement shall be in such form and
content as is acceptable to Lessor. At the request from time to time by any
Facility Lender, within ten (10) days from the date of request, Lessee shall
cause any subtenant or sublessee of the Leased Property to execute and deliver
within such ten (10) day period, to such Facility Lender a written agreement in
a form reasonably acceptable to such Facility Lender whereby such subtenant or
sublessee subordinates the sublease and all of its rights and estate thereunder
to each Facility Instrument and agrees with each such Facility Lender that such
subtenant or sublessee will attorn to and recognize such Facility Lender or the
purchaser at any foreclosure sale or any sale under a power of sale contained in
any such Facility Instrument, as Lessor under this Lease for the balance of the
Term then remaining, subject to all of the terms and provisions of the sublease.
Lessee shall use its best efforts to cause the service company under the Energy
Services Agreement to execute and deliver to Lessor a subordination and estoppel
certificate or agreement (the "Energy Services Estoppel") relating to the Energy
Services Agreement as soon as practicable but in no event later than thirty (30)
days following the Commencement Date, which Energy Services Estoppel shall be in
form and content acceptable to Lessor. Lessee agrees to reimburse Lessor,
immediately upon written request, for all amounts disbursed by Lessor and its
Affiliates pursuant to the Energy Services Agreement and the Energy Services
Estoppel.

                                  ARTICLE XXV

  OFFICER'S CERTIFICATES; FINANCIAL STATEMENTS; NOTICES AND OTHER CERTIFICATES

          (a) At any time and from time to time within twenty (20) days
     following written request by Lessor, Lessee will furnish to Lessor an
     Officer's Certificate certifying that this Lease is unmodified and in full
     force and effect (or that this Lease is in full force and effect as
     modified and setting forth the modifications) and the dates to which the
     Rent has been paid. Any such Officer's Certificate furnished pursuant to
     this Article may be relied upon by Lessor and any prospective purchaser of
     the Leased Property.

          (b) Lessee will furnish, or cause to be furnished, the following
     statements to Lessor, which must be in such form and detail as Lessor may
     from time to time, but not unreasonably, request:


                                       43



               (i) within ninety (90) days after the end of each year, audited
     financial statements of Lessee, the Guarantors and, if Lessee owns any
     assets or conducts any other operations other than for the Facility, the
     Facility separately, prepared by a nationally recognized accounting firm or
     an independent certified public accounting firm reasonably acceptable to
     Lessor, which statements shall include a balance sheet and statement of
     income and expenses and changes in cash flow all in accordance with
     generally accepted accounting principles for the year then ended (it being
     agreed that Lessor shall bear the cost of any premium over normal charges
     that such accounting firm may charge in order to prepare such statements on
     an expedited basis (so long as Lessee has ordered such statements in a
     timely manner)), and

               (ii) within forty-five (45) days after the end of each quarter,
     current financial statements of Lessee, the Guarantors and, if Lessee owns
     any assets or conducts any other operations other than for the Facility,
     the Facility separately, certified to be true and correct by an officer of
     Lessee, and

               (iii) within thirty (30) days after the end of each month current
     operating statements of the Facility, including, but not limited to
     operating statistics, certified to be true and correct by an officer of the
     Lessee, and

               (iv) within ten (10) days of receipt, any and all notices
     (regardless of form) from any and all licensing and/or certifying agencies
     that any license or certification, including, without limitation, the
     Medicare and/or Medicaid certification and/or managed care contract of the
     Facility is being downgraded to a substandard category, revoked, or
     suspended, or that action is pending or being considered to downgrade to a
     substandard category, revoke, or suspend such Facility's license or
     certification, and

               (v) with reasonable promptness, such other information respecting
     the financial condition and affairs of Lessee and the Guarantors as Lessor
     may reasonably request from time to time.

          (c) Upon Lessor's request, Lessee will furnish to Lessor a certificate
     in form acceptable to Lessor certifying that no Event of Default as defined
     herein or in any of the Other Leases, then exists and no event has occurred
     (that has not been cured) and no condition currently exists that would, but
     for the giving of any required notice or expiration of any applicable cure
     period, constitute a default.

          (d) Within two (2) business days of receipt, Lessee shall furnish to
     Lessor copies of all notices and demands from any third party payor,
     including, without limitation, Medicare and/or Medicaid, concerning
     overpayment which will or may result in a repayment or a refund in excess
     of One Million Dollars ($1,000,000). Lessee hereby agrees that in the event
     of receipt of such notices or demands Lessor shall have the right, at
     Lessor's option, to participate in the appeal of such notices and demands.

          (e) Lessee shall furnish to Lessor on a monthly basis ongoing status
     reports (in form and content acceptable to Lessor) of any governmental
     investigations of the Lessee, the Guarantors, or any of their respective
     Affiliates, or the Facility, conducted by the United States Attorney, State
     Attorney General, the Office of the Inspector General of the Department of
     Health and Human Services, or any other Governmental Entity.

          (f) Lessee shall furnish to Lessor immediately upon receipt thereof
     copies of all notices of adverse events or deficiencies as defined by
     regulations or standards of the American Osteopathic Association or the
     equivalent of the accrediting body relied upon by the Lessee in the
     operation of the Facility or any part thereof.

          (g) Lessee shall furnish to Lessor immediately upon receipt thereof
     copies of all notices that the Lessee and/or the Desert Valley Tenants are
     not in compliance with the Standards for Privacy of Individually
     Identifiable Health Information and the Transaction and Code Set Standards
     which were promulgated pursuant to the Health Insurance Portability and
     Accountability Act of 1996 ("HIPAA").


                                       44



          (h) Lessor reserves the right to (A) require such other financial
     information from Lessee, and (B) require the Lessee to provide such other
     financial information from the Desert Valley Tenants, at such other times
     as it shall deem reasonably necessary. All financial statements and
     information must be in such form and detail as Lessor shall from time to
     time, but not unreasonably, request.

          Subject to the rights of Lessor as provided in Section 42.8 of this
     Lease, Lessor and Lessee agree that all financial information disclosed
     pursuant to this Article XXV shall be kept in strictest confidence and
     shall not be disclosed to any person or entity.

                                  ARTICLE XXVI

                                   INSPECTION

     Lessee shall permit Lessor and its authorized representatives to inspect
the Leased Property and the Power Generation Facility during usual business
hours subject to any security, health, safety or confidentiality requirements of
Lessee, any governmental agency, any Insurance Requirements relating to the
Leased Property, or imposed by law or applicable regulations.

                                  ARTICLE XXVII

                                    NO WAIVER

     No failure by Lessor or Lessee to insist upon the strict performance of any
term hereof or to exercise any right, power or remedy consequent upon a breach
thereof, and no acceptance of full or partial payment of Rent during the
continuance of any such breach, shall constitute a waiver of any such breach or
any such term. To the extent permitted by law, no waiver of any breach shall
affect or alter this Lease, which shall continue in full force and effect with
respect to any other then existing or subsequent breach.

                                 ARTICLE XXVIII

                               REMEDIES CUMULATIVE

     To the extent permitted by law, each legal, equitable or contractual right,
power and remedy of Lessor or Lessee now or hereafter provided either in this
Lease or by statute or otherwise shall be cumulative and concurrent and shall be
in addition to every other right, power and remedy and the exercise or beginning
of the exercise by Lessor or Lessee of any one or more of such rights, powers
and remedies shall not preclude the simultaneous or subsequent exercise by
Lessor or Lessee of any or all of such other rights, powers and remedies.

                                  ARTICLE XXIX

                                    SURRENDER

     No surrender to Lessor of this Lease or of the Leased Property or any part
of any thereof, or of any interest therein, shall be valid or effective unless
agreed to and accepted in writing by Lessor and no act by Lessor or any
representative or agent of Lessor, other than such a written acceptance by
Lessor, shall constitute an acceptance of any such surrender.


                                       45



                                  ARTICLE XXX

                               NO MERGER OF TITLE

     There shall be no merger of this Lease or of the leasehold estate created
hereby by reason of the fact that the same person, firm, corporation or other
entity may acquire, own or hold, directly or indirectly, (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate and (b) the fee estate in the Leased Property.

                                  ARTICLE XXXI

                               TRANSFERS BY LESSOR

     If Lessor or any successor owner of the Leased Property shall convey the
Leased Property in accordance with the terms hereof, other than as security for
a debt, and the grantee or transferee of the Leased Property shall expressly
assume all obligations of Lessor hereunder arising or accruing from and after
the date of such conveyance or transfer, and shall be reasonably capable of
performing the obligations of Lessor hereunder, Lessor or such successor owner,
as the case may be, shall thereupon be released from all future liabilities and
obligations of the Lessor under this Lease arising or accruing from and after
the date of such conveyance or other transfer as to the Leased Property and all
such future liabilities and obligations shall thereupon be binding upon the new
owner.

                                  ARTICLE XXXII

                                 QUIET ENJOYMENT

     So long as Lessee shall pay all Rent as the same becomes due and shall
fully comply with all of the terms of this Lease and fully perform its
obligations hereunder and under the Other Leases, Lessee shall peaceably and
quietly have, hold and enjoy the Leased Property for the Term hereof, free of
any claim or other action by Lessor or anyone claiming by, through or under
Lessor, but subject to all liens and encumbrances of record as of the date
hereof or hereafter consented to by Lessee. No failure by Lessor to comply with
the foregoing covenant shall give Lessee any right to cancel or terminate this
Lease, or to fail to pay any other sum payable under this Lease, or to fail to
perform any other obligation of Lessee hereunder. Notwithstanding the foregoing,
Lessee shall have the right by separate and independent action to pursue any
claim it may have against Lessor as a result of a breach by Lessor of the
covenant of quiet enjoyment contained in this Article.

     Notwithstanding anything contained herein to the contrary, Lessor and
Lessee acknowledge that the Lessee has received and reviewed copies of the
Existing Leases. Lessee agrees that it will not disturb the rights of the
tenants under the Existing Leases.

     Lessee agrees that it will not disturb the rights of the tenants under the
Tenant Leases, if any, and will enforce all of the obligations of the tenants
under such Tenant Leases and will pay and perform all of the obligations to be
performed under the Tenant Leases as if Lessee is the lessor or landlord
thereunder. In addition, Lessor and Lessee acknowledge that the Lessee has taken
an assignment of certain contracts relating to the operation of the facility
located on the Leased Property (the "Contracts"), which Contracts require that
certain space in the Leased Property be provided as more particularly described
in the Contracts. Lessee agrees to abide by the terms and perform the
obligations under the Contracts. Lessee hereby agrees to indemnify and hold
Lessor harmless from any liabilities and damages incurred by the Lessor as a
result of the Lessee's default under the Tenant Leases and the Contracts.


                                       46



                                 ARTICLE XXXIII

                                     NOTICES

     All notices, demands, consents, approvals, requests and other
communications under this Lease shall be in writing and shall be either (a)
delivered in person, (b) sent by certified mail, return receipt requested, (c)
delivered by a recognized over-night delivery service or (d) sent by facsimile
transmission and addressed as follows:

     (a)   if to Lessee:     Veritas Health Services, Inc.
                             5451 Walnut Avenue
                             Chino, California 91710
                             Attention: James M. Lally
                             Fax: (909)464-8882

           if to Prime:      Prime Healthcare Services, LLC
                             16850 Bear Valley Road
                             Victorville, California 92392
                             Attn: Mr. Lex Reddy
                             Fax: (760) 241-8220

           with a copies to: Desert Valley Hospital, Inc.
                             16850 Bear Valley Road
                             Victorville, California 92392
                             Attention: Richard Hayes, Esq.
                             Fax: (951) 346-3873

     (b)   if to Lessor:     MPT of Chino, LLC
                             1000 Urban Center Drive, Suite 501
                             Birmingham, Alabama 35242
                             Attn: Michael G. Stewart, Esq.
                             Fax: (205) 969-3756

           with a copy to:   Thomas O. Kolb, Esq.
                             Baker, Donelson, Bearman, Caldwell & Berkowitz
                             1600 SouthTrust Tower
                             Birmingham, Alabama 35203
                             Fax: (205) 322-8007

or to such other address as either party may hereafter designate, and shall be
effective upon receipt. A notice, demand, consent, approval, request and other
communication shall be deemed to be duly received if delivered in person or by a
recognized delivery service, when left at the address of the recipient and if
sent by facsimile, upon receipt by the sender of an acknowledgment or
transmission report generated by the machine from which the facsimile was sent
indicating that the facsimile was sent in its entirety to the recipient's
facsimile number; provided that if a notice, demand, consent, approval, request
or other communication is served by hand or is received by facsimile on a day
which is not a Business Day, or after 5:00 p.m. on any Business Day at the
addressee's location, such notice or communication shall be deemed to be duly
received by the recipient at 9:00 a.m. on the first Business Day thereafter.


                                       47



                                 ARTICLE XXXIV

                                   APPRAISAL

     In the event that it becomes necessary to determine the Fair Market Value,
Fair Market Value Purchase Price or Fair Market Added Value of the Leased
Property for any purpose of this Lease, the party required or permitted to give
notice of such required determination shall include in the notice the name of a
person selected to act as an appraiser on its behalf. Lessor and Lessee agree
that any appraisal of the Leased Property shall be without regard to the
termination of this Lease or any purchase options contained herein and shall
assume the Lease is in place for a term of fifteen (15) years, and based solely
on the rents and other revenues generated and to be generated pursuant to this
Lease without any regard to Lessee's operations. Within ten (10) days after
receipt of any such notice, Lessor (or Lessee, as the case may be) shall by
notice to Lessee (or Lessor, as the case may be) appoint a second person as an
appraiser on its behalf. The appraisers thus appointed (each of whom must be a
member of the American Institute of Real Estate Appraisers or any successor
organization thereto) shall, within forty-five (45) days after the date of the
notice appointing the first (1st) appraiser, proceed to appraise the Leased
Property to determine the Fair Market Value, Fair Market Value Purchase Price or
Fair Market Added Value thereof as of the relevant date (giving effect to the
impact, if any, of inflation from the date of their decision to the relevant
date); provided, however, that if only one (1) appraiser shall have been so
appointed, or if two (2) appraisers shall have been so appointed but only one
(1) such appraiser shall have made such determination within fifty (50) days
after the making of Lessee's or Lessor's request, then the determination of such
appraiser shall be final and binding upon the parties. If two (2) appraisers
shall have been appointed and shall have made their determinations within the
respective requisite periods set forth above and if the difference between the
amounts so determined shall not exceed ten percent (10%) of the lesser of such
amounts, then the Fair Market Value, Fair Market Value Purchase Price or Fair
Market Added Value shall be an amount equal to fifty percent (50%) of the sum of
the amounts so determined. If the difference between the amounts so determined
shall exceed ten percent (10%) of the lesser of such amounts, then such two (2)
appraisers shall have twenty (20) days to appoint a third (3rd) appraiser, but
if such appraisers fail to do so, then either party may request the American
Arbitration Association or any successor organization thereto to appoint an
appraiser within twenty (20) days of such request, and both parties shall be
bound by any appointment so made within such 20-day period. If no such appraiser
shall have been appointed within such twenty (20) days or within ninety (90)
days of the original request for a determination of Fair Market Value, Fair
Market Value Purchase Price or Fair Market Added Value, whichever is earlier,
either Lessor or Lessee may apply to any court having jurisdiction to have
appointment made by such court. Any appraiser appointed, by the American
Arbitrator Association or by such court shall be instructed to determine the
Fair Market Value, Fair Market Value Purchase Price or Fair Market Added Value
within thirty (30) days after appointment of such appraiser. The determination
of the appraiser which differs most in terms of dollar amount from the
determinations of the other two (2) appraisers shall be excluded, and fifty
percent (50%) of the sum of the remaining two (2) determinations shall be final
and binding upon Lessor and Lessee as the Fair Market Value, Fair Market Value
Purchase Price or Fair Market Added Value for such interest. This provision for
determination by appraisal shall be specifically enforceable to the extent such
remedy is available under applicable law, and any determination hereunder shall
be final and binding upon the parties except as otherwise provided by applicable
law. Lessor and Lessee shall each pay the fees and expenses of the appraiser
appointed by it and each shall pay one-half of the fees and expenses of the
third appraiser and one-half of all other costs and expenses incurred in
connection with each appraisal.

                                  ARTICLE XXXV

                                 PURCHASE RIGHTS

     35.1 LESSEE'S OPTION TO PURCHASE. So long as Lessee is not in monetary or
payment default of any kind, or no event has occurred which with the giving of
notice or the passage of time or both would constitute such a default (except as
otherwise expressly provided in Section 16.2) under the terms of this Lease, the
Other Leases and the Tenant Leases, at any time from and after the third
anniversary of the Commencement Date, Lessee shall have the option, to be
exercised by ninety (90) days' prior written notice to the Lessor, to purchase
the Leased Property


                                       48



(including the Parking Lot Interest) at a purchase price sufficient to cause
Lessor to receive, on an unleveraged basis, a sum equal to (i) the Purchase
Price of the Leased Property, and (ii) an amount sufficient to yield to Lessor
an internal rate of return thereon that is equal to eleven percent (11%) per
year, taking into account all payments of Base Rent received by Lessor prior to
the closing date of such purchase (the "Option Price"). Unless expressly
otherwise provided in this Section 35.1, in the event Lessee exercises such
option to purchase the Leased Property, (i) the terms set forth in Article XVIII
shall apply, (ii) Lessee shall continue paying Rent as required under this Lease
until the purchase is closed, and (iii) the sale/purchase must be closed within
ninety (90) days after the date of the written notice from Lessee to Lessor of
Lessee's intent to purchase, unless a different closing date is agreed upon in
writing by Lessor and Lessee.

     35.2 LESSOR'S OPTION TO PURCHASE LESSEE'S AND PRIME'S PERSONAL PROPERTY.
Effective on not less than ninety (90) days' prior written notice given at any
time within one hundred eighty (180) days prior to the expiration of the Term of
this Lease, but not later than ninety (90) days prior to such expiration, or
such shorter notice as shall be appropriate if this Lease is terminated prior to
its expiration date, Lessor shall have the option to purchase all (but not less
than all) of Lessee's Personal Property and Prime's Personal Property, if any,
at the expiration or termination of this Lease, for an amount equal to the net
sound insurable value thereof (current replacement cost less accumulated
depreciation on the books of Lessee pertaining thereto), subject to, and with
appropriate price adjustments for, all equipment leases, conditional sale
contracts, security interests and other encumbrances to which Lessee's Personal
Property and Prime's Personal Property are subject. Notwithstanding anything
contained in this Section 35.2 to the contrary, the options to purchase granted
under this Section 35.2 do not pertain to any of the Licenses, it being
understood and agreed that all matters relating to the transfer of the Licenses
are addressed in Article XXXIX hereof.

     35.3 LESSOR'S PUT OPTION. Subject to the terms and conditions of Section
35.1 above and Section 35.4 below, if, at any time during the Term, Lessor
receives notice that the Parking Lot Lease will not be renewed in favor of the
Lessor beyond December 31, 2013, or that Lessor's rights with respect thereto
are or will be terminated, or if Lessor receives notice that the Parking Lot
Property cannot be used for parking for the Facility (each, a "Put Event"), then
Lessor, subject to terms and provisions of Section 35.4 below, shall have the
right and option (the "Put Option") to sell and convey to Lessee, and to cause
Lessee to purchase and acquire from Lessor, all of the Leased Property
(including the Parking Lot Interest which will be assigned to and assumed by
Lessee at the time of closing) for the Option Price (as defined in Section
35.1). In the event Lessor exercises the Put Option, the terms set forth in
Article XVIII shall apply and the sale/purchase must be closed within ninety
(90) days after the date of Lessor's written notice (the "Put Notice") to Lessee
of the Put Event, unless a different closing date is agreed upon in writing by
Lessor and Lessee.

     35.4 LESSEE SUBSTITUTION FOR PARKING LOT PROPERTY. If in Lessor's
discretion, it becomes necessary to exercise the Put Option, Lessee shall first
have the right, within thirty (30) days following the Put Notice and subject to
the other terms and provisions of this Section 35.4, to substitute one or more
properties (collectively referred to as the "Substitute Property") to be used
for parking for the Facility; it being understood and agreed that Lessor shall
not be obligated to accept any Substitute Property which: (i) does not satisfy
applicable zoning and use laws, ordinances, rules and regulations; or (ii) in
Lessor's sole discretion would create an undue burden or inconvenience for
parking at the Facility. If Lessor accepts the Substitute Property, the
Substitute Property shall be conveyed to Lessor by general warranty deed, the
terms of Article XVIII shall apply and the purchase and conveyance to Lessor
must be closed within ninety (90) days after the Put Notice (or, if the
Substitute Property is obtained by Lessee by a lease, such lease shall be
assigned to Lessor by written instrument in form and substance reasonably
acceptable to Lessor within ninety (90) days after the Put Notice) and Lessor
and Lessee agree to enter into a written amendment to this Lease in form and
substance acceptable to Lessor to make the Substitute Property subject to all of
the terms and provisions of this Lease. In the event Lessor rejects the
Substitute Property pursuant to this Section 35.4, Lessee shall purchase the
Leased Property in accordance with the terms and provisions of Section 35.3
above. Lessee shall obtain and deliver to Lessor all due diligence documentation
required by Lessor in connection with or relating to the Substitute Property
(including, without limitation, surveys, environmental reports, soil test
reports and property condition reports) and Lessee shall pay all costs and
expenses of Lessee and Lessor paid or incurred in connection


                                       49



with the substitution (or attempted substitution) of property under this Section
35.4, including, without limitation, any increase in rents or expenses related
to the Substitute Property.

                                  ARTICLE XXXVI

                              INTENTIONALLY OMITTED

                                 ARTICLE XXXVIII

                        FINANCING OF THE LEASED PROPERTY

     37.1 FINANCING BY LESSOR. Lessor agrees that, if it grants or creates any
mortgage, lien, encumbrance or other title retention agreement ("Encumbrances")
upon the Leased Property, Lessor will use reasonable efforts to obtain an
agreement from the holder of each such Encumbrance whereby such holder agrees
(a) to give Lessee the same notice, if any, given to Lessor of any default or
acceleration of any obligation underlying any such Encumbrance or any sale in
foreclosure of such Encumbrance, (b) to permit Lessee, after twenty (20) days
prior written notice, to cure any such default on Lessor's behalf within any
applicable cure period, in which event Lessor agrees to reimburse Lessee for any
and all reasonable out-of-pocket costs and expenses incurred to effect any such
cure (including reasonable attorneys' fees), (c) to permit Lessee to appear with
its representatives and to bid at any foreclosure sale with respect to any such
Encumbrance, (d) that, if subordination by Lessee is requested by the holder of
each such Encumbrance, to enter into an agreement with Lessee containing the
provisions described in Article XXXVIII of this Lease, and (e) Lessor further
agrees that no such Encumbrance shall in any way prohibit, derogate from, or
interfere with Lessee's right and privilege to collaterally assign its leasehold
and contract rights hereunder provided such collateral assignment and rights
granted to the assignee thereunder shall be subordinate to the rights of the
holder of an Encumbrance as provided in Article XXXVIII hereof.

                                ARTICLE XXXVIII

                       SUBORDINATION AND NON-DISTURBANCE

     At the request from time to time by one or more Facility Lenders, within
ten (10) days from the date of request, Lessee shall execute and deliver to such
Facility Lender a written agreement in a form reasonably acceptable to such
Facility Lender whereby Lessee subordinates this Lease and all of its rights and
estate hereunder (except for Lessee's purchase options as expressly provided in
this Lease) to each Facility Instrument that encumbers the Leased Property or
any part thereof and agrees with each such Facility Lender that Lessee will
attorn to and recognize such Facility Lender or the purchaser at any foreclosure
sale or any sale under a power of sale contained in any such Facility
Instrument, as the case may be, as Lessor under this Lease for the balance of
the Term then remaining, subject to all of the terms and provisions of this
Lease; provided, however, that each such Facility Lender simultaneously executes
and delivers a written agreement consenting to this Lease and agreeing that,
notwithstanding any such other mortgage, deed of trust, right, title or
interest, or any default, expiration, termination, foreclosure, sale, entry or
other act or omission under, pursuant to or affecting any of the foregoing,
Lessee shall not be disturbed in peaceful enjoyment of the Leased Property nor
shall this Lease be terminated or canceled at any time, except in the event
Lessee is in default under this Lease.


                                       50



                                 ARTICLE XXXIX

                                    LICENSES

     Lessee shall maintain at all times during the Term hereof and any holdover
period all federal, state and local governmental licenses, approvals,
qualifications, variances, certificates of need, franchises, accreditations,
certificates, certifications, consents, permits and other authorizations and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary or useful in the operation of the Facility (collectively,
the "Licenses'), and shall qualify and comply with all applicable laws as they
may from time to time exist, including those applicable to certification and
participation as a provider under Medicare and Medicaid legislation and
regulations.

     Lessee shall not, without the prior written consent of Lessor, which may be
granted or withheld in its sole discretion, effect or attempt to effect any
change in the license category or status of the Facility or any part thereof.
Under no circumstances shall Lessee have the right to transfer any of the
Licenses to any location other than the Facility or to any other person or
entity (except to Lessor as contemplated herein), whether before, during or
after the Term hereof. Following the termination of this Lease, Lessee shall
retain no rights whatsoever to the Licenses, and Lessee will not move or attempt
to move the Licenses to any other location. To the extent that Lessee has or
will extend any right, title, or claim of right whatsoever in and to the
Licenses or the right to operate the Facility, all such right, title, or claim
of right shall automatically revert to the Lessor or to Lessor's designee upon
termination of this Lease, to the extent permitted by law. Upon any termination
of this Lease or any breach or default by Lessee hereunder (which breach or
default is not cured within any applicable grace period and which results in
Lessor terminating this Lease), to the extent permitted by law, Lessor shall
have the sole, complete, unilateral, absolute and unfettered right to cause all
Licenses to be reissued in Lessor's name or in the name of Lessor's designee
upon application therefor to the issuing authority, and to further have the
right to have any and all provider and/or third party payor agreements as a
provider in the Medicare and/or Medicaid and other federal healthcare programs
issued in Lessor's name or in the name of Lessor's designee.

     Upon the termination of this Lease and for reasonable periods of time
immediately before and after such termination, Lessee shall use its best
efforts, without additional consideration to Lessee, to facilitate an orderly
transfer of the operation and occupancy of the Facility to Lessor or any new
lessee or operator selected by Lessor, it being understood and agreed that such
cooperation shall include, without limitation, (a) Lessee's transfer and
assignment, if and to the extent permitted by law, to Lessor, Lessor's nominee
or Lessor's new lessee or operator of any and all Licenses, (b) Lessee's use of
best efforts to maintain, to the maximum extent allowed by applicable law, the
effectiveness of any and all such Licenses until such time as any new Licenses
necessary for any new Lessee or operator to operate the Facility have been
issued, and (c) the taking of such other actions as are required by applicable
law or as are reasonably requested by Lessor. Upon any termination of this Lease
or any breach or default by Lessee hereunder (which breach or default is not
cured within any applicable grace period and which results in Lessor terminating
this Lease), to the extent permitted by law, Lessor shall have the sole,
complete, unilateral, absolute and unfettered right to cause any and all
Licenses to be reissued in Lessor's name or in the name of Lessor's designee
upon application therefor to the appropriate authority, if required, and to
further have the right, to the extent permitted by law, to have any and all
Medicare and Medicaid and any other provider and/or third party payor agreements
issued in Lessor's name or in the name of Lessor's designee. The provisions of
this Section are in addition to the other provisions of this Lease.

     It is an integral condition of this Lease that Lessee covenants and agrees
not to sell, move, modify, cancel, surrender, transfer, assign, sell, relocate,
pledge, secure, convey or in any other manner encumber any License or any
governmental or regulatory approval, consent or authorization of any kind to
operate the Facility. To the extent permitted by law, Lessee hereby grants to
Lessor a landlord's lien on the Licenses.

     Lessee shall immediately (within two (2) business days) notify Lessor in
writing of any notice, action or other proceeding or inquiry of any governmental
agency, bureau or other authority whether federal, state, or local, of any kind,
nature or description, which could adversely affect any material License or
Medicare and/or Medicaid-


                                       51



certification status, or accreditation status of the Facility, or the ability of
Lessee to maintain its status as the licensed and accredited operator of the
Facility or which alleges noncompliance with any law. Lessee shall immediately
(within two (2) business days) upon Lessee's receipt, furnish Lessor with a copy
of any and all such notices and Lessor shall have the right, but not the
obligation, to attend and/or participate, in Lessor's sole and absolute
discretion, in any such actions or proceedings. Lessee shall act diligently to
correct any deficiency or deal effectively with any "adverse action" or other
proceedings, inquiry or other governmental action, so as to maintain the
licensure and Medicare and/or Medicaid-certification status stated herein in
good standing at all times. Lessee shall not agree to any settlement or other
action with respect to such proceedings or inquiry which affects the use of the
Leased Property or any portion thereof as provided herein without the prior
written consent of Lessor, which consent shall not be unreasonably withheld or
delayed. Lessee agrees to sign, acknowledge, provide and deliver to Lessor (and
if Lessee fails to do so upon request of Lessor, Lessee hereby irrevocably
appoints Lessor, as agent of Lessee for such express purposes) any and all
documents, instruments or other writings which are or may become necessary,
proper and/or advisable to cause any and all hospital licenses required for the
Primary Intended Use, Department of Human Services of the State of California
("DHS") provider agreements, and/or state or federal Title XVIII and/or Title
XIX provider agreements to be obtained (either in total or individually) in the
name of Lessor or the name of Lessor's designee in the event that Lessor
reasonably determines in good faith that (irrespective of any claim, dispute or
other contention or challenge of Lessee) there is any breach, default or other
lapse in any representation, warranty, covenant or other delegation of duty to
Lessee (beyond any applicable grace or cure period) and the issuing government
agency has threatened or asserted that such license or provider agreement will
terminate or has lapsed or that Lessee's license or certification or
accreditation status is in jeopardy. This power is coupled with the ownership
interest of Lessor in and to the Facility and all incidental rights attendant to
any and all of the foregoing rights.

                                   ARTICLE XL

                         COMPLIANCE WITH HEALTHCARE LAWS

     Lessee hereby covenants, warrants and represents to Lessor that as of the
Commencement Date and throughout the Term: (i) Lessee shall be, and shall
continue to be validly licensed, Medicare and/or Medicaid certified, and, if
required, accredited to operate the Facility in accordance with the applicable
rules and regulations of the State of California, federal governmental
authorities and accrediting bodies, including, but not limited to, the United
States Department of Health and Human Services, DHSS, DHS and CMS; and/or (ii)
Lessee shall be, and shall continue to be, certified by and the holder of valid
provider agreements with Medicare/Medicaid issued by DHHS, DHS and/or CMS and
shall remain so certified and shall remain such a holder in connection with its
operation of the Primary Intended Use on the Leased Property as a licensed and
Medicare and/or Medicaid certified acute care hospital facility; (iii) Lessee
shall be, and shall continue to be in substantial compliance with and shall
remain in substantial compliance with all state and federal laws, rules,
regulations and procedures with regard to the operation of the Facility,
including, without limitation, substantial compliance under HIPAA; (iv) Lessee
shall operate the Facility in a manner consistent with high quality acute care
services and sound reimbursement principles under the Medicare and/or Medicaid
programs and as required under state and federal law; and (v) Lessee shall not
abandon, terminate, vacate or fail to renew any license, certification,
accreditation, certificate, approval, permit, waiver, provider agreement or any
other authorization which is required for the lawful and proper operation of the
Facility or in any way commit any act which will or may cause any such license,
certification, accreditation, certificate, approval, permit, waiver, provider
agreement or other authorization to be revoked by any federal, state or local
governmental authority or accrediting body having jurisdiction thereof.


                                       52



                                  ARTICLE XLI

           LESSOR'S RIGHT TO SELL AND LESSEE'S RIGHT OF FIRST REFUSAL

     41.1 LESSOR'S RIGHT TO SELL. Lessee understands that Lessor may sell its
interest in the Leased Property in whole or in part at any time, subject to this
Lease and the rights of Lessee as expressly provided in this Lease. The Lessee
agrees that any purchaser may exercise any and all rights of Lessor as fully as
if such had made the purchase of the Leased Property directly from the Lessee as
set out in the Purchase Agreement. Lessor may divulge to any such purchaser all
information, reports, financial statements, certificates and documents obtained
by it from Lessee.

     41.2 LESSEE'S RIGHT OF FIRST REFUSAL. If, during the Term, Lessor shall
receive from Health Care Property Investors, Inc., a Maryland corporation (or
any affiliate thereof) (the "Transferee") a written, bona fide offer to purchase
the Leased Property, and Lessor is willing to accept such offer, so long as
Lessee is not in monetary or payment default of any kind, or no event has
occurred which with the giving of notice or the passage of time or both would
constitute such a default under the terms of this Lease, the Other Leases and
the Tenant Leases, Lessor must first present such offer to Lessee and allow
Lessee the right to purchase the Leased Property upon the same price, terms and
conditions as set forth in such offer except as otherwise expressly set forth
herein; provided, however, in the event Transferee makes a bona fide offer to
purchase any time after the second anniversary of the Commencement Date, in lieu
of such right of first refusal, Lessee may exercise its option to purchase as
provided in Section 35.1. Lessor shall make such offer by delivery of written
notice to Lessee (the "Notice") which shall contain the amount to be paid for
the Leased Property (including the amount and type of any consideration other
than cash), the terms of payment, the date on which the Leased Property is
proposed to be sold and all other terms and conditions of such transfer. For a
period of ten (10) days following the date of the Notice (the "Option Period"),
Lessee shall have the right, option and privilege (but not the obligation) to
purchase the Leased Property. If Lessee determines to purchase the Leased
Property, it shall deliver written notice of that fact to Lessor within the
Option Period and such delivery shall create an agreement between Lessor and
Lessee pursuant to which Lessor shall sell and Lessee shall purchase the Leased
Property from Lessor (i) at the price and upon the terms and conditions stated
in the Notice, and (ii) in accordance with the terms, conditions and provisions
set forth in Article XVIII, and the sale/purchase must be closed on the earlier
of (A) the closing date as stated in the Notice, or (B) ninety (90) days (the
"Closing Period") from the date of the written notice from Lessee to Lessor of
Lessee's intent to purchase. If Lessee does not exercise its option to purchase
the Leased Property within the Option Period, or if Lessee does not close the
purchase within the Closing Period, then Lessee's option and the right of first
refusal shall be deemed not to have been exercised and Lessor may thereafter
sell the Property to the Transferee or any other party on any terms as Lessor
deems acceptable in its sole discretion, subject to this Lease and the rights of
Lessee as expressly provided in this Lease.

                                  ARTICLE XLII

                                  MISCELLANEOUS

     42.1 GENERAL. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Lessee or Lessor
arising prior to any date of expiration or termination of this Lease shall
survive such expiration or termination. If any term or provision of this Lease
or any application thereof shall be invalid or unenforceable, the remainder of
this Lease and any other application of such term or provision shall not be
affected thereby. If any late charges provided for in any provision of this
Lease are based upon a rate in excess of the maximum rate permitted by
applicable law, the parties agree that such charges shall be fixed at the
maximum permissible rate. Neither this Lease nor any provision hereof may be
changed, waived, discharged or terminated except by an instrument in writing and
in recordable form signed by Lessor and Lessee. All the terms and provisions of
this Lease shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. The headings in this Lease are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.


                                       53



     42.2 LESSOR'S EXPENSES. In addition to other provisions herein, Lessee
agrees and shall pay and/or reimburse Lessor's reasonable costs and expenses,
including legal fees, incurred or resulting from and relating to (a) requests by
Lessee for approval or consent under this Lease Agreement; (b) requests by
Lessor for approval or consent under this Lease and all other documents executed
between Lessor and Lessee in connection herewith, (c) any circumstances or
developments which give rise to Lessor's right of consent or approval, (d)
circumstances resulting from any action or inaction by Lessee contrary to the
lease provisions, and (e) a request for changes including, but not limited to,
(i) the permitted use of the Leased Property, (ii) alterations and improvements
to the Leased Improvements, (iii) subletting or assignment, and (iv) any other
changes in the terms, conditions or provisions of this Lease. Such expenses and
fees shall be paid by Lessee within thirty (30) days of the submission of a
statement for the same or such amount(s) shall become Additional Charges and
subject to the Overdue Rate after the 30 days.

     42.3 ASSETS PURCHASED PURSUANT TO PURCHASE OPTIONS. In connection with any
purchase options granted to Lessee hereunder, in the event Lessee exercises such
purchase options, the term "Leased Property" shall also include any "Assets" as
such term is defined in the Purchase Agreement.

     42.4 ENTIRE AGREEMENT; MODIFICATIONS. This Lease embodies and constitutes
the entire understanding between the parties with respect to the transactions
contemplated herein, and all prior to contemporaneous agreements,
understandings, representations and statements (oral or written) are merged into
this Lease. Neither this Lease nor any provision hereof may be modified or
amended except by an instrument in writing signed by Lessor and Lessee.

     42.5 LEASE GUARANTY. Lessee shall cause to be delivered to Lessor
simultaneously herewith the fully executed Lease Guaranty.

     42.6 FUTURE FINANCING. Lessee hereby agrees that if at any time during the
Term Lessee purchases or contemplates the purchase of a facility, or property to
be used, for the operation of a business for the Primary Intended Use, Lessee
shall notify Lessor in writing ("Lessee's Notice") of such purchase or
contemplated purchase, and Lessor shall have the first opportunity to provide
financing for such purchase, expansion or renovation upon terms mutually
agreeable to Lessor and Lessee. Lessor shall notify Lessee in writing on or
before the expiration of twenty (20) business days after receipt of Lessee's
Notice whether Lessor is interested in providing such financing. If Lessor
agrees to provide the financing, the terms and conditions of such financing will
be contingent upon, among other things, performance benchmarks acceptable to
Lessor and the Lessor's satisfaction and approval of other due diligence
requirements.

     42.7 CHANGE IN OWNERSHIP/CONTROL. So long as this Lease remains in effect,
the aggregate ownership of the current members or shareholders of Lessee and the
Guarantors shall not be reduced below fifty-one (51%) percent.

     42.8 LESSOR SECURITIES OFFERING AND FILINGS. Notwithstanding anything
contained herein to the contrary, Lessee shall cooperate with Lessor or MPT in
connection with any securities offerings and filings, or MPT's efforts to
procure or maintain financing for or related to the Leased Property and
Facility, and in connection therewith, the Lessee shall furnish MPT with such
financial and other information as MPT shall request. MPT may disclose that
Lessor has entered into this Lease with Lessee and Prime and may provide and
disclose information regarding this Lease, the Lessee, the Guarantors, the
Leased Property and the Facility, and such additional information which MPT may
reasonably deem necessary, to its proposed investors in such public offering or
private offering of securities, or any current or prospective lenders with
respect to such financing. Upon reasonable advance notice, MPT and any lender
providing financing for the Leased Property shall have the right, subject to the
execution of a written confidentiality agreement on terms reasonably acceptable
to MPT, such lender and Lessee, to access, examine and copy all agreements,
records, documentation and information relating to the Lessee and the
Guarantors, the Leased Property and Facility, and to discuss such affairs and
information with the officers, employees and independent public accountants of
the Lessee and Guarantors as often as may reasonably be desired.


                                       54



     42.9 NON-RECOURSE AS TO LESSOR. Anything contained herein to the contrary
notwithstanding, any claim based on or in respect of any liability of Lessor
under this Lease shall be enforced only against the Leased Property and not
against any other assets, properties or funds of (i) Lessor, (ii) any director,
officer, general partner, shareholder, limited partner, beneficiary, employee or
agent of Lessor or any general partner of Lessor or any of its general partners
(or any legal representative, heir, estate, successor or assign of any thereof),
(iii) any predecessor or successor partnership or corporation (or other entity)
of Lessor or any of its general partners, shareholders, officers, directors,
employees or agents, either directly or through Lessor or its general partners,
shareholders, officers, directors, employees or agents or any predecessor or
successor partnership or corporation (or other entity), or (iv) any person
affiliated with any of the foregoing, or any director, officer, employee or
agent of any thereof.

     42.10 MANAGEMENT AGREEMENTS. Lessee shall not engage any Management Company
or allow any tenants, subtenants or sublessees of the Facility to engage any
Management Company, without Lessor's prior written consent, which consent shall
not be unreasonably withheld; provided, however, Lessor's rights relating to any
Management Company as set forth in Section 16.2 hereof shall be at Lessor's sole
and absolute discretion. Lessee shall, if required by Lessor, assign all of
Lessee's rights under the Management Agreements to Lessor and Lessor shall be
entitled to assign same to Lessor's lender. At the request of the Lessor from
time to time, Lessee shall execute and deliver (and require the tenants,
subtenants or sublessees to execute and deliver, if applicable) an assignment
and/or subordination agreement relating to the Management Agreements, which
assignment and/or subordination agreement shall be in such form and content as
reasonably acceptable to Lessor and/or any lender providing financing to Lessor,
and shall be delivered to Lessor within ten (10) days after Lessor's request.
Lessee hereby agrees that all payments and fees payable under the Management
Agreements are and shall be subordinate to the payment of the obligations under
this Lease and all other documents executed in connection with this Lease and
the Purchase Agreement. Lessee agrees that all Management Agreements entered
into in connection with the Leased Property shall expressly contain provisions
acceptable to Lessor which (i) require an assignment of the Management
Agreements to Lessor upon request by Lessor, (ii) confirm and warrant that all
sums due and payable under the Management Agreements are subordinate to this
Lease, (iii) grant Lessor the right to terminate the Management Agreement
(individually or collectively, if more than one (1)) upon a default hereunder or
upon a default under such applicable Management Agreement, (iv) require the
Management Company to execute and deliver to Lessor within ten (10) days from
Lessor's request an estoppel certificate, assignment and/or subordination
agreement as required by Lessor and/or Lessor's lender providing financing to
Lessor, in such form and content as is acceptable to Lessor and/or its lender,
and (v) all fees due and payable under any Management Agreements, shall be
subordinate to all monetary obligations under this Lease. At the request of the
Lessor from time to time, Lessee shall execute and obtain from all parties
subject to such Management Agreements executed written confirmation of such
assignment or subordination, which shall be delivered to Lessor within ten (10)
days from Lessor's request.

     42.11 PRIME'S RIGHT TO EXERCISE PURCHASE OPTIONS. Lessor hereby consents to
and agrees that Prime may exercise any of Lessee's rights and options to
purchase as set forth herein pursuant to the same terms and conditions provided
to Lessee under this Lease.

     42.12 GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO CONFLICTS OF LAW
PRINCIPLES.

     42.13 JURISDICTION AND VENUE. LESSOR AND LESSEE CONSENT TO PERSONAL
JURISDICTION IN THE STATE OF DELAWARE. LESSOR AND LESSEE AGREE THAT ANY ACTION
OR PROCEEDING ARISING FROM OR RELATED TO THIS LEASE SHALL BE BROUGHT AND TRIED
EXCLUSIVELY IN THE STATE OR FEDERAL COURTS OF THE STATE OF DELAWARE. EACH OF THE
PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF
VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT. LESSEE
EXPRESSLY ACKNOWLEDGES THAT DELAWARE IS A FAIR, JUST AND REASONABLE FORUM AND
LESSEE AGREES NOT TO SEEK REMOVAL OR TRANSFER OF ANY ACTION FILED BY LESSOR IN
SAID


                                       55



COURTS. FURTHER, LESSOR AND LESSEE IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY
CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN ANY INCONVENIENT
FORUM. SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY CERTIFIED MAIL
ADDRESSED TO A PARTY AT THE ADDRESS DESIGNATED PURSUANT TO ARTICLE XXXIII HEREOF
SHALL BE EFFECTIVE SERVICE OF PROCESS AGAINST SUCH PARTY FOR ANY ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT. A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT MAY BE ENFORCED IN ANY OTHER COURT TO WHOSE
JURISDICTION ANY OF THE PARTIES IS OR MAY BE SUBJECT.

     42.14 COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.

                                 ARTICLE XLIII

                              MEMORANDUM OF LEASE

     Lessor and Lessee shall, promptly upon the request of either, enter into a
short form memorandum of this Lease, in form suitable for recording under the
laws of the state in which the Leased Property is located in which reference to
this Lease, and all options contained herein, shall be made.

                     [SIGNATURES APPEAR ON FOLLOWING PAGES]


                                       56



     IN WITNESS WHEREOF, the parties have caused this Lease to be executed and
their respective corporate seals to be hereunto affixed and attested by their
respective officers thereunto duly authorized.

                                        LESSOR:

                                        MPT OF CHINO, LLC

                                        By: MPT OPERATING PARTNERSHIP, L.P.
                                        Its: Sole Member


                                        By: /s/ Edward K. Aldag, Jr.
                                            ------------------------------------
                                        Name: Edward K. Aldag, Jr.
                                        Its: President and Chief Executive
                                             Officer


                                       57



                                        LESSEE:

                                        VERITAS HEALTH SERVICES, INC.


                                        By: /s/ Lex Reddy
                                            ------------------------------------
                                        Name: Lex Reddy
                                              ----------------------------------
                                        Its: CEO
                                             -----------------------------------


                                        PRIME:

                                        PRIME HEALTHCARE SERVICES, LLC


                                        By: /s/ Prem Reddy
                                            ------------------------------------
                                        Name: Prem Reddy
                                              ----------------------------------
                                        Its: Manager
                                             -----------------------------------


                                       58



STATE OF ALABAMA
JEFFERSON COUNTY

     On this ______ day of ___________, 2005, before me, the undersigned
authority, a Notary Public of said State, duly commissioned and sworn,
personally appeared EDWARD K. ALDAG, JR., personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person who executed the
within instrument as President and Chief Executive Officer of MPT Operating
Partnership, L.P., the Sole Member of MPT OF CHINO, LLC, a Delaware limited
liability company, and acknowledged to me that such limited partnership, as the
Sole Member of such limited liability company executed the same.

     IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year in this certificate first above written.


                                        ----------------------------------------
                                        NOTARY PUBLIC
                                        Printed Name:
                                                      --------------------------
                                        My Commission Expires:
                                                               -----------------
[AFFIX NOTARY SEAL]


                                       59



STATE OF CALIFORNIA
SAN BERNARDINO COUNTY

     On this ______ day of ___________, 2005, before me, the undersigned
authority, a Notary Public of said State, duly commissioned and sworn,
personally appeared _________________, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person who executed the within
instrument as _____________ of VERITAS HEALTH SERVICES, INC., a California
corporation, and acknowledged to me that such corporation executed the same.

     IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year in this certificate first above written.


                                        ----------------------------------------
                                        NOTARY PUBLIC
                                        Printed Name:
                                                      --------------------------
                                        My Commission Expires:
                                                               -----------------
[AFFIX NOTARY SEAL]


                                       60



STATE OF CALIFORNIA
SAN BERNARDINO COUNTY

     On this ______ day of ___________, 2005, before me, the undersigned
authority, a Notary Public of said State, duly commissioned and sworn,
personally appeared _______________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person who executed the within
instrument as _____________ of PRIME HEALTHCARE SERVICES, LLC, a California
limited liability company, and acknowledged to me that such corporation executed
the same.

     IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year in this certificate first above written.


                                        ----------------------------------------
                                        NOTARY PUBLIC
                                        Printed Name:
                                                      --------------------------
                                        My Commission Expires:
                                                               -----------------
[AFFIX NOTARY SEAL]


                                       61



                                  SCHEDULE 8.6

                Exceptions to Single Purpose Entity Requirements

                                      None.


                                       62



                                    EXHIBIT A

                                Legal Description

PARCEL A: Parcel 1 of Parcel Map No. 11169 in the City of Chino, County of San
Bernardino, State of California, as per Map recorded in Book 131, Pages 29 and
30 of Parcel Maps, in the Office of the County Recorder of said County, together
with those portions of 10th Street, Walnut Street and Jefferson Avenue which
would pass with a conveyance of said parcels by operation of law.

PARCEL A-1: And the non-exclusive easements and rights for vehicular and
pedestrian ingress and egress, parking of motor vehicles, and use of drainage
facilities as set forth in the Declaration of Reciprocal Easements for Parking,
Driveways and Drainage recorded August 7, 1992, as Instrument No. 92-328555, and
May 27, 1993, as Instrument No. 93-227512, Official Records.


                                       63



                                    EXHIBIT B

                       Parking Lot Land Legal Description

Being a portion of the Southerly 402 feet of the Northerly 562.71 feet of the
Westerly 394.26 feet of the Easterly 515.26 feet of Lot 34, Section 2, Township
2 South, Range 8 West, San Bernardino Meridian, according to Map of Subdivision
of Part of Rancho Santa Ana Del Chino, in the City of Chino, County of San
Bernardino, State of California, as per Map recorded in Book 6, Page 15 of Maps,
in the Office of the County Recorder of said County, more particularly described
as follows:

Beginning at the most northwesterly corner of the land described above; thence N
89 degrees 49' 32" E, 394.26 feet to the Northeasterly corner of said land;
thence S 0 degrees 12' 12" E, 147.50 feet to a point in said Easterly line of
said land; thence S 89 degrees 49' 32" W, 394.26 feet to the Westerly line of
said land; thence N 0 degrees 12' 12" W, 147.50 feet to the point of beginning.


                                       64



                                    EXHIBIT C

                              Permitted Exceptions

1. General and special taxes and assessments for the fiscal year 2005-2006, a
lien not yet due or payable.

2. Supplemental taxes, if any, assessed pursuant to Chapter 3.5 commencing with
Section 75 of the California Revenue and Taxation Code, a lien not yet due or
payable.

3. An easement for pipelines and incidental purposes in the document recorded in
Book 373 of Deeds, Page 49.

4. An easement for pipelines and incidental purposes in the document recorded in
Book 373 of Deeds, Page 50.

5. An easement for pipelines and incidental purposes in the document recorded in
Book 754 of Deeds, Page 14.

6. An easement for road and utilities and incidental purposes in the document
recorded in Book 3526, Page 577 of Official Records.

7. An easement for above ground or underground conduits or both and incidental
purposes, recorded in Book 7976, Page 868 of Official Records.

8. An easement for street and highway purposes and incidental purposes, recorded
in Book 8142, Page 582 of Official Records.

9. An easement for street and highway purposes and incidental purposes, recorded
in Book 8142, Page 584 of Official Records.

10. An easement for above ground or underground conduits or both and incidental
purposes, recorded in Book 8479, Page 932 of Official Records.

11. An easement for above ground or underground conduits or both and incidental
purposes, recorded in Book 8560, Page 673 of Official Records.

12. The fact that the land lies within the boundaries of the Central City
Amended Redevelopment Project Area, as disclosed by the document recorded
December 28, 1981, as Instrument No. 81-279411 of Official Records.


                                       65



13. An easement shown or dedicated on Parcel Map No. 11169 filed or recorded in
Book 131, Pages 29 and 30 of Parcel Maps for vehicular ingress and egress, storm
water drainage and incidental purposes.

14. An easement for above ground or underground conduits or both and incidental
purposes in the document recorded November 19, 1987, as Instrument No. 87-410734
of Official Records.

15. An easement for above ground or underground conduits or both and incidental
purposes in the document recorded June 9, 1988, as Instrument No. 87-183995 of
Official Records.

16. The terms and provisions contained in an easement for parking, driveways and
drainage purposes and incidental purposes in the document recorded August 7,
1992, as Instrument No. 92-328555 of Official Records.

17. An easement for street, road and utilities and incidental purposes in the
document recorded August 31, 1992, as Instrument No. 92-360268 of Official
Records.

18. The terms and provisions contained in an easement for walkways, driveways
and parking areas and incidental purposes in the document recorded May 27, 1993,
as Instrument No. 93-227512 of Official Records.

19. The terms and provisions contained in the document entitled "Declaration of
Reciprocal Easements for Parking, Driveways, Drainage" recorded January 5, 2005
as Instrument No. 2005-0008635 of Official Records.


                                       66



                                    EXHIBIT D

                                 Existing Leases

Medical Office Building Lease dated January 20, 2000, with Henry Chen, M.D.

Medical Office Building Lease dated December 10, 1999, with Mao-Jin Fu, M.D.

Medical Office Building Lease dated January 20, 2000, with Hector H. Costamagna,
M.D.

Medical Office Building Lease dated January 20, 2000, with Thomas T. Lee, M.D.

Ground Lease dated as of January 21, 1994, as amended by that certain Amendment
to Ground Lease dated as of June 16, 1995, wherein DHS Management Services, Inc.
is the current tenant for the MRI Facility.


                                       67

                                                                   EXHIBIT 10.66

                           PURCHASE AND SALE AGREEMENT

                                  BY AND AMONG

                         MPT OPERATING PARTNERSHIP, L.P.

                                MPT OF CHINO, LLC

                     (COLLECTIVELY, THE "PURCHASER PARTIES")

                                       AND

                         VERITAS HEALTH SERVICES, INC.,

                        PRIME HEALTHCARE SERVICES, INC.,

                          DESERT VALLEY HOSPITAL, INC.,

                       DESERT VALLEY MEDICAL GROUP, INC.,

                                       AND

                         PRIME HEALTHCARE SERVICES, LLC

                      (COLLECTIVELY, THE "SELLER PARTIES")

                         DATED AS OF NOVEMBER 30, 2005




                                                                           
ARTICLE I DEFINED TERMS....................................................    2

   SECTION 1.1.   Certain Defined Terms....................................    2
   SECTION 1.2.   Interpretation; Terms Generally..........................    9

ARTICLE II PURCHASE AND SALE OF ASSETS, ASSUMPTION OF LIABILITIES..........   10

   SECTION 2.1.   Purchase and Sale of Assets..............................   10
   SECTION 2.2.   Excluded Liabilities.....................................   10
   SECTION 2.3.   Special Purpose Entity...................................   11

ARTICLE III PURCHASE PRICE.................................................   11

   SECTION 3.1.   Purchase Price...........................................   11
   SECTION 3.2.   Taxes, Rentals, Utilities................................   11
   SECTION 3.3.   Allocation of Purchase Price.............................   11

ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
   PARTIES.................................................................   11

   SECTION 4.1.   Organization.............................................   11
   SECTION 4.2.   Authorization and Enforceability.........................   12
   SECTION 4.3.   Absence of Conflicts.....................................   12
   SECTION 4.4.   Consents and Approvals...................................   12
   SECTION 4.5.   Financial Statements.....................................   13
   SECTION 4.6.   Accounts Receivable......................................   13
   SECTION 4.7.   No Undisclosed Liabilities...............................   13
   SECTION 4.8.   Absence of Changes.......................................   13
   SECTION 4.9.   Licenses.................................................   15
   SECTION 4.10.  Accreditation; Medicare and Medi-Cal; Third Party
                     Payors................................................   15
   SECTION 4.11.  HIPAA Compliance.........................................   16
   SECTION 4.12.  Healthcare Regulatory Matters............................   16
   SECTION 4.13.  Taxes....................................................   18
   SECTION 4.14.  Good Title to Assets.....................................   18
   SECTION 4.15.  Title and Condition of the Real Property.................   18
   SECTION 4.16.  Condition of Personal Property...........................   20
   SECTION 4.17.  Compliance with Environmental Laws.......................   20
   SECTION 4.18.  Insurance................................................   22
   SECTION 4.19.  Litigation...............................................   22
   SECTION 4.20.  Contracts, Obligations and Commitments...................   23
   SECTION 4.21.  Intangible Property......................................   23
   SECTION 4.22.  Employees and Employee Relations.........................   23
   SECTION 4.23.  Compliance with Law......................................   24
   SECTION 4.24.  Hill-Burton Obligations..................................   25
   SECTION 4.25.  Medical Staff Matters....................................   25
   SECTION 4.26.  Brokers..................................................   25
   SECTION 4.27.  Records..................................................   25
   SECTION 4.28.  Existing Leases..........................................   24
   SECTION 4.29   Representations Complete.................................   25

ARTICLE V REPRESENTATIONS AND WARRANTIES BY THE PURCHASER PARTIES..........   26

   SECTION 5.1.   Organization.............................................   26
   SECTION 5.2.   Authorization; Enforcement, Absence of Conflicts.........   26





                                                                           
   SECTION 5.3.   Binding Agreement........................................   27
   SECTION 5.4.   Litigation...............................................   27
   SECTION 5.5.   Brokers..................................................   27
   SECTION 5.6.   Compliance with Law......................................   27

ARTICLE VI TITLE AND SURVEY................................................   27

   SECTION 6.1.   Survey...................................................   27
   SECTION 6.2.   Title Insurance..........................................   28

ARTICLE VII PRE-CLOSING COVENANTS..........................................   28

   SECTION 7.1.   No Shop..................................................   28
   SECTION 7.2.   Access; Confidentiality..................................   29
   SECTION 7.3.   Schedule Updates.........................................   30
   SECTION 7.4.   Conduct of Business by the Seller Parties Pending the
                     Closing...............................................   30
   SECTION 7.5.   Cooperation..............................................   31
   SECTION 7.6.   Intentionally Deleted
   SECTION 7.7.   Regulatory and other Authorizations, Notices and
                     Consents..............................................   31
   SECTION 7.8.   Mutual Covenants.........................................   32
   SECTION 7.9.   Public Announcements.....................................   32

ARTICLE VIII CLOSING CONDITIONS............................................   33

   SECTION 8.1.   Conditions to the Obligations of the Seller Parties......   33
   SECTION 8.2.   Conditions to the Obligations of the Purchaser Parties...   33

ARTICLE IX CLOSING.........................................................   34

   SECTION 9.1.   Closing Date.............................................   34
   SECTION 9.2.   Seller Parties' Closing Date Deliverables................   34
   SECTION 9.3.   Purchaser Parties' Closing Date Deliverables.............   36

ARTICLE X TERMINATION......................................................   37

   SECTION 10.1.  Termination..............................................   37
   SECTION 10.2.  Notice and Effect........................................   37

ARTICLE XI CERTAIN POST-CLOSING COVENANTS..................................   37

   SECTION 11.1.  Post-Closing Access to Information.......................   36
   SECTION 11.2   Bankruptcy...............................................   37

ARTICLE XII INDEMNIFICATION................................................   38

   SECTION 12.1.  Seller Parties Agreement to Indemnify....................   38
   SECTION 12.2.  The Purchaser Parties' Agreement to Indemnify............   39
   SECTION 12.3.  Notification and Defense of Claims.......................   39
   SECTION 12.4.  Investigations...........................................   40
   SECTION 12.5.  Treatment of Indemnification Payments....................   40
   SECTION 12.6.  Exclusive Remedy.........................................   41

ARTICLE XIII DISPUTE RESOLUTION............................................   41





                                                                           
   SECTION 13.1.  Governing Law............................................   39
   SECTION 13.2.  Jurisdiction And Venue...................................   39

ARTICLE XIV MISCELLANEOUS..................................................   41

   SECTION 14.1.  Assignment...............................................   41
   SECTION 14.2.  Notice...................................................   42
   SECTION 14.3.  Calculation of Time Period...............................   42
   SECTION 14.4.  Captions.................................................   42
   SECTION 14.5.  Entire Agreement; Modification...........................   42
   SECTION 14.6.  Schedules and Exhibits...................................   43
   SECTION 14.7.  Further Assurances.......................................   43
   SECTION 14.8.  Counterparts.............................................   43
   SECTION 14.9.  Expenses.................................................   43
   SECTION 14.10. Purchase Option..........................................   42
   SECTION 14.11  Syndication..............................................   43
   SECTION 14.12. Securities Offering and Filings..........................   43
   SECTION 14.13. Prime Healthcare Services II, LLC........................   44
   SECTION 14.14. Binding Effect...........................................   44




                           PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and entered into as
of November 30, 2005 by and among MPT OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership ("MPT"), MPT OF CHINO, LLC, a Delaware limited liability
company, (the "Acquisition Sub") (MPT and the Acquisition Sub being herein
referred to, collectively, as the "Purchaser Parties"); and VERITAS HEALTH
SERVICES, INC., a California corporation ("Veritas"), PRIME HEALTHCARE SERVICES,
INC., a Delaware corporation ("Desert Valley Parent"), DESERT VALLEY HOSPITAL,
INC., a California corporation, PRIME HEALTHCARE SERVICES, LLC, a California
limited liability company ("Prime"), and DESERT VALLEY MEDICAL GROUP, INC., a
California corporation (Veritas, Desert Valley Parent, Desert Valley Hospital,
Inc. Prime and Desert Valley Medical Group, Inc., being collectively referred to
herein as the "Seller Parties").

                                   WITNESSETH:

WHEREAS, Veritas is the current operator of that certain general acute care
hospital (the "Hospital") facility located in the Chino, California area;

WHEREAS, Veritas is a party to that certain Lease with Kasirer Family Holdings
#4, LLC ("KFH") and dated as of April 7, 2001, as amended, (the "KFH Lease")
pursuant to which Veritas leases from KFH, among other things, the land and
improvements relating to the Hospital;

WHEREAS, pursuant to the KFH Lease, KFH subleases to Veritas its leasehold
interest in that certain parking lot located adjacent to the Hospital (the
"Parking Lot Lease");

WHEREAS, the KFH Lease provides Veritas with a right of first refusal to
purchase the land and improvements relating to the Hospital from KFH (the
"Purchase Option"), which right was timely and properly exercised and assigned
to Prime;

WHEREAS, Veritas is currently a Chapter 11 Debtor-in-Possession under Case No.
RS 04-11158 MJ (the "Bankruptcy"), presently pending in the United States
Bankruptcy Court for the Central District of California (the "Bankruptcy
Court");

WHEREAS, Veritas' Purchase Option has been the subject of one of the Adversary
Proceedings (as hereinafter defined) pending in the Bankruptcy Court;

WHEREAS, to avoid any further litigation, KFH, Veritas and Prime have entered
into that certain Settlement Agreement dated November 2, 2005 relating to
Veritas' Purchase Option (the "Settlement Agreement");

WHEREAS, contemporaneously with the closing of the transactions contemplated
hereby and pursuant to the Settlement Agreement, Prime will purchase the land
and improvements relating to the Hospital;


                                        1



WHEREAS, contemporaneously with the closing of the transactions contemplated
hereby, KFH will assign the Parking Lot Lease to Prime and Prime will assign the
Parking Lot Lease to the Acquisition Sub;

WHEREAS, subject to the terms and conditions hereinafter set forth, Prime and
the other applicable Seller Parties desire to sell, and the Acquisition Sub
desires to purchase, the Real Property (as hereinafter defined) and certain
other assets associated or used in connection with the Hospital, all on the
terms and conditions set forth in this Agreement; and

WHEREAS, contemporaneously with the closing of such purchase and sale, Veritas
shall lease back the Real Property from the Acquisition Sub pursuant to a lease
in the form of EXHIBIT A (the "Lease");

NOW, THEREFORE, in consideration of the promises and mutual agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto do hereby agree as follows:

                                    ARTICLE I
                                  DEFINED TERMS

SECTION 1.1. CERTAIN DEFINED TERMS. Capitalized terms used herein shall have the
respective meanings ascribed to them in this Section 1.1.

"Acquisition Sub" shall have the meaning set forth in the preamble to this
Agreement.

"Adversary Proceedings" shall have the meaning set forth in Section 4.19 hereof.

"Adverse Events" shall have the meaning set forth in Section 4.10 hereof.

"Affiliate" "means, with respect to any Person (i) any Person that, directly or
indirectly, controls or is controlled by or is under common control with such
Person, (ii) any other Person that owns, beneficially, directly or indirectly,
10% or more of the outstanding capital stock, shares or equity interests of such
Person, or (iii) any officer, director, employee, partner, member, manager or
trustee of such Person or any Person controlling, controlled by or under common
control with such Person (excluding trustees and persons serving in similar
capacities who are not otherwise an Affiliate of such Person). For the purposes
of this definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
through the ownership of voting securities or otherwise.

"AOA" shall have the meaning set forth in Section 4.10 hereof.

"Appraisal" means that certain appraisal of the Real Property in form and
substance, and prepared by a Person, satisfactory to MPT in its sole discretion.

"Appraised Value" means the fair market value of the Real Property as set forth
in the Appraisal.


                                        2



"Assets" shall have the meaning set forth in Section 2.1 hereof.

"Assumed Liabilities" shall have the meaning set forth in Section 2.2 hereof.

"Balance Sheet" shall have the meaning set forth in Section 4.5 hereof.

"Balance Sheet Date" shall have the meaning set forth in Section 4.5 hereof.

"Bankruptcy" shall have the meaning set forth in the recitals hereof..

"Business" means the operation of the Hospital and the engagement in and pursuit
and conduct of any business venture or activity related thereto.

"Business Day" shall mean any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in New York, New
York are authorized or required by law, regulation or executive order to close.

"Business Employees" shall have the meaning set forth in Section 4.22(a) hereof.

"CMS" means the Centers for Medicare and Medicaid Services.

"Claim" shall have the meaning set forth in Section 4.19 hereof.

"Closing" shall have the meaning set forth in Section 9.1 hereof.

"Closing Date" shall have the meaning set forth in Section 9.1 hereof.

"Code" means the United States Internal Revenue Code of 1986, as amended through
the date hereof, and all regulations thereunder. Any reference herein to a
specific section or sections of the Code shall be deemed to include a reference
to any corresponding provision of future law.

"Confidentiality Agreement" shall have the meaning set forth in Section 7.2(c)
hereof.

"Contracts" shall have the meaning set forth in Section 4.20 hereof.

"Deed" shall have the meaning set forth in Section 9.2(b) hereof.

"Desert Valley Parent" shall have the meaning set forth in the recitals hereto.

"Encroachment Issue" shall mean any encroachment of the Real Property onto
adjacent property, or any encroachment of adjacent property onto the Real
Property, each as set forth on the Survey.

"Energy Services Agreement" shall mean that certain Energy Services Agreement
dated December 15, 2004, by and between U.S. Power Corporation and Veritas
Healthcare Services, Inc. d/b/a Chino Valley Medical Center.

"Energy Services Rights" shall mean any and all rights of U.S. Power Corporation
under that certain Energy Services Agreement.


                                        3



"Environmental Claim" means any Claim, action, cause of action, investigation or
notice (written or oral) by any Person alleging actual or potential liability
for investigatory, cleanup or governmental response costs, or natural resources
or property damages, or personal injuries, attorney's fees or penalties relating
to (i) the presence, or release into the environment, of any Hazardous Materials
at any location owned, leased or operated by any Seller Party, now or in the
past, or (ii) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.

"Environmental Law" means each federal, state, local and foreign law and
regulation relating to pollution, protection or preservation of human health or
the environment, including ambient air, surface water, ground water, land
surface or subsurface strata, and natural resources, and including each law and
regulation relating to emissions, discharges, releases or threatened releases of
Hazardous Materials, or otherwise relating to the manufacturing, processing,
distribution, use, treatment, generation, storage, containment (whether above
ground or underground), disposal, transport or handling of Hazardous Materials,
or the preservation of the environment or mitigation of adverse effects thereon
and each law and regulation with regard to record keeping, notification,
disclosure and reporting requirements respecting Hazardous Materials, including,
without limitation, the Resource Conservation and Recovery Act of 1976, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986, the
Hazardous Materials Transportation Act, the Federal Water Pollution Control Act,
the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the
Safe Drinking Water Act, and all similar federal, state and local environmental
statutes, ordinances and the regulations, orders, or decrees now or hereafter
promulgated thereunder, in each case as amended from time to time.

"Equity Constituents" means, with respect to any Person, as applicable, the
members, general or limited partners, shareholders, stockholders or other
Persons, however designated, who are the owners of the issued and outstanding
equity or ownership interests of such Person.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

"Exception Documents" means true, correct, current and legible copies of each
document listed as an exception to title on the Title Commitment.

"Excluded Liabilities" shall have the meaning set forth in Section 2.2 hereof.

"Existing Leases" means those certain lease agreements in effect as of the date
hereof (other than the Lease) between Affiliates of MPT and Affiliates of Desert
Valley Parent.

"Financial Statements" shall have the meaning set forth in Section 4.5 hereof.

"Fixtures" means all permanently affixed non-medical equipment, machinery,
fixtures, and other items of real property, including all components thereof,
now and hereafter located in, on or used in connection with, and permanently
affixed to or incorporated into the Improvements, including, without limitation,
all furnaces, boilers, heaters, electrical equipment, heating, plumbing,
lighting, ventilating, refrigerating, incineration, air and water pollution
control, waste disposal, air-cooling and air-conditioning systems and apparatus,
sprinkler systems and fire and theft protection equipment, and built-in vacuum,
cable transmission, oxygen and similar systems, all


                                        4



of which, to the greatest extent permitted by law, are hereby deemed by the
parties hereto to constitute real estate, together with all replacements,
modifications, alterations and additions thereto, but excluding any and all
Energy Services Rights.

"GAAP" means United States generally accepted accounting principles as in effect
from time to time. Any accounting term used herein and not specifically defined
herein shall be construed in accordance with GAAP.

"Governing Documents" means, with respect to any Person, as applicable, such
Person's charter, articles or certificate of incorporation, formation or
organization, bylaws or other documents or instruments which establish and/or
set forth the rules, procedures and rights with respect to such Person's
governance, including, without limitation, any stockholders, limited liability
company, operating or partnership agreement related to such Person, in each case
as amended, restated, supplemented and/or modified and in effect as of the
relevant date.

"Governmental Entity" means any national, federal, regional, state, local,
provincial, municipal, foreign or multinational court or other governmental or
regulatory authority, administrative body or government, department, board,
body, tribunal, instrumentality or commission of competent jurisdiction.

"Government Programs" shall have the meaning set forth in Section 4.10 hereof.

"Hazardous Materials" means any substance deemed hazardous under any
Environmental Law, including, without limitation, asbestos or any substance
containing asbestos, the group of organic compounds known as polychlorinated
biphenyls, flammable explosives, radioactive materials, infectious wastes,
biomedical and medical wastes, chemicals known to cause cancer or reproductive
toxicity, lead and lead-based paints, radon, pollutants, effluents,
contaminants, emissions or related materials and any items included in the
definition of hazardous or toxic wastes, materials or substances under any
Environmental Law.

"Healthcare Fraud Laws" shall have the meaning set forth in Section 4.12(a)
hereof.

"HIPAA" shall have the meaning set forth in Section 4.11 hereof.

"Hospital" shall have the meaning set forth in the recitals to this Agreement.

"Improvements" means all buildings, improvements, structures and Fixtures now or
on the Closing Date located on the Land, including, without limitation,
landscaping, parking lots and structures, roads, drainage and all above ground
and underground utility structures, equipment systems and other so-called
"infrastructure" improvements, but excluding any and all Energy Services Rights.

"Indebtedness" of any Person means, without duplication, (a) all liabilities and
obligations, contingent or otherwise, of such Person: (i) in respect of borrowed
money (whether secured or unsecured), (ii) under conditional sale or other title
retention agreements relating to property or services purchased and/or sold by
such Person, (iii) evidenced by bonds, notes, debentures or similar instruments,
(iv) for the payment of money relating to a capitalized lease obligation, (v)
evidenced by a letter of credit or a reimbursement obligation of such Person
with respect to any


                                        5



letter of credit, (vi) pursuant to any guarantee, or (vii) secured by (or for
which the holder of such obligation has an existing right, contingent or
otherwise, to be secured by) a Lien on the assets or property of such Person,
and (b) all liabilities and obligations of others of the kind described in the
preceding clause (a) and otherwise that (i) such Person is responsible or liable
for, directly or indirectly, as obligor, guarantor, surety or otherwise, or (ii)
which are secured by a Lien on any of the assets or property of such Person.

"Indemnified Party" shall have the meaning set forth in Section 12.3(a) hereof.

"Indemnifying Party" shall have the meaning set forth in Section 12.3(a) hereof.

"Intangible Property" shall have the meaning set forth in Section 4.21 hereof.

"Joint Plan" shall have the meaning set forth in Section 4.30 hereof.

"KFH" shall have the meaning set forth in the recitals hereof.

"KFH Lease" shall have the meaning set forth in the recitals hereof.

"Knowledge," "to the knowledge or best knowledge of" or similar words or phrases
means, with respect to any Person, such Person's actual or deemed knowledge of a
particular fact or matter if (i) any of such Person's current or former officers
or directors (or other Persons however denominated, currently or formerly
exercising similar authority with respect to such Person) including, but not
limited to, in the case of any Seller Party, James Lally, DO, Gregory Brentano,
Lea Ann Rohde, Prem Reddy, M.D. and/or Lex Reddy (a Person's "Knowledge Group"),
has actual knowledge of such fact or matter; or (ii) any of such Person's
Knowledge Group would be expected to discover or otherwise become aware of such
fact or matter after conducting a reasonably diligent inquiry. Knowledge, when
applied to the Seller Parties, shall mean the Knowledge of any Seller Party.

"Labor Proceeding" shall have the meaning set forth in Section 4.22(c) hereof.

"Land" shall have the meaning set forth in Section 2.1(a) hereof.

"Law" means any federal, state or local statute, rule, regulation, ordinance,
order, code, policy or rule of common law, now or hereafter in effect, and in
each case as amended, and any judicial or administrative interpretation thereof
by a Governmental Entity or otherwise, including, without limitation, any
judicial or administrative order, consent, decree or judgment.

"Lease" shall have the meaning set forth in the recitals to this Agreement.

"Lien" means any mortgage, adverse Claim, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, lien (statutory or otherwise) or
preference, security interest or other encumbrance of any kind or nature
whatsoever.

"Material Adverse Effect" means, with respect to any Person, any change,
event(s), occurrence(s) or effect(s), whether direct or indirect, that, both
before and after giving effect to the transactions contemplated by this
Agreement, could, individually or in the aggregate, have a


                                        6



material adverse effect on (i) the business, properties, results of operations,
assets, revenue, income, prospects or condition (financial or otherwise) of, or
the ability to timely satisfy the obligations or liabilities (whether absolute
or contingent) of, any Seller Party, (ii) the Business or the Assets, or (iii)
the ability of any Seller Party to perform its obligations under, and/or
consummate the transactions contemplated by, this Agreement within the time
periods specified herein.

"Medi-Cal" shall have the meaning set forth in Section 4.10 hereof.

"Medicare" shall have the meaning set forth in Section 4.10 hereof.

"Minimum Aggregate Liability Amount" shall have the meaning set forth in Section
12.1(b) hereof.

"Parking Lot Lease" shall have the meaning set forth in the recitals hereof.

"Permitted Encumbrances" means (i) Liens for or arising from current taxes not
yet due and payable; (ii) easements and other restrictions of record; (iii)
matters set forth in the Title Commitment issued by the Title Company; (iv)
matters disclosed on the Survey; and (v) other matters, encumbrances and defects
approved by MPT in writing.

"Permits" shall have the meaning set forth in Section 4.9 hereof.

"Person" means an individual, a corporation, a limited liability company, a
partnership, an unincorporated association, a joint venture, a Governmental
Entity or another entity or group.

"Personal Property" shall have the meaning set forth in Section 4.16 hereof.

"Personal Property Leases" shall have the meaning set forth in Section 4.16
hereof.

"Physician" means any physician rendering services, within, at or on the
Hospital or its premises within the five (5) year period ending on the date of
this Agreement.

"Public Taking" shall have the meaning set forth in Section 4.16(e) hereof.

"Purchase Price" shall have the meaning set forth in Section 3.1 hereof.

"Purchase Option" shall have the meaning set forth in the recitals hereof.

"Purchaser Damages" shall have the meaning set forth in Section 12.1(a) hereof.

"Purchaser Parties" shall have the meaning set forth in the preamble to this
Agreement.

"Purchaser Indemnified Party" shall have the meaning set forth in Section
12.1(a).

"Purchaser's Indemnity Periods" shall have the meaning set forth in Section
12.1(b) hereof.

"Real Property" shall have the meaning set forth in Section 2.1 hereof.


                                       7



"Search Reports" means reports of searches made of the uniform commercial code
records of the county in which the Real Property is located, and of the office
of the secretary of state of the state in which the Real Property is located and
in the state in which the principal office of each Seller Party is located.

"Seller Damages" shall have the meaning set forth in Section 12.2(a) hereof.

"Seller Indemnified Parties" shall have the meaning set forth in Section 12.2(a)
hereof.

"Seller Indemnity Period" shall have the meaning set forth in Section 12.2(b)
hereof.

"Seller Instruments" shall have the meaning set forth in Section 4.2 hereof.

"Seller Parties" shall have the meaning set forth in the preamble to this
Agreement.

"Seller Party Plan" shall have the meaning set forth in Section 4.22(f) hereof.

"Service Provider" means any Person who has rendered or is rendering services to
or on behalf of any of the Seller Parties.

"Settlement Agreement" shall have the meaning set forth in the recitals hereof.

"Special Purpose Entity" means an entity which (i) exists solely for the purpose
of owning and/or leasing all or any portion of the Real Property and conducting
the operation of the Business, (ii) conducts business only in its own name,
(iii) does not engage in any business other than the ownership and/or leasing
all or any portion of the Real Property and the operation of the Business, (iv)
does not hold, directly or indirectly, any ownership interest (legal or
equitable) in any entity or any real or personal property other than the
interest which it owns in the Real Property and the other assets incident to the
operation of the Business, (v) does not have any debt other than as permitted by
the Lease or arising in the ordinary course of the Business and does not
guarantee or otherwise obligate itself with respect to the debts of any other
Person other than as approved by MPT, (vi) has its own separate books, records,
accounts, financial statements and tax returns (with no commingling of funds or
assets), (vii) holds itself out as being a company separate and apart from any
other entity, (viii) maintains all corporate formalities independent of any
other entity.

"Subsidiary" means, with respect to any Person, any other Person of or with
respect to which Fifty Percent (50%) or more of the total voting power of the
voting securities is beneficially owned by such Person.

"Survey" means a current "as-built" ALTA survey, certified to ALTA requirements,
prepared by an engineer or surveyor licensed in the state in which the Real
Property is located acceptable to MPT in its sole discretion, which shall be
prepared in accordance with the provisions set forth in Section 6.1 of this
Agreement.

"Taxes" means any and all taxes, charges, fees, levies or other assessments,
including, without limitation, any and all income, gross receipts, excise, real
and personal property (including leaseholds and interests in leaseholds), sales,
use, occupation, transfer, license, ad valorem,


                                        8



gains, profits, gift, minimum estimated, social security, unemployment,
disability, premium, recapture, credit, payroll, withholding, severance, stamp,
capital stock, value added leasing, franchise and other taxes or similar charges
of any kind including any interest and penalties on or additions thereto or
attributable to any failure to comply with any requirement regarding any Tax
Return.

"Tax Return" means any return, declaration, filing, report, claim for refund or
information return or other statement relating to Taxes (whether filed with or
submitted to, or required to be filed with or submitted to, any Governmental
Entity), including any schedule or attachment thereto, and including any
amendment or extension thereof.

"Tax Structure" shall have the meaning set forth in Section 7.2(c) hereof.

"Tax Treatment" shall have the meaning set forth in Section 7.2(c) hereof.

"Tenant" means the lessees or tenants under the Tenant Leases, if any.

"Tenant Leases" shall have the meaning set forth in Section 4.15(i) hereof.

"Third Party Claim" shall have the meaning set forth in Section 12.3(a) hereof.

"Title Commitment" means a current commitment issued by the Title Company to the
Purchaser Parties pursuant to the terms of which the Title Company shall commit
to issue the Title Policy to the Purchaser Parties in accordance with the
provisions of this Agreement, and reflecting all matters which would be listed
as exceptions to coverage on the Title Policy.

"Title Company" means First American Title Company.

"Title Policy" means a title insurance policy in form and substance satisfactory
to MPT in its sole discretion.

"Veritas" shall have the meaning set forth in the recitals hereof.

"Warranties" means all warranties, representations and guaranties with respect
to any of the Assets, whether express or implied, which any Seller Party now
holds or under which any Seller Party is the beneficiary.

SECTION 1.2. INTERPRETATION; TERMS GENERALLY. The definitions set forth in
Section 1.1 and elsewhere in this Agreement shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. Unless otherwise indicated, the words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation."
The words "herein", "hereof" and "hereunder" and words of similar import shall
be deemed to refer to this Agreement (including the Schedules and Exhibits) in
its entirety and not to any part hereof, unless the context shall otherwise
require. All references herein to Articles, Sections, Schedules and Exhibits
shall be deemed to refer to Articles, Sections and Schedules of, and Exhibits
to, this Agreement, unless the context shall otherwise require. Unless the
context shall otherwise require, any references to any agreement or other
instrument or statute or regulation


                                       9



are to it as amended and supplemented from time to time (and, in the case of a
statute or regulation, to any corresponding provisions of successor statutes or
regulations). Any reference in this Agreement to a "day" or number of "days"
that does not refer explicitly to a "Business Day" or "Business Days" shall be
interpreted as a reference to a calendar day or number of calendar days. If any
action or notice is to be taken or given on or by a particular calendar day, and
such calendar day is not a Business Day, then such action or notice shall be
deferred until, or may be taken or given on, the next Business Day.

                                   ARTICLE II
             PURCHASE AND SALE OF ASSETS, ASSUMPTION OF LIABILITIES

SECTION 2.1. PURCHASE AND SALE OF ASSETS. Based upon the representations and
warranties of the Seller Parties as set forth herein, and subject to the terms
and conditions hereof, at the Closing, Prime (or, if Prime is not the owner of
the applicable Asset, the appropriate Seller Party), in consideration for the
payment of the Purchase Price in accordance with Section 3.1, shall grant, sell,
assign, transfer, convey and deliver to the Acquisition Sub, and the Acquisition
Sub shall purchase and acquire from Prime (or, if Prime is not the owner of the
applicable Asset, the appropriate Seller Party), free and clear of all Liens,
other than Permitted Encumbrances, the following assets of Prime (or, if Prime
is not the owner of the applicable Asset, the appropriate Seller Party)
(collectively, the "Assets"):

(a) those certain tracts of land consisting of approximately six (6) acres
located in Chino, California the legal descriptions of which are set forth on
EXHIBIT B attached hereto (the "Land") and all Improvements located thereon;

(b) all of Prime's rights under and interest in the Parking Lot Lease (the
leasehold interest under the Parking Lot Lease and the real property interest
described in Section 2.1(a) above being referred to collectively herein as the
"Real Property");

(c) to the extent assignable, all rights in all intangible property relating
exclusively to the Real Property, including, but limited to, zoning rights,
Permits (other than operating permits) and indemnification or similar rights and
all Warranties affecting or inuring to the benefit of the Real Property or the
owner thereof (including, without limitation, any indemnification or similar
rights and Warranties related to the Real Property);

(d) all right, title and interest in and to site plans, surveys, soil and
substrata studies, architectural drawings, plans and specifications, inspection
reports, engineering and environmental plans and studies, title reports, floor
plans, landscape plans and other plans relating to the Real Property and the
Improvements; and

(e) all right, title and interest in and to all causes of action, claims and
rights in litigation (or which could result in litigation against any party)
pertaining or relating to the Real Property (including, without limitation, any
causes of action, claims or rights in litigation or other rights related to or
arising under any purchase contracts respecting the Real Property).

SECTION 2.2. EXCLUDED LIABILITIES. Notwithstanding anything in this Agreement to
the contrary, except as set forth on SCHEDULE 2.2 (the "Assumed Liabilities") no
Purchaser Party shall assume or agree to pay, satisfy, discharge or perform, or
shall be deemed by virtue of the


                                       10



execution and delivery of this Agreement or any other document delivered at the
Closing pursuant to this Agreement, or as a result of the consummation of the
transactions contemplated by this Agreement or such other document, to have
assumed, or to have agreed to pay, satisfy, discharge or perform, or shall be
liable for, any liability, obligation, contract or Indebtedness of any Seller
Party or any other Person, whether primary or secondary, direct or indirect,
including, without limitation, any liability or obligation relating to the
ownership, use or operation of any of the Assets or the Hospital prior to
Closing, any liability or obligation arising out of or related to any breach,
default, tort or similar act committed by any of the Seller Parties or for any
failure of any of the Seller Parties to perform any covenant or obligation for
or during any period prior to Closing, and any liability arising out of the
ownership and operation of the Assets or the Hospital by Veritas or any other
Person prior to Closing (collectively, the "Excluded Liabilities").

SECTION 2.3. SPECIAL PURPOSE ENTITY. Seller Parties agree that Veritas has been
since its inception, and shall be at all times during the term of the Lease, a
Special Purpose Entity.

                                   ARTICLE III
                                 PURCHASE PRICE

SECTION 3.1. PURCHASE PRICE. Subject to obtaining the Appraisal in accordance
with Section 8.2(m) hereof, the purchase price for the Assets shall be Twenty
One Million and No/100 Dollars ($21,000,000.00) (the "Purchase Price"). Subject
to the terms and conditions hereof, at Closing, the Acquisition Sub shall pay
the Purchase Price via transfer of immediately available federal funds to an
account specified in writing by Desert Valley Parent not less than three (3)
Business Days prior to the Closing Date.

SECTION 3.2. TAXES, RENTALS, UTILITIES. The parties acknowledge that all utility
charges and all real and personal property Taxes related to the Assets shall be
the responsibility of Veritas pursuant to the terms of the Lease.

SECTION 3.3. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets for purposes of Section 1060 of the Code as set forth on
SCHEDULE 3.3. The parties agree to use, and to not take any position which is
inconsistent with, such allocation in the preparation and filing of any Tax
Return (including Form 8594).

                                   ARTICLE IV
         REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER PARTIES

With the understanding that the Purchaser Parties shall rely hereon, and as a
material inducement to the Purchaser Parties to enter into this Agreement and
the Lease, each Seller Party hereby jointly and severally represents, warrants
and covenants to the Purchaser Parties as of the date hereof and as of the
Closing Date as follows:

SECTION 4.1. ORGANIZATION. Each Seller Party is a corporation or limited
liability company duly organized, validly existing and in good standing under
the laws of their respective states of incorporation and is duly licensed in
each jurisdiction in which the nature of the business conducted, or the assets
owned, operated and/or leased, by such Seller Party requires or makes such
qualification necessary. Veritas is, and has at all times since its
incorporation been, a


                                       11



Special Purpose Entity. SCHEDULE 4.1 sets forth the ownership of each Seller
Party and, except as set forth therein, no other party has any equity interest
in any Seller Party or any option, warrant or other right to acquire same.

SECTION 4.2. AUTHORIZATION AND ENFORCEABILITY. Each Seller Party has the
requisite corporate or limited liability company power and authority to conduct
its business as it is now being conducted and as proposed to be conducted and to
execute, deliver and carry out the terms of this Agreement, together with all
documents and agreements necessary to give effect to the provisions of this
Agreement, including the Lease, and to consummate the transactions contemplated
hereby and thereby. All corporate or limited liability company actions required
to be taken by each Seller Party (including, without limitation, all necessary
actions by the board of directors and shareholders of such Seller Party) to
authorize the execution, delivery and performance of this Agreement as well as
all documents, agreements and instruments executed by such Seller Party which
are necessary to give effect to this Agreement (collectively, the "Seller Party
Instruments") and all transactions contemplated hereby and thereby, have been
duly and properly taken or obtained in accordance and compliance with, as
applicable, such Seller Party's Governing Documents. Each Seller Party has
heretofore delivered to the Purchaser Parties true, correct and complete copies
of such Seller Party's Governing Documents. No other action on the part of any
Seller Party is necessary to authorize the execution, delivery and performance
of this Agreement, the Seller Party Instruments and all transactions
contemplated hereby and thereby. This Agreement, the Seller Party Instruments
and all agreements to which any Seller Party will become a party hereunder,
including the Lease, are and will constitute the valid and legally binding
obligations of such Seller Party, and are and will be enforceable against such
Seller Party in accordance with the respective terms hereof or thereof, except
as enforceability may be restricted, limited or delayed by applicable
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally and except as enforceability may be subject to and limited by general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).

SECTION 4.3. ABSENCE OF CONFLICTS. Each Seller Party's execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, will not, with or without the giving of notice and/or the
passage of time: (i) violate or conflict with any provision of such Seller
Party's Governing Documents; (ii) violate any provision of any Law to which such
Seller Party is subject; (iii) violate or conflict with any judgment, order,
writ or decree of any court applicable to such Seller Party; (iv) result in or
cause the creation of a Lien on any of the Assets; or (v) except as disclosed on
SCHEDULE 4.3, result in the breach or termination of any provision of, or create
rights of acceleration or constitute a default under, the terms of any
indenture, mortgage, deed of trust, contract, agreement or other instrument to
which such Seller Party is a party or by which such Seller Party or any of the
assets is bound.

SECTION 4.4. CONSENTS AND APPROVALS. Except as set forth on SCHEDULE 4.4, no
license, permit, qualification, order, consent, authorization, approval or
waiver of, or registration, declaration or filing with, or notification to, any
Governmental Entity or other Person is required to be made or obtained by or
with respect to any Seller Party, including, without limitation the approval of
the Bankruptcy Court, in connection with the execution, delivery and performance
of this Agreement or the Seller Party Instruments by any Seller Party, the
purchase of the


                                       12



outstanding stock of Veritas, as contemplated by Section 8.2(m) hereof, or the
consummation of the transactions contemplated hereby or thereby.

SECTION 4.5. FINANCIAL STATEMENTS. SCHEDULE 4.5 sets forth (i) the audited
balance sheets of each applicable Seller Party (other than Prime and Veritas)
for the fiscal years ended 2003 and 2004, (ii) the unaudited balance sheet of
Veritas for the fiscal year ended 2003 and the audited balance sheet of Veritas
for the fiscal year ended 2004; (iii) the unaudited balance sheet of each Seller
Party at September 30, 2005 (the "Balance Sheet Date") (the balance sheets
described in this subsection (iii) being herein referred to, collectively, as
the "Balance Sheets"), (iv) the audited statement of income and cash flows of
each applicable Seller Party (other than Prime and Veritas) for the fiscal years
ended 2003 and 2004, (v) the unaudited statement of income of Veritas for the
fiscal year ended 2003 and the audited statement of income and cash flows of
Veritas for the fiscal year ended 2004 and (vi) the unaudited statement of
income of each Seller Party for the nine (9) months ended September 30, 2005
(the financial statements described in this sentence, being herein referred to,
collectively, as the "Financial Statements"). Except as set forth on SCHEDULE
4.5, the Financial Statements have been prepared in accordance with GAAP, are
based on the books, records and accounts of the Seller Parties and fairly
present the financial condition and results of operations, cash flows and
shareholders' equity of the Seller Parties as of the respective dates thereof
and for the respective periods indicated therein, except (i) that the unaudited
interim statements do not include complete note (including footnote) disclosure
as required by GAAP; and (ii) that the unaudited interim statements are subject
to normal, year-end adjustments which are not, and will not be, material in
amount or effect, either individually or in the aggregate.

SECTION 4.6. ACCOUNTS RECEIVABLE. The accounts receivable of Veritas include
only accounts receivable arising from bona fide transactions in the conduct of
the ordinary course of business of Veritas, are in all material respects true
and genuine, represent legal, valid and binding obligations of the respective
debtors enforceable in accordance with their terms. No material payment of said
receivables is contingent upon performance of any obligations or contract, past
or future, and, except as set forth on SCHEDULE 4.6, all such receivables are
free of all security interests and encumbrances. Except as set forth on SCHEDULE
4.6, no defense, counterclaim, offset or adjustment exists as to any such
account receivable.

SECTION 4.7. NO UNDISCLOSED LIABILITIES. Except as set forth on SCHEDULE 4.7, no
Seller Party has any material liability or obligation, whether absolute,
accrued, contingent or otherwise, including any potential future liability
arising out of acts or omissions which have already occurred, which is not fully
and accurately reflected or reserved against in the Balance Sheets except for
liabilities or obligations that may have arisen in the ordinary course of
business of the Seller Parties, consistent with the past practice of the Seller
Parties, since the Balance Sheet Date (none of which results from, arises out
of, relates to, is in the nature of, or was caused by any breach of contract,
breach of warranty, tort, infringement or violation of law) and no Seller Party
has Knowledge of any fact, condition or circumstance which could form the basis
of any such liability or obligation.

SECTION 4.8. ABSENCE OF CHANGES. Except as set forth on SCHEDULE 4.8 or as
otherwise provided in this Agreement, since the Balance Sheet Date, Veritas has:


                                       13



(a) conducted its business only in the ordinary course of business and
consistently with its past practices;

(b) not suffered any change, event or circumstance which has had, or could have,
a Material Adverse Effect;

(c) preserved its legal existence and retained its business organization intact;

(d) maintained its relationships with all suppliers, trade creditors and trade
debtors;

(e) paid or satisfied all of its debts, liabilities or obligations as the same
became due;

(f) paid all compensation and other obligations to its employees when the same
were due and payable;

(g) timely made all applicable filings with Governmental Entities;

(h) not mortgaged, pledged, subjected to Lien, charged, encumbered or granted a
security interest in or to any of the Assets;

(i) except as otherwise provided in this Agreement, not sold or transferred any
of its assets except for sales of inventory in the ordinary course of business
and consistently with its past practices;

(j) not suffered any damage, destruction or loss (whether or not covered by
insurance) affecting the Assets;

(k) not cancelled any debts owing to it or otherwise granted or waived any right
of substantial value;

(l) not terminated or materially modified any contract, lease, agreement or
arrangement with any payor, vendor or supplier or received notice of termination
or become aware of any threat of termination with respect to any such contract,
lease, agreement or arrangement;

(m) not made any capital expenditure or commitment for the acquisition of assets
in excess of Fifty Thousand Dollars ($50,000);

(n) not made or suffered any change to its Governing Documents;

(o) not made or received any loans or advances to or from any Person, other than
renewals or extensions of existing indebtedness and uses of lines of credit;

(p) maintained its books and records in accordance with GAAP, consistent with
past practices;

(q) not incurred, assumed or guaranteed any Indebtedness;

(r) not experienced any defections in its medical staff; or


                                       14



(s) not agreed or offered, whether in writing or otherwise, to take, and neither
Veritas nor its board of directors (or by any Person or group of Persons
possessing and/or exercising similar authority with respect to Veritas) or
Equity Constituents have authorized the taking of, any action described in
Sections 4.8(a) through 4.8(r) above.

SECTION 4.9. LICENSES. Veritas has all licenses, permits, certificates of need,
provider numbers and agreements and other authorizations of Government Entities
(the "Permits") from all applicable Governmental Entities necessary or proper in
order to operate the Hospital and to conduct the Business. Except as set forth
on SCHEDULE 4.9, Veritas has good, clear and indefeasible title to and ownership
of all the Permits, free and clear of all Liens and may grant Acquisition Sub a
first priority security interest in and to the Permits. Each Permit issued to
and held by Veritas is identified and described on SCHEDULE 4.9, and true,
correct and current copies of each such Permit have previously been made
available to the Purchaser Parties by the Seller Parties. Except as set forth on
SCHEDULE 4.9, Veritas previously has complied and is currently complying with
its obligations under each of the Permits and all such Permits are in full force
and effect. No written notice from any authority in respect to the threatened,
pending or possible revocation, termination, suspension or limitation of any of
the Permits has been issued or given to any Seller Party and no Seller Party has
any Knowledge of the proposed or threatened issuance of any such notice or of
any grounds or basis therefor. The Hospital is currently licensed as a general
acute-care hospital with 126 general acute-care beds, and will remain so
licensed through the Closing Date in compliance with and subject only to the
usual and customary laws and government regulations pertaining to the operation
of an acute-care hospital in the State of California.

SECTION 4.10. ACCREDITATION; MEDICARE AND MEDI-CAL; THIRD PARTY PAYORS. Veritas
is currently accredited by the American Osteopathic Association ("AOA") and has
previously made available to the Purchaser Parties true, correct and complete
copies of the following documents (i) the most recent AOA accreditation survey
reports for the Hospital and deficiency list and plan of correction, if any, and
a list and description of events in the past three (3) years at the Hospital
that constitute "Adverse Events" (as defined by AOA), if any, and any
documentation that was created prepared and/or produced by any Seller Party to
satisfy AOA requirements relating to addressing such Adverse Events; (ii) any
state licensing survey reports with respect to the Hospital for the two (2) year
period prior to the date hereof, as well as any statements of deficiencies and
plans of correction in connection with such reports; (iii) the fire marshal's
surveys for the past two (2) years and list of deficiencies, if any, for the
Hospital; and (iv) the boiler inspection reports for the past two (2) years and
list of deficiencies, if any, for the Hospital. Veritas has taken all reasonable
steps to correct all such deficiencies and a description of any uncorrected
deficiency is set forth on SCHEDULE 4.10. Except as set forth on SCHEDULE 4.10
attached hereto, Veritas participates without restriction under Title XVIII of
the Social Security Act ("Medicare") and Title XIX of the Social Security Act
("Medi-Cal"), the Medicare and the Medi-Cal programs of the State of California
and the TRICARE/CHAMPUS programs (collectively, the "Government Programs").
Veritas has received Medicare or Medi-Cal reimbursement with respect to the
Hospital and is eligible to receive payment without restriction under Medicare
and Medi-Cal. Except as set forth on SCHEDULE 4.10, the Hospital is in
compliance with the conditions of participation for the Government Programs, has
received all approvals or qualifications necessary for capital reimbursement and
has been found by CMS to be in compliance with 42 C.F.R. Sections 489.20 and
489.24 and its medicare provider agreement will


                                       15



not be terminated for failure to so comply. Except as set forth on SCHEDULE
4.10, there is no pending, nor, to the Seller Parties' Knowledge, threatened,
proceeding or investigation under the Government Programs involving the Hospital
or any of the Assets. Veritas has previously made available to the Purchaser
Parties true, correct and complete copies of the most recent Medicare and
Medi-Cal certification survey reports for the Hospital including any statements
of deficiencies and plans of correction, and the corrective action plans related
thereto. Veritas has taken all reasonable steps to correct all such deficiencies
and a description of any uncorrected deficiency is set forth on SCHEDULE 4.10.
With respect to the operation of the Hospital, except as set forth on SCHEDULE
4.10, neither Veritas nor any of its officers, directors or any of the Business
Employees (as hereinafter defined), nor any Seller Party (or Equity Constituent
thereof) or Service Provider (i) has been excluded, suspended or debarred from,
or otherwise adjudicated, deemed or determined ineligible for, participation in
any Government Program, including Medicare or Medi-Cal, (ii) has been convicted
of a criminal offense related to conduct that would trigger an exclusion from
any Government Program, (iii) committed any act or omission which could result
in, or form the basis of, any of the actions described in clauses (i) or (ii) of
this sentence; and (v) no Medicare funds will be used to make any payment for
any items or services furnished by any excluded individual. Veritas has timely
filed, caused to be timely filed and, as to reports due after the Closing, shall
timely file, all cost reports required by third party payors, including, but not
limited to, Government Programs and other insurance carriers, and, except as
disclosed on SCHEDULE 4.10 all such reports are or will be complete and accurate
when filed. Except as disclosed on SCHEDULE 4.10, Veritas is and has been in
compliance with filing requirements with respect to cost reports of the
Hospital, including appropriate allocation of expenses associated with any
management or consulting services provided by any of the Seller Parties or any
employees of the Seller Parties and such reports do not claim and the Hospital
has not received, payment or reimbursement in excess of the amount provided or
allowed by applicable law or any applicable agreement, except where excess
reimbursement was noted on the cost report. True and correct copies of the cost
reports to third parties for the Hospital for the three (3) most recent fiscal
years with respect to which Veritas received such cost reports have been made
available to the Purchaser Parties. Except as disclosed on SCHEDULE 4.10, no
Seller Party, has received any written notice of any dispute relating to the
Hospital between any Seller Party and any Governmental Entity, including any
fiscal intermediary or carrier, federal, state or local governmental body or
entity, or the Administrator of the Center for Medicare and Medi-Cal Services,
with respect to any Government Program cost reports or claims filed with respect
to the Hospital, on or before the date of this Agreement.

SECTION 4.11. HIPAA COMPLIANCE. Veritas is in full compliance with the Standards
for Privacy of Individually Identifiable Health Information and the Transaction
and Code Set Standards which were promulgated pursuant to the Health Insurance
Portability and Accountability Act of 1996 ("HIPAA"). SCHEDULE 4.11 describes
any privacy, security or transaction and code set standards compliance plan of
Veritas in place or in development, and any plans, analyses or budgets relating
to information systems, including but not limited to necessary purchases,
upgrades or modifications to effect HIPAA compliance.

SECTION 4.12. HEALTHCARE REGULATORY MATTERS.

(a) No Seller Party or, to the Knowledge of any Seller Party, any Physician,
Service Provider or other Person rendering services (including directly or
indirectly referring patients) to or at, or


                                       16



in any way affiliated with the Hospital (i) is a party to, or has received
notice of, the commencement of any investigation or debarment proceedings or any
governmental investigation or action (including any civil investigative demand
or subpoena) under the False Claims Act (31 U.S.C. Section 3729 et seq.), the
Anti-Kickback Act of 1986 (41 U.S.C. Section 51 et seq.), the Federal Health
Care Programs Anti-Kickback statute (42 U.S.C. Section 1320a-7a(b)), the Ethics
in Patient Referrals Act of 1989, as amended (Stark Law) (42 U.S.C. 1395nn), the
Civil Money Penalties Law (42 U.S.C. Section 1320a-7a), or the Truth in
Negotiations (10 U.S.C. Section 2304 et seq.), Health Care Fraud (18 U.S.C.
1347), Wire Fraud (18 U.S.C. 1343), Theft or Embezzlement (18 U.S.C. 669), False
Statements (18 U.S.C. 1001), False Statements (18 U.S.C. 1035), and Patient
Inducement Statute and equivalent state statutes or any rule or regulation
promulgated by a Governmental Entity with respect to any of the foregoing
(collectively, the "Healthcare Fraud Laws") affecting any Seller Party, or the
Hospital (and no grounds for any such proceeding, investigation or action
exist); and (ii) is not in full compliance with all applicable Healthcare Fraud
Laws. The terms and structure of the Tenant Leases currently comply and shall
comply in all respects with all Healthcare Fraud Laws.

(b) Except as set forth on SCHEDULE 4.12, no Seller Party, or, to the Seller
Parties' Knowledge, any Physician, Service Provider or other Person rendering
services (including directly or indirectly referring patients) to or at, or in
any way affiliated with, the Hospital, has ever been investigated, charged or
implicated in any violation of any state or federal statute or regulation
involving false, fraudulent or abusive practices relating to participation in
state or federally sponsored reimbursement programs, including, but not limited
to, false or fraudulent billing practices. No Seller Party, or, to the Seller
Parties' Knowledge, any Physician, Service Provider or other Person rendering
services (including directly or indirectly referring patients) to or at, or in
any way affiliated with, the Hospital, has ever engaged in any of the following:
(i) knowingly and willfully making or causing to be made a false statement or
representation of a material fact in any applications for any benefit or payment
under Medicare or Medi-Cal program; (ii) knowingly and willfully making or
causing to be made any false statement or representation of a material fact for
use in determining rights to any benefit or payment under Medicare or Medi-Cal
program; (iii) failing to disclose knowledge of any event affecting the initial
or continued right to any benefit or payment under Medicare or Medi-Cal program
on its own behalf or on behalf of another, with intent to secure such payment or
benefit fraudulently; (iv) knowingly and willfully soliciting, paying, or
receiving any remuneration (including kickback, bribe or rebate), directly or
indirectly, overtly or covertly, in cash or in kind or offering to pay such
remuneration (A) in return for referring an individual to a Person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare or Medi-Cal, or (B) in
return for purchasing, leasing or ordering or arranging for or recommending the
purchasing, leasing or ordering of any good, facility, service, or item for
which payment may be made in whole or in part by Medicare or Medi-Cal; (v)
presenting or causing to be presented a claim for reimbursement for services
that is for an item or service that was known or should have been known to be
(A) not provided as claimed, or (B) false or fraudulent; or (vi) knowingly and
willfully making or causing to be made or inducing or seeking to induce the
making of any false statement or representation (or omitting to state a fact
required to be stated therein or necessary to make the statements contained
therein not misleading) of a material fact with respect to (A) a facility in
order that the facility may qualify for Governmental Entity certification or (B)
information to be provided under 42 USC Section 1320a-3.


                                       17



SECTION 4.13. TAXES. Veritas has filed or caused to be filed all Tax Returns of
Veritas which have become due (taking into account valid extensions of time to
file) prior to the date hereof. Such Tax Returns are accurate and complete in
all material respects, and Veritas has paid or caused to be paid all Taxes for
the periods covered thereby, whether or not shown to be due on such Tax Returns.
There are (i) no outstanding Liens for any Taxes that have been filed by any
Governmental Entity against the Assets, nor, to the Seller Parties' Knowledge,
any of the assets purchased from KFH, or any other assets of any Seller Party
used in the Business (other than for ad valorem taxes not yet due and payable),
and (ii) no claims being asserted with respect to any Taxes owed by any Seller
Party with respect to the Assets or the Business for which any Purchaser Party
could be held liable, and there is no basis for the assertion of any such claim.
No Seller Party has made or agreed or offered to make, or revoked or agreed or
offered to revoke, a Tax election with respect to or affecting the Assets at any
time during the last two (2) years. Except as set forth on SCHEDULE 4.13, no
Seller Party is a party to any tax abatement agreement relating to the Assets.
Except as disclosed with reasonable specificity on SCHEDULE 4.13, there are no
outstanding waivers or agreements extending the statute of limitations for any
period with respect to any Tax to which the Assets or any Purchaser Party may be
subject following the Closing.

SECTION 4.14. GOOD TITLE TO ASSETS. Except as set forth on SCHEDULE 4.14, each
applicable Seller Party owning any of the Assets has good, absolute and
marketable title to, and unrestricted possession of, such Assets (other than the
Real Property, which is addressed in Section 4.15 below), free and clear of all
Liens (other than Permitted Encumbrances) and any adverse Claims of third
parties.

SECTION 4.15. TITLE AND CONDITION OF THE REAL PROPERTY.

(a) Schedule 2.1(a) sets forth a legal description of the Real Property. Except
as set forth on SCHEDULE 4.15, Prime is the sole and exclusive legal and
equitable owner of all right, title and interest in the Real Property and at
Closing will have and convey to the Acquisition Sub good and marketable title to
the Real Property, free and clear of any and all Liens, encumbrances,
restrictions or easements of any kind whatsoever (other than Permitted
Encumbrances).

(b) The location, construction, occupancy, operation, use and sale of the Real
Property (including the Improvements) do not violate any applicable law,
statute, ordinance, rule, regulation, order or determination of any Governmental
Entity or any restrictive covenant or deed restriction (recorded or otherwise)
affecting the Real Property, including, without limitation, any applicable
zoning or subdivision ordinance or building code, flood disaster law or health
and environmental law or regulation.

(c) With regard to the Real Property, except as set forth on SCHEDULE 4.15(C) or
as otherwise disclosed in the Survey, to the Knowledge of the Seller Parties,
there are no (i) encroachments onto or from adjacent properties; (ii) violations
of set-back, building or side lines; (iii) encroachments onto any easements or
servitudes located on such Real Property; (iv) pending or, to the Knowledge of
any Seller Party, threatened boundary line disputes; (v) portions of such Real
Property located in a flood plain or in an area defined as a wetland under
applicable state or federal law; (vi) cemeteries or gravesites located on the
Real Property; or (vii) mine shafts under


                                       18



the Real Property or any other latent defects, such as sinkholes, regarding or
affecting the Real Property.

(d) The existing water, sewer, gas and electricity lines, storm sewer and other
utility systems are adequate to serve the utility needs of the Real Property.
All of said utilities are installed and operating, and all installation and
connection charges have been paid in full.

(e) Except as set forth on SCHEDULE 4.15(E), neither the whole nor any portion
of the Real Property has been condemned, requisitioned or otherwise taken by any
public authority (a "Public Taking"), and no notice of any Public Taking has
been received by any Seller Party with regard to any of the Real Property. No
Seller Party has any Knowledge of any Public Taking being threatened or
contemplated. No Seller Party has any Knowledge of any public improvements which
have been ordered to be made and/or which have not heretofore been assessed,
and, to the Knowledge of the Seller Parties, there are no special, general or
other assessments pending or threatened against or affecting any of the Real
Property (except those expressly identified in the Title Commitment).

(f) Except as set forth on SCHEDULE 4.15(F), there are no Claims, actions,
suits, proceedings or investigations pending or, to the Knowledge of any Seller
Party, threatened, against or affecting all or any portion of the Real Property.

(g) Permanent certificates of occupancy, all licenses, permits, certificates of
need (if applicable), authorizations and approvals required by all Governmental
Entities having jurisdiction, have been issued for the Improvements, and, as of
the Closing, all of the same will be in full force and effect. The Improvements,
as designed and constructed, comply with all statutes, restrictions, regulations
and ordinances applicable thereto, including but not limited to the Americans
with Disabilities Act and Section 504 of the Rehabilitation Act of 1973. No
Seller Party either has in its possession or has Knowledge of any studies or
reports which specify or suggest the presence of any defects in the design or
construction of any of the Improvements.

(h) No Seller Party has Knowledge of any fact or condition which would result in
the termination of the current access from the Real Property to any presently
existing public highways and/or roads adjoining or situated on the Real Property
or to sewer or other utility services to serve the Real Property.

(i) SCHEDULE 4.15(I) attached hereto sets forth an accurate and complete list of
all leases, subleases, commitment letters, letters of intent and other rental
agreements, whether written or oral, now or hereafter in effect, if any, that
grant or will grant a possessory interest in and to any space in the Real
Property or that otherwise assign or convey rights with regard to the Real
Property or the Improvements (collectively referred to as the "Tenant Leases").
SCHEDULE 4.15(I) designates which of the Tenant Leases described therein are
with the referral sources (as determined by any of the Healthcare Fraud Laws) of
Veritas or any other Seller Party. SCHEDULE 4.15(I) specifies the rent and
security deposit, if any, for each Tenant Lease. The Seller Parties have made
available to the Purchaser Parties complete, correct and current copies of all
Tenant Leases. The Seller Parties shall provide to the Purchaser Parties prior
to Closing Tenant Lease estoppels in form satisfactory to the Purchaser Parties
from all Tenants under the applicable Tenant Leases. Except for the Tenant
Leases and any other items listed on SCHEDULE 4.15(I),


                                       19



there are no purchase contracts, leases of space, options, rights of first
refusal or other written or oral agreements of any kind whereby any person or
entity will have acquired or will have any basis to assert any right, title or
interest in, or right to the possession, use, enjoyment or proceeds of, any part
or all of the Real Property or the Improvements.

(j) No Seller Party has accepted the payment of rent or other sums due under any
of the Tenant Leases for more than one (1) month in advance. As of the Closing,
none of the Tenant Leases and none of the rents or other charges payable
thereunder, if any, will have been assigned, pledged or encumbered. Except as
set forth on SCHEDULE 4.15(J), as of the Closing, no brokerage or leasing
commissions or other compensation will be due or payable to any Person with
respect to, or on account of, the Lease or any Tenant Lease or any extensions or
renewals thereof, if any, excepting those agreements entered into or accepted in
writing by the Purchaser Parties.

(k) All tenant improvements, repairs and other work and obligations, if any,
then required to be performed by the landlord under each of the Tenant Leases
will be fully performed and paid for in full on or prior to the Closing.

(l) Except as set forth on SCHEDULE 4.15(L): (i) the Tenant Leases are freely
assignable by the applicable Seller Parties to the Acquisition Sub, have not
been modified, amended or assigned, are legally valid, binding and enforceable
against the applicable Seller Parties (and, to the best of the Seller Parties'
Knowledge, against the other parties to such Tenant Leases) in accordance with
their respective terms and are in full force and effect; (ii) there are no
monetary defaults and no material nonmonetary defaults by the applicable Seller
Party or, to the best of the Seller Parties' Knowledge, any other party to the
Tenant Leases; (iii) no Seller Party has received written notice of any default,
offset, counterclaim or defense under any of the Tenant Leases; and (iv) no
condition or event has occurred which with the passage of time or the giving of
notice or both would constitute a default or breach by any Seller Party of the
terms of any of the Tenant Leases.

(m) The Real Property constitutes all the land and improvements used by Veritas
in connection with the operation of the Hospital, it being understood that
certain administrative activities relating to such operations are not conducted
at the Real Property.

SECTION 4.16. CONDITION OF PERSONAL PROPERTY. SCHEDULE 4.16 sets forth a list of
all equipment and other items of tangible personal property used by the Seller
Parties in the operation of the Hospital (the "Personal Property") and said
SCHEDULE 4.16 identifies the ownership of such Personal Property. Except as set
forth on SCHEDULE 4.16, each applicable Seller Party has good, clear and
indefeasible title to and ownership of all the Personal Property, free and clear
of all Liens and may grant Acquisition Sub a first priority security interest in
and to the Personal Property. SCHEDULE 4.16 sets forth an accurate and complete
list of all leases of personal property used in the operation of the Hospital
(the "Personal Property Leases"). The Seller Parties have made available to the
Purchaser Parties complete, correct and current copies of all of the Personal
Property Leases. Except as set forth on SCHEDULE 4.16: (i) each applicable
Seller Party may, grant a first priority security interest in the Personal
Property Leases to the Acquisition Sub, (ii) the Personal Property Leases have
not been modified, amended or assigned, are legally valid, binding and
enforceable against such Seller Party (and, to the Seller Parties'


                                       20



Knowledge, against the other parties to such Personal Property Leases) in
accordance with their respective terms and are in full force and effect; (iii)
there are no monetary defaults and no material nonmonetary defaults by each
applicable Seller Party, or, to the Seller Parties' Knowledge, any other party
to the Personal Property Leases; (iv) no Seller Party has received notice of any
default, offset, counterclaim or defense under any Personal Property Lease; and
(v) no condition or event has occurred which with the passage of time or the
giving of notice or both would constitute a default or breach by each applicable
Seller Party of the terms of any Personal Property Lease. Except as set forth on
SCHEDULE 4.16, all Personal Property is in good operating condition and repair,
ordinary wear and tear excepted, and is located on the Real Property.

SECTION 4.17. COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as set forth on
SCHEDULE 4.17:

(a) with respect to the ownership and operation of the Real Property and the
Hospital, including any operations at or from any real property currently or
formerly owned, used, leased, occupied or managed by any Seller Party, each
Seller Party is and has at all times been, in compliance with all Environmental
Laws;

(b) no Governmental Entity or any nongovernmental third party has notified any
Seller Party of any alleged violation or investigation of any suspected
violation under the Environmental Laws in connection with the ownership,
operation and/or leasing of the Real Property or the Hospital, including any
litigation or cause of action alleging personal injury or property damage caused
by exposure to, or the disposal, release or migration of, any Hazardous
Materials;

(c) with respect to the ownership, operation and/or leasing of the Real Property
and the Hospital, no Seller Party has stored, disposed of or arranged for the
disposal of Hazardous Materials, except in compliance with the Environmental
Laws;

(d) there have been no actions nor, any activities, circumstances, conditions,
events or incidents, including, without limitation, the generation,
transportation, treatment, storage, release, emission, discharge, presence or
disposal of any Hazardous Materials on or from any of the Real Property or the
Hospital that could form the basis of any claim under the Environmental Laws
against any Seller Party or any Purchaser Party;

(e) no Seller Party has, whether contractually or by operation of law (including
any Environmental Law), assumed or succeeded to any liability of any direct or
indirect predecessors or any other Person (including, without limitation, KFH)
related or with respect to any Environmental Law applicable to the Real Property
or the Hospital;

(f) there are no underground storage tanks located at, on or under the Real
Property, and the Real Property does not contain any asbestos-containing
building material;

(g) there are no conditions presently existing on, at or emanating from the Real
Property or the operation of the Hospital, that may result in any liability,
investigation or clean-up cost under any Environmental Law; and

(h) no Seller Party, nor to the Seller Parties' Knowledge, any other Person, has
installed, used, generated, manufactured, treated, handled, refined, produced,
processed, stored or disposed of, any Hazardous Materials in, on or under the
Real Property, except in compliance with the


                                       21



Environmental Laws. No Seller Party has undertaken any activity, and the Seller
Parties have no Knowledge that any other Person has undertaken any activity, on
the Real Property which would cause (i) the Real Property to become a hazardous
waste treatment, storage or disposal facility within the meaning of, or
otherwise bring the Real Property within the ambit of, any Environmental Law,
(ii) a release or threatened release of Hazardous Material from the Real
Property within the meaning of, or otherwise bring the Real Property within the
ambit of, any Environmental Law, or (iii) the discharge of Hazardous Material
into any watercourse, body of, surface or subsurface water or wetland, or the
discharge into the atmosphere of any Hazardous Material which would require a
permit under any Environmental Law. No activity has been undertaken by any
Seller Party with respect to the Real Property which would cause a violation or
support a claim under any Environmental Law. No investigation, administrative
order, litigation or settlement with respect to any Hazardous Material is in
existence, or, to the Seller Parties' Knowledge, threatened with respect to the
Real Property. No notice has been served on any Seller Party from any
Governmental Entity claiming any violation of any Environmental Law, or
requiring compliance with any Environmental Law, or demanding payment or
contribution for environmental damage or injury to natural resources. No Seller
Party has obtained or is required to obtain, and no Seller Party has any
Knowledge of any reason Acquisition Sub will be required to obtain, any permits,
licenses, or similar authorizations to occupy, operate or use the Improvements
or any part of the Real Property by reason of any Environmental Law.

SECTION 4.18. INSURANCE. SCHEDULE 4.18 sets forth a complete and accurate list
and brief description of all insurance policies currently held by any Seller
Party with respect to the Real Property, the operation of the Hospital, and the
professional liability, negligence and other acts of the Physicians and the
Service Providers, it being acknowledged that such insurance coverages are, at a
minimum, those required by the terms of the Lease. All such Insurance policies
are in full force and effect, all premiums due thereon have been paid in full
and each Seller Party is in compliance with the terms of such Insurance
Policies.

SECTION 4.19. LITIGATION. Except as set forth on SCHEDULE 4.19, there is no
dispute, suit, action, proceeding, inquiry or investigation (a "Claim") against
or involving any of the Seller Parties or any of their properties or rights,
pending or, to the Knowledge of the Seller Parties, threatened (including,
without limitation any suit, action, proceeding or investigation pursuant to
Title 11 of the Civil Rights Act of 1964, the Americans with Disabilities Act,
the Age Discrimination in Employment Act, the Family and Medical Leave Act of
1993, or any other federal, state or local law regulating employment) nor do the
Seller Parties know of any facts which might result in any such Claim. There is
no Claim pending, or, to the Seller Parties' Knowledge, threatened, against any
Physician or Service Provider which could, by operation of law, through contract
or otherwise, result in a Claim against any Seller Party, and no Seller Party
has any Knowledge of any facts which could result in such a Claim. Except as set
forth on SCHEDULE 4.19, there is no judgment, decree, injunction, rule or order
of any Governmental Entity or any other Person (including, without limitation,
any arbitral tribunal) outstanding against any Seller Party and no Seller Party
is not in violation of any term of any judgment, decree, injunction or order
outstanding against it. Furthermore, there is no Claim by or before any
Governmental Entity or other Person pending or, to the Knowledge of the Seller
Parties, threatened, which questions or challenges the validity of this
Agreement or any action taken or to be taken by any Seller Party pursuant to
this Agreement or in connection with the transactions contemplated hereby, nor
is


                                       22



there any basis for any such Claim. SCHEDULE 4.19(A) sets forth each and every
adversary proceeding connected with the Bankruptcy (the "Adversary
Proceedings").

SECTION 4.20. CONTRACTS, OBLIGATIONS AND COMMITMENTS. SCHEDULE 4.20 sets forth a
list of all contractual agreements for consideration in excess of $5,000.00,
whether written or oral, relating to or affecting the Assets and/or the
operation of the Business to which any Seller Party is a party, including,
without limitation, the KFH Lease and the Parking Lot Lease (the "Contracts").
The Seller Parties have made available to the Purchaser Parties complete and
correct copies of all of the Contracts. Except as set forth on SCHEDULE 4.20,
(i) the Contracts are legally valid, binding and enforceable against the
applicable Seller Party (and, to the Seller Parties' Knowledge, against all
parties thereto) in accordance with their respective terms and are in full force
and effect; (ii) there are no defaults by any Seller Party, or to the Seller
Parties' Knowledge, any other party to the Contracts; (iii) no Seller Party has
received notice of any default, offset, counterclaim or defense under any
Contract; and (iv) no condition or event has occurred which with the passage of
time or the giving of notice or both would constitute a default or breach by an
Seller Party of the terms of any Contract.

SECTION 4.21. INTANGIBLE PROPERTY. SCHEDULE 4.21 sets forth a true and complete
list of the trademarks, service marks, and other intangible assets used by the
Seller Parties in the operation of the Hospital (the "Intangible Property") and
said SCHEDULE 4.21 identifies the ownership of such Intangible Property. Each
applicable Seller Party owns, or possesses adequate, enforceable licenses or
other rights to use, all of the Intangible Property, and no rights thereto have
been granted to others by any Seller Party. Except as set forth on SCHEDULE
4.21, all of the Intangible Property is owned or used by the applicable Seller
Party free and clear of all assignments, licenses, restrictions, encumbrances,
charges or claims for infringement, and none is subject to any outstanding
order, decree, judgment, stipulation or charge. There is no unauthorized use,
disclosure, infringement or misappropriation of any of the Intangible Property
by any third party. The Seller Parties' use of the Intangible Property does not
infringe upon or otherwise violate the rights of others. No one has asserted to
any Seller Party that the use of the Intangible Property by any Seller Party
infringes upon the patents, trade secrets, trade names, trademarks, service
marks, copyrights or other intellectual property rights of any other Person and
no Seller Party has any Knowledge of any fact or circumstance which could
provide the basis for any such assertion.

SECTION 4.22. EMPLOYEES AND EMPLOYEE RELATIONS.

(a) SCHEDULE 4.22(A) contains a current, correct and complete list of the names
and current hourly wage, monthly salary and other compensation of all employees
who are or who will provide services at the Hospital (collectively, the
"Business Employees"), together with a summary (containing estimates to the
extent necessary) of the individual's existing bonuses, additional compensation
and other benefits (whether current or deferred), if any, accrued, paid or
payable to each such individual for services rendered or to be rendered through
the fiscal period ending September 30, 2005. Except as set forth on SCHEDULE
4.22(A), all of the Business Employees are "at will" employees. Except as set
forth on SCHEDULE 4.22(A), no Seller Party is a party to any oral (express or
implied) or written: (i) employment agreement, or (ii) agreement that contains
any severance or termination pay obligations, with any Business Employee. The
Seller Parties have made available true, correct and current copies (or, if not
written, accurate descriptions of the parties and terms) of such agreements to
the Purchaser Parties.


                                       23



(b) Except as set forth on SCHEDULE 4.22(B), no Business Employee is represented
by any labor union, trade association or other employee organization, no demand
for recognition has been made by any labor union with respect to the Business
Employees, and there is not and has not been any labor union organizing activity
at the Hospital during the periods it has been operated by any Seller Party.
Except as set forth on SCHEDULE 4.22(B), no Seller Party is a party to any
collective bargaining agreement or understanding with any labor union, trade
association or other employee organization with respect to any Business Employee
and no such agreements are currently being proposed and/or negotiated.

(c) Except as set forth on SCHEDULE 4.22(C), there is no labor dispute, work
stoppage, strike, slowdown, walkout, lockout, or any other interruption or
disruption of operations at the Hospital as a result of labor disputes or
disturbances with respect to the Business Employees and there is no
investigation, grievance, arbitration, complaint, claim or other dispute or
controversy (collectively, the "Labor Proceeding") pending or threatened,
between any Seller Party and any present or former Business Employee, nor have
any discharges or terminations of any former Business Employee occurred which
would form the basis for any claim of discrimination against any Seller Party.
Except as set forth on SCHEDULE 4.22(C), no Seller Party has any Knowledge of
any facts or past, current or contemplated event that could form the basis for
any such Labor Proceeding, nor has there been any such Labor Proceeding within
the past twelve (12) months.

(d) Except as set forth on SCHEDULE 4.22(D), no Seller Party has received any
notice that any vice president, director or director-level employee, or higher,
of Vertias or any group of Business Employees, has any plans to terminate his or
her employment or affiliation with any Seller Party.

(e) Veritas has complied with and is currently in compliance with, and Veritas
has not received any notice of noncompliance with, any and all applicable laws
relating to the employment of labor, including, without limitation, any
provisions relating to wages, hours, equal employment, occupational safety and
health, workers' compensation, unemployment insurance, collective bargaining,
immigration, affirmative action and the payment and withholding of social
security and other taxes. Veritas has withheld all amounts required by law or
agreement to be withheld from the wages or salaries of the Business Employees,
and Veritas is not liable for any arrears of any tax or penalties for failure to
comply with the foregoing.

(f) SCHEDULE 4.22(F) sets forth each Employee Pension Benefit Plan (as defined
in Section 3(2) of ERISA) maintained by Veritas (each a "Veritas Plan") and
applicable to the Business Employees. Veritas is in compliance in all material
respects with all applicable laws and regulations respecting such Veritas Plans.

SECTION 4.23. COMPLIANCE WITH LAW. Each Seller Party, (a) is in compliance in
all material respects with every applicable law, rule, regulation, ordinance,
license, permit and other governmental action and authority and every order,
writ, and decree of every Governmental Entity in connection with the ownership,
conduct, operation and maintenance of the Business and its ownership and use of
its assets and no event has occurred or circumstance exists which (with notice
or lapse of time) would result in any noncompliance with any such law, rule,
regulation, ordinance, license permit, order, writ or decree; and (b) has timely
made or given all filings and notices required to be made by such Seller Party
in connection with the Business with the regulatory agencies of any Governmental
Entity.


                                       24



SECTION 4.24. HILL-BURTON OBLIGATIONS.

(a) Except as set forth on SCHEDULE 4.24, neither Veritas, nor, to the Knowledge
of the Seller Parties, any predecessor in interest of Veritas, has received any
loans, grants or loan guarantees pursuant to the United States Hill-Burton Act
(42 U.S.C. 291a, et seq.) program, the Health Professions Educational Assistance
Act, the Nurse Training Act, the National Health Pharmacy and Resources
Development Act or the Community Mental Health Centers Act. All of the
obligations set forth on SCHEDULE 4.24 have been fully satisfied. The
transactions contemplated hereby will not result in any obligation of any
Purchaser Party to repay any such loan, grant or loan guarantee or to provide
uncompensated care in consideration thereof.

(b) None of the Assets are subject to any liability in respect of amounts
received by any Seller Party, or any other Person for the purchase or
improvement of the Assets or any part thereof under restricted or conditioned
grants or donations, including monies received under the Public Health Service
Act, 42 U.S.C. Section 291, et seq.

SECTION 4.25. MEDICAL STAFF MATTERS. Except as set forth on SCHEDULE 4.25, there
are no pending or, to the Knowledge of the Seller Parties, threatened
investigations, appeals, challenges, disciplinary or corrective actions, or
disputes involving applicants to the medical staff of the Hospital, current
members of the medical staff of the Hospital or affiliated health professionals.
Since the Balance Sheet Date, no member of the medical staff of the Hospital has
resigned or been terminated therefrom and no Seller Party has received notice
that any Physician or medical staff member intends to resign from its medical
staff. True and correct copies of Medical Staff Bylaws of the Hospital, the
Hospital's Medical Staff Rules and Regulations, and the Hospital's Medical Staff
Hearing Procedures, all as presently in effect, have been previously made
available by the Seller Parties to the Purchaser Parties.

SECTION 4.26. BROKERS. Except as set forth on SCHEDULE 4.26, No Person is or
will be entitled to any brokerage, finder's or other similar fee, commission or
payment in connection with or as a result of the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of any Seller Party.

SECTION 4.27. RECORDS. True, complete and current copies of each Seller Party's
Governing Documents have been delivered to the Purchaser Parties prior to the
execution and delivery of this Agreement. The books of account, minute books,
stock record books and other records of each Seller Party, all of which have
been made available to the Purchaser Parties, are complete and correct. The
minute books of each Seller Party contain records of all meetings and other
corporate actions of the directors and shareholders of such Seller Party, and
have been delivered to the Purchaser Parties prior to the execution and delivery
of this Agreement.

SECTION 4.28. EXISTING LEASES. Desert Valley Parent and its Subsidiaries are in
compliance in all respects with the terms of the Existing Leases and no default
or breach (or event which with notice and/or passage of time would constitute
such a default or breach) has occurred by any party thereto. None of the
facilities and none of the Desert Valley Parent's Subsidiaries subject to the
existing Leases has suffered a Material Adverse Effect since February 28, 2005
and no event has occurred which would reasonably likely to result in such a
Material Adverse Effect.


                                       25



SECTION 4.29. REPRESENTATIONS COMPLETE. The representations and warranties made
by the Seller Parties in this Agreement and the statements made in or
information contained on any Schedules or certificates furnished by any Seller
Party pursuant to this Agreement do not contain and will not contain, as of
their respective dates and as of the Closing Date, any untrue statement of a
material fact, nor do they omit or will they omit, as of their respective dates
or as of the Closing Date, to state any material fact necessary in order to make
the statements contained herein or therein, in the light of the circumstances
under which they were made, not misleading.

SECTION 4.30. BANKRUPTCY CASE. The Bankruptcy Court confirmed the Modified
Second Amended Joint Chapter 11 Plan of Reorganization in the Bankruptcy (the
"Joint Plan") on July 1, 2005. Pursuant to the Joint Plan, all assets of the
Bankruptcy estate have been re-vested in Veritas. The Effective Date of the Plan
was July 31, 2005. Veritas is in compliance in all respects with the Joint Plan
and all orders of the Bankruptcy Court relating to the Bankruptcy. All
distributions required under the Joint Plan have been made and the Joint Plan is
substantially consummated (as such term is defined in 11 U.S.C. Section 1101(2).

                                    ARTICLE V
             REPRESENTATIONS AND WARRANTIES BY THE PURCHASER PARTIES

The Purchaser Parties hereby jointly and severally represent and warrant to the
Seller Parties as of the date hereof, and as of the Closing Date as follows:

SECTION 5.1. ORGANIZATION. MPT is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Delaware. The
Acquisition Sub is a limited liability company duly formed, validly existing and
in good standing under the laws of the State of Delaware and qualified to do
business in the State of California.

SECTION 5.2. AUTHORIZATION; ENFORCEMENT, ABSENCE OF CONFLICTS. Each Purchaser
Party has the requisite power and authority to execute, deliver and carry out
the terms of this Agreement, to consummate the transactions contemplated hereby
and to conduct its businesses as now being conducted. All actions required to be
taken by each to authorize the execution, delivery and performance of this
Agreement, all documents executed by the Purchaser Parties which are necessary
to give effect to this Agreement and all transactions contemplated hereby and
thereby, have been duly and properly taken or obtained. No other action on the
part of either Purchaser Party is necessary to authorize the execution, delivery
and performance of this Agreement, all documents necessary to give effect to
this Agreement and all transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not, with or without the giving of notice
and/or the passage of time: (i) violate or conflict with any provision of the
Governing Documents of either Purchaser Party; (ii) violate any provision of
law, statute, rule or regulation to which either Purchaser Party is subject;
(iii) violate or conflict with any judgment, order, writ or decree of any court
applicable to either Purchaser Party; (iv) violate or conflict with any law or
regulation applicable to either Purchaser Party; or (v) result in the breach or
termination of any provision of, or create rights of acceleration or constitute
a default under, the terms of any debt or obligation to which either Purchaser
Party is a party or by which either Purchaser Party is bound.


                                       26



SECTION 5.3. BINDING AGREEMENT. This Agreement and all agreements to which any
Purchaser Party will become a party hereunder is and will constitute the valid
and legally binding obligations of such Purchaser Party, and are and will be
enforceable against such Purchaser Party in accordance with the respective terms
hereof or thereof, except as enforceability may be restricted, limited or
delayed by applicable bankruptcy, insolvency or other laws affecting creditors'
rights generally and except as enforceability may be subject to and limited by
general principles of equity.

SECTION 5.4. LITIGATION. There is no Claim pending or, to the Knowledge of the
Purchaser Parties, threatened against or affecting any Purchaser Party that has
or would reasonably be expected to have a material adverse effect on the ability
of the Purchaser Parties to perform their respective obligations under this
Agreement or any aspect of the transactions contemplated hereby.

SECTION 5.5. BROKERS. No Person is or will be entitled to any brokerage,
finder's or other similar fee, commission or payment in connection with or as a
result of the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Purchaser Parties.

SECTION 5.6. COMPLIANCE WITH LAW. The Purchaser Parties, where applicable (a)
are in compliance with every applicable law, rule, regulation, ordinance,
license, permit and other governmental action and authority and every order,
writ, and decree of every Governmental Entity in connection with the ownership,
conduct, operation and maintenance of their businesses, and their ownership and
use of their assets, except where non-compliance would not prevent or impede the
Purchaser Parties from consummating the transactions contemplated hereby or the
ability of the Purchaser Parties to perform their respective obligations under
this Agreement and, to the Knowledge of the Purchaser Parties, no event has
occurred or circumstance exists which (without notice or lapse of time) would
result in any noncompliance with any such law, rule, regulation, ordinance,
license permit, order, writ or decree which would prevent or impede the
Purchaser Parties from consummating the transactions contemplated hereby; and
(b) have timely made or given all filings and notices required to be made by the
Purchaser Parties with the regulatory agencies of any Governmental Entity,
except where such failure would not prevent or impede the Purchaser Parties from
consummating the transactions contemplated hereby.

                                   ARTICLE VI
                                TITLE AND SURVEY

SECTION 6.1. SURVEY. MPT shall cause to be prepared, at Seller Parties' expense,
a current ALTA/ACSM Land Title Survey of the Real Property, prepared by a duly
licensed land surveyor. The survey shall be currently dated, shall show the
location on the Real Property of any improvements, fences, evidence of abandoned
fences, ponds, creeks, streams, rivers, easements, roads, rights-of-way, means
of ingress and egress, location of all utilities serving the Real Property, and
encroachments, and shall contain a legal description of the boundaries of the
Real Property by metes and bounds and the appropriate flood zone designation and
the total number of acres constituting the Real Property. The surveyor shall
certify to the Purchaser Parties and to the Title Company that the survey is
correct and that there are no visible discrepancies, conflicts, encroachments,
overlapping of improvements, fences, evidence of


                                       27



abandoned fences, ponds, creeks, streams, rivers, easements, roads or
rights-of-way except as are shown on the survey plat. Any and all matters shown
on such survey shall be legibly identified by appropriate volume and page
recording references with dates of recording noted. If MPT shall disapprove such
survey for any reason in MPT's sole discretion, MPT may either (i) treat such
objection as a title objection and request that it be cured, or (ii) terminate
this Agreement and the parties hereto shall have no further liability or
obligations hereunder, expect as otherwise expressly set forth herein. If the
Seller Parties are unable to cure any objection to the survey within ten (10)
days following delivery of notice to Seller Parties thereof, then MPT may
terminate this Agreement upon written notice to the Seller Parties.

SECTION 6.2. TITLE INSURANCE. MPT will cause to be prepared, at Seller Parties'
expense, a title commitment for the issuance of an ALTA Owner's Policy (and a
leasehold policy covering the real property interest under the Parking Lot
Lease) in form and substance satisfactory to MPT, issued by a title insurance
company acceptable to MPT and qualified to insure titles in the State of
California (the "Title Company"), in the amount of the Purchase Price, covering
title to the Real Property at a date not earlier than the date hereof and
showing good and marketable title, subject only to the Permitted Encumbrances.
All of the standard exceptions within the policy and the exceptions for
mechanic's and materialmen's liens and the survey exception shall be deleted. If
MPT shall disapprove any items stated in the Title Commitment or the Exception
Documents, MPT may either (i) treat such objection as a title objection and
request that it be cured, or (ii) terminate this Agreement and, upon such
termination, the parties hereto shall have no further liability or obligations
hereunder, except as otherwise expressly provided herein. If the Seller Parties
are unable to cure any exception or objection to title that is not a Permitted
Encumbrance within ten (10) days following delivery of notice to the Seller
Parties thereof, then MPT may terminate this Agreement upon written notice to
Seller Parties.

                                   ARTICLE VII
                              PRE-CLOSING COVENANTS

From and after the execution and delivery of this Agreement to and including the
Closing Date, the applicable party shall observe the following covenants:

SECTION 7.1. NO SHOP. Neither any Seller Party nor any investment banker,
attorney, accountant, representative or other Person retained by or on behalf of
any Seller Party, shall directly or indirectly, initiate contact with, respond
to, solicit or encourage any inquiries, proposals or offers by, or participate
in any discussions or negotiations with, enter into any agreement with, disclose
any information concerning any Seller Party, the Hospital or the Assets to,
afford any access to the properties, books or records of any Seller Party to, or
otherwise assist, facilitate or encourage, any Person in connection with any
possible proposal regarding a sale, lease, transfer, disposition or other
transaction related to or affecting all or any portion of the Assets (including
all or any portion of the Real Property). The Seller Parties shall notify MPT
immediately if any discussions or negotiations are sought to be initiated, any
inquiry or proposal is made, or any such information is requested.


                                       28



SECTION 7.2. ACCESS; CONFIDENTIALITY.

(a) Between the date hereof and the Closing, the Seller Parties shall (i) afford
the Purchaser Parties and their authorized representatives full and complete
access to the employees, (including the Business Employees) medical staff, and
other agents and representatives of the Seller Parties relating to the Business
and during normal working hours to all books, records, offices and other
facilities of the Seller Parties relating to the Business, (ii) permit the
Purchaser Parties to make such inspections and to make copies of such books and
records as they may reasonably require and (iii) furnish the Purchaser Parties
with such financial and operating data and other information related to the
Business or the Seller Parties as the Purchaser Parties may from time to time
reasonably request. The Purchaser Parties and their authorized representatives
shall conduct all such inspections under the supervision of personnel of the
Seller Parties in a manner that will minimize disruptions to the business and
operations of the Seller Parties and in a manner as to maintain the
confidentiality of this Agreement.

(b) The Purchaser Parties and their authorized representatives (including their
designated engineer, architects, surveyors and/or consultants) may, upon
reasonable notice and at any time enter into and upon all or any portion of the
Real Property in order to investigate and assess, as the Purchaser Parties deem
necessary or appropriate in their sole and absolute discretion, the condition
(including the structural and environmental condition) of the Assets. The Seller
Parties shall cooperate with the Purchaser Parties and their authorized
representatives in conducting such investigation, shall allow, the Purchaser
Parties and their authorized representatives full access to the Assets, together
with full permission to conduct such investigation, and shall provide to the
Purchaser Parties and their authorized representatives all information
maintained by the Seller Parties and related to the condition of the Assets,
including the Real Property, and all plans, soil or surface or ground water
tests or reports, any environmental investigation results, reports or
assessments previously or contemporaneously conducted or prepared by or on
behalf of, or in the possession of or reasonably available to the Seller Parties
or any of their engineers, consultants or agents and all other information
relating to environmental matters in respect of their properties and businesses.

(c) The provisions of that certain Confidentiality Agreement dated May 5, 2005
among the parties (the "Confidentiality Agreement") shall remain binding and in
full force and effect until the Closing. Notwithstanding anything to the
contrary contained herein or in the Confidentiality Agreement, the
confidentiality obligations as they relate to the transactions contemplated by
this Agreement shall not apply to the purported or claimed Federal income tax
treatment of the transactions (the "Tax Treatment") or to any fact that may be
relevant to understanding the purported or claimed Federal income tax treatment
of the transactions (the "Tax Structure"), and each party hereto (and any
employee, representative, or agent of any party hereto) may disclose to any and
all persons, without limitation of any kind, the Tax Treatment and Tax Structure
of the transactions contemplated by this Agreement and any materials of any kind
(including any tax opinions or other tax analyses) that relate to the Tax
Treatment or Tax Structure. In addition, each party hereto acknowledges that it
has no proprietary or exclusive rights to any tax matter or tax idea related to
the transactions contemplated by this Agreement. The preceding sentence is
intended to ensure that the transactions contemplated by this Agreement shall
not be treated as having been offered under conditions of confidentiality for
purposes of the Confidentiality Regulations and shall be construed in a manner
consistent with such purpose. The information


                                       29



contained herein, in the Schedules hereto or delivered to the Purchaser Parties
or its authorized representatives pursuant hereto shall be subject to the
Confidentiality Agreement as Information (as defined and subject to the
exceptions contained therein) until the Closing and, for that purpose and to
that extent, the terms of the Confidentiality Agreement are incorporated herein
by reference.

SECTION 7.3. SCHEDULE UPDATES. From the date hereof until the Closing Date, the
Purchaser Parties, on the one hand, and the Seller Parties on the other hand,
shall immediately advise the other in writing of any additions or changes to any
Schedule to reflect any deficiencies or inaccuracies in such Schedule or to
reflect circumstances or matters which occur after the date of this Agreement
which, if existing prior to such date, would have been required to be described
on such Schedule; provided, however, that no additions or changes made to any
Schedule by any party to correct deficiencies or inaccuracies on such Schedule
shall be deemed to cure any breach or inaccuracy of a representation or
warranty, covenant or agreement or to satisfy any condition unless otherwise
agreed to in writing by the other party, but provided further, however, that an
addition or change made to any Schedule by any Party to reflect circumstances or
matters which occur after the date of this Agreement shall be deemed to cure a
breach or inaccuracy of a representation or warranty, covenant or agreement, but
shall not be deemed to satisfy any condition unless agreed to in writing by the
other party.

SECTION 7.4. CONDUCT OF BUSINESS BY THE SELLER PARTIES PENDING THE CLOSING. The
Seller Parties covenant and agree that, during the period from the date hereof
and continuing until the earlier of the termination of this Agreement or the
Closing Date, unless the Purchaser Parties shall otherwise agree in writing, the
Seller Parties shall conduct their businesses only in, and the Seller Parties
shall not take any action except in, the ordinary course of business and in a
manner consistent with past practice and in compliance in all material respects
with all applicable laws and regulations, and that the Seller Parties shall use
reasonable best efforts to preserve substantially intact the business
organization of each Seller Party, to keep available the services of their
current officers, employees and consultants and to preserve the present
relationships of each Seller Party with patients, suppliers and other persons
with which each Seller Parties have significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement or
set forth on SCHEDULE 7.4, Veritas, or any Person acting on behalf of Veritas,
shall not, during the period from the date hereof and continuing until the
earlier of the termination of this Agreement or the Closing Date, directly or
indirectly do, or propose to do, any of the following without the prior written
consent of MPT:

(a) amend, repeal or otherwise change in any way its Governing Documents;

(b) make or revoke any Tax election related to or affecting the Assets;

(c) fail to perform its obligations in all respects under agreements relating to
or respecting its assets, properties and rights;

(d) reduce the coverage of, fail to timely renew or pay the premiums on or
cancel any insurance policy;


                                       30



(e) cause to lapse or fail to renew any license and certification necessary to
conduct its business;

(f) fail to timely make all applicable filings with Governmental Entities;

(g) create, assume or, other than those presently in existence, permit to exist
any Lien upon any of the Assets;

(h) purchase, sell, assign, lease or otherwise acquire, transfer or dispose of
any material assets, except in the ordinary course of business and consistent
with its past practice;

(i) enter into or agree to enter into any agreement or arrangements granting any
rights to purchase any of its assets, properties or rights, except for purchases
of inventory in the ordinary course of business and consistent with its past
practice;

(j) engage in any business other than the Business;

(k) terminate or modify any contract, lease or other agreement to which it is a
party (excluding expiration or satisfaction in accordance with the terms of such
contract or agreement);

(l) waive any right of substantial value other than in exchange for reasonable
consideration; or

(m) take, agree or offer, in writing or otherwise, to take, any of the actions
described in Sections 7.4 (a) through (l) above. In addition, no Seller Party
shall take any action which would make any of the representations or warranties
of any Seller Party contained in this Agreement untrue, incorrect or incomplete
or prevent any Seller Party from performing or cause any Seller Party not to
perform its covenants hereunder, in each case, such that the conditions set
forth in Sections 8.2(a) or 8.2(b), as the case may be, would not be satisfied.

SECTION 7.5. COOPERATION. Subject to compliance with applicable law, from the
date hereof until the Closing Date, (a) the Seller Parties shall confer on a
regular and frequent basis with one or more representatives of the Purchaser
Parties to report operational matters that are material and the general status
of ongoing operations of the Business, (b) each of the Purchaser Parties and the
Seller Parties shall promptly provide the other or their counsel with copies of
all filings made by such party with any Governmental Entity in connection with
this Agreement and the transactions contemplated hereby, (c) the Seller Parties
shall promptly provide to Purchaser Parties a written summary of any
developments in the Bankruptcy including each of the Adversary Proceedings.

SECTION 7.6. INTENTIONALLY DELETED.

SECTION 7.7. REGULATORY AND OTHER AUTHORIZATIONS, NOTICES AND CONSENTS.

(a) Each party hereto shall use all commercially reasonable efforts to obtain
all authorizations, consents, orders and approvals of all Governmental Entities
and officials that may be or become necessary for its execution and delivery of,
and the performance of its obligations


                                       31



pursuant to, this Agreement and each such party will cooperate fully with the
other parties hereto in promptly seeking to obtain all such authorizations,
consents, orders and approvals.

(b) The Seller Parties shall give promptly such notices to third parties and use
its commercially reasonable efforts to obtain such third party consents and
estoppel certificates as MPT may in its sole and absolute discretion deem
necessary or desirable in connection with the transactions contemplated by this
Agreement, including, without limitation, all third party consents that are
necessary or desirable in connection with the transfer of the Assumed Contracts.

(c) The Purchaser Parties shall cooperate and use commercially reasonable
efforts to assist the Seller Parties in giving such notices and obtaining such
consents and estoppel certificates; provided, however, that the Purchaser
Parties shall have no obligation to give any guarantee or other consideration of
any nature in connection with any such notice, consent or estoppel certificate
which MPT in its sole and absolute discretion may deem adverse to the interests
of the Purchaser Parties.

(d) Anything in this Agreement to the contrary notwithstanding, this Agreement
shall not constitute an agreement to assign any Asset if an attempted assignment
thereof, without the consent of the other party thereto, would constitute a
breach or other contravention thereof, noncompliance by any Seller Party or its
affiliates thereunder or in any way adversely affect the rights of any Purchaser
Party thereunder. The Seller Parties and the Purchaser Parties agree that, in
the event any consent, approval or authorization necessary or desirable to
preserve for the Purchaser Parties any right or benefit with respect to any such
Asset is not obtained prior to the Closing, the Seller Parties will, subsequent
to the Closing, cooperate with the Purchaser Parties in attempting to obtain
such consent, approval or authorization as promptly thereafter as practicable.
If such consent, approval or authorization cannot be obtained, the Seller
Parties will use commercially reasonable efforts to provide the Purchaser
Parties with the rights and benefits of such affected Asset, and, if the Seller
Parties provide such rights and benefits, the Purchaser Parties shall assume the
obligations and burdens with respect thereto in accordance with this Agreement,
including, subcontracting, sublicensing, or subleasing to the Purchaser Parties,
any and all rights of the applicable Seller Party against a third party thereto.

SECTION 7.8. MUTUAL COVENANTS. The parties shall use their good faith reasonable
efforts to satisfy the conditions to the closing of the transactions
contemplated hereby. Without limiting the generality of the foregoing, the
respective parties shall execute and/or deliver, or use their respective good
faith reasonable efforts to cause to be executed and/or delivered, the documents
contemplated to be executed and/or delivered by them at Closing.

SECTION 7.9. PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, the parties agree
to consult with each other before any party hereto or any of their respective
affiliates issues any press release or makes any public statement with respect
to this Agreement or the transactions contemplated hereby and, except as may be
required by applicable law or any listing agreement with any national securities
exchange, will not issue, or permit to be issued, any such press release or
make, or permit to be made, any such public statement prior to such
consultation.


                                       32



                                  ARTICLE VIII
                               CLOSING CONDITIONS

SECTION 8.1. CONDITIONS TO THE OBLIGATIONS OF THE SELLER PARTIES. The
obligations of the Seller Parties to effect the transactions contemplated hereby
shall be further subject to the fulfillment of the following conditions, any one
or more of which may be waived by the Seller Parties:

(a) All of the representations and warranties of Purchaser Parties set forth in
this Agreement shall be true and correct when made and as of the Closing Date as
if made on the Closing Date.

(b) The Purchaser Parties shall have delivered, performed, observed and complied
with all of the items, instruments, documents, covenants, agreements and
conditions required by this Agreement to be delivered, performed, observed and
complied with by them prior to, or as of, the Closing.

(c) The Purchaser Parties shall have executed, where applicable, and delivered
to the Seller Parties the documents referenced in Section 9.3 hereof.

(d) Prime shall have purchased and acquired the Real Property pursuant to the
terms and conditions of the KFH Lease and the Settlement Agreement (including an
assignment of leasehold interest with respect to the Parking Lot Lease to
Veritas).

SECTION 8.2. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER PARTIES. The
obligations of the Purchaser Parties to effect the transactions contemplated
hereby shall be further subject to the fulfillment of the following conditions,
any one or more of which may be waived by the Purchaser Parties:

(a) All of the representations and warranties of Seller Parties set forth in
this Agreement shall be true and correct when made and as of the Closing Date as
if made on the Closing Date.

(b) The Seller Parties shall have delivered, performed, observed and complied
with all of the items, instruments, documents, covenants, agreements and
conditions required by this Agreement to be delivered, performed, observed and
complied with by them prior to, or as of, the Closing.

(c) No Seller Party shall have suffered any change, event or circumstance which
has had, or could have, a Material Adverse Effect.

(d) The Purchaser Parties shall have satisfactorily completed their due
diligence investigations of the Assets, the Business and the Seller Parties and
shall be satisfied with the results of such investigations.

(e) All necessary approvals, consents, estoppel certificates and the like of
Governmental Entities and third parties (including the Bankruptcy Court approval
of the Settlement Agreement, any other Bankruptcy Court approval and the consent
of Immanuel Lutheran Church with respect to the assignment of the Parking Lot
Lease) to the validity and effectiveness of the transactions contemplated hereby
have been obtained.


                                       33



(f) No portion of the Assets shall have been damaged or destroyed by fire or
casualty.

(g) No condemnation, eminent domain or similar proceedings shall have been
commenced or threatened with respect to any portion of the Assets.

(h) The Purchaser Parties shall have received copies of all permits, licenses
and other approvals of Governmental Entities required for the operation of the
Assets for their intended uses and written evidence satisfactory to the
Purchaser Parties that the operation and use of the Hospital are in accordance
with all applicable governmental requirements.

(i) The Purchaser Parties shall have received evidence that the Seller Parties
are maintaining insurance on the Assets and that the Purchaser Parties are named
as additional insureds and, where applicable, loss payees.

(j) The Seller Parties shall have executed where applicable, and delivered to
Purchaser Parties the documents referenced in Section 9.2 hereof.

(k) There shall not have been instituted by any creditor of any Seller Party,
any Governmental Entity or any other third party, any suit, action or proceeding
which would affect the Assets or seek to restrain, enjoin or invalidate the
transactions contemplated by this Agreement.

(l) Prime shall have purchased and acquired the Real Property pursuant to the
terms and conditions of the KFH Lease and the Settlement Agreement (including an
assignment of leasehold interest with respect to the Parking Lot Lease to
Veritas).

(m) Prime or its Affiliates shall have completed its purchase of all of the
outstanding capital stock of Veritas and Seller Parties shall have furnished
Purchaser Parties with evidence of the same.

(n) The Appraisal shall have been delivered and shall reflect an Appraised Value
that equals or exceeds the Purchase Price.

(o) The Bankruptcy Court shall have entered an order approving the Settlement
Agreement.

                                   ARTICLE IX
                                     CLOSING

SECTION 9.1. CLOSING DATE. . The closing of the purchase and sale of the Assets
pursuant hereto (the "Closing") shall be handled through deliveries by mail into
escrow on November 30, 2005 (the actual date of closing being herein referred to
as the "Closing Date"), or on such other date (the "Closing Date") and such
other place as the parties hereto shall mutually agree.

SECTION 9.2. SELLER PARTIES' CLOSING DATE DELIVERABLES. On the Closing Date, the
Seller Parties shall deliver to the Purchaser Parties the documents listed
below.

(a) Duly executed bills of sale and assignments transferring all Assets other
than the Real Property in form and substance satisfactory to MPT;


                                       34



(b) A duly executed general warranty deed in substantially the form as EXHIBIT
9.2(B) (the "Deeds") conveying the Real Property to the Acquisition Sub;

(c) A certified copy of the resolutions of the governing body of each Seller
Party dated as of the date hereof and authorizing such Seller Party's execution,
delivery and performance of this Agreement and all other documents to be
executed in connection herewith;

(d) Certificates of existence and good standing of each Seller Party from the
secretary of state of such Seller Party's state of incorporation or
organization, dated the most recent practical date prior to the Closing Date;

(e) Certificates of good standing and foreign qualification of each Seller Party
from the secretary of state of the State of California dated the most recent
practical date prior to the Closing Date;

(f) The Title Commitment and Title Policy in form and substance satisfactory to
MPT;

(g) A Survey dated the most recent practical date prior to the Closing Date in
form and substance satisfactory to MPT;

(h) A Phase I Environmental Site Assessment Report dated the most recent
practical date prior to the Closing Date in form and substance satisfactory to
MPT (and a Phase II if recommended by the Phase I Report);

(i) Property condition and seismic reports for the Real Property, dated the most
recent practical date prior to the Closing Date and in form and substance
satisfactory to MPT;

(j) A Zoning Compliance Letter/Certificate dated the most recent practical date
prior to the Closing Date in form and substance satisfactory to MPT;

(k) Tenant Estoppel Certificates in form and substance satisfactory to MPT;

(l) Owner's Affidavits in form and substance satisfactory to MPT;

(m) The Search Reports dated the most recent practical date prior to the Closing
Date in form and substance satisfactory to MPT;

(n) A Non-Foreign Affidavit in form and substance satisfactory to MPT;

(o) The Lease, together with a Memorandum of Lease Agreement in form and
substance satisfactory to MPT;

(p) A Lease Guaranty Agreement substantially in the form attached hereto as
EXHIBIT 9.2(P);

(q) The Assignment of Rents and Leases in substantially the form attached hereto
as EXHIBIT 9.2(Q);

(r) The Security Agreements in substantially the form attached hereto as EXHIBIT
9.2(R);


                                       35



(s) Intentionally deleted;

(t) The legal opinion of Shulman, Hodges & Bastian LLP as counsel for the Seller
Parties, substantially in the form attached hereto as EXHIBIT 9.2(T);

(u) At the Closing, each Seller Party shall have furnished to the Purchaser
Parties a certificate dated the Closing Date signed by such Seller Party to the
effect that all of the representations and warranties of each Seller Party
contained in the Agreement (considered collectively) and each of these
representations and warranties (considered individually) remain in all respects
true and correct as of the Closing Date as if made on such date and that such
Seller Party has performed and satisfied all covenants and conditions required
by this Agreement to be performed or satisfied by such Seller Party on or prior
to Closing;

(v) All necessary approvals, consents, estoppel certificates, orders and the
like of third parties or Governmental Entities (including the Bankruptcy Court,
if applicable) to the validity and effectiveness of the transactions
contemplated hereby;

(w) The Noncompete Agreements substantially in the form attached hereto as
EXHIBIT 9.2(W);

(x) An order of the Bankruptcy Court approving the Settlement Agreement;

(y) The Assignment and Assumption of the Parking Lot Lease in form and substance
satisfactory to MPT and;

(z) Such other instruments and documents as the Purchaser Parties reasonably
deem necessary to effect the transactions contemplated hereby.

SECTION 9.3. PURCHASER PARTIES' CLOSING DATE DELIVERABLES. On the Closing Date,
the Purchaser Parties shall deliver to the Seller Parties the documents listed
below.

(a) A certified copy of the resolutions of the governing body of each Purchaser
Party dated as of the date hereof authorizing the execution, delivery and
performance of this Agreement and all other documents to be executed in
connection herewith;

(b) Certificates of existence and good standing of each Purchaser Party from the
Delaware Secretary of State of the State of Delaware, dated the most recent
practical date prior to the Closing Date;

(c) Certificates of good standing and foreign qualification of the Acquisition
Sub from the secretary of state of the State of California, dated the most
recent practical date prior to the Closing Date;

(d) The Lease, together with a Memorandum of Lease in form and substance
satisfactory to MPT;

(e) The Assignment of Rents and Leases in substantially the form attached hereto
as EXHIBIT 9.2(Q);


                                       36



(f) An Opinion of Baker Donelson, Bearman, Caldwell & Berkowitz, P.C., as
counsel for the Purchaser Parties substantially in the form attached as EXHIBIT
9.3(F);

(g) At the Closing, each Purchaser Party shall have furnished to the Seller
Parties a certificate dated the Closing Date signed by such Purchaser Party to
the effect that all of the representations and warranties of such Purchaser
Party contained in the Agreement (considered collectively) and each of these
representations and warranties (considered individually) remain in all respects
true and correct as of the Closing Date as if made on such date and that such
Purchaser Party has performed and satisfied in all material respects all
covenants and conditions required by this Agreement to be performed or satisfied
by such Purchaser on or prior to Closing;

(h) Any bills of sale and assignments requiring the signature of any Purchaser
Party;

(i) The Security Agreements in substantially the form attached hereto as EXHIBIT
9.2(R);

(j) The Noncompete Agreements substantially in the form attached as EXHIBIT
9.2(W); and

(k) The Assignment and Assumption of the Parking Lot Lease in form and substance
satisfactory to MPT.

                                    ARTICLE X
                                   TERMINATION

SECTION 10.1. TERMINATION. Notwithstanding anything to the contrary in this
Agreement, the remaining obligations of the parties hereunder may be terminated
and the transactions contemplated hereby abandoned at any time prior to Closing:
(i) by mutual written consent of the parties; (ii) by the Seller Parties if the
conditions set forth in Section 8.1 shall not have been satisfied on or before
December 31, 2005; or (iii) by the Purchaser Parties if the conditions set forth
in Section 8.2 shall not have been satisfied on or before December 31, 2005.

SECTION 10.2. NOTICE AND EFFECT. In the event of the termination of this
Agreement pursuant to this Article X, the party terminating this Agreement shall
give prompt written notice thereof to the parties, and the transactions
contemplated hereby shall be abandoned, without further action by any party.
Each filing, application and other submission relating to the transactions
contemplated hereby shall, to the extent practicable, be withdrawn from the
person to which it was made. The confidentiality provisions set forth in Article
VII of this Agreement shall survive any termination of this Agreement.
Notwithstanding any statement contained in this Agreement to the contrary,
termination of this Agreement shall not relieve any party from liability for any
breach or violation of this Agreement that arose prior to such termination.

                                   ARTICLE XI
                         CERTAIN POST-CLOSING COVENANTS

SECTION 11.1. POST-CLOSING ACCESS TO INFORMATION. The Parties acknowledge that,
subsequent to Closing, each may need access to the Assets and to information,
documents or computer data in the control or possession of the other for
purposes of concluding the transactions contemplated herein and for audits,
investigations, compliance with governmental requirements, regulations and
requests, the prosecution or defense of third party claims. Accordingly, the
Parties agree that


                                       37



they will make available to the other and their agents, independent auditors
and/or governmental entities such documents and information as may be available
relating to the Assets or the Hospital and will permit the other to make copies
of such documents and information at the requesting party's expense.

SECTION 11.2. BANKRUPTCY Seller Parties shall immediately notify the Purchaser
Parties of any material pleadings, rulings, hearings, and developments,
including, without limitation, the filing of any status reports required by the
Bankruptcy Court and any Application for Final Decree, with respect to the
Bankruptcy, including, without limitation, the Adversary Proceedings.

                                   ARTICLE XII
                                 INDEMNIFICATION

SECTION 12.1. SELLER PARTIES AGREEMENT TO INDEMNIFY.

(a) Subject to the limitations set forth in this Article, the Seller Parties
jointly and severally agree to indemnify, defend and hold harmless the Purchaser
Parties, their Affiliates and their respective officers, directors, members,
(general and limited) partners, shareholders, employees, agents and
representatives (collectively, the "Purchaser Indemnified Parties") from and
against all demands, claims, actions, losses, damages, liabilities, penalties,
Taxes, costs and expenses (including, without limitation, attorneys' and
accountants' fees, settlement costs, arbitration costs and any reasonable other
expenses for investigating or defending any action or threatened action)
asserted against or incurred by the Purchaser Indemnified Parties or any of them
arising out of or in connection with or resulting from (i) any breach of,
misrepresentation associated with or failure to perform under any covenant,
representation, warranty or agreement under this Agreement or the other
agreements contemplated hereby on the part of any Seller Party; (ii) any
Encroachment Issue; or (iii) any Excluded Liabilities (including Taxes arising
prior to Closing, and any Purchaser Damages arising out of the ownership and
operation of the Assets prior to Closing) (collectively, "Purchaser Damages").

(b) The indemnification of the Purchaser Indemnified Parties by the Seller
Parties provided for under this Article XII shall be limited in certain respects
as follows: (i) the right of the Purchaser Indemnified Parties to seek
indemnification under this Section 12.1 shall terminate on the third anniversary
of Closing (the "Purchaser's Indemnity Periods"), except that the Purchaser'
Indemnity Period shall terminate on the fifth anniversary of the Closing Date
for claims under Sections 4.15 and 4.17 and (ii) the Seller shall not be
required to indemnify the Purchaser Indemnified Parties for indemnification
claims under this Section 12.1 unless and until the aggregate amount of all
losses resulting in Purchaser' Damages exceeds One Hundred Thousand and No/100
Dollars ($100,000.00) (the "Minimum Aggregate Liability Amount") in which event
the foregoing indemnification obligation shall apply to the aggregate amount of
Purchaser Damages that exceeds One Hundred Thousand and No/100 Dollars
($100,000.00); provided, however, that the maximum liability of the Seller
Parties under this Agreement shall be an amount equal to the Purchase Price. The
foregoing limitations on time and amount shall not apply to any Purchaser
Damages arising or resulting from (i) any act or omission of any Seller Party
which constitutes fraud, (ii) any breach by any Seller Party of its post-closing
covenants; (iii) any Encroachment Issue; or (iv) the Excluded Liabilities.


                                       38



SECTION 12.2. THE PURCHASER PARTIES' AGREEMENT TO INDEMNIFY.

(a) Subject to the limitations set forth in this Article, the Purchaser Parties
jointly and severally agree to indemnify, defend and hold harmless the Seller
Parties, its and representatives (collectively, the "Seller Indemnified
Parties") from and against all demands, claims, actions, losses, damages,
liabilities, penalties, Taxes, costs and expenses (including, without
limitation, reasonable attorneys' fees, settlement costs, arbitration costs and
any reasonable other expenses for investigating or defending any action or
threatened action) asserted against or incurred by any of the Seller Indemnified
Parties or any of them arising out of or in connection with or resulting from
(i) any breach of, misrepresentation associated with or failure to perform under
any covenant, representation, warranty or agreement under this Agreement or the
other agreements contemplated hereby on the part of any Purchaser Party; or (ii)
the use, ownership or operation of any of the Assets after Closing
(collectively, "Seller Damages").

(b) The indemnification of the Seller Indemnified Parties by the Purchaser
Parties provided for under this Article XII shall be limited in certain respects
as follows: (i) the right of the Seller Indemnified Parties to seek
indemnification under this Section 12.2 shall terminate on the first anniversary
of Closing (the "Seller Indemnity Period"), and (ii) the Purchaser Parties shall
not be required to indemnify the Seller Indemnified Parties for indemnification
claims under this Section 12.2 unless and until the amount of all losses
resulting in Seller Damages exceeds One Hundred Thousand and No/100 Dollars
($100,000.00) in which event the foregoing indemnification obligation shall
apply to the aggregate amount of Seller Damages that exceeds One Hundred
Thousand and No/100 Dollars ($100,000.00); provided, however, that the maximum
liability of the Purchaser Parties under this Agreement shall be an amount equal
to the Purchase Price. The foregoing limitation on time and amount shall not
apply to any Seller Damages arising or resulting from any act or omission of any
Purchaser Party which constitutes fraud, any breach by any Purchaser Party of
its post-closing covenants.

SECTION 12.3. NOTIFICATION AND DEFENSE OF CLAIMS.

(a) A party entitled to be indemnified pursuant to Section 12.1 or Section 12.2
(the "Indemnified Party") shall notify the party liable for such indemnification
(the "Indemnifying Party") in writing of any claim or demand which the
Indemnified Party has determined has given or could give rise to a right of
indemnification under this Agreement, as soon as possible after the Indemnified
Party becomes aware of such claim or demand; provided, that the Indemnified
Party's failure to give such notice to the Indemnifying Party in a timely
fashion shall not result in the loss of the Indemnified Party's rights with
respect thereto except to the extent the Indemnified Party is materially
prejudiced by the delay.

If the Indemnified Party shall notify the Indemnifying Party of any claim or
demand pursuant to the provisions hereof, and if such claim or demand relates to
a claim or demand asserted by a third party against the Indemnified Party (a
"Third Party Claim"), the Indemnifying Party shall have the obligation either
(i) to pay such claim or demand, or (ii) defend any such Third Party Claim with
counsel reasonably satisfactory to the Indemnified Party. After the Indemnifying
Party has assumed the defense of such Third Party Claim, the Indemnifying Party
shall not be liable to the Indemnified Party under this Section 12 for any legal
or other expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof other than reasonable


                                       39



costs of investigation, provided that the Indemnified Party shall have the right
to employ counsel, at the Indemnifying Party's expense, to represent it if (A)
in the Indemnified Party's reasonable opinion the Indemnifying Party is not
diligently prosecuting the defense of such Third Party Claim, (B) such Third
Party Claim involves remedies other than monetary damages and such remedies, in
the Indemnified Party's reasonable judgment, could have a material adverse
effect on such Indemnified Party, (C) the Indemnified Party may have available
to it one or more defenses or counterclaims that are inconsistent with one or
more defenses or counterclaims that may be alleged by the Indemnifying Party, or
(D) the Indemnified Party believes in its reasonable discretion that a conflict
of interest exists between the Indemnifying Party and the Indemnified Party with
respect to such Third-Party Claim or action, and in any such event the
reasonable fees and expenses of such separate counsel for the Indemnified Party
shall be paid by the Indemnifying Party. The Indemnified Party shall make
available to the Indemnifying Party or its agents all records and other
materials in the Indemnified Party's possession reasonably required by it for
its use in contesting any Third-Party Claim or demand.

(b) No Indemnified Party may settle or compromise any claim or consent to the
entry of any judgment with respect to which indemnification is being sought
hereunder without the prior written consent of the Indemnifying Party, unless
(i) the Indemnifying Party fails to assume and diligently prosecuting the
defense of such claim or (ii) such settlement, compromise or consent includes an
unconditional release of the Indemnifying Party from all liability arising out
of such claim and does not contain any equitable order, judgment or term which
includes any admission of wrongdoing or could result in any liability (including
regulatory liability) of the Indemnifying Party or which would otherwise in any
manner affect, restrain or interfere with the business of the Indemnifying Party
or any Affiliate of the Indemnifying Party. An Indemnifying Party may not,
without the prior written consent of the Indemnified Party, settle or compromise
any claim or consent to the entry of any judgment with respect to which
indemnification is being sought hereunder unless such settlement, compromise or
consent includes an unconditional release of the Indemnified Party from all
liability arising out of such claim and does not contain any equitable order,
judgment or term which includes any admission of wrongdoing or could result in
any liability (including regulatory liability) of the Indemnified Party or which
would otherwise in any manner affect, restrain or interfere with the business of
the Indemnified Party or any of the Indemnified Party's Affiliates.

SECTION 12.4. INVESTIGATIONS. The right to indemnification based upon breaches
or inaccuracies of representations, warranties and covenants will not be
affected by any investigation conducted with respect to, or knowledge acquired
(or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, whether as a
result of disclosure by a party pursuant to this Agreement or otherwise, with
respect to the accuracy or inaccuracy of or compliance with any such
representation, warranty or covenant. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant, will not affect a party's right to
indemnification, payment of damages or other remedies based on such
representations, warranties and covenants.

SECTION 12.5. TREATMENT OF INDEMNIFICATION PAYMENTS. All indemnification
payments made pursuant to this Article XII shall be treated by the parties for
income Tax purposes as adjustments to the Purchase Price, unless otherwise
required by applicable Law.


                                       40



SECTION 12.6. EXCLUSIVE REMEDY. FROM AND AFTER THE APPLICABLE CLOSING, THE
PARTIES AGREE AND ACKNOWLEDGE THAT THE INDEMNIFICATION RIGHTS PROVIDED IN THIS
ARTICLE XII SHALL BE THE SOLE AND EXCLUSIVE REMEDY OF THE PARTIES TO THIS
AGREEMENT FOR BREACHES OF THIS AGREEMENT AND FOR ALL DISPUTES ARISING UNDER OR
RELATING TO THIS AGREEMENT AND ANY ADDITIONAL AGREEMENTS OR DOCUMENTS EXECUTED
OR DELIVERED IN OR ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY, EXCEPT
FOR POST-CLOSING COVENANTS, CASES WHERE SPECIFIC PERFORMANCE IS AVAILABLE AS A
REMEDY AND EXCEPT IN CASES OF FRAUD.

                                  ARTICLE XIII
                               DISPUTE RESOLUTION

SECTION 13.1. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS
PRINCIPLES.

SECTION 13.2. JURISDICTION AND VENUE. THE PARTIES CONSENT TO PERSONAL
JURISDICTION IN DELAWARE. THE PARTIES AGREE THAT ANY ACTION OR PROCEEDING
ARISING FROM OR RELATED TO THIS AGREEMENT SHALL BE BROUGHT AND TRIED EXCLUSIVELY
IN THE STATE OR FEDERAL COURTS OF DELAWARE. EACH OF THE PARTIES IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT. THE SELLER PARTIES EXPRESSLY
ACKNOWLEDGE THAT DELAWARE IS A FAIR, JUST AND REASONABLE FORUM AND AGREE NOT TO
SEEK REMOVAL OR TRANSFER OF ANY ACTION FILED BY THE MPT PARTIES IN SAID COURTS.
FURTHER, THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY CLAIM THAT SUCH
SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. SERVICE OF
ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY REGISTERED MAIL ADDRESSED TO A PARTY
AT THE ADDRESS DESIGNATED PURSUANT TO THIS SECTION 13.2 SHALL BE EFFECTIVE
SERVICE OF PROCESS AGAINST SUCH PARTY FOR ANY ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT. A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT MAY BE ENFORCED IN ANY OTHER COURT TO WHOSE JURISDICTION ANY OF THE
PARTIES IS OR MAY BE SUBJECT.

                                   ARTICLE XIV
                                  MISCELLANEOUS

SECTION 14.1. ASSIGNMENT. This Agreement is not assignable by any party without
the prior written consent of the other party hereto. Notwithstanding the
foregoing, the Purchasing Parties may at any time and without the consent of any
Seller Party assign all of their respective rights and obligations hereunder to
one or more of its Affiliates; provided, however, that no such assignment shall
relieve or release such Purchaser Parties from their obligations hereunder.


                                       41



SECTION 14.2. NOTICE. All notices, demands, requests and other communications or
documents required or permitted to be provided under this Agreement shall duly
be in writing and shall be given to the applicable party at its address or
facsimile number set forth below or such other address or facsimile number as
the party may later specify for that purpose by notice to the other party:

If to any Seller Party:     Prime Healthcare Services, Inc.
                            16850 Bear Valley Road
                            Victorville, California 92392
                            Attention: Lex Reddy

With a copy to:             Prime Healthcare Services, Inc.
                            16850 Bear Valley Road
                            Victorville, California 92392
                            Attention: Richard Hayes, Esq.

If to any Purchaser Party   c/o Medical Properties Trust, Inc.
                            1000 Urban Center Drive, Suite 501
                            Birmingham, AL 35242
                            Attention: Edward K. Aldag, Jr.

With a copy to:             Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
                            420 20th Street North, Suite 1600
                            Birmingham, Alabama 35203
                            Attention: Thomas O. Kolb, Esq.

Each notice shall, for all purposes, be deemed given and received:

(i) if by hand, when delivered;

(ii) if given by nationally recognized and reputable overnight delivery service,
the Business Day on which the notice is actually received by the party; or

(iii) if given by certified mail, return receipt requested, postage prepaid, the
date shown on the return receipt.

SECTION 14.3. CALCULATION OF TIME PERIOD. When calculating the period of time
before which, within which or following which any act is to be done or step
taken, the date that is the reference date in calculating such period shall be
excluded. If the last day of such period is a non-Business Day, the period in
question shall end as of the next succeeding Business Day.

SECTION 14.4. CAPTIONS. The section and paragraph headings or captions appearing
in this Agreement are for convenience only, are not a part of this Agreement,
and are not to be considered in interpreting this Agreement.

SECTION 14.5. ENTIRE AGREEMENT; MODIFICATION. This Agreement, including the
Exhibits and Schedules attached hereto, and other written agreements executed
and delivered at Closing by the parties hereto, constitute the entire agreement
and understanding of the parties with respect to


                                       42



the subject matter of this Agreement. This Agreement supersedes any prior oral
or written agreements between the parties with respect to the subject matter of
this Agreement. It is expressly agreed that there are no verbal understandings
or agreements which in any way change the terms, covenants, and conditions set
forth in this Agreement, and that no modification of this Agreement and no
waiver of any of its terms and conditions shall be effective unless it is made
in writing and duly executed by the parties hereto.

SECTION 14.6. SCHEDULES AND EXHIBITS. All Schedules and Exhibits referred to in
this Agreement and attached hereto shall be deemed a part of this Agreement and
are hereby incorporated herein by reference.

SECTION 14.7. FURTHER ASSURANCES. From time to time after the Closing and
without further consideration, the Seller Parties shall execute and deliver to
the Purchaser Parties such instruments of sale, transfer, conveyance,
assignment, consent or other instruments as may be reasonably requested by the
Purchaser Parties in order to vest all right, title and interest of the
applicable Seller Parties in and to the Assets conveyed and delivered at the
Closing or as otherwise required to carry out the purpose and intent of this
Agreement.

SECTION 14.8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Executed signature pages
to this Agreement may be delivered by facsimile transmission and any such
signature page shall be deemed an original.

SECTION 14.9. EXPENSES. The Seller Parties shall pay all costs and expenses
incurred by Seller Parties and Purchaser Parties in connection with the
transactions contemplated hereby, including, without limitation, all document
stamps, transfer, excise, recording, gains, sales, bulk sales, use and similar
conveyance Taxes and fees imposed by reason of and associated with the
transactions contemplated hereby and by deficiency, interest or penalty asserted
with respect thereto, as well as the cost of the survey, the title insurance and
all title endorsements required by the Purchaser Parties and its lenders, and
all attorneys' fees and expenses. The parties acknowledge that the Seller
Parties have already paid MPT the sum of Twenty Five thousand Dollars ($25,000)
which sum shall be credited against the expense reimbursement obligations of
Seller Parties set forth herein.

SECTION 14.10. PURCHASE OPTION. Prime shall have the right and option to
exercise any and all purchase options granted to Veritas under the Lease in
accordance with the terms thereof.

SECTION 14.11. SYNDICATION. Subject to applicable healthcare regulatory
requirements, MPT will offer up to twenty percent (20%) of the equity interests
in Acquisition Sub to the owners, operators and practicing physicians of the
Hospital at such time following closing as determined by MPT. MPT and the Seller
Parties will work together to decide which such persons receive an opportunity
to invest in the Acquisition Sub.

SECTION 14.12. SECURITIES OFFERING AND FILINGS. Notwithstanding anything
contained herein to the contrary, the Seller Parties agree to cooperate with MPT
in connection with any securities offerings and filings, or MPT's efforts to
procure or maintain financing for or related to the Real Property and
Improvements, and in connection therewith, the Seller Parties shall furnish MPT


                                       43



with such financial and other information as MPT shall request. MPT may disclose
that it has entered into this Agreement with the Seller Parties and may provide
and disclose information regarding this Agreement, the Seller Parties, the Real
Property and Improvements, and such additional information which MPT may
reasonably deem necessary, to its proposed investors in such public offering or
private offering of securities, or any current or prospective lenders with
respect to such financing. Upon reasonable advance notice, MPT and any lender
providing financing for the Real Property shall have the right to access,
examine and copy all agreements, records, documentation and information relating
to the Seller Parties, the Real Estate and Improvements, and to discuss such
affairs and information with the officers, employees and independent public
accountants of the Seller Parties as often as may reasonably be desired, but
subject to the terms of a confidentiality agreement, as reasonably approved by
the parties.

SECTION 14.13. PRIME HEALTHCARE SERVICES II, LLC. Notwithstanding any other
provision in this Agreement, Prime Healthcare Services II, LLC, a Delaware
limited liability company, shall be deemed not to be an Affiliate for purposes
of this Agreement.

SECTION 14.14. BINDING EFFECT. This Agreement shall bind and inure to the
benefit of the parties hereto and their successors and assigns; provided,
however, that this Agreement shall not inure to the benefit of any assignee
pursuant to an assignment which violates the terms of this Agreement

                   [Signatures appear on the following page.]


                                       44



IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers on the date first written above.

                                        SELLER PARTIES:

                                        VERITAS HEALTH SERVICES, INC.


                                        By: /s/ James Lally, D.O.
                                            ------------------------------------
                                        Name: James Lally, D.O.
                                              ----------------------------------
                                        Title: President
                                               ---------------------------------


                                        PRIME HEALTHCARE SERVICES, INC.


                                        By: /s/ Prem Reddy
                                            ------------------------------------
                                        Name: Prem Reddy, M.D.
                                              ----------------------------------
                                        Title: Chairman
                                               ---------------------------------


                                        DESERT VALLEY HOSPITAL, INC.


                                        By: /s/ Prem Reddy
                                            ------------------------------------
                                        Name: Prem Reddy, M.D.
                                              ----------------------------------
                                        Title: Chairman
                                               ---------------------------------


                                        PRIME HEALTHCARE SERVICES, LLC


                                        By: /s/ Prem Reddy
                                            ------------------------------------
                                        Name: Prem Reddy, M.D.
                                              ----------------------------------
                                        Title: Manager
                                               ---------------------------------


                                        DESERT VALLEY MEDICAL GROUP, INC.


                                        By: /s/ Prem Reddy
                                            ------------------------------------
                                        Name: Prem Reddy, M.D.
                                              ----------------------------------
                                        Title: Chairman
                                               ---------------------------------



                                        PURCHASER PARTIES:

                                        MPT OPERATING PARTNERSHIP, L.P.


                                        By: /s/ Edward K. Aldag, Jr.
                                            ------------------------------------
                                        Name: Edward K. Aldag, Jr.
                                              ----------------------------------
                                        Title: President and Chief Executive
                                               Officer
                                               ---------------------------------


                                        MPT OF CHINO, LLC
                                        By: MPT Operating Partnership, L.P.
                                        Its: Sole Member


                                        By: /s/ Edward K. Aldag, Jr.
                                            ------------------------------------
                                        Name: Edward K. Aldag, Jr.
                                        Title: President and Chief Executive
                                               Officer



                                    EXHIBIT A

                                      Lease

                                (See attachment)


                                       A-1



                                    EXHIBIT B

                   Legal Description of the Land/Real Property

Parcel 1 of Parcel Map No. 11169 in the City of Chino, County of San Bernardino,
State of California, as per Map recorded in Book 131, Pages 29 and 30 of Parcel
Maps, in the Office of the County Recorder of said County, together with those
portions of 10th Street, Walnut Street and Jefferson Avenue which would pass
with a conveyance of said parcels by operation of law.

Interest in the non-exclusive easements and rights for vehicular and pedestrian
ingress and egress, parking of motor vehicles, and use of drainage facilities as
set forth in the Declaration of Reciprocal Easements for Parking, Driveways and
Drainage recorded August 7, 1992, as Instrument No. 92-328555, and May 27, 1993,
as Instrument No. 93-227512, Official Records.


                                       B-1



                                 EXHIBIT 9.2(b)

                                      Deed

                                (See attachment)


                               Exhibit 9.2(b) - 1



                                 EXHIBIT 9.2(p)

                            Lease Guaranty Agreement

                                (See attachment)


                               Exhibit 9.2(p) - 1



                                 EXHIBIT 9.2(q)

                         Assignment of Rents and Leases

                                (See attachment)


                               Exhibit 9.2(q) - 1



                                 EXHIBIT 9.2(r)

                               Security Agreements

                                (See attachment)


                               Exhibit 9.2(r) - 1



                                 EXHIBIT 9.2(t)

                 Legal Opinion of Shulman, Hodges & Bastian LLP

                                (See attachment)


                               Exhibit 9.2(t) - 1



                                 EXHIBIT 9.2(w)

                              Noncompete Agreements

                                (See attachment)


                               Exhibit 9.2(w) - 1



                                 EXHIBIT 9.3(f)

      Legal Opinion of Baker, Donelson, Beaman, Caldwell & Berkowitz, P.C.

                                (See attachment)


                               Exhibit 9.3(f) - 1

                                                                   Exhibit 10.67

                                 LOAN AGREEMENT

                                  BY AND AMONG

                        MPT OPERATING PARTNERSHIP, L.P.,
                         A DELAWARE LIMITED PARTNERSHIP,

                          MPT OF ODESSA HOSPITAL, L.P.,
                         A DELAWARE LIMITED PARTNERSHIP,

                        (COLLECTIVELY, THE "MPT PARTIES")

                                       AND

                            ALLIANCE HOSPITAL, LTD.,
                          A TEXAS LIMITED PARTNERSHIP,

                                       AND

                           SRI-SAI ENTERPRISES, INC.,
                               A TEXAS CORPORATION

                     (COLLECTIVELY, THE "BORROWER PARTIES")

                          DATED AS OF December 23, 2005



                                Table of Contents



                                                                                Page
                                                                                ----
                                                                             
ARTICLE I DEFINED TERMS......................................................     1
   Section 1.1.   Certain Defined Terms......................................     1
   Section 1.2.   Interpretation; Terms Generally............................    15

ARTICLE II THE LOAN..........................................................    15
   Section 2.1.   The Loan...................................................    15
   Section 2.2.   Increased Costs............................................    16
   Section 2.3.   The Note...................................................    16
   Section 2.4.   Security...................................................    16

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BORROWER PARTIES...........    16
   Section 3.1.   Organization...............................................    17
   Section 3.2.   Authorization and Enforceability...........................    17
   Section 3.3.   Absence of Conflicts.......................................    17
   Section 3.4.   Consents and Approvals.....................................    18
   Section 3.5.   Financial Statements.......................................    18
   Section 3.6.   Accounts Receivable........................................    18
   Section 3.7.   No Undisclosed Liabilities.................................    18
   Section 3.8.   Absence of Changes.........................................    19
   Section 3.9.   Licenses...................................................    20
   Section 3.10.  Accreditation; Medicare and Medicaid; Third Party Payors...    20
   Section 3.11.  HIPAA Compliance...........................................    22
   Section 3.12.  Healthcare Regulatory Matters..............................    22
   Section 3.13.  Taxes......................................................    23
   Section 3.14.  Good Title to Collateral...................................    23
   Section 3.15.  Title and Condition of the Real Property...................    24
   Section 3.16.  Condition of Personal Property.............................    26
   Section 3.17.  Compliance with Environmental Laws.........................    26



                                        i



                                Table of Contents
                                   (continued)



                                                                                Page
                                                                                ----
                                                                             
   Section 3.18.  Insurance..................................................    27
   Section 3.19.  Litigation.................................................    28
   Section 3.20.  Contracts, Obligations and Commitments.....................    28
   Section 3.21.  Intangible Property........................................    28
   Section 3.22.  Employees and Employee Relations...........................    29
   Section 3.23.  Compliance with Law........................................    30
   Section 3.24.  Hill-Burton Obligations....................................    30
   Section 3.25.  Medical Staff Matters......................................    31
   Section 3.26.  Brokers....................................................    31
   Section 3.27.  Records....................................................    31
   Section 3.28.  Representations Complete...................................    31

ARTICLE IV REPRESENTATIONS AND WARRANTIES BY THE MPT PARTIES.................    31
   Section 4.1.   Organization...............................................    32
   Section 4.2.   Authorization; Enforcement, Absence of Conflicts...........    32
   Section 4.3.   Binding Agreement..........................................    32
   Section 4.4.   Litigation.................................................    32
   Section 4.5.   Brokers....................................................    32
   Section 4.6.   Compliance with Law........................................    32

ARTICLE V TITLE AND SURVEY...................................................    33
   Section 5.1.   Survey.....................................................    33
   Section 5.2.   Title Insurance............................................    33

ARTICLE VI COVENANTS OF THE BORROWER PARTIES.................................    34
   Section 6.1.   Affirmative Covenants......................................    34
   Section 6.2.   Negative Covenants.........................................    40
   Section 6.3.   Financial Covenants........................................    42
   Section 6.4.   General Collateral Covenants...............................    43



                                       ii



                                Table of Contents
                                   (continued)



                                                                                Page
                                                                                ----
                                                                             
   Section 6.5.   Repairs; Reserves; Restrictions............................    44
   Section 6.6.   Insurance Covenants........................................    47
   Section 6.7.   Fire and Casualty..........................................    51
   Section 6.8.   Condemnation...............................................    53
   Section 6.9.   Operational Covenants......................................    54
   Section 6.10.  Hazardous Materials and Environmental Laws.................    57
   Section 6.11.  Impositions................................................    58
   Section 6.12.  Assignment, Subletting and Sublease Subordination..........    60
   Section 6.13.  Special Purpose Entity.....................................    61
   Section 6.14.  Organizational Documents...................................    61

ARTICLE VII CLOSING CONDITIONS...............................................    62
   Section 7.1.   Conditions to the Obligations of the Borrower Parties......    62
   Section 7.2.   Conditions to the Obligations of the MPT Parties...........    62

ARTICLE VIII CLOSING.........................................................    63
   Section 8.1.   Closing Date...............................................    63
   Section 8.2.   Borrower Parties' Closing Date Deliverables................    63
   Section 8.3.   MPT Parties' Closing Date Deliverables.....................    65

ARTICLE IX TERMINATION.......................................................    66
   Section 9.1.   Termination................................................    66
   Section 9.2.   Notice and Effect..........................................    66

ARTICLE X DEFAULT............................................................    67
   Section 10.1.  Events of Default..........................................    67
   Section 10.2.  Remedies...................................................    70
   Section 10.3.  Cumulative.................................................    72
   Section 10.4.  Waiver.....................................................    72
   Section 10.5.  Cooperation................................................    72



                                       iii



                                Table of Contents
                                   (continued)



                                                                                Page
                                                                                ----
                                                                             
   Section 10.6.  Application of Funds.......................................    72
   Section 10.7.  Notices by the MPT Parties.................................    72

ARTICLE XI PERMITTED CONTESTS................................................    73

ARTICLE XII INDEMNIFICATION..................................................    73
   Section 12.1.  Borrower Parties Agreement to Indemnify....................    73
   Section 12.2.  Notification and Defense of Claims.........................    74
   Section 12.3.  Investigations.............................................    75

ARTICLE XIII DISPUTE RESOLUTION..............................................    75
   Section 13.1.  Governing Law..............................................    75
   Section 13.2.  Jurisdiction and Venue.....................................    76

ARTICLE XIV MISCELLANEOUS....................................................    76
   Section 14.1.  Limitation of Liability as to the MPT Parties..............    76
   Section 14.2.  Assignment.................................................    77
   Section 14.3.  Notice.....................................................    77
   Section 14.4.  Calculation of Time Period.................................    78
   Section 14.5.  No Waiver..................................................    78
   Section 14.6.  Captions...................................................    78
   Section 14.7.  Entire Agreement; Modification.............................    78
   Section 14.8.  Schedules and Exhibits.....................................    78
   Section 14.9.  Further Assurances.........................................    78
   Section 14.10. Counterparts...............................................    78
   Section 14.11. Expenses...................................................    79
   Section 14.12. Securities Offering and Filings............................    80
   Section 14.13. Binding Effect.............................................    80



                                       iv



                                 LOAN AGREEMENT

     THIS LOAN AGREEMENT (this "Agreement") is made and entered into as of
December 23, 2005 by and among, MPT OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership ("MPT"), MPT OF ODESSA HOSPITAL, L.P., a Delaware limited
partnership ("MPT Odessa")(MPT and MPT Odessa being herein referred to,
collectively, as the "MPT Parties"); and ALLIANCE HOSPITAL, LTD., a Texas
limited partnership ("Alliance"), and SRI-SAI ENTERPRISES, INC., a Texas
corporation (the "General Partner") (Alliance and the General Partner being
herein referred to, collectively, as the "Borrower Parties").

                                   WITNESSETH:

WHEREAS, Alliance is the owner of that certain seventy-eight (78) bed, general
acute care hospital facility, of which twenty-eight (28) beds are licensed to
Alliance's tenant (the "Hospital"), that is located on that certain real
property located in Odessa, Ector County, Texas, which real property is more
particularly described on EXHIBIT A attached hereto and incorporated herein by
reference (the "Land"), and all Improvements located thereon (collectively, the
"Real Property");

WHEREAS, Alliance has requested that MPT Odessa make and extend a loan to
Alliance in the principal amount of Forty Million and No/100 Dollars
($40,000,000.00) (the "Loan"), the proceeds of which shall be used for the
purposes and in the manner set forth herein;

WHEREAS, General Partner is the general partner of Alliance, and as such, will
derive substantial benefits from the transactions contemplated hereby; and

WHEREAS, MPT Odessa is willing to make and extend the Loan to Alliance on the
terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the promises and mutual agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto do hereby covenant and
agree as follows:

                                    ARTICLE I
                                  DEFINED TERMS

SECTION 1.1. CERTAIN DEFINED TERMS. Capitalized terms used herein shall have the
respective meanings ascribed to them in this Section 1.1.

     "Additional Charges" has the meaning set forth in Section 6.11(a) hereof.

     "Affiliate" means, with respect to any Person, (i) any Person that,
directly or indirectly, controls or is controlled by or is under common control
with such Person, (ii) any other Person that owns, beneficially, directly or
indirectly, 10% or more of the outstanding capital stock, shares or equity
interests of such Person, or (iii) any officer, director, employee, partner,


                                       1



member, manager or trustee of such Person or any Person controlling, controlled
by or under common control with such Person (excluding trustees and persons
serving in similar capacities who are not otherwise an Affiliate of such
Person). For the purposes of this definition, "control" (including the
correlative meanings of the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, through the ownership of voting securities or
otherwise.

     "Agreement" shall have the meaning set forth in the preamble hereof.

     "Alliance" shall have the meaning set forth in the preamble hereof.

     "Alliance's Notice" shall have the meaning set forth in Section 6.1(m)
hereof.

     "Appraisal" means an appraisal of the Real Property prepared by a Person
satisfactory to MPT in its sole discretion and accompanied by a letter executed
by the Person preparing such appraisal authorizing and consenting to MPT's
reliance thereon, each in form and substance satisfactory to MPT in its sole
discretion.

     "Appraised Value" means the fair market value of the Real Property as set
forth in any Appraisal.

     "Assignment of Leases and Rents" means that certain Assignment of Rents and
Leases dated as of the Closing Date made by Alliance in favor of MPT and
attached hereto as EXHIBIT B.

     "Award" means all compensation, sums or anything of value awarded, paid or
received on a total or partial Condemnation.

     "Balance Sheet Date" shall have the meaning set forth in Section 3.5
hereof.

     "Balance Sheets" shall have the meaning set forth in Section 3.5 hereof.

     "Base Interest" shall, during the Loan Term, mean an amount equal to
monthly debt service under the Loan.

     "Borrower Party Instruments" shall mean all documents, agreements and
instruments hereto for or hereafter executed and delivered by any Borrower Party
in connection with the transactions contemplated hereby or in connection with
the Loan or the Collateral and the transactions contemplated thereby, or
necessary to give effect to any of the forgoing, including, without limitation,
this Agreement, the other Loan Documents, the Tenant Leases, the Management
Agreement and each Letter of Credit.

     "Borrower Parties" shall have the meaning set forth in the preamble to this
Agreement.

     "Borrower Party Plan" shall have the meaning set forth in Section 3.22(f)
hereof.

     "Business" means the operation of the Hospital and the engagement in and
pursuit and conduct of any business venture or activity directly related
thereto.


                                       2



     "Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in New York, New
York are authorized or required by law, regulation or executive order to close.

     "Business Employees" shall have the meaning set forth in Section 3.22(a)
hereof.

     "Capital Additions" shall mean one or more new buildings or one or more
additional structures annexed to any portion of any of the Improvements, which
are constructed on any parcel or portion of the Land during the Loan Term,
including the construction of a new wing or new story.

     "CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by SARA, and as the same may be hereafter
amended, restated or modified.

     "Claim" shall have the meaning set forth in Section 3.19 hereof.

     "Closing" shall have meaning set forth in Section 8.1 of this Agreement.

     "Closing Date" shall have meaning set forth in Section 8.1 of this
Agreement.

     "CMS" means the Centers for Medicare and Medicaid Services.

     "Code" means the United States Internal Revenue Code of 1986, as amended
through the date hereof, and all regulations thereunder. Any reference herein to
a specific section or sections of the Code shall be deemed to include a
reference to any corresponding provision of future law.

     "Collateral" shall mean, collectively, the Real Property, the Personal
Property, the Rents and Leases (as such terms are defined in the Assignment of
Leases and Rents), the general partnership interest of the General Partner in
Alliance subject to the Pledge Agreement, and all other properties or assets of
the Borrower Parties that are subject or shall be subject to any lien, security
interest, or other encumbrance pursuant to the Security Documents.

     "Collateral Assignment" shall mean a collateral assignment, in form and
substance reasonably acceptable to the MPT Parties, pursuant to which the MPT
Parties shall have the right and privilege, after the occurrence of an Event of
Default, at their option, to assume from the Borrower Parties any lease of real
property or improvements to any of the Borrower Parties by any third party
lessor.

     "Commitment Fee" means an amount equal to Two Hundred Thousand and No/100
Dollars ($200,000.00).

     "Commitment Letter" means that certain letter dated November 2, 2005 from
MPT to Alliance, accepted by Alliance November 4, 2005.

     "Condemnation" means (i) the exercise of any governmental power, whether by
legal proceedings or otherwise, by a Condemnor or (ii) a voluntary sale or
transfer by MPT to any


                                       3



Condemnor, either under threat of Condemnation or while legal proceedings for
Condemnation are pending.

     "Condemnor" means any public or quasi-public authority, or private
corporation or individual, having the power of Condemnation.

     "Confidential Information" with respect to a party means (a) any
confidential, non-public or proprietary information (including, without
limitation, any business records, financial information, business activity,
ownership or investor lists, ownership or investor information, service, data,
documentation, description, know-how, concept, trade secret, copyright or other
intellectual property right) of such party, whether disclosed verbally, in
writing or electronically, or which is otherwise learned by the other party
hereto, and whether disclosed prior to, on or after the date hereof, and (b) all
data, analyses, compilations, studies or other documents prepared by the other
party hereto that contain or reflect any Confidential Information; provided,
however, that the term "Confidential Information" does not include information
which (i) is already in the other party's possession, provided that such
information is not known by the other party to be subject to another
confidentiality Agreement with or other obligation of secrecy to the disclosing
party, or (ii) becomes generally available to the public other than as a result
of a disclosure by the other party in breach hereof, or (iii) becomes available
to the other party on a non-confidential basis from a source other than the
disclosing party or its representatives, provided that such source is not known
by the other party to be bound by a confidentiality agreement with or other
obligation of secrecy to the MPT Parties.

     "Consolidated Net Worth" means at any time, the sum of the following for
the Alliance, the General Partner, and their respective consolidated
subsidiaries on a consolidated basis determined in accordance with GAAP:

     (a) the amount of capital or stated capital (after deducting the cost of
     any treasury shares), plus

     (b) the amount of capital surplus and retained earnings (or, in the case of
     a capital surplus or retained earnings deficit, minus the amount of such
     deficit), minus

     (c) the sum of the following (without duplication of deductions in respect
     of items already deducted in arriving at surplus and retained earnings):
     (i) unamortized debt discount and expense and (ii) any write-up in book
     value of assets resulting from a revaluation thereof pursuant to generally
     accepted accounting principles subsequent to the most recent Statements of
     Cash Flow prior to the date thereof, except any net write-up in value of
     foreign currency in accordance with GAAP; any write-up resulting from
     reversal of a reserve for bad debts or depreciation; and any write-up
     resulting from a change in methods of accounting for inventory.

     "Consumer Price Index" or "CPI" shall mean all urban consumers, all items,
U.S. City Average, published by the United States Department of Labor, Bureau of
Labor Statistics, in which 1982-1984 equals one hundred (100). If the Consumer
Price Index is discontinued or revised during the Loan Term, such other
governmental index or computation with which it is


                                       4



replaced shall be used in order to obtain substantially the same result as would
be obtained if the Consumer Price Index had not been discontinued or revised.

     "Contracts" shall have the meaning set forth in Section 3.20 hereof.

     "Credit Enhancements" means all security deposits, security interests,
letters of credit, pledges, guaranties, prepaid rent or other sums, deposits or
interests held by any Borrower Party, if any, with respect to the Collateral,
the Tenant Leases or the tenants or subtenants thereunder.

     "Current Manager" means TSR, LLC, a Kansas limited liability company.

     "Date of Taking" means the date the Condemnor has the right to possession
of the property being condemned.

     "Default Rate" shall have the meaning set forth in the Note.

     "DHS" shall mean the Department of State Health Services of the State of
Texas.

     "DHHS" shall mean United States Department of Health and Human Services.

     "EBITDA" means earnings before the deduction of interest, taxes,
depreciation and amortization, as determined in accordance with GAAP.

     "Environmental Claim" means any Claim, action, cause of action,
investigation or notice (written or oral) by any Person alleging actual or
potential liability for investigatory, cleanup or governmental response costs,
or natural resources or property damages, or personal injuries, attorney's fees
or penalties relating to (i) the presence, or release into the environment, of
any Hazardous Materials at any location owned, leased or operated by any
Borrower Party, now or in the past, or (ii) circumstances forming the basis of
any violation, or alleged violation, of any Environmental Law.

     "Environmental Indemnity Agreement" means that certain Environmental
Indemnity Agreement as of the Closing Date from the Borrower Parties in favor of
the MPT Parties attached hereto as EXHIBIT C.

     "Environmental Law" means each federal, state, local and foreign law and
regulation relating to pollution, protection or preservation of human health or
the environment, including ambient air, surface water, ground water, land
surface or subsurface strata, and natural resources, and including each law and
regulation relating to emissions, discharges, releases or threatened releases of
Hazardous Materials, or otherwise relating to the manufacturing, processing,
distribution, use, treatment, generation, storage, containment (whether above
ground or underground), disposal, transport or handling of Hazardous Materials,
or the preservation of the environment or mitigation of adverse effects thereon
and each law and regulation with regard to record keeping, notification,
disclosure and reporting requirements respecting Hazardous Materials, including,
without limitation, RCRA, CERCLA, SARA, the Hazardous Materials Transportation
Act, the Federal Water Pollution Control Act, the Clean Air Act, the Clean Water
Act, the Toxic Substances Control Act, the Safe Drinking Water Act, and all
similar federal,


                                       5



state and local environmental statutes, ordinances and the regulations, orders,
or decrees now or hereafter promulgated thereunder, in each case as amended from
time to time.

     "Equity Constituents" means, with respect to any Person, as applicable, the
members, general or limited partners, shareholders, stockholders or other
Persons, however designated, who are the owners of the issued and outstanding
equity or ownership interests of such Person.

     "Existing Licenses" shall have the meaning ascribed to such term in Section
3.9 hereof.

     "Existing Tenant Leases" shall have the meaning ascribed to such term in
Section 6.12(a) hereof.

     "Expense Deposit" shall mean the One Hundred Thousand Dollars ($100,000)
expense deposit paid by Alliance or its Affiliates pursuant to Section 4.1 of
the Commitment Letter.

     "Expense Reserve" shall have the meaning ascribed to such term in Section
2.1 hereof.

     "Extraordinary Repairs" All repairs to the Hospital and other Improvements
of every kind and nature, whether interior or exterior, structural or
non-structural (including, without limitation, all parking decks and parking
lots) which are considered to be extraordinary in nature (as opposed to being
ordinary or normal in nature), as the Borrower Parties and/or the MPT Parties
may determine to be necessary or appropriate from time to time during the Loan
Term.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

     "Event of Default" shall have the meaning set forth in Section 10.1 hereof.

     "Financial Statements" shall have the meaning set forth in Section 3.5
hereof.

     "Financing Statements" shall mean the financing statements evidencing the
MPT Parties' security interests in the Collateral.

     "Fiscal Year" means the twelve (12) calendar month period from January 1 to
December 31.

     "Fixtures" means all permanently affixed non-medical equipment, machinery,
fixtures, and other items of real property, including all components thereof,
now and hereafter located in, on or used in connection with, and permanently
affixed to or incorporated into the Improvements, including, without limitation,
all furnaces, boilers, heaters, electrical equipment, heating, plumbing,
lighting, ventilating, refrigerating, incineration, air and water pollution
control, waste disposal, air-cooling and air-conditioning systems and apparatus,
sprinkler systems and fire and theft protection equipment, and built-in vacuum,
cable transmission, oxygen and similar systems, all of which, to the greatest
extent permitted by law, are hereby deemed by the parties hereto to constitute
real estate, together with all replacements, modifications, alterations and
additions thereto.

     "Full Replacement Cost" shall have the meaning set forth in Section 6.6(a)
hereof.


                                       6



     "GAAP" means generally accepted accounting principles in the United States,
consistently applied. All accounting terms used herein and not expressly and
otherwise defined herein shall be construed in accordance with, and have the
meanings ascribed or imputed to them under, GAAP.

     "General Partner" shall have the meaning set forth in the preamble of this
Agreement.

     "Governing Documents" means, with respect to any Person, as applicable,
such Person's charter, articles or certificate of incorporation, formation or
organization, bylaws or other documents or instruments which establish and/or
set forth the rules, procedures and rights with respect to such Person's
governance, including, without limitation, any stockholders, limited liability
company, operating or partnership agreement related to such Person, in each case
as amended, restated, supplemented and/or modified and in effect as of the
relevant date.

     "Government Programs" shall have the meaning set forth in Section 3.10
hereof.

     "Governmental Entity" means any national, federal, regional, state, local,
quasi-governmental, provincial, municipal, foreign or multinational court or
other governmental or regulatory authority, administrative body or government,
department, board, body, tribunal, instrumentality or commission of competent
jurisdiction.

     "Guarantors" shall mean, collectively, R.J. Patel, M.D., M.C. Parekh, M.D.,
John Challapalli, M.D., Jayaram B. Naidu, M.D., Madhava Agusala, M.D.,
Ramachandrarao Kolluru, M.D., Suresh N. Gadasalli, M.D., Sudhir P. Srivastava,
M.D., Richard L. Duke, M.D., William G. Reilly, M.D., and Steven C. Riley, M.D.,
and their respective successors and assigns.

     "Guaranty" means that certain Guaranty Agreement dated as of the Closing
Date and attached hereto as EXHIBIT D.

     "Hazardous Materials" means any substance deemed hazardous under any
Environmental Law, including, without limitation, asbestos or any substance
containing asbestos, the group of organic compounds known as polychlorinated
biphenyls, flammable explosives, radioactive materials, infectious wastes,
biomedical and medical wastes, chemicals known to cause cancer or reproductive
toxicity, lead and lead-based paints, radon, pollutants, effluents,
contaminants, emissions or related materials and any items included in the
definition of hazardous or toxic wastes, materials or substances under any
Environmental Law.

     "Healthcare Fraud Laws" shall have the meaning set forth in Section 3.12(a)
hereof.

     "HIPAA" shall have the meaning set forth in Section 3.11 hereof.

     "Hospital" shall have the meaning set forth in the recitals to this
Agreement.

     "Impositions" shall mean, collectively, all civil monetary penalties, fines
and overpayments imposed by state and federal regulatory authorities, all taxes
(including, without limitation, all capital stock and franchise taxes of the MPT
Parties, all ad valorem, sales and use, single business, gross receipts,
transaction privilege, rent or similar taxes), assessments (including, without
limitation, all assessments, charges and costs imposed under the Permitted


                                       7



Encumbrances, all assessments for public improvements or benefits, whether or
not commenced or completed prior to the Closing Date and whether or not to be
completed within the Loan Term), ground rents, water, sewer or other rents and
charges, excises, tax levies, fees (including, without limitation, license,
permit, inspection, authorization and similar fees), and all other governmental
charges, in each case whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, of every character in respect of the Real Property
(including all interest and penalties thereon due to any failure in payment by
the Borrower Parties), and all other fees, costs and expenses which at any time
prior to, during or in respect of the Loan Term hereof may be charged, assessed
or imposed on or in respect of or be a lien upon (a) the MPT Parties or the MPT
Parties' interest in the Real Property, (b) the Real Property or any part
thereof or any rent therefrom or any estate, right, title or interest therein,
or (c) any occupancy, operation, use or possession of, sales from, or activity
conducted on, or in connection with, the Real Property or the leasing or use of
the Real Property or any part thereof; provided, however, nothing contained in
this Agreement shall be construed to require the Borrower Parties to pay (1) any
tax based on net income (whether denominated as a franchise or capital stock,
financial institutions or other tax) imposed on the MPT Parties, or (2) any
transfer or net revenue tax of the MPT Parties, or (3) any tax imposed with
respect to the sale, exchange or other disposition by the MPT Parties of any
portion of the Real Property or the proceeds thereof, or (4) except as expressly
provided elsewhere in this Agreement, any principal or interest on any lien,
security interests or other encumbrance on the Real Property granted by the MPT
Parties, except to the extent that any tax, assessment, tax levy or charge which
the Borrower Parties are obligated to pay pursuant to the first sentence of this
definition and which is in effect at any time during the Loan Term is totally or
partially repealed, and a tax, assessment, tax levy or charge set forth in
clause (1) or (2) is levied, assessed or imposed expressly in lieu thereof, in
which case the Borrower Parties, jointly and severally, shall pay.

     "Improvements" means all buildings, improvements, structures and Fixtures
now or on the Closing Date located on the Land, including, without limitation,
landscaping, parking lots and structures, roads, drainage and all above ground
and underground utility structures, equipment systems and other so-called
"infrastructure" improvements.

     "Indebtedness" of any Person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of such Person: (i) in
respect of borrowed money (whether secured or unsecured), (ii) under conditional
sale or other title retention agreements relating to property or services
purchased and/or sold by such Person, (iii) evidenced by bonds, notes,
debentures or similar instruments, (iv) for the payment of money relating to a
capitalized lease obligation, (v) evidenced by a letter of credit or a
reimbursement obligation of such Person with respect to any letter of credit,
(vi) pursuant to any guarantee, (vii) secured by (or for which the holder of
such obligation has an existing right, contingent or otherwise, to be secured
by) a Lien on the assets or property of such Person, and (b) all liabilities and
obligations of others of the kind described in the preceding clause (a) and
otherwise that (i) such Person is responsible or liable for, directly or
indirectly, as obligor, guarantor, surety or otherwise, or (ii) which are
secured by a Lien on any of the assets or property of such Person or (viii) the
Loan Obligations.

     "Indemnified Party" shall have the meaning set forth in Section 12.2
hereof.

     "Indemnifying Party" shall have the meaning set forth in Section 12.2
hereof.


                                       8



     "Insurance Requirements" means all terms of any insurance policy required
by this Agreement (including, without limitation, the requirements in Section
6.6 hereof) and all requirements of the issuer of any such policy, and such
additional insurance which the MPT Parties may reasonably require.

     "Intangible Property" shall have the meaning set forth in Section 3.21
hereof.

     "JCAHO" shall have the meaning set forth in Section 3.10 hereof.

     "Knowledge," "to the knowledge or best knowledge of" or similar words or
phrases means, with respect to any Person, such Person's actual or deemed
knowledge of a particular fact or matter if (i) any of such Person's current or
former officers or directors (or other Persons however denominated, exercising
similar authority with respect to such Person) including, but not limited to, in
the case of any Borrower Party, Jayaram B. Naidu, M.D., and Steven C. Riley,
M.D. (a Person's "Knowledge Group"), has actual knowledge of such fact or
matter; or (ii) any of such Person's Knowledge Group would be expected to
discover or otherwise become aware of such fact or matter after conducting a
reasonably diligent inquiry.

     "Labor Proceeding" shall have the meaning set forth in Section 3.22(c)
hereof.

     "Land" shall have the meaning set forth in recitals to this Agreement.

     "Law" means any federal, state or local statute, rule, regulation,
ordinance, order, code, policy or rule of common law, now or hereafter in
effect, and in each case as amended, and any judicial or administrative
interpretation thereof by a Governmental Entity or otherwise, including, without
limitation, any judicial or administrative order, consent, decree or judgment.

     "Legal Requirements" means all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting Alliance's operation of its business on the
Real Property, along with the Collateral or the construction, use or alteration
thereof (including, without limitation, the Americans With Disabilities Act and
Section 504 of the Rehabilitation Act of 1973) whether now or hereafter enacted
and in force, including any which may (a) require repairs, modifications, or
alterations in or to the Collateral, or (b) in any way adversely affect the use
and enjoyment thereof, and all permits, licenses, authorizations and regulations
relating thereto, and all covenants, agreements, restrictions and encumbrances
contained in any instruments, either of record or known to Alliance, at any time
in force affecting the Collateral.

     "Letter of Credit" means an unconditional and irrevocable letter of credit
from a bank acceptable to the MPT Parties in their sole discretion naming the
MPT Parties as the beneficiaries thereunder, in an amount equal to and upon
terms and conditions acceptable to the MPT Parties in its sole discretion,
subject to Section 6.3(c) hereof.

     "Licenses" means all Existing Licenses and any New Licenses.

     "Lien" means any mortgage, adverse Claim, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, lien (statutory or
otherwise) or preference, security


                                       9



interest or other encumbrance of any kind or nature whatsoever, other than the
Security Documents.

     "Limited Partnership Agreement" shall mean that certain First Amended and
Restated Limited Partnership Agreement of Alliance, effective March 8, 2005, by
and among the General Partner and the limited partners of Alliance, as the same
may be amended, restated or modified from time to time.

     "Line of Credit" shall mean a line of credit, from a financing source
acceptable of MPT and upon terms reasonably acceptable to MPT, of at least Five
Million Dollars ($5,000,000.00), which shall be available to Alliance during the
Loan Term to fund normal operating and working capital needs.

     "Loan" shall have the meaning set forth in the recitals to this Agreement.

     "Loan Documents" shall mean, collectively, this Agreement, the Note, the
Security Documents, the Guaranty, the Subordination of Management Agreement, the
Subordination Agreement, the Environmental Indemnity Agreement, and the
Commitment Letter.

     "Loan Obligations" shall mean the obligations (including obligations of
performance) and liabilities of any of the Borrower Parties to any of the MPT
Parties of every kind and description whatsoever, direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter incurred,
contracted or arising, or acquired by any of the MPT Parties from any source,
joint or several, liquidated or unliquidated, regardless of how they arise or by
what agreement or instrument they may be evidenced or whether they are evidenced
by any agreement or instrument, and whether incurred as maker, endorser, surety,
guarantor, general partner, drawer, tort-feasor, indemnitor, account party with
respect to a letter of credit or otherwise, and arising out of, incurred
pursuant to and/or in connection with any of the Loan Documents, and any and all
extensions and renewals of any of the same, including but not limited to the
obligation: (a) to pay the principal of and interest on the Note in accordance
with the terms thereof and/or hereof, including any and all extensions,
modifications, and renewals thereof and substitutions therefor; and (b) to pay,
repay or reimburse the MPT Parties for all amounts owing hereunder and/or under
any of the other Loan Documents, including any reimbursement obligations and all
MPT Damages.

     "Loan Term" shall mean the period during which any of the Loan Obligations
shall remain outstanding.

     "Management Agreement" shall mean any contracts and agreements for the
management of any part of the Real Property, including, without limitation, the
real estate and the Improvements and the operations of the Hospital.

     "Management Company" means any person, firm, corporation or other entity or
individual who or which will manage any part of the Hospital and other
Collateral.

     "Material Adverse Effect" means any change, event(s), occurrence(s) or
effect(s), whether direct or indirect, that, both before and after giving effect
to the transactions contemplated by this Agreement, could, individually or in
the aggregate, have a material adverse


                                       10



effect on (i) the business, properties, results of operations, assets, revenue,
income or condition (financial or otherwise) of, or the ability to timely
satisfy the obligations or liabilities (whether absolute or contingent) of, any
Borrower Party, (ii) the Business or the Collateral, or (iii) the ability of any
Borrower Party to perform its obligations under, and/or consummate the
transactions contemplated by, this Agreement within the time periods specified
herein.

     "Maturity Date" shall have the meaning set forth in the Note.

     "Medicaid" shall have the meaning set forth in Section 3.10 hereof.

     "Medicare" shall have the meaning set forth in Section 3.10 hereof.

     "Mortgage" means that certain Deed of Trust and Fixture Filing, dated as of
the Closing Date, by Alliance for the benefit of MPT attached hereto as EXHIBIT
E.

     "MPT" shall have the meaning set forth in the preamble to this Agreement.

     "MPT Damages" shall have the meaning set forth in Section 12.1 hereof.

     "MPT Indemnified Parties" shall have the meaning set forth in Section 12.1
hereof.

     "MPT Odessa" shall have the meaning set forth in the preamble to this
Agreement.

     "MPT Parties" shall have the meaning set forth in the preamble to this
Agreement.

     "MPT's Notice Address" shall have the meaning set forth in Section 6.6(c)
hereof.

     "Net Worth Amount" shall have the meaning set forth in Section 6.3(a)
hereof.

     "New Licenses" shall have the meaning set forth in Section 3.9 hereof.

     "New Tenant Leases" shall have the meaning ascribed to such term in Section
6.12(b) hereof.

     "Noncompete Agreement" means that certain Noncompetition Agreement, dated
as of the Closing Date, attached hereto as EXHIBIT F.

     "Note" means that certain Promissory Note, dated as of the Closing Date, in
the original principal amount of Forty Million and No/100 Dollars
($40,000,000.00) made by Alliance and payable to MPT attached hereto as EXHIBIT
G.

     "Organizational Documents" shall have the meaning set forth in Section 6.14
hereof.

     "Other Agreements" means all agreements of any kind (other than the Loan
Documents), entered into between either of the MPT Parties or any Affiliate of
the MPT Parties, on the one hand, and any Borrower Party or any Affiliate of any
Borrower Party, on the other hand.

     "Parties" shall mean, collectively, the Borrower Parties and the MPT
Parties.


                                       11



     "Partial Taking" shall have the meaning set forth in Section 6.8(c) hereof.

     "Permitted Encumbrances" means (i) Liens for or arising from current taxes
not yet due and payable; (ii) easements and other restrictions of record and
approved by the MPT Parties; (iii) matters set forth in the Title Commitment
issued by the Title Company and approved by the MPT Parties; (iv) matters
disclosed on the Survey and approved by the MPT Parties; (v) Liens arising under
the Security Documents and the other Loan Documents; or (vi) other matters,
encumbrances and defects approved by the MPT Parties and set forth in SCHEDULE
6.2 of this Agreement.

     "Person" means an individual, a corporation, a limited liability company, a
partnership, an unincorporated association, a joint venture, a Governmental
Entity or another entity or group.

     "Personal Property" shall have the meaning set forth in Section 3.16
hereof.

     "Personal Property Leases" shall have the meaning set forth in Section 3.16
hereof.

     "Physician" means any physician who has rendered or is rendering services
with respect to the operations of the Hospital.

     "Pledge Agreement" shall mean that certain Pledge Agreement, dated as of
the Closing Date, pursuant to which the general partnership interest of the
General Partner in Alliance is pledged to the MPT Parties, a copy of which is
attached hereto as EXHIBIT H.

     "Primary Intended Use" shall have the meaning set forth in Section 6.4(c)
hereof.

     "Public Taking" shall have the meaning set forth in Section 3.15(e) hereof.

     "Purchaser" shall have the meaning set forth in Section 10.2(c) hereof.

     "RCRA" means the Resource Conservation and Recovery Act of 1976, as the
same may be hereafter amended, restated or modified.

     "Real Estate Taxes" shall mean all taxes due and payable as a result of a
Party's interest in the Real Property.

     "Real Property" shall have the mean set forth in the recitals to this
Agreement.

     "Regularly Scheduled Payment of Base Interest" means any regularly
scheduled payment of Base Interest payable pursuant to the terms of the Note.

     "Repairs" shall mean any and all repairs to be made to any of the
Collateral, including, without limitation, the Improvements.

     "Reserve" shall have the meaning ascribed to such term in Section 6.5(b)
hereof.

     "SARA" means the Superfund Amendments and Reauthorization Act of 1986, as
the same may be hereafter amended, restated or modified.


                                       12



     "Schedule" shall have the meaning set forth in Section 6.1(b) hereof.

     "Search Reports" means reports of searches made of the uniform commercial
code records of the county in which the Real Property is located, and of the
office of the secretary of state of the State of Texas and in the state in which
the principal office of each Borrower Party is located.

     "Security Agreement" shall mean the Security Agreement by and between MPT
of Odessa and Alliance, a copy of which is attached hereto as EXHIBIT I.

     "Security Documents" shall collectively mean the Mortgage, the Security
Agreement, the Assignment of Leases and Rents, the Pledge Agreement, the
Collateral Assignment, and all other documents or instruments pursuant to which
any of the MPT Parties has a Lien on any of the assets or properties of the
Borrower Parties or the Guarantors.

     "Sentinel Events" shall have the meaning set forth in Section 3.10 hereof.

     "Service Provider" means any Person who has rendered or is rendering
services to or on behalf of any of the Borrower Parties with respect to the
operations of the Hospital.

     "Special Purpose Entity" means an entity which (i) exists solely for the
purpose of owning and/or leasing all or any portion of the Real Property and
conducting the operation of the Business, (ii) conducts business only in its own
name, (iii) does not engage in any business other than the ownership and/or
leasing all or any portion of the Real Property and the operation of the
Business, (iv) does not hold, directly or indirectly, any ownership interest
(legal or equitable) in any entity or any real or personal property other than
the interest which it owns in the Real Property and the other assets incident to
the operation of the Business, (v) does not have any debt other than as
permitted by the Loan Documents or arising in the ordinary course of the
Business and does not guarantee or otherwise obligate itself with respect to the
debts of any other Person other than as approved by MPT, (vi) has its own
separate books, records, accounts, financial statements and tax returns (with no
commingling of funds or assets), (vii) holds itself out as being a company
separate and apart from any other entity, (viii) maintains all company
formalities independent of any other entity.

     "Standards" shall have the meaning set forth in Section 3.11 hereof.

     "Subordination of Management Agreement" means that certain Subordination
Agreement (Management Agreement), dated as of the Closing Date by and between
Management Company and MPT Odessa attached hereto as EXHIBIT J.

     "Subordination Agreement" means that certain Subordination Agreement, dated
as of the Closing Date, pursuant to which all existing indebtedness owed to the
General Partner by Alliance is subordinated, a copy of which is attached hereto
as EXHIBIT K.

     "Survey" means a current "as-built" ALTA survey of the Real Property,
certified to ALTA requirements in effect as of January 1, 2006, and otherwise
sufficient to cause the Title Company to delete (except for shortages in area)
the printed exceptions for discrepancies, conflicts, or shortages in area or
boundary lines, or encroachments, and otherwise meeting the


                                       13



requirements of Section 5.1 hereof, and prepared by an engineer or surveyor
licensed in the state in which the Real Property is located acceptable to MPT in
its sole discretion.

     "Taking" shall mean a taking or voluntary conveyance during the Loan Term
of all or part of the Collateral, or any interest therein or right accruing
thereto or use thereof, as the result of, or in settlement of, any Condemnation
or other eminent domain proceeding affecting the Collateral whether or not the
same shall have actually been commenced.

     "Tangible Net Worth" means, with respect to any Borrower Party at any given
time, the equity of such Borrower Party determined in accordance with GAAP,
minus the value of all intangible assets used in such calculation.

     "Tax Return" means any return, declaration, filing, report, claim for
refund or information return or other statement relating to Taxes (whether filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Entity), including any schedule or attachment thereto, and
including any amendment or extension thereof.

     "Tax Structure" shall have the meaning set forth in Section 6.1(k)(iii)
hereof.

     "Tax Treatment" shall have the meaning set forth in Section 6.1(k)(iii)
hereof.

     "Taxes" means any and all taxes, charges, fees, levies or other
assessments, including, without limitation, any and all income, gross receipts,
excise, real and personal property (including leaseholds and interests in
leaseholds), sales, use, occupation, transfer, license, ad valorem, gains,
profits, gift, minimum estimated, social security, unemployment, disability,
premium, recapture, credit, payroll, withholding, severance, stamp, capital
stock, value added leasing, franchise and other taxes or similar charges of any
kind including any interest and penalties on or additions thereto or
attributable to any failure to comply with any requirement regarding any Tax
Return.

     "Tenant" means the lessees, tenants or sublessees under the Tenant Leases,
if any.

     "Tenant Leases" means all leases, subleases, commitment letters, letters of
intent and other rental agreements, whether written or oral, now or hereafter in
effect, if any, that grant or will grant a possessory interest in and to any
space in the Real Property (including the Hospital or any other Improvements) or
that otherwise assign or convey rights with regard thereto, and all Credit
Enhancements, if any, held in connection therewith.

     "THHSC" means the Texas Health and Human Services Commission.

     "Third Party Claim" shall have the meaning set forth in Section 12.2(a)
hereof.

     "Title Commitment" means a current commitment issued by the Title Company
to the MPT Parties pursuant to the terms of which the Title Company shall commit
to issue the Title Policy to the MPT Parties in accordance with the provisions
of this Agreement, and reflecting all matters which would be listed as
exceptions to coverage on the Title Policy.

     "Title Company" shall have the meaning set forth in Section 5.2 hereof.


                                       14



     "Title Policy" means a title insurance policy in the amount of Forty
Million and No/100 Dollars ($40,000,000.00) issued by the Title Company in form
and substance satisfactory to MPT in its sole discretion and meeting the
requirements of Section 5.2 hereof.

     "Total Taking" shall have the meaning set forth in Section 6.8(b) hereof.

     "Unsuitable for Its Use" or "Unsuitable for Its Primary Intended Use" as
used anywhere in this Agreement, the terms "Unsuitable for Its Use" or
"Unsuitable for Its Primary Intended Use" shall mean that, by reason of damage
or destruction, or a partial Taking by Condemnation, the Facility cannot be
operated on a commercially practicable basis for its Primary Intended Use,
taking into account, all relevant factors, and the effect of such damage or
destruction or partial Taking.

SECTION 1.2. INTERPRETATION; TERMS GENERALLY. The definitions set forth in
Section 1.1 and elsewhere in this Agreement shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. Unless otherwise indicated, the words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation."
The words "herein", "hereof" and "hereunder" and words of similar import shall
be deemed to refer to this Agreement (including the Schedules and Exhibits) in
its entirety and not to any part hereof, unless the context shall otherwise
require. All references herein to Articles, Sections, Schedules and Exhibits
shall be deemed to refer to Articles, Sections and Schedules of, and Exhibits
to, this Agreement, unless the context shall otherwise require. Unless the
context shall otherwise require, any references to any agreement or other
instrument or statute or regulation are to it as amended and supplemented from
time to time (and, in the case of a statute or regulation, to any corresponding
provisions of successor statutes or regulations). Any reference in this
Agreement to a "day" or number of "days" that does not refer explicitly to a
"Business Day" or "Business Days" shall be interpreted as a reference to a
calendar day or number of calendar days. If any action or notice is to be taken
or given on or by a particular calendar day, and such calendar day is not a
Business Day, then such action or notice shall be deferred until, or may be
taken or given on, the next Business Day.

                                   ARTICLE II
                                    THE LOAN

SECTION 2.1. THE LOAN. Based upon the representations, warranties and covenants
of the Borrower Parties as set forth herein, and subject to the terms and
conditions hereinafter set forth, MPT Odessa shall loan and advance to Alliance
the principal amount of Forty Million and NO/100 Dollars ($40,000,000.00) at the
Closing, the proceeds of which Loan shall be used by Alliance for general
business purposes directly related to and necessitated by the Business.
Notwithstanding the foregoing, at the Closing, the Borrower Parties shall
deposit One Hundred Thousand and NO/100 Dollars ($100,000.00) of the Loan
proceeds into a reserve account (the "Expense Reserve") to be held by MPT for a
period of sixty (60) days following the Closing Date. The amounts in the Expense
Reserve, including interest, shall be used by the MPT Parties to pay the costs
and expenses pursuant to Section 14.11 hereof, without the necessity of
obtaining the signature of an officer of the Borrower Parties. The Borrower
Parties hereby grant


                                       15



to the MPT Parties a security interest in all monies deposited into the Expense
Reserve and the Borrower Parties shall, within fifteen (15) days following the
Closing Date, execute all documents necessary for the MPT Parties to perfect
their security interest in the Expense Reserve. So long as no Event of Default
has occurred, and no event has occurred which with the giving of notice or the
passage of time or both would constitute an Event of Default hereunder, any
amounts remaining in the Expense Reserve, after the payment of and the
reimbursement for the costs and expenses payable by the Borrower Parties
pursuant to Section 14.11 hereof, shall be returned to Alliance promptly
following the expiration of such sixty (60) day period.

SECTION 2.2. INCREASED COSTS.

     (a) If, after the date of delivery of this Agreement, any change in any law
or regulation or in the interpretation, administration or enforcement thereof by
any court or governmental authority charged with the administration thereof or
any action by any governmental authority (whether or not constituting or
resulting from such change) shall impose, modify or deem applicable any reserve,
assessment, special deposit or similar requirement against the Loan made by MPT
Odessa, and the result of any such event shall be to increase the cost to the
MPT Parties of making or maintaining the Loan (which increase in cost shall be
the result of the MPT Parties' reasonable allocation of the aggregate of such
cost increases resulting from such events and shall be calculated without giving
effect to any participation granted by the MPT Parties in this Agreement or
elsewhere), then, upon demand by the MPT Parties, Alliance shall immediately pay
to the MPT Parties from time to time, as specified by the MPT Parties in
writing, additional amounts which shall be sufficient to compensate the MPT
Parties for such increased costs.

     (b) The MPT Parties shall deliver to the Borrower Parties a certificate as
to such increased costs incurred by the MPT Parties as a result of any event
referred to in subsection (a) of this Section, and such certificate shall be
conclusive, absent manifest error, as to the amount thereof. In making the
determination contemplated by such certificate, the MPT Parties may make such
reasonable estimates, assumptions, allocations and the like that the MPT Parties
deem to be appropriate.

SECTION 2.3. THE NOTE. The Loan shall be evidenced by, and shall bear interest,
be repaid and be subject to such other terms and conditions all as set forth in,
the Note.

SECTION 2.4. SECURITY. The Loan Obligations of the Borrower Parties shall be
secured by, among other things, the Security Documents and the other Loan
Documents.

                                   ARTICLE III
             REPRESENTATIONS AND WARRANTIES OF THE BORROWER PARTIES

With the understanding that the MPT Parties shall rely hereon, and as a material
inducement to the MPT Parties to enter into this Agreement and to MPT Odessa
making and extending the Loan, each Borrower Party hereby jointly and severally
represents, warrants and covenants to the MPT Parties as of the date hereof and
as of the Closing Date as follows:


                                       16



SECTION 3.1. ORGANIZATION. Each Borrower Party is a corporation, limited
liability company or limited partnership, as applicable, duly incorporated,
organized or formed (as applicable), validly existing and in good standing under
the laws of their respective states of incorporation, organization or formation,
as applicable, and is duly licensed in each jurisdiction in which the nature of
the business conducted, or the assets owned, operated and/or leased, by such
Borrower Party requires or makes such qualification necessary. Alliance is, and
has at all times since its incorporation, organization or formation, as
applicable, been, a Special Purpose Entity. Simultaneously with the execution of
this Agreement, Alliance has provided the MPT Parties evidence that Alliance is
a Special Purpose Entity and is in good standing in the state of its
organization and in the state in which the Collateral is located. SCHEDULE 3.1
sets forth the ownership of each Borrower Party and, except as set forth
therein, no other Person has any equity interest in any Borrower Party or any
option, warrant or other right to acquire same, nor shall any other Party obtain
any such interest, option, warrant or right without the prior written consent of
MPT. The Board of Directors of Alliance consists of seven (7) directors, and no
more than three (3) of such directors are Equity Constituents of the Borrower
Parties.

SECTION 3.2. AUTHORIZATION AND ENFORCEABILITY. Each Borrower Party has the
applicable requisite corporate or limited partnership power and authority to
conduct its business as it is now being conducted and as proposed to be
conducted and to execute, deliver and carry out the terms of this Agreement,
together with all documents and agreements necessary to give effect to the
provisions of this Agreement and the other Borrower Party Instruments, and to
consummate the transactions contemplated hereby and thereby. All applicable
corporate or limited partnership actions required to be taken by each Borrower
Party (including, without limitation, all necessary actions by the board of
directors, general partners, and Equity Constituents of such Borrower Party) to
authorize the execution, delivery and performance of this Agreement as well as
the other Borrower Party Instruments and all transactions contemplated hereby
and thereby, have been duly and properly taken or obtained in accordance and
compliance with, as applicable, such Borrower Party's Governing Documents. Each
Borrower Party has heretofore delivered to the MPT Parties true, correct and
complete copies of such Borrower Party's Governing Documents. No other action on
the part of any Borrower Party or any of its Equity Constituents is necessary to
authorize the execution, delivery and performance of this Agreement or the other
Borrower Party Instruments and all transactions contemplated hereby and thereby.
This Agreement, the Borrower Party Instruments and all agreements to which any
Borrower Party will become a party in connection herewith or therewith are and
will constitute the valid and legally binding obligations of such Borrower
Party, and are and will be enforceable against such Borrower Party in accordance
with the respective terms hereof or thereof, except as enforceability may be
restricted, limited or delayed by applicable bankruptcy, insolvency or other
similar laws affecting creditors' rights generally and except as enforceability
may be subject to and limited by general principles of equity (regardless of
whether considered in a proceeding in equity or at law).

SECTION 3.3. ABSENCE OF CONFLICTS. Each Borrower Party's execution, delivery and
performance of this Agreement and the other Borrower Party Instruments, and the
consummation of the transactions contemplated hereby and thereby, will not, with
or without the giving of any applicable notice and/or the passage of time: (i)
violate or conflict with any provision of such Borrower Party's Governing
Documents; (ii) violate any provision of any Law to which such Borrower Party is
subject; (iii) violate or conflict with any judgment, order, writ or decree of
any court applicable to such Borrower Party; (iv) result in or cause the
creation of a Lien on any of


                                       17



the Collateral other than those in favor of the MPT Parties hereunder or
thereunder; or (v) except as disclosed on SCHEDULE 3.3, result in the breach or
termination of any provision of, or create rights of acceleration or constitute
a default under, the terms of any indenture, mortgage, deed of trust, contract,
agreement or other instrument to which such Borrower Party is a party or by
which such Borrower Party or any of the Collateral is bound.

SECTION 3.4. CONSENTS AND APPROVALS. Except as set forth on SCHEDULE 3.4, no
license, permit, qualification, order, consent, authorization, approval or
waiver of, or registration, declaration or filing with, or notification to, any
Governmental Entity or other Person is required to be made or obtained by or
with respect to any Borrower Party in connection with the execution, delivery
and performance of this Agreement or the Borrower Party Instruments by any
Borrower Party or the consummation of the transactions contemplated hereby or
thereby.

SECTION 3.5. FINANCIAL STATEMENTS. SCHEDULE 3.5 sets forth (i) the audited
balance sheets of Alliance for the fiscal years ended December 31, 2003 and
December 31, 2004, (ii) the unaudited balance sheet of each Borrower Party at
June 30, 2005 (the "Balance Sheet Date") (the balance sheets described in
subsections (i) and (ii) above being herein referred to, collectively, as the
"Balance Sheets"), (iii) the audited statement of income and cash flows of
Alliance for the fiscal years ended December 31, 2003 and December 31, 2004 and
(iv) the unaudited statement of income of Alliance for the six (6) month period
ended June 30, 2005 (the financial statements described in this sentence, being
herein referred to, collectively, as the "Financial Statements"). Except as set
forth on SCHEDULE 3.5, the Financial Statements have been prepared in accordance
with GAAP, are based on the books, records and accounts of the Borrower Parties
and fairly present the financial condition and results of operations, cash flows
and shareholders' equity of the Borrower Parties as of the respective dates
thereof and for the respective periods indicated therein, except (i) that the
unaudited interim statements do not include complete note (including footnote)
disclosure as required by GAAP; and (ii) that the unaudited interim statements
are subject to normal, year-end adjustments which are not, and will not be,
material in amount or effect, either individually or in the aggregate.

SECTION 3.6. ACCOUNTS RECEIVABLE. The accounts receivable of each Borrower Party
include only accounts receivable arising from bona fide transactions in the
conduct of the ordinary course of business of such Borrower Party, are in all
material respects true and genuine, represent legal, valid and binding
obligations of the respective debtors enforceable in accordance with their terms
and are collectible net of reserves. No material payment of said receivables is
contingent upon performance of any obligations or contract, past or future, and,
except as set forth on SCHEDULE 3.6, all such receivables are free of all
security interests and encumbrances created by any Borrower Party. Except as set
forth on SCHEDULE 3.6, no defense, counterclaim, offset or adjustment exists as
to any such account receivable. Except as set forth on SCHEDULE 3.6, the
Borrower Parties have good, clear and indefeasible title to and ownership of all
their respective accounts receivable, free and clear of all Liens and may grant
the MPT Parties at least a second priority security interest in and to such
accounts receivable.

SECTION 3.7. NO UNDISCLOSED LIABILITIES. Except as set forth on SCHEDULE 3.7, no
Borrower Party has any material liability or obligation, whether absolute,
accrued, contingent or otherwise, including any potential future liability
arising out of acts or omissions which have already occurred, which is not fully
and accurately reflected or reserved against in the Balance Sheets


                                       18



except for liabilities or obligations that may arise in the ordinary course of
business of the Borrower Parties, consistent with the past practice of the
Borrower Parties since the date of the most recent Financial Statement delivered
to the MPT Parties (none of which results from, arises out of, relates to, is in
the nature of, or is caused by any breach of contract, breach of warranty, tort,
infringement or violation of law). No Borrower Party has Knowledge of any fact,
condition or circumstance which could form the basis of any such liability or
obligation.

SECTION 3.8. ABSENCE OF CHANGES. Except as set forth on SCHEDULE 3.8, each
Borrower Party has, since June 30, 2005:

     (a) conducted its business only in the ordinary course of business and
consistently with its past practices;

     (b) not suffered any change, event or circumstance which has had, or could
have, a Material Adverse Effect;

     (c) preserved its legal existence and retained its business organization
intact;

     (d) maintained its relationships with all suppliers, trade creditors and
trade debtors;

     (e) paid or satisfied all of its debts, liabilities or obligations as the
same became due;

     (f) paid all compensation and other obligations to its employees when the
same became due and payable;

     (g) timely made all applicable filings with Governmental Entities;

     (h) not mortgaged, pledged, subjected to Lien, charged, encumbered or
granted a security interest in or to any of the Collateral other than the lien
of the Security Documents and the other Loan Documents;

     (i) except as otherwise provided in this Agreement, the Security Documents
and the other Loan Documents, not sold or transferred any of its assets except
for sales of inventory in the ordinary course of business and consistently with
its past practices;

     (j) not cancelled any debts owing to it or otherwise granted or waived any
right of substantial value;

     (k) not terminated or materially modified any contract, lease, agreement or
arrangement with any payor, vendor or supplier;

     (l) not made any material capital expenditure or commitment;

     (m) not made or received any loans or advances to or from any Person;

     (n) not made or suffered any change to its Governing Documents;

     (o) maintained its books and records in accordance with GAAP, consistent
with past practices;


                                       19



     (p) not incurred, assumed or guaranteed any Indebtedness;

     (q) not experienced or caused any defections in its medical staff; or

     (r) not agreed or offered, whether in writing or otherwise, to take, and no
Borrower Party (nor any Person or group of Persons possessing and/or exercising
management authority with respect to such Borrower Party) or any Equity
Constituents of any Borrower Party have authorized the taking of, in
contravention any action described in Section 3.8(a) through Section 3.8(p)
above.

SECTION 3.9. LICENSES. The Borrower Parties have all federal, state and local
governmental licenses, permits, approvals, qualifications, variances,
certificates of need, franchises, accreditations, certificates, certifications,
consents, permits and other authorizations and all contracts, including
contracts with Governmental Entities, from all applicable Governmental Entities
necessary or proper in order to operate the Hospital and to conduct the Business
(the "Existing Licenses"). All Existing Licenses issued to and held by the
Borrower Parties as of the date hereof are identified and described on SCHEDULE
3.9. True, correct, and current copies of each such Existing License have been
previously delivered to the MPT Parties by the Borrower Parties. Additionally,
the Borrower Parties shall immediately deliver to MPT Parties all additional
federal, state and local governmental licenses, permits, approvals,
qualifications, variances, certificates of need, franchises, accreditations,
certificates, certifications, consents, permits and other authorizations, and
all contracts, including contracts with Governmental Entities, that are
necessary or proper to operate the Hospital and to conduct the Business that are
obtained during the Loan Term (the "New Licenses"). Except as set forth on
SCHEDULE 3.9, the Borrower Parties have good, clear and indefeasible title to
and ownership of all the Existing Licenses, free and clear of all Liens, and may
grant the MPT Parties a first priority security interest in and to the Existing
Licenses. Except as set forth on SCHEDULE 3.9, the Borrower Parties previously
have complied, and are currently complying, with their respective obligations
under each of the Existing Licenses and all such Existing Licenses are in full
force and effect. No written notice from any authority with respect to a
threatened, pending or possible revocation, termination, suspension or
limitation of any of the Existing Licenses has been issued or given to any
Borrower Party, and no Borrower Party has any Knowledge of the proposed or
threatened issuance of any such notice or of any grounds or basis therefor. The
Hospital is currently licensed as a general acute-care hospital with fifty (50)
general acute-care beds, and will remain so licensed through the Closing Date in
compliance with, and subject only to, the usual and customary laws and
government regulations pertaining to the operation of an acute-care hospital in
the State of Texas.

SECTION 3.10. ACCREDITATION; MEDICARE AND MEDICAID; THIRD PARTY PAYORS. Alliance
is in the process of obtaining accreditation by the Joint Commission on
Accreditation of Healthcare Organizations ("JCAHO") and, to the extent
available, has previously delivered to the MPT Parties true, correct and
complete copies of the following documents: (i) the most recent JCAHO
accreditation survey reports for the Hospital and deficiency list and plan of
correction, if any, and a list and description of events in the past three (3)
years at the Hospital that constitute "Sentinel Events" (as defined by JCAHO),
if any, and any documentation that was created prepared and/or produced by, or
on behalf of, any Borrower Party to satisfy JCAHO requirements relating to
addressing such Sentinel Events; (ii) any state licensing survey reports


                                       20



with respect to the Hospital for the two (2) year period prior to the date
hereof, as well as any statements of deficiencies and plans of correction in
connection with such reports; (iii) the fire marshal's surveys for the past two
(2) years and list of deficiencies, if any, for the Hospital; and (iv) the
boiler inspection reports for the past two (2) years and list of deficiencies,
if any, for the Hospital. Alliance has taken all reasonable steps to correct all
such deficiencies and a description of any uncorrected deficiency is set forth
on SCHEDULE 3.10. Each Borrower Party participates without restriction under
Title XVIII of the Social Security Act ("Medicare") and Title XIX of the Social
Security Act ("Medicaid"), the Medicare and the Medicaid programs of the State
of Texas, and the TRICARE/CHAMPUS programs (collectively, the "Government
Programs"). Alliance has received Medicare and Medicaid reimbursement with
respect to the Hospital and has taken all actions necessary to be eligible to
receive payment without restriction under Medicare and Medicaid. The Hospital is
in compliance with the conditions of participation for the Government Programs,
maintains all approvals or qualifications necessary for capital reimbursement,
and has taken all actions deemed necessary by CMS to be in compliance with 42
C.F.R. Sections 489.20 and 489.24, such that its Medicare provider agreement
will not be terminated for failure to so comply. Except as set forth on SCHEDULE
3.10, there is no pending, nor, to the best of the Borrower Parties' Knowledge,
threatened, proceeding or investigation under the Government Programs involving
the Hospital or any of the Collateral. Alliance has previously delivered to the
MPT Parties true, correct and complete copies of the most recent Medicare and
Medicaid certification survey reports for the Hospital, including any statements
of deficiencies and plans of correction and the corrective action plans related
thereto. Alliance has taken all reasonable steps to correct all such
deficiencies and a description of any uncorrected deficiency is set forth on
SCHEDULE 3.10. With respect to the operation of the Hospital, except as set
forth on SCHEDULE 3.10, none of the Borrower Parties nor any of their officers,
directors or any of the Business Employees (as hereinafter defined), nor any
Borrower Party (or Equity Constituent thereof) or, to the Borrower Parties'
Knowledge, any Service Provider (i) has been excluded, suspended or debarred
from, or otherwise adjudicated, deemed or determined ineligible for,
participation in any Government Program, including Medicare or Medicaid, (ii)
has been convicted of a criminal offense related to conduct that would trigger
an exclusion from any Government Program, (iii) committed any act or omission
which could result in, or form the basis of, any of the actions described in
clauses (i) or (ii) of this sentence; and (v) no Medicare funds have been used
to make any payment for any items or services furnished by any excluded
individual. Alliance has timely filed, or caused to be timely filed, all cost
reports required by third party payors, including, but not limited to,
Government Programs and other insurance carriers, and, except as disclosed on
SCHEDULE 3.10 all such reports are or will be complete and accurate when filed.
Except as disclosed on SCHEDULE 3.10, Alliance is, and has been, in compliance
with filing requirements with respect to cost reports of the Hospital, including
appropriate allocation of expenses associated with any management or consulting
services provided by the Borrower Parties or any employees of the Borrower
Parties, and such reports do not claim, and the Hospital has not received,
payment or reimbursement in excess of the amount provided or allowed by
applicable law or any applicable agreement, except where excess reimbursement
may be noted on the cost report. True and correct copies of the cost reports to
any and all third parties for the Hospital for the three (3) most recent fiscal
years with respect to which Alliance received such cost reports have been made
available to the MPT Parties. Except as disclosed on SCHEDULE 3.10, no Borrower
Party has received any written notice of any dispute relating to the Hospital
between any Borrower Party and any Governmental


                                       21



Entity, including any fiscal intermediary or carrier, federal, state or local
governmental body or entity, or the Administrator of the Center for Medicare and
Medicaid Services, with respect to any Government Program cost reports or claims
filed with respect to the Hospital, on or before the date of this Agreement.

SECTION 3.11. HIPAA COMPLIANCE. Each Borrower Party is in full compliance with
the Standards for Privacy of Individually Identifiable Health Information and
the Transaction and Code Set Standards (the "Standards") which were promulgated
pursuant to the Health Insurance Portability and Accountability Act of 1996
("HIPAA"). SCHEDULE 3.11 includes any privacy, security or transaction and code
set standards compliance plan of each Borrower Party in place or in development,
and any plans, analyses or budgets relating to information systems, including
but not limited to necessary purchases, upgrades or modifications to effect
HIPAA compliance.

SECTION 3.12. HEALTHCARE REGULATORY MATTERS.

     (a) No Borrower Party, or, to the Borrower Parties' Knowledge, any
Physician, Service Provider or other Person rendering services (including
directly or indirectly referring patients) to or at, or in any way affiliated
with, the Hospital (i) is a party to, or has received notice of, the
commencement of any investigation or debarment proceedings or any governmental
investigation or action (including any civil investigative demand or subpoena)
under the False Claims Act (31 U.S.C. Section 3729 et seq.), the Anti-Kickback
Act of 1986 (41 U.S.C. Section 51 et seq.), the Federal Health Care Programs
Anti-Kickback statute (42 U.S.C. Section 1320a-7a(b)), the Ethics in Patient
Referrals Act of 1989, as amended (Stark Law) (42 U.S.C. 1395nn), the Civil
Money Penalties Law (42 U.S.C. Section 1320a-7a), or the Truth in Negotiations
(10 U.S.C. Section 2304 et seq.), Health Care Fraud (18 U.S.C. 1347), Wire Fraud
(18 U.S.C. 1343), Theft or Embezzlement (18 U.S.C. 669), False Statements (18
U.S.C. 1001), False Statements (18 U.S.C. 1035), and Patient Inducement Statute
and equivalent state statutes or any rule or regulation promulgated by a
Governmental Entity with respect to any of the foregoing (collectively, the
"Healthcare Fraud Laws") affecting any Borrower Party, the Hospital, or the
Business (and no grounds for any such proceeding, investigation or action
exist); and (ii) is not in full compliance with all applicable Healthcare Fraud
Laws. The terms and structure of the Tenant Leases currently comply, and shall
comply in all respects, with all Healthcare Fraud Laws.

     (b) Except as set forth on SCHEDULE 3.12, no Borrower Party, or, to the
Borrower Parties' Knowledge, any Physician, Service Provider or other Person
rendering services (including directly or indirectly referring patients) to or
at, or in any way affiliated with, the Hospital, has ever been investigated,
charged or implicated in any violation of any state or federal statute or
regulation involving false, fraudulent or abusive practices relating to
participation in state or federally sponsored reimbursement programs, including,
but not limited to, false or fraudulent billing practices. No Borrower Party,
or, to the Borrower Parties' Knowledge, any Physician, Service Provider or other
Person rendering services (including directly or indirectly referring patients)
to or at, or in any way affiliated with, the Hospital, has ever engaged in any
of the following: (i) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any applications for any
benefit or payment under Medicare or Medicaid program; (ii) knowingly and
willfully making or causing to be made any false statement or representation of
a material fact for use in determining rights


                                       22



to any benefit or payment under Medicare or Medicaid program; (iii) failing to
disclose knowledge of any event affecting the initial or continued right to any
benefit or payment under Medicare or Medicaid program on its own behalf or on
behalf of another, with intent to secure such payment or benefit fraudulently;
(iv) knowingly and willfully soliciting, paying, or receiving any remuneration
(including kickback, bribe or rebate), directly or indirectly, overtly or
covertly, in cash or in kind, or offering to pay such remuneration (A) in return
for referring an individual to a Person for the furnishing or arranging for the
furnishing of any item or service for which payment may be made in whole or in
part by Medicare or Medicaid, or (B) in return for purchasing, leasing or
ordering or arranging for or recommending the purchasing, leasing or ordering of
any good, facility, service, or item for which payment may be made in whole or
in part by Medicare or Medicaid; (v) presenting or causing to be presented a
claim for reimbursement for services that is for an item or service that was
known or should have been known to be (A) not provided as claimed or (B) false
or fraudulent; or (vi) knowingly and willfully making or causing to be made or
inducing or seeking to induce the making of any false statement or
representation (or omitting to state a fact required to be stated therein or
necessary to make the statements contained therein not misleading) of a material
fact with respect to (A) a facility in order that the facility may qualify for
Governmental Entity certification or (B) information to be provided under 42 USC
Section 1320a-3.

SECTION 3.13. TAXES. Each Borrower Party has duly filed or caused to be filed
all Tax Returns of such Borrower Party (taking into account valid extensions of
time to file) prior to the applicable due date therefor. Such Tax Returns are
accurate and complete in all material respects, and each Borrower Party has paid
or caused to be paid all Taxes for the periods covered thereby, whether or not
shown to be due on such Tax Returns. There are (i) no outstanding Liens for any
Taxes that have been filed by any Governmental Entity against the Collateral or
any other assets of any Borrower Party used in the Business (other than for ad
valorem taxes not yet due and payable), and (ii) no claims being asserted with
respect to any Taxes relating to any Borrower Party, the Collateral or the
Business for which any MPT Party could be held liable, and there is no basis for
the assertion of any such claim. No Borrower Party has made or agreed or offered
to make, or revoked or agreed or offered to revoke, a Tax election with respect
to or affecting the Collateral at any time during the last two (2) years. Except
as set forth on SCHEDULE 3.13, no Borrower Party is a party to any tax abatement
agreement relating to the Collateral. Except as disclosed with reasonable
specificity on SCHEDULE 3.13, there are no outstanding waivers or agreements
extending the statute of limitations for any period with respect to any Tax to
which the Collateral or any of the MPT Parties may be subject following the date
hereof.

SECTION 3.14. GOOD TITLE TO COLLATERAL. Except as set forth on SCHEDULE 3.14,
each Borrower Party has good, absolute and marketable title to, and unrestricted
possession of, all of the Collateral (other than the Real Property, which is
addressed in Section 3.15 below, Personal Property, which is addressed in
Section 3.16 below, and accounts receivable, which are addressed in Section 3.6
above), free and clear of all Liens (other than Permitted Encumbrances) and any
adverse Claims of third parties, and such Borrower Party may grant the MPT
Parties a first priority security interest in and to all of the Collateral. The
Collateral constitutes all assets and properties necessary for the operation of
the Hospital and the Business as they are currently being operated.


                                       23



SECTION 3.15. TITLE AND CONDITION OF THE REAL PROPERTY.

     (a) Except as set forth on SCHEDULE 3.15, Alliance is the sole and
exclusive legal and equitable owner of all right, title and interest in the Real
Property.

     (b) The location, construction, occupancy, operation, use and encumbrance
of the Real Property (including the Improvements) do not violate any applicable
law, statute, ordinance, rule, regulation, order or determination of any
Governmental Entity or any restrictive covenant or deed restriction (recorded or
otherwise) affecting the Real Property, including, without limitation, any
applicable zoning or subdivision ordinance or building code, flood disaster law,
or health and environmental law or regulation.

     (c) With regard to the Real Property, except as set forth on SCHEDULE
3.15(C), there are no (i) encroachments onto or from adjacent properties; (ii)
violations of set-back, building or side lines; (iii) encroachments onto any
easements or servitudes located on such Real Property; (iv) pending or, to the
Knowledge of any Borrower Party, threatened boundary line disputes; (v) portions
of such Real Property located in a flood plain or in an area defined as a
wetland under applicable state or federal law; (vi) cemeteries or gravesites
located on the Real Property; or (vii) mine shafts under the Real Property or
any other latent defects, such as sinkholes, regarding or affecting the Real
Property.

     (d) The existing water, sewer, gas and electricity lines, storm sewer and
other utility systems are adequate to serve the utility needs of the Real
Property. All of said utilities are installed and operating, and all
installation and connection charges have been paid in full.

     (e) Except as set forth on SCHEDULE 3.15(E), neither the whole nor any
portion of the Real Property has been condemned, requisitioned or otherwise
taken by any public authority (a "Public Taking"), and no notice of any Public
Taking has been received by any Borrower Party with regard to any of the Real
Property. The Borrower Parties shall immediately deliver any notice thereof to
the MPT Parties. No Borrower Party has any Knowledge of any Public Taking being
threatened or contemplated. No Borrower Party has any Knowledge of any public
improvements which have been ordered to be made and/or which have not heretofore
been assessed, and, to the Knowledge of the Borrower Parties, there are no
special, general or other assessments pending or threatened against or affecting
any of the Real Property.

     (f) Except as set forth on SCHEDULE 3.15(F), there are no Claims, actions,
suits, proceedings or investigations pending or, to the Knowledge of any
Borrower Party, threatened, against or affecting all or any portion of the Real
Property.

     (g) All Existing Licenses required by all Governmental Entities having
jurisdiction have been issued for the Real Property and are in full force and
effect. The Improvements, as designed and constructed, comply with all statutes,
restrictions, regulations and ordinances applicable thereto, including but not
limited to the Americans with Disabilities Act and Section 504 of the
Rehabilitation Act of 1973. No Borrower Party either has in its possession or
has Knowledge of any studies or reports which specify or suggest the presence of
any defects in the design or construction of any of the Improvements, and if any
such report is obtained, Borrower Party shall deliver any such study or report
to the MPT Parties.


                                       24



     (h) No Borrower Party has Knowledge of any fact or condition which would
result in the termination of the current access from the Real Property to any
presently existing public highways and/or roads adjoining or situated on the
Real Property or to sewer or other utility services to serve the Real Property.

     (i) SCHEDULE 3.15(I) attached hereto sets forth an accurate and complete
list of all Tenant Leases. SCHEDULE 3.15(I) designates which of the Tenant
Leases described therein are with the referral sources (as determined by any of
the Healthcare Fraud Laws) of any Borrower Party or Guarantor. SCHEDULE 3.15(I)
specifies the rent and security deposit, if any, for each Tenant Lease. The
Borrower Parties shall provide the MPT Parties with complete, correct and
current copies of all Tenant Leases. The Borrower Parties shall provide to the
MPT Parties, prior to the Closing Date, Tenant Lease estoppels in form
satisfactory to the MPT Parties from all Tenants under the applicable Tenant
Leases. Except for the Tenant Leases and any other items listed on SCHEDULE
3.15(I), there are no purchase contracts, leases of space, options, rights of
first refusal or other written or oral agreements of any kind whereby any person
or entity has acquired, or has any basis to assert any right, title or interest
in, or right to the possession, use, enjoyment or proceeds of, any part or all
of the Real Property or the Improvements.

     (j) Except as set forth on SCHEDULE 3.15(J), no Borrower Party has accepted
the payment of rent or other sums due under any of the Tenant Leases more than
one (1) month in advance. None of the Tenant Leases and none of the rents or
other charges payable thereunder, if any, have been assigned, pledged or
encumbered. Except as set forth on SCHEDULE 3.15(J), as of the Closing Date, no
brokerage or leasing commissions or other compensations are or will be due or
payable to any Person with respect to, or on account of, any Tenant Lease or any
extensions or renewals thereof, if any, excepting those agreements entered into
or accepted in writing by the MPT Parties.

     (k) All tenant improvements, repairs and other work and obligations, if
any, required to be performed by the landlord under each of the Tenant Leases
have been duly performed and paid for in full in accordance with the terms
thereof. A listing of such items is shown on SCHEDULE 3.15(K).

     (l) Except as set forth on SCHEDULE 3.15(L): (i) the Tenant Leases are
freely assignable by the Borrower Parties to the MPT Parties, have not been
modified, amended or assigned, are legally valid, binding and enforceable
against the applicable Borrower Parties (and, to the best of the Borrower
Parties' Knowledge, against the other parties to such Tenant Leases) in
accordance with their respective terms, and are in full force and effect; (ii)
there are no monetary defaults and no material nonmonetary defaults by the
applicable Borrower Party or, to the best of the Borrower Parties' Knowledge,
any other party to the Tenant Leases; (iii) no Borrower Party has received
written notice of any default, offset, counterclaim or defense under any of the
Tenant Leases; and (iv) no condition or event has occurred which, with the
passage of time or the giving of notice or both, would constitute a default or
breach by any Borrower Party of the terms of any of the Tenant Leases.

     (m) Except as set forth on SCHEDULE 3.15(J), the Real Property constitutes
all the land and improvements used by Alliance in connection with the operation
of the Hospital, and such Real Property is adequate for the present and proposed
conduct of the Business.


                                       25



SECTION 3.16. CONDITION OF PERSONAL PROPERTY. SCHEDULE 3.16 sets forth a list of
all equipment and other items of tangible personal property used by Alliance in
the operation of the Hospital (the "Personal Property"). Except to the extent
set forth on SCHEDULE 3.16, Alliance has and shall maintain good, clear and
indefeasible title to and ownership of all of the Personal Property, free and
clear of all Liens, and may grant the MPT Parties a first priority security
interest in and to the Intangible Property and Licenses and at least a second
priority security interest in and to the other Personal Property as of the date
hereof. SCHEDULE 3.16 sets forth an accurate and complete list of all leases of
personal property used in the operation of the Hospital (the "Personal Property
Leases"). The Borrower Parties have provided the MPT Parties with complete,
correct and current copies of all of the Personal Property Leases. Except as set
forth on SCHEDULE 3.16: (i) Alliance may grant a first priority security
interest in the Personal Property Leases to the MPT Parties, (ii) the Personal
Property Leases have not been modified, amended or assigned, are legal, valid,
binding and enforceable against Alliance (and, to the Borrower Parties'
Knowledge, against the other parties to such Personal Property Leases) in
accordance with their respective terms, and are in full force and effect; (iii)
there are no monetary defaults and no material nonmonetary defaults by Alliance,
to the Borrower Parties' Knowledge, any other party to the Personal Property
Leases; (iv) no Borrower Party has received notice of any default, offset,
counterclaim or defense under any Personal Property Lease and shall immediately
deliver to the MPT Parties any notice thereof received by such Borrower Party;
and (v) no condition or event has occurred which with the passage of time or the
giving of notice or both would constitute a default or breach by Alliance of the
terms of any Personal Property Lease. Except as set forth on SCHEDULE 3.16, all
personal property, whether owned by Alliance or subject to any Personal Property
Lease, is in good operating condition and repair, ordinary wear and tear
excepted, is located on the Real Property, and constitutes all of the personal
property necessary for the operation of the Hospital and the Business as they
are currently being operated.

SECTION 3.17. COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as set forth on
SCHEDULE 3.17:

     (a) with respect to the ownership and operation of the Real Property and
the Hospital, including any operations at or from any real property currently or
formerly owned, used, leased, occupied or managed by any Borrower Party, each
Borrower Party is, and has at all times been, in compliance with all
Environmental Laws;

     (b) no Governmental Entity or nongovernmental third party has notified any
Borrower Party of any alleged violation or investigation of any suspected
violation under the Environmental Laws in connection with the ownership,
operation and/or leasing of the Real Property or the Hospital, including any
litigation or cause of action alleging personal injury or property damage caused
by exposure to, or the disposal, release or migration of, any Hazardous
Materials, and any Borrower Party shall immediately deliver any notice thereof
upon receipt to the MPT Parties;

     (c) with respect to the ownership, operation and/or leasing of the Real
Property and the Hospital, no Borrower Party has stored, disposed of or arranged
for the disposal of any Hazardous Materials, except in compliance with the
Environmental Laws;

     (d) there have been no actions nor, to the Knowledge of Borrower Parties,
any activities, circumstances, conditions, events or incidents, including,
without limitation, the


                                       26



generation, transportation, treatment, storage, release, emission, discharge,
presence or disposal of any Hazardous Materials on or from the Real Property or
the Hospital that could form the basis of any claim under the Environmental Laws
against any Borrower Party or any MPT Party;

     (e) no Borrower Party has, whether contractually or by operation of law
(including any Environmental Law), assumed, or succeeded to, any liability of
any direct or indirect predecessors or any other Person related or with respect
to any Environmental Law;

     (f) no underground storage tanks are located at, on or under the Real
Property, and the Real Property does not contain any asbestos-containing
building material;

     (g) there are no conditions presently existing on, at, or emanating from
the Real Property or the operation of the Hospital or the Business that may
result in any liability, investigation or clean-up cost under any Environmental
Law; and

     (h) no Borrower Party, nor to the Borrower Parties' Knowledge any other
Person, has installed, used, generated, manufactured, treated, handled, refined,
produced, processed, stored or disposed of any Hazardous Materials in, on or
under the Real Property, nor has any Borrower Party caused, suffered or
permitted any thereon, except in compliance with the Environmental Laws. No
Borrower Party has undertaken any activity, and the Borrower Parties have no
Knowledge that any other Person has undertaken any activity, on the Real
Property nor has any Borrower Party caused, suffered or permitted any thereon
which would cause (i) the Real Property to become a hazardous waste treatment,
storage or disposal facility within the meaning of, or otherwise bring the Real
Property within the ambit of, any Environmental Law, (ii) a release or
threatened release of Hazardous Material from the Real Property within the
meaning of, or otherwise bring the Real Property within the ambit of, any
Environmental Law, (iii) the discharge of Hazardous Material into any
watercourse, body of water, surface or subsurface water, or wetland which would
required a permit under any Environmental Law, or (iv) the discharge into the
atmosphere of any Hazardous Material which would require a permit under any
Environmental Law. No activity has been undertaken by any Borrower Party with
respect to the Real Property which would cause a violation or support a claim
under any Environmental Law. No investigation, administrative order, litigation
or settlement with respect to any Hazardous Material is in existence or, to the
Borrower Parties' Knowledge, threatened with respect to the Real Property, and
each Borrower Party will immediately notify the MPT Parties of any such matter.
No notice has been served on any Borrower Party from any Governmental Entity
claiming any violation of any Environmental Law, or requiring compliance with
any Environmental Law, or demanding payment or contribution for environmental
damage or injury to natural resources. No Borrower Party has obtained or is
required to obtain, and no Borrower Party has any Knowledge of any reason MPT
will be required to obtain, any permits, licenses, or similar authorizations to
occupy, operate or use the Improvements or any part of the Real Property by
reason of any Environmental Law.

SECTION 3.18. INSURANCE. SCHEDULE 3.18 sets forth a complete and accurate list
and brief description of all insurance policies currently held by any Borrower
Party with respect to the Real Property, the operation of the Hospital, and the
professional liability, negligence, and other acts of the Physicians and the
Service Providers, it being acknowledged by Alliance that such insurance
coverages are, at a minimum, those required by Section 6.6 hereof. All such
insurance


                                       27



policies are in full force and effect and all premiums due thereon
have been paid in full. Each Borrower Party is in compliance with the terms of
such insurance policies.

SECTION 3.19. LITIGATION. Except as set forth on SCHEDULE 3.19, there is no
dispute, suit, action, proceeding, inquiry or investigation (a "Claim") against
or involving any of the Borrower Parties or any of their properties or rights,
pending or, to the Knowledge of the Borrower Parties, threatened (including,
without limitation any suit, action, proceeding or investigation pursuant to
Title 11 of the Civil Rights Act of 1964, the Americans with Disabilities Act,
the Age Discrimination in Employment Act, the Family and Medical Leave Act of
1993, or any other federal, state or local law regulating employment) nor do the
Borrower Parties know of any facts which might result in any such Claim. There
is no Claim pending, or, to the Borrower Parties' Knowledge, threatened, against
any Physician or Service Provider which could, by operation of law, through
contract or otherwise, result in a Claim against any Borrower Party, and no
Borrower Party has any Knowledge of any facts which could result in such a
Claim. Except as set forth on SCHEDULE 3.19, there is no judgment, decree,
injunction, rule or order of any Governmental Entity or any other Person
(including, without limitation, any arbitral tribunal) outstanding against any
Borrower Party and no Borrower Party is not in violation of any term of any
judgment, decree, injunction or order outstanding against it. Furthermore, there
is no Claim by or before any Governmental Entity or other Person pending or, to
the Knowledge of the Borrower Parties, threatened, which questions or challenges
the validity of this Agreement or any action taken or to be taken by any
Borrower Party pursuant to this Agreement or in connection with the transactions
contemplated hereby, nor is there any basis for any such Claim.

SECTION 3.20. CONTRACTS, OBLIGATIONS AND COMMITMENTS. SCHEDULE 3.20 sets forth a
list of all contractual agreements, whether written or oral, relating to or
affecting the Collateral, the Hospital, and/or the operation of the Business to
which any Borrower Party is a party (such agreements, together with any
hereafter entered into, the "Contracts"). The Borrower Parties have provided to
the MPT Parties and shall promptly provide during the Loan Term complete and
correct copies of all of the Contracts. Except as set forth on SCHEDULE 3.20,
(i) the Contracts are legally valid, binding and enforceable against the
applicable Borrower Party (and, to the Borrower Parties' Knowledge, against the
other parties thereto) in accordance with their respective terms and are in full
force and effect; (ii) there are no defaults by any Borrower Party or, to the
Borrower Parties' Knowledge, any other party to the Contracts; (iii) no Borrower
Party has received notice of any default, offset, counterclaim or defense under
any Contract and, if received, shall promptly deliver any such notice to the MPT
Parties; and (iv) no condition or event has occurred which with the passage of
time or the giving of notice or both would constitute a default or breach by any
Borrower Party of the terms of any Contract, nor shall any Borrower Party cause
any such condition or event.

SECTION 3.21. INTANGIBLE PROPERTY. A true and complete list of the trademarks,
service marks, and other intangible assets of the Borrower Parties used in the
operation of the Business and the Hospital is set forth on SCHEDULE 3.21 (such
items, together with any hereafter obtained, the "Intangible Property"). The
Borrower Parties own or possess adequate, enforceable licenses, or other rights
to use, all of the Intangible Property, and no rights thereto have been granted
to others by any Borrower Party. Except as set forth on SCHEDULE 3.21, all of
the Intangible Property is owned or used by the Borrower Parties and are free
and clear of all assignments, licenses, restrictions, encumbrances, charges or
claims for infringement, and are not subject to


                                       28



any outstanding order, decree, judgment, stipulation or charge. Except as set
forth on SCHEDULE 3.21, the Borrower Parties may grant the MPT Parties a first
priority security interest in and to all of the Intangible Property. To the
Borrower Parties' Knowledge, there has been no unauthorized use, disclosure,
infringement or misappropriation of any of the Intangible Property by any third
party. The Borrower Parties' use of the Intangible Property does not infringe
upon or otherwise violate the rights of others. No one has asserted to any
Borrower Party that the use of the Intangible Property by the Borrower Parties
infringes upon the patents, trade secrets, trade names, trademarks, service
marks, copyrights or other intellectual property rights of any other Person, and
no Borrower Party has any Knowledge of any fact or circumstance which could
provide the basis for any such assertion, and, if received, a Borrower Party
shall promptly deliver any such notice to the MPT Parties. The Intangible
Property constitutes all of the intangible properties necessary for the
operation of the Hospital and the Business as they are currently being operated.

SECTION 3.22. EMPLOYEES AND EMPLOYEE RELATIONS.

     (a) SCHEDULE 3.22(A) contains a current, correct and complete list of the
names and current hourly wage, monthly salary, and other compensation of all
employees who are providing, or who will provide, services at the Hospital
(collectively, the "Business Employees"), together with a summary (containing
estimates to the extent necessary) of the individuals' existing bonuses,
additional compensation, and other benefits (whether current or deferred), if
any, accrued, paid, or payable to each such individual for services rendered or
to be rendered through the fiscal period ending December 31, 2004. Except to the
extent set forth on SCHEDULE 3.22(A), all of the Business Employees are "at
will" employees. Except to the extent set forth on SCHEDULE 3.22(A), no Borrower
Party is a party to any oral (express or implied) or written (i) employment
agreement or (ii) agreement that contains any severance or termination pay
obligations, with any Business Employee. The Borrower Parties have provided
true, correct and current copies (or, if not written, accurate descriptions of
the parties and terms) of such agreements to the MPT Parties.

     (b) Except to the extent set forth on SCHEDULE 3.22(B), no Business
Employee is represented by any labor union, trade association, or other employee
organization, no demand for recognition has been made by any labor union with
respect to the Business Employees, and there is not and has not been any labor
union organizing activity at the Hospital during the periods it has been
operated by any Borrower Party. Except to the extent set forth on SCHEDULE
3.22(B), no Borrower Party is a party to any collective bargaining agreement or
understanding with any labor union, trade association, or other employee
organization with respect to any Business Employee and no such agreements are
currently being proposed and/or negotiated.

     (c) Except to the extent set forth on SCHEDULE 3.22(C), there is no labor
dispute, work stoppage, strike, slowdown, walkout, lockout, or any other
interruption or disruption of operations at the Hospital as a result of labor
disputes or disturbances with respect to the Business Employees. Further, there
is no investigation, grievance, arbitration, complaint, claim or other dispute
or controversy (collectively, a "Labor Proceeding") pending or, to the Borrower
Parties' Knowledge, threatened between any Borrower Party and any present or
former Business Employee, nor have any discharges or terminations of any former
Business Employee occurred which would form the basis for any claim of
discrimination against a Borrower Party, and any


                                       29



Borrower Party shall promptly notify the MPT Parties upon its receipt of any of
the foregoing. Except to the extent set forth on SCHEDULE 3.22(C), no Borrower
Party has any Knowledge of any facts or any past, current or contemplated event
that could form the basis for any such Labor Proceeding, nor has there been any
such Labor Proceeding within the past twelve (12) months.

     (d) Except as set forth on SCHEDULE 3.22(D), no Borrower Party has received
any notice that any vice president, director or director-level employee, or
higher, of any Borrower Party or any group of Business Employees has any plans
to terminate his or her employment or affiliation with any Borrower Party.

     (e) Each Borrower Party has complied with, is currently and shall remain in
compliance with, and has received no notice of noncompliance with any and all
applicable laws relating to the employment of labor, including, without
limitation, any provisions relating to wages, hours, equal employment,
occupational safety and health, workers' compensation, unemployment insurance,
collective bargaining, immigration, affirmative action, and the payment and
withholding of social security and other taxes. Each Borrower Party has withheld
and shall withhold all amounts required by law or agreement to be withheld from
the wages or salaries of the Business Employees, and no Borrower Party is liable
for any arrears of any tax or penalties for failure to comply with the
foregoing.

     (f) SCHEDULE 3.22(F) sets forth each Employee Pension Benefit Plan (as
defined in Section 3(2) of ERISA) maintained by any Borrower Party (each a
"Borrower Party Plan") and applicable to the Business Employees. The Borrower
Parties are in compliance in all material respects with all applicable laws and
regulations respecting such Borrower Party Plans.

SECTION 3.23. COMPLIANCE WITH LAW. Each Borrower Party (a) is in compliance in
all material respects with every applicable law, rule, regulation, ordinance,
license, permit and other governmental action and authority and every order,
writ, and decree of every Governmental Entity in connection with the ownership,
conduct, operation and maintenance of the Business and its ownership and use of
its assets, and no event has occurred or circumstance exists which (with notice
or lapse of time) would result in any noncompliance with any such law, rule,
regulation, ordinance, license permit, order, writ or decree; and (b) has timely
made or given all filings and notices required to be made by such Borrower Party
with the regulatory agencies of any Governmental Entity.

SECTION 3.24. HILL-BURTON OBLIGATIONS.

     (a) Except as set forth on SCHEDULE 3.24, neither any Borrower Party nor,
to the Knowledge of the Borrower Parties, any predecessor in interest of any
Borrower Party has received any loans, grants or loan guarantees pursuant to the
United States Hill-Burton Act (42 U.S.C. 291a, et seq.) program, the Health
Professions Educational Assistance Act, the Nurse Training Act, the National
Health Pharmacy and Resources Development Act, or the Community Mental Health
Centers Act, nor shall any of them obtain therefrom any such loans, grants or
loan guarantees. All of the obligations set forth on SCHEDULE 3.24, if any, have
been fully satisfied. The transactions contemplated hereby will not result in
any obligation of any MPT Party to repay any such loan, grant or loan guarantee
or to provide uncompensated care in consideration thereof.


                                       30



     (b) None of the Collateral is subject to any liability with respect to
amounts received by any Borrower Party or others for the purchase or improvement
of the Collateral or any part thereof under restricted or conditioned grants or
donations, including monies received under the Public Health Service Act, 42
U.S.C. Section 291, et seq.

SECTION 3.25. MEDICAL STAFF MATTERS. Except as set forth on SCHEDULE 3.25, there
are no pending or, to the Knowledge of the Borrower Parties, threatened
investigations, appeals, challenges, disciplinary or corrective actions, or
disputes involving applicants to the medical staff of the Hospital, current
members of the medical staff of the Hospital, or affiliated health
professionals, and the Borrower Parties shall immediately notify the MPT Parties
if any of the same shall occur. Since the Balance Sheet Date, no member of the
medical staff of the Hospital has resigned or been terminated therefrom and no
Borrower Party has received notice that any Physician or medical staff member
intends to resign from its medical staff, and the Borrower Parties shall
immediately notify the MPT Parties if any of the same shall occur. The Borrower
Parties have previously delivered to the MPT Parties true and correct copies of
the Medical Staff Bylaws of the Hospital, the Hospital's Medical Staff Rules and
Regulations, and the Hospital's Medical Staff Hearing Procedures, all as
presently in effect. Except as consented to, in writing, by the MPT Parties and
set forth on SCHEDULE 3.25, no Physician is a member of more than two (2)
medical staff committees.

SECTION 3.26. BROKERS. No Person is or will be entitled to any brokerage,
finder's, or other fee, commission, or payment in connection with, or as a
result of, the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of any Borrower Party.

SECTION 3.27. RECORDS. True, complete and current copies of each Borrower
Party's Governing Documents have been delivered to the MPT Parties prior to the
execution and delivery of this Agreement. The books of account, minute books,
stock record books and other records of each Borrower Party, all of which have
been and shall be made available to the MPT Parties, are complete and correct.
The minute books of each Borrower Party contain records of all meetings and
other corporate actions of the directors and shareholders of such Borrower
Party, have been and shall be delivered to the MPT Parties.

SECTION 3.28. REPRESENTATIONS COMPLETE. The representations, warranties and
covenants made by the Borrower Parties in this Agreement and the statements made
in, or information contained on, any Schedules or certificates furnished by any
Borrower Party pursuant to this Agreement do not contain and will not contain,
as of the date hereof, their respective dates, and for and during the Loan Term,
any untrue statement of a material fact, nor do they omit or will they omit to
state any material fact necessary to make the statements contained herein or
therein, in the light of the circumstances under which they were made, not
misleading.

                                   ARTICLE IV
                REPRESENTATIONS AND WARRANTIES BY THE MPT PARTIES

The MPT Parties hereby jointly and severally represent and warrant to the
Borrower Parties as of the date hereof and as of the Closing Date as follows:


                                       31



SECTION 4.1. ORGANIZATION. MPT and MPT Odessa are each a limited partnership
duly formed, validly existing, and in good standing under the laws of the State
of Delaware. MPT Odessa is qualified to do business in the State of Texas.

SECTION 4.2. AUTHORIZATION; ENFORCEMENT, ABSENCE OF CONFLICTS. Each MPT Party
has the requisite power and authority to execute, deliver and carry out the
terms of this Agreement, to consummate the transactions contemplated hereby, and
to conduct its businesses as now being conducted. All actions required to be
taken by each to authorize the execution, delivery and performance of this
Agreement, all documents executed by the MPT Parties which are necessary to give
effect to this Agreement, and all transactions contemplated hereby and thereby
have been duly and properly taken or obtained. No other action on the part of
either MPT Party is necessary to authorize the execution, delivery, and
performance of this Agreement, all documents necessary to give effect to this
Agreement, and all transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby will not, with or without the giving of notice and/or the
passage of time: (i) violate or conflict with any provision of the Governing
Documents of either MPT Party; (ii) violate any provision of law, statute, rule
or regulation to which either MPT Party is subject; (iii) violate or conflict
with any judgment, order, writ or decree of any court applicable to either MPT
Party; (iv) violate or conflict with any law or regulation applicable to either
MPT Party; or (v) result in the breach or termination of any provision of, or
create rights of acceleration or constitute a default under, the terms of any
debt or obligation to which either MPT Party is a party or by which either MPT
Party is bound.

SECTION 4.3. BINDING AGREEMENT. This Agreement and all agreements to which any
MPT Party will become a party hereunder is and will constitute the valid and
legally binding obligations of such MPT Party, and are and will be enforceable
against such MPT Party in accordance with the respective terms hereof or
thereof, except as enforceability may be restricted, limited or delayed by
applicable bankruptcy, insolvency or other laws affecting creditors' rights
generally and except as enforceability may be subject to and limited by general
principles of equity.

SECTION 4.4. LITIGATION. There is no Claim pending or, to the Knowledge of the
MPT Parties, threatened against or affecting any MPT Party that has or would
reasonably be expected to have a material adverse effect on the ability of the
MPT Parties to perform their respective obligations under this Agreement or any
aspect of the transactions contemplated hereby.

SECTION 4.5. BROKERS. No Person is or will be entitled to any brokerage,
finder's or other similar fee, commission or payment in connection with or as a
result of the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the MPT Parties.

SECTION 4.6. COMPLIANCE WITH LAW. The MPT Parties, where applicable (a) are in
compliance with every applicable law, rule, regulation, ordinance, license,
permit and other governmental action and authority and every order, writ, and
decree of every Governmental Entity in connection with the ownership, conduct,
operation and maintenance of their businesses, and their ownership and use of
their assets, except where non-compliance would not prevent or impede the MPT
Parties from consummating the transactions contemplated hereby or the ability of
the MPT


                                       32



Parties to perform their respective obligations under this Agreement and, to the
Knowledge of the MPT Parties, no event has occurred or circumstance exists which
(without notice or lapse of time) would result in any noncompliance with any
such law, rule, regulation, ordinance, license permit, order, writ or decree
which would prevent or impede the MPT Parties from consummating the transactions
contemplated hereby; and (b) have timely made or given all filings and notices
required to be made by the MPT Parties with the regulatory agencies of any
Governmental Entity, except where such failure would not prevent or impede the
MPT Parties from consummating the transactions contemplated hereby.

                                    ARTICLE V
                                TITLE AND SURVEY

SECTION 5.1. SURVEY. MPT shall cause to be prepared, at Borrower Parties'
expense, a current ALTA/ACSM Land Title Survey of the Real Property, prepared by
a land surveyor duly licensed in the State in which the Collateral is located.
The survey shall be currently dated, shall show the location on the Real
Property and actual dimensions of all improvements, fences, evidence of
abandoned fences, ponds, creeks, streams, rivers, easements, roads,
rights-of-way, means of ingress and egress to and from a publicly dedicated
street or road, location of all utilities serving the Real Property, and
encroachments, reflect any area within the Real Property that has been
designated by the Federal Insurance Administration, the Army Corps of Engineers,
or any other Governmental Body as being subject to special flood hazards, and
shall contain a legal description of the boundaries of the Real Property by
metes and bounds and the total number of acres constituting the Real Property,
and shall, in general, comply with the "Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys" established and adopted by ALTA to be effective
January 1, 2006. The surveyor shall certify to the MPT Parties and to the Title
Company that the survey is correct and that there are no visible discrepancies,
conflicts, encroachments, overlapping of improvements, fences, evidence of
abandoned fences, ponds, creeks, streams, rivers, easements, roads or
rights-of-way except as are shown on the survey plat. Any and all matters shown
on such survey shall be legibly identified by appropriate volume and page
recording references with dates of recording noted. If MPT shall disapprove such
survey for any reason in MPT's sole discretion, MPT may either (i) treat such
objection as a title objection and request that it be cured, or (ii) terminate
this Agreement and the parties hereto shall have no further liability or
obligations hereunder, expect as otherwise expressly set forth herein. If the
Borrower Parties are unable to cure any objection to the survey within ten (10)
days following delivery of notice to Borrower Parties thereof, then MPT may
terminate this Agreement upon written notice to the Borrower Parties.

SECTION 5.2. TITLE INSURANCE. MPT will cause to be prepared, at Borrower
Parties' expense, a Title Commitment for the issuance of a Texas form Mortgagee
Policy of Title Insurance in form and substance satisfactory to MPT to the
extent permitted by Texas title regulations, issued by the national service
office of a title insurance company acceptable to MPT and qualified to insure
titles in the State of Texas (the "Title Company"), in the amount of the Loan,
covering title to the Real Property at a date not earlier than the date hereof
and showing good and marketable title in Alliance, subject only to the Permitted
Encumbrances, and insuring that the lien created by the Mortgage in favor of MPT
Odessa is a valid, subsisting, first lien on the Real Property. All of the
standard exceptions within the policy to the extent permitted by Texas title
regulations and the exceptions for mechanic's and materialmen's liens and the
survey exception shall be deleted


                                       33



at the sole cost and expense of the Borrower Parties. If MPT shall disapprove
any items stated in the Title Commitment or any exception documents, MPT may
either (i) treat such objection as a title objection and request that it be
cured, or (ii) terminate this Agreement and, upon such termination, the parties
hereto shall have no further liability or obligations hereunder, except as
otherwise expressly provided herein. If the Borrower Parties are unable to cure
any exception or objection to title that is not a Permitted Encumbrance within
ten (10) days following delivery of notice to the Borrower Parties thereof, then
MPT may terminate this Agreement upon written notice to Borrower Parties.

                                   ARTICLE VI
                        COVENANTS OF THE BORROWER PARTIES

     From and after the execution and delivery of this Agreement until the
expiration of the Loan Term (or as otherwise provided), the applicable party
shall observe the following covenants:

SECTION 6.1. AFFIRMATIVE COVENANTS.

     (a) Payment and Performance. Each of the Borrower Parties will duly and
promptly pay and perform all of such Borrower Party's liabilities and
obligations to the MPT Parties in accordance with the terms and conditions of
this Agreement and the other Loan Documents.

     (b) Continuation of Representations and Warranties; Schedule Updates. Each
of the Borrower Parties shall cause all of the representations, warranties, and
covenants made by each of the Borrower Parties in this Agreement (including,
without limitation, those in Article III hereof) and the other Loan Documents
(considered collectively), and each of the representations and warranties of
each Borrower Party in this Agreement and the other Loan Documents (considered
individually), to remain in all respects true and correct after the date hereof
and during the Loan Term as if made on such dates. In the event that any such
representation, warranty or covenant shall become untrue or incorrect in any
material respect after the date hereof, the Borrower Parties shall immediately
notify the MPT Parties and shall take such corrective action as shall be
authorized, approved or directed by the MPT Parties. From the date hereof and
during the Loan Term, the Borrower Parties shall immediately advise the MPT
Parties in writing of any additions or changes to any Schedule to this Agreement
(each, a "Schedule" and, collectively, the "Schedules") to reflect any
deficiencies or inaccuracies in such Schedule relating to the Borrower Parties
or to reflect circumstances or matters which occur after the date of this
Agreement which, if existing prior to such date, would have been required to be
described on such Schedule by the Borrower Parties; provided, however, that no
additions or changes made to any Schedule by any party to correct deficiencies
or inaccuracies on such Schedule shall be deemed to cure any breach or
inaccuracy of a representation or warranty, covenant or agreement or to satisfy
any condition unless otherwise agreed to in writing by the MPT Parties, but
provided further, however, that an addition or change made to any Schedule by
any of the Borrower Parties to reflect circumstances or matters which occur
after the date of this Agreement shall be deemed to cure a breach or inaccuracy
of a representation or warranty, covenant or agreement, but shall not be deemed
to satisfy any condition unless agreed to in writing by the other party.


                                       34



     (c) Certification. At any time and from time to time within ten (10) days
following written request by any of the MPT Parties, Alliance will certify to
the MPT Parties, in such form and substance as are reasonably acceptable to the
MPT Parties, that this Agreement and the other Loan Documents are unmodified and
in full force and effect (or that this Agreement and the other Loan Documents
are in full force and effect as modified and setting forth the modifications)
and the dates to which the Loan has been paid. Any such certification furnished
pursuant hereto may be relied upon by the MPT Parties and any prospective
purchaser of or participant in the Loan.

     (d) Financial Statements. The Borrower Parties will furnish, or cause to be
furnished, the following statements to the MPT Parties, which must be in such
form and detail as the MPT Parties may from time to time, but not unreasonably,
request:

     (i) prior to the Closing Date and within ninety (90) days after the end of
     each year, audited financial statements of Alliance and the Hospital,
     prepared by a nationally recognized accounting firm or an independent
     certified public accounting firm reasonably acceptable to the MPT Parties,
     which statements shall include a balance sheet and statement of income and
     expenses and changes in cash flow all in accordance with GAAP for the year
     then ended (it being agreed that the accounting firm of Condley and
     Company, LLP is acceptable to the MPT Parties), and

     (ii) prior to the Closing Date and within ninety (90) days after the end of
     each year, unaudited balance sheets of the General Partner, and

     (iii) prior to the Closing Date, current financial statements of each of
     the Guarantors, reasonably acceptable to the MPT Parties,

     (iv) within forty-five (45) days after the end of each calendar quarter,
     current financial statements of the Borrower Parties and the Hospital,
     certified to be true and correct by an executive officer of Alliance
     (provided, however, that the General Partner shall not be required to
     deliver an income statement in connection herewith), and

     (v) within thirty (30) days after the end of each month current operating
     statements of the Hospital, including, but not limited to operating
     statistics, certified to be true and correct by an executive officer of
     Alliance, and

     (vi) within ten (10) days of receipt, any and all notices (regardless of
     form) from any and all licensing and/or certifying agencies that any
     license or certification, including, without limitation, the Medicare
     and/or Medicaid certification and/or managed care contract of the Hospital
     is being downgraded to a substandard category, revoked, or suspended, or
     that action is pending or being considered to downgrade to a substandard
     category, revoke, or suspend such Hospital's license or certification, and

     (vii) with reasonable promptness, such other information respecting the
     financial condition and affairs of the Borrower Parties and the Guarantors
     as the MPT Parties may reasonably request from time to time.


                                       35



     (e) No Event of Default. Upon either of the MPT Parties' request, the
Borrower Parties will furnish to the MPT Parties a certificate in form
reasonably acceptable to MPT certifying that no Event of Default as defined
herein or in any of the Other Agreements or the Loan Documents), then exists and
no event has occurred (that has not been cured) and no condition currently
exists that would, but for the giving of any required notice or expiration of
any applicable cure period, constitute a default.

     (f) Third Party Payor Notices. Within two (2) Business Days of receipt, the
Borrower Parties shall furnish to the MPT Parties copies of all notices and
demands from any third party payor, including, without limitation, Medicare
and/or Medicaid, concerning overpayment which will or may result in a repayment
or a refund in excess of Two Hundred Thousand Dollars ($200,000). The Borrower
Parties hereby agree that, in the event of receipt of such notices or demands,
the MPT Parties shall have the right, at the MPT Parties' option, to participate
in the appeal of such notices and demands.

     (g) Governmental Investigations. The Borrower Parties shall furnish to the
MPT Parties on a monthly basis ongoing status reports (in form and content
acceptable to the MPT Parties) of any governmental investigations of either of
the Borrower Parties, the Guarantors, or any of their respective Affiliates, or
the Hospital, conducted by the United States Attorney, State Attorney General,
the Office of the Inspector General of the Department of Health and Human
Services, or any other Governmental Entity.

     (h) Deficiency Reports. The Borrower Parties shall furnish to the MPT
Parties immediately upon receipt thereof copies of all notices of adverse events
or deficiencies as defined by regulations or standards of the JCAHO or the
equivalent of the accrediting body relied upon by Alliance in the operation of
the Hospital, the Business or any parts thereof; it being acknowledge that
Alliance is in the process of seeking accreditation from JCAHO as of the Closing
Date.

     (i) HIPAA. The Borrower Parties shall furnish to the MPT Parties
immediately upon receipt thereof copies of all notices that any of the Borrower
Parties, the Guarantors, and/or the Tenants are not in compliance with the
Standards which were promulgated pursuant to HIPAA.

     (j) Other Financial Information. The MPT Parties reserve the right to (A)
require such other financial information from the Borrower Parties, and (B)
require the Borrower Parties to provide such other financial information from
the Tenants to the extent permitted under any Existing Tenant Leases and as
shall be required under any New Tenant Leases, at such other times as the MPT
Parties shall deem reasonably necessary, the Borrower Parties hereby agreeing to
promptly provide such other financial information following any such request by
any of the MPT Parties. All financial statements and information must be in such
form and detail as the MPT Parties shall from time to time, but not
unreasonably, request.

     (k) Access; Confidentiality.

     (i) After the date hereof until the expiration of the Loan Term, the
     Borrower Parties shall (i) afford the MPT Parties and their authorized
     representatives full and complete access to the employees, medical staff,
     and other agents and representatives of the


                                       36



     Borrower Parties relating to the Business and the Hospital and during
     normal working hours to all books, records, offices and other facilities of
     the Borrower Parties relating to the Business and the Hospital, (ii) permit
     the MPT Parties to make such inspections and to make copies of such books
     and records as they may reasonably require and (iii) furnish the MPT
     Parties with such financial and operating data and other information
     related to the Business, the Hospital or the Borrower Parties as the MPT
     Parties may from time to time reasonably request following reasonable
     notice to the Borrower Parties by the MPT Parties. The MPT Parties and
     their authorized representatives shall conduct all such inspections under
     the supervision of personnel of the Borrower Parties in a manner that will
     minimize disruptions to the business and operations of the Borrower Parties
     and in a manner as to maintain the confidentiality of this Agreement.

     (ii) The MPT Parties and their authorized representatives (including their
     designated engineer, architects, surveyors and/or consultants) may, upon
     reasonable notice and at any time enter into and upon all or any portion of
     the Real Property in order to investigate and assess, as the MPT Parties
     deem necessary or appropriate in their sole and absolute discretion, the
     condition (including the structural and environmental condition) of the
     Collateral (including, without limitation, the Improvements). The Borrower
     Parties shall cooperate with the MPT Parties and their authorized
     representatives in conducting such investigation, shall allow, the MPT
     Parties and their authorized representatives full access to the Collateral,
     together with full permission to conduct such investigation, and shall
     provide to the MPT Parties and their authorized representatives all
     information maintained by the Borrower Parties and related to the condition
     of the Collateral, including the Real Property, and all plans, soil or
     surface or ground water tests or reports, any environmental investigation
     results, reports or assessments previously or contemporaneously conducted
     or prepared by or on behalf of, or in the possession of or reasonably
     available to the Borrower Parties or any of their engineers, consultants or
     agents and all other information relating to environmental matters in
     respect of their properties and businesses.

     (iii) As a condition to the parties furnishing one another with their
     respective Confidential Information, each party hereto agrees to treat the
     other party's Confidential Information (whether prepared by the disclosing
     party, its advisors or otherwise) in accordance with the provisions of this
     Agreement and to take or abstain from taking certain other actions herein
     set forth. The parties hereby agree that, except as otherwise set forth
     herein, the other parties' Confidential Information, and the fact that the
     parties are parties to this Agreement, will be kept confidential by the
     parties and will be used by such party solely for the purpose of fulfilling
     the obligations of such parties to the other parties pursuant to the Loan
     document; provided, however, that any Confidential Information may be
     disclosed to the following: (1) the parties' respective agents or
     representatives who need to know the Confidential Information for the
     purpose of evaluating or providing services in connection with the
     transactions contemplated in the Loan Documents (it being understood (A)
     that such agents and representatives shall be informed by such party of the
     confidential nature of the other party's Confidential Information, (B) such
     agents and representatives shall be directed by such party to treat the
     other party's Confidential Information confidentially in accordance with
     the terms of this Agreement and (C) such party shall be liable for any
     breach of confidentiality


                                       37



     committed by such agents or representatives) and (2) the MPT Parties'
     prospective investors in relation to or in connection with any private
     placement or public offering of the MPT Parties' securities, and (3) any
     person or entity in which disclosure is required by federal or state
     securities laws.

     (iv) Except with the prior written consent of the other parties and except
     for the permitted disclosures described in the immediately preceding
     paragraph, prior to any public announcement concerning the transaction
     contemplated in the Loan Documents and business relationship between the
     MPT Parties and the Borrower Parties, neither party will, and will direct
     its agents and representatives not to, disclose to any person either the
     fact that a business relationship between the MPT Parties and the Borrower
     Parties has commenced. If as a result of federal or state securities laws,
     any party is required by law, in the reasonable opinion of such party's
     legal counsel, to disclose the business relationship between the MPT
     Parties and the Borrower Parties or any of the proposed or effective terms
     of such business relationship, such party shall, to the extent reasonably
     practical, provide prior notice thereto to the other parties, and shall
     consult with the other parties concerning the language, form and substance
     of any disclosure of the other parties' Confidential Information.

     (v) In the event that any party hereto, or such party's representatives or
     agents, are requested or required in a judicial, administrative or
     governmental proceeding to disclose any other party's Confidential
     Information, such party will cooperate with the other party and provide it
     with prompt notice of such request(s) so that the other party may seek an
     appropriate protective order and/or waive compliance with the provisions of
     this Agreement. If, in the absence of a protective order or the receipt of
     a waiver hereunder, a party or its representatives or agents are
     nonetheless, in the opinion of such party's legal counsel, legally required
     to disclose the other party's Confidential Information to any tribunal or
     else stand liable for contempt or suffer other censure or penalty, such
     party may disclose the other party's Confidential Information to such
     tribunal without liability hereunder.

     (vi) Each of the parties shall, upon request of any other party, return or
     destroy all of such other party's written Confidential Information and all
     documents, memoranda, notes and other writings whatsoever prepared by such
     party or its representatives or agents based on the other party's
     Confidential Information. Neither this letter nor the disclosure of any
     party's Confidential Information to the other parties grants or confers
     upon the other parties any license, ownership right or other right in or to
     such Confidential Information.

     (vii) Notwithstanding anything to the contrary contained herein, the
     confidentiality obligations as they relate to the transactions contemplated
     by this Agreement shall not apply to the purported or claimed Federal
     income tax treatment of the transactions (the "Tax Treatment") or to any
     fact that may be relevant to understanding the purported or claimed Federal
     income tax treatment of the transactions (the "Tax Structure"), and each
     party hereto (and any employee, representative, or agent of any party
     hereto) may disclose to any and all persons, without limitation of any
     kind, the Tax Treatment and Tax Structure of the transactions contemplated
     by this Agreement and any materials of


                                       38



     any kind (including any tax opinions or other tax analyses) that relate to
     the Tax Treatment or Tax Structure. In addition, each party hereto
     acknowledges that it has no proprietary or exclusive rights to any tax
     matter or tax idea related to the transactions contemplated by this
     Agreement. The preceding sentence is intended to ensure that the
     transactions contemplated by this Agreement shall not be treated as having
     been offered under conditions of confidentiality for purposes of the
     Confidentiality Regulations and shall be construed in a manner consistent
     with such purpose. The information contained herein, in the Schedules
     hereto or delivered to the MPT Parties or its authorized representatives
     pursuant hereto shall be subject to the confidentiality provisions of this
     Agreement until the Closing.

     (l) Regulatory and other Authorizations, Notices and Consents.

          (i) The Borrower Parties shall use all commercially reasonable efforts
     to obtain all authorizations, consents, orders and approvals of all
     Governmental Entities and officials that may be or become necessary for its
     execution and delivery of, and the performance of their obligations
     pursuant to, this Agreement and each such borrower Party will cooperate
     fully with the other parties hereto in promptly seeking to obtain all such
     authorizations, consents, orders and approvals.

          (ii) The Borrower Parties shall give promptly such notices to third
     parties and use its commercially reasonable efforts to obtain such third
     party consents and estoppel certificates as MPT may in its sole and
     absolute discretion deem necessary or desirable in connection with the
     transactions contemplated by this Agreement, including, without limitation,
     all third party consents that are necessary or desirable in connection with
     the transfer of the Assumed Contracts.

     (m) Future Financing. The Borrower Parties hereby agree that, if at any
time during the Loan Term, any of the Borrower Parties purchases or contemplates
the purchase of a Hospital, or property to be used, for the operation of a
business for the Primary Intended Use, the Borrower Parties shall notify MPT in
writing ("Alliance's Notice") of such purchase or contemplated purchase, and MPT
or its Affiliates shall have the first opportunity to provide financing for such
purchase, expansion or renovation upon terms mutually agreeable to MPT and the
Borrower Parties. MPT shall notify the Borrower Parties in writing on or before
the expiration of twenty (20) business days after receipt of Alliance's Notice
whether MPT is interested in providing such financing. If MPT agrees to provide
the financing, the terms and conditions of such financing will be contingent
upon, among other things, performance benchmarks acceptable to MPT and MPT's
satisfaction and approval of other due diligence requirements.

     (n) Good Faith Efforts. The Borrower Parties shall use their good faith
reasonable efforts to satisfy the conditions to the Closing of the transactions
contemplated hereby. Without limiting the generality of the foregoing, the
Borrower Parties shall execute and/or deliver, or use their respective good
faith reasonable efforts to cause to be executed and/or delivered, the documents
contemplated to be executed and/or delivered by them at Closing.


                                       39



     (o) Public Announcements. Prior to the Closing Date, the Borrower Parties
agree to consult with the MPT Parties before any of the Borrower Parties or any
of their respective affiliates issues any press release or makes any public
statement with respect to this Agreement or the transactions contemplated hereby
and, except as may be required by applicable law or any listing agreement with
any national securities exchange, will not issue, or permit to be issued, any
such press release or make, or permit to be made, any such public statement
prior to such consultation.

SECTION 6.2. NEGATIVE COVENANTS.

     (a) Loan Proceeds and Distributions. None of the proceeds of the Loan or
revenues of Alliance shall be distributed to any of the Equity Constituents of
any of the Borrower Parties, but shall be retained by Alliance for use in the
operation of the Hospital and the Business. Notwithstanding the foregoing,
Alliance may make distributions to its general and limited partners of taxable
net income (1) for the purpose of the payment of applicable income taxes of such
partners, which such distributions shall not exceed thirty-five percent (35%) of
taxable net income or (2) in all other instances, only at such time as Tangible
Net Worth shall exceed Seven Million Five Hundred Thousand and No/100 Dollars
($7,500,000.00), and provided that, after such distribution, such Tangible Net
Worth shall remain in excess of Seven Million Five Hundred Thousand and No/100
Dollars ($7,500,000.00). Additionally, and notwithstanding the foregoing
restrictions, Alliance may use proceeds of the Loan and the revenues of Alliance
to the limited extent necessary (1) to pay the interest payable to the holders
of Class B Units, as such term is defined in, and in accordance with the terms
and conditions of, the Limited Partnership Agreement), and (2) to pay the
principal and interest payable on the certain loan to Alliance from the General
Partner outstanding as of the date hereof, and the General Partner may use such
payment to pay the principal and interests payable on those certain loans to the
General Partner from National Bank of Andrews and Plains Capital Bank; provided
however, that each such payment shall not exceed the lesser of (i) Eight Hundred
Thirty Five Thousand Dollars ($835,000.00), and (ii) the outstanding balance of
the applicable loan.

     (b) Liens. Subject to the provisions of Article XI relating to permitted
contests, the Borrower Parties will not, directly or indirectly, create or allow
to remain and will promptly discharge at their expense any lien, encumbrance,
attachment, title retention agreement or claim upon the Collateral, not
including, however, (i) this Agreement or the other Loan Documents, (ii) the
Permitted Encumbrances set forth in SCHEDULE 6.2 of this Agreement, (iii)
restrictions, liens and other encumbrances which are consented to in writing by
the MPT Parties, or any easements granted pursuant to the provisions of Section
6.5(c) of this Agreement, (iv) liens for Impositions or for sums resulting from
noncompliance with Legal Requirements so long as (1) the same are not yet
payable or are payable without the addition of any fine or penalty or (2) such
liens are in the process of being contested as permitted by Article XI, and (v)
liens of mechanics, laborers, materialmen, suppliers or vendors for sums either
disputed or not yet due, provided that (1) the payment of such sums shall not be
postponed for more than sixty (60) days after the completion of the action
giving rise to such lien and such reserve or other appropriate provisions as
shall be required by law or generally accepted accounting principles shall have
been made therefor or (2) any such liens are in the process of being contested
as permitted by Article XI. Unless otherwise expressly provided herein, Alliance
shall not mortgage or grant any interest or security interest in, or otherwise
assign, any part of Alliance's rights and interests in this Agreement or the
other


                                       40



Borrower Party Instruments, the Collateral, or any Licenses or other approvals
required to operate the Collateral during the Loan Term without the prior
written consent of MPT, which may be withheld at MPT's sole discretion.

     (c) No Shop. Between the date hereof and the Closing Date, neither any
Borrower Party nor any investment banker, attorney, accountant, representative
or other Person retained by or on behalf of any Borrower Party shall, directly
or indirectly, initiate contact with, respond to, solicit or encourage any
inquiries, proposals or offers by, or participate in any discussions or
negotiations with, enter into any agreement with, disclose any information
concerning any Borrower Party or the Collateral to, afford any access to the
properties, books or records of any Borrower Party to, or otherwise assist,
facilitate or encourage, any Person in connection with any possible proposal
regarding a sale, lease, mortgage, transfer, disposition or other transaction
related to or affecting all or any portion of the Collateral (including all or
any portion of the Real Property). The Borrower Parties shall notify the MPT
Parties immediately if any discussions or negotiations are sought to be
initiated, any inquiry or proposal is made, or any such information is
requested.

     (d) Management Agreements. The Borrower Parties shall not engage any
Management Company (provided, however, that the MPT Parties hereby acknowledge
and consent to the Borrower Parties' engagement of the Current Manager) or
permit, allow, approve or suffer any Tenants of the Hospital that are subject to
any New Tenant Lease to engage any Management Company, without the MPT Parties'
prior written consent, which consent shall not be unreasonably withheld;
provided, however, the MPT Parties' rights relating to any Management Company as
set forth in Article X hereof shall be at the MPT Parties' sole and absolute
discretion. The Borrower Parties shall, if required by the MPT Parties, assign
all of the Borrower Parties' rights under the Management Agreements to the MPT
Parties and the MPT Parties shall be entitled to assign same to any third party,
including any lender of any of the MPT Parties. At the request of the MPT
Parties from time to time, the applicable Borrower Parties shall execute and
deliver (and require the Tenants to execute and deliver, if applicable) an
assignment and/or subordination agreement relating to the Management Agreements,
which assignment and/or subordination agreement shall be in such form and
content as reasonably acceptable to the MPT Parties and/or any lender providing
financing to any of the MPT Parties or their Affiliates, shall be delivered to
the MPT Parties within ten (10) days after the MPT Parties' request. The
Borrower Parties agree that all Management Agreements entered into in connection
with the Collateral or the Hospital shall expressly contain provisions
acceptable to the MPT Parties which (i) require an assignment of the Management
Agreements to the MPT Parties upon request by the MPT Parties, (ii) confirm and
warrant that all sums due and payable under the Management Agreements are
subordinate to the Loan Documents, (iii) grant the MPT Parties the right to
terminate the Management Agreement (individually or collectively, if more than
one (1)) following an Event of Default hereunder or upon a default under such
applicable Management Agreement, (iv) require the Management Company to execute
and deliver to the MPT Parties within ten (10) days from the MPT Parties'
request an estoppel certificate, assignment and/or subordination agreement as
required by the MPT Parties and/or any lender providing financing to any of the
MPT Parties, in such form and content as is acceptable to the MPT Parties and/or
such lender, and (v) require that all fees due and payable under any Management
Agreements shall be subordinate to all monetary obligations under the Loan
Documents. At the request of any of the MPT Parties from time to time, the
Borrower Parties


                                       41



shall execute and obtain from all parties subject to such Management Agreements
executed written confirmation of such assignment or subordination, which shall
be delivered to the MPT Parties within ten (10) days from the MPT Parties'
request.

     (e) Noncompetion. The Borrower Parties shall not modify, amend or restate
the Limited Partnership Agreement without the prior written consent of the MPT
Parties, which consent shall not be unreasonably withheld. The Borrower Parties
shall not consent to any New Technology Activity (as such term is defined in the
Limited Partnership Agreement) without the prior written consent of the MPT
Parties, which consent shall not be unreasonably withheld. The Borrower Parties
shall not permit any breach, and shall enforce all terms and conditions, of that
certain Non-Competition Agreement, dated as of the date hereof, by and among the
Borrower Parties and the Guarantors and, to the extent allowed by law, upon any
such breach by Guarantors or the Borrower Parties of such Non-competition
Agreement and the written request of the MPT Parties, the Borrower Parties shall
assign such Non-competition Agreement to the MPT Parties or their designee. The
parties hereby acknowledge that, in lieu of such assignment, the MPT Parties may
enforce such Non-competition Agreement against the Borrower Parties and the
Guarantors as a third party beneficiary thereof.

SECTION 6.3. FINANCIAL COVENANTS.

     (a) At all times during the Loan Term (other than when the Guaranty is in
full force and effect), the Borrower Parties shall maintain an aggregate
Tangible Net Worth of not less than ten percent (10%) of the original principal
balance of the Loan (the "Net Worth Amount"). Within thirty (30) days after
request by any of the MPT Parties during the Loan Term, the Borrower Parties
shall deliver to MPT Parties unaudited balance sheets of each of the Borrower
Parties confirming that the Net Worth Amount is being maintained. Such balance
sheets shall be dated within thirty (30) days after the date of such request,
and all such unaudited balance sheets shall be certified as true and correct by
the chief financial officer (or other officer acceptable to the MPT Parties) of
each of the Borrower Parties.

     (b) On or before the Closing Date, Alliance shall obtain, and shall
maintain during the Loan Term a Line of Credit from a financing source
acceptable to the MPT Parties, and upon terms and conditions acceptable to them
in all respects, of not less than Five Million and 00/100 Dollars
($5,000,000.00), which Line of Credit shall be available to Alliance to fund
normal operating and working capital needs.

     (c) On or before the Closing Date, Alliance shall have obtained, and shall
maintain during the Loan Term a Letter of Credit from a financial institution
acceptable to the MPT Parties, and upon terms and conditions acceptable to the
MPT Parties in all respects, of not less than one year's Base Interest; provided
that, at such time as the Hospital's EBITDA shall be equal to or greater than
Two Hundred Fifty Percent (250%) of the amount of the Regularly Scheduled
Payment of Base Interest for each calendar month during a period of three (3)
consecutive years, the Letter of Credit shall be reduced to an amount equal to
six (6) months' Base Interest.


                                       42



SECTION 6.4. GENERAL COLLATERAL COVENANTS.

     (a) Personal Property. Alliance, at its expense, shall install, affix,
assemble, place and maintain on the Real Property, the Personal Property, which
Personal Property shall be subject to the security interests and liens
contemplated hereby and in the Security Documents. The Borrower Parties shall
not, without the prior written consent of the MPT Parties (which consent may be
withheld in the event any Borrower Party or Guarantor is in default under any
Loan Document) remove any of the Personal Property from the Real Property. The
Borrower Parties shall provide and maintain during the entire Loan Term all such
Personal Property as shall be necessary in order to operate the Hospital in
compliance with all licensure and certification requirements, in compliance with
all applicable Legal Requirements and Insurance Requirements and otherwise in
accordance with customary practice in the industry for the Primary Intended Use.
The Borrower Parties will, at their own expense, jointly and severally, restore
the Collateral and repair of all damage to the Collateral caused by the removal
of Personal Property, whether effected by any of the Borrower Parties or the MPT
Parties.

     (b) Condition of the Collateral. The Borrower Parties shall obtain and
maintain during the entire Loan Term all approvals needed to use and operate the
Collateral and the Hospital for the Primary Intended Use, as defined below,
under applicable local, state and federal law, including but not limited to
licensure approvals and Medicare and/or a Medicaid certifications, provider
numbers, certificates of need, governmental approvals, and full accreditation
from all applicable governmental authorities, if any, that are necessary for the
operation of the Hospital as a fifty (50) bed general acute care hospital
facility.

     (c) Primary Intended Use of Collateral. Beginning on the Closing Date and
during the entire Loan Term, the Borrower Parties shall use the Collateral and
the improvements thereon only as a seventy-eight (78) bed general acute care
hospital facility (of which twenty-eight (28) beds are licensed to Alliance's
Tenant) and for such other legal ancillary uses as may be necessary in
connection with or incidental to such uses, subject to any covenants,
restrictions and easements relating to the Hospital (the "Primary Intended
Use"). Alliance shall not use the Collateral or any portion thereof for any
other use, nor change the number or type of beds within the Hospital, nor
reconfigure or rearrange any portion of the Collateral or the Hospital without
the prior written consent of the MPT Parties, which consent the Borrower Parties
agree may be withheld in the MPT Parties' sole discretion. No use shall be made
or permitted to be made of the Collateral and no acts shall be done which will
cause the cancellation of any insurance policy covering the Collateral or any
part thereof, nor shall any of the Borrower Parties sell or otherwise provide to
residents or patients therein, or permit to be kept, used or sold in or about
the Collateral any article which may be prohibited by law or by the standard
form of fire insurance policies, any other insurance policies required to be
carried hereunder, or fire underwriters regulations. Alliance shall, at its sole
cost, comply with all of the requirements, covenants and restrictions pertaining
to the Collateral, including, without limitation, all of the Permitted
Encumbrances, and other requirements of any insurance board, association,
organization or company necessary for the maintenance of the insurance, as
herein provided, covering the Collateral.


                                       43



     (d) Waste, Nuisance. The Borrower Parties shall not commit or suffer to be
committed any waste on the Collateral, or in the Hospital, nor shall any of the
Borrower Parties cause or permit any nuisance thereon.

     (e) Maintenance of Security Interests. The Borrower Parties' shall neither
suffer nor permit the Collateral or any portion thereof to be used in such a
manner as (i) might reasonably tend to impair their respective title thereto or
to any portion thereof or the lien and security interest of any of the MPT
Parties therein, or (ii) may reasonably make possible a claim or claims of
adverse usage or adverse possession by the public, as such, or of implied
dedication of the Collateral or any portion thereof.

     (f) Inspection. The Borrower Parties shall permit the MPT Parties and their
authorized representatives to inspect the Collateral during usual business hours
subject to any security, health, safety or confidentiality requirements of the
Borrower Parties, any governmental agency, any Insurance Requirements relating
to the Collateral, or imposed by law or applicable regulations.

     (g) Publicity Signs. The Borrower Parties agree that during the Loan Term,
the MPT Parties and their respective Affiliates shall have the right and option
to erect one or more signs on the Collateral stating that the Collateral is
financed by MPT, or an Affiliate of MPT. Such sign shall be in a size, and shall
be erected in a location, reasonably acceptable to the MPT Parties and approved
by Alliance, which approval shall not be unreasonably withheld, conditioned or
delayed.

SECTION 6.5. REPAIRS; RESERVES; RESTRICTIONS.

     (a) Maintenance and Repair.

          (i) The Borrower Parties, at their joint and several expense, will
     keep the Collateral (including, without limitation, the Real Property, the
     Hospital, and all other Improvements) and all private roadways, sidewalks
     and curbs appurtenant thereto, and Borrower Parties' Personal Property in
     good first class order and repair (whether or not the need for such repairs
     occurs as a result of the Borrower Parties' use, any prior use, the
     elements, the age of the Collateral or any portion thereof) and, except as
     otherwise provided in Section 6.7 and Section 6.8, with reasonable
     promptness, will make all necessary and appropriate repairs thereto of
     every kind and nature, whether interior or exterior, structural or
     non-structural, ordinary or extraordinary, foreseen or unforeseen or
     arising by reason of a condition existing prior to the commencement of the
     Loan Term (concealed or otherwise). All repairs shall, to the extent
     reasonably achievable, be at least equivalent in quality to the original
     work. The Borrower Parties will not take or omit to take any action the
     taking or omission of which might materially impair the value or the
     usefulness of the Collateral or any part thereof for the Primary Intended
     Use. Notwithstanding anything contained herein to the contrary, the
     Borrower Parties shall make additions, modifications and remodeling to the
     Collateral from time to time which are necessary for the Primary Intended
     Use and which permit the the Borrower Parties to comply fully with its
     obligations set forth in this Agreement and the other Loan Documents,
     provided that any such action will be undertaken expeditiously, in a


                                       44



     workmanlike manner and will not significantly alter the character or
     purpose or detract from the value or operating efficiency of the Collateral
     and will not significantly impair the revenue producing capability of the
     Collateral or adversely affect the ability of the Borrower Parties to
     comply with the provisions of this Agreement and the other Loan Documents.
     Such additions, modifications and remodeling shall, without payment by any
     of the MPT Parties at any time, be included under the terms of this
     Agreement and the other Loan Documents and shall be subject to the Security
     Documents. The Borrower Parties shall notify the MPT Parties of any and all
     Capital Additions, repairs, improvements, additions, modifications, and
     remodeling made to the Collateral in excess of Twenty Five Thousand and
     00/100 Dollars ($25,000.00) and obtain consent from the MPT Parties prior
     to making such repairs, improvements, additions, modifications and
     remodeling.

          (ii) The Borrower Parties hereby acknowledge that the MPT Parties
     shall not under any circumstances be required to build or rebuild any
     improvements on the Collateral, or to make any repairs, replacements,
     alterations, restorations, or renewals of any nature or description to the
     Collateral, whether ordinary or extraordinary, structural or
     non-structural, foreseen or unforeseen, or to make any expenditure
     whatsoever with respect thereto in connection with this Agreement or any
     other Loan Document, or to maintain the Collateral in any way.

          (iii) The Borrower Parties hereby acknowledge that nothing contained
     in this Agreement or any other Loan Document, and no action or inaction by
     any of the MPT Parties, shall be construed as (i) constituting the consent
     or request of the MPT Parties, expressed or implied, to any contractor,
     subcontractor, laborer, materialman or vendor to or for the performance of
     any labor or services or the furnishing of any materials or other property
     for the construction, alteration, addition, repair or demolition of or to
     the Collateral or any part thereof, or (ii) giving any of the Borrower
     Parties any right, power or permission to contract for or permit the
     performance of any labor or services or the furnishing of any materials or
     other property in such fashion as would permit the making of any claim
     against any of the MPT Parties in respect thereof or to make any agreement
     that may create, or in any way be the basis for, any right, title,
     interest, lien, claim or other encumbrance upon the estate of any of the
     MPT Parties in the Collateral or any portion thereof.

          (iv) In the event of any conveyance of the Collateral to the MPT
     Parties pursuant to this Agreement or any other Loan Document (including,
     without limitation, pursuant to Article X hereof), the Borrower Parties
     will vacate and surrender the Collateral to the MPT Parties in the
     condition in which the Collateral was originally mortgaged to the MPT
     Parties, except as improved, repaired, rebuilt, restored, altered or added
     to as permitted or required by the provisions of this Agreement and except
     for ordinary wear and tear (subject to the obligation of Borrower Parties
     to maintain the Collateral in good order and repair during the entire Loan
     Term), damage caused by the gross negligence or willful acts of the MPT
     Parties and damage or destruction described in Section 6.7 or resulting
     from a Taking described in Section 6.8 which the Borrower Parties are not
     required by the terms of this Agreement to repair or restore.


                                       45



     (b) Reserves for Extraordinary Repairs. Commencing on the Closing Date, the
Borrower Parties shall make advance quarterly deposits to a reserve account (the
"Reserve") to be held by MPT; provided, however, that the first such deposit
shall be prorated based upon a Three Hundred Sixty (360) day year. Subject to
the immediately preceding sentence, each deposit to be made quarterly thereafter
through and including December 31, 2006, shall be equal to the sum of Two
Thousand Five Hundred and 00/100 Dollars ($2,500.00) per bed per annum. For the
period commencing on the Closing Date and ending on December 31, 2006, the
number of beds shall be assumed to be fifty (50). Beginning on January 1, 2007,
and on each January 1 thereafter, the number of beds shall be determined by the
actual number of beds placed in service or certified to be available for use in
the Hospital, which shall not be reduced without the prior written consent of
the MPT Parties. The account to which such payments are made shall require the
signature of an officer of Alliance and MPT to make withdrawals. Beginning on
January 1, 2007, and on each January 1 thereafter during the entire Loan Term,
such payment into the Reserve shall be increased by three and one-half percent
(3.5%) per annum. Notwithstanding anything contained herein to the contrary, the
Borrower Parties shall pay into the Reserve any amounts needed in excess of such
required payments as provided herein. The amounts in the Reserve, including
interest, shall be used to pay for Extraordinary Repairs on the Hospital, or, in
the event the Borrower Parties fail to make any required non-Extraordinary
Repairs, the MPT Parties may use funds in the Reserve for that purpose as well,
without the necessity of obtaining the signature of an officer of Alliance. The
Borrower Parties shall replenish amounts drawn from the Reserve at the rate of
one-twelfth (1/12th) of the total amount withdrawn per month, until completely
replenished. The Borrower Parties hereby grant to the MPT Parties a security
interest in all monies deposited into the Reserve and the Borrower Parties
shall, within fifteen (15) days from the Closing Date, execute all documents
necessary for the MPT Parties to perfect their security interest in the Reserve.
If either of the MPT Parties, in its reasonable discretion, determines at any
time that the balance then remaining in the Reserve account is insufficient to
pay in full for the present and future anticipated Extraordinary Repairs on the
Hospital, the Borrower Parties will deposit additional sums into the account
from time to time, upon the written request of the MPT Parties, in amounts equal
to the difference between the then balance in the Reserve account and the cost
to complete the present and future Extraordinary Repairs so that at all times
there is an adequate amount in the Reserve account to pay for such items on a
going forward basis. So long as no Event of Default has occurred, and no event
has occurred which with the giving of notice or the passage of time or both
would constitute an Event of Default hereunder, any amounts remaining in the
Reserve, after the payment of and the reimbursement for the Extraordinary
Repairs on the Hospital, at the expiration of the Loan Term shall be returned to
Alliance. The Borrower Parties consent to the MPT Parties' pledge of the Reserve
to any lender to the MPT Parties or their affiliates, subject to MPT Parties'
obligation to return any remaining amounts in the Reserve to Alliance Lessee
pursuant to this Section.

     (c) Encroachments; Restrictions. If any of the Improvements shall, at any
time, encroach upon any property, street or right-of-way adjacent to the Land,
or shall violate the agreements or conditions contained in any federal, state or
local law, restrictive covenant or other agreement affecting the Collateral, or
any part thereof, or shall impair the rights of others under any easement or
right-of-way to which the Collateral is subject, then promptly upon the request
of any of MPT, the Borrower Parties shall, at their joint and several expense,
subject to their right to contest the existence of any encroachment, violation
or impairment, (a) obtain valid and effective waivers or settlements of all
claims, liabilities and damages resulting from each such


                                       46



encroachment, violation or impairment or (b) make such changes in the
Improvements, and take such other actions, as MPT in the good faith exercise of
its judgment deems reasonably practicable, to remove such encroachment, or to
end such violation or impairment, including, if necessary, the alteration of any
of the Improvements, and in any event take all such actions as may be necessary
in order to be able to continue the operation of the Hospital without such
violation, encroachment or impairment. Any such alteration shall be made in
conformity with the applicable requirements of this Agreement. The Borrower
Parties' obligations under this Section shall be in addition to and shall in no
way discharge or diminish any obligation of any insurer under any policy of
title or other insurance and Alliance shall be entitled to a credit for any sums
paid by Alliance and recovered by MPT under any such policy of title or other
insurance.

SECTION 6.6. INSURANCE COVENANTS.

     (a) General Insurance Requirements. During the Loan Term, the Borrower
Parties shall at all times keep the Collateral and all property located in or on
the Collateral, insured against loss or damage from such causes as are
customarily insured against, by prudent owners of similar facilities. Without
limiting the generality of the foregoing, the Borrower Parties shall obtain and
maintain in effect throughout the Loan Term, the kinds and amounts of insurance
deemed necessary by the MPT Parties and as described below. At the MPT Parties'
option and provided that the costs of such coverages collectively do not exceed
the costs of such insurance obtained by the Borrower Parties, the MPT Parties
may obtain the insurance coverages as required herein and, in such event, the
Borrower Parties, jointly and severally, shall reimburse the MPT Parties for the
costs of such coverages immediately upon request by either of the MPT Parties.
This insurance shall be written by insurance companies (i) acceptable to the MPT
Parties, (ii) that are rated at least an "A, VIII" or better by Best's Insurance
Guide and Key Ratings and a claim payment rating by Standard & Poor's
Corporation of A or better (except as otherwise set forth in SCHEDULE 6.6(A)
hereof), and (iii) authorized, licensed and qualified to do insurance business
in the state in which the Collateral is located. The aggregate amount of
coverage by a single company must not exceed five percent (5%) of the insurance
company's policyholders' surplus. The policies must name the MPT Parties (and
any other entities as MPT may deem necessary) as an additional insured and
losses shall be payable to the MPT Parties and/or Alliance as provided in
Section 6.7. Each insurance policy required hereunder must (i) provide primary
insurance without right of contribution from any other insurance carried by the
MPT Parties, (ii) contain an express waiver by the insurer of any right of
subrogation, setoff or counterclaim against any insured party thereunder
including the MPT Parties, (iii) permit the MPT Parties to pay premiums at the
MPT Parties' discretion, and (iv) as respects any third party liability claim
brought against any one or more of the MPT Parties, obligate the insurer to
defend the MPT Parties as an additional insured thereunder. In addition, the
policies shall name the MPT Parties as an additional insured by way of a
standard form of mortgagee's loss payable endorsement. Any loss adjustment shall
require the written consent of the MPT Parties. Evidence of insurance and/or
Impositions shall be deposited with the MPT Parties. The policies on the
Collateral, including the Improvements, the Fixtures and Personal Property,
shall insure against the following risks:

     (i) All Risks or Special Form Property insurance against loss or damage to
     the building and improvements, including, but not limited to, perils, fire,
     lightning,


                                       47



     windstorm, water, hail, aircraft, riot, vehicle collision, explosion,
     smoke, vandalism, malicious mischief, flood, earth movement (including
     earthquake), theft, collapse, boiler and machinery, plate glass breakage,
     and perils typically provided under an Extended Coverage Endorsement and
     other forms of broadened risk perils, and insured on a Full Replacement
     Cost (as herein defined) value basis to the extent of the full replacement
     value of the Collateral, to be determined by MPT. The policy shall include
     coverage for subsidence. The deductible amount thereunder shall be borne by
     Alliance in the event of a loss and the deductible must not exceed, per
     occurrence, an amount equal to three percent (3%) of the value of the
     Collateral, to be determined by MPT. Further, in the event of a loss,
     Alliance shall abide by all provisions of the insurance contract, including
     proper and timely notice of the loss to the insurer, and Alliance further
     agrees that it will notify the MPT Parties of any loss in the amount of
     Twenty-Five Thousand and 00/100 Dollars ($25,000.00) or greater and that no
     claim at or in excess of Twenty-Five Thousand and 00/100 Dollars
     ($25,000.00) shall be settled without the prior written consent of MPT the
     Parties, which consent shall not be unreasonably withheld or delayed.

     (ii) Flood and earthquake insurance shall be required at a minimum amount
     equal to twenty percent (20%) of the value of the Collateral (as determined
     by MPT) up to a Ten Million and 00/100 Dollar ($10,000,000.00) limit unless
     the Real Property is located in an earthquake or flood zone, in which event
     such insurance shall be required at a minimum amount equal to the Full
     Replacement Cost value of the Hospital, subject to no more than a
     Twenty-Five Thousand Dollars ($25,000) per occurrence deductible and such
     policy shall include coverage for subsidence. The deductible for any
     insurance required hereunder must not exceed, per occurrence, an amount
     equal to three percent (3%) of the value of the Collateral, as determined
     by MPT. Notwithstanding any provision to the contrary in any Loan Document,
     the parties hereby acknowledge that the Borrower Parties shall have a
     commercially reasonable period of time following the Closing to obtain the
     flood insurance required by this subsection.

     (iii) Insurance against loss of earnings in an amount sufficient to cover
     not less than twelve (12) months' lost earnings and payment of Obligations,
     and written on an :actual loss sustained" form, for the same perils and
     other events as described in Section 6.6(a)(i) hereof.

     (iv) Worker's compensation insurance covering all employees in amounts that
     are customary for Alliance's industry.

     (v) Commercial General Liability in a primary amount of at least One
     Million and 00/100 Dollars ($1,000,000.00) per occurrence, bodily injury
     for injury or death of any one person and for Property Damage for damage to
     or loss of property of others, subject to a Two Million and 00/100 Dollars
     ($2,000,000.00) annual aggregate policy limit for all bodily injury and
     property damage claims, occurring on or about the Collateral or in any way
     related to the Collateral, including but not limited to, any swimming pools
     or other rehabilitation and recreational facilities or areas that are
     located on the Collateral otherwise related to the Collateral. Such policy
     shall include coverages found on the current ISO Commercial General
     Liability Policy form.


                                       48



     (vi) For so long as the Borrower Parties do not own any automobile or other
     vehicle, automobile and vehicle liability insurance coverage for all
     non-owned, leased or hired automobiles and vehicles in a primary limit
     amount of Two Hundred Fifty Thousand and NO/100 Dollars ($250,000.00) per
     occurrence for bodily injury and property damage; provided, however, that
     if at any time during the Loan Term, either Borrower Party owns an
     automobile or other vehicle, the Borrower Parties shall maintain automobile
     and vehicle liability insurance coverage for all owned, non-owned, leased
     or hired automobiles and vehicles in a primary limit amount of One Million
     and 00/100 Dollars ($1,000,000.00) per occurrence for bodily injury and
     property damage.

     (vii) Umbrella liability insurance in the minimum amount of Ten Million and
     00/100 Dollars ($10,000,000.00) for each occurrence and aggregate combined
     single limit for all liability. The umbrella liability policy shall
     specifically name in its underlying schedule the policies of commercial
     general liability, professional liability, garage keepers liability,
     automobile/vehicle liability and employer's liability under the workers
     compensation policy. Notwithstanding any provision to the contrary in any
     Loan Document, the parties hereby acknowledge that the Borrower Parties
     shall have a commercially reasonable period of time following the Closing
     to obtain the umbrella liability insurance required by this subsection.

     (viii) Professional liability insurance for the Borrower Parties and all
     employed professionals (including any Physician) of the Borrower Parties in
     an amount not less than One Million and 00/100 Dollars ($1,000,000.00) per
     individual claim and Three Million and 00/100 Dollars ($3,000,000.00)
     annual aggregate. All contractors, agents and other persons (including
     Physicians) who perform professional services for the Borrower Parties
     shall met the required minimum insurance requirements of One Million and
     00/100 Dollars ($1,000,000.00) per individual claim and Three Million and
     00/100 Dollars ($3,000,000.00) annual aggregate.

     The term "Full Replacement Cost" as used herein, shall mean the actual
replacement cost thereof from time to time, including increased cost of
construction endorsement, less exclusions provided in the normal fire insurance
policy. In the event either the MPT Party or Alliance believes that the Full
Replacement Cost has increased or decreased at any time during the Loan Term, it
shall have the right to have such Full Replacement Cost re-determined by the
fire insurance company which is then providing the largest amount of fire
insurance carried on the Collateral, hereinafter referred to as the "impartial
appraiser". The party desiring to have the Full Replacement Cost so
re-determined shall forthwith, on receipt of such determination by such
impartial appraiser, give written notice thereof to the other party hereto. The
determination of such impartial appraiser shall be final and binding on the
parties hereto, and Alliance shall forthwith increase, or may decrease, the
amount of the insurance carried pursuant to this Article, as the case may be, to
the amount so determined by the impartial appraiser. The Borrower Parties,
jointly and severally, shall pay the fee, if any, of the impartial appraiser.

     (b) Waiver of Subrogation. All insurance policies to be obtained by
Alliance as required hereunder, including, without limitation, insurance
policies covering the Collateral, the Fixtures, the Hospital, and/or Personal
Property, including, without limitation, contents, fire and casualty insurance,
shall expressly waive any right of subrogation on the part of the insurer


                                       49



against MPT. Alliance shall obtain insurance policies which will include such a
waiver clause or endorsement regardless of whether same is obtainable without
extra cost, and in the event of such an extra charge Alliance shall pay the
same.

     (c) Form of Insurance. All of the policies of insurance referred to in this
Section shall be written in form satisfactory to the MPT Parties and by
insurance companies satisfactory to the MPT Parties. The Borrower Parties,
jointly and severally, shall pay all of the premiums therefor, and shall deliver
such original policies, or, in the case of a blanket policy, a copy of the
original policy certified in writing, by a duly authorized agent for the
insurance company, as a "true and certified" copy of the policy, to the MPT
Parties effective with the Closing Date and furnished annually thereafter (and,
with respect to any renewal policy, at least fifteen (15) days prior to the
expiration of the existing policy) and, in the event of the failure of Alliance
either to obtain such insurance in the names herein called for or to pay the
premiums therefor or to deliver such policies or certified copies of such
policies (if allowed hereunder) to the MPT Parties at the times required, MPT
shall be entitled, but shall have no obligation, to obtain such insurance and
pay the premiums therefor, which premiums shall be repayable to the MPT Parties
upon written demand therefor, and failure to repay the same shall constitute an
Event of Default within the meaning of this Agreement. Each insurer mentioned in
this Section shall agree, by endorsement on the policy or policies issued by it,
or by independent instrument furnished to the MPT Parties, that it will give to
the MPT Parties sixty (60) days' prior written notice (at the MPT Parties'
notice address as specified in this Agreement ("MPT's Notice Address")) before
the policy or policies in question shall be altered, allowed to expire, or
canceled. The parties hereto agree that all insurance policies, endorsements and
certificates which provide that the insurer will "endeavor to" give notice
before same may be altered, allowed to expire or canceled will not be acceptable
to the MPT Parties. Notwithstanding anything contained herein to the contrary,
all policies of insurance required to be obtained by Alliance hereunder shall
provide (i) that such policies will not lapse, terminate, be canceled, or be
amended or modified to reduce limits or coverage terms unless and until the MPT
Parties have received not less than sixty (60) days' prior written notice at
MPT's Notice Address, and (ii) that in the event of cancellation due to
non-payment of premium, the insurer will provide not less than ten (10) days'
prior written notice to the MPT Parties at MPT's Notice Address.

     (d) Increase in Limits. In the event that either of the MPT Parties shall
at any time in its reasonable discretion deem the limits of the personal injury,
property damage or general public liability insurance then carried to be
insufficient, the parties shall endeavor to agree on the proper and reasonable
limits for such insurance to be carried and such insurance shall thereafter be
carried with the limits thus agreed on until further change pursuant to the
provisions of this Section. If the parties shall be unable to agree thereon, the
proper and reasonable limits for such insurance to be carried shall be
determined by an impartial third party selected by the parties. Nothing herein
shall be constructed to permit the amount of insurance to be reduced below the
amount or amounts required by any of the Borrower Party Instruments.

     (e) Blanket Policy. Notwithstanding anything to the contrary contained in
this Section, Alliance's obligations to carry the insurance provided for herein
may be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Alliance, provided that:


                                       50



     (i) Any such blanket policy or policies are acceptable to and have been
     approved by the MPT Parties;

     (ii) Any such blanket policy or policies shall not be changed, altered or
     modified without the prior written consent of the MPT Parties; and

     (iii) Any such blanket policy or policies shall otherwise satisfy the
     insurance requirements of this Section 6.6 (including the requirement of
     thirty (30) days' written notice before the expiration or cancellation of
     such policies as required by subsection (d) hereof) and shall provide for
     deductibles in amounts acceptable to the MPT Parties.

     (f) No Separate Insurance. None of the Borrower Parties shall, on its own
initiative or pursuant to the request or requirement of any third party, take
out separate insurance concurrent in form or contributing in the event of loss
with that required in this Article to be furnished by, or which may reasonably
be required to be furnished by, the Borrower Parties, or increase the amounts of
any then existing insurance by securing an additional policy or additional
policies, unless all parties having an insurable interest in the subject matter
of the insurance, including in all cases the MPT Parties, are included therein
as additional insureds and the loss is payable under said insurance in the same
manner as losses are required to be payable under this Agreement. The Borrower
Parties shall immediately notify the MPT Parties of the taking out of any such
separate insurance or of the increasing of any of the amounts of the then
existing insurance by securing an additional policy or additional policies.

SECTION 6.7. FIRE AND CASUALTY.

     (a) Insurance Proceeds. All proceeds payable by reason of any loss or
damage to the Collateral, or any portion thereof, during the Loan Term and
insured under any policy of insurance required by Section 6.6 of this Agreement
shall be paid to MPT and held by MPT in trust (subject to the provisions of
Section 6.7(d) hereof), and shall be applied as follows:

     (i) If, within sixty (60) days after the event causing any such loss or
     damage to the Collateral, neither the Borrower Parties nor the Guarantors
     are in monetary or payment default of any kind, and no event has occurred
     which with the giving of notice or the passage of time, or both, would
     constitute such a default, under this Agreement or the other Borrower Party
     Instruments, and the Borrower Parties advise the MPT Parties in writing
     that, in the Borrower Parties' reasonable opinion, the Collateral can be
     reconstructed, repaired, restored and/or replaced within one (1) year after
     such event to substantially the same operating utility that it had prior to
     such event and in a condition suitable for its Primary Intended Use, then
     at the Borrower Parties' request and following delivery of invoices or
     other appropriate documentation to the MPT Parties, the proceeds shall be
     paid out by MPT to the Borrower Parties from time to time to be used, to
     the extent necessary, to pay for the costs and expenses of reconstructing,
     repairing, restoring and/or replacing any damaged portion of the Collateral
     or remedying any loss thereof.

     (ii) If, within sixty (60) days after the event causing any such loss or
     damage to the Collateral, either the Borrower Parties or the Guarantors are
     in monetary or payment default of any kind, any event has occurred which
     with the giving of notice or the passage


                                       51



     of time, or both, would constitute such a default under this Agreement, or
     the other Borrower Party Instruments, or the Borrower Parties fail to
     notify the MPT Parties that, in the Borrower Parties' reasonable opinion,
     the Collateral can be reconstructed, repaired, restored and/or replaced
     within one (1) year after such event to substantially the same operating
     utility that it had prior to such event and to a condition suitable for its
     Primary Intended Use, then such proceeds, at the MPT Parties' sole
     discretion, shall be either (A) retained by the MPT Parties and applied
     toward prepayment of the Loan Obligations, in any order, whether or not
     then due, in which case an Event of Default shall be deemed to have
     occurred and the Borrower Parties, jointly and severally, shall pay to the
     MPT Parties on demand the amount of any deductible or uninsured loss
     arising in connection therewith and any unpaid Loan Obligations, or (B) to
     the Borrower Parties by the MPT Parties from time to time following
     delivery of invoices or other appropriate documentation to the MPT Parties,
     to be used, to the extent necessary, to pay for the costs and expenses of
     reconstructing, repairing, restoring and/or replacing any damaged portion
     of the Collateral or remedying any loss thereof, in which case the Borrower
     Parties shall use such proceeds to cause the Collateral to reconstructed,
     repaired, restored and/or replaced to substantially the same operating
     utility that the Collateral had prior to such event and to the reasonable
     satisfaction of the MPT Parties.

     (iii) Any excess proceeds of insurance remaining after the completion of
     the restoration or reconstruction of the Collateral (or in the event
     neither the MPT Parties nor the Borrower Parties are required or elect to
     reconstruct, repair, restore or replace, all such insurance proceeds) shall
     be retained by MPT free and clear upon the earlier of any completion of any
     such reconstruction, repair, restoration or replacement or any parties
     election not to reconstruct, repair, restore or replace, as applicable,
     except as otherwise specifically provided below in this Section, and shall
     be applied toward prepayment of the Loan Obligations, in any order, whether
     or not then due.

     (iv) If the cost and expense of the reconstruction, repair, restoration, or
     replacement exceeds the amount of proceeds received by the MPT Parties
     pursuant hereto from the insurance required under Section 6.6, and the
     Borrower Parties are obligated hereunder to reconstruct, repair, restore or
     replace the Collateral, the Borrower Parties shall be obligated, jointly
     and severally, to contribute any excess amount needed to reconstruct,
     repair, restore or replace the Collateral prior to use of the insurance
     proceeds. Such amount shall be paid by the Borrower Parties to MPT to be
     held in trust together with any other insurance proceeds for application to
     the cost and expense of reconstruction, repair, restoration, or replacement
     as herein provided.

     (b) Uninsured Event of Damage or Destruction. Except as provided in Section
6.7(d) below, if during the Loan Term, the Collateral is totally or partially
destroyed from a risk not covered by the insurance described in Section 6.6 but
that would have been covered if the Borrower Parties carried the insurance
customarily maintained by, and generally available to, the operators of
reputable health care facilities in the region in which the Collateral is
located, then, whether or not such damage or destruction renders the Collateral
Unsuitable for its Primary Intended Use, the Borrower Parties shall, at their
sole, joint and several cost and expense, reconstruct, repair, restore or
replace the Collateral to substantially the same condition it was in


                                       52



immediately before such damage or destruction and such damage or destruction
shall not terminate this Agreement.

     (c) Restoration. If the Borrower Parties are required or elect to restore
the Collateral as provided in Section 6.7(a) or Section 6.7(b), the Borrower
Parties shall also restore all alterations and improvements made by the Borrower
Parties and all Personal Property.

     (d) Damage Near End of Loan Term. Notwithstanding any provisions of Section
6.7(a) or Section 6.7(b) to the contrary, if damage to or destruction of the
Collateral occurs during the last twenty-four (24) months of the Loan Term, and
if such damage or destruction cannot be fully repaired and restored within six
(6) months immediately following the date of loss, an Event of Default shall be
deemed to have occurred under this Agreement, and the MPT Parties shall be
entitled to retain the insurance proceeds relating thereto and apply the same
toward prepayment of the Loan Obligations, in any order, whether or not then
due, in which case the Borrower Parties, jointly and severally, shall pay to the
MPT Parties on demand the amount of any deductible or uninsured loss arising in
connection therewith and any unpaid Loan Obligations.

     (e) Waiver. The Borrower Parties hereby waive any statutory or common law
rights of termination which may arise by reason of any damage or destruction of
the Collateral.

SECTION 6.8. CONDEMNATION.

     (a) Parties' Rights and Obligations. If during the Loan Term there is any
Taking of all or any part of the Collateral or any interest in this Agreement by
Condemnation, the rights and obligations of the parties shall be determined by
this Article.

     (b) Total Taking. If there is a Taking of all of the Collateral by
Condemnation (a "Total Taking"), the provisions of Section 6.8(d) hereof shall
apply.

     (c) Partial Taking. If there is a Taking of a portion of the Collateral by
Condemnation (a "Partial Taking"), this Agreement shall remain in effect if, in
the MPT Parties' reasonable opinion exercised in good faith, the Collateral is
not thereby rendered Unsuitable for its Primary Intended Use. If, however, the
Collateral is thereby rendered Unsuitable for its Primary Intended Use, so long
as neither of the Borrower Parties nor the Guarantors are in monetary or payment
default of any kind, and no other event has occurred which, with the giving of
notice or the passage of time or both, would constitute such a default under the
terms of this Agreement or the other Borrower Party Instruments, the Borrower
Parties shall have the option to repair, restore, or relocate the Collateral, at
their own expense, to the extent possible, to substantially the same condition
as existed immediately before the partial Taking within one (1) year of the date
of such Partial Taking. In the event that the Borrower Parties do not exercise
such option, this Agreement shall be deemed to terminate on the Date of Taking.

     (d) Award. In the event there is any Taking, the Award shall be paid to MPT
and held by MPT in trust, and shall be applied as follows

          (i) In the event there is a Total Taking or there is a Partial Taking
     and the Borrower Parties do not exercise their option to repair, restore or
     relocate the Collateral,


                                       53



     the Award shall be paid to the MPT Parties and applied toward prepayment of
     the Loan Obligations, in any order, whether or not then due, and any unpaid
     Loan Obligations shall be due and payable to the MPT Parties immediately.

          (ii) In the event there is a Partial Taking and the Borrower Parties
     exercise their option to repair, restore or relocate the Collateral, the
     Award shall be paid to the Borrower Parties upon the MPT Parties receipt of
     invoices or other appropriate documentation regarding the costs and
     expenses for any such repair, restoration or relocation.

     (e) Restoration. If there is a partial Taking of the Collateral and this
Agreement remains in full force and effect pursuant to Section 6.8(c), the
Borrower Parties shall accomplish all necessary repair, restoration or
relocation within one (1) year of the date of the Taking.

     (f) Temporary Taking. The Taking of the Collateral, or any part thereof, by
military or other public authority shall constitute a Taking by Condemnation
only when the use and occupancy by the Taking authority has continued for longer
than six (6) months. During any such six (6) month period all the provisions of
this Agreement shall remain in full force and effect and the Loan Obligations
shall remain payable as provided in this Agreement and the other Loan Documents.

SECTION 6.9. OPERATIONAL COVENANTS.

     (a) Conduct of Business by the Borrower Parties. The Borrower Parties
covenant and agree that, unless the MPT Parties shall otherwise agree in
writing, the Borrower Parties shall conduct their businesses only in, and the
Borrower Parties shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice and in compliance in all
material respects with all applicable laws and regulations, and that the
Borrower Parties shall use reasonable best efforts to preserve substantially
intact the business organization of each Borrower Party, to keep available the
services of their current officers, employees and consultants and to preserve
the present relationships of each Borrower Party with patients, suppliers and
other persons with which each Borrower Parties have significant business
relations. By way of amplification and not limitation, except as contemplated by
this Agreement or set forth on SCHEDULE 6.9(A), no Borrower Party shall, during
the Loan Term, directly or indirectly do, or propose to do, any of the following
without the prior written consent of the MPT Parties:

          (i) amend, repeal or otherwise change in any way its Governing
     Documents;

          (ii) make or revoke any Tax election related to or affecting (whether
     currently, prospectively or otherwise) the Collateral;

          (iii) fail to perform its obligations in all respects under agreements
     relating to or respecting its assets, properties and rights;

          (iv) reduce the coverage of, fail to timely renew or pay the premiums
     on or cancel any insurance policy;


                                       54



          (v) cause to lapse or fail to renew any license and certification
     necessary to conduct its business;

          (vi) fail to timely make all applicable filings with Governmental
     Entities;

          (vii) create, assume or, other than those presently in existence,
     permit to exist any Lien upon any of the Collateral;

          (viii) purchase, sell, assign, lease or otherwise acquire, transfer or
     dispose of any material assets, except in the ordinary course of business
     and consistent with its past practice;

          (ix) enter into or agree to enter into any agreement or arrangements
     granting any rights to purchase any of its assets, properties or rights,
     except for purchases of inventory in the ordinary course of business and
     consistent with its past practice;

          (x) engage in any business other than the Business;

          (xi) terminate or modify any contract, lease or other agreement to
     which it is a party (excluding expiration or satisfaction in accordance
     with the terms of such contract or agreement);

          (xii) waive any right of substantial value other than in exchange for
     reasonable consideration; or

          (xiii) take, agree or offer, in writing or otherwise, to take, any of
     the actions described in Section 6.9(a)(i) through (xii) above, or any
     action which would make any of the representations or warranties of any
     Borrower Party contained in this Agreement untrue, incorrect or incomplete
     or prevent any Borrower Party from performing or cause any Borrower Party
     not to perform its covenants hereunder or in the other Loan Documents.

     (b) Cooperation. Subject to compliance with applicable law, (a) the
Borrower Parties shall confer on a regular and frequent basis with one or more
representatives of the MPT Parties to report operational matters that are
material and the general status of ongoing operations and (b) each of the MPT
Parties and the Borrower Parties shall promptly provide the other or their
counsel with copies of all filings made by such party with any Governmental
Entity in connection with this Agreement and the transactions contemplated
hereby.

     (c) Compliance with Requirements. The Borrower Parties, at their joint and
several expense, will promptly (i) comply with all Legal Requirements and
Insurance Requirements in respect of the operation of the Business and the use,
operation, maintenance, repair and restoration of the Collateral, whether or not
compliance therewith shall require structural change in any of the Improvements
or interfere with the use and enjoyment of the Collateral or operation of the
Hospital, and (ii) procure, maintain and comply with all licenses, certificates
of need, Medicare and Medicaid provider agreements, accreditations and other
authorizations required for the conduct of the Business and any use of the
Collateral then being made, and for the proper erection, installation, operation
and maintenance of the Collateral or any part thereof. Upon


                                       55



MPT's request, the Borrower Parties shall deliver copies of all such licenses,
certificates of need, agreements and other authorizations. The Borrower Parties,
jointly and severally, hereby agree to indemnify and defend, at the Borrower
Parties' sole cost and expense, and hold the MPT Parties, their respective
successors and assigns, harmless from and against, and to reimburse the MPT
Parties and their respective successors and assigns, with respect to any and all
claims, demands, actions, causes of action, losses, damages, liabilities, costs
and expenses (including, without limitation, reasonable attorneys' fees and
court costs) of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by any of the MPT Parties, or their
respective successors and assigns, at any time and from time to time by reason
or arising out of any breach by the Borrower Parties of any of the provisions of
this Section. The Borrower Parties covenant and agree that the Collateral shall
not be used for any unlawful purpose. The Borrower Parties shall use their best
efforts to have tenants acquire and maintain all licenses, certificates,
permits, provider agreements and other authorizations and approvals needed to
operate the Collateral and all equipment and machinery used in or in connection
with the Collateral in its customary manner for the Primary Intended Use and any
other use conducted on the Collateral as may be permitted from time to time
hereunder. The Borrower Parties further covenant and agree that their use of the
Collateral, the use of all equipment and machinery used in connection with the
Collateral, and the maintenance, alteration, and operation of the same, and all
parts thereof, shall at all times conform to all applicable local, state and
federal laws, ordinances, rules and regulations.

     (d) Licenses.

          (i) The Borrower Parties shall maintain, at all times during the Loan
     Term, all Existing Licenses which may be necessary or useful in the
     operation of the Hospital or the Business, shall obtain all New Licenses
     which may be necessary in the operation of the Hospital or the Business,
     and shall qualify and comply with all applicable laws as they may from time
     to time exist, including those applicable to certification and
     participation as a provider under Medicare and Medicaid legislation and
     regulations.

          (ii) The Borrower Parties shall not, without the prior written consent
     of the MPT Parties, which may be granted or withheld in their sole
     discretion, effect or attempt to effect any change in the license category
     or status of the Hospital or any part thereof. Under no circumstances shall
     the Borrower Parties have the right to transfer any of the Licenses to any
     location other than the Hospital or to any other person or entity (except
     to the MPT Parties as contemplated herein), whether before, during, or
     after the Loan Term. To the extent that any of the Borrower Parties has or
     will extend to any third party any right, title, or claim of right
     whatsoever in and to the Licenses or the right to operate the Hospital, all
     such right, title, or claim of right shall automatically revert to the MPT
     Parties or to the MPT Parties' designee upon the occurrence of a Event of
     Default, to the extent permitted by law.

          (iii) It is an integral condition of this Agreement that the Borrower
     Parties covenant and agree not to sell, move, modify, cancel, surrender,
     transfer, assign, sell, relocate, pledge, secure, convey or in any other
     manner encumber any License or any governmental or regulatory approval,
     consent or authorization of any kind to operate the Hospital or the
     Business.


                                       56



          (iv) The Borrower Parties shall immediately (within two (2) Business
     Days) notify the MPT Parties in writing of any notice, action, or other
     proceeding or inquiry of any governmental agency, bureau, or other
     authority, whether federal, state or local, of any kind, nature or
     description, which could adversely affect any License or Medicare and/or
     Medicaid-certification status, or accreditation status, of the Hospital, or
     the ability of Alliance to maintain its status as the licensed and
     accredited operator of the Hospital, or which alleges noncompliance with
     any law. The Borrower Parties shall immediately (within two (2) Business
     Days) upon any of the Borrower Parties' receipt, furnish the MPT Parties
     with a copy of any and all such notices and the MPT Parties shall have the
     right, but not the obligation, to attend and/or participate, in the MPT
     Parties' sole and absolute discretion, in any such actions or proceedings.
     The Borrower Parties shall act diligently to correct any deficiency or deal
     effectively with any "adverse action" or other proceeding, inquiry, or
     other governmental action, so as to maintain the licensure and Medicare
     and/or Medicaid-certification status stated herein in good standing at all
     times. The Borrower Parties shall not agree to any settlement or other
     action with respect to such proceedings or inquiry which affects the use of
     the Collateral or any portion thereof as provided herein without the prior
     written consent of the MPT Parties, which consent shall not be unreasonably
     withheld or delayed.

     (e) Compliance with Healthcare Laws. The Borrower Parties hereby covenant
and agree that on and after the date hereof and during the Loan Term: (i)
Alliance shall be validly licensed, Medicare and/or Medicaid certified, and, if
required, accredited to operate the Hospital in accordance with the applicable
rules and regulations of the State of Texas and those of all applicable federal
governmental authorities and accrediting bodies, including, but not limited to,
DHHS, DHS, THHSC and CMS; and/or (ii) Alliance shall be, certified by and the
holder of valid provider agreements with, Medicare or Medicaid, which
certifications and provider agreements shall be issued by THHSC and CMS and
Alliance shall remain so certified and shall remain such a holder in connection
with its Primary Intended Use of the Collateral as a licensed general acute care
hospital; (iii) Alliance shall be in substantial compliance with and shall
remain in substantial compliance with all state and federal laws, rules,
regulations and procedures with regard to the operation of the Hospital,
including, without limitation, compliance under HIPAA; (iv) Alliance shall
operate the Hospital in a manner consistent with high quality acute care
services and sound reimbursement principles under the Medicare and/or Medicaid
programs and as required under state and federal law; and (v) the Borrower
Parties shall not abandon, terminate, vacate, or fail to renew any License which
is required for the lawful and proper operation of the Hospital or in any way
commit any act which will or may cause any such License to be revoked by any
Governmental Entity having jurisdiction thereof. The Borrower Parties agree to
promptly notify the MPT Parties in writing of receipt of any notice of
investigation of any alleged Healthcare Fraud violations.

SECTION 6.10. HAZARDOUS MATERIALS AND ENVIRONMENTAL LAWS.

     (a) Hazardous Materials. Except for Hazardous Materials generated in the
normal course of business regarding the Primary Intended Use (which Hazardous
Materials shall be handled and disposed of in compliance with all Environmental
Laws), no Hazardous Materials shall be installed, used, generated, manufactured,
treated, handled, refined, produced, processed, stored or disposed of, or
otherwise present in, on or under the Collateral. No activity shall be


                                       57



undertaken on the Collateral which would cause (i) the Collateral to become a
treatment, storage or disposal facility of hazardous waste, infectious waste, or
biomedical or medical waste within the meaning of, or otherwise bring the
Collateral within the ambit of, RCRA or any Environmental Laws, (ii) releases or
threatened releases of Hazardous Materials from the Collateral within the
meaning of, or otherwise bring the Collateral within the ambit of, CERCLA or
SARA or any Environmental Laws, or (iii) the discharge of Hazardous Materials
into any watercourse, surface or subsurface body of water, or wetland, or the
discharge into the atmosphere of any Hazardous Material which would require a
permit under any Environmental Laws. No activity shall be undertaken with
respect to the Collateral or the operation of the Business which would cause a
violation or support a claim under RCRA, CERCLA, SARA or any Environmental Laws.
No investigation, administrative order, litigation or settlement with respect to
any Hazardous Material is, to Alliance's Knowledge, threatened or in existence
with respect to the Collateral. No notice has been served on Alliance from any
entity, governmental body or individual claiming any violation of any
Environmental Laws, or requiring compliance with any Environmental Laws, or
demanding payment or contribution for environmental damage or injury to natural
resources. Alliance has not obtained and Alliance has no knowledge of any reason
Alliance will be required to obtain any permits, licenses, or similar
authorizations to occupy, operate or use the Improvements or any part of the
Collateral by reason of any Environmental Laws. Alliance hereby agrees to
indemnify and defend, at its sole cost and expense, and hold MPT, its successors
and assigns, harmless from and against and to reimburse MPT with respect to any
and all claims, demands, actions, causes of action, losses, damages,
liabilities, costs and expenses (including, without limitation, reasonable
attorney's fees and court costs) of any and every kind or character, known or
unknown, fixed or contingent, asserted against or incurred by MPT at any time
and from time to time by reason or arising out of any breach or violation of any
Environmental Laws. Alliance shall, at its sole cost, expense, risk and
liability, remove or cause to be removed from the Collateral all Hazardous
Materials generated in connection with the Primary Intended Use and as found in
hospital and healthcare facilities, including, without limitation, all
infectious waste materials, syringes, needles and any materials contaminated
with bodily fluids of any type, character or description of whatsoever nature in
accordance with all Environmental Laws. Alliance shall not dispose of any such
infectious waste and Hazardous Materials in any receptacles used for the
disposal of normal refuse.

     (b) Environmental Laws. Alliance agrees to add to all of its third party
agreements relating to the Collateral, including, without limitation, all Tenant
Leases, that in the event it is determined that such Tenant Lease is in
violation of the Environmental Laws, such Tenant Lease shall be renegotiated so
that same are in compliance with all Environmental Laws. Alliance agrees
promptly to notify MPT in writing of receipt of any notice of investigation of
any alleged Environmental Law violations. Alliance hereby agrees to indemnify
and defend, at Alliance's sole cost and expense, and hold the MPT Indemnified
Parties harmless from and against and to reimburse the MPT Indemnified Parties
with respect to any and all claims, demands, actions, causes of action, losses,
damages, liabilities, costs and expenses (including, without limitation,
reasonable attorneys' fees and court costs) of any and every kind or character,
known or unknown, fixed or contingent, asserted against or incurred by the MPT
Indemnified Parties, at any time and from time to time by reason or arising out
of any breach by Alliance of any of the provisions set forth in this Section.

SECTION 6.11. IMPOSITIONS.


                                       58



     (a) Additional Charges. Each of the Borrwer Parties shall also pay and
discharge as and when due and payable (a) all other amounts, liabilities,
obligations and Impositions which such Borrower Party assumes or agrees to pay
under the Loan Documents, and all other amounts, liabilities, obligations and
Impositions related to the ownership, use, possession and operation of the
Collateral or the Business, including, without limitation, all costs of owning
and operating the Hospital, all Real Estate Taxes, insurance premiums,
maintenance and capital improvements, all licensure violations, violations of
and defaults under any of the Permitted Encumbrances, civil monetary penalties
and fines, and (b) in the event of any failure on the part of the Borrower
Parties to pay any of those items referred to in clause (a) above, the Borrower
Parties, jointly and severally, will also promptly pay and reimburse the MPT
Parties for all such amounts paid by the MPT Parties and promptly pay and
discharge every fine, penalty, interest and cost which may be added for
non-payment or late payment of such items (the items referred to in clauses (a)
and (b) above being referred to herein collectively as the "Additional
Charges"), and the MPT Parties shall have all legal, equitable and contractual
rights, powers and remedies provided in the Loan Documents, by statute or
otherwise, in the case of non-payment of the Additional Charges, as in the case
of the other Loan Obligations. If any installment of Additional Charges shall
not be paid within five (5) Business Days after its due date, the Borrower
Parties, jointly and severally, will pay to the MPT Parties on demand, as
Additional Charges, a late charge (to the extent permitted by law) computed at
the Default Rate (or at the maximum rate permitted by law, whichever is less) on
the amount of such installment, from the due date of such installment to the
date of payment thereof. To the extent that the Borrower Parties pay any
Additional Charges to the MPT Parties pursuant to any requirement of the Loan
Documents, the Borrower Parties shall be relieved of their obligation to pay
such Additional Charges to the entity to which they would otherwise be due. At
any time during the Loan Term, the MPT Parties may require the Borrower Parties
to pay to the MPT Parties the MPT Parties' estimates of Real Estate Taxes and
insurance premiums and the Borrower Parties, jointly and severally, shall pay to
the MPT Parties, upon written request from any of the MPT Parties, such amounts
as and when required by the MPT Parties. All sums paid into escrow or deposits
shall not bear interest and may be commingled with the MPT Parties' books,
accounts and funds; however, upon an Event of Default, the escrowed funds or
deposits may be applied by the MPT Parties to all sums owed by the Borrower
Parties or the Guarantors to the MPT Parties.

     (b) Payment of Impositions. Subject to Article XI relating to permitted
contests, the Borrower Parties, jointly and severally, will pay, or cause to be
paid, all Impositions before any fine, penalty, interest or cost may be added
for non-payment, such payments to be made directly to the taxing or assessing
authorities unless, in the case of escrows and deposits required to be paid to
the MPT Parties as provided in this Agreement, and the Borrower Parties will
promptly, upon request, furnish to the MPT Parties copies of official receipts
or other satisfactory proof evidencing such payments. The Borrower Parties'
obligation to pay such Impositions shall be deemed absolutely fixed upon the
date such Impositions become a lien upon the Collateral or any part thereof. If
any such Imposition may, at the option of the MPT Parties, lawfully be paid in
installments (whether or not interest shall accrue on the unpaid balance of such
Imposition), the Borrower Parties may exercise the option to pay the same (and
any accrued interest on the unpaid balance of such Imposition) in installments
and, in such event, shall pay such installments during the Loan Term (subject to
the Borrower Parties' right of contest pursuant to the provisions of Article XI;
and subject to the requirement to pay the full amount of escrows and deposits as
required under this Agreement) as the same respectively become due and before
any


                                       59



fine, penalty, premium, further interest or cost may be added thereto. The
Borrower Parties, at their sole, joint and several expense, shall, to the extent
permitted by applicable laws and regulations, prepare and file all other Tax
Returns and reports in respect of any Imposition as may be required by
Governmental Entities. If any refund shall be due from any taxing authority in
respect of any Imposition paid by the Borrower Parties, the same shall be paid
over to or retained by the Borrower Parties if no Event of Default shall have
occurred hereunder and be continuing. Any such funds retained by the MPT Parties
due to an Event of Default shall be applied as provided in Article X. The MPT
Parties and the Borrower Parties shall, upon request of the other, provide such
data as is maintained by the parties to whom the request is made with respect to
the Collateral as may be necessary to prepare any required returns and reports.
In the event Governmental Entities classify any property covered by this
Agreement as personal property, the Borrower Parties shall file all Tax Returns
relating to such personal property in such jurisdictions where they may legally
so file. The Borrower Parties, to the extent they possess the same, will provide
to the MPT Parties, upon request, with cost and depreciation records necessary
for filing returns for any property so classified as personal property. The
Borrower Parties may, upon giving notice to the MPT Parties, at the Borrower
Parties' option and at the Borrower Parties' sole cost and expense, protest,
appeal, or institute such other proceedings as the Borrower Parties may deem
appropriate to effect a reduction of real estate or personal property
assessments and the MPT Parties, at the Borrower Parties' expense as aforesaid,
shall fully cooperate with the Borrower Parties in such protest, appeal, or
other action.

     (c) Utility Charges. Alliance will contract for, in its own name, and will
pay or cause to be paid when due all charges for electricity, power, gas, oil,
water and other utilities used in connection with the Collateral during the Loan
Term, including, without limitation, all impact and tap fees necessary for the
operation of the Hospital.

SECTION 6.12. ASSIGNMENT, SUBLETTING AND SUBLEASE SUBORDINATION.

     (a) Assignment and Subletting. The Borrower Parties shall not lease any
portion of the Collateral or permit, approve, accept or suffer same, without the
MPT Parties' prior written consent, which consent shall not be unreasonably
withheld, provided that such lease shall comply with the provisions of this
Section, and an original counterpart of each such lease, in form and substance
satisfactory to the MPT Parties, shall be delivered promptly to the MPT Parties.
Notwithstanding anything contained herein to the contrary, the MPT Parties and
the Borrower Parties acknowledge the existence of the Tenant Leases set forth on
SCHEDULE 6.12(a) hereof ("Existing Tenant Leases"). Any modifications,
amendments and restatements of the Existing Tenant Leases must be approved by
MPT in accordance with this Section.

     (b) Lease Limitations. In addition to the limitations as set forth in
subsection (a) above, all leases contemplated by this Section shall comply with
the Healthcare Fraud Laws. The Borrower Parties agree that all Tenant Leases
entered into after the date hereof ("New Tenant Leases") and submitted for
approval of the MPT Parties as provided herein must include provisions to the
effect that (i) such New Tenant Lease is subject and subordinate to all of the
terms and provisions of the Security Documents and the other Loan Documents,
(ii) from and after an Event of Default, Tenant will, at MPT's option, attorn to
the MPT Parties and waive any right the Tenant may have to terminate the New
Tenant Lease or to surrender possession thereunder, as a result thereof, (iii)
at MPT's option, the New Tenant Lease may be terminated or


                                       60



left in place by the MPT Parties from and after an Event of Default, (iv) the
obligations and performance of the Tenant must be guaranteed by guarantors
acceptable to the MPT Parties, (v) Tenant shall from time to time upon request
of the Borrower Parties or the MPT Parties furnish within ten (10) days from
request an estoppel certificate in form and content acceptable to the MPT
Parties relating to the New Tenant Lease, (vi) in the event the Tenant receives
a written notice from the MPT Parties or their assignees, if any, stating that
an Event of Default has occurred, the Tenant shall thereafter be obligated to
pay all rentals accruing under said New Tenant Lease directly to the party
giving such notice, or as such party may direct and such Tenant shall be
entitled to conclusively rely on such notice, (vii) and that such New Tenant
Lease shall at all times be subject to the obligations and requirements as set
forth in this Section, and (viii) Tenant shall provide to the MPT Parties upon
written request such officer's certificates and financial statements as the MPT
Parties may request from time to time.

     (c) Lease Subordination and Non-Disturbance. Within ten (10) days after
request by the MPT Parties, the Borrower Parties shall cause any Tenants to
execute and deliver to the MPT Parties a subordination agreement relating to the
Tenant Leases of such Tenants, which subordination agreements shall be in form
and content acceptable to the MPT Parties whereby each Tenant subordinates its
Tenant Lease and all of its rights and estate thereunder to the Loan Documents
and agrees with the MPT Parties that such Tenant will attorn to and recognize
the MPT Parties or the purchaser at any foreclosure sale or any sale under a
power of sale contained in any such Loan Document, as successor owner of the
Real Property, subject to all of the terms and provisions of the Tenant Lease,
provided that, among other things, such Tenant is not in default in its
obligations under such Tenant Lease beyond any applicable grace period provided
therefor.

SECTION 6.13. SPECIAL PURPOSE ENTITY. Alliance shall remain at all times during
the Loan Term a Special Purpose Entity created and to remain in good standing
for the sole purpose of leasing and operating the Hospital in accordance with
the terms of this Agreement. Promptly following any request by the MPT Parties
during the Loan Term, Alliance shall provide MPT evidence that Alliance is a
Special Purpose Entity and is in good standing in the state of its organization
and in the state in which the Collateral is located.

SECTION 6.14. ORGANIZATIONAL DOCUMENTS. During the Loan Term, the Borrower
Parties shall not permit or suffer, without the prior written consent of the MPT
Parties (i) any material amendment or modification of their respective
Organizational Documents (as defined below), or the organizational documents of
any constituent entity of the Borrower Parties, which changes Alliance's status
as a Special Purpose Entity, (ii) any dissolution or termination of the
existence of either Borrower Party, (iii) the aggregate ownership of the current
partners of Alliance or the current shareholders of the General Partner to be
reduced below fifty-one percent (51%), (iv) any addition, replacement or removal
of any general partner of Alliance, or (v) any change in the state of formation
or incorporation or the name of any of the Borrower Parties. Simultaneously
with the execution of this Agreement, Alliance has delivered to the MPT Parties
true and complete copies of its certificate of limited partnership and limited
partnership agreement creating Alliance, and all other documents creating and
governing Alliance and the General Partner has delivered to the MPT Parties true
and complete copies of its articles of incorporation and bylaws creating the
General Partner, and all other documents creating and governing the General
Partner (collectively, the "Organizational Documents").


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                                   ARTICLE VII
                               CLOSING CONDITIONS

SECTION 7.1. CONDITIONS TO THE OBLIGATIONS OF THE BORROWER PARTIES. The
obligations of the Borrower Parties to effect the transactions contemplated
hereby shall be further subject to the fulfillment of the following conditions,
any one or more of which may be waived by the Borrower Parties:

(a) All of the representations and warranties of the MPT Parties set forth in
this Agreement shall be true and correct when made and as of the Closing Date as
if made on the Closing Date.

(b) The MPT Parties shall have delivered, performed, observed and complied with
all of the items, instruments, documents, covenants, agreements and conditions
required by this Agreement to be delivered, performed, observed and complied
with by them prior to, or as of, the Closing.

(c) The MPT Parties shall have executed, where applicable, and delivered to the
Borrower Parties the documents referenced in Section 8.3 hereof.

SECTION 7.2. CONDITIONS TO THE OBLIGATIONS OF THE MPT PARTIES. The obligations
of the MPT Parties to effect the transactions contemplated hereby shall be
further subject to the fulfillment of the following conditions, any one or more
of which may be waived by the MPT Parties:

(a) All of the representations and warranties of Borrower Parties set forth in
this Agreement shall be true and correct when made and as of the Closing Date as
if made on the Closing Date.

(b) The Borrower Parties shall have delivered, performed, observed and complied
with all of the items, instruments, documents, covenants, agreements and
conditions required by this Agreement to be delivered, performed, observed and
complied with by them prior to, or as of, the Closing.

(c) No Borrower Party shall have suffered any change, event or circumstance
which has had, or could have, a Material Adverse Effect.

(d) The MPT Parties shall have satisfactorily completed their due diligence
investigations of the Hospital, the Real Property, the Business and the Borrower
Parties and shall be satisfied with the results of such investigations
(including, without limitation, any MPT directed audit of Medicare and/or
Medicaid cost reports of the Borrower Parties for any period and any other
Medicare, Medicaid and/or DHS survey and/or audit of the Hospital or the
Business, any investigations involving the lawsuit of Michael E. Hildebrand,
M.D. vs. Alliance Medical Group, Alliance Hospital, Ltd; and SRI-SAI
Enterprises, Inc. filed in the District Court of Ector County, Texas D-117, 769,
and any other medical fraud investigations).

(e) All necessary approvals, consents, estoppel certificates, and the like of
Governmental Entities and third parties to the validity and effectiveness of the
transactions contemplated hereby have been obtained.


                                       62



(f) No portion of the Collateral shall have been damaged or destroyed by fire or
casualty.

(g) No condemnation, eminent domain or similar proceedings shall have been
commenced or threatened with respect to any portion of the Collateral.

(h) The MPT Parties shall have received copies of all permits, licenses and
other approvals of Governmental Entities required for the operation of the
Collateral for their intended uses and written evidence satisfactory to the MPT
Parties that the operation and use of the Hospital are in accordance with all
applicable governmental requirements.

(i) The MPT Parties shall have received evidence that the Borrower Parties are
maintaining insurance on the Collateral and that the MPT Parties are named as
additional insureds and, where applicable, loss payees.

(j) The Borrower Parties shall have executed where applicable, and delivered to
the MPT Parties the documents referenced in Section 8.2 hereof.

(k) There shall not have been instituted by any creditor of any of the Borrower
Parties, any Governmental Entity or any other third party, any suit, action or
proceeding which would affect the Collateral or seek to restrain, enjoin or
invalidate the transactions contemplated by this Agreement.

(l) The Appraisal shall have been delivered and shall reflect an Appraised Value
that equals or exceeds the amount of the Loan.

                                  ARTICLE VIII
                                     CLOSING

SECTION 8.1. CLOSING DATE. The closing of the Loan pursuant hereto (the
"Closing") shall be handled through deliveries by mail into escrow on December
21, 2005, or on such other date (the "Closing Date") and such other place as the
parties hereto shall mutually agree.

SECTION 8.2. BORROWER PARTIES' CLOSING DATE DELIVERABLES. On the Closing Date,
the Borrower Parties shall deliver to the MPT Parties the documents,
certificates, fees, and other instruments described below, each of which shall
be executed and delivered, as applicable, by the Borrower Parties, and shall be
reasonably satisfactory to the MPT Parties in form and substance.

     (a) The Note;

     (b) The Mortgage;

     (c) The Security Agreement;

     (d) The Financing Statements;

     (e) The Pledge Agreement;


                                       63



     (f) The Guaranty;

     (g) The Letter of Credit;

     (h) The Environmental Indemnity Agreement;

     (i) The Assignment of Leases and Rents;

     (j) The Subordination of Management Agreement;

     (k) The Subordination Agreement;

     (l) The Collateral Assignment;

     (m) The Noncompete Agreement;

     (n) An Appraisal dated the most recent practical date prior to the date
hereof indicating that the Appraised Value equals or exceeds the amount of the
Loan;

     (o) The Commitment Fee;

     (p) Certificates dated the Closing Date signed by each of the Borrower
Parties to the effect that all of the representations and warranties of each
Borrower Party contained in the Agreement (considered collectively) and each of
these representations and warranties (considered individually) remain in all
respects true and correct as of the Closing Date as if made on such date and
that such Borrower Party has performed and satisfied all covenants and
conditions required by this Agreement to be performed or satisfied by such
Borrower Party on or prior to Closing;

     (q) A certified copy of the resolutions or consents of the governing body
of each Borrower Party dated as of the date hereof and authorizing such Borrower
Party's execution, delivery and performance of this Agreement and all other
documents to be executed in connection herewith;

     (r) Certificates of existence and good standing of each Borrower Party from
the secretary of state of such Borrower Party's state of incorporation or
organization, dated the most recent practical date prior to the Closing Date;

     (s) Certificates of good standing and foreign qualification of each
Borrower Party from the secretary of state of the State of Texas dated the most
recent practical date prior to the Closing Date;

     (t) The Title Policy in form and substance satisfactory to the MPT Parties;

     (u) The Survey dated not more than sixty (60) days prior to the Closing
Date hereof in form and substance satisfactory to the MPT Parties;


                                       64



     (v) A Phase I Environmental Site Assessment Report dated the most recent
practical date prior to the Closing Date in form and substance satisfactory to
the MPT Parties (and a Phase II if recommended by the Phase I Report);

     (w) Property condition reports for the Real Property, dated the most recent
practical date prior to the Closing Date and in form and substance satisfactory
to the MPT Parties;

     (x) A Zoning Compliance Letter/Certificate dated the most recent practical
date prior to the Closing Date hereof in form and substance satisfactory to the
MPT Parties;

     (y) Tenant Estoppel Certificates in form and substance satisfactory to the
MPT Parties;

     (z) An owner's affidavit in form and substance satisfactory to the MPT
Parties;

     (aa) The Search Reports dated the most recent practical date prior to the
Closing Date in form and substance satisfactory to the MPT Parties;

     (bb) The legal opinion of Hollmann, Lyon, Patterson & Durell, Inc. as
counsel for the Borrower Parties and the Guarantors, substantially in the form
attached hereto as EXHIBIT L;

     (cc) Copies of all insurance policies required pursuant to Section 6.6 of
this Agreement;

     (dd) All necessary approvals, consents, estoppel certificates and the like
of third parties or Governmental Entities to the validity and effectiveness of
the transactions contemplated hereby; and

Such other instruments and documents as the MPT Parties reasonably deem
necessary to effect the transactions contemplated hereby.

SECTION 8.3. MPT PARTIES' CLOSING DATE DELIVERABLES. On the Closing Date, the
MPT Parties shall take the following actions and deliver to the Borrower Parties
the documents listed below.

(a) Payment of the Loan proceeds to Alliance, subject to deduction for the
Expense Reserve;

(b) A certified copy of the resolutions of the governing body of each Borrower
Party dated as of the date hereof authorizing the execution, delivery and
performance of this Agreement and all other documents to be executed in
connection herewith;

(c) Certificates of existence and good standing of each Borrower Party from the
Delaware Secretary of State of the State of Delaware, dated the most recent
practical date prior to the Closing Date;

(d) Certificates of good standing and foreign qualification of MPT Odessa from
the secretary of state of the State of Texas, dated the most recent practical
date prior to the Closing Date;

(e) The Mortgage;


                                       65



(f) The Security Agreement

(g) The Assignment of Leases and Rents;

(h) The Subordination of Management Agreement;

(i) The Subordination Agreement;

(j) The Collateral Assignment;

(k) The Pledge Agreement;

(l) The Noncompete Agreement;

(m) An Opinion of Baker Donelson, Bearman, Caldwell & Berkowitz, P.C., as
counsel for the MPT Parties substantially in the form attached as EXHIBIT M; and

(n) At the Closing, each MPT Party shall have furnished to the Borrower Parties
a certificate dated the Closing Date signed by such MPT Party to the effect that
all of the representations and warranties of such MPT Party contained in the
Agreement (considered collectively) and each of these representations and
warranties (considered individually) remain in all respects true and correct as
of the Closing Date as if made on such date and that such MPT Party has
performed and satisfied in all material respects all covenants and conditions
required by this Agreement to be performed or satisfied by such MPT Party on or
prior to Closing.

                                   ARTICLE IX
                                   TERMINATION

SECTION 9.1. TERMINATION. Notwithstanding anything to the contrary in this
Agreement, the remaining obligations of the parties hereunder may be terminated
and the transactions contemplated hereby abandoned at any time prior to Closing:
(i) by mutual written consent of the parties; (ii) by the Borrower Parties if
the conditions set forth in Section 7.1 shall not have been satisfied on or
before December 31, 2005; or (iii) by the MPT Parties if the conditions set
forth in Section 7.2 shall not have been satisfied on or before December 31,
2005.

SECTION 9.2. NOTICE AND EFFECT. In the event of the termination of this
Agreement pursuant to this Article, the party terminating this Agreement shall
give prompt written notice thereof to the parties, and the transactions
contemplated hereby shall be abandoned, without further action by any party.
Each filing, application and other submission relating to the transactions
contemplated hereby shall, to the extent practicable, be withdrawn from the
person to whom it was made. The confidentiality provisions set forth in Section
6.1(k) of this Agreement and the Confidentiality Agreement shall survive any
termination of this Agreement. Notwithstanding any statement contained in this
Agreement to the contrary, termination of this Agreement shall not relieve any
party from liability for any breach or violation of this Agreement that arose
prior to such termination.


                                       66



                                    ARTICLE X
                                     DEFAULT

SECTION 10.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events (individually, an "Event of Default") shall constitute Events
of Default or defaults hereunder:

     (a) a default or event of default by any of the Borrower Parties or the
Guarantors shall occur under any of the other Loan Documents (including, without
limitation, any of the Security Documents) or Other Agreements that is not cured
within the applicable cure period as provided therein, or

     (b) if the Borrower Parties shall fail to make payment of any monetary sum
due and payable by the Borrower Parties under this Agreement, the Note, or any
other Loan Document when the same becomes due and payable, or

     (c) if any of the Borrower Parties shall fail to observe or perform any
other term, covenant or condition of this Agreement or any other Loan Document
and such failure is not cured by the Borrower Parties within a period of thirty
(30) days after receipt by the applicable Borrower Party of written notice
thereof from the MPT Parties (provided, however, in no event shall the MPT
Parties be required to give more than one (1) written notice per calendar year
for a non-monetary default), unless such failure cannot with due diligence be
cured within a period of thirty (30) days, in which case such failure shall not
be deemed to continue if the Borrower Parties proceed promptly and with due
diligence to cure the failure and diligently complete the curing thereof within
sixty (60) days after receipt by the applicable Borrower Party of the MPT
Parties' notice of default, or

     (d) if any of the Borrower Parties shall:

          (i) admit in writing its inability to pay its debts generally as they
     become due,

          (ii) file a petition in bankruptcy or a petition to take advantage of
     any insolvency act,

          (iii) make an assignment for the benefit of its creditors,

          (iv) consent to the appointment of a receiver of itself or of the
     whole or any substantial part of its property, or

          (v) file a petition or answer seeking reorganization or arrangement
     under the Federal bankruptcy laws or any other applicable law or statute of
     the United States of America or any state thereof,

     (e) if the Borrower Parties' Licenses or participation or certification in
Medicare, Medicaid or other governmental payor programs is terminated, or

     (f) if any Borrower Party admits in writing that it cannot meet its
obligations as they become due; or is declared insolvent according to any law;
or assignment of any of the Borrower


                                       67



Parties' properties is made for the benefit of creditors; or a receiver or
trustee is appointed for any of the Borrower Parties' or their respective
properties; or the interest of any of the Borrower Parties under this Agreement
or any other Loan Document is levied on under execution or other legal process;
or any petition is filed by or against any of the Borrower Parties to declare
such Borrower Party bankrupt or to delay, reduce or modify such Borrower Party's
capital structure if such Borrower Party be a corporation or other entity
(provided that no such levy, execution, legal process or petition filed against
such Borrower Party shall constitute a breach of this Agreement if such Borrower
Party shall vigorously contest the same by appropriate proceedings and shall
remove or vacate the same within thirty (30) days from the date of its creation,
service or filing), or

     (g) the abandonment or vacation of the Collateral by the Borrower Party
that owns such Collateral as of the date hereof (such Borrower Party's absence
from the Collateral for thirty (30) consecutive days shall constitute
abandonment), or Alliance fails to continuously operate the Hospital in
accordance with the terms of this Agreement, or

     (h) if any of the Borrower Parties shall, after a petition in bankruptcy is
filed against it, be adjudicated a bankrupt or if a court of competent
jurisdiction shall enter an order or decree appointing, without the consent of
such Borrower Party, a receiver of such Borrower Party or of the whole or
substantially all of its property, or approving a petition filed against it
seeking reorganization or arrangement of such Borrower Party under the federal
bankruptcy laws or any other applicable law or statute of the United States of
America or any state thereof, and such judgment, order or decree shall not be
vacated or set aside or stayed within ninety (90) days from the date of the
entry thereof, or

     (i) if any Borrower Party shall be liquidated or dissolved, or shall begin
proceedings toward such liquidation or dissolution, or shall, in any manner,
permit the sale or divestiture of substantially all of its assets other than in
connection with a merger or consolidation of such Borrower Party into, or a sale
of substantially all of such Borrower Party's assets to, another corporation,
provided that if the survivor of such merger or the purchaser of such assets
shall assume all of such Borrower Party's obligations under this Agreement by a
written instrument, in form and substance reasonably satisfactory to the MPT
Parties, accompanied by an opinion of counsel, reasonably satisfactory to the
MPT parties and addressed to the MPT Parties stating that such instrument of
assumption is valid, binding and enforceable against the parties thereto in
accordance with its terms (subject to usual bankruptcy and other creditors'
rights exceptions), and provided, further, that if, immediately after giving
effect to any such merger, consolidation or sale, such Borrower Party or such
other corporation (if not a Borrower Party) surviving the same, together with
the other Borrower Parties, shall have a Consolidated Net Worth not less than
the Consolidated Net Worth of the Borrower Parties immediately prior to such
merger, consolidation or sale, all as to be set forth in an certification by an
authorized officer of such Borrower Party delivered to the MPT Parties within
thirty (30) days of such merger, consolidation or sale, an Event of Default
shall not be deemed to have occurred, or

     (j) if the estate or interest of any of the Borrower Parties or the
Guarantors in the Collateral or any part thereof shall be levied upon or
attached in any proceeding and the same shall not be vacated or discharged
within the later of ninety (90) days after commencement thereof or thirty (30)
days after receipt by the Borrower Parties of written notice thereof from the


                                       68



MPT Parties (unless such Borrower Party or Guarantor shall be contesting such
lien or attachment in good faith in accordance with Article XI hereof), or

     (k) if, except as a result of damage, destruction or a partial or complete
Condemnation, any the Borrower Parties voluntarily cease operations on the
Collateral for a period in excess of ninety (90) days, or

     (l) if any of the representations or warranties made by any of the Borrower
Parties herein or in the certificates delivered in connection therewith are or
become untrue in any material respect, and which is not cured within ten (10)
days after notice from the MPT Parties, or

     (m) a default shall occur under the Guaranty that is not cured within the
applicable cure period as provided therein, or

     (n) if Alliance defaults under the Tenant Leases or fails or refuses to
enforce the terms and conditions of the Tenant Leases, any such default by
Alliance or the Tenant is not cured within the applicable cure period as
provided therein, or

     (o) if a payment default occurs under any other material debt instrument of
the Borrower Parties or any material nonpayment default occurs any such debt
instrument, including, without limitation, a default under the Line of Credit,
and such default is not cured within the applicable cure periods provided
therefore, or

     (p) if the Borrower Parties shall fail to pay any insurance premiums in
accordance with Section 6.6(c) hereof; or

     (q) if, beginning on January 1, 2006, the Hospital's EBITDA (based on the
trailing twelve (12) months) shall fall below One Hundred Fifty Percent (150%)
of Base Interest, as determined on a quarterly basis, and, beginning on January
1, 2007, the Hospital's EBITDA (based on the trailing twelve (12) months) shall
fall below One Hundred Seventy-Five Percent (175%) of Base Interest, as
determined on a quarterly basis, or

     (r) if the aggregate Tangible Net Worth of the Borrower Parties shall fall
below Ten Percent (10%) of the original principal balance of the Loan (however,
violation of this provision shall not constitute an event of default so long as
the Guaranty shall remain in full force and effect), or

     (s) if the Hospital's census shall decline by more than Twenty Percent
(20%), measured cumulatively, for two (2) consecutive quarters, or

     (t) if fifty Percent (50%) or more of the Hospital's total revenues shall
be generated by three or fewer Physicians, or

     (u) if either the General Partner or any or Physician who represents more
than Ten Percent (10%) of the Hospital's total revenue shall be convicted on a
charge of fraud that is in any way related to medicine or the practice of
medicine.


                                       69



SECTION 10.2. REMEDIES. Upon the occurrence of an Event of Default hereunder,
any MPT Party shall be entitled, at the option of such MPT Party and in its sole
and absolute discretion, to pursue any one or more of the following remedies, in
addition to any remedies which may be permitted by law or by other provisions of
this Agreement or the other Loan Documents (including, without limitation, the
Security Documents), without notice or demand, except as hereinafter provided:

     (a) In addition to other rights and remedies the MPT Parties may have in
this Agreement and at law and in equity, if an Event of Default occurs under
this Agreement, the MPT Parties may declare all amounts (including, without
limitation, all Loan Obligations), if any not otherwise immediately due under
this Agreement to be, and all such amounts shall thereupon become, due and
payable to the MPT Parties, without presentment, demand, protest, or other
notice of any kind, all of which are expressly waived by the Borrower Parties,
anything in this Agreement or the other Loan Documents notwithstanding.

     (b) In addition to other rights and remedies the MPT Parties may have in
this Agreement and at law and in equity, if an Event of Default occurs under
this Agreement and the MPT Parties foreclose on, take possession of, or exercise
voting rights with respect to, any of the Collateral, including, without
limitation, the General Partner's interest in Alliance pursuant to the Pledge
Agreement or any other Loan Document, to the extent permitted by law, the MPT
Parties shall have the sole, complete, unilateral, absolute and unfettered right
to cause all Licenses to be reissued in MPT's name or in the name of MPT's
designee upon application therefor to the appropriate authority, if required,
and to further have the right to have any and all provider and/or third party
payor agreements as a provider in the Medicare and/or Medicaid and other federal
healthcare programs issued in MPT's name or in the name of MPT's designee. For
reasonable periods of time following the MPT Parties notice to the Borrower
Parties after the occurrence of an Event of Default, the Borrower Parties shall
use their best efforts, without additional consideration to the Borrower
Parties, to facilitate an orderly transfer of the operation and occupancy of the
Hospital to the MPT Parties or any new owner, manager, or operator selected by
the MPT Parties, it being understood and agreed that such cooperation shall
include, without limitation, (i) the Borrower Parties' transfer and assignment,
if and to the extent permitted by law, to MPT, MPT's nominee or MPT's new owner,
manager or operator of any and all Licenses, (ii) the Borrower Parties' use of
best efforts to maintain, to the maximum extent allowed by applicable law, the
effectiveness of any and all such Licenses until such time as any new Licenses
necessary for any new owner, manager or operator to operate the Hospital have
been issued, and (iii) the taking of such other actions as are required by
applicable law or as are reasonably requested by the MPT Parties. The Borrower
Parties agree to sign, acknowledge, provide and deliver to the MPT Parties (and
if the Borrower Parties fail to do so upon request of the MPT Parties, the
Borrower Parties hereby irrevocably appoint MPT as agent of the Borrower Parties
for such express purposes) any and all documents, instruments or other writings
which are or may become necessary, proper and/or advisable to cause any and all
hospital licenses required for the Primary Intended Use, Medicare and Medicaid
provider agreements, and/or state or federal Title XVIII and/or Title XIX
provider agreements to be obtained (either in total or individually) in the name
of MPT or the name of MPT's designee in the event that the MPT Parties
reasonably determine in good faith that (irrespective of any claim, dispute, or
other contention or challenge of the Borrower Parties) there is any breach,
default or other lapse in any representation, warranty, covenant, or other
delegation of duty to any of the Borrower Parties


                                       70



(beyond any applicable grace or cure period) and the issuing government agency
has threatened or asserted that such license or provider agreement will
terminate or has lapsed or that any of the Borrower Parties' license or
certification or accreditation status, as applicable, is in jeopardy. This power
is coupled with the security interest and lien of MPT in and to the Hospital and
all incidental rights attendant to any and all of the foregoing rights.

     (c) In addition to other rights and remedies the MPT Parties may have in
this Agreement and at law and in equity, if an Event of Default occurs under
this Agreement, the MPT Parties may exercise all rights and remedies set forth
in Section 6.11 regarding escrowed or deposited funds.

     (d) In addition to the above remedies and to all other legal rights and
remedies, if an Event of Default occurs under this Agreement, the MPT Parties,
at their option, exercise all rights and remedies set forth in Section 6.2(a)
hereof and, upon five (5) days' written notice to the MPT Parties, may require
the Borrower Parties to terminate the engagement of the Management Company then
managing the Hospital and replace such Management Company with manager chosen by
the MPT Parties (or, if there is no Management Company managing the facility at
that time, the MPT Parties may require the Borrower Parties to engage a
Management Company acceptable to the MPT Parties and enter into a contract with
such Management Company upon terms and conditions acceptable to the MPT
Parties), and the MPT Parties may, at their option, proceed with all other
remedies the MPT Parties deem necessary, including, without limitation, pursuing
all other customary remedies available at law and in equity.

     (e) In addition to the above remedies and to all other legal rights and
remedies, if an Event of Default occurs under this Agreement, the MPT Parties,
at their option, may cause the Borrower Parties to sell, assign, transfer and
convey any or all of the Collateral (including the Real Property) to the MPT
Parties or any designee of the MPT Parties (the "Purchaser"), without judicial
proceedings of any kind, on or before the sixtieth (60th) day following the date
of the occurrence of such Event of Default. The purchase price for such
Collateral shall be equal to Forty Million and No/100 Dollars ($40,000,000.00).
Upon and after the Borrower Parties receipt of written notice of such
determination by the MPT Parties, the Borrower Parties agree to consent to such
transaction and take all actions necessary to orderly transfer the operations
and occupancy of the Collateral (including the Real Property) to the Purchaser,
including, without limitation, cooperating with respect (i) to the transfer of
the Licenses, provider numbers and Other Agreements to the Purchaser, (ii) the
operation of the Hospital by any such Purchaser or its designee, and (iii) the
continuation of the relationships of any Physicians, Service Providers, or any
other employees, agents or contractors with the Hospital. If the Borrower
Parties fail to take such actions upon request of the MPT Parties, the Borrower
Parties hereby irrevocably appoint MPT, as agent of the Borrower Parties for
such express purposes. In the event of such transaction, the proceeds thereof
shall be applied, first, towards payment of any reasonable costs or expenses of
the MPT Parties incurred in connection with exercising this remedy and, second,
towards the outstanding Loan Obligations under the Note or any of the other Loan
Documents. Promptly following such payment, the MPT Parties shall cancel the
Note and the then unexpired Loan Term shall terminate and become absolutely void
as of such payment, and the Agreement, and well as the right, title, and
interest of the Borrower Parties hereunder shall, except as to the rights and
remedies of the MPT Parties upon termination as provided herein, terminate and
become void in the same manner and with the same force and effect as if the date
of such


                                       71



payment were the date originally specified for the expiration of the Loan Term.
The balance of the proceeds from such transaction shall belong to the Borrower
Parties and, unless otherwise agreed by the Borrower Parties and Purchaser,
shall be paid to the Borrower Parties at the closing of the transaction
contemplated herein.

     (f) In addition to the above remedies and to all other legal rights and
remedies, in the Event of Default hereunder by any of the Borrower Parties, the
MPT Parties, at their option, may (i) institute and prosecute proceedings in any
court of competent jurisdiction to pursue any remedies available in law or in
equity, including, without limitation, the recovery of damages, the enforcement
of specific performance or to obtain an injunction, or (ii) pursue any and all
rights or remedies available to any MPT Party under any Loan Document. No such
termination and/or subsequent election by any MPT Party hereunder shall in any
way limit, qualify or otherwise affect the obligations of the Borrower Parties
with respect to the Loan Obligations of their indemnification obligations
hereunder.

SECTION 10.3. CUMULATIVE. The remedies of any MPT Party in this Agreement or in
any other Loan Document, or at law or in equity, shall be cumulative and
concurrent with the remedies of such MPT Party and any other MPT Party, and may
be pursued singly, successively or together in such MPT Party's discretion.
Notwithstanding any statement contained in this Agreement to the contrary,
termination of this Agreement shall not relieve any Borrower Party from
liability for any breach or violation of this Agreement that arose prior to such
termination.

SECTION 10.4. WAIVER. If this Agreement is terminated pursuant to this Article,
the Borrower Parties waive, to the extent permitted by applicable law, (a) any
right of redemption, re-entry or repossession, (b) any right to a trial by jury
in the event of summary proceedings to enforce the remedies set forth in this
Article, and (c) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt.

SECTION 10.5. COOPERATION. In the event there are legal limitations on any of
the remedies set forth in this Article X, the Borrower Parties hereby covenant
and agree that, at the MPT Parties' request, the Borrower Parties will take all
actions necessary to orderly transfer the operations and occupancy of the
Collateral (including the Real Property and the Hospital) to the MPT Parties or
any designee of the MPT Parties, including cooperating with respect to the
transfer of Licenses, provider numbers and other agreements.

SECTION 10.6. APPLICATION OF FUNDS. Any payments otherwise payable to the
Borrower Parties which are received by the MPT Parties under any of the
provisions of this Agreement during the existence or continuance of any Event of
Default shall be applied to the Borrower Parties' obligations in the order which
the MPT Parties may reasonably determine or as may be prescribed by the laws of
the state in which the Hospital is located.

SECTION 10.7. NOTICES BY THE MPT PARTIES. The provisions of this Article
concerning notices shall be liberally construed insofar as the contents of such
notices are concerned, and any such notice shall be sufficient if reasonably
designed to apprise the Borrower Parties of the nature and approximate extent of
any default, it being agreed that the Borrower Parties are in good or better
position than the MPT Parties to ascertain the exact extent of any default by
the Borrower Parties hereunder.


                                       72



                                   ARTICLE XI
                               PERMITTED CONTESTS

     Alliance, on its own or on MPT's behalf (or in MPT's name), but at
Alliance's expense, after two (2) Business Days' prior written notice to MPT,
may contest, by appropriate legal proceedings conducted in good faith and with
due diligence, the amount, validity or application, in whole or in part, of any
Imposition, Legal Requirement, Insurance Requirement, lien, attachment, levy,
encumbrance, charge or claim not otherwise permitted by this Agreement, provided
that (a) in the case of an unpaid Imposition, lien, attachment, levy,
encumbrance, charge or claim, the commencement and continuation of such
proceedings shall suspend the collection thereof from the MPT Parties and from
the Collateral, (b) neither the Collateral nor any part thereof or interest
therein would be in any immediate danger of being sold, forfeited, attached or
lost, (c) in the case of a Legal Requirement, the MPT Parties would not be in
any immediate danger of civil or criminal liability for failure to comply
therewith pending the outcome of such proceedings, (d) in the event that any
such contest shall involve a sum of money or potential loss in excess of Fifty
Thousand Dollars ($50,000), then, in any such event, (i) provided the
Consolidated Net Worth of the Borrower Parties is then in excess of Fifty
Million Dollars ($50,000,000), Alliance shall deliver to the MPT Parties a
certification from a duly authorized officer of Alliance to the effect set forth
in clauses (a), (b) and (c), to the extent applicable, or (ii) in the event the
Consolidated Net Worth of the Borrower Parties is not then in excess of Fifty
Million Dollars ($50,000,000), then Alliance shall deliver to MPT and its
counsel an opinion of Alliance's counsel to the effect set forth in clauses (a),
(b) and (c), to the extent applicable, (e) in the case of a Legal Requirement
and/or an Imposition, lien, encumbrance or charge, Alliance shall give such
reasonable security as may be demanded by the MPT Parties to insure ultimate
payment of the same and to prevent any sale or forfeiture of the affected
portion of the Collateral by reason of such non-payment or non-compliance;
provided, however, the provisions of this Article shall not be construed to
permit Alliance to contest the payment of the Loan Obligations, (f) in the case
of an Insurance Requirement, the coverage required by Section 6.6 shall be
maintained, and (g) if such contest be finally resolved against any of the MPT
Parties or the Borrower Parties, Alliance shall, as Additional Charges due
hereunder, promptly pay the amount required to be paid, together with all
interest and penalties accrued thereon, or comply with the applicable Legal
Requirement or Insurance Requirement. MPT, at Alliance's expense, shall execute
and deliver to Alliance such authorizations and other documents as may
reasonably be required in any such contest and, if reasonably requested by
Alliance or if MPT so desires, MPT shall join as a party therein. The Borrower
Parties, jointly and severally, shall indemnify and save MPT harmless against
any liability, cost or expense of any kind that may be imposed upon MPT in
connection with any such contest and any loss resulting therefrom.

                                   ARTICLE XII
                                 INDEMNIFICATION

SECTION 12.1. BORROWER PARTIES AGREEMENT TO INDEMNIFY. Notwithstanding the
existence of any insurance or self insurance required by this Agreement and
without regard to the policy limits of any such insurance or self insurance, and
in addition to any other indemnification obligation set forth herein or in any
other Loan Document, the Borrower Parties jointly and


                                       73



severally agree to indemnify, defend and hold harmless the MPT Parties, their
affiliates and their respective officers, directors, members, (general and
limited) partners, shareholders, employees, agents and representatives
(collectively, the "MPT Indemnified Parties") from and against all demands,
claims, actions, losses, damages, liabilities, penalties, Taxes, costs and
expenses (including, without limitation, attorneys' and accountants' fees,
settlement costs, arbitration costs and any reasonable other expenses for
investigating or defending any action or threatened action) asserted against or
incurred by the MPT Indemnified Parties or any of them arising out of or in
connection with or resulting from (a) any breach of, misrepresentation
associated with or failure to perform under any covenant, representation,
warranty or agreement under this Agreement or any other Borrower Party
Instrument by any Borrower Party or any of their respective Affiliates; (b) any
stamp tax, intangible tax, or other tax, fee or charge imposed by any
Governmental Entity arising out of or relating to the Note or this Agreement or
the transactions anticipated herein; (c) any accident, injury to or death of
persons or loss of percentage to property occurring on or about the Real
Property, or adjoining sidewalks, including without limitation any claims of
malpractice, (d) any use, misuse, no use, condition, maintenance or repair by
any of the Borrower Parties of the Collateral, (e) any Impositions (which are
the obligations of the Borrower Parties to pay pursuant to the applicable
provisions of this Agreement), and (f) the non-performance of any of the terms
and provisions of any and all existing and future Tenant Leases to be performed
by the landlord (Alliance) thereunder (collectively, "MPT Damages"). The
foregoing indemnification obligations of the Borrower Parties shall be in
addition to, and shall in no way limit or qualify, any other indemnification or
similar obligations of the Borrower Parties set forth in this Agreement or in
any other Loan Document.

SECTION 12.2. NOTIFICATION AND DEFENSE OF CLAIMS.

     (a) A party entitled to be indemnified pursuant to Section 12.1 (the
"Indemnified Party") shall notify the party liable for such indemnification (the
"Indemnifying Party") in writing of any claim or demand which the Indemnified
Party has determined has given or could give rise to a right of indemnification
under this Agreement, as soon as possible after the Indemnified Party becomes
aware of such claim or demand; provided, that the Indemnified Party's failure to
give such notice to the Indemnifying Party in a timely fashion shall not result
in the loss of the Indemnified Party's rights with respect thereto except to the
extent the Indemnified Party is materially prejudiced by the delay.

     If the Indemnified Party shall notify the Indemnifying Party of any claim
or demand pursuant to the provisions hereof, and if such claim or demand relates
to a claim or demand asserted by a third party against the Indemnified Party (a
"Third Party Claim"), the Indemnifying Party shall have the obligation either
(i) to pay such claim or demand, or (ii) defend any such Third Party Claim with
counsel reasonably satisfactory to the Indemnified Party. After the Indemnifying
Party has assumed the defense of such Third Party Claim, the Indemnifying Party
shall not be liable to the Indemnified Party under this Section 12.2 for any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation, provided that the Indemnified Party shall have the right to
employ counsel, at the Indemnifying Party's expense, to represent it if (A) in
the Indemnified Party's reasonable opinion the Indemnifying Party is not
diligently prosecuting the defense of such Third Party Claim, (B) such Third
Party Claim involves remedies other than monetary damages and such remedies, in
the Indemnified Party's reasonable judgment, could


                                       74



have a material adverse effect on such Indemnified Party, (C) the Indemnified
Party may have available to it one or more defenses or counterclaims that are
inconsistent with one or more defenses or counterclaims that may be alleged by
the Indemnifying Party, or (D) the Indemnified Party believes in its reasonable
discretion that a conflict of interest exists between the Indemnifying Party and
the Indemnified Party with respect to such Third Party Claim or action, and in
any such event the reasonable fees and expenses of such separate counsel for the
Indemnified Party shall be paid by the Indemnifying Party. The Indemnified Party
shall make available to the Indemnifying Party or its agents all records and
other materials in the Indemnified Party's possession reasonably required by it
for its use in contesting any Third Party Claim or demand.

     (b) No Indemnified Party may settle or compromise any claim or consent to
the entry of any judgment with respect to which indemnification is being sought
hereunder without the prior written consent of the Indemnifying Party, unless
(i) the Indemnifying Party fails to assume and diligently prosecuting the
defense of such claim or (ii) such settlement, compromise or consent includes an
unconditional release of the Indemnifying Party from all liability arising out
of such claim and does not contain any equitable order, judgment or term which
includes any admission of wrongdoing or could result in any liability (including
regulatory liability) of the Indemnifying Party or which would otherwise in any
manner affect, restrain or interfere with the business of the Indemnifying Party
or any Affiliate of the Indemnifying Party. An Indemnifying Party may not,
without the prior written consent of the Indemnified Party, settle or compromise
any claim or consent to the entry of any judgment with respect to which
indemnification is being sought hereunder unless such settlement, compromise or
consent includes an unconditional release of the Indemnified Party from all
liability arising out of such claim and does not contain any equitable order,
judgment or term which includes any admission of wrongdoing or could result in
any liability (including regulatory liability) of the Indemnified Party or which
would otherwise in any manner affect, restrain or interfere with the business of
the Indemnified Party or any of the Indemnified Party's Affiliates.

SECTION 12.3. INVESTIGATIONS. The right to indemnification based upon breaches
or inaccuracies of representations, warranties and covenants will not be
affected by any investigation conducted with respect to, or knowledge acquired
(or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement, whether as a result of disclosure by a
party pursuant to this Agreement or otherwise, with respect to the accuracy or
inaccuracy of or compliance with any such representation, warranty or covenant.
The waiver of any condition based on the accuracy of any representation or
warranty, or on the performance of or compliance with any covenant, will not
affect a party's right to indemnification, payment of damages or other remedies
based on such representations, warranties and covenants.

                                  ARTICLE XIII
                               DISPUTE RESOLUTION

SECTION 13.1. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS
PRINCIPLES.


                                       75



NOTWITHSTANDING THE FOREGOING, THE TERMS AND PROVISIONS OF THIS AGREEMENT
PERTAINING TO THE PRIORITY, PERFECTION, ENFORCEMENT, OR REALIZATION BY THE MPT
PARTIES OF THEIR RIGHTS AND REMEDIES UNDER THIS AGREEMENT OR THE MORTGAGE WITH
RESPECT TO THE REAL PROPERTY SHALL BE GOVERNED, CONSTRUED, AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS.

SECTION 13.2. JURISDICTION AND VENUE. THE PARTIES HEREBY CONSENT TO PERSONAL
JURISDICTION IN DELAWARE. THE PARTIES AGREE THAT ANY ACTION OR PROCEEDING
ARISING FROM OR RELATED TO THIS AGREEMENT SHALL BE BROUGHT AND TRIED EXCLUSIVELY
IN THE STATE OR FEDERAL COURTS OF DELAWARE. EACH OF THE PARTIES IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT. THE BORROWER PARTIES EXPRESSLY
ACKNOWLEDGE THAT DELAWARE IS A FAIR, JUST AND REASONABLE FORUM AND AGREE NOT TO
SEEK REMOVAL OR TRANSFER OF ANY ACTION FILED BY THE MPT PARTIES IN SAID COURTS.
FURTHER, THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY CLAIM THAT SUCH
SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. SERVICE OF
ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY REGISTERED MAIL ADDRESSED TO A PARTY
AT THE ADDRESS DESIGNATED PURSUANT TO SECTION 14.3 SHALL BE EFFECTIVE SERVICE OF
PROCESS AGAINST SUCH PARTY FOR ANY ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT. A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT MAY BE ENFORCED IN ANY OTHER COURT TO WHOSE JURISDICTION ANY OF THE
PARTIES IS OR MAY BE SUBJECT.

                                   ARTICLE XIV
                                  MISCELLANEOUS

SECTION 14.1. LIMITATION OF LIABILITY AS TO THE MPT PARTIES.

(a) No Consequential Damages. IN NO EVENT SHALL THE MPT PARTIES BE LIABLE FOR
INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES,
REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT OR OTHERWISE, AND
EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

(b) Direct Damages. IN NO EVENT SHALL THE MPT PARTIES' LIABILITY TO THE BORROWER
PARTIES UNDER ANY LOAN DOCUMENT AT ANY TIME EXCEED THE OUTSTANDING PRINCIPAL
BALANCE OF THE LOAN AT SUCH TIME

(c) Anything contained herein to the contrary notwithstanding, the MPT Parties
shall not be liable to the Borrower Parties for any acts, omissions, errors of
judgment, or mistakes of facts or law (except for the MPT Parties' gross
negligence or willful misconduct). Any claim based on or in respect of any
liability of the MPT Parties under any Loan Document shall be enforced only


                                       76



against the MPT Parties' rights to receive payments of the Loan Obligations
pursuant to the Loan Documents and not against any other assets, properties or
funds of (i) any of the MPT Parties or their Affiliates, (ii) any director,
officer, general partner, shareholder, limited partner, beneficiary, employee or
agent of the MPT Parties (or any legal representative, heir, estate, successor
or assign of any thereof), (iii) any predecessor or successor partnership or
corporation (or other entity) of any of the MPT Parties or any of its general
partners, shareholders, officers, directors, employees or agents, either
directly or through any of the MPT Parties or their respective general partners,
shareholders, officers, directors, employees or agents or any predecessor or
successor partnership or corporation (or other entity), or (iv) any person
affiliated with any of the foregoing, or any director, officer, employee or
agent of any thereof.

SECTION 14.2. ASSIGNMENT. Neither this Agreement nor any other Loan Document is
assignable by any Borrower Party without the prior written consent of the MPT
Parties. The MPT Parties may at any time during the Loan Term and without the
consent of any Borrower Party assign all of their respective rights and
obligations hereunder in connection with a sale or transfer of the Loan.

SECTION 14.3. NOTICE. All notices, demands, requests and other communications or
documents required or permitted to be provided under this Agreement shall duly
be in writing and shall be given to the applicable party at its address or
facsimile number set forth below or such other address or facsimile number as
the party may later specify for that purpose by notice to the other party:

     If to any Borrower Party: c/o Alliance Hospital, Ltd.
                               515 North Adams
                               Odessa, Texas 79761
                               Attention: Chief Executive Officer

               With a copy to: Hollmann, Lyon, Patterson & Durell, Inc.
                               5030 E. University Boulevard
                               Suite D-103
                               Odessa, Texas 79762-8148
                               Attention: Daniel J. Hollmann, Esq.

          If to any MPT Party: Medical Properties Trust, Inc.
                               1000 Urban Center Drive, Suite 501
                               Birmingham, AL 35242
                               Attention: Michael G. Stewart, Esq.

               With a copy to: Baker, Donelson, Bearman, Caldwell & Berkowitz,
                               PC
                               420 20th Street North, Suite 1600
                               Birmingham, Alabama 35203
                               Attention: Thomas O. Kolb, Esq.

Each notice shall, for all purposes, be deemed given and received:

     (i)  if by hand, when delivered;


                                       77



     (ii) if given by nationally recognized and reputable overnight delivery
     service, the Business Day on which the notice is actually received by the
     party; or

     (iii) if given by certified mail, return receipt requested, postage
     prepaid, the date shown on the return receipt.

SECTION 14.4. CALCULATION OF TIME PERIOD. When calculating the period of time
before which, within which or following which any act is to be done or step
taken, the date that is the reference date in calculating such period shall be
excluded. If the last day of such period is not a Business Day, the period in
question shall end of the next succeeding Business Day.

SECTION 14.5. NO WAIVER. No failure by the MPT Parties or the Borrower Parties
to insist upon the strict performance of any term hereof or to exercise any
right, power or remedy consequent upon a breach thereof, and no acceptance of
full or partial payment of any sums due the MPT Parties hereunder or under any
other Loan Document during the continuance of any such breach, shall constitute
a waiver of any such breach or any such term. To the extent permitted by law, no
waiver of any breach shall affect or alter this Agreement or the other Loan
Documents, which shall continue in full force and effect with respect to any
other then existing or subsequent breach.

SECTION 14.6. CAPTIONS. The article and section headings or captions appearing
in this Agreement are for convenience only, are not a part of this Agreement,
and are not to be considered in interpreting this Agreement.

SECTION 14.7. ENTIRE AGREEMENT; MODIFICATION. This Agreement, including the
Exhibits and Schedules attached hereto, and other written agreements executed
and delivered as of the date hereof by the parties hereto, constitute the entire
agreement and understanding of the parties with respect to the subject matter of
this Agreement. This Agreement supersedes any prior oral or written agreements
between the parties with respect to the subject matter of this Agreement. It is
expressly agreed that there are no verbal understandings or agreements which in
any way change the terms, covenants, and conditions set forth in this Agreement,
and that no modification of this Agreement and no waiver of any of its terms and
conditions shall be effective unless it is made in writing and duly executed by
the parties hereto.

SECTION 14.8. SCHEDULES AND EXHIBITS. All Schedules and Exhibits referred to in
this Agreement and attached hereto shall be deemed a part of this Agreement and
are hereby incorporated herein by reference.

SECTION 14.9. FURTHER ASSURANCES. From time to time after the Closing Date, and
without further consideration, the Borrower Parties shall execute and deliver to
MPT all instruments of security, collateral assignment, consent or other
instruments as may be reasonably requested by the MPT Parties in order to vest a
Lien in favor of the MPT Parties in all right, title and interest of the
applicable Borrower Parties in and to the Collateral as of the Closing Date or
as otherwise required to carry out the purpose and intent of this Agreement.

SECTION 14.10. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the


                                       78



same instrument. Executed signature pages to this Agreement may be delivered by
facsimile transmission and any such signature page shall be deemed an original.

SECTION 14.11. EXPENSES. The Borrower Parties, jointly and severally, shall pay
all costs and expenses incurred by Borrower Parties and MPT Parties in
connection with the transactions contemplated hereby, including, without
limitation, all document stamps, transfer, excise, recording, gains, sales, bulk
sales, use and similar conveyance Taxes and fees imposed by reason of and
associated with the transactions contemplated hereby and by deficiency, interest
or penalty asserted with respect thereto, as well as the cost of the survey, the
title insurance and all title endorsements required by the MPT Parties and its
lenders, and all attorneys' fees and expenses. In addition to the foregoing, the
Borrower Parties, jointly and severally, shall pay and/or reimburse the MPT
Parties' costs and expenses, including reasonable legal fees, incurred or
resulting from and relating to:

          (i) requests by the Borrower Parties for approval or consent under
     this Agreement or any other Loan Document;

          (ii) any circumstances or developments which give rise to any of the
     MPT Parties' right of consent or approval;

          (iii) circumstances resulting from any action or inaction by the
     Borrower Parties contrary to the provisions hereof or any other Loan
     Document,

          (iv) a request for changes including, but not limited to, (A) the uses
     of the Collateral including the Primary Intended Use, (B) alterations and
     improvements to the Improvements, (C) Tenant Leases, and (D) any other
     changes in the terms, conditions or provisions of this Agreement or any
     other Loan Document,

          (v) all expenses incurred by the MPT Parties in repossessing the
     Collateral (including among other expenses, any increase in insurance
     premiums caused by the vacancy of the Collateral),

          (vi) all expenses incurred by MPT in reletting as permitted herein or
     by applicable law (including among other expenses, repairs, remodeling,
     replacements, advertisements and brokerage fees),

          (vii) all concessions granted to a new tenant or tenants upon
     reletting (including among other concessions, renewal options),

          (viii) all losses incurred by the MPT Parties as a direct or indirect
     result of any of the Borrower Parties' default hereunder or under any other
     Loan Document (including among other losses any adverse action by
     mortgagees), and

          (ix) the MPT Parties' administrative efforts, salaries and overhead
     attributable directly or indirectly to any of the Borrower Parties' default
     and the MPT Parties' pursuing the rights and remedies provided in this
     Agreement and under applicable law.


                                       79



Such costs, expenses and fees shall be paid by the Borrower Parties, jointly and
severally, within thirty (30) days after the MPT Parties' submission of a
statement for the same, or such amount(s) shall be part of the Loan Obligations,
with interest payable thereon at the Default Rate if not paid within five (5)
days after demand. Notwithstanding any provision herein to the contrary, the
Expense Deposit shall be credited against any payments due by the Borrower
Parties hereunder.

SECTION 14.12. SECURITIES OFFERING AND FILINGS. Notwithstanding anything
contained herein to the contrary, the Borrower Parties agree to cooperate with
the MPT Parties in connection with any securities offerings and filings, or the
MPT Parties' efforts to procure or maintain any third party participation
financing for or related to the Real Property and Improvements, and in
connection therewith, the Borrower Parties Parties shall furnish the MPT Parties
with such financial and other information as the MPT Parties shall request. The
MPT Parties may disclose that it has entered into this Agreement with the
Borrower Parties and may provide and disclose information regarding this
Agreement, the Borrower Parties, the Real Property and Improvements, and such
additional information which the MPT Parties may reasonably deem necessary, to
its proposed investors in such public offering or private offering of
securities, or any current or prospective lenders with respect to such
financing. Upon reasonable advance notice, the MPT Parties and any lender
providing financing for the Real Property shall have the right to access,
examine and copy all agreements, records, documentation and information relating
to the Borrower Parties, the Real Property and Improvements, and to discuss such
affairs and information with the officers, employees and independent public
accountants of the Borrower Parties as often as may reasonably be desired, but
subject to the terms of a confidentiality agreement, as reasonably approved by
the parties.

SECTION 14.13. BINDING EFFECT. This Agreement shall bind and inure to the
benefit of the parties hereto and their successors and assigns; provided,
however, that this Agreement shall not inure to the benefit of any assignee
pursuant to an assignment which violates the terms of this Agreement.

                   [Signatures appear on the following page.]


                                       80



IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers on the date first written above.

                                        BORROWER PARTIES:

                                        ALLIANCE HOSPITAL, LTD.

                                        BY: SRI-SAI ENTERPRISES, INC.
                                        ITS: GENERAL PARTNER


                                        By: /s/ Steven C. Riley
                                            ------------------------------------
                                        Name: Steven C. Riley
                                        Title: Co-Chairman


                                        By: /s/ Jayaram B. Naidu
                                            ------------------------------------
                                        Name: Jayaram B. Naidu
                                        Title: Co-Chairman


                                        SRI-SAI ENTERPISES, INC.


                                        By: /s/ Steven C. Riley
                                            ------------------------------------
                                        Name: Steven C. Riley
                                        Title: Co-Chairman


                                        By: /s/ Jayaram B. Naidu
                                            ------------------------------------
                                        Name: Jayaram B. Naidu
                                        Title: Co-Chairman


                                       81



                                        MPT PARTIES:

                                        MPT OF ODESSA HOSPITAL, L.P.

                                        By: MPT of ODESSA HOSPITAL, LLC
                                        Its: GENERAL PARTNER

                                        By: MPT Operating Partnership, L.P.
                                        Its: Sole Member


                                        By: /s/ Edward K. Aldag, Jr.
                                            ------------------------------------
                                        Name: Edward K. Aldag, Jr.
                                        Title: President and Chief Executive
                                               Officer


                                        MPT OPERATING PARTNERSHIP, L.P.


                                        By: /s/ Edward K. Aldag, Jr.
                                            ------------------------------------
                                        Name: Edward K. Aldag, Jr.
                                        Title: President and Chief Executive
                                               Officer


                                       82



                                    EXHIBIT A

                                LEGAL DESCRIPTION

See Attached.






                                    EXHIBIT B

                         ASSIGNMENT OF LEASES AND RENTS

See Attached.






                                    EXHIBIT C

                         ENVIRONMENT INDEMNITY AGREEMENT

See Attached.






                                    EXHIBIT D

                                    GUARANTY

See Attached.






                                    EXHIBIT E

                            MORTGAGE / DEED OF TRUST

See Attached.






                                    EXHIBIT F

                              NONCOMPETE AGREEMENT

See Attached.






                                    EXHIBIT G

                                 PROMISSORY NOTE

See Attached.






                                    EXHIBIT H

                                PLEDGE AGREEMENT

See Attached.






                                    EXHIBIT I

                               SECURITY AGREEMENT

See Attached.






                                    EXHIBIT J

                      SUBORDINATION OF MANAGEMENT AGREEMENT

See Attached.






                                    EXHIBIT K

                        SUBORDINATION AGREEMENT (PLEDGOR)

See Attached.






                                    EXHIBIT L

                    BORROWER PARTIES' COUNSEL'S LEGAL OPINION

See Attached.






                                    EXHIBIT M

                               BDBCB LEGAL OPINION

See Attached.

                                                                   Exhibit 10.68

                                 PROMISSORY NOTE

$40,000,000.00                                                December 23, 2005

     FOR VALUE RECEIVED, the undersigned ALLIANCE HOSPITAL, LTD., a Texas
limited partnership (hereinafter, "Borrower"), having an address at 515 North
Adams, Odessa, Texas 79761, promises to pay to the order of MPT OF ODESSA
HOSPITAL, L.P., a Delaware limited partnership (hereinafter, "Lender"), at its
office at 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242, or at
such other address as the holder of this Promissory Note (this "Note") may from
time to time designate in writing, the principal sum of FORTY MILLION and NO/100
DOLLARS ($40,000,000.00), or as much thereof as may be advanced from time to
time hereunder, together with interest thereon and other amounts payable as
provided herein.

     1. DEFINED TERMS. All capitalized terms not otherwise defined herein shall
have the meanings ascribed to such terms in the Loan Agreement (defined below).

     2. SECURITY. The indebtedness evidenced by this Note and the obligations
evidenced hereby are secured by, inter alia, (a) that certain Deed of Trust and
Fixture Filing (as amended, consolidated, modified, severed or spread from time
to time, the "Mortgage") from Borrower to Lender of even date herewith, (b) that
certain Loan Agreement (the "Loan Agreement") by and among Lender, Borrower, and
SRI-SAI Enterprises, Inc., a Texas corporation (the "General Partner"), of even
date herewith, and (c) certain other Security Documents (as such term is defined
in the Loan Agreement). All of the terms and provisions of the Loan Documents
are incorporated herein by reference.

     3. BASE INTEREST. Interest shall be payable on so much principal as is from
time to time outstanding and unpaid hereunder at a per annum rate equal to Ten
Percent (10.000%) (the "Base Interest"). Base Interest shall be computed
hereunder based on a Three Hundred Sixty (360) day year and paid for the actual
number of days elapsed (based on the assumption of a thirty (30) day month) for
any whole or partial calendar month in which interest is being calculated. In
computing the number of days during which Base Interest accrues, the day on
which funds are initially advanced shall be included (regardless of the time of
day such advance is made), and the day on which funds are repaid shall be
included unless repayment is credited prior to close of business. Payments in
federal funds immediately available in the place designated for payment and
received by Lender prior to 2:00 p.m. local time on a Business Day in
Birmingham, Alabama shall be credited prior to close of business, while other
payments may, at the option of Lender, not be credited until immediately
available to Lender in federal funds at the place designated for payment prior
to 2:00 p.m. local time at said place of payment on a day on which Lender is
open for business.

     4. PAYMENTS. On January 1, 2006 and the first (1st) day of each calendar
month thereafter (each a "Scheduled Payment Date"), and ending on the Maturity
Date (defined below), Borrower shall pay to Lender all accrued and unpaid
interest on the outstanding principal balance hereof (each such payment, a
"Scheduled Monthly Payment"). If not sooner repaid in



accordance with the terms hereof, on December 1, 2020 (the "Maturity Date"),
Borrower shall pay to Lender the entire outstanding principal balance of this
Note, together with all accrued and unpaid interest thereon and all other sums
due Lender hereunder and under the other Loan Documents. So long as no Event of
Default exists, each Scheduled Monthly Payment shall be applied, first, to any
amounts hereafter advanced by Lender and otherwise due hereunder or under any
other Loan Document, second, to any late fees and other amounts payable to
Lender, third, to the payment of accrued interest, and, last, any remaining
funds may, at the option of Lender, be retained by Lender as additional security
for the Loan Obligations.

     5. PREPAYMENT. Borrower may not voluntarily prepay this Note in whole or in
part at any time prior to the Maturity Date, except in accordance with the
following:

          (a) Provided no Event of Default has occurred and is continuing,
Borrower may prepay the Loan in whole at any time provided such prepayment is in
connection with a bona fide Purchase Offer (as defined below), by a party
unrelated to Borrower Parties or their Affiliates, to acquire, directly or
indirectly, more than fifty percent (50%) of the ownership interests in, or
substantially all of the assets of, Borrower; provided, however, that, upon the
occurrence of such prepayment, Borrower shall pay to Lender, together with all
outstanding Loan Obligations, the applicable Yield Maintenance Premium (defined
below in Section 7). A "Purchase Offer" shall consist of a binding agreement for
a third-party purchaser to acquire, and the Borrower to sell, in consideration
for cash or cash equivalents, more than fifty percent (50%) of the equity
interest, and more than fifty percent (50%) of the value of the equity interest,
in, or substantially all of the value of the assets of, Borrower.
Notwithstanding anything to the contrary contained herein, in the absence of a
consummated Purchase Offer, Borrower may not repay the Loan in whole or in part
prior to the eighth Loan Year (defined in Section 8(a) below).

          (b) Borrower may prepay the Loan in whole at any time during the
eighth Loan Year or thereafter, provided that (i) no Event of Default has
occurred and is continuing, (ii) all outstanding Loan Obligations shall be paid
in full, and (iii) such prepayment is accompanied by the applicable Yield
Maintenance Premium.

          (c) Any prepayment made in accordance with Section 5(a) or 5(b) above
shall be made on a Scheduled Payment Date and upon not less than sixty (60)
days' prior written notice to Lender.

     6. ADDITIONAL INTEREST; PAYMENTS. Commencing on January 1, 2007 and on each
January 1st thereafter during the Loan Term, Borrower shall, in addition to Base
Interest due hereunder, pay to Lender additional interest ("Additional
Interest") at a per annum rate equal to the greater of (i) Three and One-Half
Percent (3.5%) or (ii) the rate of the Consumer Price Index ("CPI") increase for
such prior year multiplied by the Annual Interest Payable (as hereinafter
defined). Additional Interest for each Loan Year shall be payable in twelve (12)
equal monthly installments, due on each Scheduled Payment Date during such Loan
Year. "Annual Interest Payable" shall mean, for each Loan Year subsequent to the
first Loan Year, the sum of (A) Base Interest, and (B) Additional Interest, with
all due Lender in the immediately preceding Loan Year. For the first Loan Year,
Annual Interest Payable shall mean the annualized Base Interest.


                                        2



     7. LATE CHARGES; INTEREST ON OVERDUE INSTALLMENTS; COLLECTION COSTS.

          (a) Borrower will pay to Lender a late charge equal to five percent
(5%) of the amount of any payment due hereunder which is unpaid for more than
ten (10) days after the applicable Scheduled Payment Date (provided, however,
that no grace period is provided for the payment of sums due and payable on the
Maturity Date). Collection or acceptance by Lender of such late charge shall not
constitute a waiver of any other rights or remedies of Lender provided herein,
in the Mortgage, or in any other Loan Document.

          (b) So long as any Event of Default exists hereunder or under any
other Loan Document, regardless of whether or not there has been an acceleration
of the indebtedness evidenced hereby, and at all times after maturity of the
indebtedness evidenced hereby (whether by acceleration or otherwise), interest
(the "Default Interest") shall accrue on the outstanding principal balance of
this Note at a rate per annum equal to ten percent (10%) plus the sum of the
Base Interest and the Additional Interest which would be in effect hereunder
absent such default or maturity, or, if such increased rate of interest may not
be charged or collected under applicable law, then at the maximum rate of
interest, if any, which may be charged or collected from Borrower under
applicable law (the "Default Rate"), and such Default Interest shall be
immediately due and payable.

          (c) Borrower acknowledges that it would be extremely difficult or
impracticable to determine Lender's actual damages resulting from any late
payment or Event of Default, and such Default Interest and the late charges
payable pursuant to Sections 7(a) and 7(b) above are reasonable estimates of
those damages and do not constitute a penalty.

          (d) Lender shall be entitled to recover all costs of collecting,
securing or attempting to collect or secure this Note, including, without
limitation, court costs and reasonable attorneys' fees, including attorneys'
fees on any appeal by either Borrower or Lender. The remedies of Lender in this
Note, the Loan Agreement, the Mortgage, or the other Loan Documents, or at law
or in equity, shall be cumulative and concurrent and may be pursued singly,
successively, or together in Lender's discretion.

     8. YIELD MAINTENANCE PREMIUM.

          (a) As used herein, the term "Yield Maintenance Premium" shall mean a
sum paid to Lender at the time of a prepayment, which shall be equal in amount
to the sum of: (1) the present value of the Scheduled Monthly Payments under
this Note from the date of prepayment to the Applicable Repayment Date, and (2)
the present value of the amount of principal and interest due on the Applicable
Repayment Date (assuming all Scheduled Monthly Payments due prior to the
Applicable Repayment Date were made when due), minus the outstanding principal
balance of this Note as of the date of prepayment (which outstanding principal
balance shall be paid in accordance with Section 5 hereof). The present values
described in the foregoing clauses (1) and (2) shall be computed on a monthly
basis as of the date of prepayment, discounted at the rate equal to the sum of
(x) the U.S. Treasury obligation closest in maturity to the Applicable Repayment
Date as reported in The Wall Street Journal (or, if not then published, a
similar publication acceptable to Lender) or, as applicable, from the Federal
Reserve Bank of New York on the fifth (5th) business day preceding the date of
prepayment, plus (y) two hundred (200) basis


                                        3



points. Lender's determination of the Yield Maintenance Premium shall be
conclusive absent manifest error. "Loan Year" shall mean each twelve (12) month
period with an anniversary of January 1st during the Loan Term, commencing
January 1, 2006. "Applicable Repayment Date" shall mean (i) in the event that
prepayment is made pursuant to a bona fide Purchase Offer as described in
Section 5(a) hereof, December 1, 2013, and (ii) in the event of any other
prepayment, December 1, 2015. Notwithstanding anything herein to the contrary,
no Yield Maintenance Premium shall be payable with respect to any prepayment
after the Applicable Repayment Date.

          (b) Involuntary Prepayment. Except as hereinafter provided in this
Section 8(b), in the event that any prepayment is received by Lender other than
in accordance with Section 5(a) or 5(b) above or if a prepayment results from
Lender's exercise of its remedies hereunder or under any other Loan Document,
Borrower shall pay Lender a Yield Maintenance Premium in connection with such
prepayment. Partial prepayments of this Note shall be permitted without the
imposition of a Yield Maintenance Premium in connection with Lender's
application of insurance or condemnation proceeds on account of the Loan in
accordance with the terms and provisions of the Mortgage (as defined in Section
2 hereof), however, if an Event of Default shall have occurred and be continuing
at the time of the related casualty or condemnation, in addition to applying
such proceeds as provided in the Mortgage, Borrower shall pay a Yield
Maintenance Premium to Lender. No notice of prepayment by Borrower shall be
required, and provided no Event of Default then exists and is continuing, no
Yield Maintenance Premium shall be due and payable in connection with an
application of insurance or condemnation proceeds pursuant to the terms and
conditions of the Loan Agreement. No tender of a prepayment of this Note with
respect to which a Yield Maintenance Premium is due shall be effective unless
such prepayment is accompanied by such Yield Maintenance Premium.

          (c) No principal amount repaid may be re-borrowed.

     9. EVENT OF DEFAULT.

     The principal sum evidenced by this Note, together with all accrued but
unpaid interest thereon, shall become immediately due and payable at the option
of Lender upon the occurrence of any of the following events, each of which
shall constitute an "EVENT OF DEFAULT" hereunder:

               (i) Nonpayment of Indebtedness. Failure by Borrower to make any
          payment of interest, principal or any other sum when due, whether by
          acceleration or otherwise, under the terms of this Note, the Loan
          Agreement, the Mortgage or any other Loan Document.

               (ii) Failure to Perform Obligations. Failure by Borrower to
          perform any term, condition or covenant herein (other than terms,
          conditions or covenants requiring the payment of money), which failure
          is not cured within any applicable grace or cure period provided
          therefor; or

               (iii) Default Under Loan Documents. The occurrence under any of
          the other Loan Documents of (A) an "Event of Default" or (B) any
          default which is not cured within any applicable grace or cure period
          provided therefor.


                                        4



     Notwithstanding the foregoing, no notice of default as provided hereunder
or in the other Loan Documents shall be required and an event shall constitute
an Event of Default hereunder if Lender is prevented from giving notice by
bankruptcy or other applicable law, and the cure period, if any, specified with
respect to such event shall commence on the date of such event rather than from
the date of notice. Nothing herein shall require any notice to Borrower except
as expressly set forth herein or in the Mortgage or other Loan Documents.

     10. USURY. In no event shall the amount of interest due or payable
hereunder exceed the maximum rate of interest allowed by applicable law, and in
the event any such payment is inadvertently paid by Borrower or inadvertently
received by Lender, then Lender may elect, in its sole discretion, to do one or
more of the following with all or any portion of such excess: (a) apply such
excess to other sums due, if any, under this Note or the other Loan Documents,
(b) credit such excess as a prepayment of principal, (c) retain such excess as
additional security for the Loan or (d) refund such excess to Borrower, which
refund Borrower shall forthwith accept. It is the express intent hereof that
Borrower not pay and Lender not receive, directly or indirectly, interest in
excess of that which may be legally paid by Borrower under applicable law.

     11. RELATIONSHIP OF PARTIES. Borrower and Lender agree that the
relationship between them shall be solely that of debtor and creditor. Nothing
contained in this Note or in any other Loan Document shall be deemed to create a
partnership, tenancy-in-common, joint tenancy, joint venture or co-ownership by
or between Borrower and Lender. Lender shall not be in any way responsible or
liable for debts, losses, obligations or duties of Borrower with respect to the
Hospital, the Real Property, the Improvements, or otherwise. Borrower, at all
times consistent with the terms and provisions of this Note and the other Loan
Documents, shall be free to determine and follow its own policies and practices
in the conduct of its business.

     12. NOTICES. Any notice required herein or by applicable law shall be
deemed properly given (a) when personally delivered (to the person or department
if one is designated below), (b) as of the delivery date shown on the return
receipt when sent by United States Mail, certified or registered, postage
prepaid, return receipt requested, or (c) one day after the date sent by Federal
Express or overnight United States Mail or other national overnight carrier, and
addressed in each such case as set forth below:

          If to Borrower:   Alliance Hospital, Ltd.
                            515 North Adams
                            Odessa, Texas 79761
                            Attention: Chief Executive Officer

          With a copy to:   Hollmann, Lyon, Patterson & Durell, Inc.
                            5030 E. University Boulevard
                            Suite D-103
                            Odessa, Texas 79762-8148
                            Attention: Daniel J. Hollmann, Esq.

          If to Lender      Medical Properties Trust, Inc.
                            1000 Urban Center Drive, Suite 501
                            Birmingham, AL 35242


                                        5



                            Attention: Michael G. Stewart, Esq.

          With a copy to:   Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
                            420 20th Street North, Suite 1600
                            Birmingham, Alabama 35203
                            Attention: Thomas O. Kolb, Esq.

Either party may by notice given as herein provided change its address to
another single address.

     13. GOVERNING LAW; JURISDICTION AND VENUE; WAIVER OF JURY TRIAL.

          (a) THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED AND PERFORMED
IN SUCH STATE, WITHOUT GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES.
NOTWITHSTANDING THE FOREGOING, THE TERMS AND PROVISIONS OF THIS NOTE PERTAINING
TO THE PRIORITY, PERFECTION, ENFORCEMENT, OR REALIZATION BY THE LENDER OF ITS
RIGHTS AND REMEDIES UNDER THIS NOTE OR THE MORTGAGE WITH RESPECT TO THE REAL
PROPERTY SHALL BE GOVERNED, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF TEXAS.

          (b) THE BORROWER CONSENTS TO PERSONAL JURISDICTION IN THE STATE OF
DELAWARE. THE BORROWER AGREES THAT ANY ACTION OR PROCEEDING ARISING FROM OR
RELATED TO THIS AGREEMENT SHALL BE BROUGHT AND TRIED EXCLUSIVELY IN THE STATE OR
FEDERAL COURTS OF THE STATE OF DELAWARE. THE BORROWER IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT. BORROWER EXPRESSLY ACKNOWLEDGES THAT
DELAWARE IS A FAIR, JUST AND REASONABLE FORUM AND BORROWER AGREES NOT TO SEEK
REMOVAL OR TRANSFER OF ANY ACTION FILED BY THE LENDER OR ITS AFFILIATES IN SAID
COURTS. FURTHER, BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY CLAIM THAT
SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY CERTIFIED MAIL ADDRESSED
TO A PARTY AT THE ADDRESS DESIGNATED IN SECTION 12 OF THIS NOTE, SHALL BE
EFFECTIVE SERVICE OF PROCESS AGAINST SUCH PARTY FOR ANY ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT. A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT MAY BE ENFORCED IN ANY OTHER COURT TO WHOSE
JURISDICTION ANY OF THE PARTIES IS OR MAY BE SUBJECT.

     14. MISCELLANEOUS.

          (a) All amounts due hereunder shall be payable in lawful money of the
United States of America.


                                        6



          (b) With respect to the amounts due under this Note, Borrower waives
the following to the fullest extent permitted by law:

               (i) All rights of exemption of property from levy or sale under
          execution or other process for the collection of debts under the
          Constitution or laws of the United States of America or any state
          thereof;

               (ii) Demand, presentment, protest, notice of protest, notice of
          dishonor, notice of non-payment, diligence in collection, and all
          other requirements necessary to charge or hold the Borrower liable on
          any Loan Obligations; and

               (iii) Any further receipt for or acknowledgment of any collateral
          now or hereafter deposited as security for the Loan Obligations.

          (c) Borrower hereby acknowledges that Lender shall not by any act,
delay, omission, or otherwise be deemed to have waived any of its rights or
remedies under the Loan Documents, and no waiver of any kind shall be valid
unless in writing and signed by Lender. All rights and remedies of Lender under
the terms of this Note and the other Loan Documents and applicable statutes or
rules of law shall be cumulative and may be exercised successively or
concurrently. Any provision in this Note which may be unenforceable or invalid
under any law shall be ineffective to the extent of such unenforceability or
invalidity without affecting the enforceability or validity of any other
provision hereof.

          (d) Borrower agrees that, as of the date hereof, and as of the date of
each future advance of loan proceeds hereunder, there are and shall be no
defenses, equities, or setoffs with respect to the Loan Obligations.

          (e) This Note and the obligations of Borrower hereunder shall be
binding upon and enforceable against Borrower and its successors and assigns,
and shall inure to the benefit of Lender and its successors and assigns,
including any subsequent holder of this Note.

          (f) Lender may, at its option, release any collateral given to secure
the indebtedness evidenced hereby, or release any guarantor from its obligations
under any guaranty, and no such release shall impair the Loan Obligations under
this Note and the other Loan Documents.

          (g) Section headings are inserted for convenience of reference only
and shall be disregarded in the interpretation of this Note. The provisions of
this Note shall be construed without regard to the party responsible for the
drafting and preparation hereof.

          (h) Time is of the essence with respect to this Note and the
performance of each of the covenants and agreements contained herein.

             [The remainder of this page intentionally left blank.]


                                        7



     IN WITNESS WHEREOF, Borrower has caused this instrument to be duly executed
and delivered to Lender as of the day and year first above written.

                                        BORROWER:

                                        ALLIANCE HOSPITAL, LTD.

                                        BY: SRI-SAI ENTERPRISES, INC.
                                        ITS: GENERAL PARTNER


                                        By: /s/ Steven C. Riley
                                            ------------------------------------
                                        Name: Steven C. Riley
                                        Title: Co-Chairman


                                        By: /s/ Jayaram B. Naidu
                                            ------------------------------------
                                        Name: Jayaram B. Naidu
                                        Title: Co-Chairman


                                       8

                                                                   Exhibit 10.69

                           PURCHASE AND SALE AGREEMENT

                                  BY AND AMONG

                       MPT OPERATING PARTNERSHIP, L.P. AND

                            MPT OF SHERMAN OAKS, LLC

                    (COLLECTIVELY, THE "PURCHASER PARTIES");

                                       AND

                       PRIME HEALTHCARE SERVICES II, LLC,

                          PRIME A INVESTMENTS, L.L.C.,

                        PRIME HEALTHCARE SERVICES, INC.,

                          DESERT VALLEY HOSPITAL, INC.,

                                       AND

                        DESERT VALLEY MEDICAL GROUP, INC.

                      (COLLECTIVELY, THE "SELLER PARTIES ")

                         DATED AS OF December 30, 2005


                                        1



                                Table of Contents


                                                                           
ARTICLE I DEFINED TERMS....................................................    2
   Section 1.1.   Certain Defined Terms....................................    2
   Section 1.2.   Interpretation; Terms Generally..........................    9

ARTICLE II PURCHASE AND SALE OF ASSETS, ASSUMPTION OF LIABILITIES..........   10
   Section 2.1.   Purchase and Sale of Assets..............................   10
   Section 2.2.   Excluded Liabilities.....................................   10

ARTICLE III PURCHASE PRICE.................................................   11
   Section 3.1.   Purchase Price...........................................   11
   Section 3.2.   Taxes, Rentals, Utilities................................   11
   Section 3.3.   Allocation of Purchase Price.............................   11

ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
           PARTIES.........................................................   11
   Section 4.1.   Organization.............................................   11
   Section 4.2.   Authorization and Enforceability.........................   11
   Section 4.3.   Absence of Conflicts.....................................   12
   Section 4.4.   Consents and Approvals...................................   12
   Section 4.5.   Financial Statements.....................................   12
   Section 4.6.   No Undisclosed Liabilities...............................   13
   Section 4.7.   Accounts Receivable......................................   13
   Section 4.8.   Absence of Changes.......................................   13
   Section 4.9.   Licenses.................................................   15
   Section 4.10.  Accreditation; Medicare and Medicaid; Third Party
                     Payors................................................   15
   Section 4.11.  HIPAA Compliance.........................................   16
   Section 4.12.  Healthcare Regulatory Matters............................   16
   Section 4.13.  Taxes....................................................   18
   Section 4.14.  Good Title to Assets.....................................   18
   Section 4.15.  Title and Condition of the Real Property.................   18
   Section 4.16.  Condition of Personal Property...........................   20
   Section 4.17.  Compliance with Environmental Laws.......................   21
   Section 4.18.  Insurance................................................   22
   Section 4.19.  Litigation...............................................   22
   Section 4.20.  Contracts, Obligations and Commitments...................   23
   Section 4.21.  Employees and Employee Relations.........................   23
   Section 4.22.  Intangible Property......................................   24
   Section 4.23.  Compliance with Law......................................   24
   Section 4.24.  Hill Burton Obligations..................................   25
   Section 4.25.  Medical Staff Matters....................................   25
   Section 4.26.  Brokers..................................................   25
   Section 4.27.  Records..................................................   25
   Section 4.28.  Existing Leases..........................................   25
   Section 4.29.  Representations Complete.................................   26



                                        i



                                Table of Contents


                                                                           
ARTICLE V REPRESENTATIONS AND WARRANTIES BY THE PURCHASER PARTIES..........   26
   Section 5.1.   Organization.............................................   26
   Section 5.2.   Authorization; Enforcement, Absence of Conflicts.........   26
   Section 5.3.   Binding Agreement........................................   27
   Section 5.4.   Litigation...............................................   27
   Section 5.5.   Brokers..................................................   27
   Section 5.6.   Compliance with Law......................................   27

ARTICLE VI TITLE AND SURVEY................................................   27
   Section 6.1.   Survey...................................................   27
   Section 6.2.   Title Insurance..........................................   28

ARTICLE VII PRE-CLOSING COVENANTS..........................................   28
   Section 7.1.   No Shop..................................................   28
   Section 7.2.   Access; Confidentiality..................................   29
   Section 7.3.   Schedule Updates.........................................   30
   Section 7.4.   Conduct of Business by the Seller Parties Pending the
                     Closing...............................................   30
   Section 7.5.   Cooperation..............................................   31
   Section 7.6.   Regulatory and other Authorizations, Notices and
                     Consents..............................................   31
   Section 7.7.   Mutual Covenants.........................................   32
   Section 7.8.   Public Announcements.....................................   32

ARTICLE VIII CLOSING CONDITIONS............................................   33
   Section 8.1.   Conditions to the Obligations of the Seller Parties......   33
   Section 8.2.   Conditions to the Obligations of the Purchaser Parties...   33

ARTICLE IX CLOSING.........................................................   34
   Section 9.1.   Closing Date.............................................   34
   Section 9.2.   The Seller Parties' Closing Date Deliverables............   34
   Section 9.3.   Purchaser Parties' Closing Date Deliverables.............   36

ARTICLE X TERMINATION......................................................   37
   Section 10.1.  Termination..............................................   37
   Section 10.2.  Notice and Effect........................................   37

ARTICLE XI CERTAIN POST-CLOSING COVENANTS..................................   38
   Section 11.1.  Post-Closing Access to Information.......................   38
   Section 11.2.  Licensure................................................   38
   Section 11.3.  Sherman Oaks Purchase Agreement Indemnification..........   38

ARTICLE XII INDEMNIFICATION................................................   39
   Section 12.1.  The Seller Parties' Agreement to Indemnify...............   39
   Section 12.2.  The Purchaser Parties' Agreement to Indemnify............   39
   Section 12.3.  Notification and Defense of Claims.......................   40
   Section 12.4.  Investigations...........................................   41



                                       ii



                                Table of Contents


                                                                           
   Section 12.5.  Treatment of Indemnification Payments....................   41
   Section 12.6.  Exclusive Remedy.........................................   42
   Section 12.7.  Limitation of Liability of Seller Parties................   42

ARTICLE XIII DISPUTE RESOLUTION............................................   42
   Section 13.1.  Governing Law............................................   42
   Section 13.2.  Jurisdiction and Venue...................................   42

ARTICLE XIV MISCELLANEOUS..................................................   43
   Section 14.1.  Assignment...............................................   43
   Section 14.2.  Notice...................................................   43
   Section 14.3.  Calculation of Time Period...............................   44
   Section 14.4.  Captions.................................................   44
   Section 14.5.  Entire Agreement; Modification...........................   44
   Section 14.6.  Schedules and Exhibits...................................   44
   Section 14.7.  Further Assurances.......................................   44
   Section 14.8.  Counterparts.............................................   44
   Section 14.9.  Expenses.................................................   44
   Section 14.10. Syndication..............................................   45
   Section 14.11. Securities Offering and Filings..........................   45
   Section 14.12. Binding Effect...........................................   45



                                       iii



                           PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and entered into as
of December 30, 2005 by and among MPT OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership ("MPT"), and MPT OF SHERMAN OAKS, LLC, a Delaware limited
liability company (the "Acquisition Sub") (MPT and the Acquisition Sub being
herein referred to, collectively, as the "Purchaser Parties"); and PRIME
HEALTHCARE SERVICES II, LLC, a Delaware limited liability company ("Desert
Valley Operator"), PRIME A INVESTMENTS, L.L.C., a Delaware limited liability
company ("Prime A"), PRIME HEALTHCARE SERVICES, INC., a Delaware corporation
("Desert Valley Parent"), DESERT VALLEY HOSPITAL, INC., a California corporation
("Desert Valley Hospital"), and DESERT VALLEY MEDICAL GROUP, INC., a California
corporation (Desert Valley Operator, Prime A, Desert Valley Parent, Desert
Valley Hospital and Desert Valley Medical Group, Inc., being collectively
referred to herein as the "Seller Parties").

                                   WITNESSETH:

WHEREAS, Desert Valley Operator and Prime A are parties to that certain Asset
Purchase Agreement dated September 21, 2005 between Sherman Oaks Health System
("Sherman Oaks"), the subsidiaries of Sherman Oaks, Desert Valley Operator and
Prime A (the "Sherman Oaks Purchase Agreement") pursuant to which Sherman Oaks
has agreed to sell and assign to Desert Valley Operator and Prime A, and Desert
Valley Operator and Prime A have agreed to purchase and assume from Sherman
Oaks, certain assets related to the Sherman Oaks Hospital located in Sherman
Oaks, California (the "Hospital"), including the Real Property (as hereinafter
defined), as well as Sherman Oaks' leasehold interest in the Landlord Leases (as
hereinafter defined);

WHEREAS, pursuant to that certain Amended and Restated Air Space Agreement,
dated March 1, 1995, between Trustee in Bankruptcy for Triad and G&L Medical
Partnership, L.P. ("G&L"), as assigned to Desert Valley Operator (the "Air Space
Agreement"), Desert Valley Operator leases to G&L certain air space above a
portion of the Real Property for the operation of a parking facility and
subleases back from G&L Medical Partnership, L.P. twenty (20) parking spaces;

WHEREAS, subject to the terms and conditions hereinafter set forth, Seller
Parties desire to sell and assign to the Acquisition Sub, and the Acquisition
Sub desires to purchase and assume from Seller Parties, the Real Property and
certain other assets associated or used in connection with the Hospital, all on
the terms and conditions set forth in this Agreement;

WHEREAS, contemporaneously with the closing of such purchase and sale, Desert
Valley Operator shall lease back the Real Property from the Acquisition Sub
pursuant to a lease in the form of EXHIBIT A hereto (the "Lease"); and

WHEREAS, until its change in ownership application is approved by the California
Department of Health Services ("DHS"), Desert Valley Operator intends to
sublease the Real Property and



other assets back to Sherman Oaks and to operate the same for Sherman Oaks
pursuant to the terms and conditions of the Management Agreement (as hereinafter
defined).

NOW, THEREFORE, in consideration of the promises and mutual agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto do hereby agree as follows:

                                    ARTICLE I

                                  DEFINED TERMS

SECTION 1.1. CERTAIN DEFINED TERMS. Capitalized terms used herein shall have the
respective meanings ascribed to them in this Section 1.1.

"Acquisition Sub" shall have the meaning set forth in the preamble to this
Agreement.

"Affiliate" "means, with respect to any Person (i) any Person that, directly or
indirectly, controls or is controlled by or is under common control with such
Person, (ii) any other Person that owns, beneficially, directly or indirectly,
10% or more of the outstanding capital stock, shares or equity interests of such
Person, or (iii) any officer, director, employee, partner, member, manager or
trustee of such Person or any Person controlling, controlled by or under common
control with such Person (excluding trustees and persons serving in similar
capacities who are not otherwise an Affiliate of such Person). For the purposes
of this definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
through the ownership of voting securities or otherwise.

"Agreement" shall have the meaning set forth in the preamble to this Agreement.

"Air Space Agreement" shall have the meaning set forth in the recitals to this
Agreement.

"Appraisal" means that certain appraisal of the Real Property in form and
substance, and prepared by a Person, satisfactory to MPT in its sole discretion.

"Appraised Value" means the fair market value of the Real Property as set forth
in the Appraisal.

"Assets" shall have the meaning set forth in Section 2.1 hereof.

"Assumed Liabilities" shall have the meaning set forth in Section 2.2 hereof.

"Balance Sheet" shall have the meaning set forth in Section 4.5 hereof.

"Balance Sheet Date" shall have the meaning set forth in Section 4.5 hereof.

"Business" means the operation of the Hospital and the engagement in and pursuit
and conduct of any business venture or activity related thereto.


                                        2



"Business Day" means any day, other than a Saturday or Sunday, that is neither a
legal holiday nor a day on which banking institutions in New York, New York are
authorized or required by law, regulation or executive order to close.

"Business Employee" shall have the meaning set forth in Section 4.21 hereof.

"CMS" means the Centers for Medicare and Medicaid Services.

"Claim" shall have the meaning set forth in Section 4.19 hereof.

"Closing" shall have the meaning set forth in Section 9.1 hereof.

"Closing Date" shall have the meaning set forth in Section 9.1 hereof.

"Code" means the United States Internal Revenue Code of 1986, as amended through
the date hereof, and all regulations thereunder. Any reference herein to a
specific section or sections of the Code shall be deemed to include a reference
to any corresponding provision of future law.

"Confidentiality Agreement" shall have the meaning set forth in Section 7.2(c)
hereof.

"Contracts" shall have the meaning set forth in Section 4.20 hereof.

"Deed" shall have the meaning set forth in Section 9.2(b) hereof.

"DHS" shall have the meaning set forth in the recitals to this Agreement.

"Desert Valley Hospital" shall have the meaning set forth in the preamble to
this Agreement.

"Desert Valley Operator" shall have the meaning set forth in the preamble to
this Agreement.

"Desert Valley Parent" shall have the meaning set forth in the preamble to this
Agreement.

"Environmental Claim" means any Claim, action, cause of action, investigation or
notice (written or oral) by any Governmental Entity or other Person alleging
actual or potential liability for investigatory, cleanup or governmental
response costs, or natural resources or property damages, or personal injuries,
attorney's fees or penalties relating to (i) the presence, or release into the
environment, of any Hazardous Materials at the Real Property, now or in the
past, or (ii) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.

"Environmental Law" means each federal, state, local and foreign law and
regulation relating to pollution, protection or preservation of human health or
the environment, including ambient air, surface water, ground water, land
surface or subsurface strata, and natural resources, and including each law and
regulation relating to emissions, discharges, releases or threatened releases of
Hazardous Materials, or otherwise relating to the manufacturing, processing,
distribution, use, treatment, generation, storage, containment (whether above
ground or underground), disposal, transport or handling of Hazardous Materials,
or the preservation of the environment or mitigation of adverse effects thereon
and each law and regulation with regard to


                                        3



record keeping, notification, disclosure and reporting requirements respecting
Hazardous Materials, including, without limitation, the Resource Conservation
and Recovery Act of 1976, the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, the Hazardous Materials Transportation Act, the
Federal Water Pollution Control Act, the Clean Air Act, the Clean Water Act, the
Toxic Substances Control Act, the Safe Drinking Water Act, and all similar
federal, state and local environmental statutes, ordinances and the regulations,
orders, or decrees now or hereafter promulgated thereunder, in each case as
amended from time to time.

"Equity Constituents" means, with respect to any Person, as applicable, the
members, general or limited partners, shareholders, stockholders or other
Persons, however designated, who are the owners of the issued and outstanding
equity or ownership interests of such Person.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

"Exception Documents" means true, correct, current and legible copies of each
document listed as an exception to title on the Title Commitment.

"Excluded Liabilities" shall have the meaning set forth in Section 2.2 hereof.

"Existing Leases" means those certain lease agreements in effect as of the date
hereof (other than the Lease) between Affiliates of MPT and Affiliates of Desert
Valley Parent.

"Expansion Commitment Letter" shall have the meaning set forth in Section 9.2(x)
hereof.

"Financial Statements" shall have the meaning set forth in Section 4.5 hereof.

"Fixtures" means all permanently affixed non-medical equipment, machinery,
fixtures, and other items of real property, including all components thereof,
now and hereafter located in, on or used in connection with, and permanently
affixed to or incorporated into the Improvements, including, without limitation,
all furnaces, boilers, heaters, electrical equipment, heating, plumbing,
lighting, ventilating, refrigerating, incineration, air and water pollution
control, waste disposal, air-cooling and air-conditioning systems and apparatus,
sprinkler systems and fire and theft protection equipment, and built-in vacuum,
cable transmission, oxygen and similar systems, all of which, to the greatest
extent permitted by law, are hereby deemed by the parties hereto to constitute
real estate, together with all replacements, modifications, alterations and
additions thereto.

"G&L" shall have the meaning set forth in the recitals to this Agreement.

"GAAP" means United States generally accepted accounting principles as in effect
from time to time. Any accounting term used herein and not specifically defined
herein shall be construed in accordance with GAAP.

"Governing Documents" means, with respect to any Person, as applicable, such
Person's charter, articles or certificate of incorporation, formation or
organization, bylaws or other documents or instruments which establish and/or
set forth the rules, procedures and rights with respect to such Person's
governance, including, without limitation, any stockholders, limited liability
company,


                                        4



operating or partnership agreement related to such Person, in each case as
amended, restated, supplemented and/or modified and in effect as of the relevant
date.

"Governmental Entity" means any national, federal, regional, state, local,
provincial, municipal, foreign or multinational court or other governmental or
regulatory authority, administrative body or government, department, board,
body, tribunal, instrumentality or commission.

"Government Programs" shall have the meaning set forth in Section 4.10 hereof.

"Hazardous Materials" means any substance deemed hazardous under any
Environmental Law, including, without limitation, asbestos or any substance
containing asbestos, the group of organic compounds known as polychlorinated
biphenyls, flammable explosives, radioactive materials, infectious wastes,
biomedical and medical wastes, chemicals known to cause cancer or reproductive
toxicity, lead and lead-based paints, radon, pollutants, effluents,
contaminants, emissions or related materials and any items included in the
definition of hazardous or toxic wastes, materials or substances under any
Environmental Law.

"Healthcare Fraud Laws" shall have the meaning set forth in Section 4.12(a)
hereof.

"HIPAA" shall have the meaning set forth in Section 4.11 hereof.

"Hospital" shall have the meaning set forth in the recitals to this Agreement.

"Improvements" means all buildings, improvements, structures and Fixtures now or
on the Closing Date located on the Land, including, without limitation,
landscaping, parking lots and structures, roads, drainage and all above ground
and underground utility structures, equipment systems and other so-called
"infrastructure" improvements.

"Indebtedness" of any Person means, without duplication, (a) all liabilities and
obligations, contingent or otherwise, of such Person: (i) in respect of borrowed
money (whether secured or unsecured), (ii) under conditional sale or other title
retention agreements relating to property or services purchased and/or sold by
such Person, (iii) evidenced by bonds, notes, debentures or similar instruments,
(iv) for the payment of money relating to a capitalized lease obligation, (v)
evidenced by a letter of credit or a reimbursement obligation of such Person
with respect to any letter of credit, (vi) pursuant to any guarantee, or (vii)
secured by (or for which the holder of such obligation has an existing right,
contingent or otherwise, to be secured by) a Lien on the assets or property of
such Person, and (b) all liabilities and obligations of others of the kind
described in the preceding clause (a) and otherwise that (i) such Person is
responsible or liable for, directly or indirectly, as obligor, guarantor, surety
or otherwise, or (ii) which are secured by a Lien on any of the assets or
property of such Person.

"Indemnified Party" shall have the meaning set forth in Section 12.3(a) hereof.

"Indemnifying Party" shall have the meaning set forth in Section 12.3(a) hereof.

"Intangible Property" shall have the meaning set forth in Section 4.22 hereof.

"JCAHO" shall have the meaning set forth in Section 4.10 hereof.


                                        5



"Knowledge," "to the knowledge or best knowledge of" or similar words or phrases
means, with respect to any Person, such Person's actual or deemed knowledge of a
particular fact or matter if any of such Person's current or former officers or
directors (or other Persons however denominated, currently or formerly
exercising similar authority with respect to such Person) (a Person's "Knowledge
Group"), including, but not limited to, in the case of the Seller Parties, Prem
Reddy, M.D. and/or Lex Reddy, has actual knowledge of such fact or matter.

"Land" shall have the meaning set forth in Section 2.1(a) hereof.

"Landlord Leases" means those certain leases set forth on EXHIBIT B hereto,
pursuant to which Desert Valley Operator or Sherman Oaks Medical Group
Management, Inc., a California professional corporation, as tenant, leases
certain property or space related to the Business.

"Law" means any federal, state or local statute, rule, regulation, ordinance,
order, code, policy or rule of common law, now or hereafter in effect, and in
each case as amended, and any judicial or administrative interpretation thereof
by a Governmental Entity or otherwise, including, without limitation, any
judicial or administrative order, consent, decree or judgment.

"Lease" shall have the meaning set forth in the recitals to this Agreement.

"Lien" means any mortgage, adverse Claim, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, lien (statutory or otherwise) or
preference, security interest or other encumbrance of any kind or nature
whatsoever.

"Management Agreement" means that certain Interim Management Agreement dated as
of the closing date by and between the Desert Valley Operator and Sherman Oaks.

"Material Adverse Effect" means, with respect to any Person, any change,
event(s), occurrence(s) or effect(s), whether direct or indirect, that, both
before and after giving effect to the transactions contemplated by this
Agreement, could, individually or in the aggregate, have a material adverse
effect on (i) the business, properties, results of operations, assets, revenue,
income, prospects or condition (financial or otherwise) of, or the ability to
timely satisfy the obligations or liabilities (whether absolute or contingent)
of, such Person, (ii) such Person's business or assets, or (iii) the ability of
such Person to perform its obligations under, and/or consummate the transactions
contemplated by, this Agreement within the time periods specified herein.

"Medicaid" shall have the meaning set forth in Section 4.10 hereof.

"Medi-Cal" shall have the meaning set forth in Section 4.10 hereof.

"Medicare" shall have the meaning set forth in Section 4.10 hereof.

"Minimum Aggregate Liability Amount" shall have the meaning set forth in Section
12.1(b) hereof.

"MPT" shall have the meaning set forth in the recitals to this Agreement.


                                        6



"Permitted Encumbrances" means (i) Liens for or arising from current taxes not
yet due and payable; (ii) easements and other restrictions of record; (iii)
matters set forth in the Title Commitment issued by the Title Company; (iv)
matters disclosed on the Survey; and (v) other matters, encumbrances and defects
approved by MPT in writing.

"Permits" shall have the meaning set forth in Section 4.9 hereof.

"Person" means an individual, a corporation, a limited liability company, a
partnership, an unincorporated association, a joint venture, a Governmental
Entity or another entity or group.

"Personal Property" shall have the meaning set forth in Section 4.16 hereof.

"Personal Property Leases" shall have the meaning set forth in Section 4.16
hereof.

"Physician" means any physician rendering services, within, at or on the
Hospital or its premises within the five (5) year period ending on the date of
this Agreement.

"Plan" shall have the meaning set forth in Section 4.21 hereof.

"Prime A" shall have the meaning set forth in the preamble to this Agreement.

"Public Taking" shall means any condemnation, requisition or other taking by any
Governmental Entity.

"Purchase Price" shall have the meaning set forth in Section 3.1 hereof.

"Purchaser Damages" shall have the meaning set forth in Section 12.1(a) hereof.

"Purchaser Parties" shall have the meaning set forth in the preamble to this
Agreement.

"Purchaser Indemnified Party" shall have the meaning set forth in Section
12.1(a).

"Purchaser's Indemnity Periods" shall have the meaning set forth in Section
12.1(b) hereof.

"Real Property" shall have the meaning set forth in Section 2.1(b) hereof.

"Search Reports" means reports of searches made of the uniform commercial code
records of the county in which the Real Property is located, and of the office
of the secretary of state of the state in which the Real Property is located and
in the state in which the principal office of the Seller Parties is located.

"Seller Damages" shall have the meaning set forth in Section 12.2(a) hereof.

"Seller Indemnified Parties" shall have the meaning set forth in Section 12.2(a)
hereof.

"Seller Indemnity Period" shall have the meaning set forth in Section 12.2(b)
hereof.

"Seller Party Instruments" shall have the meaning set forth in Section 4.2
hereof.


                                        7



"Seller Parties" shall have the meaning set forth in the preamble to this
Agreement.

"Service Provider" means any Person who has rendered or is rendering services to
or on behalf of Desert Valley Parent or any of its Subsidiaries.

"Sherman Oaks" shall have the meaning set forth in the recitals to this
Agreement.

"Sherman Oaks Claim" shall have the meaning set forth in Section 11.3 hereof.

"Sherman Oaks Purchase Agreement" shall have the meaning set forth in Section
11.3 hereof.

"Special Purpose Entity" means an entity which (i) exists solely for the purpose
of owning and/or leasing all or any portion of the Real Property and conducting
the operation of the Business, (ii) conducts business only in its own name,
(iii) does not engage in any business other than the ownership and/or leasing
all or any portion of the Real Property and the operation of the Business, (iv)
does not hold, directly or indirectly, any ownership interest (legal or
equitable) in any entity or any real or personal property other than the
interest which it owns in the Real Property and the other assets incident to the
operation of the Business, (v) does not have any debt other than as permitted by
the Lease or arising in the ordinary course of the Business and does not
guarantee or otherwise obligate itself with respect to the debts of any other
Person other than as approved by MPT, (vi) has its own separate books, records,
accounts, financial statements and tax returns (with no commingling of funds or
assets), (vii) holds itself out as being a company separate and apart from any
other entity, (viii) maintains all corporate formalities independent of any
other entity.

"Subsidiary" means with respect to Desert Valley Parent, those certain
subsidiaries of Desert Valley Parent listed and described on SCHEDULE 4.1 hereto
and with respect to any Person, any other Person of or with respect to which
Fifty Percent (50%) or more of the total voting power of the voting securities
is beneficially owned by such Person.

"Survey" means a current "as-built" ALTA survey, certified to ALTA requirements,
prepared by an engineer or surveyor licensed in the state in which the Real
Property is located acceptable to MPT in its sole discretion, which shall be
prepared in accordance with the provisions set forth in Section 6.1 of this
Agreement.

"Taxes" means any and all taxes, charges, fees, levies or other assessments,
including, without limitation, any and all income, gross receipts, excise, real
and personal property (including leaseholds and interests in leaseholds), sales,
use, occupation, transfer, license, ad valorem, gains, profits, gift, minimum
estimated, social security, unemployment, disability, premium, recapture,
credit, payroll, withholding, severance, stamp, capital stock, value added
leasing, franchise and other taxes or similar charges of any kind including any
interest and penalties on or additions thereto or attributable to any failure to
comply with any requirement regarding any Tax Return.

"Tax Return" means any return, declaration, filing, report, claim for refund or
information return or other statement relating to Taxes (whether filed with or
submitted to, or required to be filed with or submitted to, any Governmental
Entity), including any schedule or attachment thereto, and including any
amendment or extension thereof.


                                        8



"Tax Structure" shall have the meaning set forth in Section 7.2(c) hereof.

"Tax Treatment" shall have the meaning set forth in Section 7.2(c) hereof.

"Tenant" means the lessees or tenants under the Tenant Leases (as hereinafter
defined), if any.

"Tenant Leases" shall have the meaning set forth in Section 4.15(i) hereof.

"Third Party Claim" shall have the meaning set forth in Section 12.3(a) hereof.

"Title Commitment" means a current commitment issued by the Title Company to the
Purchaser Parties pursuant to the terms of which the Title Company shall commit
to issue the Title Policy to the Purchaser Parties in accordance with the
provisions of this Agreement, and reflecting all matters which would be listed
as exceptions to coverage on the Title Policy.

"Title Company" means the national service office of a title insurance company
licensed in the state in which the Real Property is located and selected by MPT
in its sole discretion.

"Title Policy" means a title insurance policy in form and substance satisfactory
to MPT in its sole discretion.

"Warranties" means all warranties, representations and guaranties with respect
to any of the Assets, whether express or implied, which the Seller Parties now
hold or under which the Seller Parties are the beneficiary.

SECTION 1.2. INTERPRETATION; TERMS GENERALLY. The definitions set forth in
Section 1.1 and elsewhere in this Agreement shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. Unless otherwise indicated, the words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation."
The words "herein", "hereof" and "hereunder" and words of similar import shall
be deemed to refer to this Agreement (including the Schedules and Exhibits) in
its entirety and not to any part hereof, unless the context shall otherwise
require. All references herein to Articles, Sections, Schedules and Exhibits
shall be deemed to refer to Articles, Sections and Schedules of, and Exhibits
to, this Agreement, unless the context shall otherwise require. Unless the
context shall otherwise require, any references to any agreement or other
instrument or statute or regulation are to it as amended and supplemented from
time to time (and, in the case of a statute or regulation, to any corresponding
provisions of successor statutes or regulations). Any reference in this
Agreement to a "day" or number of "days" that does not refer explicitly to a
"Business Day" or "Business Days" shall be interpreted as a reference to a
calendar day or number of calendar days. If any action or notice is to be taken
or given on or by a particular calendar day, and such calendar day is not a
Business Day, then such action or notice shall be deferred until, or may be
taken or given on, the next Business Day.


                                        9



                                   ARTICLE II

             PURCHASE AND SALE OF ASSETS, ASSUMPTION OF LIABILITIES

SECTION 2.1. PURCHASE AND SALE OF ASSETS. Based upon the representations and
warranties of the Seller Parties as set forth herein, and subject to the terms
and conditions hereof, at the Closing, the Seller Parties, in consideration for
the payment of the Purchase Price in accordance with Section 3.1, shall grant,
sell, assign, transfer, convey and deliver to the Acquisition Sub, and the
Acquisition Sub shall purchase and acquire from the Seller Parties, free and
clear of all Liens, other than Permitted Encumbrances, the following assets of
the Seller Parties to the extent the Seller Parties have an interest therein
(collectively, the "Assets"):

(a) those certain tracts of land consisting of approximately 3.7 acres
located in Sherman Oaks, California the legal descriptions of which are set
forth on EXHIBIT C attached hereto (the "Land") and all Improvements located
thereon (collectively the "Real Property");

(b) [all of the Seller Parties' rights under and interest in the Air Space
Agreement;]

(c) to the extent assignable, all of Seller Parties' rights in all intangible
property relating exclusively to the Real Property, including, but limited to,
zoning rights, Permits and indemnification or similar rights and all Warranties
affecting or inuring to the benefit of the Real Property or the owner thereof
(including, without limitation, any indemnification or similar rights and
Warranties related to the Real Property);

(d) all of the Seller Parties' right, title and interest in and to site plans,
surveys, soil and substrata studies, architectural drawings, plans and
specifications, inspection reports, engineering and environmental plans and
studies, title reports, floor plans, landscape plans and other plans relating to
the Real Property and the Improvements; and

(e) all of the Seller Parties' right, title and interest in and to all causes of
action, claims and rights in litigation (or which could result in litigation
against any party) pertaining or relating to the Real Property (including,
without limitation, any causes of action, claims or rights in litigation or
other rights related to or arising under any purchase contracts (including,
without limitation, all of Seller Parties' rights to indemnification and claims
for breach or default under the Sherman Oaks Purchase Agreement) respecting the
Real Property).

SECTION 2.2. EXCLUDED LIABILITIES. Notwithstanding anything in this Agreement to
the contrary, except as set forth on SCHEDULE 2.2 (the "Assumed Liabilities") no
Purchaser Party shall assume or agree to pay, satisfy, discharge or perform, or
shall be deemed by virtue of the execution and delivery of this Agreement or any
other document delivered at the Closing pursuant to this Agreement, or as a
result of the consummation of the transactions contemplated by this Agreement or
such other document, to have assumed, or to have agreed to pay, satisfy,
discharge or perform, or shall be liable for, any liability, obligation,
contract or Indebtedness of the Seller Parties or any other Person, whether
primary or secondary, direct or indirect, including, without limitation, any
liability or obligation relating to the ownership, use or operation of any of
the Assets or the Hospital prior to Closing, any liability or obligation arising
out of or related to any breach, default, tort or similar act committed by a
Seller Party or for any


                                       10



failure of a Seller Party to perform any covenant or obligation for or during
any period prior to Closing, and any liability arising out of the ownership and
operation of the Assets and the Hospital by Sherman Oaks or any other Person
prior to Closing (collectively, the "Excluded Liabilities").

                                   ARTICLE III

                                 PURCHASE PRICE

SECTION 3.1. PURCHASE PRICE. Subject to obtaining the Appraisal in accordance
with Section 8.2(m) hereof and subject to adjustment as provided herein, the
purchase price for the Assets shall be Twenty Million and No/100 Dollars
($20,000,000.00) (the "Purchase Price"). Subject to the terms and conditions
hereof, at Closing, the Acquisition Sub shall pay the Purchase Price via wire
transfer of immediately available federal funds to an account specified in
writing by Desert Valley Parent not less than three (3) Business Days prior to
the Closing Date.

SECTION 3.2. TAXES, RENTALS, UTILITIES. The parties acknowledge that all utility
charges and all real and personal property Taxes related to the Assets shall be
the responsibility of Desert Valley Operator pursuant to the terms of the Lease.

SECTION 3.3. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets for purposes of Section 1060 of the Code as set forth on
SCHEDULE 3.3. The parties agree to use, and to not take any position which is
inconsistent with, such allocation in the preparation and filing of any Tax
Return (including Form 8594).

                                   ARTICLE IV

                    REPRESENTATIONS, WARRANTIES AND COVENANTS
                              OF THE SELLER PARTIES

With the understanding that the Purchaser Parties shall rely hereon, and as a
material inducement to the Purchaser Parties to enter into this Agreement and
the Lease, the Seller Parties hereby jointly and severally represent, warrant
and covenant to the Purchaser Parties as of the date hereof and as of the
Closing Date as follows:

SECTION 4.1. ORGANIZATION. Each Seller Party is a corporation or limited
liability company duly organized, validly existing and in good standing under
the laws of their respective states of incorporation and is duly licensed in
each jurisdiction in which the nature of the business conducted, or the assets
owned, operated and/or leased, by such Seller Party requires or makes such
qualification necessary. Desert Valley Operator is, and has at all times since
its incorporation been, a Special Purpose Entity. SCHEDULE 4.1 sets forth the
ownership of each Seller Party and, except as set forth therein, no other party
has any equity interest in any Seller Party or any option, warrant or other
right to acquire same.

SECTION 4.2. AUTHORIZATION AND ENFORCEABILITY. Each Seller Party has the
requisite corporate or limited liability company power and authority to conduct
its business as it is now being conducted and as proposed to be conducted and to
execute, deliver and carry out the terms of the Sherman Oaks Purchase Agreement
(if it is a party thereto) and this Agreement, together with all


                                       11



documents and agreements necessary to give effect to the provisions of the
Sherman Oaks Purchase Agreement (if it is a party thereto) and this Agreement,
including the Lease, and to consummate the transactions contemplated hereby and
thereby. All corporate or limited liability company actions required to be taken
by a Seller Party (including, without limitation, all necessary actions by the
manager, members, board of directors and/or shareholders of such Seller Party)
to authorize the execution, delivery and performance of the Sherman Oaks
Purchase Agreement (if it is a party thereto), this Agreement, and all other
documents, agreements and instruments executed by such Seller Party which are
necessary to give effect to the Sherman Oaks Purchase Agreement (if it is a
party thereto) and this Agreement (collectively, the "Seller Party Instruments")
and all transactions contemplated hereby and thereby, have been duly and
properly taken or obtained in accordance and compliance with, as applicable,
such Seller Party's Governing Documents. Each Seller Party has heretofore
delivered to the Purchaser Parties true, correct and complete copies of such
Seller Party's Governing Documents. No other action on the part of any Seller
Party is necessary to authorize the execution, delivery and performance of the
Sherman Oaks Purchase Agreement (if it is a party thereto), this Agreement, the
Seller Party Instruments and all transactions contemplated hereby and thereby.
The Sherman Oaks Purchase Agreement, this Agreement, the Seller Party
Instruments and all agreements to which any Seller Party will become a party
hereunder or thereunder, including the Lease, are and will constitute the valid
and legally binding obligations of such Seller Party, and are and will be
enforceable against such Seller Party in accordance with the respective terms
hereof or thereof, except as enforceability may be restricted, limited or
delayed by applicable bankruptcy, insolvency or other similar laws affecting
creditors' rights generally and except as enforceability may be subject to and
limited by general principles of equity (regardless of whether considered in a
proceeding in equity or at law).

SECTION 4.3. ABSENCE OF CONFLICTS. Each Seller Party's execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby (or by the Sherman Oaks Purchase Agreement if such Seller
Party is a party thereto), will not, with or without the giving of notice and/or
the passage of time: (i) violate or conflict with any provision of either Seller
Parties' Governing Documents; (ii) violate any provision of any Law to which
such Seller Party is subject; (iii) violate or conflict with any judgment,
order, writ or decree of any court applicable to such Seller Party; (iv) result
in or cause the creation of a Lien on any of the Assets; or (v) except as
disclosed on SCHEDULE 4.3, result in the breach or termination of any provision
of, or create rights of acceleration or constitute a default under, the terms of
any indenture, mortgage, deed of trust, contract, agreement or other instrument
to which such Seller Party is a party or by which such Seller Party or any of
its assets is bound.

SECTION 4.4. CONSENTS AND APPROVALS. Except as set forth on SCHEDULE 4.4, no
license, permit, qualification, order, consent, authorization, approval or
waiver of, or registration, declaration or filing with, or notification to, any
Governmental Entity or other Person is required to be made or obtained by or
with respect to either Seller Party in connection with the execution, delivery
and performance of the Sherman Oaks Purchase Agreement (if such Seller Party is
a party thereto), this Agreement or the Seller Instruments by the Seller Parties
or the consummation of the transactions contemplated hereby or thereby.

SECTION 4.5. FINANCIAL STATEMENTS. SCHEDULE 4.5 sets forth (i) the audited
balance sheets of each applicable Seller Party (other than Desert Valley
Operator and Prime A) for the fiscal years


                                       12



ended 2003 and 2004, (ii) the unaudited balance sheet of each Seller Party at
September 30, 2005 (in the case of Desert Valley Operator and Prime A November
30, 2005) (the "Balance Sheet Date") (the balance sheets described in this
subsection (ii) being herein referred to, collectively, as the "Balance
Sheets"), (iii) the audited statement of income and cash flows of each
applicable Seller Party (other than Desert Valley Operator and Prime A) for the
fiscal years ended 2003 and 2004, and (iv) the unaudited statement of income of
each Seller Party for the nine (9) months ended September 30, 2005 (in the case
of Desert Valley Operator and Prime A November 30, 2005) (the financial
statements described in this sentence, being herein referred to, collectively,
as the "Financial Statements"). Except as set forth on SCHEDULE 4.5, the
Financial Statements have been prepared in accordance with GAAP, are based on
the books, records and accounts of the Seller Parties and fairly present the
financial condition and results of operations, cash flows and shareholders'
equity of the Seller Parties as of the respective dates thereof and for the
respective periods indicated therein, except (i) that the unaudited interim
statements do not include complete note (including footnote) disclosure as
required by GAAP; and (ii) that the unaudited interim statements are subject to
normal, year-end adjustments which are not, and will not be, material in amount
or effect, either individually or in the aggregate.

SECTION 4.6. NO UNDISCLOSED LIABILITIES. Except as set forth on SCHEDULE 4.6, no
Seller Party has any material liability or obligation, whether absolute,
accrued, contingent or otherwise, including any potential future liability
arising out of acts or omissions which have already occurred, which is not fully
and accurately reflected or reserved against in the Balance Sheets except for
liabilities or obligations that may have arisen in the ordinary course of
business of the Seller Parties, consistent with the past practice of the Seller
Parties, since the Balance Sheet Date (none of which results from, arises out
of, relates to, is in the nature of, or was caused by any breach of contract,
breach of warranty, tort, infringement or violation of law) and no Seller Party
has Knowledge of any fact, condition or circumstance which could form the basis
of any such liability or obligation.

SECTION 4.7. ACCOUNTS RECEIVABLE. The accounts receivable of Sherman Oaks
include only accounts receivable arising from bona fide transactions in the
conduct of the ordinary course of business of Sherman Oaks, are in all material
respects true and genuine, represent legal, valid and binding obligations of the
respective debtors enforceable in accordance with their terms. No material
payment of said receivables is contingent upon performance of any obligations or
contract, past or future, and, except as set forth on SCHEDULE 4.7, all such
receivables are free of all security interests and encumbrances created by
Sherman Oaks. Except as set forth on SCHEDULE 4.7, no defense, counterclaim,
offset or adjustment exists as to any such account receivable.

SECTION 4.8. ABSENCE OF CHANGES. Except as set forth on SCHEDULE 4.8, since the
Balance Sheet Date, Sherman Oaks has, as applicable:

(a) conducted its business only in the ordinary course of business and
consistently with its past practices;

(b) not suffered any change, event or circumstance which has had, or could have,
a Material Adverse Effect;


                                       13



(c) preserved its legal existence and retained its business organization intact;

(d) maintained its relationships with all suppliers, trade creditors and trade
debtors;

(e) paid or satisfied all of its debts, liabilities or obligations as the same
became due;

(f) paid all compensation and other obligations to its employees when the same
were due and payable;

(g) timely made all applicable filings with Governmental Entities;

(h) not mortgaged, pledged, subjected to Lien, charged, encumbered or granted a
security interest in or to any of the Assets;

(i) except as otherwise provided in this Agreement, not sold or transferred any
of its assets except for sales of inventory in the ordinary course of business
and consistently with its past practices;

(j) not suffered any damage, destruction or loss (whether or not covered by
insurance) affecting the Assets;

(k) not cancelled any debts owing to it or otherwise granted or waived any right
of substantial value;

(l) not terminated or materially modified any contract, lease, agreement or
arrangement with any payor, vendor or supplier or received notice of termination
or become aware of any threat of termination with respect to any such contract,
lease, agreement or arrangement;

(m) except for the Sherman Oaks Purchase Agreement, not made any capital
expenditure or commitment for the acquisition of assets in excess of Fifty
Thousand Dollars ($50,000);

(n) not made or suffered any change to its Governing Documents;

(o) not made or received any loans or advances to or from any Person, other than
renewals or extensions of existing indebtedness and uses of lines of credit;

(p) maintained its books and records in accordance with GAAP, consistent with
past practices;

(q) not incurred, assumed or guaranteed any Indebtedness;

(r) not experienced any defections in its medical staff; or

(s) not agreed or offered, whether in writing or otherwise, to take, and neither
any Seller Party nor its board of directors (or by any Person or group of
Persons possessing and/or exercising similar authority with respect to such
Seller Party) or Equity Constituents have authorized the taking of, any action
described in Sections 4.8(a) through 4.8(r) above.


                                       14



SECTION 4.9. LICENSES. Except as set forth on SCHEDULE 4.9, Sherman Oaks has,
and, upon the closing of the transaction under the Sherman Oaks Purchase
Agreement, Desert Valley Operator will have, all licenses, permits, certificates
of need and other authorizations of Government Entities (the "Permits") from all
applicable Governmental Entities necessary or proper in order to operate the
Hospital and to conduct the Business. Except as set forth on SCHEDULE 4.9,
Sherman Oaks has, and upon the closing of the transaction under the Sherman Oaks
Purchase Agreement, Desert Valley Operator will have, good, clear and
indefeasible title to and ownership of all the Permits, free and clear of all
Liens and may grant Acquisition Sub a first priority security interest in and to
the Permits. Each Permit issued to and held by Sherman Oaks is identified and
described on SCHEDULE 4.9, and true, correct and current copies of each such
Permit have previously been made available to the Purchaser Parties by the
Seller Parties. Except as set forth on SCHEDULE 4.9, Sherman Oaks previously has
complied and is currently complying with its obligations under each of the
Permits and all such Permits are in full force and effect. No written notice
from any authority in respect to the threatened, pending or possible revocation,
termination, suspension or limitation of any of the Permits has been issued or
given to Sherman Oaks or any Seller Party and neither Sherman Oaks, nor any
Seller Party, has any Knowledge of the proposed or threatened issuance of any
such notice or of any grounds or basis therefor. The Hospital is currently
licensed as a general acute-care hospital with __ general acute-care beds, and
will remain so licensed through the Closing Date in compliance with and subject
only to the usual and customary laws and government regulations pertaining to
the operation of an acute-care hospital in the State of California.

SECTION 4.10. ACCREDITATION; MEDICARE AND MEDICAID; THIRD PARTY PAYORS. Sherman
Oaks is currently accredited by the Joint Commission on Accreditation of
Healthcare Organizations ("JCAHO") and the Seller Parties have previously made
available to the Purchaser Parties true, correct and complete copies of the
following documents (i) the most recent JCAHO accreditation survey reports for
the Hospital and deficiency list and plan of correction, if any, and a list and
description of events in the past three (3) years at the Hospital that
constitute "Adverse Events" (as defined by JCAHO), if any, and any documentation
that was created prepared and/or produced by Sherman Oaks or any Seller Party to
satisfy JCAHO requirements relating to addressing such Adverse Events; (ii) any
state licensing survey reports with respect to the Hospital for the two (2) year
period prior to the date hereof, as well as any statements of deficiencies and
plans of correction in connection with such reports; (iii) the fire marshal's
surveys for the past two (2) years and list of deficiencies, if any, for the
Hospital; and (iv) the boiler inspection reports for the past two (2) years and
list of deficiencies, if any, for the Hospital. Sherman Oaks has taken all
reasonable steps to correct all such deficiencies and a description of any
uncorrected deficiency is set forth on SCHEDULE 4.10. Except as set forth on
SCHEDULE 4.10 attached hereto, Sherman Oaks and each Seller Party (other than
Prime Healthcare Services, Inc.) participates without restriction under Title
XVIII of the Social Security Act ("Medicare") and Title XIX of the Social
Security Act ("Medi-Cal"), the Medicare and the Medi-Cal programs of the State
of California and the TRICARE/CHAMPUS programs (collectively, the "Government
Programs"). Sherman Oaks has received Medicare or Medi-Cal reimbursement with
respect to the Hospital and is eligible to receive payment without restriction
under Medicare and Medi-Cal. Except as set forth on SCHEDULE 4.10, the Hospital
is in compliance with the conditions of participation for the Government
Programs, has received all approvals or qualifications necessary for capital
reimbursement and has been found by CMS to be in compliance with 42 C.F.R.
Sections 489.20 and 489.24 and its medicare provider agreement will


                                       15



not be terminated for failure to so comply. Except as set forth on SCHEDULE
4.10, there is no pending, nor, to the Seller Parties' Knowledge, threatened,
proceeding or investigation under the Government Programs involving the Hospital
or any of the Assets. The Seller Parties have previously made available to the
Purchaser Parties true, correct and complete copies of the most recent Medicare
and Medi-Cal certification survey reports for the Hospital including any
statements of deficiencies and plans of correction, and the corrective action
plans related thereto. Sherman Oaks has taken all reasonable steps to correct
all such deficiencies and a description of any uncorrected deficiency is set
forth on SCHEDULE 4.10. With respect to the operation of the Hospital, except as
set forth on SCHEDULE 4.10, neither Sherman Oaks nor any of its officers,
directors or any of the Business Employees (as hereinafter defined), nor any
Seller Party (or Equity Constituent thereof) or Service Provider (i) has been
excluded, suspended or debarred from, or otherwise adjudicated, deemed or
determined ineligible for, participation in any Government Program, including
Medicare or Medi-Cal, (ii) has been convicted of a criminal offense related to
conduct that would trigger an exclusion from any Government Program, (iii)
committed any act or omission which could result in, or form the basis of, any
of the actions described in clauses (i) or (ii) of this sentence; and (v) no
Medicare funds will be used to make any payment for any items or services
furnished by any excluded individual. Sherman Oaks has timely filed, caused to
be timely filed and, as to reports due after the Closing, Desert Valley Operator
shall timely file or cause to be filed, all cost reports required by third party
payors, including, but not limited to, Government Programs and other insurance
carriers, and, except as disclosed on SCHEDULE 4.10 all such reports are or will
be complete and accurate when filed. Except as disclosed on SCHEDULE 4.10,
Sherman Oaks is and has been in compliance with filing requirements with respect
to cost reports of the Hospital, including appropriate allocation of expenses
associated with any management or consulting services provided by any employees
of Sherman Oaks and such reports do not claim and the Hospital has not received,
payment or reimbursement in excess of the amount provided or allowed by
applicable law or any applicable agreement, except where excess reimbursement
was noted on the cost report. True and correct copies of the cost reports to
third parties for the Hospital for the three (3) most recent fiscal years with
respect to which Sherman Oaks received such cost reports have been made
available to the Purchaser Parties. Except as disclosed on SCHEDULE 4.10,
neither Sherman Oaks, nor any Seller Party, has received any written notice of
any dispute relating to the Hospital between Sherman Oaks and any Governmental
Entity, including any fiscal intermediary or carrier, federal, state or local
governmental body or entity, or the Administrator of the Center for Medicare and
Medi-Cal Services, with respect to any Government Program cost reports or claims
filed with respect to the Hospital, on or before the date of this Agreement.

SECTION 4.11. HIPAA COMPLIANCE. Sherman Oaks and each Seller Party are in full
compliance with the Standards for Privacy of Individually Identifiable Health
Information and the Transaction and Code Set Standards which were promulgated
pursuant to the Health Insurance Portability and Accountability Act of 1996
("HIPAA"). SCHEDULE 4.11 includes, but is not limited in any manner whatsoever
to, any privacy, security or transaction and code set standards compliance plan
of Sherman Oaks in place or in development, and any plans, analyses or budgets
relating to information systems, including but not limited to necessary
purchases, upgrades or modifications to effect HIPAA compliance.

SECTION 4.12. HEALTHCARE REGULATORY MATTERS.


                                       16



(a) No Seller Party, Sherman Oaks, or, to the Knowledge of any Seller Party, any
Physician, Service Provider or other Person rendering services (including
directly or indirectly referring patients) to or at, or in any way affiliated
with the Hospital (i) is a party to, or has received notice of, the commencement
of any investigation or debarment proceedings or any governmental investigation
or action (including any civil investigative demand or subpoena) under the False
Claims Act (31 U.S.C. Section 3729 et seq.), the Anti-Kickback Act of 1986 (41
U.S.C. Section 51 et seq.), the Federal Health Care Programs Anti-Kickback
statute (42 U.S.C. Section 1320a-7a(b)), the Ethics in Patient Referrals Act of
1989, as amended (Stark Law) (42 U.S.C. 1395nn), the Civil Money Penalties Law
(42 U.S.C. Section 1320a-7a), or the Truth in Negotiations (10 U.S.C. Section
2304 et seq.), Health Care Fraud (18 U.S.C. 1347), Wire Fraud (18 U.S.C. 1343),
Theft or Embezzlement (18 U.S.C. 669), False Statements (18 U.S.C. 1001), False
Statements (18 U.S.C. 1035), and Patient Inducement Statute and equivalent state
statutes or any rule or regulation promulgated by a Governmental Entity with
respect to any of the foregoing (collectively, the "Healthcare Fraud Laws")
affecting any Seller Party, Sherman Oaks, the Hospital or the Business (and no
grounds for any such proceeding, investigation or action exist); and (ii) is not
in full compliance with all applicable Healthcare Fraud Laws.

(b) Except as set forth on SCHEDULE 4.12, no Seller Party, Sherman Oaks, or, to
the Seller Parties' Knowledge, any Physician, Service Provider or other Person
rendering services (including directly or indirectly referring patients) to or
at, or in any way affiliated with, the Hospital, has ever been investigated,
charged or implicated in any violation of any state or federal statute or
regulation involving false, fraudulent or abusive practices relating to
participation in state or federally sponsored reimbursement programs, including,
but not limited to, false or fraudulent billing practices. No Seller Party,
Sherman Oaks or, to the Seller Parties' Knowledge, any Physician, Service
Provider or other Person rendering services (including directly or indirectly
referring patients) to or at, or in any way affiliated with, the Hospital, has
ever engaged in any of the following: (i) knowingly and willfully making or
causing to be made a false statement or representation of a material fact in any
applications for any benefit or payment under Medicare or Medi-Cal program; (ii)
knowingly and willfully making or causing to be made any false statement or
representation of a material fact for use in determining rights to any benefit
or payment under Medicare or Medi-Cal program; (iii) failing to disclose
knowledge of any event affecting the initial or continued right to any benefit
or payment under Medicare or Medi-Cal program on its own behalf or on behalf of
another, with intent to secure such payment or benefit fraudulently; (iv)
knowingly and willfully soliciting, paying, or receiving any remuneration
(including kickback, bribe or rebate), directly or indirectly, overtly or
covertly, in cash or in kind or offering to pay such remuneration (A) in return
for referring an individual to a Person for the furnishing or arranging for the
furnishing of any item or service for which payment may be made in whole or in
part by Medicare or Medi-Cal, or (B) in return for purchasing, leasing or
ordering or arranging for or recommending the purchasing, leasing or ordering of
any good, facility, service, or item for which payment may be made in whole or
in part by Medicare or Medi-Cal; (v) presenting or causing to be presented a
claim for reimbursement for services that is for an item or service that was
known or should have been known to be (A) not provided as claimed, or (B) false
or fraudulent; or (vi) knowingly and willfully making or causing to be made or
inducing or seeking to induce the making of any false statement or
representation (or omitting to state a fact required to be stated therein or
necessary to make the statements contained therein not misleading) of a material
fact with respect to (A) a


                                       17



facility in order that the facility may qualify for Governmental Entity
certification or (B) information to be provided under 42 USC Section 1320a-3.

SECTION 4.13. TAXES. Each Seller Party has filed or caused to be filed all Tax
Returns of such party which have become due (taking into account valid
extensions of time to file) prior to the date hereof. Such Tax Returns are
accurate and complete in all material respects, and each Seller Party has paid
or caused to be paid all Taxes for the periods covered thereby, whether or not
shown to be due on such Tax Returns. There are (i) no outstanding Liens for any
Taxes that have been filed by any Governmental Entity against the Assets, or any
other assets of Sherman Oaks or any Seller Party used in the Business (other
than for ad valorem taxes not yet due and payable), and (ii) no claims being
asserted with respect to any Taxes relating to any Seller Party, Sherman Oaks,
the Assets or the Business for which any Purchaser Party could be held liable,
and there is no basis for the assertion of any such claim. No Seller Party or
Sherman Oaks has made or agreed or offered to make, or revoked or agreed or
offered to revoke, a Tax election with respect to or affecting the Assets at any
time during the last two (2) years. Except as set forth on SCHEDULE 4.13, no
Seller Party or Sherman Oaks is a party to any tax abatement agreement relating
to the Assets. Except as disclosed with reasonable specificity on SCHEDULE 4.13,
there are no outstanding waivers or agreements extending the statute of
limitations for any period with respect to any Tax to which the Assets or any
Purchaser Party may be subject following the Closing.

SECTION 4.14. GOOD TITLE TO ASSETS. Except as set forth on SCHEDULE 4.14 and
upon the closing of the transaction under the Sherman Oaks Purchase Agreement,
Desert Valley Operator will have, good, absolute and marketable title to, and
unrestricted possession of, all of the Assets (other than the Real Property,
which is addressed in Section 4.15 below), free and clear of all Liens (other
than Permitted Exceptions) and any adverse Claims of third parties.

SECTION 4.15. TITLE AND CONDITION OF THE REAL PROPERTY.

(a) EXHIBIT C hereto sets forth a legal description of the Real Property. At
Closing, Desert Valley Operator and Prime A will have and convey to the
Acquisition Sub good and marketable title in their interests in the Real
Property, free and clear of any and all Liens, encumbrances, restrictions or
easements of any kind whatsoever (other than Permitted Encumbrances).

(b) The location, construction, occupancy, operation, use and sale of the Real
Property (including the Improvements) do not violate any applicable law,
statute, ordinance, rule, regulation, order or determination of any Governmental
Entity or any restrictive covenant or deed restriction (recorded or otherwise)
affecting the Real Property, including, without limitation, any applicable
zoning or subdivision ordinance or building code, flood disaster law or health
and environmental law or regulation.

(c) With regard to the Real Property, except as set forth on SCHEDULE 4.15(C) or
as otherwise disclosed on the Survey, to the Knowledge of the Seller Parties,
there are no (i) encroachments onto or from adjacent properties; (ii) violations
of set-back, building or side lines; (iii) encroachments onto any easements or
servitudes located on such Real Property; (iv) pending or threatened boundary
line disputes; (v) portions of such Real Property located in a flood plain or in
an area defined as a wetland under applicable state or federal law; (vi)
cemeteries or gravesites


                                       18



located on the Real Property; or (vii) mine shafts under the Real Property or
any other latent defects, such as sinkholes, regarding or affecting the Real
Property.

(d) The existing water, sewer, gas and electricity lines, storm sewer and other
utility systems are adequate to serve the utility needs of the Real Property.
All of said utilities are installed and operating, and all installation and
connection charges have been paid in full.

(e) Except as set forth on SCHEDULE 4.15(E), neither the whole nor any portion
of the Real Property has been condemned, requisitioned or otherwise taken by any
public authority (a "Public Taking"), and no notice of any Public Taking has
been received by any Seller Party with regard to any of the Real Property. No
Seller Party has any Knowledge of any Public Taking being threatened or
contemplated. No Seller Party has any Knowledge of any public improvements which
have been ordered to be made and/or which have not heretofore been assessed,
and, to the Knowledge of the Seller Parties, there are no special, general or
other assessments pending or threatened against or affecting any of the Real
Property (except those expressly identified in the Title Commitment).

(f) Except as set forth on SCHEDULE 4.15(F), there are no Claims, actions,
suits, proceedings or investigations pending or, to the Knowledge of any Seller
Party, threatened, against or affecting all or any portion of the Real Property.

(g) Permanent certificates of occupancy, all licenses, permits, certificates of
need (if applicable), authorizations and approvals required by all Governmental
Entities having jurisdiction, have been issued for the Improvements, and, as of
the Closing, all of the same will be in full force and effect. The Improvements,
as designed and constructed, comply with all statutes, restrictions, regulations
and ordinances applicable thereto, including but not limited to the Americans
with Disabilities Act and Section 504 of the Rehabilitation Act of 1973. No
Seller Party has in its possession or has Knowledge of any studies or reports
which specify or suggest the presence of any defects in the design or
construction of any of the Improvements.

(h) The Seller Parties have no Knowledge of any fact or condition which would
result in the termination of the current access from the Real Property to any
presently existing public highways and/or roads adjoining or situated on the
Real Property or to sewer or other utility services to serve the Real Property.

(i) SCHEDULE 4.15(I) attached hereto sets forth an accurate and complete list of
all leases, subleases, commitment letters, letters of intent and other rental
agreements, whether written or oral, now or hereafter in effect, if any, that
grant or will grant a possessory interest in and to any space in the Real
Property or that otherwise assign or convey rights with regard to the Real
Property or the Improvements (collectively referred to as the "Tenant Leases").
SCHEDULE 4.15(I) designates which of the Tenant Leases described therein are
with the referral sources (as determined by any of the Healthcare Fraud Laws) of
Sherman Oaks. SCHEDULE 4.15(I) specifies the rent and security deposit, if any,
for each Tenant Lease. The Seller Parties have made available to the Purchaser
Parties complete, correct and current copies of all Tenant Leases. The Seller
Parties shall provide to the Purchaser Parties prior to Closing Tenant Lease
estoppels in form satisfactory to the Purchaser Parties from all Tenants under
the applicable Tenant Leases. Except for the Tenant Leases and any other items
listed on SCHEDULE 4.15(I), there are no


                                       19



purchase contracts, leases of space, options, rights of first refusal or other
written or oral agreements of any kind whereby any person or entity will have
acquired or will have any basis to assert any right, title or interest in, or
right to the possession, use, enjoyment or proceeds of, any part or all of the
Real Property or the Improvements.

(j) Sherman Oaks has not accepted the payment of rent or other sums due under
any of the Tenant Leases for more than one (1) month in advance. As of the
Closing, none of the Tenant Leases and none of the rents or other charges
payable thereunder, if any, will have been assigned, pledged or encumbered.
Except as set forth on SCHEDULE 4.15(J), as of the Closing, no brokerage or
leasing commissions or other compensation will be due or payable to any Person
with respect to, or on account of, the Lease or any Tenant Lease or any
extensions or renewals thereof, if any, excepting those agreements entered into
or accepted in writing by the Purchaser Parties.

(k) All tenant improvements, repairs and other work and obligations, if any,
then required to be performed by the landlord under each of the Tenant Leases
will be fully performed and paid for in full on or prior to the Closing.

(l) Except as set forth on SCHEDULE 4.15(L): (i) the Tenant Leases are freely
assignable by Sherman Oaks to the Seller Parties, have not been modified,
amended or assigned, are legally valid, binding and enforceable against Sherman
Oaks and, following closing, the Seller Parties (and, to the best of the Seller
Parties' Knowledge, against the other parties to such Tenant Leases) in
accordance with their respective terms and are in full force and effect; (ii)
there are no monetary defaults and no material nonmonetary defaults by Sherman
Oaks or, to the best of the Seller Parties' Knowledge, any other party to the
Tenant Leases; (iii) Sherman Oaks has not received written notice of any
default, offset, counterclaim or defense under any of the Tenant Leases; (iv) no
condition or event has occurred which with the passage of time or the giving of
notice or both would constitute a default or breach by Sherman Oaks or any
Seller Party of the terms of any of the Tenant Leases; and (v) upon the closing
of the transaction under the Sherman Oaks Purchase Agreement, the Tenant Leases
will be freely assignable by the Seller Parties to the Acquisition Sub.

(m) The Real Property constitutes all the land and improvements used by Sherman
Oaks in connection with the operation of the Hospital, it being understood that
certain administrative activities relating to such operations are not conducted
at the Real Property.

SECTION 4.16. CONDITION OF PERSONAL PROPERTY. SCHEDULE 4.16 sets forth a list of
all equipment and other items of tangible personal property used by Sherman Oaks
in the operation of the Hospital and to be purchased by Desert Valley Operator
(the "Personal Property"). Except as set forth on SCHEDULE 4.16, upon the
closing of the transaction under the Sherman Oaks Purchase Agreement, Desert
Valley Operator may grant Acquisition Sub a first priority security interest in
and to the Personal Property. SCHEDULE 4.16 sets forth an accurate and complete
list of all leases of personal property used in the operation of the Hospital
(the "Personal Property Leases"). The Seller Parties have made available the
Purchaser Parties with complete, correct and current copies of all of the
Personal Property Leases. Except as set forth on SCHEDULE 4.16: (i) the Seller
Parties may, upon the closing of the transaction under the Sherman Oaks Purchase
Agreement, grant a first priority security interest in the Personal Property
Leases to the Acquisition Sub, (ii)


                                       20



the Personal Property Leases have not been modified, amended or assigned, are
legally valid, binding and enforceable in accordance with their respective terms
and are in full force and effect; (iii) there are no monetary defaults and no
material nonmonetary defaults by any party to the Personal Property Leases; and
(iv) to the Knowledge of Seller Parties, no condition or event has occurred
which with the passage of time or the giving of notice or both would constitute
a default or breach by any Party of the terms of any Personal Property Lease.
Except as set forth on SCHEDULE 4.16, all Personal Property is in good operating
condition and repair, ordinary wear and tear excepted, and is located on the
Real Property.

SECTION 4.17. COMPLIANCE WITH ENVIRONMENTAL LAWS. To the Knowledge of the Seller
Parties, except as set forth on SCHEDULE 4.17

(a) no Governmental Entity or any nongovernmental third party has notified any
Seller Party of any alleged violation or investigation of any suspected
violation under the Environmental Laws in connection with the ownership,
operation and/or leasing of the Real Property or the Hospital, including any
litigation or cause of action alleging personal injury or property damage caused
by exposure to, or the disposal, release or migration of, any Hazardous
Materials;

(b) with respect to the ownership, operation and/or leasing of the Real Property
and the Hospital, no Seller Party has stored, disposed of or arranged for the
disposal of Hazardous Materials, except in compliance with the Environmental
Laws;

(c) there have been no actions nor, any activities, circumstances, conditions,
events or incidents, including, without limitation, the generation,
transportation, treatment, storage, release, emission, discharge, presence or
disposal of any Hazardous Materials on or from any of the Real Property or the
Hospital that could form the basis of any claim under the Environmental Laws
against any Seller Party or any Purchaser Party;

(d) no Seller Party has, whether contractually or by operation of law (including
any Environmental Law), assumed or succeeded to any liability of any direct or
indirect predecessors or any other Person (including, without limitation,
Sherman Oaks) related or with respect to any Environmental Law applicable to the
Real Property or the Hospital;

(e) there are no underground storage tanks located at, on or under the Real
Property, and the Real Property does not contain any asbestos-containing
building material;

(f) there are no conditions presently existing on, at or emanating from the Real
Property or the operation of the Hospital, that may result in any liability,
investigation or clean-up cost under any Environmental Law; and

(g) neither Sherman Oaks, nor, to the Knowledge of the Seller Parties, any other
Person has installed, used, generated, manufactured, treated, handled, refined,
produced, processed, stored or disposed of, any Hazardous Materials in, on or
under the Real Property, except in compliance with the Environmental Laws. No
Seller Party has undertaken any activity, and the Seller Parties have no
Knowledge that any other Person has undertaken any activity, on the Real
Property which would cause (i) the Real Property to become a hazardous waste
treatment, storage or disposal facility within the meaning of, or otherwise
bring the Real Property within the ambit of, any Environmental Law, (ii) a
release or threatened release of Hazardous Material from the Real


                                       21



Property within the meaning of, or otherwise bring the Real Property within the
ambit of, any Environmental Law, or (iii) the discharge of Hazardous Material
into any watercourse, body of, surface or subsurface water or wetland, or the
discharge into the atmosphere of any Hazardous Material which would require a
permit under any Environmental Law. No activity has been undertaken by any
Seller Party with respect to the Real Property which would cause a violation or
support a claim under any Environmental Law. No investigation, administrative
order, litigation or settlement with respect to any Hazardous Material is in
existence, or, to the Seller Parties' Knowledge, threatened with respect to the
Real Property. No notice has been served on any Seller Party from any
Governmental Entity claiming any violation of any Environmental Law, or
requiring compliance with any Environmental Law, or demanding payment or
contribution for environmental damage or injury to natural resources. No Seller
Party has obtained or is required to obtain, and no Seller Party has any
Knowledge of any reason Acquisition Sub will be required to obtain, any permits,
licenses, or similar authorizations to occupy, operate or use the Improvements
or any part of the Real Property by reason of any Environmental Law.

SECTION 4.18. INSURANCE. SCHEDULE 4.18 sets forth a complete and accurate list
and brief description of all insurance policies currently held by Sherman Oaks
or any Seller Party with respect to the Real Property, the operation of the
Hospital and the professional liability, negligence and other acts of the
Physicians of the Hospitals and the Service Providers of the Hospital. All such
Insurance policies are in full force and effect, all premiums due thereon have
been paid in full and Sherman Oaks and the Seller Parties are in compliance with
the terms of such Insurance Policies.

SECTION 4.19. LITIGATION. Except as set forth on SCHEDULE 4.19, there is no
dispute, suit, action, proceeding, inquiry or investigation (a "Claim") against
or involving any of the Hospital or Sherman Oaks or any of their properties or
rights, pending or, to the Knowledge of the Seller Parties, threatened
(including, without limitation any suit, action, proceeding or investigation
pursuant to Title 11 of the Civil Rights Act of 1964, the Americans with
Disabilities Act, the Age Discrimination in Employment Act, the Family and
Medical Leave Act of 1993, or any other federal, state or local law regulating
employment) nor do the Seller Parties know of any facts which might result in
any such Claim. There is no Claim pending, or, to the Seller Parties' Knowledge,
threatened, against any Physician of the Hospital or Service Provider of the
Hospital which could, by operation of law, through contract or otherwise, result
in a Claim against Sherman Oaks, and no Seller Party has any Knowledge of any
facts which could result in such a Claim. Except as set forth on SCHEDULE 4.19,
there is no judgment, decree, injunction, rule or order of any Governmental
Entity or any other Person (including, without limitation, any arbitral
tribunal) outstanding against the Hospital or Sherman Oaks, to the extent that
such judgment, decree, injunction, rule or order relates to the transactions
contemplated by the Sherman Oaks Agreement or this Agreement, and no Seller
Party or Sherman Oaks, to the extent that any of the following relates to the
transactions contemplated by the Sherman Oaks Agreement or this Agreement, is in
violation of any term of any judgment, decree, injunction or order outstanding
against it. Furthermore, there is no Claim by or before any Governmental Entity
or other Person pending or, to the Knowledge of the Seller Parties, threatened,
which questions or challenges the validity of the Sherman Oaks Agreement or this
Agreement or any action taken or to be taken by any Person pursuant to the
Sherman Oaks Agreements or this


                                       22



Agreement or in connection with the transactions contemplated thereby or hereby,
nor is there any basis for any such Claim.

SECTION 4.20. CONTRACTS, OBLIGATIONS AND COMMITMENTS. SCHEDULE 4.20 sets forth a
list of all contractual agreements, whether written or oral, relating to or
affecting the Assets, the Hospital and/or the operation of the Business to which
Sherman Oaks is a party which may be assigned to and assumed by the Seller
Parties pursuant to the terms of the Sherman Oaks Purchase Agreement, including,
without limitation, the Landlord Leases (the "Contracts"). The Seller Parties
have made available to the Purchaser Parties complete and correct copies of all
of the Contracts. Except as set forth on SCHEDULE 4.20, (i) the Contracts are
legally valid, binding and enforceable against the parties in accordance with
their respective terms and are in full force and effect; (ii) there are no
defaults by any party to the Contracts; (iii) no party has not received notice
of any default, offset, counterclaim or defense under any Contract; and (iv) no
condition or event has occurred which with the passage of time or the giving of
notice or both would constitute a default or breach under the terms of any
Contract; and (v) the Contracts are freely assignable by Sherman Oaks to the
Seller Parties.

SECTION 4.21. EMPLOYEES AND EMPLOYEE RELATIONS.

(a) SCHEDULE 4.21(A) contains a current, correct and complete list of the names
and current hourly wage, monthly salary and other compensation of all employees
who are or who will provide services at the Hospital (collectively, the
"Business Employees"), together with a summary (containing estimates to the
extent necessary) of the individual's existing bonuses, additional compensation
and other benefits (whether current or deferred), if any, accrued, paid or
payable to each such individual for services rendered or to be rendered through
the fiscal period ending September 30, 2005. Except as set forth on SCHEDULE
4.21(A), all of the Hospital Employees are "at will" employees. Except as set
forth on SCHEDULE 4.21(A), Sherman Oaks is not a party to any oral (express or
implied) or written: (i) employment agreement, or (ii) agreement that contains
any severance or termination pay obligations, with any Business Employee. The
Seller Parties have made available true, correct and current copies (or, if not
written, accurate descriptions of the parties and terms) of such agreements to
the Purchaser Parties.

(b) Except as set forth on SCHEDULE 4.21(B), no Business Employee is represented
by any labor union, trade association or other employee organization, no demand
for recognition has been made by any labor union with respect to the Business
Employees, and there is not and has not been any labor union organizing activity
at the Hospital during the periods it has been operated by Sherman Oaks. Except
as set forth on SCHEDULE 4.22(B), Sherman Oaks is not a party to any collective
bargaining agreement or understanding with any labor union, trade association or
other employee organization with respect to any Business Employee and no such
agreements are currently being proposed and/or negotiated.

(c) Except as set forth on SCHEDULE 4.21(C), there is no labor dispute, work
stoppage, strike, slowdown, walkout, lockout, or any other interruption or
disruption of operations at the Hospital as a result of labor disputes or
disturbances with respect to the Business Employees and there is no
investigation, grievance, arbitration, complaint, claim or other dispute or
controversy (collectively, the "Labor Proceeding") pending or threatened,
between Sherman Oaks and any


                                       23



present or former Business Employee, nor have any discharges or terminations of
any former Business Employee occurred which would form the basis for any claim
of discrimination against any Seller Party. Except as set forth on SCHEDULE
4.21(C), no Seller Party has any Knowledge of any facts or past, current or
contemplated event that could form the basis for any such Labor Proceeding, nor
has there been any such Labor Proceeding within the past twelve (12) months.

(d) Except as set forth on SCHEDULE 4.21(D), neither Sherman Oaks, nor any
Seller Party has received notice that any vice president, director or
director-level employee, or higher, of Sherman Oaks or any group of Business
Employees, has any plans to terminate his or her employment or affiliation with
Sherman Oaks or any Seller Party.

(e) Sherman Oaks has complied with and is currently in compliance with, and
Sherman Oaks has not received any notice of noncompliance with, any and all
applicable laws relating to the employment of labor, including, without
limitation, any provisions relating to wages, hours, equal employment,
occupational safety and health, workers' compensation, unemployment insurance,
collective bargaining, immigration, affirmative action and the payment and
withholding of social security and other taxes. Sherman Oaks has withheld all
amounts required by law or agreement to be withheld from the wages or salaries
of the Business Employees, and Sherman Oaks is not liable for any arrears of any
tax or penalties for failure to comply with the foregoing.

(f) SCHEDULE 4.21(F) sets forth each Employee Pension Benefit Plan (as defined
in Section 3(2) of ERISA) maintained by Sherman Oaks (each a "Plan") and
applicable to the Business Employees. Sherman Oaks is in compliance in all
material respects with all applicable laws and regulations respecting such
Plans.

SECTION 4.22. INTANGIBLE PROPERTY. SCHEDULE 4.22 sets forth a list of all
trademarks, service marks, and other intangible assets of Sherman Oaks used in
the operation of the Business and the Hospital and to be purchased by Desert
Valley Operator pursuant to the term of the Sherman Oaks Purchase Agreement (the
"Intangible Property"). Sherman Oaks own, or possess adequate, enforceable
licenses or other rights to use, all of the Intangible Property, and no rights
thereto have been granted to others by Sherman Oaks (except under the Sherman
Oaks Purchase Agreement). Except as set forth on SCHEDULE 4.22, all of the
Intangible Property is owned or used by Sherman Oaks free and clear of all
assignments, licenses, restrictions, encumbrances, charges or claims for
infringement, and none is subject to any outstanding order, decree, judgment,
stipulation or charge. There is no unauthorized use, disclosure, infringement or
misappropriation of any of the Intangible Property by any third party. Sherman
Oaks use of the Intangible Property does not infringe upon or otherwise violate
the rights of others. No one has asserted to Sherman Oaks that the use of the
Intangible Property by Sherman Oaks or by any Seller Party infringes upon the
patents, trade secrets, trade names, trademarks, service marks, copyrights or
other intellectual property rights of any other Person and no Seller Party has
any Knowledge of any fact or circumstance which could provide the basis for any
such assertion.

SECTION 4.23. COMPLIANCE WITH LAW. Sherman Oaks (a) is in compliance in all
material respects with every applicable law, rule, regulation, ordinance,
license, permit and other governmental action and authority and every order,
writ, and decree of every Governmental Entity in connection with the ownership,
conduct, operation and maintenance of the Business


                                       24



and its ownership and use of its assets and no event has occurred or
circumstance exists which (with notice or lapse of time) would result in any
noncompliance with any such law, rule, regulation, ordinance, license permit,
order, writ or decree; and (b) have timely made or given all filings and notices
required to be made with the regulatory agencies of any Governmental Entity.

SECTION 4.24. HILL BURTON OBLIGATIONS.

(a) Except as set forth on SCHEDULE 4.24, neither Sherman Oaks, nor, to the
Knowledge of the Seller Parties, any predecessor in interest of Sherman Oaks,
has received any loans, grants or loan guarantees pursuant to the United States
Hill-Burton Act (42 U.S.C. 291a, et seq.) program, the Health Professions
Educational Assistance Act, the Nurse Training Act, the National Health Pharmacy
and Resources Development Act or the Community Mental Health Centers Act. All of
the obligations set forth on SCHEDULE 4.24 have been fully satisfied. The
transactions contemplated hereby will not result in any obligation of any
Purchaser Party to repay any such loan, grant or loan guarantee or to provide
uncompensated care in consideration thereof.

(b) None of the Assets are subject to any liability in respect of amounts
received by Sherman Oaks, any Seller Party, or any other Person for the purchase
or improvement of the Assets or any part thereof under restricted or conditioned
grants or donations, including monies received under the Public Health Service
Act, 42 U.S.C. Section 291, et seq.

SECTION 4.25. MEDICAL STAFF MATTERS. Except as set forth on SCHEDULE 4.25, there
are no pending or, to the Knowledge of the Seller Parties, threatened
investigations, appeals, challenges, disciplinary or corrective actions, or
disputes involving applicants to the medical staff of the Hospital, current
members of the medical staff of the Hospital or affiliated health professionals.
Since the Balance Sheet Date, no member of the medical staff of the Hospital has
resigned or been terminated therefrom and neither Sherman Oaks, nor any Seller
Party, has received notice that any Physician or medical staff member intends to
resign from its medical staff. True and correct copies of Medical Staff Bylaws
of the Hospital, the Hospital's Medical Staff Rules and Regulations, and the
Hospital's Medical Staff Hearing Procedures, all as presently in effect, have
been previously made available by the Seller Parties to the Purchaser Parties.

SECTION 4.26. BROKERS. Except as set forth on SCHEDULE 4.26 hereto, no Person is
or will be entitled to any brokerage, finder's or other fee, commission or
payment in connection with or as a result of the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Seller
Parties.

SECTION 4.27. RECORDS. True, complete and current copies of the Seller Parties'
Governing Documents have been delivered to the Purchaser Parties prior to the
execution and delivery of this Agreement. The books of account, minute books,
stock record books and other records of Seller Parties, all of which have been
made available to the Purchaser Parties, are complete and correct. The minute
books of Seller Parties contain records of all meetings and other limited
liability company actions of the manager and/or members of Seller Parties, and
have been delivered to the Purchaser Parties prior to the execution and delivery
of this Agreement.

SECTION 4.28. EXISTING LEASES. Desert Valley Parent and its Subsidiaries are in
compliance in all respects with the terms of the Existing Leases and no default
or breach (or event which with


                                       25



notice and/or passage of time would constitute such a default or breach) has
occurred by any party thereto. None of the Seller Parties nor any of their
respective facilities has suffered a Material Adverse Effect since December 31,
2004 and no event has occurred which would reasonably likely to result in such a
Material Adverse Effect.

SECTION 4.29. REPRESENTATIONS COMPLETE. The representations and warranties made
by the Seller Parties in this Agreement (and, to the Knowledge of Seller
Parties, by Sherman Oaks in the Sherman Oaks Purchase Agreement) and the
statements made in or information contained on any Schedules or certificates
furnished by the Seller Parties pursuant to this Agreement (and, to the
Knowledge of Seller Parties, by Sherman Oaks in the Sherman Oaks Purchase
Agreement) do not contain and will not contain, as of their respective dates and
as of the Closing Date, any untrue statement of a material fact, nor do they
omit or will they omit, as of their respective dates or as of the Closing Date,
to state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which they were made,
not misleading.

                                    ARTICLE V

             REPRESENTATIONS AND WARRANTIES BY THE PURCHASER PARTIES

The Purchaser Parties hereby jointly and severally represent and warrant to the
Seller Parties as of the date hereof, and as of the Closing Date as follows:

SECTION 5.1. ORGANIZATION. MPT is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Delaware. The
Acquisition Sub is a limited liability company duly formed, validly existing and
in good standing under the laws of the State of Delaware and qualified to do
business in the State of California.

SECTION 5.2. AUTHORIZATION; ENFORCEMENT, ABSENCE OF CONFLICTS. Each Purchaser
Party has the requisite power and authority to execute, deliver and carry out
the terms of this Agreement, to consummate the transactions contemplated hereby
and to conduct its businesses as now being conducted. All actions required to be
taken by each to authorize the execution, delivery and performance of this
Agreement, all documents executed by the Purchaser Parties which are necessary
to give effect to this Agreement and all transactions contemplated hereby and
thereby, have been duly and properly taken or obtained. No other action on the
part of either Purchaser Party is necessary to authorize the execution, delivery
and performance of this Agreement, all documents necessary to give effect to
this Agreement and all transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not, with or without the giving of notice
and/or the passage of time: (i) violate or conflict with any provision of the
Governing Documents of either Purchaser Party; (ii) violate any provision of
law, statute, rule or regulation to which either Purchaser Party is subject;
(iii) violate or conflict with any judgment, order, writ or decree of any court
applicable to either Purchaser Party; (iv) violate or conflict with any law or
regulation applicable to either Purchaser Party; or (v) result in the breach or
termination of any provision of, or create rights of acceleration or constitute
a default under, the terms of any debt or obligation to which either Purchaser
Party is a party or by which either Purchaser Party is bound.


                                       26



SECTION 5.3. BINDING AGREEMENT. This Agreement and all agreements to which any
Purchaser Party will become a party hereunder is and will constitute the valid
and legally binding obligations of such Purchaser Party, and are and will be
enforceable against such Purchaser Party in accordance with the respective terms
hereof or thereof, except as enforceability may be restricted, limited or
delayed by applicable bankruptcy, insolvency or other laws affecting creditors'
rights generally and except as enforceability may be subject to and limited by
general principles of equity.

SECTION 5.4. LITIGATION. There is no Claim pending or, to the Knowledge of the
Purchaser Parties, threatened against or affecting any Purchaser Party that has
or would reasonably be expected to have a material adverse effect on the ability
of the Purchaser Parties to perform their respective obligations under this
Agreement or any aspect of the transactions contemplated hereby.

SECTION 5.5. BROKERS. Except as set forth on SCHEDULE 5.5 hereto, no Person is
or will be entitled to any brokerage, finder's or other fee, commission or
payment in connection with or as a result of the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Purchaser
Parties.

SECTION 5.6. COMPLIANCE WITH LAW. The Purchaser Parties, where applicable (a)
are in compliance with every applicable law, rule, regulation, ordinance,
license, permit and other governmental action and authority and every order,
writ, and decree of every Governmental Entity in connection with the ownership,
conduct, operation and maintenance of their businesses, and their ownership and
use of their assets, except where non-compliance would not prevent or impede the
Purchaser Parties from consummating the transactions contemplated hereby or the
ability of the Purchaser Parties to perform their respective obligations under
this Agreement and, to the Knowledge of the Purchaser Parties, no event has
occurred or circumstance exists which (without notice or lapse of time) would
result in any noncompliance with any such law, rule, regulation, ordinance,
license permit, order, writ or decree which would prevent or impede the
Purchaser Parties from consummating the transactions contemplated hereby; and
(b) have timely made or given all filings and notices required to be made by the
Purchaser Parties with the regulatory agencies of any Governmental Entity,
except where such failure would not prevent or impede the Purchaser Parties from
consummating the transactions contemplated hereby.

                                   ARTICLE VI

                                TITLE AND SURVEY

SECTION 6.1. SURVEY. Purchaser Parties shall cause to be prepared, at the
expense of the Seller Parties, a current ALTA/ACSM Land Title Survey of the Real
Property, prepared by a duly licensed land surveyor. The survey shall be
currently dated, shall show the location on the Real Property of any
improvements, fences, evidence of abandoned fences, ponds, creeks, streams,
rivers, easements, roads, rights-of-way, means of ingress and egress, location
of all utilities serving the Real Property, and encroachments, and shall contain
a legal description of the boundaries of the Real Property by metes and bounds
and the appropriate flood zone designation and the total number of acres
constituting the Real Property. The surveyor shall certify to the Purchaser
Parties and to the Title Company that the survey is correct and that there are
no visible


                                       27



discrepancies, conflicts, encroachments, overlapping of improvements, fences,
evidence of abandoned fences, ponds, creeks, streams, rivers, easements, roads
or rights-of-way except as are shown on the survey plat. Any and all matters
shown on such survey shall be legibly identified by appropriate volume and page
recording references with dates of recording noted. If Purchaser Parties shall
disapprove such survey for any reason in Purchaser Parties' sole discretion,
Purchaser Parties may either (i) treat such objection as a title objection and
request that it be cured, or (ii) terminate this Agreement and the parties
hereto shall have no further liability or obligations hereunder, expect as
otherwise expressly set forth herein. If the Seller Parties are unable to cure
any objection to the survey within ten (10) days following delivery of notice to
the Seller Parties thereof, then Purchaser Parties may terminate this Agreement
upon written notice to the Seller Parties.

SECTION 6.2. TITLE INSURANCE. Purchaser Parties will cause to be prepared, at
the Seller Parties' expense, a title commitment for the issuance of an ALTA
Owner's Policy Form dated October 17, 1992, issued by a title insurance company
acceptable to MPT and qualified to insure titles in the State of California (the
"Title Company"), in the amount of the Purchase Price, covering title to the
Real Property at a date not earlier than the date hereof and showing good and
marketable title, subject only to the Permitted Exceptions. All of the standard
exceptions within the policy and the exceptions for mechanic's and materialmen's
liens and the survey exception shall be deleted. If Purchaser Parties shall
disapprove any items stated in the Title Commitment or the Exception Documents,
Purchaser Parties may either (i) treat such objection as a title objection and
request that it be cured, or (ii) terminate this Agreement and, upon such
termination, the parties hereto shall have no further liability or obligations
hereunder, except as otherwise expressly provided herein. If the Seller Parties
are unable to cure any exception or objection to title that is not a Permitted
Encumbrance within ten (10) days following delivery of notice to the Seller
Parties thereof, then Purchaser Parties may terminate this Agreement upon
written notice to the Seller Parties.

                                   ARTICLE VII

                              PRE-CLOSING COVENANTS

From and after the execution and delivery of this Agreement to and including the
Closing Date, the applicable party shall observe the following covenants:

SECTION 7.1. NO SHOP. Neither the Seller Parties, nor any investment banker,
attorney, accountant, representative or other Person retained by or on behalf of
the Seller Parties, shall directly or indirectly, initiate contact with, respond
to, solicit or encourage any inquiries, proposals or offers by, or participate
in any discussions or negotiations with, enter into any agreement with, disclose
any information concerning the Seller Parties or the Assets to, afford any
access to the properties, books or records of the Seller Parties to, or
otherwise assist, facilitate or encourage, any Person in connection with any
possible proposal regarding a sale, lease, transfer, disposition or other
transaction related to or affecting all or any portion of the Assets (including
all or any portion of the Real Property). The Seller Parties shall notify
Purchaser Parties immediately if any discussions or negotiations are sought to
be initiated, any inquiry or proposal is made, or any such information is
requested.


                                       28



SECTION 7.2. ACCESS; CONFIDENTIALITY.

(a) Between the date hereof and the Closing, the Seller Parties shall (i) afford
the Purchaser Parties and their authorized representatives full and complete
access to Seller Parties' employees, medical staff, and other agents and
representatives and during normal working hours to all books, records, offices
and other facilities of Seller Parties and shall use their best efforts to cause
Sherman Oaks to afford to Purchaser Parties similar access to its personnel and
records relating to the Assets and the Business, (ii) permit the Purchaser
Parties to make such inspections and to make copies of such books and records as
they may reasonably require and (iii) furnish the Purchaser Parties with such
financial and operating data and other information related to the Hospital, the
Business, the Seller Parties and their respective Subsidiaries as the Purchaser
Parties may from time to time reasonably request. The Purchaser Parties and
their authorized representatives shall conduct all such inspections under the
supervision of personnel of the Seller Parties in a manner that will minimize
disruptions to the business and operations of the Seller Parties and in a manner
as to maintain the confidentiality of this Agreement.

(b) The Purchaser Parties and their authorized representatives (including their
designated engineer, architects, surveyors and/or consultants) may, subject to
Sherman Oaks's approval, upon reasonable notice and at any time enter into and
upon all or any portion of the Real Property in order to investigate and assess,
as the Purchaser Parties deem necessary or appropriate in their sole and
absolute discretion, the condition (including the structural and environmental
condition) of the Assets. The Seller Parties shall cooperate with the Purchaser
Parties and their authorized representatives in conducting such investigation,
shall use their best efforts to cause Sherman Oaks to allow the Purchaser
Parties and their authorized representatives full access to the Assets and the
Business, together with full permission to conduct such investigation, and shall
provide to the Purchaser Parties and their authorized representatives all
information maintained by the Seller Parties and related to the condition of the
Assets and the Business, including the Real Property, and all plans, soil or
surface or ground water tests or reports, any environmental investigation
results, reports or assessments previously or contemporaneously conducted or
prepared by or on behalf of, or in the possession of or reasonably available to
the Seller Parties or any of their engineers, consultants or agents and all
other information relating to environmental matters in respect of their
properties and businesses.

(c) The provisions of Confidentiality Agreement, dated May 5, 2005, (which
Seller Parties agree to be bound by as if they were original signatories
thereto) (the "Confidentiality Agreement") shall remain binding and in full
force and effect until the Closing. Notwithstanding anything to the contrary
contained herein or in the Confidentiality Agreement, the confidentiality
obligations as they relate to the transactions contemplated by this Agreement
shall not apply to the purported or claimed Federal income tax treatment of the
transactions (the "Tax Treatment") or to any fact that may be relevant to
understanding the purported or claimed Federal income tax treatment of the
transactions (the "Tax Structure"), and each party hereto (and any employee,
representative, or agent of any party hereto) may disclose to any and all
persons, without limitation of any kind, the Tax Treatment and Tax Structure of
the transactions contemplated by this Agreement and any materials of any kind
(including any tax opinions or other tax analyses) that relate to the Tax
Treatment or Tax Structure. In addition, each party hereto acknowledges that it
has no proprietary or exclusive rights to any tax matter or tax idea related to
the transactions contemplated by this Agreement. The preceding sentence is
intended to ensure that


                                       29



the transactions contemplated by this Agreement shall not be treated as having
been offered under conditions of confidentiality for purposes of the
Confidentiality Regulations and shall be construed in a manner consistent with
such purpose. The information contained herein, in the Schedules hereto or
delivered to the Purchaser Parties or its authorized representatives pursuant
hereto shall be subject to the Confidentiality Agreement as Information (as
defined and subject to the exceptions contained therein) until the Closing and,
for that purpose and to that extent, the terms of the Confidentiality Agreement
are incorporated herein by reference.

SECTION 7.3. SCHEDULE UPDATES. From the date hereof until the Closing Date, the
Purchaser Parties, on the one hand, and the Seller Parties on the other hand,
shall immediately advise the other in writing of any additions or changes to any
Schedule to reflect any deficiencies or inaccuracies in such Schedule or to
reflect circumstances or matters which occur after the date of this Agreement
which, if existing prior to such date, would have been required to be described
on such Schedule; provided, however, that no additions or changes made to any
Schedule by any party to correct deficiencies or inaccuracies on such Schedule
shall be deemed to cure any breach or inaccuracy of a representation or
warranty, covenant or agreement or to satisfy any condition unless otherwise
agreed to in writing by the other party, but provided further, however, that an
addition or change made to any Schedule by any party to reflect circumstances or
matters which occur after the date of this Agreement shall be deemed to cure a
breach or inaccuracy of a representation or warranty, covenant or agreement, but
shall not be deemed to satisfy any condition unless agreed to in writing by the
other party.

SECTION 7.4. CONDUCT OF BUSINESS BY THE SELLER PARTIES PENDING THE CLOSING. The
Seller Parties covenant and agree that, during the period from the date hereof
and continuing until the earlier of the termination of this Agreement or the
Closing Date, unless the Purchaser Parties shall otherwise agree in writing, the
Seller Parties shall conduct their respective businesses only in, and the Seller
Parties shall not take any action except in, the ordinary course of business and
in a manner consistent with past practice and in compliance in all material
respects with all applicable laws and regulations, and that the Seller Parties
shall use reasonable best efforts to preserve substantially intact their
respective business organizations, to keep available the services of their
current officers, employees and consultants and to preserve their present
relationships with patients, suppliers and other persons with which they have
significant business relations. By way of amplification and not limitation,
except as contemplated by this Agreement or set forth on SCHEDULE 7.4, no Seller
Party shall, during the period from the date hereof and continuing until the
earlier of the termination of this Agreement or the Closing Date, directly or
indirectly do, or propose to do, any of the following without the prior written
consent of Purchaser Parties:

(a) amend, repeal or otherwise change in any way its Governing Documents;

(b) make or revoke any Tax election related to or affecting the Assets;

(c) fail to perform its obligations in all respects under agreements relating to
or respecting its assets, properties and rights;

(d) reduce the coverage of, fail to timely renew or pay the premiums on or
cancel any insurance policy;


                                       30



(e) cause to lapse or fail to renew any license and certification necessary to
conduct its business;

(f) fail to timely make all applicable filings with Governmental Entities;

(g) create, assume or, other than those presently in existence, permit to exist
any Lien upon any of the Assets;

(h) modify or amend Sherman Oaks Purchase Agreement;

(i) purchase, sell, assign, lease or otherwise acquire, transfer or dispose of
any material assets, except in the ordinary course of business and consistent
with its past practice;

(j) enter into or agree to enter into any agreement or arrangements granting any
rights to purchase any of its assets, properties or rights, except for purchases
of inventory in the ordinary course of business and consistent with its past
practice;

(k) engage in any business other than the business currently conducted by such
Seller Party;

(l) terminate or modify any contract, lease or other agreement to which it is a
party (excluding expiration or satisfaction in accordance with the terms of such
contract or agreement); or

(m) take, agree or offer, in writing or otherwise, to take, any of the actions
described in Sections 7.4 (a) through (l) above, or any action which would make
any of the representations or warranties of such Seller Party contained in this
Agreement untrue, incorrect or incomplete or prevent such Seller Party from
performing or cause such Seller Party not to perform its covenants hereunder, in
each case, such that the conditions set forth in Sections 8.2(a) or 8.2(b), as
the case may be, would not be satisfied.

SECTION 7.5. COOPERATION. Subject to compliance with applicable law, from the
date hereof until the Closing Date, (a) the Seller Parties shall confer on a
regular and frequent basis with one or more representatives of the Purchaser
Parties to report operational matters that are material and the general status
of ongoing operations and (b) each of the Purchaser Parties and the Seller
Parties shall promptly provide the other or their counsel with copies of all
filings made by such party with any Governmental Entity in connection with this
Agreement and the transactions contemplated hereby.

SECTION 7.6. REGULATORY AND OTHER AUTHORIZATIONS, NOTICES AND CONSENTS.

(a) Each party hereto shall use all commercially reasonable efforts to obtain
all authorizations, consents, orders and approvals of all Governmental Entities
and officials that may be or become necessary for its execution and delivery of,
and the performance of its obligations pursuant to, this Agreement and each such
party will cooperate fully with the other parties hereto in promptly seeking to
obtain all such authorizations, consents, orders and approvals.

(b) The Seller Parties shall promptly give such notices to third parties and use
its commercially reasonable efforts to obtain such third party consents and
estoppel certificates as


                                       31



Purchaser Parties may in their sole and absolute discretion deem necessary or
desirable in connection with the transactions contemplated by this Agreement,
including, without limitation, all third party consents that are necessary or
desirable in connection with the transfer of the Assets.

(c) The Purchaser Parties shall cooperate and use commercially reasonable
efforts to assist the Seller Parties in giving such notices and obtaining such
consents and estoppel certificates; provided, however, that the Purchaser
Parties shall have no obligation to give any guarantee or other consideration of
any nature in connection with any such notice, consent or estoppel certificate
or to consent to any change in the terms of any Asset which Purchaser Parties in
their sole and absolute discretion may deem adverse to the interests of the
Purchaser Parties.

(d) Anything in this Agreement to the contrary notwithstanding, this Agreement
shall not constitute an agreement to assign any Asset if an attempted assignment
thereof, without the consent of the other party thereto, would constitute a
breach or other contravention thereof, noncompliance by the Seller Parties or
their Affiliates thereunder or in any way adversely affect the rights of any
Purchaser Party thereunder. The Seller Parties and the Purchaser Parties agree
that, in the event any consent, approval or authorization necessary or desirable
to preserve for the Purchaser Parties any right or benefit with respect to any
such Asset is not obtained prior to the Closing, the Seller Parties will,
subsequent to the Closing, cooperate with the Purchaser Parties in attempting to
obtain such consent, approval or authorization as promptly thereafter as
practicable. If such consent, approval or authorization cannot be obtained, the
Seller Parties will use commercially reasonable efforts to provide the Purchaser
Parties with the rights and benefits of such affected Asset, and, if the Seller
Parties provide such rights and benefits, the Purchaser Parties shall assume the
obligations and burdens thereunder in accordance with this Agreement, including,
subcontracting, sublicensing, or subleasing to the Purchaser Parties, or under
which the Seller would enforce for the benefit of the Purchaser Parties, with
the Purchaser Parties assuming the Seller Parties' obligations, any and all
rights of the Seller Parties against a third party thereto.

SECTION 7.7. MUTUAL COVENANTS. The parties shall use their good faith reasonable
efforts to satisfy the conditions to the closing of the transactions
contemplated hereby. Without limiting the generality of the foregoing, the
respective parties shall execute and/or deliver, or use their respective good
faith reasonable efforts to cause to be executed and/or delivered, the documents
contemplated to be executed and/or delivered by them at Closing.

SECTION 7.8. PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, the parties agree
to consult with each other before any party hereto or any of their respective
affiliates issues any press release or makes any public statement with respect
to this Agreement or the transactions contemplated hereby and, except as may be
required by applicable law or any listing agreement with any national securities
exchange, will not issue, or permit to be issued, any such press release or
make, or permit to be made, any such public statement prior to such
consultation.


                                       32



                                  ARTICLE VIII

                               CLOSING CONDITIONS

SECTION 8.1. CONDITIONS TO THE OBLIGATIONS OF THE SELLER PARTIES. The
obligations of the Seller Parties to effect the transactions contemplated hereby
shall be further subject to the fulfillment of the following conditions, any one
or more of which may be waived by the Seller Parties:

(a) All of the representations and warranties of Purchaser Parties set forth in
this Agreement shall be true and correct when made and as of the Closing Date as
if made on the Closing Date.

(b) The Purchaser Parties shall have delivered, performed, observed and complied
in all material respects with all of the items, instruments, documents,
covenants, agreements and conditions required by this Agreement to be delivered,
performed, observed and complied with by them prior to, or as of, the Closing.

(c) The Purchaser Parties shall have executed, where applicable, and delivered
to the Seller Parties the documents referenced in Section 9.3 hereof.

(d) The closing of the transactions contemplated by the Sherman Oaks Purchase
Agreement shall have occurred; including, but not limited to, the approval of
the California Attorney General of the transactions contemplated thereby.

(e) Sherman Oaks has entered into the lease back of the Hospital and the Interim
Management Agreement.

SECTION 8.2. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER PARTIES. The
obligations of the Purchaser Parties to effect the transactions contemplated
hereby shall be further subject to the fulfillment of the following conditions,
any one or more of which may be waived by the Purchaser Parties:

(a) All of the representations and warranties of the Seller Parties set forth in
this Agreement shall be true and correct when made and as of the Closing Date as
if made on the Closing Date.

(b) The Seller Parties shall have delivered, performed, observed and complied
with all of the items, instruments, documents, covenants, agreements and
conditions required by this Agreement to be delivered, performed, observed and
complied with by them prior to, or as of, the Closing.

(c) The Seller Parties shall not have suffered any change, event or circumstance
which has had, or could have, a Material Adverse Effect.

(d) The closing of the transactions contemplated by the Sherman Oaks Purchase
Agreement shall have occurred, including, but not limited to, the approval of
the California Attorney General of such transactions.


                                       33



(e) All necessary approvals, consents, estoppel certificates and the like of
third parties to the validity and effectiveness of the transactions contemplated
hereby have been obtained.

(f) No portion of the Assets shall have been damaged or destroyed by fire or
casualty.

(g) No condemnation, eminent domain or similar proceedings shall have been
commenced or threatened with respect to any portion of the Assets.

(h) The Purchaser Parties shall have received copies of all permits, licenses
and other approvals of governmental authorities required for the operation of
the Assets for their intended uses and written evidence satisfactory to the
Purchaser Parties that the operation and use of the Hospital are in accordance
with all applicable governmental requirements.

(i) The Purchaser Parties shall have received evidence that the Seller Parties
are maintaining insurance on the Assets and that the Purchaser Parties are named
as additional insureds and, where applicable, loss payees.

(j) The Seller Parties shall have executed where applicable, and delivered to
Purchaser Parties, the documents referenced in Section 9.2 hereof.

(k) There shall not have been instituted by any creditor of the Seller Parties,
any Governmental Entity or any other third party, any suit, action or proceeding
which would affect the Assets or seek to restrain, enjoin or invalidate the
transactions contemplated by the Sherman Oaks Purchase Agreement or this
Agreement.

(l) The Appraisal shall have been delivered and shall reflect an Appraised Value
that equals or exceeds the Purchase Price.

(m) The closing of the transactions contemplated by the Sherman Oaks Purchase
Agreement shall have occurred; including, but not limited to, the approval of
the California Attorney General of the transactions contemplated thereby.

(n) Sherman Oaks has entered into the lease back of the Hospital and the Interim
Management Agreement.

                                   ARTICLE IX

                                     CLOSING

SECTION 9.1. CLOSING DATE. The closing of the purchase and sale of the Assets
pursuant hereto (the "Closing") shall be handled through deliveries by mail into
escrow on December 31, 2005 (the actual date of closing being herein referred to
as the "Closing Date"), or on such other date (the "Closing Date") and such
other place as the parties hereto shall mutually agree.

SECTION 9.2. THE SELLER PARTIES' CLOSING DATE DELIVERABLES. On the Closing Date,
the Seller Parties shall deliver to the Purchaser Parties the documents listed
below.


                                       34



(a) Duly executed bills of sale and assignments transferring all Assets
(including all of the Seller Parties' rights under and with respect to the Air
Space Agreement) other than the Real Property in form and substance satisfactory
to MPT;

(b) A duly executed general warranty deed in substantially the form as EXHIBIT
9.2(B) (the "Deeds") conveying the Real Property to the Acquisition Sub;

(c) A certified copy of the resolutions of the governing body of the Seller
Parties dated as of the date hereof and authorizing the Seller Parties'
execution, delivery and performance of this Agreement and all other documents to
be executed in connection herewith;

(d) Certificates of existence and good standing of each Seller Party from the
secretary of state of such Seller Party's state of incorporation or
organization, dated the most recent practical date prior to the Closing Date;

(e) Certificates of good standing and foreign qualification of each Seller Party
from the secretary of state of the State of California or Delaware dated the
most recent practical date prior to the Closing Date;

(f) The Title Commitment and Title Policy in form and substance satisfactory to
MPT;

(g) A Survey dated the most recent practical date prior to the Closing Date in
form and substance satisfactory to MPT;

(h) A Phase I Environmental Site Assessment Report dated the most recent
practical date prior to the Closing Date in form and substance satisfactory to
MPT (and a Phase II if recommended by the Phase I Report);

(i) Property condition and seismic reports for the Real Property, dated the most
recent practical date prior to the Closing Date and in form and substance
satisfactory to MPT;

(j) A Zoning Compliance Letter/Certificate dated the most recent practical date
prior to the Closing Date in form and substance satisfactory to MPT;

(k) Tenant Estoppel Certificates, if any, in form and substance satisfactory to
MPT;

(l) A Landlord Collateral Assignment and Consent, in form and substance
satisfactory to MPT, for each Landlord Lease;

(m) Owner's Affidavits in form and substance satisfactory to MPT;

(n) The Search Reports dated the most recent practical date prior to the Closing
Date in form and substance satisfactory to MPT;

(o) A Non-Foreign Affidavit in form and substance satisfactory to MPT;

(p) The Lease, together with a Memorandum of Lease Agreement, in form and
substance satisfactory to MPT;


                                       35



(q) A Lease Guaranty Agreement substantially in the form of EXHIBIT 9.2(P);

(r) The Assignment of Rents and Leases in substantially the form attached hereto
as EXHIBIT 9.2(Q);

(s) The Security Agreement in substantially the form attached hereto as EXHIBIT
9.2(R);

(t) The Subordination of Management Agreement in form and substance satisfactory
to MPT;

(u) The opinion of Shulman, Hodges & Bastian LLP as counsel for the Seller
Parties, substantially in the form attached hereto as Exhibit 9.2(t);

(v) At the Closing, the Seller Parties shall have furnished to the Purchaser
Parties a certificate dated the Closing Date signed by the Seller Parties to the
effect that all of the representations and warranties of the Seller Parties
contained in this Agreement (considered collectively) and each of these
representations and warranties (considered individually) remain in all respects
true and correct as of the Closing Date as if made on such date and that the
Seller Parties have performed and satisfied all covenants and conditions
required by this Agreement to be performed or satisfied by the Seller Parties on
or prior to Closing;

(w) All necessary approvals, consents, estoppel certificates and the like of
third parties or Governmental Entities to the validity and effectiveness of the
transactions contemplated hereby;

(x) The Noncompete Agreements substantially in the form attached as EXHIBIT
9.2(W);

(y) The Expansion Commitment Letter in the form attached hereto as EXHIBIT
9.2(X) (the "Expansion Commitment Letter"); and

(z) Such other instruments and documents as the Purchaser Parties reasonably
deem necessary to effect the transactions contemplated hereby.

SECTION 9.3. PURCHASER PARTIES' CLOSING DATE DELIVERABLES. On the Closing Date,
the Purchaser Parties shall deliver to the Seller Parties the documents listed
below.

(a) A certified copy of the resolutions of the governing body of each Purchaser
Party dated as of the date hereof authorizing the execution, delivery and
performance of this Agreement and all other documents to be executed in
connection herewith;

(b) Certificates of existence and good standing of each Purchaser Party from the
Secretary of State of the State of Delaware, dated the most recent practical
date prior to the Closing Date;

(c) Certificates of good standing and foreign qualification of the Acquisition
Sub from the Secretary of State of the State of California, dated the most
recent practical date prior to the Closing Date;

(d) The Lease, together with a Memorandum of Lease, in form and substance
satisfactory to MPT;


                                       36



(e) The Assignment of Rents and Leases in substantially the form attached hereto
as EXHIBIT 9.2(Q);

(f) An Opinion of Baker Donelson, Bearman, Caldwell & Berkowitz, P.C., as
counsel for the Purchaser Parties substantially in the form attached as EXHIBIT
9.3(F);

(g) At the Closing, each Purchaser Party shall have furnished to the Seller
Parties a certificate dated the Closing Date signed by such Purchaser Party to
the effect that all of the representations and warranties of such Purchaser
Party contained in this Agreement (considered collectively) and each of these
representations and warranties (considered individually) remain in all respects
true and correct as of the Closing Date as if made on such date and that such
Purchaser Party has performed and satisfied in all material respects all
covenants and conditions required by this Agreement to be performed or satisfied
by such Purchaser on or prior to Closing;

(h) Any bills of sale and assignments requiring the signature of any Purchaser
Party;

(i) The Security Agreement in substantially the form attached hereto as EXHIBIT
9.2(R);

(j) The Noncompete Agreements substantially in the form attached as EXHIBIT
9.2(W); and

(k) The Expansion Commitment Letter in the form attached hereto as EXHIBIT
9.2(X).

                                    ARTICLE X

                                   TERMINATION

SECTION 10.1. TERMINATION. Notwithstanding anything to the contrary in this
Agreement, the remaining obligations of the parties hereunder may be terminated
and the transactions contemplated hereby abandoned at any time prior to Closing:
(i) by mutual written consent of the parties; (ii) by the Seller Parties if the
conditions set forth in Section 8.1 shall not have been satisfied on or before
December 31. 2005; or (iii) by the Purchaser Parties if the conditions set forth
in Section 8.2 shall not have been satisfied on or before December 31, 2005.

SECTION 10.2. NOTICE AND EFFECT. In the event of the termination of this
Agreement pursuant to this Article X, the party terminating this Agreement shall
give prompt written notice thereof to the parties, and the transactions
contemplated hereby shall be abandoned, without further action by any party.
Each filing, application and other submission relating to the transactions
contemplated hereby shall, to the extent practicable, be withdrawn from the
person to which it was made. The confidentiality provisions set forth in Article
VII of this Agreement shall survive any termination of this Agreement.
Notwithstanding any statement contained in this Agreement to the contrary,
termination of this Agreement shall not relieve any party from liability for any
breach or violation of this Agreement that arose prior to such termination.


                                       37



                                   ARTICLE XI

                         CERTAIN POST-CLOSING COVENANTS

SECTION 11.1. POST-CLOSING ACCESS TO INFORMATION. The Parties acknowledge that,
subsequent to Closing, each may need access to the Assets and to information,
documents or computer data in the control or possession of the other for
purposes of concluding the transactions contemplated herein and for audits,
investigations, compliance with governmental requirements, regulations and
requests, the prosecution or defense of third party claims. Accordingly, the
Parties agree that they will make available to the other and their agents,
independent auditors and/or governmental entities such documents and information
as may be available relating to the Assets and the Hospital and will permit the
other to make copies of such documents and information at the requesting party's
expense.

SECTION 11.2. LICENSURE. To the extent not obtained as of Closing, the Seller
Parties shall use their best efforts, including the scheduling of all applicable
surveys of state or federal governmental agencies, to obtain, as soon as
possible following the Closing, all provider numbers permitting Desert Valley
Operator to participate in the Government Programs and all other licenses and
permits from Governmental Entities necessary to conduct the Business. The Seller
Parties shall immediately notify the Purchaser Parties in the event of any
controversy relating to such efforts, including any deficiencies identified by
applicable governmental agencies with respect to the aforementioned surveys, and
shall use its best efforts to remedy any such deficiencies immediately.

SECTION 11.3. SHERMAN OAKS PURCHASE AGREEMENT INDEMNIFICATION. The parties
acknowledge that certain of the Seller Parties now have or may hereafter have
certain indemnification rights and claims against Sherman Oaks pursuant to the
terms of Sherman Oaks Purchase Agreement. In the event that any such
indemnification right or claim under the Sherman Oaks Purchase Agreement shall
arise or accrue after the Closing with respect to or affecting any of the Assets
which are delivered and conveyed as of such Closing (a "Sherman Oaks Claim"),
the Seller Parties shall, after notification to Purchaser Parties (i)
immediately notify Sherman Oaks of the Sherman Oaks Claim (including all
material facts related thereto) and make a claim for indemnity against Sherman
Oaks with respect thereto pursuant to the terms of the Sherman Oaks Purchase
Agreement; (ii) immediately notify the Purchaser Parties of any and all
communications, notices or other information, whether written or oral, it
receives with respect to the Sherman Oaks Claim; (iii) coordinate with Purchaser
Parties in the exercise all of the Seller Parties' rights with respect to the
Sherman Oaks Claim (including, without limitation, the selection, engagement
and/or approval of counsel) it being understood that no Seller Party shall take
any action with respect to any Sherman Oaks Claim (except for those actions set
forth in (i) and (ii) above) without the Purchaser Party's prior written
consent; (iv) hold in trust for the benefit of the Purchaser Parties and account
for any amounts received by any Seller Party in respect of any Sherman Oaks
Claim until the final resolution of any of the Purchaser Parties' indemnity
claims against the Seller Parties hereunder which may be based on, or arise as a
consequence of, the facts and circumstances giving rise to the Sherman Oaks
Claim; and (v) not take or agree to take any action which would conflict with
its obligations to Purchaser Parties with respect to such Sherman Oaks Claim
pursuant to this Section 11.3 or which would


                                       38



otherwise adversely affect any rights of the Seller Parties with respect to such
Sherman Oaks Claim.

                                   ARTICLE XII

                                 INDEMNIFICATION

SECTION 12.1. The Seller Parties' Agreement to Indemnify.

(a) Subject to the limitations set forth in this Article, the Seller Parties
agree to jointly and severally indemnify, defend and hold harmless the Purchaser
Parties, their affiliates and their respective officers, directors, members,
(general and limited) partners, shareholders, employees, agents and
representatives (collectively, the "Purchaser Indemnified Parties") from and
against all demands, claims, actions, losses, damages, liabilities, penalties,
Taxes, costs and expenses (including, without limitation, attorneys' and
accountants' fees, settlement costs, arbitration costs and any reasonable other
expenses for investigating or defending any action or threatened action)
asserted against or incurred by the Purchaser Indemnified Parties or any of them
arising out of or in connection with or resulting from (i) any breach of,
misrepresentation associated with or failure to perform under any covenant,
representation, warranty or agreement under this Agreement or the other
agreements contemplated hereby on the part of the Seller Parties; (ii) any
Excluded Liabilities (including Taxes arising prior to Closing and any liability
arising out of the ownership and operation of the Assets prior to Closing) or
(iii) any liability arising out of or relating to a breach or default by Sherman
Oaks under the Sherman Oaks Purchase Agreement or any liability or obligation
with respect to which Sherman Oaks is required to indemnify Seller Parties under
the Sherman Oaks Purchase Agreement (collectively, "Purchaser Damages").

(b) The indemnification of the Purchaser Indemnified Parties by the Seller
Parties provided for under this Article XII shall be limited in certain respects
as follows: (i) the right of the Purchaser Indemnified Parties to seek
indemnification under this Section 12.1 shall terminate on the third anniversary
of Closing (the "Purchaser's Indemnity Periods"), except that the Purchaser'
Indemnity Period shall terminate on the fifth anniversary of the Closing Date
for claims under Sections 4.15 and 4.17 and (ii) the Seller shall not be
required to indemnify the Purchaser Indemnified Parties for indemnification
claims under this Section 12.1 unless and until the aggregate amount of all
losses resulting in Purchaser' Damages exceeds One Hundred Thousand and No/100
Dollars ($100,000.00) (the "Minimum Aggregate Liability Amount") in which event
the foregoing indemnification obligation shall apply to the aggregate amount of
Purchaser Damages that exceeds One Hundred Thousand and No/100 Dollars
($100,000.00); provided, however, that the maximum liability of the Seller
Parties under this Agreement shall be an amount equal to the Purchase Price. The
foregoing limitations on time and amount shall not apply to any Purchaser
Damages arising or resulting from (i) any act or omission of any Seller Party
which constitutes fraud, (ii) any breach by any Seller Party of its post-closing
covenants; (iii) any Encroachment Issue; or (iv) the Excluded Liabilities.

SECTION 12.2. THE PURCHASER PARTIES' AGREEMENT TO INDEMNIFY.

(a) Subject to the limitations set forth in this Article, the Purchaser Parties
jointly and severally agree to indemnify, defend and hold harmless the Seller
Parties, their Affiliates and


                                       39



their respective officers, directors, members, purchasers, shareholders,
employees and representatives (collectively, the "Seller Indemnified Parties")
from and against all demands, claims, actions, losses, damages, liabilities,
penalties, Taxes, costs and expenses (including, without limitation, reasonable
attorneys' fees, settlement costs, arbitration costs and any reasonable other
expenses for investigating or defending any action or threatened action)
asserted against or incurred by any of the Seller Indemnified Parties or any of
them arising out of or in connection with or resulting from (i) any breach of,
misrepresentation associated with or failure to perform under any covenant,
representation, warranty or agreement under this Agreement or the other
agreements contemplated hereby on the part of any Purchaser Party; or (ii) the
use, ownership or operation of any of the Assets after Closing (collectively,
"Seller Damages").

(b) The indemnification of the Seller Indemnified Parties by the Purchaser
Parties provided for under this Article XII shall be limited in certain respects
as follows: (i) the right of the Seller Indemnified Parties to seek
indemnification under this Section 12.2 shall terminate on the first anniversary
of Closing (the "Seller Indemnity Period"), and (ii) the Purchaser Parties shall
not be required to indemnify the Seller Indemnified Parties for indemnification
claims under this Section 12.2 unless and until the amount of all losses
resulting in Seller Damages exceeds One Hundred Thousand and No/100 Dollars
($100,000.00) in which event the foregoing indemnification obligation shall
apply to the aggregate amount of Seller Damages that exceeds One Hundred
Thousand and No/100 Dollars ($100,000.00); provided, however, that the maximum
liability of the Purchaser Parties under this Agreement shall be an amount equal
to the Purchase Price. The foregoing limitation on time and amount shall not
apply to any Seller Damages arising or resulting from any act or omission of any
Purchaser Party which constitutes fraud, any breach by any Purchaser Party of
its post-closing covenants.

SECTION 12.3. NOTIFICATION AND DEFENSE OF CLAIMS.

(a) A party entitled to be indemnified pursuant to Section 12.1 or Section 12.2
(the "Indemnified Party") shall notify the party liable for such indemnification
(the "Indemnifying Party") in writing of any claim or demand which the
Indemnified Party has determined has given or could give rise to a right of
indemnification under this Agreement, as soon as possible after the Indemnified
Party becomes aware of such claim or demand; provided, that the Indemnified
Party's failure to give such notice to the Indemnifying Party in a timely
fashion shall not result in the loss of the Indemnified Party's rights with
respect thereto except to the extent the Indemnified Party is materially
prejudiced by the delay.

If the Indemnified Party shall notify the Indemnifying Party of any claim or
demand pursuant to the provisions hereof, and if such claim or demand relates to
a claim or demand asserted by a third party against the Indemnified Party (a
"Third Party Claim"), the Indemnifying Party shall have the obligation either
(i) to pay such claim or demand, or (ii) defend any such Third Party Claim with
counsel reasonably satisfactory to the Indemnified Party. After the Indemnifying
Party has assumed the defense of such Third Party Claim, the Indemnifying Party
shall not be liable to the Indemnified Party under this Section 12 for any legal
or other expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof other than reasonable costs of investigation, provided
that the Indemnified Party shall have the right to employ counsel, at the
Indemnifying Party's expense, to represent it if (A) in the Indemnified Party's
reasonable opinion the Indemnifying Party is not diligently prosecuting the
defense of such Third Party


                                       40



Claim, (B) such Third Party Claim involves remedies other than monetary damages
and such remedies, in the Indemnified Party's reasonable judgment, could have a
material adverse effect on such Indemnified Party, (C) the Indemnified Party may
have available to it one or more defenses or counterclaims that are inconsistent
with one or more defenses or counterclaims that may be alleged by the
Indemnifying Party, or (D) the Indemnified Party believes in its reasonable
discretion that a conflict of interest exists between the Indemnifying Party and
the Indemnified Party with respect to such Third-Party Claim or action, and in
any such event the reasonable fees and expenses of such separate counsel for the
Indemnified Party shall be paid by the Indemnifying Party. The Indemnified Party
shall make available to the Indemnifying Party or its agents all records and
other materials in the Indemnified Party's possession reasonably required by it
for its use in contesting any Third-Party Claim or demand.

(b) No Indemnified Party may settle or compromise any claim or consent to the
entry of any judgment with respect to which indemnification is being sought
hereunder without the prior written consent of the Indemnifying Party, unless
(i) the Indemnifying Party fails to assume and diligently prosecuting the
defense of such claim or (ii) such settlement, compromise or consent includes an
unconditional release of the Indemnifying Party from all liability arising out
of such claim and does not contain any equitable order, judgment or term which
includes any admission of wrongdoing or could result in any liability (including
regulatory liability) of the Indemnifying Party or which would otherwise in any
manner affect, restrain or interfere with the business of the Indemnifying Party
or any Affiliate of the Indemnifying Party. An Indemnifying Party may not,
without the prior written consent of the Indemnified Party, settle or compromise
any claim or consent to the entry of any judgment with respect to which
indemnification is being sought hereunder unless such settlement, compromise or
consent includes an unconditional release of the Indemnified Party from all
liability arising out of such claim and does not contain any equitable order,
judgment or term which includes any admission of wrongdoing or could result in
any liability (including regulatory liability) of the Indemnified Party or which
would otherwise in any manner affect, restrain or interfere with the business of
the Indemnified Party or any of the Indemnified Party's Affiliates.

SECTION 12.4. INVESTIGATIONS. The right to indemnification based upon breaches
or inaccuracies of representations, warranties and covenants will not be
affected by any investigation conducted with respect to, or knowledge acquired
(or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, whether as a
result of disclosure by a party pursuant to this Agreement or otherwise, with
respect to the accuracy or inaccuracy of or compliance with any such
representation, warranty or covenant. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant, will not affect a party's right to
indemnification, payment of damages or other remedies based on such
representations, warranties and covenants.

SECTION 12.5. TREATMENT OF INDEMNIFICATION PAYMENTS. All indemnification
payments made pursuant to this Article XII shall be treated by the parties for
income Tax purposes as adjustments to the Purchase Price, unless otherwise
required by applicable Law.


                                       41



SECTION 12.6. EXCLUSIVE REMEDY. FROM AND AFTER THE APPLICABLE CLOSING, THE
PARTIES AGREE AND ACKNOWLEDGE THAT THE INDEMNIFICATION RIGHTS PROVIDED IN THIS
ARTICLE XII SHALL BE THE SOLE AND EXCLUSIVE REMEDY OF THE PARTIES TO THIS
AGREEMENT FOR BREACHES OF THIS AGREEMENT AND FOR ALL DISPUTES ARISING UNDER OR
RELATING TO THIS AGREEMENT AND ANY ADDITIONAL AGREEMENTS OR DOCUMENTS EXECUTED
OR DELIVERED IN OR ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY, EXCEPT
FOR POST-CLOSING COVENANTS, CASES WHERE SPECIFIC PERFORMANCE IS AVAILABLE AS A
REMEDY AND EXCEPT IN CASES OF FRAUD.

SECTION 12.7. LIMITATION OF LIABILITY OF SELLER PARTIES. Notwithstanding any
other provision of this Agreement, the liability of all of the Seller Parties,
other than Desert Valley Operator (the "Guarantors") under this Agreement for
any reason shall continue in full force and effect until the second (2nd)
anniversary of the date hereof, whereupon the liability of the Guarantors under
this Agreement, the Lease, and any other commitments, guarantees, obligations or
liabilities of the Guarantors under the transactions pertaining thereto, shall
be collectively limited to a maximum of Five Million Dollars ($5,000,000.00) in
the aggregate. Thereafter, when Lessee satisfies the covenants set forth in
Section 16.2 of the Lease, tested by reference to Lessee only for a period of
two (2) consecutive fiscal years, all the obligations of the Guarantors under
this Agreement, the Lease and all other agreements entered into pursuant to the
terms of this Agreement shall terminate.

                                  ARTICLE XIII

                               DISPUTE RESOLUTION

SECTION 13.1. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS
PRINCIPLES.

SECTION 13.2. JURISDICTION AND VENUE. THE PARTIES CONSENT TO PERSONAL
JURISDICTION IN DELAWARE. THE PARTIES AGREE THAT ANY ACTION OR PROCEEDING
ARISING FROM OR RELATED TO THIS AGREEMENT SHALL BE BROUGHT AND TRIED EXCLUSIVELY
IN THE STATE OR FEDERAL COURTS OF DELAWARE. EACH OF THE PARTIES IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT. THE SELLER PARTIES EXPRESSLY
ACKNOWLEDGE THAT DELAWARE IS A FAIR, JUST AND REASONABLE FORUM AND AGREE NOT TO
SEEK REMOVAL OR TRANSFER OF ANY ACTION FILED BY THE MPT PARTIES IN SAID COURTS.
FURTHER, THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY CLAIM THAT SUCH
SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. SERVICE OF
ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY REGISTERED MAIL ADDRESSED TO A PARTY
AT THE ADDRESS DESIGNATED PURSUANT TO THIS SECTION 13.2 SHALL BE EFFECTIVE
SERVICE OF PROCESS AGAINST SUCH PARTY FOR ANY ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT. A FINAL


                                       42



JUDGMENT IN ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT MAY BE
ENFORCED IN ANY OTHER COURT TO WHOSE JURISDICTION ANY OF THE PARTIES IS OR MAY
BE SUBJECT.

                                   ARTICLE XIV

                                  MISCELLANEOUS

SECTION 14.1. ASSIGNMENT. This Agreement is not assignable by any party without
the prior written consent of the other party hereto. Notwithstanding the
foregoing, the Purchaser Parties may at any time and without the consent of the
Seller Parties assign all of their respective rights and obligations hereunder
to one or more of its Affiliates; provided, however, that no such assignment
shall relieve or release such Purchaser Parties from their obligations
hereunder.

SECTION 14.2. NOTICE. All notices, demands, requests and other communications or
documents required or permitted to be provided under this Agreement shall duly
be in writing and shall be given to the applicable party at its address or
facsimile number set forth below or such other address or facsimile number as
the party may later specify for that purpose by notice to the other party:

     If to any Seller Party:     Prime Healthcare Services, Inc.
                                 16850 Bear Valley Road
                                 Victorville, California 92392
                                 Attention: Lex Reddy

     With a copy to:             Prime Healthcare Services, Inc.
                                 16850 Bear Valley Road
                                 Victorville, California 92392
                                 Attention: Richard Hayes, Esq.

     If to any Purchaser Party   c/o Medical Properties Trust, Inc.
                                 1000 Urban Center Drive, Suite 501
                                 Birmingham, AL 35242
                                 Attention: Edward K. Aldag, Jr.

     With a copy to:             Baker, Donelson, Bearman, Caldwell &
                                 Berkowitz, PC
                                 420 20th Street North, Suite 1600
                                 Birmingham, Alabama 35203
                                 Attention: Thomas O. Kolb, Esq.

Each notice shall, for all purposes, be deemed given and received:

     (i) if by hand, when delivered;

     (ii) if given by nationally recognized and reputable overnight delivery
     service, the Business Day on which the notice is actually received by the
     party; or


                                       43



     (iii) if given by certified mail, return receipt requested, postage
     prepaid, the date shown on the return receipt.

SECTION 14.3. CALCULATION OF TIME PERIOD. When calculating the period of time
before which, within which or following which any act is to be done or step
taken, the date that is the reference date in calculating such period shall be
excluded. If the last day of such period is a non-Business Day, the period in
question shall end as of the next succeeding Business Day.

SECTION 14.4. CAPTIONS. The section and paragraph headings or captions appearing
in this Agreement are for convenience only, are not a part of this Agreement,
and are not to be considered in interpreting this Agreement.

SECTION 14.5. ENTIRE AGREEMENT; MODIFICATION. This Agreement, including the
Exhibits and Schedules attached hereto, and other written agreements executed
and delivered at Closing by the parties hereto, constitute the entire agreement
and understanding of the parties with respect to the subject matter of this
Agreement. This Agreement supersedes any prior oral or written agreements
between the parties with respect to the subject matter of this Agreement. It is
expressly agreed that there are no verbal understandings or agreements which in
any way change the terms, covenants, and conditions set forth in this Agreement,
and that no modification of this Agreement and no waiver of any of its terms and
conditions shall be effective unless it is made in writing and duly executed by
the parties hereto.

SECTION 14.6. SCHEDULES AND EXHIBITS. All Schedules and Exhibits referred to in
this Agreement and attached hereto shall be deemed a part of this Agreement and
are hereby incorporated herein by reference.

SECTION 14.7. FURTHER ASSURANCES. From time to time after the Closing and
without further consideration, the Seller Parties shall execute and deliver to
the Purchaser Parties such instruments of sale, transfer, conveyance,
assignment, consent or other instruments as may be reasonably requested by the
Purchaser Parties in order to vest all right, title and interest of the
applicable Seller Parties in and to the Assets conveyed and delivered at the
Closing or as otherwise required to carry out the purpose and intent of this
Agreement.

SECTION 14.8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Executed signature pages
to this Agreement may be delivered by facsimile transmission and any such
signature page shall be deemed an original.

SECTION 14.9. EXPENSES. The Seller Parties shall pay all costs and expenses
incurred by the Seller Parties and Purchaser Parties in connection with the
transactions contemplated hereby, including, without limitation, all document
stamps, transfer, excise, recording, gains, sales, bulk sales, use and similar
conveyance Taxes and fees imposed by reason of and associated with the
transactions contemplated hereby and by deficiency, interest or penalty asserted
with respect thereto, as well as the cost of the survey, the title insurance and
all title endorsements required by the Purchaser Parties and its lenders, and
all attorneys' fees and expenses. Notwithstanding the foregoing, the obligation
of Seller Parties to pay legal expenses of Purchaser Parties, shall not exceed
the sum of Seventy Five Thousand Dollars ($75,000.00).


                                       44



SECTION 14.10. SYNDICATION. Subject to applicable healthcare regulatory
requirements, MPT will offer up to twenty percent (20%) of the equity interests
in Acquisition Sub to local or area physicians at such time following closing as
determined by MPT. MPT and the Seller Parties will work together to decide which
physicians receive an opportunity to invest in the Acquisition Sub.

SECTION 14.11. SECURITIES OFFERING AND FILINGS. Notwithstanding anything
contained herein to the contrary, the Seller Parties agree to cooperate with MPT
in connection with any securities offerings and filings, or MPT's efforts to
procure or maintain financing for or related to the Real Property and
Improvements, and in connection therewith, the Seller Parties shall furnish MPT
with such financial and other information as MPT shall request. MPT may disclose
that it has entered into this Agreement with the Seller Parties and may provide
and disclose information regarding this Agreement, the Seller Parties, the Real
Property and Improvements, and such additional information which MPT may
reasonably deem necessary, to its proposed investors in such public offering or
private offering of securities, or any current or prospective lenders with
respect to such financing. Upon reasonable advance notice, MPT and any lender
providing financing for the Real Property shall have the right to access,
examine and copy all agreements, records, documentation and information relating
to the Seller Parties, the Real Estate and Improvements, and to discuss such
affairs and information with the officers, employees and independent public
accountants of the Seller Parties as often as may reasonably be desired, but
subject to the terms of a confidentiality agreement, as reasonably approved by
the parties.

SECTION 14.12. BINDING EFFECT. This Agreement shall bind and inure to the
benefit of the parties hereto and their successors and assigns; provided,
however, that this Agreement shall not inure to the benefit of any assignee
pursuant to an assignment which violates the terms of this Agreement.

                   [Signatures appear on the following page.]


                                       45



IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers on the date first written above.

                                        PURCHASER PARTIES:

                                        MPT OPERATING PARTNERSHIP, L.P.


                                        By: /s/ Edward K. Aldag, Jr.
                                            ------------------------------------
                                        Name: Edward K. Aldag, Jr.
                                        Title: President and Chief
                                               Executive Officer


                                        MPT OF SHERMAN OAKS, LLC
                                        BY: MPT OPERATING PARTNERSHIP, L.P.
                                        ITS: SOLE MEMBER


                                        By: /s/ Edward K. Aldag, Jr.
                                            ------------------------------------
                                        Name: Edward K. Aldag, Jr.
                                        Title: President and Chief
                                               Executive Officer



                                        SELLER PARTIES:

                                        PRIME HEALTHCARE SERVICES II, LLC


                                        By: /s/ Lex Reddy
                                            ------------------------------------
                                        Name: Lex Reddy
                                              ----------------------------------
                                        Title: President/CEO
                                               ---------------------------------


                                        PRIME HEALTHCARE SERVICES, INC.


                                        By: /s/ Lex Reddy
                                            ------------------------------------
                                        Name: Lex Reddy
                                              ----------------------------------
                                        Title: President/CEO
                                               ---------------------------------


                                        DESERT VALLEY HOSPITAL, INC.


                                        By: /s/ Lex Reddy
                                            ------------------------------------
                                        Name: Lex Reddy
                                              ----------------------------------
                                        Title: President/CEO
                                               ---------------------------------


                                        DESERT VALLEY MEDICAL GROUP, INC.


                                        By: /s/ Lex Reddy
                                            ------------------------------------
                                        Name: Lex Reddy
                                              ----------------------------------
                                        Title: Secretary
                                               ---------------------------------



                                        PRIME A INVESTMENTS, L.L.C.


                                        By: /s/ Prem Reddy
                                            ------------------------------------
                                        Name: Prem Reddy, M.D.
                                              ----------------------------------
                                        Title: Manager - Real Estate
                                               ---------------------------------



                                    EXHIBIT A

                                      LEASE

                                [See attachment.]



                                    EXHIBIT B

                                 LANDLORD LEASES



                                    EXHIBIT C

                     LEGAL DESCRIPTION OF THE REAL PROPERTY



                                 EXHIBIT 9.2(B)

                                      DEED

                                [See attachment.]



                                 EXHIBIT 9.2(P)

                            LEASE GUARANTY AGREEMENT

                                [See attachment.]



                                 EXHIBIT 9.2(Q)

                         ASSIGNMENT OF RENTS AND LEASES

                                [See attachment.]



                                 EXHIBIT 9.2(R)

                               SECURITY AGREEMENT

                                [See attachment.]



                                 EXHIBIT 9.2(T)

                 LEGAL OPINION OF SHULMAN, HODGES & BASTIAN LLP

                                [See attachment.]



                                 EXHIBIT 9.2(W)

                              NONCOMPETE AGREEMENTS

                                [See attachment.]



                                 EXHIBIT 9.2(X)

                           EXPANSION COMMITMENT LETTER

                                [See attachment.]



                                 EXHIBIT 9.3(F)

      LEGAL OPINION OF BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, P.C.

                                [See attachment.]

                                                                   Exhibit 10.70

                                                                SHERMAN OAKS, CA

                                 LEASE AGREEMENT

                            MPT OF SHERMAN OAKS, LLC,
                      a Delaware limited liability company

                                     Lessor

                                       AND

                        PRIME HEALTHCARE SERVICES II, LLC
                      a Delaware limited liability company

                                     Lessee

                                    Property:

         One Hundred Fifty-Three (153)-Bed Acute Care Hospital Facility
                    and incorporated Medical Office Building
               (Commonly referred to as the Sherman Oaks Hospital)
                             4929 Van Nuys Boulevard
               Sherman Oaks, Los Angeles County, California 91403

                               December 30, 2005
                               -----------------


                                Table of Contents



                                                                            Page
                                                                            ----
                                                                         
ARTICLE I LEASED PROPERTY; TERM..........................................     1

ARTICLE II DEFINITIONS...................................................     2

ARTICLE III RENT.........................................................    11
   3.1         Base Rent.................................................    11
   3.2         Additional Charges........................................    11
   3.3         Absolute Net Lease........................................    12
   3.4         Lease Deposit.............................................    12
   3.5         Adjustments...............................................    12
   3.6         Rent and Payments under Air Space Agreement...............    12
   3.7         Rent and Payments under the Parking Space Lease...........    12

ARTICLE IV IMPOSITIONS...................................................    12
   4.1         Payment of Impositions....................................    12
   4.2         Adjustment of Impositions.................................    13
   4.3         Utility Charges...........................................    13
   4.4         Insurance Premiums........................................    13

ARTICLE V NO TERMINATION.................................................    14
   5.1         Acknowledgement...........................................    14

ARTICLE VI OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY............    14
   6.1         Ownership of the Leased Property..........................    14
   6.2         Lessee's Personal Property................................    14

ARTICLE VII CONDITION AND USE OF LEASED PROPERTY.........................    15
   7.1         Condition of the Leased Property..........................    15
   7.2         Use of the Leased Property................................    15
   7.3         Lessor to Grant Easements.................................    16

ARTICLE VIII LEGAL AND INSURANCE REQUIREMENTS............................    16
   8.1         Compliance with Legal and Insurance Requirements..........    16
   8.2         Legal Requirement Covenants...............................    17
   8.3         Hazardous Materials.......................................    17
   8.4         Healthcare Laws...........................................    17
   8.5         Representations and Warranties............................    18
   8.6         Single Purpose Entity.....................................    18
   8.7         Organizational Documents..................................    18

ARTICLE IX REPAIRS; RESERVE; RESTRICTIONS................................    18
   9.1         Maintenance and Repair....................................    18



                                        i



                                Table of Contents
                                   (continued)



                                                                            Page
                                                                            ----
                                                                         
   9.2         Reserves for Extraordinary Repairs........................    19
   9.3         Encroachments; Restrictions...............................    20

ARTICLE X CAPITAL ADDITIONS..............................................    21
   10.1        Construction of Capital Additions to the Leased
               Property..................................................    21
   10.2        Capital Additions Financed by Lessee......................    21
   10.3        Capital Additions Financed by Lessor......................    22
   10.4        Salvage...................................................    24

ARTICLE XI LIENS.........................................................    24

ARTICLE XII PERMITTED CONTESTS...........................................    25

ARTICLE XIII INSURANCE...................................................    25
   13.1        General Insurance Requirements............................    25
   13.2        Additional Insurance......................................    28
   13.3        Waiver of Subrogation.....................................    28
   13.4        Form of Insurance.........................................    28
   13.5        Increase in Limits........................................    28
   13.6        Blanket Policy............................................    29
   13.7        No Separate Insurance.....................................    29

ARTICLE XIV FIRE AND CASUALTY............................................    29
   14.1        Insurance Proceeds........................................    29
   14.2        Reconstruction in the Event of Damage or Destruction
               Covered by Insurance......................................    29
   14.3        Reconstruction in the Event of Damage or Destruction Not
               Covered by Insurance......................................    30
   14.4        Lessee's Personal Property................................    30
   14.5        Restoration of Lessee's Property..........................    31
   14.6        No Abatement of Rent......................................    31
   14.7        Damage Near End of Term...................................    31
   14.8        Termination of Right to Purchase..........................    31
   14.9        Waiver....................................................    31

ARTICLE XV CONDEMNATION..................................................    31
   15.1        Definitions...............................................    31
   15.2        Parties' Rights and Obligations...........................    31
   15.3        Total Taking..............................................    31
   15.4        Partial Taking............................................    32
   15.5        Restoration...............................................    32
   15.6        Award Distribution........................................    32



                                       ii



                                Table of Contents
                                   (continued)



                                                                            Page
                                                                            ----
                                                                         
   15.7        Temporary Taking..........................................    32

ARTICLE XVI DEFAULT......................................................    32
   16.1        Events of Default.........................................    32
   16.2        Events of Default in Financial Covenants..................    37
   16.3        Additional Expenses.......................................    38
   16.4        Intentionally Omitted.....................................    38
   16.5        Waiver....................................................    38
   16.6        Application of Funds......................................    38
   16.7        Notices by Lessor.........................................    38
   16.8        Lessor's Contractual Security Interest....................    38

ARTICLE XVII LESSOR'S RIGHT TO CURE......................................    40

ARTICLE XVIII PURCHASE OF THE LEASED PROPERTY............................    40

ARTICLE XIX HOLDING OVER.................................................    40

ARTICLE XX INTENTIONALLY OMITTED.........................................    41

ARTICLE XXI INTENTIONALLY OMITTED........................................    41

ARTICLE XXII RISK OF LOSS................................................    41

ARTICLE XXIII INDEMNIFICATION............................................    41

ARTICLE XXIV ASSIGNMENT, SUBLETTING AND SUBLEASE SUBORDINATION...........    42
   24.1        Assignment and Subletting.................................    42
   24.2        Sublease Limitations......................................    42
   24.3        Sublease Subordination and Non-Disturbance................    43

ARTICLE XXV OFFICER'S CERTIFICATES; FINANCIAL STATEMENTS; NOTICES AND
   OTHER CERTIFICATES....................................................    43

ARTICLE XXVI INSPECTION..................................................    44

ARTICLE XXVII NO WAIVER..................................................    45

ARTICLE XXVIII REMEDIES CUMULATIVE.......................................    45

ARTICLE XXIX SURRENDER...................................................    45



                                       iii



                                Table of Contents
                                   (continued)



                                                                            Page
                                                                            ----
                                                                         
ARTICLE XXX NO MERGER OF TITLE...........................................    45

ARTICLE XXXI TRANSFERS BY LESSOR.........................................    45

ARTICLE XXXII QUIET ENJOYMENT............................................    46

ARTICLE XXXIII NOTICES...................................................    46

ARTICLE XXXIV APPRAISAL..................................................    47

ARTICLE XXXV PURCHASE RIGHTS.............................................    48
   35.1        Lessee's Option to Purchase...............................    48
   35.2        Lessee's Option to Petition For Purchase..................    48
   35.3        Lessor's Option to Purchase Lessee's Personal Property....    48
   35.4        Lessee's Option to Purchase Upon Other Events.............    48

ARTICLE XXXVI INTENTIONALLY OMITTED......................................    49

ARTICLE XXXVII FINANCING OF THE LEASED PROPERTY..........................    49
   37.1        Financing by Lessor.......................................    49

ARTICLE XXXVIII SUBORDINATION AND NON-DISTURBANCE........................    49

ARTICLE XXXIX LICENSES...................................................    50

ARTICLE XL COMPLIANCE WITH HEALTHCARE LAWS...............................    51

ARTICLE XLI LESSOR'S RIGHT TO SELL.......................................    52

ARTICLE XLII MISCELLANEOUS...............................................    52
   42.1        General...................................................    52
   42.2        Lessor's Expenses.........................................    52
   42.3        Assets Purchased Pursuant to Purchase Options.............    52
   42.4        Entire Agreement; Modifications...........................    52
   42.5        Lease Guaranty............................................    53
   42.6        Future Financing..........................................    53
   42.7        Letter of Credit..........................................    53
   42.8        Change in Ownership/Control...............................    53
   42.9        Lessor Securities Offering and Filings....................    53
   42.10       Non-Recourse as to Lessor.................................    53
   42.11       Prime A Investments, L.L.C.'s Right to Exercise Purchase
               Options...................................................    54
   42.12       Management Agreements.....................................    54



                                       iv



                                Table of Contents
                                   (continued)



                                                                            Page
                                                                            ----
                                                                         
   42.13       Governing Law.............................................    54
   42.14       Jurisdiction and Venue....................................    54
   42.15       Counterparts..............................................    55

ARTICLE XLIII  MEMORANDUM OF LEASE.......................................    55



                                        v



                                 LEASE AGREEMENT

     This LEASE AGREEMENT (the "Lease") is dated as of the 30th day of
December, 2005, and is between MPT OF SHERMAN OAKS, LLC, a Delaware limited
liability company ("Lessor"), having its principal office at 1000 Urban Center
Drive, Suite 501, Birmingham, Alabama 35242, and PRIME HEALTHCARE SERVICES II,
LLC, a Delaware limited liability company ("Lessee"), having its principal
office at 16850 Bear Valley Road, Victorville, California 92392.

                                   WITNESSETH:

     WHEREAS, Lessor is the current owner of that certain real property located
in Sherman Oaks, Los Angeles County, California, which real property is more
particularly described on EXHIBIT A attached hereto and incorporated herein by
reference, and all improvements located thereon;

     WHEREAS, pursuant to that certain Assignment and Assumption of Amended and
Restated Air Space Agreement dated and delivered to Lessor as of the date
hereof, whereby Prime A Investments, L.L.C. assigned to Lessor, and Lessor
assumed from Prime, all of Prime's right, title and interest under that certain
Amended and Restated Air Space Agreement dated March 1, 1995 (the "Air Space
Agreement"), Lessor holds an interest in certain rights and has certain
obligations pursuant to the Air Space Agreement;

     WHEREAS, pursuant to that certain Assignment and Assumption of Parking
Space Lease Agreement dated and delivered to Lessor as of the date hereof,
whereby Prime assigned to Lessor, and Lessor assumed from Prime, all of Prime's
right, title and interest under that certain Parking Space Lease Agreement dated
January 1, 2002 (the "Parking Space Lease"), Lessor holds an interest in certain
rights and has certain obligations pursuant to the Parking Space Lease; and

     WHEREAS, Lessor and Lessee desire to enter into this Lease on the terms and
conditions hereinafter provided.

     NOW, THEREFORE, the parties hereto hereby agree as follows:

                                    ARTICLE I

                              LEASED PROPERTY; TERM

     Lessor and Lessee acknowledge and agree that this Lease is subject to
Lessor's continued leasehold interest and rights in the Air Space Agreement and
the Parking Space Lease and Lessee accepts, assumes and agrees to perform and
observe all of the terms, conditions, provisions, limitations and obligations
contained in the Air Space Agreement and the Parking Space Lease, except as
expressly modified and limited herein. Upon and subject to the foregoing and the
terms and conditions hereinafter set forth, and subject to the rights of any
tenants, subtenants, lessees or sublessees under any Existing Leases as
described in Section 24.1 below, Lessor leases to Lessee and Lessee rents from
Lessor all of Lessor's rights and interest in and to the following property
(collectively, the "Leased Property"):

          (a) the real property described on EXHIBIT A attached hereto (the
     "Land");

          (b) the Air Space Agreement and the Parking Space Lease;

          (c) the Facility and all buildings, structures, Fixtures (as
     hereinafter defined) and other improvements of every kind, alleyways and
     connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site
     and off-site), parking areas and roadways appurtenant to such buildings and
     structures presently or hereafter situated upon the Land, and Capital
     Additions (hereinafter defined) financed by Lessor (collectively, the
     "Leased Improvements");


                                        1



          (d) all easements, rights and appurtenances relating to the Land and
     the Leased Improvements;

          (e) all site plans, surveys, soil and substrata studies, architectural
     drawings, plans and specifications, inspection reports, engineering and
     environmental plans and studies, title reports, floor plans, landscape
     plans and other plans relating to the Land and Leased Improvements; and

          (f) all permanently affixed non-medical equipment, machinery,
     fixtures, and other items of real and/or personal property, including all
     components thereof, now and hereafter located in, on or used in connection
     with, and permanently affixed to or incorporated into the Leased
     Improvements, including, without limitation, all furnaces, boilers,
     heaters, electrical equipment, heating, plumbing, lighting, ventilating,
     refrigerating, incineration, air and water pollution control, waste
     disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
     systems and fire and theft protection equipment, and built-in oxygen and
     vacuum systems, all of which, to the greatest extent permitted by law, are
     hereby deemed by the parties hereto to constitute real estate, together
     with all replacements, modifications, alterations and additions thereto,
     but specifically excluding all items included within the category of
     Lessee's Personal Property as defined in Article II below (collectively the
     "Fixtures").

SUBJECT, HOWEVER, to the matters set forth on EXHIBIT B attached hereto (the
"Permitted Exceptions"); Lessee shall have and hold the Leased Property for a
fixed term (the "Fixed Term") commencing on the date hereof (the "Commencement
Date") and ending at midnight on the last day of the one hundred and eightieth
(180th) month period after the Commencement Date, unless sooner terminated as
herein provided.

     So long as Lessee is not in default, and no event has occurred which with
the giving of notice or the passage of time or both would constitute a default,
under any of the terms and conditions of this Lease, Lessee shall have the
option to extend the Fixed Term of this Lease on the same terms and conditions
set forth herein for three (3) additional periods of five (5) years each (each
an "Extension Term"). Lessee may exercise each such option by giving written
notice to the Lessor at least three hundred sixty five (365) days prior to the
expiration of the Fixed Term or Extension Term, as applicable (the "Extension
Notice"). If during the period following the delivery of the Extension Notice to
Lessor, a default or breach by Lessee shall occur under this Lease, and such
default or breach is not cured within the applicable time periods as provided
herein, Lessee shall be deemed to have forfeited all Extension Options. If
Lessee elects not to exercise its option to extend, all subsequent options to
extend shall be deemed to have lapsed.

                                   ARTICLE II

                                   DEFINITIONS

     For all purposes of this Lease, except as otherwise expressly provided or
unless the context otherwise requires, (a) the terms defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular, (b) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with GAAP as at the time applicable,
(c) all references in this Lease to designated "Articles", "Sections" and other
subdivisions are to the designated Articles, Sections and other subdivisions of
this Lease, and (d) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Lease as a whole and not to any particular
Article, Section or other subdivision:

     Added Value Additional: As defined in Section 10.2.

     Additional Charges: As defined in Section 3.2.

     Adjustment Date: January 1 of each year commencing on January 1, 2007.

     Affiliate: When used with respect to any corporation, limited liability
company, or partnership, the term "Affiliate" shall mean any person,
corporation, limited liability company, partnership or other legal entity,
which,


                                        2



directly or indirectly, controls or is controlled by or is under common control
with such corporation, limited liability company, or partnership. For the
purposes of this definition, "control" (including the correlative meanings of
the terms "controlled by" and "under common control with"), as used with respect
to any person, corporation, limited liability company, partnership or other
legal entity, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
corporation, limited liability company, partnership or other legal entity,
through the ownership of voting securities, partnership interests or other
equity interests.

     Air Space Agreement: As defined in the Preamble.

     Applicable Seismic Laws: As defined in Section 10.3(e).

     Award: As defined in Section 15.1.

     Base Rent: As defined in Section 3.1.

     Business: The operation of the Facility and the engagement in and pursuit
and conduct of any business venture or activity related thereto.

     Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which money centers in the City of New York, New York are
authorized, or obligated, by law or executive order, to close.

     Capital Additions: One or more new buildings or one or more additional
structures, annexed to any portion of any of the Leased Improvements, which are
constructed on any parcel or portion of the Land during the Term, including,
without limitation, the construction of a new wing or new story and any Seismic
Upgrades.

     Capital Addition Cost: The cost of any Capital Additions proposed to be
made by Lessee whether or not paid for by Lessee or Lessor. Such cost shall
include (a) the cost of construction of the Capital Additions, including site
preparation and improvement, materials, labor, supervision and certain related
design, engineering and architectural services, the cost of any fixtures, the
cost of construction financing and miscellaneous costs approved by Lessor, (b)
if agreed to by Lessor in writing in advance, the cost of any land contiguous to
the Leased Property purchased for the purpose of placing thereon the Capital
Additions or any portion thereof or for providing means of access thereto, or
parking facilities therefor, including the cost of surveying the same, (c) the
cost of insurance, real estate taxes, water and sewage charges and other
carrying charges for such Capital Additions during construction, (d) the cost of
title insurance, (e) reasonable fees and expenses of legal counsel, (f) filing,
registration and recording taxes and fees, (g) documentary stamp taxes, if any,
and (h) all reasonable costs and expenses of Lessor and any Lending Institution
which has committed to finance the Capital Additions, including, but not limited
to, (i) the reasonable fees and expenses of their respective legal counsel, (ii)
all printing expenses, (iii) the amount of any filing, registration and
recording taxes and fees, (iv) documentary stamp taxes, if any, (v) title
insurance charges, appraisal fees, if any, (vi) rating agency fees, if any, and
(vii) commitment fees, if any, charged by any Lending Institution advancing or
offering to advance any portion of the financing for such Capital Additions.

     Capital Improvement Reserve: As defined in Section 9.1(e).

     CERCLA: As defined in Article II.

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

     Collateral: As defined in Section 16.8.

     Commencement Date: The date hereof.

     Commitment Letter: The commitment letter between Lessor and Prime
Healthcare Services, Inc. (or their Affiliates) dated August 1, 2005, as
amended.


                                        3



     Condemnation, Condemnor: As defined in Section 15.1.

     Consolidated Net Worth: At any time, the sum of the following for
Guarantors or Lessee and their respective consolidated subsidiaries on a
consolidated basis determined in accordance with GAAP.

          (a) the amount of capital or stated capital (after deducting the cost
     of any treasury shares), plus

          (b) the amount of capital surplus and retained earnings (or, in the
     case of a capital surplus or retained earnings deficit, minus the amount of
     such deficit), minus

          (c) the sum of the following (without duplication of deductions in
     respect of items already deducted in arriving at surplus and retained
     earnings): (i) unamortized debt discount and expense and (ii) any write-up
     in book value of assets resulting from a revaluation thereof pursuant to
     generally accepted accounting principles subsequent to the most recent
     Statements of Cash Flow prior to the date thereof, except any net write-up
     in value of foreign currency in accordance with GAAP; any write-up
     resulting from reversal of a reserve for bad debts or depreciation; and any
     write-up resulting from a change in methods of accounting for inventory.

     Consumer Price Index: The Consumer Price Index, all urban consumers, all
items, U.S. City Average, published by the United States Department of Labor,
Bureau of Labor Statistics, in which 1982-1984 equals one hundred (100). If the
Consumer Price Index is discontinued or revised during the term of this Lease,
such other governmental index or computation with which it is replaced shall be
used in order to obtain substantially the same result as would be obtained if
the Index had not been discontinued or revised.

     Contracts: As defined in Article XXXII.

     Covenant Commencement Date: As defined in Section 16.2(a).

     CPI: The Consumer Price Index.

     Credit Enhancements: All security deposits, security interests, letters of
credit, pledges, guaranties, prepaid rent or other sums, deposits or interests
held by Lessee, if any, with respect to the Leased Property, the Tenant Leases
or the Tenants.

     DHS: As defined in Article XXXIX.

     Date of Taking: As defined in Section 15.1.

     EBITDAR: Earnings before the deduction of interest, taxes, depreciation,
amortization and rent, as determined in accordance with GAAP.

     Encumbrances: As defined in Article XXXVII.

     Equity Investment: The Purchase Price.

     Events of Default: As defined in Section 16.1 and Section 16.2.

     Existing Leases: As defined in Section 24.1.

     Expansion: As defined in Section 10.3(f).

     Expansion Amount: Such amount as may be disbursed from time to time to
Lessee, for use in financing certain improvements and expansions of the
Facility, said amount not to exceed Five Million Dollars ($5,000,000).


                                        4



     Extension Notice: As defined in Article I.

     Extension Term: As defined in Article I.

     Extraordinary Repairs: All repairs to the Facility of every kind and
nature, whether interior or exterior, structural or non-structural (including,
without limitation, all parking decks and parking lots) which are considered to
be extraordinary in nature (as opposed to being ordinary or normal in nature),
as Lessee and/or Lessor may determine to be necessary or appropriate from time
to time during the Term.

     Facility: The licensed one hundred fifty-three (153)-bed acute care
hospital facility and incorporated medical office building and all improvements
in connection therewith operated on the Land.

     Facility Instrument: A note (whether secured or unsecured), loan agreement,
credit agreement, guaranty, security agreement, mortgage, deed of trust or other
security agreement pursuant to which a Facility Lender has provided financing to
Lessor in connection with the Leased Property or any part thereof, or financing
provided to Lessee, if such financing is provided by Lessor or any Affiliate of
Lessor, to Lessee, and any and all renewals, replacements, modifications,
supplements, consolidations, spreaders and extensions thereof.

     Facility Lender: A holder (which may include any Affiliate of Lessor) of
any Facility Instrument.

     Fair Market Added Value: The Fair Market Value (as hereinafter defined) of
the Leased Property (including all Capital Additions) less the Fair Market Value
of the Leased Property determined as if no Capital Additions paid for by Lessee
had been constructed.

     Fair Market Value: The Fair Market Value of the Leased Property, including
all Capital Additions, (a) and shall be determined in accordance with the
appraisal procedures set forth in Article XXXIV or in such other manner as shall
be mutually acceptable to Lessor and Lessee, (b) and shall not take into account
any reduction in value resulting from any indebtedness to which the Leased
Property is subject and which encumbrance Lessee or Lessor is otherwise required
to remove pursuant to any provision of this Lease or agrees to remove at or
prior to the closing of the transaction as to which such Fair Market Value
determination is being made. The positive or negative effect on the value of the
Leased Property attributable to the interest rate, amortization schedule,
maturity date, prepayment penalty and other terms and conditions of any
Encumbrance on the Leased Property, which is not so required or agreed to be
removed shall be taken into account in determining such Fair Market Value.
Notwithstanding anything contained herein to the contrary, any appraisal of the
Leased Property shall assume the Lease is in place for a term of fifteen (15)
years, and based solely on the rents and other revenues generated and to be
generated pursuant to this Lease without any regard to the Lessee's operations.

     Fair Market Value Purchase Price: The Fair Market Value of the Leased
Property less the Fair Market Added Value.

     Fiscal Year: The fiscal year for this Lease shall be the twelve (12) month
period from January 1 to December 31.

     Fixed Charges: The sum of Lease Payments and required principal and
interest payments with respect to Total Debt as reduced for any inter-company
transactions.

     Fixed Term: As defined in Article I.

     Fixtures: As defined in Article I.

     Full Replacement Cost: As defined in Section 13.1.

     GAAP: Generally accepted accounting principles in the United States,
consistently applied.


                                        5



     Governmental Entity: Any national, federal, regional, state, local,
provincial, municipal, foreign or multinational court or other governmental or
regulatory authority, administrative body or government, department, board,
body, tribunal, instrumentality or commission of competent jurisdiction.

     Guarantors: Jointly and severally, Prime Healthcare Services, Inc., a
Delaware corporation, Desert Valley Medical Group, Inc., a California
corporation, Prime A Investments, L.L.C., a Delaware limited liability company
and Desert Valley Hospital, Inc., a California corporation.

     Hazardous Materials: Any substance, including without limitation, asbestos
or any substance containing asbestos and deemed hazardous under any Hazardous
Materials Law, the group of organic compounds known as polychlorinated
biphenyls, flammable explosives, radioactive materials, infectious wastes,
biomedical and medical wastes, chemicals known to cause cancer or reproductive
toxicity, pollutants, effluents, contaminants, emissions or related materials
and any items included in the definition of hazardous or toxic wastes, materials
or substances under any Hazardous Materials Laws.

     Hazardous Materials Laws: All local, state and federal laws relating to
environmental conditions and industrial hygiene, including, without limitation,
the Resource Conservation and Recovery Act of 1976 ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as
amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"),
the Hazardous Materials Transportation Act, the Federal Water Pollution Control
Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act,
the Safe Drinking Water Act, and all similar federal, state and local
environmental statutes, ordinances and the regulations, orders, or decrees now
or hereafter promulgated thereunder.

     Healthcare Laws: All rules and regulations under the False Claims Act (31
U.S.C. Section 3729 et seq.), the Anti-Kickback Act of 1986 (41 U.S.C. Section
51 et seq.), the Federal Health Care Programs Anti-Kickback statute (42 U.S.C.
Section 1320a-7a(b)), the Ethics in Patient Referrals Act of 1989, as amended
(Stark Law) (42 U.S.C. 1395nn), the Civil Money Penalties Law (42 U.S.C. Section
1320a-7a), or the Truth in Negotiations (10 U.S.C. Section 2304 et seq.), Health
Care Fraud (18 U.S.C. 1347), Wire Fraud (18 U.S.C. 1343), Theft or Embezzlement
(18 U.S.C. 669), False Statements (18 U.S.C. 1001), False Statements (19 U.S.C.
1035), and Patient Inducement Statute, and equivalent state statutes and any and
all rules or regulations promulgated by governmental entities with respect to
any of the foregoing.

     HIPPA: As defined in Article XXV.

     Impositions: Collectively, all civil monetary penalties, fines and
overpayments imposed by state and federal regulatory authorities, all taxes
(including, without limitation, all capital stock and franchise taxes of Lessor,
all ad valorem, sales and use, single business, gross receipts, transaction
privilege, rent or similar taxes), assessments (including, without limitation,
all assessments, charges and costs imposed under the Permitted Exceptions, all
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not to be completed within the
Term), ground rents, water, sewer or other rents and charges, excises, tax
levies, fees (including, without limitation, license, permit, inspection,
authorization and similar fees), and all other governmental charges, in each
case whether general or special, ordinary or extraordinary, or foreseen or
unforeseen, of every character in respect of the Leased Property and/or the Rent
(including all interest and penalties thereon due to any failure in payment by
Lessee), and all other fees, costs and expenses which at any time prior to,
during or in respect of the Term hereof may be charged, assessed or imposed on
or in respect of or be a lien upon (a) Lessor or Lessor's interest in the Leased
Property, (b) the Leased Property or any part thereof or any rent therefrom or
any estate, right, title or interest therein, or (c) any occupancy, operation,
use or possession of, sales from, or activity conducted on, or in connection
with, the Leased Property or the leasing or use of the Leased Property or any
part thereof; provided, however, nothing contained in this Lease shall be
construed to require Lessee to pay (1) any tax based on net income (whether
denominated as a franchise or capital stock, financial institutions or other
tax) imposed on Lessor, or (2) any transfer or net revenue tax of Lessor, or (3)
any tax imposed with respect to the sale, exchange or other disposition by
Lessor of any portion of the Leased Property or the proceeds thereof, or (4)
except as expressly provided elsewhere in this Lease, any principal or interest
on any Encumbrance on the Leased Property,


                                        6



except to the extent that any tax, assessment, tax levy or charge which Lessee
is obligated to pay pursuant to the first sentence of this definition and which
is in effect at any time during the Term hereof is totally or partially
repealed, and a tax, assessment, tax levy or charge set forth in clause (1) or
(2) is levied, assessed or imposed expressly in lieu thereof, in which case
Lessee shall pay.

     Initial Purchase Price: A price equal to the purchase price paid by Lessor
(and its Affiliates, including, without limitation, MPT Operating Partnership,
L.P.) for the Leased Property pursuant to the Purchase Agreement, plus all costs
and expenses incurred in association with the purchase and lease of such Leased
Property, including, but not limited to, legal, appraisal, title, survey,
environmental, seismic, engineering and other fees and expenses paid in
connection with the inspection of the Leased Property and site visits, and fees
paid to advisors and brokers, except to the extent such items are paid by
Lessee.

     Insurance Premiums: As defined in Section 4.4.

     Insurance Requirements: All terms of any insurance policy required by this
Lease and all requirements of the issuer of any such policy, and such additional
insurance which the Lessor may reasonably require.

     Land: As defined in Article I.

     Lease: As defined in the Preamble.

     Lease Amendment: As defined in Section 10.3.

     Lease Assignment: That certain Assignment of Rents and Leases to be
effective the Commencement Date executed and delivered by Lessee to Lessor,
pursuant to the terms of which Lessee has assigned to Lessor each of the Tenant
Leases and Credit Enhancements, if any, as security for the obligations of
Lessee under this Lease (as this Lease may be amended, modified and/or restated
from time to time), the obligations of Guarantors under the Lease Guaranty and
any other obligations of Lessee to Lessor, any Guarantor or any Affiliate of
Lessee or any Guarantor to Lessor or any Affiliate of Lessor.

     Lease Guaranty: That certain Lease Guaranty to be effective on the
Commencement Date executed and delivered by Guarantors in favor of Lessor
contemporaneously herewith.

     Lease Payments: The payments of Base Rent of the Lessee required pursuant
to this Lease.

     Lease Rate: A per annum rate initially equal to ten and one-half percent
(10.5%), as adjusted by the escalator described in Section 3.1(b) hereof; such
rate (as escalated) to be decreased by one-half percent (0.5%) at such time as
the Facility has generated a total lease coverage from EBITDAR (based on
trailing twelve (12) months) of at least two hundred fifty percent (250%) for
two (2) consecutive twelve-month periods.

     Lease Year: A twelve (12) month period commencing on the Commencement Date
or on each anniversary date thereof, as the case may be.

     Leased Improvements; Leased Property: Each as defined in Article I.

     Legal Requirements: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting the Lessee's operation of its business on the
Leased Property, along with the Leased Property or the construction, use or
alteration thereof (including, without limitation, the Americans With
Disabilities Act and Section 504 of the Rehabilitation Act of 1973) whether now
or hereafter enacted and in force, including any which may (a) require repairs,
modifications, or alterations in or to the Leased Property, or (b) in any way
adversely affect the use and enjoyment thereof, and all permits, licenses,
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
known to Lessee (other than encumbrances created by Lessor without the consent
of Lessee), at any time in force affecting the Leased Property.


                                        7



     Lending Institution: Any insurance company, federally insured commercial or
savings bank, national banking association, savings and loan association,
employees' welfare, pension or retirement fund or system, corporate
profit-sharing or pension trust, college or university, or real estate
investment trust, including any corporation qualified to be treated for federal
tax purposes as a real estate investment trust, having a net worth of at least
Fifty Million Dollars ($50,000,000).

     Lessee: Prime Healthcare Services II, LLC, a Delaware limited liability
company, and its successors and permitted assigns, which, if required by Lessor,
shall at all times during the term of this Lease be a Single Purpose Entity
created and to remain in good standing as required hereunder for the sole
purpose of leasing and operating the Facility.

     Lessee's Notice: As defined in Section 42.6.

     Lessee's Personal Property: All machinery, equipment, medical equipment
(including all medical equipment affixed to the Leased Property), furniture,
furnishings, trailers, movable walls or partitions, computers, trade fixtures,
consumable inventory and supplies and all other personal property currently
owned or acquired after the execution of this Lease, and used or useful in the
operation of the Facility, including without limitation, all items of furniture,
furnishings, equipment, supplies and inventory, and Lessee's operating licenses,
but excluding Lessee's accounts receivable and any items included within the
definition of Fixtures.

     Lessor: MPT of Sherman Oaks, LLC, a Delaware limited liability company, and
its successors and assigns.

     Lessor's Notice: As defined in Section 42.6.

     Lessor's Notice Address: As defined in Section 13.4.

     Licenses: As defined in Article XXXIX.

     LOC Amount: As defined in Section 42.7.

     Management Agreement: Any contracts and agreements for the management of
any part of the Leased Property, including, without limitation, the real estate
and the Leased Improvements and the operations of the Facility.

     Management Company: Any person, firm, corporation or other entity or
individual who or which will manage any part of the Leased Property.

     Market Value of Lessee: An amount equal to the EBITDAR of Lessee, on a
trailing twelve (12) months basis, multiplied by four (4).

     Medicaid : The medical assistance program established by Title XIX of the
Social Security Act (42 U.S.C. Sections 1396 et seq.) and any statute succeeding
thereto.

     Medicare: The health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act (42 U.S.C. Sections 1395
et seq.) and any statute succeeding thereto.

     MPT: Medical Properties Trust, Inc., an Affiliate of Lessor.

     MPT Development Services: MPT Development Services, Inc., an Affiliate of
Lessor.

     Officer's Certificate: A certificate of Lessee signed by the Chairman of
the Board of Directors, the President, any Vice President or the Treasurer of
Lessee or another officer or representative authorized to so sign by the Board
of Directors or other governing body of Lessee, or any other person whose power
and authority to act has been authorized by delegation in writing by any of the
persons holding the foregoing offices.


                                        8



     Option Price: As defined in Section 35.1.

     Organizational Documents: As defined in Section 8.7.

     Other Lease: Any other lease entered into between Lessor or any Affiliate
of Lessor, on one hand, and Lessee, any Guarantor, or any of their respective
Affiliates, on the other hand.

     Overdue Rate: On any date, a rate per annum equal to four (4%) percent.

     Parking Space Lease: As defined in the Preamble.

     Payment Date: Any due date for the payment of the installments of Base
Rent, Additional Rent, or any other sums payable under this Lease.

     Permitted Exceptions: As defined in Article I.

     Primary Intended Use: As defined in Article VII.

     Primary Lender: As defined in Section 16.8.

     Primary Lien of Lessee's Primary Lender: As defined in Section 16.8.

     Prime Rate: The annual rate announced by Citibank in New York, New York, to
be the prime rate for 90-day unsecured loans to its United States corporate
borrowers of the highest credit standing, as in effect from time to time.

     Purchase Agreement: That certain Purchase and Sale Agreement dated of even
date herewith, by and among Lessor, Lessee, the Guarantors and MPT Operating
Partnership, L.P.

     Purchase Price: The Initial Purchase Price, plus all costs and expenses not
included in the Initial Purchase Price incurred or paid in connection with the
purchase and lease of the Leased Property, including, but not limited to, legal,
appraisal, title, survey, environmental, seismic, engineering and other fees and
expenses paid in connection with the inspection of the Leased Property, and paid
to advisors and brokers (except to the extent such items are paid by Lessee),
and shall include the costs of Capital Additions financed by Lessor (and
Lessor's Affiliates) as provided in Section 10.3 of this Lease (collectively the
"Purchase Price Adjustment").

     Purchase Price Adjustment: As defined in the above definition of "Purchase
Price."

     RCRA: As defined in Article II.

     Real Estate Taxes: All real estate taxes, assessments and special
assessments and dues which shall be levied or imposed upon the Leased Property
during the Term.

     Removal Notice: As defined in Section 16.2.

     Rent: Collectively, the Base Rent (as increased in accordance with the
provisions of Section 3.1(b) hereof) and the Additional Charges.

     Request: As defined in Section 10.3(a).

     Reserve: As defined in Section 9.2.

     SARA: As defined in Article II.


                                        9



     Security Agreement: That certain Security Agreement to be effective the
Commencement Date executed and delivered by Lessee to Lessor, pursuant to the
terms of which Lessee has granted to Lessor a first lien and security interest
in all of Lessee's rights under this Lease (as this Lease may be amended,
modified and/or restated from time to time), to all of Lessee's Personal
Property (excluding accounts receivable) and to all of the Licenses.

     Seismic Upgrades: Those certain upgrades and renovations to the Leased
Property required for compliance with the State of California laws and
regulations governing seismic structural integrity, the costs of which are
anticipated to be approximately Seven Million Two Hundred Thousand Dollars
($7,200,000.00).

     Sherman Oaks: As defined in Section 24.2.

     Sherman Oaks Sublease: As defined in Section 24.2.

     Single Purpose Entity: An entity which (i) exists solely for the purpose of
owning and/or leasing all or any portion of the Facility and conducting the
operation of the Business, (ii) conducts business only in its own name, (iii)
does not engage in any business other than the ownership and/or leasing all or
any portion of the Facility and the operation of the Business, (iv) does not
hold, directly or indirectly, any ownership interest (legal or equitable) in any
entity or any real or personal property other than the interest in the Facility
which it owns in the Facility and the other assets incident to the operation of
the Business, (v) does not have any debt other than as permitted by this Lease
or arising in the ordinary course of the Business and does not guarantee or
otherwise obligate itself with respect to the debts of any other person or
entity, other than as approved by Lessor, (vi) has its own separate books,
records, accounts, financial statements and tax returns (with no commingling of
funds or assets), (vii) holds itself out as being a company separate and apart
from any other entity, and (viii) maintains all corporate formalities
independent of any other entity.

     Statements of Cash Flow: For any fiscal year or other accounting period for
Lessee or Guarantors and their respective consolidated subsidiaries, statements
of earnings and retained earnings and of changes in financial position for such
period and for the period from the beginning of the respective Fiscal Year to
the end of such period and the related balance sheet as at the end of such
period, together with the notes thereto, all in reasonable detail and setting
forth in comparative form the corresponding figures for the corresponding period
in the preceding fiscal year, and prepared in accordance with GAAP.

     Taking: A taking or voluntary conveyance during the Term hereof of all or
part of the Leased Property, or any interest therein or right accruing thereto
or use thereof, as the result of, or in settlement of, any Condemnation or other
eminent domain proceeding affecting the Leased Property whether or not the same
shall have actually been commenced.

     Tenant: The lessees or tenants under the Tenant Leases, if any.

     Tenant Leases: All leases, subleases, pharmacy leases and other rental
agreements (written or verbal, now or hereafter in effect), if any, including,
without limitation, the Existing Leases as described in Section 24.1 hereof,
that grant a possessory interest in and to any space in or any part of the
Leased Property, or that otherwise have rights with regard to the Leased
Property, and all Credit Enhancements, if any, held in connection therewith.

     Term: The actual duration of this Lease, including the Fixed Term and the
Extension Terms (if exercised by the Lessee) and taking into account any
termination.

     Test Rate: As defined in Section 10.2.

     Total Capitalization: Total Debt plus all capital account or stated capital
balances according to GAAP.

     Total Debt: All indebtedness which, in accordance with GAAP, will be
included in determining total liabilities as shown on the liability side of a
balance sheet, including any such indebtedness represented by


                                       10



obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, but excluding any nonrecourse
indebtedness and excluding any current liabilities.

     Unavoidable Delays: Delays due to strikes, lockouts, inability to procure
materials, power failure, acts of God, governmental restrictions, enemy action,
civil commotion, fire, unavoidable casualty or other causes beyond the control
of the party responsible for performing an obligation hereunder, provided that
lack of funds shall not be deemed a cause beyond the control of either party
hereto unless such lack of funds is caused by the failure of the other party
hereto.

     Unsuitable for Its Use or Unsuitable for Its Primary Intended Use: As used
anywhere in this Lease, the terms "Unsuitable for Its Use" or "Unsuitable for
Its Primary Intended Use" shall mean that, by reason of damage or destruction,
or a partial Taking by Condemnation, the Facility cannot be operated on a
commercially practicable basis for its Primary Intended Use, taking into
account, all relevant factors, and the effect of such damage or destruction or
partial Taking.

     Upgrade EBITDAR Covenant: As defined in Section 10.3(e).

                                  ARTICLE III

                                      RENT

     3.1 BASE RENT. During the Term, Lessee shall pay to Lessor, in advance and
without notice, demand, set off or counterclaim, in lawful money of the United
States of America, at Lessor's address set forth herein or at such other place
or to such other person, firm or entity as Lessor from time to time may
designate in writing, Base Rent as follows:

          (a) BASE RENT: Subject to adjustment as provided herein, Lessee shall
     pay Lessor base rent (the "Base Rent") in a per annum amount equal to ten
     and one-half percent (10.5%) multiplied by the Purchase Price, which as of
     the date hereof is an annual amount of Two Million, One Hundred Thousand
     and 00/100 Dollars ($2,100,000.00). Base Rent shall be payable in advance
     in equal, consecutive monthly installments on or before the 10th day of
     each calendar month during the Term, commencing on the Commencement Date
     (prorated as to any partial month based upon a three hundred sixty (360)
     day year).

          (b) ADJUSTMENT OF BASE RENT: Commencing on January 1, 2007, and on
     each January 1 thereafter (each an "Adjustment Date") during the term of
     this Lease, the Base Rent shall be increased, if any, by an amount equal to
     the greater of (A) two percent (2%) per annum of the prior year's Base
     Rent, or (B) the percentage by which the CPI on the Adjustment Date shall
     have increased over the CPI figure in effect on the immediately preceding
     January 1. If the previous year's Base Rent is for a partial year, Base
     Rent shall be annualized based on the highest annual rate effective during
     the preceding year. Notwithstanding anything contained herein to the
     contrary, the parties hereto acknowledge and agree that all calculations of
     Base Rent as specified herein have been made by multiplying the Initial
     Purchase Price by the Lease Rate. In the event the Initial Purchase Price
     or Lease Rate is adjusted, then all calculations of Base Rent shall be
     adjusted accordingly.

     3.2 ADDITIONAL CHARGES. In addition to the Base Rent (a) Lessee will also
pay and discharge as and when due and payable all other amounts, liabilities,
obligations and Impositions which Lessee assumes or agrees to pay under this
Lease, and all other amounts, liabilities, obligations and Impositions related
to the ownership, use, possession and operation of the Leased Property,
including, without limitation, all costs of owning and operating the Facility,
all Real Estate Taxes, Insurance Premiums, maintenance and capital improvements,
all licensure violations, violations of and defaults under any of the Permitted
Exceptions, civil monetary penalties and fines, and (b) in the event of any
failure on the part of Lessee to pay any of those items referred to in clause
(a) above, Lessee will also promptly pay and reimburse Lessor for all such
amounts paid by Lessor and promptly pay and discharge every fine, penalty,
interest and cost which may be added for non-payment or late payment of such
items (the items referred to


                                       11



in clauses (a) and (b) above being referred to herein collectively as the
"Additional Charges"), and Lessor shall have all legal, equitable and
contractual rights, powers and remedies provided in this Lease, by statute or
otherwise, in the case of non-payment of the Additional Charges, as in the case
of the Base Rent. If any installment of Base Rent or Additional Charges (but
only as to those Additional Charges which are payable directly to Lessor) shall
not be paid within five (5) Business Days after its due date, Lessee will pay
Lessor on demand, as Additional Charges, a late charge (to the extent permitted
by law) computed at the Overdue Rate (or at the maximum rate permitted by law,
whichever is less) on the amount of such installment, from the due date of such
installment to the date of payment thereof. To the extent that Lessee pays any
Additional Charges to Lessor pursuant to any requirement of this Lease, Lessee
shall be relieved of its obligation to pay such Additional Charges to the entity
to which they would otherwise be due. At any time during the Term, Lessor may
require Lessee to pay to Lessor or its Facility Lender estimates of Real Estate
Taxes and Insurance Premiums and Lessee shall pay to Lessor (or directly to a
Facility Lender, if requested by Lessor), upon written request from Lessor, such
amounts as and when required by Lessor (or the Facility Lender). All sums paid
into escrow or deposits shall not bear interest and may be commingled with
Lessor's books, accounts and funds; however, upon an Event of Default under this
Lease, the escrowed funds or deposits may be applied by Lessor (or the Facility
Lender) to all sums owed by Lessee to Lessor (or to sums owed to Facility
Lender).

     3.3 ABSOLUTE NET LEASE. The Rent shall be paid absolutely net to Lessor, so
that this Lease shall yield to Lessor the full amount of the installments of
Base Rent and the payments of Additional Charges throughout the Term, but
subject to any other provisions of this Lease which expressly provide for
adjustment of Rent or other charges. Lessee further acknowledges and agrees that
all charges, assessments or payments of any kind due and payable without notice,
demand, set off or counterclaim under the Permitted Exceptions shall be paid by
Lessee as they become due and payable.

     3.4 LEASE DEPOSIT. Intentionally Omitted.

     3.5 ADJUSTMENTS. Lessor and Lessee acknowledge that to the extent Lessee
fails to reimburse to Lessor, any costs and expenses which otherwise would be
included in the definition of Purchase Price, then the Lessor shall recalculate
the Purchase Price to include such unreimbursed costs and expenses and deliver
to Lessee a letter confirming the Base Rent to be paid hereunder and such letter
shall constitute an amendment to the provisions of this Lease.

     3.6 RENT AND PAYMENTS UNDER AIR SPACE AGREEMENT. Lessee shall pay all rents
and other payments due as required under the Air Space Agreement (a copy of
which has been provided to Lessee) as and when such payments become due and
payable, and Lessee shall provide Lessor with reasonable evidence of payment
each month confirming that the rents and payments have been timely paid or, at
Lessor's request, Lessee shall pay the rents and payments due under the Air
Space Agreement directly to Lessor at least five (5) business days prior to its
due date under the Air Space Agreement.

     3.7 RENT AND PAYMENTS UNDER THE PARKING SPACE LEASE. Lessee shall pay all
rents and other payments due as required under the Parking Space Lease (a copy
of which has been provided to Lessee) as and when such payments become due and
payable, and Lessee shall provide Lessor with reasonable evidence of payment
each month confirming that the rents and payments have been timely paid or, at
Lessor's request, Lessee shall pay the rents and payments due under the Parking
Space Lease directly to Lessor at least five (5) business days prior to its due
date under the Parking Space Lease.

                                   ARTICLE IV

                                   IMPOSITIONS

     4.1 PAYMENT OF IMPOSITIONS. Subject to Article XII relating to permitted
contests, Lessee will pay, or cause to be paid, all Impositions before any fine,
penalty, interest or cost may be added for non-payment, such


                                       12



payments to be made directly to the taxing or assessing authorities unless, in
the case of escrows and deposits required to be paid to Lessor or Facility
Lender as provided in Section 3.2 hereof, and Lessee will promptly, upon
request, furnish to Lessor copies of official receipts or other satisfactory
proof evidencing such payments. Lessee's obligation to pay such Impositions
shall be deemed absolutely fixed upon the date such Impositions become a lien
upon the Leased Property or any part thereof. If any such Imposition may, at the
option of the Lessor, lawfully be paid in installments (whether or not interest
shall accrue on the unpaid balance of such Imposition), Lessee may exercise the
option to pay the same (and any accrued interest on the unpaid balance of such
Imposition) in installments and, in such event, shall pay such installments
during the Term hereof (subject to Lessee's right of contest pursuant to the
provisions of Article XII; and subject to the requirement to pay the full amount
of escrows and deposits as required under Section 3.2 hereof) as the same
respectively become due and before any fine, penalty, premium, further interest
or cost may be added thereto. Lessor, at its expense, shall, to the extent
permitted by applicable law, prepare and file all tax returns and reports as may
be required by governmental authorities in respect of Lessor's net income, gross
receipts, franchise taxes and taxes on its capital stock, and Lessee, at its
expense, shall, to the extent permitted by applicable laws and regulations,
prepare and file all other tax returns and reports in respect of any Imposition
as may be required by governmental authorities. If any refund shall be due from
any taxing authority in respect of any Imposition paid by Lessee, the same shall
be paid over to or retained by Lessee if no Event of Default shall have occurred
hereunder and be continuing. Any such funds retained by Lessor due to an Event
of Default shall be applied as provided in Article XVI. Lessor and Lessee shall,
upon request of the other, provide such data as is maintained by the party to
whom the request is made with respect to the Leased Property as may be necessary
to prepare any required returns and reports. In the event governmental
authorities classify any property covered by this Lease as personal property,
Lessee shall file all personal property tax returns in such jurisdictions where
it may legally so file. Lessor, to the extent it possesses the same, and Lessee,
to the extent it possesses the same, will provide the other party, upon request,
with cost and depreciation records necessary for filing returns for any property
so classified as personal property. Where Lessor is legally required to file
personal property tax returns, Lessee will be provided with copies of assessment
notices indicating a value in excess of the reported value in sufficient time
for Lessee to file a protest. Lessee may, upon giving notice to Lessor, at
Lessee's option and at Lessee's sole cost and expense, protest, appeal, or
institute such other proceedings as Lessee may deem appropriate to effect a
reduction of real estate or personal property assessments and Lessor, at
Lessee's expense as aforesaid, shall fully cooperate with Lessee in such
protest, appeal, or other action. Billings for reimbursement by Lessee to Lessor
of personal property taxes shall be accompanied by copies of a bill therefor and
payments thereof which identify the personal property with respect to which such
payments are made.

     4.2 ADJUSTMENT OF IMPOSITIONS. Impositions imposed in respect of the
tax-fiscal period during which the Term terminates, unless Lessee purchases the
Leased Property pursuant to the purchase options expressly provided herein,
shall be adjusted and prorated between Lessor and Lessee, whether or not such
Imposition is imposed before or after such termination, and Lessee's obligation
to pay its prorated share thereof shall survive such termination.

     4.3 UTILITY CHARGES. Lessee will contract for, in its own name, and will
pay or cause to be paid when due all charges for electricity, power, gas, oil,
water and other utilities used in connection with the Leased Property during the
Term, including, without limitation, all impact and tap fees necessary for the
operation of the Facility.

     4.4 INSURANCE PREMIUMS. Lessee will contract for in its own name and will
pay or cause to be paid when due all premiums for the insurance coverage
required to be maintained pursuant to Article XIII during the Term (the
"Insurance Premiums"); provided, however, that if required by Lessor, such
premiums shall be paid as required under Section 3.2 hereof. At Lessor's option
and provided that the costs of such coverages collectively do not exceed the
costs of such insurance obtained by Lessee, Lessor may obtain the insurance
coverages required herein and, in such event, Lessee shall reimburse Lessor for
the costs of such coverages immediately upon request by Lessor.


                                       13



                                   ARTICLE V

                                 NO TERMINATION

     5.1 ACKNOWLEDGEMENT. The parties hereto understand, acknowledge and agree
that this is an absolute triple net lease. Lessee shall remain bound by this
Lease in accordance with its terms and shall neither take any action without the
consent of Lessor to modify, surrender or terminate the same, nor seek nor be
entitled to any abatement, deduction, deferment or reduction of Rent, or set-off
against the Rent, nor shall the respective obligations of Lessor and Lessee be
otherwise affected by reason of (a) any damage to, or destruction of, any Leased
Property or any portion thereof from whatever cause or any Taking of the Leased
Property or any portion thereof, (b) the lawful or unlawful prohibition of, or
restriction upon, Lessee's use of the Leased Property, or any portion thereof,
or the interference with such use by any person, corporation, partnership or
other entity, or by reason of eviction by paramount title; (c) any claim which
Lessee has or might have against Lessor or by reason of any default or breach of
any warranty by Lessor under this Lease or any other agreement between Lessor
and Lessee, or to which Lessor and Lessee are parties, (d) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceedings affecting Lessor or any assignee or transferee
of Lessor, or (e) for any other cause whether similar or dissimilar to any of
the foregoing other than a discharge of Lessee from any such obligations as a
matter of law. Lessee hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law to
(i) modify, surrender or terminate this Lease or quit or surrender the Leased
Property or any portion thereof, or (ii) entitle Lessee to any abatement,
reduction, suspension or deferment of the Rent or other sums payable by Lessee
hereunder, except as otherwise specifically provided in this Lease. The
obligations of Lessor and Lessee hereunder shall be separate and independent
covenants and agreements and the Rent and all other sums payable by Lessee
hereunder shall continue to be payable in all events unless the obligations to
pay the same shall be terminated pursuant to the express provisions of this
Lease or by termination of this Lease other than by reason of an Event of
Default.

                                   ARTICLE VI

               OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY

     6.1 OWNERSHIP OF THE LEASED PROPERTY. Lessee acknowledges that the Leased
Property is the property of Lessor (except for the rights under the Air Space
Agreement with respect to which Lessor holds a leasehold interest pursuant to
the Air Space Agreement and except for the rights under the Parking Space Lease
with respect to which Lessor holds a leasehold interest pursuant to the Parking
Space Lease) and that Lessee has only the right to the possession and use of the
Leased Property upon the terms and conditions of this Lease, the Air Space
Agreement and the Parking Space Lease.

     6.2 LESSEE'S PERSONAL PROPERTY. Lessee, at its expense, shall install,
affix, assemble and place on the Leased Property, the Lessee's Personal
Property, which Lessee's Personal Property shall be subject to the security
interests and liens as provided in Section 16.8 of this Lease. Lessee shall not,
without the prior written consent of Lessor (which consent may be withheld in
the event Lessee is in default hereunder) remove any of the Lessee's Personal
Property from the Leased Property. Lessee shall provide and maintain during the
entire Term all such Lessee's Personal Property as shall be necessary in order
to operate the Facility in compliance with all licensure and certification
requirements, in compliance with all applicable Legal Requirements and Insurance
Requirements and otherwise in accordance with customary practice in the industry
for the Primary Intended Use. If removal is authorized by Lessor as provided
herein, all of Lessee's Personal Property not removed by Lessee within seven (7)
days following the expiration or earlier termination of this Lease shall be
considered abandoned by Lessee and may be appropriated, sold, destroyed or
otherwise disposed of by Lessor without first giving notice thereof to Lessee,
without any payment to Lessee and without any obligation to Lessee to account
therefor. Lessee will, at its expense, restore the Leased Property and repair of
all damage to the Leased Property caused by the removal of Lessee's Personal
Property, whether effected by Lessee, Lessor, any Lessee lender, or any Lessor
lender.


                                       14



                                  ARTICLE VII

                      CONDITION AND USE OF LEASED PROPERTY

     7.1 CONDITION OF THE LEASED PROPERTY. Lessee acknowledges receipt and
delivery of possession of the Leased Property and that Lessee has examined and
otherwise has acquired knowledge of the condition of the Leased Property prior
to the execution and delivery of this Lease and has found the same to be in good
order and repair and satisfactory for its purpose hereunder. Lessee is leasing
the Leased Property "as is" in its present condition. Lessee waives any claim or
action against Lessor in respect of the condition of the Leased Property. Lessee
warrants and represents that to the best of its knowledge (a) the Leased
Property is in compliance with all of the requirements, restrictions and
conditions as set forth in the Permitted Exceptions, and (b) the use of the
Leased Property for the Primary Intended Use will not violate any of the
Permitted Exceptions. LESSOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS
FITNESS FOR USE, SUITABILITY, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR
PURPOSE OR OTHERWISE, AS TO QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN,
LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY LESSEE.
LESSEE ACKNOWLEDGES THAT THE LEASED PROPERTY HAS BEEN INSPECTED BY LESSEE AND IS
SATISFACTORY TO IT.

     7.2 USE OF THE LEASED PROPERTY.

          (a) Lessee covenants that it will obtain and maintain throughout the
     entire Term all approvals and requirements needed to use and operate the
     Leased Property and the Facility for the Primary Intended Use, as defined
     below, under applicable local, state and federal law, including but not
     limited to all requirements relating to parking (including, without
     limitation, the parking requirements and agreements as set forth in the
     parking certification affidavits and agreements which are a part of the
     Permitted Exceptions), licensure approvals and Medicare and/or a Medicaid
     certifications, provider numbers, certificates of need, governmental
     approvals, and full accreditation from all applicable governmental
     authorities, if any, that are necessary for the operation of the Facility
     as a one hundred fifty-three (153) bed acute care hospital facility and
     incorporated medical office building.

          (b) Beginning on the Commencement Date and during the entire Term,
     Lessee shall use the Leased Property and the improvements thereon only as a
     one hundred fifty-three (153) bed acute care hospital facility and
     incorporated medical office building and for such other legal ancillary
     uses as may be necessary in connection with or incidental to such uses,
     subject to any covenants, restrictions and easements relating to the
     Facility (the "Primary Intended Use"). Lessee shall not use the Leased
     Property or any portion thereof for any other use, nor change the number or
     type of beds within the Facility, nor reconfigure or rearrange any portion
     of the Leased Property or the Facility without the prior written consent of
     Lessor, which consent Lessee agrees may be withheld in Lessor's sole
     discretion. No use shall be made or permitted to be made of the Leased
     Property and no acts shall be done which will cause the cancellation of any
     insurance policy covering the Leased Property or any part thereof, nor
     shall Lessee sell or otherwise provide to residents or patients therein, or
     permit to be kept, used or sold in or about the Leased Property any article
     which may be prohibited by law or by the standard form of fire insurance
     policies, any other insurance policies required to be carried hereunder, or
     fire underwriters regulations. Lessee shall, at its sole cost, comply with
     all of the requirements, covenants and restrictions pertaining to the
     Leased Property, including, without limitation, all of the Permitted
     Exceptions, and other requirements of any insurance board, association,
     organization or company necessary for the maintenance of the insurance, as
     herein provided, covering the Leased Property and Lessee's Personal
     Property.

          (c) Lessee covenants and agrees that during the Term it will
     continuously operate the Leased Property only as a provider of healthcare
     services in accordance with the Primary Intended Use and Lessee


                                       15



     shall maintain its certifications for reimbursement and licensure and all
     accreditations necessary to maintain its Medicare and Medicaid
     certifications.

          (d) Lessee shall not commit or suffer to be committed any waste on the
     Leased Property, or in the Facility, nor shall Lessee cause or permit any
     nuisance thereon.

          (e) Lessee shall neither suffer nor permit the Leased Property or any
     portion thereof, including any Capital Addition whether or not financed by
     Lessor, or Lessee's Personal Property, to be used in such a manner as (i)
     might reasonably tend to impair Lessor's (or Lessee's, as the case may be)
     title thereto or to any portion thereof, or (ii) may reasonably make
     possible a claim or claims of adverse usage or adverse possession by the
     public, as such, or of implied dedication of the Leased Property or any
     portion thereof.

          (f) Lessee agrees that during the entire term of this Lease, Lessor
     shall have the right and option to erect a sign on the Leased Property
     stating that the Leased Property is owned by the Lessor. Such sign shall be
     in a size, and shall be erected in a location, reasonably acceptable to
     Lessor and approved by Lessee, which approval shall not be unreasonably
     withheld, conditioned or delayed.

     7.3 LESSOR TO GRANT EASEMENTS. Lessor will, from time to time so long as no
default, and no event has occurred which with the giving of notice or the
passage of time or both would constitute a default, has occurred and is
continuing under this Lease, at the request of Lessee and at Lessee's cost and
expense, but subject to the approval of Lessor (a) grant easements and other
rights in the nature of easements, (b) release existing easements or other
rights in the nature of easements which are for the benefit of the Leased
Property, (c) dedicate or transfer unimproved portions of the Leased Property
for road, highway or other public purposes, (d) execute petitions to have the
Leased Property annexed to any municipal corporation or utility district, (e)
execute amendments to any covenants and restrictions affecting the Leased
Property and (f) execute and deliver to any person any instrument appropriate to
confirm or effect such grants, releases, dedications and transfers (to the
extent of its interest in the Leased Property), but only upon delivery to Lessor
of an Officer's Certificate stating (and such other information as Lessor may
reasonably require confirming) that such grant, release, dedication, transfer,
petition or amendment is required for and not detrimental to the proper conduct
of the Primary Intended Use on the Leased Property and does not reduce its
value.

                                  ARTICLE VIII

                        LEGAL AND INSURANCE REQUIREMENTS

     8.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS. Subject to Article
XII relating to permitted contests, Lessee, at its expense, will promptly (a)
comply with all Legal Requirements and Insurance Requirements in respect of the
use, operation, maintenance, repair and restoration of the Leased Property,
whether or not compliance therewith shall require structural change in any of
the Leased Improvements or interfere with the use and enjoyment of the Leased
Property, and (b) procure, maintain and comply with all licenses, certificates
of need, Medicare and Medicaid provider agreements, accreditations and other
authorizations required for any use of the Leased Property and Lessee's Personal
Property then being made, and for the proper erection, installation, operation
and maintenance of the Leased Property or any part thereof, including without
limitation, any Capital Additions. Upon Lessor's request, Lessee shall deliver
copies of all such licenses, certificates of need, agreements and other
authorizations. Lessee hereby agrees to indemnify and defend, at Lessee's sole
cost and expense, and hold Lessor, its successors and assigns harmless from and
against, and to reimburse Lessor and its successors and assigns with respect to
any and all claims, demands, actions, causes of action, losses, damages,
liabilities, costs and expenses (including, without limitation, reasonable
attorneys' fees and court costs) of any and every kind or character, known or
unknown, fixed or contingent, asserted against or incurred by Lessor, its
successors and assigns, at any time and from time to time by reason or arising
out of any breach by Lessee of any of the representations and warranties set
forth in this Section 8.1.


                                       16



     8.2 LEGAL REQUIREMENT COVENANTS. Lessee covenants and agrees that the
Leased Property and Lessee's Personal Property shall not be used for any
unlawful purpose. Lessee shall use its best efforts to have tenants acquire and
maintain all licenses, certificates, permits, provider agreements and other
authorizations and approvals needed to operate the Leased Property and all
equipment and machinery used in or in connection with the Leased Property in its
customary manner for the Primary Intended Use and any other use conducted on the
Leased Property as may be permitted from time to time hereunder. Lessee further
covenants and agrees that Lessee's use of the Leased Property, the use of all
equipment and machinery used in connection with the Leased Property, and the
maintenance, alteration, and operation of the same, and all parts thereof, shall
at all times conform to all applicable local, state and federal laws,
ordinances, rules and regulations.

     8.3 HAZARDOUS MATERIALS. Except for Hazardous Materials generated in the
normal course of business regarding the Primary Intended Use (which Hazardous
Materials shall be handled and disposed of in compliance with all Hazardous
Materials Laws), no Hazardous Materials shall be installed, used, generated,
manufactured, treated, handled, refined, produced, processed, stored or disposed
of, or otherwise present in, on or under the Leased Property. No activity shall
be undertaken on the Leased Property which would cause (i) the Leased Property
to become a treatment, storage or disposal facility of hazardous waste,
infectious waste, biomedical or medical waste, within the meaning of, or
otherwise bring the Leased Property within the ambit of RCRA or any Hazardous
Materials Laws, (ii) a release or threatened release of Hazardous Material from
the Leased Property within the meaning of, or otherwise bring the Leased
Property within the ambit of, CERCLA or SARA or any Hazardous Materials Laws or
(iii) the discharge of Hazardous Material into any watercourse, surface or
subsurface of body of water or wetland, or the discharge into the atmosphere of
any Hazardous Material which would require a permit under any Hazardous
Materials Laws. No activity shall be undertaken with respect to the Leased
Property which would cause a violation or support a claim under RCRA, CERCLA,
SARA or any Hazardous Materials Laws. No investigation, administrative order,
litigation or settlement with respect to any Hazardous Material is, to the best
of the Lessee's knowledge, threatened or in existence with respect to the Leased
Property. No notice has been served on Lessee from any entity, governmental body
or individual claiming any violation of any Hazardous Materials Laws, or
requiring compliance with any Hazardous Materials Laws, or demanding payment or
contribution for environmental damage or injury to natural resources. Lessee has
not obtained and Lessee has no knowledge of any reason Lessee will be required
to obtain any permits, licenses, or similar authorizations to occupy, operate or
use the Improvements or any part of the Leased Property by reason of any
Hazardous Materials Laws. Lessee hereby agrees to indemnify and defend, at its
sole cost and expense, and hold Lessor, its successors and assigns, harmless
from and against and to reimburse Lessor with respect to any and all claims,
demands, actions, causes of action, losses, damages, liabilities, costs and
expenses (including, without limitation, reasonable attorney's fees and court
costs) of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by Lessor at any time and from time to
time by reason or arising out of any breach or violation of any Hazardous
Materials Laws. Lessee shall, at its sole cost, expense, risk and liability,
remove or cause to be removed from the Leased Property all Hazardous Materials
generated in connection with the Primary Intended Use and as found in hospital
and healthcare facilities, including, without limitation, all infectious waste
materials, syringes, needles and any materials contaminated with bodily fluids
of any type, character or description of whatsoever nature in accordance with
all Hazardous Materials Laws. Lessee shall not dispose of any such infectious
waste and Hazardous Materials in any receptacles used for the disposal of normal
refuse.

     8.4 HEALTHCARE LAWS. Lessee warrants and represents that this Lease and all
subleases are, and at all times during the term of this Lease will be, in
compliance with all Healthcare Laws. Lessee agrees to add to all of its third
party agreements relating to the Leased Property, including, without limitation,
all subleases, that in the event it is determined that such agreement and/or
sublease is in violation of the Healthcare Laws, such agreement and/or sublease
shall be renegotiated so that same are in compliance with all Healthcare Laws.
Lessee agrees promptly to notify Lessor in writing of receipt of any notice of
investigation of any alleged Healthcare Law violations. Lessee hereby agrees to
indemnify and defend, at Lessee's sole cost and expense, and hold Lessor, its
successors and assigns harmless from and against and to reimburse Lessor and its
successors and assigns with respect to any and all claims, demands, actions,
causes of action, losses, damages, liabilities, costs and expenses (including,
without limitation, reasonable attorneys' fees and court costs) of any and every
kind or character, known


                                       17



or unknown, fixed or contingent, asserted against or incurred by Lessor, its
successors and assigns, at any time and from time to time by reason or arising
out of any breach by Lessee of any of the representations and warranties set
forth in this Section 8.4.

     8.5 REPRESENTATIONS AND WARRANTIES. Lessee represents and warrants to
Lessor that as of the date hereof: (i) Lessee is a limited liability company
duly organized and existing under the laws of the State of Delaware and is duly
authorized to enter into, deliver and perform this Lease and the other documents
referred to herein and such agreements constitute the valid and binding
obligations of Lessee, enforceable in accordance with their terms, (ii) neither
the entering into this Lease or the other documents referred to herein nor the
performance by Lessee of its obligations hereunder or under the other documents
referred to herein will violate any provision of law or any agreement,
indenture, note or other instrument binding upon Lessee, (iii) no authority from
or approval by any governmental body, commission or agency or consent of any
third party is required in connection with the making or validity of and the
execution, delivery and performance of this Lease or the other documents
referred to herein, (iv) there are no actions, suits or proceedings pending
against or, to the knowledge of Lessee, threatened against or affecting Lessee
or any of its Affiliates, in any court or before or by any governmental
department, agency or instrumentality, an adverse decision in which could
materially and adversely affect the financial condition, business or operations
of Lessee or the ability of Lessee to perform its obligations under this Lease
or the other documents referred to herein, (v) Lessee and each of its Affiliates
is in compliance in all material respects with all applicable laws, ordinances,
rules, regulations and requirements of governmental authorities, and (vi) Lessee
has obtained and delivered copies thereof to Lessor on the Commencement Date all
certificates of need, Medicare billing numbers, other licenses and agreements
required for the operation of the Facility.

     8.6 SINGLE PURPOSE ENTITY. Except as otherwise set forth on SCHEDULE 8.6,
Lessee represents, warrants, covenants and agrees that Lessee has always been,
is, and shall remain at all times during the term of this Lease, a Single
Purpose Entity created and to remain in good standing for the sole purpose of
leasing and operating the Facility in accordance with the terms of this Lease.
Simultaneously with the execution of this Lease, and as requested by Lessor at
other times during the term of this Lease, Lessee shall provide Lessor evidence
that Lessee is a Single Purpose Entity and is in good standing in the state of
its organization and in the state in which the Leased Property is located.

     8.7 ORGANIZATIONAL DOCUMENTS. Lessee shall not permit or suffer, without
the prior written consent of Lessor an amendment or modification of its
Organizational Documents (as defined below), or the organizational documents of
any constituent entity within the Lessee, which changes Lessee's status as a
single purpose entity, (ii) any dissolution or termination of its existence, or
(iii) change in its state of formation or incorporation or its name. Lessee has,
simultaneously with the execution of this Lease, delivered to Lessor a true and
complete copy of its articles of organization and operating agreement creating
Lessee, and all other documents creating and governing the Lessee (collectively,
the "Organizational Documents"). Lessee warrants and represents that the
Organizational Documents (i) were duly executed and delivered, (ii) are in full
force and effect and binding upon and enforceable in accordance with their
terms, (iii) constitute the entire understanding among the shareholders,
partners and members of Lessee, and (iv) no breach exists under the
Organizational Documents and no act has occurred and no condition exists which,
with the giving of notice or the passage of time or both would constitute a
breach under the Organizational Documents.

                                   ARTICLE IX

                         REPAIRS; RESERVE; RESTRICTIONS

     9.1 MAINTENANCE AND REPAIR.

          (a) Lessee, at its expense, will keep the Leased Property and all
     private roadways, sidewalks and curbs appurtenant thereto (and Lessee's
     Personal Property) in good first class order and repair (whether or not the
     need for such repairs occurs as a result of Lessee's use, any prior use,
     the elements, the age of the


                                       18



     Leased Property or any portion thereof) and, except as otherwise provided
     in Articles XIV and XV, with reasonable promptness, will make all necessary
     and appropriate repairs thereto of every kind and nature, whether interior
     or exterior, structural or non-structural, ordinary or extraordinary,
     foreseen or unforeseen or arising by reason of a condition existing prior
     to the commencement of the Term of this Lease (concealed or otherwise),
     including, without limitation, all required seismic repairs, replacements
     and upgrades. All repairs shall, to the extent reasonably achievable, be at
     least equivalent in quality to the original work. Lessee will not take or
     omit to take any action the taking or omission of which might materially
     impair the value or the usefulness of the Leased Property or any part
     thereof for the Primary Intended Use. Notwithstanding anything contained
     herein to the contrary, Lessee shall make additions, modifications and
     remodeling to the Leased Property which are not Capital Additions from time
     to time which are necessary for the Primary Intended Use and which permit
     the Lessee to comply fully with its obligations set forth in this Lease,
     provided that any such action will be undertaken expeditiously, in a
     workmanlike manner and will not significantly alter the character or
     purpose or detract from the value or operating efficiency of the Leased
     Property and will not significantly impair the revenue producing capability
     of the Leased Property or adversely affect the ability of the Lessee to
     comply with the provisions of this Lease. Such additions, modifications and
     remodeling shall, without payment by Lessor at any time, be included under
     the terms of this Lease and shall be the property of Lessor. Lessee shall
     notify the Lessor of any and all repairs, improvements, additions,
     modifications and remodeling made to the Leased Property in excess of
     Twenty-Five Thousand and 00/100 Dollars ($25,000.00) and obtain consent
     from Lessor prior to making such repairs, improvements, additions,
     modifications and remodeling.

          (b) Lessor shall not under any circumstances be required to build or
     rebuild any improvements on the Leased Property, or to make any repairs,
     replacements, alterations, restorations, or renewals of any nature or
     description to the Leased Property, whether ordinary or extraordinary,
     structural or non-structural, foreseen or unforeseen, or to make any
     expenditure whatsoever with respect thereto in connection with this Lease,
     or to maintain the Leased Property in any way.

          (c) Nothing contained in this Lease and no action or inaction by
     Lessor shall be construed as (i) constituting the consent or request of
     Lessor, expressed or implied, to any contractor, subcontractor, laborer,
     materialman or vendor to or for the performance of any labor or services or
     the furnishing of any materials or other property for the construction,
     alteration, addition, repair or demolition of or to the Leased Property or
     any part thereof, or (ii) giving Lessee any right, power or permission to
     contract for or permit the performance of any labor or services or the
     furnishing of any materials or other property in such fashion as would
     permit the making of any claim against Lessor in respect thereof or to make
     any agreement that may create, or in any way be the basis for, any right,
     title, interest, lien, claim or other encumbrance upon the estate of Lessor
     in the Leased Property or any portion thereof.

          (d) Unless Lessor shall convey any of the Leased Property to Lessee
     pursuant to the provisions of this Lease, Lessee will, upon the expiration
     or prior termination of the Term, vacate and surrender the Leased Property
     to Lessor in the condition in which the Leased Property was originally
     received from Lessor, except as improved, repaired, rebuilt, restored,
     altered or added to as permitted or required by the provisions of this
     Lease and except for ordinary wear and tear (subject to the obligation of
     Lessee to maintain the Leased Property in good order and repair during the
     entire Term of the Lease), damage caused by the gross negligence or willful
     acts of Lessor and damage or destruction described in Article XIV or
     resulting from a Taking described in Article XV which Lessee is not
     required by the terms of this Lease to repair or restore.

     9.2 RESERVES FOR EXTRAORDINARY REPAIRS. Commencing on the Commencement
Date, with respect to the initial payment, and on or before the last day of each
calendar quarter thereafter, beginning with the quarter ending March 31, 2006,
Lessee shall make quarterly deposits to a reserve (the "Reserve") at a financial
institution of the Lessor's choosing, provided, however, that the first such
deposit on the Commencement Date, shall be prorated based upon a three hundred
sixty (360) day year. Subject to the immediately preceding sentence, each
deposit to be


                                       19



made pursuant to this Section 9.2 shall be equal to the sum of Two Thousand Five
Hundred and 00/100 Dollars ($2,500.00) per bed per annum. For the period
commencing on the Commencement Date and ending on December 31, 2005, the number
of beds shall be assumed to be one hundred fifty-three (153). Beginning on
January 1, 2006, and on each January 1 thereafter, the number of beds shall be
determined by the actual number of beds placed in service or certified to be
available for use in the Facility, which shall not be reduced without the prior
written consent of Lessor. The account to which such payments are made shall
require the signature of an officer of Lessee and Lessor to make withdrawals.
Beginning on January 1, 2007, and on each January 1 thereafter during the entire
Lease Term, such payment into the Reserve shall be increased by two percent (2%)
per annum. Notwithstanding anything contained herein to the contrary, Lessee
shall pay into the Reserve any amounts needed in excess of such required
payments as provided herein. The amounts in the Reserve, including interest,
shall be used to pay for Extraordinary Repairs on the Facility, or, in the event
Lessee fails to make any required non-Extraordinary Repairs, Lessor may use
funds in the Reserve for that purpose as well, without the necessity of
obtaining the signature of an officer of Lessee. Lessee shall replenish amounts
drawn from the Reserve at the rate of one-twelfth (1/12th) of the total amount
withdrawn per month, until completely replenished. Lessee hereby grants to
Lessor a security interest in all monies deposited into the Reserve and Lessee
shall, within fifteen (15) days from the Commencement Date, execute all
documents necessary for Lessor to perfect its security interest in the Reserve.
Lessor and Lessee agree that the first dollars of all expenditures for
Extraordinary Repairs made in each year during the Term shall be funded from the
Reserve account to the full extent of such account; provided, however, that if
Lessor, in its reasonable discretion, determines at any time that the balance
then remaining in the Reserve account is insufficient to pay in full for the
present and future anticipated Extraordinary Repairs on the Facility, Lessor
shall retain funds in the Reserve account in an amount sufficient to pay in full
for Extraordinary Repairs and Lessee will deposit additional sums into the
account from time to time, upon the written request of Lessor, in amounts equal
to the difference between the then balance in the Reserve account and the cost
to complete the present and future Extraordinary Repairs so that at all times
there is an adequate amount in the Reserve account to pay for such items on a
going forward basis. So long as no default has occurred under any of the terms
hereof, and no event has occurred which with the giving of notice or the passage
of time or both would constitute a default hereunder, any amounts remaining in
the Reserve, after the payment of and the reimbursement for the Extraordinary
Repairs on the Facility, at the expiration of this Lease shall be returned to
Lessee. Lessee consents to Lessor's pledge of the Reserve to any Facility
Lender, subject to Lessor's obligation to return any remaining amounts in the
Reserve to Lessee pursuant to this Section 9.2.

     9.3 ENCROACHMENTS; RESTRICTIONS. If any of the Leased Improvements shall,
at any time, encroach upon any property, street or right-of-way adjacent to the
Leased Property, or shall violate the agreements or conditions contained in any
federal, state or local law, restrictive covenant or other agreement affecting
the Leased Property, or any part thereof, or shall impair the rights of others
under any easement or right-of-way to which the Leased Property is subject, then
promptly upon the request of Lessor, Lessee shall, at its expense, subject to
its right to contest the existence of any encroachment, violation or impairment,
(a) obtain valid and effective waivers or settlements of all claims, liabilities
and damages resulting from each such encroachment, violation or impairment,
whether the same shall affect Lessor or Lessee or (b) make such changes in the
Leased Improvements, and take such other actions, as Lessor in the good faith
exercise of its judgment deems reasonably practicable, to remove such
encroachment, or to end such violation or impairment, including, if necessary,
the alteration of any of the Leased Improvements, and in any event take all such
actions as may be necessary in order to be able to continue the operation of the
Facility without such violation, encroachment or impairment. Any such alteration
shall be made in conformity with the applicable requirements of Article X.
Lessee's obligations under this Section 9.3 shall be in addition to and shall in
no way discharge or diminish any obligation of any insurer under any policy of
title or other insurance and Lessee shall be entitled to a credit for any sums
paid by Lessee and recovered by Lessor under any such policy of title or other
insurance.


                                       20



                                    ARTICLE X

                                CAPITAL ADDITIONS

     10.1 CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED PROPERTY.

          (a) If no Event of Default shall have occurred or be continuing under
     this Lease and the Tenant Leases, Lessee shall have the right, upon and
     subject to the terms and conditions set forth below, to construct or
     install Capital Additions on the Leased Property without the prior written
     consent of Lessor, provided, however, except as expressly provided in
     Section 10.2(d) hereof, Lessee shall not be permitted to create any
     Encumbrance on the Leased Property, in connection with such Capital
     Addition. Prior to commencing construction of any Capital Addition, Lessee
     shall, at Lessee's sole cost and expense (i) submit to Lessor in writing a
     proposal setting forth in reasonable detail any proposed Capital Addition,
     (ii) submit to Lessor such plans and specifications, certificates of need
     and other approvals, permits, licenses, contracts and other information
     concerning the proposed Capital Addition as Lessor may reasonably request,
     and (iii) obtain all necessary certificates of need, state licensure
     surveys and all regulatory approvals of architectural plans. Without
     limiting the generality of the foregoing, such proposal shall indicate the
     approximate projected cost of constructing such Capital Addition, and the
     use or uses to which it will be put.

          (b) Prior to commencing construction of any Capital Addition, Lessee
     shall first request Lessor to provide funds to pay for such Capital
     Addition in accordance with the provisions of Section 10.3. If Lessor
     declines or is unable to provide such financing on terms acceptable to
     Lessee, the provisions of Section 10.2 shall apply. Notwithstanding any
     other provision of this Article X to the contrary, no Capital Additions
     shall be made without the consent of Lessor, which consent shall not be
     unreasonably withheld or delayed, if the Capital Addition Cost of such
     proposed Capital Addition, when aggregated with the costs of all Capital
     Additions made by Lessee, would exceed twenty-five percent (25%) of the
     then Fair Market Value of the Leased Property or would diminish the value
     of the Leased Property. Furthermore, no Capital Addition shall be made
     which would tie in or connect the Leased Property and/or any Leased
     Improvements on the Leased Property with any other improvements on property
     adjacent to the Leased Property (and not part of the Land covered by this
     Lease) including, without limitation, tie-ins of buildings or other
     structures or utilities, unless Lessee shall have obtained the prior
     written approval of Lessor, which approval in Lessor's sole discretion may
     be granted or withheld. All proposed Capital Additions shall be
     architecturally integrated and consistent with the Leased Property.

     10.2 CAPITAL ADDITIONS FINANCED BY LESSEE. If Lessee provides or arranges
to finance any Capital Addition, this Lease shall be and hereby is amended to
provide as follows:

          (a) The above referenced proportion of the Fair Market Added Value of
     Capital Additions paid for by Lessee to the Fair Market Value of the entire
     Leased Property expressed as a percentage is referred to herein as the
     "Added Value Additional". The Added Value Additional determined as provided
     above for each Capital Addition financed or paid for by Lessee shall remain
     in effect until any subsequent Capital Addition.

          (b) There shall be no adjustment in the Base Rent by reason of any
     such Capital Addition.

          (c) Upon the expiration or earlier termination of this Lease, except
     by reason of the default by Lessee hereunder, Lessor shall, if Lessee does
     not purchase the Leased Property as provided herein, compensate Lessee for
     all Capital Additions paid for or financed by Lessee in any of the
     following ways, determined in the sole discretion of Lessor:


                                       21



               (i) By purchasing all Capital Additions paid for by Lessee from
          Lessee for cash in the amount of the Fair Market Added Value of all
          such Capital Additions paid for or financed by Lessee; or

               (ii) By purchasing such Capital Additions from Lessee by
          delivering to Lessee Lessor's purchase money promissory note in the
          amount of said Fair Market Added Value, due and payable not later than
          eighteen (18) months after the date of expiration or other termination
          of this Lease, bearing interest at the test rate applicable under
          Section 1272 of the Code or any successor section thereto ("Test
          Rate") or, if no such Test Rate exists, at the Prime Rate, which
          interest shall be payable monthly, and which note shall be secured by
          a mortgage on the Leased Property, subject to all mortgages and
          encumbrances on the Leased Property at the time of such purchase; or

               (iii) Such other arrangement regarding such compensation as shall
          be mutually acceptable to Lessor and Lessee.

          (d) Lessor and Lessee agree that Lessee's lender for Capital Additions
     shall have the right to secure its loan by a mortgage upon the Leased
     Property provided such mortgage (i) shall not exceed the cost of the
     Capital Additions being made with the proceeds of such loan, (ii) shall be
     subordinate to Lessor's acquisition cost and any Capital Additions paid for
     by the Lessor of the Leased Property, (iii) shall be subordinate to any
     mortgage or encumbrance now existing or hereinafter created, including,
     without limitation, Facility Instruments, (iv) the term of the loan shall
     not extend beyond the term of this Lease, (v) such lender executes all
     subordination and other documents and certificates reasonably required by
     the Facility Lenders, and (vi) shall be limited solely to Lessee's interest
     in the Leased Property.

     10.3 CAPITAL ADDITIONS FINANCED BY LESSOR.

          (a) Lessee shall request that Lessor provide or arrange financing for
     a Capital Addition by providing to Lessor such information about the
     Capital Addition as Lessor may request (a "Request"), including without
     limitation, all information referred to in Section 10.1 above. Lessor may,
     but shall be under no obligation to, obtain the funds necessary to meet the
     Request. Within thirty (30) days of receipt of a Request, Lessor shall
     notify Lessee as to whether it will finance the proposed Capital Addition
     and, if so, the terms and conditions upon which it would do so, including
     the terms of any amendment to this Lease. In no event shall the portion of
     the projected Capital Addition Cost comprised of land, if any, materials,
     labor charges and fixtures be less than ninety percent (90%) of the total
     amount of such cost. Lessee may withdraw its Request by notice to Lessor at
     any time before or after receipt of Lessor's terms and conditions.

          (b) If Lessor agrees to finance the proposed Capital Addition, Lessee
     shall provide Lessor with the following prior to any advance of funds:

               (i) all customary or other required loan documentation, if the
          Capital Addition is to be financed through the incurrence of debt;

               (ii) any information, certificates of need, regulatory approvals
          of architectural plans and other certificates, licenses, permits or
          documents requested by either Lessor or any lender with whom Lessor
          has agreed or may agree to provide financing which are necessary to
          confirm that Lessee will be able to use the Capital Addition upon
          completion thereof in accordance with the Primary Intended Use,
          including all required federal, state or local government licenses and
          approvals;


                                       22



               (iii) an Officer's Certificate and, if requested, a certificate
          from Lessee's architect, setting forth in reasonable detail the
          projected (or actual, if available) cost of the proposed Capital
          Addition;

               (iv) an amendment to this Lease, duly executed and acknowledged,
          in form and substance satisfactory to Lessor (the "Lease Amendment"),
          and containing such provisions as may be necessary or appropriate,
          including without limitation, any appropriate changes in the legal
          description of the Land, the Fair Market Value and the Rent, which
          shall be increased to take into account an adjustment to the Purchase
          Price in an amount equal to the equity contributed by Lessor to
          finance the Capital Addition or, in the case of debt financing, the
          principal and interest on the debt incurred by Lessor to finance the
          Capital Addition;

               (v) a grant deed conveying title to Lessor to any land acquired
          for the purpose of constructing the Capital Addition, free and clear
          of any liens or encumbrances except those approved by Lessor and, both
          prior to and following completion of the Capital Addition, an as-built
          survey thereof satisfactory to Lessor;

               (vi) endorsements to any outstanding policy of title insurance
          covering the Leased Property and any additional land referred to in
          subparagraph (v) above, or a supplemental policy of title insurance
          covering the Leased Property and any additional land referred to in
          subparagraph (v) above, satisfactory in form and substance to Lessor
          (A) updating the same without any additional exceptions, except as may
          be permitted by Lessor; and (B) increasing the coverage thereof by an
          amount equal to the Fair Market Value of the Capital Addition (except
          to the extent covered by the owner's policy of title insurance
          referred to in subparagraph

               (vii) below); (vii) if required by Lessor, (A) an owner's policy
          of title insurance insuring fee simple title to any land conveyed to
          Lessor pursuant to subparagraph (v), free and clear of all liens and
          encumbrances except those approved by Lessor and (B) a lender's policy
          of title insurance satisfactory in form and substance to Lessor and
          the Lending Institution advancing any portion of the Capital Addition
          Cost;

               (viii) if required by Lessor, prior to commencing the Capital
          Addition, an M.A.I. appraisal of the Leased Property indicating that
          the value of the Leased Property upon completion of the Capital
          Addition will exceed the Fair Market Value of the Leased Property
          prior thereto by an amount not less than one hundred percent (100%) of
          the Capital Addition Costs; and

               (ix) such other certificates (including, but not limited to,
          endorsements increasing the insurance coverage, if any, at the time
          required by Section 13.1), documents, contracts, opinions of counsel,
          appraisals, surveys, certified copies of duly adopted resolutions of
          the governing body of Lessee authorizing the execution and delivery of
          the Lease Amendment and any other instruments as may be reasonably
          required by Lessor and any Lending Institution advancing or
          reimbursing Lessee for any portion of the Capital Addition Cost.

          (c) Lessor and Lessee agree that Lessor shall have the right, in the
     exercise of its reasonable discretion and after consulting with Lessee, to
     designate the general contractor, developer, architect, construction
     company, engineer and other parties which will participate in the
     development of the Capital Addition. Lessor and Lessee further agree that
     Lessor shall control the preparation and negotiation of the definitive
     agreements with such parties and Lessor will give Lessee an opportunity to
     review such definitive agreements prior to their execution.

          (d) Upon making a Request to finance a Capital Addition, whether or
     not such financing is actually consummated, Lessee shall pay or agree to
     pay, upon demand, all reasonable costs and expenses


                                       23



     of Lessor and any Lending Institution which has committed to finance such
     Capital Addition which have been paid or incurred by them in connection
     with the financing of the Capital Addition, including, but not limited to,
     (i) the fees and expenses of their respective counsel, (ii) all printing
     expenses, (iii) the amount of any filing, registration and recording taxes
     and fees, (iv) documentary stamp taxes, if any, (v) title insurance
     charges, appraisal fees, if any, rating agency fees, if any, and (vi)
     commitment fees, if any, and (vii) costs of obtaining regulatory and
     governmental approvals, including but not limited to any required
     certificates of need, for the construction, operation, use or occupancy of
     the Capital Addition.

          (e) Lessor and Lessee acknowledge that, in order for the Leased
     Property to comply with State of California laws and regulations governing
     seismic structural integrity requirements (the "Applicable Seismic Laws"),
     certain renovations and upgrades to the Land and the Facility must be made
     prior to the effective date of such Applicable Seismic Laws requiring such
     upgrades, the costs of which are expected to be approximately Seven Million
     Two Hundred Thousand ($7,200,000.00) (the "Seismic Upgrades"). Subject to
     the terms and conditions set forth in this Section 10.3, Lessee agrees to
     renovate and upgrade the Leased Property as necessary to comply with the
     Applicable Seismic Laws and Lessor agrees to provide the funding for the
     same as a Capital Addition under this Section 10.3, provided (i) each
     Seismic Upgrade is completed at least eighteen (18) months prior to the
     effective date of the Applicable Seismic Law requiring such an upgrade, and
     (ii) after taking into account the incurrence of such costs, EBITDAR shall
     continue to equal or exceed two hundred twenty-five percent (225%) of Lease
     Payments (the "Upgrade EBITDAR Covenant"), it being understood and agreed
     that, to the extent that the Upgrade EBITDAR Covenant is not satisfied,
     Lessee shall fund the costs of the Seismic Upgrades as a Capital Addition
     under Section 10.2 hereof to the extent necessary to remain in compliance
     with the Upgrade EBITDAR Covenant.

          (f) Lessor and Lessee acknowledge that Lessor has agreed to provide
     funding up to the Expansion Amount for certain improvements and expansions
     to the Facility (the "Expansion"), and the parties agree that such
     Expansion shall be funded as a Capital Addition pursuant to and subject to
     the provisions of this Section 10.3. The parties further agree to use
     commercially reasonable efforts to enter into an expansion agreement, as
     soon as practicable following the Commencement Date, but in no event later
     than fifteen (15) business days following the Commencement Date, regarding
     the terms and the timing of such Expansion. Upon execution of a development
     agreement relating to the Expansion, as contemplated by the expansion
     agreement, Lessee shall pay Lessor a commitment fee equal to One-Half of
     One Percent (0.5%) of the Expansion Amount.

     10.4 SALVAGE. All materials which are scrapped or removed in connection
with the making of either Capital Additions permitted by Section 10.1 or repairs
required by Article IX shall be or become the property of Lessor.

                                   ARTICLE XI

                                      LIENS

     Subject to the provisions of Article XII relating to permitted contests,
Lessee will not directly or indirectly create or allow to remain and will
promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) the matters, if any, set forth in EXHIBIT B, (c) restrictions, liens
and other encumbrances which are consented to in writing by Lessor, or any
easements granted pursuant to the provisions of Section 7.3 of this Lease, (d)
liens for those taxes of Lessor which Lessee is not required to pay hereunder,
(e) liens for Impositions or for sums resulting from noncompliance with Legal
Requirements so long as (1) the same are not yet payable or are payable without
the addition of any fine or penalty or (2) such liens are in the process of
being contested as permitted by Article XII, (f) liens of mechanics, laborers,
materialmen, suppliers or vendors for sums either disputed or not yet due,
provided that (1) the payment of such sums shall not be postponed for more than
sixty (60) days after the completion of the action giving rise to such lien and
such reserve or other


                                       24



appropriate provisions as shall be required by law or generally accepted
accounting principles shall have been made therefor or (2) any such liens are in
the process of being contested as permitted by Article XII, and (g) any liens
which are the responsibility of Lessor pursuant to the provisions of Article
XXXVII of this Lease. Unless otherwise expressly provided herein, Lessee shall
not mortgage or grant any interest or security interest in, or otherwise assign,
any part of Lessee's rights and interests in this Lease, the Leased Property,
Lessee's Personal Property, or any permits, licenses, certificates of need (if
any) or any other approvals required to operate the Leased Property during the
Term without the prior written consent of Lessor, which may be withheld at
Lessor's sole discretion.

                                   ARTICLE XII

                               PERMITTED CONTESTS

     Lessee, on its own or on Lessor's behalf (or in Lessor's name), but at
Lessee's expense, after two (2) business days' prior written notice to Lessor,
may contest, by appropriate legal proceedings conducted in good faith and with
due diligence, the amount, validity or application, in whole or in part, of any
Imposition, Legal Requirement, Insurance Requirement, lien, attachment, levy,
encumbrance, charge or claim not otherwise permitted by Article XI, provided
that (a) in the case of an unpaid Imposition, lien, attachment, levy,
encumbrance, charge or claim, the commencement and continuation of such
proceedings shall suspend the collection thereof from Lessor and from the Leased
Property, (b) neither the Leased Property nor any Rent therefrom nor any part
thereof or interest therein would be in any immediate danger of being sold,
forfeited, attached or lost, (c) in the case of a Legal Requirement, Lessor
would not be in any immediate danger of civil or criminal liability for failure
to comply therewith pending the outcome of such proceedings, (d) in the event
that any such contest shall involve a sum of money or potential loss in excess
of Fifty Thousand Dollars ($50,000), then, in any such event, (i) provided the
Consolidated Net Worth of Lessee and/or Guarantors is then in excess of Fifty
Million Dollars ($50,000,000), Lessee shall deliver to Lessor an Officer's
Certificate to the effect set forth in clauses (a), (b) and (c), to the extent
applicable, or (ii) in the event the Consolidated Net Worth of Lessee and/or
Guarantors is not then in excess of Fifty Million Dollars ($50,000,000), then
Lessee shall deliver to Lessor and its counsel an opinion of Lessee's counsel to
the effect set forth in clauses (a), (b) and (c), to the extent applicable, (e)
in the case of a Legal Requirement and/or an Imposition, lien, encumbrance or
charge, Lessee shall give such reasonable security as may be demanded by Lessor
to insure ultimate payment of the same and to prevent any sale or forfeiture of
the affected portion of the Leased Property or the Rent by reason of such
non-payment or non-compliance; provided, however, the provisions of this Article
XII shall not be construed to permit Lessee to contest the payment of Rent
(except as to contests concerning the method of computation or the basis of levy
of any Imposition or the basis for the assertion of any other claim) or any
other sums payable by Lessee to Lessor hereunder, (f) in the case of an
Insurance Requirement, the coverage required by Article XIII shall be
maintained, and (g) if such contest be finally resolved against Lessor or
Lessee, Lessee shall, as Additional Charges due hereunder, promptly pay the
amount required to be paid, together with all interest and penalties accrued
thereon, or comply with the applicable Legal Requirement or Insurance
Requirement. Lessor, at Lessee's expense, shall execute and deliver to Lessee
such authorizations and other documents as may reasonably be required in any
such contest and, if reasonably requested by Lessee or if Lessor so desires,
Lessor shall join as a party therein. Lessee shall indemnify and save Lessor
harmless against any liability, cost or expense of any kind that may be imposed
upon Lessor in connection with any such contest and any loss resulting
therefrom.

                                  ARTICLE XIII

                                    INSURANCE

     13.1 GENERAL INSURANCE REQUIREMENTS. During the Term of this Lease, Lessee
shall at all times keep the Leased Property and all property located in or on
the Leased Property, including Lessee's Personal Property, insured against loss
or damage from such causes as are customarily insured against, by prudent owners
of similar facilities. Without limiting the generality of the foregoing, Lessee
shall obtain and maintain in effect throughout the Lease Term, the kinds and
amounts of insurance deemed necessary by the Lessor and as described below.
After


                                       25



prior written notice to Lessee, Lessor may, at Lessor's option, obtain the
insurance coverages required from Lessee herein (excluding coverages for
worker's compensation and professional liability) provided that (i) the
insurance coverages obtained by Lessee may be terminated without penalty or cost
to Lessee, (ii) the costs of such coverages obtained by Lessor collectively do
not exceed the costs of the insurance obtained by Lessee and (iii) the coverages
obtained by Lessor are comparable to that obtained or to be obtained by Lessee
hereunder. In the event Lessor obtains such insurance coverages, Lessee shall
reimburse Lessor for the costs of such coverages immediately upon request by
Lessor. The insurance shall be written by insurance companies (i) acceptable to
the Lessor, (ii) that are rated at least an "A-VII" or better by Best's
Insurance Guide and Key Ratings and a claim payment rating by Standard & Poor's
Corporation of A or better, and (iii) authorized, licensed and qualified to do
insurance business in the state in which the Leased Property is located.
Notwithstanding the foregoing or any other provision of this Article XIII,
Lessor acknowledges and agrees that the insurance coverages required under
subparagraphs (d), (e), (h) and (g) for professional and general liability
umbrella coverage of this Section 13.1 are being handled through a captive
insurance company, the identity of which has been disclosed to the Lessee and
Lessor. The aggregate amount of coverage by a single company must not exceed
five percent (5%) of the insurance company's policyholders' surplus. The
policies must name Lessor (and any other entities as Lessor may deem necessary)
as an additional insured and losses shall be payable to Lessor and/or Lessee as
provided in Article XIV. Each insurance policy required hereunder must (i)
provide primary insurance without right of contribution from any other insurance
carried by Lessor, (ii) contain an express waiver by the insurer of any right of
subrogation, setoff or counterclaim against any insured party thereunder
including Lessor, (iii) permit Lessor to pay premiums at Lessor's discretion,
and (iv) as respects any third party liability claim brought against Lessor,
obligate the insurer to defend Lessor as an additional insured thereunder. In
addition, the policies shall name as an additional insured by way of a standard
form of mortgagee's loss payable endorsement. Any loss adjustment shall require
the written consent of Lessor and each affected Facility Lender(s). Evidence of
insurance and/or Impositions shall be deposited with Lessor and, if requested,
with any Facility Lender(s). If any provision of any Facility Instrument
requires deposits of insurance to be made with such Facility Lender, Lessee
shall either pay to Lessor monthly the amounts required and Lessor shall
transfer such amounts to such Facility Lender or, pursuant to written direction
by Lessor, Lessee shall make such deposits directly with such Facility Lender.
The policies on the Leased Property, including the Leased Improvements, the
Fixtures and Lessee's Personal Property, shall insure against the following
risks:

          (a) All Risks or Special Form Property insurance against loss or
     damage to the building and improvements, including but not limited to,
     perils of fire, lightning, water, wind, theft, vandalism and malicious
     mischief, plate glass breakage, and perils typically provided under an
     Extended Coverage Endorsement and other forms of broadened risk perils, and
     insured on a "replacement cost" value basis to the extent of the full
     replacement value of the Leased Property. The policy shall include coverage
     for subsidence. The deductible amount thereunder shall be borne by the
     Lessee in the event of a loss and the deductible must not exceed Ten
     Thousand and 00/100 Dollars ($10,000.00) per occurrence. Further, in the
     event of a loss, Lessee shall abide by all provisions of the insurance
     contract, including proper and timely notice of the loss to the insurer,
     and Lessee further agrees that it will notify the Lessor of any loss in the
     amount of Twenty-Five Thousand and 00/100 Dollars ($25,000.00) or greater
     and that no claim at or in excess of Twenty-Five Thousand and 00/100
     Dollars ($25,000.00) shall be settled without the prior written consent of
     Lessor, which consent shall not be unreasonably withheld or delayed.

          (b) Flood and earthquake insurance shall be required only in the event
     that the Leased Property is located in a flood plain or earthquake zone.
     Such insurance to be in an amount equal to the Full Replacement Cost value
     of the Facility, subject to no more than a Twenty-Five Thousand Dollars
     ($25,000) per occurrence deductible and such policy shall include coverage
     for subsidence.

          (c) Insurance against loss of earnings in an amount sufficient to
     cover not less than twelve (12) months' lost earnings and written in an
     "all risks" form, either as an endorsement to the insurance required under
     subparagraph (a) above, or under a separate policy.


                                       26



          (d) Worker's compensation insurance covering all employees in amounts
     that are customary for the Lessee's industry.

          (e) Commercial General Liability in a primary amount of at least Three
     Million and 00/100 Dollars ($3,000,000.00) per occurrence, bodily injury
     for injury or death of any one person and One Hundred Thousand and 00/100
     Dollars ($100,000.00) for Property Damage for damage to or loss of property
     of others, subject to a Three Million and 00/100 Dollars ($3,000,000.00)
     annual aggregate policy limit for all bodily injury and property damage
     claims, occurring on or about the Leased Property or in any way related to
     the Leased Property, including but not limited to, any swimming pools or
     other rehabilitation and recreational facilities or areas that are located
     on the Leased Property otherwise related to the Leased Property. Such
     policy shall include coverages of a Broad Form nature, including, but not
     limited to, Explosion, Collapse and Underground (XCU), Products Liability,
     Completed Operations, Broad Form Contractual Liability, Broad Form Property
     Damage, Personal Injury, Incidental Malpractice Liability, and Host Liquor
     Liability.

          (f) Automobile and vehicle liability insurance coverage for all owned,
     non-owned, leased or hired automobiles and vehicles in a primary limit
     amount of One Million and 00/100 Dollars ($1,000,000.00) per occurrence for
     bodily injury; One Hundred Thousand and 00/100 Dollars ($100,000.00) per
     occurrence for property damage; subject to an annual aggregate policy limit
     of One Million and 00/100 Dollars ($1,000,000.00).

          (g) Umbrella liability insurance in the minimum amount of Seven
     Million and 00/100 Dollars ($7,000,000.00) for each occurrence and
     aggregate combined single limit for all liability, with a Ten Thousand and
     00/100 Dollar ($10,000.00) self-insured retention (Fifty Thousand and
     00/100 Dollar ($50,000.00) for professional liability) for exposure not
     covered in underlying primary policies. The umbrella liability policy shall
     name in its underlying schedule the policies of professional liability,
     commercial general liability, garage keepers liability, automobile/vehicle
     liability and employer's liability under the workers compensation policy.

          (h) Professional liability insurance for any physician employed or
     other employee or agent of the Lessee providing services at the Leased
     Property in an amount not less than Three Million and 00/100 Dollars
     ($3,000,000.00) per individual claim and Three Million and 00/100 Dollars
     ($3,000,000.00) annual aggregate, subject to a deductible of no more than
     Fifty Thousand and 00/100 ($50,000.00) per individual claim.

          (i) A commercial blanket bond covering all employees of the Lessee,
     including its officers and the individual owners of the insured business
     entity, whether a joint-venture, partnership, proprietorship or
     incorporated entity, against loss as a result of their dishonesty. Policy
     limit shall be in an amount of at least One Million and 00/100 Dollars
     ($1,000,000.00) subject to a deductible of no more than Ten Thousand and
     00/100 Dollars ($10,000.00) per occurrence.

     The term "Full Replacement Cost" as used herein, shall mean the actual
     replacement cost thereof from time to time, including increased cost of
     construction endorsement, less exclusions provided in the normal fire
     insurance policy. In the event either Lessor or Lessee believes that the
     Full Replacement Cost has increased or decreased at any time during the
     Term, it shall have the right to have such Full Replacement Cost
     re-determined by the fire insurance company which is then providing the
     largest amount of fire insurance carried on the Leased Property,
     hereinafter referred to as the "impartial appraiser". The party desiring to
     have the Full Replacement Cost so re-determined shall forthwith, on receipt
     of such determination by such impartial appraiser, give written notice
     thereof to the other party hereto. The determination of such impartial
     appraiser shall be final and binding on the parties hereto, and Lessee
     shall forthwith increase, or may decrease, the amount of the insurance
     carried pursuant to this Article, as the case


                                       27



     may be, to the amount so determined by the impartial appraiser. Lessee
     shall pay the fee, if any, of the impartial appraiser.

     13.2 ADDITIONAL INSURANCE. In addition to the insurance described above,
Lessee shall maintain such additional insurance, including, without limitation,
adequate loss of rents insurance with respect to casualty or condemnation events
to the extent the coverage set forth in Section 3.1(c) is not adequate, as may
be required from time to time by any Facility Lender and shall further at all
times maintain adequate worker's compensation insurance coverage for all persons
employed by Lessee on the Leased Property, in accordance with the requirements
of applicable local, state and federal law.

     13.3 WAIVER OF SUBROGATION. All insurance policies to be obtained by Lessee
as required hereunder, including, without limitation, insurance policies
covering the Leased Property, the Fixtures, the Facility, and/or Lessee's
Personal Property, including without limitation, contents, fire and casualty
insurance, shall expressly waive any right of subrogation on the part of the
insurer against the Lessor. Lessee shall obtain insurance policies which will
include such a waiver clause or endorsement regardless of whether same is
obtainable without extra cost, and in the event of such an extra charge Lessee
shall pay the same.

     13.4 FORM OF INSURANCE. All of the policies of insurance referred to in
this Section shall be written in form satisfactory to Lessor and by insurance
companies satisfactory to Lessor. Lessee shall pay all of the premiums therefor,
and shall deliver such original policies, or in the case of a blanket policy, a
copy of the original policy certified in writing by a duly authorized agent for
the insurance company as a "true and certified" copy of the policy, to the
Lessor effective with the Commencement Date and furnished annually thereafter
(and, with respect to any renewal policy, at least fifteen (15) days prior to
the expiration of the existing policy) and in the event of the failure of Lessee
either to obtain such insurance in the names herein called for or to pay the
premiums therefor, or to deliver such policies or certified copies of such
policies (if allowed hereunder) to Lessor at the times required, Lessor shall be
entitled, but shall have no obligation, to obtain such insurance and pay the
premiums therefor, which premiums shall be repayable to Lessor upon written
demand therefor, and failure to repay the same shall constitute an Event of
Default within the meaning of Section 16.1(c). Each insurer mentioned in this
Section shall agree, by endorsement on the policy or policies issued by it, or
by independent instrument furnished to Lessor, that it will give to Lessor sixty
(60) days' prior written notice (at Lessor's notice address as specified in this
Lease (the "Lessor's Notice Address")) before the policy or policies in question
shall be altered, allowed to expire or canceled. The parties hereto agree that
all insurance policies, endorsements and certificates which provide that the
insurer will "endeavor to" give notice before same may be altered, allowed to
expire or canceled will not be acceptable to Lessor. Notwithstanding anything
contained herein to the contrary, all policies of insurance required to be
obtained by the Lessee hereunder shall provide (i) that such policies will not
lapse, terminate, be canceled, or be amended or modified to reduce limits or
coverage terms unless and until Lessor has received not less than sixty (60)
days' prior written notice at the Lessor's Notice Address, with a simultaneous
copy to MPT Operating Partnership, LP, Attention: Its President, 1000 Urban
Center Drive, Suite 501, Birmingham, Alabama 35242, and (ii) that in the event
of cancellation due to non-payment of premium, the insurer will provide not less
than ten (10) days' prior written notice to the Lessor at the Lessor's Notice
Address, with a simultaneous copy to MPT Operating Partnership, LP, Attention:
Its President, 1000 Urban Center Drive, Suite 501, Birmingham, Alabama 35242.

     13.5 INCREASE IN LIMITS. In the event that Lessor shall at any time in its
reasonable discretion deem the limits of the personal injury, property damage or
general public liability insurance then carried to be insufficient, the parties
shall endeavor to agree on the proper and reasonable limits for such insurance
to be carried and such insurance shall thereafter be carried with the limits
thus agreed on until further change pursuant to the provisions of this Section.
If the parties shall be unable to agree thereon, the proper and reasonable
limits for such insurance to be carried shall be determined by an impartial
third party selected by the parties. Nothing herein shall permit the amount of
insurance to be reduced below the amount or amounts required by any of the
Facility Instruments.


                                       28



     13.6 BLANKET POLICY. Notwithstanding anything to the contrary contained in
this Section, Lessee's obligations to carry the insurance provided for herein
may be brought within the coverage of a so-called blanket policy or policies of
insurance carried and maintained by Lessee provided that

          (a) Any such blanket policy or policies are acceptable to and have
     been approved by the Lessor;

          (b) Any such blanket policy or policies shall not be changed, altered
     or modified without the prior written consent of the Lessor; and

          (c) Any such blanket policy or policies shall otherwise satisfy the
     insurance requirements of this Article XIII (including the requirement of
     thirty (30) days' written notice before the expiration or cancellation of
     such policies as required by Section 13.4 hereof) and shall provide for
     deductibles in amounts acceptable to Lessor.

     13.7 NO SEPARATE INSURANCE. Lessee shall not, on Lessee's own initiative or
pursuant to the request or requirement of any third party, take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article to be furnished by, or which may reasonably be required
to be furnished by, Lessee, or increase the amounts of any then existing
insurance by securing an additional policy or additional policies, unless all
parties having an insurable interest in the subject matter of the insurance,
including in all cases Lessor and all Facility Lenders, are included therein as
additional insureds and the loss is payable under said insurance in the same
manner as losses are required to be payable under this Lease. Lessee shall
immediately notify Lessor of the taking out of any such separate insurance or of
the increasing of any of the amounts of the then existing insurance by securing
an additional policy or additional policies.

                                   ARTICLE XIV

                                FIRE AND CASUALTY

     14.1 INSURANCE PROCEEDS. All proceeds payable by reason of any loss or
damage to the Leased Property, or any portion thereof, and insured under any
policy of insurance required by Article XIII of this Lease shall be paid to
Lessor and held by Lessor in trust (subject to the provisions of Section 14.7)
and shall be made available for reconstruction or repair, as the case may be, of
any damage to or destruction of the Leased Property, or any portion thereof, and
shall be paid out by Lessor from time to time for the reasonable cost of such
reconstruction or repair. Any excess proceeds of insurance remaining after the
completion of the restoration or reconstruction of the Leased Property (or in
the event neither Lessor nor Lessee is required or elects to repair and restore,
all such insurance proceeds) shall be retained by Lessor free and clear upon
completion of any such repair and restoration except as otherwise specifically
provided below in this Article XIV. All salvage resulting from any risk covered
by insurance shall belong to Lessor except that any salvage relating to Capital
Additions paid for by Lessee or to Lessee's Personal Property shall belong to
Lessee.

     14.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY
INSURANCE.

          (a) Except as provided in Section 14.7, if during the Term, the Leased
     Property is totally or partially destroyed from a risk covered by the
     insurance described in Article XIII and the Facility thereby is rendered
     Unsuitable for its Primary Intended Use, Lessee shall have the option, by
     giving written notice to Lessor within sixty (60) days following the date
     of such destruction, to (i) restore the Facility to substantially the same
     condition as existed immediately before the damage or destruction, or (ii)
     so long as Lessee is not in monetary or payment default of any kind, and no
     event has occurred which with the giving of notice or the passage of time,
     or both, would constitute such a default, under this Lease and the Tenant
     Leases, purchase the Leased Property (including Lessor's interests and
     rights under the Air Space Agreement and the Parking Space Lease) from
     Lessor for a purchase price equal to the Option Price as defined in Section
     35.1 (less the amount of any insurance proceeds held by Lessor), or (iii)
     so long as the


                                       29



     damage or destruction was not caused by the negligence of Lessee, its
     agents, servants, employees or contractors, terminate this Lease and, in
     this event, Lessor shall be entitled to retain the insurance proceeds, and
     Lessee shall pay to Lessor on demand, the amount of any deductible or
     uninsured loss arising in connection therewith. In the event Lessee
     purchases the Leased Property pursuant to this Section 14.2(a), the terms
     set forth in Article XVIII shall apply and the sale/purchase must be closed
     within ninety (90) days after the date of the written notice from Lessee to
     Lessor of Lessee's intent to purchase, unless a different closing date is
     agreed upon in writing by Lessor and Lessee.

          (b) If during the Term, the Leased Improvements and/or the Fixtures
     are totally or partially destroyed from a risk covered by the insurance
     described in Article XIII, but the Facility is not thereby rendered
     Unsuitable for its Primary Intended Use, Lessee shall restore the Facility
     to substantially the same condition as existed immediately before the
     damage or destruction. Such damage or destruction shall not terminate this
     Lease; provided, however, if Lessee cannot within a reasonable time obtain
     all necessary governmental approvals, including building permits, licenses,
     conditional use permits and any certificates of need, after diligent
     efforts to do so, in order to be able to perform all required repair and
     restoration work and to operate the Facility for its Primary Intended Use
     in substantially the same manner as immediately prior to such damage or
     destruction, so long as Lessee is not in monetary or payment default of any
     kind, and no event has occurred which with the giving of notice or the
     passage of time or both would constitute such a default, under the terms of
     this Lease and the Tenant Leases, Lessee shall have the option, by giving
     written notice to Lessor within sixty (60) days following the date of such
     damage or destruction, to purchase the Leased Property (including Lessor's
     interests and rights under the Air Space Agreement and the Parking Space
     Lease) for a purchase price equal to the Option Price as defined in Section
     35.1 (less the amount of any insurance proceeds held by Lessor). In the
     event Lessee purchases the Leased Property pursuant to this Section
     14.2(b), the terms set forth in Article XVIII shall apply and the
     sale/purchase must be closed within ninety (90) days after the date of the
     written notice from Lessee to Lessor of Lessee's intent to purchase, unless
     a different closing date is agreed upon in writing by Lessor and Lessee.

          (c) If the cost of the repair or restoration exceeds the amount of
     proceeds received by Lessor from the insurance required under Article XIII,
     Lessee shall be obligated to contribute any excess amount needed to restore
     the Facility prior to use of the insurance proceeds. Such amount shall be
     paid by Lessee to Lessor (or a Facility Lender if required) to be held in
     trust together with any other insurance proceeds for application to the
     cost of repair and restoration.

          (d) In the event Lessee purchases the Leased Property, this Lease
     shall terminate upon payment of the Option Price (less the amount of any
     insurance proceeds held by Lessor) and Lessor shall remit to Lessee all
     insurance proceeds being held in trust by Lessor or the Facility Lender if
     applicable.

     14.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT COVERED BY
INSURANCE. Except as provided in Section 14.7 below, if during the Term, the
Facility is totally or materially destroyed from a risk not covered by the
insurance described in Article XIII but that would have been covered if Lessee
carried the insurance customarily maintained by, and generally available to, the
operators of reputable health care facilities in the region in which the
Facility is located, then, whether or not such damage or destruction renders the
Facility Unsuitable for its Use, Lessee shall, at its sole cost and expense,
restore the Facility to substantially the same condition it was in immediately
before such damage or destruction and such damage or destruction shall not
terminate this Lease. If such damage or destruction is not material, Lessee
shall restore the Leased Property at Lessee's expense.

     14.4 LESSEE'S PERSONAL PROPERTY. All insurance proceeds payable by reason
of any loss of or damage to any of Lessee's Personal Property or Capital
Additions financed by Lessee shall be paid to Lessor and Lessor shall hold such
insurance proceeds in trust to pay the cost of repairing or replacing the damage
to Lessee's Personal Property or the Capital Additions financed by Lessee.


                                       30



     14.5 RESTORATION OF LESSEE'S PROPERTY. If Lessee is required or elects to
restore the Facility as provided in Sections 14.2 or 14.3, Lessee shall also
restore all alterations and improvements made by Lessee, Lessee's Personal
Property and all Capital Additions paid for by Lessee.

     14.6 NO ABATEMENT OF RENT. This Lease shall remain in full force and effect
and Lessee's obligation to make rental payments and to pay all other charges
required by this Lease shall remain unabated during any period required for
repair and restoration.

     14.7 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of Sections
14.2 or 14.3 to the contrary but subject to the option of Lessee to purchase the
Leased Property as provided in Section 35.1 by giving Lessor written notice
within sixty (60) days following the date of such damage or destruction, if
damage to or destruction of the Facility occurs during the last twenty-four (24)
months of the Term, and if such damage or destruction cannot be fully repaired
and restored within six (6) months immediately following the date of loss,
either party shall have the right to terminate this Lease by giving notice to
the other within sixty (60) days after the date of damage or destruction, in
which event Lessor shall be entitled to retain the insurance proceeds and Lessee
shall pay to Lessor on demand the amount of any deductible or uninsured loss
arising in connection therewith; provided, however, that any such notice given
by Lessor shall be void and of no force and effect if Lessee exercises an
available option to extend the Term for one Extended Term within thirty (30)
days following receipt of such termination notice.

     14.8 TERMINATION OF RIGHT TO PURCHASE. Any termination of this Lease
pursuant to this Article XIV shall cause any right to purchase under any other
provisions of this Lease granted to Lessee under this Lease to be terminated and
to be without further force and effect.

     14.9 WAIVER. Lessee hereby waives any statutory or common law rights of
termination which may arise by reason of any damage or destruction of the
Facility.

                                   ARTICLE XV

                                  CONDEMNATION

     15.1 DEFINITIONS.

          (a) "Condemnation" means (i) the exercise of any governmental power,
     whether by legal proceedings or otherwise, by a Condemnor or (ii) a
     voluntary sale or transfer by Lessor to any Condemnor, either under threat
     of Condemnation or while legal proceedings for Condemnation are pending.

          (b) "Date of Taking" means the date the Condemnor has the right to
     possession of the property being condemned.

          (c) "Award" means all compensation, sums or anything of value awarded,
     paid or received on a total or partial Condemnation.

          (d) "Condemnor" means any public or quasi-public authority, or private
     corporation or individual, having the power of Condemnation.

     15.2 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is any
Taking of all or any part of the Leased Property or any interest in this Lease
by Condemnation, the rights and obligations of the parties shall be determined
by this Article XV.

     15.3 TOTAL TAKING. If there is a Taking of all of the Leased Property by
Condemnation, this Lease shall terminate on the Date of Taking.


                                       31



     15.4 PARTIAL TAKING. If there is a Taking of a portion of the Leased
Property by Condemnation, this Lease shall remain in effect if the Facility is
not thereby rendered Unsuitable for its Primary Intended Use. If, however, the
Facility is thereby rendered Unsuitable for its Primary Intended Use, Lessee
shall have the option (a) to restore the Facility, at its own expense, to the
extent possible, to substantially the same condition as existed immediately
before the partial Taking, or (b) so long as Lessee is not in monetary or
payment default of any kind, and no event has occurred which with the giving of
notice or the passage of time or both would constitute such a default, under the
terms of this Lease, the Other Leases and the Tenant Leases to acquire the
Leased Property (including Lessor's interests and rights in the Air Space
Agreement and the Parking Space Lease) from Lessor for a purchase price equal to
the Option Price as defined in Section 35.1, in which event this Lease shall
terminate upon payment of the Option Price. Lessee shall exercise its option by
giving Lessor notice thereof within sixty (60) days after Lessee receives notice
of the Taking. In the event Lessee exercises the option to purchase the Leased
Property pursuant to this Section 15.4, the terms set forth in Article XVIII
shall apply and the sale/purchase must be closed within thirty (30) days after
the date of the written notice from Lessee to Lessor of Lessee's intent to
purchase, unless a different closing date is agreed upon in writing by Lessor
and Lessee.

     15.5 RESTORATION. If there is a partial Taking of the Leased Property and
this Lease remains in full force and effect pursuant to Section 15.4, Lessee
shall accomplish all necessary restoration.

     15.6 AWARD DISTRIBUTION. In the event Lessee exercises the purchase option
as described in clause (b) of Section 15.4, the entire Award shall belong to
Lessee provided no Event of Default is continuing and Lessor agrees to assign to
Lessee all of its rights thereto. In any other event, the entire Award shall
belong to and be paid to Lessor, except that, if this Lease is terminated, and
subject to the rights of the Facility Lender, Lessee shall be entitled to
receive from the Award, if and to the extent such Award specifically includes
such items, the following:

          (a) A sum attributable to the Capital Additions for which Lessee would
     be entitled to reimbursement at the end of the Term pursuant to the
     provisions of Section 10.2(c) and the value, if any, of the leasehold
     interest of Lessee under this Lease; and

          (b) A sum attributable to Lessee's Personal Property and any
     reasonable removal and relocation costs included in the Award.

If Lessee is required or elects to restore the Facility, Lessor agrees that,
subject to the rights of the Facility Lenders, its portion of the Award shall be
used for such restoration and it shall hold such portion of the Award in trust,
for application to the cost of the restoration. Notwithstanding any provision of
this Lease to the contrary, any Award retained by Lessor and not used for
restoration shall be taken into account as an amount received by Lessor for
purposes of calculating the Option Price as defined in Section 35.1.

     15.7 TEMPORARY TAKING. The Taking of the Leased Property, or any part
thereof, by military or other public authority shall constitute a Taking by
Condemnation only when the use and occupancy by the Taking authority has
continued for longer than six (6) months. During any such six (6) month period
all the provisions of this Lease shall remain in full force and effect and the
Base Rent shall not be abated or reduced during such period of Taking.

                                   ARTICLE XVI

                                     DEFAULT

     16.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events (individually, an "Event of Default") shall constitute Events of Default
or defaults hereunder:

          (a) if Lessee defaults under the Air Space Agreement and such default
     is not cured within the applicable cure period as provided therein, or


                                       32



          (b) if Lessee defaults under the Parking Space Lease and such default
     is not cured within the applicable cure period as provided therein, or

          (c) if Lessee shall fail to make a payment of the Rent or any other
     monetary payment due and payable by Lessee under this Lease when the same
     becomes due and payable, or

          (d) if Lessee shall fail to observe or perform any other term,
     covenant or condition of this Lease and such failure is not cured by Lessee
     within a period of thirty (30) days after receipt by Lessee of written
     notice thereof from Lessor (provided, however, in no event shall Lessor be
     required to give more than one (1) written notice per calendar year for a
     non-monetary default), unless such failure cannot with due diligence be
     cured within a period of thirty (30) days, in which case such failure shall
     not be deemed to continue if Lessee proceeds promptly and with due
     diligence to cure the failure and diligently completes the curing thereof
     within sixty (60) days after receipt by Lessee of Lessor's notice of
     default, or

          (e) if Lessee or any Guarantor shall:

               (i) admit in writing its inability to pay its debts generally as
          they become due,

               (ii) file a petition in bankruptcy or a petition to take
          advantage of any insolvency act,

               (iii) make an assignment for the benefit of its creditors,

               (iv) consent to the appointment of a receiver of itself or of the
          whole or any substantial part of its property, or

               (v) file a petition or answer seeking reorganization or
          arrangement under the Federal bankruptcy laws or any other applicable
          law or statute of the United States of America or any state thereof,
          or

               (vi) if Lessee's license as defined in Article XXXIX or
          participation or certification in Medicare, Medicaid or other
          governmental payor programs is terminated, or

               (vii) if Lessee admits in writing that it cannot meet its
          obligations as they become due; or is declared insolvent according to
          any law; or assignment of Lessee's property is made for the benefit of
          creditors; or a receiver or trustee is appointed for Lessee or its
          property; or the interest of Lessee under this Lease is levied on
          under execution or other legal process; or any petition is filed by or
          against Lessee to declare Lessee bankrupt or to delay, reduce or
          modify Lessee's capital structure if Lessee be a corporation or other
          entity (provided that no such levy, execution, legal process or
          petition filed against Lessee shall constitute a breach of this Lease
          if Lessee shall vigorously contest the same by appropriate proceedings
          and shall remove or vacate the same within thirty (30) days from the
          date of its creation, service or filing); or

               (viii) the abandonment or vacation of the Leased Property by
          Lessee (Lessee's absence from the Leased Property for thirty (30)
          consecutive days shall constitute abandonment), or Lessee fails to
          continuously operate the Facility in accordance with the terms of this
          Lease.

          (f) if the Lessee or any Guarantor shall, after a petition in
     bankruptcy is filed against it, be adjudicated a bankrupt or if a court of
     competent jurisdiction shall enter an order or decree appointing, without
     the consent of Lessee or such Guarantor, as the case may be, a receiver of
     Lessee or such Guarantor or of the whole or substantially all of its
     property, or approving a petition filed against it seeking reorganization
     or arrangement of Lessee or such Guarantor under the federal bankruptcy
     laws or any other


                                       33



     applicable law or statute of the United States of America or any state
     thereof, and such judgment, order or decree shall not be vacated or set
     aside or stayed within ninety (90) days from the date of the entry thereof,
     or

          (g) if Lessee or any Guarantor shall be liquidated or dissolved, or
     shall begin proceedings toward such liquidation or dissolution, or shall,
     in any manner, permit the sale or divestiture of substantially all of its
     assets other than in connection with a merger or consolidation of Lessee or
     such Guarantor into, or a sale of substantially all of Lessee's or such
     Guarantor's assets to, another corporation, provided that if the survivor
     of such merger or the purchaser of such assets shall assume all of Lessee's
     obligations under this Lease by a written instrument, in form and substance
     reasonably satisfactory to Lessor, accompanied by an opinion of counsel,
     reasonably satisfactory to Lessor and addressed to Lessor stating that such
     instrument of assumption is valid, binding and enforceable against the
     parties thereto in accordance with its terms (subject to usual bankruptcy
     and other creditors' rights exceptions), and provided, further, that if,
     immediately after giving effect to any such merger, consolidation or sale,
     Lessee or such other corporation (if not the Lessee) surviving the same,
     together with Guarantors, shall have a Consolidated Net Worth not less than
     the Consolidated Net Worth of Lessee or Guarantors immediately prior to
     such merger, consolidation or sale, all as to be set forth in an Officer's
     Certificate delivered to Lessor within thirty (30) days of such merger,
     consolidation or sale, an Event of Default shall not be deemed to have
     occurred, or

          (h) if the estate or interest of Lessee in the Leased Property or any
     part thereof shall be levied upon or attached in any proceeding and the
     same shall not be vacated or discharged within the later of ninety (90)
     days after commencement thereof or thirty (30) days after receipt by Lessee
     of written notice thereof from Lessor (unless Lessee shall be contesting
     such lien or attachment in good faith in accordance with Article XII
     hereof), or

          (i) if, except as a result of damage, destruction or a partial or
     complete Condemnation, Lessee voluntarily ceases operations on the Leased
     Property for a period in excess of ninety (90) days, or

          (j) if any of the representations or warranties made by Lessee or any
     of the Sellers named in the Purchase Agreement or in the certificates
     delivered in connection therewith are or become untrue in any material
     respect, and which is not cured within ten (10) days after notice from
     Lessor, or

          (k) a default shall occur under the Lease Guaranty, or

          (l) a default or event of default shall occur under the Lease
     Assignment, Purchase Agreement, Security Agreement or any other agreement
     between Lessor or any Affiliate of Lessor, on the one hand, and Lessee, any
     Guarantor, or any of their respective Affiliates, on the other hand, which
     is not cured within the cure period as provided therein, or

          (m) if Lessee defaults under the Tenant Leases or fails or refuses to
     enforce the terms and conditions of the Tenant Leases, or

          (n) if a payment default occurs with respect to any of Lessee's or any
     Guarantor's debt or other leases or is declared to be in material default
     by any of its lenders and such default is not cured within the applicable
     cure periods provided therefor.

Notwithstanding anything contained herein to the contrary, a default under any
Other Leases or a default under any guaranty executed by the guarantors
guaranteeing the obligations of the lessee under any Other Leases shall not
constitute a default under this Lease.

If an Event of Default shall have occurred, Lessor may pursue any one or more of
the remedies set forth in Sections 16.1A through D below and in Section 16.2
hereof, in addition to any remedies which may be permitted by law or


                                       34



by other provisions of this Lease, without notice or demand, except as
hereinafter provided. Lessor may exercise these remedies at the time of an Event
of Default or at any time thereafter; provided, however, that if Lessor fails to
exercise any such remedy within six (6) months following the occurrence of such
Event of Default, Lessee may cure such default, provided such cure occurs prior
to Lessor's exercise of such remedy and, provided further, that any cure by
Lessee within such six (6) month period shall have no effect on Lessor's right
to exercise any such remedy within such six (6) month period.

     A. Without any notice or demand whatsoever, Lessor may take any one or more
of the actions permissible at law to insure performance by Lessee of Lessee's
covenants and obligations under this Lease. In this regard, it is agreed that if
Lessee deserts or vacates the Leased Property, Lessor may enter upon and take
possession of such Leased Property in order to protect it from deterioration and
continue to demand from Lessee the monthly rentals and other charges provided in
this Lease, without any obligation to relet; but that if Lessor does, at its
sole discretion, elect to relet the Leased Property, such action by Lessor shall
not be deemed as an acceptance of Lessee's surrender of the Leased Property
unless Lessor expressly notifies Lessee of such acceptance in writing pursuant
to subsection B of this Section 16.1, Lessee hereby acknowledging that Lessor
shall otherwise be reletting as Lessee's agent and Lessee furthermore hereby
agreeing to pay to Lessor on demand any deficiency that may arise between the
monthly rentals and other charges provided in this Lease and that are actually
collected by Lessor. It is further agreed in this regard that in the event of
any default described in this Section 16.1, Lessor shall have the right to enter
upon the Leased Property without being liable for prosecution or any claim for
damages therefor, and do whatever Lessee is obligated to do under the terms of
this Lease; and Lessee agrees to reimburse Lessor on demand for any expenses
which Lessor may incur in thus effecting compliance with Lessee's obligations
under this Lease, and Lessee further agrees that Lessor shall not be liable for
any damages resulting to the Lessee from such action.

     B. Lessor may terminate this Lease by written notice to Lessee, in which
event Lessee shall immediately surrender the Leased Property to Lessor, and if
Lessee fails to do so, Lessor may, without prejudice to any other remedy which
Lessor may have for possession or arrearages in rent (including any interest
which may have accrued pursuant to Section 3.3 of this Lease), enter upon and
take possession of the Leased Property and expel or remove Lessee and any other
person who may be occupying said premises or any part thereof without being
liable of prosecution or any claim for damages therefor. Lessee hereby waives
any statutory requirement of prior written notice for filing eviction or damage
suits for nonpayment of rent. In addition, Lessee agrees to pay to Lessor on
demand the amount of all loss and damage which Lessor may suffer by reason of
any termination effected pursuant to this subsection B, said loss and damage to
be determined by:

               (i) The worth at the time of award of the unpaid rent which had
          been earned at the time of termination;

               (ii) The worth at the time of award of the amount by which the
          unpaid rent which would have been earned after termination until the
          time of award exceeds the amount of such rental loss that the Lessee
          proves could have been reasonably avoided;

               (iii) The worth at the time of award of the amount by which the
          unpaid rent for the balance of the term after the time of award
          exceeds the amount of such rental loss that the Lessee proves could be
          reasonably avoided; and

               (iv) Any other amount necessary to compensate the Lessor for all
          the detriment proximately caused by the Lessee's failure to perform
          its obligations under this Lease or which in the ordinary course of
          things would be likely to result therefrom, including, but not limited
          to, all reasonable legal expenses and other related costs incurred by
          Lessor following an Event of Default, all costs incurred by Lessor in
          recovering the Leased Property and restoring the Leased Property to
          good order and condition, and/or in remodeling, renovating or
          otherwise preparing the Leased Property for reletting, and all costs
          (including, without limitation, any brokerage commissions and
          reasonable attorneys' fees) incurred by Lessor in reletting the Leased
          Premises.


                                       35



     The "worth at the time of award" of the amounts referred to in
subparagraphs (i) and (ii) above is computed by allowing interest at a rate
equal to the lowest rate of capitalization (highest present worth) reasonably
applicable at the time of such determination and allowed by applicable law. The
worth at the time of award of the amount referred to in subparagraph (iii) above
is computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%).

     C. In addition to other rights and remedies Lessor may have hereunder and
at law and in equity, if an Event of Default occurs under this Lease, (i) Lessee
is deemed to have assigned to Lessor, at Lessor's sole option, all service
agreements (including, without limitation, all medical director agreements);
(ii) to the extent permitted by law, Lessee is deemed, at Lessor's sole
discretion, to have transferred and assigned to Lessor all Licenses and
agreements, including, without limitation, all Medicare and Medicaid provider
numbers, and (iii) to the extent permitted by law, if required by Lessor,
transfer to the Lessor all of the Licenses, including, without limitation, all
Medicare and Medicaid provider numbers. In the event there are legal limitations
on any of the foregoing remedies, Lessee further hereby covenants and agrees
that it will take all actions necessary to orderly transfer the operations and
occupancy of the Leased Property to the Lessor, including cooperating with
respect to the transfer to Lessor of Licenses, provider numbers and other
agreements.

     D. In addition to the above remedies, in the Event of any Default hereunder
by Lessee, Lessor, at its option, may have one or more of the following remedies
in addition to all other legal rights and remedies:

               (i) Lessor may serve upon Lessee notice that its Lease and the
          then unexpired term hereof shall terminate and become absolutely void
          on a date specified in such notice, which shall be the date of such
          notice or such later date as may be required by law, and the Lease,
          and well as the right, title, and interest of Lessee hereunder shall,
          except as to the rights and remedies of Lessor upon termination as
          provided herein, terminate and become void in the same manner and with
          the same force and effect as if the date filed in such notice were the
          date originally specified for the expiration of the Lease term; and
          Lessee shall then immediately quit and surrender to Lessor the Leased
          Property, including any and all buildings and improvements thereon,
          and Lessor may then or at any time thereafter, without judicial
          proceedings of any kind, enter into and repossess the Leased Property,
          and may remove all occupants and any property thereon without being
          liable for any action or prosecution of any kind for such entry or the
          manner thereof, or loss of or damage to any property upon the Leased
          Property. In the event of any such termination of this Lease, and in
          addition to any other rights and remedies Lessor may have, Lessor
          shall have all of the rights and remedies of a Lessor provided by
          Section 1951.2 of the California Civil Code.

               (ii) In addition, Lessor shall have all the rights and remedies
          described in Section 1951.4 of the California Civil Code (Lessor may
          continue the Lease in effect after Lessee's breach and abandonment and
          recover rent as it becomes due, if Lessee has the right to sublease or
          assign subject only to reasonable limitations).

               (iii) Lessor may immediately terminate Lessee's right of
          possession of the Leased Property, but not terminate the Lease, and
          without notice or demand enter upon the Leased Property or any part
          thereof and take absolute possession of the same, and at Lessor's sole
          option may relet the Leased Property or any part thereof for such
          terms and such rents as Lessor may reasonable elect. In the event
          Lessor shall elect to so relet, then rent received by Lessor from such
          reletting shall be applied first, to the payment of any indebtedness
          other than Rent due hereunder from Lessee to Lessor, second, to the
          payment of any cost of such reletting, including, without limitation,
          refurbishing costs and leasing commissions, and third, to the payment
          of Rent due and unpaid hereunder, and Lessee shall satisfy and pay any
          deficiency upon demand therefor from time to time. Any entry into and
          possession of the Leased Property by Lessor shall be without liability
          or responsibility to Lessee and shall not be in lieu of or in
          substitution for any other legal rights of Lessor hereunder. Lessee
          further agrees that Lessor may file suit to recover any sums due under
          the terms of this Lease and that no recovery of any portion due Lessor
          hereunder shall


                                       36



          be any defense to any subsequent action brought for any amount not
          therefore reduced to judgment in favor of Lessor. Reletting of the
          Leased Property shall not be construed as an election on the part of
          Lessor to terminate this Lease and, notwithstanding any such reletting
          without termination, Lessor may at any time thereafter elect to
          terminate this Lease for default.

     16.2 EVENTS OF DEFAULT IN FINANCIAL COVENANTS.

          (a) FIRST TIER DEFAULTS. Beginning with the date on which the Lease
Guaranty is terminated (the "Covenant Commencement Date"), the failure or breach
of any one or more of the following shall constitute a default and breach of
this Section 16.2(a) and the Lessor shall have the rights and remedies provided
for herein:

               (i) EBITDAR fails to equal or exceed one hundred seventy-five
               percent (175%) of Fixed Charges;

               (ii) Total Debt of Lessee shall not exceed fifty percent (50%) of
               the greater of (A) the Total Capitalization of Lessee or (B) the
               Market Value of Lessee; or

               (iii) EBITDAR fails to equal or exceed two hundred fifty percent
               (250%) of Lease Payments.

     The covenants described in this Section 16.2(a) (i) -- (iii) shall first
become effective at the end of the first full calendar quarter subsequent to the
Covenant Commencement Date and shall be tested at the end of each subsequent
calendar quarter. All operating measures shall be calculated on a trailing
twelve (12) month basis.

     Upon the occurrence of any of the items set forth in Section 16.1 or in
subparagraph (a) items (i) through (iii) of this Section 16.2(a), Lessor may, at
its option, upon five (5) days' written notice to Lessee (any such notice
requiring such termination being herein referred to as the "Removal Notice"),
require Lessee to terminate the engagement of any Management Company managing
the Facility and replace such Management Company with a manager chosen by Lessor
(or, if there is no Management Company managing the Facility at that time,
Lessor may require the Lessee to engage a Management Company acceptable to
Lessor and enter into a contract with such Management Company upon terms and
conditions acceptable to Lessor).

          (b) SECOND TIER DEFAULTS. Beginning on the Covenant Commencement Date,
the failure or breach of any one or more of the following covenants shall
constitute a default and breach of this Section 16.2(b) and Lessor shall have
the rights and remedies provided for herein:

               (i) Total Debt of Lessee shall not exceed eighty percent (80%) of
               the greater of (A) the Total Capitalization of Lessee or (B) the
               Market Value of Lessee;

               (ii) Lessee shall not experience six (6) consecutive quarters of
               falling net revenue and generate a EBITDAR of less than two
               hundred percent (200%) of the Lease Payments; or

               (iii) Neither Lessee nor any of the Guarantors shall be in
               payment default on any of its corporate debt or other leases or
               be declared to be in material default by any of its corporate
               lenders, unless such default is cured within the cure periods
               provided for therein.

     The covenants described in this Section 16.2(b) (i) - (iii) shall first
become effective at the end of the first full calendar quarter subsequent to the
Covenant Commencement Date and shall be tested at the end of each subsequent
calendar quarter. All operating measures shall be calculated on a trailing
twelve (12) month basis.


                                       37



     Upon the occurrence of any of the items set forth in Section 16.1 or in
subparagraph (b) items (i) through (iii) of this Section 16.2(b), Lessor may, at
its option, upon delivery of the Removal Notice, require Lessee to terminate the
engagement of the Management Company managing the Facility and replace such
Management Company with manager chosen by Lessor (or, if there is no Management
Company managing the facility at that time, Lessor may require the Lessee to
engage a Management Company acceptable to Lessor and enter into a contract with
such Management Company upon terms and conditions acceptable to Lessor), and
Lessor may, at its option, proceed with all other remedies Lessor deems
necessary, including, without limitation, terminating this Lease and pursuing
all other customary remedies available at law and in equity.

     16.3 ADDITIONAL EXPENSES. It is further agreed that, in addition to
payments required pursuant to subsections A and B of Section 16.1 above, Lessee
shall compensate Lessor for (i) all administrative expenses, (ii) all expenses
incurred by Lessor in repossessing the Leased Property (including among other
expenses, any increase in insurance premiums caused by the vacancy of the Leased
Property), (iii) all expenses incurred by Lessor in reletting (including among
other expenses, repairs, remodeling, replacements, advertisements and brokerage
fees), (iv) all concessions granted to a new tenant or tenants upon reletting
(including among other concessions, renewal options), (v) Lessor's reasonable
attorneys' fees and expenses, (vi) all losses incurred by Lessor as a direct or
indirect result of Lessee's default (including among other losses any adverse
action by mortgagees), and (vii) a reasonable allowance for Lessor's
administrative efforts, salaries and overhead attributable directly or
indirectly to Lessee's default and Lessor's pursuing the rights and remedies
provided herein and under applicable law.

     16.4 Intentionally Omitted.

     16.5 WAIVER. If this Lease is terminated pursuant to Section 16.1, Lessee
waives, to the extent permitted by applicable law, (a) any right of redemption,
re-entry or repossession, (b) any right to a trial by jury in the event of
summary proceedings to enforce the remedies set forth in this Article XVI, and
(c) the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt.

     16.6 APPLICATION OF FUNDS. Any payments otherwise payable to Lessee which
are received by Lessor under any of the provisions of this Lease during the
existence or continuance of any Event of Default shall be applied to Lessee's
obligations in the order which Lessor may reasonably determine or as may be
prescribed by the laws of the state in which the Facility is located.

     16.7 NOTICES BY LESSOR. The provisions of this Article XVI concerning
notices shall be liberally construed insofar as the contents of such notices are
concerned, and any such notice shall be sufficient if reasonably designed to
apprise Lessee of the nature and approximate extent of any default, it being
agreed that Lessee is in good or better position than Lessor to ascertain the
exact extent of any default by Lessee hereunder.

     16.8 LESSOR'S CONTRACTUAL SECURITY INTEREST. Subject to the Prior Lien of
Lessee's Primary Lender (as such terms are defined herein), to secure the
payment of all rent due and to become due hereunder and the faithful performance
of this Lease by Lessee and to secure all other indebtedness, obligations and
liabilities of Lessee to Lessor now existing or hereafter incurred, and all
Obligations (as defined in the Security Agreement), Lessee hereby gives to
Lessor an express first and prior contract lien and security interest in all
property which may be placed on the Leased Property (including trailers and all
equipment affixed therein, fixtures, equipment (including medical equipment
whether or not affixed to the Leased Property), chattels and merchandise) and
also upon all proceeds of any insurance which may accrue to Lessee by reason of
destruction of or damage to any such property and also upon all of Lessee's
interest as lessee and rights and options to purchase fixtures, equipment and
chattels placed on the Leased Property (in case of fixtures, equipment and
chattels leased to Lessee which are placed on the Leased Property). All
exemption laws are hereby waived in favor of such lien and security interest and
in favor of Lessor's statutory landlord lien. This lien and security interest
are given in addition to any statutory landlord lien and shall be cumulative
thereto. Except as limited in favor of the Primary Lender as set forth in this
Section 16.8, Lessor shall have at all times a valid security interest to secure
payment of all rentals and other sums of money becoming due hereunder from
Lessee, and to secure payment of any damages or loss which Lessor may suffer by
reason of the


                                       38



breach by Lessee of any covenant, agreement or condition contained herein, upon
all inventory, merchandise, goods, wares, equipment (including medical equipment
whether or not affixed to the Leased Property), fixtures, furniture,
improvements and other tangible personal property of Lessee presently, or which
may hereafter be, situated in or about the Leased Property, and all proceeds
therefrom and accessions thereto and, except as a result of sales made in the
ordinary course of Lessee's business, such property shall not be removed without
the consent of Lessor until all arrearages in rent as well as any and all other
sums of money then due to Lessor or to become due to Lessor hereunder shall
first have been paid and discharged and all the covenants, agreements and
conditions hereof have been fully complied with and performed by Lessee. Upon
the occurrence of an Event of Default by Lessee, Lessor may, in addition to any
other remedies provided herein, enter upon the Leased Property and take
possession of any and all inventory, merchandise, goods, wares, equipment,
fixtures, furniture, improvements and other personal property of Lessee situated
in or about the Leased Property, without liability for trespass or conversion,
and sell the same at public or private sale, with or without having such
property at the sale, after giving Lessee reasonable notice of the time and
place of any public sale of the time after which any private sale is to be made,
at which sale the Lessor or its assigns may purchase unless otherwise prohibited
by law. Unless otherwise provided by law, and without intending to exclude any
other manner of giving Lessee reasonable notice, the requirement of reasonable
notice shall be met, if such notice is given in the manner prescribed in this
Lease at least seven (7) days before the time of sale. Any sale made pursuant to
the provision of this paragraph shall be deemed to have been a public sale
conducted in commercially reasonable manner if held in the above-described
premises or where the property is located after the time, place and method of
sale and a general description of the types of property to be sold have been
advertised in a daily newspaper published in the county in which the property is
located, for five (5) consecutive days before the date of the sale. The proceeds
from any such disposition, less any and all expenses connected with the taking
of possession, holding and selling of the property (including reasonable
attorney's fees and legal expenses), shall be applied as a credit against the
indebtedness secured by the security interest granted in this paragraph. Any
surplus shall be paid to Lessee or as otherwise required by law; the Lessee
shall pay any deficiencies forthwith. Upon request by Lessor, Lessee agrees to
execute (if required by law; provided, however, Lessor shall have the right to
file a UCC-1 financing statement (and all amendments, modifications and
extensions thereto) at any time as provided in the Security Agreement) and
deliver to Lessor a financing statement in form sufficient to perfect the
security interest of Lessor in the aforementioned property and proceeds thereof
under the provision of the Uniform Commercial Code (or corresponding state
statute or statutes) in force in the state in which the Leased Property is
located, as well as any other state the laws of which Lessor may at any time
consider to be applicable.

     As used herein, the term "Primary Lien of Lessee's Primary Lender" means
any first priority lien granted by Lessee in any of Lessee's machinery,
equipment (including medical equipment whether or not affixed to the Leased
Property), furniture, furnishings, tools, movable walls or partitions,
computers, signage, trade fixtures, supplies, inventory, or any other tangible
personal property placed on the Leased Property and used or useful in Lessee's
business conducted at or on the Leased Property (the "Collateral"), which may be
given in connection with Lessee's lender (the "Primary Lender") providing
financing for Lessee to purchase such items of Collateral or in connection with
the refinancing of any such items of Collateral, including, without limitation,
the first priority lien of HFG Healthco-4 LLC in inventory and those intangibles
necessary to collect accounts receivable. In the event Lessee obtains financing
from a Primary Lender or refinances such items of Collateral, Lessee shall use
commercially reasonable efforts to obtain from its Primary Lender a consent to a
secondary lien on such Collateral in favor of Lessor, in form and content
reasonably acceptable to the Primary Lender and the Lessor. Lessee covenants and
agrees not to place or allow any other liens to be placed on the Collateral.
Lessee covenants and agrees that all indebtedness (except for the indebtedness
owed to the Primary Lender) owed by Lessee under all agreements executed in
connection with the Lessee's financing of Lessee's Personal Property to be used
in connection with the operation of the Facility shall be subordinate to all
monetary obligations under this Lease and Lessee shall not to place or allow any
other liens to be placed on the Lessee's Personal Property. At the request of
Lessor from time to time, Lessee shall execute and shall obtain from all parties
to such financing arrangements executed written confirmation of such
subordination (in form and content as is acceptable to Lessor), which shall be
delivered to Lessor within ten (10) days from Lessor's request.


                                       39



                                  ARTICLE XVII

                             LESSOR'S RIGHT TO CURE

     If Lessee shall fail to make any payment, or to perform any act required to
be made or performed under this Lease and to cure the same within the relevant
time periods provided in Section 16.1, Lessor, without waiving or releasing any
obligation or Event of Default, may (but shall be under no obligation to) at any
time thereafter make such payment or perform such act for the account and at the
expense of Lessee, and may, to the extent permitted by law, enter upon the
Leased Property for such purpose and take all such action thereon as, in
Lessor's opinion, may be necessary or appropriate therefor. No such entry shall
be deemed an eviction of Lessee. All sums so paid by Lessor and all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses, in each case, to the extent permitted by law) so incurred, together
with a late charge thereon (to the extent permitted by law) at the Overdue Rate
from the date on which such sums or expenses are paid or incurred by Lessor,
shall be paid by Lessee to Lessor on demand. The obligations of Lessee and
rights of Lessor contained in this Article shall survive the expiration or
earlier termination of this Lease.

                                  ARTICLE XVIII

                         PURCHASE OF THE LEASED PROPERTY

     In the event Lessee or Prime purchases the Leased Property from Lessor
pursuant to any of the terms of this Lease, including, without limitation
Section 35.1, Lessor shall, upon receipt from Lessee of the applicable purchase
price, together with full payment of any unpaid Rent due and payable with
respect to any period ending on or before the date of the purchase, deliver to
Lessee an appropriate special warranty deed, assignment agreement or other
instrument of conveyance conveying the entire interest of Lessor in and to the
Leased Property to Lessee in the condition as received from Lessee, free and
clear of all encumbrances other than (a) those that Lessee has agreed hereunder
to pay or discharge, (b) those mortgage liens, if any, which Lessee has agreed
in writing to accept and to take title subject to, (c) any other Encumbrances
permitted to be imposed on the Leased Property under the provisions of Article
XXXVII which are assumable at no cost to Lessee or to which Lessee may take
subject without cost to Lessee, and (d) any matters affecting the Leased
Property on or as of the Commencement Date. The difference between the
applicable purchase price and the total of the encumbrances assigned or taken
subject to shall be paid in cash to Lessor, or as Lessor may direct, in federal
or other immediately available funds except as otherwise mutually agreed by
Lessor and Lessee. The closing of any such sale shall be contingent upon and
subject to Lessee obtaining all required governmental consents and approvals for
such transfer and if such sale shall fail to be consummated by reason of the
inability of Lessee to obtain all such approvals and consents, any options to
extend the Term of this Lease which otherwise would have expired during the
period from the date when Lessee elected or became obligated to purchase the
Leased Property until Lessee's inability to obtain the approvals and consents is
confirmed shall be deemed to remain in effect for thirty (30) days after the end
of such period. All expenses of such conveyance, including, without limitation,
the cost of title examination or standard coverage title insurance, survey,
attorneys' fees incurred by Lessor in connection with such conveyance, transfer
taxes, prepayment penalties and any other fees with respect to any Facility
Instrument, recording fees and similar charges shall be paid for by Lessee.

                                   ARTICLE XIX

                                  HOLDING OVER

     If Lessee shall for any reason remain in possession of the Leased Property
after the expiration of the Term or any earlier termination of the Term hereof,
such possession shall be as a tenancy at will during which time Lessee shall pay
as rental each month, one and one-half times the aggregate of (a) one-twelfth of
the aggregate Base Rent payable with respect to the last complete Lease Year
prior to the expiration of the Term; (b) all Additional Charges accruing during
the month and (c) all other sums, if any, payable by Lessee pursuant to the
provisions of this Lease with respect to the Leased Property. During such period
of tenancy, Lessee shall be obligated to perform and


                                       40



observe all of the terms, covenants and conditions of this Lease, but shall have
no rights hereunder other than the right, to the extent given by law to
tenancies at will, to continue its occupancy and use of the Leased Property.
Nothing contained herein shall constitute the consent, express or implied, of
Lessor to the holding over of Lessee after the expiration or earlier termination
of this Lease.

                                   ARTICLE XX

                              INTENTIONALLY OMITTED

                                   ARTICLE XXI

                              INTENTIONALLY OMITTED

                                  ARTICLE XXII

                                  RISK OF LOSS

     During the Term of this Lease, the risk of loss or of decrease in the
enjoyment and beneficial use of the Leased Property in consequence of the damage
or destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise, or in consequence of foreclosures, attachments, levies or executions
(other than by Lessor and those claiming from, through or under Lessor) is
assumed by Lessee and, Lessor shall in no event be answerable or accountable
therefor nor shall any of the events mentioned in this Section entitle Lessee to
any abatement of Rent except as specifically provided in this Lease.

                                  ARTICLE XXIII

                                 INDEMNIFICATION

     NOTWITHSTANDING THE EXISTENCE OF ANY INSURANCE OR SELF INSURANCE PROVIDED
FOR IN ARTICLE XIII, AND WITHOUT REGARD TO THE POLICY LIMITS OF ANY SUCH
INSURANCE OR SELF INSURANCE, LESSEE WILL PROTECT, INDEMNIFY, SAVE HARMLESS AND
DEFEND LESSOR FROM AND AGAINST ALL LIABILITIES, OBLIGATIONS, CLAIMS, DAMAGES,
PENALTIES, CAUSES OF ACTION, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION,
REASONABLE ATTORNEYS' FEES AND EXPENSES), TO THE EXTENT PERMITTED BY LAW,
IMPOSED UPON OR INCURRED BY OR ASSERTED AGAINST LESSOR BY REASON OF: (A) ANY
ACCIDENT, INJURY TO OR DEATH OF PERSONS OR LOSS OF PERCENTAGE TO PROPERTY
OCCURRING ON OR ABOUT THE LEASED PROPERTY OR ADJOINING SIDEWALKS, INCLUDING
WITHOUT LIMITATION ANY CLAIMS OF MALPRACTICE, (B) ANY USE, MISUSE, NO USE,
CONDITION, MAINTENANCE OR REPAIR BY LESSEE OF THE LEASED PROPERTY, (C) ANY
IMPOSITIONS (WHICH ARE THE OBLIGATIONS OF LESSEE TO PAY PURSUANT TO THE
APPLICABLE PROVISIONS OF THIS LEASE), (D) ANY FAILURE ON THE PART OF LESSEE TO
PERFORM OR COMPLY WITH ANY OF THE TERMS OF THIS LEASE, AND (E) THE
NON-PERFORMANCE OF ANY OF THE TERMS AND PROVISIONS OF ANY AND ALL EXISTING AND
FUTURE SUBLEASES OF THE LEASED PROPERTY TO BE PERFORMED BY THE LANDLORD (LESSEE)
THEREUNDER. ANY AMOUNTS WHICH BECOME PAYABLE BY LESSEE UNDER THIS SECTION SHALL
BE PAID WITHIN FIFTEEN (15) DAYS AFTER LIABILITY THEREFOR ON THE PART OF LESSOR
IS DETERMINED BY LITIGATION OR OTHERWISE AND, IF NOT TIMELY PAID, SHALL BEAR A
LATE CHARGE (TO THE EXTENT PERMITTED BY LAW) AT THE OVERDUE RATE FROM THE DATE
OF SUCH DETERMINATION TO THE DATE OF PAYMENT. LESSEE, AT ITS EXPENSE, SHALL
CONTEST, RESIST AND DEFEND ANY SUCH CLAIM, ACTION OR PROCEEDING ASSERTED OR
INSTITUTED AGAINST LESSOR OR MAY COMPROMISE OR OTHERWISE DISPOSE OF THE SAME AS
LESSEE SEES FIT. NOTHING HEREIN SHALL BE CONSTRUED AS INDEMNIFYING LESSOR
AGAINST ITS OWN NEGLIGENT ACTS OR OMISSIONS OR WILLFUL MISCONDUCT. LESSEE'S
LIABILITY FOR A BREACH OF THE PROVISIONS OF THIS ARTICLE SHALL SURVIVE ANY
TERMINATION OF THIS LEASE.


                                       41



                                  ARTICLE XXIV

                ASSIGNMENT, SUBLETTING AND SUBLEASE SUBORDINATION

     24.1 ASSIGNMENT AND SUBLETTING. Lessee shall not assign this Lease or
sublease any portion of the Leased Property without Lessor's prior written
consent. Lessor shall not unreasonably withhold its consent to any subletting or
assignment, provided that (a) in the case of a subletting, the sublease and the
sublessee shall comply with the provisions of this Article XXIV, (b) in the case
of an assignment, the assignee shall assume in writing and agree to keep and
perform all of the terms of this Lease on the part of Lessee to be kept and
performed and shall be and become jointly and severally liable with Lessee for
the performance thereof, (c) an original counterpart of each such sublease and
assignment and assumption, duly executed by Lessee and such sublessee or
assignee, as the case may be, in form and substance satisfactory to Lessor,
shall be delivered promptly to Lessor, and (d) in case of either an assignment
or subletting, Lessee shall remain primarily liable, as principal rather than as
surety, for the prompt payment of the Rent and for the performance and
observance of all of the obligations, covenants and conditions to be performed
by Lessee hereunder and under all of the other documents executed in connection
herewith. Notwithstanding anything contained herein to the contrary, Lessor and
Lessee acknowledge that there currently exists certain leases or subleases on
the Leased Property as described on EXHIBIT C attached hereto (collectively the
"Existing Leases"). Any modifications, amendments and restatements of the
Existing Leases must be approved by Lessor in accordance with this Article XXIV.
Notwithstanding anything contained herein to the contrary, any proposed assignee
of Lessee and any proposed sublessee or subtenant must each have an equal or
stronger credit rating than the Lessee on the Commencement Date. Lessor's
failure or refusal to approve an assignment to an assignee or a subletting to a
sublessee or subtenant without the required credit rating shall be reasonable.
Within ten (10) business days following the Commencement Date, Lessor shall
obtain from the sublessees under the Existing Leases estoppel certificates in
form and substance acceptable to Lessor.

     24.2 SUBLEASE LIMITATIONS. In addition to the sublease limitations as set
forth in Section 24.1 above, anything contained in this Lease to the contrary
notwithstanding, Lessee shall not sublet the Leased Property on any basis such
that the rental to be paid by the sublessee or subtenant thereunder would be
based, in whole or in part, on either (a) the income or profits derived by the
business activities of the sublessee or subtenant, or (b) any other formula such
that any portion of the sublease rental received by Lessor would fail to qualify
as "rents from real property" within the meaning of Section 856(d) of the Code,
or any similar or successor provision thereto. Provided also, Lessee shall not
sublet any portion of the Leased Property for a term extending beyond the Fixed
Term hereof without the express consent of Lessor. In addition, all subleases
shall comply with the Healthcare Laws. Lessor and Lessee acknowledge and agree
that all subleases entered into relating to the Leased Property, whether or not
approved by Lessor, shall not, without the prior written consent of Lessor, be
deemed to be a direct lease between Lessor and any sublessee or subtenant.
Lessee agrees that all subleases submitted for Lessor approval as provided
herein must include provisions to the effect that (a) such sublease is subject
and subordinate to all of the terms and provisions of this Lease, to the rights
of Lessor hereunder, and to all financing documents relating to any Lessor
financing in connection with the Facility, (b) in the event this Lease shall
terminate or be terminated before the expiration of the sublease, the sublessee
or subtenant will, at Lessor's option, attorn to Lessor and waive any right the
sublessee or subtenant may have to terminate the sublease or to surrender
possession thereunder, as a result of the termination of this Lease, (c) at
Lessor's option, the sublease may be terminated or left in place by Lessor in
the event of a termination of this Lease, (d) the obligations and performance of
the sublessee or subtenant must be guaranteed by guarantors acceptable to
Lessor, (e) sublessee or subtenant shall from time to time upon request of
Lessee or Lessor furnish within ten (10) days from request an estoppel
certificate in form and content acceptable to Lessor or its lender relating to
the sublease, (f) in the event the sublessee or subtenant receives a written
notice from Lessor or Lessor's assignees, if any, stating that Lessee is in
default under this Lease, the sublessee or subtenant shall thereafter be
obligated to pay all rentals accruing under said sublease directly to the party
giving such notice, or as such party may direct (all rentals received from the
sublessee by Lessor or Lessor's assignees, if any, as the case may be, shall be
credited against the amounts owing by Lessee under this Lease), (g) and that
such sublease shall at all times be subject to the obligations and requirements
as set forth in this Article XXIV, and (h) sublessee or subtenant shall provide
to Lessor upon written request such officer's certificates and financial
statements as Lessor may


                                       42



request from time to time. Notwithstanding anything contained herein to the
contrary, Lessor acknowledges that Lessee has entered into that certain Interim
Lease between Lessee, as landlord, and Sherman Oaks Health System, a California
non-profit public benefit corporation ("Sherman Oaks"), as tenant (the "Sherman
Oaks Sublease"). In the event the Sherman Oaks Sublease terminates before Lessee
obtains all licenses, permits and provider numbers necessary to operate the
Facility, then this Lease shall automatically terminate upon the termination of
the Sherman Oaks Sublease.

     24.3 SUBLEASE SUBORDINATION AND NON-DISTURBANCE. Within ten (10) days after
request by Lessor, Lessee shall cause any subtenant or sublessee to execute and
deliver to Lessor a subordination agreement relating to the sublease of such
subtenant or sublessee, which subordination agreement shall be in such form and
content as is acceptable to Lessor. At the request from time to time by any
Facility Lender, within ten (10) days from the date of request, Lessee shall
cause any subtenant or sublessee of the Leased Property to execute and deliver
within such ten (10) day period, to such Facility Lender a written agreement in
a form reasonably acceptable to such Facility Lender whereby such subtenant or
sublessee subordinates the sublease and all of its rights and estate thereunder
to each Facility Instrument and agrees with each such Facility Lender that such
subtenant or sublessee will attorn to and recognize such Facility Lender or the
purchaser at any foreclosure sale or any sale under a power of sale contained in
any such Facility Instrument, as Lessor under this Lease for the balance of the
Term then remaining, subject to all of the terms and provisions of the sublease.

                                  ARTICLE XXV

  OFFICER'S CERTIFICATES; FINANCIAL STATEMENTS; NOTICES AND OTHER CERTIFICATES

          (a) At any time and from time to time within twenty (20) days
     following written request by Lessor, Lessee will furnish to Lessor an
     Officer's Certificate certifying that this Lease is unmodified and in full
     force and effect (or that this Lease is in full force and effect as
     modified and setting forth the modifications) and the dates to which the
     Rent has been paid. Any such Officer's Certificate furnished pursuant to
     this Article may be relied upon by Lessor and any prospective purchaser of
     the Leased Property.

          (b) Lessee will furnish, or cause to be furnished, the following
     statements to Lessor, which must be in such form and detail as Lessor may
     from time to time, but not unreasonably, request:

               (i) within ninety (90) days after the end of each year, audited
     financial statements of Lessee, the Guarantors and, if Lessee owns any
     assets or conducts any other operations other than for the Facility, the
     Facility separately, prepared by a nationally recognized accounting firm or
     an independent certified public accounting firm reasonably acceptable to
     Lessor, which statements shall include a balance sheet and statement of
     income and expenses and changes in cash flow all in accordance with
     generally accepted accounting principles for the year then ended (it being
     agreed that Lessor shall bear the cost of any premium over normal charges
     that such accounting firm may charge in order to prepare such statements on
     an expedited basis (so long as Lessee has ordered such statements in a
     timely manner)), and

               (ii) within forty-five (45) days after the end of each quarter,
     current financial statements of Lessee, the Guarantors and, if Lessee owns
     any assets or conducts any other operations other than for the Facility,
     the Facility separately, certified to be true and correct by an officer of
     Lessee, and

               (iii) within thirty (30) days after the end of each month current
     operating statements of the Facility, including, but not limited to
     operating statistics, certified to be true and correct by an officer of the
     Lessee, and

               (iv) within ten (10) days of receipt, any and all notices
     (regardless of form) from any and all licensing and/or certifying agencies
     that any license or certification, including, without limitation,


                                       43



     the Medicare and/or Medicaid certification and/or managed care contract of
     the Facility is being downgraded to a substandard category, revoked, or
     suspended, or that action is pending or being considered to downgrade to a
     substandard category, revoke, or suspend such Facility's license or
     certification, and

               (v) with reasonable promptness, such other information respecting
     the financial condition and affairs of Lessee and the Guarantors as Lessor
     may reasonably request from time to time.

          (c) Upon Lessor's request, Lessee will furnish to Lessor a certificate
     in form acceptable to Lessor certifying that no Event of Default, as
     defined herein, then exists and no event has occurred (that has not been
     cured) and no condition currently exists that would, but for the giving of
     any required notice or expiration of any applicable cure period, constitute
     such an Event of Default.

          (d) Within two (2) business days of receipt, Lessee shall furnish to
     Lessor copies of all notices and demands from any third party payor,
     including, without limitation, Medicare and/or Medicaid, concerning
     overpayment which will or may result in a repayment or a refund in excess
     of One Million Dollars ($1,000,000). Lessee hereby agrees that in the event
     of receipt of such notices or demands Lessor shall have the right, at
     Lessor's option, to participate in the appeal of such notices and demands.

          (e) Lessee shall furnish to Lessor on a monthly basis ongoing status
     reports (in form and content acceptable to Lessor) of any governmental
     investigations of the Lessee, the Guarantors, or any of their respective
     Affiliates, or the Facility, conducted by the United States Attorney, State
     Attorney General, the Office of the Inspector General of the Department of
     Health and Human Services, or any other Governmental Entity.

          (f) Lessee shall furnish to Lessor immediately upon receipt thereof
     copies of all notices of adverse events or deficiencies as defined by
     regulations or standards of the American Osteopathic Association or the
     equivalent of the accrediting body relied upon by the Lessee in the
     operation of the Facility or any part thereof.

          (g) Lessee shall furnish to Lessor immediately upon receipt thereof
     copies of all notices that the Lessee and/or the Guarantors are not in
     compliance with the Standards for Privacy of Individually Identifiable
     Health Information and the Transaction and Code Set Standards which were
     promulgated pursuant to the Health Insurance Portability and Accountability
     Act of 1996 ("HIPAA").

          (h) Lessor reserves the right to (A) require such other financial
     information from Lessee, and (B) require the Lessee to provide such other
     financial information from the Guarantors, at such other times as it shall
     deem reasonably necessary. All financial statements and information must be
     in such form and detail as Lessor shall from time to time, but not
     unreasonably, request.

          Subject to the rights of Lessor as provided in Section 42.8 of this
     Lease, Lessor and Lessee agree that all financial information disclosed
     pursuant to this Article XXV shall be kept in strictest confidence and
     shall not be disclosed to any person or entity.

                                  ARTICLE XXVI

                                   INSPECTION

     Lessee shall permit Lessor and its authorized representatives to inspect
the Leased Property and the Power Generation Facility during usual business
hours subject to any security, health, safety or confidentiality requirements of
Lessee, any governmental agency, any Insurance Requirements relating to the
Leased Property, or imposed by law or applicable regulations. Lessor shall use
every effort to avoid disturbing the patient care being provided at the
Facility. Lessor recognizes the importance of patient privacy. Beginning on the
Commencement Date and on each


                                       44



anniversary thereof throughout the Term of this Lease, Lessee shall pay to
Lessor, or its designated Affiliate, an annual inspection fee equal to Seven
Thousand Five Hundred Dollars ($7,500), increased each January 1st by two and
one-half percent (2.5%).

                                 ARTICLE XXVII

                                   NO WAIVER

     No failure by Lessor or Lessee to insist upon the strict performance of any
term hereof or to exercise any right, power or remedy consequent upon a breach
thereof, and no acceptance of full or partial payment of Rent during the
continuance of any such breach, shall constitute a waiver of any such breach or
any such term. To the extent permitted by law, no waiver of any breach shall
affect or alter this Lease, which shall continue in full force and effect with
respect to any other then existing or subsequent breach.

                                 ARTICLE XXVIII

                               REMEDIES CUMULATIVE

     To the extent permitted by law, each legal, equitable or contractual right,
power and remedy of Lessor or Lessee now or hereafter provided either in this
Lease or by statute or otherwise shall be cumulative and concurrent and shall be
in addition to every other right, power and remedy and the exercise or beginning
of the exercise by Lessor or Lessee of any one or more of such rights, powers
and remedies shall not preclude the simultaneous or subsequent exercise by
Lessor or Lessee of any or all of such other rights, powers and remedies.

                                  ARTICLE XXIX

                                    SURRENDER

     No surrender to Lessor of this Lease or of the Leased Property or any part
of any thereof, or of any interest therein, shall be valid or effective unless
agreed to and accepted in writing by Lessor and no act by Lessor or any
representative or agent of Lessor, other than such a written acceptance by
Lessor, shall constitute an acceptance of any such surrender.

                                  ARTICLE XXX

                               NO MERGER OF TITLE

     There shall be no merger of this Lease or of the leasehold estate created
hereby by reason of the fact that the same person, firm, corporation or other
entity may acquire, own or hold, directly or indirectly, (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate and (b) the fee estate in the Leased Property.

                                  ARTICLE XXXI

                               TRANSFERS BY LESSOR

     If Lessor or any successor owner of the Leased Property shall convey the
Leased Property in accordance with the terms hereof, other than as security for
a debt, and the grantee or transferee of the Leased Property shall expressly
assume all obligations of Lessor hereunder arising or accruing from and after
the date of such conveyance or transfer, and shall be reasonably capable of
performing the obligations of Lessor hereunder, Lessor or such successor owner,
as the case may be, shall thereupon be released from all future liabilities and
obligations of the Lessor under this Lease arising or accruing from and after
the date of such conveyance or other transfer as to the Leased Property and all
such future liabilities and obligations shall thereupon be binding upon the new
owner.


                                       45



                                 ARTICLE XXXII

                                QUIET ENJOYMENT

     So long as Lessee shall pay all Rent as the same becomes due and shall
fully comply with all of the terms of this Lease and fully perform its
obligations hereunder, Lessee shall peaceably and quietly have, hold and enjoy
the Leased Property for the Term hereof, free of any claim or other action by
Lessor or anyone claiming by, through or under Lessor, but subject to all liens
and encumbrances of record as of the date hereof or hereafter consented to by
Lessee. No failure by Lessor to comply with the foregoing covenant shall give
Lessee any right to cancel or terminate this Lease, or to fail to pay any other
sum payable under this Lease, or to fail to perform any other obligation of
Lessee hereunder. Notwithstanding the foregoing, Lessee shall have the right by
separate and independent action to pursue any claim it may have against Lessor
as a result of a breach by Lessor of the covenant of quiet enjoyment contained
in this Article.

     Notwithstanding anything contained herein to the contrary, Lessor and
Lessee acknowledge that the Lessee has received and reviewed copies of the
Existing Leases. Lessee agrees that it will not disturb the rights of the
tenants under the Existing Leases.

     Lessee agrees that it will not disturb the rights of the tenants under the
Tenant Leases, if any, and will enforce all of the obligations of the tenants
under such Tenant Leases and will pay and perform all of the obligations to be
performed under the Tenant Leases as if Lessee is the lessor or landlord
thereunder. In addition, Lessor and Lessee acknowledge that the Lessee has taken
an assignment of certain contracts relating to the operation of the facility
located on the Leased Property (the "Contracts"), which Contracts require that
certain space in the Leased Property be provided as more particularly described
in the Contracts. Lessee agrees to abide by the terms and perform the
obligations under the Contracts. Lessee hereby agrees to indemnify and hold
Lessor harmless from any liabilities and damages incurred by the Lessor as a
result of the Lessee's default under the Tenant Leases and the Contracts.

                                 ARTICLE XXXIII

                                     NOTICES

     All notices, demands, consents, approvals, requests and other
communications under this Lease shall be in writing and shall be either (a)
delivered in person, (b) sent by certified mail, return receipt requested, (c)
delivered by a recognized over-night delivery service or (d) sent by facsimile
transmission and addressed as follows:

     (a) if to Lessee:   Prime Healthcare Services II, LLC
                         16850 Bear Valley Road
                         Victorville, California 92392
                         Attention: Lex Reddy
                         Fax: (760) 242-8220

         with a copy to: Desert Valley Hospital, Inc.
                         16850 Bear Valley Road
                         Victorville, California 92392
                         Attention: Richard Hayes, Esq.
                         Fax: (951) 346-3873


                                       46



     (b) if to Lessor:   MPT of Sherman Oaks, LLC
                         1000 Urban Center Drive, Suite 501
                         Birmingham, Alabama 35242
                         Attn: Michael G. Stewart, Esq.
                         Fax: (205) 969-3756

         with a copy to: Baker, Donelson, Bearman, Caldwell & Berkowitz
                         1600 SouthTrust Tower
                         Birmingham, Alabama 35203
                         Attn: Thomas O. Kolb, Esq.
                         Fax: (205) 322-8007

or to such other address as either party may hereafter designate, and shall be
effective upon receipt. A notice, demand, consent, approval, request and other
communication shall be deemed to be duly received if delivered in person or by a
recognized delivery service, when left at the address of the recipient and if
sent by facsimile, upon receipt by the sender of an acknowledgment or
transmission report generated by the machine from which the facsimile was sent
indicating that the facsimile was sent in its entirety to the recipient's
facsimile number; provided that if a notice, demand, consent, approval, request
or other communication is served by hand or is received by facsimile on a day
which is not a Business Day, or after 5:00 p.m. on any Business Day at the
addressee's location, such notice or communication shall be deemed to be duly
received by the recipient at 9:00 a.m. on the first Business Day thereafter.

                                 ARTICLE XXXIV

                                   APPRAISAL

     In the event that it becomes necessary to determine the Fair Market Value,
Fair Market Value Purchase Price or Fair Market Added Value of the Leased
Property for any purpose of this Lease, the party required or permitted to give
notice of such required determination shall include in the notice the name of a
person selected to act as an appraiser on its behalf. Lessor and Lessee agree
that any appraisal of the Leased Property shall be without regard to the
termination of this Lease or any purchase options contained herein and shall
assume the Lease is in place for a term of fifteen (15) years, and based solely
on the rents and other revenues generated and to be generated pursuant to this
Lease without any regard to Lessee's operations. Within ten (10) days after
receipt of any such notice, Lessor (or Lessee, as the case may be) shall by
notice to Lessee (or Lessor, as the case may be) appoint a second person as an
appraiser on its behalf. The appraisers thus appointed (each of whom must be a
member of the American Institute of Real Estate Appraisers or any successor
organization thereto) shall, within forty-five (45) days after the date of the
notice appointing the first (1st) appraiser, proceed to appraise the Leased
Property to determine the Fair Market Value, Fair Market Value Purchase Price or
Fair Market Added Value thereof as of the relevant date (giving effect to the
impact, if any, of inflation from the date of their decision to the relevant
date); provided, however, that if only one (1) appraiser shall have been so
appointed, or if two (2) appraisers shall have been so appointed but only one
(1) such appraiser shall have made such determination within fifty (50) days
after the making of Lessee's or Lessor's request, then the determination of such
appraiser shall be final and binding upon the parties. If two (2) appraisers
shall have been appointed and shall have made their determinations within the
respective requisite periods set forth above and if the difference between the
amounts so determined shall not exceed ten percent (10%) of the lesser of such
amounts, then the Fair Market Value, Fair Market Value Purchase Price or Fair
Market Added Value shall be an amount equal to fifty percent (50%) of the sum of
the amounts so determined. If the difference between the amounts so determined
shall exceed ten percent (10%) of the lesser of such amounts, then such two (2)
appraisers shall have twenty (20) days to appoint a third (3rd) appraiser, but
if such appraisers fail to do so, then either party may request the American
Arbitration Association or any successor organization thereto to appoint an
appraiser within twenty (20) days of such request, and both parties shall be
bound by any appointment so made within such 20-day period. If no such appraiser
shall have been appointed within such twenty (20) days or


                                       47



within ninety (90) days of the original request for a determination of Fair
Market Value, Fair Market Value Purchase Price or Fair Market Added Value,
whichever is earlier, either Lessor or Lessee may apply to any court having
jurisdiction to have appointment made by such court. Any appraiser appointed, by
the American Arbitrator Association or by such court shall be instructed to
determine the Fair Market Value, Fair Market Value Purchase Price or Fair Market
Added Value within thirty (30) days after appointment of such appraiser. The
determination of the appraiser which differs most in terms of dollar amount from
the determinations of the other two (2) appraisers shall be excluded, and fifty
percent (50%) of the sum of the remaining two (2) determinations shall be final
and binding upon Lessor and Lessee as the Fair Market Value, Fair Market Value
Purchase Price or Fair Market Added Value for such interest. This provision for
determination by appraisal shall be specifically enforceable to the extent such
remedy is available under applicable law, and any determination hereunder shall
be final and binding upon the parties except as otherwise provided by applicable
law. Lessor and Lessee shall each pay the fees and expenses of the appraiser
appointed by it and each shall pay one-half of the fees and expenses of the
third appraiser and one-half of all other costs and expenses incurred in
connection with each appraisal.

                                  ARTICLE XXXV

                                 PURCHASE RIGHTS

     35.1 LESSEE'S OPTION TO PURCHASE. So long as Lessee is not in monetary or
payment default of any kind, or no event has occurred which with the giving of
notice or the passage of time or both would constitute such a default (except as
otherwise expressly provided in Section 16.2) under the terms of this Lease and
the Tenant Leases, at any time from and after the tenth anniversary of the
Commencement Date, Prime shall have the option, to be exercised by ninety (90)
days' prior written notice to the Lessor, to purchase the Leased Property
(including Lessor's interests and rights under the Air Space Agreement and the
Parking Space Lease) at a purchase price sufficient to cause Lessor to receive,
on an unleveraged basis, a sum equal to (i) the Purchase Price of the Leased
Property and (ii) an amount sufficient to yield to Lessor an internal rate of
return thereon that is equal to eleven percent (11%) per year, taking into
account all payments of Base Rent received by Lessor prior to the closing date
of such purchase (the "Option Price"), provided, however, in no event shall the
Option Price be less than the Purchase Price. Unless expressly otherwise
provided in this Section 35.1, in the event the option to purchase the Leased
Property is exercised, (i) the terms set forth in Article XVIII shall apply,
(ii) Lessee shall continue paying Rent as required under this Lease until the
purchase is closed, and (iii) the sale/purchase must be closed within ninety
(90) days after the date of the written notice from Lessee to Lessor of Prime's
intent to purchase, unless a different closing date is agreed upon in writing by
Lessor and Prime. If Prime declines to exercise the option provided herein, then
Lessee shall have the option to purchase on the same terms and conditions, but
without an extension of the time to close the purchase.

     35.2 LESSEE'S OPTION TO PETITION FOR PURCHASE. Subject to the terms and
conditions of Section 35.1, at anytime during the Term of this Lease while the
Lease Guaranty is in effect, and has not been terminated pursuant to the terms
therein, Prime shall have the right and option to petition Lessor for the
purchase of the Leased Property from Lessor at the Option Price. Upon such
petition by Lessee, Lessor shall have the option of either (a) agreeing to
Lessee's purchase of the Leased Property in accordance with the provisions of
this Section 35.2 or (b) releasing the Guarantors from their joint and several
obligations under the Lease Guaranty, but retaining possession of the Leased
Property. In the event Lessor agrees to Lessee's purchase of the Leased
Property, (i) the terms set forth in Article XVIII shall apply, (ii) Lessee
shall continue paying Rent as required under this Lease until the purchase is
closed, and (iii) the sale/purchase must be closed within ninety (90) days after
the date of Lessee's petition to Lessor for purchase of the property, unless a
different closing date is agreed upon in writing by Lessor and Lessee.

     35.3 LESSOR'S OPTION TO PURCHASE LESSEE'S PERSONAL PROPERTY. Effective on
not less than ninety (90) days' prior written notice given at any time within
one hundred eighty (180) days prior to the expiration of the Term of this Lease,
but not later than ninety (90) days prior to such expiration, or such shorter
notice as shall be appropriate if this Lease is terminated prior to its
expiration date, Lessor shall have the option to purchase all (but not less than
all) of Lessee's Personal Property, if any, at the expiration or termination of
this Lease, for an amount


                                       48



equal to the net sound insurable value thereof (current replacement cost less
accumulated depreciation on the books of Lessee pertaining thereto), subject to,
and with appropriate price adjustments for, all equipment leases, conditional
sale contracts, security interests and other encumbrances to which Lessee's
Personal Property is subject. Notwithstanding anything contained in this Section
35.2 to the contrary, the options to purchase granted under this Section 35.2 do
not pertain to any of the Licenses, it being understood and agreed that all
matters relating to the transfer of the Licenses are addressed in Article XXXIX
hereof.

     35.4 LESSEE'S OPTION TO PURCHASE UPON OTHER EVENTS. In the event that
Lessor seeks to terminate this Lease for any reason other than (i) a failure of
Lessee to pay the Base Rent or any other monetary obligation under this Lease or
(ii) an intentional breach of this Lease by Lessee, and such termination is
contested by Lessee, then Prime shall have the option, to be exercised by ninety
(90) days prior written notice to the Lessor and within thirty (30) days
following notice by Lessor of its intention to terminate, to purchase the Leased
Property (including Lessor's interests and rights under the Air Space Agreement
and the Parking Space Lease) at the Option Price (which, for this purpose, shall
be calculated using an internal rate of return rate of twelve and one-half
percent (12.5%)) and on the terms provided in Section 35.1.

                                 ARTICLE XXXVI

                             INTENTIONALLY OMITTED

                                 ARTICLE XXXVII

                        FINANCING OF THE LEASED PROPERTY

     37.1 FINANCING BY LESSOR. Lessor agrees that, if it grants or creates any
mortgage, lien, encumbrance or other title retention agreement ("Encumbrances")
upon the Leased Property, Lessor will use reasonable efforts to obtain an
agreement from the holder of each such Encumbrance whereby such holder agrees
(a) to give Lessee the same notice, if any, given to Lessor of any default or
acceleration of any obligation underlying any such Encumbrance or any sale in
foreclosure of such Encumbrance, (b) to permit Lessee, after twenty (20) days
prior written notice, to cure any such default on Lessor's behalf within any
applicable cure period, in which event Lessor agrees to reimburse Lessee for any
and all reasonable out-of-pocket costs and expenses incurred to effect any such
cure (including reasonable attorneys' fees), (c) to permit Lessee to appear with
its representatives and to bid at any foreclosure sale with respect to any such
Encumbrance, (d) that, if subordination by Lessee is requested by the holder of
each such Encumbrance, to enter into an agreement with Lessee containing the
provisions described in Article XXXVIII of this Lease, and (e) Lessor further
agrees that no such Encumbrance shall in any way prohibit, derogate from, or
interfere with Lessee's right and privilege to collaterally assign its leasehold
and contract rights hereunder provided such collateral assignment and rights
granted to the assignee thereunder shall be subordinate to the rights of the
holder of an Encumbrance as provided in Article XXXVIII hereof.

                                ARTICLE XXXVIII

                        SUBORDINATION AND NON-DISTURBANCE

     At the request from time to time by one or more Facility Lenders, within
ten (10) days from the date of request, Lessee shall execute and deliver to such
Facility Lender a written agreement in a form reasonably acceptable to such
Facility Lender whereby Lessee subordinates this Lease and all of its rights and
estate hereunder (except for Lessee's purchase options as expressly provided in
this Lease) to each Facility Instrument that encumbers the Leased Property or
any part thereof and agrees with each such Facility Lender that Lessee will
attorn to and recognize such Facility Lender or the purchaser at any foreclosure
sale or any sale under a power of sale contained in any such Facility
Instrument, as the case may be, as Lessor under this Lease for the balance of
the Term then


                                       49



remaining, subject to all of the terms and provisions of this Lease; provided,
however, that each such Facility Lender simultaneously executes and delivers a
written agreement consenting to this Lease and agreeing that, notwithstanding
any such other mortgage, deed of trust, right, title or interest, or any
default, expiration, termination, foreclosure, sale, entry or other act or
omission under, pursuant to or affecting any of the foregoing, Lessee shall not
be disturbed in peaceful enjoyment of the Leased Property nor shall this Lease
be terminated or canceled at any time, except in the event Lessee is in default
under this Lease.

                                 ARTICLE XXXIX

                                    LICENSES

     Lessee shall maintain at all times during the Term hereof and any holdover
period all federal, state and local governmental licenses, approvals,
qualifications, variances, certificates of need, franchises, accreditations,
certificates, certifications, consents, permits and other authorizations and all
contracts, including contracts with governmental or quasi-governmental entities
which may be necessary or useful in the operation of the Facility (collectively,
the "Licenses"), and shall qualify and comply with all applicable laws as they
may from time to time exist, including those applicable to certification and
participation as a provider under Medicare and Medicaid legislation and
regulations.

     Lessee shall not, without the prior written consent of Lessor, which may be
granted or withheld in its sole discretion, effect or attempt to effect any
change in the license category or status of the Facility or any part thereof.
Under no circumstances shall Lessee have the right to transfer any of the
Licenses to any location other than the Facility or to any other person or
entity (except to Lessor as contemplated herein), whether before, during or
after the Term hereof. Following the termination of this Lease, Lessee shall
retain no rights whatsoever to the Licenses, and Lessee will not move or attempt
to move the Licenses to any other location. To the extent that Lessee has or
will extend any right, title, or claim of right whatsoever in and to the
Licenses or the right to operate the Facility, all such right, title, or claim
of right shall automatically revert to the Lessor or to Lessor's designee upon
termination of this Lease, to the extent permitted by law. Upon any termination
of this Lease or any breach or default by Lessee hereunder (which breach or
default is not cured within any applicable grace period and which results in
Lessor terminating this Lease), to the extent permitted by law, Lessor shall
have the sole, complete, unilateral, absolute and unfettered right to cause all
Licenses to be reissued in Lessor's name or in the name of Lessor's designee
upon application therefor to the issuing authority, and to further have the
right to have any and all provider and/or third party payor agreements as a
provider in the Medicare and/or Medicaid and other federal healthcare programs
issued in Lessor's name or in the name of Lessor's designee.

     Upon the termination of this Lease and for reasonable periods of time
immediately before and after such termination, Lessee shall use its best
efforts, without additional consideration to Lessee, to facilitate an orderly
transfer of the operation and occupancy of the Facility to Lessor or any new
lessee or operator selected by Lessor, it being understood and agreed that such
cooperation shall include, without limitation, (a) Lessee's transfer and
assignment, if and to the extent permitted by law, to Lessor, Lessor's nominee
or Lessor's new lessee or operator of any and all Licenses, (b) Lessee's use of
best efforts to maintain, to the maximum extent allowed by applicable law, the
effectiveness of any and all such Licenses until such time as any new Licenses
necessary for any new Lessee or operator to operate the Facility have been
issued, and (c) the taking of such other actions as are required by applicable
law or as are reasonably requested by Lessor. Upon any termination of this Lease
or any breach or default by Lessee hereunder (which breach or default is not
cured within any applicable grace period and which results in Lessor terminating
this Lease), to the extent permitted by law, Lessor shall have the sole,
complete, unilateral, absolute and unfettered right to cause any and all
Licenses to be reissued in Lessor's name or in the name of Lessor's designee
upon application therefor to the appropriate authority, if required, and to
further have the right, to the extent permitted by law, to have any and all
Medicare and Medicaid and any other provider and/or third party payor agreements
issued in Lessor's name or in the name of Lessor's designee. The provisions of
this Section are in addition to the other provisions of this Lease.


                                       50



     It is an integral condition of this Lease that Lessee covenants and agrees
not to sell, move, modify, cancel, surrender, transfer, assign, sell, relocate,
pledge, secure, convey or in any other manner encumber any License or any
governmental or regulatory approval, consent or authorization of any kind to
operate the Facility. To the extent permitted by law, Lessee hereby grants to
Lessor a landlord's lien on the Licenses.

     Lessee shall immediately (within two (2) business days) notify Lessor in
writing of any notice, action or other proceeding or inquiry of any governmental
agency, bureau or other authority whether federal, state, or local, of any kind,
nature or description, which could adversely affect any material License or
Medicare and/or Medicaid-certification status, or accreditation status of the
Facility, or the ability of Lessee to maintain its status as the licensed and
accredited operator of the Facility or which alleges noncompliance with any law.
Lessee shall immediately (within two (2) business days) upon Lessee's receipt,
furnish Lessor with a copy of any and all such notices and Lessor shall have the
right, but not the obligation, to attend and/or participate, in Lessor's sole
and absolute discretion, in any such actions or proceedings. Lessee shall act
diligently to correct any deficiency or deal effectively with any "adverse
action" or other proceedings, inquiry or other governmental action, so as to
maintain the licensure and Medicare and/or Medicaid-certification status stated
herein in good standing at all times. Lessee shall not agree to any settlement
or other action with respect to such proceedings or inquiry which affects the
use of the Leased Property or any portion thereof as provided herein without the
prior written consent of Lessor, which consent shall not be unreasonably
withheld or delayed. Lessee agrees to sign, acknowledge, provide and deliver to
Lessor (and if Lessee fails to do so upon request of Lessor, Lessee hereby
irrevocably appoints Lessor, as agent of Lessee for such express purposes) any
and all documents, instruments or other writings which are or may become
necessary, proper and/or advisable to cause any and all hospital licenses
required for the Primary Intended Use, Department of Human Services of the State
of California ("DHS") provider agreements, and/or state or federal Title XVIII
and/or Title XIX provider agreements to be obtained (either in total or
individually) in the name of Lessor or the name of Lessor's designee in the
event that Lessor reasonably determines in good faith that (irrespective of any
claim, dispute or other contention or challenge of Lessee) there is any breach,
default or other lapse in any representation, warranty, covenant or other
delegation of duty to Lessee (beyond any applicable grace or cure period) and
the issuing government agency has threatened or asserted that such license or
provider agreement will terminate or has lapsed or that Lessee's license or
certification or accreditation status is in jeopardy. This power is coupled with
the ownership interest of Lessor in and to the Facility and all incidental
rights attendant to any and all of the foregoing rights.

                                   ARTICLE XL

                         COMPLIANCE WITH HEALTHCARE LAWS

     Lessee hereby covenants, warrants and represents to Lessor that as of the
Commencement Date and throughout the Term: (i) Lessee shall be, and shall
continue to be validly licensed, Medicare and/or Medicaid certified, and, if
required, accredited to operate the Facility in accordance with the applicable
rules and regulations of the State of California, federal governmental
authorities and accrediting bodies, including, but not limited to, the United
States Department of Health and Human Services, DHSS, DHS and CMS; and/or (ii)
Lessee shall be, and shall continue to be, certified by and the holder of valid
provider agreements with Medicare/Medicaid issued by DHHS, DHS and/or CMS and
shall remain so certified and shall remain such a holder in connection with its
operation of the Primary Intended Use on the Leased Property as a licensed and
Medicare and/or Medicaid certified acute care hospital facility; (iii) Lessee
shall be, and shall continue to be in substantial compliance with and shall
remain in substantial compliance with all state and federal laws, rules,
regulations and procedures with regard to the operation of the Facility,
including, without limitation, substantial compliance under HIPAA; (iv) Lessee
shall operate the Facility in a manner consistent with high quality acute care
services and sound reimbursement principles under the Medicare and/or Medicaid
programs and as required under state and federal law; and (v) Lessee shall not
abandon, terminate, vacate or fail to renew any license, certification,
accreditation, certificate, approval, permit, waiver, provider agreement or any
other authorization which is required for the lawful and proper operation of the
Facility or in any way commit any act which will or may cause any such license,
certification, accreditation,


                                       51



certificate, approval, permit, waiver, provider agreement or other authorization
to be revoked by any federal, state or local governmental authority or
accrediting body having jurisdiction thereof.

                                   ARTICLE XLI

                             LESSOR'S RIGHT TO SELL

     Lessee understands that Lessor may sell its interest in the Leased Property
in whole or in part at any time, subject to this Lease and the rights of Lessee
as expressly provided in this Lease. The Lessee agrees that any purchaser may
exercise any and all rights of Lessor as fully as if such had made the purchase
of the Leased Property directly from the Lessee as set out in the Purchase
Agreement. Lessor may divulge to any such purchaser all information, reports,
financial statements, certificates and documents obtained by it from Lessee.

                                  ARTICLE XLII

                                  MISCELLANEOUS

     42.1 GENERAL. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Lessee or Lessor
arising prior to any date of expiration or termination of this Lease shall
survive such expiration or termination. If any term or provision of this Lease
or any application thereof shall be invalid or unenforceable, the remainder of
this Lease and any other application of such term or provision shall not be
affected thereby. If any late charges provided for in any provision of this
Lease are based upon a rate in excess of the maximum rate permitted by
applicable law, the parties agree that such charges shall be fixed at the
maximum permissible rate. Neither this Lease nor any provision hereof may be
changed, waived, discharged or terminated except by an instrument in writing and
in recordable form signed by Lessor and Lessee. All the terms and provisions of
this Lease shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. The headings in this Lease are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

     42.2 LESSOR'S EXPENSES. In addition to other provisions herein, Lessee
agrees and shall pay and/or reimburse Lessor's reasonable costs and expenses,
including legal fees, incurred or resulting from and relating to (a) requests by
Lessee for approval or consent under this Lease Agreement; (b) requests by
Lessor for approval or consent under this Lease and all other documents executed
between Lessor and Lessee in connection herewith, (c) any circumstances or
developments which give rise to Lessor's right of consent or approval, (d)
circumstances resulting from any action or inaction by Lessee contrary to the
lease provisions, and (e) a request for changes including, but not limited to,
(i) the permitted use of the Leased Property, (ii) alterations and improvements
to the Leased Improvements, (iii) subletting or assignment, and (iv) any other
changes in the terms, conditions or provisions of this Lease. Such expenses and
fees shall be paid by Lessee within thirty (30) days of the submission of a
statement for the same or such amount(s) shall become Additional Charges and
subject to the Overdue Rate after the 30 days.

     42.3 ASSETS PURCHASED PURSUANT TO PURCHASE OPTIONS. In connection with any
purchase options granted to Lessee hereunder, in the event Lessee exercises such
purchase options, the term "Leased Property" shall also include any "Assets" as
such term is defined in the Purchase Agreement.

     42.4 ENTIRE AGREEMENT; MODIFICATIONS. This Lease embodies and constitutes
the entire understanding between the parties with respect to the transactions
contemplated herein, and all prior to contemporaneous agreements,
understandings, representations and statements (oral or written) are merged into
this Lease. Neither this Lease nor any provision hereof may be modified or
amended except by an instrument in writing signed by Lessor and Lessee.


                                       52



     42.5 LEASE GUARANTY. Lessee shall cause to be delivered to Lessor
simultaneously herewith the fully executed Lease Guaranty.

     42.6 FUTURE FINANCING. Lessee hereby agrees that if at any time during the
Term Lessee purchases, expands or renovates or contemplates the purchase,
expansion or renovation of a facility or property to be used for the operation
of a business for the Primary Intended Use, Lessee shall notify Lessor in
writing ("Lessee's Notice") of such purchase, expansion or renovation or
contemplated purchase, expansion or renovation, and Lessor shall have the first
opportunity to provide financing for such purchase, expansion or renovation upon
terms mutually agreeable to Lessor and Lessee. Lessor shall notify Lessee in
writing on or before the expiration of twenty (20) business days after receipt
of Lessee's Notice whether Lessor is interested in providing such financing. If
Lessor agrees to provide the financing, the terms and conditions of such
financing will be contingent upon, among other things, performance benchmarks
acceptable to Lessor and the Lessor's satisfaction and approval of other due
diligence requirements.

     42.7 LETTER OF CREDIT. Intentionally Omitted.

     42.8 CHANGE IN OWNERSHIP/CONTROL. So long as this Lease remains in effect,
the aggregate ownership of the current members of Lessee and the Guarantors
shall not be reduced below fifty-one (51%) percent.

     42.9 LESSOR SECURITIES OFFERING AND FILINGS. Notwithstanding anything
contained herein to the contrary, Lessee shall cooperate with Lessor or MPT in
connection with any securities offerings and filings, or MPT's efforts to
procure or maintain financing for or related to the Leased Property and
Facility, and in connection therewith, the Lessee shall furnish MPT, or cause
its accountants to furnish MPT, with such financial and other information as MPT
shall request, including, without limitation, audited and unaudited financial
statements of Lessee and Guarantors, and any necessary consents of accountants
of Lessee and Guarantors, provided, however, that Lessee and Guarantors shall
use their best efforts to furnish any consents of accountants of Lessee and
Guarantors. MPT shall reimburse Lessee and Guarantors for any and all
incremental costs (i.e. costs not otherwise incurred by Lessee or Guarantors
with respect to the normal preparation of such financial statements for other
purposes) incurred in furnishing, or causing its accountants to furnish, such
financial statements and consents. MPT shall protect, indemnify, save harmless
and defend Lessee and Guarantors from and against all liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses, but excluding any
such liabilities arising from any fraud on the part of Lessee, any Guarantor or
the accountants of Lessee or any Guarantor) imposed upon or incurred by or
asserted against Lessee by reason of the inclusion of any such financial
statements or consents in any securities offerings and filings of MPT. MPT may
disclose that Lessor has entered into this Lease with Lessee and Prime and may
provide and disclose information regarding this Lease, the Lessee, the
Guarantors, the Leased Property and the Facility, and such additional
information which MPT may reasonably deem necessary, to its proposed investors
in such public offering or private offering of securities, or any current or
prospective lenders with respect to such financing. Upon reasonable advance
notice, MPT and any lender providing financing for the Leased Property shall
have the right, subject to the execution of a written confidentiality agreement
on terms reasonably acceptable to MPT, such lender and Lessee, to access,
examine and copy all agreements, records, documentation and information relating
to the Lessee and Guarantors, the Leased Property and Facility, and to discuss
such affairs and information with the officers, employees and independent public
accountants of the Lessee and Guarantors as often as may reasonably be desired.

     42.10 NON-RECOURSE AS TO LESSOR. Anything contained herein to the contrary
notwithstanding, any claim based on or in respect of any liability of Lessor
under this Lease shall be enforced only against the Leased Property and not
against any other assets, properties or funds of (i) Lessor, (ii) any director,
officer, general partner, shareholder, limited partner, beneficiary, employee or
agent of Lessor or any general partner of Lessor or any of its general partners
(or any legal representative, heir, estate, successor or assign of any thereof),
(iii) any predecessor or successor partnership or corporation (or other entity)
of Lessor or any of its general partners, shareholders, officers, directors,
employees or agents, either directly or through Lessor or its general partners,
shareholders, officers,


                                       53



directors, employees or agents or any predecessor or successor partnership or
corporation (or other entity), or (iv) any person affiliated with any of the
foregoing, or any director, officer, employee or agent of any thereof.

     42.11 PRIME A INVESTMENTS, L.L.C.'S RIGHT TO EXERCISE PURCHASE OPTIONS.
Lessor hereby consents to and agrees that Prime may exercise any of Lessee's
rights and options to purchase as set forth under this Lease not otherwise
granted to Prime pursuant to the same terms and conditions provided to Lessee
under this Lease. Prime shall be deemed to be a third party beneficiary of this
Lease with respect to the right of such options.

     42.12 MANAGEMENT AGREEMENTS. Lessee shall not engage any Management Company
or allow any tenants, subtenants or sublessees of the Facility to engage any
Management Company, without Lessor's prior written consent, which consent shall
not be unreasonably withheld; provided, however, Lessor's rights relating to any
Management Company as set forth in Section 16.2 hereof shall be at Lessor's sole
and absolute discretion. Lessee shall, if required by Lessor, assign all of
Lessee's rights under the Management Agreements to Lessor and Lessor shall be
entitled to assign same to Lessor's lender. At the request of the Lessor from
time to time, Lessee shall execute and deliver (and require the tenants,
subtenants or sublessees to execute and deliver, if applicable) an assignment
and/or subordination agreement relating to the Management Agreements, which
assignment and/or subordination agreement shall be in such form and content as
reasonably acceptable to Lessor and/or any lender providing financing to Lessor,
and shall be delivered to Lessor within ten (10) days after Lessor's request.
Lessee hereby agrees that all payments and fees payable under the Management
Agreements are and shall be subordinate to the payment of the obligations under
this Lease and all other documents executed in connection with this Lease and
the Purchase Agreement. Lessee agrees that all Management Agreements entered
into in connection with the Leased Property shall expressly contain provisions
acceptable to Lessor which (i) require an assignment of the Management
Agreements to Lessor upon request by Lessor, (ii) confirm and warrant that all
sums due and payable under the Management Agreements are subordinate to this
Lease, (iii) grant Lessor the right to terminate the Management Agreement
(individually or collectively, if more than one (1)) upon a default hereunder or
upon a default under such applicable Management Agreement, (iv) require the
Management Company to execute and deliver to Lessor within ten (10) days from
Lessor's request an estoppel certificate, assignment and/or subordination
agreement as required by Lessor and/or Lessor's lender providing financing to
Lessor, in such form and content as is acceptable to Lessor and/or its lender,
and (v) all fees due and payable under any Management Agreements, shall be
subordinate to all monetary obligations under this Lease. At the request of the
Lessor from time to time, Lessee shall execute and obtain from all parties
subject to such Management Agreements executed written confirmation of such
assignment or subordination, which shall be delivered to Lessor within ten (10)
days from Lessor's request.

     42.13 GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO CONFLICTS OF LAW
PRINCIPLES.

     42.14 JURISDICTION AND VENUE. LESSOR AND LESSEE CONSENT TO PERSONAL
JURISDICTION IN THE STATE OF DELAWARE. LESSOR AND LESSEE AGREE THAT ANY ACTION
OR PROCEEDING ARISING FROM OR RELATED TO THIS LEASE SHALL BE BROUGHT AND TRIED
EXCLUSIVELY IN THE STATE OR FEDERAL COURTS OF THE STATE OF DELAWARE. EACH OF THE
PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF
VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT. LESSEE
EXPRESSLY ACKNOWLEDGES THAT DELAWARE IS A FAIR, JUST AND REASONABLE FORUM AND
LESSEE AGREES NOT TO SEEK REMOVAL OR TRANSFER OF ANY ACTION FILED BY LESSOR IN
SAID COURTS. FURTHER, LESSOR AND LESSEE IRREVOCABLY AND UNCONDITIONALLY WAIVE
ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN ANY
INCONVENIENT FORUM. SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY
CERTIFIED MAIL ADDRESSED TO A PARTY AT THE ADDRESS DESIGNATED PURSUANT TO
ARTICLE XXXIII HEREOF SHALL BE EFFECTIVE SERVICE OF PROCESS AGAINST SUCH PARTY
FOR ANY ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT. A FINAL JUDGMENT IN ANY
SUCH ACTION OR


                                       54



PROCEEDING BROUGHT IN ANY SUCH COURT MAY BE ENFORCED IN ANY OTHER COURT TO WHOSE
JURISDICTION ANY OF THE PARTIES IS OR MAY BE SUBJECT.

     42.15 COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.

                                  ARTICLE XLIII

                               MEMORANDUM OF LEASE

     Lessor and Lessee shall, promptly upon the request of either, enter into a
short form memorandum of this Lease, in form suitable for recording under the
laws of the state in which the Leased Property is located in which reference to
this Lease, and all options contained herein, shall be made.

                       [Signatures on the following pages]


                                       55



IN WITNESS WHEREOF, the parties have caused this Lease to be executed and their
respective corporate seals to be hereunto affixed and attested by their
respective officers thereunto duly authorized.

                                        LESSOR:

                                        MPT OF SHERMAN OAKS, LLC

                                        BY: MPT OPERATING PARTNERSHIP, L.P.
                                        ITS: SOLE MEMBER


                                        By: /s/ Edward K. Aldag, Jr.
                                            ------------------------------------
                                        Name: Edward K. Aldag, Jr.
                                        Its: President and
                                             Chief Executive Officer

STATE OF ALABAMA
JEFFERSON COUNTY

     On this ______ day of ___________, 20__, before me, the undersigned
authority, a Notary Public of said State, duly commissioned and sworn,
personally appeared EDWARD K. ALDAG, JR., personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person who executed the
within instrument as President and Chief Executive Officer of MPT Operating
Partnership, L.P., the Sole Member of MPT OF SHERMAN OAKS, LLC, a Delaware
limited liability company, and acknowledged to me that such limited partnership,
as the Sole Member of such limited liability company executed the same.

     IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year in this certificate first above written.


                                        ----------------------------------------
                                        NOTARY PUBLIC
                                        Printed Name:
                                                      --------------------------
                                        My Commission Expires:
                                                               -----------------
                                        [AFFIX NOTARY SEAL]


                                       56



                                        LESSEE:

                                        PRIME HEALTHCARE SERVICES II, LLC


                                        By: /s/ Lex Reddy
                                            ------------------------------------
                                        Name: Lex Reddy
                                              ----------------------------------
                                        Its: President/CEO
                                             -----------------------------------

STATE OF CALIFORNIA
_____________ COUNTY

     On this ______ day of ___________, 20__, before me, the undersigned
authority, a Notary Public of said State, duly commissioned and sworn,
personally appeared ____________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person who executed the within
instrument as ____________ of Prime Healthcare Services II, LLC, a California
limited liability company, and acknowledged to me that such company executed the
same.

     IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year in this certificate first above written.


                                        ----------------------------------------
                                        NOTARY PUBLIC
                                        Printed Name:
                                                      --------------------------
                                        My Commission Expires:
                                                               -----------------

[AFFIX NOTARY SEAL]


                                       57



                                  SCHEDULE 8.6

                EXCEPTIONS TO SINGLE PURPOSE ENTITY REQUIREMENTS

                                      None.


                                       58



                                    EXHIBIT A

                                LEGAL DESCRIPTION

PARCEL 1:

Lot(s) 1 of Tract No. 19339, in the City of Los Angeles, County of Los Angeles,
State of California, as per Map recorded in Book 535, Page(s) 1 of Maps, in the
Office of the County Recorder of said County.

PARCEL 1A:

An easement for ingress and egress and parking for 57 motor vehicles over the
North 200 feet of the West 114 feet of Lot 1 of Tract 15587, in the City of Los
Angeles, County of Los Angeles, State of California, as per Map recorded in Book
346, Page(s) 30 and 31 of Maps, in the Office of the County Recorder of said
County, to be used in conjunction with the operation of the building located on
Parcel 1.

PARCEL 2:

Lot(s) 1 of Tract No. 23375, in the City of Los Angeles, County of Los Angeles,
State of California, as per Map recorded in Book 628, Page(s) 83 of Maps, in the
Office of the County Recorder of said County.

PARCEL 3:

Lot(s) 1 of Tract No. 19397, in the City of Los Angeles, County of Los Angeles,
State of California, as per Map filed in Book 610, Page(s) 76 of Maps, in the
Office of the County Recorder of said County, together with that portion of Lots
1, 2, 3 and 4 of Tract No. 6595, in said City, County and State, as per Map
recorded in Book 70, Page(s) 88 of Maps, records of said County, described as
follows:

Beginning at the Northeast corner of said Lot 1 of Tract No. 19397; thence
Northerly along the prolongation of the Easterly line of said last mentioned Lot
25 feet more or less, to the Southerly line of the Northerly 75.00 feet of said
Lot 3; thence Westerly along said Southerly line 145 feet to the Westerly line
of the Easterly 150.00 feet of said Lot 3; thence Northerly along said Westerly
line to and along the Westerly line of the Easterly 150.00 feet of said Lot 2;
to and along the Westerly line of the Easterly 150.00 feet of said Lot 1, of
Tract No. 6595 to the Northerly line of last said Lot 1; thence Westerly along
said Northerly line 200 feet more or less to the Easterly line of the Westerly
50.00 feet of said Lot 4; thence Southerly along last said Easterly line 300
feet more or less to the Westerly prolongation of the Northerly line of said Lot


                                       59



1 of Tract 19397 being also the Southerly line of said Lot 4; thence Easterly
along said Westerly prolongation to and along last said Northerly line to the
point of beginning.

Except therefrom that certain air space lying within the boundary line of Lots
1, 2, 3 and 4 of Tract No. 6595 in the City of Los Angeles, County of Los
Angeles, State of California, as per Map filed in Book 70, Page(s) 88 of Maps,
in the Office of the County Recorder of said County, more particularly described
as follows:

Beginning at a point in the Westerly line of the East 150.00 feet of said Lots
1, 2 and 3 distant Southerly along said line 10.00 feet from the Northerly line
of said Lot 1; thence Westerly, parallel to said Northerly line 195 feet more or
less to a line parallel with and distant Easterly 5.00 feet measured at right
angles from the Easterly line of the West 50 feet of said Lot 4; thence
Southerly along last said parallel line 209.50 feet; thence Easterly parallel
with said Northerly line 191.00 feet more or less to a line parallel with and
distant Westerly 4.00 feet measured at right angles from said Westerly line of
the East 150.00 feet of Lots 1, 2 and 3; thence Southerly along said parallel
line 11.50 feet; thence Easterly at right angles 4.00 feet to said Westerly
line; thence Northerly along said Westerly line to the point of beginning.

The lower limit of said air space is an inclined place sloping upward to the
South at a rate of 1.002 percent from the horizontal and passing through the
Northerly line of said above described Parcel at an elevation of 667.22 feet
above mean sea level as established by the Los Angeles City Engineer's Precise
Level Loop, 1960 Adjustment.

The upper limit of said air space is an inclined place sloping upward to the
South at a rate of 1.002 percent from the horizontal and passing through last
Northerly line at an elevation of 702.22 feet above said mean sea level.

PARCEL 4:

The Northerly 25 feet of the Southerly 50 feet of the Easterly 150 feet of Lot
3, of Tract 6595, in the City of Los Angeles, County of Los Angeles, State of
California, as per Map thereof recorded in Book 70, Page(s) 88 of Maps, in the
Office of the County Recorder of said County.

PARCEL 5:

Parcel B of Parcel Map L.A. No. 1398, in the City of Los Angeles, County of Los
Angeles, State of California, as per Map filed in Book 18, Page(s) 57 of Parcel
Recorder of said County.


                                       60



PARCEL 5A:

An easement for ingress and egress over the South 28 feet of the North 30 feet
of the East 150 feet of Lot 3, of Tract No. 6595, in the City of Los Angeles,
County of Los Angeles, State of California, as per Map recorded in Book 70,
Page(s) 88 of Maps, in the Office of the County Recorder of said County, as
shown in a document recorded June 6, 1968, as Instrument No. 1820 of Official
Records.


                                       61



                                    EXHIBIT B

                              PERMITTED EXCEPTIONS


                                       62



                                    EXHIBIT C

                                 EXISTING LEASES


                                       63

                                                                    EXHIBIT 23.1


            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
Medical Properties Trust, Inc.:


We consent to the use of our report included herein and to the references to our
firm under the headings "Experts," "Summary Selected Financial Data," and
"Selected Financial Data" in the Prospectus.

/s/ KPMG LLP

Birmingham, Alabama
December 30, 2005

                                                                    EXHIBIT 23.2

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Member
Vibra Healthcare, LLC:

We hereby consent to the incorporation in this Post-Effective Amendment No.1 to
Registration Statement of Medical Properties Trust, Inc. on Form S-11 (No.
333-121883) of our report dated March 8, 2005, except for Note 11, as to which
the date is March 31, 2005, relating to the consolidated financial statements of
Vibra Healthcare, LLC and subsidiaries as of December 31, 2004 and for the
period from inception (May 14, 2004) through December 31, 2004. We also consent
to the references to us under the heading "Experts" in such Registration
Statement.

/s/ Parente Randolph, LLC

Parente Randolph, LLC
Harrisburg, Pennsylvania
December 30, 2005