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<SEC-DOCUMENT>0001010549-01-500310.txt : 20010813
<SEC-HEADER>0001010549-01-500310.hdr.sgml : 20010813
ACCESSION NUMBER:		0001010549-01-500310
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		10
CONFORMED PERIOD OF REPORT:	20010701
ITEM INFORMATION:		Other events
ITEM INFORMATION:		Financial statements and exhibits
FILED AS OF DATE:		20010810

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			GREENBRIAR CORP
		CENTRAL INDEX KEY:			0000105744
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-SKILLED NURSING CARE FACILITIES [8051]
		IRS NUMBER:				752399477
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-08187
		FILM NUMBER:		1703445

	BUSINESS ADDRESS:	
		STREET 1:		4265 KELLWAY CIRCLE
		CITY:			ADDISON
		STATE:			TX
		ZIP:			75244
		BUSINESS PHONE:		2144078400

	MAIL ADDRESS:	
		STREET 1:		4265 KELLWAY CIRCLE
		CITY:			ADDISON
		STATE:			TX
		ZIP:			75244

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MEDICAL RESOURCE COMPANIES OF AMERICA
		DATE OF NAME CHANGE:	19920703

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	WESPAC INVESTORS TRUST
		DATE OF NAME CHANGE:	19900605
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>green8k70101.txt
<TEXT>

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549





                                    FORM 8-K


                                 CURRENT REPORT


                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934





         Date of Report (Date of earliest event reported): July 1, 2001



                             Greenbriar Corporation
                         ------------------------------
             (Exact name of registrant as specified in its charter)



         Nevada                      0-8187                    75-2399477
- ------------------------    ------------------------    ------------------------
(State of incorporation)     (Commission File No.)        (IRS Employer
                                                           Identification No.)

              14185 Dallas Parkway, Suite 650, Dallas, Texas 75240
          ------------------------------------------------------------
           (Address of principal execute offices, including zip code)


                                 (972) 407-8400
                              --------------------
              (Registrant's telephone number, including area code)


<PAGE>

Item 5.  Other Events.
- ---------------------

         On August 1, 2001,  Registrant entered into agreements with LSOF Pooled
Equity,  L.P.  to settle and  resolve  litigation  over the amount and nature of
LSOF's  ownership of Registrant.  The dispute had centered  around the number of
shares of  Registrant's  common  stock and  extent of  control to which LSOF was
entitled upon  conversion  of its Series F and G Preferred  Stock and the amount
then due under a "Make Whole Agreement."  LSOF's position would have resulted in
a change of voting control of Registrant to LSOF, which  Registrant  resisted in
the litigation between the parties.

         Under the terms of the  settlement,  Registrant  will repurchase all of
LSOF's  ownership  interests in Registrant,  and LSOF will release all claims in
exchange  for  $4,000,000  in cash  and the  conveyance  of 11  assisted  living
properties  out of the 24 owned  and  operated  by  Registrant,  subject  to any
indebtedness  thereon.  Registrant  will  then  release  LSOF  from all  claims.
Registrant  previously borrowed $12,000,000 from Vestin Mortgage to enable it to
acquire two of the properties to be conveyed to LSOF.  Closing of the settlement
is  expected  to occur by the end of the third  quarter  and will be  subject to
receiving all required third party consents and approvals.

         With the litigation  concluded,  Registrant  will devote its efforts to
rebuilding  its business by exploring  attractive  acquisitions  in the assisted
living industry and in the general real estate market.  Registrant  existed from
1981 to 1989 as a real estate investment trust.  After a change in management in
1989, Registrant changed its primary focus to supplying products and services to
the elderly,  although it continued its business of investing in commercial real
estate.  Beginning in 1994,  Registrant  began  liquidating  its commercial real
estate and devoting its efforts to the assisted  living  sector of the eldercare
industry.  Between  1995 and 1997,  Registrant  opened  several  residences  and
acquired four assisted living companies.  Registrant's assisted living business,
similar to the rest of the  industry,  has  incurred  ongoing  financial  losses
resulting from vacancies,  high turnover,  regulatory  impediments and a general
state of  over-building.  Registrant  believes the long term  prospects  for the
assisted  living  industry  are  fundamentally  sound and will  continue to seek
attractive  acquisition  candidates.  However,  Registrant  will  also  seek  to
diversify its business by returning to its previously  profitable  operations in
general real estate development and investments.

         On July 1, 2001,  Registrant  exchanged all  outstanding  shares of its
Series D Preferred  Stock having an issue price of  $3,375,000 in exchange for a
promissory note in the same principal amount, payable in two years plus interest
at the rate of 10%. All such shares were owned by Sylvia M. Gilley,  the wife of
James R. Gilley, Chief Executive Officer.



                                 Page 2 of 200
<PAGE>


Item 7.  Financial Interest and Exhibits.
- ----------------------------------------


(c)      Exhibits
         --------

         4.1.8.       Certificate  of Voting Powers,  Designations,  Preferences
                      and Rights of Registrant's  Series H Preferred Stock dated
                      July 12, 2001.

         10.23.1.     Series H Convertible Preferred Stock Purchase Agreement.

         10.23.2.     Pledge Agreement.

         10.23.3.     Promissory Note to Vestin Mortgage.

         10.23.4.     Mortgage on La Villa, Roswell, New Mexico.

         10.23.5.     Deed of Trust on Camelot Assisted Living.

         10.24.1.     Master Settlement  Agreement dated July 31, 2001 with LSOF
                      Pooled Equity, L.P.

         10.24.2.     Consent Agreement dated July 31, 2001.

         10.25.1      Promissory  Note dated July 1, 2001 to Sylvia M. Gilley in
                      the principal amount of $3,375000.


                                   SIGNATURES
                                   ----------

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned hereunto duly authorized.

August 1, 2001

                                   GREENBRIAR CORPORATION




                                   By:   /s/ Gene S. Bertcher
                                      ------------------------------------------
                                      Gene S. Bertcher, Executive Vice President





                                 Page 3 of 200

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.1.8
<SEQUENCE>3
<FILENAME>green8k70101ex418.txt
<DESCRIPTION>CERTIFICATES OF DESIGNATIONS
<TEXT>


                                                                   EXHBIT 4.1.8.
                                                                   -------------

                             GREENBRIAR CORPORATION


                  Certificate of Designations, Preferences and
                            Rights of Preferred Stock
                     By Resolution of the Board of Directors

         We,  Gene S  Bertcher,  Executive  Vice  President,  and L. A.  Tuttle,
Assistant  Secretary,  of Greenbriar  Corporation,  a corporation  organized and
existing  under  the  laws of the  State  of  Nevada,  in  accordance  with  the
provisions of Section 78.195 of the Nevada Revised Statutes  thereof,  DO HEREBY
CERTIFY:


         That,  pursuant to authority  conferred  upon the Board of Directors by
the Articles of  Incorporation  (or an amendment  thereto) of said  Corporation,
said Board of  Directors  adopted,  by  unanimous  written  consent,  an amended
resolution  providing  for the  issuance  of a series of Six  Million  shares of
Series H Preferred Stock, which resolution is as follows:

         RESOLVED,  that pursuant to the authority  vested in the Board
         of  Directors  of  the  Corporation  in  accordance  with  the
         provisions of its Articles of  Incorporation,  effective as of
         the date this resolution is filed with the Nevada Secretary of
         State, a series of Preferred  Stock of the Corporation be, and
         it hereby is  created,  such series of  Preferred  Stock to be
         designated  Series H Preferred  Stock, to consist of 6,000,000
         shares  with a par  value of $0.10  per share and to have such
         features as set forth on Exhibit A to these minutes.

         IN  WITNESS  WHEREOF,  said  Greenbriar   Corporation  has  caused  its
corporate seal to be hereunto affixed and this certificate to be signed by James
R. Gilley, its President,  and Robert L. Griffis,  its Secretary,  effective the
12th day of July, 2001.


                                   By:      /s/ Gene S.  Bertcher
                                       ----------------------------------------
                                   Gene S. Bertcher, Executive Vice President



                                   By:      /s/ L.  A.  Tuttle
                                       ----------------------------------------
                                   L.  A.  Tuttle, Assistant Secretary



                                 Page 4 of 200
<PAGE>

STATE OF TEXAS

COUNTY OF DALLAS


         On July 12, 2001,  personally appeared before me, a Notary Public, Gene
S. Bertcher, Executive Vice President, and L. A. Tuttle, Assistant Secretary, of
Greenbriar Corporation, who acknowledged that they executed the above instrument
on behalf of said Corporation.



(Seal)                               /s/ Celeste Byars
                                     -------------------------------------------
                                     Notary Public in and for the State of Texas

My Commission Expires:
6/21/04



                                    EXHIBIT A

                            SERIES H PREFERRED STOCK


         1.       Greenbriar Corporation (the "Company") establishes a series of
Preferred  Stock  pursuant  to  the  authority  contained  in  the  Articles  of
Incorporation of the Company, to be known as Series H Preferred Stock, par value
$0.10 per share.


         2.       There shall be authorized the issuance of 6,000,000  shares of
Series H Preferred Stock.


         3.       The issue price of Series H Preferred Stock shall be $2.00 per
share  (the  "Issue  Price")  issuable  in  exchange  for cash or as  additional
collateral value to secured lenders to the Company or its subsidiaries.


         4.       No dividend  shall be payable on the Series H Preferred  Stock
except as shall be declared from time to time by the Board of Directors.

         5.       In the event of any dissolution,  liquidation or winding up of
the  Company,  whether  voluntary  or  involuntarily,  the  holders  of Series H
Preferred Stock, without any preference among them, shall be entitled to receive
in cash  out of the  assets  of the  Company,  whether  capital  or  surplus  or
otherwise, before any distribution of the assets shall be made to the holders of
Common  Stock,  an amount equal to the  aggregate  Issue Price of their  shares,
together,  in all  cases,  with  any  unpaid  dividends,  if any,  whether  such
dividends are earned, declared or otherwise, to the date fixed for such payment.
After  payment  to the  holders  of the  Series  H  Preferred  Stock of the full
preferential  amounts  hereinbefore  provided  for,  the  holders  of  Series  H
Preferred  Stock  will have no other  rights  or claims to any of the  remaining
assets  of the  Company,  either  upon  distribution  of  such  assets  or  upon
dissolution,  liquidation or winding up. The sale of all or substantially all of
the property of the Company to, or the merger,  consolidation or  reorganization
of the Company into or with, any other company, or the purchase or redemption by
the  Company  of any  shares of any class of its  Preferred  Stock or its Common
Stock or any other class of its stock  shall not be deemed to be a  distribution
of assets or a  dissolution,  liquidation or winding up for the purposes of this
paragraph.


                                 Page 5 of 200
<PAGE>

         6.       The Company may, at its option,  at any time, redeem the whole
or any part of the shares of Series H Preferred  Stock, and the redemption price
thereof  shall be equal to the Issue Price of the shares so  redeemed,  plus the
amount of any unpaid  dividends,  if any,  to the date of such  redemption.  The
Company may only  redeem  outstanding  shares of Series H Preferred  Stock after
giving each  record  holder of Series H Preferred  Stock at such  holder's  last
address, as shown on the records of the Company, at least ten (10), but not more
than fifty (50) days' notice thereof in writing by mail, postage prepaid. Except
as may be limited herein, all such redemptions of Series H Preferred Stock shall
be effected in accordance  with any procedure for  redemptions  set forth in the
Act.  Shares of Series H Preferred Stock which are redeemed shall be restored on
the status of authorized but unissued shares.

         On or before the date fixed for redemption,  the Company,  if it elects
to  call  such  shares  for  redemption,  shall  provide  for  payment  of a sum
sufficient  to redeem the shares  called  for  redemption  either (1) by setting
aside the sum,  separate  from its other funds,  in trust for the benefit of the
holders of the shares to be redeemed, or (2) by depositing such sum in a bank or
trust company as a trust fund, with  irrevocable  instructions  and authority to
the bank or trust  company to give or complete the notice of  redemption  and to
pay,  on or  after  the date  fixed  for  redemption,  the  redemption  price on
surrender  of  certificates  evidencing  the shares of Series H Preferred  Stock
called for  redemption.  From and after the date fixed for  redemption,  (a) the
shares shall be deemed to be redeemed,  (b) such setting  aside or deposit shall
be deemed to  constitute  full  payment of the shares,  (c) the shares  shall no
longer be deemed to be  outstanding,  (d) the holders  thereof shall cease to be
shareholders   with  respect   thereto,   except  the  right  to  receive  their
proportionate  share of the fund set aside  pursuant  hereto or  deposited  upon
surrender of their  respective  certificates.  Any interest accrued on funds set
aside pursuant hereto or deposited  shall belong to the Company.  If the holders
of shares do not,  within six (6) years after such deposit,  claim any amount so
deposited for  redemption  thereof,  the bank or trust company shall upon demand
pay over to the Company the balance of the funds so  deposited,  and the bank or
trust company shall thereupon be relieved of all responsibility to such holders.

         7.       The Shares of Series H Preferred Stock shall not be redeemable
by the holders thereof.


                                 Page 6 of 200
<PAGE>

         8.       The holders of Series H  Preferred  Stock shall have the right
to vote on all matters to come before a meeting of the Shareholders, at the rate
of one vote for each  share of common  stock  into  which the shares of Series H
Preferred  Stock are  convertible.  Holders of Series H Preferred Stock shall be
entitled to receive  notice of all  meetings of  shareholders  of the Company at
which they are  entitled to vote.  In the event the shares of Series H Preferred
Stock are held as  collateral  for the benefit of lenders to the Company or to a
Subsidiary,  neither  the lender nor the  holders  shall  obtain any such voting
rights  unless and until there shall have  occurred a "change in control" of the
Company  or an event of  default  under  the terms of loan  documents  with such
lenders.  Any shares of Series H Preferred Stock issued for cash shall have full
voting rights as provided  herein.  For purposes of these Sections,  a change of
control shall mean any one or more of the following events:

         (a)      An  acquisition  (other than directly from the Company) of any
voting securities of the Company (the "Voting  Securities") by any "Person" (the
term person is used for the purposes of Section 13(d) of the Securities Exchange
Act of 1934,  as amended  (the  "Exchange  Act"),  immediately  after which such
Person has "Beneficial  Ownership" (within the meaning of Rule 13d-3 promulgated
under the Exchange  Act) of  twenty-five  percent  (25%) or more of the combined
voting power of the Company's  then  outstanding  Voting  Securities;  provided,
however,  in  determining  whether  a Change in  Control  has  occurred,  Voting
Securities  which are acquired in a "Non-Control  Acquisition"  (as  hereinafter
defined)  shall not  constitute  an  acquisition  which  would cause a change in
Control.  A  "Non-Control  Acquisition"  shall  mean  an  acquisition  by (i) an
employee  benefit plan (or trust forming a part  thereof)  maintained by (A) the
Company or (b) any corporation or other Person of which a majority of its voting
power or its voting equity  securities or equity interest is owned,  directly or
indirectly, by the Company (for purposes of this definition, a "Subsidiary" (ii)
the  Company  or its  Subsidiaries,  or (iii) any  Person in  connection  with a
"Non-Control Transaction" (as hereinafter defined);

         (b)      The  Individuals  who, as of June 30, 2001, are members of the
Board (the  "Incumbent  Board"),  cease to constitute at least  two-third of the
members  of the  Board.  Provided,  however,  that if  after  the  election,  or
nomination  for  election  by the  Company's  common  stockholders,  if any  new
director was approved by a vote of at least  two-thirds of the Incumbent  Board,
such new director shall, for purposes of this Plan, be considered as a member of
the Incumbent  Board;  provided  further,  however,  that no individual shall be
considered a member of the Incumbent Board if such individual  initially assumed
office as a result of either an  actual or  threatened  "Election  Contest"  (as
described in Rule 14a-11  promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the board (a "Proxy Contest") including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or


                                 Page 7 of 200
<PAGE>

         (C)      Approval by stockholders of the Company of:

         (1)               a merger,  consolidation or reorganization  involving
                  the   Company,   unless  such  a  merger,   consolidation   or
                  reorganization is a "Non-Control  Transaction." A "Non-Control
                  Transaction"   shall   mean   a   merger,   consolidation   or
                  reorganization of the Company where:

                  (i)               the stockholders of the Company, immediately
                           before such merger,  consolidation or reorganization,
                           own directly or indirectly immediately following such
                           merger,  consolidation  or  reorganization,   seventy
                           percent  (70%) of the  combined  voting  power of the
                           outstanding  Voting  Securities  of  the  corporation
                           resulting  from  such  merger  or   consolidation  or
                           reorganization   (the  "Surviving   Corporation")  in
                           substantially  the same proportion as their ownership
                           of the  Voting  Securities  immediately  before  such
                           merger, consolidation or reorganization,

                  (ii)              the  individuals  who were  members  of  the
                           Incumbent Board immediately prior to the execution of
                           the    agreement    providing    for   such   merger,
                           consolidation or  reorganization  constitute at least
                           two-third of the members of the board of directors of
                           the   Surviving   Corporation,   or   a   corporation
                           beneficially directly or indirectly owning a majority
                           of   the   Voting   Securities   of   the   Surviving
                           Corporation, and

                  (iii)             no Person other than (a)  the  Company,  (b)
                           any Subsidiary, (c) any employee benefit plan (or any
                           trust  forming  a  part  thereof)  maintained  by the
                           Company,   the  Surviving   Company,   the  Surviving
                           Corporation,  or any  Subsidiary,  or (d) any  Person
                           who, immediately prior to such merger,  consolidation
                           or   reorganization   has  Beneficial   Ownership  of
                           fifty-one   percent   (51%)   or  more  of  the  then
                           outstanding   Voting   Securities,   has   Beneficial
                           Ownership of fifty-one  percent  (51%) or more of the
                           combined voting power of the Surviving  Corporation's
                           then outstanding Voting Securities.

         (2)               A plan of complete  liquidation or dissolution of the
                  Company, or

         (3)               An agreement for the sale or other disposition of all
                  or  substantially  all of the  assets  of the  Company  to any
                  Person (other than a transfer to a Subsidiary).

         9.       The  holders  of  shares  of any and all  series  of  Series H
Preferred  Stock  outstanding  on the  record  date for any such  meeting of the
shareholders  shall be entitled to vote,  as a single  class,  upon any proposed
amendment to the Company's Articles of Incorporation, and their consent shall be
required for any action of the Board of Directors,  if such  amendment or action
would (i)  increase or decrease the  aggregate  number of  authorized  shares of
Series H Preferred Stock, (ii) increase or decrease the Issue Price of shares of




                                 Page 8 of 200
<PAGE>

Series  H  Preferred  Stock,  (iii)  effect  an  exchange,  reclassification  or
cancellation  of all or part of the  shares of Series H  Preferred  Stock,  (iv)
effect an  exchange,  or create a right of  exchange,  of all or any part of the
shares of another class into shares of Series H Preferred  Stock, (v) change the
designations,  preferences,  limitations,  or  relative  rights of the  Series H
Preferred Stock herein,  (vi) change the shares of Series H Preferred Stock into
the same or a different  number of shares,  either with or without par value, of
the same class or another class or classes,  or (vii) cancel or otherwise affect
accumulated but undeclared  dividends on the shares of Series H Preferred Stock,
and no such  proposed  amendment  or action shall be deemed to have been adopted
and approved without the affirmative vote or consent of holders of a majority of
shares of Series H Preferred Stock then outstanding.

         10.      Subject to and upon  compliance  with the  provisions  hereof,
each holder of shares of Series H Preferred  Stock shall have the right, at such
holder's  option,  to convert  all or any  portion  (in  minimum  increments  of
$100,000 per  exercise if for less than all shares  owned) of the Issue Price of
shares of Series H  Preferred  Stock into  shares of common  stock (the  "Common
Stock") of the Company at a  conversion  rate of five (5) shares of common stock
for each one  share of  Series H  Preferred  Stock  (referred  to  herein as the
"Conversion  Price").  The Conversion Price is greater than the book value as of
June 30,  2001 or the fair  market  value of the  Common  Stock as quoted on the
American Stock Exchange on the last trading day prior to June 30, 2001, the date
of issue.

         The  Conversion  Price  and  number  of  common  shares  issuable  upon
conversion  shall be adjusted  to take into  account  any and all  increases  or
reductions  in the number of shares of Common Stock  outstanding  which may have
occurred  since the date of issuance of the Series H Preferred  Shares by reason
of a split, share dividend,  merger,  consolidation,  or other capital change or
reorganization  affecting the number of  outstanding  common shares so as fairly
and equitably to preserve so far as reasonably  possible the original conversion
rights of the Series H Preferred  Shares,  and  provided  further that when such
adjustment  is  required,  no notice of  redemption  shall be given  until  such
amendment and adjustments shall have been accomplished.

         Upon conversion of all or a part of the outstanding  Series H Preferred
Shares,  the Series H  Preferred  Shares  surrendered  for  conversion  shall be
cancelled and returned to the status of authorized but unissued shares. Under no
circumstances shall the Company be obligated to issue any fractional shares.

         In order to exercise the conversion  privilege,  the holder of Series H
Preferred  Stock  shall  present  the  shares  to the  Company  at  its  office,
accompanied  by written  notice to the Company that the holder elects to convert
all or a portion of Series H Preferred  Stock.  Such notice shall also state the
name or names  (with the  address  or  addresses)  in which the  certificate  or
certificates   representing  Common  Stock  which  shall  be  issuable  on  such
conversion  shall be issued.  As soon as  practicable  after the receipt of such
notice and the  presentation of the Shares of the Series H Preferred  Stock, the
Company shall issue and deliver to the holder a certificate or certificates  for
the number of full shares of common stock issuable upon the conversion of Series
H Preferred Shares (or portion hereof).  Such conversion shall be deemed to have
been  effected  immediately  prior to the close of business on the date on which
such notice shall have been received by the Company,  and the shares of Series H
Preferred Stock shall have been presented as aforesaid,  and conversion shall be



                                 Page 9 of 200
<PAGE>

at the  Conversion  Price in effect at such time, and at such time the rights of
the holder of the shares of Series H Preferred  Stock as such holder shall cease
(to the extent the shares of Series H Preferred  Stock are so converted) and the
person or persons in whose name or names any  certificate  or  certificates  for
Common  Stock shall be  issuable  upon such  conversion  shall be deemed to have
become the holder or holders of record of the Common Stock represented  thereby.
Upon  conversion  by a holder of only a part of the shares of Series H Preferred
Stock held by such holder,  new shares of Series H Preferred Stock  representing
the  shares  not  converted  shall  be  issued  in  the  name  of  such  holder.
Notwithstanding  the  holder's  designation  of names in which  shares of Common
Stock are to be issued,  nothing  contained  in this  Section  shall  permit the
holder of the Series H Preferred Stock to make any transfer or assignment of its
rights hereunder which is otherwise  prohibited by the Series H Preferred Shares
or by law.





                                 Page 10 of 200

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.23.1
<SEQUENCE>4
<FILENAME>green8k070101ex10231.txt
<DESCRIPTION>PREFERRED STOCK PURCHASE AGREEMENT
<TEXT>

                                                                EXHIBIT 10.23.1.
                                                                ----------------



             SERIES H CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT

         This agreement to purchase stock (this "Agreement"), is entered into as
of July 13th, 2001, by and among Greenbriar  Corporation,  a Nevada  corporation
(the "Company"),  and Wedgwood  Partners,  Ltd., Limited  Partnership,  a Nevada
limited partnership (the "Purchaser").



         WHEREAS,  subject  to the  terms  and  conditions  set  forth  in  this
Agreement,  the  Company  desires  to issue  and sell to the  Purchaser  and the
Purchaser  desires to purchase from the Company for an aggregate  purchase price
of $9,600,000,  6,000,000 shares of the Company's Series H Convertible Preferred
Stock,  par value $0.10 per share (the  "Preferred  Stock"),  having the rights,
restrictions,  privileges  and  preferences  set  forth  in the  Certificate  of
Designation  of Rights and  Preferences  of Series H  Preferred  Stock  attached
hereto  as  Exhibit  A  (the  "Certificate  of  Designation"),   and  which  are
convertible into shares of the Company's common stock, $0.01 par value per share
(the "Common Stock").



         NOW,  THEREFORE,  IN CONSIDERATION of the mutual covenants contained in
this Agreement,  and for other good and valuable  consideration  the receipt and
adequacy of which are hereby  acknowledged,  the Company and the Purchaser agree
as follows:

                                    ARTICLE I

                                PURCHASE AND SALE

         1.1      The  Purchase.  The  Company  has,  or before the  Closing (as
hereinafter  defined)  will  have,  authorized  the  issuance  and sale of up to
6,000,000  shares of the  Preferred  Stock,  having  the  rights,  restrictions,
privileges  and  preferences  as set forth in the  Certificate  of  Designation.
Subject to the terms and  conditions  set forth in this  Agreement,  the Company
shall issue and sell to the Purchaser and the Purchaser  shall purchase from the
Company  6,000,000  shares of Preferred  Stock at a purchase  price of $1.60 per
share,  for an  aggregate  purchase  price of  $9,600,000.  The  closing  of the
purchase and sale of the Preferred Stock (the "Closing") shall take place at the
offices of the Company, immediately following the execution hereof or such later
date as the  Company  and  Purchasers  may  agree.  The date of the  Closing  is
hereinafter referred to as the "Closing Date."


                                 Page 11 of 200
<PAGE>

         1.2      Closing.  At  the  Closing,   the  Company  shall  deliver  to
Purchaser  this  Agreement and a certificate  for the shares of Preferred  Stock
registered in such Purchaser's name. At the Closing,  Purchaser shall deliver to
the Company this Agreement,  an executed  version of the note as attached hereto
as Exhibit B, and an executed  version of the note as attached hereto as Exhibit
C.

                  Certain Defined Terms.   For purposes of this Agreement:

                           "Business  Day" shall  mean any day except  Saturday,
Sunday  and any day which  shall be a federal  legal  holiday  or a day on which
banking  institutions in the State of Texas are authorized or required by law or
other governmental action to close;

                           "Person"   means  an   individual   or   corporation,
partnership,  trust, incorporated or unincorporated association,  joint venture,
limited  liability  company,  joint stock  company,  government (or an agency or
subdivision thereof) or other entity of any kind;

                           "Transaction  Documents"  shall mean this  Agreement,
the Certificate of Designations  and the Certificate  representing the Preferred
Stock.

                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES

         2.1      Representations  and  Warranties  of the Company.  The Company
hereby makes the following representations and warranties to the Purchaser:

                  (a)      Organization  and  Qualification.  The  Company  is a
corporation duly  incorporated,  validly existing and in good standing under the
laws of the State of Nevada with the requisite  corporate power and authority to
own and use its  properties and assets and to carry on its business as currently
conducted.  The Company is duly qualified to do business and is in good standing
as a  foreign  corporation  in each  jurisdiction  in which  the  nature  of the
business conducted or property owned by it makes such  qualification  necessary,
except where the failure to be so qualified or in good standing, as the case may
be, could not, individually or in the aggregate,  adversely affect the legality,
validity  or  enforceability  of  the  Securities  (as  defined  below)  or  the
Transaction  Documents,  or have or result in a material  adverse  effect on the
results of operations,  assets, prospects, or condition (financial or otherwise)
of the Company (a "Material Adverse Effect").

                  (b)      Authorization;   Enforcement.  The  Company  has  the
requisite  corporate  power and  authority to enter into and to  consummate  the
transactions  contemplated by the  Transaction  Documents and otherwise to carry
out its obligations hereunder and thereunder. The execution and delivery of each
of the  Transaction  Documents by the Company and the  consummation by it of the
transactions  contemplated  thereby have been duly  authorized  by all necessary
action on the part of the  Company,  and no further  action is  required  by the
Company. Each of the Transaction Documents has been duly executed by the Company
and, when delivered (or filed,  as the case may be) in accordance with the terms
hereof and thereof, will constitute valid and binding obligations of the Company
enforceable against the Company in accordance with their terms.


                                 Page 12 of 200
<PAGE>

                  (c)      Issuance  of  the  Preferred  Stock.  The  shares  of
Preferred  Stock are duly authorized and, when issued and paid for in accordance
with  the  terms  hereof,  will be duly  and  validly  issued,  fully  paid  and
non-assessable,  free and clear of all liens,  encumbrances  and rights of first
refusal of any kind (collectively,  "Liens"). The Company has on the date hereof
and will, at all times while the  Preferred  Stock is  outstanding,  maintain an
adequate  reserve  of duly  authorized  shares of  Common  Stock,  reserved  for
issuance  to the  holders of the  Preferred  Stock,  to enable it to perform its
conversion and other obligations under the Transaction Documents with respect to
the Preferred  Stock. The shares of Common Stock issuable upon conversion of the
Preferred Stock are referred to herein as the "Underlying Shares." The shares of
Preferred Stock and the Underlying  Shares are  collectively  referred to herein
as, the  "Securities."  When issued upon conversion of the Preferred  Stock, the
Underlying  Shares  will be duly  authorized,  validly  issued,  fully  paid and
nonassessable,  free and clear of all Liens.  Assuming the  representations  and
warranties of the  Purchasers  contained in Article 2.2 are true,  (i) the offer
and sale of the Preferred Stock by the Company,  complies with or is exempt from
all applicable  Federal and state  securities laws and Purchaser will not have a
right of rescission or damages with respect thereto and (ii) the issuance of the
Underlying  Shares upon conversion of the Preferred Stock will comply with or be
exempt from all applicable  Federal and state  securities  laws and no Purchaser
will have a right of rescission or damages with respect thereto.

                  (d)      No Conflicts. The execution, delivery and performance
of the Transaction  Documents by the Company and the consummation by the Company
of the  transactions  contemplated  hereby  and  thereby do not and will not (i)
conflict with or violate any provision of the Company's  certificate or articles
of incorporation, bylaws or other charter documents (each as amended through the
date hereof),  or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default)  under,  or give to
others any rights of termination,  amendment, acceleration or cancellation (with
or without notice,  lapse of time or both) of, any agreement,  credit  facility,
debt or other  instrument  (evidencing  a Company  debt or  otherwise)  or other
understanding  to which the Company is a party or by which any property or asset
of the Company is bound or affected,  or (iii) result in a violation of any law,
rule, regulation,  order, judgment,  injunction,  decree or other restriction of
any court or governmental  authority to which the Company is subject  (including
federal and state securities laws and regulations),  or by which any property or
asset of the  Company  is bound or  affected.  Subject  to the  accuracy  of the
representations  and  warranties  of the  Purchaser set forth in Article 2.2, no
registration  or filing with,  or consent or approval of or other action by, any
Federal,  state or other  governmental  agency or  instrumentality,  domestic or
foreign,  under  laws and  regulations  thereof  as now in  effect is or will be
necessary for the valid  execution,  delivery and  performance by the Company of
any of the  Transaction  Documents  (other than the filing of the Certificate of
Designations),  the issuance,  sale and delivery of the  Securities,  other than
filings  pursuant to state  securities laws (all of which filings have been made
by the Company or will be made within the period of time  required by such state
securities  laws) in connection with the sale of shares of Preferred Stock under
this Agreement.


                                 Page 13 of 200
<PAGE>

                  (e)      Filings,  Consents and Approvals.  The Company is not
required  to obtain any  consent,  waiver,  authorization  or order of, give any
notice to, or make any filing or registration  with, any court or other federal,
state, local or other governmental  authority or other Person in connection with
the  execution,  delivery  and  performance  by the  Company of the  Transaction
Documents,  other than the filing of the  Certificate of  Designations  with the
Nevada Secretary of State.

                  (f)      Litigation;  Proceedings.  There is no action,  suit,
inquiry,  notice of violation,  proceeding or  investigation  pending or, to the
knowledge of the Company,  threatened against or affecting the Company or any of
its respective  properties before or by any court,  arbitrator,  governmental or
administrative agency or regulatory authority (federal,  state, county, local or
foreign)   (collectively,   an  "Action")  and/or  which  adversely  affects  or
challenges the legality,  validity or  enforceability  of any of the Transaction
Documents or the Securities.

                  (g)      Private  Offering.   Assuming  the  accuracy  of  the
representations   and   warranties  of  the  Purchaser  set  forth  in  Sections
2.2(b)-(g),  the offer,  issuance and sale of the Securities to the Purchaser as
contemplated  hereby  are  exempt  from  the  registration  requirements  of the
Securities Act of 1933, as amended (the "Securities  Act").  Neither the Company
nor any Person  acting on its behalf  has taken or is, to the  knowledge  of the
Company,  contemplating  taking any action  which could  subject  the  offering,
issuance  or sale of the  Securities  to the  registration  requirements  of the
Securities  Act including  soliciting any offer to buy or sell the Securities by
means of any form of general solicitation or advertising.

                  (h)      Disclosure. The Company understands and confirms that
the  Purchasers  shall  be  relying  on the  representations  set  forth  in the
Transaction  Documents in effecting  transactions  in securities of the Company.
All disclosure, including, without limitation, that set forth in the Transaction
Documents and the Schedules to this Agreement (which are  incorporated  into and
made a part  of  this  Agreement),  provided  to the  Purchasers  regarding  the
Company,  its  business and the  transactions  contemplated  by the  Transaction
Documents,  furnished by or on behalf of the Company are true and correct and do
not  contain  any  untrue  statement  of a  material  fact or omit to state  any
material fact necessary in order to make the statements made herein and therein,
in light of the circumstances under which they were made, not misleading.

                  (i)      Financial Information.  The Company has furnished the
Purchaser with the Company's  financial  statements and other  disclosures about
the Company in its public  documents as filed with the  Securities  and Exchange
Commission.  Such  information  is materially  true and correct and includes all
information required to be filed with the SEC.


                                 Page 14 of 200
<PAGE>

                  (j)      Insurance.   The  Company   carries   insurance  with
financially  sound and reputable  insurance  companies or associations,  in such
amounts and covering  such risks as are adequate and  customary for the type and
scope of its property and  business,  but in any event in amounts  sufficient to
prevent the Company from becoming a co-insurer.

                  (k)      No Broker.  The Company has no contract,  arrangement
or understanding  with any broker,  finder,  agent,  financial  advisor or other
intermediary with respect to the transactions contemplated by this Agreement.

                  (l)      Books and  Records.  The books of  account,  ledgers,
order books,  records and  documents of the Company  accurately  and  completely
reflect all material  information  relating to the business of the Company,  the
nature, acquisition,  maintenance,  location and collection of the assets of the
Company,  and the nature of all  transactions  giving rise to the obligations or
accounts receivable of the Company.

                  (m)      Environmental   Matters.   The   Company  is  not  in
violation  of  any  applicable  statute,  law  or  regulation  relating  to  the
environment or occupational safety and health, and, to the best knowledge of the
Company,  no material  expenditures will be required in order to comply with any
such statute, law or regulation.

                  (n)      Issuance   Taxes.   All  taxes   imposed  by  law  in
connection  with the  issuance,  sale and delivery of the Shares have been fully
paid, and all laws imposing such taxes have been fully complied with.

         2.2      Representations  and  Warranties of the  Purchaser.  Purchaser
hereby represents and warrants to the Company as follows:

                  (a)      Organization;  Authority. Purchaser has the requisite
power  and  authority  to  enter  into  and  to  consummate   the   transactions
contemplated  by the  Transaction  Documents  and  otherwise  to  carry  out its
obligations  thereunder.  The purchase by Purchaser of shares of Preferred Stock
hereunder  has been  duly  authorized  by all  necessary  action  on the part of
Purchaser.  This  Agreement  has been  duly  executed  by  Purchaser  and,  when
delivered (or filed, as the case may be) in accordance with the terms hereof and
thereof,  will  constitute  valid  and  binding  obligations  of  the  Purchaser
enforceable against the Purchaser in accordance with their terms.

                  (b)      Investment  Intent.  Purchaser is acquiring shares of
Preferred  Stock as principal for its own account for  investment  purposes only
and not with a view to or for  distributing  or  reselling  any such  shares  of
Preferred  Stock.  Purchaser is acquiring shares of Preferred Stock hereunder in
the ordinary  course of its business.  Purchaser  does not have any agreement or
understanding, directly or indirectly, with any person to distribute such Shares
of Preferred Stock.

                  (c)      Purchaser  Status.  At the time Purchaser was offered
shares of Preferred  Stock, it was, and at the date hereof it is, an "accredited
investor" as defined in Rule 501(a) under the Securities Act.  Purchaser has not
been formed solely for the purpose of acquiring the Securities.



                                 Page 15 of 200
<PAGE>

                  (d)      Experience of Purchaser.  Purchaser,  either alone or
together  with its  representatives,  has  such  knowledge,  sophistication  and
experience in business and  financial  matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.

                  (e)      Ability  of  Purchaser  to Bear  Risk of  Investment.
Purchaser is able to bear the economic risk of an  investment in the  Securities
and, at the present time, is able to afford a complete loss of such investment.

                  (f)      Access to Information. Purchaser acknowledges that it
has reviewed such information  about the Company it has deemed necessary and has
been  afforded  (i) the  opportunity  to ask  such  questions  as it has  deemed
necessary  of, and to  receive  answers  from,  representatives  of the  Company
concerning  the terms and  conditions of the offering of the  Securities and the
merits and risks of  investing  in the  Securities;  (ii) access to  information
about the Company and the Company's financial condition,  results of operations,
business,  properties,  management  and  prospects  sufficient  to  enable it to
evaluate its  investment;  and (iii) the  opportunity to obtain such  additional
information  which the Company  possesses  or can acquire  without  unreasonable
effort or expense that is necessary to make an informed investment decision with
respect to the  investment  and to verify the accuracy and  completeness  of the
information it has reviewed.  Neither such inquiries nor any other investigation
conducted by or on behalf of Purchaser or its  representatives  or counsel shall
modify,  amend or affect  Purchaser's  right to rely on the truth,  accuracy and
completeness  of  the  any of  the  Company's  disclosures  to  each  Purchaser,
including,  without limitation,  representations and warranties contained in the
Transaction Documents.

                  (g)      General  Solicitation.  Purchaser  is not  purchasing
shares of Preferred  Stock as a result of or  subsequent  to any  advertisement,
article, notice or other communication regarding the Securities published in any
newspaper,  magazine or similar media or broadcast  over  television or radio or
presented  at  any  seminar  or  any  other  general   solicitation  or  general
advertisement.

                  (h)      Reliance. Purchaser understands and acknowledges that
(i)  shares  of  preferred  stock  are  being  offered  and  sold to it  without
registration  under the  Securities  Act on the basis of an  exemption  from the
registration  provisions of the Securities Act and (ii) the availability of such
exemption,  depends in part on, and the Company  will rely upon the accuracy and
truthfulness of, the foregoing representations.

                  The Company  acknowledges  and agrees that  Purchaser does not
make or has not made any  representations  or  warranties  with  respect  to the
transactions contemplated hereby other than those specifically set forth in this
Section 2.2.

                                   ARTICLE III

                         OTHER AGREEMENTS OF THE PARTIES

         3.1      Transfer Restrictions.  (a) Securities may only be disposed of
pursuant to an effective registration statement under the Securities Act, to the
Company or pursuant  to an  available  exemption  from or in a  transaction  not
subject  to  the  registration  requirements  of  the  Securities  Act,  and  in
compliance with any applicable  federal and state securities laws. In connection
with any transfer of Securities other than pursuant to an effective registration
statement or to the Company,  except as otherwise set forth herein,  the Company
may  require  the  transferor  thereof to  provide to the  Company an opinion of
counsel  selected by the  transferor,  the form and  substance of which  opinion
shall be  reasonably  satisfactory  to the  Company,  to the  effect  that  such
transfer does not require registration of such transferred  securities under the
Securities Act.


                                 Page 16 of 200
<PAGE>

         (b)      The Purchaser agrees to the imprinting, so long as is required
by this Section 3.1(b), of the following legend on the Securities:

NEITHER THESE  SECURITIES  NOR THE  SECURITIES  INTO WHICH THESE  SECURITIES ARE
CONVERTIBLE, HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE  SECURITIES  COMMISSION  OF ANY STATE IN  RELIANCE  UPON AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES LAWS.

         3.2      Furnishing  of   Information.   As  long  as  Purchaser   owns
Securities,  the Company  covenants to provide such Purchaser (i) with quarterly
financial statements,  including year-to-date statements,  of the Company within
45 days  after the end of each  fiscal  quarter,  and (ii) an  annual  financial
statement  within  120 days  after the end of each  fiscal  year  audited  by an
accounting firm approved by the Purchasers.  All such financial statements shall
be prepared and  formatted in  accordance  with  generally  accepted  accounting
principles,  except that quarterly  financial  statements may lack footnotes and
usual year-end adjustments.

         3.3      Possible Purchase Price Per Share  Adjustment.  All agreements
between  the  Purchasers  and the  Company,  whether now  existing or  hereafter
arising  and  whether  written  or  oral,  are  hereby  limited  so  that  in no
contingency,  whether by  unilateral or mutual  mistake or otherwise,  shall the
purchase price per share of $1.60 per share of the Preferred  Stock be less than
the greater of book or market value of five shares of  Greenbriar  common stock.
If it is determined,  from any circumstance whatsoever,  that the purchase price
per  share of $1.60 per  share of the  Preferred  Stock is less than the book or
market value of five shares of Greenbriar  common stock, the number of number of
shares of Preferred  Stock held by such holder of the Preferred Stock or secured
party,  where the  Preferred  Stock is  collateral,  shall be reduced  until the
purchase price per share of Preferred Stock is equal to the book or market value
of five shares of Greenbriar  common stock.  Any holder or subsequent  holder of
the  Preferred  Stock  or any  secured  party,  where  the  Preferred  Stock  is
collateral, shall surrender such excess shares to the Company on a timely basis.
Purchasers  shall require any  subsequent  holder of the Preferred  Stock or any
secured party,  where the Preferred Stock is collateral,  to agree in writing to
be bound by the terms of this paragraph of the Agreement.  This paragraph  shall
control all agreements between the Purchasers and the Company.



                                 Page 17 of 200
<PAGE>

                                   ARTICLE IV

                                  MISCELLANEOUS

         4.1      Entire  Agreement;   Amendments.  The  Transaction  Documents,
together   with  the  Exhibits  and   Schedules   thereto   contain  the  entire
understanding  of the  parties  with  respect to the subject  matter  hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such  matters,  which the  parties  acknowledge  have been  merged  into such
documents, exhibits and schedules.

         4.2      Notices.  Any and  all  notices  or  other  communications  or
deliveries  required or permitted to be provided  hereunder  shall be in writing
and  shall be deemed  given and  effective  on the  earliest  of (i) the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  telephone number specified in this Section prior to 4:00 p.m. (Dallas
time) on a Business Day,  (ii) the Business Day after the date of  transmission,
if such notice or  communication  is delivered  via  facsimile at the  facsimile
telephone  number specified in this Agreement later than 4:00 p.m. (Dallas time)
on any date and earlier than 11:59 p.m.  (Dallas  time) on such date,  (iii) the
Business Day  following the date of mailing,  if sent by  nationally  recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and  communications
shall be as follows:

         If to the Company:        Greenbriar Corporation
                                   650 Centura Tower One
                                   14185 Dallas Parkway
                                   Dallas, Texas 75240
                                   Attn:  James R. Gilley

         With copies to:           Glast, Phillips & Murray
                                   2200 One Galleria Tower
                                   13355 Noel Road, L.B. 48
                                   Dallas, Texas 75240-6657
                                   Facsimile No.:  (972) 419-8329
                                   Attn:  Ronald L. Brown, Esq.

         If to Purchaser:          Wedgwood Partners, Ltd., Limited Partnership
                                   650 Centura Tower One
                                   14185 Dallas Parkway
                                   Dallas, Texas 75240
                                   Attn:  Gene S. Bertcher

         With copies to:           Bennett, Weston & LaJone, P.C.
                                   1750 Valley View Lane
                                   Suite 120
                                   Dallas, Texas 75234
                                   Facsimile No.:  (214) 373-6810
                                   Attn:  Mark E. Bennett, Esq.

Or such other  address as may be designated  in writing  hereafter,  in the same
manner, by such Person.


                                 Page 18 of 200
<PAGE>

         4.3      Amendments;  Waivers.  No provision of this  Agreement  may be
waived  or  amended  except in a written  instrument  signed,  in the case of an
amendment,  by the Company and the Purchaser or, in the case of a waiver, by the
party against whom  enforcement  of any such waiver is sought.  No waiver of any
default  with  respect  to any  provision,  condition  or  requirement  of  this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other  provision,  condition or requirement  hereof,  nor shall any delay or
omission of either  party to exercise any right  hereunder in any manner  impair
the exercise of any such right accruing to it thereafter.

         4.4      Headings. The headings herein are for convenience only, do not
constitute a part of this  Agreement  and shall not be deemed to limit or affect
any of the provisions hereof.

         4.5      Successors and Assigns.  This Agreement  shall be binding upon
and inure to the  benefit of the  parties  and their  successors  and  permitted
assigns.  The Company may not assign this Agreement or any rights or obligations
hereunder  without the prior  written  consent of the  Purchaser.  Except as set
forth in Section  3.1(a),  the Purchaser may not assign this Agreement or any of
the rights or obligations hereunder without the consent of the Company.

         4.6      No Third-Party  Beneficiaries.  This Agreement is intended for
the benefit of the parties hereto and their respective  successors and permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other Person.

         4.7      Governing  Law. All  questions  concerning  the  construction,
validity,  enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance  with the internal laws of the State of
Nevada, without regard to the principles of conflicts of law thereof.

         4.8      Survival.  The  representations,  warranties,  agreements  and
covenants  contained  herein  shall  survive the Closing  and the  delivery  and
conversion or exercise (as the case may be) of the Preferred Stock.

         4.9      Execution.  This  Agreement  may be  executed  in two or  more
counterparts,  all of which when taken  together shall be considered one and the
same agreement and shall become effective when  counterparts have been signed by
each party and  delivered  to the other  party,  it being  understood  that both
parties need not sign the same  counterpart.  In the event that any signature is
delivered by facsimile  transmission,  such  signature  shall create a valid and
binding  obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.



                                 Page 19 of 200
<PAGE>

         4.10     Severability.  In case  any one or more of the  provisions  of
this Agreement shall be invalid or  unenforceable  in any respect,  the validity
and enforceability of the remaining terms and provisions of this Agreement shall
not in any way be affecting or impaired  thereby and the parties will attempt to
agree  upon a valid  and  enforceable  provision  which  shall  be a  reasonable
substitute  therefor,  and upon so agreeing,  shall  incorporate such substitute
provision in this Agreement.






                                 Page 20 of 200
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this Series
H Preferred  Stock  Purchase  Agreement to be duly executed by their  respective
authorized signatories as of the date first indicated above.

                                          GREENBRIAR CORPORATION



                                          By: /s/ Oscar W. Smith
                                             -----------------------------------

                                                  Oscar W. Smith, Vice President



                                          WEDGWOOD PARTNERS, LTD.
                                          LIMITED PARTNERSHIP



                                          BY GBR, LLC, ITS GENERAL
                                          PARTNER



                                                 BY ITS SOLE MEMBER & MANAGER:

                                                 Greenbriar Acquisition
                                                 Corporation



                                                 By: /s/ Gene S. Bertcher
                                                    ----------------------------

                                                 Name: Gene S. Bertcher

                                                 Title: Executive Vice-President




                                 Page 21 of 200

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.23.2
<SEQUENCE>5
<FILENAME>green8k070101ex10232.txt
<DESCRIPTION>PLEDGE AGREEMENT
<TEXT>

                                                                 EXHIBIT 10.23.2
                                                                 ---------------


                                PLEDGE AGREEMENT


         This Pledge Agreement is entered into as of the 12th day of July, 2001,
by Wedgwood Partners, Ltd., Limited Partnership ("Pledgor"),  in favor of Vestin
Mortgage (the "Secured Party").

                                    SECTION I


         SECURITY INTEREST.  For value received,  the receipt and sufficiency of
which is hereby acknowledged,  including,  without limitation,  the agreement by
Secured  Party to make a loan to Pledgor,  pursuant to a Promissory  Note in the
principal amount of $12,000,000  entered into on the date hereof between Pledgor
and Secured  Party (the "Note"),  Pledgor has granted,  and does hereby grant to
Secured Party, a security  interest in and agrees and acknowledges  that Secured
Party have and shall  continue  to have a  security  interest  in the  following
described property, to-wit:

                  6,000,000   shares  of  the   outstanding   Series  H
                  Preferred  Stock,  par  value  $0.10,  of  Greenbriar
                  Corporation,  a Nevada  corporation,  (the  "Issuer")
                  currently owned by Pledgor;

together with all moneys, income, proceeds and benefits attributable or accruing
to such  property  including,  but not limited to, all stock  rights,  rights to
subscribe,  liquidating dividends, stock dividends, dividends paid in stock, new
security  or other  properties  or benefits  to which  Secured  Party are or may
hereafter  become  entitled to receive on account of such  property.  All of the
property in which Secured  Party are hereby  granted a security  interest  shall
herein  sometimes be called the  "Collateral"  and/or the "Pledged  Securities".
Such Pledged Securities shall be issued in the name of the Pledgor and delivered
to Secured  Party,  together  with  stock  powers  signed in blank,  in order to
perfect the Security  Interest in the shares.  The shares will be delivered from
such holder to the Pledgor upon payment in full of the obligations.

                                   SECTION II

         OBLIGATIONS. The Collateral granted hereby is to secure the payment and
performance of any and all indebtedness,  obligations,  and liabilities incurred
by the Pledgor to the Secured Party  pursuant to the terms and provisions of the
Note.



                                 Page 22 of 200
<PAGE>

                                   SECTION III

         EVENTS OF DEFAULT.  The  occurrence of any of the  following  events or
conditions shall constitute an "Event of Default":

                  (b)      Default in the payment of the Note when due;

                  (c)      The levy of any attachment, execution, garnishment or
                  other  process  against all or any part of the  Collateral  in
                  connection  with  any  lien,  debt,  judgment,  assessment  or
                  obligation of Pledgor, or the levy of any such process against
                  any other  property  of  Pledgor  which  would  tend to have a
                  material  adverse effect upon Pledgor'  ability to perform its
                  obligations to Secured Party; or

                  (d)      Any  representation  or  warranty  made by Pledgor in
                  this Pledge Agreement or in any other agreement,  certificate,
                  financial or other  statement  furnished  by Pledgor  pursuant
                  hereto or in  connection  herewith  is untrue in any  material
                  respect as of the date made or furnished.

                                   SECTION IV

         REMEDIES OF SECURED  PARTY.  Upon the happening of any Event of Default
specified  herein,  and at any time  thereafter,  at the  option  of the  holder
thereof,  the Note shall become immediately due and payable without presentment,
demand,  notice of intention to accelerate,  notice of  acceleration,  notice of
non-payment,  protest,  notice of dishonor,  or any other notice  whatsoever  to
Pledgor,  and Secured  Party shall have and may exercise  with  reference to the
Collateral  and Note any and all of the rights and  remedies of a secured  party
under the Uniform  Commercial Code as then in effect in the State of Nevada, and
as  otherwise  granted  herein or under any other  applicable  law (all of which
rights and remedies shall be cumulative),  including,  without  limitation,  the
right to sell the Pledged Securities,  or any part thereof, at public or private
sale or at any  broker's  board or on any  securities  exchange,  for cash or on
credit,  or for future  delivery  without  assumption of any credit risk, and at
such price or prices as Secured Party may deem satisfactory.

                  Secured  Party may be the  purchaser of all or any part of the
Collateral  and/or the Pledged  Securities so sold at any public sale (or if the
Pledged  Securities are of a type customarily sold in a recognized market or are
of a type which is the subject of widely distributed  standard price quotations,
at any private  sale) and  thereafter  hold the same  absolutely,  free from any
right or claim or right of whatever kind.  Secured Party is hereby authorized at
any such sale,  if it deems it advisable  so to do, to restrict the  prospective
bidders or  purchasers  of any of the  Pledged  Securities  to persons  who will
represent  and  agree  that  they are  purchasing  for  their  own  account  for
investment,  and  not  with a view  to the  distribution  or  sale of any of the
Pledged  Securities.  Upon any such sale,  Secured Party shall have the right to
deliver,  assign and transfer to the purchaser thereof the Pledged Securities so
sold. Each purchaser at any such sale shall hold the Pledged  Securities so sold
absolutely free from any claim or right of whatever kind.


                                 Page 23 of 200
<PAGE>

         Secured  Party  shall  give  Pledgor  ten days'  written  notice of its
intention to make any such public or private  sale or sale at broker's  board or
on a securities exchange. Such notice, in the case of a public sale, shall state
the time and place  fixed for such sale,  and, in the case of sale at a broker's
board or on a  securities  exchange,  shall state the board or exchange at which
such  sale is to be made and the day on which  the  Pledged  Securities,  or the
portion  thereof so being sold,  will first be offered for sale at such board or
exchange.  Any  such  public  sale  shall be held at such  time or times  within
ordinary  business hours and at such place or places as Secured Party may fix in
the notice of such sale. At any such sale, the Pledged Securities may be sold in
one lot as an entirety or in separate  parcels as Secured  Party may  determine.
Secured  Party shall not be obligated to make any such sale pursuant to any such
notice. Secured Party may, without notice or publication,  adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for the sale,  and such sale may be made at any time
or place to which  the same may be so  adjourned.  In case of any sale of all or
any part of the Pledged Securities on credit or for future delivery, the Pledged
Securities so sold may be retained by Secured Party until the purchase  price is
paid by the purchaser  thereof,  but Secured Party shall not incur any liability
due to any  failure  of such  purchaser  to  take  up and  pay  for the  Pledged
Securities so sold and, upon such failure,  such Pledged Securities may again be
sold upon like notice.  Instead of exercising the power of sale herein conferred
upon it,  Secured  Party may  proceed  by a suit or suits at law or in equity to
foreclose the security  interests herein granted and sell the Collateral  and/or
Pledged Securities,  or any part thereof,  under a judgment or decree of a court
or courts of competent jurisdiction.

         Secured Party is hereby  granted the right,  after the occurrence of an
Event of  Default,  to transfer at any time to itself or its nominee the Pledged
Securities,  or any part thereof,  and  thereafter to exercise all voting rights
with respect to any such Pledged  Securities so  transferred  and to receive the
proceeds,  payments, moneys, income or benefits attributable or accruing thereto
and to hold the same as security for the Note, or at Secured  Party's  election,
to apply  such  amounts to the Note,  whether or not then due,  in such order as
Secured  Party  may  elect,  or,  Secured  Party  may,  at its  option,  without
transferring such Pledged Securities to its nominee,  exercise all voting rights
with respect to the Pledged  Securities  and vote all or any part of the Pledged
Securities at any regular or special meeting of shareholders.

                                    SECTION V

         VOTING RIGHTS.
         --------------

                  Pursuant to the Certificate of  Designations,  Preferences and
Rights of Preferred  Stock creating the shares of Series H Preferred  Stock (the
"Certificate"),  the Shares  pledges as collateral do not have the right to vote
unless  there has been a change of control of the Issuer or unless  there  shall
occur an event of default under the loan  documents.  A special event of default
for purposes of this Agreement and the Certificate is hereby created as follows:
The special  event of default shall be deemed to be one or more of the following
events:  (i) there  shall have  occurred a renewed  attempt by LSOF  Opportunity
Fund, L.P. in litigation  pending in the District Court of Dallas County,  Texas
to assert  control of the Issuer  through the  issuance of common  stock to LSOF
pursuant to an order of such court;  or (ii) the  negotiations  between LSOF and
the Issuer in progress on the date of this Agreement shall be abandoned  without
concluding a final agreement.


                                 Page 24 of 200
<PAGE>

                  In the event of the special  default  defined by this Section,
the Issuer shall give notice to the Secured  Party,  and the sole and  exclusive
remedy of Secured  Party shall be that the Shares  constituting  the  Collateral
shall immediately and without further action by any party become fully voting by
the registered  owner thereof as provided in the  Certificate.  In the event the
default shall be cured,  the Shares shall be restored to the  non-voting  status
described in the Certificate.



                                   SECTION VI

         MISCELLANEOUS.
         -------------

         Secured  Party shall not be  obligated  to take any steps  necessary to
preserve any rights in the Collateral against prior Party.

         No delay or omission  on the part of Secured  Party in  exercising  any
rights hereunder shall operate as a waiver of any such right or any other right.
A waiver  on any one or more  occasions  shall not be  construed  as a bar to or
waiver of any right or remedy on any future occasion.

         It is the  intention  of the  parties to comply with  applicable  usury
laws;  accordingly,  it is agreed  that  notwithstanding  any  provision  to the
contrary in this Pledge  Agreement,  no such provision shall require the payment
or permit the collection of interest in excess of the maximum  permitted by such
laws.

         All rights of Secured Party hereunder shall inure to the benefit of its
successors and assigns;  however, this Agreement and the rights of Secured Party
hereunder may not be transferred or assigned  without the consent of the Issuer.
The rights and  remedies of Secured  Party  hereunder  are  cumulative,  and the
exercise  of any  one or more  of the  remedies  provided  herein  shall  not be
construed as a waiver of any of the other remedies of Secured Party.

         The security  interest  hereby granted and all the terms and provisions
hereof shall continue in full force and effect, and all the terms and provisions
hereof  shall  remain  effective  as between the Party,  until the  repayment by
Pledgor of the Note.


                                 Page 25 of 200
<PAGE>

         This Pledge  Agreement and the security  interest herein granted are in
addition  to, and not in  substitution,  novation or  discharge  of, any and all
prior or  contemporaneous  agreements and security interests in favor of Secured
Party or assigned to Secured Party by Pledgor.  All rights,  powers and remedies
of Secured  Party in all such  agreements  are  cumulative,  but in the event of
actual conflict in terms and conditions, the terms and conditions of this Pledge
Agreement shall govern and control.

         Any  provision of this Pledge  Agreement  found to be invalid under the
laws of the State of Nevada,  or any other state  having  jurisdiction  or other
applicable  law, shall be invalid only with respect to the offending  provision.
All  words  used  herein  shall be  construed  of such  gender  or number as the
circumstances  require. The laws of the State of Nevada and, as applicable,  the
laws of the United States of America,  shall govern this Pledge  Agreement,  its
construction, interpretation and enforcement.

         THIS PLEDGE  AGREEMENT  SHALL BE GOVERNED  BY AND  CONSTRUED  UNDER THE
APPICABLE  LAWS OF THE  STATE OF  NEVADA  AND THE LAWS OF THE  UNITED  STATES OF
AMERICA.  THE  COUNTY OF CLARK,  NEVADA  SHALL BE THE  PROPER  PLACE OF VENUE TO
ENFORCE PAYMENT OF THIS AGREEMENT.

         This Pledge  Agreement  may be executed in any number of  counterparts,
all of which together shall constitute one and the same instrument.

         IN WITNESS  WHEREOF,  the Party hereto have caused this agreement to be
executed as of the date first above written.

                                      WEDGWOOD PARTNERS, LTD.
                                      LIMITED PARTNERSHIP

                                      By:  GRB, LLC, a Nevada limited liability
                                      Company, General Partner

                                      By: Greenbriar Acquisition Corporation, a
                                      Nevada Corporation, Manager


                                      By:  /s/ Gene S. Bertcher
                                        ----------------------------------------
                                           Executive Vice President




                                 Page 26 of 200
<PAGE>

                                      VESTIN MORTGAGE


                                      By:  /s/ Stephen J. Byrne
                                        ----------------------------------------
                                      Stephen J. Byrne, Chief Executive Officer

                                      ISSUER:

                                      GREENBRIAR CORPORATION


                                      By:  /s/ Gene S. Bertcher
                                        ----------------------------------------
                                      Gene S. Bertcher, Executive Vice President




                                 Page 27 of 200

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.23.3
<SEQUENCE>6
<FILENAME>green8k070101ex10233.txt
<DESCRIPTION>PROMISSORY NOTE TO VESTIN MORTGAGE
<TEXT>

                                                                EXHIBIT 10.23.3.
                                                                ----------------


                                 PROMISSORY NOTE
                                 ---------------


$12,000,000.00                                                     July 12, 2001

- --------------------------------------------------------------------------------

       For value received,  Wedgwood  Partners,  Ltd.,  Limited  Partnership,  a
Nevada limited partnership (hereinafter referred to as the "Borrower"), promises
to pay to the order of Vestin Mortgage, Inc., a Nevada corporation, (hereinafter
referred to as the "Lender"), at the address set forth in Paragraph 17 below, or
at such other place as the Lender may designate in writing from time to time, in
lawful  money of the United  States,  the  principal  sum of Twelve  Million and
No/100 U.S. Dollars  ($12,000,000.00),  advanced or to be advanced with interest
from the date hereof on said principal sum and on all unpaid  balances hereof at
the rate of fourteen and one half percent (14.5%) per annum. The annual interest
rate for this Note is computed on a 365/360 basis,  that is,  applying the ratio
of the annual interest rate over a hypothetical year of 360 days,  multiplied by
the outstanding  principal balance,  multiplied by the actual number of days the
principal  balance is  outstanding,  unless such  calculation  would result in a
usurious rate, in which case interest shall be calculated on a per diem basis of
a year of 365 or 366 days, as the case may be.

       1.     Scheduled  Payments.  Payments of  interest  only shall be due and
              payable  monthly.  The  first  payment  shall be due on or  before
              August 25, 2001, and subsequent payments shall be due on or before
              the same day of each month  thereafter until the Maturity Date (as
              defined  below).  All payments  made or due  hereunder,  including
              without  limitation,   monthly  payments,   principal  reductions,
              repayment of advancements and expenses,  and payoffs, must be made
              by 5:00pm Pacific Time to be effective that day. All payments made
              after  5:00pm  Pacific  Time  shall be  deemed  late and  shall be
              applied to the next  business  day. All payments made on or before
              12:00pm on the date the payment is due shall  entitle  Borrower to
              pay a discounted rate of interest on the unpaid principal  balance
              of this Note at a rate of fourteen percent (14%) per annum.

       2.     Maturity.  The entire outstanding unpaid principal balance of this
              Promissory Note (the "Note"), together with all accrued and unpaid
              interest due under this Note shall be due and payable on or before
              July 12, 2002 (the "Maturity  Date"), or on such earlier date that
              this Note  becomes  due and  payable as a result of  acceleration,
              prepayment, or as otherwise provided herein.

       3.     Extension  of Note.  Provided no Default  (as  defined  below) has
              occurred and no event has occurred  that may result in an event of
              default,  this Note may be extended for four (4) consecutive terms
              of three (3) months  each.  In order to  exercise  its right to an
              extension,  Borrower  must:  (i) give Lender written notice thirty
              (30) days prior to the Maturity  Date (as revised  pursuant to the
              extensions  contemplated hereby); and (ii) pay Lender a fee of two
              percent (2%) of the  outstanding  principal  loan balance for each
              extension exercised.


                                 Page 28 of 200
<PAGE>

       4.     Application  of Payments.  All payments,  including any prepayment
              shall be  applied in any order that  Lender may  determine  in its
              sole and absolute discretion.

       5.     Prepayment.  Borrower may prepay the principal amount  outstanding
              hereunder,  in whole or in part, at any time, without penalty. Any
              partial  prepayment  shall be  applied as  described  in Section 4
              above.

       6.     Default  Acceleration.   At  the  option  of  Lender,  the  entire
              principal  balance and accrued interest owing hereon shall at once
              become due and payable  without  further notice or demand upon the
              occurrence at any time of any Default  (defined  below).  The term
              "Default"  shall  mean  the  occurrence  of the  following  events
              relating to any party liable for the payment of this Note, whether
              as maker, endorser, guarantor, surety or otherwise:

                     (a)    default in the punctual  payment of any  installment
                            of principal  and/or  interest due hereunder,  or in
                            the   performance   of  any  of  the   covenants  or
                            provisions of the Deed of Trust (Security Agreement,
                            Assignment  of  Leases,   Assignment  of  Rents  and
                            Financing Statement),  Mortgage (Security Agreement,
                            Assignment  of  Leases,   Assignment  of  Rents  and
                            Financing Statement),  Financing Statements,  or any
                            other Loan  Document  (as defined  herein)  securing
                            this Note or evidencing the Loan referenced hereby;

                     (b)    the  liquidation,   termination  or  dissolution  of
                            Borrower or Guarantor;

                     (c)    the  application  for or  consent  in writing to the
                            appointment of a receiver,  trustee or liquidator of
                            Borrower or Guarantor;

                     (d)    filing a voluntary petition in bankruptcy,  or admit
                            in writing  Borrower's or  Guarantor's  inability to
                            pay  Borrower's  or  Guarantor's  debts as they come
                            due;

                     (e)    making  a  general  assignment  for the  benefit  of
                            creditors;

                     (f)    filing a petition or answer  seeking  reorganization
                            or  rearrangement  with creditor or taking advantage
                            of any insolvency law; and

                     (g)    filing an answer admitting the material  allegations
                            of a petition filed against Borrower or Guarantor in
                            any   bankruptcy,   reorganization,   insolvency  or
                            similar proceedings.



                                 Page 29 of 200
<PAGE>

              Notwithstanding  the foregoing,  Lender will give Borrower written
              notice  and ten (10) days to cure  Borrower's  failure to pay real
              property  taxes  and/or  insurance  premiums  relating to the real
              property  collateral  described below. The Lender may exercise its
              option to accelerate during any default by the Borrower regardless
              of any prior forbearance.

       7.     No Waiver By  Lender.  From time to time,  without  affecting  the
obligation of the Borrower to pay the outstanding principal balance of this Note
and observe the  covenants of the Borrower  contained  herein and under the Loan
Documents  (as defined  below),  without  affecting  the guaranty of any person,
corporation,  partnership  or  other  entity  for  payment  of  the  outstanding
principal  balance of this  Note,  without  giving  notice to or  obtaining  the
consent of the Borrower,  and without  liability on the part of the Lender,  the
Lender may, in its sole and absolute discretion,  extend the time for payment of
the  outstanding  principal  balance,  or any part thereof,  reduce the payments
thereon,  release anyone liable on any outstanding  principal balance,  accept a
renewal of this Note, agree in writing with the Borrower to modify the terms and
time of payment of the outstanding  principal  balance of this Note, join in any
extension or subordination  agreement,  release any security given herefor, take
or release other or additional security,  and agree in writing with the Borrower
to modify the rate of  interest of this Note or change the amount of the monthly
payments hereunder.

       8.     Default  Rate of  Interest.  During the  existence  of any default
hereunder or under any  instrument  securing or  evidencing  the loan  evidenced
hereby and the continuance  thereof beyond any applicable  cure period,  if any,
the entire unpaid balance of principal  shall bear interest at the lesser of the
highest  rate  permitted  by  applicable  law, or the rate of twenty one percent
(21%) per annum.

       9.     Charge for Late  Payment.  In the event that any  installment  due
hereunder is not paid when due, Borrower shall pay as agreed liquidated  damages
to the  Lender a late  charge  equal to  $250.00  to  compensate  Lender for the
administrative expenses resulting from said late payment.

       10.    Costs of Collection. If this Note is not paid when due, whether at
maturity or by acceleration, or if it is collected through a bankruptcy, probate
or other court,  whether before or after  maturity,  Borrower  agrees to pay the
reasonable  attorney's  fees and all  reasonable  expenses  and actual  costs of
litigation and costs of court incurred by Lender.

       11.    Closing  Costs.  The loan  evidenced  by this Note shall be closed
without  expense to Lender,  it being  understood  and agreed that all  expenses
necessary  and usual to a  transaction  of this kind shall be paid by  Borrower,
such expenses to include,  without  limitation,  due diligence fees,  reasonable
attorney's fees and costs, loan fees,  appraisal fees, title insurance premiums,
and  recording  fees  all  arising  in  connection   with  the  negotiation  and
preparation  of this Note and all  documents to be executed in  connection  with
this Note (the "Loan Documents").


                                 Page 30 of 200
<PAGE>

       12.    Waivers  by  Borrower.  Borrower  and  all  other  parties  now or
hereafter liable for the payment hereof, whether as endorser,  guarantor, surety
or  otherwise,  severally  waive  demand,  presentment,   notice  of  intent  to
accelerate, notice of acceleration, notice of dishonor, diligence in collecting,
grace,  notice,  protest,  and any and all other notices and demands whatsoever,
and agree to remain bound by this Note until the principal and interest are paid
in full  notwithstanding any extension of time for payment which may be granted,
even though the period of  extension  be  indefinite,  and  notwithstanding  any
inaction  by, or  failure to assert  any right  available  to the holder of this
Note.

       13.    Security for Note.  This Note is secured by: (i) a first lien Deed
of Trust (Security  Agreement,  Assignment of Leases,  Assignment of Rents,  and
Financing  Statement)  of even date  herewith from Borrower to Charles S. Brown,
Trustee for the benefit of Lender,  covering land located in Harlingen,  Cameron
County,  Texas, and as more particularly  described  therein;  (ii) a first lien
Mortgage  (Security  Agreement,  Assignment of Leases,  Assignment of Rents, and
Financing  Statement) of even date  herewith  from Borrower to Lender,  covering
land  located  in  Roswell,  Chaves  County,  New  Mexico;  (iii)  a  pledge  of
$12,000,000.00  in  preferred  stock  in  Greenbriar  Corporation;  and (iv) the
Guaranty of Greenbriar Corporation, a Nevada corporation.

       14.    Assignment  by Lender.  The Lender shall have the right to assign,
in whole or in  part,  this  Note,  any  other  Loan  Documents  and all  rights
hereunder and thereunder,  and all provisions  herein and therein shall continue
to apply to the Loan.  The Lender shall have the right to  participate  the Loan
with other parties.

       15.    [RESERVED].

       16.    [RESERVED].

       17.    Notices.  Any notice or other communication  required or permitted
to be given hereto  shall be in writing,  and shall be deemed to have been given
and received if placed in the United States mail,  certified,  postage  prepaid,
return receipt requested, or federal express, addressed as follows:

       If to Borrower:         Wedgwood Partners, Ltd., Limited Partnership
                               Attention:  Mr. Jim Gilley
                               650 Centura Tower One
                               14175 Dallas Parkway
                               Dallas, Texas 75240

       If to Lender:           Vestin Mortgage, Inc.
                               Attention: Mr. Steve Byrne
                               2901 El Camino Avenue, Suite 206
                               Las Vegas, Nevada 89102



                                 Page 31 of 200
<PAGE>

       18.    Business Loan.  Borrower  warrants and represents to Lender and to
all other owners and holders of any indebtedness evidenced hereby that all loans
evidenced by this Note are and shall be "business loans" as such term is used in
the Depository  Institutions  Deregulation  and Monetary Control Act of 1980, as
amended, and such loans are for business, commercial,  investment or the similar
purpose and not primarily for personal,  family,  household or agricultural use,
as such terms are defined in Regulation Z of the Federal Reserve Board.

       19.    Severability.  In case any one or more of the provisions contained
in  this  Note  shall  for  any  reason  be  held  to be  invalid,  illegal,  or
unenforceable in any respect,  to the extent such invalidity or unenforceability
does not destroy the basis of the bargain  among the parties,  such  invalidity,
legality, or unenforceability shall not affect any other provision hereof and to
the extent such invalidity or uneforceability  does not destroy the basis of the
bargain  among the parties  hereto,  this Note shall be  constructed  as if such
invalid, illegal, or unenforceable provision had never been contained herein.

       20.    Plural Names; Gender. Whenever required by the context, as used in
the Note,  the singular  number shall  include the plural and the neutral  shall
include the masculine or feminine gender or vice versa.

       21.    Legal  Construction;   Governing  Law.  This  Note  shall  not  be
construed  against any party or less favorably by reason of authorship or origin
of  language.  This Note shall be  governed  by and  construed  and  enforced in
accordance  with  the  laws  (without  giving  effect  to  the  conflict  of law
principles thereof) of the state of Nevada, except as described in Section 10.08
of the Deed of Trust and  Mortgage  securing  this  Note.  Any  legal  action or
proceeding  with  respect to this Note may be brought in the courts of the state
of Nevada or, if the requisites of jurisdiction  obtain, of the United States of
America  sitting  in Clark  County,  State of  Nevada  (except  for  foreclosure
proceedings and other  proceedings  against the property which proceedings shall
be governed by Texas and/or New Mexico law,  respectively;  provided  that under
all circumstances any issue or issues relating to the amount or rate of interest
that may be  lawfully  contracted  for,  charged,  taken,  reserved  or received
hereunder  or under any of the other loan  documents  shall be  governed  by and
construed in accordance  with the laws of the state of Nevada).  Upon  execution
and delivery hereof, Borrower accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Nothing
herein,  however, shall affect the right of Lender to commence legal proceedings
or otherwise proceed against borrower in any other jurisdiction.

       22.    Time  of  Essence.  Time  is  of  the  essence.  Unless  otherwise
specified,  all  references to "days" shall mean and refer to calendar  days. In
the event the date for performance of any obligations  hereunder shall fall on a
weekend  or  Nevada  legal  banking  holiday,  then  that  obligation  shall  be
performable on the next following regular business day.


                                 Page 32 of 200
<PAGE>

       23.    Binding  Effect.  This Note shall be binding upon and inure to the
benefit  of  the  parties  hereto  and  their   respective   heirs,   executors,
representatives, successors and assigns where permitted by this Note.

       24.    Subsequent  Holders.  Whenever  the term  "Lender" is used in this
Note, such term shall defined to include any subsequent  owner,  owners,  holder
and/or holders of this Note.

       25.    Headings.  The descriptive headings of the paragraphs of this Note
are inserted for convenience only and do not constitute a part of this Note.

       26.    Notice to Borrower Concerning Refinance of this Loan. THIS LOAN IS
PAYABLE IN FULL AT MATURITY.  YOU MUST REPAY THE ENTIRE PRINCIPAL BALANCE OF THE
LOAN AND UNPAID  INTEREST  THEN DUE.  LENDER IS UNDER NO OBLIGATION TO REFINANCE
THE LOAN AT THAT TIME. YOU WILL,  THEREFORE,  BE REQUIRED TO MAKE PAYMENT OUT OF
OTHER  ASSETS THAT YOU MAY OWN, OR YOU WILL HAVE TO FIND A LENDER,  WHICH MAY BE
THE  LENDER  YOU HAVE THIS LOAN  WITH,  WILLING  TO LEND YOU THE  MONEY.  IF YOU
REFINANCE  THIS LOAN AT MATURITY,  YOU WILL HAVE TO PAY ALL OF THE CLOSING COSTS
NORMALLY ASSOCIATED WITH A NEW LOAN EVEN IF YOU OBTAIN REFINANCING FROM THE SAME
LENDER.

Borrower:
- --------

Wedgwood Partners, Ltd., Limited Partnership

         By:      GRB, LLC, a
                  Nevada limited liability company, general partner

                  By:      Greenbriar Acquisition Corporation, a
                           Nevada corporation, manager



                           By:      /s/ Gene S. Bertcher
                                    ----------------------------------

                           Name:    Gene S. Bertcher
                                    ----------------------------------

                           Title:   Executive Vice President
                                    ----------------------------------





                                 Page 33 of 200

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.23.4
<SEQUENCE>7
<FILENAME>green8k070101ex10234.txt
<DESCRIPTION>MORTGAGE ON LA VILLA, ROSWELL, NEW MEXICO
<TEXT>

                                                                EXHIBIT 10.23.4.
                                                                ----------------

                                    MORTGAGE
                                    --------

(Security  Agreement,  Assignment of Leases,  Assignment of Rents, and Financing
Statement)

       This  combined  Mortgage,  Security  Agreement,   Assignment  of  Leases,
Assignment of Rents, and Financing Statement (hereafter "Instrument") is made on
the date acknowledged below by Wedgwood Partners,  Ltd., Limited Partnership,  a
Nevada limited partnership (hereafter "Borrower" or "Grantor").  By signing this
instrument,  Grantor  agrees to the terms and conditions and makes the covenants
stated in this instrument.

DATE:                      July 12, 2001
- -----

BORROWER/GRANTOR:          Wedgwood Partners, Ltd., Limited Partnership, a
- -----------------          Nevada limited partnership



BORROWER'S/GRANTOR'S
ADDRESS FOR NOTICE:        650 Centura Tower One
- -------------------        14185 Dallas Parkway
                           Dallas, Texas 75240


LENDER:                    Vestin Mortgage, Inc., a Nevada corporation
- -------

LENDER'S ADDRESS:          2901 El Camino Avenue, Suite 206
- -----------------          Las Vegas, Nevada 89102

NOTE:             $12,000,000.00  promissory  note (the "Note") dated  herewith,
- -----             executed  by  Borrower  and payable to Lender as stated in the
                  Note.


LAND:             The  land is  located  in  Roswell,  New  Mexico,  and is more
- -----             particularly  described  in EXHIBIT "A",  attached  hereto and
                  incorporated herein for all purposes.

                              ARTICLE I - SECURITY

1.01   MORTGAGE GRANT.   For  value  received,  the  receipt  and sufficiency of
which  Borrower  acknowledges,  and to secure the  payment  of the  Indebtedness
described in Section 2.01 and  performance  of the covenants  and  agreements of
Borrower  stated in this  Instrument,  the Note,  and in the Loan  Documents (as
defined below),  Borrower grants,  conveys, and mortgages the Property described
in Section  1.02  including,  without  limitation,  the Land to the Lender  with
mortgage covenants and upon the statutory mortgage condition; provided, however,
that to the extent "mortgage  covenants" or "the statutory  mortgage  condition"
may conflict with specific terms or covenants contained in this Instrument,  the
latter shall control.


                                 Page 34 of 200
<PAGE>

1.02   PROPERTY.   The Property covered by this Instrument includes the Land and
the  following  items  described  in this  Section  1.02,  whether  now owned or
hereafter acquired,  all of which, including replacements and additions thereto,
shall  be  deemed  to be and  remain  a part  of the  Property  covered  by this
Instrument, and all rights,  hereditaments and appurtenances pertaining thereto,
all of  which  are  referred  to as the  "Property":  (a) any and all  building,
improvements,  and  tenements now or hereafter  attached to or placed,  erected,
constructed,  or developed on the Land (the "Improvements");  (b) all equipment,
fixtures,  furnishing,   inventory,  and  articles  of  personal  property  (the
"Personal  Property")  now or  hereafter  attached  to or used in or  about  the
Improvements  or that are  necessary or useful for the complete and  comfortable
use and  occupancy of the  Improvements  for the purposes for which they were or
are to be attached, placed, erected, constructed or developed, or which Personal
Property is or may be used in or related to the planning, development, financing
or  operation  of the  Improvements,  and all  renewals  of or  replacements  or
substitutions for any of the foregoing,  whether or not the same are or shall be
attached to the Land or  Improvements;  (c) all water and water rights,  timber,
crops, and mineral interests  pertaining to the Land; (d) all building materials
and equipment  now or hereafter  delivered to and intended to be installed in or
on the  Land or the  Improvements;  (e) all  plans  and  specifications  for the
Improvements;  (f) all Borrower's rights (but not Borrower's  obligations) under
any contracts  relating to the Land, the Improvements or the Personal  Property;
(g) all deposits  (including tenant security  deposits),  bank accounts,  funds,
Instruments,  notes,  or  chattel  paper  arising  from  or  by  virtue  of  any
transactions related to the Land, the Improvements or the Personal Property; (h)
all  Borrower's  rights (but not  Borrower's  obligations)  under any documents,
contracts rights, accounts, commitments,  construction contracts,  architectural
contracts,  engineering  contracts,  and general intangibles  (including without
limitation trademarks, trade name, and symbols) arising from or by virtue of any
transactions  related to the Land, the  Improvements,  or the Personal  Property
including, but not limited to, all of Borrower's rights arising under letters of
intent to purchase  and  contracts to sell or purchase all or any portion of the
Property, whether heretofore or hereafter executed ("Contract of Sale"); (i) all
permits,  licenses,  franchises,  certificates,  and other rights and privileges
obtained  in  connection  with  the  Land,  the  Improvements,  or the  Personal
Property; (j) all proceeds arising from or by virtue of the sale, lease or other
disposition of the Land, the  Improvements,  or the Personal  Property;  (k) all
proceeds (including premium refunds) of each policy of insurance relating to the
Land,  the  Improvements,  or the Personal  Property;  (l) all proceeds from the
taking of any of the Land, the Improvements, the Personal Property or any rights
appurtenant  thereto by right of eminent  domain or by private or other purchase
in lieu thereof, including change of grade of streets, curb cuts or other rights
of access,  for any  public or  quasi-public  use under any law;  (m) all right,
title,  and interest of Borrower in and to all  streets,  road,  public  places,
easements, and rights-of-way,  existing or proposed, public or private, adjacent
to or used in connection  with,  belonging or pertaining to the Land; (n) all of
the Leases (as hereafter defined),  rents, royalties,  bonuses, issues, profits,


                                 Page 35 of 200
<PAGE>

revenues,  or other  benefits of the Land,  the  Improvements,  or the  Personal
Property,  including without limitation cash or securities deposited pursuant to
leases to secure  performance  by the  tenants of their  obligations  thereunder
(subject to the  Assignment of Rents made in Article V below);  (o) all consumer
goods  located  in,  on,  or  about  the  Land  or the  Improvements  or used in
connection  with  the  use or  operation  thereof;  however,  neither  the  term
"consumer goods" nor the term "Personal Property" includes clothing,  furniture,
appliances,  linens,  china,  crockery,  kitchenware,  or personal  effects used
primarily for personal,  family, or household  purposes;  (p) other interests of
every kind and character that Borrower now has or at any time hereafter acquires
in and to the Land, Improvements, and Personal Property and all property that is
used or useful in connection  therewith,  including rights of ingress and egress
and all  reversionary  rights or  interests  of  Borrower  with  respect to such
property;  and (q) all products and proceeds of the Personal Property  described
in this Section 1.02.

1.03   SUBROGATION.   Any  of  the  proceeds of the Note utilized to take up any
outstanding  liens  or  other  contract  rights  against  all or any part of the
Property have been advanced by Lender at Borrower's  request and upon Borrower's
representation  that such amounts are due and are secured by valid liens against
the Property. Lender shall be subrogated to any and all rights, powers, superior
titles,  liens,  and  equities  owned or  claimed  by any owner or holder of any
outstanding  liens,  contract rights and debts,  however  remote,  regardless of
whether  said  liens,  contract  rights  or debts  are  acquired  by  Lender  by
assignment or are released by the holder thereof upon payment.

                     ARTICLE II - INDEBTEDNESS AND PAYMENTS

2.01   INDEBTEDNESS.   The  indebtedness  secured  by   this   Instrument   (the
"Indebtedness")  shall  mean and  include  the  following:  (a) any and all sums
becoming  due and  payable  pursuant  to the Note;  (b) any and all  other  sums
becoming due and payable by Borrower  (or any one or more of them,  if more than
one) to Lender as a result of advances made by Lender  pursuant to the terms and
conditions of this Instrument,  or any other Loan Document  securing or executed
in  connection  with  or  otherwise  relating  to the  Note,  including  without
limitation  the repayment of any future  advances made by Lender to Borrower and
the  repayment of any sums  advanced  for the  protection  of Lender's  security
pursuant  to  Section  6.20;   and  (c)  any  and  all   renewals,   extensions,
replacements,   substitutions,   rearrangements,   or   modifications   of   the
Indebtedness,  or any part of the Indebtedness.  The maximum aggregate principal
amount  of  the  Indebtedness   secured  by  this  Instrument  will  not  exceed
$24,000,000  at any one time,  and all or a portion of the  Indebtedness  may be
advanced  and repaid and again made or advanced  from time to time,  in the sole
and absolute  discretion of the Lender,  and the aforesaid  maximum amount shall
limit only the total amount of principal  Indebtedness  which may be outstanding
and secured by the lien of this Instrument at any one time.

2.02   OTHER LOAN DOCUMENTS.   In  addition  to  this  Instrument, and the Note,
Borrower and Lender may execute various other documents and agreements  relating
to the  Indebtedness  secured by this  Instrument,  all of which  documents  and
agreements,  are  referred to herein as the "Loan  Documents".  This  Instrument
shall also secure the  performance of all  obligations and covenants of Borrower
under this Instrument and the other Loan Documents.



                                 Page 36 of 200
<PAGE>

2.03   PAYMENT OF PRINCIPAL AND INTEREST.   Borrower shall promptly pay when due
the principal and interest on the Indebtedness evidenced by the Note, prepayment
and late  charges as  provided in the Note,  and all other sums  secured by this
Instrument.

2.04   APPLICATION OF PAYMENT.   Unless applicable law provides  otherwise,  all
payments  received by Lender  from  Borrower  under the Note or this  Instrument
shall be applied by Lender as it determines in its sole and absolute discretion.

                        ARTICLE III - SECURITY AGREEMENT

3.01   UNIFORM COMMERCIAL CODE SECURITY AGREEMENT.   This  Instrument  is   also
intended to be a security agreement between Borrower,  as debtor, and Lender, as
secured party,  pursuant to the New Mexico Uniform  Commercial Code ("New Mexico
UCC") for any of the items specified above as part of the Property which,  under
applicable law, may be subject to a security interest pursuant to the New Mexico
UCC, and Borrower  hereby grants  Lender a security  interest in all such items.
Borrower agrees that Lender may file this Instrument, or a reproduction thereof,
in the real estate records or other appropriate index, as a financing  statement
for any of the items specified above as part of the Property.  Any  reproduction
of this  Instrument or of any other  security  agreement or financing  statement
shall be sufficient as a financing  statement.  In addition,  Borrower agrees to
execute and deliver to Lender, upon Lender's request,  any financing  statement,
as well as extensions,  renewals,  and amendments  thereof,  and reproduction of
this  Instrument  in such form as  Lender  may  require  to  perfect a  security
interest with respect to said items. Borrower shall pay all costs of filing such
financing  statement  and any  extensions,  renewals,  amendments,  and releases
thereof and shall pay all reasonable  costs and expenses of any record  searches
for  financing  statements  Lender may  reasonably  require.  Without  the prior
written  consent  of  Lender,  which  consent  may be  withheld  for any  reason
whatsoever  or no  reason,  as Lender  may  determine  in its sole and  absolute
discretion,  Borrower  shall not create or suffer to be created  pursuant to the
New Mexico UCC any other security interest in said items, including replacements
and additions thereto.  Upon the occurrence of an Event of Default (as that term
is defined in Article VII below),  including  the  covenants to pay when due all
sums  secured by this  Instrument,  Lender  shall have the remedies of a secured
party  under the New Mexico UCC and,  at  Lender's  option,  may also invoke the
remedies  provided  in Article  VIII of this  Instrument  as to such  items.  In
exercising any remedies,  Lender may proceed  against the items of real property
and any  items of  personal  property  specified  above as part of the  Property
separately or together and in any order whatsoever, without in any way affecting
the  availability  of  Lender's  remedies  under  the New  Mexico  UCC or of the
remedies provided in Article VIII of this Instrument.

3.02   NOTICE OF CHANGES.   Borrower  shall  give  advance  notice in writing to
Lender of any proposed  change in Borrower's  name,  identity,  or structure and
shall  execute  and  deliver  to  Lender,  prior  to or  concurrently  with  the
occurrence of any such change, all additional  financing  statements that Lender
may require to  establish  and  maintain  the  validity and priority of Lender's
security interest with respect to any of the Property.


                                 Page 37 of 200
<PAGE>

3.03   FIXTURES.   Some of the items of  the  Property are goods that are or are
to become fixtures  related to the Land.  Borrower and Lender intend that, as to
those goods,  this Instrument shall be effective as a financing  statement filed
as a fixture  filing  from the date of its filing for record in the real  estate
records of the county in which the Property is situated.  Information concerning
the security interest created by this Instrument may be obtained from Lender, as
secured party, at the address of Lender stated above. The mailing address of the
Borrower, as debtor, is as stated above.

                       ARTICLE IV - ASSIGNMENT OF LEASES

4.01   ASSIGNMENT OF LEASES.   Borrower  assigns to Lender, and grants to Lender
a  security  interest  in,  all  of  Borrower's   rights,   but  not  Borrower's
obligations,  under existing and future leases, including subleases, and any and
all extensions,  renewals,  modifications, and replacements of such leases, upon
any part of the Property  (the  "Leases").  Borrower  also assigns to Lender all
guaranties of tenant's  performance under the Leases. Prior to the occurrence of
an Event of Default (as defined below),  Borrower shall have the right,  without
joinder of Lender, to enforce the Leases, unless Lender directs otherwise.

4.02   WARRANTIES  CONCERNING  LEASES  AND  RENTS.   Borrower   represents   and
warrants  that:  (a) Borrower has good title to the Leases  hereby  assigned and
authority to assign them, and no other person or entity has any right,  title or
interest  therein;  (b) all existing  Leases are valid,  unmodified  and in full
force and effect,  except as indicated herein, and no default exists thereunder;
(c) unless otherwise  provided herein, no Rents (as hereafter  defined) or other
sums owing under the Leases have been or will be assigned, mortgaged or pledged;
(d) no Rents have been or will be anticipated, waived, released, discounted, set
off or compromised;  and (e) except as indicated in the Leases, Borrower has not
received any funds or deposits from any tenant that has not already been applied
to the payment of accrued Rents.

4.03   BORROWER'S COVENANTS OF PERFORMANCE.   Borrower covenants to: (a) perform
all of its obligations under the Leases and give prompt written notice to Lender
of any  failure to do so;  (b) give  immediate  written  notice to Lender of any
notice  Borrower  receives  from  any  tenant  or  subtenant  under  any  Leases
specifying  any  claimed  default  by any party  under such  Leases,  excluding,
however,  notice of defaults under residential  Leases; (c) enforce the tenant's
obligations under the Leases; (d) defend, at Borrower's expense,  any proceeding
pertaining to the Leases,  including, if Lender so requests, any such proceeding
to which Lender is a party;  and (e) neither  create nor permit any  encumbrance
upon Borrower's  interest as landlord of the leases,  except this Instrument and
any other encumbrances permitted by this Instrument.

4.04   PRIOR  APPROVAL  FOR  ACTIONS  AFFECTING  LEASES.   Borrower  shall  not,
without the prior written  consent of Lender,  which consent may be withheld for
any reason  whatsoever  or no reason,  as Lender may  determine  in its sole and
absolute  discretion:  (a) receive or collect rents under any of the Leases more
than one month in advance;  (b) encumber or assign  future  Rents;  (c) waive or
release any obligation of any tenant under the Leases; (d) cancel,  terminate or
modify any of the Leases, cause, permit or accept any cancellation,  termination
or surrender of any of the Leases, or commence any proceedings for dispossession
of any  tenant  under any of the  Leases,  except  upon  default  by the  tenant
thereunder;  (e) renew or extend any of the Leases,  except pursuant to terms in
existing Leases;  (f) permit any assignment of the Leases; or (g) enter into any
Leases after the date hereof. Notwithstanding anything contained in this Section
4.04 to the contrary,  Borrower may enter into leases covering the Property with
terms of one year or less.


                                 Page 38 of 200
<PAGE>

4.05   ATTORNMENT OF TENANTS.   All  leases  of  the Property shall specifically
provide that: (a) such Leases are subordinate to this  Instrument;  (b) that the
tenant  attorns  to  Lender,  such  attornment  to be  effective  upon  Lender's
acquisition of title to the Property; (c) that the tenant agrees to execute such
further  evidences of attornment  as Lender may from time to time  request;  (d)
that the  attornment of the tenant shall not be terminated by  foreclosure;  and
(e) that Lender may, at Lender's option, accept or reject such attornments.

4.06   SETTLEMENT FOR TERMINATION.   Borrower  agrees  that  no  settlement  for
damages, for termination of any of the Leases under the Federal Bankruptcy Code,
or under any other federal,  state, or local statute,  shall be made without the
prior  written  consent of Lender,  which consent may be withheld for any reason
whatsoever  or no  reason,  as Lender  may  determine  in its sole and  absolute
discretion,  and any check in payment of such  damages  shall be made payable to
both Borrower and Lender. Borrower hereby assigns any such payment to Lender, to
be applied to the  Indebtedness  as Lender may  elect,  and  Borrower  agrees to
endorse any check for such payment to the order of Lender.

4.07   LENDER IN POSSESSION.   Lender's acceptance of this assignment shall not,
prior to entry upon and taking  possession of the Property by Lender,  be deemed
to constitute  Lender a "mortgagee in possession,"  shall not obligate Lender to
appear in or  defend  any  proceeding  relating  to any of the  Leases or to the
Property,  take any action hereunder,  expend any money, incur any expenses,  or
perform any obligation or liability  under the Leases,  or assume any obligation
for any  deposits  delivered  to  Borrower  by any tenant and not  delivered  to
Lender.  Lender  shall  not be  liable  for any  injury  to  damage to person or
property in or about the Property.

4.08   APPOINTMENT  OF   ATTORNEY.   Borrower   hereby   appoints   Lender   its
attorney-in-fact, coupled with an interest, empowering Lender to subordinate any
Leases to this Instrument,  which shall only be effective during a period of any
uncured event of default.

4.09   INDEMNIFICATION; HOLD HARMLESS.   Borrower  hereby  indemnifies and holds
Lender harmless from all liability,  damage,  or expense incurred by Lender from
any claims under the Leases, including without limitation any claims by Borrower
with  respect to Rents paid  directly  to Lender  after an event of Default  and
claims by tenants for security  deposits or for rental  payments  made more than
one (1) month in advance and not  delivered to Lender.  All amounts  indemnified
against  hereunder,  including  reasonable  attorneys'  fees, if paid by Lender,
shall bear  interest  from the date of  disbursement  at the rate  stated in the
Note,  unless  payment  of such  interest  at such  rate  would be  contrary  to
applicable  law, in which event such amounts  shall bear interest at the highest
non-usurious  rate which may collected from Borrower under applicable law, shall
be payable by Borrower  immediately without demand, and shall be secured by this
Instrument.


                                 Page 39 of 200
<PAGE>

4.10   RECORDS.   Upon the  request  by Lender, Borrower shall deliver to Lender
true and correct legible copies of all Leases and copies of all records relating
thereto.

4.11   MERGER.   There  shall be no merger  of the leasehold estates, created by
the Leases, with the fee estate of the Land without the prior written consent of
Lender, which consent may be withheld for any reason whatsoever or no reason, as
Lender may determine in its sole and absolute discretion.

4.12   RIGHT TO RELY.   Borrower  authorizes  and  directs the tenants under the
Leases to pay rents to Lender  upon  written  demand by  Lender,  provided  that
Borrower is in default  after the  expiration  of any  applicable  cure  period,
without  further  consent of Borrower and regardless of whether Lender has taken
possession of any other  portion of the Property,  and tenants may rely upon any
written statement delivered by Lender to the tenants. Any such payment to Lender
shall  constitute  payment to Borrower under the Leases,  and Borrower  appoints
Lender as Borrower's lawful attorney-in-fact for giving, and is hereby empowered
to give,  acquittance  to any tenants for such payments to Lender after an event
of Default.

                         ARTICLE V - ASSIGNMENT OF RENTS

5.01   ABSOLUTE ASSIGNMENT OF RENTS.   As  part  of  the  consideration  for the
Indebtedness  evidenced by the Note, and for other valuable  consideration,  the
receipt  and  sufficiency  of  which  Borrower  acknowledges,   Borrower  hereby
absolutely  and  unconditionally  assigns  and  transfers  to Lender  all rents,
insurance,  income,  receipts,  and profits from the Property,  and all security
deposits and other security therefor (the "Rents"),  including those now due, or
to become due by virtue of any Lease or other agreement for the occupancy or use
of all or any part of the Property, regardless of to whom the Rents are payable.
Borrower  authorizes  Lender or Lender's agents to collect the rents and directs
each  tenant on the  Property  to pay such Rents to Lender or  Lender's  agents;
provided,  however,  that prior to the  occurrence  of an Event of  Default  (as
defined below),  Borrower shall collect and receive all Rents as trustee for the
benefit  of Lender and  Borrower,  to apply the Rents so  collected  to the sums
secured by this  Instrument in the order  provided in this  Instrument  with the
balance,  so long as no such Event of Default  has  occurred,  to the account of
Borrower.  Borrower and Lender intend that this Assignment of Rents  constitutes
an absolute and present assignment and not an assignment for additional security
only.  Borrower and Lender intend that Lender shall have absolute right,  power,
and authority to collect the Rents.

5.02   EVENT OF DEFAULT.   Subject  to  any  notice  and  cure  rights expressly
granted to Borrower in this  Mortgage or any other Loan  Document,  if any, upon
the  occurrence  of an Event of Default,  and without  the  necessity  of Lender
entering upon and taking and maintaining full control of the Property in person,
by agent or by a court-appointed  receiver, Lender shall immediately be entitled
to  possession  of all the rents  specified in this Article V as the same become
due and payable, including without limitation Rents then due and unpaid, and all
such Rents shall immediately upon delivery of such notice be held by Borrower as
trustee  for the benefit of Lender  only;  provided,  however,  that the written
notice by Lender to Borrower of the breach by Borrower shall contain a statement
that Lender exercises its rights to such Rents.  Borrower agrees that commencing
upon  delivery  of such  written  notice  of an Event of  Default  by  Lender to
Borrower,  each tenant of the Property  shall make such Rents payable to and pay
such  Rents to Lender or  Lender's  agents on  Lender's  written  demand to each
tenant therefor, delivered to each tenant personally, by mail or delivering such
demand to each rental unit,  without any  liability on the part of any tenant to
inquire further as to the existence of an Event of Default.


                                 Page 40 of 200
<PAGE>

5.03   BORROWER'S COVENANTS.   Borrower covenants that Borrower has not executed
any prior assignment of the rents or any portion thereof,  that Borrower has not
performed,  and will not perform,  any acts and has not  executed,  and will not
execute,  any instrument  which would prevent Lender from  exercising its rights
under this Article V and that at the time of execution of this Instrument  there
has been  anticipation  or  prepayment  of any Rents more than  thirty (30) days
prior to the due dates of such rents.  Borrower covenants that Borrower will not
hereafter  collect or accept  payment of any Rents  more than  thirty  (30) days
prior to the due dates of such Rents without  prior  written  consent of Lender,
which consent may be withheld for any reason  whatsoever or no reason, as Lender
may determine in its sole and absolute  discretion.  Borrower further  covenants
that  Borrower  will execute and deliver to Lender such further  assignments  of
rents as Lender may from time to time request.

5.04   APPOINTMENT  OF  RECEIVER;  POSSESSION  OF  THE   PROPERTY.   After   any
applicable notice and opportunity to cure expressly granted Borrower pursuant to
any Loan Document,  if any, upon the  occurrence of an Event of Default,  Lender
may in person,  by agent or by a  court-appointed  receiver,  regardless  of the
adequacy of lender's security,  enter upon and take full control of the Property
in order to perform all acts  necessary  and  appropriate  for the operation and
maintenance thereof, including without limitation the execution, cancellation or
modification  of  Leases,  collection  of Rents,  the  making of  repairs to the
Property,  and the  execution  or  termination  of contracts  providing  for the
management or maintenance  of Property,  all on such terms as are deemed best to
protect the security of this Instrument.  In the event Lender elects to seek the
appointment  of a receiver for the Property  upon the  occurrence of an Event of
Default,  Borrower  consents to the appointment of such receiver.  Lender or the
receiver  shall be  entitled  to  receive  a  reasonable  fee for  managing  the
Property.

5.05   APPLICATION OF RENTS.   All Rents  collected subsequent to the occurrence
of an Event of Default  shall be applied  first to the costs,  if any, of taking
control of and  managing  the  Property  and  collecting  the rents,  including,
without  limitation,  reasonable  attorney's fees,  receiver's fees, premiums on
receiver's  bonds,  costs of  repairs to the  Property,  premiums  on  insurance
policies, taxes assessments, and other charges on the Property, and the costs of
discharging any obligation or liability of Borrower as landlord of the Property,
and then to the sums secured by this  Instrument.  Lender or the receiver  shall
have access to the books and records used in the  operation and  maintenance  of
the  Property  and shall be  liable to  account  only for those  Rents  actually
received.  Lender shall not be liable to Borrower for anyone  claiming  under or
through  Borrower  or anyone  having an  interest  in the  Property by reason of
anything done or left undone by Lender under this Article V.


                                 Page 41 of 200
<PAGE>

5.06   INSUFFICIENT RENTS.   If the Rents are not  sufficient to meet the costs,
if any, of taking control of and managing the Property and collecting the Rents,
any funds expended by Lender for such purposes shall become an  indebtedness  of
Borrower to Lender secured by this Instrument.  Unless Lender and Borrower agree
in writing to other terms of payment,  such amount  shall be payable upon notice
from Lender to Borrower  requesting payment thereof and shall bear interest from
the date of disbursement at the rate stated in the Note,  unless payment of such
interest at such rate would be contrary to  applicable  law, in which event such
amounts shall bear interest at the highest non-usurious rate which may collected
from Borrower under applicable law.

5.07   NO WAIVER; TERM.   Any  entering  upon  and  taking  and  maintaining  of
control of the Property by Lender or the receiver and any  application  of Rents
as provided  herein shall not cure or waive any default  hereunder or invalidate
any other right or remedy of Lender  under  applicable  law or provided  herein.
This  assignment  of the Rents shall  terminate at such time as this  Instrument
ceases to secure the Indebtedness held by Lender.

              ARTICLE VI - BORROWER'S REPRESENTATIONS, WARRANTIES,
                            COVENANTS, AND AGREEMENTS

       Borrower covenants, warrants, and represents to and agrees with Lender as
of the date of execution  and  continuing  until this  Instrument is released as
follows:

6.01   PAYMENT AND PERFORMANCE.   Borrower  shall  promptly make all payments on
the  Indebtedness  when due and shall  punctually  and  properly  perform all of
Borrower's covenants,  obligations and liabilities under this Instrument and the
other Loan Documents.

6.02   TITLE TO PROPERTY AND LIEN OF THIS INSTRUMENT.   Borrower  has  good  and
indefeasible title to the Land and to the Improvements,  and good and marketable
title  to  the  Personal  Property,  free  and  clear  of  any  liens,  charges,
encumbrances,  security  interest,  and  adverse  claims  whatsoever,  except as
otherwise provided herein. If the interest of Lender in the Property or any part
thereof  shall be  endangered  or shall be  attached,  directly  or  indirectly,
Borrower  authorizes  Lender, at Borrower's  expense,  to take all necessary and
proper  steps for the defense of such  interest,  including  the  employment  of
attorneys,  the  prosecution  or defense of  litigation,  and the  compromise or
discharge of claims made against such interest.

6.03   EXISTENCE OF BORROWER.   Borrower  shall  preserve and keep in full force
and effect its existence,  rights,  franchises,  and trade names. Borrower shall
promptly pay any and all taxes to preserve its existence in Nevada,  New Mexico,
and Texas,  and shall comply with all  requirements  of the foregoing  states to
maintain  its  authority  to  transact  business   therein,   including  without
limitation owning real and personal property, and pledging same.


                                 Page 42 of 200
<PAGE>

6.04   TITLE INSURANCE.   Borrower shall, at its sole  cost  and expense, obtain
and maintain  mortgagee  title  insurance (in the form of a policy as Lender may
require) in a form  acceptable to Lender in an amount equal to the amount of the
Note.

6.05   HAZARD INSURANCE.
       (a)    Borrower shall, at its sole cost and expense,  obtain and maintain
insurance  upon and  relating to all  insurable  Property by all-risk  insurance
policies and, if requested by Lender,  shall include perils of collapse,  flood,
as well as other  insurance  coverages,  in amounts equal to one hundred percent
(100%) of the  replacement  cost of the  Improvements  during  the  construction
thereof and at least one hundred percent (100%) of the  replacement  cost of the
Improvements not under construction, or in such additional amounts as Lender may
reasonably  require,  with loss made payable to Lender and with a standard  form
mortgage  clause.  Borrower  shall  deliver the  policies of insurance to Lender
promptly as issued;  and, if Borrower fails to do so, and such failure continues
beyond any  applicable  cure  period,  Lender,  at its option,  may procure such
insurance  at  Borrower's  expense.  Lender  shall  have  the  right to hold the
policies,  and Borrower shall promptly furnish to Lender all renewal notices and
all receipts of paid premiums.  All renewal and substitute policies of insurance
shall be delivered  at the office of Lender,  premiums  paid,  at least ten (10)
days before termination of policies previously delivered to Lender.
       (b)    In the event of loss, Borrower shall give immediate written notice
to the insurance carrier and to Lender.  Borrower hereby authorizes and empowers
Lender as  attorney-in-fact  for  Borrower to make proof of loss,  to adjust and
compromise any claim under  insurance  policies,  to appear in and prosecute any
action arising from such,  insurance policies,  to collect and receive insurance
proceeds,  and to deduct there from Lender's expenses incurred in the collection
of such proceeds; provided, however, that nothing contained in this Section 6.05
shall  require  Lender  to incur  any  expense  or take any  action  under  this
Instrument.  Borrower further authorizes Lender, at Lender's option, (i) to hold
the balance of such  proceeds to be used to  reimburse  Borrower for the cost of
reconstruction  or repair of the Property,  or (ii) to apply the balance of such
proceeds to the payment of the sums secured by this  Instrument,  whether or not
then due, in the order of application set forth herein.
       (c)    If the insurance proceeds are held by Lender to reimburse Borrower
for the cost of  restoration  and repair of the Property,  the Property shall be
restored to the equivalent of its original  condition or such other condition as
Lender may  approve in  writing.  Lender  may,  at  Lender's  option,  condition
disbursement   of  any   proceeds  on  Lender's   approval  of  such  plans  and
specifications  of  an  architect  satisfactory  to  Lender,  contractor's  cost
estimates,  architect's  certificates,  waivers of liens,  sworn  statements  of
mechanics  and  materialman  and  such  other  evidence  of  costs,   percentage
completion of construction, application of payments and satisfaction of liens as
Lender may require. If the insurance proceeds are applied to the payment of sums
secured by this instrument,  any such application of proceeds to principal shall
not extend or postpone the due date of the installments  referred to in Sections
2.03 and 6.07 or change the  amounts of such  installments.  If the  Property is
sold  pursuant  to Section  8.03 or if Lender  acquires  title to the  Property,
Lender  shall have all  rights,  title,  and  interest of Borrower in and to any
insurance  policies  and  unearned  premiums  thereon and in and to the proceeds
resulting from any damage to the Property prior to such sale or acquisition.


                                 Page 43 of 200
<PAGE>

       (d)    In case of loss, Lender, as it determines in its sole and absolute
discretion,  shall be  entitled  to  receive  and  retain  the  proceeds  of the
insurance  policies,  applying the same to payment of the  Indebtedness  in such
order and manner as Lender, in its sole and absolute  discretion,  may elect. If
any loss shall occur at any time when an Event of Default  exists,  Lender shall
be entitled to the benefit of all insurance held by or for any Borrower,  to the
same extent as if it had been made payable to Lender, and upon foreclosure under
this Instrument. Lender shall become the owner of all insurance policies.

6.06   TAXES AND ASSESSMENTS.   Borrower  shall  pay  all taxes, levies, charges
and assessments against or affecting the Property including, but not limited, to
assessments  imposed by any public or quasi-public  authority or utility company
which are (or if not paid,  may become) a lien on all or part of the Property or
any interest in it, or which may cause any decrease in the value of the Property
or any part of it, as the same  become due and  payable,  and,  upon  request by
Lender, Borrower shall deliver to Lender such evidence of the payment thereof as
Lender may require.  If Borrower  fails to do so, Lender may pay them,  together
with all costs and penalties thereon, at Borrower's  expense;  provided however,
that Borrower may in good faith, in lieu of paying such taxes and assessments as
they become due and payable, by appropriate proceedings, contest their validity.
Pending  such  contest,  Borrower  shall  not be deemed in  default  under  this
Instrument  because  of such  nonpayment  if:  (a) prior to  delinquency  of the
asserted tax or assessment,  Borrower furnishes Lender an indemnity bond secured
by a deposit in cash or other  security  acceptable to Lender,  or with a surety
acceptable to Lender,  in the amount of the tax or assessment being contested by
Borrower  plus a  reasonable  additional  sum to pay all  costs,  interest,  and
penalties that may be imposed or incurred in connection  therewith,  conditioned
that such tax or  assessment,  with  interest,  cost and  penalties,  be paid as
herein stipulated;  and (b) Borrower promptly pays an amount adjudged by a court
of competent  jurisdiction  to be due,  with all costs,  penalties  and interest
thereon,  before the judgment becomes final. In any event, the tax,  assessment,
penalties, interest, and costs shall be paid prior to the date on which any writ
or order is issued  under which the  Property or any part of the Property may be
sold in satisfaction thereof.

6.07   CONDEMNATION.
       (a)    Borrower assigns to Lender all judgments,  decrees, and awards for
injury or  damage,  direct or  consequential,  to the  Property,  and all awards
pursuant to any proceeding for  condemnation or other taking,  whether direct or
indirect,  of the  Property  or any part of the  Property.  Lender may apply any
condemnation  proceeds to the Indebtedness in such manner as Lender may elect in
its sole and absolute  discretion.  Borrower shall promptly notify Lender of any
action or  proceeding  (or  threatened  action or  proceeding)  relating  to any
condemnation or other taking,  whether direct or indirect, of all or any part of
the Property.  Borrower shall,  unless otherwise  directed by Lender in writing,
file or defend  its claim  under any such  action  and  prosecute  same with due
diligence to its final  disposition and shall cause any awards or settlements to
be paid over to Lender for disposition pursuant to the terms of this Instrument.
Borrower  authorizes  Lender,  at  Lender's  option,  as  attorney-in-fact   for
Borrower, to commence, appear in, and prosecute, in Lender's or Borrower's name,
any action or proceeding relating to any proceeding relating to any condemnation
or other taking of the Property,  whether  direct or indirect,  and to settle or
compromise any claim in connection with such  condemnation or other taking.  The
proceeds of any award,  payment, or claim for damages,  direct or consequential,
in connection with any condemnation or other taking, whether direct or indirect,
of the Property,  or part thereof, or for conveyances,  in lieu of condemnation,
are hereby assigned to and shall be paid to Lender.  Lender shall be entitled to
participate in, control,  and be represented by attorneys of Lender's own choice
in any such action.  Borrower shall deliver to Lender such Instruments as may be
requested by it from time to time to permit such participation.


                                 Page 44 of 200
<PAGE>

       (b)    Borrower  authorizes  Lender  to  apply  such  awards,   payments,
proceeds,  or damages,  after the deduction of Lender's expenses incurred in the
collection of such amounts,  at Lender's option, to restoration or repair of the
Property,  or to payment of the sums secured by this Instrument,  whether or not
then due, in the order of application set forth in Section 2.04 and the balance,
if any, to Borrower.  Unless Borrower and Lender otherwise agree in writing, any
application  of proceeds to principal  shall not extend or postpone the due date
of the installments referred to in Section 2.03 and 6.07 or change the amount of
such  installments.   Borrower  agrees  to  execute  such  further  evidence  of
assignment of any awards,  proceeds,  damages,  or claims  arising in connection
with such condemnation or taking as Lender may require.
       (c)    In the event Lender,  as the result of any such judgment,  decree,
or award,  believes that the payment or performance of any obligation secured by
this  Instrument  is impaired,  Lender may, upon  Borrower's  failure to provide
adequate  assurances  to Lender as Lender  determines  in its sole and  absolute
discretion,  and within thirty (30) days of Borrower's receipt of written notice
describing such impairment,  declare all of the Indebtedness immediately due and
payable.

6.08   TAXES ON NOTE OR INSTRUMENT.   If  at  any time, any law shall be enacted
imposing or authorizing the imposition of any tax upon this Instrument,  or upon
any rights,  titles,  liens or security  interest  created by this Instrument or
upon the Note, or any part of the  Indebtedness,  Borrower shall immediately pay
all such taxes; provided that, if it is unlawful for Borrower to pay such taxes,
Borrower  shall prepay the Note in full without  penalty within thirty (30) days
after demand therefor by Lender.

6.09   STATEMENTS BY  BORROWER.   At  the  request  of  Lender,  Borrower  shall
furnish  promptly  a  written  statement  or  affidavit,  in such form as any be
required by Lender,  stating the unpaid  balance of the Note,  the date to which
interest  has been paid and that there are no offsets or defenses  against  full
payment of the Note in full  without  penalty  within ten (10) days after demand
therefor by Lender.

6.10   REPAIR, WASTE, ALTERATIONS, ETC.   Borrower  shall keep every part of the
Property in good operating order,  repair, and condition and shall not commit or
permit any waste thereof.  Borrower  shall make promptly all repairs,  renewals,
and replacements necessary to such end. Borrower shall discharge all claims from
labor performed and material furnished thereof, and shall not suffer any lien of
mechanics or materialmen  to attach to any part of the Property.  Borrower shall
have the right to contest in good faith the validity of any such  mechanic's  or
materialman's lien, provided Borrower shall first furnish Lender a bond or other
security  satisfactory  to Lender in such  amount  as  Lender  shall  reasonably
require, but not more than one hundred fifty percent (150%) of the amount of the


                                 Page 45 of 200
<PAGE>

claim, and provided further that Borrower shall thereafter diligently proceed to
cause  such  lien to be  removed  and  discharged.  If  Borrower  shall  fail to
discharge  any such lien,  then,  in  addition  to any other  right or remedy of
Lender, Lender may, but shall not be obligated to, discharge the lien, either by
paying the amount  claimed to be due, or by procuring the discharge of such lien
by  disposition  in court a bond for the amount  claimed,  or  otherwise  giving
security for such claim,  or by taking such action as may be  prescribed by law.
Borrower shall guard every part of the Property from removal,  destruction,  and
damage,  and shall not do or suffer to be done any act  whereby the value of any
part of the  Property  may be  lessened.  Borrower or any tenant or other person
shall not  materially  alter the Property  without the prior written  consent of
Lender,  which  consent  may be  withheld  for any reason  whatsoever  as Lender
determines in its sole and absolute discretion.

6.11   NO DRILLING EXPLORATION.   Without  the  prior written consent of Lender,
which consent may be withheld for any reason  whatsoever or no reason, as Lender
may determine in its sole and absolute discretion, there shall be no drilling or
exploring for or extraction, removal, or production of minerals from the surface
or subsurface of the Land. The term "minerals" as used in this Instrument  shall
include,   without   limitation,   oil,  gas,  casinghead  gas,  coal,  lignite,
hydrocarbons,  methane,  carbon  dioxide,  helium  uranium and all other natural
elements, compounds and substances, including sand and gravel.

6.12   COMPLIANCE WITH LAWS.   Borrower, the Property, and Borrower's use of the
Property shall comply with all laws, rules, ordinances,  regulations, covenants,
conditions,  restrictions,  orders and decrees of any governmental  authority or
court applicable to Borrower or the Property and its use, and Borrower shall pay
all fees or  charges of any kind in  connection  therewith.  Borrower  shall not
initiate,  participate in, or acquiesce in a change in the zoning classification
of the Property  without  Lender's prior written  consent,  which consent may be
withheld  for any reason  whatsoever,  as Lender may  determine  in its sole and
absolute discretion.

6.13   INCOME, EXPENSE  AND  FINANCIAL  STATEMENTS.   Borrower  shall  keep  and
maintain at all times at Borrower's  address  stated in this  Instrument or such
other place as Lender may approve in writing,  complete  and  accurate  books of
accounts and records adequate to reflect  correctly the results of the operation
of the  Property  and  copies  of  all  written  contracts,  leases,  and  other
instruments which affect the Property. Such books, records,  contracts,  leases,
and other  instruments  shall be subject to  examination  and  inspection at any
reasonable time by Lender, and upon reasonable notice to Borrower.  Borrower, as
well as any Guarantor of this Note,  within thirty (30) days of written  request
from  Lender,  agree to supply  financial  information,  or other  documentation
relating to Borrower's  financial condition and business  operations,  including
but not limited to financial  statements,  tax returns,  insurance  policies and
reports,  lists of assets and liabilities,  and inventory schedules.  Failure to
timely  provide  any such  information  or  documentation  will be  treated as a
default under the Note resulting in Borrower  being  obligated to pay a late fee
of $100.00 a day for each day that the information or documentation is late. All
financial  statements  shall be  certified  as true  and  correct  by the  party
submitting such.  Borrower shall furnish,  together with the foregoing financial
statements and at any other time upon Lender's request,  a rent schedule for the
Property,  certified by Borrower,  showing the name of each tenant, and for each
tenant, the space occupied,  the Lease expiration date, the Rent payable and the
Rent paid.


                                 Page 46 of 200
<PAGE>

6.14   HOLD HARMLESS.   Borrower  shall  defend,  at  Borrower's  own  cost  and
expense,  and hold Lender  harmless  from,  any  proceeding  or claim in any way
relating to the Property or the Loan Documents.  All costs and expenses incurred
by Lender in protecting its interest under the  Instrument,  including all court
costs and reasonable  attorneys' fees and expenses,  shall be borne by Borrower.
The  provisions  of  this  Section  shall  survive  the  payment  in full of the
Indebtedness  and the  release of this  Instrument  as to events  occurring  and
causes of action arising before such payment and release.

6.15   TRADE NAMES.   At  the  request  of  Lender,  Borrower  shall  execute  a
certificate in form  satisfactory  to Lender listing the trade names under which
Borrower  intends to operate the Property and  representing  and warranting that
Borrower does  business  under no other trade name with respect to the Property.
Borrower shall  immediately  notify Lender in writing of any change in any trade
name,  and shall,  upon  request of Lender,  execute  any  additional  financing
statements and other certificates  required to reflect the change in trade names
and shall execute and file any assumed name  certificate  required by applicable
laws.

6.16   FURTHER ASSURANCE.   Borrower,  upon  request  of  Lender, shall execute,
acknowledge,  deliver,  and record such further  instruments and do such further
acts as may be necessary, desirable, or proper to carry out the purposes of this
Instrument or the other Loan  Documents and to subject to the liens and security
interests  created by this  Instrument  or the other Loan  Document any property
intended to be covered by this Instrument and the other Loan Documents  pursuant
to their  terms,  including  without  limitation  any  renewals,  substitutions,
replacements, improvements, or appurtenances to the Property.

6.17   RECORDING AND FILING.   Borrower  shall  cause  this  Instrument  and the
other  recordable Legal Documents and all amendments,  supplements,  extensions,
and substitutions  thereof to be recorded,  filed,  re-recorded,  and refiled in
such  manner and in such places as Lender  shall  reasonably  request.  Borrower
shall pay all such  recording,  filing  re-recording,  and refiling fees,  title
insurance premiums, and other charges.

6.18   PAYMENT AND DEBTS.   Borrower shall promptly pay when due all obligations
regarding the ownership and operations of the Property.

6.19   INSPECTION.   Lender may make or  cause  to  be  made  entries  upon  and
inspections  of  the  Property,  upon  reasonable  notice  to  Borrower,  and at
reasonable times.


                                 Page 47 of 200
<PAGE>

6.20   PROTECTION OF LENDER'S SECURITY.
       (a)    If  Borrower   fails  to  perform  the  covenants  and  agreements
contained in this  Instrument,  or if any action or proceeding  commenced  which
affects  the  property  or title  thereof  or the  interest  of Lender  therein,
including without limitation eminent domain,  insolvency,  code enforcement,  or
arrangements  or proceedings  involving a bankrupt or decedent,  the Lender,  at
Lender's  sole option,  may make such  appearances,  disburse such sums and take
such  action as Lender  deems  necessary,  in its sole  discretion,  to  protect
Lender's interest,  including without limitation, (i) disbursement of reasonable
attorney's  fees,  (ii)  entry  upon the  Property  to make  repair,  and  (iii)
procurement of satisfactory insurance as provided in Section 6.05.
       (b)    Any amount disbursed by Lender pursuant to this Section 6.20 shall
become an additional  indebtedness of Borrower secured by this Instrument,  with
interest  accruing  thereon.  Unless Borrower and Lender agree to other terms of
payment,  such  amounts  shall be  immediately  due and  payable  and shall bear
interest  from the date of  disbursement  at the rate  stated in the Note unless
collection  from  Borrower  of  Interest  at such  rate  would  be  contrary  to
applicable  law, in which event such amounts  shall bear interest at the highest
non-usurious  rate which may be collected  from Borrower under  applicable  law.
Borrower covenants and agrees that Lender shall be subrogated to the lien of any
mortgage or other lien  discharged,  in whole or in part,  by the  Indebtedness.
Nothing contained in this Section 6.20 shall require Lender to incur any expense
or take any action under this Instrument.

6.21   SUBORDINATE MORTGAGE.   Borrower  shall  not,  without  the prior written
consent of Lender, which consent may be withheld for any reason whatsoever or no
reason, as Lender may determine in its sole and absolute  discretion,  grant any
lien,  security  interest,  or other  encumbrance (a  "Subordinate  Instrument")
covering any of the Property. If Lender consents to a Subordinate  Instrument or
if the foregoing prohibition is determined by a court of competent  jurisdiction
to be  unenforceable,  any such  Subordinate  Instrument  shall contain  express
covenants to the effect that: (a) the Subordinate  Instrument is unconditionally
subordinate to this Instrument;  (b) if any action (whether judicial or pursuant
to a power of sale) shall be  instituted  to foreclose or otherwise  enforce the
Subordinate  Instrument,  no tenant of any of the leases shall be named as party
defendants  and no action shall be taken that would  terminate  any occupancy or
tenancy  without  the prior  written  consent of Lender,  which  consent  may be
withheld  for any  reason  whatsoever  as Lender may  determine  in its sole and
absolute  discretion;  (c)  rents,  if  collected  by or for the  holder  of the
Subordinate   Instrument,   shall  be  applied  first  to  the  payment  of  the
Indebtedness  then due and expenses  incurred in the ownership,  operation,  and
maintenance  of the  Property  in such order as Lender may  determine,  prior to
being applied to any indebtedness secured by the Subordinate Instrument; and (d)
written notice of default under the Subordinate Instrument and written notice of
the commencement of any action (whether judicial or pursuant to a power of sale)
to foreclose or otherwise  enforce the Subordinate  Instrument shall be given to
Lender  with  or  immediately  after  the  occurrence  of any  such  default  or
commencement.

6.22   LIENS.   Borrower  shall  promptly  discharge  any lien which has, or may
have, priority over or equality with, the lien of this Instrument,  and Borrower
shall pay, when due, the claims of all persons  supplying  labor or materials to
or in connection  with the Property.  Without  Lender's  prior written  consent,
which consent may be withheld for any reason  whatsoever or no reason, as Lender
may determine in its sole and absolute discretion,  Borrower shall not allow any
lien inferior to this Instrument to be perfected against the Property.


                                 Page 48 of 200
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6.23   BUSINESS USE.   Borrower  warrants  and  represents  to  Lender  that the
proceeds of the Note will be used solely for  business or  commercial  purposes,
and in no way  will  the  proceeds  be used or  personal,  family  or  household
purposes.

6.24   NON-HOMESTEAD.   Borrower  warrants  and  represents  to  Lender that the
Property is not the business or  residential  homestead of Borrower or any other
person.  Borrower has no present intent to occupy the Property in the future, or
to use or claim in the future the  Property  either as business  or  residential
homestead.

                         ARTICLE VII - EVENTS OF DEFAULT

       The  occurrence  of any one of the  following  after  notice  and cure as
provided in the Note shall be an Event of Default  under this  Instrument or any
of the Loan Documents ("Event of Default"):

7.01   FAILURE TO PAY INDEBTEDNESS.   Any  of the  Indebtedness is not paid when
due,  whether  by  acceleration  or  otherwise,   following  the  expiration  of
applicable periods of notice and cure (if any).

7.02   NONPERFORMANCE OF COVENANTS.   Any  covenant in this Instrument or any of
the other Loan Documents is not fully and timely performed, or the occurrence of
any  default  or event of  default  under  this  Instrument  or any  other  Loan
Document.

7.03   FALSE REPRESENTATION.   Any statement, representation or warranty in this
Instrument or any of the other Loan Documents,  any financial statement,  or any
other writing  delivered to Lender in  connection  with the  Indebtedness  which
Borrower knew or should have known to be false, misleading,  or erroneous in any
material respect.

7.04   BANKRUPTCY OR INSOLVENCY.   Borrower:  (a) does not pay its debts as they
become  due or  admits  in  writing  its  inability  to pay its debts or makes a
general  assignment  for the benefit of  creditors;  or (b)  commences any case,
proceeding,  or other action seeking  reorganization,  arrangement,  adjustment,
liquidation,  dissolution  or composition of its debts under any law relating to
bankruptcy,  insolvency,  reorganization,  or relief or  debtors;  or (c) in any
involuntary case,  proceeding,  or other action commenced against it which seeks
to  have  an  order  for  relief  entered  against  it,  as  debtor,   or  seeks
reorganization,    arrangement,   adjustment,   liquidation,   dissolution,   or
composition of it or its debts under any law relating to bankruptcy, insolvency,
reorganization,  or relief of debtors,  (i) fails to obtain a dismissal  of such
cause, proceeding or other action within sixty (60) days of its commencement, or
(ii)  converts  the case from one  chapter  of the  Federal  Bankruptcy  Code to
another  chapter,  or  (iii)  is the  subject  of an order  for  relief;  or (d)
conceals,  removes,  or  permits to be  concealed  or  removed,  any part of its
property, with intent to hinder, delay, or defraud its creditors or any of them,


                                 Page 49 of 200
<PAGE>

or makes or suffers a transfer of any of its  property  which may be  fraudulent
under any  bankruptcy,  fraudulent  conveyances,  or similar  law,  or makes any
transfer  of its  property  to or for the  benefit of a creditor  at a time when
other  creditors  similarly  situated have not been paid; or suffers or permits,
while insolvent,  any creditor to obtain a lien upon any of its property through
legal  proceeding  which is not  vacated  within  sixty  (60) days from the date
thereof; or (e) has a trustee,  receiver,  custodian,  or other similar official
appointed  for or take  possession  of all or any part of the Property or any of
its  property or has any court take  jurisdiction  of any other of its  property
which  remains  undissmissed  or a period  of sixty  (60) days  (except  where a
shorter period is specified in the immediately  following paragraph (f)); or (f)
fails  to have  discharged  within a period  of ten  (10)  days any  attachment,
sequestration,  or similar writ levied upon any property of such person;  or (g)
fails to pay immediately any final money judgment against such person.

7.05   TRANSFER OF THE PROPERTY.   Title  to  all  or  any part  of the Property
(other than obsolete or worn Personal Property replaced by adequate  substitutes
of equal or greater  value than the replaced  items when new) becomes  vested in
any party other than Borrower, whether by operation of law or otherwise.  Lender
may,  in its sole  discretion,  waive this Event of Default but it shall have no
obligation to do so, and any waiver may be conditioned  upon such one or more of
the following which Lender may require: (a) the grantee's integrity, reputation,
character, creditworthiness, and management ability being satisfactory to Lender
in its sole and absolute  judgment;  and (b) the grantee's  executing,  prior to
such sale or transfer,  a written assumption  agreement containing such terms as
Lender may require,  such as principal  paydown on the Note,  an increase in the
rate of  interest  payable  under  the  Note,  a  transfer  fee,  and any  other
modification  of the Note,  this  Instrument or any of the other Loan  Documents
which Lender may require.

7.06   TRANSFER OF  OWNERSHIP  OF  BORROWER.   The  sale,  pledge,  encumbrance,
assignment  or  transfer,  voluntarily  or  involuntarily,  of any  interest  in
Borrower, except sales or transfers in interests in Borrower, provided that such
sales or  transfers,  together with any prior sales or transfers of interests in
Borrower,  do not result in more than 25% of the total  beneficial  interests in
Borrower having been sold or transferred since the date of this Instrument.

7.07   GRANT OF EASEMENT, ETC.   Without  the  prior  written consent of Lender,
which consent may be withheld for any reason  whatsoever as Lender may determine
in its sole and absolute discretion, Borrower grants any easement or dedication,
file any plat, condominium  declaration,  or restriction,  or otherwise encumber
the Property,  unless such action is expressly  permitted by this  Instrument or
any of the other Loan Documents.

7.08   FORECLOSURE OF OTHER LIENS.   The  holder of any  lien, security interest
or assignment on the Property  institutes  foreclosure or other  proceedings for
the enforcement of its remedies thereunder.

7.09   LIQUIDATION, DEATH, ETC.   The  liquidation,   termination,  dissolution,
failure to  maintain  good  standing  in the States of New  Mexico,  Texas,  and
Nevada, death, or legal incapacity of Borrower or any Guarantor.


                                 Page 50 of 200
<PAGE>

7.10   The  levy  of any attachment, execution or other process against maker or
any of the collateral.

                       ARTICLE VIII - DEFAULT AND REMEDIES

8.01   ACCELERATION AND WAIVER OF NOTICE.

       (a)    Subject  to the  notice  and cure  provisions,  if any,  expressly
provided  in any Loan  Document,  upon the  occurrence  of an Event of  Default,
Lender,  at  Lender's  option,  may  declare  all of the  sums  secured  by this
Instrument to be  immediately  due and payable  without  further  demand and may
invoke the power of sale and any other remedies  permitted by applicable law, or
provided herein.  Borrower acknowledges that the power of sale granted to Lender
may be exercised by Lender  without prior  judicial  hearing.  Borrower and each
Guarantor, surety, and endorser of all or any part of the indebtedness expressly
waive  all  presentations  for  payment,  notices  of  intention  to  accelerate
maturity,  notices of acceleration  of maturity,  notices of intention to demand
payment,  demands for payment,  protests,  and notices of protest.  Borrower and
each  Guarantor,  surety and endorser  acknowledge  and understand that by these
waivers,  they waive any right they may have to receive notices of default under
this  Instrument,  the Note or any other  indebtedness  set  forth or  described
herein or in any other Loan  Document,  as well as any  opportunity  to cure any
such  default.  The  right  to  accelerate  maturity  of the  Note or any  other
indebtedness  set forth or described  herein or in any other Loan  Document does
not include the right to accelerate any interest which has not otherwise accrued
on the date of such  acceleration,  and the  holder  hereof  does not  intend to
charge  or  receive  any  unearned  or  unaccrued   interest  in  the  event  of
acceleration.
       (b)    If any  provision  of this  Mortgage  or any other  Loan  Document
provides for Lender to give Borrower any notice  regarding a default or imminent
default,  then if Lender shall fail to give such notice to Borrower as provided,
the sole and  exclusive  remedy of Borrower  for such  failure  shall be to seek
appropriate equitable relief to enforce the agreement to give such notice and to
have any  acceleration of the maturity of the Note and the secured  indebtedness
postponed  or revoked,  and  foreclosure  proceedings  in  connection  therewith
delayed or  terminated  pending or upon the curing of such default in the manner
and during the period of time permitted by such agreement,  if any, and Borrower
shall  have no  right  to  damages  or any  other  type  of  relief  not  herein
specifically  set out against  Lender,  all of which damages or other relief are
hereby waived by Borrower.  Nothing  herein or in any other Loan Document  shall
operate or be construed to add on or make  cumulative  any cure or grace periods
specified in any of the Loan Documents.

8.02   NOTICE OF SALE.   Notice  of  sale  of all or part of the Property by the
Lender shall be given in accordance with the laws of New Mexico. Service of such
notice  shall be completed  upon  deposit of the notice,  enclosed in a postpaid
wrapper,  properly  addressed to such debtor at the most recent address as shown
by the records of Lender, in a post office or official depository under the care
and custody of the United  States  Postal  Service.  The affidavit of any person
having  knowledge  of the facts to the effect that such  service  was  completed
shall  be prima  facie  evidence  of the fact of  service.  Any  notice  that is
required or  permitted  to be given to Borrower  may be addressed to Borrower at
Borrower's address as stated in this Instrument.  Any notice that is to be given
by  certified  mail to any other debtor may, if no address for such other debtor
is shown by the  records of Lender,  be  addressed  to such other  debtor at the
address of Borrower as is shown by the records of Lender.


                                 Page 51 of 200
<PAGE>

8.03   FORECLOSURE SALE.   Lender may  sell  all,  or  part,  of the Property at
public auction to the highest bidder,  for cash, at the county courthouse of the
county in New Mexico in which the Property or any part  thereof is situated,  or
if the  Property is located in more than one  county,  such sale or sales may be
made at the  courthouse  in any county in which the  Property is  situated.  All
sales  shall take place at such area as  specified  in the Notice  described  in
Section 8.02 and in such location as allowed by applicable  law. Lender may sell
all or any portion of the Property,  together or in lots or parcels. In no event
shall Lender be required to exhibit,  present or display at any such sale any of
the Personal  Property  described herein to be sold at such sale. Lender may bid
and become the  purchaser of all or any part of the Property at any  foreclosure
sale hereunder, and the amount of Lender's successful bid may be credited on the
Indebtedness.

8.04   PARTIAL SALES.   The  sale  by  Lender  of  less  than  the  whole of the
Property  shall not  exhaust  the power of sale  herein  granted  and  Lender is
specifically empowered to name successive sales under such power until the whole
of the Property shall be sold, and if the proceeds of such sale of less that the
whole of the Property shall be less than the aggregate of the  Indebtedness  and
the  expenses  thereof,  this  Instrument  and the lien,  security  interest and
assignment hereof shall remain in full force and effect as to the unsold portion
of the  Property  just  though no sale had been made;  provided,  however,  that
Borrower  shall have any right to require the sale of less than the whole of the
Property,  but Lender shall have the right,  at its sole election,  to sell less
than the  whole of the  Property.  If there is  default  on the  payment  of any
installment  on the Note or any portion of the  Indebtedness,  and Lender elects
not to accelerate the unpaid balance of the Note or  Indebtedness,  Lender shall
have the option to proceed  with  foreclosure  in  satisfaction  of such  unpaid
installment or other amount either through judicial proceedings or by proceeding
as if under a full  foreclosure,  conducting the sale as herein provided without
declaring the entire  Indebtedness due, it is agreed that such sale, if so made,
shall not in any manner affect the unmatured part of the Indebtedness, but as to
such  unmatured  part this  Instrument  shall remain in full force and effect as
though no sale had been made under the provisions of this Section. Several sales
may be made  hereunder  without  exhausting  the right of sale for any unmatured
part of the Indebtedness.

8.05   FORECLOSURE OF  ALL  PROPERTY.   The  Land,  Improvements,  and  Personal
Property  may be sold in one or more  public  sales  pursuant to New Mexico law.
Borrower  shall  assemble the Personal  Property and make it available to Lender
upon Lender's  written  request.  Borrower and all persons  obligated to pay the
Indebtedness  agree that  notice of sale of the  Property  provided  pursuant to
Section  8.02  above and  pursuant  to New  Mexico  law is and shall  constitute
commercially  reasonable  notice of the sale of the  Property or any part of the
Property.  Lender  shall also be entitled to foreclose  its  security  interests
against the Personal  Property in accordance  with any other rights and remedies
Lender may have as a secured party under, the New Mexico UCC.


                                 Page 52 of 200
<PAGE>

8.06   DEED.   Lender  shall  deliver  to  the  purchaser  a deed and such other
assignments  and  documents  of transfer  and sale as Lender may deem  necessary
conveying the Property so sold in fee simple with covenants of general warranty.
Borrower  covenants and agrees to defend generally the purchaser's  title to the
Property  against all claims and demands.  At any such sale: (a) Borrower hereby
agrees,   in  its  behalf  of  Borrower's  heirs,   executors,   administrators,
successors, personal representatives and assigns, that any and all recitals made
in any deed of conveyance  given by Lender,  the  occurrence or existence of any
default,  the  acceleration  of the  maturity  of any of the  Indebtedness,  the
request to sell, the notice of sale, the giving of notice to all debtors legally
entitled  thereto,  the time,  place,  terms and  manner of sale,  and  receipt,
distribution and application of the money realized therefrom,  and without being
limited by the foregoing with respect to any other act or thing having been duly
done by Lender  hereunder,  shall be taken by all  courts  of law and  equity as
prima facie evidence that the statements or recitals state facts and are without
further  question to be so accepted,  and Borrower  hereby ratifies and confirms
every act that  Lender  hereunder  may  lawfully  do in the  premises  by virtue
hereof,  and (b) the purchaser may disaffirm any easement  granted,  subdivision
plat  filed,  or  rental,  lease  or other  contract  made in  violation  of any
provision of this Instrument,  and may take immediate possession of the Property
free from, and despite the terms of, such grant of easement,  subdivision  plat,
or rental, lease or other contract.

8.07   PROCEEDS OF SALE.   Lender  shall  apply  the proceeds of the sale in the
following order: (a) to all reasonable costs and expenses of the sale, including
but not limited to, reasonable attorney's fees and costs of title evidence;  (b)
to all sums secured by this Instrument in such order as Lender, in Lender's sole
and absolute discretion may determine, and (c) to the successors, if any, to the
person or persons legally entitled thereto.

8.08   POSSESSION AFTER SALE.   If  the  Property  is  sold  pursuant to Section
8.03, Borrower or any person holding possession of the Property through Borrower
shall immediately  surrender possession of the Property to the purchaser at such
sale upon the purchaser's  written demand. If possession is not surrendered upon
the  purchaser's  written  demand,  Borrower or such person shall be a tenant at
sufferance  and may removed by writ of  possession  or by an action for forcible
entry and detainer.

8.09   COSTS AND EXPENSES.   Lender  shall be entitled to collect all reasonable
costs and expenses incurred in pursuing such remedies, including but not limited
to,  attorney's  fees and costs of documentary  evidence,  abstracts,  and title
reports.

8.10   [RESERVED].

8.11   REMEDIES  CUMULATIVE.   Each   remedy  provided  in  this  Instrument  is
distinct and cumulative to all other rights or remedies under this Instrument or
afforded by law or equity, and may be exercised concurrently,  independently, or
successively, in any order whatsoever.


                                 Page 53 of 200
<PAGE>

8.12   FORBEARANCE BY  LENDER NOT  A  WAIVER.   Any  forbearance  by  Lender  in
exercising any right or remedy  hereunder,  or otherwise  afforded by applicable
law,  shall not be a waiver of or preclude  the exercise of any right or remedy.
The acceptance by Lender of payment of any sum secured by this Instrument  after
the due date of such payment shall not have a waiver of Lender's right to either
require  prompt  payment  when due of all other  sums so secured or to declare a
default for failure to make prompt payment. The procurement of Insurance, of the
payment of taxes or other  liens or  charges by Lender  shall not be a waiver of
Lender's  right to  accelerate  the  maturity  of the  Indebtedness,  nor  shall
Lender's receipts of any awards,  proceeds or damages under Section 6.05 or 6.08
operate to cure or to waive  Borrower's  default  in payment of sums  secured by
this Instrument.

8.13   WAIVER OF  MARSHALLING.   Notwithstanding  the  existence  of  any  other
security interests in the Property held by Lender or by any other party,  Lender
shall have the right to determine  the order in which any or all portions of the
Indebtedness  are satisfied from the proceeds  realized upon the exercise of the
remedies provided in this Article VIII. Borrower, any party who consents to this
Instrument,  and any party who now or hereafter  acquires a security Interest in
the Property and who has actual or  constructive  notice of this  Instrument and
Lender's  rights and interests under this  Instrument,  hereby waive any and all
right to require the marshalling of assets in connection with exercise of any of
the remedies permitted by applicable law or provided by this Instrument.

                        ARTICLE IX - HAZARDOUS MATERIALS

9.01   HAZARDOUS MATERIALS.   For the purposes of this Instrument, Borrower, AND
Lender agree that,  unless the context  otherwise  specifies  or  requires,  the
following  terms shall have the following  meanings:  (a) "Hazardous  Materials"
shall mean (i) any "hazardous waste" as defined by the Resource Conservation and
Recovery Act of 1976 (42 U.S.C.  Section 6901 et seq.),  as amended from time to
time, and regulations promulgated thereunder;  (ii) any "hazardous substance" as
defined by the Comprehensive Environmental Response,  Compensation and Liability
Act of 1980 (42 U.S.C.  Section 9601 et seq.) ("CERCLA") as amended from time to
time,   and   regulations   promulgated   thereunder;   (iii)   asbestos;   (iv)
polychlorinated  biphenyls; (v) underground storage tanks, whether empty, filled
or partially filled with any substance; (vi) any substance the presence of which
on the Property is prohibited by any applicable  governmental  requirements  and
regulations ("Governmental  Requirements");  and (vii) any other substance which
by any  Governmental  Requirements  requires special handling or notification of
any federal,  state, or local  governmental  entity in its collection,  storage,
treatment,  or disposal; (b) "Hazardous Materials  Contamination" shall mean the
contamination  (whether  presently  existing  or  hereafter  occurring)  of  any
improvements, facilities, soil, groundwater, air, or other elements on or of any
other  property as a result of Hazardous  Materials at any time (whether  before
after the date of this Instrument) emanating from the Property.


                                 Page 54 of 200
<PAGE>

9.02   REPRESENTATIONS AND WARRANTIES.   Borrower  represents and warrants as of
the date of execution hereof and continuing until this Instrument is released as
follows:  (a) no Hazardous Materials are now located on the Property and neither
Borrower  nor any other  person  has ever  caused  or  permitted  any  Hazardous
Materials  to be placed,  held,  located,  or  disposed  of on,  under or at the
Property or any part thereof;  (b) no part of the Property is being used or, has
been used at any previous time for the disposal, storage, treatment, processing,
or other  handling  of  Hazardous  Materials,  nor is any  part of the  Property
affected by any Hazardous Materials Contamination; (c) no property adjoining the
Property  is being used,  or has ever been used at any  previous  time,  for the
disposal,  storage,  treatment,   processing  or  other  handling  of  Hazardous
Materials,  nor is  any  other  property  adjoining  the  Property  affected  by
Hazardous  Materials  Contamination;  and (d) no  investigation,  administrative
order,  consent order and  agreement,  litigation or settlement  with respect to
Hazardous  Materials  Contamination is proposed,  threatened,  anticipated or in
existence with respect to the Property.  The Property is not currently on, after
diligent  investigation and inquiry,  and has never been on any federal or state
"Superfund" list.

9.03   BORROWER'S COVENANTS.   Borrower  agrees  to: (a) give  written notice to
Lender  immediately upon Borrower's  acquiring  knowledge of the presence of any
Hazardous Materials on the Property or of any Hazardous Materials  Contamination
with a full description  thereof,  other than as disclosed in the  Environmental
Reports;  (b) promptly comply with any Governmental  Requirements  requiring the
removal,  treatment  or  disposal  of  such  Hazardous  Materials  or  Hazardous
Materials  Contamination and provide Lender with  satisfactory  evidence of such
compliance;  and provide  Lender,  within ten (10) days after  demand by Lender,
with a bond,  letter of credit or  similar  financial  assurance  evidencing  to
Lender's  satisfaction that the necessary funds are available to pay the cost of
removing,  treating  and  disposing  of such  Hazardous  Materials  or Hazardous
Materials Contamination and discharging any assessments which may be established
on the Property as result thereof.

9.04   SITE  ASSESSMENTS.   Upon  reasonable  information  indicating  that  the
Property is affected by Hazardous Substances,  and upon reasonable notice during
regular  business  hours,  Lender,  by or through its  officers,  employees  and
agents,  may  contract for the  services of a person (the "Site  Reviewers")  to
perform  environmental site assessments ("Site Assessments") on the Property for
the  purpose  of   determining   whether   there  exists  on  the  Property  any
environmental  condition  which  could  reasonably  be expected to result in any
liability,  cost, or expense to the owner, occupier or operator of such Property
arising under any state,  federal or local law,  rule or regulation  relating to
Hazardous  Materials.  The Site  Assessment  may be performed at any time,  upon
reasonable notice, and under reasonable conditions established by Borrower which
do not impede the  performance of the Site  Assessments.  The Site Reviewers are
authorized to enter upon the Property for such purposes.  The Site Reviewers are
further  authorized  to  perform  both above and below the  ground  testing  for
environmental  damage or the presence of Hazardous Materials on the Property and
such  other  tests on the  Property  as may be  necessary  to  conduct  the Site
Assessments  in the  reasonable  opinion of the Site  Reviewers.  Borrower  will
supply  to the  Site  Reviewers  such  historical  and  operational  information
regarding the Property as may be reasonably  requested by the Site  Reviewers to
facilitate  the Site  Assessments  and will make available for meetings with the
Site  Reviewers  appropriate  personnel  having  knowledge of such  matters.  On
request,  Lender shall make the results of such Site Assessments fully available
to Borrower,  which may, at Borrower's  election,  participate  under reasonable
procedures  in the direction of such Site  Assessments  and the  description  of
tasks of the Site reviews. The cost of performing such Site Assessments shall be
reasonable  and shall be paid by  Borrower  upon  demand of Lender  and any such
obligations shall be part of the Indebtedness secured by this Instrument.


                                 Page 55 of 200
<PAGE>

9.05   INDEMNIFICATION.   Borrower  shall  defend,  indemnify, and hold harmless
Lender  from any and all  liabilities  (including  strict  liability),  actions,
demands,  penalties,  losses,  costs, or expenses  (including without limitation
attorney's  fees  and  expenses,  and  remedial  costs),  suits,  costs  of  any
settlement  or judgement and claims of any and every kind  whatsoever  which may
now or in the future (whether before or after the release of this Instrument) be
paid, incurred or suffered by or asserted against Lender by any person or entity
or  governmental  agency for with respect to, or as a direct or indirect  result
of, the presence or under, or the escape, seepage, leakage, spillage, discharge,
emission  or  release  from  the  Property  of any  Hazardous  Materials  or any
Hazardous   Materials   Contamination  or  arise  out  of  or  result  from  the
environmental condition of the Property or the applicability of any Governmental
Requirements  relating to Hazardous  Materials  (including without limitation of
CERCLA or any federal,  state,  or local  so-called  "Superfund"  or "Superlien"
laws,  statute,  law,  ordinance,  code,  rule,  regulation,  order or  decree),
regardless  of whether or not caused by or within  the  control of  Borrower  or
Lender.  The  representations,   covenants,   warranties,  and  indemnifications
contained in this Article IX shall survive the release of this Instrument.

9.06   RIGHTS OF LENDER.   Lender  shall have the right, but not the obligation,
without  in any way  limiting  Lender's  other  rights and  remedies  under this
Instrument, to enter onto the Property or to take such other actions as it deems
necessary or advisable to clean up, remove,  resolve, or minimize the impact of,
or  otherwise  deal  with,  any  Hazardous   Materials  or  Hazardous  Materials
Contamination on the Property that could result in an order, suit, imposition of
a lien on the Property,  or other action and/or which, in Lender's sole opinion,
could jeopardize  Lender's security under this Instrument.  All reasonable costs
and expenses paid or incurred by Lender in the exercise of any such rights shall
be Indebtedness secured by this Instrument and shall be payable by Borrower upon
demand.

                      ARTICLE X - MISCELLANEOUS PROVISIONS

10.01  RELEASE.   Upon  payment of  all sums under  the Note, the performance of
all  obligations  secured by this  Instrument,  and performance of all covenants
under the Loan Documents, Lender will release this Instrument. Grantor shall pay
Lender's costs incurred in releasing this Instrument.

10.02  PARTIAL RELEASE.   Lender  will  release  the  lien created hereby  as it
relates to the Property  described  herein upon  Borrower's  compliance with the
following:  (i) delivery to Lender of written notice from Borrower of Borrower's
desire to release the Property;  (ii) payment of $7,340,000.00 to Lender;  (iii)
payment of Lender's  reasonable  legal fees and costs  incurred in released  the
lien created hereby.


                                 Page 56 of 200
<PAGE>

10.03  BORROWER AND LIEN NOT RELEASED.   From  time  to  time,  Lender  may,  at
Lender's option,  without giving notice to or obtaining the consent of Borrower,
Borrower's successors or assigns or any junior lienholder or Guarantor,  without
liability on Lender's  part and  notwithstanding  the  existence of any Event of
Default,  extend the time for payment of the  Indebtedness  or any part thereof,
reduce the payments  thereon,  release anyone liable on any of the Indebtedness,
accept a renewal note or notes therefor, modify the terms and time of payment of
the  Indebtedness,  release  from the liens of this  Instrument  any part of the
Property, take or release other or additional security, reconvey any part of the
Property,  consent to the  granting of any  easement,  join in any  extension or
subordination  agreement,  and agree in writing with Borrower to modify the rate
of  interest or period of  amortization  of the Note or change the amount of the
installments  payable  thereunder.  Any actions taken by Lender  pursuant to the
terms of this  Section  10.03  shall not affect the  obligation  of  Borrower or
Borrower's  successors or assigns to pay the sums secured by this Instrument and
to observe the  covenants  of Borrower  contained  herein,  shall not affect the
guaranty of any person, corporation, partnership, or other entity for payment of
the Indebtedness or any part thereof,  and shall not affect the lien or priority
of liens  of this  Instrument  on the  Property.  Borrower  shall  pay  Lender a
reasonable  charge,  together with such title insurance  premiums and reasonable
attorney's  fees as may be incurred at Lender's  option,  for any such action if
taken at Borrower's request.

10.04  NOTICE.   Except  for  any  notice  required  under applicable law to  be
given in another manner,  any notice to Borrower provided for in this Instrument
or in the Note  shall be given by mailing  such  notice by United  States  mail,
postage  prepaid,  certified  mail,  return  receipt  requested,  or by  Federal
Express,  addressed to Borrower's  address stated in this  Instrument or at such
other  address  as  Borrower  may  designate  by notice  addressed  to Lender at
Lender's  address  stated in this  Instrument or to such other address as Lender
may designate by notice to Borrower as provided herein.  Any notice provided for
in this Instrument or in the Note shall be deemed to have been given to Borrower
or Lender when given in the manner designated herein, but actual notice, however
given or received, shall always be effective.

10.05  SUCCESSORS  AND ASSIGNS  BOUND.   The  covenants  and  agreements  herein
contained  shall bind, and the rights  hereunder  shall inure to, the respective
successors  and assigns of Lender and  Borrower,  subject to the  provisions  of
Section 7.05 and 7.06.

10.06  JOINT AND SEVERAL LIABILITY.   All covenants and agreements  of  Borrower
shall be joint and several.

10.07  AGENTS.    In  exercising  any  right  hereunder  or  taking  any actions
provided for herein, Lender may act through its employees, agents or independent
contractors as authorized by Lender.

10.08  GOVERNING LAW.   THIS MORTGAGE, WHICH, TOGETHER WITH THE LOAN  DOCUMENTS,
SETS FORTH THE ENTIRE  UNDERSTANDING  OF BORROWER AD LENDER WITH RESPECT TO THE
SUBJECT  MATTER  HEREOF,  AND SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE  WITH  THE  LAWS  (WITHOUT  GIVING  EFFECT  TO  THE  CONFLICT  OF LAW
PRINCIPLES  THEREOF)  OF THE STATE OF NEVADA,  EXCEPT  THAT TO THE EXTENT OF THE
TRANSFER OR CREATION OF AN INTEREST IN THE PROPERTY, THE METHOD FOR FORECLOSURE,
THE NATURE OF THE  INTEREST IN THE  PROPERTY  RESULTING  FROM  FORECLOSURE,  THE
MANNER AND EFFECT OF  RECORDING  OR FAILING  TO RECORD  THIS  MORTGAGE,  AND ANY
ACTION OR  PROCEEDING  AGAINST  THE  PROPERTY,  INCLUDING,  BUT NOT  LIMITED TO,


                                 Page 57 of 200
<PAGE>

FORECLOSURE  PROCEEDINGS AND ATTACHMENT OF RENTALS,  THE SUBSTANTIVE LAWS OF THE
STATE OF NEW MEXICO SHALL GOVERN AND CONTROL THE CONSTRUCTION AND ENFORCEMENT OF
THE LOAN DOCUMENTS.  IT IS THE EXPRESS INTENTION OF BORROWER AND LENDER THAT, TO
THE EXTENT THE TERMS OF THIS MORTGAGE OR ANY OF THE OTHER LOAN DOCUMENTS ENTITLE
LENDER OR ANY OTHER HOLDER OF ANY PORTION OF THE  INDEBTEDNESS  EVIDENCED BY THE
NOTE TO PROCEED DIRECTLY AGAINST THE PROPERTY IN THE STATE OF NEW MEXICO, LENDER
SHALL BE ENTITLED TO PROCEED AGAINST THE SAME IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW MEXICO WITHOUT  REGARD TO WHETHER OR NOT  BENEFICIARY OR SUCH OTHER
HOLDER  THERETOFORE  SHALL HAVE  COMPLIED  WITH ANY  PROCEDURAL  OR  SUBSTANTIVE
PREREQUISITES OR REQUIREMENTS FOR FORECLOSURE AS SET FORTH UNDER THE LAWS OF ANY
OTHER STATE,  INCLUDING,  WITHOUT  LIMITATION,  ANY LAWS  RELATING TO DEFICIENCY
JUDGMENTS,  RIGHTS  OF  REDEMPTION,  OR  ANY  SO-CALLED  "ONE-ACTION  RULES"  OR
"SECURITY FIRST" PRINCIPLES.

ANY LEGAL  ACTION OR  PROCEEDING  WITH RESPECT TO THE NOTE MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEVADA OR, IF THE REQUISITES OF JURISDICTION  OBTAIN,  OF
THE UNITED STATES OF AMERICA  SITTING IN CLARK COUNTY,  STATE OF NEVADA  (EXCEPT
FOR  FORECLOSURE  PROCEEDINGS AND OTHER  PROCEEDINGS  AGAINST THE PROPERTY WHICH
PROCEEDINGS  SHALL BE  GOVERNED  BY NEW  MEXICO  LAW;  PROVIDED  THAT  UNDER ALL
CIRCUMSTANCES  ANY ISSUE OR ISSUES  RELATING  TO THE AMOUNT OR RATE OF  INTEREST
THAT MAY BE  LAWFULLY  CONTRACTED  FOR,  CHARGED,  TAKEN,  RESERVED  OR RECEIVED
HEREUNDER  OR UNDER ANY OF THE OTHER LOAN  DOCUMENTS  SHALL BE  GOVERNED  BY AND
CONSTRUED IN ACCORDANCE  WITH THE LAWS OF THE STATE OF NEVADA).  UPON  EXECUTION
AND DELIVERY HEREOF, BORROWER ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. NOTHING
HEREIN,  HOWEVER,  SHALL  AFFECT  THE RIGHT OF  BENEFICIARY  TO  COMMENCE  LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION.

10.09  SEVERABILITY.    In  the  event that any provisions of this Instrument or
the Note conflict  with  applicable  law,  such conflict  shall not affect other
provisions of this  Instrument or the Note which can be given effect without the
conflicting  provisions,  and to this end the provisions of this  Instrument and
the Note are declared to be severable.


                                 Page 58 of 200
<PAGE>

10.10  LIMITATION ON INDEMNIFICATION.   To  the  extent,  if  at  all, that N.M.
Stat. Ann.ss.  56-7-1 is applicable to Borrower's agreement to indemnify Lender,
such  agreement  will not  extend  to  liability,  claims,  damages,  losses  or
expenses,  including  attorneys'  fees,  arising out of (i) the  preparation  or
approval of maps, drawings,  opinions,  reports, surveys, change orders, designs
or  specifications  by Indemnitee,  or the agents or employees of Lender or (ii)
the giving of or the failure to give direction or instructions by Lender, or its
agents  or  employees,  where  such  giving or  failure  to give  directions  or
instructions  is the  primary  cause of bodily  injury to  persons  or damage to
property.

10.11  PARTIAL INVALIDITY.   In the event any portion of the sums intended to be
secured by this  Instrument  cannot be  lawfully  secured  hereby,  payments  in
reduction  of such sums shall be applied  first to those  portions  not  secured
hereby.

10.12  CAPTIONS.   The  captions  and  headings  of the Articles and Sections of
this Instrument are for convenience  only and are not to be used to interpret or
define the terms and provisions of this Instrument.

10.13  NO PARTNERSHIP, ETC.   The  relationship  between  Lender and Borrower is
solely that of Lender and  Borrower.  Lender has no fiduciary  or other  special
relationship with Borrower.  Nothing contained in the Loan Documents is intended
to create any  partnership,  joint venture or association  between  Borrower and
Lender or in any way make Lender a co-principal  with Borrower with reference to
the  Property.  Any  inferences  to the  contrary  of the  foregoing  are hereby
expressly negated.

10.14  ENTIRE   AGREEMENT.   The   Loan   Documents   constitute    the   entire
understanding  and  agreement  between  Borrower  and Lender with respect to the
transactions  arising in connection  with the  indebtedness  secured  hereby and
supersede  all  prior  written  or oral  understanding  and  agreements  between
Borrower and Lender with respect to the matters addressed in the Loan Documents.
Borrower hereby acknowledges that, except as incorporated in writing in the Loan
Documents,  there are not and were not and no persons are or were  authorized by
Holder to make any representations,  understanding,  stipulations, agreements or
promises,  oral or written,  with  respect to the matters  addressed in the Loan
Documents.

10.15  TIME OF  ESSENCE.   Time shall be of the  essence in this  Mortgage  with
respect to all of Borrower's obligations hereunder.

                       ARTICLE XI - ADDITIONAL PROVISIONS

11.01  [RESERVED].


                                 Page 59 of 200
<PAGE>

11.02  FLOOD PLAIN.   Borrower represents and warrants that none of the Land, or
any part thereof, is situated within a floodplain,  floodway,  flood prone area,
special  flood hazard or the like,  as so  designated  by the  applicable  Flood
Insurance Study or Flood Insurance Rate Map or other such similar study,  map or
plat issued or controlled by the Federal Emergency Management Agency, and/or any
other federal agency  appointed to regulate such matters under the Federal Flood
Disaster  Protection  Act, as amended,  or the Federal Flood  Insurance  Act, as
amended.  Borrower indemnifies and holds Lender harmless, from any claims and/or
costs caused by the Land being located within a flood prone area.

11.03  OTHER LOAN DOCUMENTS.   All agreements,  security  agreements  and  other
loan documents  which are mentioned in or executed in accordance  with the Note,
this Instrument are  incorporated  herein for all purposes as if fully set forth
herein.  Any default of any term or condition in any of the Loan Documents shall
be and is a default under the terms of this Mortgage.

11.04  NO  OBLIGATION TO REFINANCE.   Borrower  understands  and agrees that the
Indebtedness  represented  by the Note secured hereby is due and payable in full
on the maturity date specified in the Note, and Borrower understands that Lender
shall not be obligated or required to refinance the accrue and unpaid balance of
the Note,  and Lender shall be under no  obligation  to extend the maturity date
past the specified date in the Note. No extension of said maturity date shall be
of any force or effect unless set forth in a written  modification  or extension
agreement  signed by Lender and Borrower,  and in no event shall the granting of
one or more extension or  modification  of the Loan by Lender be construed as an
(i) agreement for, (ii)  requirement for, or (iii) waiver of any right to refuse
any future  modification  or extension of the  indebtedness  represented by said
Note thereafter by Lender.


                       [SIGNATURES TO FOLLOW ON NEXT PAGE]






                                 Page 60 of 200
<PAGE>


         Grantor:
         --------

Wedgwood Partners, Ltd., Limited Partnership, a
Nevada limited partnership

         By:      GBR, LLC, a
                  Nevada limited liability company, general partner

                  By:      Greenbriar Acquisition Corporation, a
                           Nevada corporation, manager



                           By:      /s/ Gene S. Bertcher
                                    --------------------

                           Name:    Gene S. Bertcher
                                    ----------------

                           Title:   Executive Vice President
                                    ------------------------


                                 ACKNOWLEDGMENT
                                 --------------


THE STATE OF TEXAS                ss.
COUNTY OF DALLAS                  ss.

                  "Before me, the undersigned notary public, on this 12th day of
July, 2001,  personally  appeared Gene S. Bertcher,  Executive Vice President of
Greenbriar Acquisition Corporation, a Nevada corporation, manager of GBR, LLC, a
Nevada limited liability company,  general partner of Wedgwood  Partners,  Ltd.,
Limited Partnership, a Nevada limited partnership,  known to me to be the person
whose name is subscribed to the foregoing instrument and acknowledged to me that
he/she executed the same for the purposes and consideration  therein  expressed,
and in the capacity stated therein."

                                            /s/ Polly Kendall
                                            ------------------------------------
                                            Notary Public - State of Texas

AFTER RECORDING, RETURN TO :
- ----------------------------
The Brown Law Firm, L.L.P.
Attn: Charles S. Brown
8235 Douglas Avenue, Suite 1220
Dallas, Texas 75225



                                 Page 61 of 200



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.23.5
<SEQUENCE>8
<FILENAME>green8k070101ex10235.txt
<DESCRIPTION>DEED OF TRUST ON CAMELOT ASSISTED LIVING
<TEXT>

                                                                EXHIBIT 10.23.5.
                                                                ----------------

                                  DEED OF TRUST
                                  -------------

(Security  Agreement,  Assignment of Leases,  Assignment of Rents, and Financing
Statement)

       This combined Deed of Trust,  Security  Agreement,  Assignment of Leases,
Assignment of Rents, and Financing Statement (hereafter "Instrument") is made on
the date acknowledged below by Wedgwood Partners,  Ltd., Limited Partnership,  a
Nevada limited partnership.  By signing this instrument,  Borrower agrees to the
terms and conditions and makes the covenants stated in this instrument.

DATE:                               July 12, 2001
- -----


BORROWER/GRANTOR:          Wedgwood Partners, Ltd., Limited Partnership, a
- -----------------          Nevada limited partnership


BORROWER'S/GRANTOR'S
ADDRESS FOR NOTICE:        650 Centura Tower One
- -------------------        14185 Dallas Parkway
                           Dallas, Texas 75240


LENDER:                    Vestin Mortgage, Inc., a Nevada corporation
- -------

LENDER'S ADDRESS:          2901 El Camino Avenue, Suite 206
- -----------------          Las Vegas, Nevada 89102


TRUSTEE:                   Charles S. Brown
- --------

TRUSTEE'S ADDRESS:         8235 Douglas Avenue, Suite 1220
- ------------------         Dallas, Texas 75225

NOTE:         $12,000,000.00   promissory  note  (the  "Note")  dated  herewith,
- -----         executed by Borrower and payable to Lender as stated in the Note.


LAND:         The land is located in Harlingen,  Cameron County,  Texas,  and is
- -----         more  particularly  described in EXHIBIT "A",  attached hereto and
              incorporated herein for all purposes.

                              ARTICLE I - SECURITY

1.01   CONVEYANCE IN TRUST.  For value received,  the receipt and sufficiency of
which  Borrower  acknowledges,  and to secure the  payment  of the  Indebtedness
described in Section 2.01 and  performance  of the covenants  and  agreements of
Borrower  stated in this  Instrument,  the Note,  and in the Loan  Documents (as
defined  below),  Borrower  conveys  the  Property  described  in  Section  1.02
including,  without  limitation,  the Land to the Trustee in trust with power of
sale,  TO HAVE AND TO HOLD the Property,  together with the rights,  privileges,
and  appurtenances   thereto  belonging  unto  the  Trustee  and  the  Trustee's
substitutes or successors forever.  Borrower binds itself and its successors and
assigns to WARRANT AND FOREVER  DEFEND the Property  unto the  Trustee,  and the
Trustee's substitutes or successors and assigns,  against the claim or claims of
all persons claiming or to claim the same or any part thereof.


                                 Page 62 of 200
<PAGE>

1.02   PROPERTY.  The Property covered by this Instrument  includes the Land and
the  following  items  described  in this  Section  1.02,  whether  now owned or
hereafter acquired,  all of which, including replacements and additions thereto,
shall  be  deemed  to be and  remain  a part  of the  Property  covered  by this
Instrument, and all rights,  hereditaments and appurtenances pertaining thereto,
all of  which  are  referred  to as the  "Property":  (a) any and all  building,
improvements,  and  tenements now or hereafter  attached to or placed,  erected,
constructed,  or developed on the Land (the "Improvements");  (b) all equipment,
fixtures,  furnishing,   inventory,  and  articles  of  personal  property  (the
"Personal  Property")  now or  hereafter  attached  to or used in or  about  the
Improvements  or that are  necessary or useful for the complete and  comfortable
use and  occupancy of the  Improvements  for the purposes for which they were or
are to be attached, placed, erected, constructed or developed, or which Personal
Property is or may be used in or related to the planning, development, financing
or  operation  of the  Improvements,  and all  renewals  of or  replacements  or
substitutions for any of the foregoing,  whether or not the same are or shall be
attached to the Land or  Improvements;  (c) all water and water rights,  timber,
crops, and mineral interests  pertaining to the Land; (d) all building materials
and equipment  now or hereafter  delivered to and intended to be installed in or
on the  Land or the  Improvements;  (e) all  plans  and  specifications  for the
Improvements;  (f) all Borrower's rights (but not Borrower's  obligations) under
any contracts  relating to the Land, the Improvements or the Personal  Property;
(g) all deposits  (including tenant security  deposits),  bank accounts,  funds,
Instruments,  notes,  or  chattel  paper  arising  from  or  by  virtue  of  any
transactions related to the Land, the Improvements or the Personal Property; (h)
all  Borrower's  rights (but not  Borrower's  obligations)  under any documents,
contracts rights, accounts, commitments,  construction contracts,  architectural
contracts,  engineering  contracts,  and general intangibles  (including without
limitation trademarks, trade name, and symbols) arising from or by virtue of any
transactions  related to the Land, the  Improvements,  or the Personal  Property
including, but not limited to, all of Borrower's rights arising under letters of
intent to purchase  and  contracts to sell or purchase all or any portion of the
Property, whether heretofore or hereafter executed ("Contract of Sale"); (i) all
permits,  licenses,  franchises,  certificates,  and other rights and privileges
obtained  in  connection  with  the  Land,  the  Improvements,  or the  Personal
Property; (j) all proceeds arising from or by virtue of the sale, lease or other
disposition of the Land, the  Improvements,  or the Personal  Property;  (k) all
proceeds (including premium refunds) of each policy of insurance relating to the
Land,  the  Improvements,  or the Personal  Property;  (l) all proceeds from the
taking of any of the Land, the Improvements, the Personal Property or any rights
appurtenant  thereto by right of eminent  domain or by private or other purchase
in lieu thereof, including change of grade of streets, curb cuts or other rights
of access,  for any  public or  quasi-public  use under any law;  (m) all right,



                                 Page 63 of 200
<PAGE>

title,  and interest of Borrower in and to all  streets,  road,  public  places,
easements, and rights-of-way,  existing or proposed, public or private, adjacent
to or used in connection  with,  belonging or pertaining to the Land; (n) all of
the Leases (as hereafter defined),  rents, royalties,  bonuses, issues, profits,
revenues,  or other  benefits of the Land,  the  Improvements,  or the  Personal
Property,  including without limitation cash or securities deposited pursuant to
leases to secure  performance  by the  tenants of their  obligations  thereunder
(subject to the  Assignment of Rents made in Article V below);  (o) all consumer
goods  located  in,  on,  or  about  the  Land  or the  Improvements  or used in
connection  with  the  use or  operation  thereof;  however,  neither  the  term
"consumer goods" nor the term "Personal Property" includes clothing,  furniture,
appliances,  linens,  china,  crockery,  kitchenware,  or personal  effects used
primarily for personal,  family, or household  purposes;  (p) other interests of
every kind and character that Borrower now has or at any time hereafter acquires
in and to the Land, Improvements, and Personal Property and all property that is
used or useful in connection  therewith,  including rights of ingress and egress
and all  reversionary  rights or  interests  of  Borrower  with  respect to such
property;  and (q) all products and proceeds of the Personal Property  described
in this Section 1.02.

1.03   SUBROGATION.  Any of the  proceeds  of the Note  utilized  to take up any
outstanding  liens  or  other  contract  rights  against  all or any part of the
Property have been advanced by Lender at Borrower's  request and upon Borrower's
representation  that such amounts are due and are secured by valid liens against
the Property. Lender shall be subrogated to any and all rights, powers, superior
titles,  liens,  and  equities  owned or  claimed  by any owner or holder of any
outstanding  liens,  contract rights and debts,  however  remote,  regardless of
whether  said  liens,  contract  rights  or debts  are  acquired  by  Lender  by
assignment or are released by the holder thereof upon payment.

                     ARTICLE II - INDEBTEDNESS AND PAYMENTS

2.01   INDEBTEDNESS.   The   indebtedness   secured  by  this   Instrument  (the
"Indebtedness")  shall  mean and  include  the  following:  (a) any and all sums
becoming  due and  payable  pursuant  to the Note;  (b) any and all  other  sums
becoming due and payable by Borrower  (or any one or more of them,  if more than
one) to Lender as a result of advances made by Lender  pursuant to the terms and
conditions of this Instrument,  or any other Loan Document  securing or executed
in  connection  with  or  otherwise  relating  to the  Note,  including  without
limitation  the  repayment of any future  advances made by Lender to Borrower as
provided in paragraph  (c) below and the  repayment of any sums advanced for the
protection of Lender's  security  pursuant to Section 6.20;  and (c) any and all
renewals,   extensions,   replacements,   substitutions,    rearrangements,   or
modifications of the Indebtedness, or any part of the Indebtedness.

2.02   OTHER LOAN  DOCUMENTS.  In  addition  to this  Instrument,  and the Note,
Borrower and Lender may execute various other documents and agreements  relating
to the  Indebtedness  secured by this  Instrument,  all of which  documents  and
agreements,  are  referred to herein as the "Loan  Documents".  This  Instrument
shall also secure the  performance of all  obligations and covenants of Borrower
under this Instrument and the other Loan Documents.


                                 Page 64 of 200
<PAGE>

2.03   PAYMENT OF PRINCIPAL AND INTEREST.  Borrower  shall promptly pay when due
the principal and interest on the Indebtedness evidenced by the Note, prepayment
and late  charges as  provided in the Note,  and all other sums  secured by this
Instrument.

2.04   APPLICATION OF PAYMENT.  Unless  applicable law provides  otherwise,  all
payments  received by Lender  from  Borrower  under the Note or this  Instrument
shall be applied by Lender as it determines in its sole and absolute discretion.

                        ARTICLE III - SECURITY AGREEMENT

3.01   UNIFORM  COMMERCIAL  CODE  SECURITY  AGREEMENT.  This  Instrument is also
intended to be a security agreement between Borrower,  as debtor, and Lender, as
secured  party,  pursuant to the Texas  Business and Commerce  Code 1.01 et seq.
("Texas  UCC")  for any of the  items  specified  above as part of the  Property
which,  under applicable law, may be subject to a security  interest pursuant to
the Texas UCC, and Borrower hereby grants Lender a security interest in all such
items.  Borrower  agrees that Lender may file this  Instrument or a reproduction
thereof in the real  estate  records or other  appropriate  index as a financing
statement  for any of the items  specified  above as part of the  Property.  Any
reproduction of this Instrument or of any other security  agreement or financing
statement shall be sufficient as a financing  statement.  In addition,  Borrower
agrees to execute and deliver to Lender,  upon Lender's  request,  any financing
statement,  as  well  as  extensions,  renewals,  and  amendments  thereof,  and
reproduction  of this Instrument in such form as Lender may require to perfect a
security  interest with respect to said items.  Borrower  shall pay all costs of
filing such financing statement and any extensions,  renewals,  amendments,  and
releases  thereof and shall pay all reasonable  costs and expenses of any record
searches for financing  statements  Lender may reasonably  require.  Without the
prior  written  consent of Lender,  which consent may be withheld for any reason
whatsoever  or no  reason,  as Lender  may  determine  in its sole and  absolute
discretion,  Borrower  shall not create or suffer to be created  pursuant to the
Texas UCC any other security interest in said items,  including replacements and
additions  thereto.  Upon the occurrence of an Event of Default (as that term is
defined in Article VII below),  including the covenants to pay when due all sums
secured by this  Instrument,  Lender shall have the remedies of a secured  party
under the Texas UCC and,  at  Lender's  option,  may also  invoke  the  remedies
provided in Article VIII of this  Instrument as to such items. In exercising any
remedies, Lender may proceed against the items of real property and any items of
personal property specified above as part of the Property separately or together
and in any order  whatsoever,  without in any way affecting the  availability of
Lender's  remedies  under the Texas UCC or of the  remedies  provided in Article
VIII of this Instrument.

3.02   NOTICE OF  CHANGES.  Borrower  shall  give  advance  notice in writing to
Lender of any proposed  change in Borrower's  name,  identity,  or structure and
shall  execute  and  deliver  to  Lender,  prior  to or  concurrently  with  the
occurrence of any such change, all additional  financing  statements that Lender
may require to  establish  and  maintain  the  validity and priority of Lender's
security interest with respect to any of the Property.


                                 Page 65 of 200
<PAGE>

3.03   FIXTURES.  Some of the items of the Property are goods that are or are to
become  fixtures  related to the Land.  Borrower and Lender  intend that,  as to
those goods,  this Instrument shall be effective as a financing  statement filed
as a fixture  filing  from the date of its filing for record in the real  estate
records of the county in which the Property is situated.  Information concerning
the security interest created by this Instrument may be obtained from Lender, as
secured party, at the address of Lender stated above. The mailing address of the
Borrower, as debtor, is as stated above.

                        ARTICLE IV - ASSIGNMENT OF LEASES

4.01   ASSIGNMENT OF LEASES.  Borrower  assigns to Lender and grants to Lender a
security interest in all of Borrower's rights,  but not Borrower's  obligations,
under  existing  and  future  leases,  including  subleases,  and  any  and  all
extensions,  renewals,  modifications, and replacements of such leases, upon any
part of the  Property  (the  "Leases").  Borrower  also  assigns  to Lender  all
guaranties of tenant's  performance under the Leases. Prior to the occurrence of
an Event of Default (as defined below),  Borrower shall have the right,  without
joinder of Lender, to enforce the Leases, unless Lender directs otherwise.

4.02   WARRANTIES  CONCERNING LEASES AND RENTS. Borrower represents and warrants
that: (a) Borrower has good title to the Leases hereby assigned and authority to
assign  them,  and no other  person or entity has any right,  title or  interest
therein;  (b) all existing  Leases are valid,  unmodified  and in full force and
effect, except as indicated herein, and no default exists thereunder; (c) unless
otherwise  provided herein, no Rents (as hereafter  defined) or other sums owing
under the Leases have been or will be  assigned,  mortgaged  or pledged;  (d) no
Rents have been or will be anticipated, waived, released, discounted, set off or
compromised;  and (e)  except  as  indicated  in the  Leases,  Borrower  has not
received any funds or deposits from any tenant that has not already been applied
to the payment of accrued Rents.

4.03   BORROWER'S  COVENANTS OF PERFORMANCE.  Borrower covenants to: (a) perform
all of its obligations under the Leases and give prompt written notice to Lender
of any  failure to do so;  (b) give  immediate  written  notice to Lender of any
notice  Borrower  receives  from  any  tenant  or  subtenant  under  any  Leases
specifying  any  claimed  default  by any party  under such  Leases,  excluding,
however,  notice of defaults under residential  Leases; (c) enforce the tenant's
obligations under the Leases; (d) defend, at Borrower's expense,  any proceeding
pertaining to the Leases,  including, if Lender so requests, any such proceeding
to which Lender is a party;  and (e) neither  create nor permit any  encumbrance
upon Borrower's  interest as landlord of the leases,  except this Instrument and
any other encumbrances permitted by this Instrument.



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<PAGE>

4.04   PRIOR APPROVAL FOR ACTIONS AFFECTING LEASES.  Borrower shall not, without
the prior  written  consent of Lender,  which  consent may be  withheld  for any
reason whatsoever or no reason, as Lender may determine in its sole and absolute
discretion:  (a) receive or collect  rents under any of the Leases more than one
month in advance;  (b) encumber or assign future Rents; (c) waive or release any
obligation of any tenant under the Leases;  (d) cancel,  terminate or modify any
of the  Leases,  cause,  permit  or  accept  any  cancellation,  termination  or
surrender of any of the Leases, or commence any proceedings for dispossession of
any  tenant  under  any  of the  Leases,  except  upon  default  by  the  tenant
thereunder;  (e) renew or extend any of the Leases,  except pursuant to terms in
existing Leases;  (f) permit any assignment of the Leases; or (g) enter into any
Leases after the date hereof. Notwithstanding anything contained in this Section
4.04 to the contrary,  Borrower may enter into leases covering the Property with
terms of one year or less.

4.05   ATTORNMENT  OF TENANTS.  All leases of the  Property  shall  specifically
provide that: (a) such Leases are subordinate to this  Instrument;  (b) that the
tenant  attorns  to  Lender,  such  attornment  to be  effective  upon  Lender's
acquisition of title to the Property; (c) that the tenant agrees to execute such
further  evidences of attornment  as Lender may from time to time  request;  (d)
that the  attornment of the tenant shall not be terminated by  foreclosure;  and
(e) that Lender may, at Lender's option, accept or reject such attornments.

4.06   SETTLEMENT  FOR  TERMINATION.  Borrower  agrees  that no  settlement  for
damages, for termination of any of the Leases under the Federal Bankruptcy Code,
or under any other federal,  state, or local statute,  shall be made without the
prior  written  consent of Lender,  which consent may be withheld for any reason
whatsoever  or no  reason,  as Lender  may  determine  in its sole and  absolute
discretion,  and any check in payment of such  damages  shall be made payable to
both Borrower and Lender. Borrower hereby assigns any such payment to Lender, to
be applied to the  Indebtedness  as Lender may  elect,  and  Borrower  agrees to
endorse any check for such payment to the order of Lender.

4.07   LENDER IN POSSESSION.  Lender's  acceptance of this assignment shall not,
prior to entry upon and taking  possession of the Property by Lender,  be deemed
to constitute  Lender a "mortgagee in possession,"  shall not obligate Lender to
appear in or  defend  any  proceeding  relating  to any of the  Leases or to the
Property,  take any action hereunder,  expend any money, incur any expenses,  or
perform any obligation or liability  under the Leases,  or assume any obligation
for any  deposits  delivered  to  Borrower  by any tenant and not  delivered  to
Lender.  Lender  shall  not be  liable  for any  injury  to  damage to person or
property in or about the Property.

4.08   APPOINTMENT   OF   ATTORNEY.   Borrower   hereby   appoints   Lender  its
attorney-in-fact, coupled with an interest, empowering Lender to subordinate any
Leases to this Instrument,  which shall only be effective during a period of any
uncured event of default.

4.09   INDEMNIFICATION;  HOLD HARMLESS.  Borrower  hereby  indemnifies and holds
Lender harmless from all liability,  damage,  or expense incurred by Lender from
any claims under the Leases, including without limitation any claims by Borrower
with  respect to Rents paid  directly  to Lender  after an event of Default  and
claims by tenants for security  deposits or for rental  payments  made more than
one (1) month in advance and not  delivered to Lender.  All amounts  indemnified
against  hereunder,  including  reasonable  attorneys'  fees, if paid by Lender,
shall bear  interest at the maximum  lawful  rate,  shall be payable by Borrower
immediately without demand, and shall be secured by this Instrument.


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4.10   RECORDS.  Upon the request by Lender,  Borrower  shall  deliver to Lender
true and correct legible copies of all Leases and copies of all records relating
thereto.

4.11   MERGER. There shall be no merger of the leasehold estates, created by the
Leases,  with the fee estate of the Land  without the prior  written  consent of
Lender, which consent may be withheld for any reason whatsoever or no reason, as
Lender may determine in its sole and absolute discretion.

4.12   RIGHT TO RELY.  Borrower  authorizes  and directs  the tenants  under the
Leases to pay rents to Lender  upon  written  demand by  Lender,  provided  that
Borrower is in default  after the  expiration  of any  applicable  cure  period,
without  further  consent of Borrower and regardless of whether Lender has taken
possession of any other  portion of the Property,  and tenants may rely upon any
written statement delivered by Lender to the tenants. Any such payment to Lender
shall  constitute  payment to Borrower under the Leases,  and Borrower  appoints
Lender as Borrower's lawful attorney-in-fact for giving, and is hereby empowered
to give,  acquittance  to any tenants for such payments to Lender after an event
of Default.

                         ARTICLE V - ASSIGNMENT OF RENTS

5.01   ABSOLUTE  ASSIGNMENT  OF  RENTS.  As  part of the  consideration  for the
Indebtedness  evidenced by the Note, and for other valuable  consideration,  the
receipt  and  sufficiency  of  which  Borrower  acknowledges,   Borrower  hereby
absolutely  and  unconditionally  assigns  and  transfers  to Lender  all rents,
insurance,  income,  receipts,  and profits from the Property,  and all security
deposits and other security therefore (the "Rents"), including those now due, or
to become due by virtue of any Lease or other agreement for the occupancy or use
of all or any part of the Property, regardless of to whom the Rents are payable.
Borrower  authorizes  Lender or Lender's agents to collect the rents and directs
each  tenant on the  Property  to pay such Rents to Lender or  Lender's  agents;
provided,  however,  that prior to the  occurrence  of an Event of  Default  (as
defined below),  Borrower shall collect and receive all Rents as trustee for the
benefit  of Lender and  Borrower,  to apply the Rents so  collected  to the sums
secured by this  Instrument in the order  provided in this  Instrument  with the
balance,  so long as no such Event of Default  has  occurred,  to the account of
Borrower.  Borrower and Lender intend that this Assignment of Rents  constitutes
an absolute and present assignment and not an assignment for additional security
only.  Borrower and Lender intend that Lender shall have absolute right,  power,
and authority to collect the Rents.

5.02   EVENT OF DEFAULT. Subject to any notice and cure rights expressly granted
to Borrower in this Deed of Trust or any other Loan Documents,  if any, upon the
occurrence of an Event of Default,  and without the necessity of Lender entering
upon and taking and maintaining full control of the Property in person, by agent
or by a  court-appointed  receiver,  Lender  shall  immediately  be  entitled to
possession  of all the rents  specified in this Article V as the same become due
and payable,  including  without  limitation Rents then due and unpaid,  and all
such Rents shall immediately upon delivery of such notice be held by Borrower as
trustee  for the benefit of Lender  only;  provided,  however,  that the written
notice by Lender to Borrower of the breach by Borrower shall contain a statement
that Lender exercises its rights to such Rents.  Borrower agrees that commencing
upon  delivery  of such  written  notice  of an Event of  Default  by  Lender to
Borrower,  each tenant of the Property  shall make such Rents payable to and pay
such  Rents to Lender or  Lender's  agents on  Lender's  written  demand to each
tenant  therefore,  delivered to each tenant  personally,  by mail or delivering
such demand to each rental unit, without any liability on the part of any tenant
to inquire further as to the existence of an Event of Default.


                                 Page 68 of 200
<PAGE>

5.03   BORROWER'S  COVENANTS.  Borrower covenants that Borrower has not executed
any prior assignment of the rents or any portion thereof,  that Borrower has not
performed,  and will not perform,  any acts and has not  executed,  and will not
execute,  any instrument  which would prevent Lender from  exercising its rights
under this Article V and that at the time of execution of this Instrument  there
has been  anticipation  or  prepayment  of any Rents more than  thirty (30) days
prior to the due dates of such rents.  Borrower covenants that Borrower will not
hereafter  collect or accept  payment of any Rents  more than  thirty  (30) days
prior to the due dates of such Rents without  prior  written  consent of Lender,
which consent may be withheld for any reason  whatsoever or no reason, as Lender
may determine in its sole and absolute  discretion.  Borrower further  covenants
that  Borrower  will execute and deliver to Lender such further  assignments  of
rents as Lender may from time to time request.

5.04   APPOINTMENT OF RECEIVER; POSSESSION OF THE PROPERTY. After any applicable
notice and opportunity to cure expressly  granted Borrower  pursuant to any Loan
Documents,  if any, upon the  occurrence  of an Event of Default,  Lender may in
person, by agent or by a court-appointed receiver, regardless of the adequacy of
lender's security,  enter upon and take full control of the Property in order to
perform all acts  necessary and  appropriate  for the operation and  maintenance
thereof,   including   without   limitation  the  execution,   cancellation   or
modification  of  Leases,  collection  of Rents,  the  making of  repairs to the
Property,  and the  execution  or  termination  of contracts  providing  for the
management or maintenance  of Property,  all on such terms as are deemed best to
protect the security of this Instrument.  In the event Lender elects to seek the
appointment  of a receiver for the Property  upon the  occurrence of an Event of
Default,  Borrower  consents to the appointment of such receiver.  Lender or the
receiver  shall be  entitled  to  receive  a  reasonable  fee for  managing  the
Property.

5.05   APPLICATION OF RENTS. All Rents collected subsequent to the occurrence of
an Event of Default  shall be  applied  first to the  costs,  if any,  of taking
control of and  managing  the  Property  and  collecting  the rents,  including,
without  limitation,  reasonable  attorney's fees,  receiver's fees, premiums on
receiver's  bonds,  costs of  repairs to the  Property,  premiums  on  insurance
policies, taxes assessments, and other charges on the Property, and the costs of
discharging any obligation or liability of Borrower as landlord of the Property,
and then to the sums secured by this  Instrument.  Lender or the receiver  shall
have access to the books and records used in the  operation and  maintenance  of
the  Property  and shall be  liable to  account  only for those  Rents  actually
received.  Lender shall not be liable to Borrower for anyone  claiming  under or
through  Borrower  or anyone  having an  interest  in the  Property by reason of
anything done or left undone by Lender under this Article V.


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<PAGE>

5.06   INSUFFICIENT RENTS. If the Rents are not sufficient to meet the costs, if
any, of taking  control of and managing the Property and  collecting  the Rents,
any funds expended by Lender for such purposes shall become an  indebtedness  of
Borrower to Lender secured by this Instrument.  Unless Lender and Borrower agree
in writing to other terms of payment,  such amount  shall be payable upon notice
from Lender to Borrower  requesting payment thereof and shall bear interest from
the date of disbursement at the rate stated in the Note,  unless payment of such
interest at such rate would be contrary to  applicable  law, in which event such
amounts shall bear interest at the highest non-usurious rate which may collected
from Borrower under applicable law.

5.07   NO WAIVER;  TERM. Any entering upon and taking and maintaining of control
of the  Property  by  Lender or the  receiver  and any  application  of Rents as
provided herein shall not cure or waive any default  hereunder or invalidate any
other right or remedy of Lender under  applicable law or provided  herein.  This
assignment of the Rents shall terminate at such time as this  Instrument  ceases
to secure the Indebtedness held by Lender.

              ARTICLE VI - BORROWER'S REPRESENTATIONS, WARRANTIES,
                            COVENANTS, AND AGREEMENTS

       Borrower covenants, warrants, and represents to and agrees with Lender as
of the date of execution  and  continuing  until this  Instrument is released as
follows:

6.01   PAYMENT AND PERFORMANCE. Borrower shall promptly make all payments on the
Indebtedness  when  due  and  shall  punctually  and  properly  perform  all  of
Borrower's covenants,  obligations and liabilities under this Instrument and the
other Loan Documents.

6.02   TITLE TO  PROPERTY  AND LIEN OF THIS  INSTRUMENT.  Borrower  has good and
indefeasible title to the Land and to the Improvements,  and good and marketable
title  to  the  Personal  Property,  free  and  clear  of  any  liens,  charges,
encumbrances,  security  interest,  and  adverse  claims  whatsoever,  except as
otherwise provided herein. If the interest of Lender in the Property or any part
thereof  shall be  endangered  or shall be  attached,  directly  or  indirectly,
Borrower  authorizes  Lender, at Borrower's  expense,  to take all necessary and
proper  steps for the defense of such  interest,  including  the  employment  of
attorneys,  the  prosecution  or defense of  litigation,  and the  compromise or
discharge of claims made against such interest.

6.03   EXISTENCE OF BORROWER. Borrower shall preserve and keep in full force and
effect its  existence,  rights,  franchises,  and trade  names.  Borrower  shall
promptly pay any and all taxes to preserve its existence in Nevada,  Texas,  and
New Mexico,  and shall comply with all of the foregoing  state  requirements  to
maintain its authority to transact business in Nevada, Texas, and New Mexico.


                                 Page 70 of 200
<PAGE>

6.04   TITLE INSURANCE. Borrower shall, at its sole cost and expense, obtain and
maintain  mortgagee  title  insurance  (in the form of a policy  as  Lender  may
require) in a form  acceptable to Lender in an amount equal to the amount of the
Note.

6.05   HAZARD INSURANCE.
       (a)    Borrower shall, at its sole cost and expense,  obtain and maintain
insurance  upon and  relating to all  insurable  Property by all-risk  insurance
policies and, if requested by Lender,  shall include perils of collapse,  flood,
as well as other  insurance  coverages,  in amounts equal to one hundred percent
(100%) of the  replacement  cost of the  Improvements  during  the  construction
thereof and at least one hundred percent (100%) of the  replacement  cost of the
Improvements not under construction, or in such additional amounts as Lender may
reasonably  require,  with loss made payable to Lender and with a standard  form
mortgage  clause.  Borrower  shall  deliver the  policies of insurance to Lender
promptly as issued;  and, if Borrower fails to do so, and such failure continues
beyond any  applicable  cure  period,  Lender,  at its option,  may procure such
insurance  at  Borrower's  expense.  Lender  shall  have  the  right to hold the
policies,  and Borrower shall promptly furnish to Lender all renewal notices and
all receipts of paid premiums.  All renewal and substitute policies of insurance
shall be delivered  at the office of Lender,  premiums  paid,  at least ten (10)
days before termination of policies previously delivered to Lender.

       (b)    In the event of loss, Borrower shall give immediate written notice
to the Insurance carrier and to Lender.  Borrower hereby authorizes and empowers
Lender as  attorney-in-fact  for  Borrower to make proof of loss,  to adjust and
compromise any claim under  insurance  policies,  to appear in and prosecute any
action arising from such,  insurance policies,  to collect and receive insurance
proceeds,  and to deduct there from Lender's expenses incurred in the collection
of such proceeds; provided, however, that nothing contained in this Section 6.05
shall  require  Lender  to incur  any  expense  or take any  action  under  this
Instrument.  Borrower further authorizes Lender, at Lender's option, (i) to hold
the balance of such  proceeds to be used to  reimburse  Borrower for the cost of
reconstruction  or repair of the Property,  or (ii) to apply the balance of such
proceeds to the payment of the sums secured by this  Instrument,  whether or not
then due, in the order of application set forth herein.
       (c)    If the insurance proceeds are held by Lender to reimburse Borrower
for the cost of  restoration  and repair of the Property,  the Property shall be
restored to the equivalent of its original  condition or such other condition as
Lender may  approve in  writing.  Lender  may,  at  Lender's  option,  condition
disbursement   of  any   proceeds  on  Lender's   approval  of  such  plans  and
specifications  of  an  architect  satisfactory  to  Lender,  contractor's  cost
estimates,  architect's  certificates,  waivers of liens,  sworn  statements  of
mechanics  and  materialman  and  such  other  evidence  of  costs,   percentage
completion of construction, application of payments and satisfaction of liens as
Lender may require. If the insurance proceeds are applied to the payment of sums
secured by this instrument,  any such application of proceeds to principal shall
not extend or postpone the due date of the installments  referred to in Sections
2.03 and 6.07 or change the  amounts of such  installments.  If the  Property is
sold  pursuant  to Section  8.03 or if Lender  acquires  title to the  Property,
Lender  shall have all  rights,  title,  and  interest of Borrower in and to any
insurance  policies  and  unearned  premiums  thereon and in and to the proceeds
resulting from any damage to the Property prior to such sale or acquisition.


                                 Page 71 of 200
<PAGE>

       (d)    In case of loss, Lender, as it determines in its sole and absolute
discretion,  shall be  entitled  to  receive  and  retain  the  proceeds  of the
insurance  policies,  applying the same to payment of the  Indebtedness  in such
order and manner as Lender, in its sole and absolute  discretion,  may elect. If
any loss shall occur at any time when an Event of Default  exists,  Lender shall
be entitled to the benefit of all insurance held by or for any Borrower,  to the
same extent as if it had been made payable to Lender, and upon foreclosure under
this Instrument. Lender shall become the owner of all insurance policies.

6.06   TAXES AND ASSESSMENTS.  Borrower shall pay all taxes, levies, charges and
assessments  against or affecting the Property  including,  but not limited,  to
assessments on appurtenant  water stock,  imposed by any public or  quasi-public
authority or utility  company  which are (or if not paid,  may become) a lien on
all or part of the  Property  or any  interest  in it,  or which  may  cause any
decrease in the value of the  Property or any part of it, as the same become due
and payable, and, upon request by Lender,  Borrower shall deliver to Lender such
evidence of the payment  thereof as Lender may require.  If Borrower fails to do
so,  Lender may pay them,  together  with all costs and  penalties  thereon,  at
Borrower's expense;  provided however,  that Borrower may in good faith, in lieu
of  paying  such  taxes and  assessments  as they  become  due and  payable,  by
appropriate proceedings,  contest their validity. Pending such contest, Borrower
shall not be deemed in default under this Instrument  because of such nonpayment
if:  (a)  prior to  delinquency  of the  asserted  tax or  assessment,  Borrower
furnishes  Lender  an  indemnity  bond  secured  by a  deposit  in cash or other
security  acceptable to Lender,  or with a surety  acceptable to Lender,  in the
amount of the tax or  assessment  being  contested by Borrower plus a reasonable
additional sum to pay all costs,  interest, and penalties that may be imposed or
incurred in connection therewith,  conditioned that such tax or assessment, with
interest,  cost and penalties,  be paid as herein  stipulated;  and (b) Borrower
promptly pays an amount adjudged by a court of competent jurisdiction to be due,
with all costs,  penalties  and interest  thereon,  before the judgment  becomes
final. In any event, the tax, assessment,  penalties,  interest, and costs shall
be paid prior to the date on which any writ or order is issued  under  which the
Property or any part of the Property may be sold in satisfaction thereof.

6.07   CONDEMNATION.
       (a)    Borrower assigns to Lender all judgments,  decrees, and awards for
injury or  damage,  direct or  consequential,  to the  Property,  and all awards
pursuant to any proceeding for  condemnation or other taking,  whether direct or
indirect,  of the  Property  or any part of the  Property.  Lender may apply any
condemnation  proceeds to the Indebtedness in such manner as Lender may elect in
its sole and absolute  discretion.  Borrower shall promptly notify Lender of any
action or  proceeding  (or  threatened  action or  proceeding)  relating  to any
condemnation or other taking,  whether direct or indirect, of all or any part of
the Property.  Borrower shall,  unless otherwise  directed by Lender in writing,
file or defend  its claim  under any such  action  and  prosecute  same with due
diligence to its final  disposition and shall cause any awards or settlements to
be paid over to Lender for disposition pursuant to the terms of this Instrument.
Borrower  authorizes  Lender,  at  Lender's  option,  as  attorney-in-fact   for
Borrower, to commence, appear in, and prosecute, in Lender's or Borrower's name,
any action or proceeding relating to any proceeding relating to any condemnation
or other taking of the Property,  whether  direct or indirect,  and to settle or
compromise any claim in connection with such  condemnation or other taking.  The
proceeds of any award,  payment, or claim for damages,  direct or consequential,
in connection with any condemnation or other taking, whether direct or indirect,
of the Property,  or part thereof, or for conveyances,  in lieu of condemnation,
are hereby assigned to and shall be paid to Lender.  Lender shall be entitled to
participate in, control,  and be represented by attorneys of Lender's own choice
in any such action.  Borrower shall deliver to Lender such Instruments as may be
requested by it from time to time to permit such participation.


                                 Page 72 of 200
<PAGE>

       (b)    Borrower  authorizes  Lender  to  apply  such  awards,   payments,
proceeds,  or damages,  after the deduction of Lender's expenses incurred in the
collection of such amounts,  at Lender's option, to restoration or repair of the
Property,  or to payment of the sums secured by this Instrument,  whether or not
then due, in the order of application set forth in Section 2.04 and the balance,
if any, to Borrower.  Unless Borrower and Lender otherwise agree in writing, any
application  of proceeds to principal  shall not extend or postpone the due date
of the installments referred to in Section 2.03 and 6.07 or change the amount of
such  installments.   Borrower  agrees  to  execute  such  further  evidence  of
assignment of any awards,  proceeds,  damages,  or claims  arising in connection
with such condemnation or taking as Lender may require.
       (c)    In the event Lender,  as the result of any such judgment,  decree,
or award,  believes that the payment or performance of any obligation secured by
this  Instrument  is impaired,  Lender may, upon  Borrower's  failure to provide
adequate  assurances  to Lender as Lender  determines  in its sole and  absolute
discretion,  and within thirty (30) days of Borrower's receipt of written notice
describing such impairment,  declare all of the Indebtedness immediately due and
payable.

6.08   TAXES ON NOTE OR  INSTRUMENT.  If at any time,  any law shall be  enacted
imposing or authorizing the imposition of any tax upon this Instrument,  or upon
any rights,  titles,  liens or security  interest  created by this Instrument or
upon the Note, or any part of the  Indebtedness,  Borrower shall immediately pay
all such taxes; provided that, if it is unlawful for Borrower to pay such taxes,
Borrower  shall prepay the Note in full without  penalty within thirty (30) days
after demand therefore by Lender.

6.09   STATEMENTS BY BORROWER. At the request of Lender,  Borrower shall furnish
promptly a written  statement or  affidavit,  in such form as may be required by
Lender,  stating the unpaid  balance of the Note, the date to which interest has
been paid and that there are no offsets or defenses  against full payment of the
Note in full  without  penalty  within ten (10) days after  demand  therefore by
Lender.

6.10   REPAIR,  WASTE,  ALTERATIONS,  ETC. Borrower shall keep every part of the
Property in good operating order,  repair, and condition and shall not commit or
permit any waste thereof.  Borrower  shall make promptly all repairs,  renewals,
and replacements necessary to such end. Borrower shall discharge all claims from
labor performed and material furnished thereof, and shall not suffer any lien of
mechanics or materialmen  to attach to any part of the Property.  Borrower shall
have the right to contest in good faith the validity of any such  mechanic's  or
materialman's lien, provided Borrower shall first furnish Lender a bond or other


                                 Page 73 of 200
<PAGE>

security  satisfactory  to Lender in such  amount  as  Lender  shall  reasonably
require, but not more than one hundred fifty percent (150%) of the amount of the
claim, and provided further that Borrower shall thereafter diligently proceed to
cause  such  lien to be  removed  and  discharged.  If  Borrower  shall  fail to
discharge  any such lien,  then,  in  addition  to any other  right or remedy of
Lender, Lender may, but shall not be obligated to, discharge the lien, either by
paying the amount  claimed to be due, or by procuring the discharge of such lien
by  disposition  in court a bond for the amount  claimed,  or  otherwise  giving
security for such claim,  or by taking such action as may be  prescribed by law.
Borrower shall guard every part of the Property from removal,  destruction,  and
damage,  and shall not do or suffer to be done any act  whereby the value of any
part of the  Property  may be  lessened.  Borrower or any tenant or other person
shall not  materially  alter the Property  without the prior written  consent of
Lender,  which  consent  may be  withheld  for any reason  whatsoever  as Lender
determines in its sole and absolute discretion.

6.11   NO DRILLING  EXPLORATION.  Without the prior  written  consent of Lender,
which consent may be withheld for any reason  whatsoever or no reason, as Lender
may determine in its sole and absolute discretion, there shall be no drilling or
exploring for or extraction, removal, or production of minerals from the surface
or subsurface of the Land. The term "minerals" as used in this Instrument  shall
include,   without   limitation,   oil,  gas,  casinghead  gas,  coal,  lignite,
hydrocarbons,  methane,  carbon  dioxide,  helium  uranium and all other natural
elements, compounds and substances, including sand and gravel.

6.12   COMPLIANCE  WITH LAWS.  Borrower and Borrower's use of the Property shall
comply with all laws, rules,  ordinances,  regulations,  covenants,  conditions,
restrictions,  orders  and  decrees  of  any  governmental  authority  or  court
applicable  to Borrower or the Property and its use, and Borrower  shall pay all
fees or  charges  of any  kind  in  connection  therewith.  Borrower  shall  not
initiate,  participate in, or acquiesce in a change in the zoning classification
of the Property  without  Lender's prior written  consent,  which consent may be
withheld  for any reason  whatsoever,  as Lender may  determine  in its sole and
absolute discretion.

6.13   INCOME,  EXPENSE  AND  FINANCIAL  STATEMENTS.  Borrower  shall  keep  and
maintain at all times at Borrower's  address  stated in this  Instrument or such
other place as Lender may approve in writing,  complete  and  accurate  books of
accounts and records adequate to reflect  correctly the results of the operation
of the  Property  and  copies  of  all  written  contracts,  leases,  and  other
instruments which affect the Property. Such books, records,  contracts,  leases,
and other  instruments  shall be subject to  examination  and  inspection at any
reasonable time by Lender, and upon reasonable notice to Borrower.  Borrower, as
well as any Guarantor of this Note,  within thirty (30) days of written  request
from  Lender,  agree to supply  financial  information,  or other  documentation
relating to Borrower's  financial condition and business  operations,  including
but not limited to financial  statements,  tax returns,  insurance  policies and
reports,  lists of assets and liabilities,  and inventory schedules.  Failure to
timely  provide  any such  information  or  documentation  will be  treated as a
default under the Note resulting in Borrower  being  obligated to pay a late fee
of $30.00 a day for each day that the information or  documentation is late. All
financial  statements  shall be  certified  as true  and  correct  by the  party
submitting such.  Borrower shall furnish,  together with the foregoing financial
statements and at any other time upon Lender's request,  a rent schedule for the
Property,  certified by Borrower,  showing the name of each tenant, and for each
tenant, the space occupied,  the Lease expiration date, the Rent payable and the
Rent paid.


                                 Page 74 of 200
<PAGE>

6.14   HOLD HARMLESS. Borrower shall defend, at Borrower's own cost and expense,
and hold Lender  harmless  from,  any proceeding or claim in any way relating to
the Property or the Loan Documents. All costs and expenses incurred by Lender in
protecting  its interest  under the  Instrument,  including  all court costs and
reasonable  attorneys'  fees and  expenses,  shall be  borne  by  Borrower.  The
provisions of this Section shall survive the payment in full of the Indebtedness
and the release of this  Instrument as to events  occurring and causes of action
arising before such payment and release.

6.15   TRADE  NAMES.  At  the  request  of  Lender,  Borrower  shall  execute  a
certificate in form  satisfactory  to Lender listing the trade names under which
Borrower  intends to operate the Property and  representing  and warranting that
Borrower does  business  under no other trade name with respect to the Property.
Borrower shall  immediately  notify Lender in writing of any change in any trade
name,  and shall,  upon  request of Lender,  execute  any  additional  financing
statements and other certificates  required to reflect the change in trade names
and shall execute and file any assumed name  certificate  required by applicable
laws.

6.16   FURTHER  ASSURANCE.  Borrower,  upon  request of Lender,  shall  execute,
acknowledge,  deliver,  and record such further  instruments and do such further
acts as may be necessary, desirable, or proper to carry out the purposes of this
Instrument or the other Loan  Documents and to subject to the liens and security
interests  created by this  Instrument  or the other Loan  Document any property
intended to be covered by this Instrument and the other Loan Documents  pursuant
to their  terms,  including  without  limitation  any  renewals,  substitutions,
replacements, improvements, or appurtenances to the Property.

6.17   RECORDING AND FILING.  Borrower shall cause this Instrument and the other
recordable  Legal Documents and all  amendments,  supplements,  extensions,  and
substitutions thereof to be recorded,  filed,  re-recorded,  and refiled in such
manner and in such places as Lender shall reasonably request. Borrower shall pay
all such recording,  filing,  re-recording,  and refiling fees,  title insurance
premiums, and other charges.

6.18   PAYMENT AND DEBTS.  Borrower shall promptly pay when due all  obligations
regarding the ownership and operations of the Property.

6.19   INSPECTION.  Lender  may  make or  cause  to be  made  entries  upon  and
inspections  of  the  Property,  upon  reasonable  notice  to  Borrower,  and at
reasonable times.


                                 Page 75 of 200
<PAGE>

6.20   PROTECTION OF LENDER'S SECURITY.
       (a)    If  Borrower   fails  to  perform  the  covenants  and  agreements
contained in this  Instrument,  or if any action or proceeding  commenced  which
affects  the  property  or title  thereof  or the  interest  of Lender  therein,
including without limitation eminent domain,  insolvency,  code enforcement,  or
arrangements  or proceedings  involving a bankrupt or decedent,  the Lender,  at
Lender's  sole option,  may make such  appearances,  disburse such sums and take
such  action as Lender  deems  necessary,  in its sole  discretion,  to  protect
Lender's interest,  including without limitation, (i) disbursement of reasonable
attorney's  fees,  (ii)  entry  upon the  Property  to make  repair,  and  (iii)
procurement of satisfactory insurance as provided in Section 6.05.
       (b)    Any amount disbursed by Lender pursuant to this Section 6.20 shall
become an additional  indebtedness of Borrower secured by this Instrument,  with
interest  accruing  thereon.  Unless Borrower and Lender agree to other terms of
payment,  such  amounts  shall be  immediately  due and  payable  and shall bear
interest  from the date of  disbursement  at the rate  stated in the Note unless
collection  from  Borrower  of  Interest  at such  rate  would  be  contrary  to
applicable  law, in which event such amounts  shall bear interest at the highest
non-usurious  rate which may be collected  from Borrower under  applicable  law.
Borrower covenants and agrees that Lender shall be subrogated to the lien of any
mortgage or other lien  discharged,  in whole or in part,  by the  Indebtedness.
Nothing contained in this Section 6.20 shall require Lender to incur any expense
or take any action under this Instrument.

6.21   SUBORDINATE DEED OF TRUST.  Borrower shall not, without the prior written
consent of Lender, which consent may be withheld for any reason whatsoever or no
reason, as Lender may determine in its sole and absolute  discretion,  grant any
lien,  security  interest,  or other  encumbrance (a  "Subordinate  Instrument")
covering any of the Property. If Lender consents to a Subordinate  Instrument or
if the foregoing prohibition is determined by a court of competent  jurisdiction
to be  unenforceable,  any such  Subordinate  Instrument  shall contain  express
covenants to the effect that: (a) the Subordinate  Instrument is unconditionally
subordinate to this Instrument;  (b) if any action (whether judicial or pursuant
to a power of sale) shall be  instituted  to foreclose or otherwise  enforce the
Subordinate  Instrument,  no tenant of any of the leases shall be named as party
defendants  and no action shall be taken that would  terminate  any occupancy or
tenancy  without  the prior  written  consent of Lender,  which  consent  may be
withheld  for any  reason  whatsoever  as Lender may  determine  in its sole and
absolute  discretion;  (c)  rents,  if  collected  by or for the  holder  of the
Subordinate   Instrument,   shall  be  applied  first  to  the  payment  of  the
Indebtedness  then due and expenses  incurred in the ownership,  operation,  and
maintenance  of the  Property  in such order as Lender may  determine,  prior to
being applied to any indebtedness secured by the Subordinate Instrument; and (d)
written notice of default under the Subordinate Instrument and written notice of
the commencement of any action (whether judicial or pursuant to a power of sale)
to foreclose or otherwise  enforce the Subordinate  Instrument shall be given to
Lender  with  or  immediately  after  the  occurrence  of any  such  default  or
commencement.

6.22   LIENS. Borrower shall promptly discharge any lien which has, or may have,
priority over or equality with, the lien of this Instrument,  and Borrower shall
pay, when due, the claims of all persons  supplying  labor or materials to or in
connection  with the Property.  Without  Lender's prior written  consent,  which
consent may be withheld for any reason  whatsoever  or no reason,  as Lender may
determine in its sole and absolute discretion, Borrower shall not allow any lien
inferior to this Instrument to be perfected against the Property.


                                 Page 76 of 200
<PAGE>

6.23   BUSINESS  USE.  Borrower  warrants  and  represents  to  Lender  that the
proceeds of the Note will be used solely for  business or  commercial  purposes,
and in no way  will  the  proceeds  be used or  personal,  family  or  household
purposes.

6.24   NON-HOMESTEAD.  Borrower  warrants  and  represents  to  Lender  that the
Property is not the business or  residential  homestead of Borrower or any other
person.  Borrower has no present intent to occupy the Property in the future, or
to use or claim in the future the  Property  either as business  or  residential
homestead.

                         ARTICLE VII - EVENTS OF DEFAULT

       The  occurrence  of any one of the  following  after  notice  and cure as
provided in the Note shall be an Event of Default  under this  Instrument or any
of the Loan Documents ("Event of Default"):

7.01   FAILURE TO PAY  INDEBTEDNESS.  Any of the  Indebtedness  is not paid when
due,  whether  by  acceleration  or  otherwise,   following  the  expiration  of
applicable periods of notice and cure (if any).

7.02   NONPERFORMANCE  OF COVENANTS.  Any covenant in this  Instrument or any of
the other Loan Documents is not fully and timely performed, or the occurrence of
any  default  or event of  default  under  this  Instrument  or any  other  Loan
Document.

7.03   FALSE REPRESENTATION.  Any statement,  representation or warranty in this
Instrument or any of the other Loan Documents,  any financial statement,  or any
other writing  delivered to Lender in  connection  with the  Indebtedness  which
Borrower knew or should have known to be false, misleading,  or erroneous in any
material respect.

7.04   BANKRUPTCY OR  INSOLVENCY.  Borrower:  (a) does not pay its debts as they
become  due or  admits  in  writing  its  inability  to pay its debts or makes a
general  assignment  for the benefit of  creditors;  or (b)  commences any case,
proceeding,  or other action seeking  reorganization,  arrangement,  adjustment,
liquidation,  dissolution  or composition of its debts under any law relating to
bankruptcy,  insolvency,  reorganization,  or relief or  debtors;  or (c) in any
involuntary case,  proceeding,  or other action commenced against it which seeks
to  have  an  order  for  relief  entered  against  it,  as  debtor,   or  seeks
reorganization,    arrangement,   adjustment,   liquidation,   dissolution,   or
composition of it or its debts under any law relating to bankruptcy, insolvency,
reorganization,  or relief of debtors,  (i) fails to obtain a dismissal  of such
cause, proceeding or other action within sixty (60) days of its commencement, or
(ii)  converts  the case from one  chapter  of the  Federal  Bankruptcy  Code to
another  chapter,  or  (iii)  is the  subject  of an order  for  relief;  or (d)
conceals,  removes,  or  permits to be  concealed  or  removed,  any part of its
property, with intent to hinder, delay, or defraud its creditors or any of them,
or makes or suffers a transfer of any of its  property  which may be  fraudulent


                                 Page 77 of 200
<PAGE>

under any  bankruptcy,  fraudulent  conveyances,  or similar  law,  or makes any
transfer  of its  property  to or for the  benefit of a creditor  at a time when
other  creditors  similarly  situated have not been paid; or suffers or permits,
while insolvent,  any creditor to obtain a lien upon any of its property through
legal  proceeding  which is not  vacated  within  sixty  (60) days from the date
thereof; or (e) has a trustee,  receiver,  custodian,  or other similar official
appointed  for or take  possession  of all or any part of the Property or any of
its  property or has any court take  jurisdiction  of any other of its  property
which remains undismissed or a period of sixty (60) days (except where a shorter
period is specified in the immediately following paragraph (f)); or (f) fails to
have discharged within a period of ten (10) days any attachment,  sequestration,
or similar  writ levied upon any  property of such  person;  or (g) fails to pay
immediately any final money judgment against such person.

7.05   TRANSFER OF THE PROPERTY. Title to all or any part of the Property (other
than  obsolete or worn Personal  Property  replaced by adequate  substitutes  of
equal or greater value than the replaced  items when new) becomes  vested in any
party other than Borrower, whether by operation of law or otherwise. Lender may,
in its sole  discretion,  waive  this  Event  of  Default  but it shall  have no
obligation to do so, and any waiver may be conditioned  upon such one or more of
the following which Lender may require: (a) the grantee's integrity, reputation,
character, creditworthiness, and management ability being satisfactory to Lender
in its sole and absolute  judgment;  and (b) the grantee's  executing,  prior to
such sale or transfer,  a written assumption  agreement containing such terms as
Lender may require,  such as principal  paydown on the Note,  an increase in the
rate of  interest  payable  under  the  Note,  a  transfer  fee,  and any  other
modification  of the Note,  this  Instrument or any of the other Loan  Documents
which Lender may require.

7.06   TRANSFER  OF  OWNERSHIP  OF  BORROWER.  The  sale,  pledge,  encumbrance,
assignment  or  transfer,  voluntarily  or  involuntarily,  of any  interest  in
Borrower, except sales or transfers in interests in Borrower, provided that such
sales or  transfers,  together with any prior sales or transfers of interests in
Borrower,  do not result in more than 25% of the total  beneficial  interests in
Borrower having been sold or transferred since the date of this Instrument.

7.07   GRANT OF  EASEMENT,  ETC.  Without the prior  written  consent of Lender,
which consent may be withheld for any reason  whatsoever as Lender may determine
in its sole and absolute discretion, Borrower grants any easement or dedication,
file any plat, condominium  declaration,  or restriction,  or otherwise encumber
the Property,  unless such action is expressly  permitted by this  Instrument or
any of the other Loan Documents.

7.08   FORECLOSURE OF OTHER LIENS. The holder of any lien,  security interest or
assignment on the Property  institutes  foreclosure or other proceedings for the
enforcement of its remedies thereunder.

7.09   LIQUIDATION,  DEATH,  ETC.  The  liquidation,  termination,  dissolution,
failure  to  maintain  good  standing  in the  State of Texas,  death,  or legal
incapacity of Borrower or any Guarantor.


                                 Page 78 of 200
<PAGE>

7.10   The levy of any  attachment,  execution or other process against maker or
any of the collateral.

                      ARTICLE VIII - DEFAULT AND REMEDIES

8.01   ACCELERATION AND WAIVER OF NOTICE.
       (a)    Subject  to the  notice  and cure  provisions,  if any,  expressly
provided  in any Loan  Document,  upon the  occurrence  of an Event of  Default,
Lender,  at  Lender's  option,  may  declare  all of the  sums  secured  by this
Instrument to be  immediately  due and payable  without  further  demand and may
invoke the power of sale and any other remedies  permitted by applicable law, or
provided herein.  Borrower acknowledges that the power of sale granted to Lender
may be  exercised  by  Lender  without  prior  judicial  hearing.  Borrower  and
Guarantor, surety, and endorser of all or any part of the indebtedness expressly
waive  all  presentations  for  payment,  notices  of  intention  to  accelerate
maturity,  notices of acceleration  of maturity,  notices of intention to demand
payment,  demands for payment,  protests,  and notices of protest.  Borrower and
Guarantor, surety and endorser acknowledge and understand that by these waivers,
they  waive any right they may have to  receive  notices  of default  under this
Instrument,  the Note or any other indebtedness set forth or described herein or
in any other Loan Document, as well as any opportunity to cure any such default.
The right to accelerate maturity of the Note or any other indebtedness set forth
or described  herein or in any other Loan Document does not include the right to
accelerate  any  interest  which has not  otherwise  accrued on the date of such
acceleration,  and the holder  hereof  does not intend to charge or receive  any
unearned or unaccrued interest in the event of acceleration.
       (b)    If any  provision of this Deed of Trust or any other Loan Document
provides for Lender to give Borrower any notice  regarding a default or imminent
default,  then if Lender shall fail to give such notice to Borrower as provided,
the sole and  exclusive  remedy of Borrower  for such  failure  shall be to seek
appropriate equitable relief to enforce the agreement to give such notice and to
have any  acceleration of the maturity of the Note and the secured  indebtedness
postponed  or revoked,  and  foreclosure  proceedings  in  connection  therewith
delayed or  terminated  pending or upon the curing of such default in the manner
and during the period of time permitted by such agreement,  if any, and Borrower
shall  have no  right  to  damages  or any  other  type  of  relief  not  herein
specifically  set out against  Lender,  all of which damages or other relief are
hereby waived by Borrower.  Nothing  herein or in any other Loan Document  shall
operate or be construed to add on or make  cumulative  any cure or grace periods
specified in any of the Loan Documents.

8.02   NOTICE  OF SALE.  Notice  of sale of all or part of the  Property  by the
Trustee shall be given by posting  written notice thereof at the courthouse door
(or other area in the courthouse as may be designated  for such public  notices)
of the  county  in which  the sale is to be  made,  and by  filing a copy of the
notice in the office of the  county  clerk of the county in which the sale is to
be made, at least  twenty-one  (21) days  preceding the date of the sale, and if
the  Property to be sold is in more than one county a notice  shall be posted at
the  courthouse  door (or other area in the  courthouse as my be designated  for
such public notices) and filed with the county clerk of each county in which the


                                 Page 79 of 200
<PAGE>

Property to be sold is situated. In addition,  Lender shall, at least twenty-one
(21) days preceding the date of sale,  serve written notice of the proposed sale
by certified mail on Borrower and each debtor  obligated to pay the Indebtedness
secured hereby according to the records of Lender.  Service of such notice shall
be  completed  upon  deposit of the  notice,  enclosed  in a  postpaid  wrapper,
properly  addressed  to such debtor at the most  recent  address as shown by the
records of Lender,  in a post office or official  depository  under the care and
custody of the United States Postal Service.  The affidavit of any person having
knowledge  of the facts to the effect that such service was  completed  shall be
prima  facie  evidence  of the fact of  service.  Any notice that is required or
permitted to be given to Borrower  may be  addressed  to Borrower at  Borrower's
address  as  stated  in this  Instrument.  Any  notice  that is to be  given  by
certified  mail to any other  debtor may, if no address for such other debtor is
shown by the records of Lender, be addressed to such other debtor at the address
of Borrower as is shown by the records of Lender.  Notwithstanding the foregoing
provisions  of this Section,  notice of such sale given in  accordance  with the
requirements  of the applicable laws of the State of Texas in effect at the time
of such sale shall constitute sufficient notice of such sale.

8.03   TRUSTEE'S  SALE.  Lender may require the Trustee to sell all, or part, of
the Property at public  auction to the highest  bidder,  for cash, at the county
courthouse  of the county in Texas in which the  Property or any part thereof is
situated,  or if the  Property is located in more than one county,  such sale or
sales may be made at the  courthouse  in any  county in which  the  Property  is
situated.  All sales shall take place at such area of the courthouse as shall be
properly  designated from time to time by the commissioners court (or, if not so
designated by the  commissioners  court, at such other area in the courthouse as
my be provided in the notice of sale  hereinafter  described)  of the  specified
county,  between the hours of 10:00  o'clock a.m.  and 4:00  o'clock  p.m.  (the
commencement  of such  sale to  occur  within  three  hours  following  the time
designated in the above  described  notice of sale as the earliest time at which
such sale shall occur,  if required by  applicable  law) on the first Tuesday of
any  month,  after  giving  notice  of the  time,  place  and terms of said sale
(including the earliest time at which such sale shall occur) and of the Property
to be sold in the  manner  hereinafter  described.  Trustee  may sell all or any
portion of the  Property,  together  or in lots or  parcels.  In no event  shall
Trustee be required  to exhibit,  present or display at any such sale any of the
Personal  Property  described herein to be sold at such sale. Lender may bid and
become the  purchaser  of all or any part of the  Property at any  trustee's  or
foreclosure  sale  hereunder,  and the amount of Lender's  successful bid may be
credited on the Indebtedness.

8.04   PARTIAL SALES. The sale by Trustee of less than the whole of the Property
shall not exhaust the power of sale herein  granted and Trustee is  specifically
empowered  to name  successive  sales  under such  power  until the whole of the
Property  shall be sold, and if the proceeds of such sale of less that the whole
of the Property  shall be less than the  aggregate of the  Indebtedness  and the
expenses thereof, this Instrument and the lien, security interest and assignment
hereof  shall  remain in full force and  effect as to the unsold  portion of the
Property as though no sale had been made; provided, however, that Borrower shall
not have any right to require  the sale of less than the whole of the  Property,
but Lender shall have the right,  at its sole  election,  to request  Trustee to


                                 Page 80 of 200
<PAGE>

sell less than the whole of the Property.  If there is default on the payment of
any  installment  on the Note or any  portion  of the  Indebtedness,  and Lender
elects not to accelerate the unpaid balance of the Note or Indebtedness,  Lender
shall have the option to proceed with foreclosure in satisfaction of such unpaid
installment or other amount either through judicial  proceedings or by directing
Trustee to proceed as if under a full foreclosure, conducting the sale as herein
provided without  declaring the entire  Indebtedness due, it is agreed that such
sale,  if so made,  shall not in any  manner  affect the  unmatured  part of the
Indebtedness, but as to such unmatured part this Instrument shall remain in full
force and  effect as though no sale had been made under the  provisions  of this
Section.  Several sales may be made  hereunder  without  exhausting the right of
sale for any unmatured part of the Indebtedness.

8.05   FORECLOSURE  OF  ALL  PROPERTY.  The  Land,  Improvements,  and  Personal
Property may be sold in one or more public sales pursuant to Texas Property Code
ss.51.002  and Texas UCC  ss.9.504(d).  Borrower  shall  assemble  the  Personal
Property and make it available to Lender upon Lender's written request. Borrower
and all persons  obligated to pay the Indebtedness  agree that notice of sale of
the  Property  provided  pursuant  to Section  8.02 above and  pursuant to Texas
Property Code ss.51.002 is and shall constitute  commercially  reasonable notice
of the sale of the  Property or any part of the  Property.  Lender shall also be
entitled to foreclose its security  interests  against the Personal  Property in
accordance with any other rights and remedies Lender may have as a secured party
under, the Texas UCC.

8.06   TRUSTEE'S  DEED.  Trustee shall deliver to the purchaser a Trustee's deed
and such other  assignments  and  documents  of transfer and sale as Trustee may
deem  necessary  conveying the Property so sold in fee simple with  covenants of
general  warranty.  Borrower  covenants  and  agrees  to  defend  generally  the
purchaser's  title to the Property  against all claims and demands.  At any such
sale: (a) Borrower hereby agrees, in its behalf of Borrower's heirs,  executors,
administrators,  successors,  personal representatives and assigns, that any and
all recitals made in any deed of conveyance given by Trustee with respect to the
Identity of Lender, the occurrence or existence of any default, the acceleration
of the maturity of any of the  Indebtedness,  the request to sell, the notice of
sale, the giving of notice to all debtors legally  entitled  thereto,  the time,
place,  terms and manner of sale, and receipt,  distribution  and application of
the money realized therefrom,  or the due and proper appointment of a Substitute
Trustee,  and without being  limited by the foregoing  with respect to any other
act or thing having been duly done by Lender or by Trustee  hereunder,  shall be
taken  by all  courts  of law and  equity  as  prima  facie  evidence  that  the
statements  or recitals  state facts and are without  further  question to be so
accepted,  and Borrower  hereby  ratifies and confirms every act that Trustee or
any  Substitute  Trustee  hereunder  may  lawfully do in the  premises by virtue
hereof,  and (b) the purchaser may disaffirm any easement  granted,  subdivision
plat  filed,  or  rental,  lease  or other  contract  made in  violation  of any
provision of this Instrument,  and may take immediate possession of the Property
free from, and despite the terms of, such grant of easement,  subdivision  plat,
or rental, lease or other contract.


                                 Page 81 of 200
<PAGE>

8.07   PROCEEDS OF SALE.  Trustee  shall  apply the  proceeds of the sale in the
following order: (a) to all reasonable costs and expenses of the sale, including
but not limited to,  reasonable  Trustee's fees and attorney's fees and costs of
title  evidence;  (b) to all sums  secured by this  Instrument  in such order as
Lender, in Lender's sole and absolute  discretion may determine,  and (c) to the
successors, if any, to the person or persons legally entitled thereto.

8.08   POSSESSION  AFTER SALE. If the Property is sold pursuant to Section 8.03,
Borrower or any person holding possession of the Property through Borrower shall
immediately  surrender  possession of the Property to the purchaser at such sale
upon the purchaser's  written demand.  If possession is not surrendered upon the
purchaser's  written  demand,  Borrower  or such  person  shall be a  tenant  at
sufferance  and may removed by writ of  possession  or by an action for forcible
entry and detainer.

8.09   COSTS AND  EXPENSES.  Lender shall be entitled to collect all  reasonable
costs and expenses incurred in pursuing such remedies, including but not limited
to,  attorney's  fees and costs of documentary  evidence,  abstracts,  and title
reports.

8.10   SUBSTITUTE  TRUSTEE.  Lender, at Lender's option,  with or without cause,
may from time to time remove  Trustee  and  appoint a  successor  trustee to any
Trustee  appointed  hereunder by an  instrument  recorded in the county in which
this Instrument is recorded.  Without conveyance of the Property,  the successor
trustee shall succeed to all title, power, and duties conferred upon the Trustee
by this Instrument and by applicable law.

8.11   REMEDIES CUMULATIVE.  Each remedy provided in this Instrument is distinct
and cumulative to all other rights or remedies under this Instrument or afforded
by  law  or  equity,  and  may  be  exercised  concurrently,  independently,  or
successively, in any order whatsoever.

8.12   FORBEARANCE  BY  LENDER  NOT  A  WAIVER.Any   forbearance  by  Lender  in
exercising any right or remedy  hereunder,  or otherwise  afforded by applicable
law,  shall not be a waiver of or preclude  the exercise of any right or remedy.
The acceptance by Lender of payment of any sum secured by this Instrument  after
the due date of such payment shall not have a waiver of Lender's right to either
require  prompt  payment  when due of all other  sums so secured or to declare a
default for failure to make prompt payment. The procurement of Insurance, of the
payment of taxes or other  liens or  charges by Lender  shall not be a waiver of
Lender's  right to  accelerate  the  maturity  of the  Indebtedness,  nor  shall
Lender's receipts of any awards,  proceeds or damages under Section 6.05 or 6.08
operate to cure or to waive  Borrower's  default  in payment of sums  secured by
this Instrument.

8.13   WAIVER  OF  MARSHALLING.  Notwithstanding  the  existence  of  any  other
security interests in the Property held by Lender or by any other party,  Lender
shall have the right to determine  the order in which any or all portions of the
Indebtedness  are satisfied from the proceeds  realized upon the exercise of the
remedies provided in this Article VIII. Borrower, any party who consents to this
Instrument,  and any party who now or hereafter  acquires a security Interest in
the Property and who has actual or  constructive  notice of this  Instrument and
Lender's  rights and interests under this  Instrument,  hereby waive any and all
right to require the marshalling of assets in connection with exercise of any of
the remedies permitted by applicable law or provided by this Instrument.


                                 Page 82 of 200
<PAGE>

8.14   NO LIABILITY OF TRUSTEE. The Trustee shall not be liable for any error of
judgment or act done by Trustee in good faith,  or be otherwise  responsible  or
accountable under any circumstances whatsoever (including Trustee's negligence),
except for  Trustee's  willful  misconduct.  The Trustee shall have the right to
rely on any  instrument,  document or signature  authorizing  or supporting  any
action taken or proposed to be taken by him  hereunder,  believed by him in good
faith to be genuine. All moneys received by Trustee shall, until used or applied
as herein  provided,  be held in trust  for the  purposes  for  which  they were
received, but need not be segregated in any manner from any other moneys (except
to the extent  required  by law) and  Trustee  shall be under no  liability  for
interest on any moneys  received by him hereunder.  Grantor hereby  ratifies and
confirms  any and all acts which the herein  named  Trustee or his  successor or
successors, substitute or substitutes, in this trust shall do lawfully by virtue
hereof.  Grantor will reimburse Trustee for, and save him harmless against,  any
and all liability and expenses that may be incurred by him in the performance of
his duties.  The foregoing  indemnity  shall not terminate upon discharge of the
secured indebtedness or foreclosure or release or other termination of this Deed
of Trust.

                        ARTICLE IX - HAZARDOUS MATERIALS

9.01   HAZARDOUS  MATERIALS.  For the  purposes  of this  Instrument,  Borrower,
Lender and  Trustee  agree  that,  unless the  context  otherwise  specifies  or
requires,  the following terms shall have the following meanings: (a) "Hazardous
Materials"  shall mean (i) any  "hazardous  waste" as  defined  by the  Resource
Conservation  and  Recovery  Act of 1976 (42 U.S.C.  Section  6901 et seq.),  as
amended from time to time,  and  regulations  promulgated  thereunder;  (ii) any
"hazardous  substance" as defined by the Comprehensive  Environmental  Response,
Compensation  and  Liability  Act of 1980  (42  U.S.C.  Section  9601  et  seq.)
("CERCLA") as amended from time to time, and regulations promulgated thereunder;
(iii) asbestos; (iv) polychlorinated  biphenyls;  (v) underground storage tanks,
whether empty, filled or partially filled with any substance; (vi) any substance
the  presence  of  which  on  the  Property  is  prohibited  by  any  applicable
governmental  requirements and regulations  ("Governmental  Requirements");  and
(vii)  any  other  substance  which by any  Governmental  Requirements  requires
special  handling or notification of any federal,  state, or local  governmental
entity in its  collection,  storage,  treatment,  or  disposal;  (b)  "Hazardous
Materials   Contamination"  shall  mean  the  contamination  (whether  presently
existing  or  hereafter  occurring)  of  any  improvements,   facilities,  soil,
groundwater,  air,  or other  elements  on any  other  property  as a result  of
Hazardous  Materials  at any  time  (whether  before  after  the  date  of  this
Instrument) emanating from the Property.


                                 Page 83 of 200
<PAGE>

9.02   REPRESENTATIONS  AND WARRANTIES.  Borrower  represents and warrants as of
the date of execution hereof and continuing until this Instrument is released as
follows:  (a) no Hazardous Materials are now located on the Property and neither
Borrower  nor any other  person  has ever  caused  or  permitted  any  Hazardous
Materials  to be placed,  held,  located,  or  disposed  of on,  under or at the
Property or any part thereof;  (b) no part of the Property is being used or, has
been used at any previous time for the disposal, storage, treatment, processing,
or other  handling  of  Hazardous  Materials,  nor is any  part of the  Property
affected by any Hazardous Materials Contamination; (c) no property adjoining the
Property  is being used,  or has ever been used at any  previous  time,  for the
disposal,  storage,  treatment,   processing  or  other  handling  of  Hazardous
Materials,  nor is  any  other  property  adjoining  the  Property  affected  by
Hazardous  Materials  Contamination;  and (d) no  investigation,  administrative
order,  consent order and  agreement,  litigation or settlement  with respect to
Hazardous  Materials  Contamination is proposed,  threatened,  anticipated or in
existence with respect to the Property.  The Property is not currently on, after
diligent  investigation and inquiry,  and has never been on any federal or state
"Superfund" list.

9.03   BORROWER'S  COVENANTS.  Borrower  agrees to: (a) give  written  notice to
Lender  immediately upon Borrower's  acquiring  knowledge of the presence of any
Hazardous Materials on the Property or of any Hazardous Materials  Contamination
with a full description  thereof,  other than as disclosed in the  Environmental
Reports;  (b) promptly comply with any Governmental  Requirements  requiring the
removal,  treatment  or  disposal  of  such  Hazardous  Materials  or  Hazardous
Materials  Contamination and provide Lender with  satisfactory  evidence of such
compliance;  and provide  Lender,  within ten (10) days after  demand by Lender,
with a bond,  letter of credit or  similar  financial  assurance  evidencing  to
Lender's  satisfaction that the necessary funds are available to pay the cost of
removing,  treating  and  disposing  of such  Hazardous  Materials  or Hazardous
Materials Contamination and discharging any assessments which may be established
on the Property as result thereof.

9.04   SITE  ASSESSMENTS.   Upon  reasonable  information  indicating  that  the
Property is affected by Hazardous Substances,  and upon reasonable notice during
regular  business  hours,  Lender,  by or through its  officers,  employees  and
agents,  may  contract for the  services of a person (the "Site  Reviewers")  to
perform  environmental site assessments ("Site Assessments") on the Property for
the  purpose  of   determining   whether   there  exists  on  the  Property  any
environmental  condition  which  could  reasonably  be expected to result in any
liability,  cost, or expense to the owner, occupier or operator of such Property
arising under any state,  federal or local law,  rule or regulation  relating to
Hazardous  Materials.  The Site  Assessment  may be performed at any time,  upon
reasonable notice, and under reasonable conditions established by Borrower which
do not impede the  performance of the Site  Assessments.  The Site Reviewers are
authorized to enter upon the Property for such purposes.  The Site Reviewers are
further  authorized  to  perform  both above and below the  ground  testing  for
environmental  damage or the presence of Hazardous Materials on the Property and
such  other  tests on the  Property  as may be  necessary  to  conduct  the Site
Assessments  in the  reasonable  opinion of the Site  Reviewers.  Borrower  will
supply  to the  Site  Reviewers  such  historical  and  operational  information
regarding the Property as may be reasonably  requested by the Site  Reviewers to
facilitate  the Site  Assessments  and will make available for meetings with the
Site  Reviewers  appropriate  personnel  having  knowledge of such  matters.  On
request,  Lender shall make the results of such Site Assessments fully available
to Borrower,  which may, at Borrower's  election,  participate  under reasonable
procedures  in the direction of such Site  Assessments  and the  description  of
tasks of the Site reviews. The cost of performing such Site Assessments shall be
reasonable  and shall be paid by  Borrower  upon  demand of Lender  and any such
obligations shall be part of the Indebtedness secured by this Instrument.


                                 Page 84 of 200
<PAGE>

9.05   INDEMNIFICATION.  Borrower  shall  defend,  indemnify,  and hold harmless
Lender and Trustee from any and all liabilities  (including  strict  liability),
actions,  demands,  penalties,  losses,  costs, or expenses  (including  without
limitation  attorney's fees and expenses,  and remedial costs),  suits, costs of
any settlement or judgment and claims of any and every kind whatsoever which may
now or in the future (whether before or after the release of this Instrument) be
paid,  incurred  or suffered  by or  asserted  against  Lender or Trustee by any
person or entity or  governmental  agency for with respect to, or as a direct or
indirect  result of, the  presence or under,  or the escape,  seepage,  leakage,
spillage,  discharge,  emission or release  from the  Property of any  Hazardous
Materials or any  Hazardous  Materials  Contamination  or arise out of or result
from the  environmental  condition of the Property or the  applicability  of any
Governmental  Requirements  relating to Hazardous  Materials  (including without
limitation of CERCLA or any federal,  state, or local  so-called  "Superfund" or
"Superlien" laws, statute,  law,  ordinance,  code, rule,  regulation,  order or
decree),  regardless  of  whether  or not  caused by or within  the  control  of
Borrower,  Lender or Trustee. The representations,  covenants,  warranties,  and
indemnifications  contained in this Article IX shall survive the release of this
Instrument.

9.06   RIGHTS OF LENDER.  Lender shall have the right,  but not the  obligation,
without  in any way  limiting  Lender's  other  rights and  remedies  under this
Instrument, to enter onto the Property or to take such other actions as it deems
necessary or advisable to clean up, remove,  resolve, or minimize the impact of,
or  otherwise  deal  with,  any  Hazardous   Materials  or  Hazardous  Materials
Contamination on the Property that could result in an order, suit, imposition of
a lien on the Property,  or other action and/or which, in Lender's sole opinion,
could jeopardize  Lender's security under this Instrument.  All reasonable costs
and expenses paid or incurred by Lender in the exercise of any such rights shall
be Indebtedness secured by this Instrument and shall be payable by Borrower upon
demand.

                      ARTICLE X - MISCELLANEOUS PROVISIONS

10.01  RELEASE.  Upon payment of all sums under the Note, the performance of all
obligations  secured by this Instrument,  and performance of all covenants under
the Loan  Documents,  Lender will release  this  Instrument.  Grantor  shall pay
Lender's costs incurred in releasing this Instrument.

10.02  PARTIAL  RELEASE.  Lender  will  release  the lien  created  hereby as it
relates to the Property  described  herein upon  Borrower's  compliance with the
following:  (i) delivery to Lender of written notice from Borrower of Borrower's
desire to release the Property;  (ii) payment of $7,060,000.00 to Lender;  (iii)
payment of Lender's  reasonable  legal fees and costs  incurred in releasing the
lien created hereby.


                                 Page 85 of 200
<PAGE>

10.03  BORROWER  AND LIEN  NOT  RELEASED.  From  time to time,  Lender  may,  at
Lender's option,  without giving notice to or obtaining the consent of Borrower,
Borrower's successors or assigns or any junior lienholder or Guarantor,  without
liability on Lender's  part and  notwithstanding  the  existence of any Event of
Default,  extend the time for payment of the  Indebtedness  or any part thereof,
reduce the payments  thereon,  release anyone liable on any of the Indebtedness,
accept a renewal note or notes  therefore,  modify the terms and time of payment
of the  Indebtedness,  release from the liens of this Instrument any part of the
Property, take or release other or additional security, reconvey any part of the
Property,  consent to the  granting of any  easement,  join in any  extension or
subordination  agreement,  and agree in writing with Borrower to modify the rate
of  interest or period of  amortization  of the Note or change the amount of the
installments  payable  thereunder.  Any actions taken by Lender  pursuant to the
terms of this  Section  10.03  shall not affect the  obligation  of  Borrower or
Borrower's  successors or assigns to pay the sums secured by this Instrument and
to observe the  covenants  of Borrower  contained  herein,  shall not affect the
guaranty of any person, corporation, partnership, or other entity for payment of
the Indebtedness or any part thereof,  and shall not affect the lien or priority
of liens  of this  Instrument  on the  Property.  Borrower  shall  pay  Lender a
reasonable  charge,  together with such title insurance  premiums and reasonable
attorney's  fees as may be incurred at Lender's  option,  for any such action if
taken at Borrower's request.

10.04  NOTICE.  Except for any notice required under  applicable law to be given
in another manner,  any notice to Borrower provided for in this Instrument or in
the Note shall be given by mailing such notice by United  States  mail,  postage
prepaid,  certified  mail,  return  receipt  requested,  or by Federal  Express,
addressed  to  Borrower's  address  stated in this  Instrument  or at such other
address as Borrower  may  designate  by notice  addressed  to Lender at Lender's
address  stated in this  Instrument  or to such  other  address  as  Lender  may
designate by notice to Borrower as provided  herein.  Any notice provided for in
this Instrument or in the Note shall be deemed to have been given to Borrower or
Lender when given in the manner designated  herein,  but actual notice,  however
given or received, shall always be effective.

10.05  SUCCESSORS  AND  ASSIGNS  BOUND.  The  covenants  and  agreements  herein
contained  shall bind, and the rights  hereunder  shall inure to, the respective
successors  and assigns of Lender and  Borrower,  subject to the  provisions  of
Section 7.05 and 7.06.

10.06  JOINT AND SEVERAL  LIABILITY.  All covenants  and  agreements of Borrower
shall be joint and several.

10.07  AGENTS.  In exercising any right hereunder or taking any actions provided
for  herein,  Lender  may act  through  its  employees,  agents  or  independent
contractors as authorized by Lender.

10.08  GOVERNING  LAW.  THIS  DEED OF  TRUST,  WHICH,  TOGETHER  WITH  THE  LOAN
DOCUMENTS,  SETS FORTH THE ENTIRE UNDERSTANDING OF BORROWER AND BENEFICIARY WITH
RESPECT TO THE SUBJECT MATTER HEREOF, AND SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE  WITH THE LAWS (WITHOUT  GIVING EFFECT TO THE CONFLICT OF
LAW PRINCIPLES THEREOF) OF THE STATE OF NEVADA, EXCEPT THAT TO THE EXTENT OF THE
TRANSFER OR CREATION OF AN INTEREST IN THE PROPERTY, THE METHOD FOR FORECLOSURE,
THE NATURE OF THE  INTEREST IN THE  PROPERTY  RESULTING  FROM  FORECLOSURE,  THE
MANNER AND EFFECT OF RECORDING OR FAILING TO RECORD THIS DEED OF TRUST,  AND ANY
ACTION OR  PROCEEDING  AGAINST  THE  PROPERTY,  INCLUDING,  BUT NOT  LIMITED TO,


                                 Page 86 of 200
<PAGE>

FORECLOSURE  PROCEEDINGS AND ATTACHMENT OF RENTALS,  THE SUBSTANTIVE LAWS OF THE
STATE OF TEXAS SHALL GOVERN AND CONTROL THE  CONSTRUCTION AND ENFORCEMENT OF THE
LOAN DOCUMENTS. IT IS THE EXPRESS INTENTION OF BORROWER AND BENEFICIARY THAT, TO
THE EXTENT  THE TERMS OF THIS DEED OF TRUST OR ANY OF THE OTHER  LOAN  DOCUMENTS
ENTITLE  BENEFICIARY  OR ANY OTHER  HOLDER OF ANY  PORTION  OF THE  INDEBTEDNESS
EVIDENCED BY THE NOTE TO PROCEED  DIRECTLY  AGAINST THE PROPERTY IN THE STATE OF
TEXAS,  BENEFICIARY  SHALL BE ENTITLED TO PROCEED AGAINST THE SAME IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO WHETHER OR NOT BENEFICIARY
OR SUCH OTHER HOLDER  THERETOFORE  SHALL HAVE  COMPLIED  WITH ANY  PROCEDURAL OR
SUBSTANTIVE PREREQUISITES OR REQUIREMENTS FOR FORECLOSURE AS SET FORTH UNDER THE
LAWS OF ANY OTHER STATE,  INCLUDING,  WITHOUT  LIMITATION,  ANY LAWS RELATING TO
DEFICIENCY JUDGMENTS,  RIGHTS OF REDEMPTION, OR ANY SO-CALLED "ONE-ACTION RULES"
OR "SECURITY FIRST" PRINCIPLES.

ANY LEGAL  ACTION OR  PROCEEDING  WITH RESPECT TO THE NOTE MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEVADA OR, IF THE REQUISITES OF JURISDICTION  OBTAIN,  OF
THE UNITED STATES OF AMERICA  SITTING IN CLARK COUNTY,  STATE OF NEVADA  (EXCEPT
FOR  FORECLOSURE  PROCEEDINGS AND OTHER  PROCEEDINGS  AGAINST THE PROPERTY WHICH
PROCEEDINGS   SHALL  BE  GOVERNED  BY  TEXAS  LAW;   PROVIDED   THAT  UNDER  ALL
CIRCUMSTANCES  ANY ISSUE OR ISSUES  RELATING  TO THE AMOUNT OR RATE OF  INTEREST
THAT MAY BE  LAWFULLY  CONTRACTED  FOR,  CHARGED,  TAKEN,  RESERVED  OR RECEIVED
HEREUNDER  OR UNDER ANY OF THE OTHER LOAN  DOCUMENTS  SHALL BE  GOVERNED  BY AND
CONSTRUED IN ACCORDANCE  WITH THE LAWS OF THE STATE OF NEVADA).  UPON  EXECUTION
AND DELIVERY HEREOF, BORROWER ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. NOTHING
HEREIN,  HOWEVER,  SHALL  AFFECT  THE RIGHT OF  BENEFICIARY  TO  COMMENCE  LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION.

10.09  SEVERABILITY.  In the event that any provisions of this Instrument or the
Note  conflict  with  applicable  law,  such  conflict  shall not  affect  other
provisions of this  Instrument or the Note which can be given effect without the
conflicting  provisions,  and to this end the provisions of this  Instrument and
the Note are declared to be severable.


                                 Page 87 of 200
<PAGE>

10.10  [RESERVED].

10.11  PARTIAL  INVALIDITY.  In the event any portion of the sums intended to be
secured by this  Instrument  cannot be  lawfully  secured  hereby,  payments  in
reduction  of such sums shall be applied  first to those  portions  not  secured
hereby.

10.12  CAPTIONS.  The captions and headings of the Articles and Sections of this
Instrument  are for  convenience  only  and are not to be used to  interpret  or
define the terms and provisions of this Instrument.

10.13  NO  PARTNERSHIP,  ETC. The  relationship  between  Lender and Borrower is
solely that of Lender and  Borrower.  Lender has no fiduciary  or other  special
relationship with Borrower.  Nothing contained in the Loan Documents is intended
to create any  partnership,  joint venture or association  between  Borrower and
Lender or in any way make Lender a co-principal  with Borrower with reference to
the  Property.  Any  inferences  to the  contrary  of the  foregoing  are hereby
expressly negated.

10.14  ENTIRE AGREEMENT.  The Loan Documents constitute the entire understanding
and  agreement  between  Borrower  and Lender with  respect to the  transactions
arising in connection  with the  indebtedness  secured  hereby and supersede all
prior written or oral  understanding and agreements  between Borrower and Lender
with respect to the matters  addressed in the Loan  Documents.  Borrower  hereby
acknowledges  that,  except as  incorporated  in writing in the Loan  Documents,
there are not and were not and no persons  are or were  authorized  by Holder to
make any representations,  understanding,  stipulations, agreements or promises,
oral or written, with respect to the matters addressed in the Loan Documents.

10.15  TIME OF ESSENCE.  Time shall be of the essence in this Deed of Trust with
respect to all of Borrower's obligations hereunder.

                       ARTICLE XI - ADDITIONAL PROVISIONS

11.01  FLOOD PLAIN.  Borrower  represents and warrants that none of the Land, or
any part thereof, is situated within a floodplain,  floodway,  flood prone area,
special flood hazard area or the like, as so designated by the applicable  Flood
Insurance Study or Flood Insurance Rate Map or other such similar study,  map or
plat issued or controlled by the Federal Emergency Management Agency, and/or any
other federal agency  appointed to regulate such matters under the Federal Flood
Disaster  Protection  Act, as amended,  or the Federal Flood  Insurance  Act, as
amended.  Borrower indemnifies and holds Lender harmless, from any claims and/or
costs caused by the Land being located within a flood prone area.


                                 Page 88 of 200
<PAGE>

11.02  OTHER LOAN DOCUMENTS. All agreements,  security agreements and other loan
documents  which are mentioned in or executed in accordance  with the Note, this
Instrument  are  incorporated  herein  for all  purposes  as if fully  set forth
herein.  Any default of any term or condition in any of the Loan Documents shall
be and is a default under the terms of this Deed of Trust.

11.03  NO  OBLIGATION  TO REFINANCE.  Borrower  understands  and agrees that the
Indebtedness  represented  by the Note secured hereby is due and payable in full
on the maturity date specified in the Note, and Borrower understands that Lender
shall not be obligated or required to refinance the accrue and unpaid balance of
the Note,  and Lender shall be under no  obligation  to extend the maturity date
past the specified date in the Note. No extension of said maturity date shall be
of any force or effect unless set forth in a written  modification  or extension
agreement  signed by Lender and Borrower,  and in no event shall the granting of
one or more extension or  modification  of the Loan by Lender be construed as an
(i) agreement for, (ii)  requirement for, or (iii) waiver of any right to refuse
any future  modification  or extension of the  indebtedness  represented by said
Note thereafter by Lender.

                                     NOTICE

              THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED  BY EVIDENCE OF PRIOR,  CONTEMPORANEOUS,
OR  SUBSEQUENT  ORAL  AGREEMENTS  OF THE PARTIES.  THERE ARE NO ORAL  AGREEMENTS
BETWEEN THE PARTIES.


                        [SIGNATURE FOLLOWS ON NEXT PAGE]






                                 Page 89 of 200
<PAGE>

         Grantor:
         --------


Wedgwood Partners, Ltd., Limited Partnership, a
Nevada limited partnership

         By:      GBR, LLC, a
                  Nevada limited liability company, general partner

                  By:      Greenbriar Acquisition Corporation, a
                           Nevada corporation, manager




                           By:      /s/ Gene S. Bertcher
                                    --------------------

                           Name:    Gene S. Bertcher
                                    ----------------

                           Title:   Executive Vice President
                                    ------------------------

                                 ACKNOWLEDGMENT
                                 --------------


THE STATE OF TEXAS                ss.
                                  ss.
COUNTY OF DALLAS                  ss.

       "Before  me, the  undersigned  notary  public,  on this 12th day of July,
2001,  personally  appeared  Gene  S.  Bertcher,  Executive  Vice  President  of
Greenbriar Acquisition Corporation, a Nevada corporation, manager of GBR, LLC, a
Nevada limited  liability  company,  the general  partner of Wedgwood  Partners,
Ltd., Limited Partnership,  a Nevada limited partnership,  known to me to be the
person whose name is subscribed to the foregoing  instrument and acknowledged to
me that he/she  executed  the same for the purposes  and  consideration  therein
expressed, and in the capacity stated therein."


                                            /s/ Polly Kendall
                                            ------------------------------------
                                            Notary Public - State of Texas

AFTER RECORDING, RETURN TO :
- ----------------------------
The Brown Law Firm, L.L.P.
Attention:   Charles S. Brown
8235 Douglas Avenue, Suite 1220
Dallas, Texas 75225




                                 Page 90 of 200

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.24.1
<SEQUENCE>9
<FILENAME>green8k070101ex10241.txt
<DESCRIPTION>MASTER SETTLEMENT AGREEMENT
<TEXT>

                                                                EXHIBIT 10.24.1.
                                                                ----------------


                           MASTER SETTLEMENT AGREEMENT

                  This Master Settlement Agreement (this "Agreement") is made as
of August 1, 2001,  by and among LSOF Pooled  Equity,  L.P., a Delaware  limited
partnership  ("Lone Star"),  Greenbriar  Corporation,  a Nevada corporation (the
"Company"), Berne Village, Inc., a North Carolina corporation ("Berne Village"),
Rose Tara Plantation,  Inc., a North Carolina corporation ("RTP"), Windsor House
West,   Incorporated,    a   South   Carolina   corporation   ("Windsor"),   The
Denison-Greenbriar,  Inc., a Texas corporation  ("DG"), The Terrace  Retirement,
Inc.,  an Oregon  corporation  ("TRI"),  Rose  Garden  Estates,  Inc.,  a Nevada
corporation  ("RGE"),  Wedgwood  Partners  Ltd.  Limited  Partnership,  a Nevada
limited  partnership  ("WPL"),  Wedgwood  Retirement  Inns,  Inc.,  a Washington
corporation   ("Wedgwood"),   and   Transferco,   Inc.,  a  Nevada   corporation
("Transferco,"  and together with Berne  Village,  RTP,  Windsor,  DG, TRI, WPL,
Wedgwood and RGE, each an "Assignor," and collectively the "Assignors").

                                    RECITALS
                                    --------

                  WHEREAS, in January 1998, Lone Star's ultimate  predecessor in
interest,  Lone Star Opportunity  Fund, L.P.,  purchased shares of the Company's
Series F Senior Convertible Preferred Stock and shares of the Company's Series G
Senior  Convertible  Preferred Stock  (collectively,  the "Preferred Stock") for
$22,000,000,  which Preferred Stock was convertible into shares of the Company's
common stock;

                  WHEREAS,  on October 30, 2000,  Lone Star delivered its notice
of conversion  evidencing its desire to convert the Preferred  Stock into shares
of the Company's common stock;

                  WHEREAS,  a dispute arose between the Company and Lone Star as
to the conversion  price of the Preferred  Stock and the number of shares of the
Company's common stock into which the Preferred Stock would be convertible;

                  WHEREAS,  all  matters  relating  to  the  conversion  of  the
Preferred Stock are currently  being  litigated  pursuant to the lawsuit styled:
LSOF Pooled Equity, L.P. v. Greenbriar  Corporation,  Cause No. 00-08824, in the
162nd Judicial  District Court (the  "District  Court") of Dallas County,  Texas
(the  "Lawsuit")  asserting  claims  against the  Company and seeking  legal and
equitable relief;

                  WHEREAS, on April 5, 2001, the  District Court granted partial
summary judgment in favor of Lone Star;

                  WHEREAS, a trial will be scheduled for the near future;

                  WHEREAS,  solely to avoid the  prospect of  prolonged,  costly
litigation,  Greenbriar and Lone Star desire to compromise and settle all claims
between them,  including,  but not limited to, all existing  claims  asserted or
existing claims that could have been asserted by any party;



                                 Page 91 of 200
<PAGE>

                  WHEREAS,  each  Assignor is a direct or indirect  wholly-owned
subsidiary of the Company;

                  WHEREAS,   in   connection   with   this   Agreement   and  in
consideration  for  the  releases   contained  herein,  (i)  the  Assignors  are
transferring to Assignee all of their respective right,  title and interest,  in
and to the Assigned Assets, (ii) the Company will pay to Lone Star $4,000,000 in
immediately  available funds, and (iii) for the same consideration,  the Company
is redeeming all of Lone Star's  Preferred  Stock,  any and all of the Company's
common stock into which Lone Star's  Preferred Stock was purportedly  converted,
together with all of Lone Star's right, title and interest to any and all claims
and rights with respect to its interest as a stockholder, equity interest holder
or otherwise; and

                  WHEREAS,  this  Agreement  and the  consideration  transferred
pursuant  hereto is to  compromise  and  settle all  disputed  claims and to buy
peace,  and no payment,  release or other  consideration  given  constitutes  an
admission of liability by any party hereto,  all such liability  being expressly
denied.

                  NOW,  THEREFORE,  in consideration of the foregoing  premises,
the mutual agreements contained in this Agreement and other  consideration,  the
receipt and  sufficiency of which are hereby  acknowledged,  the parties to this
Agreement hereby agree as follows:

                                    AGREEMENT
                                    ---------

                                    ARTICLE I

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

                  "Affiliate"  shall mean, with respect to any Person,  (a) each
Person that, directly or indirectly, owns or controls, whether beneficially,  or
as a trustee,  guardian or other  fiduciary,  five  percent  (5%) or more of the
Capital Stock having  ordinary voting power in the election of directors of such
Person,  (b) each Person that  controls,  is  controlled  by or is under  common
control  with such  Person  and (c) in the case of  individuals,  the  immediate
family members, spouses and lineal descendants of individuals who are Affiliates
of the Person. For the purposes of this definition,  "control" of a Person shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting
securities,  by contract,  by virtue of being an executive officer or a director
or otherwise.

                  "Agreement"  means  this  Master  Settlement   Agreement,   as
amended, supplemented or otherwise modified from time to time.

                  "Assigned  Assets" shall have the meaning  assigned in Section
2.2.


                                 Page 92 of 200
<PAGE>

                  "Assignee" shall mean Lone Star or its designated assignees in
accordance with Section 9.11.

                  "Assignee  Party"  shall have the meaning  assigned in Section
7.2.

                  "Assignor" or "Assignors"  shall have the meaning  assigned in
the Preamble.

                  "Assignor  Party"  shall have the meaning  assigned in Section
7.3.

                  "Assumed  Liabilities"  shall  have the  meaning  assigned  in
Section 2.3.

                  "Assumption Agreement" means that certain Assumption Agreement
to be executed by the Assignee and each of the  Assignors  substantially  in the
form of Exhibit C hereto.

                  "Berne  Village"  shall  have  the  meaning  assigned  in  the
Preamble.

                  "Bill of Sale" means that  certain Bill of Sale to be executed
by each of the Assignors substantially in the form of Exhibit B hereto.

                  "Business"  shall mean with respect to (i) Berne Village,  the
operation and ownership of the assisted  living  facility and community known as
Berne Village located in New Bern,  North Carolina;  (ii) RTP, the operation and
ownership  of the assisted  living  facility  and  community  known as Rosa Tara
Plantation located in King, North Carolina; (iii) Windsor (or its assignee), the
operation and ownership of the assisted  living  facility and community known as
Windsor  House  West  located  in  Spartanburg,  South  Carolina;  (iv) DG,  the
operation and ownership of the assisted  living  facility and community known as
Greenbriar  at Denison  located in Denison,  Texas;  (v) TRI, the  operation and
ownership of the assisted  living  facility and  community  known as The Terrace
located in  Portland,  Oregon;  (vi) RGE,  the  operation  and  ownership of the
assisted  living  facility and community known as Rose Garden Estates located in
Ritzville,  Washington;  (vii)  Transferco,  the  operation and ownership of the
assisted  living   facilities  and  communities   known  as  Villa  de  Sol  and
Meadowbrook,  each located in Roswell, New Mexico; (viii) WPL, the operation and
ownership of the assisted  living  facilities and  communities  known as Camelot
Assisted Living located in Harlingen, Texas and La Villa located in Roswell, New
Mexico;  and (ix) Wedgwood,  the operation and ownership of the assisted  living
facility and community known as Summer Hill located in Oak Harbor, Washington.

                  "Capital  Stock"  shall mean all  shares,  options,  warrants,
general or limited  partnership  or  membership  interests or other  equivalents
(regardless  of how  designated) of or in a  corporation,  partnership,  limited
liability company or other Person, whether voting or nonvoting, including common
stock,  preferred stock or any other "equity  security" (as such term is defined
in  Rule  3a11-1  of  the  General  Rules  and  Regulations  promulgated  by the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended).


                                 Page 93 of 200
<PAGE>
                  "Claims"  means all claims and causes of actions  that  either
were or could have been asserted in the Lawsuit as more  specifically  set forth
in the Mutual Release.

                  "Closing" has the meaning set forth in Section 2.4.

                  "Closing Date" has the meaning set forth in Section 2.4.

                  "Code" has the meaning assigned in Section 2.3(b).

                  "Company" shall have the meaning assigned in the Preamble.

                  "Consent Agreement" shall mean that  certain Consent Agreement
of even date herewith executed by certain stockholders of the Company, including
each of the directors of the Company and Intervenors attached  hereto as Exhibit
D.

                  "Crowne  Point  Escrow"  shall have the  meaning  set forth in
Section 2.10(b).

                  "Crowne  Point  Proceeds"  shall have the meaning set forth in
Section 2.10(b).

                  "DG" shall have the meaning assigned in the Preamble.

                  "Direct  Claim"  shall have the  meaning  set forth in Section
7.4(d).

                  "District  Court"  shall  have  the  meaning  assigned  in the
Recitals.

                  "Employee" shall have the meaning assigned in Section 3.1(r).

                  "Employee Benefit Plans" shall have the meaning assigned in
Section 3.1(r).

                  "Environmental  Laws"  shall  have  the  meaning  assigned  in
Section 3.1(p).

                  "ERISA" shall have the meaning set forth in Section 4.4.

                  "ERISA Affiliate" shall have  the meaning set forth in Section
3.1(r).

                  "Escrow  Amounts"  shall have the meaning set forth in Section
2.10(b).

                  "Excluded  Assets" shall have the meaning  assigned in Section
2.2.

                  "Facility"   shall  mean  any  assisted   living  facility  or
community that is an Assigned Asset.

                  "Facility  Leases" shall have the meaning  assigned in Section
3.1(j)(v).

                  "Former  Employee" shall have the meaning  assigned in Section
3.1(r).


                                 Page 94 of 200
<PAGE>

                  "GAAP" generally accepted accounting  principles in the United
States of America.

                  "Greenbriar Parties" shall mean the Company and each Assignor.

                  "Harlingen" shall have the meaning assigned in the Preamble.

                  "Indebtedness"  means  with  respect  to any  Person,  without
duplication, any liability of such Person (i) for borrowed money, (ii) evidenced
by bonds,  debentures,  notes or other similar  instruments,  (iii) constituting
capitalized lease obligations, (iv) incurred or assumed as the deferred purchase
price of  property,  or  pursuant  to  conditional  sale  obligations  and title
retention agreements,  (v) for the reimbursement of any obligor on any letter of
credit, bankers' acceptance or similar credit transaction, (vi) for Indebtedness
of others  guaranteed  by such  Person,  (vii) for  interest  swap  obligations,
commodity  agreements and currency agreements and (viii) for Indebtedness of any
other  Person of the type  referred to in clauses  (i)  through  (vii) which are
secured by any Lien on any  property or asset of such first  referred to Person,
the amount of such  Indebtedness  being  deemed to be the lesser of the value of
such property or asset or the amount of the Indebtedness so secured.

                  "Indemnifiable  Losses"  means  any and all  damages,  losses,
liabilities,  obligations, costs, and expenses, and any and all claims, demands,
or suits  (by any  person),  including  the costs  and  expenses  of any and all
actions, suits, proceedings,  demands, assessments,  judgments, settlements, and
compromises  relating  thereto  and  including  reasonable  attorneys'  fees and
expenses in connection therewith.

                  "Indemnifying  Party"  means any  person  required  to provide
indemnification under this Agreement.

                  "Indemnitee"  means any  person  entitled  to  indemnification
under this Agreement.

                  "Indemnity  Payment" means any amount of Indemnifiable  Losses
required to be paid pursuant to this Agreement.

                  "Intervenors"  American  Realty  Trust,  Inc.,  Basic  Capital
Management,  Inc., One Realco  Corporation (in its own capacity and as successor
in  interest  to  Nanook   Partners,   L.P.),   Tacco   Financial   Corporation,
International Health Products, Inc.

                  "Law" shall mean any law (including common law), constitution,
statute,  regulation,  rule, ordinance, order, injunction, writ, decree or award
of any  governmental  authority of competent  jurisdiction  or of any arbitrator
(including ERISA, the Code, the Uniform Commercial Code, any applicable tax law,
product safety law, occupational safety or health law,  Environmental Law and/or
securities laws).

                  "Lawsuit" shall have the meaning assigned in the Recitals.

                  "Leased Tangible Property" shall  have the meaning assigned in
Section 3.1(k).


                                 Page 95 of 200
<PAGE>

                  "Licensed  Intangible   Properties"  shall  have  the  meaning
assigned in Section 3.1(l).

                  "Lien" shall mean any mortgage,  pledge,  hypothecation,  lien
(statutory or other),  judgment lien,  security  interest,  security  agreement,
charge  or  other  encumbrance,  or other  security  arrangement  of any  nature
whatsoever,  including any installment contract, conditional sale or other title
retention  arrangement,  any sale of accounts  receivable or chattel paper,  any
assignment, deposit arrangement or lease (including capital leases) intended as,
or having the  effect of,  security  and the filing of any  financing  statement
under the UCC or comparable law of any jurisdiction.

                  "Lone Star" shall have the meaning assigned in the Preamble.

                  "Lone Star Parties" shall mean Lone Star and Assignee.

                  "Mutual  Release" shall mean the Mutual Release  substantially
in the form of Exhibit A and all related exhibits thereto,  including the Agreed
Motion to Dismiss and the Agreed Order Granting Motion to Dismiss.

                  "Organizational  Documents"  shall  mean  with  respect  to  a
corporation,  the certificate or articles of  incorporation  and by-laws of such
corporation;  with respect to a partnership,  the certificate of partnership (or
limited partnership, as applicable) and partnership agreement, together with the
analogous  documents  for any corporate or  partnership  general  partner;  with
respect to a limited liability company, the certificate of formation or articles
of organization  and operating  agreement;  and, in any case, any other document
governing the formation and conduct of business by such Person.

                  "Owned Tangible  Property" shall have the meaning  assigned in
Section 3.1(k).

                  "Owned Intangible Property" shall have the meaning assigned in
Section 3.1(l).

                  "Permitted Liens" means those liens set forth on Schedule 1.1,
liens for ad valorem taxes and  assessments  not yet due and payable,  mechanics
liens  incurred in the  ordinary  course of the  Business  consistent  with past
practice,  and  other  minor  encumbrances  which do not and will not  adversely
affect the transferability, use or value of the Real Property as it is currently
being used in connection with such Assignor's Business.

                  "Person" shall mean an individual,  corporation,  partnership,
limited liability  company,  joint venture,  association,  joint-stock  company,
trust,  unincorporated  organization or government or department or other agency
or political subdivision thereof.


                                 Page 96 of 200
<PAGE>
                  "Pre-Closing Escrow Agent" shall  have the meaning assigned in
Section 2.10(a).

                  "Pre-Closing Escrow Agreement" shall have the meaning assigned
in Section 2.10(a).

                  "Pre-Closing Escrow Amount" shall have the meaning assigned in
Section 2.10(a).

                  "Preferred Stock" has the meaning assigned in the Recitals.

                  "Real  Property"  shall have the  meaning  assigned in Section
3.1(j)(i).

                  "RGE" shall have the meaning assigned in the Preamble.

                  "RTP" shall have the meaning assigned in the Preamble.

                  "Solvent"  shall  mean,  with  respect  to  any  Person  on  a
particular  date,  that on such date (a) the fair value of the  property of such
Person is greater than the total  amount of  liabilities,  including  contingent
liabilities, of such Person; (b) the present fair salable value of the assets of
such  Person  is not less  than the  amount  that  will be  required  to pay the
probable  liability  of such  Person on its debts as they  become  absolute  and
matured;  (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities  mature;  and (d)  such  Person  is not  engaged  in a  business  or
transaction,  and is not about to engage in a business or transaction, for which
such Person's property would constitute an unreasonably small amount of capital.
The amount of contingent liabilities (such as litigation, guarantees and pension
plan liabilities) at any time shall be computed as the amount which, in light of
all the facts and  circumstances  existing  at the time,  represents  the amount
which can reasonably be expected to become an actual or matured liability.

                  "Stock Certificates" shall mean any and all stock certificates
evidencing the Company's common stock into which Lone Star's Preferred Stock was
purportedly converted.

                  "Subject Employee" shall have  the meaning assigned in Section
3.1(w).

                  "Subsidiary"  shall mean with  respect to any Person,  (a) any
corporation  (i) of which an aggregate of more than fifty  percent  (50%) of the
outstanding  Capital Stock having  ordinary  voting power to elect a majority of
the Board of  Directors of such  corporation  (irrespective  of whether,  at the
time, Capital Stock of any other class or classes of such corporation shall have
or might have voting power by reason of the happening of any  contingency) is at
the time,  directly or indirectly,  owned legally or beneficially by such Person
and/or one or more Subsidiaries of such Person or (ii) with respect to which any
such Person has the right to vote or designate  the vote of fifty  percent (50%)
or more of such Capital Stock, whether by proxy, agreement,  operation of law or
otherwise and (b) any partnership or limited liability company (i) in which such
Person  and/or one or more  Subsidiaries  of such Person  shall have an interest
(whether  in  the  form  of  voting  or  participation  in  profits  or  capital
contribution)  of more than fifty percent (50%) or (ii) of which any such Person
is a general  partner or manager or may exercise the powers of a general partner
or manager.


                                 Page 97 of 200
<PAGE>

                  "Taxes" means all taxes,  assessments,  fees, levies, imposts,
duties, penalties, deductions, liabilities, withholdings or other charges of any
nature whatsoever, including interest and penalties, imposed by any governmental
authority.

                  "Terminating   Assignee's   Breach"  shall  have  the  meaning
assigned in Section 6.1(c).

                  "Terminating   Assignor's   Breach"  shall  have  the  meaning
assigned in Section 6.1(b).

                  "Third  Party Claim" means any claim,  action,  or  proceeding
made or  brought  by any  Person  who is not a party  to  this  Agreement  or an
Affiliate of a party to this Agreement.

                  "Transaction Documents" shall mean this Agreement,  the Mutual
Release, the Bill of Sale, the Assumption Agreement,  the Consent Agreement, and
all other agreements,  instruments,  documents and certificates now or hereafter
delivered  to Lone  Star or its  Affiliates  by the  Company  or its  Affiliates
pursuant to or in connection with any of the foregoing.

                  "Transferco" shall have the meaning assigned in the Preamble.

                  "TRI" shall have the meaning assigned in the Preamble.

                  "Wedgwood" shall have the meaning assigned in the Preamble.

                  "Windsor" shall have the meaning assigned in the Preamble.

                  "WTP" shall have the meaning assigned in the Preamble.

                                   ARTICLE II

                            TRANSFER OF CONSIDERATION

2.1      Consideration.


(a)      Subject  to the  terms  hereof,  (i) the  Company  agrees to (A) on the
         Closing Date, pay to Lone Star, a cash payment of Four Million  Dollars
         ($4,000,000) in immediately  available funds; and (B) cause each of the
         Assignors  to assign,  convey and  transfer  to Assignee on the Closing
         Date,  the Assigned  Assets as set forth below in Section 2.2; and (ii)
         the Company  and the  Intervenors  shall fully and finally  release all
         claims the Company or any of its Subsidiaries, stockholders (including,
         without limitation, the Intervenors),  directors,  officers, employees,
         representatives, agents or any of their Affiliates may have against the
         Lone Star Parties or any of their Affiliates  pursuant to the terms and
         conditions of the Mutual Release.


                                 Page 98 of 200
<PAGE>

(b)      Subject to the terms  hereof,  Lone Star  agrees to accept (i) the cash
         payment referenced in clause (i)(A) above, and (ii) the transfer of the
         Assigned Assets in consideration of the following:

(i)      the  redemption by the Company of (A) all of Lone Star's  right,  title
         and  interest  in and to Lone  Star's  Capital  Stock  in the  Company,
         including (1) Lone Star's  Preferred  Stock and all  attendant  rights,
         including  conversion  rights and  default  dividend  claims,  (2) Lone
         Star's  1,054,202  shares of the Company's  common  stock,  and (3) all
         other  equity  interests  in the Company that may be held by Lone Star;
         and (B) all  reimbursable  expenses (other than the expenses related to
         the  transactions  contemplated by the Transaction  Documents) due Lone
         Star  by  the  Company  and  such   reimbursable   expenses   shall  be
         compromised, waived and discharged;

(ii)     the assumption by Lone Star of the Assumed  Liabilities as set forth in
         Section 2.3 below; and

(iii)    the full and final  release of all Claims  that Lone Star or any of its
         Subsidiaries,    stockholders,    directors,    officers,    employees,
         representatives,  agents or any of their Affiliates (including, but not
         limited to Lone Star Opportunity Fund, L.P. and LSOF Greenbriar L.L.C.)
         may have against the Company, or any of its Subsidiaries, stockholders,
         directors,  officers,  employees,  representatives,   agents  or  their
         Affiliates pursuant to the terms and conditions of the Mutual Release.

(c)      All parties to this Agreement  agree for federal income tax purposes to
         treat all  consideration  payable to Lone Star (except for reimbursable
         expenses  referenced in Section  2.1(b)(i)(B),  if any) as a payment to
         Lone Star in redemption of its Capital Stock of the Company.

                  Subject to the terms and conditions of this  Agreement,  it is
         the  express  intent of the  Company and Lone Star to fully and finally
         resolve all disputes  between them,  including  without  limitation the
         Lawsuit,  in a manner that settles and  discharges all past and present
         differences  of any  kind or  character  and,  to the  greatest  extent
         allowed by law.

2.2      Transfer of Assets.  Subject to the provisions of this  Agreement,  the
         Company agrees to cause each of the Assignors, and each Assignor hereby
         agrees, to assign to Assignee and Assignee hereby agrees to accept from
         each Assignor,  all of such  Assignor's  assets and properties of every
         kind and  nature,  real,  personal or mixed,  tangible  or  intangible,
         wherever  situated,   including  all  land,  buildings,   improvements,
         fixtures,  machinery,  tooling, furniture,  vehicles, equipment, tools,
         inventory,  supplies,  indemnification  rights,  technology,  know-how,
         patents,  trademarks,   tradenames,   proprietary  information,   trade
         secrets, computer programs, copyrights, customer lists, resident lists,
         resident deposits refundable to residents held by the Company or any of
         its Subsidiaries  related to the Businesses,  demographic  information,
         customer data,  goodwill and other  intangible  property  rights of any



                                 Page 99 of 200
<PAGE>

         kind whatsoever, licensing agreements and other contractual rights, and
         all of such Assignor's  books and records relating to the operations of
         such  Assignor's  Business,  as each of the foregoing  exists as of the
         Closing Date (such assets being sold by the Assignors are  collectively
         referred to herein as the "Assigned Assets"); excluding, however, cash,
         cash equivalents,  marketable  securities,  accounts receivable,  notes
         receivable, loan receivables,  deferred income taxes and prepaid income
         taxes,  income  tax  refunds,  accrued  interest  receivables,  utility
         deposits,  insurance  policies  and claims  thereunder  (other than the
         proceeds of any claims which relate to the  Assigned  Assets),  and the
         other  assets  listed on  Schedule  2.2  (collectively,  the  "Excluded
         Assets"). The Assigned Assets shall be sold and transferred to Assignee
         "as is" free and clear of all Liens, other than Permitted Liens.

2.3      Assumption of Liabilities. Subject to the provisions of this Agreement,
         the Assignee,  in consideration of the other agreements related thereto
         or entered  into in  connection  therewith,  shall  assume the payment,
         performance  and  discharge  of the Assumed  Liabilities.  For purposes
         hereof,  "Assumed  Liabilities" means only (i) the specific liabilities
         of each  Assignor  under the  contracts,  purchase  commitments,  sales
         orders and  arrangements  listed on  Schedule  2.3 to the  extent  such
         obligations  accrue  following the Closing Date, (ii) the  Indebtedness
         specifically  set forth on  Schedule  2.3,  and (iii) all  liabilities,
         obligations,  costs and  expenses  incurred in the  ordinary  course of
         business  consistent  with past practices prior to the Closing Date for
         goods or services to be used by any of the Businesses after the Closing
         Date in an aggregate amount not to exceed  $250,000.  Assignee does not
         and shall not agree to pay, assume,  perform,  or discharge any of such
         Assignor's  debts,  obligations,   or  liabilities  (whether  known  or
         unknown,  direct  or  indirect,  absolute  or  contingent,  matured  or
         unmatured,  or otherwise),  whether the same currently exist or come to
         exist in the future, except the Assumed Liabilities.  For the avoidance
         of doubt, "Assumed Liabilities" shall not include any of the following:

(a)      any of the  Assignor's  liabilities  for which  assumption  by Assignee
         would be  prohibited  under the terms of such  contracts,  commitments,
         orders or arrangements;

(b)      any of the Assignor's  liabilities  or obligations  with respect to the
         employment  or  termination  of  employment  of  any  employee  of  any
         Assignor,  payment of salary or  severance  or  provision  of benefits,
         including  but not limited to the benefits  payable  under any Employee
         Benefit  Plan with  respect to the  employment  by any  Assignor of any
         employee or  independent  contractor  of any  Assignor or of any former
         employee of any Assignor,  and any  liabilities  or  obligations of any
         Assignor  arising out of or resulting from any Employee Benefit Plan or
         any  other  employee  benefit  agreement,  arrangement,  understanding,
         program or practice,  including any liabilities or obligations  arising
         under  Section  4980B of the Internal  Revenue Code of 1986, as amended
         (the "Code");


                                 Page 100 of 200
<PAGE>

(c)      except  as  specifically  set  forth  on  Schedule  2.3,  any  of  such
         Assignor's liabilities for Indebtedness;

(d)      any of the Assignor's  liabilities or obligations  for Taxes other than
         those  Taxes that shall be prorated as set forth in Section 2.5 and the
         special  assessment  described  on  Schedule  2.3 with  respect  to the
         Facility known as "The Terrace";

(e)      any  of the  Assignor's  liabilities  or  obligations  under  contracts
         relating to any Assignor's equity or any Assignor's equityholders;

(f)      any of the Assignor's  liabilities  or obligations  with respect to any
         litigation or other claims arising in connection  with the  pre-Closing
         operations of the Assigned Assets or such Assignor's Business;

(g)      any  of  the  Assignor's  liabilities  or  obligations  arising  out of
         Environmental   Laws  arising  in  connection   with  the   pre-Closing
         operations of the Assigned Assets or the Business  (including,  without
         limitation,  any off-site disposal  activities) or the Real Property or
         any other real  property  (including  previously-owned  real  property)
         owned,  leased or operated by any  Assignor or any  predecessor  of any
         Assignor or any prior owner of all or part of their respective business
         or  assets  (including,   but  not  limited  to,  any  liability  under
         Environmental Laws as a result of hazardous materials present at, on or
         under any such real property as of or prior to the Closing).

2.4      Closing. The consummation of the transactions  contemplated herein (the
         "Closing")  shall take place at 10:00 a.m.,  local time, on the earlier
         to occur of (i) three (3) business days after all of the  conditions to
         Closing set forth in Article V have been satisfied or waived,  and (ii)
         August 31,  2001 at the  offices  of Weil,  Gotshal & Manges  LLP,  100
         Crescent Court,  Suite 1300,  Dallas Texas 75201, or at such other time
         or place as the Lone Star and the Company may agree in writing (the day
         on which  the  Closing  takes  place  being  referred  to herein as the
         "Closing Date"). At the Closing,  the Company shall deliver or cause to
         be  delivered  to the Lone  Star  Parties  (i)  $4,000,000  payable  in
         immediately available funds to an account designated by Lone Star, (ii)
         the  Assigned  Assets,  and (iii) the other  documents  required  to be
         delivered  by the  Greenbriar  Parties  pursuant  to  Article V hereof,
         including without limitation the Mutual Release.  At the Closing,  Lone
         Star shall deliver to the Company the Mutual  Release,  the  Assumption
         Agreement and the Stock Certificates.

2.5      Prorations.  Utility  charges,  ad valorem taxes and property taxes and
         personal  property  taxes on the  Assigned  Assets  and rents and other
         charges payable with respect to leases and other  contracts  assumed by
         Assignee will be prorated between the respective  Assignor,  on the one
         hand, and Assignee,  on the other hand, as of 12:01 a.m. on the Closing
         Date. To the extent practicable,  all such prorations and payments will
         be made on the  Closing  Date,  with the  balance to be made as soon as
         practicable following the Closing Date in one or more payments.


                                 Page 101 of 200
<PAGE>

2.6      Allocation of  Consideration.  For federal income and other  applicable
         tax purposes,  the consideration  shall be allocated among the Assigned
         Assets as set forth in  Schedule  2.6,  such  allocation  to be made as
         provided in Section 1060 of the Code. Assignors and Assignee shall each
         file Form 8594 (Asset  Acquisition  Statement  Under Section 1060) on a
         timely basis reporting the allocation of the  consideration  consistent
         with the  allocation  in Schedule  2.6.  Schedule 2.6 also reflects the
         aggregate fair market values for the Assigned Assets, as such terms are
         defined in  regulations  promulgated  pursuant  to Section  1060 of the
         Code.  Assignors  and  Assignee  shall  file  on  a  timely  basis  any
         amendments  required  to such  Form  8594 as a result  of a  subsequent
         adjustment of the consideration.  Assignors and Assignee shall not take
         any position on their respective federal income or other applicable tax
         returns that is inconsistent  with the allocation of the  consideration
         as agreed to in Schedule 2.6 or as adjusted as a result of a subsequent
         increase or decrease in the  consideration.  The Assignors and Assignee
         shall  each  indemnify,  defend  and hold  harmless  the other from and
         against  any and all claims,  losses,  liabilities,  damages,  cost and
         expenses  that may be  incurred as a result of the failure to file Form
         8594,  the  failure  to file such  Form  8594 on a timely  basis or the
         failure to file its tax returns in the manner  required by this Section
         2.6.

2.7      Damages.  The  consideration  exchanged by the parties pursuant to this
         Agreement,  and  the  allocation  of  consideration  described  herein,
         reflects a mutual  compromise  and may not be indicative of the damages
         or losses that will result from the breach of this  Agreement or any of
         the Transaction Documents.

2.8      Intentionally Deleted.

2.9      Filings.   Immediately   after  the  execution  and  delivery  of  this
         Agreement,  the  Company  shall  file a Current  Report on 8-K with the
         Securities  and  Exchange  Commission  and  Lone  Star  shall  file  an
         amendment  to  its  Schedule  13D  with  the  Securities  and  Exchange
         Commission  relating  to  the  transactions  contemplated  herein,  the
         contents of which shall be subject to the  reasonable  approval of both
         Company  and Lone  Star,  but  shall  comply  in all  respect  with all
         applicable law, rules, and regulations,  including, without limitation,
         all regulations of the Securities and Exchange Commission.

2.10     Pre-Closing Escrow.

(a)      Upon the execution  hereof,  the Company shall pay Two Million  Dollars
         ($2,000,000) (the "Pre-Closing  Escrow Amount") to American Escrow (the
         "Pre-Closing  Escrow Agent"),  and the  Pre-Closing  Escrow Agent shall
         hold the  Pre-Closing  Escrow  Amount  under  the  terms  of an  escrow
         agreement  in the form of  Exhibit E hereto  (the  "Pre-Closing  Escrow
         Agreement").

(b)      Upon the  consummation  of the sale of the assisted living facility and
         community  known as Crowne  Point,  the Company shall pay an additional
         Two Million Dollars  ($2,000,000)  (the "Crowne Point Proceeds") to the
         Pre-Closing  Escrow Agent, and the Pre-Closing  Escrow Agent shall hold
         the Crowne  Point  Proceeds in a separate  escrow  account (the "Crowne
         Point Escrow")  pursuant to an escrow agreement between the Company and
         the Pre-Closing  Escrow Agent. Such escrow agreement shall provide that
         the  Pre-Closing  Escrow Agent shall  provide  Lone Star with  evidence
         satisfactory  to Lone Star that the  Crowne  Point  Proceeds  have been
         deposited into the Crowne Point Escrow and will immediately notify Lone
         Star of any distributions from the Crown Point Escrow Account.


                                 Page 102 of 200
<PAGE>

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

3.1      Representations and Warranties of the Assignors. Each of the Greenbriar
         Parties  represents and warrants,  for and on behalf of itself and with
         respect to each Assignor and the Assigned Assets  purported to be owned
         by each such Assignor, to the Lone Star Parties as follows:

(a)      Organization.  Each of the  Greenbriar  Parties is a  corporation  duly
         organized,  validly existing and in good standing under the laws of the
         jurisdiction of its formation and has the requisite power and authority
         to own, lease or otherwise  hold the assets owned,  leased or otherwise
         held by it and to carry on its business as  presently  conducted by it.
         Each of the  Greenbriar  Parties is in good standing and duly qualified
         to conduct business as a foreign entity in every  jurisdiction in which
         its  ownership  or lease of property or conduct of the  business  makes
         such  qualification  necessary.  All of the  jurisdictions in which the
         Greenbriar  Parties are in good standing and duly  qualified to conduct
         business as a foreign entity are listed on Schedule 3.1(a).

(b)      Authorization and Effect of Agreement.  Each of the Greenbriar  Parties
         has the requisite corporate power and authority to execute, deliver and
         perform  its  obligations  under  each  of  the  Transaction  Documents
         executed or to be executed by such  Greenbriar  Party.  The  execution,
         delivery  and  performance  by  each  Greenbriar  Party  of each of the
         Transaction  Documents  executed or to be  executed by such  Greenbriar
         Party has been duly  authorized  by all requisite  corporate  action as
         applicable. This Agreement has been duly executed and delivered by each
         of the Greenbriar Parties. This Agreement constitutes,  and each of the
         other  Transaction  Documents  to be  executed  by a party  hereto will
         constitute,  the valid and binding obligation of such Greenbriar Party,
         enforceable against such Greenbriar Party in accordance with its terms,
         subject to applicable  bankruptcy,  insolvency,  fraudulent conveyance,
         reorganization, moratorium and similar laws affecting creditors' rights
         and remedies generally and subject,  as to  enforceability,  to general
         principles    of   equity,    including    principles   of   commercial
         reasonableness,  good  faith and fair  dealing  (regardless  of whether
         enforcement is sought in a proceeding at law or in equity).


                                 Page 103 of 200
<PAGE>

(c)      Conflicts.  Neither the  execution,  delivery,  nor  performance of any
         Transaction Document executed or to be executed by any Greenbriar Party
         will (i) violate any material Law applicable to such Greenbriar  Party,
         (ii) violate,  conflict with,  permit the  cancellation or acceleration
         of, or give rise to a loss of any benefit under, any material agreement
         or commitment to which such Greenbriar Party is a party or by which any
         of its  properties  are bound,  or (iii)  violate or conflict  with any
         provision of such Greenbriar Party's Organizational Documents.  Neither
         the Company nor any the  Assignors  have entered  into, or is aware of,
         any  agreement  pursuant to which any person or entity has obtained the
         right to acquire any assets of the Company any of its Subsidiaries.

(d)      Consents.  Except as set forth on Schedule 3.1(d), no material actions,
         consents,   or  approvals  of,  or  filings  with,   any   governmental
         authorities  or any third parties are required in  connection  with the
         execution,  delivery or performance by any of the Greenbriar Parties of
         the Transaction Documents.

(e)      Stockholder  Matters.  The Consent  Agreement  has been signed by those
         officers,   directors  and  holders  of  the  Company's  Capital  Stock
         (including the Intervenors)  signatory thereto,  and no action has been
         taken  by an such  party  to  amend,  modify  of  rescind  the  Consent
         Agreement.

(f)      Absence  of Certain  Changes  and  Events.  Except as  contemplated  or
         expressly  permitted  by this  Agreement  and  except  as set  forth on
         Schedule 3.1(f) or disclosed in any filing with the Securities Exchange
         and Commission  prior to the date hereof,  since March 31, 2001,  there
         has not been (i) any material  damage,  destruction or loss of any kind
         with  respect  to any of the  Assigned  Assets,  nor has there been any
         event or circumstance  which has had or reasonably could be expected to
         have a material  adverse effect on the financial  condition or business
         operations of such  Assignor;  (ii) any  declaration,  setting aside or
         payment of any dividend or other  distribution  (whether in cash, stock
         or property) with respect to any of the Assignors'  outstanding capital
         stock;  (iii) any  cancellation  or compromise of any debt or claim, or
         waiver  or  release  of any  right,  except in the  ordinary  course of
         business  consistent  with past practices;  (iv) any sale,  assignment,
         lease or disposition of assets of any of the Assignors (or a commitment
         to do any of the foregoing),  except in the case of obsolete  equipment
         or in connection with the acquisition of replacement  property that has
         substantially  the same  value and  utility;  (v) any Lien  created  or
         assumed upon the Assigned Assets (other than Permitted Liens); (vi) any
         capital expenditures, or commitments to make such capital expenditures,
         in excess of $100,000 (in the  aggregate);  (vii) the  execution of any
         agreement   with  any  director,   officer,   employee  or  independent
         contractor of any of the Assignors providing for his/her employment, or
         any increase in  compensation  or severance or  termination of benefits
         payable or to become payable by an Assignor to such director,  officer,
         employee, or independent contractor,  or any increase in benefits under
         any collective  bargaining  agreement or other Employee Benefit Plan of
         any  of the  Assignors,  except  in the  ordinary  course  of  business
         consistent  with  past  practices;  (viii)  any  distributions  to  its


                                 Page 104 of 200
<PAGE>

         stockholders in respect of its Capital Stock or loans to any Person; or
         (ix) any transaction with any Affiliate  required to be disclosed under
         Item 404 of Regulation  S-K  promulgated  under the  Securities  Act of
         1933, as amended.  Since March 31. 2001 such Assignor has not conducted
         the Business other than in the ordinary  course,  consistent  with such
         Assignor's past practice.  Since March 31, 2001, there has not been any
         material  adverse change in the Business or the financial  condition or
         results of operations of the Business.  Since December 31, 2000,  there
         has  not  been  any  change  by  any  of  the  Company  or  any  of its
         Subsidiaries  in  their  financial  or  tax  accounting  principles  or
         methods,  except  insofar  as  required  by  GAAP,  applicable  law  or
         circumstances  which did not exist as of the date of the  December  31,
         2000 audited financial statements.

(g)      Subsidiaries.  The Company has previously  provided to Lone Star copies
         of all Organizational  Documents of the Company and each Assignor,  and
         such copies are true and correct in all respects.

(h)      Litigation;  Decrees. Except as disclosed on Schedule 3.1(h)(1) and the
         Lawsuit,  there  are no  lawsuits,  claims or  administrative  or other
         proceedings  or  investigations  pending  or, to the  knowledge  of the
         Company or any of its Subsidiaries, threatened by, against or affecting
         (i)  any  of  the  Company  or  its  Subsidiaries,   including  without
         limitation,  the  Assignors,  relating  to the  Businesses,  where  the
         uninsured amount exceeds $200,000, individually or in the aggregate, or
         (ii)  this   Agreement,   the  other   Transaction   Documents  or  the
         transactions  contemplated  hereby or thereby.  Except as  disclosed on
         Schedule  3.1(h)(1),  neither the Company nor any of its  Subsidiaries,
         including the Assignors,  is a party to or subject to the provisions of
         any judgment,  order, writ,  injunction,  decree or award of any court,
         arbitrator or  governmental or regulatory  official,  body or authority
         relating  to the  Businesses,  this  Agreement,  the other  Transaction
         Documents or the transactions contemplated hereby or thereby. Except as
         disclosed on Schedule  3.1(h)(2),  none of the litigation  described on
         Schedule 3.1(h)(1), affects or could affect the Assigned Assets or such
         Assignor's Business.

(i)      Deposits.  Schedule  3.1(i)  sets  forth a true and  complete  list all
         resident  deposits being held by the Company or any of its Subsidiaries
         and all  cash  of the  Company  or any of its  Subsidiaries  which  are
         related to the Assignors' Businesses.

(j)      Real Property.

(i)      Schedule  3.1(j)  sets  forth a true  and  complete  list  of all  real
         property  owned by each Assignor (the "Real  Property").  Such Assignor
         has, and Assignee will be transferred,  good and indefeasible  title to
         the Real  Property,  free and clear of any Liens (other than  Permitted
         Liens).  Such Assignor does not lease,  as lessee,  any real  property.
         Such Assignor has provided to Assignee  correct and complete  copies of
         all  title  insurance  policies  issued  to  such  Assignor  or in such
         Assignor's possession relating to the Real Property.


                                 Page 105 of 200
<PAGE>

(ii)     The Real Property of such Assignor  constitutes  all real property used
         in connection  with such Assignor's  Business.  Neither the Company nor
         such Assignor has knowledge  that the Real Property,  any  improvements
         thereon,  or the use by such Assignor thereof,  fails to conform to (i)
         all applicable Laws,  including but not limited to zoning  requirements
         and the  Americans  With  Disabilities  Act,  and (ii) all  restrictive
         covenants,  if any. There are no eminent domain proceedings pending, or
         to such Assignor's knowledge, threatened against the Real Property. The
         Real  Property  has  adequate  ingress or egress to public  streets and
         highways.

(iii)    The Real  Property is connected to and is served by water,  solid waste
         and sewage disposal,  drainage,  telephone,  gas, electricity and other
         utility equipment  facilities and services necessary and sufficient for
         the  operation  or  use  of  the  Real  Property.  To  such  Assignor's
         knowledge,  such  facilities  and services are adequate for the present
         use and operation of the Real Property on a fully occupied  basis,  and
         are  installed  and  connected  pursuant  to valid  permits  and are in
         material  compliance  with  all  governmental   regulations.   To  such
         Assignor's knowledge, no fact or condition exists which would result in
         the termination or impairment in the furnishing of utility  services to
         the Real  Property.  With  respect to the prior three  sentences,  such
         Assignor has not received any written notice to the contrary.

(iv)     Other than as set forth on Schedule  3.1(j),  the Real Property has not
         been damaged by fire or other casualty except for such damage which has
         been fully repaired and restored prior to the date of this Agreement.

(v)      Schedule  3.1(j)  sets  forth a true  and  complete  list  of all  real
         property  leased by such  Assignor,  as lessor,  and a true and correct
         copy of the rent roll  relating  to each of the  Assignor's  Facilities
         (the "Facility Leases").

(vi)     There  has not been (i) any  threatened  cancellation  of any  Facility
         Leases not in the ordinary course of such Assignor's Business, (ii) any
         outstanding  disputes,  of a material nature, under any Facility Leases
         or (iii) to such  Assignor's  knowledge,  any  bases  for any  claim of
         breach or default  thereunder.  Such  Assignor has no reason to believe
         that any of the Facility  Leases that are renewable will not be renewed
         by the other  party on  reasonable  terms  other  than in the  ordinary
         course of such Assignor's Business.

(k)      Physical  Assets  and  Properties.  Each  Assignor  owns or leases  all
         physical assets and personal  properties  necessary in the operation of
         their  respective  Businesses.  To the extent such  Assignor  owns such
         physical assets and personal property,  each Assignor has, and Assignee
         will be  transferred  and have,  good title to all tangible  assets and
         properties,  whether  personal or mixed,  purported to be owned by such
         Assignor  and  included in the  Assigned  Assets  (the "Owned  Tangible
         Property"),  free and clear of all Liens,  other than Permitted  Liens.
         Schedule  3.1(m) sets forth a true and  complete  list of each lease or
         other agreement under which such Assignor leases,  licenses,  holds, or
         operates any item of physical  property,  other than the Owned Tangible
         Property, that is included in the Assigned Assets (such leased tangible
         property being referred to herein as the "Leased  Tangible  Property").
         Such  Assignor  has valid and  enforceable  leasehold  interests in the
         Leased  Tangible  Property,  free and clear of all  Liens,  other  than
         Permitted  Liens.  All Owned  Tangible  Property  and  Leased  Tangible
         Property is located on the Real Property.


                                 Page 106 of 200
<PAGE>

(l)      Intangible  Assets and  Properties.  Set forth on Schedule  3.1(l) is a
         true and  complete  listing of all  intangible  assets and  properties,
         including, without limitation, all patents, copyrights,  trademarks and
         service marks, owned by such Assignor as of the date hereof (the "Owned
         Intangible  Properties").  Set forth on  Schedule  3.1(l) is a true and
         complete  listing of all intangible  assets and properties,  including,
         without  limitation,  all patents,  copyrights,  trademarks and service
         marks,  which such Assignor  licenses from third parties (the "Licensed
         Intangible  Properties").  The  Owned  Intangible  Properties  and  the
         Licensed  Intangible  Properties  constitute all intangible  assets and
         properties  used in connection  with the  operation of such  Assignor's
         Business.  Such Assignor has, and Assignee will be transferred and will
         have,  good and marketable  title to the Owned  Intangible  Properties,
         free and clear of all Liens. Such Assignor has, and except as set forth
         on Schedule  3.1(i) and as provided in Section  8.1,  Assignee  will be
         transferred and will have, the valid and  enforceable  right to use the
         Licensed  Intangible  Properties in the manner the Licensed  Intangible
         Properties  are used in  connection  with such  Assignor's  Business as
         currently  conducted,  without the requirement for any payment therefor
         and free and clear of all  Liens.  The  operations  of such  Assignor's
         Business do not, in any material respect,  infringe on the intellectual
         property rights of any other person or entity other than the litigation
         with respect to the name "Greenbriar" disclosed on Page D-7 of Schedule
         3.1(h).

(m)      Contracts.  Each  Assignor  has provided to Lone Star or has given Lone
         Star access to accurate  and  complete  copies of all of the  following
         agreements  or documents to which such  Assignor is subject and each of
         which is listed on Schedule  3.1(m):  (i) any lease (whether of real or
         personal  property);  (ii) any agreement for the purchase of materials,
         supplies, goods, services, equipment, or other assets (A) providing for
         annual  payments by such Assignor of $10,000 or more, (B) providing for
         aggregate  payments  by such  Assignor  of $25,000 or more,  or (C) not
         terminable on thirty (30) days or less notice  without  penalty;  (iii)
         any  partnership,   joint  venture,   or  other  similar  agreement  or
         arrangement;  (iv) any instruments or documents evidencing the issuance
         of any equity  securities,  warrants,  rights or  options  to  purchase
         equity securities of such Assignor; (v) any management agreements; (vi)
         any instruments or documents evidencing or relating to Indebtedness, or
         guarantees of Indebtedness by such Assignor,  and any security interest
         granted  by such  Assignor  with  respect  thereto;  (vii) any  option,
         license,  franchise,  or similar agreement;  (viii) any agency, dealer,


                                 Page 107 of 200
<PAGE>

         sales representative,  marketing, or other similar agreement;  (ix) any
         agreement  that  limits the  freedom of any  Assignor to compete in any
         line of business or with any Person or in any area that would limit the
         freedom of Assignee  or any  Affiliate  of  Assignee  after the Closing
         Date; (x) any agreement with a holder of any Assignor's  capital stock;
         (xi) any  agreement  with any  director  or officer  of any  Greenbriar
         Party; or (xii) any other agreement,  commitment,  arrangement, or plan
         not made in the  ordinary  course  of  business.  All such  agreements,
         arrangements,  commitments, guarantees and other instruments are legal,
         valid and binding obligations of such Assignor,  and to such Assignor's
         knowledge, of the other parties thereto, enforceable in accordance with
         their terms; all payments required to be made thereunder have been made
         by the  parties  required  to do so,  except  to the  extent  that  any
         payments  are being  contested  in good faith and are listed as such on
         Schedule 3.1(m); and no defenses, offsets or counterclaims thereto have
         been asserted in writing, or, to such Assignor's knowledge, may be made
         by any party  thereto other than such  Assignor,  nor has such Assignor
         waived any substantial rights thereunder.

(n)      Contract  Defaults.  Except  as  disclosed  on  Schedule  3.1(n),  such
         Assignor  has not  received  written  notice of any  default,  and such
         Assignor is not in default, under any material agreement,  arrangement,
         commitment,  guarantee or other  instrument  relating to,  binding,  or
         affecting  such  Assignor,  such  Assignor's  Business  or  any  of the
         Assigned Assets,  and there has not occurred any event which,  with the
         lapse of time or giving of notice,  or both, would constitute a default
         under any such  material  agreement.  Except  as set forth on  Schedule
         3.1(n),  there  has not been  (i) any  threatened  cancellation  of any
         contract set forth on Schedule  3.1(m),  (ii) any  outstanding  dispute
         under  such  contracts  listed  on  Schedule  3.1(m)  or  (iii)  to the
         knowledge  of such  Assignor,  any  bases  for any  claim of  breach or
         default  thereunder.  The execution,  delivery and  performance of this
         Agreement  will not entitle any other party to a contract  specified on
         Schedule 3.1(m) to cancel,  suspend or terminate such contract or cause
         a diminution of such Assignor's rights thereunder.  Except as set forth
         on Schedule  3.1(m),  in the case of any such  contracts  (specified on
         Schedule  3.1(m)) which such Assignor was not an original  party,  such
         entities rights  thereunder have been duly assigned to such Assignor by
         written  instrument,  and  where  required,  such  assignment  has been
         consented to in writing by the other party or parties thereto, and such
         Assignor has furnished  Assignee  with true and complete  copies of all
         such  assignments and consents.  Such Assignor has no reason to believe
         that  any of the  contracts  specified  on  Schedule  3.1(m)  that  are
         renewable will not be renewed by the other party on reasonable terms.

(o)      Compliance  With Laws.  Such Assignor is not in material  violation of,
         nor has such Assignor (or any predecessor of such  Assignor),  received
         any written notice of any alleged material violation of, any Law in (i)
         the  conduct  of its  Business,  or (ii)  its  execution,  delivery  or
         performance  of the  Transaction  Documents.  Such  Assignor  is not in
         default of or in  violation in any  material  respect of any  judgment,
         order,  injunction  or decree of any  court,  administrative  agency or
         other governmental authority.

(p)      Environmental  Matters.  Except as set forth in Schedule 3.1(p), (i) to
         the  knowledge of such  Assignor,  the Real Property is and has been in
         compliance in all material respects with all applicable federal, state,
         or local  statutes,  codes,  rules,  regulations,  licenses  or permits
         relating to the  environment,  natural  resources or public or employee
         health or safety  ("Environmental  Laws") and  Assignor is not aware of
         any facts, circumstances or conditions relating to the Real Property or
         the facilities or operations  thereon that could reasonably be expected
         to result in the owner or operator of the Real  Property  incurring any
         material  liability  or loss  under  any  Environmental  Law;  and (ii)
         Assignor has provided Assignee with copies of all environmental  health
         and safety reports relating to the Real Property that are in Assignor's
         possession,  custody or control.  There are no, and to the knowledge of
         the Assignor,  there never have been any  underground  storage tanks on
         the Real Property.


                                 Page 108 of 200
<PAGE>

(q)      Insurance.  The assets,  properties and operations of such Assignor are
         insured under various policies of general  liability and other forms of
         insurance listed on Schedule 3.1(q),  which policies are, in full force
         and effect on the date hereof, valid and enforceable in accordance with
         their terms.

(r)      Employee Matters.

(i)      Schedule 3.1(r) sets forth each "employee  benefit plan," as defined in
         Section  3(3) of the ERISA,  and all other  employee  compensation  and
         benefit   arrangements  or  payroll   practices,   including,   without
         limitation,  all  severance  pay,  sick  leave,  vacation  pay,  salary
         continuation   for   disability,   consulting  or  other   compensation
         agreements,   retirement,   deferred  compensation,   bonus,  long-term
         incentive,  stock  option,  stock  purchase,  hospitalization,  medical
         insurance, life insurance, and scholarship plans or programs maintained
         by such Assignor or any trade or business (whether or not incorporated)
         which  is  under  common  control,  or  which  is  treated  as a single
         employer,  with such Assignor under Section 414(b),  (c), (m) or (o) of
         the Code  ("ERISA  Affiliate")  or to which such  Assignor,  any of its
         Subsidiaries,  or an ERISA Affiliate has contributed or is obligated to
         contribute (all such plans or arrangements  being hereinafter  referred
         to as the "Employee  Benefit Plans") on account of any person presently
         employed by such  Assignor (an  "Employee")  or formerly so employed by
         such  Assignor (a "Former  Employee"),  or under which any  Employee or
         Former  Employee  participates  or has accrued  any  rights.  The terms
         Employee  and Former  Employee  will  include,  where  applicable,  the
         beneficiaries and dependents of an Employee or Former Employee.  Except
         as  disclosed  on  Schedule  3.1(r),  no  such  Assignor  or any  ERISA
         Affiliate  has ever  contributed  to any plan subject to Section 413 of
         the Code or to any multiple employer welfare arrangement, as defined in
         Section  3(40) of ERISA.  Such Assignor has no commitment or obligation
         to establish or adopt any new or additional  Employee  Benefit Plans or
         to materially increase the benefits under any existing Employee Benefit
         Plan.

(ii)     No Employee or Former Employee of such Assignor will be entitled to any
         additional  benefit  or any  acceleration  of the  time of  payment  or
         vesting of any  benefit  under any of the  Employee  Benefit  Plans set
         forth on Schedule 3.1(r) as a result of the  transactions  contemplated
         by this Agreement or the other Transaction Documents.


                                 Page 109 of 200
<PAGE>

(s)      Labor  Matters.  Except as listed and  described  on  Schedule  3.1(h),
         Schedule  3.1(r) and Schedule  3.1(s),  with  respect to Employees  and
         Former  Employees,  (i) such Assignor has no written  personnel  policy
         applicable  to such  Employees,  (ii) such  Assignor is and has been in
         compliance in all material  respects with all applicable Laws regarding
         employment   and   employment   practices,   terms  and  conditions  of
         employment,  wages  and  hours,  occupational  safety  and  health  and
         workers' compensation and is not engaged in any unfair labor practices,
         (iii) such  Assignor  has no  material  grievances  pending  or, to the
         knowledge  of  such  Assignor,  threatened  against  it and  (iv)  such
         Assignor  has no  material  charges or  complaints  pending or, to such
         entity's  knowledge,  threatened  against it before the National  Labor
         Relations  Board, the Equal  Employment  Opportunity  Commission or any
         other federal,  state or local agency responsible for the prevention of
         unlawful employment practices. There is no labor strike, slowdown, work
         stoppage  or lockout  actually  pending  or, to the  knowledge  of such
         Assignor,  threatened  against or affecting such  Assignor's  Business.
         Such Assignor is not a party to any collective bargaining agreement, no
         such  agreement  determines the terms and conditions of any Employee or
         Former Employee,  and no collective bargaining agent has been certified
         as a  representative  of any of the Employees or Former  Employees.  To
         such  Assignor's  knowledge,   no  union  organizational   campaign  is
         currently  pending  with  respect  to any of the  Employees  or  Former
         Employees.

(t)      Solvency.  After giving effect to the transactions  contemplated by the
         Transaction  Documents  and the payment and accrual of all  transaction
         costs  in  connection   with  the   foregoing,   the  Company  and  its
         Subsidiaries, taken as a whole, are Solvent.

(u)      Warranty and Product Liability Claims.  Except as set forth on Schedule
         3.1(u), such Assignor has not made any express warranties or guarantees
         with  respect  to any  services  rendered  in  the  operation  of  such
         Assignor's Business.

(v)      Licenses,  Permits,  Etc.  Schedule 3.1(v) sets forth all  governmental
         licenses,  franchises,  permits and other  authorizations  held by such
         Assignor.  Such  government  licenses,  franchises,  permits  and other
         authorizations  transferred to Assignee by such Assignor constitute all
         government  licenses,  franchises,  permits  and  other  authorizations
         necessary in the conduct of such Assignor's Business.

(w)      Employees and  Consultants.  Schedule 3.1(w) hereto contains a complete
         list of the employees of each Assignor (the "Subject  Employees"),  and
         the total current compensation and benefits of each such employee. Such
         Assignor has furnished  the Assignee  with true and complete  copies of
         any contracts with such Subject Employees,  provided, however, Assignee
         shall have no obligation to assume any such contract.  Schedule  3.1(w)
         also sets forth a true and complete list of all consulting,  service or
         commission agreements to which such Assignor (or the Company (or any of
         its  Subsidiaries)  on behalf of such Assignor) is a party or otherwise
         relating to such Assignor's Business.


                                 Page 110 of 200
<PAGE>

(x)      Disclosure.  No  representation  or warranty by the Greenbriar  Parties
         contained  in this  Agreement  or in any  Transaction  Document  and no
         statement  contained in any document furnished or to be furnished by or
         on behalf of any Greenbriar Party, or any Affiliate thereof to any Lone
         Star Party or any of Lone Star Party's  representatives  in  connection
         with the transactions contemplated hereby, contains or will contain any
         untrue statement of a material fact, or omits or will omit to state any
         material fact necessary,  in light of the circumstances  under which it
         was or will be made, in order to make the statements  herein or therein
         not misleading.

(y)      Taxes and Fees.  Other than those  Taxes that will be  prorated  on the
         Closing  Date as set forth in Section 2.5,  each  Assignor has paid and
         discharged,  or has  caused  to be paid and  discharged,  all Taxes for
         which it is obligated  and will pay and  discharge all such Taxes which
         will have  become due and payable  prior to or as of the Closing  Date.
         Each  Assignor has duly filed or will file, or has caused or will cause
         to be duly  filed,  with  the  appropriate  federal,  state  and  local
         governmental  agencies all returns and reports  required to be filed by
         such  Assignor as of the Closing  Date and with  respect to any taxable
         period  prior to or which  includes  the  Closing  Date  (each of which
         fairly  present or will present the  information  purported to be shown
         and reflect or will  reflect,  all Tax liability of such entity for the
         periods in question) and such Assignor has paid or will pay in full all
         Taxes in respect of the periods for which such returns and reports were
         filed. All necessary payments required to be withheld for the employees
         (including,  without limitation,  for unemployment insurance) have been
         properly withheld and paid.

(z)      Finders. None of the Company, any of the Assignors, or any Affiliate of
         such entity has made any agreement  with any Person or taken any action
         which  would  cause  any  Person  to  become  entitled  to an  agent's,
         broker's,  or  finder's  fee  or  commission  in  connection  with  the
         transactions contemplated hereby.

(aa)     Books  of  Account.   None  of  the  Assignors   have  engaged  in  any
         transaction,  maintained  any bank  account or used any of the funds of
         such Assignor  except for  transactions,  bank accounts and funds which
         have  been and are  reflected  in the  normally  maintained  books  and
         records of the Business.

(bb)     Sufficiency of Assets.  The Assigned  Assets  constitute all properties
         and assets  used by such  Assignor  in the  conduct of such  Assignor's
         Business as currently conducted.

(cc)     Cash  Position.  The cash balances  shown on the Corporate  Cash Report
         dated as of July 26, 2001  certified by James Gilley and Gene  Bertcher
         represents  the  approximate  total cash and cash  equivalents  for the
         Company and its  Subsidiaries.  The uses of cash shown on the Corporate
         Cash  Requirements  Report dated as of July 26, 2001 certified by James
         Gilley and Gene Bertcher  represents the approximate  cash uses for the
         Company and its Subsidiaries.



                                 Page 111 of 200
<PAGE>

(dd)     Bankruptcy.  Neither the Company nor any of the Assignors has (i) filed
         a petition  seeking relief under Title 11 of the United States Code, as
         now constituted or hereafter amended,  or any other applicable federal,
         state or foreign  bankruptcy,  debtor relief or other similar law, (ii)
         consented to the institution of proceedings thereunder or to the filing
         of any such petition or to the appointment of or taking possession by a
         custodian, receiver, liquidator,  assignee, trustee or sequestrator (or
         similar  official) of such Greenbriar  Party or of any substantial part
         of any such Person's  assets,  (iii) made a general  assignment for the
         benefit of creditors,  (iv) taken any corporate action to authorize any
         of the  foregoing or (v) admitted in writing its inability to, or shall
         be generally unable to, pay its debts as such debts become due.

3.2      Representations  and Warranties of Assignee.  Lone Star  represents and
         warrants to the Greenbriar Parties as follows:

(a)      Corporate Organization. Lone Star is a limited partnership duly formed,
         validly  existing and in good  standing  under the laws of the State of
         Delaware.

(b)      Authorization  and  Effect of  Agreement.  Lone Star has the  requisite
         limited partnership power and authority to execute, deliver and perform
         its obligations under each of the Transaction  Documents executed or to
         be executed by Lone Star.  The execution,  delivery and  performance by
         Lone  Star of  each  of the  Transaction  Documents  executed  or to be
         executed by Lone Star has been duly authorized by all requisite limited
         partnership action. This Agreement has been duly executed and delivered
         by Lone  Star.  This  Agreement  constitutes,  and  each  of the  other
         Transaction Documents to be executed by Lone Star will constitute,  the
         valid and binding  obligation  of Lone Star,  enforceable  against Lone
         Star in accordance  with its terms,  subject to applicable  bankruptcy,
         insolvency,  fraudulent  conveyance,  reorganization,   moratorium  and
         similar laws  affecting  creditors'  rights and remedies  generally and
         subject,  as  to  enforceability,  to  general  principles  of  equity,
         including principles of commercial reasonableness,  good faith and fair
         dealing (regardless of whether enforcement is sought in a proceeding at
         law or in equity).

(c)      Conflicts.  Neither the  execution,  delivery,  nor  performance of any
         Transaction  Document  executed or to be executed by Lone Star will (i)
         violate  any  material  Law  applicable  to Lone  Star,  (ii)  violate,
         conflict with, permit the cancellation or acceleration of, or give rise
         to a loss of any benefit under, any material agreement or commitment to
         which Lone Star is a party or by which any of its properties are bound,
         or  (iii)  violate  or  conflict  with  any  provision  of Lone  Star's
         Organizational Documents.

(d)      Consents.  No actions,  consents, or approvals of, or filings with, any
         governmental   authorities   or  any  third  parties  are  required  in
         connection with the execution,  delivery or performance by Lone Star of
         the Transaction Documents executed or to be executed by Lone Star.

(e)      Finders.  Neither  Lone Star nor an Affiliate of Lone Star has made any
         agreement  with any person or taken any action  which  would  cause any
         person to become  entitled to an agent's,  broker's or finder's  fee or
         commission in connection with the transactions contemplated hereby.


                                 Page 112 of 200
<PAGE>

                                   ARTICLE IV

                                   AGREEMENTS
                                   ----------

4.1      Conduct of  Business.  From the date hereof  through the  Closing,  the
         Company  and  each  of the  Assignors  will  not  to  take  any  action
         inconsistent  with this Agreement.  Without  limiting the generality of
         the foregoing,  unless consented to by Assignee in writing, the Company
         and each of the Assignors,  will not,  except as  contemplated  by this
         Agreement:

(a)      with  respect  to the  Company,  change  or  amend  its  Organizational
         Documents,  except as otherwise  required by law in a manner that would
         adversely affect its ability to consummate the transaction contemplated
         hereby,  and  with  respect  to  any  Assignor,  change  or  amend  its
         Organizational Documents, except as otherwise required by law;

(b)      enter into, extend,  materially modify, terminate or renew any contract
         of a type  required  to be listed  on  Schedule  3.1(m),  except in the
         ordinary course of business;

(c)      sell,  assign,  transfer,  convey,  lease or  otherwise  dispose of any
         material assets or properties used or useful in any of the Businesses;

(d)      except as otherwise  required by law or consistent with past practices,
         no  Assignor  shall  take any action  with  respect to the grant of any
         severance  or  termination  pay which will become due and payable  from
         such  Assignor  on or after the  Closing  Date;  make any change in the
         management structure of such Assignor,  including,  without limitation,
         the hiring of  additional  officers  or the  terminations  of  existing
         officers, other than in the ordinary course of business;

(e)      with respect to any Assignor,  acquire by merger or consolidation with,
         or merge or  consolidate  with,  or purchase  substantially  all of the
         assets of, or otherwise  acquire any material assets or business of any
         corporation, partnership, association or other business organization or
         division thereof, except as contemplated by Section 9.11; and

(f)      with respect to any Assignor, incur any Indebtedness.

4.2      Inspection.  From time to time prior to  Closing,  the  Company and the
         Assignors  shall  afford to Assignee and its  accountants,  counsel and
         other representatives  reasonable access, during normal business hours,
         to the properties, books, contracts,  commitments, tax returns, records
         and  appropriate   officers  and  employees  of  the  Company  and  its
         Subsidiaries,   including  the   Assignors,   and  shall  furnish  such
         representatives  with  all  financial  and  operating  data  and  other
         information  concerning the affairs of the Company and its Subsidiaries
         as they may reasonably request.


                                 Page 100 of 200
<PAGE>

4.3      Litigation  Standstill.  The parties hereto agree not to seek a hearing
         date,  or, if  applicable,  agree to postpone any hearing  date, on any
         motions or pleadings in connection with the Lawsuit, including, without
         limitation,  Lone Star's Motion for Summary Judgment, until the earlier
         to occur of the termination of this Agreement  pursuant to Article 9 or
         September 15, 2001. Lone Star's  obligations under this Section 4.3 are
         subject to no further  motions or  pleadings  being made in  connection
         with the  Lawsuit by the parties  hereto or the  subject  matter of the
         Lawsuit by any parties hereto attempting to intervene in the Lawsuit.

4.4      Employees.

(a)      Assignor  Obligations.  Each Assignor acknowledges that notwithstanding
         any  benefits  which  Assignee  may offer or provide to any Employee to
         whom  Assignee has extended an offer of  employment,  such Assignor has
         certain  obligations  with respect to such  Assignor's  Employees under
         Section  4980B of the Code and Section  601 et seq.  of the  Employment
         Retirement  Income Security Act of 1974, as amended ("ERISA") and agree
         to comply with those  obligations.  Each Assignor  shall be responsible
         for and shall cause to be discharged  and satisfied in full all amounts
         owed to any Employee or Former  Employee,  including  wages,  salaries,
         accrued  vacation,  any  employment,  incentive,  compensation or bonus
         agreements or other  benefits or payments on account of  termination of
         employment by such Assignor,  and shall indemnify the Lone Star Parties
         and hold the Lone Star  Parties  harmless  from any losses  thereunder.
         Each Assignor shall be responsible for compliance with the COBRA notice
         and continuation  coverage  requirements under Part 6 of Title I of the
         ERISA,  with  respect  to  all  employees  (and  their   beneficiaries)
         experiencing a qualifying event (as defined in Section 603 of ERISA) on
         account of the transactions contemplated by this Agreement or occurring
         prior to the Closing.

(b)      Employment  by Assignor.  Assignee may, but is not obligated to, extend
         offers of employment effective as of the Closing Date to any or none of
         the Subject  Employees  on terms and  conditions  to be  determined  by
         Assignee in its sole  discretion.  Assignee will notify the appropriate
         Assignor within ten (10) days prior to the anticipated  Closing Date of
         which Subject Employees, if any, the Assignee intends to make offers of
         employment.  Assignor will have no liability for any claims made by any
         Subject  Employee  subsequently  employed or continued in employment by
         Assignee  and for which the  initial  event  giving  rise to such claim
         occurred after the Closing Date and not as a result of the transactions
         contemplated  hereby. To the extent that Assignee does extend offers of
         employment to any of the Subject  Employees,  each  Assignor  agrees to
         terminate  or  release  any such  Subject  Employee  from such  Subject
         Employee's employment with Assignor.

4.5      Agreement to Forward Orders,  Inquiries and Leads. The Company and each
         Assignor  hereby agrees that for a period of three (3) months they will
         forward  promptly to the Assignee any and all inquiries and sales leads
         relating to the Businesses and the Facilities transferred in connection
         therewith.


                                 Page 114 of 200
<PAGE>

4.6      Third Party  Solicitations.  From the date hereof  until  Closing,  the
         Company,   its   Affiliates,    officers,   directors,   employees   or
         representatives will not initiate any transaction which could adversely
         affect their  obligations  under this Agreement,  and the Company shall
         give Lone Star  prompt  written  notice  if the  Company  or any of its
         Affiliates  is  approached  by any Person or group of Persons about any
         such  transaction  and  a  reasonable  opportunity  to  participate  in
         discussions  regarding the same; provided,  however,  nothing contained
         herein shall  prohibit the Company from  entering into  discussions  or
         negotiations with any Person or group of Persons concerning any merger,
         sale of assets,  sale of shares of Capital Stock or similar transaction
         if such transaction could not adversely affect the Greenbriar  Parties'
         obligations under this Agreement.

4.7      Employee Solicitation.

(a)      From the date  hereof and for a period of one (1) year from the Closing
         Date,  without  the prior  written  consent of Lone Star,  neither  the
         Company nor any of its  Subsidiaries  shall, or shall knowingly  permit
         its Affiliates, officers, directors, representatives and agents to, (i)
         prior to Closing, directly or indirectly offer, participate or initiate
         negotiations with any Person employed at the Facilities with respect to
         a transfer of such  Person's  employment to another  facility  owned or
         operated  by  the  Company,  its  Subsidiaries,   or  their  respective
         Affiliates,  or (ii) directly or indirectly,  hire, offer,  participate
         in, or initiate negotiations concerning,  employment,  with any officer
         or  employee of the  Assignee  or any Person  that was  employed at any
         Facility within the year prior to Closing and was subsequently employed
         by Assignee after Closing.

(b)      From the date  hereof and for a period of one (1) year from the Closing
         Date, without the prior written consent of the Company, Lone Star shall
         not,  and  shall  not  knowingly   permit  its  Affiliates,   officers,
         directors, representatives and agents to, directly or indirectly, hire,
         offer,  participate in, or initiate negotiations  concerning employment
         with any officer or employee of the Company or any  Assignor  (or their
         Affiliates)   other  than  the  Subject   Employees   or  as  otherwise
         contemplated herein.

(c)      Notwithstanding  the foregoing,  this Agreement  shall not prohibit any
         advertisement  or general  solicitation (or hiring as a result thereof)
         that is not specifically targeted at such persons.

4.8      Non-Competition.  For a period beginning on the Closing Date and ending
         one (1) year after the date of Closing,  neither the Company nor any of
         its  Subsidiaries or their  respective  Affiliates  shall,  without the
         prior written  consent of Lone Star,  directly or  indirectly,  engage,
         participate,  make  any  financial  investment  in,  manage  or  render
         advisory other services to or for any Person engaged in the business of
         owning, operating or managing assisted living facilities or communities
         located  within a twenty-mile  radius of any of the  Businesses,  other
         than  the  assisted  living  facilities  and  communities  known as The
         Greenbriar at Sherman located in Sherman,  Texas,  Villa de Rey located
         in Roswell,  New Mexico and Camelot  Retirement  located in  Harlingen,
         Texas. The Company and each of the Assignors  acknowledges,  in its own
         behalf and on behalf of their respective  Subsidiaries,  that the scope
         of prohibited activities, the geographic boundaries and the duration of
         the obligations set forth herein are (i) reasonable and no broader than
         necessary to protect the legitimate  business interest of the Lone Star
         Parties and (ii) do not and will not impose an unreasonable burden upon
         such parties.



                                 Page 115 of 200
<PAGE>

4.9      Confidentiality.  Except for any governmental filings required in order
         to complete the transactions contemplated herein and as the Company and
         the Lone Star Parities may otherwise  agree or consent in writing,  all
         information  received  by the  Lone  Star  Parties  and the  Greenbriar
         Parties  and their  respective  representatives  in  contemplation,  or
         pursuant to the terms, of this Agreement shall be kept in confidence by
         the receiving party and its representatives;  provided,  however,  that
         any  party  hereto  may  disclose  such  information  to its  legal and
         financial  advisors,  lenders,  financing  sources and their respective
         legal  advisors and  representatives  so long as such Persons  agree to
         maintain the  confidentiality  of such  information in accordance  with
         this Section 4.9. If the transactions contemplated hereby shall fail to
         be consummated,  all copies of documents or extracts thereof containing
         information  and data as to one of the  other  parties,  including  all
         information  prepared by the receiving party's  representatives  may be
         destroyed  at the option of the  receiving  party,  with notice of such
         destruction  (or return) to be confirmed  in writing to the  disclosing
         party.  Any  information  not so destroyed  (or  returned)  will remain
         subject  to  these  confidentiality  provisions   (notwithstanding  any
         termination of this  Agreement)  until the second (2nd)  anniversary of
         the date of this Agreement.  The foregoing  confidentiality  provisions
         shall not apply to such portions of the information  received which (i)
         are or become  generally  available to the public  through no action by
         the  receiving  party or by such party's  representatives,  (ii) are or
         become  available to the receiving  party on a  non-confidential  basis
         from a source,  other than the disclosing party or its representatives,
         not known by the receiving  party to be prohibited from disclosing such
         portions to it by a contractual legal or fiduciary obligation, or (iii)
         are  required  by law  to be  disclosed.  In  addition,  the  foregoing
         confidentiality  provisions  shall not apply to any  disclosure  by the
         Lone Star  Parties  after the Closing of any  information  disclosed to
         them by the Greenbriar Parties.

         Cooperation.  The Company and each of the  Assignors  agrees to use its
reasonable best efforts to cooperate with the Lone Star Parties in obtaining any
third-party  consents  necessary to  effectuate  the  transactions  contemplated
hereby.


                                 Page 116 of 200
<PAGE>

                                   ARTICLE V

                              CONDITIONS TO CLOSING
                              ---------------------

5.1      Conditions to Obligations of Assignee and Assignor.  The obligations of
         the Lone Star  Parties and the  Greenbriar  Parties to  consummate,  or
         cause to be  consummated,  the  transactions  contemplated  hereby  are
         subject  to the  condition  that  there  not be in force  any  order or
         decree,  statute,  rule or  regulation  nor shall  there be on file any
         complaint  by  a  governmental  agency  seeking  an  order  or  decree,
         restraining,   enjoining  or  prohibiting   the   consummation  of  the
         transactions contemplated hereby, and neither the Lone Star Parties nor
         the Greenbriar Parties shall have received notice from any governmental
         authority that it has determined to institute any suit or proceeding to
         restrain or enjoin the  consummation of the  transactions  contemplated
         hereby  or  to  nullify  or  render   ineffective   this  Agreement  if
         consummated,  or to take any other  action  which  would  result in the
         prohibition  or a  material  change  in the  terms of the  transactions
         contemplated hereby.

5.2      Conditions to Obligations of Assignee. The obligations of the Lone Star
         Parties to consummate,  or cause to be  consummated,  the  transactions
         contemplated  by this Agreement are subject to the  satisfaction of the
         following additional conditions, any one or more of which may be waived
         in writing by the Lone Star Parties:

(a)      Each of the  representations  and warranties of the Greenbriar  Parties
         contained  in this  Agreement  all of the other  Transaction  Documents
         shall be true and  correct in all  material  respects  (other  than the
         representation  set forth in Section  3.1(cc),  which shall be true and
         correct  in all  respects),  both  on  the  date  hereof  and as of the
         Closing,  as if  made  anew  at and as of that  time,  and  each of the
         covenants and agreements of the  Greenbriar  Parties to be performed as
         of or prior to the Closing shall have been duly  performed and complied
         with in all material  respects,  except in each case for changes  after
         the date hereof which are  contemplated or expressly  permitted by this
         Agreement.

(b)      Each  Greenbriar  Party shall have delivered to the Lone Star Parties a
         certificate  signed by an officer of such Greenbriar Party, dated as of
         the date of Closing,  certifying that, to the best of the knowledge and
         belief of such  officer,  the  conditions  specified in Section 5.1, as
         they relate to such  Greenbriar  Party,  and  Section  5.2(a) have been
         fulfilled.

(c)      Any  consent   required  for  the   consummation  of  the  transactions
         contemplated shall have been obtained.

(d)      The Lone Star Parties  shall have received the  following,  and in form
         and substance satisfactory to Lone Star Parties:

(i)      a Warranty Deed executed by each of the Assignors  conveying all of the
         Real Property;

(ii)     Title Insurance Policies covering all of the Real Property;

(iii)    Surveys, certified to Assignee and the applicable title company, of the
         Real  Property  reasonably   acceptable  to  Lone  Star  and  otherwise
         satisfactory  for the  applicable  title  company  to delete the survey
         exception  from the title  insurance  policy to be issued by such title
         company,  provided,  Lone Star shall pay any costs charged by the title
         company solely related to the deletion of the survey exception from the
         title policy;


                                 Page 117 of 200
<PAGE>

(iv)     a Bill of Sale duly executed by each of the Assignors; and

(v)      the Assumption Agreement duly executed by each of the Assignors.

(e)      Lone Star Parties shall have received the following opinions, all dated
         the Closing Date and all in form and substance satisfactory to the Lone
         Star Parties:

(i)      a  written  opinion  of (A)  Glast,  Phillips  &  Murray,  in form  and
         substance satisfactory to Lone Star, and (B) with respect to matters of
         local law,  local  counsel to the  Company and its  Subsidiaries  (such
         counsel to be reasonably  satisfactory to Lone Star), each such opinion
         as to such  matters as shall be required  by Lone Star or its  counsel,
         including the corporate  good standing of the Greenbriar  Parties,  the
         proper  adoption  of any  corporate  resolution  required  hereby,  the
         authority  of the  Person  signing  for  the  Greenbriar  Parties,  the
         validity,  binding nature and  enforceability of this Agreement and the
         other Transaction Documents;

(ii)     a written opinion of Nevada counsel to the Company and its Subsidiaries
         (such counsel to be reasonably  satisfactory  to Lone Star) (i) stating
         that  this  Agreement,   the  other  Transaction  Documents,   and  the
         consummation of the transactions contemplated hereby and thereby do not
         require  the  approval of the holders of the  Company's  Capital  Stock
         under Nevada law or the Company's Organizational Documents, and (ii) as
         to such other matters as shall be required by Lone Star or its counsel;
         and

(iii)    unless  waived by Lone Star,  the  Company  having  obtained a solvency
         opinion from Business  Valuation  Services,  Inc. or another  valuation
         firm reasonably acceptable to Lone Star, on which the Lone Star Parties
         may rely and which is  reasonably  satisfactory  to Lone  Star,  to the
         effect that after giving effect to the transactions contemplated by the
         Transaction  Documents  and the payment and accrual of all  transaction
         costs  in  connection   with  the   foregoing,   the  Company  and  its
         Subsidiaries, taken as a whole, are Solvent.

(f)      The Lone Star  Parties  shall  have  received  lien  searches  from all
         jurisdictions  reasonably  determined  by the Lone Star  Parties  to be
         appropriate,  as of one (1) day prior to the Closing Date, with respect
         to the Company and each of its  Assignors  reflecting  no Liens  (other
         than  Permitted  Liens) or  evidence  satisfactory  to  Assignee of the
         payment or release of any and all Lien.

(g)      Each  Greenbriar  Party shall have (A) delivered to Assignee (x) copies
         certified by the appropriate  governmental official of the jurisdiction
         of its  incorporation as of a date not more than five (5) days prior to
         the  Closing  Date,  of  each   Greenbriar   Party's   certificate   of
         incorporation and all amendments  thereto and (y) copies,  certified by
         the Secretary or an Assistant  Secretary of each  Greenbriar  Party, of
         each Greenbriar  Party's Bylaws;  (B) deliver to Assignee a certificate
         of good standing  issued with respect to each  Greenbriar  Party by the
         appropriate   governmental   official  of  the   jurisdiction   of  its
         incorporation  as of a date  not  more  than  one (1) day  prior to the
         Closing Date; and (C) executed and delivered a secretary's  certificate
         relating to incumbency,  corporate  proceedings  and the certificate of
         incorporation and bylaws.


                                 Page 118 of 200
<PAGE>

(h)      As of the Closing Date and prior to giving  effect to the  transactions
         contemplated  by  the  Transaction  Documents,  there  shall  not  have
         occurred  any  material  adverse  change in the  business,  results  of
         operations, financial condition of the Company or the Assignors between
         the date hereof and the Closing Date.

(i)      The  Consent  Agreement  is in full  force and effect and no action has
         been  taken to amend,  modify or rescind  such  Agreement  without  the
         consent of Lone Star.

(j)      The Lone Star Parties shall have entered into employment contracts with
         the executive director of each Facility on terms no less favorable than
         such Persons' existing employment contracts.

(k)      No Assignor shall have any Indebtedness outstanding (including, without
         limitation,  any trade payables for which such Assignor has received an
         invoice prior to Closing,  provided  after Closing such Assignor  shall
         promptly pay any trade  payables upon receipt of the invoice  thereof),
         other than the  Assumed  Liabilities,  and no  Assignor  shall have any
         creditors,  other than those creditors whose claims arise directly from
         the Assumed  Liabilities,  other than  creditors  whose  claims are the
         subject of a bona fide dispute.

(l)      The bankruptcy case commenced by American Care Communities,  Inc. shall
         have been dismissed,  or the Bankruptcy  Court with  jurisdiction  over
         such proceedings  shall have issued an order permitting the transfer of
         the assisted living  facilities and communities  known as Berne Village
         and Rose Tara Plantation.

(m)      All repairs  necessitated by the existing damage to the assisted living
         facility and community  known as the Greenbriar at Dennison  (including
         roof and siding  repairs)  shall have been  completed to the reasonable
         satisfaction of Lone Star; provided,  however, if such repairs have not
         been completed  prior to the Closing,  the repairs will be completed by
         the  Company  and/or its  contractors  at the  Company's  sole cost and
         expense within thirty (30) days of the Closing Date.

5.3      Conditions  to the  Obligations  of  Assignor.  The  obligation  of the
         Greenbriar Parties to consummate the transactions  contemplated by this
         Agreement is subject to the  satisfaction  of the following  additional
         conditions,  any one or more of which may be waived in  writing  by the
         Greenbriar Parties:

(a)      Each of the  representations  and  warranties of Lone Star contained in
         this Agreement shall be true and correct in all material  respects both
         on the date hereof and as of the Closing,  as if made anew at and as of
         that time,  and each of the covenants and agreements of Lone Star to be
         performed as of or prior to the Closing shall have been duly  performed
         in all  material  respects,  except in each case for changes  after the
         date hereof  which are  contemplated  or  expressly  permitted  by this
         Agreement.


                                 Page 119 of 200
<PAGE>

(b)      Lone Star shall have delivered to the Assignors a certificate signed by
         an officer of Lone Star,  dated the Closing,  certifying  that,  to the
         best of the  knowledge  and  belief  of such  officer,  the  conditions
         specified  in Section  5.1,  as they  relate to Lone Star,  and Section
         5.3(a) have been fulfilled.

(c)      Lone  Star  shall  have  delivered  the  Mutual  Release  and any Stock
         Certificates.

(d)      The Lone Star Parties shall have delivered the Assumption Agreement.

                                   ARTICLE VI

                                   TERMINATION
                                   -----------

6.1      Termination.  This  Agreement  may be terminated  and the  transactions
         contemplated hereby abandoned:

(a)      By mutual  written  consent  of the  parties  at any time  prior to the
         Closing.

(b)      After  August 15, 2001 and prior to the Closing,  by written  notice to
         the Company from Assignee,  if (i) there is any material  breach of any
         representation,  warranty,  covenant  or  agreement  on the part of any
         Greenbriar   Party  set  forth  in  this   Agreement,   or  (ii)  if  a
         representation or warranty of the Greenbriar Parties shall be untrue in
         any material respect, in either case, such that the condition specified
         in Section  5.2(a)  hereof  would not be  satisfied  at the  Closing (a
         "Terminating  Assignor's  Breach") and, in each such case,  such breach
         has not been cured within  seven (7) days after  notice  thereof by the
         Assignee to the Company.

(c)      After  August 15, 2001 and prior to the Closing,  by written  notice to
         Lone Star from the Company,  if (i) there is any material breach of any
         representation,  warranty,  covenant or  agreement  on the part of Lone
         Star  set  forth  in this  Agreement,  (ii) or if a  representation  or
         warranty  of Lone  Star  shall be untrue in any  material  respect,  in
         either case,  such that the  condition  specified in Section 5.3 hereof
         would  not be  satisfied  at the  Closing  (a  "Terminating  Assignee's
         Breach") and, in each such case,  such breach has not been cured within
         seven (7) days after notice thereof by the Company to Lone Star.

(d)      By either the Company or Lone Star,  after  September  15, 2001, if the
         Closing  has not  occurred  prior  to such  date,  provided  that  such
         terminating  party  is not  in  breach  of any of its  representations,
         warranties,   covenants  or  agreements  hereunder,  and  all  of  such
         terminating  party's conditions to Closing have been satisfied prior to
         such date.


                                 Page 120 of 200
<PAGE>

(e)      By either the Company or Lone Star on or before  August 8, 2001, if the
         sale of the  assisted  living  facility and  community  known as Crowne
         Point has not been consummated.

(f)      By  either  the  Company  or Lone Star on or before  August  14,  2001,
         because  Heller  Financial  has not  consented  to the  transfer of the
         assisted living  facilities and communities  known as Berne Village and
         Rose Tara  Plantation on terms  satisfactory to each of the Company and
         Lone Star.

(g)      By Lone Star, after August 14, 2001,  because any of the first mortgage
         holders  have not  consented  to the  transfer of the  assisted  living
         facilities and communities known as Greenbriar at Denison,  Rose Garden
         Estates,  Windsor  House West,  The  Terrace,  Villa del Sol, La Villa,
         Summer Hill, Meadowbrook or Camelot Assisted Living.

(h)      By Lone Star,  if the Company shall fail to put or at any time maintain
         $2,000,000  from the  Crowne  Point  closing,  i.e.  the  Crowne  Point
         Proceeds, in the Crowne Point Escrow Account in accordance with Section
         2.10(b).

(i)      By Lone Star, if a case or proceeding  commences against any Greenbriar
         Party (i) seeking a decree or order in respect of any Greenbriar  Party
         under  Title  11 of the  United  States  Code,  as now  constituted  or
         hereafter  amended or any other  applicable  federal,  state or foreign
         bankruptcy,  debtor  relief or other  similar  law,  (ii)  seeking  the
         appointment of a custodian, receiver, liquidator,  assignee, trustee or
         sequestrator  (or similar  official) for any Greenbriar Party or of any
         substantial  part of any such  Person's  assets  or (iii)  seeking  the
         winding-up or liquidation of the affairs of any Greenbriar Party.

(j)      By Lone Star, if any Greenbriar  Party,  subsequent  hereto (i) files a
         petition  seeking  relief under Title 11 of the United  States Code, as
         now constituted or hereafter amended,  or any other applicable federal,
         state or foreign  bankruptcy,  debtor relief or other similar law, (ii)
         consents to the institution of proceedings  thereunder or to the filing
         of any such petition or to the appointment of or taking possession by a
         custodian, receiver, liquidator,  assignee, trustee or sequestrator (or
         similar official) of any Greenbriar Party or of any substantial part of
         any such  Person's  assets,  (iii) makes a general  assignment  for the
         benefit of creditors,  (iv) takes any corporate action to authorize any
         of the foregoing or (v) admits in writing its inability to, or shall be
         generally unable to, pay its debts as such debts become due.

6.2      Post-Termination  Activity.  In the  event  of the  termination  of the
         Agreement   pursuant  to  Section  6.1(and   including  any  notice  of
         termination or acts in  furtherance of a declared  purpose to terminate
         regardless of whether such  termination  is effective) or for any other
         reason, either party agrees that it shall not, directly or indirectly:


                                 Page 121 of 200
<PAGE>

(a)      contact  the escrow  agent or any other  person to stop,  inderdict  or
         delay the  immediate  release  and return of the Escrow  Amounts to the
         appropriate party;

(b)      file or sponsor any  garnishment,  attachment  or other legal effort to
         obtain  control over all or any portion of the  escrowed  fund if it is
         not the party  entitled to such Escrow Amounts for a period which shall
         end seven (7) days after all of the  Escrowed  Amounts  shall have been
         returned  to the  appropriate  party  free and clear of any  claims by,
         through,  or under the other  party for the  possession  or use of such
         funds.

6.3      Effect of  Termination.  In the event of  termination of this Agreement
         pursuant to Section 6.1, this Agreement shall forthwith become void and
         have no effect,  without any  liability on the part of any party hereto
         or their respective  Affiliates,  officers,  directors or stockholders,
         other than liability of the Greenbriar Parties or Lone Star as the case
         may  be,  for  breaches  of  this  Agreement  occurring  prior  to such
         termination.  The  provisions of Sections 4.9, 9.7 and 9.8 hereof shall
         survive any termination of this Agreement.

                                  ARTICLE VII

                          SURVIVAL AND INDEMNIFICATION
                          ----------------------------

7.1      Survival   of   Representations,    Warranties   and   Covenants.   The
         representations,  warranties, agreement and covenants contained in this
         Agreement  shall survive the execution of this Agreement and remain for
         two (2) years  following  the  Closing  Date;  provided,  however,  the
         representations  and  warranties  set  forth  in each  of (i)  Sections
         3.1(b),  3.1(e),  3.1(j)(i),  3.1(k), 3.1(l) shall survive indefinitely
         and (ii)  Sections  3.1(p),  3.1(r) and 3.1(y) shall  survive until the
         applicable statute of limitations has expired.

7.2      Indemnification  by  Assignor.  The Company  and each of the  Assignors
         shall, jointly and severally, indemnify and hold harmless each Assignee
         Party  (hereinafter  defined)  in respect of any and all  Indemnifiable
         Losses resulting from or relating to:

(a)      any and all liabilities  and  obligations of the Greenbriar  Parties of
         any nature whatsoever, except for the Assumed Liabilities;

(b)      any  and  all  actions,   suits,  claims,  or  legal,   administrative,
         arbitration,   governmental  or  other  proceedings  or  investigations
         against any Assignee Party that relate to the Greenbriar  Parties,  the
         Businesses,  the Assigned  Assets or any  affiliate  of the  Greenbriar
         Parties in which the initial event giving rise thereto  occurred  prior
         to the  Closing  or which  results  from or arise out of any  action or
         inaction  prior  to the  Closing  of  the  Greenbriar  Parties,  or any
         director,  officer, employee, agent, representative or subcontractor of
         any Greenbriar  Party,  including  without  limitation,  the litigation
         described on Schedule 3.1(h)(2);


                                 Page 122 of 200
<PAGE>

(c)      nonperformance or breach of any  representation or warranty on the part
         of any Greenbriar  Party under this Agreement or any other  Transaction
         Document,  or any misrepresentation in or omission from any certificate
         furnished to the Lone Star Parties pursuant hereto;

(d)      nonfulfillment  of  any  covenant  or  agreement  on  the  part  of any
         Greenbriar  Party  under  this  Agreement  or  any  other   Transaction
         Document;

(e)      any failure of the Company, any Assignor or Assignee to comply with any
         bulk sales or transfer law (including the bulk sales  provisions of the
         Uniform  Commercial  Code  in any  jurisdiction)  of  any  jurisdiction
         applicable to the sale and transfer of the Assigned Assets contemplated
         hereby;

(f)      all sales or  transfer  taxes in respect of real or  personal  property
         which may be due as a result of the sale taking place  pursuant to this
         Agreement;

(g)      all  actions,  suits,  proceedings,  demands,  assessments,  judgments,
         reasonable attorney's fees, court costs and expenses incident to any of
         the foregoing; or

(h)      any  and  all  actions,   suits,  claims,  or  legal,   administrative,
         arbitration,   governmental  or  other  proceedings  or  investigations
         against any Assignee  Party that relate to this Agreement or any of the
         other Transaction Documents or the transactions contemplated hereby and
         thereby.

         "Assignee Party" shall mean the Lone Star Parties, any Affiliate of the
Lone Star Parties, including, without limitation, the owners of Assignee or Lone
Star,  and any  officer,  director,  or  employee  of  Assignee or the Lone Star
Parties or of any Affiliate thereof,  including,  without limitation, the owners
of the Lone Star Parties.

         Indemnification by Lone Star Parties. The Lone Star Parties shall
indemnify and hold harmless each Assignor Party (hereinafter defined) in respect
of any and all Indemnifiable Losses resulting from or relating to:

(i)      any and all Assumed Liabilities;

(j)      nonperformance or breach of any  representation or warranty on the part
         of Lone Star under this Agreement or any other Transaction Document, or
         any  misrepresentation in or omission from any certificate furnished to
         Assignor pursuant hereto;

(k)      nonfulfillment  of any  covenant or  agreement on the part of Lone Star
         under this Agreement or any other Transaction Document;

(l)      any  and  all  actions,   suits,  claims,  or  legal,   administrative,
         arbitration,   governmental  or  other  proceedings  or  investigations
         against any Assignor  Party that relate to the Lone Star  Parties,  the
         Business, the Assigned Assets or any Affiliate of the Lone Star Parties
         in which the initial event giving use rise thereto  occurred  after the
         Closing or which  results  from or arise out of any action or  inaction
         after the Closing of the Lone Star  Parties or any  director,  officer,
         employee,  agent,  representative  or  subcontractor  of the Lone  Star
         Parties; or


                                 Page 123 of 200
<PAGE>

(m)      all  actions,  suits,  proceedings,  demands,  assessments,  judgments,
         reasonable  attorney's fees, costs and expenses  incident to any of the
         foregoing.

         "Assignor Party" shall mean the Company,  the Assignors,  any Affiliate
of Assignors,  including,  without limitation,  the owners of Assignors,  or any
officer,  director,  or employee of Assignors or of any  Affiliate of Assignors,
including, without limitation, the owners of Assignors.

7.3      Defense of Claims.

(a)      If any Indemnitee  receives  notice of assertion or commencement of any
         Third Party Claim  against  such  Indemnitee  with  respect to which an
         Indemnifying Party is obligated to provide  indemnification  under this
         Agreement,  the Indemnitee will give such Indemnifying Party reasonably
         prompt written notice thereof,  but in any event not later than fifteen
         (15)  calendar  days after  receipt of such  notice of such Third Party
         Claim.  Such notice will  describe the Third Party Claim in  reasonable
         detail,  will include copies of all material  written  evidence thereof
         and will indicate the estimated amount, if reasonably  practicable,  of
         the  Indemnifiable  Loss  that  has  been  or may be  sustained  by the
         Indemnitee.  The Indemnifying  Party will have the right to participate
         in, or, by giving  written  notice to the  Indemnitee,  to assume,  the
         defense  of any Third  Party  Claim at such  Indemnifying  Party's  own
         expense  and by  such  Indemnifying  Party's  own  counsel  (reasonably
         satisfactory to the  Indemnitee),  and the Indemnitee will cooperate in
         good faith in such defense.

(b)      If,  within ten (10) calendar days after giving notice of a Third Party
         Claim  to  an  Indemnifying   Party  pursuant  to  Section  7.4(a),  an
         Indemnitee receives written notice from the Indemnifying Party that the
         Indemnifying  Party has  elected  to assume  the  defense of such Third
         Party  Claim as provided in the last  sentence of Section  7.4(a),  the
         Indemnifying   Party  will  not  be  liable  for  any  legal   expenses
         subsequently  incurred by the Indemnitee in connection with the defense
         thereof; provided, however, that if (i) the Indemnifying Party fails to
         take reasonable  steps necessary to defend  diligently such Third Party
         Claim within five (5) calendar days after receiving written notice from
         the Indemnitee that the Indemnitee  believes the Indemnifying Party has
         failed  to  take  such  steps  or if the  Indemnifying  Party  has  not
         undertaken  fully  to  indemnify  the  Indemnitee  in  respect  of  all
         Indemnifiable  Losses  relating  to the  matter,  (ii)  the  Indemnitee
         believes that a conflict of interest  exists between the Indemnitee and
         Indemnifying  Party,  (iii) the Indemnitee is requested to participate,
         at the  request of the  Indemnifying  Party,  or (iv) the  Indemnifying
         Party's elects not to defend such claim,  the Indemnitee  will be free,
         without prejudice to any the Indemnitee's  rights hereunder,  to assume
         its own  defense,  and the  Indemnifying  Party  will be liable for all
         reasonable costs or expenses paid or incurred in connection  therewith.
         Without the prior written consent of the Indemnitee,  the  Indemnifying
         Party will not enter into any settlement of any Third Party Claim which
         would lead to liability or create any financial or other  obligation on
         the part of the  Indemnitee for which the Indemnitee is not entitled to
         indemnification hereunder.


                                 Page 124 of 200
<PAGE>

(c)      A failure to give timely notice or to include any specified information
         in any notice as provided  in Section  7.4(a) or 7.4(b) will not affect
         the rights or obligations of any party hereunder except and only to the
         extent that, as a result of such failure, any person which was entitled
         to receive such notice was deprived of its right to recover any payment
         under its  applicable  insurance  coverage or was otherwise  materially
         damaged as a result of such failure.

(d)      The  Indemnifying  Party will have a period of ten (10)  calendar  days
         within  which to respond in  writing to any claim by an  Indemnitee  on
         account of an  Indemnifiable  Loss  which does not result  from a Third
         Party Claim (a "Direct Claim").  If the Indemnifying  Party does not so
         respond  within such ten (10)  calendar  day period,  the  Indemnifying
         Party will be deemed to have  rejected  such claim,  in which event the
         Indemnitee  will be free to pursue such remedies as may be available to
         the Indemnitee.

                                  ARTICLE VIII

                               TRANSITION SERVICES
                               -------------------

8.1      Use of Name. On and after the Closing Date, the Assignors agree to sign
         or file such consents or other  documents as Assignee shall  reasonably
         request  in  order  to  permit  Assignee  to use any  Owned  Intangible
         Property or Licensed Intangible Property, including without limitation,
         the  names  "Berne  Village",   "Rose  Garden   Estates",   "Rose  Tara
         Plantation",  "The  Terrace",  "Windsor  House West",  "Villa del Sol",
         "Summer Hill", "La Villa",  "Camelot Assisted Living", and "Meadowbrook
         Place" and the Company and the Assignors shall  immediately cease using
         the same.  The Assignee shall not use the name  "Greenbriar"  or any of
         its related marks,  and shall remove the name and mark of  "Greenbriar"
         from  any of the  Facilities'  signage  as  soon as  practicable  after
         Closing, but in no event later than 90 days after Closing.

8.2      Permits. Form the date hereof and after the Closing Date, the Assignors
         agree to join and fully  cooperate  with the  Assignee in the filing of
         any application with any necessary federal, state or local governmental
         authorities,  requesting such governmental authority's approval for the
         assignment  or transfer to the Assignee (or any of its  Affiliates)  of
         any or all permits issued to any Assignor (or its Subsidiaries) by such
         governmental  authority  with  respect  to  the  Assignors'  respective
         Businesses and the operation  thereof.  Such cooperation  shall include
         without  limitation  the  furnishing  of any  information  that  may be
         required in connection with such applications.

8.3      Payment  Received.  Each  Assignor  agrees  that it will  hold and will
         promptly  transfer and deliver to the appropriate  party,  from time to
         time as and when received by them,  any cash,  checks with  appropriate
         endorsements  (using their best efforts not to convert such checks into
         cash),  or other property that they may receive which properly  belongs
         to another party, including any insurance proceeds, and will account to
         the  appropriate  party for all such receipts.  Assignee shall have the
         right  and  authority  to  endorse  the  name of each  Assignor  (which
         endorsement  of the  name of such  Assignor  shall  include  the  words
         "without recourse") on any check or any other evidences of indebtedness
         received  by  Assignee on account of the  Businesses  and the  Assigned
         Assets transferred to Assignee hereunder.


                                 Page 125 of 200
<PAGE>

8.4      Copies of Records.

(a)      Each of the Assignors  shall preserve all records  possessed by it (and
         not otherwise transferred to Assignee) relating to the Assigned Assets,
         Assumed  Liabilities  or  operations  of the Business and shall provide
         Assignee with access,  upon prior reasonable  written  request,  during
         regular business hours, to such books of account and records.  Assignee
         and its  representatives  shall  have the right to make  copies of such
         books and  records.  Such  records may  nevertheless  be  destroyed  by
         Assignors if Assignors send Assignee  written notice of their intent to
         destroy  records,  specifying  with  particularity  the contents of the
         records to be destroyed.  Such records may then be destroyed  after the
         90th day following  delivery of such notice unless Assignee  objects to
         the  destruction,  in which case Assignors shall either agree to retain
         such records or to deliver such records to Assignee.

(b)      Assignee shall preserve all records of Assignors which were transferred
         to Assignee  relating to the time  periods  prior to the  Closing,  and
         shall  provide to each  Assignor  with  access to such  records (to the
         extent  related  to  such  Assignor),  upon  prior  reasonable  written
         request,   during   regular   business   hours.   Assignors  and  their
         representatives  shall have the right to make  copies of such books and
         records.  Such  records may  nevertheless  be  destroyed by Assignee if
         Assignee sends the applicable  Assignor written notice of its intent to
         destroy such records, specifying with particularity the contents of the
         records to be destroyed.  Such records may then be destroyed  after the
         90th day  following  delivery  of such  notice  unless  the  applicable
         Assignor  objects  to the  destruction,  in which case  Assignee  shall
         either  agree to retain such records or to deliver such records to such
         Assignor.

                                   ARTICLE IX

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

9.1      Notices.  No notice or other communication shall be deemed given unless
         sent in the manner, and to the persons,  specified in this Section 9.1.
         All notices and other communications  hereunder shall be in writing and
         shall be deemed given (a) upon receipt if delivered  personally (unless
         subject to clause (b)) or if mailed by  registered  or certified  mail,
         (b) at noon on the date after dispatch if sent by overnight  courier or
         (c)  upon  the   completion   of   transmission   (which  is  confirmed
         telephonically  by the receiving  party) if  transmitted by telecopy or
         other means of facsimile  which  provides  immediate or near  immediate
         transmission   to  compatible   equipment  in  the  possession  of  the
         recipient, and in any case to the parties at the following addresses or
         telecopy  numbers (or at such other  address or  telecopy  number for a
         party as will be specified by like notice):


                                 Page 126 of 200
<PAGE>

                           if to any Greenbriar Party, to

                           Greenbriar Corporation
                           650 Centura Tower One
                           14185 Dallas Parkway
                           Dallas, Texas  75240
                           Attention:  President
                           Telecopy:  (972) 407-8420
                           with a copy (which shall not constitute notice) to

                           Henry W. Simon, Jr.
                           Simon, Warner & Doby, L.L.P.
                           1700 City Center Tower II
                           301 Commerce Street
                           Fort Worth, Texas  76102
                           Telecopy:  (817) 810-5255

                           If to Lone Star, to

                           LSOF Pooled Equity, L.P.
                           600 N. Pearl Street
                           Suite 1550, LB 161
                           Dallas, Texas 76140
                           Attention:  Len Allen
                           Telecopy:  (214) 754-8401

                           with a copy (which shall not constitute notice) to

                           Weil, Gotshal & Manges LLP
                           100 Crescent Court, Suite 1300
                           Dallas, Texas 75201-6950
                           Attention:  Michael A. Saslaw
                           Telecopy:  (214) 746-7777

Each party named above may change its address and that of its representative for
notice by the giving of notice thereof in the manner hereinabove provided.

9.2      Transfer  Taxes.  Assignors  shall  bear  responsibility,  jointly  and
         severally,  for, and timely pay, all applicable Taxes, if any, due as a
         result of the transfer of the Assigned Assets in accordance herewith.


                                 Page 127 of 200
<PAGE>

9.3      Non-Assignable Contracts.  Nothing contained in this Agreement shall be
         construed as an assignment  or an attempted  assignment of any contract
         which is in law nonassignable without the consent of the other party or
         parties thereto, unless such consent shall be given. To the extent that
         all consents  for the  assignment  of any contract  shall not have been
         obtained by Assignors,  the applicable  Assignor shall use commercially
         reasonable  efforts  to (i)  provide  to  Assignee  the  financial  and
         business benefits of such nonassignable  contract and (ii) enforce,  at
         the request of  Assignee,  for the account of  Assignee,  any rights of
         Assignor arising from any such  nonassignable  contract  (including the
         right to elect to terminate in  accordance  with the terms thereof upon
         the request of Assignee).

9.4      Entire  Agreement.  This Agreement,  the Transaction  Documents and the
         other agreements  contemplated hereby set forth the entire agreement of
         the parties  with  respect to the matters set forth  herein or therein.
         This  Agreement  shall not be  modified  except by  written  instrument
         executed together or in counterparts by all of the parties hereto.  All
         exhibits and schedules referred to herein are intended to be and hereby
         are specifically made a part of this Agreement.

9.5      Non-Waiver.  The failure of any party to insist upon strict performance
         of any provision  hereof shall not  constitute a waiver of, or estoppel
         against asserting, the right to require such performance in the future,
         nor shall a waiver or  estoppel  with  respect  to a later  breach of a
         similar nature or otherwise.

9.6      Curative Actions; Severability.

(a)      If any of the covenants, terms or conditions of this Agreement are held
         illegal by any court or administrative body of competent  jurisdiction,
         and any director or stockholder action,  including, but not limited to,
         the  execution  of  any  documents  or  instruments,   will  make  such
         covenants, terms or conditions valid and enforceable, each party hereby
         agrees  that it shall  take or cause to be  taken  such  action  as may
         reasonably  be required to make any such  covenant,  term or  condition
         valid and enforceable.

(b)      If any  provision of this  Agreement is held invalid,  such  invalidity
         shall not affect the other provisions  hereof which can be given effect
         without the invalid  provision,  and to this end the provisions of this
         Agreement are intended to be and shall be deemed severable.

9.7      Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
         GOVERNED  BY THE  LAWS OF THE  STATE  OF TEXAS  WITHOUT  REGARD  TO THE
         PRINCIPLES OF CONFLICTS OF LAWS.  THE PARTIES  HERETO HEREBY CONSENT TO
         THE  JURISDICTION  OF ANY STATE OR FEDERAL COURT LOCATED  WITHIN DALLAS
         COUNTY,  TEXAS AND  IRREVOCABLY  AGREE THAT ALL ACTIONS OR  PROCEEDINGS
         ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH
         COURTS.  THE  PARTIES  ACCEPT  FOR ITSELF  AND IN  CONNECTION  WITH ITS
         PROPERTIES,    GENERALLY   AND   UNCONDITIONALLY,    THE   NONEXCLUSIVE
         JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE OF FORUM NON
         CONVENIENS,  AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED
         THEREBY IN  CONNECTION  WITH THIS  AGREEMENT  OR ANY OTHER  TRANSACTION
         DOCUMENTS.


                                 Page 128 of 200
<PAGE>

9.8      WAIVER OF JURY TRAIL.  EACH PARTY  HERETO  WAIVES ANY RIGHT TO TRAIL BY
         JURY OF ANY CLAIM, DEMAND,  ACTION OR CAUSE OF ACTION (i) ARISING UNDER
         THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR (ii) IN ANY
         WAY  CONNECTED  WITH OR RELATED OR  INCIDENTAL  TO THE  DEALINGS OF THE
         PARTIES  HERETO  IN  RESPECT  OF  THIS  AGREEMENT  OR ANY OF THE  OTHER
         TRANSACTION  DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN
         EACH CASE  WHETHER NOW EXISTING OR  HEREAFTER  ARISING,  AND WHETHER IN
         CONTRACT,  TORT,  EQUITY OR  OTHERWISE.  EACH PARTY  HEREBY  AGREES AND
         CONSENTS THAT ANY SUCH CLAIM,  DEMAND,  ACTION OR CAUSE OF ACTION SHALL
         BE DECIDED BY COURT  TRIAL  WITHOUT A JURY AND THAT SUCH PARTY MAY FILE
         AN ORIGINAL  COUNTERPART  OF A COPY OF THIS AGREEMENT WITH ANY COURT AS
         WRITTEN  EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
         THEIR RIGHT TO TRIAL BY JURY.

9.9      Construction.   The  headings  in  this   Agreement  are  inserted  for
         convenience and  identification  only and are not intended to describe,
         interpret,  define  or limit  the  scope,  extent,  or  intent  of this
         Agreement or any provision hereof.  Whenever the context requires,  the
         gender of all words used in this Agreement shall include the masculine,
         feminine,  and neuter,  and the number of all words  shall  include the
         singular  and  the  plural.  No  provision  of this  Agreement  will be
         interpreted  in favor  of, or  against,  any of the  parties  hereto by
         reason  of  the  extent  to  which  any  such  party  or  its   counsel
         participated  in the  drafting  thereof  or by reason of the  extent to
         which any such provision is inconsistent with any prior draft hereof or
         thereof.

9.10     Counterparts.   This  Agreement  may  be  executed  in  any  number  of
         counterparts  with the same effect as if each of the parties had signed
         the same document.  All  counterparts  shall be construed  together and
         shall constitute one and the same instrument.

9.11     Successors  and  Assigns.  Except as provided  to the  contrary in this
         Agreement,  this  Agreement  shall apply to, and shall be binding  upon
         each of the parties, their respective successors and permitted assigns.
         Neither  this  Agreement  nor  any  rights,  interests  or  obligations
         hereunder  may be assigned  without the prior  written  consent of Lone
         Star and the Company; provided,  however, that Lone Star may assign its
         rights and obligations  hereunder to any designee or designees  subject
         to  compliance by Lone Star of its  obligations  to execute and deliver
         the Mutual  Release;  provided,  further,  that  Windsor may assign its
         rights and obligations hereunder to Windsor House Greenville LLC.

9.12     Cumulative  Rights.  The rights and remedies provided by this Agreement
         are  cumulative,  and the use of any right or  remedy  by either  party
         shall not preclude or waive its right to use any or all other remedies.


                                 Page 129 of 200
<PAGE>

9.13     Costs;  Expenses.  The Company  will pay all of the costs and  expenses
         incurred  by  itself  and the  Lone  Star  Parties  incidental  to this
         Agreement and the Transaction  Documents and in preparing to consummate
         and  consummating  the  transactions  provided  for herein and therein;
         provided,  however,  such  costs  and  expenses  shall  be  limited  to
         $150,000.

9.14     No Third Party Beneficiaries.  Nothing in this Agreement is intended to
         confer  upon  any  Person  that is not a party  hereto  any  rights  or
         remedies hereunder or otherwise.

9.15     Press  Releases/Filings.  The Greenbriar  Parties, on the one hand, and
         the Lone Star Parties,  on the other hand, hereby acknowledge and agree
         that the  portion of any  proposed  press  release  or filing  with the
         Securities and Exchange Commission or any other governmental  authority
         by such party pertaining to the transactions  contemplated hereby which
         references  either such  transactions  or other parties  hereto by name
         shall be  coordinated  with,  and agreed upon,  prior to the release or
         publication  of such press  release or filing with the  Securities  and
         Exchange  Commission by the Lone Star Parties, on the one hand, and the
         Company,  on the other hand. With respect to filing with the Securities
         and Exchange  Commission,  the contents of such filing shall be subject
         to the reasonable approval of both the Company and Lone Star, but shall
         comply in all respects with all applicable law, rules, and regulations,
         including,  without  limitation,  all regulations of the Securities and
         Exchange Commission.

9.16     Time of the Essence. Time is of the essence to each and every provision
         of this Agreement.

9.17     Acknowledgments.  The parties hereto hereby  acknowledge that: (a) each
         such party has been  advised by counsel in the  negotiation,  execution
         and delivery of this Agreement and the other Transaction Documents; and
         (b) no joint  venture  is  created  hereby or by the other  Transaction
         Documents   or   otherwise   exists  by  virtue  of  the   transactions
         contemplated  hereby  among the  Greenbriar  Parties  and the Lone Star
         Parties.

9.18     Assignment of Stock.  The  Greenbriar  Parties hereby agree that should
         Lone Star determine that it is advisable to accept an assignment of the
         Capital  Stock  of any  Assignor  rather  than the  assignment  of such
         Assignor's  assets, the Greenbriar Parties shall agree to enter into an
         amendment (and cause the appropriate  Subsidiary of Greenbriar to enter
         into an amendment) of this Agreement to effectuate such change provided
         such  transaction  shall not  affect  the  economic  terms as set forth
         herein.


            [The Remainder of this Page Is Intentionally Left Blank]



                                 Page 130 of 200
<PAGE>

         IN WITNESS WHEREOF,  the parties have hereunto  executed this Agreement
         as of August 1, 2001.

                                THE COMPANY

                                GREENBRIAR CORPORATION


                                By:    /s/ Gene S. Bertcher
                                  ----------------------------------------------
                                Gene S. Bertcher, Executive Vice President
                                and Chief Financial Officer


                                THE ASSIGNORS

                                WINDSOR HOUSE WEST, INCORPORATED

                                By:    /s/ Gene S. Bertcher
                                  ----------------------------------------------
                                Gene S. Bertcher, President, Chief
                                Executive Officer and Treasurer

                                BERNE VILLAGE, INC.

                                By:    /s/ Gene S. Bertcher
                                  ----------------------------------------------
                                Gene S. Bertcher, President, Chief
                                Executive Officer and Treasurer


                                ROSE TARA PLANTATION, INC.


                                By:    /s/ Gene S. Bertcher
                                  ----------------------------------------------
                                Gene S. Bertcher, President, Chief
                                Executive Officer and Treasurer


                                THE DENISON - GREENBRIAR, INC.


                                By:    /s/ Gene S. Bertcher
                                  ----------------------------------------------
                                Gene S. Bertcher, President, Chief
                                Executive Officer and Treasurer




                                 Page 131 of 200
<PAGE>

                                ROSE GARDEN ESTATES, INC.


                                By:    /s/ Gene S. Bertcher
                                  ----------------------------------------------
                                Gene S. Bertcher, President, Chief
                                Executive Officer and Treasurer


                                THE TERRACE RETIREMENT, INC.


                                By:    /s/ Gene S. Bertcher
                                  ----------------------------------------------
                                Gene S. Bertcher, President, Chief
                                Executive Officer and Treasurer

                                TRANSFERCO, INC.


                                By:    /s/ Gene S. Bertcher
                                  ----------------------------------------------
                                Gene S. Bertcher, President, Chief
                                Executive Officer and Treasurer

                                WEDGWOOD PARTNERS LTD.,
                                LIMITED PARTNERSHIP

                                By:      GRB, LLC, a Nevada limited
                                         liability company, General Partner

                                         By:      Greenbriar Acquisition
                                                  Corporation, a Nevada
                                                  corporation, Manager


                                                  By: /s/  Gene S. Bertcher
                                                      --------------------------
                                                  Gene S. Bertcher, President,
                                                  Chief Executive Officer and
                                                  Treasurer

                                WEDGWOOD RETIREMENT INNS, INC.

                                By:    /s/ Gene S. Bertcher
                                  ----------------------------------------------
                                Gene S. Bertcher, President, Chief
                                Executive Officer and Treasurer



                                 Page 132 of 200
<PAGE>

                                LSOF POOLED EQUITY, L.P.

                                By:  LSOF GenPar, Inc., its General Partner


                                By:    /s/  J. D. Dell
                                  ----------------------------------------------
                                        J. D. Dell, Vice President







                                 Page 133 of 200
<PAGE>

                                 MUTUAL RELEASE
                                 --------------


         This Mutual  Release dated as of August ___,  2001 (this  "Release") is
entered into by and among LSOF Pooled Equity,  L.P.  ("Lone  Star"),  Greenbriar
Corporation  (the  "Company"),   American  Realty  Trust,  Inc.,  Basic  Capital
Management,  Inc., One Realco  Corporation (in its own capacity and as successor
in  interest  to  Nanook  Partners,   L.P.)  and  Tacco  Financial  Corporation,
International Health Products, Inc. (collectively, the "Intervenors"), and James
R.  Gilley,  Gene S.  Bertcher,  Victor L.  Lund,  and Don C.  Benton,  in their
capacity as individuals,  directors,  officers,  and stockholders of the Company
(collectively  the "Directors")  (Lone Star, the Company,  Intervenors,  and the
Directors may sometimes be individually referred to as a "Party" or collectively
as the "Parties").

                                    RECITALS

         WHEREAS,  in January 1998,  Lone Star's  predecessor in interest,  Lone
Star Opportunity  Fund, L.P.,  purchased shares of the Company's Series F Senior
Convertible  Preferred  Stock  and  shares  of the  Company's  Series  G  Senior
Convertible   Preferred  Stock   (collectively,   the  "Preferred   Stock")  for
$22,000,000,  which Preferred Stock was convertible into shares of the Company's
common stock;

         WHEREAS,  on  October  30,  2000,  Lone Star  delivered  its  notice of
conversion  evidencing its desire to convert the Preferred  Stock into shares of
the Company's common stock;

         WHEREAS,  a dispute  arose  between the Company and Lone Star as to the
conversion  price  of the  Preferred  Stock  and the  number  of  shares  of the
Company's common stock into which the Preferred Stock would be convertible;

         WHEREAS,  all matters relating to the conversion of the Preferred Stock
are  currently  being  litigated  pursuant  to the lawsuit  styled:  LSOF Pooled
Equity,  L.P.  v.  Greenbriar  Corporation,  Cause  No.  00-08824,  in the 162nd
Judicial  District  Court (the "District  Court") of Dallas  County,  Texas (the
"Lawsuit")  asserting claims against the Company and seeking legal and equitable
relief;

         WHEREAS, on April 5, 2001, the District Court granted Lone Star partial
summary judgment in favor of Lone Star;

         WHEREAS,  on May 25, 2001,  Intervenors  filed an Original  Petition in
Intervention, seeking to join the Lawsuit;

         WHEREAS, a trial is scheduled for the near future;

         WHEREAS,  bona  fide  disputes  and  controversies  exist  between  the
Parties, and solely to avoid the prospect of prolonged,  costly litigation,  the
Parties desire to compromise and settle all claims between them, including,  but
not limited to, all existing  claims asserted or existing claims that could have
been asserted by any party in the Lawsuit;


                                 Page 134 of 200
<PAGE>

         NOW, THEREFORE, in consideration of the recitals, covenants,  releases,
and  agreements  contained  in this  Release,  and for other  good and  valuable
consideration,  the receipt and sufficiency of which is hereby acknowledged, the
Parties hereby agree as follows:

                                    ARTICLE I

                                  CONSIDERATION
                                  -------------

         1.1      The Master Settlement Agreement and Transaction Documents. The
         parties  hereby  incorporate  by  reference  the  terms  of the  Master
         Settlement  Agreement dated as of August 1, 2001 between Lone Star, the
         Company,  and certain  individuals of the Company (the "Agreement") and
         the  Transaction   Documents  (as  defined  in  the  Master  Settlement
         Agreement) as consideration for this Release.

         1.2      Dismissal  of  Lawsuit.  Contemporaneously  with the  complete
         execution  and  delivery  of  this  Release,  the  Agreement,  and  the
         Transaction  Documents,   counsel  for  Lone  Star,  the  Company,  and
         Intervenors  shall  execute and file with the Court an original  Agreed
         Motion to Dismiss  in the form  attached  hereto as Exhibit  "A" and an
         Agreed Order of Dismissal in the form attached hereto as Exhibit "B."

         1.3      Release by Lone Star.  Lone Star,  for itself and its  current
         and former employees,  officers, directors,  stockholders,  affiliates,
         incorporators,  successors,  predecessors (including but not limited to
         Lone Star Opportunity Fund, L.P. and LSOF Greenbriar L.L.C.), partners,
         parent companies, subsidiaries,  assigns, executors, agents, attorneys,
         and  representatives  of any  kind,  if any,  by this  Release,  hereby
         RELEASES,  SURRENDERS,  REMISES,  ACQUITS,  and FOREVER  DISCHARGES the
         Company,  Intervenors,  the Directors and their respective  current and
         former  employees,  officers,  directors,   stockholders,   affiliates,
         successors,  predecessors,  partners,  parent companies,  subsidiaries,
         assigns, executors, agents, attorneys, and representatives of any kind,
         if any, from any and all offsets,  claims, demands,  damages,  actions,
         causes of action, suits in equity, liabilities, debts, accounts, costs,
         expenses,  contributions,  bills,  promises,  covenants  or  warranties
         (whether past, present, future, currently accrued,  unaccrued, known or
         unknown), and whether permanent,  continuing, or otherwise, that either
         were or could  have been  asserted  in the  Lawsuit,  are  directly  or
         indirectly  related to Lone Star's  Preferred  Stock  investment in the
         Company or are otherwise  directly or indirectly related to Lone Star's
         entering into the Agreement and the  Transaction  Documents;  provided,
         however,  that this Release  does not in any way  release,  compromise,
         surrender or acquit Lone Star's  ability to enforce the  provisions  of
         this Release, the Agreement,  or the Transaction Documents in the event
         of a breach or default  hereunder or thereunder by another Party hereto
         or thereto.


                                 Page 135 of 200
<PAGE>

         1.4      Release  by the  Company.  The  Company,  for  itself  and its
         respective   current  and  former   employees,   officers,   directors,
         stockholders,  affiliates, successors,  predecessors,  partners, parent
         companies, subsidiaries,  assigns, heirs, executors, agents, attorneys,
         and  representatives  of any kind,  if any, by this  Release  RELEASES,
         SURRENDERS,   REMISES,  ACQUITS,  AND  FOREVER  DISCHARGES  Lone  Star,
         Intervenors,  the  Directors  and their  current and former  employees,
         officers, directors, stockholders, affiliates, successors, predecessors
         (including,  but not limited to, Lone Star  Opportunity  Fund, L.P. and
         LSOF Greenbriar  L.L.C.),  partners,  parent  companies,  subsidiaries,
         assigns, executors,  agents, attorneys, and representatives of any kind
         from  any and all  claims,  demands,  damages,  entitlements,  actions,
         causes of action, suits in equity, liabilities, debts, accounts, costs,
         expenses, setoffs, contributions,  payments, bills, promises, covenants
         or  warranties  (whether  past,  present,  future,  currently  accrued,
         unaccrued,  known or unknown),  and whether permanent,  continuing,  or
         otherwise, that either were or could have been asserted in the Lawsuit,
         are  directly  or  indirectly  related to Lone Star's  Preferred  Stock
         investment  in the  Company or are  otherwise  directly  or  indirectly
         related to Lone Star's  entering into the Agreement and the Transaction
         documents;  provided,  however,  that this  Release does not in any way
         release,  compromise,  surrender  or acquit  the  Company's  ability to
         enforce  the  provisions  of  this  Release,  the  Agreement,   or  the
         Transaction  Documents in the event of a breach or default hereunder or
         thereunder by another Party hereto or thereto.

         1.5      Release by Intervenors.  Intervenors, for themselves and their
         respective   current  and  former   employees,   officers,   directors,
         stockholders,  affiliates, successors,  predecessors,  partners, parent
         companies, subsidiaries,  assigns, heirs, executors, agents, attorneys,
         and  representatives  of any kind,  if any,  by this  Release  RELEASE,
         SURRENDER,  REMISE,  ACQUIT,  AND  FOREVER  DISCHARGE  Lone  Star,  the
         Company,   the  Directors  and  their  current  and  former  employees,
         officers, directors, stockholders, affiliates, successors, predecessors
         (including but not limited to Lone Star Opportunity Fund, L.P. and LSOF
         Greenbriar L.L.C.), partners, parent companies, subsidiaries,  assigns,
         executors,  agents, attorneys, and representatives of any kind from any
         and all claims,  demands,  damages,  entitlements,  actions,  causes of
         action, suits in equity, liabilities, debts, accounts, costs, expenses,
         setoffs,   contributions,   payments,  bills,  promises,  covenants  or
         warranties   (whether  past,   present,   future,   currently  accrued,
         unaccrued,  known or unknown),  and whether permanent,  continuing,  or
         otherwise, that either were or could have been asserted in the Lawsuit,
         are  directly  or  indirectly  related to Lone Star's  Preferred  Stock
         investment  in the  Company or are  otherwise  directly  or  indirectly
         related to Lone Star's  entering into the Agreement and the Transaction
         documents;  provided,  however,  that this  Release does not in any way
         release,  compromise,  surrender  or  acquit  Intervenors'  ability  to
         enforce the provisions of this Release or the Consent  Agreement in the
         event of a breach or default hereunder by another Party hereto.


                                 Page 136 of 200
<PAGE>

         1.6      Release by the Directors.  The  Directors,  for themselves and
         their respective  current and former  employees,  officers,  directors,
         stockholders,  affiliates, successors,  predecessors,  partners, parent
         companies, subsidiaries,  assigns, heirs, executors, agents, attorneys,
         and  representatives  of any kind,  if any,  by this  Release  RELEASE,
         SURRENDER,  REMISE,  ACQUIT,  AND  FOREVER  DISCHARGE  Lone  Star,  the
         Company,  the  Intervenors  and their  current  and  former  employees,
         officers, directors, stockholders, affiliates, successors, predecessors
         (including but not limited to Lone Star Opportunity Fund, L.P. and LSOF
         Greenbriar L.L.C.), partners, parent companies, subsidiaries,  assigns,
         executors,  agents, attorneys, and representatives of any kind from any
         and all claims,  demands,  damages,  entitlements,  actions,  causes of
         action, suits in equity, liabilities, debts, accounts, costs, expenses,
         setoffs,   contributions,   payments,  bills,  promises,  covenants  or
         warranties   (whether  past,   present,   future,   currently  accrued,
         unaccrued,  known or unknown),  and whether permanent,  continuing,  or
         otherwise, that either were or could have been asserted in the Lawsuit,
         are  directly  or  indirectly  related to Lone Star's  Preferred  Stock
         investment  in the  Company or are  otherwise  directly  or  indirectly
         related to Lone Star's  entering into the Agreement and the Transaction
         documents;  provided,  however,  that this  Release does not in any way
         release,  compromise,  surrender  or acquit the  Directors'  ability to
         enforce the provisions of this Release or the Consent  Agreement in the
         event of a breach or default hereunder by another Party hereto.

         1.7      Attorneys'  Fees and  Expenses.  Except as provided for in the
         Agreement,  the Parties  hereby agree that they are solely  responsible
         for their own attorneys'  fees, court costs and expenses related to the
         Lawsuit.

                                   ARTICLE II

                                 INDEMNIFICATION
                                 ---------------

         2.1      Each Party hereto represents and warrants that it has full and
         express authority to settle all claims and demands as set forth in this
         Release,  to enter this Release that it has not made any  assignment of
         any one or more of those  claims,  and that it  knows of no  person  or
         entity that intends to assert a claim by, through,  under, or on behalf
         of such Party ("Known Claimants").  TO THE EXTENT THAT ANY CLAIM MAY BE
         BROUGHT BY PERSONS OR ENTITIES  CLAIMING BY, THROUGH,  OR UNDER A PARTY
         OR BY KNOWN  CLAIMANTS,  THE PARTY  THROUGH WHICH SUCH CLAIM IS BROUGHT
         AGREES TO INDEMNIFY,  DEFEND,  AND HOLD HARMLESS THE OTHER PARTIES (AND
         THE CURRENT AND FORMER EMPLOYEES,  OFFICERS,  DIRECTORS,  STOCKHOLDERS,
         AFFILIATES,  SUCCESSORS,   PREDECESSORS,  PARTNERS,  PARENT  COMPANIES,
         SUBSIDIARIES,    ASSIGNS,    EXECUTORS,    AGENTS,    ATTORNEYS,    AND
         REPRESENTATIVES  OF ANY KIND OF EACH PARTY) FROM ANY COSTS OR EXPENSES,
         INCLUDING LEGAL FEES, COURT COSTS,  JUDGMENTS, OR REASONABLE SETTLEMENT
         PAYMENTS ARISING FROM SUCH CLAIMS.


                                 Page 137 of 200
<PAGE>

                                   ARTICLE III

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

         3.1      Representations  and Warranties of the Parties. As a condition
         precedent to any  obligations  or liabilities of the Parties under this
         Release,  the Parties do hereby expressly represent and warrant to each
         other that:

(a)      Claims.  Each  Party  (i) is the  lawful  owner  of all  claims  herein
         released;  and (ii) no claim that they may have had,  may now have,  or
         will  hereinafter  have,  or claim to have  against the other Party has
         been  assigned or  transferred  in any way to any other  person,  firm,
         corporation or other entity in any manner,  including,  but not limited
         to, assignment or transfer by subrogation or by operation of law.

(b)      Organization.  Each  of  the  Parties  hereto  is  a  corporation  duly
         organized,  validly existing and in good standing under the laws of the
         jurisdiction of its formation and has the requisite power and authority
         to own, lease or otherwise  hold the assets owned,  leased or otherwise
         held by it and to carry on its business as  presently  conducted by it.
         Each of the Parties  hereto is in good  standing and duly  qualified to
         conduct business as a foreign entity in every jurisdiction in which its
         ownership  or lease of property or conduct of the  business  makes such
         qualification necessary.

(c)      Authorization  and Effect of Agreement.  Each of the Parties hereto has
         the requisite  corporate  power and  authority to execute,  deliver and
         perform  its  obligations  under  this  Release  and each of the  other
         Transaction  Documents  executed or to be  executed by such party.  The
         execution,  delivery  and  performance  by each  party  hereto  of this
         Release and each of the other Transaction  Documents  executed or to be
         executed  by such  Party  have been duly  authorized  by all  requisite
         corporate  action as applicable.  This Agreement has been duly executed
         and delivered by each of the Parties hereto. This Release  constitutes,
         and each of the other  Transaction  Documents to be executed by a Party
         hereto will constitute, the valid and binding obligation of such Party,
         enforceable against such party in accordance with its terms, subject to
         applicable    bankruptcy,     insolvency,     fraudulent    conveyance,
         reorganization, moratorium and similar laws affecting creditors' rights
         and remedies generally and subject,  as to  enforceability,  to general
         principles    of   equity,    including    principles   of   commercial
         reasonableness,  good  faith and fair  dealing  (regardless  of whether
         enforcement is sought in a proceeding at law or in equity).

(d)      Conflicts.  Neither the  execution,  delivery,  nor  performance of any
         Transaction  Document  executed or to be  executed by any Party  hereto
         will (i) violate  any  material  Law  applicable  to such  Party,  (ii)
         violate,  conflict with, permit the cancellation or acceleration of, or
         give rise to a loss of any benefit  under,  any  material  agreement or
         commitment  to which  such  Party  is a party  or by  which  any of its
         properties  are bound,  or (iii) violate or conflict with any provision
         of such Party's Organizational Documents.


                                 Page 138 of 200
<PAGE>

                  Nanook Partners,  L.P. One Realco Corporation is the successor
         in interest to Nanook Partners, L.P. and has all right and authority to
         release the claims of Nanook  Partners,  L.P. against Lone Star and its
         affiliates as provided herein.

                  The Parties agree and  stipulate  that the Parties are relying
         upon  these  representations  and  warranties  in  entering  into  this
         Release.   These  representations  and  warranties  shall  survive  the
         execution of this Release.

         3.2      Consultation  with  Attorneys.  The Parties  represent to each
         other that they have been  represented  by and consulted with attorneys
         prior to executing this Release.  The Parties further  acknowledge that
         they have been  provided  with a reasonable  period of time to consider
         and execute this Release.

                                   ARTICLE IV

                                GENERAL COVENANTS
                                -----------------

         4.1      Severability  and  Savings  Clause.  If any of the  covenants,
         terms or conditions of this  Agreement are held illegal by any court or
         administrative  body of  competent  jurisdiction,  and any  director or
         stockholder action, including, but not limited to, the execution of any
         documents or instruments, will make such covenants, terms or conditions
         valid and  enforceable,  each party hereby agrees that it shall take or
         cause to be taken such action as may reasonably be required to make any
         such  covenant,  term  or  condition  valid  and  enforceable.  If  any
         provision of this Agreement is held invalid,  such invalidity shall not
         affect the other  provisions  hereof which can be given effect  without
         the invalid provision, and to this end the provisions of this Agreement
         are intended to be and shall be deemed severable.

         4.2      GOVERNING  LAW.  THIS RELEASE SHALL BE CONSTRUED IN ACCORDANCE
         WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS  WITHOUT  REGARD TO
         THE  PRINCIPLES OF CONFLICTS OF LAWS. THE PARTIES HERETO HEREBY CONSENT
         TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN DALLAS
         COUNTY,  TEXAS AND  IRREVOCABLY  AGREE THAT ALL ACTIONS OR  PROCEEDINGS
         ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH
         COURTS.  THE  PARTIES  ACCEPT  FOR ITSELF  AND IN  CONNECTION  WITH ITS
         PROPERTIES,    GENERALLY   AND   UNCONDITIONALLY,    THE   NONEXCLUSIVE
         JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE OF FORUM NON
         CONVENIENS,  AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED
         THEREBY IN  CONNECTION  WITH THIS  AGREEMENT  OR ANY OTHER  TRANSACTION
         DOCUMENTS.


                                 Page 139 of 200
<PAGE>

         4.3      FORUM  SELECTION;  WAIVER OF JURY  TRIAL.  EACH  PARTY  HERETO
         WAIVES ANY RIGHT TO TRAIL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE
         OF  ACTION  (i)  ARISING  UNDER  THIS  AGREEMENT  OR ANY  OF THE  OTHER
         TRANSACTION  DOCUMENTS OR (ii) IN ANY WAY CONNECTED  WITH OR RELATED OR
         INCIDENTAL  TO THE  DEALINGS OF THE  PARTIES  HERETO IN RESPECT OF THIS
         AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS
         RELATED  HERETO  OR  THERETO  IN EACH  CASE  WHETHER  NOW  EXISTING  OR
         HEREAFTER ARISING, AND WHETHER IN CONTRACT,  TORT, EQUITY OR OTHERWISE.
         EACH PARTY  HEREBY  AGREES AND  CONSENTS  THAT ANY SUCH CLAIM,  DEMAND,
         ACTION OR CAUSE OF ACTION  SHALL BE  DECIDED BY COURT  TRIAL  WITHOUT A
         JURY AND THAT SUCH PARTY MAY FILE AN ORIGINAL  COUNTERPART OF A COPY OF
         THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
         PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

         4.4      Entire Agreement.  This Release, the Transaction Documents and
         the other agreements contemplated hereby set forth the entire agreement
         of the parties with respect to the matters set forth herein or therein.
         This  Release  shall  not be  modified  except  by  written  instrument
         executed together or in counterparts by all of the parties hereto.  All
         exhibits and schedules referred to herein are intended to be and hereby
         are specifically made a part of this Release.

         4.5      Non-Waiver.  The  failure of any party to insist  upon  strict
         performance  of any provision  hereof shall not constitute a waiver of,
         or estoppel against asserting, the right to require such performance in
         the  future,  nor shall a waiver or  estoppel  with  respect to a later
         breach of a similar nature or otherwise.

         4.6      Representation  by and Reliance Upon Own Counsel.  The Parties
         have been  represented  by their own  counsel  in the  preparation  and
         execution of this Release,  and therefore stipulate and agree that this
         Release  shall  not be  construed  against  any  Party  as the  drafter
         thereof.  All  provisions  of this Release have been  negotiated by the
         Parties at arm's  length and no Party shall be deemed the  scrivener of
         this Release.

         4.7      Construction.  The  headings in this  Release are inserted for
         convenience and  identification  only and are not intended to describe,
         interpret, define or limit the scope, extent, or intent of this Release
         or any provision hereof.  Whenever the context requires,  the gender of
         all words used in this Release shall include the  masculine,  feminine,
         and neuter,  and the number of all words shall include the singular and
         the plural.  No provision of this Release will be  interpreted in favor
         of, or against,  any of the  parties  hereto by reason of the extent to
         which  any  such  party or its  counsel  participated  in the  drafting
         thereof  or by reason of the  extent  to which  any such  provision  is
         inconsistent with any prior draft hereof or thereof.


                                 Page 140 of 200
<PAGE>

         4.8      Multiple  Counterparts.   This  Release  may  be  executed  in
         multiple  counterparts,  each of which shall be fully  effective  as an
         original when all of the Parties have executed this Release.

         4.9      No Admission of Fault.  Neither the  execution of this Release
         nor  compliance  with its terms shall  constitute  an  admission of any
         fault or liability  on the part of any of the Parties,  or any of their
         agents,  attorneys,  representatives,  or employees, all such liability
         being expressly denied.

         4.10     Successors and Assigns.  Except as provided to the contrary in
         this  Agreement,  this  Agreement  shall apply to, and shall be binding
         upon each of the parties,  their  respective  successors  and permitted
         assigns.

         4.11     Action  to  Enforce  Release.   Notwithstanding  the  releases
         contained herein, any Party may bring an action to enforce this Release
         or may interpose  this Release by way of defense or  counterclaim,  and
         reasonable  attorneys'  fees and expenses for such  enforcement  may be
         recovered by the prevailing party.

         4.12     Non-Disparagement.  The  Parties  agree that they will make no
         disparaging  remarks  (oral or written)  concerning  the other Party or
         their  parents,   principals,   partners,   subsidiaries,   affiliates,
         officers,  directors,   stockholders,   agents,   representatives,   or
         employees, nor will the Parties make any disparaging remarks concerning
         the policies,  practices,  and operations of the other Party.  Further,
         the Parties  agree that they will engage in no conduct  detrimental  to
         the interests and goodwill of the other Party,  nor will they engage in
         any conduct which reflects  adversely on the reputation and/or goodwill
         of the other Party, their principals,  partners, parents, subsidiaries,
         affiliates, officers, agents, directors, stockholders, representatives,
         or employees. This paragraph does not prohibit either Party from making
         factual  truthful  statements to any  regulatory or other  governmental
         agencies  pursuant to subpoena  or, after  written  notice to the other
         Party,  in  response  to  a  written  request  for  such  testimony  or
         information.

         4.13     Confidentiality.  Except for any governmental filings required
         in order to complete the  transactions  contemplated  herein and as the
         Company and Lone Star may  otherwise  agree or consent in writing,  all
         information    received   by   the   Parties   and   their   respective
         representatives  in  contemplation,  or pursuant to the terms,  of this
         Release  shall be kept in  confidence  by the  receiving  party and its
         representatives;  provided, however, that any party hereto may disclose
         such information to its legal and financial  advisors,  so long as such


                                 Page 141 of 200
<PAGE>

         persons agree to maintain the  confidentiality  of such  information in
         accordance  with  this  Section  4.13.  The  foregoing  confidentiality
         provisions shall not apply to such portions of the information received
         which (i) are or become  generally  available to the public  through no
         action by the receiving party or by such party's representatives,  (ii)
         are or become  available to the receiving  party on a  non-confidential
         basis  from  a  source,   other  than  the  disclosing   party  or  its
         representatives, not known by the receiving party to be prohibited from
         disclosing  such  portions to it by a  contractual  legal or  fiduciary
         obligation, or (iii) are required by law to be disclosed.

                  [Remainder of Page Intentionally Left Blank]




                                 Page 142 of 200
<PAGE>

                        SIGNATURE PAGE TO MUTUAL RELEASE




                  DATED AND EFFECTIVE this day of August, 2001.

                                           LSOF POOLED EQUITY, L.P.


                                           By:
                                              ----------------------------------
                                           Name:    J.D. Dell
                                           Title:  Vice-President


                                           GREENBRIAR CORPORATION


                                           By:
                                              ----------------------------------
                                           Name:  James R. Gilley
                                           Title:  President and CEO



                                           AMERICAN REALTY TRUST, INC.


                                           By:
                                              ----------------------------------
                                           Name:
                                           Title:


                                           BASIC CAPITAL MANAGEMENT, INC.


                                           By:
                                              ----------------------------------
                                           Name:
                                           Title:




                                 Page 143 of 200
<PAGE>

                                           ONE REALCO CORPORATION


                                           By:
                                              ----------------------------------
                                           Name:
                                           Title:


                                           TACCO FINANCIAL CORPORATION


                                           By:
                                              ----------------------------------
                                           Name:
                                           Title:


                                           INTERNATIONAL HEALTH PRODUCTS INC.


                                           By:
                                              ----------------------------------
                                           Name:
                                           Title:


                                           JAMES R GILLEY


                                           Name:    James R. Gilley


                                           GENE S. BERTCHER


                                           Name:    Gene S. Bertcher



                                 Page 144 of 200
<PAGE>

                                           VICTOR L. LUND


                                           Name:    Victor L. Lund


                                           DON C. BENTON


                                           Name:    Don C. Benton


                                           LSOF POOLED EQUITY, L.P.


                                           By:
                                              ----------------------------------

                                           Name:

                                           Title:



THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.


         BEFORE ME, the undersigned  authority,  on this day personally appeared
_______________________  as  ______________________ of LSOF Pooled Equity, L.P.,
known  to me to be  the  person  whose  name  is  subscribed  to  the  foregoing
instrument,  and  acknowledged  to me that he executed the same for the purposes
and consideration therein expressed,  in the capacity therein stated, and as the
act and deed of said corporation.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]
                                       _________________________________________

                                       Notary Public, State of _________________

Printed Name:  ________________________
My Commission Expires:  _______________



                                            GREENBRIAR CORPORATION


                                            By:_________________________________

                                            Name:

                                            Title:



                                 Page 145 of 200
<PAGE>

THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.


         BEFORE ME, the undersigned  authority,  on this day personally appeared
_______________________  as  ______________________  of Greenbriar  Corporation,
known  to me to be  the  person  whose  name  is  subscribed  to  the  foregoing
instrument,  and  acknowledged  to me that he executed the same for the purposes
and consideration therein expressed,  in the capacity therein stated, and as the
act and deed of said corporation.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]
                                       _________________________________________

                                       Notary Public, State of _________________

Printed Name:  ________________________
My Commission Expires:  _______________


                                            AMERICAN REALTY TRUST, INC.


                                            By:_________________________________

                                            Name:

                                            Title:




                                 Page 146 of 200
<PAGE>


THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.


         BEFORE ME, the undersigned  authority,  on this day personally appeared
_______________________  as  ________________________  of American Realty Trust,
Inc.,  known to me to be the person whose name is  subscribed  to the  foregoing
instrument,  and  acknowledged  to me that he executed the same for the purposes
and consideration therein expressed,  in the capacity therein stated, and as the
act and deed of said ____________________.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]

                                        ________________________________________

                                        Notary Public, State of ________________


Printed Name:  ________________________
My Commission Expires:  _______________


                                            BASIC CAPITAL MANAGEMENT



                                            By:_________________________________

                                            Name:

                                            Title:



                                 Page 147 of 200
<PAGE>

THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.


         BEFORE ME, the undersigned  authority,  on this day personally appeared
_______________________ as ________________________ of Basic Capital Management,
known  to me to be  the  person  whose  name  is  subscribed  to  the  foregoing
instrument,  and  acknowledged  to me that he executed the same for the purposes
and consideration therein expressed,  in the capacity therein stated, and as the
act and deed of said ____________________.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]

                                        ________________________________________

                                        Notary Public, State of ________________


Printed Name:  ________________________
My Commission Expires:  _______________


                                            ONE REALCO CORPORATION



                                            By:_________________________________

                                            Name:

                                            Title:


                                 Page 148 of 200
<PAGE>

THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.


         BEFORE ME, the undersigned  authority,  on this day personally appeared
_______________________ as  ________________________  of One Realco Corporation,
known  to me to be  the  person  whose  name  is  subscribed  to  the  foregoing
instrument,  and  acknowledged  to me that he executed the same for the purposes
and consideration therein expressed,  in the capacity therein stated, and as the
act and deed of said ____________________.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]

                                        ________________________________________

                                        Notary Public, State of ________________


Printed Name:  ________________________
My Commission Expires:  _______________


                                            TACCO FINANCIAL CORPORATION



                                            By:_________________________________

                                            Name:

                                            Title:


                                 Page 149 of 200
<PAGE>

THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.


         BEFORE ME, the undersigned  authority,  on this day personally appeared
_______________________   as   ________________________   of   Tacco   Financial
Corporation,  known  to me to be the  person  whose  name is  subscribed  to the
foregoing  instrument,  and acknowledged to me that he executed the same for the
purposes and consideration  therein  expressed,  in the capacity therein stated,
and as the act and deed of said ____________________.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]

                                        ________________________________________

                                        Notary Public, State of ________________


Printed Name:  ________________________
My Commission Expires:  _______________


                                            INTERNATIONAL HEALTH PRODUCTS, INC.



                                            By:_________________________________

                                            Name:

                                            Title:


                                 Page 150 of 200
<PAGE>

THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.


         BEFORE ME, the undersigned  authority,  on this day personally appeared
_______________________  as  ________________________  of  International  Health
Products,  Inc.,  known to me to be the person whose name is  subscribed  to the
foregoing  instrument,  and acknowledged to me that he executed the same for the
purposes and consideration  therein  expressed,  in the capacity therein stated,
and as the act and deed of said ____________________.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]

                                        ________________________________________

                                        Notary Public, State of ________________


Printed Name:  ________________________
My Commission Expires:  _______________





                                 Page 151 of 200
<PAGE>



THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.


         BEFORE ME, the undersigned  authority,  on this day personally appeared
James R. Gilley,  known to me to be the person whose name is  subscribed  to the
foregoing  instrument,  and acknowledged to me that he executed the same for the
purposes and consideration therein expressed.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]

                                        ________________________________________

                                        Notary Public, State of ________________


Printed Name:  ________________________
My Commission Expires:  _______________





                                 Page 152 of 200
<PAGE>



THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.


         BEFORE ME, the undersigned  authority,  on this day personally appeared
Gene S.  Bertcher,  known to me to be the person whose name is subscribed to the
foregoing  instrument,  and acknowledged to me that he executed the same for the
purposes and consideration therein expressed.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]

                                        ________________________________________

                                        Notary Public, State of ________________


Printed Name:  ________________________
My Commission Expires:  _______________




                                 Page 153 of 200
<PAGE>

THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.


         BEFORE ME, the undersigned  authority,  on this day personally appeared
Don C.  Benton,  known to me to be the person  whose name is  subscribed  to the
foregoing  instrument,  and acknowledged to me that he executed the same for the
purposes and consideration therein expressed.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]

                                        ________________________________________

                                        Notary Public, State of ________________


Printed Name:  ________________________
My Commission Expires:  _______________





                                 Page 154 of 200
<PAGE>

                               CAUSE NO. 00-08824

LSOF POOLED EQUITY, L.P.               ss.          IN THE DISTRICT COURT
                                       ss.
       Plaintiff,                      ss.
                                       ss.
v.                                     ss.
                                       ss.
GREENBRIAR CORPORATION                 ss.
                                       ss.
       Defendant.                      ss.
                                       ss.
AMERICAN REALTY TRUST, INC.,           ss.
BASIC CAPITAL MANAGEMENT, INC.,        ss.
ONE REALCO CORPORATION, TACCO          ss.          162nd JUDICIAL DISTRICT
FINANCIAL CORPORATION,                 ss.
INTERNATIONAL HEALTH PRODUCTS,         ss.
INC. and NANOOK PARTNERS, L.P.,        ss.
                                       ss.
       Intervenors,                    ss.
                                       ss.
v.                                     ss.
                                       ss.
LSOF POOLED EQUITY, L.P. and           ss.
GREENBRIAR CORPORATION,                ss.
                                       ss.
       Intervention Defendants.        ss.
                                       ss.          DALLAS COUNTY, TEXAS

                            AGREED MOTION TO DISMISS
                            ------------------------

TO THE HONORABLE JUDGE OF SAID COURT:

         Plaintiff  LSOF  Pooled  Equity,  L.P.  ("Pooled  Equity"),  Greenbriar
Corporation  ("Greenbriar"),  and American  Realty  Trust,  Inc.,  Basic Capital
Management,   Inc.,  One  Realco  Corporation,   Tacco  Financial   Corporation,
International Health Products, Inc., and Nanook Partners, L.P. (collectively the
"Intervenors")   (Pooled  Equity,   Greenbriar,   and  the   Intervenors   shall
collectively  be referred to as the "Parties")  file this their Agreed Motion to
Dismiss, and would respectfully show the Court as follows:
         1.       Currently  pending is Cause No. 00-08824;  LSOF Pooled Equity,
L.P. v. Greenbriar  Corporation,  in the District Court of Dallas County, Texas,
162nd Judicial District (the "Lawsuit").
         2.       The Parties have agreed to dismiss the Lawsuit.
         3.       Accordingly,  the Parties  respectfully request that the Court
grant this Agreed Motion to Dismiss and enter the attached Agreed Order Granting
Motion to Dismiss.


                                 Page 155 of 200
<PAGE>

                                          Respectfully submitted,


                                          ______________________________________
                                          T. Ray Guy
                                          State Bar No. 08648500
                                          K. Todd Phillips
                                          State Bar No. 24002767
                                          J. Brian Williams
                                          State Bar No. 24028222

                                          WEIL, GOTSHAL & MANGES LLP
                                          100 Crescent Court, Suite 1300
                                          Dallas, Texas 75201-6950
                                          Telephone:        (214) 746-7700
                                          Facsimile:        (214) 746-7777

                                          ATTORNEYS FOR PLAINTIFF
                                          LSOF POOLED EQUITY, L.P.







                                 Page 156 of 200
<PAGE>

AGREED AS TO FORM AND SUBSTANCE:

LYNCH LAW FIRM



By:
   -----------------------------------------
   Jeffrey S. Lynch
   State Bar No. 12727500
   Quorum Drive
   Dallas, Texas  75240
   Telephone:  (972) 991-0000
   Facsimile:   (972) 991-4611

ATTORNEYS FOR PLAINTIFF

SUSMAN GODFREY L.L.P.


By:
   -----------------------------------------
   Terrell W. Oxford
   State Bar No. 15390500
   Mark A. Evetts
   State Bar No. 00793709
   Kenneth E. Gardner
   State Bar No. 07656825
   Salvador Espino
   State Bar No. 00795007
   901 Main Street, Suite 4100
   Dallas, Texas  75202
   Telephone:  (214) 754-1908
   Facsimile:   (214) 665-0853

ATTORNEYS FOR DEFENDANT




                                 Page 157 of 200
<PAGE>

BRADEN W. SPARKS, P.C.



By:
   -----------------------------------------
   Braden W. Sparks
   State Bar No. 18874500
   8117 Preston Road, Suite 800
   Dallas, Texas  75225
   Telephone:  (214) 696-3200
   Facsimile:   (214) 696-5971

ATTORNEYS FOR INTERVENORS

FRIEDMAN & DRIEGERT


By:
   -----------------------------------------
   Lawrence J. Friedman
   State Bar No. 07469300
   Amy Ganci
   State Bar No. 07611600
   5301 Spring Valley Road, Suite 200
   Dallas, Texas  75240
   Telephone:  (972) 788-1400
   Facsimile:   (972) 788-2667

ATTORNEYS FOR INTERVENORS



                                 Page 158 of 200
<PAGE>

                                CAUSE NO. 00-08824

LSOF POOLED EQUITY, L.P.               ss.          IN THE DISTRICT COURT
                                       ss.
       Plaintiff,                      ss.
                                       ss.
v.                                     ss.
                                       ss.
GREENBRIAR CORPORATION                 ss.
                                       ss.
       Defendant.                      ss.
                                       ss.
AMERICAN REALTY TRUST, INC.,           ss.
BASIC CAPITAL MANAGEMENT, INC.,        ss.
ONE REALCO CORPORATION, TACCO          ss.          162nd JUDICIAL DISTRICT
FINANCIAL CORPORATION,                 ss.
INTERNATIONAL HEALTH PRODUCTS,         ss.
INC. and NANOOK PARTNERS, L.P.,        ss.
                                       ss.
       Intervenors,                    ss.
                                       ss.
v.                                     ss.
                                       ss.
LSOF POOLED EQUITY, L.P. and           ss.
GREENBRIAR CORPORATION,                ss.
                                       ss.
       Intervention Defendants.        ss.
                                       ss.          DALLAS COUNTY, TEXAS

                            AGREED ORDER OF DISMISSAL
                            -------------------------

         The  Court,  having  considered  the  Agreed  Motion  to  Dismiss  (the
"Motion") filed by Plaintiff LSOF Pooled Equity, L.P.,  Greenbriar  Corporation,
and American  Realty Trust,  Inc.,  Basic Capital  Management,  Inc., One Realco
Corporation,  Tacco Financial Corporation,  International Health Products, Inc.,
and Nanook Partners, L.P., is of the opinion that the Motion should be GRANTED.
         It is therefore  ORDERED that all claims that either were or could have
been  asserted by any party in the  above-styled  and numbered  cause are hereby
DISMISSED.
         It is further  ORDERED that the  above-styled  and numbered  lawsuit is
hereby DISMISSED in its entirety.
         It is further  ORDERED that all relief not expressly  granted herein is
DENIED. SIGNED: ______________, 2001.




                                 Page 159 of 200
<PAGE>
                                                     ___________________________
                                                     HONORABLE JUDGE PRESIDING







                                 Page 160 of 200
<PAGE>

AGREED AS TO SUBSTANCE AND FORM AND ENTRY REQUESTED:


WEIL, GOTSHAL & MANGES LLP



By:
   -----------------------------------------
T. Ray Guy
State Bar No. 08648500
K. Todd Phillips
State Bar No. 24002767
J. Brian Williams
State Bar No. 24028222
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Telephone:        (214) 746-7700
Facsimile:        (214) 746-7777
ATTORNEYS FOR PLAINTIFF


SUSMAN GODFREY L.L.P.


By:
   -----------------------------------------
     Terrell W. Oxford
     State Bar No. 15390500
     Mark A. Evetts
     State Bar No. 00793709
     Kenneth E. Gardner
     State Bar No. 07656825
     Salvador Espino
     State Bar No. 00795007
     901 Main Street, Suite 4100
     Dallas, Texas  75202
     Telephone:  (214) 754-1908
     Facsimile:   (214) 665-0853
ATTORNEYS FOR DEFENDANT


                                 Page 161 of 200
<PAGE>

LYNCH LAW FIRM



By:
   -----------------------------------------
     Jeffrey S. Lynch
     State Bar No. 12727500
     Quorum Drive
     Dallas, Texas  75240
     Telephone:  (972) 991-0000
     Facsimile:   (972) 991-4611
ATTORNEYS FOR INTERVENORS

BRADEN W. SPARKS, P.C.



By:
   -----------------------------------------
     Braden W. Sparks
     State Bar No. 18874500
     8117 Preston Road, Suite 800
     Dallas, Texas  75225
     Telephone:  (214) 696-3200
     Facsimile:   (214) 696-5971
ATTORNEYS FOR INTERVENORS


FRIEDMAN & DRIEGERT


By:
   -----------------------------------------
     Lawrence J. Friedman
     State Bar No. 07469300
     Amy Ganci
     State Bar No. 07611600
     5301 Spring Valley Road, Suite 200
     Dallas, Texas  75240
     Telephone:  (972) 788-1400
     Facsimile:   (972) 788-2667
ATTORNEYS FOR INTERVENORS



                                 Page 162 of 200
<PAGE>

                                     FORM OF
                                  BILL OF SALE
                                  ------------


         THIS BILL OF SALE (this "Bill of Sale") is made and delivered  this ___
day of August,  2001, by  [__________________________],  a ________  corporation
("Assignor") to  ___________________________________  ("Assignee").  Capitalized
terms used but not defined herein shall have the meanings ascribed to such terms
in the Settlement Agreement (as hereinafter defined).

         WHEREAS,  Assignor  and  Assignee  are parties to that  certain  Master
Settlement Agreement dated as of August 1, 2001 (the "Settlement  Agreement") by
and among  Greenbriar  Corporation,  a Nevada  corporation,  LSOF Pooled Equity,
L.P.,  a Delaware  limited  partnership,  the  Assignors  named  therein and the
Intervenors  named  therein,  the  terms of which  are  incorporated  herein  by
reference,  which provides,  among other things, for the transfer and assignment
by Assignor to Assignee of certain Assigned Assets.

         NOW,  THEREFORE,  in consideration of the mutual promises  contained in
the Settlement  Agreement,  and for other good and valuable  consideration,  the
receipt  and  sufficiency  of which are hereby  acknowledged  by  Assignor,  and
subject to the terms and conditions of the Settlement Agreement:

                  1.  Assignor  does  hereby  bargain,   sell,  grant,   assign,
transfer,  convey and deliver unto  Assignee,  and its  successors  and assigns,
forever,  all of  Assignor's  right,  title and  interest in and to the Assigned
Assets.

                  TO  HAVE  AND  TO  HOLD   such   Assigned   Assets   with  all
appurtenances  thereto,  unto Assignee,  and its successors and assigns, for its
use forever.

                  2.  This Bill of Sale  shall  inure to the  benefit  of and be
binding upon Assignor and its successors and assigns.

                  3.  Nothing  in this  Bill of Sale,  express  or  implied,  is
intended to or shall be  construed to expand or vary in any way the terms of the
Settlement Agreement. To the extent there is any difference between this Bill of
Sale and the Settlement Agreement, the Settlement Agreement shall govern.

                  4. This Bill of Sale is executed and delivered pursuant to the
Settlement Agreement.

                  5. This Bill of Sale, the Transaction  Documents and the other
agreements  contemplated  hereby set forth the entire  agreement  of the parties
with respect to the matters set forth herein or therein. This Bill of Sale shall
not  be  modified  except  by  written   instrument   executed  together  or  in
counterparts by the Assignor and Assignee.

                  6. The failure of  Assignee to insist upon strict  performance
of any provision  hereof shall not  constitute a waiver of, or estoppel  against
asserting,  the right to require  such  performance  in the future,  nor shall a
waiver or  estoppel  with  respect  to a later  breach  of a  similar  nature or
otherwise.

                                 Page 163 of 200
<PAGE>

                  7. If any of the  covenants,  terms or conditions of this Bill
of Sale are  held  illegal  by any  court or  administrative  body of  competent
jurisdiction, and any director or stockholder action, including, but not limited
to, the execution of any  documents or  instruments,  will make such  covenants,
terms or  conditions  valid and  enforceable,  each party hereby  agrees that it
shall take or cause to be taken such  action as may  reasonably  be  required to
make  any  such  covenant,  term or  condition  valid  and  enforceable.  If any
provision of this Bill of Sale is held invalid, such invalidity shall not affect
the other  provisions  hereof  which can be given  effect  without  the  invalid
provision,  and to this end the  provisions of this Bill of Sale are intended to
be and shall be deemed severable.

                  8. THIS BILL OF SALE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT  REGARD TO THE  PRINCIPLES OF
CONFLICTS OF LAWS.  ASSIGNOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN DALLAS COUNTY,  TEXAS AND  IRREVOCABLY  AGREES THAT
ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS BILL OF SALE SHALL
BE LITIGATED IN SUCH COURTS.  THE ASSIGNOR  ACCEPTS FOR ITSELF AND IN CONNECTION
WITH  ITS   PROPERTIES,   GENERALLY  AND   UNCONDITIONALLY,   THE   NONEXCLUSIVE
JURISDICTION  OF THE  AFORESAID  COURTS  AND  WAIVES  ANY  DEFENSE  OF FORUM NON
CONVENIENS,  AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS BILL OF SALE OR ANY OTHER TRANSACTION DOCUMENTS.

                  9.  ASSIGNOR  HEREBY  WAIVES ANY RIGHT TO TRAIL BY JURY OF ANY
CLAIM, DEMAND,  ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS BILL OF SALE OR
ANY OF THE OTHER  TRANSACTION  DOCUMENTS  OR (ii) IN ANY WAY  CONNECTED  WITH OR
RELATED OR INCIDENTAL  TO THE DEALINGS OF THE PARTIES  HERETO IN RESPECT OF THIS
BILL OF SALE  OR ANY OF THE  OTHER  TRANSACTION  DOCUMENTS  OR THE  TRANSACTIONS
RELATED  HERETO OR  THERETO  IN EACH CASE  WHETHER  NOW  EXISTING  OR  HEREAFTER
ARISING,  AND WHETHER IN CONTRACT,  TORT,  EQUITY OR OTHERWISE.  ASSIGNOR HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL  WITHOUT A JURY AND THAT ASSIGNEE MAY FILE AN ORIGINAL
COUNTERPART OF A COPY OF THIS BILL OF SALE WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE ASSIGNOR HERETO TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

                  10.  Whenever  the context  requires,  the gender of all words
used in this Bill of Sale shall include the masculine, feminine, and neuter, and
the number of all words shall include the singular and the plural.  No provision
of this Bill of Sale will be  interpreted  in favor of, or  against,  any of the
parties  hereto by reason of the extent to which any such  party or its  counsel
participated  in the  drafting  thereof  or by reason of the extent to which any
such provision is inconsistent with any prior draft hereof or thereof.

                                 Page 164 of 200
<PAGE>

                  11.  Nothing in this Bill of Sale is  intended  to confer upon
any  Person  that is not a party  hereto  (other  than  Assignee)  any rights or
remedies hereunder or otherwise.

                  12. Time is of the essence to each and every provision of this
Bill of Sale.

                  13. Assignor hereby acknowledges that: (a) it has been advised
by counsel in the  negotiation,  execution and delivery of this Bill of Sale and
the other Transaction  Documents;  and (b) no joint venture is created hereby or
by the  other  Transaction  Documents  or  otherwise  exists  by  virtue  of the
transactions contemplated hereby among the Assignor and the Assignee.

                  IN WITNESS WHEREOF, and intending to  be legally bound hereby,
Assignor has caused this Bill of Sale to be executed and delivered as of the day
and year first above written.


                                               _________________________________



                                               By:______________________________

                                               Name:____________________________

                                               Title:___________________________







                                 Page 165 of 200
<PAGE>

                                     FORM OF
                              ASSUMPTION AGREEMENT
                              --------------------


         THIS ASSUMPTION  AGREEMENT (this  "Agreement") is made and entered into
this ___ day of August [___], 2001 by and between  [__________________________],
a           [_____________________________]           ("Assignor"),          and
[__________________________],    a   [_____________________________]   (or   its
permitted assigns)  ("Assignee").  Capitalized terms used but not defined herein
shall have the meanings  ascribed to such terms in the Settlement  Agreement (as
hereinafter defined).

         WHEREAS,  Assignor  and  Assignee  are parties to that  certain  Master
Settlement Agreement dated as of August 1, 2001 (the "Settlement Agreement"), by
and among  Greenbriar  Corporation,  a Nevada  corporation,  LSOF Pooled Equity,
L.P., a Delaware  limited  partnership,  the Assignors  named  therein,  and the
Intervenors  named  therein,  the  terms of which  are  incorporated  herein  by
reference,  which provides,  among other things, for the assignment and transfer
by Assignor to Assignee of certain Assigned Assets of Assignor; and

         WHEREAS,  pursuant  to the  terms  and  conditions  of  the  Settlement
Agreement,  Assignor  desires to transfer to Assignee,  and Assignee  desires to
assume from Assignor, the Assigned Assets and the Assumed Liabilities.

         NOW,  THEREFORE,  in consideration of the mutual promises  contained in
the Settlement  Agreement,  and for other good and valuable  consideration,  the
receipt  and  sufficiency  of which are hereby  acknowledged  by  Assignor,  and
subject to the terms and conditions of the Settlement Agreement:

         1.  Assignment  and  Assumption.  Assignee  hereby  assumes the Assumed
Liabilities.

         2.  Successors.  All of the  covenants,  terms and conditions set forth
herein  shall be binding  upon,  and shall  inure to the benefit of, the parties
hereto and their respective heirs, successors and assigns.

         3.   Counterparts.   This   Agreement   may  be  executed  in  multiple
counterparts,  all of which together  shall for all purposes  constitute one and
the same instrument.

         4. Entire Agreement.  This Agreement, the Transaction Documents and the
other  agreements  contemplated  hereby  set forth the entire  agreement  of the
parties with respect to the matters set forth herein or therein.  This Agreement
shall not be  modified  except by written  instrument  executed  together  or in
counterparts by all of the parties hereto.


                                 Page 166 of 200
<PAGE>

         5.  Non-Waiver.  The  failure  of  any  party  to  insist  upon  strict
performance  of any  provision  hereof  shall  not  constitute  a waiver  of, or
estoppel against asserting, the right to require such performance in the future,
nor shall a waiver  or  estoppel  with  respect  to a later  breach of a similar
nature or otherwise.

         6. Curative Actions;  Severability.  If any of the covenants,  terms or
conditions  of this  Agreement  are held illegal by any court or  administrative
body  of  competent  jurisdiction,  and  any  director  or  stockholder  action,
including,  but not limited to, the execution of any  documents or  instruments,
will make such covenants, terms or conditions valid and enforceable,  each party
hereby  agrees  that it  shall  take or cause to be  taken  such  action  as may
reasonably be required to make any such  covenant,  term or condition  valid and
enforceable. If any provision of this Agreement is held invalid, such invalidity
shall not affect the other  provisions  hereof which can be given effect without
the invalid  provision,  and to this end the  provisions  of this  Agreement are
intended to be and shall be deemed severable.

         7. Governing Law. THIS AGREEMENT  SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT  REGARD TO THE PRINCIPLES
OF CONFLICTS OF LAWS. THE PARTIES HERETO HEREBY CONSENT TO THE  JURISDICTION  OF
ANY STATE OR FEDERAL COURT LOCATED WITHIN DALLAS COUNTY,  TEXAS AND  IRREVOCABLY
AGREE  THAT ALL  ACTIONS  OR  PROCEEDINGS  ARISING  OUT OF OR  RELATING  TO THIS
AGREEMENT  SHALL BE LITIGATED IN SUCH COURTS.  THE PARTIES ACCEPT FOR ITSELF AND
IN  CONNECTION  WITH  ITS  PROPERTIES,   GENERALLY  AND   UNCONDITIONALLY,   THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE OF FORUM
NON  CONVENIENS,  AND  IRREVOCABLY  AGREE TO BE BOUND BY ANY  JUDGMENT  RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENTS.

         8. WAIVER OF JURY TRAIL. EACH PARTY HERETO WAIVES ANY RIGHT TO TRAIL BY
JURY OF ANY  CLAIM,  DEMAND,  ACTION OR CAUSE OF ACTION (i)  ARISING  UNDER THIS
AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR (ii) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL  TO THE DEALINGS OF THE PARTIES  HERETO IN RESPECT
OF THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION  DOCUMENTS OR THE TRANSACTIONS
RELATED  HERETO OR  THERETO  IN EACH CASE  WHETHER  NOW  EXISTING  OR  HEREAFTER
ARISING, AND WHETHER IN CONTRACT,  TORT, EQUITY OR OTHERWISE.  EACH PARTY HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE  DECIDED  BY COURT  TRIAL  WITHOUT  A JURY AND THAT  SUCH  PARTY  MAY FILE AN
ORIGINAL  COUNTERPART  OF A COPY OF THIS  AGREEMENT  WITH ANY  COURT AS  WRITTEN
EVIDENCE OF THE  CONSENT OF THE  PARTIES  HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.


                                 Page 167 of 200
<PAGE>

         9.  Construction.  The  headings in this  Agreement  are  inserted  for
convenience and identification only and are not intended to describe, interpret,
define or limit the scope,  extent, or intent of this Agreement or any provision
hereof.  Whenever  the  context  requires,  the gender of all words used in this
Agreement shall include the masculine,  feminine,  and neuter, and the number of
all words  shall  include the  singular  and the plural.  No  provision  of this
Agreement will be interpreted in favor of, or against, any of the parties hereto
by reason of the extent to which any such party or its counsel  participated  in
the drafting  thereof or by reason of the extent to which any such  provision is
inconsistent with any prior draft hereof or thereof.

         10.  Counterparts.  This  Agreement  may be  executed  in any number of
counterparts  with the same effect as if each of the parties had signed the same
document.  All counterparts shall be construed together and shall constitute one
and the same instrument.

         11. No Third Party Beneficiaries. Nothing in this Agreement is intended
to confer  upon any Person  that is not a party  hereto  any rights or  remedies
hereunder or otherwise.

         12.  Time of the  Essence.  Time is of the  essence  to each and  every
provision of this Agreement.

         13.  Acknowledgments.  The parties hereto hereby  acknowledge that: (a)
each such party has been advised by counsel in the  negotiation,  execution  and
delivery of this Agreement and the other Transaction Documents; and (b) no joint
venture is created  hereby or by the other  Transaction  Documents  or otherwise
exists by virtue of the transactions  contemplated hereby among the Assignor and
the Assignee.

                  [Remainder of Page Intentionally Left Blank]





                                 Page 168 of 200
<PAGE>

         IN WITNESS WHEREOF,  and intending to be legally bound hereby,  each of
Assignor and Assignee has caused this  Agreement to be executed and delivered by
its duly authorized representative as of the day and year first above written.

ASSIGNOR                                              ASSIGNEE
- --------                                              --------


[_________________]                                   [_________________]


By:_______________________                            By:_______________________
Name:_____________________                            Name:_____________________
Title:____________________                            Title:____________________








                                 Page 169 of 200

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.24.2
<SEQUENCE>10
<FILENAME>green8k070101ex10242.txt
<DESCRIPTION>CONSENT AGREEMENT
<TEXT>

                                                                 EXHIBIT 10.24.2

                                CONSENT AGREEMENT

         This Consent  Agreement dated as of August 1, 2001 (this  "Agreement"),
is made by and among LSOF Pooled Equity,  L.P., a Delaware  limited  partnership
("Lone Star"), Greenbriar Corporation,  a Nevada corporation (the "Company") and
each  of  the   undersigned   holders  of  shares  of  capital  stock  (each,  a
"Stockholder" and collectively, the "Stockholders") of the Company.

                             PRELIMINARY STATEMENTS

         The  Company  and Lone  Star  have  entered  into a  Master  Settlement
Agreement  (as the same  may be  amended  from  time to  time,  the  "Settlement
Agreement"; terms used herein but not defined herein have the meanings set forth
in the  Settlement  Agreement),  which  provides  that in  consideration  of the
release of any Claims that Lone Star may have  against the Company  with respect
to Lone Star's  Preferred Stock  investment in the Company and the assumption by
Lone Star of the Assumed  Liabilities,  (i) the  Assignors are  transferring  to
Assignee  all of their  respective  right,  title  and  interest,  in and to the
Assigned  Assets  (the  "Assignment"),  (ii) the  Company  will pay to Lone Star
$4,000,000 in immediately available funds, and (iii) for the same consideration,
the Company is also redeeming all of Lone Star's Preferred Stock, any and all of
the  Company's   common  stock  into  which  Lone  Star's  Preferred  Stock  was
purportedly  converted,  together  with  all of Lone  Star's  right,  title  and
interest  to any and all claims and rights  with  respect to its  interest  as a
stockholder,   equity   interest   holder  or   otherwise   (collectively,   the
"Transactions").

         The  Transactions  do not  require  the  approval of the holders of the
majority of shares of the Company's  capital stock under  applicable  law or the
Company's Organizational Documents.

         The Stockholders  own the shares of the Company common stock,  $.01 par
value per share (the "Common Stock"),  set forth opposite their respective names
on Exhibit A hereto.  As used herein,  the term "Shares"  includes all shares of
such  Common  Stock  as to which  each  Stockholder  (at any  time  prior to the
termination of this Agreement) is the beneficial or record owner or is otherwise
able to direct the voting  thereof and all  securities  issued or exchanged with
respect  to  any  such  Shares  upon  any  reclassification,   recapitalization,
reorganization, merger, consolidation, spin-off, stock split, combination, stock
or other dividend or any other change in the Company's capital structure.

         To  induce  Lone Star to enter  into the  Settlement  Agreement  and to
consummate the transactions contemplated thereby,  including without limitation,
executing the Mutual Release, the Company has agreed, upon the terms and subject
to the conditions set forth herein, to cause holders of not less than a majority
of the outstanding shares of Common Stock to execute this Agreement.



                                Page 170 of 200
<PAGE>

         NOW,  THEREFORE,  for good and  valuable  consideration,  the  receipt,
sufficiency and adequacy of which are hereby  acknowledged,  the parties to this
Agreement agree as follows:

         1. Consent.  Notwithstanding  the fact that consent to the Transactions
is not required under applicable law or the Company's  Organizational  Document,
each Stockholder hereby consents to and approves the terms and conditions of the
Settlement Agreement and the other Transaction  Documents,  and the consummation
of the transactions  contemplated  thereby,  including without  limitation,  the
Transactions.

         2. Public Filings. In the event that it is subsequently determined that
the  Transactions  require  a  vote  of the  stockholders  of  any  class  under
applicable  law, the Company agrees to promptly  prepare and file an Information
Statement  with the  Securities  and  Exchange  Commission  (the  "SEC") and the
Company shall respond as promptly as practicable to any comments of the SEC with
respect  thereto.  The Company shall give Lone Star a reasonable  opportunity to
review, comment on and make reasonable changes to the Information Statement. The
Company shall use its reasonable  efforts to cause the Information  Statement to
be mailed to the Company's  stockholders  as promptly as  practicable  after the
Information Statement is cleared by the SEC. The parties shall notify each other
promptly  of the  receipt of any  comments  from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Information
Statement and shall supply each other with copies of all correspondence  between
such party or any of its representatives, on the one hand, and the SEC or any of
its staff, on the other hand, with respect to the Information Statement.

         3. Stockholders'  Representations and Warranties.  Each Stockholder, as
to itself only,  represents  and warrants to Lone Star that such  Stockholder is
the  beneficial and record owner of the Shares set forth on Exhibit A, (ii) such
Stockholder has the sole right to vote such Shares,  (iii) such  Stockholder has
the full and  unrestricted  legal  power,  authority  and  right to enter  into,
execute and deliver this Agreement  without the consent or approval of any other
person,  (iv)  this  Agreement  is the  valid  and  binding  agreement  of  such
Stockholder,  (v) the execution  and delivery of this  Agreement do not, and the
consummation  of the  transactions  contemplated  hereby and compliance with the
terms hereof will not,  conflict with, or result in any violation of, or default
(with or without  notice or lapse of time or both) under any  provision  of, the
certificate  of  incorporation  or  bylaws  of any  Stockholder,  to the  extent
applicable, any trust agreement, loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,  franchise,
license,  judgment,  order, notice,  decree,  statute,  law, ordinance,  rule or
regulation  applicable to such Stockholder or to such Stockholder's  property or
assets and (vi) such stockholder is not an Affiliate of Vestin Mortgage.


                                Page 171 of 200
<PAGE>

         4. The Company's  Representations  and  Warranties.  The Company hereby
represents  and  warrants  to Lone Star as of the date here that the Company has
all requisite  corporate power and authority to enter into this Agreement and to
consummate the transactions  contemplated  hereby. The execution and delivery of
this  Agreement  by the  Company,  and  the  consummation  of  the  transactions
contemplated hereby, have been duly authorized by all necessary corporate action
on the part of the Company.  This Agreement has been duly executed and delivered
by the Company and  constitutes  a valid and binding  obligation  of the Company
enforceable  in  accordance  with its terms.  The execution and delivery of this
Agreement do not, and the consummation of the transactions  contemplated  hereby
and compliance  with the terms hereof will not,  conflict with, or result in any
violation of, or default (with or without notice or lapse of time or both) under
any provision of, the certificate of incorporation or bylaws of the Company, any
trust agreement,  loan or credit  agreement,  note, bond,  mortgage,  indenture,
lease or other agreement,  instrument,  permit, concession,  franchise, license,
judgment,  order, notice,  decree,  statute, law, ordinance,  rule or regulation
applicable  to the Company or to the Company's  property or assets.  The Company
hereby represents and warrants that the Shares set forth on Exhibit A constitute
the majority of all issued and outstanding  shares of Common Stock. Set forth on
Exhibit B is a true and correct list of (i) the authorized  capital stock of the
Company,  and (ii) as of the date hereof,  the number of shares of each class of
capital stock that is issued and outstanding.  Except as set forth on Exhibit B,
no other shares of capital stock are issued and  outstanding.  All of the issued
and  outstanding  shares of capital  stock of the Company  are duly  authorized,
validly issued, dully paid and nonassessable, and were issued in compliance with
applicable  federal and state securities laws. Except as set forth on Exhibit B,
there are no outstanding  shares of capital stock or outstanding rights of first
refusal, preemptive rights or other rights, options, warrants, conversion rights
or  other  agreements   either  directly  or  indirectly  for  the  purchase  or
acquisition from the Company of any shares of its capital stock.

         5.  Lone  Star's  Representations  and  Warranties.  Lone  Star  hereby
represents and warrants to the  Stockholders  as of the date here that Lone Star
has all requisite corporate power and authority to enter into this Agreement and
to consummate the transactions  contemplated  hereby. The execution and delivery
of  this  Agreement  by Lone  Star,  and the  consummation  of the  transactions
contemplated hereby, have been duly authorized by all necessary corporate action
on the part of Lone Star. This Agreement has been duly executed and delivered by
Lone  Star  and  constitutes  a  valid  and  binding  obligation  of  Lone  Star
enforceable  in  accordance  with its terms.  The execution and delivery of this
Agreement do not, and the consummation of the transactions  contemplated  hereby
and compliance  with the terms hereof will not,  conflict with, or result in any
violation of, or default (with or without notice or lapse of time or both) under
any provision of, the certificate of formation or limited partnership  agreement
of Lone  Star,  any trust  agreement,  loan or  credit  agreement,  note,  bond,
mortgage, indenture, lease or other agreement,  instrument,  permit, concession,
franchise,  license,  judgment,  order, notice, decree, statute, law, ordinance,
rule or regulation applicable to Lone Star or to Lone Star's property or assets.


                                Page 172 of 200
<PAGE>

         6. No  Voting  Trusts.  Each  Stockholder  hereby  revokes  any and all
proxies and voting  instructions  with respect to the Shares previously given by
such Stockholder and such Stockholder  agrees that it will not grant or give any
other proxies or voting  instructions  with respect to the voting of the Shares,
enter into any voting trust or other  arrangement  or agreement  with respect to
the  voting  of the  Shares  (and if given or  executed,  such  proxies,  voting
instructions,  voting  trust or other  arrangement  or  agreement  shall  not be
effective),  or agree,  in any  manner,  to vote the Shares  for or against  any
proposal  submitted to the  Stockholders of the Company except in furtherance of
the proposals set forth in paragraph 7 hereof.

         7. Agreements with Respect to the Shares.

                  (a)  Should  a vote  of the  stockholders  be  required  under
         applicable  law,  each  Stockholder  agrees to vote the Shares,  to the
         extent entitled to vote, (x) in favor of the approval of the Settlement
         Agreement, the Transactions and any other transactions  contemplated by
         the Transaction Documents,  at every meeting of the Stockholders of the
         Company  at  which  any of such  matters  are  considered  and at every
         adjournment  thereof or in any other  circumstances  upon which a vote,
         consent or other approval  (including by written  consent) with respect
         to any of the Transactions and the Settlement  Agreement is sought, and
         (y) with respect to all other proposals  submitted to the  Stockholders
         of the Company  which,  directly or  indirectly,  would  reasonably  be
         expected  to  prevent  or   materially   delay  the   consummation   of
         Transactions, in such manner as Lone Star may direct; and

                  (b)  Unless  otherwise  instructed  in  writing  by Lone Star,
         during  the term of this  Agreement,  each  Stockholder  will  vote the
         Shares against any Competing Transaction.

                  (c) For purposes of this Agreement, a "Competing  Transaction"
         shall mean a transaction  of any kind proposed by any person(s) in lieu
         of or in opposition to the Settlement Agreement and the Transactions.

         8. Proxies.  In  furtherance  of the  foregoing,  each  Stockholder  is
granting to John P. Grayken and J.D. Dell, or to their  respective  designee(s),
irrevocable  proxies  and powers of attorney  (which may be in the form  annexed
hereto or such other form  consistent  with the terms hereof and thereof as Lone
Star may specify) to vote the Shares,  to the extent such Shares are entitled to
vote, and hereby  specifically  agrees not to revoke such proxies  granted under
any circumstances:

                  (a) at any and all  meetings of  Stockholders  of the Company,
         notice  of  which  meetings  are  given  prior  to the due  and  proper
         termination of this Agreement, with respect to matters presented to the
         Company's  Stockholders  for vote which  relates to or affects  (i) the
         Transaction  or the  Settlement  Agreement  or the  approval  of either
         thereof; and (ii) any Competing Transaction; or


                                Page 173 of 200
<PAGE>

                  (b) with respect to actions to be taken by written  consent of
         the  Stockholders of the Company which relates to or affects any of the
         foregoing,  and which consent is solicited  prior to the due and proper
         termination of this Agreement.

         9.  Limitation  on  Sales.  During  the  term of this  Agreement,  each
Stockholder  agrees not to sell, assign,  transfer,  or otherwise dispose of, or
issue an option or call with  respect  to,  any of the  Shares,  or impair  such
Stockholder's  Shares;  provided,  that any  Stockholder  may sell or  otherwise
dispose of any of his or her Shares in a bona fide open market transaction or in
any other transaction if the transferee of such Shares agrees to be bound by and
subject to the terms and conditions of this Agreement as if such  transferee had
executed this Agreement on the date hereof as a Stockholder.

         10. Specific Performance. Each Stockholder acknowledges that it will be
impossible to measure in money the damage to Lone Star if the Stockholder  fails
to comply with the obligations imposed by this Agreement, and that, in the event
of any such  failure,  Lone Star will not have an  adequate  remedy at law or in
damages.  Accordingly,  each  Stockholder  agrees that injunctive  relief or any
other equitable  remedy,  in addition to any remedies at law or damages,  is the
appropriate  remedy for any such failure and will not oppose the granting of any
such  remedy on the basis  that Lone Star has an  adequate  remedy at law.  Each
Stockholder  agrees not to seek,  and agrees to waive any  requirement  for, the
securing or posting of a bond in connection  with Lone Star seeking or obtaining
such equitable relief.

         11.  Reasonable  Efforts.  Each  Stockholder  will  use all  reasonable
efforts  to cause to be  satisfied  the  conditions  to the  obligations  of the
Company in such Stockholder's control to effect the Closing under the Settlement
Agreement.

         12. Publicity. Each Stockholder agrees that, from the date hereof, such
Stockholder  shall not issue any public release or  announcement  concerning the
transactions contemplated by this Agreement and the Settlement Agreement without
the prior consent of Lone Star,  except as such release or announcement  may, in
the opinion of such  Stockholder's  counsel,  be required by applicable  law, in
which case such Stockholder  shall allow Lone Star reasonable time to comment on
such release or announcement in advance of such issuance.

         13. Term of Agreement; Termination.

                  (a) The  term of this  Agreement  shall  commence  on the date
         hereof and shall  terminate upon the earliest to occur of (i) after the
         consummation of the Transactions,  (ii) the due and proper  termination
         of the Settlement  Agreement in accordance  with its terms or (iii) six
         (6) months from the date hereof. Upon such termination,  no party shall
         have any further obligations or liabilities hereunder.


                                Page 174 of 200
<PAGE>

                  (b) The  obligations  of the  Stockholders  set  forth in this
         Agreement shall not be effective or binding upon any Stockholder  until
         after such time as the  Settlement  Agreement is executed and delivered
         by Lone Star, the Company, each Assignor and each Intervenor.

         14. Miscellaneous.

                  (a) Entire  Agreement.  This Agreement  constitutes the entire
         agreement  among the parties with respect to the subject matter of this
         Agreement   and   supersedes   all  prior  written  and  oral  and  all
         contemporaneous  oral agreements and understandings with respect to the
         subject matter of this Agreement.

                  (b) Notices.  No notice or other communication shall be deemed
         given unless sent in the manner, and to the persons,  specified in this
         paragraph 14. All notices and other  communications  hereunder shall be
         in writing  and shall be deemed  given (a) upon  receipt  if  delivered
         personally (unless subject to clause (b)) or if mailed by registered or
         certified  mail,  (b) at noon on the  date  after  dispatch  if sent by
         overnight courier or (c) upon the completion of transmission  (which is
         confirmed  telephonically  by the receiving  party) if  transmitted  by
         telecopy or other means of facsimile  which provides  immediate or near
         immediate transmission to compatible equipment in the possession of the
         recipient, and in any case to the parties at the following addresses or
         telecopy  numbers (or at such other  address or  telecopy  number for a
         party as will be specified by like notice):

                           if to any Greenbriar Party, to

                           Greenbriar Corporation
                           650 Centura Tower One
                           14185 Dallas Parkway
                           Dallas, Texas  75240
                           Attention:  President
                           Telecopy:  (972) 407-8420

                           with a copy (which shall not constitute notice) to:

                           Henry W. Simon, Jr.
                           Simon, Warner & Doby, L.L.P.
                           1700 City Center Tower II
                           301 Commerce Street
                           Fort Worth, Texas  76102
                           Telecopy:  (817) 810-5255

                           If to Lone Star, to

                           LSOF Pooled Equity, L.P.
                           600 N. Pearl Street
                           Suite 1550, LB 161
                           Dallas, Texas 76140
                           Attention:  Len Allen
                           Telecopy:  (214) 754-8401


                                Page 175 of 200
<PAGE>

                           with a copy (which shall not constitute notice) to:

                           Weil, Gotshal & Manges LLP
                           100 Crescent Court, Suite 1300
                           Dallas, Texas 75201-6950
                           Attention:  Michael A. Saslaw
                           Telecopy:  (214) 746-7777

                           If to a Stockholder, to the address set  forth  below
                           such Stockholder's name on Exhibit A hereto,  with  a
                           copy (which shall not constitute notice) to:

                           Henry W. Simon, Jr.
                           Simon, Warner & Doby, L.L.P.
                           1700 City Center Tower II
                           301 Commerce Street
                           Fort Worth, Texas  76102
                           Telecopy:  (817) 810-5255

                           Waiver.  The  failure  of any  party to  insist  upon
         strict  performance  of any  provision  hereof  shall not  constitute a
         waiver of, or estoppel  against  asserting,  the right to require  such
         performance in the future,  nor shall a waiver or estoppel with respect
         to a later breach of a similar nature or otherwise.

                           Curative Actions; Severability.

         (i) If any of the covenants,  terms or conditions of this Agreement are
held illegal by any court or administrative body of competent jurisdiction,  and
any director or stockholder action, including, but not limited to, the execution
of any documents or instruments,  will make such covenants,  terms or conditions
valid and  enforceable,  each party hereby agrees that it shall take or cause to
be taken such action as may  reasonably  be required to make any such  covenant,
term or condition valid and enforceable.

         (ii)  If  any  provision  of  this  Agreement  is  held  invalid,  such
invalidity  shall not  affect  the other  provisions  hereof  which can be given
effect  without the invalid  provision,  and to this end the  provisions of this
Agreement are intended to be and shall be deemed severable.


                                Page 176 of 200
<PAGE>

                  (c)  Governing  Law.  THIS  AGREEMENT  SHALL BE  CONSTRUED  IN
         ACCORDANCE  WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT
         REGARD TO THE  PRINCIPLES  OF  CONFLICTS  OF LAWS.  THE PARTIES  HERETO
         HEREBY  CONSENT  TO THE  JURISDICTION  OF ANY  STATE OR  FEDERAL  COURT
         LOCATED  WITHIN DALLAS  COUNTY,  TEXAS AND  IRREVOCABLY  AGREE THAT ALL
         ACTIONS OR  PROCEEDINGS  ARISING OUT OF OR  RELATING TO THIS  AGREEMENT
         SHALL BE LITIGATED IN SUCH COURTS. THE PARTIES ACCEPT FOR ITSELF AND IN
         CONNECTION  WITH ITS  PROPERTIES,  GENERALLY AND  UNCONDITIONALLY,  THE
         NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE
         OF  FORUM  NON  CONVENIENS,  AND  IRREVOCABLY  AGREE TO BE BOUND BY ANY
         JUDGMENT  RENDERED  THEREBY IN  CONNECTION  WITH THIS  AGREEMENT OR ANY
         OTHER TRANSACTION DOCUMENTS.

                  (d) WAIVER OF JURY TRAIL.  EACH PARTY HERETO  WAIVES ANY RIGHT
         TO TRAIL BY JURY OF ANY  CLAIM,  DEMAND,  ACTION OR CAUSE OF ACTION (i)
         ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION  DOCUMENTS
         OR (ii) IN ANY WAY  CONNECTED  WITH OR  RELATED  OR  INCIDENTAL  TO THE
         DEALINGS OF THE PARTIES  HERETO IN RESPECT OF THIS  AGREEMENT OR ANY OF
         THE OTHER TRANSACTION  DOCUMENTS OR THE TRANSACTIONS  RELATED HERETO OR
         THERETO IN EACH CASE  WHETHER NOW EXISTING OR  HEREAFTER  ARISING,  AND
         WHETHER IN  CONTRACT,  TORT,  EQUITY OR  OTHERWISE.  EACH PARTY  HEREBY
         AGREES AND  CONSENTS  THAT ANY SUCH CLAIM,  DEMAND,  ACTION OR CAUSE OF
         ACTION  SHALL BE  DECIDED BY COURT  TRIAL  WITHOUT A JURY AND THAT SUCH
         PARTY MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH
         ANY COURT AS WRITTEN  EVIDENCE OF THE CONSENT OF THE PARTIES  HERETO TO
         THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

                  (e) Construction.  The headings in this Agreement are inserted
         for  convenience  and  identification  only  and  are not  intended  to
         describe,  interpret,  define or limit the scope,  extent, or intent of
         this Agreement or any provision hereof.  Whenever the context requires,
         the  gender of all  words  used in this  Agreement  shall  include  the
         masculine,  feminine,  and  neuter,  and the number of all words  shall
         include the  singular and the plural.  No  provision of this  Agreement
         will be interpreted in favor of, or against,  any of the parties hereto
         by  reason  of the  extent  to  which  any such  party  or its  counsel
         participated  in the  drafting  thereof  or by reason of the  extent to
         which any such provision is inconsistent with any prior draft hereof or
         thereof. Capitalized terms used herein but not otherwise defined herein
         shall have the meaning given to them in the Settlement Agreement.



                                Page 177 of 200
<PAGE>

                  (f) Counterparts. This Agreement may be executed in any number
         of  counterparts  with the same  effect as if each of the  parties  had
         signed the same document.  All counterparts shall be construed together
         and shall constitute one and the same instrument.

                  (g) Successors and Assigns. Except as provided to the contrary
         in this Agreement,  this Agreement shall apply to, and shall be binding
         upon each of the parties,  their  respective  successors  and permitted
         assigns.  Lone  Star may  freely  assign  its  rights  and  obligations
         hereunder to any  designee  subject to  compliance  by Lone Star of its
         obligations to execute and deliver the Mutual  Release  pursuant to the
         terms and conditions of the Settlement Agreement.

                  (h)  Cumulative  Rights.  The rights and remedies  provided by
         this  Agreement are  cumulative,  and the use of any right or remedy by
         either  party  shall not  preclude or waive its right to use any or all
         other remedies.

                  (i) No Third Party Beneficiaries. Nothing in this Agreement is
         intended  to confer  upon any  Person  that is not a party  hereto  any
         rights or remedies hereunder or otherwise.

                  (j) Time of the  Essence.  Time is of the  essence to each and
         every provision of this Agreement.

                  (k)  Acknowledgments.  The parties  hereto hereby  acknowledge
         that:  (a)  each  such  party  has  been  advised  by  counsel  in  the
         negotiation,  execution  and delivery of this  Agreement  and the other
         Transaction Documents; and (b) no joint venture is created hereby or by
         the other  Transaction  Documents or otherwise  exists by virtue of the
         transactions  contemplated  hereby  among the  parties  hereto and Lone
         Star.

            [The remainder of this page is intentionally left blank.]


         IN WITNESS WHEREOF,  the parties hereto,  intending to be legally bound
hereby,  have duly  executed  this Consent  Agreement as of the date first above
written.

                                      LSOF POOLED EQUITY, L.P.

                                      By: LSOF GenPar, Inc., its General Partner


                                      By:   /s/  J. D. Dell
                                        ----------------------------------------
                                             J. D. Dell, Vice President




                                Page 178 of 200
<PAGE>

                                      THE APRIL TRUST, A GRANTOR TRUST FOR THE
                                      BENEFIT OF JAMES R. GILLEY AND SYLVIA M.
                                      GILLEY



                                      By:    /s/  James R. Gilley
                                        ----------------------------------------
                                              James R. Gilley, Trustee

                                      JRG INVESTMENTS CO., INC.



                                      By:   /s/  James R. Gilley
                                        ----------------------------------------
                                             James R. Gilley, Trustee



                                            /s/  Sylvia M. Gilley
                                      ------------------------------------------
                                             Sylvia M. Gilley



                                            /s/  Victor L. Lund
                                      ------------------------------------------
                                              Victor L. Lund



                                            /s/  Gene S. Bertcher
                                      ------------------------------------------
                                              Gene S. Bertcher



                                            /s/  Robert L. Griffis
                                      ------------------------------------------
                                             Robert L. Griffis



                                            /s/  Don C. Benton
                                      ------------------------------------------
                                             Don C. Benton




                                Page 179 of 200
<PAGE>

                                      AMERICAN REALTY TRUST, INC.



                                      By:   /s/  Robert Waldman
                                        ----------------------------------------
                                             Robert Waldman, Secretary



                                      BASIC CAPITAL MANAGEMENT, INC.



                                      By:   /s/  Robert Waldman
                                        ----------------------------------------
                                             Robert Waldman, Secretary



                                      NEVADA SEA INVESTMENTS, INC.



                                      By:   /s/  Robert Waldman
                                        ----------------------------------------
                                             Robert Waldman, Secretary



                                      INTERNATIONAL HEALTH PRODUCTS, INC.



                                      By:   /s/  Ronald E. Kimbrough
                                         ---------------------------------------
                                             Ronald E. Kimbrough, Secretary







                                Page 180 of 200
<PAGE>





                                      ONE REALCO CORPORATION (fka Davister
                                      Corporation)



                                      By:   /s/  Ronald Akin
                                         ---------------------------------------
                                             Ronald Akin, President




                                      TACCO FINANCIAL, INC.



                                      By:   /s/  J. T. Tackett
                                        ----------------------------------------
                                             J. T. Tackett, Vice President




                                    EXHIBIT A
                                    ---------

Name of Stockholder:                         The April Trust,  a  Grantor  Trust
                                             for the benefit of  James R. Gilley
                                             and Sylvia M. Gilley

Address:                                     650 Centura Tower One
                                             14185 Dallas Parkway
                                             Dallas, TX 75240

Telephone No.:                               972-407-8400

Facsimile No.:                               214-273-0620

Number of Shares of Common Stock:            2,340,851

Name of Stockholder:                         JRG Investments Co., Inc.

Address:                                     650 Centura Tower One
                                             14185 Dallas Parkway
                                             Dallas, TX 75240


                                Page 181 of 200
<PAGE>

Telephone No.:                               972-407-8400

Facsimile No.:                               214-273-0620

Number of Shares of Common Stock:            897,851

Name of Stockholder:                         Sylvia M. Gilley

Address:                                     650 Centura Tower One
                                             14185 Dallas Parkway
                                             Dallas, TX 75240

Telephone No.:                               972-407-8400

Facsimile No.:                               972-991-8582

Number of Shares of Common Stock:            536,000



Name of Stockholder:                         Victor L. Lund

Address:                                     816 NE 87th Avenue
                                             Vancouver, Washington  98664

Telephone No.:                               360-892-9090

Facsimile No.:                               360-892-2146

Number of Shares of Common Stock:            1,234,961




Name of Stockholder:                         Gene S. Bertcher

Address:                                     650 Centura Tower One
                                             14185 Dallas Parkway
                                             Dallas, TX 75240

Telephone No.:                               972-407-8400

Facsimile No.:                               214-273-0624

Number of Shares of Common Stock:            66,000



                                Page 182 of 200
<PAGE>

Name of Stockholder:                         Robert L. Griffis

Address:                                     650 Centura Tower One
                                             14185 Dallas Parkway
                                             Dallas, TX 75240

Telephone No.:                               972-407-8400

Facsimile No.:                               214-273-0625

Number of Shares of Common Stock:            30,000



Name of Stockholder:                         Don C. Benton

Address:                                     Arrowhead Ranch
                                             Route 1
                                             Clarksville, Texas  75246

Telephone No.:                               903-966-2347

Facsimile No.:                               903-427-5773

Number of Shares of Common Stock:            10,000



Name of Stockholder:                         American Realty Trust, Inc.

Address:                                     1800 Valley View Lane, Suite 300
                                             Dallas, Texas  75234

Telephone No.:                               469-522-4277

Facsimile No.:                               469-522-4388

Number of Shares of Common Stock:            97,500





                                Page 183 of 200
<PAGE>

Name of Stockholder:                         Basic Capital Management, Inc.

Address:                                     1800 Valley View Lane, Suite 300
                                             Dallas, Texas  75234

Telephone No.:                               469-522-4277

Facsimile No.:                               469-522-4388

Number of Shares of Common Stock:            141,260



Name of Stockholder:                         Nevada Sea Investments, Inc.

Address:                                     1800 Valley View Lane, Suite 300
                                             Dallas, Texas  75234

Telephone No.:                               469-522-4277

Facsimile No.:                               469-522-4388

Number of Shares of Common Stock:            72,800



Name of Stockholder:                         International Health Products, Inc.

Address:                                     1800 Valley View Lane, Suite 300
                                             Dallas, Texas  75234

Telephone No.:                               469-522-4277

Facsimile No.:                               469-522-4388

Number of Shares of Common Stock:            229,085





                                Page 184 of 200
<PAGE>

Name of Stockholder:                         One   Realco   Corporation   (fka
                                             Davister Corporation)

Address:                                     1800 Valley View Lane, Suite 300
                                             Dallas, Texas  75234

Telephone No.:                               469-522-4277

Facsimile No.:                               469-522-4388

Number of Shares of Common Stock:            264,200



Name of Stockholder:                         TacCo Financial, Inc.

Address:                                     1800 Valley View Lane, Suite 300
                                             Dallas, Texas  75234

Telephone No.:                               469-522-4277

Facsimile No.:                               469-522-4388

Number of Shares of Common Stock:            242,500






                                Page 185 of 200
<PAGE>

                                    EXHIBIT B
                                    ---------

                                 CAPITALIZATION
                                 --------------





The total number of shares of stock which the Company has  authority to issue is
110,000,000  shares of capital stock,  classified as (i)  100,000,000  shares of
common stock,  $0.01 par value and (ii)  10,000,000  shares of preferred  stock,
$0.10 par value.  As of the date of this Agreement,  9,714,608  shares of common
stock are issued and  outstanding  and  6,000,000  shares of Series H  Preferred
Stock, $0.10 par value, are issued and outstanding.






                                Page 186 of 200
<PAGE>

                     IRREVOCABLE PROXY AND POWER OF ATTORNEY


         The  undersigned  hereby appoints John P. Grayken and J.D. Dell, as the
undersigned's  attorney-in-fact and proxy, with full power of substitution,  for
and in the  undersigned's  name, to vote,  express  consent or  disapproval,  or
otherwise act (including pursuant to written consent, but excluding the right to
assert,  perfect and  prosecute  dissenters'  rights of appraisal) in accordance
with  Paragraphs  7(a) and 4(b) of the Consent  Agreement with respect to all of
the shares of Common Stock, $.01 par value per share, of Greenbriar Corporation,
a Nevada corporation (the "Company"), owned of record by the undersigned.

         The proxy granted hereby shall be  irrevocable  and may be exercised at
any  meeting  of  Stockholders,  notice of which is given,  or in respect of any
written consent which is solicited  prior to the due and proper  termination of,
and subject to and in accordance  with the terms and  conditions of, the Consent
Agreement,  dated of even date  herewith,  among the  undersigned,  LSOF  Pooled
Equity, L.P., a Delaware limited  partnership,  the Company and the Stockholders
of the  Company  signatory  thereto.  This  proxy is  coupled  with an  interest
sufficient in law to support such proxy.

Dated:   August 1, 2001
                                         ---------------------------------------
                                         Name:





                                Page 187 of 200
<PAGE>

                                                                       EXHIBIT E
                                                                       ---------


                                ESCROW AGREEMENT

         THIS ESCROW AGREEMENT (as the same may be amended or modified from time
to time and including any and all written  instructions  given to "Escrow Agent"
(hereinafter  defined)  pursuant  hereto,  this "Escrow  Agreement") is made and
entered into as of August 1, 2001 by and among Greenbriar Corporation,  a Nevada
corporation  (the  "Company"),  LSOF Pooled  Equity,  L.P.,  a Delaware  limited
partnership  ("Lone Star", and together with the Company,  sometimes referred to
collectively as the "Other  Parties"),  and American  Escrow Company  ("American
Escrow").


                              W I T N E S S E T H :
         WHEREAS,  the Company and Lone Star are parties to that certain  Master
Settlement Agreement dated as of August 1, 2001 (the "Settlement Agreement");

         WHEREAS,  pursuant to the Settlement Agreement, the Company is required
to deliver the Deposit  (hereinafter  defined) to American  Escrow to be held by
bank and released in  accordance  with the terms and  conditions  of this Escrow
Agreement; and

         WHEREAS,  the Company and Lone Star have requested  American  Escrow to
act in the  capacity of escrow agent under this Escrow  Agreement,  and American
Escrow, subject to the terms and conditions hereof, has agreed so to do.

         NOW,  THEREFORE,  in consideration of the premises and mutual covenants
and agreements contained herein, the parties hereto hereby agree as follows:

         1.       Appointment of Escrow Agent. Each of the Company and Lone Star
hereby appoints  American Escrow as the escrow agent under this Escrow Agreement
(American Escrow in such capacity,  the "Escrow Agent"), and Escrow Agent hereby
accepts such appointment.

         2.       Deposit. Upon execution of this Escrow Agreement,  the Company
will  deliver to the Escrow  Agent (i) the sum of Nine  Hundred Two Thousand One
Hundred Fourteen Dollars and NO/100  ($902,114.00)  (as said amount may increase
or  decrease  as a result of the  investment  thereof  and as said amount may be
reduced by charges  thereto and payments and setoffs  therefrom to compensate or
reimburse  Escrow  Agent for  amounts  owing to it pursuant  hereto),  (ii) that
certain  Certificate  of Deposit in the amount of $527,825  dated April 30, 2001
and issued to Roswell  Retirement  Ltd Co and (iii) that certain  Certificate of
Deposit  in the amount of  $570,061  dated  April 30,  2001  (collectively,  the
"Deposit")  to be held by Escrow  Agent in  accordance  with the  terms  hereof.


                                Page 188 of 200
<PAGE>

Subject to and in accordance with the terms and conditions hereof,  Escrow Agent
agrees that it shall  receive,  hold in escrow,  invest the cash  portion of the
Deposit and release or distribute the Deposit. It is hereby expressly stipulated
and agreed  that all  interest  and other  earnings  on the cash  portion of the
Deposit  shall  accrue for the benefit of the Company and shall be  disbursed to
the Company upon termination of this Escrow Agreement.

         3.       Investment of the Deposit.  Escrow Agent shall invest the cash
portion of the Deposit in the Nations 231 Fund,  unless otherwise  instructed in
writing by the Other Parties. Such written instructions,  if any, referred to in
the foregoing sentence shall specify the type and identity of the investments to
be purchased  and/or sold and shall also include the name of the  broker-dealer,
if any,  which the Other  Parties  direct the Escrow  Agent to use in respect of
such investment,  any particular  settlement  procedures required, if any (which
settlement   procedures   shall  be  consistent  with  industry   standards  and
practices), and such other information as Escrow Agent may require. Escrow Agent
shall not be liable  for  failure  to invest  funds  absent  sufficient  written
direction.   Unless   Escrow  Agent  is  otherwise   directed  in  such  written
instructions,  Escrow  Agent  may  use a  broker-dealer  of its  own  selection,
including a broker-dealer owned by or affiliated with Escrow Agent or any of its
affiliates.  The Escrow Agent or any of its affiliates may receive  compensation
with respect to any investment  directed  hereunder.  It is expressly agreed and
understood  by the  parties  hereto  that  Escrow  Agent  shall  not in any  way
whatsoever be liable for losses on any investments,  including,  but not limited
to,  losses from market risks due to  premature  liquidation  or resulting  from
other actions taken pursuant to this Escrow Agreement.

         Receipt and  investment  of the cash  portion of the  Deposit  shall be
confirmed by Escrow Agent as soon as practicable by account  statement,  and any
discrepancies in any such account  statement shall be noted by the Other Parties
to Escrow Agent within 30 calendar days after receipt thereof. Failure to inform
Escrow  Agent in  writing of any  discrepancies  in any such  account  statement
within said 30-day  period shall  conclusively  be deemed  confirmation  of such
account  statement in its  entirety.  For purposes of this  paragraph,  (a) each
account  statement  shall be deemed to have been  received  by the party to whom
directed  on the earlier to occur of (i) actual  receipt  thereof and (ii) three
Business  Days  (hereinafter  defined)  after the deposit  thereof in the United
States Mail,  postage prepaid and (b) the term "Business Day" shall mean any day
of the year,  excluding  Saturday,  Sunday and any other day on which  banks are
required or authorized to close in Dallas, Texas.

         4.       Release of Deposit.  Escrow Agent is hereby authorized to make
disbursements of the Deposit only as follows:

                  (a)      Upon receipt of written  instructions  signed by both
the Company and Lone Star and  otherwise in form and substance  satisfactory  to
Escrow Agent, in accordance with such instructions;

                  (b)      Upon receipt of a certificate of an executive officer
of:

                           (i)      Lone   Star   which   certifies   that   the
         Settlement  Agreement  has  been  terminated  other  than  pursuant  to
         Sections  6.1(c),  (d),  (e),  (f),  (g), (i) or (j) of the  Settlement
         Agreement, to Lone Star; or


                                Page 189 of 200
<PAGE>

                           (ii)     the  Company   which   certifies   that  the
         Settlement  Agreement has been terminated  pursuant to Sections 6.1(c),
         (d), (e), (f) or (g), to the Company;

it being  acknowledged  and agreed that each of Lone Star and the Company has an
unconditional  right to receive  the  disbursement  requested  by the  foregoing
certificates  provided that such certificates are timely and properly  delivered
to Escrow Agent as determined by Escrow Agent;

                  (c)      Upon  receipt of  evidence  from the  Company or Lone
Star that:

                           (i)      an adverse  judgment is entered  against any
         Greenbriar  Party or any of its respective  Subsidiaries and Affiliates
         (as such terms are defined in the Settlement Agreement) with respect to
         (A) Title 11 of the United States Code or any other applicable federal,
         state or foreign  bankruptcy,  debtor  relief or other similar law, (B)
         the appointment of a custodian, receiver, liquidator, assignee, trustee
         or sequestrator  (or similar  official) for any Greenbriar Party or any
         of its respective  Subsidiaries  and  Affiliates or of any  substantial
         part of such person's  assets or (C) the  winding-up or  liquidation of
         the  affairs  of  any  Greenbriar   Party  or  any  of  its  respective
         Subsidiaries and Affiliates,  other than the pending bankruptcy filings
         of American Care Communities,  Inc.,  Neawanna by the Sea LP, Villa Del
         Rey Roswell, L.P. and Villa Del Rey Seaside Inc.; or

                           (ii)     any   Greenbriar   Party   or   any  of  its
         respective  Subsidiaries  or  Affiliates  (A) filed a petition  seeking
         relief under Title 11 of the United States Code or any other applicable
         federal, state or foreign bankruptcy, debtor relief or similar law, (B)
         consented to the institution of proceedings thereunder or to the filing
         of any such petition or to the appointment of or taking possession by a
         custodian, receiver, liquidator,  assignee, trustee or sequestrator (or
         similar  official)  of any  Greenbriar  Party or any of its  respective
         Subsidiaries  or  Affiliates  or of any  substantial  part of any  such
         person's  assets,  (C) made a general  assignment  for the  benefit  of
         creditors,  (D) took  any  corporate  action  to  authorize  any of the
         foregoing  or (E)  admitted  in writing its  inability  to, or shall be
         generally unable to, pay its debts as such debts become due, other than
         the pending  bankruptcy  filings of American  Care  Communities,  Inc.,
         Neawanna by the Sea LP, Villa Del Rey  Roswell,  L.P. and Villa Del Rey
         Seaside Inc.

         to Lone Star; or

                  (d)      Upon the  receipt of a copy of a judgment  of a court
of competent  jurisdiction  having the authority to determine the disposition of
the Deposit, which judgment is not subject to appeal, reconsideration or review,
in accordance with such judgment.


                                Page 190 of 200
<PAGE>

Notwithstanding  anything  contained  herein or elsewhere to the  contrary,  the
Other Parties hereby  expressly agree that the Escrow Agent shall be entitled to
charge the cash  portion of the Deposit  for,  and pay and set-off from the cash
portion of the Deposit,  any and all amounts,  if any, then owing to it pursuant
to this Escrow  Agreement prior to the disbursement of the Deposit in accordance
with clauses (a) and (b) of this Section 4.

         5.       Tax Matters. The Other Parties shall provide Escrow Agent with
their respective  taxpayer  identification  numbers documented by an appropriate
Form W 8 or Form W 9 upon  execution  of this  Escrow  Agreement.  Failure so to
provide such forms may prevent or delay  disbursements  from the Deposit and may
also result in the  assessment of a penalty and Escrow Agent's being required to
withhold tax on any interest or other income earned on the Deposit. Any payments
of income shall be subject to applicable  withholding  regulations then in force
in the United States or any other jurisdiction, as applicable.

         6.       Scope   of    Undertaking.    Escrow    Agent's   duties   and
responsibilities  in  connection  with  this  Escrow  Agreement  shall be purely
ministerial  and shall be limited to those  expressly  set forth in this  Escrow
Agreement.  Escrow Agent is not a principal,  participant  or beneficiary in any
transaction  underlying this Escrow  Agreement and shall have no duty to inquire
beyond  the  terms  and   provisions   hereof.   Escrow   Agent  shall  have  no
responsibility  or  obligation  of any  kind  in  connection  with  this  Escrow
Agreement or the Deposit and shall not be required to deliver the Deposit or any
part  thereof or take any action with respect to any matters that might arise in
connection  therewith,  other than to  receive,  hold,  invest and  deliver  the
Deposit as herein provided. Without limiting the generality of the foregoing, it
is hereby  expressly  agreed and  stipulated  by the parties  hereto that Escrow
Agent shall not be required to exercise any discretion  hereunder and shall have
no investment or management responsibility and, accordingly,  shall have no duty
to, or  liability  for its failure to,  provide  investment  recommendations  or
investment advice to the Other Parties or either of them. Escrow Agent shall not
be liable for any error in judgment,  any act or omission, any mistake of law or
fact,  or for anything it may do or refrain from doing in  connection  herewith,
except for,  subject to Section 7  hereinbelow,  its own willful  misconduct  or
gross  negligence.  It is the intention of the parties  hereto that Escrow Agent
shall never be required to use, advance or risk its own funds or otherwise incur
financial  liability in the  performance of any of its duties or the exercise of
any of its rights and powers hereunder.

         7.       Reliance;  Liability.  Escrow Agent may rely on, and shall not
be liable for acting or refraining  from acting in accordance  with, any written
notice,  instruction  or request or other paper  furnished  to it  hereunder  or
pursuant  hereto and  believed  by it to have been  signed or  presented  by the
proper  party or  parties.  Escrow  Agent  shall  be  responsible  for  holding,
investing  and  disbursing  the  Deposit  pursuant  to  this  Escrow  Agreement;
provided,  however,  that in no event shall  Escrow Agent be liable for any lost
profits, lost savings or other special,  exemplary,  consequential or incidental
damages in excess of Escrow  Agent's fee hereunder and provided,  further,  that
Escrow Agent shall have no liability  for any loss arising from any cause beyond
its  control,  including,  but not limited to, the  following:  (a) acts of God,
force majeure,  including,  without limitation,  war (whether or not declared or
existing),  revolution,  insurrection,  riot, civil commotion,  accident,  fire,



                                Page 191 of 200
<PAGE>

explosion,  stoppage of labor, strikes and other differences with employees; (b)
the act,  failure or neglect of any Other Party or any agent or correspondent or
any other person  selected by Escrow Agent;  (c) any delay,  error,  omission or
default of any mail, courier,  telegraph,  cable or wireless agency or operator;
or (d) the acts or  edicts of any  government  or  governmental  agency or other
group or entity exercising  governmental powers. Escrow Agent is not responsible
or liable in any manner whatsoever for the sufficiency, correctness, genuineness
or validity of the subject matter of this Escrow Agreement or any part hereof or
for the  transaction  or  transactions  requiring or underlying the execution of
this  Escrow  Agreement,  the form or  execution  hereof or for the  identity or
authority of any person  executing  this Escrow  Agreement or any part hereof or
depositing the Deposit.

         8.       Right of Interpleader.  Should any controversy arise involving
the  parties  hereto or any of them or any  other  person,  firm or entity  with
respect to this Escrow Agreement or the Deposit,  or should a substitute  escrow
agent fail to be designated as provided in Section 15 hereof, or if Escrow Agent
should be in doubt as to what action to take, Escrow Agent shall have the right,
but not the obligation, either to (a) withhold delivery of the Deposit until the
controversy is resolved,  the conflicting  demands are withdrawn or its doubt is
resolved or (b) institute a petition for  interpleader in any court of competent
jurisdiction to determine the rights of the parties hereto.  In the event Escrow
Agent is a party to any dispute, Escrow Agent shall have the additional right to
refer  such   controversy  to  binding   arbitration.   Should  a  petition  for
interpleader be instituted, or should Escrow Agent be threatened with litigation
or become involved in litigation or binding arbitration in any manner whatsoever
in  connection  with this Escrow  Agreement  or the Deposit,  the Other  Parties
hereby jointly and severally agree to reimburse  Escrow Agent for its attorneys'
fees and any and all other  expenses,  losses,  costs and  damages  incurred  by
Escrow Agent in  connection  with or resulting  from such  threatened  or actual
litigation or arbitration prior to any disbursement hereunder.

         9.       Indemnification.   The  Other  Parties   hereby   jointly  and
severally indemnify Escrow Agent, its officers,  directors,  partners, employees
and agents (each herein called an "Indemnified  Party")  against,  and hold each
Indemnified  Party  harmless  from,  any and all  expenses,  including,  without
limitation,  attorneys' fees and court costs, losses, costs, damages and claims,
including,   but  not  limited  to,  costs  of  investigation,   litigation  and
arbitration,  tax liability and loss on investments  suffered or incurred by any
Indemnified  Party in  connection  with or  arising  from or out of this  Escrow
Agreement,  except  such  acts or  omissions  as may  result  from  the  willful
misconduct or gross  negligence  of such  Indemnified  Party.  IT IS THE EXPRESS
INTENT OF EACH OF THE COMPANY AND LONE STAR TO INDEMNIFY EACH OF THE INDEMNIFIED
PARTIES  FOR,  AND HOLD  THEM  HARMLESS  AGAINST,  THEIR OWN  NEGLIGENT  ACTS OR
OMISSIONS.

         10.      Compensation and Reimbursement of Expenses. The Company hereby
agrees to pay Escrow Agent for its services  hereunder in accordance with Escrow
Agent's fee  schedule as attached as Schedule I hereto as in effect from time to
time and to pay all  expenses  incurred by Escrow Agent in  connection  with the
performance of its duties and enforcement of its rights  hereunder and otherwise
in connection with the preparation, operation, administration and enforcement of
this Escrow Agreement, including, without limitation, attorneys' fees, brokerage
costs and related expenses incurred by Escrow Agent.


                                Page 192 of 200
<PAGE>

         11.      Funds Transfer.  In the event funds transfer  instructions are
given (other than in writing at the time of execution of the Escrow  Agreement),
whether in writing, by telefax, or otherwise,  the Escrow Agent is authorized to
seek confirmation of such  instructions by telephone  call-back to the person or
person designated on Schedule II hereto,  and the Escrow Agent may rely upon the
confirmations  of anyone  purporting to be the person or persons so  designated.
The persons and telephone  numbers for call-backs may be changed only in writing
actually  received and  acknowledged  by the Escrow  Agent.  The parties to this
Escrow  Agreement  acknowledge  that such  security  procedure  is  commercially
reasonable.

                  It is understood  that the Escrow Agent and the  beneficiary's
bank in any funds  transfer may rely solely upon any account  numbers or similar
identifying  number  provided by either of the other parties  hereto to identify
(i) the beneficiary, (ii) the beneficiary's bank, or (iii) an intermediary bank.
The Escrow  Agent may apply any of the escrowed  funds for any payment  order it
executes using any such identifying  number,  even where its use may result in a
person other than the beneficiary being paid, or the transfer of funds to a bank
other than the beneficiary's bank or an intermediary bank, designated.


         12.      Notices.  Any  notice  or  other  communication   required  or
permitted  to be given under this Escrow  Agreement  by any party  hereto to any
other party hereto shall be considered  as properly  given if in writing and (a)
delivered against receipt therefor,  (b) mailed by registered or certified mail,
return receipt requested and postage prepaid or (c) sent by telefax machine,  in
each case to the address or telefax number, as the case may be, set forth below:

         If to Escrow Agent:

                American Escrow Company
                2626 Howell Street, 10th Floor
                Dallas, Texas 75204
                Attn:  Judy DeMara
                Telefax No.: (214) 855-8889
                Telephone No.: (214) 855-8830

         If to the Company:

                Greenbriar Corporation
                650 Centura Tower One
                14185 Dallas Parkway
                Dallas, Texas 75240
                Attn:   President
                Telefax No.:  (972) 407-8420
                Telephone No.: (972) 407-8400



                                Page 193 of 200
<PAGE>

         With a copy (which shall not constitute notice) to:

                Henry W. Simon, Jr.
                Simon, Warner & Doby, L.L.P.
                1700 City Center Tower II
                301 Commerce Street
                Fort Worth, Texas  76102
                Telefax No.: (817) 810-5255
                Telephone No.: (817) 810-5250

         If to Lone Star:

                LSOF Pooled Equity, L.P.
                600 N. Pearl Street
                Suite 1550, LB 161
                Dallas, Texas  76140
                Attn: Len Allen
                Telefax No.:  (214) 754-8401
                Telephone No.: (214) 754-8300

         With a copy (which shall not constitute notice) to:

                Weil, Gotshal & Manges LLP
                100 Crescent Court, Suite 1300
                Dallas, Texas 75201-6950
                Attn: Michael A. Saslaw
                Telefax No.: (214) 746-7777
                Telephone No,: (214) 746-7700

Except to the extent  otherwise  provided in the second  paragraph  of Section 3
hereinabove, delivery of any communication given in accordance herewith shall be
effective only upon actual receipt  thereof by the party or parties to whom such
communication  is directed.  Any party to this Escrow  Agreement  may change the
address to which  communications  hereunder are to be directed by giving written
notice to the other  party or  parties  hereto in the  manner  provided  in this
section.

         13.      Consultation with Legal Counsel. Escrow Agent may consult with
its counsel or other counsel satisfactory to it concerning any question relating
to its duties or responsibilities  hereunder or otherwise in connection herewith
and shall not be liable for any action taken,  suffered or omitted by it in good
faith upon the advice of such counsel.


                                Page 194 of 200
<PAGE>

         14.      Choice of Laws; Cumulative Rights. This Escrow Agreement shall
be construed under, and governed by, the laws of the State of Texas,  excluding,
however,  (a) its choice of law rules and (b) the  portions  of the Texas  Trust
Code Sec.  111.001,  et seq. of the Texas  Property  Code  concerning  fiduciary
duties and liabilities of trustees.  All of Escrow Agent's rights  hereunder are
cumulative of any other rights it may have at law, in equity or  otherwise.  The
parties hereto agree that the forum for resolution of any dispute  arising under
this  Escrow  Agreement  shall be Dallas  County,  Texas,  and each of the Other
Parties hereby consents, and submits itself, to the jurisdiction of any state or
federal court sitting in Dallas County, Texas.

         15.      Resignation.  Escrow Agent may resign  hereunder upon ten (10)
days'  prior  notice  to the  Other  Parties.  Upon the  effective  date of such
resignation,  Escrow Agent shall  deliver the Deposit to any  substitute  escrow
agent  designated by the Other Parties in writing.  If the Other Parties fail to
designate a  substitute  escrow  agent  within ten (10) days after the giving of
such notice,  Escrow Agent may  institute a petition  for  interpleader.  Escrow
Agent's sole responsibility  after such 10-day notice period expires shall be to
hold the Deposit  (without any  obligation  to reinvest the same) and to deliver
the same to a designated  substitute escrow agent, if any, or in accordance with
the   directions  of  a  final  order  or  judgment  of  a  court  of  competent
jurisdiction,  at which time of delivery  Escrow Agent's  obligations  hereunder
shall cease and terminate.

         16.      Assignment.  This  Escrow  Agreement  shall not be assigned by
either of the Other Parties  without the prior  written  consent of Escrow Agent
(such assigns of the Other Parties to which Escrow Agent  consents,  if any, and
Escrow Agent's assigns being hereinafter  referred to collectively as "Permitted
Assigns"); provided that Lone Star may assign its right to receive any or all of
the Deposit to any other person.

         17.      Severability.  If one or more of the  provisions  hereof shall
for any reason be held to be invalid,  illegal or  unenforceable  in any respect
under applicable law, such invalidity,  illegality or unenforceability shall not
affect any other provisions hereof, and this Escrow Agreement shall be construed
as if such invalid,  illegal or unenforceable provision had never been contained
herein,  and the  remaining  provisions  hereof  shall be given  full  force and
effect.

         18.      Termination.  This Escrow  Agreement  shall terminate upon the
disbursement,  in  accordance  with  Sections 4 or 15 hereof,  of the Deposit in
full; provided,  however, that in the event all fees, expenses,  costs and other
amounts  required to be paid to Escrow Agent hereunder are not fully and finally
paid prior to termination, the provisions of Section 10 hereof shall survive the
termination hereof and, provided further, that the last two sentences of Section
8 hereof and the provisions of Section 9 hereof shall, in any event, survive the
termination hereof.

         19.      General.   The  section  headings  contained  in  this  Escrow
Agreement  are for  reference  purposes only and shall not affect in any way the
meaning or interpretation  of this Escrow  Agreement.  This Escrow Agreement and
any affidavit, certificate,  instrument, agreement or other document required to
be provided hereunder may be executed in two or more counterparts, each of which
shall be deemed an original,  but all of which taken together  shall  constitute
but one and the same instrument. Unless the context shall otherwise require, the
singular shall include the plural and vice-versa, and each pronoun in any gender
shall  include  all  other  genders.  The terms and  provisions  of this  Escrow


                                Page 195 of 200
<PAGE>

Agreement constitute the entire agreement among the parties hereto in respect of
the subject  matter  hereof,  and neither the Other Parties nor Escrow Agent has
relied on any representations or agreements of the other, except as specifically
set forth in this Escrow  Agreement.  This  Escrow  Agreement  or any  provision
hereof may be amended, modified, waived or terminated only by written instrument
duly signed by the parties  hereto.  This  Escrow  Agreement  shall inure to the
benefit of, and be binding upon, the parties hereto and their respective  heirs,
devisees,  executors,  administrators,  personal  representatives,   successors,
trustees, receivers and Permitted Assigns. This Escrow Agreement is for the sole
and exclusive  benefit of the Other Parties and the Escrow Agent, and nothing in
this Escrow  Agreement,  express or  implied,  is intended to confer or shall be
construed as conferring upon any other person any rights,  remedies or any other
type or types of benefits.


            [The Remainder of this Page Is Intentionally Left Blank.]







                                Page 196 of 200
<PAGE>

         IN WITNESS  WHEREOF,  the  parties  hereto  have  executed  this Escrow
Agreement to be effective as of the date first above written.

                                   GREENBRIAR CORPORATION

                                   By: _________________________________________
                                   Name: _______________________________________
                                   Title: ______________________________________

                                   LSOF POOLED EQUITY, L.P.

                                   By: LSOF Genpar, Inc., its General Partner

                                   By: _________________________________________
                                   Name: _______________________________________
                                   Title: ______________________________________


                                   AMERICAN ESCROW COMPANY


                                   By: _________________________________________
                                   Name: _______________________________________
                                   Title: ______________________________________







                                Page 197 of 200
<PAGE>

Schedule I

                                      $500


Schedule II

                Telephone Number(s) for Call-backs and Person(s)
                Designated to Confirm Funds Transfer Instructions


                  If to the Company:


     Name                                    Telephone Number
     ----                                    ----------------

Gene Bertcher                                 (972) 407-8400



If to Lone Star:

     Name                                    Telephone Number
     ----                                    ----------------

JD Dell                                       (214) 754-8300


Telephone  call-backs  shall be made to either the Company or Lone Star if joint
instructions are required pursuant to the Escrow Agreement.







                                Page 198 of 200

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.25.1
<SEQUENCE>11
<FILENAME>green8k070101ex10251.txt
<DESCRIPTION>PROMISSORY NOTE
<TEXT>

                                                                EXHIBIT 10.25.1.

                                 PROMISSORY NOTE
                                 ---------------

$3,375,000                                                          July 1, 2001

         For value received, the undersigned,  GREENBRIAR CORPORATION, having an
address at Centura Tower I, Suite 650, 14185 Dallas Parkway, Dallas, Texas 75240
(hereinafter referred to as "MAKER"),  promises to pay to the order of SYLVIA M.
GILLEY, at 6211 Georgian Court,  Dallas,  Texas 75240 (hereinafter  collectively
referred to as "HOLDER"),  the  principal  amount of THREE MILLION THREE HUNDRED
SEVENTY FIVE THOUSAND ($3,375,000) DOLLARS, together with interest on the unpaid
principal  balance  thereof  at the rate of TEN (10%)  percent  per  annum.  All
accrued and unpaid  interest on this Note shall be due and payable,  and must be
received  by  Holder,  on  October  1, 2001 and on the first day of every  three
months thereafter.  Notwithstanding  any provision to the contrary in this Note,
payment of principal  and interest of this Note is to be made only if and to the
extent that payment of a distribution to stockholders of Greenbriar  Corporation
could then be made pursuant to NRS 78.288. Maker may prepay this Note in full or
in part at any time, without premium or penalty.  The entire outstanding balance
evidenced by this Note, including,  without limitation,  all unpaid interest and
any other amounts that may be due hereunder, shall be due and payable in full on
the date which is TWO (2) YEARS from the date  hereof.  All  payments  hereunder
shall be applied first to: (i) any amounts due hereunder other than for interest
or  principal,  then (ii) to  accrued  and  unpaid  interest  and then  (iii) to
principal.

         Notwithstanding  any provision to the contrary in this Note,  the total
obligation for payments which are legally  regarded as interest shall not exceed
the maximum limits imposed by applicable state and federal laws in effect on the
date  hereof,  and no payment  shall be made  hereunder  if such  payment  would
otherwise violate any other provision of any applicable State or Federal law. If
any payment in excess of said limits is provided for, or shall be adjudicated to
be provided  for, in this Note then,  in any such event:  (i) the  provisions of
this paragraph  shall govern and control and supersede  every other provision of
this Note,  (ii) neither  Maker nor its  successors,  legal  representatives  or
assigns,  nor any other party  liable for the payment of any sum due pursuant to
this Note shall be  obligated  to pay such  amount to the  extent  that it is in
excess of the maximum  amount or otherwise not permitted by law,  (iii) any such
excess  interest or other payment which may have been  collected  shall,  at the
option of the Holder (unless otherwise  required by law), either be applied as a
credit  against  the then  unpaid  principal  amount of this Note or refunded to
Maker, and (iv) the effective rate of interest shall be automatically subject to
reduction to the maximum lawful contract rate allowed under any applicable State
or Federal laws in effect on the date hereof.

         If Maker fails to promptly  pay any amount  required to be paid by this
Note when  DEMANDED,  and the same is placed  in the  hands of an  attorney  for
collection,  or suit is brought on the same,  or the same is  collected  through
probate,  bankruptcy  or other  judicial  proceedings,  or any  other  costs are
incurred by Holder in connection  with the  collection  of the same,  then Maker
agrees and promises to pay all such costs of  collection,  including  reasonable
attorney's fees and court costs, whether or not a lawsuit is brought.


                                Page 199 of 200
<PAGE>

         Maker waives all notices, demands for payment, presentment for payment,
notice of dishonor,  notice of protest,  protest,  and diligence in  collection.
Maker shall pay Holder all sums which are payable  pursuant to the terms of this
Note without  setoff,  recoupment or deduction of any kind. No provision of this
Note may be  waived,  changed,  modified,  amended  or  discharged,  except by a
written  agreement  which is signed by the party  against  whom  enforcement  is
sought.  Maker hereby irrevocably  waives its right to a Jury Trial,  submits to
the law and  jurisdiction  of the Courts of the State where this Note is payable
and agrees that venue shall lie in the County where this Note is payable.

         IN WITNESS  WHEREOF,  the Maker has  executed  this  Note,  by its duly
authorized representative, as of the day and year first above written.

                                          MAKER:
                                                 GREENBRIAR CORPORATION


                                                 By:____________________________
                                                        Gene S. Bertcher,
                                                        Executive Vice President

STATE OF TEXAS    )
                  ) s.s.:
COUNTY OF DALLAS  )


         On the ____ day of June, in the year 2001,  before me, the undersigned,
a Notary Public in and for said state,  personally  appeared  GENE S.  BERTCHER,
personally know to me or proved to me on the basis of  satisfactory  evidence to
be the person(s) whose name(s) is (are) subscribed to the within  instrument and
acknowledged  to  me  that  he/she/they   executed  the  same  in  his/her/their
capacity(ies),  and that by  his/her/their  signature(s) on the instrument,  the
person(s),  or the entity upon behalf of which the person(s) acted, executed the
instrument.


                                                      __________________________
                                                             Notary Public




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</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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