AGREEMENT OF PURCHASE AND SALE

     This agreement is made as of March 17, 1997, between RESTORE REHABILITATION
GROUP,  INC.,  a Georgia  corporation  ("Buyer"),  party of the first part,  and
MEADOWBROOK  REHABILITATION  GROUP, INC., a Delaware  corporation with principal
offices   in   Emeryville,   California   ("Meadowbrook/CA")   and   MEADOWBROOK
REHABILITATION GROUP OF GEORGIA, INC., a Georgia corporation ("Meadowbrook/GA"),
parties of the second part.  Meadowbrook/CA  and  Meadowbrook/GA are referred to
hereinafter jointly as the "Selling Parties".

                                    RECITALS

     A.   Meadowbrook/GA   (i)  manages  the  operation  of  a   neurobehavioral
rehabilitation  program at Columbia West Paces Medical  Center in Fulton County,
Georgia (such program being  formerly  operated at Decatur  Hospital in Decatur,
Georgia);  (ii) manages the  operation of a subacute  rehabilitation  program at
Columbia  Parkway Medical Center in Douglas County,  Georgia (such program being
formerly  operated at  Newtonhouse,  a unit of Georgia Baptist Medical Center in
Atlanta, Georgia); and (iii) operates a post-acute rehabilitation program at its
Transitional Living Center in DeKalb County,  Georgia (the foregoing  activities
being hereinafter referred to as the "Business").

     B.  Meadowbrook/CA  owns  all  of  the  issued  and  outstanding  stock  of
Meadowbrook/GA.

     C. Buyer desires to purchase from Meadowbrook/GA and Meadowbrook/GA desires
to sell to Buyer,  on the terms and subject to the conditions of this agreement,
the Business and the Assets (as herein  defined) of  Meadowbrook/GA  in exchange
for the cash to be paid by Buyer.

     D. Buyer desires to purchase from Meadowbrook/CA (after the consummation of
the aforesaid  purchase of the Business and Assets of  Meadowbrook/GA  by Buyer)
all of the issued and outstanding stock of Meadowbrook/GA.

     In consideration of the mutual covenants, agreements,  representations, and
warranties contained in this agreement, the parties agree as follows:

ARTICLE ONE: PURCHASE AND SALE

1.1 Purchase and Sale of Assets.  Subject to the terms and  conditions set forth
in this agreement,  Selling Parties agree to sell, convey, transfer, assign, and
deliver to Buyer,  and Buyer  agrees to purchase  from the  Selling  Parties the
Business and the assets of the Business.

     1.1.1  Description  of Assets.  The assets of the Business  (the  "Assets")
include the following:

     (a) The real property commonly known as 1942 Clairmont Road, DeKalb County,
Georgia (the "Real Property");

     (b) All of Meadowbrook/GA's  equipment,  furniture, and fixtures located in
the State of Georgia (the "Equipment");

     (c) The transitional  in-patient and out-patient  clinics  conducted at the
Real Property and the Leased Property (as hereinafter defined), including all of
Meadowbrook/GA's rights therein;

     (d) The assets of the  in-patient  neurobehavioral  unit at  Columbia  West
Paces Ferry Medical  Center,  but not the  management  agreement with West Paces
Hospital, Inc., which shall be retained by Meadowbrook/GA;

     (e) The contract  with Medical  Center West,  Inc.  d/b/a  Parkway  Medical
Center to provide subacute  rehabilitation  services at Columbia Parkway Medical
Center, including all of Meadowbrook/GA's rights therein;

     (f) Any other  licenses,  contracts or leases related to the Business which
Buyer  wishes to  acquire,  and which the  Selling  Parties  are able to sell or
assign;

     (g) All goodwill associated with the Business or the Assets,  together with
the right to represent to third  parties that the Buyer is the  successor to the
Business;

     (h)  All  medical  and   financial   records   for   patients   treated  by
Meadowbrook/GA within the State of Georgia,  provided the Buyer agrees to retain
all such  records for the period  required by law and to make them  available to
the Selling Parties and governmental authorities as required;

     (i) All of Meadowbrook/GA's right, title and interest in that certain lease
dated March 1, 1993 between J & S Properties and Meadowbrook/GA of real property
known as 1946 Clairmont Road, DeKalb County, Georgia (the "Leased Property");

     (j) All motor  vehicles  used in the  operation of the Business (the "Motor
Vehicles");

     (k)  All  inventories  of  supplies,   drugs,   disposable  goods,  labels,
containers,  bags and  other  packing  materials,  and  other  materials  of the
Business, wherever located (the "Inventory");

     (l)  To  the  extent   transferrable,   all  licenses,   permits  or  other
governmental  authorizations  affecting, or relating in any way to, the Business
or the Assets; and

     (m) All books, records,  files and papers, whether intangible or intangible
form, used in, or relating in any way to, the Business or the Assets,  including
sales and promotional literature,  sales and purchase  correspondence,  lists of
present and former  suppliers,  lists of present and former patients,  personnel
and employment  records,  and any  information  relating to taxes imposed on the
Assets.

     1.1.2 Right to Exclude Other Agreements.  Notwithstanding  the above, Buyer
shall have the right,  exercisable at any time on or before the Closing Date (as
hereinafter  defined),  and in its  sole  discretion,  to  designate  any  other
license,  contract  or lease  described  above (in  addition  to the  management
agreement with West Paces Hospital,  Inc.) to be retained by Meadowbrook/GA,  in
which  event  the  license,  contract  or  lease  so  designated  shall  not  be
transferred  to Buyer;  provided  however,  there shall be no  adjustment in the
purchase price as a result of Buyer's election.

     1.1.3 Excluded  Assets.  There is specifically  excluded from the sale, all
cash,  cash  equivalents,  Medicare  cost report  receivables,  and all accounts
receivable arising from services rendered by Meadowbrook/GA prior to the Closing
Effective Date (as defined in section 8.1 hereof).

     1.1.4 Consent to Transfer Leased  Property.  The assignment and transfer by
Meadowbrook/GA  of its right,  title and interest in and to the Leased  Property
shall  be  subject  to  the  requirement,   if  any,  of  obtaining  consent  of
Meadowbrook/GA's  landlord  to such  transaction  or any  other  restriction  on
transfer contained in the lease of the Leased Property. Selling Parties agree to
cooperate  reasonably  and in good  faith  with  Buyer in  seeking to obtain the
consent (if required) of Meadowbrook/GA's landlord to such transaction.

1.2  Consideration  For Sale of Assets.  As full payment for the transfer of the
Assets to Buyer,  Buyer shall  deliver at the Closing,  in  accordance  with the
provisions  of section  8.3,  a bank  cashier's  check,  payable to the order of
Meadowbrook/GA in the amount of $1,250,000.00.

1.3 Purchase and Sale of Stock.  Immediately  after the consummation of the sale
of the Assets as described  above,  and subject to the terms and  conditions set
forth in this agreement,  Meadowbrook/CA shall sell, convey,  transfer,  assign,
and deliver to Buyer, and Buyer shall purchase from  Meadowbrook/CA,  all of the
issued and  outstanding  stock of  Meadowbrook/GA  (the  "Stock").  Prior to the
transfer of the Stock,  but after the transfer of the Assets as provided  above,
Meadowbrook/GA   shall  transfer  to  Meadowbrook/CA   all  of  its  assets  not
transferred to Buyer hereunder,  with the exception of the management  agreement
with West Paces Hospital, Inc. identified herein and any other license, contract
or lease of  Meadowbrook/GA  designated by Buyer,  pursuant to the provisions of
section 1.1.2 above, to be retained by Meadowbrook/GA,  and Meadowbrook/CA shall
assume all of the obligations and liabilities of  Meadowbrook/GA  not assumed by
Buyer  hereunder or paid or otherwise  satisfied  prior to or at the Closing (as
hereinafter defined).

1.4  Consideration  For Sale of Stock.  As full  payment for the transfer of the
Stock to Buyer,  Buyer shall  deliver at the  Closing,  in  accordance  with the
provisions  of section  8.3,  a bank  cashier's  check,  payable to the order of
Meadowbrook/CA in the amount of $50,000.

1.5 Assumption of Liabilities.  Buyer agrees to assume those  equipment  leases,
conditional sales contracts and security  interests listed in Exhibit 2.5, those
contracts  listed in Exhibit 2.8 and those security  agreements and related debt
on Motor Vehicles listed in Exhibit 2.17. It is expressly  understood and agreed
that Buyer  shall not be liable for any of the  obligations  or  liabilities  of
Meadowbrook/GA of any kind and nature other than those  specifically  assumed by
Buyer  under this  section.  Without  limiting  the  foregoing,  Buyer shall not
assume,  pay or perform  any of the  following  liabilities  or  obligations  of
Meadowbrook/GA, which, if not paid or otherwise satisfied by the Selling Parties
at or prior to the  Closing,  shall  be  assumed  by and  become  the  exclusive
responsibility of Meadowbrook/CA:

     (a) Any liabilities or obligations of  Meadowbrook/GA  relating to employee
benefits  or  compensation  arrangements  of any nature  existing on the Closing
Effective  Date,   including  any  liabilities  or  obligations   under  any  of
Meadowbrook/GA's employee benefit agreements, plans or other arrangements;

     (b) Any liability or obligation of  Meadowbrook/GA  for breach of contract,
personal  injury or property  damage  (whether  based on  negligence,  breach of
warranty,  strict  liability or any other theory) caused by or arising out of or
resulting from, directly or indirectly,  any alleged or actual acts or omissions
occurring on or before the Closing Effective Date;

     (c) Any  liability or  obligation  of  Meadowbrook/GA  for money  borrowed,
whether such  liabilities and obligations  were incurred in the operation of the
Business or otherwise;

     (d) Any  amounts  due or that may be  claimed  or become  due to  Medicare,
Medicaid,  or any other health care reimbursement or payment  intermediary audit
adjustments,  disallowances  or  reclassifications  on  account  of health  care
reimbursement cost report adjustments or other payment adjustments  attributable
to any period ending on or before the Closing Effective Date;

     (e) Any form of  Medicare,  Medicaid,  or other  health care  reimbursement
recapture, adjustment, overpayment, penalty assessment or charge whatsoever with
respect to any period ending on or before the Closing Effective Date;

     (f)  Income  taxes owed by  Meadowbrook/GA  which are  attributable  to any
period of time  occurring  prior to the Closing  Effective Date and income taxes
owed by Meadowbrook/GA  which are attributable to the sale of the Assets and the
Business; and

     (g) Any  and  all  other  liabilities  and  obligations  of  every  kind of
Meadowbrook/GA  incurred by  Meadowbrook/GA  in  connection  with, or arising by
reason of, its  ownership of the Assets or its conduct of the Business  prior to
the Closing  Effective  Date,  other than the liabilities  specifically  assumed
hereunder by Buyer.

1.6  Allocation  of Purchase  Price.  The purchase  price of the Assets shall be
allocated in the manner set forth in Exhibit 1.6.

     Each of the  parties  agrees to report  this  transaction  for  federal tax
purposes in accordance with this allocation of the purchase price.

1.7  Sales and  Property  Taxes.  Meadowbrook/GA  shall  pay the  Georgia  state
transfer  tax due on the sale of the Real  Property.  Meadowbrook/GA  and  Buyer
shall each pay  one-half  of all other  sales and use taxes  arising  out of the
transfer of the Assets and shall pay their respective  portions,  prorated as of
the Closing  Effective Date, of state and local real and personal property taxes
of the business  applicable to the year in which the Closing occurs.  Such taxes
shall be prorated at Closing and if any  assessment for the property at issue is
not then  available  for the 1997 tax  year,  the  parties  shall  compute  such
proration based on the assessed value or values applicable to the 1996 tax year.
Following the Closing, Buyer shall return any transferred assets or property for
taxes and shall pay all real or personal property taxes owing thereon.

ARTICLE TWO: REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES

2.  Representations  and Warranties.  The Selling Parties  represent and warrant
that:

     2.1   Organization,   Standing,   and   Qualification  of   Meadowbrook/GA.
Meadowbrook/GA is a corporation duly organized,  validly  existing,  and in good
standing under the laws of Georgia.  True and correct copies of its  certificate
of  incorporation  and bylaws and all amendments  thereto are attached hereto as
Exhibit 2.1. This agreement has been duly authorized,  executed and delivered by
Meadowbrook/GA and constitutes a valid and binding obligation of Meadowbrook/GA,
enforceable  against  Meadowbrook/GA in accordance with its terms, except to the
extent that enforceability may be limited by bankruptcy,  insolvency,  and other
laws  affecting the  enforcement of creditors'  rights  generally and by general
principles of equity.  The sole shareholder of Meadowbrook/GA is Meadowbrook/CA.
A true and correct copy of the share  certificates  evidencing  Meadowbrook/CA's
ownership of the Stock is attached  hereto as a part of Exhibit 2.1. The Selling
Parties will deliver to Buyer, on or before the Closing Date,  certified  copies
of  the   resolutions  of  the  boards  of  directors  of   Meadowbrook/CA   and
Meadowbrook/GA  authorizing and approving the sale of the Business and Assets to
Buyer on the terms and conditions provided in this Agreement.

     2.2 Financial Statements.

     Exhibit  2.2A  to  this   agreement   sets  forth  the  balance   sheet  of
Meadowbrook/GA  as of June 30,  1996,  and the related  statement  of income and
retained  earnings for the 12-month  period ending June 30, 1996.  The financial
statements  in Exhibit  2.2A are  referred  to as the "June 30,  1996  Financing
Statements".  While  the  June  30,  1996  Financial  Statements  have  not been
separately  audited  (they  have  been  audited  as a part  of the  consolidated
financial  statements of Meadowbrook/CA),  they have been prepared in accordance
with  generally  accepted  accounting   principles   consistently   followed  by
Meadowbrook/GA  through  the period  indicated,  and, in all  material  respects
fairly present the financial  position of Meadowbrook/GA as of June 30, 1996 and
the results of its operations for the 12-month period indicated.

     Exhibit  2.2B  to  this   agreement   sets  forth  the  balance   sheet  of
Meadowbrook/GA  as of January 31, 1997 (the "Current  Balance  Sheet"),  and the
related  statement of income and retained earnings for the 7-month period ending
on such date.  The  financial  statements in Exhibit 2.2B are referred to as the
"Current Financial Statements".  While the Current Financial Statements have not
been  audited,  they have been  prepared in the  ordinary  course of business by
Meadowbrook/GA and  Meadowbrook/CA,  and to the best of their knowledge,  fairly
present in all material respects the financial  position of Meadowbrook/GA as of
its date, and the results of its operations for the period indicated.

     2.3 Absence of Specified  Changes.  Since June 30, 1996, there has not been
any  materially  adverse  change in the  financial  condition or  operations  of
Meadowbrook/GA except changes in the ordinary course of business,  none of which
would be material in determining the company's financial  condition,  and except
that West Paces Hospital, Inc. has given written notice (dated February 20,1997)
of  cancellation  of its  management  agreement  with  Meadowbrook/GA  effective
February 21, 1998.

     2.4 Real  Property.  The Real  Property is  described  in Exhibit  2.4. The
Selling  Parties  make no  warranty or  representation  regarding  the  physical
condition  of  the  Real  Property,  including  the  improvements  and  fixtures
constituting a part thereof.  The Buyer shall be responsible  for  investigating
the  physical  condition  of the Real  Property,  and if the Buyer is  satisfied
therewith,  shall purchase the Real Property "as is" and in its current state of
repair.

     2.5  Equipment.  To the best of Selling  Parties'  knowledge,  Exhibit  2.5
contains a list of substantially all Equipment owned by Meadowbrook/GA  and sold
to Buyer  hereunder.  Except as  indicated  in Exhibit 2.5 the  Equipment is not
subject to any equipment lease, conditional sale contract,  mortgage or security
agreement.  True and correct  copies of all such equipment  leases,  conditional
sales contracts, mortgages and security agreements are attached hereto as a part
of Exhibit 2.5. The Selling Parties make no warranty or representation regarding
the physical  condition of the  Equipment.  The Buyer shall be  responsible  for
investigating  the  physical  condition  of the  Equipment,  and if the Buyer is
satisfied  therewith,  shall  purchase the  Equipment "as is" and in its current
state of repair. The Buyer shall check the actual Equipment in place against the
list contained in Exhibit 2.5. Any corrections shall be noted on Exhibit 2.5. If
Buyer shall consummate the purchase  contemplated in the Agreement,  Buyer shall
be deemed to be satisfied with the corrected  list of Equipment.  It is intended
however,  that Buyer is purchasing and the Selling  Parties are selling,  all of
the  Equipment  owned by the Selling  Parties and used in the Business at any of
the three locations in Georgia  described in Recital A. on page 1, and the title
conveyance  documents  transferring  title to the  Equipment  shall reflect that
intent.

     2.6  Employment  Contracts  and  Benefits.  Exhibit  2.6 to this  agreement
contains a true and correct copy of all of Meadowbrook/GA's  material employment
contracts, collective bargaining agreements, and pension, bonus, profit-sharing,
stock  option,  or other  agreements  providing  for  employee  remuneration  or
benefits.  To the best of Selling Parties'  knowledge,  Meadowbrook/GA is not in
default under any of these agreements.

     2.7 Insurance  Policies.  Exhibit 2.7 to this agreement contains a true and
correct copy of all insurance  policies held by  Meadowbrook/GA  concerning  its
business and  properties.  All these  policies are in the  respective  principal
amounts set forth in Exhibit 2.7.  Meadowbrook/GA is not in default with respect
to payment of premiums on any such policy.  Except as set forth in Exhibit 2.10,
no claim is pending under any such policy.

     2.8 Other  Contracts.  Exhibit 2.8  contains a true and correct copy of all
material  leases and contracts  which  Meadowbrook/GA  is assigning to Buyer and
which will be assumed by Buyer, except for those leases and contracts, copies of
which are attached as a part of Exhibits  2.5,  2.17,  2.18 and 2.20.  So far as
known  to  the  Selling  Parties,  Meadowbrook/GA  is  not  in  default  in  the
performance  of any of its  obligations  under any such lease or  contract.  The
Selling Parties warrant that all such leases and contracts are currently in full
force and effect, and have not been modified except as stated in Exhibit 2.8.

     2.9 Compliance  With Laws. The Selling  Parties have not received notice of
any  violation of any  applicable  federal,  state,  or local  statute,  law, or
regulation  (including,  without limitation,  any applicable  building,  zoning,
environmental  protection,  or other law,  ordinance,  or regulation)  affecting
Meadowbrook/GA's properties or the operation of its business; and to the best of
the knowledge of the Selling Parties, there are no such violations.

     2.10 Litigation.  Except as set forth in Exhibit 2.10, there is not pending
or, to the best knowledge of the Selling Parties,  threatened, any suit, action,
arbitration,  or legal,  administrative,  or other  proceeding,  or governmental
investigation  against or affecting  Meadowbrook/GA or its business,  assets, or
financial condition.

     2.11 Tax Matters.  Except for the taxes described in section 1.7 above, the
Selling  Parties  have duly and timely filed with all  appropriate  governmental
agencies all tax returns,  information  returns and reports required to be filed
by the  Selling  Parties,  which  relate  in any way to the tax  liabilities  of
Meadowbrook/GA.  Except for accruals  for payroll  taxes  payable,  income taxes
payable  and  deferred  taxes  as  set  forth  in  the  Current   Balance  Sheet
(collectively,  the "Accrued Taxes"),  Meadowbrook/GA has paid in full all taxes
(including taxes withheld from employees'  salaries and other  withholding taxes
and  obligations),  interest,  penalties,  assessments and deficiencies  owed by
Meadowbrook/GA to all taxing authorities. Complete and correct copies of (i) the
income tax returns of Meadowbrook/GA for Meadowbrook/GA's two fiscal years ended
June 30,  1994,  and June 30,  1995,  as filed by the Selling  Parties  with the
Georgia  Department of Revenue  (collectively,  the  "Returns"),  (ii) all audit
reports received by the Selling Parties during the last five years and issued by
the IRS or any state taxing  authorities,  and (iii) all consents and agreements
entered into by the Selling  Parties  during the last five years with the IRS or
any  state  taxing   authorities   (collectively,   the  "Tax  Agreements")  are
collectively  attached hereto as Exhibit 2.11. All  information  reported on the
Returns  is true,  accurate  and  complete.  All  claims by the IRS or any state
taxing  authorities  for taxes due and payable by the Selling  Parties have been
paid by the Selling  Parties.  The provisions for Accrued Taxes are adequate for
the payment of all of Meadowbrook/GA's  liabilities for unpaid taxes (whether or
not  disputed).  Neither of the Selling  Parties is a party to, or aware of, any
pending or threatened action, suit,  proceeding or assessment against it for the
collection of taxes by any governmental agency.

     2.12  Authority and Consents.  The Selling  Parties have the right,  power,
legal capacity, and authority to enter into, and perform their obligations under
this  agreement.  No approvals or consents of any persons other than the Selling
Parties are necessary in connection herewith other than the consent of the other
parties to the leases and  contracts to be assigned to Buyer.  The execution and
delivery of this  agreement by the Selling  Parties has been duly  authorized by
all necessary corporate action on the part of the Selling Parties.

     2.13 Personnel  Identification  and  Compensation.  Exhibit 2.13 contains a
list of the names of all officers,  directors,  and employees of Meadowbrook/GA,
stating the rates of compensation  payable to each and any vacation,  holiday or
sick pay and any other compensation  arrangements or benefits applicable to each
current employee of the Business.

     2.14 Title.  Meadowbrook/GA  is the owner and will  transfer in  accordance
with the terms hereof good and  marketable  title to the Business and the Assets
to Buyer,  subject to those debts,  liens,  security  interests and encumbrances
permitted herein.

     2.15  Contracts.  Meadowbrook/GA  has entered  into no  material  contracts
relating to the Business or the Assets except as disclosed herein other than (i)
routine  maintenance  and  utility  agreements  relating  to the Assets and (ii)
contracts  known to James L.  Kelly but not known to any  other  officer  of the
Selling Parties.

     2.16 Solvency.  Meadowbrook/GA  is not insolvent,  and will not be rendered
insolvent by the consummation of the transaction contemplated hereby.

     2.17 Motor  Vehicles.  Exhibit 2.17 contains a list and  description of all
Motor Vehicles owned by Meadowbrook/GA and sold to Buyer hereunder.  Included in
Exhibit 2.17 is a true and correct copy of any  security  agreement  encumbering
any of such Motor Vehicles,  along with the note secured thereby and the related
loan amortization schedule.  Also included in Exhibit 2.17 is a true and correct
copy of the title certificate for those Motor Vehicles not encumbered by a loan.
Except as indicated  in Exhibit  2.17 the Motor  Vehicles are not subject to any
equipment leases, conditional sales contracts, mortgages or security agreements.

     2.18 Leased  Property.  Exhibit 2.18 contains a true,  correct and complete
copy of the lease between  Meadowbrook/GA and J&S Properties covering the Leased
Property.  The current  term  expired  February  28,  1997.  Meadowbrook/GA  has
delivered  the  landlord  a  written  notice  stating  that the term will not be
extended,  a copy of which is included in Exhibit 2.18. The Selling Parties make
no warranty or  representation  regarding  the physical  condition of the Leased
Property,  including the improvements and fixtures  constituting a part thereof.
The Buyer shall be responsible for investigating  the physical  condition of the
Leased  Property,  and if the Buyer is  satisfied  therewith,  shall  accept the
Leased Property "as is" and in its current state of repair.

     2.19 West Paces Management Agreement. Exhibit 2.19 contains a true, correct
and complete copy of the management  agreement between  Meadowbrook/GA  and West
Paces  Hospital,  Inc. Said  contract has not been modified in any respect.  The
Selling  Parties have received a notice from West Paces  Hospital,  Inc.,  dated
February  20,  1997,  stating  its  intent to cancel  the  management  agreement
effective  February 21, 1998. A copy of said notice is included in Exhibit 2.19.
The  Selling  Parties  are not aware of any  default on their  part which  would
authorize West Paces Hospital,  Inc. to terminate the management agreement prior
to February 21, 1998.

     2.20 Parkway Medical  Management  Agreement.  Exhibit 2.20 contains a true,
correct and complete copy of the management agreement between Meadowbrook/GA and
Medical Center West, Inc. d/b/a Parkway  Medical  Center.  Said contract has not
been  modified  in any  respect.  The Selling  Parties  are unable to  determine
whether  the  conditions  specified  in  paragraph  10.2(a)  of  the  management
agreement  (providing for the automatic  renewal of the agreement) have been met
because they are unable to obtain the necessary  information from medical Center
West, Inc.  Further,  the evaluation  contemplated to occur in the 17th month of
the term has not yet occurred.  Therefore, the Selling Parties can not represent
and warrant that said agreement has been automatically renewed for an additional
term. Other than the foregoing matters, the Selling Parties are not aware of any
default on their  part which  would  authorize  Medical  Center  West,  Inc.  to
terminate the management agreement pursuant to paragraph 10.3 thereof.

     2.21  Accounts  Payable.  Exhibit 2.21  contains the Selling  Parties' best
determination of the accounts payable of Meadowbrook/GA as of February 28, 1997.

     2.22 Permits.  Set forth on Exhibit 2.22 is an accurate description of each
material  license,  Medicaid or  Medicare  Participation  Agreement,  franchise,
permit or other similar authorization  affecting, or relating in any way, to the
Business  (the  "Permits").  Except as set forth in said exhibit the Permits are
valid and in full force and effect,  and the Selling  Parties  have not received
any  notice of any  claim,  default,  complaint,  citation  or other  proceeding
relating to any of the Permits.  To the best of the Selling  Parties'  knowledge
the Permits are legally  sufficient  to authorize the conduct of the Business by
Meadowbrook/GA  without being in violation of any applicable law,  regulation or
valid governmental requirement requiring any such Permit.

     2.23 Notes  Payable.  Exhibit  2.23  contains a true,  correct and complete
list, and description,  of the notes payable of Meadowbrook/GA as of January 31,
1997.  All such notes relate to Motor  Vehicles.  True and correct copies of the
notes listed therein are contained in Exhibit 2.17.

     2.24 Patient  Credit  Balances.  Exhibit 2.24 contains a true,  correct and
complete  list  of  the  patient  credit  balances   carried  on  the  books  of
Meadowbrook/GA as of January 31, 1997,  containing the names of the patients and
the amount of credit applicable to each patient.

     2.25 No Other  Liabilities.  To the best of the Selling Parties'  knowledge
Meadowbrook/GA has no liabilities or obligations,  and there is no basis for any
assertion against  Meadowbrook/GA  of any liability or obligation,  except those
liabilities or obligations which are (a) fully reflected or adequately  reserved
against in the Current Financial Statements,  (b) disclosed in this agreement or
in the  exhibits  hereto,  or (c)  incurred in the  ordinary  course of business
consistent  with past practice  since January 31, 1997, the total of which would
not be material in determining the company's financial position.

     2.26   Organization,   Standing,   and  Qualification  of   Meadowbrook/CA.
Meadowbrook/CA is a corporation duly organized,  validly  existing,  and in good
standing under the laws of Delaware.  Attached  hereto as Exhibit 2.26 is a true
and  correct  copy  of its  certificate  of  incorporation  and  bylaws  and all
amendments  thereto.  This  agreement  has been duly  authorized,  executed  and
delivered by  Meadowbrook/CA  and constitutes a valid and binding  obligation of
Meadowbrook/CA, enforceable against Meadowbrook/CA in accordance with its terms,
except  to  the  extent  that  enforceability  may  be  limited  by  bankruptcy,
insolvency,  and other laws  affecting  the  enforcement  of  creditors'  rights
generally and by general  principles of equity.  Meadowbrook/CA  will deliver to
Buyer,  on or before the Closing  Date, a certified  copy of a resolution of its
board of directors  authorizing  and approving the sale of the Stock to Buyer on
the terms and conditions provided in this Agreement.

     2.27  Capitalization of  Meadowbrook/GA.  The aggregate number of shares of
stock which  Meadowbrook/GA  is authorized to issue is 100,000 common shares, of
which  10,000  shares are  issued and  presently  outstanding.  All such  issued
shares, which represent all of the "Stock" as herein defined,  have been validly
issued and are fully paid and  nonassessable.  Meadowbrook/GA has no outstanding
subscriptions,  contracts,  options,  warrants,  or other  obligations to issue,
sell, or otherwise dispose of, or to purchase,  redeem or otherwise acquire, any
of its stock.

     2.28 Share Ownership. Meadowbrook/CA represents and warrants that it is the
owner, free and clear of any  encumbrances,  of all of  Meadowbrook/GA's  common
shares and has full right and  authority to transfer  said shares to Buyer,  and
there are no other shares of Meadowbrook/GA owned or claimed by any other person
or entity.

     2.29 Full Disclosure.  None of the  representations  and warranties made by
the Selling Parties in this agreement,  or made in any certificate  furnished or
to be furnished by either of them, contains or will contain any untrue statement
of a material  fact,  or omits to state a material  fact  necessary  to make the
statements made, in the light of the  circumstances  under which they were made,
not misleading.

ARTICLE THREE: BUYER'S REPRESENTATIONS AND WARRANTIES

     Buyer represents and warrants that:

     3.1  Organization,  Standing,  and  Qualification  of  Buyer.  Buyer  is  a
corporation  duly organized,  validly  existing,  and in good standing under the
laws of Georgia.  True and complete copies of its  certificate of  incorporation
and bylaws and all amendments  thereto are attached  hereto as Exhibit 3.1. This
agreement  has been  duly  authorized,  executed  and  delivered  by  Buyer  and
constitutes a valid and binding obligation of Buyer,  enforceable  against Buyer
in accordance with its terms,  except to the extent that  enforceability  may be
limited by bankruptcy,  insolvency,  and other laws affecting the enforcement of
creditors' rights generally.  The sole shareholder of Buyer is Stiles A. Kellett
III. The Buyer will deliver to Selling  Parties on or before the Closing Date, a
certified copy of the resolution of the board of directors of Buyer  authorizing
and  approving the purchase of the Business and Assets from  Meadowbrook/GA  and
the Stock  from  Meadowbrook/CA  on the terms and  conditions  provided  in this
Agreement.

     3.2 Authority and Consents. The Buyer has the right, power, legal capacity,
and authority to enter into, and perform its  obligations  under this agreement.
No  approvals  or consents of any persons  other than the Buyer is  necessary in
connection  herewith  other than the consent of the other  parties to the leases
and  contracts  to be  assigned to Buyer.  The  execution  and  delivery of this
agreement  by the Buyer  has been duly  authorized  by all  necessary  corporate
action on the part of the Buyer.

     3.3 Investment  Intent. The Stock is being acquired by Buyer for investment
for its own account and not with a view to, or for the offer for sale or for the
sale in connection with, any distribution thereof.

ARTICLE FOUR: SELLING PARTIES' OBLIGATIONS BEFORE CLOSING

     Selling  Parties  covenant that from the date of this  agreement  until the
Closing Effective Date:

     4.1 Buyer's  Access to Premises  and  Information.  Buyer and its  counsel,
accountants,  and other  representatives  shall have full access  during  normal
business hours to all  properties,  books,  accounts,  records,  contracts,  and
documents of or relating to  Meadowbrook/GA.  Selling  Parties  shall furnish or
cause to be furnished to Buyer and its  representatives all data and information
concerning  the business,  finances,  and  properties of  Meadowbrook/GA  as may
reasonably be requested.

     Nothing in this agreement  shall obligate  Selling  Parties to disclose any
restricted patient information or provide any access to representatives of Buyer
prohibited or not authorized by applicable governmental authority.

     4.2 Conduct of Business in Normal Course.  Meadowbrook/GA will carry on its
business and activities  diligently and in  substantially  the same manner as it
previously has been carried out.

     4.3 Preservation of Business and Relationships. Meadowbrook/GA will use its
best efforts to preserve its business  organization intact, to keep available to
Buyer its present  employees,  and to preserve  its present  relationships  with
suppliers, customers, and others having business relationships with it.

     4.4 Reserved.

     4.5 Employees and Compensation. Meadowbrook/GA will not do, or agree to do,
any of the following  acts:  (a) make any change in  compensation  payable or to
become payable by it, to any officer, employee, or representative;  (b) make any
change in benefits payable to any officer, employee, or representative under any
bonus or  pension  plan or other  contract  or  commitment;  or (c)  modify  any
employment agreement; except that the Selling Parties may pay bonuses to certain
existing employees of Meadowbrook/GA.

     4.6 Existing Agreements.  Meadowbrook/GA will not modify, amend, cancel, or
terminate  any of the leases or contracts  to be assigned to Buyer  hereunder or
the management agreement with West Paces Hospital,  Inc. without prior notice to
Buyer or agree to do any of those acts.

     4.7 Consents of Others. As soon as reasonably practical after the execution
and delivery of this agreement,  and in any event on or before the Closing Date,
Selling Parties will use their best efforts to obtain the written consent of the
persons  whose  consents  are  required  for the  assignment  of the  leases and
contracts to be assigned to Buyer.  Buyer will  exercise its best  efforts,  and
promptly  execute  and  deliver  any  documents  and  instruments  that  may  be
reasonably required, to assist Selling Parties in obtaining such consents.

     4.8 Reserved.

     4.9 Disposition of Assets. Meadowbrook/GA shall not sell, lease, licence or
otherwise dispose of any of the Assets or agree or commit to do any of the same,
except  (i)  pursuant  to  existing  contracts  or  commitments  and (ii) in the
ordinary course of business consistent with past practice.

     4.10 Maintenance of Inventory.  Meadowbrook/GA will not allow the Inventory
to be  materially  depleted  from its  level as of the date  hereof  or agree or
commit to do any of the same.

     4.11  Maintenance  of  Permits.  Meadowbrook/GA  shall  use all  reasonable
efforts  to  maintain  in  full  force  and  effect,  without  qualification  or
limitation, all Permits currently in effect with respect to the Business.

     4.12 Payment of Taxes.  Meadowbrook/GA  will cause to be paid when due, all
taxes,  assessments  and charges or levies imposed upon it with respect to or on
the  Business or any of the Assets,  or which it is required to withhold and pay
over, other than any which it may contest in good faith.

     4.13 Reports.  Meadowbrook/GA  shall prepare,  execute and file on a timely
basis all interim cost reports and all other reports and statements  required to
be filed with all  intermediaries  and other public or private third party payor
or governmental  authority in connection with the  transactions  contemplated by
this  Agreement.  Buyer shall be responsible  for  preparation and filing of all
change of ownership documents required in connection with this transaction.  The
Selling Parties will file all final cost reports for services  provided prior to
the Closing  Effective Date using  Meadowbrook/GA's  existing  provider  number.
Buyer  will  apply for a new  provider  number  and will file cost  reports  for
services  provided  after the  Closing  Effective  Date  using its new  provider
number.

     4.14  Payment of  Medicare  Obligations.  The  Selling  Parties  shall make
arrangements to repay all governmental  authorities with  jurisdiction  over the
Business  (including the Health Care Financing  Administration) any amounts owed
to such governmental authorities by Meadowbrook/GA with respect to the operation
of the Business prior to the Closing  Effective  Date.  The parties  acknowledge
that  overpayments or  underpayments to  Meadowbrook/GA  by Medicaid or Medicare
programs  for  periods  ending  prior  to  the  Closing  Effective  Date  may be
discovered  after  the  Closing,  whether  in  connection  with an  audit of the
Business or otherwise.  Meadowbrook/CA  shall assume the  obligation  for and be
liable for all such  overpayments  received  by  Meadowbrook/GA.  Meadowbrook/CA
shall be liable for and shall promptly pay all depreciation  recapture,  and all
recapture of property cost reimbursement, that is required under the Medicaid or
Medicare  programs  as  a  result  of  the  transactions  contemplated  by  this
Agreement.  Any refunds  shall  belong to  Meadowbrook/CA  and shall be promptly
remitted to Meadowbrook/CA as provided in section 10.2 below.

ARTICLE FIVE: BUYER'S OBLIGATIONS BEFORE CLOSING

     5.1 Information To Be Held in Confidence. The Buyer agrees that, unless and
until the Closing has been consummated,  the Buyer and its officers,  directors,
and other  representatives  will hold in strict confidence,  and will not use to
the detriment of the Selling  Parties all data and  information  with respect to
the business of the Selling Parties obtained in connection with this transaction
or agreement.  If the transaction  does not close,  the Buyer will return to the
Selling  Parties  all that data and  information  that the  Selling  Parties may
reasonably  request,  including,  but not limited to, worksheets,  test reports,
manuals, lists, memoranda,  and other documents prepared by or made available to
the Buyer in connection with this  transaction.  If the transaction  does close,
the  Buyer  shall  be free to use any  information  it  obtains  related  to the
Business or Assets, but shall not disclose  confidential  information  regarding
Meadowbrook/CA  which is clearly  designated as confidential by  Meadowbrook/CA,
unless otherwise required by law.

     5.2 Cooperation in Securing  Consents of Third Parties.  The Buyer will use
its best efforts to assist the Selling  Parties in obtaining  the consent of all
necessary  persons and agencies to the  assignment  and transfer to the Buyer of
any and all  properties,  assets,  and agreements to be assigned and transferred
under the terms of this agreement.

     5.3 Bulk Sales Law. The Buyer waives  compliance with the provisions of the
law relating to bulk transfers in connection  with this sale of assets,  subject
to the indemnity of the Selling Parties contained in this agreement. The Selling
Parties shall indemnify and hold the Buyer harmless from and against any and all
claims, loses, damages,  liabilities,  costs and expenses,  including reasonable
attorneys fees,  incurred by the Buyer as a result of any failure by the Selling
Parties to comply with any such bulk sales law.  Nothing in this paragraph shall
stop or prevent either the Buyer or the Selling  Parties from asserting as a bar
or defense to any action or  proceeding  brought under that law that it does not
apply to the sale contemplated under this agreement.

ARTICLE SIX: CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE

     The  obligations  of Buyer to purchase  the Assets and the Stock under this
agreement are subject to the satisfaction,  at or before the Closing, of all the
conditions  set out below in this Article Six. The Buyer may waive any or all of
these  conditions in whole or in part without prior notice;  provided,  however,
that no such waiver of a condition shall constitute a waiver by the Buyer of any
of its other rights or  remedies,  at law or in equity,  if the Selling  Parties
shall be in default of any of their  representations,  warranties,  or covenants
under this agreement.

     6.1 Accuracy of Selling Parties' Representations and Warranties.  Except as
otherwise permitted by this agreement, all representations and warranties by the
Selling  Parties in this  agreement,  or in any written  statement that shall be
delivered to the Buyer by the Selling  Parties  under this  agreement,  shall be
true in all  material  respects on and as of the Closing  Date as though made at
that time.

     6.2  Performance  by  Selling  Parties.  The  Selling  Parties  shall  have
performed,  satisfied, and complied in all material respects with all covenants,
agreements,  and  conditions  required  by this  agreement  to be  performed  or
complied  with by either or both of them on or before  the  Closing  Date or the
Closing Effective Date, as applicable.

     6.3  Certification  by Selling  Parties.  The Buyer  shall have  received a
certificate, dated the Closing Date, signed by the Selling Parties' president or
vice president and its secretary or treasurer  certifying,  in such detail as is
reasonable  and  customary,  that to the best of such  officers'  knowledge  the
conditions specified in sections 6.1 and 6.2 have been fulfilled.

     6.4 Absence of Litigation.  No action, suit, or proceeding before any court
or  any   governmental   body  or  authority,   pertaining  to  the  transaction
contemplated  by  this  agreement  or  to  its  consummation,  shall  have  been
instituted or threatened on or before the Closing Date.

     6.5 Commitment for Title Policy. The Buyer shall have received from Lawyers
Title  Insurance  Corporation  a commitment  to issue,  at Buyer's  expense,  an
owner's title insurance policy in its usual form and for its usual fee, insuring
the fee simple title of Buyer to all the Real Property described in Exhibit 2.4,
subject only to (a) the lien, if any, of current real property taxes, payment of
which is not delinquent;  and (b) such other  exceptions as may be acceptable to
the Buyer.

     6.6 FIRPTA Withholding.  The Buyer shall have received a certificate of the
Selling Parties to the effect that Meadowbrook/GA is a U.S. person or such other
evidence as the Buyer may in its reasonable  discretion determine to be adequate
to relieve the Buyer of any  obligation  to withhold  under  Section 1445 of the
Internal  Revenue Code of 1986  (relating to  withholding by buyers of U.S. real
property interests) in connection with possible liability of the Selling Parties
for income tax under the Foreign Investment in Real Property Tax Act of 1980).

     6.7 Consents.  All necessary  agreements and consents of any parties to the
consummation of the  transactions  contemplated by this agreement,  or otherwise
pertaining to the matters covered by it, shall have been obtained by the Selling
Parties and  delivered to the Buyer.  Such  consent  shall  include,  but is not
limited to, the  consent of West Paces  Hospital,  Inc.  to the  transfer of the
Stock;  the  consent of Medical  Center  West,  Inc.  to the  assignment  of its
management  contract  with  Meadowbrook/GA;  the  consent  of the  managed  care
providers to the assignment of the managed care contracts  identified in Exhibit
2.8; the consent of the other parties to the leases, conditional sales contracts
and security  agreements  identified in Exhibits 2.5 and 2.8; and the consent of
the  lenders  holding  notes  secured  by  encumbrances  on the  Motor  Vehicles
identified in Exhibits 2.17 and 2.23.  The closing of the  transaction  by Buyer
shall  conclusively  be  presumed  to be an  approval  by  Buyer  of any and all
consents obtained, or that a consent is not required with respect to transferred
leases and  agreements  for which no consent is  obtained.  The Selling  Parties
shall not be  responsible  for any damages  which  Buyer may  sustain  after the
Closing by reason of the  termination  or attempted  termination of any lease or
agreement,  unless  such  termination  or  attempted  termination  is based on a
default of one of the Selling Parties which was not disclosed to the Buyer prior
to the Closing.  It is recognized that the notice of termination from West Paces
Hospital,  Inc.  described in section 2.19 and the matters  regarding  automatic
renewal of the Parkway Medical Center management  agreement described in section
2.20 shall be deemed not to be a default of the Selling Parties.

     6.8 Permits.  Buyer shall be  satisfied  that it will be able to obtain all
governmental permits,  approvals,  certificates and licenses which are necessary
to enable  the Buyer to  conduct  the  Business  in the same  manner  that it is
presently being conducted by Meadowbrook/GA.

     6.9 Extension of Lease on Leased Property. Buyer shall be satisfied that it
will be able to  negotiate  an  extension  or renewal of the lease on the Leased
Property (located at 1946 Clairmont Road,  DeKalb County,  Georgia) on terms and
conditions acceptable to it.

     6.10 Notice  Regarding Real Property.  The Selling Parties shall have given
the notice required by special  stipulation 13 of that certain  contract between
Meadowbrook/GA,  as purchaser, and TAS Contracting, Inc. and John W. Jonap d/b/a
J&S Properties (the "Original Seller"),  as seller, dated February 25, 1993 (for
the purchase by Meadowbrook/GA of the Real Property) to the Original Seller, and
the Original  Seller shall have declined to exercise the right of first offering
provided by such special  stipulation or shall have waived same, and the Selling
Parties  shall  have  provided  written  proof  thereof  to the  Buyer  in  form
reasonably satisfactory to Buyer.

     6.11  Condition of Real  Property.  The Buyer shall be  satisfied  with the
condition of the Real Property.  The closing of the  transaction  shall create a
conclusive  presumption  that Buyer is satisfied  with the condition of the Real
Property.

     6.12 No Zoning or Building  Code  Violations.  The Buyer shall be satisfied
that the Real  Property  shall not be in  violation  of zoning or building  laws
applicable to the same.

     6.13  Removal  of  Encumbrances.  The  Selling  Parties  shall have paid or
otherwise  satisfied all  obligations and  encumbrances  attaching to any of the
Assets, except for those obligations and encumbrances being specifically assumed
by the Buyer in accordance with the provisions of this agreement.

     6.14  Satisfaction  With  Equipment.  The Buyer shall be satisfied that the
Equipment listed in Exhibit 2.5 is accurate and complete and includes all of the
Equipment used in the Business,  and if any Equipment is omitted from such list,
such missing  Equipment  shall be added to the list and shall be included in the
transfer  to Buyer.  Buyer shall also be  satisfied  with the  condition  of the
Equipment and that all of the  Equipment is in place in one of  Meadowbrook/GA's
three business locations in Metropolitan Atlanta. The closing of the transaction
shall create a conclusive  presumption  that Buyer is satisfied with the matters
described in this section 6.14.

     6.15 Satisfaction With Insurance and Tail Coverage  Endorsement.  The Buyer
shall be satisfied (i) that Selling  Parties shall have taken such action as may
be  necessary  to continue  in effect the  coverage  provided  by the  insurance
policies  described in and copies of which are included in Exhibit 2.7 until the
Closing  Effective  Date;  (ii) that the Selling  Parties  shall have taken such
action as may be necessary to continue  coverage under the "Health Care Facility
Medical  Professional  Liability  Protection - Claims Made"  provisions  of such
policy (the  "professional  liability  coverage")  and the "Health Care Umbrella
Excess  Liability  Protection  - Claims  Made"  provisions  of such  policy (the
"umbrella  coverage") for an indefinite period beyond the Closing Effective Date
(the reporting endorsement or "tail coverage endorsement");  (iii) that the tail
coverage  endorsement  provides the same coverage as is presently afforded under
the professional  liability  coverage and the umbrella  coverage for claims made
after the Closing  Effective  Date which relate to  occurrences  which  occurred
prior to the Closing  Effective Date and which would  otherwise be covered under
the professional  liability  coverage and the umbrella  coverage;  (iv) that the
professional  liability coverage provided by the tail coverage  endorsement (but
not the  umbrella  coverage)  provides  that the  coverage  limits  shall not be
diminished by claims arising from incidents occurring at other facilities owned,
managed or  controlled by  Meadowbrook/CA  or its  affiliates;  and (v) that the
Buyer  has  been  added  as  an  additional  insured  under  the  tail  coverage
endorsement.  The tail coverage  endorsement  shall be in form  satisfactory  to
Buyer,  and the Selling  Parties shall have provided  Buyer with proof,  in form
reasonably  satisfactory to Buyer, that such endorsement has been fully paid for
and the coverage provided thereunder is in full force and effect.

     6.16  Satisfaction  With  Due  Diligence  Investigation.   Buyer  shall  be
satisfied,  after making such investigations of the Business, the Assets and the
Selling Parties' representations herein as the Buyer deems appropriate, (i) that
it has been  offered  sufficient  opportunity  to verify  the  accuracy  of such
representations,  (ii) that such  representations  appear to be  accurate in all
material  respects,  and (iii) that nothing has come to its attention that would
indicate  that the  value of the  Business,  Assets  and  Stock is less than the
purchase price contained  herein.  The Closing of the transaction shall create a
conclusive   presumption   that  Buyer  is  satisfied  with  its  due  diligence
investigations;  provided however,  that such presumption of satisfaction  shall
not prevent the enforcement of  Meadowbrook/CA's  indemnity contained in section
9.3 hereof.

     6.17 List of Payables. The Selling Parties shall have provided the Buyer at
the  Closing,  a list (the  "Closing  Payables  List")  containing  the  Selling
Parties' best determination of all payables of Meadowbrook/GA, including accrued
but unbilled  obligations,  outstanding  on the Closing Date. The amount of each
such  payable  shall  include  the  amount  due (or  expected  to be due) on the
"Closing  Effective  Date" (as defined in section  8.1  below).  Such list shall
identify  separately (a) those payables (the "Identified  Payables") the amounts
of which can be established  with reasonable  certainty  through the exercise of
reasonable  diligence (e.g., from written  invoices,  through telephone calls or
other contact with vendors,  from advance estimates,  or from fixed charges) and
(b) those payables (the  "Estimated  Payables") the amounts of which can only be
estimated (based on previous experience or other reasonable methods).  Such list
shall include all outstanding payment  obligations of Meadowbrook/GA  which have
been incurred  prior to the Closing Date, or which can reasonably be expected to
be incurred  prior to the Closing  Effective  Date,  and which can be identified
with reasonable diligence, including, but not limited to those obligations which
have  been or would be  allocated  to the  balance  sheet  liability  categories
identified as "Accounts  Payable",  "Patient Credit Balances",  "Accrued Payroll
and Other Wages",  "Accrued  Vacation/Sick"  and  "Withholding and Other Payroll
Liabilities"  on  the  balance  sheets   contained  in  the  Current   Financial
Statements.  The Closing  Payables  List shall  separate the  payables  into the
balance sheet liability categories listed above. The Closing Payables List shall
be certified as to the use of reasonable  diligence in its preparation and as to
its  completeness  and  accuracy  being to the  best  knowledge  of the  Selling
Parties,  by the chief financial officer of Meadowbrook/CA.  The payables listed
on the Closing Payables List shall be paid or otherwise satisfied as provided in
section 8.4 below.

ARTICLE SEVEN: CONDITIONS PRECEDENT TO SELLING PARTIES PERFORMANCE

     The  obligations  of  Meadowbrook/GA  to sell and  transfer  the Assets and
Meadowbrook/CA  to sell and transfer the Stock under this  agreement are subject
to the satisfaction,  at or before the Closing, of all the following conditions.
The Selling Parties may waive any or all of these conditions in whole or in part
without  prior  notice;  provided,  however,  that no such waiver of a condition
shall constitute a waiver by the Selling Parties of any of their other rights or
remedies,  at law or in equity,  if the Buyer should be in default of any of its
representations, warranties, or covenants under this agreement.

     7.1 Accuracy of Buyer's Representations and Warranties. All representations
and  warranties  by the Buyer  contained  in this  agreement  or in any  written
statement delivered by the Buyer under this agreement shall be true on and as of
the Closing Date as though such  representations and warranties were made on and
as of that date.

     7.2 Buyer's  Performance.  The Buyer shall have performed and complied with
all covenants and agreements and satisfied all conditions that it is required by
this agreement to perform, comply with, or satisfy, before or at the Closing.

     7.3  Certification  by Buyer.  The Selling  Parties  shall have  received a
certificate,  dated the Closing  Date,  signed by the Buyer's  president and its
secretary  or  treasurer  certifying,  in  such  detail  as  is  reasonable  and
customary, that to the best of such officers' knowledge the conditions specified
in sections 7.1 and 7.2 have been fulfilled.

     7.4 Absence of Litigation.  No action, suit, or proceeding before any court
or  any   governmental   body  or  authority,   pertaining  to  the  transaction
contemplated  by  this  agreement  or  to  its  consummation,  shall  have  been
instituted or threatened on or before the Closing Date.

ARTICLE EIGHT: THE CLOSING

     8.1 Time and Place. The transfer of the Assets by  Meadowbrook/GA  to Buyer
and the transfer of the Stock by  Meadowbrook/CA  to Buyer (the "Closing") shall
take  place at the  offices  of Smith,  Bassett,  Purcell  & Koenig in  Atlanta,
Georgia at 10:00 a.m. EST, on March 28, 1997, or at such other time and place as
the parties may agree to in writing (the "Closing  Date").  Notwithstanding  the
fact that the Closing will occur on March 28, 1997,  the  effective  date of the
Closing shall be March 31, 1997 at the close of business (the "Closing Effective
Date").  All transfer and assumption  documents and all prorations shall be made
effective as of the Closing  Effective Date. Actual transfer of possession shall
take place on the Closing  Effective  Date.  The Selling  Parties  shall  remain
liable  for  all  obligations  incurred  by the  Business  through  the  Closing
Effective  Date and shall retain the risk of loss through the Closing  Effective
Date.

     8.2 The Selling Parties' Obligations at Closing.

          8.2.1 On the Closing Date. On the Closing  Date,  the Selling  Parties
shall deliver or cause to be delivered to Buyer:

          (a) A limited  warranty  deed,  properly  executed  and  acknowledged,
conforming  to and  conveying the agreed state of the title to the Real Property
made effective as of the Closing Effective Date;

          (b)  Assignments  of all contracts and  leaseholds  being  assigned to
Buyer  hereunder,  made  effective as of the Closing  Effective  Date,  properly
executed by  Meadowbrook/GA  and  accompanied  by such consents as may have been
obtained of lessors and contracting  parties  required by this agreement and the
leases and contracts being assigned;

          (c) Such other executed instruments of transfer as the title insurance
company may reasonably  require to issue Buyer's owner's title insurance  policy
with respect to the Real Property in accordance with this Agreement;

          (d) A bill of sale for all personal  property  comprising  part of the
Assets,  made  effective as of the Closing  Effective  Date, in form and content
reasonably acceptable to counsel for Buyer, including a transfer of title to the
Motor Vehicles;

          (e) A usual and customary  affidavit  concerning parties in possession
and mechanics' or materialmans' liens with respect to the Real Property, in form
and  substance  necessary  to induce the title  insurance  company to delete the
exceptions for such matters from Buyer's owner's title policy;

          (f) Reserved.

          (g) An  affidavit  of  non-foreign  status  under  Section 1445 of the
Internal Revenue Code, duly executed and acknowledged by Meadowbrook/GA;

          (h) The certificate required by section 6.3 above;

          (i) Proof  that the tail  coverage  endorsement  is in full  force and
effect as required by section 6.15 above;

          (j) The Closing Payables List required by section 6.17 above; and

          (k) Proof of Payment,  in such form as Buyer shall reasonably require,
of the payables listed or otherwise  identified in Exhibit 2.21 hereto which are
not assumed by Buyer under the  provisions  of this  agreement  or which are not
listed on the Closing Payables List.

          (l) After  Meadowbrook/GA shall have transferred to Meadowbrook/CA all
of its assets not  transferred  to Buyer  hereunder  with the  exception  of the
management  agreement  with West Paces  Hospital,  Inc.,  and any other license,
contract or lease designated by Buyer to be retained by Meadowbrook/GA  pursuant
to section  1.1.2  hereof,  and  Meadowbrook/CA  shall have  assumed  all of the
obligations and liabilities of Meadowbrook/GA not assumed by Buyer hereunder (or
paid or otherwise satisfied prior to or at the Closing),  all in form reasonably
satisfactory to counsel for Buyer,  Meadowbrook/CA  shall deliver or cause to be
delivered to Buyer:

               (i) Share  certificates  for the Stock,  made effective as of the
Closing  Effective Date,  which shall be in negotiable  form, and which shall be
delivered free and clear of all encumbrances;

               (ii)  The  written  resignations  of  all  of  the  officers  and
directors of Meadowbrook/GA, made effective as of the Closing Effective Date;

               (iii) The corporate  minute books and all corporate and financial
records of Meadowbrook/GA; and

               (iv) An opinion of counsel,  dated the Closing Date, from the law
firm of Hanson,  Bridgett,  Marcus, Vlahos & Rudy in San Francisco,  California,
counsel  for  the  Selling  Parties,  to the  effect  that  (1)  the  shares  of
Meadowbrook/GA  being  acquired  have been duly  issued  and are fully  paid and
nonassessable  and,  to the best of its  knowledge,  after  reasonable  inquiry,
constitute  all of the  issued  and  outstanding  stock of  Meadowbrook/GA;  (2)
Meadowbrook/CA  has full power and  authority to sell,  assign and transfer such
shares, and, to the best of its knowledge, after reasonable inquiry, delivery of
such shares to Buyer will  transfer to Buyer title thereto free and clear of all
liens,  pledges,  encumbrances,  security  interests,  or  claims;  and (3) this
Agreement  has been duly  executed  and  delivered  by  Meadowbrook/CA  and is a
binding obligation of Meadowbrook/CA.

          8.2.2 On the Closing Effective Date. On the Closing Effective Date the
Selling  Parties,  through their  officers,  agents and employees,  will put the
Buyer into full  possession  and  enjoyment of all  properties  and assets to be
conveyed and transferred to Buyer by this agreement.

          8.2.3 After the Closing Date. The Selling  Parties,  at any time after
the Closing Date,  will  execute,  acknowledge,  and deliver any further  deeds,
assignments,  conveyances, and other documents as may be reasonably requested by
the  Buyer,  and will take any other  action  consistent  with the terms of this
agreement  that may  reasonably  be  requested  by the Buyer for the  purpose of
assigning,  transferring,  granting,  conveying, and confirming to the Buyer, or
reducing to  possession,  any or all property to be conveyed and  transferred to
Buyer under this agreement.

     8.3 Buyer's Obligations at Closing. At the Closing, the Buyer shall deliver
to the Selling Parties the following  instruments and documents against delivery
of the items specified in section 8.2 above:

          (a) In payment of the Assets,  a bank cashier's check in the amount of
$1,250,000  less the $75,000 to be deposited in the joint  account  described in
subsection 8.4(b) below.

          (b) In payment of the Stock, a bank  cashier's  check in the amount of
$50,000.00;

          (c) A bank cashier's check in the amount of $75,000 to be deposited in
the joint account described in subsection 8.4(b) below.

          (d) A  certificate  executed by the  president  and the  secretary  or
treasurer  of  Buyer  certifying  that  all  the  Buyer's   representations  and
warranties  under this agreement are true as of the Closing Date, as though each
of those representations and warranties had been made on that date; and

          (e)  Instruments of assumption of the  liabilities  of  Meadowbrook/GA
under the assigned leases and contracts and any other  liabilities to be assumed
by Buyer pursuant to this agreement from and after the Closing  Effective  Date,
in form reasonably acceptable to the Selling Parties.

     8.4  Satisfaction  of  Payables.  The payables of  Meadowbrook/GA  shall be
satisfied at the Closing as follows:

          (a) The Identified Payables,  other than the payables contained in the
category  identified as "Patient Credit  Balance",  and those payables which are
being assumed by Buyer under the provisions of this agreement,  if any, shall be
paid at the Closing,  utilizing such method as shall be reasonably  satisfactory
to the Buyer.  With  respect  to the  payables  in the  category  identified  as
"Accrued Vacation/Sick",  only (i) the amounts representing the accrued vacation
pay benefits of all Meadowbrook/GA  employees and (ii) the amounts  representing
the accrued sick leave  benefits of Dottie  Borders,  Leeanne  Dennis and Lauren
Witsaman (being  Meadowbrook/GA  employees who have already made claims for such
benefits in connection with requested  maternity  leave,  and the total value of
which is $5,450),  shall be paid,  and such amounts  shall be paid,  at the sole
option of Buyer,  either (i)  directly  to the  employee to which such amount is
attributed,  or (ii) to the Buyer,  in which  event the Buyer  shall  assume the
obligation to provide such employee or employees  with the paid vacation or sick
leave to which the amount paid is attributed.

          (b) To assure payment of the Estimated Payables and the Patient Credit
Balance portion of the Identified  Payables,  a portion of the proceeds received
from the Buyer shall be placed in a joint checking  account to be established at
Wachovia Bank of Georgia in Atlanta,  Georgia. Such joint checking account shall
require  the  signatures  of  both  a  representative  of  Meadowbrook/CA  and a
representative  of the Buyer on all checks drawn on such account.  The amount to
be placed in the account  shall be $75,000.  $50,000 of such amount shall be for
the  purpose  of  indemnifying  the Buyer  against  claims  for  payment  of the
Estimated  Payables.  $25,000  of  such  amount  shall  be for  the  purpose  of
indemnifying  the  Buyer  against  claims  for  payment  of the  Patient  Credit
Balances.

          (c) With respect to the $50,000 held to  indemnify  the Buyer  against
claims for payment of the Estimated  Payables,  as Meadowbrook/CA  shall pay the
Estimated Payables after the Closing,  it shall provide proof of such payment to
Buyer in such  reasonable  form as Buyer may  request,  and upon receipt of such
proof of payment,  Buyer  shall sign a check  drawn on the joint  account in the
amount of such payment,  made payable to Meadowbrook/CA,  and shall deliver such
check to  Meadowbrook/CA.  Such  process  shall be repeated  until the amount of
$50,000  from the joint  account has been paid over to  Meadowbrook/CA  for such
purpose.  If  after  six  (6)  months  from  the  Closing  Effective  Date,  (i)
Meadowbrook/CA has provided  reasonable proof to Buyer that all of the Estimated
Payables  have been paid in full and (ii) Buyer has not  received  notice of any
unpaid Estimated  Payables,  Buyer shall sign a check drawn on the joint account
in the amount of the balance of the $50,000 held for such  purpose  remaining in
the account,  made payable to  Meadowbrook/CA,  and shall  deliver such check to
Meadowbrook/CA.  If after six (6) months from the Closing  Effective  Date,  the
events  described  in clauses (i) and (ii) of the  preceding  sentence  have not
occurred,  the balance of the $50,000  remaining in the joint  account  shall be
held in such account and released as and when the remaining  Estimated  Payables
are paid in accordance with the above provisions of this subsection 8.4(c).

          (d) With respect to the $25,000 held to  indemnify  the Buyer  against
claims for payment of the Patient Credit Balances,  such amount shall be held in
the joint  account and  disbursed as follows.  As  Meadowbrook/CA  shall pay any
claim for refund of any Patient  Credit  Balance item listed in Exhibit 2.24, it
shall  provide proof of such payment to Buyer in such  reasonable  form as Buyer
may request, and upon receipt of such proof of payment, Buyer shall sign a check
drawn on the joint  account in an amount  equal to the lesser of: (i) the amount
of the payment made by Meadowbrook/CA for such purpose or (ii) the amount of the
$25,000 then remaining in the joint  account,  less the amount needed to pay any
Patient  Credit Balance items listed in Exhibit 2.24 which have not been paid or
otherwise  satisfied  at such  time.  Such  check  shall be made  payable to and
delivered to Meadowbrook/CA.  Such process shall be repeated until the amount of
$25,000  from the joint  account has been paid over to  Meadowbrook/CA  for such
purpose.  If on December 1, 1997 (i) no claims for  repayment of Patient  Credit
Balances have been received by  Meadowbrook/CA,  or (ii) if any such claims have
been received,  and all such claims have been paid or otherwise satisfied,  then
upon the receipt of such  reasonable  proof  thereof as Buyer  shall  reasonably
request,  Buyer shall sign a check  drawn on the joint  account in the amount of
the  balance  of the  $25,000  then held in the joint  account  made  payable to
Meadowbrook/CA,  and shall deliver such check to Meadowbrook/CA.  If on December
1, 1997 any such  claims have been  received,  but all such claims have not been
paid or  otherwise  satisfied,  then the balance of the $25,000 then held in the
account  shall  continue to be held in the joint account until all such received
claims have been paid or otherwise satisfied.

          (e) The provisions of subsections 8.4(c) and (d) above to the contrary
notwithstanding,  if on December 31,  1997,  any funds shall remain in the joint
account,  the joint  account  shall be closed and the  remaining  funds shall be
delivered   to   Meadowbrook/CA,   unless   any   outstanding   claims   against
Meadowbrook/CA  for  indemnification  pursuant  to section  9.3 hereof  shall be
pending, in which event the funds in the joint account shall continue to be held
in such account  pending the  disposition  of such claims,  and  distributed  as
agreed upon between Meadowbrook/CA and the Buyer.

     8.5 Closing Costs and  Prorations.  Buyer shall pay all  customary  closing
costs for the purchase of the Real Property,  including recording fees, the cost
of obtaining the owner's title insurance policy described  hereinabove,  and the
cost of any  boundary  survey of the  property  obtained  by Buyer.  The Selling
Parties shall pay the Georgia state transfer tax incurred in connection with the
transfer of the Real Estate. Property taxes and rental,  maintenance and utility
charges  attributable to periods  spanning the Closing  Effective Date on assets
transferred to the Buyer hereunder  shall be prorated  between the parties as of
the Closing  Effective  Date.  Buyer shall reimburse the Selling Parties for any
deposits   related  to  the  Business  which  are  transferable  and  which  are
transferred to Buyer.


     8.6 Employment of Meadowbrook/GA's Employees. The Selling Parties shall, at
such date on or before the  Closing  Date as the  Selling  Parties and the Buyer
shall agree upon, notify  Meadowbrook/GA's  employees of this  transaction,  and
that their  employment  with  Meadowbrook/GA  will  terminate  as of the Closing
Effective  Date.  It is  understood  and agreed that the Buyer shall be under no
obligation to employ any of the employees of Meadowbrook/GA. The Selling Parties
will assist Buyer in the hiring of any such  employees at Buyer's  request.  The
Selling Parties shall, on or before the Closing Date, discharge any liability it
may have to any of  Meadowbrook/GA's  employees,  whether  or not said  employee
shall  enter the  employ of Buyer.  Such  liability  shall  include,  but is not
limited to, wages and other compensation and accrued vacation benefits.

     8.7  Reciprocal   Services.   In  connection   with  the  transfer  to  and
continuation of the Business by the Buyer, it is anticipated that Meadowbrook/CA
may  provide  certain  personnel,  financial  or other  services to the Buyer to
assist with the  transition.  Likewise,  Buyer may provide  certain  services to
Meadowbrook/CA  in connection with the transition.  The terms and conditions and
compensation  due for such services  shall be determined by mutual  agreement of
the parties by separate oral or written agreement.  Each party agrees to perform
its obligations under such agreements in a timely and competent manner.

ARTICLE NINE: MEADOWBROOK/CA'S OBLIGATIONS AFTER CLOSING

     9.1 Payment of Obligations Not Assumed.  Meadowbrook/CA  shall pay, perform
or otherwise  satisfy,  in a timely manner,  all  obligations and liabilities of
Meadowbrook/GA  which were  incurred or which  relate to the period prior to the
Closing  Effective  Date,  which are not paid at the Closing,  and which are not
expressly  assumed  by  Buyer  hereunder,  including  but  not  limited  to  the
assumption,  payment or  satisfaction,  as applicable,  of the  obligations  and
liabilities set forth in subparts (a) through (g) of section 1.5 hereof, and the
performance of its obligations  under section 8.4 hereof.  Meadowbrook/CA  shall
file all income tax  returns  and pay all  income  taxes owed by  Meadowbrook/GA
which are  attributable  to the period  prior to the Closing  Effective  Date or
which are attributable to the sale of the Assets and Business to Buyer.

     9.2  Keep  Insurance  In  Force.  Meadowbrook/CA  shall  take  all  actions
necessary to keep the professional  liability coverage and the umbrella coverage
provisions  of the  insurance  policies  described  in sections  2.7 and 4.4, as
amended by the tail coverage  endorsement,  in full force and effect,  and shall
take no action  which  would  cause such  insurance  coverage  to be modified or
canceled.

     9.3 Meadowbrook/CA's Indemnity. Meadowbrook/CA shall indemnify, defend, and
hold harmless the Buyer  against and in respect of any and all claims,  demands,
losses, costs, expenses,  obligations,  liabilities,  damages,  recoveries,  and
deficiencies,  including interest,  penalties,  and reasonable  attorneys' fees,
that the Buyer shall incur or suffer, that arise, result from, or relate to:

          (a)  The  failure  of  Meadowbrook/CA  to  pay or  perform  any of the
obligations set forth in sections 9.1 and 9.2 above;

          (b) The breach of any warranty or representation contained herein with
respect  to the  state of  Meadowbrook/GA's  title to any of the  Assets or with
respect to the number of outstanding shares, state of title, or ownership of the
Stock by Meadowbrook/CA;

          (c) The indemnity contained in section 5.3 hereof;

          (d) The failure of  Meadowbrook/CA  to promptly  notify the  insurance
company  of,  or take  appropriate  action  to defend  against,  (i) the  claims
identified in Exhibit 2.10 hereof, and (ii) any claim which may be made or filed
against  Meadowbrook/GA  or  the  Buyer,  which  arises  out of an  incident  or
transaction  involving  the  Business  or the  Assets  or the  Stock,  and which
incident or  transaction  occurred or is alleged to have  occurred  prior to the
Closing Effective Date; or

          (e) The failure of  Meadowbrook/CA  to perform its  obligations  under
section 4.14 hereof.

None of the Selling Parties' other representations,  warranties and obligations,
other  than  its  obligations  contained  in this  Article  Nine and  except  as
otherwise provided in Article Seventeen hereof, shall survive the Closing.

     The Buyer shall  promptly  notify  Meadowbrook/CA  of the  existence of any
claim,  demand,  or other  matter  to which  Meadow  brook/CA's  indemnification
obligation would apply, and shall give it a reasonable opportunity to defend the
same at its own expense and with counsel of its own selection; provided that the
Buyer shall at all times also have the right to fully participate in the defense
at its own expense. If Meadowbrook/CA shall, within a reasonable time after this
notice,  fail to defend, the Buyer shall have the right, but not the obligation,
to undertake the defense of, and to compromise or settle (exercising  reasonable
business judgment), the claim or other matter on behalf, for the account, and at
the risk,  of  Meadowbrook/CA.  If the claim is one that cannot by its nature be
defended solely by Meadowbrook/CA (including, without limitation, any federal or
state tax  proceeding),  then the Buyer shall make available all information and
assistance that Meadowbrook/CA may reasonably request.

     9.4 Covenant Against  Competition.  Meadowbrook/CA  agrees that neither it,
nor its principal stockholder,  Dr. Harvey Wm. Glasser, will, at any time within
the  two-year  period  immediately  following  the  Closing  Date,  directly  or
indirectly, engage in, or have any interest in any person, firm, corporation, or
business (as employee,  officer,  director,  agent,  security holder,  creditor,
consultant, or otherwise) that engages in any activity in any of the counties of
Douglas,  Coweta,  Fayette,  Fulton,  Cobb, Henry,  Clayton,  DeKalb,  Gwinnett,
Rockdale, or Cherokee, Georgia, which activity is substantially the same as, and
competitive with the Business,  so long as the Buyer (or any affiliated  person)
shall engage in such  activity in any of such  counties.  Meadowbrook/CA  agrees
that the Buyer's  remedies at law for enforcing this  provision are  inadequate,
and  agrees  that the  Buyer  and its  affiliates  shall be  entitled  to invoke
equitable remedies in enforcing same.

ARTICLE TEN: BUYER'S OBLIGATIONS AFTER CLOSING

     10.1  Buyer's  Indemnity.  Buyer  agrees  to  indemnify  and hold  harmless
Meadowbrook/CA against, and in respect of, any and all claims, demands,  losses,
costs,   expenses,   obligations,    liabilities,   damages,   recoveries,   and
deficiencies,  including interest,  penalties,  and reasonable  attorneys' fees,
that  Meadowbrook/CA  shall incur or suffer,  that arise, result from, or relate
to:

          (a)  Buyer's  breach of or failure to perform  any of its  obligations
assumed under the assigned contracts and leases; or

          (b) Any matter  arising after the Closing  Effective Date and relating
to the  operation of the  Business or use of the Assets by Buyer,  and for which
Meadowbrook/CA is not responsible.

     Meadowbrook/CA  shall promptly  notify Buyer of the existence of any claim,
demand, or other matter to which Buyer's indemnification obligation would apply,
and shall give it a reasonable opportunity to defend the same at its own expense
and with counsel of its own selection; provided that Meadowbrook/CA shall at all
times  also  have the  right  to fully  participate  in the  defense  at its own
expense.  If Buyer shall,  within a reasonable  time after this notice,  fail to
defend,  Meadowbrook/CA  shall  have  the  right,  but  not the  obligation,  to
undertake  the defense of, and to compromise  or settle  (exercising  reasonable
business judgment), the claim or other matter on behalf, for the account, and at
the  risk,  of the  Buyer.  If the  claim is one that  cannot  by its  nature be
defended  solely by the Buyer  (including,  without  limitation,  any federal or
state tax proceeding),  then Meadowbrook/CA shall make available all information
and assistance that the Buyer may reasonably request.

None of the Buyer's other  representations,  warranties and  obligations,  other
than its  obligations  contained  in this  Article  Ten and except as  otherwise
provided in Article Seventeen hereof, shall survive the Closing.

     10.2  Collection  of  Accounts  Receivable.  The  Buyer  agrees  to  assist
Meadowbrook/CA in the collection of all of its outstanding  accounts  receivable
which it receives from Meadowbrook/GA which are attributable to the period prior
to the Closing Effective Date. No charge shall be made to Meadowbrook/CA for the
services of the employees of Buyer,  but  Meadowbrook/CA  shall pay or reimburse
Buyer for all out of pocket  costs and for the services of any attorney or other
third party  employed to collect such accounts  receivable.  The Buyer shall not
engage  an  attorney   for  such   services   without   the  prior   consent  of
Meadowbrook/CA. Meadowbrook/CA acknowledges and agrees that the Buyer shall have
no responsibility or liability for the collection of said accounts receivable or
for their  delivery  to  Meadowbrook/CA  except to exercise  reasonable  care in
accounting   for  the  receipt   thereof  and  in  effecting  such  delivery  to
Meadowbrook/CA.   All  receipts  shall  be  remitted  to  Meadowbrook/CA  within
twenty-four (24) hours from receipt or deposited into  Meadowbrook/CA's  account
if requested by Meadowbrook/CA.

     10.3 Retention of Medical Records.  The Buyer shall retain and store at its
expense all medical  records of patients  treated by  Meadowbrook/GA  within the
State of Georgia for the period required by federal or state law. Meadowbrook/CA
and governmental  authorities  shall have access to such records upon reasonable
prior notice.

     10.4  Use of  Name.  The  Buyer  shall,  as soon as  reasonably  practical,
discontinue the use of the name  "Meadowbrook"  in connection with the operation
of the Business.  It is agreed,  however, that the Buyer shall have the right to
continue to use the name "Meadowbrook of Georgia" for a period of one year after
the Closing, and shall have the right to represent the Business to third parties
as the  successor  to the  Business as  previously  operated by  Meadowbrook/GA.
Notwithstanding  the foregoing,  Buyer shall only have the right to use the name
"Meadowbrook of Georgia" in Georgia and contiguous  states,  shall use such name
in a lawful  manner,  and  shall  not use the name  "Meadowbrook  Rehabilitation
Group"  or   otherwise   hold  itself  out  as  being  a  part  of   Meadowbrook
Rehabilitation  Group.  Meadowbrook/CA  does not represent or warrant that Buyer
shall have the exclusive  right to use the name  "Meadowbrook  of Georgia".  The
Buyer shall have the right to continue to use all forms and operating procedures
currently  in use in the  Business  for a period of one year after the  Closing.
Thereafter,  the use of any such forms and procedures  which are  copyrighted by
Meadowbrook/CA, shall be discontinued by the Buyer.

ARTICLE ELEVEN: RISK OF LOSS

     The Selling Parties shall bear the risk of all loss or damage to the Assets
from  all  causes  and all  loss or  damage  arising  out of or  related  to the
operation of the Business until the Closing Effective Date. If at any time prior
to the Closing  Effective Date any material  portion of the Assets is damaged or
destroyed  as a  result  of  fire,  other  casualty  or  for  any  other  reason
whatsoever,  or in the event  condemnation  or eminent  domain  proceedings  (or
private  purchase  in  lieu  thereof)  shall  be  commenced  by  any  public  or
quasi-public  authority  having  jurisdiction  against  all or any  part  of the
Assets,  Selling Parties shall immediately give notice thereof to the Buyer. The
Buyer shall have the right, in its sole and absolute discretion, within ten days
of receipt of such  notice,  to (i) elect not to proceed with the Closing (or to
rescind the Closing if same has already  occurred) and terminate this agreement,
or (ii) proceed to Closing and consummate the transactions  contemplated  hereby
and receive any and all insurance  proceeds  received by the Selling  Parties on
account of any such casualty. If the Buyer elects option (ii), it will be deemed
to have waived all breaches of covenants or warranties resulting from such loss.

ARTICLE TWELVE: PUBLICITY

     All  notices  to third  parties  and all  other  publicity  concerning  the
transactions  contemplated  by this  agreement  shall  be  jointly  planned  and
coordinated by and between the Buyer and the Selling Parties. No party shall act
unilaterally  in this regard  without the prior written  approval of the others;
however, this approval shall not be unreasonably withheld.

ARTICLE THIRTEEN: COSTS

     13.1 Finder's or Broker's Fees. Each party  represents and warrants that it
has  dealt  with  no  broker  or  finder  in  connection  with  any  transaction
contemplated  by this  agreement,  and,  as far as it knows,  no broker or other
person is entitled to any  commission or finder's fee in connection  with any of
these transactions.

     13.2  Expenses.  Subject to the provisions of section 8.5, each party shall
pay all costs and expenses  incurred or to be incurred by it in negotiating  and
preparing  this  agreement  and in closing  and  carrying  out the  transactions
contemplated by this agreement.

ARTICLE FOURTEEN: FORM OF AGREEMENT

     14.1  Effect  of  Headings.  The  subject  headings  of  the  sections  and
subsections  of this agreement are included for  convenience  only and shall not
affect the construction or interpretation of any of its provisions.

     14.2 Entire Agreement; Modification; Waiver. This agreement constitutes the
entire agreement between the parties  pertaining to the subject matter contained
in it and supersedes all prior and contemporaneous agreements,  representations,
and understandings of the parties. No supplement,  modification, or amendment of
this agreement  shall be binding unless  executed in writing by all the parties.
No waiver of any of the provisions of this agreement  shall be deemed,  or shall
constitute,  a waiver of any other provision,  whether or not similar, nor shall
any waiver  constitute a continuing  waiver.  No waiver shall be binding  unless
executed in writing by the party making the waiver.

     14.3 Counterparts.  This agreement may be executed simultaneously in one or
more counterparts,  each of which shall be deemed an original,  but all of which
together shall constitute one and the same instrument.

ARTICLE FIFTEEN: PARTIES

     15.1 Parties in Interest.  Nothing in this  agreement,  whether  express or
implied, is intended to confer any rights or remedies under or by reason of this
agreement  on any  persons  other than the  parties  to it and their  respective
successors and assigns, nor is anything in this agreement intended to relieve or
discharge the  obligation or liability of any third persons to any party to this
agreement,  nor  shall  any  provision  give  any  third  persons  any  right of
subrogation or action over against any party to this agreement.

     15.2 Assignment. This agreement shall be binding on, and shall inure to the
benefit of, the parties to it and their respective heirs, legal  representative,
successors, and assigns; provided, however, that the Buyer may not assign any of
its rights under this agreement  without the consent of the Selling Parties.  No
such  assignment by the Buyer shall relieve the Buyer of any of its  obligations
or duties under this agreement.

     15.3 Obligations Joint and Several.  The obligations of the Selling Parties
herein shall be joint and several.

ARTICLE SIXTEEN: REMEDIES

     16.1 Arbitration.  Any controversy or claim arising out of, or relating to,
this agreement,  or the making,  performance,  or interpretation of it, shall be
settled by  arbitration  in Atlanta,  Georgia under the  commercial  arbitration
rules of the American Arbitration Association then existing, and judgment on the
arbitration  award may be  entered  in any court  having  jurisdiction  over the
subject matter of the controversy.

     16.2 Recovery of Litigation  Costs.  If any legal action or any arbitration
or other proceeding is brought for the enforcement of this agreement, or because
of an alleged dispute,  breach, default, or misrepresentation in connection with
any of the provisions of this agreement,  the successful or prevailing  party or
parties shall be entitled to recover reasonable  attorneys' fees and other costs
incurred in that action or proceeding,  in addition to any other relief to which
it or they may be entitled.

ARTICLE SEVENTEEN: NATURE AND SURVIVAL OF REPRESENTATIONS AND
OBLIGATIONS

     None of the  representations,  warranties,  covenants and agreements of the
parties  contained in this  agreement  shall survive the Closing except that the
obligations of the parties  contained in Articles Four,  Five,  Eight and Eleven
hereof not performed or  extinguished on or before the Closing Date shall expire
on  midnight of the  Closing  Effective  Date;  and the  obligations  of Meadow-
brook/CA  contained  in  Article  Nine  hereof,  the  obligations  of the  Buyer
contained in Article Ten hereof, the obligations of Meadowbrook/CA  contained in
section 8.2.3 hereof and the obligations of  Meadowbrook/CA  and Buyer contained
in sections  4.14 and 8.4 hereof  shall  survive the Closing for a period of two
years after the Closing  Effective  Date,  provided  any claim for  indemnity of
which the  indemnifying  party  receives  notice prior to the  expiration of two
years after the  Closing  Effective  Date shall not be barred by the  provisions
hereof.

ARTICLE EIGHTEEN: NOTICES

     All  notices,  requests,  demands,  and  other  communications  under  this
agreement shall be in writing and shall be deemed to have been duly given on the
date of service if served personally on the party to whom notice is to be given,
or on the second day after  mailing if mailed to the party to whom  notice is to
be given, by first class mail,  registered or certified,  postage  prepaid,  and
properly addressed as follows:

         To Selling Parties:             Meadowbrook Rehabilitation Group,
                                         Inc.
                                         2200 Powell Street, Suite 800
                                         Emeryville, California 94608
                                         Attn: President

         To Buyer:                       Stiles A. Kellett III
                                         Restore Respiratory Care, Inc.
                                         200 Galleria Parkway, Suite 1800
                                         Atlanta, Georgia 30339

Any party may change its address for  purposes of this  paragraph  by giving the
other parties written notice of the new address in the manner set forth above.

ARTICLE NINETEEN: GOVERNING LAW

     This agreement shall be construed in accordance  with, and governed by, the
laws of the State of  Georgia  as applied to  contracts  that are  executed  and
performed entirely in Georgia.

ARTICLE TWENTY: SEVERABILITY

     If any provision of this agreement is held invalid or  unenforceable by any
court of final  jurisdiction,  it is the  intent of the  parties  that all other
provisions  of this  Agreement be construed to remain fully valid,  enforceable,
and binding on the parties.

     IN WITNESS WHEREOF,  the parties to this agreement have duly executed it on
the day and year first above written.

                                      MEADOWBROOK REHABILITATION GROUP OF
                                      GEORGIA, INC.



                                      By:    /s/ Harvey Wm. Glasser, M.D.  
                                          ----------------------------------

                                          President

                                      MEADOWBROOK REHABILITATION GROUP,
                                      INC.



                                      By:    /s/ Harvey Wm. Glasser, M.D.  
                                          ----------------------------------

                                          President


                                     
                                      RESTORE REHABILITATION GROUP, INC.



                                      By:    /s/ Stiles A. Kellett III  
                                          ----------------------------------

                                          President