EXHIBIT 10.1



                       MASTER PURCHASE AND SALE AGREEMENT


                                     Between


                     KAISER FOUNDATION HEALTH PLAN OF TEXAS
                                   (As Seller)


                                       and


                                 HMO TEXAS, L.C.
                                   (As Buyer)


                                               Dated:   June 5, 1998



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                                TABLE OF CONTENTS




                                                                           Page

ARTICLE I

<TABLE>
<CAPTION>

<S>                                                                                                              <C>
GENERAL...........................................................................................................1
                           1.1      Agreement to Sell and Purchase................................................1
                           1.2      Purchase Price................................................................4
                           1.3      Escrow Deposit................................................................4

         ARTICLE II

TITLE COMMITMENT AND SURVEY;
REVIEW AND INSPECTION BY BUYER....................................................................................4
                           2.1      Title Commitment and Survey...................................................4
                           2.2      Review and Inspection by Buyer................................................5
                           2.3      Due Diligence Notice..........................................................6

         ARTICLE III

REPRESENTATIONS, WARRANTIES, COVENANTS,
AND AGREEMENTS....................................................................................................7
                           3.1      Representations and Warranties of Seller......................................7
                           (a)      Organization and Good Standing................................................7
                           (b)      Seller's Authority and No Breach..............................................8
                           (c)      No Violations.................................................................8
                           (d)      Seller's Financial Statements.................................................8
                           (e)      Litigation....................................................................8
                           (f)      No Brokers or Finders.........................................................8
                           (g)      Seller's Consents.............................................................9
                           (h)      Tax Returns and Tax Liabilities...............................................9
                           (i)      No Untrue Representation or Warranty..........................................9
                           (j)      Inspection, Representations and Warranties of Seller..........................9
                           (k)      Due Diligence Materials......................................................11
                           (l)      Licenses and Permits.........................................................11
                           (m)      Zoning.......................................................................11
                           (n)      Proceedings..................................................................11
                           (o)      Improvements.................................................................11
                           (p)      Representations and Warranties True and Correct at Closing;
                  Breaches
                                                                                                                 11
                           3.2      Representations and Warranties of Buyer......................................12
                           (a)      Organization and Good Standing...............................................12
                           (b)      Buyer's Authority and No Breach..............................................12


<PAGE>



                           (c)      No Brokers or Finders........................................................12
                           (d)      Buyer's Consents.............................................................12
                           (e)      No Untrue Representation or Warranty.........................................12
                           (f)      Representations and Warranties True and Correct at Closing;
                  Breaches
                                                                                                                 12
                           3.3      Survival of Provisions.......................................................13
                           3.4      Operations Pending Closing...................................................13
                           3.5      Communications...............................................................14
                           3.6      Indemnification..............................................................15
                           (a)      Indemnification by Seller....................................................15
                           (b)      Indemnification by Buyer.....................................................15
                           (c)      Limitation...................................................................15
                           3.7      Guarantees...................................................................16

         ARTICLE IV

CONDITIONS PRECEDENT; TERMINATION................................................................................16
                           4.1      Conditions to Buyer's Obligations............................................16
                           4.2      Conditions to Seller's Obligations...........................................17
                           4.3      Joint Conditions Precedent to Closing........................................17
                           4.4      Termination..................................................................17

         ARTICLE V

THE CLOSING......................................................................................................18
                           5.1      The Closing Date.............................................................18
                           5.2      Seller's Obligations at the Closing..........................................18
                           5.3      Buyer's Obligations at the Closing...........................................19
                           5.4      Closing Costs................................................................20
                           5.5      Prorations...................................................................20

         ARTICLE VI

DAMAGE OR CONDEMNATION PRIOR TO THE CLOSING......................................................................21
                           6.1      Damage.......................................................................21
                           6.2      Condemnation.................................................................21

         ARTICLE VII

DEFAULTS.........................................................................................................22
                           7.1      Default by Seller............................................................22
                           7.2      Default by Buyer.............................................................22


                                       ii

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         ARTICLE VIII

MISCELLANEOUS....................................................................................................22
                           8.1      Notices......................................................................22
                           8.2      Waiver.......................................................................24
                           8.3      Counterparts.................................................................24
                           8.4      Brokerage Fees and Commissions...............................................24
                           8.5      Entire Agreement.............................................................24
                           8.6      Modification.................................................................24
                           8.7      Applicable Law...............................................................24
                           8.8      Headings.....................................................................25
                           8.9      Assignment...................................................................25
                           8.10     Further Assurances...........................................................25
                           8.11     Time of Essence..............................................................25
                           8.12     Severability.................................................................25
                           8.13     Attorneys' Fees..............................................................25
                           8.14     Construction.................................................................25
</TABLE>

LIST OF EXHIBITS:

EXHIBIT A            -        The Land
EXHIBIT B            -        Special Warranty Deed With Vendor's Lien
EXHIBIT C            -        Bill of Sale
EXHIBIT D            -        Assignment and Assumption of Intangible Property
EXHIBIT E            -        Assignment and Assumption of Leases
EXHIBIT F            -        Note
EXHIBIT G            -        Deed of Trust
EXHIBIT H            -        Certificate of Nonforeign Status
EXHIBIT I            -        Estoppel Certificate
EXHIBIT J            -        Subleases
EXHIBIT K            -        Limited Guaranty
EXHIBIT L            -        Sublease Guaranty


DEFINITIONS:

"ADA" can be found in Paragraph 2.3.
"Adjustment Date" can be found in Paragraph 5.5.
"Agreement" can be found on page 1.
"Applicable Environmental Laws" can be found in Paragraph 3.1(j)(viii).
"Applicable Laws" can be found in Paragraph 3.1(j)(vii).
"Appurtenances" can be found in Paragraph 1.1(b).
"Business day" can be found in Paragraph 1.3.

                                       iii

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"Buyer" can be found on page 1.
"Buyer's Due Diligence Notice" can be found in Paragraph 2.3.
"Buyer's Parent" can be found in Paragraph 3.7(b).
"CERCLA" can be found in Paragraph 3.1(j)(viii).
"Centex" can be found in Paragraph 3.4(c).
"Closing" can be found in Paragraph 5.1.
"Closing Date" can be found in Paragraph 5.1.
"Closing Rent Roll" can be found in Paragraph 5.2(c).
"Damage" can be found in Paragraph 6.1.
"Deeds" can be found in Paragraph 1.1(a).
"Down Payment" can be found in Paragraph 1.2(a).
"Due Diligence Materials" can be found in Paragraph 2.2.
"Escrow Deposit" can be found in Paragraph 1.3.
"Estoppels" can be found in Paragraph 3.4(i).
"Execution Date" can be found on page 1.
"HMO Agreement" can be found in Recital A.
"Hazardous substance" can be found in Paragraph 3.1(j)(viii).
"Health Plan Agreements" can be found in Recital A.
"Improvements" can be found in Paragraph 1.1(c).
"Intangible Property" can be found in Paragraph 1.1(e).
"Land" can be found in Paragraph 1.1(a).
"Leases" can be found in Paragraph 1.1(f).
"Loan Documents" can be found in Paragraph 1.2(b).
"Loss" and "Losses" can be found in Paragraph 3.6(a).
"Material" can be found in Paragraph 6.1(c).
"Notice Date" can be found in Paragraph 2.3.
"Owner Title Policy" can be found in Paragraph 5.2(e).
"Permitted Exceptions" can be found in Paragraph 2.1(b).
"Personal Property" can be found in Paragraph 1.1(d).
"Property" or "Properties" can be found in Paragraph 1.1(f).
"Purchase Price" can be found in Paragraph 1.2.
"RCRA" can be found in Paragraph 3.1(j)(viii).
"Real Property" can be found in Paragraph 1.1(f).
"Rent Roll" can be found in Paragraph 2.2(c).
"Returns" can be found in Paragraph 3.1(h).
"Seller" can be found on page 1.
"Seller's Affiliate" can be found in Paragraph 3.7(a).
"Seller's Title Indemnity" can be found in Paragraph 2.1(b).
"Subleases" can be found in Paragraph 5.3(b).
"Tenant Deposits" can be found in Paragraph 1.1(f).
"Tenant Notices" can be found in Paragraph 5.2(f).
"Title Commitment" can be found in Paragraph 2.1(a).
"Title Company" can be found in Paragraph 1.3.
"Title Exceptions" can be found in Paragraph 2.1(b).

                                       iv

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"Violation" can be found in Paragraph 3.1(c).


                                        v

<PAGE>



                       MASTER PURCHASE AND SALE AGREEMENT

         THIS  MASTER  PURCHASE  AND SALE  AGREEMENT  ("Agreement")  is made and
entered into as of this 5th day of June, 1998 ("Execution Date"), by and between
HMO  TEXAS,  L.C.,  a Texas  limited  liability  company  ("Buyer"),  and KAISER
FOUNDATION HEALTH PLAN OF TEXAS, a Texas non-profit corporation ("Seller").

                                    RECITALS:

         A.  Buyer,  Seller  and their  affiliates  have  entered  into  various
agreements  pursuant to which Seller or its  affiliates  will convey to Buyer or
its affiliates  certain assets and liabilities of the Kaiser  Permanente  Health
Care  Program  in  the  State  of  Texas.  These  agreements  include,   without
limitation, that certain Asset Sale and Purchase Agreement of even date herewith
between Buyer and Seller (the "HMO Agreement").  The HMO Agreement and the other
agreements  referenced in this recital are  hereinafter  sometimes  collectively
referred to as the "Health Plan Agreements."

         B.   Seller  owns  in  fee  simple   eight  (8)   medical   office  and
administrative  office facilities in Tarrant and Dallas Counties in the State of
Texas,  which constitute a portion of the operating assets used by Seller in the
operation of its health care  delivery  system.  Buyer  desires to purchase from
Seller and Seller desires to sell to Buyer Seller's interest in these Properties
(as further  defined in Article I below) on the terms and  conditions  set forth
herein.

         C. The parties  intend for this  Agreement to be  executed,  closed and
funded  concurrently with the execution,  closing and funding of the Health Plan
Agreements.

         NOW, THEREFORE,  for and in consideration of the above recitals and the
representations,  warranties, mutual covenants, and agreements herein expressed,
and for other good and valuable  consideration,  the receipt and  sufficiency of
which are hereby expressly acknowledged, the parties hereby agree as follows:

                                    ARTICLE I

                                     GENERAL

         1.1  Agreement to Sell and  Purchase.  Seller hereby agrees to sell and
convey to Buyer, and Buyer hereby agrees to purchase and accept from Seller, for
the Purchase Price  (hereinafter  defined) and upon and subject to the terms and
conditions hereinafter
set forth, all of the following described property:





<PAGE>



         (a) Land.  Eight (8) improved  parcels of land (the "Land")  located in
Tarrant  and Dallas  Counties in the State of Texas and  described  in Exhibit A
hereto, commonly known as:

o         NorthPoint I
         9229 LBJ
         Dallas, TX 75245

o         NorthPoint II
         9330 Amberton Pkwy
         Dallas, TX 75243

o         North Point III (North Dallas)
         9250 Amberton Pkwy
         Dallas, TX 75243

o         Northpoint IV (Dallas Specialty Center)
         12606 Greenville Avenue
         Dallas, TX 75243

o         Mesquite
         2727 Military Parkway
         Mesquite, TX 75149

o         SW Dallas
         4201 Brookspring Dr.
         Dallas, TX 75244

o         Central FW
         1001 12th Avenue
         Ft. Worth, TX 76104

o         Arlington
         7011-20 East
         Arlington, TX 76018

All of the Land shall be conveyed to Buyer  through a special  warranty deed for
the Dallas  County Real  Property  and a special  warranty  deed for the Tarrant
County Real  Property  with  vendor's  lien in the form of Exhibit B hereto (the
"Deeds");

         (b) Appurtenances.  All rights, privileges and easements appurtenant to
and for the benefit of the Land of Seller,  including,  without limitation,  all
minerals, oil, gas and other hydrocarbon substances on and/or under the Land, as
well as all development



                                                         2

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rights, air rights, water, water rights and water stock relating to the Land and
any easements,  rights-of-way or appurtenances relating to or used in connection
with the  ownership,  operation,  use,  occupancy or enjoyment of the Land,  the
Improvements (as defined in Paragraph 1.1(c) below), the Intangible Property (as
defined in Paragraph 1.1(e) below), or any other appurtenance, together with all
rights of Seller in and to streets, sidewalks,  alleys, driveways, parking areas
and areas adjacent thereto or used in connection  therewith,  and any land lying
in the bed of any existing or proposed street adjacent to the Land (all of which
are collectively referred to as the "Appurtenances");

         (c) Improvements. All improvements,  structures, buildings and fixtures
owned by Seller  and  presently  and/or  hereafter  located  on the Land and all
apparatus,  equipment and appliances  located on and/or used in connection  with
the ownership,  operation,  use, occupancy or enjoyment thereof (such as heating
and air  conditioning  systems,  and  facilities  used to  provide  any  utility
services,  parking  services,  refrigeration,   ventilation,  garbage  disposal,
recreation or other services thereto including,  without limitation, any and all
computers  and/or  computer  systems used for or in connection with any building
operating systems, elevator systems, irrigation systems, climate control systems
and security systems), all landscaping thereon and all leasehold improvements of
tenants,  if any,  which remain a part of the Property  upon  expiration  of any
Lease (as defined in  Paragraph  1.1(f)  below)  (all of which are  collectively
referred to as the "Improvements");

         (d) Personal  Property.  All personal  property owned by Seller located
on,  situated in or used in connection with the Land, the  Appurtenances  and/or
the Improvements including,  without limitation,  that certain personal property
described  in the  schedule  of personal  property  attached to Exhibit C hereto
("Personal  Property"),  and all of which Personal Property shall be transferred
and assigned to Buyer  pursuant to an instrument in the form of Exhibit C hereto
(the "Bill of Sale");

         (e)  Intangible  Property.  All  of  the  interest  of  Seller  in  any
contractual rights and intangible  personal property owned by Seller relating to
or used in connection with the ownership, operation, use, occupancy or enjoyment
of the Land,  Appurtenances,  Improvements  or  Personal  Property,  and, to the
extent  approved  by  Buyer  in  writing  pursuant  to the  provisions  of  this
Agreement, any and all development agreements,  permits, contracts,  service and
vendor  contracts,  warranties,  guarantees,  indemnities,  agreements,  utility
contracts,  permits,  licenses and other  rights owned by Seller  relating to or
used in connection with the ownership, operation, use, occupancy or enjoyment of
all or any part of the Land,  Appurtenances,  Improvements or Personal  Property
(all of which are collectively  referred to as the "Intangible  Property"),  and
all of which shall be assigned to Buyer pursuant to an assignment in the form of
Exhibit D hereto (the "Assignment and Assumption of Intangible Property"); and




                                                         3

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         (f) Leases.  All of the interest of Seller, as landlord,  in and to the
leases  of  the  Land  or  space  in  the   Improvements   and  any  amendments,
modifications  or supplements  thereto in effect now and on the Closing Date (as
defined in Paragraph 5.1 below)  including,  without  limitation,  those certain
leases  described  in the  schedule of leases  attached to Exhibit E hereto (the
"Leases"),  and all security,  advance  rental and other deposits made under the
tenant leases (the "Tenant  Deposits");  all of which shall be assigned to Buyer
pursuant  to an  instrument  in the  form of  Exhibit  E  attached  hereto  (the
"Assignment and Assumption of Leases").

         All of the  items  described  in  Paragraphs  1.1(a),  1.1(b),  1.1(c),
1.1(d), 1.1(e) and 1.1(f) above are sometimes hereinafter  collectively referred
to as the "Property" or the "Properties;" provided however that, notwithstanding
the foregoing,  the Personal Property and Intangible  Property shall not include
any Assets or  Excluded  Assets,  as defined in the HMO  Agreement  or any other
asset  expressly  retained  by Seller  pursuant  to the terms of the Health Plan
Agreements.  The items described in Paragraphs  1.1(a),  1.1(b) and 1.1(c) above
are sometimes hereinafter referred to collectively as the "Real Property."

     1.2 Purchase  Price.  The purchase price (the "Purchase  Price") to be paid
for  the   Properties   shall  be  Forty  Four   Million   and  No/100   Dollars
($44,000,000.00), payable to Seller on the Closing Date (hereinafter defined) as
follows:

     (a) The sum of $8,800,000,  inclusive of the Escrow Deposit, as hereinafter
defined (the "Down Payment"), and

         (b) A  promissory  note in the  amount  of  $35,200,000  in the form of
Exhibit F attached hereto (the "Note"),  secured by a Deed of Trust and Security
Agreement in the form of Exhibit G attached hereto (the "Deed of Trust"),  which
Note  and Deed of Trust  are  sometimes  hereinafter  referred  to as the  "Loan
Documents."

         1.3 Escrow  Deposit.  Within five (5) business days after the execution
hereof,  and as a  condition  to  Seller's  obligations  hereunder,  Buyer shall
deposit with  Republic  Title  Insurance  Company of Texas,  Inc.,  300 Crescent
Court,  Dallas,  Texas 75201 (Attn:  Bill Kramer,  Escrow  Officer)  (the "Title
Company"),  in escrow, the sum equal to Seventy Five Thousand and No/100 Dollars
($75,000.00),  which  amount  shall  be  invested  by the  Title  Company  in an
interest-bearing  account  with a financial  institution  approved by Seller and
Buyer whose accounts are insured by the Federal Deposit  Insurance  Corporation,
and be held and disbursed by the Title Company  strictly in accordance  with the
terms  and  provisions  of  this  Agreement.  The  amount  of  such  deposit  is
hereinafter  referred to as the "Escrow  Deposit."  At the  Closing,  the Escrow
Deposit shall be applied to the payment of the Purchase Price. If this Agreement
is  terminated  due to the  default of the Buyer,  the Escrow  Deposit  shall be
released and paid to Seller and shall constitute  Seller's  liquidated  damages.
All accrued interest on the Escrow Deposit shall



                                                         4

<PAGE>



be paid to Buyer  regardless of the ultimate  disposition  of the Escrow Deposit
itself.  The term  "business day" shall mean Monday  through  Friday,  excluding
federal holidays.

                                   ARTICLE II

                          TITLE COMMITMENT AND SURVEY;
                         REVIEW AND INSPECTION BY BUYER

         2.1 Title  Commitment and Survey.  Prior to the date of this Agreement,
Seller has caused to be issued and delivered to Buyer the following:

         (a) A commitment  for title  insurance for the  Properties  (the "Title
Commitment")  prepared by Title  Company,  accompanied by a copy of all recorded
documents  affecting the Properties and listed as title exceptions in Schedule B
of the Commitment; and

         (b)  All of the  surveys  of the  Properties  in  Seller's  possession,
prepared by a licensed land surveyor.

Buyer shall review the Title Commitment and may order surveys of the Properties.
Buyer  agrees  to accept  the  condition  of title  subject  only to the  liens,
encumbrances  and  exceptions  arising  out of the  actions  of  Buyer,  and any
encumbrances  that do not materially  interfere with Buyer's intended use of the
Properties (the "Permitted Exceptions").  Notwithstanding the foregoing, none of
the following items shall constitute Permitted Exceptions, and all of such items
shall be discharged, satisfied, cured or insured over, as appropriate, by Seller
at or prior to the Closing:

     (i) All mortgages or deeds of trust affecting the Properties;

                           (ii) All past due ad valorem taxes and assessments of
                  any kind  constituting  a lien  against the  Property,  except
                  taxes for the year 1998, not yet due and payable,  which shall
                  be prorated between the parties and any special assessments in
                  excess of $10,000;

                           (iii) All mechanic's, materialman's and similar liens
                  (and/or affidavits claiming the same) filed against all or any
                  portion of the Property;

     (iv) Judgments  which have been abstracted and become a lien against all or
any portion of the Property; and

                           (v) Any federal  tax lien  against all or any portion
of the Property.




                                                         5

<PAGE>



If  Seller is unable to  discharge,  satisfy,  cure or insure  over any title or
survey  defects,   encroachments  over  building  and  property  lines,   liens,
encumbrances or exceptions that materially  interfere with Buyer's  intended use
of the Property (the "Title  Exceptions")  on or before the Closing Date,  Buyer
agrees to take title subject to the Title Exceptions; provided that Seller shall
indemnify and hold Buyer  harmless in accordance  with  Paragraph 3.6 ("Seller's
Title  Indemnity").  Title  Exceptions  shall not  include  matters set forth in
Paragraph  2.1(b)(i) through (v), above, which Seller shall discharge,  satisfy,
cure or insure over, as appropriate, at or prior to the Closing.

     2.2 Review and  Inspection by Buyer.  Seller has delivered to Buyer or will
deliver to Buyer within ten (10) days after the Execution Date all of the books,
inspection  reports  and other  information  in Seller's  possession  containing
material   information   pertaining  to  the  Properties   (the  "Due  Diligence
Materials").  The Due Diligence Materials include the following  information and
documents:

     (a) An unaudited  Income and Expense  Statement  for the  calendar  quarter
ended March,  1998, showing first quarter 1998 operating income and expenses for
the Properties;

         (b)      A copy of each of the Leases;

         (c) A Rent Roll (the "Rent Roll") for any Property  subject to a Lease,
including  for each Lease (i) the  tenant's  name,  (ii) the area  leased to the
tenant,  (iii) the monthly rental payable by the tenant,  (iv) the amount of any
security or other deposit,  (v) the date of commencement of the Lease,  (vi) the
term and the date of  expiration  of the Lease,  (vii) any renewal or  expansion
options,  and (viii) any rents or other charges in arrears or prepaid thereunder
and the period for which the rents or other  charges are in arrears or have been
prepaid;

     (d) A copy of the most  recent ad  valorem  tax  statement  for each of the
Properties;

     (e)  Any  "as-built"   plans  and   specifications   with  respect  to  the
Improvements that Seller possesses;

         (f) A copy of any  licenses and permits  owned by Seller in  connection
with the ownership, occupancy and operation of the Property;

     (g) A copy  of any  hazardous  materials  inspection  reports  in  Seller's
possession; and

     (h)  Copies  of  any  guaranties  and  warranties  in  Seller's  possession
pertaining to all Personal Property and equipment at the Properties.



                                                         6

<PAGE>




From  the  Execution  Date  through  the  Closing  Date,   Buyer,  its  counsel,
accountants,   and  other  representatives  shall,  subject  to  confidentiality
covenants made by Seller to third parties and state and federal  antitrust laws,
have the right to inspect  (without  copying)  additional  books and  records of
Seller relating to the Properties located at Seller's  administrative offices in
Dallas,  Texas,  except  for  market  valuation  information  such  as  Property
appraisals, purchase and sale agreements, and information pertaining to the book
value of the Properties.  Any such inspection shall occur during normal business
hours  and  shall be  scheduled  by  Buyer  and  Seller  following  request  for
inspection made to Seller.  Buyer and its  representatives  shall use their best
efforts to conduct their  inspection in such a manner as not to be disruptive to
Seller's  employees  or  business  operations  and without  infringing  upon the
confidential  nature of  physician-patient  encounters.  Buyer  shall  reimburse
Seller for any damage to the Property caused by Buyer or Buyer's representatives
during the inspection  process.  All information  provided by Seller to Buyer or
obtained by Buyer  relating to the Property in the course of its review shall be
treated as confidential  information by Buyer. Buyer shall defend, indemnify and
hold Seller harmless from and against any liabilities, claims, demands, actions,
loss or damage to the Property incident to, resulting from or in any way arising
out of any entry upon or inspection by or on behalf of Buyer of the Property. By
entering into this Agreement,  Buyer shall be deemed to have determined that the
Property is in satisfactory condition and suitable for Buyer's purposes.

         2.3 Due Diligence  Notice.  Buyer shall have thirty-five (35) days from
the  Execution  Date (the  "Notice  Date") to notify  Seller in  writing  of any
matters pertaining to (i) the presence or release of Hazardous  Materials on the
Properties,  (ii) the violation of any zoning laws pertaining to the Properties,
and (iii) any  violations of the  Americans  with  Disabilities  Act (the "ADA")
arising  from any  improvements  or  renovations  performed  by Seller after the
passage of the ADA  ("Buyer's  Due  Diligence  Notice").  Buyer's Due  Diligence
Notice  shall  describe  the nature of the  concern  arising  from  Buyer's  due
diligence  review and shall  include any  supporting  documentation  that may be
necessary for Seller to fashion an appropriate cure for the matter referenced in
said notice.  Within  fifteen (15) days after  receipt of Buyer's Due  Diligence
Notice,  Seller shall  advise  Buyer in writing that Seller will either  remedy,
discharge,  repair,  remediate,  insure over or cure said matters  referenced in
Buyer's Due  Diligence  Notice.  Alternatively,  Seller may notify Buyer that it
will  indemnify  Buyer with regard to such matters in accordance  with Paragraph
3.6.

         BUYER  ACKNOWLEDGES  THAT  SELLER HAS NOT MADE AND DOES NOT HEREBY MAKE
ANY  REPRESENTATIONS,   WARRANTIES,  OR  COVENANTS  OF  ANY  KIND  OR  CHARACTER
WHATSOEVER WITH RESPECT TO THE PROPERTIES,  WHETHER EXPRESSED OR IMPLIED, EXCEPT
AS  EXPRESSLY  SET FORTH IN THIS  AGREEMENT,  AND AS LIMITED BY THE  INFORMATION
PROVIDED IN BUYER'S DUE  DILIGENCE  NOTICE.  FURTHERMORE,  WITHOUT  LIMITING THE
GENERALITY OF THE FOREGOING, BUYER ACKNOWLEDGES AND AGREES THAT SELLER HAS NOT



                                                         7

<PAGE>



MADE AND DOES NOT MAKE, AND BUYER HEREBY  DISCLAIMS THE EXISTENCE OF OR RELIANCE
UPON, ANY IMPLIED WARRANTY, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. BUYER HEREBY REPRESENTS THAT IT IS NOT RELYING
UPON ANY WARRANTIES,  PROMISES, GUARANTEES, OR REPRESENTATIONS MADE BY SELLER OR
ANYONE  ACTING  OR  CLAIMING  TO ACT ON  BEHALF  OF  SELLER  IN  PURCHASING  THE
PROPERTIES, OTHER THAN THE WARRANTIES SET OUT IN THE DEEDS OR THIS AGREEMENT.

                                   ARTICLE III

                     REPRESENTATIONS, WARRANTIES, COVENANTS,
                                 AND AGREEMENTS

         3.1 Representations and Warranties of Seller. As of the Execution Date,
Seller represents and warrants to Buyer as follows:

         (a) Organization and Good Standing.  Seller is a non-profit corporation
duly  organized,  validly  existing and in good  standing  under the laws of the
jurisdiction  of  its  organization,  has  all  requisite  corporate  power  and
authority to own,  lease and operate the Properties and is duly qualified and in
good standing to do business  under the corporate  law of each  jurisdiction  in
which the  ownership  or leasing  of the  Properties  makes  such  qualification
necessary, except where the failure to be so qualified would not have a Material
Adverse Effect, as defined in the HMO Agreement.

         (b)  Seller's  Authority  and  No  Breach.  Seller  has  all  requisite
corporate power and corporate  authority to enter into this Agreement and all of
the other  agreements  contemplated  hereby,  and to consummate the transactions
contemplated  hereby.  The  execution  and  delivery of this  Agreement  and the
consummation of the transactions  contemplated  hereby have been duly authorized
by all necessary corporate action on the part of Seller. This Agreement and each
other agreement  contemplated  hereby constitute valid and binding agreements of
Seller,  enforceable  against Seller in all material respects in accordance with
their  respective  terms  except  insofar  as  enforcement  may  be  limited  by
insolvency or similar laws  affecting the  enforcement  of creditors'  rights in
general,  and except as enforceability  may be limited by general  principles of
equity (regardless of whether such  enforceability is considered in a proceeding
in equity or at law).

         (c) No Violations.  Except for consents of third parties required under
any  contracts,  the  execution  and  delivery of this  Agreement  and the other
agreements   contemplated  hereby  and  the  consummation  of  the  transactions
contemplated  hereby or thereby will not: (i)  conflict  with,  or result in any
material  violation of, or default (with or without  notice or lapse of time, or
both)  under,  or  give  rise  to  a  right  of  termination,   cancellation  or
acceleration of any material obligation or the loss of a material benefit



                                                         8

<PAGE>



under, or the creation of a material lien,  material  security interest or other
material  encumbrance  pursuant  to, any  material  contract,  lease,  mortgage,
instrument or other agreement to which Seller is a party or by which it is bound
that will not be paid or satisfied prior to or at Closing,  with respect to, any
Property  (any  such  conflict,   violation,   default,  right  of  termination,
cancellation or acceleration, loss or creation, a "Violation"),  pursuant to any
provisions of the Articles of Incorporation or Bylaws of Seller;  (ii) result in
any  Violation of any material  agreement to which the  Properties  are subject;
(iii)  result in any  Violation of any  judgment,  order,  injunction  or decree
entered into with respect to Seller or to which the Properties are subject,  or;
(iv) to  Seller's  knowledge,  result  in any  Violation  of any  statute,  law,
ordinance,  rule or regulation  applicable to the Properties,  except in each of
clauses  (i)  through  (iv),  where  such  Violations,  individually  or in  the
aggregate,  would not have a  Material  Adverse  Effect,  as  defined in the HMO
Agreement.

         (d) Seller's Financial Statements. Seller has delivered or will deliver
to Buyer as Seller's  Financial  Statements in accordance  with Section 2.1.5 of
the HMO Agreement.

         (e) Litigation.  To Seller's  knowledge,  there are no actions,  suits,
proceedings,  or investigations of any kind now pending or threatened in writing
against  Seller that may have a Material  Adverse  Effect (as defined in the HMO
Agreement), except as set forth in the HMO Agreement.

         (f) No Brokers or Finders. No broker or finder is involved on behalf of
Seller or any affiliate of Seller in connection with the sale of the Properties,
nor may any broker or finder  involved on behalf of Seller claim any  commission
on account of the sale of the Properties,  except for Wasserstein  Perella & Co.
The fees due Wasserstein Perella & Co. relating to this transaction are not real
estate broker commissions and shall be paid
in accordance with the HMO Agreement.

         (g) Seller's Consents. Except as set forth in the HMO Agreement, Seller
is not  required to obtain the consent or  approval  of any  government  agency,
department  or other  government  body to  perform  its  obligations  under this
Agreement.

         (h) Tax Returns and Tax Liabilities.  To Seller's knowledge, Seller has
made and is current  with  respect to all  reports,  returns  and other  filings
(collectively,  the "Returns") required to be furnished from time to time to all
federal,   state,   local  or  other  governmental  tax  or  fiscal  authorities
(including,  without limitation,  all real and personal property,  franchise and
withholding taxes and other Returns); all such Returns so furnished were correct
in all  material  respects;  and based on the  applicable  measure  of  Seller's
operations or Assets during the period in question;  each such Return  correctly
stated and reported the amount due in all  material  respects;  true and correct
copies of all such  Returns  are  included in  Seller's  files;  and all amounts
reflected as due and payable on the Returns have been paid.




                                                         9

<PAGE>



         (i) No Untrue  Representation or Warranty.  To Seller's  knowledge,  no
representation  or warranty by Seller in this  Agreement,  nor any  statement or
certificate  furnished  or  to be  furnished  to  Buyer  pursuant  hereto  or in
connection with the  transactions  contemplated  hereby contains or will contain
any untrue statement of a
material fact.

         (j)  Inspection,  Representations  and  Warranties  of  Seller.  Seller
represents and warrants to Buyer as follows, except as set forth to the contrary
in the Due Diligence Materials, that:

     (i) There are no adverse or other parties in possession of the Property, or
of any part thereof, except Seller and tenants under the Leases;

                           (ii) There is direct  access  between the  Properties
                  and adjacent public streets, and there are utilities necessary
                  for the  operation of the  Property as it is  currently  being
                  operated, and no fact or condition exists that would result in
                  the  termination  of  access to and from the  Property  or the
                  cessation  of  utilities  necessary  for the  operation of the
                  Property as it is currently being or intended to be operated;

                           (iii) Each Lease  furnished to Buyer pursuant to this
                  Agreement  is in good  standing  and in full force and effect,
                  and has not been amended, modified, or supplemented in any way
                  that has not been shown on the Rent Roll and Closing Rent Roll
                  (hereinafter defined);

                           (iv) Neither Seller nor, to Seller's  knowledge,  any
                  of Seller's  predecessors in interest has within the past five
                  (5) years has claimed  with respect to the Land the benefit of
                  any  law   permitting  a  special  use   valuation   (such  as
                  "agricultural" or "open space") for the purpose of obtaining a
                  lower tax assessment or rate;

     (v) No  condemnation  proceedings or similar actions or proceedings are now
pending or, to Seller's  knowledge,  threatened against the Property or any part
thereof;

                           (vi) Seller now has,  and on the Closing  Date Seller
                  will  have,  and will  convey to Buyer  good and  indefeasible
                  title to the Property.  The  Properties  consist of all of the
                  real property owned by Seller in the State of Texas;

                           (vii) To Seller's knowledge, the occupancy, operation
                  and use of the Property does not violate any  applicable  law,
                  statute, ordinance, rule,



                                                        10

<PAGE>



     regulation,  order or determination of any Governmental Authority affecting
the Property,  including without  limitation the Americans With Disabilities Act
of 1990, 42 U.S.C. ss.ss. 12101 et seq. and regulations thereunder  (hereinafter
sometimes collectively called "Applicable Laws");

                           (viii) To Seller's knowledge,  no asbestos,  material
                  containing  asbestos  which  is  or  may  become  friable,  or
                  material  containing  asbestos deemed  hazardous by Applicable
                  Laws has been installed in the Property,  and the Property and
                  Seller are not in  violation  of or  subject  to any  existing
                  investigation or inquiry by any  governmental  authority or to
                  any remedial  obligations under any Applicable Laws pertaining
                  to health,  safety or the environment (such Applicable Laws as
                  they  now  exist  or  are  hereafter  enacted  and/or  amended
                  hereinafter   sometimes    collectively   called   "Applicable
                  Environmental   Laws"),   including  without   limitation  the
                  Comprehensive   Environmental  Response,   Compensation,   and
                  Liability  Act  of  1980,  as  amended   (hereinafter   called
                  "CERCLA"),  and the Resource  Conservation and Recovery Act of
                  1976, as amended  (hereinafter called "RCRA"). As used in this
                  Agreement, the term "release" shall have the meaning specified
                  in  CERCLA,   the  terms  "solid  waste"  and  "disposal"  (or
                  "disposed") shall have the meanings specified in RCRA, and the
                  term  "hazardous  substance"  shall mean:  (i) any  "hazardous
                  substance"  as defined in CERCLA and  regulations  promulgated
                  thereunder;  (ii) any "hazardous substance" as defined in RCRA
                  and regulations promulgated  thereunder;  (iii) any petroleum,
                  including  crude  oil or any  fraction  thereof  which  is not
                  otherwise  specifically  listed or  designated  as a hazardous
                  substance  under the  definition  of  hazardous  substance  in
                  CERCLA as well as natural gas, natural gas liquids,  liquefied
                  natural gas, or synthetic  gas usable for fuel (or mixtures of
                  natural  gas and such  synthetic  gas),  and  other  petroleum
                  products   and   by-products;    (iv)   formaldehyde,    urea,
                  polychlorinated  biphenyls,   radon,  and  "source,"  "special
                  nuclear" and  "by-product"  materials as defined in the Atomic
                  Energy Act of 1985,  42 U.S.C.  ss.ss.  3011 et seq.;  (v) any
                  material  defined as  hazardous  or toxic under any statute or
                  regulation  of the State of Texas or any agency  thereof;  and
                  (vi)  any  other   material  or  substance   which  is  toxic,
                  ignitable, reactive or corrosive and which is regulated by any
                  Applicable  Environmental  Law;  provided,  (i) all such terms
                  shall be deemed  to  include  all  similar  terms  used in any
                  Applicable   Environmental  Laws  or  regulations   thereunder
                  (including by way of example,  but not limitation,  pollutant,
                  contaminant,  toxic substance,  discharge and migration),  and
                  (ii) to the extent that any Applicable  Environmental  Laws or
                  regulations  thereunder  are  amended  so  as to  broaden  the
                  meaning,  or  otherwise  establish a meaning,  for  "hazardous
                  substance,"   "release,"  "solid  waste,"  or  "disposal"  (or
                  "disposed"),  or any similar terms, which is broader than that
                  specified



                                                        11

<PAGE>



                  above,   such  broader   meaning   shall   apply.   Applicable
                  Environmental  Laws shall not  include any  substance  that is
                  customarily  used in the  delivery  of health  care  services;
                  detergents, solvents and other substances that are customarily
                  used in administrative  and medical offices;  and biohazardous
                  and other  wastes,  chemicals and  pharmaceuticals  stored and
                  used in accordance with Applicable Law;

         (k) Due Diligence Materials. The Due Diligence Materials contain all of
the  information  in  Seller's  possession  relating  to  the  existence  of any
hazardous materials, as defined by state and federal law, in, on or under any of
the Properties.

         (l) Licenses and Permits.  To Seller's  knowledge,  Seller has obtained
all  licenses,  permits,  variances,  approvals,  authorizations,  easements and
rights of way,  including  proof of dedication,  required from all  Governmental
Authorities  having  jurisdiction  over the Property or from private parties for
the  intended  use,  operation  and  occupancy  of the  Property  and to  insure
vehicular and pedestrian ingress to and egress
from the Property.

         (m) Zoning. To Seller's  knowledge,  the zoning of the Property permits
the current use of the Property,  and there exists no judicial,  quasi-judicial,
administrative  or other proceeding which might adversely affect the validity of
such zoning.

         (n)  Proceedings.  To Seller's  knowledge,  there  exists no  judicial,
quasi-judicial, administrative or other proceeding or court order, building code
provision,  deed restriction or restrictive  covenant (recorded or otherwise) or
other  private or public  limitation  which might in any way impede or adversely
affect the use of the Property by Buyer as offices or medical offices.

         (o) Improvements.  To Seller's knowledge,  the Improvements are in good
condition and repair, free of any patent structural defects.

         (p)  Representations  and  Warranties  True  and  Correct  at  Closing;
Breaches.  Seller shall execute and deliver to Buyer a certificate  signed by an
authorized  representative of Seller, dated as of the Closing Date, stating that
each of the  representations  and  warranties of Seller made herein are true and
correct in all  respects as of the Closing  Date,  or  describing  the manner in
which such  representations  and warranties are not true and correct.  If any of
the  representations and warranties of Seller are not true and correct as of the
Closing Date,  then Buyer shall be entitled to  indemnification  for any and all
losses   arising   therefrom  in  accordance   with  Paragraph  3.6,  but  shall
nevertheless be obligated to conclude the transactions  contemplated hereby. The
consummation  of the  transactions  under  this  Agreement  by Buyer  shall  not
constitute  a waiver  of  Buyer's  rights to  indemnification  for a breach of a
representation or warranty



                                                        12

<PAGE>



     provided for in this  Paragraph.  Seller's  representations  and warranties
shall survive for a period of five (5) years after the Closing Date.

     3.2  Representations  and  Warranties of Buyer.  As of the Execution  Date,
Buyer represents and warrants to Seller as follows:

         (a)  Organization  and  Good  Standing.  Buyer is a  limited  liability
company duly organized,  validly existing and in good standing under the laws of
the State of Texas.  Buyer is authorized  under state law to conduct business in
the State of Texas.

         (b) Buyer's Authority and No Breach.  Buyer has all requisite corporate
power and corporate  authority to enter into this Agreement and all of the other
agreements contemplated hereby, and to consummate the transactions  contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions  contemplated  hereby have been duly  authorized  by all  necessary
corporate  action on the part of Buyer.  This Agreement and each other agreement
contemplated   hereby   constitute  valid  and  binding   agreements  of  Buyer,
enforceable  against  Buyer in all material  respects in  accordance  with their
respective terms,  except insofar as enforcement may be limited by insolvency or
similar laws  affecting the  enforcement  of creditors'  rights in general,  and
except  as  enforceability  may be  limited  by  general  principles  of  equity
(regardless  of whether such  enforceability  is  considered  in a proceeding in
equity or at law.)

         (c) No Brokers or Finders. No broker or finder is involved on behalf of
Buyer or any  affiliates of Buyer in connection  with the sale of the Properties
nor may any broker or finder involved on behalf of Buyer claim any commission on
account of the sale of the Properties. The parties acknowledge that Bear Stearns
has been engaged by Buyer as a financial  advisor to Buyer, and the fees of Bear
Stearns shall be paid for by Buyer in accordance with the HMO Agreement.

         (d) Buyer's Consents.  Except as set forth in the HMO Agreement,  Buyer
is not  required to obtain the consent or  approval  of any  government  agency,
department  or other  government  body to  perform  its  obligations  under this
Agreement.

         (e) No Untrue  Representation  or Warranty.  To Buyer's  knowledge,  no
representation  or warranty by Buyer in this  Agreement,  nor any  statement  or
certificate  furnished  or to be  furnished  to  Seller  pursuant  hereto  or in
connection with the transactions  contemplated hereby,  contains or will contain
any untrue statement of a
material fact.

         (f)  Representations  and  Warranties  True  and  Correct  at  Closing;
Breaches.  Buyer shall execute and deliver to Seller a certificate  signed by an
authorized  representative of Buyer,  dated as of the Closing Date, stating that
each of the  representations  and  warranties  of Buyer made  herein is true and
correct in all respects



                                                        13

<PAGE>



as of the Closing Date, or describing  the manner in which such  representations
and  warranties  are not true and  correct.  If any of the  representations  and
warranties of Buyer are not true and correct as of the Closing Date, then Seller
shall be  entitled  to  indemnification  for any and all losses as  provided  in
Paragraph  3.6. The  consummation  of the  transactions  under this Agreement by
Seller shall not constitute a waiver of Seller's rights to indemnification for a
breach of a representation or warranty provided for in this Paragraph.

         3.3 Survival of Provisions. The representations, warranties, covenants,
agreements, indemnities, terms and provisions contained herein shall survive the
Closing for a term of five (5) years and shall not be deemed to have been merged
with or into the
Deeds.

     3.4 Operations  Pending  Closing.  From the date hereof through the Closing
Date, Seller agrees as follows:

         (a) Seller will  manage,  operate,  repair and maintain the Property in
the same manner as it operated  the  Property  prior to the date hereof and will
keep the  Property  in its  present  state of repair  subject to normal wear and
tear,  exercising  the  same  degree  of care  in such  matters  as  Seller  has
previously  exercised  and in compliance  with  Applicable  Laws and  Applicable
Environmental  Laws. Except for the sale or use of operating  inventories in the
ordinary  course of  business,  Seller  shall not  remove  any item of  Personal
Property from the Property without  replacing the same with property of equal or
greater value.

         (b) Except as  permitted  by the HMO  Agreement,  Seller will not enter
into any renewal, extension, modification or replacement of any existing service
contract or enter into any new employment, maintenance, service, supply or other
agreement  relating to the Property  without the express  written  permission of
Buyer.

         (c) Without the prior  written  consent of Buyer,  Seller shall not (i)
enter into any new leases or  occupancy  agreements  for space at the  Property,
(ii)  modify,  amend,  terminate,  renew,  extend or waive any rights  under any
existing Lease,  (iii) apply any rental security  deposits  against sums payable
under any Lease,  (iv) grant any concession,  rebate,  allowance or free rent to
any tenant for any  period,  or (v) accept the  surrender  of or  terminate  any
Lease.  Notwithstanding  the foregoing,  to the extent  available at the time of
Closing, Buyer shall use its best efforts to lease to Seller up to 10,000 square
feet, at Seller's option, of currently built-out  administrative space in either
North Point I (9229 LBJ Freeway,  Dallas,  Texas) or Hillcrest (12720 Hillcrest,
Dallas,  Texas) (but in no event less than 5,000  square feet) for not more than
18 months for gross rent equal to $11.00 per foot per year (Seller shall pay for
electricity).  The lease,  if entered  into,  shall be executed and delivered at
Closing,  shall  allow  Seller  to  release  space  back to  Buyer  as  Seller's
operations wind down, in 1,000 square foot increments,



                                                        14

<PAGE>



at months end, and shall contain such other terms as are typically  including in
third party leases at the same  building.  In addition,  Seller shall attempt to
satisfy  Seller's   transition  space   requirements  from  Centex  Real  Estate
Corporation  ("Centex")  first and shall have the option to sublease any portion
of the  premises now leased to Centex and not  subleased  to third  parties upon
such terms as Seller may deem  appropriate  as between Centex and Seller without
modification  of the terms of the Lease  Agreement now in effect  between Centex
and Seller covering  premises located in North Point I. There are  approximately
15,000  square feet of space not  subleased  by Centex to third  parties at this
time.  Buyer  agrees not to compete for the Centex  space until  Seller's  space
requirements have been satisfied.

         (d) Seller  will  continue to  self-insure  for all  existing  fire and
casualty liability, which self-insurance shall inure to the benefit of Buyer.

         (e) Seller  shall  perform  its  obligations  when due  pursuant to the
Leases, including, without limitation, any maintenance or repair of the Property
to be performed by Seller as landlord  under the Leases;  and except as provided
this Agreement,  all construction of tenant improvements and other work required
to be  performed  under any Lease  entered  into prior to the  Closing  shall be
completed, satisfied and paid in full by Seller prior to Closing.

         (f) Buyer or representatives of Buyer shall have access to the Property
during normal  business  hours if Buyer  notifies  Seller in writing at least 48
hours in advance of the time Buyer desires access to the Property.

         (g) Seller  will not cause any action to be taken which would cause any
of the  representations  or  warranties  made by Seller in this  Agreement to be
false on or as of the  Closing  Date.  Seller  shall  promptly  notify  Buyer in
writing of the  occurrence  of any event or condition  which occurs prior to the
Closing Date which  causes an adverse  change in any of the  representations  or
warranties made in Article III of this Agreement.

         (h) Seller shall give Buyer  prompt  notice of the  institution  of any
litigation,  arbitration or administrative proceeding or condemnation proceeding
of which it becomes aware prior to the Closing Date involving Seller relating to
the Real Property.

         (i) Seller shall make best efforts to obtain  estoppel  certificates in
the form of  Exhibit I  attached  hereto  (the  "Estoppels")  and  deliver  said
Estoppels to Buyer on or before the Closing  Date. If Seller is unable to obtain
such Estoppels, Seller may substitute a certificate from Seller substantially in
the form of the Estoppels.

         3.5  Communications.  Between the Execution  Date and the Closing Date,
and unless otherwise  specifically  authorized in this Agreement,  Buyer may not
communicate,  orally  or in  writing,  with  Members  (as  defined  in  the  HMO
Agreement), service providers



                                                        15

<PAGE>



of Seller, employees of Seller, vendors of Seller, suppliers of Seller, or other
third party  contractors of Seller,  concerning  this  transaction,  without the
prior  written  consent of Seller  (which  shall not be  unreasonably  withheld)
except for  communications  with Peter Hohl,  Director of  Acquisitions/Alliance
Services for Seller,  and George Tomberlin,  Senior Counsel for Seller, or their
designees,  or as  provided  in the  Health  Plan  Agreements.  Nothing  in this
Paragraph shall preclude either Buyer or Seller from  communicating  as it deems
advisable with its own subscribers,  government  regulators,  service providers,
employees,  vendors,  shareholders,  suppliers,  and third party  contractors as
required by law in the ordinary course of business, or prohibit Buyer from doing
its  due  diligence  review,  including  inspections  with  surveyors,  property
inspectors,  environmental  consultants  and title officers and the obtaining of
zoning and other similar  property related  information from local  governmental
authorities.  In  no  event  shall  either  party  cause  any  oral  or  written
communication  to be issued relating to this  transaction  which  disparages any
other party or its affiliates,  unless required by law.  Communications with the
media  shall be  subject  to the joint  work plan to be  developed  by Buyer and
Seller pursuant to the HMO Agreement.

         3.6      Indemnification.

         (a)  Indemnification  by Seller.  Subject to  Paragraph  3.6(c)  below,
Seller shall  indemnify and hold  harmless  Buyer and its  respective  officers,
directors,  employees,  agents and affiliates against any and all actual damages
resulting from claims, losses, costs,  expenses,  fees, liabilities and damages,
including interest,  penalties and reasonable  attorneys' fees and disbursements
(each  individually  a "Loss"  and  collectively  "Losses")  arising  out of, in
connection with or otherwise relating to:

     (i) Seller's indemnification obligation set forth in Paragraph 2.1;

     (ii) Seller's indemnification obligation set forth in Paragraph 2.3; and

                           (iii)   The   material   breach   by  Seller  of  any
                  representation, warranty, covenant or agreement made by Seller
                  in this  Agreement,  or in any  other  agreement  executed  in
                  connection herewith.

         (b)  Indemnification by Buyer.  Subject to the limitations of Paragraph
3.6(c) below,  Buyer shall indemnify and hold harmless Seller and its respective
officers,  directors,  employees,  agents  and  affiliates,  against  any losses
arising out of, in connection with or otherwise  relating to the material breach
by Buyer of any representation, warranty, covenant or agreement made by Buyer in
this Agreement, or
in any other agreements executed in connection therewith.




                                                        16

<PAGE>



         (c) Limitation. The indemnification rights and obligations set forth in
this  Paragraph  3.6 shall  survive the Closing and shall  expire as provided in
Paragraph 3.3; provided,  however,  that with respect to claims notified in good
faith to the indemnifying party prior to the expiration of the indemnity rights,
the parties'  obligations  with respect to its indemnity  rights and obligations
shall continue in effect until payment or other resolution of such claims.  Each
party's  liability  hereunder  shall be limited to actual  damages  and no party
shall be  liable  to any  other  party  hereunder  for  special,  consequential,
incidental, punitive or other damages. If a party is entitled to indemnification
under the specific indemnification  provisions of this Agreement with respect to
a particular  claim,  then such  indemnification  shall be such party's sole and
exclusive remedy;  provided however,  indemnification  shall not be the sole and
exclusive remedy under the documents,  agreements and certificates  delivered at
Closing pursuant to Paragraph 5.2 hereof.  This subparagraph shall be subject to
and limited by the  provisions  contained  in Sections  11.4 and 11.6 of the HMO
Agreement, which are incorporated herein by reference.

         3.7      Guarantees.

         (a)  Seller's  Guarantor.   Kaiser  Foundation   Hospitals   ("Seller's
Affiliate")  hereby  irrevocably and  unconditionally  agrees to cause Seller to
fully  perform its  obligations  under this  Agreement in a timely  manner,  and
unconditionally  guarantees the full and timely performance of this Agreement by
Seller  in  accordance  with its  terms.  The  foregoing  guarantee  includes  a
guarantee of the immediate  payment when due of all amounts for which Seller may
at any time be liable on account  of the  Agreement.  Buyer  may,  at it option,
proceed  directly  against  Seller's   Affiliate  for  the  performance  of  any
obligations of Seller hereunder or for any amounts which may be recoverable as a
result of any misrepresentation, breach of warranty, breach of covenant or other
cause of Seller's  liability  under this  Agreement,  without any requirement to
proceed against Seller either prior to or concurrently  with proceeding  against
Seller's  Affiliate.  Seller's Affiliate further agrees that its guarantee shall
continue in effect notwithstanding any modification,  extension, waiver or other
changes in or under this Agreement or any guaranteed obligation of any other act
or thing which might  otherwise  operate as a legal or equitable  discharge of a
guarantor.  Seller's Affiliate hereby waives all special suretyship defenses and
notice requirements.

     (b) Buyer's  Guarantor.  Sierra Health Services,  Inc.  ("Buyer's  Parent")
shall enter into the guarantees referenced in Paragraph 5.3(c) below.

                                   ARTICLE IV

                        CONDITIONS PRECEDENT; TERMINATION




                                                        17

<PAGE>



         4.1 Conditions to Buyer's  Obligations.  Buyer's  agreement to purchase
and to pay for the  Properties  hereunder is subject to compliance  with and the
occurrence of each of the following  conditions on or before Closing,  except as
any thereof may be
waived in writing by Buyer:

         (a)  Agreements.  Seller shall have executed and delivered to Buyer all
agreements,  instruments,  certificates  and other  documents to be delivered by
Seller,  including  those  required  by  Paragraph  5.2  below.  Buyer  shall be
obligated to consummate this transaction if Seller has  substantially  performed
its obligations under Paragraph 3.4 and is proceeding in good faith and with due
diligence with respect to such obligations.

         (b) Corporate Resolutions.  Seller shall provide Buyer with appropriate
resolutions  from its Board of Directors,  authorizing  Seller to effectuate the
actions required by Seller to consummate the  transactions  contemplated by this
Agreement.

         (c) Delivery of  Certificate.  The  representations  and  warranties of
Seller set forth in Paragraphs  3.1(a),  3.1(b),  3.1(d) and 3.1(j)(vi) shall be
true and correct in all material respects as of the Execution Date and as of the
Closing  Date as though  made on and as of the  Closing  Date.  Buyer shall have
received a certificate  signed on behalf of Seller by an  authorized  officer of
Seller to the effect  that such  representations  and  warranties  of Seller (as
amended by the Due Diligence Notice and through  disclosures  submitted to Buyer
on or before the Closing Date regarding events arising since the Execution Date)
shall be true and correct in all material  respects as of the Execution Date and
as of the Closing Date as though made on and as of the Closing  Date,  except as
otherwise contemplated in this Agreement.

Except  as  provided  to the  contrary  herein,  in the  event  that  any of the
foregoing  conditions are not satisfied as of the Closing Date, Buyer shall have
the right at its option to terminate  this  Agreement by written  notice thereof
given to both Seller and the Title Company, and upon receipt of such notice, the
Title Company shall forthwith return the Escrow Deposit to Buyer.

         4.2 Conditions to Seller's Obligations.  Seller's agreement to sell and
to deliver  the  Properties  to be sold  hereunder  is subject to the payment at
Closing of the Purchase Price and compliance  with and the occurrence of each of
the  following  conditions  on or before  Closing,  except as any thereof may be
waived in writing by Seller:

         (a)  Agreements.  Buyer shall have executed and delivered to Seller all
agreements,  instruments,  certificates  and other  documents to be delivered by
Buyer, including those required by Paragraph 5.3.




                                                        18

<PAGE>



         (b)  Delivery of Purchase  Price;  Documents.  Buyer shall  deliver the
Purchase Price on the Closing Date.

         (c) Delivery of Corporate  Resolution.  Buyer shall provide Seller with
appropriate  resolutions  from its Board of Directors  (which  resolutions  were
obtained  prior  to the  execution  of this  Agreement),  authorizing  Buyer  to
effectuate  the  actions  required  by  Buyer  to  consummate  the  transactions
contemplated by this Agreement.

         (d)  Buyer's  Representations  and  Warranties  True and  Correct.  The
representations  and  warranties  of Buyer set forth in  Paragraphs  3.2(a)  and
3.2(b)  shall be true and correct in all material  respects as of the  Execution
Date and as of the Closing  Date as though  made on and as of the Closing  Date.
Seller  shall  have  received  a  certificate  signed  on  behalf of Buyer by an
authorized  officer  of  Buyer  to  the  effect  that  the  representations  and
warranties  set  forth in  those  Paragraphs  (as  amended  through  disclosures
submitted to Buyer on or before the Closing Date regarding  events arising since
the Execution Date) shall be true and correct in all material respects as of the
Execution  Date  and as of the  Closing  Date  as  though  made on and as of the
Closing Date, except as otherwise contemplated in this Agreement.

     4.3 Joint Conditions Precedent to Closing. The transactions contemplated by
the HMO Agreement and referenced in Section 7.4 therein and further described in
the Health Plan Agreements shall have closed  concurrently with the transactions
contemplated by this Agreement.

         4.4  Termination.  This  Agreement  and the  transactions  contemplated
hereby may be terminated or abandoned at any time prior to the Closing Date:

         (a)      By the mutual consent of Buyer and Seller; or

         (b) By Seller or Buyer if the  Closing  shall not have  occurred  on or
before  October 31, 1998, in which event the Escrow Deposit shall be returned to
Buyer.

                                    ARTICLE V

                                   THE CLOSING

         5.1 The  Closing  Date.  The actions  contemplated  to  consummate  the
transactions  under this  Agreement  shall take place on the date which,  unless
otherwise agreed by Buyer and Seller, shall be the Closing Date set forth in the
HMO Agreement (the "Closing Date") in accordance with the HMO Agreement.  Unless
otherwise agreed to by the parties,  the closing  ("Closing") shall be deemed to
be  effective  as of and to occur,  and the risk of loss  shall  pass  Seller to
Buyer, at 12:01:01 a.m.  (Central  Standard Time,  adjusted for daylight savings
time, if applicable) on the Closing Date. Closing shall



                                                        19

<PAGE>



commence on the Closing Date at the offices of Seller's counsel, the law firm of
Jenkens & Gilchrist, A Professional  Corporation,  1445 Ross Avenue, Suite 3200,
Dallas Texas 75202, at 10:00 a.m. (Central Standard Time,  adjusted for daylight
savings time, if
applicable).

         5.2 Seller's Obligations at the Closing.  Seller shall deliver or cause
to be delivered to Buyer the following items at the Closing.

         (a) The Deeds, executed by Seller conveying the Real Property to Buyer,
subject to the Permitted Exceptions and the Title Exceptions;

         (b)      The Bill of Sale executed by Seller;

         (c) The Assignment and Assumption of Leases executed by Seller,  with a
Rent  Roll  dated as of the  Closing  Date (the  "Closing  Rent  Roll")  and the
Subleases, as defined below.

         (d) A certificate of nonforeign  status (the "Certificate of Nonforeign
Status"),  executed  by Seller,  in the form of the  Certificate  of  Nonforeign
Status attached hereto as Exhibit H.

         (e) An Owner  Policy of Title  Insurance  (the  "Owner  Title  Policy")
issued by the Title Company,  insuring good and indefeasible fee simple title to
the  Property  in  Buyer  in a face  amount  equal to the  Purchase  Price,  and
containing  no  exceptions  other than the  Permitted  Exceptions  and the Title
Exceptions,  the standard  printed  title company  exceptions,  an exception for
taxes for the calendar year in which the Closing  occurs and  subsequent  years,
and  subsequent  assessments  for prior  years  due to  change in land  usage or
ownership, an exception for "shortages in area," and an exception for the rights
of the tenants (as tenants  only) in  possession  under the Leases listed in the
Closing Rent Roll.

         (f)  Notices  to each  of the  tenants  of the  Property  (the  "Tenant
Notices"),  executed by Seller,  advising each of the tenants of the Property of
the sale of the Property to Buyer,  and stating that future rents should be paid
as specified by Buyer.  The Tenant  Notices  shall also be executed by Buyer and
shall  contain  a  statement  acknowledging  that  Buyer  has  received  and  is
responsible  for the tenants'  security  deposit and specifying the exact dollar
amount of the deposit.

         (g)  All  executed  original  Estoppels  in the  form  of the  Estoppel
Certificate  attached  hereto as  Exhibit  I (or  Seller's  certificate  in lieu
thereof), Leases and contracts to be assumed by Buyer in Seller's possession.




                                                        20

<PAGE>



         (h) Keys and electronic pass cards or devices to all entrance doors to,
and equipment and utility rooms and vault boxes located in, the Property.

     (i) The closing  certificates  described  in  Paragraphs  3.1(p) and 4.1(c)
above. ----------------------------

         (j)      A credit in the amount of the Tenant Deposits.

     (k) Appropriate  resolutions from Seller's Board of Directors,  authorizing
Seller  to  effectuate  the  actions   required  by  Seller  to  consummate  the
transactions contemplated by this Agreement.

         (l) Such other documents as may be required by this Agreement or by the
Title Company in order to consummate this transaction and issue the Title Policy
to Buyer.


         5.3 Buyer's Obligations at the Closing. Buyer shall deliver or cause to
be delivered to Seller the following items at the Closing:

         (a) The Purchase Price required above, by delivery to Seller of (i) the
Down Payment, as prorated and adjusted in accordance with Paragraphs 5.4 and 5.5
herewith, in readily available funds via federal wire transfer to the account of
Seller, and (ii) the
Note and Deed of Trust;

         (b) The subleases  substantially  in the form attached as Exhibit J for
Seller's  leasehold estates located at 3501 MacArthur Blvd.,  Suite 100, Irving,
Texas; 1816 Norwood Plaza,  Hurst,  Texas; 1832 Norwood Plaza, Suite 200, Hurst,
Texas;  555 Republic Drive,  Suite 418, Plano,  Texas; One Forest Medical Plaza,
12200 Park Central,  Suite 210, Dallas, Texas; 12720 Hillcrest,  Suites 200, 518
and 600, Dallas, Texas; and 1320 South University, Suites 201, 502 and 505, Fort
Worth,  Texas,  subject  to  subleases  to  third  parties  (collectively,   the
"Subleases");

         (c) The  Limited  Guaranty  attached  as Exhibit K executed  by Buyer's
Parent and the  Sublease  Guaranty  attached  as  Exhibit L executed  by Buyer's
Parent; and

     (d) Buyer shall provide Seller with  appropriate  resolutions  from Buyer's
managers  authorizing  Buyer to  effectuate  the  actions  required  by Buyer to
consummate the transactions contemplated by this Agreement.

         5.4 Closing Costs. The premium for issuing the Owner Title Policy,  the
cost of insuring over any Title Exceptions,  as set forth in this Agreement, and
the escrow fees of the Title Company  shall be borne by Seller.  Buyer shall pay
for any  surveys,  the cost of  recording  the Deeds and the cost of any  survey
endorsements.  Except as otherwise provided herein, each party shall pay its own
attorneys' fees and costs.



                                                        21

<PAGE>




     5.5 Prorations.  At the Closing, the following items of revenue and expense
shall be adjusted and  apportioned  in cash as of 12:01 a.m. on the Closing Date
(the "Adjustment Date"):

         (a) Real estate and other ad valorem  taxes,  personal  property or use
taxes,  on the basis of the fiscal  year for which  such  taxes or  charges  are
assessed.  If the actual ad valorem  taxes are not available on the Closing Date
for the tax year in which the  Adjustment  Date  occurs,  the  proration of such
taxes at the  Closing  shall be  estimated  based  upon  reasonable  information
available  to the  parties,  including  information  disclosed  by the local tax
office or other public information,  and an adjustment shall be made when actual
figures are published or otherwise become available; provided, however, that any
prorations  made pursuant to the HMO Agreement shall not be duplicated in making
the prorations hereunder.

         (b) All costs and expenses of operating the Property,  and amounts paid
or payable under the service  contracts  shall be  determined to the  Adjustment
Date and paid by the Seller.  If Buyer assumes any service contract or agrees to
pay any of such charges,  an  appropriate  cash  adjustment  will be made at the
Closing.

         (c) Water and sewer charges, fuel charges,  electricity, gas or utility
charges (including, without limitation, telephone, gas and electricity) shall be
prorated as of the Adjustment  Date, and Seller shall terminate its account (but
not the  service  itself)  with the  providers  of all such  services  as of the
Adjustment Date. Buyer shall, prior to the Closing Date, make application to the
providers of such services for the  continuation of such services in the name of
Buyer or its designee. If termination of such accounts on the Adjustment Date is
not feasible,  the meters will be read on or about the  Adjustment  Date and the
Seller  shall be  responsible  for paying the bills for such  services  accruing
prior to the Adjustment  Date and the Buyer shall be responsible for the payment
of all such accounts accruing on or after the Adjustment Date.

         (d) Collected  rents and other sums payable under the Leases which have
accrued  prior to the  Adjustment  Date shall be prorated as of the Closing Date
and Seller shall receive a credit at Closing for such amounts.  Buyer and Seller
shall have the right to collect  delinquent  rents directly from a tenant by any
legal  means,  provided  that  neither  party shall be  obligated  to attempt to
collect such delinquent rents, and any recovery,  after the costs of collection,
shall be prorated equitably as of the Adjustment Date.

                                   ARTICLE VI

                   DAMAGE OR CONDEMNATION PRIOR TO THE CLOSING

         6.1 Damage.  If, at any time after the date hereof and on or before the
Closing Date, all or a portion of any Property is damaged, destroyed or rendered
inoperative



                                                        22

<PAGE>



(collectively,  the "Damage"),  by fire, flood, natural elements or other causes
beyond Seller's control, then the following shall apply:

         (a) If the Damage is not Material  (hereinafter  defined),  Buyer shall
proceed to close and purchase the Property as diminished by such Damage, subject
to a reduction in the Purchase Price equal to the cost of repairing or restoring
the Damage, as determined under subparagraph (c) below.

         (b) If the Damage is  Material,  then Buyer,  at its sole  option,  may
elect either (i) to terminate  this  Agreement by written notice to Seller given
at or prior to the Closing, whereupon the Title Company shall immediately return
the Escrow  Deposit to Buyer and, upon Buyer's  receipt  thereof,  neither party
hereto shall have any further rights against, or obligations to, the other under
this Agreement; or (ii) require Seller to agree to close and complete the repair
or restoration of the Damage after the Closing.

         (c) For the purposes of this Paragraph  6.1,  Damage shall be deemed to
be  "Material"  if (i) the  cost of  repairing  the  Damage  equals  or  exceeds
$250,000.  The cost of repairing the Damage shall be determined in the following
manner:  Within 10 days after the Damage occurs,  each party shall  designate an
engineering  firm to act on its behalf,  and the firms designated shall promptly
consult  with  each  other in an  attempt  to  mutually  agree  upon the cost of
repairing  the Damage.  If the firms  cannot agree on the cost within the 10-day
period after they have both been designated,  they shall, within five days after
such  10-day  period,  designate  a  third  engineering  firm,  which  shall  be
instructed  to determine  the cost of repairing  the Damage within 10 days after
its  designation.  The cost of repairing  the Damage as  determined by the third
engineering firm shall be conclusive.

         (d) This  Agreement  shall not be interpreted as including an agreement
by the parties that they shall have the rights and duties  prescribed by Section
5.007 of the Texas Property Code.

         6.2  Condemnation.  If,  prior to the Closing  Date,  all or a material
portion of the Property is taken by, or made subject to,  condemnation,  eminent
domain or other governmental  acquisition  proceedings,  then Buyer, at its sole
option, may elect either:

         (a) To terminate this Agreement by written notice to Seller given at or
prior to the Closing,  whereupon the Title Company shall immediately  return the
Escrow Deposit to Buyer and, upon Buyer's receipt thereof,  neither party hereto
shall have any further rights  against,  or obligations to, the other under this
Agreement; or

         (b) To agree to close  and  deduct  from the  Purchase  Price an amount
equal to any sum paid to  Seller  for such  governmental  acquisition,  in which
event Seller shall assign, transfer and set over to Buyer all of Seller's right,
title and  interest  in and to any  awards  which  may in the  future be made on
account of such governmental acquisition.



                                                        23

<PAGE>




         (c)  A  "Material"  taking  shall  be  a  taking  and  the  payment  of
compensation in excess of $5,000,000.

                                   ARTICLE VII

                                    DEFAULTS

         7.1  Default  by  Seller.  In the event  Seller  shall  default  in its
obligation to convey the Real Property to Buyer pursuant to this Agreement,  the
Buyer may, as its sole alternatives,  either (i) enforce specific performance of
this Agreement, or (ii) terminate this Agreement by written notice to Seller and
the Title Company, in which event the Escrow Deposit shall be returned to Buyer,
or (iii) institute suit against Seller for damages.

         7.2 Default by Buyer.  In the event Buyer defaults in its obligation to
purchase the Real Property from Seller pursuant to this  Agreement,  Seller may,
as its sole and exclusive  remedy for such breach,  terminate  this Agreement by
written notice to Buyer and the Title Company, and upon any such termination the
Title Company shall immediately  deliver the Escrow Deposit to Seller,  such sum
being agreed upon as the amount payable by Buyer to Seller as liquidated damages
and in  consideration  of Buyer  having  the  option to refuse to  purchase  the
Property  without any  liability on account of its refusal other than payment of
the Escrow Deposit.

                                  ARTICLE VIII

                                  MISCELLANEOUS

         8.1 Notices. All notices and other communications hereunder shall be in
writing and shall be either (i) be deposited in first class United  States mail,
certified,  with postage  prepaid,  (ii)  delivered by messenger,  (iii) sent by
overnight  courier,  or (iv) sent by fully  completed  and  confirmed  facsimile
transmission  (with a written  confirmation  simultaneously  sent in first class
United States mail), as follows:

If to the Seller:                           Copy to:

Kaiser Foundation Health Plan of Texas      Jenkens & Gilchrist
c/o Kaiser Foundation Hospitals             1445 Ross Avenue, Suite 3200
One Kaiser Plaza                            Dallas, Texas  75202
Oakland, California 94612                   Attention:  Edward F.Walker
Attention: Peter Hohl, Director of          Fax: (214) 855-4300
Acquisitions/Alliance Services
Fax: (510) 271-2309




                                                        24

<PAGE>



With an Additional Copy to:

Kaiser Foundation Hospitals
1950 Franklin Street, 17th Fl.
Oakland, CA 94612
Attention:  Indrajit Obeysekere, Counsel
Fax:  (510) 873-5080

If to the Buyer:                            Copy to:

HMO Texas, L.C.                             Morgan, Lewis & Bockius, LLP
c/o Sierra Health Services, Inc.            300 South Grand Avenue
2724 N. Tenaya Way (for Fed. Exp.)          Twenty-Second Floor
Las Vegas, Nevada 89128                     Los Angeles, California  90071-3132
P. O. Box 15645 (for U.S. mail)             Attn:  Richard J. Maire, Jr.
Las Vegas, Nevada  89114-5645               Fax:     (213) 612-2554
Attn:  Frank Collins
Corporate Counsel
Fax:     (702) 240-7148

With an Additional Copy to:

Thompson & Knight
1700 Pacific Avenue, Suite 3300
Dallas, Texas  75201-4693
Attn:  M. Lawrence Hicks, Jr.
Fax:     (214) 969-1751

or such other  address or fax number as any party may request by notice given as
aforesaid.  Notices  sent as provided  herein  shall be deemed given on the date
received by the recipient.  If a recipient rejects or refuses to accept a notice
given pursuant to this Paragraph, or if a notice is not deliverable because of a
changed  address or fax number of which no notice was given in  accordance  with
the provisions hereof, such notice shall be deemed to be received two days after
such notice was mailed (whether as the actual notice or as the confirmation of a
faxed notice) in  accordance  with the terms  hereof.  The  foregoing  shall not
preclude  the  effectiveness  of actual  written  notice given to a party at any
address or by any means.

         8.2 Waiver.  No waiver by either  Buyer or Seller  hereto of its rights
under any provision of this Agreement shall  constitute a waiver of such party's
rights under such provision at any other time or a waiver of such party's rights
under any other provision of this Agreement.




                                                        25

<PAGE>



         8.3  Counterparts.  This  Agreement  may be  executed  in any number of
counterparts,  each of  which  shall  be  deemed  an  original  but all of which
together shall constitute one and the same instrument. An executed faxed copy of
this Agreement shall
be deemed an original executed copy of this Agreement.

         8.4 Brokerage Fees and Commissions. Except as set forth herein, neither
Seller nor Buyer has contracted with any other real estate broker, agent, finder
or similar  person in  connection  with the  negotiation  and  execution of this
Agreement, the transactions  contemplated hereby or the sale and purchase of the
Property.  It is agreed that if any claims for any other brokerage fees are ever
made against Seller or Buyer in connection with the transactions contemplated by
this  Agreement,  all such claims  shall be paid by the party whose  commitments
form the basis of such claims. Seller and Buyer each agree to indemnify and hold
harmless the other from and against any and all liabilities,  claims, demands or
actions for or with respect to any other  brokerage fees asserted by any person,
firm or  corporation  in  connection  with this  Agreement  or the  transactions
contemplated  hereby,  and any court costs,  attorneys'  fees or other costs and
expenses arising therefrom, insofar as any such liabilities,  claims, demands or
actions are based upon a contract or commitment of the indemnifying party.

         8.5 Entire  Agreement.  This  Agreement  (including  the  Exhibits  and
Schedules) and the other  agreements,  certificates  and documents of Seller and
Buyer  contemplated  herein  constitute the entire agreement between the parties
hereto with respect to the matter hereof, and supersedes all prior agreements or
understandings between the parties. No amendment, alteration, or modification of
this  Agreement   shall  be  valid  unless  in  each  instance  such  amendment,
alteration,  or modification is expressed in a written  instrument duly executed
by the parties hereto.

         8.6  Modification.  Neither this Agreement nor any provision hereof may
be waived, modified, amended, discharged or terminated except as provided herein
or by an instrument in writing signed by the party against which the enforcement
of such waiver, modification, amendment, discharge or termination is sought, and
then only to the extent set forth in such instrument.

         8.7 Applicable Law. This Agreement is to be governed by and interpreted
under  the laws of the  State of  Texas,  without  resort  to  choice  of law or
conflict  of law  principles  which  direct  the  application  of the  laws of a
different state.

         8.8  Headings.  The  headings  contained  in this  Agreement  have been
inserted  for  convenience  of  reference  only and shall in no way  restrict or
modify any of the terms or provisions hereof.

         8.9  Assignment.  This Agreement shall be binding upon and inure to the
benefit of and be enforceable  by the  respective  successors and assigns of the
parties hereto.



                                                        26

<PAGE>



Notwithstanding  the foregoing,  this  Agreement  shall not be assignable by any
party  without  the prior  written  consent of the other,  and any attempt at an
assignment  in violation of this  Paragraph  shall be void ab initio;  provided,
however,  that this  Agreement  may be assigned to an affiliate of Buyer without
Seller's consent.

         8.10 Further  Assurances.  Each party hereto  agrees for the benefit of
the other  parties  hereto to  execute  and  deliver  any  necessary  documents,
instruments or agreements,  and to take any and all necessary actions,  in order
to (i) fully vest in Buyer all right,  title and interest to the  Property,  and
(ii) carry out the terms of this Agreement
and the transactions contemplated by this Agreement.

         8.11 Time of Essence.  Time is of the essence of this  Agreement and of
each  covenant and  agreement  that is to be  performed at a particular  time or
within a  particular  period of time.  However,  if the final date of any period
which is set out in any  provision  of this  Agreement  (other  than the Closing
Date) falls on a Saturday,  Sunday or legal holiday under the laws of the United
States or the State of Texas,  then the time of such period shall be extended to
the next date which is not a Saturday, Sunday or legal holiday.

         8.12 Severability.  If any provision of this Agreement is held by final
judgment  of a  court  of  competent  jurisdiction  to be  invalid,  illegal  or
unenforceable, such invalid, illegal or unenforceable provision shall be severed
from the remainder of this Agreement,  and the remainder of this Agreement shall
be enforced. In addition, the invalid,  illegal or unenforceable provision shall
be deemed to be automatically  modified,  and, as so modified, to be included in
this Agreement,  such modification being made to the minimum extent necessary to
render  the  provision  valid,  legal  and  enforceable.   Notwithstanding   the
foregoing,  however,  if the severed or  modified  provision  concerns  all or a
portion of the essential  consideration  to be delivered under this Agreement by
one party to the other, the remaining provisions of this Agreement shall also be
modified to the extent  necessary to adjust  equitably  the parties'  respective
rights and obligations hereunder.

     8.13  Attorneys'   Fees.  If  either  party  defaults  in  its  obligations
hereunder,  the  defaulting  party  shall  pay the  reasonable  attorneys'  fees
incurred by the other party in order to enforce its rights hereunder.

                  8.14  Construction.  Whenever  the  context of this  Agreement
requires, the gender of all words herein shall include the masculine,  feminine,
and neuter,  and the number of all words herein  shall  include the singular and
plural.  All parties to this  Agreement  have been  represented  by counsel and,
accordingly,  this Agreement shall not be construed  strictly for or against any
party hereto. The Schedules and Exhibits attached hereto are incorporated herein
for all purposes and made a part of this Agreement as if set out in full in this
Agreement.




                                                        27

<PAGE>



                         [Signatures on following page]






                                                        28

<PAGE>


     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the Execution Date.

                                 BUYER:

                                 HMO TEXAS, L.C.,
                                 a Texas limited liability company

                                 By:               /s/ Larry S. Howard
                                 Name:             Larry S. Howard
                                 Title:            President


                                 SELLER:

                                 KAISER FOUNDATION HEALTH PLAN OF
                                 TEXAS, a Texas non-profit corporation


                                 By:               /s/ Deborah Stokes
                                 Name:             Deborah Stokes
                                 Title:            President

     Sierra Health Services,  Inc. and Kaiser Foundation Hospitals have executed
this  Agreement  below  solely  with  respect  to  their  respective   guarantee
obligations set forth in Paragraph 3.7. SIERRA HEALTH SERVICES, INC.


                                 By:               /s/ Anthony M. Marlon
                                 Name:    Anthony M. Marlon, M.D.
                                 Title:            Chairman and CEO


                                 SELLER:

                                 KAISER FOUNDATION HOSPITALS


                                 By:               /s/ Deborah Stokes
                                 Name:    Deborah Stokes
                                 Title:            Acting Senior Vice President





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