Document:

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

                           MASTER SETTLEMENT AGREEMENT

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

                                    RECITALS
                                    --------

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

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

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

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

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

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

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

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

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

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

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

                                    AGREEMENT
                                    ---------

                                    ARTICLE I

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                   ARTICLE II

                            TRANSFER OF CONSIDERATION

2.1      Consideration.

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

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

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

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

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

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

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

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

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<PAGE>

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

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

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

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

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<PAGE>

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

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

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

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

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

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

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

                                 Page 101 of 200
<PAGE>

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

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

2.8      Intentionally Deleted.

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

2.10     Pre-Closing Escrow.

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

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

                                 Page 102 of 200
<PAGE>

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

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

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

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

                                 Page 103 of 200
<PAGE>

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

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

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

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

                                 Page 104 of 200
<PAGE>

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

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

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

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

(j)      Real Property.

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

                                 Page 105 of 200
<PAGE>

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

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

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

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

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

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

                                 Page 106 of 200
<PAGE>

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

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

                                 Page 107 of 200
<PAGE>

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

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

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

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

                                 Page 108 of 200
<PAGE>

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

(r)      Employee Matters.

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

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

                                 Page 109 of 200
<PAGE>

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

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

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

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

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

                                 Page 110 of 200
<PAGE>

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

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

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

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

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

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

                                 Page 111 of 200
<PAGE>

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

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

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

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

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

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

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

                                 Page 112 of 200
<PAGE>

                                   ARTICLE IV

                                   AGREEMENTS
                                   ----------

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

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

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

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

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

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

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

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

                                 Page 100 of 200
<PAGE>

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

4.4      Employees.

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

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

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

                                 Page 114 of 200
<PAGE>

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

4.7      Employee Solicitation.

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

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

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

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

                                 Page 115 of 200
<PAGE>

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

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

                                 Page 116 of 200
<PAGE>

                                   ARTICLE V

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

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

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

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

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

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

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

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

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

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

                                 Page 117 of 200
<PAGE>

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

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

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

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

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

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

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

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

                                 Page 118 of 200
<PAGE>

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

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

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

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

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

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

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

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

                                 Page 119 of 200
<PAGE>

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

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

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

                                   ARTICLE VI

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

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

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

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

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

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

                                 Page 120 of 200
<PAGE>

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

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

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

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

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

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

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

                                 Page 121 of 200
<PAGE>

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

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

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

                                  ARTICLE VII

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

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

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

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

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

                                 Page 122 of 200
<PAGE>

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

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

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

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

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

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

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

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

(i)      any and all Assumed Liabilities;

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

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

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

                                 Page 123 of 200
<PAGE>

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

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

7.3      Defense of Claims.

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

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

                                 Page 124 of 200
<PAGE>

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

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

                                  ARTICLE VIII

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

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

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

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

                                 Page 125 of 200
<PAGE>

8.4      Copies of Records.

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

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

                                   ARTICLE IX

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

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

                                 Page 126 of 200
<PAGE>

                           if to any Greenbriar Party, to

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

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

                           If to Lone Star, to

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

                           with a copy (which shall not constitute notice) to

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

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

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

                                 Page 127 of 200
<PAGE>

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

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

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

9.6      Curative Actions; Severability.

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

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

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

                                 Page 128 of 200
<PAGE>

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

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

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

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

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

                                 Page 129 of 200
<PAGE>

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

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

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

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

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

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

            [The Remainder of this Page Is Intentionally Left Blank]

                                 Page 130 of 200
<PAGE>

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

                                THE COMPANY

                                GREENBRIAR CORPORATION

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

                                THE ASSIGNORS

                                WINDSOR HOUSE WEST, INCORPORATED

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

                                BERNE VILLAGE, INC.

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

                                ROSE TARA PLANTATION, INC.

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

                                THE DENISON - GREENBRIAR, INC.

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

                                 Page 131 of 200
<PAGE>

                                ROSE GARDEN ESTATES, INC.

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

                                THE TERRACE RETIREMENT, INC.

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

                                TRANSFERCO, INC.

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

                                WEDGWOOD PARTNERS LTD.,
                                LIMITED PARTNERSHIP

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

                                         By:      Greenbriar Acquisition
                                                  Corporation, a Nevada
                                                  corporation, Manager

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

                                WEDGWOOD RETIREMENT INNS, INC.

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

                                 Page 132 of 200
<PAGE>

                                LSOF POOLED EQUITY, L.P.

                                By:  LSOF GenPar, Inc., its General Partner

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

                                 Page 133 of 200
<PAGE>

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

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

                                    RECITALS

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

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

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

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

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

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

         WHEREAS, a trial is scheduled for the near future;

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

                                 Page 134 of 200
<PAGE>

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

                                    ARTICLE I

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

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

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

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

                                 Page 135 of 200
<PAGE>

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

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

                                 Page 136 of 200
<PAGE>

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

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

                                   ARTICLE II

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

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

                                 Page 137 of 200
<PAGE>

                                   ARTICLE III

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

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

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

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

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

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

                                 Page 138 of 200
<PAGE>

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

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

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

                                   ARTICLE IV

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

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

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

                                 Page 139 of 200
<PAGE>

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

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

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

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

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

                                 Page 140 of 200
<PAGE>

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

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

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

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

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

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

                                 Page 141 of 200
<PAGE>

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

                  [Remainder of Page Intentionally Left Blank]

                                 Page 142 of 200
<PAGE>

                        SIGNATURE PAGE TO MUTUAL RELEASE

                  DATED AND EFFECTIVE this day of August, 2001.

                                           LSOF POOLED EQUITY, L.P.

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

                                           GREENBRIAR CORPORATION

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

                                           AMERICAN REALTY TRUST, INC.

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

                                           BASIC CAPITAL MANAGEMENT, INC.

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

                                 Page 143 of 200
<PAGE>

                                           ONE REALCO CORPORATION

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

                                           TACCO FINANCIAL CORPORATION

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

                                           INTERNATIONAL HEALTH PRODUCTS INC.

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

                                           JAMES R GILLEY

                                           Name:    James R. Gilley

                                           GENE S. BERTCHER

                                           Name:    Gene S. Bertcher

                                 Page 144 of 200
<PAGE>

                                           VICTOR L. LUND

                                           Name:    Victor L. Lund

                                           DON C. BENTON

                                           Name:    Don C. Benton

                                           LSOF POOLED EQUITY, L.P.

                                           By:
                                              ----------------------------------

                                           Name:

                                           Title:

THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
_______________________  as  ______________________ of LSOF Pooled Equity, L.P.,
known  to me to be  the  person  whose  name  is  subscribed  to  the  foregoing
instrument,  and  acknowledged  to me that he executed the same for the purposes
and consideration therein expressed,  in the capacity therein stated, and as the
act and deed of said corporation.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]
                                       _________________________________________

                                       Notary Public, State of _________________

Printed Name:  ________________________
My Commission Expires:  _______________

                                            GREENBRIAR CORPORATION

                                            By:_________________________________

                                            Name:

                                            Title:

                                 Page 145 of 200
<PAGE>

THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
_______________________  as  ______________________  of Greenbriar  Corporation,
known  to me to be  the  person  whose  name  is  subscribed  to  the  foregoing
instrument,  and  acknowledged  to me that he executed the same for the purposes
and consideration therein expressed,  in the capacity therein stated, and as the
act and deed of said corporation.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]
                                       _________________________________________

                                       Notary Public, State of _________________

Printed Name:  ________________________
My Commission Expires:  _______________

                                            AMERICAN REALTY TRUST, INC.

                                            By:_________________________________

                                            Name:

                                            Title:

                                 Page 146 of 200
<PAGE>

THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
_______________________  as  ________________________  of American Realty Trust,
Inc.,  known to me to be the person whose name is  subscribed  to the  foregoing
instrument,  and  acknowledged  to me that he executed the same for the purposes
and consideration therein expressed,  in the capacity therein stated, and as the
act and deed of said ____________________.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]

                                        ________________________________________

                                        Notary Public, State of ________________

Printed Name:  ________________________
My Commission Expires:  _______________

                                            BASIC CAPITAL MANAGEMENT

                                            By:_________________________________

                                            Name:

                                            Title:

                                 Page 147 of 200
<PAGE>

THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
_______________________ as ________________________ of Basic Capital Management,
known  to me to be  the  person  whose  name  is  subscribed  to  the  foregoing
instrument,  and  acknowledged  to me that he executed the same for the purposes
and consideration therein expressed,  in the capacity therein stated, and as the
act and deed of said ____________________.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]

                                        ________________________________________

                                        Notary Public, State of ________________

Printed Name:  ________________________
My Commission Expires:  _______________

                                            ONE REALCO CORPORATION

                                            By:_________________________________

                                            Name:

                                            Title:

                                 Page 148 of 200
<PAGE>

THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
_______________________ as  ________________________  of One Realco Corporation,
known  to me to be  the  person  whose  name  is  subscribed  to  the  foregoing
instrument,  and  acknowledged  to me that he executed the same for the purposes
and consideration therein expressed,  in the capacity therein stated, and as the
act and deed of said ____________________.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]

                                        ________________________________________

                                        Notary Public, State of ________________

Printed Name:  ________________________
My Commission Expires:  _______________

                                            TACCO FINANCIAL CORPORATION

                                            By:_________________________________

                                            Name:

                                            Title:

                                 Page 149 of 200
<PAGE>

THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
_______________________   as   ________________________   of   Tacco   Financial
Corporation,  known  to me to be the  person  whose  name is  subscribed  to the
foregoing  instrument,  and acknowledged to me that he executed the same for the
purposes and consideration  therein  expressed,  in the capacity therein stated,
and as the act and deed of said ____________________.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]

                                        ________________________________________

                                        Notary Public, State of ________________

Printed Name:  ________________________
My Commission Expires:  _______________

                                            INTERNATIONAL HEALTH PRODUCTS, INC.

                                            By:_________________________________

                                            Name:

                                            Title:

                                 Page 150 of 200
<PAGE>

THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
_______________________  as  ________________________  of  International  Health
Products,  Inc.,  known to me to be the person whose name is  subscribed  to the
foregoing  instrument,  and acknowledged to me that he executed the same for the
purposes and consideration  therein  expressed,  in the capacity therein stated,
and as the act and deed of said ____________________.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]

                                        ________________________________________

                                        Notary Public, State of ________________

Printed Name:  ________________________
My Commission Expires:  _______________

                                 Page 151 of 200
<PAGE>

THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
James R. Gilley,  known to me to be the person whose name is  subscribed  to the
foregoing  instrument,  and acknowledged to me that he executed the same for the
purposes and consideration therein expressed.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]

                                        ________________________________________

                                        Notary Public, State of ________________

Printed Name:  ________________________
My Commission Expires:  _______________

                                 Page 152 of 200
<PAGE>

THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
Gene S.  Bertcher,  known to me to be the person whose name is subscribed to the
foregoing  instrument,  and acknowledged to me that he executed the same for the
purposes and consideration therein expressed.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]

                                        ________________________________________

                                        Notary Public, State of ________________

Printed Name:  ________________________
My Commission Expires:  _______________

                                 Page 153 of 200
<PAGE>

THE STATE OF TEXAS       ss.
                         ss.
COUNTY OF ___________    ss.

         BEFORE ME, the undersigned  authority,  on this day personally appeared
Don C.  Benton,  known to me to be the person  whose name is  subscribed  to the
foregoing  instrument,  and acknowledged to me that he executed the same for the
purposes and consideration therein expressed.

         GIVEN  UNDER  MY  HAND  AND  SEAL  OF  OFFICE,  this  the  ____  day of
_______________. 2001.

[SEAL]

                                        ________________________________________

                                        Notary Public, State of ________________

Printed Name:  ________________________
My Commission Expires:  _______________

                                 Page 154 of 200
<PAGE>

                               CAUSE NO. 00-08824

LSOF POOLED EQUITY, L.P.               ss.          IN THE DISTRICT COURT
                                       ss.
       Plaintiff,                      ss.
                                       ss.
v.                                     ss.
                                       ss.
GREENBRIAR CORPORATION                 ss.
                                       ss.
       Defendant.                      ss.
                                       ss.
AMERICAN REALTY TRUST, INC.,           ss.
BASIC CAPITAL MANAGEMENT, INC.,        ss.
ONE REALCO CORPORATION, TACCO          ss.          162nd JUDICIAL DISTRICT
FINANCIAL CORPORATION,                 ss.
INTERNATIONAL HEALTH PRODUCTS,         ss.
INC. and NANOOK PARTNERS, L.P.,        ss.
                                       ss.
       Intervenors,                    ss.
                                       ss.
v.                                     ss.
                                       ss.
LSOF POOLED EQUITY, L.P. and           ss.
GREENBRIAR CORPORATION,                ss.
                                       ss.
       Intervention Defendants.        ss.
                                       ss.          DALLAS COUNTY, TEXAS

                            AGREED MOTION TO DISMISS
                            ------------------------

TO THE HONORABLE JUDGE OF SAID COURT:

         Plaintiff  LSOF  Pooled  Equity,  L.P.  ("Pooled  Equity"),  Greenbriar
Corporation  ("Greenbriar"),  and American  Realty  Trust,  Inc.,  Basic Capital
Management,   Inc.,  One  Realco  Corporation,   Tacco  Financial   Corporation,
International Health Products, Inc., and Nanook Partners, L.P. (collectively the
"Intervenors")   (Pooled  Equity,   Greenbriar,   and  the   Intervenors   shall
collectively  be referred to as the "Parties")  file this their Agreed Motion to
Dismiss, and would respectfully show the Court as follows:
         1.       Currently  pending is Cause No. 00-08824;  LSOF Pooled Equity,
L.P. v. Greenbriar  Corporation,  in the District Court of Dallas County, Texas,
162nd Judicial District (the "Lawsuit").
         2.       The Parties have agreed to dismiss the Lawsuit.
         3.       Accordingly,  the Parties  respectfully request that the Court
grant this Agreed Motion to Dismiss and enter the attached Agreed Order Granting
Motion to Dismiss.

                                 Page 155 of 200
<PAGE>

                                          Respectfully submitted,

                                          ______________________________________
                                          T. Ray Guy
                                          State Bar No. 08648500
                                          K. Todd Phillips
                                          State Bar No. 24002767
                                          J. Brian Williams
                                          State Bar No. 24028222

                                          WEIL, GOTSHAL & MANGES LLP
                                          100 Crescent Court, Suite 1300
                                          Dallas, Texas 75201-6950
                                          Telephone:        (214) 746-7700
                                          Facsimile:        (214) 746-7777

                                          ATTORNEYS FOR PLAINTIFF
                                          LSOF POOLED EQUITY, L.P.

                                 Page 156 of 200
<PAGE>

AGREED AS TO FORM AND SUBSTANCE:

LYNCH LAW FIRM

By:
   -----------------------------------------
   Jeffrey S. Lynch
   State Bar No. 12727500
   Quorum Drive
   Dallas, Texas  75240
   Telephone:  (972) 991-0000
   Facsimile:   (972) 991-4611

ATTORNEYS FOR PLAINTIFF

SUSMAN GODFREY L.L.P.

By:
   -----------------------------------------
   Terrell W. Oxford
   State Bar No. 15390500
   Mark A. Evetts
   State Bar No. 00793709
   Kenneth E. Gardner
   State Bar No. 07656825
   Salvador Espino
   State Bar No. 00795007
   901 Main Street, Suite 4100
   Dallas, Texas  75202
   Telephone:  (214) 754-1908
   Facsimile:   (214) 665-0853

ATTORNEYS FOR DEFENDANT

                                 Page 157 of 200
<PAGE>

BRADEN W. SPARKS, P.C.

By:
   -----------------------------------------
   Braden W. Sparks
   State Bar No. 18874500
   8117 Preston Road, Suite 800
   Dallas, Texas  75225
   Telephone:  (214) 696-3200
   Facsimile:   (214) 696-5971

ATTORNEYS FOR INTERVENORS

FRIEDMAN & DRIEGERT

By:
   -----------------------------------------
   Lawrence J. Friedman
   State Bar No. 07469300
   Amy Ganci
   State Bar No. 07611600
   5301 Spring Valley Road, Suite 200
   Dallas, Texas  75240
   Telephone:  (972) 788-1400
   Facsimile:   (972) 788-2667

ATTORNEYS FOR INTERVENORS

                                 Page 158 of 200
<PAGE>

                                CAUSE NO. 00-08824

LSOF POOLED EQUITY, L.P.               ss.          IN THE DISTRICT COURT
                                       ss.
       Plaintiff,                      ss.
                                       ss.
v.                                     ss.
                                       ss.
GREENBRIAR CORPORATION                 ss.
                                       ss.
       Defendant.                      ss.
                                       ss.
AMERICAN REALTY TRUST, INC.,           ss.
BASIC CAPITAL MANAGEMENT, INC.,        ss.
ONE REALCO CORPORATION, TACCO          ss.          162nd JUDICIAL DISTRICT
FINANCIAL CORPORATION,                 ss.
INTERNATIONAL HEALTH PRODUCTS,         ss.
INC. and NANOOK PARTNERS, L.P.,        ss.
                                       ss.
       Intervenors,                    ss.
                                       ss.
v.                                     ss.
                                       ss.
LSOF POOLED EQUITY, L.P. and           ss.
GREENBRIAR CORPORATION,                ss.
                                       ss.
       Intervention Defendants.        ss.
                                       ss.          DALLAS COUNTY, TEXAS

                            AGREED ORDER OF DISMISSAL
                            -------------------------

         The  Court,  having  considered  the  Agreed  Motion  to  Dismiss  (the
"Motion") filed by Plaintiff LSOF Pooled Equity, L.P.,  Greenbriar  Corporation,
and American  Realty Trust,  Inc.,  Basic Capital  Management,  Inc., One Realco
Corporation,  Tacco Financial Corporation,  International Health Products, Inc.,
and Nanook Partners, L.P., is of the opinion that the Motion should be GRANTED.
         It is therefore  ORDERED that all claims that either were or could have
been  asserted by any party in the  above-styled  and numbered  cause are hereby
DISMISSED.
         It is further  ORDERED that the  above-styled  and numbered  lawsuit is
hereby DISMISSED in its entirety.
         It is further  ORDERED that all relief not expressly  granted herein is
DENIED. SIGNED: ______________, 2001.

                                 Page 159 of 200
<PAGE>
                                                     ___________________________
                                                     HONORABLE JUDGE PRESIDING

                                 Page 160 of 200
<PAGE>

AGREED AS TO SUBSTANCE AND FORM AND ENTRY REQUESTED:

WEIL, GOTSHAL & MANGES LLP

By:
   -----------------------------------------
T. Ray Guy
State Bar No. 08648500
K. Todd Phillips
State Bar No. 24002767
J. Brian Williams
State Bar No. 24028222
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Telephone:        (214) 746-7700
Facsimile:        (214) 746-7777
ATTORNEYS FOR PLAINTIFF

SUSMAN GODFREY L.L.P.

By:
   -----------------------------------------
     Terrell W. Oxford
     State Bar No. 15390500
     Mark A. Evetts
     State Bar No. 00793709
     Kenneth E. Gardner
     State Bar No. 07656825
     Salvador Espino
     State Bar No. 00795007
     901 Main Street, Suite 4100
     Dallas, Texas  75202
     Telephone:  (214) 754-1908
     Facsimile:   (214) 665-0853
ATTORNEYS FOR DEFENDANT

                                 Page 161 of 200
<PAGE>

LYNCH LAW FIRM

By:
   -----------------------------------------
     Jeffrey S. Lynch
     State Bar No. 12727500
     Quorum Drive
     Dallas, Texas  75240
     Telephone:  (972) 991-0000
     Facsimile:   (972) 991-4611
ATTORNEYS FOR INTERVENORS

BRADEN W. SPARKS, P.C.

By:
   -----------------------------------------
     Braden W. Sparks
     State Bar No. 18874500
     8117 Preston Road, Suite 800
     Dallas, Texas  75225
     Telephone:  (214) 696-3200
     Facsimile:   (214) 696-5971
ATTORNEYS FOR INTERVENORS

FRIEDMAN & DRIEGERT

By:
   -----------------------------------------
     Lawrence J. Friedman
     State Bar No. 07469300
     Amy Ganci
     State Bar No. 07611600
     5301 Spring Valley Road, Suite 200
     Dallas, Texas  75240
     Telephone:  (972) 788-1400
     Facsimile:   (972) 788-2667
ATTORNEYS FOR INTERVENORS

                                 Page 162 of 200
<PAGE>

                                     FORM OF
                                  BILL OF SALE
                                  ------------

         THIS BILL OF SALE (this "Bill of Sale") is made and delivered  this ___
day of August,  2001, by  [__________________________],  a ________  corporation
("Assignor") to  ___________________________________  ("Assignee").  Capitalized
terms used but not defined herein shall have the meanings ascribed to such terms
in the Settlement Agreement (as hereinafter defined).

         WHEREAS,  Assignor  and  Assignee  are parties to that  certain  Master
Settlement Agreement dated as of August 1, 2001 (the "Settlement  Agreement") by
and among  Greenbriar  Corporation,  a Nevada  corporation,  LSOF Pooled Equity,
L.P.,  a Delaware  limited  partnership,  the  Assignors  named  therein and the
Intervenors  named  therein,  the  terms of which  are  incorporated  herein  by
reference,  which provides,  among other things, for the transfer and assignment
by Assignor to Assignee of certain Assigned Assets.

         NOW,  THEREFORE,  in consideration of the mutual promises  contained in
the Settlement  Agreement,  and for other good and valuable  consideration,  the
receipt  and  sufficiency  of which are hereby  acknowledged  by  Assignor,  and
subject to the terms and conditions of the Settlement Agreement:

                  1.  Assignor  does  hereby  bargain,   sell,  grant,   assign,
transfer,  convey and deliver unto  Assignee,  and its  successors  and assigns,
forever,  all of  Assignor's  right,  title and  interest in and to the Assigned
Assets.

                  TO  HAVE  AND  TO  HOLD   such   Assigned   Assets   with  all
appurtenances  thereto,  unto Assignee,  and its successors and assigns, for its
use forever.

                  2.  This Bill of Sale  shall  inure to the  benefit  of and be
binding upon Assignor and its successors and assigns.

                  3.  Nothing  in this  Bill of Sale,  express  or  implied,  is
intended to or shall be  construed to expand or vary in any way the terms of the
Settlement Agreement. To the extent there is any difference between this Bill of
Sale and the Settlement Agreement, the Settlement Agreement shall govern.

                  4. This Bill of Sale is executed and delivered pursuant to the
Settlement Agreement.

                  5. This Bill of Sale, the Transaction  Documents and the other
agreements  contemplated  hereby set forth the entire  agreement  of the parties
with respect to the matters set forth herein or therein. This Bill of Sale shall
not  be  modified  except  by  written   instrument   executed  together  or  in
counterparts by the Assignor and Assignee.

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

                                 Page 163 of 200
<PAGE>

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

                  8. THIS BILL OF SALE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT  REGARD TO THE  PRINCIPLES OF
CONFLICTS OF LAWS.  ASSIGNOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN DALLAS COUNTY,  TEXAS AND  IRREVOCABLY  AGREES THAT
ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS BILL OF SALE SHALL
BE LITIGATED IN SUCH COURTS.  THE ASSIGNOR  ACCEPTS FOR ITSELF AND IN CONNECTION
WITH  ITS   PROPERTIES,   GENERALLY  AND   UNCONDITIONALLY,   THE   NONEXCLUSIVE
JURISDICTION  OF THE  AFORESAID  COURTS  AND  WAIVES  ANY  DEFENSE  OF FORUM NON
CONVENIENS,  AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS BILL OF SALE OR ANY OTHER TRANSACTION DOCUMENTS.

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

                  10.  Whenever  the context  requires,  the gender of all words
used in this Bill of Sale shall include the masculine, feminine, and neuter, and
the number of all words shall include the singular and the plural.  No provision
of this Bill of Sale will be  interpreted  in favor of, or  against,  any of the
parties  hereto by reason of the extent to which any such  party or its  counsel
participated  in the  drafting  thereof  or by reason of the extent to which any
such provision is inconsistent with any prior draft hereof or thereof.

                                 Page 164 of 200
<PAGE>

                  11.  Nothing in this Bill of Sale is  intended  to confer upon
any  Person  that is not a party  hereto  (other  than  Assignee)  any rights or
remedies hereunder or otherwise.

                  12. Time is of the essence to each and every provision of this
Bill of Sale.

                  13. Assignor hereby acknowledges that: (a) it has been advised
by counsel in the  negotiation,  execution and delivery of this Bill of Sale and
the other Transaction  Documents;  and (b) no joint venture is created hereby or
by the  other  Transaction  Documents  or  otherwise  exists  by  virtue  of the
transactions contemplated hereby among the Assignor and the Assignee.

                  IN WITNESS WHEREOF, and intending to  be legally bound hereby,
Assignor has caused this Bill of Sale to be executed and delivered as of the day
and year first above written.

                                               _________________________________

                                               By:______________________________

                                               Name:____________________________

                                               Title:___________________________

                                 Page 165 of 200
<PAGE>

                                     FORM OF
                              ASSUMPTION AGREEMENT
                              --------------------

         THIS ASSUMPTION  AGREEMENT (this  "Agreement") is made and entered into
this ___ day of August [___], 2001 by and between  [__________________________],
a           [_____________________________]           ("Assignor"),          and
[__________________________],    a   [_____________________________]   (or   its
permitted assigns)  ("Assignee").  Capitalized terms used but not defined herein
shall have the meanings  ascribed to such terms in the Settlement  Agreement (as
hereinafter defined).

         WHEREAS,  Assignor  and  Assignee  are parties to that  certain  Master
Settlement Agreement dated as of August 1, 2001 (the "Settlement Agreement"), by
and among  Greenbriar  Corporation,  a Nevada  corporation,  LSOF Pooled Equity,
L.P., a Delaware  limited  partnership,  the Assignors  named  therein,  and the
Intervenors  named  therein,  the  terms of which  are  incorporated  herein  by
reference,  which provides,  among other things, for the assignment and transfer
by Assignor to Assignee of certain Assigned Assets of Assignor; and

         WHEREAS,  pursuant  to the  terms  and  conditions  of  the  Settlement
Agreement,  Assignor  desires to transfer to Assignee,  and Assignee  desires to
assume from Assignor, the Assigned Assets and the Assumed Liabilities.

         NOW,  THEREFORE,  in consideration of the mutual promises  contained in
the Settlement  Agreement,  and for other good and valuable  consideration,  the
receipt  and  sufficiency  of which are hereby  acknowledged  by  Assignor,  and
subject to the terms and conditions of the Settlement Agreement:

         1.  Assignment  and  Assumption.  Assignee  hereby  assumes the Assumed
Liabilities.

         2.  Successors.  All of the  covenants,  terms and conditions set forth
herein  shall be binding  upon,  and shall  inure to the benefit of, the parties
hereto and their respective heirs, successors and assigns.

         3.   Counterparts.   This   Agreement   may  be  executed  in  multiple
counterparts,  all of which together  shall for all purposes  constitute one and
the same instrument.

         4. Entire Agreement.  This Agreement, the Transaction Documents and the
other  agreements  contemplated  hereby  set forth the entire  agreement  of the
parties with respect to the matters set forth herein or therein.  This Agreement
shall not be  modified  except by written  instrument  executed  together  or in
counterparts by all of the parties hereto.

                                 Page 166 of 200
<PAGE>

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

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

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

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

                                 Page 167 of 200
<PAGE>

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

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

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

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

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

                  [Remainder of Page Intentionally Left Blank]

                                 Page 168 of 200
<PAGE>

         IN WITNESS WHEREOF,  and intending to be legally bound hereby,  each of
Assignor and Assignee has caused this  Agreement to be executed and delivered by
its duly authorized representative as of the day and year first above written.

ASSIGNOR                                              ASSIGNEE
--------                                              --------

[_________________]                                   [_________________]

By:_______________________                            By:_______________________
Name:_____________________                            Name:_____________________
Title:____________________                            Title:____________________

                                 Page 169 of 200EXHIBIT 10.24.2

                                CONSENT AGREEMENT

         This Consent  Agreement dated as of August 1, 2001 (this  "Agreement"),
is made by and among LSOF Pooled Equity,  L.P., a Delaware  limited  partnership
("Lone Star"), Greenbriar Corporation,  a Nevada corporation (the "Company") and
each  of  the   undersigned   holders  of  shares  of  capital  stock  (each,  a
"Stockholder" and collectively, the "Stockholders") of the Company.

                             PRELIMINARY STATEMENTS

         The  Company  and Lone  Star  have  entered  into a  Master  Settlement
Agreement  (as the same  may be  amended  from  time to  time,  the  "Settlement
Agreement"; terms used herein but not defined herein have the meanings set forth
in the  Settlement  Agreement),  which  provides  that in  consideration  of the
release of any Claims that Lone Star may have  against the Company  with respect
to Lone Star's  Preferred Stock  investment in the Company and the assumption by
Lone Star of the Assumed  Liabilities,  (i) the  Assignors are  transferring  to
Assignee  all of their  respective  right,  title  and  interest,  in and to the
Assigned  Assets  (the  "Assignment"),  (ii) the  Company  will pay to Lone Star
$4,000,000 in immediately available funds, and (iii) for the same consideration,
the Company is also redeeming all of Lone Star's Preferred Stock, any and all of
the  Company's   common  stock  into  which  Lone  Star's  Preferred  Stock  was
purportedly  converted,  together  with  all of Lone  Star's  right,  title  and
interest  to any and all claims and rights  with  respect to its  interest  as a
stockholder,   equity   interest   holder  or   otherwise   (collectively,   the
"Transactions").

         The  Transactions  do not  require  the  approval of the holders of the
majority of shares of the Company's  capital stock under  applicable  law or the
Company's Organizational Documents.

         The Stockholders  own the shares of the Company common stock,  $.01 par
value per share (the "Common Stock"),  set forth opposite their respective names
on Exhibit A hereto.  As used herein,  the term "Shares"  includes all shares of
such  Common  Stock  as to which  each  Stockholder  (at any  time  prior to the
termination of this Agreement) is the beneficial or record owner or is otherwise
able to direct the voting  thereof and all  securities  issued or exchanged with
respect  to  any  such  Shares  upon  any  reclassification,   recapitalization,
reorganization, merger, consolidation, spin-off, stock split, combination, stock
or other dividend or any other change in the Company's capital structure.

         To  induce  Lone Star to enter  into the  Settlement  Agreement  and to
consummate the transactions contemplated thereby,  including without limitation,
executing the Mutual Release, the Company has agreed, upon the terms and subject
to the conditions set forth herein, to cause holders of not less than a majority
of the outstanding shares of Common Stock to execute this Agreement.

                                Page 170 of 200
<PAGE>

         NOW,  THEREFORE,  for good and  valuable  consideration,  the  receipt,
sufficiency and adequacy of which are hereby  acknowledged,  the parties to this
Agreement agree as follows:

         1. Consent.  Notwithstanding  the fact that consent to the Transactions
is not required under applicable law or the Company's  Organizational  Document,
each Stockholder hereby consents to and approves the terms and conditions of the
Settlement Agreement and the other Transaction  Documents,  and the consummation
of the transactions  contemplated  thereby,  including without  limitation,  the
Transactions.

         2. Public Filings. In the event that it is subsequently determined that
the  Transactions  require  a  vote  of the  stockholders  of  any  class  under
applicable  law, the Company agrees to promptly  prepare and file an Information
Statement  with the  Securities  and  Exchange  Commission  (the  "SEC") and the
Company shall respond as promptly as practicable to any comments of the SEC with
respect  thereto.  The Company shall give Lone Star a reasonable  opportunity to
review, comment on and make reasonable changes to the Information Statement. The
Company shall use its reasonable  efforts to cause the Information  Statement to
be mailed to the Company's  stockholders  as promptly as  practicable  after the
Information Statement is cleared by the SEC. The parties shall notify each other
promptly  of the  receipt of any  comments  from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Information
Statement and shall supply each other with copies of all correspondence  between
such party or any of its representatives, on the one hand, and the SEC or any of
its staff, on the other hand, with respect to the Information Statement.

         3. Stockholders'  Representations and Warranties.  Each Stockholder, as
to itself only,  represents  and warrants to Lone Star that such  Stockholder is
the  beneficial and record owner of the Shares set forth on Exhibit A, (ii) such
Stockholder has the sole right to vote such Shares,  (iii) such  Stockholder has
the full and  unrestricted  legal  power,  authority  and  right to enter  into,
execute and deliver this Agreement  without the consent or approval of any other
person,  (iv)  this  Agreement  is the  valid  and  binding  agreement  of  such
Stockholder,  (v) the execution  and delivery of this  Agreement do not, and the
consummation  of the  transactions  contemplated  hereby and compliance with the
terms hereof will not,  conflict with, or result in any violation of, or default
(with or without  notice or lapse of time or both) under any  provision  of, the
certificate  of  incorporation  or  bylaws  of any  Stockholder,  to the  extent
applicable, any trust agreement, loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,  franchise,
license,  judgment,  order, notice,  decree,  statute,  law, ordinance,  rule or
regulation  applicable to such Stockholder or to such Stockholder's  property or
assets and (vi) such stockholder is not an Affiliate of Vestin Mortgage.

                                Page 171 of 200
<PAGE>

         4. The Company's  Representations  and  Warranties.  The Company hereby
represents  and  warrants  to Lone Star as of the date here that the Company has
all requisite  corporate power and authority to enter into this Agreement and to
consummate the transactions  contemplated  hereby. The execution and delivery of
this  Agreement  by the  Company,  and  the  consummation  of  the  transactions
contemplated hereby, have been duly authorized by all necessary corporate action
on the part of the Company.  This Agreement has been duly executed and delivered
by the Company and  constitutes  a valid and binding  obligation  of the Company
enforceable  in  accordance  with its terms.  The execution and delivery of this
Agreement do not, and the consummation of the transactions  contemplated  hereby
and compliance  with the terms hereof will not,  conflict with, or result in any
violation of, or default (with or without notice or lapse of time or both) under
any provision of, the certificate of incorporation or bylaws of the Company, any
trust agreement,  loan or credit  agreement,  note, bond,  mortgage,  indenture,
lease or other agreement,  instrument,  permit, concession,  franchise, license,
judgment,  order, notice,  decree,  statute, law, ordinance,  rule or regulation
applicable  to the Company or to the Company's  property or assets.  The Company
hereby represents and warrants that the Shares set forth on Exhibit A constitute
the majority of all issued and outstanding  shares of Common Stock. Set forth on
Exhibit B is a true and correct list of (i) the authorized  capital stock of the
Company,  and (ii) as of the date hereof,  the number of shares of each class of
capital stock that is issued and outstanding.  Except as set forth on Exhibit B,
no other shares of capital stock are issued and  outstanding.  All of the issued
and  outstanding  shares of capital  stock of the Company  are duly  authorized,
validly issued, dully paid and nonassessable, and were issued in compliance with
applicable  federal and state securities laws. Except as set forth on Exhibit B,
there are no outstanding  shares of capital stock or outstanding rights of first
refusal, preemptive rights or other rights, options, warrants, conversion rights
or  other  agreements   either  directly  or  indirectly  for  the  purchase  or
acquisition from the Company of any shares of its capital stock.

         5.  Lone  Star's  Representations  and  Warranties.  Lone  Star  hereby
represents and warrants to the  Stockholders  as of the date here that Lone Star
has all requisite corporate power and authority to enter into this Agreement and
to consummate the transactions  contemplated  hereby. The execution and delivery
of  this  Agreement  by Lone  Star,  and the  consummation  of the  transactions
contemplated hereby, have been duly authorized by all necessary corporate action
on the part of Lone Star. This Agreement has been duly executed and delivered by
Lone  Star  and  constitutes  a  valid  and  binding  obligation  of  Lone  Star
enforceable  in  accordance  with its terms.  The execution and delivery of this
Agreement do not, and the consummation of the transactions  contemplated  hereby
and compliance  with the terms hereof will not,  conflict with, or result in any
violation of, or default (with or without notice or lapse of time or both) under
any provision of, the certificate of formation or limited partnership  agreement
of Lone  Star,  any trust  agreement,  loan or  credit  agreement,  note,  bond,
mortgage, indenture, lease or other agreement,  instrument,  permit, concession,
franchise,  license,  judgment,  order, notice, decree, statute, law, ordinance,
rule or regulation applicable to Lone Star or to Lone Star's property or assets.

                                Page 172 of 200
<PAGE>

         6. No  Voting  Trusts.  Each  Stockholder  hereby  revokes  any and all
proxies and voting  instructions  with respect to the Shares previously given by
such Stockholder and such Stockholder  agrees that it will not grant or give any
other proxies or voting  instructions  with respect to the voting of the Shares,
enter into any voting trust or other  arrangement  or agreement  with respect to
the  voting  of the  Shares  (and if given or  executed,  such  proxies,  voting
instructions,  voting  trust or other  arrangement  or  agreement  shall  not be
effective),  or agree,  in any  manner,  to vote the Shares  for or against  any
proposal  submitted to the  Stockholders of the Company except in furtherance of
the proposals set forth in paragraph 7 hereof.

         7. Agreements with Respect to the Shares.

                  (a)  Should  a vote  of the  stockholders  be  required  under
         applicable  law,  each  Stockholder  agrees to vote the Shares,  to the
         extent entitled to vote, (x) in favor of the approval of the Settlement
         Agreement, the Transactions and any other transactions  contemplated by
         the Transaction Documents,  at every meeting of the Stockholders of the
         Company  at  which  any of such  matters  are  considered  and at every
         adjournment  thereof or in any other  circumstances  upon which a vote,
         consent or other approval  (including by written  consent) with respect
         to any of the Transactions and the Settlement  Agreement is sought, and
         (y) with respect to all other proposals  submitted to the  Stockholders
         of the Company  which,  directly or  indirectly,  would  reasonably  be
         expected  to  prevent  or   materially   delay  the   consummation   of
         Transactions, in such manner as Lone Star may direct; and

                  (b)  Unless  otherwise  instructed  in  writing  by Lone Star,
         during  the term of this  Agreement,  each  Stockholder  will  vote the
         Shares against any Competing Transaction.

                  (c) For purposes of this Agreement, a "Competing  Transaction"
         shall mean a transaction  of any kind proposed by any person(s) in lieu
         of or in opposition to the Settlement Agreement and the Transactions.

         8. Proxies.  In  furtherance  of the  foregoing,  each  Stockholder  is
granting to John P. Grayken and J.D. Dell, or to their  respective  designee(s),
irrevocable  proxies  and powers of attorney  (which may be in the form  annexed
hereto or such other form  consistent  with the terms hereof and thereof as Lone
Star may specify) to vote the Shares,  to the extent such Shares are entitled to
vote, and hereby  specifically  agrees not to revoke such proxies  granted under
any circumstances:

                  (a) at any and all  meetings of  Stockholders  of the Company,
         notice  of  which  meetings  are  given  prior  to the due  and  proper
         termination of this Agreement, with respect to matters presented to the
         Company's  Stockholders  for vote which  relates to or affects  (i) the
         Transaction  or the  Settlement  Agreement  or the  approval  of either
         thereof; and (ii) any Competing Transaction; or

                                Page 173 of 200
<PAGE>

                  (b) with respect to actions to be taken by written  consent of
         the  Stockholders of the Company which relates to or affects any of the
         foregoing,  and which consent is solicited  prior to the due and proper
         termination of this Agreement.

         9.  Limitation  on  Sales.  During  the  term of this  Agreement,  each
Stockholder  agrees not to sell, assign,  transfer,  or otherwise dispose of, or
issue an option or call with  respect  to,  any of the  Shares,  or impair  such
Stockholder's  Shares;  provided,  that any  Stockholder  may sell or  otherwise
dispose of any of his or her Shares in a bona fide open market transaction or in
any other transaction if the transferee of such Shares agrees to be bound by and
subject to the terms and conditions of this Agreement as if such  transferee had
executed this Agreement on the date hereof as a Stockholder.

         10. Specific Performance. Each Stockholder acknowledges that it will be
impossible to measure in money the damage to Lone Star if the Stockholder  fails
to comply with the obligations imposed by this Agreement, and that, in the event
of any such  failure,  Lone Star will not have an  adequate  remedy at law or in
damages.  Accordingly,  each  Stockholder  agrees that injunctive  relief or any
other equitable  remedy,  in addition to any remedies at law or damages,  is the
appropriate  remedy for any such failure and will not oppose the granting of any
such  remedy on the basis  that Lone Star has an  adequate  remedy at law.  Each
Stockholder  agrees not to seek,  and agrees to waive any  requirement  for, the
securing or posting of a bond in connection  with Lone Star seeking or obtaining
such equitable relief.

         11.  Reasonable  Efforts.  Each  Stockholder  will  use all  reasonable
efforts  to cause to be  satisfied  the  conditions  to the  obligations  of the
Company in such Stockholder's control to effect the Closing under the Settlement
Agreement.

         12. Publicity. Each Stockholder agrees that, from the date hereof, such
Stockholder  shall not issue any public release or  announcement  concerning the
transactions contemplated by this Agreement and the Settlement Agreement without
the prior consent of Lone Star,  except as such release or announcement  may, in
the opinion of such  Stockholder's  counsel,  be required by applicable  law, in
which case such Stockholder  shall allow Lone Star reasonable time to comment on
such release or announcement in advance of such issuance.

         13. Term of Agreement; Termination.

                  (a) The  term of this  Agreement  shall  commence  on the date
         hereof and shall  terminate upon the earliest to occur of (i) after the
         consummation of the Transactions,  (ii) the due and proper  termination
         of the Settlement  Agreement in accordance  with its terms or (iii) six
         (6) months from the date hereof. Upon such termination,  no party shall
         have any further obligations or liabilities hereunder.

                                Page 174 of 200
<PAGE>

                  (b) The  obligations  of the  Stockholders  set  forth in this
         Agreement shall not be effective or binding upon any Stockholder  until
         after such time as the  Settlement  Agreement is executed and delivered
         by Lone Star, the Company, each Assignor and each Intervenor.

         14. Miscellaneous.

                  (a) Entire  Agreement.  This Agreement  constitutes the entire
         agreement  among the parties with respect to the subject matter of this
         Agreement   and   supersedes   all  prior  written  and  oral  and  all
         contemporaneous  oral agreements and understandings with respect to the
         subject matter of this Agreement.

                  (b) Notices.  No notice or other communication shall be deemed
         given unless sent in the manner, and to the persons,  specified in this
         paragraph 14. All notices and other  communications  hereunder shall be
         in writing  and shall be deemed  given (a) upon  receipt  if  delivered
         personally (unless subject to clause (b)) or if mailed by registered or
         certified  mail,  (b) at noon on the  date  after  dispatch  if sent by
         overnight courier or (c) upon the completion of transmission  (which is
         confirmed  telephonically  by the receiving  party) if  transmitted  by
         telecopy or other means of facsimile  which provides  immediate or near
         immediate transmission to compatible equipment in the possession of the
         recipient, and in any case to the parties at the following addresses or
         telecopy  numbers (or at such other  address or  telecopy  number for a
         party as will be specified by like notice):

                           if to any Greenbriar Party, to

                           Greenbriar Corporation
                           650 Centura Tower One
                           14185 Dallas Parkway
                           Dallas, Texas  75240
                           Attention:  President
                           Telecopy:  (972) 407-8420

                           with a copy (which shall not constitute notice) to:

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

                           If to Lone Star, to

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

                                Page 175 of 200
<PAGE>

                           with a copy (which shall not constitute notice) to:

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

                           If to a Stockholder, to the address set  forth  below
                           such Stockholder's name on Exhibit A hereto,  with  a
                           copy (which shall not constitute notice) to:

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

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

                           Curative Actions; Severability.

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

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

                                Page 176 of 200
<PAGE>

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

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

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

                                Page 177 of 200
<PAGE>

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

                  (g) Successors and Assigns. Except as provided to the contrary
         in this Agreement,  this Agreement shall apply to, and shall be binding
         upon each of the parties,  their  respective  successors  and permitted
         assigns.  Lone  Star may  freely  assign  its  rights  and  obligations
         hereunder to any  designee  subject to  compliance  by Lone Star of its
         obligations to execute and deliver the Mutual  Release  pursuant to the
         terms and conditions of the Settlement Agreement.

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

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

                  (j) Time of the  Essence.  Time is of the  essence to each and
         every provision of this Agreement.

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

            [The remainder of this page is intentionally left blank.]

         IN WITNESS WHEREOF,  the parties hereto,  intending to be legally bound
hereby,  have duly  executed  this Consent  Agreement as of the date first above
written.

                                      LSOF POOLED EQUITY, L.P.

                                      By: LSOF GenPar, Inc., its General Partner

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

                                Page 178 of 200
<PAGE>

                                      THE APRIL TRUST, A GRANTOR TRUST FOR THE
                                      BENEFIT OF JAMES R. GILLEY AND SYLVIA M.
                                      GILLEY

                                      By:    /s/  James R. Gilley
                                        ----------------------------------------
                                              James R. Gilley, Trustee

                                      JRG INVESTMENTS CO., INC.

                                      By:   /s/  James R. Gilley
                                        ----------------------------------------
                                             James R. Gilley, Trustee

                                            /s/  Sylvia M. Gilley
                                      ------------------------------------------
                                             Sylvia M. Gilley

                                            /s/  Victor L. Lund
                                      ------------------------------------------
                                              Victor L. Lund

                                            /s/  Gene S. Bertcher
                                      ------------------------------------------
                                              Gene S. Bertcher

                                            /s/  Robert L. Griffis
                                      ------------------------------------------
                                             Robert L. Griffis

                                            /s/  Don C. Benton
                                      ------------------------------------------
                                             Don C. Benton

                                Page 179 of 200
<PAGE>

                                      AMERICAN REALTY TRUST, INC.

                                      By:   /s/  Robert Waldman
                                        ----------------------------------------
                                             Robert Waldman, Secretary

                                      BASIC CAPITAL MANAGEMENT, INC.

                                      By:   /s/  Robert Waldman
                                        ----------------------------------------
                                             Robert Waldman, Secretary

                                      NEVADA SEA INVESTMENTS, INC.

                                      By:   /s/  Robert Waldman
                                        ----------------------------------------
                                             Robert Waldman, Secretary

                                      INTERNATIONAL HEALTH PRODUCTS, INC.

                                      By:   /s/  Ronald E. Kimbrough
                                         ---------------------------------------
                                             Ronald E. Kimbrough, Secretary

                                Page 180 of 200
<PAGE>

                                      ONE REALCO CORPORATION (fka Davister
                                      Corporation)

                                      By:   /s/  Ronald Akin
                                         ---------------------------------------
                                             Ronald Akin, President

                                      TACCO FINANCIAL, INC.

                                      By:   /s/  J. T. Tackett
                                        ----------------------------------------
                                             J. T. Tackett, Vice President

                                    EXHIBIT A
                                    ---------

Name of Stockholder:                         The April Trust,  a  Grantor  Trust
                                             for the benefit of  James R. Gilley
                                             and Sylvia M. Gilley

Address:                                     650 Centura Tower One
                                             14185 Dallas Parkway
                                             Dallas, TX 75240

Telephone No.:                               972-407-8400

Facsimile No.:                               214-273-0620

Number of Shares of Common Stock:            2,340,851

Name of Stockholder:                         JRG Investments Co., Inc.

Address:                                     650 Centura Tower One
                                             14185 Dallas Parkway
                                             Dallas, TX 75240

                                Page 181 of 200
<PAGE>

Telephone No.:                               972-407-8400

Facsimile No.:                               214-273-0620

Number of Shares of Common Stock:            897,851

Name of Stockholder:                         Sylvia M. Gilley

Address:                                     650 Centura Tower One
                                             14185 Dallas Parkway
                                             Dallas, TX 75240

Telephone No.:                               972-407-8400

Facsimile No.:                               972-991-8582

Number of Shares of Common Stock:            536,000

Name of Stockholder:                         Victor L. Lund

Address:                                     816 NE 87th Avenue
                                             Vancouver, Washington  98664

Telephone No.:                               360-892-9090

Facsimile No.:                               360-892-2146

Number of Shares of Common Stock:            1,234,961

Name of Stockholder:                         Gene S. Bertcher

Address:                                     650 Centura Tower One
                                             14185 Dallas Parkway
                                             Dallas, TX 75240

Telephone No.:                               972-407-8400

Facsimile No.:                               214-273-0624

Number of Shares of Common Stock:            66,000

                                Page 182 of 200
<PAGE>

Name of Stockholder:                         Robert L. Griffis

Address:                                     650 Centura Tower One
                                             14185 Dallas Parkway
                                             Dallas, TX 75240

Telephone No.:                               972-407-8400

Facsimile No.:                               214-273-0625

Number of Shares of Common Stock:            30,000

Name of Stockholder:                         Don C. Benton

Address:                                     Arrowhead Ranch
                                             Route 1
                                             Clarksville, Texas  75246

Telephone No.:                               903-966-2347

Facsimile No.:                               903-427-5773

Number of Shares of Common Stock:            10,000

Name of Stockholder:                         American Realty Trust, Inc.

Address:                                     1800 Valley View Lane, Suite 300
                                             Dallas, Texas  75234

Telephone No.:                               469-522-4277

Facsimile No.:                               469-522-4388

Number of Shares of Common Stock:            97,500

                                Page 183 of 200
<PAGE>

Name of Stockholder:                         Basic Capital Management, Inc.

Address:                                     1800 Valley View Lane, Suite 300
                                             Dallas, Texas  75234

Telephone No.:                               469-522-4277

Facsimile No.:                               469-522-4388

Number of Shares of Common Stock:            141,260

Name of Stockholder:                         Nevada Sea Investments, Inc.

Address:                                     1800 Valley View Lane, Suite 300
                                             Dallas, Texas  75234

Telephone No.:                               469-522-4277

Facsimile No.:                               469-522-4388

Number of Shares of Common Stock:            72,800

Name of Stockholder:                         International Health Products, Inc.

Address:                                     1800 Valley View Lane, Suite 300
                                             Dallas, Texas  75234

Telephone No.:                               469-522-4277

Facsimile No.:                               469-522-4388

Number of Shares of Common Stock:            229,085

                                Page 184 of 200
<PAGE>

Name of Stockholder:                         One   Realco   Corporation   (fka
                                             Davister Corporation)

Address:                                     1800 Valley View Lane, Suite 300
                                             Dallas, Texas  75234

Telephone No.:                               469-522-4277

Facsimile No.:                               469-522-4388

Number of Shares of Common Stock:            264,200

Name of Stockholder:                         TacCo Financial, Inc.

Address:                                     1800 Valley View Lane, Suite 300
                                             Dallas, Texas  75234

Telephone No.:                               469-522-4277

Facsimile No.:                               469-522-4388

Number of Shares of Common Stock:            242,500

                                Page 185 of 200
<PAGE>

                                    EXHIBIT B
                                    ---------

                                 CAPITALIZATION
                                 --------------

The total number of shares of stock which the Company has  authority to issue is
110,000,000  shares of capital stock,  classified as (i)  100,000,000  shares of
common stock,  $0.01 par value and (ii)  10,000,000  shares of preferred  stock,
$0.10 par value.  As of the date of this Agreement,  9,714,608  shares of common
stock are issued and  outstanding  and  6,000,000  shares of Series H  Preferred
Stock, $0.10 par value, are issued and outstanding.

                                Page 186 of 200
<PAGE>

                     IRREVOCABLE PROXY AND POWER OF ATTORNEY

         The  undersigned  hereby appoints John P. Grayken and J.D. Dell, as the
undersigned's  attorney-in-fact and proxy, with full power of substitution,  for
and in the  undersigned's  name, to vote,  express  consent or  disapproval,  or
otherwise act (including pursuant to written consent, but excluding the right to
assert,  perfect and  prosecute  dissenters'  rights of appraisal) in accordance
with  Paragraphs  7(a) and 4(b) of the Consent  Agreement with respect to all of
the shares of Common Stock, $.01 par value per share, of Greenbriar Corporation,
a Nevada corporation (the "Company"), owned of record by the undersigned.

         The proxy granted hereby shall be  irrevocable  and may be exercised at
any  meeting  of  Stockholders,  notice of which is given,  or in respect of any
written consent which is solicited  prior to the due and proper  termination of,
and subject to and in accordance  with the terms and  conditions of, the Consent
Agreement,  dated of even date  herewith,  among the  undersigned,  LSOF  Pooled
Equity, L.P., a Delaware limited  partnership,  the Company and the Stockholders
of the  Company  signatory  thereto.  This  proxy is  coupled  with an  interest
sufficient in law to support such proxy.

Dated:   August 1, 2001
                                         ---------------------------------------
                                         Name:

                                Page 187 of 200
<PAGE>

                                                                       EXHIBIT E
                                                                       ---------

                                ESCROW AGREEMENT

         THIS ESCROW AGREEMENT (as the same may be amended or modified from time
to time and including any and all written  instructions  given to "Escrow Agent"
(hereinafter  defined)  pursuant  hereto,  this "Escrow  Agreement") is made and
entered into as of August 1, 2001 by and among Greenbriar Corporation,  a Nevada
corporation  (the  "Company"),  LSOF Pooled  Equity,  L.P.,  a Delaware  limited
partnership  ("Lone Star", and together with the Company,  sometimes referred to
collectively as the "Other  Parties"),  and American  Escrow Company  ("American
Escrow").

                              W I T N E S S E T H :
         WHEREAS,  the Company and Lone Star are parties to that certain  Master
Settlement Agreement dated as of August 1, 2001 (the "Settlement Agreement");

         WHEREAS,  pursuant to the Settlement Agreement, the Company is required
to deliver the Deposit  (hereinafter  defined) to American  Escrow to be held by
bank and released in  accordance  with the terms and  conditions  of this Escrow
Agreement; and

         WHEREAS,  the Company and Lone Star have requested  American  Escrow to
act in the  capacity of escrow agent under this Escrow  Agreement,  and American
Escrow, subject to the terms and conditions hereof, has agreed so to do.

         NOW,  THEREFORE,  in consideration of the premises and mutual covenants
and agreements contained herein, the parties hereto hereby agree as follows:

         1.       Appointment of Escrow Agent. Each of the Company and Lone Star
hereby appoints  American Escrow as the escrow agent under this Escrow Agreement
(American Escrow in such capacity,  the "Escrow Agent"), and Escrow Agent hereby
accepts such appointment.

         2.       Deposit. Upon execution of this Escrow Agreement,  the Company
will  deliver to the Escrow  Agent (i) the sum of Nine  Hundred Two Thousand One
Hundred Fourteen Dollars and NO/100  ($902,114.00)  (as said amount may increase
or  decrease  as a result of the  investment  thereof  and as said amount may be
reduced by charges  thereto and payments and setoffs  therefrom to compensate or
reimburse  Escrow  Agent for  amounts  owing to it pursuant  hereto),  (ii) that
certain  Certificate  of Deposit in the amount of $527,825  dated April 30, 2001
and issued to Roswell  Retirement  Ltd Co and (iii) that certain  Certificate of
Deposit  in the amount of  $570,061  dated  April 30,  2001  (collectively,  the
"Deposit")  to be held by Escrow  Agent in  accordance  with the  terms  hereof.

                                Page 188 of 200
<PAGE>

Subject to and in accordance with the terms and conditions hereof,  Escrow Agent
agrees that it shall  receive,  hold in escrow,  invest the cash  portion of the
Deposit and release or distribute the Deposit. It is hereby expressly stipulated
and agreed  that all  interest  and other  earnings  on the cash  portion of the
Deposit  shall  accrue for the benefit of the Company and shall be  disbursed to
the Company upon termination of this Escrow Agreement.

         3.       Investment of the Deposit.  Escrow Agent shall invest the cash
portion of the Deposit in the Nations 231 Fund,  unless otherwise  instructed in
writing by the Other Parties. Such written instructions,  if any, referred to in
the foregoing sentence shall specify the type and identity of the investments to
be purchased  and/or sold and shall also include the name of the  broker-dealer,
if any,  which the Other  Parties  direct the Escrow  Agent to use in respect of
such investment,  any particular  settlement  procedures required, if any (which
settlement   procedures   shall  be  consistent  with  industry   standards  and
practices), and such other information as Escrow Agent may require. Escrow Agent
shall not be liable  for  failure  to invest  funds  absent  sufficient  written
direction.   Unless   Escrow  Agent  is  otherwise   directed  in  such  written
instructions,  Escrow  Agent  may  use a  broker-dealer  of its  own  selection,
including a broker-dealer owned by or affiliated with Escrow Agent or any of its
affiliates.  The Escrow Agent or any of its affiliates may receive  compensation
with respect to any investment  directed  hereunder.  It is expressly agreed and
understood  by the  parties  hereto  that  Escrow  Agent  shall  not in any  way
whatsoever be liable for losses on any investments,  including,  but not limited
to,  losses from market risks due to  premature  liquidation  or resulting  from
other actions taken pursuant to this Escrow Agreement.

         Receipt and  investment  of the cash  portion of the  Deposit  shall be
confirmed by Escrow Agent as soon as practicable by account  statement,  and any
discrepancies in any such account  statement shall be noted by the Other Parties
to Escrow Agent within 30 calendar days after receipt thereof. Failure to inform
Escrow  Agent in  writing of any  discrepancies  in any such  account  statement
within said 30-day  period shall  conclusively  be deemed  confirmation  of such
account  statement in its  entirety.  For purposes of this  paragraph,  (a) each
account  statement  shall be deemed to have been  received  by the party to whom
directed  on the earlier to occur of (i) actual  receipt  thereof and (ii) three
Business  Days  (hereinafter  defined)  after the deposit  thereof in the United
States Mail,  postage prepaid and (b) the term "Business Day" shall mean any day
of the year,  excluding  Saturday,  Sunday and any other day on which  banks are
required or authorized to close in Dallas, Texas.

         4.       Release of Deposit.  Escrow Agent is hereby authorized to make
disbursements of the Deposit only as follows:

                  (a)      Upon receipt of written  instructions  signed by both
the Company and Lone Star and  otherwise in form and substance  satisfactory  to
Escrow Agent, in accordance with such instructions;

                  (b)      Upon receipt of a certificate of an executive officer
of:

                           (i)      Lone   Star   which   certifies   that   the
         Settlement  Agreement  has  been  terminated  other  than  pursuant  to
         Sections  6.1(c),  (d),  (e),  (f),  (g), (i) or (j) of the  Settlement
         Agreement, to Lone Star; or

                                Page 189 of 200
<PAGE>

                           (ii)     the  Company   which   certifies   that  the
         Settlement  Agreement has been terminated  pursuant to Sections 6.1(c),
         (d), (e), (f) or (g), to the Company;

it being  acknowledged  and agreed that each of Lone Star and the Company has an
unconditional  right to receive  the  disbursement  requested  by the  foregoing
certificates  provided that such certificates are timely and properly  delivered
to Escrow Agent as determined by Escrow Agent;

                  (c)      Upon  receipt of  evidence  from the  Company or Lone
Star that:

                           (i)      an adverse  judgment is entered  against any
         Greenbriar  Party or any of its respective  Subsidiaries and Affiliates
         (as such terms are defined in the Settlement Agreement) with respect to
         (A) Title 11 of the United States Code or any other applicable federal,
         state or foreign  bankruptcy,  debtor  relief or other similar law, (B)
         the appointment of a custodian, receiver, liquidator, assignee, trustee
         or sequestrator  (or similar  official) for any Greenbriar Party or any
         of its respective  Subsidiaries  and  Affiliates or of any  substantial
         part of such person's  assets or (C) the  winding-up or  liquidation of
         the  affairs  of  any  Greenbriar   Party  or  any  of  its  respective
         Subsidiaries and Affiliates,  other than the pending bankruptcy filings
         of American Care Communities,  Inc.,  Neawanna by the Sea LP, Villa Del
         Rey Roswell, L.P. and Villa Del Rey Seaside Inc.; or

                           (ii)     any   Greenbriar   Party   or   any  of  its
         respective  Subsidiaries  or  Affiliates  (A) filed a petition  seeking
         relief under Title 11 of the United States Code or any other applicable
         federal, state or foreign bankruptcy, debtor relief or similar law, (B)
         consented to the institution of proceedings thereunder or to the filing
         of any such petition or to the appointment of or taking possession by a
         custodian, receiver, liquidator,  assignee, trustee or sequestrator (or
         similar  official)  of any  Greenbriar  Party or any of its  respective
         Subsidiaries  or  Affiliates  or of any  substantial  part of any  such
         person's  assets,  (C) made a general  assignment  for the  benefit  of
         creditors,  (D) took  any  corporate  action  to  authorize  any of the
         foregoing  or (E)  admitted  in writing its  inability  to, or shall be
         generally unable to, pay its debts as such debts become due, other than
         the pending  bankruptcy  filings of American  Care  Communities,  Inc.,
         Neawanna by the Sea LP, Villa Del Rey  Roswell,  L.P. and Villa Del Rey
         Seaside Inc.

         to Lone Star; or

                  (d)      Upon the  receipt of a copy of a judgment  of a court
of competent  jurisdiction  having the authority to determine the disposition of
the Deposit, which judgment is not subject to appeal, reconsideration or review,
in accordance with such judgment.

                                Page 190 of 200
<PAGE>

Notwithstanding  anything  contained  herein or elsewhere to the  contrary,  the
Other Parties hereby  expressly agree that the Escrow Agent shall be entitled to
charge the cash  portion of the Deposit  for,  and pay and set-off from the cash
portion of the Deposit,  any and all amounts,  if any, then owing to it pursuant
to this Escrow  Agreement prior to the disbursement of the Deposit in accordance
with clauses (a) and (b) of this Section 4.

         5.       Tax Matters. The Other Parties shall provide Escrow Agent with
their respective  taxpayer  identification  numbers documented by an appropriate
Form W 8 or Form W 9 upon  execution  of this  Escrow  Agreement.  Failure so to
provide such forms may prevent or delay  disbursements  from the Deposit and may
also result in the  assessment of a penalty and Escrow Agent's being required to
withhold tax on any interest or other income earned on the Deposit. Any payments
of income shall be subject to applicable  withholding  regulations then in force
in the United States or any other jurisdiction, as applicable.

         6.       Scope   of    Undertaking.    Escrow    Agent's   duties   and
responsibilities  in  connection  with  this  Escrow  Agreement  shall be purely
ministerial  and shall be limited to those  expressly  set forth in this  Escrow
Agreement.  Escrow Agent is not a principal,  participant  or beneficiary in any
transaction  underlying this Escrow  Agreement and shall have no duty to inquire
beyond  the  terms  and   provisions   hereof.   Escrow   Agent  shall  have  no
responsibility  or  obligation  of any  kind  in  connection  with  this  Escrow
Agreement or the Deposit and shall not be required to deliver the Deposit or any
part  thereof or take any action with respect to any matters that might arise in
connection  therewith,  other than to  receive,  hold,  invest and  deliver  the
Deposit as herein provided. Without limiting the generality of the foregoing, it
is hereby  expressly  agreed and  stipulated  by the parties  hereto that Escrow
Agent shall not be required to exercise any discretion  hereunder and shall have
no investment or management responsibility and, accordingly,  shall have no duty
to, or  liability  for its failure to,  provide  investment  recommendations  or
investment advice to the Other Parties or either of them. Escrow Agent shall not
be liable for any error in judgment,  any act or omission, any mistake of law or
fact,  or for anything it may do or refrain from doing in  connection  herewith,
except for,  subject to Section 7  hereinbelow,  its own willful  misconduct  or
gross  negligence.  It is the intention of the parties  hereto that Escrow Agent
shall never be required to use, advance or risk its own funds or otherwise incur
financial  liability in the  performance of any of its duties or the exercise of
any of its rights and powers hereunder.

         7.       Reliance;  Liability.  Escrow Agent may rely on, and shall not
be liable for acting or refraining  from acting in accordance  with, any written
notice,  instruction  or request or other paper  furnished  to it  hereunder  or
pursuant  hereto and  believed  by it to have been  signed or  presented  by the
proper  party or  parties.  Escrow  Agent  shall  be  responsible  for  holding,
investing  and  disbursing  the  Deposit  pursuant  to  this  Escrow  Agreement;
provided,  however,  that in no event shall  Escrow Agent be liable for any lost
profits, lost savings or other special,  exemplary,  consequential or incidental
damages in excess of Escrow  Agent's fee hereunder and provided,  further,  that
Escrow Agent shall have no liability  for any loss arising from any cause beyond
its  control,  including,  but not limited to, the  following:  (a) acts of God,
force majeure,  including,  without limitation,  war (whether or not declared or
existing),  revolution,  insurrection,  riot, civil commotion,  accident,  fire,

                                Page 191 of 200
<PAGE>

explosion,  stoppage of labor, strikes and other differences with employees; (b)
the act,  failure or neglect of any Other Party or any agent or correspondent or
any other person  selected by Escrow Agent;  (c) any delay,  error,  omission or
default of any mail, courier,  telegraph,  cable or wireless agency or operator;
or (d) the acts or  edicts of any  government  or  governmental  agency or other
group or entity exercising  governmental powers. Escrow Agent is not responsible
or liable in any manner whatsoever for the sufficiency, correctness, genuineness
or validity of the subject matter of this Escrow Agreement or any part hereof or
for the  transaction  or  transactions  requiring or underlying the execution of
this  Escrow  Agreement,  the form or  execution  hereof or for the  identity or
authority of any person  executing  this Escrow  Agreement or any part hereof or
depositing the Deposit.

         8.       Right of Interpleader.  Should any controversy arise involving
the  parties  hereto or any of them or any  other  person,  firm or entity  with
respect to this Escrow Agreement or the Deposit,  or should a substitute  escrow
agent fail to be designated as provided in Section 15 hereof, or if Escrow Agent
should be in doubt as to what action to take, Escrow Agent shall have the right,
but not the obligation, either to (a) withhold delivery of the Deposit until the
controversy is resolved,  the conflicting  demands are withdrawn or its doubt is
resolved or (b) institute a petition for  interpleader in any court of competent
jurisdiction to determine the rights of the parties hereto.  In the event Escrow
Agent is a party to any dispute, Escrow Agent shall have the additional right to
refer  such   controversy  to  binding   arbitration.   Should  a  petition  for
interpleader be instituted, or should Escrow Agent be threatened with litigation
or become involved in litigation or binding arbitration in any manner whatsoever
in  connection  with this Escrow  Agreement  or the Deposit,  the Other  Parties
hereby jointly and severally agree to reimburse  Escrow Agent for its attorneys'
fees and any and all other  expenses,  losses,  costs and  damages  incurred  by
Escrow Agent in  connection  with or resulting  from such  threatened  or actual
litigation or arbitration prior to any disbursement hereunder.

         9.       Indemnification.   The  Other  Parties   hereby   jointly  and
severally indemnify Escrow Agent, its officers,  directors,  partners, employees
and agents (each herein called an "Indemnified  Party")  against,  and hold each
Indemnified  Party  harmless  from,  any and all  expenses,  including,  without
limitation,  attorneys' fees and court costs, losses, costs, damages and claims,
including,   but  not  limited  to,  costs  of  investigation,   litigation  and
arbitration,  tax liability and loss on investments  suffered or incurred by any
Indemnified  Party in  connection  with or  arising  from or out of this  Escrow
Agreement,  except  such  acts or  omissions  as may  result  from  the  willful
misconduct or gross  negligence  of such  Indemnified  Party.  IT IS THE EXPRESS
INTENT OF EACH OF THE COMPANY AND LONE STAR TO INDEMNIFY EACH OF THE INDEMNIFIED
PARTIES  FOR,  AND HOLD  THEM  HARMLESS  AGAINST,  THEIR OWN  NEGLIGENT  ACTS OR
OMISSIONS.

         10.      Compensation and Reimbursement of Expenses. The Company hereby
agrees to pay Escrow Agent for its services  hereunder in accordance with Escrow
Agent's fee  schedule as attached as Schedule I hereto as in effect from time to
time and to pay all  expenses  incurred by Escrow Agent in  connection  with the
performance of its duties and enforcement of its rights  hereunder and otherwise
in connection with the preparation, operation, administration and enforcement of
this Escrow Agreement, including, without limitation, attorneys' fees, brokerage
costs and related expenses incurred by Escrow Agent.

                                Page 192 of 200
<PAGE>

         11.      Funds Transfer.  In the event funds transfer  instructions are
given (other than in writing at the time of execution of the Escrow  Agreement),
whether in writing, by telefax, or otherwise,  the Escrow Agent is authorized to
seek confirmation of such  instructions by telephone  call-back to the person or
person designated on Schedule II hereto,  and the Escrow Agent may rely upon the
confirmations  of anyone  purporting to be the person or persons so  designated.
The persons and telephone  numbers for call-backs may be changed only in writing
actually  received and  acknowledged  by the Escrow  Agent.  The parties to this
Escrow  Agreement  acknowledge  that such  security  procedure  is  commercially
reasonable.

                  It is understood  that the Escrow Agent and the  beneficiary's
bank in any funds  transfer may rely solely upon any account  numbers or similar
identifying  number  provided by either of the other parties  hereto to identify
(i) the beneficiary, (ii) the beneficiary's bank, or (iii) an intermediary bank.
The Escrow  Agent may apply any of the escrowed  funds for any payment  order it
executes using any such identifying  number,  even where its use may result in a
person other than the beneficiary being paid, or the transfer of funds to a bank
other than the beneficiary's bank or an intermediary bank, designated.

         12.      Notices.  Any  notice  or  other  communication   required  or
permitted  to be given under this Escrow  Agreement  by any party  hereto to any
other party hereto shall be considered  as properly  given if in writing and (a)
delivered against receipt therefor,  (b) mailed by registered or certified mail,
return receipt requested and postage prepaid or (c) sent by telefax machine,  in
each case to the address or telefax number, as the case may be, set forth below:

         If to Escrow Agent:

                American Escrow Company
                2626 Howell Street, 10th Floor
                Dallas, Texas 75204
                Attn:  Judy DeMara
                Telefax No.: (214) 855-8889
                Telephone No.: (214) 855-8830

         If to the Company:

                Greenbriar Corporation
                650 Centura Tower One
                14185 Dallas Parkway
                Dallas, Texas 75240
                Attn:   President
                Telefax No.:  (972) 407-8420
                Telephone No.: (972) 407-8400

                                Page 193 of 200
<PAGE>

         With a copy (which shall not constitute notice) to:

                Henry W. Simon, Jr.
                Simon, Warner & Doby, L.L.P.
                1700 City Center Tower II
                301 Commerce Street
                Fort Worth, Texas  76102
                Telefax No.: (817) 810-5255
                Telephone No.: (817) 810-5250

         If to Lone Star:

                LSOF Pooled Equity, L.P.
                600 N. Pearl Street
                Suite 1550, LB 161
                Dallas, Texas  76140
                Attn: Len Allen
                Telefax No.:  (214) 754-8401
                Telephone No.: (214) 754-8300

         With a copy (which shall not constitute notice) to:

                Weil, Gotshal & Manges LLP
                100 Crescent Court, Suite 1300
                Dallas, Texas 75201-6950
                Attn: Michael A. Saslaw
                Telefax No.: (214) 746-7777
                Telephone No,: (214) 746-7700

Except to the extent  otherwise  provided in the second  paragraph  of Section 3
hereinabove, delivery of any communication given in accordance herewith shall be
effective only upon actual receipt  thereof by the party or parties to whom such
communication  is directed.  Any party to this Escrow  Agreement  may change the
address to which  communications  hereunder are to be directed by giving written
notice to the other  party or  parties  hereto in the  manner  provided  in this
section.

         13.      Consultation with Legal Counsel. Escrow Agent may consult with
its counsel or other counsel satisfactory to it concerning any question relating
to its duties or responsibilities  hereunder or otherwise in connection herewith
and shall not be liable for any action taken,  suffered or omitted by it in good
faith upon the advice of such counsel.

                                Page 194 of 200
<PAGE>

         14.      Choice of Laws; Cumulative Rights. This Escrow Agreement shall
be construed under, and governed by, the laws of the State of Texas,  excluding,
however,  (a) its choice of law rules and (b) the  portions  of the Texas  Trust
Code Sec.  111.001,  et seq. of the Texas  Property  Code  concerning  fiduciary
duties and liabilities of trustees.  All of Escrow Agent's rights  hereunder are
cumulative of any other rights it may have at law, in equity or  otherwise.  The
parties hereto agree that the forum for resolution of any dispute  arising under
this  Escrow  Agreement  shall be Dallas  County,  Texas,  and each of the Other
Parties hereby consents, and submits itself, to the jurisdiction of any state or
federal court sitting in Dallas County, Texas.

         15.      Resignation.  Escrow Agent may resign  hereunder upon ten (10)
days'  prior  notice  to the  Other  Parties.  Upon the  effective  date of such
resignation,  Escrow Agent shall  deliver the Deposit to any  substitute  escrow
agent  designated by the Other Parties in writing.  If the Other Parties fail to
designate a  substitute  escrow  agent  within ten (10) days after the giving of
such notice,  Escrow Agent may  institute a petition  for  interpleader.  Escrow
Agent's sole responsibility  after such 10-day notice period expires shall be to
hold the Deposit  (without any  obligation  to reinvest the same) and to deliver
the same to a designated  substitute escrow agent, if any, or in accordance with
the   directions  of  a  final  order  or  judgment  of  a  court  of  competent
jurisdiction,  at which time of delivery  Escrow Agent's  obligations  hereunder
shall cease and terminate.

         16.      Assignment.  This  Escrow  Agreement  shall not be assigned by
either of the Other Parties  without the prior  written  consent of Escrow Agent
(such assigns of the Other Parties to which Escrow Agent  consents,  if any, and
Escrow Agent's assigns being hereinafter  referred to collectively as "Permitted
Assigns"); provided that Lone Star may assign its right to receive any or all of
the Deposit to any other person.

         17.      Severability.  If one or more of the  provisions  hereof shall
for any reason be held to be invalid,  illegal or  unenforceable  in any respect
under applicable law, such invalidity,  illegality or unenforceability shall not
affect any other provisions hereof, and this Escrow Agreement shall be construed
as if such invalid,  illegal or unenforceable provision had never been contained
herein,  and the  remaining  provisions  hereof  shall be given  full  force and
effect.

         18.      Termination.  This Escrow  Agreement  shall terminate upon the
disbursement,  in  accordance  with  Sections 4 or 15 hereof,  of the Deposit in
full; provided,  however, that in the event all fees, expenses,  costs and other
amounts  required to be paid to Escrow Agent hereunder are not fully and finally
paid prior to termination, the provisions of Section 10 hereof shall survive the
termination hereof and, provided further, that the last two sentences of Section
8 hereof and the provisions of Section 9 hereof shall, in any event, survive the
termination hereof.

         19.      General.   The  section  headings  contained  in  this  Escrow
Agreement  are for  reference  purposes only and shall not affect in any way the
meaning or interpretation  of this Escrow  Agreement.  This Escrow Agreement and
any affidavit, certificate,  instrument, agreement or other document required to
be provided hereunder may be executed in two or more counterparts, each of which
shall be deemed an original,  but all of which taken together  shall  constitute
but one and the same instrument. Unless the context shall otherwise require, the
singular shall include the plural and vice-versa, and each pronoun in any gender
shall  include  all  other  genders.  The terms and  provisions  of this  Escrow

                                Page 195 of 200
<PAGE>

Agreement constitute the entire agreement among the parties hereto in respect of
the subject  matter  hereof,  and neither the Other Parties nor Escrow Agent has
relied on any representations or agreements of the other, except as specifically
set forth in this Escrow  Agreement.  This  Escrow  Agreement  or any  provision
hereof may be amended, modified, waived or terminated only by written instrument
duly signed by the parties  hereto.  This  Escrow  Agreement  shall inure to the
benefit of, and be binding upon, the parties hereto and their respective  heirs,
devisees,  executors,  administrators,  personal  representatives,   successors,
trustees, receivers and Permitted Assigns. This Escrow Agreement is for the sole
and exclusive  benefit of the Other Parties and the Escrow Agent, and nothing in
this Escrow  Agreement,  express or  implied,  is intended to confer or shall be
construed as conferring upon any other person any rights,  remedies or any other
type or types of benefits.

            [The Remainder of this Page Is Intentionally Left Blank.]

                                Page 196 of 200
<PAGE>

         IN WITNESS  WHEREOF,  the  parties  hereto  have  executed  this Escrow
Agreement to be effective as of the date first above written.

                                   GREENBRIAR CORPORATION

                                   By: _________________________________________
                                   Name: _______________________________________
                                   Title: ______________________________________

                                   LSOF POOLED EQUITY, L.P.

                                   By: LSOF Genpar, Inc., its General Partner

                                   By: _________________________________________
                                   Name: _______________________________________
                                   Title: ______________________________________

                                   AMERICAN ESCROW COMPANY

                                   By: _________________________________________
                                   Name: _______________________________________
                                   Title: ______________________________________

                                Page 197 of 200
<PAGE>

Schedule I

                                      $500

Schedule II

                Telephone Number(s) for Call-backs and Person(s)
                Designated to Confirm Funds Transfer Instructions

                  If to the Company:

     Name                                    Telephone Number
     ----                                    ----------------

Gene Bertcher                                 (972) 407-8400

If to Lone Star:

     Name                                    Telephone Number
     ----                                    ----------------

JD Dell                                       (214) 754-8300

Telephone  call-backs  shall be made to either the Company or Lone Star if joint
instructions are required pursuant to the Escrow Agreement.

                                Page 198 of 200

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