Document:

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                                                                   Exhibit 10.26

                              PURCHASE AGREEMENT
                              ------------------

SELLER:        Charis Hospital, L.L.C., a Louisiana limited liability company
               (Taxpayer Identification No. _____________), domiciled in East
               Baton Rouge Parish, Louisiana, having a mailing address of 9302
               Perkins Road, Baton Rouge, Louisiana 70809, herein represented by
               its duly authorized officer.

BUYER:         Dynacq International, Inc., a Nevada corporation Taxpayer
               Identification No. 760375477, domiciled in Harris County, Texas,
               having a mailing address of 4301A Vista, Pasadena, Texas 77504
               herein represented by its duly authorized officer.

PROPERTY:      Charis Hospital, a facility presently used for the operation of a
               psychiatric hospital, consisting of several buildings located on
               14 acres of land, more or less, located at 9302 Perkins Road, in
               the City of Baton Rouge, East Baton Rouge Parish, Louisiana, and
               more fully described on Exhibit "A" attached hereto.

1    Agreement to Sell and Consideration. Seller shall sell and convey to Buyer
     -----------------------------------
and Buyer shall purchase from Seller upon the terms and conditions set forth in
this purchase agreement ("Agreement") the following described property. Buyer
agrees to pay and Seller agrees to accept as full consideration for the
conveyance of the Property the sum of Three Million Four Hundred Thousand
($3,400,000.00) Dollars (the "Purchase Price") payable in cash or by wire
transfer at the closing of the sale contemplated herein ("Closing"):

     1.1  The real property described more fully in Exhibit "A" which is
     attached hereto and incorporated herein by reference, including without
     limitation, all right, title, and interest, if any, of Seller in and to any
     easements appurtenant thereto and all covenants, licenses, privileges and
     benefits thereto belonging, and all right, title and interest, if any, of
     Seller in and to any land lying in the bed of any street, road, fire lane
     or avenue opened or proposed in front of or adjoining the real property, to
     the center line thereof, all of which shall hereinafter be referred to as
     the "Real Property."

     1.2  The "Improvements," which include all improvements and fixtures
     attached to the Real Property.

     The Real Property and Improvements shall collectively be referred to as the
"Property".

2    Deposit.
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     2.1  Terms of Deposit. Upon the execution of this Agreement by Buyer, Buyer
     shall deposit with the escrow agent described in Section 21 hereof (the
     "Escrow Agent") the sum of $75,000.00, or in Buyer's discretion, a check
     for such sum made payable to Seller (the "Deposit"). Interest earned on the
     Deposit, if any, shall be considered part of the Deposit.

     2.2  Application of Deposit. The Deposit shall be applied to the payment of
     the Purchase Price at Closing, or in the event of a default by either
     Seller or Buyer, or in the event of a termination or if the conditions set
     out in Section 2.5 are applicable, then in accordance with this Agreement.

     2.3  Earnest Money. The Deposit shall not constitute earnest money as
     defined in Louisiana Civil Code article 2624.

     2.4  Reporting of Earnings. The Escrow Agent is authorized to report the
     earnings on the Deposit to the Internal Revenue Service for the account of
     Buyer. Buyer represents that its federal tax identification number as set
     forth above.

     2.5  Escrow of Purchase Agreement. After execution by Buyer, Buyer shall
     deposit this Agreement with the Escrow Agent to be held in escrow and
     released to Seller upon receipt of Seller's executed original of this
     Agreement. Prior to Seller's execution of Agreement, Escrow Agent will
     return to Buyer the Deposit, and Buyer's executed original(s) of the
     Agreement (i) upon receipt of written request of Buyer; or (ii) upon
     receipt of written notification from Buyer that Seller is not planning to
     execute the Agreement.

3    Due Diligence.
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     3.1  Due Diligence Materials. Buyer has begun its investigation of the
     Property and its review of certain documents pertaining to the Property it
     has deemed necessary and appropriate. Seller shall provide Buyer such
     additional documents (including originals of same if available) as Buyer
     shall reasonably request. Without limiting its right to request additional
     materials, Buyer hereby requests those documents set out on Exhibit "B"
     hereto. All documents and materials provided to Buyer by Seller shall
     hereafter be referred to as "Due Diligence Materials". In addition, Seller
     agrees that at all times prior to the Closing, Buyer and its
     representatives including without limitation, the Permitted Outside
     Parties, shall be given adequate opportunity to inspect and investigate the
     Property, all improvements thereon and all aspects relating thereto, and
     shall have the right to conduct any inspections, studies or tests that
     Buyer reasonably deems appropriate.

     3.2  Inspection Obligations. Buyer and its agents and representatives
     including without limitation, the Permitted Outside Parties shall: (a) not
     unreasonably disturb the patients and operations of the Property or
     interfere with the use of the Improvements; (b) not interfere with the
     maintenance of the Property; (c) not damage any part of the Property; (d)
     not injure or otherwise cause bodily harm to Seller, its agents,
     contractors and employees or any tenant of the Property; (e) maintain
     general liability (occurrence) insurance in terms and amounts satisfactory
     to Seller covering any accident arising in connection with the presence of
     Buyer, its agents and representatives on the Property; (f) promptly pay
     when due the costs of all tests, investigations, and examinations done with
     regard to the Property; (g) not permit any liens to attach to the Property
     by reason of the exercise of its rights hereunder; (h) restore the Property
     to the condition in which the same was found before any such inspection or
     tests were undertaken; and (i) not reveal or disclose any information
     obtained from Seller concerning the Property to anyone outside Buyer's
     organization other than Permitted Outside Parties, as that term is defined
     below. Buyer indemnifies and holds Seller harmless from and against any and
     all liens, claims, causes of action, and expenses (including reasonable
     attorneys' fees) arising out of any violation of the provisions of this
     Section 3.2.

     3.3  Confidentiality. Buyer shall keep confidential, to the extent
     permitted by law, all information coming into Buyer's possession as a
     result of activities performed hereunder, provided that Buyer may disclose
     such information to the Permitted Outside Parties as provided herein.

4    Application of Deposit, Order From Bankruptcy Court, and Closing.
     ----------------------------------------------------------------

     4.1  Application of Deposit. If all conditions to Closing are met, and
          ----------------------
     Buyer does not terminate this Agreement as provided for in Sections 4, 6,
     9, 14, 16 or as otherwise provided herein, or if the conditions set out in
     Section 2.5 are not applicable, then Buyer's Deposit shall be applied to
     the Purchase Price at Closing.

     4.2  Order from Bankruptcy Court. As a condition to Closing in favor of
          ---------------------------
     Buyer, the U. S. Bankruptcy Court for the Middle District of Louisiana in
     In re: Charis Hospital, LLC, No. 01-10616, shall have issued an order for
     the sale of the Property to Buyer free and clear of all liens, and no stay
     pending appeal has been issued as of the Closing. If the U. S. Bankruptcy
     Court has not issued such order on or before October 26, 2001, Buyer may,
     at its sole option and at any time thereafter, terminate this Agreement and
     receive the return of its Deposit, or may proceed to close after
     satisfaction of said condition.

     4.3  Closing. The Closing shall occur no more than thirty (30) days after
          -------
     the date on which the order referenced in Section 4.2 has become final and
     non-appealable. The date upon which the Closing occurs shall be herein
     referred to as the "Closing Date". Notwithstanding anything forgoing to the
     contrary, in the event fire or other casualty, or condemnation proceedings,
     damage to any portion of the Property, the Closing automatically will be
     postponed without the payment of any additional sum pending a determination
     of the cost of restoration or replacement in accordance with the Section of
     this Agreement detailing the rights and obligations of the parties in the
     event of such casualty or condemnation.

     4.4  Location of the Closing. The Closing will be held at the local office
     of Buyer's attorneys, Phelps Dunbar LLP, 445 North Boulevard, 6/th/ Floor,
     Baton Rouge, Louisiana 70802; provided, however that the Closing may be
     completed through escrow and neither Seller nor Buyer shall be required to
     attend the Closing in the person of a duly authorized representative.

     4.5  Closing Expenses of Buyer. The following Closing expenses shall be
     paid by Buyer: premium for the Owner's policy of title insurance to the
     extent not paid by Seller, and fees in connection therewith including
     abstract, legal, and notary fee; not paid by Seller, recording charges;
     fees in connection with the inspection of the Property, including, but not
     limited to engineering fees, survey fees and costs of an Environmental
     Audit; and fees of Buyer's

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     attorney.

     4.6  Closing Expenses of Seller. The following Closing expenses shall be
     paid by Seller: one-half the premium for the Owner's title insurance policy
     up to a maximum of $4,550.00, the cost to recertify the existing survey or
     cost of new survey, up to the sum of $1,500.00.

5    Title. Seller shall convey valid and merchantable title to the Property
     -----
free and clear of all liens, mortgages, or encumbrances with the exception of
the Permitted Encumbrances ("Permitted Encumbrances"), being defined as those
items that may exist which Buyer has indicated in writing are acceptable to
Buyer.

6    Title Inspection. First American Title Insurance Company has delivered to
     ----------------
Buyer a preliminary report or title commitment covering the Property (the "Title
Report"), together with copies of all documents (collectively, the "Title
Documents") referenced in the Title Report. In addition, Buyer has received or
will receive an updated, recertified or new survey of the Property. In addition,
Buyer shall have updates to the Title Report and a Title Policy prepared
covering periods through the Closing Date. Buyer shall provide to Seller its
objections to seller's title revealed by the Title Report, Title Documents,
Title Policy, survey and any update to any of the foregoing. Without limiting
the foregoing, Buyer shall have the right to object to any encumbrances
affecting the title arising as a matter of law (such as a lien) or which were
filed in the conveyance and mortgage records of the Clerk of Court for the
parish where the Property is located and arising after the effective dates of
the Title Report, Title Policy, and any updates. Seller shall, at Seller's sole
cost and expense, promptly undertake to correct all objections; provided,
however, Seller shall have no obligation to expend more than $5,000.00 to cure
such title objections. Further, such title objections may be cured by Seller
causing First American Title Insurance Company to provide affirmative title
insurance over such claims in a manner satisfactory to Buyer.

     In the event that Seller does not satisfy all such title requirements
within the time fixed for Closing, Seller and Buyer may agree (a) to extend the
time period to a mutually acceptable date; or (b) Buyer may, in its discretion
(i) accept Seller's title subject to objections, or (ii) terminate the
Agreement, in which latter event Seller shall instruct the Escrow Agent to
return to Buyer its Deposit in full, and Buyer and Seller shall have no further
obligations to each other.

7    Limitation Related to Due Diligence Materials. Buyer acknowledges that any
     ---------------------------------------------
and all of the Due Diligence Materials are proprietary, and confidential in
nature and will be delivered to Buyer solely to assist Buyer in determining the
feasibility of purchasing the Property. Buyer agrees not to disclose the Due
Diligence Materials, or any of the provisions, terms or conditions thereof, to
any party outside of Buyer's organization except as to its attorneys,
accountants, lenders, representatives of or any regulatory agency participating
in the process of licensing health care facilities, or investors including
without limitation medical doctors or groups or representatives of same
(collectively, the "Permitted Outside Parties"). Buyer further agrees that
within its organization, or as to the Permitted Outside Parties, the Due
Diligence Materials shall be disclosed and exhibited only to those persons
within Buyer's organization or as to the Permitted Outside Parties who are
responsible for determining the feasibility of Buyer's acquisition of the
Property. Buyer shall return all of the Due Diligence Materials, any and all
copies Buyer has made of the Due Diligence Materials, and all copies of any
studies, reports or test results obtained by Buyer in connection with its
inspection of the Property, on the first to occur of (a) such time as Buyer
determines that it shall not acquire the Property, or (b) such time as this
Agreement is terminated for any reason other than Seller's default. Buyer hereby
acknowledges that Seller has not made and does not make any warranty or
representation regarding the truth or accuracy of the Due Diligence Materials or
the source thereof. Seller has not undertaken any independent investigation as
to the truth or accuracy of the Due Diligence Materials and is providing the Due
Diligence Materials solely as an accommodation to Buyer; in permitting the
Permitted Outside Parties to review such Due Diligence Materials or information
to assist Buyer. Buyer acknowledges that no third party benefits or
relationships of any kind, either express or implied, have been offered, or are
intended or created by Seller in connection with the delivery of the Due
Diligence Materials and any such claims are expressly rejected by Seller. The
providing of the Due Diligence Materials shall not be construed as a
representation or warranty as to the condition of the Property or its value.
Notwithstanding anything foregoing to the contrary, Seller agrees to notify
Buyer if Seller knows that any of the Due Diligence Materials contain one or
more material false statements or materially misleading statements when the Due
Diligence Materials are considered as a whole.

8    Broker Fees. Buyer and Seller each represent and warrant that it has not
     -----------
dealt with a broker or other real estate agent in connection herewith and that
there are no broker's, finder's or other fee which will be due or payable in
connection with this transaction.

9    Representations and Warranties.
     ------------------------------

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     9.1  Representations, Warranties and Covenants of Seller. Seller hereby
     makes the following representations, warranties and covenants to Buyer:

     (a)  Employment Matters. Seller will terminate the employment of all
          ------------------
          employees of Seller whose duties pertain solely to the Property
          immediately prior to the Closing, and represents and warrants that
          there are no claims which may be asserted against Buyer by any such
          employees for any matter arising prior to or after Closing based on a
          claim arising out of or resulting from a claim of past employment by
          Seller or a continuing employment relationship with Buyer arising out
          of Buyer's acceptance of conveyance of title to the Property.
     (b)  Litigation. There is no material pending or threatened, action,
          ----------
          litigation, condemnation or other proceeding against the Property or
          against Seller with respect to the Property, which would prevent
          Seller from conveying the Property to Buyer, or which would result in
          an encumbrance upon the Property, following the issuance of the order
          referenced in Section 4.2 herein and the conveyance to Buyer at the
          Closing.
     (c)  Contracts. Seller has not entered into any and has no knowledge of any
          ---------
          service contracts, equipment leasing contracts or other contracts
          relating to the Property (including without limitation, medical
          service, commission, leasing, management) which will be in force after
          the Closing, except for the Contracts. As used in this Agreement, the
          "Contracts" shall be deemed to mean, collectively the contracts
          described on Exhibit "C" attached hereto and made a part hereof
     (d)  Due Authority. This Agreement and all agreements, instruments and
          -------------
          documents herein provided to be executed or to be caused to be
          executed by Seller are, or on the Closing Date will be, duly
          authorized, executed and delivered by and are binding upon Seller.
     (e)  Reliance on Documents. To the best of Seller's knowledge the Due
          ---------------------
          Diligence Materials delivered and to be delivered by Seller to Buyer,
          or made available for inspection and copying by Buyer, pertaining to
          Buyer's review and analysis of the Property are the originals of or
          true and complete copies of the documents and to Seller's actual
          knowledge do not contain material misstatements. The documents have
          been relied on in the operation, management and maintenance of the
          Property, and with respect to those documents dated within six (6)
          months of the Closing Date, Seller continues to rely on in the
          operation, management and maintenance of the Property.
     (f)  Authority of Seller. Seller is a limited liability company duly
          -------------------
          organized and validly existing and in good standing under the laws of
          the State of Louisiana and has the authority to own and convey the
          Property. Seller has all requisite power to own all of its properties
          and assets and to carry on its business as presently conducted. The
          execution, delivery and performance of this Agreement has been duly
          and validly authorized by all necessary action of Seller. This
          Agreement and all other documents and agreements to be executed by
          Seller in the performance of this Agreement are and will be valid and
          binding obligations of Seller, enforceable against Seller in
          accordance with their respective terms.
     (g)  Title. Seller holds fee simple title to the Property, and to Seller's
          -----
          knowledge, such fee simple title is free and clear of all liens,
          encumbrances, security interests, charges, adverse claims and other
          exceptions to title, except for the Permitted Encumbrances or will be
          free and clear of all liens, encumbrances, security interests,
          charges, adverse claims and other exceptions following the issuance of
          the order referred in Section 4.2.
     (h)  Compliance with Laws. Seller does not have any knowledge that the
          --------------------
          Property is not in compliance in any material respect with all
          applicable local, state and federal laws and regulations applicable to
          hospitals and otherwise applicable to Property used for medical
          purposes, building codes, safety and fire, environmental, zoning and
          land use laws, and other applicable local, state and federal laws,
          ordinances, regulations and requirements, (either directly or as a
          legal conforming use) including without limitation the Americans With
          Disabilities Act, applicable to the ownership and operation of the
          Property unless disclosed to Buyer in writing. Seller has not received
          any notice of any violation, defect or inadequacy in connection with
          the Property or its operation from any government or quasi-government
          entity or insurance company or board of fire underwriters which
          remains uncured.
     (i)  No Defaults in Other Agreements. To Seller's knowledge, neither Seller
          -------------------------------
          nor any other party is in material default under any contract which
          will affect the Property after the issuance of the order referenced in
          Section 4.2 and the conveyance of the Property to Buyer, and no event
          exists which, with the passage of time or the giving of notice or
          both, will become a material default by a party to any contract which
          will affect the Property after the issuance of the order referenced in
          Section 4.2 and the conveyance of the Property to Buyer. To Seller's
          knowledge, Seller is in compliance in all material respects with the
          terms and provisions of the covenants, conditions, restrictions,
          rights-of-way or easements affecting the Property.
     (j)  Eminent Domain or Government Action. To Seller's knowledge, there is
          -----------------------------------
          no existing or proposed or threatened eminent domain or similar
          proceeding, or private purchase in lieu of such a proceeding which
          would affect the Property in any material way. To Seller's knowledge,
          there is no existing or proposed or threatened

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          environmental, zoning or other land use regulation proceeding,
          instituted or planned to be instituted, or development of adjacent
          property, which would detrimentally affect the use or operation of the
          Property for its present purpose, nor has Seller received notice of
          any special assessment proceeding affecting the Property.
     (k)  Licenses, Permits, Certificates. All permits, certificates of
          -------------------------------
          occupancy, business licenses and all other notices, licenses, permits,
          certificates and authority required in connection with the use or
          occupancy of the Property have been obtained and are in full force and
          effect and in good standing. Without limiting the foregoing, Seller
          represents and warrants that it has obtained and maintained all
          permits and licenses necessary to operate the Property as a hospital
          and medical provider facility.
     (l)  Taxes and Assessments. All real property taxes relating to the
          ---------------------
          Property, excepting those for the current tax year which are not yet
          overdue (i.e., which are still payable without interest or penalty),
          have been paid in full, or will be paid in full in association with a
          confirmed plan of reorganization for Seller in In re: Charis hospital,
          LLC, No. 01-10616.
     (m)  Physical Condition. To Seller's knowledge, there are no material
          ------------------
          latent defects in the Improvements which have not been or will not
          have been disclosed by Seller. For purposes of this paragraph, (latent
          defect does not include matters arising solely due to the age of the
          Property).
     (n)  Mechanic's Liens. All bills and claims for labor performed and
          ----------------
          materials furnished to or for the benefit of the Property currently
          due and contracted for by Seller or its manager have been paid in
          full, and there are no mechanic's or materialmen's liens (whether or
          not perfected) on or affecting the Property as a result of labor
          performed or materials furnished and contracted for by the Seller or
          its manager. At or as of Closing, Seller will execute and deliver to
          First American Title Insurance Company such affidavits as may be
          required by that firm to issue an Owner's policy of title insurance
          insuring against mechanic's liens substantially in the form attached
          hereto as Exhibit "D".
     (o)  No Leases of Property or Assets. No material portion of the Property
          -------------------------------
          or fixtures with respect to the Property is leased by the Seller as
          lessee.
     (p)  Property History. Except as disclosed in Section 10.3 herein, during
          ----------------
          the period of Seller's ownership of the Property, the Property never
          has been damaged to a material extent due to fire, flood, earthquake
          or other calamity, or ground settlement or subsidence. During the
          period of Seller's ownership, there have been no material claims made
          under any policy of insurance arising out of or resulting from the
          condition of, or any condition found upon, the Property.
     (q)  Insurance. The Improvements are and until the Closing will continue to
          ---------
          be insured against "all risks" for the full replacement cost thereof
          with the premiums therefor paid by Seller.
     (r)  Environmental Compliance. The Property is not and will not be in
          ------------------------
          violation of any federal, state or local law, ordinance or regulation
          or requirement relating to industrial hygiene or to the environmental
          conditions on, under or near the Property including but not limited to
          the presence of asbestos, soil and groundwater conditions. Neither
          Seller nor, to the best of Seller's knowledge (after due and diligent
          inquiry), any third party has used, generated, manufactured, produced,
          stored or disposed of on, under or near the Property or transported to
          or from the Property any flammable explosives, asbestos, radioactive
          materials, hazardous wastes, toxic substances or related injurious
          materials, whether injurious by themselves (collectively, "Hazardous
          Materials"). To the best of Seller's knowledge, there is no proceeding
          or inquiry by any governmental authority with respect to the presence
          of such Hazardous Materials on the Property or the migration thereof
          from or to other property. For the purpose of this Agreement,
          Hazardous Materials shall include but not be limited to substances
          defined as hazardous substances, hazardous materials, or toxic
          substances in the Comprehensive Environmental Response, Compensation
          and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq.;
          the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et
          seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Section
          6901 et seq.; and those substances defined as hazardous waste under
          Louisiana law and in the regulations adopted and publications
          promulgated pursuant to said laws. To Seller's knowledge, there are
          not currently and there have not ever been on or under the Property
          and underground storage tanks of any size or for any purpose.
     (s)  Survival of Representations. The representations, warranties and
          ---------------------------
          covenants stated in Section 9.1, except 9.1(d), (i), (m), (n), and (p)
          will survive the execution and delivery of this Agreement, the
          delivery of the documents transferring title to the Property to Buyer.

     9.2  Conditions and Limitations. If any of the representations or
     warranties of Seller contained in this Agreement or in any certificate
     delivered in connection herewith are false or inaccurate then Buyer will be
     entitled to the remedies in Section 16.1.

     9.3  Representations, Warranties and Covenants of Buyer. As of the Closing
     Date, Buyer makes the following

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     representations and warranties to Seller:

          9.3.1 Buyer is a corporation duly organized, validly existing under
          the laws of the State of Nevada and Buyer has full power, authority
          and legal right to enter into this Agreement and to perform all
          covenants, obligations and agreements of Buyer hereunder.

          9.3.2 Buyer has taken all necessary action to authorize the execution,
          delivery and performance by Buyer of this Agreement and all other
          documents or instruments required in connection with this Agreement
          and upon execution and delivery of this Agreement and such other
          documents and instruments by Buyer, this Agreement, and each of such
          documents and instruments will have been duly authorized, executed and
          delivered by Buyer and will constitute the legal, valid and binding
          obligation of Buyer enforceable in accordance with these terms.

          9.3.3 The execution and delivery of this Agreement does not, and the
          consummation of the transactions contemplated hereby will not, violate
          any provision of any mortgage, agreement, instrument, order, judgment
          or decrees by which Buyer is bound, and will not violate any other
          restriction of any kind or character to which Buyer is subject.

 10  Property Expense and Operation Issues.
     -------------------------------------

     10.1  Adjustments and Prorations. Utility Charges. The utility charges
     relating to the Property will be determined as of the Closing Date and paid
     by Seller. Buyer will have the contracts for utilities at the Property
     changed into Buyer's name, for the account of Buyer and will make new
     deposits at utility companies so that Seller can receive a return of its
     deposits. Buyer shall have no liability for Seller's deposits or any
     damages related thereto.

     10.2  Not Used.

     10.3  Roof Damage. Seller acknowledges that the roof of the Building
     located on the Property has sustained certain storm damage. As a condition
     to Closing in favor of Buyer, Seller shall have replaced or repaired the
     roof to the reasonable satisfaction of Buyer, or shall have executed
     appropriate assignment documents assigning to Buyer the insurance proceeds
     attributable to the roof damage, along with an opinion of counsel that the
     assignment of such proceeds will effectively assign such proceeds free and
     clear of all liens and encumbrances to Buyer notwithstanding Buyer's
     bankruptcy proceeding. Any deductible with respect to such claim will be an
     adjustment of the Purchase Price proceeds in favor of Buyer at the Closing.

11   Property Taxes. All real and personal property ad valorem taxes shall be
     --------------
prorated at and as of the date of the Closing based on the latest available tax
rates and assessments. If the Closing shall occur before a real estate or
personal property tax rate or assessment is fixed for the tax year in which the
Closing occurs, the apportionment of taxes at the Closing shall be upon the
basis of the tax rate or assessment for the preceding fiscal year applied to the
latest assessed valuation. Promptly after the new tax rate or assessment is
fixed, the apportionment of taxes or assessments shall be recomputed and any
discrepancy resulting from such recomputation and any errors or omissions in
computing apportionments at Closing shall be promptly corrected and Buyer or
Seller reimbursed by the other, as the case may be. The obligations stated in
this Section 11 shall survive the Closing.

12   Possession. Possession of the Property will be delivered to the Buyer on
     ----------
the date of the Closing, unless otherwise agreed to in writing by both parties.

13   Termite Certificate. A Termite Inspection Certificate by a pest control
     -------------------
company licensed by the State of Louisiana is to be paid for and furnished by
Seller to Buyer prior to Closing. The termite certificate shall state that the
Property is free from visible active termite and other wood boring insect
infestation. Any required termite treatment or repair of termite damage shall be
at Seller's expense.

14   Casualty. Prior to the Closing, the risk of loss or damage to the Property
     --------
or any part thereof by fire or other casualty shall be borne by Seller. In case
the Property shall be damaged by fire or other casualty before the Closing in an
amount that does not exceed $100,000, Seller shall repair the same to at least
the condition as existed prior to such casualty. In case the Property shall be
damaged by fire or other casualty before the Closing in an amount that exceeds
$100,000, Seller shall give notice thereof to Buyer, and Buyer shall have one of
two options as described below, exercisable within fifteen (15) days after
receipt of notice:

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          Option A         Cancel this Agreement. In the event that Buyer elects
                           this Option A, Buyer shall receive the return of its
                           Deposit, and this Agreement shall terminate and be
                           null and void and neither party shall have further
                           claim against the other.
          Option B         Proceed to the Closing with a credit adjustment to
                           Buyer in the Purchase Price equal to Seller's
                           casualty insurance policy deductible amount and at
                           Closing, Seller shall assign to Buyer all of its
                           rights, title and interest in and to any insurance
                           proceeds and shall thereafter permit Buyer to conduct
                           all negotiations and enter into all agreements with
                           respect thereto and shall reduce the cash down
                           payment portion of the Purchase Price by an amount
                           equal to Seller's insurance deductible.

 15       Not Used.
          --------

 16       Remedies.
          --------

          16.1 Default by Seller. In the event of any material breach of this
          Agreement by Seller, Buyer may, at its option, i) terminate this
          Agreement by giving Seller written notice thereof, in which event the
          Deposit, shall be returned to Buyer, Buyer shall be entitled to
          receive from Seller an amount equal to the Deposit and neither party
          shall have any further rights, duties or obligations hereunder; ii)
          waive the fulfilment of any conditions and acquire the Property
          subject to the defect; or iii) waive a claim for damages and the
          return of an amount equal to the Deposit, sue for specific performance
          of the obligations listed in this Agreement.

          16.2 Default by Buyer. If Buyer fails to complete its purchase of the
          Property in accordance with the terms and conditions of this
          Agreement, Seller may, as its sole remedy and as liquidated damages,
          terminate this Agreement by giving Buyer written notice thereof, in
          which event the Deposit shall be forfeited to Seller and neither party
          shall have any further rights, duties or obligations hereunder.

          16.3 Just Compensation. Seller and Buyer expressly acknowledge and
          agree that the amount of the Deposit (including additional amounts
          added with the Deposit) to which Seller may be entitled hereunder in
          the event of a breach or default by Buyer, and to which Buyer may be
          entitled hereunder in the event of a breach or default by Seller, is a
          reasonable forecast of just compensation for the harm that would be
          caused by a breach of or default under this Agreement, that the harm
          caused by such breach shall constitute full satisfaction of Buyer's or
          Seller's respective obligations hereunder, that the above provisions
          are reasonable in light of the intent of the parties and the
          circumstances surrounding the execution of this Agreement.

 17       Documentation and Delivery of Instructions at Closing.
          -----------------------------------------------------

          17.1 Seller Closing Documents. The Seller covenants and agrees to
          execute, acknowledge (as appropriate) and deliver to Buyer at the
          Closing the following documents:

               17.1.1   Act of Sale with full warranty from the Seller to the
                        Buyer, in a form acceptable to Buyer, conveying valid
                        and merchantable title to the Real Property subject only
                        to the Permitted Encumbrances, except as otherwise
                        provided in the Agreement.
               17.1.2   A certificate from the Seller dated at the Closing Date
                        and stating that all representations and warranties made
                        by Seller in the Agreement are true and correct as of
                        the Closing Date.
               17.1.3   A certificate from the Seller dated the Closing Date and
                        stating that Seller is not a "Foreign Person" as that
                        term is defined in Section 1445 of the Internal Revenue
                        Code.
               17.1.4   A Possession Affidavit and any Lien Affidavits if and as
                        required by the Title Company, substantially in the form
                        attached hereto as Exhibit "D".
               17.1.5   Documentation reasonably required by Buyer's counsel and
                        Title Company showing that Seller has the authority to
                        enter in this Agreement and to convey title to the
                        Property and such other documentation as may be required
                        in order for Buyer to obtain its title insurance policy.
               17.1.6   A certified copy of the order referenced in Section 4.2
                        from the U.S. Bankruptcy Court for the Middle District.

          17.2 Buyer Closing Documents. The Buyer covenants and agrees to
          deliver to the Seller at Closing:

               17.2.1   The Purchase Price.

                                       7
<PAGE>

               17.2.2 Execution of those documents listed in Section 17.1
above requiring Buyer's signature.

18       Miscellaneous.  It is further agreed as follows:
         -------------

         18.1  Entire Agreement. This document constitutes the entire agreement
         between the Buyer and Seller and supersedes any prior agreements, which
         are herewith declared null and void, and there are no other agreements,
         understandings, warranties or representations between the Buyer and
         Seller, except any written Addenda or Amendments as may be signed by
         both Buyer and Seller.

         18.2  Binding Effect. This Agreement will inure to the benefit of and
         bind the respective heirs, personal representatives, successors and
         assigns of the parties hereto.

         18.3  Assignment. Buyer may assign this Agreement to a related business
         entity provided that Buyer notify Seller in writing of this assignment.

         18.4  Notice. All notices required hereunder shall be in writing and
         served by hand delivery, Federal Express or other national overnight
         courier service, by certified mail, postage prepaid at the addresses
         shown herein below for the respective parties, or via facsimile
         transmission to the numbers shown below for the respective parties:

         To Seller:                 Charis Hospital, L.L.C.
                                    9302 Perkins Road
                                    8aton Rouge, LA 70809

         To Seller's Atty:          Art Vingiello
                                    Steffes & Macmurdo, LLP
                                    201 St. Charles Street
                                    Baton Rouge, LA 70802

         To Buyer:                  Dynacq International, Inc.
                                    4301A Vista
                                    Pasadena, Texas 77504

         To Buyer's Atty:           Richard E. Matheny
                                    Phelps Dunbar, LLP
                                    445 North Boulevard, 7th Floor
                                    Baton Rouge, Louisiana 70802
                                    Phone: 225-346-0285 /Fax: 225-346-0285

         Any notice given in a manner specified above will be deemed to have
         been properly given or served (i) in the case of personal delivery,
         when actually received, (ii) in the case of next day delivery by a
         private overnight courier service, then on that next day upon
         confirmation of delivery or refusal to accept delivery) (iii) in the
         case of certified mail, then on the third (3rd) day following the date
         of deposit with the United States Postal Service or (iv) if transmitted
         via telecopier or telephonic facsimile transmission to the attention of
         such party, then only if and when receipt by specifically named
         addressee has been confirmed. Each person or entity may change its
         address for the delivery of notices from time to time by giving notice
         of change in the manner described above.

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

19       Maintenance of the Property Pending Closing. Between the Acceptance
         -------------------------------------------
Date and the Date of Closing, the Seller agrees to maintain the Property in the
condition it existed as of the date Buyer signed this Agreement, ordinary wear
and tear excepted, and Seller shall not take any actions outside the ordinary
course and scope of its business without the prior written consent of Buyer,
which consent shall not be unreasonably withheld or delayed.

20       Not Used.
         --------

21       Escrow Agent.
         ------------

                                       8
<PAGE>

          21.1 Role of Escrow Agent. Buyer and Seller agree to appoint First
          American Title Insurance Company, or its agent in Louisiana as "Escrow
          Agent" for the accommodation of Buyer and Seller. In the event any
          litigation should arise between the parties to this Agreement
          concerning the Deposit, then Buyer and Seller hereto do solitarily and
          severally and jointly agree to hold Escrow Agent harmless from, and
          indemnify Escrow Agent for, the payment of any cost or other expenses
          that may be involved in said litigation, except for negligence,
          willful misconduct or bad faith of the Escrow Agent. In the event of a
          dispute, Escrow Agent's only obligation shall be to retain the Deposit
          (and Buyer's executed copy of this Agreement, if applicable) until a
          final determination has been issued or to pay the Deposit into a court
          of competent jurisdiction.

          21.2 Delivery Of Deposit. Escrow Agent shall deliver the Deposit in
          accordance with the following:

          (a)  To the person responsible for closing the sale, at the Closing,
               in the event the Closing timely occurs under this Agreement;
          (b)  To Seller upon receipt of demand therefore signed by Seller
               stating that Buyer has defaulted in the performance of Buyer's
               obligation to timely close the sale contracted for under this
               Agreement and specifying each fact which Seller alleges result in
               the claimed default; provided, however, that Escrow Agent shall
               not honor such demand until at least three (3) calendar days
               after the date on which Escrow Agent shall have mailed a copy of
               such demand to Buyer; nor thereafter if Escrow Agent shall have
               received a written notice of objection from Buyer; or
          (c)  To Buyer upon receipt of demand therefor signed by Buyer stating
               that either Seller has defaulted in the performance of Seller's
               obligations under this Agreement or that this Agreement has been
               terminated by Seller or Buyer and Buyer is entitled to the refund
               of the Deposit pursuant to the terms of this Agreement, or prior
               to Seller's execution of this Agreement, (i) upon receipt of
               written request of Buyer; or (ii) upon receipt of written
               notification from Buyer or Seller that Seller is not planning to
               execute the Agreement; provided, however, that Escrow Agent shall
               not honor such demand until at least three (3) calendar days
               after the date on which Escrow Agent shall have mailed a copy of
               such demand to Seller, nor thereafter if Escrow Agent shall have
               received a written notice of objection from Seller.

          21.3 Delivery of Agreement. Escrow Agent shall deliver Buyer's
          executed original(s) of the Agreement to Seller upon receipt of
          Seller's executed original of this Agreement, as provided in Section
          2.5. As further provided in Section 2.5, Escrow Agent shall deliver
          Buyer's executed original(s) of the Agreement to Buyer (i) upon
          receipt of written request of Buyer; or (ii) upon receipt of written
          notification from Buyer that Seller is not planning to execute the
          Agreement. Other than as previously set forth, or a final
          nonappealable order by a court of competent jurisdiction, entered in a
          proceeding in which Buyer, Seller and Escrow Agent are named as
          parties, directing the release of the Agreement, in either of which
          events Escrow Agent shall then release the Agreement in accordance
          with such direction. Escrow Agent shall not be or become liable in any
          way or to any person for its refusal to comply with any such claims
          and demands unless it has received such direction. Upon compliance
          with such direction, Escrow Agent shall be released of and from all
          liability under this Agreement, unless caused by its gross negligence,
          willful misconduct or bad faith.

          21.4 Objections. If Escrow Agent shall have received a written notice
          of objection within the time prescribed, then and in any such event,
          Escrow Agent shall refuse to comply with any claims or demands on it,
          and shall continue to hold the Deposit until Escrow Agent receives
          either a written notice signed by Buyer and Seller directing the
          disbursement of the Deposit, or a final nonappealable order by a court
          of competent jurisdiction, entered in a proceeding in which Buyer,
          Seller and Escrow Agent are named as parties, directing the
          disbursement of the Deposit, in either of which events Escrow Agent
          shall then disburse the Deposit in accordance with such direction.
          Escrow Agent shall not be or become liable in any way or to any person
          for its refusal to comply with any such claims and demands unless it
          has received such direction. Upon compliance with such direction,
          Escrow Agent shall be released of and from all liability under this
          Agreement, unless caused by its gross negligence, willful misconduct
          or bad faith.

          21.5 Interpleader or Concursus. The foregoing notwithstanding, Escrow
          Agent may, on notice to Buyer and Seller, take such affirmative steps
          as Escrow Agent may, at its option, elect in order to terminate its
          duties as Escrow Agent, including, without limitation, the placement
          of the Deposit (and Agreement, if applicable) it with a court of
          competent jurisdiction and the commencement of an action for
          interpleader or concursus proceeding, the costs of which shall be
          borne by whichever of the parties is the losing party. Upon the taking
          by Escrow Agent of the action described above, Escrow Agent shall be
          released of and from all liability under this Agreement, unless caused
          by its gross negligence, willful misconduct or bad faith.

                                       9
<PAGE>

          21.6 No Other Duties. Escrow Agent shall not have any duties or
          responsibilities, except those specifically set forth in this Article,
          and, absent gross negligence, willful misconduct or bad faith, shall
          not incur any liability in acting upon any signature, notice, demand,
          request, waiver, consent, receipt, or other writing, instrument or
          document reasonably believed by Escrow Agent to be genuine.

22        Not Used.
          --------

23        Obligations Related to Use as Hospital. Buyer anticipates conversion
          --------------------------------------
of the Property for use as a surgical hospital. Seller agrees that after the
Acceptance Date, it will accept no new patients, and will diligently seek to
have all existing patients discharged and transferred to another medical
facility if necessary. Buyer shall have the right but not the obligation, to
monitor the progress of the discharges and to take actions it deems necessary to
facilitate same. Unless otherwise specifically agreed to by Buyer in writing, as
of the Closing Date, all patients will have been properly discharged and will no
longer be located at the Property.

          In addition, except for the Contracts described in 9.1(c), Seller
agrees that all medical providers and other lessees of Seller will no longer
have any access to or rights to perform services on or otherwise operate on the
Property.

24        Louisiana Terms.  For purposes of this Agreement:
          ------------------------------------------------

          Any and all references to "real property" shall also mean, refer to
          and include "immovable property" as that term is used in the Louisiana
          Civil Code, and any and all references to " personal property" shall
          also mean, refer to and include "movable property";

          Any and all references to "tangible" shall mean, refer to and include
          "corporeal" and any and all references to "intangible" shall mean,
          refer to and include "incorporeal";

          The term "fee estate" will mean "full ownership interest" as that term
          is used in the Louisiana Civil Code;

          The term "condemnation" will include "expropriation" as that term is
          used in Louisiana law;

          The term "easement" will mean "servitude and advantages" as that term
          is used in the Louisiana Civil Code;

          The term "fixtures" will include "component parts" as that term is
          used in the Louisiana Civil Code; and

          The term "building" will include "other constructions" as that term is
          used in the Louisiana Civil Code.

25        Acceptance Date. The date this Agreement is fully executed by both
          ---------------
          Buyer and Seller will be the "Acceptance Date." For the purposes of
          this agreement, the Acceptance Date is _______________________ (to be
          filled in by last party executing the agreement.)

          This Agreement has been signed by the Buyer on the _____ day of
_______________, 2001 in the City of __________________ State of
________________.

Witnesses:                                Buyer:

_____________________________             Dynacq International, Inc.

                                          ______________________________________
_____________________________             By:
                                          Its:

          This Agreement has been signed by the Seller on the ___ day of
__________________, 2001, in the City of Baton Rouge, State of Louisiana.

Witnesses:
                                          Seller:

                                       10
<PAGE>

                                       Charis Hospital, L.L.C., a Louisiana
________________________________
                                       limited liability company

                                       By:
________________________________          __________________________________

                                       11
<PAGE>

                                  Exhibit "A"

                             Property Description

Item I

A CERTAIN PIECE OR PORTION OF GROUND situated in the Section 59, Township 8
South, Range 1 East, Greensburg Land District of Louisiana, in the Parish of
East Baton Rouge, State of Louisiana, and being more fully described according
to a map entitled "Survey Map of the removal of Lot R from the Joe Anselmo
Tract, (S) 59, T8S, R1E, East Baton Rouge Parish, Louisiana, for Joe Anselmo",
made by Carey Hodges, C.E., dated August 1, 1963, filed as Orig. 20, bdle. 5462,
as Lot "R", said lot containing 2.49 acres and fronting 276.73 feet on the south
side of Perkins Road, and being more particularly described as follows:

Begin at the intersection of the section line common to Section 59 and 60 with
the boundary of the southern right of way of Perkins Road, thence S27(0)25'E,
295 feet to the point of beginning; thence S27(0)25'E a distance of 276.73 feet
along the southerly side of Perkins Road to a point and corner; thence
S28(0)45'W a distance of 394.25 feet to a point and corner; thence N61(0)11'W a
distance of 230.64 feet to a point and corner; thence N28(0)49'E a distance of
548.15 to the point of beginning. Excepting therefrom, any portions thereof
lying within Perkins Road.

A CERTAIN PIECE OR PORTION OF GROUND situated in the Parish of East Baton Rouge,
Louisiana, containing .957 acres, being described more particularly as Lot "B"
removed from the Joe Anselmo property being part of the Frank Anselmo Estate
Partition located in Section 59, Township 8 South, Range 1 East, Greensburg Land
District of Louisiana, said Lot B being more completely described on a map dated
August 15, 1962, made by Henry E. Kleinpeter, C.E., attached to act of sale
dated August 29, 1963, recorded as Orig. 38, Bundle 5193, Official Records of
Baton Rouge, Louisiana, said Lot fronting 100 feet on Perkins Road, having a
depth of 502.6 feet between parallel lines and a rear measurement of 100 feet,
all as shown on a map referred to above. Excepting therefrom, any portions
thereof lying within Perkins Road.

According to survey of Daryl B. Patin, R.L.S., certified correct September 9,
1983, said parcels are located and measure as follows:

Commence at the intersection of northwest property line of the Clarence Anselmo
property with the center line of Perkins Road (La. Hwy. 427), point A, thence
S28(0)49'57"W, 102.78 feet to the west right of way of Perkins Road, continuing
S28(0)49'57"W, 555.22 feet to a market found at point B being the southwest
corner of the tract surveyed, thence S61(0)09'17"E, 230.47 feet to a marker
found at point C, thence S27(0)31'43"E, 82.26 feet to a marker found at point K,
thence S27(0)17'49"E, 17.63 feet to a marker found at point D, being the
southeast corner of the tract survey, thence N28(0)21'18"E, 428.56 feet to the
west right of way of Perkins Road, thence continuing N28(0)21'18"E, 76.99 feet
to point E at the centerline of Perkins Road, being the northeast corner of the
property surveyed, thence N27(0)15'56"W, 372.75 feet to point A, being the point
of beginning and the northwest corner of the property. The tract herein
described contains 4.01 acres with 0.70 acres being subject to the servitude for
Perkins Road. Excepting therefrom, any portions thereof lying within Perkins
Road.

Item II

A CERTAIN PIECE OR PORTION OF GROUND situated in Section 59, T8S, R1E, and being
more particularly described on map by Henry E. Kleinpeter, dated March 24, 1966,
as revised July 26, 1966, attached to Original 40, Bundle 6253, as Tract "A",
said tract measuring 300 feet front on middle Highland Road by a depth of 697.21
feet on its Western Boundary, a depth of 654.95 feet on its Eastern Boundary and
measuring a total distance of 313.10 feet (230.64 feet plus 82.46 feet) across
the rear.

According to a survey by Daryl B. Patin, R.L.S., certified correct September 9,
1983, said parcel is located and measures as follows:

Commence at the intersection of the northwest property line of the Joseph
Anselmo, Jr. property with the centerline of Hyacinth Avenue, point L, being the
southwest corner of the property herein described, thence traverse the
centerline of Hyacinth Avenue, S54(0)49'38"E, 64.97 feet; S58(0)42'14"E, 100.06
feet; S60(0)11'34"E, 100.01 feet; S61(0)46'05"E, 34.68 feet to point J being the
southeast corner of the property described, thence N28(0)48'36"E 25.00 feet to
the northeast right of way of Hyacinth Avenue, continuing N28(0)48'36"E, 627.63
feet to a marker found at point K being the northeast corner of the property
described, thence N27(0)31'43"W, 82.26 feet to a marker found at point C, thence
N61(0)09'17"W, 230.47 feet to a marker found at point B being the northwest
corner of the property described, thence S28(0)49'57"W, 660.28 feet to the
northeast right of way of Hyacinth Avenue, continuing S28(0)49'57"W, 25.16 feet
to point L on the centerline of Hyacinth Avenue being the point of beginning.
The tract herein described contains 4.73 acres of which 0.17 acres is subject to
the right of way for Hyacinth Avenue. Excepting therefrom, any portions thereof
lying within Hyacinth Avenue.

                                       12
<PAGE>

A CERTAIN PIECE OR PORTION OF GROUND situated in the Parish of East Baton Rouge,
State of Louisiana, containing 1.731 acres and being described more particularly
as Lot A removed from the Joe Anselmo property and being a part of the Frank
Anselmo Estate Partition located in Section 59, T8S, R1E, Greensburg Land
District of Louisiana, and said Lot A is shown on a map dated March 25, 1962
made by Henry E. Kleinpeter, C.E. registered at Original 57, Bundle 5093, said
lot fronting 180.58 feet on the south side of Perkins Road having a depth of
502.6 feet between parallel lines and a rear measurement of 180.58 feet all as
shown on said map referenced above. Excepting therefrom, any portions thereof
lying within Hyacinth Avenue.

A CERTAIN PIECE OR PORTION OF GROUND being more particularly described on map of
Henry E. Kleinpeter, dated March 24, 1966, as revised July 26, 1966, as Tract
"D", said tract measuring 337.64 feet (296.3' plus 41.34') on the Northerly side
of the middle Highland Road by a depth on its westerly boundary of 654.95 feet;
a depth on its easterly boundary of 410.4 feet (387.9' plus 22.5') and measuring
406.83 feet across the rear. Excepting therefrom, any portions thereof lying
within Perkins Road.

According to survey of Daryl E. Patin, R.L.S., certified correct September 9,
1983, said parcels are located and measure together as follows:

Commence at Point E, being at the centerline of Perkins Road and the northeast
corner of the Clarence Anselmo property which is the northwest corner of the
property herein described, thence S27(0)15'56"E, 184.74 feet along the
centerline of Perkins Road to point F being the northeast corner of the property
described, thence S28(0)46'31"W, 75.75 feet to the west right of way of Perkins
Road, continuing S28(0)46'31"W, 426.45 feet to a marker found at point G, thence
S27(0)23'29"E, 209.19 feet to a marker found at point H, thence S29(0)46'42"W
383.92 feet to the northeast right of way of Hyacinth Avenue, continuing
S28(0)46'42"W, 25.10 feet to point I being on the centerline of Hyacinth Avenue
and the southeast corner of the tract described, thence traversing along the
centerline of Hyacinth Avenue; N66(0)28'21"W 73.12 feet, N64(0)52'58"W 100.28
feet; N63(0)22'13"W; 100.12 feet; N61(0)46'05"E, 65.35 feet to point J being the
Southwest corner of the tract surveyed; thence N28(0)48'36"E, 25.00 feet to the
northeast right of way of Hyacinth, continuing N28(0)46'36"W, 627.63 feet to a
marker found at point K, thence S27(0)17'49"E, 17.63 feet to a marker found at
point D, thence N28(0)21'18"E, 428.56 feet to the west right of way of Perkins
Road, continuing N28(0)21'18"E, 76.99 feet to point E, being the point of
beginning. The tract herein described contains 5.89 acres being subject to a
road servitude for Perkins Road, excepting therefrom, any portions thereof lying
within Hyacinth Avenue and Perkins Road.

According to a survey prepared by Carl L. Mistric, surveyor, dated November 11,
1996, and last revised November 27, 1996, said Tracts I, Ii and III are located
and measures as follows:

A CERTAIN LOT OR PARCEL OF GROUND situated in East Baton Rouge Parish, Louisiana
located in Section 59, T8S-R1E consisting of Tracts A & D, Lots A, B & R of the
Joseph Anselmo, Sr. Subdivision being more fully described as follows:

Commence at the centerline intersection of Roundhill Drive and Hyacinth Avenue,
being also the point of beginning, thence along the centerline of Hyacinth
Avenue N64(0)03'05"W 194.83 feet to a point and turn; thence continue along said
centerline N60(0)18'39"W a distance of 177.27 feet to a point and turn; thence
continue along said centerline N56(0)56'14"W a distance of 131.84 to a point and
turn; thence N28(0)49'00"E a distance of 1343.98 feet to the centerline of
Perkins Road and turn; thence along centerline of Perkins Road S27(0)25'00"E a
distance of 556.43 feet to a point and turn; thence S28(0)40'26"W a distance of
503.11 feet to a point and turn; thence S27(0)22'23"E a distance of 209.06 feet
to a point and turn; thence S28(0)45'00"W a distance of 411.24 feet to the
centerline of Hyacinth Avenue and turn; thence along the centerline of said
avenue N64(0)03'05"W a distance of 134.85 feet to the point of beginning.
Excepting therefrom, any portions thereof lying within Hyacinth Avenue and
Perkins Road.

                                       13
<PAGE>

                                  Exhibit "B"
                       Requested Documents and Materials

1.   If any Asbestos Containing Materials (ACM) or Presumed Asbestos Containing
     Materials (PACM) exist at the project, provide the Operations and
     Maintenance Plan and all records required to be provided to successor
     owners of buildings pursuant to OSHA construction Standard 29 C.F.R.
     1910.1101 (n)(5), (6). Applies to all buildings constructed before 1981.

2.   Zoning letter.

3.   Copies of guarantees and warranties covering premises (capital and tenant
     improvements, roofs, termites, etc.).

4.   Certificates of Occupancy.

                                       14
<PAGE>

                                  Exhibit "C"
                                   Contracts

                                       15
<PAGE>

                                  Exhibit "D"
                               Owner's Affidavit

                          SELLER'S/OWNER'S AFFIDAVIT

State of Louisiana,
Parish of East Baton Rouge

         I, we, Charis Hospital, L.L.C., duly sworn, on oath depose and state
that I, we, own the following described property:

                                See Exhibit "A"
                      East Baton Rouge Parish, Louisiana

         I/We have owned the property now being sold or mortgaged by me
continuously for approximately ____ (__) years, and my enjoyment thereof has
been peaceable and undisturbed and the title to said property has never been
disrupted to my knowledge, nor do I know of any facts by reason of which the
title to, or possession of, said property might be disputed or by reason of
which any claim to any of said property might be asserted adversely to me, and
more particularly:

         1. No party other than the Seller(s)/Owner(s) is in possession of all
or any portion of the premises above described under any unrecorded leases,
tenancy at will or otherwise.

         2. The Seller(s)/Owner(s) during the time of ownership of the premises
above described has/have conveyed no portion of the premises nor done any act or
allowed any act to be done which has changed or could change the boundaries of
the premises.

         3. The Seller(s)/Owner(s) has/have allowed no encroachments on the
premises above described under any adjoining land owners nor has/have the
undersigned encroachment upon the property of adjoining land owners.

         4. The Seller(s)/Owner(s) has/have allowed no easements, rights of way,
continuous driveway usage, drain, sewer, water, gas or oil pipeline or other
rights of passage to others over the premises above described and has/have no
knowledge of such adverse rights.

         5. The Seller(s)/Owner(s), at present, and for a period of ninety (90)
days past, has/have caused no construction, erection, alteration or repairs of
any structures or improvements on the premises above cited to be done, nor
has/have contracted for any material to be delivered to the premises for which
charges therefor remain unpaid.

         6. The Seller(s)/Owner(s) has/have no knowledge of any highways,
abandoned roads, lanes, cemetery or family burial grounds, springs, streams,
rivers, ponds, or lakes bordering or running through said premises.

         7. The undersigned has no knowledge of any due taxes or special
assessments.

         8. The undersigned has not allowed and knows of no violation of any
covenants, restrictions, agreements, conditions or zoning ordinances affecting
the premises.

         9. That there are no pending suits, proceedings, judgments,
bankruptcies, liens or executions against said owner, either in the aforesaid
parish or any other parish in the aforesaid state.

                                       16
<PAGE>

         This affidavit is given to induce FIRST AMERICAN TITLE INSURANCE
COMPANY, a California corporation, to issue its title insurance policy or
policies without exception to claims of materialmen's and laborers' liens,
survey matters, special assessments and rights of parties in possession.

Seller/Owner:                           Date: _____ _____, 2001

Charis Hospital, L.L.C.

By:________________________

                   _________________________________________
                                 Notary Public

                                       17<PAGE>
                                                                     Exhibit 4.3

                                   TUCOWS INC.
                              AMENDED AND RESTATED
                          1996 EQUITY COMPENSATION PLAN

                   AMENDED AND RESTATED AS OF AUGUST 28, 2001

     The purpose of the Tucows Inc. Amended and Restated 1996 Equity
Compensation Plan (the "Plan") is to provide (i) designated officers (including
officers who are also directors) and other employees of Tucows Inc., a
Pennsylvania corporation formerly known as Infonautics, Inc. (the "Company") and
its subsidiaries, (ii) non-employee members of the board of directors of the
Company (the "Board"), and (iii) independent contractors and consultants who
perform valuable services for the Company or its subsidiaries, with the
opportunity to receive grants of incentive stock options, nonqualified stock
options, stock appreciation rights, restricted stock and performance units. The
Company believes that the Plan will cause the participants to contribute
materially to the growth of the Company, thereby benefiting the Company's
shareholders, and will align the economic interests of the participants with
those of the shareholders.

     On August 28, 2001, under the terms of an agreement and plan of merger
among the Company (then named Infonautics, Inc.), a wholly-owned subsidiary of
the Company and Tucows Inc., a Delaware corporation ("Tucows Delaware"), the
wholly-owned subsidiary of the Company merged with and into Tucows Delaware with
Tucows Delaware surviving and becoming a wholly-owned subsidiary of the Company
(the "Merger"). On August 29, 2001, the Company changed its name to Tucows Inc.
In connection with the Merger, the rights and obligations relating to
outstanding options originally granted under the Tucows Delaware Amended and
Restated 1999 Stock Option Plan (the "Tucows Plan") have been assigned to and
assumed by this Plan and shall be satisfied under this Plan. Also in connection
with the Merger, the name of this Plan was changed to the Tucows Inc. Amended
and Restated 1996 Equity Compensation Plan.

1. ADMINISTRATION

     The Plan shall be administered and interpreted by a committee (the
"Committee"), which shall consist of two or more persons appointed by the Board,
all of whom shall be "non-employee directors" as defined under Rule 16b-3 under
the Securities Exchange Act of 1934 (the "Exchange Act") and "outside directors"
as defined under section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code") and related Treasury regulations.

     The Committee shall have the sole authority to (i) determine the
individuals to whom grants shall be made under the Plan, (ii) determine the
type, size and terms of the grants to be made to each such individual, (iii)
determine the time when the grants will be made and the duration of any
applicable exercise or restriction period, including the criteria for vesting
and the acceleration of vesting and (iv) deal with any other matters arising
under the Plan.

     The Committee shall have full power and authority to administer and
interpret the Plan, to make factual determinations and to adopt or amend such
rules, regulations, agreements and instruments for implementing the Plan and for
the conduct of its business as it deems necessary or advisable, in its sole
discretion. The Committee's interpretations of the Plan and all determinations
made by the Committee pursuant to the powers vested in it hereunder shall be
conclusive and binding on all persons having any interests in the Plan or in any
grants hereunder. All powers of the Committee shall be executed in its sole
discretion, in the best interest of the Company and in keeping with the
objectives of the Plan and need not be uniform as to similarly situated
individuals.

2. GRANTS

     Incentives under the Plan shall consist of grants of incentive stock
options, nonqualified stock options, stock appreciation rights, restricted stock
and performance units (hereinafter collectively referred to as "Grants"). All
Grants shall be subject to the terms and conditions set forth herein and to
those other terms and conditions consistent with this Plan as the Committee
deems appropriate and as are specified in writing by the Committee to the
individual (the

<PAGE>

"Grant Instrument"). The Committee shall approve the form and provisions of each
Grant Instrument. Grants under a particular section of the Plan need not be
uniform as among the grantees.

3. SHARES SUBJECT TO THE PLAN

     (a) Subject to the adjustment specified below, the aggregate number of
shares of Common Stock of the Company (the "Company Stock") that may be issued
or transferred under the Plan is 10,000,000 shares. Notwithstanding anything in
the Plan to the contrary, the maximum aggregate number of shares of Company
Stock that shall be subject to Grants of stock options or stock appreciation
rights made under the Plan to any one individual during any calendar year shall
be 250,000. The shares may be authorized but unissued shares of Company Stock or
reacquired shares of Company Stock, including shares purchased by the Company on
the open market for purposes of the Plan. If and to the extent options granted
under the Plan terminate, expire, or are cancelled, forfeited, exchanged or
surrendered without having been exercised or if any shares of restricted stock
are forfeited, the shares subject to such Grants shall again be available for
purposes of the Plan.

     (b) If there is any change in the number or kind of shares of Company Stock
outstanding by reason of a stock dividend, a recapitalization, stock split, a
combination or exchange of shares, or merger, reorganization or consolidation in
which the Company is the surviving corporation, a reclassification or change in
par value or by reason of any other extraordinary or unusual events affecting
the outstanding Company Stock as a class without the Company's receipt of
consideration, or if the value of outstanding shares of Company Stock is
substantially reduced due to the Company's payment of an extraordinary dividend
or distribution, the maximum number of shares of Company Stock available for
Grants, the maximum number of shares of Company Stock that may be subject to
Grants of stock options or stock appreciation rights to any one individual under
the Plan in any calendar year, the number of shares covered by outstanding
Grants, and the price per share or the applicable market value of such Grants
shall be proportionately adjusted by the Committee to reflect any increase or
decrease in the number or kind of issued shares of Company Stock to preclude the
enlargement or dilution of rights and benefits under such Grants; provided,
however, that any fractional shares resulting from such adjustment shall be
eliminated. For purposes of this Section 3(b), "shares of Company Stock" and
"shares" include referenced shares with respect to stock appreciation rights or,
to the extent applicable, performance units. The adjustments determined by the
Committee shall be final, binding and conclusive. Notwithstanding the foregoing,
no adjustment shall be authorized or made pursuant to this Section to the extent
that such authority or adjustment would cause any incentive stock option to fail
to comply with section 422 of the Code.

     (c) As a result of the Merger, the rights and obligations relating to
outstanding options originally granted under the Tucows Plan ("Assumed Options")
have been assigned to and assumed by this Plan. Accordingly, Company Stock
authorized for issuance under the Plan shall be used to satisfy the exercise of
Assumed Options. The terms and conditions contained in the grant agreements for
Assumed Options shall continue to govern the Assumed Options to the extent not
inconsistent with this Plan; provided, however, the terms and conditions of this
Plan are not intended to terminate any terms or provisions of the grant
agreements for the Assumed Options that are beneficial to the holders of the
Assumed Options. The exercise price per share of an Assumed Option shall be
equal to the per share exercise price of such Assumed Option divided by the
exchange ratio of Tucows Delaware common stock to the Company common stock
applied in connection with the Merger subject to the adjustments described in
Section 3(b) of this Plan. The number of shares underlying an Assumed Option
shall be equal to the number of shares of Tucows Delaware common stock
originally underlying the Assumed Option multiplied by the exchange ratio of
Tucows Delaware common stock to the Company common stock applied in connection
with the Merger, subject to the adjustments described in Section 3(b) of this
Plan.

4. ELIGIBILITY FOR PARTICIPATION

     All employees of the Company and its subsidiaries ("Employees"), including
Employees who are officers or members of the Board, shall be eligible to
participate in the Plan. All members of the Board who are not employees of the
Company or any of its subsidiaries ("Non-Employee Directors") shall be eligible
only to receive nonqualified stock options pursuant to Section 6. Any
independent contractors or consultants who perform valuable services to the
Company or any of its subsidiaries ("Consultants") shall be eligible to
participate in the Plan, but shall not be eligible to receive incentive stock
options. The Committee shall select the Employees and Consultants to receive
Grants and determine the number of shares of Company Stock subject to a
particular Grant in such manner as the Committee

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<PAGE>

determines. (Employees and Consultants who receive Grants under this Plan shall
hereinafter be referred to as "Grantees".)

     Nothing contained in this Plan shall be construed to (i) limit the right of
the Committee to make Grants under this Plan in connection with the acquisition,
by purchase, lease, merger, consolidation or otherwise, of the business or
assets of any corporation, firm or association, including options granted to
employees thereof who become Employees, or for other proper corporate purpose,
or (ii) limit the right of the Company to grant stock options or make other
awards outside of this Plan.

5. GRANTING OF OPTIONS

     (a) NUMBER OF SHARES. The Committee, in its sole discretion, shall
determine the number of shares of Company Stock that will be subject to each
Grant of stock options.

     (b) TYPE OF OPTION AND PRICE. The Committee may grant options intended to
qualify as "incentive stock options" within the meaning of section 422 of the
Code ("Incentive Stock Options") or options which are not intended to so qualify
("Nonqualified Stock Options") or any combination of Incentive Stock Options and
Nonqualified Stock Options (hereinafter collectively the "Stock Options"), all
in accordance with the terms and conditions set forth herein.

     The purchase price of Company Stock subject to a Stock Option shall be
determined by the Committee and may be equal to, greater than, or less than the
Fair Market Value (as defined below) of a share of such Company Stock on the
date such Stock Option is granted; provided, however, that the purchase price of
Company Stock subject to an Incentive Stock Option shall be equal to, or greater
than, the Fair Market Value of a share of such Company Stock on the date such
Stock Option is granted.

     If the Company Stock is traded in a public market, then the "Fair Market
Value" per share shall be the last reported sale price thereof on the relevant
date or (if there were no trades on that date) the latest preceding date upon
which a sale was reported. If the Company Stock is not traded in a public
market, the "Fair Market Value" per share shall be as determined by the
Committee.

     (c) OPTION TERM. The Committee shall determine the term of each Stock
Option. The term of any Stock Option shall not exceed ten years from the date of
grant.

     (d) EXERCISABILITY OF OPTIONS. Stock Options shall become exercisable in
accordance with the terms and conditions determined by the Committee, in its
sole discretion, and specified in the Grant Instrument. The Committee, in its
sole discretion, may accelerate the exercisability of any or all outstanding
Stock Options at any time for any reason. In addition, all outstanding Stock
Options automatically shall become fully and immediately exercisable upon a
Change of Control (as defined herein) in accordance with the provisions of
Sections 11 and 12.

     (e) MANNER OF EXERCISE. A Grantee may exercise a Stock Option which has
become exercisable, in whole or in part, by delivering a notice of exercise to
the Committee (in a form established by the Committee) with accompanying payment
of the option price in accordance with Subsection (g) below. Such notice may
instruct the Company to deliver shares of Company Stock due upon the exercise of
the Stock Option to any registered broker or dealer designated by the Committee
("Designated Broker") in lieu of delivery to the Grantee. Such instructions must
designate the account into which the shares are to be deposited. The Grantee may
tender a notice of exercise, which has been properly executed by the Grantee and
the aforementioned delivery instructions to any Designated Broker.

     (f) TERMINATION OF EMPLOYMENT, DISABILITY OR DEATH.

          (i) In the event that a Grantee ceases to be an Employee or a
     Consultant, as the case may be, of the Company for any reason other than a
     "disability", death, or "termination for cause", any Stock Option which is
     otherwise exercisable by the Grantee shall terminate unless exercised
     within 90 days of the date on which the Grantee ceases to be an Employee or
     Consultant of the Company (or within such other period of time as may be
     specified in the Grant Instrument), but in any event no later than the date
     of expiration of the option term. Any of the Grantee's Stock Options which
     are not otherwise exercisable as of the date on which the Grantee ceases to
     be an Employee or Consultant of the Company shall terminate as of such
     date.

                                       3
<PAGE>

          (ii) In the event the Grantee ceases to be an Employee or Consultant
     of the Company on account of a "termination for cause" by the Company, any
     Stock Option held by the Grantee shall terminate as of the date the Grantee
     ceases to be an Employee or Consultant of the Company.

          (iii) In the event the Grantee ceases to be an Employee or Consultant
     of the Company because the Grantee suffers a "disability", any Stock Option
     which is otherwise exercisable by the Grantee shall terminate unless
     exercised within one year of the date on which the Grantee ceases to be an
     Employee or Consultant of the Company (or within such other period of time
     as may be specified in the Grant Instrument), but in any event no later
     than the date of expiration of the option term. Any of the Grantee's Stock
     Options which are not otherwise exercisable as of the date on which the
     Grantee ceases to be an Employee or Consultant shall terminate as of such
     date.

          (iv) In the event of the death of the Grantee while the Grantee is an
     Employee or Consultant of the Company or within not more than 90 days of
     the date on which the Grantee ceases to be an Employee or Consultant of the
     Company on account of a termination of employment specified in Section
     5(f)(i) (or within such other period of time as may be specified in the
     Grant Instrument), any Stock Option which is otherwise exercisable by the
     Grantee shall terminate unless exercised within one year of the date on
     which the Grantee ceases to be an Employee or Consultant of the Company (or
     within such other period of time as may be specified in the Grant
     Instrument), but in any event no later than the date of expiration of the
     option term. Any of the Grantee's Stock Options which are not otherwise
     exercisable as of the date on which the Grantee ceases to be an Employee or
     Consultant shall terminate as of such date.

          (v) For purposes of this Section 5(f), the term "Company" shall
     include the Company's subsidiaries and the following terms shall be defined
     as follows: (A) "disability" shall mean a Grantee's becoming disabled
     within the meaning of Section 22(e)(3) of the Code and (B) "termination for
     cause" shall mean, except to the extent otherwise provided in a Grantee's
     Grant Instrument, a finding by the Committee, after full consideration of
     the facts presented on behalf of both the Company and the Grantee, that the
     Grantee has breached his or her employment or service contract with the
     Company, or has been engaged in disloyalty to the Company, including,
     without limitation, fraud, embezzlement, theft, commission of a felony or
     proven dishonesty in the course of his or her employment or service, or has
     disclosed trade secrets or confidential information of the Company. In such
     event, in addition to the immediate termination of the Stock Option, the
     Grantee shall automatically forfeit all option shares for any exercised
     portion of a Stock Option for which the Company has not yet delivered the
     share certificates upon refund by the Company of the option price.

     (g) SATISFACTION OF OPTION PRICE. The Grantee shall pay the option price
specified in the Grant Instrument in (i) cash, (ii) with the approval of the
Committee, by delivering shares of Company Stock owned by the Grantee (including
Company Stock acquired in connection with the exercise of a Stock Option,
subject to such restrictions as the Committee deems appropriate) and having a
Fair Market Value on the date of exercise equal to the option price or (iii)
through any combination of (i) and (ii). The Grantee shall pay the option price
and the amount of withholding tax due, if any, at the time of exercise. Shares
of Company Stock shall not be issued or transferred upon exercise of a Stock
Option until the option price is fully paid and any required withholding is
made.

     (h) ELECTION TO WITHHOLD SHARES. Grantees may make an election to satisfy
the Company income tax withholding obligation with respect to a Stock Option by
having shares withheld up to an amount that does not exceed the Grantee's
minimum withholding tax rate for federal (including FICA), state and local tax
liabilities. Such election must be in the form and manner prescribed by the
Committee.

     (i) LIMITS ON INCENTIVE STOCK OPTIONS. Each Incentive Stock Option shall
provide that, to the extent that the aggregate Fair Market Value of the Company
Stock on the date of the grant with respect to which Incentive Stock Options are
exercisable for the first time by a Grantee during any calendar year under the
Plan or any other stock option plan of the Company exceeds $100,000, then such
option as to the excess shall be treated as a Nonqualified Stock Option. An
Incentive Stock Option shall not be granted to any participant who is not an
Employee of the Company or any "subsidiary" within the meaning of section 424(f)
of the Code. An Incentive Stock Option shall not be granted to any Employee who,
at the time of grant, owns stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company or any "parent" or
"subsidiary" of the Company within the meaning of section 424(e) and (f) of the
Code, unless the option price per share is not less than 110% of the Fair

                                       4
<PAGE>

Market Value of Company Stock on the date of grant and the option exercise
period is not more than five years from the date of grant.

6. FORMULA OPTION GRANTS TO NON-EMPLOYEE DIRECTORS; GRANTS TO COMMITTEE MEMBERS

     A Non-Employee Director or a member of a committee of the Board (a
"Committee Member") shall be entitled to receive Nonqualified Stock Options in
accordance with this Section 6.

     (a) INITIAL GRANT. Each Non-Employee Director who is a member of the Board
on the effective date of this Plan (as specified in Section 20) will receive a
grant of a Nonqualified Stock Option to purchase 15,000 shares of Company Stock
as of such date. Each Non-Employee Director who first becomes a member of the
Board after the effective date of this Plan (as specified in Section 20), will
receive a grant of a Nonqualified Stock Option to purchase 15,000 shares of
Company Stock immediately upon the date he or she becomes a member of the Board.

     Each Committee Member on the effective date of this Plan (as specified in
Section 20) will receive a grant of a Nonqualified Stock Option to purchase
10,000 shares of Company Stock with respect to each committee such Committee
Member sits on as of such date. Each Committee Member who first becomes a
Committee Member after the effective date of this Plan (as specified in Section
20), will receive a grant of a Nonqualified Stock Option to purchase 10,000
shares of Company Stock with respect to each committee such Committee Member
sits on immediately upon the date he or she becomes a Committee Member.

     (b) ANNUAL GRANTS. On each date that the Company holds its annual meeting
of shareholders, commencing with the 2002 calendar year, each Non-Employee
Director in office both immediately before and after the annual election of
directors will receive a grant of a Nonqualified Stock Option to purchase 5,000
shares of Company Stock. The date of grant of such annual Grants shall be the
date of such annual meeting of shareholders.

     On each date that the Company holds its annual meeting of shareholders,
commencing with the 2002 calendar year, each Committee Member in office both
immediately before and after the annual election of directors will receive a
grant of a Nonqualified Stock Option to purchase 5,000 shares of Company Stock
with respect to each committee such Committee Member sits on as of such date.
The date of grant of such annual Grants shall be the date of such annual meeting
of shareholders.

     (c) OPTION PRICE. The purchase price per share of Company Stock subject to
a Stock Option granted under this Section 6 shall be equal to the Fair Market
Value of a share of Company Stock on the date of grant.

     (d) OPTION TERM. The term of each Stock Option granted pursuant to this
Section 6 shall be five years.

     (e) EXERCISABILITY. Options granted under this Section 6 shall be fully and
immediately exercisable upon the date of grant.

     (f) ADMINISTRATION. The provisions of this Section 6 are intended to
operate automatically and not require administration. However, to the extent
that administrative determinations are required, the provisions of this Section
6 shall be made by the members of the Board who are not eligible to receive
grants under this Section 6, but in no event shall such determinations affect
the eligibility of Grantees, the determination of the exercise price, the timing
of the grants or the number of shares of Company Stock subject to Stock Options
granted hereunder.

     (g) APPLICABILITY OF PLAN PROVISIONS. Except as otherwise provided in, and
not inconsistent with, this Section 6, the Nonqualified Stock Options granted to
Non-Employee Directors and Committee Members shall be subject to the provisions
of this Plan applicable to Nonqualified Stock Options granted to other persons.

7. RESTRICTED STOCK GRANTS

     The Committee may issue or transfer shares of Company Stock to an Employee
or Consultant under a Grant (a "Restricted Stock Grant"), upon such terms as the
Committee deems appropriate. The following provisions are applicable to
Restricted Stock Grants:

                                       5
<PAGE>

     (a) GENERAL REQUIREMENTS. Shares of Company Stock issued pursuant to
Restricted Stock Grants may be issued for cash consideration or for no cash
consideration, at the sole discretion of the Committee. The Committee shall
establish conditions under which restrictions on the transfer of shares of
Company Stock shall lapse over a period of time or according to such other
criteria as the Committee deems appropriate. The period of years during which
the Restricted Stock Grant will remain subject to restrictions will be
designated in the Grant Instrument as the "Restriction Period."

     (b) NUMBER OF SHARES. The Committee shall grant to each Grantee a number of
shares of Company Stock pursuant to a Restricted Stock Grant in such manner as
the Committee determines.

     (c) TERMINATION OF EMPLOYMENT OR SERVICES. If the Grantee's employment or
service with the Company terminates during a period designated in the Grant
Instrument as the Restriction Period, or if other specified conditions are not
met, the Restricted Stock Grant shall terminate as to all shares covered by the
Grant as to which restrictions on transfer have not lapsed, and those shares of
Company Stock must be immediately returned to the Company. The Committee may,
however, provide for complete or partial exceptions to this requirement as it
deems equitable.

     (d) RESTRICTIONS ON TRANSFER AND LEGEND ON STOCK CERTIFICATE. During the
Restriction Period, a Grantee may not sell, assign, transfer, pledge or
otherwise dispose of the shares of Company Stock to which such Restriction
Period applies except to a Successor Grantee (as defined in Section 10). Each
certificate for a share issued or transferred under a Restricted Stock Grant
shall contain a legend giving appropriate notice of the restrictions in the
Grant. The Grantee shall be entitled to have the legend removed from the stock
certificate or certificates covering any of the shares subject to restrictions
when all restrictions on such shares have lapsed.

     (e) RIGHT TO VOTE AND TO RECEIVE DIVIDENDS. During the Restriction Period,
unless the Committee determines otherwise, the Grantee shall have the right to
vote shares subject to the Restricted Stock Grant and to receive any dividends
paid on such shares, subject to such restrictions as the Committee deems
appropriate.

     (f) LAPSE OF RESTRICTIONS. All restrictions imposed under the Restricted
Stock Grant shall lapse upon the expiration of the applicable Restriction Period
and the satisfaction of any conditions imposed by the Committee. The Committee
may determine, as to any or all Restricted Stock Grants, that all the
restrictions shall lapse without regard to any Restriction Period. All
restrictions under all outstanding Restricted Stock Grants shall automatically
and immediately lapse upon a Change of Control, unless the Committee determines
otherwise.

     (g) ELECTION TO WITHHOLD SHARES. Grantees may make an election to satisfy
the Company's income tax withholding obligation with respect to a Restricted
Stock Grant by having shares withheld up to an amount that does not exceed the
participant's minimum withholding tax rate for federal (including FICA), state
and local tax liabilities. Such election must be in the form and manner
prescribed by the Committee.

8. STOCK APPRECIATION RIGHTS

     (a) GENERAL REQUIREMENTS. The Committee may grant stock appreciation rights
("SARs") to any Grantee in tandem with any Stock Option, for all or a portion of
the applicable Stock Option, either at the time the Stock Option is granted or
at any time thereafter while the Stock Option remains outstanding; provided,
however, that in the case of an Incentive Stock Option, such rights may be
granted only at the time of the Grant of such Stock Option. Unless the Committee
determines otherwise, the base price of each SAR shall be equal to the greater
of (i) the exercise price of the related Stock Option or (ii) the Fair Market
Value of a share of Company Stock as of the date of Grant of such SAR. A SAR is
exercisable only during the period when the Stock Option to which it is related
is also exercisable.

     (b) NUMBER OF SARS. The number of SARs granted to a Grantee which shall be
exercisable during any given period of time shall not exceed the number of
shares of Company Stock which the Grantee may purchase upon the exercise of the
related Stock Option during such period of time. Upon the exercise of a Stock
Option, the SARs relating to the Company Stock covered by such Stock Option
shall terminate. Upon the exercise of SARs, the related Stock Option shall
terminate to the extent of an equal number of shares of Company Stock.

                                       6
<PAGE>

     (c) VALUE OF SARS. Upon a Grantee's exercise of some or all of the
Grantee's SARs, the Grantee shall receive in settlement of such SARs an amount
equal to the value of the stock appreciation for the number of SARs exercised,
payable in cash, Company Stock or a combination thereof. The stock appreciation
for a SAR is the difference between the base price of the SAR as described in
subsection (a) and the Fair Market Value of the underlying Company Stock on the
date of exercise of such SAR.

     (d) FORM OF PAYMENT. At the time of such exercise, the Grantee shall have
the right to elect the portion of the amount to be received that shall consist
of cash and the portion that shall consist of Company Stock, which for purposes
of calculating the number of shares of Company Stock to be received, shall be
valued at their Fair Market Value on the date of exercise of such SARs. The
Committee shall have the right in its sole discretion to disapprove a Grantee's
election to receive cash in full or partial settlement of the SARs exercised and
to require that shares of Company Stock be delivered in lieu of cash. If shares
of Company Stock are to be received upon exercise of a SAR, cash shall be
delivered in lieu of any fractional share.

9. PERFORMANCE UNITS

     (a) GENERAL REQUIREMENTS. The Committee may grant performance units
("Performance Units") to any Grantee. Each Performance Unit shall represent the
right of a Grantee to receive an amount equal to the value of the Performance
Unit, determined in the manner established by the Committee at the time of
grant.

     (b) PERFORMANCE PERIOD. At the time of grant of each Performance Unit, the
Committee shall establish a performance period during which performance shall be
measured ("Performance Period"). There may be more than one grant in existence
at any one time, and Performance Periods may differ.

     (c) PERFORMANCE GOALS. Prior to the beginning of a Performance Period, the
Committee shall establish in writing performance goals for the Company and its
various operating units ("Performance Goals"). The Performance Goals will be
comprised of specified levels of one or more performance criteria as the
Committee may deem appropriate such as: earnings per share, net earnings,
operating earnings, unit volume, net sales, market share, balance sheet
measurements, cash return on assets, shareholder return, or return on capital.
The Committee may disregard or offset the effect of any special charges or gains
or cumulative effect of a change in accounting in determining the attainment of
Performance Goals. Awards of Performance Units may also be payable when Company
performance, as measured by one or more of the above criteria, as compared to
peer companies, meets or exceeds an objective target established by the
Committee.

     (d) PERFORMANCE MEASURES. Performance Units shall be granted to a Grantee
contingent upon the attainment of Performance Goals in accordance with Section
9(c).

     (e) PERFORMANCE UNIT VALUE. Each Performance Unit shall have a maximum
dollar value established by the Committee at the time of the grant. Performance
Units earned will be determined by the Committee in respect of a Performance
Period in relation to the degree of attainment of Performance Goals. The measure
of a Performance Unit may, in the Committee's discretion, be equal to the Fair
Market Value of a share of Company Stock.

     (f) GRANT CRITERIA. In determining the number of Performance Units to be
granted to any Grantee, the Committee shall take into account the Grantee's
responsibility level, performance, potential, cash compensation level, other
incentive awards, and such other considerations as it deems appropriate.

     (g) ANNOUNCEMENT OF GRANTS. The Committee shall certify and announce the
results for each Performance Period to all Grantees immediately following the
announcement of the Company's financial results for the Performance Period and
the filing of its Form 10-K or Form 10-Q, as the case may be.

     (h) PAYMENT. Following the end of a Performance Period, a Grantee holding
Performance Units will be entitled to receive payment of an amount, not
exceeding the maximum value of the Performance Units, based on the achievement
of the Performance Goals for such Performance Period, as determined by the
Committee. Payment of Performance Units shall be made in cash, except that, in
the discretion of the Committee, Performance Units which are measured using
Company Stock may be paid in shares of Company Stock. Payment shall be made in a
lump sum or in installments and shall be subject to such other terms and
conditions as shall be determined by the Committee.

                                       7
<PAGE>

     (i) TERMINATION OF EMPLOYMENT OR SERVICES AND CHANGE IN CONTROL.

          (i) A Performance Unit Grant shall terminate for all purposes if the
     Grantee does not remain continuously in the employ or service of the
     Company at all times during the applicable Performance Period, except as
     may otherwise be determined by the Committee, provided that in the event
     the Grantee terminates employment with the Company within 12 months
     following a Change of Control, a percentage of the Performance Unit
     payments, if any, for the full Performance Period in which the Grantee so
     terminates equal to the percentage of the Performance Period during which
     the Grantee was in the employ or service of the Company and all amounts for
     the prior Performance Period, if not then distributed, shall be distributed
     to such Grantee in a lump sum.

          (ii) In the event that a Grantee holding a Performance Unit terminates
     employment with or ceases to provide services to the Company following the
     end of the applicable Performance Period, but prior to full payment
     according to the terms of the Performance Unit award, payment shall be made
     in accordance with the terms established by the Committee for the payment
     of such Performance Unit.

10. TRANSFERABILITY OF GRANTS

     Only the Grantee or his or her authorized representative may exercise
rights under a Grant. Such persons may not transfer those rights except by will
or by the laws of descent and distribution or, with respect to Grants other than
Incentive Stock Options, if permitted in any specific case by the Committee in
its sole discretion, pursuant to a qualified domestic relations order as defined
under the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended, or the regulations thereunder. When a Grantee dies, the
representative or other person entitled to succeed to the rights of the Grantee
("Successor Grantee") may exercise such rights. A Successor Grantee must furnish
proof satisfactory to the Company of his or her right to receive the Grant under
the Grantee's will or under the applicable laws of descent and distribution.
Notwithstanding the foregoing, the Committee may provide, in a Grant Instrument,
that a Grantee may transfer Nonqualified Stock Options to his or her children,
grandchildren or spouse or to one or more trusts for the benefit of such family
members or to partnerships in which such family members are the only partners (a
"Family Transfer"), provided that the Grantee receives no consideration for a
Family Transfer and the Grant Instruments relating to Nonqualified Stock Options
transferred in a Family Transfer continue to be subject to the same terms and
conditions that were applicable to such Nonqualified Stock Options immediately
prior to the Family Transfer.

11. CHANGE OF CONTROL OF THE COMPANY

     As used herein, a "Change of Control" shall be deemed to have occurred if:

          (a) A liquidation or dissolution of the Company (excluding transfers
     to subsidiaries) or the sale of all or substantially all of the Company's
     assets occurs;

          (b) As a result of a tender offer, stock purchase, other stock
     acquisition, merger, consolidation, recapitalization, reverse split or sale
     or transfer of assets, any person or group (as such terms are used in and
     under Section 13(d)(3) or 14(d)(2) of the Exchange Act) becomes the
     beneficial owner (as defined in Rule 13-d under the Exchange Act), directly
     or indirectly, of securities of the Company representing more than 40% of
     the common stock of the Company or the combined voting power of the
     Company's then outstanding securities; provided, however, that for purposes
     of this subsection 11(b), a person or group shall not include (i) the
     Company or any subsidiary, (ii) any employee benefit plan (or related
     trust) sponsored or maintained by the Company or any subsidiary or (iii)
     any affiliate (within the meaning of Rule 144 under the Securities Act of
     1933, as amended) of the Company.

          (c) If at least a majority of the Board at any time does not consist
     of individuals who were elected, or nominated for election, by directors in
     office at the time of such election or nomination; or

          (d) The Company merges or consolidates with any other corporation
     (other than a wholly owned subsidiary) and is not the surviving corporation
     (or survives only as a subsidiary of another corporation).

                                       8
<PAGE>

12. CONSEQUENCES OF A CHANGE OF CONTROL

     (a) NOTICE.

          (i) If a Change of Control described in Section 11(a), (b) or (d) will
     occur, then, not later than 10 days after the approval by the shareholders
     of the Company (or approval by the Board, if shareholder action is not
     required) of such Change of Control, the Company shall give each Grantee
     with any outstanding Stock Options or SARs written notice of such proposed
     Change of Control.

          (ii) If a Change of Control described in Section 11(b) may occur
     without approval by the shareholders (or approval by the Board) and does so
     occur, or if a Change of Control described in Section 11(c) occurs, then,
     not later than 10 days after such Change of Control, the Company shall give
     each Grantee with any outstanding Stock Options or SARs written notice of
     the Change of Control.

     (b) ELECTION PERIOD. In connection with the Change of Control and effective
only upon such Change of Control, each Grantee shall thereupon have the right,
within 90 days after such written notice is sent by the Company (the "Election
Period"), to make an election as described in Subsection (c) with respect to all
of his or her outstanding Stock Options or SARs (whether the right to exercise
such Stock Options or SARs has then accrued or the right to exercise such Stock
Options or SARs will accrue or has accrued upon the Change of Control).

     (c) ELECTION RIGHT. During the Election Period, each Grantee shall have the
right to elect to exercise in full any installments of such Stock Options or
SARs not previously exercised.

     (d) TERMINATION OF STOCK OPTIONS. If a Grantee does not make a timely
election in accordance with Subsection (c) in connection with a Change of
Control where the Company is not the surviving corporation (or survives only as
a subsidiary of another corporation), the Grantee's Stock Options or SARs shall
terminate as of the Change of Control. Notwithstanding the foregoing, a Stock
Option or SAR will not terminate if assumed by the surviving or acquiring
corporation, or its parent, upon a merger or consolidation and, with respect to
an Incentive Stock Option, the assumption of the Stock Option occurs under
circumstances which are not deemed a modification of the Stock Option within the
meaning of sections 424(a) and 424(h)(3)(A) of the Code.

     (e) TAX LIMITATIONS. Notwithstanding the foregoing, if the right described
in Subsection (c) in connection with SARs would make the applicable Change of
Control ineligible for desired tax treatment with respect to such Change of
Control and, but for those provisions, the Change of Control would otherwise
qualify for such treatment, the Grantee shall receive shares of Company Stock
with a Fair Market Value equal to the cash that would otherwise be payable
pursuant to Subsection (c) in substitution for the cash.

13. AMENDMENT AND TERMINATION OF THE PLAN

     (a) AMENDMENT. The Board may amend or terminate the Plan at any time;
provided, however, that any amendment that increases the aggregate number (or
individual limit for any single Grantee) of shares of Company Stock that may be
issued or transferred under the Plan (other than by operation of Section 3(b)),
or modifies the requirements as to eligibility for participation in the Plan,
shall be subject to approval by the shareholders of the Company and provided,
further, that the Board shall not amend the Plan without shareholder approval if
such approval is required by Section 162(m) of the Code.

     (b) TERMINATION OF PLAN. The Plan shall terminate on the day immediately
preceding the tenth anniversary of its initial effective date unless terminated
earlier by the Board or unless extended by the Board with the approval of the
shareholders.

     (c) TERMINATION AND AMENDMENT OF OUTSTANDING GRANTS. A termination or
amendment of the Plan that occurs after a Grant is made shall not materially
impair the rights of a Grantee unless the Grantee consents or unless the
Committee acts under Section 21 or 22(b) hereof. The termination of the Plan
shall not impair the power and authority of the Committee with respect to an
outstanding Grant. Whether or not the Plan has terminated, an outstanding Grant
may be terminated or amended under Section 21 or 22(b) hereof or may be amended
by agreement of the Company and the Grantee consistent with the Plan.

                                       9
<PAGE>

     (d) GOVERNING DOCUMENT. The Plan shall be the controlling document. No
other statements, representations, explanatory materials or examples, oral or
written, may amend the Plan in any manner. The Plan shall be binding upon and
enforceable against the Company and its successors and assigns.

14. FUNDING OF THE PLAN

     This Plan shall be unfunded. The Company shall not be required to establish
any special or separate fund or to make any other segregation of assets to
assure the payment of any Grants under this Plan. In no event shall interest be
paid or accrued on any Grant, including unpaid installments of Grants.

15. RIGHTS OF PARTICIPANTS

     Except as provided in Section 6, nothing in this Plan shall entitle any
Employee, Consultant or other person to any claim or right to receive a Grant
under this Plan. Neither this Plan nor any action taken hereunder shall be
construed as giving any individual any rights to be retained by or in the employ
of the Company or any other employment rights.

16. NO FRACTIONAL SHARES

     No fractional shares of Company Stock shall be issued or delivered pursuant
to the Plan or any Grant. The Committee shall determine whether cash, other
awards or other property shall be issued or paid in lieu of such fractional
shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.

17. WITHHOLDING OF TAXES

     The Company shall have the right to deduct from all Grants paid in cash, or
from other wages paid to an employee of the Company, any federal, state or local
taxes required by law to be withheld with respect to such cash awards and, in
the case of Grants paid in Company Stock, the Grantee or other person receiving
such shares shall be required to pay to the Company the amount of any such taxes
which the Company is required to withhold with respect to such Grants, or the
Company shall have the right to deduct from other wages paid to the employee by
the Company the amount of any withholding due with respect to such Grants.

18. REQUIREMENTS FOR ISSUANCE OF SHARES

     No Company Stock shall be issued or transferred in connection with any
Grant hereunder unless and until all legal requirements applicable to the
issuance or transfer of such Company Stock have been complied with to the
satisfaction of the Committee. The Committee shall have the right to condition
any Grant made to any Grantee hereunder on such Grantee's undertaking in writing
to comply with such restrictions on his or her subsequent disposition of such
shares of Company Stock as the Committee shall deem necessary or advisable as a
result of any applicable law, regulation or official interpretation thereof, and
certificates representing such shares may be legended to reflect any such
restrictions. Certificates representing shares of Company Stock issued under the
Plan will be subject to such stop-transfer orders and other restrictions as may
be applicable under such laws, regulations and other obligations of the Company,
including any requirement that a legend or legends be placed thereon.

19. HEADINGS

     Section headings are for reference only. In the event of a conflict between
a title and the content of a Section, the content of the Section shall control.

20. EFFECTIVE DATE OF THE PLAN

     This Plan became effective upon consummation of the initial public offering
of the Company Stock. The amendment and restatement of the Plan was effective as
of August 28, 2001.

                                       10
<PAGE>

21. MODIFICATION FOR GRANTS OUTSIDE THE U.S.

     The Board may, without amending the Plan, determine the terms and
conditions applicable Stock Options Grants or Restricted Stock Grants to
participants who are foreign nationals or employed outside the United States in
a manner otherwise inconsistent with the Plan if the Board deems such terms and
conditions necessary in order to recognize differences in local law or
regulations, tax policies or customs.

22. MISCELLANEOUS

     (a) SUBSTITUTE GRANTS. The Committee may make a Grant to an employee of
another corporation who becomes an Employee by reason of a corporate merger,
consolidation, acquisition of stock or property, reorganization or liquidation
involving the Company or any of its subsidiaries in substitution for a stock
option or restricted stock grant made by such corporation ("Substituted Stock
Incentives"). The terms and conditions of the substitute grant may vary from the
terms and conditions required by the Plan and from those of the Substituted
Stock Incentives. The Committee shall prescribe the provisions of the substitute
grants.

     (b) COMPLIANCE WITH LAW. The Plan, the exercise of Stock Options and the
obligations of the Company to issue or transfer shares of Company Stock under
Grants shall be subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. With respect to persons
subject to Section 16 of the Exchange Act, it is the intent of the Company that
the Plan and all transactions under the Plan comply with all applicable
provisions of Rule 16b-3 or its successors under the Exchange Act. The Committee
may revoke any Grant if it is contrary to law or modify a Grant to bring it into
compliance with any valid and mandatory government regulation. The Committee may
also adopt rules regarding the withholding of taxes on payments to Grantees. The
Committee may, in its sole discretion, agree to limit its authority under this
Section.

     (c) OWNERSHIP OF STOCK. A Grantee or Successor Grantee shall have no rights
as a shareholder with respect to any shares of Company Stock covered by a Grant
until the shares are issued or transferred to the Grantee or Successor Grantee
on the stock transfer records of the Company.

     (d) GOVERNING LAW. The validity, construction, interpretation and effect of
the Plan and Grant Instruments issued under the Plan shall exclusively be
governed by and determined in accordance with the law of the Commonwealth of
Pennsylvania.

                                       11

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