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MEMORANDUM OF INTENT This MEMORANDUM OF INTENT is between the CITY OF BATESVILLE, ARKANSAS (hereinafter referred to as the "Municipality" ) , and BATESVILLE MEDICAL INVESTORS LIMITED PARTNERSHIP, an Arkansas limited partnership, (hereinafter referred to as the "Company" ) . IN CONSIDERATION of the undertakings of the parties set forth herein and the benefits to be derived therefrom and of other good and valuable considerations, receipt of which is hereby acknowledged by the parties, the Municipality and the Company AGREE: 1 . Preliminary Statement. (a) The Municipality is a duly organized and existing city of the first class under the laws of the State of Arkansas and is authorized by the laws of the State of Arkansas, including particularly Act No. 175 of the Acts of Arkansas of 1961, as amended (the "Act" ) , to issue revenue bonds for financing the costs of acquiring, constructing and equipping hospital facilities (as defined in and authorized by the Act) and to make loans to finance the same for such payments and upon such terms and conditions as the Municipality deems advisable. (b) The Company proposes to acquire Grays Hospital, a 51 bed hospital located within the Municipality (the "Existing Facility" ) , and to construct and equip (or cause the present owner to construct and equip, as a condition of the acquisition) improvements to the Existing Facility. The acquisition of the Existing Facility and the constructing and equipping of the improvements will be hereafter referred to as the "Project" . (c) The Municipality has determined that the Project would enhance the quality of health care available to persons in the area and that the financing thereof with revenue bonds as hereinafter provided will decrease the costs of health care. (d) The Company has determined that prior to commencement of the Project, it must obtain a commitment from the Municipality that it will issue revenue bonds under the Act as the Company and the Municipality, upon advice of counsel, shall deem appropriate and make the proceeds available for the permanent financing of any part or all of the costs and expenses of the Project, including expenses of issuing the bonds ( "Project Costs" ) . (e) The Municipality is willing to so commit and to proceed with the issuance of such bonds as and when requested by the Company, in principal amounts necessary to furnish such permanent financing of Project Costs subject to compliance with all conditions set forth in the Act.