Exhibit 10.48














                               INDENTURE OF TRUST

                                   relating to

                                                              $2,185,000
                    Nursing Facility Refunding Revenue Bonds
                       (Salem Health Care Corp. Project),
                                   Series 1996

                                     between

                 THE COUNTY COMMISSION OF HARRISON COUNTY BY AND
                   ON BEHALF OF HARRISON COUNTY, WEST VIRGINIA

                                       and

                     ONE VALLEY BANK, NATIONAL ASSOCIATION,
                                   as Trustee

                          Dated as of September 1, 1996














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                              INDENTURE OF TRUST

         INDENTURE  OF TRUST  dated as of  September  1, 1996 (the  "Indenture")
between THE COUNTY  COMMISSION OF HARRISON COUNTY,  by and on behalf of HARRISON
COUNTY,  WEST  VIRGINIA,  a political  subdivision of the State of West Virginia
(the "Issuer"),  and ONE VALLEY BANK, NATIONAL  ASSOCIATION,  a national banking
association  organized,  existing and authorized to accept and execute trusts of
the character  herein set out (in such capacity,  together with any successor in
such capacity, the "Trustee"), as trustee.

         WHEREAS,  the Issuer is a duly organized  political  subdivision of the
State of West Virginia and is authorized by Chapter 13, Article 2C, Code of West
Virginia of 1931, as amended (the "Act"), (a) to issue its revenue bonds for the
purpose  of  providing  funds  (i) to pay the cost of  acquiring,  constructing,
furnishing and equipping a commercial facility comprising a health care facility
and (ii) to  refund  one or more  series  of  revenue  bonds  previously  issued
pursuant to the Act to finance any such facility,  in either case by lending the
proceeds of such revenue bonds or otherwise  making such proceeds  available for
such purposes to any person,  firm or private corporation which will operate and
maintain such facility in such a manner as shall  effectuate the purposes of the
Act and (b) to secure its revenue bonds by a trust agreement  between the issuer
and a corporate  trustee including therein the pledge and assignment of revenues
from any such loan to the payment of such revenue bonds; and

         WHEREAS,  at the request of Salem Health Care Corp. (the "Company") and
in order to further the purposes of the Act, the Issuer has  determined to issue
and sell its Nursing Facility  Refunding  Revenue Bonds (Salem Health Care Corp.
Project),  Series  1996 in the  original  principal  amount of  $2,185,000  (the
"Bonds")  for the purpose of  providing  funds,  together  with other  available
funds,  to refund in full the  outstanding  principal  amount of its  $2,670,000
First Mortgage Refunding Revenue Bonds (Salem Health Care Corp.  Project) Series
1986 (the "Prior Bonds"), the proceeds of which were used to refinance the costs
of acquisition, construction and equipping of a 120-bed intermediate and skilled
nursing facility, owned and operated by the Company, located at 146 Water Street
in Salem, Harrison County, West Virginia (the "Facility"); and

         WHEREAS, by issuing the Bonds to refund the Prior Bonds, the Issuer and
the Company  expect to finance the  Facility  more  economically  and thereby to
achieve interest cost savings; and

         WHEREAS,  the Issuer has undertaken to provide for the refunding of the
Prior Bonds and the refinancing of the  acquisition,  construction and equipping
of the  Facility by making  available  the  proceeds  from the sale of the Bonds
pursuant to the provisions of a Financing  Agreement (the  "Agreement")  between
the Issuer and the Company, dated as of even date herewith; and

         WHEREAS,  the  Agreement  provides that the Issuer shall issue and sell
the Bonds; and that the Company shall pay, or cause to be paid,  pursuant to the
Agreement,  in addition to other moneys  available for such  purpose,  an amount
sufficient to pay the Bonds in full and related expenses; and

         WHEREAS,  the  Issuer  wishes  to  provide  in this  Indenture  for the
issuance of its Bonds,  and the Trustee is willing to accept the trusts provided
for in this Indenture; and

         WHEREAS,  the execution and delivery of the Bonds and of this Indenture
and the issuance and sale of the Bonds have been duly authorized by a resolution
duly  adopted by the  governing  body of the Issuer and all things  necessary to
make the Bonds, when executed by the Issuer and authenticated by the Trustee (as
hereinafter  defined),  valid and binding legal obligations of the Issuer and to
make this Indenture a valid and binding agreement have been done;

         ACCORDINGLY,  THE  ISSUER  AND THE  TRUSTEE  AGREE AS  FOLLOWS  FOR THE
BENEFIT  OF THE OTHER AND FOR THE  BENEFIT OF THE  HOLDERS  OF THE BONDS  ISSUED
PURSUANT TO THIS  INDENTURE  (SUBJECT  TO THE  PROVISIONS  OF SECTIONS  6.01 and
12.08):

                                                   GRANTING CLAUSE

         To secure  first,  the  payment of the Bonds,  the Issuer  assigns  and
pledges to the Trustee,  and grants to the Trustee,  a security interest in, all
right,  title and interest of the Issuer in and to (a) the Agreement,  including
any right to delivery of the Letter of Credit,  the Receipts and Revenues of the
Issuer from the Agreement (as hereinafter  defined),  any right to bring actions
and proceedings  under the Agreement or for the enforcement of the Agreement and
any  right to do all  things  that  the  Issuer  is  entitled  to do  under  the
Agreement,  but excluding the Unassigned Rights (as hereinafter defined) and the
right to enforce the Unassigned  Rights,  and (b) all moneys and securities held
from time to time by the Trustee under this Indenture,  first, for the equal and
proportionate   benefit  of  all  holders  of  the  Bonds  without  priority  or
distinction as to lien or otherwise of any Bonds over any other Bonds.



                                    ARTICLE I

                      DEFINITIONS AND RULES OF CONSTRUCTION

         Section 1.01.  Definitions.  For all purposes of this Indenture, unless
the context requires  otherwise,  the following terms
shall have the following meanings:

         "Act" means  Chapter 13,  Article 2C, Code of West Virginia of 1931, as
amended.

         "Additional  Bonds" shall mean any Bonds authorized and issued pursuant
to Section 2.09 of this Indenture.

         "Agreement"  or "Financing  Agreement"  means the Financing  Agreement,
dated as of the date of this Indenture,  between the Issuer and the Company,  as
such  Agreement may be amended or  supplemented  from time to time in accordance
with its terms.

         "Authorized Denominations" means with respect to all Bonds $5,000 and 
any multiple thereof.

         "Available  Moneys" means moneys that (a) are  continuously  on deposit
with the Trustee in trust for the benefit of the  Bondholders  in a separate and
segregated  account in which only Available Moneys are held and (b) are proceeds
of either (i) the Bonds  received  contemporaneously  with and directly from the
issuance and sale of the Bonds,  (ii)  payments made by the Company (and, if the
bonds are then rated by any national  securities  rating agency,  at the time of
the deposit of such  payments and for a period of at least 366 days  thereafter,
no Bankruptcy  Filing shall have  occurred),  (iii) a draw by the Trustee on the
Letter of Credit,  (iv)  refunding  bonds for which the Trustee  has  received a
written opinion of Bankruptcy  Counsel to the effect that payment of such moneys
to the Bondholders  would not constitute an avoidable  preference  under Section
547 of the United States  Bankruptcy Code in the event the Company or the Issuer
were to become a debtor under the United States  Bankruptcy Code,  provided that
such opinion  shall only be required if the Bonds are then rated by any national
rating agency, or (v) income derived from the investment of the foregoing.

         "Bank" means the issuer of the Letter of Credit,  initially NationsBank
of Texas,  N.A.,  and, upon the issuance and delivery of a Substitute  Letter of
Credit, shall mean the issuer of such Substitute Letter of Credit.

         "Bankruptcy  Counsel"  means  any  counsel  nationally   recognized  in
bankruptcy  matters  that is  independent  of the  Company and the Issuer and is
reasonably acceptable to the Trustee.

         "Bankruptcy  Filing"  means the filing of a petition  by or against the
Company  or the Issuer in respect of the  Company,  any of its  partners  or the
Issuer, as the case may be, as debtor under the United States Bankruptcy Code or
similar bankruptcy or insolvency act. If the petition has been dismissed and the
dismissal  is final and not subject to appeal at the relevant  time,  the filing
will not be considered to have occurred.

         "Beneficial Owner" shall have the meaning set forth in Section 2.05(c).

         "Bonds" means the bonds issued pursuant to this Indenture.

         "Bond Fund" means the fund by that name created by Section 4. 02.

         "Bond  Purchase  Agreement"  means the Bond  Purchase  Agreement  dated
September  26, 1996,  among the Company,  the Issuer and the  Underwriter,  with
respect to the sale of the Bonds.

         "Bond Year" means the  one-year  period  beginning on the day after the
expiration of the preceding Bond Year. The first Bond Year begins on the date of
the  delivery of the Bonds and ends on August 31,  1997.  The first and the last
Bond Year may be for periods of less than one year.

         "Business Day" means any day other than (a) a Saturday or Sunday, (b) a
day on which  commercial  banks in New York,  New York, or the city or cities in
which the  corporate  trust  office of the  Trustee,  the primary  office of the
Remarketing  Agent or the  paying  office of the Bank are  authorized  by law or
executive  order to close or (c) a day on which the New York Stock  Exchange  is
closed.  For purposes of this definition,  "paying office of the Bank" means the
Bank office  responsible for making  payments under any Letter of Credit,  which
initially shall be the office in Los Angeles, California.

         "Cede & Co." means  Cede & Co.,  the  nominee  of DTC or any  successor
nominee of DTC with respect to the Bonds.

         "Code"  means  the  Internal  Revenue  Code of 1986,  as  amended,  the
regulations  (whether  proposed,  temporary  or  final)  under  that Code or the
statutory  predecessor  of  that  Code,  and any  amendments  of,  or  successor
provisions to, the foregoing and any official rulings,  announcements,  notices,
procedures and judicial  determinations  regarding any of the foregoing,  all as
and to the extent applicable. Unless otherwise indicated, reference to a Section
of  the  Code  means  that  Section  of  the  Code,  including  such  applicable
regulations,  rulings,  announcements,  notices,  procedures and  determinations
pertinent to that Section of the Code.

         "Company"  means Salem Health Care Corp., a West Virginia  corporation,
or any successor or successors to the Company's  obligations under the Agreement
as permitted under Section 5.8 of the Agreement.

         "Company  Representative"  means a person at the time designated to act
on behalf  of the  Company  by a written  instrument  furnished  to the  Trustee
containing  the  specimen  signature  of such person and signed on behalf of the
Company by its  President,  its Vice  President  or the Chairman of its Board of
Directors. The certificate may designate an alternate or alternates.

         "Conversion  Date" shall mean that Interest  Payment Date, if any, upon
which the interest  rate on the Bonds  converts  from any given rate to a Weekly
Rate, a One-year Rate, a Three-year  Rate or a Fixed Rate, all as established in
Section 3.09 of this Indenture.

         "Credit  Modification"  means,  and shall be deemed to occur upon,  the
acceptance of a Substitute Letter of Credit by the Trustee if (a) as a result of
such acceptance, the rating then assigned to the Bonds by any Rating Agency then
rating the Bonds  would be lowered or  eliminated  or (b) in the event the Bonds
are not then  rated,  the  issuer of such  Substitute  Letter of Credit  has (i)
senior debt or long-term  bank  deposits  that are rated by a Rating Agency at a
lower rating than the rating then assigned to the senior debt or long-term  bank
deposits of the Bank,  or (ii)  outstanding  letters of credit or other  similar
instruments  supporting debt  obligations that are rated by a Rating Agency at a
lower rating than the rating assigned to debt obligations supported with letters
of credit or similar instruments issued by the Bank.

         "DTC" means The Depository  Trust Company,  a limited  purpose  company
organized  under  the laws of the  State of New  York,  and its  successors  and
assigns.

         "DTC Participant" or "DTC  Participants"  means securities  brokers and
dealers,  banks,  trust companies and clearing  corporations that have access to
the DTC system.

         "Determination of Taxability" shall have the meaning set forth in 
Section 3.01(c).

         "Escrow Agreement" means the Escrow Deposit Agreement,  dated as of the
date of this  Indenture,  among the  Issuer,  the  Company  and the Prior  Bonds
Trustee, as Escrow Agent.

         "Event of Default" is defined in Section 8.01.

         "Event of  Taxability"  shall mean  delivery  to the  Trustee of (a) an
opinion of Bond  Counsel  or (b) a letter or notice  from the  Internal  Revenue
Service to a Bondholder, in either event to the effect that interest on any Bond
is includable in gross income of the recipient  thereof (other than a Bondholder
that is a  "substantial  user" of the Facility or a "related  person" within the
meaning of Section 147(a) of the Code) for Federal  income tax purposes.  "Date"
of an Event of  Taxability  shall mean the date of receipt by the Trustee of the
material described in (a) or (b).

         "Facility"  or  "Project"  means the 128-bed  intermediate  and skilled
nursing  and  rehabilitation  facility  located  at 146  Water  Street in Salem,
Harrison County, West Virginia.

         "Fixed Rate" means with respect to the Bonds the Fixed Rate established
in accordance with Section 2.02.

         "Fixed Rate Period" means that period during which the Fixed Rate is in
effect.

         "Indenture"  means  this  Indenture  of Trust,  as it may be amended or
supplemented from time to time in accordance with its terms.

         "Interest  Payment  Date"  means  the  first  day  of  each  March  and
September,  commencing March 1, 1997,  provided,  however,  that while the Bonds
bear interest at the Weekly Rate,  the Interest  Payment Date shall be the first
Business Day of each calendar  month  commencing  the first  Business Day of the
month subsequent to the Conversion Date.

         "Issuer" means Harrison County, West Virginia, a political  subdivision
of the State of West  Virginia,  acting by and through the County  Commission of
Harrison County, West Virginia, and its successors and assigns.

         "Issuer  Representative"  means the  President of the  Harrison  County
Commission or other person designated at the time to act on behalf of the Issuer
by a  written  instrument  furnished  to the  Trustee  containing  the  specimen
signature of such person and signed on behalf of the Issuer by the  President of
the Harrison County Commission.

         "Letter of Credit"  means an  irrevocable  letter of credit  having the
characteristics  of a "credit" or "letter of credit" set forth in Section  5-103
of the Uniform  Commercial  Code of the State except that a letter of credit (a)
may not be revocable and (b) may only be issued by (i) a national bank, (ii) any
banking  institution  organized  under the laws of any state,  territory  or the
District of Columbia, the business of which is substantially confined to banking
and is  supervised  by the state or  territorial  banking  commission or similar
officials  or (iii) a branch  or agency of a  foreign  bank,  provided  that the
nature and extent of federal and/or state  regulation and the supervision of the
particular  branch or agency is  substantially  equivalent to that applicable to
federal  or  state   chartered   domestic  banks  doing  business  in  the  same
jurisdiction.  Initially, the term "Letter of Credit" shall mean the irrevocable
letter of credit  issued by the Bank to the  Trustee,  including  any  permitted
supplements or amendments thereto and any renewals or extensions  thereof,  and,
upon the  expiration or termination of the Letter of Credit and the issuance and
delivery of a Substitute  Letter of Credit meeting the requirements set forth in
this  paragraph  and in Section 5.03 hereof,  "Letter of Credit" shall mean such
Substitute Letter of Credit.

         "Mandatory  Repurchase Date" means, with respect to any Bonds, the date
on which such Bonds are required to be purchased pursuant to Section 3.07(a).

         "Maximum  Rate" means the lesser of (a) the highest  interest  rate 
that may be borne by the Bonds under State law and (b) 12% per year.

         "Note" shall mean the  promissory  note of the Company in the principal
amount of $2,185,000, dated as of the date of the Bonds, in the form attached to
the  Agreement as Exhibit A, issued  pursuant to the  Agreement and delivered to
the Issuer as  consideration  for the use of the proceeds of the Bonds to refund
the Prior  Bonds,  and any  amendment  or  supplement  thereto  or  substitution
therefor.

         "Notice of  Mandatory  Repurchase"  means that  notice  required  to be
prepared by the Trustee and given by the Trustee pursuant to Section 3.07.

         "One-year  Rate"  means  with  respect to the Bonds the  variable  rate
established  annually in accordance with Section 2.02. The Bonds shall initially
bear a One-year Rate of 4.00%.

         "One-year Rate Period" means each period during which the One-year Rate
is in effect.

         "Opinion  of Bond  Counsel"  means an Opinion of Counsel by  nationally
recognized bond counsel.

         "Opinion  of  Counsel"  means  a  written  opinion  of  counsel  who is
reasonably  acceptable  to the  Trustee.  The  counsel  may be an employee of or
counsel to the Issuer, the Trustee, the Remarketing Agent or the Company.

         "Optional Tender Date" shall have the meaning set forth in Section 
3.07(b)(i).

         "Outstanding" when used with reference to Bonds, or "Bonds outstanding"
means all Bonds that have been  authenticated  and  delivered  by the under this
Indenture, except the following:

         (a) Bonds  canceled or  purchased  by or  delivered  to the Trustee for
cancellation  pursuant to the provisions of this Indenture.  Except as otherwise
provided in Section 3.08,  Bonds  purchased by the Company  pursuant to optional
tender  or  mandatory   repurchase  under  Section  3.07  will  continue  to  be
outstanding until the Company directs the Trustee to cancel them;

         (b)  Bonds  that  have  become  due  (at  maturity  or  on  redemption,
acceleration or otherwise) and for the payment,  including  interest  accrued to
the due date, of which sufficient moneys are held by the Trustee;

         (c) Bonds deemed paid by Section 7.01; and

         (d) Bonds in lieu of which others have been authenticated under Section
2.05 (relating to registration  and exchange of Bonds) or Section 2.06 (relating
to mutilated, lost, stolen, destroyed or undelivered Bonds).

         "Owner," "owners,"  "Bondholder,"  "bondholder,"  "Holder," "holder" or
words of similar  import mean:  (a) in the event that the  book-entry  system of
evidence and transfer of ownership in the Bonds is employed  pursuant to Section
2.05(c),  Cede & Co., as nominee for DTC, or its  nominee,  and (b) in all other
cases,  the registered  owner or owners of any Bond fully registered as shown on
the register maintained by the Trustee.

         "Person" means (a) any individual,  (b) any  corporation,  partnership,
joint   venture,   association,   joint-stock   company,   business   trust   or
unincorporated  organization,  or  grouping of any such  entities,  in each case
formed or organized  under the laws of the United  States of America,  any state
thereof or the  District of Columbia or (c) the United  States of America or any
state thereof,  or any political  subdivision of either thereof,  or any agency,
authority or other instrumentality of any of the foregoing.

         "Parent" means Regency Health Services,  Inc., a Delaware  Corporation,
and owner of 100% of the stock of the Company.

         "Prior Bonds" means Harrison County,  West Virginia First Mortgage 
Refunding Revenue Bonds (Salem Health Care Corp.  Project), Series 1986, in the 
original principal amount of $2,670,000.

         "Prior Bonds Trustee" means United National Bank, Charleston, West 
Virginia, as indenture trustee for the Prior Bonds.

         "Rating Agency" means Moody's Investors Service, Inc., if such agency's
ratings are in effect with respect to the Bonds,  and Standard & Poor's  Ratings
Group,  if such  agency's  ratings are in effect with respect to the Bonds,  and
their respective  successors and assigns.  If either such corporation  ceases to
act as a securities  rating  agency,  the Company may,  with the approval of the
Remarketing  Agent and the Bank,  appoint any nationally  recognized  securities
rating agency as a replacement.

         "Receipts  and  Revenues  of the Issuer from the  Agreement"  means all
moneys paid to the Issuer pursuant to Section 4.1 of the Agreement, and receipts
of the Trustee  credited  under the  provisions of this  Indenture  against such
payments,  including  all moneys  (other  than moneys  drawn to  purchase  Bonds
pursuant to the terms  hereof)  received  by the  Trustee  from a draw under the
Letter of Credit.

         "Record  Date"  means (i) while the Bonds bear  interest  at the Weekly
Rate,  the Trustee's  close of business on the Business Day next  preceding each
Interest  Payment  Date;  and (ii)  while the Bonds bear  interest  at any other
interest  rate,  the 15th day of the calendar  month next  preceding an Interest
Payment Date.

         "Reimbursement  Agreement" means the Credit Agreement among the Parent,
the Lenders Identified therein,  NationsBank Capital Markets,  Inc. and the Bank
pursuant  to which the Letter of Credit is issued by the Bank and  delivered  to
the  Trustee,  and  any  and  all  modifications,  alterations,  amendments  and
supplements thereto.

         "Remarketing Agent" means initially Crew and Associates,  Inc., and any
successor agent or agents appointed from time to time pursuant to Section 9.12.

         "Remarketing   Agreement"  means  (a)  initially  the  Remarketing  and
Interest  Services  Agreement among the Issuer,  the Company and the Remarketing
Agent dated as of September 1, 1996, and any and all modifications, alterations,
amendments and  supplements  thereto and (b) any agreement  between the Company,
the Issuer and any successor  remarketing  agent  appointed  pursuant to Section
9.12.

         "Remarketing Proceeds" shall have the meaning set forth in Section 
3.08(c).

         "Responsible Officer" means, when used with respect to the Trustee, any
officer  within the  Corporate  Trust  Division (or any  successor  group of the
Trustee),  including any vice  president,  assistant vice  president,  assistant
secretary or any other officer or assistant  officer of the Trustee  customarily
performing  functions  similar to those performed by the persons who at the time
shall be such officers,  respectively,  or to whom any corporate trust matter is
referred  at the  Trustee's  address set forth in Section  12.01  because of his
knowledge of and familiarity with the particular subject.

         "State" means the State of West Virginia.

         "Substitute Letter of Credit" shall have the meaning set forth in 
Section 5.03.

         "Tax Regulatory  Agreement" means the Tax Regulatory Agreement dated as
of the date of the delivery of the Bonds among the  Company,  the Issuer and the
Trustee,  as the  same  may be  amended  or  supplemented  from  time to time in
accordance  with its terms or with an opinion of Bond Counsel to the effect that
such amendment  will not have an adverse effect on the tax-exempt  status of the
Bonds under the Code.

         "Three-year  Rate" means with  respect to the Bonds the  variable  rate
established every three-years in accordance with Section 2.02.

         "Three-year  Rate Period"  means each period  during which a Three-year
Rate is in effect.

         "Trustee"  means the entity  identified  as such in the heading of this
Indenture and such entity's successors under this Indenture, and any separate or
co-trustee at the time serving as such under this Indenture.

         "Unassigned  Rights"  means the  rights  of the  Issuer  under  Section
4.1(b)(2)  (relating  to  fees  and  expenses)  and  Section  5.6  (relating  to
indemnification)  of the  Agreement  and the  rights of the  Issuer  to  receive
documentation  and notices,  to give or withhold consents in connection with the
provisions  of this  Indenture or the  Agreement and the right to enforce any of
the foregoing.

         "Underwriter" means Crews and Associates, Inc.

         "U.S.  Government  Obligations"  means (a)  direct  obligations  of the
United  States for which its full faith and  credit are  pledged  for the timely
payment  thereof,  (b)  obligations of a person  controlled or supervised by and
acting as an agency or  instrumentality  of the United  States,  the  payment of
which is unconditionally guaranteed as a full faith and credit obligation of the
United  States for the timely  payment  thereof or (c)  securities  or  receipts
evidencing  ownership  interests in obligations  or specified  portions (such as
principal or interest) of obligations described in (a) or (b).

         "Weekly  Rate" means with  respect to the Bonds the  variable  interest
rate on the Bonds established weekly in accordance with Section 2.02.

         "Weekly Rate Period" means each period during which a Weekly Rate is in
effect.

         All other terms used in this Indenture that are defined in Article I of
the Agreement have the same meanings  assigned them in the Agreement  unless the
context clearly requires otherwise.

         Section 1.02. Rules of Construction.  Unless the context otherwise 
requires,

         (a)      an  accounting  term not  otherwise  defined has the meaning  
assigned to it in accordance  with  generally  accepted accounting principles 
applied on a consistent basis;

         (b)      references to Articles and Sections are to the Articles and 
Sections of this Indenture;

         (c)      terms defined elsewhere in this Indenture shall have the 
meanings therein prescribed for them;

         (d)      words of the masculine gender shall be deemed and construed to
include  correlative  words of the feminine and neuter genders;

         (e)      headings used in this  Indenture are for  convenience  of 
reference only and shall not define or limit the provisions hereof;

         (f) each  reference  herein  or in the Bonds to a  percentage  of Bonds
required for notices,  consents or for any other reason shall be deemed to refer
to Bonds then outstanding; and

         (g)      all references herein to time shall be Charleston, West 
Virginia time unless otherwise expressly stated.


<PAGE>


                            ARTICLE II

                            THE BONDS

         Section 2.01. Issuance of Bonds; Form; Dating.

         (a) Authorization.  The Issuer hereby authorizes and creates under this
Indenture an issue of Bonds, entitled to the benefit, security and protection of
this  Indenture,  to be designated  "Nursing  Facility  Refunding  Revenue Bonds
(Salem Health Care Corp.  Project),  Series 1996." The total principal amount of
Bonds that may be issued and outstanding  hereunder shall be $2,185,000,  except
as provided in Section  2.06 with respect to  replacement  of  mutilated,  lost,
stolen,  destroyed  or  undelivered  Bonds  and  Section  2.09 with  respect  to
Additional  Bonds.  The Bonds shall be issuable only as fully  registered  bonds
without coupons in Authorized  Denominations only, and in substantially the form
of  Exhibit  A  to  this  Indenture,  with  appropriate  variations,  omissions,
insertions,  notations,  legends  or  endorsements  required  by law or usage or
permitted  or  required  by this  Indenture.  The  Bonds  may be in  printed  or
typewritten  form. No Bonds may be issued under the provisions of this Indenture
except in accordance with this Article.

         The Bonds  shall be  payable in lawful  money of the United  States but
only from the sources pledged to such purpose. The Bonds are limited obligations
of the Issuer  payable  solely  from the  revenues  and  receipts  derived  from
payments  made by the  Company  on the Note or by the Bank  under the  Letter of
Credit,  which revenues and receipts and security have been pledged and assigned
to the  Trustee  to secure  payment of the Bonds in the manner and to the extent
provided  herein.  NEITHER THE STATE OF WEST  VIRGINIA,  HARRISON  COUNTY,  WEST
VIRGINIA, THE COUNTY COMMISSION OF HARRISON COUNTY, WEST VIRGINIA, NOR ANY OTHER
POLITICAL  SUBDIVISION  THEREOF  SHALL BE OBLIGATED  TO PAY THE  PRINCIPAL OF OR
INTEREST ON THE BONDS OR OTHER COSTS INCIDENT  THERETO EXCEPT FROM THE REVENUES,
MONIES AND PROPERTY PLEDGED THEREFOR,  AND NEITHER THE TAXING POWER NOR THE FULL
FAITH AND CREDIT OF THE STATE OF WEST VIRGINIA,  HARRISON COUNTY, WEST VIRGINIA,
THE COUNTY COMMISSION OF HARRISON COUNTY, WEST VIRGINIA,  OR ANY OTHER POLITICAL
SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON
THE BONDS OR OTHER COSTS INCIDENT  THERETO.  THE BONDS SHALL NEVER CONSTITUTE AN
INDEBTEDNESS OF THE ISSUER WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY
PROVISION AND SHALL NEVER  CONSTITUTE  OR GIVE RISE TO A PECUNIARY  LIABILITY OF
THE ISSUER. NEITHER SHALL THE BONDS NOR THE INTEREST THEREON BE A CHARGE AGAINST
THE GENERAL CREDIT OR TAXING POWERS OF THE ISSUER. NO PRESENT OR FUTURE OFFICER,
MEMBER, COMMISSIONER, EMPLOYEE OR AGENT OF THE ISSUER SHALL BE PERSONALLY LIABLE
ON THE BONDS; AND NO COVENANT, AGREEMENT OR OBLIGATION CONTAINED HEREIN SHALL BE
DEEMED TO BE A  COVENANT,  AGREEMENT  OR  OBLIGATION  OF ANY  PRESENT  OR FUTURE
MEMBER, COMMISSIONER, OFFICER, EMPLOYEE OR AGENT OF THE ISSUER IN HIS INDIVIDUAL
CAPACITY.

         (b) Details of Bonds.  All Bonds shall be dated  September  1, 1996 and
delivery  of the  Bonds  and  shall  mature,  subject  to prior  redemption,  on
September  1, 2010.  Interest on the Bonds shall be computed  from the  Interest
Payment Date next  preceding  the date of  authentication  thereof,  unless such
authentication  date (a) is prior to the first  Interest  Payment Date following
the initial delivery of the Bonds, in which case interest shall be computed from
such initial delivery date, (b) is after a Record Date and before the subsequent
Interest  Payment  Date,  in which  case  interest  shall be  computed  from the
subsequent  Interest  Payment Date, or (c) is an Interest Payment Date, in which
case interest shall be computed from such authentication date; provided, that if
interest on the Bonds is in default,  Bonds  shall bear  interest  from the last
date to which interest has been paid.  The principal of,  redemption or purchase
price and premium,  if any, and interest on the Bonds shall be payable in lawful
currency of the United States. The principal of and redemption or purchase price
and premium,  if any, on the Bonds shall be payable at the  principal  corporate
trust  office of the  Trustee  upon  presentation  and  surrender  of the Bonds.
Payments  of interest on the Bonds shall be mailed to the persons in whose names
the Bonds are registered on the register of the Trustee at the close of business
on the Record Date next preceding each Interest Payment Date; provided that, any
Holder  of a Bond or Bonds in an  aggregate  principal  amount  of not less than
$500,000  may,  by prior  written  instructions  filed with the  Trustee  (which
instructions  shall  remain  in  effect  until  revoked  by  subsequent  written
instructions),  instruct that  interest  payments for any period be made by wire
transfer  to an  account  in  the  continental  United  States  or  other  means
acceptable  to the Trustee.  Bonds shall be numbered from 1 upward as determined
by the Trustee and shall contain the designation "R."

         (c) Delivery.  Upon the execution and delivery of this  Indenture,  the
Issuer shall  execute and deliver the Bonds to the Trustee and,  upon receipt by
the Trustee of the  following,  the Trustee  shall  authenticate  the  principal
amount of Bonds  specified in the Issuer's  authorization  and request,  and the
Trustee  shall  deliver the Bonds to the  purchaser or purchasers as directed by
the Issuer:

         (i)      a copy of the resolution or resolutions of the Issuer  
authorizing the issuance of the Bonds,  certified by the Clerk of the Harrison 
County Commission;

         (ii) original executed  counterparts of the Agreement,  this Indenture,
the Escrow Agreement, the Remarketing Agreement and the Tax Regulatory Agreement
and a copy of the Reimbursement Agreement;

         (iii)    confirmation that the Trustee has received the original, 
executed Letter of Credit from the Bank;

         (iv) an  authorization  and  request  from the Issuer to the Trustee to
authenticate and deliver the Bonds in specified Authorized  Denominations to the
initial purchaser or purchasers upon payment to the Trustee,  for the account of
the Issuer, of the purchase price for such principal amount of Bonds;

         (v) an Opinion of Bond Counsel for the Bonds, addressed to the Trustee,
or upon which the  Trustee may rely,  to the effect that the Bonds so  specified
have been validly authorized, executed and issued under the law of the State and
this Indenture has been duly authorized, executed and delivered by the Issuer;

         (vi) an opinion of Counsel to the Bank  addressed  to the  Trustee,  or
upon which the  Trustee  may rely,  to the effect that the Letter of Credit is a
binding  and valid  obligation  of the Bank and is not  subject to  registration
under the Securities Act of 1933, as amended;

         (vii)    Internal Revenue Service Form 8038 completed by the Issuer 
with respect to the Bonds;

         (viii) An Opinion of Counsel that (1) the Company is a corporation duly
organized  and  validly  existing  under  the  laws  of the  State,  and (2) the
Agreement and the Note have been duly authorized,  executed and delivered by the
Company and are enforceable against the Company, subject to usual exceptions for
matters relating to bankruptcy and equitable principles; and

         (ix)     Appropriate evidence that the Remarketing Agent has accepted 
its obligations and duties described in this Indenture.

         (d)  Disbursement.  On the date of issuance  of the Bonds,  the Trustee
shall  disburse  all of the  proceeds  derived  from the  issuance of the Bonds,
together  with  sufficient  equity money  provided by the Company,  to the Prior
Bonds Trustee as Escrow Agent under the Escrow Agreement in order to provide for
the  defeasance  in full of the Prior Bonds.  All  additional  moneys  should be
deposited in the Bond Fund and shall be applied as set forth in Section 4.04.

         Section 2.02.  Interest on the Bonds.  The Bonds shall bear interest as
herein  provided  from the date  thereof  until  paid in full.  The  Bonds  will
initially  bear  interest at a One-year Rate of 4.00%.  Interest  accrued on the
Bonds  shall be paid on each  Interest  Payment  Date (or,  if such day is not a
Business Day, on the next succeeding Business Day), commencing on March 1, 1997.
Subsequent  to a Conversion  Date,  the Bonds shall bear  interest at the lowest
rate determined by the Remarketing  Agent on their date of issuance as necessary
to sell all of the Bonds at par;  provided  that no  interest  rate on the Bonds
shall exceed the Maximum  Rate.  The amount of interest  payable on any Interest
Payment Date shall be computed on the basis of the actual number of days elapsed
over a year of 365 or 366 days, whichever may be applicable.

         If,  subsequent to any Conversion  Date, the Bonds bear interest at the
Weekly Rate, during each Weekly Rate Period the Bonds shall bear interest at the
Weekly Rate,  determined by the  Remarketing  Agent  initially no later than the
first day of each Weekly Rate Period and  thereafter no later than Wednesday (or
the next  succeeding  Business Day, if such  Wednesday is not a Business Day) of
each week during such Weekly Rate  Period.  The Weekly Rate shall be the minimum
rate of interest  that would cause the Bonds on the date such rate is determined
to have a market value equal to the then outstanding  principal amount, plus, if
such sale would not be on an Interest Payment Date, accrued interest.  Such rate
shall be determined by the  Remarketing  Agent in its sole  discretion  based on
prevailing market conditions.  The determination of the Weekly Rates as provided
in this Indenture  shall be conclusive  and binding on the Issuer,  the Company,
the  Bank,  the  Trustee,  the  Remarketing  Agent  and  the  Bondholders.   The
calculation  and  verification  of interest  payable on the Bonds as provided in
this Indenture shall be conclusive and binding on the Issuer,  the Company,  the
Bank, the Trustee,  the Remarketing Agent, and the Bondholders,  absent manifest
error.

         If the  Remarketing  Agent shall not have  determined a Weekly Rate for
any  week,  the  Weekly  Rate  shall  be the  same as the  Weekly  Rate  for the
immediately  preceding  week.  If for any  reason,  the  Weekly  Rate  cannot be
determined for any week as hereinbefore  provided, the Weekly Rate for such week
shall be a rate per annum equal to 100% of the rate  published  in the then most
recent edition of The Bond Buyer for 30-day prime  tax-exempt  commercial  paper
or,  if The  Bond  Buyer  no  longer  publishes  such  information,  such  other
publication or provider of such information as the Remarketing Agent may select.

         The first  Weekly Rate  determined  for each  Weekly Rate Period  shall
apply to the period  commencing  on the first day of such Weekly Rate Period and
ending on the next succeeding Wednesday (or the next succeeding Business Day, if
such Wednesday is not a Business Day). Thereafter,  each Weekly Rate shall apply
to the period  commencing on Thursday (or if the date of  determination is not a
Wednesday, on the next following Business Day) and ending on the next succeeding
date of determination, or if earlier, on the last day of the Weekly Rate Period.

         Promptly   following  the   determination  of  each  Weekly  Rate,  the
Remarketing Agent shall give notice thereof to the Trustee.  Upon the request of
any Bondholder,  the Remarketing  Agent shall notify any such Bondholder of each
change in the Weekly  Rate by first  class  mail.  The  failure to give any such
notice shall not affect,the change in the Weekly Rate.

         The  Remarketing  Agent  shall  notify the  Trustee  and the Company in
writing  (which may be in telecopy form) or by telephone  promptly  confirmed in
writing by 4:00 p.m. on the last  Wednesday of each month (or if such  Wednesday
is not a Business Day, on the next  succeeding  Business Day) of the Weekly Rate
set for each week in such  month,  and the  principal  amount  of Bonds  bearing
interest at the Weekly Rate during each week.

         Using the Weekly Rates supplied by the Remarketing  Agent,  the Trustee
shall calculate the amount of interest payable on the Bonds.

         Section 2.03.  Execution and Authentication.  The Bonds shall be signed
on behalf of the Issuer with the manual or facsimile  signature of the President
of the Harrison County Commission, and the seal of the Issuer shall be impressed
or imprinted on the Bonds by facsimile or otherwise,  and attested by the manual
or facsimile  signature of the Clerk of the Harrison County  Commission.  If any
officer whose signature is on a Bond no longer holds that office at the time the
Trustee authenticates the Bond, the Bond shall nevertheless be valid. Also, if a
person signing a Bond is the proper officer on the actual date of execution, the
Bond shall be valid even if that person is not the proper officer on the nominal
date of action.

         A Bond shall not be valid for any purpose under this  Indenture  unless
and until the Trustee  manually signs the certificate of  authentication  on the
Bond,  and such  signature  shall be conclusive  evidence that the Bond has been
authenticated under this Indenture.

         Section 2.04. Bond Register. The Trustee shall keep a register of Bonds
and of their  transfer and  exchange.  Bonds not held under a book-entry  system
must be presented at the  principal  corporate  trust  operations  office of the
Trustee for registration,  transfer and exchange,  and Bonds may be presented at
that office for payment. Bonds not held under a book-entry system and optionally
tendered by their holders must be delivered as specified in Section 3.07(b).

         Section 2.05. Registration and Exchange of Bonds; Persons Treated as 
Owners; Book-Entry System.

         (a) Bonds may be  transferred  only on the register  maintained  by the
Trustee.  Upon surrender for transfer of any Bond to the Trustee,  duly endorsed
for transfer or accompanied by an assignment  duly executed by the holder or the
holder's  attorney  duly  authorized  in  writing  and in either  case,  with an
appropriate  guarantee of signature  conforming to the requirements of Exhibit A
hereto,  the Trustee  shall  authenticate  a new Bond or Bonds in an equal total
principal amount and registered in the name of the transferee.

         Bonds may be exchanged for an equal total principal  amount of Bonds of
different Authorized  Denominations.  The Trustee shall authenticate and deliver
Bonds that the  Bondholder  making the exchange is entitled to receive,  bearing
numbers not then outstanding.

         Except in  connection  with the  optional  tender of Bonds  pursuant to
Section 3.07(b) and the delivery  thereof  pursuant to Section 3.08, the Trustee
shall not be  required  to  transfer  or  exchange  any Bond  during  the period
beginning  15 days before the mailing of notice  calling the Bond or any portion
of the Bond for redemption and ending on the redemption  date.  Bonds subject to
redemption or mandatory  repurchase  may be transferred or exchanged only if the
Trustee  provides the new holder thereof with a copy of the notice of redemption
or mandatory repurchase, as the case may be.

         The holder of a Bond as shown on the  register of the Trustee  shall be
the  absolute  owner of the Bond for all  purposes,  and  payment of  principal,
interest  or purchase  price shall be made only to or upon the written  order of
such holder or the holder's legal  representative;  provided that interest shall
be paid  to the  Person  shown  on the  register  as a  holder  of a Bond on the
applicable Record Date.

         (b) The Trustee may  require  the  payment by a  Bondholder  requesting
exchange or  registration  of transfer of any tax or other  governmental  charge
required to be paid in respect of the exchange or  registration  of transfer but
shall not impose any other charge.

         (c)  The  Trustee  or  the  Remarketing   Agent  may  make  appropriate
arrangements  for the Bonds  (or any  portion  thereof)  to be issued or held by
means of a book-entry system  administered by DTC with no physical  distribution
of Bonds made to the public (other than those Bonds, if any, not held under such
book-entry  system).  References in this Section  2.05(c) to a Bond or the Bonds
shall be  construed  to mean  the Bond or the  Bonds  that  are held  under  the
book-entry  system.  In such event, one Bond of each maturity shall be issued to
DTC and  immobilized  in its  custody.  A  book-entry  system shall be employed,
evidencing ownership of the Bonds in Authorized Denominations, with transfers of
beneficial  ownership  effected on the  records of DTC and the DTC  Participants
pursuant to rules and procedures established by DTC.

         Each DTC  Participant  shall be credited in the records of DTC with the
amount of such DTC  Participant's  interest in the Bonds.  Beneficial  ownership
interests  in the Bonds may be  purchased  by or through DTC  Participants.  The
holders of these beneficial  ownership interests are hereinafter  referred to as
the  "Beneficial   owners."  The  Beneficial  Owners  shall  not  receive  Bonds
representing their beneficial  ownership  interests.  The ownership interests of
each  Beneficial  Owner  shall  be  recorded  through  the  records  of the  DTC
Participant from which such Beneficial  Owner purchased its Bonds.  Transfers of
ownership  interests in the Bonds shall be  accomplished by book entries made by
DTC and, in turn, by DTC Participants  acting on behalf of Beneficial Owners. SO
LONG AS CEDE & CO., AS NOMINEE FOR DTC,  IS THE  REGISTERED  OWNER OF THE BONDS,
THE  TRUSTEE  SHALL  TREAT  CEDE & CO.  AS THE ONLY  HOLDER OF THE BONDS FOR ALL
PURPOSES  UNDER  THIS  INDENTURE,  INCLUDING  RECEIPT  OF ALL  PRINCIPAL  OF AND
INTEREST ON THE BONDS,  RECEIPT OF NOTICES,  VOTING AND  REQUESTING OR DIRECTING
THE TRUSTEE TO TAKE OR NOT TO TAKE, OR CONSENTING TO, CERTAIN ACTIONS UNDER THIS
INDENTURE.

         Payments of principal,  interest and purchase price with respect to the
Bonds,  so long as DTC is the  only  owner  of the  Bonds,  shall be paid by the
Trustee directly to DTC or its nominee,  Cede & Co. as provided in the Letter of
Representation  dated as of September 1, 1996 from the Issuer, the Company,  the
Remarketing  Agent,  the Trustee to DTC (the  "Letter of  Representation").  DTC
shall remit such  payments to DTC  Participants,  and such  payments  thereafter
shall be paid by DTC  Participants  to the Beneficial  owners.  The Issuer,  the
Company,  and the Trustee shall not be  responsible or liable for payment by DTC
or DTC  Participants,  for sending  transaction  statements or for  maintaining,
supervising or reviewing records maintained by DTC or DTC Participants.

         In  the  event  that  (1)  DTC  determines  not to  continue  to act as
securities  depository for the Bonds or (2) the Company or the Remarketing Agent
determines  that the  continuation  of the  book-entry  system of  evidence  and
transfer of ownership of the Bonds would  adversely  affect its interests or the
interests  of the  Beneficial  Owners of the  Bonds,  the Issuer  shall,  at the
request of the Company or the  Remarketing  Agent,  discontinue  the  book-entry
system with DTC. If the Remarketing  Agent fails to identify  another  qualified
securities depository to replace DTC, the Trustee shall authenticate and deliver
replacement  Bonds  in the  form of fully  registered  Bonds to each  Beneficial
Owner.

         THE ISSUER,  THE COMPANY,  THE REMARKETING AGENT, AND THE TRUSTEE SHALL
NOT  HAVE  ANY  RESPONSIBILITY  OR  OBLIGATIONS  TO ANY DTC  PARTICIPANT  OR ANY
BENEFICIAL OWNER WITH RESPECT TO (i) THE BONDS; (ii) THE ACCURACY OF ANY RECORDS
MAINTAINED  BY DTC OR ANY DTC  PARTICIPANT;  (iii) THE PAYMENT BY DTC OR ANY DTC
PARTICIPANT  OF ANY  AMOUNT  DUE TO  ANY  BENEFICIAL  OWNER  IN  RESPECT  OF THE
PRINCIPAL  OF AND  INTEREST ON THE BONDS;  (iv) THE  DELIVERY OR  TIMELINESS  OF
DELIVERY BY DTC OR ANY DTC PARTICIPANT OF ANY NOTICE DUE TO ANY BENEFICIAL OWNER
THAT IS REQUIRED OR PERMITTED  UNDER THE TERMS OF THIS  INDENTURE TO BE GIVEN TO
BENEFICIAL OWNERS; (v) THE SELECTION OF BENEFICIAL OWNERS TO RECEIVE PAYMENTS IN
THE EVENT OF ANY PARTIAL  REDEMPTION OF THE BONDS;  OR (vi) ANY CONSENT GIVEN OR
OTHER ACTION TAKEN BY DTC, OR ITS NOMINEE, CEDE & CO., AS OWNER.

         In the event that a  book-entry  system of  evidence  and  transfer  of
ownership  of the  Bonds is  discontinued  pursuant  to the  provisions  of this
Section,  the Bonds shall be delivered  solely as fully registered Bonds without
coupons in the  Authorized  Denominations,  shall be lettered  "IR" and numbered
separately  from 1  upward,  and  shall  be  payable,  executed,  authenticated,
registered, exchanged and canceled pursuant to the provisions hereof.

         (d)  The  Remarketing  Agent  shall  not  be  limited  to  utilizing  a
book-entry  system maintained by DTC but may enter into a custody agreement with
any bank or trust company serving as custodian (which may be the Trustee serving
in the capacity of custodian) to provide for a book-entry or similar  method for
the registration and registration of transfer of all or a portion of the Bonds.


         SO LONG AS A BOOK-ENTRY  SYSTEM OF EVIDENCE OF TRANSFER OF OWNERSHIP OF
ALL THE BONDS IS  MAINTAINED  IN  ACCORDANCE  HEREWITH,  THE  PROVISIONS OF THIS
INDENTURE RELATING TO THE DELIVERY OF PHYSICAL BOND CERTIFICATES SHALL BE DEEMED
INAPPLICABLE  OR BE  OTHERWISE  SO  CONSTRUED  AS TO GIVE  FULL  EFFECT  TO SUCH
BOOK-ENTRY SYSTEM.

         Section 2.06. Mutilated, Lost, Stolen, Destroyed or Undelivered Bonds.

         (a) If any Bond is mutilated,  lost,  stolen or destroyed,  the Trustee
shall authenticate a new Bond of the same denomination for any mutilated,  lost,
stolen or destroyed  Bond if there is delivered to the Trustee at its  principal
corporate  trust  operations  office,  (1) in the case of a mutilated Bond, such
mutilated  Bond and (2) in the  case of any  lost,  stolen  or  destroyed  Bond,
evidence  of such loss,  theft or  destruction  reasonably  satisfactory  to the
Issuer,  Bank,  Trustee  and  Company,  together  with  an  indemnity  from  the
Bondholder,  reasonably satisfactory to them. If the Bond has matured and if the
evidence and indemnity  described  above have been  provided by the  Bondholder,
instead  of issuing a  duplicate  Bond,  the  Trustee,  with the  consent of the
Company,  shall pay the Bond  without  requiring  surrender of the Bond and make
such requirements as the Trustee deems fit for its protection,  including a lost
instrument  bond.  The  Issuer,  the  Company  and the  Trustee  may  charge the
Bondholder their reasonable fees and expenses in this connection.

         (b) In the event that any Bond purchased pursuant to an optional tender
or mandatory  repurchase is not delivered by the holder thereof on the date such
Bond is purchased, the Issuer shall execute (if necessary) and the Trustee shall
authenticate  and deliver a new Bond of like aggregate  principal  amount as the
Bond purchased,  which Bond shall, for all purposes of this Indenture, be deemed
to  evidence  the  same  debt as the Bond  purchased  and  shall be  remarketed,
delivered and registered in accordance with Section 3.08(d) hereof.

         If any Bond is purchased by the Trustee with Available  Moneys provided
by the Company and sufficient for such  purchase,  the Trustee,  upon request of
the  Company,  shall  authenticate  a new  Bond in any  Authorized  Denomination
specified by the Company, registered as the Company may direct and deliver it to
the Company, or to its order, whether or not such Bond is ever delivered. If any
Bond is purchased with funds obtained by a drawing on the Letter of Credit,  the
Trustee shall comply with the provisions of Section 3.08(d)(ii).

         (c) Every new Bond  issued  pursuant  to this  Section  2.06  shall (i)
constitute an  additional  contractual  obligation  of the Issuer  regardless of
whether, in the case of (a) above, the mutilated, lost, stolen or destroyed Bond
and, in the case of (b) above,  the Bond  purchased  shall be enforceable at any
time by anyone,  and (ii) be entitled to all of the  benefits of this  Indenture
equally and proportionately  with any and all other Bonds issued and outstanding
hereunder.

         (d) All Bonds shall be held and owned on the express condition that the
foregoing  provisions  of this  Section 2.06 are  exclusive  with respect to the
replacement  or payment of mutilated,  lost,  stolen or destroyed  Bonds and the
replacement  of any Bond purchased  pursuant to an optional  tender or mandatory
repurchase  and, to the extent  permitted by law, and shall preclude any and all
other  rights  and  remedies  with  respect  to the  replacement  or  payment of
negotiable  instruments or other investment  securities without their surrender,
notwithstanding  any law or  statute to the  contrary  now  existing  or enacted
hereafter.

         Section  2.07.  Cancellation  of Bonds.  All Bonds  paid,  redeemed  or
purchased,  either at or before maturity, shall be delivered to the Trustee when
such payment,  redemption or purchase is made, and except as otherwise  provided
herein  shall be  canceled.  Whenever a Bond is  delivered  to the  Trustee  for
cancellation  (upon  payment,  redemption,  defeasance  or  otherwise),  or  for
transfer,  exchange or replacement pursuant to Section 2.05 or 2.06, the Trustee
shall  safeguard  such  Bond  for  such  period  of time as may be  required  by
governmental  regulations and thereafter  promptly cancel the Bond and prepare a
certificate of destruction therefor.

         Section 2.08.  Temporary  Bonds.  Until  definitive Bonds are ready for
delivery,  the Issuer may execute and the Trustee shall  authenticate  temporary
Bonds  substantially  in the  form of the  definitive  Bonds,  with  appropriate
variations.  The Issuer  shall,  without  unreasonable  delay,  prepare  and the
Trustee shall authenticate definitive Bonds in exchange for the temporary Bonds.
Such exchange shall be made by the Trustee  without  charge to the  Bondholders.
Temporary  Bonds shall not otherwise be eligible for transfer or exchange  under
Section 2.05.

         Section 2.09.  Additional Bonds.

         (a) At any time while the Issuer is not in default under this Indenture
and subject to the approval and  execution of a  supplemental  Indenture  making
appropriate  provisions  therefor in  accordance  with Section  10.01 hereof and
subject to receipt by the Trustee of the documents  listed below, the Issuer may
issue one or more series of Additional  Bonds for the purpose of providing funds
to be used,  with any other available  funds,  for the purpose of (i) paying the
cost of all improvements,  restoration,  repairing, rebuilding,  rearranging and
replacements  of the Project or any part thereof by the Company  pursuant to, or
(ii) refunding all or part of any prior series of Bonds,  or any  combination of
the  above.  Each  series of  Additional  Bonds  shall be issued  pursuant  to a
supplement  to this  Indenture.  Unless  otherwise  provided  in a  supplemental
Indenture,  all such Additional Bonds shall be in substantially the same form as
the Bonds, but shall be of such denominations, bear such dates, bear interest at
such rates, have such maturity dates,  redemption dates and redemption premiums,
contain an appropriate series  designation,  and be issued at such prices all as
approved by Company.

         The Trustee shall  authenticate and deliver such Additional  Bonds, but
only upon receipt of the following:

         (1)      A certificate of the Issuer, signed by its President, that it 
is not in default under this Indenture.

         (2)      A   certificate   of  the   Company,   signed   by  a  Company
                  Representative  approving  the  issuance  and  terms  of  such
                  Additional  Bonds  and  that it is not in  default  under  the
                  Agreement.

         (3)      A certified  copy of a resolution or resolutions of the Issuer
                  authorizing  a)the  execution and delivery of the amendment to
                  the Agreement  referred to in  subparagraph  4 of this Section
                  2.09,  (b) the  execution  and  delivery  of the  supplemental
                  Indenture  referred to in  subparagraph 5 hereof,  and (c) the
                  issuance,  award,  execution  and delivery of such  Additional
                  Bonds.

         (4)      An  original  executed  counterpart  of an  amendment  to  the
                  Agreement  providing,  among other things,  for increasing the
                  amounts  payable by the Company  thereunder to include payment
                  of  principal  of,  premium,  if  any,  and  interest  on such
                  Additional Bonds.

         (5)      An original executed counterpart of a supplemental Indenture 
                  providing for the issuance of such Additional Bonds.

         (6)      Evidence of the consent of the Bank to the issuance of such 
                  Additional Bonds.

         (7)      An opinion of Counsel that the  amendment to the Agreement and
                  a new  promissory  note  each  has been  properly  authorized,
                  executed,  and  delivered  by Company,  that the  supplemental
                  Indenture  has  been  properly   authorized,   executed,   and
                  delivered  by the  Issuer,  and  that  such  amendment  to the
                  Agreement,  new promissory  note, and  supplemental  Indenture
                  (assuming in the case of the  supplemental  Indenture,  proper
                  authorization  and  execution  and  delivery  thereof  by  the
                  Trustee),  are valid and binding and enforceable in accordance
                  with their  respective  terms,  except as same is  affected by
                  laws affecting  creditors' rights and the enforcement  thereof
                  generally and except to the extent that the remedy of specific
                  performance and other equitable remedies are always within the
                  discretion  of  the  Court,  and  that  the  amendment  to the
                  Agreement  and  the  supplemental  Indenture  have  been  duly
                  recorded in every necessary  recording  office and appropriate
                  financing  statements  have been filed in all  filing  offices
                  where such filing shall be necessary;

         (8)      A written  opinion of Nationally  Recognized Bond Counsel that
                  the issuance of such Additional Bonds has been duly authorized
                  by the  Issuer  and  will  have no  adverse  effect  upon  the
                  exemption  from Federal  income taxes of interest on the Bonds
                  or any other then outstanding series of Additional Bonds.

         (9)      A  request  and  authorization  by the  Issuer,  signed by its
                  President,  to the Trustee to  authenticate  and deliver  such
                  Additional  Bonds upon  payment to the Trustee for the account
                  of the Issuer of a specified sum.

         (b) When the requirements of subsection A of this Section have been met
to the  reasonable  satisfaction  of the Trustee and when the  Additional  Bonds
shall  have been  executed  and  authenticated  in the manner  required  by this
Indenture, the Trustee shall deliver such Additional Bonds but only upon payment
to the Trustee of the purchase price of such Additional Bonds.

         (c) The  proceeds  of all Bonds  issued  under the  provisions  of this
Section  (other than  refunding  Bonds) shall be deposited with the Trustee in a
special  fund  appropriately  designated  and held in trust for the  purpose  of
paying the costs for which such  Additional  Bonds were issued to finance except
that any accrued interest  received on the sale of such Additional Bonds and any
amount  authorized for the payment of interest  during any period of acquisition
and  construction and for a reasonable  period  thereafter shall be deposited to
the credit of the Bond Fund (i.e., in the designated  subaccount  therein).  The
proceeds of all  refunding  Bonds  issued under the  provisions  of this Section
shall be deposited with the Trustee in a special  escrow account  pledged solely
to the  payment of the  principal  of,  premium,  if any,  and  interest  on the
refunded Bonds,  except that the accrued  interest  received on the sale of such
Additional Bonds may be deposited instead in the Bond Fund.



<PAGE>


                                   ARTICLE III

                      REDEMPTION, PURCHASE AND REMARKETING

         Section 3.01. Redemption of Bonds.

         (a) Optional Redemption-Bonds in Weekly Rate Mode. While the Bonds bear
interest  at the Weekly  Rate,  the Bonds may be  redeemed  by the Issuer at the
direction  of the  Company,  in whole  on any  Business  Day,  or in part on any
Interest  Payment Date, or, if such Interest  Payment Date is not a Business Day
on the next succeeding  Business Day, without  premium,  at the principal amount
thereof with interest accrued to, but excluding,  the redemption date;  provided
that any such  redemption  in part  shall be in a minimum  redemption  amount of
$100,000.

         (b) Optional  Redemption-Bonds in One-year Rate Mode or Three-year Rate
Mode.  While  the  Bonds  bear  interest  at  either  the  One-year  Rate or the
Three-year Rate, the Bonds may be redeemed by the Issuer at the direction of the
Company, in whole or in part on the final Interest Payment Date occurring during
such One-year Rate Period or Three-year  Rate Period,  at a redemption  price of
par plus interest accrued to the date fixed for redemption.

         (c) Optional  Redemption-Bonds in Fixed Rate Mode. While the Bonds bear
interest  at a Fixed  Rate,  the  Bonds  may be  redeemed  by the  Issuer at the
direction of the Company, in whole or in part at any time on and after the tenth
anniversary  date subsequent to the Conversion Date upon which the interest rate
on the Bonds was  converted to a Fixed Rate,  at a redemption  price of par plus
interest accrued to the date fixed for redemption.

         NOTWITHSTANDING ANYTHING IN THIS INDENTURE TO THE CONTRARY, IN NO EVENT
SHALL  PROCEEDS OF THE LETTER OF CREDIT BE USED TO PAY THE  REDEMPTION  PRICE OF
BONDS CALLED FOR REDEMPTION PURSUANT TO SECTIONS 3.01(a), 3.01(b) or 3.01(c).

         (d)  Mandatory  Sinking Fund  Redemption.  (i) The Bonds are subject to
mandatory  sinking  fund  redemption  prior  to  their  scheduled  maturity,  on
September 1, 1997, and on each succeeding September 1 to and including September
1,  2010,  or if any such date is not a  Business  Day,  on the next  succeeding
Business Day,  without  premium,  at a redemption  price of the principal amount
thereof with interest  accrued to, but excluding,  the  redemption  date, in the
following principal amounts:

                                                                       Principal
                  Year                                                  Amount

                  1997                                                 $110,000
                  1998                                                  110,000
                  1999                                                  120,000
                  2000                                                  125,000
                  2001                                                  135,000
                  2002                                                  140,000
                  2003                                                  150,000
                  2004                                                  155,000
                  2005                                                  165,000
                  2006                                                  175,000
                  2007                                                  185,000
                  2008                                                  190,000
                  2009                                                  205,000
                  2010 (Maturity)                              220,000


         (ii) At its  option,  to be  exercised  on or before  the 45th day next
preceding any such sinking fund redemption  date, the Issuer,  or the Company on
behalf of the Issuer, may:

                  (x)      deliver to the Trustee for  cancellation  Bonds in 
                  any  aggregate  principal  amount  desired to be credited
                  against the Issuer's sinking fund redemption obligations; or

                  (y)  instruct  the  Trustee,  to credit  against the  Issuer's
                  sinking fund  redemption  obligations  any Bonds that prior to
                  such date have  been  redeemed  (otherwise  than  through  the
                  operation of the sinking fund) and canceled by the Trustee and
                  not  theretofore  applied as a credit against any sinking fund
                  redemption obligation.

         Each Bond so delivered or previously  redeemed shall be credited by the
Trustee at 100% of the principal  amount  thereof  against the obligation of the
Issuer on such sinking fund  redemption  dates.  Any excess over such obligation
shall  be  credited  against  future  sinking  fund  redemption  obligations  in
chronological  order,  and the  principal  amount of the Bonds to be redeemed by
operation of the sinking fund shall be accordingly reduced.

         (e) Mandatory Redemption on Determination of Taxability.  The Bonds are
also  subject  to  mandatory  redemption  at a  redemption  price  equal  to the
principal amount thereof with interest to, but excluding, the redemption date in
whole (or in part as provided  below),  without  premium,  on the first day of a
month  within  180  days  after  the  Company  receives  written  notice  from a
Bondholder or former  Bondholder or the Trustee of a final  determination by the
Internal Revenue Service or a court of competent  jurisdiction that the interest
paid or to be paid on any Bond is or was  includable  in the gross income of the
Bond's owner (other than an owner that is a  "substantial  user" of the Facility
or a  "related  person"  within the  meaning of Section  147(a) of the Code) for
federal income tax purposes (a "Determination  of Taxability"),  or if such date
is  not  a  Business  Day,  on  the  next  succeeding   Business  Day.  No  such
determination   will  be  considered  final  unless  the  Bondholder  or  former
Bondholder  involved in the determination  gives the Company,  the Trustee,  the
Remarketing  Agent and the Bank prompt written notice of the commencement of the
proceedings  resulting in the determination  and offers the Company,  subject to
the Company's  agreeing to pay all expenses of the  proceeding  and to indemnify
the holder against all liabilities that might result from it, the opportunity to
control the  defense of the  proceeding  and either the  Company  does not agree
within 30 days to pay the expenses, indemnify the holder and control the defense
or the  Company  exhausts  or chooses  not to exhaust  available  procedures  to
contest or obtain  review of the result of the  proceedings.  Fewer than all the
Bonds may be  redeemed  if  redemption  of fewer  than all  would  result in the
interest payable on the Bonds remaining  outstanding being not includable in the
gross income for federal  income tax  purposes of any holder.  If fewer than all
Bonds are redeemed,  the Remarketing Agent shall select the Bonds to be redeemed
by lot as provided in Section  3.03 or by such other  method  acceptable  to the
Remarketing Agent as may be approved in an opinion of Bond Counsel.

         (f) Mandatory  Redemption on  Expiration  or  Termination  of Letter of
Credit Without Extension or Providing a Substitute  Letter of Credit.  The Bonds
are subject to mandatory  redemption,  in whole without  premium at a redemption
price equal to 100% of the  principal  amount  thereof  plus  accrued and unpaid
interest  thereon to, but not including,  the  redemption  date, on the Interest
Payment  Date that next  precedes by at least 14 days the stated  expiration  or
termination  date of the Letter of Credit or, if such  Interest  Payment Date is
not a Business Day, on the next succeeding  Business Day, unless by the 15th day
prior to such Interest Payment Date the Company provides to the Trustee, and the
Trustee has accepted,  (1) evidence that such Letter of Credit has been extended
or (2) a  Substitute  Letter  of  Credit  to be  effective  on or  prior to such
Interest Payment Date.

         (g) Mandatory  Redemption upon Failure of Remarketing Agent to Remarket
Bonds.  Bonds  unable to be  remarketed  by the  Remarketing  Agent  pursuant to
Section 3.08 of this  Indenture  shall be subject to mandatory  redemption  at a
redemption  price equal to the principal  amount thereof plus accrued and unpaid
interest  thereof to, but not including,  the redemption  date in the manner set
forth in Section 3.08.

         Section  3.02.  Redemption  Date.  The  redemption  date of Bonds to be
redeemed  pursuant to the  optional  redemption  provisions  in Section  3.01(a)
through  (c) shall be a date  permitted  by such  clauses and  specified  by the
Company  in  the  notice  delivered  pursuant  to  the  preceding  Section.  The
redemption  date for  mandatory  redemptions  shall be as  specified  in Section
3.01(d)  through  (g),  as the  case  may  be,  or  determined  by  the  Trustee
consistently with the provisions thereof.

         Section  3.03.  Selection of Bonds To Be Redeemed.  Except as otherwise
provided in this Section  3.03,  if fewer than all the Bonds are to be redeemed,
the Remarketing Agent shall select the Bonds to be redeemed by lot or such other
method as it deems in its sole  discretion to be fair and  appropriate and shall
notify the  Trustee  (which  notice may be provided  by  telephone,  immediately
confirmed in writing by legible facsimile transmission,  registered or certified
mail,  overnight  express  delivery,  or other secure means), of the holders and
denominations  of Bonds to be  redeemed.  The  Remarketing  Agent shall make the
selection  from Bonds not  previously  called for  redemption.  In the event the
Remarketing  Agent fails to notify the Trustee of the Bonds to be redeemed on or
before the 35th day prior to the redemption. day, the Trustee shall select Bonds
for redemption from among the Outstanding  Bonds as set forth below. The Trustee
shall  treat  each  holder  of Bonds as the  owner of one Bond for  purposes  of
selection for  redemption  and shall select Bonds for redemption by lot (1) from
among the  holders  of less  than  $1,000,000  in  aggregate  principal  amount,
provided that if there are no such holders,  or if, after  selection  from among
such  holders such  selection  has not  resulted in  redemption  of a sufficient
amount of  Bonds,  then (2) from  among the  holders  of  $1,000,000  or more in
aggregate  principal amount of Bonds. In the event the Trustee selects Bonds for
redemption,  the  Trustee  shall,  on or  before  the  day on  which  notice  of
redemption is mailed to the holders,  give telephonic  notice to the Remarketing
Agent of the Bonds selected for redemption and the name of the holder or holders
thereof.  No portion of a Bond may be redeemed  that would result in a Bond that
is smaller than the then permitted  minimum  Authorized  Denomination.  For this
purpose,  the  Remarketing  Agent or the Trustee  shall  consider each Bond in a
denomination larger than the minimum denomination  permitted by the Bonds at the
time to be separate Bonds each in the minimum  denomination.  Provisions of this
Indenture  that apply to Bonds called for  redemption  also apply to portions of
Bonds called for redemption.

         Notwithstanding anything to the contrary in this Indenture, there shall
be no  redemption of less than all of the Bonds if there shall have occurred and
be continuing an Event of Default.

         Section 3.04. Notice to Trustee; Notice of Redemption.

         (a) If the Company  wishes  that any Bonds be redeemed  pursuant to the
optional  redemption  provisions  in Section  3.01(a)  through (c)  hereof,  the
Company  shall notify the Trustee,  the  Trustee,  the Bank and the  Remarketing
Agent in writing of the applicable provision, the redemption date, the principal
amount of Bonds to be  redeemed  and other  necessary  particulars.  The Company
shall give such notices at least 40 days before the redemption date.

         (b) For Bonds being redeemed pursuant to Subsections (a) through (e) of
Section 3.01,  the Trustee  shall prepare and send notice of each  redemption to
each  Bondholder  whose Bonds are being redeemed,  the Company,  the Remarketing
Agent  and the Bank by  first-class  mail at least 30 days but not more  than 60
days  before  each  redemption.  If the Bonds are being held under a  book-entry
system  administered  by DTC and  less  than all of the  Bonds  are  called  for
redemption,  the  Remarketing  Agent  shall  notify the Trustee of the names and
addresses of the Beneficial Owners of the Bonds selected for redemption pursuant
to  Section  3.03,  and the  Trustee  shall  prepare  and  send  notice  of such
redemption to each such Beneficial  owner at the time and in the manner provided
in this Section 3.04(b). The notice shall identify the Bonds or portions thereof
to be redeemed  and shall state (i) the type of  redemption  and the  redemption
date, (ii) the redemption price, (iii) that the Bonds called for redemption must
be surrendered to collect the  redemption  price,  (iv) the address at which the
Bonds must be surrendered,  (v) that interest on the Bonds called for redemption
ceases to accrue on the redemption  date, (vi) the CUSIP number of the Bonds and
(vii) any condition to the redemption.

         The procedure for  redemption of Bonds  pursuant to 3.01(f) shall be 
identical  except that notice shall be sent at least 7 days before each 
redemption.

         The procedure for  redemption of Bonds  pursuant to 3.01(g) shall be as
set forth in Section 3.08 of this Indenture.

         With respect to any Bonds to be redeemed  that have not been  presented
for  redemption  within 60 days after the redemption  date, the Trustee,  at the
expense of the Company, shall prepare and the Trustee shall give a second notice
of redemption  to the holder of any such Bonds that have not been  presented for
redemption,  by  first-class  mail,  within  30 days  of the end of such  60-day
period.

         Failure  by the  Trustee  to give any  notice of  redemption  as to any
particular  Bonds will not affect the validity of the call for redemption of any
Bonds in respect of which no such  failure has  occurred.  Any notice  mailed as
provided in the Bonds will be  conclusively  presumed to have been given whether
or not actually received by any holder.

         Section 3.05. Payment of Bonds Called for Redemption. Upon surrender to
the  Trustee,  Bonds  called for  redemption  shall be paid as  provided in this
Article at the redemption price provided for in this Article.  On the date fixed
for redemption,  notice having been given in the manner and under the conditions
hereinabove provided,  the Bonds or portions thereof called for redemption shall
be due and payable at the  redemption  price  provided  therefor,  plus  accrued
interest to such date. On such redemption date, if moneys  sufficient to pay the
redemption  price of the Bonds to be redeemed,  plus accrued interest thereon to
the date fixed for  redemption,  are held by the Trustee,  interest on the Bonds
called for  redemption  shall  cease to accrue;  such  Bonds  shall  cease to be
entitled  to any  benefits  or  security  under this  Indenture  or to be deemed
outstanding;  and the  holders  of such  Bonds  shall  have no rights in respect
thereof except to receive payment of the redemption price thereof,  plus accrued
interest to the date of redemption.

         Section 3.06. Bonds Redeemed in Part. Upon surrender of a Bond redeemed
in part, the Trustee shall authenticate for the holder a new Bond or Bonds equal
in principal amount to the unredeemed portion of the Bond surrendered.

         Section 3.07. Other Redemption; Purchase of Bonds.

         (a)      Mandatory  Repurchase  of Bonds;  Notice.  Except as  provided
in Section  3.07(e),  Bonds are  subject  to  mandatory repurchase as follows:

         (i) on the effective date of any Substitute  Letter of Credit delivered
pursuant to Section 5.03, if, but only if, such Substitute Letter of Credit will
result  in a  Credit  Modification,  at a  purchase  price  equal to 100% of the
principal  amount  thereof plus accrued and unpaid  interest  thereon to but not
including the date of purchase; and

         (ii) on any Interest  Payment Date selected by the Company,  or if such
Interest  Payment Date is not a Business  Day, on the next  succeeding  Business
Day, at a purchase  price equal to 100% of the  principal  amount  thereof  plus
accrued and unpaid  interest  thereon to but not including the date of purchase;
provided that any such mandatory repurchase,  except as provided in Section 9.12
hereof, shall be subject to the prior written consent of the Bank; and

         The Trustee  shall  prepare and send to the holders of Bonds subject to
mandatory repurchase,  and to the Remarketing Agent, the Bank and the Company, a
Notice of Mandatory Repurchase at least 15 days but not more than 60 days before
the Mandatory Repurchase Date. Any Notice of Mandatory Repurchase shall be given
by first-class  mail and shall be  substantially  in the form attached hereto as
Exhibit B.

         With respect to any Bonds to be purchased  that have not been presented
for purchase within 60 days after the Mandatory Repurchase Date, the Trustee, at
the expense of the Company,  prepare and send a second notice of purchase to the
holder of any such Bonds, by first-class mail, within 30 days of the end of such
60-day period.

         (b)  Optional  Tender  of Bonds.  (i)  Except as  provided  in  Section
3.07(e),  while the Bonds bear interest at the Weekly Rate, the holder (or while
the Bonds are held pursuant to a book-entry system, the Beneficial Owner) of any
Bond may elect to tender such Bond (or portion  thereof,  provided  that each of
the portion to be purchased  and the portion to be retained is in an  Authorized
Denomination)  for purchase at a purchase  price equal to 100% of the  principal
amount of such Bond (or  portion  thereof),  plus  accrued  and unpaid  interest
thereon to but not  including  the date of  purchase,  on any  Business Day (the
"Optional Tender Date"),  but only upon (A) receipt by the Remarketing  Agent by
not later than 11:00 a.m. at least seven  calendar days or five  Business  Days,
whichever  may be  earlier,  but not more than 30 days,  prior to such  Optional
Tender Date of telephonic  (followed,  if requested by the Remarketing Agent, by
written or facsimile  confirmation  delivered to the Remarketing  Agent no later
than the close of business on the next succeeding  Business Day) or other notice
stating  (x) the  principal  amount  of the  Bond  (or  portion  thereof)  to be
tendered,  (y) the Bond  number  or  other  identification  satisfactory  to the
Remarketing  Agent,  and (z) the Optional Tender Date on which such Bond will be
tendered;  and (B) if the Bonds are not being  held under a  book-entry  system,
delivery of such Bond (with an appropriate  instrument of transfer duly executed
in blank) to the Trustee by 10:00 a.m. on such Optional Tender Date.

         (ii) Any notice of optional tender for purchase  delivered  pursuant to
subpart (i) above shall be irrevocable and shall be binding on the holder giving
or delivering such notice and on any transferee of such holder.

         (iii) Upon  receipt by the  Remarketing  Agent of a notice of  optional
tender for purchase  pursuant to subparagraph (i) above,  the Remarketing  Agent
shall give prompt telephonic notice thereof to the Trustee.

         (c) Payment for Purchased  Bonds. To the extent that sufficient  moneys
have been made  available  therefor to the Trustee by 3:30 p.m. on the  purchase
date pursuant to Sections 3.08 and 5.02,  upon surrender to the Trustee of Bonds
optionally  tendered or called for mandatory  repurchase as provided herein, the
purchase  price  therefor  (as  provided  in  this  Section)  shall  be  paid in
immediately  available funds by the Trustee not later than the close of business
on the purchase date.  From and after the Mandatory  Repurchase Date or Optional
Tender Date, as applicable, or, if later, the date on which such moneys are made
available  to the  Trustee,  interest  accruing  on such Bonds shall cease to be
payable to the prior  holder  thereof,  such Bonds shall cease to be entitled to
the benefits or security of this  Indenture  and to such extent the prior holder
shall have recourse  solely to the funds held by the Trustee for the purchase of
such Bonds as provided in Section 4.06.

         (d) Bonds Purchased in Part. Upon surrender of a Bond purchased in part
and receipt by the Trustee thereof,  the Trustee shall  authenticate and deliver
to  the  surrendering  holder  a new  Bond  equal  in  principal  amount  to the
unpurchased portion of the Bond surrendered.

         (e)      Limitations on Tenders.

         (i) The holders  shall not have the right or be  required,  as the case
may be,  to  tender  any Bond  for  purchase  on an  Optional  Tender  Date or a
Mandatory  Repurchase Date if on such date, following the occurrence of an Event
of Default, the Trustee shall have declared the principal of and interest on the
Bonds to be immediately due and payable pursuant to Section 8.02.

         (ii)  Notwithstanding  the  provisions of Section  3.07(b),  holders of
Bonds called for  redemption  or mandatory  repurchase  shall not have the right
(without the prior  consent of the  Remarketing  Agent) to tender such Bonds for
purchase on an Optional  Tender Date if such Optional  Tender Date will occur on
or after  the 10th day  prior to the date  fixed  for  redemption  or  mandatory
repurchase.   Notwithstanding  the  foregoing,   holders  of  Bonds  called  for
redemption  shall  not have the  right in any  event to  tender  such  Bonds for
purchase on an Optional  Tender Date if such Optional  Tender Date will occur on
or after the second day prior to the date fixed for redemption.

         Section 3.08. Remarketing of Purchased Bonds.

         (a)      Bonds To Be Remarketed.  Bonds  purchased  pursuant to 
optional tender or mandatory  repurchase  shall be remarketed by the Remarketing
Agent as provided in this Section except an follows:

         (i) Bonds  purchased  pursuant  to an  optional  tender or a  mandatory
repurchase  and as to which  the  Remarketing  Agent  has  received  a notice of
redemption may be remarketed  before the date fixed for  redemption  only if the
purchaser  receives  prior to  purchasing  such Bond a notice  that such Bond is
subject to redemption on the date fixed for redemption, notwithstanding the fact
that such  notice of  redemption  may be sent to such  purchaser  after the time
period mentioned in Section 3.04(b).

         (ii) The  Remarketing  Agent  shall not be  required to offer Bonds for
sale under this Section (1) during the  continuance of an Event of Default,  (2)
following  receipt of notice from the Internal Revenue Service,  a Bondholder or
former  Bondholder,  the  Company,  the Trustee of an Event of  Taxability  or a
Determination  of  Taxability  or (3) as otherwise  provided in the  Remarketing
Agreement.

         (iii) Bonds  purchased  pursuant to an optional  tender and as to which
the  Remarketing  Agent has  received a Notice of  Mandatory  Repurchase  may be
remarketed before the Mandatory Repurchase Date only if the purchaser receives a
copy of the Notice of Mandatory Repurchase prior to purchasing such Bond.

         (iv) When a Letter of Credit is in effect,  the Remarketing Agent shall
not knowingly  remarket any Bonds to the Issuer or the Company or any partner or
affiliate of either thereof  pursuant to this Section 3.08 unless either (i) the
entire purchase price is paid from Available  Moneys or (ii) prior to such sale,
the Trustee shall have received a written  opinion of Bankruptcy  Counsel to the
effect that such purchase would not result in a preferential payment pursuant to
the provisions of Section 547 of the Bankruptcy Code.

         (b)  Remarketing  Effort.  Except as provided in (a) above or except to
the  extent  the  Company  directs  the  Remarketing  Agent  not to do  so,  the
Remarketing Agent shall use reasonable  efforts to remarket on the purchase date
all Bonds  purchased  pursuant to Section 3.07 and to the extent such  purchased
Bonds are not remarketed on the purchase  date,  shall notify the Trustee in the
manner  provided  below.  Bonds not  remarketed  shall be subject  to  mandatory
redemption as provided in Section 3.01(g).

         As early as practicable  but not later than 10:00 a.m. on each Business
Day on which the  Remarketing  Agent is required to remarket  Bonds  pursuant to
this  Section  3.08,  the  Remarketing  Agent  shall (A) notify  the  Trustee by
telephone,  with such notice promptly confirmed in writing, of (i) the amount of
Bonds that have been  remarketed  and which have not been  remarketed,  (ii) the
amount of proceeds  from such  remarketing  and the amount  needed to redeem the
Bonds which have not been  remarketed,  and (iii) the  information to enable the
Trustee  to  prepare  new Bond  certificates  with  respect  to Bonds  that were
remarketed and (B) transfer to the Trustee the proceeds from such remarketing as
provided  in (c) below.  The  Trustee  shall  immediately  notify the Company by
telephone, with such notice promptly confirmed in writing, of the amount of such
proceeds and the Trustee shall take action as set forth in Section  5.02(a).  If
the Trustee  fails to receive  such notice from the  Remarketing  Agent by 10:00
a.m., the Trustee shall  immediately the Company of the principal  amount of all
Bonds to be remarketed  and/or  redeemed on such date and the Trustee shall take
action as set forth in Section 5.02(a).

         (c)  Remarketing  Proceeds.  To the  extent the  Remarketing  Agent has
remarketed  Bonds and has received  funds  representing a payment for such Bonds
(the "Remarketing  Proceeds") from the purchasers thereof, the Remarketing Agent
shall  promptly,  but in no event later than 10:30 a.m.  forward the Remarketing
Proceeds  by wire  transfer  (or in such other  manner as is  acceptable  to the
Remarketing  Agent  and the  Trustee)  to the  Trustee  with  notice.  All  such
Remarketing Proceeds shall be deposited in a separate, segregated account of the
Bond Fund for  application in accordance with the provisions of Section 3.08 and
Article IV hereof and, until so applied,  shall be held in trust for the benefit
of the holders tendering such Bonds for purchase.

         (d)      Delivery of Purchased  Bonds.  Bonds  purchased  pursuant to 
Section 3.07 shall be delivered to the purchasers  thereof upon receipt of 
payment  therefor.  Prior to such  delivery the Trustee  shall provide for  
registration  of transfer to the Holders,  as provided in a written notice from 
the Remarketing Agent; and

         Section 3.09.  Authority  for and  Conditions to Conversion of Interest
Rate.  The  interest  rate borne on the Bonds shall be  converted to an interest
rate of in a  different  interest  rate mode upon  receipt by the  Trustee,  the
Remarketing  Agent,  the  Bank of a  direction  from  the  Issuer,  given at the
direction of the Company,  specifying  the date new interest  rate mode shall be
determined  (which date shall not be less than five  Business  Days prior to the
effective date thereof),  the resulting  interest rate mode (i.e.,  Weekly Rate,
One-year  Rate,  Three-year  Rate or Fixed Rate) and the effective  date thereof
(which shall be a Business Day not less than 45 days from the date the Authority
gives such  direction).  Such request and direction  shall be  accompanied by an
opinion of counsel, which counsel shall be acceptable to the Trustee,  addressed
to the Trustee,  the Company,  the Bank and the Remarketing Agent,  stating that
such conversion is authorized or permitted by the Indenture, and that conversion
to the new  interest  rate  mode is in  accordance  with the  provisions  of the
Indenture  and will not  adversely  affect the  exclusion  from gross income for
federal  income tax  purposes  of  interest  on the Bonds.  Conversion  to a new
interest rate mode shall not occur without such opinion. Upon the date stated in
such directions as the date the new interest rate mode shall be determined,  the
Remarketing  Agent shall  determine the Weekly Rate,  One-year Rate,  Three-year
Rate or Fixed  Rate,  which  shall be the rate or rates  which,  if borne by the
Bonds, would, based on prevailing  financial market conditions,  be the interest
rate or rates  necessary,  but  would  not  exceed  the  interest  rate or rates
necessary,  to enable each maturity of the Bonds to be remarketed at 100% of the
principal amount thereof.

         NOTWITHSTANDING ANYTHING IN THIS INDENTURE OR IN THE BONDS CONTRARY, IN
THE EVENT  THE  INTEREST  RATE ON THE BONDS IS  CONVERTED  TO A FIXED  RATE,  NO
FURTHER CONVERSIONS WILL BE PERMITTED OR AUTHORIZED UNDER THIS INDENTURE.

         Section 3.10. Notice to Owners of Conversion to New Interest Rate Mode.
The Trustee shall give notice to the Remarketing  Agent and by first class mail,
postage  prepaid,  to the  Owners of Bonds  not less  than 30 days  prior to the
effective  date of conversion  to the new interest rate mode.  Such notice shall
state  (i)  that the  interest  rate on the  Bonds  will be  converted  to a new
interest rate mode,  (ii) whether the new interest rate mode is the Weekly Rate,
One-year Rate,  Three-year  Rate or the Fixed Rate,  (iii) the effective date of
conversion  to the new interest  rate mode,  (iv) the date the new interest rate
mode is to be  determined  and the  procedure  for  notifying  Owners of the new
interest  rate  mode,  (v) the dates upon  which  interest  on the Bonds will be
payable after the effective date of the new interest rate mode,  (vi) that after
conversion to a Fixed Rate, if applicable the Owners of the Bonds will no longer
have the right to deliver the Bonds to the Remarketing  Agent for purchase,  and
(vii) that all Outstanding  Bonds not purchased prior to the effective date will
be purchased on the effective  date of the new interest rate mode,  except Bonds
with  respect to which the Owner has  directed  the  Company  not to purchase in
accordance herewith.

         Section 3.11.  Notification of Interest Rate;  Replacement  Bonds. Upon
determining  the interest rate to be borne under the new interest rate mode, the
Remarketing Agent shall provide notice of such rate to the Trustee by telephone,
with written  confirmation in writing and the Trustee shall give notice by first
class  mail,  postage  prepaid to the owners of the Bonds  which shall set forth
such interest rate. In connection  with the conversion of the interest rate to a
Fixed  Rate,  the  Trustee,  at the  direction  of  the  Company  shall  deliver
replacement  Bonds  bearing the Fixed Rate with deletion of such terms as are no
longer   applicable.   Any  such   replacement   Bonds  shall  be  executed  and
authenticated  as provided  herein.  In the event that definitive  Bonds are not
available for delivery, temporary replacement Bonds may be delivered as provided
herein.

         Section 3.12.  Certain Provisions of Bonds and Indenture Inapplicable 
After Conversion to Fixed Rate.

         The day after the effective  date of conversion to the Fixed Rate,  the
Bonds shall no longer be subject to those  provisions  of the  Indenture  or the
Bonds relating to computation of interest rate,  remarketing of Bonds,  optional
tender of the  Bonds,  mandatory  repurchase  of the  Bonds,  or any  provisions
relating to the conversion of the interest rate on the Bonds.

         Additionally,  following  conversion to the Fixed Rate,  all references
herein to the Remarketing Agent shall be of no further effect.

         Section  3.13.  Interest  on Bonds  After  Conversion  to  Fixed  Rate.
Following conversion to a One-year Rate, a Three-year Rate, or a Fixed Rate, the
Bonds  shall bear  interest  at such  interest  rate,  payable  each March 1 and
September  1,  commencing  on the first March 1 or  September  1 following  such
conversion. The amount of interest payable on any Interest Payment Date shall be
computed on the basis of the actual number of days elapsed over a year of 365 or
366 days, whichever may be applicable.


<PAGE>


                                   ARTICLE IV

                              PAYMENT OF BONDS AND
                                CREATION OF FUNDS

         Section  4.01.  Payment of Bonds.  The Trustee shall make payments when
due of principal of and interest on Bonds  (including upon the redemption of the
Bonds as  described  in Article  III  hereof)  and the  purchase  price of Bonds
purchased pursuant to an optional tender or a mandatory repurchase:

         (a) first,  (but only with respect to payments of purchase  price) from
the available proceeds of the remarketing of Bonds under Section 3.08, excluding
any remarketing to the Issuer, the Company or affiliate of either thereof unless
the proceeds thereof constitute Available Moneys;

         (b)      second, from any other Available Moneys held by the Trustee in
the Bond Fund; and

         (c)      third, from moneys drawn by the Trustee under the Letter of 
Credit and deposited in the Bond Fund;

         (d)      last, from any other moneys available to the Trustee.

The proceeds of investments of any moneys in any of these categories may be used
to the same extent as the moneys invested could be used.

         Section  4.02.  Creation of Bond Fund.  There is hereby  created by the
Issuer and ordered  established  with the Trustee a trust fund to be  designated
"Harrison County, West  Virginia/Salem  Health Care Corp.: Bond Fund." The money
and securities in such fund shall be held in trust by the Trustee and applied as
herein  provided and, until such  application,  the money and securities in such
Fund shall be subject to a lien and charge in favor of the Bondholders.

         Section 4.03. Payments into Bond Fund.  There shall be deposited into 
the Bond Fund, as and when received:

         (a)      all moneys received from a drawing under the Letter of Credit;

         (b)      all payments specified in section 4.1 of the Agreement; and

         (c) all other moneys  received by the Trustee under and pursuant to any
of the provisions of the Agreement  (other than Sections 4.1(b) and 5.6 thereof)
that are required or that are  accompanied by directions that such moneys are to
be paid into the Bond Fund.  To the extent that moneys  described in (a), (b) or
(c) above would not constitute Available Moneys at the time of such deposit, the
Trustee  shall  create  separate  subaccounts  in the Bond Fund in which  moneys
described in each of such (a), (b) and (c) above shall be held until such moneys
constitute  Available Moneys. The Trustee shall create a separate  subaccount in
the Bond Fund for, and shall not commingle  moneys  described in Section 4.01(a)
with, any other moneys  hereunder.  So long as any of the Bonds issued hereunder
are Outstanding the Issuer shall deposit, or cause to be paid to the Trustee for
deposit  in the Bond Fund for its  account,  sufficient  sums  from the  amounts
derived from the  Agreement  promptly to pay when due the principal of all Bonds
(whether at maturity, upon redemption or acceleration or otherwise), interest on
the  Bonds  and the  purchase  price of the  Bonds as the  same  become  due and
payable,  except that all payments  shall be limited as provided in Section 2.01
and the Issuer makes no  representation  or warranty  that the amount  deposited
will be adequate to make all payments when due.

         Section 4.04. Use of Moneys in Bond Fund. Except as provided in Section
4.06,  moneys in the Bond  Fund  shall be used  solely  for the  payment  of the
principal  of and interest on the Bonds as the same shall become due and payable
whether at maturity,  upon redemption or otherwise and for the purchase price of
the Bonds as the same shall become due, and the Trustee  shall make such payment
in accordance  with the  provisions of the Bonds and this  Indenture;  provided,
however,  that to the extent such principal,  interest or purchase price is paid
with  proceeds  of a drawing  under the Letter of Credit and the Parent does not
reimburse the Bank directly,  the Trustee shall promptly reimburse the Bank from
funds on deposit in the Bond Fund (other than  Remarketing  Proceeds or proceeds
from a drawing on the Letter of Credit).

         Section 4.05.  Custody of Bond Fund. The Bond Fund shall be held in the
custody  of the  Trustee  but in the  name  of the  Issuer.  The  Issuer  hereby
authorizes  and directs (a) the  Trustee to withdraw  sufficient  funds from the
Bond Fund to pay the  principal  of,  interest on and the purchase  price of the
Bonds as the same become due and  payable,  and to  withdraw  from the Bond Fund
funds  sufficient to pay any other amounts payable  therefrom as the same become
due and payable;  provided however, that to the extent such principal,  interest
or purchase  price is paid with proceeds of a drawing under the Letter of Credit
and the Parent does not reimburse the Bank directly,  the Trustee shall promptly
reimburse the Bank from funds on deposit in the Bond Fund other than Remarketing
Proceeds to be paid to former  holders or proceeds  from a drawing on the Letter
of Credit.

         Section  4.06.  Moneys To Be Held in Trust.  All money that the Trustee
shall have  withdrawn  from the Bond Fund or shall have  received from any other
source and set aside for the purpose of paying any of the Bonds hereby  secured,
either at the maturity thereof or by purchase (other than as provided in Section
3.08 hereof) or call for redemption or for the purpose of paying any interest on
the  Bonds  hereby  secured,  shall  be held in  trust  by the  Trustee  for the
respective Holders. Moneys received by the Remarketing Agent or Trustee from the
sale of a Bond under Section 3.08 or from the purchase of any Bond shall be held
segregated  from other funds held by the  Remarketing  Agent or Trustee in trust
for the benefit of the person from whom such Bond was purchased and shall not be
invested while so held.  Any money that is so set aside or transferred  and that
remains  unclaimed by the Holders for the escheat  period  provided by State law
shall be treated as abandoned  property,  and the Trustee shall report and remit
this property  according to the  requirements  of State law and  thereafter  the
Holders shall look only to the appropriate  State agency or official for payment
and then only to the extent of the amounts so  received,  without  any  interest
thereon,  and the  Trustee  and the  Issuer  shall have no  responsibility  with
respect to such money.

         Section 4.07.  Payment to Company From Bond Fund. After payment in full
of the principal of and interest on the outstanding Bonds, the fees, charges and
expenses  of the  Issuer,  the  Trustee,  the  Remarketing  Agent  and the  Bank
(including without limitation the fees and expenses of their respective counsel)
and all other  amounts  required  to be paid  hereunder,  including  payments of
rebatable  arbitrage,  any  amounts  remaining  in the Bond  Fund  shall be paid
immediately to the Company.

         Section 4.08. Investment of Moneys. To the extent permitted by law, the
Trustee  shall invest and reinvest  moneys held by it  representing  proceeds of
drawings under the Letter of Credit and Available  Moneys on deposit in the Bond
Fund only in U.S. Government obligations (or in a mutual fund composed solely of
U.S.  Government  Obligations)  maturing at such times as such  amounts  will be
needed for the  purposes  thereof.  Unclaimed  moneys held by the Trustee  under
Section 4.06 shall be held uninvested by the Trustee.

         The Trustee may make  investments  permitted by this Article through or
from their own bond  departments  or the bond  departments  of any bank or trust
company under common control with the Trustee.  Investments  shall be registered
in the name of the  Trustee,  or its nominee and held by or under the control of
the Trustee.  The Trustee  shall sell and reduce to cash a sufficient  amount of
investments  whenever  the  cash  held  by  them  is  insufficient.  The  Issuer
represents  that it will take no action  that  would  cause  moneys  held by the
Trustee in connection with the Bonds to be used in a manner that would cause the
Bonds to be classified as "arbitrage bonds" within the meaning of Section 148 of
the Code.



<PAGE>


                                    ARTICLE V

                                LETTER OF CREDIT

         Section 5.01. Requirements for Letter of Credit. In order to secure its
obligations  under the  Agreement,  pursuant  to  Section  4.7 of the  Financing
Agreement,  the  Company  has agreed  (a) upon the  initial  authentication  and
delivery of the Bonds, to deliver to the Trustee the Letter of Credit, issued by
the Bank in favor of the  Trustee  and for the  benefit  of the  holders  of the
Bonds; and (b) to ensure that so long as any Bonds remain outstanding,  a Letter
of Credit shall be in effect with respect to such Bonds with terms substantially
conforming to those of the original Letter of Credit.

         Section 5.02.  Draws on Letter of Credit; Extensions.

         (a) The Trustee shall make timely draws in  accordance  with the Letter
of Credit such that timely  payment under Section 4.01 is made without resort to
the sources of payment  described in  Subsections  (c) and (d) of Section  4.01.
Such draws shall be in amounts equal to the total  principal and interest due on
redemption price, or purchase price payable with respect to, the Bonds, less the
amounts (if any)  available  under  Subsection  (a) of Section 4.01. If any such
draws are made on a Mandatory Repurchase Date in connection with the delivery of
a  Substitute  Letter of  Credit,  such draws  shall be made under the  existing
Letter of Credit and not on the Substitute  Letter of Credit.  The Trustee shall
make such  draws in such a fashion  as to be able to obtain by 3:15 p.m.  and to
make such payment when due in accordance with this Indenture and the Bonds.

         (b) In drawing on the Letter of Credit,  the Trustee  will be acting on
behalf of the Bondholders by facilitating payment of the Bonds and not on behalf
of the  Issuer or Company  and shall not be  subject  to the  control of either.
Proceeds of draws on the Letter of Credit shall be held in the Bond Fund.

         (c) The Trustee  shall advise the Company and the Parent by telecopy or
telex on the date of each draw on the Letter of Credit of the amount and date of
such draw and of the reason for such draw.

         (d) For  extensions  of the term of the Letter of Credit,  the  Trustee
shall,  at the  direction of a Company  Representative,  but only if required to
evidence an extension of the term of the Letter of Credit,  surrender the Letter
of Credit to the Bank in exchange  for a new Letter of Credit of the Bank or the
Letter of Credit with notations thereon, as the Bank may so elect, conforming in
all material  respects to the Letter of Credit except that the  expiration  date
shall be extended. Any such extension shall be for a period of at least one year
or, if less, until the 15th day following the maturity date of the Bonds.


         Section 5.03. Substitute Letter of Credit.

         (a) At any time while a Letter of Credit is in effect  with  respect to
the Bonds,  upon at least 60 days' prior  written  notice to the Trustee and the
Remarketing  Agent,  the Company may, subject to the approval of the Remarketing
Agent,  provide for the delivery to the Trustee of a substitute Letter of Credit
complying  with the  provisions of this  Indenture  (the  "Substitute  Letter of
Credit"),  which  shall  be  effective  upon  acceptance  by  the  Trustee.  Any
Substitute  Letter of Credit shall have a stated expiration date of at least one
year following the effective date thereof.

         (b) On or  before  the date of  delivery  of any  Substitute  Letter of
Credit to the Trustee,  as a condition to the  acceptance by the Trustee of such
Substitute Letter of Credit, the Company shall furnish to the Trustee:

         An opinion of Counsel  addressed  to the Trustee to the effect that (A)
the  Substitute  Letter of Credit is the  valid and  binding  obligation  of the
issuer  thereof  enforceable  against such issuer in  accordance  with its terms
except insofar as its enforceability may be limited by any insolvency or similar
proceedings  applicable to the issuer or by proceedings  affecting generally the
rights  of the  issuer's  creditors  or by  general  equitable  principles;  (B)
payments of principal, interest or purchase price on the Bonds from the proceeds
of a draw on the  Substitute  Letter of  Credit  will not  constitute  avoidable
preferences under any applicable bankruptcy, reorganization, insolvency or other
similar  laws;  and (C) the  Substitute  Letter of Credit does not  constitute a
separate security  requiring  registration under any applicable federal or state
securities laws. In the case of a Substitute Letter of Credit issued by a branch
or agency of a foreign commercial bank, there shall also be delivered an opinion
of Counsel from a firm licensed to practice law in the jurisdiction in which the
head office of such bank is located,  addressed  to the  Trustee,  to the effect
that the Substitute Letter of Credit is the valid and binding obligation of such
bank, enforceable against such bank in accordance with its terms, subject to the
limitations referred to in Section 5.03(b)(i)(A) above;

         (ii)  written  evidence  that the  issuer of the  Substitute  Letter of
Credit meets the  requirements  for an issuer of a Letter of Credit as set forth
in the definition of Letter of Credit;

         (iii) an opinion of Bond Counsel addressed to the Trustee to the effect
that the  delivery  and  acceptance  of such  Substitute  Letter  of  Credit  is
authorized  under  this  Indenture  and its  delivery  and  acceptance  will not
adversely  affect the  exclusion  from gross income of the interest on the Bonds
for federal income tax purposes;

         (iv)     written approval by the Remarketing Agent of the delivery of 
the Substitute Letter of Credit; and

         (v) a letter from each Rating Agency or, in the event the Bonds are not
then  rated,  other  written  evidence  satisfactory  to  the  Trustee  and  the
Remarketing  Agent,  stating  whether or not the  acceptance  of the  Substitute
Letter of Credit will result in a Credit Modification.

         The Trustee shall accept any such  Substitute  Letter of Credit only in
accordance with the terms, and upon satisfaction of the conditions, contained in
this  Section  and  any  other  applicable  provisions  of  this  Indenture.  If
acceptance of the  Substitute  Letter of Credit  results in the  occurrence of a
Mandatory  Repurchase  Date,  the Trustee  shall not  terminate or surrender the
Letter of Credit until the Trustee shall have made such drawings thereunder,  if
any,  as shall be  required  under the  Indenture  to provide for payment of the
purchase  price of the  Bonds,  and shall have  received  the  proceeds  of such
drawing from the Bank.

         (c) Not  more  than 60 days  and not  less  than 15 days  prior  to the
effective  date of the  Substitute  Letter of  Credit,  the  Trustee  shall,  in
addition  to the notice  required by Section  12.01(b),  send by  registered  or
certified  mail,  to each  holder of the Bonds,  notice of the  issuance  of the
Substitute Letter of Credit,  which notice shall include (i) the identity of the
issuer thereof, (ii) the date the Substitute Letter of Credit will be effective,
(iii)  whether  the  Substitute  Letter  of  Credit  will  result  in  a  Credit
Modification  and (iv) if applicable,  notice  pursuant to Section 3.07 that the
Bonds are subject to mandatory repurchase pursuant to Section 3.07.

         Section 5.04.  Enforcement  of the Letter of Credit.  The Trustee shall
hold and  maintain  the  Letter of Credit  for the  benefit of the Owners of the
Bonds until the Letter of Credit  terminates or expires in  accordance  with its
terms.

         When the Letter of Credit  terminates or expires in accordance with its
terms,  the Trustee shall  immediately  surrender it to the Bank.  Except in the
case of a  redemption  in part  pursuant  to  Article  III  hereof  or any other
reduction in the principal  amount of Bonds  outstanding,  the Trustee shall not
request that the Bank reduce the amount of the Letter of Credit. If at any time,
all Bonds shall cease to be outstanding,  the Trustee shall surrender the Letter
of Credit to the Bank in accordance with the terms thereof.

         If at any time the Bank  fails  to honor a draft  presented  under  the
Letter of Credit in conformity  with the terms  thereof,  the Trustee shall give
immediate telephonic notice thereof to the Remarketing Agent and the Company.



<PAGE>


                                   ARTICLE VI

                                    COVENANTS

         Section 6.01. Payment of Bonds. The Issuer shall promptly pay, or cause
to be paid, the principal of,  whether at maturity,  by  acceleration,  call for
redemption,  or otherwise,  and purchase price and interest on the Bonds, to the
Trustee  for payment to the  registered  owners of the Bonds on the dates and in
the manner  provided herein  authorizing the issuance  thereof and in the Bonds,
according to the true intent and meaning thereof, but subject to the limitations
set forth in Section 2.01(a) hereof.

         Section 6.02. Covenants and Representations of Issuer. The Issuer shall
observe  and  perform  all  covenants,  conditions  and  agreements  on its part
contained in this Indenture, in every Bond executed, authenticated and delivered
hereunder and in all of its proceedings pertaining thereto;  provided,  however,
that the liability of the Issuer under any such covenant, condition or agreement
for any breach or default by the Issuer  thereof or thereunder  shall be limited
solely to the Receipts and Revenues of the Issuer from the Agreement. The Issuer
represents that it is duly  authorized  under the  Constitution  and laws of the
State, including particularly and without limitation the Act, to issue the Bonds
authorized  by this  Indenture  and to  execute  this  Indenture,  to assign the
Financing  Agreement and the Note and to pledge the Receipts and Revenues of the
Issuer from the Agreement in the manner and to the extent herein set forth; that
all  action  on its part  with  respect  to the  issuance  of the  Bonds and the
execution and delivery of this  Indenture duly and  effectively  has been taken;
and that the Bonds in the hands of the owners  thereof are and will be valid and
enforceable  limited  obligations  of the Issuer  according to the terms thereof
except as limited by bankruptcy and usual equity principles.

         Section 6.03. Further Assurances.  The Issuer shall execute and deliver
such supplemental  indentures and such further instruments,  and do such further
acts, as the Trustee may reasonably  require for the better assuring,  assigning
and confirming to the Trustee the amounts  assigned under this Indenture for the
payment of the Bonds.



<PAGE>


                                   ARTICLE VII

                             DISCHARGE OF INDENTURE

         Section  7.01.  Bonds Deemed Paid;  Discharge of  Indenture.  All Bonds
shall be deemed paid for all purposes of this  Indenture when

         (a) payment of the greater of the  principal of and the maximum  amount
of interest  that may become due on the Bonds to the due date of such  principal
and interest (whether at maturity,  upon redemption,  acceleration or otherwise)
and the  payment  of the  purchase  price  of any Bond  that  may be  optionally
tendered by the owner either (i) has been made in  accordance  with the terms of
Section 3.07(c) or (ii) has been provided for by depositing with the Trustee (A)
moneys  sufficient  to make such  payment,  which  moneys  must  comply with the
provisions  of Section  4.01(b) or (c) and/or (B)  noncallable  U.S.  Government
Obligations  maturing as to  principal  and interest in such amounts and at such
times as will insure the availability of sufficient  moneys to make such payment
without  regard  to the  reinvestment  thereof,  provided  that  (i)  such  U.S.
Government  Obligations  must be purchased  from  Available  Moneys and (ii) the
Trustee shall have received  written  evidence from each Rating Agency,  if any,
rating the Bonds that as a result of such action, their rating on the Bonds will
not be lowered or eliminated; and

         (b) all  compensation  and  expenses  of the Issuer and the Trustee (as
well as the fees and  expenses  of their  Counsel)  pertaining  to each  Bond in
respect of which such  payment or deposit is made have been paid or provided for
to the respective satisfaction of the Trustee.

         When a Bond is  deemed  paid,  it  shall no  longer  be  secured  by or
entitled to the  benefits of this  Indenture,  except for payment from moneys or
U.S.  Government  Obligations  under  (a)(ii)  above and  except  that it may be
optionally  tendered  if  and  as  provided  in  Section  3.07(b)  and it may be
transferred,  exchanged, registered, discharged from registration or replaced as
provided in Article II.

         Notwithstanding the foregoing,  no deposit under (a)(ii) above made for
the  purpose of paying the  redemption  price of a Bond (as opposed to the final
payment  thereof upon  maturity) will be deemed a payment of a Bond as aforesaid
until (x) notice of redemption  of the Bond is given in accordance  with Article
III or, if the Bond is not to be  redeemed  within  the next 60 days,  until the
Company has given the Trustee, in form satisfactory to the Trustee,  irrevocable
instructions  to notify,  as soon as  practicable,  the  holder of the Bond,  in
accordance with Article III, that the deposit required by (a)(ii) above has been
made with the Trustee and that the Bond is deemed to be paid under this  Article
and stating the  redemption  date upon which moneys are to be available  for the
payment  of the  principal  of  the  Bond  or  (y)  the  maturity  of the  Bond.
Additionally,  and while the deposit  under  clause  (a)(ii)  above made for the
purpose of paying the final payment of a Bond upon its maturity will be deemed a
payment of such Bond as aforesaid, the Trustee shall mail notice to the Owner of
such Bond, as soon as practicable,  stating that the deposit required by (a)(ii)
above  has been  made  with the  Trustee  and that the Bond is deemed to be paid
under this. Article.

         When  all  Outstanding  Bonds  are  deemed  paid  under  the  foregoing
provisions of this Section and other sums due hereunder, under the Agreement and
the Remarketing  Agreement are paid, the Trustee shall upon request  acknowledge
the  discharge  of the  Issuer's  obligations  under this  Indenture  except for
obligations  relating  to  optional  tender  as  provided  in  Section  3.07(b),
obligations under Article II in respect of the transfer, exchange, registration,
discharge from  registration  and replacement of Bonds,  and  obligations  under
Section   9.06  hereof  with   respect  to  the   Trustee's   compensation   and
indemnification,  and the Trustee without further  direction shall surrender the
Letter  of Credit to the Bank,  in  accordance  with the terms of the  Letter of
Credit.  Bonds  delivered  to the Trustee  for payment  shall be canceled by the
Trustee pursuant to Section 2.07.

         A Company  Representative shall direct the deposit,  investment and use
of the moneys and securities described in this Section such that no deposit will
be made and no use made of any such  deposit  which  would cause any Bonds to be
treated as  "arbitrage  bonds"  within the  meaning of Section  148 of the Code.
Before  accepting or using any such deposit,  the Trustee may request an opinion
of Bond Counsel as to whether such use or acceptance would cause the Bonds to be
so  treated  and that all  conditions  hereunder  have been  satisfied,  and the
Trustee may conclusively rely on such opinion with regard thereto.

         The Trustee  may  request a  certificate  of an  independent  certified
public accountant to the effect that a deposit will be sufficient to defease the
Bonds as provided in this Section 7.01.

         Upon  receipt of any amount  pursuant to this  Article VII, the Trustee
shall  give  written  notice  thereof,  which  notice  shall  include,   without
limitation, the amount of such deposit and any instructions given to the Trustee
pursuant thereto, to the Remarketing Agent by first-class mail, postage prepaid.

         Section  7.02.  Application  of Trust Money.  The Trustee shall hold in
trust money or U.S.  Government  Obligations  deposited  with it pursuant to the
preceding  Section  and shall apply the  deposited  money and the money from the
U.S.  Government  Obligations  in  accordance  with this  Indenture  only to the
payment of principal of, interest on, or purchase prince of, the Bonds.



<PAGE>


                                  ARTICLE VIII

                              DEFAULTS AND REMEDIES

         Section 8.01. Events of Default.  Each of the following events shall be
an Event of Default:

         (a)      Default in the due and punctual payment of any interest on any
Bond;

         (b)      Default in the due and  punctual  payment of the  principal  
of any Bond  (whether  at  maturity,  by  acceleration  or redemption, upon 
purchase or otherwise);

         (c)      Subject to the  provisions of Section 8.11,  default in the  
observance or  performance  of any other of the covenants, conditions or 
agreements on the part of the Issuer under the Indenture or in the Bonds;

         (d)  Receipt by the  Trustee  of notice  from the Bank that an Event of
Default has occurred under the Reimbursement  Agreement  accompanied by a demand
by the Bank  that the  Trustee  declare  the  Bonds  to be  immediately  due and
payable; or

         (e)      The occurrence of an Event of Default under the Financing 
Agreement.

         Section 8.02. Acceleration and Duty to Draw on Letter of Credit.

         (a) Upon the  occurrence of an Event of Default under Section  8.01(a),
(b) or (d) hereof, the Trustee shall, by notice to the Issuer, the Holders,  the
Bank, the Remarketing Agent and the Company, declare the entire unpaid principal
of and interest on the Bonds  immediately  due and payable and,  thereupon,  the
entire  unpaid  principal  of and interest on the Bonds shall  forthwith  become
immediately due and payable.  Upon the occurrence of any other Event of Default,
the Trustee may and, if requested  by the holders of 25% in aggregate  principal
amount of Bonds then Outstanding,  shall, by notice to the Issuer,  the Holders,
the Bank,  the  Remarketing  Agent and the  Company,  declare the entire  unpaid
principal  of and  interest  on the  Bonds  immediately  due  and  payable  and,
thereupon,  the entire  unpaid  principal  of and  interest  on the Bonds  shall
forthwith  become due and  payable;  provided,  however,  that  anything in this
Article  VIII to the  contrary,  so long as the  Bank  has  honored  all  proper
drawings  under the Letter of Credit,  without the prior written  consent of the
Bank, the Trustee shall not have the right to declare the principal of all Bonds
and the  interest  accrued  thereon to become  immediately  due and payable as a
result of the  occurrence.of  an Event of Default under Section  8.01(c) or (e).
Upon any such  declaration  the Issuer shall forthwith pay to the holders of the
Bonds the entire unpaid principal of and accrued interest on the Bonds, but only
from the revenues and receipts  herein  specifically  pledged for such  purpose.
Upon the  occurrence  of an Event of Default  specified  in  Section  8.01 and a
declaration  of  acceleration  hereunder,  the Trustee as assignee of the Issuer
shall immediately exercise its right under the Note and the Agreement to declare
all installments on the Note to be immediately due and payable. In the event the
Trustee fails to accelerate as required by this Section 8.02(a), the owners of a
majority in aggregate principal amount of Bonds outstanding shall have the right
to take such actions.

         (b) Upon the  acceleration of the maturity of the Bonds, by declaration
or otherwise,  the Trustee shall  immediately draw upon the Letter of Credit for
the  aggregate  unpaid  principal  amount of the Bonds and all interest  accrued
thereon,  which shall be applied  immediately as set forth in Section 8.03. Upon
such acceleration, interest on the Bonds shall cease to accrue as of the date of
declaration of such acceleration.

         Section 8.03. Disposition of Amounts Drawn on Letter of Credit; 
Assignment of Rights to Contest.

         (a) All  amounts  drawn on the  Letter  of  Credit  by the  Trustee  in
accordance  with Section  8.02(b)  shall be held by the Trustee in the Bond Fund
(and invested in accordance with Section 4.08), shall be applied  immediately to
the payment of principal and interest accrued on the Bonds.

         (b) The Trustee hereby assigns to the Bank all its rights to contest or
otherwise  dispute in the Trustee's name, place and stead and at the Bank's sole
election  and  cost any  claim of  preferential  transfer  made by a  bankruptcy
trustee,  debtor-in-possession  or other  similar  official  with respect to any
amount  paid to the  Trustee by or on behalf of the  Company or the Issuer to be
applied to principal of or interest on the Bonds, to the extent of payments made
to the  Trustee  pursuant to a drawing  under the Letter of Credit.  The Trustee
shall  cooperate  with and assist the Bank in any such contest or dispute as the
Bank may reasonably request;  provided,  however,  that the Bank shall reimburse
the Trustee for its reasonable  costs incurred in connection with providing such
cooperation and assistance. The Trustee shall give the Bank prompt notice of any
claim of preferential transfer of which the Trustee has knowledge. The foregoing
assignment  shall not be deemed to confer  upon the Bank any right to contest or
otherwise dispute any claim of preferential  transfer with respect to any amount
as to which there has been no drawing under the Letter of Credit. The assignment
set forth above shall in no event be  effective  until the Bank shall have first
furnished to the Trustee an  agreement to indemnify  the Trustee and the holders
of the Bonds  against any claim,  liability  or damage that they might suffer by
reason of any such contest or dispute.

         Section  8.04.  Other  Remedies;   Rights  of  Bondholders.   Upon  the
occurrence  of an Event of  Default  the  Trustee,  subject to the terms of this
Indenture,  may  proceed to protect and enforce its rights and the rights of the
Bondholders by mandamus or other suit, action or proceeding at law or in equity,
including but not limited to an action for specific performance of any agreement
herein  contained  or making a demand for  payment  from the  Company and taking
action pursuant to any other document to which the Trustee is a party.

         Upon the  occurrence  of an Event of Default,  if requested to do so by
the holders of 25% in aggregate  principal  amount of Bonds then outstanding and
if indemnified as provided in Section 9.01(d), the Trustee, subject to the terms
of this  Indenture,  shall  exercise  such one or more of the  rights and powers
conferred by this Article as the Trustee,  upon being advised by counsel,  shall
deem most expedient in the interests of the Bondholders.

         No remedy  conferred by this  Indenture upon or reserved to the Trustee
or to the Bondholders is intended to be exclusive of any other remedy,  but each
such remedy  shall be  cumulative  and shall be in addition to any other  remedy
given  to  the  Trustee  or to the  Bondholders  hereunder  or now or  hereafter
existing at law or in equity or by statute.

         No delay or omission to exercise any right or power  accruing  upon any
default  or Event of  Default  shall  impair any such right or power or shall be
construed to be a waiver of any such default or Event of Default or acquiescence
therein,  and every such right and power may be exercised  from time to time and
as often as may be deemed expedient.

         No waiver of any default or Event of Default hereunder,  whether by the
Trustee pursuant to Section 8.10 or by the Bondholders, shall extend to or shall
affect any subsequent  default or Event of Default or shall impair any rights or
remedies consequent thereon.

         Section 8.05. Right of Bondholders To Direct  Proceedings.  Anything in
this  Indenture  to the contrary  notwithstanding,  the holders of a majority in
aggregate  principal amount of Bonds then  outstanding  shall have the right, at
any time, by an instrument or instruments  in writing  executed and delivered to
the Trustee,  to direct the method and place of conducting all proceedings to be
taken in connection  with the  enforcement  of the terms and  conditions of this
Indenture  or  for  the  appointment  of a  receiver  or any  other  proceedings
hereunder; provided, however, that such direction shall not be otherwise than in
accordance with the provisions of law and of this Indenture.

         Section 8.06. Application of Moneys. All moneys received by the Trustee
pursuant to any right given or action taken under the provisions of this Article
shall,  after payment of the cost and expenses of the  proceedings  resulting in
the  collection  of such moneys and of the  expenses,  liabilities  and advances
incurred or made by the Trustee and the fees and expenses, if any, of the Issuer
in carrying out this Indenture or the Agreement,  be deposited in the Bond Fund;
provided,  however, that no proceeds from any draw on the Letter of Credit shall
be used for any purpose  other than  payment of principal of and interest on the
Bonds or  purchase  thereof.  All  moneys in the Bond Fund  shall be  applied as
follows:

         (a) Unless the  principal  of all the Bonds  shall have become of shall
have been declared due and payable:

         First  - To  the  payment  to  the  persons  entitled  thereto  of  all
installments  of interest then due on the Bonds, in the order of the maturity of
the  installments  of such  interest and, if the amount  available  shall not be
sufficient  to pay in full  any  particular  installment,  then  to the  payment
ratably,  according  to the  amounts  due on such  installment,  to the  persons
entitled thereto, without any discrimination or preference except as provided in
Section  8.13 and as to any  difference  in the  respective  rates  of  interest
specified in the Bonds;

         Second - To the payment to the persons  entitled  thereto of the unpaid
principal  of any of the Bonds  which  shall have  become due (other  than Bonds
called for  redemption  for the payment of which moneys are held pursuant to the
provisions of this Indenture), in the order of their due dates, with interest on
such Bonds at the respective  rates specified  therein from the respective dates
upon which they become due and, if the amount  available shall not be sufficient
to pay in full Bonds due on any  particular  date,  together with such interest,
then first to the payment of such interest  ratably,  according to the amount of
such  interest  due on such  date,  and then to the  amount  of such  principal,
ratably,  according  to the amount of such  principal  due on such date,  to the
persons entitled  thereto,  without any  discrimination  or preference except as
provided in Section 8.13 and as to any  difference  in the  respective  rates of
interest specified in the Bonds; and

         Third - To the extent  permitted  by law, to the payment to the persons
entitled  thereto of the unpaid  interest  on overdue  installments  of interest
ratably, according to the amounts of such interest due on such date, without any
discrimination  or  preference  except as provided in Section 8.13 and as to any
difference in the respective rates of interest specified in the Bonds.

         (b) If the  principal  of all the Bonds  shall have become due or shall
have been  declared  due and  payable,  all such moneys  shall be applied to the
payment  of the  principal  and  interest  then due and  unpaid  upon the Bonds,
including to the extent  permitted by law  interest on overdue  installments  of
interest,  without  preference  or priority  of  principal  over  interest or of
interest  over  principal,  or of any  installment  of  interest  over any other
installment of interest, or of any Bond over any other Bond, ratably,  according
to the amounts due  respectively  for  principal  and  interest,  to the persons
entitled thereto,  without any discrimination or privilege except as provided in
Section 8.13.

         (c) If the  principal of all the Bonds shall have been declared due and
payable,  and if such  declaration  shall  thereafter  have been  rescinded  and
annulled under the provisions of this Article,  then,  subject to the provisions
of  subsection  (b) of this  Section in the event that the  principal of all the
Bonds shall later become due or be declared due and payable, the moneys shall be
applied in accordance with the provisions of subsection (a) of this Section.

         (d) All amounts  received by the Trustee from a draw upon the Letter of
Credit shall be applied  exclusively to the payment of principal of and interest
on the Bonds.

         Whenever  moneys are to be applied  pursuant to the  provisions of this
section, such moneys shall be applied at such times and from time to time as the
Trustee  shall  determine,  having  due  regard  to the  amount  of such  moneys
available for  application  and the  likelihood of  additional  moneys  becoming
available for such  application in the future.  Whenever the Trustee shall apply
such  moneys,  it shall fix the date (which  shall be an Interest  Payment  Date
unless it shall deem another date more suitable) upon which such  application is
to be made. The Trustee shall give such notice as it may deem appropriate of the
deposit with it of any such moneys and of the fixing of any such date, and shall
not be  required  to make  payment  to the holder of any Bond until such Bond is
presented to the Trustee for  appropriate  endorsement  or for  cancellation  if
fully paid.

         Whenever  all  principal  of and  interest  on all Bonds have been paid
under the provisions of this Section and all expenses and charges of the Trustee
and the Issuer have been paid,  and all  obligations  of the Company to the Bank
pursuant  to the  Reimbursement  Agreement  have been  paid in full the  balance
remaining  in the Bond Fund shall be paid to the  Company as provided in Section
4.07.

         Section  8.07.  Remedies  Vested  in  Trustee.  All  rights  of  action
(including  the right to file proof of claims) under this Indenture or under any
of the Bonds may be enforced by the Trustee without the possession of any of the
Bonds or the  production  thereof  in any  trial or  other  proceeding  relating
thereto and any such suit or proceeding instituted by the Trustee may be brought
in its name as  Trustee  without  the  necessity  of joining  as  plaintiffs  or
defendants  any holders of the Bonds,  and any recovery of judgment shall be for
the equal benefit of the holders of the outstanding Bonds.

         Section 8.08.  Limitations on Suits. Except to enforce the rights given
under  Sections  8.02(a),  8.05 and 8.12,  no holder of any Bond  shall have any
right to institute  any suit,  action or  proceeding in equity or at law for the
enforcement  of this  Indenture or for the execution of any trust thereof or any
other remedy  hereunder,  unless (a) a default has occurred of which the Trustee
has been notified as provided in Section 9.05, or of which by such Section it is
deemed to have notice,  (b) such  default  shall have become an Event of Default
and the  holders  of at least 25% in  aggregate  principal  amount of Bonds then
outstanding  shall  have made  written  request  to the  Trustee  and shall have
offered it  reasonable  opportunity  either to proceed  to  exercise  the powers
hereinbefore  granted or to institute such action, suit or proceeding in its own
name,  (c) such  holders  have  offered to the Trustee  indemnity as provided in
Section  9.01(d),  (d) the Trustee  for 60 days after such notice  shall fail or
refuse to exercise the powers hereinbefore granted, or to institute such action,
suit or  proceeding  in its  own  name or in the  name of such  holders,  (e) no
direction  inconsistent  with such request has been given to the Trustee  during
such 60 day period by the holders of a majority in aggregate principal amount of
Bonds then  outstanding,  and (f) notice of such action,  suit or  proceeding is
given to the  Trustee;  it being  understood  and  intended  that no one or more
holders of the Bonds  shall have any right in any manner  whatsoever  to affect,
disturb or  prejudice  this  Indenture by its, his or their action or to enforce
any  right  hereunder  except  in the  manner  herein  provided,  and  that  all
proceedings at law or in equity shall be instituted and maintained in the manner
herein  provided  and for the equal  benefit  of the  holders  of all Bonds then
outstanding.

         The  notification,  request  and  offer of  indemnity  set forth in the
preceding paragraph, at the option of the Trustee, shall be conditions precedent
to the execution of the powers and trusts in this Indenture and to any action or
cause of action for the  enforcement  of this  Indenture or for any other remedy
hereunder.

         Section 8.09.  Termination  of  Proceedings.  In case the Trustee shall
have proceeded to enforce any right under this Indenture by the appointment of a
receiver,  by  entry  or  otherwise,   and  such  proceedings  shall  have  been
discontinued  or  abandoned  for any  reason,  or  shall  have  been  determined
adversely,  then.and in every such case the Issuer, the Company, the Bondholders
and the  Trustee  shall  be  restored  to  their  former  positions  and  rights
hereunder,  and all rights, remedies and powers of the Trustee shall continue as
if no such proceedings had been taken.

         Section  8.10.  Waivers of Events of  Default.  The  Trustee,  with the
written  consent of the Bank,  may waive any Event of Default  hereunder and its
consequences  and  rescind any  declaration  of  maturity  of  principal  of and
interest  on the  Bonds and the Note,  and shall do so with the  consent  of the
Bank,  upon the written  request of the  holders of (a) a majority in  aggregate
principal  amount of Bonds then  outstanding  in respect of which default in the
payment of  principal  and/or  interest  exists,  or (b) a majority in aggregate
principal  amount of Bonds then  outstanding  in the case of any other  default;
provided, however, that:

         (1) there shall not be waived without the consent of the holders of all
Bonds then outstanding:

         (A)      any default in the payment of the principal of any  
outstanding  Bonds when due (whether at maturity or by mandatory or optional 
redemption), or

         (B) any  default in the  payment  when due of the  interest on any such
Bonds unless, prior to such waiver or rescission:

         (i) there shall have been paid or provided  for all arrears of interest
at the rate borne by the Bonds on overdue installments of principal, all arrears
of payments of principal  when due and all expenses of the Trustee in connection
with such default, and

         (ii)  in case  of any  such  waiver  or  rescission,  or in case of the
discontinuance,  abandonment or adverse determination of any proceeding taken by
the Trustee on account of any such  default,  the  Trustee  and the  Bondholders
shall be restored to their respective former positions and rights hereunder;

         (2) no  declaration  of maturity under Section 8.02 made at the request
of the holders of 25% in aggregate  principal  amount of Bonds then  outstanding
shall be  rescinded  unless  requested by the holders of a majority in aggregate
principal amount of Bonds then outstanding; and

         (3) unless the Trustee has received written evidence that the Letter of
Credit is reinstated  in full as to principal  and  interest,  there shall be no
waiver or  rescission  if the Letter of Credit shall have been drawn upon due to
the occurrence of an Event of Default.

         No such waiver or  rescission  shall extend to any  subsequent or other
default, or impair any right consequent thereon.

         Section  8.11.  Notice of  Defaults;  Opportunity  of  Company  to Cure
Defaults.  Anything contained in this Indenture to the contrary notwithstanding,
no  default  specified  in  Section  8.01(c)  on the  part of the  Issuer  shall
constitute  an Event of Default  until (a) notice of such default shall be given
(1) by the Trustee to the Issuer, the Bank and the Company or (2) by the holders
of 25% in aggregate  principal  amount of Bonds then outstanding to the Trustee,
the Issuer,  the Bank and the Company,  and (b) the Issuer and the Company shall
have had 30 days after such notice to correct such default or cause such default
to be  corrected,  and shall not have  corrected  such  default  or caused  such
default to be corrected within such period;  provided,  however,  if any default
specified in Section  8.01(c)  shall be such that it cannot be corrected  within
such period, it shall not constitute an event of default if corrective action is
instituted  by the Issuer or the  Company  within  such  period  and  diligently
pursued until such default is corrected;  provided, further, that the period for
corrective  action  shall not in any event  extend more than 180 days after such
notice to correct such default.

         With regard to any alleged default  concerning which notice is given to
the  Company,  the  Company  may,  but is under no  obligation  to,  perform any
covenant,  condition or agreement the nonperformance of which is alleged in such
notice to  constitute  a default,  in the name and stead of the Issuer with full
power to do any and all things and acts to the same extent that the Issuer could
do and perform any such things and acts with power of substitution.

         Section 8.12.  Unconditional  Right To Receive  Principal and Interest.
Nothing  in this  Indenture  shall,  however,  affect or impair the right of any
Bondholder  to enforce,  by action at law,  payment of the principal or purchase
price of or interest on any Bond at and after the  maturity  thereof,  or on the
date fixed for  redemption or purchase or (subject to the  provisions of Section
8.02) on the same being  declared due prior to maturity as herein  provided,  or
the  obligation  of the Issuer to pay the  principal  or  purchase  price of and
interest on each of the Bonds issued hereunder to the respective holders thereof
at the time,  place,  from the source and in the manner  herein and in the Bonds
expressed.

         Section 8.13. Bonds Outstanding.  In the event the Bonds are held under
a book entry system, the securities  depositary shall provide the Trustee,  upon
request  of the  Trustee,  the  names,  addresses  and  principal  amount of the
Beneficial Owners of the Bonds.  Subject to the provisions of Section 8.14, such
Beneficial  Owners  shall be treated in all respects as the holders of the Bonds
for  purposes  of this  Article,  and the  Trustee  shall  send  notices to such
Beneficial owners as required by this Article.  Notwithstanding anything else in
this  Article  to  the  contrary,  Company  Bonds  shall  not  be  deemed  to be
outstanding for purposes of this Article and the Company as holder thereof shall
not be entitled to any rights or payments  therefor  pursuant to Sections  8.05,
8.06, 8.08 and 8.10.

         Section 8.14. Bank Deemed Holder. For all purposes of this Article VIII
(other  than  receipt of  payments),  the Bank  shall,  so long as the Letter of
Credit shall not have been dishonored  (other than for a reason permitted by the
Letter of Credit),  be deemed the holder and registered  owner of all Bonds.  As
such,  the Bank may take all actions  permitted by this Article VIII to be taken
by the holders or Beneficial Owners of the Bonds, to the exclusion of the actual
holders and  Beneficial  Owners of the Bonds;  the purpose of this  Section 8.14
being to permit  the Bank to direct the taking of  actions  and  enforcement  of
remedies  permitted  by this  Article VIII so long as the Letter of Credit shall
not have been  dishonored  (other than for a reason  permitted  by the Letter of
Credit).



<PAGE>


                                   ARTICLE IX

                          TRUSTEE AND REMARKETING AGENT

         Section 9.01. Duties of Trustee.

         (a) If an Event of Default has occurred and is continuing,  the Trustee
shall  exercise  its rights and powers and use the same degree of care and skill
in  its  exercise  as  a  prudent   person  would  exercise  or  use  under  the
circumstances in the conduct of such person's own affairs.

         (b)      Except during the continuance of an Event of Default:

         (i) the Trustee need  perform  only those duties that are  specifically
set  forth  in  this  Indenture  and no  others  and  no  implied  covenants  or
obligations shall be read into this Indenture against the Trustee, and

         (ii)  in  the  absence  of  bad  faith,  gross  negligence  or  willful
misconduct on its part,  the Trustee may  conclusively  rely, as to the truth of
the statements and the correctness of the opinions expressed,  upon certificates
or opinions  furnished to the Trustee and conforming to the requirements of this
Indenture.  However,  the Trustee shall examine the certificates and opinions to
determine whether they conform to the requirements of this Indenture.

         (c) The Trustee may not be relieved from  liability for its own grossly
negligent  action,  its own grossly  negligent failure to act or its own willful
misconduct, except that:

         (i)      this paragraph does not limit the effect of (b) above;

         (ii) the Trustee  shall not be liable for any error of judgment made in
good faith by a  Responsible  Officer,  unless it is proved that the Trustee was
grossly negligent in ascertaining the pertinent facts; and

         (iii) the  Trustee  shall not be liable  with  respect to any action it
takes or omits to take in good faith in accordance with a direction  received by
it pursuant to Section 8.05.

         (d) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives  indemnity  reasonably  satisfactory  to it against any
loss,  liability  or expense,  but the Trustee  may not require  indemnity  as a
condition  to  declaring  the  principal  of and interest on the Bonds to be due
immediately  under  Section  8.02 or to  drawing  on the  Letter of Credit or to
taking  action under the Letter of Credit.  The Trustee shall not be required to
give any bond or surety in respect of the execution of the trust created  hereby
or the powers granted hereunder.

         (e) The Trustee shall not be liable for interest on any cash held by it
except as the  Trustee  may agree with the  Company or with the Issuer  with the
consent of the Company.

         (f)      The Trustee may  conclusively  rely on a Company  
Representative's  certificate  as to whether a Bankruptcy  Filing has occurred.

         (g)      The Trustee shall strictly comply with the terms of the Letter
of Credit.

         (h) The Trustee shall maintain adequate records pertaining to the funds
held by the Trustee,  the  investment  thereof and the  disbursement  therefrom;
notwithstanding anything to the contrary in this Indenture or the Agreement, the
Trustee  shall not be required to advance its own funds or  otherwise  incur any
financial liability in the performance of any of its duties hereunder.

         (i)      Every  provision of this  Indenture  that in any way relates 
to the Trustee is subject to all the foregoing  paragraphs of this Section.

         (j) The Trustee shall in no event be responsible  for ensuring that the
rate of  interest  due and payable on the Bonds  under this  Indenture  does not
exceed the highest legal rate of interest permissible under federal or state law
applicable thereto.

         Section 9.02. Rights of Trustee.

         (a) Subject to the foregoing  Section,  including,  but not limited to,
Sections  9.01(b)(ii) and 9.01(c), the Trustee may rely on any document believed
by it to be genuine and to have been signed or presented  by the proper  person.
The Trustee need not investigate any fact or matter stated in the document.  Any
action  taken by the  Trustee  pursuant  to this  Indenture  upon the request or
authority  or consent of any person,  who at the time of making such  request or
authority or consent is the owner of any Bond,  shall be conclusive  and binding
upon all future owners of any Bond issued in replacement thereof.

         (b) Before the Trustee acts or refrains  from acting,  it may require a
certificate of an  appropriate  officer or officers of the Issuer or the Company
or an opinion of Counsel stating that (i) the person making such  certificate or
opinion has read such  covenant or  condition;  (ii) the nature and scope of the
examination or investigation  upon which the statements or opinions contained in
such certificate or opinion are based;  (iii) in the opinion of such person,  he
has made such  examination  or  investigation  as is  necessary to enable him to
express an informed  opinion as to whether or not such covenant or condition has
been complied with; and (iv) a statement as to whether or not, in the opinion of
such person,  such  condition or covenant has been  complied  with.  The Trustee
shall not be  liable  for any loss or damage or action it takes or omits to take
in good faith in reliance on the certificate or opinion of Counsel.

         (c) The Trustee may execute any of the trusts or powers  hereunder  and
perform any of its duties through agents,  attorneys or employees or co-trustees
and shall not be  responsible  for the  misconduct  or  negligence of any agent,
attorney, employee or co-trustee appointed with due care.

         Section  9.03.  Individual  Rights of Trustee,  Etc. The Trustee in its
individual or any other  capacity may become the owner,  custodian or pledgee of
Bonds and may  otherwise  deal with the Issuer,  the Bank or with the Company or
its affiliates with the same rights it would have if it were not Trustee.

         Section 9.04. Trustee's Disclaimer.  Subject to Sections 9.01(b) and 
9.01(c):

         (a) the Trustee makes no  representation as to the validity or adequacy
of  this  Indenture  or the  Bonds,  and it  shall  not be  responsible  for any
statement  in the  Bonds  or for the  perfection  of any  lien  created  by this
Indenture or otherwise as security for the Bonds;

         (b) the Trustee may construe any of the  provisions  of this  Indenture
insofar  as same may  appear  to be  ambiguous  or  inconsistent  with any other
provision hereof,  and any construction of any such provisions hereof by Trustee
in good faith shall be binding upon the Bondholders, the Issuer, the Company and
the Remarketing Agent;

         (c) the Trustee shall not be responsible  for the application of any of
the  proceeds of the Bonds or any other moneys  deposited  with it and paid out,
withdrawn or transferred hereunder if such application,  payment,  withdrawal or
transfer shall be made in accordance with the provisions of this Indenture;

         (d)  the  Trustee  shall  not be  under  any  obligation  to see to the
recording or filing of this Indenture,  the Agreement,  any financing statements
or any other  instrument  or  otherwise to the giving to any person of notice of
the provisions hereof or thereof; and

         (e) the Trustee shall not be under any obligation to effect or maintain
insurance  or to  renew  any  policies  of  insurance  or to  inquire  as to the
sufficiency of any policies of insurance  carried by the Company,  or to report,
or make or file claims or proof of loss for, any loss or damage insured  against
or that may occur,  or, to keep itself  informed or advised as to the payment of
any taxes or assessments, or to require any such payment to be made.

         Section 9.05. Notice of Defaults.  The Trustee shall not be required to
take  notice,  or be deemed to have  notice,  of any default or Event of Default
under this Indenture,  other than an Event of Default under Section 8.01(a), (b)
or (d), unless specifically  notified in writing at such address as set forth in
Section  12.01  hereof of such  default or Event of Default by the holders of at
least 25% in principal amount of the Bonds then Outstanding, by the Bank, by the
Remarketing Agent or by the Company.

         If an event  occurs  that with the giving of notice or lapse of time or
both would be an Event of  Default,  and if the event is  continuing  and if the
Trustee  has  actual  notice  or is  deemed  to have  notice  thereof  as herein
provided,  the Trustee shall mail to each Bondholder,  the Remarketing Agent and
the Bank  notice of the  event  upon  such  occurrence.  Except in the case of a
default in payment or purchase of any Bonds, the Trustee may withhold the notice
if and so  long  as a  committee  of its  Responsible  Officers  in  good  faith
determines  that  withholding  the notice is in the  interests  of  Bondholders;
provided  that,  in any event such notice shall not be withheld from the Bank or
the Remarketing Agent.

         Section 9.06.  Compensation and Indemnification of Trustee.  For acting
under this  Indenture,  the Trustee  shall be entitled  to  compensation  by the
Company (which shall not be limited by any statute  regulating the  compensation
of a trustee of an express trust) of reasonable fees for the Trustee's  services
and  reimbursement of advances,  counsel fees and other expenses  reasonably and
necessarily  made or  incurred by the Trustee in  connection  with its  services
under this indenture.

         The Trustee shall be  indemnified by the Company for, and shall be held
harmless  against,  any  loss,  liability  or  expense  incurred  without  gross
negligence,  willful  misconduct or bad faith on the Trustee's part, arising out
of or in connection with the acceptance or  administration  of the trust created
by this Indenture,  including the costs and expenses of defending itself against
any claim or liability in connection  with the exercise or performance of any of
its powers or duties hereunder.

         To secure the payment or  reimbursement  to the Trustee provided for in
this Section, the Trustee shall have a senior claim, to which the Bonds are made
subordinate,  on all money or property held or collected by the Trustee,  except
moneys held under  Article VII or otherwise  held in trust to pay  principal of,
interest on and purchase price of the Bonds,  and except amounts drawn under the
Letter of Credit and Available Moneys on deposit in the Bond Fund.

         Section 9.07.  Eligibility of Trustee.  Each of the initial Trustee and
any successor Trustee at the time of its appointment shall: (i) be a corporation
or national  banking  association  duly  organized  under the laws of the United
States of America or any state or territory  thereof,  doing business and having
an  office  in  such  location  as  shall  be  approved  by the  Issuer  and the
Remarketing  Agent,  (ii)  have a  combined  capital  and  surplus  of at  least
$25,000,000  as  set  forth  in its  most  recent  published  annual  report  of
condition, and (iii) be authorized by law to perform all the duties imposed upon
it by this Indenture.

         Section  9.08.  Replacement  of Trustee.  The Trustee may resign and be
discharged of the trust created by this  Indenture by notifying the Issuer,  the
Bank and the Company;  provided,  however, that no such resignation shall become
effective until the appointment of a successor trustee, as hereinafter provided.
The  holders of not less than a majority  in  principal  amount of the Bonds may
remove the Trustee by notifying the removed  Trustee and may appoint a successor
Trustee with the Issuer's,  the Bank's and the Company's prior written  consent;
provided,  however,  that no  such  removal-shall  become  effective  until  the
appointment of a successor trustee, as hereinafter provided.  The Issuer may, in
its sole  discretion,  and at the  request  of the  Company  shall,  remove  the
Trustee,  but in the case where such removal is  requested by the Company,  only
after  obtaining  the prior  written  consent of the Bank.  Upon the  removal or
replacement of the Trustee for any reason, the Issuer and the Company shall give
written  notice  thereof to the  Remarketing  Agent and the Bank by  first-class
mail, postage prepaid.

         If the  Trustee  resigns or is  removed  or if a vacancy  exists in the
office of Trustee for any reason, the Issuer,  with the prior written consent of
the Bank and the Company,  shall,  at the expense of the  Company,  use its best
efforts to appoint  promptly a  successor  Trustee.  Notice of such  appointment
shall be given by the Issuer to the Remarketing  Agent in writing by first-class
mail.

         A  successor  Trustee  shall  deliver  a  written   acceptance  of  its
appointment to the retiring Trustee and to the Issuer, the Bank, the Company and
the  Remarketing  Agent.  Immediately  thereafter,  the retiring  Trustee  shall
transfer  all  property  held by it as Trustee  to the  successor  Trustee,  the
resignation or removal of the retiring Trustee shall then (but only then) become
effective,  and the  successor  Trustee  shall have all the  rights,  powers and
duties of the Trustee under this Indenture.  The successor  Trustee shall notify
the  holders  of  the  Bonds  of  its  acceptance  of the  trusts  hereunder  by
first-class mail promptly following such acceptance.

         If a successor  Trustee  does not take office  within 60 days after the
retiring Trustee resigns or is removed,  the retiring Trustee,  the Issuer,  the
Bank, the Company or the holders of a majority in principal  amount of the Bonds
may  petition  any court of  competent  jurisdiction  for the  appointment  of a
successor Trustee.

         If the Trustee fails to comply with Section 9.07,  any  Bondholder  may
petition any court of competent  jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

         Section 9.09. Duties of Remarketing Agent.

         (a) The  Remarketing  Agent shall,  in accordance  with the Remarketing
Agreement,  determine  the Weekly Rate on the Bonds and perform the other duties
provided for to be done by it in Section 2.02,  Section  3.08,  Section 4.01 and
Section  4.06.  The  Remarketing  Agent may for its own  account or as broker or
agent for others deal in Bonds and may do anything any other  Bondholder  may do
to the same extent as if the  Remarketing  Agent were not  serving as such.  The
Remarketing  Agent  shall  have no  duty  to act  hereunder  to the  extent  the
Remarketing  Agent  is  not  required  to  perform  its  obligations  under  the
Remarketing Agreement.

         (b) The  Remarketing  Agent may  execute  and perform any of its duties
hereunder  through agents,  attorneys,  employees or  co-remarketing  agents and
shall  not be  responsible  for  the  misconduct  or  negligence  of any  agent,
attorney, employee or co-remarketing agent appointed with due care.

         Section  9.12.  Eligibility  of  Remarketing  Agent;  Replacement.  The
Remarketing  Agent shall be a member of the National  Association  of Securities
Dealers,  Inc.  having  excess  net  capital of at least  $5,000,000  or, in the
alternative,  a national  banking  association  having a combined capital stock,
surplus and  undivided  profits of at least  $50,000,000,  and, if the Bonds are
rated by a Rating Agency,  the Remarketing Agent must be rated at least Baa3/P-3
or otherwise be acceptable to the Rating Agency.

         Crews  and  Associates,   Inc.  is  hereby  appointed  as  the  initial
Remarketing  Agent and is herein  referred  to as the  "Remarketing  Agent." Any
Remarketing  Agent  shall  accept its  appointment  hereunder  in  writing.  The
Remarketing Agent may resign by notifying the Issuer,  the Company,  the Trustee
and the Bank at least 45 days before the effective date of the resignation.  The
Issuer,  at the  direction of the Company but only with the Bank's prior written
consent,  which consent shall not be unreasonably  withheld,  shall, at any time
remove the Remarketing Agent as the Issuer's  designee for determining  interest
rates and appoint a successor by notifying the Remarketing  Agent,  the Bank and
the Trustee at least 60 days prior to the effective  date of such removal.  Upon
the  resignation  or  removal  of the  Remarketing  Agent,  the  Issuer,  at the
direction of the Company,  but only with the prior written  consent of the Bank,
which consent shall not be unreasonably  withheld,  shall appoint a successor by
notifying the Remarketing  Agent,  the Bank and the Trustee,  if the Remarketing
Agent resigns or is removed  pursuant to the terms of this  Indenture and, after
45 days in the case of resignation or 60 days in the case of removal, the Issuer
at the direction of the Company,  has failed to appoint a successor  Remarketing
Agent in  accordance  with the terms of this  Section  9.12,  the Company  shall
immediately  give notice  thereof to the Trustee and shall direct the Trustee to
give notice to the holders of all Bonds of a mandatory  repurchase of such bonds
pursuant to Section  3.07(a)(ii)  hereof.  Such mandatory  repurchase shall take
place on the first  Interest  Payment  Date to occur  following  such  Notice of
Mandatory  Repurchase  by the Trustee (of if such date is not a Business Day, on
the next succeeding  Business Day),  unless such Mandatory  Repurchase Date is a
date less than 15 days after such Notice of Mandatory  Repurchase  is given,  in
which case such mandatory repurchase shall occur on the next succeeding Interest
Payment  Date (or, if such date is not a Business  Day,  on the next  succeeding
Business Day).  Notwithstanding  the foregoing,  no such  resignation or removal
shall  be  effective  until  either  (i) the  successor  Remarketing  Agent  has
delivered an acceptance of its  appointment to the Trustee or (ii) the Mandatory
Repurchase Date described above.

         Section 9.10. [Reserved]

         Section 9.11.  Successor  Trustee or Agent by Merger. If the Trustee or
the,  Remarketing Agent consolidates with, merges or converts into, or transfers
all or substantially all its assets (or, in the case of a bank or trust company,
its  corporate  trust  assets)  to,  another  corporation  or  national  banking
association,  the  resulting,  surviving or transferee  corporation  or national
banking association without any further act shall be the successor Trustee,  the
Remarketing   Agent,   provided  that  such   corporation  or  national  banking
association  shall  otherwise be eligible to serve in such  capacity  under this
Indenture.

         Section  9.12.  Appointment  of  Co-Trustee.  It is the purpose of this
Indenture  that  there  shall  be no  violation  of any law of any  jurisdiction
(including  particularly  the law of the State) denying or restricting the right
of banking  corporations or associations to transact business as trustee in such
jurisdiction.  It is recognized that in case of litigation  under this Indenture
or the Agreement,  and in particular in case of the  enforcement  thereof upon a
default or an Event of Default,  or in case the Trustee  deems that by reason of
any present or future law of any  jurisdiction  it may not  exercise  any of the
powers,  rights or remedies  herein  granted to the Trustee or hold title to the
properties,  in  trust,  as  herein  granted,  or take any  action  which may be
desirable or necessary in  connection  therewith,  it may be necessary  that the
Trustee  appoint an  additional  individual  or  institution  as a  separate  or
co-trustee. The following provisions of this Section are adapted to these ends.

         In the event that the Trustee  appoints  an  additional  individual  or
institution as a separate or co-trustee,  each and every remedy,  power,  right,
claim,  demand,  cause of action,  immunity,  estate,  title,  interest and lien
expressed  or  intended by this  Indenture  to be  exercised  by or vested in or
conveyed to the Trustee with respect thereto shall be exercisable by and vest in
such  separate or  co-trustee  but only to the extent  necessary  to enable such
separate or co-trustee to exercise such powers,  rights and remedies,  and every
covenant and  obligation  necessary to the exercise  thereof by such separate or
co-trustee shall run to and be enforceable by either of them; provided, however,
that no co-trustee shall be liable by reason of any act or omission of any other
such co-trustee.

         Should any  instrument  in writing  from the Issuer be  required by the
separate or  co-trustee so appointed by the Trustee for more fully and certainly
vesting in and confirming to him or it such properties,  rights, powers, trusts,
duties  and  obligations,  any and all such  instruments  in writing  shall,  on
request,  be executed,  acknowledged  and  delivered by the Issuer.  In case any
separate or co-trustee or a successor to either shall die,  become  incapable of
acting,  resign or be removed,  all the  estates,  properties,  rights,  powers,
trusts,  duties  and  obligations  of such  separate  or  co-trustee,  so far as
permitted  by law,  shall  vest in and be  exercised  by the  Trustee  until the
appointment of a new co-trustee or successor to such separate or co-trustee.



<PAGE>


                                    ARTICLE X

                                AMENDMENTS OF AND
                            SUPPLEMENTS TO INDENTURE

         Section 10.01.  Without Consent of  Bondholders.  The Issuer and the 
Trustee may amend or supplement this Indenture or the Bonds without prior notice
to or consent of any Bondholder:

         (a)      to cure any ambiguity, inconsistency or formal defect or 
omission;

         (b)      to grant to the Trustee for the benefit of the Bondholders 
additional rights, remedies, powers or authority;

         (c)      to subject to this Indenture additional collateral or to add 
other agreements of the Issuer;

         (d) to modify this Indenture or the Bonds to permit qualification under
the Trust  Indenture Act of 1939, as amended,  or any similar federal statute at
the time in effect;  to permit the qualification of the Bonds for sale under the
securities laws of any state of the United States; or to prevent the application
of the Investment  Company Act of 1940, as amended,  to any of the  transactions
contemplated  by, or any of the parties to this Indenture,  the Agreement or the
Bonds;

         (e)      to provide for  uncertificated  Bonds or to make any change 
necessary to give effect to a custody agreement pursuant to Section 2.05(d);

         (f)      to evidence the succession of a new Trustee or the appointment
by the Trustee of a co-trustee;

         (g) to make any  change to  reflect  any  provision  in the Code or the
interpretations  thereof by the  Internal  Revenue  Service  provided  that such
change does not materially adversely affect the rights of any Bondholder;

         (h)  to  make  any  change  not  materially   adversely  affecting  any
Bondholder's  rights  requested  by the  Rating  Agency in order (i) to obtain a
rating from the Rating  Agency  after the  initial  issuance of the Bonds if the
Bonds are initially issued without a rating equivalent to the rating assigned to
other securities supported by a Letter of Credit of the Bank or (ii) to maintain
any rating on the Bonds;

         (i)      to make any change not  materially  adversely  affecting  any 
Bondholder's  rights to provide for or to implement  the provisions of a Letter 
of Credit;

         (j) to make any change to provide for or to implement the provisions of
a Letter  of  Credit  only if such  Letter of  Credit  and the  changes  to this
Indenture become effective on a Mandatory Repurchase Date;

         (k) to make any change to be effective on any Mandatory Repurchase Date
provided that such change has been disclosed to all owners of Bonds who purchase
on such date;

         (l)      to make any change that does not materially adversely affect 
the rights of any Bondholder;

         (m) to add to this Indenture the obligation of the Trustee,  the Issuer
or the Company to disclose such  information  regarding the Bonds, the Facility,
the Issuer,  the Company or the Bank as shall be required or  recommended  to be
disclosed in accordance  with applicable  regulations or guidelines  established
by, among others, the American Bankers Association Corporate Trust Committee; or

         (n)      to provide for the issuance of Additional Bonds under Section 
2.09.

         Section  10.02.  With  Consent of  Bondholders.  If an  amendment of or
supplement to this  Indenture or the Bonds without any consent of Bondholders is
not  permitted by the  preceding  Section,  the Issuer and the Trustee may enter
into such amendment or supplement  without prior notice to any  Bondholders  but
with the consent of the holders of at least a majority  in  principal  amount of
the Bonds then  outstanding.  However,  without the  consent of all  Bondholders
affected,  no  amendment  or  supplement  may (a)  extend  the  maturity  of the
principal of, or interest on, any Bond,  (b) reduce the principal  amount of, or
rate of interest on, any Bond or change the terms of any redemption,  (c) effect
a  privilege  or  priority  of any Bond or Bonds  over any  other  Bond or Bonds
(except as provided  herein),  (d) reduce the percentage of the principal amount
of the Bonds required for consent to such  amendment or  supplement,  (e) impair
the  exclusion  from gross  income for  purposes of federal  income  taxation of
interest on any Bond, (f) eliminate the holders' rights to optionally tender the
Bonds,  extend the due date for the purchase of Bonds optionally tendered by the
holders  thereof or reduce the purchase  price of such Bonds,  (g) create a lien
ranking prior to or on a parity with the lien of this  Indenture on the property
described in the Granting Clause of this Indenture or (h) deprive any Bondholder
of the lien created by this Indenture on such property.  In addition,  if moneys
or U.S. Government Obligations have been deposited or set aside with the Trustee
pursuant  to Article VII for the payment of Bonds and those Bonds shall not have
in fact been  actually  paid in full,  no  amendment to the  provisions  of that
Article  shall be made  without the consent of the holder of each of those Bonds
affected.

         Section  10.03.  Effect of Consents.  After an amendment or  supplement
becomes  effective,  it shall  bind  every  Bondholder  unless it makes a change
described in any of the lettered clauses of the preceding Section. In such case,
the amendment or supplement  shall bind each  Bondholder who consented to it and
each  subsequent  holder of a Bond or portion of a Bond evidencing the same debt
as the consenting holder's Bond.

         Section  10.04.  Notation on or Exchange of Bonds.  If an  amendment or
supplement  changes the terms of a Bond, the Trustee may request that the holder
deliver  the Bond to it. The Trustee  may place an  appropriate  notation on the
Bond regarding the changed terms and return it to the holder. Alternatively,  if
the Trustee,  the Issuer and the Company  determine,  the Issuer in exchange for
the Bond shall issue and the Trustee shall authenticate a new Bond that reflects
the changed  terms.  In either  event,  the cost of placing such notation on the
Bond(s) shall be borne by the Company.

         Section 10.05.  Signing by Trustee of Amendments and  Supplements.  The
Trustee shall sign any  amendment or  supplement to this  Indenture or the Bonds
authorized  by this Article if the  amendment or  supplement  does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If it does,
the Trustee may, but need not,  sign it. In signing an amendment or  supplement,
the Trustee  shall be entitled to receive and (subject to Section 9.01) shall be
fully  protected in relying on an Opinion of Counsel stating that such amendment
or supplement is authorized by this Indenture and is duly  authorized,  executed
and delivered and enforceable in accordance with its terms.

         Section 10.06. Company, Bank and Remarketing Agent Consent Required. An
amendment  or  supplement  to this  Indenture  or the  Bonds  shall  not  become
effective unless the Company, the Remarketing Agent (but only to the extent that
such amendment  affects the rights,  duties or  obligations  of the  Remarketing
Agent  hereunder) and the Bank deliver to the Trustee their written  consents to
the amendment or  supplement.  In any event,  no amendment or supplement  hereto
shall become  effective until the Remarketing  Agent  acknowledges  receipt of a
copy of such supplement or amendment.

         Section 10.07. Notice to Bondholders. The Trustee shall cause notice of
the execution of a supplemental  indenture to be mailed  promptly by first-class
mail to each  Bondholder at the holder's  registered  address.  The notice shall
state briefly the nature of the  supplemental  indenture and that copies thereof
are on file with the Trustee for inspection by all Bondholders.

         Section  10.08.  Opinion of Bond  Counsel  Required.  An  amendment  or
supplement to this Indenture shall not become  effective  unless the Trustee has
received an opinion of Bond  Counsel  addressed to the  Trustee,  the Bank,  the
Company and the Remarketing Agent to the effect that the amendment or supplement
will not impair the  exclusion of interest on the Bonds from the gross income of
the recipients thereof for purposes of federal income taxation.



<PAGE>


                                   ARTICLE XI

                   AMENDMENTS OF AND SUPPLEMENTS TO AGREEMENT

         Section 11.01.  Without  Consent of Bondholders.  The Issuer,  with the
consent of the  Company,  may enter  into,  and the  Trustee may consent to, any
amendment of or supplement to the Agreement or the Note, without prior notice to
or consent of any Bondholder,  if the amendment or supplement is required (a) by
the  provisions of the Agreement or this  Indenture,  (b) to cure any ambiguity,
inconsistency  or formal defect or omission,  (c) to identify more precisely the
Facility,  (d) in connection  with any authorized  amendment of or supplement to
this  Indenture,  or (e) to make any change  comparable  to those  described  in
Section 10.01.

         Section  11.02.  With  Consent of  Bondholders.  If an  amendment of or
supplement  to the Agreement or the Note without any consent of  Bondholders  is
not  permitted  by the  foregoing  Section,  the Issuer may enter into,  and the
Trustee may consent to, such amendment or supplement without prior notice to any
Bondholder  but with the  consent  of the  holders  of at  least a  majority  in
principal amount of the Bonds then outstanding.  However, without the consent of
each  Bondholder  affected,  no amendment or  supplement  may result in a change
comparable to those described in the lettered clauses of Section 10.02.

         Section  11.03.  Consent by Trustee to Amendments or  Supplements.  The
Trustee  shall  consent to any  amendment or  supplement to the Agreement or the
Note  authorized  by this  Article  if the  amendment  or  supplement  does  not
adversely affect the rights,  duties,  liabilities or immunities of the Trustee.
If it does,  the Trustee  may,  but need not,  consent to such an  amendment  or
supplement.  In consenting to an amendment or  supplement,  the Trustee shall be
entitled to receive and  (subject to Section  9.01) shall be fully  protected in
relying on an opinion of Counsel  stating that such  amendment or  supplement is
authorized  by this  Indenture  and  has  been  duly  authorized,  executed  and
delivered and is enforceable in accordance with its terms.

         Section 11.04. Notice to Bondholders. The Trustee shall cause notice of
the  execution of an amendment or  supplement to the Agreement or the Note to be
mailed  promptly  by  first-class  mail  to  each  Bondholder  at  the  holder's
registered  address.  The notice shall state briefly the nature of the amendment
or  supplement  and  that  copies  thereof  are on file  with  the  Trustee  for
inspection by all Bondholders.

         Section  11.05.  Bank  and  Remarketing  Agent  Consent  Required.   An
amendment or supplement to the Agreement or the Note shall not become  effective
unless the  Remarketing  Agent (but only to the extent  that such  amendment  or
supplement  affects the rights,  duties or obligations of the Remarketing  Agent
hereunder  or  thereunder)  and the Bank  deliver to the Trustee  their  written
consents to the  amendment or  supplement.  In any event,  no such  amendment or
supplement  shall become  effective  until the  Remarketing  Agent  acknowledges
receipt of a copy of such amendment or supplement.

                                   ARTICLE XII

                                  MISCELLANEOUS

         Section 12.01. Notices.

         (a)   Any   notice,   request,   direction,    designation,    consent,
acknowledgment,   certification,  appointment,  waiver  or  other  communication
required or permitted by this  Indenture or the Bonds must be in writing  except
as expressly provided otherwise in this Indenture or the Bonds.

         (b)  Except  as  otherwise   provided  herein,   any  notice  or  other
communication  shall be  sufficiently  given and deemed given when  delivered by
hand or mailed by first-class mail, postage prepaid, addressed as follows or, if
the communication may be given by telex or telecopy under the provisions of this
Indenture, when telexed or telecopied to the following numbers:

         (1)      if to the Issuer,  to Harrison County,  West Virginia,  
Harrison County  Courthouse,  Clarksburg,  West Virginia 26301, Attention: 
President of Harrison County Commission;

         (2)      if to the  Trustee,  to One Valley  Bank,  National  
Association,  P.O.  Box 1793,  Charleston,  West  Virginia  25326, Attention: 
Corporate Trust Department;

         (3)      if to the Company, to Salem Health Care Corp., 146 Water 
Street, Salem, West Virginia 26426;

         (4)      if to the  Underwriter  or  Remarketing  Agent,  to Crews and 
Associates,  Inc. 2000 Union  National  Plaza,  124 West Capitol, Little Rock, 
Arkansas 72201;

         (5)      if to the Bank, to  NationsBank of Texas,  N.A, 901 Main 
Street,  13th Floor,  Dallas,  Texas 75202,  Attention:  Marie Lancanster; and

         (6)      if to the Parent, Regency Health Services,  Inc. 2742 Dow 
Avenue,  Tustin,  California 92780,  Attention:  David Grant, Esquire.

         Any addressee may designate  additional or different addresses or telex
or telecopy numbers for purposes of this Section. Notwithstanding the provisions
of this Section  12.01,  any notice to the Trustee shall only be sufficient  and
deemed given when mailed to the Trustee at the address  provided in this Section
12.01 by certified mail, return receipt requested, and received by the Trustee.

         A copy of any notice to any party given  hereunder  (with the exception
of notices  required for drawings  under any Letter of Credit) shall be provided
to the Remarketing Agent in the manner such notice is otherwise given.

         The  Beneficial  Owner of  $1,000,000  or more or Bonds may, by written
notice to the Trustee, request that all notices given with respect to such Bonds
be given to the  registered  owner thereof and to a second  address  provided in
such written notice to the Trustee. Upon receipt of such notice described in the
preceding sentence,  the Trustee shall send all notices relating to the relevant
Bonds to the registered owner and the second address so designated.

         Section 12.02.  Bondholders'  Consents. Any consent or other instrument
required by this Indenture to be signed by  Bondholders  may be in any number of
concurrent  documents and may be signed by a Bondholder or by the holder's agent
appointed  in  writing.  Proof of the  execution  of such  instrument  or of the
instrument  appointing  an agent and of the  ownership of Bonds,  if made in the
following  manner,  shall be conclusive  for any purposes of this Indenture with
regard to any action taken by the Trustee under the instrument:

         (a) The fact and date of a person's signing an instrument may be proved
by the  certificate of any officer in any  jurisdiction  who by law has power to
take  acknowledgments  within  that  jurisdiction  that the person  signing  the
writing  acknowledged  before the officer the execution of the writing, or by an
affidavit of any witness to the signing.

         (b) The fact of ownership of Bonds, the amount or amounts,  numbers and
other  identification  of such Bonds and the date of holding  shall be proved by
the registration books kept pursuant to this Indenture.

         In determining  whether the holders of the required principal amount of
Bonds Outstanding have taken any action under this Indenture, Bonds owned by the
Issuer,  the  Company or any partner or  affiliate  of either  thereof  shall be
disregarded and deemed not to be Outstanding; provided, however, that Bank Bonds
shall not be disregarded and shall be deemed to be outstanding for such purpose.
In  determining  whether the Trustee  shall be  protected in relying on any such
action, only Bonds that the Trustee knows to be so owned shall be disregarded.

         Section  12.03.  Notices to Rating Agency.  If applicable,  the Trustee
shall notify any Rating Agency rating the Bonds,  in writing,  of the occurrence
of any of the following events prior to the occurrence  thereof:  (a) any change
in the identity of the Trustee or the  Remarketing  Agent;  (b) any amendment or
modification of or change to this Indenture,  the Agreement,  the  Reimbursement
Agreement or the Letter of Credit;  (c) the  expiration  or  termination  of the
Letter of  Credit,  or any  extension  thereof;  (d) the  payment in full of the
principal  of and  interest  on the Bonds;  and (e) the  delivery of any written
opinion of Bankruptcy  Counsel  required to be delivered under the terms of this
Indenture.

         Section 12.04.  Limitation of Rights.  Nothing  expressed or implied in
this  Indenture or the Bonds shall give any person  other than the Trustee,  the
Issuer,  the Bank, the Company,  the  Remarketing  Agent and the Bondholders any
right, remedy or claim under or with respect to this Indenture.

         Section 12.05.  Severability.  If any provision of this Indenture shall
be determined to be  unenforceable  by a court of law, that shall not affect any
other  provision of this  Indenture;  provided,  no holding or invalidity  shall
require the Trustee to make any payment  from any source  except  those  pledged
hereunder.

         Section 12.06.  Payments Due on Non-Business Days. If a payment date is
not a Business Day at the place of payment,  then payment  shall be made at that
place on the next succeeding  Business Day, with the same force and effect as if
made on the  payment  date,  and, in the case of any such  payment,  no interest
shall accrue for the intervening period.

         Section  12.07.  Governing Law. This Indenture and the authority of the
Issuer to issue the Bonds shall be governed by and construed in accordance  with
the laws of the State,  but it is the  intention of the Issuer that the situs of
the trust  created by this  Indenture  be in the state in which is  located  the
corporate  trust  office of the  Trustee  from time to time  acting  under  this
Indenture.  The word  "Trustee" as used in the preceding  sentence  shall not be
deemed to include  any  additional  individual  or  institution  appointed  as a
separate or  co-trustee  pursuant to Section 9.15 of this  Indenture.  It is the
further  intention of the Issuer that the Trustee  administer  said trust in the
state in which  it is  located,  from  time to  time,  and that  same be for all
purposes hereunder, the situs of said trust.

         Section  12.08.  No  Liability.  No  provision,  covenant or  agreement
contained in this Indenture or in the Bonds, or any obligation herein or therein
imposed upon the Issuer, or the breach thereof, shall constitute or give rise to
or impose  upon the Issuer a  pecuniary  liability  or a charge upon its general
credit or taxing power. In making the agreements,  provisions, and covenants set
forth in this Indenture, the Issuer has not obligated itself except with respect
to the  Facility  and the  application  of the  revenues,  income  and all other
property  therefrom and the security therefor including the Letter of Credit, as
hereinabove  provided.  No official or member of the Issuer shall be  personally
liable on the  Indenture  or the Bonds,  nor shall the  issuance of the Bonds be
considered as misfeasance in office.

         Section 12.09.  Counterparts.  This Indenture may be signed in several 
counterparts,  each of which shall be an original and all of which together 
shall constitute the same instrument.

         Section 12.10. References to the Bank. The Bank shall have no rights to
enforce  any  provision  of this  Indenture  during any period in which it is in
default under the Letter of Credit.

         IN WITNESS WHEREOF, the Issuer has caused this Indenture to be executed
in its name and on its  behalf by the  President  of the  County  Commission  of
Harrison County,  West Virginia and its official seal to be impressed hereon and
attested  by the  Clerk  of the  County  Commission  of  Harrison  County,  West
Virginia,  and the  Trustee,  to evidence  its  acceptance  of the trust  hereby
created,  has caused this Indenture to be executed in its name and on its behalf
by its duly authorized officers, all as of the day and year first above written.

                         HARRISON COUNTY, WEST VIRGINIA



                                           By:
                                           President, Harrison County Commission

[SEAL]



ATTEST:



Clerk, Harrison County Commission

                                          ONE VALLEY BANK, NATIONAL ASSOCIATION


                                          By:


                                          Its:

[SEAL]



ATTEST:


By:


Its: