Exhibit 10.1

                                                 SECURITY AGREEMENT


         This  SECURITY  AGREEMENT  (as  it  may  be  amended,  supplemented  or
otherwise  modified from time to time,  this  "Agreement") is dated as of August
23, 2000 and is made by and among each of the  companies  listed on Schedule VII
hereto,  and any future Subsidiary,  if any, of Sierra Health Services,  Inc., a
Nevada  corporation  ("Borrower")  that becomes a party to this Agreement  (each
such party  other  than the  Borrower  is  referred  to herein as a  "Subsidiary
Grantor"; the Borrower and each Subsidiary Guarantor is individually a "Grantor"
and are  collectively the "Grantors") in favor of and for the benefit of BANK OF
AMERICA,  N.A. ("Bank of America"),  as Administrative  Agent (together with any
successor  appointed  pursuant  to  Section  10.09 of the Credit  Agreement  (as
hereinafter  defined),  the  "Agent")  for  the  financial  institutions  (which
financial institutions, together with the Agent, are each a "Secured Party" and,
collectively,  the "Secured  Parties") that are or may hereafter become party to
the Credit Agreement (as hereinafter defined).

                                               PRELIMINARY STATEMENTS

(1) The Borrower,  various financial  institutions (the "Lenders"),  and Bank of
America, in its capacity as agent for the Lenders (in such capacity, the "Lender
Agent") have entered into a Credit  Agreement  dated as of October 30, 1998,  as
amended (said  agreement,  as it may hereafter be amended or otherwise  modified
from time to time, being the "Credit  Agreement",  capitalized terms used herein
and not otherwise  defined herein shall have the meanings assigned to such terms
in the Credit  Agreement),  pursuant to which Lenders have,  among other things,
and  subject  to the terms and  conditions  set forth in the  Credit  Agreement,
agreed to make  available to the Borrower  certain Loans and to issue Letters of
Credit for the account of the Borrower.

(2) Pursuant to that certain  Guaranty  (as it may be amended,  supplemented  or
otherwise modified from time to time, the "Guaranty") of even date herewith, the
Subsidiary  Grantors have  guaranteed all  obligations of the Borrower under the
Credit Agreement.

(3) Pursuant to that certain Waiver and Fourth Amendment to the Credit Agreement
dated as of August 14,  2000  ("Fourth  Amendment")  Borrower  agreed  that each
Grantor shall grant the  assignments  and security  interest and make the pledge
and assignment contemplated by this Agreement.

     (4)  The  Grantors  have  duly  authorized  the  execution,   delivery  and
performance of this Agreement.

     (5) The obligations of each Subsidiary Grantor under the Guaranty are to be
secured pursuant to this Agreement.

         NOW, THEREFORE, in consideration of the premises and in order to induce
the Lenders to execute the Fourth  Amendment,  the  Grantors,  and each of them,
hereby  agree  with the Agent for its  benefit  and the  ratable  benefit of the
Secured Parties as follows:

1. SECTION  Grant of Security.  Each Grantor  hereby  assigns and pledges to the
Agent for its benefit and the ratable benefit of the Secured Parties, and hereby
grants to the Agent for its  benefit  and the  ratable  benefit  of the  Secured
Parties a first  priority  security  interest in, all of such  Grantor's  right,
title and  interest,  whether  now owned or  hereafter  acquired,  in and to the
following (collectively,  the "Collateral"),  subject only to Liens described on
Schedule VIII and Liens  permitted  under the Credit  Agreement (the  "Permitted
Liens"):

(a)      all equipment in all of its forms,  wherever located,  now or hereafter
         existing   (including,   but  not   limited   to,  all   manufacturing,
         distribution,  selling,  data  processing  and  office  equipment,  all
         machinery,  all furniture,  furnishings,  appliances,  tools,  tooling,
         molds, dies, vehicles,  vessels,  aircraft and all other goods of every
         type and description other than Inventory as hereinafter defined),  all
         fixtures  and trade  fixtures  and all  parts  thereof  and  accessions
         thereto (any and all of the foregoing being the "Equipment");

(b)      all inventory in all of its forms,  wherever located,  now or hereafter
         existing  (including,  but not limited to, (i) all goods which are held
         for sale or lease or to be  furnished  (or which  have been  furnished)
         under any  contract of  service,  or which are raw  materials,  work in
         process therefor,  finished goods thereof or materials used or consumed
         in the manufacture or production thereof,  and (ii) goods in which such
         Grantor has an  interest in mass or a joint or other  interest or right
         of any kind (including, without limitation, goods in which such Grantor
         has an  interest  or right  as  consignee)  and  (iii)  goods  that are
         returned to or repossessed by such Grantor), and all accessions thereto
         and  products  thereof  and  documents  therefor  (any  and  all of the
         foregoing being the "Inventory");

     (c) all accounts,  contract  rights,  chattel paper,  instruments,  deposit
accounts,  general intangibles  (including,  without  limitation,  any licenses,
permits or quotas) and other obligations of any kind, now or hereafter existing,
whether or not arising out of or in  connection  with the sale or lease of goods
or the rendering of services, and all rights now or hereafter existing in and to
all  security  agreements,  leases and other  contracts  securing  or  otherwise
relating to any such accounts,  contract  rights,  chattel  paper,  instruments,
deposit accounts, general intangibles or obligations (any and all such accounts,
contract  rights,  chattel  paper,   instruments,   deposit  accounts,   general
intangibles and  obligations,  to the extent not referred to in clause (d), (e),
(f) or (g) below, being the "Receivables", and any and all such leases, security
agreements and other contracts relating thereto being the "Related Contracts");

(d)                        all of the following (the "Security Collateral"):

(i)               the indebtedness  (the "Pledged Debt") described on Schedule I
                  and owing to such Grantor by the issuers named therein and the
                  instruments  evidencing  the Pledged  Debt,  and all interest,
                  cash,  instruments  and  other  property  from  time  to  time
                  received, receivable or otherwise distributed in respect of or
                  in exchange for any or all of the Pledged Debt;

(ii)              all  additional  indebtedness  from  time to time owed to such
                  Grantor by any obligor of the Pledged Debt or any other Person
                  and the  instruments  evidencing  such  indebtedness,  and all
                  interest,  cash,  instruments  and other property from time to
                  time received,  receivable or otherwise distributed in respect
                  of or in exchange for any or all of such indebtedness; and

                           (iii)  the  shares  of  capital  stock  described  on
                  Schedule  II (the  "Pledged  Securities"),  together  with any
                  other shares,  stock certificates,  options or warrants of any
                  issuer listed in Schedule II that may be issued or granted to,
                  or held by, any Grantor while this Agreement is in effect;

     (e) all of the following (collectively, the "Account Collateral"):

(i)               the account at the offices of Agent in which the  Borrower has
                  deposited  cash  collateral  pursuant  to Section  3.07 of the
                  Credit Agreement ("Cash Collateral  Account"),  all funds held
                  therein and all  certificates  and  instruments,  if any, from
                  time to time  representing  or evidencing the Cash  Collateral
                  Account;

(ii)              all other  deposit  accounts of such  Grantor,  all funds held
                  therein and all  certificates  and  instruments,  if any, from
                  time to time representing or evidencing such deposit accounts;

(iii)             all notes,  certificates of deposit, deposit accounts,  checks
                  and other instruments from time to time hereafter delivered to
                  or  otherwise  possessed by the Agent for or on behalf of such
                  Grantor in  substitution  for or in  addition to any or all of
                  the then-existing Account Collateral; and

(iv)              all interest,  dividends, cash, instruments and other property
                  from  time  to  time   received,   receivable   or   otherwise
                  distributed in respect of or in exchange for any or all of the
                  then-existing Account Collateral;

     (f) all past,  present and  future:  trade  secrets  and other  proprietary
information; trademarks, service marks, business names, designs, logos, indicia,
and/or other source and/or business identifiers and the goodwill of the business
relating thereto or symbolized thereby and all registrations or applications for
registrations  which have  heretofore  been or may  hereafter be issued  thereon
throughout  the  world  (collectively,   "Trademarks");  copyrights  (including,
without   limitation,   copyrights   for  computer   programs)   and   copyright
registrations  or applications for  registrations  which have heretofore been or
may hereafter be issued throughout the world and all tangible property embodying
the copyrights (collectively,  "Copyrights");  unpatented inventions (whether or
not  patentable);  patent  applications  and  patents,  and the  inventions  and
improvements  described and claimed therein,  and patentable  inventions and the
reissues,     divisions,     continuations,     renewals,     extensions     and
continuations-in-part  of the  foregoing and any written  agreement  granting to
such Grantor any right to use any invention on which a subsisting  patent exists
(collectively,   the   "Patents");   industrial   designs,   industrial   design
applications and registered  industrial  designs;  license agreements related to
any of the foregoing set forth in this definition and income  therefrom;  books,
records, writings, computer tapes or disks, flow diagrams, specification sheets,
source codes,  object codes and other  physical  manifestations,  embodiments or
incorporations  of any of the foregoing set forth in this definition;  the right
to sue for all past,  present and future  infringements  of any of the foregoing
set forth in this definition; and all common law and other rights throughout the
world in and to all of the  foregoing set forth in this  definition  (all of the
foregoing in this clause (f) being the "Intellectual Property");

(g)      all  proceeds  of any and all of the  foregoing  Collateral  (including
         without  limitation,  proceeds  that  constitute  property of the types
         described  in clauses  (a)-(f) of this Section 1) and to the extent not
         otherwise  included,  all (i) payments under insurance  (whether or not
         the Agent is the loss payee  thereof),  or any  indemnity,  warranty or
         guaranty,  payable  by reason of loss or  damage to or  otherwise  with
         respect to any of the foregoing Collateral and (ii) cash;

         provided,  however, the foregoing grant of a security interest shall be
         deemed  not to  grant  a  security  interest  in  any  of the  property
         described  below  (such  property  being  hereinafter  referred  to  as
         "Excluded Property"):

                           (x) any Equipment,  Related Contracts or Intellectual
                  Property,  but only to the extent that,  under applicable law,
                  the applicable Grantor is expressly prohibited from granting a
                  security  interest  therein or applicable law provides for the
                  involuntary forfeiture of the property in the event a security
                  interest  is  granted  therein  without  the  consent  of  the
                  appropriate  Governmental  Authority,  or  at  all;  provided,
                  however,  that if such prohibition or the condition  requiring
                  such  consent  relates only to the  foreclosure  of a security
                  interest or the exercise of other  rights and remedies  upon a
                  default  but  not  to  the  granting  of a  security  interest
                  therein,  then a security  interest in such property  shall be
                  deemed  to  be  granted  by  this  Agreement  subject  to  the
                  condition that the consent of such  Governmental  Authority is
                  obtained by the Agent prior to  foreclosure  or exercising its
                  other rights or remedies hereunder as to which such consent is
                  required, and

                           (y) any Equipment,  Related Contracts or Intellectual
                  Property, but only to the extent that the terms and provisions
                  of a written  agreement,  document or  instrument in effect on
                  the date hereof  creating or  evidencing  such property or any
                  rights relating thereto  expressly  prohibit the granting of a
                  security  interest  therein or  condition  the  granting  of a
                  security  interest  therein on the  consent  of a third  party
                  whose consent has not been obtained or would cause, or allow a
                  third party to cause, the forfeiture of such property upon the
                  granting of a security  interest therein,  provided,  however,
                  that if  such  prohibition  or the  condition  requiring  such
                  consent relates only to the foreclosure of a security interest
                  or the  exercise of other  rights or remedies  upon a default,
                  then a security  interest in such property  shall be deemed to
                  be granted by this Agreement subject to the condition that the
                  consent of such third  party is obtained by the Agent prior to
                  foreclosure  or  exercising  of its other  rights or  remedies
                  hereunder as to which such consent is required.

         In the event of the  termination or  elimination of any  prohibition or
the  requirement  for  any  consent  contained  in  any  applicable  law,  rule,
regulation, agreement, document or instrument to the extent sufficient to permit
any Excluded  Property to become Collateral  hereunder,  or upon the granting of
any such consent,  or waiving or terminating any requirement for such consent, a
security   interest  in  such  Excluded  Property  shall  be  automatically  and
simultaneously  granted  hereunder in such Excluded  Property,  and the Excluded
Property  automatically  and  simultaneously  shall be deemed to be assigned and
pledged to the Agent and shall be included as Collateral hereunder.

2. SECTION Security for Obligations. This Agreement secures with respect to each
Grantor,  and the  Collateral  of such Grantor is  collateral  security for, the
prompt payment and performance in full when due, whether on a specified  payment
date, at stated  maturity,  by  acceleration  or otherwise  (including,  without
limitation,  the payment of amounts that would become due but for the  operation
of the automatic stay under Section 362(a) of the Bankruptcy Code or any similar
law) of all  Obligations  of such Grantor to any Secured  Party now or hereafter
existing under the Credit Agreement,  this Agreement,  the Guaranty,  the Notes,
any Swap  Contract  entered  into with a Lender and  permitted  under the Credit
Agreement  and the other  Loan  Documents  in each case  whether  for  principal
(including  reimbursement  for  amounts  drawn or  available  to be drawn  under
Letters of Credit), interest (including, without limitation,  interest that, but
for the filing of a petition in  bankruptcy  would accrue on such  obligations),
fees, expenses,  increased costs, indemnification or otherwise (any and all such
Obligations being the "Secured Obligations"). Without limiting the generality of
the foregoing, this Agreement secures the payment of all amounts that constitute
part of the Secured  Obligations  and would be owed by any Grantor to the Agent,
the Lender Agent, the Lenders, this Agreement,  the Guaranty, the Notes, and the
other  Loan  Documents  but for the  fact  that  they are  unenforceable  or not
allowable  due to the  existence  of a  bankruptcy,  reorganization  or  similar
proceedings.

3.  SECTION   Grantors   Remains   Liable.   Anything  herein  to  the  contrary
notwithstanding,  (a) each Grantor  shall remain  liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its  duties  and  obligations  thereunder  to the same  extent as if this
Agreement  had not been  executed,  (b) the  exercise by the Agent of any of the
rights  hereunder  shall  not  release  any  Grantor  from any of its  duties or
obligations  under the contracts and  agreements  included in the Collateral and
(c) neither the Agent or any Lender shall have any obligation or liability under
the  contracts  and  agreements  included  in the  Collateral  by reason of this
Agreement, nor shall the Agent, or any Lender be obligated to perform any of the
obligations or duties of any Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.

4. SECTION Delivery of Security  Collateral and Account  Collateral.  Subject to
Section  5(f),  all  certificates  or  instruments  representing  or  evidencing
Security  Collateral or Account  Collateral shall be delivered to and held by or
on  behalf of the  Agent  pursuant  hereto  and  shall be in  suitable  form for
transfer by delivery,  or shall be accompanied  by duly executed  instruments of
transfer or assignment in blank,  all in form and substance  satisfactory to the
Agent.  The Agent  shall  have the  right,  upon the  occurrence  and during the
continuance  of an Event of Default,  upon three  Business  Days'  notice to the
Grantors,  to  transfer to or to register in the name of the Agent or any of its
nominees any or all of the Security Collateral and Account  Collateral,  subject
to compliance with Applicable Regulatory  Requirements.  In addition,  the Agent
shall have the right upon the occurrence and during the  continuance of an Event
of  Default  to  exchange   instruments   representing  or  evidencing  Security
Collateral  or  Account  Collateral,   for  instruments  of  smaller  or  larger
denominations.

     5. SECTION  Representations and Warranties.  Each Grantor hereby represents
and warrants as follows:

(a)      All of the Equipment and Inventory are located at the places  specified
         on Schedule III,  except for (i) Inventory and Equipment in transit and
         (ii) other  Equipment  and Inventory  that,  in the ordinary  course of
         business,  is held or stored  at other  locations.  The chief  place of
         business  and chief  executive  office of such  Grantor  and the office
         where such Grantor keeps its records  concerning the  Receivables,  and
         all  originals  of all chattel  paper that  evidence  Receivables,  are
         located at the address  specified for such Grantor on Schedule IV. None
         of  the  Receivables  are  evidenced  by a  promissory  note  or  other
         instrument.  Such Grantor's federal tax identification number is as set
         forth on Schedule IV.

(b)      Such Grantor is the legal and beneficial  owner of the Collateral  free
         and  clear of any  Lien,  except  for the Lien  created  hereunder  and
         Permitted Liens. No effective  financing  statement or other instrument
         similar in effect covering all or any part the Collateral is on file in
         any  recording  office,  except such as may have been filed in favor of
         the Agent  relating to this  Agreement  or any other Loan  Document and
         except for  Permitted  Liens.  As of the date of this  Agreement,  such
         Grantor  currently  conducts  business  only under its own name and, in
         certain  areas and for certain  operations,  the trade names  listed on
         Schedule V.  Neither such Grantor nor any  corporate  predecessor  has,
         during the  preceding  five (5) years,  been known as or used any other
         corporate or  fictitious  name,  except such names as are  disclosed on
         Schedule V.

(c)      Such Grantor has exclusive  possession and control of the Equipment and
         Inventory  of such  Grantor  except  for (i)  Equipment  leased by such
         Grantor as a lessee,  Equipment in the  possession  and control of such
         Grantor's  lessees  and  licensees  under  written  lease  and  license
         agreements  entered  into  in  the  ordinary  course  of  business  and
         consistent  with past  practice,  and (ii)  Equipment  and Inventory in
         transit with common or other carriers.

(d)      The Pledged Debt of such  Grantor,  if any, is in all respects  what it
         purports  to be and  represents  genuine  debt  owing  to such  Grantor
         arising from bona fide  transactions  completed in accordance  with the
         terms and provisions  contained in the document  delivered to the Agent
         with respect thereto.

(e)      Assuming continuous  possession by the Agent, the pledge of each of the
         Pledged Debt and Pledged Securities  pursuant to this Agreement creates
         a valid and first priority  perfected  security interest in the Pledged
         Debt and Pledged  Securities,  respectively,  subject only to Permitted
         Liens.

(f)      The Pledged Debt constitutes,  as of the date hereof,  all of the notes
         and instruments  payable to or owned by such Grantor,  except for notes
         and  instruments  with an  outstanding  principal  amount  of less than
         Twenty  Five  Thousand  Dollars  ($25,000)  and  except  for  notes and
         instruments  received in the ordinary course of business and which such
         Grantor is not  required to deliver to the Agent  pursuant to Section 6
         hereof or of which the Agent has not at any time  requested  possession
         and which are not a material portion of the Collateral either singly or
         in the aggregate.

(g)      All  shares  of  capital  stock  described  on  Schedule  II  are  duly
         authorized, validly issued, fully paid and non-assessable.

(h)      As to each  issuer  whose name  appears  on  Schedule  II, the  Pledged
         Securities  represent  on the date hereof not less than the  applicable
         percentage as shown on Schedule II of the total shares of capital stock
         issued and outstanding of such issuer.

     (i)  Appropriate  financing  statements  have been  filed in the  necessary
jurisdictions (or have been executed and delivered by the applicable  Grantor to
the Agent in appropriate  form for filing in the necessary  jurisdictions)  with
respect to the  Collateral as to which  financing  statements are required to be
filed, so that the security interests granted pursuant to this Agreement, to the
extent they may be perfected by filing  financing  statements  in the  necessary
jurisdictions,  constitute (or in the case of any such financing  statements not
yet filed, will constitute upon filing thereof) valid,  continuing and perfected
security  interests  in and liens on the  Collateral  to the  extent a  security
interest can be created  therein under the Uniform  Commercial Code as in effect
in the applicable  jurisdictions  in the United States,  securing the payment of
the Secured  Obligations,  subject only to Permitted  Liens.  All other  actions
necessary  or  requested  by the Agent to  perfect  and  protect  such  security
interest in each item of Collateral (including,  without limitation, the actions
described  in  clauses  (i) and  (ii) of  Section  6(a) to the  extent  required
therein)  have been duly taken to the extent a security  interest can be created
therein  under  the  Uniform  Commercial  Code as in  effect  in the  applicable
jurisdictions of the United States.

(j)      No  authorization,  approval  or other  action  by, and no notice to or
         filing   with,   any   Governmental    Authority   (other   than   such
         authorizations,  approvals and other actions as have already been taken
         or are in full force and effect) is required  (i) for the pledge of the
         Security  Collateral,  for the grant of the  security  interest  in the
         Collateral  held by such Grantor hereby or for the execution,  delivery
         or  performance  of this  Agreement  by such  Grantor,  or (ii) for the
         exercise  by the Agent of any  rights or  remedies  in  respect  of the
         Collateral hereunder except as may be required for the Agent to receive
         payments   directly  from  the  United  States   government  under  the
         Assignment of Claims Act, 31 U.S.C.  ss. 3727 and 41 U.S.C. ss. 15 (the
         "Assignment of Claims Act").

(k)      To the best of such Grantor's knowledge, each Trademark,  Copyright and
         Patent material to the operations of the Borrower and its  Subsidiaries
         taken  as a  whole  is  validly  subsisting  and is  presently  in good
         standing.  Schedule  VI  contains  a  complete  listing  of all of such
         Grantor's   Copyrights,   Registered   Trademarks,   Applications   for
         Trademarks and Patents.

(l)      To the best of the  Grantors'  knowledge,  no claim  has been made by a
         third party that any Intellectual Property is invalid or unenforceable.

(m)      To the best of the Grantors' knowledge, no claim has been made that the
         use of any Intellectual  Property does or may violate the rights of any
         third party.

(n)      The execution and delivery of this  Agreement  and the  performance  by
         such Grantor of its  obligations  hereunder  are within such  Grantor's
         corporate power,  have been duly authorized by all necessary  corporate
         action  and do not  and  will  not  contravene  or  conflict  with  any
         provision of law or of the organizational  documents of such Grantor or
         of any  agreement,  indenture,  instrument  or other  document,  or any
         judgment, order or decree, which is binding upon such Grantor.

     (o) This  Agreement  is a  legal,  valid  and  binding  obligation  of such
Grantor,   enforceable   in   accordance   with  its  terms,   except  that  the
enforceability  of this  Agreement  may be  limited by  bankruptcy,  insolvency,
fraudulent conveyance, fraudulent transfer, reorganization,  moratorium or other
similar laws now or hereafter in effect relating to creditors'  rights generally
and by general principles of equity (regardless of whether enforcement is sought
in a  proceeding  in  equity  or at law) and  creates a valid  and,  except  for
Permitted  Liens,  after all  appropriate  financing  statements are filed,  all
appropriate  filings are made with the U.S. Patent and Trademark Office, and all
appropriate  action is taken with respect to the chattel  paper,  the  certified
securities and the deposit  accounts,  first priority  security  interest in the
Collateral and such security interest is entitled to all rights,  priorities and
benefits afforded by the Uniform Commercial Code.

(p)      Such Grantor is in compliance  with the  requirements of all applicable
         laws (including,  without limitation,  the provisions of the Fair Labor
         Standards Act),  rules,  regulations  and orders of every  Governmental
         Authority,  the  non-compliance  with which would materially  adversely
         affect any material portion of the Collateral of such Grantor.

6.       SECTION   Further Assurances.

         (a) Each Grantor  agrees from time to time that, at the expense of such
         Grantor,  such  Grantor will  promptly  execute and deliver all further
         instruments  and documents,  and take all further  action,  that may be
         necessary or  reasonably  desirable,  or that the Agent may  reasonably
         request, in order to perfect,  protect and maintain the priority of any
         pledge,  assignment  or security  interest  granted or  purported to be
         granted  hereby or to enable  the Agent to  exercise  and  enforce  its
         rights and remedies  hereunder with respect to any Collateral.  Without
         limiting the generality of the foregoing, each Grantor will: (i) at the
         request of the Agent made at any time after the  occurrence  and during
         the  continuation  of an Event of Default,  mark  conspicuously  on the
         applicable certificate, in the event any of its Equipment is covered by
         a certificate  of title or on the Equipment  itself if not covered by a
         certificate  of title,  each  document  included in each chattel  paper
         included in the  Receivables,  each Related  Contract,  and each of its
         records  pertaining  to the  Collateral  with a  legend,  in  form  and
         substance  reasonably  satisfactory to the Agent,  indicating that such
         Equipment,  document,  chattel paper, Related Contract or Collateral is
         subject to the security interest granted hereby; (ii) if any Collateral
         shall be evidenced by, or if such Grantor shall  otherwise be the payee
         under, a promissory note or other  instrument or chattel paper having a
         principal balance in excess of Twenty Five Thousand Dollars  ($25,000),
         deliver and pledge to the Agent  hereunder  such note or  instrument or
         chattel   paper  duly  indorsed  and   accompanied   by  duly  executed
         instruments  of  transfer  or  assignment,  all in form  and  substance
         reasonably  satisfactory to the Agent;  and (iii) execute and file such
         financing or continuation  statements,  or amendments thereto, and such
         other instruments or notices,  as may be necessary or desirable,  or as
         the Agent may  reasonably  request,  in order to perfect and  preserve,
         with  the  required  priority,  the  pledge,  assignment  and  security
         interest granted or purported to be granted hereby.

         (b)  Each  Grantor  hereby  authorizes  the  Agent  to file one or more
         financing or continuation statements,  and amendments thereto, relating
         to all or any part of the  Collateral  without  the  signature  of such
         Grantor where  permitted by law. A photocopy or other  reproduction  of
         this  Agreement or any financing  statement  covering the Collateral or
         any part thereof  shall be sufficient  as a financing  statement  where
         permitted by law.

         (c)  Each  Grantor  shall  furnish  to the  Agent,  from  time to time,
         statements  and  schedules  further   identifying  and  describing  the
         Collateral and such other reports in connection  with the Collateral as
         the Agent may reasonably request, all in reasonable detail.

         (d) Each Grantor  agrees that,  at the request of the Agent,  following
         the occurrence and during the continuance of an Event of Default,  such
         Grantor will execute any and all  documents,  notices or instruments as
         may be necessary or desirable,  or as the Agent may reasonably request,
         to direct the  government of the United States of America to pay to the
         Agent,  for the  account  of the Agent  and the  Lenders,  all  amounts
         otherwise payable to the Grantors under the Assignment of Claims Act.

         (e) Each Grantor shall (i) preserve and maintain all material rights in
         the material  Intellectual  Property,  and (ii) upon the occurrence and
         during the continuation of an Event of Default, use its best efforts to
         obtain any  consents,  waivers or  agreements  necessary  to enable the
         Agent  to  exercise  its  remedies  with  respect  to the  Intellectual
         Property.  No  Grantor  shall  abandon  any  material  right  to file a
         material  Copyright,  Patent  or  Trademark  application  nor shall any
         Grantor  abandon any material  pending  Copyright,  Patent or Trademark
         application,  or material  Copyright,  Patent or Trademark  without the
         prior written consent of Agent.

<PAGE>

7.       SECTION   As to Equipment and Inventory.

(a)      Each Grantor  shall keep the  Equipment  and  Inventory of such Grantor
         (other than (i) Inventory sold in the ordinary course of business,  and
         (ii) Equipment and Inventory  that, in the ordinary course of business,
         is held or stored at other locations) at the places therefor  specified
         on Schedule  III or, upon prior  written  notice to the Agent,  at such
         other places in a jurisdiction  where all action  required by Section 6
         shall have been taken with respect to the Equipment and Inventory.

(b)      Each Grantor shall cause the Equipment material to its operations to be
         maintained  and  preserved in good repair and working  order,  ordinary
         wear and tear and damage due to casualty excepted, and make or cause to
         be made all appropriate repairs,  renewals and replacements thereof, to
         the extent not  obsolete,  and  consistent  with past  practice of such
         Grantor,  as quickly as practicable after the occurrence of any loss or
         damage  thereto,  that are  necessary or  desirable  to such end.  Each
         Grantor shall promptly furnish to the Agent a statement  respecting any
         material loss or damages to any of the Equipment or Inventory.

8.       SECTION   Insurance.

(a) Each Grantor (or the Borrower,  on behalf of each Grantor) shall, at its own
expense,  maintain insurance with respect to the Equipment and Inventory of such
Grantor with financially sound and reputable insurers in such amounts,  covering
such  risks  and in such form as is  consistent  with  past  practice  and as is
usually  carried by companies  engaged in similar  businesses and owning similar
properties in the same general areas in which such Grantor operates. Each policy
for property  damage  insurance shall provide for all losses to be paid directly
to the Agent. Each such policy shall in addition:  (i) name such Grantor (or the
Borrower)  as  insured  thereunder  and  the  Agent  as  an  additional  insured
thereunder  (without any  representation  or warranty by or obligation  upon the
Agent)  as their  interests  may  appear,  (ii) in the case of  property  damage
insurance,  contain the agreement by the insurer that any loss thereunder  shall
be payable to the Agent, (iii) not contain any provision  providing for recourse
against the Agent for payment of premiums or other amounts with respect  thereto
and (iv) provide that at least 10 days' prior written notice of  cancellation or
of lapse  shall be given to the  Agent  by the  insurer.  Each  Grantor  (or the
Borrower) shall, if so requested by the Agent,  deliver to the Agent original or
duplicate  policies of such  insurance and, as often as the Agent may reasonably
request,  a  report  of a  reputable  insurance  broker  with  respect  to  such
insurance.  Further, each Grantor (or the Borrower) shall, at the request of the
Agent,  duly exercise and deliver  instruments  of assignment of such  insurance
policies to comply with the  requirements  of this Section 8 and use  reasonable
efforts to cause the insurers to acknowledge notice of such assignment.

(b)  Reimbursement  under any  liability  insurance  maintained  by such Grantor
pursuant  to this  Section 8 may be paid  directly  to the Person who shall have
incurred  liability  covered by such  insurance.  In case of any loss  involving
damage to  Equipment  or  Inventory  when  clause  (c) of this  Section 8 is not
applicable, such Grantor shall make or cause to be made the necessary repairs to
or  replacements  of such Equipment or Inventory,  and any proceeds of insurance
maintained by such Grantor  pursuant to this Section 8 and received by the Agent
shall be released to such Grantor as reimbursement for the costs of such repairs
or replacements.

(c) At the request of the Agent,  upon the occurrence and during the continuance
of any Event of Default, all insurance payments made by an insurer in respect of
such  Equipment  or  Inventory  shall  be paid to and  applied  by the  Agent as
specified in Section 17(b) hereof.

9.       SECTION   Voting Rights; Dividends; Payments; etc.

     (a) So long as the Agent has not given the notice referred to in clause (b)
below:

(i)               Each Grantor  shall be entitled to exercise any and all voting
                  or  consensual   rights  and  powers  and  stock  purchase  or
                  subscription  rights  relating  or  pertaining  to the Pledged
                  Securities  for any  purpose;  provided,  however,  that  each
                  Grantor  agrees  that it will not  exercise  any such right or
                  power in any manner which would have a material adverse effect
                  on the value of the Collateral or any part thereof.

     (ii) Each  Grantor  shall be  entitled  to  receive  and retain any and all
lawful dividends payable in respect of the Pledged  Securities which are paid in
cash by any issuer if such dividends are permitted by the Credit Agreement,  but
all  dividends  and  distributions  in  respect of such  Collateral  or any part
thereof made in shares of stock or other property or representing  any return of
capital,  whether resulting from a subdivision,  combination or reclassification
of such  Collateral or any part thereof or received in exchange for such Pledged
Securities  or any part  thereof  or as a result of any  merger,  consolidation,
acquisition  or  other  exchange  of  assets  to which  any  issuer  of  Pledged
Securities  may be a party or  otherwise  or as a result of any  exercise of any
stock purchase or subscription right, shall be and become part of the Collateral
hereunder and, if received by any Grantor,  shall be forthwith  delivered to the
Agent in due form for transfer (i.e.,  endorsed in blank or accompanied by stock
or bond powers executed in blank) to be held for the purposes of this Agreement.

(iii)             The Agent shall  execute and deliver,  or cause to be executed
                  and delivered,  to each Grantor,  all such proxies,  powers of
                  attorney,  dividend  orders  and  other  instruments  as  such
                  Grantor may request for the purpose of enabling  such  Grantor
                  to  exercise  the rights and powers  which it is  entitled  to
                  exercise  pursuant to  subclause  (I) above and to receive the
                  dividends  which  it  is  authorized  to  retain  pursuant  to
                  subclause (ii) above.

(iv)              Each  Grantor  shall be  entitled  to (A)  collect all regular
                  payments made or proceeds received with respect to the Pledged
                  Debt and (B) enforce  and  prosecute  all rights and  remedies
                  available under any of the Pledged Debt.

         (b) Upon written notice from the Agent during the existence of an Event
         of Default, and so long as the same shall be continuing, all rights and
         powers which the Grantors are entitled to exercise  pursuant to Section
         9(a)(I)  hereof,  and all rights of the  Grantors to receive and retain
         dividends  pursuant to Section 9(a)(ii)  hereof,  and all rights of the
         Pledgors to receive payments pursuant to Section 9(a)(iv) hereof, shall
         forthwith  cease, and all such rights and powers shall thereupon become
         vested in the Agent which shall have,  during the  continuance  of such
         Event of Default,  the sole and  exclusive  authority to exercise  such
         rights and powers and to receive such  dividends and payments,  subject
         to  Applicable  Regulatory  Requirements.  Any and all  money and other
         property paid over to or received by the Agent  pursuant to this clause
         (b) shall be retained by the Agent as additional  Collateral  hereunder
         and applied in accordance with the provisions hereof.

     10.  SECTION  Place of  Perfection;  Records;  Collection  of  Receivables;
Intellectual Property.

         (a) Each  Grantor  shall  keep its chief  place of  business  and chief
         executive  office and the office where it keeps its records  concerning
         the  Collateral,  and all  originals of all chattel paper that evidence
         Receivables,  at the  location  therefor  specified on Schedule III or,
         upon prior written  notice to the Agent,  at such other  locations in a
         jurisdiction  where all  actions  required by Section 6 shall have been
         taken  with  respect  to the  Collateral.  Each  Grantor  will hold and
         preserve   such   records,   and   chattel   paper   and  will   permit
         representatives  of the Agent at any time during normal  business hours
         to inspect and make abstracts from such records and chattel paper.

         (b) Except as otherwise provided in this clause (b), each Grantor shall
         continue to collect in accordance with its customary  practice,  at its
         own expense,  all amounts due or to become due such  Grantor  under the
         Receivables  and, prior to the occurrence of an Event of Default,  such
         Grantor shall have the right to adjust, settle or compromise the amount
         or payment of any  account,  or  release  wholly or partly any  account
         debtor or obligor thereof, or allow any credit or discount thereon, all
         in accordance  with its customary  practices.  In connection  with such
         collections, each Grantor may take (and, upon the occurrence and during
         the  continuation  of an Event of Default,  at the  Agent's  direction,
         shall take) such action as such Grantor or the Agent may deem necessary
         or  advisable  to  enforce  collection  of the  Receivables;  provided,
         however,  that the Agent shall have the right,  upon the occurrence and
         during the continuance of an Event of Default,  and upon written notice
         to such Grantor of its intention to do so, to notify the obligors under
         any Receivables of the assignment of such  Receivables to the Agent and
         to direct such obligors to make payment of all amounts due or to become
         due to such  Grantor  thereunder  directly to the Agent and,  upon such
         notification and at the expense of such Grantor,  to enforce collection
         of any such Receivables, and to adjust, settle or compromise the amount
         or payment  thereof,  in the same manner and to the same extent as such
         Grantor  might have done.  After receipt by such Grantor or Grantors of
         the notice from the Agent  referred to in the proviso to the  preceding
         sentence,  (i) all amounts and proceeds (including instruments received
         by such  Grantor in respect of the  Receivables)  shall be  received in
         trust for the benefit of the Agent hereunder,  shall be segregated from
         other  funds of such  Grantor and shall be  forthwith  paid over to the
         Agent in the same form as so received (with any necessary  endorsement)
         to be applied as provided by Section  17(b) and (ii) such Grantor shall
         not  adjust,  settle  or  compromise  the  amount  or  payment  of  any
         Receivable,  release wholly or partly any obligor thereof, or allow any
         credit or discount thereon.

11.      SECTION   Intentionally Deleted.

12.      SECTION   Intentionally Deleted.

13. SECTION Transfers and Other Liens;  Additional  Shares.  Except as otherwise
permitted  under the Credit  Agreement,  no Grantor  shall (a) sell,  assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect  to,  any of the  Collateral,  or (b) create or suffer to exist any Lien
upon or with respect to any of the Collateral.

14. SECTION Agent Appointed  Attorney-in-Fact.  Each Grantor hereby  irrevocably
appoints the Agent such Grantor's  attorney-in-fact,  with full authority in the
place and stead of such  Grantor and in the name of such  Grantor or  otherwise,
from time to time in the Agent's  discretion,  to take any action and to execute
any instrument  that the Agent may deem necessary or advisable to accomplish the
purposes  of this  Agreement  and to  enforce  its right  hereunder,  including,
without limitation:

     (a) upon the occurrence and during the  continuance of an Event of Default,
to obtain and adjust  insurance  required  to be paid to the Agent  pursuant  to
Section 8;

         (b)  upon  the  occurrence  of an  Event  of  Default  and  while it is
         continuing, to ask for, demand, collect, sue for, recover,  compromise,
         receive and give  acquittance and receipts for moneys due and to become
         due under or in respect  of any of the  Collateral  including,  without
         limitation,  to  receive,  endorse and  collect  all  instruments  made
         payable to such Grantor representing any dividend,  interest payment or
         other distribution in respect of the Collateral or any part thereof and
         to give full discharge for the same;

     (c) to  receive,  endorse  and  collect  any  drafts or other  instruments,
documents and chattel paper, in connection with clause (a) or (b) above; and

(d)      upon the  occurrence of an Event of Default and while it is continuing,
         to file any claims or take any action or institute any proceedings that
         the Agent may deem  necessary or desirable for the collection of any of
         the  Collateral or otherwise to enforce  compliance  with the rights of
         the Agent with respect to any of the Collateral.

15.  SECTION  Agent May Perform.  If any Grantor  fails to perform any agreement
contained   herein,   the  Agent,  upon  prior  written  notice  and  reasonable
opportunity  to remedy such  failure to such Grantor or the  Borrower,  may (but
shall not be  obligated  to)  itself  perform,  or cause  performance  of,  such
agreement,  and the  reasonable  expenses of the Agent  incurred  in  connection
therewith shall be payable by such Grantor and the Borrower under Section 18(b).
Neither the Agent nor any Lender  shall have any  obligation  or duty to perform
any of the obligations or duties of any Grantor hereunder.

16. SECTION The Agent's Duties.  The powers conferred on the Agent hereunder are
solely to protect its interest in the  Collateral  and shall not impose any duty
upon it to  exercise  any  such  powers.  Except  for the  safe  custody  of any
Collateral in its possession and the accounting for moneys actually  received by
it  hereunder,  the  Agent  shall  have  no  duty  as to any  Collateral,  as to
ascertaining  or taking  action with respect to calls,  conversions,  exchanges,
maturities,  tenders  or other  matters  relative  to any  Security  Collateral,
whether  or not the Agent or any Lender  has or is deemed to have  knowledge  of
such  matters,  or as to the taking of any  necessary  steps to preserve  rights
against any parties or any other rights pertaining to any Collateral.  The Agent
shall  be  deemed  to  have  exercised   reasonable  care  in  the  custody  and
preservation  of any Collateral in its possession if such Collateral is accorded
treatment  substantially  equal to that which Bank of  America  accords  its own
property  or if it takes  such  action as any  applicable  Grantor  requests  in
writing;  but, failure of the Agent to comply with any such request shall not of
itself be deemed a failure to exercise  reasonable care. No failure of the Agent
to preserve or protect any rights with respect to such Collateral  against prior
parties,  or to do any act with respect to the  preservation  of such Collateral
not so requested by any Grantor, shall be deemed of itself a failure to exercise
reasonable care in the custody or preservation of such Collateral.

     17.  SECTION  Remedies.  If any Event of Default shall have occurred and be
continuing:

         (a) The Agent may exercise in respect of the Collateral, in addition to
all other rights and remedies  provided for herein or otherwise  available to it
under  applicable  law,  all the rights  and  remedies  of a secured  party upon
default under the Uniform  Commercial  Code in effect in the State of California
at such  time  (the  "Uniform  Commercial  Code")  (whether  or not the  Uniform
Commercial  Code  applies to the affected  Collateral)  and also may (i) require
each Grantor to, and each Grantor hereby agrees that it shall at its expense and
upon request of the Agent  forthwith,  assemble all or part of the Collateral as
directed  by the  Agent  and  make it  available  to the  Agent at a place to be
designated  by the Agent that is  reasonably  convenient  to both  parties  (ii)
require  each  Grantor  to, and each  Grantor  hereby  agrees that it shall upon
request of the Agent forthwith, execute all such documents and do all such other
things  which may be  reasonably  necessary  or desirable in order to enable the
Agent or its nominee to be registered as the owner of the Intellectual  Property
with any competent registration  authority,  and (iii) without notice, except as
specified herein, advertisement, hearing or process of law of any kind, sell the
Collateral  or any part  thereof  in one or more  parcels  free and clear of all
rights  and claims of the  Grantors  at public or  private  sale,  at any of the
Agent's offices or elsewhere,  for cash, on credit or for future  delivery,  and
upon  such  other  terms as the  Agent may deem  commercially  reasonable.  Each
Grantor  agrees that,  to the extent notice of sale shall be required by law, at
least five days' notice to such Grantor of the time and place of any public sale
or the  time  after  which  any  private  sale  is to be made  shall  constitute
reasonable  notification.  The Agent shall not be  obligated to make any sale of
Collateral regardless of notice of sale having been given. The Agent may adjourn
any public or  private  sale from time to time by  announcement  at the time and
place fixed therefor,  and such sale may, without further notice, be made at the
time and place to which it was so adjourned. The Grantors further agree that the
Secured  Parties  shall have the right to bid for and purchase any or all of the
Collateral at any such public sale.

(b) All  cash  proceeds  received  by the  Agent  in  respect  of any  sale  of,
collection  from, or other  realization  upon all or any part of the  Collateral
may, in the  discretion of the Agent,  be held by the Agent as  collateral  for,
and/or  then or at any time  thereafter  applied  (after  payment of any amounts
payable to the Agent  pursuant  to Section  18) in whole or in part by the Agent
against,  all or any part of the Secured  Obligations  as provided in the Credit
Agreement.  Any  surplus  of such  cash or cash  proceeds  held by the Agent and
remaining after payment in full of all the Secured Obligations shall be promptly
paid over to the Borrower or to whomsoever  may be lawfully  entitled to receive
such surplus.

(c) The Agent may exercise any and all rights and remedies of any Grantor  under
or in respect of the  Collateral,  including,  without  limitation,  any and all
rights of any  Grantor  to demand or  otherwise  require  payment  of any amount
under, or performance of any provision of, any agreement.

(d) All payments received by any of the Grantors under or in connection with any
agreement or otherwise in respect of the  Collateral  shall be received in trust
for the  benefit  of the Agent,  shall be  segregated  from other  funds of such
Grantor  and  shall be  forthwith  paid over to the Agent in the same form as so
received (with any necessary endorsement).

(e) The  Agent  may,  without  notice  to any  Grantor  except  as  required  by
applicable  law and at any  time  or from  time to  time,  charge,  set-off  and
otherwise  apply all or any part of the  Secured  Obligations  against  the Cash
Collateral  Account,  or any  other  Account  Collateral  or any part of  either
thereof.

(f) The Agent is hereby  authorized to comply with any limitation or restriction
in  connection  with any sale of  Security  Collateral  as it may be  advised by
counsel is  necessary  in order to (i) avoid any  violation  of  applicable  law
(including, without limitation,  compliance with such procedures as may restrict
the number of prospective  bidders and purchasers  and/or further  restrict such
prospective  bidders or purchasers to persons or entities who will represent and
agree that they are purchasing for their own account for investment and not with
a view to the  distribution  or resale of such  Collateral)  or (ii)  obtain any
required approval of the sale or of the purchase by any governmental  regulatory
authority or official,  and each Grantor agrees that such  compliance  shall not
result  in such  sale  being  considered  or  deemed  not to have been made in a
commercially  reasonable  manner  and that the  Agent  shall  not be  liable  or
accountable  to any Grantor for any discount  allowed by reason of the fact that
such Collateral is sold in compliance with any such limitation or restriction.

18.      SECTION   Indemnity and Expenses; Taxes.

(a)      Each  Grantor  agrees,   jointly  and  severally,   to  indemnify  each
         Indemnified  Person from and  against  any and all  claims,  losses and
         liabilities arising out of or resulting from this Agreement (including,
         without  limitation,  enforcement  of this  Agreement),  except claims,
         losses or liabilities  resulting from such  Indemnified  Person's gross
         negligence or willful misconduct as determined by a final judgment of a
         court of competent jurisdiction.

(b)      Each Grantor agrees,  jointly and severally,  to pay to the Agent, upon
         written  demand,  the  amount  of  any  and  all  reasonable  expenses,
         including  the  reasonable  fees and expenses of its counsel and of any
         experts and agents,  that the Agent may incur in connection  with:  (i)
         the administration of this Agreement,  (ii) the custody,  preservation,
         use  or  operation  of,  or the  sale  of,  collection  from  or  other
         realization  upon,  any  of  the  Collateral,  (iii)  the  exercise  or
         enforcement of any of the rights of the Agent or the Lenders  hereunder
         or (iv) the  failure by such  Grantor to perform or observe  any of the
         provisions hereof.

     (c) Each Grantor shall pay: (i) all taxes, assessments and other charges of
governmental  authorities  imposed upon any of the Collateral before any penalty
or interest accrues thereon, and (ii) all claims (including, without limitation,
claims  for  labor,  services,  materials  and  supplies)  for  sums  materially
adversely affecting the Collateral,  which have become due and payable and which
by law have or may become a Lien (other  than a Permitted  Lien) upon any of the
Collateral prior to the time when any material penalty or fine shall be incurred
with respect  thereto,  provided that no such taxes,  assessments and charges of
Governmental  Authorities  referred to in subclause (i) above or claims referred
to in  subclause  (ii)  need to be paid if  being  contested  in good  faith  by
appropriate   proceedings  promptly  instituted  and  diligently  conducted  and
enforcement  thereof is stayed and if a reserve or other  appropriate  provision
required in  conformity  with GAAP shall have been made  therefor and if, at the
request of the Agent, it posts a bond or other form of indemnity satisfactory to
the Agent in the amount of such contested  taxes,  assessments  and charges plus
any applicable interest and penalties.

19. SECTION Security  Interest  Absolute.  The obligations of each Grantor under
this Agreement are independent of the Secured Obligations, and a separate action
or actions may be brought and  prosecuted  against  each Grantor to enforce this
Agreement, irrespective of whether any action is brought against the Borrower or
whether the Borrower are joined in any such action or actions. All rights of the
Agent and the  pledge,  assignment  and  security  interest  hereunder,  and all
obligations  of each Grantor  hereunder,  shall be absolute  and  unconditional,
irrespective of:

     (a) any lack of  validity  or  enforceability  of any Loan  Document or any
other agreement or instrument relating thereto;

         (b) any change in the time,  manner or place of  payment  of, or in any
         other  term of,  all or any of the  Secured  Obligations  or any  other
         amendment  or waiver of or any consent to any  departure  from any Loan
         Document,  including,  without limitation,  any increase in the Secured
         Obligations  resulting  from the extension of additional  credit to the
         Borrower or any of its Subsidiaries or otherwise;

     (c)  any  taking,   exchange,   release  or  non-perfection  of  any  other
collateral,  or any  taking,  release  or  amendment  or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;

(d)      any manner of application of collateral, or proceeds thereof, to all or
         any of the  Secured  Obligations,  or  any  manner  of  sale  or  other
         disposition of any collateral for all or any of the Secured Obligations
         or any other assets of the Borrower or any of its Subsidiaries;

     (e) any change,  restructuring or termination of the corporate structure or
existence of the Borrower or any of its Subsidiaries; or

(f)      any  other  circumstance  that  might  otherwise  constitute  a defense
         available  to, or a discharge of, such Grantor or a third party grantor
         of a security interest.

20. SECTION Amendments: Waivers; Etc. No amendment or waiver of any provision of
this Agreement,  and no consent to any departure by any Grantor herefrom,  shall
in any event be effective  unless the same shall be in writing and signed by the
Agent and each Grantor,  and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
however,  that any amendment to this Agreement that is in substantially the same
form as Exhibit A hereto  shall be  effective  when signed by only the Agent and
the Additional Grantor (as defined therein). No failure on the part of the Agent
to exercise, and no delay in exercising any right hereunder,  shall operate as a
waiver  thereof,  nor shall any  single or  partial  exercise  of any such right
preclude  any other or further  exercise  thereof or the  exercise  of any other
right.

21. SECTION Addresses for Notices. All notices and other communications provided
to the  Agent  and to any  Grantor  shall  be in  writing  or by  facsimile  and
addressed,  delivered or  transmitted  to such party at its address or facsimile
number  set  forth  below  its  signature  hereto or at such  other  address  or
facsimile  number as may be  designated  by such  party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage prepaid or if
properly  addressed and sent by pre-paid courier service,  shall be deemed given
when received;  any notice,  if transmitted by facsimile,  shall be deemed given
when transmitted.

22.  SECTION  Continuing   Security  Interest;   Assignments  under  the  Credit
Agreement.  This Agreement  shall create a continuing  security  interest in the
Collateral  and shall:  (a) remain in full  force and effect  until all  Secured
Obligations  have been paid in full and all  Commitments  have  terminated,  all
Letters of Credit have expired or been cross-collateralized, (b) be binding upon
each Grantor, its successors and assigns and (c) inure, together with the rights
and remedies of the Agent  hereunder,  to the benefit of the Agent,  the Lenders
and their  respective  permitted  successors,  transferees and assigns.  Without
limiting the  generality of the  foregoing  clause (c), any Lender may assign or
otherwise  transfer all or any portion of its rights and  obligations  under the
Credit  Agreement  (including,  without  limitations  all or any  portion of its
Commitment,  the loans  owing to it and the  Notes,  if any,  held by it) to any
other Person,  and such other Person shall thereupon  become vested with all the
benefits in respect thereof granted to such Lender herein or otherwise,  in each
case as provided in Section 10.04 of the Credit Agreement.

23. SECTION  Termination.  When all Secured  Obligations have been paid in full,
all  Commitments  have terminated and all Letters of Credit have expired or been
cross-collateralized,  the security  interest granted hereby shall terminate and
all rights to the  Collateral  as shall not have been sold or otherwise  applied
pursuant to the terms hereof shall revert to the  applicable  Grantor.  Upon the
termination of any such security  interest,  the Agent shall promptly  return to
the applicable Grantor, at such Grantor's expense,  such of the Collateral (and,
in the case of a release,  such of the released Collateral) held by the Agent as
shall not have been sold or otherwise applied pursuant to the terms hereof.  The
Agent will, at such Grantor's  expense,  execute and deliver to the Grantor such
other  documents  as the  Grantor  shall  reasonably  request to  evidence  such
termination or release, as the case may be.

24.  SECTION  Governing  Law;  Terms.  THIS  AGREEMENT  SHALL BE GOVERNED BY AND
CONSTRUED  IN  ACCORDANCE  WITH THE  LAWS OF THE  STATE  OF  CALIFORNIA  WITHOUT
REFERENCE TO CONFLICTS OF LAW PRINCIPLES, except to the extent that the validity
or perfection of the security  interest  hereunder,  or remedies  hereunder,  in
respect of any particular  Collateral are governed by the laws of a jurisdiction
other than the State of California.  Unless  otherwise  defined herein or in the
Credit  Agreement,  terms used in Article 9 of the Uniform  Commercial  Code are
used herein as therein defined.

25. SECTION Entire Agreement;  Severability of Provisions. This Agreement, taken
together  with all of the other Loan  Documents and all  certificates  and other
documents  delivered by the Borrower and the other  Grantors to the Agent or the
Lenders,  embodies the entire  agreement and  supersedes  all prior  agreements,
written and oral,  relating to the subject matter hereof.  Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction  shall, as to
such  jurisdiction,  be  ineffective  to  the  extent  of  such  prohibition  or
unenforceability   without  invalidating  the  remaining  provisions  hereof  or
affecting  the  validity  or  enforceability  of  such  provision  in any  other
jurisdiction.

26.  SECTION  Counterparts.  This  Agreement  may be  executed  in any number of
counterparts and by different parties hereto in separate  counterparts,  each of
which when so executed  shall be deemed to be an original and all of which taken
together shall  constitute one and the same  agreement.  Delivery of an executed
counterpart  of a signature  page to this  Agreement  by  facsimile  shall be as
effective as delivery of a manually executed counterpart of this Agreement.

27.  SECTION  WAIVER  OF JURY  TRIAL.  EACH OF THE  GRANTORS,  THE AGENT AND THE
LENDERS  IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,  PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING  TO THIS  AGREEMENT,  OR THE  ACTIONS OF THE AGENT OR ANY LENDER IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

28.  SECTION  Consent to  Jurisdiction  and  Service of  Process.  ALL  JUDICIAL
PROCEEDINGS  BROUGHT  AGAINST THE GRANTORS WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT  JURISDICTION IN THE STATE OF
CALIFORNIA,  AND BY  EXECUTION  AND  DELIVERY OF THIS  AGREEMENT,  EACH  GRANTOR
ACCEPTS,  FOR  ITSELF  AND IN  CONNECTION  WITH ITS  PROPERTIES,  GENERALLY  AND
UNCONDITIONALLY,  THE  NONEXCLUSIVE  JURISDICTION OF THE AFORESAID  COURTS,  AND
IRREVOCABLY  AGREES  TO BE BOUND  BY ANY  FINAL  JUDGMENT  RENDERED  THEREBY  IN
CONNECTION  WITH  THIS  AGREEMENT  FROM  WHICH NO  APPEAL  HAS BEEN  TAKEN OR IS
AVAILABLE. EACH GRANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF
THE  AFOREMENTIONED  COURTS IN ANY SUCH ACTION OR  PROCEEDING  BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,  POSTAGE PREPAID,  TO ITS NOTICE
ADDRESS  SPECIFIED IN SECTION 21, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER
SUCH MAILING.  EACH GRANTOR, THE AGENT AND THE LENDERS IRREVOCABLY WAIVE, TO THE
FULLEST EXTENT  PERMITTED BY APPLICABLE  LAW, ANY OBJECTION  (INCLUDING  WITHOUT
LIMITATION,  ANY  OBJECTION  TO THE  LAYING OF VENUE OR BASED ON THE  GROUNDS OF
FORUM NON CONVENIENS)  WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT IN ANY JURISDICTION SET
FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER  PERMITTED  BY LAW OR SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO
BRING PROCEEDINGS AGAINST THE GRANTORS IN THE COURTS OF ANY OTHER JURISDICTION.

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by its officer  thereunto duly  authorized as of the
date first above written.

                            SIERRA HEALTH SERVICES, INC.


                             By: /s/ Erin MacDonald

                             Title: President & COO

                            SIERRA HEALTH-CARE OPTIONS, INC.


                             By: /s/ Wayne R. Nippe

                                Title: Secretary

                            NEVADA ADMINISTRATORS, INC.


                              By: /s/ D. Sonenstein

                                Title: Secretary

                            BEHAVIORAL HEALTHCARE OPTIONS, INC.


                            By: /s/ Stephen E. Shoop

                                Title: Secretary

                            SIERRA HOME MEDICAL PRODUCTS, INC.


                             By: /s/ Lynn Rosenbach

                                Title: Secretary

<PAGE>

                           FAMILY HEALTHCARE SERVICES

                              By: /s/ D. Sivertsen

                                Title: Secretary

                            FAMILY HOME HOSPICE, INC.


                              By: /s/ D. Sivertsen

                                Title: Secretary

                            SIERRA MEDICAL MANAGEMENT, INC.


                             By: /s/ Paul H. Palmer

                                Title: Secretary/Treasurer

                            SIERRA HEALTH HOLDINGS, INC.


                             By: /s/ Erin MacDonald

                                Title: Secretary

                            SOUTHWEST MEDICAL ASSOCIATES, INC.


                              By: /s/ Steven Evans

                                 Title: President/Secretary

                            NORTHERN NEVADA HEALTH NETWORK, INC.


                             By: /s/ David M. Marlon

                                Title: Secretary

<PAGE>

                            INTERMED, INC.


                              By: /s/ D. Sivertsen

                                Title: Secretary

                            MOHAVE VALLEY HOSPITAL, INC.


                             By: /s/ David M. Marlon

                                Title: Secretary

                            TOLEMAC, INC.


                             By: /s/ David M. Marlon

                                Title: Secretary

                            M.E.G.A., INC.


                              By: /s/ Frank Collins

                                Title: Secretary

                            CII FINANCIAL, INC.


                              By: /s/ D. Sonenstein

                                Title: Secretary

                            SOUTHWEST REALTY, INC.


                              By: /s/ Frank Collins

                                Title: Secretary

                            Address for all of the foregoing:

                              2724 North Tenaya Way

                             Las Vegas, Nevada 89128

                            BANK OF AMERICA, N.A., as

                              Administrative Agent

                            By:
                               Title:


<PAGE>

                                    EXHIBIT A

                         AMENDMENT TO SECURITY AGREEMENT

         This Amendment to Security  Agreement (this  "Amendment"),  dated as of
________,  ____,  relates to the Security  Agreement dated as of August 23, 2000
(as  amended  to  date,  the  "Agreement")  executed  by each of the  Subsidiary
Grantors listed on Schedule 1 hereto (collectively,  the "Grantors") in favor of
Bank of  America,  N.A.  ("Bank of  America"),  as agent (the  "Agent")  for the
benefit  of the  Lenders  (as  defined in the Credit  Agreement  as  hereinafter
defined).

         In compliance with the Credit Agreement dated as of October 30, 1998(as
amended  from time to time,  the "Credit  Agreement")  among the  Borrower,  the
Lenders and Agent,  and in conjunction  with the execution by the parties hereto
of the Amendment to Guaranty  dated of even date herewith,  ______________  (the
"Additional  Grantor") and the Agent hereby agree as follows  (capitalized terms
used but not otherwise  defined herein shall have the meanings  ascribed to them
in the Credit Agreement):

     29. Amendment.  The Agreement is hereby amended to add as a party, and more
specifically, as a Subsidiary Grantor, thereunder, the Additional Grantor.

30.  Representations  and  Warranties.  The  Additional  Grantor  represents and
warrants to the Agent and the Secured  Parties that each of the  representations
and warranties of a Subsidiary Grantor contained in the Agreement is hereby made
by the  Additional  Grantor  as of the date  hereof  except to the  extent  such
representations and warranties relate to an earlier date and is true and correct
as to the  Additional  Grantor as of the date  hereof  except to the extent such
representations and warranties relate to an earlier date.

31. Grant of Security Interest.  The Additional  Grantor, to secure the complete
and timely payment,  observance and performance of all of its Obligations at any
time arising  under or in connection  with the Guaranty,  the Agreement and each
other Loan  Document to which it is a party,  hereby  assigns and pledges to the
Agent,  and hereby  grants to the Agent for its  benefit  and the benefit of the
Secured  Parties,  a  first  priority  security  interest  and  lien  under  the
Agreement,  in all of the Additional  Grantor's right, title and interest in and
to the  Collateral  (as defined in the  Agreement),  subject  only to  Permitted
Liens,  whether  now owned or  existing or  hereafter  arising or  acquired  and
wheresoever located together in each instance, with all accessions and additions
thereto,  substitutions  therefor,  and  replacements,   proceeds  and  products
thereof.

     32.  Assumption of Rights,  Obligations  and  Liabilities.  The  Additional
Grantor  assumes all of the rights,  obligations  and  liabilities  of a Grantor
under the Agreement and agrees to be bound thereby as if the Additional  Grantor
were an original party to the Agreement.

     33. Effectiveness. This Amendment shall become effective on the date hereof
upon the execution  hereof by the Additional  Grantor and the Agent and delivery
hereof to the Agent.

     34.  Governing Law. This  Amendment  shall be governed by, and construed in
accordance with, the laws of the State of California.


                                       -----------------------------------

                                       By:________________________________
                                          Title:

                                       Notice Address:




                                       Attention:


                                       BANK OF AMERICA, N.A., as Administrative
                                      Agent

                                       By:________________________________
                                          Title:


<PAGE>

                                   Schedule I

                              to Security Agreement

                                  Pledged Debt

<TABLE>

<CAPTION>

Loan/Note Receivable                Amount                    Due

<S>                               <C>                        <C>   <C>
Dr. Anthony Marlon                $5,277,589                 06/30/02
Charles Giampa                      $152,000                 03/22/29
Dr. Sosey                           $935,000                 09/12/12
Dr. Sosey                           $153,440                 03/01/13
TriWest (Buyout)                  $3,700,000                 03/30/01
Hebets (uncollectable)              $550,000                 Past Due
</TABLE>

<PAGE>

                                   Schedule II

                              to Security Agreement

                               Pledged Securities

                           PLEDGED STOCK CERTIFICATES

<TABLE>

<CAPTION>

Name of Stock                        No. Shares       Stock No.       Owner


<S>                                    <C>                      <C>
Behavioral Healthcare Options, Inc.    100,000        Cert. No. 5      SHS
Family Health Care Services            1,000          Cert. No. 6      SHS
Family Home Hospice, Inc.              100            Cert. No. 1      SHS
Health Plan of Nevada, Inc.            100            Cert. No. 2      SHS
Intermed, Inc.                         100            Cert. No. 2      SHS
Med One Health Plan                    1,000          Cert. No. 2      PHI
M.E.G.A.                               10             Cert. No. 8      PHI
M.E.G.A.                               1.76           Cert. No. 9      PHI
Mohave Valley Hospital, Inc.           100            Cert. No. 9      SMM
Nevada Administrators, Inc.            55             Cert. No. 9      SHS
Nevada Administrators, Inc.            40             Cert. No. 7      SHS
Nevada Administrators, Inc.            5              Cert. No. 11     SHS
Northern Nevada Health Network, Inc.   1,600          Cert. No. 17     SHS
Prime Health, Inc.                     1,765          Cert. No. 9      PHI
Prime Holdings, Inc.                   745,556.67     Cert. No. 008    SHS
Prime Holdings, Inc.                   588,235        Cert. No. 014    SHS
Sierra Acquisition, Inc.               100            Cert. No. 1      SHS
Sierra Health-Care Options, Inc.       100            Cert. No. 1      SHS
Sierra Health Holdings, Inc.           100            Cert. No. 1      SHS
Sierra Home Medical Products, Inc.     100            Cert. No. 001    SHS
Sierra Medical Management, Inc.        100            Cert. No. 2      SHS
Sierra Military Health Services, Inc.  100            Cert. No. 2      SHS
Sierra Texas Systems, Inc.             100            Cert. No. 1      SHS
Southwest Medical Associates           100            Cert. No. 1      SHS
Southwest Realty, Inc.                 1,000          Cert. No. 1      SHS
Tolemac, Inc.                          100            Cert. No. 3      SMM
</TABLE>


<PAGE>



                                  Schedule III

                             Occupied Properties by
                                State and Address

                                    08/22/00

SIERRA HEALTH SERVICES AND SUBSIDIARIES
OCCUPIED PROPERTIES - NON REGULATED ENTITIES

<TABLE>




<CAPTION>
                                                                                                   SQ FT.
                                                                                                   UNDER   2000       LEASE
STREET                   COMPLEX                                                DEPARTMENT         LEASE/   MONTHLY    TERM
ADDRESS                  NAME                         CITY            COMPANY   OR USE             ACRES    RENT       DATE


ARIZONA

<S>                                                                                               <C>
1225 E. Hancock Rd.      Hancock Medical Plaza     Bullhead City      SMM        Medical Clinic   124,014  owned       na
1245 E. Hancock Rd.      Hancock Medical Plaza     Bullhead City      SMM        Medical Clinic   1,392    owned       na
2728 Silver Creek Rd.                              Bullhead City      BHO        Clinical         3,360    3,763.20  10/31/00 (1)
3003 Highway 95          Palo Verde Plaza,         Bullhead City      BHO        Admin/Clinical   4,100    4,797.00  09/30/05 (2)(3)
                         Suite 103 10/00
2601 Stockton Hill Rd.   Hilltop Plaza, #H-1       Kingman            BHO        Clinical         300        360.00  10/31/00

CONNECTICUT

220 Route 12             Groton Square,            Groton             SHS-SMHS   TSC              2,400    2,400.00  06/30/03
                         Unit 3

DELAWARE

RR Route 113             Blue Hen Corp             Dover              SHS-SMHS   TSC              3,690    4,835.67  06/30/03
                         Center, Ste 5G2
MARYLAND

1202 Technology Dr.      Heat Business             Aberdeen           SMHS       TSC              1,500    1,988.93  05/31/03
                         Center., Suite B
621 Ridgely Ave.         Ridgely Oaks              Annapolis          SMHS       TSC              1,610    1,999.08  06/30/03
                         Prof Ctr, Unit 404
111 Market Place         Candler Building          Baltimore          SMHS       Administrative   4,730    6,306.67  11/30/03
                         First Floor
111 Market Place         Candler Building          Baltimore          SMHS       Administrative   83,151 117,450.78  05/30/08 (2)
                         2nd, 4th, & 6th Floors
22576 RR 235             San Souci Plaza           California         SMHS       TSC              1,600    2,051.07  06/14/03 (2)
   & MacArthur Blvd      Store #306
10 N. Jefferson St.      Suite 201                 Frederick          SMHS       TSC              1,500    1,850.00  06/30/03
1215 Annapolis Rd.       NAH-Odenton               Odenton            SMHS       TSC              3,000    2,678.06  06/15/03
                         Med. Ctr., Ste 204
6009 Oxon Hill Rd.       One Constellation         Oxon Hill          SMHS       TSC              3,151    5,054.54  05/31/03 (2)
                         Center., Suite 42
11200 Rockville Pike                               Rockville          SMHS       TSC              3,093    6,562.73  06/30/03 (2)
8401 Colesville Rd.      Silver Spring             Silver Spring      SMHS       TSC              2,641    4,320.23  06/30/03
                         Metro Plaza,
                         4th Floor

MAINE

14 Main St.              Suite 104                 Brunswick          SMHS       TSC              1,200    1,414.19  06/30/03
226 Main St.                                       Limestone          SMHS       TSC              1,700    2,431.92  06/15/03

NEW HAMPSHIRE
30 International Plaza   2nd Floor                 Portsmouth         SMHS       TSC              3,661    5,177.26  06/14/03 (2)

NEW JERSEY
615 Hope Rd.             Victoria Plaza            Eatontown          SHS        TSC              2,030    2,368.33  06/15/03
                         1st Floor
527 Syksville Rd.        N. Hanover Mall           Wrightstown        SMHS       TSC              1,998    1,700.00  06/14/03

NEVADA

806 S. Buchanan          Los Posadas #112          Boulder City       SMA        Medical Clinic   1,468    1,556.04  05/31/06 (2)
98 E. Lake Mead Dr.      St. Rose                  Henderson          SMA        OB/GYN Clinic    4,063    7,811.99  04/15/06
                         Dominican #105
2651 Green Valley Pkwy.  Civic Center              Henderson          SMA        Medical Clinic   13,942  21,191.84  03/31/05 (2)
                         Building D
150 E. Harmon Ave.       Harmon Med. Ctr.          Las Vegas          SMA        Medical Clinic   25,500     NA       NA (4)
650 N. Nellis Blvd.                                Las Vegas          SMA        Medical Clinic   36,765   owned      NA
801 S. Rancho Dr.        Quail Park                Las Vegas          SMA        HPN sublease     5,008    8,120.00  04/30/02
                         F1 & F2

888 S. Rancho Dr.                                  Las Vegas          SMA        Medical Clinic   45,000   owned      NA
900 S. Rancho Dr.                                  Las Vegas          SMA        Demand Mgmt.     4,992    9,984.00   auto renew
1661 E. Flamingo Rd.     Cambridge Quail           Las Vegas          BHO        Clinical         4,076    6,929.00  04/03/03
                         Unit 2
1701 W. Charleston       Charleston Towers         Las Vegas          FHS        Administrative   20,266  37,495.80  11/30/05
                         1st & 2nd floors
2300 W. Charleston Blvd.                           Las Vegas          SMA        Medical Clinic   25,425   owned      NA
2316 W. Charleston Blvd.                           Las Vegas          SMA        Medical Clinic   25,122  61,623.14  12/31/04
2350 W. Charleston Blvd.                           Las Vegas          SMA/SMM    Administrative   15,300  19,890.00  07/20/05 (2)
2450 W. Charleston Blvd.                           Las Vegas          SMA        Surgery Center   28,500   owned      NA
2704 N. Tenaya Way                                 Las Vegas          SMA        Medical Clinic   40,103   owned      NA
2716 N. Tenaya Way                                 Las Vegas          SHS        Administrative  113,887 227,774.00  12/31/06
2716 N. Tenaya Way                                 Las Vegas          NV ADM     Administrative   1,571    3,141.18  12/31/06
2716 N. Tenaya Way                                 Las Vegas          SMA        Administrative   841      1,662.00  12/31/06
2720 N. Tenaya Way                                 Las Vegas          SHS        Administrative   2,876    5,752.00  auto renew
2720 N. Tenaya Way                                 Las Vegas          SHO        Administrative   9,713   19,426.00  auto renew
2724 N. Tenaya Way                                 Las Vegas          SHS        Administrative  43,480    owned      NA
2801 S. Valley View Blvd. Quail Park               Las Vegas          BHO        Admin.Clinical  11,280   18,418.63  11/30/01 (5)
3016 W. Charleston Blvd. Westbay #100              Las Vegas          SHS        Sales           27,000   51,300.00  05/31/07
3111 S. Valley View Blvd.  Location I              Las Vegas          SHS        Purchasing      20,248    9,899.00  12/31/02
                         C104/D104-105
4475 S. Eastern Ave.                               Las Vegas          SMA        Medical Clinic  53,672   90,168.96  auto renew
5321 Cameron St.         Sterling Business         Las Vegas          THC        Business / Whse.18,695   16,322.34  01/14/04 (2)
                         Park

6330 W. Flamingo Rd.                               Las Vegas          SMA        Medical Clinic  11,700    owned      NA
2239 Crestline Loop                                N. Las Vegas       SHS        Print Shop       6,860    owned      NA
4511 Cheyenne Ave.       Hangar Unit 3             N. Las Vegas       SHS        Hangar           9,400    1,725.00  01/31/06
2005 Silverado Blvd.                               Reno               SMM        Medical Clinic  Pending   Pending    Pending (6)
6100 Plumas              Club Lakeridge            Reno               SHS        Master Lease    11,410   17,387.00  11/30/00 (2)

NEW YORK

273 Main St.             Keller/Westpoint          Highland Falls     SMHS       TSC              2,464    2,150.00  06/30/03 (2)
RR Route 3               West Plaza                Plattsburgh        SMHS       TSC              1,525    1,668.96  06/15/03 (2)
584 Phoenix Dr.          Griffis Bus &             Rome               SMHS       TSC              2,366    2,760.33  06/30/03 (2)
                         Tech Park, Bldg 780
26515 Route 3            Partridge BerryInn        Watertown          SMHS       TSC              2,500    1,875.00  06/14/03 (2)

PENNSYLVANIA

875 Greentree Rd.        Eleven Parkway            Green Tree         SHS        TSC              1,653    2,410.63  06/30/03 (2)
                         Center, Ste 215           (Pittsburgh)
34 Main St.              Palm Plaza Ste 42         Palmyra            SMHS       TSC              1,360    1,345.00  06/14/03 (2)
RR Scott Way & RR 291    International Plaza       Tinicum            SMHS       TSC              2,445    4,687.33  06/14/03
                         Suite 635                 (Philadelphia)

RHODE ISLAND
221 Third St.            Admiral's Gate            Newport            SMHS       TSC               1,4     1,703.08  06/14/03
                         Tower
TEXAS

701 I-20 East                                      Arlington          BHO        Clinical          165      330.00     auto renew
4201 Brook Spring Dr.                              Dallas             BHO        Clinical          165      330.00     auto renew
4201 Brook Spring Dr.    Southwest Dallas          Dallas             TMGT/TXHC   SW Dallas Ctr. 29,635.00   owned         NA (7)
9250 Amberton Pkwy.      Northpoint III            Dallas             BHO        Clinical          9,773  19,546.00    auto renew
9250 Amberton Pkwy.      Northpoint III            Dallas             TMGT/TXHC   Medical Clinic    33,725    owned        NA (7)
12606 Greenville Ave.    Northpoint IV             Dallas             TMGT/TXHC   Dallas Spec. Ctr 122,310    owned        NA (7)
1001 12th Avenue                                   Ft. Worth          TMGT/TXHC   Medical Clinic    77,783    owned        NA (7)
1300 S. University Dr.   University                Ft. Worth          BHO        Clinical          5,465  10,930.00   auto renew (8)
                         Centre 1
2727 Military Pkwy.                                Mesquite           BHO        Clinical          158       316.00     auto renew
2727 Military Pkwy.                                Mesquite           TMGT/TXHC   Medical Clinic    30,684    owned     NA (9)

VIRGINIA

1800 North Kent St.                                Arlington          SHS        TSC               1,846   3,753.65  05/31/03 (2)
17479 Jefferson          Coach House               Dumfries           SMHS       TSC               1,240   1,025.00  06/14/00 (2)
Davis Highway            Plaza, Unit B5
3918 Prosperity Ave.     Suite 202                 Fairfax            SHS-SMHS   TSC               1,229   2,060.03  06/15/03 (2)
7764 Armistead Rd.       Gunston Plaza             Lorton             SHS-SMHS   TSC               3,472   4,833.75  06/30/03 (2)
                         Suite 260
</TABLE>

(1) Relo to 3003 (2) Option to Extend (3) Relo from 2728 (4)  Sumitomo  Bank (5)
Increase  Overdue (6) Info Joe Devin (7) staying  open (8) relo to 1001 12th (9)
close 9/30


                                   Schedule IV

             Chief Place of Business and Chief Executive Office and
                 Office Where Records Concerning Receivables and

                       Assigned Agreements are Maintained:

                    All subsidiaries listed below have their

                chief place of business,  chief  executive  office,  and records
              2724 Tenaya Way, Las Vegas, Nevada 89128.

                       Federal Tax Identification Numbers:

<TABLE>

<CAPTION>

     Employer

Name of Corporation                                 Identification Number

<S>                                                  <C>
Sierra Health-Care Options                           88-0254322
Nevada Administrators, Inc.                          88-0264562
Behavioral Healthcare Options, Inc.                  88-0267857
Sierra Home Medical Products, Inc.                   88-0385705
Family Healthcare Services                           88-0223385
Family Home Hospice, Inc.                            88-0257036
Sierra Medical Management, Inc.                      88-0353504
Sierra Health Holdings, Inc.                         88-0332118
Southwest Medical Associates, Inc.                   88-0201420
Northern Nevada Health Network, Inc.                 88-0245121
Intermed, Inc.                                       86-0644010
Mohave Valley Hospital, Inc.                         86-0693199
Tolemac, Inc.                                        86-0671683
M.E.G.A., Inc.                                       88-0198777
CII Financial, Inc.                                  95-4188244
Southwest Realty, Inc.                               88-0245985
Prime Holdings, Inc.                                 88-0330952
</TABLE>

<PAGE>

                                   Schedule V

                   Trade Names, Corporate or Fictitious Names

                                   Trade Names

See Schedule VI

                                Corporation Names

Behavioral Healthcare Options, Inc.
CII Financial, Inc.
Family Healthcare Services
Family Home Hospice, Inc.
Intermed, Inc.
M.E.G.A., Inc.
Mohave Valley Hospital, Inc.
Nevada Administrators, Inc.
Northern Nevada Health Network, Inc.
Prime Holdings, Inc.
Sierra Health Holdings, Inc.
Sierra Health-Care Options, Inc.
Sierra Home Medical Products, Inc.
Sierra Medical Management, Inc.
Southwest Medical Associates, Inc.
Southwest Realty, Inc.
Tolemac, Inc.

<TABLE>

                                Fictitious Names

<CAPTION>

               Company                                Doing Business As                        File Date        County

<S>                                                                                              <C>   <C>
Health Plan of Nevada, Inc.                      Southwest Vision                                06/28/85       Clark
Southwest Medical Associates, Inc.               Rancho Surgical Plaza                           06/28/85       Clark
M.E.G.A., Inc.                                   Silver State Medical Administrators             06/28/91       Clark
Prime Health, Inc.                               Med One Works                                   10/18/95       Clark
M.E.G.A., Inc.                                   Patient Advocate                                07/02/96       Clark
Allan Ebbin, M.D.                                Las Vegas Anesthesia Consultants                01/09/97       Clark
Steven Evans, M.D.                               Pacific Anesthesia Consultants                  03/25/97       Clark
Elias F. Ghanem & William Bannen                 CURB Associates1                                10/23/97       Clark
Sierra Health-Care Options, Inc.                 Sierra at Work                                  10/24/97       Clark
Sierra Health-Care Options, Inc.                 Sierra at Work                                  11/04/97       Clark
                                                                                               Terminated

Nevada Administrators, Inc.                      Sierra at Work                                  11/04/97       Clark
Southwest Medical Associates, Inc.               Harmon Medical Center                           02/09/98       Clark
Southwest Medical Associates, Inc.               Laughlin Medical Center                         02/09/98       Clark
Sierra Home Medical Products, Inc.               THC of Nevada                                   02/09/98       Clark
Sierra Home Medical Products, Inc.               THC of Nevada2                                  08/20/98       Sacramento,
                                                                                                                  California

Sierra Home Medical Products, Inc.               THC of Nevada3                                  09/14/98       Nye
Sierra Home Medical Products, Inc.               THC of Nevada4                                  10/05/98       Mohave County,
                                                                                                                  Arizona

Tolemac,Inc.                                     Mohave Medical Associates                       10/08/98       Mohave County,
                                                                                                                  Arizona

Elias F. Ghanem & William Bannen                 CURB Associates                                 12/21/98       Clark
                                                                                               Terminated

Sierra Health-Care Options, Inc.                 CURB Associates                                 12/21/98       Clark
Sierra Home Medical Products, Inc.               THC of Nevada Pharmacy                          03/10/99       Clark
Southwest Medical Associates, Inc.               Laughlin Medical Center                         06/22/99       Clark
                                                                                              Terminated5

Health Plan of Nevada, Inc.                      Southwest Vision                                11/12/99       Clark
                                                                                               Terminated

Health Plan of Nevada, Inc.                      Southwest Vision Services                       11/12/99       Clark
Mohave Valley Hospital                           Hancock Medical Plaza6                          07/20/00       Mohave County,
                                                   Arizona

</TABLE>

1A Termination of Fictitious  Firm name was never filed after the Prime closing;
hence the late filing date.

2 Required  pursuant to Section 17917 of the  California  Business & Professions
  Code, SMHS was required to file Fictitious  Statement in Sacramento  County in
  connection with its Needles,  California  business license and, because it has
  not  business  location  in  California,  we were also  required  to publish a
  statement for 3  consecutive  weeks in a newspaper of general  circulation  in
  Sacramento County. IN ADDITION,  THIS MUST BE RENEWED WITHIN FIVE (5) YEARS OF
  FILING DATE.

3This filing required for the Pahrump business license.
4This filing  required for the Kingman,  AZ business  license ~ THC works out of
its Bullhead City, AZ office.

5This dba was  terminated  because SMA sold Laughlin  Medical Center to UMC. The
  termination  became  effective  as of the  closing  date of  03/31/99 at Steve
  Peterson's request.

6This filing made at the request of Wayne Nippe.











<PAGE>

                                   Schedule VI

                              to Security Agreement

                       Copyrights, Trademarks and Patents

                                     PATENTS

                                      None

                                   COPYRIGHTS

                                      None

<TABLE>

                                   TRADEMARKS

<CAPTION>

         Mark                  Appl.            T or S             Registered              Renew     Abnd.   Reg. No      Class
         Date                                                         Date

<S>                           <C>   <C>                             <C>   <C>            <C>   <C>             <C>
Senior Dimensions             07/03/85             T                01/28/96             01/28/06            1,380,893     Unk
Sierra Health
 Services, Inc.               03/22/85             T                05/13/86             05/13/06            1,393,502      34
Health Dimensions             03/11/85             T                02/24/87               Cxled.            1,430,511    36 & 42
SHS                           03/22/85             T                03/10/87             03/10/07            1,432,169      35
Diamond Design                04/17/90             S                02/08/94             02/08/04            1,820,310  35, 36 & 42
Gemini                        05/19/87             S                12/29/87             12/29/07            1,470,955    36
Gemini & Design               05/19/87             S                01/05/88             01/05/08            1,471,657    36
Sierra Health &
  Life Ins. Co., Inc.         05/19/87             T                02/28/89             02/28/09            1,527,323      36
SHL & Design                  05/19/87             T                02/09/88               Cxled.            1,476,187      36
SD                            07/03/85             T                01/28/86               Cxled.            1,380,892      42
SD & Design                   07/03/85             T                09/23/86               Cxled.            1,410,903      42
HD (Stylized)                 03/22/85            Unk               09/23/86               Cxled.            1,410,851     36 & 42
SHS (Stylized)                03/22/85            Unk               03/10/87               Cxled.            1,432,170         35
</TABLE>

1"T" for Trademark; "S" for Servicemark

                                     Page 1

<PAGE>

                                   Schedule VI

                      To the Security Agreement (continued)

                          SHS Federal Registrations(R)

<TABLE>

<CAPTION>

         Mark                     Appl.         T or S2            Registered              Renew   Abnd.     Reg. No       Class
                                  Date                                                     Date



<S>                                                                                                                      <C> <C> <C>
Behavioral Health-                                                                                                       35, 36, 41

  Care Options, Inc.             08/27/91          T                 Abandoned                      X                        & 42
Southwest Medical
  Associates, Inc.               03/13/92          T                  02/23/93           02/23/03            1,754,358       42
Health Dimensions                03/13/92          T                 Abandoned                      X                        42
HMO Texas                        04/12/95          S                  02/17/98           02/17/08            2,136,473      36 & 42
HMO Texas & Design               04/12/95          S                  02/17/98           02/17/08            2,136,474      36 & 42

Just What the Patient

  Ordered                        04/12/95          S                  02/24/98           02/24/08            2,139,367      36 & 42
Golden Choice                    04/02/96          S              App. Pending                               Serial No.
                                                                                                            75/082/625      36 & 42
                                                                                                            Reg. Pending

Texas Choice                     12/29/98          S              App. Pending                              Serial No.
                                                                                                            Reg. Pending

Texas Health Choice              02/25/99          S              App. Pending                              Serial No.      36 & 42
                                                                                                            75/647,836

                                                                                                            Reg. Pending

Texas Health Choice &
  Design                         02/01/00          S              App. Pending                              Serial No.      36 & 42
                                                                                                            75/907,095

                                                                                                            Reg. Pending

Western Medical                                                                                             Serial No.
  Consultants                    05/04/99          S                 Abandoned                      X       75/698,573      36 & 42
</TABLE>

                                                                        02/02/00

1"T" for Trademark; "S" for Servicemark

                                     Page 2

<PAGE>

                                   Schedule VI

                      To the Security Agreement (continued)

                             SHS State Trademarkssm

<TABLE>

<CAPTION>

   Mark                   State        Appl.     T or S1    Registered      Renew    Abnd.    Reg. No         Class
                                       Date                                 Date2


Sierra Health


<S>                                                         <C>   <C>    <C>   <C>     <C>   <C>
 Services, Inc.         Colorado       Unk         S        11/15/85     11/15/05      0     951122493          Unk
Gemini The Dual
  Choice Healthcare

  Plan & Design          Nevada         Unk        S        02/03/86        N/A        X     20 Pg 21;          36
                                                                                                 2021

Gemini The Dual
  Choice Healthcare
  Plan & Design

  (Tradename)            Nevada         Unk        T        02/03/86        N/A        X     20 Pg 22;          102
                                                                                             2022

Gemini & Design          Arizona       05/19/87    S        04/04/88        N/A        X     26,203             Unk
Gemini                   California    05/19/87    S        09/30/87        N/A        X     30,270             100
Gemini                   Missouri      07/20/87    S        10/30/87        N/A        X     S09,745             101
Gemini                   Kansas        07/20/87    S        11/23/87        N/A        X     Unk                  2
Gemini                   Colorado      05/21/87    S        05/21/87        N/A        X     33,218              101
Design Only              Nevada        05/30/90    T        06/19/90     06/19/00      -     23 Pg 666;           42
  (Diamond)                                                                                  23666
</TABLE>

1"T" for Trademark; "S" for Servicemark

2Nevada marks are no longer good for ten (10) years;  effective  10/02/93,  when
each mark is renewed, they are good only for a period of five (5) years.

                                     Page 1

<PAGE>

                                   Schedule VI

                      To the Security Agreement (continued)

                             SHS State Trademarkssm

<TABLE>

<CAPTION>

         Mark            State      Appl.   T or S  Registered   Renew    Abnd.         Reg. No                        Class
                                    Date                         Date



<S>                                                                                  <C>   <C>                            <C>
Design Only                                                                          23 Pg 667;                           0
  (Diamond)              Nevada     Unk         T    06/19/90    06/19/00                 23667                          42
Design Only                                                                          23 Pg 668;
  (Diamond)              Nevada     Unk         T    06/19/90    06/19/00            23668                               42
Coordinated Care         Nevada     Unk         S    06/19/90    N/A        X
Med One Health Plan      Nevada     Unk         S    10/30/90    10/30/00            Judy at the SOS to
                                                                                     send us a copy
Northern Nevada                                                                      Judy at the SOS to
  Health Network         Nevada     Unk         S    12/27/90    12/27/00            send us a copy
Health Plan of Nevada    Nevada     07/31//91   S    07/31/91    10/21/01            Vol. 17, Pg 307                    Unk
Sierra Choice            Nevada     03/25/94    S    04/01/94    04/01/04            27 Pg 388; 27388                   102
Gemini:  The Dual
  Choice Healthcare
  Plan                   Nevada     Unk         S                N/A        X
Nevada Administrators    Nevada     07/19/99    S   08/17/99     08/17/04            None                               102
One Generation to the
  The Next               Nevada     05/08/00    S   05/15/00     05/15/05            None                               101
</TABLE>

<PAGE>

                                                    Schedule VII
                                                 Subsidiary Grantors

Sierra Health-Care Options, Inc., a Nevada corporation
Nevada Administrators, Inc., a Nevada corporation
Behavioral Healthcare Options, Inc., a Nevada corporation
Sierra Home Medical Products, Inc., a Nevada corporation
Family Healthcare Services, a Nevada corporation
Family Home Hospice, Inc., a Nevada corporation
Sierra Medical Management, Inc., a Nevada corporation
Sierra Health Holdings, Inc., a Nevada corporation
Southwest Medical Associates, Inc., a Nevada corporation
Northern Nevada Health Network, Inc., a Nevada corporation
Intermed, Inc., an Arizona corporation, a Nevada corporation
Mohave Valley Hospital, Inc., an Arizona corporation
Tolemac, Inc., an Arizona corporation
M.E.G.A., Inc., a Nevada corporation
CII Financial, Inc., a Nevada corporation
Southwest Realty, Inc., a Nevada corporation
Prime Holdings, Inc., a Nevada corporation



<PAGE>

                                  Schedule VIII

                                 Existing Liens

                                   [to follow]

                                  Schedule VIII

                                 Existing Liens*

<TABLE>

<CAPTION>

      Debtor                                   Secured Party               Collateral Description

<S>                                                                                     <C>  <C>
Sierra Home Medical                         Originally Sabratek                  (10) 6060 Infusion Pumps
Products, Inc. (Prin DB                     Credit Corp assigned to
For Debtor THC of                           Michigan Heritage Bank
Nevada)

Sierra Home Medical                         Originally Sabratek                  (10) 6060 Infusion Pumps
Products, Inc. (Prin DB                     Credit Corp assigned to
For Debtor THC of                           Michigan Heritage Bank
Nevada)

Sierra Home Medical                         Originally Sabratek                  (10) 6060 Infusion Pumps
Products, Inc. (Prin DB                     Credit Corp assigned to
For Debtor THC of                           Michigan Heritage Bank
Nevada)

Sierra Health Services                      BCL Capital                          (1) Toshiba Copier System Model 1560
(Prin DB for Debtor                                                              (1) Toshiba Copier System Model 2460
Sierra Home Medical                                                              (1) Toshiba Controller Model SC-1
Products)

Southwest Medical                           General Electric Co.                 (1) CT  HiSpeed  Advantage  2.X  System and all
Associates, Inc.                                                                     additions, improvements, etc. thereto
</TABLE>

<PAGE>

<TABLE>

<S>                                                                                     <C>          <C>
Mohave Valley  Hospital                 Copelco  Capital Inc.                   (1) Demo MAC 6  Computerized
                                                                                 Electrocardiograph Inc.
                                                                                (1) Siemens Siremobile 2U
                                                                                 fluoroscopic C-arm refurbished
                                                                                 in 1993 with [7 additional  parts]
                                                                                (1) Demo EPM-3000 Video  Endoscopy  Processor
                                                                                (1) Demo PV-M2030/BS Demo 20" Color Monitor
                                                                                (1) Demo EC-3801L Video  Colonoscope

                                                                                 with water jet
                                                                                (1) Demo EG-2901 Video  Gastroscope
                                                                                (1) AMSCO Eagle 2021 Gravity

                                                                                 Sterilizer with 20 KW Electric Steam Generator

Sierra Military Health                      Pitney Bowes Credit                  All equipment of whatever nature manufactured,
Services, Inc.                              Corporation                          sold or distributed by Pitney  Bowes Credit Inc.,
                                                                                 Monarch  Marketing  Systems Inc.,  Pitney Bowes
                                                                                 Credit Corp.,  Dictaphone  Corp. and subject to
                                                                                 lease  dated   12/21/98   between   Debtor  and
                                                                                 Secured  Party  and  all  proceeds,   additions
                                                                                 thereto and  replacements  thereof.  (says "not
                                                                                 subject to  recordation  tax-does  not create a
                                                                                 security interest")

Southwest Realty (Prin                      Marvco Inc.                          (1) Gestetner #2301 Copier
DB for Debtor Strebeck,                                                          (1) Murata Fax

Sierra Health Services,                     Bank of America Nevada               All of the Debtor's right, title and interest in
Inc.                                                                             and to all personal property of every kind  and

                                                                                 description,
                                                                                 whether
                                                                                 now
                                                                                 existing
                                                                                 or
                                                                                 later
                                                                                 acquired,
                                                                                 which
                                                                                 now,
                                                                                 or
                                                                                 which
                                                                                 at
                                                                                 any
                                                                                 later
                                                                                 time
                                                                                 may
                                                                                 be
                                                                                 attached
                                                                                 to,
                                                                                 erected
                                                                                 upon,
                                                                                 situated
                                                                                 in
                                                                                 or
                                                                                 upon,
                                                                                 forming
                                                                                 a
                                                                                 part
                                                                                 of,
                                                                                 appurtenant
                                                                                 to,
                                                                                 used
                                                                                 or
                                                                                 useful
                                                                                 in
                                                                                 the
                                                                                 construction
                                                                                 or
                                                                                 operation
                                                                                 of
                                                                                 or
                                                                                 in
                                                                                 connection
                                                                                 with,
                                                                                 or
                                                                                 arising
                                                                                 from
                                                                                 the
                                                                                 use
                                                                                 or
                                                                                 enjoyment
                                                                                 of
                                                                                 all
                                                                                 or
                                                                                 any
                                                                                 part
                                                                                 of,
                                                                                 or
                                                                                 from
                                                                                 any
                                                                                 lease
                                                                                 or
                                                                                 agreement
                                                                                 pertaining
                                                                                 to,
                                                                                 the
                                                                                 real
                                                                                 property
                                                                                 or
                                                                                 interests
                                                                                 in
                                                                                 it
                                                                                 located
                                                                                 in
                                                                                 the
                                                                                 County
                                                                                 of
                                                                                 Clark,
                                                                                 State
                                                                                 of
                                                                                 Nevada,
                                                                                 as
                                                                                 more
                                                                                 particularly
                                                                                 described
                                                                                 in
                                                                                 Exhibit
                                                                                 A
                                                                                 attached
                                                                                 hereto
                                                                                 and
                                                                                 made
                                                                                 a
                                                                                 part
                                                                                 of
                                                                                 this
                                                                                 financing
                                                                                 statement
                                                                                 as
                                                                                 if
                                                                                 fully
                                                                                 set
                                                                                 forth
                                                                                 (the
                                                                                 "Land"),
                                                                                 including,
                                                                                 without
                                                                                 limitation:
                                                                                 Description
                                                                                 of
                                                                                 the
                                                                                 Land:
                                                                                 The
                                                                                 following
                                                                                 Land
                                                                                 situated
                                                                                 in
                                                                                 the
                                                                                 city
                                                                                 of
                                                                                 Las
                                                                                 Vegas,
                                                                                 County
                                                                                 of
                                                                                 Clark,
                                                                                 State
                                                                                 of
                                                                                 Nevada:


                                                                                 Commencing
                                                                                 at
                                                                                 the
                                                                                 South
                                                                                 Quarter
                                                                                 Corner
                                                                                 of
                                                                                 Section
                                                                                 15
                                                                                 Township
                                                                                 20
                                                                                 South,
                                                                                 Range
                                                                                 60
                                                                                 East,
                                                                                 M.D.M.,
                                                                                 City
                                                                                 of
                                                                                 Las
                                                                                 Vegas,
                                                                                 Clark
                                                                                 County,
                                                                                 Nevada,
                                                                                 as
                                                                                 shown
                                                                                 on
                                                                                 the
                                                                                 Plat
                                                                                 of
                                                                                 "Resubdivision
                                                                                 of
                                                                                 a
                                                                                 Portion
                                                                                 of
                                                                                 the
                                                                                 Las
                                                                                 Vegas
                                                                                 Technology
                                                                                 Center",
                                                                                 a
                                                                                 commercial
                                                                                 subdivision,
                                                                                 as
                                                                                 shown
                                                                                 in
                                                                                 Book
                                                                                 47,
                                                                                 Page
                                                                                 35
                                                                                 or
                                                                                 recorded
                                                                                 Plats
                                                                                 official
                                                                                 records,
                                                                                 Clark
                                                                                 County,
                                                                                 Nevada;


                                                                                 Thence
                                                                                 North
                                                                                 12(degree)12'21"
                                                                                 East,
                                                                                 2752.56
                                                                                 Feet
                                                                                 to
                                                                                 the
                                                                                 centerline
                                                                                 intersection
                                                                                 of
                                                                                 Peak
                                                                                 Drive
                                                                                 and
                                                                                 Tenaya
                                                                                 Way;

                                                                                 Thence South 89(degree)51'34" East, 45.00 Feet to a
                                                                                 point on the east right-of-way on Tenaya Way;

                                                                                 Thence North 07(degree)10'13"  East,  12.67 Feet
                                                                                 Along Said east right-of-way;

                                                                                 Thence  Departing  said   right-of-way,   south
                                                                                 89(degree)57'23" East, 298.29 Feet;

                                                                                 Thence  North  84(degree)04'34",  191.14  feet
                                                                                 to the
                                                                                 true point of beginning;

                                                                                 Thence North 84(degree)04'34" East, 346.94 Feet;

                                                                                 Thence South 04(degree)00'00" West, 582.89 Feet;

                                                                                 Thence North 86(degree)00'00" West, 278.75 Feet;

                                                                                 Thence North 04(degree)00'00" East, 208.52 Feet;

                                                                                 Thence North 20(degree)34'57" West, 151.44 Feet;



                                                                                 Thence
                                                                                 North
                                                                                 04(degree)00'00"
                                                                                 East,
                                                                                 176.86
                                                                                 Feet
                                                                                 to
                                                                                 the
                                                                                 true
                                                                                 point
                                                                                 of
                                                                                 beginning.

                                                                                 (a) all buildings structures and improvements
                                                                                     located or later constructed on the land
                                                                                 (b) all existing and future appurtenances,
                                                                                     privileges, easements, mineral rights, etc.
                                                                                 (c) all existing and future leases, subleases, etc.
                                                                                 (d) all real property and improvements, described
                                                                                     or not, required for the beneficial enjoyment
                                                                                     of the land
                                                                                 (e) all goods, materials, supplies, chattels,
                                                                                     furniture, etc. nor or later attached or
                                                                                     placed on land
                                                                                 (f) all building materials, equipment, etc. used
                                                                                     for land improvements
                                                                                 (g) all right to payment of money and all value
                                                                                     arising from any and all existing and future
                                                                                     interest rate protection agreements
                                                                                 (h) all rights to the payment of money,  accounts,
                                                                                     etc. which arise from or relate to
                                                                                     construction on the land or to any business
                                                                                     now or later to be conducted on it


                                                                                      (i)
                                                                                      all
                                                                                      proceeds,
                                                                                      including
                                                                                      all
                                                                                      claims
                                                                                      and
                                                                                      demands
                                                                                      for
                                                                                      them
                                                                                      of
                                                                                      the
                                                                                      voluntary
                                                                                      or
                                                                                      involuntary
                                                                                      conversion
                                                                                      of
                                                                                      any
                                                                                      of
                                                                                      the
                                                                                      land
                                                                                      etc.

                                                                                 (j) all books and records pertaining to any and
                                                                                     all of the property described above


                                                                                     (k)
                                                                                     all
                                                                                     proceeds
                                                                                     of,
                                                                                     additions
                                                                                     and
                                                                                     accretions
                                                                                     to,
                                                                                     substitutions
                                                                                     and
                                                                                     replacements
                                                                                     for,
                                                                                     and
                                                                                     changes
                                                                                     in
                                                                                     any
                                                                                     of
                                                                                     the
                                                                                     property
                                                                                     described
                                                                                     above.

Sierra Health Services,                     Norstan Financial                    Aspect Call Center Model 200-R telecommunications
Inc.                                        Services Inc.                        system and all related equipment.
</TABLE>

<PAGE>

<TABLE>

<S>                                                                                          <C>        <C>
Sierra Health Services,                     Norstan Financial                    Refurbished 9751 Model 10 with AVT system and all
Inc.                                        Services Inc.                        related equipment.

Sierra Health Services,                     Norstan Financial                    Siemens 9751 Model 50 telecommunication system and
Inc.                                        Services Inc.                        all related equipment.

Sierra Health Services,                     Young Electric Sign Co.              (1)  double  faced non-illuminated monument sign.
Inc.

Sierra Health Services,                     Sumitomo Bank Leasing                Description of Land:
Inc.                                        & Finance Inc.                       That portion of the Northwest  Quarter  (NW1/4)
                                                                                 of  Section  21  Township  21  South,  Range 61
                                                                                 East,  M.D.B.&M.,  more particularly  described
                                                                                 as  parcel  one (1) as shown by  parcel  map in
                                                                                 file 13,  Page 40,  recorded  June 14,  1977 as
                                                                                 document  No.   709873  of  official   records,
                                                                                 Clark County, Nevada.



                                                                                 Savings
                                                                                 and
                                                                                 excepting
                                                                                 therefrom
                                                                                 that
                                                                                 portion
                                                                                 of
                                                                                 the
                                                                                 hereinabove
                                                                                 described
                                                                                 property
                                                                                 conveyed
                                                                                 to
                                                                                 the
                                                                                 county
                                                                                 of
                                                                                 Clark,
                                                                                 State
                                                                                 of
                                                                                 Nevada,
                                                                                 by
                                                                                 document
                                                                                 no.744760
                                                                                 in
                                                                                 book
                                                                                 785
                                                                                 of
                                                                                 Official
                                                                                 Records,
                                                                                 Recorded
                                                                                 September
                                                                                 8,
                                                                                 1977
                                                                                 in
                                                                                 the
                                                                                 office
                                                                                 of
                                                                                 the
                                                                                 county
                                                                                 recorder
                                                                                 of
                                                                                 Clark
                                                                                 County,
                                                                                 Nevada.

                                                                                 (a) All buildings, structures, facilities,
                                                                                     landscaping and other improvements to the
                                                                                     land, etc.

                                                                                 (b) All additions, proceeds, substitutions,
                                                                                     replacements etc. on land



                                                                                     (c)
                                                                                     The
                                                                                     lease
                                                                                     of
                                                                                     the
                                                                                     land
                                                                                     between
                                                                                     Debtor
                                                                                     and
                                                                                     Secured
                                                                                     Party
                                                                                     dated
                                                                                     of
                                                                                     even
                                                                                     date
                                                                                     herewith
                                                                                     and
                                                                                     all
                                                                                     rights
                                                                                     of
                                                                                     Debtor
                                                                                     therein,
                                                                                     etc.

                                                                                 (d) Any and all  moneys,  goods,  accounts,
                                                                                     chattel  paper,  general  intangibles,
                                                                                     documents,  etc.  that the  Secured  Party is
                                                                                     authorized to receive.



                                                                                     (e)
                                                                                     All
                                                                                     unearned
                                                                                     premiums
                                                                                     under
                                                                                     insurance
                                                                                     policies,
                                                                                     all
                                                                                     proceeds
                                                                                     from
                                                                                     conversion
                                                                                     of
                                                                                     any
                                                                                     property
                                                                                     etc.

                                                                                  (f) Any process equipment, furniture, furnishings
                                                                                      or trade fixtures which are purchased or
                                                                                      constructed by Debtor

Sierra Health Services,                     BCL Capital                                 (1) Toshiba Copier System Model 1560
Inc. (Prin DB for Debtor                                                                (1) Toshiba Copier System Model 2460
Sierra Home Medical                                                                     (1) Toshiba Controller Model SC-1
Products)

Sierra Health Services,                     Norstan Financial                     Aspect  Call  Center  Model  200R  and  related
Inc.                                        Services Inc.                         equipment

Sierra Health Services,                     General Electric                      C-Arm Demo System per contract 509327 and related
Inc. (and Mohave Valley                     Company                               equipment.
Hospital & Medical
Center Inc.)

Sierra Health Services,                     Minolta Business                      (2?) Minolta D1520 Copiers
Inc.                                        Systems                               (3) Minolta D1250 Copiers
                                                                                  (1) Minolta 1030 Copier
                                                                                  (1) Minolta 1031F Copier

</TABLE>

*The  descriptions  of  collateral  contained  in  this  Schedule  VIII  may  be
abbreviated,  and are subject to the actual  descriptions  as they appear in the
original financing statements.


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