Exhibit 10.36

                                  $7,000,000.00



                           LOAN AND SECURITY AGREEMENT

                                  by and among

                         RAINTREE HEALTHCARE CORPORATION
                           BRITWILL HEALTHCARE COMPANY
                          BRITWILL FUNDING CORPORATION
                                CEDAR CARE, INC.
                            SHERWOOD HEALTHCARE CORP.
                          BRITWILL INVESTMENTS-I, INC.
                          BRITWILL INVESTMENTS-II, INC.
                          BRITWILL INDIANA PARTNERSHIP
                             BROOKSHIRE HOUSE, INC.
                        CHRISTOPHER NURSING CENTER, INC.
                              AMBERWOOD COURT, INC.
                       THE ARBORS HEALTH CARE CORPORATION
                                 LOS ARCOS, INC.
                               PUEBLO NORTE, INC.
                         RIO VERDE NURSING CENTER, INC.
                        SIGNATURE HEALTH CARE CORPORATION
                        SIGNATURE MANAGEMENT GROUP, INC.


                         (collectively, the "Borrower")

                                       and

                               HCFP FUNDING, INC.

                                 (the "Lender")





                                  May 11, 1999


<PAGE>

                           LOAN AND SECURITY AGREEMENT


THIS LOAN AND SECURITY AGREEMENT (the "Agreement" or the "New LOC II Agreement")
is made as of this  11th  day of May  1999,  by and  among  RAINTREE  HEALTHCARE
CORPORATION,  a Delaware  corporation  (f/k/a  Unison  Healthcare  Corporation),
BRITWILL   HEALTHCARE   COMPANY,  a  Delaware   corporation,   BRITWILL  FUNDING
CORPORATION,  a Delaware corporation,  CEDAR CARE, INC., an Indiana corporation,
SHERWOOD HEALTHCARE CORP., an Indiana corporation, BRITWILL INVESTMENTS-I, INC.,
a Delaware corporation,  BRITWILL  INVESTMENTS-II,  INC., a Delaware corporation
BRITWILL INDIANA PARTNERSHIP, an Arizona general partnership,  BROOKSHIRE HOUSE,
INC., a Colorado  corporation (f/k/a Asbury Circle,  Inc.),  CHRISTOPHER NURSING
CENTER,  INC.,  a  Colorado  corporation,  AMBERWOOD  COURT,  INC.,  a  Colorado
corporation  (f/k/a Valley Hi, Inc.),  THE ARBORS  HEALTH CARE  CORPORATION,  an
Arizona  corporation,  LOS ARCOS,  INC., a Colorado  corporation,  PUEBLO NORTE,
INC.,  a  Colorado  corporation  (f/k/a  Signature  Health  Care  of  California
Corporation), RIO VERDE NURSING CENTER, INC., a Colorado corporation,  SIGNATURE
HEALTH CARE CORPORATION, a Delaware corporation, and SIGNATURE MANAGEMENT GROUP,
INC., a Colorado corporation  (collectively,  "Borrower(s)");  and HCFP FUNDING,
INC., a Delaware corporation ("Lender").

                                    RECITALS

A.   Borrower  desires to  establish  certain  financing  arrangements  with and
borrow funds from Lender,  and Lender is willing to establish such  arrangements
for and make  loans  and  extensions  of credit  to  Borrower,  on the terms and
conditions set forth below.

B.   Borrower includes some of the Debtors in the jointly  administered  Chapter
11 bankruptcies  pending in the United States  Bankruptcy Court for the District
of  Arizona  (the  "Bankruptcy  Court")  (Case Nos.  B-98-06583-PHX-GBN  through
B-98-06612-PHX-GBN,  and Case Nos.  B-98-0173-PHX-GBN through B-98-0175-PHX-GBN)
(the "Bankruptcy Cases").

C.   By on Order dated  January 29, 1999 entered in the  Bankruptcy  Cases,  the
Bankruptcy Court has confirmed a plan of reorganization with respect to Borrower
(and  the  other  Debtors)  (as  confirmed,   the  "Reorganization  Plan").  The
Reorganization Plan contemplates that the Debtors, as reorganized, will obtain a
secured working line of credit of approximately  $12,000,000.00  (defined in the
Reorganization Plan as the "New Line of Credit"). The New Line of Credit will be
comprised  of the  credit  facility  of up to the  maximum  principal  amount of
$7,000,000.00  available to Borrower  under this New LOC II  Agreement,  and the
credit facility of up to the maximum principal amount of $7,000,000.00 available
to New LOC I Borrower  (as  defined  below)  under the New LOC I  Agreement  (as
defined below).  As provided below, the credit  facilities  available under this
New LOC II Agreement  and under the New LOC I Agreement are limited in principal
amount to the aggregate of $12,000,000.00.


                                       2
<PAGE>

D.   Borrower  and  New  LOC I  Borrower  consist  of  some  of the  Debtors  as
reorganized  pursuant to the  Reorganization  Plan  confirmed in the  Bankruptcy
Cases.

E.   The parties desire to define the terms and conditions of their relationship
in this Agreement.

NOW, THEREFORE, in consideration of the promises and covenants contained in this
Agreement, and for other consideration, the receipt and sufficiency of which are
acknowledged, the parties agree as follows:


                                    ARTICLE I

                                   DEFINITIONS

As used in  this  Agreement,  the  following  terms  shall  have  the  following
meanings:

SECTION 1.1.   ACCOUNT. "Account"  means any right to payment  for goods sold or
leased or  services  rendered,  whether or not  evidenced  by an  instrument  or
chattel paper, and whether or not earned by performance.

SECTION 1.2.   ACCOUNT DEBTOR.  "Account Debtor"  means any  Person obligated on
any  Account of  Borrower,  including  without  limitation,  any Insurer and any
Medicaid/Medicare Account Debtor.

SECTION 1.3.   AFFILIATE. "Affiliate" means, with respect to a specified Person,
any Person  directly or indirectly  controlling,  controlled by, or under common
control  with  the  specified  Person,   including   without   limitation  their
stockholders and any Affiliates  thereof.  A Person shall be deemed to control a
corporation if the Person possesses, directly or indirectly, the power to direct
or cause the direction of the management and business of the corporation whether
through the ownership of voting securities, by contract, or otherwise.

SECTION 1.4.   AGREEMENT. "Agreement" means this Loan and Security Agreement, as
it may be amended or  supplemented  from time to time.  This  Agreement  is also
referred to herein from time to time as the "New LOC II Agreement".

SECTION 1.5.   BASE  RATE. "Base  Rate"  means  a  rate  of  interest  equal  to
eighty-five  one-hundredths  of one  percent  (0.85%)  above the "Prime  Rate of
Interest".

SECTION 1.6.   BORROWED MONEY.  "Borrowed  Money" means any  obligation to repay
money,  any  indebtedness  evidenced  by notes,  bonds,  debentures  or  similar
obligations,  any obligation  under a conditional  sale or other title retention
agreement and the net  aggregate  rentals under any lease which under GAAP would
be  capitalized  on the  books  of the  Borrower  or  which  is the  substantial
equivalent of the financing of the property so leased.


                                       2
<PAGE>

SECTION 1.7.   BORROWER(S). "Borrower"  and  "Borrowers"  have the  meanings set
forth in the Preamble,  PROVIDED,  HOWEVER,  THAT  individual  references to the
singular  and the  plural  will not  limit  or  affect  the  joint  and  several
incurrence  of  Obligations,   granting  of  liens  and  security  interests  in
Collateral, and repayment and enforcement provisions provided herein.

SECTION 1.8.   BORROWING  BASE.  "Borrowing  Base" has the  meaning set forth in
Section 2.1 (d).

SECTION 1.9.   BUSINESS  DAY.  "Business  Day" means any day on which  financial
institutions are open for business in the State of Maryland, excluding Saturdays
and Sundays.

SECTION 1.10.  CLOSING;  CLOSING DATE.  "Closing"  and "Closing  Date" have the
meanings set forth in Section 5.3.

SECTION 1.11.  COLLATERAL.  "Collateral"  has the  meaning set forth in  Section
3.1.

SECTION 1.12.  COMMITMENT  FEE.  "Commitment  Fee"  has the meaning set forth in
Section 2.4(a).

SECTION 1.13.  CONCENTRATION ACCOUNT.  "Concentration Account"  has the  meaning
set forth in Section 2.3.

SECTION 1.14.  CONTROLLED GROUP.  "Controlled  Group" means a "controlled group"
within the meaning of Section 4001(b) of ERISA.

SECTION 1.15.  COST REPORT SETTLEMENT ACCOUNT.  "Cost Report Settlement Account"
means an  "Account"  owed to  Borrower  by a  Medicaid/Medicare  Account  Debtor
pursuant to any cost report,  either interim,  filed or audited,  as the context
may require.

SECTION 1.16.  DEFAULT RATE.  "Default Rate" means a rate per annum equal to two
percent (2%) above the Base Rate.

SECTION 1.17.  ERISA. "ERISA" has the meaning set forth in Section 4.12.

SECTION 1.18.  EVENT OF DEFAULT. "Event of Default" and "Events of Default" have
the meanings set forth in Section 8.1.

SECTION 1.19.  GAAP.  "GAAP"  means  generally  accepted  accounting  principles
applied in a matter  consistent  with the  financial  statements  referred to in
Section 4.7.

SECTION 1.20.  GOVERNMENTAL  AUTHORITY.   "Governmental  Authority"   means  and
includes any federal, state, District of Columbia,  county,  municipal, or other
government  and  any   department,   commission,   board,   bureau,   agency  or
instrumentality thereof, whether domestic or foreign.


                                       3
<PAGE>

SECTION 1.21.  HAZARDOUS  MATERIAL.  "Hazardous  Material"  means any substances
defined or designated as hazardous or toxic waste,  hazardous or toxic material,
hazardous or toxic  substance,  or similar term, by any  environmental  statute,
rule or regulation or any Governmental Authority.

SECTION 1.22.  HIGHEST  LAWFUL  RATE.   "Highest  Lawful Rate" means the maximum
lawful rate of interest  referred to in Section 2.8 that may accrue  pursuant to
this Agreement.

SECTION 1.23.  INSURER.  A Person that insures a Patient  against certain of the
costs incurred in the receipt by such Patient of Medical  Services,  or that has
an agreement  with Borrower to compensate  Borrower for providing  services to a
Patient.

SECTION 1.23A.  ISSUING BANK. "Issuing Bank" shall refer to Fleet Bank, N.A., or
such other bank  mutually  acceptable  to Lender and Borrower  from which Lender
obtains the issuance of any of the Letters of Credit in accordance  with Section
2.1(e).

SECTION 1.24.  LENDER. "Lender" has the meaning set forth in the Preamble.

SECTION 1.24A. LETTERS OF CREDIT.  "Letters of Credit" has the meaning set forth
in Section 2.1(e).

SECTION 1.25.  LOAN. "Loan" has the meaning set forth in Section 2.1(a).

SECTION  1.26. LOAN  DOCUMENTS.   "Loan  Documents"   means  and  includes  this
Agreement,  the  Note,  and each  and  every  other  document  now or  hereafter
delivered in connection therewith,  as any of them may be amended,  modified, or
supplemented from time to time.

SECTION 1.27.  LOAN  MANAGEMENT  FEE. "Loan  Management Fee" has the meaning set
forth in Section 2.4(c).

SECTION 1.28.  LOCKBOX. "Lockbox" has the meaning set forth in Section 2.3(a).

SECTION 1.29.  LOCKBOX BANK. "Lockbox Bank" has the meaning set forth in Section
2.3(a).

SECTION 1.30.  MAXIMUM LOAN AMOUNT.  "Maximum  Loan  Amount" has the meaning set
forth in Section 2.1(a).

SECTION 1.31.  MEDICAID/MEDICARE  ACCOUNT DEBTOR.  "Medicaid/  Medicare  Account
Debtor"  means any  Account  Debtor  which is (i) the  United  States of America
acting under the  Medicaid/Medicare  program established  pursuant to the Social
Security  Act, (ii) any state or the District of Columbia  acting  pursuant to a
health plan  adopted  pursuant to Title XIX of the Social  Security Act or (iii)
any agent, carrier, administrator or intermediary for any of the foregoing.

SECTION 1.32.  MEDICAL SERVICES.  Medical and health care services provided to a
Patient,  including,  but not  limited  to,  medical  and health  care  services
provided to a Patient and performed by Borrower which are covered by a policy of


                                       4
<PAGE>

insurance  issued by an Insurer,  and  includes  physician  services,  nurse and
therapist services, dental services, hospital services, skilled nursing facility
services,  comprehensive  outpatient  rehabilitation  services, home health care
services,  residential  and  out-patient  behavioral  healthcare  services,  and
medicine  or health  care  equipment  provided  by  Borrower  to a Patient for a
necessary or specifically requested valid and proper medical or health purpose.

SECTION 1.32A. NEW LOC II AGREEMENT.  "New LOC II Agreement" means this Loan and
Security Agreement,  as it may be amended or supplemented from time to time. The
term "New LOC II Agreement" is completely  synonymous and  interchangeable  with
"Agreement" as defined above.

SECTION 1.32B. NEW LOC I AGREEMENT.  "New LOC I Agreement"  means  that  certain
Loan and Security  Agreement  between  Lender and New LOC I Borrower dated as of
February 8, 1999, as it may be amended or supplemented  from time to time. Under
the New LOC I Agreement,  Lender makes  available to New LOC I Borrower a credit
facility of up to the maximum principal amount of $7,000,000.00  under the terms
and conditions stated in the New LOC I Agreement.

SECTION 1.32C. NEW LOC I BORROWER.  "New LOC I Borrower" means  collectively the
following Affiliates of Borrower:  RAINTREE HEALTHCARE  CORPORATION,  a Delaware
corporation  (f/k/a  Unison  Healthcare  Corporation),  SUNQUEST  SPC,  INC., an
Arizona corporation,  SAFFORD CARE, INC., a Colorado corporation, DOUGLAS MANOR,
INC.,  a  Colorado  corporation,  CORNERSTONE  CARE  CENTER,  INC.,  a  Colorado
corporation, and ARKANSAS, INC., a Colorado corporation.

SECTION 1.33.  NOTE. "Note" has the meaning set forth in Section 2.1(c).

SECTION 1.34.  OBLIGATIONS.  "Obligations"  has the meaning set forth in Section
3.1.

SECTION 1.35.  PATIENT.  "Patient" means any Person  receiving  Medical Services
from  Borrower and all Persons  legally  liable to pay Borrower for such Medical
Services other than Insurers.

SECTION 1.36.  PERMITTED LIENS. "Permitted Liens" means: (a) liens for taxes not
delinquent,  or which  are being  contested  in good  faith  and by  appropriate
proceedings  which  suspend  the  collection  thereof  and in  respect  of which
adequate  reserves have been made  (provided  that such  proceedings  do not, in
Lender's sole  discretion,  involve any substantial  danger of the sale, loss or
forfeiture of such property or assets or any interest therein);  (b) deposits or
pledges to secure obligations under workmen's  compensation,  social security or
similar laws, or under unemployment insurance; (c) deposits or pledges to secure
bids,  tenders,  contracts  (other  than  contracts  for the  payment of money),
leases, statutory obligations,  surety and appeal bonds and other obligations of
like  nature  arising  in the  ordinary  course  of  business;  (d)  mechanic's,
workmen's,  materialmen's  or other like liens arising in the ordinary course of
business  with  respect  to  obligations  which are not due,  or which are being
contested in good faith by appropriate  proceedings which suspend the collection
thereof and in respect of which adequate  reserves have been made (provided that
such  proceedings do not, in Lender's sole  discretion,  involve any substantial
danger  of the  sale,  loss or  forfeiture  of such  property  or  assets or any
interest  therein);  (e) liens and  encumbrances  in favor of Lender;  (f) liens
granted in connection  with the lease or purchase of property or assets financed


                                       5
<PAGE>

by  borrowings  permitted  by  Section  7.1  (provided,  however,  that  no such
borrowings  permitted  by  Section  7.1 may be  secured  by  liens on any of the
Collateral); and (g) liens set forth on SCHEDULE 1.36.

SECTION 1.37.  PERSON. "Person" means an individual,  partnership,  corporation,
trust,   joint  venture,   joint  stock  company,   limited  liability  company,
association,  unincorporated organization,  Governmental Authority, or any other
entity.

SECTION 1.38.  PLAN. "Plan" has the meaning set forth in Section 4.12.

SECTION 1.39.  PREMISES. "Premises" has the meaning set forth in Section 4.14.

SECTION 1.40.  PRIME RATE OF INTEREST.  "Prime Rate of Interest" means that rate
of interest quoted by Fleet National Bank of Connecticut, N.A., or any successor
thereto, as the same may from time to time fluctuate.

SECTION 1.41.  PROHIBITED   TRANSACTION.   "Prohibited   Transaction"   means  a
"prohibited  transaction"  within the meaning of Section 406 of ERISA or Section
4975(c)(1) of the Internal Revenue Code.

SECTION 1.42.  QUALIFIED  ACCOUNT.   "Qualified  Account"  means an  Account  of
Borrower  generated in the ordinary course of Borrower's  business from the sale
of goods or rendition of medical services which Lender, in its reasonable credit
judgment,  deems to be a Qualified  Account.  Without limiting the generality of
the  foregoing,  no Account  shall be a Qualified  Account if: (a) it is payable
directly to Borrower by a Medicaid/Medicare Account Debtor or commercial medical
Insurer  acceptable to Lender in its reasonable  discretion,  and remains unpaid
more  than one  hundred  twenty  (120)  days  past the  claim  or  service  date
(provided,  however, that to be Qualified such Medicaid/Medicare Account must be
billed within thirty (30) days after the applicable  Medical  Services have been
rendered);   (b)  it  or  any  portion  thereof  is  payable  by  an  individual
beneficiary,  recipient or subscriber  individually and remains unpaid more than
thirty (30) days after the  applicable  Medical  Services have been rendered (it
being agreed by Borrower that,  outstanding  Revolving Credit Loans with respect
to such  pre-billed  Accounts  shall at no time exceed  $1,300,000.00);  (c) the
Account is subject to any defense, set-off,  counterclaim,  deduction, discount,
credit, chargeback, freight claim, allowance, or adjustment of any kind; (d) any
part of any  goods  the sale of which has  given  rise to the  Account  has been
returned, rejected, lost, or damaged; (e) if it arises from the sale of goods by
Borrower, such sale was not an absolute sale or on consignment or on approval or
on a  sale-or-return  basis  or  subject  to  any  other  repurchase  or  return
agreement,  or such goods have not been  shipped  to the  Account  Debtor or its
designee; (f) if it arises from the performance of services,  such services have
not been actually been performed or were undertaken in violation of any law; (g)
the Account is subject to a lien other than a Permitted  Lien;  (h) the Borrower
knows or should have known of the bankruptcy,  receivership,  reorganization, or


                                       6
<PAGE>

insolvency of the Account Debtor;  (i) the Account is evidenced by chattel paper
or an  instrument  of any kind in which  Lender does not have a first  priority,
perfected  security  interest,  or has been  reduced to  judgment;  (j) it is an
Account of an Account Debtor having its principal place of business or executive
office  outside the United  States;  (k) the Account  Debtor is an  Affiliate or
Subsidiary of Borrower; (l) more than ten percent (10%) of the aggregate balance
of all Accounts  owing from the Account  Debtor  obligated on the Account (other
than Medicaid or Medicare Account Debtors) are outstanding more than one hundred
twenty (120) days past their invoice date;  (m) more than fifteen  percent (15%)
of the  aggregate  balance of all Accounts  owing from any  individual  Medicaid
Account Debtor  obligated on the Account are  outstanding  more than one hundred
fifty (150) days past their invoice date;  (n) more than twenty percent (20%) of
the aggregate  balance of all Accounts owing from any individual  Account Debtor
(other than a  Medicaid/Medicare  Account  Debtor)  obligated on the Account are
outstanding  more than one hundred fifty (150) days past their invoice date; (o)
fifty  percent  (50%) or more of the  Accounts  from the Account  Debtor are not
deemed  Qualified  Accounts  hereunder;  (p) the total  unpaid  Accounts  of the
Account Debtor,  except for a  Medicaid/Medicare  Account Debtor,  exceed twenty
percent (20%) of the net amount of all Qualified  Accounts;  (q) the Account has
been  generated  through the  operation  of one of the nursing  home  facilities
listed on  SCHEDULE  4.15 as to which  Lender has not yet  received  an estoppel
certificate that is substantially in the form of EXHIBIT D attached hereto or is
otherwise  acceptable  to  Lender  in  form  and  substance  (r)  any  covenant,
representation or warranty  contained in the Loan Documents with respect to such
Account  has  been  breached;  or (s)  the  Account  fails  to meet  such  other
specifications  and  requirements  which may from time to time be established by
Lender.

SECTION 1.43.  REPORTABLE EVENT.  "Reportable Event"  means a "reportable event"
as defined in Section 4043(b) of ERISA.

SECTION 1.44.  REVOLVING CREDIT LOAN.  "Revolving Credit Loan"  has the  meaning
set forth in Section 2.1(b).

SECTION 1.45.  TERM. "Term" has the meaning set forth in Section 2.8.

SECTION 1.46.  USAGE  FEE.  "Usage  Fee"  has the  meaning  set forth in Section
2.4(b).


                                   ARTICLE II

                                      LOAN

SECTION 2.1.  TERMS.

     (a)  The maximum aggregate principal amount of credit extended by Lender to
Borrower  hereunder  (the "Loan") that may be  outstanding  at any time is Seven
Million and No/100 ($7,000,000.00) (the "Maximum Loan Amount").  Notwithstanding
the foregoing, or anything else in this Agreement to the contrary,  however, the
total of the aggregate  outstanding principal amount of the Loan made under this
Agreement and the aggregate  outstanding  principal amount of the Loan under the
New LOC I Agreement shall not exceed Twelve Million and No/100 ($12,000,000.00).

     (b)  The Loan shall be in the  nature of a  revolving  line of credit,  and
shall  include sums  advanced and other credit  extended by Lender to or for the
benefit  of the  Borrower  from  time  to  time  under  this  Article  2 (each a
"Revolving Credit Loan"),  limited at all times to the least of: (i) the Maximum
Loan  Amount;  (ii)  the  availability  in the  Borrowing  Base;  or  (iii)  the


                                       7
<PAGE>

difference between $12,000,000.00 and the outstanding Loan owing pursuant to the
New LOC I Agreement (as defined therein).  Depending on the requests of Borrower
pursuant  to the terms and  conditions  of  Sections  2.1(e) and 2.2 below,  the
outstanding principal balance of the Loan may fluctuate from time to time, to be
reduced by  repayments  made by Borrower  (which may be made without  penalty or
premium),  and to be increased by future  Revolving  Credit Loans,  advances and
other  extensions of credit to or for the benefit of Borrower,  and shall be due
and  payable  in full upon the  expiration  of the Term.  For  purposes  of this
Agreement, any determination as to whether there is ability within the Borrowing
Base for  advances  or  extensions  of  credit  shall be made by  Lender  in its
reasonable discretion and is final and binding upon Borrower.

     (c)  At Closing,  Borrower shall execute and deliver to Lender a promissory
note  evidencing  Borrower's   unconditional  obligation  to  repay  Lender  for
Revolving Credit Loans,  advances, and other extensions of credit made under the
Loan  (including  without  limitation  Borrower's  obligations  with  respect to
Letters of Credit),  in the form of EXHIBIT A to this  Agreement  (the  "Note"),
dated the date  hereof,  payable to the order of Lender in  accordance  with the
terms thereof.  The Note (and the principal balance of the Loan outstanding from
time to time  thereunder,  but not  including  the portion of the Loan owing for
undrawn  Letters of Credit)  shall bear  interest  from the date  thereof  until
repaid,  with interest  payable  monthly in arrears on the first Business Day of
each  month,  at a rate per  annum (on the  basis of the  actual  number of days
elapsed over a year of 360 days) equal to the Base Rate,  provided that after an
occurrence or during the  continuance  of an Event of Default such rate shall be
equal to the  Default  Rate.  Each  Revolving  Credit  Loan,  advance  and other
extension  of credit  shall be  deemed  evidenced  by the Note,  which is deemed
incorporated by reference herein and made a part hereof.

     (d)  As used  herein,  the term  "Borrowing  Base"  shall mean that  amount
equal,  at any  applicable  time,  to  eighty-five  percent  (85%) of  Qualified
Accounts due and owing from any  Medicaid/Medicare  Account  Debtor,  Insurer or
other Account  Debtor.  Notwithstanding  any other  provision of this Agreement,
advances  under the Loan  shall not be made in an amount  that  would  cause the
total amount  outstanding  under the Loan (after  taking into account a proposed
advance) to exceed the amount of the Borrowing Base.

     (e)  Borrower may request from time to time that Lender obtain from Issuing
Bank  irrevocable  standby  letters of credit  (collectively,  the  "Letters  of
Credit")  issued  on  behalf  of  Borrower  for the  benefit  of  third  parties
identified  by  Borrower,   PROVIDED  THAT:   (i)  the  aggregate   amount  that
beneficiaries  of  outstanding  Letters  of Credit  may draw at any time may not
exceed the amount equal to  $2,500,000.00  less the aggregate face amount of all
Letters of Credit outstanding pursuant to the New LOC I Agreement; and (ii) when
a Letter of Credit  is  issued,  the  maximum  amount  that can be drawn on that
Letter of Credit by the  beneficiary  thereof  shall be deemed an advance  under
this Agreement for purposes of determining  Borrower's  borrowing capacity under
the Loan.  Such advances  shall be deemed  Revolving  Credit Loans and therefore
part of the Loan owing by Borrower  hereunder,  but shall be deemed to be repaid
as the amounts  that can be drawn under  Letters of Credit are reduced from time


                                       8
<PAGE>

to time in accordance with the terms and conditions thereof. In the event of any
draw under a Letter of Credit: (i) Borrower shall immediately  thereafter pay to
Lender an amount equal to all amounts that Lender has paid to, or owes,  Issuing
Bank in  relation  to that  Letter of Credit;  and (ii) the  portion of the Loan
comprised of Borrower's  obligations  with respect to the Letter of Credit drawn
upon shall  thereafter bear interest at the applicable rate for the remainder of
the Loan (not including obligations related to other Letters of Credit). Payment
and performance of all obligations and liabilities of Borrower to Lender arising
in  connection  with the  Letters of Credit,  including  but not  limited to all
obligations   and   liabilities   of  Borrower  to  Lender  under  the  fee  and
reimbursement  agreement (in a form acceptable to Lender in its sole discretion)
that shall be entered into by Borrower and Lender with respect to each Letter of
Credit,  shall be secured by the liens and security  interests in the Collateral
granted to Lender under this  Agreement.  Notwithstanding  any of the foregoing,
Lender's  failure,  for any  reason,  to  obtain a Letter of Credit on behalf of
Borrower  following  a request by  Borrower  shall not  constitute  a default by
Lender under this Agreement.

SECTION 2.2. LOAN ADMINISTRATION. Borrowings under the Loan shall be as follows:

     (a)  A request  for a  Revolving  Credit  Loan  shall be made,  or shall be
deemed to be made, in the following manner:  (i) Borrower may give Lender notice
of its intention to borrow, in which notice Borrower shall specify the amount of
the proposed borrowing and the proposed borrowing date, not later than 2:00 p.m.
Eastern  time  one (1)  Business  Day  prior  to the  proposed  borrowing  date;
PROVIDED,  HOWEVER, that no such request may be made at a time when there exists
an Event of Default;  and (ii) the  becoming  due (after the  expiration  of the
applicable  grace period,  if any) of any amount  required to be paid under this
Agreement,  whether as  interest  or for any other  Obligation,  shall be deemed
irrevocably  to be a request for a Revolving  Credit Loan on the due date in the
amount required to pay such interest or other Obligation.

     (b)  Borrower hereby irrevocably authorizes Lender to disburse the proceeds
of each Revolving Credit Loan requested,  or deemed to be requested, as follows:
(i) the  proceeds of each  Revolving  Credit  Loan  requested  under  subsection
2.2(a)(i)  shall be disbursed by Lender by wire transfer to such bank account as
may be agreed upon by  Borrower  and Lender  from time to time or  elsewhere  if
pursuant  to written  direction  from  Borrower;  and (ii) the  proceeds of each
Revolving Credit Loan requested under  subsection  2.2(a)(ii) shall be disbursed
by Lender by way of direct payment of the relevant interest or other Obligation.

     (c)  All Revolving Credit Loans, advances and other extensions of credit to
or for the benefit of Borrower shall constitute the Obligation of Borrower,  and
shall be secured by Lender's lien upon all of the Collateral of the Borrower.

     (d)  Lender  shall  enter all  Revolving  Credit  Loans as debits to a loan
account in the name of Borrower  and shall also record in said loan  account all
payments  made by Borrower on any  Obligations  and all  proceeds of  Collateral
which are  indefeasibly  paid to Lender,  and may record therein,  in accordance
with customary accounting practice, other debits and credits, including interest
and all charges and expenses  properly  chargeable to Borrower.  All collections
into the Concentration Account pursuant to Section 2.3 shall be applied first to
fees,  costs and  expenses  due and  owing  under  the Loan  Documents,  then to
interest  due and  owing  under  the  Loan  Documents,  and  then  to  principal
outstanding with respect to Revolving Credit Loans.


                                       9
<PAGE>

     (e)  Lender will account to Borrower  monthly with a statement of Revolving
Credit Loans,  charges and payments made  pursuant to this  Agreement,  and such
account  rendered by Lender  shall,  absent  manifest  error,  be deemed  final,
binding and  conclusive  upon Borrower  unless Lender is notified by Borrower in
writing to the contrary  within thirty (30) days of the date each  accounting is
mailed to  Borrower.  Such notice  shall be deemed an  objection  to those items
specifically objected to therein.

SECTION 2.3.  COLLECTIONS, DISBURSEMENTS,  BORROWING  AVAILABILITY,  AND LOCKBOX
ACCOUNT. Borrower shall maintain one or more lockbox accounts (collectively, the
"Lockbox")  with Bank One Arizona,  N.A.  (the "Lockbox  Bank"),  subject to the
provisions of this Agreement,  and shall execute with the Lockbox Bank a Lockbox
Agreement in the form acceptable to Lender,  and such other  agreements  related
thereto as Lender may require.  Borrower  shall ensure that all  collections  of
Accounts are paid directly from Account  Debtors into the Lockbox,  and that all
funds  paid into the  Lockbox  are  immediately  transferred  into a  depository
account  maintained  by Lender at Bank One Arizona,  N.A. or U.S.  Bank N.A., as
determined by Lender in its sole  discretion and  communicated  to Borrower (the
"Concentration  Account").  Lender  shall  apply,  on a daily  basis,  all funds
transferred  into the  Concentration  Account  pursuant  to this  Section 2.3 to
reduce the outstanding indebtedness under the Loan, with future Revolving Credit
Loans,  advances and other  extensions  of credit to be made by Lender under the
conditions  set forth in this Article II. To the extent that any  collections of
Accounts or proceeds of other  Collateral  are not sent  directly to the Lockbox
but are received by Borrower,  such  collections  shall be held in trust for the
benefit of Lender and immediately remitted, in the form received, to the Lockbox
Bank for  transfer to the  Concentration  Account  immediately  upon  receipt by
Borrower. Borrower acknowledges and agrees that its compliance with the terms of
this Section 2.3 is essential, and that upon its failure to comply with any such
terms  Lender  shall be  entitled  to assess a  non-compliance  fee which  shall
operate  to  increase  the Base Rate by two  percent  (2%) per annum  during any
period of non-compliance. Lender shall be entitled to assess such fee whether or
not an Event of Default is declared or otherwise  occurs.  All funds transferred
from the  Concentration  Account for  application to Borrower's  indebtedness to
Lender  shall be  applied  to  reduce  the Loan  balance,  but for  purposes  of
calculating  interest,  shall be subject to a five (5)  Business  Day  clearance
period.  If as the result of collections  of Accounts  pursuant to the terms and
conditions  of this  Section 2.3 a credit  balance  exists  with  respect to the
Concentration Account, such credit balance shall not accrue interest in favor of
Borrower, but shall be available to Borrower at any time or times for so long as
no Event of Default exists.

SECTION 2.4.  FEES.

     (a)  Upon execution of this Agreement,  Borrower shall  unconditionally pay
to Lender a commitment fee equal to Ten Thousand and No/100 Dollars ($10,000.00)
(the "Commitment Fee").

     (b)  For  so  long  as  the  Loan  is  available   to  Borrower,   Borrower
unconditionally  shall pay to Lender a monthly usage fee (the "Usage Fee") equal
to one twelfth  (1/12th) of one and  one-quarter  percent (1.25%) of the average
amount by which the  Maximum  Loan  Amount  exceeds  the  average  amount of the


                                       10
<PAGE>

outstanding principal balance of the Revolving Credit Loans during the preceding
month.  The Usage Fee shall be  payable  monthly  in arrears on the first day of
each successive calendar month.

     (c)  For  so  long  as  the  Loan  is  available   to  Borrower,   Borrower
unconditionally  shall pay to Lender a quarterly loan  management fee (the "Loan
Management  Fee") equal to Three Thousand Seven Hundred Fifty and No/100 Dollars
($3,750.00)  per  quarter  within  the Term.  The Loan  Management  Fee shall be
payable quarterly in advance on the first day of each February,  May, August and
November while this Agreement remains in effect.

     (d)  Borrower shall pay to Lender all  reasonable  audit and appraisal fees
in connection with audits and appraisals of Borrower's  books and records on not
more than a quarterly  basis while no Event of Default exists and is continuing,
which shall be due and payable on the first Business Day of the month  following
the date of issuance by Lender of a request  for  payment  thereof to  Borrower;
provided,  however,  that (i) absent an Event of Default the payment by Borrower
of the quarterly Loan Management Fee shall satisfy its payment obligations under
this  Section  2.4(d)  for  the  applicable  quarter,  and  (ii)  following  the
occurrence or during the continuation of an Event of Default the hourly rates of
the professionals  selected by Lender to perform the audits and appraisals shall
be reasonable in relation to the scope of the services performed.

     (e)  Borrower shall pay to Lender,  on demand,  any and all fees,  costs or
expenses  which  Lender  or any  participant  pays  to a bank or  other  similar
institution  (including,  without  limitation,  any fees  paid by  Lender to any
participant) arising out of or in connection with (i) the forwarding to Borrower
or any other Person on behalf of Borrower,  by Lender,  of proceeds of Revolving
Credit Loans made by Lender to Borrower pursuant to this Agreement, and (ii) the
depositing for collection, by Lender or any participant, of any check or item of
payment  received  or  delivered  to Lender or any  participant  on  account  of
Obligations.

     (f)  Borrower shall pay to Lender,  on demand,  any and all fees,  costs or
expenses which Lender pays to Issuing Bank arising out of or in connection  with
any Letter of Credit issued on behalf of Borrower. In addition, on the date that
any Letter of Credit is issued or renewed by Issuing Bank, Borrower shall pay to
Lender a fee equal to four  percent  (4%) of the face  amount  of the  Letter of
Credit issued or renewed.

SECTION 2.5.  PAYMENTS.  Principal  payable on account of Revolving Credit Loans
shall be payable by Borrower to Lender  immediately upon the earliest of (i) the
receipt by Borrower of any proceeds of any of the  Collateral,  to the extent of
such proceeds, (ii) any draw under a Letter of Credit, to the extent provided in
Section  2.1(e)  hereof,  (iii)  the  occurrence  of  an  Event  of  Default  in
consequence of which the Loan and the maturity of the payment of the Obligations
are accelerated,  or (iv) the termination of this Agreement  pursuant to Section
2.8 hereof;  PROVIDED,  HOWEVER, that if any advance made by Lender in excess of
the Borrowing Base shall exist at any time,  Borrower  shall,  immediately  upon
demand,  repay such overadvance.  Interest accrued on the Revolving Credit Loans
shall be due on the  earliest of (i) the first  Business  Day of each month (for
the  immediately  preceding  month),  computed on the last  calendar  day of the


                                       11
<PAGE>

preceding  month,  (ii) the  occurrence of an Event of Default in consequence of
which  the  Loan  and  the  maturity  of  the  payment  of the  Obligations  are
accelerated,  or (iii) the termination of this Agreement pursuant to Section 2.8
hereof. Except to the extent otherwise set forth in this Agreement, all payments
of  principal  and of  interest  on the Loan,  all other  charges  and any other
obligations of Borrower hereunder,  shall be made to Lender to the Concentration
Account, in immediately available funds.

SECTION 2.6.  USE OF PROCEEDS.  The proceeds of Lender's advances under the Loan
shall be used solely for working capital and for other costs of Borrower arising
in the ordinary course of Borrower's business.

SECTION 2.7.  INTEREST RATE LIMITATION.  The parties intend to  conform strictly
to the applicable  usury laws in effect from time to time during the term of the
Loan.  Accordingly,  if any  transaction  contemplated  hereby would be usurious
under  such laws,  then  notwithstanding  any other  provision  hereof:  (a) the
aggregate of all interest that is contracted  for,  charged,  or received  under
this  Agreement  or under any other Loan  Document  shall not exceed the maximum
amount of interest  allowed by applicable  law, and any excess shall be promptly
credited to Borrower by Lender (or, to the extent that such consideration  shall
have been paid,  such excess shall be promptly  refunded to Borrower by Lender);
(b) neither  Borrower  nor any other Person now or  hereafter  liable  hereunder
shall be obligated  to pay the amount of such  interest to the extent that it is
in excess of the maximum  interest  permitted by  applicable  law (the  "Highest
Lawful  Rate");  and (c) the effective  rate of interest shall be reduced to the
Highest Lawful Rate. All sums paid, or agreed to be paid, to Lender for the use,
forbearance,  and  detention  of the debt of  Borrower to Lender  shall,  to the
extent permitted by applicable law, be allocated throughout the full term of the
Note until  payment is made in full so that the actual rate of interest does not
exceed the Highest Lawful Rate in effect at any particular  time during the full
term  thereof.  If at any time the rate of interest  under the Note  exceeds the
Highest Lawful Rate,  the rate of interest to accrue  pursuant to this Agreement
shall be  limited,  notwithstanding  anything  to the  contrary  herein,  to the
Highest Lawful Rate,  but any  subsequent  reductions in the Base Rate shall not
reduce the  interest  to accrue  pursuant  to this  Agreement  below the Highest
Lawful  Rate until the total  amount of  interest  accrued  equals the amount of
interest  that  would  have  accrued  if a varying  rate per annum  equal to the
interest  rate  under the Note had at all  times  been in  effect.  If the total
amount  of  interest  paid or  accrued  pursuant  to this  Agreement  under  the
foregoing  provisions  is less than the total mount of interest  that would have
accrued if a varying  rate per annum equal to the  interest  rate under the Note
had been in effect, then Borrower agrees to pay to Lender an amount equal to the
difference  between (a) the lesser of (i) the amount of interest that would have
accrued if the Highest Lawful Rate had at all times been in effect,  or (ii) the
amount of interest  that would have accrued if a varying rate per annum equal to
the  interest  rate under the Note had at all times been in effect,  and (b) the
amount of  interest  accrued in  accordance  with the other  provisions  of this
Agreement.

SECTION 2.8.  TERM.

     (a)  Subject to Lender's  right to cease making  Revolving  Credit Loans to
Borrower upon or after any Event of Default,  this Agreement  shall be in effect
for a period of three (3) years from the  Closing  Date,  unless  terminated  as


                                       12
<PAGE>

provided in this Section 2.8 (the "Term"), and this Agreement may be renewed for
one-year periods thereafter upon the mutual written agreement of the parties.

     (b)  Upon at least  thirty  (30) days  prior  written  notice to  Borrower,
Lender may  terminate  this  Agreement as of the end of the Term. In all events,
however,  Lender may terminate this  Agreement  without notice upon or after the
occurrence of an Event of Default.

     (c)  Upon at least  thirty  (30) days prior  written  notice to Lender (the
"Termination  Notice Period"),  Borrower may terminate this Agreement before the
third annual  anniversary  of the Closing Date,  provided that, at the effective
date of such termination,  Borrower shall pay to Lender (in addition to the then
outstanding  principal,  accrued interest and other  Obligations owing under the
terms of this Agreement and any other Loan Documents) as liquidated  damages for
the loss of bargain  and not as a penalty,  an amount  equal to (i) two  percent
(2%) of the Maximum Loan Amount if the  effective  date of such  termination  by
Borrower is on or before the first annual  anniversary of the Closing Date, (ii)
one  percent  (1%) of the  Maximum  Loan  Amount if the  effective  date of such
termination  by Borrower is after the first  annual  anniversary  of the Closing
Date and before the second annual anniversary of the Closing Date, and (iii) one
percent  (1%)  of  the  Maximum  Loan  Amount  if the  effective  date  of  such
termination  by Borrower is after the second annual  anniversary  of the Closing
Date and before the third annual anniversary of the Closing Date.

     (d)  All of the  Obligations  shall be immediately due and payable upon the
termination  date of this Agreement  (the  "Termination  Date");  provided that,
notwithstanding anything in Section 2.8(c) to the contrary, the Termination Date
shall be effective no earlier than the first Business Day of the month following
the expiration of the Termination Notice Period.  All undertakings,  agreements,
covenants,  warranties,  and  representations  of Borrower contained in the Loan
Documents  shall survive any such  termination and Lender shall retain its liens
in the  Collateral  and all of its rights and remedies  under the Loan Documents
notwithstanding  such  termination  until  Borrower has paid the  Obligations to
Lender, in full, in immediately available funds.

     (e)  Notwithstanding  any provision of this Agreement which makes reference
to the  continuance of an Event of Default,  nothing in this Agreement  shall be
construed to permit Borrower to cure an Event of Default  following the lapse of
the  applicable  cure  period,  and  Borrower  shall  have no such  right in any
instance unless specifically granted in writing by Lender.

SECTION  2.9.  JOINT AND SEVERAL  LIABILITY;  BINDING  OBLIGATIONS.  Each entity
comprising  Borrower and executing this Agreement on behalf of Borrower shall be
jointly and  severally  liable for all of the  Obligations.  In  addition,  each
entity  comprising  Borrower  hereby  acknowledges  and  agrees  that all of the
representations,  warranties, covenants, obligations, conditions, agreements and
other terms  contained in this  Agreement  shall be  applicable  to and shall be
binding upon each individual  entity comprising  Borrower,  and shall be binding
upon all such entities when taken together.


                                   ARTICLE III

                                   COLLATERAL

SECTION 3.1.  GENERALLY.  As  security  for the  payment of all  liabilities  of
Borrower to Lender,  including without  limitation:  (i) indebtedness  evidenced


                                       13
<PAGE>

under  the  Note,  repayment  of  Revolving  Credit  Loans,  advances  and other
extensions  of credit,  all fees and charges  owing by  Borrower,  and all other
liabilities  and  obligations of every kind or nature  whatsoever of Borrower to
Lender, whether now existing or hereafter incurred, joint or several, matured or
unmatured,  direct or indirect, primary or secondary,  related or unrelated, due
or to become due,  including but not limited to any  extensions,  modifications,
substitutions,  increases and renewals thereof,  (ii) the payment of all amounts
advanced  by Lender  to  preserve,  protect,  defend,  and  enforce  its  rights
hereunder  and in the following  property in  accordance  with the terms of this
Agreement,  and  (iii)  the  payment  of all  expenses  incurred  by  Lender  in
connection therewith (collectively, the "Obligations"),  Borrower hereby assigns
and grants to Lender a continuing  first priority lien on and security  interest
in, upon, and to the following property (the "Collateral"):

     (a)  All  of  Borrower's   now-owned  and  hereafter  acquired  or  arising
Accounts,   accounts  receivable  and  rights  to  payment  of  every  kind  and
description,  and any contract rights,  chattel paper, documents and instruments
with respect thereto,  together with all fees and other payments due Borrower in
connection with its management of nursing homes and other healthcare facilities;

     (b)  All of Borrower's now owned and hereafter  acquired or arising general
intangibles of every kind and description  pertaining to its Accounts,  accounts
receivable  and other  rights to  payment,  including,  but not  limited to, all
existing and future customer lists, choses in action,  claims,  books,  records,
contracts,  licenses,  formulae,  tax and other types of refunds,  returned  and
unearned insurance premiums, rights and claims under insurance policies relating
to any of the Collateral, and computer information, software, records, and data;

     (c)  All of  Borrower's  now or hereafter  acquired  deposit  accounts into
which Accounts are deposited, including the Lockbox Account;

     (d)  All of Borrower's  monies and other  property of every kind and nature
now or at any time or times  hereafter in the possession of or under the control
of Lender or a bailee or Affiliate of Lender; and

     (e)  The proceeds  (including,  without limitation,  insurance proceeds) of
all of the foregoing.

Notwithstanding  anything in this  Agreement to the contrary,  the parties agree
that if (i) Lender has  extended  credit  hereunder  equal to the  Maximum  Loan
Amount, and (ii) thereafter Borrower receives an offer, term sheet or commitment
(for purposes of the Section,  an "Offer") from any Person to provide permanent,
long term,  short term or any other  financing  (for  purposes of this  Section,
"Additional  Financing") with respect to Borrower,  Borrower shall first forward
the Offer to the  Lender,  and the  Lender  shall  have  thirty  (30) days after


                                       14
<PAGE>

receipt (the "Option  Period") to agree to provide the  Additional  Financing in
place of such third party upon the terms and  conditions  set forth in the Offer
and to notify  Borrower in writing of the Lender's  acceptance of the Offer (the
"Acceptance  Notice").  If Borrower has not received an Acceptance Notice within
the Option Period,  then Borrower  shall be free to consummate  the  transaction
described  in  the  Offer  with  the  third  party   providing  the  Offer  (the
"Transaction"),  provided that (a) any liens on Collateral granted to such third
party shall be generated solely and exclusively  through the operation of one or
more nursing homes or other healthcare facilities not owned, operated or managed
by any of the  entities  comprising  Borrower  as of the Closing  Date,  and (b)
Lender shall obtain signed  documentation from such third party financing source
confirming  (in  form  and  substance   satisfactory  to  Lender,  in  its  sole
discretion)  that  such  third  party  has no  security  interest  in any of the
Collateral  generated at any nursing home or other  healthcare  facility  owned,
operated or managed by any of the entities comprising Borrower as of the Closing
Date. If the  Transaction  is not  consummated  with such third party during the
longer of (i) the one hundred  twenty (120) day period  following the expiration
of the Option  Period,  and (ii) the period (if any)  proposed  in the Offer for
completion  of  the  Transaction,  then  Borrower  shall  not  be  permitted  to
consummate  the  Transaction  without again  complying  with this  Section.  For
purposes of this Section  only,  the "Lender"  shall mean and include  either of
HCFP Funding, Inc., HCFP Funding II, Inc., HealthCare Financial Partners REIT, a
Maryland  corporation,  or any other parent company,  subsidiary or Affiliate of
HCFP  Funding,  Inc.  or the  parent  company  or  subsidiaries  of any of  such
entities.

SECTION 3.2. LIEN DOCUMENTS. At Closing and thereafter as Lender deems necessary
in its sole  discretion,  Borrower shall execute and deliver to Lender,  or have
executed and delivered (all in form and substance  satisfactory to Lender in its
sole discretion):

     (a)  UCC-1 Financing  statements pursuant to the Uniform Commercial Code in
effect in the jurisdictions in which Borrower operates, which Lender may file in
any  State  where  any  Collateral  is or  may  be  located  and  in  any  other
jurisdiction   that  Lender   deems   appropriate;   PROVIDED   that  a  carbon,
photographic,  or other  reproduction  or other copy of this  Agreement  or of a
financing  statement  is  sufficient  as and may be filed in lieu of a financing
statement;

     (b)  Any other  agreements,  documents,  instruments,  and writings  deemed
necessary by Lender or as Lender may otherwise  request from time to time in its
reasonable  discretion  to  evidence,  perfect,  or protect  Lender's  liens and
security interests in the Collateral required hereunder.

SECTION 3.3.  COLLATERAL ADMINISTRATION.

     (a)  All Collateral  (except deposit accounts) will at all times be kept by
Borrower at its  principal  office(s)  as set forth on SCHEDULE  4.15 hereto and
shall not, without the prior written approval of Lender, be moved therefrom.


                                       15
<PAGE>

     (b)  Borrower shall keep accurate and complete  records of its Accounts and
all payments and collections thereon and shall submit to Lender on such periodic
basis as Lender shall request a sales and  collections  report for the preceding
period, in form satisfactory to Lender. In addition, if Accounts in an aggregate
face amount in excess of $50,000.00 become  ineligible  because they fall within
one of the specified  categories of ineligibility set forth in the definition of
Qualified Accounts or otherwise, Borrower shall notify Lender of such occurrence
on the first  Business  Day  following  such  occurrence  (or  immediately  upon
Borrower's   preparation   of  a  monthly  aging  schedule  if  the  reason  for
ineligibility  is that the  Account  has  remained  unpaid for  longer  than the
applicable  period  for  Qualified  Accounts),  and  the  Borrowing  Base  shall
thereupon  be adjusted  to reflect  such  occurrence.  If  requested  by Lender,
Borrower shall execute and deliver to Lender formal  written  assignments of all
of its Accounts weekly or daily, which shall include all Accounts that have been
created since the date of the last  assignment,  together with copies of claims,
invoices or other information related thereto.

     (c)  Whether  or not an Event of  Default  has  occurred,  any of  Lender's
officers,  employees  or  agents  shall  have  the  right,  at any time or times
hereafter,  in the name of Lender, any designee of Lender or Borrower, to verify
the  validity,  amount or any other  matter  relating  to any  Accounts by mail,
telephone, telegraph or otherwise. Borrower shall cooperate fully with Lender in
an effort to facilitate and promptly conclude such verification process.

     (d)  To expedite collection,  Borrower shall endeavor in the first instance
to make  collection of its Accounts for Lender.  Lender retains the right at all
times after the  occurrence  and during the  continuance of an Event of Default,
subject to applicable law regarding Medicaid/Medicare Account Debtors, to notify
Account  Debtors  that  Accounts  have been  assigned  to Lender  and to collect
Accounts  directly  in its own name  and to  charge  the  collection  costs  and
expenses, including attorneys' fees to Borrower.

SECTION 3.4.  OTHER ACTIONS.  In addition to the  foregoing,  Borrower (i) shall
provide prompt written notice to each private  indemnity,  managed care or other
Insurer who either is currently an Account  Debtor or becomes an Account  Debtor
at any time  following  the date hereof that the Lender has been granted a first
priority lien and security  interest in, upon and to all Accounts  applicable to
such Insurer,  and hereby  authorizes Lender to send any and all similar notices
to such  Insurers  by Lender,  and (ii) shall do  anything  further  that may be
lawfully  required by Lender to secure Lender and  effectuate the intentions and
objects  of this  Agreement,  including  but not  limited to the  execution  and
delivery of lockbox agreements, continuation statements, amendments to financing
statements,  and any other documents  required  hereunder.  At Lender's request,
Borrower  shall also  immediately  deliver to Lender all items for which  Lender
must receive possession to obtain a perfected security interest. Borrower shall,
on Lender's demand, deliver to Lender all notes, certificates,  and documents of
title,  chattel paper,  warehouse receipts,  instruments,  and any other similar
instruments constituting Collateral.

SECTION 3.5.  SEARCHES.  Prior to Closing, and thereafter (as and when requested
by Lender in its  reasonable  discretion),  Borrower shall obtain and deliver to
Lender the following  searches  against Borrower (the results of which are to be


                                       16
<PAGE>

consistent with Borrower's representations and warranties under this Agreement),
all at its own expense:

     (a)  Uniform Commercial Code searches with the Secretary of State and local
filing  offices of each  jurisdiction  where  Borrower  maintains  its executive
offices, a place of business, or assets;

     (b)  Judgment,  federal tax lien and corporate tax lien  searches,  in each
jurisdiction searched under clause (a) above; and

     (c)  Good standing  certificates showing Borrower to be in good standing in
its  state of  formation  and in each  other  state  in  which  it is doing  and
presently intends to do business for which qualification is required.

SECTION 3.6. POWER OF ATTORNEY. To the extent permitted by applicable bankruptcy
law, each of the officers of Lender is hereby, or, if required, upon application
to the bankruptcy court, may be, irrevocably made, constituted and appointed the
true and lawful attorney for Borrower  (without  requiring any of them to act as
such) with full power of substitution to do the following:  (a) endorse the name
of Borrower upon any and all checks, drafts, money orders, and other instruments
for the payment of money that are payable to Borrower and constitute collections
on  Borrower's  Accounts;  (b)  execute in the name of  Borrower  any  financing
statements, schedules, assignments,  instruments, documents, and statements that
Borrower  is  obligated  to give  Lender  hereunder;  and (c) do such  other and
further acts and deeds in the name of Borrower that Lender may deem necessary or
desirable  to enforce  any  Account  or other  Collateral  or  perfect  Lender's
security interest or lien in any Collateral.  In addition,  if Borrower breaches
its  obligation  to direct  payments of the  proceeds of the  Collateral  to the
Lockbox Account, Lender, as the irrevocably made, constituted and appointed true
and lawful  attorney  for  Borrower  pursuant  to this  paragraph,  may,  by the
signature or other act of any of Lender's  officers  (without  requiring  any of
them  to  do  so),  direct  any  federal,  state  or  private  payor  or  fiscal
intermediary to pay proceeds of the Collateral to Borrower by directing  payment
to the Lockbox Account.


                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

     Each entity  comprising  Borrower,  jointly and  severally,  represents and
warrants to Lender,  and shall be deemed to represent and warrant on each day on
which any Obligations shall be outstanding hereunder, that:

SECTION 4.1.  SUBSIDIARIES.  Except as set forth in  SCHEDULE 4.1,  Borrower has
no subsidiaries.

SECTION 4.2.  ORGANIZATION  AND GOOD  STANDING.  Borrower is a corporation  duly
organized, validly existing, and in good standing under the laws of its state of
incorporation, is in good standing as a foreign corporation in each jurisdiction
in which the  character of the  properties  owned or leased by it therein or the


                                       17
<PAGE>

nature of its business  makes such  qualification  necessary,  has the corporate
power and  authority  to own its assets and transact the business in which it is
engaged, and has obtained all certificates, licenses and qualifications required
under  all laws,  regulations,  ordinances,  or  orders  of  public  authorities
necessary  for  the  ownership  and  operation  of  all of  its  properties  and
transaction of all of its business.

SECTION 4.3. AUTHORITY. Borrower has full corporate power and authority to enter
into,  execute,  and  deliver  this  Agreement  and to perform  its  obligations
hereunder, to borrow the Loan, to execute and deliver the Note, and to incur and
perform the obligations  provided for in the Loan  Documents,  all of which have
been duly authorized by all necessary  corporate  action. No consent or approval
of shareholders of, or lenders to, Borrower and no consent,  approval, filing or
registration  with any Governmental  Authority is required as a condition to the
validity of the Loan Documents or the performance by Borrower of its obligations
thereunder.

SECTION 4.4.  BINDING  AGREEMENT.  This  Agreement and all other Loan  Documents
constitute,  and the Note,  when issued and delivered  pursuant hereto for value
received,  will  constitute,  the  valid  and  legally  binding  obligations  of
Borrower,  enforceable  against  Borrower in  accordance  with their  respective
terms.

SECTION 4.5.  LITIGATION.  Except  as disclosed  in SCHEDULE  4.5,  there are no
actions,  suits,  proceedings or  investigations  pending or threatened  against
Borrower  before  any  court or  arbitrator  or  before  or by any  Governmental
Authority which, in any one case or in the aggregate, if determined adversely to
the  interests  of the  Borrower,  could have a material  adverse  effect on the
business, properties,  condition (financial or otherwise) or operations, present
or  prospective,  of  Borrower,  or upon its ability to perform its  obligations
under the Loan  Documents.  Borrower is not in default with respect to any order
of any court,  arbitrator,  or Governmental  Authority applicable to Borrower or
its properties.

SECTION 4.6.  NO CONFLICTS.  Except as disclosed in SCHEDULE  4.6, the execution
and delivery by Borrower of this  Agreement and the other Loan Documents do not,
and the performance of its obligations  thereunder will not,  violate,  conflict
with,  constitute  a  default  under,  or result  in the  creation  of a lien or
encumbrance upon the property of Borrower under: (a) any provision of Borrower's
articles of incorporation or its bylaws,  (b) any provision of any law, rule, or
regulation applicable to Borrower,  or (c) any of the following:  (i) any lease,
indenture or other  agreement or instrument  to which  Borrower is a party or by
which Borrower or its property is bound;  or (ii) any judgment,  order or decree
of  any  court,   arbitration   tribunal,   or  Governmental   Authority  having
jurisdiction over Borrower which is applicable to Borrower.

SECTION 4.7.  FINANCIAL  CONDITION.  The audited financial  statements of Unison
Healthcare  Corporation and its subsidiaries  (including the entities comprising
the  Borrower)  (collectively,  the  "Consolidated  Company") as of December 31,
1997,  certified by Ernst & Young, and the unaudited financial statements of the
Consolidated  Company as of November  30,  1998,  certified by an officer of the
Consolidated  Company,  which have been delivered to Lender,  fairly present the


                                       18
<PAGE>

financial  condition  of  the  Consolidated  Company  and  the  results  of  its
operations  and  changes  in  financial  condition  as of the  dates and for the
periods  referred to, and have been prepared in accordance with GAAP.  There are
no material unrealized or anticipated liabilities,  direct or indirect, fixed or
contingent,  of the  Consolidated  Company  as of the  dates  of such  financial
statements  which are not reflected  therein or in the notes thereto,  except as
otherwise   disclosed  in  the   disclosure   statement   with  respect  to  the
Reorganization   Plan  filed  by  the  Debtors  in  the  Bankruptcy  Cases.  The
Consolidated  Company's  fiscal  year  ends on  December  31.  The  federal  tax
identification  numbers for the entities  comprising  the Borrower are listed on
SCHEDULE 4.7.

SECTION 4.8.  NO DEFAULT.  Except as disclosed in SCHEDULE 4.6,  Borrower is not
in default under or with respect to any obligation in any respect which could be
adverse to its business,  operations,  property or financial condition, or which
could adversely affect the ability of Borrower to perform its obligations  under
the Loan  Documents.  No Event of  Default  or event  which,  with the giving of
notice or lapse of time, or both, could become an Event of Default, has occurred
and is continuing.

SECTION 4.9.  TITLE TO PROPERTIES. Borrower has good and marketable title to its
properties  and assets,  including the  Collateral and the properties and assets
reflected in the financial  statements  described in Section 4.7,  subject to no
lien, mortgage,  pledge, encumbrance or charge of any kind, other than Permitted
Liens.  Borrower has not agreed or consented to cause any of its  properties  or
assets whether owned now or hereafter acquired to be subject in the future (upon
the happening of a contingency  or  otherwise)  to any lien,  mortgage,  pledge,
encumbrance or charge of any kind other than Permitted Liens.

SECTION 4.10.  TAXES.  Except as disclosed on SCHEDULE 4.10, Borrower has filed,
or has obtained  extensions for the filing of, all federal,  state and other tax
returns  which are required to be filed,  and has paid all taxes shown as due on
those  returns and all  assessments,  fees and other  amounts due as of the date
hereof.  All tax  liabilities of Borrower were, as of November 30, 1998, and are
now,  adequately  provided for on  Borrower's  books.  No tax liability has been
asserted by the  Internal  Revenue  Service or other  taxing  authority  against
Borrower for taxes in excess of those already paid.

SECTION 4.11.  SECURITIES AND BANKING LAWS AND REGULATIONS.

     (a)  The use of the  proceeds  of the Loan and  Borrower's  issuance of the
Note will not  directly or  indirectly  violate or result in a violation  of the
Securities  Act of 1933 or the Securities  Exchange Act of 1934, as amended,  or
any  regulations   issued  pursuant  thereto,   including   without   limitation
Regulations  U, T, G, or X of the  Board of  Governors  of the  Federal  Reserve
System.  Borrower is not engaged in the  business  of  extending  credit for the
purpose of the purchasing or carrying "margin stock" within the meaning of those
regulations.  No part of the  proceeds  of the  Loan  hereunder  will be used to
purchase  or carry  any  margin  stock or to extend  credit  to others  for such
purpose.

     (b)  Borrower  is not an  investment  company  within  the  meaning  of the
Investment  Company Act of 1940, as amended,  nor is it, directly or indirectly,
controlled by or acting on behalf of any Person which is an  investment  company
within the meaning of that Act.


                                       19
<PAGE>

SECTION 4.12. ERISA. No employee benefit plan (a "Plan") subject to the Employee
Retirement Income Security Act of 1974 ("ERISA") and regulations issued pursuant
thereto that is  maintained by Borrower or under which  Borrower  could have any
liability  under  ERISA  (a)  has  failed  to  meet  minimum  funding  standards
established  in  Section  302 of  ERISA,  (b) has  failed  to  comply  with  all
applicable requirements of ERISA and of the Internal Revenue Code, including all
applicable  rulings  and  regulations  thereunder,  (c) has  engaged  in or been
involved in a prohibited  transaction (as defined in ERISA) under ERISA or under
the Internal Revenue Code, or (d) has been terminated. Borrower has not assumed,
or  received  notice  of a  claim  asserted  against  Borrower  for,  withdrawal
liability (as defined in the Multi-Employer Pension Plan Amendments Act of 1980,
as amended) with respect to any multi-employer  pension plan and is not a member
of any Controlled Group (as defined in ERISA). Borrower has timely made when due
all contributions  with respect to any  multi-employer  pension plan in which it
participates  and no event has occurred  triggering a claim against Borrower for
withdrawal  liability with respect to any  multi-employer  pension plan in which
Borrower participates.

SECTION  4.13.  COMPLIANCE  WITH LAW.  Except as  described  in  SCHEDULE  4.13,
Borrower  is  not in  violation  of  any  statute,  rule  or  regulation  of any
Governmental  Authority  (including,  without limitation,  any statute,  rule or
regulation  relating to employment  practices or to environmental,  occupational
and health standards and controls). Borrower has obtained all licenses, permits,
franchises, and other governmental authorizations necessary for the ownership of
its  properties  and the conduct of its  business.  Borrower is current with all
reports and documents  required to be filed with any state or federal securities
commission or similar Governmental  Authority and is in full compliance with all
applicable rules and regulations of such commissions.

SECTION 4.14.  ENVIRONMENTAL  MATTERS.  No use, exposure,  release,  generation,
manufacture,  storage,  treatment,   transportation  or  disposal  of  Hazardous
Material has occurred or is occurring on or from any real  property on which the
Collateral  is  located  or which is owned,  leased  or  otherwise  occupied  by
Borrower  (the  "Premises"),  or off the  Premises  as a result of any action of
Borrower,  except as described in SCHEDULE  4.14.  All Hazardous  Material used,
treated,  stored,  transported to or from, generated or handled on the Premises,
or off the Premises by Borrower,  has been disposed of on or off the Premises by
or on behalf of Borrower in a lawful manner.  There are no  underground  storage
tanks  present on or under the Premises  owned or leased by  Borrower.  No other
environmental,  public  health or  safety  hazards  exist  with  respect  to the
Premises.

SECTION 4.15.  PLACES OF BUSINESS.  The only places of business of Borrower, and
the  places  where it keeps  and  intends  to keep the  Collateral  and  records
concerning  the  Collateral,  are at the addresses  set forth in SCHEDULE  4.15.
SCHEDULE 4.15 also lists the owner of record of each such property.

SECTION 4.16.  INTELLECTUAL PROPERTY. Borrower exclusively owns or possesses all
the patents,  patent applications  trademarks  trademark  applications,  service
marks, trade names, copyrights, franchises, licenses, and rights with respect to
the  foregoing  necessary  for the  present and  planned  future  conduct of its
business,  without any  conflict  with the rights of others.  A list of all such
intellectual property (indicating the nature of Borrower's interest), as well as


                                       20
<PAGE>

all  outstanding  franchises  and  licenses  given  by or held by  Borrower,  is
attached  as SCHEDULE  4.16.  Borrower  is not in default of any  obligation  or
undertaking with respect to such intellectual property or rights.

SECTION 4.17.  STOCK  OWNERSHIP. The identity of the stockholders of all classes
of the outstanding stock of each entity comprising  Borrower,  together with the
respective ownership percentages held by such stockholders,  are as set forth on
SCHEDULE 4.17.

SECTION 4.18. MATERIAL FACTS. Neither this Agreement nor any other Loan Document
nor any other agreement, document, certificate, or statement furnished to Lender
by or on behalf of Borrower in  connection  with the  transactions  contemplated
hereby  contains  any  untrue  statement  of  material  fact or omits to state a
material  fact  necessary in order to make the  statements  contained  herein or
therein  not  misleading.  There is no fact  known to  Borrower  that  adversely
affects or in the future may adversely affect the business,  operations, affairs
or financial condition of Borrower, or any of its properties or assets.

SECTION 4.19.  INVESTMENTS, GUARANTEES, AND CERTAIN CONTRACTS. Borrower does not
own or hold any equity or long-term debt  investments  in, have any  outstanding
advances to, have any outstanding guarantees for the obligations of, or have any
outstanding  borrowings from, any Person,  except as described on SCHEDULE 4.19.
Borrower is not a party to any contract or agreement,  or subject to any charter
or other corporate restriction, which adversely affects its business.

SECTION 4.20.   BUSINESS  INTERRUPTIONS.  Within  five  years  prior to the date
hereof, neither the business,  property or assets, or operations of Borrower has
been adversely affected in any way by any casualty, strike, lockout, combination
of  workers,  or order of the United  States of  America  or other  Governmental
Authority,  directed against Borrower.  There are no pending or threatened labor
disputes,  strikes,  lockouts,  or similar  occurrences  or  grievances  against
Borrower or its business.

SECTION 4.21.  NAMES.  Within five years prior to the date hereof,  Borrower has
not  conducted  business  under or used any other  name  (whether  corporate  or
assumed) other than as shown on SCHEDULE 4.21. Borrower is the sole owner of all
names listed on that Schedule and any and all business done and invoices  issued
in such names are Borrower's sales, business,  and invoices.  Each trade name of
Borrower  represents a division or trading  style of Borrower and not a separate
corporate subsidiary or independent Affiliate.

SECTION 4.22.  JOINT VENTURES.  Borrower is not engaged in any joint  venture or
partnership with any other Person, except as set forth on SCHEDULE 4.22.

SECTION 4.23.  ACCOUNTS.  Lender may rely,  in  determining  which  Accounts are
Qualified Accounts,  on all statements and representations made by Borrower with
respect to any Account or  Accounts.  Unless  otherwise  indicated in writing to
Lender, with respect to each Account:

     (a)  It is genuine and in all  respects  what it purports to be, and is not
evidenced by a judgment;

                                       21
<PAGE>

     (b)  It arises out of a  completed,  BONA FIDE sale and delivery of (or, in
the case of an Account relating to individual  recipients of Medical Services, a
BONA FIDE  pre-billing  for) goods or  rendition  of services by Borrower in the
ordinary  course of its business and in accordance with the terms and conditions
of all purchase orders, contracts, certification,  participation, certificate of
need,  or other  documents  relating  thereto and forming a part of the contract
between Borrower and Account Debtor (provided, however, that in the case only of
pre-billed Accounts to individual recipients of Medical Services covered by such
Account, the services will be rendered in full within thirty (30) days following
the claim or invoice date);

     (c)  It is for a liquidated  amount maturing as stated in a duplicate claim
or invoice covering such sale or rendition of services, a copy of which has been
furnished  or is  available  to Lender (or in the case only of Accounts  owed by
Medicaid/Medicare  Account Debtors,  Borrower has furnished Lender with evidence
reasonably  satisfactory to Lender that the Medical  Services have been rendered
but  have  not  yet   been   invoiced   solely   as  a  result   of   applicable
Medicaid/Medicare billing procedures);

     (d)  Such Account, and Lender's security interest therein, is not, and will
not (by voluntary act or omission by Borrower), be in the future, subject to any
offset, lien,  deduction,  defense,  dispute,  counterclaim or any other adverse
condition,  and each such  Account is  absolutely  owing to Borrower  and is not
contingent in any respect or for any reason;

     (e)  There are no facts,  events or occurrences which in any way impair the
validity or  enforceability of any Accounts or tend to reduce the amount payable
thereunder from the face amount of the claim or invoice and statements delivered
to Lender with respect thereto;

     (f)  To the best of Borrower's knowledge, the Account Debtor thereunder (i)
had the capacity to contract at the time any contract or other  document  giving
rise to the Account was executed and (ii) such Account Debtor is solvent;

     (g)  To the best of  Borrower's  knowledge,  there  are no  proceedings  or
actions which are threatened or pending  against any Account  Debtor  thereunder
which might  result in any  material  adverse  change in such  Account  Debtor's
financial condition or the collectibility of such Account;

     (h)  It has been billed and forwarded to the Account  Debtor for payment in
accordance  with  applicable  laws and compliance and  conformance  with any and
requisite  procedures,  requirements and regulations  governing  payment by such
Account  Debtor  with  respect to such  Account (or in the case only of Accounts
owed by  Medicaid/Medicare  Account Debtors,  Borrower has furnished Lender with
evidence  reasonably  satisfactory to Lender that the Medical Services have been
rendered  but have not yet  been  invoiced  solely  as a  result  of  applicable
Medicaid/Medicare   billing  procedures),   and  such  Account  if  due  from  a
Medicaid/Medicare Account Debtor is properly payable directly to Borrower; and


                                       22
<PAGE>

     (i)  Borrower has  obtained and  currently  has all  certificates  of need,
Medicaid and Medicare provider numbers,  licenses, permits and authorizations as
necessary in the generation of such Accounts.

SECTION 4.24.  SOLVENCY. Both before and after giving effect to the transactions
contemplated  by the terms and  provisions of this  Agreement (and following the
effective date of the Reorganization Plan): (i) Borrower (taken as a whole) owns
property  whose fair saleable  value is greater than the amount  required to pay
all of  Borrower's  Indebtedness  (including  contingent  debts),  (ii) Borrower
(taken  as a  whole)  was and is able  to pay  all of its  Indebtedness  as such
Indebtedness  matures, and (iii) Borrower (taken as a whole) had and has capital
sufficient  to carry on its  business  and  transactions  and all  business  and
transactions  in which  it  about  to  engage.  For  purposes  hereof,  the term
"Indebtedness" means, without duplication (x) all items which in accordance with
GAAP  would  be  included  in  determining  total  liabilities  as  shown on the
liability  side of a  balance  sheet  of such  Borrower  as of the date on which
Indebtedness  is to be  determined,  (y) all  obligations of any other person or
entity which such Borrower has guaranteed, and (z) the Obligations.

SECTION 4.25.  NO APPROVALS,  ETC. No approval,  authorization,  bond,  consent,
certificate,  franchise, license, permit, registration,  qualification, or other
action or grant by or filing with any Governmental  Authority or other Person is
required in connection with the execution,  delivery, or performance (other than
performance which is not yet due) by any Borrower of the Loan Documents.

SECTION 4.26. PURPOSE OF ADVANCES. The purpose of each advance under the Loan is
a business  purpose,  and the  proceeds of each  advance will be used solely for
working  capital and for other costs of Borrower  arising in the ordinary course
of Borrower's business.

SECTION 4.27.  APPROVALS AND PERMITS; ASSETS AND PROPERTY. To the best knowledge
of  Borrower,  Borrower  has obtained and there are in full force and effect all
approvals  and permits  presently  necessary  for the conduct of the business of
each  Borrower,  and each  Borrower  owns,  leases,  or licenses  all assets and
property  necessary for conduct of the business and operations of such Borrower,
except as otherwise permitted pursuant to this Agreement, except for any failure
to own,  lease or license such assets and property that would not,  individually
or in the aggregate, be materially adverse to the business,  properties, assets,
operations, prospects, or condition (financial or otherwise) of Borrower.

SECTION 4.28.  GOVERNMENTAL  REGULATION.   Borrower is not subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, and
Investment  Company  Act of 1940,  the  Interstate  Commerce  Act (as any of the
preceding have been amended),  or any other law which regulates the incurring by
Borrower of  indebtedness,  including but not limited to laws relating to common
or contract  carriers or the sale of electricity,  gas,  steam,  water, or other
public utility services.

SECTION 4.29. YEAR 2000 COMPLIANCE. Borrower will use its best efforts to insure
that all devices, systems, machinery,  information technology, computer software
and hardware,  and other date sensitive  technology (jointly and severally,  the
"Systems")  necessary  for  Borrower  to  carry  on its  business  as  presently


                                       23
<PAGE>

conducted  and as  contemplated  to be  conducted  in the  future  are Year 2000
Compliant or will be Year 2000 Compliant  within a period of time  calculated to
result in no material disruption of any of Borrower's business  operations.  For
purposes of these provisions,  "Year 2000 Compliant" means that such Systems are
designed to be used prior to, during and after the Gregorian  calendar year 2000
A.D. and will operate  during each such time period  without  error  relating to
date data, specifically including any error relating to, or the product of, date
data  which  represents  or  references  different  centuries  or more  than one
century.


                                    ARTICLE V

                        CLOSING AND CONDITIONS OF LENDING

SECTION 5.1.  CONDITIONS  PRECEDENT TO  AGREEMENT.  The  obligation of Lender to
enter into and perform  this  Agreement  and to make  Revolving  Credit Loans is
subject to the following conditions precedent:

     (a)  Lender shall have received two (2) originals of this Agreement and all
other Loan  Documents  required  to be  executed  and  delivered  at or prior to
Closing  (other  than  the  Note,  as to which  Lender  shall  receive  only one
original), executed by Borrower and any other required Persons, as applicable.

     (b)  Lender shall have received all searches and good standing certificates
required by section 3.5.

     (c)  Borrower shall have complied and shall then be in compliance  with all
the terms, covenants and conditions of the Loan Documents.

     (d)  There shall have occurred no Event of Default and no event which, with
the giving of notice or the lapse of time,  or both,  could  constitute  such an
Event of Default.

     (e)  The  representations  and warranties  contained in Article IV shall be
true and correct.

     (f)  Lender  shall  have   received   copies  of  all  board  of  directors
resolutions  and other  corporate  action  taken by  Borrower to  authorize  the
execution,  delivery and  performance of the Loan Documents and the borrowing of
the Loan  thereunder,  as well as the names and  signatures  of the  officers of
Borrower  authorized to execute documents on its behalf in connection  herewith,
all as also certified as of the date hereof by an officer of Borrower,  and such
other papers as Lender may require.

     (g)  Lender shall have  received  copies,  certified  as true,  correct and
complete by a corporate  officer of Borrower,  of the articles of  incorporation
and bylaws of Borrower,  with any amendments  thereto,  and all other  documents
necessary for  performance  of the  obligations of Borrower under this Agreement
and the other Loan Documents.


                                       24
<PAGE>

     (h)  Lender shall have received a written  opinion of counsel for Borrower,
dated the date hereof, substantially in the form of EXHIBIT C.

     (i)  Lender  shall  have  received  such  financial  statements,   reports,
certifications,  and other  operational  information  required  to be  delivered
hereunder,  including  without  limitation an initial borrowing base certificate
calculating the Borrowing Base.

     (j)  Lender shall have received the Commitment Fee.

     (k)  The Lockbox and the Concentration Account shall have been established.

     (l)  INTENTIONALLY OMITTED.

     (m)  Lender shall have received a certificate of Borrower's chief financial
officer,  dated the  Closing  Date,  certifying  that (i) all of the  conditions
specified  in this  Section  have been  fulfilled,  (ii) no Event of Default has
occurred, and that no event has occurred which, with the giving of notice or the
lapse of time,  or both,  could  constitute  an Event of Default,  and (iii) the
representations and warranties contained in Article IV are true and correct..

     (n)  Lender shall have received  copies of  certificates  of insurance that
show that the  insurance  requirements  stated in Section 6.7 of this  Agreement
have been satisfied, and that the insurance is in full force and effect.

SECTION 5.2.  CONDITIONS  PRECEDENT  TO  ADVANCES.   Notwithstanding  any  other
provision of this Agreement, no Loan proceeds,  Revolving Credit Loans, advances
or other extensions of credit under the Loan shall be disbursed hereunder unless
the following conditions have been satisfied or waived immediately prior to such
disbursement:

     (a)  Lender shall have received  from Borrower a Borrowing  Base Report and
Compliance Certificate in a form acceptable to Lender in its sole discretion.

     (b)  The  representations  and warranties on the part of Borrower contained
in Article IV of this Agreement shall be true and correct in all respects at and
as of the date of disbursement or advance, as though made on and as of such date
(except to the extent that such  representations and warranties expressly relate
solely to an  earlier  date and except  that the  references  in Section  4.7 to
financial  statements  shall be deemed to be a reference to the then most recent
annual and interim financial statements of Borrower furnished to Lender pursuant
to Section 6.1 hereof).

     (c)  No Event of Default or event  which,  with the giving of notice of the
lapse of time, or both, could become an Event of Default shall have occurred and
be continuing or would result from the making of the disbursement or advance.


                                       25
<PAGE>

     (d)  No  adverse   change  in  the  condition   (financial  or  otherwise),
properties,  business,  or  operations  of Borrower  shall have  occurred and be
continuing with respect to Borrower since the date hereof.

     (e)  Borrower  shall have used its best  efforts  to obtain and  provide to
Lender an estoppel  certificate  substantially in the form of EXHIBIT D attached
hereto from Borrower's landlord or sublandlord, as the case may be, with respect
to each of the facilities identified on SCHEDULE 4.15.

SECTION 5.3.  CLOSING.  Subject  to the  conditions  of this Article V, the Loan
shall be made  available  on the date as is mutually  agreed by the parties (the
"Closing  Date") at such time as may by mutually  agreeable  to the parties upon
the  execution  hereof  (the  "Closing")  at such place as may be  requested  by
Lender.

SECTION 5.4. WAIVER OF RIGHTS. By completing the Closing hereunder, or by making
advances under the Loan, Lender does not waive a breach of any representation or
warranty  of Borrower  hereunder  or under any other Loan  Document,  and all of
Lender's  claims and rights  resulting from any breach or  misrepresentation  by
Borrower are specifically reserved by Lender.


                                   ARTICLE VI

                              AFFIRMATIVE COVENANTS

Each  Borrower  covenants  and agrees  that for so long as  Borrower  may borrow
hereunder  and until  payment in full of the Note and  performance  of all other
obligations of Borrower under the Loan Documents:

SECTION 6.1.  FINANCIAL STATEMENTS AND COLLATERAL REPORTS. Borrower will furnish
to Lender (a) a sales and  collections  report  and  accounts  receivable  aging
schedule on a form  acceptable to Lender within  fifteen (15) days after the end
of each calendar  month;  (b) payable aging  schedules  within fifteen (15) days
after the end of each calendar month; (c) internally  prepared monthly financial
statements  for the  Consolidated  Company  (as such term is  defined in Section
4.7), certified by a duly authorized officer of Borrower, within forty-five (45)
days of the end of each calendar month; (d) quarterly  financial  statements for
the Consolidated Company on Form 10-Q, certified by a duly authorized officer of
Borrower,  within  forty-five  (45) days of the end of each  fiscal  quarter  of
Borrower; (e) to the extent prepared by Borrower, annual projections, profit and
loss statements,  balance sheets,  and cash flow reports  (prepared on a monthly
basis) for the succeeding  fiscal year within thirty (30) days before the end of
each of Borrower's  fiscal  years;  (f)  internally  prepared  annual  financial
statements  for  Borrower  within  sixty  (60)  days  after  the  end of each of
Borrower's  fiscal  years;  (g)  annual  audited  financial  statements  for the
Consolidated  Company prepared by Ernst & Young or a firm of independent  public


                                       26
<PAGE>

accountants  satisfactory  to Lender,  within  ninety (90) days after the end of
each of Borrower's  fiscal years; (h) promptly upon receipt  thereof,  copies of
any reports submitted to Borrower by independent  accountants in connection with
any interim audit of the books of Borrower and copies of each management control
letter  provided  to  Borrower  by  independent  accountants;  (i)  as  soon  as
available,  copies of all financial  statements and notices provided by Borrower
to all of its  stockholders;  and (j) such  additional  information,  reports or
statements as Lender may from time to time request.  Annual financial statements
shall set forth in comparative form figures for the corresponding periods in the
prior fiscal year.  All financial  statements  shall include a balance sheet and
statement of earnings and shall be prepared in accordance with GAAP.

SECTION 6.2.  PAYMENTS HEREUNDER.  Borrower will make all payments of principal,
interest,  fees, and all other payments required hereunder,  under the Loan, and
under any other agreements with Lender to which Borrower is a party, as and when
due.

SECTION 6.3.  EXISTENCE, GOOD STANDING,  AND COMPLIANCE WITH LAWS. Borrower will
do or cause to be done all things necessary (a) to obtain and keep in full force
and effect all corporate existence, rights, licenses, privileges, and franchises
of Borrower  necessary  to the  ownership  of its property or the conduct of its
business,  and comply with all applicable  present and future laws,  ordinances,
rules,  regulations,  orders and decrees of any Governmental Authority having or
claiming  jurisdiction  over  Borrower;  and (b) to  maintain  and  protect  the
properties  used or useful in the conduct of the  operations  of Borrower,  in a
prudent  manner,  including  without  limitation the maintenance at all times of
such insurance upon its insurable  property and operations as required by law or
by Section 6.7 hereof.

SECTION 6.4.  LEGALITY.  The making of the Loan and each disbursement or advance
under the Loan shall not be subject to any penalty or special tax,  shall not be
prohibited by any governmental order or regulation  applicable to Borrower,  and
shall not violate any rule or  regulation  of any  Governmental  Authority,  and
necessary consents,  approvals and authorizations of any Governmental  Authority
to or of any such disbursement or advance shall have been obtained.

SECTION 6.5.  LENDER'S  SATISFACTION.  All  instruments  and legal documents and
proceedings in connection with the  transactions  contemplated by this Agreement
shall be  satisfactory  in form and  substance  to Lender and its  counsel,  and
Lender  shall have  received  all  documents,  including  records  of  corporate
proceedings  and  opinions  of  counsel,  which  Lender  may have  requested  in
connection therewith.

SECTION 6.6.  TAXES AND CHARGES.  Borrower  will timely file all tax reports and
pay and discharge all post-petition taxes,  assessments and governmental charges
or levies imposed upon Borrower, or its income or profits or upon its properties
or any part  thereof,  before the same shall be in default and prior to the date
on which  penalties  attach  thereto,  as well as all  lawful  claims for labor,
material,  supplies or otherwise which, if unpaid, might become a lien or charge
upon the properties or any part thereof of Borrower; PROVIDED, HOWEVER, that the
Borrower  shall not be  required  to pay and  discharge  or cause to be paid and
discharged  any  such  tax,  assessment,  charge,  levy or  claim so long as the
validity or amount  thereof shall be contested in good faith and by  appropriate
proceedings  by Borrower,  and the Borrower  shall have set aside on their books


                                       27
<PAGE>

adequate reserve therefor;  and PROVIDED FURTHER, that such deferment of payment
is  permissible  only so long as Borrower's  title to, and its right to use, the
Collateral is not adversely  affected  thereby and Lender's lien and priority on
the Collateral are not adversely affected, altered or impaired thereby.

SECTION 6.7.  INSURANCE.  Borrower  will carry  adequate  public  liability  and
professional  liability  insurance with  responsible  companies  satisfactory to
Lender in such amounts and against such risks as is  customarily  maintained  by
similar  businesses and by owners of similar  property in the same general area,
including without limitation insurance on the Collateral covering such risks and
in such form and amount as may be  required  by Lender  from time to time,  with
loss payable to Lender as its interests may appear. Upon request,  Borrower will
deliver  certificates of insurance  regarding such  insurance,  or copies of the
insurance policy or policies, to Lender.

SECTION  6.8.  GENERAL  INFORMATION.   Borrower  will  furnish  to  Lender  such
information  as Lender  may,  from time to time,  request  with  respect  to the
business or financial affairs of Borrower,  and permit any officer,  employee or
agent of Lender to visit and  inspect  any of the  properties,  to  examine  the
minute books, books of account and other records,  including  management letters
prepared  by  Borrower's  auditors,  of  Borrower,  and make  copies  thereof or
extracts therefrom, and to discuss its and their business affairs,  finances and
accounts with, and be advised as to the same by, the accountants and officers of
Borrower, all at such times and as often as Lender may require.

SECTION 6.9.  MAINTENANCE OF PROPERTY. Borrower will maintain, keep and preserve
all of its properties in good repair,  working order and condition and from time
to time make all needful and proper repairs, renewals, replacements, betterments
and  improvements  thereto,  so  that  the  business  carried  on in  connection
therewith may be properly and advantageously conducted at all times.

SECTION 6.10.   NOTIFICATION  OF EVENTS OF  DEFAULT  AND  ADVERSE  DEVELOPMENTS.
Borrower  promptly will notify Lender upon the  occurrence  of: (a) any Event of
Default;  (b) any event  which,  with the giving of notice or lapse of time,  or
both,  could  constitute  an Event of  Default;  (c) any event,  development  or
circumstance  whereby the financial  statements  previously  furnished to Lender
fail in any material  respect to present  fairly,  in accordance  with GAAP, the
financial  condition  and  operational  results of Borrower;  (d) any  judicial,
administrative  or arbitration  proceeding  pending  against  Borrower,  and any
judicial or administrative proceeding known by Borrower to be threatened against
it which, if adversely decided,  could adversely affect its condition (financial
or  otherwise)  or  operations  (present  or  prospective)  or which may  expose
Borrower to uninsured  liability of $25,000.00 or more; (e) any default  claimed
by any other creditor for borrowed  money of Borrower other than Lender,  or any
lessor;  and (f) any other  development  in the  business or affairs of Borrower
which may be materially  adverse; in each case describing the nature thereof and
(in the case of  notification  under  clauses  (a) and (b)) the action  Borrower
proposes to take with respect thereto.

SECTION 6.11.  EMPLOYEE BENEFIT PLANS. Borrower will (a) comply with the funding
requirements  of ERISA  with  respect  to the Plans for its  employees,  or will
promptly  satisfy any accumulated  funding  deficiency that arises under Section
302 of ERISA; (b) furnish Lender, promptly after filing the same, with copies of
all  reports or other  statements  filed with the United  States  Department  of
Labor, the Pension Benefit Guaranty Corporation, or the Internal Revenue Service


                                       28
<PAGE>

with  respect to all Plans,  or which  Borrower,  or any member of a  Controlled
Group,  may receive from such  Governmental  Authority  with respect to any such
Plans,  and (c) promptly advise Lender of the occurrence of any Reportable Event
or  Prohibited  Transaction  with  respect to any such Plan and the action which
Borrower  proposes  to  take  with  respect  thereto.  Borrower  will  make  all
contributions when due with respect to any multi-employer  pension plan in which
it participates and will promptly advise Lender:  (a) upon its receipt of notice
of the assertion against Borrower of a claim for withdrawal liability;  (b) upon
the  occurrence  of any event which could  trigger the  assertion of a claim for
withdrawal liability against Borrower;  and (c) upon the occurrence of any event
which would place Borrower in a Controlled Group as a result of which any member
(including Borrower) thereof may be subject to a claim for withdrawal liability,
whether liquidated or contingent.

SECTION 6.12.  FINANCING  STATEMENTS.  Borrower shall provide to Lender evidence
satisfactory  to  Lender  as to the due  recording  of  termination  statements,
releases of  collateral,  and Forms UCC-2 and UCC-3 (as  applicable),  and shall
cause to be recorded  financing  statements  on Form UCC-1  and/or  UCC-3,  duly
executed by Borrower and Lender, in all places necessary to release all existing
security  interests and other liens in the  Collateral  (other than as permitted
hereby) and to perfect and protect  Lender's  first  priority  lien and security
interest in the Collateral, as Lender may request.

SECTION 6.13.  FINANCIAL RECORDS. Borrower shall keep current and accurate books
of records and accounts in which full and correct entries will be made of all of
its business transactions, and will reflect in its financial statements adequate
accruals and appropriations to reserves, all in accordance with GAAP.

SECTION 6.14.  COLLECTION OF ACCOUNTS.  Borrower  shall  continue to collect its
Accounts in the ordinary course of business.

SECTION 6.15.  PLACES OF BUSINESS.  Borrower  shall give thirty (30) days' prior
written  notice to Lender of any change in the  location of any of its places of
business,  of the places where its records  concerning its Accounts are kept, of
the places where the Collateral is kept, or of the  establishment of any new, or
the discontinuance of any existing, places of business.

SECTION  6.16.  BUSINESS  CONDUCTED.  Borrower  shall  continue in the  business
presently  conducted by it using its best efforts to maintain its  customers and
goodwill.  Borrower  shall not engage,  directly or  indirectly,  in any line of
business  substantially  different from the business conducted by it immediately
prior to the Closing Date, or engage in business or lines of business  which are
not reasonably related thereto.

SECTION 6.17.  LITIGATION  AND  OTHER  PROCEEDINGS.  Borrower  shall give prompt
notice to Lender of any litigation,  arbitration, or other proceeding before any
court,  arbitrator (or arbitration panel), or Governmental  Authority against or
affecting Borrower if the amount claimed is more than $50,000.00.

SECTION 6.18.  BANK ACCOUNTS. Borrower shall assign all of its depository (which
shall not include  Borrower's  operating  account) and disbursement  accounts to
Lender.


                                       29
<PAGE>

SECTION 6.19.  SUBMISSION OF COLLATERAL  DOCUMENTS.  Borrower will, on demand of
Lender,  make  available  to Lender  copies of shipping  and  delivery  receipts
evidencing the shipment of goods that gave rise to an Account,  medical records,
insurance  verification  forms,  assignment of benefits,  in-take forms or other
proof of the satisfactory  performance of services that gave rise to an Account,
a copy of the claim or  invoice  for each  Account  and  copies  of any  written
contract or order from which the Account arose.  Borrower shall promptly  notify
Lender if an Account  becomes  evidenced or secured by an  instrument or chattel
paper and upon request of Lender,  will promptly  deliver any such instrument or
chattel paper to Lender.

SECTION 6.20.  LICENSURE; MEDICAID/MEDICARE COST REPORTS. Borrower will maintain
all certificates of need, provider numbers and licenses necessary to conduct its
business as presently conducted,  and take any steps required to comply with any
such new or additional  requirements that may be imposed on providers of medical
products and services. If required, all Medicaid/Medicare  costs reports will be
properly filed.

SECTION 6.21.  OFFICER'S  CERTIFICATES.   Together  with the  monthly  financial
statements  delivered  pursuant to clause (c) of Section 6.1, and together  with
the audited annual financial statements delivered pursuant to clause (g) of that
Section,  Borrower  shall deliver to Lender a certificate  of a duly  authorized
officer in form and substance satisfactory to Lender setting forth:

     (a)  The  information  (including  detailed  calculations),  to the best of
Borrower's  knowledge,  required in order to  establish  whether  Borrower is in
compliance  with the  requirements  of  Articles VI and VII as of the end of the
period covered by the financial statements then being furnished; and

     (b)  That the signer has reviewed the relevant terms of this Agreement, and
has  made  (or  caused  to be  made  under  his  supervision)  a  review  of the
transactions  and  conditions of Borrower  from the beginning of the  accounting
period  covered  by the income  statements  being  delivered  to the date of the
certificate,  and that such review has not disclosed  the existence  during such
period of any condition or event which  constitutes an Event of Default or which
is then,  or with the passage of time or giving of notice or both,  could become
an Event of Default,  and if any such  condition  or event  existed  during such
period or now exists,  specifying the nature and period of existence thereof and
what action Borrower has taken or proposes to take with respect thereto.

SECTION 6.22.  VISITS AND INSPECTIONS.  Borrower will permit  representatives of
Lender,  from time to time,  as often as may be reasonably  requested,  but only
during normal  business  hours, to visit and inspect the properties of Borrower,
and to inspect,  audit and make extracts from its books and records, and discuss
with its officers,  its employees and its  independent  accountants,  Borrower's
business,  assets,  liabilities,  financial  condition,  business  prospects and
results of operations.  All inspections by representatives of Lender are for the
sole purpose of protecting  the rights and interests of Lender and are not to be
construed as a representation  by Lender that there has been compliance with any
of the  requirements  of this  Agreement.  Borrower may make or cause to be made
such  other  independent   inspections  as  Borrower  may  desire  for  its  own
protection.


                                       30
<PAGE>

SECTION 6.23.  DEFENSE OF TITLE.

     (a)  Borrower will defend the Collateral and the title and interest therein
of  Borrower  against  all  matters,  including,  without  limitation,  (a)  any
attachment,  levy,  or other seizure by legal process or otherwise of any or all
the  Collateral;  (b) any lien or  encumbrance or claim thereof on any or all of
the Collateral;  and (c) any attempt to foreclose or otherwise  realize upon any
or all of the  Collateral  under any lien or  encumbrance.  Borrower will notify
Lender  promptly  in  writing  of any of the  foregoing  and will  provide  such
information with respect thereto as Lender may from time to time request.

     (b)  Borrower  will defend all assets other than  Collateral  and the title
and  interest  therein of  Borrower  against  all  matters,  including,  without
limitation,  (a) any  attachment,  levy,  or other  seizure by legal  process or
otherwise of any or all of such  assets;  (b) any lien or  encumbrance  or claim
thereof on any or all of such assets; and (c) any attempt to foreclose,  conduct
a trustee's sale, or otherwise  realize upon any or all of such assets under any
lien or encumbrance or claim thereof on any of all of such assets. Borrower will
notify Lender  promptly in writing of any of the foregoing and will provide such
information with respect thereto as Lender may from time to time request.

SECTION 6.24.  YEAR 2000 COMPLIANCE.  Borrower  covenants and agrees with Lender
that,  while  any  Loan  Document  is in  effect,  Borrower  will  furnish  such
additional information,  statements and other reports with respect to Borrower's
activities,  course of action and progress  towards becoming Year 2000 Compliant
as Lender may request from time to time.


                                   ARTICLE VII

                               NEGATIVE COVENANTS

Each Borrower covenants and agrees that so long as Borrower may borrow hereunder
and until payment in full of the Note and  performance of all other  obligations
of the Borrower under the Loan Documents:

SECTION 7.1.  BORROWING.  Borrower will not create,  incur,  assume or suffer to
exist any liability for Borrowed Money except: (i) indebtedness to Lender;  (ii)
indebtedness of Borrower  secured by mortgages,  encumbrances or liens expressly
permitted by Section 7.3 hereof;  (iii) accounts  payable to trade creditors and
current  operating  expenses  (other than for borrowed money) which are not aged
more than one  hundred  twenty  (120)  days from the  billing  date or more than
thirty (30) days from the due date, in each case incurred in the ordinary course
of  business  and paid  within  such  time  period,  unless  the same are  being
contested in good faith and by appropriate and lawful proceedings,  and Borrower
shall have set aside such reserves, if any, with respect thereto as are required
by GAAP and deemed  adequate by Borrower and its  independent  accountants;  and
(iv)  borrowings  incurred  in the  ordinary  course  of its  business  and  not
exceeding  $250,000.00 in the aggregate  outstanding  at any one time.  Borrower
will not make  prepayments on any existing or future  indebtedness  for Borrowed
Money  to any  Person  (other  than  Lender,  to the  extent  permitted  by this
Agreement or any subsequent agreement between Borrower and Lender).


                                       31
<PAGE>

SECTION 7.2.  JOINT VENTURES. Borrower will not invest directly or indirectly in
any joint venture for any purpose  without the prior written  notice to, and the
express  written  consent of, Lender,  which consent may be withheld in Lender's
sole discretion.

SECTION 7.3.  LIENS AND ENCUMBRANCES. Borrower will not create, incur, assume or
suffer to exist any  mortgage,  pledge,  lien or other  encumbrance  of any kind
(including the charge upon property  purchased under a conditional sale or other
title  retention  agreement)  upon,  or any  security  interest  in,  any of its
Collateral,  whether now owned or  hereafter  acquired,  except as  described on
SCHEDULE 1.36 and SCHEDULE 4.19.

SECTION 7.4.  RESTRICTION  ON FUNDAMENTAL  CHANGES.  Borrower will not (a) enter
into any merger or  consolidation  with any  Person  without  the prior  written
consent of the Lender,  which consent shall not be  unreasonably  withheld,  (b)
acquire  all or  substantially  all of the  assets of any  Person,  unless  such
acquisition is done for a commercially reasonable price, and with the purpose of
expanding  Borrower's existing business or entering into new businesses that are
reasonably  related to Borrower's  existing  business,  or (c) sell,  lease,  or
otherwise  dispose of any of its  assets  except in the  ordinary  course of its
business (such prohibition to include,  without limitation,  the transfer of any
nursing home or other healthcare facility from any entity comprising Borrower to
any other entity comprising Borrower or any other Affiliate of Unison Healthcare
Corporation)  without the prior  written  consent of the Lender,  which  consent
shall not be unreasonably  withheld.  Consistent  with the foregoing,  until the
Obligations  are repaid in full none of the entities  comprising  Borrower shall
transfer,  assign,  convey or grant to any other  Person the right to operate or
control any of the nursing  homes  listed on  SCHEDULE  4.15,  whether by lease,
sublease, management agreement, joint venture agreement or otherwise.

SECTION 7.5.  SALE AND LEASEBACK. Except to the extent permitted by Section 7.1,
Borrower will not,  directly or indirectly,  enter into any arrangement  whereby
Borrower  sells or  transfers  all or any part of its assets and  thereupon  and
within one year  thereafter  rents or leases  the assets so sold or  transferred
without the prior written notice to, and the express written consent of, Lender,
which consent may be withheld in Lender's sole discretion.

SECTION 7.6.  DIVIDENDS  AND  MANAGEMENT  FEES.  Except under the  circumstances
described  in SCHEDULE  7.6,  Borrower  will not  declare or pay any  dividends,
purchase, redeem or otherwise acquire for value any of its outstanding stock, or
return  any  capital  of its  stockholders,  nor  shall  Borrower  pay or become
obligated  to pay  management  fees or fees of a similar  nature to any  Person;
PROVIDED,  HOWEVER,  that so long as no Event of Default has occurred hereunder,
Borrower may make any such  dividends or purchase,  redeem or otherwise  acquire
such  outstanding  stock,  return any such capital,  or pay any such  management
fees,  so long as  doing  so  would  not  violate  any of the  other  terms  and
conditions of this Agreement.

SECTION 7.7.  LOANS.  Borrower  will not  make loans or  advances to any Person,
other than (i) trade  credit  extended in the ordinary  course of its  business,
(ii) advances for business travel and similar temporary advances in the ordinary
course of business to officers, stockholders, directors, and employees, or (iii)


                                       32
<PAGE>

loans or advances in the ordinary course of business from one entity  comprising
Borrower to another entity comprising Borrower.

SECTION 7.8.  CONTINGENT  LIABILITIES.  Borrower  will  not  assume,  guarantee,
endorse,  contingently  agree to purchase or  otherwise  become  liable upon the
obligation of any Person,  except (a) for guarantees of  indebtedness  otherwise
permitted by Section 7.1, or (b) by the  endorsement  of negotiable  instruments
for deposit or  collection  or similar  transactions  in the ordinary  course of
business.

SECTION 7.9. SUBSIDIARIES. Borrower will not form any subsidiary or other Person
except for the purpose of  expanding  Borrower's  existing  business or entering
into new businesses that are reasonably related to Borrower's business, and will
not make any  investment in or any loan in the nature of an  investment  to, any
other Person.

SECTION 7.10.  COMPLIANCE  WITH ERISA.  Borrower will not permit with respect to
any  Plan  covered  by  Title  IV of ERISA  any  Prohibited  Transaction  or any
Reportable Event.

SECTION 7.11.  CERTIFICATES  OF NEED.  Borrower  will not seek to, or otherwise,
amend,  alter or suspend or terminate or make  provisional  in any material way,
any  certificate of need or provider number without the prior written consent of
Lender.

SECTION 7.12.  TRANSACTIONS  WITH  AFFILIATES.   Except as  otherwise  expressly
permitted  by this  Agreement,  Borrower  will not enter  into any  transaction,
including without limitation the purchase, sale, or exchange of property, or the
loaning  or  giving  of funds to any  Affiliate  or  subsidiary,  except  in the
ordinary  course of business  and  pursuant to the  reasonable  requirements  of
Borrower's  business and upon terms substantially the same and no less favorable
to Borrower as it would obtain in a comparable arm's length transaction with any
Person not an Affiliate or  subsidiary,  and so long as the  transaction  is not
otherwise prohibited hereunder.  For purposes of the foregoing,  Lender consents
to the transactions described on SCHEDULE 7.12.

SECTION 7.13.  USE OF LENDER'S NAME. Borrower will not use Lender's name (or the
name of any of  Lender's  affiliates)  in  connection  with any of its  business
operations. Borrower may disclose to third parties that Borrower has a borrowing
relationship  with  Lender.  Nothing  herein  contained is intended to permit or
authorize Borrower to make any contract on behalf of Lender.

SECTION 7.14.  CHANGE IN CAPITAL  STRUCTURE.  There shall occur no change in the
Borrower's capital structure,  or change in control of Borrower through a change
in the  ownership of  Borrower's  capital  stock,  both as set forth in SCHEDULE
4.17. For so long as this Agreement  remains in effect Michael Jeffries shall be
engaged full-time in the management and operation of Borrower's business.

SECTION 7.15.  CONTRACTS AND AGREEMENTS.  Borrower will not become or be a party
to any contract or agreement  which would breach this  Agreement,  or breach any
other  instrument,  agreement,  or document  to which  Borrower is a party or by
which it is or may be bound.


                                       33
<PAGE>

SECTION  7.16.  MARGIN  STOCK.  Borrower  will not carry or purchase any "margin
security"  within  the  meaning  of  Regulations  U, G, T or X of the  Board  of
Governors of the Federal Reserve System.

SECTION 7.17. TRUTH OF STATEMENTS AND CERTIFICATES. Borrower will not furnish to
Lender any certificate or other document that contains any untrue statement of a
material  fact or that omits to state a material  fact  necessary to make it not
misleading in light of the circumstances under which it was furnished.

SECTION 7.18.  CENSUS.  With respect  to any twelve (12) month period during the
Term,  Borrower  will not allow the  average  patient  census for such  12-month
period, on an aggregate basis at all facilities listed in SCHEDULE 4.15 attached
hereto and made a part hereof, to fall below ninety percent (90%) of the overall
patient  occupancy  rate at all  facilities  listed in  SCHEDULE  4.15 as of the
Closing Date.

SECTION 7.19. PROHIBITION ON AMENDMENTS TO ORGANIZATIONAL DOCUMENTS. No Borrower
will amend, modify, restate, supplement, or terminate its respective certificate
of  incorporation  or bylaws (or other  organizational  documents) in any manner
that would materially affect the validity and  enforceability of the Obligations
or such Borrower's ability to borrow hereunder,  or that would materially impair
any security for the Obligations.

SECTION 7.20. NAME, FISCAL YEAR AND ACCOUNTING  METHOD. No Borrower shall change
its name, fiscal year or accounting methods except as required by GAAP.


                                  ARTICLE VIII

                                EVENTS OF DEFAULT

SECTION 8.1.  EVENTS OF DEFAULT. Each of the following (individually,  an "Event
of Default" and collectively, the "Events of Default") shall constitute an event
of default hereunder:

     (a)  A default  in the  payment  of any  installment  of  principal  of, or
interest upon, the Note when due and payable,  whether at maturity or otherwise,
which  default  shall have  continued  unremedied  for a period of five (5) days
after written notice thereof from Lender to Borrower;

     (b)  A default in the payment of any other charges, fees, or other monetary
obligations  owing to Lender arising out of or incurred in connection  with this
Agreement  when such  payment  is due and  payable,  which  default  shall  have
continued  unremedied  for a period of five (5) days after  written  notice from
Lender;

     (c)  A default in the due  observance  or  performance  by  Borrower of any
other term, covenant or agreement contained in any of the Loan Documents,  which
default shall have  continued  unremedied for a period of thirty (30) days after
written notice from Lender;


                                       34
<PAGE>

     (d)  If any representation or warranty made by Borrower herein or in any of
the  other  Loan  Documents,  any  financial  statement,  or  any  statement  or
representation  made in any other  certificate,  report or opinion  delivered in
connection  herewith or therewith proves to have been incorrect or misleading in
any material  respect when made,  which default shall have continued  unremedied
for a period of thirty (30) days after written notice from Lender;

     (e)  If any obligation of Borrower (other than its  Obligations  hereunder)
for the payment of Borrowed  Money in excess of  $50,000.00 is not paid when due
or within any applicable grace period, or such obligation becomes or is declared
to be due and payable prior to the expressed  maturity  thereof,  or there shall
have occurred a monetary  default  which,  with the giving of notice or lapse of
time,  or both,  would cause any such  obligation  to become,  or allow any such
obligation to be declared to be, due and payable;

     (f)  If Borrower makes an assignment for the benefit of creditors, offers a
composition  or extension to creditors,  or makes or sends notice of an intended
bulk sale of any business or assets now or hereafter conducted by Borrower;

     (g)  If Borrower files a petition in bankruptcy,  is adjudicated  insolvent
or  bankrupt,  petitions  or applies to any  tribunal for any receiver of or any
trustee  for  itself or any  substantial  part of its  property,  commences  any
proceeding   relating   to  itself   under  any   reorganization,   arrangement,
readjustment  or  debt,  dissolution  or  liquidation  law  or  statute  of  any
jurisdiction,  whether now or hereafter in effect, or there is commenced against
Borrower any such  proceeding  which remains  undismissed  for a period of sixty
(60) days, or any Borrower by any act indicates its consent to,  approval of, or
acquiescence  in, any such  proceeding or the  appointment of any receiver of or
any trustee for a Borrower or any substantial  part of its property,  or suffers
any such  receivership or trusteeship to continue  undischarged  for a period of
sixty (60) days;

     (h)  If one or more final judgments against Borrower or attachments against
its  property  not fully  and  unconditionally  covered  by  insurance  shall be
rendered  by a court of record  and shall  remain  unpaid,  unstayed  on appeal,
undischarged, unbonded and undismissed for a period of ten (10) days;

     (i)  A Reportable Event which might  constitute  grounds for termination of
any Plan covered by Title IV of ERISA or for the  appointment by the appropriate
United States District Court of a trustee to administer any such Plan or for the
entry of a lien or  encumbrance  to secure any  deficiency,  has occurred and is
continuing  thirty  (30)  days  after  its  occurrence,  or  any  such  Plan  is
terminated,  or a trustee is appointed by an appropriate  United States District
Court to administer any such Plan, or the Pension Benefit  Guaranty  Corporation
institutes  proceedings  to  terminate  any such Plan or to appoint a trustee to
administer  any such  Plan,  or a lien or  encumbrance  is entered to secure any
deficiency or claim;

     (j)  If any outstanding stock of Borrower is sold or otherwise  transferred
by the Person owning such stock on the date hereof, PROVIDED, HOWEVER, THAT this
provision  will not be violated  such that an Event of Default  has  occurred if
publicly  traded stock of Borrower Unison  Healthcare  Corporation is bought and
sold in ordinary course by non-insider stockholders of that entity;


                                       35
<PAGE>

     (k)  If there  shall  occur  any  uninsured  damage  to or  loss,  theft or
destruction of any portion of the Collateral;

     (l)  If Borrower  breaches or violates  the terms of, or if a default or an
event  which  could,  whether  with  notice  or the  passage  of time,  or both,
constitute  a  default,  occurs  under any other  existing  or future  agreement
(related or unrelated) between Borrower and Lender;

     (m)  Upon the  issuance  of any  execution  or  distraint  process  against
Borrower or any of its property or assets;

     (n)  If Borrower ceases any material portion of its business  operations as
presently conducted;

     (o)  If any  indication or evidence is received by Lender that Borrower may
have  directly or  indirectly  been  engaged in any type of activity  which,  in
Lender's discretion,  might result in the forfeiture of any property of Borrower
to any Governmental Authority, which default shall have continued unremedied for
a period of ten (10) days after written notice from Lender;

     (p)  Borrower or any Affiliate of Borrower,  shall challenge or contest, in
any  action,  suit  or  proceeding,  the  validity  or  enforceability  of  this
Agreement,   or  any  of  the  other  Loan   Documents,   the  legality  or  the
enforceability  of any of the  Obligations  or the perfection or priority of any
Lien granted to Lender;

     (q)  Borrower shall be criminally  indicted or convicted under any law that
could lead to a forfeiture of any Collateral.

     (r)  There shall occur a material adverse change in the financial condition
or business  prospects  of  Borrower,  or if Lender in good faith  deems  itself
insecure as a result of acts or events  bearing upon the financial  condition of
Borrower  or the  repayment  of the Note,  which  default  shall have  continued
unremedied for a period of ten (10) days after written notice from Lender.

     (s)  The  occurrence  of any event of default under the New LOC I Agreement
or related loan and security documents.

     (t)  If Borrower  fails to pay all amounts owing under Section  2.1(e) with
respect to any draw on a Letter of Credit  within five (5)  Business  Days after
receiving  written  notice  from  Lender of the draw on the  Letter  of  Credit,
provided,  however,  that  Borrower may use a Revolving  Credit Loan to fund any
such  payments to Lender if and to the extent  credit is otherwise  available to
Borrower under the terms and conditions of this Agreement.

SECTION 8.2. ACCELERATION. Upon the occurrence of any of the foregoing Events of
Default,  the  Note  shall  become  and be  immediately  due  and  payable  upon
declaration to that effect delivered by Lender to Borrower;  provided that, upon
the happening of any event specified in Section  8.1.(g) hereof,  the Note shall


                                       36
<PAGE>

be immediately due and payable without declaration or other notice to Borrower.

SECTION 8.3. REMEDIES.

     (a)  In addition to all other  rights,  options,  and  remedies  granted to
Lender under this  Agreement,  upon the occurrence of an Event of Default Lender
may (i) suspend, or halt forever, any of its obligations under this Agreement to
make  advances  to  Borrower,  (ii)  terminate  this  Agreement,  whereupon  all
outstanding Obligations shall be immediately due and payable, (iii) exercise all
other rights granted to it hereunder and all rights under the Uniform Commercial
Code in effect in the applicable  jurisdiction(s) and under any other applicable
law,  and/or (iv) exercise all rights and remedies  under all Loan Documents now
or hereafter in effect,  including the following rights and remedies (which list
is given by way of example and is not intended to be an  exhaustive  list of all
such rights and remedies):

          (i)  The right to take  possession  of, send  notices  regarding,  and
collect  directly  the  Collateral,  with or without  judicial  process,  and to
exercise  all  rights  and  remedies  available  to Lender  with  respect to the
Collateral under the Uniform Commercial Code in effect in the jurisdiction(s) in
which such Collateral is located;

          (ii) Subject to  applicable  law regarding  Medicaid/Medicare  Account
Debtors,  Lender shall have the  additional  rights and remedies with respect to
the Accounts,  all of which may be exercised  with or without  further notice to
Borrower:  to notify any and all  parties to any of the  Accounts  that the same
have  been  assigned  to  Lender  and  that  all  performance  thereunder  shall
thereafter be rendered to Lender; to renew, extend,  modify, amend,  accelerate,
accept partial performance on, release, settle, compromise, compound, collect or
otherwise  liquidate or deal with, on terms acceptable to Lender, in whole or in
part, the Accounts and all of Borrower's rights or interests  therein;  to enter
into any other  agreement  relating to or  affecting  the  Accounts;  to enforce
performance  and prosecute any action or proceeding  with respect to any and all
of the Accounts, and take or bring, in Lender's name or in the name of Borrower,
all steps, actions, suits or proceedings deemed by Lender necessary or desirable
with  respect to the  Accounts;  and to exercise  all other  rights,  powers and
remedies of Lender with respect to the Accounts;  provided, however, that Lender
shall have no liability  or  responsibility  for any act or omission  taken with
respect   thereto.   Borrower   hereby   nominates   and   appoints   Lender  as
attorney-in-fact  to perform all acts and execute all documents deemed necessary
by Lender in furtherance of the terms hereof;

          (iii) The right  to (by its own  means  or with  judicial  assistance)
enter any of  Borrower's  premises and take  possession  of the  Collateral,  or
render it unusable,  or dispose of the Collateral on such premises in compliance
with  subsection (b),  without any liability for rent,  storage,  utilities,  or
other sums, and Borrower shall not resist or interfere with such action;

          (iv) The right to require  Borrower at Borrower's  expense to assemble
all or any part of the  Collateral  and make it available to Lender at any place
designated by Lender;



                                       37
<PAGE>

          (v)  The  right  to  reduce  the  Maximum  Loan  Amount  or to use the
Collateral  and/or  funds in the  Concentration  Account  in  amounts  up to the
Maximum Loan Amount for any reason; and

          (vi) The right to relinquish or abandon any Collateral or any security
interest therein.

     (b)  Borrower  agrees  that a notice  received by it at least five (5) days
before the time of any intended public sale, or the time after which any private
sale or other disposition of the Collateral is to be made, shall be deemed to be
reasonable notice of such sale or other disposition.  If permitted by applicable
law, any perishable  Collateral  which threatens to speedily decline in value or
which is sold on a recognized  marked may be sold  immediately by Lender without
prior notice to Borrower.  At any sale or disposition of Collateral,  Lender may
(to the extent  permitted  by  applicable  law)  purchase all or any part of the
Collateral, free from any right of redemption by Borrower, which right is hereby
waived and released.  At any sale or disposition  of Collateral,  Lender may (to
the  extent  permitted  by  applicable  law)  purchase  all or any  part  of the
Collateral, free from any right of redemption by Borrower, which right is hereby
waived and  released.  Borrower  covenants  and agrees not to interfere  with or
impose any obstacle to Lender's exercise of its rights and remedies with respect
to the Collateral.

SECTION 8.4.  NATURE OF REMEDIES. Lender shall have the right to proceed against
all or any portion of the Collateral to satisfy in any order the liabilities and
Obligations  of  Borrower  to Lender.  All rights and  remedies  granted  Lender
hereunder and under any agreement referred to herein, or otherwise  available at
law or in equity, shall be deemed concurrent and cumulative, and not alternative
remedies,  and Lender may  proceed  with any number of remedies at the same time
until the Loans,  and all other existing and future  liabilities and obligations
of Borrower to Lender,  are satisfied in full.  The exercise of any one right or
remedy shall not be deemed a waiver or release of any other right or remedy, and
Lender,  upon the  occurrence  of an  Event  of  Default,  may  proceed  against
Borrower,  and/or the  Collateral,  at any time,  under any agreement,  with any
available remedy and in any order.


                                   ARTICLE IX

                                  MISCELLANEOUS

SECTION 9.1.  EXPENSES AND TAXES.

     (a)  Borrower  agrees  to  pay,  whether  or  not  the  Closing  occurs,  a
reasonable  documentation  preparation  fee,  together  with  actual  audit  and
appraisal  fees and all other  out-of-pocket  charges and  expenses  incurred by
Lender  in  connection  with the  negotiation,  preparation,  legal  review  and
execution of each of the Loan  Documents.  In addition,  Borrower  shall pay all
such  fees  associated  with  any  amendments  to the Loan  Documents  following
Closing.


                                       38
<PAGE>

     (b)  Borrower  shall pay all taxes (other than taxes based upon or measured
by  Lender's  income or  revenues  or any  personal  property  tax),  if any, in
connection  with the  issuance  of the Note and the  recording  of the  security
documents  therefor.  The  obligations  of Borrower  under this clause (b) shall
survive the payment of Borrower's  indebtedness hereunder and the termination of
this Agreement.

SECTION 9.2.  ENTIRE  AGREEMENT;  AMENDMENTS.  This Agreement and the other Loan
Documents  constitute the full and entire  understanding and agreement among the
parties with regard to their  subject  matter and supersede all prior written or
oral  agreements,  understandings,  representations  and  warranties  made  with
respect thereto. No amendment,  supplement or modification of this Agreement nor
any waiver of any provision  thereof shall be made except in writing executed by
the party against whom enforcement is sought.

SECTION 9.3.  NO WAIVER; CUMULATIVE RIGHTS. No waiver by any party hereto of any
one or  more  defaults  by the  other  party  in the  performance  of any of the
provisions  of this  Agreement  shall operate or be construed as a waiver of any
future default or defaults, whether of a like or different nature. No failure or
delay on the  part of any  party  in  exercising  any  right,  power  or  remedy
hereunder  shall  operate as a waiver  thereof,  nor shall any single or partial
exercise  of any such  right,  power or remedy  preclude  any  other or  further
exercise  thereof or the  exercise  of any other  right,  power or  remedy.  The
remedies  provided  for  herein  are  cumulative  and are not  exclusive  of any
remedies  that may be  available  to any  party  hereto  at law,  in  equity  or
otherwise.

SECTION 9.4.  NOTICES. Any notice or other  communication  required or permitted
hereunder shall be in writing and personally delivered,  mailed by registered or
certified  mail  (return  receipt  requested  and  postage  prepaid),   sent  by
telecopier  (with a confirming  copy sent by regular  mail),  or sent by prepaid
overnight  courier  service,  and addressed to the relevant party at its address
set forth below,  or at such other address as such party may, by written notice,
designate as its address for purposes of notice hereunder:


                                       39
<PAGE>

     (a)  If to Lender, at:

          HCFP Funding, Inc.
          2 Wisconsin Circle, 4th floor
          Chevy Chase, MD 20815
          Attn: Michael Gardullo
          Telephone: (301) 664-9850
          Telecopier: (301) 664-9890

and a copy to:

          John J. Dawson, Esq.
          John A. Harris, Esq.
          Streich Lang, P.A.
          Renaissance One
          Two North Central
          Phoenix, Arizona 85004-2391
          Telephone: (602) 229-5200
          Telecopier: (602) 229-5690

     (b)  If to Borrower, at:

          c/o RainTree HealthCare Corporation
          15300 N. 90th Street, Suite 100
          Scottsdale, AZ 85260
          Attention: Treasurer
          Telephone:  (602) 423-1954
          Telecopier: (602) 423-1929

And a copy to:

          Thomas J. Salerno, Esq.
          Jordan A. Kroop, Esq.
          Squire Sanders & Dempsey
          40 North Central Avenue
          Suite 2700
          Phoenix, AZ 85004
          Telephone: (602) 528-4000
          Telecopier: (602) 253-8129

If mailed, notice shall be deemed to be given five (5) days after being sent, if
sent by personal delivery or telecopier, notice shall be deemed to be given when
delivered, and if sent by prepaid courier, notice shall be deemed to be given on
the next Business Day following deposit with the courier.


                                       40
<PAGE>

SECTION 9.5. SEVERABILITY. If any term, covenant or condition of this Agreement,
or the  application  of  such  term,  covenant  or  condition  to any  party  or
circumstance  shall be found by a court of competent  jurisdiction to be, to any
extent,  invalid or  unenforceable,  the  remainder  of this  Agreement  and the
application  of such term,  covenant,  or condition to parties or  circumstances
other than those as to which it is held invalid or  unenforceable,  shall not be
affected  thereby,  and each  term,  covenant  or  condition  shall be valid and
enforced to the fullest  extent  permitted by law. Upon  determination  that any
such term is invalid,  illegal or unenforceable,  the parties hereto shall amend
this Agreement so as to effect the original  intent of the parties as closely as
possible in an acceptable manner.

SECTION 9.6.  SUCCESSORS AND ASSIGNS.  This  Agreement,  the Note, and the other
Loan  Documents  shall be binding  upon and inure to the benefit of Borrower and
Lender  and  their  respective  successors  and  assigns.   Notwithstanding  the
foregoing,  Borrower  may not assign any of its  rights or  delegate  any of its
obligations  hereunder without the prior written consent of Lender, which may be
withheld  in  its  sole  discretion.  Lender  may  sell,  assign,  transfer,  or
participate any or all of its rights or obligations  hereunder with ten calendar
days' notice to, but without requiring the consent of, Borrower.

SECTION 9.7.  COUNTERPARTS.  This  Agreement  may be  executed in any  number of
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute but one instrument.

SECTION 9.8.  INTERPRETATION.  No provision of this  Agreement or any other Loan
Document shall be interpreted or construed  against any party because that party
or its legal representative drafted that provision. The titles of the paragraphs
of this  Agreement  are for  convenience  of  reference  only  and are not to be
considered  in construing  this  Agreement.  Any pronoun used in this  Agreement
shall be deemed to  include  singular  and plural and  masculine,  feminine  and
neuter gender as the case may be. The words "herein,"  "hereof," and "hereunder"
shall be  deemed  to refer  to this  entire  Agreement,  except  as the  context
otherwise requires.

SECTION 9.9. SURVIVAL OF TERMS. All covenants,  agreements,  representations and
warranties  made  in  this  Agreement,  any  other  Loan  Document,  and  in any
certificates and other  instruments  delivered in connection  therewith shall be
considered  to have been relied  upon by Lender and shall  survive the making by
Lender of the Loans herein contemplated and the execution and delivery to Lender
of the Note, and shall  continue in full force and effect until all  liabilities
and obligations of Borrower to Lender are satisfied in full.

SECTION 9.10.  RELEASE OF  LENDER.   Borrower  releases  Lender,  its  officers,
employees,  and agents, of and from any claims for loss or damage resulting from
acts or conduct of any or all of them,  unless caused by Lender's  recklessness,
gross negligence, or willful misconduct.

SECTION 9.11. TIME. Whenever Borrower is required to make any payment or perform
any act on a Saturday, Sunday, or a legal holiday under the laws of the State of
Maryland (or other  jurisdiction  where Borrower is required to make the payment
or perform the act),  the payment may be made or the act  performed  on the next


                                       41
<PAGE>

Business  Day.  Time is of the  essence  in  Borrower's  performance  under this
Agreement and all other Loan Documents.

SECTION 9.12.  COMMISSIONS.  The transaction  contemplated by this Agreement was
brought  about by Lender and  Borrower  acting as  principals  and  without  any
brokers,  agents,  or finders  being the  effective  procuring  cause.  Borrower
represents that it has not committed Lender to the payment of any brokerage fee,
commission, or charge in connection with this transaction.  If any such claim is
made on Lender by any broker,  finder,  or agent or other person,  Borrower will
indemnify,  defend, and hold Lender harmless from and against the claim and will
defend any action to recover on that  claim,  at  Borrower's  cost and  expense,
including  Lender's  counsel fees.  Borrower  further agrees that until any such
claim or demand is adjudicated in Lender's  favor,  the amount  demanded will be
deemed a liability of Borrower under this Agreement, secured by the Collateral.

SECTION 9.13. THIRD PARTIES.  No rights are intended to be created  hereunder or
under any  other  Loan  Document  for the  benefit  of any  third  party  donee,
creditor,  or  incidental  beneficiary  of Borrower.  Nothing  contained in this
Agreement  shall be construed as a delegation  to Lender of  Borrower's  duty of
performance, including without limitation Borrower's duties under any account or
contract in which Lender has a security interest.

SECTION 9.14.  DISCHARGE OF BORROWER'S  OBLIGATIONS.  Lender,  in its reasonable
discretion,  shall  have the right at any time,  and from time to time,  without
prior  notice to Borrower if Borrower  fails to do so, to: (a) obtain  insurance
covering  any  of  the  Collateral  as  required  hereunder;  (b)  pay  for  the
performance of any of Borrower's  obligations  hereunder;  (c) discharge  taxes,
liens, security interests, or other encumbrances at any time levied or placed on
any of the Collateral in violation of this Agreement  unless Borrower is in good
faith with due diligence by appropriate  proceedings contesting those items; and
(d) pay for the maintenance and preservation of any of the Collateral.  Expenses
and advances shall be added to the Loan, until reimbursed to Lender and shall be
secured by the  Collateral.  Such  payments  and advances by Lender shall not be
construed as a waiver by Lender of an Event of Default.

SECTION 9.15. INFORMATION TO PARTICIPANTS. Lender may divulge to any participant
it may obtain in the Loan, or any portion thereof, all information,  and furnish
to such participant copies of reports, financial statements,  certificates,  and
documents  obtained  under any  provision  of this  Agreement  or any other Loan
Document.

SECTION 9.16.  INDEMNITY.  Borrower hereby agrees to indemnify and hold harmless
Lender,   its   partners,   officers,   agents  and   employees   (collectively,
"Indemnitee")  from and against  any  liability,  loss,  cost,  expense,  claim,
damage,  suit,  action  or  proceeding  ever  suffered  or  incurred  by  Lender
(including  reasonable  attorneys'  fees and expenses)  arising from  Borrower's
failure to observe,  perform or  discharge  any of its  covenants,  obligations,
agreements or duties hereunder, or from the breach of any of the representations
or warranties contained in Article IV hereof. In addition, with the exception of
claims  asserted in the motion for approval of debtor in  possession  financing,
Borrower shall defend Indemnitee against and save it harmless from all claims of
any  Person  with  respect  to  the  Collateral.  Notwithstanding  any  contrary


                                       42
<PAGE>

provision in this Agreement,  the obligation of Borrower under this Section 9.16
shall survive the payment in full of the Obligations and the termination of this
Agreement.

SECTION 9.17.  CHOICE OF LAW;  CONSENT TO  JURISDICTION.  THIS AGREEMENT AND THE
NOTE SHALL BE GOVERNED BY, AND  CONSTRUED IN  ACCORDANCE  WITH,  THE LAWS OF THE
STATE OF MARYLAND,  WITHOUT  REGARD TO ANY  OTHERWISE  APPLICABLE  PRINCIPLES OF
CONFLICTS OF LAWS. IF ANY COLLECTION ACTION ARISING OUT OF THIS AGREEMENT OR THE
NOTE IS COMMENCED BY LENDER IN THE STATE OF MARYLAND OR FEDERAL COURT LOCATED IN
THE STATE OF MARYLAND,  BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY SUCH
COURT IN ANY SUCH  ACTION AND TO THE  LAYING OF VENUE IN THE STATE OF  MARYLAND.
ANY  PROCESS IN ANY SUCH  ACTION  SHALL BE DULY  SERVED IF MAILED BY  REGISTERED
MAIL,  POSTAGE PREPAID,  TO THE BORROWER AT ITS ADDRESS DESCRIBED IN SECTION 9.4
HEREOF.

SECTION 9.18.  WAIVER OF TRIAL BY JURY. BORROWER HEREBY (A) COVENANTS AND AGREES
NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE  TRIABLE  OF RIGHT BY A JURY,  AND (B)
WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT  THAT ANY SUCH RIGHT SHALL
NOW OR  HEREAFTER  EXIST.  THIS  WAIVER OF RIGHT TO TRIAL BY JURY IS  SEPARATELY
GIVEN,  KNOWINGLY AND VOLUNTARILY,  BY BORROWER,  AND THIS WAIVER IS INTENDED TO
ENCOMPASS  INDIVIDUALLY  EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A
JURY TRIAL WOULD OTHERWISE ACCRUE.  LENDER IS HEREBY AUTHORIZED AND REQUESTED TO
SUBMIT THIS AGREEMENT TO ANY COURT HAVING  JURISDICTION  OVER THE SUBJECT MATTER
AND THE PARTIES  HERETO,  SO AS TO SERVE AS  CONCLUSIVE  EVIDENCE OF  BORROWER'S
WAIVER OF THE RIGHT TO JURY TRIAL.  FURTHER,  BORROWER HEREBY  CERTIFIES THAT NO
REPRESENTATIVE OR AGENT OF LENDER (INCLUDING  LENDER'S COUNSEL) HAS REPRESENTED,
EXPRESSLY OR  OTHERWISE,  TO BORROWER  THAT LENDER WILL NOT SEEK TO ENFORCE THIS
WAIVER OF RIGHT TO JURY TRIAL PROVISION.

SECTION 9.19.  CONFESSION OF JUDGMENT. BORROWER AUTHORIZES ANY ATTORNEY ADMITTED
TO PRACTICE BEFORE ANY COURT OF RECORD IN THE UNITED STATES OR THE CLERK OF SUCH
COURT TO APPEAR ON BEHALF OF BORROWER  IN ANY COURT IN ONE OR MORE  PROCEEDINGS,
OR BEFORE ANY CLERK  THEREOF OF  PROTHONOTARY  OR OTHER COURT  OFFICIAL,  AND TO
CONFESS  JUDGMENT  AGAINST BORROWER IN FAVOR OF LENDER IN THE FULL AMOUNT DUE ON
THIS AGREEMENT (INCLUDING  PRINCIPAL,  ACCRUED INTEREST AND ANY AND ALL CHARGES,
FEES AND COSTS)  PLUS  ATTORNEYS'  FEES EQUAL TO  FIFTEEN  PERCENT  (15%) OF THE
AMOUNT  DUE,  PLUS COURT  COSTS,  ALL WITHOUT  PRIOR  NOTICE OR  OPPORTUNITY  OF
BORROWER  FOR  PRIOR  HEARING.  BORROWER  AGREES  AND  CONSENTS  THAT  VENUE AND
JURISDICTION  SHALL BE PROPER IN THE CIRCUIT COURT OF ANY COUNTY OF THE STATE OF
MARYLAND OR OF BALTIMORE CITY, MARYLAND,  OR IN THE UNITED STATES DISTRICT COURT
FOR THE  DISTRICT  OF  MARYLAND.  BORROWER  WAIVES THE  BENEFIT OF ANY AND EVERY


                                       43
<PAGE>

STATUTE,  ORDINANCE,  OR RULE OF COURT WHICH MAY BE LAWFULLY  WAIVED  CONFERRING
UPON BORROWER ANY RIGHT OR PRIVILEGE OF  EXEMPTION,  HOMESTEAD  RIGHTS,  STAY OF
EXECUTION, OR SUPPLEMENTARY PROCEEDINGS, OR OTHER RELIEF FROM THE ENFORCEMENT OR
IMMEDIATE  ENFORCEMENT OF A JUDGMENT OR RELATED  PROCEEDINGS ON A JUDGMENT.  THE
AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT  AGAINST BORROWER SHALL NOT
BE EXHAUSTED BY ONE OR MORE  EXERCISES  THEREOF,  OR BY ANY  IMPERFECT  EXERCISE
THEREOF, AND SHALL NOT BE EXTINGUISHED BY ANY JUDGMENT ENTERED PURSUANT THERETO;
SUCH  AUTHORITY AND POWER MAY BE EXERCISED ON ONE OR MORE OCCASIONS FROM TIME TO
TIME,  IN THE SAME OR  DIFFERENT  JURISDICTIONS,  AS OFTEN AS LENDER  SHALL DEEM
NECESSARY, CONVENIENT, OR PROPER.


                                       44
<PAGE>

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

ATTEST:                                 HCFP FUNDING, INC.,
                                        a Delaware corporation


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


ATTEST:                                 RAINTREE HEALTHCARE CORPORATION,
                                        a Delaware corporation


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


ATTEST:                                 BRITWILL HEALTHCARE COMPANY, a
                                        Delaware corporation


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


ATTEST:                                 BRITWILL FUNDING CORPORATION,
                                        a Delaware corporation


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


                                       45
<PAGE>

ATTEST:                                 CEDAR CARE, INC., an Indiana corporation


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


ATTEST:                                 SHERWOOD HEALTHCARE CORP., an
                                        Indiana corporation


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


ATTEST:                                 BRITWILL INVESTMENTS-I, INC.,
                                        a Delaware corporation


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


ATTEST:                                 BRITWILL INVESTMENTS-II, INC.,
                                        a Delaware corporation


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


ATTEST:                                 BRITWILL INDIANA PARTNERSHIP.,
                                        an Arizona general partnership


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


                                       46
<PAGE>

ATTEST:                                 BROOKSHIRE HOUSE, INC., a Colorado
                                        corporation (f/k/a Asbury Circle, Inc.)


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


ATTEST:                                 CHRISTOPHER NURSING CENTER, INC., a 
                                        Colorado corporation


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


ATTEST:                                 AMBERWOOD COURT, INC., a Colorado 
                                        corporation (f/k/a Valley Hi, Inc.)


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


ATTEST:                                 THE ARBORS HEALTH CARE 
                                        CORPORATION, an Arizona corporation


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


ATTEST:                                 LOS ARCOS, INC., a Colorado corporation


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


                                       47
<PAGE>

ATTEST:                                 PUEBLO NORTE, INC., a Colorado 
                                        corporation (f/k/a Signature Health
                                        Care of California Corporation)


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


ATTEST:                                 RIO VERDE NURSING CENTER, INC., a 
                                        Colorado corporation


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


ATTEST:                                 SIGNATURE HEALTH CARE CORPORATION, a 
                                        Delaware corporation


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


ATTEST:                                 SIGNATURE MANAGEMENT GROUP, INC., a 
                                        Colorado corporation


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


                                       48
<PAGE>

                                LIST OF EXHIBITS


Exhibit A - Form of Revolving Credit Note

Exhibit B - INTENTIONALLY DELETED

Exhibit C - Opinion Letter from Borrower's Counsel

Exhibit D - Form of Estoppel Certificate


                                       49
<PAGE>

                                LIST OF SCHEDULES

Schedule 1.36 - Permitted Liens

Schedule 4.1  - Subsidiaries

Schedule 4.5  - Litigation

Schedule 4.6  - Loan Defaults to be Discharged

Schedule 4.7  - Tax Identification Numbers

Schedule 4.10 - Taxes

Schedule 4.13 - Non-Compliance with Law

Schedule 4.14 - Environmental Matters

Schedule 4.15 - Places of Business with patient census

Schedule 4.16 - Licenses

Schedule 4.17 - Stock Ownership

Schedule 4.19 - Borrowings and Guarantees

Schedule 4.21 - Trade Names

Schedule 4.22 - Joint Ventures

Schedule 7.6  - Dividends and Management Fees

Schedule 7.12 - Transactions with Affiliates


                                       50