<PAGE>
                                                                     Exhibit 2.1

                     IN THE UNITED STATES BANKRUPTCY COURT

                          FOR THE DISTRICT OF DELAWARE

In re                       ) Chapter 11
                            )
MARINER POST-ACUTE NETWORK, ) Case No. 00-00113 (MFW)
INC., a Delaware            )
corporation,                ) (Jointly Administered
                            ) Case Nos. 00-00113 (MFW)
and affiliates,             ) through   00-00214 (MFW),
                            ) inclusive)
       Debtors.             )
                            ) CONFIRMATION HEARING: MARCH 25, 2002 AT 9:00 A.M.
                            ) OBJECTION DEADLINE: MARCH 5, 2002 AT 4:00 P.M.


       SECOND AMENDED JOINT PLAN OF REORGANIZATION FOR MARINER POST-ACUTE
        NETWORK, INC., MARINER HEALTH GROUP, INC., AND THEIR RESPECTIVE
                   DEBTOR AFFILIATES DATED FEBRUARY 1, 2002


<PAGE>


                                TABLE OF CONTENTS
<TABLE>
<S>      <C>      <C>      <C>      <C>                                                                            <C>
I.  DEFINITIONS AND RULES OF CONSTRUCTION.....................................................................      1

         A.       Defined Terms...............................................................................      1

         B.       Rules of Construction.......................................................................     25

         C.       Plan Documentary Supplement.................................................................     26

         D.       Exhibits....................................................................................     26

II.  CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS..............................................     26

         A.       Summary.....................................................................................     26

         B.       Administrative Expenses.....................................................................     28

                  1.       Payment Generally..................................................................     28

                  2.       Administrative Expenses Bar Date...................................................     29

                           a.       General Administrative Expenses Bar Date..................................     29

                           b.       Tax Administrative Expenses Bar Date......................................     29

                  3.       Post-Effective Date Professional Fees and Expenses.................................     29

         C.       Priority Tax Claims.........................................................................     30

         D.       Classification and Treatment of Claims......................................................     30

                  1.       Secured Claims.....................................................................     30

                           a.       Class SP-1: MPAN Senior Credit Facility Claims............................     30

                           b.       Class SP-2: Omega Claims..................................................     31

                           c.       Class SP-3: LaSalle Secured Claims........................................     31

                           d.       Class SP-4: Fireside Manor Secured Claims.................................     33

                           e.       Class SP-5: Aramark Secured Claims........................................     34

                           f.       Class SP-6: Bank Midwest Secured Claims...................................     35

                           g.       Class SP-7: Bank of New York Claims.......................................     35

                           h.       Class SP-8: Lend Lease Secured Claims.....................................     36

                           i.       Class SM-1: MHG Senior Credit Facility Claims.............................     37

                           j.       Class SM-2:  Bankers Trust Palmetto Claims................................     38
</TABLE>


                                       i


<PAGE>

<TABLE>
<S>      <C>      <C>      <C>      <C>                                                                            <C>
                           k.       Class SM-3:  Bankers Trust Westchester Claims.............................     42

                           l.       Class SM-4: Bankers Trust St. Augustine Claims............................     44

                           m.       Class SM-5:  THCI Secured Claims..........................................     44

                           n.       Class SM-6:  HUD Jacksonville Claims......................................     46

                           o.       Class SM-7:  NHP Secured Claims...........................................     46

                           p.       Class SM-8:  Porche Secured Claims........................................     47

                           q.       Class SM-9:  Quaker Deland Claims.........................................     47

                           r.       Class SM-10:  Monticello Bonifay Claims...................................     48

                           s.       Class SM-11:  Monticello Titusville Claims................................     50

                           t.       Class SM-12:  Monticello San Antonio Claims...............................     50

                           u.       Class SJ-1: Secured Tax Claims............................................     50

                           v.       Class SJ-2: Other Secured Claims..........................................     51

                           w.       Alternative Section 1111(b) Treatment.....................................     53

                  2.       Priority Claims....................................................................     53

                           a.       Class PJ-1: Other Priority Claims.........................................     53

                  3.       Unsecured Claims...................................................................     54

                           a.       Class UP-1: MPAN General Unsecured Claims Not Otherwise Classified........     54

                           b.       Class UP-2: MPAN Subordinated Note Claims.................................     57

                           c.       Class UP-3:  MPAN Punitive Damage Claims..................................     58

                           d.       Class UM-1: MHG General Unsecured Claims Not Otherwise Classified.........     58

                           e.       Class UM-2: MHG Third Party Subordinated Note Claims......................     61

                           f.       Class UM-3:  MHG Punitive Damage Claims...................................     62

                           g.       Class UJ-1: Debtors Intercompany Claims...................................     62

                  4.       Certain Government Claims..........................................................     62

                           a.       Class GP-1: MPAN United States Claims.....................................     62

                           b.       Class GM-1: MHG United States Claims......................................     62
</TABLE>


                                       ii


<PAGE>

<TABLE>
<S>      <C>      <C>      <C>      <C>                                                                            <C>
                           c.       Classification and Treatment of State Medicaid Program Claims.............     63

                  5.       Equity Interests...................................................................     64

                           a.       Class EP-1: Equity Interests in MPAN......................................     64

                           b.       Class EM-1:  Equity Interests in MHG......................................     64

                           c.       Class EJ-1: Equity Interests in Debtor Affiliates.........................     64

III.  METHOD OF DISTRIBUTIONS UNDER THE PLAN..................................................................     65

         A.       The Disbursing Agent........................................................................     65

         B.       Funding of Cash Payments....................................................................     65

         C.       Investment of Cash in Reserves..............................................................     66

         D.       Delivery of Distributions and Undeliverable or Unclaimed Distributions......................     66

                  1.       Delivery of Distributions Generally................................................     66

                  2.       Undeliverable Distributions........................................................     66

                  3.       Voting Of Undelivered New MPAN Common Stock........................................     67

         E.       Setoffs.....................................................................................     67

         F.       De Minimis Distributions and Fractional Shares..............................................     67

         G.       Record Date.................................................................................     68

IV.  PROVISIONS FOR TREATMENT OF DISPUTED, CONTINGENT, OR UNLIQUIDATED CLAIMS, EQUITY INTERESTS, AND
         ADMINISTRATIVE EXPENSES..............................................................................     68

         A.       Reserve for Certain Disputed Claims and Disputed Administrative Expenses....................     68

         B.       Resolution of Disputed Claims and Disputed Administrative Expenses..........................     69

         C.       Distributions With Respect to Disputed Claims That Become Allowed...........................     69

         D.       Estimation of Disputed Claims...............................................................     70

V.  IMPLEMENTATION OF THE PLAN................................................................................     70

         A.       Termination of MPAN DIP Credit Agreement and MHG DIP Credit Agreement.......................     70

         B.       Post-Effective Date Financing...............................................................     71

                  1.       Financing Generally and Total Funded Debt..........................................     71
</TABLE>


                                      iii


<PAGE>

<TABLE>
<S>      <C>      <C>      <C>      <C>                                                                            <C>
                  2.       The Exit Facility..................................................................     72

                  3.       Senior Lender Notes................................................................     72

                  4.       Investor Notes.....................................................................     73

                  5.       Junior Lender Notes................................................................     73

         C.       Limited Substantive Consolidation...........................................................     74

                  1.       Substantive Consolidation for Purposes of Claim Allowance and Plan Distributions...     74

                  2.       Corporate Restructuring Program and Continued Corporate Existence of Reorganized
                           Debtors............................................................................     75

         D.       Issuance of New Securities and Registration Rights..........................................     76

         E.       Cancellation of Existing Securities and Rejection of Related Agreements.....................     76

         F.       Surrender of Existing Securities............................................................     76

         G.       Elimination of Subordination Rights.........................................................     77

         H.       Amended and Restated Certificates of Incorporation and Bylaws...............................     77

         I.       Management of the Reorganized Debtors.......................................................     78

         J.       New Incentive Equity Plan...................................................................     78

         K.       Employment Agreements.......................................................................     79

         L.       Release Of Senior Credit Facility Claim Holders, Agents, And Representatives................     79

         M.       Corporate Action............................................................................     80

         N.       Revesting of Assets.........................................................................     80

         O.       Implementation of Bankruptcy Code Section 1146(c)...........................................     80

         P.       Closing of Cases............................................................................     81

VI.  EXECUTORY CONTRACTS AND UNEXPIRED LEASES.................................................................     81

         A.       Assumption or Assumption and Assignment.....................................................     81

                  1.       Assumption and Assumption and Assignment Generally.................................     81

                  2.       Conditional Assumption and Assumption and Assignment...............................     83

         B.       Rejection...................................................................................     83

         C.       Survival of the Debtors' Corporate Indemnities..............................................     84
</TABLE>


                                       iv


<PAGE>

<TABLE>
<S>      <C>      <C>      <C>      <C>                                                                            <C>
         D.       APS Executory Contracts and Unexpired Leases................................................     84

VII.  EFFECTIVENESS OF THE PLAN...............................................................................     85

         A.       Effective Date..............................................................................     85

         B.       Conditions Precedent........................................................................     85

         C.       Waiver of Conditions........................................................................     85

         D.       Notice of Effective Date....................................................................     85

VIII.  RETENTION OF JURISDICTION..............................................................................     86

IX.  MISCELLANEOUS PROVISIONS.................................................................................     87

         A.       Payment of Statutory Fees...................................................................     87

         B.       Retiree Benefits............................................................................     87

         C.       Dissolution Of  The Creditors' Committees And Establishment Of The Claims Resolution Monitor     87

                  1.       Dissolution Of The Creditors' Committees...........................................     87

                  2.       Claims Resolution Monitor..........................................................     88

                           a.       Establishment And Function Of The Claims Monitor..........................     88

                           b.       Employment Of Professionals By The Claims Monitor; Compensation And
                                    Reimbursement Of Claims Monitor And Its Professionals.....................     88

                           c.       Termination Of The Claims Monitor.........................................     88

         D.       Discharge of Debtors and Injunction.........................................................     89

         E.       No Liability for Solicitation or Participation..............................................     90

         F.       Limitation of Liability.....................................................................     90

         G.       Preservation of Rights of Action and Defenses...............................................     90

         H.       Saturday, Sunday, or Legal Holiday..........................................................     91

         I.       Headings....................................................................................     91

         J.       Binding Effect..............................................................................     91

         K.       Revocation or Withdrawal....................................................................     91

                  1.       Right to Revoke....................................................................     91

                  2.       Effect of Withdrawal or Revocation.................................................     92
</TABLE>


                                       v


<PAGE>

<TABLE>
<S>      <C>      <C>      <C>      <C>                                                                            <C>
         L.       Nonconsensual Confirmation..................................................................     92

         M.       Other Documents and Actions.................................................................     92

         N.       Modification of the Plan....................................................................     92

         O.       Governing Law...............................................................................     92

         P.       Withholding, Reporting, and Payment of Taxes................................................     92

         Q.       Notices.....................................................................................     93

         R.       Successors and Assigns......................................................................     94

         S.       Indenture Trustee Fees and Expenses.........................................................     94
</TABLE>


                                       vi



<PAGE>

                                  INTRODUCTION

                  The Debtors Mariner Post-Acute Network, Inc., a Delaware
corporation, Mariner Health Group, Inc., a Delaware corporation, and their
respective subsidiaries, affiliated partnerships, joint ventures, and limited
liability companies that are debtors and debtors in possession in jointly
administered case numbers 00-00113 (MFW) through 00-00214 (MFW) and jointly
administered case numbers 00-00215 (MFW) through 00-0301 (MFW) hereby jointly
propose this Plan for the Debtors pursuant to section 1121(a) of the Bankruptcy
Code.

                  The Disclosure Statement that accompanies this Plan discusses
the Debtors' history, businesses, properties, and results of operations and
contains a summary and discussion of this Plan. Holders of Claims and Equity
Interests and parties to executory contracts and unexpired leases are
encouraged to read the Disclosure Statement. No solicitation materials, other
than the Disclosure Statement and related materials transmitted therewith and
approved for solicitation purposes by the Bankruptcy Court, have been
authorized for use in soliciting acceptances or rejections of this Plan.

                                       I.

                     DEFINITIONS AND RULES OF CONSTRUCTION

         A.       DEFINED TERMS

                  As used herein, the following terms have the respective
meanings specified below, subject to the rules of construction set forth in
Section I.B hereof:

                  1.       "ADMINISTRATIVE EXPENSE" means any cost or expense
of administration of the Chapter 11 Cases allowable under section 330, 331,
503(b), or 507(a)(1) of the Bankruptcy Code, including, without limitation, any
actual and necessary postpetition expenses of preserving the estates of the
Debtors, any actual and necessary postpetition expenses of operating the
business of the Debtors in Possession, all compensation or reimbursement of
expenses to the extent allowable by the Bankruptcy Court under section 330,
331, or 503 of the Bankruptcy Code, personal injury claims arising from acts or
omissions occurring after the Petition Date, and any fees or charges assessed
against the estates of the Debtors under section 1930 of title 28 of the United
States Code. Notwithstanding the foregoing, Administrative Expenses shall not
include any Debtors Intercompany Claims.

                  2.       "ADR PROCEDURE" means the alternative dispute
resolution procedures established by the Bankruptcy Court pursuant to its
Orders Approving Alternative Dispute Resolution Procedures to Resolve
Prepetition Personal Injury/Employment Litigation and Similar Claims, entered
on or about December 26, 2000 in the Chapter 11 Cases.

                  3.       "ALLOWED ADMINISTRATIVE EXPENSE" means any
Administrative Expense, or portion thereof, with respect to which both (i) a
timely and proper request for payment has been made to the extent required by
this Plan, the Confirmation Order, or by any other order of the Bankruptcy
Court, and (ii) either (a) such Administrative Expense is subject to allowance
by the Bankruptcy Court pursuant to Bankruptcy Code section 330, 331, or
503(b)(2) through (5), but only to the extent such Administrative Expense
actually is allowed by the Bankruptcy Court


                                       1
<PAGE>


or by any professional fee allowance procedures authorized by the Bankruptcy
Court and then in effect, or (b) such Administrative Expense is not subject to
allowance by the Bankruptcy Court pursuant to Bankruptcy Code section 330, 331,
or 503(b)(2) through (5), but only to the extent that the amount, validity,
priority, or enforceability of such Administrative Expense is not the subject
of a bona fide dispute, including without limitation an objection that has not
been resolved by a Final Order. An Administrative Expense may be deemed an
Allowed Administrative Expense, as and when ultimately allowed, notwithstanding
the fact that (i) such Administrative Expense is not liquidated as of the
Confirmation Date or the Effective Date, or (ii) such Administrative Expense is
liquidated in a court of competent jurisdiction other than the Bankruptcy
Court. To the extent that neither the General Administrative Expenses Bar Date
nor the Tax Administrative Expenses Bar Date established by this Plan applies
to a particular Administrative Expense, such Administrative Expense may be
asserted at any time as and to the extent permitted by applicable nonbankruptcy
law, and the discharge injunction shall not bar the liquidation of the amount
of an Allowed Administrative Expense in a court of competent jurisdiction.
Notwithstanding anything in this definition to the contrary, in no event shall
an Allowed Administrative Expense include non-compensatory penalties, fines,
punitive damages, exemplary damages, multiple damages, or any other claims or
obligations that do not compensate for actual losses incurred.

                  4.       "ALLOWED CLAIM" shall mean, except as otherwise
provided in this Plan (including with respect to those Classes of Secured
Claims that provide a more specific definition for Allowed Claims in such
Class), a Claim to the extent that all four of the following conditions apply:

                           (a)      a proof of claim was timely and properly
         filed or, if no proof of claim was filed, the Claim is listed by the
         Debtors on their Schedules as liquidated in amount and not disputed or
         contingent;

                           (b)      no objection to the allowance of the Claim
         or request to estimate the Claim has been interposed on or before the
         Claims Objection Deadline, or if any timely objection or request for
         estimation has been interposed, such Claim has been determined by a
         Final Order to be allowed in favor of the respective holder by such
         Final Order (in which case the Allowed Claim shall equal the allowed
         amount as determined by such Final Order);

                           (c)      the Claim is not currently being
         administered pursuant to the ADR Procedure, or, if such Claim
         previously was being administered pursuant to the ADR Procedure, such
         Claim is no longer subject to the ADR Procedure because either (i) the
         Claim has been resolved pursuant to the ADR Procedure (in which case
         the Allowed Claim shall equal the allowed amount agreed to in a
         settlement consented to by the Debtors in writing or as determined in
         binding arbitration with respect to such Claim), (ii) the holder of
         the Claim has opted out of the ADR Procedure with respect to such
         Claim by executing the necessary stipulation (in which case the
         Allowed Claim of such holder is zero), or (iii) the holder of the
         Claim has completed the requirements of the ADR Procedure (in which
         case the amount of the Allowed Claim shall be determined by a court of
         competent jurisdiction, including the Bankruptcy Court if and to the
         extent permitted by 28 U.S.C. section 157(b)(5)); and


                                       2
<PAGE>


                           (d)      the Claim is not otherwise a Disputed
         Claim.

                  Unless otherwise specified herein or by order of the
Bankruptcy Court, "Allowed Claim" shall not include interest (including but not
limited to unamortized original issue discount as of the Petition Date), fees
(including but not limited to late charges and attorneys fees), or penalties on
such Claim accruing after the Petition Date.

                  5.       "ALLOWED ________ CLAIM" or "ALLOWED CLASS ____
CLAIM" means a Claim of the type specified or in the Class specified that is
also an Allowed Claim (i.e., an Allowed Secured Tax Claim is a Secured Tax
Claim that is also an Allowed Claim, and an Allowed Class UP-1 Claim is a Claim
classified in Class UP-1 that is also an Allowed Claim).

                  6.       "AMENDED AND RESTATED CERTIFICATE OF INCORPORATION"
means, with respect to each Reorganized Debtor, the amended and restated
certificate or articles of incorporation (or document of similar effect with
respect to any Debtor that is not a corporation) for such Reorganized Debtor,
which shall be substantially in the forms of the examples set forth in the Plan
Documentary Supplement.

                  7.       "AMENDED AND RESTATED BYLAWS" means, with respect to
each Reorganized Debtor, the amended and restated bylaws for such Reorganized
Debtor that is a corporation, which shall be substantially in the forms of the
examples set forth in the Plan Documentary Supplement.

                  8.       "APS" means, collectively, American Pharmaceutical
Services, Inc., American Medical Insurance Billing Services, Inc., APS Pharmacy
Management, Inc., Compass Pharmacy Services, Inc., Compass Pharmacy Services of
Maryland, Inc., Pinnacle Pharmaceutical Services, Inc., Ocean Pharmacy, Inc.,
and Compass Pharmacy Services of Texas, Inc.

                  9.       "APS SALE PROCEEDS" means the Cash proceeds received
by the Debtors on account of a sale of the pharmaceutical business of APS upon
the closing of such sale, excluding (i) any Cash required to satisfy executory
contract and unexpired lease cure amounts, closing costs (including any breakup
fee), and sales and transfer taxes, if any, relating to the sale, and (ii) any
deferred consideration to be received by the Debtors on account of such sale.

                  10.      "ARAMARK" means Aramark Services, Inc., and any
affiliates, successors, or assigns thereof.

                  11.      "ARAMARK DOCUMENTS" means the following, each as may
have been amended, supplemented, restated, or otherwise modified from time to
time: (i) the Note dated October 1, 1981, in the original principal amount of
$366,150, relating to the facility known as Sunset Manor, (ii) the Deed of
Trust dated October 1, 1981, relating to the facility known as Sunset Manor,
(iii) the Note dated October 1, 1981, in the original principal amount of
$505,155, relating to the facility known as Sierra Vista HealthCare Center,
(iv) the Deed of Trust dated October 1, 1981, relating to the facility known as
Sierra Vista HealthCare Center, (v) the Note dated December 28, 1982, in the
original principal amount of $900,000, relating to the facility known as Alpine
Living Center, (vi) the Deed of Trust dated December 28, 1982, relating to the
facility known as Alpine Living Center, and (vii) any other documents that
either evidence or


                                       3
<PAGE>


perfect the Aramark Secured Claims or that were delivered pursuant to or in
connection with the foregoing documents.

                  12.      "ARAMARK SECURED CLAIMS" means any and all Secured
Claims asserted by Aramark or others arising under, evidenced by, or relating
to (i) the Aramark Documents, or (ii) Claim number 7037 filed in the MPAN
Chapter 11 Cases, including but not limited to: (a) any liens securing such
Claims, (b) any guarantees of such Claims, or (c) any interest, penalties, and
fees relating to such Claims, each as it relates to the Debtors' facilities
known as Sunset Manor, Sierra Vista HealthCare Center, and Alpine Living
Center.

                  13.      "AVAILABLE CASH" means the Debtors' (other than the
PHCMI Debtors') aggregate Cash on hand as of the Effective Date, plus (i) the
net proceeds of the Exit Term Loans, if any (excluding any proceeds earmarked
to pay Claims other than Class SP-1 Claims and Class SM-1 Claims, as expressly
provided for in the documents governing the Exit Term Loans), and (ii) the net
proceeds from the issuance of the Investor Notes, if any, less (x) $25 million
working capital for the Reorganized Debtors' operations after the Effective
Date, and (y) the aggregate amount of all Cash payments and reserves required
by this Plan to be made on the Effective Date or within sixty (60) days
thereafter (excluding all Cash payments required to be made to the Senior
Credit Facility Claim Holders other than the payment of $625,000 described in
the treatment of Class SM-1 below).

                  14.      "AVOIDING POWER CAUSES OF ACTION" means any actions
commenced, or that may be commenced before or after the Effective Date,
pursuant to section 544, 545, 547, 548, 549, 550, or 551 of the Bankruptcy
Code.

                  15.      "BANKERS TRUST" means Bankers Trust Company of
California, N.A. (n/k/a Bankers Trust, part of Deutsche Bank Group), and any
affiliates, successors, assigns, or beneficiaries thereof.

                  16.      "BANKERS TRUST PALMETTO DOCUMENTS" means the
following, each as may have been amended, supplemented, restated, or otherwise
modified from time to time, as each relates to the Debtors' Palmetto facility
located in Manatee County, Florida: (i) the Loan Agreement dated as of November
1, 1993; (ii) the Promissory Note in the principal amount of $5,800,000 dated
as of November 1, 1993; (iii) the Mortgage and Security Agreement dated as of
November 1, 1993; (iv) the Estoppel Certificate and Guaranty executed by MHG;
and (v) any other documents that either evidence or perfect the Bankers Trust
Palmetto Claims or that were delivered pursuant to or in connection with the
foregoing documents.

                  17.      "BANKERS TRUST PALMETTO CLAIMS" means any and all
Claims asserted by Bankers Trust or others arising under, evidenced by, or
relating to: (i) the Bankers Trust Palmetto Documents; or (ii) Claim number
2864 or 2865 filed in the MHG Chapter 11 Cases, including but not limited to:
(a) any liens securing such Claims; (b) any guarantee of such Claims; or (c)
any interest, penalties, and fees relating to such Claims, each as it relates
to the Debtors' Palmetto facility located in Manatee County, Florida.

                  18.      "BANKERS TRUST ST. AUGUSTINE DOCUMENTS" means the
following, each as may have been amended, supplemented, restated, or otherwise
modified from time to time, as


                                       4
<PAGE>


each relates to the Debtors' St. Augustine leased facility located in St. Johns
County, Florida: (i) the Loan Agreement dated as of November 1, 1993; (ii) the
Promissory Note in the principal amount of $5,750,000 dated as of November 1,
1993; (iii) the Mortgage and Security Agreement dated as of November 1, 1993;
and (iv) any other documents that either evidence or perfect the Bankers Trust
St. Augustine Claims or that were delivered pursuant to or in connection with
the foregoing documents, each as it relates to the Debtors' St. Augustine
facility located in St. Johns County, Florida.

                  19.      "BANKERS TRUST ST. AUGUSTINE CLAIMS" means any and
all Claims asserted by Bankers Trust or others arising under, evidenced by, or
relating to (i) the Bankers Trust St. Augustine Documents; or (ii) Claim number
2863 or 2865 filed in the MHG Chapter 11 Cases, including but not limited to:
(a) any liens securing such Claims; (b) any guarantee of such Claims; or (c)
any interest, penalties, and fees relating to such Claims, each as it relates
to the Debtors' St. Augustine leased facility located in St. Johns County,
Florida.

                  20.      "BANKERS TRUST WESTCHESTER DOCUMENTS" means the
following, each as may have been amended, supplemented, restated, or otherwise
modified from time to time: (i) the Loan Agreement dated as of November 1,
1993; (ii) the Promissory Note in the principal amount of $5,989,000 dated as
of November 1, 1993; (iii) the Mortgage and Security Agreement dated as of
November 1, 1993; (iv) Mariner Guaranty Agreement dated as of January 2, 1996;
(v) the Mariner Indemnity Agreement dated as of January 2, 1996; and (vi) any
other documents that either evidence or perfect the Bankers Trust Westchester
Claims or that were delivered pursuant to or in connection with the foregoing
documents.

                  21.      "BANKERS TRUST WESTCHESTER CLAIMS" means any and all
Claims asserted by Bankers Trust or others arising under, evidenced by, or
relating to (i) the Bankers Trust Westchester Documents; or (ii) Claim number
2861 or 2862 filed in the MHG Chapter 11 Cases, including but not limited to:
(a) any liens securing such Claims; (b) any guarantee of such Claims; or (c)
any interest, penalties, and fees relating to such Claims, each as it relates
to the Debtors' facility known as Westchester Manor.

                  22.      "BANK MIDWEST" means Bank Midwest, N.A., and any
affiliates, successors, or assigns thereof.

                  23.      "BANK MIDWEST DOCUMENTS" means the following, each
as may have been amended, supplemented, restated, or otherwise modified from
time to time: (i) the Non-Negotiable Bond, in the original principal amount of
$250,000, dated December 31, 1965, (ii) the Mortgage dated December 31, 1965,
relating to the Debtors' Arbor Manor facility, and (iii) any other documents
that either evidence or perfect the Bank Midwest Secured Claims or that were
delivered pursuant to or in connection with the foregoing documents.

                  24.      "BANK MIDWEST SECURED CLAIMS" means any and all
Secured Claims asserted by Bank Midwest or others arising under, evidenced by,
or relating to (i) the Bank Midwest Documents, or (ii) Claim number 2817 or
9439 filed in the MPAN Chapter 11 Cases, including but not limited to: (a) any
liens securing such Claims, (b) any guarantees of such Claims, or (c) any
interest, penalties, and fees relating to such Claims, each as it relates to
the Debtors' facility known as Arbor Manor.


                                       5
<PAGE>


                  25.      "BANK OF NEW YORK" means Bank of New York Trust
Company of Florida, N.A., as Trustee, and any affiliates, successors, assigns,
or beneficiaries thereof.

                  26.      "BANK OF NEW YORK CLAIMS" means any and all Claims
asserted by Bank of New York or others arising under, evidenced by, or relating
to (i) the Bank of New York Documents, or (ii) Claim number 5969 filed in the
MPAN Chapter 11 Cases, including but not limited to: (a) any liens relating to
such Claims, (b) any guarantees of such Claims, or (c) any interest, penalties,
and fees relating to such Claims. The Bank of New York Claims shall not include
any Claims relating to or arising under the Subordinated Notes or the
Indentures relating thereto.

                  27.      "BANK OF NEW YORK DOCUMENTS" means the following,
each as may have been amended, supplemented, restated, or otherwise modified
from time to time: (i) the Amended and Restated Trust Indenture dated as of
April 1, 1993, (ii) the Amended and Restated Agreement of Sale dated as of
April 1, 1993, (iii) the Guaranty dated as of April 23, 1993, (iv) the Pledge
Agreement - Reserve Fund Accounts dated as of April 1, 1993, (v) the Restated
and Amended Lease dated as of February 1, 1998, (vi) any other documents that
either evidence or perfect the Bank of New York Claims, that were delivered
pursuant to or in connection with the foregoing documents, or that relate to
any Claims of Bank of New York arising in connection with the Debtors' facility
known as Summit Hospital of Northwest Louisiana.

                  28.      "BANKRUPTCY CODE" means Title I of the Bankruptcy
Reform Act of 1978, as amended, set forth in sections 101 et seq. of title 11
of the United States Code, as applicable to the Chapter 11 Cases.

                  29.      "BANKRUPTCY COURT" means the United States
Bankruptcy Court for the District of Delaware, having jurisdiction over the
Chapter 11 Cases and, to the extent of any withdrawal of the reference made
pursuant to section 157 of title 28 of the United States Code, the United
States District Court for the District of Delaware; or, in the event such
courts cease to exercise jurisdiction over the Chapter 11 Cases, such court or
unit thereof that exercises jurisdiction over the Chapter 11 Cases in lieu
thereof.

                  30.      "BANKRUPTCY RULES" means, collectively, as now in
effect or hereafter amended and as applicable in the Chapter 11 Cases, (i) the
Federal Rules of Bankruptcy Procedure, and (ii) the Local Bankruptcy Rules and
General Orders applicable to cases pending before the Bankruptcy Court.

                  31.      "BUSINESS DAY" means any day that is not a Saturday,
a Sunday, or a "legal holiday" as defined in Bankruptcy Rule 9006(a).

                  32.      "CASH" means cash or other legal tender of the
United States.

                  33.      "CASH PAY DOWN" means a distribution of Cash in an
amount so that, immediately after giving effect to such distribution, the
respective Secured Claim holder's loan-to-collateral-value ratio shall equal
80%, provided, however, that if such Secured Claim holder's
loan-to-collateral-value ratio prior to any such distribution of Cash is equal
to or less than 80%, the Cash Pay Down shall equal zero.


                                       6
<PAGE>


                  34.      "CHAPTER 11 CASES" means, collectively, the MPAN
Chapter 11 Cases and the MHG Chapter 11 Cases.

                  35.      "CHASE" means JPMorgan Chase Bank (f/k/a The Chase
Manhattan Bank), a New York banking corporation.

                  36.      "CLAIM" shall have the broadest possible meaning
under section 101(5) of the Bankruptcy Code, and shall include (a) any right to
payment from any of the Debtors, whether or not such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured, or (b) any right
to an equitable remedy for breach of performance if such breach gives rise to a
right of payment from any of the Debtors, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured, or unsecured.

                  37.      "CLAIMS ESTIMATION PROCEDURE" has the meaning
referred to in Section IV.D of the Plan.

                  38.      "CLAIMS OBJECTION DEADLINE" means the later of (i)
the one-hundred eightieth (180th) day after the Effective Date, (ii) with
respect to a specific Claim, the one-hundred eightieth (180th) day after proof
of such Claim is filed, (iii) with respect to a Claim that is subject to the
ADR Procedure, the ninetieth (90th) day after the holder of such Claim either
has opted out of the ADR Procedure by executing the necessary stipulation or
has completed the requirements of the ADR Procedure, or (iv) such greater
period of limitation as may be fixed or extended by the Bankruptcy Court or by
agreement between a Debtor and the holder of the Claim.

                  39.      "CLASS" means any group of Claims or Equity
Interests classified by this Plan pursuant to sections 1122 and 1123 of the
Bankruptcy Code.

                  40.      "COMMITTEES" means, collectively, the MPAN Committee
and the MHG Committee.

                  41.      "CONFIRMATION DATE" means the date on which the Clerk
of the Bankruptcy Court enters the Confirmation Order on its docket.

                  42.      "CONFIRMATION HEARING" means the hearing on
confirmation of the Plan.

                  43.      "CONFIRMATION ORDER" means the order of the
Bankruptcy Court confirming the Plan in accordance with the provisions of
chapter 11 of the Bankruptcy Code, in form and substance reasonably
satisfactory to the Required Senior Credit Facility Claim Holders.

                  44.      "CONSENTING CLASS UM-2 HOLDER" means a holder of a
Class UM-2 Claim that (i) does not vote against the Plan, (ii) does not object
to confirmation of the Plan on any grounds, and (iii) does not object to, or
otherwise challenge, the allowance or treatment of the MHG Senior Credit
Facility Claims under this Plan.


                                       7
<PAGE>


                  45.      "CONSENTING CLASS UP-2 HOLDER" means a holder of a
Class UP-2 Claim that (i) does not vote against the Plan, (ii) does not object
to confirmation of the Plan on any grounds, and (iii) does not object to, or
otherwise challenge, the allowance or treatment of the MPAN Senior Credit
Facility Claims under this Plan.

                  46.      "CORPORATE RESTRUCTURING PROGRAM" means the program
generally described in the Plan Documentary Supplement and made a part of this
Plan pursuant to which certain of the Debtors shall (i) establish new
subsidiaries or other entities, (ii) acquire, merge with, or dissolve various
other Debtors, or (iii) transfer some or all of the assets of certain Debtors
to newly-created entities or to one or more of the other surviving Debtors, as
further described in Section V.C.2 hereto.

                  47.      "CURE PAYMENT" has the meaning referred to in
Section VI.A of the Plan.

                  48.      "DEBTOR AFFILIATES" means the MPAN Debtor Affiliates
and the MHG Debtor Affiliates, collectively.

                  49.      "DEBTORS" mean, collectively, the MPAN Debtors and
the MHG Debtors.

                  50.      "DEBTORS IN POSSESSION" means the Debtors when each
is acting in the capacity of representative of the estates in the Chapter 11
Cases.

                  51.      "DEBTORS INTERCOMPANY CLAIMS" means all Claims and
Administrative Expenses of any of the Debtors against any of the other Debtors,
whether reflected on the Debtors' books and records or otherwise, including but
not limited to any Claims arising under the MHG Subordinated Notes held by the
MPAN Debtors.

                  52.      "DISBURSING AGENT" means the Reorganized Debtors, or
any agents thereof (including any Third Party Disbursing Agent as defined in
Section III.A hereof), in their capacity to hold and distribute the
consideration to be distributed to holders of Allowed Administrative Expenses
and Allowed Claims pursuant to the Plan, the Confirmation Order, or such other
orders as may be entered by the Bankruptcy Court, as more fully described in
Section III.A hereof.

                  53.      "DISCLOSURE STATEMENT" means the disclosure
statement relating to this Plan including, without limitation, all annexes and
schedules thereto, as approved by the Bankruptcy Court pursuant to section 1125
of the Bankruptcy Code on or about January ___, 2002.

                  54.      "DISPUTED ADMINISTRATIVE EXPENSE" means any
Administrative Expense that is not an Allowed Administrative Expense.

                  55.      "DISPUTED CLAIM" means a Claim as to which any one
of the following applies: (i) no proof of claim has been filed with respect to
such Claim, and either (a) the Claim is not listed in the Schedules, or (b) the
Claim is listed in the Schedules as unliquidated, disputed, contingent, or
unknown, (ii) the Claim is the subject of a timely objection or request for
estimation in accordance with the Bankruptcy Code, the Bankruptcy Rules, any
applicable order of the Bankruptcy Court, or the Plan filed on or before the
Claims Objection Deadline, which


                                       8
<PAGE>


objection or request for estimation has not been withdrawn or determined by a
Final Order, (iii) the Claim is currently being administered pursuant to the
ADR Procedure, (iv) the holder of the Claim has completed the ADR Procedure,
and the allowed amount of such Claim has not been determined by a settlement
consented to by the Debtors in writing, a binding decision in arbitration, or a
Final Order, (v) the holder of the Claim is a defendant in a pending Avoiding
Power Cause of Action, or has failed to pay or turn over property as required
by section 502(d) of the Bankruptcy Code, or (vi) the Claim is otherwise
treated as a "Disputed Claim" pursuant to this Plan.

                  In addition, prior to the earlier of (i) the Claims Objection
Deadline, (ii) such date as the Bankruptcy Court allows the Claim pursuant to a
Final Order, or (iii) such date as the Claim is resolved pursuant to the ADR
Procedure, any Claim evidenced by a proof of claim in Classes SJ-2, UP-1, UP-2,
UM-1, or UM-2, or any Priority Tax Claim or Other Priority Claim, shall be
deemed a Disputed Claim for purposes of calculating and making any
distributions under this Plan if: (a) no Claim corresponding to the proof of
claim is listed in the Schedules, (b) the Claim corresponding to the proof of
claim is listed in the Schedules as disputed, contingent, unliquidated,
unknown, or in a zero amount, (c) the amount of the Claim as specified in the
proof of claim exceeds the amount of any corresponding Claim listed in the
Schedules as not disputed, not contingent, and liquidated, but only to such
extent, or (d) the priority or secured status of the Claim as specified in the
proof of claim differs from the priority or secured status of any corresponding
Claim listed in the Schedules.

                  56.      "DISPUTED ___ CLAIM" or "DISPUTED CLASS ___ CLAIM"
means a Claim of the type specified or in the Class specified that is also a
Disputed Claim (i.e., a Disputed Secured Tax Claim is a Secured Tax Claim that
is also a Disputed Claim, and a Disputed Class UP-1 Claim is a Claim classified
in Class UP-1 that is also a Disputed Claim).

                  57.      "DISPUTED CLAIMS RESERVE" means any reserve referred
to in Section IV.A of the Plan.

                  58.      "EFFECTIVE DATE" means the date that this Plan shall
become effective as determined by the Debtors in accordance with Section VII
hereof.

                  59.      "EFFECTIVE DATE CASH RESERVE" means the bank account
or accounts referred to in Section III.B of the Plan for the purpose of funding
certain Cash distributions under the Plan and all monies and investments
therein.

                  60.      "EQUITY INTEREST" means any equity interest in any
of the Debtors, whether in the form of common or preferred stock, stock
options, warrants, partnership interests, membership interests, or any other
equity security or interest, and includes any equity interest based on Old MPAN
Common Stock, Old MHG Common Stock, or any Old Affiliates Equity.

                  61.      "EXIT FACILITY" has the meaning set forth in Section
V.B.2 of the Plan.

                  62.      "EXIT FACILITY LIENS" has the meaning set forth in
Section V.B.2 of the Plan.


                                       9
<PAGE>


                  63.      "EXIT TERM LOANS" has the meaning set forth in
Section V.B.2 of the Plan.

                  64.      "FEDERAL GOVERNMENT SETTLEMENT" means the Debtors'
settlement with the United States, as set forth in the Plan Documentary
Supplement.

                  65.      "FINAL ORDER" means an order or judgment of the
Bankruptcy Court or other applicable court as to which the time to appeal,
petition for certiorari, or move for reargument or rehearing has expired and as
to which no appeal, petition for certiorari, or other proceedings for
reargument or rehearing shall then be pending or as to which any right to
appeal, petition for certiorari, reargue, or rehear shall have been waived in
writing in form and substance satisfactory to the Debtors or, in the event that
an appeal, writ of certiorari, or reargument or rehearing thereof has been
sought, such order or judgment of the Bankruptcy Court or other applicable
court shall have been affirmed by the highest court to which such order or
judgment was appealed, or certiorari, reargument, or rehearing has been denied,
and the time to take any further appeal, petition for certiorari, or move for
reargument or rehearing shall have expired.

                  66.      "FIRESIDE MANOR" means Fireside Manor, a Texas
general partnership, and any affiliates, successors, or assigns thereof.

                  67.      "FIRESIDE MANOR DOCUMENTS" means the following, each
as may have been amended, supplemented, restated, or otherwise modified from
time to time: (i) the Promissory Note dated as of September 17, 1991, (ii) the
Deed of Trust and Security Agreement relating to the Debtors' facility known as
Greenview Manor, and (iii) any other documents that either evidence or perfect
the Fireside Manor Secured Claims or that were delivered pursuant to or in
connection with the foregoing documents.

                  68.      "FIRESIDE MANOR SECURED CLAIMS" means any and all
Secured Claims asserted by Fireside Manor or others arising under, evidenced
by, or relating to (i) the Fireside Manor Documents, or (ii) Claim number 2361
or 5179 filed in the MPAN Chapter 11 Cases, including but not limited to: (a)
any liens securing such Claims, (b) any guarantees of such Claims, or (c) any
interest, penalties, and fees relating to such Claims, each as it relates to
the Debtors' Greenview Manor facility.

                  69.      "GENERAL UNSECURED CLAIM" means any Claim against
the Debtors that is not an Administrative Expense, Secured Claim, Priority Tax
Claim, Other Priority Claim, Subordinated Note Claim, Debtors Intercompany
Claim, Securities Damages Claim, Senior Credit Facility Claim, Bankers Trust
Palmetto Claim, Bankers Trust St. Augustine Claim, Bankers Trust Westchester
Claim, Monticello Bonifay Claim, Monticello San Antonio Claim, Monticello
Titusville Claim, United States Claim, HUD Jacksonville Claim, Quaker Deland
Claim, or Punitive Damage Claim. General Unsecured Claims shall include,
without limitation, any and all unsecured trade, contribution, indemnification,
reimbursement, employee contract, unsecured deficiency Claims, and lease and
contract rejection Claims against the Debtors.

                  70.      "HUD" means the United States Department of Housing
and Urban Development and other department, agency, or other instrumentality of
the United States, as successor in interest to Mellon Bank, N.A. or Quaker, and
any successors or assigns thereof.


                                      10
<PAGE>


                  71.      "HUD JACKSONVILLE CLAIMS" means any and all Claims
asserted by HUD or others arising under, evidenced by, or relating to the
mortgage of HUD on the Debtors' facility located in Jacksonville, Florida.

                  72.      "INVESTOR NOTES" means certain notes that may be
issued on the Effective Date, as described more fully in Section V.B.4 of this
Plan.

                  73.      "JUNIOR LENDER NOTES" means certain notes that may
be distributed on the Effective Date to holders of MPAN Senior Credit Facility
Claims and MHG Senior Credit Facility Claims, as described more fully in
Sections II.D.1 and V.B.5 of this Plan.

                  74.      "LASALLE" means LaSalle National Bank, As Trustee
Under That Certain Pooling and Servicing Agreement Effective As Of December 1,
1995 Relating To Commercial Mortgage Pass-Through Certificates Series RMF
1995-1, and any affiliates, successors, assigns, or beneficiaries thereof.

                  75.      "LASALLE DOCUMENTS" means the following, each as may
have been amended, supplemented, restated, or otherwise modified from time to
time: (i) all documents attached to Claim number 1601 filed in the MPAN Chapter
11 Cases, and (ii) any other documents that either evidence or perfect the
LaSalle Secured Claims or that were delivered pursuant to or in connection with
the foregoing documents.

                  76.      "LASALLE SECURED CLAIMS" means any and all Secured
Claims asserted by LaSalle or others arising under, evidenced by, or relating
to (i) the LaSalle Documents, or (ii) Claim number 1601 filed in the MPAN
Chapter 11 Cases, including but not limited to: (a) any liens securing such
Claims, (b) any guarantees of such Claims, or (c) any interest, penalties, and
fees relating to such Claims, each as it relates to the Debtors' facilities
known as Birchwood Nursing Home, Crestview Nursing Center, Dixon Healthcare
Center, Flora Care Center, Lafayette Health Care Center, and Parkway Healthcare
Center.

                  77.      "LEND LEASE" means Lend Lease Asset Management,
L.P., as Special Servicer for Bankers Trust Company of California, N.A.,
Trustee for Commercial Mortgage Pass-Through Certificates Series 1992-C5, and
any affiliates, successors, assigns, or beneficiaries thereof, including but
not limited to Regency Savings Bank, FSB.

                  78.      "LEND LEASE DOCUMENTS" means the following, each as
may have been amended, supplemented, restated, or otherwise modified from time
to time: (i) the Non-Negotiable Bond dated April 10, 1968, the Real Estate
Mortgage - Corporation dated April 10, 1968 relating to the Debtors' Arbor
Manor facility, and (ii) any other documents that either evidence or perfect
the Lend Lease Secured Claims or that were delivered pursuant to or in
connection with the foregoing documents.

                  79.      "LEND LEASE SECURED CLAIMS" means any and all
Secured Claims asserted by Lend Lease or others arising under, evidenced by, or
relating to (i) the Lend Lease Documents, or (ii) Claim number 2895 filed in
the MPAN Chapter 11 Cases, including but not limited to: (a) any liens securing
such Claims, (b) any guarantees of such Claims, or (c) any interest, penalties,
and fees relating to such Claims, each as it relates to the Debtors' Arbor
Manor facility.


                                      11
<PAGE>


                  80.      "LENDER NOTES" means, collectively, the Junior
Lender Notes and the Senior Lender Notes.

                  81.      "LENDER SHARES" means 96.0% of the Primary Effective
Date Shares of New MPAN Common Stock, which shall be distributed on the
Effective Date to the Senior Credit Facility Claim Holders as provided in this
Plan.

                  82.      "LIBOR" means, as more fully described in the
applicable notes or other documents in the Plan Documentary Supplement, the
rate of interest offered in the London interbank market for dollar deposits (i)
in an amount approximately equal to the subject amount and (ii) either (a) with
respect to fixed-rate obligations, with a comparable maturity, or (b) with
respect to floating-rate obligations, with a maturity as specified in the
applicable notes or other documents.

                  83.      "MEDICARE" means the United States Medicare Program,
Title XVIII of the Social Security Act, 42 U.S.C.ss.ss. 1395-1395ggg.

                  84.      "MHG" means Mariner Health Group, Inc., a Delaware
corporation and a wholly-owned subsidiary of MPAN.

                  85.      "MHG CHAPTER 11 CASES" means the cases under chapter
11 of the Bankruptcy Code commenced by the MHG Debtors on the Petition Date and
assigned case numbers 00-00215 (MFW) through 00-00301 (MFW), jointly
administered as "In re Mariner Health Group, Inc., et al." under case number
00-00215 (MFW).

                  86.      "MHG COMMITTEE" means the Official Committee of
Creditors Holding Unsecured Claims as appointed by the Office of the United
States Trustee pursuant to section 1102 of the Bankruptcy Code to serve in the
MHG Chapter 11 Cases.

                  87.      "MHG DEBTOR AFFILIATES" means MHG's direct and
indirect subsidiaries and certain affiliated partnerships, joint ventures, and
limited liability entities that are debtors and debtors in possession in the
MHG Chapter 11 Cases, as identified in Exhibit 1 to the Plan (excluding those
entities specifically identified as not being chapter 11 debtors). This
definition of MHG Debtor Affiliates does not include any of the MPAN Debtors.

                  88.      "MHG DEBTORS" means MHG and each of the MHG Debtor
Affiliates (but in each case excluding the MPAN Debtors) that are debtors and
debtors in possession in the MHG Chapter 11 Cases.

                  89.      "MHG DIP CREDIT AGREEMENT" means that certain
Debtor-in-Possession Credit Agreement dated as of January 20, 2000, among the
MHG Debtors, First Union National Bank, as syndication agent, and PNC Bank,
National Association, as administrative agent and collateral agent, and any
financial institutions party thereto as a lender, as amended, supplemented,
restated, or otherwise modified from time to time.

                  90.      "MHG GENERAL UNSECURED CLAIM" means a General
Unsecured Claim against any of the MHG Debtors.


                                      12
<PAGE>


                  91.      "MHG INDENTURE" means the Indenture, dated as of
April 4, 1996, between MHG and State Street Bank and Trust Company, as trustee,
as amended, supplemented, restated, or otherwise modified from time to time.

                  92.      "MHG LENDER PERCENTAGE" means 20.37%.

                  93.      "MHG SENIOR CREDIT FACILITY AGENT" means PNC Bank,
National Association, and First Union National Bank, acting in their capacities
as agents for the MHG Senior Credit Facility Claim Holders.

                  94.      "MHG SENIOR CREDIT FACILITY CLAIM HOLDER" means the
holder of a MHG Senior Credit Facility Claim.

                  95.      "MHG SENIOR CREDIT FACILITY CLAIMS" means any and
all Claims, whether secured or unsecured, arising under, evidenced by, or
relating to the MHG Senior Credit Facility Documents.

                  96.      "MHG SENIOR CREDIT FACILITY DOCUMENTS" means the
following documents, as amended, supplemented, restated, or otherwise modified
from time to time: (i) the $210,000,000 Term Loan Facility Credit Agreement
dated as of December 23, 1998, among MHG, PNC Bank, National Association, as
Administrative Agent, First Union National Bank, as Syndication Agent, and the
lenders party thereto; (ii) the $250,000,000 Revolving Credit Facility Credit
Agreement dated as of May 18, 1994, among Mariner Health, PNC Bank, National
Association, as Administrative Agent, First Union National Bank, as Syndication
Agent, and the lenders party thereto; (iii) all promissory notes evidencing the
indebtedness incurred under the credit agreements described in clauses (i) and
(ii) above; (iv) all agreements, documents, and instruments pursuant to which
any interest in collateral is granted or purported to be granted, created,
evidenced, or perfected in connection with such credit agreements, including,
without limitation, all deeds of trust, mortgages, security agreements, pledge
agreements, assignments, licenses, landlord consents and releases, financing
statements, fixture filings, registrations, and similar documents; (v) all
ancillary agreements as to which any holder of any of the obligations evidenced
by any of the foregoing is a party or a beneficiary and all other agreements as
to which any holder of any of the obligations evidenced by any of the foregoing
is a party or a beneficiary and all other agreements, guarantees, instruments,
documents, and certificates delivered in connection with any of the foregoing;
and (vi) Claim numbers 2144 and 2145 filed in the MHG Chapter 11 Cases.

                  97.      "MHG STATE MEDICAID CLAIMS" means State Medicaid
Claims against any of the MHG Debtors.

                  98.      "MHG SUBORDINATED NOTE CLAIM" means any Claim
against any of the MHG Debtors arising under or in connection with (i) the MHG
Indenture, (ii) the MHG Subordinated Notes, and (iii) any documents,
instruments, agreements, and rights related to the foregoing, all as amended,
supplemented, restated, or otherwise modified from time to time.

                  99.      "MHG SUBORDINATED NOTES" means the 9 1/2% Senior
Subordinated Notes due 2006, issued by MHG under the MHG Indenture.


                                      13
<PAGE>


                  100.     "MHG THIRD PARTY SUBORDINATED NOTE CLAIMS" means all
MHG Subordinated Note Claims other than those held by any MPAN Debtor.

                  101.     "MHG UNITED STATES CLAIMS" means United States
Claims against any of the MHG Debtors.

                  102.     "MHG UNSECURED CLAIMS DISTRIBUTION FUND" means a
Cash fund for distribution to (i) holders of Allowed MHG General Unsecured
Claims in Class UM-1, (ii) holders of Allowed MHG Third Party Subordinated Note
Claims in Class UM-2 (other than Securities Damages Claims) that are also
Consenting Class UM-2 Holders, and (iii) to the extent any holders of Allowed
Class UM-2 Claims are not Consenting Class UM-2 Holders, the MHG Senior Credit
Facility Agent for the benefit of the MHG Senior Credit Facility Claim Holders.
The MHG Unsecured Claims Distribution Fund shall be in an amount equal to the
lesser of (a) $7.5 million, or (b) such amount as may be necessary to fund a
five percent (5%) distribution to (i) holders of Allowed Class UM-1 Claims, and
(ii) holders of Allowed Class UM-2 Claims.

                  103.     "MONTICELLO" means Monticello Investment Associates,
LLC, successor to SouthTrust Bank, and any affiliates, successors, or assigns
thereof.

                  104.     "MONTICELLO BONIFAY DOCUMENTS" means the following,
each as may have been amended, supplemented, restated, or otherwise modified
from time to time: (i) the Loan Agreement dated August 24, 1993, (ii) the Term
Loan Note dated August 24, 1993, in the original principal sum of $5,000,000,
(iii) the Mortgage and Security Agreement dated July 8, 1993, as supplemented
and amended by the Notice and Receipt of Future Advance and Spreader Agreement
dated August 24, 1993, and (iv) any other documents that evidence or perfect
the Monticello Bonifay Claims or that were delivered pursuant to the foregoing
documents.

                  105.     "MONTICELLO BONIFAY CLAIMS" means any and all Claims
of Monticello or others arising under, evidenced by, or relating to (i) the
Monticello Bonifay Documents, or (ii) Claim number 2127 or 2129 filed in the
MHG Chapter 11 Cases, including but not limited to: (a) any liens securing such
Claims, (b) any guarantees of such Claims, or (c) any interest, penalties, and
fees relating to such Claims, each as it relates to the Debtors' facility known
as Mariner Health at Bonifay.

                  106.     "MONTICELLO SAN ANTONIO DOCUMENTS" means the
following, each as may have been amended, supplemented, restated, or otherwise
modified from time to time: (i) the Promissory Note dated October 26, 1993,
(ii) the Loan Agreement dated October 26, 1993, (iii) the Deed of Trust,
Security Agreement and Financing Statement dated October 26, 1993, and (iv) any
other documents that evidence or perfect the Monticello San Antonio Claims or
that were delivered pursuant to the foregoing documents.

                  107.     "MONTICELLO SAN ANTONIO CLAIMS" means any and all
Claims of Monticello or others arising under, evidenced by, or relating to (i)
the Monticello San Antonio Documents, or (ii) Claim number 2127 or 2128 filed
in the MHG Chapter 11 Cases, including but not limited to: (a) any liens
securing such Claims, (b) any guarantees of such Claims, or (c) any interest,
penalties, or fees relating to such Claims, each as it relates to the Debtors'
facility known as Mariner Health of San Antonio.


                                      14
<PAGE>


                  108.     "MONTICELLO TITUSVILLE DOCUMENTS" means the
following, each as may have been amended, supplemented, restated, or otherwise
modified from time to time: (i) the Loan Agreement dated December 21, 1995,
(ii) the Note dated December 21, 1995 in the original principal sum of
$5,637,000, (iii) the Mortgage and Security Agreement dated December 21, 1995,
and (iv) any other documents that evidence or perfect the Monticello Titusville
Claims or that were delivered pursuant to the foregoing documents.

                  109.     "MONTICELLO TITUSVILLE CLAIMS" means any and all
Secured Claims of Monticello arising under, evidenced by, or relating to (i)
the Monticello Titusville Documents, or (ii) Claim number 2126 or 2127 filed in
the MHG Chapter 11 Cases, including but not limited to: (a) any liens securing
such Claims, (b) any guarantees of such Claims, or (c) any interest, penalties,
or fees relating to such Claims, each as it relates to the Debtors' facility
known as Mariner Health of Titusville.

                  110.     "MPAN" means Mariner Post-Acute Network, Inc. (f/k/a
Paragon Health Network, Inc.), a Delaware corporation.

                  111.     "MPAN CHAPTER 11 CASES" means the cases under
chapter 11 of the Bankruptcy Code, commenced by the MPAN Debtors on the
Petition Date and assigned case numbers 00-00113 (MFW) through 00-00214 (MFW),
jointly administered as "In re Mariner Post-Acute Network, Inc., et al." under
case number 00-00113 (MFW).

                  112.     "MPAN COMMITTEE" means the Official Committee of
Creditors Holding Unsecured Claims as appointed by the Office of the United
States Trustee pursuant to section 1102 of the Bankruptcy Code to serve in the
MPAN Chapter 11 Cases.

                  113.     "MPAN DEBTOR AFFILIATES" means MPAN's direct and
indirect subsidiaries and certain affiliated partnerships, joint ventures, and
limited liability entities that are debtors and debtors in possession in the
MPAN Chapter 11 Cases, as identified on Exhibit 2 of the Plan (excluding those
entities specifically identified as not being chapter 11 debtors). This
definition of "MPAN Debtor Affiliates" does not include any of the MHG Debtors.

                  114.     "MPAN DEBTORS" means MPAN and each of the MPAN
Debtor Affiliates (but in each case excluding the MHG Debtors) that are debtors
and debtors in possession in the MPAN Chapter 11 Cases.

                  115.     "MPAN DIP CREDIT AGREEMENT" means the Revolving
Credit and Guaranty Agreement dated January 18, 2000, among MPAN as borrower,
the MPAN Debtor Affiliates as guarantors, the lenders party thereto, Chase, and
Chase Securities Inc., and all other agreements and other documents entered
into or delivered in connection therewith, as may have been amended,
supplemented, restated, or otherwise modified from time to time.

                  116.     "MPAN GENERAL UNSECURED CLAIM" means a General
Unsecured Claim against any of the MPAN Debtors.

                  117.     "MPAN GENERAL UNSECURED CLAIMS DISTRIBUTION FUND"
means a fund containing (i) 399,078 shares of New MPAN Common Stock, which
shall constitute in the aggregate 2.0% of the Primary Effective Date Shares of
New MPAN Common Stock as of the


                                      15
<PAGE>


Effective Date, and (ii) New MPAN Warrants, which shall enable the holders
thereof to purchase in the aggregate an additional 376,893 shares of New MPAN
Common Stock (subject to the anti-dilution provisions contained in the New
Warrant Agreement), which fund shall be held by the Disbursing Agent for the
purpose of funding distributions to holders of Allowed Class UP-1 Claims
pursuant to Section II.D.3 of the Plan.

                  118.     "MPAN INDENTURE" means the Indenture dated as of
November 4, 1997, between MPAN and IBJ Schroder Bank & Trust Company, as
trustee, as amended, supplemented, restated, or otherwise modified from time to
time.

                  119.     "MPAN LENDER PERCENTAGE" means 79.63%.

                  120.     "MPAN SENIOR CREDIT FACILITY AGENT" means Chase, or
any successor thereto, in its capacities as (i) Administrative Agent under the
MPAN Senior Credit Facility Agreement, (ii) Agent in connection with the
Synthetic Lease Transactions, and (iii) Collateral Agent on behalf of the MPAN
Senior Credit Facility Claim Holders.

                  121.     "MPAN SENIOR CREDIT FACILITY AGREEMENT" means the
Credit Agreement dated as of November 4, 1997, as amended, supplemented,
restated, or otherwise modified from time to time, among MPAN, the several
lenders from time to time party thereto, the MPAN Senior Credit Facility Agent
as Administrative Agent, and Bank of America, N.A. (formerly known as
Nationsbank, N.A.) as Documentation Agent.

                  122.     "MPAN SENIOR CREDIT FACILITY CLAIM HOLDER" means the
holder of A MPAN Senior Credit Facility Claim.

                  123.     "MPAN SENIOR CREDIT FACILITY CLAIMS" means any and
all Claims, whether secured or unsecured, arising under, evidenced by, or
relating to the MPAN Senior Credit Facility Documents.

                  124.     "MPAN SENIOR CREDIT FACILITY DOCUMENTS" means the
following documents, as amended, supplemented, restated, or otherwise modified
from time to time: (a) the MPAN Senior Credit Facility Agreement, including any
term loan, revolving loan, and letter of credit obligations arising thereunder
or relating thereto; (b) the Guarantee and Collateral Agreement dated as of
November 4, 1997, made by MPAN and its MPAN Debtor Affiliates parties thereto
in favor of the MPAN Senior Credit Facility Agent; (c) the Tranche A Term
Notes, (d) the Tranche B Term Notes; (e) the Tranche C Term Notes; (f) the
Revolving Credit Notes; (g) the Swing Line Note (as the capitalized terms in
the preceding clauses "(c)" through "(g)" are defined in the MPAN Senior Credit
Facility Agreement); (h) the Synthetic Lease Transaction Documents; (i) the
Deficiency Note dated August 16, 1999, in the original principal amount of
$26,485,562.79, made by MPAN in favor of Bank of America, N.A.; (j) all other
agreements granting security interests and liens in property and assets of the
MPAN Debtors to the holders of Claims arising under, evidenced by, or relating
to the foregoing documents, including, without limitation, the security
agreements, collateral pledges, stock pledges, fee simple and leasehold
mortgages, deeds of trust, and deeds to secure debt listed on Schedule 1.01 to
the MPAN DIP Credit Agreement; and (k) Claim numbers 6015 and 6372 filed in the
MPAN Chapter 11 Cases.


                                      16
<PAGE>


                  125.     "MPAN STATE MEDICAID CLAIMS" means State Medicaid
Claims against any of the MPAN Debtors.

                  126.     "MPAN SUBORDINATED NOTE CLAIMS DISTRIBUTION FUND"
means a fund containing (i) 399,078 shares of New MPAN Common Stock, which
shall constitute in the aggregate 2.0% of the Primary Effective Date Shares of
New MPAN Common Stock as of the Effective Date, and (ii) New MPAN Warrants,
which shall enable the holders thereof to purchase in the aggregate an
additional 376,893 shares of New MPAN Common Stock (subject to the
anti-dilution provisions contained in the New Warrant Agreement), which fund
shall be held by the Disbursing Agent for the purpose of funding distributions
to (i) holders of Allowed Class UP-2 Claims (other than Securities Damages
Claims) that are also Consenting Class UP-2 Holders, and (ii) to the extent any
holders of Allowed Class UP-2 Claims are not Consenting Class UP-2 Holders, the
MPAN Senior Credit Facility Agent for the benefit of the MPAN Senior Credit
Facility Claim Holders on account of such Allowed Class UP-2 Claims.

                  127.     "MPAN SUBORDINATED NOTES" means, collectively, the
10-1/2% Series B Senior Subordinated Discount Notes due 2007, and the 9-1/2%
Senior Subordinated Discount Notes due 2007, each as governed by the MPAN
Indenture.

                  128.     "MPAN SUBORDINATED NOTES CLAIM" means any Claim
against any of the MPAN Debtors arising under or in connection with (i) the
MPAN Indenture, (ii) the MPAN Subordinated Notes, and (iii) any documents,
instruments, agreements, and rights related to the foregoing, all as amended,
supplemented, restated, or otherwise modified from time to time.

                  129.     "MPAN UNITED STATES CLAIMS" means United States
Claims against any of the MPAN Debtors.

                  130.     "NEW AFFILIATES EQUITY" means the new common stock
of, partnership interests in, membership interests in, or other Equity
Interests in the Debtor Affiliates or any entities to be created pursuant to
the Corporate Restructuring Program, which stock or other Equity Interests
shall be issued pursuant to the Plan. The certificates or other documents
evidencing the New Affiliates Equity shall be substantially in the form set
forth in the Plan Documentary Supplement or, at the election of the Debtors,
the certificates or other documents evidencing the Old Affiliates Equity shall
continue to evidence the New Affiliates Equity.

                  131.     "NEW BANKERS TRUST PALMETTO NOTE" means the note to
be issued to the holder of the Bankers Trust Palmetto Claims, as described more
fully in Section II.D.1 of this plan.

                  132.     "NEW BANKERS TRUST WESTCHESTER NOTE" means the note
to be issued to the holder of the Bankers Trust Westchester Claims, as
described more fully in Section II.D.1 of this plan.

                  133.     "NEW BOARD" has the meaning referred to in Section
V.I of this Plan.

                  134.     "NEW LASALLE NOTE" means the note to be issued to
the holder of the LaSalle Secured Claims, as described more fully in Section
II.D.1 of this Plan.


                                      17
<PAGE>


                  135.     "NEW MHG COMMON STOCK" means the new common stock of
Reorganized MHG to be issued to Reorganized MPAN pursuant to the Plan. The
certificates for the New MHG Common Stock shall be substantially in the form
set forth in the Plan Documentary Supplement or, at the election of the
Debtors, the certificates evidencing the Old MHG Common Stock shall continue to
evidence the New MHG Common Stock.

                  136.     "NEW MPAN COMMON STOCK" means the new common stock
of Reorganized MPAN, par value $0.01 per share, to be issued pursuant to the
Plan. The certificates for the New MPAN Common Stock shall be substantially in
the form set forth in the Plan Documentary Supplement.

                  137.     "NEW MPAN WARRANTS" means the warrants representing
the right to purchase in the aggregate 753,786 shares of New MPAN Common Stock
at an exercise price of $28.04 per share for a period of two (2) years
following the Effective Date, as described more fully in the New Warrant
Agreement. The anti-dilution provisions in the New Warrant Agreement shall
apply to preserve the purchase rights of the New MPAN Warrants in the event
that Reorganized MPAN (i) pays a dividend in the form of shares of New MPAN
Common Stock or makes a distribution in shares of its New MPAN Common Stock, or
subdivides, combines, or reclassifies its shares of New MPAN Common Stock, (ii)
distributes to all holders of its New MPAN Common Stock Cash dividends or other
distributions of Cash, evidences of its indebtedness, shares of capital stock
(other than New MPAN Common Stock) or any other properties or securities, or
any options, warrants, or other rights to subscribe for or purchase any of the
foregoing (other than any regular Cash dividend, including increases thereof),
or (iii) engages in any combination (e.g., consolidation, merger, or
disposition of a substantial portion of its property and assets).

                  138.     "NEW NHP NOTE" means the note to be issued to the
holder of the NHP Secured Claims, as described more fully in Section II.D.1 of
this Plan.

                  139.     "NEW PROJECT LENDER NOTES" means, collectively, the
New LaSalle Note, New Bankers Trust Palmetto Note, New Bankers Trust
Westchester Note, New THCI Note, and New NHP Note.

                  140.     "NEW THCI NOTE" means the note to be issued to the
holder of the THCI Secured Claims, as described more fully in Section II.D.1 of
this Plan.

                  141.     "NEW WARRANT AGREEMENT" means the Warrant Agreement
that shall govern the issuance, terms, and conditions of the New MPAN Warrants
and that shall be substantially in the form set forth in the Plan Documentary
Supplement.

                  142.     "NHP" means Nationwide Health Properties, Inc., and
any affiliates, successors, or assigns thereof.

                  143.     "NHP DOCUMENTS" means the following, each as may
have been amended, supplemented, restated, or otherwise modified from time to
time: (i) the Loan Agreement dated June 30, 1993; (ii) the Deed of Trust,
Assignment of Rents, Security Agreement, Financing Statement and Fixture Filing
dated as of June 30, 1993; (iii) the First Amendment to Loan Agreement, Deed of
Trust and Other Loan Documents (Kensington


                                      18
<PAGE>


Gardens) dated June 28, 1996; (iv) the Secured Promissory Note dated June 30,
1993; and (v) any other documents that either evidence or perfect the NHP
Secured Claims or that were delivered pursuant to the foregoing documents.

                  144.     "NHP SECURED CLAIMS" means any and all Secured
Claims of NHP or others arising under, evidenced by, or relating to (i) the NHP
Documents; or (ii) Claim number 2469 filed in the MHG Chapter 11 Cases
including but not limited to (a) any liens securing such Claims, (b) any
guarantees of such Claims, or (c) any interest, penalties, and fees relating to
such Claims, each as it relates to the Debtors' facility known as Mariner
Health of Kensington.

                  145.     "NIEP" means the New Incentive Equity Plan, as
described more fully in Section V.J of this Plan.

                  146.     "OLD AFFILIATES EQUITY" means the stock, partnership
interests, membership interests, or other interests comprising the Equity
Interests in the Debtor Affiliates prior to the Effective Date.

                  147.     "OLD MHG COMMON STOCK" means the stock comprising
the Equity Interests in MHG prior to the Effective Date.

                  148.     "OLD MPAN COMMON STOCK" means the stock comprising
the Equity Interests in MPAN prior to the Effective Date.

                  149.     "OMEGA" means Omega Healthcare Investors, Inc., a
Maryland corporation, and any affiliates, successors, or assigns thereof.

                  150.     "OMEGA CLAIMS" means any and all Claims asserted by
Omega or others arising under, evidenced by, or relating to (i) the Omega
Documents, or (ii) Claim number 7291, 7294 through 7299, 7301, or 7304 through
7310 filed in the MPAN Chapter 11 Cases, including but not limited to: (a) any
liens securing such Claims, (b) any guarantees of such Claims, or (c) any
interest, penalties, and fees relating to such Claims.

                  151.     "OMEGA DOCUMENTS" means the following, each as may
have been amended, supplemented, restated, or otherwise modified from time to
time: (i) the Michigan Loan Agreement dated June 7, 1992, (ii) the Mortgage,
Security Agreement, Assignment of Rents and Leases, and Fixture Filing dated
August 14, 1992, (iii) the Mortgage Note dated August 14, 1992, (iv) the
Security Agreement dated August 14, 1992, (v) the Letter of Credit Pledge
Agreement dated August 14, 1992, (vi) the Cash Collateral Escrow Agreement
dated August 14, 1992, (vii) the Assignment of Leases dated August 14, 1992,
(viii) the Omega-PHCM Subsidiary Guaranty dated February 12, 1997, (ix) the
Omega - PHCM Subsidiary Security Agreement dated February 12, 1997, (x) the
Intercreditor Agreement dated February 12, 1997, (xi) the Supplementary Letter
of Credit and Cash Collateral Escrow Agreement dated March, 1996, (xii) the
Security Agreement dated July 31, 1998 from Living Centers-PHCM, Inc. in favor
of Omega, (xiii) the Deed of Trust, Security Agreement, and Fixture Filing (fee
simple) dated July 31, 1998, from Living Centers-PHCM in favor of David J.
Witheft, Esq., as trustee for the benefit of Omega, (xiv) the Deed of Trust,
Security Agreement, and Fixture Filing (leasehold) dated July 31, 1998, in
favor of David J. Witheft, Esq., as trustee for the benefit of


                                      19
<PAGE>


Omega, and (xv) any other documents that either evidence or perfect the Omega
Claims or that were delivered pursuant to or in connection with the foregoing
documents.

                  152.     "OMEGA SETTLEMENT AGREEMENT" means that certain
Settlement Agreement dated as of August 1, 2001 by and among MPAN, the other
MPAN Debtors identified as parties thereto, and Omega, and all schedules and
exhibits thereto and all documents, instruments, and agreements executed or
delivered as required or contemplated thereunder, as the same may have been
amended, supplemented, restated, or otherwise modified from time to time, as
approved by order of the Bankruptcy Court entered on or about August 22, 2001.

                  153.     "OTHER PRIORITY CLAIM" means any Claim accorded
priority in right of payment under section 507(a) of the Bankruptcy Code
(including sections 507(a)(3), 507(a)(4), and 507(a)(6)), other than a Priority
Tax Claim or an Administrative Expense.

                  154.     "OTHER SECURED CLAIMS" means any Secured Claim not
classified in any of Classes SP-1 through SP-8, Classes SM-1 through SM-12, or
Class SJ-1.

                  155.     "PETITION DATE" means January 18, 2000, the date on
which the Debtors filed their voluntary petitions commencing the Chapter 11
Cases.

                  156.     "PHCMI DEBTORS" means, collectively, (i)
Professional Health Care Management, Inc. ("PHCMI"), (ii) all of the
subsidiaries of PHCMI that are indebted to Omega, and (iii) Living
Centers-PHCM, Inc. a wholly-owned subsidiary of MPAN that is also indebted to
Omega. The PHCMI Debtors are identified as such on Exhibit 2 hereto.

                  157.     "PLAN" means this chapter 11 plan of reorganization,
including all exhibits hereto and all documents incorporated by reference
herein or contained in the Plan Documentary Supplement, either in their present
form or as they may be amended, supplemented, restated, or otherwise modified
from time to time in accordance with the Bankruptcy Code, the Bankruptcy Rules,
and this Plan.

                  158.     "PLAN DOCUMENTARY SUPPLEMENT" means the compilation
of the forms and summaries of certain documents, as same may be amended,
supplemented, restated, or otherwise modified from time to time, referred to
herein as specified in Section I.C of the Plan.

                  159.     "PORCHE" means, collectively, Edwin J. Porche and
Donna L. Porche, and any affiliates, successors, or assigns thereof.

                  160.     "PORCHE DOCUMENTS" means the following, each as may
have been amended, supplemented, restated, or otherwise modified from time to
time: (i) the Subordinated Promissory Note in the original principal amount of
$1,000,000 dated as of March 17, 1989, (ii) Second Lien Pledge Agreement, and
(iii) any other documents that either evidence or perfect the Porche Secured
Claims or that were delivered pursuant to or in connection with the foregoing
documents.

                  161.     "PORCHE SECURED CLAIMS" means any and all Secured
Claims asserted by Porche or others arising under, evidenced by, or relating
to: (i) the Porche Documents; or


                                      20
<PAGE>


(ii) Claim number 479, 1439, or 1449 filed in the MHG Chapter 11 Cases,
including but not limited to: (a) any liens securing such Claims; (b) any
guarantees of such Claims; or (c) any interest, penalties, and fees relating to
such Claims.

                  162.     "PRIMARY EFFECTIVE DATE SHARES" means the shares of
New MPAN Common Stock to be issued on the Effective Date (regardless whether
such shares actually are distributed on the Effective Date or are held in the
MPAN General Unsecured Claims Distribution Fund or the MPAN Subordinated Note
Claims Distribution Fund for distribution at a later date in accordance with
this Plan), excluding (i) any shares issuable upon exercise of the New MPAN
Warrants, and (ii) any shares issuable under the NIEP.

                  163.     "PRIORITY TAX CLAIM" means a Claim of a governmental
unit of the kind specified in section 507(a)(8) of the Bankruptcy Code.

                  164.     "PRO RATA" means proportionately so that the ratio
of (a) the amount of consideration distributed on account of a particular
Allowed Claim to (b) the allowed amount of the Allowed Claim, is the same as
the ratio of (x) the amount of consideration available for distribution on
account of all Allowed Claims in the Class in which the particular Allowed
Claim is included to (y) the amount of all Claims (whether Allowed Claims or
Disputed Claims) in that Class, in all cases excluding any Securities Damages
Claims (whether Allowed Claims or Disputed Claims), provided, however, that
with respect to any distribution to be made from the MHG Unsecured Claims
Distribution Fund, "Pro Rata" means the amount determined proportionately so
that the ratio of (a) the amount of consideration distributed on account of a
particular Allowed Claim in Class UM-1 or Class UM-2 to (b) the amount of such
Allowed Claim, is the same as the ratio of (x) the amount of consideration
available for distribution in the MHG Unsecured Claims Distribution Fund to (y)
the amount of all Claims (whether Allowed Claims or Disputed Claims) in Classes
UM-1 and UM-2.

                  The Pro Rata ratio or formula is illustrated as follows:

    (a) Amount of consideration           (x) Total consideration available for
distributed to holder of Allowed Claim      distribution to holders of Allowed
                                                   Claims in Class


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

                                       =

(b) Amount of holder's Allowed Claim    (y) Total amount of all Claims (whether
                                           Allowed Claims or Disputed Claims)
                                                      in Class


                  For purposes of the application of this definition, (a) the
amount of any Disputed Claim shall be the lesser of: (i) the face amount of
such Claim, (ii) the maximum amount of such Claim as estimated in accordance
with the Claims Estimation Procedure set forth in Section IV.D hereof, or (iii)
zero, to the extent such Claim has been disallowed by a Final Order or
otherwise deemed disallowed under this Plan, (b) the term "consideration" may
refer to New MPAN Common Stock, New MPAN Warrants, Cash, or any other property
that may be distributed


                                      21
<PAGE>


under this Plan, and (c) if the Debtors recover any transfers from an entity on
the basis that such transfers were preferential as provided in section 547 of
the Bankruptcy Code, and if such entity is entitled to an Allowed Claim as a
consequence of such recovery and is otherwise entitled to distributions on
account of such Allowed Claim under this Plan (including, if applicable, as a
Consenting Class UP-2 Holder or a Consenting Class UM-2 Holder), then such
entity shall be entitled to a Pro Rata distribution as the holder of an Allowed
Claim in the applicable Class.

                  165.     "PUNITIVE DAMAGE CLAIMS" means any Claim arising
before the Petition Date, whether secured or unsecured, for any fine, penalty,
or forfeiture, or for multiple, exemplary, or punitive damages, to the extent
that such fine, forfeiture, or damages is not compensation for actual pecuniary
loss suffered by the holder of such Claim.

                  166.     "QUAKER" means Quaker Capital, L.P., and any
affiliates, successors, or assigns thereof, including but not limited to HUD in
such capacity.

                  167.     "QUAKER DELAND CLAIMS" means any and all Claims
asserted by Quaker, HUD, or others arising under, evidenced by, or relating to
(i) the Quaker Documents; or (ii) Claim number 3222 filed in the MHG Chapter 11
Cases, including but not limited to: (a) any liens securing such Claims; (b)
any guarantees of such Claims; or (c) any interest, penalties, and fees
relating to such Claims, each as it relates to the Debtors' facility known as
Mariner Health of Deland.

                  168.     "QUAKER DOCUMENTS" means the following, each as may
have been amended, supplemented, restated, or otherwise modified from time to
time: (i) the Mortgage Note dated as of March 12, 1992 in the original
principal amount of $7,200,000, (ii) the Mortgage dated as of March 12, 1992,
and (iii) any other documents that either evidence or perfect the Quaker Deland
Claims or that were delivered pursuant to or in connection with the foregoing
documents.

                  169.     "REORGANIZED DEBTORS" means the Debtors, or any
successors thereto by merger, consolidation, acquisition, or otherwise
(including but not limited to any such transactions consummated pursuant to the
Corporate Restructuring Program), on and after the Effective Date.

                  170.     "REORGANIZED MHG," "REORGANIZED MHG DEBTOR
AFFILIATES," "REORGANIZED MPAN," and "REORGANIZED MPAN DEBTOR AFFILIATES"
means, respectively, MHG, the MHG Debtor Affiliates, MPAN, or the MPAN Debtor
Affiliates, or any successor thereto by merger, consolidation, or otherwise, on
and after the Effective Date.

                  171.     "REQUIRED SENIOR CREDIT FACILITY CLAIM HOLDERS"
means the consent of more than 50% of the Senior Credit Facility Claim Holders
in amount, determined as follows: (a) the denominator shall be $1,237,768,000
(the sum of the face principal amounts of the MPAN Senior Credit Facility
Claims and 60.665% of the face principal amounts of the MHG Senior Credit
Facility Claims), and (b) the numerator shall be the sum of (i) the face
principal amounts of the consenting or approving MPAN Senior Credit Facility
Claim Holders, and (ii) 60.665% of the face principal amounts of the consenting
or approving MHG Senior Credit Facility Claim Holders.


                                      22
<PAGE>


                  172.     "SCHEDULES" means the schedules of assets and
liabilities, list of equity security holders, and statement of affairs filed by
the MPAN Debtors or the MHG Debtors, as applicable, as required by section
521(1) of the Bankruptcy Code, Bankruptcy Rules 1007(a)(3) and (b)(1), and
Official Bankruptcy Form No. 6, as amended from time to time.

                  173.     "SECURED CLAIM" means a Claim against the Debtors
that is (a) secured by a lien on property in which any or all of the Debtors'
estates have an interest, to the extent of the value of any validly perfected,
enforceable, and nonavoidable interest in property of the estate securing such
Claim or (b) a Claim that is subject to setoff under section 553 of the
Bankruptcy Code, to the extent of the amount subject to a valid setoff, in the
case of each of (a) and (b) as determined by the Bankruptcy Court pursuant to
section 506(a) of the Bankruptcy Code or agreed to by the Debtors or the
Reorganized Debtors and the applicable Claim holder.

                  174.     "SECURED CREDITOR RATE" means an interest rate,
compounded monthly, equal to the yield for ten (10) year obligations of the
United States Treasury having a maturity date closest to the tenth anniversary
of the Effective Date, plus 300 basis points.

                  175.     "SECURED TAX CLAIM" means a Claim of a governmental
unit for taxes that is also a Secured Claim.

                  176.     "SECURITIES DAMAGES CLAIM" means a Claim against any
of the Debtors arising from the rescission of a purchase, sale, or other
transfer of shares, notes, or other securities of any of the Debtors, for
damages arising from the purchase, sale, or other transfer of any such share,
note, or other security, or for reimbursement or contribution allowed under
section 502 of the Bankruptcy Code on account of any such Claim, including but
not limited to any Claim that would be subject to subordination under section
510(b) of the Bankruptcy Code. For purposes of this definition, "security"
includes, among other things, Old MPAN Common Stock, Old MHG Common Stock, Old
Affiliates Equity, MPAN Subordinated Notes, MHG Subordinated Notes, and any
options, warrants, or other rights to purchase, sell, or transfer the same.

                  177.     "SENIOR CREDIT FACILITY CLAIM HOLDERS" means the
holders of the Senior Credit Facility Claims.

                  178.     "SENIOR CREDIT FACILITY CLAIMS" means, together, the
MPAN Senior Credit Facility Claims and the MHG Senior Credit Facility Claims.

                  179.     "SENIOR LENDER NOTES" means certain notes that may
be distributed on the Effective Date to holders of MPAN Senior Credit Facility
Claims and MHG Senior Credit Facility Claims, as described more fully in
Sections II.D.1 and V.B.3 of this Plan.

                  180. "STATE" means any State, commonwealth, or territory of
the United States, the District of Columbia, any department, agency, or
subdivision of the foregoing, or any fiscal intermediary, agent, or authorized
representative of the foregoing when acting in such capacity.

                  181.     "STATE MEDICAID CLAIM" means a Claim of a State for
payment, recovery, recoupment, or offset of any reimbursements or other
payments made by or on behalf of a State pursuant to a State's Medicaid
program, for services rendered or otherwise provided by or on


                                      23
<PAGE>


behalf of any of the Debtors prior to the Petition Date (regardless whether any
cost reports with respect to such services were submitted or audited before or
after the Petition Date), which reimbursements or other payments the State
contends were improperly made, were made in the wrong amount, or are otherwise
recoverable by the State, provided, however, that any Claims for penalties or
fines shall not be treated as State Medicaid Claims.

                  182.     "SUBORDINATED NOTES" means the MPAN Subordinated
Notes and the MHG Subordinated Notes.

                  183.     "SYNTHETIC LEASE TRANSACTION DOCUMENTS" means the
following documents, as amended, supplemented, restated, or otherwise modified
from time to time: (i) the Amended and Restated Participation Agreement dated
as of November 4, 1997; (ii) the Amended and Restated Credit Agreement dated as
of November 4, 1997; (iii) the Lease dated as of October 10, 1996, and the
Memoranda of Leases and Lease Supplements relating thereto; (iv) the Amended
and Restated Guarantee dated as of November 4, 1997; (v) the Mortgages and/or
Deeds of Trust relating to the foregoing; (vi) the Agency Agreement relating to
the foregoing; and (vii) the Stipulation Acknowledging Ownership of Properties
Subject to "Synthetic Lease" Transaction approved by the Bankruptcy Court on or
about January 19, 2000.

                  184.     "SYNTHETIC LEASE TRANSACTIONS" means those
transactions involving, among others, FBTC Leasing Corp., the MPAN Senior
Credit Facility Agent, The Fuji Bank, Limited (Houston Agency), as co-agent,
and the MPAN Debtors, arising under, relating to, or evidenced by the Synthetic
Lease Transaction Documents.

                  185.     "THCI" means THCI Mortgage Holding Company LLC,
successor to Meditrust Mortgage Investments, Inc., and any affiliates,
successors, or assigns thereof.

                  186.     "THCI DOCUMENTS" means the following, each as may
have been amended, supplemented, restated, or otherwise modified from time to
time: (i) all documents attached to Claim number 2245 or 3462 filed in the MHG
Chapter 11 Cases, (ii) all documents that purport to grant a lien in favor of
THCI relating to the Debtors' Mariner Health Care at Pendleton facility located
in Stonington, Connecticut, and (iii) any other documents that either evidence
or perfect the THCI Secured Claims or that were delivered pursuant to or in
connection with the foregoing documents.

                  187.     "THCI SECURED CLAIMS" means any and all Secured
Claims of THCI or others arising under, evidenced by, or relating to: (i) the
THCI Documents; or (ii) Claim numbers 2245 or 3462 filed in the MHG Chapter 11
Cases, including but not limited to: (a) any liens securing such Claims, (b)
any guarantees of such Claims, or (c) any interest, penalties, and fees
relating to such Claims, each as it relates to the Debtors' Mariner Health Care
at Pendleton facility located in Stonington, Connecticut.

                  188.     "TOTAL FUNDED DEBT" means the sum of the principal
amount as of the Effective Date of the Exit Term Loans, the Investor Notes, the
Lender Notes, the New Project Lender Notes, and any capital lease or mortgage
obligations assumed or unimpaired under the Plan.


                                      24
<PAGE>


                  189.     "UNITED STATES" means the United States of America,
all agencies and departments thereof, and all officers, agents, fiscal
intermediaries, employees, and assigns thereof when acting in such capacity,
including without limitation, the Office of Inspector General of the Department
of Health and Human Services ("OIG"), the United States Department of Justice,
Civil Division ("DOJ"), the Center for Medicare and Medicaid Services ("CMS",
formerly known as the Health Care Financing Administration ("HCFA")), and the
United States Department of Health and Human Services.

                  190.     "UNITED STATES CLAIMS" means any and all Claims or
causes of action against the Debtors asserted by or on behalf of the United
States (including all of its agencies, departments, agents, fiscal
intermediaries, employees, and assigns, or third parties under 31 U.S.C. ss.
3730(b) or (d), including all qui tam actions) seeking payments, damages,
offsets, recoupments, penalties, attorneys' fees, costs, expenses of any kind,
or other remedies of any kind: (i) under the False Claims Act, 31 U.S.C. ss.ss.
3729-3733; the Civil Monetary Penalties Law, 42 U.S.C. ss. 1320a-7a; and the
Program Fraud Civil Remedies Act, 31 U.S.C. ss.ss. 3801-3812; and/or other
statutory or common law doctrines of payment by mistake, unjust enrichment,
breach of contract, or fraud; (ii) for administrative overpayments, including
Claims or causes of action for services rendered or products supplied under
Medicare, the TRICARE Program, 10 U.S.C. ss.ss. 1071-1106, or any other federal
health program; (iii) for civil monetary penalties imposed pursuant to 42
U.S.C. ss.1395i-3(h)(2)(B)(ii) and 42 U.S.C. ss. 1396r(h)(2)(A)(ii) or other
applicable law; (iv) arising under any provider agreement or similar agreement
with the United States; and (v) for permissive exclusion from Medicare,
Medicaid, and other federal health programs (as defined in 42 U.S.C. ss.
1320a-7b(f) and under 42 U.S.C. ss. 1320a-7(b) and 42 U.S.C. ss. 1320a-7a).
Notwithstanding anything in this definition to the contrary, United States
Claims shall not include Claims for taxes or Claims of HUD otherwise classified
under this Plan.

         B.       RULES OF CONSTRUCTION.

                  For purposes of the Plan, (i) whenever from the context it is
appropriate, each term, whether stated in the singular or the plural, shall
include both the singular and the plural; (ii) any reference in the Plan to a
contract, instrument, release, indenture, agreement, or other document being in
a particular form or on particular terms and conditions means that such
document shall be substantially and materially in such form or substantially
and materially on such terms and conditions; (iii) any reference in the Plan to
a document, schedule, annex, or exhibit to the Plan, Plan Documentary
Supplement, or Disclosure Statement filed or to be filed means such document,
schedule, annex, or exhibit, as it may have been or may be amended, modified,
or supplemented; (iv) unless otherwise specified, all references in the Plan to
articles, sections, subsections, clauses, paragraphs, schedules, and exhibits
are references to articles, sections, subsections, clauses, paragraphs,
schedules, and exhibits of or to the Plan; (v) the words "herein," "hereof,"
"hereto," "hereunder," and others of similar import refer to the Plan as a
whole and not to any particular section, subsection, clause, or paragraph
contained in the Plan; (vi) a term used herein that is not defined herein shall
have the meaning ascribed to that term, if any, in the Bankruptcy Code or
Bankruptcy Rules; and (vii) the rules of construction set forth in section 102
of the Bankruptcy Code shall apply to the extent such rules are not
inconsistent with the express terms of the Plan or any other provision in this
Section I.B.


                                      25
<PAGE>


         C.       PLAN DOCUMENTARY SUPPLEMENT.

                  Forms or summaries of certain documents referred to herein
are contained in a separate Plan Documentary Supplement, which the Debtors
shall file with the Bankruptcy Court and amend from time to time prior to the
Effective Date. The Plan Documentary Supplement may be inspected in the office
of the Clerk of the Bankruptcy Court during normal court hours.

         D.       EXHIBITS.

                  All exhibits to the Plan and all documents contained in the
Plan Documentary Supplement are incorporated into and are a part of the Plan as
if set forth in full herein.

                                      II.

                        CLASSIFICATION AND TREATMENT OF
                          CLAIMS AND EQUITY INTERESTS

         A.       SUMMARY.

                  The categories of Claims and Equity Interests listed below
classify Claims and Equity Interests for all purposes, including voting,
confirmation, and distribution pursuant to the Plan. Administrative Expenses
and Priority Tax Claims have not been classified and are excluded from the
following Classes, in accordance with section 1123(a)(1) of the Bankruptcy
Code. A Claim or Equity Interest is classified in a particular Class only to
the extent that the Claim or Equity Interest qualifies within the description
of that Class and is classified in a different Class to the extent that any
remainder of the Claim or Equity Interest qualifies within the description of
such different Class.


<TABLE>
<CAPTION>
                       CLASS                                  STATUS
                       -----                                  ------
   <S>                                            <C>
   SP-1:    MPAN Senior Credit Facility           Impaired - entitled to vote.
            Claims
   SP-2:    Omega Claims                          Impaired - entitled to vote.
   SP-3:    LaSalle Secured   Claims              Impaired - entitled to vote
   SP-4:    Fireside Manor Secured Claims         Impaired - entitled to vote
   SP-5:    Aramark Secured Claims                Impaired - entitled to vote
   SP-6:    Bank Midwest Secured Claims           Impaired - entitled to vote
   SP-7:    Bank of New York Claims               Unimpaired - deemed to have accepted the Plan
   SP-8:    Lend Lease Secured Claims             Impaired - entitled to vote
</TABLE>


                                      26
<PAGE>


<TABLE>
<CAPTION>
                       CLASS                                  STATUS
                       -----                                  ------
   <S>                                            <C>
   SM-1:    MHG Senior Credit Facility Claims     Impaired - entitled to vote
   SM-2:    Bankers Trust Palmetto Claims         Impaired - entitled to vote
   SM-3:    Bankers Trust Westchester Claims      Impaired - entitled to vote
   SM-4:    Bankers Trust St. Augustine Claims    Impaired - entitled to vote
   SM-5:    THCI Secured Claims                   Impaired - entitled to vote
   SM-6:    HUD Jacksonville Claims               Unimpaired - deemed to have accepted the Plan
   SM-7:    NHP Secured Claims                    Impaired - entitled to vote
   SM-8:    Porche Secured Claims                 Impaired - deemed to have rejected the Plan
   SM-9:    Quaker Deland Claims                  Impaired - entitled to vote
   SM-10:   Monticello Bonifay Claims             Impaired - entitled to vote
   SM-11:   Monticello Titusville Claims          Impaired - entitled to vote
   SM-12:   Monticello San Antonio Claims         Impaired - entitled to vote
   SJ-1:    Secured Tax Claims                    Impaired - entitled to vote
   SJ-2:    Other Secured Claims                  Impaired - entitled to vote; provided, however, that the
                                                  Debtors may elect to unimpair certain holders

   PJ-1:    Other Priority Claims                 Unimpaired - deemed to have accepted the Plan

   UP-1:    MPAN General Unsecured Claims         Impaired - entitled to vote
   UP-2:    MPAN Subordinated Note Claims         Impaired - entitled to vote
   UP-3:    MPAN Punitive Damages Claims          Impaired - deemed to have rejected the Plan
</TABLE>


                                      27
<PAGE>


<TABLE>
<CAPTION>
                       CLASS                                  STATUS
                       -----                                  ------
   <S>                                            <C>
   UM-1:    MHG General Unsecured Claims          Impaired - entitled to vote
   UM-2:    MHG Third Party Subordinated Note     Impaired - entitled to vote
            Claims
   UM-3:    MHG Punitive Damages Claims           Impaired - deemed to have rejected the Plan
   UJ-1:    Debtors  Intercompany Claims          Impaired - consenting to the Plan as Plan proponents

   GP-1:    MPAN United States         Claims     Impaired - consenting to the Plan pursuant to the Federal
                                                  Government Settlement
   GM-1:    MHG United States Claims              Impaired - consenting to the Plan pursuant to the Federal
                                                  Government Settlement

   EP-1:    Old MPAN Common Stock                 Impaired- deemed to have rejected the Plan
   EM-1:    Old MHG Common Stock                  Impaired - consenting to the Plan as Plan proponents
   EJ-1:    Old Affiliates Equity                 Impaired - consenting to the Plan as Plan proponents
</TABLE>

         B.       ADMINISTRATIVE EXPENSES.

                  1.       PAYMENT GENERALLY.

                  No Administrative Expense shall receive a distribution under
this Plan except to the extent that it is an Allowed Administrative Expense.
Except to the extent that the holder of an Allowed Administrative Expense
agrees to a different treatment, and subject to the bar dates for
Administrative Expenses set forth in the following Sections, the Disbursing
Agent shall pay each Allowed Administrative Expense in full, in Cash, on the
later of (i) the Effective Date, (ii) within ten (10) Business Days after the
date such Administrative Expense becomes an Allowed Administrative Expense, or
(iii) the date such Allowed Administrative Expense becomes due according to its
terms. Notwithstanding the foregoing, any Allowed Administrative Expenses
representing obligations incurred in the ordinary course of postpetition
business by the Debtors in Possession (including without limitation
postpetition trade obligations and postpetition payroll obligations, but
excluding any postpetition tax obligations) or that have been expressly
authorized by the Bankruptcy Court or this Plan shall be paid in full or
performed by the Reorganized Debtors in the ordinary course of business, in
accordance with the terms of the particular obligation.


                                      28
<PAGE>


                  2.       ADMINISTRATIVE EXPENSES BAR DATE.

                           A.       GENERAL ADMINISTRATIVE EXPENSES BAR DATE.

                  All applications for final compensation of professional
persons for services rendered and for reimbursement of expenses incurred on or
before the Effective Date and all other requests for payment of Administrative
Expenses incurred before the Effective Date under sections 507(a)(1) or 507(b)
of the Bankruptcy Code shall be filed with the Bankruptcy Court and served upon
the Reorganized Debtors, the MPAN Senior Credit Facility Agent, and the MHG
Senior Credit Facility Agent no later than sixty (60) days after the Effective
Date (the "General Administrative Expenses Bar Date"), unless such date is
extended by the Bankruptcy Court after notice to the Reorganized Debtors. Any
such request for payment of an Administrative Expense that is subject to the
General Administrative Expenses Bar Date and that is not filed and served on or
before the General Administrative Expenses Bar Date shall be forever barred;
any party that seeks payment of Administrative Expenses that (i) is required to
file a request for payment of such Administrative Expenses and (ii) does not
file such a request by the deadline established herein shall be forever barred
from asserting such Administrative Expenses against the Debtors, the
Reorganized Debtors, their estates, or any of their property. Notwithstanding
the foregoing, the General Administrative Expenses Bar Date shall not apply to
(i) postpetition, ordinary course trade obligations and postpetition payroll
obligations incurred in the ordinary course of the Debtors' postpetition
business, personal injury claims arising from acts or omissions occurring after
the Petition Date, and postpetition obligations expressly authorized by the
Bankruptcy Court or this Plan (including but not limited to obligations arising
under any agreements entered into during the Chapter 11 Cases pursuant to
Bankruptcy Court approval), for which no Administrative Expenses bar date shall
apply, and (ii) postpetition tax obligations, for which the bar date for Tax
Administrative Expenses described in the following Section shall apply.

                           B.       TAX ADMINISTRATIVE EXPENSES BAR DATE.

                  All requests for payment of Administrative Expenses by a
governmental unit for taxes (and for interest and/or penalties related to such
taxes) for any tax year or period, all or any portion of which occurs or falls
within the period from and including the Petition Date through and including
the Effective Date ("Tax Administrative Expenses") and for which no bar date
has otherwise been previously established, must be filed and served on the
Reorganized Debtors, the MPAN Senior Credit Facility Agent, and the MHG Senior
Credit Facility Agent on or before the later of (i) sixty (60) days following
the Effective Date; or (ii) 120 days following the filing of the tax return for
such taxes for such tax year or period with the applicable governmental unit.
Any holder of any Tax Administrative Expenses that is required to file a
request for payment of such taxes and does not file and properly serve such a
request by the applicable bar date shall be forever barred from asserting any
such Tax Administrative Expenses against the Debtors, Reorganized Debtors,
their estates, or their property.

                  3.       POST-EFFECTIVE DATE PROFESSIONAL FEES AND EXPENSES.

                  Any professional fees or reimbursement of expenses incurred
by the Reorganized Debtors subsequent to the Effective Date may be paid by the
Reorganized Debtors without application to the Bankruptcy Court, provided,
however, that the Bankruptcy Court shall retain


                                      29
<PAGE>


jurisdiction to resolve any disputes regarding payment for professional
services relating to the implementation of the Plan or the administration of
the Chapter 11 Cases.

         C.       PRIORITY TAX CLAIMS.

                  Except to the extent that the holder of an Allowed Priority
Tax Claim agrees to a different treatment, the Disbursing Agent shall pay each
holder of an Allowed Priority Tax Claim in full, in Cash, on the later of (i)
the Effective Date, or (ii) the date such Priority Tax Claim becomes an Allowed
Priority Tax Claim. Allowed Priority Tax Claims shall not include any interest
or penalties accruing subsequent to the Petition Date, and all postpetition
interest and all penalties shall be disallowed.

         D.       CLASSIFICATION AND TREATMENT OF CLAIMS.

                  1.       SECURED CLAIMS.

                           A.       CLASS SP-1: MPAN SENIOR CREDIT FACILITY
CLAIMS.

                                    I.       CLASSIFICATION: Class SP-1
consists of the MPAN Senior Credit Facility Claims.

                                    II.     ALLOWANCE: The MPAN Senior Credit
Facility Claims shall be deemed Allowed Claims in the aggregate amount of
$985,631,204 for purposes of this Plan.

                                    III.     TREATMENT: The MPAN Senior Credit
Facility Claim Holders shall receive in the aggregate and in full satisfaction
of the MPAN Senior Credit Facility Claims on the Effective Date: (a) the MPAN
Lender Percentage of the Available Cash; (b) the MPAN Lender Percentage of the
Lender Notes, if any such Lender Notes are issued pursuant to Section V.B.4 of
this Plan; (c) the MPAN Lender Percentage of the Lender Shares; and (d) a
release as provided in Section V.L.1 of this Plan. In addition, as soon as such
consideration is available on or after the Effective Date, the MPAN Senior
Credit Facility Claim Holders shall receive: (y) the MPAN Lender Percentage of
the APS Sale Proceeds (to the extent such APS Sale Proceeds are not otherwise
included in the calculation of Available Cash or have not been paid to the MPAN
Senior Credit Facility Claim Holders as adequate protection prior to the
Effective Date); and (z) New MPAN Common Stock and New MPAN Warrants that would
otherwise have been issued to holders of Allowed Class UP-2 Claims that are not
Consenting Class UP-2 Holders, if such holders had been Consenting Class UP-2
Holders. Any and all rights of the MPAN Senior Credit Facility Claim Holders to
receive New Affiliates Equity and all other Equity Interests in the Reorganized
Debtors (other than Reorganized MPAN) shall be subordinated to the rights of
the Reorganized Debtors as provided in the treatment of Class EJ-1 under this
Plan.

                  Notwithstanding the foregoing, in the event that either the
MPAN Senior Credit Facility Claim Holders or the MHG Senior Credit Facility
Claim Holders receive any payments from the Debtors on account of collateral
sales (including but not limited to the APS Sale Proceeds) or any other
adequate protection payments from and after December 10, 2001 through the date
immediately preceding the Effective Date (the "Pre-Effective Date Payments"),
the


                                      30
<PAGE>


percentage of Available Cash distributed to the MPAN Senior Credit Facility
Claim Holders shall be adjusted so that (a) the sum of (1) any Pre-Effective
Date Payments received by the MPAN Senior Credit Facility Claim Holders, and
(2) Available Cash distributed to the MPAN Senior Credit Facility Claim
Holders, equals (b) the MPAN Lender Percentage multiplied by the sum of (1) all
Pre-Effective Date Payments (whether to the MPAN Senior Credit Facility Claim
Holders or the MHG Senior Credit Facility Claim Holders), and (2) all Available
Cash.

                  All Cash to be distributed to the MPAN Senior Credit Facility
Claim Holders shall be distributed initially to the MPAN Senior Credit Facility
Agent, for distribution by the MPAN Senior Credit Facility Agent to the MPAN
Senior Credit Facility Claim Holders. All of the New MPAN Common Stock and
Lender Notes to be distributed to the MPAN Senior Credit Facility Claim Holders
shall be distributed by the Reorganized Debtors as directed in writing by the
MPAN Senior Credit Facility Agent. Distribution of Cash, Lender Notes, and New
MPAN Common Stock to individual MPAN Senior Credit Facility Claim Holders
(including, without limitation, the payment in full with accrued interest at
the non-default rate of the Tranche B and Tranche C obligations under the
Synthetic Lease Transaction Documents) shall be made in accordance with their
respective rights inter se and any election and allocation procedures that may
be agreed upon by the MPAN Senior Credit Facility Claim Holders.

                  Except as may be provided with respect to the Lender Notes,
all liens, mortgages, and security interests securing MPAN Senior Credit
Facility Claims will be extinguished on the Effective Date. Except as expressly
provided in this Plan, any and all Claims of the MPAN Senior Credit Facility
Agent and the MPAN Senior Credit Facility Claim Holders existing as of the
Effective Date against (a) the Debtors or (b) to the extent such Claims relate
to the MPAN Senior Credit Facility Claims, against the Debtors' subsidiaries,
affiliates, officers, directors, employees, agents, and advisors, will be
extinguished on the Effective Date, whether such Claims are known or unknown,
matured or unmatured, contingent or noncontingent, or liquidated or
unliquidated.

                           B.       CLASS SP-2: OMEGA CLAIMS.

                                    I.      CLASSIFICATION: Class SP-2 consists
of the Omega Claims.

                                    II.     TREATMENT: The holder of the Omega
Claims shall receive on account of such Claims treatment in accordance with the
terms of the Omega Settlement Agreement.

                           C.       CLASS SP-3: LASALLE SECURED CLAIMS.

                                    I.      CLASSIFICATION: Class SP-3 consists
of the LaSalle Secured Claims.

                                    II.     ALLOWANCE: The Allowed LaSalle
Secured Claims shall consist of (i) all amounts owing on account of the LaSalle
Secured Claims as of the Petition Date, plus (ii) interest from the Petition
Date through the Effective Date in an amount equal to the nondefault rate (and
excluding any late charges or penalties) as specified in the LaSalle Documents,
but only to the extent such interest is allowable under Bankruptcy Code section
506(b), less (iii) any amounts paid by the Debtors on account of the LaSalle
Secured Claims


                                      31
<PAGE>


during the Chapter 11 Cases, whether in the form of adequate protection
payments, through the application of security deposits, or otherwise.
Notwithstanding the foregoing, in no event shall the Allowed LaSalle Secured
Claims exceed the value, as determined by the Bankruptcy Court pursuant to
section 506(a) of the Bankruptcy Code, of any interest in property of the
Debtors' estates securing such Claims as of the Effective Date, less any amount
of adequate protection payments that did not compensate the holder of such
Claims for any diminution in collateral value. To the extent that LaSalle holds
Allowed Claims against the Debtors in excess of the Allowed LaSalle Secured
Claims, such Allowed Claims shall be treated in Classes UP-1 or UP-3 under this
Plan, as applicable.

                  No less than fourteen (14) days prior to the deadline to
object to confirmation of the Plan, the Debtors shall file with the Court and
serve upon the holder of the LaSalle Secured Claims the Debtors' estimate of
the amount of the Allowed LaSalle Secured Claims as of the anticipated
Effective Date, which amount shall be binding upon the holder of the LaSalle
Secured Claims unless such holder files with the Bankruptcy Court and serves
upon the Debtors an objection to the Debtors' estimate on or before the
deadline to object to confirmation of the Plan. In the event of such an
objection, the LaSalle Secured Claims shall be treated as Disputed Claims until
the allowed amount of the LaSalle Secured Claims is determined by the
Bankruptcy Court, or by mutual agreement of the Debtors and the holder of the
LaSalle Secured Claims.

                                    III.     TREATMENT: In full satisfaction
of the LaSalle Secured Claims, LaSalle shall receive within ten (10) Business
Days after the later of (x) the Effective Date, or (y) the date the LaSalle
Secured Claims become Allowed Class SP-3 Claims, the indubitable equivalent of
the Allowed LaSalle Secured Claims, in the form of: (i) the Cash Pay Down; and
(ii) the New LaSalle Note. LaSalle also shall receive the Debtors' surrender to
LaSalle or its designee of the skilled nursing facilities known as the Dixon
HealthCare Center and the Crestview HealthCare Center (the "LaSalle Surrendered
Facilities"), and all tangible and intangible personal property located at or
relating solely to the LaSalle Surrendered Facilities upon which LaSalle holds
validly perfected, nonavoidable liens as of the Confirmation Date (together
with the LaSalle Surrendered Facilities, the "LaSalle Surrendered Collateral"),
which surrender shall take place within ten (10) Business Days after the
Effective Date, or, upon LaSalle's written request prior to the Confirmation
Date, such later date on or before one hundred twenty (120) days after the
Effective Date (after which date the Debtors shall have the right to close the
LaSalle Surrendered Facilities in accordance with applicable nonbankruptcy law
in the event LaSalle or its designee has not assumed operation of such
facilities).

                  The New LaSalle Note shall include the following terms:

                                    PRINCIPAL AMOUNT: The New LaSalle Note
         shall be in a principal amount equal to the Allowed LaSalle Secured
         Claim, less the sum of (a) the Cash Pay Down, and (b) the value of the
         LaSalle Surrendered Collateral as determined by agreement between
         LaSalle and the Debtors or, if no agreement is reached prior to the
         conclusion of the Confirmation Hearing, as determined by the
         Bankruptcy Court.

                                    MATURITY: All unpaid amounts owing under
         the New LaSalle Note shall be due and payable ten (10) years after the
         Effective Date.


                                      32
<PAGE>


                                    INTEREST: The New LaSalle Note shall bear
         interest at a fixed, annual rate equal to the Secured Creditor Rate,
         which rate shall be fixed as of the Effective Date.

                                    PAYMENTS AND AMORTIZATION: The New LaSalle
         Note shall be payable in equal, monthly installments of principal and
         interest, calculated on a twenty-five year amortization schedule
         following the Effective Date, with the remaining balance fully due and
         payable ten (10) years after the Effective Date.

                                    COLLATERAL: The New LaSalle Note shall be
         secured by a first priority lien on the skilled nursing facilities
         known as the Birchwood Nursing Home, Flora Care Center, Lafayette
         Health Care Center, and Parkway Healthcare Center, and all tangible
         and intangible personal property located at or relating solely to the
         foregoing facilities upon which LaSalle holds validly perfected,
         nonavoidable liens as of the Confirmation Date.

                           D.       CLASS SP-4: FIRESIDE MANOR SECURED CLAIMS.

                                    I.      CLASSIFICATION: Class SP-4 consists
of the Fireside Manor Secured Claims.

                                    II.     ALLOWANCE: The Allowed Fireside
Manor Secured Claims shall consist of (i) all amounts owing on account of the
Fireside Manor Secured Claims as of the Petition Date, plus (ii) interest from
the Petition Date through the Effective Date in an amount equal to the
nondefault rate (and excluding any late charges or penalties) as specified in
the Fireside Manor Documents, less (iii) any amounts paid by the Debtors on
account of the Fireside Manor Secured Claims during the Chapter 11 Cases,
whether in the form of adequate protection payments, through the application of
security deposits, or otherwise.

                  No less than fourteen (14) days prior to the deadline to
object to confirmation of the Plan, the Debtors shall file with the Court and
serve upon the holder of the Fireside Manor Secured Claims the Debtors'
estimate of the amount of the Allowed Fireside Manor Secured Claims as of the
anticipated Effective Date, which amount shall be binding upon the holder of
the Fireside Manor Secured Claims unless such holder files with the Bankruptcy
Court and serves upon the Debtors an objection to the Debtors' estimate on or
before the deadline to object to confirmation of the Plan. In the event of such
an objection, the Fireside Manor Secured Claims shall be treated as Disputed
Claims until the allowed amount of the Fireside Manor Secured Claims is
determined by the Bankruptcy Court, or by mutual agreement of the Debtors and
the holder of the Fireside Manor Secured Claims.

                                    III.    TREATMENT: In full satisfaction of
the Fireside Manor Secured Claims, the Disbursing Agent shall pay the holder of
the Allowed Class SP-4 Claims the full amount of such Allowed Class SP-4
Claims, in Cash, on the later of (i) the Effective Date, or (ii) the date the
Fireside Manor Secured Claims become Allowed Class SP-4 Claims. Any and all
liens, encumbrances, and other interests in the Debtors' or the Reorganized
Debtors' property securing the Fireside Manor Secured Claims shall be deemed
released automatically, without the need for any further action by any party,
immediately upon the earlier of either (a) payment of the Allowed Class SP-4
Claims in accordance herewith, or (b) the Debtors' funding of a reserve


                                      33
<PAGE>


account with Cash in an amount equal to the amount of the Fireside Manor
Secured Claims as asserted by the holder of such Claims, with the liens
securing the Fireside Manor Secured Claims attaching to such account until
payment of the Allowed Class SP-4 Claims. As a condition precedent to such
payment, however, the Reorganized Debtors may require the holder of the
Fireside Manor Secured Claims to surrender any outstanding notes relating to
such Claims and execute collateral or lien releases in a form reasonably
acceptable to the Reorganized Debtors and that, in the Reorganized Debtors'
discretion, may be filed or recorded to evidence such release.

                           E.       CLASS SP-5: ARAMARK SECURED CLAIMS.

                                    I.      CLASSIFICATION: Class SP-5 consists
of the Aramark Secured Claims.

                                    II.     ALLOWANCE: The Allowed Aramark
Secured Claims shall consist of (i) all amounts owing on account of the Aramark
Secured Claims as of the Petition Date, plus (ii) interest from the Petition
Date through the Effective Date in an amount equal to the nondefault rate (and
excluding any late charges or penalties) as specified in the Aramark Documents,
less (iii) any amounts paid by the Debtors on account of the Aramark Secured
Claims during the Chapter 11 Cases, whether in the form of adequate protection
payments, through the application of security deposits, or otherwise.

                  No less than fourteen (14) days prior to the deadline to
object to confirmation of the Plan, the Debtors shall file with the Court and
serve upon the holder of the Aramark Secured Claims the Debtors' estimate of
the amount of the Allowed Aramark Secured Claims as of the anticipated
Effective Date, which amount shall be binding upon the holder of the Aramark
Secured Claims unless such holder files with the Bankruptcy Court and serves
upon the Debtors an objection to the Debtors' estimate on or before the
deadline to object to confirmation of the Plan. In the event of such an
objection, the Aramark Secured Claims shall be treated as Disputed Claims until
the allowed amount of the Aramark Secured Claims is determined by the
Bankruptcy Court, or by mutual agreement of the Debtors and the holder of the
Aramark Secured Claims.

                                    III.    TREATMENT: In full satisfaction of
the Aramark Secured Claims, the Disbursing Agent shall pay the holder of the
Allowed Class SP-5 Claims the full amount of such Allowed Class SP-5 Claim, in
Cash, on the later of (i) the Effective Date, or (ii) the date the Aramark
Secured Claims become Allowed Class SP-5 Claims. Any and all liens,
encumbrances, and other interests in the Debtors' or the Reorganized Debtors'
property securing the Aramark Secured Claims shall be deemed released
automatically, without the need for any further action by any party,
immediately upon the earlier of either (a) payment of the Allowed Class SP-5
Claims in accordance herewith, or (b) the Debtors' funding of a reserve account
with Cash in an amount equal to the amount of the Aramark Secured Claims as
asserted by the holder of such Claims, with the liens securing the Aramark
Secured Claims attaching to such account until payment of the Allowed Class
SP-5 Claims. As a condition precedent to such payment, however, the Reorganized
Debtors may require the holder of the Aramark Secured Claims to surrender any
outstanding notes relating to such Claims and execute collateral or lien
releases in


                                      34
<PAGE>


a form reasonably acceptable to the Reorganized Debtors and that, in the
Reorganized Debtors' discretion, may be filed or recorded to evidence such
release.

                           F.       CLASS SP-6: BANK MIDWEST SECURED CLAIMS.

                                    I.      CLASSIFICATION: Class SP-6 consists
of the Bank Midwest Secured Claims.

                                    II.     ALLOWANCE: The Allowed Bank Midwest
Secured Claims shall consist of (i) all amounts owing on account of the Bank
Midwest Secured Claims as of the Petition Date, plus (ii) interest from the
Petition Date through the Effective Date in an amount equal to the nondefault
rate (and excluding any late charges or penalties) as specified in the Bank
Midwest Documents, less (iii) any amounts paid by the Debtors on account of the
Bank Midwest Secured Claims during the Chapter 11 Cases, whether in the form of
adequate protection payments, through the application of security deposits, or
otherwise.

                  No less than fourteen (14) days prior to the deadline to
object to confirmation of the Plan, the Debtors shall file with the Court and
serve upon the holder of the Bank Midwest Secured Claims the Debtors' estimate
of the amount of the Allowed Bank Midwest Secured Claims as of the anticipated
Effective Date, which amount shall be binding upon the holder of the Bank
Midwest Secured Claims unless such holder files with the Bankruptcy Court and
serves upon the Debtors an objection to the Debtors' estimate on or before the
deadline to object to confirmation of the Plan. In the event of such an
objection, the Bank Midwest Secured Claims shall be treated as Disputed Claims
until the allowed amount of the Bank Midwest Secured Claims is determined by
the Bankruptcy Court, or by mutual agreement of the Debtors and the holder of
the Bank Midwest Secured Claims.

                                    III.    TREATMENT: In full satisfaction of
the Bank Midwest Secured Claims, the Disbursing Agent shall pay the holder of
the Allowed Class SP-6 Claims the full amount of such Allowed Class SP-6 Claim,
in Cash, on the later of (i) the Effective Date, or (ii) the date the Bank
Midwest Secured Claims become Allowed Class SP-6 Claims. Any and all liens,
encumbrances, and other interests in the Debtors' or the Reorganized Debtors'
property securing the Bank Midwest Secured Claims shall be deemed released
automatically, without the need for any further action by any party,
immediately upon the earlier of either (a) payment of the Allowed Class SP-6
Claims in accordance herewith, or (b) the Debtors' funding of a reserve account
with Cash in an amount equal to the amount of the Bank Midwest Secured Claims
as asserted by the holder of such Claims, with the liens securing the Bank
Midwest Secured Claims attaching to such account until payment of the Allowed
Class SP-6 Claims. As a condition precedent to such payment, however, the
Reorganized Debtors may require the holder of the Bank Midwest Secured Claims
to surrender any outstanding notes relating to such Claims and execute
collateral or lien releases in a form reasonably acceptable to the Reorganized
Debtors and that, in the Reorganized Debtors' discretion, may be filed or
recorded to evidence such release.

                           G.       CLASS SP-7: BANK OF NEW YORK CLAIMS.

                                    I.      CLASSIFICATION: Class SP-7 consists
of the Bank of New York Claims.


                                      35
<PAGE>


                                    II.     TREATMENT: The Bank of New York
Claims shall be unimpaired under this Plan pursuant to section 1124(2) of the
Bankruptcy Code. Accordingly: (a) any default other than a default of a kind
specified in section 365(b)(2) of the Bankruptcy Code shall be cured; (b) the
maturity of the Claim shall be reinstated as the maturity existed before any
default; (c) the holder of such Claim shall be compensated for any damages
incurred as a result of any reasonable reliance of such holder to the extent
provided by section 1124(2) of the Bankruptcy Code; and (d) the other legal,
equitable, or contractual rights to which the Claim entitles the holder shall
not otherwise be altered.

                           H.       CLASS SP-8: LEND LEASE SECURED CLAIMS.

                                    I.      CLASSIFICATION: Class SP-8 consists
of the Lend Lease Secured Claims.

                                    II.     ALLOWANCE: The Allowed Lend Lease
Secured Claims shall consist of (i) all amounts owing on account of the Lend
Lease Secured Claims as of the Petition Date, plus (ii) interest from the
Petition Date through the Effective Date in an amount equal to the nondefault
rate (and excluding any late charges or penalties) as specified in the Lend
Lease Documents, less (iii) any amounts paid by the Debtors on account of the
Lend Lease Secured Claims during the Chapter 11 Cases, whether in the form of
adequate protection payments, through the application of security deposits, or
otherwise.

                  No less than fourteen (14) days prior to the deadline to
object to confirmation of the Plan, the Debtors shall file with the Court and
serve upon the holder of the Lend Lease Secured Claims the Debtors' estimate of
the amount of the Allowed Lend Lease Secured Claims as of the anticipated
Effective Date, which amount shall be binding upon the holder of the Lend Lease
Secured Claims unless such holder files with the Bankruptcy Court and serves
upon the Debtors an objection to the Debtors' estimate on or before the
deadline to object to confirmation of the Plan. In the event of such an
objection, the Lend Lease Secured Claims shall be treated as Disputed Claims
until the allowed amount of the Lend Lease Secured Claims is determined by the
Bankruptcy Court, or by mutual agreement of the Debtors and the holder of the
Lend Lease Secured Claims.

                                    III.    TREATMENT: In full satisfaction of
the Lend Lease Secured Claims, the Disbursing Agent shall pay the holder of the
Allowed Class SP-8 Claims the full amount of such Allowed Class SP-8 Claims, in
Cash, on the later of (i) the Effective Date, or (ii) the date the Lend Lease
Secured Claims become Allowed Class SP-8 Claims. Any and all liens,
encumbrances, and other interests in the Debtors' or the Reorganized Debtors'
property securing the Lend Lease Secured Claims shall be deemed released
automatically, without the need for any further action by any party,
immediately upon the earlier of either (a) payment of the Allowed Class SP-8
Claims in accordance herewith, or (b) the Debtors' funding of a reserve account
with Cash in an amount equal to the amount of the Lend Lease Secured Claims as
asserted by the holder of such Claims, with the liens securing the Lend Lease
Secured Claims attaching to such account until payment of the Allowed Class
SP-8 Claims. As a condition precedent to such payment, however, the Reorganized
Debtors may require the holder of the Lend Lease Secured Claims to surrender
any outstanding notes relating to such Claims and execute collateral or lien
releases in a form reasonably acceptable to the Reorganized Debtors


                                      36
<PAGE>


and that, in the Reorganized Debtors' discretion, may be filed or recorded to
evidence such release.

                           I.       CLASS SM-1: MHG SENIOR CREDIT FACILITY
CLAIMS.

                                    I.      CLASSIFICATION: Class SM-1 consists
of the MHG Senior Credit Facility Claims.

                                    II.     ALLOWANCE: The MHG Senior Credit
Facility Claims shall be deemed Allowed Claims in the aggregate amount of
$426,302,882 for purposes of this Plan.

                                    III.    TREATMENT: The MHG Senior Credit
Facility Claim Holders shall receive in the aggregate and in full satisfaction
of the MHG Senior Credit Facility Claims on the Effective Date: (a) Cash in the
amount of $625,000 for payment to or at the direction of the MHG Senior Credit
Facility Agent in respect of a success fee owed to Houlihan Lokey Howard &
Zukin; (b) the MHG Lender Percentage of the Available Cash; (c) the MHG Lender
Percentage of the Lender Notes, if any such Lender Notes are issued pursuant to
Section V.B.4 of this Plan; (d) the MHG Lender Percentage of the Lender Shares;
(e) the surrender of all undrawn letters of credit issued pursuant to the MHG
Senior Credit Facility Documents or, if not so surrendered, the backing of such
letters of credit (to the extent they are not already so backed) to the extent
of 105% of their aggregate face amount with either cash collateral or
"back-to-back" letters of credit acceptable to the MHG Senior Credit Facility
Agent; and (f) a release as provided in Section V.L.2 of this Plan. In
addition, as soon as such consideration is available on or after the Effective
Date, the MHG Senior Credit Facility Claim Holders shall receive: (y) the MHG
Lender Percentage of the APS Sale Proceeds (to the extent such APS Sale
Proceeds are not otherwise included in the calculation of Available Cash or
have not been paid to the MHG Senior Credit Facility Claim Holders as adequate
protection prior to the Effective Date); and (z) the Cash that would otherwise
have been issued to holders of Allowed Class UM-2 Claims that are not
Consenting Class UM-2 Holders, if such holders had been Consenting Class UM-2
Holders. Any and all rights of the MHG Senior Credit Facility Claim Holders to
receive New MHG Common Stock, New Affiliates Equity, and all other Equity
Interests in the Reorganized Debtors (other than Reorganized MPAN) shall be
subordinated to the rights of the Reorganized Debtors as provided in the
treatment of Classes EM-1 and EJ-1 under this Plan.

                  Notwithstanding the foregoing, in the event that either the
MPAN Senior Credit Facility Claim Holders or the MHG Senior Credit Facility
Claim Holders receive any payments from the Debtors on account of collateral
sales (including but not limited to the APS Sale Proceeds) or any other
adequate protection payments from and after December 10, 2001 through the date
immediately preceding the Effective Date (the "Pre-Effective Date Payments"),
the percentage of Available Cash distributed to the MHG Senior Credit Facility
Claim Holders shall be adjusted so that (a) the sum of (1) any Pre-Effective
Date Payments received by the MHG Senior Credit Facility Claim Holders, and (2)
Available Cash distributed to the MHG Senior Credit Facility Claim Holders,
equals (b) the MHG Lender Percentage multiplied by the sum of (1) all
Pre-Effective Date Payments (whether to the MPAN Senior Credit Facility Claim
Holders or the MHG Senior Credit Facility Claim Holders), and (2) all Available
Cash.


                                      37
<PAGE>


                  All Cash to be distributed to the MHG Senior Credit Facility
Claim Holders shall be distributed initially to the MHG Senior Credit Facility
Agent, for distribution by the MHG Senior Credit Facility Agent to the MHG
Senior Credit Facility Claim Holders. All of the New MPAN Common Stock and
Lender Notes to be distributed to the MHG Senior Credit Facility Claim Holders
shall be distributed by the Reorganized Debtors as directed in writing by the
MHG Senior Credit Facility Agent. Distribution of Cash, Lender Notes, and New
MPAN Common Stock to individual MHG Senior Credit Facility Claim Holders shall
be made in accordance with their respective rights inter se and any election
and allocation procedures that may be agreed upon by the MHG Senior Credit
Facility Claim Holders.

                  Except as may be provided with respect to the Lender Notes,
all liens, mortgages, and security interests securing MHG Senior Credit
Facility Claims will be extinguished on the Effective Date. Except as expressly
provided in this Plan, any and all Claims of the MHG Senior Credit Facility
Agent and the MHG Senior Credit Facility Claim Holders existing as of the
Effective Date against (a) the Debtors or (b) to the extent such Claims relate
to the MHG Senior Credit Facility Claims, against the Debtors' subsidiaries,
affiliates, officers, directors, employees, agents, and advisors, will be
extinguished on the Effective Date, whether such Claims are known or unknown,
matured or unmatured, contingent or noncontingent, or liquidated or
unliquidated.

                           J.       CLASS SM-2: BANKERS TRUST PALMETTO CLAIMS.

                                    I.      CLASSIFICATION: Class SM-2 consists
of the Bankers Trust Palmetto Claims.

                                   II.      ALLOWANCE: The Allowed Bankers
Trust Palmetto Claims shall equal $5,302,142.20, plus all reasonable attorneys'
fees and expenses of Bankers Trust's counsel of record in the MHG Chapter 11
Cases allocated to the Bankers Trust Palmetto Claims.

                                    III.    TREATMENT: In full and complete
satisfaction of the Bankers Trust Palmetto Claims, Bankers Trust shall receive
on the Effective Date (i) $225,000.00 in Cash, and (ii) the New Bankers Trust
Palmetto Note.

                  The New Bankers Trust Palmetto Note shall be an obligation of
Mariner Health of Palmetto, Inc. and shall include the following terms:

                                    PRINCIPAL AMOUNT: The New Bankers Trust
         Palmetto Note shall be in a principal amount equal to the Allowed
         Bankers Trust Palmetto Claim, less the $225,000.00 Cash payment made
         on the Effective Date.

                                    MATURITY: All unpaid amounts owing under
         the New Bankers Trust Palmetto Note shall be due and payable on March
         31, 2009.

                                    INTEREST: The New Bankers Trust Palmetto
         Note shall bear interest at a fixed, annual rate equal to 8.5% per
         annum.

                                    PAYMENTS AND AMORTIZATION: The New Bankers
         Trust Palmetto Note shall be payable in equal, monthly installments of
         principal and interest, calculated


                                      38
<PAGE>


         on a twenty-five year amortization schedule following the Effective
         Date, with the remaining balance fully due and payable on March 31,
         2009.

                                    PREPAYMENT: All obligations arising under
         the New Bankers Trust Palmetto Note shall be prepayable in full, at
         the Debtors' option, prior to maturity without penalty or premium.

                                    POSTPETITION PAYMENTS; INTEREST ARISING
         DURING THE MHG CHAPTER 11 CASES: All "adequate protection" payments
         made by the Debtors to date with respect to Mariner Health of Palmetto
         shall be retained by Bankers Trust. No other unpaid pre-Effective Date
         interest, default interest, late charges, or penalties will be charged
         or paid.

                                    COLLATERAL: The New Bankers Trust Palmetto
         Note shall be secured by a first priority lien on the skilled nursing
         facility known as Mariner Health of Palmetto and all tangible and
         intangible personal property located at or relating solely to the
         foregoing facility (including receivables generated by such facility),
         subject only to any existing, validly perfected prior liens in favor
         of third parties, and such interests of the landlord of the Debtors'
         St. Augustine skilled nursing facility that currently secure the
         Bankers Trust Palmetto Claims. Mariner Health of Palmetto, Inc. shall
         execute or authorize the filing of new UCC financing statements to the
         extent necessary to perfect Bankers Trust's liens. In the event that
         the Debtors seek to encumber the Mariner Health of Palmetto facility
         and the personal property directly relating thereto (including but not
         limited to receivables generated by such facility) with new junior
         liens from and after the Effective Date (including, without
         limitation, with respect to the Exit Facility and the Lender Notes),
         the holders of such junior liens shall agree to intercreditor
         protection for Bankers Trust on terms that are mutually acceptable to
         Bankers Trust and the junior lienholders (in which case Bankers Trust
         shall consent to such junior liens).

                                    COVENANTS, DEFAULTS, AND OTHER LOAN
         PROVISIONS: The Definition of "Debt Service Coverage" for the Mariner
         Health of Palmetto and Mariner Health of St. Augustine facilities
         shall be modified to add back all non-Cash accruals for self-insured
         retention losses for purposes of calculating the "Debt Service
         Coverage Ratio" for both the stand-alone and combined "Affiliated
         Homes" calculations. Otherwise, the covenants, events of default, and
         other material loan provisions shall be substantially the same and, in
         any event, no more or less restrictive for the Debtors than as
         currently provided in the Bankers Trust Palmetto Documents, except as
         otherwise modified by this Plan.

                                    GUARANTY: Subject to the "Limitations on
         Recourse" below, the New Bankers Trust Palmetto Note shall be
         guaranteed by MHG, but shall otherwise not be an obligation of any of
         the Debtors other than Mariner Health of Palmetto, Inc.

                                    LIMITATIONS ON RECOURSE: So long as there
         is no event of default or waste (as described below) as of forty-eight
         (48) months after the Effective Date, which default is not cured by
         the Debtors, then commencing forty-eight (48) months after the
         Effective Date and at all times thereafter, (a) recourse under the
         reconstituted Bankers


                                      39
<PAGE>


         Trust loan documents shall be limited to the facility and Bankers
         Trust's other collateral at Mariner Health of Palmetto, (b) the
         existing corporate guaranty of MHG for Mariner Health of Palmetto
         (which as of the Effective Date shall be modified to reflect the
         reduced amount of the New Bankers Trust Palmetto Note) shall be
         released and terminated, and (c) Bankers Trust's security interests
         and liens against the Debtors' St. Augustine facility shall cease to
         secure the obligations arising under the New Bankers Trust Palmetto
         Note and any other obligations relating to Palmetto, and all
         cross-collateralization and cross-default provisions relating to both
         the Palmetto and St. Augustine facilities shall be eliminated. For
         purposes of this provision, an event of default or waste (as
         applicable) shall mean, a monetary default (including the non-payment
         of principal, interest, or other charges due under the loan and
         non-payment of taxes), a violation of the occupancy covenant set forth
         in section 6.1(h) of the Loan Agreement dated as of November 1, 1993
         relating to Palmetto, or any waste to the project (including any such
         action or inaction that violates an express duty of Borrower under the
         Palmetto loan documents and directly causes material harm to or a
         material loss in value of the Palmetto facility or the related
         collateral securing the New Bankers Trust Palmetto Note).

                                    IV.     MISCELLANEOUS:

                                    INTERCREDITOR AND SUBORDINATION RIGHTS:
         Bankers Trust shall not seek recovery from the MHG Senior Credit
         Facility Claim Holders, the MHG Senior Credit Facility Agent, the
         holders of MHG Subordinated Notes, the indenture trustee under the MHG
         Indenture, or any other party on account of any intercreditor
         agreements or the subordination provisions in the MHG Indenture.

                                    ASSUMPTION OF LEASES AND NON-DISTURBANCE
         AGREEMENTS: The Debtors will assume the Melbourne, First Colony,
         Greenwood Village, and St. Augustine facility leases, and Bankers
         Trust shall not oppose such assumption. Bankers Trust shall enter into
         with the Debtors non-disturbance agreements with respect to the
         foregoing leases on terms acceptable to the Debtors.

                                    FINANCIAL COVENANTS: All debt service
         coverage provisions contained in the applicable Bankers Trust
         documents relating to the Melbourne, Palmetto, and St. Augustine
         facilities and all related provisions (including, without limitation,
         any obligation to provide additional collateral if such ratios are not
         maintained) shall be amended as provided in the paragraphs titled
         "Covenants, Defaults, and Other Loan Provisions" in the treatments of
         Class SM-2: Bankers Trust Palmetto Claims above, and Class SM-3:
         Bankers Trust Westchester Claims below, regardless of whether (i) such
         debt service coverage requirements relate to a single facility or a
         group of facilities, and (ii) the Debtors are a party to the
         applicable document.

                                    ATTORNEYS' FEES AND EXPENSES: The Debtors
         shall satisfy Bankers Trust's reasonable attorneys' fees and expenses
         in the manner and to the extent as provided in this Plan. As of
         December 31, 2001, Bankers Trust's total fees and expenses incurred
         with respect to all loans to the Debtors and the Debtors' landlords
         for their Melbourne, First Colony, Greenwood Village, and St.
         Augustine facilities (the "Kellett


                                      40
<PAGE>


         and Regency Landlords") totaled $116,681.78. The Debtors will accept
         Bankers Trust's good faith allocation of its attorneys' fees and
         expenses among the foregoing loans to the Debtors and the Kellett and
         Regency Landlords. In addition, the Debtors understand that additional
         fees and expenses will be incurred prior to the Effective Date, which
         reasonable fees and expenses will be included in the Allowed Bankers
         Trust Palmetto Claims and the Allowed Bankers Trust Westchester
         Claims, as applicable, to the extent so allocated by Bankers Trust in
         good faith to such Claims.

                                    NO ADDITIONAL CONSIDERATION: Bankers Trust
         shall seek no additional consideration with respect to the concessions
         it has made in consenting to its treatment under this Plan from the
         MPAN Senior Credit Facility Claim Holders, the MPAN Senior Credit
         Facility Agent, the MHG Senior Credit Facility Claim Holders, the MHG
         Senior Credit Facility Agent, the holders of Subordinated Notes and
         the indenture trustees therefor, the Kellett and Regency Landlords, or
         any affiliates of the foregoing. Notwithstanding the foregoing, the
         Debtors acknowledge that Bankers Trust asserts that the Kellett and
         Regency Landlords currently owe Bankers Trust for attorneys fees and
         expenses relating to the properties they have leased to the Debtors,
         Mariner Health of Palmetto, and Mariner Health of Westchester, in the
         total amount of $116,681.78 as of December 31, 2001, and that
         additional fees and expenses will accrue under various loan documents
         prior to the Effective Date. Nothing in this Plan shall preclude
         Bankers Trust from seeking and obtaining payment on account of such
         fees from the Kellett and Regency Landlords to the extent not
         otherwise paid by the Debtors.

                                    MUTUAL RELEASES: Bankers Trust and the
         Debtors shall execute mutual releases of each other and each others'
         affiliates, officers, directors, employees, professionals, and agents,
         except for such obligations arising under the Plan. Such releases
         shall be effective upon the Effective Date.

                                    NO MODIFICATION: The provisions of the
         Bankers Trust Palmetto Documents, the Bankers Trust Westchester
         Documents, and the Bankers Trust St. Augustine Documents, as
         applicable, shall remain in full force and effect (subject to the
         automatic stay) until the Effective Date. Nothing contained herein
         shall be construed to impair the security of Bankers Trust under the
         applicable documents, nor affect or impair any rights or powers that
         Bankers Trust may have under such documents, prior to the Effective
         Date.

                                    DOCUMENTATION: The Debtors shall execute
         and deliver, or cause to be executed and delivered, to Bankers Trust
         such new, additional, or supplementary agreements, notices, or other
         documents, instruments, or agreements as Bankers Trust may, in its
         sole discretion, request that are in Bankers Trust's judgment
         necessary or desirable to implement Bankers Trust's treatment under
         this Plan, provided, however, that such agreements, notices, or other
         documents, instruments, or agreements (i) shall not impose any
         additional or more stringent covenants or events of default other than
         as are currently contained in, as applicable, the Bankers Trust
         Palmetto Documents (with respect to the Bankers Trust Palmetto
         Claims), the Bankers Trust Westchester Documents (with respect to the
         Bankers Trust Westchester Claims), or the Bankers Trust St. Augustine
         Documents (with respect to the Bankers Trust St. Augustine Claims),
         except to


                                      41
<PAGE>


         the extent such covenants or events of default have been modified by
         this Plan, and (ii) shall otherwise be consistent with the terms of
         this Plan.

                           K.       CLASS SM-3: BANKERS TRUST WESTCHESTER
CLAIMS.

                                    I.      CLASSIFICATION: Class SM-3 consists
of the Bankers Trust Westchester Claims.

                                    II.     ALLOWANCE: The Allowed Bankers
Trust Westchester Claims shall equal $5,474,919.00, plus all reasonable
attorneys' fees and expenses of Bankers Trust's counsel of record in the MHG
Chapter 11 Cases allocated to the Bankers Trust Westchester Claims.

                                    III.    TREATMENT: In full and complete
satisfaction of the Bankers Trust Westchester Claims, Bankers Trust shall
receive on the Effective Date (i) $225,000.00 in Cash, (ii) payment in Cash of
the reasonable attorneys' fees and expenses of Bankers Trusts' counsel of
record in the MHG Chapter 11 Cases allocated to the Bankers Trust Westchester
Claims, (iii) payment in Cash of all interest owing to Bankers Trust on account
of the Bankers Trust Westchester Claims at the non-default rate, after
application to such non-default interest of all "adequate protection" payments
made in connection with the Bankers Trust Westchester Claims, and (iv) the New
Bankers Trust Westchester Note.

                  The New Bankers Trust Westchester Note shall be an obligation
of Mariner Health Care of Nashville, Inc. and shall include the following
terms:

                                    PRINCIPAL AMOUNT: The New Bankers Trust
         Westchester Note shall be in a principal amount equal to the Allowed
         Bankers Trust Westchester Claim, less the $225,000.00 Cash payment and
         the payment of reasonable attorneys' fees and expenses made on the
         Effective Date.

                                    MATURITY: All unpaid amounts owing under
         the New Bankers Trust Westchester Note shall be due and payable on
         March 31, 2009.

                                    INTEREST: The New Bankers Trust Westchester
         Note shall bear interest at a fixed, annual rate equal to 9.0% per
         annum.

                                    PAYMENTS AND AMORTIZATION: The New Bankers
         Trust Westchester Note shall be payable in equal, monthly installments
         of principal and interest, calculated on a twenty-five year
         amortization schedule following the Effective Date, with the remaining
         balance fully due and payable on March 31, 2009.

                                    PREPAYMENT: All obligations arising under
         the New Bankers Trust Westchester Note shall be prepayable in full, at
         the Debtors' option, prior to maturity without penalty or premium.

                                    POSTPETITION PAYMENTS; INTEREST ARISING
         DURING THE MHG CHAPTER 11 CASES: All "adequate protection" payments
         made by the Debtors to date with respect to Mariner Health of
         Westchester shall be retained by Bankers Trust. As


                                      42
<PAGE>


         provided above, the Debtors will pay, in Cash on the Effective Date,
         all non-default interest owing on account of the Bankers Trust
         Westchester Claims, after application to such non-default interest of
         all "adequate protection" payments made on account of such Claims. No
         other unpaid pre-Effective Date interest, default interest, late
         charges, or penalties will be charged or paid.

                                    COLLATERAL: The New Bankers Trust
         Westchester Note shall be secured by a first priority lien on the
         skilled nursing facility known as Mariner Health of Westchester and
         all tangible and intangible personal property located at or relating
         solely to the foregoing facility (including receivables generated by
         such facility), subject only to any existing, validly perfected prior
         liens in favor of third parties, and such interests of the landlord of
         the Debtors' First Colony skilled nursing facility that currently
         secure the Bankers Trust Westchester Claims. Mariner Health Care of
         Nashville, Inc. shall execute or authorize the filing of new UCC
         financing statements to the extent necessary to perfect Bankers
         Trust's liens. In the event that the Debtors seek to encumber the
         Mariner Health of Westchester facility and the personal property
         directly relating thereto (including but not limited to receivables
         generated by such facility) with new junior liens from and after the
         Effective Date (including, without limitation, with respect to the
         Exit Facility and the Lender Notes), the holders of such junior liens
         shall agree to intercreditor protection for Bankers Trust on terms
         that are mutually acceptable to Bankers Trust and the junior
         lienholders (in which case Bankers Trust shall consent to such junior
         liens).

                                    COVENANTS, DEFAULTS, AND OTHER LOAN
         PROVISIONS: The Definition of "Debt Service Coverage" for the Mariner
         Health of Melbourne facility shall be modified to add back all
         non-Cash accruals for self-insured retention losses for purposes of
         calculating the "Debt Service Coverage Ratio" for both the stand-alone
         and combined "Affiliated Homes" calculations. Otherwise, the
         covenants, events of default, and other material loan provisions shall
         be substantially the same and, in any event, no more or less
         restrictive for the Debtors than as currently provided in the Bankers
         Trust Westchester Documents, except as otherwise modified by this
         Plan.

                                    GUARANTY: Subject to the "Limitations on
         Recourse" below, the New Bankers Trust Westchester Note shall be
         guaranteed by MHG to the same extent as currently guaranteed by MHG,
         but shall otherwise not be an obligation of any of the Debtors other
         than Mariner Health Care of Nashville, Inc.

                                    LIMITATIONS ON RECOURSE: So long as there
         is no event of default or waste (as described below) as of forty-eight
         (48) months after the Effective Date, which default is not cured by
         the Debtors, then commencing forty-eight (48) months after the
         Effective Date and at all times thereafter, (a) recourse under the
         reconstituted Bankers Trust loan documents shall be limited to the
         facility and Bankers Trust's other collateral at Mariner Health of
         Westchester, (b) the existing limited corporate guaranty of MHG for
         Mariner Health of Westchester shall be released and terminated, and
         (c) Bankers Trust's security interests and liens against the Debtors'
         First Colony facility shall cease to secure the obligations arising
         under the New Bankers Trust Westchester Note and any other obligations
         relating to Westchester. For purposes of this provision, an event of
         default or waste (as applicable) shall mean, a monetary default
         (including the non-payment of


                                      43
<PAGE>


         principal, interest, or other charges due under the loan and
         non-payment of taxes), the transfer of patients from the Westchester
         facility to other facilities operated by the Debtors in anticipation
         of surrender of the Westchester facility, or any waste to the project
         (including any such action or inaction that violates an express duty
         of Borrower under the Westchester loan documents and directly causes
         material harm to or a material loss in value of the Westchester
         facility or the related collateral securing the New Bankers Trust
         Westchester Note.

                                    IV.     MISCELLANEOUS:

                  All provisions in the section titled "Miscellaneous"
applicable to the treatment of the Bankers Trust Palmetto Claims in Class SM-2
above are incorporated herein by reference for the treatment of the Bankers
Trust Westchester Claims in Class SM-3.

                           L.       CLASS SM-4: BANKERS TRUST ST. AUGUSTINE
CLAIMS.

                                    I.      CLASSIFICATION: Class SM-4 consists
of the Bankers Trust St. Augustine Claims.

                                    II.     TREATMENT: In full and complete
satisfaction of the Bankers Trust St. Augustine Claims, the Debtors shall
assume the lease related to the St. Augustine facility and cure any defaults
thereunder in accordance with the provisions of this Plan. Any guaranty,
pledge, or other rights or interests granted by the Debtors (or any affiliate
thereof) to Bankers Trust with respect to the St. Augustine facility shall be
cancelled and released on the Effective Date; provided, however, nothing herein
shall cancel or release the cross-collateralization and cross-default
provisions relating to the St. Augustine and Palmetto facilities except as
modified by the paragraph above titled "Limitation on Recourse" for the
treatment of Class SM-2: Bankers Trust Palmetto Claims.

                                    III.    MISCELLANEOUS:

                  All provisions in the section titled "Miscellaneous"
applicable to the treatment of the Bankers Trust Palmetto Claims in Class SM-2
above are incorporated herein by reference for the treatment of the Bankers
Trust St. Augustine Claims in Class SM-4.

                           M.       CLASS SM-5: THCI SECURED CLAIMS.

                                    I.      CLASSIFICATION: Class SM-5 consists
of the THCI Secured Claims.

                                    II.     ALLOWANCE: The Allowed THCI Secured
Claims shall consist of (i) all amounts owing on account of the THCI Secured
Claims as of the Petition Date, plus (ii) interest from the Petition Date
through the Effective Date in an amount equal to the nondefault rate (and
excluding any late charges or penalties) as specified in the THCI Documents,
but only to the extent such interest is allowable under Bankruptcy Code section
506(b), less (iii) any amounts paid by the Debtors on account of the THCI
Secured Claims during the Chapter 11 Cases, whether in the form of adequate
protection payments, through the application of security deposits, or
otherwise. Notwithstanding the foregoing, in no event shall


                                      44
<PAGE>


the Allowed THCI Secured Claims exceed the value, as determined by the
Bankruptcy Court pursuant to section 506(a) of the Bankruptcy Code, of any
interest in property of the Debtors' estates securing such Claims as of the
Effective Date, less any amount of adequate protection payments that did not
compensate the holder of such Claims for any diminution in collateral value. To
the extent that THCI holds Allowed Claims against the Debtors in excess of the
Allowed THCI Secured Claims, such Allowed Claims shall be treated in Classes
UM-1 or UM-3 under this Plan, as applicable.

                  No less than fourteen (14) days prior to the deadline to
object to confirmation of the Plan, the Debtors shall file with the Court and
serve upon the holder of the THCI Secured Claims the Debtors' estimate of the
amount of the Allowed THCI Secured Claims as of the anticipated Effective Date,
which amount shall be binding upon the holder of the THCI Secured Claims unless
such holder files with the Bankruptcy Court and serves upon the Debtors an
objection to the Debtors' estimate on or before the deadline to object to
confirmation of the Plan. In the event of such an objection, the THCI Secured
Claims shall be treated as Disputed Claims until the allowed amount of the THCI
Secured Claims is determined by the Bankruptcy Court, or by mutual agreement of
the Debtors and the holder of the THCI Secured Claims.

                                    III.    TREATMENT: In full satisfaction of
the THCI Secured Claims, THCI shall receive within ten (10) Business Days after
the later of (x) the Effective Date, or (y) the date the THCI Secured Claims
become Allowed Class SM-5 Claims, the indubitable equivalent of the Allowed
THCI Secured Claim, in the form of (i) the Cash Pay Down, and (ii) the New THCI
Note.

                  The New THCI Note shall include the following terms:

                                    PRINCIPAL AMOUNT: The New THCI Note shall
         be in a principal amount equal to the Allowed THCI Secured Claim, less
         the Cash Pay Down.

                                    MATURITY: All unpaid amounts owing under
         the New THCI Note shall be due and payable ten (10) years after the
         Effective Date.

                                    INTEREST: The New THCI Note shall bear
         interest at a fixed, annual rate equal to the Secured Creditor Rate,
         which rate shall be fixed as of the Effective Date.

                                    PAYMENTS AND AMORTIZATION: The New THCI
         Note shall be payable in equal, monthly installments of principal and
         interest, calculated on a twenty-five year amortization schedule
         following the Effective Date, with the remaining balance fully due and
         payable ten (10) years after the Effective Date.

                                    COLLATERAL: The New THCI Note shall be
         secured by a first priority lien on the skilled nursing facilities
         known as Mariner Health Care of Pendleton, and all tangible and
         intangible personal property located at or relating solely to the
         foregoing facilities upon which THCI holds validly perfected,
         nonavoidable liens as of the Confirmation Date.


                                      45
<PAGE>


                           N.       CLASS SM-6: HUD JACKSONVILLE CLAIMS.

                                    I.      CLASSIFICATION: Class SM-6 consists
of the HUD Jacksonville Claims.

                                    II.     TREATMENT: The HUD Jacksonville
Claims shall be unimpaired under this Plan pursuant to section 1124(2) of the
Bankruptcy Code. Accordingly: (a) any default other than a default of a kind
specified in section 365(b)(2) of the Bankruptcy Code shall be cured; (b) the
maturity of the Claim shall be reinstated as the maturity existed before any
default; (c) the holder of such Claim shall be compensated for any damages
incurred as a result of any reasonable reliance of such holder to the extent
provided by section 1124(2) of the Bankruptcy Code; and (d) the other legal,
equitable, or contractual rights to which the Claim entitles the holder shall
not otherwise be altered.

                           O.       CLASS SM-7: NHP SECURED CLAIMS.

                                    I.      CLASSIFICATION: Class SM-7 consists
of the NHP Secured Claims.

                                    II.     ALLOWANCE: The Allowed NHP Secured
Claims shall consist of (i) all amounts owing on account of the NHP Secured
Claims as of the Petition Date, plus (ii) interest from the Petition Date
through the Effective Date in an amount equal to the nondefault rate (and
excluding any late charges or penalties) as specified in the NHP Documents, but
only to the extent such interest is allowable under Bankruptcy Code section
506(b), less (iii) any amounts paid by the Debtors on account of the NHP
Secured Claims during the Chapter 11 Cases, whether in the form of adequate
protection payments, through the application of security deposits, or
otherwise. Notwithstanding the foregoing, in no event shall the Allowed NHP
Secured Claims exceed the value, as determined by the Bankruptcy Court pursuant
to section 506(a) of the Bankruptcy Code, of any interest in property of the
Debtors' estates securing such Claims as of the Effective Date, less any amount
of adequate protection payments that did not compensate the holder of such
Claims for any diminution in collateral value. To the extent that NHP holds
Allowed Claims against the Debtors in excess of the Allowed NHP Secured Claims,
such Allowed Claims shall be treated in Classes UM-1 or UM-3 under this Plan,
as applicable.

                  No less than fourteen (14) days prior to the deadline to
object to confirmation of the Plan, the Debtors shall file with the Court and
serve upon the holder of the NHP Secured Claims the Debtors' estimate of the
amount of the Allowed NHP Secured Claims as of the anticipated Effective Date,
which amount shall be binding upon the holder of the NHP Secured Claims unless
such holder files with the Bankruptcy Court and serves upon the Debtors an
objection to the Debtors' estimate on or before the deadline to object to
confirmation of the Plan. In the event of such an objection, the NHP Secured
Claims shall be treated as Disputed Claims until the allowed amount of the NHP
Secured Claims is determined by the Bankruptcy Court, or by mutual agreement of
the Debtors and the holder of the NHP Secured Claims.

                                    III.    TREATMENT: In full satisfaction of
the NHP Secured Claims, NHP shall receive within ten (10) Business Days after
the later of (x) the Effective Date,


                                      46
<PAGE>


or (y) the date the NHP Secured Claims become Allowed Class SM-7 Claims, the
indubitable equivalent of the Allowed NHP Secured Claims, in the form of (i)
the Cash Pay Down, and (ii) the New NHP Note.

                  The New NHP Note shall include the following terms:

                                    PRINCIPAL AMOUNT: The New NHP Note shall be
         in a principal amount equal to the Allowed NHP Secured Claim, less the
         Cash Pay Down.

                                    MATURITY: All unpaid amounts owing under
         the New NHP Note shall be due and payable ten (10) years after the
         Effective Date.

                                    INTEREST: The New NHP Note shall bear
         interest at a fixed, annual rate equal to the Secured Creditor Rate,
         which rate shall be fixed as of the Effective Date.

                                    PAYMENTS AND AMORTIZATION: The New NHP Note
         shall be payable in equal, monthly installments of principal and
         interest, calculated on a twenty-five year amortization schedule
         following the Effective Date, with the remaining balance fully due and
         payable ten (10) years after the Effective Date.

                                    COLLATERAL: The New NHP Note shall be
         secured by a first priority lien on the skilled nursing facility known
         as Mariner Health of Kensington, and all tangible and intangible
         personal property located at or relating solely to the foregoing
         facilities upon which NHP holds validly perfected, nonavoidable liens
         as of the Confirmation Date.

                           P.       CLASS SM-8:  PORCHE SECURED CLAIMS.

                                    I.      CLASSIFICATION: Class SM-8 consists
of the Porche Secured Claims.

                                    II.     ALLOWANCE AND TREATMENT: The Class
SM-8 Claims shall be allowed in the amount of zero, because the collateral
securing such Claims has no value. Accordingly, the holders of Class SM-8
Claims shall neither receive nor retain any consideration on account of such
Claims.

                           Q.       CLASS SM-9: QUAKER DELAND CLAIMS.

                                    I.      CLASSIFICATION: Class SM-9 consists
of the Quaker Deland Claims.

                                    II.     TREATMENT: In full satisfaction of
the Quaker Deland Claims, the Debtors shall surrender to Quaker or its designee
the skilled nursing facility known as Mariner Health of Deland, and all
tangible and intangible personal property located at or relating solely to the
foregoing facility upon which Quaker holds validly perfected, nonavoidable
liens as of the Confirmation Date, which surrender shall take place within ten
(10) Business Days after the Effective Date, or, upon Quaker's written request
prior to the Confirmation Date, such later date on or before one hundred twenty
(120) days after the Effective Date (after which date


                                      47
<PAGE>


the Debtors shall have the right to close the facility in accordance with
applicable nonbankruptcy law in the event Quaker or its designee has not
assumed operation of such facility).

                           R.       CLASS SM-10:  MONTICELLO BONIFAY CLAIMS.

                                    I.      CLASSIFICATION: Class SM-10
consists of the Monticello Bonifay Claims.

                                    II.     TREATMENT: On account of the
Monticello Bonifay Claims, the Monticello Titusville Claims, and the Monticello
San Antonio Claims, and in full and complete satisfaction thereof, Monticello
shall receive the following:

                  A.       CASH: The Debtors shall pay to Monticello $9.4
million in Cash on the Effective Date; and

                  B.       PROPERTY: On the Effective Date, the Debtors shall
transfer to Monticello all of the Debtors' right, title, and interest in and to
(x) the real property described in the Monticello San Antonio Documents,
together with the buildings and improvements thereon, comprising the skilled
nursing facility known as Mariner Health of San Antonio, located in San
Antonio, Texas (the "Mariner San Antonio Facility"), and (y) all transferable
tangible and intangible personal property located at or relating solely to that
facility, including furniture, fixtures, equipment, inventory, accounts
receivable, deposits, deposit accounts, petty cash, and rights to payment
(collectively, the "Mariner San Antonio Facility Personal Property"). To
facilitate the Debtors' transfer and assignment to Monticello of executory
contracts and unexpired leases, the Debtors will cooperate in good faith with
Monticello by assuming and assigning to Monticello (or Monticello's designee),
or rejecting, as Monticello may direct, executory contracts and unexpired
leases affecting the Mariner San Antonio Facility and the related personal
property referred to in this paragraph; provided, however, that (i) any such
assumption and assignment, or rejection, as the case may be, shall be subject
to approval of the Bankruptcy Court, which approval the Debtors agree to use
their best efforts to obtain, and (ii) the Debtors shall not be required to
incur or assume any monetary obligation or fund payment of any cure payments
that may be required under section 365(b) of the Bankruptcy Code; Monticello
shall be responsible for the payment of any cure payment that is required with
respect to any executory contract or unexpired lease that Monticello desires to
be assumed and assigned to it or its designee.

                           III.     RELEASES: Upon Monticello's receipt of the
consideration described in the "Treatment" section immediately above,

                  A.       Monticello and the Debtors shall exchange
comprehensive mutual general releases of all claims; provided, however, each
such release shall exclude from the scope thereof any and all duties,
obligations, covenants, undertakings, agreements, representations, and
warranties of the releasor set forth in this Plan or the "Monticello Transition
and Conveyance Agreement" described below;

                  B.       Monticello shall release any and all liens it may
have against any of the Debtors' assets encumbered by the Monticello Bonifay
Documents or the Monticello Titusville Documents, as the case may be, including
releases or reconveyances of the applicable deeds of


                                      48
<PAGE>


trust, and shall deliver to the Debtors (i) termination statements with respect
to any of its security interests encumbering the Debtors' assets encumbered by
the Monticello Bonifay Documents and the Monticello Titusville Documents,
respectively; and (ii) the originals of each of the Monticello Bonifay
Documents and the Monticello Titusville Documents (collectively, the
"Monticello Documents"), each of which shall be marked "CANCELLED". Monticello
shall be entitled to retain the original Monticello San Antonio Documents and
shall not be required to release, reconvey, or terminate the liens created
thereby; provided, however, that, notwithstanding the foregoing, the debt
evidenced by the Monticello San Antonio Documents shall be deemed discharged
upon the Effective Date; and

                  C.       Monticello shall represent and warrant that it is
the sole owner of the Claims evidenced by the Monticello Documents, and shall
indemnify and hold harmless the Debtors for any losses or damages the Debtors
might incur as a result of the breach of such warranty.

                           IV.      TRANSITION AND CONVEYANCE AGREEMENT: On or
before  February 21, 2002, the Debtors and Monticello  shall execute a written
agreement (the "Monticello Transition and Conveyance Agreement"), reasonably
satisfactory in form and substance to the Debtors and Monticello, that
memorializes the transfer of the Mariner San Antonio Facility and the Mariner
San Antonio Facility Personal Property to Monticello or its designee as
provided by this Plan, sets forth the parties' respective duties, obligations,
agreements, covenants, undertakings, representations, and warranties in
connection therewith, and otherwise contains provisions reasonable and
customary for such transactions.

                  Prior to the Effective Date, the Debtors shall continue to
operate and maintain the Mariner San Antonio Facility and the Mariner San
Antonio Facility Personal Property in the ordinary course of business and in
the same manner as they have operated and maintained such facility since the
Petition Date. Among its other provisions, the Monticello Transition and
Conveyance Agreement shall provide that the Debtors shall cooperate with
Monticello in good faith and use reasonable efforts to (i) assist Monticello in
obtaining prompt transfers of the Debtors' permits, licenses, and contracts
that relate to the Mariner San Antonio Facility, and (ii) facilitate the smooth
and orderly transition in ownership, operation, and management of the Mariner
San Antonio Facility; provided, however, that the Debtors shall not be required
to incur any expense or obligation in connection with providing such
cooperation and assistance.

                           V.       MISCELLANEOUS:

                  The treatment of the Monticello Bonifay Claims, the
Monticello Titusville Claims, and the Monticello San Antonio Claims set forth
in this Plan is in conjunction with a consensual agreement among the Debtors
and Monticello providing for payment of certain adequate protection payments to
Monticello upon certain conditions. The Debtors agree to use their best efforts
to incorporate such agreement in a stipulation (the "Monticello Adequate
Protection Stipulation"), reasonably satisfactory in form and substance to
Monticello and the Debtors, and obtain approval by the Bankruptcy Court of such
stipulation on or before February 27, 2002. If the Monticello Adequate
Protection Stipulation is not approved in its entirety on or before February
27, 2002, or if the Monticello Transition and Conveyance Agreement shall not
have been executed by the parties on or before February 21, 2002, Monticello
and the Debtors


                                      49
<PAGE>


have certain rights, as set forth more fully in that certain "Term Sheet for
Monticello Project Debt" executed by Monticello and the Debtors.

                           S.       CLASS SM-11: MONTICELLO TITUSVILLE CLAIMS.

                                    I.      CLASSIFICATION: Class SM-11
consists of the Monticello Titusville Claims.

                                    II.     TREATMENT: On account of the
Monticello Bonifay Claims, the Monticello Titusville Claims, and the Monticello
San Antonio Claims, and in full and complete satisfaction thereof, Monticello
shall receive the treatment set forth for Class SM-10: Monticello Bonifay
Claims above, and the provisions of Class SM-10: Monticello Bonifay Claims
above are incorporated herein by reference.

                           T.       CLASS SM-12: MONTICELLO SAN ANTONIO CLAIMS.

                                    I.      CLASSIFICATION: Class SM-12
consists of the Monticello San Antonio Claims.

                                    II.     TREATMENT: On account of the
Monticello Bonifay Claims, the Monticello Titusville Claims, and the Monticello
San Antonio Claims, and in full and complete satisfaction thereof, Monticello
shall receive the treatment set forth for Class SM-10: Monticello Bonifay
Claims above, and the provisions of Class SM-10: Monticello Bonifay Claims
above are incorporated herein by reference.

                           U.       CLASS SJ-1: SECURED TAX CLAIMS.

                                    I.      CLASSIFICATION: Class SJ-1 consists
of any Secured Tax Claims. In accordance with Bankruptcy Code section 1122(a),
each Class SJ-1 Claim shall be deemed to be in its own separate subclass for
purposes of voting and treatment under the Plan.

                                    II.     ALLOWANCE: Each Class SJ-1 Claim
shall be an Allowed Class SJ-1 Claim in an amount equal to (i) all amounts
owing on account of such Class SJ-1 Claim as of the Petition Date, plus (ii)
interest from the Petition Date through the Effective Date in an amount equal
to the applicable statutory nondefault rate with respect to such Class SJ-1
Claim (excluding any late charges or penalties), less (iii) any amounts paid by
the Debtors on account of such Class SJ-1 Claim during the Chapter 11 Cases,
whether in the form of adequate protection payments, through the application of
security deposits, or otherwise. Notwithstanding the foregoing, in no event
shall an Allowed Class SJ-1 Claim exceed the value, as determined by the
Bankruptcy Court pursuant to section 506(a) of the Bankruptcy Code, of any
interest in property of the Debtors' estates securing such Claim as of the
Effective Date, less any amount of adequate protection payments that did not
compensate the holder of such Claim for any diminution in collateral value. To
the extent that the holder of an Allowed Class SJ-1 Claim holds Allowed Claims
against the Debtors in excess of the holder's Allowed Class SJ-1 Claim, such
Allowed Claims shall be treated as Priority Tax Claims or in Classes UP-1,
UP-3, UM-1, or UM-3 under this Plan, as applicable.


                                      50
<PAGE>

                  No less than fourteen (14) days prior to the deadline to
object to confirmation of the Plan, the Debtors shall file with the Court and
serve upon the holders of the Secured Tax Claims the Debtors' estimate of the
amount of the Allowed Secured Tax Claims as of the anticipated Effective Date,
which estimate shall be binding on each holder of a Secured Tax Claims unless
such holder files with the Bankruptcy Court and serves upon the Debtors an
objection to the Debtors' estimate prior to the deadline to object to
confirmation of the Plan. In the event of such an objection, the Secured Tax
Claim in question shall be treated as a Disputed Claim until the allowed amount
of such Secured Tax Claim is determined by the Bankruptcy Court, or by mutual
agreement of the Debtors and the holder of the respective Secured Tax Claim.

                                    III.     TREATMENT: In full satisfaction of
each Secured Tax Claim, and except to the extent that the holder of an Allowed
Secured Tax Claim agrees to a different treatment, the Disbursing Agent shall
pay each holder of an Allowed Secured Tax Claim the full amount of such Allowed
Secured Tax Claim, in Cash, on the later of (i) the Effective Date, or (ii) ten
(10) Business Days after the date such Secured Tax Claim becomes an Allowed
Secured Tax Claim. Any and all liens, encumbrances, and other interests in the
Debtors' or the Reorganized Debtors' property securing each Secured Tax Claim
shall be deemed released automatically, without the need for any further action
by any party, immediately upon the earlier of either (a) payment of such Allowed
Secured Tax Claim in accordance herewith, or (b) the Debtors' funding of a
reserve account with Cash in an amount equal to the amount of such Secured Tax
Claim as asserted by the holder of such Claim, with the liens securing such
Secured Tax Claim attaching to such account until payment of such Allowed
Secured Tax Claim. As a condition precedent to such payment, however, the
Reorganized Debtors may require the holder of each Secured Tax Claim to
surrender any outstanding notes relating to such Claims and execute collateral
or lien releases in a form reasonably acceptable to the Reorganized Debtors and
that, in the Reorganized Debtors' discretion, may be filed or recorded to
evidence such release.

                           V.       CLASS SJ-2: OTHER SECURED CLAIMS.

                                    I.       CLASSIFICATION: Class SJ-2 consists
of Secured Claims that are not classified in any other Class in the Plan,
whether secured by liens on the Debtors' personal or real property. In
accordance with Bankruptcy Code section 1122(a), each Class SJ-2 Claim shall be
deemed to be in its own separate subclass for purposes of voting and treatment
under the Plan.

                                    II.      ALLOWANCE: Each Class SJ-2 Claim
shall be an Allowed Class SJ-2 Claim in an amount equal to (i) all amounts owing
on account of such Class SJ-2 Claim as of the Petition Date, plus (ii) interest
from the Petition Date through the Effective Date in an amount equal to the
nondefault rate, if any (and excluding any late charges or penalties), as
specified in any agreement relating to such Class SJ-2 Claim, less (iii) any
amounts paid by the Debtors on account of such Class SJ-2 Claim during the
Chapter 11 Cases, whether in the form of adequate protection payments, through
the application of security deposits, or otherwise. Notwithstanding the
foregoing, (a) in no event shall an Allowed Class SJ-2 Claim exceed the value,
as determined by the Bankruptcy Court pursuant to section 506(a) of the
Bankruptcy Code, of any interest in property of the Debtors' estates securing
such Claim as of the Effective


                                       51
<PAGE>

Date, less any amount of adequate protection payments that did not compensate
the holder of such Claim for any diminution in collateral value, and (b) no
distribution shall be made on account of a Class SJ-2 Claim so long as such
Claim is a Disputed Claim as provided by this Plan. To the extent that the
holder of an Allowed Class SJ-2 Claim holds Allowed Claims against the Debtors
in excess of the holder's Allowed Class SJ-2 Claim, such Allowed Claims shall be
treated in Classes UP-1, UP-3, UM-1, or UM-3 under this Plan, as applicable.

                                    III.     TREATMENT: In full satisfaction of
each Class SJ-2 Claim, each Allowed Class SJ-2 Claim shall be treated under
Option A, Option B, or Option C below, at the election of the Debtors or
Reorganized Debtors:

                                    OPTION   A: The Disbursing Agent shall pay
         the Allowed Class SJ-2 Claim in full, in Cash, on or before the later
         of (i) sixty (60) days after the Effective Date, or (ii) fifteen (15)
         Business Days after the date the Class SJ-2 Claim becomes an Allowed
         Class SJ-2 Claim;

                                    OPTION   B: The Reorganized Debtors shall
         surrender the property securing the Allowed Class SJ-2 Claim to the
         holder of such Claim by making the property reasonably available to
         such holder at the Reorganized Debtors' place of business on or before
         the later of (i) sixty (60) days after the Effective Date, or (ii)
         fifteen (15) Business Days after the date the Class SJ-2 Claim becomes
         an Allowed Class SJ-2 Claim; if the property securing a Class SJ-2
         Claim has been lost or destroyed, the Debtors shall provide notice of
         such fact to the holder of the Class SJ-2 Claim, the delivery of which
         notice shall constitute "surrender" of the property securing the Class
         SJ-2 Claim for purposes of this Option B; or

                                    OPTION   C: On or before the later of (i)
         sixty (60) days after the Effective Date, or (ii) fifteen (15) Business
         Days after the date the Class SJ-2 Claim becomes an Allowed Class SJ-2
         Claim, the Reorganized Debtors shall comply with the following: (a) any
         default other than a default of a kind specified in section 365(b)(2)
         of the Bankruptcy Code shall be cured; (b) the maturity of the Claim
         shall be reinstated as the maturity existed before any default; (c) the
         holder of such Claim shall be compensated for any damages incurred as a
         result of any reasonable reliance of such holder to the extent provided
         by section 1124(2) of the Bankruptcy Code; and (d) the other legal,
         equitable, or contractual rights to which the Claim entitles the holder
         shall not otherwise be altered.

                  The Debtors and Reorganized Debtors shall be deemed to have
elected Option C, except with respect to any Class SJ-2 Claim as to which the
Debtors or Reorganized Debtors elect Option A or Option B by filing a notice of
such election with the Bankruptcy Court and serving such notice on the holder of
the respective Class SJ-2 Claim on or before the later of (i) forty-five (45)
days after the Effective Date, or (ii) ten (10) Business Days after the Class
SJ-2 Claim becomes an Allowed Class SJ-2 Claim. All creditors in Class SJ-2 may
vote on the Plan, although such creditors' votes will not be counted to the
extent the Debtors commit in writing to provide such creditors with Option C
treatment prior to the conclusion of the Confirmation Hearing.


                                       52
<PAGE>

                  With respect to each Class SJ-2 Claim for which the Debtors or
Reorganized Debtors have elected Option A above, any and all liens,
encumbrances, and other interests in the Debtors' or the Reorganized Debtors'
property securing such Class SJ-2 Claim shall be deemed released automatically,
without the need for any further action by any party, immediately upon the
earlier of either (a) payment of such Allowed Class SJ-2 Claims in accordance
with Option A above, or (b) the Debtors' funding of a reserve account with Cash
in an amount equal to the amount of Class SJ-2 Claim as asserted by the holder
of such Claim, with the liens securing the Class SJ-2 Claim attaching to such
account until payment of such Allowed Class SJ-2 Claim. As a condition precedent
to such payment, however, the Reorganized Debtors may require the holder of the
respective Class SJ-2 Claim to surrender any outstanding notes relating to such
Claims and execute collateral or lien releases in a form reasonably acceptable
to the Reorganized Debtors and that, in the Reorganized Debtors' discretion, may
be filed or recorded to evidence such release.

                           W.       ALTERNATIVE SECTION 1111(B) TREATMENT.

                  Notwithstanding any other provision in this Plan to the
contrary, in the event that any holder of a Secured Claim that is to receive a
New Project Lender Note pursuant to this Plan timely and properly makes in
writing the election contained in section 1111(b) of the Bankruptcy Code in
accordance with Bankruptcy Rule 3014, then: (i) the amount of such holder's
Allowed Secured Claim in the respective Class shall equal the amount of such
holder's Allowed Claim (as calculated pursuant to the respective provisions in
the treatment for such Class) without regard to section 506(a) of the Bankruptcy
Code, and (ii) in accordance with section 1129(b)(2)(A)(i) of the Bankruptcy
Code, the interest rate, amortization, and payment terms of the New Project
Lender Note to be provided to such holder shall be modified to provide that,
after giving effect to the value of any Cash Pay Down and, in the case of
LaSalle of any surrendered collateral, such holder shall receive monthly
payments commencing one month after the Effective Date totaling in the aggregate
the amount of such Allowed Claim, of a value as of the Effective Date equal to
the value of such holder's interest in the estate's interest in the collateral
securing such Allowed Claim as of the Effective Date. For purposes of this
alternative treatment, the value as of the Effective Date of the proposed
monthly payments shall be determined by discounting such payments at the Secured
Creditor Rate.

                  2.       PRIORITY CLAIMS.

                           A.       CLASS PJ-1:      OTHER PRIORITY CLAIMS.

                                    I.       CLASSIFICATION: Class PJ-1 consists
of all Other Priority Claims.

                                    II.      TREATMENT: The Disbursing Agent
shall pay each Allowed Other Priority Claim in full, in Cash, on the later of
(i) the Effective Date, or (ii) ten Business Days after the date such Other
Priority Claim becomes an Allowed Other Priority Claim.


                                       53
<PAGE>

                  3.       UNSECURED CLAIMS.

                           A.       CLASS UP-1: MPAN GENERAL UNSECURED CLAIMS
                                    NOT OTHERWISE CLASSIFIED.


                                    I.       CLASSIFICATION: Class UP-1 consists
of MPAN General Unsecured Claims that are not otherwise classified in any other
Class under this Plan.

                                    II.      TREATMENT: Each holder of an
Allowed Class UP-1 Claim shall receive, in full satisfaction of such Claim, a
Pro Rata share of the MPAN General Unsecured Claims Distribution Fund, in
accordance with the following procedures.

                                    III.    TIMING AND MANNER OF DISTRIBUTIONS:

                                    INITIAL DISTRIBUTION FROM THE MPAN GENERAL
UNSECURED CLAIMS DISTRIBUTION FUND: The Disbursing Agent shall make an initial,
Pro Rata distribution from the MPAN General Unsecured Claims Distribution Fund
to the holders of Allowed Class UP-1 Claims (the "Initial MPAN Distribution") as
soon as practicable following the later of (i) sixty (60) days following the
Effective Date, or (ii) the date upon which all unliquidated Class UP-1 Claims
(i.e., all Class UP-1 Claims, whether allowed or disputed, that are asserted in
an unknown or undetermined amount) have been (w) allowed in part (and disallowed
for the balance) or allowed in whole in a liquidated amount pursuant to a Final
Order, (x) disallowed in whole pursuant to a Final Order, or (y) estimated
pursuant to the Claims Estimation Procedure at zero or in a liquidated amount
(or a maximum liquidated amount) greater than zero (whether or not such
estimation is pursuant to a Final Order).

              Example of Initial MPAN Distribution ("Example A"):(1)

                  For purposes of illustration only, assume that (i) a holder's
         ("Creditor X") Allowed Class UP-1 Claim is $100, (ii) the total amount
         of Allowed Class UP-1 Claims (including Creditor X) is $700, (iii) the
         total amount of Disputed Claims in Class UP-1 that are in liquidated
         amounts is $200, (iv) in addition to the foregoing, another Disputed
         Claim in Class UP-1 has been determined to have a maximum allowable
         amount of $100 pursuant to the Claims Estimation Procedure, and (v) a
         total of 1,000 shares of New MPAN Common Stock and 500 New MPAN
         Warrants in the MPAN General Unsecured Claims Distribution Fund are
         available for distribution to all holders of Allowed Class UP-1 Claims.
         Under the Pro Rata formula, a total of 100 shares and 500 warrants
         would be distributed to Creditor X as the holder of a $100 Allowed
         Class UP-1 Claim as follows:

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

(1)   The amounts set forth in the Examples in this Plan are for illustrative
      purposes only, and in no way are intended to reflect the actual amount of
      Claims against the Debtors or consideration to be distributed under the
      Plan; the actual amount of consideration to be distributed to holders of
      Allowed Claims may differ substantially from the amounts depicted in the
      Examples. Additionally, the Examples do not reflect the Plan's restriction
      on de minimis and fractional distributions.


                                       54
<PAGE>

<TABLE>
<S>                                                                     <C>
                                                                        (x) Total amount of shares and warrants
       (a) Distribution to Creditor X, the holder of a                      in MPAN General Unsecured Claims
      $100 Allowed Class UP-1 Claim on account of such                             Distribution Fund
         Allowed Claim (100 shares and 50 warrants)                         (1,000 shares and 500 warrants)

                 ------------------------                                       ---------------------
                                                              =

       (b) Total amount of Creditor X's Allowed Class                      (y) Total amount of all Class UP-1
                      UP-1 Claim ($100)                                 Allowed Claims and Disputed Claims ($700
                                                                                + $200 + $100 = $1,000)
</TABLE>

                           ADDITIONAL MPAN DISTRIBUTIONS: Upon the (i)
disallowance or allowance of Disputed Class UP-1 Claims by Final Orders, and
(ii) the estimation of Disputed Class UP-1 Claims pursuant to the Claims
Estimation Procedure, additional shares and warrants in the MPAN General
Unsecured Claims Distribution Fund may become available to holders of Allowed
Class UP-1 Claims, including holders that have received prior distributions. The
Reorganized Debtors may, in their discretion, direct the Disbursing Agent to
make additional distributions from the MPAN General Unsecured Claims
Distribution Fund to holders of Allowed Class UP-1 Claims from time to time
("Additional MPAN Distributions"). The amount distributed to holders of Allowed
Class UP-1 Claims in any Additional MPAN Distribution shall be equal to the
amount indicated by the Pro Rata formula, less any prior distributions received
by such holders (fractional distributions that were not distributed on account
of Section III.F hereof shall not be treated as having been previously received
by such holders). By operation of the Pro Rata formula, the MPAN General
Unsecured Claims Distribution Fund shall automatically maintain sufficient
consideration in reserve so as to permit Pro Rata distributions to holders of
Disputed Class UP-1 Claims if such Claims eventually are allowed for purposes of
receiving distributions in accordance with the terms of this Plan.

         Illustration of Additional MPAN Distributions ("Example B"):

         Starting with the same assumptions from Example A above, assume now for
         purposes of illustration only that of the $300 in total Disputed Class
         UP-1 Claims: (i) $50 have been allowed (bringing the total allowed to
         $750), (ii) $100 have been disallowed, and (iii) $150 remain disputed.
         Thus, the total amount of remaining Class UP-1 Claims (whether allowed
         or disputed) has been reduced from $1,000 to $900. The Reorganized
         Debtors direct the Disbursing Agent to make an Additional Distribution
         from the MPAN General Unsecured Claims Distribution Fund. Under the Pro
         Rata formula, Creditor X would be entitled to a total of 111 shares and
         55 warrants(2) (including amounts received in prior distributions) as
         follows:

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

(2)   Although the Pro Rata formula would result in 55.5 warrants, fractional
      shares and warrants will not be issued.


                                       55
<PAGE>

<TABLE>
      <S>                                                             <C>
       (a)  Total Distribution to Creditor X as a                     (x)  Total amount of shares and warrants
      holder of a $100 Allowed Class UP-1 Claim on                           in MPAN General Unsecured Claims
                  account of such Claim                                          Distribution Fund
              (111 shares and 55 warrants)                                  (1,000 shares and 500 warrants)

                ------------------------                                       ------------------------
                                                            =

       (b)  Total amount of Creditor X's                              (y)  Total amount of all Class UP-
         Allowed Class UP-1 Claim ($100)                                    1, whether Allowed Claims
                                                                           or Disputed Claims
                                                                           ($750 + $150 = $900)
</TABLE>

         Because Creditor X already had received 100 shares and 50 warrants from
         the Initial MPAN Distribution, Creditor X is entitled to receive an
         additional 11 shares and 5 warrants on account of the Additional
         Distribution.

                           FINAL MPAN DISTRIBUTION:   Within sixty (60) days
after the resolution (either by allowance, disallowance, or final estimation for
purposes of distribution) of all Disputed Class UP-1 Claims pursuant to Final
Orders, the Reorganized Debtors shall promptly direct a final, Pro Rata
distribution from the MPAN General Unsecured Claims Distribution Fund (the
"Final MPAN Distribution") to holders of Allowed Class UP-1 Claims. The amount
distributed to holders of Allowed Class UP-1 Claims in the Final MPAN
Distribution shall be equal to the amount indicated by the Pro Rata formula,
less any prior distributions received by the holders of such Claims.

                           SPECIAL RULES FOR INSURED CLAIMS:   Notwithstanding
anything to the contrary herein, if insurance coverage exists for a Class UP-1
Claim, regardless whether such Class UP-1 Claim is an Allowed Claim or a
Disputed Claim: (i) for purposes of applying the Pro Rata formula, no value
shall be attributed to such Class UP-1 Claim to the extent such insurance
coverage exists and is paid or is payable to the holder of such Class UP-1
Claim, and (ii) no distributions shall be made on account of such Class UP-1
Claim to the extent such insurance coverage exists and is paid or is payable to
the holder of such Class UP-1 Claim.

                           DISTRIBUTIONS OF OTHER CONSIDERATION:   In the event
that any dividend or other distribution of Cash, stock, or any other
consideration is made on account of New MPAN Common Stock or New MPAN Warrants
that are held in the MPAN General Unsecured Claims Distribution Fund, such
consideration shall be distributed to holders of Allowed Class UP-1 Claims in
the same manner as such holders would be entitled to receive distributions of
New MPAN Common Stock and New MPAN Warrants under this Plan. Nothing in this
Plan shall prevent the Reorganized Debtors from engaging in any transaction
(including, but not limited to, any merger or acquisition transaction) that
results in the cancellation or dilution of New MPAN Common Stock or New MPAN
Warrants, provided that the shares of New MPAN Common Stock or New MPAN Warrants
in the MPAN General Unsecured Claims Distribution Fund at the time of such
transaction shall receive the same treatment as shares or warrants held by
other, similarly situated holders of New MPAN Common Stock or New MPAN Warrants.


                                       56
<PAGE>

                  In the event that any of the New MPAN Warrants in the MPAN
General Unsecured Claims Distribution Fund have not been distributed to holders
of Allowed Claims in Class UP-1 as of the last Business Day that is at least
thirty (30) days prior to the expiration of such New MPAN Warrants, then such
undistributed New MPAN Warrants shall be deemed exercised, if possible, pursuant
to "cashless" exercise provisions contained in the agreement governing such New
MPAN Warrants; otherwise, if a "cashless" exercise is not possible, such New
MPAN Warrants shall be permitted to expire. Any shares of New MPAN Common Stock
attributable to the "cashless" exercise of such New MPAN Warrants shall be
distributed to holders of Allowed Claims in accordance with the Pro Rata formula
as if such shares were New MPAN Warrants (i.e., and for purposes of illustration
only, if under the Pro Rata formula holders of Allowed Class UP-1 Claims were
entitled to 1 New MPAN Warrant per each $10,000 in Allowed Claims, after the
deemed exercise of the New MPAN Warrants such holders instead would be entitled
to the shares of New MPAN Common Stock derived from the cashless exercise of 1
New MPAN Warrant per each $10,000 in Allowed Claims).

                           B.       CLASS UP-2: MPAN SUBORDINATED NOTE CLAIMS.

                                    I.       CLASSIFICATION: Class UP-2 consists
of MPAN Subordinated Note Claims and any Securities Damages Claims relating
thereto.

                                    II.      TREATMENT: Each holder of an
Allowed Class UP-2 Claim that is also a Consenting Class UP-2 Holder shall
receive, in full satisfaction of such Claim, a Pro Rata share of the MPAN
Subordinated Note Claims Distribution Fund. Distributions shall be made in
accordance with the procedures described for Class UP-1 under "Timing and Manner
of Distributions," except that: (i) all references to "Class UP-1" shall be
deemed to be to "Class UP-2," (ii) all references to the "MPAN General Unsecured
Claims Distribution Fund" shall be deemed to be to the "MPAN Subordinated Note
Claims Distribution Fund," (iii) no distributions shall be made on account of
any Securities Damages Claims (whether or not such Claims are Allowed Claims),
and no value shall be ascribed to any Securities Damages Claims for purposes of
applying the Pro Rata formula, (iv) for purposes of applying the Pro Rata
formula, the total amount of Allowed Class UP-2 Claims and Disputed Class UP-2
Claims shall be determined irrespective of whether the holders of such Claims
are Consenting Class UP-2 Holders, and (v) in the absence of any Disputed Class
UP-2 Claims or any dispute as to whether a particular holder of Class UP-2
Claims is a Consenting Class UP-2 Holder, all distributions to holders of
Allowed Class UP-2 Claims that are Consenting Class UP-2 Holders shall be made
within sixty (60) days following the Effective Date.

                  With respect to each Consenting Class UP-2 Holder of Allowed
Class UP-2 Claims, (i) the MPAN Senior Credit Facility Claim Holders waive their
contractual subordination rights against such Consenting Class UP-2 Holder, and
(ii) the distributions to such Consenting Class UP-2 Holder on account of its
Allowed Class UP-2 Claims shall not be subject to levy, garnishment,
attachments, or other legal process by any holder of MPAN Senior Credit Facility
Claims by reason of claimed contractual subordination rights. With respect to
any Allowed Class UP-2 Claims held by an entity that is not a Consenting Class
UP-2 Holder, (i) any and all contractual subordination provisions shall remain
in effect and shall be enforced under the Plan, and (ii) any consideration that
would otherwise be distributed on account of such


                                       57
<PAGE>

Allowed Class UP-2 Claims under this Plan shall instead be distributed at the
direction of the MPAN Senior Credit Facility Agent for the benefit of the
holders of Allowed Class SP-1 Claims.

                           C.       CLASS UP-3: MPAN PUNITIVE DAMAGE CLAIMS.

                                    I.       CLASSIFICATION: Class UP-3 consists
of all Punitive Damage Claims against any of the MPAN Debtors.

                                    II.      TREATMENT: Each holder of a
Punitive Damage Claim against any of the MPAN Debtors shall receive no
distribution under the Plan on account of such Claim, in complete settlement,
satisfaction, and discharge thereof.

                           D.       CLASS UM-1: MHG GENERAL UNSECURED CLAIMS NOT
                                    OTHERWISE CLASSIFIED.

                                    I.       CLASSIFICATION: Class UM-1 consists
of MHG General Unsecured Claims that are not otherwise classified in any other
Class under this Plan.

                                    II.      TREATMENT: Each holder of an
Allowed Class UM-1 Claim shall receive, in full satisfaction of such Claim, a
Pro Rata share of the MHG Unsecured Claims Distribution Fund, which shall be
shared on a Pro Rata basis by holders of Allowed Class UM-1 Claims and Allowed
Class UM-2 Claims in accordance with the following procedures.

                                    III.     TIMING AND MANNER OF DISTRIBUTIONS:

                                    INITIAL DISTRIBUTION FROM THE MHG UNSECURED
CLAIMS DISTRIBUTION FUND: The Disbursing Agent shall make an initial, Pro Rata
distribution from the MHG Unsecured Claims Distribution Fund to the holders of
Allowed Class UM-1 Claims and Allowed Class UM-2 Claims (the "Initial MHG
Distribution") as soon as practicable following the later of (i) sixty (60) days
following the Effective Date, or (ii) the date upon which all unliquidated Class
UM-1 Claims and Class UM-2 Claims (i.e., all Class UM-1 Claims and Class UM-2
Claims, whether allowed or disputed, that are asserted in an unknown or
undetermined amount) have been (w) allowed in part (and disallowed for the
balance) or allowed in whole in a liquidated amount pursuant to a Final Order,
(x) disallowed in whole pursuant to a Final Order, or (y) estimated pursuant to
the Claims Estimation Procedure at zero or in a liquidated amount (or a maximum
liquidated amount) greater than zero (whether or not such estimation is pursuant
to a Final Order). No distributions shall be made on account of any Securities
Damages Claims in Class UM-2 (whether of not such Claims are Allowed Claims),
and no value shall be ascribed to any Securities Damages Claims for purposes of
applying the Pro Rata formula. In addition, for purposes of applying the Pro
Rata formula, the total amount of Allowed Class UM-2 Claims and Disputed Class
UM-2 Claims shall be determined irrespective of whether the holders of such
Claims are Consenting Class UM-2 Holders.


                                       58
<PAGE>

               Example of Initial MHG Distribution ("Example A"):(3)

                  For purposes of illustration only, assume that (i) a holder's
         ("Creditor X") Allowed Class UM-1 Claim is $100, (ii) the total amount
         of Allowed Class UM-1 Claims and Allowed Class UM-2 Claims (including
         Creditor X) is $700, (iii) the total amount of Disputed Claims in
         Classes UM-1 and UM-2 that are liquidated is $200, (iv) in addition to
         the foregoing, another Disputed Claim in Class UM-1 has been determined
         to have a maximum allowable amount of $100 pursuant to the Claims
         Estimation Procedure, and (v) a total of $50 in the MHG Unsecured
         Claims Distribution Fund are available for distribution to all holders
         of Allowed Class UM-1 Claims and Allowed Class UM-2 Claims. Under the
         Pro Rata formula, a total of $5 would be distributed to Creditor X as
         the holder of a $100 Allowed Class UM-1 Claim as follows:

<TABLE>
      <S>                                                                  <C>
      (a) Distribution to Creditor X, the holder of a                       (x) Total amount of Cash in MHG
      $100 Allowed Class UM-1 Claim on account of such                     Unsecured Claims Distribution Fund
                     Allowed Claim ($5)                                                  ($50)

                  ------------------------                                       ---------------------
                                                              =

       (b) Total amount of Creditor X's Allowed Class                    (y) Total amount of all Class UM-1 and
                      UM-1 Claim ($100)                                   UM-2 Claims, whether such Claims are
                                                                           Allowed Claims or Disputed Claims
                                                                              ($700 + $200 + $100 = $1,000)
</TABLE>

                                    ADDITIONAL MHG DISTRIBUTIONS: Upon the (i)
disallowance or allowance of Disputed Claims in Classes UM-1 and UM-2 by Final
Orders, and (ii) the estimation of Disputed Claims in Classes UM-1 and UM-2
pursuant to the Claims Estimation Procedure, additional Cash in the MHG
Unsecured Claims Distribution Fund may become available to holders of Allowed
Class UM-1 Claims and Allowed Class UM-2 Claims, including holders that have
received prior distributions. The Reorganized Debtors may, in their discretion,
direct the Disbursing Agent to make additional distributions from the MHG
General Unsecured Claims Fund to holders of Allowed Class UM-1 Claims and
Allowed Class UM-2 Claims from time to time ("Additional MHG Distributions").
The amount distributed to holders of Allowed Class UM-1 and UM-2 Claims in any
Additional MHG Distribution shall be equal to the amount indicated by the Pro
Rata formula, less any prior distributions received by such holders

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

(3)   The amounts set forth in the Examples in this Plan are for illustrative
      purposes only, and in no way are intended to reflect the actual amount of
      Claims against the Debtors or consideration to be distributed under the
      Plan; the actual amount of consideration to be distributed to holders of
      Allowed Claims may differ substantially from the amounts depicted in the
      Examples. Additionally, the Examples do not reflect the Plan's restriction
      on de minimis and fractional distributions.


                                       59
<PAGE>

(fractional distributions that were not distributed on account of Section III.F
hereof shall not be treated as having been previously received by such holders).
By operation of the Pro Rata formula, the MHG Unsecured Claims Distribution Fund
shall automatically maintain sufficient consideration in reserve so as to permit
Pro Rata distributions to holders of Disputed Class UM-1 Claims if such Claims
eventually are allowed for purposes of receiving distributions in accordance
with the terms of this Plan.

         Illustration of Additional MHG Distributions ("Example B"):

         Starting with the same assumptions from Example A above, and for
         purposes of illustration only, assume now that of the $300 in total
         Disputed Claims in Classes UM-1 and UM-2 (i) $50 have been allowed
         (bringing the total allowed to $750), (ii) $100 have been disallowed,
         and (iii) $150 remain disputed. Thus, the total amount of remaining
         Class UM-1 and UM-2 Claims (whether allowed or disputed) has been
         reduced from $1,000 to $900. The Reorganized Debtors direct the
         Disbursing Agent to make an Additional MHG Distribution from the MHG
         Unsecured Claims Distribution Fund. Under the MHG Ratable Share
         formula, Creditor X would be entitled to a total of $5.55 (including
         amounts received in prior distributions) as follows:

<TABLE>
<S>                                                           <C>
       (a) Total Distribution to Creditor X as                (x) Total amount of Cash in MHG
          a holder of a $100 Allowed Class UM-                   Unsecured Claims Distribution
            1 Claim on account of such Claim                                 Fund
                         ($5.55)                                             ($50)

                 ------------------------                           ------------------------
                                                      =

        (b) Total amount of Creditor X's                       (y) Total amount of all Class UM-
            Allowed Class UM-1 Claim ($100)                      1 and UM-2 Claims, whether such
                                                                   Claims are Allowed Claims or
                                                                           Disputed Claims
                                                                         ($750 + $150 = $900)
</TABLE>

         Because Creditor X already had received $5 from the Initial MHG
         Distribution, Creditor X is entitled to receive an additional $0.55 on
         account of the Additional MHG Distribution.

                                    FINAL MHG DISTRIBUTION: Within sixty (60)
days after the resolution (either by allowance, disallowance, or final
estimation for purposes of distribution) of all Disputed Claims in Classes UM-1
and UM-2 pursuant to Final Orders, the Reorganized Debtors shall promptly direct
a final, Pro Rata distribution from the MHG Unsecured Claims Distribution Fund
(the "Final MHG Distribution") to holders of Allowed Class UM-1 and UM-2 Claims.
The amount distributed to holders of Allowed Class UM-1 and UM-2 Claims in the
Final MHG Distribution shall be equal to the amount indicated by the Pro Rata
formula, less any prior distributions received by the holders of such Claims.

                                    SPECIAL RULES FOR INSURED CLAIMS:
Notwithstanding anything to the contrary herein, if insurance coverage exists
for a Class UM-1 Claim, regardless whether


                                       60
<PAGE>

such Class UM-1 Claim is an Allowed Claim or a Disputed Claim: (i) for purposes
of applying the Pro Rata formula, no value shall be attributed to such Class
UM-1 Claim to the extent such insurance coverage exists and is paid or is
payable to the holder of such Class UM-1 Claim, and (ii) no distributions shall
be made on account of such Class UM-1 Claim to the extent such insurance
coverage exists and is paid or is payable to the holder of such Class UM-1
Claim.

                                    DISTRIBUTIONS OF OTHER CONSIDERATION: In the
event that any interest is received on account of Cash that is held in the MHG
Unsecured Claims Distribution Fund, such consideration shall be distributed to
holders of Allowed Class UM-1 and UM-2 Claims in the same manner as such holders
would be entitled to receive distributions of Cash from the MHG Unsecured Claims
Distribution Fund under this Plan.

                                    LIMITATION ON TOTAL DISTRIBUTION:
Notwithstanding anything in this Plan to the contrary, in no event shall any
holder of an Allowed Class UM-1 or UM-2 Claim receive more than a five percent
(5%) distribution on account of its Allowed Claim. In the event that both (i)
holders of all Allowed Class UM-1 and UM-2 Claims have received a five percent
(5%) distribution (excluding those holders of Class UM-2 Claims that are not
Consenting Class UM-2 Holders), and (ii) all Disputed Class UM-1 and UM-2 Claims
have been resolved through allowance, disallowance, or final estimation, then
all remaining amounts in the MHG Unsecured Claims Distribution Fund shall be
released to the Reorganized Debtors.

                           E.       CLASS UM-2: MHG THIRD PARTY SUBORDINATED
                                    NOTE CLAIMS.

                                    I.       CLASSIFICATION: Class UM-2 consists
of MHG Third Party Subordinated Note Claims and any Securities Damages Claims
relating thereto.

                                    II.      TREATMENT: Each holder of an
Allowed Class UM-2 Claim that is also a Consenting Class UM-2 Holder shall
receive, in full satisfaction of such Claim, a Pro Rata share of the MHG
Unsecured Claims Distribution Fund, which shall be shared on a Pro Rata basis by
holders of Allowed Class UM-1 Claims and Allowed Class UM-2 Claims in accordance
with the procedures described for Class UM-1 under "Timing and Manner of
Distributions." No distributions shall be made on account of any Securities
Damages Claims, and no value shall be ascribed to any Securities Damages Claims
for purposes of applying the Pro Rata formula. In addition, for purposes of
applying the Pro Rata formula, the total amount of Allowed Class UM-2 Claims and
Disputed Class UM-2 Claims shall be determined irrespective of whether the
holders of such Claims are Consenting Class UM-2 Holders.

                  With respect to each Consenting Class UM-2 Holder of Allowed
Class UM-2 Claims, (i) the MHG Senior Credit Facility Claim Holders waive their
contractual subordination rights against such Consenting Class UM-2 Holder, and
(ii) the distributions to such Consenting Class UM-2 Holder on account of its
Allowed Class UM-2 Claims shall not be subject to levy, garnishment,
attachments, or other legal process by any holder of MHG Senior Credit Facility
Claims by reason of claimed contractual subordination rights. With respect to
any Allowed Class UM-2 Claims held by an entity that is not a Consenting Class
UM-2 Holder, (i) any and all contractual subordination provisions shall remain
in effect and shall be enforced under the Plan, and (ii) any consideration that
would otherwise be distributed on account of such Allowed Class


                                       61
<PAGE>

UM-2 Claims under this Plan shall instead be distributed at the direction of the
MHG Senior Credit Facility Agent for the benefit of the holders of Allowed Class
SM-1 Claims.

                           F.       CLASS UM-3: MHG PUNITIVE DAMAGE CLAIMS.

                                    I.       CLASSIFICATION: Class UM-3 consists
of all Punitive Damage Claims against any of the MHG Debtors.

                                    II.      TREATMENT: Each holder of a
Punitive Damage Claim against any of the MHG Debtors shall receive no
distribution under the Plan on account of such Claim, in complete settlement,
satisfaction, and discharge thereof.

                           G.       CLASS UJ-1: DEBTORS INTERCOMPANY CLAIMS.

                                    I.       CLASSIFICATION: Class UJ-1 consists
of all Debtors Intercompany Claims.

                                    II.      TREATMENT: At the election of the
Debtors with respect to each Debtors Intercompany Claim that is reflected on the
Debtors' books and records as of the Effective Date, the Debtors may either (i)
eliminate such Debtors Intercompany Claim on the Effective Date either through
(a) the declaration of intercompany dividends and/or contributions to capital,
or (b) the cancellation of such Debtors Intercompany Claim, or (ii) leave such
Debtors Intercompany Claim unimpaired, in which event such Debtors Intercompany
Claim shall continue in full force and effect notwithstanding the Confirmation
Order and this Plan. Any other Debtors Intercompany Claims that are not
reflected on the Debtors' books and records as of the Effective Date shall be
deemed to be released as of the Effective Date.

                  4.       CERTAIN GOVERNMENT CLAIMS.

                           A.       CLASS GP-1: MPAN UNITED STATES CLAIMS.

                                    I.       CLASSIFICATION: Class GP-1 consists
of any MPAN United States Claims and any other Claims against the MPAN Debtors
that arise under or relate to the Federal Government Settlement.

                                    II.      TREATMENT: The holders of Class
GP-1 Claims shall receive the treatment set forth in the Federal Government
Settlement described in the Plan Documentary Supplement, in complete settlement,
satisfaction, and discharge thereof.

                           B.       CLASS GM-1: MHG UNITED STATES CLAIMS.

                                    I.       CLASSIFICATION: Class GM-1 consists
of any MHG United States Claims and any Claims against the MHG Debtors that
arise under or relate to the Federal Government Settlement.

                                    II.      TREATMENT: The holders of Claims in
Class GM-1 shall receive the treatment as set forth in the Federal Government
Settlement described in the Plan Documentary Supplement, in complete settlement,
satisfaction, and discharge thereof.


                                       62
<PAGE>

                           C.       CLASSIFICATION AND TREATMENT OF STATE
                                    MEDICAID PROGRAM CLAIMS.

                  Except as otherwise agreed to in writing by the Debtors and
the holder of a State Medicaid Claim, with respect to each holder of a State
Medicaid Claim that does not timely object to confirmation of this Plan: (i) the
State Medicaid provider agreement for the Debtor's facility relating to such
State Medicaid Claim shall not be treated as an executory contract within the
meaning of Bankruptcy Code section 365 and, accordingly, the Debtors need not
cure pre-Petition Date defaults under such agreement (including defaults
resulting from the nonpayment of pre-Petition Date Claims) in order for the
Debtors and such facility to continue to participate in the State Medicaid
program, and (ii) the MPAN State Medicaid Claims relating to such facility shall
be treated in Class UP-1, and the MHG State Medicaid Claims relating to such
facility shall be treated in Class UM-1.

                  With respect to each holder of a State Medicaid Claim that
timely objects to confirmation of this Plan, the foregoing paragraph regarding
the treatment of such holder's State Medicaid Claim shall apply unless the
Bankruptcy Court determines that both (i) the applicable prepetition Medicaid
provider agreement relating to the State Medicaid Claim is an executory contract
that is in effect and executory as of the Confirmation Date, and (ii) in order
for the facility relating to such holder's State Medicaid Claim to continue to
participate in the State Medicaid program, the Debtor-operator of such facility
must assume such prepetition Medicaid provider agreement as an executory
contract and cure defaults thereunder. If the Bankruptcy Court makes such a
determination with respect to a particular State Medicaid Claim, then with
respect to that State Medicaid Claim only: (x) if such Debtor-operator
determines that it will continue to operate the facility after the Effective
Date, and if such Debtor indicates in writing its intent to assume the
applicable executory Medicaid provider agreement within thirty (30) days after
such Bankruptcy Court determination, then such Medicaid provider agreement shall
be assumed and the Allowed State Medicaid Claims relating to such Medicaid
provider agreement shall be paid in full in accordance with the terms of such
Medicaid provider agreement to the extent required to cure as provided by
section 365 of the Bankruptcy Code; or (y) if such Debtor-operator determines
that it will no longer operate such facility following the Effective Date and a
reasonable period of time to close the facility or transfer operation of the
facility in accordance with applicable law, and if such Debtor indicates in
writing its intent to reject the applicable Medicaid provider agreement within
thirty (30) days after such Bankruptcy Court determination, then such Medicaid
provider agreement shall be rejected effective upon the termination or transfer
of the Debtor's operations at the facility, and any MPAN State Medicaid Claims
relating to such facility shall be treated in Class UP-1, and any MHG State
Medicaid Claims relating to such facility shall be treated in Class UM-1.

                  Except as otherwise agreed to in writing by the Debtors and
the holder of a State Medicaid Claim: (i) post-Effective Date Medicaid rates and
allowances of reimbursable costs shall be determined without reference to the
discharge or restructuring of any Claim of any type (whether for goods or
services, principal or interest, Medicaid overpayments or penalties, or any
other Claim) under this Plan or during the Chapter 11 Cases, and the Debtors and
Reorganized Debtors shall not be prejudiced with respect to such rates by any
such discharge or restructuring; and (ii) Claims of States for penalties and
fines shall be treated as Punitive Damage Claims for


                                       63
<PAGE>

purposes of this Plan and shall be treated in Classes UP-3 or UM-3, as
applicable; such Claims for penalties and fines shall not be treated as State
Medicaid Claims.

                  5.       EQUITY INTERESTS.

                           A.       CLASS EP-1: EQUITY INTERESTS IN MPAN.

                                    I.       CLASSIFICATION: Class EP-1 consists
of Equity Interests in MPAN, including but not limited to those evidenced by the
Old MPAN Common Stock, options and warrants to purchase such stock, and any
Securities Damages Claims relating thereto.

                                    II.      TREATMENT: The holders of Class
EP-1 Equity Interests and related Securities Damages Claims shall not receive or
retain anything on account of such Equity Interests and Claims. All Old MPAN
Common Stock shall be deemed cancelled on the Effective Date. All options or
warrants to purchase Old MPAN Common Stock shall be deemed rejected, cancelled,
and terminated as of the Petition Date.

                  All Equity Interests in Reorganized MPAN as of the Effective
Date shall be evidenced by New MPAN Common Stock and New MPAN Warrants. The New
MPAN Common Stock and New MPAN Warrants shall be distributed to certain holders
of Allowed Claims and others in accordance with the terms of this Plan.

                           B.       CLASS EM-1:  EQUITY INTERESTS IN MHG.

                                    I.       CLASSIFICATION: Class EM-1 consists
of Equity Interests in MHG, including but not limited to those evidenced by the
Old MHG Common Stock.

                                    II.      TREATMENT: The holders of Class
EM-1 Equity Interests shall not receive or retain anything on account of such
Equity Interests. The MHG Senior Credit Facility Claim Holders shall be deemed
to have subordinated their rights to receive all of the New MHG Common Stock and
other Equity Interests in Reorganized MHG on account of their MHG Senior Credit
Facility Claims in favor of Reorganized MPAN. On account of the foregoing, all
Equity Interests in Reorganized MHG shall be held by Reorganized MPAN or its
designee.

                           C.       CLASS EJ-1: EQUITY INTERESTS IN DEBTOR
                                    AFFILIATES.

                                    I.       CLASSIFICATION: Class EJ-1 consists
of MPAN's, MHG's, and the other Debtors' Equity Interests in the Debtor
Affiliates, as evidenced by the Old Affiliates Equity.

                                    II.      TREATMENT: The holders of Class
EJ-1 Equity Interests shall not receive or retain anything on account of such
Equity Interests. The MPAN Senior Credit Facility Claim Holders and the MHG
Senior Credit Facility Claim Holders, as applicable, shall be deemed to have
subordinated their rights to receive all of the New Affiliates Equity and other
Equity Interests in the Reorganized Debtor Affiliates on account of their Senior
Credit Facility Claims to the Reorganized Debtors. On account of the foregoing,
all Equity Interests in


                                       64
<PAGE>

the Reorganized Debtor Affiliates shall be held by the Reorganized Debtors as
provided in the Corporate Restructuring Program.

                                      III.

                     METHOD OF DISTRIBUTIONS UNDER THE PLAN

         A.       THE DISBURSING AGENT.

                  The Reorganized Debtors or such other entity or entities as
the Reorganized Debtors may employ in their sole discretion ("Third Party
Disbursing Agent") shall act as Disbursing Agent under this Plan and make all
distributions required to be made by the Disbursing Agent under this Plan. Any
Disbursing Agent may employ or contract on commercially reasonable terms with
affiliates and other entities to assist in or perform the distribution of
property to be distributed. Unless otherwise determined by the Reorganized
Debtors, each Disbursing Agent (including any Third Party Disbursing Agent)
shall serve without bond. Each Third Party Disbursing Agent shall receive,
without further Bankruptcy Court approval, reasonable compensation for
distribution services rendered pursuant to this Plan and reimbursement of
reasonable out-of-pocket expenses incurred in connection with such services from
the Reorganized Debtors on terms agreed to with the Reorganized Debtors.

                  Neither the Disbursing Agent, the Debtors, or the Reorganized
Debtors, nor any of their employees, officers, agents, or professionals, shall
be liable for (i) any acts or omissions (except for gross negligence or willful
misconduct) in connection with implementing the distribution provisions of this
Plan and the making or withholding of distributions pursuant to the Plan, or
(ii) any change in the value of distributions made pursuant to the Plan
resulting from any delays in making such distributions in accordance with the
Plan's terms (including but not limited to any delays caused by the resolution
of Disputed Claims) or due to fluctuations in the value or market price of New
MPAN Common Stock, New MPAN Warrants, or any other consideration to be
distributed under this Plan.

         B.       FUNDING OF CASH PAYMENTS.

                  On or before the Effective Date, the Debtors shall deposit
into an account an amount, in Cash, equal to the aggregate amount of Cash
anticipated to be distributed on or about the Effective Date to holders of
Allowed Claims and Allowed Administrative Expenses (including without limitation
all unpaid chapter 11 professionals' fees and expenses) thereunder (the
"Effective Date Cash Reserve"). The Disbursing Agent shall hold the Effective
Date Cash Reserve in trust for the benefit of holders of Allowed Claims and
Allowed Administrative Expenses entitled to receive distributions therefrom and
the Reorganized Debtors, as their respective interests may appear. All
distributions of Cash under the Plan shall be made by the Disbursing Agent or
the Reorganized Debtors from the Effective Date Cash Reserve, except as
otherwise required to be made from any Disputed Claims Reserve as set forth in
Section IV.A hereof or as otherwise agreed with the holder of an Allowed Claim
or Allowed Administrative Expense. Any shortfall in the Effective Date Cash
Reserve shall be funded promptly by the Reorganized Debtors or, alternatively,
paid directly by the Reorganized Debtors to the holder of the Allowed Claim or
Allowed Administrative Expense. Any surplus funds in the Effective Date Cash
Reserve not required for distributions under the Plan or ordered by the
Bankruptcy Court to


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<PAGE>

be deposited into any Disputed Claims Reserve shall be transferred from the
Effective Date Cash Reserve to the Reorganized Debtors on the ninetieth (90th)
day after the Effective Date.

                  Cash payments made pursuant to this Plan shall be in U.S.
dollars by checks drawn on a domestic bank selected by the Reorganized Debtors,
or by wire transfer from a domestic bank, at the Reorganized Debtors' option,
except that payments made to foreign trade creditors holding Allowed Claims may
be paid, at the option of the Reorganized Debtors, in such funds and by such
means as are necessary or customary in a particular foreign jurisdiction. Except
to the extent this Plan provides expressly to the contrary, no interest arising
after either the Petition Date or the Effective Date shall accrue or be payable
to holders of Allowed Claims under this Plan.

         C.       INVESTMENT OF CASH IN RESERVES.

                  Cash held in the Disputed Claims Reserve (if any) and the
Effective Date Cash Reserve shall, to the greatest extent practicable, be
invested by the Debtors or the Disbursing Agent in interest-bearing certificates
of deposit and interest-bearing accounts to be established in one or more
depository banks that have qualified to hold deposits of bankruptcy estates. All
interest earned on such Cash shall be disbursed to the Reorganized Debtors, to
the extent not utilized in paying Allowed Claims or Allowed Administrative
Expenses.

         D.       DELIVERY OF DISTRIBUTIONS AND UNDELIVERABLE OR UNCLAIMED
                  DISTRIBUTIONS.

                  1.       DELIVERY OF DISTRIBUTIONS GENERALLY.

                  Except as provided above with respect to holders of Class SP-1
Claims and Class SM-1 Claims, and below with respect to holders of undeliverable
distributions, distributions to holders of Allowed Claims and Allowed
Administrative Expenses shall be distributed by mail as follows: (1) with
respect to each holder of an Allowed Claim that has filed a proof of claim, at
the address for such holder as maintained by the official claims agent for the
Debtors; (2) with respect to each holder of an Allowed Claim that has not filed
a proof of claim, at the address reflected on the Schedules filed by the
Debtors, provided, however, that if the Debtors, the Reorganized Debtors, or the
Disbursing Agent have received a written notice of a change of address for such
holder, the address set forth in such notice shall be used; or (3) with respect
to each holder of an Allowed Administrative Expense, at such address as the
holder may specify in writing.

                  2.       UNDELIVERABLE DISTRIBUTIONS.

                  If the distribution to the holder of any Allowed Claim or
Allowed Administrative Expense is returned to the Reorganized Debtors or the
Disbursing Agent as undeliverable, no further distribution shall be made to such
holder unless and until the Reorganized Debtors or the Disbursing Agent are
notified in writing of such holder's then current address. Subject to the
remainder of this Section, undeliverable distributions shall remain in the
possession of the Reorganized Debtors or the Disbursing Agent pursuant to this
Section until such time as a distribution becomes deliverable.


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<PAGE>

                  Unclaimed Cash shall be held in trust in a segregated bank
account in the name of the Reorganized Debtors, for the benefit of the potential
claimants of such funds, and shall be accounted for separately. Such funds shall
be held in interest-bearing accounts (as selected by Reorganized Debtors in
their sole discretion), to the extent practicable; and the parties entitled to
such funds shall be entitled to any interest earned on such funds.

                  Any holder of an Allowed Claim or Allowed Administrative
Expense that does not assert a claim in writing for an undeliverable
distribution held by the Reorganized Debtors or the Disbursing Agent within two
(2) years after the Effective Date shall no longer have any claim to or interest
in such undeliverable distribution, and shall be forever barred from receiving
any distributions under this Plan or otherwise from the Reorganized Debtors. In
such cases any property held for distribution on account of such Claims or
Administrative Expenses shall be retained by Reorganized Debtors, as follows:
(i) pursuant to Bankruptcy Code section 347(b), any undistributed Cash or
securities other than New MPAN Common Stock shall be the property of Reorganized
Debtors, free from any restrictions thereon, and such undistributed Cash or
securities shall not be subject to the unclaimed property or escheat laws of any
State or other governmental unit; (ii) any undistributed New MPAN Common Stock
shall, at the election of Reorganized MPAN, be cancelled or treated as treasury
stock; and (iii) any undistributed New MPAN Warrants shall be cancelled. Nothing
contained in this Plan shall require the Debtors, Reorganized Debtors, or the
Disbursing Agent to attempt to locate any holder of an Allowed Claim or Allowed
Administrative Expense.

                  3.       VOTING OF UNDELIVERED NEW MPAN COMMON STOCK.

                  In connection with any election or other vote by the holders
of New MPAN Common Stock, any shares of New MPAN Common Stock that have not been
delivered pursuant to this Plan (including but not limited to any shares held in
the MPAN General Unsecured Claims Distribution Fund, the MPAN Subordinated Note
Claims Distribution Fund, or in any other reserve established by this Plan) and
that have not been cancelled on account of being undeliverable, shall be deemed
voted in the same proportion as those shares of New MPAN Common Stock that have
been distributed and voted with respect to the particular election or other
vote.

         E.       SETOFFS.

                  The Reorganized Debtors may, but shall not be required to, set
off against (i) any Claim, and (ii) the payments to be made pursuant to the Plan
in respect of such Claim, any claims or causes of action of any nature
whatsoever the Debtors or the Reorganized Debtors may have against the holder of
such Claim, but neither the failure to do so nor the allowance of any Claim
hereunder shall constitute a waiver or release by the Debtors or the Reorganized
Debtors of any such claim or cause of action they may have against such holder.

         F.       DE MINIMIS DISTRIBUTIONS AND FRACTIONAL SHARES.

                  No Cash payment of less than ten dollars ($10) shall be made
by the Reorganized Debtors or the Disbursing Agent to any holder of Claims
unless a request therefor is made in writing to the Reorganized Debtors or the
Disbursing Agent. No fractional shares of New MPAN Common Stock or New MPAN
Warrants shall be distributed; any entity that otherwise


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<PAGE>

would be entitled to receive a fractional share distribution under this Plan
shall instead receive an amount of shares rounded down to the next whole number.
Any Cash, securities, or other property that is not distributed as a consequence
of this Section shall, after the last distribution on account of Allowed Claims
in the applicable Class, be treated as an Undeliverable Distribution under
Section III.D.2 of this Plan.

         G.       RECORD DATE.

                  On the Confirmation Date, the transfer ledgers for the
Subordinated Notes and Old MPAN Common Stock shall be closed, and there shall be
no further changes in the holders of record of such securities. Unless written
notice of an assignment executed by both the assignor and assignee is provided
to the Disbursing Agent and, in the case of Subordinated Notes only, to the
respective indenture trustee, the Disbursing Agent and the respective indenture
trustee shall not recognize any transfer of Senior Credit Facility Claims,
Subordinated Notes, or Old MPAN Common Stock occurring after the Confirmation
Date, but shall instead be entitled to recognize and deal for all purposes with
only those holders of record as of the close of business on the Confirmation
Date.

                                       IV.

                PROVISIONS FOR TREATMENT OF DISPUTED, CONTINGENT,
                    OR UNLIQUIDATED CLAIMS, EQUITY INTERESTS,
                           AND ADMINISTRATIVE EXPENSES

         A.       RESERVE FOR CERTAIN DISPUTED CLAIMS AND DISPUTED
                  ADMINISTRATIVE EXPENSES.

                  Under no circumstances shall the Debtors or Reorganized
Debtors be required to establish or maintain any Cash reserves or other reserves
with respect to any Disputed Claim or Disputed Administrative Expense to the
extent that (i) the holder of such Claim or Administrative Expense would not be
entitled to a distribution under this Plan even if such Claim or Administrative
Expense were to become an Allowed Claim or Allowed Administrative Expense, as
the case may be, (ii) the holder of such Claim would be entitled to
distributions from the MPAN General Unsecured Claims Distribution Fund, the MPAN
Subordinated Note Claims Distribution Fund, or the MHG Unsecured Claims
Distribution Fund, as the case may be, if such Claim were to become an Allowed
Claim (except to the extent that the operation of the Pro Rata formula
automatically reserves consideration in the foregoing distribution funds for
Disputed Claims if such Claims eventually are allowed for purposes of receiving
distributions in accordance with the terms of this Plan), (iii) any insurance
coverage exists with respect to such Claim or Administrative Expense and may be
payable on account thereof, or (iv) any funds are already reserved in the
Effective Date Cash Reserve on account of such Claim or Administrative Expense.

                  In the event that the Bankruptcy Court, after notice and a
hearing, and then only for good cause shown, requires the establishment of a
reserve with respect to a particular Disputed Claim or Disputed Administrative
Expense other than of the type described in the foregoing paragraph (the
"Disputed Claims Reserve"), such Disputed Claims Reserve shall be held in trust
for the benefit of the holder of such Disputed Claim or Disputed Administrative


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<PAGE>

Expense, and the Reorganized Debtors, as their respective interests may appear,
pending determination of their respective entitlement thereto. Any amounts in
the Disputed Claims Reserve shall be distributed in accordance with the Plan by
the Disbursing Agent to the holder of any Disputed Claim or Disputed
Administrative Expense for which a reserve has been required by the Bankruptcy
Court to the extent that such Disputed Claim or Disputed Administrative Expense
becomes an Allowed Claim or an Allowed Administrative Expense pursuant to a
Final Order. To the extent that such a Disputed Claim or Disputed Administrative
Expense ultimately is disallowed or allowed in an amount less than the amount of
such Disputed Claim or Disputed Administrative Expense, any resulting surplus in
the Disputed Claims Reserve shall be transferred from the Disputed Claims
Reserve to the Reorganized Debtors by the Disbursing Agent.

         B.       RESOLUTION OF DISPUTED CLAIMS AND DISPUTED ADMINISTRATIVE
                  EXPENSES.

                  The Reorganized Debtors shall have the right to make and file
objections to Claims, to Equity Interests, and to Administrative Expenses, and
shall serve a copy of each objection upon the holder of the Claim, Equity
Interest, or Administrative Expense to which the objection is made.
Notwithstanding any prior order of the Bankruptcy Court or the provisions of
Bankruptcy Rule 9019, as of the Effective Date the Reorganized Debtors may
settle or compromise any Disputed Claim without approval of the Bankruptcy
Court, provided that such settlement or compromise is evidenced by a writing
signed by a duly authorized representative of the Reorganized Debtors.

         C.       DISTRIBUTIONS WITH RESPECT TO DISPUTED CLAIMS THAT BECOME
                  ALLOWED.

                  Notwithstanding any other provisions of this Plan, no payments
of Cash or other consideration of any kind shall be made on account of any
Disputed Claim until such Claim becomes an Allowed Claim or is deemed to be such
for purposes of distribution, and then only to the extent that the Claim
becomes, or is deemed to be for distribution purposes, an Allowed Claim. To the
extent a Disputed Claim becomes, or is deemed to be, an Allowed Claim after the
date a distribution has been made to the other holders of Allowed Claims in the
Class to which such Allowed Claim belongs, the first distribution shall be
tendered in respect of such Allowed Claim within ten (10) Business Days after
the date such Claim becomes an Allowed Claim, except to the extent that (i) this
Plan specifies a different period with respect to certain Claims (including, but
not limited to, with respect to Claims in Classes UP-1 and UM-1), or (ii) the
fair market value of Cash or other consideration to be distributed on account of
such Allowed Claim is less than $5,000, in which case the Debtors may coordinate
distributions to similarly situated holders of Claims that have become Allowed
Claims no less often than once every three (3) months. In the event that the
newly Allowed Claim is in Class UP-1, UP-2, UM-1, or UM-2, the first
distribution shall be equal to the Pro Rata share to which the holder of such
Allowed Claim in Class UP-1, UP-2, UM-1, or UM-2 would have been entitled if
such Claim had been allowed at the time of all previous distributions to other
holders of Allowed Claims in Class UP-1, UP-2, UM-1, or UM-2, as applicable. No
interest shall be paid to the holder of a Disputed Claim that becomes an Allowed
Claim on account of the delay in distribution caused by the resolution of such
Claim.


                                       69
<PAGE>

         D.       ESTIMATION OF DISPUTED CLAIMS.

                  As to any Disputed Claim, including Disputed Claims based upon
rejection of executory contracts or unexpired leases, the Bankruptcy Court, upon
motion by Debtors or Reorganized Debtors, shall estimate (the "Claims Estimation
Procedure") for purposes of distribution and maintaining reserves under this
Plan (a) the amount in which such Disputed Claim may become an Allowed Claim
were an objection to such Claim to be resolved by a Final Order (the "Estimated
Allowed Amount"), which shall be estimated as a single amount in whole dollars
(i.e. $500), or (b) the maximum amount in which such Claim may become an Allowed
Claim were an objection to such Claim to be resolved by a Final Order (the
"Estimated Maximum Amount"), which shall be estimated as any amount equal to or
less than an amount in whole dollars (i.e., any amount equal to or less than
$500). The purpose of the Claims Estimation Procedure is to enable the
Reorganized Debtors promptly to distribute amounts required to be distributed
under this Plan to the holders of Claims that are not Disputed Claims.

                  If the Bankruptcy Court estimates the Estimated Allowed Amount
of any Disputed Claim, such estimate will (i) result in the Claim being deemed
an Allowed Claim in the Estimated Allowed Amount (or disallowed if the Estimated
Allowed Amount is zero) for purposes of distribution and such other purposes as
the Bankruptcy Court may order, and (ii) be final for all such purposes,
regardless of the amount, if any, that could be allowed on account of such Claim
absent such Claims Estimation Procedure. Accordingly, the fact that such Claim
subsequently may become an Allowed Claim in an amount greater than the Estimated
Allowed Amount shall not entitle the holder of such Claim to any additional
distributions on account of such Claim under this Plan.

                  If the Bankruptcy Court estimates the Estimated Maximum Amount
of a Disputed Claim, then (i) such Claim shall continue to be treated as a
Disputed Claim for all purposes under this Plan until such time as any objection
to such Claim is resolved by a Final Order or agreement of the parties, (ii) no
distribution shall be made on account of such Claim unless and until it becomes
an Allowed Claim, (iii) for purposes of maintaining reserves and applying Pro
Rata distribution formulae under this Plan with respect to other Claims that are
Allowed Claims (including distributions to holders of Allowed Claims in Classes
UP-1, UP-2, UM-1, and UM-2), such Claim shall be treated as a Disputed Claim in
an amount equal to the Estimated Maximum Amount of such Claim, and (iv) in no
event shall such Claim become an Allowed Claim in an amount greater than the
Estimated Maximum Amount, regardless of the amount, if any, that could be
allowed on account of such Claim absent such Claims Estimation Procedure.

                                       V.

                           IMPLEMENTATION OF THE PLAN

         A.       TERMINATION OF MPAN DIP CREDIT AGREEMENT AND MHG DIP CREDIT
                  AGREEMENT.

                  On the Effective Date, the MPAN DIP Credit Agreement and the
MHG DIP Credit Agreement shall be deemed to have been terminated. All amounts,
if any, payable thereunder shall be paid in full on the Effective Date, and all
liens, mortgages, and security interests granted under the MPAN DIP Credit
Agreement or the MHG DIP Credit Agreement, or


                                       70
<PAGE>

in connection thereunder, shall be extinguished. All outstanding postpetition
fees and expenses required to be paid under the MPAN DIP Credit Agreement and
the MHG DIP Credit Agreement shall be paid by the Debtors on the Effective Date
(including professional fees and expenses and $875,000 of a success fee payable
to Houlihan Lokey Howard & Zukin ("HLHZ"), provided, however, that $625,000 of a
success fee payable to HLHZ and transaction fees and confirmation bonuses
payable to Capella Senior Living, LLC (both of which are advisors to the MHG
Senior Credit Facility Agent) shall be paid by the MHG Senior Credit Facility
Agent from Cash otherwise distributable to the holders of MHG Senior Credit
Facility Claims under this Plan or from adequate protection payments made to the
MHG Senior Credit Facility Claim Holders prior to the Effective Date.

                  With respect to each letter of credit issued under the MPAN
DIP Credit Agreement or the MHG DIP Credit Agreement that is still outstanding
as of the Effective Date, the Reorganized Debtors on the Effective Date shall
either (i) cause such outstanding letter of credit to be surrendered to the
issuer of such letter of credit for cancellation, (ii) to the extent the Debtors
have not otherwise already done so, collateralize such outstanding letter of
credit with Cash in an amount equal to 105% of the then undrawn stated amount of
such letter of credit deposited in accordance with instructions from the issuer
of such outstanding letter of credit, or (iii) to the extent the Debtors have
not otherwise already done so, provide the issuer of such outstanding letter of
credit with a "back-to-back" letter of credit in an amount equal to 105% of the
then undrawn stated amount of such outstanding letter of credit; any
"back-to-back" letter of credit provided hereunder shall be issued by a bank and
be in a form that is reasonably satisfactory to the issuer of the outstanding
letter of credit.

         B.       POST-EFFECTIVE DATE FINANCING.

                  1.       FINANCING GENERALLY AND TOTAL FUNDED DEBT.

                  The Cash required to fund distributions under this Plan and
the Reorganized Debtors' continuing working capital needs shall come from (1) an
Exit Facility, (2) the Debtors' cash on hand as of the Effective Date (other
than cash held by the PHCMI Debtors), and (3) the Investor Notes, if issued. In
addition, the Plan provides for the restructuring of certain obligations of the
Debtors existing as of the Effective Date, including through the issuance of the
New Project Lender Notes, the assumption of certain capital leases, and, if
determined necessary by the Debtors with the consent of the Required Senior
Credit Facility Claim Holders, the issuance of Lender Notes.

                  Notwithstanding any other provision of this Plan to the
contrary, (i) the aggregate principal amount of the Exit Term Loans, Investor
Notes, and Lender Notes to be issued on the Effective Date will be $350 million,
provided that such amount will be increased dollar-for-dollar to the extent that
the Debtors, with the consent of the Required Senior Credit Facility Claim
Holders, elect, or have elected, to pay Cash instead of issuing Project Lender
Notes to the holders of Claims in Classes SP-3, SM-2, SM-3, SM-5, SM-7, SM-10,
SM-11 or SM-12, with (a) the amount of Exit Term Loans increasing to the extent
such Cash payments are funded from additional Exit Term Loans, and (b) the
amount of Senior Lender Notes increasing to the extent such Cash Payments are
funded from what otherwise would be Available Cash, and (ii) the Total Funded
Debt of the Reorganized Debtors on the Effective Date shall not exceed $450
million.


                                       71
<PAGE>

                  2.       THE EXIT FACILITY.

                  The Exit Facility shall consist of (i) a revolving credit
commitment in an amount between $50 million and $100 million, and (ii) subject
to the issuance of Senior Lender Notes as provided in Section V.B.3 below, term
loan commitments (the "Exit Term Loans") in the projected aggregate principal
amount of $200 million, subject to increase to the extent that the proceeds of
the Exit Term Loans are used to pay Cash instead of issuing New Project Lender
Notes to the holders of Claims as set forth in V.B.1 above, and which may be
divided into multiple tranches.

                  The terms of the Exit Facility shall be governed by an
agreement that shall include, inter alia: (a) interest at a market rate, as
determined and adjusted in the usual and customary manner for financings of this
type; (b) with respect to some or all of the Exit Term Loans, mandatory
quarterly principal amortization payments, taking into account the Reorganized
Debtors' projected cash flow and cash requirements; and (c) covenants mandating
and restricting certain performance by the Reorganized Debtors, usual and
customary for financings of this type. The Exit Facility shall be: (i)
guaranteed by all of the Reorganized Debtors except Reorganized MPAN (which will
be the borrower and primary obligor) and the PHCMI Debtors; and (ii) secured by
(x) a pledge of the stock of all of the Reorganized Debtors except Reorganized
MPAN and the PHCMI Debtors, and (y) liens, mortgages, pledges, collateral
assignments, and security interests (the "Exit Facility Liens") on all of the
assets of the Reorganized Debtors (except the PHCMI Debtors), except to the
extent prohibited with respect to specific assets of the Reorganized Debtors by
the terms of any agreement that is assumed by the Debtors or that is unimpaired
under this Plan. The Exit Facility Liens shall be senior to any and all other
liens and other security interests (including any securing the Junior Lender
Notes), provided, however, that the Exit Facility Liens shall be pari passu with
the liens and security interests securing any Senior Lender Notes distributed,
and junior to (a) liens and other security interests existing as of the
Effective Date that are senior to the liens held by the holders of Senior Credit
Facility Claims, until such liens and other security interests are fully
satisfied, (b) the New Project Lender Notes, and (c) certain liens and other
secured interests arising after the Effective Date (including certain purchase
money security interests) as permitted by the agreements governing the Exit
Facility.

                  3.       SENIOR LENDER NOTES.

                  In the event that the Debtors are not able to obtain the Exit
Term Loans on commercially acceptable terms, or otherwise determine not to
obtain the Exit Term Loans (with the consent of the Required Senior Credit
Facility Claim Holders), or if the principal amount of the Exit Term Loans
obtained is less than anticipated in the immediately preceding Section, then,
with the consent of the Required Senior Credit Facility Claim Holders, the
Debtors shall issue Senior Lender Notes to the holders of Class SP-1 Claims and
Class SM-1 Claims as provided in the treatment for those Classes, provided,
however, that in no event shall the Total Funded Debt exceed $450 million.

                  The Senior Lender Notes shall (i) be an obligation of
Reorganized MPAN pari passu with the obligations under the Exit Facility; (ii)
be guaranteed by all of the Reorganized Debtors other than Reorganized MPAN and
the PHCMI Debtors; (iii) be secured by liens on all


                                       72
<PAGE>

assets that secure the Exit Facility, pari passu with such liens; (iv) bear
interest at LIBOR plus 3.5%; (v) mature no later than six (6) years after
issuance; (vi) contain covenants that shall be no more restrictive than the
covenants contained in the Exit Facility; (vii) amortize according to a schedule
to be agreed upon by the Debtors and the Required Senior Credit Facility Claim
Holders; and (viii) at the election of Reorganized MPAN, be redeemable in whole
or in part by Reorganized MPAN at any time at 100% of the face amount of the
Senior Lender Notes redeemed (without penalty of any kind), plus unpaid accrued
interest as of the date of redemption.

                  To the extent that the Senior Lender Notes are to be issued
under an indenture trust, (i) Reorganized MPAN shall cause the indenture under
which the Senior Lender Notes are to be issued to be qualified under the Trust
Indenture Act of 1939, as amended, (ii) upon the written demand of a holder of
10% or more in principal amount of the Senior Lender Notes, Reorganized MPAN
shall provide demand registration rights for the Senior Lender Notes to such
holder(s) pursuant to the terms and conditions of a registration rights
agreement; and (iii) upon the written demand of a holder or holders of 25% or
more in principal amount of the Senior Lender Notes, Reorganized MPAN shall use
its best efforts to effect a shelf registration for the Senior Lender Notes
within ninety (90) days (and in no event later than 180 days) following the
receipt of such demand.

                  4.       INVESTOR NOTES.

                  The Debtors anticipate that, in addition to the Exit Facility
and any Senior Lender Notes, they will issue on the Effective Date Investor
Notes in the approximate principal face amount of $150 million, which Investor
Notes would be issued at par to third party investors in a public offering or
private placement.

                  The Investor Notes shall (i) be obligations of Reorganized
MPAN; (ii) be guaranteed by all of the Reorganized Debtors other than
Reorganized MPAN and the PHCMI Debtors; (iii) be either general unsecured
obligations or senior subordinated unsecured obligations; (iv) bear interest at
a fixed market rate; (v) mature no earlier than seven (7) years after issuance;
and (vi) contain normal and customary covenants for indebtedness of this nature.

                  To the extent that the Investor Notes are to be issued under
an indenture trust, (i) Reorganized MPAN shall cause the indenture under which
the Investor Notes are to be issued to be qualified under the Trust Indenture
Act of 1939, as amended, (ii) upon the written demand of a holder of 10% or more
in principal amount of the Investor Notes, Reorganized MPAN shall provide demand
registration rights for the Investor Notes to such holder(s) pursuant to the
terms and conditions of a registration rights agreement; and (iii) upon the
written demand of a holder or holders of 25% or more in principal amount of the
Investor Notes, Reorganized MPAN shall use its best efforts to effect a shelf
registration for the Investor Notes within ninety (90) days (and in no event
later than 180 days) following the receipt of such demand.

                  5.       JUNIOR LENDER NOTES.

                  In the event that the Debtors are not able to issue the
Investor Notes on commercially acceptable terms, or otherwise determine not to
issue the Investor Notes (with the consent of the Required Senior Credit
Facility Claim Holders), or if the principal amount of


                                       73
<PAGE>

Investor Notes issued is less than anticipated in the foregoing Section, then,
with the consent of the Required Senior Credit Facility Claim Holders, the
Debtors shall issue Junior Lender Notes to the holders of Class SP-1 Claims and
Class SM-1 Claims as provided in the treatment for those Classes, provided,
however, that in no event shall the Total Funded Debt exceed $450 million.

                  The Junior Lender Notes shall (i) be an obligation of
Reorganized MPAN; (ii) be guaranteed by all of the Reorganized Debtors other
than Reorganized MPAN and the PHCMI Debtors; (iii) be secured by liens on all
assets that secure the Exit Facility and the Senior Lender Notes, immediately
junior to such liens; (iv) bear interest at LIBOR plus 5.5%; (v) mature no later
than seven (7) years after issuance; (vi) contain covenants that shall be no
more restrictive than the covenants contained in the Exit Facility, and (vii) at
the election of Reorganized MPAN, be redeemable in whole or in part by
Reorganized MPAN at any time at 100% of the face amount of the Junior Lender
Notes redeemed (without penalty of any kind), plus unpaid accrued interest as of
the date of redemption.

                  Reorganized MPAN shall cause the indenture under which the
Junior Lender Notes are to be issued to be qualified under the Trust Indenture
Act of 1939, as amended. In addition to the foregoing, (x) upon the written
demand of a holder of 10% or more in principal amount of the Junior Lender
Notes, Reorganized MPAN shall provide demand registration rights for the Junior
Lender Notes to such holder(s) pursuant to the terms and conditions of a
registration rights agreement; and (y) upon the written demand of a holder or
holders of 25% or more in principal amount of the Junior Lender Notes,
Reorganized MPAN shall use its best efforts to effect a shelf registration for
the Junior Lender Notes within ninety (90) days (and in no event later than 180
days) following the receipt of such demand.

         C.       LIMITED SUBSTANTIVE CONSOLIDATION.

                  1.       SUBSTANTIVE CONSOLIDATION FOR PURPOSES OF CLAIM
                           ALLOWANCE AND PLAN DISTRIBUTIONS.

                  On the Effective Date, (1) each MPAN Debtor shall be
substantively consolidated with each other MPAN Debtor, and (2) each MHG Debtor
shall be substantively consolidated with each other MHG Debtor, for purposes of
allowance of Claims and distributions under the Plan as follows: (i) any of the
assets and liabilities of each MPAN Debtor shall be deemed to be the assets and
liabilities of all of the MPAN Debtors; (ii) any of the assets and liabilities
of each MHG Debtor shall be deemed to be the assets and liabilities of all of
the MHG Debtors; (iii) all guarantees by any MPAN Debtor of the obligations of
any other MPAN Debtor, and all guarantees by any MHG Debtor of the obligations
of any other MHG Debtor, arising prior to the Petition Date (regardless whether
such guarantee is secured, unsecured, liquidated, unliquidated, contingent, or
disputed) shall be deemed liquidated so that any Claim against any MPAN Debtor
and any guarantee thereof executed by any other MPAN Debtor, and any Claim
against any MHG Debtor and any guarantee thereof executed by any other MHG
Debtor, shall be deemed to be a single obligation of the consolidated MPAN
Debtors or the consolidated MHG Debtors, as applicable; (iv) any joint liability
(including, but not limited to joint and several liability) of any of the MPAN
Debtors with one another or of any of the MHG Debtors with one another shall be
deemed to be a single obligation of the consolidated MPAN Debtors or the
consolidated MHG Debtors, as applicable; and (v) each and every proof of claim
filed or to be filed in the MPAN


                                       74
<PAGE>

Chapter 11 Cases, and each and every proof of claim filed or to be filed in the
MHG Chapter 11 Cases, shall be deemed filed against the consolidated MPAN
Debtors or against the consolidated MHG Debtors, as applicable, and shall be
deemed a single Claim against and obligation of the consolidated MPAN Debtors or
the consolidated MHG Debtors, as applicable. In accordance with the foregoing,
(1) the assets and liabilities of any MPAN Debtor shall not be consolidated with
the assets and liabilities of any MHG Debtor, and (2) the assets and liabilities
of any MHG Debtor shall not be consolidated with the assets and liabilities of
any MPAN Debtor.

                  In addition, each of the Debtors and Reorganized Debtors shall
be vested with equal authority (a) to be heard with respect to the allowance or
disallowance of Claims and requests for payment of Administrative Expenses,
including but not limited to filing, prosecuting, and settling objections
thereto, (b) to utilize the Claims Estimation Procedure, (c) to commence,
prosecute, recover on account of, and settle Avoiding Power Causes of Action,
and (d) to enforce the terms of this Plan and the Confirmation Order, including
but not limited to the Debtors' discharge, on behalf of each of the other
Debtors and Reorganized Debtors and their estates. Notwithstanding the
foregoing, substantive consolidation shall not affect: (i) the Debtors
Intercompany Claims and Equity Interests in the Debtor Affiliates, which shall
be treated as provided in this Plan, (ii) the legal and organizational structure
of the Debtors, which shall be restructured pursuant to the Corporate
Restructuring Program as described in Section V.C.2 of this Plan, (iii) the
Debtors' ability to pursue Avoiding Power Causes of Action and other claims or
causes of action, or (iv) any pre- or post-Petition Date guarantees, liens, or
security interests that are required to be maintained in connection with
executory contracts and unexpired leases entered into during the Chapter 11
Cases or that have been or will be assumed in the Chapter 11 Cases, or that are
required by the Investor Notes, Lender Notes, or the Exit Facility.

                  2.       CORPORATE RESTRUCTURING PROGRAM AND CONTINUED
                           CORPORATE EXISTENCE OF REORGANIZED DEBTORS.

                  Upon the Effective Date, the Debtors shall implement the
Corporate Restructuring Program that is set forth in the Plan Documentary
Supplement, and made a part of this Plan. Pursuant to the Corporate
Restructuring Program, certain of the Debtor Affiliates either shall (i) be
merged into other Debtors or newly-created affiliates of the Debtors, (ii) be
acquired by other surviving Debtors or newly-created affiliates of the Debtors,
(iii) transfer some or all of their assets to other Debtors or newly created
affiliates of the Debtors, or (iv) be dissolved, with any assets of such
dissolved Debtor transferred to one or more of the other Debtors or
newly-created affiliates of the Debtors.

                  Except as provided for in the Corporate Restructuring Plan,
each of the Debtors shall, as a Reorganized Debtor, continue to exist after the
Effective Date as a separate legal entity, with all powers of a corporation,
limited liability company, joint venture, or partnership, as applicable, under
the laws of their respective states of incorporation, formation, or
organization, and without prejudice to any right to alter or terminate such
existence (whether by merger, acquisition, or otherwise) under such applicable
State law.

                  The Debtors and Reorganized Debtors are authorized to take
whatever corporate, joint venture, partnership, or limited liability company
action is necessary or advisable in order to accomplish the Corporate
Restructuring Program, including but not limited to transferring


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certificates of need, operating licenses, and other licenses and permits to the
extent allowed by applicable nonbankruptcy law.

         D.       ISSUANCE OF NEW SECURITIES AND REGISTRATION RIGHTS.

                  On the Effective Date, (i) Reorganized MPAN shall be deemed
empowered to issue and shall issue the New MPAN Common Stock, the New MPAN
Warrants (subject to certain anti-dilution provisions provided in the New
Warrant Agreement, as summarized under the definition of "New MPAN Warrants" in
Section I.A), the Investor Notes, and the Lender Notes, and (ii) the other
Reorganized Debtors and entities to be created pursuant to the Corporate
Restructuring Program shall be deemed empowered to issue and shall issue the New
Affiliates Equity. Any securities issued pursuant to this Plan shall be exempt
from laws requiring registration for the offer or sale of such securities or
registration or licensing of an issuer of, underwriter of, or broker or dealer
in, such securities to the fullest extent as provided by section 1145 of the
Bankruptcy Code, including the New MPAN Common Stock, the New MPAN Warrants, and
the Lender Notes.

                  Reorganized MPAN shall: (i) provide demand registration rights
for the New MPAN Common Stock to any holders on the Effective Date of ten
percent (10%) or more of the New MPAN Common Stock and any permitted transferees
of such holders, pursuant to the terms and conditions of a registration rights
agreement, (ii) use its best efforts to effect a shelf registration for the New
MPAN Common Stock within 90 (but in no event more than 180) days following the
Effective Date, and keep that shelf registration effective for two years
following the date upon which the shelf registration statement was declared
effective, pursuant to the terms and conditions of such registration rights
agreement, and (iii) use its best efforts to cause the New MPAN Common Stock to
be listed on a national securities exchange.

         E.       CANCELLATION OF EXISTING SECURITIES AND REJECTION OF RELATED
                  AGREEMENTS.

                  On the Effective Date, (i) the Subordinated Notes, the Old
MPAN Common Stock, the Old MHG Common Stock, and the Old Affiliates Equity (but
only to the extent provided in the treatment of Class EJ-1) shall each be deemed
cancelled, and (ii) the obligations of the Debtors under the indentures
governing the Subordinated Notes and any agreements relating to the purchase or
sale of Equity Interests in any of the Debtors shall be rejected, provided,
however, that the cancellation of the indentures (a) shall not affect the
treatment provided to the holders of Subordinated Notes under this Plan, and (b)
shall not affect the rights of the respective indenture trustees under this
Plan, including the treatment of their liens and priority rights under the
respective indentures. Moreover, all options, option agreements, and warrants to
purchase or sell the Old MPAN Common Stock or any of the other foregoing
securities shall be deemed rejected, cancelled, and terminated as of the
Petition Date.

         F.       SURRENDER OF EXISTING SECURITIES.

                  Each holder of Subordinated Notes shall surrender such notes
to the Disbursing Agent in exchange for the right to receive any distribution
under this Plan. No distributions under this Plan shall be made to or on behalf
of any holder of Subordinated Notes unless and until such notes are received by
the Disbursing Agent or the unavailability of such notes is reasonably
established to the satisfaction of the Disbursing Agent. Any such holder that
fails to


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surrender such notes or to execute and deliver an affidavit of loss and
indemnity reasonably satisfactory to the Disbursing Agent and, if so requested
by the Disbursing Agent, fails to furnish a bond in form and substance
(including, without limitation, with respect to amount) reasonably satisfactory
to the Disbursing Agent, within five years after the Confirmation Date shall be
deemed to have forfeited all rights, Claims, and interests and shall not
participate in any distribution under this Plan with respect to such
Subordinated Notes, and all property in respect of such forfeited distribution
shall be treated as an Undeliverable Distribution under Section III.D.2 of this
Plan.

         G.       ELIMINATION OF SUBORDINATION RIGHTS.

                  The subordination rights of the MPAN Senior Credit Facility
Claim Holders under the MPAN Indenture shall be modified with respect to
Consenting Class UP-2 Holders as provided in the treatment of Class UP-2 under
this Plan. Any and all contractual subordination provisions in the MPAN
Indenture shall remain in effect and shall be enforced under this Plan with
respect to any MPAN Subordinated Note Claim held by an entity that is not a
Consenting Class UP-2 Holder; provided, however, that pursuant to section 1315
of the MPAN Indenture, the subordination provisions in the MPAN Indenture do not
apply to, inter alia, claims of, or payments to, the indenture trustee under or
pursuant to section 607 of the MPAN Indenture.

                  The subordination rights of the MHG Senior Credit Facility
Claim Holders under the MHG Indenture shall be modified with respect to
Consenting Class UM-2 Holders as provided in the treatment of Class UM-2 under
this Plan. Any and all contractual subordination provisions in the MHG Indenture
shall remain in effect and shall be enforced under this Plan with respect to any
MHG Subordinated Note Claim held by an entity that is not a Consenting Class
UM-2 Holder; provided, however, that pursuant to section 1311 of the MHG
Indenture, the subordination provisions in the MHG Indenture do not apply to,
inter alia, claims of, or payments to, the indenture trustee under or pursuant
to section 607 of the MHG Indenture.

         H.       AMENDED AND RESTATED CERTIFICATES OF INCORPORATION AND BYLAWS.

                  As of the Effective Date, the certificates or articles of
incorporation (or document of similar effect with respect to any Reorganized
Debtor that is not a corporation) of each of the Reorganized Debtors shall be
the Amended and Restated Certificates of Incorporation substantially in the form
of the exemplary documents included in the Plan Documentary Supplement. The
Amended and Restated Certificates of Incorporation will, among other provisions,
prohibit the issuance of non-voting equity securities to the extent required by
section 1123(a)(6) of the Bankruptcy Code. As of the Effective Date, the bylaws
of each of the Reorganized Debtors that are corporations shall be the Amended
and Restated Bylaws substantially in the form of the exemplary documents
included in the Plan Documentary Supplement. The Amended and Restated
Certificates of Incorporation and Amended and Restated Bylaws shall be deemed
effective as of the Effective Date by virtue of the Confirmation Order without
the need for any corporate, partnership, limited liability company, joint
venture, director, stockholder, partner, member, or venturer action.


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<PAGE>

         I.       MANAGEMENT OF THE REORGANIZED DEBTORS.

                  On the Effective Date, the operation of the Reorganized
Debtors shall become the general responsibility of the Reorganized Debtors'
newly-constituted Boards of Directors (the "New Boards"), which shall thereafter
have the responsibility for the management and control of the Reorganized
Debtors. As of the Effective Date, the New Boards shall consist of the
individuals to be designated as set forth in the Plan Documentary Supplement,
which individuals shall include with respect to the New Board of Reorganized
MPAN: (i) the Chief Executive Officer of Reorganized MPAN, and (ii) six
directors designated by the Required Senior Credit Facility Claim Holders. The
initial senior officers of each of the Reorganized Debtors as of the Effective
Date shall consist of the individuals whose names are set forth in the Plan
Documentary Supplement. All such directors and senior officers shall be deemed
appointed pursuant to the Confirmation Order without the need for any corporate
action. As of the Effective Date, those directors and senior officers not
continuing in office shall be deemed removed therefrom pursuant to the
Confirmation Order without the need for any corporate action.

                  The portion of the Plan Documentary Supplement relating to the
designation of the New Board and of the initial senior officers of the
Reorganized Debtors, and the compensation thereof, shall be filed with the
Bankruptcy Court no less than ten (10) days prior to the commencement of the
Confirmation Hearing. Holders of Claims entitled to vote on the Plan shall be
entitled to change their votes to accept or reject the Plan based upon such
designation by notifying counsel for the Debtors in writing so that such notice
is received no later than 5:00 p.m., Eastern Time, three (3) Business Days prior
to the commencement of the Confirmation Hearing.

         J.       NEW INCENTIVE EQUITY PLAN.

                  Upon the Effective Date, Reorganized MPAN shall adopt the NIEP
in a form substantially similar to that as set forth in the Plan Documentary
Supplement. Shares representing 9.0% percent of the fully-diluted New MPAN
Common Stock will be reserved for issuance upon exercise of options granted
under the NIEP (the "NIEP Shares"). It is expected that up to approximately 100
employees of Reorganized MPAN will be eligible to participate in the NIEP.

                  The NIEP will be a broad-based, flexible stock incentive plan
that will be administered by the Compensation Committee of the Board of
Directors of Reorganized MPAN. The nature of an award and the number of shares
subject to an award will be determined by the Compensation Committee of
Reorganized MPAN after receiving a recommendation from the Chief Executive
Officer of Reorganized MPAN. Options to purchase approximately 88.0% of the NIEP
Shares will be awarded to employees of Reorganized MPAN promptly, but in any
event within 90 days, after the Effective Date (the "Effective Date Options").
The Effective Date Options will be exercisable at the per share valuation
established in connection with the Plan. The exercise price for all other
options awarded under the NIEP shall be the fair market value as of the date of
the grant thereof, provided that grants of options (including any options issued
pursuant to employment agreements) made within 90 days of the Effective Date
will be deemed to have been granted on the Effective Date and consequently, will
be exercisable at the per share


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<PAGE>

valuation established in connection with the Plan. All shares awarded pursuant
to any employment agreements will be issued under the NIEP and will count
against the total number of NIEP Shares available for issuance under the NIEP.

         K.       EMPLOYMENT AGREEMENTS.

                  It is expected that approximately 25 key senior management
employees will receive employment agreements in connection with their employment
by Reorganized MPAN or one of its wholly-owned subsidiaries. The terms of each
employment agreement, including the salary and target bonus level to be offered
to each employee, will be determined based upon negotiations with individual
employees. The employment agreements will provide for usual and customary
severance benefits, including benefit continuance, depending on an employee's
position within Reorganized MPAN. The various forms of employment agreements to
be entered into between such key senior management personnel and Reorganized
MPAN will be included or summarized in the Plan Documentary Supplement. The
employment agreements either (i) will be entered into prior to the Effective
Date and deemed assumed upon the Effective Date, or (ii) will become effective
upon the Effective Date.

         L.       RELEASE OF SENIOR CREDIT FACILITY CLAIM HOLDERS, AGENTS, AND
                  REPRESENTATIVES.

                  As of the Effective Date each of the following shall occur:

                  1.       The Debtors and any entity claiming by or through the
Debtors shall be deemed to have released all claims or causes of action (other
than with respect to depositary relationships and other claims unrelated to the
MPAN Senior Credit Facility Claims), whether such claims or causes of action are
known or unknown, matured or unmatured, contingent or noncontingent, or
liquidated or unliquidated, of any nature whatsoever against the MPAN Senior
Credit Facility Agent, the MPAN Senior Credit Facility Claim Holders, and the
advisors of the MPAN Senior Credit Facility Agent in the Chapter 11 Cases
arising on account of or in relation to (i) the MPAN Senior Credit Facility
Claims, or (ii) the actions or omissions of the MPAN Senior Credit Facility
Agent and its advisors relating to their service as representatives of the MPAN
Senior Credit Facility Claim Holders during the Chapter 11 Cases.

                  2.       The Debtors and any entity claiming by or through the
Debtors shall be deemed to have released all claims or causes of action (other
than with respect to depositary relationships and other claims unrelated to the
MHG Senior Credit Facility Claims), whether such claims or causes of action are
known or unknown, matured or unmatured, contingent or noncontingent, or
liquidated or unliquidated, of any nature whatsoever against the MHG Senior
Credit Facility Agent, the MHG Senior Credit Facility Claim Holders, and the
advisors of the MHG Senior Credit Facility Agent in the in the Chapter 11 Cases
arising on account of or in relation to (i) the MHG Senior Credit Facility
Claims, or (ii) the actions or omissions of the MHG Senior Credit Facility Agent
and its advisors relating to their service as representatives of the MHG Senior
Credit Facility Claim Holders during the Chapter 11 Cases (provided, however,
that the Debtors shall not release Capella Senior Living, LLC or any of its
principals for any acts or omissions occurring prior to the Petition Date).


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<PAGE>

                  3.       The officers, directors, and employees of the Debtors
who are serving in such capacities as of the Confirmation Date, shall be
released by the Debtors and any entity claiming by or through the Debtors from
any and all claims and other causes of action arising after the Petition Date
against them, whether such claims or causes of action are known or unknown,
matured or unmatured, contingent or noncontingent, or liquidated or
unliquidated, arising on account of or in relation to any acts or omissions in
their capacities as representatives of the Debtors, except (i) for willful
misconduct or gross negligence, or (ii) as otherwise expressly provided in the
Plan or the Confirmation Order.

         M.       CORPORATE ACTION.

                  On the Effective Date, the issuance of securities as provided
in the Plan, the adoption of the Amended and Restated Certificates of
Incorporation and Amended and Restated Bylaws pursuant to the Plan, the
appointment of the New Boards and initial senior officers of the Reorganized
Debtors as specified in the Plan, and all other corporate, partnership, joint
venture, and limited liability company actions called for by the Plan shall be
deemed authorized and approved by virtue of entry of the Confirmation Order, in
accordance with the Bankruptcy Code and applicable State law (including but not
limited to section 303 of the Delaware General Corporations Law, to the extent
applicable, and any analogous provision of the business corporation law or code
of each other State in which any Reorganized Debtor is incorporated or
organized) and without any requirement of further action by the stockholders,
directors, or members of the Debtors or the Reorganized Debtors.

         N.       REVESTING OF ASSETS.

                  Except as otherwise provided in the Plan, on the Effective
Date the property of the estates of the Debtors shall revest in the Reorganized
Debtors, including but not limited to Avoiding Power Causes of Action and any
other claims or rights of action (whether known or unknown, and whether or not
identified in the Schedules or Disclosure Statement) that any of the Debtors or
Reorganized Debtors have asserted or may assert against any other entity. The
Reorganized Debtors may operate their businesses and may use, acquire, and
dispose of property without supervision by the Bankruptcy Court or the United
States Trustee and free of any restrictions of the Bankruptcy Code or the
Bankruptcy Rules. As of the Effective Date, all property of the Reorganized
Debtors shall be free and clear of all Claims, liens, encumbrances, and other
interests of creditors and holders of Equity Interests, except as otherwise
provided herein.

         O.       IMPLEMENTATION OF BANKRUPTCY CODE SECTION 1146(C).

                  Any transfers or other transactions that occur pursuant to or
in connection with this Plan, the Confirmation Order, or the Corporate
Restructuring Program may not be taxed under any federal, State, or local law
imposing a stamp tax, real estate transfer tax, recording tax, or similar tax,
including but not limited to: (i) the issuance, transfer, or exchange of any
security (including but not limited to the New MPAN Common Stock, the New MPAN
Warrants, the New Affiliates Equity, the Investor Notes, the Lender Notes, the
New Project Lender Notes, or any notes issued in connection with the Exit
Facility); (ii) the creation, modification, filing, or recording of any
mortgage, deed of trust, deed to secure debt, collateral pledge, collateral
assignment, UCC financing statement, or other security interest or lien; (iii)
the making or


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<PAGE>

assignment of any contract, lease, or sublease; or (iv) the making or delivery
of any deeds, bills of sale, or assignments.

         P.       CLOSING OF CASES.

                  Each Reorganized Debtor may close its respective Chapter 11
Case at any time after the Effective Date, provided that the Chapter 11 Case of
at least one Reorganized Debtor remains open until the Debtors' estates are
fully administered in accordance with Bankruptcy Code section 350 and Bankruptcy
Rule 3022. Upon the closing of the Chapter 11 Case of a Reorganized Debtor, all
rights vested in such Reorganized Debtor under this Plan (including but not
limited to the rights to object to or otherwise be heard with respect to Claims
and requests for payment of Administrative Expenses, to utilize the Claims
Estimation Procedure, to commence, prosecute, recover on account of, or settle
Avoiding Power Causes of Action, and to enforce the terms of this Plan and the
Confirmation Order, including but not limited to the Debtors' discharge), shall
vest in each Reorganized Debtor that has not closed its Chapter 11 Case.

                                       VI.

                    EXECUTORY CONTRACTS AND UNEXPIRED LEASES

         A.       ASSUMPTION OR ASSUMPTION AND ASSIGNMENT.

                  1.       ASSUMPTION AND ASSUMPTION AND ASSIGNMENT GENERALLY.

                  Effective upon the Effective Date, the Debtors in Possession
hereby either (i) assume those executory contracts and unexpired leases that are
listed in Exhibit 3 to the Plan, or (ii) assume and assign such executory
contracts or unexpired leases to another affiliated entity, as indicated on
Exhibit 3, pursuant to the implementation of the Corporate Restructuring
Program. Such assumption, or assumption and assignment, shall be only to the
extent that the listed items constitute executory contracts and unexpired leases
within the meaning of section 365 of the Bankruptcy Code. Inclusion of a matter
in Exhibit 3 does not constitute an admission by the Debtors or Debtors in
Possession that (i) such matter is an executory contract or unexpired lease
within the meaning of section 365 of the Bankruptcy Code, (ii) that the Debtors
must assume such matter in order to continue to receive or retain rights,
benefits, or performance thereunder or that any Claim under such matter must be
paid or default cured if it is not an executory contract or unexpired lease, or
(iii) an executory contract or unexpired lease exists or is valid. Any contract
or lease assumed, or assumed and assigned, pursuant to this Plan shall be
assumed, or assumed and assigned, as previously amended or otherwise modified by
the parties thereto, whether before or after the Petition Date. The Debtors
reserve the right to amend the list of contracts and leases to be assumed, or
assumed and assigned, through the conclusion of the Confirmation Hearing.

                  Exhibit 3 to the Plan specifies the amount ("Cure Payment"),
if any, that the Debtors acknowledge must be tendered in order to provide cure
and compensation in accordance with sections 365(b)(1)(A) & (B) of the
Bankruptcy Code. In the event that any party to a contract or lease listed on
Exhibit 3 contends that the Cure Payment amount is incorrect, such party must
file with the Bankruptcy Court and serve upon counsel for the Debtors, the
Committees, and the MPAN Senior Credit Facility Agent a written statement and an


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<PAGE>

accompanying affidavit in support thereof specifying the amounts allegedly owing
under sections 365(b)(1)(A) & (B) of the Bankruptcy Code no later than the
deadline established by the Bankruptcy Court in its order scheduling the
Confirmation Hearing. Failure timely to file and serve such statement shall
result in the determination that the Reorganized Debtors' tender of the Cure
Payment, as specified in Exhibit 3, shall provide cure and compensation for any
and all defaults and unpaid obligations under such assumed or assumed and
assigned executory contract or unexpired lease, and that no other amounts are
owing thereunder as of the Confirmation Date. The Debtors reserve the right to
respond to and challenge any objection filed by any party to an executory
contract or unexpired lease under this Section and/or to reject any executory
contract or unexpired lease or assume or assume and assign such contract or
unexpired lease by complying with section 365(b) of the Bankruptcy Code, if the
other party to any executory contract or unexpired lease establishes that the
Cure Payment is greater than the amount specified in Exhibit 3. To the extent
the Debtors disagree with any objection filed by any party to an executory
contract or unexpired lease under this paragraph, the Debtors will request that
the Bankruptcy Court declare that the Cure Payment is as stated by the Debtors,
and any disputes shall be resolved by a Final Order, which Final Order may be
entered after the Effective Date.

                  Entry of the Confirmation Order shall constitute approval of
the assumptions and assumptions and assignments under the Plan pursuant to
sections 365(a) and 363 of the Bankruptcy Code, effective as of the Effective
Date. All Cure Payments that may be required by section 365(b)(1) of the
Bankruptcy Code shall be made on the later of (i) thirty (30) days after the
Effective Date, or as soon thereafter as is practicable, (ii) resolution by a
Final Order of any dispute with respect to such Cure Payment, or (iii) at such
time as may otherwise be agreed by the parties to any particular contracts or
leases.

                  The assumption or assumption and assignment, as applicable, of
any executory contract or unexpired lease under the Plan shall be authorized
notwithstanding the existence of any cross-default provision or other provision
in such contract or lease that conditions the rights of the Debtors or the
obligations of the non-debtor parties on (i) the insolvency or financial
condition of any of the Debtors or any of their affiliates, or (ii) performance
under any other contract or agreement. Any breach, default, or failure to
perform under any contract or agreement that is not assumed, or assumed and
assigned, by the Debtors shall in no way constitute grounds to terminate the
Debtors', Reorganized Debtors', or any of their assignees' rights under any
contract or lease that is assumed, or assumed and assigned, under this Plan, or
excuse non-performance by the other party to such contract or lease, or
otherwise affect, modify, or reduce the rights of the Debtors, Reorganized
Debtors, or their assignees under such assumed, or assumed and assigned,
contract or lease.

                  Notwithstanding any other provision of this Plan to the
contrary, (i) the Debtors' Medicare provider agreements with the United States
shall be treated as provided in the Federal Government Settlement, and (ii)
other than with respect to those contracts and leases relating to the APS
pharmacy business as provided below, all executory contracts and unexpired
leases between any of the Debtors and any of the other Debtors that have not
been assumed, assumed and assigned, or rejected during the Chapter 11 Cases
shall, at the election of the Debtors either before or after the Effective Date
and in their discretion, be deemed either assumed or rejected upon the Effective
Date.


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<PAGE>

                  2.       CONDITIONAL ASSUMPTION AND ASSUMPTION AND ASSIGNMENT.

                  Notwithstanding anything in Section VI.A to the contrary, the
Debtors expressly condition the assumption, or assumption and assignment, of
certain leases and contracts specifically identified in Exhibit 3 upon the
non-Debtor party's agreement to accept a Cure Payment in the amount specified by
the Debtors (regardless whether such Cure Payment amount is less than the amount
that the Debtors otherwise would be required to pay in order to comply with
Bankruptcy Code section 365). In the event that the non-Debtor party fails to
object timely to the Debtors' assumption, or assumption and assignment, of the
contract or lease on the Debtors' conditional Cure Payment terms, then the
contract or lease shall be deemed assumed, or assumed and assigned, on the
Effective Date on the Debtors' conditional Cure Payment terms in accordance with
Section VI.A. If the non-Debtor party timely objects to the Debtors' conditional
assumption, or assumption and assignment, then the contract or lease shall be
deemed rejected upon the Confirmation Date in accordance with Section VI.B.

         B.       REJECTION.

                  Effective upon the Effective Date, the Debtors in Possession
hereby reject all executory contracts and unexpired leases that exist between
the Debtors and any other entity that have not previously been assumed or
rejected, except that the Debtors in Possession do not reject those executory
contracts and unexpired leases (i) that are listed in Exhibit 3 hereto and
assumed, or assumed and assigned, pursuant to Section VI.A of the Plan (unless
such contracts or leases are deemed rejected in accordance with Section VI.A.2),
(ii) that are the subject of a pending motion filed by a Debtor in the Chapter
11 Cases to assume, or assume and assign, such contracts or leases, (iii) that
are or have been specifically assumed, or assumed and assigned, by the Debtors
in Possession with the approval of the Bankruptcy Court by separate proceeding
in the Chapter 11 Cases, or (iv) with respect to which the Bankruptcy Court has
otherwise granted the Debtors additional time to assume or reject such contracts
or leases after the Effective Date. The executory contracts and unexpired leases
rejected under the Plan shall include, without limitation, those listed in
Exhibit 4 to the Plan. Inclusion of a matter in Exhibit 4 does not constitute an
admission by the Debtors in Possession that an executory contract or unexpired
lease exists or is valid. To the extent that a matter that provides the Debtors
with a property right does not constitute an executory contract or unexpired
lease, rejection shall not constitute an abandonment by the Debtors of such
property right. As a matter of prudence, Exhibit 4 may include contracts and
leases that previously have been rejected or cancelled or assigned or that have
expired. Entry of the Confirmation Order shall constitute approval of the
rejections under the Plan pursuant to section 365(a) of the Bankruptcy Code.

                  All Allowed General Unsecured Claims arising from the
rejection of executory contracts or unexpired leases, whether under the Plan or
by separate proceeding, shall be treated as Claims in Classes UP-1, UP-3, UM-1,
or UM-3, as applicable, under the Plan.

                  All Claims arising from the rejection of executory contracts
or unexpired leases under the Plan must be filed with the Bankruptcy Court
within thirty (30) days after notice of the entry of the Confirmation Order. Any
such Claims that are not filed within such time will be forever barred from
assertion against the Debtors, their estates, the Reorganized Debtors, and their
property, and shall not share in any distributions under this Plan.


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<PAGE>

         C.       SURVIVAL OF THE DEBTORS' CORPORATE INDEMNITIES.

                  Solely with respect to directors, officers, and other
employees of any of the Debtors who are serving or employed in such capacity for
any such Debtor as of the Confirmation Date, the Debtors shall be deemed to
assume, as of the Effective Date, their respective obligations to indemnify such
individuals (and only such individuals) with respect to or based upon any act or
omission taken or omitted in any of such capacities, or for or on behalf of any
Debtor, pursuant to and to the extent provided by the Debtors' respective
articles of incorporation, corporate charters, bylaws and similar corporate,
partnership, joint venture, or limited liability company documents, employment
agreements with such individuals, or any other agreements entered into at any
time prior to the Confirmation Date (the "Assumed Indemnity Obligations"). The
Assumed Indemnity Obligations shall not be discharged, impaired, or otherwise
modified by confirmation of this Plan and shall be deemed and treated as
executory contracts that have been assumed by the Debtors pursuant to this Plan.
This Section VI.C shall not be construed as an assumption of any obligations
other than the Assumed Indemnity Obligations; all of the Debtors' other
indemnification obligations that are not expressly assumed in this Plan, or that
have not otherwise expressly been assumed during the Chapter 11 Cases, shall be
discharged and shall be of no further force or effect as of the Effective Date.

         D.       APS EXECUTORY CONTRACTS AND UNEXPIRED LEASES.

                  Notwithstanding any other provision in this Plan, all
executory supply contracts between any of the Debtors that provide inpatient
services at skilled nursing and assisted living facilities or LTAC hospitals, on
the one hand, and APS Acquisition LLC ("Acquisition"), as the assignee of those
Debtors that have sold substantially all of their assets and assumed and
assigned their supply contracts to Acquisition pursuant to the sale of APS'
pharmaceutical division, on the other hand, shall be assumed on the Effective
Date, subject to the termination provisions provided in the Asset Purchase
Agreement dated December 5, 2001, as amended, between certain of the Debtors on
the one hand, and Acquisition and Omnicare, Inc., on the other hand. All other
executory contracts and unexpired leases relating to the APS pharmacy business
will be rejected upon the Effective date, except as such executory contracts and
unexpired leases have been assumed and assigned pursuant to the relief requested
in the "Motion Under 11 U.S.C. ss.ss. 105(a), 363, 364, 365 and 1146 and Fed. R.
Bankr. P. 2002, 4001, 6004, 6006, 9014 and 9019 to (A) Sell Debtors'
Pharmaceutical Business Free and Clear of Liens and Encumbrances Pursuant to
Sale Procedures Order; (B) Incur Indebtedness and Compromise Claims in
Connection Therewith; (C) Assume and Assign Executory Contracts and Unexpired
Leases in Connection Therewith; and (D) Grant Relief Related Thereto" filed with
the Bankruptcy Court on or about October 16, 2001, or will be assumed and
assigned pursuant to the relief requested in any supplemental motions filed
prior to the Effective Date of the Plan in connection with the sale of APS'
pharmacy business (collectively, the "APS Sale Motion"). The date of turnover of
possession of any rejected lease of nonresidential real property related to the
operation of APS shall be governed by the relief ordered by the Bankruptcy Court
in connection with the APS Sale Motion.


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<PAGE>

                                      VII.

                            EFFECTIVENESS OF THE PLAN

         A.       EFFECTIVE DATE.

                  The Effective Date shall be the first Business Day upon which
all of the conditions specified in Section VII.B of the Plan have been satisfied
or waived. Notwithstanding the foregoing and any other provision of this Plan to
the contrary, (1) the Debtors may defer the occurrence of the Effective Date for
a period of no more than thirty (30) days beyond the date specified in the
preceding sentence in their discretion, and (2) any distribution of Cash or
other consideration required to be made on the Effective Date shall be made on
such date, or on such later date as soon as practical thereafter that is no more
than ten (10) Business Days after the Effective Date.

         B.       CONDITIONS PRECEDENT.

                  The Plan shall not become effective unless and until the
following conditions shall have been satisfied or waived:

                  1.       The Confirmation Order shall have been entered on the
docket of the Bankruptcy Court in both the MPAN Chapter 11 Cases and the MHG
Chapter 11 Cases for at least ten (10) days (as calculated in accordance with
Bankruptcy Rule 9006(a));

                  2.       No stay of the Confirmation Order in any of the
Chapter 11 Cases shall be in effect;

                  3.       The Confirmation Order (or another order that shall
have been entered on the docket of the Bankruptcy Court in both the MPAN Chapter
11 Cases and the MHG Chapter 11 Cases for at least ten (10) days) shall have
approved the Federal Government Settlement; and

                  4.       All conditions precedent to the closing of the Exit
Facility and, if applicable, the Investor Notes shall have been satisfied or
waived.

         C.       WAIVER OF CONDITIONS.

                  The Debtors, with the consent of the Required Senior Credit
Facility Claim Holders, may waive by a writing signed by an authorized
representative of the Debtors and filed with the Bankruptcy Court any of the
conditions to effectiveness of this Plan, except the condition set forth in
VII.B.2 above.

         D.       NOTICE OF EFFECTIVE DATE.

                  As soon as practicable after the Effective Date has occurred,
the Reorganized Debtors shall file with the Bankruptcy Court an informational
notice specifying the Effective Date, as a matter of record.


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<PAGE>

                                      VIII.

                            RETENTION OF JURISDICTION

                  Following the Confirmation Date, and further following the
Effective Date, the Bankruptcy Court shall retain jurisdiction of all matters
arising out of, or related to, the Chapter 11 Cases and the Plan pursuant to,
and for the purposes of, sections 105(a) and 1142 of the Bankruptcy Code and
for, among other things, the following purposes:

                  A.       To hear and determine pending motions for the
assumption, assumption and assignment, or rejection of executory contracts or
unexpired leases, if any are pending as of the Effective Date; the determination
of any cure payments related thereto; and the allowance, estimation, or
disallowance of Claims resulting therefrom;

                  B.       To determine any and all adversary proceedings,
applications, motions, and contested matters arising in or related to the
Chapter 11 Cases, including, but not limited to, Avoiding Power Causes of
Action;

                  C.       To ensure that distributions to holders of Allowed
Administrative Expenses and Allowed Claims are accomplished as provided herein;

                  D.       To hear and determine any objections to
Administrative Expenses, to proofs of claims, and to proofs of Equity Interests
filed both before and after the Confirmation Date, and to allow, estimate, or
disallow any Disputed Administrative Expense or Disputed Claim, in whole or in
part;

                  E.       To enter and implement such orders as may be
appropriate in the event the Confirmation Order is for any reason stayed,
revoked, modified, or vacated;

                  F.       To enforce the Plan and issue orders in aid of
execution of the Plan and to issue injunctions or take such other actions or
make such other orders as may be necessary or appropriate to restrain
interference with this Plan or its execution or implementation by any entity;

                  G.       To consider any modifications of the Plan, to cure
any defect or omission, or to reconcile any inconsistency in the Plan or any
order of the Bankruptcy Court, including, without limitation, the Confirmation
Order;

                  H.       To hear and determine all applications for
compensation and reimbursement of expenses of professionals under sections 330,
331, and 503(b) of the Bankruptcy Code, and to resolve any disputes regarding
payment for professional services incurred after the Effective Date for purposes
of implementing the Plan or administrating the Chapter 11 Cases;

                  I.       To hear and determine any disputes arising in
connection with the interpretation, implementation, execution, or enforcement of
the Plan, the Confirmation Order, or any other order of the Bankruptcy Court;


                                       86

<PAGE>

                  J.       To recover all assets of the Debtors and property of
the estates, wherever located;

                  K.       To hear and determine any matters concerning State,
local, and federal taxes in accordance with sections 346, 505, and 1146 of the
Bankruptcy Code;

                  L.       To hear any other matter not inconsistent with the
Bankruptcy Code; and

                  M.       To enter a final decree closing one or more of the
Chapter 11 Cases.

                                       IX.

                            MISCELLANEOUS PROVISIONS

         A.       PAYMENT OF STATUTORY FEES.

                  All quarterly fees due and payable to the Office of the United
States Trustee pursuant to section 1930(a)(6) of title 28 of the United States
Code shall be paid in full on or before the Effective Date, as required by
section 1129(a)(12) of the Bankruptcy Code. Each Reorganized Debtor shall remain
responsible for compliance with applicable reporting requirements of the Office
of the United States Trustee and timely payment of its respective quarterly fees
due and payable after the Effective Date and until such Reorganized Debtor's
Chapter 11 Case is closed, to the extent required by section 1930(a)(6) of title
28 of the United States Code. The United States Trustee and the Debtors shall
reserve all rights regarding the effect of substantive consolidation on the
payment of quarterly fees.

         B.       RETIREE BENEFITS.

                  To the extent required by section 1129(a)(13) of the
Bankruptcy Code, the Reorganized Debtors shall continue to pay on and after the
Effective Date all retiree benefits (within the meaning of section 1114 of the
Bankruptcy Code), at the level established in accordance with section 1114 of
the Bankruptcy Code, for the duration of the period for which the Debtors have
obligated themselves to provide such benefits, provided, however, that nothing
in this Section IX.B shall relieve any third party of providing retiree benefits
to the extent such third party has assumed the obligation of the Debtors to do
so.

         C.       DISSOLUTION OF  THE CREDITORS' COMMITTEES AND ESTABLISHMENT
                  OF THE CLAIMS RESOLUTION MONITOR.

                  1.       DISSOLUTION OF THE CREDITORS' COMMITTEES.

                  The Committees shall cease to exist as of the Effective Date.
Notwithstanding the foregoing, the Committees shall have standing to be heard
with respect to the allowance of Administrative Expenses requested by the
Committees' professionals and by Committee members to the extent such
Administrative Expenses relate to such members' service on the Committees.


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<PAGE>

                  2.       CLAIMS RESOLUTION MONITOR.

                           A.       ESTABLISHMENT AND FUNCTION OF THE
                                    CLAIMS MONITOR.

                  On the Effective Date, the Claims Resolution Monitor (the
"Claims Monitor") will be established. Its sole functions will be: (i) to
monitor the Reorganized Debtors' progress in (x) reconciling and resolving
Disputed Claims and (y) making distributions on account of such Claims once
resolved, (ii) to review and assert objections to the reasonableness of
settlements and compromises of such Claims, and (iii) to commence an action or
actions or intervene in a proceeding or proceedings in the event the Bankruptcy
Court allows the Claims Monitor to do so as a result of the failure of the
Reorganized Debtors to resolve Claims in a satisfactory manner. The Claims
Monitor will be selected jointly by the Committees.

                           B.       EMPLOYMENT OF PROFESSIONALS BY THE CLAIMS
                                    MONITOR; COMPENSATION AND REIMBURSEMENT OF
                                    CLAIMS MONITOR AND ITS PROFESSIONALS.

                  The Claims Monitor will be authorized to retain and employ
counsel and other professionals. The role of the Claims Monitor's professionals
will be strictly limited to assisting the Claims Monitor in its functions as set
forth herein. The Reorganized Debtors will pay the actual, necessary,
reasonable, and documented fees and out-of-pocket expenses of the Claims Monitor
and of the professionals retained by the Claims Monitor (each of whom shall be
employed on a fee-for-service basis only) incurred in the performance of their
duties upon the monthly submission of detailed, itemized bills to the
Reorganized Debtors; provided, however, that such fees and expenses cannot
exceed, in the aggregate, (i) $65,000.00 per month during the first six months
following the Effective Date, and (ii) $25,000.00 per month beginning the
seventh month after the Effective Date; provided further that the foregoing
limits may be appropriately modified by the Bankruptcy Court, after notice to
the Reorganized Debtors and a hearing, in the event the Bankruptcy Court allows
the Claims Monitor to commence any action or intervene in any proceeding as a
result of the failure of the Reorganized Debtors to resolve Claims in a
satisfactory manner. If the aggregate amount of the billed fees and expenses
does not exceed the limits referred to in the preceding sentences and if no
objection to payment thereof is received within 30 days following delivery of
the bill, the bill will be paid by the Reorganized Debtors. If there is any
unresolved dispute between the Reorganized Debtors and the Claims Monitoror its
professionals, such dispute will be submitted to the Bankruptcy Court for
resolution. The undisputed portion of each bill will be paid on the 31st day
after delivery.

                           C.       TERMINATION OF THE CLAIMS MONITOR.

                  Subject to further order of the Bankruptcy Court, the Claims
Monitor will terminate on the later of (i) the eleventh day after the date that
an officer of Reorganized Debtors files and serves on the Claims Monitor, by
overnight delivery service or facsimile transmission, a certification that both
(a) the aggregate face amount of the remaining Disputed Claims in Class UP-1 is
equal to or less than $27.5 million, and (b) the aggregate face amount of the
remaining Disputed Claims in Class UM-1 is equal to or less than $15.0 million,
and (ii) the date that any objection filed to such certification is resolved by
the Bankruptcy Court. The Claims Monitor may file and serve on the Reorganized
Debtors an objection to the certification within ten (10) days of receipt
thereof, with the issue of the aggregate face amount of remaining Disputed


                                       88

<PAGE>

Claims to be determined by the Bankruptcy Court. The Claims Monitor and the
professionals retained by the Claims Monitor will not be entitled to
compensation or reimbursement of expenses for any services rendered after the
date of termination of the Claims Monitor.

         D.       DISCHARGE OF DEBTORS AND INJUNCTION.

                  Except as otherwise expressly provided in the Plan or as
otherwise agreed to in writing by the Debtors since the Petition Date (including
but not limited to the Federal Government Settlement and any stipulation with a
State entered into during the Chapter 11 Cases), the rights afforded in the Plan
and the treatment of all Claims and Equity Interests therein shall be in
exchange for and in complete satisfaction, discharge, and release of any and all
Claims and Equity Interests of any nature whatsoever, including any interest,
fees, or penalties accrued on or relating to such Claims whether before or after
the Petition Date, against the Debtors and the Debtors in Possession, or any of
their assets or properties. Except as otherwise provided herein, (i) on the
Effective Date, the Debtors and Reorganized Debtors shall be deemed discharged
and released to the fullest extent permitted by section 1141 of the Bankruptcy
Code from all Claims and Equity Interests, including, but not limited to,
demands, liabilities, Claims, and Equity Interests that arose before the
Confirmation Date and all debts of the kind specified in sections 502(g),
502(h), or 502(i) of the Bankruptcy Code, whether or not: (a) a proof of claim
or proof of interest based on such debt or interest is filed or deemed filed
pursuant to section 501 of the Bankruptcy Code, (b) a Claim or Equity Interest
based on such debt or interest is allowed pursuant to section 502 of the
Bankruptcy Code, or (c) the holder of a Claim or Equity Interest based on such
debt or interest has accepted the Plan or has made an appearance in the Chapter
11 Cases; and (ii) all persons and entities (including, but not limited to,
States and other governmental units) shall be deemed precluded from asserting
against the Reorganized Debtors, their successors, or their assets or properties
any other or further Claims or Equity Interests based upon any act or omission,
transaction, or other activity of any kind or nature that occurred prior to the
Confirmation Date. The Confirmation Order shall act as a discharge of any and
all Claims against and all debts and liabilities of the Debtors, as provided in
sections 524 and 1141 of the Bankruptcy Code, and such discharge shall void any
judgment against the Debtors at any time obtained to the extent that it relates
to a Claim discharged.

                  Except as otherwise expressly provided in the Plan or as
otherwise agreed to in writing by the Debtors since the Petition Date (including
but not limited to the Federal Government Settlement and any stipulation with a
State entered into during the Chapter 11 Cases), the documents executed pursuant
to the Plan, or the Confirmation Order, on and after the Effective Date, all
persons and entities who have held, currently hold, or may hold a debt, Claim,
or Equity Interest discharged pursuant to the terms of the Plan (including but
not limited to States and other governmental units, and any State official,
employee, or other entity acting in an individual or official capacity on behalf
of any State or other governmental units) shall be deemed permanently enjoined
from taking any of the following actions on account of any such discharged debt,
Claim, or Equity Interest: (1) commencing or continuing in any manner any action
or other proceeding against the Debtors, the Reorganized Debtors, their
successors, or their property; (2) enforcing, attaching, executing, collecting,
or recovering in any manner any judgment, award, decree, or order against the
Debtors, the Reorganized Debtors, their successors, or their property; (3)
creating, perfecting, or enforcing any lien or encumbrance against the Debtors,
the Reorganized Debtors, their successors, or their property; (4) asserting any
setoff,


                                       89

<PAGE>

right of subrogation, or recoupment of any kind against any obligation due to
the Debtors, the Reorganized Debtors, their successors, or their property; and
(5) commencing or continuing any action, in any manner, in any place that does
not comply with or is inconsistent with the provisions of this Plan. Any person
or entity injured by any willful violation of such injunction shall recover
actual damages, including costs and attorneys' fees, and, in appropriate
circumstances, may recover punitive damages from the willful violator. Without
limiting the foregoing, and except as otherwise agreed to in writing by the
Debtors since the Petition Date (including but not limited to any stipulation
with a State entered into during the Chapter 11 Cases), each State or other
governmental unit, and each official, employee, or other entity acting on behalf
of each such State or other governmental unit, shall be barred and enjoined from
asserting against, seeking from, or imposing upon the Debtors or Reorganized
Debtors any fine, forfeiture, recoupment, offset, other reduction in payment or
penalty of any nature based upon conduct, acts, or omissions occurring prior to
the Effective Date.

         E.       NO LIABILITY FOR SOLICITATION OR PARTICIPATION.

                  As specified in section 1125(e) of the Bankruptcy Code,
entities that solicit acceptances or rejections of the Plan and/or that
participate in the offer, issuance, sale, or purchase of securities offered or
sold under the Plan, in good faith and in compliance with the applicable
provisions of the Bankruptcy Code, are not liable, on account of such
solicitation or participation, for violation of any applicable law, rule, or
regulation governing the solicitation of acceptances or rejections of the Plan
or the offer, issuance, sale, or purchase of securities.

         F.       LIMITATION OF LIABILITY.

                  Neither the Debtors, the Reorganized Debtors, the Disbursing
Agent, the MPAN Senior Credit Facility Agent, the MHG Senior Credit Facility
Agent, the holders of Senior Credit Facility Claims, the indenture trustee under
the MPAN Indenture, the indenture trustee under the MHG Indenture, nor the
Committees, nor the Claims Monitor, nor any of their employees, officers,
directors, members, agents, or representatives, nor any professional persons
employed by any of the foregoing, shall have or incur any liability to any
person or entity for any act taken or omission made in good faith in connection
with, or relating to, the Chapter 11 Cases, or to negotiating, formulating,
implementing, confirming, or consummating the Plan, the Disclosure Statement,
the Corporate Restructuring Program, or any contract, instrument, security,
release, or other agreement, instrument, or document created in connection with
the foregoing, except for willful misconduct or gross negligence.

         G.       PRESERVATION OF RIGHTS OF ACTION AND DEFENSES.

                  Except to the extent such rights, claims, causes of action,
defenses, and counterclaims are expressly and specifically released in
connection with the Plan or in any settlement agreement approved during the
Chapter 11 Cases, (i) any and all rights, claims, causes of action, defenses,
and counterclaims accruing to the Debtors or their estates (including, without
limitation, Avoiding Power Causes of Action) shall remain assets of and vest in
the Reorganized Debtors, whether or not litigation relating thereto is pending
on the Effective Date, and whether or not any such rights, claims, causes of
action, defenses, and counterclaims have been Scheduled or otherwise listed or
referred to in this Plan, the Disclosure Statement, or any other document filed
with the Bankruptcy Court, and (ii) neither the Debtors nor the Reorganized


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Debtors waive, relinquish, or abandon (nor shall they be estopped or otherwise
precluded from asserting) any right, claim, cause of action, defense, or
counterclaim that constitutes property of the Debtors' estates: (a) whether or
not such right, claim, cause of action, defense, or counterclaim has been listed
or referred to in the Schedules, this Plan, the Disclosure Statement, or any
other document filed with the Bankruptcy Court, (b) whether or not such right,
claim, cause of action, defense, or counterclaim is currently known to the
Debtors, and (c) whether or not a defendant in any litigation relating to such
right, claim, cause of action, defense, or counterclaim filed a proof of claim
in the Chapter 11 Cases, filed a notice of appearance or any other pleading or
notice in the Chapter 11 Cases, voted for or against this Plan, or received or
retained any consideration under this Plan. Without in any manner limiting the
scope of the foregoing, notwithstanding any otherwise applicable principle of
law or equity, including, without limitation, any principles of judicial
estoppel, res judicata, collateral estoppel, issue preclusion, or any similar
doctrine, the failure to list, disclose, describe, identify, or refer to a
right, claim, cause of action, defense, or counterclaim, or potential right,
claim, cause of action, defense, or counterclaim, in the Debtors' Schedules,
this Plan, the Disclosure Statement, or any other document filed with the
Bankruptcy Court shall in no manner waive, eliminate, modify, release, or alter
the Reorganized Debtors' right to commence, prosecute, defend against, settle,
and realize upon any rights, claims, causes of action, defenses, or
counterclaims that any of the Debtors or Reorganized Debtors have or may have as
of the Confirmation Date. The Reorganized Debtors may commence, prosecute,
defend against, recover on account of, and settle all rights, claims, causes of
action, defenses, and counterclaims in their sole discretion in accordance with
what is in the best interests, and for the benefit, of the Reorganized Debtors.

         H.       SATURDAY, SUNDAY, OR LEGAL HOLIDAY.

                  If any payment or act under the Plan is required to be made or
performed on a date that is not a Business Day, then the making of such payment
or the performance of such act may be completed on the next succeeding Business
Day, but shall be deemed to have been completed as of the required date.

         I.       HEADINGS.

                  Headings are used in the Plan for convenience and reference
only, and shall not constitute a part of the Plan for any other purpose.

         J.       BINDING EFFECT.

                  The Plan shall be binding upon and inure to the benefit of the
Debtors, the Reorganized Debtors, holders of Claims, holders of Equity
Interests, and their respective successors, assigns, heirs, and beneficiaries.

         K.       REVOCATION OR WITHDRAWAL.

                  1.       RIGHT TO REVOKE.

                  The Debtors reserve the right to revoke or withdraw the Plan
prior to the Confirmation Date, with the consent of the Required Senior Credit
Facility Claim Holders.


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<PAGE>

                  2.       EFFECT OF WITHDRAWAL OR REVOCATION.

                  If the Debtors revoke or withdraw the Plan prior to the
Confirmation Date, if confirmation is denied by a Final Order, or if the
Effective Date does not occur by the date that is no later than ninety (90) days
after the Confirmation Date, then the Plan shall be deemed null and void, unless
such deadline is extended by the Bankruptcy Court with the consent of the
Required Senior Credit Facility Claim Holders. In such event, nothing contained
herein shall be deemed to constitute a waiver or release of any claims by or
against the Debtors or any other entity or to prejudice in any manner the rights
of the Debtors or any entity in any further proceedings involving the Debtors.

         L.       NONCONSENSUAL CONFIRMATION.

                  With respect to any impaired Class of Claims or Equity
Interests that fails to accept, or that is deemed not to accept, the Plan in
accordance with section 1129(a)(8) of the Bankruptcy Code, the Debtors (i)
request that the Bankruptcy Court confirm the Plan in accordance with section
1129(b) of the Bankruptcy Code, and (ii) in accordance with Section IX.N below,
may modify the Plan in accordance with section 1127(a) of the Bankruptcy Code.

         M.       OTHER DOCUMENTS AND ACTIONS.

                  The Reorganized Debtors may execute such other documents and
take such other actions as may be necessary or appropriate to effectuate the
transactions contemplated under this Plan.

         N.       MODIFICATION OF THE PLAN.

                  The Debtors or the Reorganized Debtors, with the consent of
the MPAN Senior Credit Facility Agent, may further alter, amend, or modify the
Plan pursuant to section 1127 of the Bankruptcy Code. The provisions of this
Plan shall not be severable unless such severance is agreed to by the Debtors or
the Reorganized Debtors, with the consent of the MPAN Senior Credit Facility
Agent.

         O.       GOVERNING LAW.

                  Unless a rule of law or procedure is supplied by federal law
(including the Bankruptcy Code and Bankruptcy Rules), the laws of the State of
Delaware (without reference to its conflict of law rules) shall govern the
construction and implementation of the Plan and any agreements, documents, and
instruments executed in connection with the Plan, unless otherwise specifically
provided in such agreements, documents, or instruments.

         P.       WITHHOLDING, REPORTING, AND PAYMENT OF TAXES.

                  In connection with the Plan and all instruments issued in
connection therewith and distributions thereon, the Disbursing Agent shall
comply with all withholding and reporting requirements imposed by any federal,
State, local, or foreign taxing authority, and all distributions hereunder shall
be subject to any such withholding and reporting requirements. The Disbursing
Agent shall report and pay taxes on the income of any Disputed Claims Reserve or
the Effective Date Cash Reserve as required by applicable law. In addition, to
the extent


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<PAGE>

required by applicable law, reported distributions from such reserves shall
include all interest and investment income, if any, attributable to the Cash or
property being distributed net of taxes that are, or are estimated to be, due
and payable thereon.

                  Notwithstanding any other provision in this Plan, the
Disbursing Agent by written demand may require any holder of an Allowed
Administrative Expense, an Allowed Claim, or other recipient of a distribution
under this Plan to provide the Disbursing Agent with such information as is
reasonably necessary for the Disbursing Agent to comply with all applicable
withholding and reporting requirements. Such information, if demanded by the
Disbursing Agent, shall be provided to the Disbursing Agent in advance of, and
as a condition to, receiving any distribution under this Plan.

         Q.       NOTICES.

                  Any notice to the Debtors, the Reorganized Debtors, the MPAN
Senior Credit Facility Agent, or the MHG Senior Credit Facility Agent required
or permitted to be provided under the Plan shall be in writing and served by
either (a) certified mail, return receipt requested, postage prepaid, (b) hand
delivery, or (c) reputable overnight delivery service, freight prepaid, to be
addressed as follows (as applicable):

                  To the Debtors or Reorganized Debtors:

                               Mariner Post-Acute Network, Inc.
                               One Ravinia Drive, Suite 1500
                               Atlanta, Georgia  30346
                               Attn.: Stefano Miele, Esquire
                               Facsimile: (770) 698-8199

                               with a copy to:

                               Stutman, Treister & Glatt
                               Professional Corporation
                               3699 Wilshire Boulevard, Suite 900
                               Los Angeles, California 90010
                               Attn: Isaac M. Pachulski, Esquire
                               Facsimile: (213) 251-5288

                  To the MPAN Senior Credit Facility Agent:

                               JP Morgan Chase Bank
                               622 Madison Avenue
                               9th Floor
                               New York, New York 10022
                               Attn: Michael Lancia
                               Facsimile: (212) 622-4834


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<PAGE>

                               with a copy to:

                               Simpson, Thacher & Bartlett
                               425 Lexington Avenue
                               New York, New York 10017
                               Attn: Kenneth Ziman, Esquire
                               Facsimile: (212) 455-2502

                  To the MHG Senior Credit Facility Agent:

                               First Union Securities, Inc.
                               One First Union Center
                               301 South College Street
                               Charlotte, NC 28288-0735
                               Attn: G. Christian Ullrich, Sr.
                               Facsimile: 704-383-6249

                                     - and -

                               PNC Bank, National Association
                               One PNC Plaza
                               249 Fifth Avenue
                               Pittsburgh, PA 15222-2707
                               Attn: Thomas J. McCool, Sr.
                               Facsimile: 412-762-4157

                               with a copy to:

                               O'Melveny & Myers LLP
                               153 East 53rd Street, 54th Floor
                               New York, New York 10022
                               Attn: Adam Harris, Esquire
                               Facsimile: (212) 455-2502

         R.       SUCCESSORS AND ASSIGNS.

                  The rights, benefits, and obligations of any entity named or
referred to in the Plan shall be binding on, and shall inure to the benefit of,
the heirs, executors, administrators, successors, and assigns of such entity.

         S.       INDENTURE TRUSTEE FEES AND EXPENSES.

                  The fees, expenses, and other charges that are both documented
and fair and reasonable of (i) the indenture trustee and its professionals under
the MPAN Indenture, in an aggregate amount of all such fees, expenses, and other
charges of any kind not to exceed $119,000, and of (ii) the indenture trustee
and its professionals under the MHG Indenture, in an aggregate amount of all
such fees, expenses, and other charges of any kind not to exceed


                                       94

<PAGE>

$85,000, will be paid by the Debtors and/or Reorganized Debtors on the Effective
Date in a manner consistent with the provisions of the respective indentures,
and without the need for the indenture trustees to file applications for
allowance. In addition to the foregoing amounts, the Debtors and/or Reorganized
Debtors shall reimburse the respective indenture trustees for the documented,
fair and reasonable out-of-pocket expenses (excluding any hourly fees charged by
employees of the indenture trustees) for services specifically requested by the
Debtors and/or Reorganized Debtors subsequent to the approval of the Disclosure
Statement. Such payments shall be in lieu of and shall result in the release of
the respective indenture trustees' liens and priority rights under the
indentures.


                                       95

<PAGE>

DATED: February 1, 2002                MARINER POST-ACUTE NETWORK, INC.,
                                       a Delaware corporation, on behalf of
                                       itself and its Debtor Affiliates, which
                                       are identified on Exhibit "2" hereto



                                       By        /s/
                                         ---------------------------------------
                                         Stefano Miele
                                         Senior Vice President



DATED: February 1, 2002                MARINER HEALTH GROUP, INC.,
                                       a Delaware corporation, on behalf of
                                       itself and its Debtor Affiliates, which
                                       are identified on Exhibit "1" hereto



                                       By         /s/
                                         ---------------------------------------
                                         Stefano Miele
                                         Vice President


                                       96

<PAGE>

SUBMITTED BY:


ISAAC M. PACHULSKI (Cal. 62337),
JEFFREY H. DAVIDSON (Cal. 73980)
K. JOHN SHAFFER (Cal. 153729), and
MARGRETA SUNDELIN (DE. 3873), Members of
STUTMAN, TREISTER & GLATT
PROFESSIONAL CORPORATION
3699 Wilshire Boulevard, 9th Floor
Los Angeles, California 90010
Telephone: (213) 251-5100
Facsimile: (213) 251-5288


RICHARD E. GREEN (Ga. Bar 306671)
WENDY L. HAGENAU (Ga. Bar 316688)
ROBERT C. LEWINSON (Ga. Bar 449900)
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
191 Peachtree Street, N.E. 16th Floor
Atlanta, Georgia  30303
Telephone: (404) 572-6600
Facsimile: (404) 572-6999

 - AND -



--------------------------------------
MARK D. COLLINS (Del. Bar 2981)
RUSSELL C. SILBERGLIED (Del. Bar 3462)
REBECCA L. BOOTH (Del. Bar 4031)
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square
P.O. Box 551
Wilmington, DE  19899
Telephone: (302) 658-6541
Facsimile: (302) 658-6548

Reorganization Counsel for Debtors
and Debtors in Possession


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