Document:

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                               WARRANT AGREEMENT

                                  Dated as of

                                  May __, 2002

                                    between

                           MARINER HEALTH CARE, INC.

                                      and

                    AMERICAN STOCK TRANSFER & TRUST COMPANY

                              as the Warrant Agent

================================================================================
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                               TABLE OF CONTENTS
                                                                           Page

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                  PAGE
<S>      <C>                                                                                                      <C>
ARTICLE 1. Defined Terms ................................................................................           1

         SECTION 1.1  Definitions .......................................................................           1

         SECTION 1.2  Other Definitions .................................................................           3

         SECTION 1.3  Rules of Construction .............................................................           3

ARTICLE 2. Warrant Certificates..........................................................................           4

         SECTION 2.1  Issuance and Dating ...............................................................           4

         SECTION 2.2  Execution and Countersignature ....................................................           4

         SECTION 2.3  Certificate Register ..............................................................           4

         SECTION 2.4  Transfer and Exchange .............................................................           5

         SECTION 2.5  Replacement Certificates ..........................................................           6

         SECTION 2.6  Temporary Certificates ............................................................           6

         SECTION 2.7  Cancellation ......................................................................           6

ARTICLE 3. Exercise Terms................................................................................           7

         SECTION 3.1  Exercise Price ....................................................................           7

         SECTION 3.2  Exercise Periods ..................................................................           7

         SECTION 3.3  Expiration ........................................................................           7

         SECTION 3.4  Manner of Exercise ................................................................           7

         SECTION 3.5  Issuance of Warrant Shares ........................................................           8

         SECTION 3.6  Fractional Warrant Shares .........................................................           8

         SECTION 3.7  Reservation of Warrant Shares .....................................................           8

         SECTION 3.8  Compliance with Law ...............................................................           9
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                                      i
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<TABLE>
<S>      <C>                                                                                                      <C>
         SECTION 3.9  Payment of Taxes ..................................................................           9

ARTICLE 4. Antidilution Provisions.......................................................................          10

         SECTION 4.1  Changes in Common Stock ..........................................................           10

         SECTION 4.2  Cash Dividends and Other Distributions ...........................................           10

         SECTION 4.3  NIEP Awards Issued as Options ....................................................           11

         SECTION 4.4  NIEP Awards Issued as Additional Shares of Common Stock ..........................           11

         SECTION 4.5  Combination; Liquidation .........................................................           12

         SECTION 4.6  Other Adjustments ................................................................           13

         SECTION 4.7  Current Market Value .............................................................           13

         SECTION 4.8  Adjustment to Exercise Price .....................................................           14

         SECTION 4.9  Superseding Adjustment ...........................................................           14

         SECTION 4.10 Minimum Adjustment ...............................................................           14

         SECTION 4.11 Notice of Adjustment .............................................................           14

         SECTION 4.12 Notice of Certain Transactions ...................................................           15

         SECTION 4.13 Adjustment in Exercise Price .....................................................           16

         SECTION 4.14 Adjustment to Warrant Certificate ................................................           16

ARTICLE 5. Warrant Agent.................................................................................          16

         SECTION 5.1  Appointment of Warrant Agent ......................................................          16

         SECTION 5.2  Rights and Duties of Warrant Agent ................................................          16

         SECTION 5.3  Individual Rights of Warrant Agent ................................................          17

         SECTION 5.4  Warrant Agent's Disclaimer ........................................................          17

         SECTION 5.5  Compensation and Indemnity ........................................................          18

         SECTION 5.6  Successor Warrant Agent ...........................................................          18

ARTICLE 6. Representations, Warranties and Agreements....................................................          19
</TABLE>

                                       ii
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<TABLE>
<S>      <C>                                                                                                      <C>

         SECTION 6.1  Agreement of Warrant Holders ......................................................          19

         SECTION 6.2  Representations and Warranties of the Company .....................................          20

ARTICLE 7. Miscellaneous.................................................................................          21

         SECTION 7.1  Agreements Respecting Warrants; Impairment ........................................          21

         SECTION 7.2  SEC Reports .......................................................................          21

         SECTION 7.3  Persons Benefiting ................................................................          22

         SECTION 7.4  Rights of Holders .................................................................          22

         SECTION 7.5  Amendment .........................................................................          22

         SECTION 7.6  Notices ...........................................................................          22

         SECTION 7.7  GOVERNING LAW .....................................................................          23

         SECTION 7.8  Successors ........................................................................          23

         SECTION 7.9  Counterparts ......................................................................          23

         SECTION 7.10 Headings ..........................................................................          24

         SECTION 7.11 Severability ......................................................................          24
</TABLE>

                                      iii
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<TABLE>
<CAPTION>
EXHIBITS
--------
<S>           <C>
EXHIBIT A     --  Form of Warrant Certificate
EXHIBIT B     --  Form of Election to Purchase Warrant Shares At Exercise Price
EXHIBIT C     --  Form of Election to Purchase Warrant Shares by Cashless Exercise
</TABLE>

                                      iv
<PAGE>

         WARRANT AGREEMENT, dated as of May __, 2002 (this "Agreement"),
between MARINER HEALTH CARE, INC., a Delaware corporation (the "Company"), and
American Stock Transfer & Trust Company, a New York corporation, as Warrant
Agent (in such capacity, the "Warrant Agent").

                             W I T N E S S E T H :

         WHEREAS, pursuant to the Plan of Reorganization, the Company has
agreed to issue warrants to purchase from the Company 753,786 shares of Common
Stock of the Company (the "Warrants") representing in the aggregate
approximately 3.32% of the fully diluted Common Stock of the Company on the
Plan Effective Date to certain of the holders of MPAN General Unsecured Claims,
MPAN Subordinated Notes, and possibly the holders of Senior Credit Facility
Claims (such terms, and all other capitalized terms used herein without being
otherwise defined, having the meaning referred to in Section 1.1 below);

         NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:

                                  ARTICLE 1.

                                 Defined Terms

         SECTION 1.1. Definitions. All terms defined in the Plan of
Reorganization shall have such defined meanings when used herein or in any
Exhibit hereto unless otherwise defined herein or therein. As used in this
Agreement, the following terms shall have the following meanings:

         "Affiliate" means, as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person means
the power, directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors of such
Person or (b) direct or cause the direction of the management and policies of
such Person, whether by contract or otherwise.

         "Board" means the Board of Directors of the Company or any committee
thereof duly authorized to act on behalf of such Board of Directors.

         "Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required by law to
close.

         "Cashless Exercise Ratio" means a fraction, the numerator of which is
the excess of the Current Market Value per share of Common Stock on the date of
exercise over the Exercise Price per share as of the date of exercise and the
denominator of which is the Current Market Value per share of the Common Stock
on the date of exercise.
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                                                                              2

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Combination" means an event in which the Company consolidates with,
merges with or into, or sells its property and assets as an entirety or
substantially as an entirety to, another Person.

         "Common Stock" means the common stock, par value $.01 per share, of
the Company to be issued on the Plan Effective Date or reserved for issuance
after the Plan Effective Date, together with any other equity securities that
may be issued by the Company in substitution therefor.

         "Expiration Date" means the second anniversary of the Plan Effective
Date.

         "Holder" means the duly registered holder of a Warrant under the terms
of this Agreement.

         "New Incentive Equity Plan" means the Management Stock Options Plan
adopted by the Company in connection with the Plan of Reorganization.

         "NIEP Awards" means up to an aggregate of 1,978,022 shares (or 9% of
the fully diluted shares of Common Stock as of the date hereof, excluding
Warrant Shares) of Common Stock and/or options to purchase Common Stock that
the Company and any of its Affiliates issued or granted, or will issue and
grant, as the case may be, to is employees who are eligible for such grants
under the New Incentive Equity Plan as adopted by the Company in connection
with the Plan of Reorganization.

         "Officer" means the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer or the Treasurer of the Company.

         "Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

         "Plan Effective Date" means the date that the Plan of Reorganization
becomes effective or determined in accordance with Article VII thereof.

         "Plan of Reorganization" means the Second Amended Joint Plan of
Reorganization for Mariner Post-Acute Network, Inc., Mariner Health Group,
Inc., and their respective Debtor Affiliates, as confirmed by an order of the
United States Bankruptcy Court for the District of Delaware, dated April 3,
2002, including all schedules and exhibits thereto and all documents
incorporated by reference therein or contained in the documentary supplement
thereto.

         "Securities Act" means the Securities Act of 1933, as amended.

         "Warrant Certificates" means the certificates evidencing the Warrants
to be delivered pursuant to this Agreement, substantially in the form of
Exhibit A hereto.
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                                                                              3

         "Warrant Shares" means the shares of Common Stock of the Company to be
issued and received, or issued and received, as the case may be, upon exercise
of the Warrants.

         SECTION 1.2. Other Definitions.

<TABLE>
<CAPTION>
                                                                           Defined in
                                  Term                                      Section
                                  ----                                      -------
     <S>                                                                   <C>
     "Agreement" ...................................................        Preamble
     "Cashless Exercise" ...........................................        3.4
     "Certificate Register" ........................................        2.3
     "Company" .....................................................        Preamble
     "Current Market Value" ........................................        4.7
     "Exercise Price" ..............................................        3.1
     "Fair Value" ..................................................        4.2
     "Fair Market Value" ...........................................        4.3
     "NIEP Options" ................................................        4.3
     "NIEP Shares" .................................................        4.4
     "Successor Company" ...........................................        4.5
     "Time of Determination" .......................................        4.7
     "Transfer Agent" ..............................................        3.5
     "Warrant Agent" ...............................................        Preamble
     "Warrants" ....................................................        Recitals
</TABLE>

         SECTION 1.3. Rules of Construction. Unless the text otherwise
required.

         (a)      a term has the meaning assigned to it;

         (b)      an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles as
in effect as of the date hereof;

         (c)      "or" is not exclusive;

         (d)      "including" means including, without limitation, except when
preceded by a negative predicate; and

         (e)      words in the singular include the plural and words in the
plural include the singular.
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                                                                              4

                                  ARTICLE 2.

                              Warrant Certificates

         SECTION 2.1. Issuance and Dating. The Warrants shall be initially
issued on the Plan Effective Date or as soon as practicable thereafter in
accordance with the terms of the Plan of Reorganization. The Warrant
Certificates will be issued in registered form as definitive Warrant
Certificates, substantially in the form of Exhibit A, which is hereby
incorporated in and expressly made a part of this Agreement. The Warrant
Certificates may have notations, legends or endorsements required by law, stock
exchange rules, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). Each Warrant shall be dated as of the date of its
countersignature. The terms of the Warrants set forth in Exhibit A are part of
the terms of this Agreement.

         SECTION 2.2. Execution and Countersignature(a). (a) With respect to
the Warrants to be initially issued pursuant to the terms hereof, Warrant
Certificates registered in such names and representing such number of Warrants
as specified by the Warrant Agent shall be executed on behalf of the Company by
manual or facsimile signature by one Officer and attested by its Secretary or
an Assistant Secretary. The Warrant Agent shall countersign such Warrant
Certificate(s) by manual signature, and such Warrant Certificate(s) shall be
delivered in accordance with the terms of the Plan of Reorganization and
Section 2.1 hereof. With respect to all other Warrants, the Warrant
Certificates therefor shall be executed on behalf of the Company by one Officer
and attested by its Secretary or an Assistant Secretary. Such signature may be
by manual or facsimile signature. If an Officer whose signature is on a Warrant
Certificate no longer holds that office at the time the Warrant Agent
countersigns the Warrant Certificate, the Warrant Certificate shall be valid
nevertheless. A Warrant Certificate shall not be valid until an authorized
signatory of the Warrant Agent manually counter-signs the Warrant Certificate.
The signature shall be conclusive evidence that the Warrant Certificate has
been countersigned under this Agreement.

         (b)      The Warrant Agent may appoint an agent reasonably acceptable
to the Company to countersign the Warrant Certificate. Unless limited by the
terms of such appointment, such agent may countersign the Warrant Certificate
whenever the Warrant Agent may do so. Each reference in this Agreement to
countersignature by the Warrant Agent includes by such agent. Such agent will
have the same rights as the Warrant Agent for service of notices and demands.

         SECTION 2.3. Certificate Register. The Warrant Agent shall keep a
register ("Certificate Register") of the Warrant Certificates and of their
transfer and exchange. The Certificate Register shall show the names and
addresses of the respective Holders and the date and number of Warrants
evidenced on the face of each of the Warrant Certificates. The Company and the
Warrant Agent may deem and treat the Person in whose name a Warrant Certificate
is reflected as registered on the Certificate Register as the absolute owner of
such

<PAGE>

                                                                              5

Warrant Certificate for all purposes whatsoever and neither the Company nor the
Warrant Agent shall be affected by notice to the contrary.

         SECTION 2.4. Transfer and Exchange. (a) When Warrants are presented to
the Warrant Agent with a request to register the transfer of such Warrants or
to exchange such Warrants for an equal number of Warrants of other authorized
denominations, the Warrant Agent shall register the transfer or make the
exchange as requested if its reasonable requirements for such transaction are
met; provided, however, that the Warrant Certificates representing such
Warrants surrendered for transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer on the reverse of the Warrant
Certificates or in form reasonably satisfactory to the Company and the Warrant
Agent, duly executed by the Holder thereof or his attorney duly authorized in
writing. The Warrant Agent shall not be obligated to transfer any Warrant if it
reasonably believes such transfer will result in the violation of applicable
federal or state securities laws. The Warrant Agent shall provide the Company
with prompt written notice of any proposed transfer of a Warrant. In connection
with any proposed transfer of a Warrant, the Company shall be entitled to
request, at the expense of the Holder, an opinion of counsel reasonably
satisfactory to the Company, that the proposed transfer will not result in an
violation of applicable federal or state securities laws; provided, however,
that the Company must make such request within five Business Days of receiving
notice from the Warrant Agent of a proposed transfer.

         (b)      (i) To permit registrations of transfers and exchanges, the
Company shall execute and the Warrant Agent shall countersign Warrant
Certificates as required pursuant to the provisions of Section 2.2.

                  (ii)     All Warrant Certificates issued upon any
registration of transfer or exchange of Warrants shall be the valid obligations
of the Company, entitled to the same benefits under this Agreement, as the
Warrant Certificates surrendered upon such registration of transfer or
exchange. Any warrant issued upon the transfer or exchange of a Warrant shall
continue to bear the same restrictive legends, if any, appearing upon the
Warrant transferred or exchanged, unless the Company receives an opinion of
counsel, reasonably satisfactory to it that such legends are not required under
applicable federal or state securities laws.

                  (iii)    The Company shall not be required to issue any
Warrant Certificate evidencing a fraction of a Warrant or to issue fractions of
shares of securities on the exercise of the Warrants, and any fractional
interest in a Warrant alone shall be of no value whatsoever. By accepting a
Warrant Certificate, the holder thereof expressly waives any right to receive
(A) a Warrant Certificate evidencing any fraction of a Warrant, (B) any
fractional share of securities upon exercise of a Warrant, or (C) any value
whatsoever upon exercise of a fractional interest in a Warrant.

                  (iv)     No service charge shall be made to a Holder for any
registration of transfer or exchange upon surrender of any Warrant Certificate
at the office of the Warrant Agent maintained for that purpose. However, the
Company may require payment of a
<PAGE>

                                                                              6

sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Warrant
Certificates.

         SECTION 2.5. Replacement Certificates. If a mutilated Warrant
Certificate is surrendered to the Warrant Agent or if the Holder of a Warrant
Certificate claims that the Warrant Certificate has been lost, destroyed or
wrongfully taken, the Company shall issue and the Warrant Agent shall
countersign a replacement Warrant Certificate if the reasonable requirements of
the Warrant Agent and of Section 8-405 of the Uniform Commercial Code as in
effect in the State of Delaware are met. If required by the Warrant Agent or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Warrant Agent to protect the Company and the
Warrant Agent from any loss which either of them may suffer if such a
replacement Warrant Certificate is issued. The Company and the Warrant Agent
may charge the Holder for their expenses in replacing a Warrant Certificate.
Every replacement Warrant Certificate is an additional obligation of the
Company.

         SECTION 2.6. Temporary Certificates. Until definitive Warrant
Certificates are ready for delivery, the Company may prepare and the Warrant
Agent shall countersign temporary Warrant Certificates. Temporary Warrant
Certificates shall be substantially in the form of definitive Warrant
Certificates but may have variations that the Company considers appropriate for
temporary Warrant Certificates. Without unreasonable delay, the Company shall
prepare and the Warrant Agent shall countersign definitive Warrant Certificates
and deliver them in exchange for temporary Warrant Certificates.

         SECTION 2.7. Cancellation. (a) In the event the Company shall purchase
or otherwise acquire Warrants (other than Warrants held by the Company for
distribution in accordance with the terms of the Plan), the Warrant
Certificates in respect thereof shall thereupon be delivered to the Warrant
Agent for cancellation.

         (b)      The Warrant Agent shall cancel and destroy all Warrant
Certificates surrendered for transfer, exchange, replacement, exercise or
cancellation and deliver a certificate of such destruction to the Company
unless the Company directs the Warrant Agent to deliver canceled Warrant
Certificates to the Company. The Company may not issue new Warrant Certificates
to replace Warrant Certificates to the extent they evidence Warrants that have
been exercised or Warrants that the Company has purchased or otherwise
acquired.

         SECTION 2.8. Payment of Taxes. The Company will pay all documentary or
stamp taxes, if any, attributable to the initial issuance of the Warrants
pursuant to Section 2.1 and 2.2 and the initial issuance of the Warrant Shares
upon the exercise of Warrants, if the Warrant Shares are issued in the name of
the Holder to whom such Warrants were initially issued; provided, however, that
the Holder shall reasonably cooperate with the Company and the Warrant Agent to
minimize or eliminate any such taxes. Neither the Company nor the Warrant Agent
will be required to pay any tax or governmental charge that may be payable in
connection with any transfer, split up, combination or exchange of Warrants or
Warrant Certificates.
<PAGE>

                                                                              7

                                  ARTICLE 3.

                                 Exercise Terms

         SECTION 3.1. Exercise Price. Each Warrant shall initially entitle the
Holder thereof, subject to adjustment pursuant to the terms of this Agreement,
to purchase one share of Common Stock for a per share exercise price of $28.04
(as the same may be adjusted pursuant to Article 4, the "Exercise Price").

         SECTION 3.2. Exercise Periods. (a) Subject to the terms and conditions
set forth herein, each Warrant shall be exercisable at any time or from time to
time on or after the Plan Effective Date.

         (b)      No Warrant shall be exercisable after 5:00 p.m., New York
City time, on the Expiration Date.

         SECTION 3.3. Expiration. A Warrant shall terminate and become void as
of the earlier of (a) 5:00 p.m., New York City time on the Expiration Date and
(b) the time and date such Warrant is exercised.

         SECTION 3.4. Manner of Exercise. Warrants may be exercised upon (a)
surrender to the Warrant Agent of the Warrant Certificates, together with the
form of election to purchase Common Stock (attached hereto as Exhibit B and
Exhibit C in the case of Cashless Exercise referred to below) duly filled in
and signed by the Holder thereof, and (b) payment to the Warrant Agent, for the
account of the Company, of the Exercise Price for the number of Warrant Shares
in respect of which such Warrant is then exercised. Such payment shall be made
(i) in cash or by certified or official bank check payable to the order of the
Company or by wire transfer of immediately available funds to an account
designated by the Company for such purpose or (ii) by the surrender (which
surrender shall be evidenced by cancellation of the number of Warrants
represented by any Warrant Certificate presented in connection with a Cashless
Exercise) of a Warrant or Warrants (represented by one or more relevant Warrant
Certificates), and without the payment of the Exercise Price in cash, in
exchange for the issuance of such number of shares of Common Stock equal to the
product of (1) the number of shares of Common Stock for which such Warrant
would otherwise then be nominally exercised if payment of the Exercise Price as
of the date of exercise were being made in cash and (2) the Cashless Exercise
Ratio. An exercise of a Warrant in accordance with the immediately preceding
sentence is herein called a "Cashless Exercise." All provisions of this
Agreement shall be applicable with respect to an exercise of Warrant
Certificates pursuant to a Cashless Exercise for less than the full number of
Warrants represented thereby. Subject to Section 3.2, the rights represented by
the Warrants shall be exercisable at the election of the Holders thereof either
in full at any time or from time to time in part and in the event that a
Warrant Certificate is surrendered for exercise in respect of less than all the
Warrant Shares purchasable on such exercise at any time prior to the Expiration
Date a new Warrant Certificate exercisable for the remaining number of full
Warrant Shares will be issued. The Warrant Agent shall countersign and deliver
the required new Warrant Certificates, and the Company, at the Warrant Agent's
<PAGE>

                                                                              8

request, shall supply the Warrant Agent with Warrant Certificates duly signed
on behalf of the Company in accordance with Section 2.2 for such purpose.

         SECTION 3.5. Issuance of Warrant Shares. Subject to Section 2.5, upon
the surrender of Warrant Certificates and payment of the per share Exercise
Price, as set forth in Section 3.4, the Company shall, as soon as practicable
and in any event within 3 Business Days after such exercise, issue and cause
the Warrant Agent or, if appointed, a transfer agent for the Common Stock
("Transfer Agent") to countersign and deliver to or upon the written order of
the Holder and in such name or names as the Holder may designate, a certificate
or certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrants or other securities or property to which it is
entitled, registered or otherwise to the Person or Persons entitled to receive
the same, together with cash as provided in Section 3.6 in respect of any
fractional Warrant Shares otherwise issuable upon such exercise; provided,
however, that if the Company is requested to issue Common Stock upon the
exercise of a Warrant to any Person other than the Holder, then the Company
shall be entitled to request, at the expense of the Holder, an opinion of
counsel for the Holder, reasonably satisfactory to it, that the requested
issuance will not violate applicable federal or state securities laws. Such
certificate or certificates shall be deemed to have been issued and any Person
so designated to be named therein shall be deemed to have become a holder of
record of such Warrant Shares as of the date of the surrender of such Warrant
Certificates and payment of the per share Exercise Price.

         SECTION 3.6. Fractional Warrant Shares. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If
more than one Warrant shall be exercised in full at the same time by the same
Holder, the number of full Warrant Shares which shall be issuable upon such
exercise shall be computed on the basis of the aggregate number of Warrant
Shares purchasable pursuant thereto. If any fraction of a Warrant Share would,
except for the provisions of this Section 3.6, be issuable on the exercise of
any Warrant (or specified portion thereof), the Company shall pay an amount in
cash equal to the Current Market Value for one Warrant Share on the Business
Day immediately preceding the date the Warrant is exercised, multiplied by such
fraction, computed to the nearest whole cent.

         SECTION 3.7. Reservation of Warrant Shares. The Company shall at all
times keep reserved out of its authorized shares of Common Stock a number of
shares of Common Stock sufficient to provide for the exercise of all
outstanding Warrants. The registrar for the Common Stock shall at all times
until the Expiration Date, or the time at which all Warrants have been
exercised or cancelled, reserve such number of authorized shares as shall be
required for such purpose. The Company will keep a copy of this Agreement on
file with the Transfer Agent. All Warrant Shares which may be issued upon
exercise of Warrants shall, upon issue, by fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security
interests imposed or created by the Company. The Company will supply such
Transfer Agent with duly executed stock certificates for such purpose and will
itself provide or otherwise make available any cash which may be payable as
provided in Section 3.6. The Company will furnish to such Transfer Agent a copy
of all notices of adjustments and certificates related thereto transmitted to
each Holder.
<PAGE>

                                                                              9

         SECTION 3.8. Compliance with Law. If any shares of Common Stock
required to be reserved for purposes of exercise of Warrants require, under any
other Federal or state law or applicable governing rule or regulation of any
national securities exchange, registration with or approval of any governmental
authority, or listing on any such national securities exchange before such
shares may be issued upon exercise, the Company will cause such shares to be
duly registered or approved by such governmental authority or listed on the
relevant national securities exchange; provided that the Company shall not have
any obligation under this Agreement to register the Warrant Shares under the
Securities Act state securities laws.

         SECTION 3.9. Payment of Taxes. The Company will pay all expenses,
taxes and other charges payable in connection with the preparation, issuance
and delivery of certificates representing Warrant Shares or Warrant
Certificates representing unexercised Warrants in connection with any exercise
of Warrants in accordance with Section 3.4, except that, if any such
certificates representing Warrant Shares or any such Warrant Certificates are
to be registered in a name or names other than that of the Holder at the time
of any such exercise of Warrants, funds sufficient to pay all transfer or
similar taxes payable as a result of such transfer shall be paid by the Holder
at the time of such exercise or promptly upon receipt of a written request of
the Company for payment thereof. In connection with any exercise of Warrants in
accordance with Section 3.4, the Warrants will be deemed to have been
exercised, any certificate representing Warrant Shares or any Warrant
Certificate issued on account thereof will be deemed to have been issued, and
the person in whose name any such certificate or Warrant Certificate is issued
will be deemed for all purposes to have become a holder of record of the
Warrant Shares or Warrants, as the case may be, represented thereby as of the
date of surrender of the subject Warrant Certificate and payment of the per
share Exercise Price.

                                  ARTICLE 4.

                            Antidilution Provisions

         SECTION 4.1. Changes in Common Stock. In the event that at any time or
from time to time after the date hereof the Company shall (a) pay a dividend in
shares of its Common Stock or make a distribution on its Common Stock in shares
of its Common Stock, (b) subdivide its outstanding shares of Common Stock into
a larger number of shares of Common Stock, (c) combine its outstanding shares
of Common Stock into a smaller number of shares of Common Stock or (d) increase
or decrease the number of shares of Common Stock outstanding by
reclassification of its Common Stock, then the number of shares of Common Stock
purchasable upon exercise of each Warrant immediately after the happening of
such event shall be adjusted so that, after giving affect to such adjustment,
the Holder of each Warrant shall be entitled to receive the number of shares of
Common Stock upon exercise that such holder would have owned had such Warrants
been exercised immediately prior to the happening of the events described above
(or, in the case of a dividend or distribution of Common Stock, immediately
prior to the record date therefor). An adjustment made pursuant to this Section
4.1 shall become effective immediately after the effective date, retroactive to
the record date therefor in the case of a dividend or distribution in shares of
Common Stock, and shall become effective immediately after the effective date
in the case of a subdivision, combination or reclassification.
<PAGE>

                                                                             10

         SECTION 4.2. Cash Dividends and Other Distributions. In the event that
at any time or from time to time after the date hereof the Company shall
distribute to all holders of Common Stock (a) any dividend or other
distribution of cash, evidences of its indebtedness, shares of its capital
stock (other than its Common Stock) or any other properties or securities or
(b) any options, warrants or other rights to subscribe for or purchase any of
the foregoing (other than, in each case set forth in (a) and (b), (i) any
dividend or distribution described in Section 4.1 or (ii) any regular cash
dividend, including increases thereof), then the number of shares of Common
Stock thereafter purchasable upon the exercise of each Warrant shall be
increased to a number determined by multiplying the number of shares of Common
Stock purchasable upon the exercise of such Warrant immediately prior to the
record date for any such dividend or distribution by a fraction, the numerator
of which shall be the Current Market Value per share of Common Stock on the
record date for such distribution, and the denominator of which shall be such
Current Market Value per share of Common Stock less the sum of (x) any cash
distributed per share of Common Stock (excluding any regular cash dividends,
including increases thereof) and (y) the fair value (the "Fair Value") (as
determined in good faith by the Board, whose determination shall be evidenced
by a board resolution filed with the Warrant Agent, a copy of which will be
sent to Holders upon request) of the portion, if any, of the distribution
applicable to one share of Common Stock consisting of evidences of
indebtedness, shares of stock, securities, other property, warrants, options or
subscription of purchase rights (notwithstanding the foregoing, if the Fair
Value per share of Common Stock in the above formula equals or exceeds the
Current Market Value per share of Common Stock in the above formula, then the
Current Market Value per share of Common Stock shall be equal to the Fair Value
per share of the Common Stock on the record date as determined in good faith by
the Board, whose determination shall be evidenced by a board resolution filed
with the Warrant Agent, a copy of which will be sent to the Holders upon
request). If the majority of the Holders object to the Fair Value as determined
by the Board under the terms of this Section 4.2, then the Board shall be
required to retain an investment banking firm of recognized national standing
to determine the Fair Value of the matter in question. Such adjustments shall
be made whenever any distribution is made and shall become effective as of the
date of distribution, retroactive to the record date for any such distribution;
provided, however, that the Company is not required to make an adjustment
pursuant to this Section 4.2 if at the time of such distribution the Company
makes the same distribution to Holders of Warrants as it makes to holders of
Common Stock based on the number of shares of Common Stock for which such
Warrants are exercisable (whether or not currently exercisable).

         SECTION 4.3. NIEP Awards Issued as Options. In the event that at any
time or from time to time after the date hereof the Company shall issue,
distribute or otherwise grant any NIEP Awards in the form of options to
purchase Common Stock (each such option being referred to herein as a "NIEP
Option"), and with respect to such shares of Common Stock, the per share
exercise price is lower on the date of grant than the Fair Market Value
(defined below) of such shares of Common Stock on the date of grant, then the
number of shares of Common Stock thereafter purchasable upon the exercise of
each Warrant shall be increased to a number determined by multiplying the
number of shares of Common Stock purchasable upon the exercise of such Warrant
immediately prior to the date of issuance of such NIEP Options by a fraction,
the numerator of which shall be the number of shares of Common Stock actually
issued and outstanding on the date of issuance of such NIEP Options plus the
number of additional shares of Common Stock issuable upon the exercise of the
NIEP Options, and the denominator of which shall be the number of shares of
Common Stock actually issued
<PAGE>

                                                                             11

and outstanding on the date of issuance of such NIEP Options plus the total
number of shares of Common Stock which could be purchased at the Fair Market
Value with the aggregate consideration received upon exercise of such NIEP
Options (excluding any fractional shares). For purposes of this Section 4.3 and
Section 4.4, "Fair Market Value" shall mean the fair market value per share of
Common Stock for purposes of Section 422(b)(4) of the Code ("Fair Market
Value"), except that if the NIEP Awards are granted on or within 90 days of the
Plan Effective Date, then the Fair Market Value shall be the fair market value
per share of Common Stock on the Plan Effective Date, which shall be deemed to
be $20.12.

         SECTION 4.4. NIEP Awards Issued as Additional Shares of Common Stock.
In the event that at any time or from time to time after the date hereof the
Company shall issue or grant any NIEP Awards in the form of additional shares
of Common Stock (such additional shares of Common Stock being referred to
herein as "NIEP Shares") for consideration less than the Fair Market Value
determined as of the time the NIEP Shares are granted, then the number of
shares of Common Stock thereafter purchasable upon the exercise of each Warrant
shall be increased to a number determined by multiplying the number of shares
of Common Stock purchasable upon the exercise of each Warrant immediately prior
to such issue or grant by a fraction the numerator of which shall be the number
of shares of Common Stock actually issued and outstanding immediately after
such issue or sale of NIEP Shares, and the denominator of which shall be the
sum of (i) the number of shares of Common Stock actually issued and outstanding
immediately prior to such issue or sale of NIEP Shares, and (ii) the number of
shares of Common Stock which could be purchased at the Fair Market Value with
the aggregate consideration received from the issuance or grant of the
additional NIEP Shares (excluding any fractional shares).

         SECTION 4.5. Combination; Liquidation. (a) Except as provided in
Section 4.5(b), in the event of any Combination, the Holders shall have the
right to receive upon exercise of the Warrants such number of shares of capital
stock or other securities or property which such Holder would have been
entitled to receive upon or as a result of such Combination had such Warrant
been exercised immediately prior to such event. Unless paragraph (b) is
applicable to a Combination, the Company shall provide that the surviving or
acquiring Person (the "Successor Company") in such Combination will enter into
an agreement with the Warrant Agent confirming the Holders' rights pursuant to
this Section 4.5(a) and providing for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Article 4. The provisions of this Section 4.5(a) shall similarly apply to
successive Combinations involving any Successor Company.

         (b)      In the event of (i) a Combination where consideration to
holders of Common Stock in exchange for their shares is payable solely in cash,
or (ii) the dissolution, liquidation or winding-up of the Company in which
holders of Common Stock shall receive a cash payment or other consideration in
respect of their shares of Common Stock, then the Holders of the Warrants will
be entitled to receive distributions on an equal basis with the holders of
Common Stock or other securities issuable upon exercise of the Warrants, as if
the
<PAGE>

                                                                             12

Warrants had been exercised immediately prior to such event, less the Exercise
Price (subject to adjustment in accordance with Article 4).

         (c)      In case of any Combination described in Section 4.5(b), the
surviving or acquiring Person and, in the event of any reorganization,
dissolution, liquidation or winding-up of the Company in which holders of the
Common Stock will receive a cash payment or other consideration in respect of
their shares of Common Stock, the Company, shall deposit with the Warrant
Agent, prior to the effective time of such Combination or such dissolution,
liquidation, or winding-up, the funds, if any, necessary to pay to the holders
of the Warrants the amounts to which they are entitled as described above.
After such funds and the surrendered Warrant Certificates are received, the
Warrant Agent shall make payment to the Holders by delivering a check in such
amount as is appropriate (or, in the case of consideration other than cash,
such other consideration as is appropriate) to such Person or Persons as it may
be directed in writing by the Holders surrendering such Warrants. Upon the
deposit of sufficient funds to fulfill the Company's obligations hereunder,
which amount shall be further adjusted in accordance with subsequent changes in
the terms of any Combination described herein, if any, the Warrants shall
thereafter represent only the right to receive such cash payments or other
consideration and the Company's obligations in respect of the Warrants shall be
discharged; provided, however, that if such a deposit is made in anticipation
of a Combination, such Combination must actually be consummated before the
Company's obligations in respect of the Warrants shall be discharged.

         SECTION 4.6. Other Adjustments. If any event shall occur as to which
the provisions of this Article 4 are not strictly applicable, but as to which
failure to make any adjustment would, in the reasonable judgment of the Board,
adversely affect the purchase rights of the Warrants in accordance with the
essential intent and principles of the preceding Sections of this Article 4
(which are to place the Holder of a Warrant in a position as nearly as equal as
possible to the position such Holder would have occupied had such Holder
purchased Common Stock on the date hereof), then, in each case, the Warrants
shall be adjusted in such a manner as may be equitable in the circumstances as
the Board acting in good faith shall determine is necessary to protect the
purchase rights of the Warrants.

         SECTION 4.7. Current Market Value. For the purpose of any computation
of Current Market Value under Section 3.6 and Section 4.2, the "Current Market
Value" per share of Common Stock at any date shall be (a) for purposes of
Section 3.6, the closing price on the Business Day immediately prior to the
date of the exercise of the applicable Warrant pursuant to Article 3 and (b) in
all other cases, the average of the daily closing prices for the shorter of (i)
the 20 consecutive trading days ending on the last full trading day on the
exchange or market specified in the second succeeding sentence prior to the
Time of Determination (as defined below) and (ii) the period commencing on the
date next succeeding the first public announcement of the issuance, sale,
distribution or granting in question through such last full trading day prior
to the Time of Determination. The term "Time of Determination" as used herein
shall be the time and date of the earlier to occur of (A) the date as of which
the Current Market Value is to be computed or (B) the last full trading day on
such exchange or market before the commencement of "ex-dividend" trading in the
Common Stock relating to the event giving rise to the adjustment required by
Section 4.2. The closing price for any day shall be the
<PAGE>

                                                                             13

last reported sale price regular way or, in case no such reported sale takes
place on such day, the average of the closing bid and asked prices regular way
for such day, in each case (1) on the principal national securities exchange on
which the shares of Common Stock are listed or to which such shares are
admitted to trading or (2) if the Common Stock is not listed or admitted to
trading on a national securities exchange, in the over-the-counter market as
reported by the Nasdaq National Market or any comparable system or (3) if the
Common Stock is not listed on the Nasdaq National Market or a comparable
system, as furnished by two members of the NASD selected from time to time in
good faith by the Board for that purpose. In the absence of all of the
foregoing, or if for any other reason the Current Market Value per share cannot
be determined pursuant to the foregoing provisions of this Section 4.7, the
Current Market Value per share shall be the fair value thereof determined in
good faith by the Board, whose determination shall be supported by an opinion
from an investment banking firm of reorganized national standing and evidenced
by a Board resolution filed with the Warrant Agent.

         SECTION 4.8. Adjustment to Exercise Price. Whenever the number of
Warrant Shares purchasable upon the exercise of each Warrant is adjusted as
herein provided, the Exercise Price will be adjusted by multiplying the
Exercise Price in effect immediately prior to such adjustment by a fraction,
the numerator of which will be the number of Shares of Common Stock purchasable
upon the exercise of each Warrant immediately prior to such adjustment, and the
denominator of which will be the number of Shares of Common Stock purchasable
immediately thereafter.

         SECTION 4.9. Superseding Adjustment. Upon the expiration of any
rights, options, warrants or conversion or exchange privileges which resulted
in the adjustments pursuant to this Article 4, if any thereof shall not have
been exercised, the number of Warrant Shares purchasable upon the exercise of
each Warrant shall be readjusted as if (a) the only shares of Common Stock
issuable upon exercise of such rights, options, warrants, conversion or
exchange privileges were the shares of Common Stock, if any, actually issued
upon the exercise of such rights, options, warrants or conversion or exchange
privileges and (b) shares of Common Stock actually issued, if any, were
issuable for the consideration actually received by the Company upon such
exercise plus the aggregate consideration, if any, actually received by the
Company for the issuance, sale or grant of all such rights, options, warrants
or conversion or exchange privileges whether or not exercised; provided,
however, that no such readjustment shall (except by reason of an intervening
adjustment under Section 4.1) have the effect of decreasing the number of
Warrant Shares purchasable upon the exercise of each Warrant by an amount in
excess of the amount of the adjustment initially made in respect of the
issuance, sale or grant of such rights, options, warrants or conversion or
exchange privileges.

         SECTION 4.10. Minimum Adjustment. The adjustments required by the
preceding Sections of this Article 4 shall be made whenever and as often as any
specified event requiring an adjustment shall occur, except that no adjustment
of the number of shares of Common Stock purchasable upon exercise of Warrants
that would otherwise be required shall be made (except in the case of a
subdivision or combination of shares of Common Stock, as provided for in
Section 4.1) unless and until such adjustment either by itself or with other
adjustments not previously made increases or decreases by at least 1% the
number of shares of Common Stock purchasable upon exercise of Warrants
immediately prior to the making of such
<PAGE>

                                                                             14

adjustment. Any adjustment representing a change of less than such minimum
amount shall be carried forward and made as soon as such adjustment, together
with other adjustments required by this Article 4 and not previously made,
would result in a minimum adjustment. For the purpose of any adjustment, any
specified event shall be deemed to have occurred at the close of business on
the date of its occurrence. In computing adjustments under this Article 4,
fractional interests in Common Stock shall be disregarded.

         SECTION 4.11. Notice of Adjustment. Whenever the number of shares of
Common Stock and other property, if any, purchasable upon exercise of Warrants
is adjusted, as herein provided, the Company shall, within a reasonable time,
deliver to the Warrant Agent a certificate setting forth, in reasonable detail,
the event requiring the adjustment and the method by which such adjustment was
calculated (including a description of the basis on which the Board determined
the fair market value of any evidences of indebtedness, other securities or
property or warrants or other subscription or purchase rights), and specifying
the number of shares of Common Stock purchasable upon exercise of Warrants
after giving effect to such adjustment. The Company shall promptly cause the
Warrant Agent to mail a copy of such certificate to each Holder in accordance
with Section 7.6. The Warrant Agent shall be entitled to rely on such
certificate and shall be under no duty or responsibility with respect to any
such certificate, except to exhibit the same from time to time, to any Holder
desiring an inspection thereof during reasonable business hours. The Warrant
Agent shall not at any time be under any duty or responsibility to any Holder
to determine whether any facts exist which may require any adjustment of the
Exercise Price or the number of shares of Common Stock or other stock or
property, purchasable on exercise of the Warrants, or with respect to the
nature or extent of any such adjustment when made, or with respect to the
method employed in making such adjustment or the validity or value of any
shares of Common Stock.

         SECTION 4.12. Notice of Certain Transactions. In the event that the
Company shall propose (a) to pay any dividend payable in securities of any
class to the holders of its Common Stock or to make any other distribution to
the holders of its Common Stock (other than regular cash dividends or any
increases thereof), (b) to offer the holders of its Common Stock rights to
subscribe for or to purchase any securities convertible into shares of Common
Stock or shares of Common Stock or shares of stock of any class or any other
securities, rights or options, (c) to effect any reclassification of its Common
Stock, capital reorganization or Combination, (d) to effect the voluntary or
involuntary dissolution, liquidation or winding-up of the Company, or (e) to
effect any other event which would require adjustments under Article 4, the
Company shall within five Business Days of the adoption of a Board resolution
approving such action send to the Warrant Agent and the Warrant Agent shall
within five Business Days thereafter send the Holders a notice (in such form as
shall be furnished to the Warrant Agent by the Company) of such proposed
action, such notice to be mailed by the Warrant Agent to the Holders at their
addresses as they appear in the Certificate Register, which shall specify the
record date for the purposes of such dividend, distribution or rights, or the
date such issuance or event is to take place and the date of participation
therein by the holders of Common Stock, if any such date is to be fixed, and
shall briefly indicate the effect of such action on the Common Stock and on the
number and kind of any other shares of stock and on other property, if any, and
the number of shares of Common Stock and other property, if any, purchasable
upon exercise of each Warrant
<PAGE>

                                                                             15

after giving effect to any adjustment which will be required as a result of
such action. Such notice shall be given by the Company as promptly as possible
and, in the case of any action covered by clause (a) or (b) above, at least 30
Business Days prior to the record date for determining holders of the Common
Stock for purposes of such action and, in the case of any other such action, at
least 30 Business Days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of Common Stock, whichever
shall be the earlier.

         SECTION 4.13. Adjustment in Exercise Price. Upon each event that
provides for an adjustment of the number of shares of Common Stock issuable
upon exercise of each Warrant pursuant to this Article 4, each Warrant
outstanding prior to the making of the adjustment shall thereafter have an
adjusted Exercise Price (calculated to the nearest hundredth) equal to an
amount determined by multiplying the Exercise Price immediately prior to
adjustment by a fraction, the numerator of which shall be the number of shares
of Common Stock issuable upon exercise of a Warrant prior to adjustment and the
denominator of which shall be the adjusted number of shares of Common Stock
issuable upon exercise of a Warrant subsequent to such adjustment pursuant to
this Article 4.

         SECTION 4.14. Adjustment to Warrant Certificate. The form of Warrant
Certificate need not be changed because of any adjustment made pursuant to this
Article 4, and Warrant Certificates issued after such adjustment may state the
same number of shares of Common Stock as are stated in any Warrant Certificates
issued prior to the adjustment. The Company, however, may at any time in its
sole discretion make any change in the form of the Warrant Certificate that it
may deem appropriate to give effect to such adjustments and that does not
affect the substance of the Warrant Certificate, and any Warrant Certificate
thereafter issued or countersigned, whether in exchange or substitution for an
outstanding Warrant Certificate or otherwise, may be in the form as so changed.

                                  ARTICLE 5.

                                 Warrant Agent

         SECTION 5.1. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with provisions
of this Agreement and the Warrant Agent hereby accepts such appointment.

         SECTION 5.2. Rights and Duties of Warrant Agent. (a) In acting under
this Agreement and in connection with the Warrant Certificates, the Warrant
Agent is acting solely as agent of the Company and does not assume any
obligation or relationship or agency or trust for or with any of the holders of
Warrant Certificates or beneficial owners of Warrants.

         (b)      The Warrant Agent may consult with counsel reasonably
satisfactory to it and the Company, and the advice of such counsel shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with the
advice of such counsel.
<PAGE>

                                                                             16

         (c)      The Warrant Agent shall be protected and shall incur no
liability for or in respect of any action taken or thing suffered by it in
reliance upon any Warrant Certificate, notice, direction, consent, certificate,
affidavit, statement or other paper or document reasonably believed by it to be
genuine and to have been presented or signed by the proper parties.

         (d)      The Warrant Agent shall be obligated to perform only such
duties as are herein and in the Warrant Certificates specifically set forth and
no implied duties or obligations shall be read into this Agreement or the
Warrant Certificates against the Warrant Agent. The Warrant Agent shall not be
under any obligation to take any action hereunder which may tend to involve it
in any expense or liability for which it does not receive indemnity if such
indemnity is reasonably requested. The Warrant Agent shall not be accountable
or under any duty or responsibility for the use by the Company of any of the
Warrant Certificates countersigned by the Warrant Agent and delivered by it to
the Holders or on behalf of the Holders pursuant to this Agreement or for the
application by the Company of the proceeds of the Warrants. The Warrant Agent
shall have no duty or responsibility in case of any default by the Company in
the performance of its covenants or agreements contained herein or in the
Warrant Certificates or in the case of the receipt of any written demand from a
Holder with respect to such default, including any duty or responsibility to
initiate or attempt to initiate any proceedings at law or otherwise.

         (e)      The Warrant Agent shall not at any time be under any duty or
responsibility to any Holder to determine whether any facts exist that may
require an adjustment of the number of shares of Common Stock purchasable upon
exercise of each Warrant or with respect to the nature or extent of any
adjustment when made, or with respect to the method employed, or herein or in
any supplemental agreement provided to be employed, in making the same. The
Warrant Agent shall not be accountable with respect to the validity or value of
any shares of Common Stock or of any securities or property which may at any
time be issued or delivered upon the exercise of any Warrant or upon any
adjustment pursuant to Article 4, and it makes no representation with respect
thereto. The Warrant Agent shall not be responsible for any failure of the
Company to make any cash payment or to issue, transfer or deliver any shares of
Common Stock or stock certificates upon the surrender of any Warrant
Certificate for the purpose of exercise or upon any adjustment pursuant to
Article 4, or to comply with any of the covenants of the Company contained in
Article 4.

         SECTION 5.3. Individual Rights of Warrant Agent. Subject to compliance
with applicable federal and state securities laws, the Warrant Agent and any
stockholder, director, officer or employee of the Warrant Agent may buy, sell
or deal in any of the Warrants or other securities of the Company or its
affiliates or become peculiarly interested in transactions in which the Company
or its affiliates may be interested, or contract with or lend money to the
Company or its affiliates or otherwise act as fully and freely as though it
were not the Warrant Agent under this Agreement. Nothing herein shall preclude
the Warrant Agent from acting in any other capacity for the Company or for any
other legal entity.

         SECTION 5.4. Warrant Agent's Disclaimer. The Warrant Agent shall not
be responsible for and makes no representation as to the validity or adequacy
of this Agreement or
<PAGE>

                                                                             17

the Warrant Certificates and it shall not be responsible for any statement in
this Agreement or the Warrant Certificates other than its countersignature
thereon.

         SECTION 5.5. Compensation and Indemnity. The Company and the Warrant
Agent have entered into an agreement pursuant to which the Company agrees to
pay the Warrant Agent from time to time reasonable compensation for its
services and to reimburse the Warrant Agent upon request for all reasonable out
of pocket expenses incurred by it, including the reasonable compensation and
expenses of the Warrant Agent's agents and counsel. The Company shall indemnify
and hold harmless the Warrant Agent against any loss, liability or expense
(including agents' and attorneys' fees and expenses) incurred by it without
willful misconduct, gross negligence or bad faith on its part arising out of or
in connection with the acceptance or performance of its duties under this
Agreement. The Warrant Agent shall notify the Company promptly of any claim for
which it may seek indemnity and the failure to provide such notice shall not
prejudice the Warrant Agent's right to indemnity hereunder unless and to the
extent that the Company's ability to defend any such claim shall have been
materially compromised as a result of such failure to notify. The Company need
not reimburse any expense or indemnify against any loss or liability incurred
by the Warrant Agent through willful misconduct, gross negligence or bad faith.
The Company's payment obligations pursuant to this Section 5.5 shall survive
the termination of this Agreement.

         SECTION 5.6. Successor Warrant Agent. (a) The Company agrees for the
benefit of the Holders that there shall at all times be a Warrant Agent
hereunder until all the Warrants have been exercised or are no longer
exercisable.

         (b)      The Warrant Agent may at any time resign by giving written
notice to the Company of such intention on its part, specifying the date on
which its desired resignation shall become effective; provided, however, that
such date shall not be less than 30 days after the date on which such notice is
given, unless the Company otherwise agrees. The Warrant Agent hereunder may be
removed at any time by the filing with it of an instrument in writing signed by
or on behalf of the Company and specifying such removal and the date when it
shall become effective, which date shall not be less than 30 days after such
notice is given unless the Warrant Agent otherwise agrees. Any removal under
this Section 5.6 shall take effect upon the appointment by the Company as
hereinafter provided of a successor Warrant Agent (which shall be a bank or
trust company authorized under the laws of the jurisdiction of its organization
to exercise corporate trust powers) and the acceptance of such appointment by
such successor Warrant Agent.

         (c)      In case at any time the Warrant Agent shall resign, or shall
be removed, or shall become incapable of acting, or shall be adjudged a
bankrupt or insolvent, or shall commence a voluntary case under the Federal
bankruptcy laws, as now or hereafter constituted, or under any other applicable
Federal or state bankruptcy, insolvency or similar law or shall consent to the
appointment of or taking possession by a receiver, custodian, liquidator,
assignee, trustee, sequestrator (or other similar official) of the Warrant
Agent or its property or affairs, or shall make an assignment for the benefit
of creditors, or shall admit in writing its inability to pay its debts
generally as they become due, or shall take corporate action in furtherance of
any such action, or a decree or order for relief by a court having jurisdiction
in the premises shall have
<PAGE>

                                                                             18

been entered in respect of the Warrant Agent in an involuntary case under the
Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or State bankruptcy, insolvency or similar law; or a decree
or order for relief by a court having jurisdiction in the premises shall have
been entered for the appointment of a receiver, custodian, liquidator,
assignee, trustee, sequestrator (or similar official) of the Warrant Agent or
of its property or affairs, or any public officer shall take charge or control
of the Warrant Agent or of its property or affairs for the purpose of
rehabilitation, conservation, winding up of or liquidation, a successor Warrant
Agent, qualified as aforesaid, shall be appointed by the Company by an
instrument in writing, filed with the successor Warrant Agent. Upon the
appointment as aforesaid of a successor Warrant Agent and acceptance by the
successor Warrant Agent of such appointment, the Warrant Agent shall cease to
be Warrant Agent hereunder; provided, however, that in the event of the
resignation of the Warrant Agent hereunder, such resignation shall be effective
on the earlier of (i) the date specified in the Warrant Agent's notice of
resignation and (ii) the appointment and acceptance of a successor Warrant
Agent hereunder.

         (d)      Any successor Warrant Agent appointed hereunder shall
execute, acknowledge and deliver to its predecessor and to the Company an
instrument accepting such appointment hereunder, and thereupon such successor
Warrant Agent, without any further act, deed or conveyance, shall become vested
with all the rights and obligations of such predecessor with like effect as if
originally named as Warrant Agent hereunder, and such predecessor, upon payment
of its charges and disbursements then unpaid, shall thereupon become obligated
to transfer, deliver and pay over, and such successor Warrant Agent shall be
entitled to receive, all monies, securities and other property on deposit with
or held by such predecessor, as Warrant Agent hereunder.

         (e)      Any corporation into which the Warrant Agent hereunder may be
merged or consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
to which the Warrant Agent shall sell or otherwise transfer all or
substantially all the assets and business of the Warrant Agent, provided that
it shall be qualified as aforesaid, shall be the successor Warrant Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto.

                                  ARTICLE 6.

                   Representations, Warranties and Agreements

         SECTION 6.1. Agreement of Warrant Holders. Every Holder by accepting a
Warrant Certificate consents and agrees with the Company and the Warrant Agent
and with every other Holder that:

                  (a)      the Warrant Certificates are transferable only in
         accordance with the terms of this Agreement and only on the registry
         books of the Warrant Agent if surrendered at the principal office of
         the Warrant Agent designated for such
<PAGE>

                                                                             19

         purpose, duly endorsed or accompanied by a proper instrument of
         transfer, and otherwise in compliance with Article 2;

                  (b)      the Company and the Warrant Agent may deem and treat
         the person in whose name the Warrant Certificate is registered on the
         Certificate Register as the absolute owner thereof and of the Warrants
         evidenced thereby (notwithstanding any notations of ownership or
         writing on the Warrant Certificate made by anyone other than the
         Company or the Warrant Agent) for all purposes whatsoever, and neither
         the Company nor the Warrant Agent will be affected by any notice to
         the contrary;

                  (c)      notwithstanding anything in this Agreement to the
         contrary, the Warrant Agent will not have any liability to any Holder
         or other person as a result of its inability to perform any of its
         obligations under this Agreement by reason of any preliminary or
         permanent injunction or other order, decree or ruling issued by a
         court of competent jurisdiction or by a governmental, regulatory or
         administrative agency or commission, or any statute, rule, regulation
         or executive order promulgated or enacted by any governmental
         authority, prohibiting or otherwise restraining performance of such
         obligation; provided, however, that the Company will use commercially
         reasonable efforts to have any such order, decree or ruling lifted or
         otherwise overturned as soon as possible.

         SECTION 6.2. Representations and Warranties of the Company. The
Company hereby represents and warrants to the Warrant Agent that, subject to
the receipt of any necessary approvals from the Bankruptcy Court:

                  (a)      the Company is a corporation duly organized, validly
         existing and in good standing under the laws of the State of Delaware
         and has all requisite corporate power and authority to execute, deliver
         and perform its obligations hereunder and to consummate the
         transactions contemplated hereby;

                  (b)      the execution, delivery and performance of this
         Agreement by the Company and the consummation by the Company of the
         transactions contemplated hereby have been duly authorized by all
         necessary corporate action on the part of the Company;

                  (c)      the execution, delivery and performance of this
         Agreement by the Company and the consummation by the Company of the
         transactions contemplated hereby in accordance with the terms hereof
         will not conflict with, violate or constitute a breach of any material
         contract, agreement or instrument by which the Company is bound or any
         judgment, order, decree, law, statute, rule, regulation or other
         judicial or governmental restriction to which the company is subject;

                  (d)      this Agreement constitutes the legal, valid and
         binding obligation of the Company, enforceable against the Company in
         accordance with its terms, except as the enforceability hereof may be
         limited by bankruptcy, insolvency, reorganization, moratorium or other
         similar laws affecting creditors' rights generally;
<PAGE>

                                                                             20

         (e)      the Warrants, when issued and delivered to the initial
         Holders as provided in this Agreement, and the Warrant Shares
         purchasable upon exercise of the Warrants, when issued, paid for and
         delivered as provided in this Agreement, will be validly issued, fully
         paid and nonassessable; and

         (f)      the Company shall at all times reserve out of its authorized
         shares of Common Stock a number of shares of Common Stock sufficient
         for the exercise of all outstanding Warrants.

                                  ARTICLE 7.

                                 Miscellaneous

         SECTION 7.1. Agreements Respecting Warrants; Impairment. The Company
will not enter into any agreement or instrument, which would preclude the
exercise of the Warrants as herein provided. The Company shall not by any
action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of
this Warrant, but will at all times assist in the carrying out of all such
terms and in the taking of all such actions as may be necessary or appropriate
to protect the rights of Holder against impairment.

         SECTION 7.2. SEC Reports. The Company shall file its annual and
quarterly reports and other information, documents and other reports (or copies
of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that the
Company may not be subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act, the Company shall file with the SEC (to the extent the SEC
will accept such filings) such annual reports and such information, documents
and other reports as are specified in Sections 13 and 15(d) of the Exchange Act
and applicable to a U.S. corporation subject to such Sections, such
information, documents and other reports to be so filed and provided at the
times specified for the filing of such information, documents and reports under
such Sections.

         SECTION 7.3. Persons Benefiting. Nothing in this Agreement is intended
or shall be construed to confer upon any Person other than the Company, the
Warrant Agent and the Holders any right, remedy or claim under or by reason of
this Agreement or any part hereof.

         SECTION 7.4. Rights of Holders. Except as otherwise specifically
required herein, holders of unexercised Warrants are not entitled (a) to
receive dividends or other distributions, (b) to receive notice of or vote at
any meeting of the stockholders, (c) to consent to any action of the
stockholders, (d) to receive notice of any other proceedings of the Company, or
(e) to exercise any other rights as stockholders of the Company.
<PAGE>

                                                                             21

         SECTION 7.5. Amendment. This Agreement may be amended by the parties
hereto without the consent of any Holder for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or making any other provisions with respect to matters or
questions arising under this Agreement as the Company and the Warrant Agent may
deem necessary or desirable; provided, however, that such action shall not
affect adversely the rights of the Holders. Any amendment or supplement to this
Agreement (including any Exhibit hereto) that has or would have an adverse
effect on the interests of the Holders shall require the written consent of the
Holders of a majority of the outstanding Warrants. The consent of each Holder
affected shall be required for any amendment pursuant to which the Exercise
Price would be increased or the number of Warrant Shares purchasable upon
exercise of Warrants would be decreased (other than pursuant to any adjustments
pursuant to Article 4 hereof). In determining whether the Holders of the
required number of Warrants have concurred in any direction, waiver or consent,
Warrants owned by the Company or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company shall be disregarded and deemed not to be outstanding, except that,
for the purpose of determining whether the Warrant Agent shall be protected in
relying on any such direction, waiver or consent, only Warrants which the
Warrant Agent knows are so owned shall be so disregarded. Also, subject to the
foregoing, only Warrants outstanding at the time shall be considered in any
such determination.

         SECTION 7.6. Notices. Any notice or communication shall be in writing
and delivered either in person, via telecopy with machine generated receipt
confirmation, or mailed by first-class mail addressed as follows:

    if to the Company:                Mariner Health Care, Inc.
                                      One Ravinia Drive, Suite 1500
                                      Atlanta, GA 30346
                                      Attention: General Counsel
                                      Telecopy: (678) 443-6778

    with a copy to:                   Powell, Goldstein, Frazer & Murphy LLP
                                      191 Peachtree Street N.E., 16th Floor
                                      Atlanta, GA 30303
                                      Attention: Richard H. Miller, Esq.
                                      Telecopy: (404) 572-6999

    if to the Warrant Agent:

                                      American Stock Transfer & Trust Company
                                      59 Maiden Lane
                                      Plaza Level
                                      New York, NY 10038
                                      Attention: Carolyn O'Neill
                                      Telecopy: (718) 921-8336
<PAGE>

                                                                             22

         The Company or the Warrant Agent by notice to the other may designate
additional or different addresses for subsequent notices or communications.

         Any notice or communication mailed to a Holder shall be mailed to the
Holder at the Holder's address as it appears on the Certificate Register and
shall be sufficiently given if so mailed within the time prescribed.

         Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is provided in the manner stipulated above, it is duly given,
whether or not the addressee receives it.

         SECTION 7.7. GOVERNING LAW. THIS AGREEMENT AND THE WARRANT
CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE.

         SECTION 7.8. Successors. All agreements of the Company in this
Agreement and the Warrant Certificates shall bind its successors. All
agreements of the Warrant Agent in this Agreement shall bind its successors.

         SECTION 7.9. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.

         SECTION 7.10. Headings. The headings of the Articles and Sections of
this Agreement have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.

         SECTION 7.11. Severability. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE>

                                                                             23

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

                                    MARINER HEALTH CARE, INC.

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

                                    AMERICAN STOCK TRANSFER & TRUST COMPANY,
                                    as Warrant Agent

                                    By:
                                       ---------------------------------
                                        Name:
                                        Title:
<PAGE>

                                   EXHIBIT A

                      FORM OF FACE OF WARRANT CERTIFICATE

No.  __                                             Certificate for ___ Warrants

                      WARRANTS TO PURCHASE COMMON STOCK OF

                           MARINER HEALTH CARE, INC.

         THIS CERTIFIES THAT, ____________, or its registered assigns, is the
registered holder of the number of Warrants set forth above (the "Warrants").
Each Warrant entitles the holder thereof (the "Holder"), at its option and
subject to the provisions contained herein and in the Agreement referred to
below, to purchase from Mariner Health Care, Inc., a Delaware corporation ("the
Company"), one share of Common Stock, $.01 par value, of the Company (the
"Common Stock") at the per share exercise price of $28.04 (the "Exercise
Price"), or by Cashless Exercise referred to below. This Warrant Certificate
shall terminate and become void as of the close of business on May [9], 2004
(the "Expiration Date") or upon the exercise hereof as to all the shares of
Common Stock subject hereto. The number of shares purchasable upon exercise of
the Warrants and the Exercise Price per share shall be subject to adjustment
from time to time as set forth in the Agreement.

         This Warrant Certificate is issued under and in accordance with a
Warrant Agreement dated as of May [9], 2002 (the "Agreement"), between the
Company and American Stock Transfer & Trust Company (the "Warrant Agent", which
term includes any successor Warrant Agent under the Agreement), and is subject
to the terms and provisions contained in the Agreement, to all of which terms
and provisions the Holder of this Warrant Certificate consents by acceptance
hereof. The Agreement is hereby incorporated herein by reference and made a
part hereof. Reference is hereby made to the Agreement for a full statement of
the respective rights, limitations of rights, duties and obligations of the
Company, the Warrant Agent and the Holders of the Warrants. Capitalized terms
used but not defined herein shall have the meanings ascribed thereto in the
Agreement. A copy of the Agreement may be obtained for inspection by the Holder
hereof upon written request to the Warrant Agent at American Stock Transfer &
Trust Company, 59 Maiden Lane, Plaza Level, New York, NY 10038.

         Subject to the terms of the Agreement, the Warrants may be exercised
in whole or in part by surrender of this Warrant Certificate with the form of
election to purchase Warrant Shares attached hereto duly executed and with (i)
the simultaneous payment of the Exercise Price in cash (subject to adjustment)
to the Warrant Agent for the account of the Company at the office of the
Warrant Agent or (ii) by Cashless Exercise. Payment of the Exercise Price in
cash shall be made in cash or by certified or official bank check payable to
the order of the Company or by wire transfer of immediately available funds to
an account designated by the Company for such purpose. Payment by Cashless
Exercise shall be made by the surrender of a Warrant or Warrants
<PAGE>

represented by one or more Warrant Certificates and without payment of the
Exercise Price in cash, in exchange for the issuance of such number of shares
of Common Stock equal to the product of (1) the number of shares of Common
Stock for which such Warrant would otherwise then be nominally exercised if
payment of the Exercise Price were being made in cash and (2) the Cashless
Exercise Ratio.

         As provided in the Agreement and subject to the terms and conditions
therein set forth, the Warrants shall be exercisable at any time from and after
the Plan Effective Date; provided, however, that no Warrant shall be
exercisable after the Expiration Date.

         In the event the Company enters into a Combination, the Holder hereof
will be entitled to receive upon exercise of the Warrants the shares of capital
stock or other securities or other property of such surviving entity as such
Holder would have been entitled to receive upon or as the result of such
Combination had the Holder exercised its Warrants immediately prior to such
Combination; provided, however, that in the event that, in connection with such
Combination, consideration to holders of Common Stock in exchange for their
shares is payable solely in cash or in the event of the dissolution,
liquidation or winding-up of the Company, the Holder hereof will be entitled to
receive distributions on an equal basis with the holders of Common Stock as if
the Warrants had been exercised immediately prior to such events, less the
Exercise Price (subject to adjustment in accordance with Article 4 of the
Agreement.).

         The Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with the transfer or
exchange of the Warrant Certificates pursuant to Section 2.4 of the Agreement
but not transfer taxes in connection with any exchange or original issuance
(not involving a transfer) with respect to temporary Warrant Certificates, the
exercise of the Warrants or the Warrant Shares.

         Upon any partial exercise of the Warrants, there shall be
countersigned and issued to the Holder hereof a new Warrant Certificate in
respect of the shares of Common Stock as to which the Warrants shall not have
been exercised. This Warrant Certificate may be exchanged at the office of the
Warrant Agent by presenting this Warrant Certificate properly endorsed with a
request to exchange this Warrant Certificate for other Warrant Certificates
evidencing an equal number of Warrants. No fractional Warrant Shares will be
issued upon the exercise of the Warrants, but the Company shall pay an amount
in cash equal to the Current Market Value for one Warrant Share on the date the
Warrant is exercised, multiplied by such fraction, computed to the nearest
whole cent.

         The Warrants do not entitle any holder hereof to any of the rights of
a stockholder of the Company. All shares of Common Stock issuable by the
Company upon the exercise of the Warrants shall, upon such issue, be duly and
validly issued and fully paid and non-assessable.

         The holder in whose name the Warrant Certificate is registered may be
deemed and treated by the Company and the Warrant Agent as the absolute owner
of the Warrant Certificate for all purposes whatsoever and neither the Company
nor the Warrant Agent shall be affected by notice to the contrary.
<PAGE>

         This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.

                                                     MARINER HEALTH CARE, INC.

                                                     By
                                                        ------------------------

Attest:
        ---------------------------
                Secretary

DATED:

Countersigned:

AMERICAN STOCK TRANSFER & TRUST COMPANY
as Warrant Agent,

By
   -------------------------------
Authorized Signatory
<PAGE>

                     FORM OF REVERSE OF WARRANT CERTIFICATE

                               FORM OF ASSIGNMENT

          (To be executed if the Holder desires to transfer Warrants)

         FOR VALUE RECEIVED, ________________________________________ hereby

sells, assigns, and transfers unto _________________________________________

------------------------------------------------------------------------------
                 (Please print name and address of transferee)

------------------------------------------------------------------------------
this Warrant Certificate, together with all right, title, and interest therein,
and does hereby irrevocably constitute and appoint _____________ Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.

Dated:  ________________, ________

                                                  ------------------------------
                                                  Signature

Signature Guaranteed:
<PAGE>

                                   EXHIBIT B

                  FORM OF ELECTION TO PURCHASE WARRANT SHARES
                          AT PER SHARE EXERCISE PRICE

                (TO BE EXECUTED ONLY UPON EXERCISE OF WARRANTS)

                           MARINER HEALTH CARE, INC.

         The undersigned hereby irrevocably elects to exercise [ ] Warrants at
an exercise price per share (subject to adjustment in accordance with Article 4
of the Agreement) of $28.04 to acquire the number of shares of Common Stock of
Mariner Health Care, Inc. purchasable upon exercise of such Warrants, on the
terms and conditions specified in the within Warrant Certificate and the
Agreement therein referred to, surrenders this Warrant Certificate and all
right, title and interest therein to American Stock Transfer & Trust Company,
and directs that the shares of Common Stock deliverable upon the exercise of
such Warrants be registered or placed in the name and at the address specified
below and delivered thereto.

Date:  ________________, ____

                                                 -------------------------------
                                                 (Signature of Holder)(1)

                                                 -------------------------------
                                                 (Street Address)

                                                 -------------------------------
                                                 (City)    (State)    (Zip Code)

---------------
(1)      The signature must correspond with the name as written upon the face of
         the within Warrant Certificate in every particular, without alteration
         or enlargement or any change whatever, and must be guaranteed by a
         national bank or trust company or by a member firm of any national
         securities exchange.
<PAGE>

                                                 Signature Guaranteed by:

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

Securities and/or check to be issued to:

         Please insert social security or identifying number:

         Name:

         Street Address:

         City, State and Zip Code:

Any unexercised Warrants evidenced by the within Warrant Certificate to be
issued to:

         Please insert social security or identifying number:

         Name:

         Street Address:

         City, State and Zip Code:
<PAGE>

                                   EXHIBIT C

                  FORM OF ELECTION TO PURCHASE WARRANT SHARES
                              BY CASHLESS EXERCISE

                (TO BE EXECUTED ONLY UPON EXERCISE OF WARRANTS)

                           MARINER HEALTH CARE, INC.

         The undersigned hereby irrevocably elects to exercise [ ] Warrants at
an exercise price per share (subject to adjustment in accordance with Article 4
of the Agreement) of $28.04 by Cashless Exercise to acquire the number of
shares of Common Stock of Mariner Health Care, Inc. purchasable upon exercise
of such Warrants, on the terms and conditions specified in the within Warrant
Certificate and the Agreement therein referred to, surrenders this Warrant
Certificate and all right, title and interest therein to American Stock
Transfer & Trust Company, and directs that the shares of Common Stock
deliverable upon the exercise of such Warrants be registered or placed in the
name and at the address specified below and delivered thereto. Payment by
Cashless Exercise is hereby made by the surrender of this Certificate and
without payment of the Exercise Price in cash, in exchange for the issuance of
such number of shares of Common Stock equal to the product of (1) the number of
shares of Common Stock for which such Warrant would otherwise then be nominally
exercised if payment of the Exercise Price were being made in cash and (2) the
Cashless Exercise Ratio as provided in Article 1 of the Agreement.

Date:  ________________, ____

                                                -------------------------------
                                                     (Signature of Holder)(1)

                                                -------------------------------
                                                         (Street Address)

---------------
(1)      The signature must correspond with the name as written upon the face of
         the within Warrant Certificate in every particular, without alteration
         or enlargement or any change whatever, and must be guaranteed by a
         national bank or trust company or by a member firm of any national
         securities exchange.
<PAGE>

                                                -------------------------------
                                                (City)    (State)    (Zip Code)

                                                     Signature Guaranteed by:

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

Securities and/or check to be issued to:

         Please insert social security or identifying number:

         Name:

         Street Address:

         City, State and Zip Code:

Any unexercised Warrants evidenced by the within Warrant Certificate to be
issued to:

         Please insert social security or identifying number:

         Name:

         Street Address:

         City, State and Zip Code:<PAGE>

                      EQUITY REGISTRATION RIGHTS AGREEMENT

                                   DATED AS OF

                                  May __, 2002

                                  BY AND AMONG

                            MARINER HEALTH CARE, INC.

                                       AND

                            THE PERSONS LISTED ON THE
                         SIGNATURE PAGES ATTACHED HERETO

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                              PAGE
<S>                                                                                                           <C>
ARTICLE I. Definitions and Rules of Construction................................................................2

   1.1      Definitions.........................................................................................2
   1.2      Rules of Construction...............................................................................5

ARTICLE II. Shelf Registration..................................................................................5

   2.1      Filing of Shelf Registration Statement..............................................................5
   2.2      Underwriting Procedures.............................................................................6

ARTICLE III. Demand Registration................................................................................8

   3.1      Right to Demand Registration........................................................................8
   3.2      Exceptions to Demand Registrations..................................................................8
   3.3      Blackout Period.....................................................................................9
   3.4      Priority in Registration...........................................................................10
   3.5      Effective Demand Registration......................................................................10
   3.6      Revocation of Demand Registration..................................................................10
   3.7      Continuous Effectiveness of Registration Statement.................................................11
   3.8      Selection of Underwriters in an Underwritten Demand Registration...................................11

ARTICLE IV. Piggyback Registration.............................................................................11

   4.1      Right to Piggyback.................................................................................11
   4.2      Priority in Piggyback Registration.................................................................12

ARTICLE V. Procedures and Expenses.............................................................................13

   5.1      Registration Procedures............................................................................13
   5.2      Information from Holder............................................................................17
   5.3      Roadshows..........................................................................................18
   5.4      Holdback Agreements................................................................................19
   5.5      Suspension of Disposition..........................................................................19
   5.6      Registration Expenses..............................................................................19

ARTICLE VI. Indemnification....................................................................................20

   6.1      Indemnification by the Company.....................................................................20
   6.2      Indemnification by Holders.........................................................................21
   6.3      Conduct of Indemnification Proceedings.............................................................21
   6.4      Contribution, etc..................................................................................22

</TABLE>

<PAGE>

<TABLE>
<S>                                                                                                            <C>
ARTICLE VII. Miscellaneous.....................................................................................23

   7.1      Additional Parties.................................................................................23
   7.2      Notices............................................................................................24
   7.3      Assignment.........................................................................................24
   7.4      No Third-Party Beneficiaries.......................................................................25
   7.5      Counterparts.......................................................................................25
   7.6      Entire Agreement...................................................................................25
   7.7      Amendment and Waiver...............................................................................25
   7.8      No Waiver..........................................................................................25
   7.9      Headings...........................................................................................25
   7.10     Severability.......................................................................................26
   7.11     GOVERNING LAW......................................................................................26
   7.12     Specific Performance...............................................................................26
   7.13     Further Assurances.................................................................................26

</TABLE>

<PAGE>

                      EQUITY REGISTRATION RIGHTS AGREEMENT

                  This EQUITY REGISTRATION RIGHTS AGREEMENT (this "Agreement"),
dated as of May __, 2002 (the "Effective Date"), is made by and among Mariner
HEALTH CARE, Inc., a Delaware corporation formerly known as Mariner Post-Acute
Network, Inc. (the "Company"), each of the Holders that is the Beneficial Owner
as of the Effective Date of at least 10% or more of the outstanding Shares (as
defined in Section 1.1) on the Effective Date, as listed on the signature pages
attached hereto, each Permitted Transferee (as defined in Section 1.1) and any
other Holders that are the Beneficial Owners as of the Effective Date of at
least 10% or more of the outstanding Shares on the Effective Date who may become
parties to this Agreement from time to time pursuant to and in accordance with
Section 7.1 of this Agreement.

                                    RECITALS

                  A.       The Company, its subsidiaries and affiliated
partnerships, joint ventures and limited liability companies that are debtors
and debtors in possession have filed with the United States Bankruptcy Court in
the District of Delaware the Joint Plan of Reorganization, dated as of November
30, 2001 (as amended for confirmation and confirmed by an order of the United
States Bankruptcy Court for the District of Delaware, dated April 3, 2002,
including all exhibits thereto and all documents incorporated by reference
therein or contained in the documentary supplement thereto, the "Joint Plan").

                  B.       Pursuant to the Joint Plan and the transactions
contemplated thereby, each of the Holders may become the Beneficial Owner (as
defined in Section 1.1) of shares or Warrants (as defined in Section 1.1)
exercisable to purchase shares of common stock, par value $.01 per share, of the
Company to be issued on the Effective Date or reserved for issuance after the
Effective Date, together with any other equity securities that may be issued by
the Company in substitution therefor pursuant to the Joint Plan ("New Common
Stock").

                  C.       In accordance with the terms of the Joint Plan, the
Company desires to provide for the registration of the sale by the Holders of
the Registrable Securities (as defined in Section 1.1) from time to time, on the
terms and subject to conditions set forth below.

                                   AGREEMENTS

                  NOW, THEREFORE, in consideration of the foregoing and the
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:

<PAGE>

                                   ARTICLE I.
                      Definitions and Rules of Construction

                  1.1      Definitions. All terms defined in the Joint Plan
shall have such defined meanings when used herein or in any Exhibit hereto
unless otherwise defined herein or therein. As used in this Agreement, the
following terms shall have the following meanings:

                  "Advice" shall have the meaning defined in Section 5.5.

                  "Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" of a
Person means the power, directly or indirectly, either to (a) vote 10% or more
of the securities having ordinary voting power for the election of directors of
such Person or (b) direct or cause the direction of the management and policies
of such Person, whether by contract or otherwise.

                  "Agreement" shall have the meaning defined in the Preamble.

                  "Beneficial Owner" or "Beneficial Ownership" shall have the
meaning defined in Rule 13d-3 under the Exchange Act.

                  "Blackout Period" shall have the meaning defined in Section
3.3.

                  "Board" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board of Directors.

                  "Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to close.

                  "Company" shall have the meaning defined in the Preamble.

                  "Demand Registration" shall have the meaning defined in
Section 3.1.

                  "Demand Registration Notice" shall have the meaning defined in
Section 3.1.

                  "Demand Request" shall have the meaning defined in Section
3.1.

                  "Demand Request Threshold" shall have the meaning defined in
Section 3.1.

                  "Effective Date" shall have the meaning defined in the
Preamble.

                  "Effective Period" shall have the meaning defined in Section
2.1.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                                       2
<PAGE>

                  "Extension Period" shall have the meaning defined in Section
5.5.

                  "Holders" means the parties to this Agreement on the Effective
Date that are the Beneficial Owners of at least 10% or more of the outstanding
Shares on the Effective Date and each other Person that becomes a party to this
Agreement from time to time after the Effective Date pursuant to and in
accordance with Section 7.1 of this Agreement that was the Beneficial Owner on
the Effective Date of at least 10% or more of the outstanding Shares on the
Effective Date.

                  "Indemnified Party" shall have the meaning defined in Section
6.3.

                  "Indemnifying Party" shall have the meaning defined in Section
6.3.

                  "Joint Plan" has the meaning defined in Recital A.

                  "Losses" shall have the meaning defined in Section 6.1.

                  "Nasdaq" means the Nasdaq Stock Market, Inc.

                  "New Common Stock" shall have the meaning as defined in
Recital B.

                  "New Warrant Agreement" means that certain Warrant Agreement
dated May [9], 2002 between the Company and American Stock Transfer & Trust
Company, as the Warrant Agent.

                  "Other Holders" shall have the meaning defined in Section 4.2.

                  "Permitted Transferee" means any Person who (i) acquires from
a Holder or Holders, in compliance with all applicable securities laws, all or a
portion of such Holder's Registrable Securities and, as a result of such
transfer or transfers, has Beneficial Ownership of 10% or more of the shares of
New Common Stock then outstanding and (ii) agrees to be bound by the terms of
this Agreement.

                  "Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

                  "Prospectus" means, with respect to any Registration
Statement: if Rule 434 under the Securities Act is relied on, the term sheet
that is first filed pursuant to Rule 424(b)(7) under the Securities Act,
together with the preliminary prospectus identified therein that such term sheet
supplements; if Rule 434 under the Securities Act is not relied on, the
prospectus first filed with the SEC pursuant to Section 424(b) under the
Securities Act; and if Rule 434 under the Securities Act is not relied on and no
prospectus is required to be filed pursuant to Rule 424(b) under the Securities
Act, the prospectus included in such Registration Statement at the time when it
is or was declared effective; in each case, as amended or supplemented by any
prospectus supplement, all other amendments and supplements to such prospectus
(including

                                       3
<PAGE>

post-effective amendments), and all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such prospectus.

                  "Registration Request" shall have the meaning defined in
Section 2.2.

                  "Registrable Securities" means (i) the Shares, including a
Holder's or Holders' Shares purchasable upon the exercise of Warrants and held
by such Holder or Holders and (ii) any securities paid, issued or distributed in
respect of any of the Shares by way of stock dividend, stock split or
distribution, or in connection with a combination of shares or a
reclassification of shares, recapitalization, reorganization, merger or
consolidation, or otherwise, including a Holder's or Holders' Shares purchasable
upon the exercise of Warrants and held by such Holder or Holders; provided,
however, that as to any Registrable Securities, such securities will irrevocably
cease to constitute "Registrable Securities" if: (A) such securities are
disposed of pursuant to an effective registration statement under the Securities
Act; (B) such securities are distributed to the public pursuant to Rule 144; (C)
such securities have been transferred to any Person other than a Permitted
Transferee; or (D) such securities cease to be outstanding.

                  "Registration Expenses" shall have the meaning defined in
Section 5.6.

                  "Registration Statement" means any registration statement of
the Company under the Securities Act on a form the Company is then eligible to
use that covering any of the Registrable Securities pursuant to the provisions
of this Agreement, including the related Prospectus, all amendments and
supplements to such registration statement (including post-effective
amendments), and all exhibits and all materials incorporated by reference or
deemed to be incorporated by reference in such registration statement.

                  "SEC" means the Securities and Exchange Commission (or any
successor thereto).

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Shares" mean the shares of New Common Stock issued to the
Holders pursuant to the Joint Plan on or after the effective date of the Joint
Plan.

                  "Shelf Registration Statement" shall have the meaning defined
in Section 2.1.

                  "Underwritten Offering Notice" shall have the meaning defined
in Section 2.2.

                  "Underwritten Registration" or "Underwritten Offering" means a
registration in which securities of the Company are sold to one or more
underwriters for reoffering to the public pursuant to a firm commitment
offering.

                  "Underwriting Request Threshold" shall have the meaning
defined in Section 2.2.

                  "Violation" shall have the meaning defined in Section 6.1.

                                       4
<PAGE>

                  "Warrants" means the warrants to purchase shares of New Common
Stock issued under the Joint Plan pursuant to the New Warrant Agreement.

                  1.2      Rules of Construction. Unless the context otherwise
requires, (a) all references to Articles or Sections are to Articles or Sections
of this Agreement, (b) each term defined in this Agreement has the meaning
assigned to it, (c) all uses of "herein," "hereto," "hereof" and words similar
thereto in this Agreement refer to this Agreement in its entirety, and not
solely to the Article, Section or provision in which it appears, (d) "or" is
disjunctive but not necessarily exclusive, and (e) words in the singular include
the plural and vice versa.

                                  ARTICLE II.

                               Shelf Registration

                  2.1      Filing of Shelf Registration Statement. (a) As
promptly as practicable following the Effective Date, the Company shall file
with the SEC a Registration Statement covering the resale of the Registrable
Securities by the Holders on a continuous basis pursuant to Rule 415 under the
Securities Act (the "Shelf Registration Statement"). The Company shall use its
best efforts to cause the Shelf Registration Statement (A) to be declared
effective under the Securities Act within 90 days (but in no event more than 180
days) following the Effective Date and (B) once effective, to remain
continuously effective for a period ending on the earlier of: (i) the first date
on which there ceases to be any Registrable Securities; and (ii) the second
anniversary of the date on which the SEC declares such Shelf Registration
Statement effective ("Effective Period") (subject to extension pursuant to
Section 5.5). The Company shall not register any securities other than
Registrable Securities pursuant to the Shelf Registration Statement; provided,
however, that, as contemplated by the registration rights agreement covering
certain Junior Lender Notes (as defined in the Joint Plan), dated as of even
date herewith, among the Company and the parties named therein, the Company
shall be permitted to register pursuant to the Shelf Registration Statement
other securities of the Company issued pursuant to the Joint Plan. The plan of
distribution contained in the Shelf Registration Statement shall permit
Underwritten Offerings. The Shelf Registration Statement shall comply as to form
in all material respects with the requirements of the Securities Act and the
rules and regulations promulgated thereunder, permitting registration of such
Registrable Securities for resale by the Holders in the manner or manners
designated by them (including, without limitation, one or more underwritten
public offerings). If the Shelf Registration Statement ceases to be effective
for any reason at any time during the Effective Period (other than because of
the sale of all of the securities registered thereunder, the Company shall use
its best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and the Effective Period shall be extended pursuant to
Section 5.5 for the Extension Period.

                  (b)      Effective Registration. A registration shall not be
deemed to have been effected pursuant to a Shelf Registration Statement (i)
unless the Shelf Registration Statement with respect thereto has been declared
effective by the SEC or become effective in accordance with the Securities Act
and the rules and regulations thereunder and kept effective as

                                       5
<PAGE>

contemplated by this Section 2.1(b), (ii) if, after it has become effective,
such registration becomes subject to any stop order, injunction or other order
or requirement of the SEC or other governmental agency or court for any reason
other than an act or omission by a Holder or an underwriter selected by the
Holders (provided that this item 2.1(b)(ii) will not be deemed applicable if the
Company obtains the removal of the relevant stop order, injunction or other
order or requirement and extends the Effective Period as provided in Section
5.5), or (iii) the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such registration are not
satisfied, other than by reason of some act or omission by Holders or an
underwriter. If a registration pursuant to this Section is deemed not to have
been effected, then the Company shall continue to be obligated to effect a
registration pursuant to Section 2.1(a) until such registration is effected. The
provisions of Sections 3.3(a), (b) and (c) shall apply to the Shelf Registration
Statement.

                  2.2      Underwriting Procedures. (a) If Holders of at least
the lesser of 20% of the Registrable Securities, determined as of the date
hereof, or Registrable Securities with a then-current market value of $50
million (the "Underwriting Request Threshold") so request in writing (a
"Registration Request"), the Company shall effect pursuant to the Shelf
Registration Statement an Underwritten Offering; provided, however, that the
Company shall not be required to take any action in response to any such
request:

                           (i)      if the Company has effected an Underwritten
                                    Offering pursuant to this Section 2.2(a)
                                    within the 270-day period immediately
                                    preceding such request;

                           (ii)     if, following the receipt of all responses
                                    to the Underwritten Offering Notice, the
                                    Registrable Securities requested to be
                                    included in the Underwritten Offering have a
                                    then-current market value of less than $50.0
                                    million;

                           (iii)    if the Holders making such request have not
                                    secured the services of an underwriter or
                                    underwriters (it being understood that the
                                    Company shall have no obligation to secure
                                    the services of an underwriter on behalf of
                                    the Holders); or

                           (iv)     if entitled to delay action pursuant to
                                    Section 3.3.

The Company shall give written notice (an "Underwritten Offering Notice") of the
proposed Underwritten Offering to all Holders within 15 calendar days after
receipt of a valid Registration Request. Such notice shall offer the Holders the
opportunity to include in such Underwritten Offering such amount of Registrable
Securities as each Holder may request. The Company shall include in such
Underwritten Offering all Registrable Securities for which the Company has
received written requests for inclusion within 15 calendar days after delivery
of the Underwritten Offering Notice, subject to Section 2.2(b).

                  (b)      The Company shall cause the managing underwriter or
underwriters of a proposed Underwritten Offering to permit the Holders that have
requested Registrable

                                       6
<PAGE>

Securities to be included in an Underwritten Offering, undertaken pursuant to
Section 2.2(a) above, to include all such Registrable Securities on the same
terms and conditions as all other Registrable Securities to be included.
Notwithstanding the foregoing, if the managing underwriter or underwriters of
such Underwritten Offering advises the Company and the selling Holders that the
total amount of Registrable Securities that such Holders propose to include in
such Underwritten Offering is such as to materially and adversely affect the
success of such Underwritten Offering, then the Company shall include in such
Underwritten Offering up to the full amount of Registrable Securities requested
to be included in such Underwritten Offering by the Holders (allocated pro rata
among the Holders on the basis of the amount of Registrable Securities initially
requested to be included therein by each such Holder) so that the total amount
of Registrable Securities to be included in such Underwritten Offering is the
full amount that, in the written opinion of such managing underwriter or
underwriters, can be sold without materially and adversely affecting the success
of such Underwritten Offering.

                  (c)      Any Registrable Securities may be withdrawn from a
proposed Underwritten Offering at any time before the execution and delivery by
such Holder of the underwriting agreement relating to such Underwritten
Offering. In the event that the number of Holders withdrawing Registrable
Securities from a proposed Underwritten Offering before the execution and
delivery of an underwriting agreement relating to such Underwritten Offering
causes the number of Holders participating in such offering to drop below the
requirement set forth in Section 2.2(a)(ii) above, the Holders withdrawing their
Registrable Securities shall reimburse the Company for all of its out-of-pocket
fees and expenses (including counsel fees and expenses) incurred in connection
with the proposed Underwritten Offering in excess of the amount of expenses
relating solely to the maintenance of the Shelf Registration Statement and the
Company shall have no obligation to proceed with the applicable request for an
underwritten offering; provided, however, that if such withdrawal was based on
the Company's failure to comply with its obligations hereunder, such
reimbursement shall not be required and the requested Underwritten Offering
shall not be deemed to have been effected for purposes of Section 2.2(a).

                  (d)      The managing underwriter or underwriters of the
Underwritten Offering relating thereto shall be selected by the Holders of at
least a majority of the Registrable Securities proposed to be included in such
Underwritten Offering, subject to the approval of the Company (which approval
shall not be unreasonably withheld or unreasonably delayed).

                                  ARTICLE III.

                               Demand Registration

                  3.1      Right to Demand Registration. Upon termination of the
Effective Period, Holders holding in the aggregate at least 10% or more of the
Registrable Securities (determined as of the Effective Date) (the "Demand
Request Threshold") have the right to request in writing ("Demand Request") that
the Company effect the registration of all or part of such Holder's or Holders'
Registrable Securities with the SEC under and in accordance with

                                       7
<PAGE>

the provisions of the Securities Act (which written request shall specify the
aggregate number of shares of Registrable Securities requested to be registered
and the intended means of disposition of such shares of Registrable Securities)
("Demand Registration"). The Company shall give written notice (a "Demand
Registration Notice") of the proposed Demand Registration to all Holders within
15 calendar days after receipt of a valid Demand Request. Such notice shall
offer the Holders the opportunity to register such amount of Registrable
Securities as each Holder may request. Following receipt of the Demand Request,
if applicable, the provisions of Section 2.2 hereof shall apply to the subject
Demand Registration. Subject to Section 3.4, the Company shall file a
Registration Statement covering such Holder's or Holders' Registrable Securities
requested to be registered as promptly as practicable (and, in any event within
60 days) after receipt of such written requests received within 15 calendar days
after delivery of the Demand Registration Notice.

                  3.2      Exceptions to Demand Registrations. Notwithstanding
anything in Section 3.1 above to the contrary, the Company shall not be required
to take any action pursuant to this Article III:

                           (i)      if the Holder or Holders making such request
                                    are not Affiliates of the Company at the
                                    time such request is made;

                           (ii)     if the Company has effected a registration
                                    contemplated by this Article III or Section
                                    2.1 within the 180-day period next preceding
                                    such request (unless the provisions of
                                    Section 2.2 are applicable to a Demand
                                    Request in which case the terms of Section
                                    2.2(a)(i) shall apply);

                           (iii)    if a shelf registration is effective at the
                                    time such request is made pursuant to which
                                    the Holder or Holders that requested
                                    registration could effect the disposition of
                                    such Holder's or Holders' Registrable
                                    Securities in the manner requested and the
                                    Company offered, in accordance with the
                                    procedures set forth herein, to include or
                                    did include such Holder's or Holders'
                                    Registrable Securities in such shelf
                                    registration;

                           (iv)     if the Registrable Securities requested to
                                    be registered shall have a then-current
                                    market value of less than $50.0 million; or

                           (v)      during the pendency of any Blackout Period
                                    (as defined in Section 3.3 hereof).

                  3.3      Blackout Period. (a) If (i) at any time during the
Effective Period or the period during which Holders may request a Demand
Registration pursuant to Section 3.1, the Company files or proposes to file a
registration statement with respect to an offering of equity securities of the
Company for its own account and (ii) with reasonable notice (and subject to the
completion of an offering that may have been initiated pursuant to a previously
delivered Underwritten Offering Notice) (A) the Company (in the case of an
offering that is not an

                                       8
<PAGE>

Underwritten Offering) advises the Holders in writing that the Board of
Directors of the Company has determined, in the good faith exercise of its
reasonable business judgment, that a sale or distribution of Registrable
Securities (whether pursuant to the Shelf Registration Statement or a Demand
Registration) would adversely affect such offering or (B) the managing
underwriter or underwriters, if any, advise the Company in writing (in which
case the Company shall notify the Holders) that a sale or distribution of
Registrable Securities (whether pursuant to the Shelf Registration Statement or
a Demand Registration) would adversely affect such offering, then: (x) the
Holders agree to suspend sales pursuant to the Shelf Registration Statement
during the Blackout Period (as defined below), or (y) the Company shall not be
obligated to effect the initial filing of a Registration Statement pursuant to
Section 3.1 during the Blackout Period. As used herein the term "Blackout
Period" shall mean the 45 days prior to the date the Company in good faith
estimates (as certified in writing by an officer of the Company to the
applicable Holders) shall be the date of the filing of, and ending on the date
which is 90 days following the effective date of, the registration statement
proposed to be filed by the Company for its own account (the "Blackout Period").

                  (b)      If the Board determines, in the good faith exercise
of its reasonable business judgment, that the registration and distribution of
Registrable Securities (i) would materially impede, delay or interfere with any
financing, acquisition, corporate reorganization or other significant
transaction involving the Company or (ii) would require disclosure of non-public
material information, the disclosure of which would materially and adversely
affect the Company, the Company shall promptly give the Holders written notice
of such determination and shall be entitled to (x) require that Holders suspend
resale transactions pursuant to the Shelf Registration Statement or (y) postpone
the filing or effectiveness of a Registration Statement for a reasonable period
of time not to exceed 120 days; provided, however, that the Company shall
deliver to the applicable Holders a general statement, signed by an officer of
the Company, of the reasons for such postponement or restriction on use (without
any need to identify with specificity the underlying event or issue which is the
predicate for such delay) and an estimate of the duration of the anticipated
delay. The Company shall promptly notify the applicable Holders of the
expiration or earlier termination of such a period.

                  (c)      Notwithstanding anything in this Section 3.3 to the
contrary, there shall be no more than one delay period as contemplated by this
Section 3.3 during any consecutive 12 month period during the time in which
Holders may request a Demand Registration pursuant to Section 3.1.

                  3.4      Priority in Registration. If the Company seeks to
include in any underwritten Demand Registration any securities which are not
Registrable Securities and the managing underwriter advises the Company in
writing that in its opinion the number of Registrable Securities proposed to be
included in the Demand Registration exceeds the number of Registrable Securities
and other securities which can be sold in such offering, the Company shall
include in such registration: (i) first, the Registrable Securities requested to
be included which, in the opinion of such underwriters, can be sold, by the
selling Holders pro rata based upon the total number of Registrable Securities
which such Holder proposed to include in such

                                       9
<PAGE>

registration and (ii) second, the securities proposed to be included in such
registration by any other holders as determined by the Company and the managing
underwriter.

                  3.5      Effective Demand Registration. (a) The Company may
satisfy its obligations under Section 3.1 by amending (to the extent permitted
by applicable law) any registration statement previously filed by the Company
under the Securities Act so that such amended registration statement will permit
the disposition (in accordance with the intended methods of disposition
specified as aforesaid) of all of the Registrable Securities for which a Demand
Request has been properly made under Section 3.1. If the Company so amends a
previously filed registration statement, it shall be deemed to have effected a
registration for purposes of Section 3.1.

                  (b)      Except as provided in Section 3.4, a registration
requested pursuant to Section 3.1 shall not be deemed to be effected for
purposes of Section 3.1(i) unless it has been declared effective by the SEC or
become effective in accordance with the Securities Act and the rules and
regulations thereunder and kept effective as contemplated by Section 3.7,
provided that a registration which does not become effective after the Company
has filed a registration statement with respect thereto solely by reason of the
refusal of a selling Holder to proceed (other than a refusal to proceed based
upon the reasonable advice of counsel relating to a matter with respect to the
Company) shall be deemed to have been effected by the Company at the request of
such selling Holder unless such selling Holder shall have elected to pay all
Registration Expenses in connection with such registration, (ii) if, after it
has become effective, such registration becomes subject to any stop order,
injunction or other order or requirement of the SEC or other governmental agency
or court for any reason other than an act or omission of a Holder or an
underwriter selected by the Holders, or (iii) the conditions to closing
specified in the purchase agreement or underwriting agreement entered into in
connection with such registration are not satisfied, other than by reason of
some act or omission by Holders or an underwriter selected by the Holders.

                  3.6      Revocation of Demand Registration. A Holder of
Registrable Securities to be included in a Registration Statement pursuant to
Section 3.1 may, at any time prior to the effective date of the Registration
Statement relating to such registration, revoke its request to have Registrable
Securities included therein by providing a written notice to the Company. In the
event the number of Holders of Registrable Securities revoking their request
causes the amount of Registrable Securities participating in such request to
fall below the requirement set forth in Section 3.2(iv), the Holders of
Registrable Securities who revoke such request shall reimburse the Company for
all its out-of-pocket fees and expenses (including counsel fees and expenses)
incurred in the preparation, filing and processing of the Registration Statement
and the Company shall have no obligation to proceed with the applicable Demand
Registration; provided, however, that, if such revocation was based on the
Company's failure to comply in any material respect with its obligations
hereunder, such reimbursement shall not be required and the requested
registration that has been revoked shall not be deemed to have been effected for
purposes of Section 3.1.

                                       10
<PAGE>

                  3.7      Continuous Effectiveness of Registration Statement.
The Company shall use its best efforts to keep a Registration Statement that has
become effective as contemplated by this Article III continuously effective for
a period of 90 days (subject to extension pursuant to Section 5.5) or such
shorter period that will terminate when all Registrable Securities covered by
such Registration Statement have been sold pursuant to such Registration
Statement; provided, however, that in no event will such period expire prior to
the expiration of the applicable period referred to in Section 4(3) of the
Securities Act and Rule 174 promulgated thereunder.

                  3.8      Selection of Underwriters in an Underwritten Demand
Registration. In the event that a registration requested pursuant to Section 3.1
is to be an Underwritten Registration, the managing underwriter or underwriters
of the Underwritten Offering relating thereto shall be selected by the Holders
of at least a majority of the Registrable Securities proposed to be included in
such Underwritten Registration, subject to the approval of the Company (which
approval shall not be unreasonably withheld or unreasonably delayed).

                                  ARTICLE IV.

                             Piggyback Registration

                  4.1      Right to Piggyback. If at any time the Company
proposes to file a registration statement under the Securities Act with respect
to an offering of any class of equity securities (other than a registration
statement on Form S-4, Form S-8 or any successor forms thereto and the Shelf
Registration Statement, whether or not for its own account, then the Company
shall give written notice (the "Piggyback Notice") of such proposed filing to
the Holders at least 30 days before the anticipated filing date. Such notice
shall offer the Holders the opportunity to register such amount of Registrable
Securities as each Holder may request (a "Piggyback Registration"). The Company
shall include in each Piggyback Registration all Registrable Securities for
which the Company has received written requests for inclusion within 15 days
after delivery of the Piggyback Notice, subject to Section 4.2; provided, that
if, at any time after giving written notice of its intention to register any
securities and prior to the effective date of the Registration Statement filed
in connection with such registration, the Company shall determine for any reason
either not to register or to delay registration of such securities, the Company
may, at its election, give written notice of such determination to each selling
Holder and, thereupon, (i) in the case of a determination not to register, shall
be relieved of its obligation to register any Registrable Securities in
connection with the such registration (but not from its obligation to pay the
Registration Expenses in connection with therewith), without prejudice, however,
to the rights of any selling Holder to request that such registration be
effected as a registration under Section 3.1, and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities for the same period as the delay in registering such
other securities. No registration effected under this Section 4.1 shall relieve
the Company of its obligation to effect any registration upon request under
Section 3.1, nor shall any such registration hereunder be deemed to have been
effected pursuant to Section 3.1. The Holders may withdraw all or part of the
Registrable Securities

                                       11
<PAGE>

from a Piggyback Registration by giving written notice to the Company of such
withdrawal any time before the fifth Business Day immediately preceding the
effective date of such Piggyback Registration.

                  4.2      Priority in Piggyback Registration. (a) The
Company shall cause the managing underwriter or underwriters of a proposed
Underwritten Offering to permit the Holders that have requested Registrable
Securities to be included in the Piggyback Registration to include all such
Registrable Securities on the same terms and conditions as any similar
securities, if any, of the Company. Notwithstanding the foregoing, if the
managing underwriter or underwriters of such Underwritten Offering advises the
Company and the selling Holder or Holders that the total amount of securities
that the Company, such Holders and any other Persons having rights to
participate in such Piggyback Registration ("Other Holders") propose to include
in such offering is such as to materially and adversely affect the success of
such Underwritten Offering, then:

                  (b)      if such Piggyback Registration is a primary
registration by the Company for its own account, the Company shall include in
such Piggyback Registration: (i) first, all securities to be offered by the
Company; and (ii) second, up to the full amount of securities requested to be
included in such Piggyback Registration by the Holders and Other Holders having
rights to participate in such Piggyback Registration (allocated pro rata among
such Holders and Other Holders on the basis of the amount of securities
requested to be included therein by each such Holder or Other Holder) so that
the total amount of securities to be included in such Underwritten Offering is
the full amount that, in the opinion of such managing underwriter or
underwriters, can be sold without materially and adversely affecting the success
of such Underwritten Offering; and

                  (c)      if such Piggyback Registration is an underwritten
secondary registration for the account of holders of securities of the Company,
the Company shall include in such registration: (i) first, all securities of the
Persons exercising "demand" registration rights requested to be included therein
(including without limitation the Person who demands registration and any
Persons who are entitled to participate in such Piggyback Registration pursuant
to the same agreement as the Person demanding such registration); and (ii)
second, up to the full amount of securities requested to be included in such
Piggyback Registration by the Holders and Other Holders having rights to
participate in such Piggyback Registration (allocated pro rata among such
Holders and Other Holders on the basis of the amount of securities requested to
be included therein by each such Holder or Other Holder) so that the total
amount of securities to be included in such Underwritten Offering is the full
amount that, in the written opinion of such managing underwriter or
underwriters, can be sold without materially and adversely affecting the success
of such Underwritten Offering.

                                       12
<PAGE>

                                   ARTICLE V.

                             Procedures and Expenses

                  5.1      Registration Procedures(a) . (a) In connection with
the Company's registration obligations pursuant to Articles II, III and IV, the
Company shall effect such registrations to permit the sale of Registrable
Securities by a Holder in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company shall as promptly as
reasonably practicable:

                  (b)      Prepare and file with the SEC a Registration
Statement or Registration Statements available for the sale of the Registrable
Securities by the selling Holder in accordance with the intended method or
methods of distribution thereof; provided, however, that the Company (i) shall,
before filing, furnish to each selling Holder, its counsel and the managing
underwriter or underwriters, if any, copies of the Registration Statement or
Prospectus proposed to be filed, which documents shall be subject to the review
of such Holder, its counsel and such underwriters, (ii) shall provide such
Persons with a reasonable opportunity to review and comment on such Registration
Statement or Prospectus, and (iii) shall not file any such Registration
Statement or amendment thereto or any such Prospectus or supplement thereto
(including such documents incorporated by reference and proposed to be filed
after the initial filing of the Registration Statement) to which such selling
Holder, its counsel or such underwriter or underwriters, if any, shall
reasonably object on a timely basis, provided, however, that the Company may
file such document in a form required by law or upon the advice of its counsel.

                  (c)      Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary;
cause the related Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provision then in force) under the Securities Act; and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable period
in accordance with the intended methods of disposition by each selling Holder
set forth in such Registration Statement as so amended, or in such Prospectus as
so supplemented.

                  (d)      Promptly notify each selling Holder, its counsel and
the managing underwriter or underwriters, if any, in writing (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the SEC or
any other federal or state governmental authority for amendments or supplements
to a Registration Statement or related Prospectus or for additional information,
(iii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation of any proceeding for
such

                                       13
<PAGE>

purpose, (v) of the occurrence of any event which makes any statement made in
such Registration Statement or Prospectus untrue in any material respect or
which requires the making of any changes in a Registration Statement or
Prospectus or other documents so that, (A) in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and (B) in the case of the Prospectus, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (vi) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.

                  (e)      Use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement, or the lifting
of any suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, at the earliest
practicable date.

                  (f)      If requested by the managing underwriter or
underwriters, if any, or the selling Holder, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information as the
managing underwriter or underwriters, if any, and such selling Holder reasonably
agree should be included therein under applicable law and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective amendment;
provided, however, that the Company shall not be required to take any actions
under this Section 5.1(e) that are not, in the opinion of counsel for the
Company, in compliance with applicable law.

                  (g)      Furnish to each selling Holder, its counsel and each
managing underwriter, if any, at least one conformed copy of the Registration
Statement and any post-effective amendment thereto, including financial
statements (but excluding all schedules, all documents incorporated or deemed
incorporated therein by reference and all exhibits).

                  (h)      Deliver to each selling Holder, its counsel and the
managing underwriter or underwriters, if any, as many copies of the Prospectus
relating to such Registrable Securities (including each preliminary Prospectus)
and any amendment or supplement thereto as such Persons may reasonably request
and, by such delivery, the Company shall be deemed to have consented to the use
of such Prospectus or such amendment or supplement thereto by the selling Holder
and the underwriter or underwriters, if any, in connection with the offering and
sale of the Registrable Securities covered by such Prospectus or any amendment
or supplement thereto.

                  (i)      Prior to any public offering of Registrable
Securities, register or qualify, or cooperate with each selling Holder, the
managing underwriter or underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions within the United
States as such selling Holder or underwriter or underwriters reasonably request
in writing; keep each such registration or

                                       14
<PAGE>

qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective; and do any and all
other acts or things reasonably necessary or advisable to enable the disposition
in such jurisdictions of the Registrable Securities covered by the Registration
Statement; provided, however, that the Company shall not be required to (i)
qualify generally to do business in any jurisdiction in which it is not then so
qualified or (ii) take any action that would subject it to general service of
process in any jurisdiction in which it is not then so subject.

                  (j)      Cooperate with the selling Holders and the managing
underwriter or underwriters, if any, to facilitate any filings with the NASD and
the timely preparation and delivery of certificates representing Registrable
Securities to be sold, which certificates shall not bear any restrictive legends
pertaining to resale of such Registrable Securities under the Securities Act,
and cause such certificates to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, shall request at
least two Business Days prior to any sale of Registrable Securities to the
managing underwriter or underwriters.

                  (k)      As promptly as practicable upon the occurrence of any
event contemplated by Section 5.1(d)(v) or 5.1(d)(vi) hereof, prepare a
supplement or post-effective amendment to each Registration Statement or a
supplement to the related Prospectus, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder, such Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

                  (l)      Use its best efforts to cause all Registrable
Securities covered by such Registration Statement to be listed on Nasdaq or any
other national securities exchange; provided, however, that the Company then
meets the listing criteria of Nasdaq or any such other national securities
exchange.

                  (m)      Engage an appropriate transfer agent and provide such
transfer agent with printed certificates for the Registrable Securities in a
form eligible for deposit with The Depository Trust Company, and provide a CUSIP
number for the Registrable Securities not later than the effective date of a
Registration Statement.

                  (n)      Enter into such agreements (including, in the event
of an Underwritten Offering, an underwriting agreement in form, scope and
substance as is customary in Underwritten Offerings) and take all such other
actions in connection therewith (including those reasonably requested by any
selling Holder or, in the event of an Underwritten Offering, those reasonably
requested by the managing underwriter or underwriters) reasonably necessary or
desirable to expedite or facilitate the disposition of such Registrable
Securities, in connection with an Underwritten Registration, and (i) make such
representations and warranties to each selling Holder and the managing
underwriter or underwriters, if any, with respect to the business of the Company
and its subsidiaries, the Registration Statement or Prospectus, in each case, in
form, substance and scope as are customarily made by issuers to underwriters in
Underwritten Offerings and confirm the same if and when requested, (ii) use its
commercially

                                       15
<PAGE>

reasonable best efforts to obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriter or underwriters, if any)
addressed to such selling Holder and the managing underwriter or underwriters,
if any, covering the matters customarily covered in opinions requested in
Underwritten Offerings, (iii) use its commercially reasonable best efforts to
obtain "comfort" letters and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other certified public
accountants of any subsidiary of the Company or of any business acquired by the
Company for which financial statements and financial data is, or is required to
be, included in the Registration Statement), addressed to each of the managing
underwriter or underwriters, if any, such letters to be in customary form and
covering matters of the type customarily covered in "comfort" letters in
connection with Underwritten Offerings, and (iv) deliver such documents (not
including the delivery of opinions of counsel under clause (ii) above to the
selling Holder) and certificates as may be reasonably requested by the selling
Holder, its counsel, managing underwriter or underwriters, if any, to evidence
the continued validity of the representations and warranties of the Company and
its subsidiaries made pursuant to clause (i) above and to evidence compliance
with any customary conditions contained in the underwriting agreement or similar
agreement entered into by the Company. The foregoing actions shall be taken in
connection with each closing under such underwriting or similar agreement as and
to the extent required thereunder.

                  (o)      Give any selling Holder, its underwriter or
underwriters, if any, and their counsel and accountants, the reasonable
opportunity to participate in the preparation of such Registration Statement,
each Prospectus included therein or filed with the SEC, and each amendment
thereof or supplement thereto, make available for inspection by each of them all
pertinent financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries, cause the officers, directors
and employees of the Company and its subsidiaries to supply all information
reasonably requested by any such representative, underwriter, attorney or
accountant in connection with such Registration Statement and give each of them
such opportunities to discuss the business of the Company with its officers and
the independent public accountants who have certified its financial statements
as shall be necessary, in the reasonable opinion of such selling Holder's and
such underwriter's or underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act; provided, however, that
any records, information or documents that are designated by the Company as
confidential at the time of delivery of such records, information or documents
shall be kept confidential by such Persons unless (i) such records, information
or documents are in the public domain or otherwise publicly available (other
than by reason of breach of this confidentiality provision), (ii) disclosure of
such records, information or documents is required by court or administrative
order or is necessary to respond to inquires of regulatory authorities, or (iii)
disclosure of such records, information or documents, in the reasonable opinion
of counsel to such Person, is otherwise required by law or regulation (including
without limitation pursuant to the requirements of the Securities Act or
regulations promulgated thereunder); provided, however, that in the case of
subsections (ii) and (iii) hereof, prior to making such disclosure the Holder
shall, subject to applicable law, advise and consult with the Company and its
counsel as to the timing and content of such disclosure and the nature and
wording of such disclosure and shall use its reasonable best efforts to obtain,
at the

                                       16
<PAGE>

Company's expense, confidential treatment therefor. Also, if possible, the
Company shall be given a reasonable time to intervene with the appropriate
authorities in order to prevent disclosure of the confidential information.

                  (p)      Comply with all applicable rules and regulations of
the SEC and make generally available to its security holders earning statements
satisfying the provisions of Section 11(a) of the Securities Act, provided that
the Company shall be deemed to have complied with this Section 5.1(n) if it has
satisfied the provisions of Rule 158 under the Securities Act (or any similar
rule promulgated under the Securities Act).

                  (q)      During the period when a Prospectus is required to be
delivered under the Securities Act, promptly file all documents required to be
filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act.

                  (r)      If the selling Holders of at least a majority of the
Registrable Securities proposed to be included in any Registration Statement so
request, request acceleration of effectiveness of the Registration Statement
from the SEC, provided at the time of such request the Company does not, in good
faith, believe it is necessary to amend further the Registration Statement in
order to comply with the provisions of this Section 5.1. If the Company wishes
to further amend the Registration Statement prior to requesting acceleration, it
shall have five Business Days to so amend prior to requesting acceleration.

                  5.2      Information from Holder. (a) The Company may
require each Holder including its Registrable Securities in any Registration
Statement to furnish to the Company such information regarding the Holder and
its intended plan and method of disposition of such Registrable Securities as
the Company may, from time to time, reasonably request in writing. The Company
may refuse to proceed with the registration of such Holder's Registrable
Securities if such Holder fails to furnish such information within a reasonable
time after receiving such request.

                  (b)      Each selling Holder shall (i) notify the Company of
the occurrence of any event that makes any statement made in a Registration
Statement or Prospectus regarding such selling Holder untrue in any material
respect or that requires the making of any changes in a Registration Statement
or Prospectus so that, in such regard, (A) in the case of a Registration
Statement, it will not contain any untrue statement of a material fact or omit
any material fact required to be stated therein or necessary to make the
statements not misleading and (B) in the case of a Prospectus, it will not
contain any untrue statement of a material fact or omit any material fact
required to be stated or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading and (ii) provide
the Company with such information as may be required to enable the Company to
prepare a supplement or post-effective amendment to any such Registration
Statement or a supplement to such Prospectus as contemplated by Section 5.1(k).

                  (c)      With respect to any Underwritten Offering, the
inclusion of a Holder's Registrable Securities therein will be conditioned upon
the execution and delivery by such Holder of an underwriting agreement in form,
scope and substance as is customary in

                                       17
<PAGE>

Underwritten Offerings, provided that a Holder will not be required to make any
representations or warranties other than with respect to such Holder, such
Holder's Registrable Securities, such Holder's intended method of distribution
and such other representations as may be required by law.

                  (d)      If any such Registration Statement to be filed
pursuant to this Agreement refers to any Holder by name or otherwise as a holder
of any securities of the Company, then such Holder shall have the right to
require (i) the insertion therein of language, in form and substance
satisfactory to such Holder, to the effect that the holding by such Holder of
such securities is not to be construed as a recommendation by such Holder of the
investment quality of the Company's securities covered thereby and that such
holding does not imply that such Holder will assist in meeting any future
financial requirements of the Company, or (ii) in the event that such reference
to such Holder by name or otherwise is not required by the Securities Act or any
similar federal statue then in force, the deletion of the reference to such
Holder.

                  5.3      Roadshows. In connection with any Underwritten
Offering, the Company and members of its management (which shall include the
President and the Chief Financial Officer) or such other members of its
management acceptable to the managing underwriter or underwriters shall
participate in roadshows and other similar selling efforts as the managing
underwriter or underwriters shall reasonably deem to be necessary.

                  5.4      Holdback Agreements. The Company agrees to if so
required by the managing underwriter or underwriters not to sell, make any short
sale of, loan, grant any option for the purchase of (other than options pursuant
to a Company stock option plan, which options are not by their terms expected to
be exercisable for at least 90 days following the date of grant), effect any
public sale or distribution of or otherwise dispose of its equity securities or
securities convertible into or exchangeable or exercisable for any of such
securities during the seven days prior to and the 90 days after any Underwritten
Registration pursuant to Section 3.8 or 4.1 has become effective, except as part
of such Underwritten Registration and except pursuant to registrations on Form
S-4, S-8 or any successor forms thereto. During any Blackout Period, the Holders
agree, if so required by the managing underwriter or underwriters, not to sell,
make any short sale of, loan, grant any option for the purchase of, effect any
public sale or distribution of or otherwise dispose of any of the Company's
equity securities or securities convertible into or exchangeable or excisable
for any of such securities.

                  5.5      Suspension of Disposition. Each selling Holder shall
be deemed to have agreed that, upon receipt of any notice from the Company of
the occurrence of any event of the kind described in Section 5.1(d)(ii),
5.1(d)(iii), 5.1(d)(iv), 5.1(d)(v) or 5.1(d)(vi), such Holder shall discontinue
disposition of Registrable Securities covered by a Registration Statement or
Prospectus until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5.1(k) or until it is advised in
writing (the "Advice") by the Company that the use of the applicable Prospectus
may be resumed and has received copies of any additional or supplemental filings
that are incorporated or deemed to be incorporated by reference in such
Prospectus. In the event the Company shall give any such notice, the period of
time during which a Registration Statement should remain effective as set forth
in Section 2.1 or Section 3.5 shall be extended by the number of days comprising
the time period

                                       18
<PAGE>

commencing on and including the date of the giving of such notice to and
including the date when each seller of Registrable Securities covered by such
Registration Statement shall have received (i) the copies of the supplemented or
amended Prospectus contemplated by Section 5.1(k) or (ii) the Advice (the
"Extension Period"). The Company shall use its commercially reasonable efforts
and take such actions as are reasonably necessary to render the Advice as
promptly as practicable.

                  5.6      Registration Expenses. (a) Subject to Section
2.2(c) and 3.6, all fees and expenses incurred by the Company in complying with
Articles II, III and IV and Section 5.1 ("Registration Expenses") shall be borne
by the Company. Such fees and expenses shall include without limitation (i) all
registration and filing fees (including without limitation fees and expenses (x)
with respect to filings required to be made with the National Association of
Securities Dealers, Inc. and (y) of compliance with securities or blue sky
laws), (ii) printing expenses (including without limitation the expenses of
printing certificates for securities in a form eligible for deposit with The
Depository Trust Company and of printing Prospectuses if the printing of
Prospectuses is requested by the selling Holder), (iii) messenger, telephone and
delivery expenses, (iv) reasonable fees and disbursements of counsel for the
Company, (v) reasonable fees and disbursements of one counsel for all selling
Holders and Other Holders collectively (which counsel will be selected by
Holders and Other Holders holding a majority of the securities sought to be
included in the Registration Statement), (vi) reasonable fees and disbursements
of all independent certified public accountants referred to in Section 5.1(n)
(iii) (including the expenses of any "comfort" letters required by or incident
to such performance), (vii) reasonable fees and expenses of any qualified
"independent underwriter" or other independent appraiser participating in an
offering pursuant to Section 2720(c) of the Conduct Rules of the National
Association of Securities Dealers, Inc., and (viii) reasonable fees and expenses
all other Persons retained by the Company. In addition, the Company shall pay
its internal expenses (including without limitation all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit, and the fees and expenses incurred in connection with the
listing of Registrable Securities with each securities exchange, if any, on
which similar securities issued by the Company are then listed or the quotation
of such securities on Nasdaq if similar securities issued by the Company are
then quoted on Nasdaq.

                  (b)      Notwithstanding anything to the contrary herein
contained, all underwriting fees, discounts, selling commissions and transfer
taxes, if any, in connection with the sale of Registrable Securities shall be
borne by the Holders proportionately (based on the number of Registrable
Securities sold by a Holder in such offering in relation to the total number of
Registrable Securities sold in such offering).

                  (c)      Notwithstanding anything to the contrary herein
contained, each selling Holder may have its own separate counsel (in addition to
the counsel referred to in clause (v) of Section 5.6(a)) in connection with the
registration of any of its Registrable Securities, which counsel may participate
therein to the full extent provided herein; provided, however, that all fees and
expenses of such separate counsel shall be paid for by such selling Holder.

                                       19
<PAGE>

                                  ARTICLE VI.

                                 Indemnification

                  6.1      Indemnification by the Company. (a) The Company shall
indemnify and hold harmless, to the fullest extent permitted by law, each Holder
owning Registrable Securities registered pursuant to this Agreement, its
officers, directors, trustees, agents and employees, each Person who controls
such Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, trustees, agents and
employees of any such controlling Person, from and against all losses, claims,
damages, liabilities, costs (including without limitation the costs of
investigation and attorneys' fees) and expenses (collectively, "Losses"), as
incurred, arising out of or based upon (i) any untrue or alleged untrue
statement of a material fact contained or incorporated by reference in any
Registration Statement, Prospectus or preliminary prospectus, or arising out of
or based upon (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (iii) any violation or alleged violation by the Company of
the Securities Act, the Exchange Act, any federal or state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
federal or state securities law in connection with the offering covered by any
Registration Statement, (each a "Violation") except for a Violation based solely
upon written information furnished to the Company through an instrument provided
by such Holder for use therein or in the preparation thereof; provided, however,
that the Company shall not be liable to any Holder to the extent that any such
Losses arise out of or are based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any preliminary prospectus if
either (i) (A) such Holder failed to send or deliver a copy of the Prospectus
with or prior to the delivery of written confirmation of the sale by such Holder
of a Registrable Security to the Person asserting the claim from which such
Losses arise and (B) the Prospectus would have corrected such untrue statement
or alleged untrue statement or such omission or alleged omission or (ii) such
untrue statement or alleged untrue statement or such omission or alleged
omission is corrected in an amendment or supplement to the Prospectus previously
furnished by or on behalf of the Company, such Holder was furnished with copies
of the Prospectus as so amended or supplemented, and such Holder thereafter
failed to deliver such Prospectus as so amended or supplemented prior to or
concurrently with the sale of a Registrable Security to the Person asserting the
claim from which such Losses arise.

                  (b)      Notwithstanding the foregoing, if in connection with
an underwritten public offering of any Registrable Securities, the Company, the
selling Holder and the underwriters enter into an underwriting or purchase
agreement relating to such offering which contains provisions covering
indemnification among the parties, the indemnification provided thereunder shall
be in addition to (and not in lieu of) the indemnification provided to the
Holders hereunder.

                  6.2      Indemnification by Holders. Each Holder selling
Registrable Securities in any Registration Statement filed pursuant to the terms
hereof shall, severally and not jointly,

                                       20
<PAGE>

hold harmless, to the fullest extent permitted by law, the Company, its
officers, directors, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act), and the directors, officers, agents and employees of any such
controlling Person, from and against all Losses, as incurred, arising out of or
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation is based solely upon written information furnished to the
Company through an instrument provided by such Holder specifically for use
therein or in the preparation thereof. In no event shall the liability of any
Holder hereunder be greater in amount than the dollar amount of the proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.

                  6.3      Conduct of Indemnification Proceedings. If any Person
becomes entitled to indemnity hereunder (an "Indemnified Party"), such
Indemnified Party shall give prompt notice to the party from which such
indemnity is sought (the "Indemnifying Party") of any claim or of the
commencement of any action or proceeding with respect to which such Indemnified
Party seeks indemnification or contribution pursuant hereto; provided, however,
that the failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party from any obligation or liability except to the extent that
the Indemnifying Party has been prejudiced materially by such failure. If such
an action or proceeding is brought against the Indemnified Party, the
Indemnifying Party shall be entitled to participate therein and, to the extent
it may elect by written notice delivered to the Indemnified Party promptly after
receiving the notice referred to in the immediately preceding sentence, to
assume the defense thereof with counsel reasonably satisfactory to the
Indemnified Party. Notwithstanding the foregoing, the Indemnified Party shall
have the right to employ its own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of the Indemnified Party unless
(i) the employment of such counsel shall have been authorized in writing by the
Indemnifying Party, (ii) the Indemnifying Party shall not have employed counsel
(reasonably satisfactory to the Indemnified Party) to take charge of such action
or proceeding within a reasonable time after notice of commencement thereof, or
(iii) the Indemnified Party reasonably shall have concluded (based on the advice
of counsel) that there may be defenses or actions available to it which are
different from or additional to those available to the Indemnifying Party which,
if the Indemnifying Party and the Indemnified Party were to be represented by
the same counsel, could result in a conflict of interest for such counsel or
materially prejudice the prosecution of defenses or actions available to the
Indemnified Party. If any of the events specified in clause (i), (ii) or (iii)
of the immediately preceding sentence are applicable, then the fees and expenses
of one separate counsel for the Indemnified Party shall be borne by the
Indemnifying Party. If, in any case, the Indemnified Party employs separate
counsel, the Indemnifying Party shall not have the right to direct the defense
of such action or proceeding on behalf of the Indemnified Party. All fees and
expenses required to be paid to the Indemnified Party pursuant to this Article
VI shall be paid periodically during the course of the investigation or defense,
as and when reasonably itemized bills therefor are delivered to the Indemnifying
Party in respect of any particular Loss that is incurred. Notwithstanding
anything to the contrary contained in this Section 6.3, an Indemnifying Party
shall not be liable for the settlement of any action or proceeding effected
without its prior written consent. The Indemnifying Party shall not consent to
entry of any judgment or enter into any settlement or otherwise seek to
terminate any action

                                       21
<PAGE>

or proceeding in which any Indemnified Party is or could be a party and as to
which indemnification or contribution could be sought by such Indemnified Party
under this Article VI, unless such judgment, settlement or other termination
provides solely for the payment of money and includes as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release, in form and substance satisfactory to the Indemnified Party, from all
liability in respect of such claim or litigation for which such Indemnified
Party would be entitled to indemnification hereunder.

                  6.4      Contribution, etc. (a) If the indemnification
provided for in this Article VI is unavailable to an Indemnified Party under
Section 6.1 or 6.2 in respect of any Losses or is insufficient to hold such
Indemnified Party harmless, then each applicable Indemnifying Party (severally
and not jointly), in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party or Indemnifying Parties, on the one hand, and
such Indemnified Party, on the other hand, in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
or Indemnifying Parties, on the one hand, and such Indemnified Party, on the
other hand, shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken
or made by, or related to information supplied by, such Indemnifying Party or
Indemnifying Parties or such Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action, statement or omission. The amount paid or payable by a party as a
result of any Losses shall be deemed to include any legal or other fees or
expenses incurred by such party in connection with any action or proceeding.

                  (b)      The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 6.4 were determined by
pro rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding anything contained in this Section 6.4 to the
contrary, an Indemnifying Party that is a selling Holder shall not be required
to contribute any amount in excess of the amount by which the total price at
which the Registrable Securities were sold by such selling Holder to the public
exceeds the amount of any damages which such selling Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.

                  (c)      The provisions of this Article VI will survive
indefinitely, notwithstanding any transfer of the Registrable Securities by any
Holder. Nothing herein shall be deemed to abrogate the effects of the statutes
of limitation with respect to causes of action that may be brought under this
Article VI.

                                       22
<PAGE>

                                  ARTICLE VII.

                                  Miscellaneous

                  7.1      Additional Parties. A Person may become a party to
this Agreement and cause the Shares issued to it on the Effective Date pursuant
to the Joint Plan to be Registrable Securities by delivering to the Company (a)
evidence reasonably satisfactory to the Company that it was the Beneficial Owner
on the Effective Date of Shares in an amount equal to at least 10% of the
aggregate amount of all Shares issued by the Company on the Effective Date and
(b) an executed acknowledgement by which such Person agrees to be bound by the
terms of this Agreement, which to be effective must be acknowledged by the
Company. Once so acknowledged by the Company, such Person will be a Holder and a
party hereto for all purposes of this Agreement.

                  7.2      Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made by
delivery in person, by courier service, by facsimile transmission or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
7.1).

                  (a)      If to the Company:

                                      Mariner Health Care, Inc.
                                      One Ravinia Drive
                                      Suite 1500
                                      Atlanta, GA 30346
                                      Attention: General Counsel
                                      Telecopy: (770) 698-8199

                                      Powell, Goldstein, Frazer and Murphy LLP
                                      191 Peachtree Street, N.E.
                                      Sixteenth Floor
                                      Atlanta, GA  30303-1740
                                      Attention:  Richard H. Miller, Esq.
                                      Telecopy:  (404) 572-6999

                  (b)      If to a Holder, to the address thereof set forth on
the signature page hereto.

The Company or the Holder by notice to the other may designate additional or
different addresses for subsequent notices or communications.

All such notices and communications shall be deemed to have been delivered or
given: upon delivery, if personally delivered; one Business Day after being
dispatched, if dispatched by

                                       23
<PAGE>

same-day or next-day courier guaranteeing timely delivery; when receipt
acknowledged, if sent by facsimile transmission; and five Business Days after
being deposited in the mail, if mailed.

                  7.3      Assignment. Neither this Agreement nor the rights and
obligations hereunder may be assigned by operation of law or otherwise except
that this Agreement and rights and obligations hereunder may be assigned by any
Holder to a Permitted Transferee thereof, which Permitted Transferee shall be
deemed to be a Holder and a party hereto for all purposes of this Agreement upon
receipt by the Company of such Permitted Transferee's written agreement to be
bound by the terms hereof). Notwithstanding the foregoing, nothing herein
contained shall restrict the right of any Holder to transfer securities of the
Company held by it.

                  7.4      No Third-Party Beneficiaries. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
respective successors and permitted assigns and nothing herein, express or
implied, is intended to or shall confer upon any other Person any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.

                  7.5      Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original, but all such counterparts shall together constitute one and the same
instrument.

                  7.6      Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral,
among the parties with respect to the subject matter hereof.

                  7.7      Amendment and Waiver. This Agreement may not be
amended or modified or any provision hereof waived except by an instrument in
writing signed by the Company and both (x) Holders of at least a majority of the
Registrable Securities and (y) each Holder of 10% or more of the Registrable
Securities. Notwithstanding anything contained herein to the contrary, a waiver
that does not adversely affect all of the parties hereto may be executed by only
the adversely affected party or parties.

                  7.8      No Waiver. No failure or delay on the part of any
party hereto in exercising any right, shall operate as a waiver thereof nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude the simultaneous or later exercise of any other right, power or
privilege. The rights and remedies herein expressly provided are cumulative and
not exclusive of any rights or remedies which any party hereto would otherwise
have.

                  7.9      Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.

                                       24
<PAGE>

                  7.10     Severability. If any term or other provision of this
Agreement is invalid, illegal or unenforceable under any law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect. Upon such determination that any term or other provision
is invalid, illegal or unenforceable, the parties hereto shall endeavor in good
faith to replace the invalid, illegal or unenforceable provisions with valid,
legal and enforceable provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.

                  7.11     GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE.

                  7.12     Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled as a matter of right, without proof of actual damages, to specific
performance of the terms hereof, in addition to any other remedy at law or
equity.

                  7.13     Further Assurances. The parties hereto shall do such
further acts and things necessary to ensure that the terms of this Agreement are
carried out and observed.

                                       25
<PAGE>

                  IN WITNESS WHEREOF, each of the parties has executed this
Agreement as of the date first written above.

                      MARINER HEALTH CARE, INC.

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

                      OCM ADMINISTRATIVE SERVICES II, L.L.C.

                      By:  OAKTREE CAPITAL MANAGEMENT, LLC
                               Its Manager

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

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

                               Address: c/o Oaktree Capital Management, LLC
                                           333 South Grand Avenue, 28th Floor
                                           Los Angeles, California  90071
                                           Telecopy:  (213) 830-8522
                                           Attention:  Kenneth Liang

                                       26
<PAGE>

                                 ACKNOWLEDGEMENT

                  Reference is hereby made to the Equity Registration Rights
Agreement dated as of May [9], 2002, (the "Agreement"), among Mariner Health
Care, Inc., a Delaware corporation formerly known as Mariner Post-Acute Network,
Inc., and each of the Holders as of the Effective Date of at least 10% or more
of the outstanding Shares on the Effective Date, as listed on the signature
pages thereto, in which this Acknowledgement is incorporated. The undersigned
Holder represents that it was the Beneficial Owner as of the Effective Date of
at least 10% or more of the outstanding Shares on the Effective Date. The
undersigned Holder and the Company each agree that the Holder will be a party to
the Agreement for all purposes thereof. Capitalized terms used herein without
definition are defined in the Agreement.

                               [HOLDER]

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

                               Address:
                                         ---------------------------------------

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

                               Acknowledged and Agreed:

                               MARINER HEALTH CARE, INC.

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

                                       27

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