Document:

<PAGE>
                                                                  EXHIBIT 10.96

                          AMENDMENT OF LEASE AGREEMENT
                                 BY AND BETWEEN

                         STUDER/MORTON COMPANIES, INC.,
                                      AND

                         LIVING CENTERS OF TEXAS, INC.

                             DATED JANUARY 25, 2001

         This Amendment of Lease Agreement ("Amendment") is made and entered
into effective as of January 25, 2001, by and between Studer/Morton Companies,
Inc., a Texas corporation ("Lessor") and Living Centers of Texas, Inc., a
Delaware corporation ("Lessee").

                                    RECITALS

         A.       Lessor and Lessee previously entered into a Lease Agreement
dated May 20, 1994 (the "Lease"), for the following long-term health care
center ("Leased Center"), owned by Lessor and located in the State of Texas, on
the land described in "Exhibit A" attached thereto:

         Location of Center                  Rental Beds / Licensed Beds

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

         B.       Lessor and Lessee also previously entered into an agreement
entitled "Master Lease Agreement" ("Morton Master Lease") dated May 20, 1994,
and 13, individual lease agreements, including the Lease for, the
__________________. Five Leases (the "Cheetah Leases") covered the following
Care Centers: Care Inn of Llano; Care Inn of Sanger; Care Inn of Edna; Retama
Manor of Del Rio; and, Care Inn of Seguin (collectively, the "Cheetah
Centers"). Eight Leases (the "Morton Leases") covered the following Care
Centers: Care Inn of Ganado; Care Inn of Gladewater; Victoria Linwood Place;
Retama Manor Victoria South; Victoria Care Inn West; Care Inn of Shamrock; Oak
Crest Inn of New Braunfels; and, Care Inn of San Marcos (collectively, the
"Morton Centers").

         C.       Lessor has entered into certain agreements contemplating the
transfer of the Cheetah Centers and the Cheetah Leases to Cheetah Homes, Ltd.,
a Texas limited partnership ("Cheetah"), upon the satisfaction of certain
conditions, including, without limitation, the express written consent of Bank
One, Texas, National Association. As a result, Lessor and Lessee have amended
the Morton Master Lease concurrently herewith to eliminate the five Cheetah
Centers from the Morton Master Lease, so that the Morton Master Lease covers
only the eight Morton Centers.

         D.       Concurrent with this Amendment, Lessor and Lessee are
entering into amendments to the other four Cheetah Leases (the "Cheetah Lease
Amendments").

<PAGE>

Further, Lessor and Lessee concurrently herewith entered into a separate master
lease agreement for the five Cheetah Centers (the "Cheetah Master Lease").

         E.       Lessee filed a petition for relief under Chapter 11 of Title
11 of the United States Code on January 18, 2000.

         F.       The Bankruptcy Court having jurisdiction over Tenant's
bankruptcy case has entered an order authorizing Tenant to assume the Cheetah
Leases, as amended by the Cheetah Lease Amendments, and to enter into this
Amendment, the Cheetah Master Lease, the remaining Cheetah Lease Amendments,
and the amendment to the Morton Master Lease.

         G.       This Amendment does not constitute an assignment of the
Cheetah Master Lease or the Cheetah Leases, as amended, to Cheetah.

         H.       Pursuant to Article XV, Section 15.7, of the Lease, Lessor
and Lessee may amend the Lease by a written agreement signed by Lessor and
Lessee.

         ACCORDINGLY, Lessor and Lessee agree as follows:

         1.       Amendments. Lessor and Lessee hereby amend the Lease
effective as of the Effective Date as follows:

                  (a)      Section 1.2, Use, is amended to read as follows:

                           "Section 1.2 Use. The Leased Center shall be used
during the Term hereof by Lessee solely and exclusively for the purpose of
operating a long term health care center for the elderly (including without
limitation long term care for Alzheimer's disease, stroke care, arthritis care
and transitional care), and any and all related business activities. The Lessee
will not seek to have the Leased Center certified for any other specialized
purpose.

Lessee shall use the Leased Center in a careful and proper manner, and agrees
not to permit the Leased Center to be operated or used in continuing violation
of any applicable federal, state, or local statute, law, ordinance, rule or
regulation relating to the possession, use, or maintenance of the Leased Center
as a long-term health care center, including but not limited to, those of the
Life Safety Code Requirements, and of the Texas Department of Health, Texas
Department of Human Services and U.S. Department of Health and Human Services
necessary to qualify the Leased Center for reimbursement under the applicable
Medicaid and Medicare programs, if applicable due to Lessee's use of the Leased
Center. During the Term hereof, Lessee agrees to furnish Lessor, at the time
the operating statements are furnished to Lessor pursuant to Section 15.4
below, a certification from Lessee that the Leased Center is in substantial
compliance with all requirements of the Texas Department of Health and Texas
Department of Human Services, and a list of capital expenditures for the prior
year and pro-forma capital expenditures for the succeeding tear. Lessee agrees
to provide

                                       2
<PAGE>

Lessor with any notice received by lessee within five (5) (Jays after receipt
by Lessee of proposed or threatened decertification or suspension of licensure
of the Leased Center by any appropriate governmental authorities."

                  (b)      Exhibit B, referenced in Section 1.5,
Representations and Warranties of Lessor, is amended to include the following
liens:

                           "Liens in favor of Bank One, Texas, National
Association."

                  (c)      Section 2.1, Initial Term, is amended to read as
follows:

                           "Section 2.1 Initial Term. The initial term of this
Lease (the "Initial Term") will be for a term that will expire on October 31,
2020, unless sooner terminated as hereinafter provided."

                  (d)      Section 2.2, Renewal Term, is deleted in its
entirety. Accordingly, all references to the Renewal Term are hereby deleted
from Sections 4.2, 4.3 and 7.3.

                  (e)      Section 2.4, Right of First Refusal to Lease, is
amended to read as follows:

                           Section 2.4 Right of First Refusal to Lease. So long
as no Event of Default by Lessee is then occurring, Lessor grants to Lessee the
right of first refusal to re-lease the Leased Center upon the expiration of the
Initial Term, if Lessor receives a bona fide offer from any unrelated third
party to lease the Leased Center upon terms acceptable to Lessor. In that
event, Lessor shall give Lessee written notice of the terms and conditions
offered by such third party. Upon receipt of any such written notice, Lessee
shall have ten (10) days to notify Lessor whether or not Lessee elects to lease
the Leased Center upon such terms and conditions stated in the notice from
Lessor to Lessee. If Lessee elects to lease the Leased Center upon the same
terms and conditions offered by Lessor to the unrelated third party, it shall
so notify Lessor and such lease shall be executed within ten (10) days
following such notice. If Lessee declines to lease the Leased Center (or does
not respond timely to Lessor), Lessor may thereafter lease the Leased Center to
the third party only on such terms and conditions originally offered by Lessor
to Lessee, such new lease to become effective only at the expiration of the
Initial Term. It is agreed that Lessor shall not seek to re-lease the Leased
Center until the last twelve months (12) of the Initial Term."

                  (f)      Section 2.6, Lessor's End of Term Rights, is amended
to read as follows:

                           "Section 2.6 Lessor's End of Term Rights. Lessee
hereby represents and warrants that at the end of the Initial Term hereof, the
Leased Center shall be turned over to Lessor in a fully licensable condition,
with at least 94 licensed and Medicaid certified skilled nursing facility beds
and 28 licensed assisted living beds, and operating as a long-term health care
center facility with the Medicaid contract, if

                                       3
<PAGE>

any, reassigned, if then assignable, to Lessor, as more fully described in
Section 1.2 above."

                  (g)      Section 3.1, Base Rent, is amended to read as
follows:

                           "Section 3.1 Base Rent. For the first year of the
Lease, Lessee agrees to pay as base rent the amount of $20,529.60 per month,
adjusted annually as provided herein, to such address as Lessor may from time
to time designate to Lessee in writing, without demand and without deduction,
abatement or setoff. The Leased Center presently contains 141 Rental Beds,
which number shall not be decreased by any action of Lessee during the term of
this Lease, but may be increased should appropriate licensing be obtained from
the proper administrative agency."

                  (h)      Section 3.2, Annual Rent Escalation, is amended to
read as follows:

                           "Section 3.2 Annual Rent Escalation. On June 1st of
each year during the Term of this Lease, beginning June 1, 2001, the then
current year's rent shall be adjusted by the change in the prior year of the
Consumer Price Index ("CPI Adjustment") as set forth in this Section 3.2. To
calculate the CPI Adjustment:

         1)       Determine the annual percentage change in the CPI:
                  (CPI-Current Year minus CPI-Base Year) divided by CPI-Base
                  Year; and

         2)       Add 100% to the annual percentage change in the CPI
                  determined in (1) above.

"CPI-Base Year" means the CPI for the month of June for the immediately
preceding year. "CPI-Current Year" means the CPI for the month of June of the
current year. "CPI" means the Consumer Price Index - All Urban Consumers
(CPI-U) for the U.S. City Average for All Items, 1982-84=100, reported by the
Bureau of Labor Statistics of the U.S. Department of Labor. If the index is no
longer reported, then the successor index reported by that agency for it shall
be used, and if there is no successor index reported, the Lessor and Lessee
will select an inflationary index that most closely tracks the changes in
prices tracked by the consumer price index. Any rent increase will not exceed
3% in any given year.

         For purposes of illustrating the annual rent increase:

         If the rent on May 31, 1999, is $20,163.00 and the CPI for June 1999
is 166.2 (CPI-Current Year) and the CPI for June 1998 is 163.0 (CPI-Base Year)
the following calculations would apply:

100% + (3.2 (being, 166.2 - 1 63.0) / 163.0 X 100) = 102%

         Thus, $20,163.00 X 102% = $20,566.26

                                       4
<PAGE>

         For the next year, the rent on May 31, 2000, is $20,566.26 and the CPI
for June 2000 is 172.4 (CPI-Current Year) and the CPI for June 1999 was 166.2
(CPI-Base Year), the following calculations would apply:

100% + (6.2 (being, 172.4 - 166.2) / 166.2 X 1 00) = 103.17%

         Thus, $20,566.26 X 103%* = $21,183.25

         *Since any adjustments are capped at 3%, the CPI adjustment would be
103%.

                  (i)      Section 6.1, Assignment and Subletting, is amended
to read as follows:

                           "Section 6.1 Assignment and Subletting. It is
understood and agreed that the Leased Center is one of the Cheetah Centers
being leased of even date herewith by Lessor to Lessee, and that Lessor agrees
that Lessee may assign or sublease any of the Cheetah Centers to third parties
experienced in the operation of nursing homes. However, Lessee grants to
Lessor, or its assigns, a right of first refusal to sublease the Leased Center
on the same terms offered to a third party by Lessee. Lessee's right to
sublease shall be subject to Lessor's right of first refusal. Lessee shall
provide Lessor with notice of any intent to sublease and information indicating
the sublessee's experience in the operation of nursing homes. Lessor shall have
10 days to notify Lessee whether or not Lessor elects to sublease the Leased
Center. In the event Lessor declines to sublease the Leased Center (or does not
timely respond to Lessor), Lessee may thereafter sublease the Leased Center.
Any sublease shall be subject to the terms of this Lease and that the proposed
sublessee and Lessee have timely complied with all change of ownership and
certification of all applicable governmental authorities. If Lessee subleases
the Leased Center and Lessor does not exercise the right of first refusal,
Lessee shall remain primarily liable for full payment and performance of the
obligations under this Lease and all other terms and conditions hereunder. If
Lessor subleases, Lessee shall be released of all obligations and liabilities
under the Lease."

                  (j)      Section 6.2 is added to the Lease as follows:

                           "Section 6.2 Assignment by Lessor. Lessor shall have
the right to assign the Lease without the prior written approval of Lessee.
Lessor will provide Lessee with notice of the assignment. If the Lease is
assigned, Lessor shall be released and discharged of its obligation arising
under the Lease after the effective date of the assignment of the Lease. The
assignment shall be Subject to the terms of the Lease and the assignee as the
new Lessor shall assume all obligations under the Lease."

                                       5
<PAGE>

                  (k)      Section 7.1, Operating Costs, the first paragraph
and subparagraph are amended to read as follows. Paragraphs (ii) through (viii)
under this heading shall remain unchanged.

                           "Section 7.1 Operating Costs. "Operating Costs"
shall include, but not be limited to, the following costs, expenses and
disbursements that Lessor or Lessee shall incur, pay or become obligated to pay
in connection with the ownership, operation, maintenance, repair and security
of the Leased Center which shall be obligated to be paid solely by the Lessee
as provided in Section 3.3 herein above, including, but not limited to, the
following:

                           (i)      As a condition to this Lease a11
outstanding 1999 ad valorem taxes (and all penalties and interest) for the
Leased Center not previously paid must be paid within 30 days of the effective
date of the Amendment. In addition, Lessee shall be obligated to pay before
they become delinquent all other taxes and assessments and governmental charges
applicable to the Leased Center, or to personal property used in connection
therewith, whether federal, state, county or municipal, and whether assessed by
taxing districts or authorities presently taxing the Leased Center or the
operation thereof, or by other taxing authorities, whether subsequently created
or otherwise, and any other taxes and assessments attributable to the Leased
Center or its operation;"

                  (l)      Section 7.3, Damage to Leased Center. The third
paragraph of Section 7.3 is amended to read as follows, with all other
paragraphs in the section remaining unchanged.

                           "If Lessee does any rebuilding or repair, Lessee
will be entitled to receive all insurance proceeds, which shall be applied as
necessary to accomplish such rebuilding or repair. Such proceeds shall be held
and disbursed by Lessor as repair and rebuilding progresses. If any lienholder
will not release the insurance proceeds to Lessee, Lessor may elect to timely
provide Lessee with funds equal to the insurance proceeds for such rebuilding,
which funds shall be utilized by Lessee in the same manner as if the insurance
proceeds had been paid directly to Lessee. Notwithstanding anything in this
Lease to the contrary, if Lessee is provided neither the insurance proceeds due
to the Lessor's lender's election not to release such insurance proceeds, nor
other funds from Lessor to repair or rebuild as required, then in such event,
but only in such event, Lessee may, at its election: (i) terminate this Lease
and its obligations hereunder as of the date of such damage or destruction,
(ii) repair the Leased Center (or replace if totally destroyed) such that it is
operable as required by Lessee and licensing governmental authorities, using
its own funds, and offset such cost against future rentals in their direct
order of maturity."

                  (m)      Section 7.4, Insurance Requirements, is hereby
amended by deleting the first sentence of the paragraph immediately following
subparagraph d. thereof and inserting the following in lieu thereof:

                                       6
<PAGE>

                           All policies of insurance described above shall: (i)
                  be written by companies authorized to do business in the
                  State of Texas and with a policy rating and financial size
                  category of at least "A" according to the most current Best's
                  Insurance Reports, or as otherwise reasonably acceptable to
                  Lessor; and (ii) contain an endorsement requiring thirty (30)
                  days written notice to Lessor prior to cancellation.

                  (n)      Section 7.7, Renewal Policies, is hereby amended by
deleting the first sentence of such Section and inserting the following in lieu
thereof:

                           As soon as reasonably possible, but in any event on
                  or prior to the expiration of each insurance policy, Lessee
                  shall deliver to Lessor copies of a renewal policy or binder
                  which shall comply with the foregoing provisions with respect
                  to prior notice of cancellation thereof being given by the
                  insurance company to Lessor.

                  (o)      Section 9.1, Indemnification, is amended to add
"general partners and limited partners and their respective officers and
owners" after the phrase shareholders, directors and officers, employees and
agents" in each place it appears. In all other respects Section 9.1 remains
unchanged.

                  (p)      Section 11.1, Events of Default, paragraphs (iii)
and (viii) are amended to read as follows.

                           "(iii)   If Lessee shall fail to comply with any
term, provision, or covenant of any Lease Agreement for the Sanger, Edna, Del
Rio or Llano Care Centers executed as of the date hereof between Lessee and
Lessor, and if Lessee shall not cure such failure within 20 days after written
notice thereof from Lessor to Lessee; provided, however, that if such
non-financial failure is incapable of cure within such twenty (20) day period,
so long as Lessee has commenced and is diligently pursuing a cure, such
non-financial failure shall not be deemed to be an Event of Default."

                           "(viii)  If the Leased Center is operating as a
Medicaid facility and such Medicaid qualification is involuntarily terminated,
or any enforcement action is brought by Texas Department of Human Services
resulting in suspension or revocation of the license of the leased Center to
operate; emergency suspension and closing order; suspension of admissions,
voluntary or involuntary appointment of a trustee or the appointment of a
trustee by agreement; and the termination or suspension of the Leased Center's
provider agreement based on imposition of enforcement action any number of
times within an accountability period; provided, however, that no Event of
Default shall be deemed so long as Lessee is diligently pursuing the resolution
and cure of any termination, revocation, suspension or closing."

                                       7
<PAGE>

                  (q)      Section 1 5.4, Operating Statement, is amended to
read as follows:

                           "Section 15.4 Operating Statement. Lessee shall
furnish Lessor with a copy of the annual operating statement for the Leased
Center within 30 days after the end of each fiscal year. Lessee also agrees to
provide Lessor within 30 days of its filing, the balance sheet and income
information for Lessee contained in the consolidated federal income tax return
filed by Living ,,enters of America, Inc., now known as Mariner Post-Acute
Network, Inc. or any affiliate for the applicable fiscal year. Further, Lessee
agrees to provide Lessor within 60 days following the end of each calendar
quarter ending December 31, March 31, and June 30 and within 120 days following
the end of the fiscal year (September 30), the financial statements of Living
Centers of America, Inc., now known as Mariner Post-Acute Network, Inc. and its
wholly owned subsidiaries as the guarantor of this Lease. This, obligation may
be satisfied by the provision of 10-Q and 10-K for the particular period filed
by the parent company with the Securities and Exchange Commission."

                  (r)      Section 15.5, Notices, is amended to read as
follows:

                           "Section 15.5 Notices. Any notice to be given or to
be served in connection with this Lease must be in writing, and may be given by
certified or registered mail and shall be deemed to have been given and
received (48) hours after a certified or registered letter containing such
notice, properly addressed, with postage prepaid, is deposited in the United
States mail, or the next business day if delivered by the overnight delivery
service addressed as follows:

                  If to Lessor:     Stan Studer, Jr.
                                    8626 Tesoro Drive, Suite 202
                                    San Antonio, Texas 78217

                                             and

                                    Cliff Morton
                                    Studer/Morton Companies, Inc.
                                    1919 Oakwell Farms Parkway, Suite 270
                                    San Antonio, Texas 78219

                  If to Lessee:     Living Centers of Texas, Inc.
                                    One Ravinia Dr., Suite 1500
                                    Atlanta, Georgia 30346
                                    Attention: Treasurer

         Each party hereto shall have the right by giving written notice to the
other party hereto, to change the address of such party for the purpose of
notice under this Section."

                                       8
<PAGE>

         2.       LCT Bankruptcy.

                  (a)      Lessor and Lessee agree that notwithstanding
anything to the contrary in this particular Lease, Lessee's currently pending
Chapter 11 case does not, and shall not, constitute a default under the terms
of this Lease only. A future case under the Bankruptcy Code that is filed by or
against Lessee after a plan of reorganization for Lessee is confirmed in
Lessee's currently pending Chapter 11 case, the effective date thereof occurs,
and Lessee's Chapter 11 case is closed, will be subject to the default
provisions of this Lease.

                  (b)      Lessor and Lessee agree that notwithstanding
anything to the contrary in this particular lease, including, without
limitation, any otherwise applicable limitation or prohibition on assignment or
transfer, during the pendency of Lessee's currently pending chapter 11 case,
and until the effective date of a plan of reorganization in such chapter 11
case, Lessee may assign this Lease to any entity that satisfies the
requirements for the assignment of a lease under 11 U.S.C. ss.365. Lessor and
Lessee also expressly agree however that the right of Lessee to assign this
Lease during the pendency of Lessee's Chapter 11 case given in this provision
solely relates to this Lease and shall not and does not give Lessee the right
to assign any of the Morton Leases, the Morton Master Lease or any other lease
between Lessor and Lessee to any other entity unless expressly agreed to in
writing by Lessor by an amendment to such lease.

         3.       Miscellaneous. This Amendment is governed by and will be
construed in accordance with the laws of the State of Texas and applicable
federal laws. The parties agree that the Lease as amended by this Amendment
sets forth the entire agreement of the parties and supersedes all prior
agreements and understandings by or among them, written or oral, with respect
to this particular Lease. This Amendment shall be binding upon and inure to the
benefit of each party's successors and assigns. Except as expressly set forth,
the Lease shall continue in effect with no other changes.

         IN WITNESS WHEREOF, Lessor and Lessee hereby sign and deliver to the
other this Amendment effective as of the date first above written.

                   [signatures appear on the following page]

                                       9
<PAGE>

Lessor:                             Lessee:

Studer/Morton Companies, Inc.       Living Centers of Texas, Inc.

By:                                 By:
   -----------------------------       ----------------------------------------
   Clifford E. Morton, President    Its:
                                        ---------------------------------------

STATE OF
        -----------------------
COUNTY OF
         ----------------------

         THIS INSTRUMENT was ACKNOWLEDGED BEFORE ME, on this ____ day of
_______________, 2001, by Clifford E. Morton, President of Studer/Morton
Companies, Inc., a Texas corporation, on behalf of said corporation.

                                             ----------------------------------
                                             Notary Public, State of Texas

STATE OF TEXAS
COUNTY OF BEXAR

         THIS INSTRUMENT was ACKNOWLEDGED BEFORE ME, on this ____ day of
_______________, 2001, by Boyd P. Gentry, Vice President of Living Centers of
Texas, a Delaware corporation, on behalf of said corporation.

                                             ----------------------------------
                                             Notary Public, State of Texas

                                      10<PAGE>
                                                                  EXHIBIT 10.97

                         PRELIMINARY NOTE TO EXHIBIT TO
                ANNUAL REPORT OF MARINER POST-ACUTE NETWORK, INC.

This is not a solicitation or acceptance or rejection of this Plan.

Acceptances or rejections may not be solicited until a Disclosure Statement has
been approved by the Bankruptcy Court.

A Disclosure Statement has been submitted for approval but has not been approved
by the Court at this time.

<PAGE>

                      IN THE UNITED STATES BANKRUPTCY COURT

                          FOR THE DISTRICT OF DELAWARE

In re                                    )   Chapter 11
                                         )
MARINER HEALTH GROUP, INC.,              )   Case No. 00-00215 (MFW)
a Delaware Corporation,                  )
                                         )   (Jointly Administered
and affiliates,                          )    Case Nos. 00-00215 (MFW)
                                         )    through 00-00301 (MFW),
                  Debtors.               )    inclusive)
                                         )
                                         )

               JOINT PLAN OF REORGANIZATION FOR MARINER POST-ACUTE
              NETWORK, INC., MARINER HEALTH GROUP, INC., AND THEIR
              RESPECTIVE DEBTOR AFFILIATES DATED NOVEMBER 30, 2001

[THIS IS NOT A SOLICITATION OF ACCEPTANCE OR REJECTION OF THIS PLAN. ACCEPTANCES
    OR REJECTIONS MAY NOT BE SOLICITED UNTIL A DISCLOSURE STATEMENT HAS BEEN
APPROVED BY THE BANKRUPTCY COURT. A DISCLOSURE STATEMENT HAS BEEN SUBMITTED FOR
         APPROVAL BUT HAS NOT BEEN APPROVED BY THE COURT AT THIS TIME]

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

                                TABLE OF CONTENTS

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

         A.       Defined Terms...................................................................................1
         B.       Rules of Construction..........................................................................25
         C.       Plan Documentary Supplement....................................................................25
         D.       Exhibits.......................................................................................25

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

         A.       Summary........................................................................................26
         B.       Administrative Expenses........................................................................28

                  1.       Payment Generally.....................................................................28
                  2.       Administrative Expenses Bar Date:.....................................................28

                           a.       General Administrative Expenses Bar Date:....................................28
                           b.       Tax Administrative Expenses Bar Date:........................................29

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

         C.       Priority Tax Claims............................................................................29
         D.       Classification and Treatment of Claims.........................................................30

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

                           a.       Class SP-1: MPAN Senior Credit Facility Claims...............................30
                           b.       Class SP-2: Omega Claims.....................................................31
                           c.       Class SP-3: LaSalle Secured Claims...........................................31
                           d.       Class SP-4: Fireside Manor Secured Claims....................................33
                           e.       Class SP-5: Aramark Secured Claims...........................................34
                           f.       Class SP-6: Bank Midwest Secured Claims......................................34
                           g.       Class SP-7: Bank of New York Claims..........................................35
                           h.       Class SP-8: Lend Lease Secured Claims........................................35
                           i.       Class SM-1: MHG Senior Credit Facility Claims................................36
                           j.       Class SM-2: Bankers Trust Palmetto Secured Claims............................38
</TABLE>

                                       i

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

<TABLE>
<S>                                                                                                               <C>
                           k.       Class SM-3:  Bankers Trust Westchester Secured Claims.........................39
                           l.       Class SM-4:  Bankers Trust St. Augustine Secured Claims.......................40
                           m.       Class SM-5:  THCI Secured Claims..............................................41
                           n.       Class SM-6:  HUD Secured Claims...............................................42
                           o.       Class SM-7:  NHP Secured Claims...............................................43
                           p.       Class SM-8:  Porche Secured Claims............................................44
                           q.       Class SM-9:  Quaker Secured Claims............................................44
                           r.       Class SM-10: Monticello Bonifay Secured Claims................................46
                           s.       Class SM-11: Monticello Titusville Secured Claims.............................47
                           t.       Class SM-12: Monticello San Antonio Secured Claims............................48
                           u.       Class SJ-1:  Secured Tax Claims...............................................50
                           v.       Class SJ-2:  Other Secured Claim..............................................51
                           w.       Alternative Section 1111(b) Treatment.........................................53

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

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

                  3.       Unsecured Claims:......................................................................53

                           a.       Class UP-1:  MPAN General Unsecured Claims Not Otherwise Classified...........53
                           b.       Class UP-2:  MPAN Subordinated Note Claims....................................56
                           c.       Class UP-3:  MPAN Punitive Damage Claims......................................57
                           d.       Class UM-1:  MHG General Unsecured Claims Not Otherwise Classified............57
                           e.       Class UM-2:  MHG Third Party Subordinated Note Claims.........................61
                           f.       Class UM-3:  MHG Punitive Damage Claims.......................................61
                           g.       Class UJ-1:  Debtors Intercompany Claims......................................62

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

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

                                       ii

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

<TABLE>
<S>                                                                                                              <C>
                           c.       Classification and Treatment of State Medicaid Program Claims................62

                  5.       Equity Interests......................................................................63

                           a.       Class EP-1: Equity Interests in MPAN.........................................63
                           b.       Class EM-1: Equity Interests in MHG..........................................64
                           c.       Class EJ-1: Equity Interests in Debtor Affiliates............................64

III.     METHOD OF DISTRIBUTIONS UNDER THE PLAN..................................................................64

         A.       The Disbursing Agent...........................................................................64
         B.       Funding of Cash Payments.......................................................................65
         C.       Investment of Cash in Reserves.................................................................66
         D.       Delivery of Distributions and Undeliverable or Unclaimed Distributions.........................66

                  1.       Delivery of Distributions Generally...................................................66
                  2.       Undeliverable Distributions...........................................................66
                  3.       Voting Of Undelivered New MPAN Common Stock...........................................67

         E.       Setoffs........................................................................................67
         F.       De Minimis Distributions and Fractional Shares.................................................67
         G.       Record Date....................................................................................67

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

         A.       Reserve for Certain Disputed Claims and Disputed Administrative Expenses.......................68
         B.       Resolution of Disputed Claims and Disputed Administrative Expenses.............................68
         C.       Distributions With Respect to Disputed Claims That Become Allowed..............................69
         D.       Estimation of Disputed Claims..................................................................69

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

         A.       Termination of MPAN DIP Credit Agreement and MHG DIP Credit Agreement..........................70
         B.       Post-Effective Date Financing..................................................................71

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

                                      iii

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

<TABLE>
<S>                                                                                                              <C>
                  2.       The Exit Facility.....................................................................71
                  3.       Investor Notes........................................................................72
                  4.       Lender Notes..........................................................................72

         C.       Limited Substantive Consolidation..............................................................73

                  1.       Substantive Consolidation for Purposes of Claim Allowance and
                           Plan Distributions....................................................................73
                  2.       Corporate Restructuring Program and Continued Corporate Existence of
                           Reorganized Debtors...................................................................74

         D.       Issuance of New Securities and Registration Rights.............................................74
         E.       Cancellation of Existing Securities and Rejection of Related Agreements........................75
         F.       Surrender of Existing Securities...............................................................75
         G.       Elimination of Subordination Rights............................................................76
         H.       Amended and Restated Certificates of Incorporation and Bylaws..................................76
         I.       Management of the Reorganized Debtors..........................................................76
         J.       New Incentive Equity Plan......................................................................77
         K.       Employment Agreements..........................................................................77
         L.       Release Of Senior Credit Facility Claim Holders, Agents, And Representatives...................77
         M.       Corporate Action...............................................................................78
         N.       Revesting of Assets............................................................................78
         O.       Implementation of Bankruptcy Code Section 1146(c)..............................................78
         P.       Closing of Cases...............................................................................79

VI.      EXECUTORY CONTRACTS AND UNEXPIRED LEASES................................................................79

         A.       Assumption or Assumption and Assignment........................................................79

                  1.       Assumption and Assumption and Assignment Generally....................................79
                  2.       Conditional Assumption and Assumption and Assignment..................................80

         B.       Rejection......................................................................................81
         C.       Survival of the Debtors' Corporate Indemnities.................................................81
         D.       APS Executory Contracts and Unexpired Leases...................................................82
</TABLE>

                                       iv
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

<TABLE>
<S>                                                                                                             <C>
VII.     EFFECTIVENESS OF THE PLAN...............................................................................82

         A.       Effective Date.................................................................................82
         B.       Conditions Precedent...........................................................................82
         C.       Waiver of Conditions...........................................................................83
         D.       Notice of Effective Date.......................................................................83

VIII.    RETENTION OF JURISDICTION...............................................................................83

IX.      MISCELLANEOUS PROVISIONS................................................................................84

         A.       Payment of Statutory Fees......................................................................84
         B.       Retiree Benefits...............................................................................85
         C.       Dissolution of Committees......................................................................85
         D.       Discharge of Debtors and Injunction............................................................85
         E.       No Liability for Solicitation or Participation.................................................86
         F.       Limitation of Liability........................................................................86
         G.       Preservation of Rights of Action and Defenses..................................................87
         H.       Saturday, Sunday, or Legal Holiday.............................................................87
         I.       Headings.......................................................................................87
         J.       Binding Effect.................................................................................88
         K.       Revocation or Withdrawal.......................................................................88

                  1.       Right to Revoke.......................................................................88
                  2.       Effect of Withdrawal or Revocation....................................................88

         L.       Nonconsensual Confirmation.....................................................................88
         M.       Other Documents and Actions....................................................................88
         N.       Modification of the Plan.......................................................................88
         O.       Governing Law..................................................................................88
         P.       Withholding, Reporting, and Payment of Taxes...................................................89
         Q.       Notices........................................................................................89
         R.       Successors and Assigns.........................................................................90
</TABLE>

                                       v

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

                                  INTRODUCTION

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

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

                                       I.

                      DEFINITIONS AND RULES OF CONSTRUCTION

         A.       DEFINED TERMS

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

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

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

                  3.       "ALLOWED ADMINISTRATIVE EXPENSE" means any
Administrative Expense, or portion thereof, with respect to which both (i) a
timely and proper request for payment has been made to the extent required by
this Plan, and (ii) either (a) such Administrative Expense is subject to
allowance by the Bankruptcy Court pursuant to Bankruptcy Code section 330, 331,
or 503(b)(2) through (5), but only to the extent such Administrative Expense
actually is allowed by the Bankruptcy Court or by any professional fee allowance
procedures authorized by the Bankruptcy Court and then in effect, or (b) such
Administrative Expense is not subject to

                                       1

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

allowance by the Bankruptcy Court pursuant to Bankruptcy Code section 330, 331,
or 503(b)(2) through (5), but only to the extent that the amount, validity,
priority, or enforceability of such Administrative Expense is not the subject of
a bona fide dispute, including without limitation an objection that has not been
resolved by a Final Order.

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

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

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

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

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

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

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

                  6.       "AMENDED AND RESTATED CERTIFICATE OF INCORPORATION"
means, with respect to each Reorganized Debtor, the amended and restated
certificate or articles of incorporation (or document of similar effect with
respect to any Debtor that is not a corporation)

                                       2

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

for such Reorganized Debtor, which shall be substantially in the forms of the
examples set forth in the Plan Documentary Supplement.

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

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

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

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

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

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

                  13.      "AVAILABLE CASH" means the Debtors' (other than the
PHCMI Debtors') aggregate Cash on hand as of the Effective Date, plus (i) the
net proceeds of the Exit Term Loans, if any (excluding any proceeds earmarked to
pay Claims other than Class SP-1 Claims and Class SM-1 Claims, as expressly
provided for in the documents governing the Exit Term

                                       3

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

Loans), and (ii) the net proceeds from the issuance of the Investor Notes, if
any, less (x) $25 million working capital for the Reorganized Debtors'
operations after the Effective Date, and (y) the aggregate amount of all Cash
payments and reserves required by this Plan to be made on the Effective Date or
within sixty (60) days thereafter (excluding all Cash payments required to be
made to the Senior Credit Facility Claim Holders other than the payment of
$625,000 described in the treatment of Class SM-1 below).

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

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

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

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

                  18.      "BANKERS TRUST ST. AUGUSTINE DOCUMENTS" means the
following, each as may have been amended, supplemented, restated, or otherwise
modified from time to time, as each relates to the Debtors' St. Augustine leased
facility located in St. Johns County, Florida: (i) the Loan Agreement dated as
of November 1, 1993; (ii) the Promissory Note in the principal amount of
$5,750,000 dated as of November 1, 1993; (iii) the Mortgage and Security
Agreement dated as of November 1, 1993; and (iv) any other documents that either
evidence or perfect the Bankers Trust St. Augustine Secured Claims or that were
delivered pursuant to or in connection with the foregoing documents, each as it
relates to the Debtors' St. Augustine facility located in St. Johns County,
Florida.

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

                                       4

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

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

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

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

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

                  27.      "BANK OF NEW YORK DOCUMENTS" means the following,
each as may have been amended, supplemented, restated, or otherwise modified
from time to time: (i) the Amended and Restated Trust Indenture dated as of
April 1, 1993, (ii) the Amended and Restated

                                       5

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

Agreement of Sale dated as of April 1, 1993, (iii) the Guaranty dated as of
April 23, 1993, (iv) the Pledge Agreement - Reserve Fund Accounts dated as of
April 1, 1993, (v) the Restated and Amended Lease dated as of February 1, 1998,
(vi) any other documents that either evidence or perfect the Bank of New York
Claims, that were delivered pursuant to or in connection with the foregoing
documents, or that relate to any Claims of Bank of New York arising in
connection with the Debtors' facility known as Summit Hospital of Northwest
Louisiana.

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

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

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

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

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

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

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

                  35.      "CHASE" means The Chase Manhattan Bank, a New York
banking corporation.

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

                                       6

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

                  38.      "CLAIMS OBJECTION DEADLINE" means the later of (i)
the two-hundred seventieth (270th) day after the Effective Date, (ii) with
respect to a specific Claim, the one-hundred eightieth (180th) day after proof
of such Claim is filed, (iii) with respect to a Claim that is subject to the ADR
Procedure, the ninetieth (90th) day after the holder of such Claim either has
opted out of the ADR Procedure by executing the necessary stipulation or has
completed the requirements of the ADR Procedure, or (iv) such greater period of
limitation as may be fixed or extended by the Bankruptcy Court or by agreement
between a Debtor and the holder of the Claim.

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

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

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

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

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

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

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

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

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

                                       7

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

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

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

                  53.      "DISCLOSURE STATEMENT" means the disclosure statement
relating to this Plan including, without limitation, all exhibits and schedules
thereto, as approved by the Bankruptcy Court pursuant to section 1125 of the
Bankruptcy Code on or about January ___, 2002 [NOTICE: THE DISCLOSURE STATEMENT
CURRENTLY HAS NOT BEEN APPROVED].

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

                  55.      "DISPUTED CLAIM" means a Claim as to which any one of
the following applies: (i) no proof of claim has been filed with respect to such
Claim, and either (a) the Claim is not listed in the Schedules, or (b) the Claim
is listed in the Schedules as unliquidated, disputed, contingent, or unknown,
(ii) the Claim is the subject of a timely objection or request for estimation in
accordance with the Bankruptcy Code, the Bankruptcy Rules, any applicable order
of the Bankruptcy Court, or the Plan filed on or before the Claims Objection
Deadline, which objection or request for estimation has not been withdrawn or
determined by a Final Order, (iii) the Claim is currently being administered
pursuant to the ADR Procedure, (iv) the holder of the Claim has opted out of the
ADR Procedure or has completed the ADR Procedure, and the allowed amount of such
Claim has not been determined by a settlement consented to by the Debtors in
writing, a binding decision in arbitration, or a Final Order, or (v) the Claim
is otherwise treated as a "Disputed Claim" pursuant to this Plan.

                  In addition, prior to the earlier of (i) the Claims Objection
Deadline, (ii) such date as the Bankruptcy Court allows the Claim pursuant to a
Final Order, or (iii) such date as the Claim is resolved pursuant to the ADR
Procedure, any Claim evidenced by a proof of claim in Classes UP-1, UP-2, UM-1,
or UM-2, or any Priority Tax Claim, shall be deemed a Disputed Claim for
purposes of calculating and making any distributions under this Plan if: (a) no
Claim corresponding to the proof of claim is listed in the Schedules, (b) the
Claim corresponding to the proof of claim is listed in the Schedules as
disputed, contingent, unliquidated, unknown, or in a

                                       8

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

zero amount, (c) the amount of the Claim as specified in the proof of claim
exceeds the amount of any corresponding Claim listed in the Schedules as not
disputed, not contingent, and liquidated, but only to such extent, or (d) the
priority of the Claim as specified in the proof of claim differs from the
priority of any corresponding Claim listed in the Schedules.

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

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

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

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

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

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

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

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

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

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

                                       9

<PAGE>

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

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

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

                  69.      "GENERAL UNSECURED CLAIM" means any Claim against the
Debtors that is not an Administrative Expense, Secured Claim, Priority Tax
Claim, Other Priority Claim, Subordinated Note Claim, Debtors Intercompany
Claim, Securities Damages Claim, Senior Credit Facility Claim, United States
Claim, or Punitive Damage Claim. General Unsecured Claims shall include, without
limitation, any and all unsecured trade, contribution, indemnification,
reimbursement, employee contract, unsecured deficiency Claims, and lease and
contract rejection Claims against the Debtors.

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

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

                  72.      "INVESTOR NOTES" means certain notes that may be
issued on the Effective Date, as described more fully in Section V.B.3 of this
Plan.

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

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

                                       10

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

                  76.      "LEND LEASE" means Lend Lease Asset Management, L.P.,
as Special Servicer for Bankers Trust Company of California, N.A., Trustee for
Commercial Mortgage Pass-Through Certificates Series 1992-C5, and any
affiliates, successors, assigns, or beneficiaries thereof.

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

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

                  79.      "LENDER NOTES" means the notes that may be
distributed on the Effective Date to holders of MPAN Senior Credit Facility
Claims and the MHG Senior Credit Facility Claims, as described more fully in
Sections II.D.1 and V.B.4 of this Plan.

                  80.      "LENDER SHARES" means [96.12%] of the Primary
Effective Date Shares of New MPAN Common Stock, which shall be distributed on
the Effective Date to the Senior Credit Facility Claim Holders as provided in
this Plan.

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

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

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

                                       11

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

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

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

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

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

                  91.      "MHG LENDER PERCENTAGE" means 20.37%.

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

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

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

                  95.      "MHG SENIOR CREDIT FACILITY DOCUMENTS" means the
following documents, as amended, supplemented, restated, or otherwise modified
from time to time: (i) the $210,000,000 Term Loan Facility Credit Agreement
dated as of December 23, 1998, among

                                       12

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

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

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

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

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

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

                                       13

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

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

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

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

                  109.     "MPAN" means Mariner Post-Acute Network, Inc., a
Delaware corporation.

                                       14

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

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

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

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

                  116.     "MPAN GENERAL UNSECURED CLAIMS DISTRIBUTION FUND"
means a fund containing (i) [INSERT NUMBER OF SHARES], which shall constitute in
the aggregate [1.94%] of the Primary Effective Date Shares of New MPAN Common
Stock as of the Effective Date, and (ii) New MPAN Warrants, which shall enable
the holders thereof to purchase in the aggregate [INSERT NUMBER OF SHARES],
which shall constitute [1.91%] of the fully diluted shares of New MPAN Common
Stock as of the Effective Date (assuming that all of the New MPAN Warrants are
exercised, but excluding certain shares issued or to be issued on account of the
NIEP), held by the Disbursing Agent and established pursuant to Section II.D.3
of the Plan for the purpose of funding distributions to holders of Allowed Class
UP-1 Claims.

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

                  118.     "MPAN LENDER PERCENTAGE" means 79.63%.

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

                                       15

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

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

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

                  125.     "MPAN SUBORDINATED NOTE CLAIMS DISTRIBUTION FUND"
means a fund containing (i) [INSERT NUMBER OF SHARES], which shall constitute in
the aggregate [1.94%] of the Primary Effective Date Shares of New MPAN Common
Stock as of the Effective Date, and (ii) New MPAN Warrants, which shall enable
the holders thereof to purchase in the aggregate [INSERT NUMBER OF SHARES],
which shall constitute [1.91%] of the fully diluted shares of New MPAN Common
Stock as of the Effective Date (assuming that all of the New MPAN Warrants are
exercised, but excluding certain shares issued or to be issued on account of the
NIEP), held by the Disbursing Agent and established pursuant to Section II.D.3
of the Plan for the purpose of funding distributions to (i) holders of Allowed
Class UP-2 Claims (other than Securities Damages Claims) that are also
Consenting Class UP-2 Holders, and (ii) to the extent any holders of Allowed
Class UP-2 Claims are not Consenting Class UP-2 Holders, the MPAN Senior Credit
Facility Agent for the benefit of the MPAN Senior Credit Facility Claim Holders
on account of such Allowed Class UP-2 Claims.

                                       16

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

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

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

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

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

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

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

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

                  136.     "NEW MONTICELLO BONIFAY NOTE" means the note to be
issued to the holder of the Monticello Bonifay Secured Claims, as described more
fully in Section II.D.1 of this Plan.

                  137.     "NEW MONTICELLO SAN ANTONIO NOTE" means the note to
be issued to the holder of the Monticello San Antonio Secured Claims, as
described more fully in Section II.D.1 of this Plan.

                                       17

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

                  140.     "NEW MPAN WARRANTS" means the warrants representing
the right to purchase in the aggregate [INSERT NUMBER OF SHARES] shares of New
MPAN Common Stock at an exercise price of $31.34 per share for a period of two
(2) years following the Effective Date, as described more fully in the New
Warrant Agreement.

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

                  142.     "NEW PROJECT LENDER NOTES" means, collectively, the
New LaSalle Note, New Bankers Trust Palmetto Note, New Bankers Trust Westchester
Note, New HUD Note, New THCI Note, New NHP Note, New Quaker Note, New Monticello
Bonifay Note, New Monticello San Antonio Note, and New Monticello Titusville
Note.

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

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

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

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

                  147.     "NHP DOCUMENTS" means the following, each as may have
been amended, supplemented, restated, or otherwise modified from time to time:
(i) the Loan Agreement dated June 30, 1993; (ii) the Deed of Trust, Assignment
of Rents, Security Agreement, Financing Statement and Fixture Filing dated as of
June 30, 1993; (iii) the First Amendment to Loan Agreement, Deed of Trust and
Other Loan Documents (Kensington Gardens) dated June 28, 1996; (iv) the Secured
Promissory Note dated June 30, 1993; and (v) any other documents that either
evidence or perfect the NHP Secured Claims or that were delivered pursuant to
the foregoing documents.

                  148.     "NHP SECURED CLAIMS" means any and all Secured Claims
of NHP or others arising under, evidenced by, or relating to (i) the NHP
Documents; or (ii) Claim number 2469 filed in the MHG Chapter 11 Cases including
but not limited to (a) any liens securing such

                                       18

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

Claims, (b) any guarantees of such Claims, or (c) any interest, penalties, and
fees relating to such Claims, each as it relates to the Debtors' facility known
as Mariner Health of Kensington.

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

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

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

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

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

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

                  155.     "OMEGA DOCUMENTS" means the following, each as may
have been amended, supplemented, restated, or otherwise modified from time to
time: (i) the Michigan Loan Agreement dated June 7, 1992, (ii) the Mortgage,
Security Agreement, Assignment of Rents and Leases, and Fixture Filing dated
August 14, 1992, (iii) the Mortgage Note dated August 14, 1992, (iv) the
Security Agreement dated August 14, 1992, (v) the Letter of Credit Pledge
Agreement dated August 14, 1992, (vi) the Cash Collateral Escrow Agreement dated
August 14, 1992, (vii) the Assignment of Leases dated August 14, 1992, (viii)
the Omega-PHCM Subsidiary Guaranty dated February 12, 1997, and (ix) any other
documents that either evidence or perfect the Omega Claims or that were
delivered pursuant to or in connection with the foregoing documents.

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

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

                                       19

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

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

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

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

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

                  165.     "PORCHE SECURED CLAIMS" means any and all Secured
Claims asserted by Porche or others arising under, evidenced by, or relating to:
(i) the Porche Documents; or (ii) Claim number 479, 1439, or 1449 filed in the
MHG Chapter 11 Cases, including but not limited to: (a) any liens securing such
Claims; (b) any guarantees of such Claims; or (c) any interest, penalties, and
fees relating to such Claims.

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

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

                                       20

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

                  The Pro Rata ratio or formula is illustrated as follows:

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

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

                                           =

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

                  For purposes of the application of this definition, (a) the
amount of any Disputed Claim shall be the lesser of: (i) the face amount of such
Claim, (ii) the maximum amount of such Claim as estimated in accordance with the
Claims Estimation Procedure set forth in Section IV.D hereof, or (iii) zero, to
the extent such Claim has been disallowed by a Final Order, (b) the term
"consideration" may refer to New MPAN Common Stock, New MPAN Warrants, Cash, or
any other property that may be distributed under this Plan, and (c) if the
Debtors recover any transfers from an entity on the basis that such transfers
were preferential as provided in section 547 of the Bankruptcy Code, and if such
entity is entitled to an Allowed Claim as a consequence of such recovery and is
otherwise entitled to distributions on account of such Allowed Claim under this
Plan (including, if applicable, as a Consenting Class UP-2 Holder or a
Consenting Class UM-1 Holder), then such entity shall be entitled to a Pro Rata
distribution as the holder of an Allowed Claim in the applicable Class.

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

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

                                       21

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

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

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

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

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

                                       22

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

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

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

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

                  184.     "STATE MEDICAID CLAIM" means a Claim of a State for
payment, recovery, recoupment, or offset of any reimbursements or other payments
made by or on behalf of a State pursuant to a State's Medicaid program, for
services rendered or otherwise provided by or on behalf of any of the Debtors
prior to the Petition Date (regardless whether any cost reports with respect to
such services were submitted or audited before or after the Petition Date),
which reimbursements or other payments the State contends were improperly made,
were made in the wrong amount, or are otherwise recoverable by the State,
provided, however, that any Claims for penalties or fines shall not be treated
as State Medicaid Claims.

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

                  186.     "SYNTHETIC LEASE TRANSACTION DOCUMENTS" means the
following documents, as amended, supplemented, restated, or otherwise modified
from time to time: (i) the Amended and Restated Participation Agreement dated as
of November 4, 1997; (ii) the Amended and Restated Credit Agreement dated as of
November 4, 1997; (iii) the Lease dated as of October 10, 1996, and the
Memoranda of Leases and Lease Supplements relating thereto; (iv) the Amended and
Restated Guarantee dated as of November 4, 1997; (v) the Mortgages and/or Deeds
of Trust relating to the foregoing; (vi) the Agency Agreement relating to the
foregoing;

                                       23

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

and (vii) the Stipulation Acknowledging Ownership of Properties Subject to
"Synthetic Lease" Transaction approved by the Bankruptcy Court on or about
January 18, 2000.

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

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

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

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

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

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

                  193.     "UNITED STATES CLAIMS" means any and all Claims or
causes of action against the Debtors asserted by or on behalf of the United
States, or its agencies, departments, officers, agents, fiscal intermediaries,
employees, or assigns, or by third parties under 31 U.S.C. ss. 3730(b) or (d)
(including any and all "Qui Tam" Claims) seeking payments, damages, offsets,
recoupments, penalties, attorneys' fees, costs, expenses of any kind, or other
remedies of any kind: (i) under the False Claims Act, 31 U.S.C. ss.ss.
3801-3812, and/or other statutory or common law doctrines of payment by mistake,
unjust enrichment, breach of contract, or fraud; (ii) for administrative
overpayments, including Claims or causes of action for services rendered or
products supplied under Medicare, the TRICARE Program, 10 U.S.C. ss.ss.
1071-1106, or any

                                       24

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

other federal health program; (iii) for civil monetary penalties imposed
pursuant to 42 U.S.C. ss.1395i-3(h)(2)(B)(ii) and 42 U.S.C. ss.
1396r(h)(2)(A)(ii) or other applicable law; (iv) arising under any provider
agreement or similar agreement with the United States; and (v) for permissive
exclusion from Medicare, Medicaid, and other federal health programs.
Notwithstanding anything in this definition to the contrary, United States
Claims shall not include Claims for taxes or Claims of HUD otherwise classified
under this Plan.

         B.       RULES OF CONSTRUCTION.

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

         C.       PLAN DOCUMENTARY SUPPLEMENT.

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

         D.       EXHIBITS.

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

                                       25

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

                                       II.

                         CLASSIFICATION AND TREATMENT OF
                           CLAIMS AND EQUITY INTERESTS

         A.       SUMMARY.

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

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

                                       26

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

<TABLE>
<Caption>
                     CLASS                                           STATUS
                     -----                                           ------
<S>                                               <C>
   SM-6:    HUD Secured Claims                    Impaired - entitled to vote
   SM-7:    NHP Secured Claims                    Impaired - entitled to vote
   SM-8:    Porche Secured Claims                 Impaired - deemed to have rejected Plan
   SM-9:    Quaker Secured Claims                 Impaired - entitled to vote
   SM-10:   Monticello Bonifay Secured Claims     Impaired - entitled to vote
   SM-11:   Monticello Titusville Secured         Impaired - entitled to vote
            Claims
   SM-12:   Monticello San Antonio Secured        Impaired - entitled to vote
            Claims
   SJ-1:    Secured Tax Claims                    Impaired - entitled to vote
   SJ-2:    Other Secured Claims                  Impaired - entitled to vote; provided, however, that the
                                                  Debtors may elect to unimpair certain holders

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

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

                                       27

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

<TABLE>
<S>                                               <C>
   GP-1:    MPAN United States Claims             Impaired - consenting to the Plan pursuant to the Federal
                                                  Government Settlement
   GM-1:    MHG United States Claims              Impaired - consenting to the Plan pursuant to the Federal
                                                  Government Settlement

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

         B.       ADMINISTRATIVE EXPENSES.

                  1.       PAYMENT GENERALLY.

                  Except to the extent that the holder of an Allowed
Administrative Expense agrees to a different treatment, and subject to the bar
dates for Administrative Expenses set forth in the following Sections, the
Disbursing Agent shall pay each Allowed Administrative Expense in full, in Cash,
on the later of (i) the Effective Date, (ii) within ten (10) Business Days after
the date such Administrative Expense becomes an Allowed Administrative Expense,
or (iii) the date such Allowed Administrative Expense becomes due according to
its terms. Notwithstanding the foregoing, any Allowed Administrative Expenses
representing obligations incurred in the ordinary course of postpetition
business by the Debtors in Possession (including without limitation postpetition
trade obligations and postpetition payroll obligations, but excluding any
postpetition tax obligations) or that have been expressly authorized by the
Bankruptcy Court or this Plan shall be paid in full or performed by the
Reorganized Debtors in the ordinary course of business, in accordance with the
terms of the particular obligation.

                  2.       ADMINISTRATIVE EXPENSES BAR DATE.

                           A.       GENERAL ADMINISTRATIVE EXPENSES BAR DATE.

                  All applications for final compensation of professional
persons for services rendered and for reimbursement of expenses incurred on or
before the Effective Date and all other requests for payment of Administrative
Expenses incurred before the Effective Date under sections 507(a)(1) or 507(b)
of the Bankruptcy Code (except only for (i) postpetition, ordinary course trade
obligations and postpetition payroll obligations incurred in the ordinary course
of the Debtors' postpetition business and obligations expressly authorized by
the Bankruptcy Court or this Plan (including but not limited to obligations
arising under any agreements entered into during the Chapter 11 Cases pursuant
to Bankruptcy Court approval), for which no bar date shall apply, and (ii)
postpetition tax obligations, for which the bar date described in the following

                                       28

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

Section shall apply) shall be filed with the Bankruptcy Court and served upon
the Reorganized Debtors, the MPAN Senior Credit Facility Agent, and the MHG
Senior Credit Facility Agent no later than sixty (60) days after the Effective
Date (the "General Administrative Expenses Bar Date"), unless such date is
extended by the Bankruptcy Court after notice to the Reorganized Debtors. Any
such request for payment of an Administrative Expense that is subject to the
General Administrative Expenses Bar Date and that is not filed and served on or
before the General Administrative Expenses Bar Date shall be forever barred; any
party that seeks payment of Administrative Expenses that (i) is required to file
a request for payment of such Administrative Expenses and (ii) does not file
such a request by the deadline established herein (including but not limited to
parties seeking payment of Administrative Expenses relating to personal injuries
occurring after the Petition Date) shall be forever barred from asserting such
Administrative Expenses against the Debtors, the Reorganized Debtors, their
estates, or any of their property.

                           B.       TAX ADMINISTRATIVE EXPENSES BAR DATE.

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

                  3.       POST-EFFECTIVE DATE PROFESSIONAL FEES AND EXPENSES.

                  Any professional fees or reimbursement of expenses incurred by
the Reorganized Debtors subsequent to the Effective Date may be paid by the
Reorganized Debtors without application to the Bankruptcy Court, provided,
however, that the Bankruptcy Court shall retain jurisdiction to resolve any
disputes regarding payment for professional services relating to the
implementation of the Plan or the administration of the Chapter 11 Cases.

         C.       PRIORITY TAX CLAIMS.

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

                                       29

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                                                   NOT APPROVED FOR SOLICITATION

         D.       CLASSIFICATION AND TREATMENT OF CLAIMS.

                  1.       SECURED CLAIMS.

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

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

                                    II.      ALLOWANCE: The MPAN Senior Credit
Facility Claims shall be deemed Allowed Claims in the aggregate amount of
[$985,631,000] for purposes of this Plan.

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

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

                  All Cash to be distributed to the MPAN Senior Credit Facility
Claim Holders shall be distributed initially to the MPAN Senior Credit Facility
Agent, for distribution by the MPAN Senior Credit Facility Agent to the MPAN
Senior Credit Facility Claim Holders. All of the New MPAN Common Stock and
Lender Notes to be distributed to the MPAN Senior Credit Facility Claim Holders
shall be distributed by the Reorganized Debtors as directed in writing by

                                       30

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

                           B.       CLASS SP-2: OMEGA CLAIMS.

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

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

                           C.       CLASS SP-3: LASALLE SECURED CLAIMS.

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

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

                  No less than twenty (20) days prior to the commencement of the
Confirmation Hearing, the Debtors shall file with the Court and serve upon the
holder of the LaSalle Secured

                                       31

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

Claims the Debtors' estimate of the amount of the Allowed LaSalle Secured Claims
as of the anticipated Effective Date, which amount shall be binding upon the
holder of the LaSalle Secured Claims unless such holder files with the
Bankruptcy Court and serves upon the Debtors an objection to the Debtors'
estimate prior to the commencement of the Confirmation Hearing. In the event of
such an objection, the LaSalle Secured Claims shall be treated as Disputed
Claims until the allowed amount of the LaSalle Secured Claims is determined by
the Bankruptcy Court, or by mutual agreement of the Debtors and the holder of
the LaSalle Secured Claims.

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

                  The New LaSalle Note shall include the following terms:

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

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

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

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

                                    COLLATERAL: The New LaSalle Note shall be
         secured by a first priority lien on the skilled nursing facilities
         known as the Birchwood Nursing Home, Flora Care Center, Lafayette
         Health Care Center, and Parkway Healthcare Center, and all

                                       32

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

         tangible and intangible personal property located at or relating solely
         to the foregoing facilities upon which LaSalle holds validly perfected,
         nonavoidable liens as of the Confirmation Date.

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

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

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

                  No less than twenty (20) days prior to the commencement of the
Confirmation Hearing, the Debtors shall file with the Court and serve upon the
holder of the Fireside Manor Secured Claims the Debtors' estimate of the amount
of the Allowed Fireside Manor Secured Claims as of the anticipated Effective
Date, which amount shall be binding upon the holder of the Fireside Manor
Secured Claims unless such holder files with the Bankruptcy Court and serves
upon the Debtors an objection to the Debtors' estimate prior to the commencement
of the Confirmation Hearing. In the event of such an objection, the Fireside
Manor Secured Claims shall be treated as Disputed Claims until the allowed
amount of the Fireside Manor Secured Claims is determined by the Bankruptcy
Court, or by mutual agreement of the Debtors and the holder of the Fireside
Manor Secured Claims.

                                    III.     TREATMENT: In full satisfaction of
the Fireside Manor Secured Claims, the Disbursing Agent shall pay the holder of
the Allowed Class SP-4 Claims the full amount of such Allowed Class SP-4 Claims,
in Cash, on the later of (i) the Effective Date, or (ii) the date the Fireside
Manor Secured Claims become Allowed Class SP-4 Claims. Any and all liens,
encumbrances, and other interests in the Debtors' or the Reorganized Debtors'
property securing the Fireside Manor Secured Claims shall be deemed released
automatically, without the need for any further action by any party, immediately
upon the earlier of either (a) payment of the Allowed Class SP-4 Claims in
accordance herewith, or (b) the Debtors' funding of a reserve account with Cash
in an amount equal to the amount of the Fireside Manor Secured Claims as
asserted by the holder of such Claims, with the liens securing the Fireside
Manor Secured Claims attaching to such account until payment of the Allowed
Class SP-4 Claims. As a condition precedent to such payment, however, the
Reorganized Debtors may require the holder of the Fireside Manor Secured Claims
to surrender any outstanding notes relating to such Claims and execute
collateral or lien releases in a form reasonably acceptable to the Reorganized
Debtors and that, in the Reorganized Debtors' discretion, may be filed or
recorded to evidence such release.

                                       33

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

                           E.       CLASS SP-5: ARAMARK SECURED CLAIMS.

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

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

                  No less than twenty (20) days prior to the commencement of the
Confirmation Hearing, the Debtors shall file with the Court and serve upon the
holder of the Aramark Secured Claims the Debtors' estimate of the amount of the
Allowed Aramark Secured Claims as of the anticipated Effective Date, which
estimate shall be binding upon the holder of the Aramark Secured Claims unless
such holder files with the Bankruptcy Court and serves upon the Debtors an
objection to the Debtors' estimate prior to the commencement of the Confirmation
Hearing. In the event of such an objection, the Aramark Secured Claims shall be
treated as Disputed Claims until the allowed amount of the Aramark Secured
Claims is determined by the Bankruptcy Court, or by mutual agreement of the
Debtors and the holder of the Aramark Secured Claims.

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

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

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

                                    II.      ALLOWANCE: The Allowed Bank Midwest
Secured Claims shall consist of (i) all amounts owing on account of the Bank
Midwest Secured Claims as of the Petition Date, plus (ii) interest from the
Petition Date through the Effective Date in an amount

                                       34

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

equal to the nondefault rate (and excluding any late charges or penalties) as
specified in the Bank Midwest Documents, less (iii) any amounts paid by the
Debtors on account of the Bank Midwest Secured Claims during the Chapter 11
Cases, whether in the form of adequate protection payments, through the
application of security deposits, or otherwise. No less than twenty (20) days
prior to the commencement of the Confirmation Hearing, the Debtors shall file
with the Court and serve upon the holder of the Bank Midwest Secured Claims the
Debtors' estimate of the amount of the Allowed Bank Midwest Secured Claims as of
the anticipated Effective Date, which amount shall be binding upon the holder of
the Bank Midwest Secured Claims unless such holder files with the Bankruptcy
Court and serves upon the Debtors an objection to the Debtors' estimate prior to
the commencement of the Confirmation Hearing. In the event of such an objection,
the Bank Midwest Secured Claims shall be treated as Disputed Claims until the
allowed amount of the Bank Midwest Secured Claims is determined by the
Bankruptcy Court, or by mutual agreement of the Debtors and the holder of the
Bank Midwest Secured Claims.

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

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

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

                                    II.      TREATMENT: The Bank of New York
Claims shall be unimpaired under this Plan pursuant to section 1124 of the
Bankruptcy Code, and the holder of the Bank of New York Claims shall retain
unaltered by this Plan whatever rights it may have under the Bank of New York
Documents.

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

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

                                    II.      ALLOWANCE: The Allowed Lend Lease
Secured Claims shall consist of (i) all amounts owing on account of the Lend
Lease Secured Claims as of the

                                       35

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

Petition Date, plus (ii) interest from the Petition Date through the Effective
Date in an amount equal to the nondefault rate (and excluding any late charges
or penalties) as specified in the Lend Lease Documents, less (iii) any amounts
paid by the Debtors on account of the Lend Lease Secured Claims during the
Chapter 11 Cases, whether in the form of adequate protection payments, through
the application of security deposits, or otherwise. No less than twenty (20)
days prior to the commencement of the Confirmation Hearing, the Debtors shall
file with the Court and serve upon the holder of the Lend Lease Secured Claims
the Debtors' estimate of the amount of the Allowed Lend Lease Secured Claims as
of the anticipated Effective Date, which amount shall be binding upon the holder
of the Lend Lease Secured Claims unless such holder files with the Bankruptcy
Court and serves upon the Debtors an objection to the Debtors' estimate prior to
the commencement of the Confirmation Hearing. In the event of such an objection,
the Lend Lease Secured Claims shall be treated as Disputed Claims until the
allowed amount of the Lend Lease Secured Claims is determined by the Bankruptcy
Court, or by mutual agreement of the Debtors and the holder of the Lend Lease
Secured Claims.

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

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

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

                                    II.      ALLOWANCE: The MHG Senior Credit
Facility Claims shall be deemed Allowed Claims in the aggregate amount of
[_______________] for purposes of this Plan.

                                    III.     TREATMENT: The MHG Senior Credit
Facility Claim Holders shall receive in the aggregate and in full satisfaction
of the MHG Senior Credit Facility Claims on the Effective Date: (a) Cash in the
amount of $625,000 for payment to or at the direction of the MHG Senior Credit
Facility Agent in respect of a success fee owed to Houlihan Lokey Howard &
Zukin; (b) the MHG Lender Percentage of the Available Cash; (c) the MHG Lender
Percentage of the Lender Notes, if any such Lender Notes are issued pursuant to
Section

                                       36

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

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

                                       37

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

                  No less than twenty (20) days prior to the commencement of the
Confirmation Hearing, the Debtors shall file with the Court and serve upon the
holder of the Bankers Trust Palmetto Secured Claims the Debtors' estimate of the
amount of the Allowed Bankers Trust Palmetto Secured Claims as of the
anticipated Effective Date, which amount shall be binding upon the holder of the
Bankers Trust Palmetto Secured Claims unless such holder files with the
Bankruptcy Court and serves upon the Debtors an objection to the Debtors'
estimate prior to the commencement of the Confirmation Hearing. In the event of
such an objection, the Bankers Trust Palmetto Secured Claims shall be treated as
Disputed Claims until the allowed amount of the Bankers Trust Palmetto Secured
Claims is determined by the Bankruptcy Court, or by mutual agreement of the
Debtors and the holder of the Bankers Trust Palmetto Secured Claims.

                                    III.    TREATMENT: In full satisfaction of
the Bankers Trust Palmetto Secured Claims, Bankers Trust shall receive within
ten (10) Business Days after the later of (x) the Effective Date, or (y) the
date the Bankers Trust Palmetto Secured Claims become Allowed Class SM-2 Claims,
the indubitable equivalent of the Allowed Bankers Trust Palmetto Secured Claim,
in the form of (i) the Cash Pay Down, and (ii) the New Bankers Trust Palmetto
Note.

                  The New Bankers Trust Palmetto Note shall include the
following terms:

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

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

                                       38

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

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

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

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

                  No less than twenty (20) days prior to the commencement of the
Confirmation Hearing, the Debtors shall file with the Court and serve upon the
holder of the Bankers Trust Westchester Secured Claims the Debtors' estimate of
the amount of the Allowed Bankers Trust Westchester Secured Claims as of the
anticipated Effective Date, which amount shall be binding upon the holder of the
Bankers Trust Westchester Secured Claims unless such holder files with the
Bankruptcy Court and serves upon the Debtors an objection to the Debtors'
estimate prior to the commencement of the Confirmation Hearing. In the event of
such an objection, the Bankers Trust Westchester Secured Claims shall be treated
as Disputed Claims until the allowed amount of the Bankers Trust Westchester
Secured Claims is determined by the Bankruptcy Court, or by

                                       39

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

mutual agreement of the Debtors and the holder of the Bankers Trust Westchester
Secured Claims.

                                   III.      TREATMENT: In full satisfaction of
the Bankers Trust Westchester Secured Claims, Bankers Trust shall receive within
ten (10) Business Days after the later of (x) the Effective Date, or (y) the
date the Bankers Trust Westchester Secured Claims become Allowed Class SM-3
Claims, the indubitable equivalent of the Allowed Bankers Trust Westchester
Secured Claim, in the form of (i) a payment of Cash in the amount of the Cash
Pay Down, and (ii) the New Bankers Trust Westchester Note.

                  The New Bankers Trust Westchester Note shall include the
following terms:

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

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

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

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

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

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

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

                                    II.      TREATMENT: The Bankers Trust St.
Augustine Secured Claims shall be unimpaired under this Plan pursuant to section
1124 of the Bankruptcy Code, and the holder of the Bankers Trust St. Augustine
Secured Claims shall retain unaltered by this Plan whatever rights it may have
with respect to such Claims.

                                       40

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

                           M.       CLASS SM-5:  THCI SECURED CLAIMS.

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

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

                  No less than twenty (20) days prior to the commencement of the
Confirmation Hearing, the Debtors shall file with the Court and serve upon the
holder of the THCI Secured Claims the Debtors' estimate of the amount of the
Allowed THCI Secured Claims as of the anticipated Effective Date, which amount
shall be binding upon the holder of the THCI Secured Claims unless such holder
files with the Bankruptcy Court and serves upon the Debtors an objection to the
Debtors' estimate prior to the commencement of the Confirmation Hearing. In the
event of such an objection, the THCI Secured Claims shall be treated as Disputed
Claims until the allowed amount of the THCI Secured Claims is determined by the
Bankruptcy Court, or by mutual agreement of the Debtors and the holder of the
THCI Secured Claims.

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

                  The New THCI Note shall include the following terms:

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

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

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

                                       41

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

                           N.       CLASS SM-6:  HUD SECURED CLAIMS.

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

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

                  No less than twenty (20) days prior to the commencement of the
Confirmation Hearing, the Debtors shall file with the Court and serve upon the
holder of the HUD Secured Claims the Debtors' estimate of the amount of the
Allowed HUD Secured Claims as of the anticipated Effective Date, which amount
shall be binding upon the holder of the HUD Secured Claims unless such holder
files with the Bankruptcy Court and serves upon the Debtors an objection to the
Debtors' estimate prior to the commencement of the Confirmation Hearing. In the
event of such an objection, the HUD Secured Claims shall be treated as Disputed
Claims until the allowed amount of the HUD Secured Claims is determined by the
Bankruptcy Court, or by mutual agreement of the Debtors and the holder of the
HUD Secured Claims.

                                    III.     TREATMENT: In full satisfaction of
the HUD Secured Claims, HUD shall receive within ten (10) Business Days after
the later of (x) the Effective Date, or (y) the date the HUD Secured Claims
become Allowed Class SM-6 Claims, the indubitable equivalent of the Allowed HUD
Secured Claim, in the form of (i) the Cash Pay Down, and (ii) the New HUD Note.

                                       42

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

                  The New HUD Note shall include the following terms:

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

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

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

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

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

                  O.       CLASS SM-7: NHP SECURED CLAIMS.

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

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

                  No less than twenty (20) days prior to the commencement of the
Confirmation Hearing, the Debtors shall file with the Court and serve upon the
holder of the NHP Secured Claims the Debtors' estimate of the amount of the
Allowed NHP Secured Claims as of the anticipated Effective Date, which amount
shall be binding upon the holder of the NHP Secured

                                       43
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

Claims unless such holder files with the Bankruptcy Court and serves upon the
Debtors an objection to the Debtors' estimate prior to the commencement of the
Confirmation Hearing. In the event of such an objection, the NHP Secured Claims
shall be treated as Disputed Claims until the allowed amount of the NHP Secured
Claims is determined by the Bankruptcy Court, or by mutual agreement of the
Debtors and the holder of the NHP Secured Claims.

                           III.     TREATMENT: In full satisfaction of the NHP
Secured Claims, NHP shall receive within ten (10) Business Days after the later
of (x) the Effective Date, or (y) the date the NHP Secured Claims become Allowed
Class SM-7 Claims, the indubitable equivalent of the Allowed NHP Secured Claims,
in the form of (i) the Cash Pay Down, and (ii) the New NHP Note.

                  The New NHP Note shall include the following terms:

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

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

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

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

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

                  P.       CLASS SM-8: PORCHE SECURED CLAIMS.

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

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

                  Q.       CLASS SM-9:  QUAKER SECURED CLAIMS.

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

                                       44
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

                  No less than twenty (20) days prior to the commencement of the
Confirmation Hearing, the Debtors shall file with the Court and serve upon the
holder of the Quaker Secured Claims the Debtors' estimate of the amount of the
Allowed Quaker Secured Claims as of the anticipated Effective Date, which amount
shall be binding upon the holder of the Quaker Secured Claims unless such holder
files with the Bankruptcy Court and serves upon the Debtors an objection to the
Debtors' estimate prior to the commencement of the Confirmation Hearing. In the
event of such an objection, the Quaker Secured Claims shall be treated as
Disputed Claims until the allowed amount of the Quaker Secured Claims is
determined by the Bankruptcy Court, or by mutual agreement of the Debtors and
the holder of the Quaker Secured Claims.

                           III.     TREATMENT: In full satisfaction of the
Quaker Secured Claims, Quaker shall receive within ten (10) Business Days after
the later of (x) the Effective Date, or (y) the date the Quaker Secured Claims
become Allowed Class SM-9 Claims, the indubitable equivalent of the Allowed
Quaker Secured Claim, in the form of (i) the Cash Pay Down, and (ii) the New
Quaker Note.

                  The New Quaker Note shall include the following terms:

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

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

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

                           PAYMENTS AND AMORTIZATION: The New Quaker Note shall
         be payable in equal, monthly installments of principal and interest,
         calculated on a twenty-

                                       45
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

         five year amortization schedule following the Effective Date, with the
         remaining balance fully due and payable ten (10) years after the
         Effective Date.

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

                           R.       CLASS SM-10: MONTICELLO BONIFAY SECURED
                                    CLAIMS.

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

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

                  No less than twenty (20) days prior to the commencement of the
Confirmation Hearing, the Debtors shall file with the Court and serve upon the
holder of the Monticello Bonifay Secured Claims the Debtors' estimate of the
amount of the Allowed Monticello Bonifay Secured Claims as of the anticipated
Effective Date, which amount shall be binding upon the holder of the Monticello
Bonifay Secured Claims unless such holder files with the Bankruptcy Court and
serves upon the Debtors an objection to the Debtors' estimate prior to the
commencement of the Confirmation Hearing. In the event of such an objection, the
Monticello Bonifay Secured Claims shall be treated as Disputed Claims until the
allowed amount of the Monticello Bonifay Secured Claims is determined by the
Bankruptcy Court, or by mutual agreement of the Debtors and the holder of the
Monticello Bonifay Secured Claims.

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

                  The New Monticello Bonifay Note shall include the following
terms:

                                       46
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

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

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

                           S.       CLASS SM-11:  MONTICELLO TITUSVILLE SECURED
                                    CLAIMS.

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

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

                  No less than twenty (20) days prior to the commencement of the
Confirmation Hearing, the Debtors shall file with the Court and serve upon the
holder of the Monticello Titusville Secured Claims the Debtors' estimate of the
amount of the Allowed Monticello Titusville Secured Claims as of the anticipated
Effective Date, which amount shall be binding

                                       47
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

upon the holder of the Monticello Titusville Secured Claims unless such holder
files with the Bankruptcy Court and serves upon the Debtors an objection to the
Debtors' estimate prior to the commencement of the Confirmation Hearing. In the
event of such an objection, the Monticello Titusville Secured Claims shall be
treated as Disputed Claims until the allowed amount of the Monticello Titusville
Secured Claims is determined by the Bankruptcy Court, or by mutual agreement of
the Debtors and the holder of the Monticello Titusville Secured Claims.

                                    III.    TREATMENT:  In full satisfaction of
the Monticello Titusville Secured Claims, Monticello shall receive within ten
(10) Business Days after the later of (x) the Effective Date, or (y) the date
the Monticello Titusville Secured Claims become Allowed Class SM-11 Claims, the
indubitable equivalent of the Allowed Monticello Titusville Secured Claim, in
the form of (i) the Cash Pay Down, and (ii) the New Monticello Titusville Note.

                  The New Monticello Titusville Note shall include the following
terms:

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

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

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

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

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

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

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

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

                                       48
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

                  No less than twenty (20) days prior to the commencement of the
Confirmation Hearing, the Debtors shall file with the Court and serve upon the
holder of the Monticello San Antonio Secured Claims the Debtors' estimate of the
amount of the Allowed Monticello San Antonio Secured Claims as of the
anticipated Effective Date, which amount shall be binding upon the holder of the
Monticello San Antonio Secured Claims unless such holder files with the
Bankruptcy Court and serves upon the Debtors an objection to the Debtors'
estimate prior to the commencement of the Confirmation Hearing. In the event of
such an objection, the Monticello San Antonio Secured Claims shall be treated as
Disputed Claims until the allowed amount of the Monticello San Antonio Secured
Claims is determined by the Bankruptcy Court, or by mutual agreement of the
Debtors and the holder of the Monticello San Antonio Secured Claims.

                           III.     TREATMENT: In full satisfaction of the
Monticello San Antonio Secured Claims, Monticello shall receive within ten (10)
Business Days after the later of (x) the Effective Date, or (y) the date the
Monticello San Antonio Secured Claims become Allowed Class SM-12 Claims, the
indubitable equivalent of the Allowed Monticello San Antonio Secured Claim, in
the form of (i) the Cash Pay Down, and (ii) the New Monticello San Antonio Note.

                  The New Monticello San Antonio Note shall include the
following terms:

                           PRINCIPAL AMOUNT: The New Monticello San Antonio Note
         shall be in a principal amount equal to the Allowed Monticello San
         Antonio Secured Claims, less the Cash Pay Down.

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

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

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

                                       49
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

                  U.       CLASS SJ-1: SECURED TAX CLAIMS.

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

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

                  No less than twenty (20) days prior to the commencement of the
Confirmation Hearing, the Debtors shall file with the Court and serve upon the
holders of the Secured Tax Claims the Debtors' estimate of the amount of the
Allowed Secured Tax Claims as of the anticipated Effective Date, which estimates
shall be binding on each holder of a Secured Tax Claims unless such holder files
with the Bankruptcy Court and serves upon the Debtors an objection to the
Debtors' estimate prior to the commencement of the Confirmation Hearing. In the
event of such an objection, the Secured Tax Claim in question shall be treated
as a Disputed Claim until the allowed amount of such Secured Tax Claim is
determined by the Bankruptcy Court, or by mutual agreement of the Debtors and
the holder of the respective Secured Tax Claim.

                           III.     TREATMENT: In full satisfaction of each
Secured Tax Claim, and except to the extent that the holder of an Allowed
Secured Tax Claim agrees to a different treatment, the Disbursing Agent shall
pay each holder of an Allowed Secured Tax Claim the full amount of such Allowed
Secured Tax Claim, in Cash, on the later of (i) the Effective Date, or (ii) ten
(10) Business Days after the date such Secured Tax Claim becomes an Allowed
Secured Tax Claim. Any and all liens, encumbrances, and other interests in the
Debtors' or the Reorganized Debtors' property securing each Secured Tax Claim
shall be deemed released automatically, without the need for any further action
by any party, immediately upon

                                       50
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

the earlier of either (a) payment of such Allowed Secured Tax Claim in
accordance herewith, or (b) the Debtors' funding of a reserve account with Cash
in an amount equal to the amount of such Secured Tax Claim as asserted by the
holder of such Claim, with the liens securing such Secured Tax Claim attaching
to such account until payment of such Allowed Secured Tax Claim. As a condition
precedent to such payment, however, the Reorganized Debtors may require the
holder of each Secured Tax Claim to surrender any outstanding notes relating to
such Claims and execute collateral or lien releases in a form reasonably
acceptable to the Reorganized Debtors and that, in the Reorganized Debtors'
discretion, may be filed or recorded to evidence such release.

                           V.       CLASS SJ-2: OTHER SECURED CLAIMS.

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

                                    II.      ALLOWANCE: Each Class SJ-2 Claim
shall be an Allowed Class SJ-2 Claim in an amount equal to (i) all amounts owing
on account of such Class SJ-2 Claim as of the Petition Date, plus (ii) interest
from the Petition Date through the Effective Date in an amount equal to the
nondefault rate, if any (and excluding any late charges or penalties), as
specified in any agreement relating to such Class SJ-2 Claim, less (iii) any
amounts paid by the Debtors on account of such Class SJ-2 Claim during the
Chapter 11 Cases, whether in the form of adequate protection payments, through
the application of security deposits, or otherwise. Notwithstanding the
foregoing, in no event shall an Allowed Class SJ-2 Claim exceed the value, as
determined by the Bankruptcy Court pursuant to section 506(a) of the Bankruptcy
Code, of any interest in property of the Debtors' estates securing such Claim as
of the Effective Date, less any amount of adequate protection payments that did
not compensate the holder of such Claim for any diminution in collateral value.
To the extent that the holder of an Allowed Class SJ-2 Claim holds Allowed
Claims against the Debtors in excess of the holder's Allowed Class SJ-2 Claim,
such Allowed Claims shall be treated in Classes UP-1, UP-3, UM-1, or UM-3 under
this Plan, as applicable.

                  No less than twenty (20) days prior to the commencement of the
Confirmation Hearing, the Debtors shall file with the Court and serve upon each
holder of a Class SJ-2 Claim the Debtors' estimate of the amount of such
holder's Allowed Class SJ-2 Claim as of the anticipated Effective Date, which
estimate shall be binding on such holder unless such holder files with the
Bankruptcy Court and serves upon the Debtors an objection to the Debtors'
estimate prior to the commencement of the Confirmation Hearing. In the event of
such an objection, the Class SJ-2 Claim in question shall be treated as a
Disputed Claim until the amount of such Allowed Class SJ-2 Claim is resolved by
the Bankruptcy Court, or by mutual agreement of the Debtors and the holder of
the respective Class SJ-2 Claim.

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

                                       51
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

                  The Debtors and Reorganized Debtors shall be deemed to have
elected Option C, except with respect to any Class SJ-2 Claim as to which the
Debtors or Reorganized Debtors elect Option A or Option B by filing a notice of
such election with the Bankruptcy Court and serving such notice on the holder of
the respective Class SJ-2 Claim on or before the later of (i) forty-five (45)
days after the Effective Date, or (ii) ten (10) Business Days after the Class
SJ-2 Claim becomes an Allowed Class SJ-2 Claim.

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

                                       52
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

                           W.       ALTERNATIVE SECTION 1111(B) TREATMENT.

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

                  2.       PRIORITY CLAIMS.

                           A.       CLASS PJ-1: OTHER PRIORITY CLAIMS.

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

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

                  3.       UNSECURED CLAIMS.

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

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

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

                                    III.    TIMING AND MANNER OF DISTRIBUTIONS:

                                    INITIAL DISTRIBUTION FROM THE MPAN GENERAL
UNSECURED CLAIMS DISTRIBUTION FUND: The Disbursing Agent shall make an initial,
Pro Rata distribution from the MPAN General Unsecured Claims Distribution Fund
to the holders of Allowed Class UP-1 Claims (the "Initial MPAN Distribution") as
soon as practicable following the later of

                                       53
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

(i) sixty (60) days following the Effective Date, or (ii) the date upon which
all unliquidated Class UP-1 Claims (i.e., all Class UP-1 Claims, whether allowed
or disputed, that are asserted in an unknown or undetermined amount) have been
(w) allowed in part (and disallowed for the balance) or allowed in whole in a
liquidated amount pursuant to a Final Order, (x) disallowed in whole pursuant to
a Final Order, or (y) estimated pursuant to the Claims Estimation Procedure at
zero or in a liquidated amount (or a maximum liquidated amount) greater than
zero (whether or not such estimation is pursuant to a Final Order).

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

                  For purposes of illustration only, assume that (i) a holder's
         ("Creditor X") Allowed Class UP-1 Claim is $100, (ii) the total amount
         of Allowed Class UP-1 Claims (including Creditor X) is $700, (iii) the
         total amount of Disputed Claims in Class UP-1 that are in liquidated
         amounts is $200, (iv) in addition to the foregoing, another Disputed
         Claim in Class UP-1 has been determined to have a maximum allowable
         amount of $100 pursuant to the Claims Estimation Procedure, and (v) a
         total of 1,000 shares of New MPAN Common Stock and New MPAN Warrants
         for 500 shares of New MPAN Stock in the MPAN General Unsecured Claims
         Distribution Fund are available for distribution to all holders of
         Allowed Class UP-1 Claims. Under the Pro Rata formula, a total of 100
         shares and warrants for 50 shares would be distributed to Creditor X as
         the holder of a $100 Allowed Class UP-1 Claim as follows:

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

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

                           ADDITIONAL MPAN DISTRIBUTIONS: Upon the (i)
disallowance or allowance of Disputed Class UP-1 Claims by Final Orders, and
(ii) the estimation of Disputed Class UP-1 Claims pursuant to the Claims
Estimation Procedure, additional shares and warrants

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

                                       54
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

in the MPAN General Unsecured Claims Distribution Fund may become available to
holders of Allowed Class UP-1 Claims, including holders that have received prior
distributions. The Reorganized Debtors may, in their discretion, direct the
Disbursing Agent to make additional distributions from the MPAN General
Unsecured Claims Distribution Fund to holders of Allowed Class UP-1 Claims from
time to time ("Additional MPAN Distributions"). The amount distributed to
holders of Allowed Class UP-1 Claims in any Additional MPAN Distribution shall
be equal to the amount indicated by the Pro Rata formula, less any prior
distributions received by such holders (fractional distributions that were not
distributed on account of Section III.F hereof shall not be treated as having
been previously received by such holders).

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

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

<TABLE>

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

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

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

                           FINAL MPAN DISTRIBUTION: Within sixty (60) days after
the resolution (either by allowance, disallowance, or final estimation for
purposes of distribution) of all Disputed Class UP-1 Claims pursuant to Final
Orders, the Reorganized Debtors shall promptly direct a final, Pro Rata
distribution from the MPAN General Unsecured Claims Distribution Fund (the
"Final MPAN Distribution") to holders of Allowed Class UP-1 Claims.

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

                                       55
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

The amount distributed to holders of Allowed Class UP-1 Claims in the Final MPAN
Distribution shall be equal to the amount indicated by the Pro Rata formula,
less any prior distributions received by the holders of such Claims.

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

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

                  In the event that any of the New MPAN Warrants in the MPAN
General Unsecured Claims Distribution Fund have not been distributed to holders
of Allowed Claims in Classes UP-1 or UP-2 as of the last Business Day that is at
least thirty (30) days prior to the expiration of such New MPAN Warrants, then
such undistributed New MPAN Warrants shall be deemed exercised, if possible,
pursuant to "cashless" exercise provisions contained in the agreement governing
such New MPAN Warrants; otherwise, if a "cashless" exercise is not possible,
such New MPAN Warrants shall be permitted to expire. Any shares of New MPAN
Common Stock attributable to the "cashless" exercise of such New MPAN Warrants
shall be distributed to holders of Allowed Claims in accordance with the Pro
Rata formula as if such shares were New MPAN Warrants (i.e., and for purposes of
illustration only, if under the Pro Rata formula holders of Allowed Class UP-1
Claims were entitled to 1 New MPAN Warrant per each $10,000 in Allowed Claims,
after the deemed exercise of the New MPAN Warrants such holders instead would be
entitled to the shares of New MPAN Common Stock derived from the cashless
exercise of 1 New MPAN Warrant per each $10,000 in Allowed Claims).

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

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

                                       56
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

                  With respect to each Consenting Class UP-2 Holder of Allowed
Class UP-2 Claims, (i) the MPAN Senior Credit Facility Claim Holders waive their
contractual subordination rights against such Consenting Class UP-2 Holder, and
(ii) the distributions to such Consenting Class UP-2 Holder on account of its
Allowed Class UP-2 Claims shall not be subject to levy, garnishment,
attachments, or other legal process by any holder of MPAN Senior Credit Facility
Claims by reason of claimed contractual subordination rights. With respect to
any Allowed Class UP-2 Claims held by an entity that is not a Consenting Class
UP-2 Holder, (i) any and all contractual subordination provisions shall remain
in effect and shall be enforced under the Plan, and (ii) any consideration that
would otherwise be distributed on account of such Allowed Class UP-2 Claims
under this Plan shall instead be distributed at the direction of the MPAN Senior
Credit Facility Agent for the benefit of the holders of Allowed Class SP-1
Claims.

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

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

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

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

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

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

                                       57
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

                                    III.     TIMING AND MANNER OF DISTRIBUTIONS:

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

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

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

--------

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

                                       58
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

                                    ADDITIONAL MHG DISTRIBUTIONS: Upon the (i)
disallowance or allowance of Disputed Claims in Classes UM-1 and UM-2 by Final
Orders, and (ii) the estimation of Disputed Claims in Classes UM-1 and UM-2
pursuant to the Claims Estimation Procedure, additional Cash in the MHG
Unsecured Claims Distribution Fund may become available to holders of Allowed
Class UM-1 Claims and Allowed Class UM-2 Claims, including holders that have
received prior distributions. The Reorganized Debtors may, in their discretion,
direct the Disbursing Agent to make additional distributions from the MHG
General Unsecured Claims Fund to holders of Allowed Class UM-1 Claims and
Allowed Class UM-2 Claims from time to time ("Additional MHG Distributions").
The amount distributed to holders of Allowed Class UM-1 and UM-2 Claims in any
Additional MHG Distribution shall be equal to the amount indicated by the Pro
Rata formula, less any prior distributions received by such holders (fractional
distributions that were not distributed on account of Section III.F hereof shall
not be treated as having been previously received by such holders).

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

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

                                       59

<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

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

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

                                       60
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

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

                  With respect to each Consenting Class UM-2 Holder of Allowed
Class UM-2 Claims, (i) the MHG Senior Credit Facility Claim Holders waive their
contractual subordination rights against such Consenting Class UM-2 Holder, and
(ii) the distributions to such Consenting Class UM-2 Holder on account of its
Allowed Class UM-2 Claims shall not be subject to levy, garnishment,
attachments, or other legal process by any holder of MHG Senior Credit Facility
Claims by reason of claimed contractual subordination rights. With respect to
any Allowed Class UM-2 Claims held by an entity that is not a Consenting Class
UM-2 Holder, (i) any and all contractual subordination provisions shall remain
in effect and shall be enforced under the Plan, and (ii) any consideration that
would otherwise be distributed on account of such Allowed Class UM-2 Claims
under this Plan shall instead be distributed at the direction of the MHG Senior
Credit Facility Agent for the benefit of the holders of Allowed Class SM-1
Claims.

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

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

                                       61
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

                           G.       CLASS UJ-1:  DEBTORS INTERCOMPANY CLAIMS.

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

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

                  4.       CERTAIN GOVERNMENT CLAIMS.

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

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

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

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

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

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

                           C.       CLASSIFICATION AND TREATMENT OF STATE
                                    MEDICAID PROGRAM CLAIMS.

                  Except as otherwise agreed to in writing by the Debtors and
the holder of a State Medicaid Claim, with respect to each holder of a State
Medicaid Claim that does not timely object to confirmation of this Plan: (i) the
State Medicaid provider agreement for the Debtor's facility relating to such
State Medicaid Claim shall not be treated as an executory contract within the
meaning of Bankruptcy Code section 365 and, accordingly, the Debtors need not
cure

                                       62
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

pre-Petition Date defaults under such agreement (including defaults resulting
from the nonpayment of pre-Petition Date Claims) in order for the Debtors and
such facility to continue to participate in the State Medicaid program, and (ii)
the MPAN State Medicaid Claims relating to such facility shall be treated in
Class UP-1, and the MHG State Medicaid Claims relating to such facility shall be
treated in Class UM-1.

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

                  Except as otherwise agreed to in writing by the Debtors and
the holder of a State Medicaid Claim: (i) post-Effective Date Medicaid rates and
allowances of reimbursable costs shall be determined without reference to the
discharge or restructuring of any Claim of any type (whether for goods or
services, principal or interest, Medicaid overpayments or penalties, or any
other Claim) under the Plan or during the Chapter 11 Cases, and the Debtors and
Reorganized Debtors shall not be prejudiced with respect to such rates by any
such discharge or restructuring; and (ii) Claims of States for penalties and
fines shall be treated as Punitive Damage Claims for purposes of this Plan and
shall be treated in Classes UP-3 or UM-3, as applicable; such Claims for
penalties and fines shall not be treated as State Medicaid Claims.

                  5.       EQUITY INTERESTS.

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

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

                                    II.      TREATMENT: The holders of Class
EP-1 Equity Interests and related Securities Damages Claims shall not receive or
retain anything on account of such

                                       63
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

Equity Interests and Claims. All Old MPAN Common Stock shall be deemed cancelled
on the Effective Date. All options or warrants to purchase Old MPAN Common Stock
shall be deemed rejected, cancelled, and terminated as of the Petition Date.

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

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

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

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

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

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

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

                                      III.

                     METHOD OF DISTRIBUTIONS UNDER THE PLAN

         A.       THE DISBURSING AGENT.

                  The Reorganized Debtors or such other entity or entities as
the Reorganized Debtors may employ in their sole discretion ("Third Party
Disbursing Agent") shall act as Disbursing Agent under this Plan and make all
distributions required to be made by the

                                       64
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

         B.       FUNDING OF CASH PAYMENTS.

                  On or before the Effective Date, the Debtors shall deposit
into an account an amount, in Cash, equal to the aggregate amount of Cash
anticipated to be distributed on or about the Effective Date to holders of
Allowed Claims and Allowed Administrative Expenses (including without limitation
all unpaid chapter 11 professionals' fees and expenses) thereunder (the
"Effective Date Cash Reserve"). The Disbursing Agent shall hold the Effective
Date Cash Reserve in trust for the benefit of holders of Allowed Claims and
Allowed Administrative Expenses entitled to receive distributions therefrom and
the Reorganized Debtors, as their respective interests may appear. All
distributions of Cash under the Plan shall be made by the Disbursing Agent or
the Reorganized Debtors from the Effective Date Cash Reserve, except as
otherwise required to be made from any Disputed Claims Reserve as set forth in
Section IV.___ hereof or as otherwise agreed with the holder of an Allowed Claim
or Allowed Administrative Expense. Any shortfall in the Effective Date Cash
Reserve shall be funded promptly by the Reorganized Debtors or, alternatively,
paid directly by the Reorganized Debtors to the holder of the Allowed Claim or
Allowed Administrative Expense. Any surplus funds in the Effective Date Cash
Reserve not required for distributions under the Plan or ordered by the
Bankruptcy Court to be deposited into any Disputed Claims Reserve shall be
transferred from the Effective Date Cash Reserve to the Reorganized Debtors on
the ninetieth (90th) day after the Effective Date.

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

                                       65
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

         C.       INVESTMENT OF CASH IN RESERVES.

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

         D.       DELIVERY OF DISTRIBUTIONS AND UNDELIVERABLE OR UNCLAIMED
                  DISTRIBUTIONS.

                  1.       DELIVERY OF DISTRIBUTIONS GENERALLY.

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

                  2.       UNDELIVERABLE DISTRIBUTIONS.

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

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

                  Any holder of an Allowed Claim or Allowed Administrative
Expense that does not assert a claim in writing for an undeliverable
distribution held by the Reorganized Debtors or the Disbursing Agent within two
(2) years after the Effective Date shall no longer have any claim to or interest
in such undeliverable distribution, and shall be forever barred from receiving
any distributions under this Plan or otherwise from the Reorganized Debtors. In
such cases any property held for distribution on account of such Claims or
Administrative Expenses shall be retained by Reorganized Debtors, as follows:
(i) pursuant to Bankruptcy Code section 347(b),

                                       66
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

any undistributed Cash or securities other than New MPAN Common Stock shall be
the property of Reorganized Debtors, free from any restrictions thereon, and
such undistributed Cash or securities shall not be subject to the unclaimed
property or escheat laws of any State or other governmental unit; (ii) any
undistributed New MPAN Common Stock shall, at the election of Reorganized MPAN,
be cancelled or treated as treasury stock; and (iii) any undistributed New MPAN
Warrants shall be cancelled. Nothing contained in this Plan shall require the
Debtors, Reorganized Debtors, or the Disbursing Agent to attempt to locate any
holder of an Allowed Claim or Allowed Administrative Expense.

                  3.       VOTING OF UNDELIVERED NEW MPAN COMMON STOCK.

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

         E.       SETOFFS.

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

         F.       DE MINIMIS DISTRIBUTIONS AND FRACTIONAL SHARES.

                  No Cash payment of less than ten dollars ($10) shall be made
by the Reorganized Debtors or the Disbursing Agent to any holder of Claims
unless a request therefor is made in writing to the Reorganized Debtors or the
Disbursing Agent. No fractional shares of New MPAN Common Stock or New MPAN
Warrants shall be distributed; any entity that otherwise would be entitled to
receive a fractional share distribution under this Plan shall instead receive an
amount of shares rounded down to the next whole number. Any Cash, securities, or
other property that is not distributed as a consequence of this Section shall,
after the last distribution on account of Allowed Claims in the applicable
Class, be treated as unclaimed property under this Plan.

         G.       RECORD DATE.

                  On the Confirmation Date, the transfer ledgers for the
Subordinated Notes and Old MPAN Common Stock shall be closed, and there shall be
no further changes in the holders of record of such securities. Unless written
notice of an assignment executed by both the assignor and assignee is provided
to the Disbursing Agent, the Disbursing Agent shall not recognize any transfer
of Senior Credit Facility Claims, Subordinated Notes, or Old MPAN

                                       67
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

Common Stock occurring after the Confirmation Date, but shall instead be
entitled to recognize and deal for all purposes with only those holders of
record as of the Confirmation Date.

                                       IV.

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

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

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

                  In the event that the Bankruptcy Court, after notice and a
hearing, and then only for good cause shown, requires the establishment of a
reserve with respect to a particular Disputed Claim or Disputed Administrative
Expense other than of the type described in the foregoing paragraph (the
"Disputed Claims Reserve"), such Disputed Claims Reserve shall be held in trust
for the benefit of the holder of such Disputed Claim or Disputed Administrative
Expense, and the Reorganized Debtors, as their respective interests may appear,
pending determination of their respective entitlement thereto. Any amounts in
the Disputed Claims Reserve shall be distributed in accordance with the Plan by
the Disbursing Agent to the holder of any Disputed Claim or Disputed
Administrative Expense for which a reserve has been required by the Bankruptcy
Court to the extent that such Disputed Claim or Disputed Administrative Expense
becomes an Allowed Claim or an Allowed Administrative Expense pursuant to a
Final Order. To the extent that such a Disputed Claim or Disputed Administrative
Expense ultimately is disallowed or allowed in an amount less than the amount of
such Disputed Claim or Disputed Administrative Expense, any resulting surplus in
the Disputed Claims Reserve shall be transferred from the Disputed Claims
Reserve to the Reorganized Debtors by the Disbursing Agent.

         B.       RESOLUTION OF DISPUTED CLAIMS AND DISPUTED ADMINISTRATIVE
                  EXPENSES.

                  The Reorganized Debtors shall have the right to make and file
objections to Claims, to Equity Interests, and to Administrative Expenses, and
shall serve a copy of each objection upon the holder of the Claim, Equity
Interest, or Administrative Expense to which the

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objection is made. Notwithstanding any prior order of the Bankruptcy Court or
the provisions of Bankruptcy Rule 9019, as of the Effective Date the Reorganized
Debtors may settle or compromise any Disputed Claim without approval of the
Bankruptcy Court, provided that such settlement or compromise is evidenced by a
writing signed by a duly authorized representative of the Reorganized Debtors.

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

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

         D.       ESTIMATION OF DISPUTED CLAIMS.

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

                  If the Bankruptcy Court estimates the Estimated Allowed Amount
of any Disputed Claim, such estimate will (i) result in the Claim being deemed
an Allowed Claim in the Estimated Allowed Amount (or disallowed if the Estimated
Allowed Amount is zero) for

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                                                   NOT APPROVED FOR SOLICITATION

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

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

                                       V.

                           IMPLEMENTATION OF THE PLAN

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

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

                  With respect to each letter of credit issued under the MPAN
DIP Credit Agreement or the MHG DIP Credit Agreement that is still outstanding
as of the Effective Date, the Reorganized Debtors on the Effective Date shall
either (i) cause such outstanding letter of credit to be surrendered to the
issuer of such letter of credit for cancellation, (ii) to the extent the Debtors
have not otherwise already done so, collateralize such outstanding letter of
credit with Cash in an amount equal to 105% of the then undrawn stated amount of
such letter of credit

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                                                   NOT APPROVED FOR SOLICITATION

deposited in accordance with instructions from the issuer of such outstanding
letter of credit, or (iii) to the extent the Debtors have not otherwise already
done so, provide the issuer of such outstanding letter of credit with a
"back-to-back" letter of credit in an amount equal to 105% of the then undrawn
stated amount of such outstanding letter of credit; any "back-to-back" letter of
credit provided hereunder shall be issued by a bank and be in a form that is
reasonably satisfactory to the issuer of the outstanding letter of credit.

         B.       POST-EFFECTIVE DATE FINANCING.

                  1.       FINANCING GENERALLY AND TOTAL FUNDED DEBT.

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

                  Notwithstanding any other provision of this Plan to the
contrary, (i) the aggregate principal amount of the Exit Term Loans, Investor
Notes, and Lender Notes to be issued on the Effective Date shall not be less
than $300 million without the written consent of the Required Senior Credit
Facility Claim Holders, and (ii) the Total Funded Debt of the Reorganized
Debtors on the Effective Date shall not exceed [$420 MILLION TO $450 MILLION].

                  2.       THE EXIT FACILITY.

                  The Exit Facility shall consist of (i) a revolving credit
commitment in an amount between $50 million and $100 million, and (ii) term loan
commitments (the "Exit Term Loans") in the projected aggregate principal amount
of approximately [$145 MILLION], which may be divided into multiple tranches.

                  The terms of the Exit Facility shall be governed by an
agreement to be included in the Plan Documentary Supplement, and shall include,
inter alia: (a) interest at a market rate, as determined and adjusted in the
usual and customary manner for financings of this type; (b) with respect to some
or all of the Exit Term Loans, mandatory quarterly principal amortization
payments, taking into account the Reorganized Debtors' projected cash flow and
cash requirements; and (c) covenants mandating and restricting certain
performance by the Reorganized Debtors, usual and customary for financings of
this type. The Exit Facility shall be: (i) guaranteed by all of the Reorganized
Debtors except Reorganized MPAN (which will be the borrower and primary obligor)
and the PHCMI Debtors; and (ii) secured by (x) a pledge of the stock of all of
the Reorganized Debtors except Reorganized MPAN and the PHCMI Debtors, and (y)
liens, mortgages, pledges, collateral assignments, and security interests (the
"Exit Facility Liens") on all of the assets of the Reorganized Debtors (except
the PHCMI Debtors), except to the extent prohibited with respect to specific
assets of the Reorganized Debtors by the terms of any agreement that is assumed
by the Debtors or that is unimpaired under this Plan. The Exit Facility Liens
shall be senior to any and all other liens and other security interests
(including any

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<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

securing the Lender Notes), provided, however, that the Exit Facility Liens
shall be junior to (a) liens and other security interests existing as of the
Effective Date that are senior to the liens held by the holders of Senior Credit
Facility Claims, until such liens and other security interests are fully
satisfied, (b) the New Project Lender Notes, and (c) certain liens and other
secured interests arising after the Effective Date (including certain purchase
money security interests) as permitted by the agreements governing the Exit
Facility.

                  Notwithstanding the foregoing, if the Debtors determine, with
the approval of the Required Senior Credit Facility Claim Holders, that the Exit
Term Loans are not available on commercially acceptable terms (or that only a
lesser principal amount of Exit Term Loans can be obtained on commercially
acceptable terms), the Debtors shall instead issue additional Investor Notes or,
if necessary, Lender Notes, as provided in the following Sections.

                  3.       INVESTOR NOTES.

                  The Debtors anticipate that they will issue on the Effective
Date Investor Notes in the approximate principal face amount of [$185 million],
which Investor Notes would be issued at par to third party investors in a public
offering or private placement. The form of the Investor Notes shall be
substantially in the form set forth in the Plan Documentary Supplement.

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

                  Notwithstanding the foregoing, if the Debtors determine, with
the approval of the Required Senior Credit Facility Claim Holders, that the Exit
Term Loans are not available on commercially acceptable terms, the Debtors shall
instead issue additional Investor Notes, provided, however that in no event
shall the Total Funded Debt exceed [$420 MILLION TO $450 MILLION]. Additionally,
if the Debtors determine, with the approval of the Required Senior Credit
Facility Claim Holders, that the Investor Notes are not available on
commercially acceptable terms (or that only a lesser principal amount of
Investor Notes can be issued on commercially acceptable terms), the Debtors
shall instead issue Lender Notes, again provided that in no event shall the
Total Funded Debt exceed [$420 MILLION TO $450 MILLION].

                  4.       LENDER NOTES.

                  In the event that the Debtors are not able to obtain the Exit
Term Loans or to issue the Investor Notes on commercially acceptable terms, or
if the principal amount of Exit Term Loans obtained or Investor Notes issued on
commercially acceptable terms is less than anticipated in the foregoing
Sections, then, with the consent of the Required Secured Credit Facility Claim
Holders, the Debtors shall issue Lender Notes to the holders of Class SP-1
Claims and Class SM-1 Claims as provided in the treatment for those Classes,
provided, however, that in no event shall the Total Funded Debt exceed [$420
MILLION TO $450 MILLION].

                  The form of the Lender Notes shall be substantially in the
form set forth in the Plan Documentary Supplement. The Lender Notes shall (i) be
an obligation of Reorganized

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<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

MPAN; (ii) be guaranteed by all of the Reorganized Debtors other than
Reorganized MPAN and the PHCMI Debtors; (iii) be secured by liens on all assets
that secure the Exit Facility, immediately junior to such liens; (iv) bear
interest at a floating market rate; (v) mature no later than seven (7) years
after issuance; (vi) contain covenants that shall be no more restrictive than
the covenants contained in the Exit Facility; (vii) at the election of
Reorganized MPAN, be redeemable in whole or in part by Reorganized MPAN at any
time at 100% of the face amount of the Lender Notes redeemed (without penalty of
any kind), plus unpaid accrued interest as of the date of redemption.
Reorganized MPAN shall cause the indenture under which the Lender Notes are to
be issued to be qualified under the Trust Indenture Act of 1939, as amended. In
addition to the foregoing, (x) upon the written demand of a holder of 10% or
more in principal amount of the Lender Notes, Reorganized MPAN shall provide
demand registration rights for the Lender Notes to such holder(s) pursuant to
the terms and conditions of a registration rights agreement in substantially the
form included in the Plan Documentary Supplement; and (y) upon the written
demand of a holder or holders of 25% or more in principal amount of the Lender
Notes, Reorganized MPAN shall use its best efforts to effect a shelf
registration for the Lender Notes within ninety (90) days (and in no event later
than 180 days) following the receipt of such demand.

         C.       LIMITED SUBSTANTIVE CONSOLIDATION.

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

                  On the Effective Date, (1) each MPAN Debtor shall be
substantively consolidated with each other MPAN Debtor, and (2) each MHG Debtor
shall be substantively consolidated with each other MHG Debtor, for purposes of
allowance of Claims and distributions under the Plan as follows: (i) any of the
assets and liabilities of each MPAN Debtor shall be deemed to be the assets and
liabilities of all of the MPAN Debtors; (ii) any of the assets and liabilities
of each MHG Debtor shall be deemed to be the assets and liabilities of all of
the MHG Debtors; (iii) all guarantees by any MPAN Debtor of the obligations of
any other MPAN Debtor, and all guarantees by any MHG Debtor of the obligations
of any other MHG Debtor, arising prior to the Petition Date (regardless whether
such guarantee is secured, unsecured, liquidated, unliquidated, contingent, or
disputed) shall be deemed liquidated so that any Claim against any MPAN Debtor
and any guarantee thereof executed by any other MPAN Debtor, and any Claim
against any MHG Debtor and any guarantee thereof executed by any other MHG
Debtor, shall be deemed to be a single obligation of the consolidated MPAN
Debtors or the consolidated MHG Debtors, as applicable; (iv) any joint liability
(including, but not limited to joint and several liability) of any of the MPAN
Debtors with one another or of any of the MHG Debtors with one another shall be
deemed to be a single obligation of the consolidated MPAN Debtors or the
consolidated MHG Debtors, as applicable; and (v) each and every proof of claim
filed or to be filed in the MPAN Chapter 11 Cases, and each and every proof of
claim filed or to be filed in the MHG Chapter 11 Cases, shall be deemed filed
against the consolidated MPAN Debtors or against the consolidated MHG Debtors,
as applicable, and shall be deemed a single Claim against and obligation of the
consolidated MPAN Debtors or the consolidated MHG Debtors, as applicable. In
accordance with the foregoing, (1) the assets and liabilities of any MPAN Debtor
shall not be consolidated with the assets and liabilities of any MHG Debtor, and
(2) the assets and liabilities of any MHG Debtor shall not be consolidated with
the assets and liabilities of any MPAN Debtor.

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<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

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

                  The Debtors and Reorganized Debtors are authorized to take
whatever corporate, joint venture, partnership, or limited liability company
action is necessary or advisable in order to accomplish the Corporate
Restructuring Program, including but not limited to transferring certificates of
need, operating licenses, and other licenses and permits to the extent allowed
by applicable nonbankruptcy law. The mergers, consolidations, acquisitions, and
other transactions contemplated by the Corporate Restructuring Program shall not
constitute changes of ownership ("CHOW's") for any purpose under applicable
nonbankruptcy law.

         D.       ISSUANCE OF NEW SECURITIES AND REGISTRATION RIGHTS.

                  On the Effective Date, (i) Reorganized MPAN shall be deemed
empowered to issue and shall issue the New MPAN Common Stock, the New MPAN
Warrants, the Investor

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<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

Notes, and the Lender Notes, and (ii) the other Reorganized Debtors and entities
to be created pursuant to the Corporate Restructuring Program shall be deemed
empowered to issue and shall issue the New Affiliates Equity. Any securities
issued pursuant to this Plan shall be exempt from laws requiring registration
for the offer or sale of such securities or registration or licensing of an
issuer of, underwriter of, or broker or dealer in, such securities as provided
by section 1145 of the Bankruptcy Code.

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

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

                  On the Effective Date, (i) the Subordinated Notes, the Old
MPAN Common Stock, the Old MHG Common Stock, and the Old Affiliates Equity (but
only to the extent provided in the treatment of Class EJ-1) shall each be deemed
cancelled, and (ii) the obligations of the Debtors under the indentures
governing the Subordinated Notes and any agreements relating to the purchase or
sale of Equity Interests in any of the Debtors shall be rejected. Moreover, all
options, option agreements, and warrants to purchase or sell the Old MPAN Common
Stock or any of the other foregoing securities shall be deemed rejected,
cancelled, and terminated as of the Petition Date.

         F.       SURRENDER OF EXISTING SECURITIES.

                  Each holder of Subordinated Notes shall surrender such notes
to the Disbursing Agent in exchange for the right to receive any distribution
under this Plan. No distributions under this Plan shall be made to or on behalf
of any holder of Subordinated Notes unless and until such notes are received by
the Disbursing Agent or the unavailability of such notes is reasonably
established to the satisfaction of the Disbursing Agent. Any such holder that
fails to surrender such notes or to execute and deliver an affidavit of loss and
indemnity reasonably satisfactory to the Disbursing Agent and, if so requested
by the Disbursing Agent, fails to furnish a bond in form and substance
(including, without limitation, with respect to amount) reasonably satisfactory
to the Disbursing Agent, within five years after the Confirmation Date shall be
deemed to have forfeited all rights, Claims, and interests and shall not
participate in any distribution under this Plan with respect to such
Subordinated Notes, and all property in respect of such forfeited distribution
shall be treated as unclaimed property under this Plan.

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<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

         G.       ELIMINATION OF SUBORDINATION RIGHTS.

                  The subordination rights of the MPAN Senior Credit Facility
Claim Holders under the MPAN Indenture shall be modified with respect to
Consenting Class UP-2 Holders as provided in the treatment of Class UP-2 under
this Plan. Any and all contractual subordination provisions in the MPAN
Indenture shall remain in effect and shall be enforced under this Plan with
respect to any MPAN Subordinated Note Claim held by an entity that is not a
Consenting Class UP-2 Holder.

                  The subordination rights of the MHG Senior Credit Facility
Claim Holders under the MHG Indenture shall be modified with respect to
Consenting Class UM-2 Holders as provided in the treatment of Class UM-2 under
this Plan. Any and all contractual subordination provisions in the MHG Indenture
shall remain in effect and shall be enforced under this Plan with respect to any
MHG Subordinated Note Claim held by an entity that is not a Consenting Class
UM-2 Holder.

         H.       AMENDED AND RESTATED CERTIFICATES OF INCORPORATION AND BYLAWS.

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

         I.       MANAGEMENT OF THE REORGANIZED DEBTORS.

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

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<PAGE>

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         J.       NEW INCENTIVE EQUITY PLAN.

                  Upon the Effective Date, Reorganized MPAN shall adopt the NIEP
in a form substantially similar to that as set forth in the Plan Documentary
Supplement. As described further therein, the NIEP shall reserve _______ shares
of New Common Stock (or __% of the fully diluted New MPAN Common Stock) for
issuance pursuant to grants under the NIEP.

         K.       EMPLOYMENT AGREEMENTS.

                  The Reorganized Debtors shall secure the services of key
employees pursuant to new employment agreements that either (i) will be entered
into prior to the Effective Date and deemed assumed upon the Effective Date, or
(ii) will become effective upon the Effective Date. Copies or summaries of the
foregoing agreements shall be included in the Plan Documentary Supplement. Such
agreements shall establish the terms regarding employment, severance, equity
incentives, and other matters.

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

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

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

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

                  3.       The officers, directors, agents, employees,
representatives, financial advisors, professionals, accountants, and attorneys
of the Debtors, who are serving in such capacities as of the Confirmation Date,
shall be released by the Debtors from any and all claims

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and other causes of action arising after the Petition Date against them, whether
such claims or causes of action are known or unknown, matured or unmatured,
contingent or noncontingent, or liquidated or unliquidated, arising on account
of or in relation to any acts or omissions in their capacities as
representatives of the Debtors, except (i) for willful misconduct or gross
negligence, or (ii) as otherwise expressly provided in the Plan or the
Confirmation Order.

         M.       CORPORATE ACTION.

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

         N.       REVESTING OF ASSETS.

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

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

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

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         P.       CLOSING OF CASES.

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

                                       VI.

                    EXECUTORY CONTRACTS AND UNEXPIRED LEASES

         A.       ASSUMPTION OR ASSUMPTION AND ASSIGNMENT.

                  1.       ASSUMPTION AND ASSUMPTION AND ASSIGNMENT GENERALLY.

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

                  Exhibit ___ to the Plan specifies the amount ("Cure Payment"),
if any, that the Debtors acknowledge must be tendered in order to provide cure
and compensation in accordance with sections 365(b)(1)(A) & (B) of the
Bankruptcy Code. In the event that any party to a contract or lease listed on
Exhibit ____ contends that the Cure Payment amount is incorrect, such party must
file with the Bankruptcy Court and serve upon counsel for the Debtors, the
Committees, and the MPAN Senior Credit Facility Agent a written statement and an
accompanying affidavit in support thereof specifying the amounts allegedly owing
under sections 365(b)(1)(A) & (B) of the Bankruptcy Code no later than ____ days
before the first date scheduled for the commencement of the Confirmation
Hearing. Failure timely to file and serve

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                                                   NOT APPROVED FOR SOLICITATION

such statement shall result in the determination that the Reorganized Debtors'
tender of the Cure Payment, as specified in Exhibit ____, shall provide cure and
compensation for any and all defaults and unpaid obligations under such assumed
or assumed and assigned executory contract or unexpired lease, and that no other
amounts are owing thereunder as of the Confirmation Date. The Debtors reserve
the right to respond to and challenge any objection filed by any party to an
executory contract or unexpired lease under this Section and/or to reject any
executory contract or unexpired lease or assume or assume and assign such
contract or unexpired lease by complying with section 365(b) of the Bankruptcy
Code, if the other party to any executory contract or unexpired lease
establishes that the Cure Payment is greater than the amount specified in
Exhibit ___. To the extent the Debtors disagree with any objection filed by any
party to an executory contract or unexpired lease under this paragraph, the
Debtors will request that the Bankruptcy Court declare that the Cure Payment is
as stated by the Debtors, and any disputes shall be resolved by a Final Order,
which Final Order may be entered after the Effective Date.

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

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

                  2.       CONDITIONAL ASSUMPTION AND ASSUMPTION AND ASSIGNMENT.

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

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                                                   NOT APPROVED FOR SOLICITATION

non-Debtor party timely objects to the Debtors' conditional assumption, or
assumption and assignment, then the contract or lease shall be deemed rejected
upon the Confirmation Date in accordance with Section VI.B.

         B.       REJECTION.

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

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

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

         C.       SURVIVAL OF THE DEBTORS' CORPORATE INDEMNITIES.

                  Solely with respect to directors, officers, and other
employees of any of the Debtors who are serving or employed in such capacity for
any such Debtor as of the Confirmation Date, the Debtors shall be deemed to
assume, as of the Effective Date, their respective obligations to indemnify such
individuals (and only such individuals) with respect to or based upon any act or
omission taken or omitted in any of such capacities, or for or on behalf of any
Debtor, pursuant to and to the extent provided by the Debtors' respective
articles of incorporation, corporate charters, bylaws and similar corporate,
partnership, joint venture, or limited liability company documents, employment
agreements with such individuals, or any other agreements entered into at any
time prior to the Confirmation Date (the "Assumed Indemnity Obligations"). The
Assumed Indemnity Obligations shall not be discharged, impaired, or otherwise
modified by confirmation of this Plan and shall be deemed and treated as

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<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

executory contracts that have been assumed by the Debtors pursuant to this Plan.
This Section VI.C shall not be construed as an assumption of any obligations
other than the Assumed Indemnity Obligations.

         D.       APS EXECUTORY CONTRACTS AND UNEXPIRED LEASES.

                  Notwithstanding any provision in this Plan to the contrary,
all executory contracts and unexpired leases of APS shall be rejected upon the
closing of the sale of APS' pharmacy business (whether such sale occurs before
or after the Confirmation Date), except as such executory contracts and
unexpired leases are assumed and assigned pursuant to the relief requested in
the "Motion Under 11 U.S.C. ss.ss. 105(A), 363, 364, 365 and 1146 And Fed. R.
Bankr. P. 2002, 4001, 6004, 6006, 9014 and 9019 to (A) Sell Debtors'
Pharmaceutical Business Free and Clear of Liens and Encumbrances Pursuant to
Sale Procedures Order; (B) Incur Indebtedness and Compromise Claims in
Connection Therewith; (C) Assume and Assign Executory Contracts and Unexpired
Leases in Connection Therewith; and (D) Grant Relief Related Thereto" filed with
the Bankruptcy Court on or about October 16, 2001, as may be amended from time
to time (the "APS Sale Motion"). The date of turnover of possession of any
rejected lease of nonresidential real property related to the operation of APS
shall be governed by the relief ordered by the Bankruptcy Court in connection
with the APS Sale Motion.

                                      VII.

                            EFFECTIVENESS OF THE PLAN

         A.       EFFECTIVE DATE.

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

         B.       CONDITIONS PRECEDENT.

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

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

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

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                                                   NOT APPROVED FOR SOLICITATION

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

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

         C.       WAIVER OF CONDITIONS.

                  The Debtors, with the consent of the Required Senior Credit
Facility Claim Holders, may waive by a writing signed by an authorized
representative of the Debtors and filed with the Bankruptcy Court any of the
conditions to effectiveness of this Plan, except the conditions set forth in
VII.B.1 and VII.B.2 above.

         D.       NOTICE OF EFFECTIVE DATE.

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

                                      VIII.

                            RETENTION OF JURISDICTION

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

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

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

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

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

                                       83
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

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

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

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

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

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

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

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

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

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

                                       IX.

                            MISCELLANEOUS PROVISIONS

         A.       PAYMENT OF STATUTORY FEES.

                  All quarterly fees due and payable to the Office of the United
States Trustee pursuant to section 1930(a)(6) of title 28 of the United States
Code shall be paid in full on or before the Effective Date, as required by
section 1129(a)(12) of the Bankruptcy Code. Each Reorganized Debtor shall remain
responsible for timely payment of its respective quarterly fees due and payable
after the Effective Date and until such Reorganized Debtor's Chapter 11 Case is
closed, to the extent required by section 1930(a)(6) of title 28 of the United
States Code. After the Effective Date and until the Chapter 11 Cases are closed,
the Reorganized Debtors shall file with the Office of the United States Trustee
any required financial reports.

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<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

         B.       RETIREE BENEFITS.

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

         C.       DISSOLUTION OF COMMITTEES.

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

         D.       DISCHARGE OF DEBTORS AND INJUNCTION.

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

                  Except as otherwise expressly provided in the Plan or as
otherwise agreed to in writing by the Debtors since the Petition Date (including
but not limited to the Federal

                                       85
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

Government Settlement and any stipulation with a State entered into during the
Chapter 11 Cases), the documents executed pursuant to the Plan, or the
Confirmation Order, on and after the Effective Date, all persons and entities
who have held, currently hold, or may hold a debt, Claim, or Equity Interest
discharged pursuant to the terms of the Plan (including but not limited to
States and other governmental units, and any State official, employee, or other
entity acting in an individual or official capacity on behalf of any State or
other governmental units) shall be deemed permanently enjoined from taking any
of the following actions on account of any such discharged debt, Claim, or
Equity Interest: (1) commencing or continuing in any manner any action or other
proceeding against the Debtors, the Reorganized Debtors, their successors, or
their property; (2) enforcing, attaching, executing, collecting, or recovering
in any manner any judgment, award, decree, or order against the Debtors, the
Reorganized Debtors, their successors, or their property; (3) creating,
perfecting, or enforcing any lien or encumbrance against the Debtors, the
Reorganized Debtors, their successors, or their property; (4) asserting any
setoff, right of subrogation, or recoupment of any kind against any obligation
due to the Debtors, the Reorganized Debtors, their successors, or their
property; and (5) commencing or continuing any action, in any manner, in any
place that does not comply with or is inconsistent with the provisions of this
Plan. Any person or entity injured by any willful violation of such injunction
shall recover actual damages, including costs and attorneys' fees, and, in
appropriate circumstances, may recover punitive damages from the willful
violator. Without limiting the foregoing, and except as otherwise agreed to in
writing by the Debtors since the Petition Date (including but not limited to any
stipulation with a State entered into during the Chapter 11 Cases), each State
or other governmental unit, and each official, employee, or other entity acting
on behalf of each such State or other governmental unit, shall be barred and
enjoined from asserting against, seeking from, or imposing upon the Debtors or
Reorganized Debtors any fine, forfeiture, recoupment, offset, other reduction in
payment or penalty of any nature based upon conduct, acts, or omissions
occurring prior to the Effective Date.

         E.       NO LIABILITY FOR SOLICITATION OR PARTICIPATION.

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

         F.       LIMITATION OF LIABILITY.

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

                                       86
<PAGE>

                                                   NOT APPROVED FOR SOLICITATION

instrument, or document created in connection with the foregoing, except for
willful misconduct or gross negligence.

         G.       PRESERVATION OF RIGHTS OF ACTION AND DEFENSES.

                  Except to the extent such rights, claims, causes of action,
defenses, and counterclaims are expressly and specifically released in
connection with the Plan, (i) any and all rights, claims, causes of action,
defenses, and counterclaims accruing to the Debtors or their estates (including,
without limitation, Avoiding Power Causes of Action) shall remain assets of and
vest in the Reorganized Debtors, whether or not litigation relating thereto is
pending on the Effective Date, and whether or not any such rights, claims,
causes of action, defenses, and counterclaims have been Scheduled or otherwise
listed or referred to in this Plan, the Disclosure Statement, or any other
document filed with the Bankruptcy Court, and (ii) neither the Debtors nor the
Reorganized Debtors waive, relinquish, or abandon (nor shall they be estopped or
otherwise precluded from asserting) any right, claim, cause of action, defense,
or counterclaim that constitutes property of the Debtors' estates: (a) whether
or not such right, claim, cause of action, defense, or counterclaim has been
listed or referred to in the Schedules, this Plan, the Disclosure Statement, or
any other document filed with the Bankruptcy Court, (b) whether or not such
right, claim, cause of action, defense, or counterclaim is currently known to
the Debtors, and (c) whether or not a defendant in any litigation relating to
such right, claim, cause of action, defense, or counterclaim filed a proof of
claim in the Chapter 11 Cases, filed a notice of appearance or any other
pleading or notice in the Chapter 11 Cases, voted for or against this Plan, or
received or retained any consideration under this Plan. Without in any manner
limiting the scope of the foregoing, notwithstanding any otherwise applicable
principle of law or equity, including, without limitation, any principles of
judicial estoppel, res judicata, collateral estoppel, issue preclusion, or any
similar doctrine, the failure to list, disclose, describe, identify, or refer to
a right, claim, cause of action, defense, or counterclaim, or potential right,
claim, cause of action, defense, or counterclaim, in the Debtors' Schedules,
this Plan, the Disclosure Statement, or any other document filed with the
Bankruptcy Court shall in no manner waive, eliminate, modify, release, or alter
the Reorganized Debtors' right to commence, prosecute, defend against, settle,
and realize upon any rights, claims, causes of action, defenses, or
counterclaims that any of the Debtors or Reorganized Debtors have or may have as
of the Confirmation Date. The Reorganized Debtors may commence, prosecute,
defend against, recover on account of, and settle all rights, claims, causes of
action, defenses, and counterclaims in their sole discretion in accordance with
what is in the best interests, and for the benefit, of the Reorganized Debtors.

         H.       SATURDAY, SUNDAY, OR LEGAL HOLIDAY.

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

         I.       HEADINGS.

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

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                                                   NOT APPROVED FOR SOLICITATION

         J.       BINDING EFFECT.

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

         K.       REVOCATION OR WITHDRAWAL.

                  1.       RIGHT TO REVOKE.

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

                  2.       EFFECT OF WITHDRAWAL OR REVOCATION.

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

         L.       NONCONSENSUAL CONFIRMATION.

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

         M.       OTHER DOCUMENTS AND ACTIONS.

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

         N.       MODIFICATION OF THE PLAN.

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

         O.       GOVERNING LAW.

                  Unless a rule of law or procedure is supplied by federal law
(including the Bankruptcy Code and Bankruptcy Rules), the laws of the State of
Delaware (without reference to

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                                                   NOT APPROVED FOR SOLICITATION

its conflict of law rules) shall govern the construction and implementation of
the Plan and any agreements, documents, and instruments executed in connection
with the Plan, unless otherwise specifically provided in such agreements,
documents, or instruments.

         P.       WITHHOLDING, REPORTING, AND PAYMENT OF TAXES.

                  In connection with the Plan and all instruments issued in
connection therewith and distributions thereon, the Disbursing Agent shall
comply with all withholding and reporting requirements imposed by any federal,
State, local, or foreign taxing authority, and all distributions hereunder shall
be subject to any such withholding and reporting requirements. The Disbursing
Agent shall report and pay taxes on the income of any Disputed Claims Reserve or
the Effective Date Cash Reserve as required by applicable law. In addition, to
the extent required by applicable law, reported distributions from such reserves
shall include all interest and investment income, if any, attributable to the
Cash or property being distributed net of taxes that are, or are estimated to
be, due and payable thereon.

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

         Q.       NOTICES.

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

                  To the Debtors or Reorganized Debtors:

                               Mariner Post-Acute Network, Inc.
                               One Ravinia Drive, Suite 1500
                               Atlanta, Georgia  30346
                               Attn.:  ___________________

                               with a copy to:

                  To the MPAN Senior Credit Facility Agent:

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                                                   NOT APPROVED FOR SOLICITATION

                               with a copy to:

                  To the MHG Senior Credit Facility Agent:

                               with a copy to:

         R.       SUCCESSORS AND ASSIGNS.

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

DATED:  November 30, 2001            MARINER POST-ACUTE NETWORK, INC.,
                                     a Delaware corporation, on behalf of itself
                                     and its Debtor Affiliates, which are
                                     identified on Exhibit "2" hereto

                                     By
                                        ----------------------------------------
                                        Susan Thomas Whittle
                                        Executive Vice President

DATED:  November 30, 2001            MARINER HEALTH GROUP, INC.,
                                     a Delaware corporation, on behalf of itself
                                     and its Debtor Affiliates, which are
                                     identified on Exhibit "1" hereto

                                     By
                                        ----------------------------------------
                                        Stefano Miele
                                        Vice President

                                       90
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                                                   NOT APPROVED FOR SOLICITATION

SUBMITTED BY:

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

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

 - AND -

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

Reorganization Counsel for Debtors
and Debtors in Possession

                                       91

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