Document:

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                                                                   EXHIBIT 10.19

                          GUARANTY OF PAYMENT (PLEDGOR)

                  THIS GUARANTY OF PAYMENT (PLEDGOR) (this "GUARANTY") is
executed as of August 19, 2003, by SUMMIT CARE CORPORATION, a California
corporation, SUMMIT CARE TEXAS, L.P., a Texas limited partnership, SUMMIT CARE
TEXAS MANAGEMENT, LLC, a Delaware limited liability company, SKILLED HEALTHCARE,
LLC, a Delaware limited liability company (collectively referred to as
"GUARANTOR"), for the benefit of CAPITALSOURCE FINANCE LLC, a Delaware limited
liability company, as administrative agent and collateral agent for the lenders
under the Loan Agreement, having an address at 4445 Willard Avenue, 12th Floor,
Chevy Chase, Maryland 20815 (in such capacity as Agent, referred to herein as
"LENDER").

                              W I T N E S S E T H :

                  WHEREAS, pursuant to those certain Promissory Notes each of
even date herewith given by SHG Property Resources, LLC, a Delaware limited
liability company and SHG Investments, LLC a Delaware limited liability company
(collectively, "BORROWER") in favor of the lenders under the Loan Agreement in
the original principal amount of Twenty Three Million and No/100 Dollars
($23,000,000.00) (as the same may hereafter be amended, restated, replaced,
supplemented or otherwise modified from time to time, collectively, the "NOTE"),
Borrower has become indebted, and may from time to time be further indebted, to
Lender with respect to a loan ("LOAN"), made pursuant to that certain Mezzanine
Loan Agreement, of even date herewith, between Borrower and the lenders under
the Loan Agreement (as the same may be amended, restated, replaced,
supplemented, or otherwise modified from time to time, the "LOAN AGREEMENT"),
which Loan is secured by that certain Pledge and Security Agreement of even date
herewith (as the same may be amended, restated, replaced, supplemented, or
otherwise modified from time to time, collectively, the "PLEDGE AGREEMENT"), and
further evidenced, secured or governed by other instruments and documents
executed in connection with the Loan (together with the Note, the Loan Agreement
and the Pledge Agreement are hereinafter collectively, the "LOAN DOCUMENTS");
and

                  WHEREAS, the lenders under the Loan Agreement are not willing
to make the Loan, or otherwise extend credit, to Borrower unless Guarantor
unconditionally guarantees payment and performance to Lender of the Guaranteed
Obligations (as herein defined); and

                  WHEREAS, Guarantor will directly benefit from the making of
the Loan to Borrower.

                  NOW, THEREFORE, as an inducement to the lenders under the Loan
Agreement to make the Loan to Borrower, and for other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties do hereby agree as follows:

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                                   ARTICLE I

                          NATURE AND SCOPE OF GUARANTY

                  1.1 GUARANTY OF PAYMENT. Guarantor hereby irrevocably and
unconditionally guarantees to Lender and its successors and assigns the full
payment and performance of all obligations of Borrower under the Loan Documents
as and when the same shall be due and payable, whether by lapse of time, by
acceleration of maturity or otherwise, either before or after maturity thereof,
and Guarantor shall be liable for, the full amount of the Debt, including,
without limitation, any costs and expenses incurred by Lender in connection with
collecting or enforcing against Guarantor the terms and provisions of this
Guaranty and enforcing all terms and provisions of the Loan Documents
(including, without limitation, all court costs and attorneys' fees and costs)
(the "GUARANTEED OBLIGATIONS"); provided, however, that notwithstanding anything
to the contrary in this Guaranty, Guarantor's liability under this Guaranty
shall be limited to its interests in and to (i) Summit Pledged Entity Interests
(as defined in the Pledge Agreement), SCTX Pledged Entity Interests (as defined
in the Pledge Agreement), SCTM Pledged Entity Interests (as defined in the
Pledge Agreement) and SH Pledged Entity Interests (as defined in the Pledge
Agreement); (ii) all other equity, membership or partnership interest
certificates, options or rights of any nature whatsoever which may be issued or
granted to Guarantor while this Agreement is in effect, other than those
relating to any subsidiary of Guarantor which is in existence as of the date
first written above but whose equity, membership or partnership interest is not
included as Pledged Entity Interests (as defined in the Pledge Agreement); and
(iii) any and all replacements, products and Proceeds (as defined in the Pledge
Agreement) of, and dividends, distributions in property, returns of capital or
other distributions made on or with respect to, any of the foregoing shares and
other equity securities and ownership interests. Guarantor hereby irrevocably
and unconditionally covenants and agrees that it is liable for the Guaranteed
Obligations as a direct and primary obligor.

                  1.2 INTENTIONALLY DELETED.

                  1.3 NATURE OF GUARANTY. This Guaranty is an irrevocable,
absolute, continuing guaranty of payment and performance and not a guaranty of
collection. This Guaranty may not be revoked by Guarantor and shall continue to
be effective with respect to any Guaranteed Obligations arising or created after
any attempted revocation by Guarantor. The fact that at any time or from time to
time the Guaranteed Obligations may be increased or reduced shall not release or
discharge the obligation of Guarantor to Lender with respect to the Guaranteed
Obligations. This Guaranty may be enforced by Lender and any subsequent holder
of the Note and shall not be discharged by the assignment or negotiation of all
or part of the Note.

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                  1.4 GUARANTEED OBLIGATIONS NOT REDUCED BY OFFSET. The
Guaranteed Obligations and the liabilities and obligations of Guarantor to
Lender hereunder, shall not be reduced, discharged or released because or by
reason of any existing or future offset, claim or defense of Borrower, or any
other party, against Lender or against payment of the Guaranteed Obligations,
whether such offset, claim or defense arises in connection with the Guaranteed
Obligations (or the transactions creating the Guaranteed Obligations) or
otherwise.

                  1.5 PAYMENT BY GUARANTOR. If all or any part of the Guaranteed
Obligations shall not be punctually paid when due, whether at demand, maturity,
acceleration or otherwise, Guarantor shall, immediately upon demand by Lender,
and without presentment, protest, notice of protest, notice of non-payment,
notice of intention to accelerate the maturity, notice of acceleration of the
maturity, or any other notice whatsoever, pay in lawful money of the United
States of America, the amount due on the Guaranteed Obligations to Lender at
Lender's address as set forth herein. Such demand(s) may be made at any time
coincident with or after the time for payment of all or part of the Guaranteed
Obligations, and may be made from time to time with respect to the same or
different items of Guaranteed Obligations. Such demand shall be deemed made,
given and received in accordance with the notice provisions hereof.

                  1.6 NO DUTY TO PURSUE OTHERS. It shall not be necessary for
Lender (and Guarantor hereby waives any rights which Guarantor may have to
require Lender), in order to enforce the obligations of Guarantor hereunder,
first to (a) institute suit or exhaust its remedies against Borrower or others
liable on the Loan or the Guaranteed Obligations or any other person, (b)
enforce Lender's rights against any collateral which shall ever have been given
to secure the Loan, (c) enforce Lender's rights against any other guarantors of
the Guaranteed Obligations, (d) join Borrower or any others liable on the
Guaranteed Obligations in any action seeking to enforce this Guaranty, (e)
exhaust any remedies available to Lender against any collateral which shall ever
have been given to secure the Loan, or (f) resort to any other means of
obtaining payment of the Guaranteed Obligations. Lender shall not be required to
mitigate damages or take any other action to reduce, collect or enforce the
Guaranteed Obligations.

                  1.7 WAIVERS. Guarantor agrees to the provisions of the Loan
Documents, and hereby waives notice of (a) any loans or advances made by Lender
to Borrower, (b) acceptance of this Guaranty, (c) any amendment or extension of
the Note, the Pledge Agreement, the Loan Agreement or of any other Loan
Documents, (d) the execution and delivery by Borrower and Lender of any other
loan or credit agreement or of Borrower's execution and delivery of any
promissory notes or other documents arising under the Loan Documents or in
connection with the Collateral, (e) the occurrence of any breach by Borrower or
an Event of Default, (f) Lender's transfer or disposition of the Guaranteed
Obligations, in accordance with the Loan Agreement, (g) sale or foreclosure (or
posting or advertising for sale or foreclosure) of any collateral for the
Guaranteed Obligations, (h) protest, proof of non-payment or default by Borrower
and (i) any other action at any time taken or omitted by Lender, and, generally,
all demands and notices of every kind in connection with this Guaranty, the Loan
Documents, any documents or agreements evidencing, securing or relating to any
of the Guaranteed Obligations.

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                  1.8 PAYMENT OF EXPENSES. In the event that Guarantor should
breach or fail to timely perform any provisions of this Guaranty, Guarantor
shall, immediately upon demand by Lender, pay Lender all costs and expenses
(including court costs and reasonable attorneys' fees and costs) incurred by
Lender in the enforcement hereof or the preservation of Lender's rights
hereunder. The covenant contained in this Section shall survive the payment and
performance of the Guaranteed Obligations.

                  1.9 EFFECT OF BANKRUPTCY. In the event that, pursuant to any
insolvency, bankruptcy, reorganization, receivership or other debtor relief law,
or any judgment, order or decision thereunder, Lender must rescind or restore
any payment, or any part thereof, received by Lender in satisfaction of the
Guaranteed Obligations, as set forth herein, any prior release or discharge from
the terms of this Guaranty given to Guarantor by Lender shall be without effect,
and this Guaranty shall remain in full force and effect. It is the intention of
Borrower and Guarantor that Guarantor's obligations hereunder shall not be
discharged except by Guarantor's performance of such obligations and then only
to the extent of such performance.

                  1.10 WAIVER OF SUBROGATION, REIMBURSEMENT AND CONTRIBUTION.
Notwithstanding anything to the contrary contained in this Guaranty, Guarantor
hereby unconditionally and irrevocably waives, releases and abrogates any and
all rights it may now or hereafter have under any agreement, at law or in equity
(including, without limitation, any law subrogating the Guarantor to the rights
of Lender), to assert any claim against or seek contribution, indemnification or
any other form of reimbursement from Borrower or any other party liable for
payment of any or all of the Guaranteed Obligations for any payment made by
Guarantor under or in connection with this Guaranty or otherwise.

                  1.11 BORROWER. The term "BORROWER" as used herein shall
include any new or successor corporation, association, partnership (general or
limited), joint venture, trust, limited liability company or other individual or
organization formed as a result of any merger, reorganization, sale, transfer,
devise, gift or bequest of Borrower or any interest in Borrower.

                                   ARTICLE II

                      EVENTS AND CIRCUMSTANCES NOT REDUCING
                     OR DISCHARGING GUARANTOR'S OBLIGATIONS

                  Guarantor hereby consents and agrees to each of the following,
and agrees that Guarantor's obligations under this Guaranty shall not be
released, diminished, impaired, reduced or adversely affected by any of the
following, and waives any common law, equitable, statutory or other rights
(including without limitation rights to notice) which Guarantor might otherwise
have as a result of or in connection with any of the following:

                  2.1 MODIFICATIONS. Any renewal, extension, increase,
modification, alteration or rearrangement of all or any part of the Guaranteed
Obligations, the Note, the Pledge Agreement, the Loan Agreement, the other Loan
Documents, or any other document, instrument, contract or understanding between
Borrower and Lender, or any other parties, pertaining to the Guaranteed
Obligations or any failure of Lender to notify Guarantor of any such action.

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                  2.2 ADJUSTMENT. Any adjustment, indulgence, forbearance or
compromise that might be granted or given by Lender to Borrower or any
Guarantor.

                  2.3 CONDITION OF BORROWER OR GUARANTOR. The insolvency,
bankruptcy, arrangement, adjustment, composition, liquidation, disability,
dissolution or lack of power of Borrower, Guarantor or any other party at any
time liable for the payment of all or part of the Guaranteed Obligations; or any
dissolution of Borrower or Guarantor, or any sale, lease or transfer of any or
all of the assets of Borrower or Guarantor, or any changes in the shareholders,
partners or members of Borrower or Guarantor; or any reorganization of Borrower
or Guarantor.

                  2.4 INVALIDITY OF GUARANTEED OBLIGATIONS. The invalidity,
illegality or unenforceability of all or any part of the Guaranteed Obligations,
or any document or agreement executed in connection with the Guaranteed
Obligations, for any reason whatsoever, including without limitation the fact
that (a) the Guaranteed Obligations, or any part thereof, exceeds the amount
permitted by law, (b) the act of creating the Guaranteed Obligations or any part
thereof is ultra vires, (c) the officers or representatives executing the Note,
the Loan Agreement or the other Loan Documents or otherwise creating the
Guaranteed Obligations acted in excess of their authority, (d) the Guaranteed
Obligations violate applicable usury laws, (e) the Borrower has valid defenses,
claims or offsets (whether at law, in equity or by agreement) which render the
Guaranteed Obligations wholly or partially uncollectible from Borrower, (f) the
creation, performance or repayment of the Guaranteed Obligations (or the
execution, delivery and performance of any document or instrument representing
part of the Guaranteed Obligations or executed in connection with the Guaranteed
Obligations, or given to secure the repayment of the Guaranteed Obligations) is
illegal, uncollectible or unenforceable, or (g) the Note, the Pledge Agreement,
the Loan Agreement or any of the other Loan Documents have been forged or
otherwise are irregular or not genuine or authentic, it being agreed that
Guarantor shall remain liable hereon regardless of whether Borrower or any other
Person be found not liable on the Guaranteed Obligations or any part thereof for
any reason.

                  2.5 RELEASE OF OBLIGORS. Any full or partial release of the
liability of Borrower on the Guaranteed Obligations, or any part thereof, or of
any co-guarantors, or any other Person now or hereafter liable, whether directly
or indirectly, jointly, severally, or jointly and severally, to pay, perform,
guarantee or assure the payment of the Guaranteed Obligations, or any part
thereof, it being recognized, acknowledged and agreed by Guarantor that
Guarantor may be required to pay the Guaranteed Obligations in full without
assistance or support of any other party, and Guarantor has not been induced to
enter into this Guaranty on the basis of a contemplation, belief, understanding
or agreement that other Persons will be liable to pay or perform the Guaranteed
Obligations, or that Lender will look to other Persons to pay or perform the
Guaranteed Obligations.

                  2.6 OTHER COLLATERAL. The taking or accepting of any other
security, collateral or guaranty, or other assurance of payment, for all or any
part of the Guaranteed Obligations.

                  2.7 RELEASE OF COLLATERAL. Any release, surrender, exchange,
subordination, deterioration, waste, loss or impairment (including without
limitation negligent, willful, unreasonable or unjustifiable impairment) of any
collateral, property or security at any time

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existing in connection with, or assuring or securing payment of, all or any part
of the Guaranteed Obligations.

                  2.8 CARE AND DILIGENCE. The failure of Lender or any other
party to exercise diligence or reasonable care in the preservation, protection,
enforcement, sale or other handling or treatment of all or any part of such
collateral, property or security, including but not limited to any neglect,
delay, omission, failure or refusal of Lender (a) to take or prosecute any
action for the collection of any of the Guaranteed Obligations, or (b) to
foreclose, or initiate any action to foreclose, or, once commenced, prosecute to
completion any action to foreclose upon any security therefor, or (c) to take or
prosecute any action in connection with any instrument or agreement evidencing
or securing all or any part of the Guaranteed Obligations.

                  2.9 UNENFORCEABILITY. The fact that any collateral, security,
security interest or lien contemplated or intended to be given, created or
granted as security for the repayment of the Guaranteed Obligations, or any part
thereof, shall not be properly perfected or created, or shall prove to be
unenforceable or subordinate to any other security interest or lien, it being
recognized and agreed by Guarantor that Guarantor is not entering into this
Guaranty in reliance on, or in contemplation of the benefits of, the validity,
enforceability, collectibility or value of any of the collateral for the
Guaranteed Obligations.

                  2.10 OFFSET. The Note, the Loan Agreement, the Guaranteed
Obligations and the liabilities and obligations of the Guarantor to Lender shall
not be reduced, discharged or released because of or by reason of any existing
or future right of offset, claim or defense of Borrower against Lender, or any
other Person, or against payment of the Guaranteed Obligations, whether such
right of offset, claim or defense arises in connection with the Guaranteed
Obligations (or the transactions creating the Guaranteed Obligations) or
otherwise.

                  2.11 MERGER . The reorganization, merger or consolidation of
Borrower into or with any other Person.

                  2.12 PREFERENCE . Any payment by Borrower to Lender is held to
constitute a preference under bankruptcy laws, or for any reason Lender is
required to refund such payment or pay such amount to Borrower or someone else.

                  2.13 OTHER ACTIONS TAKEN OR OMITTED. Any other action taken or
omitted to be taken with respect to the Loan Documents, the Guaranteed
Obligations, or the security and collateral therefor, whether or not such action
or omission prejudices Guarantor or increases the likelihood that Guarantor will
be required to pay the Guaranteed Obligations pursuant to the terms hereof, it
is the unambiguous and unequivocal intention of Guarantor that Guarantor shall
be obligated to pay the Guaranteed Obligations when due, notwithstanding any
occurrence, circumstance, event, action, or omission whatsoever, whether
contemplated or uncontemplated, and whether or not otherwise or particularly
described herein, which obligation shall be deemed satisfied only upon the full
and final payment and satisfaction of the Guaranteed Obligations.

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                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

                  To induce Lender to enter into the Loan Documents and extend
credit to Borrower, Guarantor represents and warrants to Lender as follows:

                  3.1 BENEFIT. Guarantor is an affiliate of Borrower, is the
owner of a direct or indirect interest in Borrower, and has received, or will
receive, direct or indirect benefit from the making of this Guaranty with
respect to the Guaranteed Obligations.

                  3.2 FAMILIARITY AND RELIANCE. Guarantor is familiar with, and
has independently reviewed books and records regarding, the financial condition
of the Borrower and is familiar with the value of any and all collateral
intended to be created as security for the payment of the Note or Guaranteed
Obligations; however, Guarantor is not relying on such financial condition or
the collateral as an inducement to enter into this Guaranty.

                  3.3 NO REPRESENTATION BY LENDER. Neither Lender nor any other
party has made any representation, warranty or statement to Guarantor in order
to induce the Guarantor to execute this Guaranty.

                  3.4 GUARANTOR'S FINANCIAL CONDITION. As of the date hereof,
and after giving effect to this Guaranty and the contingent obligation evidenced
hereby, Guarantor is, and will be, solvent, and has and will have assets which,
fairly valued, exceed its obligations, liabilities (including contingent
liabilities) and debts, and has and will have property and assets sufficient to
satisfy and repay its obligations and liabilities.

                  3.5 LEGALITY . The execution, delivery and performance by
Guarantor of this Guaranty and the consummation of the transactions contemplated
hereunder do not, and will not, contravene or conflict with any law, statute or
regulation whatsoever to which Guarantor is subject or constitute a default (or
an event which with notice or lapse of time or both would constitute a default)
under, or result in the breach of, any indenture, mortgage, deed of trust,
charge, lien, or any contract, agreement or other instrument to which Guarantor
is a party or which may be applicable to Guarantor. This Guaranty is a legal and
binding obligation of Guarantor and is enforceable in accordance with its terms,
except as limited by bankruptcy, insolvency or other laws of general application
relating to the enforcement of creditors' rights.

                  3.6 SURVIVAL. All representations and warranties made by
Guarantor herein shall survive the execution hereof.

                                   ARTICLE IV

                      SUBORDINATION OF CERTAIN INDEBTEDNESS

                  4.1 SUBORDINATION OF ALL GUARANTOR CLAIMS. As used herein, the
term "GUARANTOR CLAIMS" shall mean all debts and liabilities of Borrower to
Guarantor, whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligations of

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Borrower thereon be direct, contingent, primary, secondary, several, joint and
several, or otherwise, and irrespective of whether such debts or liabilities be
evidenced by note, contract, open account, or otherwise, and irrespective of the
Person in whose favor such debts or liabilities may, at their inception, have
been, or may hereafter be created, or the manner in which they have been or may
hereafter be acquired by Guarantor. The Guarantor Claims shall include without
limitation all rights and claims of Guarantor against Borrower (arising as a
result of subrogation or otherwise) as a result of Guarantor's payment of all or
a portion of the Guaranteed Obligations. Upon the occurrence of an Event of
Default, Guarantor shall not receive or collect, directly or indirectly, from
Borrower or any other party any amount upon the Guarantor Claims.

                  4.2 CLAIMS IN BANKRUPTCY. In the event of receivership,
bankruptcy, reorganization, arrangement, debtor's relief, or other insolvency
proceedings involving Guarantor as debtor, Lender shall have the right to prove
its claim in any such proceeding so as to establish its rights hereunder and
receive directly from the receiver, trustee or other court custodian dividends
and payments which would otherwise be payable upon Guarantor Claims. Guarantor
hereby assigns such dividends and payments to Lender. Should Lender receive, for
application upon the Guaranteed Obligations, any such dividend or payment which
is otherwise payable to Guarantor, and which, as between Borrower and Guarantor,
shall constitute a credit upon the Guarantor Claims, then upon payment to Lender
in full of the Guaranteed Obligations, Guarantor shall become subrogated to the
rights of Lender to the extent that such payments to Lender on the Guarantor
Claims have contributed toward the liquidation of the Guaranteed Obligations,
and such subrogation shall be with respect to that proportion of the Guaranteed
Obligations which would have been unpaid if Lender had not received dividends or
payments upon the Guarantor Claims.

                  4.3 PAYMENTS HELD IN TRUST. In the event that, notwithstanding
anything to the contrary in this Guaranty, Guarantor should receive any funds,
payment, claim or distribution which is prohibited by this Guaranty, Guarantor
agrees to hold in trust for Lender an amount equal to the amount of all funds,
payments, claims or distributions so received, and agrees that it shall have
absolutely no dominion over the amount of such funds, payments, claims or
distributions so received except to pay them promptly to Lender, and Guarantor
covenants promptly to pay the same to Lender.

                  4.4 LIENS SUBORDINATE. Guarantor agrees that any liens,
security interests, judgment liens, charges or other encumbrances upon
Borrower's assets securing payment of the Guarantor Claims shall be and remain
inferior and subordinate to any liens, security interests, judgment liens,
charges or other encumbrances upon Borrower's assets securing payment of the
Guaranteed Obligations, regardless of whether such encumbrances in favor of
Guarantor or Lender presently exist or are hereafter created or attach. Without
the prior written consent of Lender, Guarantor shall not (a) exercise or enforce
any creditor's right it may have against Borrower, or (b) foreclose, repossess,
sequester or otherwise take steps or institute any action or proceedings
(judicial or otherwise, including without limitation the commencement of, or
joinder in, any liquidation, bankruptcy, rearrangement, debtor's relief or
insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security
interests, collateral rights, judgments or other encumbrances on assets of
Borrower held by Guarantor.

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                                   ARTICLE V

                                  MISCELLANEOUS

                  5.1 WAIVER. No failure to exercise, and no delay in
exercising, on the part of Lender, any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right. The rights of
Lender hereunder shall be in addition to all other rights provided by law. No
modification or waiver of any provision of this Guaranty, nor consent to
departure therefrom, shall be effective unless in writing and no such consent or
waiver shall extend beyond the particular case and purpose involved. No notice
or demand given in any case shall constitute a waiver of the right to take other
action in the same, similar or other instances without such notice or demand.

                  5.2 NOTICES. Any notice, demand, statement, request or consent
made hereunder shall be in writing and shall be deemed to be received by the
addressee on the third day following the day such notice is deposited with the
United States Postal Service first class certified mail, return receipt
requested, addressed to the address, as set forth below, of the party to whom
such notice is to be given, or to such other address as either party shall in
like manner designate in writing. The addresses of the parties hereto are as
follows:

   Guarantor:
                       Fountain View, Inc.
                       27442 Portola Parkway, Suite 200
                       Foothill Ranch, California 92610
                       Attention: General Counsel
                       Facsimile No.: (949) 282-5820

   with a copy to:     Latham & Watkins LLP
                       650 Town Center Drive, Suite 2000
                       Costa Mesa, California 92626-1925
                       Attention: David Meckler, Esq.
                       Facsimile No.: (714) 755-8290

   Lender:
                       CapitalSource Finance LLC
                       4445 Willard Avenue, 12th Floor
                       Chevy Chase, Maryland 20815
                       Attention:  Healthcare Finance Group, Portfolio Manager
                       Facsimile No. (301) 841-2380

                       Highbridge/Zwirn Special Opportunities Fund, L.P.
                       9 West 57th Street, 27th Floor
                       New York, New York 10019
                       Attention:  David Brenner
                       Facsimile No. (212) 287-4263

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                       Fortress Credit Opportunities I, LP
                       1251 Avenue of the Americas, 16th Floor
                       New York, New York 10020
                       Attention:  Joshua A. Pack
                       Facsimile No.  (212) 798-6060

   with a copy to:     Skadden, Arps, Slate, Meagher & Flom LLP
                       4 Times Square
                       New York, New York 10036
                       Attention: David L. Nagler
                       Facsimile No. (917) 777-2369

   with a copy to:     Hahn & Hessen LLP
                       488 Madison Avenue
                       New York, New York 10022
                       Attention: Daniel D. Batterman
                       Facsimile No. (212) 478-7400

                  5.3 GOVERNING LAW. This Guaranty shall be governed in
accordance with the State of New York and the applicable law of the United
States of America.

                  5.4 INVALID PROVISIONS. If any provision of this Guaranty is
held to be illegal, invalid, or unenforceable under present or future laws
effective during the term of this Guaranty, such provision shall be fully
severable and this Guaranty shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of this Guaranty,
and the remaining provisions of this Guaranty shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from this Guaranty, unless such continued
effectiveness of this Guaranty, as modified, would be contrary to the basic
understandings and intentions of the parties as expressed herein.

                  5.5 AMENDMENTS. This Guaranty may be amended only by an
instrument in writing executed by the party or an authorized representative of
the party against whom such amendment is sought to be enforced.

                  5.6 PARTIES BOUND; ASSIGNMENT; JOINT AND SEVERAL. This
Guaranty shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, assigns and legal representatives; provided,
however, that Guarantor may not, without the prior written consent of Lender,
assign any of its rights, powers, duties or obligations hereunder. If Guarantor
consists of more than one person or party, the obligations and liabilities of
each such person or party shall be joint and several.

                  5.7 HEADINGS. Section headings are for convenience of
reference only and shall in no way affect the interpretation of this Guaranty.

                  5.8 RECITALS. The recital and introductory paragraphs hereof
are a part hereof, form a basis for this Guaranty and shall be considered prima
facie evidence of the facts and documents referred to therein.

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                  5.9 COUNTERPARTS. To facilitate execution, this Guaranty may
be executed in as many counterparts as may be convenient or required. It shall
not be necessary that the signature of, or on behalf of, each party, or that the
signature of all Persons required to bind any party, appear on each counterpart.
All counterparts shall collectively constitute a single instrument. It shall not
be necessary in making proof of this Guaranty to produce or account for more
than a single counterpart containing the respective signatures of, or on behalf
of, each of the parties hereto. Any signature page to any counterpart may be
detached from such counterpart without impairing the legal effect of the
signatures thereon and thereafter attached to another counterpart identical
thereto except having attached to it additional signature pages.

                  5.10 RIGHTS AND REMEDIES. If Guarantor becomes liable for any
indebtedness owing by Borrower to Lender, by endorsement or otherwise, other
than under this Guaranty, such liability shall not be in any manner impaired or
affected hereby and the rights of Lender hereunder shall be cumulative of any
and all other rights that Lender may ever have against Guarantor. The exercise
by Lender of any right or remedy hereunder or under any other instrument, or at
law or in equity, shall not preclude the concurrent or subsequent exercise of
any other right or remedy.

                  5.11 OTHER DEFINED TERMS. Any capitalized term utilized herein
shall have the meaning as specified in the Loan Agreement, unless such term is
otherwise specifically defined herein.

                  5.12 ENTIRETY. THIS GUARANTY EMBODIES THE FINAL AND ENTIRE
AGREEMENT OF GUARANTOR AND LENDER WITH RESPECT TO GUARANTOR'S GUARANTY OF THE
GUARANTEED OBLIGATIONS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF. THIS GUARANTY IS INTENDED BY GUARANTOR AND LENDER AS A
FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO COURSE OF
DEALING BETWEEN GUARANTOR AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE
PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE
USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY
AGREEMENT. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND LENDER.

                  5.13 WAIVER OF RIGHT TO TRIAL BY JURY. GUARANTOR AND LENDER
HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY,
AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT
SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS GUARANTY, THE NOTE, THE LOAN
AGREEMENT, THE PLEDGE AGREEMENT, OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM,
COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY GUARANTOR AND
LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE
AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER AND
GUARANTOR ARE HEREBY

                                       11
<PAGE>

AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY GUARANTOR AND LENDER.

                  5.14 REINSTATEMENT IN CERTAIN CIRCUMSTANCES. If at any time
any payment of the principal of or interest under the Note or any other amount
payable by Borrower under the Loan Documents is rescinded or must be otherwise
restored or returned upon the insolvency, bankruptcy or reorganization of
Borrower or otherwise, Guarantor's obligations hereunder with respect to such
payment shall be reinstated as though such payment has been due but not made at
such time.

                                   ARTICLE VI

                     STATE SPECIFIC PROVISIONS - CALIFORNIA

                  To the extent this document is enforceable in the State of
California, and notwithstanding the provisions of Section 5.3 hereof, the laws
of the State of California are held to govern this Agreement and the following
provisions shall apply:

                  6.1 PRINCIPLES OF CONSTRUCTION. IN THE EVENT OF ANY
INCONSISTENCIES BETWEEN THE TERMS AND CONDITIONS OF THIS ARTICLE 6 AND THE TERMS
AND CONDITIONS OF THIS SECURITY INSTRUMENT, THE TERMS AND CONDITIONS OF THIS
ARTICLE 6 SHALL CONTROL AND BE BINDING.

                  6.2 GUARANTOR. GUARANTOR ACKNOWLEDGES THAT IT IS GUARANTEEING
THE OBLIGATIONS OF BORROWER TO LENDER. ACCORDINGLY, GUARANTOR AGREES AS FOLLOWS:

                  (a) Modifications to Loan and Loan Documents. Guarantor agrees
that Lender may do any of the following without affecting the enforceability of
this Agreement:

                           (i)      take or release additional security for any
         obligation in connection with the Loan Documents;

                           (ii)     discharge or release (by judicial or
         nonjudicial foreclosure, acceptance of a deed in lieu of foreclosure or
         otherwise) any party or parties liable under the Loan Documents;

                           (iii)    accept or make compositions or other
         arrangements or file or refrain from filing a claim in any bankruptcy
         proceeding of Borrower, any guarantor of Borrower's obligations under
         the Loan Documents or any pledgor of collateral for any person's
         obligations to Lender; and

                           (iv)     credit payments in such manner and order of
         priority to principal, interest or other obligations as Lender may
         determine.

                  (b) Waivers.

                           (i)      Guarantor agrees that Lender's right to
         enforce this Agreement is absolute and is not contingent upon the
         genuineness, validity or enforceability of any

                                       12
<PAGE>

         of the Loan Documents. Guarantor waives all benefits and defenses it
         may have under California Civil Code Section 2810 and agrees that
         Lender's rights under this Agreement shall be enforceable even if
         Borrower had no liability at the time of execution of the Loan
         Documents or later ceases to be liable.

                           (ii)     Guarantor waives all benefits and defenses
         it may have under California Civil Code Section 2809 and agrees that
         Lender's rights under this Agreement will remain enforceable even if
         the amount secured by this Agreement is larger in amount and more
         burdensome than that for which Borrower is responsible. The
         enforceability of this Agreement against Guarantor shall continue until
         all sums due under the Loan Documents have been paid in full and shall
         not be limited or affected in any way by any impairment or any
         diminution or loss of value of any security or collateral for
         Borrower's obligations under the Loan Documents, from whatever cause,
         the failure of any security interest in any such security or collateral
         or any disability or other defense of Borrower, any guarantor of
         Borrower's obligations under the Loan Documents, any other pledgor of
         collateral for any person's obligations to Lender or any other person
         in connection with Borrower's loan.

                           (iii)    Guarantor waives all benefits and defenses
         it may have under California Civil Code Sections 2845, 2849 and 2850,
         including, without limitation, the right to require Lender to (A)
         proceed against Borrower, any guarantor of Borrower's obligations under
         the Loan Documents, any other pledgor of collateral for any person's
         obligations to Lender or any other person in connection with Borrower's
         loan, (B) proceed against or exhaust any other security or collateral
         Lender may hold, or (C) pursue any other right or remedy for
         Guarantor's benefit, and agrees that Lender may exercise its rights
         under this Agreement or may foreclose against the Mortgaged Property
         without taking any action against Borrower, Guarantor, guarantor of
         Borrower's obligations under the Loan Document, any pledgor of
         collateral for any person's obligations to Lender or any other person
         in connection with Borrower's loan, and without proceeding against or
         exhausting any security or collateral Lender holds.

                           (iv)     Guarantor waives any rights or benefits it
         may have by reason of California Code of Civil Procedure Section 580a
         which could limit the amount which Lender could recover in a
         foreclosure of the Mortgaged Property to the difference between the
         amount owing under the Loan Documents and the fair value of the
         property or interests sold at a nonjudicial foreclosure sale or sales
         of any other real property held by Lender as security for the
         obligations under the Loan Documents.

                           (v)      Guarantor waives diligence and all demands,
         protests, presentments and notices of protest, dishonor, nonpayment and
         acceptance of this Agreement.

                  (c) Guarantor Informed of Borrower's Condition. Guarantor
acknowledges that it has had an opportunity to review the Loan Documents, the
value of the security for Borrower's obligations under the Loan Documents and
Borrower's financial condition and ability to satisfy its obligations to Lender.
Guarantor agrees to keep itself fully informed of all aspects of Borrower's
financial condition and the performance of Borrower's obligations to Lender and

                                       13
<PAGE>

agrees that Lender has no duty to disclose to Guarantor any information
pertaining to Borrower or any security for Borrower's obligations under the Loan
Documents.

                  (d) Waiver of Estoppel Defense. Upon Borrower's default under
the Loan Documents, Lender may elect to foreclose nonjudicially on real property
given by Borrower or others as security under the Loan Documents and also to
exercise its rights under this Agreement. Guarantor acknowledges that its right
to seek reimbursement from Borrower for any amounts paid by Guarantor to Lender
under this Agreement will be eliminated if Lender elects to so foreclose on
Borrower's property. Nevertheless, Guarantor waives any such right to
reimbursement and agrees that a nonjudicial foreclosure by Lender against any
real property security owned by Borrower or others will not affect the
enforceability of this Agreement on Guarantor's interest in the Mortgaged
Property. In order to further effectuate such waiver Guarantor hereby agrees as
follows:

                  Guarantor waives all rights and defenses arising out of an
                  election of remedies by Lender, even though that election of
                  remedies, such as a nonjudicial foreclosure with respect to
                  the Mortgaged Property, has destroyed Guarantor's rights of
                  subrogation and reimbursement against Borrower by the
                  operation of Section 580d of the Code of Civil Procedure or
                  otherwise.

                  (e) Subrogation. Guarantor agrees that its rights of
subrogation and reimbursement against Borrower, its right of subrogation against
the Mortgaged Property or any other collateral or security for Lender's loan to
Borrower or the pledgor of such collateral or security and its right of
contribution from any guarantor or surety of Borrower's obligation sunder the
Loan Documents shall be subordinate to Lender's rights against Borrower, in such
collateral or security, against any such pledgor and against any such guarantor
or surety. Guarantor shall have no such rights of subrogation, reimbursement or
contribution until all amounts due under the Note, the Mortgage and the other
Loan Documents have been paid in full and Lender has released, transferred or
disposed of all of its rights in any collateral or security. Guarantor waives
its rights under California Civil Code Sections 2847, 2848 and 2849 to the
extent inconsistent with the foregoing.

                  (f) Confirmation of Waivers. In accordance with California
Civil Code Section 2856(c), Guarantor hereby makes the following waivers:

                           (i)      The guarantor waives all rights and defenses
         that the guarantor may have because the debtor's debt is secured by
         real property. This means, among other things:

                                    (A) The creditor may collect from the
                           guarantor without first foreclosing on any other real
                           or personal property collateral pledged by the debtor
                           or any other person.

                                    (B) If the creditor forecloses on any real
                           property collateral pledged by the debtor:

                                       14
<PAGE>

         a.       The amount of the debt may be reduced only by the price for
                  which the collateral is sold at the foreclosure sale, even if
                  the collateral is worth more than the sale price.

         b.       The creditor may collect from the guarantor even if the
                  creditor, by foreclosing on the real property collateral, has
                  destroyed any right the guarantor may have to collect from the
                  debtor.

                           (ii)     This is an unconditional and irrevocable
         waiver of any rights and defenses the guarantor may have because the
         debtor's debt is secured by real property. These rights and defenses
         include, but are not limited to, any rights or defenses based upon
         Section 580a, 580b, 580d or 726 of the California Code of Civil
         Procedures.

                                       15
<PAGE>

              EXECUTED as of the day and year first above written.

                                  SUMMIT CARE CORPORATION

                                  By:    \s\ Roland G. Rapp
                                         --------------------------------------
                                  Name:  Roland G. Rapp
                                  Title: Secretary

                                  SUMMIT CARE TEXAS, L.P.

                                  By:    Summit Care Texas Management, LLC,
                                         its General Partner

                                         By:    \s\ Roland G. Rapp
                                                -------------------------------
                                         Name:  Roland G. Rapp
                                         Title: Secretary

                                       16
<PAGE>

                                  SKILLED HEALTHCARE, LLC

                                  By:    \s\ Roland G. Rapp
                                         --------------------------------------
                                  Name:  Roland G. Rapp
                                  Title: Secretary

                                  Address for Notices:
                                  c/o Fountain View, Inc.
                                  27442 Portola Parkway, Suite 200
                                  Foothill Ranch, California  92610
                                  Attention: General Counsel

                                       17
<PAGE>

                                  SUMMIT CARE TEXAS MANAGEMENT, LLC

                                  By:    \s\ Roland G. Rapp
                                         --------------------------------------
                                  Name:  Roland G. Rapp
                                  Title: Secretary

                                  Address for Notices:
                                  c/o Fountain View, Inc.
                                  27442 Portola Parkway, Suite 200
                                  Foothill Ranch, California 92610
                                  Attention: General Counsel

                                       18<PAGE>

                                                                   EXHIBIT 10.20

                               SECURITY AGREEMENT

         This SECURITY AGREEMENT, dated as of August 19, 2003 (this "Security
Agreement"), among FOUNTAIN VIEW, INC., a Delaware corporation (the "Company"),
the Subsidiaries of the Company listed in Schedule 1 annexed hereto (the Company
and such undersigned Subsidiaries are sometimes collectively referred to herein
as "Grantors" and individually as a "Grantor"); and CAPITALSOURCE FINANCE LLC, a
Delaware limited liability company, as administrative agent and collateral agent
for the lenders under the Mezzanine Loan Agreement, having an address at 4445
Willard Avenue, 12th Floor, Chevy Chase, Maryland 20815 (in such capacity as
Agent, together with its successors and assigns, referred to herein as
"Lender").

                              W I T N E S S E T H:

1.       The Company and certain of its subsidiaries filed for reorganization
         under chapter 11 of title 11 of the United States Code (the "Bankruptcy
         Code") in the United States Bankruptcy Court for the Central District
         of California, Los Angeles Division (the "Bankruptcy Court"); and

2.       By order, dated July 10, 2003, the Debtors' Joint Plan of
         Reorganization under Chapter 11 of the Bankruptcy Code, dated April 22,
         2003, in Case No. LA 01-39678BB through LA 01-39697BB and LA
         01-45516BB, LA 01-45520BB and LA 01-45525BB, in the United States
         Bankruptcy Court for the Central District of California, Los Angeles
         Division, as such may be modified, amended or supplemented from time to
         time (the "Plan"), has been approved in accordance with section 1129 of
         the Bankruptcy Code and such Plan has become effective as of August __,
         2003;

3.       As part of the Plan, the Company has agreed to grant Liens on the
         Collateral.

4.       SHG Property Resources, LLC, a Delaware limited liability company and
         SHG Investments, LLC, a Delaware limited liability company
         (collectively "Borrower") has requested that the lenders under the Loan
         Agreement make a loan to Borrower in the aggregate principal amount of
         $23,000,000.00 (the "Loan"), pursuant to that certain Mezzanine Loan
         Agreement (as defined herein), and as evidenced by those certain
         Mezzanine Promissory Notes, each dated as of the date hereof (as the
         same may be amended, restated, replaced, supplemented, increased,
         extended, consolidated or otherwise modified from time to time,
         collectively, the "Note");

5.       As collateral security for the prompt and complete payment and
         performance when due (whether at the stated maturity, by acceleration
         or otherwise) of the Debt, Grantors have agreed to grant the lenders
         under the Loan Agreement, subject to the Permitted Liens, a first
         priority security interest upon all of Grantor's right, title and
         interest in, to and under the Collateral (as defined below).

         NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

<PAGE>

         1.       DEFINED TERMS. All capitalized terms used but not otherwise
defined herein have the meanings given to them in the Mezzanine Loan Agreement
or Annex A attached hereto. All other undefined terms contained in this Security
Agreement, unless the context indicates otherwise, have the meanings provided
for by the Code to the extent the same are used or defined therein.

         2.       GRANT OF LIEN.

         (a)      To secure the prompt and complete payment, performance and
observance of all of the Debt, each Grantor hereby grants, assigns, conveys,
mortgages, pledges, hypothecates and transfers to Lender, a Lien upon all of its
right, title and interest in, to and under the following personal property and
other assets, whether now owned by or owing to, or hereafter acquired by or
arising in favor of such Grantor (including under any trade names, styles or
derivations thereof), and whether owned or consigned by or to, or leased from or
to, such Grantor, and regardless of where located which is used in the conduct
of the pharmaceutical business and the physical therapy business of the Company
and its Subsidiaries (all of which being hereinafter collectively referred to as
the "Collateral"):

                  (i)      all tangible personal property, including without
         limitation all present and future Inventory and Equipment (other than
         items of Equipment which are or become Fixtures);

                  (ii)     all intangible personal property, including without
         limitation all present and future Accounts, securities, contract
         rights, Permits, General Intangibles, Chattel Paper, Documents,
         Instruments, Deposit Accounts, Letter-of-Credit Rights and Supporting
         Obligations, commercial tort claims, rights to the payment of money or
         other forms of consideration of any kind, including, without
         limitation, payment intangibles, tax refunds, insurance proceeds, now
         owned or hereafter acquired, and all intangible and tangible personal
         property relating to or arising out of any of the foregoing;

                  (iii)    all present and future Government Contracts and
         rights thereunder and the related Government Accounts and proceeds
         thereof; provided, however, that the Collateral shall not include any
         rights under any Government Contract of any Grantor or in the related
         Government Account where the taking of such security interest would be
         a violation of an express prohibition contained in the Government
         Contract (for purposes of this limitation, the fact that a Government
         Contract is subject to, or otherwise refers to, Title 31, Section 203
         or Title 41, Section 15 of the United States Code shall not be deemed
         an express prohibition against assignment thereof) or is prohibited by
         applicable law; and

                  (iv)     any and all additions to any of the foregoing, and
         any and all replacements, products and Proceeds (including insurance
         proceeds) of any of the foregoing.

                  Notwithstanding the foregoing provisions of this Section 2,
such grant of a security interest shall not extend to, and the term "Collateral"
shall not include, (x) any General Intangible, contract, agreement or document
of any Grantor to the extent that (i) such General Intangible, contract,
agreement or document is not assignable or capable of being encumbered as

                                        2

<PAGE>

a matter of law or under the terms of any license or other agreement applicable
thereto (but solely to the extent that any such restriction shall be enforceable
under applicable law, which applicable law includes Section 9-408 of the Uniform
Commercial Code), without the consent of the licensor thereof or other
applicable party thereto, and (ii) such consent has not been obtained; provided,
however, that the foregoing grant of a security interest shall extend to, and
the term "Collateral" shall include, each of the following: (a) any General
Intangible which is in the nature of an Account or a right to the payment of
money or a proceed of, or otherwise related to, the enforcement or collection
of, any Account or right to the payment of money, (b) any and all proceeds of
any General Intangible, contract, agreement or document that is otherwise
excluded to the extent that the assignment, pledge or encumbrance of such
proceeds is not so restricted, and (c) upon obtaining the consent of any such
licensor or other applicable party with respect to any such otherwise excluded
General Intangible, contract, agreement or document, such General Intangible,
contract, agreement or document as well as any and all proceeds thereof that
might theretofore have been excluded from such grant of a security interest and
from the term "Collateral"; (y) any asset of any Grantor to the extent that (i)
such asset is subject to a contract, agreement or document otherwise permitted
pursuant to the Mezzanine Loan Agreement, which contract, agreement or document
restricts the grant of such security interest (but solely to the extent that any
such restriction shall be enforceable under applicable law) without the consent
of the other party to such contract, agreement or document, and (ii) such
consent has not been obtained; provided, however, that the foregoing grant of a
security interest shall extend to, and the term "Collateral" shall include, each
of the following: (a) any and all proceeds of any asset that is otherwise
excluded to the extent that the assignment, pledge or encumbrance of such
proceeds is not so restricted, and (b) upon obtaining the consent of the other
party to any such contract, agreement or document with respect to any such
otherwise excluded asset, such asset as well as any and all proceeds thereof
that might theretofore have been excluded from such grant of a security interest
and from the term "Collateral"; and (c) any Permit of any Grantor to the extent
that the assignment of such Permit would violate the law applicable to such
Permit, or materially impair the validity of such Permit. Each Grantor shall use
all reasonable efforts (which shall not include the unreasonable expenditure of
funds) to obtain any such required consent.

         3.       LENDER'S RIGHTS: LIMITATIONS ON LENDER'S OBLIGATIONS.

         (a)      It is expressly agreed by Grantors that, anything herein to
the contrary notwithstanding, each Grantor shall remain liable under each of its
Contracts and each of its Licenses, to observe and perform in all material
respects all the conditions and obligations to be observed and performed by it
thereunder. Lender shall have no obligation or liability under any Contract or
License by reason of or arising out of this Security Agreement or the granting
herein of a Lien thereon or the receipt by Lender of any payment relating to any
Contract or License pursuant hereto. Lender shall not be required or obligated
in any manner to perform or fulfill any of the obligations of any Grantor under
or pursuant to any Contract or License, or to make any payment, or to make any
inquiry as to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any Contract or License, or to
present or file any claims, or to take any action to collect or enforce any
performance or the payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times.

                                        3

<PAGE>

         (b)      Lender may, at any time after an Event of Default has occurred
and be continuing, notify (i) Account Debtors owing Accounts to Grantors other
than Medicaid/Medicare Account Debtors that their Accounts have been assigned to
Lender and to collect such Accounts directly in its own name and to charge
reasonable collection costs and expenses, including reasonable attorney's fees,
to Grantors, and (ii) Medicaid/Medicare Account Debtors that Grantors have
waived any and all defenses and counterclaims they may have or could interpose
in any such action or procedure brought by Lender to obtain a court order
recognizing the collateral assignment or security interest and lien of Lender in
and to any Account or other Collateral payable by Medicaid/Medicare Account
Debtors and that Lender is seeking or may seek to obtain a court order
recognizing the collateral assignment or security interest and lien of Lender in
and to all Accounts and other Collateral payable by Medicaid/Medicare Account
Debtors. Upon the request of Lender, at any time after an Event of Default has
occurred and is continuing, each Grantor shall so notify Account Debtors and
other Persons obligated on Collateral. Lender's rights under this Section 3(b),
shall be subject to the provisions of the Intercreditor Agreement.

         (c)      Lender may at any time in Lender's own name or in the name of
any Grantor communicate with Account Debtors, parties to Contracts, obligors in
respect of Instruments and obligors in respect of Chattel Paper and/or payment
intangibles to verify with such Persons, to Lender's satisfaction, the
existence, amount and terms of any such Accounts, Contracts, Instruments or
Chattel Paper and/or payment intangibles.

         4.       REPRESENTATIONS AND WARRANTIES. Each Grantor represents and
warrants that:

         (a)      Such Grantor has rights in and the power to transfer each item
of the Collateral upon which it purports to grant a Lien hereunder free and
clear of any and all Liens other than Permitted Liens.

         (b)      No effective security agreement, financing statement,
equivalent security or Lien instrument or continuation statement covering all or
any part of the Collateral is on file or of record in any public office, except
such as may have been filed (i) by any Grantor in favor of Lender pursuant to
this Security Agreement, the other Loan Documents, the Revolving Credit Facility
or the Indenture, each of which are subordinated in right of repayment and
remedies to all of the Debt and to all of Lender's rights, and (ii) in
connection with any other Permitted Lien.

         (c)      This Security Agreement is effective to create a valid and
continuing Lien on and, upon the filing of the appropriate financing statements
listed on Schedule I hereto, a perfected Lien in favor of Lender on the
Collateral with respect to which a Lien may be perfected by filing pursuant to
the Code. Such Lien is prior to all other Liens, except Permitted Liens, and is
enforceable as such as against any and all creditors of and purchasers from any
Grantor (other than purchasers (but not creditors of such purchasers) and
lessees in the ordinary course of business). All action by any Grantor necessary
or desirable to protect and perfect such Lien on each item of the Collateral has
been duly taken or shall be promptly taken.

         (d)      As of the Effective Date, Schedule II hereto lists all
Instruments, Letter of Credit Rights and Chattel Paper constituting Collateral
of each Grantor. All action by any Grantor

                                        4

<PAGE>

necessary or desirable to protect and perfect the Lien of Lender on each item
set forth on Schedule II (including the delivery of all originals thereof to
Lender and the legending of all Chattel Paper as required by Section 5(b)
hereof) has been duly taken; provided so long as the Intercreditor Agreement
shall be in effect, no Grantor shall be required to deliver such collateral to
Lender under this Section 4(d). The Lien of Lender on the Collateral listed on
Schedule II hereto is prior to all other Liens, except Permitted Liens, and is
enforceable as such against any and all creditors of and purchasers from any
Grantor.

         (e)      Each Grantor's name as it appears in official filings in the
state of its incorporation or other organization, the type of entity of each
Grantor (including corporation, partnership, limited partnership or limited
liability company), organizational identification number issued by each
Grantor's state of incorporation or organization or a statement that no such
number has been issued, each Grantor's state of organization or incorporation,
the location of each Grantor's chief executive office, principal place of
business, offices, all warehouses and premises where Collateral is stored or
located, and the locations of its books and records concerning the Collateral
are set forth on Schedule III hereto.

         (f)      With respect to the Accounts constituting Collateral, (i)
Accounts represent bona fide sales of Inventory or rendering of services to
Account Debtors in the ordinary course of each Grantor's business and are not
evidenced by a judgment, Instrument or Chattel Paper; and (ii) to each Grantor's
knowledge, there are no facts, events or occurrences which in any way impair the
validity or enforceability thereof or could reasonably be expected to reduce the
amount payable thereunder as shown on any Grantor's books and records and any
invoices, statements with respect thereto. Further with respect to the Accounts
(x) the amounts shown on all invoices and statements are actually and absolutely
owing to such Grantor as indicated thereon and are not in any way contingent;
(y) no payments have been or shall be made thereon except payments immediately
delivered to the applicable Accounts; and (z) to each Grantor's knowledge, all
Account Debtors have the capacity to contract. Notwithstanding anything in this
Section 4(f) to the contrary, the failure of any Account to satisfy the
representations contained in the of this Section 4(f) shall not constitute
misrepresentation unless Accounts having an aggregate face amount of $250,000 or
greater fail to comply with the representations contained in this Section 4(f).

         (g)      With respect to any Inventory constituting Collateral, (i)
such Inventory is located as of the Effective Date at one of the applicable
Grantor's locations set forth on Schedule III hereto, (ii) no Inventory is now,
or shall at any time or times hereafter be stored at any other location without
at least thirty (30) days prior written notice to Lender and after Grantors have
completed all reasonable action requested by Lender in connection therewith
required to continue the perfection of any Liens in favor of Lender in any
Collateral; provided that any such new location shall be in the continental
United States, (iii) the applicable Grantor has good, indefeasible and
merchantable title to such Inventory and such Inventory is not subject to any
Lien or security interest or document whatsoever except for the Lien granted to
Lender and except for Permitted Liens, (iv) such Inventory is not subject to any
licensing, patent, royalty, trademark, trade name or copyright agreements with
any third parties which would require any consent of any third party upon sale
or disposition of that Inventory or the payment of any monies to any third party
as a precondition of such sale or other disposition, and (v) the completion of
manufacture, sale or other disposition of such Inventory by Lender following an

                                        5

<PAGE>

Event of Default shall not require the consent of any Person and shall not
constitute a breach or default under any contract or agreement to which any
Grantor is a party or to which such property is subject. Notwithstanding
anything in this Section 4(g) to the contrary, the failure of any Inventory to
satisfy the representations contained in the of this Section 4(g) shall not
constitute misrepresentation unless Inventory having an aggregate face amount of
$250,000 or greater fail to comply with the representations contained in this
Section 4(g).

         (h)      As of the Effective Date, no Grantor has any interest in, or
title to, any Patent, Trademark or Copyright constituting Collateral except as
set forth in Schedule IV hereto. This Security Agreement is effective to create
a valid and continuing Lien on and, upon filing of the financing statements
listed on Schedule I hereto, and filing of the Copyright Security Agreements
with the United States Copyright Office and filing of the Patent Security
Agreements and the Trademark Security Agreements with the United State Patent
and Trademark Office, perfected Liens in favor of Lender on each Grantor's
material Patents, Trademarks and Copyrights and such perfected Liens are
enforceable as such as against any and all creditors of and purchasers (but not
creditors of such purchasers) from any Grantor. Upon filing of the Copyright
Security Agreements with the United States Copyright Office and filing of the
Patent Security Agreements and the Trademark Security Agreements with the United
State Patent and Trademark Office and the filing of appropriate financing
statements listed on Schedule I hereto, all action necessary or desirable to
protect and perfect Lender's Lien on each Grantor's material Patents, Trademarks
or Copyrights shall have been duly taken.

         5.       COVENANTS. Each Grantor covenants and agrees with Lender that
from and after the date of this Security Agreement and until the Termination
Date:

         (a)      Further Assurances.

                  (i)      At any time and from time to time, upon the written
         request of Lender and at the sole expense of Grantors, each Grantor
         shall promptly and duly execute and deliver any and all such further
         instruments and documents and take such further actions as Lender may
         deem desirable to perfect the security interest herein granted,
         including (A) using commercially reasonable efforts to secure all
         consents and approvals necessary or appropriate for the assignment to
         or for the benefit of the Lender of any License or Contract held by
         such Grantor, and (B) filing any financing or continuation statements
         under the Code.

                  (ii)     Upon written request of Lender, each Grantor shall
         deliver to Lender all Collateral consisting of negotiable Documents,
         certificated securities, Chattel Paper and Instruments (other than
         checks received in the ordinary course of business, which shall be
         delivered to Lender or into a lockbox or Deposit Account with respect
         to which the Grantor has entered into a control agreement with Lender
         and the related bank) (in each case, accompanied by stock powers,
         allonges or other instruments of transfer executed in blank) promptly
         after such Grantor receives the same.

                  (iii)    If requested by Lender, each Grantor shall obtain or
         use commercially reasonable efforts to obtain waivers or subordinations
         of Liens from landlords and mortgagees, and each Grantor shall in all
         instances obtain signed acknowledgements of

                                        6

<PAGE>

         Lender's Liens from bailees having possession of any Grantor's Goods
         that they hold for the benefit of Lender.

                  (iv)     If requested by Lender in writing, each Grantor shall
         obtain authenticated Control Letters from each issuer of uncertificated
         securities, securities intermediary, or commodities intermediary
         issuing or holding any financial assets or commodities to or for any
         Grantor.

                  (v)      Unless otherwise restricted by the Revolving Credit
         Facility, upon the occurrence of a Default, each Grantor shall obtain a
         blocked account, lockbox or similar agreement, as applicable, with each
         bank or financial institution holding a Deposit Account for such
         Grantor.

                  (vi)     Unless otherwise restricted by the Revolving Credit
         Facility, if requested by Lender, each Grantor that is or becomes the
         beneficiary of a letter of credit shall promptly, and in any event
         within five (5) Business Days after becoming a beneficiary, notify
         Lender thereof and enter into a tri-party agreement with Lender and the
         issuer and/or confirmation bank with respect to Letter-of-Credit Rights
         assigning such Letter-of-Credit Rights to Lender and directing all
         payments thereunder to a Deposit Account, all in form and substance
         reasonably satisfactory to Lender.

                  (vii)    Unless otherwise restricted by the Revolving Credit
         Facility, if requested by Lender, each Grantor shall take all steps
         necessary to grant Lender control of all electronic chattel paper in
         accordance with the Code and all "transferable records" as defined in
         each of the Uniform Electronic Transactions Act and the Electronic
         Signatures in Global and National Commerce Act

                  (viii)   Each Grantor hereby irrevocably authorizes Lender at
         any time and from time to time to file in any filing office in any
         Uniform Commercial Code jurisdiction any initial financing statements
         and amendments thereto that (a) indicate the Collateral (i) as all
         assets of such Grantor which is used in the conduct of the
         pharmaceutical business and the physical therapy business of the
         Company and its Subsidiaries, or words of similar effect, regardless of
         whether any particular asset comprised in the Collateral falls within
         the scope of Article 9 of the Code or such jurisdiction, or (ii) as
         being of an equal or lesser scope or with greater detail, and (b)
         contain any other information required by part 5 of Article 9 of the
         Code for the sufficiency or filing office acceptance of any financing
         statement or amendment, including (x) whether such Grantor is an
         organization, the type of organization and any organization
         identification number issued to such Grantor, and (y) in the case of a
         financing statement filed as a fixture filing or indicating Collateral
         as as-extracted collateral or timber to be cut, a sufficient
         description of real property to which the Collateral relates. Each
         Grantor agrees to promptly furnish any such information as Lender shall
         request in writing. Each Grantor also ratifies its authorization for
         Lender to have filed in any Uniform Commercial Code jurisdiction any
         initial financing statements or amendments thereto if filed prior to
         the date hereof.

                  (ix)     Each Grantor shall promptly, and in any event within
         five (5) Business Days after the same is acquired by it, notify Lender
         of any commercial tort claim (as

                                        7

<PAGE>

         defined in the Code) acquired by it, and if requested by the Lender,
         such Grantor shall enter into a supplement to this Security Agreement,
         granting to Lender a Lien in such commercial tort claim; provided that
         no Grantor shall be in default of this provision for failure to notify
         of any commercial tort claims unless the value of all commercial tort
         claims of Grantors for which not notice has been given hereunder shall
         be $250,000 or more.

         (b)      Maintenance of Records. Grantors shall keep and maintain, at
their own cost and expense, satisfactory and complete records of the Collateral,
including a record of any and all payments received and any and all credits
granted with respect to the Collateral and all other dealings with the
Collateral.

         (c)      Covenants Regarding Patent, Trademark and Copyright
Collateral.

                  (i)      Grantors shall notify Lender immediately if they know
         or have reason to know that any application or registration relating to
         any material Patent, Trademark or Copyright (now or hereafter existing)
         may become abandoned or dedicated, or of any adverse determination or
         development (including the institution of, or any such determination or
         development in, any proceeding in the United States Patent and
         Trademark Office, the United States Copyright Office or any court)
         regarding any Grantor's ownership of any material Patent, Trademark or
         Copyright, its right to register the same, or to keep and maintain the
         same.

                  (ii)     In no event shall any Grantor, either itself or
         through any agent, employee, licensee or designee, file an application
         for the registration of any material Patent, Trademark or Copyright
         with the United States Patent and Trademark Office, the United States
         Copyright Office or any similar office or agency without giving Lender
         prior written notice thereof, and, upon request of Lender, Grantor
         shall execute and deliver any and all Patent Security Agreements,
         Copyright Security Agreements or Trademark Security Agreements as
         Lender may request to evidence Lender's Lien on such Patent, Trademark
         or Copyright, and the General Intangibles of such Grantor relating
         thereto or represented thereby.

                  (iii)    Grantors shall take all actions necessary or
         requested by Lender to maintain and pursue each application, to obtain
         the relevant registration and to maintain the registration of each of
         the material Patents, Trademarks and Copyrights (now or hereafter
         existing), including the filing of applications for renewal, affidavits
         of use, affidavits of noncontestability and opposition and interference
         and cancellation proceedings, each at Grantor's expense.

                  (iv)     In the event that any of the material Patent,
         Trademark or Copyright Collateral is infringed upon, or misappropriated
         or diluted by a third party, such Grantor shall comply with Section
         5(a)(v) of this Security Agreement. Such Grantor shall, unless such
         Grantor shall reasonably determine that such Patent, Trademark or
         Copyright Collateral is in no way material to the conduct of its
         business or operations, promptly sue for infringement, misappropriation
         or dilution and to recover any and all damages for such infringement,
         misappropriation or dilution, and shall take such other actions as

                                        8

<PAGE>

         Lender shall deem appropriate under the circumstances to protect such
         Patent, Trademark or Copyright Collateral.

         (d)      Indemnification. In any suit, proceeding or action brought by
Lender relating to any Collateral for any sum owing with respect thereto or to
enforce any rights or claims with respect thereto, each Grantor will save,
indemnify and keep Lender harmless from and against all reasonable expense
(including reasonable attorneys' fees and expenses), loss or damage suffered by
reason of any defense, setoff, counterclaim, recoupment or reduction of
liability whatsoever of the Account Debtor or other Person obligated on the
Collateral, arising out of a breach by any Grantor of any obligation thereunder
or arising out of any other agreement, indebtedness or liability at any time
owing to, or in favor of, such obligor or its successors from such Grantor,
except to the extent such expense, loss, or damage is attributable solely to the
negligence or willful misconduct of Lender as finally determined by a court of
competent jurisdiction. All such obligations of Grantors shall be and remain
enforceable against and only against Grantors and shall not be enforceable
against Lender.

         (e)      Compliance with Terms of Accounts, etc. Each Grantor will
perform and comply in all material respects with all obligations in respect of
the Collateral and all other agreements to which it is a party or by which it is
bound relating to the Collateral.

         (f)      Limitation on Liens on Collateral. No Grantor will create,
permit or suffer to exist, and each Grantor will defend the Collateral against,
and take such other action as is necessary to remove, any material Lien on the
Collateral except Permitted Liens and the Lien granted to the Claims Agent for
the benefit of Claims Agent, Class 10 Holders, Vendor Claim Holders, Trustee and
Noteholders (which Liens are subordinated in right of repayment and remedies to
all of the Debt and to all of Lender's rights), and will defend the right, title
and interest of Lender in and to any of such Grantor's rights under the
Collateral against the material claims and demands of all Persons whomsoever, in
each case defended in accordance with Lender's request and at Grantor's expense.

         (g)      Limitations on Disposition. No Grantor will sell, license,
lease, transfer or otherwise dispose of any of the Collateral, or attempt or
contract to do so, except as permitted by the Mezzanine Loan Agreement.

         (h)      Further Identification of Collateral. Grantors will, if so
requested by Lender, furnish to Lender, as often as Lender reasonably requests,
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Lender may reasonably
request, all in such detail as Lender may reasonably specify.

         (i)      Notices. Grantors will advise Lender promptly, in reasonable
detail, (i) of any Lien (other than Permitted Liens) or claim made or asserted
against any of the Collateral, (ii) of the occurrence of any other event which
would have a material adverse effect on the aggregate value of the Collateral or
on the Liens created hereunder and (iii) updates of any of the schedules to this
Security Agreement to the extent necessary to keep them accurate on an ongoing
basis in all material respects.

                                        9

<PAGE>

         (j)      No Reincorporation. No Grantor shall reincorporate or
reorganize itself under the laws of any jurisdiction other than the jurisdiction
in which it is incorporated or organized as of the date hereof or change its
name without providing 30 days prior written notice to Lender and taking all
action necessary to maintain the perfection of the security interests in
accordance with this Security Agreement.

         (k)      Terminations; Amendments Not Authorized. Each Grantor
acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement
without the prior written consent of Lender and agrees that it will not do so
without the prior written consent of Lender, subject to such Grantor's rights
under Section 9-509(d)(2) of the Code.

         (l)      Authorized Terminations. Lender will promptly deliver to each
Grantor for filing or authorize each Grantor to prepare and file termination
statements and releases in accordance with the Indenture.

         6.       LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT. On the Closing Date
each Grantor shall execute and deliver to Lender a power of attorney (the "Power
of Attorney") substantially in the form attached hereto as Exhibit A. The power
of attorney granted pursuant to the Power of Attorney is a power coupled with an
interest and shall be irrevocable until the termination of this Security
Agreement in accordance with its terms. The powers conferred on Lender under the
Power of Attorney are solely to protect Lender's interests in the Collateral and
shall not impose any duty upon Lender to exercise any such powers. Lender agrees
that (a) except for the powers granted in clause (h) of the Power of Attorney,
it shall not exercise any power or authority granted under the Power of Attorney
unless an Event of Default has occurred and is continuing, and (b) Lender shall
account for any moneys received by Lender in respect of any foreclosure on or
disposition of Collateral pursuant to the Power of Attorney provided that Lender
shall not have any duty as to any Collateral, and Lenders shall be accountable
only for amounts that it actually receive as a result of the exercise of such
powers. NEITHER LENDER NOR ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO ANY GRANTOR FOR ANY ACT OR
FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF
DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN NEGLIGENCE OR WILLFUL MISCONDUCT AS
FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE,
EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

         7.       REMEDIES: RIGHTS UPON DEFAULT.

         (a)      In addition to all other rights and remedies granted to it
under this Security Agreement and under any other instrument or agreement
securing, evidencing or relating to any of the Debt, if any Event of Default
shall have occurred and be continuing, Lender may exercise all rights and
remedies of a secured party under the Code. Without limiting the generality of
the foregoing, each Grantor expressly agrees that in any such event Lender,
without demand of performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of public or private
sale) to or upon such Grantor or any other Person (all and each of which
demands, advertisements and notices are hereby expressly waived to the

                                       10

<PAGE>

maximum extent permitted by the Code and other applicable law), may forthwith
enter upon the premises of such Grantor where any Collateral is located through
self-help, without judicial process, without first obtaining a final judgment or
giving such Grantor or any other Person notice and opportunity for a hearing on
Lender's claim or action and may collect, receive, assemble, process,
appropriate and realize upon the Collateral, or any part thereof, and may
forthwith sell, lease, license, assign, give an option or options to purchase,
or sell or otherwise dispose of and deliver said Collateral (or contract to do
so), or any part thereof, in one or more parcels at a public or private sale or
sales, at any exchange at such prices as it may deem acceptable, for cash or on
credit or for future delivery without assumption of any credit risk. Lender
shall have the right upon any such public sale or sales and, to the extent
permitted by law, upon any such private sale or sales, to purchase for the
benefit of Lender, the whole or any part of said Collateral so sold, free of any
right or equity of redemption, which equity of redemption each Grantor hereby
releases. Such sales may be adjourned and continued from time to time with or
without notice. Lender shall have the right to conduct such sales on any
Grantor's premises or elsewhere and shall have the right to use any Grantor's
premises without charge for such time or times as Lender deems necessary or
advisable.

         If any Event of Default shall have occurred and be continuing, each
Grantor further agrees, at Lender's request, to assemble the Collateral and make
it available to Lender at a place or places designated by Lender which are
reasonably convenient to Lender and such Grantor, whether at such Grantor's
premises or elsewhere. Until Lender is able to effect a sale, lease or other
disposition of Collateral, Lender shall have the right to hold or use
Collateral, or any part thereof, to the extent that it deems appropriate for the
purpose of preserving Collateral or its value or for any other purpose deemed
appropriate by Lender. Lender shall have no obligation to any Grantor to
maintain or preserve the rights of such Grantor as against third parties with
respect to Collateral while Collateral is in the possession of Lender. Lender
may, if it so elects, seek the appointment of a receiver or keeper to take
possession of Collateral and to enforce any of Lender's remedies with respect to
such appointment without prior notice or hearing as to such appointment. Lender
shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale to the Debt as provided in the Mezzanine Loan
Agreement, and only after so paying over such net proceeds, and after the
payment by Lender of any other amount required by any provision of law, need
Lender account for the surplus, if any, to any Grantor. To the maximum extent
permitted by applicable law, each Grantor waives all claims, damages, and
demands against Lender arising out of the repossession, retention or sale of the
Collateral except such as arise solely out of the negligence or willful
misconduct of Lender as finally determined by a court of competent jurisdiction.
Each Grantor agrees that ten (10) days' prior notice by Lender to Grantor of the
time and place of any public sale or of the time after which a private sale may
take place is reasonable notification of such matters. Grantors shall remain
liable for any deficiency if the proceeds of any sale or disposition of the
Collateral are insufficient to pay all Debt, including any reasonable attorneys'
fees and other expenses incurred by Lender to collect such deficiency.

         (b)      Except as otherwise specifically provided herein, each Grantor
hereby waives presentment, demand, protest or any notice (to the maximum extent
permitted by applicable law) of any kind in connection with this Security
Agreement or any Collateral.

                                       11

<PAGE>

         (c)      Lender shall not be required to make any demand upon, or
pursue or exhaust any of their rights or remedies against, any Grantor, any
other obligor, guarantor, pledgor or any other Person with respect to the
payment of the Debt or to pursue or exhaust any of their rights or remedies with
respect to any Collateral therefor or any direct or indirect guarantee thereof.
Lender shall not be required to marshal the Collateral or any guarantee of the
Debt or to resort to the Collateral or any such guarantee in any particular
order, and all of its and their rights hereunder or under any other Security
Document shall be cumulative. To the extent it may lawfully do so, each Grantor
absolutely and irrevocably waives and relinquishes the benefit and advantage of,
and covenants not to assert against Lender, any valuation, stay, appraisement,
extension, redemption or similar laws and any and all rights or defenses it may
have as a surety now or hereafter existing which, but for this provision, might
be applicable to the sale of any Collateral made under the judgment, order or
decree of any court, or privately under the power of sale conferred by this
Security Agreement, or otherwise.

         8.       GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY COLLATERAL. For
the purpose of enabling Lender to exercise rights and remedies under Section 7
hereof (including, without limiting the terms of Section 7 hereof, in order to
take possession of, hold, preserve, process, assemble, prepare for sale, market
for sale, sell or otherwise dispose of Collateral) at such time as Lender shall
be lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to Lender, an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to such Grantor) to use, license or
sublicense any Intellectual Property now owned or hereafter acquired by such
Grantor, and wherever the same may be located, and including in such license
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof.

         9.       LIMITATION ON LENDER'S DUTY IN RESPECT OF COLLATERAL. Lender
shall use reasonable care with respect to the Collateral in its possession or
under its control. Lender shall have no other duty as to any Collateral in its
possession or control or in the possession or control of any agent or nominee of
Lender, or any income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto.

         10.      REINSTATEMENT. This Security Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by or
against any Grantor for liquidation or reorganization, should any Grantor become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Grantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Debt, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Debt, whether as a
"voidable preference," "fraudulent conveyance," or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Debt shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.

         11.      NOTICES. Except as otherwise provided herein, all notices,
demands, consents, approvals and requests required or permitted hereunder shall
be given in writing and shall be

                                       12

<PAGE>

effective for all purposes if hand delivered or sent by (a) certified or
registered United States mail, postage prepaid, return receipt requested or (b)
expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of attempted delivery, and by telecopier (with answer back
acknowledged), addressed as follows (or at such other address and Person as
shall be designated from time to time by any party hereto, as the case may be,
in a notice to the other parties hereto in the manner provided for in this
Section 11):

                  If to Lender:               CapitalSource Finance LLC
                                              4445 Willard Avenue, 12th Floor
                                              Chevy Chase, Maryland 20815
                                              Attention: Healthcare Finance
                                              Group, Portfolio
                                                       Manager
                                              Facsimile No. (301) 841-2380

                  with a copy to:             Skadden, Arps, Slate, Meagher &
                                              Flom LLP
                                              4 Times Square
                                              New York, New York 10036
                                              Attention: David L. Nagler
                                              Facsimile No. (917) 777-2369

                  If to Company or Grantors:  c/o Fountain View, Inc.
                                              27442 Portola Parkway, Suite 200
                                              Foothill Ranch, California 92610
                                              Attention: Bill Scott
                                              Facsimile No.: (949) 282-5889

                  With a copy to:             Latham & Watkins LLP
                                              650 Tower Center Drive, Suite 2000
                                              Costa Mesa, California 92626-1925
                                              Attention: David C. Meckler, Esq.
                                              Facsimile No.: (714) 755-8290

A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy, upon the first attempted delivery on a
Business Day; or in the case of telecopy, upon sender's receipt of a
machine-generated confirmation of successful transmission after advice by
telephone to recipient that a telecopy notice is forthcoming.

         12.      SEVERABILITY. Whenever possible, each provision of this
Security Agreement shall be interpreted in a manner as to be effective and valid
under applicable law, but if any provision of this Security Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Security
Agreement. This Security Agreement is to be read, construed and applied together
with the other instruments or agreements securing, evidencing or relating to any
of the Debt which, taken together, set forth

                                       13

<PAGE>

the complete understanding and agreement of Lender and Grantors with respect to
the matters referred to herein and therein.

         13.      NO WAIVER: CUMULATIVE REMEDIES. Lender shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
Lender and then only to the extent therein set forth. A waiver by Lender of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which Lender would otherwise have had on any future
occasion. No failure to exercise nor any delay in exercising on the part of
Lender any right, power or privilege hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law. None of the
terms or provisions of this Security Agreement may be waived, altered, modified
or amended except by an instrument in writing, duly executed by Lender and
Grantors.

         14.      LIMITATION BY LAW. All rights, remedies and powers provided in
this Security Agreement may be exercised only to the extent that the exercise
thereof does not violate any applicable provision of law, and all the provisions
of this Security Agreement are intended to be subject to all applicable
mandatory provisions of law that may be controlling and to be limited to the
extent necessary so that they shall not render this Security Agreement invalid,
unenforceable, in whole or in part, or not entitled to be recorded, registered
or filed under the provisions of any applicable law.

         15.      TERMINATION OF THIS SECURITY AGREEMENT; RELEASE OF COLLATERAL.

         (a)      Subject to Section 10 hereof, this Security Agreement shall
terminate and the Collateral shall be released from the Lien created hereby upon
payment and performance in full of the Debt (other than contingent
indemnification obligations for which no claims have been asserted). Upon such
termination, and at the request and sole expense of the Grantors, Lender shall
execute and deliver such documents as the Grantors shall reasonably request to
evidence such termination.

         (b)      If any Collateral shall be sold, conveyed, or disposed of in
compliance with the provisions of the this Security Agreement, the Lien of the
Lender pursuant to this Security Agreement on such Collateral shall be released
automatically. Lender shall execute deliver such documents as any Grantor shall
reasonably request at the cost of Grantor to evidence such release.

         (c)      If any Grantor (other than the Company) shall cease to be a
Subsidiary of the Company in a transaction that complies with the provisions of
the Indenture, then such Grantor shall automatically cease to be a Grantor under
this Security Agreement and shall be released from all of its obligations under
this Security Agreement and the Collateral of such Grantor shall be release from
the created hereby. Lender shall execute deliver such documents as the

                                       14

<PAGE>

Company or such Grantor shall reasonably request at the cost of Grantor to
evidence such release.

         16.      SUCCESSORS AND ASSIGNS. This Security Agreement and all
obligations of Grantors hereunder shall be binding upon the successors and
assigns of each Grantor (including any debtor-in-possession on behalf of such
Grantor) and shall, together with the rights and remedies of Lender, inure to
the benefit of Lender, all future holders of any instrument evidencing any of
the Debt and their respective successors and assigns. No sales of
participations, other sales, assignments, transfers or other dispositions of any
agreement governing or instrument evidencing the Debt or any portion thereof or
interest therein shall in any manner affect the Lien granted to Lender
hereunder. No Grantor may assign, sell, hypothecate or otherwise transfer any
interest in or obligation under this Security Agreement.

         17.      COUNTERPARTS. This Security Agreement may be executed in any
number of separate counterparts, each of which shall collectively and separately
constitute one agreement.

         18.      GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT
AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THAT STATE, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. EACH GRANTOR HEREBY CONSENTS AND AGREES THAT THE STATE
OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK, SHALL
HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
GRANTORS AND LENDER PERTAINING TO THIS SECURITY AGREEMENT OR THE INDENTURE OR
ANY OF THE OTHER INSTRUMENTS OR AGREEMENTS SECURING, EVIDENCING OR RELATING TO
ANY OF THE DEBT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS SECURITY
AGREEMENT OR ANY OF THE OTHER INSTRUMENTS OR AGREEMENTS SECURING, EVIDENCING OR
RELATING TO ANY OF THE DEBT, PROVIDED, THAT LENDER AND GRANTORS ACKNOWLEDGE THAT
ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF
NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK, AND, PROVIDED, FURTHER, NOTHING IN
THIS SECURITY AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER. EACH GRANTOR EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY NEW YORK COURT, AND EACH GRANTOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY
HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF
AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH GRANTOR HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR
SUIT AND AGREES THAT

                                       15

<PAGE>

SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL ADDRESSED TO SUCH GRANTOR AT THE ADDRESS SET FORTH ON SCHEDULE
III TO THE SECURITY AGREEMENT OR AT SUCH OTHER ADDRESS AS SUCH GRANTEE SHALL
STATE IN NOTICES DELIVERED PURSUANT TO THIS SECURITY AGREEMENT AND THAT SERVICE
SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

         19.      WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
DISPUTES ARISING HEREUNDER OR RELATING HERETO BE RESOLVED BY A JUDGE APPLYING
SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG LENDER AND GRANTORS
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED IN CONNECTION WITH, THIS SECURITY AGREEMENT OR ANY OF THE OTHER
INSTRUMENTS OR AGREEMENTS SECURING, EVIDENCING OR RELATING TO ANY OF THE DEBT OR
THE TRANSACTIONS RELATED HERETO OR THERETO.

         20.      SECTION TITLES. The Section titles contained in this Security
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.

         21.      NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Security Agreement. In the event
an ambiguity or question of intent or interpretation arises, this Security
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Security Agreement.

         22.      ADVICE OF COUNSEL. Each of the parties represents to each
other party hereto that it has discussed this Security Agreement and,
specifically, the provisions of Section 18 and, Section 19. with its counsel.

         23.      BENEFIT OF HOLDERS. All Liens granted or contemplated hereby
shall be for the benefit of Lender and all proceeds or payments realized from
Collateral in accordance herewith shall be applied to the Debt in accordance
with the terms of the Mezzanine Loan Agreement.

                                      * * *

                                       16

<PAGE>

IN WITNESS WHEREOF, the parties hereto has caused this Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.

"COMPANY"                  FOUNTAIN VIEW, INC.
"GRANTORS"                 ALEXANDRIA CARE CENTER, INC.
                           ALTA CARE CENTER, LLC
                           ANAHEIM TERRACE CARE CENTER, LLC
                           BAY CREST CARE CENTER, LLC
                           BRIER OAK ON SUNSET, INC.
                           CARSON SENIOR ASSISTED LIVING, LLC
                           ELMCREST CARE CENTER, INC.
                           FOUNTAIN VIEW SUBACUTE AND NURSING CENTER, INC.
                           HALLMARK INVESTMENT GROUP, INC.
                           HALLMARK REHABILITATION GP, LLC
                           HALLMARK REHABILITATION LP
                                    By: Hallmark Rehabilitation LLC, its general
                                        partner

                           HANCOCK PARK REHABILITATION CENTER, INC.
                           HANCOCK PARK SENIOR ASSISTED LIVING, INC.
                           HEMET SENIOR ASSISTED LIVING, LLC
                           LEASEHOLD RESOURCE GROUP, LLC
                           MONTEBELLO CARE CENTER, LLC
                           RIO HONDO SUBACUTE AND NURSING CENTER, INC.
                           ROYALWOOD CARE CENTER, LLC
                           SHARON CARE CENTER, LLC
                           SHG PROPERTY RESOURCES, LLC
                           SHG INVESTMENTS, LLC
                           SKILLED HEALTHCARE, LLC
                           SUMMIT CARE CORPORATION
                           SUMMIT CARE TEXAS MANAGEMENT, LLC
                           SUMMIT CARE PHARMACY, INC.
                           SUMMIT CARE TEXAS, L.P.
                                    By: Summit Care Texas Management, LLC, its
                                        general partner
                           SYCAMORE PARK CARE CENTER, INC.
                           WOODLAND CARE CENTER, LLC

                           By: \s\ Roland G. Rapp
                               --------------------------------------------
                           Name: Roland G. Rapp
                           Title: Secretary

                                       17

<PAGE>

                           Address for Notices:
                           -------------------
                           Fountain View, Inc.
                           27442 Portola Parkway, Suite 200
                           Foothill Ranch, California 92610
                           Attention: General Counsel
                           Telephone: (949) 282-5822
                           Facsimile: (949) 282-5820
                           E-Mail: rrapp@fountainviewinc.net

                                       18

<PAGE>

                           CAPITALSOURCE FINANCE LLC

                           By: \s\ James J. Pieczynski
                               -----------------------------------
                           Name: James J. Pieczynski
                           Title: Director

                                       19

<PAGE>

                                   SCHEDULE A

         "Account Debtor" means any Person who may become obligated to any
Grantor under, with respect to, or on account of, an Account, Chattel Paper or
General Intangibles (including a payment intangible).

         "Accounts" shall mean all "accounts" (as defined in the Code) of any
Grantor, including without limitation, accounts, accounts receivables, monies
due or to become due and obligations in any form (whether arising in connection
with contracts, contract rights, Instruments, General Intangibles or Chattel
Paper), in each case whether arising out of goods sold or services rendered or
from any other transaction and whether or not earned by performance, now or
hereafter in existence, and all documents of title or other documents
representing any of the foregoing, and all collateral security and guaranties of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.

         "Capital Lease Obligation" of any Person means the obligation to pay
rent or other payment amounts under a lease of (or other Indebtedness
arrangements conveying the right to use) real or personal property of such
Person which is required to be classified and accounted for as a capital lease
or a liability on the face of a balance sheet of such Person in accordance with
GAAP. The Stated Maturity of such obligation shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty.

         "Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.

         "CapitalSource" shall mean CapitalSource Finance LLC, a Delaware
limited liability company.

         "Chattel Paper" means any "chattel paper" as such term is defined in
the Code, including electronic chattel paper, now owned or hereafter acquired by
any Grantor.

         "Code" means the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of New York; provided, that to the
extent that the Code is used to define any term in the Security Agreement and
such term is defined differently in different Articles or Divisions of the Code,
the definition of such term contained in Article or Division 9 shall govern;
provided, further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection or priority of, or remedies with
respect to, the Lender's Lien on any Collateral is governed by the Uniform
Commercial Code as enacted and in effect in a jurisdiction other than the State
of New York, the term "Code" shall mean the Uniform Commercial Code as enacted
and in effect in such other jurisdiction solely for purposes of the provisions
thereof relating to such attachment, perfection, priority or remedies and for
purposes of definitions related to such provisions.

                                        1

<PAGE>

         "Contracts" shall mean all "contracts," as such term is defined in the
Code, now owned or hereafter acquired by any Grantor, in any event, including
all contracts, undertakings, or agreements (other than rights evidenced by
Chattel Paper, Documents or Instruments) in or under which any Grantor may now
or hereafter have any right, title or interest, including any agreement relating
to the terms of payment or the terms of performance of any Account.

         "Control Letter" means a letter agreement between Lender and (i) the
issuer of uncertificated securities with respect to uncertificated securities in
the name of any Grantor, (ii) a securities intermediary with respect to
securities, whether certificated or uncertificated, securities entitlements and
other financial assets held in a securities account in the name of any Grantor,
(iii) a futures commission merchant or clearing house with respect to commodity
accounts and commodity contracts held by any Grantor, whereby, among other
things, the issuer, securities intermediary or futures commission merchant
disclaims any security interest in the applicable financial assets, acknowledges
the Lien of Lender, on such financial assets, and agrees to follow the
instructions or entitlement orders of Administrative Agent without further
consent by the affected Grantor.

         "Copyright License" shall mean any and all rights now owned or
hereafter acquired by any Grantor under any written agreement granting any right
to use any Copyright or Copyright registration.

         "Copyrights" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all copyrights and general intangibles of like
nature (whether registered or unregistered), now owned or existing or hereafter
adopted or acquired, all registration and recordings thereof, and all
applications in connection therewith, including all registrations, recordings
and applications in the United States Copyright Office or in any similar office
or agency of the United States, any state or territory thereof, or any other
country or any political subdivision thereof, and (b) all reissues, extensions
or renewals thereof.

         "Debt" shall mean the outstanding principal amount set forth in, and
evidenced by, the Mezzanine Loan Agreement and the Mezzanine Note together with
all interest accrued and unpaid thereon and all other sums due to Lender in
respect of the Mezzanine Loan under the Mezzanine Note, the Mezzanine Loan
Agreement and the other Mezzanine Loan Documents.

         "Deposit Account" shall mean all bank or other depository accounts of
any Grantor.

         "Documents" means all "documents" as such term is defined in the Code,
now owned or hereafter acquired by any Grantor, wherever located.

         "Equipment" means all "equipment" as such term is defined in the Code,
now owned or hereafter acquired by any Grantor, wherever located and, in any
event, including all such Grantor's machinery and equipment, including
processing equipment, conveyors, machine tools, data processing and computer
equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together-

                                        2

<PAGE>

with all additions and accessions thereto, replacements therefor, all parts
therefor, all substitutes for any of the foregoing, fuel therefor, and all
manuals, drawings, instructions, warranties and rights with respect thereto, and
all products and proceeds thereof and condemnation awards and insurance proceeds
with respect thereto.

         "Fixtures" means all "fixtures" as such term is defined in the Code,
now owned or hereafter acquired by any Grantor.

         "General Intangibles" means all "general intangibles" as such term is
defined in the Code, now owned or hereafter acquired by any Grantor, including
all right, title and interest that such Grantor may now or hereafter have in or
under any Contract, all payment intangibles, customer lists, Licenses,
Copyrights, Trademarks, Patents, and all applications therefor and reissues,
extensions or renewals thereof, rights in Intellectual Property, interests in
partnerships, joint ventures and other business associations, licenses, permits,
copyrights, trade secrets, proprietary or confidential information, inventions
(whether or not patented or patentable), technical information, procedures,
designs, knowledge, know-how, software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials and records, goodwill
(including the goodwill associated with any Trademark or Trademark License), all
rights and claims in or under insurance policies (including insurance for fire,
damage, loss and casualty, whether covering personal property, real property,
tangible rights or intangible rights, all liability, life, key man and business
interruption insurance, and all unearned premiums), uncertificated securities,
choses in action, deposit, checking and other bank accounts, rights to receive
tax refunds and other payments, rights to receive dividends, distributions,
cash, Instruments and other property in respect of or in exchange for pledged
Stock and Investment Property, rights of indemnification, all books and records,
correspondence, credit files, invoices and other papers, including without
limitation all tapes, cards, computer runs and other papers and documents in the
possession or under the control of such Grantor or any computer bureau or
service company from time to time acting for such Grantor.

         "Goods" means all "goods" as such term is defined in the Code, now
owned or hereafter acquired by any Grantor, wherever located, including embedded
software to the extent included in "goods" as defined in the Code, manufactured
homes, standing timber that is cut and removed for sale and unborn young of
animals.

         "Government Accounts" shall be defined to mean all Accounts arising out
of or with respect to any Government Contract.

         "Government Contracts" shall be defined to mean all contracts with any
Government Authority, and all amendments thereto.

         "Governmental Authority" shall mean any federal, state, municipal,
national, local or other governmental department, court, commission, board,
bureau, agency or instrumentality or political subdivision thereof, or any
entity or officer exercising executive, legislative or judicial, regulatory or
administrative functions of or pertaining to any government or any court, in
each case, whether of the United States or a state, territory or possession
thereof, a foreign sovereign entity or country or jurisdiction or the District
of Columbia.

                                        3

<PAGE>

         "Highbridge" shall mean Highbridge/Zwirn Opportunity Fund LP .

         "Instruments" means all "instruments" as such term is defined in the
Code, now owned or hereafter acquired by any Grantor, wherever located, and, in
any event, including all certificated securities, all certificates of deposit,
and all promissory notes and other evidences of indebtedness, other than
instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.

         "Intellectual Property" shall mean any and all Licenses, Patents,
Copyrights, Trademarks, trade secrets and customer lists.

         "Intercreditor Agreement" shall mean that certain Intercreditor
Agreement dated as of the date hereof by and among CapitalSource Finance LLC, a
Delaware limited liability company, as agent for itself and the other lenders
under the Revolving Credit Agreement and the Mezzanine Loan Agreement, the
Collateral Agent, AmerisourceBergen Drug Corporation, the Company and each of
the obligors signatory thereto.

         "Inventory" shall mean all "inventory" (as defined in the Code) of any
Grantor now owned or hereafter acquired, and all documents of title or other
documents representing any of the foregoing, and all collateral security and
guaranties of any kind, now or hereafter in existence, given by any Person with
respect to any of the foregoing.

         "Investment Property" means all "investment property" as such term is
defined in the Code, now owned or hereafter acquired by any Grantor, wherever
located, including (i) all securities, whether certificated or uncertificated,
including stocks, bonds, interests in limited liability companies, partnership
interests, treasuries, certificates of deposit, and mutual fund shares; (ii) all
securities entitlements of any Grantor, including the rights of any Grantor to
any securities account and the financial assets held by a securities
intermediary in such securities account and any free credit balance or other
money owing by any securities intermediary with respect to that account; (iii)
all securities accounts of any Grantor; (iv) all commodity contracts of any
Grantor; and (v) all commodity accounts held by any Grantor.

         "Letter-of-Credit Rights" means all "letter-of-credit rights" as such
term is defined in the Code, now owned or hereafter acquired by any Grantor,
including rights to payment or performance under a letter of credit, whether or
not such Grantor, as beneficiary, has demanded or is entitled to demand payment
or performance.

         "License" shall mean any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by any Grantor.

         "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).

                                        4

<PAGE>

         "Mezzanine Borrower" means, collectively, SHG Property Resources, LLC,
a Delaware limited liability company and SHG Investments, LLC a Delaware limited
liability company, jointly and severally.

         "Mezzanine Loan Documents" means, collectively, the Loan Agreement, the
Mezzanine Note, the Pledge Agreement, the Environmental Indemnity, the Guaranty,
the Pledgor Guaranty, the Mezzanine Cash Management Agreement, the Intercreditor
Agreement, the Subordination of Management Agreement, and all other documents
executed and/or delivered in connection with the Loan, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

         "Mezzanine Loan Facility" means a $23,000,000 aggregate principal
amount term loan facility, pursuant to the Mezzanine Loan Agreement, including
any related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, as such may be amended, modified, renewed,
refunded, replaced (within 2 Business Days) or refinanced, but not increased,
from time to time.

         "Mezzanine Loan Agreement" shall mean that certain Loan Agreement
between CapitalSource, as agent for the Mezzanine Lenders (as defined therein)
and the Mezzanine Borrower thereunder, in an outstanding aggregate principal
amount not to exceed $23,000,000, including any related guarantees, collateral
documents, instruments and agreements, as such may be amended, modified,
renewed, refunded, replaced (within 2 Business Days) or refinanced, but not
increased, from time to time.

         "Mezzanine Note" shall mean that certain Promissory Note, dated as of
the date hereof, in the principal amount of Twenty Three Million Dollars
($23,000,000.00) made by Mezzanine Borrower in favor of Lender, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time.

         "Patent License" shall mean rights under any written agreement now
owned or hereafter acquired by any Grantor granting any right with respect to
any invention on which a patent is in existence.

         "Patents" shall mean all of the following in which any Grantor now
holds or hereafter acquires any interest: (a) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or Territory thereof, or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.

         "Permits" shall mean collectively all licenses, leases, powers,
permits, franchises, certificates, authorizations, approvals, certificates of
need, provider numbers and other rights.

         "Proceeds" means "proceeds" as such term is defined in the Code,
including (a) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to any Grantor from time to time with respect to any of the
Collateral, (b) any and all payments (in any form whatsoever) made or due and
payable to any Grantor from time to time in connection with any requisition,

                                        5

<PAGE>

confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any Governmental Authority (or any Person acting under color of
governmental authority), (c) any claim of any Grantor against third parties (i)
for past, present or future infringement of any Patent or Patent License or (ii)
for past, present or future infringement or dilution of any Copyright, Copyright
License, Trademark or Trademark License, or for injury to the goodwill
associated with any Trademark or Trademark License, (d) any recoveries by any
Grantor against third parties with respect to any litigation or dispute
concerning any of the Collateral including claims arising out of the loss or
nonconformity of, interference with the use of, defects in, or infringement of
rights in, or damage to, Collateral, (e) all amounts collected on, or
distributed on account of, other Collateral, including dividends, interest,
distributions and Instruments with respect to Investment Property and pledged
stock, and (f) any and all other amounts, rights to payment or other property
acquired upon the sale, lease, license, exchange or other disposition of
Collateral and all rights arising out of Collateral.

         "Revolving Credit Facility" means the revolving credit facilities in an
outstanding aggregate principal amount not to exceed $32,000,000.00 evidenced by
the Revolving Credit and Security Agreement dated as of ______, 2003, by and
among the Guarantors, the Company and CapitalSource Finance LLC and the
Revolving Credit and Security Agreement dated as of _________, 2003, by and
among the borrowers thereunder, and CapitalSource, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, as such may be amended, modified, renewed, refunded,
replaced (within 2 Business Days) or refinanced, but not increased, from time to
time.

         "Senior Mortgage Loan" means that certain loan issued pursuant to that
certain Loan Agreement between Column Financial, Inc., a Delaware corporation
and the borrowers thereunder, in an outstanding aggregate principal amount not
to exceed $95,000,000, including any related guarantees, collateral documents,
instruments and agreements, as such may be amended, modified, renewed, refunded,
replaced (within 2 Business Days) or refinanced, but not increased, from time to
time.

         "Software" means all "software" as such term is defined in the Code,
now owned or hereafter acquired by any Grantor, other than software embedded in
any category of goods, including all computer programs and all supporting
information provided in connection with a transaction related to any program.

         "Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).

         "Subordination of Management Agreement" shall mean that certain
Subordination of Interim Management Agreement and Interim Subleases (Mezzanine)
dated as of August 19, 2003, by Summit Care Corporation, Fountainview Senior
Assisted Living, LLC, Spring Senior

                                        6

<PAGE>

Assisted Living, LLC, Carson Senior Assisted Living, LLC, Hemet Senior Assisted
Living, LLC and CapitalSource Finance LLC.

         "Summit Care Pharmacy" means Summit Care Pharmacy, Inc., a Restricted
Subsidiary of the Company.

         "Supporting Obligations" means all "supporting obligations" as such
term is defined in the Code, including letters of credit and guaranties issued
in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments or Investment Property.

         "Trademark License" shall mean rights under any written agreement now
owned or hereafter acquired by any Grantor granting any right to use any
Trademark.

         "Trademarks" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, trade names, corporate names,
business names, trade styles, service marks, logos, other source or business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of like nature (whether registered or
unregistered), now owned or existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state or territory thereof, or any other country or any
political subdivision thereof; (b) all reissues, extensions or renewals thereof;
and (c) all goodwill associated with or symbolized by any of the foregoing.

         "Uniform Commercial Code Jurisdiction" means any jurisdiction that had
adopted all or substantially all of Article 9 as contained in the 2000 Official
Text of the Uniform Commercial Code, as recommended by the National Conference
of Commissioners on Uniform State Laws and the American Law Institute, together
with any subsequent amendments or modifications to the Official Text.

                                        7

<PAGE>

                                   SCHEDULE I

                                       TO

                               SECURITY AGREEMENT

                              FILING JURISDICTIONS

                                    Delaware

                                   California

                                      Texas

                                        1

<PAGE>

                                   SCHEDULE II

                                       TO

                               SECURITY AGREEMENT

                                   INSTRUMENTS

                                       AND

                                  CHATTEL PAPER

                                      None.

                                        2
<PAGE>

                                  SCHEDULE III
                                       TO
                               SECURITY AGREEMENT

            SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL AND RECORDS

I.       Grantor's official name, type of entity, organizational identification
         number, and state of organization/incorporation:

<TABLE>
<CAPTION>
                                                                  STATE OF
                                               ORGANIZATIONAL   ORGANIZATION/
       OFFICIAL NAME       TYPE OF ENTITY           ID #        INCORPORATION
-----------------------------------------------------------------------------
<S>                       <C>                  <C>              <C>
Fountain View, Inc.       corporation             2772638        Delaware

-----------------------------------------------------------------------------
Alexandria Care Center,   corporation             C1714192       California
Inc.

-----------------------------------------------------------------------------
Alta Care Center, LLC     limited liability       3677854        Delaware
                          company

-----------------------------------------------------------------------------
Anaheim Terrace Care      limited liability       3677853        Delaware
Center, LLC               company

-----------------------------------------------------------------------------
Bay Crest Care Center,    limited liability       3677857        Delaware
LLC                       company

-----------------------------------------------------------------------------
Brier Oak On Sunset,      corporation             C1459020       California
Inc.

-----------------------------------------------------------------------------
Carson Senior Assisted    limited liability       3677859        Delaware
Living, LLC               company

-----------------------------------------------------------------------------
Elmcrest Care Center,     corporation             C1477539       California
Inc.

-----------------------------------------------------------------------------
Fountain View Subacute    corporation             C0529092       California
And Nursing Center, Inc.

-----------------------------------------------------------------------------
Hallmark Investment       corporation             2772640        Delaware
Group, Inc.

-----------------------------------------------------------------------------
Hallmark Rehabilitation   limited liability       3678206        Delaware
GP, LLC                   company

-----------------------------------------------------------------------------
Hallmark Rehabilitation,  limited partnership     3677880        Delaware
LP

-----------------------------------------------------------------------------
Hancock Park              corporation             C1222398       California
Rehabilitation Center,
Inc.

-----------------------------------------------------------------------------
Hancock Park Senior       corporation             C1222399       California
Assisted Living, Inc.
-----------------------------------------------------------------------------
</TABLE>

                                        1
<PAGE>

<TABLE>
<S>                       <C>                     <C>            <C>
Hemet Senior Assisted     limited liability       3677860        Delaware
Living, LLC               company

----------------------------------------------------------------------------
Leasehold Resource        limited liability       3677795        Delaware
Group, LLC                company

----------------------------------------------------------------------------
Montebello Care Center,   limited liability       3677862        Delaware
LLC                       company

----------------------------------------------------------------------------
Rio Hondo Subacute And    corporation             C1482166       California
Nursing Center, Inc.

----------------------------------------------------------------------------
Royalwood Care Center,    limited liability       3677863        Delaware
LLC                       company

----------------------------------------------------------------------------
Sharon Care Center, LLC   limited liability       3677865        Delaware
                          company

----------------------------------------------------------------------------
Skilled Healthcare, LLC   limited liability       3675398        Delaware
                          company

----------------------------------------------------------------------------
Summit Care Corporation   corporation             C1080507       California

----------------------------------------------------------------------------
Summit Care Texas         limited liability       3678960        Delaware
Management, LLC           company

----------------------------------------------------------------------------
Summit Care Pharmacy,     corporation             C1151693       California
Inc.

----------------------------------------------------------------------------
Summit Care Texas, L.P.   limited partnership     9948910        Texas

----------------------------------------------------------------------------
Sycamore Park Care        corporation             C0495471       California
Center, Inc.

----------------------------------------------------------------------------
Woodland Care Center,     limited liability       3677866        Delaware
LLC                       company

----------------------------------------------------------------------------
SHG Property Resources,   limited liability       3677918        Delaware
LLC                       company

----------------------------------------------------------------------------
SHG Investments, LLC      limited liability       3677832        Delaware
                          company
----------------------------------------------------------------------------
</TABLE>

II.      Chief Executive Office and principal place of business:

                  27442 Portola Parkway, Suite 200, Foothill Ranch, California
                  92610

                  For Summit Care Texas, L.P.: 19365 FM 2252, Suite 5, Garden
                  Ridge, TX 78266

                                       2
<PAGE>

III.     Corporate Offices:

                  27442 Portola Parkway, Suite 200, Foothill Ranch, California
                  92610

                  For Summit Care Texas, L.P.: 19365 FM 2252, Suite 5, Garden
                  Ridge, TX 78266

IV.      Warehouses:

                  None

V.       Other Premises at which Collateral is Stored or Located:

         1.       27442 Portola Parkway, Suite 200, Foothill Ranch, CA 92610

         2.       2600 W. Magnolia Blvd., Burbank, CA 91505

         3.       1515 N. Alexandria Avenue, Los Angeles, CA 90027

         4.       5154 Sunset Blvd., Los Angeles, CA 90027

         5.       3111 Santa Anita Avenue, Los Angeles, CA 91733

         6.       505 N La Brea Avenue, Los Angeles, CA 90036

         7.       515 N. La Brea Avenue, Los Angeles, CA 90036

         8.       5310 Fountain Avenue, Los Angeles, CA 90029

         9.       273 E. Beverly Blvd., Montebello, CA 90640

         10.      4585 N. Figueroa Street, Los Angeles, CA 90065

         11.      1036 W. Beverly Blvd., Montebello, CA 90640

         12.      141 S. Knott Avenue, Anaheim, CA 92804

         13.      3750 Garnet Street, Torrance, CA 90503

         14.      13075 Blackbird, Garden Grove, CA 92643

         15.      22520 Maple Avenue, Torrance, CA 90505

         16.      8167 W. Third Street, Los Angeles, CA 90048

         17.      7120 Corbin Avenue, Reseda, CA 91335

         18.      345 East Carson St., Carson, CA 90745

         19.      1353 E. Devonshire Avenue, Hemet, CA 92544

         20.      19365 FM 2252, Suite 5, Garden Ridge, TX 78266

         21.      222 E. Huntington Drive #111, Monrovia, CA 91016

         22.      22607 Old Canal Road, Yorba Linda, CA 92887

         23.      19365 FM 2252, Suite 5, Garden Ridge, TX 78266

                                        3
<PAGE>

VI.      Locations of Records Concerning Collateral:

         27442 Portola Parkway, Suite 200, Foothill Ranch, California 92610

         19365 FM 2252, Suite 5, Garden Ridge, TX 78266

         2721 Michelle Drive, Tustin, California 92780

         26862 Vista Terrace, Lake Forest, California 92630

                                       4
<PAGE>

                                     PATENTS

                                      None.

                                       5
<PAGE>

                                   TRADEMARKS

<TABLE>
<CAPTION>
    TRADEMARK OR SERVICE MARK                HOLDER            REGISTRATION DATE    REGISTRATION NO.
    -------------------------                ------            -----------------    ----------------
<S>                                 <C>                        <C>                  <C>
Design of man with outstretched     Summit Care Corporation        10/20/98             2197216
arms standing on top of a
medicinal tablet

---------------------------------------------------------------------------------------------------
"Innovative Solutions In Health     Summit Care Corporation        10/06/98             2193214
Care"

---------------------------------------------------------------------------------------------------
"RXPertise"                         Summit Care Corporation        03/03/98             2140771

---------------------------------------------------------------------------------------------------
"SCP Systems"                       Summit Care Corporation        03/20/01             2436075

---------------------------------------------------------------------------------------------------
"Skilled Care Pharmacy"             Summit Care Corporation        03/07/00             2325082

---------------------------------------------------------------------------------------------------
"SkilledCare Pharmacy" (including   Summit Care Corporation        03/07/00             2325083
design of man with outreached
arms standing on top of a
medicinal tablet)

---------------------------------------------------------------------------------------------------
</TABLE>

                                       6
<PAGE>

                         LICENSED INTELLECTUAL PROPERTY

                                      None.

                                        7

<PAGE>

                                   COPYRIGHTS

                                      None.

                                        8
<PAGE>

                                    EXHIBIT A

                                POWER OF ATTORNEY

         This Power of Attorney is executed and delivered by [FOUNTAIN VIEW,
INC., A DELAWARE CORPORATION OR INSERT SUBSIDIARY NAME] ("Grantor"), to
__________ (hereinafter referred to as "Attorney"), as Lender under that certain
Security Agreement, dated as of __________, 2003, and other related documents
(as amended from time to time, the "Security Documents"). No person to whom this
Power of Attorney is presented, as authority for Attorney to take any action or
actions contemplated hereby, shall be required to inquire into or seek
confirmation from Grantor as to the authority of Attorney to take any action
described below (but Lender shall be required to request to such Person that it
is entitled to take such action pursuant to the Security Agreement), or as to
the existence of or fulfillment of any condition to this Power of Attorney,
which is intended to grant to Attorney unconditionally the authority to take and
perform the actions contemplated herein, and Grantor irrevocable waives any
right to commence any suit or action, in law or equity, against any person or
entity which acts in reliance upon or acknowledges the authority granted under
this Power of Attorney. [The power of attorney granted hereby is subject to that
certain Intercreditor Agreement dated as of ___________ ____, 2003 by and among
CapitalSource Finance LLC, a Delaware limited liability company, as agent for
itself and the other lenders under that certain Revolving Loan Agreement, as
defined therein, the Collateral Agent, Amerisourcebergen Drug Corporation, the
Company and each of the obligors signatory thereto, and to the extent that any
provisions contained herein are inconsistent, the Intercreditor Agreement shall
control.] The power of attorney granted hereby is coupled with an interest, and
may not be revoked or canceled by Grantor without Attorney's written consent.

         Grantor hereby irrevocably constitutes and appoints Attorney (and all
officers, employees or agents designated by Attorney), with full power of
substitution, as Grantor's true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Grantor and in the
name of Grantor or in its own name, from time to time in Attorney's discretion,
to take any and all appropriate action and to execute and deliver any and all
documents and instruments which may be necessary or desirable to perfect the
Lien of Attorney granted pursuant to the Security Agreement, and without
limiting the generality of the foregoing, Grantor hereby grants to Attorney the
power and right, on behalf of Grantor, without notice to or assent by Grantor,
and at any time, to do the following: (a) change the mailing address of Grantor,
open a post office box on behalf of Grantor, open mail for Grantor, and ask,
demand, collect, give acquittances and receipts for, take possession of, endorse
any invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, and notices in
connection with any property of Grantor; (b) effect any repairs to any asset of
Grantor, or continue or obtain any insurance and pay all or any part of the
premiums therefor and costs thereof, and make, settle and adjust all claims
under such policies of insurance, and make all determinations and decisions with
respect to such policies; (c) pay or discharge any taxes, liens, security
interests, or other encumbrances levied or placed on or threatened against
Grantor or its property other than those being contested by Grantor in
accordance with the Security Agreement; (d) defend any suit, action or

<PAGE>

proceeding brought against Grantor if Grantor does not defend such suit, action
or proceeding or if Attorney believes that Grantor is not pursuing such defense
in a manner that will maximize the recovery to Attorney, and settle, compromise
or adjust any suit, action, or proceeding described above and, in connection
therewith, give such discharges or releases as Attorney may deem appropriate;
(e) file or prosecute any claim, litigation, suit or proceeding in any court of
competent jurisdiction or before any arbitrator, or take any other action
otherwise deemed appropriate by Attorney for the purpose of collecting any and
all such moneys due to Grantor whenever payable and to enforce any other right
in respect of Grantor's property; (f) communicate in its own name with any party
to any Contract with regard to the assignment of the right, title and interest
of such Grantor in and under the Contracts and other matters relating thereto;
(g) to file such financing statements and amendments thereto and continuation
statements with respect to the Security Agreement, as Lender may deem
appropriate to perfect the security interest in the collateral granted pursuant
to the Security Agreement; and (h) execute, in connection with any sale provided
for in any Security Document, any endorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral and to otherwise direct
such sale or resale, all as though Attorney were the absolute owner of the
property of Grantor for all purposes, and to do, at Attorney's option and
Grantor's expense, at any time or from time to time, all acts and other things
that Attorney reasonably deems necessary to perfect, preserve, or realize upon
Grantor's property or assets and Attorney's Liens thereon, all as fully and
effectively as Grantor might do. Grantor hereby ratifies, to the extent
permitted by law, all that said Attorney shall lawfully do or cause to be done
by virtue hereof.

         IN WITNESS WHEREOF, this Power of Attorney is executed by Grantor, and
Grantor has caused its seal to be affixed pursuant to the authority of its board
of directors this ____day of __________, 2003.

                                    [INSERT NAME]

                                    By:__________________________________
                                    Name:
                                    Title:

                                       2

<PAGE>

                            NOTARY PUBLIC CERTIFICATE

         On this _____ day of ______________, 2003, [OFFICER'S NAME] who is
personally known to me appeared before me in his/her capacity as the [TITLE] of
[_______________] ("Grantor") and executed on behalf of Grantor the Power of
Attorney in favor of [__________] to which this Certificate is attached.

                                    _____________________________________
                                    Notary Public

<PAGE>
                                   SCHEDULE 1

                           Subsidiaries of the Company

         1.       SHG Property Resources, LLC

         2.       SHG Investments, LLC

         3.       Fountain View, Inc.

         4.       Summit Care Corporation

         5.       Summit Care Pharmacy, Inc.

         6.       Alexandria Care Center, Inc.

         7.       Brier Oak on Sunset, Inc.

         8.       Elmcrest Care Center, Inc.

         9.       Hancock Park Rehabilitation Center, Inc.

         10.      Hancock Park Senior Assisted Living, Inc.

         11.      Fountain View Subacute and Nursing Center, Inc.

         12.      Rio Hondo Subacute and Nursing Center, Inc.

         13.      Sycamore Park Care Center, Inc.

         14.      Anaheim Terrace Care Center, LLC

         15.      Bay Crest Care Center, LLC

         16.      Alta Care Center, LLC

         17.      Royalwood Care Center, LLC

         18.      Sharon Care Center, LLC

         19.      Woodland Care Center, LLC

         20.      Carson Senior Assisted Living, LLC

         21.      Hemet Senior Assisted Living, LLC

         22.      Montebello Care Center, LLC

         23.      Summit Care Texas, L.P.

         24.      Summit Care Texas Management, LLC

         25.      Hallmark Investment Group, Inc.

         26.      Hallmark Rehabilitation GP, LLC

         27.      Hallmark Rehabilitation, LP

         28.      Leasehold Resource Group, LLC

         29.      Skilled Healthcare, LLC

                                        2

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