AMENDMENT ONE
                                       TO
                      RHEEM VALLEY ASSET PURCHASE AGREEMENT

         This Amendment Number One to Rheem Valley Asset Purchase Agreement (the
"Amendment"), is dated as of April 14, 1999, and entered into by and among
PARACELSUS CONVALESCENT HOSPITALS, INC., a California corporation ("PCHI"),
PARACELSUS REAL ESTATE CORPORATION, a California corporation ("PREC") (PCHI and
PREC are also sometimes referred to herein individually as, a "Seller" and,
collectively as, the "Sellers"), and SUNLAND ASSOCIATES, INC., a Tennessee
corporation (the "Buyer") or its assigns as herein permitted.

                                   WITNESSETH:

         WHEREAS, PCHI, PREC and Buyer entered into that one certain Asset
Purchase Agreement dated as of March 15, 1999 (the "Purchase
Agreement")providing for among other things the sale by PCHI and PREC and the
purchase by Buyer of Sellers' operations of the skilled nursing facility named
Rheem Valley Convalescent Hospital, located at 348 Rheem Boulevard, Moraga,
California 94556 ("Rheem Valley") ; and

         WHEREAS, PCHI, PREC and Buyer desire to amend certain of the terms of
the Purchase Agreement;

         NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, and covenants stated in this Agreement, and the
other good and valuable consideration exchanged between the parties, the receipt
and sufficiency of which is hereby acknowledged, the parties intending to be
legally bound agree as follows:

1.       DEFINED TERMS. Unless otherwise defined herein, terms used herein as
         defined terms shall have the meaning given them in the Purchase
         Agreement.

2.       SECTION 5.1. CLOSING DATE." Section 5.1. is hereby amended to provide
         that the "Scheduled Closing Date" shall be June 15, 1999, or such other
         date mutually agreed upon in writing by the parties.

3.       SECTION 9.16. "CONSENTS TO ASSUMPTION OF LEASES." Section 9.16 is
         hereby amended to read as follows:

                  "a. Buyer shall assist and cooperate with Seller and its
                  representatives in obtaining, by the Closing Date the consents
                  by the lessor under the Rheem Valley Lease to the assumption
                  of such lease by Buyer.

                  b. If Seller is unable after using all commercially reasonable
                  means, to obtain the termination and release required in
                  Section 9.16.a. by the Closing Date, then Buyer shall be
                  deemed to have terminated this Agreement under Section
                  13.1.a."

4.       MISCELLANEOUS.

         a.       ENTIRE AGREEMENT. This Amendment, constitutes the entire
         agreement between the parties




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         relating to the subject matter hereof, and supersedes all previous
         agreements, written or oral. If there shall be any conflict between
         the terms or interpretation of this Amendment and the terms of the
         Purchase Agreement, the terms of this Amendment shall govern. Headings
         are for convenience of reference only and shall not affect the
         interpretation or construction of this Amendment. All exhibits,
         schedules, documents, and instruments referred to in this Amendment
         are incorporated by reference for all purposes.

         b.       GOVERNING LAW; VENUE; ATTORNEY'S FEES.

                  i.   Any dispute between the parties relating to this
         Amendment shall be construed under and in accordance with the laws of
         the State of California applicable to contracts between residents of
         California that are to be wholly performed within such state.

                  ii.  The parties agree that the courts within Contra Costa
         County, California shall have exclusive venue and jurisdiction of same.

                  iii. The prevailing party in any litigation shall be entitled
         to recover from the other party reasonable attorney's fees and court
         costs incurred in the same, in addition to any other relief that may be
         awarded.

         c.      MULTIPLE COUNTERPARTS. This Amendment may be executed in
         multiple counterparts, each of which shall constitute an original and
         all of which shall constitute one document; and furthermore, a
         facsimile signature shall be deemed an original.

         IN WITNESS WHEREOF, the parties have executed this Agreement and caused
same to be duly delivered on their behalf as of the day and year first written
above.

Buyer:

SUNLAND ASSOCIATES, INC.


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

PARACELSUS CONVALESCENT
HOSPITALS, INC.



By:
   ------------------------
Name: R. T. Pinchback
     ----------------------
Title: Vice President
      ---------------------

PARACELSUS REAL ESTATE
CORPORATION



By:
   ------------------------
Name: R. T. Pinchback
     ----------------------
Title: Vice President
      ---------------------