EXHIBIT 7
 
                               FORUM GROUP, INC.
 
As of October 3, 1995
 
Mr. Robert A. Whitman
Investors GenPar, Inc.
Forum Holdings, L.P.
4200 Texas Commerce Tower West
2200 Ross Avenue
Dallas, Texas 75201
 
Dear Bob:
 
  Upon the occurrence of a Qualifying Transaction (as defined below), this
letter will (i) confirm the Company's determination made in the following
paragraph and (ii) amend our October 3, 1995 letter agreement with you (the
"Letter Agreement") regarding Section 4.17 of that certain Acquisition
Agreement among Apollo Investment Fund, L.P., Investors GenPar, Inc.,
Evergreen Healthcare, Ltd., L.P. and Forum Group, Inc. (the "Company") dated
as of April 18, 1993 (the "Acquisition Agreement"). The Company agreed in the
Acquisition Agreement to indemnify and hold harmless the Indemnified Parties
specified therein (the "Indemnity") from Transactional Losses as that term is
defined therein.
 
  This letter confirms that the Company has made a final determination that
all losses, claims, liabilities, damages, costs (including, without
limitation, costs of preparation and attorneys' fees) and expenses (including,
without limitation, expenses incurred in connection with investigating,
preparing or defending any action, claim or proceeding, whether or not in
connection with pending or threatened litigation in which any Indemnified
Party is a party) or actions in respect thereof related to or arising out of
the Law Suit (as defined in the Letter Agreement) are Transactional Losses
with respect to which you and the other Indemnified Parties described in the
Acquisition Agreement are entitled to the Indemnity. As a result of, and
without limiting, the foregoing determination, the conditions set forth in
items 1-4 of the Letter Agreement are no longer applicable.
 
  This letter will be of no force or effect unless and until a Qualifying
Transaction has occurred. As used herein, the term "Qualifying Transaction"
means (i) with respect to the Agreement and Plan of Merger dated as of
February 15, 1996 by and among the Company and the other parties thereto, the
acquisition of Shares (as defined therein) of the Company pursuant to the
Offer or the Merger (as defined therein) or (ii) the consummation of another
transaction in which a majority of the Shares or all or the majority of the
assets of the Company are acquired by a third party on or prior to March 31,
1997.
 
  If the foregoing correctly states our agreement, please signify by signing a
copy of this letter in the space indicated and returning it to the
undersigned.
 
Sincerely,
 
FORUM GROUP, INC.
 
By: /s/ Marc L. Pacala
    ------------------ 
Agreed and Accepted:
 
Investors GenPar, Inc.
 
By: /s/ Robert A. Whitman
 
Name: ___________________________
 
Title: __________________________