EXHIBIT 10.1

INTERCREDITOR AGREEMENT

          THIS INTERCREDITOR AGREEMENT

(this "Agreement") is entered into as of this 28th day of February, 2002, by and
among SUN HEALTHCARE GROUP, INC., a Delaware corporation (the "Company") and its
affiliates and subsidiaries who are or will become "Borrowers" under the Senior
Credit Agreement (as defined below) (collectively, the "Borrowers"), US BANK,
NATIONAL ASSOCIATION, a national banking association (in its capacity as
administrative agent under the Term Loan Agreement (as defined below), the "Term
Agent"), CITICORP USA, INC., a Delaware corporation, as Administrative Agent for
all Senior Lenders who are or will become parties to the Senior Credit Agreement
(the "Senior Administrative Agent") and HELLER HEALTHCARE FINANCE, INC., a
Delaware corporation, as Collateral Agent for all Senior Lenders who are or will
become parties to the Senior Credit Agreement (the "Senior Collateral Agent"
and, together with Senior Administrative Agent, collectively, the "Senior
Agents").

RECITALS

          WHEREAS,

Borrowers, Senior Agents and Senior Lenders (as defined below) have entered into
a Loan and Security Agreement of even date herewith (the "Senior Loan
Agreement", pursuant to which, among other things, Senior Lenders have agreed,
subject to the terms and conditions set forth therein, to make certain loans and
financial accommodations to Borrowers. All of Borrowers' obligations to Senior
Agents and Senior Lenders under the Senior Credit Agreement and the Senior Debt
Documents (as defined below) are or will be secured by (a) first priority liens
on and security interests in favor of the Senior Collateral Agent, on behalf of
Senior Lenders in all of the now existing and hereafter acquired personal
property of Borrowers (other than the SunScript Stock (as defined below)) and in
certain real property of Borrowers (as more particularly described in the Senior
Debt Documents), (b) a first priority pledge of the stock of all of the
Borrowers except the capital stock issued by the Company and the SunScript Stock
(the property and assets described in (a) and (b) above are herein referred to
collectively as the "Collateral"), and (c) a second priority pledge of the
SunScript Stock, each in favor of the Senior Collateral Agent on behalf of the
Senior Lenders;

          WHEREAS,

Borrowers, Term Agent and Term Creditors (as defined below) have entered into a
Term Loan and Note Purchase Agreement of even date herewith pursuant to which,
among other things, Term Creditors have agreed, subject to the terms and
conditions set forth therein, to make certain loans and financial accommodations
to Borrowers. All of Borrowers' obligations to Term Agent and Term Creditors
under the Term Loan Agreement (as defined below) and the Term Debt Documents (as
defined below) are secured by (a) a first priority pledge of the SunScript
Stock, and (b) second priority liens on and security interests in all of the
Collateral, each in favor of the Term Agent on behalf of the Term Creditors; and

          WHEREAS,

as an inducement to and as one of the conditions precedent to the agreement of
Senior Agents and Senior Lenders to consummate the transactions contemplated by
the Senior Credit Agreement, Senior Agents and Senior Lenders have required the
execution and delivery of this Agreement by Term Agent and Borrowers, in order
to set forth the relative rights and priorities of Senior Agents, Senior
Lenders, Term Agent and Term Creditors in respect of the Senior Debt Documents
and the Term Debt Documents, and in and to the Collateral and other assets that
have been pledged to both as security for the obligations of the respective
debtors thereunder.

          NOW, THEREFORE,

in order to induce Senior Agents and Senior Lenders to consummate the
transactions contemplated by the Senior Credit Agreement and to induce Term
Agent and Term Creditors

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to consummate the transactions contemplated by the Term Loan Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:

          1.     Definitions. The following terms shall have the following
meanings in this Agreement:

                  "Bankruptcy Code"

shall mean Chapter 11 of Title 11 of the United States Code, as amended from
time to time, and any successor statute thereto and all rules and regulations
promulgated thereunder.

                  "Collateral

" shall have the meaning assigned thereto in the Recitals and shall expressly
exclude the SunScript Stock and, after the Option Closing, shall also expressly
exclude the SunScript Assets.

                  "Collateral Enforcement Action"

shall mean (a) to notify account debtors or directly collect accounts receivable
or other payment rights of Borrowers or (b) to take from or for the account of
Borrowers, by set-off or in any other manner, the whole or any part of any
moneys constituting proceeds (as defined in the Uniform Commercial Code), of any
Collateral or (c) to sue, or to initiate or participate with others in any suit,
action or proceeding against Borrowers to (i) to collect the whole or any part
of the Proceeds of any Collateral or (ii) commence judicial enforcement of any
of rights and remedies of Term Creditors under the Term Debt Documents or
applicable law with respect to the Collateral or (d) to take any other action
under the provisions of any state or federal law, including, without limitation,
the Uniform Commercial Code, or under any contract or agreement, including but
not limited to the Term Loan Agreement, to enforce, foreclose upon, take
possession of or sell any Collateral or any Proceeds of Collateral.

                  "Distribution"

shall mean, with respect to any indebtedness, (a) any payment or distribution by
any Person of cash, securities or other property, by set-off or otherwise, on
account of such indebtedness or obligation, (b) any redemption, purchase or
other acquisition of such indebtedness or obligation by any Person or (c) the
granting of any lien or security interest to or for the benefit of the holders
of such indebtedness or obligation in or upon any property of any Person, but
shall expressly exclude any payment or distribution received by Term Agent or
any Term Lender as a result of any action taken with respect to the SunScript
Stock.

                  "Option Price"

shall have the meaning ascribed thereto in Section 2.4.

                  "Partial Purchase Option"

shall have the meaning ascribed thereto in Section 2.4(a).

                  "Payment Enforcement Action"

shall mean (a) to take from or for the account of Borrowers, by set-off or in
any other manner, the whole or any part of any moneys which may now or hereafter
be owing by Borrowers with respect to the Term Debt, (b) to sue for payment of,
or to initiate or participate with others in any suit, action or proceeding
against Borrowers to (i) enforce payment of or to collect the whole or any part
of the Term Debt or (ii) commence judicial enforcement of any of the rights and
remedies under the Term Debt Documents or applicable law with respect to the
Term Debt; provided that neither clause (i) nor clause (ii) in the foregoing
shall include any suit, action or proceeding described in the definition of
"Collateral Enforcement Action" above, (c) to accelerate the Term Debt, or
(d) to exercise any put option or to cause Borrowers to honor any redemption or
mandatory prepayment obligation under any Term Debt Document.

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                  "Permitted Refinancing"

shall mean any refinancing of the Senior Debt under the Senior Debt Documents
provided that the financing documentation entered into by Borrowers in
connection with such Permitted Refinancing constitute Permitted Refinancing
Senior Debt Documents.

                  "Permitted Refinancing Senior Debt Documents"

shall mean any financing documentation which amends, modifies, restates or in
any manner replaces the Senior Debt Documents and pursuant to which the Senior
Debt under the Senior Debt Documents is refinanced, as such financing
documentation may be amended, supplemented or otherwise modified from time to
time in compliance with this Agreement, but specifically excluding any such
financing documentation to the extent that it contains, either initially or by
amendment or other modification, any material terms, conditions, covenants or
defaults other than those which (a) exist in the Senior Debt Documents
immediately prior to consummation of such modification or amendment or (b) could
be included in the Senior Debt Documents by an amendment or other modification
that would not be prohibited by the terms of this Agreement.

                  "Permitted Term Debt Payments"

shall mean regularly scheduled payments of interest and principal on the Term
Debt due and payable on a non-accelerated basis in accordance with the terms of
the Term Debt Documents as in effect on the date hereof or as modified in
accordance with the terms of this Agreement; provided, however, that,
notwithstanding any provision of the Term Debt Documents to the contrary, the
term "Permitted Term Debt Payments" shall not include any principal payments of
the Term Debt during the ninety (90) day period commencing on the date of this
Agreement.

                  "Person"

shall mean any natural person, corporation, general or limited partnership,
limited liability company, firm, trust, association, government, governmental
agency or other entity, whether acting in an individual, fiduciary or other
capacity.

                  "Proceeding"

shall mean any voluntary or involuntary insolvency, bankruptcy, receivership,
custodianship, liquidation, dissolution, reorganization, assignment for the
benefit of creditors, appointment of a custodian, receiver, trustee or other
officer with similar powers or any other proceeding for the liquidation,
dissolution or other winding up of any Borrower.

                  "Senior Administrative Agent

" shall have the meaning ascribed to such term in the preamble to this
Agreement.

                  "Senior Agents"

shall have the meaning ascribed to such term in the preamble to this Agreement.

                  "Senior

Collateral Agent" shall have the meaning ascribed to such term in the preamble
to this Agreement.

                  "Senior Covenant Default

" shall mean any "Event of Default" under the Senior Debt Documents (other than
a Senior Payment Default), or any condition or event that, after notice or lapse
of time or both, would constitute such an Event of Default (other than a Senior
Payment Default) if that condition or event were not cured or removed within any
applicable grace or cure period set forth therein.

                  "Senior Credit Agreement"

shall mean the Loan and Security Agreement dated as of even date herewith by and
among Borrowers, Senior Agents and Senior Lenders as such Agreement may be
amended, modified, supplemented, extended or renewed from time to time in
accordance with this Agreement.

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                  "Senior Debt"

shall mean all obligations, liabilities and indebtedness of every nature of
Borrowers from time to time owed to any Senior Agent or any Senior Lender under
the Senior Debt Documents, including, without limitation, the principal amount
of all debts, claims and indebtedness, accrued and unpaid interest and all fees,
costs, expenses and expenditures by Senior Lenders, whether primary, secondary,
direct, contingent, fixed or otherwise, heretofore, now and from time to time
hereafter owing, due or payable, whether before or after the filing of a
Proceeding under the Bankruptcy Code together with (a) any amendments,
modifications, renewals or extensions thereof made in accordance with the terms
thereof and subject to this Agreement and (b) any interest accruing thereon
after the commencement of a Proceeding, without regard to whether or not such
interest is an allowed claim. Senior Debt shall be considered to be outstanding
whenever any loan commitment under the Senior Debt Document is outstanding.

                  "Senior Debt Documents"

shall mean the Senior Credit Agreement, any promissory note or other instruments
evidencing the Senior Debt or the obligation to pay the Senior Debt, any
guaranty with respect to the Senior Debt, any security agreement or other
collateral document securing the Senior Debt and all other documents, agreements
and instruments now existing or hereafter entered into evidencing or pertaining
to all or any portion of the Senior Debt, and, after the consummation of any
Permitted Refinancing, the Permitted Refinancing Senior Debt Documents, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with this Agreement.

                  "Senior Default"

shall mean any Senior Payment Default or Senior Covenant Default.

                  "Senior Default Notice"

shall mean a written notice from Senior Administrative Agent to Term Agent
pursuant to which Term Creditors are notified of the occurrence of a Senior
Default, which notice incorporates a reasonably detailed description of such
Senior Default.

                  "Senior Lenders"

shall mean, on any date of determination, collectively, all of the holders of
the Senior Debt.

                  "Senior Payment Default"

shall mean any "Event of Default" under (and as defined in) the Senior Debt
Documents resulting from the failure of any of the Borrowers to pay, on a timely
basis, any principal, interest, fees or other obligations under the Senior Debt
Documents including, without limitation, any default in payment of Senior Debt
after acceleration thereof.

                  "SunScript Assets"

shall mean all of the real and personal assets of SunScript.

                  "SunScript"

shall mean, collectively, SunScript Pharmacy Corporation, SunFactors, Inc.,
Pharmacy Factors of Florida, Inc., Pharmacy Factors of Texas, Inc., Pharmacy
Factors of California, Inc., Advantage Health Services, Inc., Homed Convalescent
Equipment, Inc., SunScript/HRA LLC, First Class Pharmacy, Inc. and Executive
Pharmacy Services, Inc.

                  "SunScript Stock"

shall mean the stock or other equity interests issued by SunScript.

                  "Term Agent

" shall have the meaning ascribed to such term in the preamble to this Agreement
and any other Person appointed under the terms of the Term Loan Agreement by the
Term Creditors as agent for purposes of the Term Debt Documents and this
Agreement.

                  "Term Creditors

" shall mean, on any date of determination, collectively, all of the holders of
the Term Debt.

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                  "Term Debt"

shall mean all obligations, liabilities and indebtedness of every nature of
Borrowers from time to time owed to Term Agent or any Term Creditor under the
Term Debt Documents, including, without limitation, the principal amount of all
debts, claims and indebtedness, accrued and unpaid interest and all fees, costs
and expenses, whether primary, secondary, direct, contingent, fixed or
otherwise, heretofore, now and from time to time hereafter owing, due or
payable, whether before or after the filing of a Proceeding under the Bankruptcy
Code together with (a) any amendments, modifications, renewals, refinancing or
extensions thereof to the extent not prohibited by the terms of this Agreement
and (b) any interest accruing thereon after the commencement of a Proceeding,
without regard to whether or not such interest is an allowed claim.

                  "Term Debt Default"

shall mean a default in the payment of the Term Debt or in the performance of
any term, covenant or condition contained in the Term Debt Documents or any
other occurrence permitting Term Creditors or Term Agent to accelerate the
payment of all or any portion of the Term Debt.

                  "Term Debt Default Notice

" shall mean a written notice from Term Agent or any of the Borrowers to Senior
Agents pursuant to which Senior Agents are notified of the occurrence of a Term
Debt Default, which notice incorporates a reasonably detailed description of
such Term Debt Default.

                  "Term Debt Documents"

shall mean the Term Loan Agreement and any promissory note, lease or other
instrument evidencing the Term Debt or the obligation to pay the Term Debt, any
guaranty with respect to the Term Debt, any security agreement, mortgage, or
other collateral document securing the Term Debt and all other documents,
agreements and instruments now existing or hereafter entered into evidencing or
pertaining to all or any portion of the Term Debt, as the same may be amended,
supplemented, or otherwise modified from time to time in accordance with this
Agreement.

                  "Term Loan Agreement

" shall mean the Term Loan and Note Purchase Agreement dated as of even date
herewith by and among Borrowers, each Term Creditor party thereto and the Term
Agent, as such agreement may be amended, modified, supplemented, extended or
renewed from time to time in accordance with the terms thereof and subject to
the terms and conditions of this Agreement.

          2.     Restrictions Regarding Debt.

                 2.1     Liquidation, Dissolution, Bankruptcy.

                  

(a)     Term Creditors agree not to initiate, prosecute or participate in any
claim, action or other proceeding challenging the enforceability, validity,
perfection or priority of the Senior Debt or any liens and security interests
securing the Senior Debt.

                  

(b)     Senior Agents and Senior Lenders agree not to initiate, prosecute or
participate in any claim, action or other proceeding challenging the
enforceability, validity, perfection or priority of the Term Debt or any liens
and security interests securing the Term Debt.

                  

(c)     The parties agree that the provisions of this Agreement shall continue
in full force and effect notwithstanding the occurrence of any Proceeding. Term
Creditors agree that, during any Proceeding, Senior Agents and Senior Lenders
may consent to the use of cash collateral or provide financing to Borrowers on
such terms and conditions and in such amounts as Senior Agents and Senior
Lenders, in their sole discretion, may decide up to a maximum amount of
$175,000,000 in the aggregate. Term Creditors agree that they will not object to
or oppose a sale or other disposition of any property securing all of any part
of the Senior Debt free and clear of security interests, liens or other claims
of

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Term Creditors under Section 363 of the Bankruptcy Code or any other provision
of the Bankruptcy Code if Senior Agents or those Senior Lenders required to
consent pursuant to the Senior Credit Agreement have consented to such sale or
disposition.

                  

(d)     The Senior Debt shall continue to be treated as Senior Debt and the
provisions of this Agreement shall continue to govern the relative rights and
priorities of Senior Lenders and Term Creditors, even if all or part of the
Senior Debt or the security interests securing the Senior Debt are subordinated,
set aside, avoided, invalidated or disallowed in connection with any Proceeding,
and this Agreement shall be reinstated if at any time any payment of any of the
Senior Debt is rescinded or must otherwise be returned by any holder of Senior
Debt or any representative of such holder.

                  

(e)      The Term Debt shall continue to be treated as Term Debt and the
provisions of this Agreement shall continue to govern the relative rights and
priorities of Senior Lenders and Term Creditors, even if all or part of the Term
Debt or the security interests in the SunScript Stock is subordinated, set
aside, avoided, invalidated or disallowed in connection with any Proceeding, and
this Agreement shall be reinstated if at any time any payment of any of the Term
Debt is rescinded or must otherwise be returned by any holder of Term Debt or
any representative of such holder.

                  

2.2.     Term Debt Payment Restrictions.

                  

(a)     Notwithstanding the terms of the Term Debt Documents, Borrowers, jointly
and severally, hereby agree that they shall not make, and Term Agent hereby
agrees that it will not accept, any Distribution with respect to the Term Debt
until the Senior Debt is paid in full in cash and all commitments to lend under
the Senior Debt Documents have been terminated, other than the making by
Borrowers or acceptance by Term Creditors of any Permitted Term Debt Payments;
provided, however, that each of the Borrowers and Term Agent further agree that
no Permitted Term Debt Payment may be made by Borrowers or accepted by any Term
Creditor if, at the time of such payment:

                       

     (i)     a Senior Payment Default exists and such Senior Payment Default
shall not have been cured or waived; or

                       

     (ii)     subject to paragraph (d) of this Section 2.2, (A) the Company and
Term Agent shall have received a Senior Default Notice from any of the Senior
Agents or from all of the Senior Lenders identifying that a Senior Covenant
Default exists or would be created by the making of such payment, (B) each such
Senior Covenant Default shall not have been cured or waived and (C) ninety (90)
days shall not have elapsed since the date such Senior Default Notice was
received.

                  

(b)     Borrowers may resume Permitted Term Debt Payments (and may make any
Permitted Term Debt Payments missed due to the application of paragraph (a) of
this Section 2.2) in respect of the Term Debt or any judgment with respect
thereto:

                       

     (i)     in the case of a Senior Payment Default referred to in clause (i)
of paragraph (a) this Section 2.2, upon a cure or waiver thereof; or

                       

     (ii)     in the case of a Senior Covenant Default referred to in clause
(ii) of paragraph (a) of this Section 2.2, upon the earlier to occur of (A) the
cure or waiver of all such Senior Covenant Defaults or (B) the expiration of
such period of ninety (90) days referred to therein.

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(c)     No Senior Default shall be deemed to have been waived for purposes of
this Section 2.2 unless and until the Company shall have received a written
waiver from the Senior Agents, or from those Senior Lenders required by the
Senior Credit Agreement.

                  

(d)     Notwithstanding any provision of this Section 2.2 to the contrary:

                       

     (i)     Borrowers shall not be prohibited from making, and Term Creditors
shall not be prohibited from receiving, Permitted Term Debt Payments under
clause (ii) of paragraph (a) of this Section 2.2 for more than an aggregate of
one hundred eighty (180) days within any period of three hundred sixty (360)
consecutive days;

                       

     (ii)     no Senior Covenant Default existing on the date any Senior Default
Notice is given pursuant to clause (ii) of paragraph (a) of this Section 2.2
shall, unless the same shall have ceased to exist for a period of at least
thirty (30) consecutive days, be used as a basis for any subsequent such notice
(for purposes of this paragraph, breaches of the same financial covenant for
consecutive periods shall constitute separate and distinct Senior Covenant
Defaults);

                       

     (iii)     the failure of Borrowers to make any Distribution with respect to
the Term Debt by reason of the operation of this Section 2.2 shall not be
construed as preventing the occurrence of a Term Debt Default under the
applicable Term Debt Documents;

                       

     (iv)     any Permitted Term Debt Payment accepted by Term Agent at a time
when the conditions set forth in the proviso of clause (a) of this Section 2.2
shall not be met shall be held by Term Agent in accordance with Section 2.5; and

                  

2.3.     Term Debt Standstill Provisions.

                  

(a)     Until the Senior Debt is paid in full in cash and all commitments to
lend under the Senior Debt Documents shall be terminated, Term Agent or Term
Creditors shall not, without the prior written consent of all of the Senior
Agents, take any Collateral Enforcement Action with respect to any Collateral.
Furthermore, subject to Section 2.3(b) and Section 2.3(c) hereof, until the
Senior Debt is paid in full in cash and all commitments to lend under the Senior
Debt Documents have been terminated, Term Agent shall not, without the written
consent of all of the Senior Agents, take any Payment Enforcement Action until
the earliest to occur of the following and in any event no earlier than ten (10)
days after Senior Agents' receipt of written notice of Term Agent's intention to
take any such Payment Enforcement Action: (i) acceleration of the Senior Debt;
or (ii) the passage of one hundred twenty (120) days from the receipt by Senior
Agents of a Term Debt Default Notice if any Term Debt Default described therein
shall not have been cured or waived within such period. Term Agent shall
endeavor to promptly deliver to Senior Collateral Agent notice of any "Default"
as defined in and under the Term Debt Documents but shall have no liability for
failing to do so.

                  

(b)     Notwithstanding anything in this Section 2.3 to the contrary, Term Agent
and Term Creditors shall be entitled, no earlier than ten (10) days after Senior
Agents' receipt of written notice of Term Agent's or Term Creditors' intent to
do so, to exercise and execute upon its first priority pledge of the SunScript
Stock and to take any action in respect of the SunScript Stock that either Term
Agent or Term Creditors may be entitled to take pursuant to the terms of any
pledge agreement, security agreement or other Term Debt Document governing such
pledge, including, to the extent necessary in order to execute upon the pledge,
the right to accelerate the Term Debt; provided that, if Term Agent or

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Term Creditors elect to sell or otherwise transfer all or any portion of the
SunScript Stock following the exercise of or execution upon such pledge, to the
extent that the aggregate proceeds of any such sale(s) or transfer(s) are in
excess of the amount necessary to repay the Term Debt in full, such excess
proceeds shall be promptly turned over to the Senior Administrative Agent for
benefit of the Senior Lenders and shall be applied toward repayment of the
Senior Debt. Following Term Agent's and/or Term Creditor's exercise of or
execution upon its first priority pledge of the SunScript Stock, Term Agent or
Term Creditor shall be entitled, without limitation imposed by this Agreement or
anything in the Senior Credit Documents, to any and all rights, remedies or
other benefits to which such entities are entitled, in respect of and in their
capacity as holders of the SunScript Stock, under the terms of any pledge
agreement, security agreement or other Term Debt Document governing such pledge
and the exercise and/or execution thereof.

                  

(c)     Notwithstanding anything in this Section 2.3 to the contrary, and
subject to the provisions of Section 2.1 hereof, Term Agent may file proofs of
claim against Borrowers in any case or Proceeding. Subject to the provisions of
Section 2.3(b) and Section 2.4 herein (and without limiting Term Agent's and
Term Creditor's rights thereunder), any Distributions or other proceeds
resulting from any Collateral Enforcement Action made with respect to any
Collateral that is subject to such Collateral Enforcement Action or received by
Term Agent or any Term Creditor shall be held in trust by it for the benefit of
Senior Collateral Agent and Senior Lenders and promptly paid or delivered to
Senior Collateral Agent for the benefit of Senior Lenders in the form received
until all Senior Debt is paid in full in cash and all commitments to lend under
the Senior Debt Documents shall have been terminated.

                  

(d)     Notwithstanding anything contained herein to the contrary, if following
the acceleration of the Senior Debt by Senior Lenders such acceleration is
rescinded (whether or not any existing Senior Default has been cured or waived),
then all Payment Enforcement Actions taken by the Term Creditors shall likewise
be rescinded if such Payment Enforcement Action is based solely on clause (i) of
paragraph (a) of this Section 2.3.

                  

(e)     A Senior Agent shall endeavor to deliver promptly to Term Agent notice
of any "Event of Default" as defined in and under the Senior Debt Documents,
but, except in respect of the Option Notice, Senior Agents shall have no
liability for failing to do so.

                  

2.4.     Term Creditors' Partial Purchase Option Provisions. Notwithstanding
anything to the contrary in this Agreement,

                  

(a)     Upon the occurrence and continuation of a Senior Payment Default or upon
the commencement of any Proceeding by or involving any Borrower, Term Agent, on
behalf of Term Creditors, shall have the option (but not the obligation) to
acquire a portion of the Senior Debt (the "Partial Purchase Option") relating to
the SunScript Assets in an amount that shall be agreed upon and documented by
the parties as provided in this Section 2.4. In order to exercise such Partial
Purchase Option, Term Agent shall do the following: (i) deliver a binding notice
of exercise of such Partial Purchase Option to both Senior Agents (the "Option
Notice") not later than ten (10) business days following Term Agent's receipt of
written notice (A) that a Senior Payment Default has occurred or (B) that a
Proceeding has been commenced by or involving any Borrower (which notice, in
either event, shall be delivered by one of the Senior Agents promptly after the
occurrence of such Senior Payment Default or any such Senior Agent's knowledge
of commencement of a Proceeding, and shall include a copy of the most recent
Borrowing Base Certificate submitted by Borrowers pursuant to the Senior Credit
Agreement); and (ii) pay the full amount of the Option Price (as defined below)
to Senior Administrative Agent no later than five (5) days following delivery by
Term Agent of such Option Notice. If Term Agent fails to timely deliver such
Option Notice or to timely pay the Option Price, thereafter, with

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respect to any subsequent Senior Payment Default that occurs within one hundred
eighty (180) days after delivery of such Option Notice only, the Partial
Purchase Option shall expire and shall be null and void and of no further force
and effect; provided that, notwithstanding the foregoing, with respect to any
Senior Payment Default that occurs after the expiration of any such period and
with respect to each commencement of a Proceeding, the Partial Purchase Option
shall again be available to be exercised by Term Agent in accordance with the
terms set forth herein. For purposes hereof, the "Option Price" shall be defined
as the product of (x) 1.30 multiplied by (y) the sum of (1) the eligible
accounts receivable generated by SunScript (which shall be deemed to be 85% of
the amount set forth on line 46 of the most recent Borrowing Base Certificate
and (2) the aggregate "Eligible Inventory" (as defined in the Senior Loan
Agreement) (which for this purpose shall be deemed to be equal to the amount set
forth on line 87 of the Borrowing Base Certificate). Senior Lenders agree that
no foreclosure proceedings will be commenced against any of the SunScript Assets
until the earliest possible expiration of the Partial Purchase Option.

                  

(b)     The exercise of the Partial Purchase Option shall be deemed to have been
completed on the date that all of the following have been satisfied (such date,
the "Option Closing"): (i) Senior Administrative Agent shall have received the
full amount of the Option Price in cash or immediately available funds; (ii)
each of Senior Agents, Senior Lenders, Term Agent, Term Creditors and Borrower
shall have executed any and all documents reasonably necessary to affect the
purchase by Term Agent and Term Creditors of the portion of the Senior Debt to
be purchased by them in connection with the exercise of the Partial Purchase
Option hereunder; and (iii) Senior Collateral Agent shall have filed such
termination statements or financing statement amendments necessary to release
its lien on and security interest, for the benefit of the Senior Lenders, in the
SunScript Assets (which, in any event, Senior Collateral Agent agrees it shall
do concurrently with the execution of the documents described in subparagraph
(ii) above provided that the condition set forth in subparagraph (i) has also
then been satisfied), or Senior Collateral Agent shall have provided its written
consent to the filing by Borrower or Term Agent of such termination statements
or financing statement amendments necessary to release Senior Collateral Agent's
lien on and security interest, for the benefit of the Senior Lenders, in the
SunScript Assets.

                  

(c)     Following the Option Closing, Term Creditors shall be the holders of
additional indebtedness of Borrowers equal to the Option Price, which
indebtedness shall thereafter be added to the Term Debt and governed by the
terms and provisions of the Term Debt Documents, including, without limitation
the provisions governing interest and amortization. Following the Option
Closing, and notwithstanding anything in this Agreement or the Senior Debt
Documents to the contrary: (i) the SunScript Assets shall cease to comprise
Collateral (both as defined herein and as defined in the Senior Debt Documents),
(ii) the disposition of the SunScript Assets, or any proceeds thereof, shall
cease to be governed, limited or restricted by the terms of this Agreement or
the Senior Debt Documents, (iii) the rights and remedies of Term Agent and Term
Creditors with respect to the SunScript Assets shall cease to be governed,
limited or restricted by the terms of this Agreement or the Senior Debt
Documents, and shall instead by considered "Collateral" as defined in, or
otherwise be subject in all respects to, the Term Loan Agreement and the Term
Debt Documents or such other documents or agreements as may have been entered
into by and among Term Agent, Term Creditors and the Borrower in respect of Term
Agent's exercise of the Purchase Option. In addition, following the Option
Closing, Senior Agents and Borrowers shall provide notice thereof to all
Depository Banks and the Collecting Bank that is subject to a Lockbox Agreement
(each of such terms as defined in the Senior Credit Agreement) of such
disposition of the SunScript Assets and such release of SunScript as a Borrower
hereunder.

                  

(d)     The consummation of the acquisition of a portion of the Senior Debt
pursuant to this Section 2.4 shall be made without warranty or representation of
any kind, expressed or implied, on

9

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the part of the Senior Agents or the Senior Lenders, and shall be without
recourse to Senior Lenders of any kind, and in furtherance of and not in
limitation of the foregoing, Senior Collateral Agent and Senior Lenders are
released ab initio by all other parties to this Agreement from any liability or
responsibility regarding (i) the quality of the SunScript Assets, (ii) the
priority of any liens with respect to the SunScript Assets, (y) the status or
condition of SunScript and (iii) any other responsibility or liability of any
kind or nature arising from or in connection with the SunScript Assets;
provided, that the Senior Lenders shall agree to represent and warrant to the
Term Agent and the Term Creditors (x) as to the amount of the portion of the
Senior Debt being purchased by the Term Creditors, (y) that such Senior Lender
is the legal owner of such portion of the Senior Debt held by it being purchased
hereunder and (z) such other similar representations and warranties regarding
the portion of the Senior Debt being acquired as are customarily made by
financial institutions in assignment and acceptance and/or purchase agreements
of such type and that do not extend to or include the SunScript Assets.

                  

(e)     It is understood and agreed by all parties hereto that the acquisition
by Term Agent of a portion of the Senior Debt in connection with the Partial
Purchase Option shall not be deemed to increase Term Agent's or Term Creditor's
commitments, or otherwise expand any of their respective rights, in their
capacity, if any, as "Senior Lenders" under any of the Senior Debt Documents.

                  

2.5.     Incorrect Payments. If any Distribution on account of the Term Debt not
permitted to be made by Borrowers or accepted by Term Agent under this Agreement
is made by a Borrower and received by Term Agent, such Distribution shall not be
commingled with any of the assets of Term Agent, shall be held in trust by Term
Agent for the benefit of Senior Agents and Senior Lenders and shall be promptly
paid over to Senior Administrative Agent for application (in accordance with the
Senior Debt Documents) to the payment of the Senior Debt then remaining unpaid,
until all of the Senior Debt is paid in full. If any Distribution with respect
to the SunScript Stock (or following the Option Closing, the SunScript Assets)
is received by any of the Senior Agents following the Option Closing, such
Distribution shall not be commingled with any of the assets of Senior Agents,
shall be in held in trust by Senior Agents for the benefit of Term Agent and
Term Creditors and shall be promptly paid over to Term Agent for application (in
accordance with the Term Debt Documents) to the payment of the Term Debt then
remaining unpaid, until all of the Term Debt is paid in full.

                  

2.6.     Subordination of Liens and Security Interests; Agreement Not to
Contest; Agreement to Release Liens. (a) Until the Senior Debt has been paid in
full in cash and all lending commitments under the Senior Debt Documents have
terminated, notwithstanding any provision of the UCC, applicable law or the Term
Debt Documents to the contrary, the liens and security interests in the
Collateral granted by the Borrowers in favor of the Term Agent for the benefit
of the Term Creditors shall be and hereby are subordinated for all purposes and
in all respects to the liens and security interests of Senior Agents and Senior
Lenders in the Collateral, regardless of the time, manner or order of perfection
of any such liens and security interests. Term Agent agrees that it will not at
any time contest the validity, perfection, priority or enforceability of the
Senior Debt, the Senior Debt Documents, or the liens and security interests of
Senior Collateral Agent and Senior Lenders in the Collateral securing the Senior
Debt. In the event that Senior Collateral Agent or Senior Lenders release or
agree to release any of their liens or security interests in the Collateral in
connection with the sale or other disposition thereof or any of the Collateral
is sold or retained pursuant to a foreclosure or similar action, Term Agent
shall promptly execute and deliver to Senior Collateral Agent such termination
statements and releases as Senior Collateral Agent shall reasonably request to
effect the release of the liens and security interests of Term Agent in such
Collateral. In furtherance of the foregoing, Term Agent hereby irrevocably
appoints Senior Collateral Agent its attorney-in-fact, with full authority in
the place and stead of Term Agent and in the name of Term Agent or otherwise, to
execute and deliver any document or instrument which Term Agent may be required
to deliver pursuant to this Section 2.6(a).

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(b)     Until the Term Debt has been paid in full in cash and all lending
commitments under the Term Debt Documents have terminated, notwithstanding any
provision of the UCC, applicable law, this Agreement, or the Senior Debt
Documents to the contrary, the liens and security interests in the SunScript
Stock granted by the Borrowers in favor of the Senior Agents for the benefit of
the Senior Lenders shall be and hereby are subordinated for all purposes and in
all respects to the liens and security interests of Term Agent and Term
Creditors in the SunScript Stock, regardless of the time, manner or order of
perfection of any such liens and security interests. Senior Agents and Senior
Lenders agree that they will not at any time contest the validity, perfection,
priority or enforceability of the Term Debt, the Term Debt Documents, or the
liens and security interests of Term Agent and Term Creditors in the SunScript
Stock or, after the Option Closing, the SunScript Assets. In the event that Term
Agent or Term Creditors release or agree to release any of their liens or
security interests in the SunScript Stock in connection with the sale or other
disposition thereof or any of the SunScript Stock is sold or retained pursuant
to a foreclosure or similar action, Senior Collateral Agent and, if applicable,
Senior Lenders shall promptly execute and deliver to Term Agent such termination
statements and releases as Term Agent shall reasonably request to effect the
release of the liens and security interests of Senior Collateral Agent and
Senior Lenders in such SunScript Stock (but not in the SunScript Assets except
as set forth in Section 2.4(a)). In furtherance of the foregoing, Senior Agents
and Senior Lenders hereby irrevocably appoint Term Agent their attorney-in-fact,
with full authority in the place and stead of Senior Agents and Senior Lenders
and in the name of Senior Agents and Senior Lenders or otherwise, to execute and
deliver any document or instrument which Senior Agents and Senior Lenders may be
required to deliver pursuant to this Section 2.6(b).

                  

2.7.     Application of Proceeds from Sale or other Disposition of the
Collateral. Subject to Section 2.4(b), in the event of any sale, transfer or
other disposition (including a casualty loss or taking through eminent domain)
of the Collateral, the proceeds resulting therefrom (including insurance
proceeds) shall be applied in accordance with the terms of the Senior Debt
Documents or as otherwise consented to by Senior Agents and Senior Lenders until
such time as the Senior Debt is paid in full in cash and all commitments to lend
under the Senior Debt Documents have been terminated. In the event of any sale,
transfer or other disposition (including a casualty loss or taking through
eminent domain) of the SunScript Stock (or, following the Option Closing, the
SunScript Assets), the proceeds resulting therefrom (including insurance
proceeds) shall be applied in accordance with the terms of the Term Debt
Documents or as otherwise consented to by Term Agent and the Term Creditors
until such time as the Term Debt is paid in full in cash and all commitments to
lend under the Term Debt Documents have been terminated.

                  

2.8.     Sale, Transfer or other Disposition of Term Debt.

                  

(a)     Each of the Senior Debt Documents and the Term Debt Documents shall
contain provisions pursuant to which each Senior Lender or Term Creditor, as
applicable, shall acknowledge that the terms and conditions of the Senior Debt
and the Term Debt, as applicable, are subject to this Agreement. Such provision
in each agreement may not be amended or modified during the term of this
Agreement.

                  

(b)     The rights, benefits, burdens and obligations effected hereby shall
survive any sale, assignment, pledge, disposition or other transfer of all or
any portion of the Term Debt or Senior Debt, as applicable, and the terms of
this Agreement shall be binding upon the successors and assigns of any Term
Creditor or Senior Lender, as applicable, as provided in Section 10 hereof.

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2.9.     Legends. (a) Until the termination of this Agreement in accordance with
Section 16 hereof, Term Agent will cause to be clearly, conspicuously and
prominently inserted on the face of any promissory note, lease or other
instrument evidencing the Term Debt or the obligation to pay the Term Debt, as
well as any renewals or replacements thereof, the following legend:

     "This instrument and the rights and obligations evidenced hereby are
subject to the terms and provisions of that certain Intercreditor Agreement (the
"Intercreditor Agreement") dated as of February [__], 2002 among US Bank,
National Association, as Term Agent, Sun Healthcare Group, Inc. and certain of
its direct and indirect subsidiaries who are parties to that Senior Credit
Agreement, defined therein ("Borrowers"), CITICORP USA, INC. ("Senior
Administrative Agent") and Heller Healthcare Finance, Inc. ("Senior Collateral
Agent," and, together with Senior Administrative Agent, collectively, the
"Senior Agents"), and each holder of this instrument, by its acceptance hereof,
irrevocably agrees to be bound by the provisions of the Intercreditor
Agreement."

                  

(b)     Until the termination of this Agreement in accordance with Section 16
hereof, Senior Collateral Agent will cause to be clearly, conspicuously and
prominently inserted on the face of any promissory note, lease or other
instrument evidencing the Senior Debt or the obligation to pay the Senior Debt,
as well any renewals or replacement thereof, the following legend:

     "This instrument and the rights and obligations evidenced hereby are
subject to the terms and provisions of that certain Intercreditor Agreement (the
"Intercreditor Agreement") dated as of February ___, 2002 among US Bank,
National Association, as Term Agent, Sun Healthcare Group, Inc. and certain of
its direct and indirect subsidiaries who are parties to that Term Loan and Note
Purchase Agreement, defined therein ("Borrowers"), CITICORP USA, INC. ("Senior
Administrative Agent") and Heller Healthcare Finance, Inc. ("Senior Collateral
Agent" and, together with Senior Administrative Agent, collectively the ("Senior
Agents"); and each holder of this instrument, by its acceptance hereof,
irrevocably agrees to be bound by the provisions of the Intercreditor
Agreement."

          3.     Modifications.

                  3.1.     Modifications to Senior Debt Documents. Other than as
provided in this Agreement, Senior Lender may at any time and from time to time
without the consent of or notice to Term Agent, without incurring liability to
Term Agent and without impairing or releasing the obligations of Term Agent
under this Agreement, change the manner or place of payment or extend the time
of payment of or renew or alter any of the terms of the Senior Debt, or amend in
any manner any agreement, note, guaranty or other instrument evidencing or
securing or otherwise relating to the Senior Debt, provided that no such
modification or amendment (a) shall affect the payment schedule of the Term Loan
Documents, (b) (i) shall make materially more restrictive any individual
covenant or event of default under the Senior Debt Documents in existence as of
the date of this Agreement, (ii) shall result in the addition of any new
covenant or event of default not existing as of the date of this Agreement the
effect of which is to make the covenants or events of default, in either case as
applicable, under the Senior Credit Documents in the aggregate materially more
restrictive, or (iii) shall modify, so as to materially and adversely affect
Term Creditors' rights thereunder or with respect thereto, any of the Partial
Purchase Option or the provisions under this Agreement or the Senior Credit
Documents to either the SunScript Stock or the SunScript Assets specifically,
(c) shall cause the maximum principal amount of Senior Debt outstanding at any
time to exceed $175,000,000 in the aggregate, (d) shall cause the maturity date
of the Senior Debt to be sooner than otherwise provided in the Senior Debt
Documents, and (e) shall cause the

12

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interest rates under the Senior Debt Documents in existence as of the date of
this Agreement to be increased by more than 100 basis points in the aggregate;
provided that the foregoing shall not prevent Senior Agents or Senior Lenders
from assessing any default interest under the terms of and in accordance with
the Senior Debt Documents, and (f) except upon the occurrence of a Senior
Default, shall cause the amortization schedule (if any) to accelerate the
repayment of principal.

                  

3.2.     Modifications to Term Debt Documents. Until the Senior Debt has been
paid in full in cash and all lending commitments under the Senior Debt Documents
have terminated, and notwithstanding anything to the contrary contained in the
Term Debt Documents, Term Creditors shall not, without the prior written consent
of Senior Agents, agree to any amendment, modification or supplement to the Term
Debt Documents the effect of which is to (a) increase the maximum principal
amount of the Term Debt or rate of interest, by more than 100 basis points in
the aggregate, on any of the Term Debt, (b) change the dates upon which payments
of principal or interest on the Term Debt are due, (c) change or add any event
of default or any covenant with respect to the Term Debt, (d) change any
redemption or prepayment provisions of the Term Debt, (e) take any other liens
or security interests in any assets of Borrowers except to the extent Senior
Lenders take liens in such assets, in which event Term Creditors shall take a
second priority lien in such assets subject to the terms of this Agreement, or
(g) change or amend any other term of the Term Debt Documents if such change or
amendment would result in a Senior Default, increase the obligations of
Borrowers or confer additional material rights on Term Creditors or any other
holder of the Term Debt in a manner adverse to Borrowers or Senior Lenders.

          4.     Waiver of Certain Rights by Term Creditors.

                  4.1     Marshaling. Except as may be limited by Section 2.4
with respect to the SunScript Assets, Term Creditors hereby waive any rights it
may have under applicable law to assert the doctrine of marshaling or to
otherwise require Senior Agents or Senior Lenders to marshal any property of
Borrowers for the benefit of Term Creditors.

                  

4.2     Rights Relating to Senior Agents' Actions with respect to the
Collateral. Term Creditors hereby waives, to the extent permitted by applicable
law, any rights which it may have to enjoin or otherwise obtain a judicial or
administrative order preventing Senior Agents or Senior Lenders from taking, or
refraining from taking, any action with respect to all or any part of the
Collateral (other than the SunScript Stock, and, following the Option Closing,
the SunScript Assets). Without limitation of the foregoing, Term Creditors
hereby agree (a) that they have no right to direct or object to the manner in
which Senior Agents or Senior Lenders apply to the Senior Debt the proceeds of
the Collateral resulting from the exercise by Senior Agents and Senior Lenders
of rights and remedies under the Senior Debt Documents and (b) that Senior
Agents have not assumed any obligation to act as the agent for Term Creditors
with respect to the Collateral.

          5.     Representations and Warranties.

                  

5.1     Representations and Warranties of Term Creditors. Term Agent hereby
represents and warrants to Senior Agents and Senior Lenders that as of the date
hereof: (a) Term Agent is a national banking association duly formed and validly
existing under the laws governing its formation; (b) Term Agent has the power
and authority to enter into, execute, deliver and carry out the terms of this
Agreement, all of which have been duly authorized by all proper and necessary
action; (c) the execution of this Agreement by Term Agent will not violate or
conflict with the organizational documents of Term Agent, any material agreement
binding upon Term Agent or any law, regulation or order or require any consent
or approval which has not been obtained; and (d) this Agreement is the legal,
valid and binding

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obligation of Term Agent, enforceable against Term Agent in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by equitable principles.

                  

5.2     Representations and Warranties of Senior Agents. Each Agent hereby
represents and warrants to Term Agent and the Term Creditors that as of the date
hereof: (a) such Agent is a corporation duly formed and validly existing under
the laws of its respective state of formation; (b) such Agent has the power and
authority to enter into, execute, deliver and carry out the terms of this
Agreement, all of which have been duly authorized by all proper and necessary
action; (c) the execution of this Agreement by such Agent will not violate or
conflict with the organizational documents of such Agent, any material agreement
binding upon such Agent or any law, regulation or order or require any consent
or approval which has not been obtained; and (d) this Agreement is the legal,
valid and binding obligation of such Agent, enforceable against such Agent in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally or by equitable
principles.

          6.     Intentionally Deleted.

          7.     Modification. Any modification or waiver of any provision of
this Agreement, or any consent to any departure by any party from the terms
hereof, shall not be effective in any event unless the same is in writing and
signed by Senior Agents, Borrowers and Term Agent, and then such modification,
waiver or consent shall be effective only in the specific instance and for the
specific purpose given. Any notice to or demand on any party hereto in any event
not specifically required hereunder shall not entitle the party receiving such
notice or demand to any other or further notice or demand in the same, similar
or other circumstances unless specifically required hereunder.

          8.     Further Assurances. Each party to this Agreement promptly will
execute and deliver such further instruments and agreements and do such further
acts and things as may be reasonably requested in writing by any other party
hereto that may be necessary or desirable in order to effect fully the purposes
of this Agreement.

          9.     Notices. Unless otherwise specifically provided herein, any
notice delivered under this Agreement shall be in writing addressed to the
respective party as set forth below and may be personally served, telecopied or
sent by overnight courier service or certified or registered United States mail
and shall be deemed to have been given (a) if delivered in person, when
delivered, (b) if delivered by telecopy, on the date of transmission if
transmitted on a business day before 4:00 p.m. (Chicago time) or, if not, on the
next succeeding business day, (c) if delivered by overnight courier, one
business day after delivery to such courier properly addressed, or (d) if by
United States mail, four business days after deposit in the United States mail,
postage prepaid and properly addressed.

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               Notices shall be addressed as follows:

                   If to the Term Agent or Term Creditors:

                        U.S. BANK NATIONAL ASSOCIATION
                        225 South 6th Street
                        Minneapolis, Minnesota 55402-4203
                        Attention:  Jason Nadler
                        Telephone:  (314) 418-2059

                        with copy to:

                        HAYNES AND BOONE, LLP
                        901 Main Street, Suite 3100
                        Dallas, Texas 75202
                        Telephone:   (214) 651-5667
                        Facsimile:  (214) 200-0667
                        Attention:  Laurie G. Lang

                   If to the Company or to Borrowers:

                        SUN HEALTHCARE GROUP, INC.
                        101 Sun Avenue NE
                        Albuquerque, New Mexico 87109
                        Telephone:  (505) 468-4708
                        Facsimile:  (505) 468-6635
                        Attention:  Treasurer

                        With a copy to:

                        SUN HEALTHCARE GROUP, INC.
                        101 Sun Avenue NE
                        Albuquerque, New Mexico 87109
                        Telephone:  (505) 468-2423
                        Facsimile:  (505) 468-4747
                        Attention:  General Counsel

                   If to the Senior Administrative Agent:

                        CITICORP USA, INC.
                        388 Greenwich Street
                        19th Floor
                        New York, New York 10013
                        Telephone:  (212) 816-2496
                        Facsimile:  (212) 816-2613
                        Attention:  William Washburn

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                        With a copy to:

                        CITICORP USA, INC.
                        2 Penn's Way
                        Suite 200
                        New Castle, Delaware 19720
                        Telephone:  (302) 894-6017
                        Facsimile:  (302) 894-6120
                        Attention:  Robert Partee

                   If to Senior Collateral Agent or Senior Lenders:

                        HELLER HEALTHCARE FINANCE, INC.
                        2 Wisconsin Circle, Fourth Floor
                        Chevy Chase, Maryland 20815
                        Telephone:  (301) 664-9835
                        Facsimile:  (301) 664-9890
                        Attention:  Loan Officer, Portfolio Management Group
                                           re: Sun Healthcare

                        With a copy to:

                        HELLER HEALTHCARE FINANCE, INC.
                        2 Wisconsin Circle, Fourth Floor
                        Chevy Chase, Maryland 20815
                        Telephone:  (301) 664-9849
                        Facsimile: (301) 664-9866
                        Attention:  Katherine Lofft, Esq.

or in any case, to such other address as the party addressed shall have
previously designated by written notice to the serving party, given in
accordance with this Section 9.

          10.     Successors and Assigns. This Agreement shall inure to the
benefit of, and shall be binding upon, the respective successors and assigns of
Senior Agents, Senior Lenders, Term Agent, Term Creditors and Borrowers. To the
extent permitted under the Senior Debt Documents, Senior Lenders may, from time
to time, without notice to Term Agent, assign or transfer any or all of the
Senior Debt or any interest therein to any Person and, notwithstanding any such
assignment or transfer, or any subsequent assignment or transfer, the Senior
Debt shall, subject to the terms hereof, be and remain Senior Debt for purposes
of this Agreement, and every permitted assignee or transferee of any of the
Senior Debt or of any interest therein shall, to the extent of the interest of
such permitted assignee or transferee in the Senior Debt, be entitled to rely
upon and be the third party beneficiary of the provisions of this Agreement and
shall be entitled to enforce the terms and provisions hereof to the same extent
as if such assignee or transferee were initially a party hereto. To the extent
permitted under the Term Debt Documents, Term Creditors may, from time to time,
without notice to Senior Agents, assign or transfer any or all of the Term Debt
or any interest therein to any Person, and notwithstanding any such assignment
or transfer, or any subsequent assignment or transfer, the Term Debt shall,
subject to the terms hereof, be and remain Term Debt for purposes of this
Agreement, and every permitted assignee or transferee of any of the Term Debt or
of any interest therein shall, to the extent of the interest of such permitted
assignee or transferee in the Term Debt, be entitled to rely upon and be the
third party

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beneficiary of the provisions of this Agreement and shall be entitled to enforce
the terms and provisions hereof to the same extent as if such assignee or
transferee or initially a party hereto.

          11.     Relative Rights. This Agreement defines the relative rights of
Senior Agents, Senior Lenders and Term Agent and Term Creditors respectively.
Nothing in this Agreement shall (a) impair, as among Borrowers, Senior Agents
and Senior Lenders and as between Borrowers, Term Agent, and Term Creditors, the
obligation of Borrowers with respect to the payment of the Senior Debt and the
Term Debt in accordance with their respective terms or (b) affect the relative
rights of Senior Agents, Senior Lenders, Term Agent or Term Creditor with
respect to any other creditors of Borrowers.

          12.     Conflict. In the event of any conflict between any term,
covenant or condition of this Agreement and any term, covenant or condition of
any of the Term Debt Documents, the provisions of this Agreement shall control
and govern.

          13.     Headings. The paragraph headings used in this Agreement are
for convenience only and shall not affect the interpretation of any of the
provisions hereof.

          14.     Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

          15.     Severability. In the event that any provision of this
Agreement is deemed to be invalid, illegal or unenforceable by reason of the
operation of any law or by reason of the interpretation placed thereon by any
court or governmental authority, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be affected or
impaired thereby, and the affected provision shall be modified to the minimum
extent permitted by law so as most fully to achieve the intention of this
Agreement.

          16.     Continuation of Subordination; Termination of Agreement. This
Agreement shall remain in full force and effect until the payment in full in
cash of the Senior Debt and the termination of all lending commitments under the
Senior Debt Documents after which this Agreement shall terminate without further
action on the part of the parties hereto. Upon such payment and termination
described above and termination of this Agreement, Senior Agents and Borrowers
agree to notify the Depository Banks and the Collecting Bank (as such terms are
defined in the Senior Credit Agreement) of such payment and termination.

          17.     Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York excluding (to the
greatest extent a New York court would permit) any rule of law that would cause
the application of the law of any jurisdiction other than the State of New York.

          18.     CONSENT TO JURISDICTION. EACH OF SENIOR AGENTS (ON BEHALF OF
THEMSELVES AND SENIOR LENDERS), TERM AGENT (ON BEHALF OF ITSELF AND TERM
CREDITORS) AND BORROWERS HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK AND IRREVOCABLY AGREES THAT
ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE
LITIGATED IN SUCH COURTS. EACH OF

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SENIOR AGENTS (ON BEHALF OF THEMSELVES AND SENIOR LENDERS), TERM AGENT (ON
BEHALF OF ITSELF AND TERM CREDITORS) AND BORROWERS EXPRESSLY SUBMITS AND
CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS. EACH OF SENIOR AGENTS (ON BEHALF OF THEMSELVES AND SENIOR
LENDERS), TERM AGENT (ON BEHALF OF ITSELF AND TERM CREDITORS) AND BORROWERS
HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH
SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, ADDRESSED TO SENIOR AGENTS, TERM AGENT AND BORROWERS AT THEIR
RESPECTIVE ADDRESSES SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE
COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.

          19.     WAIVER OF JURY TRIAL. TERM AGENT (ON BEHALF OF ITSELF AND TERM
CREDITORS), BORROWERS, AND SENIOR AGENTS (ON BEHALF OF THEMSELVES AND SENIOR
LENDERS) HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE TERM
DEBT DOCUMENTS OR ANY OF THE SENIOR DEBT DOCUMENTS. EACH OF TERM AGENT (ON
BEHALF OF ITSELF AND TERM CREDITORS), BORROWERS AND SENIOR AGENTS ON BEHALF OF
THEMSELVES AND SENIOR LENDERS ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE
WAIVER IN ENTERING INTO THIS AGREEMENT, THE SENIOR DEBT DOCUMENTS AND THE TERM
DEBT DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR
RELATED FUTURE DEALINGS. EACH OF TERM AGENT (ON BEHALF OF TERM CREDITORS),
BORROWERS AND SENIOR AGENTS (ON BEHALF OF THEMSELVES AND SENIOR LENDERS) WARRANT
AND REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER
WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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          IN WITNESS WHEREOF

, Term Agent, Company and Senior Agents have caused this Intercreditor Agreement
to be executed as of the date first above written.

U.S. BANK, NATIONAL ASSOCIATION,
a national banking association, as Term Administrative Agent on behalf of itself
and the Term Creditors

By:      /s/                                                             
Its:                                                                       

HELLER HEALTHCARE FINANCE, INC.,
a Delaware corporation, as Senior Collateral Agent,
and on behalf of itself and the Senior Lenders

By:     /s/                                                              
Its:                                                                       

CITICORP USA, INC., a Delaware corporation, as Administrative Agent

 

By:    /s/                                                               
Its:                                                                       

 

S-1

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          IN WITNESS WHEREOF,

intending to be legally bound, and intending that this Agreement constitutes an
instrument executed under seal, Borrowers have caused this Agreement to be
executed under seal as of the date first written above.

 

Sun Healthcare Group, Inc.

By:     /s/ Robert K. Schneider                                    
Name:  Robert K. Schneider
Title:    Vice President and Treasurer

Advantage Health Services, Inc. Americare Health Services Corp. Americare of
West Virginia, Inc. Atlantic Medical Supply Holding Company, Inc. Beckley Health
Care Corp. Bergen Eldercare, Inc. Bibb Health & Rehabilitation, Inc. BioPath
Clinical Laboratories, Inc. Braswell Enterprises, Inc. Brent-Lox Hall Nursing
Home, Inc. Brittany Rehabilitation Center, Inc. Cal-Med, Inc. Care Enterprises
West Care Enterprises, Inc. Care Home Health Services CareerStaff Management,
Inc. CareerStaff Services Corporation CareerStaff Unlimited, Inc. Carmichael
Rehabilitation Center Charlton Healthcare, Inc. Circleville Health Care Corp.
Clipper Home of North Conway, Inc. Clipper Home of Portsmouth, Inc. Clipper Home
of Rochester, Inc. Clipper Home of Wolfeboro, Inc. Coalinga Rehabilitation
Center Contour Medical, Inc. Correctional Care Corp. Covina Rehabilitation
Center Dunbar Health Care Corp. Duval Healthcare Center, Inc. Executive Pharmacy
Services, Inc. [SIGNATURE APPEARS ON PAGE S-5]

S-2

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Facility Supply, Inc. Fairfield Rehabilitation Center First Class Pharmacy, Inc.
Fullerton Rehabilitation Center Gainesville Healthcare Center, Inc. Gardendale
Health Care Center, Inc. Glendora Rehabilitation Center Glenville Health Care,
Inc. Goodwin Nursing Home, Inc. Grand Terrace Rehabilitation Center Hallmark
Health Services, Inc. Harbor View Rehabilitation Center HC, Inc. Heritage
Rehabilitation Center HoMed Convalescent Equipment, Inc. HTA of New York, Inc.
Huntington Beach Convalescent Hospital Jeff Davis Healthcare, Inc. Lake Forest
Healthcare Center, Inc. Libbie Rehabilitation Center, Inc. Manatee Springs
Nursing Center, Inc. Maplewood Health Care Center of Jackson,
   Tennessee, Inc. Marion Health Care Corp. Masthead Corporation Meadowbrook
Rehabilitation Center Mediplex Management of Palm Beach
   County, Inc. Mediplex Management, Inc.
Mediplex of Concord, Inc. Mediplex of Connecticut, Inc. Mediplex of Kentucky,
Inc. Mediplex of Maryland, Inc. Mediplex of Massachusetts, Inc. Mediplex of New
Hampshire, Inc. Mediplex of New Jersey, Inc. Mediplex Rehabilitation of
Massachusetts, Inc. Mid-Florida, Inc. Mountain Care Management, Inc. New Bedford
Nursing Center, Inc. Newport Beach Rehabilitation Center Nursing Home, Inc.
Orange Rehabilitation Hospital, Inc. P.M.N.F. Management, Inc. Pacific Health
Care, Inc. Paradise Rehabilitation Center, Inc. Pharmacy Factors of California,
Inc. [SIGNATURE APPEARS ON PAGE S-5]

S-3

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Pharmacy Factors of Florida, Inc. Pharmacy Factors of Texas, Inc. PRI, Inc.
Putnam Health Care Corp. Quality Care Holding Corporation Quality Nursing Care
of Massachusetts, Inc. Regency Health Services, Inc. Regency High School, Inc.
Regency Rehab Hospitals, Inc. Regency-North Carolina, Inc. Regency-Tennessee,
Inc. Retirement Care Associates, Inc. Rose Rehabilitation Center Salem Health
Care Corp. San Bernardino Rehabilitation Hospital, Inc. San Joaquin G.P.
Corporation Shandin Hills Rehabilitation Center Southside Health Care Center,
Inc. Spofford Land, Inc. SRT, Inc. Statesboro Health Care Center, Inc. Stockton
Rehabilitation Center, Inc. Summers Landing, Inc. Sun Lane Purchase Corporation
SunAlliance Healthcare Services, Inc. (successor
   by merger with SunDelta Corporation) SunBridge G.P. Corporation SunBridge
Healthcare Corporation SunBridge Healthcare of Colorado, Inc. SunBridge Rehab of
Colorado, Inc. SunBridge, Inc. SunCare Respiratory Services, Inc. SunCare
Services Corporation SunChoice Medical Supply, Inc. SunDance Rehabilitation
Corporation SunDance Services Corporation SunFactors, Inc. SunHealth Specialty
Services, Inc. SunMark Nevada, Inc. SunMark of New Mexico, Inc. SunPlus Home
Health Services, Inc. SunScript Pharmacy Corporation SunSolution, Inc. The
Mediplex Group, Inc. [SIGNATURE APPEARS ON PAGE S-5]

 

S-4

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U.S. Laboratory Corp. Vista Knoll Rehabilitation Center, Inc. West Tennessee,
Inc. Willow Way, Inc. Worcester Nursing Center, Inc.

 

 

By:     /s/ Robert K. Schneider                                    
Name:  Robert K. Schneider
Title:    Vice President and Treasurer

 

Accelerated Care Plus, L.L.C.

 

By:  Cal-Med, Inc.,
       Member of Accelerated Care Plus, L.L.C.

 

By:     /s/ Robert K. Schneider                                    
Name:  Robert K. Schneider
Title:    Vice President and Treasurer

 

By:  HC, Inc.
       Member of Accelerated Care Plus, L.L.C.

 

By:     /s/ Robert K. Schneider                                    
Name:  Robert K. Schneider
Title:    Vice President and Treasurer

 

SunDance Rehabilitation Texas, Limited
     Partnership

By:  SRT, Inc., its general partner

By:     /s/ Robert K. Schneider                                    
Name:  Robert K. Schneider
Title:    Vice President and Treasurer

 

S-5

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West Jersey/Mediplex Rehabilitation Limited
     Partnership

By:  Mediplex of New Jersey, Inc., its general partner

By:     /s/ Robert K. Schneider                                    
Name:  Robert K. Schneider
Title:    Vice President and Treasurer

 

S-6

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HSR Partners, L.P.
Therapists Unlimited - Baltimore/Washington,
  D.C., L.P.
Therapists Unlimited - Chicago, L.P. (II)
Therapists Unlimited - Detroit II, L.P.
Therapists Unlimited - Fresno, L.P.
Therapists Unlimited - Indianapolis, L.P.
Therapists Unlimited - Seattle, L.P.

By:  CareerStaff Management, Inc., its general partner

By:     /s/ Robert K. Schneider                                    
Name:  Robert K. Schneider
Title:    Vice President and Treasurer

 

 

S-7