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                                        Valley Rehabilitation and Living Center


                           UNCONDITIONAL GUARANTY OF LEASE


    THIS UNCONDITIONAL GUARANTY OF LEASE (this "Guaranty") dated as of this
30th day of November, 1996, is given by SUN HEALTHCARE GROUP, INC., a Delaware
corporation ("Guarantor") to IDAHO ASSOCIATES, L.L.C., an Illinois limited
liability company ("Lessor").


                                          I

                                       RECITALS

    1.1  DESCRIPTION OF LEASE.  Lessor and Sunrise Healthcare Corporation, a
New Mexico corporation ("Lessee"), having entered into that certain Lease of
even date herewith (the "Lease") for a one hundred twenty-seven (127) bed
nursing home facility commonly known as Valley Rehabilitation and Living Center
located at 1014 Burrell Avenue, Lewiston, Idaho.

    1.2  INDUCEMENT.   Guarantor is the sole shareholder of Lessee, and
accordingly, Guarantor hereby acknowledges that the Lease  will economically
benefit Guarantor.  


                                          II

                                     THE GUARANTY

    2.1  GUARANTY.  Guarantor hereby absolutely and unconditionally guarantees:

         (a)  The prompt payment of each installment of fixed annual rent and
    Additional Rent (as defined in the Lease) when and as the same become due
    under the terms of the Lease;

         (b)  The prompt payment of all other sums payable by Lessee to Lessor
    or any other person under the terms of the Lease, including, without
    limitation, tax and any other deposits required under the terms of the
    Lease and damages due to default by Lessee under the Lease; and

         (c)  The full and timely performance of each and every other
    obligation of Lessee under the Lease;

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for which Guarantor shall be jointly and severally liable with Lessee (the items
described in clauses (a), (b) and (c) above are hereinafter referred to as the
"Guarantor's Obligations").

    2.2  Guarantor absolutely and unconditionally covenants and agrees that, in
the event that Lessee is unable to, or does not, pay, perform or satisfy any of
the obligations or liabilities of Lessee under the Lease (the "Lessee's
Liabilities") in a full and timely manner, for any reason, including, without
limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition, or readjustment of, or other similar proceedings affecting, the
status, composition, identity, existence, assets or obligations of Lessee, or
the disaffirmance or termination of any of the Lessee's Liabilities in or as a
result of any such proceedings, Guarantor shall pay, perform or satisfy the
Lessee's Liabilities and that no such occurrence shall in any way reduce or
affect the Guarantor's Obligations hereunder.  Upon the occurrence of a default
in the prompt payment, timely performance and satisfaction in full of Lessee's
Liabilities, all of the Guarantor's Obligations shall, at the election of
Lessor, become immediately due and payable, provided, however, that nothing
herein shall be construed as granting Lessor any greater rights or remedies
against Guarantor as a result of a breach by Lessee of its obligations under the
Lease than Lessor has against Lessee as a result thereof under the terms of the
Lease.

    2.3  Guarantor shall be directly and primarily liable, jointly and
severally with Lessee, for all of the foregoing.  Lessor's rights under this
Guaranty shall be exercisable by action against Guarantor or joined with any
action against Lessee.  Lessor need not proceed against Lessee as security for
Lessee's Liabilities or exhaust its remedies against Lessee or exercise any of
the other remedies available to Lessor under the Lease, prior to, concurrently
with or after proceeding against Guarantor to collect the full amount of the
Guarantor's Obligations hereunder.  In the event that Lessor may have collected
all or any part of Lessee's Liabilities and a claim for repayment of all or any
part thereof is made against Lessor, the liability of Guarantor hereunder as to
the amount so collected but subject to such claim shall not be discharged or
affected.


                                         III

                                   OTHER PROVISIONS

    3.1   ACTIONS BY LESSOR NOT TO AFFECT LIABILITY.  The liability of
Guarantor hereunder shall not be affected by:

          (a)  The renewal, extension, modification or termination of the
    Lease by lapse of time or otherwise (all of which are hereby authorized by
    Guarantor) or a release or limitation of the liability of Lessee or
    Lessee's estate under the Lease in

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    any bankruptcy or insolvency proceeding;

          (b)  Any extension in the time for making any payment due under
    the Lease or acceptance of partial payment or performance from Lessee;

          (c)  The acceptance or release by Lessor of any additional
    security for the performance of Lessee's obligations under the Lease;

          (d)  The failure during any period of time whatsoever of Lessor
    to attempt to collect any amount due under the Lease from Lessee or to
    exercise any remedy available under such Lease or any other security
    instrument given as security for performance of the same, in the event of a
    default in the performance by Lessee of the terms of the Lease;

          (e)  Lessor's consent to any assignment or successive assignments of
    the Lease, or any subletting or successive subletting of the Demised
    Premises (as defined in the Lease);

          (f)  Any assignment or successive assignments of Lessor's interest
    under the Lease (whether absolute or as collateral);

          (g)  Lessor's consent to any changed, expanded or different use
    of any or all of the Demised Premises;

          (h)  The assertion by Lessor against Lessee of any rights or
    remedies reserved or granted to Lessor under the Lease, including the
    commencement by Lessor of any proceedings against Lessee; or

          (i)  Any dealings, transactions or other matter occurring between
    Lessor and Lessee;

whether or not Guarantor shall have knowledge or have been notified of or agreed
to any of the foregoing.

    3.2  WAIVERS.  Guarantor hereby expressly waives:

          (a)  Notice of acceptance of this Guaranty;

          (b)  Presentment, demand, notice of dishonor, protest and notice
    of protest, and all other notices whatsoever, including, without
    limitation, notice of any event or matter described in Section 3.1 hereof;

          (c)  Any and all claims or defenses based upon lack of diligence
    in:  
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               (i)    collection of any amount the payment of which is 
         guaranteed hereby;

               (ii)   protection of any collateral or other security for the
         Lease;

               (iii)  realization upon any other security given for the
         Lease; or

               (iv)   the discharge, liquidation or reorganization of Lessee in
         bankruptcy or the rejection of the Lease by Lessee or a trustee in
         bankruptcy.

         (d)   Any and all defenses of suretyship;

    3.3  NATURE OF REMEDIES.  No delay or omission on the part of Lessor in 
the exercise of any right or remedy hereunder shall operate as a waiver 
thereof.  All remedies of Lessor hereunder shall be in addition to, and 
exercisable consecutively or concurrently in any combination with, any and 
all remedies available to Lessor by operation of law or under the Lease, and 
Lessor may exercise its remedies hereunder without the necessity of any 
notice to Lessee or Guarantor of nonpayment, nonobservance, nonperformance or 
other default by Lessee under the Lease.

    3.4  COSTS OF COLLECTION.  Notwithstanding any provision of this Guaranty 
to the contrary, in the event of the enforcement or interpretation of this 
Guaranty by the prevailing party shall be entitled to collect its costs of 
collection, including, without limitation, reasonable attorneys' fees.

    3.5  MECHANIC'S LIENS OR OTHER LIENS.  Notwithstanding any provision of 
this Guaranty to the contrary, in the event that any mechanic's liens, 
laborer's and/or materialman's claims (collectively, the "Mechanic's Liens") 
are filed against the Leased Property (as defined in the Lease), or any part 
thereof, and not paid or discharged by Lessee in accordance with the terms of 
the Lease, or the Guarantor does not either (i) deposit with Lessor such 
security as may be reasonably demanded by Lessor to protect against such 
lien, or (ii) post a release bond in form and amount as required by 
applicable law and as otherwise satisfactory to Lessor, Lessor shall be 
entitled pursuant to this Guaranty to collect from Guarantor from and after 
the expiration or earlier termination of the Lease, the total aggregate 
amount of such unpaid or undischarged Mechanic's Liens.

    3.6  SUBORDINATION OF RIGHTS OF SUBROGATION.  Guarantor's rights of 
subrogation, shall be subordinated to the rights of Lessor under the Lease 
and the performance by Guarantor of the Lessee's Liabilities hereunder, and 
until such performance of Lessee's Liabilities, Guarantor shall have no such 
right of subrogation.  Guarantor's execution and performance under this 
Guaranty shall not, however, waive Guarantor's rights of subrogation to 
proceed against Lessee following Guarantor's satifaction and performance
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of Lessee's Liabilities.

    3.7  ASSIGNMENT.  This Guaranty shall not be assignable by Guarantor but 
shall be binding upon the successors to and legal representatives of 
Guarantor.  This Guaranty shall be assignable by Lessor and shall inure to 
the benefit of its successors and assigns.

    3.8  GOVERNING LAW; CONSENT TO JURISDICTION.  This Guaranty shall be 
governed by, and construed in accordance with, the laws of the State of 
Illinois.  To induce Lessor to accept this Guaranty, Guarantor irrevocably 
agrees that, subject to Lessor's sole and absolute election, ALL ACTIONS OR 
PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED 
TO THIS GUARANTY, SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY 
OF CHICAGO, STATE OF ILLINOIS.  GUARANTOR HEREBY CONSENTS AND SUBMITS TO THE 
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID CITY 
AND STATE AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY 
REGISTERED MAIL DIRECTED TO GUARANTOR AT THE ADDRESS STATED ON THE SIGNATURE 
PAGE HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL 
RECEIPT THEREOF.

    3.9  SEVERABILITY.  If any term, restriction or covenant of this Guaranty 
is deemed illegal or unenforceable, all other terms, restrictions and 
circumstances subject hereto shall remain unaffected to the extent permitted 
by law; and if any application of any term, restriction or covenant to any 
person or circumstances is deemed illegal, the application of such term, 
restriction or covenant to other persons and circumstances shall remain 
unaffected to the extent permitted by law.

    IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the
day and year first above written.

                             SUN HEALTHCARE GROUP, INC., a Delaware corporation


                             By:_________________________________

                             Name:_______________________________

                             Title:______________________________


                             Address:

                             101 Sun Lane N.E.
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                             Albuquerque, NM  87109
                             Attention: Mr. Andrew Turner

                             with copies to:

                             101 Sun Lane N.E.
                             Albuquerque, NM  87109
                             Attention: Law Department
                                    General Counsel