<PAGE>
                               INDEMNITY AGREEMENT


     THIS AGREEMENT is made and entered into this ________ day of ______________
(the "Agreement"), by and between Sun Healthcare Group, Inc., a Delaware
corporation ("Company"), and ______________________ ("Indemnitee").

     WHEREAS, highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or in other capacities unless they are
provided with adequate protection through insurance and indemnification against
risks of claims and actions against them arising out of their service to and
activities on behalf of the corporation; and

     WHEREAS, the Board of Directors of the Company has determined that the
inability to attract and retain such persons is detrimental to the best
interests of the Company's stockholders and that the Company should act to
assure such persons that there will be increased certainty of such protection in
the future; and

     WHEREAS, neither Indemnitee nor the Company regards statutory
indemnification protection as adequate; and

     WHEREAS, it is reasonable, prudent and necessary for the Company to
contractually  obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified; and

     WHEREAS, Indemnitee presently serves the Company as a Director; and

     WHEREAS, Indemnitee is willing to continue to serve as a Director and to
consider taking on additional service for or on behalf of the Company on the
condition that he be so indemnified on the terms and conditions set forth
herein;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:

     Section 1.   INDEMNIFICATION - GENERAL.  The Company shall indemnify, and
advance Expenses (as hereinafter defined) to, Indemnitee (a) as provided in this
Agreement and (b) to the fullest extent permitted by applicable law in effect on
the date hereof and as in effect from time to time.  The rights of Indemnitee
provided under the proceeding sentence shall include, but shall not be limited
to, the rights set forth in the other Sections of this Agreement.

     Section 2.   PROCEEDINGS OTHER THAN PROCEEDINGS BY OR IN THE RIGHT OF THE
COMPANY.   Indemnitee shall be entitled to the rights of indemnification
provided in this Section 2 if, by reason of an Indemnification Event (as
hereinafter defined), he is, or is threatened to be made, a party to any
threatened, pending, or completed Proceeding (as hereinafter defined), other
than a Proceeding by or in the right of the Company.  Pursuant to this Section
2, Indemnitee shall be indemnified

<PAGE>

against all Expenses, judgements, penalties, fines, and amounts paid in 
settlement (if such settlement is approved in advance by the Company, which 
approval shall not unreasonably be withheld) actually and reasonably incurred 
by him or on his behalf in connection with such Proceeding or any claim, 
issue, or matter therein, if he acted in good faith and in a manner he 
reasonably believed to be in or not opposed to the best interests of the 
Company, and with respect to any criminal Proceeding, had no reasonable cause 
to believe his conduct was unlawful.

     Section 3.   PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY.  Indemnitee
shall be entitled to the rights of indemnification provided in this Section 3
if, by reason of an Indemnification Event, he is, or is threatened to be made, a
party to any threatened, pending, or completed Proceeding brought by or in the
right of the Company to procure a judgment in its favor.  Pursuant to this
Section 3, Indemnitee shall be indemnified against all Expenses and, to the
fullest extent permitted by Delaware law, amounts paid in settlement (if such
settlement is approved in advance by the Company, which approval shall not
unreasonably be withheld), in each case to the extent actually and reasonably
incurred by him or on his behalf in connection with such Proceeding or any
claim, issue or matter therein if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company; PROVIDED, HOWEVER, that no indemnification shall be made in respect of
any claim, issue or matter as to which Indemnitee shall have been adjudged to be
liable to the Company and its stockholders in the performance of Indemnitee's
duty to the Company and its stockholders unless and only to the extent that the
court in which such action or proceeding is or was pending shall determine that
in view of all the circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnity, and then only to the extent that the court
shall determine.

     Section 4.   CONTRIBUTION.  If, when Indemnitee has met the applicable
standard of conduct, the indemnification provisions set forth in Section 2 or 3,
as the case may be, should, under applicable law, be to any extent
unenforceable, then the Company agrees that it shall be treated as though it is
or was a party to the threatened, pending or completed Proceeding in which
Indemnitee is or was involved and that the Company shall contribute to the
amounts paid or payable by Indemnitee as a result of such Expenses, judgments in
third-party proceedings, fines and amounts paid in settlement actually and
reasonably incurred by Indemnitee (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and
Indemnitee on the other or (ii) if the allocation provided in clause (i) is not
permitted by applicable law, in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and Indemnitee on the other in
connection with such action or inaction, or alleged action or inaction, as well
as any other relevant equitable considerations.

     For purposes of this Section 4, the relative benefit to the Company shall
be deemed to be the benefits accruing to it and to all its directors, officers,
employees and agents (other than Indemnitee), as a group and treated as one
entity, and the relative benefit to Indemnitee shall be deemed to be an amount
not greater than Indemnitee's yearly base salary or director's compensation from
the Company during the first year in which the action or inaction, or alleged
action or inaction, forming the basis for the threatened, pending or
contemplated suit, action or proceeding was alleged to have occurred plus the
amount, if any, of monetary benefit and other consideration received by
Indemnity in the transaction(s) that gave rise to such suit, action or
proceeding.  The relative fault shall be 

                                       -2-
<PAGE>

determined by reference to, among other things, the fault of the Company and 
all of its directors, officers, employees and agents (other than Indemnitee), 
as a group and treated as one entity, and such group's relative intent, 
knowledge, access to information and opportunity to have altered or prevented 
the action or inaction, or alleged action or inaction, forming the basis for 
the threatened, pending or contemplated Proceeding, and Indemnitee's relative 
fault in light of such factors on the other hand.

     Section 5.   INDEMNIFICATION OF A PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL.
(a)  Notwithstanding any other provision of this agreement, to the extent that
Indemnitee is, by reason of an Indemnification Event, a party to and is
successful, on the merits or otherwise, in any Proceeding, he shall be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith.  If Indemnitee is not wholly successful in
such Proceeding but is successful, on the merits or otherwise, as to one or more
but less than all claims, issues, or matters in such Proceeding, the Company
shall indemnify Indemnitee against all Expenses actually and reasonably incurred
by him or on his behalf in connection with each successfully resolved claim,
issue, or matter.  

     (b)  If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the claims, damages,
judgments, fines or amounts paid in settlement by Indemnitee in connection with
an Indemnification Event specified in Section 2 or 3, as the case may be, but
not, however, for the total amount thereof, the Company shall nevertheless 
indemnify Indemnitee for the portion thereof to which Indemnitee is entitled. 
The party or parties making the determination shall determine the portion (if
less than all) of such claims, damages, judgments, fines or amounts paid in
settlement for which Indemnitee is entitled to indemnification under this
Agreement.

     (c)  For purposes of this Section and without limitation, the termination
of any claim, issue, or matter in such a Proceeding by abandonment, withdrawal,
running of limitations, or by dismissal, with or without prejudice, shall be
deemed to be a successful result as to such claim, issue, or matter.

     Section 6.   INDEMNIFICATION FOR EXPENSES OF A WITNESS.   Notwithstanding
any other provision of this Agreement, to the extent that Indemnitee is, by
reason of an Indemnification Event, a witness in any Proceeding to which
Indemnitee is not a party, he shall be indemnified against all Expenses actually
and reasonably incurred by him or on his behalf in connection therewith.

     Section 7.   ADVANCEMENT OF EXPENSES.   The Company shall advance all
reasonable Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding within ten (10) days after the receipt by the Company of a
statement or statements from Indemnitee  requesting such advance or advances
from time to time, whether prior to, during, or after final disposition of such
Proceeding.  Such statement or statements shall reasonably evidence the Expenses
incurred by Indemnitee and shall include or be preceded or accompanied by a
written undertaking (which shall be accepted by or on behalf of the Company
without reference to the financial ability of Indemnitee to make repayment, and
without the pledging of any security by Indemnitee) by or on behalf of
Indemnitee to repay any Expenses advanced if, as and when it shall ultimately be
determined that

                                       -3-
<PAGE>

Indemnitee is not entitled to be indemnified against such Expenses, or in the 
case of advancement of Expenses in connection with a Proceeding in which 
Indemnitee seeks recovery upon any of the insurance policies described in 
Section 12(b) below, if, as and to the extent that Indemnitee is 
unsuccessful, on the merits or otherwise, therein.  If indemnitee seeks 
advancement of Expenses in connection with any of the types of threatened, 
pending, or completed Proceedings covered by the provisions of this 
Agreement, Indemnitee, in order to obtain such advances, must submit a 
written request for Indemnification pursuant to Section 8(a) below in 
addition to a statement or statements requesting such advances or advances.  
Notwithstanding any other provision of this Agreement, if Indemnitee requests 
an adjudication or an award in arbitration pursuant to the provisions of 
Section 11(a) below in order to establish his entitlement to indemnification 
or advancement of Expenses, any determination made pursuant to Section 8(b) 
of this Agreement that Indemnitee is not entitled to indemnification or to 
receive advancement of Expenses shall not be binding and Indemnitee shall not 
be required to reimburse the Company for any Expense advance unless and until 
a final judicial determination or award in arbitration is made with respect 
thereto as to which all rights of appeal therefrom have been exhausted or 
lapsed.

     Section 8.   PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.
(a)  To obtain indemnification under Section 2 and 3 of this Agreement,
Indemnitee shall submit to the Company (Attn.: General Counsel) a written
request, including therein or therewith such documentation and information as is
reasonably available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to indemnification. The
Secretary of the Company shall, promptly upon receipt of such a request for
indemnification, advise the Board of Directors in writing that Indemnitee has
requested indemnification.

     (b)  Upon written request by Indemnitee for indemnification pursuant to the
first sentence of Section 8(a) hereof, a determination, if required by
applicable law, with respect to Indemnitee's entitlement thereto shall be made
as soon as possible:  (i) if a Change in Control (as hereinafter defined) shall
have occurred, by Independent Counsel (as hereinafter defined) in a written
opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee (unless Indemnitee shall request that such determination be made by
the Board of Directors or the stockholders, in which case the determination
shall be made in the manner provided below in clause (ii)); or (ii) if a Change
of Control shall not have occurred, (A) by the Board of Directors by a majority
vote of a quorum consisting of Disinterested Directors (as hereinafter defined),
(B) if a quorum of the Board of Directors consisting of Disinterested Directors
is not obtainable or, even if obtainable, such quorum of Disinterested Directors
so directs, by Independent Counsel in a written opinion to the Board of
Directors, a copy of which shall be delivered to Indemnitee; or (C) by the
stockholders of the Company and, if it is so determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made within ten (10)
days after such determination.  Indemnitee shall cooperate with the person,
persons, or entity making such determination with respect to Indemnitee's
entitlement to indemnification, including providing to such persons, persons, or
entity upon reasonable advance request any documentation or information which is
not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination.  Any
cost or expenses (including attorney fees and disbursements) incurred by
Indemnitee in so cooperating with the person, persons, or entity making such
determination shall be borne by the Company (irrespective of the determination
as to Indemnitee's entitlement to

                                       -4-
<PAGE>

indemnification) and the Company hereby indemnifies and agrees to hold 
Indemnitee harmless therefrom.  

     (c)  In the event the determination of entitlement to indemnification is to
be made by Independent Counsel pursuant to Section 8(b) hereof, the Independent
Counsel shall be selected as provided in this Section 8(c).  If a Change of
Control shall not have occurred, the Independent Counsel shall be selected by
the Board of Directors, and the Company shall give written notice to Indemnitee
advising him of the identity of the Independent Counsel so selected.  If a
Change of Control shall have occurred, the Independent Counsel shall be selected
by Indemnitee (unless the Indemnitee shall request that such selection be made
by the Board of Directors, in which event the preceding sentence shall apply),
and Indemnitee shall give written notice to the Company advising it of the
identity of the Independent Counsel so selected.  In either event, Indemnitee or
the Company, as the case may be, may, within ten (10) days after such written
notice of selection shall have been given, deliver to the Company or to
Indemnitee, as the case may be, a written objection to such selection; PROVIDED,
HOWEVER, that such objection may be asserted only on the ground that the
Independent Counsel so selected does not meet the requirements of "Independent
Counsel" as defined in Section 18(f) of this Agreement, and the objection shall
set forth with particularity the factual basis of such assertion.  If such
written objection is so made and substantiated, the Independent Counsel so
selected may not serve as Independent Counsel unless and until such objection is
withdrawn or a court has determined that such objection is without merit.  If,
within twenty (20) days after submission by Indemnitee of a written request for
indemnification pursuant to Section 8(a) hereof, no Independent Counsel shall
have been selected and not objected to, either the Company or Indemnitee may
petition the Court of Chancery of the State of Delaware or other court of
competent jurisdiction for resolution of any objection which shall have been
made by the Company or Indemnitee to the other's selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person selected
by the Court or by such other person as the Court shall designate, and the
person with respect to whom all objections are so resolved or the person so
appointed shall act as Independent Counsel under Section 8(b) hereof.  The
Company shall pay any and all reasonable fees and expenses of Independent
Counsel incurred by such Independent Counsel in connection with acting pursuant
to Section 8(b) hereof, and the Company shall pay all reasonable fees and
expenses incident to the procedures of this Section 8(c), including, without
limitation, those of Indemnitee, regardless of  the manner in which such
Independent Counsel was selected or appointed.  Upon the due commencement of any
judicial proceeding or arbitration pursuant to Section 11(e) of this Agreement,
Independent Counsel shall be discharged and relieved of any further
responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).

     Section 9.   COSTS.  All the costs of making the determination require by
Section 8 hereof shall be borne solely by the Company, including, but not
limited to, the costs of legal counsel, proxy solicitations and judicial
determinations.  The Company shall also be solely responsible for paying (i) all
reasonable expenses incurred by Indemnitee to enforce this Agreement, including,
but not limited to, the costs incurred by Indemnitee to obtain court-ordered
indemnification pursuant to Section 11, regardless of the outcome of any such
application or proceeding, and (ii) all costs of defending any suits or
investigation or proceedings challenging payments to Indemnitee under this
Agreement.

                                       -5-
<PAGE>

     Section 10.   PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.  (a)  In
making a determination with respect to entitlement to indemnification hereunder,
the person or persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee has
submitted a request for indemnification in accordance with Section 8(a) of this
Agreement, and the Company shall have the burden of proof to overcome that
presumption in connection with the making by any person, persons, or entity of
any determination contrary to that presumption.

     (b)  The termination of any Proceeding or of any claim, issue, or matter
therein, by judgment, order, settlement, or conviction, or upon a plea of NOLO-
CONTENDERE or its equivalent, shall not (except as otherwise expressly provided
in this Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.

     (c)  Indemnitee's conduct with respect to an employee benefit plan for a
purpose he reasonably believed to be in the interests of the participants in and
beneficiaries of the plan shall be deemed to be conduct that Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company.

     (d)  For purposes of any determination hereunder, Indemnitee shall be
deemed to have acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company, or, with respect to any
criminal action or proceeding, to have had no reasonable cause to believe his
conduct was unlawful, if his action was based on (i) the records or books of
account of the Company or another enterprise, including financial statements,
(ii) information supplied to him by the officers of the Company or another
enterprise in the course of their duties, (iii) the advice of legal counsel for
the Company or another enterprise in the course of their duties, (iv)
information or records given or reports made to the Company or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Company or another enterprise.
The term "another enterprise" as used in this Section 10 shall mean any other
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise of which Indemnitee is or was serving at the request of the
Company as an officer, director, partner, trustee, employee or agent.  The
provisions of this Section 10(d) shall not be deemed to limit in any way the
other circumstances in which Indemnitee may be deemed to have met the applicable
standard of conduct set forth in Section 2 or 3, as the case may be.

     Section 11.   REMEDIES OF INDEMNITEE.   (a)   In the event that:  (i) a
determination is made pursuant to Section 8 of this Agreement that Indemnitee is
not entitled to indemnification under this Agreement, (ii) advancement of
Expenses is not timely made pursuant to Section 7 of this Agreement, (iii) no
determination of entitlement to indemnification shall have been made pursuant to
Section 8(b) of this Agreement within 60 days after receipt by the Company of
the written request for indemnification, (iv) payment of indemnification is not
made pursuant to Section 5 or 6 of this Agreement within ten (10) days after
receipt by the Company of a written request therefor, or (v) payment of
indemnification is not made within ten (10) days after a determination has been
made

                                       -6-
<PAGE>

that Indemnitee is entitled to indemnification, Indemnitee shall be entitled 
to request an adjudication in an appropriate court of the State of Delaware, 
or in any other court of competent jurisdiction, of his entitlement to such 
indemnification or advancement or Expenses.  Alternatively, Indemnitee, at 
his option, may seek an award in arbitration to be conducted by a single 
arbitrator pursuant to the Commercial Arbitration Rules of the American 
Arbitration Association.  Indemnitee shall commence such proceeding seeking 
an adjudication or an award in arbitration within one year following the date 
on which Indemnitee first has the right to commence such proceeding pursuant 
to this Section 11(a); PROVIDED, HOWEVER, that the foregoing time limitation 
shall not apply in respect of a proceeding brought by Indemnitee to enforce 
his rights under Section 5 of this Agreement.

     (b)  In the event that a determination shall have been made pursuant to
Section 8(b) of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section 11 shall be conducted in all respects as a DE NOVO trial, or
arbitration, on the merits and Indemnitee shall not be prejudiced by reason of
that adverse determination.  If a Change of Control shall have occurred, in any
judicial proceeding or arbitration commenced pursuant to this Section 11, the
Company shall have the burden of proving that Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.

     (c)  If a determination shall have been made pursuant to Section 8(b) of
this Agreement that Indemnitee is entitled to indemnification or advancement of
Expenses, as the case may be, the Company shall be bound by such determination
in any judicial proceeding or arbitration commenced pursuant to this Section 11.


     (d)  The Company shall be precluded from asserting any judicial proceeding
or arbitration commenced pursuant to the provisions of Section 11(a) that
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.

     (e)  It is the intent of the Company that Indemnitee not be required to
incur the expenses associated with the enforcement of his rights under this
Agreement by litigation or other legal action because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
Indemnitee hereunder.  Accordingly, if it should appear to Indemnitee that the
Company has failed to comply with any of its obligations under this Agreement or
in the event that the Company or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any action, suit or
proceeding designed (or having the effect of being designed) to deny or to
recover from, Indemnitee the benefits intended to be provided to Indemnitee
hereunder, the Company irrevocably authorized Indemnitee from time to time to
retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent Indemnitee in connection with the initiation or defense
of any litigation or other legal action, whether by or against the Company or
any director, officer, stockholder or other person affiliated with the Company,
in any jurisdiction.  Regardless of the outcome thereof, but subject to
Indemnitee having acted in good faith, the Company shall pay and be solely
responsible for any and all expenses (of the type described in Section 18(e) of
this Agreement) incurred by Indemnitee (i) as a result of the Company's failure
to perform this Agreement or any provision thereof or (ii) as a result of the
Company's or any person's

                                       -7-
<PAGE>

contesting the validity or enforceability of this Agreement or any provision 
thereof as aforesaid.     

     Section 12.   NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.
(a)  The rights of indemnification and to receive advancement of Expenses as
provided by this Agreement shall not be deemed exclusive of any other rights to
which Indemnitee may at any time be entitled under applicable law, the
Certificate of Incorporation, the Bylaws, any agreement, a vote of stockholders
or a resolution of directors, or otherwise, both as to actions in his official
capacity and as to actions in another capacity while holding such office, and
shall continue after Indemnitee has ceased to be a director or officer of the
Company and shall inure to the benefit of his heirs, executors and
administrators; provided, however, that to the extent Indemnitee otherwise would
have any greater right to indemnification and/or advancement of expenses under
any provision of the Certificate of Incorporation or the Bylaws of the Company,
Indemnitee shall be deemed to have such greater right pursuant to this
Agreement; and, provided, further, that to the extent that any change is made to
the Delaware law (whether by legislative action or judicial decision), the
Certificate of Incorporation and/or the Bylaws that permits any greater right to
indemnification and/or advancement of expenses than that provided under this
Agreement as of the date hereof, Indemnitee shall be deemed to have such greater
right pursuant to this Agreement.  No amendment, alteration, or repeal of this
Agreement or of any provision hereof shall limit or restrict any right of
Indemnitee under this Agreement in respect of any action taken or omitted by
such Indemnitee in connection with an Indemnifiable Event prior to such
amendment, alteration, or repeal.

     (b)  To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees, or
agents of the Company or of any other corporation, partnership, joint venture,
trust, employee benefit plan, or other enterprise which such person serves at
the request of the Company, Indemnitee shall be covered by such policy or
policies in accordance with its or their terms to the maximum extent of the
coverage available for any such director, officer, employee, or agent under such
policy or policies.  If, at the time of the receipt of a notice of a claim
pursuant to Section 8 hereof, the Company has director's and officer's liability
insurance in effect, the Company shall give prompt notice of the commencement of
such proceeding to the insurers in accordance with the procedures set forth in
the respective policies.  The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of Indemnitee, all
amounts payable as a result of such proceeding in accordance with the terms of
such policies.  The Company shall have no obligation to obtain or maintain such
insurance. 

                                       -8-
<PAGE>

     (c)  In the event of any payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and take all action necessary
to secure such rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights. 

     (d)  The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement, or otherwise.

     Section 13.   SUCCESS ON MERITS OR OTHERWISE.   Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee has been successful
on the merits or otherwise in defense of any Proceeding described in Sections 2
or 3 hereof, or in defense of any claim, issue or matter therein, he shall be
indemnified against Expenses actually and reasonably incurred by him in
connection with the investigation, defense, settlement or appeal thereof.  For
purposes of this Section 13, the term "successful on the merits or otherwise"
shall include, but not be limited to, (i) any termination, withdrawal or
dismissal (with or without prejudice) of any claim, action, suit or proceeding
against Indemnitee without any express finding of liability or guilt against
him, (ii) the expiration of 180 days after the making of any claim or threat of
an action, suit or proceeding without the institution of the same and without
any promise of payment or payment made to induce a settlement or (iii) the
settlement of any action, suit or proceeding under Section 2 or 3, as the case
may be, pursuant to which Indemnitee pays less than $25,000.

     Section 14.   DURATION OF AGREEMENT.   This Agreement shall continue until
and terminate upon the later of:  (a) ten (10) years after the date that
Indemnitee shall have ceased to serve as a director, officer, employee, or agent
of the Company or of any other corporation, partnership, joint venture, trust,
employee benefit plan, or other enterprise which Indemnitee served at the
request of the Company; or (b) the final termination of any Proceeding then
pending in respect of which Indemnitee is granted any rights of indemnification
or advancement of expenses hereunder and of any proceeding commenced by
Indemnitee pursuant to Section 11 of this Agreement relating thereto.  This
Agreement shall be binding upon the Company and its successors and assigns and
shall survive the death, disability or incapacity of the Indemnitee or the
termination of the Indemnitee's service as a director or officer of the Company
and shall inure to the benefit of Indemnitee and his heirs, executors, and
administrators.

     Section 15.   SEVERABILITY.   If any provision or provisions of this
Agreement shall be held to be invalid, illegal, or unenforceable for any reason
whatsoever:  (a)  the validity, legality, and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of any
Section of this Agreement containing any such provision held to be invalid,
illegal, or unenforceable, that is not itself invalid, illegal, or
unenforceable) shall not in any way be affected or impaired thereby; and (b) to
the fullest extent possible, the provisions of this Agreement (including,
without limitation, each portion of any Section of this Agreement containing any
such provision held to be invalid, illegal, or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested thereby.

                                       -9-
<PAGE>

     Section 16.   IDENTICAL COUNTERPARTS.   This Agreement may be executed in
one or more counterparts, each of which shall for all purposes be deemed to be
an original but all of which together shall constitute one and the same
Agreement.  Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this
Agreement.

     Section 17.  HEADINGS.   The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.

     Section 18.  DEFINITION.   For purposes of this Agreement:

     (a)  "Change of Control" means a change in control of the Company occurring
after the Effective Date of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any
similar item on any similar schedule or form)  promulgated under the Securities
Exchange Act of 1934, as amended (the "Act"), whether or not the Company is then
subject to such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have occurred if after
the Effective Date (1) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act, as amended) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the Company's
then outstanding securities without the prior approval of at least two-thirds of
the members of the Board of Directors in office immediately prior to such person
attaining such percentage interest; (ii) there occurs a proxy contest, or the
Company is a party to a merger, consolidation, sale of assets, plan of
liquidation, or other reorganization as a consequence of which members of the
Board of Directors in office immediately prior to such transaction or event
constitute less than a majority of the Board of Directors thereafter; or (iii)
during any period of two consecutive years, other than as a result of an event
described in clause (a)(ii) of this Section 18, individuals who at the beginning
of such period constituted the Board of Directors (including for this purpose
any new director whose election or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board of Directors.

     (b)  "Indemnification Event"  means any event or occurrence related to the
fact that Indemnitee is or was a director, officer, employee, agent, or
fiduciary of the Company, or is or was serving at the request of the Company as
a director, officer, employee, trustee, agent, or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust, or other
enterprise, and also means anything done or not done by Indemnitee in or related
to any such capacity.

     (c)  "Disinterested Director" means a director of the Company who is not
and was not a party, or threatened to be made a party, to the Proceeding in
respect of which indemnification is sought by Indemnitee.

     (d)  "Effective Date" means the date this Agreement is mutually accepted by
the parties.

                                       -10-
<PAGE>

     (e)  "Expenses" shall include all reasonable attorney fees, retainers,
court costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, or being or preparing to be a witness in a
Proceeding, together with any and all applicable sales, gross receipts, and
similar taxes thereon.

     (f)  "Independent Counsel" means a law firm, or a member of a law firm,
that is experienced in matters of Delaware corporation law and neither presently
is, nor in the immediately proceeding five years has been, retained to
represent:  (i) the Company or Indemnitee in any matter material to either such
party, or (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder.  Notwithstanding the foregoing, the term "Independent
Counsel" shall not include any person, who, under the applicable standards of
professional conduct then prevailing under the law of the State of Delaware,
would be precluded from representing either the Company or Indemnitee in an
action to determine Indemnitee's rights under this Agreement.

     (g)  "Proceeding" includes any action, suit, arbitration, alternative
dispute resolution mechanism, inquiry, investigation, administrative hearing or
any other proceeding, whether civil, criminal, administrative, or investigative,
whether instituted by the Company or any other party, except one (i) initiated
by Indemnitee pursuant to Section 11 of this Agreement to enforce his rights
under this Agreement, or (ii) initiated by Indemnitee prior to a Change in
Control, unless authorized in advance by the Board of Directors of the Company. 
For purposes of Sections 5 and 7 of this Agreement, the term "Proceeding" shall
be deemed to include, without limitation, an action in which Indemnitee seeks
recovery upon any of the insurance policies described in Section 12(b) above.

     Section 19.   MODIFICATION AND WAIVER.   No supplement, modification, or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto.  No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions thereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

     Section 20.   NOTICE BY INDEMNITEE.   Indemnitee agrees to notify the
Company in writing within a reasonable time after being served with any summons,
citation, subpoena, complaint, indictment, information, or other document
relating to any Proceeding or matter which may be subject to indemnification or
advancement of Expenses covered hereunder.

     Section 21.   NOTICES.   All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:

                                       -11-
<PAGE>

          (a)  If to Indemnitee, to:

               (name)
               (address)
     

          (b)  If to the Company, to:

               Sun Healthcare Group, Inc.
               Attn.:  General Counsel
               101 Sun Lane  N.E.
               Albuquerque, NM  87109

or to such other address as may have been furnished for such purpose and in the
manner provided in this Section 21 to Indemnitee by the Company or to the
Company by Indemnitee, as the case may be.

     Section 22.  GOVERNING LAW/CONSENT TO JURISDICTION.   The parties agree
that this Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without giving effect to
principles of conflict of laws.  The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the state of Delaware
for all purposes in connection with any action, suit or proceeding which arises
out of or relates to this Agreement.

     Section 23.   MUTUAL ACKNOWLEDGMENT.  Both the Company and Indemnitee
acknowledge that in certain instances federal law or public policy may override
applicable state law and prohibit the Company from indemnifying its directors
and officers under this Agreement or otherwise.  For example, the Company and
Indemnitee acknowledge that the Securities and Exchange Commission (the "SEC")
has taken the position that indemnification is not permissible for liabilities
arising under certain federal securities laws, and federal legislation prohibits
indemnification for certain ERISA violations.  Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the SEC to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.

     Section 24.   LIMITATIONS TO RIGHTS OF INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES.   Except as otherwise provided in Sections 9 and 11 of this Agreement,
Indemnitee shall not be entitled to indemnification or advancement of expenses
under this Agreement:

          (a)  with respect to any action, suit or proceeding initiated, brought
     or made by Indemnitee (i) against the Company, unless a Change in Control
     (as defined in Section 18  (a) of this Agreement) shall have occurred, or
     (ii) against any person other than the Company, unless approved in advance
     by the Board of Directors of the Company;

          (b)  for expenses or liabilities of any type whatsoever (including,
     but not limited to, judgments, fines, ERISA excise taxes or penalties and
     amounts paid in settlement) which

                                       -12-
<PAGE>

     have been paid directly to Indemnitee by an insurance carrier under a 
     policy of officers' and directors' liability insurance maintained by the
     Company;

          (c)  for expenses or the payment of profits arising from the purchase
     and sale by Indemnitee of securities in violation of Section 16(b) of the
     Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
     similar successor statute; and

          (d)  if it shall be determined by final judgment by a court having
     jurisdiction in the matter that such indemnification is not lawful.

     Section 25.    SELECTION OF COUNSEL.   If a change in control shall not
have occurred, in the event the Company shall be obligated under Sections 2 or 3
hereof to pay the expenses of any Proceeding against Indemnitee, the Company
shall be entitled to assume the defense of such Proceeding, with counsel
approved by Indemnitee (which shall not unreasonably withhold such approval),
upon the delivery to Indemnitee of written notice of its election so to do. 
After delivery of such notice, approval of such counsel by Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same proceeding, provided, that, (i) Indemnitee
shall have the right to employ his counsel in any such proceeding at
Indemnitee's expense; and (ii) if (A) the employment of counsel by Indemnitee
has been previously authorized in writing by the Company, (B) Indemnitee shall
have reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of any such defense and shall have
notified the Company in writing thereof, (C) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between Indemnitee and other
indemnitee of the Company being represented by counsel retained by the Company
in the same proceeding and shall have notified the Company in writing thereof or
(D) the Company shall not, in fact, have employed counsel to assume the defense
of such proceeding, then the fees and expenses of Indemnitee's counsel shall be
at the expense of the Company.

     Section 26.   MISCELLANEOUS.   Use of the masculine pronoun shall be deemed
to include usage of the feminine pronoun where appropriate.

                                       -13-
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.


                         SUN HEALTHCARE GROUP, INC.
                         a Delaware corporation


                         By:
                            -------------------------------------
                              Andrew L. Turner, President

                         INDEMNITEE


                         -------------------------------------
                         (Name)
                         (Title)



                                       -14-