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                                                                   EXHIBIT 10.39
    

                                 PROMISSORY NOTE


$5,000,000                                                         July 10, 1997


         FOR VALUE RECEIVED, RETIREMENT CARE ASSOCIATES, INC., a Colorado
corporation ("RCA"), RETIREMENT MANAGEMENT CORPORATION, a Georgia corporation
("RMC"), and CAPITOL CARE MANAGEMENT COMPANY, INC., a Georgia corporation
("CCMC") (hereinafter, whether one or more, referred to as "Maker"), does hereby
promise to pay to SUN HEALTHCARE GROUP, INC., a Delaware corporation
(hereinafter referred to as "Payee"), at its principal offices located at 101
Sun Lane, Albuquerque, New Mexico 87109, or at such other address as Payee may
from time to time designate, the principal sum of FIVE MILLION AND NO/100
DOLLARS ($5,000,000.00), together with interest thereon as hereinafter set
forth.

         From and after the date hereof, interest shall accrue on the
outstanding principal balance hereof at the rate of twelve percent (12%) per
annum; provided that, during any period of default hereunder which is not cured
within any grace period provided for herein, interest shall accrue at the rate
of sixteen percent (16%) per annum; and provided further that, notwithstanding
any provision hereof, it is not intended by this Note to impose upon Maker any
obligation to pay interest in excess of the maximum rate of interest permitted
by law.

         The entire principal balance hereof, together with all accrued and
unpaid interest hereunder, and all other amounts outstanding hereunder, shall be
due and payable in full on or before the close of business on the 120th day
following the termination of the Agreement and Plan or Merger and Reorganization
among Payee, Peach Acquisition Corporation and RCA, dated as of February 17,
1997 (the "Maturity Date").

         All payments received hereunder shall be applied first to unpaid
interest and then to the principal balance outstanding hereunder. Maker shall be
entitled to prepay all or any portion of the principal balance hereof prior to
maturity without premium or penalty.

         This Note is secured by a lien on the accounts receivable and certain
related assets of Maker, which have been pledged by Maker pursuant to the terms
and conditions of that certain Security Agreement dated as of even date herewith
executed and delivered by RCA to Payee (the "Security Agreement") and by those
certain Security Agreements dated as of even date herewith executed by each of
RMC and CCMC to Payee (the "Additional Security Agreements" and, together with
the Security Agreement, the "Security Agreements"), and by a lien on the
accounts receivable and certain related assets of West Tennessee, Inc., Lake
Forest Healthcare Center, Inc., Statesboro HealthCare, Inc., Lake Health Care
Center, Inc., Roberta Health Care Center, Inc., Gardendale Health Care Center,
Inc., Southside Health Care Center, Inc., Gainesville Health Care


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Center, Inc., Charlton City Healthcare, Inc., Jeff Davis Healthcare, Inc.,
Seaside Retirement, Inc., Mid-Florida, Inc., Bibb Health & Rehabilitation, Inc.,
Brent-Lox Hall Nursing Home, Inc., Libbie Rehabilitation Center, Inc., Phoenix
Associates, Inc., Summer's Landing, Inc., Riveria Retirement, Inc., Pine Manor
Healthcare, Inc., Suncoast Retirement, Inc., Atrium of Jacksonville and The
Atrium Nursing Home, Inc. (collectively referred to herein as the "Subsidiary
Guarantors"), which have been pledged by the Subsidiary Guarantors pursuant to
the terms and conditions of that certain Subsidiary Security Agreement dated as
of even date herewith executed and delivered by the Subsidiary Guarantors to
Payee (the "Subsidiary Security Agreement").

         The occurrence and continuation of any one of the following events
(each an "Event of Default") shall constitute a default hereunder: (i) Maker
shall fail to make due and punctual payment of all amounts of principal and
interest under this Note on the Maturity Date; (ii) Maker fails to perform any
other covenant or agreement in this Note or the Security Agreements (other than
payment when due of principal and interest under this Note or compliance with
the "Borrowing Base" restriction set forth in clause (iii) below) and Maker
fails to cure such violation within ten (10) days after written notice thereof
from Payee; (iii) the aggregate principal amount outstanding at any time
hereunder shall be in excess of the "Borrowing Base" as reflected in the most
recent "Borrowing Base Certificate" provided to Payee by RCA (such terms being
used herein with the respective meanings ascribed thereto in the Security
Agreement), and Maker fails to cure such violation within twenty (20) days after
written notice thereof from Payee; (iv) any Subsidiary Guarantor fails to
perform any covenant or agreement contained in the Subsidiary Security Agreement
and such Subsidiary Guarantor fails to cure violation within ten (10) days after
written notice thereof from Payee; (v) an "Event of Default" shall occur under
that certain Amended and Restated Promissory Note made by Maker to Payee dated
as of even date herewith; (vi) Maker makes an assignment for the benefit of
creditors, is adjudicated insolvent or bankrupt, a petition for bankruptcy,
reorganization, dissolution, or liquidation is filed by or against Maker under
any arrangement or debt readjustment law or statute of any jurisdiction whether
now or hereafter in effect which remains undismissed for sixty (60) days, or
Maker applies for or permits the appointment of a receiver or trustee for any or
all of its property or any such receiver or trustee shall have been appointed
for any and all property or assets of Maker or Maker by any act indicates
consent to, approval of or acquiescence in any such proceeding; (vii) a change
in control (of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended) shall have been announced or occurred with
respect to Maker, or a person (other than Payee) shall have announced its
intention to make a tender offer or exchange offer including 15% or more of
Maker's outstanding voting stock; or (viii) the receipt by any of Christopher F.
Brogdon, Edward E. Lane, Darrell C. Tucker, Philip M. Rees, John R. Mack or
Jeffrey Andrews of notice after the date hereof from any creditor that any
account payable in excess of $35,000 is past due and that as a result of such
past due account such creditor has interrupted, suspended or terminated, or
threatened to interrupt, suspend or terminate, the provision of goods or
services to Maker or any of its subsidiaries (other than where Maker has
arranged for an alternate supplier of such goods or services on terms no less
favorable to Maker than those previously available from the terminated supplier
prior to such termination); provided, however, that Maker shall have ten (10)
days from the date of such notice to cure such violation.

                                       2.

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         If an Event of Default occurs and is continuing, then, at the option of
Payee, the entire principal amount outstanding hereunder, together with any
accrued and unpaid interest thereon, shall, upon written notice from Payee to
Maker, become immediately due and payable. The rights, remedies, powers and
privileges provided for herein are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.

         Maker shall pay all expenses of Payee in the collection of this Note,
including all reasonable attorneys' fees and expenses.

         No waiver by Payee of any default shall be effective unless in writing,
nor shall it operate as a waiver of any other default or of the same default on
a future occasion. No delay or omission by Payee in exercising any of its
rights, remedies, powers and privileges hereunder or at law and no course of
dealing between Payee and Maker or any other person shall be deemed a waiver by
Payee of any of such rights, remedies, powers and privileges even if such delay
or omission is continuous or repeated, nor shall any single or partial exercise
of any right, remedy, power or privilege preclude any other or further exercise
thereof by Payee or the exercise of any other right, remedy, power or privilege
by Payee. Maker waives demand, presentment, protest, notice of protest and
notice of dishonor.

         All amendments to this Note, and any waiver or consent of Payee, must
be in writing and signed by Payee and Maker.

         Maker hereby waives presentment, demand, notice of dishonor, protests
and all other notices except as specifically provided herein.

         This Note shall be governed by, construed and enforced in accordance
with the laws of the State of New York, without regard to the conflicts of laws
principles thereof, other than such laws that direct the application of New York
law.

         It is expressly agreed that if, from any circumstances whatsoever,
fulfillment of any provision of this Note at the time performance of such
provision shall be due shall be invalid under presently applicable usury
statutes or any other applicable laws with regard to obligations of like
character and amount, then the obligation to be fulfilled shall be reduced to
the limit of such validity, so that in no event shall any exaction be possible
under this Note that is in excess of the current limit of such validity, but
such obligation shall be fulfilled to the limit of such validity. In no event
shall Maker be bound to pay for the use, forbearance or detention of the money
loaned pursuant hereto interest of more than the current legal limit. The right
to demand any such excess is hereby expressly waived by Payee.

         This Note shall be binding upon the successors and assigns of Maker.
Neither Maker nor Payee may assign or transfer this Note to any person or entity
without the written consent of the other party.


                                       3.

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         All notices and other communications hereunder shall be in writing and
shall be deemed given if (i) delivered by hand, (ii) mailed by registered or
certified mail (return receipt requested) or (iii) telecommunicated and
immediately confirmed both orally and in writing, to the parties at the
following addresses (or at such other addresses for a party as shall be
specified by like notice) and shall be deemed given on the date on which so
hand-delivered or so telecommunicated or on the second business day following
the date on which so mailed, if deposited in a regularly-maintained receptacle
for United States mail:

         If to Maker:  6000 Lake Forrest Drive
                       Suite 200, Atlanta, Georgia 30328

         If to Payee:  101 Sun Lane
                       Albuquerque, New Mexico 87109

         IN WITNESS WHEREOF, Maker has caused this Note to be executed, sealed
and delivered as of the date and year first written above.

                                    RETIREMENT CARE ASSOCIATES, INC.



                                    By:
                                       ----------------------------------

                                       Its:
                                           ------------------------------


                                    RETIREMENT MANAGEMENT
                                     CORPORATION



                                    By:
                                       ----------------------------------

                                       Its:
                                           ------------------------------


                                    CAPITOL CARE MANAGEMENT
                                     COMPANY, INC.



                                    By:
                                       ----------------------------------

                                       Its:
                                           ------------------------------


                                       4.