PROMISSORY NOTE
                                             September ____, 1997
Atlanta, Georgia

Retirement Care Associates, Inc. ("RCA") hereby promises to pay to the order of
In-House Rehab, Inc. at 325 West Main Street, Suite 1400B, Louisville, Kentucky
40202, UPON DEMAND, an amount equal to the trade receivables owed to In-House
Rehab, Inc. by Retirement Care Associates, Inc. that are past due, being One
Million Dollars ($1,000,000) as of the date hereof, and any amounts that are or
become past due after the date hereof.  It is expressly understood that only
trade receivables owed by RCA to In-House Rehab, Inc. that are over ninety (90)
days old are considered past due. 

RCA shall pay upon demand any and all expenses, including reasonable attorney's
fees' actually incurred by Holder without suit or action in attempting to 
collect
funds due under this Note. In the event an action is instituted to enforce or
interpret any of the terms of this Note including but not limited to any action
or participation by RCA in, or in connection with, a case or proceeding under 
the
Bankruptcy Code or any successor statute, the prevailing party shall be entitled
to recover all expenses reasonably incurred at, before and after trial, on
appeal, and on review whether or not taxable as costs, including, without
limitation, attorney fees, witness fees (expert and otherwise), deposition 
costs,
copying charges and other expenses. 

RCA hereby waives presentment, dishonor, notice of dishonor, and protest. RCA
consents to, and Holder is hereby expressly authorized to make, without notice,
any and all renewals, extensions, modifications, or waivers of the terms of
payment of any sum or sums due hereunder, or under any documents or instruments
relating to or securing this Note.  Any such action taken by Holder shall not
discharge the liability of RCA hereunder. 

This Note has been delivered in the State of Georgia and it is the express 
desire
of the parties that all rights, obligations and duties that arise hereunder 
shall
be governed and construed in accordance with the laws of Georgia. 


------------------------------------ 
Retirement Care Associates, Inc. By:

Chris Brogdon, President
<PAGE>
                        SECURITY AGREEMENT

This Stock Pledge and Security Agreement ("Agreement") is entered into as of 
this
the ___th day of September, 1997, by and between Chris Brogdon ("Brogdon"), and
In-House Rehab, Inc. ("In-House"). 

WHEREAS, Retirement Care Associates, Inc.("RCA") has executed a Promissory Note
("Note") in favor of In-House equal to the trade receivables owed to In-House
Rehab, Inc. by RCA that are past due, being One Million Dollars ($1,000,000) as
of the date hereof, and any amounts that are or become past due after September
___, 1997, and pursuant to a Guaranty Agreement between Brogdon and In-House
dated of even date herewith (the "Guaranty"), Brogdon has personally guaranteed
RCA's performance under the Note; and 

WHEREAS, In-House desires to obtain additional security for performance of
Brogdon's obligations under the Guaranty"); 

NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt of which is hereby acknowledged by Brogdon, Brogdon
and In-House hereby agrees as follows: 

Section 1. Creation of Security Interest. 

In order to secure the payment of any and all amounts which may be or become due
under the Guaranty, Brogdon hereby grants a security interest to In-House in
shares of Retirement Care Associates, Inc. common stock owned and held by
Brogdon, together with all dividends and distributions paid or payable on such
stock and all proceeds of the foregoing. Brogdon agrees to tender to In-House 
all
stock certificates representing shares of Retirement Care Associates, Inc. 
common
stock that are held by Brogdon together with a stock transfer power in blank 
with
respect to such certificates and agrees that In-House may hold in its possession
and place the following legend on said certificates: 

                               LIEN

THIS CERTIFICATE, AND THE SHARES OF STOCK REPRESENTED HEREBY, SHALL BE SUBJECT
TO ALL CLAIMS, DEMANDS, AND DEBTS OWING TO IN-HOUSE REHAB, INC. BY THE HOLDER
HEREOF AND ALSO SUBJECT TO ALL CONTRACTS AND AGREEMENTS OF THE HOLDER HEREOF,
MADE WITH OR ON BEHALF OF IN-HOUSE REHAB, INC. WITH REFERENCE TO THE SHARE OF
STOCK REPRESENTED HEREBY PROVIDED THE IDENTITY OF SUCH CONTRACTS OR AGREEMENTS
OR COPIES THEREOF WITH IN-HOUSE REHAB, INC. SHALL HAVE BEEN STAMPED OR WRITTEN
ON THIS CERTIFICATE. 

         CLAIMS, DEMANDS, AND DEBTS OWING TO IN-HOUSE REHAB, INC. BY THE HOLDER
HEREOF TO WHICH THIS CERTIFICATE IS SUBJECT TO. 

           GUARANTY AGREEMENT DATED SEPTEMBER ___, 1997
           SECURITY AGREEMENT DATED SEPTEMBER ___, 1997

Section 2. Default Provisions. 

2.1. Default. The occurrence of one or more of the following events shall
constitute a default by Brogdon under the terms of this agreement. 

a. If payment is not received by In-House within ten (10) business days of 
demand
for payment on the Guaranty. 

b. The entry of a decree or order by a court having jurisdiction in the premises
adjudging Brogdon and/or RCA a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of Brogdon and/or RCA under the federal Bankruptcy Act or any
other applicable federal or state law, or appointing a receiver, liquidator,
assignee or trustee of Brogdon and/or RCA, or any substantial part of their
property. 

c. The institution by Brogdon and/or RCA of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to institution of bankruptcy or
insolvency proceedings against either of them, or the filing by it of a petition
or answer or consent seeking reorganization or relief under the federal
Bankruptcy Act or any other applicable federal or state law, or the consent by
either of them to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee or trustee, or of any substantial part of either
of their property, or the making by either of them of an assignment for the
benefit of creditors or the admission by either of them in writing of their
inability to pay debts generally as they become due, or the taking of action by
Brogdon and/or RCA in furtherance of any such action 

2.2. Possession of Collateral. In the event that Brogdon and/or RCA is in 
Default
for the purposes of this Agreement, In-House, at its sole discretion, shall have
the option to demand the immediate conveyance of Retirement Care Associates, 
Inc.
common stock secured hereunder to In-House or its assigns by Brogdon. The number
of Shares to be conveyed in the event of default shall be equal to the
outstanding obligation on the Note, divided by the bid price for Retirement Care
Associates, Inc. common stock on the day of default, and the Note shall then be
satisfied in full. This Agreement shall be terminated and all liens released and
collateral returned to Brogdon upon satisfaction of the Note. 

2.3. Non-Exclusive Remedies. The remedies set forth herein shall not be the
exclusive remedies of In-House. In the event of a failure by Brogdon to pay the
amounts owed to In-House under the terms of the Guaranty, In-House shall have 
the
right to pursue any and all remedies available, including those available to a
secured party under the Uniform Commercial Code of Georgia, and shall in no way
be limited to the remedies set forth in this Agreement.

Section 3. Specific Performance. In the event of a failure by Brogdon to abide
by the terms of this Agreement, Brogdon acknowledges that In-House is without
adequate remedy at law. Therefore, it is mutually agreed that any action 
required
to be taken by this agreement may be compelled through injunctive proceedings.
Furthermore, Brogdon agrees to cooperate with In-House to, at no cost to 
Brogdon,
prepare and file any documents necessary to perfect the security interest 
created
hereby. 

Section 4. Representations and Warranties

Brogdon hereby represents to In-House that: 

4.1 Brogdon is the registered and absolute beneficial owner of the shares of
Retirement Care Associates, Inc. secured hereby ("secured shares") free and 
clear
from all liens and security interests, charges, equities, and encumbrances as of
the date hereof except for the liens and security interests created by this
Agreement. It is specifically understood by the parties hereto that any lien on
the secured shares are subject to any proxy entered into by and between Brogdon
and Sun Healthcare Group, Inc. 

4.2 Brogdon has the right to enter into this Agreement, the execution and
performance of which will not, either immediately, or with notice and/or passage
of time, conflict with or constitute a breach under any agreement to which
Brogdon is a party, or result in the creation or imposition of any encumbrance
upon the secured shares except as granted hereby. 

Section 5. Compliance with Securities Laws. If In-House decides to compel 
Brogdon
to convey any or all of the secured shares to In-House as provided herein and 
if,
in the opinion of counsel for In-House, it is reasonably necessary to comply 
with
the provisions of any securities laws, Brogdon agrees without costs or expense
to Brogdon to prepare or have prepared, execute, and deliver all such documents
and to do or cause to be done all other such acts and things as may be 
reasonably
necessary. 

Section 6. Notices. Any notices due under this Agreement shall be sent to
In-House at:   325 West Main Street, Suite 1400B
               Louisville, Kentucky 40202
               Attn: General Counsel 
 
               And to Brogdon at:
               6000 Lake Forrest Drive
               Suite 200
               Atlanta, Georgia 30328 

Section 7. Governing Law. The laws of the State of Georgia shall govern the
construction of this agreement and the rights, remedies, and duties of the
parties hereunder. 

Section 8. Successors and Assigns. This Agreement shall bind Brogdon and In-
House
and their successors, assigns, and legal representatives, and shall inure to the
benefit of In-House and Brogdon, and their successors and assigns. 

Section 9. Captions. The Captions and headings of the sections hereof shall be
ignored in interpreting the provisions of this Agreement. 

Section 10. Presumption. This Agreement or any section hereof shall not be
construed against any party due to the fact that said Agreement or any section
thereof was drafted by said party. 

Section 11. Savings Clause. If this Agreement, or the application of any
provision to any entity or circumstance shall be held invalid, the remainder of
this Agreement, or the application of such other provisions to entities or
circumstances other than those as to which it is held invalid, shall not be
affected thereby. 

Dated: September_, 1997

-------------------------------------
Chris Brogdon

In-House Rehab Inc.,
By: 

-------------------------------------
David V. Hall, President
<PAGE>
                        GUARANTY AGREEMENT

WHEREAS, on September__, 1997, Retirement Care Associates, Inc.("RCA") executed
a Promissory Note ("Note") in favor of In-House Rehab, Inc. ("In-House") equal
to the trade receivables owed to In-House Rehab, Inc. by RCA that are past due,
being One Million Dollars ($1,000,000) as of the date hereof, and any amounts
that are or become past due after September __, 1997, and 

WHEREAS, In-House desires to obtain additional security for the payment of such
Note and receivables; 

N0W THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt of which is hereby acknowledged by the parties 
hereto,
it is agreed as follows: 

Section 1. Chris Brogdon ("Guarantor") for himself, and for his heirs, and
assigns, hereby unconditionally and jointly and severally guarantees to In-
House,
its successors and assigns, including each and every holder or owner of the 
Note,
the prompt payment when due of all obligations owed by RCA on the Note including
but not limited to all expenses, including reasonable attorney's fees, actually
incurred by Holder without suit or action in attempting to collect funds due
under the Note. 

Section 2. In order to secure the obligations created by the Note and under the
terms of this Agreement, Guarantor agrees to enter into a Security Agreement
whereby shares of common stock in RCA held by Guarantor are subjected to a lien
and security interest to the extent of the obligations of RCA and Guarantor.

Section 3.  In-House shall have the right of immediate recourse against 
Guarantor
for full and immediate payment of the obligations guaranteed at any time after
the obligations, or any part thereof, have not been paid in full according to 
the
tenor and under the terms of the instrument governing such obligations, whether
on demand as per the terms of the Note, or if accelerated by reason of default. 

Section 4. In the event of a default under the terms of the Note by RCA, or if
RCA does not satisfy the obligations as per the terms of the Note, under the
terms of this Agreement In-House shall have an immediate right of recourse
against Guarantor, individually and severally from RCA for payment of the
obligations in full. 

Section 5. The liability of the Guarantor shall be absolute and unconditional,
and nothing whatever except full payment to In-House of all of the obligations
guaranteed by Guarantor hereunder shall operate to discharge Guarantor's
liabilities. Accordingly, Guarantor unconditionally and irrevocably waives each
and every defense which, under principles of guaranty or suretyship law, would
otherwise operate to impair or diminish the liability of Guarantor. Without
limiting the generality of the foregoing, Guarantor agrees that none of the
following shall diminish or impair the liability of Guarantor in any respect 
(all
of which may be done without prior notice to Guarantor of any kind): 

(a) Any extension, modification, indulgence, compromise, settlement, or 
variation
of the terms of any of the obligations, or of any agreement entered into with
Guarantor or any other person liable for any part of the obligations on the 
Note,
the Security Agreement, or this Agreement; 

(b) The voluntary or involuntary discharge or release of any of the obligations
guaranteed hereby, or of any person liable therefor, by reason of bankruptcy or
insolvency laws or otherwise, 

(c) The acceptance or release, with or without substitution, by In-House of any
collateral security or other guaranty, or collateral security for such other
guaranty, or any settlement, compromise, or extension with respect to any
collateral security, other guaranty, or collateral security for such other
guaranty, 

(d) The creation of any new obligations covered by this guaranty or renewal,
modification or extension hereof; 

(e) Any set-offs or counterclaims against In-House which would otherwise impair
In-House's rights against Guarantor hereunder. 

Section 6. Specific Performance. In the event of a failure by Brogdon to abide
by the terms of this Agreement, Brogdon acknowledges that In-House is without
adequate remedy at law.  Therefore, it is mutually agreed that any action
required to be taken by this agreement may be compelled through injunctive
proceedings. 

Section 7. Notices. Any notices due under this Agreement shall be sent to
In-House at: 

325 West Main Street,
Suite 1400B 
Louisville, Kentucky 40202 
Attn: General Counsel 

And to Brogdon at: 

6000 Lake Forrest Drive
Suite 200 
Atlanta, Georgia 30328 

Section 8. Governing Law. The laws of the State of Georgia shall govern the
construction of this agreement and the rights, remedies, and duties of the
parties hereunder. 

Section 9. Successors and Assigns. This Agreement shall bind Brogdon and In-
House
and their successors, assigns, and legal representatives, and shall inure to the
benefit of In-House and Brogdon, and their successors and assigns. 

Section 10. Captions. The Captions and headings of the sections hereof shall be
ignored in interpreting the provisions of this Agreement. 

Section 11. Presumption. This Agreement or any section hereof shall not be
construed against any party due to the fact that said Agreement or any section
thereof was drafted by said party. 

Section 12. Savings Clause. If this Agreement, or the application of any
provision to any entity or circumstance shall be held invalid, the remainder of
this Agreement, or the application of such other provisions to entities or
circumstances other than those as to which it is held invalid, shall not be
affected thereby, 

Dated: September 16, 1997



-----------------------------------
Chris Brogdon

                               -2-
In-House Rehab Inc., By:



-----------------------------------     
David V. Hall, President