September 19, 1997
Robert D. Woltil
Chief Financial Officer
Sun Healthcare Group, Inc.
101 Sun Lane, N.C.
Albuquerque, New Mexico 87109
RE: Acquisition Financing
Ladies and Gentlemen:
You have advised us that Sun Healthcare Group, Inc. (the "Borrower") intends to make a tender offer (the
"Offer") to acquire the capital stock of Regency Health Services (the "Acquired Company") (hereinafter the
acquisition of Acquired Company may be referred to as the "Acquisition") for approximately $390,000,000. The
Acquisition will be structured as an equity purchase. You have advised us that approximately $1,000,000,000 in
senior debt financing will be required in order to effect the Acquisition, to refinance approximately $550,000,000
of existing indebtedness of the Borrower and the Acquired Company, to pay the costs and expenses related to
the Acquisition and to provide for ongoing general corporate purposes after completion of the Acquisition. You
have further advised us that any other external financing (including sale and leaseback transactions) utilized in
connection with the Acquisition will be used to reduce NationsBank's commitments hereunder.
In connection with the foregoing, NationsBank of Texas, N.A. ("NationsBank" or the "Agent") is pleased to
advise you of its commitment (this letter agreement being the "Commitment Letter") to provide the full principal
amount of the Senior Credit Facilities described in the Summary of Indicative Terms and Conditions attached to
this Commitment Letters as Exhibit A (the "Term Sheet"). NationsBanc Capital Markets, Inc. ("NCMI") is
pleased to advise you of its commitment, as Arranger and Syndication Agent for the Senior Credit Facilities, to
form a syndicate of financial institutions (the "Lenders") reasonably acceptable to you for the Senior Credit
Facilities. All capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Term
Sheet, and this letter agreement.
Mr. Robert Woltil