EXHIBIT 10.1
AMENDED AND RESTATED
SEVERANCE BENEFITS AGREEMENT

THIS AMENDED AND RESTATED SEVERANCE BENEFITS AGREEMENT (“Agreement”) is entered
into as of the 17th day of December, 2008 by and between CAREERSTAFF UNLIMITED,
INC., a Delaware corporation (“Employer”) and RICHARD L. PERANTON (“Employee”)
with reference to the following facts:
 
A.           Employer is a wholly-owned subsidiary of SHG Services, Inc., a
Delaware corporation that is itself a wholly-owned subsidiary of Sun Healthcare
Group, Inc., a Delaware corporation (“Parent”, which corporation, is referred to
herein, collectively with its various direct and indirect subsidiaries, as
“Sun”).
 
B.           Employer and Employee are parties to that certain Severance
Benefits Agreement dated as of November 1, 2004, as amended as of August 22,
2007  (the “Existing Agreement”); and
 
C.           Employer and Employee wish to amend and restate the Existing
Agreement upon the terms set forth in this Agreement to comply with Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”), effective as of
the date hereof.
 
NOW THEREFORE, in consideration of the foregoing premises and for other good and
valuable consideration, Employer and Employee agree as follows:
 
I.           SEVERANCE BENEFITS
 
Employee shall be entitled to the severance benefits described below upon
execution of Employer’s then standard separation agreement and mutual release
(the “Release”) and delivery of such executed Release to Employer within 21 days
following the effective date of the Qualifying Termination (as defined in
Section II) or Change in Control (as defined in Section IV), as applicable.
 
A. Cash Payments.
 
The following cash payments shall be made to Employee following a Qualifying
Termination or a Change in Control, as applicable (the below provisions do not
alter or affect the legal obligations of Employer to pay Employee upon
a  termination of employment that does not constitute a Qualifying Termination
or a Change in Control):
 
1. Lump Sum Severance Payment.  In the event of a Qualifying Termination or a
Change in Control, Employee shall be entitled to a lump sum severance payment in
an amount equal to one hundred percent (100%) of his annual base salary, at the
rate then in effect, less applicable federal and state tax withholding and any
other deductions required by law or otherwise authorized by Employee, with such
amount to be paid to Employee in the month immediately following the month in
which Employee’s Qualifying Termination or Change in Control occurs, as
applicable.
 
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2. Earned Salary; Reimbursable Expenses. In the event of a Qualifying
Termination, Employer shall pay Employee the full amount of any earned but
unpaid salary through the date of such termination, plus a cash payment
(calculated on the basis of Employee’s salary at the rate then in effect) for
all unused vacation that Employee has earned as of the date of such termination,
together with a cash payment for any unreimbursed expenses, with such amount to
be paid to Employee upon or promptly following (but in all events within 30 days
after) the date of the Qualifying Termination.  Employee agrees to provide
documentation of any such expenses promptly after such expenses are incurred.
 
B. Health Care Coverage. In the event of a Qualifying Termination, Employee and
Employee’s eligible dependents shall be entitled to continued coverage under
Employer’s health insurance plans on the same basis as active employees until
the earlier of (1) the last day of the twelfth month to commence on or after the
date of termination; or (2) the date Employee or Employee’s eligible dependents
become eligible to participate in a plan of a successor employer.
 
C. Other Plans. Except as expressly provided to the contrary in Section I.B,
upon any termination of employment, including without limitation a Qualifying
Termination, Employee’s right to participate in any retirement or benefits plans
and perquisites shall cease as of the date of termination.
 
II.           QUALIFYING TERMINATION.
 
Employee will have incurred a Qualifying Termination for purposes of this
Agreement if either of the following events occurs during the term of Employee’s
employment.
 
A. Termination by Employer. Any termination of Employee’s employment by Employer
other than for “Good Cause” or “Disability” (as each such term is defined in
Section IV, below); or
 
B. Termination by Employee. Employee’s termination of his employment with
Employer for “Good Reason” within one (1) year after the occurrence of a “Change
in Control” (as each such term is defined in Section IV below).
 
III.           EFFECT OF NON-QUALIFYING TERMINATIONS.
 
If Employee’s employment with Employer terminates for any reason other than a
Qualifying Termination, Employer shall pay Employee the full amount of any
earned but unpaid salary through the date of such termination, plus a cash
payment (calculated on the basis of Employee’s salary at the rate then in
effect) for all unused paid time off which Employee has earned as of the date of
such termination and a cash payment for any unreimbursed expenses, with such
amount to be paid to Employee upon or promptly following (but in all events
within 30 days after) the date of such termination. Employee agrees to provide
documentation of any such expenses promptly after such expenses are
incurred.  As of the date of such termination, Employee shall immediately
relinquish the right to any additional payments of benefits from Employer under
this Agreement or otherwise. Employee’s right to participate in any retirement
or benefits plans and perquisites shall cease as of the date of termination.
Employee and Employee’s eligible dependents may elect to continue coverage under
COBRA of any health, dental and vision plans in effect at the time.
 
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IV.           DEFINITIONS.
 
The following capitalized terms shall have the meanings specified below:
 
A. “Good Cause” shall mean any one of the following:
 
(1) Any criminal conviction of the Employee under the laws of the United States
or any state or other political subdivision thereof which, in the good faith
determination of the Chief Executive Officer of Parent (the “CEO”), renders
Employee unsuitable as an employee or legal representative of Employer and/or
Sun.
 
(2) Employee’s continued failure substantially to perform the duties reasonably
requested by the CEO and commensurate with. Employee’s position and within
Employee’s control as President of CSUI (other than any such failure resulting
from Employee’s incapacity due to Employee’s Disability) after a written demand
for substantial performance is delivered to Employee by the CEO, which demand
specifically identifies the manner in which the CEO believes that Employee has
not substantially performed his duties, and which performance is not
substantially corrected by Employee within thirty (30) days of receipt of such
demand; and
 
(3) Any material workplace misconduct or willful failure by Employee to comply
with Employer’s and Sun’s general policies and procedures as they may exist from
time to time which, in the good faith determination of the CEO, renders Employee
unsuitable as an employee or legal representative of Employer and/or Sun.
 
B. “Change in Control” shall mean the occurrence of any one or more of the
following events:
 
(1) Any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the “1934 Act”)), is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act),
directly or indirectly, of more than 33 1/3% of the then outstanding voting
stock of Employer;
 
(2) A merger or consolidation of Employer with any other corporation not
affiliated with Employer; and
 
(3) A sale or other disposition by Employer of all or substantially all of
Employer’s assets;
 
provided, however, in no event shall any acquisition of securities, or a merger
or other consolidation pursuant to a plan of reorganization under chapter 11 of
the Bankruptcy Code with respect to Employer (“Chapter 11 Plan”), or a
liquidation under the Bankruptcy Code constitute a Change in Control. In
addition, notwithstanding the above, a Change in Control shall not be deemed to
have occurred in the event of any transaction undertaken for the purpose of
reincorporating Employer under the laws of another jurisdiction, if such
transaction does not materially affect the beneficial ownership of Employer’s
capital stock. Employee’s continued employment without objection following a
Change in Control shall not, by itself, constitute consent to or a
 
 
 
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waiver of rights with respect to any circumstances constituting Good Reason
hereunder. A Change in Control shall not, by itself, constitute Good Reason
hereunder. A termination of Employee’s employment with Employer without Good
Cause (other than by reason of Employee’s death or Disability) within six (6)
months preceding a Change in Control shall be treated as if such termination
occurred on the date of such Change in Control if it is reasonably demonstrated
that the termination was at the request of the third party who has taken steps
reasonably calculated to effect such Change in Control or otherwise arose in
connection with or in anticipation of such Change in Control.
 
C. “Disability” means Employee’s inability to engage in substantial gainful
activity by reason of any medically determinable mental or physical impairment
which can be expected to result in death or which has lasted or can be expected
to last for a period of 120 substantially consecutive calendar days.
 
D. “Good Reason” means a resignation of Employee’s employment with Employer (or
any person succeeding to the assets of Employer or any substantial portion
thereof) as a result and within 60 days after the occurrence of any of the
following without Employee’s written consent:
 
(1) a meaningful and detrimental reduction in Employee’s authority, duties or
responsibilities, or a meaningful and detrimental change in Employee’s reporting
responsibilities, as in effect immediately prior to Employee’s delivery of a
“Good Reason Notice” (as defined below) to Employer;
 
(2) a material reduction in Employee’s annual base salary as in effect
immediately prior to the Employee’s delivery of a Good Reason Notice to
Employer, a material reduction in Employee’s target annual bonus (expressed as a
percentage of base salary) as in effect immediately prior to the delivery of the
Good Reason Notice, or a material failure to provide Employee with any other
form of compensation or material employment benefit being provided to Employee
immediately prior to the circumstances described in the Good Reason Notice
(excluding however, any reduction in the amount of any annual bonus or the
granting or withholding of incentive compensation (including without limitation
options or stock units) but including a material reduction to the target amount
of the bonus); or
 
(3) a relocation of Employee’s principal place of employment by more than fifty
(50) miles (or the requirement that Employee be based at a different location),
provided that such relocation results in a longer commute (measured by actual
mileage) for Employee from his primary residence to such new location;
 
provided, however, that an event described in clauses (1), (2) and (3) above
shall not constitute Good Reason unless (A) the existence of the aforementioned
circumstance is communicated to Employer and to its successor in writing in a
notice delivered within 60 days of the commencement of such circumstance and
stating the basis for Employee’s allegation that Good Reason exists (the “Good
Reason Notice”), (B) the circumstance is not corrected by Employer or such
successor in a manner which is reasonably satisfactory to Employee (including
full retroactive correction with respect to any monetary matter)
 
 
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within 30 days of Employer’s receipt of such written notice from Employee, and
(C) Employee terminates his employment with Employer within the 60 day time
period described above.
 
V.           PROTECTION OF SUN’S INTERESTS.
 
In consideration for Employer’s promise to pay the benefits described in Section
I of this Agreement upon the occurrence of a Qualifying Termination, and without
requirement for Employee to receive such benefits if a Qualifying Termination
has not occurred, Employee agrees to be fully bound by each of the following
covenants:
 
A. Confidentiality. Employee agrees that he will not at any time, during or
after the term of his employment, except in performance of his obligations to
Employer or Sun hereunder or with the prior written consent of the Chief
Executive Officer of Sun, directly or indirectly disclose to any person or
organization any secret or “Confidential, Information” that Employee may learn
or have learned by reason of Employee’s association with Sun. The term
“Confidential Information” means any information not previously disclosed to the
public or to the trade by Sun’s management with respect to Sun’s products,
services, business practices, facilities and methods, salary and benefit
information, trade secrets and other intellectual property, systems, procedures,
manuals, confidential reports, product price lists, pricing information,
customer lists, financial information (including revenues, costs or profits
associated with any of Sun’s products or lines of business), business plans,
prospects or opportunities, compliance and clinical processes, policies and
procedures.
 
B. Exclusive Property. Employee confirms that all Confidential Information is
and shall remain the exclusive property of Sun. All business records, papers and
documents kept or made by Employee relating to the business of Sun shall be and
remain the property of Sun. Upon the termination of Employee’s employment for
any reason or upon the request of Sun at any time, Employee shall promptly
deliver to Sun, and shall not without the consent of the President of Employer,
retain copies of, Confidential Information, or any written materials not
previously made available to the public, or records and documents made by
Employee or coming into Employee’s possession concerning the business or affairs
of Sun.
 
C. Nonsolicitation. Employee shall not, during Employee’s employment with
Employer, and for twelve (12) months following the termination of that
employment, for whatever reason, in any manner induce, attempt to induce, or
assist others to induce, or attempt to induce, any employee, agent,
representative or other person associated with Sun or any customer, patient or
client of Sun to terminate his association or contract with Sun, nor in any
manner, directly or indirectly, interfere with the relationship between Sun and
any of such persons or entities.
 
D. Non-Disparagement. Employee shall not during Employee’s employment with
Employer and for one year following termination of that employment, for whatever
reason, make any statements that are intended to or that would reasonably be
expected to harm Sun or, any of its subsidiaries or affiliates, their respective
predecessors, successors, assigns and employees and their respective past,
present or future officers, directors, shareholders, employees, trustees,
fiduciaries, administrators, agents or representatives.
 
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E. Relief. Without intending to limit the remedies available to Sun or Employer,
Employee acknowledges that a breach of any of the covenants in this Section V
may result in material irreparable injury to Sun and/or Employer for which there
is no adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of such a breach or threat
thereof, Sun shall be entitled to obtain a temporary restraining order, and/or a
preliminary or permanent injunction restraining Employee from engaging in
activities prohibited by these covenants or such other relief as may be required
to specifically enforce any of the covenants set forth in this Section V.
 
VI.           MISCELLANEOUS.
 
A. Governing Law. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Texas applicable to
contracts entered into and performed in such State.
 
B. Dispute Resolution; Jurisdiction. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively in arbitration
conducted in Dallas, Texas in accordance with the commercial rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction. Punitive damages shall not
be awarded.
 
C. Legal Fees and Expenses. Employer shall pay or reimburse Employee on an
after-tax basis for all costs and expenses (including, without limitation, court
costs and reasonable legal fees and expenses which reflect common practice with
respect to the matters involved) incurred by Employee as a result of any claim,
action or proceeding (a) contesting, disputing, or enforcing any right,
benefits, or obligations under this Agreement, or (b) arising out of or
challenging the validity, advisability, or enforceability of this Agreement or
any provision thereof; provided, however, that this provision shall not apply if
the arbitrator(s) rule in Sun’s favor with respect to Employee’s claim or
position.
 
D. Successors; Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of Employee (and Employee’s personal representatives and heirs),
Sun, Employer and any organization that succeeds to substantially all of the
business or assets of Employer, or any portion thereof. For the avoidance of any
doubt as to such matters, there shall be no termination of Employee’s employment
for purposes of this Agreement if Employee shall continue to be employed or
engaged by any person or entity that purchases or otherwise succeeds to the
assets of Sun (or any portion thereof). This Agreement shall inure to the
benefit of and be enforceable by Sun’s and Employer’s successors and assigns and
by Employee’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees.  If Employee should die
while any amount would still be payable to Employee hereunder if Employee had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to Employee’s devisee,
legatee, or other designee or, if there is no such designee, to Employee’s
estate.
 
E. Effectiveness and Term. On execution by Employer and Employee, this Agreement
shall be effective and shall continue so long as Employee remains employed by
Sun.
 
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F. Prior Severance Benefits Agreement. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof and any
prior agreement, arrangement or understanding between Employee and Employer,
relating to or in connection with the possible payment of severance to Employee
upon termination of his employment, is hereby terminated and superseded its
entirety by this Agreement.
 
G. Notices. For purpose of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, addressed as follows:
 
If to Employer:
 
CareerStaff Unlimited, Inc.
c/o Sun HealthCare Group, Inc.
Attention: General Counsel
18831 Von Karman, Avenue, Ste 400
Irvine, California 92612
 
 
If to Employee:
 
Mr. Richard L. Peranton
5301 Kensington. Court
Flower Mound, Texas 75022
 
H. Amendments, Waivers, Etc. No provision of, this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.
 
I. Validity. The invalidity or unenforceability of any provision of, this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
 
J. Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
 
K. Source of Payments. Except as expressly provided herein, all payments
provided under this Agreement shall be paid in cash from the general. funds of
Employer and no special or separate fund shall be established, and no other
segregation of assets made, to assure payment. Employee will have no right,
title, or interest whatsoever in or to any investments that Employer, may make
to aid in it meeting its obligations hereunder. To the extent that any person
acquires a
 
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right to receive payments from Employer hereunder, such right shall be not
greater, than the tight of an unsecured creditor.
 
L. Headings. The headings contained in this Agreement are intended solely for
convenience of reference and shall not affect the rights of the parties to this
Agreement.
 
M. Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties hereto with respect to the matters covered hereby
and supersedes all prior agreements and understandings of, the parties with
respect to the subject matter hereof.
 
N. Section 409A.
 
(1) If Employee is a “specified employee” within the meaning of Treasury
Regulation Section 1.409A-1(i) as of the date of Employee’s separation from
service (within the meaning of Treasury Regulation Section 1.409A-1(h)(1),
without regard to the optional alternative definitions available thereunder) and
any payment or benefit provided in Section I hereof constitutes a “deferral of
compensation” within the meaning of Section 409A of the Code, Employee shall not
be entitled to any such payment or benefit until the earlier of: (i) the date
which is six (6) months after his separation from service for any reason other
than death, or (ii) the date of his death.  The provisions of this paragraph
shall only apply if, and to the extent, required to avoid the imputation of any
tax, penalty or interest pursuant to Section 409A of the Code.  Any amounts
otherwise payable to Employee upon or in the six (6) month period following his
separation from service that are not so paid by reason of this Section VI(N)(1)
shall be paid (without interest) as soon as practicable (and in all events
within thirty (30) days) after the date that is six (6) months after Employee’s
separation from service (or, if earlier, as soon as practicable, and in all
events within thirty (30) days, after the date of his death).
 
(2) To the extent that any reimbursements pursuant to Sections I(B) or VI(C),
are taxable to Employee, any reimbursement payment due to Employee pursuant to
such provision shall be paid to Employee on or before the last day of Employee’s
taxable year following the taxable year in which the related expense was
incurred.  The benefits and reimbursements pursuant to Sections I(B) and VI(C)
are not subject to liquidation or exchange for another benefit and the amount of
such benefits and reimbursements that Employee receives in one taxable year
shall not affect the amount of such benefits and reimbursements that Employee
receives in any other taxable year.
 
(3) It is intended that any amounts payable under this Agreement and Employer’s,
Sun’s and Employee’s exercise of authority or discretion hereunder shall comply
with and avoid the imputation of any tax, penalty or interest under Section 409A
of the Code.  This Agreement shall be construed and interpreted consistent with
that intent.
 
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first written above.
 
“Employer”
 
CAREERSTAFF UNLIMITED, INC.
a Delaware corporation
 

 
By:   /s/ Michael Newman                    
   Michael Newman, Vice President
 

 
“Employee”
 
 
 
/s/ Richard L. Peranton                   
RICHARD L. PERANTON
 
 
 

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