EXHIBIT 10.1

 EMPLOYMENT AGREEMENT

          THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into
effective as of the 22nd day of March, 2005, by and between Michael Newman
("Executive") and SUN HEALTHCARE GROUP, INC., a Delaware corporation ("Sun" or
"Company").

          WHEREAS, Executive has been appointed to serve as the Executive Vice
President and General Counsel of Sun;

          WHEREAS, Sun and Executive desire to set forth the terms and
conditions of Executive's employment as Executive Vice President and General
Counsel of Sun in an employment agreement, and Executive is willing to perform
such services for Sun under the terms and conditions set forth below;

          NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants and agreements contained herein, Executive and Sun agree as follows:

Section 1:     Employment; Term of Employment.

          (a)  Employment.  Sun agrees to employ Executive and Executive agrees
to accept employment with Sun, subject to the terms and conditions of this
Agreement.

          (b)  Term of Employment.  The period of Executive's employment under
this Agreement shall begin as of March 22, 2005 and shall continue until
terminated in accordance with Section 5 below.  As used in this Agreement, the
phrase "Employment Term" refers to Executive's period of employment from the
date of this Agreement until the date his employment is terminated.

Section 2:     Duties and Responsibilities.  Executive shall devote his full
employment time, efforts, skills and attention exclusively to his duties as
Executive Vice Executive and General Counsel; provided, however, that to the
extent the following activities do not materially interfere or conflict with his
duties and responsibilities hereunder, Executive may (i) serve as a member of
the boards of directors of other corporations with the prior written consent of
the Chief Executive Officer of Sun; and (ii) engage in charitable, civic and
religious affairs.

Section 3:     Compensation, Benefits and Related Matters.

          (a)  Annual Base Salary. During the Employment Term, Sun shall pay to
Executive a base salary at an annual rate of $280,000 ("Base Salary"), such
salary to be payable in accordance with Sun's customary payroll practices as in
effect from time to time (but not less frequently than monthly). The annual Base
Salary will be reviewed at least annually for possible merit increases and
any increase in Executive's annual base salary rate shall thereafter constitute
"Base Salary" for purposes of this Agreement.

          (b)  Cash Bonus/Incentive Compensation. In addition to the Base Salary
provided for in Section 3(a) above, Executive shall be eligible to receive an
annual bonus ("Bonus").  Bonus targets for each fiscal year shall be set by the
Compensation Committee of the Board of Directors of Sun, which may use as
performance measurements, EBITDA (as defined below), or in lieu or in addition
thereto, return on capital, gross revenues or any combination of such factors or
other factors as determined by the Compensation Committee and generally
applicable to senior executives of Sun. For the fiscal year in which this
Agreement becomes effective, if Sun achieves or exceeds consolidated earnings
before interest, taxes, depreciation and amortization ("EBITDA") targets as
follows:

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(1)   If EBITDA is equal to or greater than 100% of target but less than 120% of
target, Executive shall receive an annual bonus equal to 50% of Base Salary
earned during such fiscal year.

(2)   If EBITDA is equal to or greater than 120% of target but less than 140% of
target, Executive shall receive an annual bonus equal to 75% of Base Salary
earned during such fiscal year.

(3)   If EBITDA is equal to or greater than 140% of target, Executive shall
receive an annual bonus equal to 100% of Base Salary earned during such fiscal
year.

The Bonus for the fiscal year in which this Agreement becomes effective shall be
pro-rated based on Executive's employment during such year. Such Bonus shall be
payable at the same time as other annual bonuses are paid to senior management
personnel.  Subject to the provisions of Section 6(b) and Section 6(d), in order
to have earned and to be paid any such Bonus, Executive must be employed by Sun
on the date of such payment. It is intended that the Bonus described in this
Section 3(b) qualify as "performance based compensation" under Section 162(m) of
the Internal Revenue Code, to the extent necessary to preserve the Company's
ability to deduct such bonus. The maximum annual bonus that may be paid pursuant
to this Section 3(b) is $1.3 million.

(c)  Equity Incentive. During the Employment Term, Executive shall be eligible
to be granted equity incentive awards during his employment on the same basis as
other senior executive officers of Sun.  Such equity incentive awards may
include stock options and restricted units.  Executive's eligibility, rights and
entitlement to such equity incentive awards shall be governed by the applicable
equity incentive plan, award agreement, award and/or grant.

(d)  Retirement and Benefit Plans. During the Employment Term, Executive shall
be eligible to participate in or receive benefits under any pension plan, 401(k)
savings plan, nonqualified deferred compensation plan, supplemental executive
retirement plan, medical and dental benefits plan, life insurance plan,
short-term and long-term disability plans, or any other employee benefit or
fringe benefit plan, generally made available by Sun to senior executives in
accordance with the eligibility requirements of such plans and subject to the
terms and conditions set forth in this Agreement.  Such plans, programs and
arrangements are subject to change during employment at the sole discretion of
the Company.

(e)  Sick, Holiday and Vacation Pay. Executive is entitled to holiday and sick
pay consistent with Sun's Employee Handbook or other policy applicable to senior
executives.  Sick and Holiday Pay is subject to change during employment at the
sole discretion of the Company.  Executive shall be entitled to up to 160 hours
of vacation per year, which shall accrue at the rate of 6.152 hours per pay
period (26 pay periods). However, in accordance with Sun's Employee Handbook or
other policy applicable to senior executives, vacation hours shall be subject to
an accrual cap of two times Executive's annual allotment of vacation hours and
shall be subject to change during employment at the sole discretion of the
Company.

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(f)  Indemnification, Liability/Insurance. Executive shall be entitled to
indemnification by Sun to the extent required by applicable law and the charter
and bylaws of Sun. In addition, Sun shall maintain during Executive's employment
customary directors and officers' liability insurance and Executive shall be
covered by such insurance.

(g)  Taxes. All compensation payable to Executive shall be subject to
withholding for all applicable federal, state and local income taxes,
occupational taxes, Social Security and similar mandatory withholdings.

Section 4:    Medical Reimbursement.  Upon proof of payment, Sun agrees to
reimburse Executive out of pocket costs for maintaining his current medical
insurance.  Said costs are estimated to be $990 per month.  During this time
Executive will not participate in Sun's health plan.  

Section 5:     Termination of Employment. Sun, at any time in its sole
discretion, may terminate Executive as Executive Vice President and General
Counsel and from all other positions with Sun and its direct and indirect
subsidiaries.  Upon termination, Executive (or his beneficiary or estate as the
case may be) shall be entitled to receive the compensation and benefits
described in Section 6 below.

(a)  Termination by Sun for "Good Cause." Sun may, at any time, by written
notice to Executive at least five (5) business days prior to the date of
termination specified in such notice and specifying the acts or omissions
believed to constitute Good Cause (as defined below), terminate Executive as an
officer and employee and from all other positions with Sun for Good Cause. Sun
may relieve Executive of his duties and responsibilities pending a final
determination of whether Good Cause exists, and such action shall not constitute
Good Reason (as defined in Section 5(c) below) for purposes of this Agreement.
Payment to Executive upon a termination for Good Cause is set forth in Section
6(a). "Good Cause" for termination shall mean any one of the following:

(1)   Any criminal conviction (including conviction on a nolo  contendere plea)
under the laws of the United States or any state or other political subdivision
thereof which, in the sole discretion of the Chief Executive Officer of Sun,
renders Executive unsuitable as an officer or employee of Sun.

(2)   Executive's continued failure to substantially perform the duties
reasonably requested by the Chief Executive Officer of Sun and commensurate with
his position as Executive Vice President and General Counsel of Sun (other than
any such failure resulting from his incapacity due to his physical or mental
condition) after a written demand for substantial performance is delivered to
him by the Chief Executive Officer of Sun, which demand specifically identifies
the manner in which the Chief Executive Officer of Sun believes that Executive
has not substantially performed his duties, and which performance, in the sole
discretion of the Chief Executive Officer is determined to not be substantially
corrected by Executive  within ten (10) calendar days of receipt of such demand;

(3)   Any material workplace misconduct or willful failure to comply with Sun's
general policies and procedures as they may exist from time to time by Executive
which, in the sole discretion of the Chief Executive
 

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Officer of Sun, renders Executive unsuitable as an officer or employee; and

(4)   Breach of any of the covenants set forth in Section 8 of this Agreement.

Regardless of whether Executive's employment initially was considered to be
terminated for any reason other than Good Cause, Executive's employment will be
considered to have been terminated for Good Cause for purposes of this Agreement
if the Chief Executive Officer of Sun subsequently determines that Executive
engaged in an act constituting Good Cause.

(b)   Termination by Sun without Good Cause. Sun may at any time in its sole
discretion, by written notice to Executive at least five (5) business days prior
to date of termination specified in such notice, terminate Executive as an
officer and employee and from all other positions with Sun. If such termination
is made by Sun other than by reason of Executive's death or Disability (as
defined in Section 5(e)) and Good Cause does not exist, such termination shall
be treated as a termination without Good Cause and Executive shall be entitled
to payment in accordance with Section 6(b).

(c)   Termination by Executive for Good Reason. Executive may, at any time at
his option within sixty (60) calendar days following an event or condition that
constitutes Good Reason (as defined below), resign for Good Reason,  as an
officer and employee and from all other positions with Sun by written notice to
Sun at least thirty (30) calendar days prior to the date of termination
specified in such notice; provided, however, that Sun has not substantially
corrected the event or condition that would constitute Good Reason prior to the
date of termination. Payment to Executive upon a termination for Good Reason is
set forth in Section 6(b).

(1)   "Good Reason" shall mean the occurrence of any one of the following events
or conditions (but only if Executive provides a notice of resignation to Sun
within sixty (60) calendar days following the first occurrence of such event or
condition and Sun thereafter fails to cure such circumstance within sixty (60)
calendar days after its receipt of that notice):

a.   A meaningful and detrimental reduction, without Executive's written
consent, in the nature of his responsibilities or a meaningful and detrimental
change in his reporting responsibilities or titles;

b.   A reduction of compensation as set forth in Sections 3(a) - 3(c)
(collectively the "Compensation") (other than a reduction of compensation
uniformly applicable to other members of Senior Management or as a result of
disciplinary action against Executive), a reduction of the benefits set forth in
Sections 3(d) - 3(g) (collectively, the "Benefits") (other than a reduction of
Benefits uniformly applicable to other members of senior management), or failure
by Sun to pay to Executive any portion of

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the Compensation or Benefits within seven (7) business days of the date such
compensation or other payments and benefits are due; or

c.   A change in Executive's principal work location to a place other than
Orange County or Los Angeles County, California.

Notwithstanding any provision of this Paragraph 5(c) to the contrary, the
occurrence of a "Change in Control" (as defined in Section 6 below) shall not,
by itself, constitute Good Reason hereunder.

(d)   Voluntary Resignation Without Good Reason. Executive may, at any time at
his option with thirty (30) calendar days written notice to Sun, voluntarily
resign without Good Reason as an officer and employee and from all positions
with Sun. Payment to Executive upon his voluntary resignation without Good
Reason is set forth in Section 6(a). Resignation from employment shall
automatically constitute resignation from all positions of any subsidiary or
affiliated corporation.

(e)   Death or Disability. Executive's employment under this Agreement shall
terminate automatically as of the date of Executive's death. Sun, at any time by
written notice to Executive at least five (5) business days prior to the date of
termination specified in such notice, terminate Executive as an officer and
employee and from all other positions with Sun by reason of his Disability.
"Disability" shall mean any physical or mental condition or illness that
prevents Executive from performing the essential duties of his position (where
such failure cannot be remedied with reasonable accommodation) for a period of
120 substantially consecutive calendar days, as determined by a physician
selected by Sun and reasonably acceptable to Executive or, if Executive is
incapacitated, reasonably acceptable to the Director of Medicine or equivalent
senior physician at a hospital of Executive's choice. In addition, Executive's
receipt of disability benefits under Sun's long-term disability benefits plan or
receipt of Social Security disability benefits shall be deemed conclusive
evidence of Disability for purpose of this Agreement.  Payment to Executive upon
his termination by reason of his death or Disability is set forth in Section
6(d).

Section 6:   Payments Upon Termination.

(a)  Payment Upon Termination for Good Cause, or Resignation without Good
Reason, Death or Disability. In the event of termination of his employment
pursuant to Sections 5(a) or 5(d), Executive, or his estate where applicable,
shall be paid any earned but unpaid Base Salary through the date of termination
and any accrued but unused vacation through the date of termination.

Executive also shall receive his vested benefits in accordance with the terms of
Sun's compensation and benefit plans, and his participation in such plans and
all other perquisites shall cease as of the date of termination, except to the
extent Executive may elect to continue coverage as under any welfare benefit
plans as required by Part 6, Title I of the Employee Retirement Income Security
Act of 1974, as amended. Upon a termination under Section 5(a) or 5(d),
Executive shall not be entitled to any compensation or benefits under this
Agreement except as set forth in this Section 6(a).

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(b)   Payment Upon Termination by Sun without Good Cause or by Executive for
Good Reason. In the event of termination of employment pursuant to Sections 5(b)
or 5(c), Executive shall be entitled to a lump sum severance payment in an
amount equal to one (1) year Base Salary or, in the event such termination
occurs on or within two (2) years following the change of a "Change in Control,"
two (2) years Base Salary. Executive also shall be entitled to (i) any earned
Bonus pursuant to Section 3(b) for the fiscal year prior to the fiscal year of
termination in the event Executive was employed the entire prior fiscal year but
is not employed by Sun on the date said Bonus is paid, (ii) a pro rata portion
of the Bonus for the fiscal year of termination, based on the number of days of
employment during the fiscal year of termination (including holidays, vacation
and sick days and weekends during the period of employment) divided by 365 and
(iii) payment of any accrued but unused vacation pursuant to Section 3(e) in
accordance with Company policy. Notwithstanding the foregoing, Executive's right
to receive the severance payment hereunder shall be conditioned upon his
execution of a release in favor of Sun, which shall not be inconsistent with the
terms of this Agreement. Executive's participation in any other retirement and
benefit plans and perquisites shall cease as of the date of termination, except
Executive and his eligible dependents (as determined under Sun's health plan)
shall be entitled to continuing coverage under Sun's health plans on the same
basis as active employees until the earlier of (x) the first anniversary of the
date of termination or (y) the date on which Executive or his eligible
dependents become eligible to participate in a plan of a successor employer.

(c)  "Change in Control." For purposes of this Agreement, a "Change in Control"
shall be deemed to have occurred if any of the following events occurs:

(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")), other than
a trustee or other fiduciary holding securities under an employee benefit plan
of Sun (an "Acquiring Person"), 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 Sun;

(2)  A merger or consolidation of Sun with any other corporation, other than a
merger or consolidation which would result in the voting securities of Sun
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 51% of the combined voting power of the voting
securities of Sun or surviving entity outstanding immediately after such merger
or consolidation;

(3)  A sale or other disposition by Sun of all or substantially all of Sun's
assets;

(4)  During any period of two (2) consecutive years, individuals who at the
beginning of such period constitute the Board of Directors and any new director
(other than a director who is a representative or nominee of an Acquiring
Person) whose election by the Board of Directors or nomination for election by
Sun's shareholders was approved by a vote of at least a majority of the
directors then still in office who either were
 

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directors at the beginning of the period or whose election or nomination was
previously so approved, no longer constitute a majority of the Board of
Directors;

provided, however, in no event shall any acquisition of securities, a change in
the composition of the Board of Directors or a merger or other consolidation
pursuant to a plan of reorganization under chapter 11 of the Bankruptcy Code
with respect to Sun ("Chapter 11 Plan"), or a liquidation under the Bankruptcy
Code constitute a Change in Control. In addition, notwithstanding Sections
6(c)(1), 6(c)(2), 6(c)(3) and 6(c)(4), a Change in Control shall not be deemed
to have occurred in the event of a sale or conveyance in which Sun continues as
a holding company of an entity or entities that conduct the business or
businesses formerly conducted by Sun, or any transaction undertaken for the
purpose of reincorporating Sun under the laws of another jurisdiction, if such
transaction does not materially affect the beneficial ownership of Sun's capital
stock. Executive's continued employment without objection following a Change in
Control shall not, by itself, constitute consent to or a waiver of rights with
respect to any circumstances constituting Good Reason hereunder.

(d)   Payment Upon Termination for Death or Disability. In the event of
termination of his employment pursuant to Section 5(e), Executive, or his estate
where applicable, shall be paid any earned but unpaid Base Salary through the
date of termination and any accrued but unused vacation through the date of
termination.

Executive, or his estate where applicable, also shall receive his vested
benefits (including those that vest by reason of death or disability) in
accordance with the terms of Sun's compensation and benefit plans, and his
participation in such plans and all other perquisites shall cease as of the date
of termination, except to the extent Executive may elect to continue coverage as
under any welfare benefit plans as required by Part 6, Title I of the Employee
Retirement Income Security Act of 1974, as amended. Upon a termination under
Section 5(e), Executive shall not be entitled to any compensation or benefits
under this Agreement except as set forth in this Section 6(d).

In the event Employee is unable to work due to death or disability on the date
of payment of Bonus as required by Section 3(b) above, Executive or his estate
shall be paid any unpaid Bonus for the prior fiscal year which shall be prorated
based on the number of days of employment (including holidays, vacation and sick
days and weekends during the period of employment) during the prior fiscal year
divided by 365.  Executive also shall receive a pro rata portion (based on the
number of days of employment (including holidays, vacation and sick days and
weekends during the period of employment) in the fiscal year of termination
divided by 365) of the Bonus, if any, for the fiscal year in which the
termination pursuant to Section 5(e) occurs.

Section 7:     Additional Payments.

(a)  Gross-Up Payments. Notwithstanding anything herein to the contrary, if it
is determined that any payment or distribution by Sun to or for the benefit of
the Executive (whether paid or payable or distributed or distributable pursuant
to the terms of this
 

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Agreement or otherwise, but determined without regard to any additional payments
required under this Section 7) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code or any interest or
penalties with respect to such excise tax (such excise tax, together with any
interest or penalties thereon, is herein referred to as an "Excise Tax"), then
Executive shall be entitled to an additional payment (a "Gross-Up Payment") in
an amount that will place Executive in the same after-tax economic position that
he would have enjoyed if the Excise Tax had not applied to the payment.

(b)   Determination of Gross-Up Payment.  Subject to the provisions of Section
7(c), all determinations required under this Section 7, including whether a
Gross-Up Payment is required, the amount of the payments constituting parachute
payments, and the amount of the Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by Sun's independent
auditors or such other certified public accounting firm reasonably acceptable to
Executive as may be designated by Sun (the "Accounting Firm")  which shall
provide detailed supporting calculations both to Sun and Executive within
fifteen business days following the receipt of notice from Executive that there
has been a Payment, or such earlier time as is requested by Sun. All fees and
expenses of the Accounting Firm shall be borne solely by Sun.  Any Gross-Up
Payment, as determined pursuant to this Section 7, shall be paid by Sun to the
Executive not later than the due date for the payment of any Excise Tax. If the
Accounting Firm determines that no Excise Tax is payable by Executive, Sun shall
cause the Accounting Firm to provide Executive and Sun with an opinion that Sun
has substantial authority under the Internal Revenue Code and Regulations not to
report an Excise Tax on Executive's federal income tax return. Any determination
by the Accounting Firm shall be binding upon Executive and Sun. As a result of
the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by Sun should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder.  In the event that Sun exhausts its remedies pursuant to Section 7(c)
and Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by Sun to or for the benefit of
Executive.

(c)   Procedures. Executive shall notify Sun in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by Sun
of a Gross-Up Payment. Such notice shall be given as soon as practicable but not
later than ten business days after Executive knows of such claim and Executive
shall apprise Sun of the nature of the claim and the date on which the claim is
requested to be paid. Executive agrees not to pay the claim until the expiration
of the thirty-day period following the date on which Executive notifies Sun, or
such shorter period ending on the date the taxes with respect to such claim are
due (the "Notice Period"). If Sun notifies Executive in writing prior to the
expiration of the Notice Period that it desires to contest the claim, Executive
shall: (i) give Sun any information reasonably requested by Sun relating to the
claim; (ii) take such action in connection with the claim as Sun may reasonably
request, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by Sun and reasonably
acceptable to Executive; (iii) cooperate with Sun in good faith in contesting
the claim; and (iv) permit Sun to participate in any proceedings relating to the
claim. Without limitation on the foregoing provisions of this Section 7(c), Sun
shall control all proceedings related to the claim and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings, and
 

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conferences with the taxing authority in respect of such claim. If requested by
Sun, Executive agrees either to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner and to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts as Sun shall determine;
provided, however, that if Sun directs Executive to pay such claim and pursue a
refund, Sun shall advance the amount of such payment to Executive on an
after-tax and interest-free basis (the "Advance"). Sun's control of the contest
related to the claim shall be limited to the issues related to the Gross-Up
Payment and Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or other taxing
authority. If Sun does not notify Executive in writing prior to the end of the
Notice Period of its desire to contest the claim, Sun shall pay to Executive an
additional Gross-Up Payment in respect of the excess parachute payments that are
the subject of the claim, and Executive agrees to pay the amount of the Excise
Tax that is the subject of the claim to the applicable taxing authority in
accordance with applicable law.

(d)   Repayments. If, after receipt by Executive of an Advance, Executive
becomes entitled to a refund with respect to the claim to which such Advance
relates, Executive shall pay Sun the amount of the refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after
receipt by Executive of an Advance, a determination is made that Executive shall
not be entitled to any refund with respect to the claim and Sun does not
promptly notify Executive of its intent to contest the denial of refund, then
the amount of the Advance shall not be required to be repaid by Executive and
the amount thereof shall offset the amount of the additional Gross-Up Payment
then owing to Executive.

(e)   Further Assurances. Sun shall indemnify Executive and hold him harmless,
on an after-tax basis, from any costs, expenses, penalties, fines, interest or
other liabilities ("Losses") incurred by Executive with respect to the exercise
by Sun of any of its rights under Section 7, including, without limitation, any
Losses related to Sun's decision to contest a claim or any imputed income to him
resulting from any Advance or action taken on Executive's behalf by Sun
hereunder. Sun shall pay all legal fees and expenses incurred under Section 7
and shall promptly reimburse Executive for the reasonable expenses incurred by
him in connection with any actions taken by Sun or required to be taken by
Executive hereunder. Sun shall also pay all of the fees and expenses of the
Accounting Firm, including, without limitation, the fees and expenses related to
the opinion referred to in Section 7(b).

Section 8:     Protection of Sun's Interests.

(a)   Confidentiality. Executive agrees that he will not at any time, during or
after the term of this Agreement, except in performance of his obligations to
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 Executive may learn or has learned by reason
of his 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, legal matters and claims
(asserted and unasserted), trade secrets and other intellectual property,
systems, procedures, manuals, confidential reports, product price lists, pricing
information,
 

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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. Executive confirms that all Confidential Information is
and shall remain the exclusive property of Sun. All business records, papers and
documents kept or made by Executive relating to the business of Sun shall be and
remain the property of Sun. Upon the termination of Executive's employment for
any reason or upon the request of Sun at any time, Executive shall promptly
deliver to Sun, and shall not without the consent of the Board of Directors of
Sun, retain copies of, Confidential Information, or any written materials not
previously made available to the public, or records and documents made by
Executive or coming into Executive's possession concerning the business or
affairs of Sun.

(c)  Nonsolicitation. Executive shall not, during his employment under this
Agreement, and for two (2) years following the termination of this Agreement,
for whatever reason or cause, 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 or her 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. Executive shall not during his employment under this
Agreement and for two years following termination of the Agreement, 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. Sun and its officers and
directors will not make any statements that are intended to or that would
reasonably be expected to harm Executive or his reputation or that reflect
negatively on Executive's performance, skills or ability.

(e)  Relief. Without intending to limit the remedies available to Sun, Executive
acknowledges that a breach of any of the covenants in Section 8 may result in
material irreparable injury to Sun 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 Executive from engaging in activities prohibited by
Section 8 or such other relief as may be required to specifically enforce any of
the covenants in Section 8.

Section 9:     Taxes.  Sun shall withhold from any compensation and benefits
payable under this Agreement all applicable federal, state, local, and other
withholding taxes.

Section 10:     Miscellaneous Provisions.

(a)  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 signed by both parties. 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

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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.

(b)  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.

(c)  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. 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
and this Agreement shall supersede all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or written,
with respect to the subject matter hereof.

(d)  Resolution of Disputes. Any disputes arising under or in connection with
this Agreement shall be resolved by binding arbitration, to be held in Orange
County, California in accordance with the National Rules for the Resolution of
Employment Disputes and procedures of the American Arbitration Association.
Executive and Sun shall mutually select the arbitrator. If Executive and Sun
cannot agree on the selection of an arbitrator, each party shall select an
arbitrator and the two arbitrators shall select a third arbitrator who shall
resolve the dispute.  The fees of the arbitrator and any administrative fees of
AAA shall be paid by Sun.  Judgment upon the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof. Nothing herein shall
limit the ability of Sun to obtain the injunctive relief described in Section
8(d) pending final resolution of matters that are sent to arbitration.

(e)  Attorneys' Fees. In the event Executive prevails on the merits on any
claim, action or proceeding: (i) contesting or otherwise relating to the
existence of Good Cause in the event of Executive's termination of employment
during the Term for Good Cause; (ii) enforcing any right, benefit or obligation
under this Agreement, or otherwise enforcing the terms of this Agreement or any
provision thereof; or (iii) asserting or otherwise relating to the existence of
Good Reason in the event of Executive's termination of employment during the
Term for Good Reason, Sun shall pay or reimburse Executive on an after-tax basis
for reasonable costs and expenses (including, without limitation, court costs,
costs of arbitration and reasonable legal fees and expenses which reflect common
practice with respect to the matters involved) incurred by Executive as a result
of such claim, action or proceeding.  

(f)  Governing Law. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of California.

(g)  Notice. For the purpose of this Agreement, notice, demands and all other
communication provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered by hand delivery or overnight
courier or mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows or to other addresses as each
party may have furnished to the other:

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To Sun:

 

Attention: Heidi Fisher

18831 Von Karman Avenue; Suite 400

Irvine, California 92612

 

To Executive:

 

Michael Newman

352 North California Street

San Gabriel, CA  91775

(h)  Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.

(i)  No Claim Against Assets.  Nothing in this Agreement shall be construed as
giving Executive any claim against any specific assets of Sun or as imposing any
trustee relationship upon Sun in respect of Executive.  Sun shall not be
required to establish a special or separate fund or to segregate any of its
assets in order to provide for the satisfaction of its obligations under this
Agreement.  Executive's rights under this Agreement shall be limited to those of
an unsecured general creditor of Sun and its affiliates.

 

(j)  Counterparts.  This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, and
such counterparts will together constitute but one Agreement.

[Signatures Commence on Immediately Following Page]

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          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

       

/s/ Michael Newman                                

  11/22/05                  

MICHAEL NEWMAN

Date

 

 

 

SUN HEALTHCARE GROUP, INC.

 

       

By:  /s/ Richard K. Matros                       

  11/28/05                   

           Richard K. Matros

Date

           Chairman and CEO

 

 

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