ex104.htm


    Exhibit
10.4

    SUN
HEALTHCARE GROUP, INC.

    2004
EQUITY INCENTIVE PLAN

    AS
AMENDED AND RESTATED

    


    NON-EMPLOYEE
DIRECTORS STOCK-FOR-FEES PROGRAM

    


    1. Establishment.  Sun
Healthcare Group, Inc. (the “Company”) hereby establishes
this Sun Healthcare Group, Inc. Non-Employee Directors Stock-for-Fees Program,
as set forth herein (this “Program”).  This
Program is effective as of July 1, 2008 (the “Effective
Date”).  This Program is an Appendix to, and any shares of
Common Stock issued under this Program on and after the Effective Date shall be
charged against the applicable share limits of, the Sun Healthcare Group, Inc.
2004 Equity Incentive Plan, as amended and restated (the “Plan”).  Except as
otherwise expressly provided herein, the provisions of the Plan shall govern all
Stock Units (as such term is defined below) credited, and shares issued,
pursuant to this Program.  Capitalized terms are defined in the Plan
if not defined herein.

     

    2. Purpose.  The
purpose of this Program is to promote the success of the Company and the
interests of its stockholders by providing members of the Company’s Board of
Directors (the “Board”)
who are not officers or employees of the Company or one of its Subsidiaries
(“Non-Employee
Directors”) an opportunity to elect to receive their Annual Cash Retainer
in the form of Stock Units and more closely aligning the interests of
Non-Employee Directors and stockholders.

     

    3. Election
to Receive Stock Units in Lieu of Annual Cash Retainer.

     

    
      	
              (a)  

            	
              Definitions.  For
      purposes of this Program, the following definitions shall
      apply:

            


    

     

    
      	
              ·  

            	
              “Annual Cash Retainer”
      shall mean the basic annual retainer (including any additional fees for
      serving as a chairperson of the Board or a committee thereof, but
      excluding any meeting fees), to the extent otherwise payable in cash,
      payable to a Non-Employee Director for services as a member of the
      Board.

            


    

     

    
      	
              ·  

            	
              “Program Account” shall
      mean the unfunded bookkeeping account maintained by the Company on behalf
      of each Non-Employee Director to which the Non-Employee Director’s Stock
      Units shall be credited.

            


    

     

    
      	
              ·  

            	
              “Program Year” shall mean
      the 12 consecutive month period beginning January 1 each year and ending
      December 31 each year, except that the initial Program Year shall commence
      on July 1, 2008 and end on December 31,
2008.

            


    

     

    
      	
              ·  

            	
              “Stock Unit” shall mean a
      non-voting unit of measurement which is deemed for bookkeeping purposes to
      be equivalent to one outstanding share of Common Stock (subject to
      adjustment as provided in Sections 5(b) and 12 of the Plan) solely for
      purposes of the Program.  Stock Units shall be used solely as a
      device for the determination of the number of shares of Common Stock
      eventually to be delivered to a Non-Employee Director upon payment of such
      Stock Units.  Stock 

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              Units
      shall not be treated as property or as a trust fund of any
      kind.  Stock Units granted to a Non-Employee Director pursuant
      to the Program shall be credited to the Non-Employee Director’s Program
      Account.

            


    

     

    
      	
              (b)  

            	
              Election
      Form.  A Non-Employee Director may elect to exchange the
      right to receive payment of all or a portion of his or her Annual Cash
      Retainer payable with respect to a particular Program Year for the right
      to receive a grant of Stock Units under this Program in lieu of such
      retainer (or portion thereof, as applicable).  Such election
      shall be made by completing the election form attached hereto as Exhibit 1 (or
      such other form as the Board may prescribe from time to time) (an “Election Form”) and
      filing such completed form with the Company by the deadline determined
      under Section 3(c), (d) or (e) below, as
  applicable.

            


    

     

    
      	
              (c)  

            	
              Election for Initial Program
      Year.  Any individual who is a Non-Employee Director on
      the Effective Date may file an Election Form with the Company no later
      than June 30, 2008.  Such Election Form shall be irrevocable and
      shall be effective with respect to the Annual Cash Retainer for the
      initial Program Year commencing July 1, 2008 and ending December 31,
      2008.

            


    

     

    
      	
              (d)  

            	
              Election for Subsequent
      Program Years.  With respect to any Program Year
      commencing on or after January 1, 2009, and except as otherwise provided
      in Section 3(e) of this Program, a Non-Employee Director may file an
      Election Form with the Company on or before December 31 immediately
      preceding the start of such Program Year or any earlier deadline that may
      be established with respect to the particular year.  Such
      Election Form shall become irrevocable as of such December 31 and shall be
      effective with respect to the Annual Cash Retainer for the Program Year
      commencing on the January 1 that next follows such December
      31.

            


    

     

    
      	
              (e)  

            	
              Election for First Year of
      Eligibility.  Notwithstanding anything to the contrary in
      this Program, any individual who first becomes a Non-Employee Director
      after the Effective Date and during the first three (3) quarters of a
      particular Program Year may file an Election Form with the Company no
      later than thirty (30) days after such individual first becomes a
      Non-Employee Director for purposes of this Program.  Such
      Election Form shall be irrevocable and shall be effective with respect to
      the director’s Annual Cash Retainer paid for services rendered during the
      Program Year in which the Election Form is filed for any quarter in such
      Program Year that commences after such Election Form is filed with the
      Company.

            


    

     

    
      	
              (f)  

            	
              Credit of Stock
      Units.  Annual Cash Retainers are paid by the Company on
      a quarterly basis.  Upon the last business day of each quarter
      of a Program Year for which a Non-Employee Director has made a valid and
      timely election to receive Stock Units under this Program in lieu of all
      or a portion of his or her Annual Cash Retainer for that quarter (each, a
      “Crediting Date”)
      the Company shall credit the Non-Employee Director’s Program Account with
      a number of Stock Units determined by dividing (i) the amount of the
      Exchanged Retainer, by (ii) the Fair Market Value of a share of Common
      Stock on that Crediting Date, rounded down to the nearest whole
      unit.  The “Exchanged Retainer” is
      that portion of the Non-Employee Director’s Annual Cash Retainer
      that

            


    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              would
      have otherwise been paid in cash to the Non-Employee Director for his or
      her service on the Board during that quarter but for his or her election
      pursuant to this Program.  Any fractional amount less than the
      Fair Market Value of a share of the Common Stock as of such Crediting Date
      shall be paid in cash.  Not less frequently than annually, the
      Company shall provide each Non-Employee Director with a current statement
      of his or her Program Account reflecting all credits of Stock Units as of
      such date.  The term “Fair Market Value” is used in this Program
      as defined in the Plan.

            


    

     

    
      	
              (g)  

            	
              Dividend and Voting
      Rights.

            


    

     

    
      	
               
      

            	
              (i)

            	
              A
      Non-Employee Director shall have no rights as a stockholder of the
      Company, no dividend rights (except as expressly provided in Section
      3(g)(ii) of this Program with respect to dividend equivalent rights) and
      no voting rights, with respect to Stock Units credited under this Program
      and any shares of Common Stock underlying or issuable in respect of such
      Stock Units until such shares are actually issued to and held of record by
      the Non-Employee Director.  No adjustments will be made for
      dividends or other rights of a holder for which the record date is prior
      to the date of issuance of the
shares.

            


    

     

    
      	
               
      

            	
              (ii)

            	
              As
      of any date that the Company pays an ordinary cash dividend on its Common
      Stock (and in all events no later than two-and-one-half months after such
      date), the Company shall pay each Non-Employee Director with a Program
      Account balance an amount in cash equal to the per-share cash dividend
      paid by the Company on its Common Stock on such date, multiplied by the
      number of outstanding and unpaid Stock Units credited to such Non-Employee
      Director’s Program Account as of the related dividend payment record
      date.  No such payment shall be made with respect to any Stock
      Units which, as of such record date, have been paid pursuant to Section
      3(h).

            


    

     

    
      	
              (h)  

            	
              Payment of Stock
      Units.  Any Stock Units credited to a Non-Employee
      Director’s Program Account shall be fully vested at all times, and shall
      be payable in an equivalent number of shares of Common Stock (either by
      delivering one or more certificates, registered in the name of the
      Non-Employee Director, for such shares or by entering such shares in the
      name of the Non-Employee Director in book-entry form, as determined by the
      Company in its discretion) on or within sixty (60) days following the
      first to occur of (A) the date of the Non-Employee Director’s Separation
      from Service or (B) the fifth (5th) anniversary of the date the Stock Unit
      was credited to the Non-Employee Director.  As used herein, a
      “Separation from Service” occurs when the Non-Employee Director dies,
      retires, or otherwise has a termination of employment with the Company
      that constitutes a “separation from service” within the meaning of
      Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional
      alternative definitions available thereunder.  Notwithstanding
      the foregoing, in the event the Non-Employee Director is a “specified
      employee” (within the meaning of Treasury Regulation Section 1.409A-1(i))
      on the date of the Non-Employee Director’s Separation from Service, the
      Non-Employee Director shall not be entitled to payment of any Stock Units
      that would otherwise be paid in connection with his or her Separation from
      Service until the earlier of (A) the date which is six (6) months after
      his or her Separation from Service with the Company for
  

            


    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              any
      reason other than death, or (ii) the date of the Non-Employee Director’s
      death (and, in either case, payment will be made within thirty (30) days
      following that event); provided that this six-month delay shall apply only
      to the extent such delay in payment is required to comply with, and avoid
      the imputation of any tax, penalty or interest under, Section 409A of the
      Code.

            


    

     

    Shares of
Common Stock issued with respect to this Program may be issued under the Plan
(and, in such case, shall be charged against the Share Limit set forth in
Section 5 of the Plan) or may be issued under any other authority of the
Company.  Notwithstanding the foregoing provisions, in the event that
the Company is not able to issue shares of Common Stock in payment of any Stock
Units credited under this Program, such Stock Units shall be settled by payment
in cash equal to the applicable number of Stock Units not eligible to be paid in
shares, multiplied by the Fair Market Value of a share of Common Stock on the
date the Stock Units are paid.

     

    4. Plan
Provisions.  Stock Units credited under this Program, and the
issuance of shares of Common Stock in respect thereof (and any shares so
issued), shall otherwise be subject to the terms of the Plan (including, without
limitation, the provisions of Sections 12, 13 and 18 of the Plan); provided that
no payment of the Stock Units shall be made earlier than the payment date
determined pursuant to this Program.

     

    5. Amendment;
Administration; Construction.  The Board may at any time amend,
modify or suspend this Program without stockholder approval; provided that no
such amendment, modification or suspension shall materially and adversely affect
the rights of participants in this Program, without their consent, as to any
Exchanged Retainer for the Program Year in which such amendment, modification or
suspension occurs that has not theretofore been satisfied by the crediting of
Stock Units pursuant to this Program or as to any Stock Units previously
credited or to be credited for that or any prior year.  The Company
may terminate this Program and pay all outstanding Stock Units hereunder in
accordance with the requirements of Treasury Regulation 1.409A-3(j)(4)(ix)(A),
(B) or (C).  This Program does not limit the Board’s authority to make
other, discretionary award grants to Non-Employee Directors pursuant to the
Plan.  The Board’s power and authority to construe and interpret the
Plan and awards thereunder pursuant to Section 2(b) of the Plan shall extend to
this Program and any Stock Units credited and shares issued
hereunder.  As provided in Section 2(b) of the Plan, any action taken
by, or inaction of, the Board relating or pursuant to this Program and within
its authority or under applicable law shall be within the absolute discretion of
that entity or body and shall be conclusive and binding upon all
persons.  The Board shall be the Committee (as such term is used
herein and in the Plan) as to this Program; provided that if at the relevant
time the Board has delegated discretionary authority as to establishing director
compensation to a committee of the Board, that particular committee shall be the
Committee.  This Program, including any Election Forms filed
hereunder, shall be construed and interpreted to comply with Section 409A of the
Code.  Notwithstanding anything to the contrary in the Plan or this
Program, the Company reserves the right to amend this Program to the extent it
reasonably determines is necessary in order to preserve the intended tax
consequences of elections made under this Program in light of Section 409A of
the Code and any regulations or other guidance promulgated
thereunder.

     


    
      
         


      

      
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    6. Restrictions
on Transfer.  Notwithstanding anything contained herein or in
the Plan to the contrary, prior to the time the Stock Units are vested and paid,
neither the Stock Units nor any interest therein or amount payable in respect
thereof may be sold, assigned, transferred, pledged or otherwise disposed of,
alienated or encumbered, either voluntarily or involuntarily, other than by will
or the laws of descent and distribution.

     

    7. Limitation
on Non-Employee Director’s Rights.  The Stock Units create no
fiduciary duty to the Non-Employee Director and shall create only a contractual
obligation on the part of the Company to make payments, subject to vesting and
the other terms and conditions hereof, as provided above.  No assets
have been secured or set aside by the Company with respect to the Stock Units
and, if amounts become payable to the Non-Employee Director pursuant to this
Program, the Non-Employee Director’s rights with respect to such amounts shall
be no greater than the rights of any general unsecured creditor of the
Company.

     

    8. Effect of
this Program.  This Program shall be assumed by, be binding
upon and inure to the benefit of any successor or successors to the
Company.

     


    
      
         


      

      
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    SUN
HEALTHCARE GROUP, INC.

    NON-EMPLOYEE
DIRECTORS STOCK-FOR-FEES PROGRAM

     

    DIRECTOR
STOCK UNIT AWARD AND PAYMENT ELECTION FORM

     

    For
the Program Year January 1, 2009 –December
31, 2009

     

    Director:  __________________________________________________________________

                     (Print Full Name)

    


    I, the
Director named above, hereby irrevocably make the elections set forth below
pursuant to the Non-Employee Director Stock-for-Fees Program (the “Program”)
adopted under the Sun Healthcare Group, Inc. 2004 Equity Incentive Plan, as
amended and restated (the “Plan”).  I understand that this election
will apply to my Annual Cash Retainer for the Program Year indicated above and
each subsequent Program Year unless I timely file a subsequent election with
respect to such Program Year.  (Capitalized terms used in this form
and not otherwise defined herein have the meanings ascribed to them in the
Program.)

     

    I have
read and understand this form.  I have received, read and understand
the Program and Plan documents and the Prospectus for the Plan.  I
agree to be bound by the terms and conditions of the Program and the
Plan.  If there is any inconsistency between this form and the Program
or the Plan, the Program or the Plan, as applicable, controls.  I
understand and agree that if I elect to receive any portion of my Annual Cash
Retainer in the form of stock units, the stock units will be distributed in
accordance with the provisions of the Program and the Plan at the time specified
below.

     

    Stock-for-Fees
Election

     

    Check
and initial one
of the following options to indicate whether you wish to receive a portion of
your Annual Cash Retainer for the above Program Year in the form of stock units
(“Units”), and, if so, indicate the amount of your Annual Cash Retainer you wish
to receive as Units by filling in a whole percentage and/or a fixed dollar
amount, as applicable.  Please note that your “Annual Cash Retainer”
is the amount of your annual retainer (including any additional Chairperson
fees, but not including any meeting fees) that, but for your election, would
have been payable to you in cash.  If you do not select any of these
options, you will be deemed to have elected to receive your Annual Cash Retainer
for the applicable Program Year in the form of a cash
payment.

     

    I hereby
make the following election with respect to my Annual Cash Retainer for the
above Program Year and each subsequent Program Year (unless I timely file a
subsequent election with respect to such Program Year):

     

    
      
        
          
            
              	 	
                       ̈  _____

                    	
                      I
      elect to receive my entire Annual Cash Retainer in
cash.

                    
	 	
                       ̈  _____

                    	
                      I
      elect to receive _____ % of my Annual Cash Retainer in the form of Units
      in accordance with the Program; the balance of my Annual Cash Retainer (if
      I elect to receive less than 100% in Units) will be paid in
      cash.  The percentage that I elect will apply equally to my
      Annual Cash Retainer for any service each quarter during the applicable
      Program
Year.

                    


            

          

        

      

    

     

    I
understand and agree that the foregoing election is irrevocable and may not be
changed once this form has been filed with the Company.

    


     

    ________________________________________________________

    (Signature of
Director)


    
      
         


      

      
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    ACKNOWLEDGEMENT
OF DELIVERY OF ELECTION

    


    On behalf
of the Company, I hereby acknowledge that the above election was received on or
before December 31, 2008.

    


    
      
        
          
            
              
                	
                        SUN
      HEALTHCARE GROUP, INC.

                      
	 
      
	 
      
	
                        By___________________________________________

                      


              

            

          

        

      

    

    


     

     

     

     

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