EXHIBIT
10.16


SunDance
Rehabilitation Corporation
 2010
President Incentive Plan








Objective:




To
provide an incentive for the President of SunDance Rehabilitation Corporation
(“SunDance”) to improve operational and financial performance and to reward
success.





Program:




►Incentive
      Potential:


·
            Target bonus equal
      to 60% of annual base salary (as of 12/31/10) with additional
      incentive potential of up to 45%.


·
            The
      maximum potential bonus payout is 105% of base
  salary.


►
Paid
Annually


·
            Incentive
      payments will be made after completion of the year-end audit for 2010 and
      following certification of achievement of financial performance targets by
      the Compensation Committee of the Board of Directors of Sun Healthcare
      Group, but no later than March 15,
2011.


►
Plan Year:


·
            January
      1, 2010 – December 31, 2010


►
      Plan
      Eligibility:


·
            In
      order to be eligible for the incentive, the Presidentmust be
      a full-time employee and actively employed on
  12/31/10.


·
            If
      an approved leave of absence occurs during the plan year, the bonus will
      be prorated.





Plan Provisions, Criteria
and Weighting:




The plan
is comprised of two financial components:  a 2010 financial
performance target for SunDance and a 2010 financial performance target for Sun
Healthcare Group.  Both financial performance targets are based on
earnings before interest, taxes, depreciation and amortization
(EBITDA).  The EBITDA targets have been established by the
Compensation Committee.  These targets are:





·
            SunDance
      2010 EBITDA of $13.1 million


·
            Sun
      Healthcare Group 2010 EBITDA of $173.8
million





The two
components of the plan are weighted as
follows:




Components
            WeightingSunDance
      EBITDA goal
            85%Sun
      Healthcare Group EBITDA goal
            15%





SunDance
EBITDA Component




The
amount of the SunDance EBITDA bonus shall be based upon actual SunDance EBITDA
attained as a percentage of the SunDance EBITDA target as follows:


1




%
      Achievement of Target for
              SunDance:
            85%
      of target
              (2010
      EBITDA of
              $11.135
      million)
            100%
      of target
              (2010
      EBITDA of
              $13.1
      million)
            115%
      of target
              (2010
      EBITDA of
              $15.065
      million)Percentage
      of Base Salary
              Paid
      as Bonus:
            10.2%
            51.0%
            89.5%





If actual
SunDance EBITDA is less than $11.135 million, the SunDance EBITDA component of
the bonus will be zero.  If actual SunDance EBITDA exceeds $15.065
million, the SunDance EBITDA component of the bonus will be 89.5% of base
salary.  If actual SunDance EBITDA is greater than $11.135 million but
less than $13.1 million, or greater than $13.1 million but less than $15.065
million, the amount of the SunDance EBITDA component of the bonus will be
prorated between the amounts shown in the applicable columns of the
table.




The level
of achievement of the SunDance EBITDA target shall be determined without regard
to changes to SunDance EBITDA that may occur as a result of acquisitions made
during 2010.







Sun
Healthcare Group EBITDA Component




The
amount of the Sun Healthcare Group EBITDA bonus shall be based upon normalized
actual EBITDA attained as a percentage of the Sun Healthcare Group EBITDA target
as follows:




%
      Achievement of Target
              for
      Sun Healthcare Group:
            85%
      of target
              (2010
      EBITDA of
              $147.73
      million)
            100%
      of target
              (2010
      EBITDA of
              $173.8
      million)
            115%
      of target
              (2010
      EBITDA of
              $199.87
      million)Percentage
      of Base Salary
              Paid
      as Bonus:
            1.8%
            9.0%
            15.5%







If actual
Sun Healthcare Group EBITDA is less than $147.73 million, the Sun Healthcare
Group EBITDA component of the bonus will be zero.  If actual Sun
Healthcare Group EBITDA exceeds $199.87 million, the Sun Healthcare Group EBITDA
component of the bonus will equal 15.5% of Base Salary.  If actual Sun
Healthcare Group EBITDA is greater than $147.73 million but less than $173.8
million or greater than $173.8 million but less than $199.87 million, the amount
of the Sun Healthcare Group EBITDA component of the bonus will be prorated
between the amounts shown in the applicable columns of the table.




The Sun
Healthcare Group EBITDA component of the bonus shall be determined solely by the
normalized actual consolidated EBITDA of Sun, as published by Sun in its press
release announcing financial results for 2010.  Normalizing
adjustments consist of actuarial adjustments for self insurance for general and
professional liability, EBITDA of discontinued operations, and nonrecurring
costs related to acquisitions and other similar events.  When
determining whether the EBITDA target has been achieved, adjustments shall be
made to the EBITDA target to eliminate the effect of discontinued operations or
any change in accounting policies or practices.







Miscellaneous:




In no
event shall the amount of the bonus exceed the amount that has been accrued for
such bonus in the calculation of either or both of the SunDance EBITDA or Sun
Healthcare Group EBITDA components of the bonus.


2


This Plan
neither constitutes a contract of employment nor grants any rights for an
employee to be retained in employment.  Rather, all employment remains
“at will” unless otherwise required by applicable law.  This document
constitutes the entire Plan, supersedes all prior agreements and there are no
oral terms or conditions to the contrary.  Sun Healthcare Group
retains the discretion to modify the Plan at any time, with or without
notice.





The
company reserves the right to reduce, eliminate or postpone payments of
employees who are on a written performance plan, have engaged in conduct that is
in direct violation of the company’s Code of Conduct/Compliance Process or such
conduct/performance that is detrimental to the company.











Employee
Acknowledgement:





I
acknowledge that I have received a copy of the 2010 President Incentive
Plan.  I understand that if I have questions about the 2010 President
Incentive Plan that I should discuss them with my immediate
manager.














________________________________________            ___________________,
2010


Sue
Gwyn                                                         
                               Date






























































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