Sun
Healthcare Group, Inc. Executive Bonus Plan




Effective
January 1, 2009, annual incentive bonuses of senior management (“Executives”) of
Sun Healthcare Group, Inc. (“Sun”)
and senior management of SunBridge Healthcare Corporation (“SunBridge”)
shall be determined pursuant to this plan.





The
incentive bonus (the “Bonus”)
of an Executive for any fiscal year (the “Applicable
Fiscal Year”) shall be based on the criteria set forth below. For Mr.
Matros, Mr. Mathies and Dr. Hunker, the Bonus will be based upon achievement of
the EBITDA and quality of care targets as described below.  For Mr.
Shaul, Mr. Newman and Ms. Crispell, the Bonus will be determined solely by
achievement of the EBITDA target as described below.





1.           EBITDA.  The amount
of the Bonus for all Executives shall be based upon Sun’s normalized
consolidated earnings before interest, taxes, depreciation and amortization of
Sun (“EBITDA”),
as published by Sun in its press release announcing financial results for the
Applicable Fiscal Year. The Compensation Committee of the Board of Directors
(the “Committee”)
of Sun reserves the right to make adjustments for the effect of prior period
actuarial adjustments for self insurance for general and professional liability,
discontinued operations and other normalizing items in determining the level of
achievement of the EBITDA target.  The calculation of actual EBITDA
shall include an accrual for all Bonuses and other cash bonuses to be paid to
Sun officers and employees based upon achievement of an EBITDA
target.





The
Committee shall establish the EBITDA target each year.Subject to the provisions
of Section 2,the amount of the Bonus shall be based upon actual EBITDA
attained as a percentage of the target EBITDA as follows (percentages in the
tables are percentages of base salary as of the last day of the Applicable
Fiscal Year):




Name
                        Position
                        85%
      of Target
                        100%
      of target
                        115%
      of
target


R.
      Matros
                  Chairman
      & CEO
                  18%
                  95%
                  158%W.
      Mathies
                  COO
      SunBridge
                  15%
                  80%
                  131%B.
      Shaul
                  CFO
                  15%
                  75%
                  131%C.
      Hunker
                  Ch.
      Comp. & Ch. Risk Off.
                  15%
                  75%
                  131%M.
      Newman
                  GC
                  15%
                  75%
                  131%C.
      Crispell
                  SVP,
      HR
                  10%
                  50%
                  88%








If actual
EBITDA is less than 85% of target EBITDA, no Bonus will be paid to any
Executive.  If actual EBITDA exceeds 115% of target EBITDA, each Bonus
will equal the percentage of base salary set forth in the last column of the
table above.  If actual EBITDA is greater than 85% of target EBITDA
but less than 100% of target EBITDA, or





greater
than 100% but less than 115%, the amount of the Bonus will be prorated between
the amounts shown in the applicable columns of the table.





2.           Quality of Care
Component.    If the quality of care target is met,
the Bonus shall be paid in the amount determined as set forth
above.  If the quality of care target is not met, the Committee shall
deduct such amount of the Bonus for each of Mr. Matros, Mr. Mathies and Dr.
Hunker as it determines in its discretion from the amount otherwise
payable.  The quality of care target is met if quality of care at
skilled nursing centers operated by SunBridge and its subsidiaries is better
than or equal to the quality of care at skilled nursing centers of SunBridge’s
for-profit peer group of companies for the Applicable Fiscal Year (or the twelve
month period ending as close as possible to the end of Applicable Fiscal Year
for which data are available at the time the Committee considers the amount of
the Bonus), in each case as measured by the Health Deficiency Index reported by
PointRight, Inc. or whichever independent reporting entity is then used by Sun
to provide such information.  Notwithstanding the above, if actual
EBITDA is at least equal to 85% of target, the amount of the Bonus payable to
Messrs. Matros and Mathies cannot be less than 10% of their respective base
salaries.





3.           Timing of
Payment.  The Bonus shall be paid to each executive after
completion of the year-end audit in 2009 (but in no event later than March 15,
2009).





4.           Recoupment of Bonus
Payments.  A Bonus paid to an Executive is subject to
recoupment, to the extent determined to be appropriate by the Committee, if each
of the following circumstances occur: (1) the amount of the Bonus was calculated
based on the achievement of EBITDA, the calculation of which was based on
financial statements that are subsequently the subject of an accounting
restatement due to noncompliance with any financial reporting requirement under
the securities laws; (2) fraud or intentional misconduct by any Executive, or
any officer or employee that reports to an Executive was a significant
contributing factor to such noncompliance; and (3) the restated financial
statements are issued and completed prior to the issuance and completion of the
financial statements for the third fiscal year following the Applicable Fiscal
Year to which the Bonus relates.  In such circumstances, a Bonus will
be subject to recoupment only to the extent a lesser Bonus would have been paid
to an Executive based upon EBITDA, as restated, and only as to the net amount of
such portion of the Bonus after reduction for the Executive’s tax liability on
that portion of the Bonus.  By accepting a Bonus, each Executive
agrees to promptly make any Bonus reimbursement required by the Committee in
accordance with this section, and that Sun, SunBridge and their respective
affiliates may deduct from any amounts owed to the executive from time to time
(such as wages or other compensation) any amounts the Executive is required to
reimburse Sun and/or SunBridge pursuant to this section.  This section
does not limit any other remedies Sun, SunBridge or their respective affiliates
may have available in the circumstances, which may include, without limitation,
dismissing the executive or initiating other disciplinary
procedures.  The provisions of this section are in addition to (and
not in lieu of) any rights to repayment Sun, SunBridge or their respective
affiliates may have under Section 304 of the Sarbanes-Oxley Act of 2002 and
other applicable laws.