----

| a.   | Annual      Base Salary.  Sun shall pay during the Term to Mr. Matros      a base salary at an annual rate of $700,000 (“Base Salary”), such salary      to be payable in accordance with Sun’s customary payroll practices (but      not less frequently than monthly).  If Sun’s EBITDA for fiscal      year 2006 equals or exceeds the amount of EBITDA set forth in Sun’s budget      for 2006 as approved by the Board of Directors, Mr. Matros’ base salary      will be increased to an annual rate of $750,000 retroactive to November 5,      2005.  On or about each anniversary of the Effective Date during      the Term, the Board of Directors or the Compensation Committee of the      Board of Directors shall review Mr. Matros’ annual base salary for      possible merit increases in its sole discretion, and any increase in Mr.      Matros’ annual base salary rate shall thereafter constitute “Base Salary”      for purposes of this Agreement.  The parties intend that such      retroactive increase not be treated as or deemed to be deferred      compensation for purposes of Section 409A of the Internal Revenue Code of      1986, as amended (the “Code”) and the rules and regulations promulgated      thereunder (“Section 409A”). |
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| b.   | Cash      Bonus/Incentive Compensation. In addition to the Base Salary      provided for in Section 3(a) above, Mr. Matros shall be entitled to      receive an annual bonus (“Bonus”) in accordance with the SunHealthcare      Group, Inc. Executive Bonus Plan (the “Plan”), as it may be amended from      time to time by the Compensation Committee of the Board of Directors;      provided, however, that no amendment shall be effective if it reduces      the percentage of Base Salary that would constitute the      minimum or maximum potential amount of the Bonus as compared to the      prior year, unless such amendment has been agreed to in writing by Mr.      Matros.  The      Bonus shall be payable at the same time as other annual bonuses are paid      to senior management personnel with respect to that      fiscal year.  Subject to the provisions of Section 6, in order      to have earned and to be paid any such Bonus, Mr. Matros 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 Code to the extent necessary to preserve Sun’s      ability to deduct such Bonus.  In the event the minimum      financial performance threshold is met as set forth in the Plan, Mr.      Matros’ minimum Bonus shall be no less than 10% of his Base Salary for the      applicable fiscal year. |
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| c.   | Restricted      Stock and Options.  Mr. Matros shall participate in such      restricted stock and option plans of the Company as are made available      generally to senior executive officers of the Company.  Any      grants under such plans shall be made by the Board of Directors (or      appropriate committee thereof) in its sole discretion and such plans are      subject to change during the Term at the sole discretion of the      Company. |
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----

| d.   | Retirement      and Benefit Plans.  During the Term, Mr. Matros shall be      entitled to participate in all retirement plans, health benefit programs,      insurance programs and other similar employee welfare benefit arrangements      available generally to senior executive officers of Sun from time to      time.  Such plans, programs and arrangements are subject to      change during the Term at the sole discretion of the    Company. |
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| e.   | Paid      Time Off.  During the Term, Mr. Matros shall be entitled      to paid time off in accordance with Sun’s policy for senior executive      officers. |
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| f.   | Indemnification      Liability/Insurance.  Mr. Matros shall be entitled to      indemnification by Sun to the fullest extent permitted by applicable law      and the charter and by laws of Sun.  In addition, Sun shall      maintain during Mr. Matros’ employment customary director’s and officers’      liability insurance and Mr. Matros shall be covered by such      insurance. |
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| g.   | Taxes.  All      compensation payable to Mr. Matros shall be subject to withholding for all      applicable federal, state and local income taxes, occupational taxes,      Social Security and similar mandatory  withholdings. |
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| h.   | Expenses.  Mr.      Matros shall be entitled to reimbursement for expenses incurred by him in      connection with the discharge of his duties hereunder.  All such      expense reimbursement shall be subject to and shall be submitted,      documented and paid in accordance with the expense reimbursement policies      of the Company, as such policies may change from time to      time.  Mr. Matros agrees that he will provide such documentation      to the Company promptly after expenses are  incurred. |
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| a.   | Termination      by Sun for “Good Cause.”  Sun may at any time, by written      notice to Mr. Matros 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 Mr. Matros      as Chairman and CEO and from all other positions with Sun and its direct      and indirect subsidiaries for Good Cause.  Sun may relieve Mr.      Matros of his duties and responsibilities pending a final determination of      whether Good Cause exists, and such action shall not constitute Good      Reason (as defined below) for purposes of this      Agreement.  Payment to Mr. Matros upon a termination for Good      Cause is set forth in Section 6(a).  “Good Cause” for      termination shall mean any one of thefollowing: |
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----

| 1.   | Any      felony criminal conviction (including conviction pursuant to 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 Board      of Directors, renders Mr. Matros unsuitable for the position of either      Chairman or CEO; |
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| 2.   | Any      act of financial malfeasance or financial impropriety, as determined by      the Board of Directors in goodfaith; |
|----------------|----------------------------------------------------------------------------------------------------------------------------|

| 3.   | Mr.      Matros’ continued willful failure to perform the duties reasonably      requested by the Board of Directors and commensurate with his positions as      Chairman and CEO (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 Board of Directors,      which demand specifically identifies the manner in which the Board of      Directors believes that he has not substantially performed his duties, and      which performance is not substantially corrected by him within ten (10)      days of receipt of such demand; |
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| 4.   | 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 Mr.      Matros which, in the good faith determination of the Board of Directors,      renders Mr. Matros unsuitable for the position of either Chairman or      CEO; |
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| 5.   | Any      material breach by Mr. Matros of the provisions of this Agreement which      has not been cured by Mr. Matros thirty (30) days following delivery of      notice to Mr. Matros specifying such material breach, or the repetition of      any such material breach after it has been cured;  or |
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| 6.   | Any      act of moral turpitude, as determined by the Board of Directors in good      faith. |
|----------------|----------------------------------------------------------------------------------------------|

| b.   | Termination      by Sun without Good Cause.  Sun may at any time, by      written notice to Mr. Matros at least five (5) business days prior to date      of termination specified in such notice, terminate Mr. Matros as Chairman      and CEO and from all other positions with Sun and its direct and indirect      subsidiaries.  If such termination is made by Sun other than by      reason of Mr. Matros’ death, Disability (as defined in Section 5(e)) or      expiration of the Term, and Good Cause does not exist, such termination      shall be treated as a termination without Good Cause and Mr. Matros shall      be entitled to payment in accordance with Section  6(b). |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | Termination      by Mr. Matros for Good Reason.  Mr. Matros may, at any      time at his option within sixty (60) days following an event or condition      that constitutes Good Reason (as defined below), resign for Good Reason as      Chairman and CEO and from all other positions with Sun and its direct and      indirect subsidiaries by written notice to Sun at least thirty (30) days      prior to the date of termination |
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----

|   | 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 Mr. Matros upon a      termination for Good Reason is set forth in Section  6(b). |
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| (a)   | A      meaningful and detrimental reduction in Mr. Matros’ authority, duties or      responsibilities or a meaningful and detrimental change in his reporting      responsibilities; |
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| (b)   | A      material failure of Sun to comply with the compensation provisions set      forth in Sections 3(a) and 3(b) or benefits provisions set forth in      Sections 3(d) - 3(f) (collectively, the “Benefits”) (other than a      reduction of Benefits uniformly applicable to other members of senior      management); or |
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| (c)   | A      material relocation of Mr. Matros’ principal work location from its      current location in Orange County,California; |
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| d.   | Voluntary      Resignation.  Mr. Matros may, at any time at his option      with thirty (30) calendar days written notice to Sun, voluntarily resign      without Good Reason as Chairman and CEO and from all other positions with      Sun and its direct and indirect subsidiaries.  Payment to Mr.      Matros upon his voluntary resignation without Good Reason is set forth in      Section 6(a).  Resignation from Sun shall automatically      constitute resignation from all positions of any    subsidiary. |
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| e.   | Death      or Disability.  Mr. Matros’ employment under this      Agreement and the Term shall terminate automatically as of the date of Mr.      Matros’ death.  Sun may, at any time by written notice to Mr.      Matros at least five (5) business days prior to the date of termination      specified in such notice, terminate Mr. Matros as Chairman and CEO and      from all other positions with Sun and its direct or indirect subsidiaries      by reason of his Disability.  “Disability” shall mean any      physical or mental condition or illness that prevents Mr. Matros’ from      performing his duties hereunder in any material respect for a period of      120 substantially consecutive calendar days, as determined by a physician      selected by Sun or, if Mr. Matros is incapacitated, reasonably acceptable      to the Director of Medicine or equivalent senior physician at Hoag      Hospital.  Payment to Mr. Matros upon his termination by reason      of his death or Disability is set forth in Section  6(a). |
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----

| a.   | Payment      Upon Termination for Good Cause, Resignation without Good Reason, Death or      Disability.  In the event of termination of employment      during the Term pursuant to Sections 5(a), 5(d) or 5(e), Mr. Matros, or      his estate where applicable, shall be paid any earned but unpaid Base      Salary through the date of termination and any accrued and unused paid      time off through the date of termination, which shall be paid to Mr.      Matros or his estate or beneficiary, as applicable, in a lump sum in cash      upon or promptly following (and in all events within 30 days after) the      date of termination of employment (collectively, the “Accrued      Obligations”).  In addition, in the case of a termination of      employment pursuant to Sections 5(e), but not Sections 5(a) or 5(d), Mr.      Matros or his estate shall be paid (i) any accrued and unpaid Bonus for      any prior fiscal year, which shall be paid to Mr. Matros or his estate or      beneficiary, as applicable, in a lump sum in cash at the time that annual      bonuses are paid to senior management personnel with respect to that      fiscal year, but in any event within seventy-five (75) days after the      conclusion of the fiscal year to which such Bonus relates, and (ii) a pro      rata portion (based on the number of days of employment in the fiscal year      of termination divided by 365 or 366, as applicable) of the Bonus, if any,      for the fiscal year in which the termination occurs, which shall be paid      at the time that annual bonuses are paid to senior management personnel      with respect to that fiscal year, but in any event within seventy-five      (75) days after the conclusion of the fiscal year to which such Bonus      relates.  Mr. Matros shall also 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 (including, but not      limited to, his car allowance) shall cease as of the date of termination,      except to the extent Mr. Matros 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), 5(d) or 5(e), Mr. Matros 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 following expiration of the      Term, or by Mr. Matros for Good Reason.  In the event of      a termination of Mr. Matros’ employment either: (i) during the Term      pursuant to Sections 5(b) or 5(c), or (ii) at the expiration of the Term      following Sun’s provision to Mr. Matros of a notice of non-extension, as      provided in Section 1, provided that Mr. Matros was willing and able to      execute a new employment agreement providing terms and conditions      substantially similar to this Agreement and to continue providing services      to Sun, Mr. Matros shall be entitled to the following payments and      benefits: |
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| 1.   | Mr.      Matros shall be entitled to a lump sum severance payment in an amount      equal to the greater of: (i) the unpaid and unearned portion of his Base      Salary for the remainder of the Initial Term or then current Renewal Term,      as the case may be, or (ii) two (2) year’s Base Salary or, in the event      such termination occurs on or within two years following the date of a |
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----

|   | Change      in Control, three (3) year’s Base Salary, with such amount to be paid to      Mr. Matros in the month immediately following the month in which Mr.      Matros’ termination of employment occurs.  Notwithstanding the      foregoing, Mr. Matros’ right to receive the severance payment hereunder      shall be conditioned upon his execution and delivery of a general release      in favor of Sun, which shall not be inconsistent with the terms of this      Agreement, and such other documents and instruments as are reasonably      required by Sun, each of which Mr. Matros shall deliver to the Company      within twenty-one (21) days following the date of his termination of      employment. |
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| 2.   | Mr.      Matros shall be entitled to: (i) any accrued and unpaid Bonus for any      prior fiscal year, payable to Mr. Matros in a lump sum in cash at the time      that annual bonuses are paid to senior management personnel with respect      to that fiscal year, but in any event within seventy-five (75) days after      the conclusion of the fiscal year to which such Bonus relates, (ii) a pro      rata portion of the Bonus, if any, for the fiscal year in which the      termination occurs (determined by multiplying the amount Mr. Matros would      have received based upon actual performance had his employment continued      through the end of the fiscal year by a fraction, the numerator of which      is the number of days during the performance year of termination that Mr.      Matros is employed by the Company and the denominator of which is 365 or      366, as applicable), payable to Mr. Matros at the time that annual bonuses      are paid to senior management personnel with respect to that fiscal year,      but in any event within seventy-five (75) days after the conclusion of the      fiscal year to which such Bonus relates, and (iii) any Accrued Obligations      payable to Mr. Matros as set forth in Section  6(a). |
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| 3.   | Mr.      Matros’ participation in any other retirement and benefit plans and      perquisites (including, but not limited to, his car allowance) shall cease      as of the date of termination, except Mr. Matros 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 (i) the second anniversary of the date of      termination or (ii) the date of Mr. Matros or his eligible dependents      become eligible to participate in a plan of a successor      employer. |
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| c.   | “Change      in Control.”  For purposes of this Section 6, a “Change      in Control” shall be deemed to have occurred if any of the following      events occurs: |
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| 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 the Company (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 the Company; |
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| 2.   | A      merger or consolidation of the Company with any other corporation, other      than a merger or consolidation which would result in the voting securities      of the Company 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 the Company or surviving entity      outstanding immediately after such merger or  consolidation; |
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| 3.   | A      sale or other disposition by the Company of all or substantially all of      the Company’s assets; |
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| 4.   | During      any period of two (2) consecutive years (beginning on or after the      Effective Date), 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 the      Company’s shareholders was approved by a vote of at least a majority of      the directors then still in office who either were 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; |
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----

| d.   | Cooperation.  Following      the expiration or a termination of this Agreement for any reason, Mr.      Matros shall provide such cooperation as is reasonably required by the      Company, including, without limitation, consulting with the Company with      respect to litigation and/or matters that relate to facts and      circumstances that occurred during the Term of his employment by the      Company, and executing such documents and instruments relating to such      Term of employment as are reasonably requested by  Sun. |
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| a.   | Gross-Up      Payments.  Notwithstanding anything herein to the      contrary, if it is determined that any payment to Mr. Matros pursuant to      this Agreement would be subject to the excise tax imposed by Section 4999      of the 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 Mr. Matros shall be entitled      to an additional payment (a “Gross-Up Payment”) in an amount that will      place Mr. Matros in the same after-tax economic position that he would      have enjoyed if the Excise Tax had not applied to the      payment.  The amount of the Gross-Up Payment shall be determined      by an accounting firm retained by Sun (the “Accounting Firm”) using such      formulas as the Accounting Firm deems appropriate.  No Gross-Up      Payment shall be payable hereunder if the Accounting Firm determines that      the payments are not subject to an ExciseTax. |
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| 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,      shall be made by the Accounting Firm, which shall provide detailed      supporting calculations both to Sun and Mr. Matros within fifteen days of      Mr. Matros’ date of termination or any other date reasonably requested by      Sun or Mr. Matros on which a determination under Section 7 is necessary or      advisable.  Within five days of the receipt by Mr. Matros and      Sun of the Accounting Firm’s determination of the initial Gross-Up      Payment, Sun shall pay the amount of such Gross-Up Payment to the      applicable taxing authorities for the benefit of Mr. Matros.  If      the Accounting Firm determines that no Excise Tax is payable by Mr.      Matros, Sun shall cause the Accounting Firm to provide Mr. Matros and Sun      with an opinion that Sun has substantial authority under the Code and      regulations thereunder not to report an Excise Tax on Mr. Matros’ federal      income tax return.  Any determination by the Accounting Firm      shall be binding upon Mr. Matros and Sun.  If the initial      Gross-Up Payment is insufficient to cover the amount of the Excise Tax      that is ultimately determined to be owing by Mr. Matros with respect to      any payment (hereinafter and “Underpayment”), Sun, after exhausting its      remedies under Section 7(c) below, shall promptly pay to the applicable      taxing authorities for the benefit of Mr. Matros (or directly to Mr.      Matros in the event Mr. Matros |
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----

|   | previously      paid the related tax amounts) an additional Gross-Up Payment in respect of      the Underpayment. |
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| c.   | Procedures.  Mr.      Matros 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 after Mr. Matros knows of such claim and shall apprise Sun of      the nature of the claim and the date on which the claim is requested to be      paid.  Mr. Matros agrees not to pay the claim until the      expiration of the thirty-day period following the date on which Mr. Matros      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 Mr. Matros in writing prior to the expiration of the Notice      Period that it desires to contest the claim, Mr. Matros      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 Mr. Matros; (iii) cooperate      with Sun in good faith in contesting the claim; and (iv) permit Sun to      participate in any proceedings relating to the claim.  Mr.      Matros shall permit Sun to control all proceedings related to the claim      and, at its option, permit Sun to pursue or forgo any and all      administrative appeals, proceedings, hearings, and conferences with the      taxing authority in respect of such claim.  If requested by Sun,      Mr. Matros 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 Mr. Matros to pay such      claim and pursue a refund, Sun shall pay such claim on Mr. Matros’ behalf      on an after-tax and interest-free basis (the “Claim      Payment”).  Sun’s control of the contest related to the claim      shall be limited to the issues related to the Gross-Up Payment and Mr.      Matros 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 Mr. Matros in writing prior      to the end of the Notice Period of its desire to contest the claim, Sun      shall pay to the applicable taxing authorities on Mr. Matros’ behalf an      additional Gross-Up Payment in respect of the excess parachute payments      that are the subject of the claim. |
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| d.   | Repayments.  If,      after a Claim Payment is made by Sun, Mr. Matros becomes entitled to a      refund with respect to the claim to which such Claim Payment relates, Mr.      Matros shall pay Sun the amount of the refund (together with any interest      paid or credited thereon after taxes applicable thereto).  If,      after a Claim Payment is made by Sun, a determination is made that Mr.      Matros shall not be entitled to any refund with respect to the claim and      Sun does not promptly notify Mr. Matros of its intent to contest the      denial of refund, then the amount of the Claim Payment shall offset the      amount of the additional Gross-Up Payment then owing to Mr.      Matros. |
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| e.   | Further      Assurances.  Sun shall indemnify Mr. Matros and hold him      harmless, on an after-tax basis, from any costs, expenses, penalties,      fines, interest or other liabilities (“Losses”) incurred by Mr. Matros      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 Claim      Payment or action taken on Mr. Matros’ behalf by Sun      hereunder.  Sun shall pay all legal fees and expenses incurred      under Section 7 and shall promptly reimburse Mr. Matros for the reasonable      expenses incurred by him in connection with any actions taken by Sun or      required to be taken by Mr. Matros 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). |
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| f.   | Section      409A.  Notwithstanding anything to the contrary in this      Section 7, any payment under this Section 7 shall be paid to Mr. Matros      promptly but in no event later than the last day of the end of Mr. Matros’      taxable year following the taxable year in which Mr. Matros (or Sun) pays      or remits the related taxes. |
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| a.   | Ownership      of Property.  Mr. Matros acknowledges and agrees that any      and all property developed, discovered or created by him during the      pendency of his employment by the Company, including, without limitation,      any and all copyrights, trademarks, trade secrets or other intellectual      property is and shall remain the sole and exclusive property of the      Company and Mr. Matros hereby sells, assigns and otherwise transfers all      of his right, title and interest in and to such property, if any, to the      Company. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Confidentiality.  Mr.      Matros 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 Board of Directors, directly or      indirectly disclose to any person or organization any secret or      “Confidential Information” that Mr. Matros may learn or has learned by      reason of his association with Sun and its direct and indirect      subsidiaries.  For purposes of all of this Section 8 only, “Sun”      shall also include Sun’s direct and indirect subsidiaries.  The      term “Confidential Information” means any information not previously      disclosed to the public or to the trade by Sun’s management may need      rewording 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. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | Exclusive      Property.  Mr. Matros confirms that all Confidential      Information is and shall remain the exclusive property of      Sun.  All business records, papers and documents kept or made by      Mr. Matros relating to the business of Sun shall  be |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | and      remain the property of Sun.  Upon the expiration or termination      of Mr. Matros’ employment with Sun for any reason or upon the request of      Sun at any time, Mr. Matros shall promptly deliver to Sun, and shall not      without the consent of the Board of Directors, retain copies of,      Confidential Information, or any written materials not previously made      available to the public, or records and documents made by Mr. Matros or      coming into Mr. Matros’ possession concerning the business or affairs of      Sun. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d.   | Nonsolicitation.  Mr.      Matros 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. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| e.   | Relief.  Without      intending to limit the remedies available to Sun, Mr. Matros 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 Mr. Matros 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. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| f.   | Non-Disparagement.  Mr.      Matros shall not during his employment under this Agreement and for two      (2) 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 Mr. Matros or his reputation or that reflect negatively      on Matros’ performance, skills orability. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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      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. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 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.  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,      including the Existing Agreement, negotiations, correspondence,      undertakings and communications of the parties, oral or written, with      respect to the subject matterhereof. |
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| d.   | Resolution      of Disputes.  Any disputes arising under or in connection      with this Agreement may, at the election of Mr. Matros or Sun, be resolved      by binding arbitration, to be held in Orange County, California in      accordance with the rules and procedures of the American Arbitration      Association.  If arbitration is elected, Mr. Matros and Sun      shall mutually select the arbitrator. If Mr. Matros 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.  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(e) pending final      resolution of matters that are sent to  arbitration. |
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| e.   | Attorneys’      Fees.  Sun shall pay or reimburse Mr. Matros on an      after-tax basis for all 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 Mr. Matros if Mr. Matros prevails on the merits of any claim,      action or proceeding (i) contesting or otherwise relating to the existence      of Good Cause in the event of Mr. Matros’ 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 Mr. Matros’ termination of      employment during the Term for GoodReason. |
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| f.   | Governing      Law.  The validity, interpretation, construction and      performance of this Agreement shall be governed by the laws of the State      of California. |
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| 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 theother: |
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| h.   | Section      409A. |
|----------------|--------------------|

| 1.   | If      Mr. Matros is a “specified employee” within the meaning of Treasury      Regulation Section 1.409A-1(i) as of the date of Mr. Matros’ 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 6      hereof constitutes a “deferral of compensation” within the meaning of      Section 409A, Mr. Matros 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.  Any amounts      otherwise payable to Mr. Matros upon or in the six (6) month period      following his separation from service that are not so paid by reason of      this Section 9(h)(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 Mr. Matros’ separation from service (or, if      earlier, as soon as practicable, and in all events within thirty (30)      days, after the date of his death). |
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| 2.   | To      the extent that any reimbursements pursuant to Sections 3(h), 6(b)(3),      7(e) and 9(e) are taxable to Mr. Matros, any reimbursement payment due to      Mr. Matros pursuant to such provision shall be paid to Mr. Matros on or      before the last day of Mr. Matros’ taxable year following the taxable year      in which the related expense was incurred.  The benefits and      reimbursements pursuant to Sections 3(h), 6(b)(3), 7(e) and 9(e) are not      subject to liquidation or exchange for another benefit and the amount of      such benefits and reimbursements that Mr. Matros receives in one taxable      year shall not affect the amount of such benefits and      reimbursements  that Mr. Matros receives in any other taxable      year. |
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| 3.   | It      is intended that any amounts payable under this Agreement and Sun’s and      Mr. Matros’ exercise of authority or discretion hereunder shall      comply |
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|   | with      and avoid the imputation of any tax, penalty or interest under Section      409A.  This Agreement shall be construed and interpreted      consistent with that intent. |
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|                                  |
|---------------------------------------|
| RICHARD      K. MATROS                |
|                                  |
| /s/ Richard K. Matros                 |
|                                  |
|                                  |
| SUN      HEALTHCARE GROUP, INC.  |
|                                  |
| /s/ Michael Newman                    |
| Its      Executive VicePresident      |

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