Document:

Exhibit 10.5

    EXHIBIT
      10.5

    Amendment
      No. 1 

    to

    EMPLOYMENT
      AGREEMENT

    

    THIS
      AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT (“Agreement”) effective as of October
      12, 2006, by and between Michael Newman (“Executive”) and Sun Healthcare Group,
      Inc., a Delaware corporation (“Sun”); 

     

    WHEREAS,
      Sun and Executive entered into an Employment Agreement dated as of March 22,
      2005 (the “Employment Agreement”), and they desire to amend the Employment
      Agreement on the terms and conditions (including the terms and conditions of
      Executive’s bonus eligibility, as approved by the Compensation Committee of the
      Board of Directors of Sun on March 28, 2006) set
      forth
      below (capitalized terms used in this Agreement without definition shall have
      the meanings provided in the Employment Agreement).

     

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

     

    1.    Section
      3(b) of the Employment Agreement is hereby amended and restated as
      follows:

     

    (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”) in accordance with
      Schedule A hereto, as it may be amended from time to time by the Compensation
      Committee of the Board of Directors of Sun; provided, however, that no amendment
      shall be effective if it reduces the potential amount of the Bonus, when
      compared to the prior year, unless such amendment has been agreed to in writing
      by Executive. 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 or one of its affiliates 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. 

    

    2.    Section
      7(b), Section 7(c), Section 7(d) and Section 7(e) of the Employment Agreement
      are hereby amended and restated as follows:

     

    (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 of Executive’s date of
      termination or any other date reasonably requested by Sun or Executive on which
      a determination under Section 7 is necessary or advisable. Within five days
      of
      the receipt by Executive 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 Executive. 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 thereunder 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 the
      applicable taxing authorities for the benefit of Executive (or directly to
      Executive in the event Executive previously paid the related tax
      amounts).

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

     (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 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. Executive 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, 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 pay
      such
claim
      on Executive’s
      behalf
      (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 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 the
      applicable taxing authorities on Executive’s
      behalf an additional Gross-Up Payment in respect of the excess parachute
      payments that are the subject of the claim. Any Gross-Up Payment shall be made
      without additional tax consequences to Executive.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (d)   Repayments.
      If,
      after a Claim Payment is made by Sun, Executive becomes entitled to a refund
      with respect to the claim to which such Claim Payment relates, Executive 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 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 Claim Payment
      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
      Claim Payment 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).

    

    3.    Except
      for the changes set forth herein, the Employment Agreement shall remain in
      full
      force and effect.

    

    4.    
Miscellaneous.

     

    
      	 	
              (a)

            	
              Amendments,
                Waivers, Etc.
                Except as otherwise provided herein, 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. 

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
      	 	
              (b)

            	
              Entire
                Agreement.
                The Employment Agreement, as amended by 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 the Employment Agreement, as
                amended
                hereby, and the Employment Agreement, as so amended, shall supersede
                all
                prior agreements, negotiations, correspondence, undertakings and
                communications of the parties, oral or written, with respect to the
                subject matter hereof. 

            

    

     

    
      	 	
              (c)

            	
              Counterparts.
                This Agreement may be executed in one or more counterparts, each
                of which,
                when so executed and delivered, shall be deemed an original, but
                all such
                counterparts together shall constitute one and the same
                instrument.

            

    

     

    The
      parties hereto have executed this Agreement as of the date first above
      written.

    

    

      /s/
      Michael
      Newman                                            October
      12, 2006

    Michael
      Newman                       
Date

     

    SUN
      HEALTHCARE GROUP, INC. 

     

    By
/s/
      Richard K.
      Matros                                 
      October
      12, 2006

    Its
      Chief
      Executive Officer                   
Date

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    Schedule
      A

    

    Executive’s
      Bonus for any fiscal year shall be based on the criteria set forth below. There
      are two components to his Bonus: EBITDA and individual goals, which are defined
      and outlined below. The EBITDA component of the Bonus shall equal 70% of the
      Maximum Amount (as defined below) and the individual goals component of the
      Bonus shall equal up
      to
      30% of
      the Maximum Amount. In no event shall his Bonus exceed 100% of his Base Salary
      for such fiscal year.

    

    1.     Maximum
      Amount.
      The
      maximum amount of the Bonus shall be determined solely by reference to earnings
      before interest, taxes, depreciation and amortization of Sun (“EBITDA”), as
      published by Sun in its press release announcing financial results for the
      fiscal year in which the Base Salary was earned, but excluding the effect of
      actuarial adjustments for self-insurance for general and professional liability.
      The Compensation Committee reserves the right to make adjustments to the
      calculation, including the inclusion or exclusion of discontinued operations.
      The Compensation Committee shall establish the EBITDA target each
      year. 

    

    The
      potential amount of the Bonus shall be based upon actual EBITDA attained as
      a
      percentage of the target EBITDA as follows: if actual EBITDA is less than 95%
      of
      target EBITDA, the Bonus will be zero; if actual EBITDA is 95% of target EBITDA,
      the maximum amount of the Bonus (the “Maximum Amount”) shall equal 10% of Base
      Salary; if actual EBITDA is 100% of target EBITDA, the Maximum Amount shall
      equal 50% of Base Salary (if actual EBITDA is greater than 95% but less than
      100% of target EBITDA, the Maximum Amount will be pro rated between 10% and
      50%
      of Base Salary); and if actual EBITDA is 120% (or greater) of target EBITDA,
      the
      Maximum Amount shall equal 100% of Base Salary (if actual EBITDA is greater
      than
      100% but less than 120% of target EBITDA, the Maximum Amount will be pro rated
      between 50% and 100% of Base Salary).

    

    2,     EBITDA
      Component.
      The
      EBITDA component of the Bonus shall equal 70% of the Maximum Amount.
 

    

    3.     Individual
      Goals Component.
      The
      Chief Executive Officer of Sun (the “CEO”) shall establish the individual goals
      each year after consulting with Executive, the Compensation Committee, and
      such
      others as the CEO deems appropriate. The amount of the individual goals
      component of the Bonus shall be an amount up
      to
      30% of
      the Maximum Amount, with the final amount to be determined as follows: after
      the
      fiscal year end, the CEO shall make a recommendation to the Compensation
      Committee as to what extent the goals have been met. The Compensation Committee
      shall determine the amount of this component of the Bonus to be paid to
      Executive based upon the level of attainment of the goals. 

    

    4.      Timing
      of
      Payment.
      Both
      components of the Bonus shall be paid to Executive at the time specified in
      Section 3(b).

    

     

    
      
        
        

      

      
        5Exhibit 10.6

    EXHIBIT
      10.6

    Amendment
      No. 1 

    to

    EMPLOYMENT
      AGREEMENT

    

    THIS
      AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT (“Agreement”) effective as of October
      12, 2006, by and between William A. Mathies (“Mr. Mathies”) and Sun Health
      Specialty Services, Inc., a New Mexico corporation (“SHSS”);

     

    WHEREAS,
      SHSS is a wholly owned subsidiary of SunBridge Healthcare Corporation
      (“SunBridge” or “Company”) which is a wholly owned subsidiary of Sun Healthcare
      Group, Inc. (“SHG”);

     

    WHEREAS,
      SunBridge and its direct and indirect subsidiaries (collectively, “the LTC
      subsidiaries”) provide inpatient services throughout the United States, in many
      instances under the “SunBridge” trade name;

     

    WHEREAS,
      SHSS has Services Agreements with the LTC subsidiaries to provide employees,
      including Mr. Mathies, to the LTC subsidiaries; 

     

    WHEREAS,
      effective January 1, 2006, Mr. Mathies was appointed President and Chief
      Operating Officer of SunBridge, the other LTC subsidiaries and SHG Services,
      Inc., the subsidiary of SHG that is a holding company for other operating
      subsidiaries of SHG that are not LTC subsidiaries (“SHG Services”);
      and

     

    WHEREAS,
      SHSS and Mr. Mathies entered into an Employment Agreement dated as of February
      28, 2002 (the “Employment Agreement”), and they desire to amend the Employment
      Agreement on the terms and conditions (including the terms and conditions of
      his
      bonus eligibility, as approved by the Compensation Committee of the Board of
      Directors of SHG on March 28, 2006) set forth below (capitalized terms used
      in
      this Agreement without definition shall have the meanings provided in the
      Employment Agreement).

     

    NOW,
      THEREFORE, in consideration of the above recitals and the mutual covenants
      and
      agreements contained herein, Mr. Mathies and SHSS agree as follows:

     

    1.    Section
      2
      of the Employment Agreement is hereby amended and restated as
      follows:

     

    Section
      2: Duties and Responsibilities.
      Mr.
      Mathies shall devote his full employment time, efforts, skills and attention
      exclusively to advancing and rendering profitable the business interests of
      SunBridge, the other LTC subsidiaries and SHG Services by serving as President
      and Chief Operating Officer thereof.

     

    2.    Section
      3(b) of the Employment Agreement is hereby amended and restated as
      follows:

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (b) Cash
      Bonus/Incentive Compensation.
      In
      addition to the Base Salary provided for in Section 3(a) above, Mr. Mathies
      shall be eligible to receive an annual bonus (“Bonus”) in accordance with
      Schedule A hereto, as it may be amended from time to time by the Compensation
      Committee of the Board of Directors of SHG; provided, however, that no amendment
      shall be effective if it reduces the potential amount of the Bonus, when
      compared to the prior year, unless such amendment has been agreed to in writing
      by Mr. Mathies. 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, Mr. Mathies must be employed by SHSS or one of its affiliates 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. 

    

    3.    Section
      7(b), Section 7(c), Section 7(d) and Section 7(e) of the Employment Agreement
      are hereby amended and restated as follows:

     

    (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 SHG and Mr. Mathies within fifteen business
      days
      of Mr. Mathies’ date of termination or any other date reasonably requested by
      SHG or Mr. Mathies on which a determination under Section 7 is necessary or
      advisable. Within five days of the receipt by Mr. Mathies and SHG of the
      Accounting Firm’s determination
      of
      the
      initial
      Gross-Up Payment, SHG
      shall
      pay the amount of such Gross-Up Payment to the applicable taxing authorities
      for
      the benefit of Mr. Mathis.
      If the
      Accounting Firm determines that no Excise Tax is payable by Mr. Mathies, SHG
      shall cause the Accounting Firm to provide Mr. Mathies and SHG with an opinion
      that SHG has substantial authority under the Internal Revenue Code and
      regulations thereunder not to report an Excise Tax on Mr. Mathies’ federal
      income tax return. Any determination by the Accounting Firm shall be binding
      upon Mr. Mathies and SHG. 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. Mathies with respect to any payment (hereinafter an “Underpayment”), SHG,
      after exhausting its remedies under Section 7(c) below, shall promptly pay
      to
the
      applicable taxing authorities for the benefit of Mr. Mathies (or directly to
      Mr.
      Mathies in the event Mr. Mathies previously paid the related tax
      amounts)
      an
      additional Gross-Up Payment in respect of the Underpayment. 

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (c)   Procedures.
      Mr.
      Mathies shall notify SHG in writing of any claim by the Internal Revenue Service
      that, if successful, would require the payment by SHG of a Gross-Up Payment.
      Such notice shall be given as soon as practicable after Mr. Mathies knows of
      such claim and Mr. Mathies shall apprise SHG of the nature of the claim and
      the
      date on which the claim is requested to be paid. Mr. Mathies agrees not to
      pay
      the claim until the expiration of the thirty-day period following the date
      on
      which Mr. Mathies notifies SHG, or such shorter period ending on the date the
      taxes with respect to such claim are due (the "Notice Period"). If SHG notifies
      Mr. Mathies in writing prior to the expiration of the Notice Period that it
      desires to contest the claim, Mr. Mathies shall: (i) give SHG any information
      reasonably requested by SHG relating to the claim; (ii) take such action in
      connection with the claim as SHG may reasonably request, including, without
      limitation, accepting legal representation with respect to such claim by an
      attorney reasonably selected by SHG and reasonably acceptable to Mr. Mathies;
      (iii) cooperate with SHG in good faith in contesting the claim; and (iv) permit
      SHG to participate in any proceedings relating to the claim. Mr. Mathies shall
      permit SHG to control all proceedings related to the claim and, at its option,
      permit SHG 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 SHG, Mr. Mathies 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 SHG shall determine;
      provided,
      however, that if SHG directs Mr. Mathies to pay such claim and pursue a refund,
      SHG shall pay
      such
      claim on
      Mr. Mathies’ behalf (the
      "Claim Payment"). SHG’s control of the contest related to the claim shall be
      limited to the issues related to the Gross-Up Payment and Mr. Mathies 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 SHG does not notify
      Mr.
      Mathies in writing prior to the end of the Notice Period of its desire to
      contest the claim, SHG shall pay to the applicable taxing authorities on
      Mr. Mathies’ behalf an additional Gross-Up Payment in respect of the excess
      parachute payments that are the subject of the claim. Any
      Gross-Up Payment shall be made without additional tax consequences to Mr.
      Mathies.

     

    (d)   Repayments.
      If,
      after a Claim Payment is made by SHG, Mr. Mathies becomes entitled to a refund
      with respect to the claim to which such Claim Payment relates, Mr. Mathies
      shall
      pay SHG 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. Mathies shall not be entitled to any
      refund with respect to the claim and SHG does not promptly notify Mr. Mathies
      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.
      Mathies.

     

    (e)
      Further
      Assurances.
      SHSS
      shall indemnify Mr. Mathies and hold him harmless, on an after-tax basis, from
      any costs, expenses, penalties, fines, interest or other liabilities (“Losses”)
      incurred by Mr. Mathies with respect to the exercise by SHG of any of its rights
      under Section 7, including, without limitation, any Losses related to SHG’s
      decision to contest a claim or any imputed income to him resulting from any
      Claim Payment or action taken on Mr. Mathies’ behalf by SHSS hereunder. SHSS
      shall pay all legal fees and expenses incurred under Section 7 and shall
      promptly reimburse Mr. Mathies for the reasonable expenses incurred by him
      in connection with any actions taken by SHSS or SHG or required to be taken
      by
      Mr. Mathies hereunder. SHSS 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).

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    4.    Except
      for the changes set forth herein, the Employment Agreement shall remain in
      full
      force and effect.

    

    5.    
Miscellaneous.

     

    
      	 	
              (a)

            	
              Amendments,
                Waivers, Etc.
                Except as otherwise provided herein, 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. 

            

    

     

    
      	 	
              (b)

            	
              Entire
                Agreement.
                The Employment Agreement, as amended by 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 the Employment Agreement, as
                amended
                hereby, and the Employment Agreement, as so amended, shall supersede
                all
                prior agreements, negotiations, correspondence, undertakings and
                communications of the parties, oral or written, with respect to the
                subject matter hereof. 

            

    

     

    
      	 	
              (c)

            	
              Counterparts.
                This Agreement may be executed in one or more counterparts, each
                of which,
                when so executed and delivered, shall be deemed an original, but
                all such
                counterparts together shall constitute one and the same
                instrument.

            

    

     

    [Signatures
      Commence on Immediately Following Page]

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    The
      parties hereto have executed this Agreement as of the date first above
      written.

     

    

    

      /s/
      William A.
      Mathies                                        October
      12, 2006

    William
      A. Mathies      

     

     

    SUN
      HEALTH SPECIALTY SERVICES, INC. 

     

    By
/s/
      Michael Newman                  
           October
      12, 2006

    Its
      Vice
      President      

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
               

              Schedule
                A

               

              Mr.
                Mathies shall be eligible to receive a Bonus for any fiscal year
                based on
                the criteria set forth below. There are two components to his Bonus:
                EBITDA and EVC, which are defined and outlined below. In the event
                performance thresholds are met as outlined below, his minimum bonus
                shall
                be no less than 10% of his Base Salary, and his maximum Bonus shall
                not
                exceed 120% of his Base Salary. 

               

              1.     Mr.
                Mathies shall be eligible for a payment of up to 60% of his Base
                Salary
                based on earnings before interest, taxes, depreciation and amortization
                of
                Sun (“EBITDA”), as published by Sun in its press release announcing
                financial results for the year in which the Base Salary was earned,
                but
                excluding the effect of actuarial adjustments for self-insurance
                for
                general and professional liability. The Compensation Committee reserves
                the right to make adjustments to the calculation, including the inclusion
                or exclusion of discontinued operations. The Compensation Committee
                shall
                establish the EBITDA target each year. The
                EBITDA component of the Bonus shall be paid based upon actual EBITDA
                attained as a percentage of the target EBITDA as follows: if actual
                EBITDA
                is less than 95% of target EBITDA, the amount of this component will
                be
                zero; if actual EBITDA is 95% of target EBITDA, the amount will be
                5% of
                Base Salary; if actual EBITDA is 100% of target EBITDA, the amount
                will be
                25% of Base Salary (if actual EBITDA is greater than 95% but less
                than
                100% of target EBITDA, the amount will be pro rated between 5% and
                25% of
                Base Salary); and if actual EBITDA is 120% (or greater) of target
                EBITDA,
                the amount will be 60% of Base Salary (if actual EBITDA is greater
                than
                100% but less than 120% of target EBITDA, the amount will be pro
                rated
                between 25% and 60% of Base Salary).  

               

              2.     Mr.
                Mathies shall be eligible for a payment of up to 60% of his Base
                Salary
                based on equity value creation (“EVC”). EVC shall be calculated as follows
                (such calculations to be based on the audited consolidated financial
                statements of SHG for the year in which the Base Salary was earned):
                (i)
                9.0 x EBITDA (as calculated above), (ii) less long-term debt, including
                the current portion, (iii) plus unrestricted cash, (iv) less 25%
                of
                accrued self-insurance obligations, including the current portion
                and net
                of restricted cash; provided, however, that the Compensation Committee
                reserves the right to exclude discontinued operations and to require
                pro
                forma calculations of EVC to take into account acquisitions, divestitures
                and material restructurings. The Compensation Committee shall establish
                the EVC targets each year. The EVC component of the Bonus shall be
                paid
                based upon the actual EVC attained as a percentage of the target
                EVC, as
                follows: if
                actual EVC is less than 90% of target EVC, the amount of this component
                will be zero; if actual EVC is 90% of target EVC, the amount will
                be 5% of
                Base Salary; if actual EVC is 100% of target EVC, the amount will
                be 25%
                of Base Salary (if actual EVC is greater than 90% but less than 100%
                of
                target EVC, the amount will be pro rated between 5% and 25% of Base
                Salary); and if actual EVC is 140% (or greater) of target EVC , the
                amount
                will be 60% of Base Salary (if actual EVC is greater than 100% but
                less
                than 140% of target EVC, the amount will be pro rated between 25%
                and 60%
                of Base Salary).  

            
	 

    

    

     

    
      
        
        

      

      
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