Document:

ex1033.htm

    Exhibit
10.3.3

    

    Stock
Unit Grant

    

    Sun
Healthcare Group, Inc.

    2004
Equity Incentive Plan

    

    

    
      
        
          
            
              
                	
                        Name
      of Grantee:

                      	
                        [____________]

                      
	 
      	 
      
	
                        Number
      of Stock Units:

                      	
                        [________]

                      
	 
      	 
      
	
                        Date
      of Grant:

                      	
                        [____________]

                      

              

            

          

        

      

    

    

    
      
        	
                Vesting:

              	
                The
      units shall become vested as follows if you are a Director of Sun
      Healthcare Group, Inc. (the “Company”) on the applicable vesting
      date:  (i) 8.333% of the units shall vest on the 18th
      day of each of the 12 months following the Date of Grant, subject in each
      case to the Terms; and (ii) the units shall become vested in full upon the
      date of the death or Disability(as defined
      in the Plan) of the Grantee or a Change in Control (as defined in
      the Plan).

              

      

    

    

    
      
        	
                Distribution:

              	
                Notwithstanding the timing rules of Section 6 of
      the Terms, the shares of common stuck underlying the vested stock
      units shall be distributed to the Grantee within 30 days following the earliest to occur
      of: (i) the date of the Grantee’s
      Separation from Service (as defined in the Plan), (ii) the
      five-year anniversary of the Date of Grant,
      or (iii) a Change in
Control.

              

      

    

    

    By
signing your name below, you accept this stock unit award and acknowledge and
agree that the units are granted under and governed by the terms and conditions
(collectively, the “Terms”) of the Sun Healthcare Group, Inc. 2004 Equity
Incentive Plan (the “Plan”) and the Stock
Unit Agreement, both of which are hereby made a part of this
document.

    

    
      	
              “GRANTEE”

               

               

              _________________________________

              Signature

               

               

            	
              SUN
      HEALTHCARE GROUP, INC.,

              a
      Delaware corporation

               

              __________________________________

              By:  Richard
      Matros

              Its:  Chief
      Executive Officer

            

    

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Stock
Unit Agreement

    

    

    Sun
Healthcare Group, Inc.

    2004
Equity Incentive Plan

    

     

    1. Stock
Units.  As used herein, a “Stock Unit” is a non-voting
unit of measurement which is deemed for bookkeeping purposes to be equivalent in
value to one outstanding share of Common Stock of the
Corporation.  The Stock Units shall be used solely as a device for the
determination of any payment to eventually be made to the Grantee if and when
such Stock Units vest pursuant to Section 2.

     

    The Stock
Units create no fiduciary duty to the Grantee and shall create only a
contractual obligation on the part of the Corporation to make payments, subject
to vesting and the other terms and conditions hereof, as provided in Sections 4
and 6 below.  The Stock Units shall not be treated as property or as a
trust fund of any kind.  No assets have been secured or set aside by
the Corporation with respect to the Award and, if amounts become payable to the
Grantee pursuant to this Award Agreement, the Grantee’s rights with respect to
such amounts shall be no greater than the rights of any general unsecured
creditor of the Corporation.

     

    2. Vesting.  As
set forth on the cover page of this Award Agreement, the Award shall vest in
percentage installments, subject to earlier termination or acceleration and
subject to adjustment as provided herein and in the Plan.

     

    3. Continuance
of Employment.  The vesting schedule requires continued
employment or service through each applicable vesting date as a condition to the
vesting of the applicable installment of the Award and the rights and benefits
under this Award Agreement.  Employment or service for only a portion
of the vesting period, even if a substantial portion, will not entitle the
Grantee to any proportionate vesting or avoid or mitigate a termination of
rights and benefits upon or following a termination of employment or services as
provided in Section 7 below or under the Plan.

     

    Nothing
contained in this Award Agreement or the Plan constitutes an employment or
service commitment by the Corporation or any Subsidiary, affects the Grantee’s
status as an employee at will who is subject to termination without cause,
confers upon the Grantee any right to remain employed by or in service to the
Corporation or any Subsidiary, interferes in any way with the right of the
Corporation or any Subsidiary at any time to terminate such employment or
services, or affects the right of the Corporation or any Subsidiary to increase
or decrease the Grantee’s other compensation or benefits.  Nothing in
this paragraph, however, is intended to adversely affect any independent
contractual right of the Grantee under any written employment agreement with the
Corporation.

     

    4. Dividend
and Voting Rights.

     

    (a)           Limitations
on Rights Associated with Units.  The Grantee shall
have no rights as a stockholder of the Corporation, no dividend rights (except
as expressly provided in Section 4(b) hereof with respect to Dividend
Equivalents) and no voting rights with respect to the Stock Units or any shares
of Common Stock issuable in respect of such Stock Units, until shares of Common
Stock are actually issued to and held of record by the Grantee.  No
adjustments will be

     

    
      
         

      

      
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    made for
dividends or other rights of a holder for which the record date is prior to the
date of issuance of the stock certificate evidencing the shares.

     

    (b)           Dividend
Equivalent Distributions.  No later than
sixty (60) days following each date that the Corporation pays an ordinary cash
dividend on its outstanding Common Stock (if any ordinary cash dividends are
paid), for which the related record date occurs after the Award Date and prior
to the fourth anniversary of the Award Date, the Corporation shall make a cash
payment to the Participant equal to, subject to the tax withholding provisions
of Section 9 hereof and Section 17 of the Plan, the amount of the ordinary cash
dividend paid by the Corporation on a single share of Common Stock multiplied by
the number of Stock Units subject to this Award Agreement outstanding and unpaid
as of such record date (“Dividend
Equivalents”).

     

    5. Restrictions
on Transfer.  Prior to the time the Stock Units are vested and
paid, neither the Stock Units comprising the Award nor any interest therein or
amount payable in respect thereof may be sold, assigned, transferred, pledged or
otherwise disposed of, alienated or encumbered, either voluntarily or
involuntarily, other than by will or the laws of descent and
distribution.

     

    6. Timing
and Manner of Payment of Stock Units.  Stock Units subject to
this Award Agreement shall be paid in an equivalent number of shares of Common
Stock promptly after the vesting of such Stock Units (and in all events not later than the first March 15
following the year in which such Stock Units became vested) in accordance
with the terms hereof; provided, however, that the Committee may provide for all
or a portion of such vested Stock Units to be paid in cash.  Such
payment shall be subject to the tax withholding provisions of Section 9 hereof
and Section 17 of the Plan and subject to adjustment as provided in Section 12
of the Plan and shall be in complete satisfaction of such vested Stock
Units.  The Grantee or any other person entitled under the Plan to
receive a payment of shares of Common Stock shall deliver to the Corporation any
representations or other documents or assurances required pursuant to Section 18
of the Plan.

     

    Notwithstanding
the foregoing paragraph, the Grantee may elect (a
“Distribution Election”) on the Award Date or at such other time as may be
provided by the Committee (and in all cases at a time that complies with the
initial deferral election requirements of Section 409A of the Code) and
in accordance with rules prescribed the Committee, not to receive payment upon
the vesting of such Stock Unit and instead have the Corporation continue to
maintain such Stock Unit on its books of account.  Distribution Elections may only be made by delivering a
written election to the Corporation on a deferral election form provided by the
Corporation. Subject to approval by the
Committee, the distribution of such
deferred Stock Units shall be payable as
elected by the Grantee on the deferral election form.  

     

    7. Effect of
Termination of Employment or Services.  The Grantee’s
Stock Units shall be forfeited to the extent such units have not become vested
upon the first date the Grantee is no longer employed by or providing services
to the Corporation or one of its Subsidiaries, regardless of the reason for the
termination of such employment or services, whether with or without cause,
voluntarily or involuntarily; provided, however,
that if the Grantee’s termination of employment or service is the result of the
Grantee’s death or Disability, any then-outstanding and otherwise unvested Stock
Units subject to this Award shall thereupon fully vest.  If the
Grantee is employed by a Subsidiary and that entity ceases to be a Subsidiary,
such event shall be deemed to be a termination of employment of the Grantee for
purposes of this Award Agreement, unless the Grantee otherwise continues to be
employed by the Corporation or another of its Subsidiaries following such
event.  If the Grantee is not an employee or director of
the

    
      
        
        

      

      
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      Corporation
or a Subsidiary, the Committee shall be the sole judge for purposes of this
Award Agreement whether the Grantee continues to render services to the
Corporation or a Subsidiary and the date, if any, upon which such services shall
be deemed to have terminated.

    

     

    8. Adjustments
Upon Specified Events.  Upon the occurrence of certain events
relating to the Corporation’s stock contemplated by Section 12 of the Plan, the
Committee will make adjustments if appropriate in the number of Stock Units
contemplated hereby and the number and kind of securities that may be issued in
respect of the Award.

     

    9. Tax
Withholding.  The Corporation shall reasonably determine the
amount of any federal, state, local or other income, employment, or other taxes
which the Corporation or any of its affiliates may reasonably be obligated to
withhold with respect to the grant, vesting, or other event with respect to the
Stock Units.  The Corporation may, in its sole discretion, withhold a
sufficient number of shares of Common Stock in connection with the vesting of
the Stock Units at the then Fair Market Value of the Common Stock (determined
either as of the date of such withholding or as of the immediately preceding
trading day, as determined by the Corporation in its discretion) to satisfy the
amount of any such withholding obligations that arise with respect to the
vesting of such Stock Units.  The Corporation may take such action(s)
without notice to the Grantee and shall remit to the Grantee the balance of any
proceeds from withholding such shares in excess of the amount reasonably
determined to be necessary to satisfy such withholding
obligations.  The Grantee shall have no discretion as to the
satisfaction of tax withholding obligations in such manner.  If,
however, any withholding event occurs with respect to the Stock Units other than
the vesting of such units, or if the Corporation for any reason does not satisfy
the withholding obligations with respect to the vesting of the Stock Units as
provided above in this Section 9, the Corporation shall be entitled to require a
cash payment by or on behalf of the Grantee and/or to deduct from other
compensation payable to the Grantee the amount of any such withholding
obligations.

     

    10. Notices.  Any
notice to be given under the terms of this Award Agreement shall be in writing
and addressed to the Corporation at its principal office to the attention of the
Secretary, and to the Grantee at the Grantee’s last address reflected on the
Corporation’s records, or at such other address as either party may hereafter
designate in writing to the other.  Any such notice shall be given
only when received, but if the Grantee is no longer an employee of the
Corporation or one of its Subsidiaries, shall be deemed to have been duly given
by the Corporation when enclosed in a properly sealed envelope addressed as
aforesaid, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States Government.

     

    11. Plan.  The
Award and all rights of the Grantee under this Award Agreement are subject to,
and the Grantee agrees to be bound by, all of the terms and conditions of the
provisions of the Plan, incorporated herein by this reference.  In the
event of a conflict or inconsistency between the terms and conditions of this
Award Agreement and of the Plan, the terms and conditions of the Plan shall
govern.  The Grantee agrees to be bound by the terms of the Plan and
of this Award Agreement.  The Grantee acknowledges reading and
understanding the Plan, the Prospectus for the Plan, and this Award
Agreement.  Unless otherwise expressly provided in other sections of
this Award Agreement, provisions of the Plan that confer discretionary authority
on the Corporation’s Board of Directors (the “Board”) or the Committee do
not (and shall not be deemed to) create any rights in the Grantee unless such
rights are expressly set forth herein or are otherwise in the sole discretion of
the Board or the Committee so conferred by appropriate action of the Board or
the Committee under the Plan after the date
hereof.

    
      
        
        

      

      
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    12. Entire
Agreement.  This Award Agreement and the Plan together
constitute the entire agreement and supersede all prior understandings and
agreements, written or oral, of the parties hereto with respect to the subject
matter hereof.  The Plan and this Award Agreement may be amended
pursuant to Section 22 of the Plan.  Such amendment must be in writing
and signed by the Corporation.  The Corporation may, however,
unilaterally waive any provision hereof in writing to the extent such waiver
does not adversely affect the interests of the Grantee hereunder, but no such
waiver shall operate as or be construed to be a subsequent waiver of the same
provision or a waiver of any other provision hereof.

     

    13. Counterparts.  This
Award Agreement may be executed simultaneously in any number of counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.

     

    14. Section
Headings.  The section headings of this Award Agreement are for
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.

     

    15. Governing
Law.  This Award Agreement and the rights of the parties
hereunder with respect to the Award shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware without regard to
conflict of law principles thereunder.

     

    16. Construction.  It is
intended that the terms of the Award will not result in the imposition of any
tax liability pursuant to Section 409A of the Code.  This Agreement
shall be construed and interpreted consistent with that
intent.

     

     

    5ex104.htm

    Exhibit
10.4

    SUN
HEALTHCARE GROUP, INC.

    2004
EQUITY INCENTIVE PLAN

    AS
AMENDED AND RESTATED

    

    NON-EMPLOYEE
DIRECTORS STOCK-FOR-FEES PROGRAM

    

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

     

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

     

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

     

    
      	
              (a)  

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

            

    

     

    
      	
              ·  

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

            

    

     

    
      	
              ·  

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

            

    

     

    
      	
              ·  

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

            

    

     

    
      	
              ·  

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

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               

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

            

    

     

    
      	
              (b)  

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

            

    

     

    
      	
              (c)  

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

            

    

     

    
      	
              (d)  

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

            

    

     

    
      	
              (e)  

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

            

    

     

    
      	
              (f)  

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

            

    

     

    
      
        
        

      

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

            

    

     

    
      	
              (g)  

            	
              Dividend and Voting
      Rights.

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
              (h)  

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

            

    

     

    
      
        
        

      

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

            

    

     

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

     

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

     

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

     

    
      
         

      

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

     

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

     

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

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    SUN
HEALTHCARE GROUP, INC.

    NON-EMPLOYEE
DIRECTORS STOCK-FOR-FEES PROGRAM

     

    DIRECTOR
STOCK UNIT AWARD AND PAYMENT ELECTION FORM

     

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

     

    Director:  __________________________________________________________________

                     (Print Full Name)

    

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

     

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

     

    Stock-for-Fees
Election

     

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

     

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

     

    
      
        
          
            
              	 	
                       ̈  _____

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

                    
	 	
                       ̈  _____

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

                    

            

          

        

      

    

     

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

    

     

    ________________________________________________________

    (Signature of
Director)

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
      
        

      

    
      

    

    

    ACKNOWLEDGEMENT
OF DELIVERY OF ELECTION

    

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

    

    
      
        
          
            
              
                	
                        SUN
      HEALTHCARE GROUP, INC.

                      
	 
      
	 
      
	
                        By___________________________________________

                      

              

            

          

        

      

    

    

     

     

     

     

    7

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