Document:

Exhibit 10.3

    EXHIBIT
      10.3

    EMPLOYMENT
      AGREEMENT

     

    THIS
      EMPLOYMENT AGREEMENT ("Agreement")
      is made and entered into effective as of the 12th day of October, 2006, by
      and
      between Heidi J. Fisher ("Executive") and SUN
      HEALTHCARE GROUP, INC., a
      Delaware corporation ("Sun"
      or
“Company”).

     

    WHEREAS,
      Executive has been appointed to serve as the Senior Vice President of Human
      Resources of Sun; 

     

    WHEREAS,
      Sun Health Specialty Services, Inc., a wholly owned subsidiary of Sun, and
      Executive entered into an Employment Agreement dated February 11, 2002 (the
      “Existing Agreement”); and

     

    WHEREAS,
      Sun and Executive desire to terminate the Existing Agreement and enter into
      a
      new employment agreement, which shall set forth 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) of Executive’s employment as Senior Vice President of Human Resources
      of Sun and Executive is willing to perform such services for Sun under the
      terms
      and conditions set forth below.

     

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

     

    Section
      1:     Employment; Term of
      Employment. 

     

    (a)
      Employment.
      Sun
      agrees to employ Executive and Executive agrees to accept employment with Sun,
      subject to the terms and conditions of this Agreement. 

     

    (b)
      Term
      of Employment.
      The
      period of Executive’s employment under this Agreement shall begin as of October
      1, 2006 and shall continue until terminated in accordance with Section 5 below.
      As used in this Agreement, the phrase “Employment Term” refers to Executive’s
      period of employment from the date of this Agreement until the date her
      employment is terminated.

     

    Section
      2:     Duties and
      Responsibilities.
      Executive shall devote her full employment time, efforts, skills and attention
      exclusively to her duties as Senior Vice President of Human Resources; provided,
      however, that to the extent the following activities do not materially interfere
      or conflict with her duties and responsibilities hereunder, Executive may (i)
      serve as a member of the boards of directors of other companies with the prior
      written consent of the Chief Executive Officer of Sun; and (ii) engage in
      charitable, civic and religious affairs. 

     

    Section
      3:     Compensation, Benefits and Related Matters.

     

    (a)   Annual
      Base Salary.
      During
      the Employment Term, Sun shall pay to Executive a base salary at an annual
      rate
      of $239,875.17 ("Base Salary"), such salary to be payable in accordance
      with Sun’s customary payroll practices as in effect from time to time (but not
      less frequently than monthly). The annual Base Salary will be reviewed at
      least annually for possible merit increases and any increase in Executive’s
      annual base salary rate shall thereafter constitute "Base Salary" for purposes
      of this Agreement.

     

    (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; 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 annual bonuses are
      paid to senior executives of Sun. Subject to the provisions of Section 6, in
      order to have earned and to be paid any such Bonus, Executive 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 the Company’s ability to
      deduct such bonus. 

    
      
        
        

      

      
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    (c)
      Equity
      Incentive.
      During
      the Employment Term, Executive shall be eligible to be granted equity incentive
      awards during her employment on the same basis as other senior executive
      officers of Sun. Such equity incentive awards may include stock options and
      restricted units. Executive’s eligibility, rights and entitlement to such equity
      incentive awards shall be governed by the applicable equity incentive plan,
      award agreement, award and/or grant.

     

    (d)   Retirement
      and Benefit Plans.
      During
      the Employment Term, Executive shall be eligible to participate in or receive
      benefits under any pension plan, 401(k) savings plan, nonqualified deferred
      compensation plan, supplemental executive retirement plan, medical and dental
      benefits plan, life insurance plan, short-term and long-term disability plans,
      or any other employee benefit or fringe benefit plan, generally made available
      by Sun to senior executives in accordance with the eligibility requirements
      of
      such plans and subject to the terms and conditions set forth in this Agreement.
      Such plans, programs and arrangements are subject to change during employment
      at
      the sole discretion of the Company. 

     

    (e)
      Sick,
      Holiday and Vacation Pay.
      Executive is entitled to holiday and sick pay consistent with Sun’s Employee
      Handbook or other policy applicable to senior executives. Sick and Holiday
      Pay
      is subject to change during employment at the sole discretion of the Company.
      Executive shall be entitled to up to 160 hours of vacation per year, which
      shall
      accrue at the rate of 6.152 hours per pay period (26 pay periods). However,
      in
      accordance with Sun’s Employee Handbook or other policy applicable to senior
      executives, vacation hours shall be subject to an accrual cap of two times
      Executive’s annual allotment of vacation hours and shall be subject to change
      during employment at the sole discretion of the Company.

     

    (f)   Indemnification,
      Liability/Insurance.
      Executive shall be entitled to indemnification by Sun to the extent required
      by
      applicable law and the charter and bylaws of Sun. In addition, Sun shall
      maintain during Executive’s employment customary directors and officers’
liability insurance and Executive shall be covered by such
      insurance.

     

    (g)   Taxes.
      All
      compensation payable to Executive shall be subject to withholding for all
      applicable federal, state and local income taxes, occupational taxes, Social
      Security and similar mandatory withholdings.

     

    (h) Expenses.
      Executive shall be entitled to reimbursement for expenses incurred by her in
      connection with the discharge of her 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 Sun, as such policies
      may
      change from time to time.

    
      
        
        

      

      
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    Section
      4:    Cooperation.
      Following the expiration or a termination of this Agreement for any reason,
      Executive 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 Employment Term, and executing such documents and
      instruments relating to such
      employment as are reasonably requested by Sun.

     

    Section
      5:     Termination of
      Employment.
      Sun, at
      any time in its sole discretion, may terminate Executive as Senior Vice
      President of Human Resources and from all other positions with Sun and its
      direct and indirect subsidiaries. Upon termination, Executive (or her
      beneficiary or estate as the case may be) shall be entitled to receive the
      compensation and benefits described in Section 6 below.

     

    (a)   Termination
      by Sun for "Good Cause."
      Sun may,
      at any time, by written notice to Executive 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 Executive as an officer and employee and from all other positions
      with
      Sun for Good Cause. Sun may relieve Executive of her duties and responsibilities
      pending a final determination of whether Good Cause exists, and such action
      shall not constitute Good Reason (as defined in Section 5(c) below) for purposes
      of this Agreement. Payment to Executive upon a termination for Good Cause is
      set
      forth in Section 6(a). "Good Cause" for termination shall mean any one of the
      following:

     

    (1)   Any
      criminal conviction (including conviction on 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 Chief Executive Officer of Sun, renders
      Executive unsuitable as an officer or employee of Sun.

     

    (2)   Executive’s
      continued failure to substantially perform the duties reasonably requested
      by
      the Chief Executive Officer of Sun and commensurate with her position as Senior
      Vice President of Human Resources of Sun (other than any such failure resulting
      from her incapacity due to her physical or mental condition) after a written
      demand for substantial performance is delivered to her by the Chief Executive
      Officer of Sun, which demand specifically identifies the manner in which the
      Chief Executive Officer of Sun believes that Executive has not substantially
      performed her duties, and which performance, in the sole discretion of the
      Chief
      Executive Officer is determined to not be substantially corrected by Executive
      within ten (10) calendar days of receipt of such demand;

     

    (3)   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 Executive which,
      in the sole discretion of the Chief Executive Officer of Sun, renders Executive
      unsuitable as an officer or employee; and

    
      
        
        

      

      
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    (4)
      Breach of any of the covenants set forth in Section 8 of this
      Agreement.

     

    Regardless
      of whether Executive’s employment initially was considered to be terminated for
      any reason other than Good Cause, Executive’s employment will be considered to
      have been terminated for Good Cause for purposes of this Agreement if the Chief
      Executive Officer of Sun subsequently determines that Executive engaged in
      an
      act constituting Good Cause.

     

    (b)   Termination
      by Sun without Good Cause.
      Sun may
      at any time in its sole discretion, by written notice to Executive at least
      five
      (5) business days prior to date of termination specified in such notice,
      terminate Executive as an officer and employee and from all other positions
      with
      Sun. If such termination is made by Sun other than by reason of Executive’s
      death or Disability (as defined in Section 5(e)) and Good Cause does not exist,
      such termination shall be treated as a termination without Good Cause and
      Executive shall be entitled to payment in accordance with Section
      6(b).

     

    (c)   Termination
      by Executive for Good Reason.
      Executive may, at any time at her option within sixty (60) calendar days
      following an event or condition that constitutes Good Reason (as defined below),
      resign for Good Reason, as an officer and employee and from all other positions
      with Sun by written notice to Sun at least thirty (30) calendar days prior
      to
      the date of termination 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 Executive upon a
      termination for Good Reason is set forth in Section 6(b).  "Good Reason"
      shall mean the occurrence of any one of the following events or conditions
      (but
      only if Executive provides a notice of resignation to Sun within sixty (60)
      calendar days following the first occurrence of such event or condition and
      Sun
      thereafter fails to cure such circumstance within sixty (60) calendar days after
      its receipt of that notice):

     

    a.   A
      meaningful and detrimental reduction, without Executive’s written consent, in
      the nature of her responsibilities or a meaningful and detrimental change in
      her
      reporting responsibilities or titles; or

     

    b.   A
      reduction of compensation as set forth in Sections 3(a) - 3(c) (collectively
      the
      "Compensation") (other than a reduction of compensation uniformly applicable
      to
      other members of Senior Management or as a result of disciplinary action against
      Executive), a reduction of the benefits set forth in Sections 3(d) - 3(h)
      (collectively, the "Benefits") (other than a reduction of Benefits uniformly
      applicable to other senior executives), or failure by Sun to pay to Executive
      any portion of the Compensation or Benefits within seven (7) business days
      of
      the date such compensation or other payments and benefits are due;
      or

     

    c.
      A
      change in Executive’s principal work location to a place other than Orange
      County, California.

     

    .Notwithstanding
      any provision of this Section 5(c) to the contrary, the occurrence of a “Change
      in Control” (as defined in Section 6 below) shall not, by itself, constitute
      Good Reason hereunder.

    
      
        
        

      

      
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    (d)   Voluntary
      Resignation Without Good Reason.
      Executive may, at any time at her option with thirty (30) calendar days written
      notice to Sun, voluntarily resign without Good Reason as an officer and employee
      and from all positions with Sun. Payment to Executive upon her voluntary
      resignation without Good Reason is set forth in Section 6(a). Resignation from
      employment shall automatically constitute resignation from all positions of
      any
      subsidiary or affiliated corporation.

     

    (e)   Death
      or Disability.
      Executive’s employment under this Agreement shall terminate automatically as of
      the date of Executive’s death. Sun, at any time by written notice to Executive
      at least five (5) business days prior to the date of termination specified
      in
      such notice, terminate Executive as an officer and employee and from all other
      positions with Sun by reason of her Disability. "Disability" shall mean any
      physical or mental condition or illness that prevents Executive from performing
      the essential duties of her position (where such failure cannot be remedied
      with
      reasonable accommodation) for a period of 120 substantially consecutive calendar
      days, as determined by a physician selected by Sun and reasonably acceptable
      to
      Executive or, if Executive is incapacitated, reasonably acceptable to the
      Director of Medicine or equivalent senior physician at a hospital of Executive’s
      choice. In addition, Executive’s receipt of disability benefits under Sun’s
      long-term disability benefits plan or receipt of Social Security disability
      benefits shall be deemed conclusive evidence of Disability for purpose of this
      Agreement. Payment to Executive upon her termination by reason of her death
      or
      Disability is set forth in Section 6(d).

     

    Section
      6:   Payments Upon Termination.

     

    (a)   Payment
      Upon Termination for Good Cause, or Resignation without Good
      Reason.
      In the
      event of termination of her employment pursuant to Sections 5(a) or 5(d),
      Executive, or her estate where applicable, shall be paid any earned but unpaid
      Base Salary through the date of termination and any accrued but unused vacation
      through the date of termination. 

     

    Executive
      also shall receive her vested benefits in accordance with the terms of Sun’s
      compensation and benefit plans, and her participation in such plans and all
      other perquisites shall cease as of the date of termination, except to the
      extent Executive 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) or 5(d),
      Executive shall not be entitled to any compensation or benefits under this
      Agreement except as set forth in this Section 6(a).

     

    (b)   Payment
      Upon Termination by Sun without Good Cause or by Executive for Good
      Reason.
      In the
      event of termination of employment pursuant to Sections 5(b) or 5(c), Executive
      shall be entitled to a lump sum severance payment in an amount equal to one
      (1)
      year Base Salary or, in the event such termination occurs on or within two
      (2)
      years following the change of a “Change in Control,” two (2) years Base Salary.
      Executive also shall be entitled to (i) any earned Bonus pursuant to Section
      3(b) for the fiscal year prior to the fiscal year of termination in the event
      Executive was employed the entire prior fiscal year but is not employed by
      Sun
      on the date said Bonus is paid, (ii) a pro rata portion of the Bonus for the
      fiscal year of termination, based on the number of days of employment during
      the
      fiscal year of termination (including holidays, vacation and sick days and
      weekends during the period of employment) divided by 365 and (iii)
      payment of any accrued but unused vacation pursuant to Section 3(e) in
      accordance with Company policy. Notwithstanding the foregoing, Executive’s right
      to receive the severance payment hereunder shall be conditioned upon her
      execution of a release in favor of Sun, which shall not be inconsistent with
      the
      terms of this Agreement and such documents and instruments as are reasonably
      requested by Sun. Executive’s participation in any other retirement and benefit
      plans and perquisites shall cease as of the date of termination, except
      Executive and her 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 (x) the first anniversary of
      the
      date of termination or (y) the date on which Executive or her 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 Agreement, a "Change in Control" shall be deemed to have
      occurred if any of the following events occurs:

     

    (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
      Sun (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 Sun;

     

    (2)   A
      merger or consolidation of Sun with any other corporation, other than a merger
      or consolidation which would result in the voting securities of Sun 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
      Sun or surviving entity outstanding immediately after such merger or
      consolidation;

     

    (3)   A
      sale or other disposition by Sun of all or substantially all of Sun’s
      assets;

     

    (4)   During
      any period of two (2) consecutive years, 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 Sun’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;

     

    provided,
      however, in no event shall any acquisition of securities, a change in the
      composition of the Board of Directors or a merger or other consolidation
      pursuant to a plan of reorganization under chapter 11 of the Bankruptcy Code
      with respect to Sun ("Chapter 11 Plan"), or a liquidation under the Bankruptcy
      Code constitute a Change in Control. In addition, notwithstanding Sections
      6(c)(1), 6(c)(2), 6(c)(3) and 6(c)(4), a Change in Control shall not be deemed
      to have occurred in the event of a sale or conveyance in which Sun continues
      as
      a holding company of an entity or entities that conduct the business or
      businesses formerly conducted by Sun, or any transaction undertaken for the
      purpose of reincorporating Sun under the laws of another jurisdiction, if such
      transaction does not materially affect the beneficial ownership of Sun’s capital
      stock. Executive’s continued employment without objection following a Change in
      Control shall not, by itself, constitute consent to or a waiver of rights with
      respect to any circumstances constituting Good Reason hereunder. 

    
      
        
        

      

      
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    (d)   Payment
      Upon Termination for Death or Disability.
      In the
      event of termination of her employment pursuant to Section 5(e), Executive,
      or
      her estate where applicable, shall be paid any earned but unpaid Base Salary
      through the date of termination and any accrued but unused vacation through
      the
      date of termination. 

     

    Executive,
      or her estate where applicable, also shall receive her vested benefits
      (including those that vest by reason of death or disability) in accordance
      with
      the terms of Sun’s compensation and benefit plans, and her participation in such
      plans and all other perquisites shall cease as of the date of termination,
      except to the extent Executive 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(e),
      Executive shall not be entitled to any compensation or benefits under this
      Agreement except as set forth in this Section 6(d).

     

    In
      the
      event Employee is unable to work due to death or disability on the date of
      payment of Bonus as required by Section 3(b) above, Executive or her estate
      shall be paid any unpaid Bonus for the prior fiscal year which shall be prorated
      based on the number of days of employment (including holidays, vacation and
      sick
      days and weekends during the period of employment) during the prior fiscal
      year
      divided by 365. Executive also shall receive a pro rata portion (based on the
      number of days of employment (including holidays, vacation and sick days and
      weekends during the period of employment) in the fiscal year of termination
      divided by 365) of the Bonus, if any, for the fiscal year in which the
      termination pursuant to Section 5(e) occurs.

     

    Section
      7:     Additional Payments. 

     

    (a)   Gross-Up
      Payments.
      Notwithstanding anything herein to the contrary, if it is determined that any
      payment or distribution by Sun to or for the benefit of the Executive (whether
      paid or payable or distributed or distributable pursuant to the terms of this
      Agreement or otherwise, but determined without regard to any additional payments
      required under this Section 7) (a “Payment”) would be subject to the excise tax
      imposed by Section 4999 of the Internal Revenue 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
      Executive shall be entitled to an additional payment (a "Gross-Up Payment")
      in
      an amount that will place Executive in the same after-tax economic position
      that
      he would have enjoyed if the Excise Tax had not applied to the payment.

    
      
        
        

      

      
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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
      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 this 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).

     

    (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 but not later than
      ten business days 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 sole 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 to
      the
      applicable taxing authorities 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.

    
      
        
        

      

      
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    (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 her 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 her 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 her 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).

     

    Section
      8:     Protection of Sun’s
      Interests.

     

    (a)   Ownership
      of Property.
      Executive acknowledges and agrees that any and all property developed,
      discovered or created by her during the pendency of her 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 Executive hereby sells, assigns and
      otherwise transfers all of her right, title and interest in and to such
      property, if any, to the Company.

     

    (b)
      Confidentiality.
      Executive agrees that he will not at any time, during or after the term of
      this
      Agreement, except in performance of her obligations to Sun hereunder or with
      the
      prior written consent of the Chief Executive Officer of Sun, directly or
      indirectly disclose to any person or organization any secret or "Confidential
      Information" that Executive may learn or has learned by reason of her
      association with Sun. The term "Confidential Information" means any information
      not previously disclosed to the public or to the trade by Sun’s management with
      respect to Sun’s products, services, business practices, facilities and methods,
      salary and benefit information, legal matters and claims (asserted and
      unasserted), 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, compliance and clinical processes, policies and
      procedures. 

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (c)   Exclusive
      Property.
      Executive confirms that all Confidential Information is and shall remain the
      exclusive property of Sun. All business records, papers and documents kept
      or
      made by Executive relating to the business of Sun shall be and remain the
      property of Sun. Upon the termination of Executive’s employment for any reason
      or upon the request of Sun at any time, Executive shall promptly deliver to
      Sun,
      and shall not without the consent of the Board of Directors of Sun, retain
      copies of, Confidential Information, or any written materials not previously
      made available to the public, or records and documents made by Executive or
      coming into Executive’s possession concerning the business or affairs of Sun.

     

    (d)   Nonsolicitation.
      Executive shall not, during her 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)   Non-Disparagement.
      Executive shall not during her employment under this Agreement and for two
      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
      Executive or her reputation or that reflect negatively on Executive’s
      performance, skills or ability. 

     

    (f)   Relief.
      Without
      intending to limit the remedies available to Sun, Executive 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
      Executive 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.

     

    Section
      9:     Miscellaneous
      Provisions.

     

    (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. 

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (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 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 this Agreement and this Agreement shall supersede
      all prior agreements, including the Existing Agreement (which is hereby
      terminated), negotiations, correspondence, undertakings and communications
      of
      the parties, oral or written, with respect to the subject matter hereof.

     

    (d)   Resolution
      of Disputes.
      Any
      disputes arising under or in connection with this Agreement shall be resolved
      by
      binding arbitration, to be held in Orange County, California in accordance
      with
      the National Rules for the Resolution of Employment Disputes and procedures
      of
      the American Arbitration Association. Executive and Sun shall mutually select
      the arbitrator. If Executive 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. The fees of the
      arbitrator and any administrative fees of AAA shall be paid by Sun. 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(d) pending final resolution of
      matters that are sent to arbitration.

     

    (e)   Attorneys’
      Fees.
      In the
      event Executive prevails on the merits on any claim, action or proceeding:
      (i)
      contesting or otherwise relating to the existence of Good Cause in the event
      of
      Executive’s 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 Executive’s termination of employment during the Term for Good Reason,
      Sun shall pay or reimburse Executive on an after-tax basis for reasonable 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 Executive as a result of such
      claim, action or proceeding. 

     

    (f)   Governing
      Law.
      The
      validity, interpretation, construction and performance of this Agreement shall
      be governed by the laws of the State of California. 

     

    (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
      the other:

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    To
      Sun:

     

    Attention:
      Chief Executive Officer

    18831
      Von
      Karman Avenue; Suite 400.

    Irvine,
      California 92612

     

    To
      Executive:

     

    Heidi
      J.
      Fisher

    24235
      Davida Lane

    Laguna
      Niguel, California 92677

     

    (h)   Successors
      and Assigns.
      This
      Agreement shall be binding upon and shall inure to the benefit of the parties
      hereto and their respective successors and assigns.

     

    (i)
      No
      Claim Against Assets.
      Nothing
      in this Agreement shall be construed as giving Executive any claim against
      any
      specific assets of Sun or as imposing any trustee relationship upon Sun in
      respect of Executive. Sun shall not be required to establish a special or
      separate fund or to segregate any of its assets in order to provide for the
      satisfaction of its obligations under this Agreement. Executive’s rights under
      this Agreement shall be limited to those of an unsecured general creditor of
      Sun
      and its affiliates.

    

    (j)
      Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which so
      executed shall be deemed to be an original, and such counterparts will together
      constitute but one Agreement.

     

    [Signatures
      Commence on Immediately Following Page]

     

     

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Agreement as of the date first above
      written.

     

     

     

     

     

      /s/
      Heidi J.
      Fisher                                      October
      12, 2006

    Heidi
      J. Fisher     

     

     

     

    SUN
      HEALTHCARE GROUP, INC. 

    

    

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

    Richard
      K. Matros

    Chairman
      and CEO

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    Schedule
      A

    

    Executive’s
      Bonus for any fiscal year shall be based on the criteria set forth below. There
      are two components to her Bonus: EBITDA and individual goals, which are
      described 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 her Bonus exceed 80% of her 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 8% of Base
      Salary; if actual EBITDA is 100% of target EBITDA, the Maximum Amount shall
      equal 40% 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 8% and
      40%
      of Base Salary); and if actual EBITDA is 120% (or greater) of target EBITDA,
      the
      Maximum Amount shall equal 80% 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 40% and 80% 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).

    

     

    
      
        
        

      

      
        14Exhibit 10.4

    EXHIBIT
      10.4

    Amendment
      No. 1 

    to

    EMPLOYMENT
      AGREEMENT

    

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

     

    WHEREAS,
      Sun and Mr. Shaul entered into an Employment Agreement dated as of February
      14,
      2005 (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 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, Mr. Shaul 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, Mr. Shaul
      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 Mr. Shaul. 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. Shaul 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, shall be made by the Accounting Firm, which shall provide detailed
      supporting calculations both to Sun and Mr. Shaul within fifteen business days
      of Mr. Shaul’s date of termination or any other date reasonably requested by Sun
      or Mr. Shaul on which a determination under Section 7 is necessary or advisable.
      Within five days of the receipt by Mr. Shaul 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. Shaul.
      If the
      Accounting Firm determines that no Excise Tax is payable by Mr. Shaul, Sun
      shall
      cause the Accounting Firm to provide Mr. Shaul 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 Mr. Shaul’s federal income tax return.
      Any determination by the Accounting Firm shall be binding upon Mr. Shaul 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. Shaul with respect
      to any payment (hereinafter an “Underpayment”), Sun, after exhausting its
      remedies under Section 7(c) below, shall promptly pay to the
      applicable taxing authorities for the benefit of Mr. Shaul (or directly to
      Mr.
      Shaul in the event Mr. Shaul previously paid the related tax
      amounts)
      an
      additional Gross-Up Payment in respect of the Underpayment. 

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (c)   Procedures.
      Mr.
      Shaul 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. Shaul knows of
      such
      claim and Mr. Shaul shall apprise Sun of the nature of the claim and the date
      on
      which the claim is requested to be paid. Mr. Shaul agrees not to pay the claim
      until the expiration of the thirty-day period following the date on which Mr.
      Shaul 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. Shaul
      in writing prior to the expiration of the Notice Period that it desires to
      contest the claim, Mr. Shaul 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. Shaul; (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. Shaul 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. Shaul 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. Shaul to pay such claim and pursue a refund,
      Sun shall pay
      such
claim
      on
      Mr.
Shaul’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 Mr. Shaul 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.
      Shaul 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. Shaul’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 Mr. Shaul.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

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

     

    (e)
      Further
      Assurances.
      Sun
      shall indemnify Mr. Shaul and hold him harmless, on an after-tax basis, from
      any
      costs, expenses, penalties, fines, interest or other liabilities (“Losses”)
      incurred by Mr. Shaul 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. Shaul’s behalf by Sun hereunder. Sun shall
      pay all legal fees and expenses incurred under Section 7 and shall promptly
      reimburse Mr. Shaul for the reasonable expenses incurred by him in
      connection with any actions taken by Sun or required to be taken by Mr. Shaul
      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. 

            

    

     

    
      	 	
              (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. 

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
      	 	
              (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/
      L. Bryan
      Shaul                                                October 12,
      2006

    L.
      Bryan
      Shaul       
Date

     

    SUN
      HEALTHCARE GROUP, INC. 

     

    By_/s/
      Richard K. Matros_____________  October
      12, 2006

    Its
      Chief
      Executive Officer      Date 

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    Schedule
      A

    

    Mr.
      Shaul’s Bonus for any fiscal year shall be based on the criteria set forth
      below. There are three components to his Bonus: EBITDA, EVC and individual
      goals, which are defined and outlined below. In no event shall his Bonus exceed
      120% of his Base Salary for such fiscal year.

    

    1.     Maximum
      Amount.
      A) A
      portion of the Bonus shall be based 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
      potential amount of the EBITDA portion 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 maximum amount of this portion
      (the “Maximum EBITDA Amount”) will be zero; if actual EBITDA is 95% of target
      EBITDA, the Maximum EBITDA Amount will be 5% of Base Salary; if actual EBITDA
      is
      100% of target EBITDA, the Maximum EBITDA 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 Maximum EBITDA Amount will
      be
      60% of Base Salary (if actual EBITDA is greater than 100% but less than 120%
      of
      target EBITDA, the Maximum EBITDA amount will be pro rated between 25% and
      60%
      of Base Salary).  

    

    B)
      Another portion of the Bonus shall be based on equity value creation (“EVC”).
      EVC shall be calculated as follows (such calculations to be based on the audited
      consolidated financial statements of Sun 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 potential amount of the EVC portion of the Bonus shall be 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 maximum amount of this portion (the
      “Maximum EVC Amount”) will be zero; if actual EVC is 90% of target EVC, the
      Maximum EVC Amount will be 5% of Base Salary; if actual EVC is 100% of target
      EVC, the Maximum EVC Amount will be 25% of Base Salary (if actual EVC is greater
      than 90% but less than 100% of target EVC, the Maximum EVC Amount will be pro
      rated between 5% and 25% of Base Salary); and if actual EVC is 140% (or greater)
      of target EVC, the Maximum EVC Amount will be 60% of Base Salary (if actual
      EVC
      is greater than 100% but less than 140% of target EVC, the Maximum EVC Amount
      will be pro rated between 25% and 60% of Base Salary).

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

      

    2,     EBITDA
      Component.
      The
      EBITDA component of the Bonus shall equal 80% of the Maximum EBITDA Amount.
       

    

    3.      
      EVC
      Component.
      The EVC
      component of the Bonus shall equal 80% of the Maximum EVC Amount.  

    

    4.     Individual
      Goals Component.
      The
      Chief Executive Officer of Sun (the “CEO”) shall establish the individual goals
      each year after consulting with Mr. Shaul, 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
      20% of
      the Maximum EBITDA Amount plus up
      to
      20% of
      the Maximum EVC 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 Mr.
      Shaul based upon the level of attainment of the goals. 

    

    5.     Timing
      of Payment.
      All
      components of the Bonus shall be paid to Mr. Shaul at the time specified in
      Section 3(b).

    

     

    
      
        
        

      

      
        6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}]]