In a medium saucepan, heat 1 tablespoon of oil over medium heat. Cook onions and garlic in oil 2 minutes, stirring occasionally. Stir in tomatoes, sugar, salt and pepper. Heat to boiling, stirring occasionally. Reduce heat; cover and simmer.
Between sheets of waxed paper, flatten chicken to ¼ inch thickness. In shallow dish, mix bread crumbs and 1/3 cup Parmesan cheese. Dip chicken into egg, then coat with bread crumb mixture.
In a non-stick 12 inch skillet, heat remaining oil over medium heat. Cook chicken in oil 10-15 minutes, turning once, until no longer pink in center.
Pour tomato sauce around chicken in skillet. Sprinkle mozzarella cheese over chicken cover and heat until melted. Sprinkle with 2 tablespoons Parmesan cheese just before serving.