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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: November 25, 1997
(Date of earliest event reported)
RETIREMENT CARE ASSOCIATES, INC.
(Exact name of registrant as specified in its charter)
COLORADO 1-14114 43-1441789
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification No.)
6000 LAKE FORREST DRIVE, SUITE 200
ATLANTA, GEORGIA 30328
(Address of principal executive offices)
(404) 255-7500
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On November 25, 1997, Retirement Care Associates, Inc. ("RCA") entered
into an amendment (the "Amendment") to the Agreement and Plan of Merger and
Reorganization dated as of February 17, 1997 as amended by Amendment No. 1
thereto dated as of May 27, 1997 and by Amendment No. 2 thereto dated as of
August 21, 1997 (as amended, the "Merger Agreement"), by and among RCA, Sun
Healthcare Group, Inc., a Delaware corporation ("Sun"), and Peach Acquisition
Corporation, a Colorado corporation and wholly-owned subsidiary of Sun ("Merger
Sub"), pursuant to which Merger Sub will be merged (the "Merger") with and into
RCA.
The Amendment changes the exchange ratio provided for in the Merger
Agreement. RCA shareholders will now receive shares of Sun common stock based
on a fixed value of $10 for each outstanding share of the common stock of RCA
(based on the average closing price of Sun common stock during the 20 trading
days ending five trading days prior to the effective time of the Merger)
(unless such average closing price exceeds $24.20, in which case the exchange
ratio shall equal .413, or is less than $19.80, in which case the exchange
ratio shall equal .505) instead of 0.520 shares of Sun common stock for each
share of RCA common stock owned by them on the effective date of the Merger.
The Amendment also (i) waives certain representations and warranties which have
become incorrect since the date of the Merger Agreement; (ii) modifies the
definition of "Company Material Adverse Effect" to relate only to changes in
the assets or liabilities of RCA; (iii) contains provisions relating to Sun and
its affiliates providing ancillary services to RCA and its affiliates; (iv)
contains provisions allowing RCA to obtain up to $15 million in working capital
financing under certain conditions; (v) contains provisions relating to certain
related company leases; (vi) modifies the conditions to Sun's obligation to
consummate the Merger related to RCA's representations and warranties and makes
corresponding modifications in Sun's termination rights; (vii) provides for a
termination fee payable to RCA in the event Sun's board of directors changes
its recommendation of the Merger in a manner adverse to RCA; (viii) contains
certain other technical provisions; and (ix) extends the date after which
either party may freely terminate the Merger Agreement from November 30, 1997
(or, under certain circumstances, to December 31, 1997) to March 31, 1998.
On November 25, 1997, Sun also entered into an amendment (the "RCA
Option Amendment") to the Stockholders Stock Option and Proxy Agreement dated
as of February 17, 1997 (the "Option Agreement") by and among Sun and certain
principal stockholders of RCA, pursuant to which the Option Agreement was
amended so as to (i) modify the exercise price of the option granted therein to
$10.00 per share of RCA common stock, (ii) not allow Sun to exercise such
option in the event that Sun materially breaches the RCA Merger Agreement and
(iii) shorten the period during which Sun may exercise such option from 120
days to 14 days.
The Merger is subject to approval by the stockholders of both
companies and will be considered at separate meetings now anticipated to occur
in the first quarter of 1998. The
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Merger remains subject to other customary conditions. The Merger will be
completed promptly following stockholder approval, assuming satisfaction of the
other conditions to the Merger.
The foregoing description is qualified in its entirety by reference to
the full text of the Amendment and the RCA Option Amendment, which are attached
hereto as Exhibits 2.1 and 2.2, respectively, and are incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) EXHIBITS
2.1 Amendment No. 3 to the Agreement and Plan of Merger and
Reorganization dated as of February 17, 1997 among Sun
Healthcare Group, Inc., Retirement Care Associates, Inc.
Peach Acquisition Corporation.
2.2 Amendment No. 1 to the Stockholders Stock Option and Proxy
Agreement dated as of February 17, 1997 among Sun Healthcare
Group, Inc. and certain stockholders of Retirement Care
Associates, Inc.
99.1 Press Release
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
RETIREMENT CARE ASSOCIATES, INC.
By:/s/ Darrell C. Tucker
--------------------------------
Darrell C. Tucker, Its Treasurer
Dated as of December 5, 1997.
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
DOCUMENT SEQUENTIALLY
NO. DOCUMENT NUMBERED PAGE
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<S> <C> <C>
2.1 Amendment No. 3 to the Agreement and 6
Plan of Merger and Reorganization dated
as of February 17, 1997 among Sun
Healthcare Group, Inc., Retirement Care
Associates, Inc. Peach Acquisition Corporation.
2.2 Amendment No. 1 to the Stockholders Stock 15
Option and Proxy Agreement dated as of
February 17, 1997 among Sun Healthcare Group, Inc.
and certain stockholders of Retirement
Care Associates, Inc.
99.1 Press Release 18
</TABLE>
5
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EXHIBIT 2.1
EXECUTION COPY
AMENDMENT NO. 3 TO THE
AGREEMENT AND PLAN OF REORGANIZATION
THIS AMENDMENT NO. 3 to the AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION, dated as of February 17, 1997, as amended by Amendment No. 1
thereto dated as of May 27, 1997 and Amendment No. 2 thereto dated as of August
21, 1997 (as so amended, the "MERGER AGREEMENT," capitalized terms used but not
otherwise defined herein are used herein as therein defined), among SUN
HEALTHCARE GROUP, INC., a corporation organized and existing under the laws of
the State of Delaware ("PARENT"), PEACH ACQUISITION CORPORATION, a corporation
organized and existing under the laws of the State of Colorado ("MERGER SUB")
and a direct wholly owned subsidiary of Parent, and RETIREMENT CARE ASSOCIATES,
INC., a corporation organized and existing under the laws of the State of
Colorado (the "COMPANY"), is made this 25th day of November, 1997 by and among
Parent, Merger Sub and the Company.
W I T N E S S E T H:
WHEREAS, Parent, Merger Sub and the Company have entered into the
Merger Agreement which provides, upon the terms and subject to the conditions
set forth therein, for the Merger of Merger Sub with and into the Company; and
WHEREAS, the boards of directors of Parent, Merger Sub and the Company
have each determined that it is consistent with and in furtherance of their
respective long-term business strategies and fair to and in the best interests
of their respective stockholders to amend the Merger Agreement as provided
herein.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
SECTION 1. AMENDMENTS TO MERGER AGREEMENT. The Merger Agreement
is hereby amended as follows:
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(a) The definition of "COMPANY DISCLOSURE SCHEDULE" included in
Section 1.01 of the Merger Agreement is hereby amended and restated in its
entirety to read as follows:
""COMPANY DISCLOSURE SCHEDULE" shall mean the disclosure
schedule entitled "Company Disclosure Schedules of Retirement
Care Associates, Inc. Re: Project Peach" dated February 17,
1997, delivered by the Company to Parent prior to the
execution of this Agreement, as amended by Schedules I, II,
and III to Amendment No. 1 to this Agreement and Schedule I
to Amendment No. 2 to this Agreement, and as further
supplemented by Schedule I to Amendment No. 3 to this
Agreement, and forming a part hereof."
(b) The definition of "COMPANY MATERIAL ADVERSE EFFECT" included in
Section 1.01 of the Merger Agreement is hereby amended and restated in its
entirety to read as follows:
""COMPANY MATERIAL ADVERSE EFFECT" shall mean any change in
or effect on the business of the Company and the Company
Subsidiaries that is, or could reasonably be expected to be,
materially adverse to the assets (including intangible
assets) or liabilities (contingent or otherwise) of the
Company and the Company Subsidiaries taken as a whole."
(c) Section 3.01(a) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows:
"(a) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other
than any shares of Company Common Stock to be cancelled
pursuant to Section 3.01(d) and any Dissenting Shares) and
all rights in respect thereof shall forthwith cease to exist
and shall be converted into and become exchangeable for the
lower of (i) the "Pre-Adjustment Exchange Ratio" (as defined
below) and (ii) in the event that the Series AA Exchange
Ratio is greater than 0.714, the Pre-Adjustment Exchange
Ratio multiplied by the Adjustment Factor (the lower of such
numbers being the "COMMON EXCHANGE RATIO"). The
"PRE-ADJUSTMENT EXCHANGE RATIO" shall be that number of
shares of Parent Common Stock equal to the ratio of (x)
$10.00 and (y) the Closing Date Market Price shares of Parent
Common Stock; PROVIDED, HOWEVER, that (i) in the event the
Closing Date Market Price is less than $19.80, the
Pre-Adjustment Exchange Ratio shall be equal to 0.505 shares
of Parent Common Stock, and (ii) in the event the
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Closing Date Market Price is more than $24.20, the
Pre-Adjustment Exchange Ratio shall be equal to 0.413 shares
of Parent Common Stock."
(d) Section 4.07(a) of the Merger Agreement is hereby amended by
deleting clause (A) thereof and adding the following clause (A) in place
thereof:
"(A) with the SEC and the NYSE since June 30, 1994 through the
date of Amendment No. 3 to this Agreement (collectively, the
"COMPANY REPORTS") and".
(e) Section 6.03 of the Agreement is hereby amended by inserting the
following as the penultimate sentence thereof: "The Steering Committee shall
meet by teleconference, upon the Company's or Parent's request, as often as
once every two weeks."
(f) Section 6.13 of the Agreement is hereby amended by inserting the
following as the last sentence thereof: "The Company shall file with the SEC
amendments to the Company Reports relating to issues described in Section 6.13
of the Company Disclosure Schedule if, and to the extent that, Parent and its
independent public accountants reasonably determine such amendments to be
advisable in connection with the filing of the Proxy Statement and/or the
Registration Statement."
(g) Section 7.04(a) of the Agreement is hereby amended by restating
the proviso set forth therein to read as follows: "; PROVIDED, HOWEVER, that
the Surviving Corporation may amend or otherwise modify the provisions with
respect to indemnification that are set forth in its articles of incorporation
and bylaws to exclude any right to indemnification thereunder with respect to
any civil or criminal penalties, damages, fines, disgorgement or other similar
personal liabilities, or any injunctions or consent decrees, incurred, imposed
or entered into, in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
brought or assessed by any United States Federal, state or local or any foreign
governmental, regulatory or administrative authority, agency or commission or
any settlement thereof ("EXCLUDED ITEMS")."
(h) Article VII of the Merger Agreement is hereby amended by the
following Sections 7.13, 7.14 and 7.15 immediately following Section 7.12
thereof:
"SECTION 7.13. COMPANY ANCILLARY SERVICES PENDING
THE CLOSING. (a) Neither Parent nor the Company shall
terminate, and each shall cause its affiliates and the
affiliates of the Principal Stockholders not to terminate,
any contracts relating to the provision or receipt of
pharmacy products or services, therapy or supplies
(collectively, "ANCILLARIES") that the Company, any of its
affiliates or any affiliates of the Principal Stockholders
have entered into with Parent or any of its affiliates;
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PROVIDED, HOWEVER, that upon termination of this Agreement,
any such contract may be terminated by any of the parties
thereto upon the provision of two weeks' written notice to
the other parties thereto.
(b) With regard to the Company's facilities that do
not, as of the date of Amendment No. 3 to this Agreement,
receive all of their required Ancillaries from Parent or
Parent's affiliates, the Company shall, and shall cause its
affiliates and the affiliates of the Principal Stockholders
to, promptly take all reasonable action, including, without
limitation, terminating existing contracts with other
providers of Ancillaries in accordance with the terms thereof
(it being understood that neither the Company nor any other
party to such contract shall be required to terminate such
contract if doing so would constitute a breach thereof or
require a penalty or termination payment by the Company
(unless Parent agrees to make such payment)), to cause all
such facilities to begin receiving all of their required
Ancillaries from Parent or Parent's affiliates as soon as
practicable after the date of Amendment No. 3 to this
Agreement.
SECTION 7.14. COMPANY WORKING CAPITAL FACILITY.
Notwithstanding anything to the contrary herein, the Company
may incur up to $15,000,000 in additional working capital
financing (the "WORKING CAPITAL FACILITY") if the following
conditions are satisfied: (i) Parent is given a reasonable
opportunity in advance to review and comment upon all
documentation related to the Working Capital Facility; (ii)
the terms of the Working Capital Facility require the Company
to provide to Parent copies of all correspondence between the
Company and the providers of the Working Capital Facility;
and (iii) the only permitted use of the Working Capital
Facility is the satisfaction of the Company's ordinary course
working capital requirements. If the conditions described in
the preceding sentence are satisfied, then Parent will agree
to the subordination on terms reasonably satisfactory to
Parent of the Company Note to the Working Capital Facility.
SECTION 7.15. CERTAIN COMPANY LEASES. Prior to the
Effective Time, the Company will cause each of its or any of
the Company Subsidiaries' leases with related parties,
including, without limitation, those disclosed on Section
7.15(a) of the Company Disclosure Schedule, to be amended so
as specify that (i) the monthly rent under such leases shall
equal 1.1 times the
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monthly payments of principal and interest that the lessor
under such lease is obligated to pay under the promissory
note related thereto in effect on the date of Amendment No. 3
to this Agreement (subject only to potential increase in such
principal amount to as much as the maximum amount allowed
under such lease as in effect on the date of Amendment No. 3
to this Agreement) and (ii) such monthly rent shall not be
affected by any pre-payment or refinancing of the amount
evidenced by such promissory note."
(i) Section 8.03(a) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows:
"(a) each of the representations and warranties of
the Company contained in this Agreement that is qualified as
to materiality shall have been true, complete and correct on
the date of Amendment No. 3 to this Agreement (other than
representations and warranties which address matters only as
of a certain date which shall be true, complete and correct
as of such certain date) and each of the representations and
warranties of the Company that is not so qualified shall have
been true, complete and correct in all material respects on
the date of Amendment No. 3 to this Agreement (other than
representations and warranties which address matters only as
of a certain date which shall be true, complete and correct
as of such date), in each case except as contemplated or
permitted by this Agreement."
(j) Section 8.03(e) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows: "(e) [Removed and reserved]".
(k) Section 9.01(b) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows:
"(b) by either Parent or the Company, if the
Effective Time shall not have occurred on or before March 31,
1998; PROVIDED, HOWEVER, that the right to terminate this
Agreement under this Section 9.01(b) shall not be available
to any party whose failure to fulfill any obligation under
this Agreement shall have caused, or resulted in, the failure
of the Effective Time to occur on or before such date."
(l) Section 9.01(g) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows:
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"(g) by Parent, (i) if any representation or
warranty on the part of the Company set forth in this
Agreement shall be untrue, incomplete or incorrect on the
date of Amendment No. 3 to this Agreement or (ii) upon a
breach of any covenant or agreement on the part of the
Company set forth in this Agreement, in either case such that
the conditions set forth in Section 8.03 would not be
satisfied (a "TERMINATING COMPANY BREACH"); PROVIDED,
HOWEVER, that if such Terminating Company Breach (i) is
curable by the Company through the exercise of its reasonable
efforts within 30 days and for so long as the Company
continues to exercise such reasonable efforts, or (ii) has
been disclosed on Schedule I, II or III to Amendment No. 1 to
this Agreement, on Schedule I to Amendment No. 2 to this
Agreement or on Schedule I to Amendment No. 3 to this
Agreement ("DISCLOSED ITEMS"), Parent may not terminate this
Agreement under this Section 9.01(g); and PROVIDED FURTHER
that the preceding proviso shall not in any event be deemed
to extend any date set forth in paragraph (b) of this Section
9.01;".
(m) Section 9.01(j) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows:
"(j) by Parent, if (i) there shall have occurred any
damage to, or destruction of, the tangible property or assets
of the Company or any of the Company Subsidiaries or (ii)
after the date of Amendment No. 3 to this Agreement, any
suit, claim, action, proceeding or investigation shall be
commenced or, to the knowledge of the Company, threatened
against the Company or any Company Subsidiary before any
Governmental Entity (A) by any party other than a
Governmental Entity and relating to patient care matters or
(B) by any Governmental Entity, which in the case of clauses
(i) and (ii), individually or in the aggregate, could
reasonably be expected to have a Company Material Adverse
Effect; PROVIDED, HOWEVER, that Disclosed Items shall not
give Parent the right to terminate this Agreement under this
Section 9.01(j)."
(n) Section 9.01(k) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows: "(k) [Removed and Reserved]".
(o) Section 9.05(f) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows:
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"(f) In the event that the Company shall terminate
this Agreement pursuant to Section 9.01(e), Parent shall pay
to the Company within two business days after such
termination an amount equal to $5,000,000 (against which the
$1,000,000 fee described in Section 9.05(d) shall be
credited) by wire transfer of immediately available funds to
an account designated by the Company."
SECTION 2. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Parent and Merger Sub that: The Company has all
necessary corporate power and authority to execute and deliver this Amendment,
to perform its obligations under the Merger Agreement as amended hereby and to
consummate the transactions contemplated hereby. The execution and delivery of
this Amendment by the Company and the consummation by the Company of the
transactions contemplated by the Merger Agreement as amended hereby have been
duly and validly authorized by all necessary corporate action (other than
stockholder approval as described in the Merger Agreement). This Amendment has
been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Merger Sub, constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms. After giving effect to Section 1(a) of
this Amendment, each of the representations and warranties of the Company
contained in the Merger Agreement that is qualified by materiality is true,
complete and correct on and as of the date hereof as if made at and as of the
date hereof (other than representations and warranties which address matters
only as of a certain date which shall be true, complete and correct as of such
certain date) and each of the representations and warranties that is not so
qualified shall be true, complete and correct in all material respects on and
as of the date hereof as if made at and as of the date hereof (other than
representations and warranties which address matters only as of a certain date
which shall be true, complete and correct in all material respects as of such
certain date), in each case except as contemplated or permitted by the Merger
Agreement.
(b) REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
Parent and Merger Sub hereby jointly and severally represent and warrant to the
Company that: Parent and Merger Sub have all necessary corporate power and
authority to execute and deliver this Amendment, to perform their respective
obligations under the Merger Agreement as amended hereby and to consummate the
transactions contemplated hereby. The execution and delivery of this Amendment
by Parent and Merger Sub and the consummation by Parent and Merger Sub of the
transactions contemplated by the Merger Agreement as amended hereby have been
duly and validly authorized by all necessary corporate action (other than
stockholder approval as described in the Merger Agreement). This Amendment has
been duly executed and delivered by Parent and Merger Sub and, assuming the due
authorization, execution and delivery by the Company, constitutes the legal,
valid and binding obligation of Parent and Merger Sub, enforceable against
Parent and Merger Sub in accordance with its terms. Each of the
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representations and warranties of Parent and Merger Sub contained in the Merger
Agreement that is qualified by materiality is true, complete and correct on and
as of the date hereof as if made at and as of the date hereof (other than
representations and warranties which address matters only as of a certain date
which shall be true, complete and correct as of such certain date) and each of
the representations and warranties that is not so qualified shall be true,
complete and correct in all material respects on and as of the date hereof as
if made at and as of the date hereof (other than representations and warranties
which address matters only as of a certain date which shall be true, complete
and correct in all material respects as of such certain date), in each case
except as contemplated or permitted by the Merger Agreement.
SECTION 3. EFFECT ON MERGER AGREEMENT. Except as otherwise
specifically provided herein, the Merger Agreement shall not be amended but
shall remain in full force and effect.
SECTION 4. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REFERENCE TO CONTRACT OF LAW PRINCIPLES OTHER THAN THOSE DIRECTING NEW
YORK LAW) EXCEPT TO THE EXTENT MANDATORILY GOVERNED BY THE LAWS OF THE STATE OF
COLORADO.
SECTION 5. COUNTERPARTS. This Amendment may be signed in one or more
counterparts, each of which shall be an original but all of which, taken
together, shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
SUN HEALTHCARE GROUP, INC.
By: /s/ Robert D. Woltil
----------------------------------------------
Name: Robert D. Woltil
Title: Senior Vice President for Financial
Services and Chief Financial Officer
PEACH ACQUISITION CORPORATION
By: /s/ Robert D. Woltil
----------------------------------------------
Name: Robert D. Woltil
Title: Vice President
RETIREMENT CARE ASSOCIATES, INC.
By: /s/ Christopher F. Brogdon
----------------------------------------------
Name: Christopher F. Brogdon
Title: President and Chief Executive Officer
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EXHIBIT 2.2
EXECUTION COPY
AMENDMENT NO. 1 TO THE
STOCKHOLDERS STOCK OPTION AND PROXY AGREEMENT
THIS AMENDMENT NO. 1 to the STOCKHOLDERS STOCK OPTION AND PROXY
AGREEMENT, dated as of February 17, 1997 (the "AGREEMENT," capitalized terms
used but not otherwise defined herein are used herein as therein defined),
among SUN HEALTHCARE GROUP, INC., a Delaware corporation ("PARENT"), and each
other person and entity listed on the signature pages hereof (each, a
"STOCKHOLDER"), is made this 25th day of November, 1997 by and among Parent and
each Stockholder.
W I T N E S S E T H:
WHEREAS, Parent, Merger Sub, and the Company desire to amend the
Merger Agreement as provided in Amendment No. 3 thereto dated of even date
herewith; and
WHEREAS, in connection therewith Parent and each Stockholder desire to
amend the Agreement as provided herein.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
SECTION 1: AMENDMENT TO AGREEMENT. The Agreement is hereby amended
as follows:
(a) Section 1.01 of the Agreement is hereby amended and restated in
its entirety as follows:
"SECTION 1.01. GRANT OF OPTIONS. Each Stockholder
hereby grants to Parent an irrevocable option (each, an
"OPTION") to purchase such Stockholder's Shares at (i) a
price per share of Company Common Stock equal to $10.00 (the
"COMMON PURCHASE PRICE"), (ii) a price per share of AA
Preferred equal to $10.00 (the "AA PURCHASE PRICE"), and
(iii) a price per share of F Preferred equal to $9.00 (the "F
PURCHASE PRICE" and, together with the Common Purchase
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Price and the AA Purchase Price, the "PURCHASE PRICE"). Each
Option shall expire if (i) such Option is not exercised prior
to the close of business on the 14th day following
termination of the Merger Agreement, or (ii) if the Merger
Agreement is terminated pursuant to Section 9.01(c) thereof
or terminated or terminable pursuant to Section 9.01(h)."
SECTION 2. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each
Stockholder, severally and not jointly, hereby represents and warrants to
Parent that: Such Stockholder has all necessary power and authority (corporate
or otherwise) to execute and deliver this Amendment, to perform its obligations
under the Agreement as amended hereby and to consummate the transactions
contemplated hereby. The execution and delivery of this Amendment by such
Stockholder and the consummation by such Stockholder of the transactions
contemplated by the Agreement as amended hereby have been duly and validly
authorized by all necessary action (corporate or otherwise) on the part of such
Stockholder. This Amendment has been duly executed and delivered by such
Stockholder and, assuming the due authorization, execution and delivery by
Parent, constitutes the legal, valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its terms.
(b) REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Parent
and Merger Sub hereby jointly and severally represent and warrant to each
Stockholder that: Parent and Merger Sub have all necessary corporate power and
authority to execute and deliver this Amendment, to perform their respective
obligations under the Agreement as amended hereby and to consummate the
transactions contemplated hereby. The execution and delivery of this Amendment
by Parent and Merger Sub and the consummation by Parent and Merger Sub of the
transactions contemplated by the Merger Agreement as amended hereby have been
duly and validly authorized by all necessary corporate action (other than
stockholder approval as described in the Merger Agreement). This Amendment has
been duly executed and delivered by Parent and Merger Sub and, assuming the due
authorization, execution and delivery by the Company, constitutes the legal,
valid and binding obligation of Parent and Merger Sub, enforceable against
Parent and Merger Sub in accordance with its terms.
SECTION 3. EFFECT ON AGREEMENT. Except as otherwise specifically
provided herein, the Agreement shall not be amended but shall remain in full
force and effect.
SECTION 4. COUNTERPARTS. This Amendment may be signed in one or more
counterparts, each of which shall be an original but all of which, taken
together, shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
SUN HEALTHCARE GROUP, INC.
By: /s/ Robert D. Woltil
-------------------------------------------
Name: Robert D. Woltil
Title: Senior Vice President for Financial
Services and Chief Financial Officer
STOCKHOLDERS
/s/ Chris Brogdon
-------------------------------------------
Chris Brogdon
/s/ Connie Brogdon
-------------------------------------------
Connie Brogdon
/s/ Edward E. Lane
-------------------------------------------
Edward E. Lane
/s/ Darrell C. Tucker
-------------------------------------------
Darrell C. Tucker
WINTER HAVEN HOMES, INC.
By: /s/ Edward E. Lane
-------------------------------------------
Name: Edward E. Lane
Title: President
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EXHIBIT 99.1
CONTACT: Phyllis Goodman (media)
Majorie Goldstein (investors)
505-821-3355
SUN HEALTHCARE GROUP AND RETIREMENT CARE ASSOCIATES
AMEND MERGER AGREEMENT
Albuquerque, N.M., and Atlanta, Ga., Nov. 26, 1997 - Sun Healthcare Group, Inc.
(NYSE:SHG) and Retirement Care Associates, Inc. (NYSE:RCA) announced today that
they have amended the terms of their merger agreement. The principal effect of
the amendment is to adjust the exchange ratio. The ratio will now be calculated
based on a fixed value of $10 for each outstanding share of RCA common stock,
subject to a 10 percent collar, centered on a $22 share price for Sun common
stock. Accordingly, the number of shares of Sun common stock that will be
issued for each share of RCA common stock is changed from 0.520 to between
0.413 and 0.505, depending upon the average closing price of Sun's common stock
during the period specified in the agreement. The amendment also modifies some
of the conditions to provide greater certainty of closing of the transaction.
The boards of directors of Sun and of RCA have each approved the merger
agreement amendment.
Sun also announced that it has reached an agreement in principle to
settle the pending class actions against RCA and its management for $9.0
million. The settlement is contingent on closing of the merger transaction.
Sun originally entered into separate merger agreements with RCA and
Contour Medical, Inc. (Nasdaq SmallCap:CTMI) on Feb. 17, 1997. The parties
amended the terms of the RCA agreement on May 27, 1997, and both the RCA and
the Contour agreements on Aug. 21, 1997.
RCA owns approximately 65 percent of the outstanding shares of
Contour. There have been no changes in the financial terms of the Contour
merger agreement, which provides for the payment of cash and/or stock
consideration with a value of $8.50 for each share of Contour common stock.
Sun's merger agreement with Contour has been amended primarily to match the RCA
amendment in extending the date after which either party may freely terminate
the agreement from Nov. 30, 1997 (or, under certain circumstances, Dec. 31,
1997) to March 31, 1998. The parties contemplate closing both transactions in
the first quarter of 1998.
Closing of the transactions is subject to the satisfaction of
customary conditions. The RCA acquisition is intended to be accounted for as a
pooling of interests. The Contour acquisition is intended to be accounted for
as a purchase.
Headquartered in Albuquerque, N.M., Sun Healthcare Group, Inc., is a
diversified international long-term care provider. Sun companies operate
long-term care facilities and
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pharmacy services across the United States, and in the United Kingdom,
Australia and Spain. Sun subsidiaries also provide therapy services in the
United States, fulfill the medical supply needs of nursing homes, and offer a
comprehensive array of ancillary services for the healthcare industry.
Atlanta, Ga.-based Retirement Care Associates, Inc. operates long-term
care, independent and assisted living facilities located primarily in the
southeastern United States. Contour Medical, Inc. is a national provider of
medical supplies for the long-term care industry.
Except for historical information, all other matters in this press
release are forward-looking statements that involve risks and uncertainties as
detailed from time to time in the company's SEC filings, including Sun's annual
report on form 10-K for the fiscal year ended Dec. 31, 1996.
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