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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: May 27, 1997
(Date of earliest event reported)
RETIREMENT CARE ASSOCIATES, INC.
(Exact name of registrant as specified in its charter)
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COLORADO 1-14114 43-1441789
(State or other jurisdiction of (Commission file number) (I.R.S. Employer Identification No.)
incorporation or organization)
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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 May 27, 1997, Retirement Care Associates, Inc. (the "Company")
entered into an amendment (the "Amendment") to the Agreement and Plan of Merger
and Reorganization (the "Merger Agreement") by and among Sun Healthcare Group,
Inc., a Delaware corporation ("Sun"), Peach Acquisition Corporation, a Colorado
corporation and wholly-owned subsidiary of Sun ("Sun Merger Sub"), and the
Company, pursuant to which Sun Merger Sub will be merged with and into the
Company (the "Merger").
The Amendment (a) changes the exchange ratio provided for in the Merger
Agreement such that the Company's shareholders will now receive 0.68265 shares
instead of 0.6625 shares of Sun common stock for each share of the Company's
common stock owned by them on the effective date of the Merger; (b) eliminates a
provision in the Merger Agreement which granted to Christopher F. Brogdon,
Connie Brogdon, Edward E. Lane, Darrell C. Tucker and Winter Haven Homes, Inc.
an option to purchase the shares of In-House Rehab Corporation (formerly known
as Perennial Development Corporation)("In-House") owned by the Company (the "In-
House Shares") at a negotiated price not to exceed the book value thereof; (c)
for a period of 24 months following the effective time of the Merger, (i)
prohibits Sun from selling the In- House Shares, subject to certain exceptions,
or acquiring additional shares of the capital stock of In-House, and (ii)
requires Sun to vote the In-House Shares with In-House's management for the
election of director candidates; and (d) adds to the Merger Agreement additional
representations, warranties and covenants with respect to the Company's accounts
receivable and accounts payable.
The foregoing description is qualified in its entirety by reference to
the full text of the Amendment, attached hereto as Exhibit 2.1 and incorporated
herein by this reference.
Following the execution of the Amendment, the Company and Sun filed
with the Securities and Exchange Commission (the "SEC"), on a confidential
basis, a preliminary proxy statement with respect to the Merger, and Sun and
Contour Medical, Inc. ("Contour") filed with the SEC, on a confidential basis, a
preliminary information statement with respect to the proposed merger of a
wholly-owned subsidiary of Sun with and into Contour.
The Merger is subject to the approval of the shareholders of the
Company and the stockholders of Sun and will be considered at separate meetings
now anticipated to occur in the third quarter of calendar year 1997. The Merger
remains subject to other customary conditions. The Merger will be effective
promptly following shareholder approval, assuming satisfaction of other
conditions to the Merger.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits. The following is a list of the Exhibits attached
hereto.
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Exhibit No. 2.1 Amendment No. 1 to the Agreement and Plan of Merger and
Reorganization dated as of February 17, 1997 among Sun
Healthcare Group, Inc., Peach Acquisition Corporation and
Retirement Care Associates, Inc.
Exhibit No. 99.1 Joint 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/ Phillip M. Rees
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Phillip M. Rees
Its General Counsel and
Assistant Secretary
Dated as of May 27, 1997.
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION PAGE
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2.1 Amendment No. 1 to the Agreement and Plan of
Merger and Reorganization dated as of February
17, 1997 among Sun Healthcare Group, Inc., Peach
Acquisition Corporation and Retirement Care
Associates, Inc.
99.1 Joint Press Release
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EXHIBIT 2.1
AMENDMENT NO. 1 TO THE
AGREEMENT AND PLAN OF REORGANIZATION
THIS AMENDMENT NO 1. to the AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION, dated as of February 17, 1997 (the "Merger Agrement,"
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
27th day of May, 1997 by and among Parent, Merger Sub and the Company.
W I T N E S E T H:
WHEREAS, Parent, Merger Sub, and the Company desire 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 acknowledge, 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:
(a) 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) 0.68265 shares of Parent Common Stock and (ii) in the event that the
Series AA Exchange Ratio is greater than 0.714, 0.68265 shares of Parent
Common Stock multiplied by the Adjustment Factor (the lower of such numbers
being the "Common Exchange Ratio");
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(b) Article IV of the Merger Agreement is hereby amended by adding
the following Section 4.24 immediately following Section 4.23 thereof:
"SECTION 4.24. Receivables and Payables. (a) Section 4.24(a) of the
Company Disclosure Schedule sets forth an aged list of the accounts
receivable of the Company and the Company Subsidiaries as of April 30, 1997,
separately showing the amount of receivables held by the Company and each
Company Subsidiary that as of such date had been outstanding (i) 30 days or
less, (ii) 31 to 60 days, (iii) 61 to 90 days, (iv) 91 to 120 days and (v)
more than 120 days, and separately showing as to each of the foregoing
categories the amount of such receivables that are owned by affiliates of
the Company. Except to the extent, if any, reserved against in the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997
(the "Company 10-Q"), all accounts receivable reflected in the Company 10-Q
arose in, and the Company's accounts receivable existing at the Effective
Time will have arisen in, the ordinary course of business, representing bona
fide claims of the Company against debtors for sales made, services
performed or other charges that to the best of the Company's knowledge are
not subject to valid claims of set-off or other defenses or counterclaims
and will be collectible in the ordinary course of business without resort to
litigation or extraordinary collection practices.
(b) Section 4.24(b) of the Company Disclosure Schedule sets forth
an aged list of the accounts payable of the Company and the Company
Subsidiaries as of April 30, 1997, separately showing the amount of payables
owed by the Company and each Company Subsidiary that as of such date has
been outstanding (i) 30 days or less, (ii) 31 to 60 days, (iii) 61 to 90
days, (iv) 91 to 120 days and (v) more than 120 days. Except to the extent
set forth on Section 4.24(b) of the Company Disclosure Schedule, not of
Christopher F. Brogdon, Edward B. Lane, Darrell C. Tucker, Philip M. Rees,
John R. Mack or Jeffrey Andrews has been informed by any creditor that any
account payable in excess of $35,000 is past due and that as a result of
such past due account such creditor has interrupt, suspended or terminated,
or threatened to interrupt, suspend or terminate, the provision of goods or
services to the Company or any Company Subsidiary (other than where the
Company has arranged for an alternate supplier of such goods or services on
terms no less favorable ot the Company than those previously available from
the terminated supplier prior to such termination.")
(c) Clause (iv) of Section 6.01(c) of the Merger Agreement is hereby
amended and restated in its entirety to read as follows:
"(iv) enter into any contract or agreement (A) relating to the
provision or receipt of pharmacy products or services, therapy or
supplies, or (B) after May 27, 1997 involving annual payment of more than
$25,000, which, in the case of either (A) or (B), is not cancelable without
penalty upon not more than 60 days notice;"
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(d) Section 6.04 of the Merger Agreement is hereby amended by
deleting the word "and" immediately preceding clause (v) thereof and adding the
following clause (vi) immediately following clause (v) thereof:
"; and (vi) the receipt by any of Christopher F. Brogdon, Edward E.
Lane, Darrell C. Tucker, Philip M. Rees, John R. Mack or Jeffrey
Andrews of notice from any creditor that any account payable in excess of
$35,000 is past due and that as a result of such past due account such
creditor has interrupted, suspended or terminated, or threatened to
interrupt, suspend or terminate, the provision of goods or services to the
Company or any Company Subsidiary (other than where the Company has arranged
for an alternate supplier of such goods or services on terms no less
favorable to the Company than those previously available from the terminated
supplier prior to such termination)."
(e) Section 7.10 of the Merger Agreement is hereby amended and
restated in its entirety to read as follows:
"SECTION 7.10. In-House Rehab Corporation. For a period of 24 months
after the Effective Time, Parent agrees that it will (i) not permit the
Surviving Corporation to voluntarily sell the shares of capital stock of
In-House Rehab Corporation ("In-House") owned by the Company at the
Effective Time unless such sale is permitted under Section 6.07 hereof, (ii)
not purchase, nor permit the Surviving Corporation to purchase any
additional shares of capital stock of In-House; and (iii) cause the
Surviving Corporation to vote all of the shares of In-House owned by it in
favor of the director candidates nominated by the board of directors of
In-House. Nothing in Section 6.07 or this Section 7.10 shall limit the
Parent's or the Surviving Corporation's ability to (a) tender or sell any of
its shares of capital stock of In-House in connection with a tender offer or
any other transaction or series of related transactions in which a third
party (including a "group" within the meaning of Section 13(d)(3) of the
Exchange Act, but excluding any affiliate of the Parent or the Surviving
Corporation) acquires or becomes the beneficial owner of (i) ore than fifty
percent (50%) of the outstanding voting securities of In-House or the
surviving entity, whether by merger, consolidation, reorganization or other
similar means, or (ii) all or substantially all of the assets of In-House,
(b) sell or exchange any of its shares of capital stock of In-House in
connection with a plan or reorganization pursuant to a bankruptcy
proceeding, or (c) sell its shares of capital stock of In-House to In-House
pursuant to a stock repurchase program."
(f) The Company Disclosure Schedule is hereby amended as follows:
(i) The page of Section 4.03 of the Company Disclosure
Schedule entitled "Retirement Care Associates, Inc. - Warrants
and Convertible Securities Outstanding at February 13, 1997" is hereby
amended and restated in its entirety by Schedule I hereto; and
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(ii) Schedule II hereto is added to the Company Disclosure
Scheudle as Section 4.24 thereto.
(g) Ten days after the Company shall have certified in writing to
Parent that it has provided Parent with all information known to the Company as
of the date of such certificate with respect to the matters set forth on
Scheule III hereto (the "Certification Date"), the Company Disclosure Schedule
shall be amended as follows:
(i) Section 4.03 of the Company Disclosure Schedule shall
be amended from and after the Certificate Date by adding Section
4.03 of Schedule III hereto thereto;
(ii) Section 4.09(g) of the Company Disclosure Schedule
shall be amended from and after the Certificate Date by adding
Section 4.09(g) of Schedule III hereto thereto; and
(iii) Section 7.11 of the Company Disclosure Schedule shall
be amended from and after the Certification Date by adding
Section 7.11 of the Schedule III hereto thereto.
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 biding obligation of the Company,
enforceable against the Company in accordance with its terms. Except as set
forth on Schedules III and IV hereto, 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. The Company acknowledged and agrees that
(i) Parent shall not have waived any of its rights or remedies under Section
8.03 or 9.01 of the Merger Agreement with respect to anything set forth on
Schedule
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III hereto until the Certificate Date shall have occurred; and (ii) Schedule IV
hereto is no an amendment ot Article IV of the Merger Agreement or to the
Company Disclosure Schedule and that Parent has not waived any of its rights or
remedies under Section 8.03 or 9.01 of the Merger Agreement with respect to
anything set fort on Schedule IV hereto.
(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
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 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 as 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 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. 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
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Name: Robert D. Woltil
Title: Senior Vice President for
Financial Services and Chief
Financial Officer
PEACH ACQUISITION CORPORATION
By: /s/ Robert D. Woltil
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Name: Robert D. Woltil
Title: Vice President
RETIREMENT CARE ASSOCIATES, INC.
By: /s/ Christopher F. Brogdon
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Name: Christopher F. Brogdon
Title: President and Chief Executive
Officer
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Schedule I - Attach revised page of Company Disclosure Schedule
entitled "Retirement Care Associates, Inc. - Warrants and
Convertible Securities Outstanding at February 13, 1997"
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EXHIBIT 99.1
[LOGO]
SUN HEALTHCARE GROUP, INC.
101 SUN LANE. NE
ALBUQUERQUE, NEW MEXICO 87109
CONTACT: Majorie Goldstein (investors)
Phyllis Goodman (media)
505-821-3355
SUN HEALTHCARE GROUP AND RETIREMENT CARE ASSOCIATES AMEND
MERGER AGREEMENT
Albuquerque, N.M., May 29, 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 amendment changes the number
of shares of Sun common stock that will be issued for each share of RCA common
stock from 0.6625 to 0.68265, to reflect an agreement for Sun to retain RCA's
ownership interest in In-House Rehab Corporation (OTC:IHRB).
Sun originally entered into merger agreements with RCA and Contour
Medical, Inc. (Nasdaq Small Cap:CTMI) on February 17, 1997, that provided for
Sun to acquire RCA and Contour, a national provider of medical supplies for the
long-term care industry. RCA owns approximately 65 percent of the outstanding
shares of Contour. The amendment does not affect Sun's merger agreement with
Contour.
The original merger agreement called for Sun to sell RCA's ownership
interest in In-House Rehab, which constitutes approximately 3.5 million shares,
for RCA's basis in the stock. The amended agreement now calls for Sun to issue
approximately 350,000 additional shares of Sun common stock to RCA
shareholders, and to retain RCA's ownership interest in In-House Rehab.
The parties contemplate closing both transactions in the third quarter of
1997.
Headquartered in Albuquerque, N.M., Sun Healthcare Group, Inc., is a
diversified international long-term care provider. Sun companies operate
long-term facilities and
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pharmacy services across the United States and in the United Kingdom. Sun
subsidiaries 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 RCA operates 120 long-term care, independent and
assisted living facilities located primarily in the southeastern United States.
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 December 31, 1996.
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