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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) NOVEMBER 25, 1997
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SUN HEALTHCARE GROUP, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 1-12040 85-041062
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
101 SUN LANE, N.E., ALBUQUERQUE, NEW MEXICO 87109
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (505) 821-3355
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NOT APPLICABLE
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS
On November 25, 1997, Sun Healthcare Group, Inc. ("Sun") entered into an
amendment (the "RCA 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 "RCA Merger Agreement"), by and among Sun,
Retirement Care Associates, Inc., a Colorado corporation ("RCA"), and Peach
Acquisition Corporation, a Colorado corporation and a wholly-owned subsidiary
of Sun ("RCA Merger Sub"), pursuant to which RCA Merger Agreement RCA Merger
Sub will be merged (the "RCA Merger") with and into RCA.
The RCA Amendment changes the exchange ratio provided for in the RCA
Merger Agreement. RCA shareholders will now receive shares of Sun commom stock
based on a fixed value of $10 for each outstanding share of RCA Common Stock
(based on the average closing price of Sun common stock during the 20 trading
days ending five trading days prior to the Effective Time) (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 RCA Merger. The RCA
Amendment also (i) waives certain representations and warranties which have
become incorrect since the date of the RCA 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 RCA 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 "Contour
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 August
21, 1997 (as amended, the "Contour Merger Agreement"), by and among Sun,
Contour Medical, Inc., a Nevada corporation ("Contour"), and Nectarine
Acquisition Corporation, a Nevada corporation and a wholly-owned subsidiary
of Sun ("Contour Merger Sub"), pursuant to which Contour Merger Agreement
Contour Merger Sub will be merged (the "Contour Merger" and, together with
the RCA Merger, the "Mergers") with and into Contour. The Contour Amendment
contains certain technical structuring provisions and extends the date after
which either party may freely terminate the Contour 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 "RCA Option Agreement"), by and among Sun and certain
principal stockholders of RCA, pursuant to which the RCA Option Agreement was
amended so as to (i) modify the exercise price of the option described
therein to $10.00 per share of RCA common stock, (ii) not allow Sun to
exercise the option thereunder in the event that Sun was in material breach
of the RCA Merger Agreement and (iii) shorten the period during which Sun
may exercise such option from 120 days to 14 days.
On November 25, 1997, Sun also entered into an amendment (the "Contour
Option Amendment" and, together with the RCA Amendment, the Contour Amendment
and the RCA Option Amendment, the "Amendments") to the Stockholders Stock
Option and Proxy Agreement, dated as of February 17, 1997 (the "Contour
Option Agreement"), by and among Sun and RCA, as principal stockholder of
Contour, pursuant to which the Contour Option Agreement was amended so as to
(i) provide certain registration rights to RCA in the event that Sun pays the
exercise price of the option thereunder in shares of Sun common stock, (ii)
not allow Sun to exercise the option thereunder in the event that Sun was in
material breach of the Contour Merger Agreement and (iii) shorten the period
during which Sun may exercise such option from 120 days to 14 days.
The Mergers are 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 Mergers remain subject to other customary
conditions. The Mergers will be completed promptly following stockholder
approval, assuming satisfaction of the other conditions to the Mergers.
The foregoing description is qualified in its entirety by reference to
the full text of the Amendments, which are attached hereto as Exhibits 2.1,
2.2, 2.3 and 2.4 and are incorporated herein by reference.
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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. and Peach
Acquisition Corporation.
2.2 Amendment No. 2 to the Agreement and Plan of Merger and
Reorganization dated as of February 17, 1997 among Sun
Healthcare Group, Inc., Contour Medical, Inc. and Nectarine
Acquisition Corporation.
2.3 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.
2.4 Amendment No. 1 to the Stockholders Stock Option and Proxy
Agreement dated as of February 17, 1997 among Sun Healthcare
Group, Inc. and Retirement Care Associates, Inc.
99.1 Press Release
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUN HEALTHCARE GROUP, INC.
By: /s/ William C. Warrick
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Name: William C. Warrick
Title: Vice President, Corporate Controller
Dated: December 1, 1997
<PAGE>
INDEX TO EXHIBITS
DOCUMENT NO. DOCUMENT SEQUENTIALLY NUMBERED PAGE
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.
and Peach Acquisition Corporation.
2.2 Amendment No. 2 to the Agreement and
Plan of Merger and Reorganization dated
as of February 17, 1997 among Sun
Healthcare Group, Inc., Contour Medical,
Inc. and Nectarine Acquisition Corporation.
2.3 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.
2.4 Amendment No. 1 to the Stockholders Stock
Option and Proxy Agreement dated as of
February 17, 1997 among Sun Healthcare
Group, Inc. and Retirement Care
Associates, Inc.
99.1 Press Release
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EXHIBIT 2.1
EXECUTION COPY
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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:
(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:
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""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 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".
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(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;
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)),
3
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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 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."
4
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(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:
"(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)."
5
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(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:
"(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
6
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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 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
<PAGE>
EXHIBIT 2.2
EXECUTION COPY
--------------
AMENDMENT NO. 2 TO THE
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AMENDMENT NO. 2 (this "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 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"), NECTARINE ACQUISITION CORPORATION, a corporation organized and
existing under the laws of the State of Nevada ("MERGER SUB") and a direct
wholly owned subsidiary of Parent, and CONTOUR MEDICAL, INC., a corporation
organized and existing under the laws of the State of Nevada (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 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 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:
(a) Section 3.01 of the Agreement shall be amended (i) by deleting
the first parenthetical phrase of Section 3.01(a) and adding the following
parenthetical phrase in place thereof: "other than any shares of Company
Common Stock to be cancelled pursuant to Section 3.01(c), any shares of
Company Common Stock to be treated in accordance with Section 3.01(e) and any
Dissenting Shares)"; and (ii) by adding the following new Section 3.01(e)
thereto: "(e) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time and owned by Principal Stockholder
shall remain issued and outstanding; PROVIDED, HOWEVER, that if at the time
the Articles of Merger are filed with the Secretary of State of Nevada either
(i) articles of merger with respect to the RCA Merger have not been filed so
as to cause the RCA Merger to occur immediately after the Merger or (ii)
Parent has not
<PAGE>
undertaken to contribute to Principal Stockholder all shares of Company
Capital Stock obtained by Parent pursuant to the Merger, then the Principal
Stockholder Shares shall not be treated in accordance with this Section
3.01(e) but instead shall be treated in accordance with Section 3.01(a)."
(b) 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."
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.
(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.
2
<PAGE>
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 NEVADA.
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.
3
<PAGE>
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
NECTARINE ACQUISITION CORPORATION
By: /s/ Robert D. Woltil
---------------------------------------------
Name: Robert D. Woltil
Title: Vice President
CONTOUR MEDICAL, INC.
By: /s/ Christopher F. Brogdon
---------------------------------------------
Name: Christopher F. Brogdon
Title: Chairman of the Board
<PAGE>
EXHIBIT 2.3
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 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
<PAGE>
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.
2
<PAGE>
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
<PAGE>
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 RETIREMENT
CARE ASSOCIATES, INC., a Colorado corporation, ("STOCKHOLDER"), is made as of
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. 2 thereto dated of even date
herewith; and
WHEREAS, in connection therewith Parent and 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 by (i)
replacing the phrase "120th" with the phrase "14th" therein and (ii) adding
the following phrase at the end thereof: "or terminated or terminable
pursuant to Section 9.01(h) thereof."
(b) The following is hereby inserted as a new Article V thereto and
the succeeding Articles and Section are hereby appropriately renumbered:
1
<PAGE>
ARTICLE V
REGISTRATION RIGHTS
-------------------
SECTION 5.01. SHELF REGISTRATION. (a) In the event that Parent pays
for the Shares being purchased by delivery of shares of Parent Common Stock,
Parent shall, within three months following the Closing, file with the
Securities and Exchange Commission (the "COMMISSION") a shelf registration
statement on an appropriate form under Rule 415 under the Securities Act, or
any similar rule that may be adopted by the Commission (a "SHELF REGISTRATION
STATEMENT"), relating to the resale of the Parent Shares by the Stockholder
from time to time in accordance with the methods of distribution set forth in
such Shelf Registration Statement and shall use its best efforts to cause
such Shelf Registration Statement to be declared effective under the
Securities Act as soon as practicable thereafter; PROVIDED, HOWEVER, that
Stockholder shall not be entitled to have the Parent Shares held by it
covered by such Shelf Registration Statement unless Stockholder is in
compliance with Section 5.02(f) hereof.
(b) Parent shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be usable by the Stockholders until the
earliest to occur of the following: (A) the two year anniversary of the
Closing; (B) the earliest time at which all the Parent Shares covered by the
Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement; and (C) the earliest time at which, in the written
opinion of independent counsel to Parent, all outstanding Parent Shares held
by persons that are not affiliates of Parent may be resold without
registration under the Securities Act pursuant to Rule 144(k) under the
Securities Act or any successor provision thereto (in any such case, such
period being called the "EFFECTIVENESS PERIOD"). Parent shall be deemed not
to have used its best efforts to keep the Shelf Registration Statement
effective during the requisite period if Parent voluntarily takes any action
that would result in Stockholders of Parent Shares covered thereby not being
able to offer and sell any such Parent Shares during that period, unless (i)
such action is required by applicable law, (ii) the continued effectiveness
of the Shelf Registration Statement would require Parent to disclose a
material financing, acquisition or other corporate transaction, and the Board
of Directors shall have determined in good faith that such disclosure is not
in the best interests of Parent and its stockholders, or (iii) the Board of
Directors shall have determined in good faith that there is a valid business
purpose for such suspension.
SECTION 5.02. REGISTRATION PROCEDURES. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) Parent shall take such action as may be necessary so that (i)
any Shelf Registration Statement and any amendment thereto and any prospectus
forming part thereof and any amendment or supplement thereto (and each report
or other document incorporated therein by reference in each case) complies in
all material respects with the Securities Act and the Exchange Act, and the
respective rules and regulations thereunder, (ii) any Shelf Registration
Statement and any amendment thereto does not, when it becomes effective,
contain an untrue
2
<PAGE>
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Shelf Registration Statement, and
any amendment or supplement to such prospectus, does not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements, in the light of the circumstances under which
they were made, not misleading.
(b) Parent shall advise the Stockholder:
(i) when a Shelf Registration Statement and any amendment
thereto has been filed with the Commission and when the Shelf Registration
Statement or any post-effective amendment thereto has become effective;
(ii) upon the issuance by the Commission of any stop order
suspending effectiveness of the Shelf Registration Statement or the
initiation of any proceedings for that purpose;
(iii) upon the receipt by Parent of any notification with
respect to the suspension of the qualification of the securities included
therein for sale in any jurisdiction or the initiation of any proceeding
for such purpose; and
(iv) upon the happening of any event that requires the making of
any changes in the Shelf Registration Statement or the prospectus so that,
as of such date, the Shelf Registration Statement and the prospectus do not
contain an untrue statement of a material fact and do not omit to state a
material fact required to be stated therein or necessary to make the
statements therein (in the case of the prospectus, in light of the
circumstances under which they were made) not misleading (which advice
shall be accompanied by an instruction to suspend the use of the prospectus
until the requisite changes have been made).
(c) Parent shall, during the Effectiveness Period, deliver to
Stockholder with respect to a Shelf Registration Statement, without charge,
as many copies of the prospectus (including each preliminary prospectus)
included in such Shelf Registration Statement and any amendment or supplement
thereto as Stockholder may reasonably request; and Parent consents (except
during the continuance of any event described in Section 5.02(b)(iv)) to the
use of the prospectus or any amendment or supplement thereto by Stockholder
in connection with the offering and sale of the Parent Shares covered by the
prospectus or any amendment or supplement thereto during the Effectiveness
Period.
(d) Prior to any offering of Parent Shares pursuant to any Shelf
Registration Statement, Parent shall register or qualify or cooperate with
the Stockholder and its counsel in connection with the registration or
qualification of such Parent Shares for offer and sale under the securities
or blue sky laws of such jurisdictions as any such Stockholders reasonably
request in writing and do any and all other acts or things necessary or
advisable to enable the offer and
3
<PAGE>
sale in such jurisdictions of the Parent Shares covered by such Shelf
Registration Statement; PROVIDED, HOWEVER, that in no event shall Parent be
obligated to (i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be required to so
qualify but for this Section 5.02(d), (ii) file any general consent to
service of process in any jurisdiction where it is not as of the date hereof
then so subject or (iii) subject itself to taxation in any jurisdiction if it
is not so subject.
(e) Upon the occurrence of any event contemplated by Section
5.02(b)(iv) above, Parent shall promptly prepare a post-effective amendment
to any Shelf Registration Statement or an amendment or supplement to the
related prospectus or file any other required document so that, as thereafter
delivered to purchasers of the Parent Shares included therein, the prospectus
will not include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Parent notifies
the Stockholder of the occurrence of any event contemplated by Section
5.02(b)(iv) above, the Stockholder shall suspend the use of the prospectus
until the requisite changes to the prospectus have been made.
(f) Parent may require Stockholder with respect to a Shelf
Registration Statement to furnish to Parent such information regarding the
Stockholder and the distribution of Parent Shares held by the Stockholder as
may be required by applicable law or regulation for inclusion in such Shelf
Registration Statement and Parent may exclude from such registration the
Parent Shares of any Stockholder that fails to furnish such information
within a reasonable time after receiving such request.
(g) Parent will use its best efforts to cause the Parent Shares to
be listed on the New York Stock Exchange or other stock exchange or trading
system on which the Parent Common Stock primarily trades on or prior to the
effective date of any Shelf Registration Statement hereunder."
SECTION 2. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder
hereby represents and warrants to Parent that: 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 Stockholder and the consummation by 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 Stockholder. This Amendment has been duly executed and
delivered by Stockholder and, assuming the due authorization, execution and
delivery by Parent, constitutes the legal, valid and binding obligation of
Stockholder, enforceable against 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
Stockholder that: Parent and
4
<PAGE>
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.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the date first written above.
SUN HEALTHCARE GROUP, INC.
By: /s/ Rober D. Woltil
-------------------------------------------
Name: Robert D. Woltil
Title: Senior Vice President for Financial
Services and Chief Financial Officer
RETIREMENT CARE ASSOCIATES, INC.
By: /s/ Christopher F. Brogdon
-------------------------------------------
Name: Christopher F. Brogdon
Title: President and Chief Executive Officer
<PAGE>
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 O.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
<PAGE>
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 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.
###
