Rule 10b5-1 Sales Plan
This Rule 10b5-1 Sales Plan is entered into on December 11, 2006 (This
"Plan") between DFW Capital Partners, GivenNameL.P. ("Seller") and Xxxxxxxxx &
Company, Inc. ("Broker"), acting as agent for Seller.
Recitals
A. This Sales Plan is entered into between Seller and Broker for the
purpose of establishing a trading plan that complies with the requirements of
Rule 10b5-1(c)(1) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
B. Seller is establishing this Sales Plan in order to permit the orderly
disposition of a portion of Seller's holding of Common Stock, par value $.01 per
share (the "Stock") of Sun Healthcare Group, Inc. (the "Issuer").
Article I
Seller's Representations, Warranties and Covenants
1.1. As of the date hereof, Seller is not aware of any material nonpublic
information concerning the Issuer or its securities. Seller is entering into
this Sales Plan in good faith and not as part of a plan or scheme to evade
compliance with the Federal securities laws.
1.2. The securities to be sold under this Sales Plan are owned free and
clear by Seller and are not subject to any agreement granting any pledge, lien,
mortgage, hypothecation, security interest, charge, option or encumbrance or any
other limitation on disposition, other than (a) those which may have been
entered into between Seller and Broker or imposed by Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), or by Section 16 of
the Exchange Act and (b) the restrictions set forth on Exhibit A.
1.3. While this Sales Plan is in effect, Seller agrees not to enter into or
alter any corresponding or hedging transaction or position with respect to the
securities covered by this Sales Plan (including, without limitation, with
respect to any securities convertible or exchangeable into the Stock) and agrees
not to alter or deviate from the terms of this Sales Plan.
1.4. Seller agrees that Seller shall not, directly or indirectly,
communicate any information relating to the Stock or the Issuer to any employee
of Broker or its affiliates who is involved, directly or indirectly, in
executing this Sales Plan at any time while this Sales Plan is in effect. Any
notice given to Broker pursuant to this Sales Plan shall be given in accordance
with Section 5.5.
1.5. (a) Seller agrees to provide Broker with a certificate dated as of the
date hereof and signed by the Issuer substantially in the form of Exhibit B
hereto prior to commencement of the Plan Sales Period (as defined below).
(b) Seller agrees to notify Broker's compliance office by telephone at the
number set forth in Section 5.5 below as soon as practicable if Seller becomes
aware of the
occurrence of any legal, contractual or regulatory restriction that is
applicable to Seller or Seller's affiliates, including, without limitation, any
restriction related to a merger or acquisition or a stock offering requiring an
affiliate lock-up, and that would prohibit any sale pursuant to the Sales Plan
(other than any such restriction relating to Seller's possession or alleged
possession of material nonpublic information about the Issuer or its
securities). Such notice shall indicate the anticipated duration of the
restriction, but shall not include any other information about the nature of the
restriction or its applicability to Seller and shall not in any way communicate
any material nonpublic information about the Issuer or its securities to Broker.
1.6. The execution and delivery of this Sales Plan by Seller and the
transactions contemplated by this Sales Plan will not contravene any provision
of applicable law or any agreement or other instrument binding on Seller or any
of Seller's affiliates or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over Seller or Seller's affiliates.
1.7. Seller has consulted with Seller's own advisors as to the legal, tax,
business, financial and related aspects of, and has not relied upon Broker or
any person affiliated with Broker in connection with, Seller's adoption and
implementation of this Sales Plan. Seller acknowledges that Broker is not acting
as a fiduciary of or an advisor to Seller.
1.8. Seller agrees, until this Sales Plan has been terminated, that Seller
shall not (i) enter into a binding contract with respect to the purchase or sale
of Stock with another broker, dealer or financial institution (each, a
"Financial Institution"), (ii) instruct another Financial Institution to
purchase or sell Stock, or (iii) adopt a plan for trading with respect to Stock
other than this Sales Plan.
1.9. (a) Seller agrees to make all filings, if any, required under Sections
13(d), 13(g) and 16 of the Exchange Act in a timely manner, to the extent any
such filings are applicable to Seller.
(b) Seller agrees that Seller shall at all times during the Plan Sales
Period, in connection with the performance of this Sales Plan, comply with all
applicable laws, including, without limitation, Section 16 of the Exchange Act
and the rules and regulations promulgated thereunder.
1.10. (a) Seller represents and warrants that the Stock to be sold pursuant
to this Sales Plan is currently eligible for sale without any restrictions such
as under Rule 144.
(b) Seller acknowledges and agrees that Seller does not have, and shall not
attempt to exercise, any influence over how, when or whether to effect sales of
Stock pursuant to this Sales Plan.
Article II
Implementation of the Sales Plan
2.1. Seller hereby appoints Broker as its agent to sell shares of Stock as
described on Exhibit A of this Plan ("Trading Formula"). Subject to such terms
and conditions, Broker hereby accepts such appointment. The resale of the shares
is currently registered pursuant to a
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registration statement which has been filed by the Issuer under the Securities
Act of 1933, as amended. If sales are made pursuant to Rule 144 of the
Securities Act because use of the resale prospectus relating to the Stock has
been suspended, Broker agrees to conduct sales pursuant to this Sales Plan in
accordance with the manner-of-sale requirement of Rule 144 under the Securities
Act and in no event shall Broker effect any sale if such sale would exceed the
then-applicable limitation on the amount of securities sold under Rule 144,
assuming Broker's sales pursuant to this Sales Plan are the only sales subject
to that limitation.
2.2. Broker is authorized to begin selling Stock pursuant to this Sales
Plan on the 31st calendar day after the date of the final prospectus supplement
(the "Final Prospectus Supplement") for the public offering of common stock by
the Issuer in December 2006 (the "Commencement Date") and shall cease selling
Stock on the earliest to occur of (i) the date on which Broker is required to
suspend or terminate sales under the Sales Plan pursuant to Section 3.1 below,
(ii) the date on which Broker receives notice of the dissolution of Seller,
(iii) the date on which the Issuer or any other person publicly announces a
tender or exchange offer with respect to the Stock or a merger, acquisition,
reorganization, recapitalization or comparable transaction affecting the
securities of the Issuer as a result of which the Stock is to be exchanged or
converted into shares of another company, (iv) the date on which Broker receives
notice of the commencement or impending commencement of any proceedings in
respect of or triggered by Seller's bankruptcy or insolvency, and (v) the date
that the aggregate number of shares of Stock sold pursuant to this Sales Plan
reaches 1,000,000 (the "Total Sale Amount"). For purposes hereof, Broker shall
determine the date of the Final Prospectus Supplement solely by reviewing the
copy of the Final Prospectus Supplement, if any, as on file and publicly
available at xxx.xxx.xxx on January 15, 2007. The period of time between the
commencement of sales and the termination of sales under this Sales Plan shall
be the "Plan Sales Period." Notwithstanding the above, if (a) during the period
that begins on the date that is fifteen (15) calendar days plus three (3)
business days before the calendar day immediately preceding the Commencement
Date and ends on the calendar day immediately preceding the Commencement Date,
the Issuer issues an earnings release or announces material news or a material
event relating to Issuer; or (b) prior to the Commencement Date, Issuer
announces that it will release earnings results during the sixteen (16) day
period beginning on the calendar day immediately preceding the Commencement
Date, then the Commencement Date shall instead be deferred to the date which is
sixteen (16) calendar days plus three (3) business days after the date on which
the issuance of the earnings release or the material news or material event
occurs.
2.3. (a) During the Plan Sales Period, Broker shall sell the Stock at such
times, at such prices and in such quantities as Broker determines to be
appropriate in accordance with the terms of this Agreement.
(b) Subject to the restrictions set forth in Section 2.1 above, Broker
shall sell shares of Stock under ordinary principles of best execution at the
then-prevailing market price. Broker will not delegate or transfer execution of
sales to another Financial Institution.
(c) Broker shall, before the close of business on each Sale Day, provide
the individuals identified in Section 5.5(c) below with the amount of shares of
Stock sold, the sales prices of each of such sales and such other information as
they may reasonably require in order
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to permit timely compliance by Seller or its affiliates, as applicable, with the
requirements of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(d) The Total Sale Amount, if applicable, shall be adjusted automatically
on a proportionate basis to take into account any stock split, reverse stock
split or stock dividend with respect to the Stock or any change in
capitalization with respect to the Issuer that occurs during the Plan Sales
Period.
2.4. Broker shall not sell Stock hereunder at any time when:
(i) Broker, in its sole discretion, has determined that a market
disruption, banking moratorium, trading suspension, outbreak or
escalation of hostilities or other crisis or calamity has occurred
that, in Broker's judgment, made it impracticable for Broker to effect
sales of the Stock; or
(ii) Broker, in its sole discretion, has determined that it is
prohibited from doing so by a legal, contractual or regulatory
restriction applicable to it or its affiliates or to Seller or
Seller's affiliates (other than any such restriction relating to
Seller's possession or alleged possession of material nonpublic
information about the Issuer or its securities); or
(iii) Broker, in its sole discretion, has determined that to do
so would materially impact the trading price for the Stock; or
(iv) Broker has received notice from the Seller of the occurrence
of any event contemplated by Section 1.5(b) above; or
(v) Broker has received notice from Seller to terminate the Sales
Plan in accordance with Section 3.1(a) below.
2.5. (a) Seller agrees to deliver the Stock to be sold pursuant to this
Sales Plan (the "Plan Shares") into an account at Broker in the name of and for
the benefit of Seller (the "Plan Account") prior to the commencement of sales
under this Sales Plan.
(b) Broker shall withdraw Stock from the Plan Account only in order to
effect sales of Stock under this Sales Plan.
(c) To the extent that any Stock remains in the Plan Account after the end
of the Plan Sales Period or upon termination of this Sales Plan, Broker agrees
to return such Stock promptly to the Issuer's transfer agent for relegending to
the extent that such Stock would then be subject to transfer restrictions in the
hands of the Seller.
2.6. Broker shall in no event effect any sale under this Sales Plan if the
Stock to be sold is not in the Plan Account.
2.7. Broker may sell Stock on any national securities exchange, in the
over-the-counter market, on an automated trading system or otherwise. Seller
agrees that if Broker is a
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market maker in the Stock at the time that any sale is to be made under this
Sales Plan, Broker may, at its sole discretion, purchase the Stock from Seller
in its capacity as market maker.
Article III
Termination; Amendment of Sales Plan
3.1. (a) This Sales Plan may be suspended or terminated by Seller at any
time upon one business days' prior written notice sent to Broker by overnight
mail and by facsimile at the address and fax number set forth in Section 5.5
below. Seller agrees that Seller shall not suspend or terminate this Sales Plan
except upon consultation with Seller's own legal advisors.
(b) This Sales Plan shall be suspended if Broker receives notice from the
Issuer of the occurrence of any event contemplated by Section 1.5(b) above.
(c) Notwithstanding anything else in this Sales Plan, only if sales are
made pursuant to Rule 144 of the Securities Act because use of the resale
prospectus relating to the Stock has been suspended, the Broker shall not be
obligated to sell Stock pursuant to this Sales Plan at any time that Broker
reasonably believes that Seller is not in compliance with Rule 144(h) of the
Securities Act.
3.2. Seller agrees that Broker will execute this Sales Plan in accordance
with its terms and will not be required to suspend or terminate any sales of the
Stock unless Broker has received notice from Seller or the Issuer in accordance
with Section 3.1 above at least one business day prior to the date on which this
Sales Plan is to be suspended or terminated.
3.3. This Sales Plan may be amended by Seller only upon the written consent
of Broker and receipt by Broker of the following documents, each dated as of the
date of such amendment:
(i) a representation signed by the Issuer substantially in the
form of Exhibit B hereto;
(ii) a certificate signed by Seller certifying that the
representations and warranties of Seller contained in this Sales Plan
are true at and as of the date of such certificate as if made at and
as of such date; and
(iii) a seller representation letter completed and executed by
Seller substantially in the form of Exhibit C hereto.
Article IV
Indemnification; Limitation of Liability
4.1. Seller agrees to indemnify and hold harmless Broker and its directors,
officers, employees, agents and affiliates from and against all claims, losses,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim): (i) arising out of or attributable to any breach by
Seller of this Plan (including Seller's representations and warranties in this
Plan); or (ii) any violation by Seller of applicable laws or regulations;
provided, however, that Seller shall
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not be liable to Broker or any of its directors, officers, employees, agents or
affiliates for special, indirect, punitive, exemplary or consequential damages,
or incidental losses or damages of any kind, even if advised of the possibility
of such losses or damages or if such losses or damages could have been
reasonably foreseen. This indemnification will survive termination of this Plan.
4.2. Notwithstanding any other provision of this Plan, neither Broker nor
any of its directors, officers, employees, agents or affiliates shall be liable
to Client or any other person or entity: (i) as a result of actions taken or not
taken by any of them under this Plan, except in the case of a liability
resulting from Broker's gross negligence or willful misconduct; (ii) for
special, indirect, punitive, exemplary or consequential damages, or incidental
losses or damages of any kind, even if advised of the possibility of such losses
or damages or if such losses or damages could have been reasonably foreseen; or
(iii) for any failure to perform or to cease performance or any delay in
performance that results from a cause or circumstance that is beyond Broker's
reasonable control, including but not limited to failure of electronic or
mechanical equipment, strikes, failure of common carrier or utility systems,
severe weather, market disruptions or other causes commonly known as "acts of
God."
Article V
General
5.1. Proceeds from each sale of Stock effected under the Sales Plan will be
delivered as such proceeds become available to the Seller at an account number
provided to Broker in accordance with Section 5.5 below on a normal three-day
settlement basis less any commission to be paid to Broker, provided that any
commission hereunder shall be not greater than $.06 per share of Stock sold. No
other commissions, account maintenance fees or other fees for execution of
transactions under this Sales Plan shall be payable by Seller to Broker.
5.2. Broker is expressly not authorized to pledge, lend, rehypothecate or
otherwise transfer shares of Stock from the Plan Account or to borrow or
purchase shares of Stock in order to complete any sale on behalf of Seller
pursuant to this Sales Plan. Notwithstanding Section 4.1 above, Seller will not
be responsible for any expense or loss which Broker may sustain relating to
borrowing or purchase of shares of the Stock in contravention of this Sales
Plan, including any expense or loss Broker may sustain as a result of its
inability to borrow or purchase shares of the Stock to complete its delivery
obligation. Seller expressly does not grant Broker any security interest in,
lien on or right of set-off with respect to shares of Stock in the Plan Account.
Seller under no circumstances shall be required to deposit cash or other
collateral in the Plan Account.
5.3. Seller and Broker acknowledge and agree that this Sales Plan is a
"securities contract," as such term is defined in Section 741(7) of Title 11 of
the United States Code (the "Bankruptcy Code"), entitled to all of the
protections given such contracts under the Bankruptcy Code.
5.4. This Sales Plan constitutes the entire agreement between the parties
with respect to this Sales Plan and supercedes any prior agreements or
understandings with regard to the Sales Plan. If requested, Seller shall execute
a standard form account agreement with Broker, but in the event of conflict
between any provision of such standard form account agreement and this Sales
Plan, the provisions of this Sales Plan shall control.
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5.5. (a) All notices to Broker under this Sales Plan shall be given to
Broker's compliance office in the manner specified by this Sales Plan by
telephone at (000)000-0000, by facsimile at (000)000-0000 or by courier to the
address below:
Xxxxxxxxx & Company, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxx
(b) All notices to Seller under this Sales Plan shall be given to Seller in
the manner specified by this Sales Plan by telephone c/o Xxxxx X. Xxxxxxx at
(000) 000-0000, by facsimile at (000) 000-0000 or by air courier to the address
below:
DFW Capital Partners, L.P.
000 Xxxxx X. Xxxx Boulevard
Glenpointe Centre East
5th Floor
Teaneck, NJ 07666
(c) All reports of sales by Broker shall be given each Sale Day by the most
expeditious means to each of:
DFW Capital Partners, L.P.
000 Xxxxx X. Xxxx Boulevard
Glenpointe Centre Xxxx
0xx Xxxxx
Xxxxxxx, XX 00000
Email: xxxxxxxx@xxxxxxxxxx.xxx
And to
Sun HealthcareGroup, Inc.
Attn: Xxxxxxx Xxxx, Esq.
Fax 000-000-0000
Email: xxxx.xxxx@xxxx.xxx
(d) All such notices and communications may be directed to such other or
additional persons or such other addresses for any party or person as may be
specified by like notice.
5.7. This Sales Plan may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
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5.8. If any provision of this Sales Plan is or becomes inconsistent with
any applicable present or future law, rule or regulation, that provision will be
deemed modified or, if necessary, rescinded in order to comply with the relevant
law, rule or regulation. All other provisions of this Sales Plan will continue
and remain in full force and effect.
5.9. This Sales Plan shall be governed by and construed in accordance with
the internal laws of the State of placeStateNew York and may be modified or
amended only by a writing signed by the parties hereto.
[Remainder of Page Intentionally Left Blank - Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned have signed this Sales Plan as of the
date first written above.
DFW CAPITAL PARTNERS, L.P.
By: Capital Partners - G.P., L.P.
By: /s/Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
Title: General Partner
XXXXXXXXX & COMPANY, INC.
By: /s/Xxxxxxx Xxxxx
-----------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Director
