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 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 27th day of May,
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(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 owed 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 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. Except to the
extent set forth on Section 4.24(b) of the Company Disclosure Schedule,
none of Xxxxxxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxx, Xxxxxxx X. Xxxxxx, Xxxxxx
X. Xxxx, Xxxx X. Xxxx or Xxxxxxx Xxxxxxx 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 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)."
(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 payments 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 Xxxxxxxxxxx X. Xxxxxxx, Xxxxxx X.
Xxxx, Xxxxxxx X. Xxxxxx, Xxxxxx X. Xxxx, Xxxx X. Xxxx or Xxxxxxx Xxxxxxx 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) more
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
Schedule 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
Schedule 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 Certification 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 Certification 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 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 binding 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
acknowledges and agrees that (i) Parent shall not have waived any of its rights
or remedies under Sections 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 Certification Date shall have occurred; and (ii) Schedule
IV hereto is not an amendment to 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 Sections 8.03 or 9.01 of the Merger Agreement with respect to
anything set forth 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 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. 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/ Xxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President for Financial
Services and Chief Financial
Officer
PEACH ACQUISITION CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
RETIREMENT CARE ASSOCIATES, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
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