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EXHIBIT 2.1
EXECUTION COPY
AMENDMENT NO. 3 TO THE
AGREEMENT AND PLAN OF REORGANIZATION
THIS AMENDMENT NO. 3 to the AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION, dated as of February 17, 1997, as amended by Amendment No. 1
thereto dated as of May 27, 1997 and Amendment No. 2 thereto dated as of August
21, 1997 (as so amended, the "MERGER AGREEMENT," capitalized terms used but not
otherwise defined herein are used herein as therein defined), among SUN
HEALTHCARE GROUP, INC., a corporation organized and existing under the laws of
the State of Delaware ("PARENT"), PEACH ACQUISITION CORPORATION, a corporation
organized and existing under the laws of the State of Colorado ("MERGER SUB")
and a direct wholly owned subsidiary of Parent, and RETIREMENT CARE ASSOCIATES,
INC., a corporation organized and existing under the laws of the State of
Colorado (the "COMPANY"), is made this 25th day of November, 1997 by and among
Parent, Merger Sub and the Company.
W I T N E S S E T H:
WHEREAS, Parent, Merger Sub and the Company have entered into the
Merger Agreement which provides, upon the terms and subject to the conditions
set forth therein, for the Merger of Merger Sub with and into the Company; and
WHEREAS, the boards of directors of Parent, Merger Sub and the Company
have each determined that it is consistent with and in furtherance of their
respective long-term business strategies and fair to and in the best interests
of their respective stockholders to amend the Merger Agreement as provided
herein.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
SECTION 1. AMENDMENTS TO MERGER AGREEMENT. The Merger Agreement
is hereby amended as follows:
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(a) The definition of "COMPANY DISCLOSURE SCHEDULE" included in
Section 1.01 of the Merger Agreement is hereby amended and restated in its
entirety to read as follows:
""COMPANY DISCLOSURE SCHEDULE" shall mean the disclosure
schedule entitled "Company Disclosure Schedules of Retirement
Care Associates, Inc. Re: Project Peach" dated February 17,
1997, delivered by the Company to Parent prior to the
execution of this Agreement, as amended by Schedules I, II,
and III to Amendment No. 1 to this Agreement and Schedule I
to Amendment No. 2 to this Agreement, and as further
supplemented by Schedule I to Amendment No. 3 to this
Agreement, and forming a part hereof."
(b) The definition of "COMPANY MATERIAL ADVERSE EFFECT" included in
Section 1.01 of the Merger Agreement is hereby amended and restated in its
entirety to read as follows:
""COMPANY MATERIAL ADVERSE EFFECT" shall mean any change in
or effect on the business of the Company and the Company
Subsidiaries that is, or could reasonably be expected to be,
materially adverse to the assets (including intangible
assets) or liabilities (contingent or otherwise) of the
Company and the Company Subsidiaries taken as a whole."
(c) Section 3.01(a) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows:
"(a) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other
than any shares of Company Common Stock to be cancelled
pursuant to Section 3.01(d) and any Dissenting Shares) and
all rights in respect thereof shall forthwith cease to exist
and shall be converted into and become exchangeable for the
lower of (i) the "Pre-Adjustment Exchange Ratio" (as defined
below) and (ii) in the event that the Series AA Exchange
Ratio is greater than 0.714, the Pre-Adjustment Exchange
Ratio multiplied by the Adjustment Factor (the lower of such
numbers being the "COMMON EXCHANGE RATIO"). The
"PRE-ADJUSTMENT EXCHANGE RATIO" shall be that number of
shares of Parent Common Stock equal to the ratio of (x)
$10.00 and (y) the Closing Date Market Price shares of Parent
Common Stock; PROVIDED, HOWEVER, that (i) in the event the
Closing Date Market Price is less than $19.80, the
Pre-Adjustment Exchange Ratio shall be equal to 0.505 shares
of Parent Common Stock, and (ii) in the event the
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Closing Date Market Price is more than $24.20, the
Pre-Adjustment Exchange Ratio shall be equal to 0.413 shares
of Parent Common Stock."
(d) Section 4.07(a) of the Merger Agreement is hereby amended by
deleting clause (A) thereof and adding the following clause (A) in place
thereof:
"(A) with the SEC and the NYSE since June 30, 1994 through the
date of Amendment No. 3 to this Agreement (collectively, the
"COMPANY REPORTS") and".
(e) Section 6.03 of the Agreement is hereby amended by inserting the
following as the penultimate sentence thereof: "The Steering Committee shall
meet by teleconference, upon the Company's or Parent's request, as often as
once every two weeks."
(f) Section 6.13 of the Agreement is hereby amended by inserting the
following as the last sentence thereof: "The Company shall file with the SEC
amendments to the Company Reports relating to issues described in Section 6.13
of the Company Disclosure Schedule if, and to the extent that, Parent and its
independent public accountants reasonably determine such amendments to be
advisable in connection with the filing of the Proxy Statement and/or the
Registration Statement."
(g) Section 7.04(a) of the Agreement is hereby amended by restating
the proviso set forth therein to read as follows: "; PROVIDED, HOWEVER, that
the Surviving Corporation may amend or otherwise modify the provisions with
respect to indemnification that are set forth in its articles of incorporation
and bylaws to exclude any right to indemnification thereunder with respect to
any civil or criminal penalties, damages, fines, disgorgement or other similar
personal liabilities, or any injunctions or consent decrees, incurred, imposed
or entered into, in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
brought or assessed by any United States Federal, state or local or any foreign
governmental, regulatory or administrative authority, agency or commission or
any settlement thereof ("EXCLUDED ITEMS")."
(h) Article VII of the Merger Agreement is hereby amended by the
following Sections 7.13, 7.14 and 7.15 immediately following Section 7.12
thereof:
"SECTION 7.13. COMPANY ANCILLARY SERVICES PENDING
THE CLOSING. (a) Neither Parent nor the Company shall
terminate, and each shall cause its affiliates and the
affiliates of the Principal Stockholders not to terminate,
any contracts relating to the provision or receipt of
pharmacy products or services, therapy or supplies
(collectively, "ANCILLARIES") that the Company, any of its
affiliates or any affiliates of the Principal Stockholders
have entered into with Parent or any of its affiliates;
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PROVIDED, HOWEVER, that upon termination of this Agreement,
any such contract may be terminated by any of the parties
thereto upon the provision of two weeks' written notice to
the other parties thereto.
(b) With regard to the Company's facilities that do
not, as of the date of Amendment No. 3 to this Agreement,
receive all of their required Ancillaries from Parent or
Parent's affiliates, the Company shall, and shall cause its
affiliates and the affiliates of the Principal Stockholders
to, promptly take all reasonable action, including, without
limitation, terminating existing contracts with other
providers of Ancillaries in accordance with the terms thereof
(it being understood that neither the Company nor any other
party to such contract shall be required to terminate such
contract if doing so would constitute a breach thereof or
require a penalty or termination payment by the Company
(unless Parent agrees to make such payment)), to cause all
such facilities to begin receiving all of their required
Ancillaries from Parent or Parent's affiliates as soon as
practicable after the date of Amendment No. 3 to this
Agreement.
SECTION 7.14. COMPANY WORKING CAPITAL FACILITY.
Notwithstanding anything to the contrary herein, the Company
may incur up to $15,000,000 in additional working capital
financing (the "WORKING CAPITAL FACILITY") if the following
conditions are satisfied: (i) Parent is given a reasonable
opportunity in advance to review and comment upon all
documentation related to the Working Capital Facility; (ii)
the terms of the Working Capital Facility require the Company
to provide to Parent copies of all correspondence between the
Company and the providers of the Working Capital Facility;
and (iii) the only permitted use of the Working Capital
Facility is the satisfaction of the Company's ordinary course
working capital requirements. If the conditions described in
the preceding sentence are satisfied, then Parent will agree
to the subordination on terms reasonably satisfactory to
Parent of the Company Note to the Working Capital Facility.
SECTION 7.15. CERTAIN COMPANY LEASES. Prior to the
Effective Time, the Company will cause each of its or any of
the Company Subsidiaries' leases with related parties,
including, without limitation, those disclosed on Section
7.15(a) of the Company Disclosure Schedule, to be amended so
as specify that (i) the monthly rent under such leases shall
equal 1.1 times the
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monthly payments of principal and interest that the lessor
under such lease is obligated to pay under the promissory
note related thereto in effect on the date of Amendment No. 3
to this Agreement (subject only to potential increase in such
principal amount to as much as the maximum amount allowed
under such lease as in effect on the date of Amendment No. 3
to this Agreement) and (ii) such monthly rent shall not be
affected by any pre-payment or refinancing of the amount
evidenced by such promissory note."
(i) Section 8.03(a) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows:
"(a) each of the representations and warranties of
the Company contained in this Agreement that is qualified as
to materiality shall have been true, complete and correct on
the date of Amendment No. 3 to this Agreement (other than
representations and warranties which address matters only as
of a certain date which shall be true, complete and correct
as of such certain date) and each of the representations and
warranties of the Company that is not so qualified shall have
been true, complete and correct in all material respects on
the date of Amendment No. 3 to this Agreement (other than
representations and warranties which address matters only as
of a certain date which shall be true, complete and correct
as of such date), in each case except as contemplated or
permitted by this Agreement."
(j) Section 8.03(e) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows: "(e) [Removed and reserved]".
(k) Section 9.01(b) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows:
"(b) by either Parent or the Company, if the
Effective Time shall not have occurred on or before March 31,
1998; PROVIDED, HOWEVER, that the right to terminate this
Agreement under this Section 9.01(b) shall not be available
to any party whose failure to fulfill any obligation under
this Agreement shall have caused, or resulted in, the failure
of the Effective Time to occur on or before such date."
(l) Section 9.01(g) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows:
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"(g) by Parent, (i) if any representation or
warranty on the part of the Company set forth in this
Agreement shall be untrue, incomplete or incorrect on the
date of Amendment No. 3 to this Agreement or (ii) upon a
breach of any covenant or agreement on the part of the
Company set forth in this Agreement, in either case such that
the conditions set forth in Section 8.03 would not be
satisfied (a "TERMINATING COMPANY BREACH"); PROVIDED,
HOWEVER, that if such Terminating Company Breach (i) is
curable by the Company through the exercise of its reasonable
efforts within 30 days and for so long as the Company
continues to exercise such reasonable efforts, or (ii) has
been disclosed on Schedule I, II or III to Amendment No. 1 to
this Agreement, on Schedule I to Amendment No. 2 to this
Agreement or on Schedule I to Amendment No. 3 to this
Agreement ("DISCLOSED ITEMS"), Parent may not terminate this
Agreement under this Section 9.01(g); and PROVIDED FURTHER
that the preceding proviso shall not in any event be deemed
to extend any date set forth in paragraph (b) of this Section
9.01;".
(m) Section 9.01(j) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows:
"(j) by Parent, if (i) there shall have occurred any
damage to, or destruction of, the tangible property or assets
of the Company or any of the Company Subsidiaries or (ii)
after the date of Amendment No. 3 to this Agreement, any
suit, claim, action, proceeding or investigation shall be
commenced or, to the knowledge of the Company, threatened
against the Company or any Company Subsidiary before any
Governmental Entity (A) by any party other than a
Governmental Entity and relating to patient care matters or
(B) by any Governmental Entity, which in the case of clauses
(i) and (ii), individually or in the aggregate, could
reasonably be expected to have a Company Material Adverse
Effect; PROVIDED, HOWEVER, that Disclosed Items shall not
give Parent the right to terminate this Agreement under this
Section 9.01(j)."
(n) Section 9.01(k) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows: "(k) [Removed and Reserved]".
(o) Section 9.05(f) of the Merger Agreement is hereby amended and
restated in its entirety to read as follows:
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"(f) In the event that the Company shall terminate
this Agreement pursuant to Section 9.01(e), Parent shall pay
to the Company within two business days after such
termination an amount equal to $5,000,000 (against which the
$1,000,000 fee described in Section 9.05(d) shall be
credited) by wire transfer of immediately available funds to
an account designated by the Company."
SECTION 2. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Parent and Merger Sub that: The Company has all
necessary corporate power and authority to execute and deliver this Amendment,
to perform its obligations under the Merger Agreement as amended hereby and to
consummate the transactions contemplated hereby. The execution and delivery of
this Amendment by the Company and the consummation by the Company of the
transactions contemplated by the Merger Agreement as amended hereby have been
duly and validly authorized by all necessary corporate action (other than
stockholder approval as described in the Merger Agreement). This Amendment has
been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Merger Sub, constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms. After giving effect to Section 1(a) of
this Amendment, each of the representations and warranties of the Company
contained in the Merger Agreement that is qualified by materiality is true,
complete and correct on and as of the date hereof as if made at and as of the
date hereof (other than representations and warranties which address matters
only as of a certain date which shall be true, complete and correct as of such
certain date) and each of the representations and warranties that is not so
qualified shall be true, complete and correct in all material respects on and
as of the date hereof as if made at and as of the date hereof (other than
representations and warranties which address matters only as of a certain date
which shall be true, complete and correct in all material respects as of such
certain date), in each case except as contemplated or permitted by the Merger
Agreement.
(b) REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
Parent and Merger Sub hereby jointly and severally represent and warrant to the
Company that: Parent and Merger Sub have all necessary corporate power and
authority to execute and deliver this Amendment, to perform their respective
obligations under the Merger Agreement as amended hereby and to consummate the
transactions contemplated hereby. The execution and delivery of this Amendment
by Parent and Merger Sub and the consummation by Parent and Merger Sub of the
transactions contemplated by the Merger Agreement as amended hereby have been
duly and validly authorized by all necessary corporate action (other than
stockholder approval as described in the Merger Agreement). This Amendment has
been duly executed and delivered by Parent and Merger Sub and, assuming the due
authorization, execution and delivery by the Company, constitutes the legal,
valid and binding obligation of Parent and Merger Sub, enforceable against
Parent and Merger Sub in accordance with its terms. Each of the
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representations and warranties of Parent and Merger Sub contained in the Merger
Agreement that is qualified by materiality is true, complete and correct on and
as of the date hereof as if made at and as of the date hereof (other than
representations and warranties which address matters only as of a certain date
which shall be true, complete and correct as of such certain date) and each of
the representations and warranties that is not so qualified shall be true,
complete and correct in all material respects on and as of the date hereof as
if made at and as of the date hereof (other than representations and warranties
which address matters only as of a certain date which shall be true, complete
and correct in all material respects as of such certain date), in each case
except as contemplated or permitted by the Merger Agreement.
SECTION 3. EFFECT ON MERGER AGREEMENT. Except as otherwise
specifically provided herein, the Merger Agreement shall not be amended but
shall remain in full force and effect.
SECTION 4. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REFERENCE TO CONTRACT OF LAW PRINCIPLES OTHER THAN THOSE DIRECTING NEW
YORK LAW) EXCEPT TO THE EXTENT MANDATORILY GOVERNED BY THE LAWS OF THE STATE OF
COLORADO.
SECTION 5. COUNTERPARTS. This Amendment may be signed in one or more
counterparts, each of which shall be an original but all of which, taken
together, shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
SUN HEALTHCARE GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
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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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