AGREEMENT
EXHIBIT
10.1
AGREEMENT
This
Agreement is dated as of January 17, 2007 (the “Agreement”)
by and
among Sun Healthcare Group, Inc. (“Sun”),
DFW
Capital Partners, L.P. (“DFW”),
Steelhead Investments Ltd., a Cayman Islands exempted company (“Steelhead”)
and,
for purposes of Sections 3 and 4 of this Agreement only, RFE Investment Partners
V, L.P. and RFE VI SBIC, L.P. (collectively, “RFE”).
WHEREAS,
Sun, DFW, RFE and others are parties to that certain Registration Rights
Agreement, dated as of May 16, 2005, as amended as of July 7, 2005 (as
amended, and as amended hereby, the “Registration
Rights Agreement”)
which,
among other things, restricts the transfer of shares of the common stock
of Sun
acquired by DFW, RFE and others in connection with Sun’s acquisition of Peak
Medical Corporation (“Peak”).
WHEREAS,
DFW proposes to sell to Steelhead 1,811,620 shares of the common stock of
Sun
acquired by DFW in connection with Sun’s acquisition of Peak (the “Shares”)
pursuant to an effective registration statement (Commission No. 333-135549)
of
Sun (the “Registration
Statement”)
under
the Securities Act of 1933, as amended, and Sun is willing to consent to
such
sale, notwithstanding the terms of the Registration Rights Agreement, on
the
terms and conditions set forth in this Agreement.
WHEREAS,
Steelhead is willing to make certain agreements set forth in this Agreement
in
order to induce Sun to consent to the sale of the Shares.
NOW,
THEREFORE, in consideration of the foregoing and the premises and agreements
contained in this Agreement, the parties, intending to be legally bound,
hereby
agree as follows:
1. Agreement
to Sell Shares and Consent of Sun.
DFW
agrees to sell the Shares to Steelhead pursuant to the Registration Statement
and Sun hereby consents to such sale by DFW to Steelhead, notwithstanding
any
restrictions thereon contained in the Registration Rights Agreement, and
hereby
waives any such restrictions.
2. Agreements
of Steelhead.
(a) From
the
date of this Agreement until the earlier of December 9, 2008 or an Early
Release Event (as defined below), Steelhead hereby agrees that Steelhead
may
only sell, transfer, pledge, encumber or otherwise dispose of (a “Transfer”)
a
number of the Shares within any three-month period that does not exceed the
Pro
Rata Limit (as defined below). After the earlier of December 9, 2008 or an
Early Release Event, Steelhead may Transfer any of the Shares without
restriction pursuant to this Section 2. Notwithstanding the previous
provisions of this Section 2, in no event shall Steelhead knowingly
Transfer all or any portion of the Shares constituting 2% or more of the
total
shares of the common stock of Sun then outstanding to any one “person” or
“group” (within the meaning of Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”));
provided that this sentence shall not apply after an Early Release Event
and
shall not apply to distributions by Steelhead to its partners, former partners
or a liquidating trust for the benefit thereof.
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(b)
For
purposes of this Section 2, the following terms shall have the following
meanings:
“Pro
Rata Limit”,
as of
any date, is equal to a number of shares of the common stock of Sun equal
to
1.053% of the total number of shares of the common stock of Sun then
outstanding, according to the most recent report or statement filed by Sun
with
the Securities and Exchange Commission.
“Early
Release Event”
shall
be deemed to have occurred upon the earliest of:
(i) a
Change
of Control;
(ii) any
event
(other than a Transfer of shares of common stock of Sun by RFE in accordance
with RFE’s Pro Rata Limit under the Registration Rights Agreement or a Transfer
in which the transferee takes subject to restrictions on resale similar to
those
currently restricting Transfers by RFE that are contained in the Registration
Rights Agreement) pursuant to which RFE is released from the restrictions
on
resale contained in the Registration Rights Agreement; and
(iii) Sun
shall
institute any bankruptcy, insolvency, reorganization, dissolution, liquidation
or similar proceeding relating to itself under the laws of any jurisdiction;
or
Sun shall take any action to authorize any such proceeding; or any such
proceeding shall be instituted against Sun and shall not be dismissed or
discharged within 60 days after its commencement; or Sun shall admit all
of the
material allegations with respect to any such proceeding; or an order for
relief
or similar order shall be entered in any such proceedings; or Sun shall apply
for the appointment of any receiver, trustee or similar officer for itself
or
for all or substantially all of its property; or Sun shall take any action
to
authorize such appointment.
A
“Change
in Control”
shall
be deemed to have occurred if any of the following events occur: (i) any
person or group (within the meaning of Sections 13(d) and 14(d)(2) of the
Exchange Act), other than Steelhead or RFE or a trustee or other fiduciary
holding securities under an employee benefit plan of Sun (an “Acquiring
Person”),
is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of more than 33 1/3% of the then outstanding
voting stock of Sun; (ii) a merger or consolidation of Sun with any other
corporation, other than a merger or consolidation which would result in the
voting securities of Sun outstanding immediately prior thereto continuing
to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 51% of the combined voting power
of
the voting securities of Sun or the surviving entity outstanding immediately
after such merger or consolidation; (iii) a sale or other disposition by
Sun of all or substantially all of Sun’s assets; (iv) during any period of
two (2) consecutive years (commencing December 9, 2005), individuals who at
the beginning of such period constitute the board of directors of Sun and
any
new director (other than a director who is a representative or nominee of
an
Acquiring Person) whose election by the board of directors of Sun or nomination
for election by Sun’s shareholders was approved by a vote of least a majority of
the directors then still in office who either were directors at the beginning
of
the period or whose election or nomination was previously so approved, no
longer
constitute a majority of the board of directors of Sun; or (v) the board of
directors of Sun shall have approved a tender offer or exchange
offer
2
for
all
or a majority of the voting securities of Sun. In addition, notwithstanding
clauses (i)-(v) above, a Change in Control shall not be deemed to have occurred
in the event of a sale or conveyance in which Sun continues as a holding company
of an entity or entities that conduct the business or businesses formerly
conducted by Sun, or any transaction undertaken for the purpose of
reincorporating Sun under the laws of another jurisdiction, if such transaction
does not materially affect the beneficial ownership of Sun’s capital
stock.
(c)
The
restrictions in this Section 2 shall not apply to Transfers to family members,
affiliates, partners, members, former partners or members or shareholders
of
Steelhead
(or
liquidating trusts for the benefit of the foregoing) in private transactions
in
which the transferee agrees to be bound by the provisions of this Section
2 and
will be aggregated with Steelhead and any other transferees for purposes
of
calculating the Pro Rata Limit, if then applicable. For the avoidance of
doubt,
a transferee need not agree to be bound by the provisions of this Section
2 if
the Transfer to such transferee either (i) complies with the Pro Rata Limit
or (ii) occurs when no Pro Rata Limit than applies.
(d)
Any
certificate representing the Shares shall bear a legend in substantially
the
following form until the earlier of December 9, 2008 and an Early Release
Event. Sun shall promptly or shall cause its transfer agent to issue promptly,
after a request by Steelhead following December 9, 2008 or an earlier Early
Release Event, a certificate without such legend.
“UNTIL
DECEMBER 9, 2008 OR UNLESS RELEASED EARLIER, THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS CONTAINED IN AN AGREEMENT,
DATED
JANUARY 17, 2007, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
COMPANY, AND SUCH SECURITIES MAY BE SOLD, TRANSFERRED, PLEDGED, ENCUMBERED
OR
OTHERWISE DISPOSED OF ONLY IN ACCORDANCE WITH THE TERMS OF SUCH
AGREEMENT.”
In
addition, in connection with a Transfer that is in accordance with the Pro
Rata
Limit, Sun shall promptly or shall cause its transfer agent to issue promptly,
after request by Steelhead accompanied by a certificate or other evidence
satisfactory to Sun that the Transfer is in accordance with the Pro Rata
Limit,
a certificate without a legend.
3. Agreements
Regarding RFE.
Each of
Sun and RFE agrees as follows:
(a)
For
purposes of Section 3 of the Registration Rights Agreement, RFE’s Pro Rata Limit
shall be equal to 2.947% of the total number of shares of the common stock
by
Sun then outstanding, according to the most recent report or statement filed
by
Sun with the Securities and Exchange Commission. As of the date hereof, the
total number of shares reported by Sun as being outstanding is
42,881,195.
(b)
In
addition, in connection with a Transfer that is in accordance with RFE’s Pro
Rata Limit, Sun shall promptly or shall cause its transfer agent to issue
promptly, after request by RFE accompanied by a certificate or other evidence
satisfactory to Sun that the Transfer is in accordance with RFE’s Pro Rata
Limit, a certificate without the legend set forth in Section 2(b)(i) of the
Registration Rights Agreement.
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(c) Any event (other than a Transfer of shares of common stock of Sun by
Steelhead in accordance with its Pro Rata Limit or a Transfer in which the
transferee takes subject to restrictions on resale similar to those currently
restricting Transfers by Steelhead that are contained in this Agreement)
pursuant to which Steelhead is released from the restrictions on resale
contained in this Agreement shall constitute an Early Release Event for RFE
under the Registration Rights Agreement.
4. DFW
Status under Agreements.
Sun,
RFE and DFW agree that DFW, upon transfer of the Shares to Steelhead, shall
no
longer have any rights or obligations pursuant to either the Registration
Rights
Agreement or the Stockholders’ Agreement, dated May 16, 2005, as amended as
of July 7, 2005 and September 16, 2005, among Sun, the entities
identified therein as Stockholders (the “Stockholders”)
and
Xxxxx X. Xxxxxxx, as agent for the Stockholders (with the exception of the
rights of the parties to indemnification and contribution pursuant to Section
10
of the Registration Rights Agreement in connection with the Registration
Statement), although the foregoing agreement among Sun, RFE and DFW shall
not
affect rights of DFW or obligations of DFW to Sun pursuant to provisions
of the
Merger Agreement (as such term is defined in the Registration Rights Agreement)
and the Escrow Agreement, dated as of December 9, 2005 (the ‘Escrow
Agreement”),
among
Sun, Xxxxx X. Xxxxxxx, as agent for the Stockholders, and U.S. Trust, N.A.,
as Escrow Agent. DFW and Sun agree that, for purposes of Rule 144 promulgated
under the Securities Act of 1933, DFW acquired the shares of common stock
allocated to DFW under the Escrow Agreement on December 9, 2005.
5. Miscellaneous.
(a) All
notices and other communications hereunder shall be in writing and shall
be
deemed given on the date of delivery if delivered personally by commercial
delivery service, or sent via facsimile (receipt confirmed) to the parties
at
the following addresses or telecopy numbers (or at such other address or
telecopy numbers for a party as shall be specified by like notice):
|
(i)
|
if
to Sun:
|
|
Sun
Healthcare Group, Inc.
00000
Xxx Xxxxxx
Xxxxx
000
Xxxxxx,
Xxxxxxxxxx 00000
Attention:
Xxxxxxx Xxxxxx, Esq.
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
|
| with a copy to: |
|
O’Melveny
& Xxxxx LLP
000
Xxxxx Xxxx Xxxxxx
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxxx Xxxxxxx, Esq.
Telephone:
(000) 000-0000
|
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| Facsimile: (000) 000-0000 |
|
(ii)
|
if
to Steelhead, to:
|
|
c/o
HBK Services XXX000
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx,
Xxxxx 00000
Attention:
Legal (PP)
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
|
| with a copy to: |
| Xxxxxxx
Xxxx & Xxxxx LLP
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx X. Xxxxx, Esq.
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
|
(b) This
Agreement may be executed in one or more counterparts, all of which shall
be
considered one and the same agreement and shall become effective when one
or
more counterparts have been signed by each of the parties and delivered to
the
other parties, it being understood that all parties need not sign the same
counterpart,
(c) This
Agreement (i) constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior agreements
and
understandings, both written and oral, among the parties with respect to
the
subject matter hereof; and (ii) except as otherwise provided herein, is not
intended to confer upon any other person any rights or remedies
hereunder.
(d) In
the
event that any provision of this Agreement, or the application thereof, becomes
or is declared by a court of competent jurisdiction to be illegal, void or
unenforceable, the remainder of this Agreement will continue in full force
and
effect and the application of such provision to other persons or circumstances
will be interpreted so as reasonably to effect the intent of the parties
hereto.
The parties further agree to replace such void or unenforceable provision
of
this Agreement with a valid and enforceable provision that will achieve,
to the
extent possible, the economic, business and other purposes of such void or
unenforceable provision.
(e) The
parties hereto agree that irreparable damage would occur in the event that
any
of the provisions of this Agreement were not performed in accordance with
their
specific terms or were otherwise breached. It is accordingly agreed that
the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction,
this
being in addition to any other remedy to which they are entitled at law or
in
equity.
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(f) This
Agreement shall be governed by and construed in accordance with the laws
of the
State of New York, regardless of the laws that might otherwise govern under
applicable principles of conflicts of law thereof.
(g) The
provisions of this Agreement may be amended upon the written agreement of
the
parties hereto. Any waiver, permit, consent or approval of any kind or character
on the part of any party hereto of any provision or condition of this Agreement
must be made in writing and shall be effective only to the extent specifically
set forth in writing.
(h) No
party
may assign either this Agreement or any of its rights, interests or obligations
hereunder without the prior written approval of the other parties. Subject
to
the preceding sentence, this Agreement shall be binding upon and shall inure
to
the benefit of the parties hereto and their respective successors and permitted
assigns.
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remainder of this page has been intentionally left blank]
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by
their duly authorized respective officers as of the date first above
written.
SUN
HEALTHCARE GROUP, INC.
By:
/s/
XXXXXXX XXXXXXXX
Name:
Xxxxxxx Xxxxxxxx
Title:
Vice President & Treasurer
DFW
CAPITAL PARTNERS, L.P.
By: Capital
Partners - GP, L.P., its
General
Partner
By:
/s/
XXXXX XXXXXXX
Name:
Xxxxx Xxxxxxx
Title:
General Partner
STEELHEAD
INVESTMENTS LTD.
By: HBK
SERVICES LLC,
its
Investment Advisor
By:
/s/
X.
XXXXX XXXXXX, JR.
Name:
X.
Xxxxx Xxxxxx, Jr.
Title:
Authorized Signatory
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For
Purposes of Sections 3 and 4 Only:
RFE
INVESTMENT PARTNERS V, L.P.
By: RFE
Associates V, L.P.,
its
General Partner
By:
/s/
XXXXXXX X. XXXXXX
Name:
Xxxxxxx X. Xxxxxx
Title:
Managing Member
RFE
SBIC,
L.P.
By: RFE
Associates VI, SBIC L.L.C.,
its
General Partner
By: RFE
Investment Partners VI L.P.,
its
Sole
Member
By: RFE
Associates VI, L.L.C.,
its
General Partner
By:
/s/
XXXXXXX X. XXXXXX
Name:
Xxxxxxx X. Xxxxxx
Title:
Managing Member
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