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EXHIBIT 10.17
EXECUTION COPY
AMENDMENT NO. 1 TO AMENDED AND RESTATED PLEDGE AGREEMENT
Amendment No. 1 dated as of January 9, 1998 (this
"Amendment"), to that certain Amended and Restated Pledge Agreement dated July
10, 1997 (the "Amended Pledge Agreement"), among SUN HEALTHCARE GROUP, INC., a
Delaware corporation ("Sun"), PEACH ACQUISITION CORPORATION, a Colorado
corporation and a direct wholly-owned subsidiary of Sun ("Merger Sub"), and
RETIREMENT CARE ASSOCIATES, INC., a Colorado corporation ("RCA").
PRELIMINARY STATEMENTS
1. Sun, Merger Sub and RCA are parties to that certain
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, Amendment No. 2
thereto dated as of August 21, 1997, and Amendment No. 3 thereto dated as of
November 25, 1997 (as amended, the "Merger Agreement").
2. RCA, Capitol Care Management Company, Inc. and Retirement
Management Corporation (collectively, the "Borrowers") are indebted to Sun in
the amount of $9,750,000 pursuant to that certain Amended and Restated
Promissory Note dated July 10, 1997 (the "Amended Note"). The Amended Note is
secured by, among other things, the Amended Pledge Agreement, dated July 10,
1997, by RCA for the benefit of Sun.
3. The Borrowers and HCFP Funding, Inc. ("HCFP"), as lender,
have entered into a Loan and Security Agreement (the "Loan Agreement"). Certain
subsidiaries of RCA, as borrower, and HCFP, as lender, have entered into a Loan
and Security Agreement (the "Affiliated Loan Agreement," the subsidiaries of RCA
party thereto being referred to herein as the "Affiliated Borrowers"). In
connection with the transactions contemplated by the Loan Agreement and the
Affiliated Loan Agreement, the parties hereto have agreed to amend the Amended
Pledge Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises set forth
herein, the parties hereto agree as follows.
SECTION 1. Amended Pledge Agreement. Section 4 of the Amended
Pledge Agreement is amended and restated as follows:
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4. Collateral Reporting. The Pledgor shall deliver to
the Lender on the date hereof and on the tenth calendar day of each
month a borrowing base certificate, attested to by an officer of the
Pledgor, indicating the amount of the Borrowing Base (the "Borrowing
Base Certificate"). As used herein, the term "Borrowing Base" shall
mean an amount equal to (i) one hundred percent (100%) of all Eligible
Accounts minus (ii) the aggregate principal amount of indebtedness
outstanding under (A) the Fidelity Agreement referred to in Section 21
hereof, (B) that certain Promissory Note made by the Pledgor, RMC and
CCMC to the Lender dated as of even date herewith, (C) that certain
Loan and Security Agreement by and among Pledgor, RMC, CCMC and HCFP
Funding, Inc. dated December 15, 1997, and (D) that certain Loan and
Security Agreement by and among certain of Pledgor's subsidiaries and
HCFP Funding, Inc. dated December 15, 1997. As used herein, the term
"Eligible Accounts" shall mean all Accounts of the Pledgor, RMC, CCMC
and the Subsidiary Guarantors (as defined in the Restated Note), but
not of any other subsidiary of the Pledgor, which are not more than one
hundred twenty (120) days past due, which are not due and payable from
any insider, affiliate, officer or shareholder of the Pledgor or any of
its managed or affiliated companies, and which are not classified as
"Pre-Current" in Pledgor's books and records pertaining to the
Collateral.
SECTION 2. Conditions of Effectiveness. Section 1 of this
Amendment shall be effective as of December 15, 1997, when and if Sun shall have
received counterparts of this Amendment duly executed by each of the parties
hereto.
SECTION 3. Reference to and Effect on the Amended Pledge
Agreement.
(a) On or after the date hereof, each reference in the Amended
Pledge Agreement to "this Agreement," "hereunder," "hereof," "herein" or words
of like import referring to the Amended Pledge Agreement, and each reference to
the Amended Pledge Agreement in the Amended Note and each other documents
delivered in connection therewith (collectively, the "Loan Documents") shall
mean and be a reference to the Amended Pledge Agreement as amended hereby.
(b) Except as specifically amended under Section 1 hereof,
each of the Loan Documents shall remain in full force and effect and is hereby
ratified and confirmed.
(c) Each Borrower acknowledges and agrees that, except to the
extent specifically amended under Section 1 hereof, it is obligated to comply
with each and every term, covenant, agreement and condition applicable to it
under each of the Loan Documents. The execution, delivery and effectiveness of
this Amendment shall not otherwise operate as a waiver of any right, remedy or
privilege of Sun under any of the Loan Documents, any and all of which rights,
remedies and privileges are reserved.
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SECTION 4. Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto on separate counterparts,
each of which, when so executed and delivered, shall be an original, but all
such counterparts shall together constitute one and the same agreement.
SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to be duly executed and delivered as of the date first above
written.
SUN HEALTHCARE GROUP, INC.
By:
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Name:
Title:
PEACH ACQUISITION CORPORATION
By:
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Name:
Title:
RETIREMENT CARE ASSOCIATES, INC.
By:
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Name:
Title:
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