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:
(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 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".
2
(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;
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)),
3
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 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."
4
(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:
"(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)."
5
(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:
"(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
6
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. 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.
7
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
