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EXHIBIT 2.1
AMENDMENT NO. 2 TO THE
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AMENDMENT NO. 2 (this "Amendment") 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 (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 21st day of August, 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 interest
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 agree as follows:
SECTION 1. Amendment to Merger Agreement. The Merger Agreement is
hereby amended as follows:
(a) The definitions 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:
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"COMPANY DISCLOSURE SCHEDULE" shall mean the disclosure
schedule entitled "Company Disclosure Schedule of Retirement Care
Associates, Inc. Re: Project Peach" dated February 17, 1997,
delivered by the Company to Paraent prior to the execution of this
Agreement, as amended by Schedules I, II, and III to Amendment No. 1 to
this Agreement, and as further supplemented by Schedule I to Amendment
No. 2 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
business, prospects, assets (including intangible assets), liabilities
(contingent or otherwise), condition (financial or otherwise) or
results of operations of the Company and the Company Subsidiaries taken
as a whole; provided, however, that no such change in or effect on the
business of the Company and the Company Subsidiaries shall constitute a
"Company Material Adverse Effect" unless such change or effect
has, or could reasonably be expected to have, individually or in the
aggregate, an effect of more than $10,000,000 on the assets,
liabilities or results of operations of the Company for one or more
financial reporting periods, exclusive of any change or effect that
results from any of the matters described in the Company Disclosure
Schedule."
(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) 0.520 shares of Parent Common
Stock and (ii) in the event that the Series AA Exchange Ratio is
greater than 0.714, 0.520 shares of Parent Common Stock multiplied by
the Adjustment Factor (the lower of such numbers, calculated to three
decimal places, being the "COMMON EXCHANGE RATIO")."
(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. 2 of this Agreement (collectively and as amended
(including any amendment filed after the date of this Agreement
pursuant to Section 6.13 hereof), the "COMPANY REPORTS") and".
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(e) Section 4.08 of the Merger Agreement is hereby amended
by deleting clause (i) thereof and adding the following clause (i) in place
thereof.
"(i) any event or events which, individually or in the aggregate,
constitute a Company Material Adverse Effect, excluding any changes
and effects resulting from changes in economic, regulatory or
political conditions or changes in conditions generally applicable to
the industries in which the Company and the Company Subsidiaries are
involved."
(f) Section 6.01 of the Merger Agreement is hereby amended
by deleting the word "or" immediately preceding clause (m) thereof and adding
the following immediately after clause (m) thereof:
";
(n) institute, file or commence any claim, action, suit or
proceeding."
(g) Section 6.03 of the Merger Agreement is hereby amended
by adding the following sentence immediately following the third sentence
thereof:
"In addition, the Company shall give Parent prompt notice of any suit,
claim, action, proceeding or investigation pending or, to the knowledge
of the Company, threatened, against the Company, any Company Subsidiary
or any Indemnified Party which could reasonably be expected to be
materially adverse to the business, prospects, assets (including
intangible assets), liabilities (contingent or otherwise), condition
(financial or otherwise) or results of operations of the Company and
the Company Subsidiaries, taken as a whole, or to such Indemnified
Party, as the case may be, and the Parent shall have the right to
participate in all negotiations and proceedings with respect to any
such suit, claim, action, proceeding or investigation."
(h) Section 6.08 of the Merger Agreement is hereby amended
and restated in its entirety to read as follows:
"SECTION 6.08. Letters of Accountants. At the written request
of Parent, each of the Company and/or Parent shall use all reasonable
efforts to cause to be delivered to the other "comfort" letters of
their respective independent public accountants, each such letter
dated and delivered as of the date the Registration Statement
shall have become effective and as of the Effective Time, and
addressed to Parent and the Company, respectively, in form and
substance reasonably satisfactory to the recipient thereof and
reasonably customary in scope and substance for letters delivered by
independent public accountants in connection with mergers such as the
Merger contemplated hereby."
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(i) Article VI of the Merger Agreement is hereby amended by
adding the following Sections 6.13 and 6.14 immediately following Section 6.12
thereto.
"SECTION 6.13. Amended Company Reports. Not later than August
25, 1997, the Company shall file with the SEC amendments to its
Quarterly Reports on Form 10-Q for the fiscal quarters ended September
30, 1996, December 31, 1996, and March 31, 1997, containing
financial statements reflecting all of the adjustments described in
Section 4.07(a) of Schedule I to Amendment No. 2 to this Agreement, and
shall promptly deliver to Parent copies of each such amended Form 10-Q
filed with the SEC. The disclosure included in the form of amended
Forms 10-Q that will be filed with the SEC pertaining to the matters
described in Section 4.07(a) of Schedule I to Amendment No. 2 to this
Agreement shall not differ in any respect from the information included
in Section 4.07(a) of Schedule I to Amendment No. 2 to this Agreement
without the prior written consent of Parent. The Company shall not
file with the SEC any amendment to any Company Report without the prior
written consent of Parent unless such amendment is permitted by this
Section 6.13.
SECTION 6.14. Consent of Accountants; Work Papers. (a) The
Company shall use its best efforts to cause Coopers & Xxxxxxx L.L.P. to
consent to the use in the Registration Statement and the Proxy
Statement of their report on the consolidated financial statements of
the Company appearing in the Company 1996 10-K; provided, however, that
the Company shall not be required under this Section 6.14(a) to pay any
amounts claimed by Coopers & Xxxxxxx L.L.P. which, in the Company's
good faith exercise of its reasonable judgment, are subject to valid
claims of set-off or other defenses or counterclaims.
(b) The Company shall use its best efforts to cause Coopers &
Xxxxxxx L.L.P. to make available to Xxxxxx Xxxxxxxx L.L.P. copies of
all materials in Coopers & Xxxxxxx L.L.P.'s possession relating to (i)
Coopers & Xxxxxxx L.L.P.'s audit of the Company's financial statements
for the year ended June 30, 1997, including all work papers, computer
files and other materials prepared by Coopers & Xxxxxxx L.L.P. in
connection with such audit, and (ii) Coopers & Xxxxxxx L.L.P.'s
analysis as to whether any condition exists with respect to the Company
that will preclude "pooling of interests" accounting treatment for the
Merger under applicable United States accounting rules, including all
computer files and other material prepared by Coopers & Xxxxxxx L.L.P.
in connection with such analysis; provided, however, that the Company
shall not be required under this Section 6.14(b) to pay any amounts
claimed by Coopers & Xxxxxxx L.L.P. which, in the Company's good faith
exercise of its reasonable judgment, are subject to valid claims of
set-off or other defenses or counterclaims.
(j) Section 7.04 of the Merger Agreement is hereby amended
and restated in its entirety to read as follow:
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"SECTION 7.04. Directors' and Officers' Indemnification. (a)
The articles of incorporation and bylaws of the Surviving Corporation
shall contain the provisions with respect to indemnification that are
set forth, as of the date of this Agreement, in the articles of
incorporation and bylaws of the Company, which provisions shall not be
amended, repealed or otherwise modified for a period of six years from
the Effective Time in any manner that would affect adversely the rights
thereunder of individuals who at or at any time prior to the Effective
Time were directors or officers of the Company; 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 Governmental Entity or any settlement thereof
("EXCLUDED ITEMS").
(b) From and after the Effective Time, Parent and the
Surviving Corporation shall indemnify and hold harmless each present
and former director and officer of the Company (the "INDEMNIFIED
PARTIES"), against (i) any costs or expenses (including reasonable
attorneys' fees) and (ii) judgments, fines, losses, claims, damages or
liabilities, but excluding from this clause (ii) Excluded Items
(collectively, "COSTS"), incurred in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to
matters existing or occurring at or prior to the Effective Time,
whether asserted or claimed prior to, at or after the Effective Time,
to the extent permitted under the articles of incorporation and bylaws
of the Company or Parent (each as in effect on the Effective Date).
(c) If any Indemnified Party shall seek indemnification
pursuant to this Section 7.04, such Indemnified Party shall give prompt
notice to Parent and the Surviving Corporation, stating the amount of
the Costs, if known, and method of computation thereof. The
obligations and liabilities of Parent and the Surviving Corporation
under this Section 7.04 with respect to Costs arising from any claims,
actions, suits, proceedings or investigations of any third party,
including any Governmental Entity, which are subject to the
indemnification provided for in this Section 7.04 ("THIRD PARTY
CLAIMS") shall be governed by and contingent upon the following
additional terms and conditions: if an Indemnified Party shall receive
notice of any Third Party Claim, the Indemnified Party shall give
Parent and the Surviving Corporation notice of such Third Party Claim
within 10 days of the receipt by the Indemnified Party of such notice;
provided, however, that the failure to provide such notice shall not
release Parent and the Surviving Corporation from any of its
obligations under this Section 7.04 except to the extent Parent and the
Surviving Corporation are materially prejudiced by such failure. Upon
receipt of notice from an Indemnified Party as provided in this Section
7.04(c), Parent and the Surviving
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Corporation shall be entitled to assume and control the defense of such
Third Party Claim at their expense and through counsel of their choice
if they give notice of their intention to do so to the Indemnified
Party within 30 days of the receipt of such notice from the Indemnified
Party. In the event that any Indemnified Party shall seek
indemnification as provided herein, the Indemnified Party shall make
available to Parent and the Surviving Corporation, at Parent's and
the Surviving Corporation's expense, all witnesses, pertinent records,
materials and information in the Indemnified Party's possession or
under the Indemnified Party's control relating thereto as is reasonably
required by Parent and the Surviving Corporation;
(d) Notwithstanding anything set forth in this Section
7.04 to the contrary, (i) if there exists a conflict of interest that
would make it inappropriate for the same counsel to represent both the
Indemnified Party and Parent and the Surviving Corporation in
connection with any Third Party Claim (other than an Excluded Item),
then the Indemnified Party shall be entitled to retain its own counsel
that is reasonably satisfactory to Parent and the Surviving
Corporation at the expense of Parent and the Surviving Corporation,
(ii) if there exists or is reasonably likely to exist a conflict of
interest that would make it inappropriate in the judgment of the
Indemnified Party for the same counsel to represent both the
Indemnified Party and Parent and the Surviving Corporation in
connection with any Excluded Item, then the Indemnified Party shall be
entitled to retain its own counsel at its own expense, and (iii) if
there exists or is reasonably likely to exist a conflict of interest
that would make it inappropriate in the judgment of the counsel
selected by Parent to defend an Excluded Item for the same counsel to
represent both the Indemnified Party and Parent and the Surviving
Corporation in connection with such Excluded Item, then the Indemnified
Party shall retain its own counsel at its own expense.
(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 November 30, 1997; provided,
however, that in the event that the Effective Time has not occurred
by such time (i) due to the failure to satisfy the condition specified
in Section 8.01(b), and as of such time (A) the condition specified in
Section 8.01(a) shall have been satisfied, (B) neither the Company
Stockholders' Meeting nor, if applicable, the Parent Stockholders'
Meeting, shall have been held, and (C) neither Parent nor the Company
shall be entitled to terminate this Agreement under any other paragraph
of this Section 9.01, then such date shall be extended, without any
action on the part of any party hereto, until December 31, 1997; or
(ii) solely due to the failure to satisfy the condition specified in
Section 8.01(d) or 8.01(e), then such date may be extended, at the
optioin of Parent, until December 31, 1997; and provided, further, 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
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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, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company set forth
in this Agreement, or if any representation or warranty of the Company
shall have become untrue, incomplete or incorrect, 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 Agreement No. 1 to this
Agreement or on Schedule I to Amendment No. 2 to this Agrement, Paraent
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(k) of the Merger Agreement is hereby
amended and restated in its entirety to read as follows:
"(k) by the Company, if the Company shall have failed to
obtain the Company Fairness Opinion by the close of business (New York
City time) on August 27, 1997; provided, however, that Parent may
extend such date by up to ten business days by delivering
written notice thereof to the Company; and provided, further that such
termination shall not be effective unless and until the Company shall
have paid to Parent an amount equal to all of Parent's Expenses, as
evidenced by the reasonable documentation, in an amount no greater than
$750,000, by wire transfer of immediately available funds to an account
designated by Parent; or".
(n) Section 9.01 of the Merger Agreement is hereby amended
by deleting the word "or" immediately preceding clause (k) thereof and adding
the following clause (l) immediately following clause (k) thereof:
"(l) by Parent, if the letter of Coopers & Xxxxxxx L.L.P.
required by Item 304(a)(3) of Regulation S-K expresses any material
disagreement with the contents of the Current Report on Form 8-K filed
by the Company with the SEC on August 21, 1997."
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 board
of directors of the
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Company has determined that it is consistent with and in furtherance of the
Company's long-term business strategy and fair to and in the best interests of
the Company's stockholders to amend the Merger Agreement as provided herein.
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 and the amendment of certain Company Reports pursuant to Section
6.13 of the Merger Agrement, as amended hereby, 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 Agrement 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
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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
NEVADA.
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
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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
