-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VSmNxzdDOh+3JEwBs7htWpleSu/bnDE+K7Ayk8+1OwV64OMQeS8UyPCBK0k3urdf nYPJXHPXKE2PhOY6EGPaHA== 0000950144-97-013125.txt : 19971208 0000950144-97-013125.hdr.sgml : 19971208 ACCESSION NUMBER: 0000950144-97-013125 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19971125 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971205 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RETIREMENT CARE ASSOCIATES INC /CO/ CENTRAL INDEX KEY: 0000798540 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 431441789 STATE OF INCORPORATION: CO FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-14114 FILM NUMBER: 97733401 BUSINESS ADDRESS: STREET 1: 6000 LAKE FORREST DR STE 200 CITY: ATLANTA STATE: GA ZIP: 30328 BUSINESS PHONE: 4042557500 MAIL ADDRESS: STREET 1: 6000 LAKE FORREST DR STREET 2: STE 200 CITY: ATLANTA STATE: GA ZIP: 30328 8-K 1 RETIREMENT CARE ASSOCIATES, INC. 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 - ------------------------------------------------------------------------------- FORM 8-K - ------------------------------------------------------------------------------- CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: November 25, 1997 (Date of earliest event reported) RETIREMENT CARE ASSOCIATES, INC. (Exact name of registrant as specified in its charter) COLORADO 1-14114 43-1441789 (State or other jurisdiction of (Commission file number) (I.R.S. Employer incorporation or organization) Identification No.) 6000 LAKE FORREST DRIVE, SUITE 200 ATLANTA, GEORGIA 30328 (Address of principal executive offices) (404) 255-7500 (Registrant's telephone number, including area code) 2 ITEM 5. OTHER EVENTS On November 25, 1997, Retirement Care Associates, Inc. ("RCA") entered into an amendment (the "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 and by Amendment No. 2 thereto dated as of August 21, 1997 (as amended, the "Merger Agreement"), by and among RCA, Sun Healthcare Group, Inc., a Delaware corporation ("Sun"), and Peach Acquisition Corporation, a Colorado corporation and wholly-owned subsidiary of Sun ("Merger Sub"), pursuant to which Merger Sub will be merged (the "Merger") with and into RCA. The Amendment changes the exchange ratio provided for in the Merger Agreement. RCA shareholders will now receive shares of Sun common stock based on a fixed value of $10 for each outstanding share of the common stock of RCA (based on the average closing price of Sun common stock during the 20 trading days ending five trading days prior to the effective time of the Merger) (unless such average closing price exceeds $24.20, in which case the exchange ratio shall equal .413, or is less than $19.80, in which case the exchange ratio shall equal .505) instead of 0.520 shares of Sun common stock for each share of RCA common stock owned by them on the effective date of the Merger. The Amendment also (i) waives certain representations and warranties which have become incorrect since the date of the Merger Agreement; (ii) modifies the definition of "Company Material Adverse Effect" to relate only to changes in the assets or liabilities of RCA; (iii) contains provisions relating to Sun and its affiliates providing ancillary services to RCA and its affiliates; (iv) contains provisions allowing RCA to obtain up to $15 million in working capital financing under certain conditions; (v) contains provisions relating to certain related company leases; (vi) modifies the conditions to Sun's obligation to consummate the Merger related to RCA's representations and warranties and makes corresponding modifications in Sun's termination rights; (vii) provides for a termination fee payable to RCA in the event Sun's board of directors changes its recommendation of the Merger in a manner adverse to RCA; (viii) contains certain other technical provisions; and (ix) extends the date after which either party may freely terminate the Merger Agreement from November 30, 1997 (or, under certain circumstances, to December 31, 1997) to March 31, 1998. On November 25, 1997, Sun also entered into an amendment (the "RCA Option Amendment") to the Stockholders Stock Option and Proxy Agreement dated as of February 17, 1997 (the "Option Agreement") by and among Sun and certain principal stockholders of RCA, pursuant to which the Option Agreement was amended so as to (i) modify the exercise price of the option granted therein to $10.00 per share of RCA common stock, (ii) not allow Sun to exercise such option in the event that Sun materially breaches the RCA Merger Agreement and (iii) shorten the period during which Sun may exercise such option from 120 days to 14 days. The Merger is subject to approval by the stockholders of both companies and will be considered at separate meetings now anticipated to occur in the first quarter of 1998. The 2 3 Merger remains subject to other customary conditions. The Merger will be completed promptly following stockholder approval, assuming satisfaction of the other conditions to the Merger. The foregoing description is qualified in its entirety by reference to the full text of the Amendment and the RCA Option Amendment, which are attached hereto as Exhibits 2.1 and 2.2, respectively, and are incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) EXHIBITS 2.1 Amendment No. 3 to the Agreement and Plan of Merger and Reorganization dated as of February 17, 1997 among Sun Healthcare Group, Inc., Retirement Care Associates, Inc. Peach Acquisition Corporation. 2.2 Amendment No. 1 to the Stockholders Stock Option and Proxy Agreement dated as of February 17, 1997 among Sun Healthcare Group, Inc. and certain stockholders of Retirement Care Associates, Inc. 99.1 Press Release 3 4 SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. RETIREMENT CARE ASSOCIATES, INC. By:/s/ Darrell C. Tucker -------------------------------- Darrell C. Tucker, Its Treasurer Dated as of December 5, 1997. 4 5 INDEX TO EXHIBITS
DOCUMENT SEQUENTIALLY NO. DOCUMENT NUMBERED PAGE - ------------------------------------------------------------------------------- 2.1 Amendment No. 3 to the Agreement and 6 Plan of Merger and Reorganization dated as of February 17, 1997 among Sun Healthcare Group, Inc., Retirement Care Associates, Inc. Peach Acquisition Corporation. 2.2 Amendment No. 1 to the Stockholders Stock 15 Option and Proxy Agreement dated as of February 17, 1997 among Sun Healthcare Group, Inc. and certain stockholders of Retirement Care Associates, Inc. 99.1 Press Release 18
5 EX-2.1 2 AMENDMENT #3 TO AGREEMENT & PLAN OF REORGANIZATION 1 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: 6 2 (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 7 3 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; 8 4 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 9 5 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: 10 6 "(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: 11 7 "(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 12 8 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. 13 9 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/ Robert D. Woltil ---------------------------------------------- Name: Robert D. Woltil Title: Senior Vice President for Financial Services and Chief Financial Officer PEACH ACQUISITION CORPORATION By: /s/ Robert D. Woltil ---------------------------------------------- Name: Robert D. Woltil Title: Vice President RETIREMENT CARE ASSOCIATES, INC. By: /s/ Christopher F. Brogdon ---------------------------------------------- Name: Christopher F. Brogdon Title: President and Chief Executive Officer 14 EX-2.2 3 AMENDMENT #1 TO STOCKHOLDERS STOCK OPTION AGREE 1 EXHIBIT 2.2 EXECUTION COPY AMENDMENT NO. 1 TO THE STOCKHOLDERS STOCK OPTION AND PROXY AGREEMENT THIS AMENDMENT NO. 1 to the STOCKHOLDERS STOCK OPTION AND PROXY AGREEMENT, dated as of February 17, 1997 (the "AGREEMENT," capitalized terms used but not otherwise defined herein are used herein as therein defined), among SUN HEALTHCARE GROUP, INC., a Delaware corporation ("PARENT"), and each other person and entity listed on the signature pages hereof (each, a "STOCKHOLDER"), is made this 25th day of November, 1997 by and among Parent and each Stockholder. W I T N E S S E T H: WHEREAS, Parent, Merger Sub, and the Company desire to amend the Merger Agreement as provided in Amendment No. 3 thereto dated of even date herewith; and WHEREAS, in connection therewith Parent and each Stockholder desire to amend the 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: AMENDMENT TO AGREEMENT. The Agreement is hereby amended as follows: (a) Section 1.01 of the Agreement is hereby amended and restated in its entirety as follows: "SECTION 1.01. GRANT OF OPTIONS. Each Stockholder hereby grants to Parent an irrevocable option (each, an "OPTION") to purchase such Stockholder's Shares at (i) a price per share of Company Common Stock equal to $10.00 (the "COMMON PURCHASE PRICE"), (ii) a price per share of AA Preferred equal to $10.00 (the "AA PURCHASE PRICE"), and (iii) a price per share of F Preferred equal to $9.00 (the "F PURCHASE PRICE" and, together with the Common Purchase 15 2 Price and the AA Purchase Price, the "PURCHASE PRICE"). Each Option shall expire if (i) such Option is not exercised prior to the close of business on the 14th day following termination of the Merger Agreement, or (ii) if the Merger Agreement is terminated pursuant to Section 9.01(c) thereof or terminated or terminable pursuant to Section 9.01(h)." SECTION 2. REPRESENTATIONS AND WARRANTIES. (a) REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each Stockholder, severally and not jointly, hereby represents and warrants to Parent that: Such Stockholder has all necessary power and authority (corporate or otherwise) to execute and deliver this Amendment, to perform its obligations under the Agreement as amended hereby and to consummate the transactions contemplated hereby. The execution and delivery of this Amendment by such Stockholder and the consummation by such Stockholder of the transactions contemplated by the Agreement as amended hereby have been duly and validly authorized by all necessary action (corporate or otherwise) on the part of such Stockholder. This Amendment has been duly executed and delivered by such Stockholder and, assuming the due authorization, execution and delivery by Parent, constitutes the legal, valid and binding obligation of such Stockholder, enforceable against such Stockholder in accordance with its terms. (b) REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Parent and Merger Sub hereby jointly and severally represent and warrant to each Stockholder 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 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. SECTION 3. EFFECT ON AGREEMENT. Except as otherwise specifically provided herein, the Agreement shall not be amended but shall remain in full force and effect. SECTION 4. 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. 16 3 IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above. SUN HEALTHCARE GROUP, INC. By: /s/ Robert D. Woltil ------------------------------------------- Name: Robert D. Woltil Title: Senior Vice President for Financial Services and Chief Financial Officer STOCKHOLDERS /s/ Chris Brogdon ------------------------------------------- Chris Brogdon /s/ Connie Brogdon ------------------------------------------- Connie Brogdon /s/ Edward E. Lane ------------------------------------------- Edward E. Lane /s/ Darrell C. Tucker ------------------------------------------- Darrell C. Tucker WINTER HAVEN HOMES, INC. By: /s/ Edward E. Lane ------------------------------------------- Name: Edward E. Lane Title: President 17 EX-99.1 4 PRESS RELEASE 1 EXHIBIT 99.1 CONTACT: Phyllis Goodman (media) Majorie Goldstein (investors) 505-821-3355 SUN HEALTHCARE GROUP AND RETIREMENT CARE ASSOCIATES AMEND MERGER AGREEMENT Albuquerque, N.M., and Atlanta, Ga., Nov. 26, 1997 - Sun Healthcare Group, Inc. (NYSE:SHG) and Retirement Care Associates, Inc. (NYSE:RCA) announced today that they have amended the terms of their merger agreement. The principal effect of the amendment is to adjust the exchange ratio. The ratio will now be calculated based on a fixed value of $10 for each outstanding share of RCA common stock, subject to a 10 percent collar, centered on a $22 share price for Sun common stock. Accordingly, the number of shares of Sun common stock that will be issued for each share of RCA common stock is changed from 0.520 to between 0.413 and 0.505, depending upon the average closing price of Sun's common stock during the period specified in the agreement. The amendment also modifies some of the conditions to provide greater certainty of closing of the transaction. The boards of directors of Sun and of RCA have each approved the merger agreement amendment. Sun also announced that it has reached an agreement in principle to settle the pending class actions against RCA and its management for $9.0 million. The settlement is contingent on closing of the merger transaction. Sun originally entered into separate merger agreements with RCA and Contour Medical, Inc. (Nasdaq SmallCap:CTMI) on Feb. 17, 1997. The parties amended the terms of the RCA agreement on May 27, 1997, and both the RCA and the Contour agreements on Aug. 21, 1997. RCA owns approximately 65 percent of the outstanding shares of Contour. There have been no changes in the financial terms of the Contour merger agreement, which provides for the payment of cash and/or stock consideration with a value of $8.50 for each share of Contour common stock. Sun's merger agreement with Contour has been amended primarily to match the RCA amendment in extending the date after which either party may freely terminate the agreement from Nov. 30, 1997 (or, under certain circumstances, Dec. 31, 1997) to March 31, 1998. The parties contemplate closing both transactions in the first quarter of 1998. Closing of the transactions is subject to the satisfaction of customary conditions. The RCA acquisition is intended to be accounted for as a pooling of interests. The Contour acquisition is intended to be accounted for as a purchase. Headquartered in Albuquerque, N.M., Sun Healthcare Group, Inc., is a diversified international long-term care provider. Sun companies operate long-term care facilities and 18 2 pharmacy services across the United States, and in the United Kingdom, Australia and Spain. Sun subsidiaries also provide therapy services in the United States, fulfill the medical supply needs of nursing homes, and offer a comprehensive array of ancillary services for the healthcare industry. Atlanta, Ga.-based Retirement Care Associates, Inc. operates long-term care, independent and assisted living facilities located primarily in the southeastern United States. Contour Medical, Inc. is a national provider of medical supplies for the long-term care industry. Except for historical information, all other matters in this press release are forward-looking statements that involve risks and uncertainties as detailed from time to time in the company's SEC filings, including Sun's annual report on form 10-K for the fiscal year ended Dec. 31, 1996. ### 19 -----END PRIVACY-ENHANCED MESSAGE-----