UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
ReadiCare, Inc.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
755276102
(CUSIP Number)
William W. Horton, Esq.
HEALTHSOUTH Corporation
Two Perimeter Park South, Suite 224W
Birmingham, Alabama 35243
(205) 967-7116
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
September 11, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Check the following box if a fee is being paid with the statement |X| . (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
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CUSIP No. 00755P101 Page 2 of 6 Pages
-------------------------- ---- -----
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NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 HEALTHSOUTH Corporation
63-0860407
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) [_]
2
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SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
00
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
5
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 771,000
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
- -------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
771,000
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [ ]
- --------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
9.5%
- --------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
ITEM 1. SECURITY AND ISSUER.
Class of Equity Securities: Common Stock, par value $.01 per share
Name and Address of Issuer: ReadiCare, Inc.
1322 Orleans Drive
Sunnyvale, California 94089
ITEM 2. IDENTITY AND BACKGROUND.
Name: HEALTHSOUTH Corporation
State of Organization: Delaware
Principal Business: Development, ownership and operation
of rehabilitation, outpatient surgery
and other healthcare facilities.
Address of Principal Business Two Perimeter Park South
and Principal Office: Suite 224W
Birmingham, Alabama 35243
(d) No.
(e) No.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
In connection with the execution of a Plan and Agreement of Merger
dated September 11, 1996 (the "Merger Agreement"), by and among ReadiCare, Inc.
("ReadiCare"), HEALTHSOUTH Corporation ("HEALTHSOUTH") and Warwick Acquisition
Corporation (the "Subsidiary"), the Dennis G. Danko and Loretta M. Danko Family
Trust, a trust of which Dennis G. Danko, Chairman of the Board, President and
Chief Executive Officer of ReadiCare is a trustee, Harry L. Casari, a Director
of ReadiCare, James M. Hall, a Director of ReadiCare, Alfred E. Osborne, Jr., a
Director of ReadiCare, and Thomas P. Carey, Senior Vice President, Operations of
ReadiCare (the "Stockholders"), entered into Proxy Agreements dated September
11, 1996 (the "Proxy Agreements"). In the Proxy Agreements, the Stockholders
granted to HEALTHSOUTH the right to vote all of the shares of Common Stock, par
value $.01 per share, of ReadiCare (the "ReadiCare Common Stock") owned,
controlled or acquired by the Stockholders in favor of the merger contemplated
in the Merger Agreement and against any proposals for any recapitalization,
merger, sale of assets or other business combination between ReadiCare and any
other person or entity, as well as certain other matters.
In connection with the Merger Agreement, shares of ReadiCare will be
canceled and the holders of such shares will be entitled to receive 0.2425
shares of the Common Stock, par value $.01 per share, of HEALTHSOUTH (the
"HEALTHSOUTH Common Stock") per share of ReadiCare Common Stock surrendered,
with adjustments in value should the average price per share of the HEALTHSOUTH
1
<PAGE>
Common Stock during the measuring period exceed $38.30 or fall below $30.60. One
of the conditions of the willingness of HEALTHSOUTH to enter into the Merger
Agreement was the Stockholders' execution and delivery of the Proxy Agreements.
The foregoing constituted the consideration for the Stockholders' executing and
delivering the Proxy Agreements.
ITEM 4. PURPOSE OF TRANSACTION.
HEALTHSOUTH entered into the Proxy Agreements as a part of the overall
transaction set forth in the Merger Agreement. By obtaining the right to vote
the shares owned or controlled by the Stockholders, HEALTHSOUTH obtained
additional assurance that the affirmative vote of ReadiCare stockholders to
approve the Merger Agreement might be obtained. Pursuant to the provisions of
the Merger Agreement, HEALTHSOUTH will seek to cause a merger to be effected
between the Subsidiary and ReadiCare, with ReadiCare to be the surviving
corporation, pursuant to which the shares of ReadiCare Common Stock will be
surrendered and canceled and the holders of such shares will be entitled to
receive 0.2425 shares of HEALTHSOUTH Common Stock per share of ReadiCare Common
Stock, with adjustments in value should the average price of the HEALTHSOUTH
Common Stock during the measuring period exceed $38.30 or fall below $30.60.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Proxy Agreements recite that the Stockholders currently own, or
have the power to vote, an aggregate of 771,000 shares of ReadiCare Common
Stock. The Proxy Agreements apply to those shares and any shares thereafter
acquired by the Stockholders prior to termination of the Proxy Agreements. The
ReadiCare Common Stock is entitled to one vote per share with respect to all
matters to be acted upon the stockholders of ReadiCare.
(b) HEALTHSOUTH has sole voting power with respect to voting in favor
of the merger contemplated within the Merger Agreement and against any proposal
for any recapitalization, merger, sale of assets or other business combination
between ReadiCare and any other person or entity, as well as certain other
matters. HEALTHSOUTH does not have voting power with respect to any other
matters to be acted upon by the stockholders of ReadiCare. Any other voting
rights with respect to the foregoing shares of Common Stock are retained by the
Stockholders. The principal business address of ReadiCare, which is also the
business address of each Stockholder, is 1322 Orleans Drive, Sunnyvale,
California 94089. Each Stockholder is a citizen of the United States of America
or is a trust formed under the laws of a state of the United States of America.
The answer to Items 2(d) and (e) with respect to each Stockholder is no.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
2
<PAGE>
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
In connection with qualifying for "pooling of interests" treatment for
accounting purposes, it is expected that each Stockholder will execute a letter
to HEALTHSOUTH representing and covenanting that, within 30 days preceding the
consummation of the transactions contemplated by the Merger Agreement, such
Stockholder has not sold, transferred or otherwise disposed of, and will not
sell, transfer or otherwise dispose of, any ReadiCare Common Stock.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
Exhibit A: Proxy Agreements, dated September 11, 1996, by and
between HEALTHSOUTH Corporation and each of the
Dennis G. Danko and Loretta M. Danko Family Trust,
Harry L. Casari, James M. Hall, Alfred E. Osborne,
Jr. and Thomas P. Carey.
Exhibit B: Plan and Agreement of Merger, dated September 11,
1996, by and among HEALTHSOUTH Corporation, Warwick
Acquisition Corporation and ReadiCare, Inc., together
with Exhibits thereto.
3
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: September 17, 1996 /s/ William W. Horton
------------------------------------------
William W. Horton
Senior Vice President and Corporate Counsel
<PAGE>
EXHIBIT A
PROXY AGREEMENT
AGREEMENT, dated September 11, 1996, between HEALTHSOUTH Corporation, a
Delaware corporation ("HEALTHSOUTH"), and The Dennis G. Danko and Loretta M.
Danko Family Trust (the "Stockholder").
W I T N E S S E T H:
--------------------
WHEREAS, as of the date hereof, the Stockholder owns, or has the power
to vote, 654,350 shares of Common Stock, par value $.01 per share (the
"ReadiCare Common Stock"), of ReadiCare, Inc., a Delaware corporation
("ReadiCare") (all such shares and any shares hereafter acquired by the
Stockholder prior to the termination of this Proxy Agreement being referred to
herein as the "Shares");
WHEREAS, HEALTHSOUTH, a subsidiary of HEALTHSOUTH (the "HEALTHSOUTH
Subsidiary") and ReadiCare propose to enter into a Plan and Agreement of Merger,
dated as of the date hereof (as the same may be amended from time to time, the
"Plan of Merger"), which provides, upon the terms and subject to the conditions
thereof, for the merger of ReadiCare with and into HEALTH- SOUTH by merging the
HEALTHSOUTH Subsidiary into ReadiCare (the "Merger"); and
WHEREAS, as a condition of the willingness of HEALTHSOUTH to enter into
the Plan of Merger, HEALTHSOUTH has requested that the Stockholder agree, and,
in order to induce HEALTH- SOUTH to enter into the Plan of Merger, the
Stockholder has agreed, to grant HEALTHSOUTH his proxy to vote the Shares;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants set forth herein and in the Plan of Merger, the parties
hereto agree as follows:
Section 1. Representation and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to HEALTHSOUTH as follows:
1.1 Authority, etc. The Stockholder has full power and authority to
execute and deliver this Proxy Agreement and to consummate the transactions
contemplated hereby and by the Plan of Merger. The execution and delivery of the
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of such Stockholder. This
Agreement has been approved by the Board of Directors of ReadiCare. This
Agreement has been duly executed and delivered by the Stockholder and, assuming
its due authorization, execution and delivery by HEALTHSOUTH, constitutes a
legal, valid and binding obligation of the Stockholder, enforceable against the
Stockholder in accordance with its terms, subject to the effect of any
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject, as to enforceability, to the
effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
A-1
<PAGE>
1.2 Title to Shares. The Stockholder is the record or beneficial owner
of the Shares, free and clear of any proxy or voting restriction other than
pursuant to this Proxy Agreement.
SECTION 2. TRANSFER AND VOTING OF SHARES.
2.1. Transfer or Conversion of Shares. During the Proxy Term (as
defined below), and except as otherwise provided herein, or in or permitted by
the Plan of Merger, the Stockholder shall not (a) sell, pledge or otherwise
dispose of any of the Shares, (b) deposit the Shares into a voting trust or
enter into a voting agreement or arrangement with respect to the Shares or grant
any proxy with respect thereto other than pursuant to this Proxy Agreement, or
(c) enter into any contract, option or other arrangement or undertaking with
respect to the direct or indirect acquisition or sale, assignment, transfer or
other disposition of any ReadiCare Common Stock.
2.2. Voting of Shares; Further Assurances. (a) The Stockholder, by this
Agreement, with respect to those Shares that he owns of record or for which he
has the power to vote, does hereby constitute and appoint HEALTHSOUTH, or any
nominee of HEALTHSOUTH, with full power of substitution, during and for the
Proxy Term, as his true and lawful attorney and proxy, for and in his name,
place and stead, to vote each of the Shares as his proxy, at every annual,
special or adjourned meeting of the stockholders of ReadiCare (including the
right to sign his name (as a stockholder) to any consent, certificate or other
document relating to ReadiCare that the law of the State of Delaware may permit
or require) (i) in favor of the adoption of the Plan of Merger and approval of
the Plan of Merger and the other transactions contemplated by the Plan of
Merger, (ii) against any proposal for any recapitalization, merger, sale of
assets or other business combination between ReadiCare and any person or entity
(other than the Merger) or any other action or agreement that would result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of ReadiCare under the Plan of Merger or which could result in any of
the conditions to ReadiCare's obligations under the Plan of Merger not being
fulfilled, and (iii) in favor of any other matter relating to consummation of
the transactions contemplated by the Plan of Merger. The Stockholder further
agrees to cause the Shares owned by him beneficially to be voted in accordance
with the foregoing.
(b) For the purposes of this Agreement, "Proxy Term" shall
mean the period from the execution of this Agreement until the termination of
the Plan of Merger, and following termination of the Plan of Merger, during such
time as a Third Party Acquisition Event (as defined in the Plan of Merger)
exists with respect to ReadiCare; provided that in no event shall the Proxy Term
extend beyond the close of business one year following the termination of the
Plan of Merger.
(c) The Stockholder shall perform such further acts and
execute such further documents and instruments as may reasonably be required to
vest in HEALTHSOUTH the power to carry out the provisions of this Proxy
Agreement.
SECTION 3. GENERAL PROVISIONS.
3.1 Severability. If any term or other provision of this Proxy
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Proxy Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Proxy Agreement so as
A-2
<PAGE>
to effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
3.2. Entire Agreement. This Proxy Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between the parties, or either of them, with respect to
the subject matter hereof.
3.3. Assignment. This Proxy Agreement shall not be assigned by
operation of law or otherwise.
3.4. Parties in Interest. This Proxy Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this Proxy
Agreement, express or implied, is intended to or shall confer upon any person
any right, benefit or remedy of any nature whatsoever under or by reason of this
Proxy Agreement.
3.5. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Proxy Agreement is not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
3.6. Governing Law. This Proxy Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed and to be performed entirely within that state.
3.7. Counterparts. This Proxy Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
A-3
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Proxy Agreement as
of the date first written above.
THE DENNIS G. DANKO AND LORETTA
M. DANKO FAMILY TRUST
By /s/Dennis G. Danko
---------------------------------------
Trustee
HEALTHSOUTH Corporation
By: /s/Richard M. Scrushy
--------------------------------------
Richard M. Scrushy
Chairman of the Board and
Chief Executive Officer
A-4
<PAGE>
PROXY AGREEMENT
AGREEMENT, dated September 11, 1996, between HEALTHSOUTH Corporation, a
Delaware corporation ("HEALTHSOUTH"), and Harry L. Casari, a resident of the
State of California (the "Stockholder").
W I T N E S S E T H:
--------------------
WHEREAS, as of the date hereof, the Stockholder owns, or has the power
to vote, 2,500 shares of Common Stock, par value $.01 per share (the "ReadiCare
Common Stock"), of ReadiCare, Inc., a Delaware corporation ("ReadiCare") (all
such shares and any shares hereafter acquired by the Stockholder prior to the
termination of this Proxy Agreement being referred to herein as the "Shares");
WHEREAS, HEALTHSOUTH, a subsidiary of HEALTHSOUTH (the "HEALTHSOUTH
Subsidiary") and ReadiCare propose to enter into a Plan and Agreement of Merger,
dated as of the date hereof (as the same may be amended from time to time, the
"Plan of Merger"), which provides, upon the terms and subject to the conditions
thereof, for the merger of ReadiCare with and into HEALTH- SOUTH by merging the
HEALTHSOUTH Subsidiary into ReadiCare (the "Merger"); and
WHEREAS, as a condition of the willingness of HEALTHSOUTH to enter into
the Plan of Merger, HEALTHSOUTH has requested that the Stockholder agree, and,
in order to induce HEALTH- SOUTH to enter into the Plan of Merger, the
Stockholder has agreed, to grant HEALTHSOUTH his proxy to vote the Shares;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants set forth herein and in the Plan of Merger, the parties
hereto agree as follows:
Section 1. Representation and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to HEALTHSOUTH as follows:
1.1 Authority, etc. The Stockholder has full power and authority to
execute and deliver this Proxy Agreement and to consummate the transactions
contemplated hereby and by the Plan of Merger. The execution and delivery of the
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of such Stockholder. This
Agreement has been approved by the Board of Directors of ReadiCare. This
Agreement has been duly executed and delivered by the Stockholder and, assuming
its due authorization, execution and delivery by HEALTHSOUTH, constitutes a
legal, valid and binding obligation of the Stockholder, enforceable against the
Stockholder in accordance with its terms, subject to the effect of any
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject, as to enforceability, to the
effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
1.2 Title to Shares. The Stockholder is the record or beneficial owner
of the Shares, free and clear of any proxy or voting restriction other than
pursuant to this Proxy Agreement.
A-5
<PAGE>
Section 2. TRANSFER AND VOTING OF SHARES.
2.1. Transfer or Conversion of Shares. During the Proxy Term (as
defined below), and except as otherwise provided herein, or in or permitted by
the Plan of Merger, the Stockholder shall not (a) sell, pledge or otherwise
dispose of any of the Shares, (b) deposit the Shares into a voting trust or
enter into a voting agreement or arrangement with respect to the Shares or grant
any proxy with respect thereto other than pursuant to this Proxy Agreement, or
(c) enter into any contract, option or other arrangement or undertaking with
respect to the direct or indirect acquisition or sale, assignment, transfer or
other disposition of any ReadiCare Common Stock.
2.2. Voting of Shares; Further Assurances. (a) The Stockholder, by this
Agreement, with respect to those Shares that he owns of record or for which he
has the power to vote, does hereby constitute and appoint HEALTHSOUTH, or any
nominee of HEALTHSOUTH, with full power of substitution, during and for the
Proxy Term, as his true and lawful attorney and proxy, for and in his name,
place and stead, to vote each of the Shares as his proxy, at every annual,
special or adjourned meeting of the stockholders of ReadiCare (including the
right to sign his name (as a stockholder) to any consent, certificate or other
document relating to ReadiCare that the law of the State of Delaware may permit
or require) (i) in favor of the adoption of the Plan of Merger and approval of
the Plan of Merger and the other transactions contemplated by the Plan of
Merger, (ii) against any proposal for any recapitalization, merger, sale of
assets or other business combination between ReadiCare and any person or entity
(other than the Merger) or any other action or agreement that would result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of ReadiCare under the Plan of Merger or which could result in any of
the conditions to ReadiCare's obligations under the Plan of Merger not being
fulfilled, and (iii) in favor of any other matter relating to consummation of
the transactions contemplated by the Plan of Merger. The Stockholder further
agrees to cause the Shares owned by him beneficially to be voted in accordance
with the foregoing.
(b) For the purposes of this Agreement, "Proxy Term" shall
mean the period from the execution of this Agreement until the termination of
the Plan of Merger, and following termination of the Plan of Merger, during such
time as a Third Party Acquisition Event (as defined in the Plan of Merger)
exists with respect to ReadiCare; provided that in no event shall the Proxy Term
extend beyond the close of business one year following the termination of the
Plan of Merger.
(c) The Stockholder shall perform such further acts and
execute such further documents and instruments as may reasonably be required to
vest in HEALTHSOUTH the power to carry out the provisions of this Proxy
Agreement.
Section 3. GENERAL PROVISIONS.
3.1 Severability. If any term or other provision of this Proxy
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Proxy Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Proxy Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
A-6
<PAGE>
3.2. Entire Agreement. This Proxy Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between the parties, or either of them, with respect to
the subject matter hereof.
3.3. Assignment. This Proxy Agreement shall not be assigned by
operation of law or otherwise.
3.4. Parties in Interest. This Proxy Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this Proxy
Agreement, express or implied, is intended to or shall confer upon any person
any right, benefit or remedy of any nature whatsoever under or by reason of this
Proxy Agreement.
3.5. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Proxy Agreement is not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
3.6. Governing Law. This Proxy Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed and to be performed entirely within that state.
3.7. Counterparts. This Proxy Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Proxy Agreement as
of the date first written above.
/s/Harry L. Casari
---------------------------------------
Harry L. Casari
HEALTHSOUTH Corporation
By: /s/Richard M. Scrushy
----------------------------------------
Richard M. Scrushy
Chairman of the Board and
Chief Executive Officer
A-7
<PAGE>
PROXY AGREEMENT
AGREEMENT, dated September 11, 1996, between HEALTHSOUTH Corporation, a
Delaware corporation ("HEALTHSOUTH"), and James M. Hall, a resident of the State
of California (the "Stockholder").
W I T N E S S E T H:
--------------------
WHEREAS, as of the date hereof, the Stockholder owns, or has the power
to vote, 10,000 shares of Common Stock, par value $.01 per share (the "ReadiCare
Common Stock"), of ReadiCare, Inc., a Delaware corporation ("ReadiCare") (all
such shares and any shares hereafter acquired by the Stockholder prior to the
termination of this Proxy Agreement being referred to herein as the "Shares");
WHEREAS, HEALTHSOUTH, a subsidiary of HEALTHSOUTH (the "HEALTHSOUTH
Subsidiary") and ReadiCare propose to enter into a Plan and Agreement of Merger,
dated as of the date hereof (as the same may be amended from time to time, the
"Plan of Merger"), which provides, upon the terms and subject to the conditions
thereof, for the merger of ReadiCare with and into HEALTH- SOUTH by merging the
HEALTHSOUTH Subsidiary into ReadiCare (the "Merger"); and
WHEREAS, as a condition of the willingness of HEALTHSOUTH to enter into
the Plan of Merger, HEALTHSOUTH has requested that the Stockholder agree, and,
in order to induce HEALTH- SOUTH to enter into the Plan of Merger, the
Stockholder has agreed, to grant HEALTHSOUTH his proxy to vote the Shares;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants set forth herein and in the Plan of Merger, the parties
hereto agree as follows:
Section 1. Representation and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to HEALTHSOUTH as follows:
1.1 Authority, etc. The Stockholder has full power and authority to
execute and deliver this Proxy Agreement and to consummate the transactions
contemplated hereby and by the Plan of Merger. The execution and delivery of the
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of such Stockholder. This
Agreement has been approved by the Board of Directors of ReadiCare. This
Agreement has been duly executed and delivered by the Stockholder and, assuming
its due authorization, execution and delivery by HEALTHSOUTH, constitutes a
legal, valid and binding obligation of the Stockholder, enforceable against the
Stockholder in accordance with its terms, subject to the effect of any
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject, as to enforceability, to the
effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
1.2 Title to Shares. The Stockholder is the record or beneficial owner
of the Shares, free and clear of any proxy or voting restriction other than
pursuant to this Proxy Agreement.
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<PAGE>
Section 2. TRANSFER AND VOTING OF SHARES.
2.1. Transfer or Conversion of Shares. During the Proxy Term (as
defined below), and except as otherwise provided herein, or in or permitted by
the Plan of Merger, the Stockholder shall not (a) sell, pledge or otherwise
dispose of any of the Shares, (b) deposit the Shares into a voting trust or
enter into a voting agreement or arrangement with respect to the Shares or grant
any proxy with respect thereto other than pursuant to this Proxy Agreement, or
(c) enter into any contract, option or other arrangement or undertaking with
respect to the direct or indirect acquisition or sale, assignment, transfer or
other disposition of any ReadiCare Common Stock.
2.2. Voting of Shares; Further Assurances. (a) The Stockholder, by this
Agreement, with respect to those Shares that he owns of record or for which he
has the power to vote, does hereby constitute and appoint HEALTHSOUTH, or any
nominee of HEALTHSOUTH, with full power of substitution, during and for the
Proxy Term, as his true and lawful attorney and proxy, for and in his name,
place and stead, to vote each of the Shares as his proxy, at every annual,
special or adjourned meeting of the stockholders of ReadiCare (including the
right to sign his name (as a stockholder) to any consent, certificate or other
document relating to ReadiCare that the law of the State of Delaware may permit
or require) (i) in favor of the adoption of the Plan of Merger and approval of
the Plan of Merger and the other transactions contemplated by the Plan of
Merger, (ii) against any proposal for any recapitalization, merger, sale of
assets or other business combination between ReadiCare and any person or entity
(other than the Merger) or any other action or agreement that would result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of ReadiCare under the Plan of Merger or which could result in any of
the conditions to ReadiCare's obligations under the Plan of Merger not being
fulfilled, and (iii) in favor of any other matter relating to consummation of
the transactions contemplated by the Plan of Merger. The Stockholder further
agrees to cause the Shares owned by him beneficially to be voted in accordance
with the foregoing.
(b) For the purposes of this Agreement, "Proxy Term" shall
mean the period from the execution of this Agreement until the termination of
the Plan of Merger, and following termination of the Plan of Merger, during such
time as a Third Party Acquisition Event (as defined in the Plan of Merger)
exists with respect to ReadiCare; provided that in no event shall the Proxy Term
extend beyond the close of business one year following the termination of the
Plan of Merger.
(c) The Stockholder shall perform such further acts and
execute such further documents and instruments as may reasonably be required to
vest in HEALTHSOUTH the power to carry out the provisions of this Proxy
Agreement.
Section 3. GENERAL PROVISIONS.
3.1 Severability. If any term or other provision of this Proxy
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Proxy Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Proxy Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
A-9
<PAGE>
3.2. Entire Agreement. This Proxy Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between the parties, or either of them, with respect to
the subject matter hereof.
3.3. Assignment. This Proxy Agreement shall not be assigned by
operation of law or otherwise.
3.4. Parties in Interest. This Proxy Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this Proxy
Agreement, express or implied, is intended to or shall confer upon any person
any right, benefit or remedy of any nature whatsoever under or by reason of this
Proxy Agreement.
3.5. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Proxy Agreement is not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
3.6. Governing Law. This Proxy Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed and to be performed entirely within that state.
3.7. Counterparts. This Proxy Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Proxy Agreement as
of the date first written above.
/s/James M. Hall
---------------------------------------
James M. Hall
HEALTHSOUTH Corporation
By: /s/Richard M. Scrushy
------------------------------------
Richard M. Scrushy
Chairman of the Board and
Chief Executive Officer
A-10
<PAGE>
PROXY AGREEMENT
AGREEMENT, dated September 11, 1996, between HEALTHSOUTH Corporation, a
Delaware corporation ("HEALTHSOUTH"), and Alfred E. Osborne, Jr., a resident of
the State of California (the "Stockholder").
W I T N E S S E T H:
--------------------
WHEREAS, as of the date hereof, the Stockholder owns, or has the power
to vote, 51,750 shares of Common Stock, par value $.01 per share (the "ReadiCare
Common Stock"), of ReadiCare, Inc., a Delaware corporation ("ReadiCare") (all
such shares and any shares hereafter acquired by the Stockholder prior to the
termination of this Proxy Agreement being referred to herein as the "Shares");
WHEREAS, HEALTHSOUTH, a subsidiary of HEALTHSOUTH (the "HEALTHSOUTH
Subsidiary") and ReadiCare propose to enter into a Plan and Agreement of Merger,
dated as of the date hereof (as the same may be amended from time to time, the
"Plan of Merger"), which provides, upon the terms and subject to the conditions
thereof, for the merger of ReadiCare with and into HEALTH- SOUTH by merging the
HEALTHSOUTH Subsidiary into ReadiCare (the "Merger"); and
WHEREAS, as a condition of the willingness of HEALTHSOUTH to enter into
the Plan of Merger, HEALTHSOUTH has requested that the Stockholder agree, and,
in order to induce HEALTH- SOUTH to enter into the Plan of Merger, the
Stockholder has agreed, to grant HEALTHSOUTH his proxy to vote the Shares;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants set forth herein and in the Plan of Merger, the parties
hereto agree as follows:
Section 1. Representation and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to HEALTHSOUTH as follows:
1.1 Authority, etc. The Stockholder has full power and authority to
execute and deliver this Proxy Agreement and to consummate the transactions
contemplated hereby and by the Plan of Merger. The execution and delivery of the
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of such Stockholder. This
Agreement has been approved by the Board of Directors of ReadiCare. This
Agreement has been duly executed and delivered by the Stockholder and, assuming
its due authorization, execution and delivery by HEALTHSOUTH, constitutes a
legal, valid and binding obligation of the Stockholder, enforceable against the
Stockholder in accordance with its terms, subject to the effect of any
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject, as to enforceability, to the
effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
1.2 Title to Shares. The Stockholder is the record or beneficial owner
of the Shares, free and clear of any proxy or voting restriction other than
pursuant to this Proxy Agreement.
A-11
<PAGE>
Section 2. TRANSFER AND VOTING OF SHARES.
2.1. Transfer or Conversion of Shares. During the Proxy Term (as
defined below), and except as otherwise provided herein, or in or permitted by
the Plan of Merger, the Stockholder shall not (a) sell, pledge or otherwise
dispose of any of the Shares, (b) deposit the Shares into a voting trust or
enter into a voting agreement or arrangement with respect to the Shares or grant
any proxy with respect thereto other than pursuant to this Proxy Agreement, or
(c) enter into any contract, option or other arrangement or undertaking with
respect to the direct or indirect acquisition or sale, assignment, transfer or
other disposition of any ReadiCare Common Stock.
2.2. Voting of Shares; Further Assurances. (a) The Stockholder, by this
Agreement, with respect to those Shares that he owns of record or for which he
has the power to vote, does hereby constitute and appoint HEALTHSOUTH, or any
nominee of HEALTHSOUTH, with full power of substitution, during and for the
Proxy Term, as his true and lawful attorney and proxy, for and in his name,
place and stead, to vote each of the Shares as his proxy, at every annual,
special or adjourned meeting of the stockholders of ReadiCare (including the
right to sign his name (as a stockholder) to any consent, certificate or other
document relating to ReadiCare that the law of the State of Delaware may permit
or require) (i) in favor of the adoption of the Plan of Merger and approval of
the Plan of Merger and the other transactions contemplated by the Plan of
Merger, (ii) against any proposal for any recapitalization, merger, sale of
assets or other business combination between ReadiCare and any person or entity
(other than the Merger) or any other action or agreement that would result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of ReadiCare under the Plan of Merger or which could result in any of
the conditions to ReadiCare's obligations under the Plan of Merger not being
fulfilled, and (iii) in favor of any other matter relating to consummation of
the transactions contemplated by the Plan of Merger. The Stockholder further
agrees to cause the Shares owned by him beneficially to be voted in accordance
with the foregoing.
(b) For the purposes of this Agreement, "Proxy Term" shall
mean the period from the execution of this Agreement until the termination of
the Plan of Merger, and following termination of the Plan of Merger, during such
time as a Third Party Acquisition Event (as defined in the Plan of Merger)
exists with respect to ReadiCare; provided that in no event shall the Proxy Term
extend beyond the close of business one year following the termination of the
Plan of Merger.
(c) The Stockholder shall perform such further acts and
execute such further documents and instruments as may reasonably be required to
vest in HEALTHSOUTH the power to carry out the provisions of this Proxy
Agreement.
Section 3. GENERAL PROVISIONS.
3.1 Severability. If any term or other provision of this Proxy
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Proxy Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Proxy Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
A-12
<PAGE>
3.2. Entire Agreement. This Proxy Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between the parties, or either of them, with respect to
the subject matter hereof.
3.3. Assignment. This Proxy Agreement shall not be assigned by
operation of law or otherwise.
3.4. Parties in Interest. This Proxy Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this Proxy
Agreement, express or implied, is intended to or shall confer upon any person
any right, benefit or remedy of any nature whatsoever under or by reason of this
Proxy Agreement.
3.5. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Proxy Agreement is not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
3.6. Governing Law. This Proxy Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed and to be performed entirely within that state.
3.7. Counterparts. This Proxy Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Proxy Agreement as
of the date first written above.
/s/Alfred E. Osborne, Jr.
-------------------------------------
Alfred E. Osborne, Jr.
HEALTHSOUTH Corporation
By: /s/Richard M. Scrushy
-----------------------------------
Richard M. Scrushy
Chairman of the Board and
Chief Executive Officer
A-13
<PAGE>
PROXY AGREEMENT
AGREEMENT, dated September 11, 1996, between HEALTHSOUTH Corporation, a
Delaware corporation ("HEALTHSOUTH"), and Thomas P. Carey, a resident of the
State of California (the "Stockholder").
W I T N E S S E T H:
--------------------
WHEREAS, as of the date hereof, the Stockholder owns, or has the power
to vote, 52,400 shares of Common Stock, par value $.01 per share (the "ReadiCare
Common Stock"), of ReadiCare, Inc., a Delaware corporation ("ReadiCare") (all
such shares and any shares hereafter acquired by the Stockholder prior to the
termination of this Proxy Agreement being referred to herein as the "Shares");
WHEREAS, HEALTHSOUTH, a subsidiary of HEALTHSOUTH (the "HEALTHSOUTH
Subsidiary") and ReadiCare propose to enter into a Plan and Agreement of Merger,
dated as of the date hereof (as the same may be amended from time to time, the
"Plan of Merger"), which provides, upon the terms and subject to the conditions
thereof, for the merger of ReadiCare with and into HEALTH- SOUTH by merging the
HEALTHSOUTH Subsidiary into ReadiCare (the "Merger"); and
WHEREAS, as a condition of the willingness of HEALTHSOUTH to enter into
the Plan of Merger, HEALTHSOUTH has requested that the Stockholder agree, and,
in order to induce HEALTH- SOUTH to enter into the Plan of Merger, the
Stockholder has agreed, to grant HEALTHSOUTH his proxy to vote the Shares;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants set forth herein and in the Plan of Merger, the parties
hereto agree as follows:
Section 1. Representation and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to HEALTHSOUTH as follows:
1.1 Authority, etc. The Stockholder has full power and authority to
execute and deliver this Proxy Agreement and to consummate the transactions
contemplated hereby and by the Plan of Merger. The execution and delivery of the
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of such Stockholder. This
Agreement has been approved by the Board of Directors of ReadiCare. This
Agreement has been duly executed and delivered by the Stockholder and, assuming
its due authorization, execution and delivery by HEALTHSOUTH, constitutes a
legal, valid and binding obligation of the Stockholder, enforceable against the
Stockholder in accordance with its terms, subject to the effect of any
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject, as to enforceability, to the
effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
1.2 Title to Shares. The Stockholder is the record or beneficial owner
of the Shares, free and clear of any proxy or voting restriction other than
pursuant to this Proxy Agreement.
A-14
<PAGE>
Section 2. TRANSFER AND VOTING OF SHARES.
2.1. Transfer or Conversion of Shares. During the Proxy Term (as
defined below), and except as otherwise provided herein, or in or permitted by
the Plan of Merger, the Stockholder shall not (a) sell, pledge or otherwise
dispose of any of the Shares, (b) deposit the Shares into a voting trust or
enter into a voting agreement or arrangement with respect to the Shares or grant
any proxy with respect thereto other than pursuant to this Proxy Agreement, or
(c) enter into any contract, option or other arrangement or undertaking with
respect to the direct or indirect acquisition or sale, assignment, transfer or
other disposition of any ReadiCare Common Stock.
2.2. Voting of Shares; Further Assurances. (a) The Stockholder, by this
Agreement, with respect to those Shares that he owns of record or for which he
has the power to vote, does hereby constitute and appoint HEALTHSOUTH, or any
nominee of HEALTHSOUTH, with full power of substitution, during and for the
Proxy Term, as his true and lawful attorney and proxy, for and in his name,
place and stead, to vote each of the Shares as his proxy, at every annual,
special or adjourned meeting of the stockholders of ReadiCare (including the
right to sign his name (as a stockholder) to any consent, certificate or other
document relating to ReadiCare that the law of the State of Delaware may permit
or require) (i) in favor of the adoption of the Plan of Merger and approval of
the Plan of Merger and the other transactions contemplated by the Plan of
Merger, (ii) against any proposal for any recapitalization, merger, sale of
assets or other business combination between ReadiCare and any person or entity
(other than the Merger) or any other action or agreement that would result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of ReadiCare under the Plan of Merger or which could result in any of
the conditions to ReadiCare's obligations under the Plan of Merger not being
fulfilled, and (iii) in favor of any other matter relating to consummation of
the transactions contemplated by the Plan of Merger. The Stockholder further
agrees to cause the Shares owned by him beneficially to be voted in accordance
with the foregoing.
(b) For the purposes of this Agreement, "Proxy Term" shall
mean the period from the execution of this Agreement until the termination of
the Plan of Merger, and following termination of the Plan of Merger, during such
time as a Third Party Acquisition Event (as defined in the Plan of Merger)
exists with respect to ReadiCare; provided that in no event shall the Proxy Term
extend beyond the close of business one year following the termination of the
Plan of Merger.
(c) The Stockholder shall perform such further acts and
execute such further documents and instruments as may reasonably be required to
vest in HEALTHSOUTH the power to carry out the provisions of this Proxy
Agreement.
Section 3. GENERAL PROVISIONS.
3.1 Severability. If any term or other provision of this Proxy
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Proxy Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Proxy Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
A-15
<PAGE>
3.2. Entire Agreement. This Proxy Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between the parties, or either of them, with respect to
the subject matter hereof.
3.3. Assignment. This Proxy Agreement shall not be assigned by
operation of law or otherwise.
3.4. Parties in Interest. This Proxy Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this Proxy
Agreement, express or implied, is intended to or shall confer upon any person
any right, benefit or remedy of any nature whatsoever under or by reason of this
Proxy Agreement.
3.5. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Proxy Agreement is not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
3.6. Governing Law. This Proxy Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed and to be performed entirely within that state.
3.7. Counterparts. This Proxy Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Proxy Agreement as
of the date first written above.
/s/Thomas P. Carey
---------------------------------------
Thomas P. Carey
HEALTHSOUTH Corporation
By: /s/Richard M. Scrushy
-------------------------------------
Richard M. Scrushy
Chairman of the Board and
Chief Executive Officer
A-16
<PAGE>
EXHIBIT B
PLAN AND AGREEMENT OF MERGER
PLAN AND AGREEMENT OF MERGER (the "Plan of Merger"), made and entered
into as of the 11th day of September, 1996, by and among HEALTHSOUTH
Corporation, a Delaware corporation ("HEALTHSOUTH"), WARWICK ACQUISITION
CORPORATION, a Delaware corporation (the "Subsidiary"), and READICARE, INC., a
Delaware corporation ("ReadiCare") (the Subsidiary and ReadiCare being sometimes
collectively referred to herein as the "Constituent Corporations").
W I T N E S S E T H:
--------------------
WHEREAS, the respective Boards of Directors of HEALTHSOUTH, the
Subsidiary and ReadiCare have approved the merger of the Subsidiary with and
into ReadiCare (the "Merger"), upon the terms and conditions set forth in this
Plan of Merger, whereby all shares of Common Stock, par value $.01 per share, of
ReadiCare (the "ReadiCare Common Stock"), not owned directly or indirectly by
ReadiCare, will be converted into the right to receive the Merger Consideration
(as hereinafter defined);
WHEREAS, each of HEALTHSOUTH, the Subsidiary and ReadiCare desires to
make certain representations, warranties, covenants and agreements in connection
with the Merger and also to prescribe various conditions to the Merger;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section 368 of
the Internal Revenue Code of 1986, as amended; and
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a "pooling of interests".
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants and agreements contained herein, the parties hereto do hereby agree as
follows:
B-1
<PAGE>
Section 1. THE MERGER.
1.1 The Merger. Upon the terms and conditions set forth in this Plan of
Merger, and in accordance with the Delaware General Corporation Law (the
"DGCL"), the Subsidiary shall be merged with and into ReadiCare at the Effective
Time (as defined in Section 1.3). Following the Effective Time, the separate
corporate existence of the Subsidiary shall cease and ReadiCare shall continue
as the surviving corporation (the "Surviving Corporation") under the name
"ReadiCare, Inc." and shall succeed to and assume all the rights and obligations
of the Subsidiary and ReadiCare in accordance with the DGCL.
1.2 The Closing. The closing of the Merger (the "Closing") will take
place at such time and such date as is specified by the parties (the "Closing
Date"), which (subject to satisfaction or waiver of the conditions set forth in
Sections 9.2 and 9.3) shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in Section 9.1 (other than
Section 9.1(a), which shall be satisfied at the Closing Date), at such location
as the parties may agree, unless another date is agreed to in writing by the
parties hereto.
1.3 Effective Time. Subject to the provisions of this Plan of Merger,
the parties shall file a certificate of merger (the "Certificate of Merger")
executed in accordance with the relevant provisions of the DGCL and shall make
all other filings or recordings required under the DGCL as soon as practicable
on or after the Closing Date. The Merger shall become effective at such time as
the Certificate of Merger is duly filed with the Delaware Secretary of State, or
at such other time as the Subsidiary and ReadiCare shall agree should be
specified in the Certificate of Merger (the "Effective Time").
1.4 Effect of the Merger. The Merger shall have the effects set forth
in Section 259 of the DGCL.
B-2
<PAGE>
Section 2. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES.
2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of any holder of shares of ReadiCare
Common Stock or any shares of capital stock of the Subsidiary:
(a) Subsidiary Common Stock. Each share of capital stock of the
Subsidiary issued and outstanding immediately prior to the Effective Time shall
be converted into one fully paid and nonassessable share of common stock of the
Surviving Corporation.
(b) Cancellation of Treasury Stock. Each share of ReadiCare Common
Stock that is owned by ReadiCare or by any subsidiary of ReadiCare shall
automatically be canceled and retired and shall cease to exist, and none of the
Common Stock, par value $.01 per share, of HEALTHSOUTH ("HEALTHSOUTH Common
Stock"), cash or other consideration shall be delivered in exchange therefor.
(c) Conversion of ReadiCare Shares. Subject to Section 2.2(d), each
issued and outstanding share of ReadiCare Common Stock (other than shares to be
canceled in accordance with Section 2.1(b)) (collectively, the "Exchanging
ReadiCare Shares") shall be converted into the right to receive .2425 (the
"Exchange Ratio") shares of HEALTHSOUTH Common Stock, as may be adjusted as
provided below (the "Merger Consideration"); provided, however, that (i) if the
Base Period Trading Price (as defined below) shall be greater than $38.30, then
the Exchange Ratio shall be equal to the quotient obtained by dividing $9.29 by
the Base Period Trading Price, computed to four decimal places, (ii) if the Base
Period Trading Price shall be less than $30.60, then the Exchange Ratio shall be
equal to the quotient obtained by dividing $7.42 by the Base Period Trading
Price, computed to four decimal places, and (iii) if the Base Period Trading
Price shall be less than $27.20, then the Exchange Ratio shall be .2728. In the
event that any of the situations described in clauses (i) - (iii) of the
preceding sentence occurs, then the Merger Consideration shall be adjusted
accordingly. For purposes of this Plan of Merger, the term "Base Period Trading
Price" shall mean the average daily closing prices per share for the shares of
HEALTHSOUTH Common Stock for the 20 consecutive trading days on which such
shares are actually traded (as reported on the New York Stock Exchange Composite
Transaction Tape as reported in The
B-3
<PAGE>
Wall Street Journal, Eastern Edition, or if not reported thereby, any other
authoritative source) ending at the close of trading on the second New York
Stock Exchange trading day immediately preceding the date of the Special Meeting
(as defined in Section 7.3) (such period being herein called the "Base Period").
Promptly after the close of trading on such day, the parties shall issue a joint
press release publicly announcing the Exchange Ratio. As of the Effective Time,
all such Exchanging ReadiCare Shares shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any Exchanging ReadiCare Shares shall cease to
have any rights with respect thereto, except the right to receive the Merger
Consideration and any cash in lieu of fractional shares of HEALTHSOUTH Common
Stock to be issued or paid in consideration therefor upon surrender of such
certificate in accordance with Section 2.2, without interest.
(d) Stock Options and Warrants. At the Effective Time, all rights with
respect to ReadiCare Common Stock pursuant to any ReadiCare stock options or
ReadiCare warrants which are outstanding at the Effective Time, whether or not
then exercisable, shall be converted into and become rights with respect to
HEALTHSOUTH Common Stock, and HEALTHSOUTH shall assume each ReadiCare stock
option or ReadiCare warrant, in accordance with the terms of any stock option
plan under which it was issued and any stock option agreement or warrant
agreement, as the case may be, by which it is evidenced. It is intended that the
foregoing provisions shall be undertaken in a manner that will not constitute a
"modification" as defined in Section 425 of the Code, as to any stock option
which is an "incentive stock option". Each ReadiCare stock option or warrant so
assumed shall be exercisable for that number of shares of HEALTHSOUTH Common
Stock equal to the number of ReadiCare shares subject thereto multiplied by the
Exchange Ratio, and shall have an exercise price per share equal to the
ReadiCare exercise price divided by the Exchange Ratio.
(e) Anti-Dilution Provisions. If after the date hereof and prior to the
Effective Time HEALTHSOUTH shall have declared a stock split (including a
reverse split) of HEALTHSOUTH Common Stock or a dividend payable in HEALTHSOUTH
Common Stock, or any other distribution of securities or dividend (in cash or
otherwise) to holders of HEALTHSOUTH Common Stock with respect to their
HEALTHSOUTH Common Stock (including without limitation such a distribution or
dividend made in connection with a recapitalization, reclassification, merger,
consolidation, reorganization, reclassification, merger, consolidation,
reorganization or similar transaction) then (i) the amounts $38.30, $30.60 and
$27.20 referred to in Section 2.1(c), and the Exchange Ratio, shall be
appropriately adjusted
B-4
<PAGE>
to reflect such stock split or dividend or other distribution of securities and
(ii) if such stock split, dividend or distribution has a record date during or
after the Base Period and prior to the Effective Time, then the number of shares
of HEALTHSOUTH Common Stock to be issued upon conversion of a share of ReadiCare
Common Stock pursuant to Section 2.1(c) shall be appropriately adjusted to
reflect such stock split, dividend or other distribution of securities.
2.2 Exchange of Certificates. (a) Exchange Agent. Prior to the
Effective Time, HEALTH- SOUTH shall enter into an agreement with such bank or
trust company as may be designated by HEALTHSOUTH (the "Exchange Agent") which
provides that HEALTHSOUTH shall deposit with the Exchange Agent as of the
Effective Time, for the benefit of the holders of Exchanging ReadiCare Shares,
for exchange in accordance with this Section 2, through the Exchange Agent,
certificates representing the shares of HEALTHSOUTH Common Stock (such shares of
HEALTHSOUTH Common Stock, together with any dividends or distributions with
respect thereto with a record date after the Effective Time, being hereinafter
referred to as the "Exchange Fund") issuable pursuant to Section 2.1 in exchange
for outstanding shares of ReadiCare Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail
to each holder of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of ReadiCare Common
Stock (the "Certificates") whose shares were converted into the right to receive
the Merger Consideration pursuant to Section 2.1, (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
HEALTHSOUTH may reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing
shares of HEALTHSOUTH Common Stock. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by HEALTHSOUTH, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required by the Exchange
Agent, the holder of such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole shares of HEALTHSOUTH
Common Stock which such holder has the right to receive pursuant to the
provisions of this Section 2, and the Certificate so surrendered shall forthwith
be canceled. In the event of a transfer of ownership of shares of ReadiCare
Common Stock which is not registered in the transfer records of ReadiCare, a
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certificate representing the proper number of shares of HEALTHSOUTH Common Stock
may be issued to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such payment
shall pay any transfer or other taxes required by reason of the issuance of
shares of HEALTHSOUTH Common Stock to a person other than the registered holder
of such Certificate or establish to the satisfaction of HEALTHSOUTH that such
tax has been paid or is not applicable. Until surrendered as contemplated by
this Section 2.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
certificate representing shares of HEALTHSOUTH Common Stock and cash in lieu of
any fractional shares of HEALTHSOUTH Common Stock as contemplated by this
Section 2.2. No interest will be paid or will accrue on any cash payable in lieu
of any fractional shares of HEALTHSOUTH Common Stock. To the extent permitted by
law, former stockholders of record of ReadiCare shall be entitled to vote after
the Effective Time at any meeting of HEALTHSOUTH stockholders the number of
whole shares of HEALTHSOUTH Common Stock into which their respective shares of
ReadiCare Common Stock are converted, regardless of whether such holders have
exchanged their Certificates for certificates representing HEALTHSOUTH Common
Stock in accordance with this Section 2.2.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to HEALTHSOUTH Common Stock with a record date
after the Effective Time of the Merger shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of HEALTHSOUTH Common Stock
represented thereby and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 2.2(e) until the surrender of such
Certificate in accordance with this Section 2. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificate representing whole shares of HEALTH- SOUTH
Common Stock issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of any cash payable in lieu of a fractional share of
HEALTHSOUTH Common Stock to which such holder is entitled pursuant to Section
2.2(e) and the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole shares of
HEALTH- SOUTH Common Stock, and (ii) at the appropriate payment date, the amount
of dividends or other distributions with a record date after the Effective Time
but prior to such surrender and with a payment date subsequent to such surrender
payable with respect to such whole shares of HEALTHSOUTH Common Stock.
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(d) No Further Ownership Rights in Exchanging ReadiCare Shares. All
shares of HEALTH- SOUTH Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this Section 2 (including any cash
paid pursuant to Section 2.2(c) or 2.2(e) ) shall be deemed to have been issued
(and paid) in full satisfaction of all rights pertaining to the Exchanging
ReadiCare Shares theretofore represented by such Certificates. If, after the
Effective Time, Certificates are presented to the Surviving Corporation or the
Exchange Agent for any reason, they shall be canceled and exchanged as provided
in this Section 2, except as otherwise provided by law.
(e) No Fractional Shares. No certificates or scrip representing
fractional shares of HEALTH- SOUTH Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to any rights of a stockholder of
HEALTHSOUTH. Notwithstanding any other provision of this Plan of Merger, each
holder of Exchanging ReadiCare Shares exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of HEALTHSOUTH
Common Stock (after taking into account all Certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an amount
equal to such fractional part of a share of HEALTHSOUTH Common Stock multiplied
by the Base Period Trading Price.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of the Certificates for six months
after the Effective Time shall be delivered to HEALTHSOUTH, upon demand, and any
holders of the Certificates who have not theretofore complied with this Section
2 shall thereafter look only to HEALTHSOUTH for payment of HEALTH- SOUTH Common
Stock, any cash in lieu of fractional shares of HEALTHSOUTH Common Stock and any
dividends or distributions with respect to HEALTHSOUTH Common Stock.
(g) No Liability. None of HEALTHSOUTH, the Subsidiary, ReadiCare or the
Exchange Agent shall be liable to any person in respect of any shares of
HEALTHSOUTH Common Stock (or dividends or distributions with respect thereto) or
cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificates shall
not have been surrendered prior to seven years after the Effective Time (or
immediately prior to such earlier date on which any shares of HEALTHSOUTH Common
Stock, any cash in lieu of fractional shares of HEALTHSOUTH Common Stock or any
dividends or distributions with respect to HEALTH-
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SOUTH Common Stock in respect of such Certificates would otherwise escheat to or
become the property of any governmental entity), any such shares, cash,
dividends or distributions in respect of such Certificates shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled
thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund in deposit accounts or short-term money
market instruments, as directed by HEALTHSOUTH, on a daily basis. Any interest
and other income resulting from such investments shall be paid to HEALTHSOUTH.
2.3 Certificate of Incorporation of Surviving Corporation. The
Certificate of Incorporation of ReadiCare shall be amended and restated,
effective at the Effective Time, in a manner satisfactory to HEALTHSOUTH. The
Certificate of Incorporation of ReadiCare, as so amended and restated, shall
become the Certificate of Incorporation of the Surviving Corporation from and
after the Effective Time and until thereafter amended as provided by law.
2.4 Bylaws of the Surviving Corporation. The Bylaws of the Subsidiary
shall be the Bylaws of the Surviving Corporation from and after the Effective
Time and until thereafter altered, amended or repealed in accordance with the
laws of the State of Delaware, the Certificate of Incorporation of ReadiCare and
the said Bylaws.
2.5 Directors and Officers of the Surviving Corporation. The Directors
and officers of the Subsidiary immediately prior to the Effective Time shall be
the Directors and officers of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation.
2.6 Assets, Liabilities, Reserves and Accounts. At the Effective Time,
the assets, liabilities, reserves and accounts of each of the Subsidiary and
ReadiCare shall be taken up on the books of the Surviving Corporation at the
amounts at which they respectively shall be carried on the books of said
corporations immediately prior to the Effective Time, except as otherwise set
forth in the Plan of Merger and subject to such adjustments, or elimination of
intercompany items, as may be appropriate in giving effect to the Merger in
accordance with generally accepted accounting principles.
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2.7 Corporate Acts of the Subsidiary. All corporate acts, plans,
policies, approvals and authorizations of the Subsidiary, its sole stockholder,
its Board of Directors, committees elected or appointed by the Board of
Directors, and all officers and agents, valid immediately prior to the Effective
Time, shall be those of the Surviving Corporation and shall be as effective and
binding thereon as they were with respect to the Subsidiary. The employees and
agents of the Subsidiary shall become the employees and agents of the Surviving
Corporation and continue to be entitled to the same rights and benefits which
they enjoyed as employees and agents of the Subsidiary.
Section 3. REPRESENTATIONS AND WARRANTIES OF READICARE.
ReadiCare hereby represents and warrants to HEALTHSOUTH and the
Subsidiary as follows:
3.1 Organization, Existence and Good Standing. ReadiCare is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. ReadiCare has all necessary corporate power to own its
properties and assets and to carry on its business as presently conducted.
ReadiCare is not, and has not been within the two years immediately preceding
the date of this Plan of Merger, a subsidiary or division of another
corporation, nor has ReadiCare within such time owned, directly or indirectly,
any shares of HEALTHSOUTH Common Stock or Subsidiary Common Stock.
3.2 ReadiCare Capital Stock. ReadiCare's authorized capital consists of
15,000,000 shares of ReadiCare Common Stock, par value $.01 per share, of which
8,252,949 shares were issued and outstanding as of May 31, 1996, and none of
which shares are issued and held as treasury shares, and 1,000,000 shares of
Preferred Stock, none of which shares are issued and outstanding or held as
treasury stock. All of the issued and outstanding shares of ReadiCare Common
Stock are duly and validly issued, fully paid and nonassessable. Except as set
forth on Exhibit 3.2 to the Disclosure Schedule delivered by ReadiCare to
HEALTHSOUTH simultaneously with the execution and delivery hereof (the
"Disclosure Schedule") or otherwise disclosed in the ReadiCare Annual Report on
Form 10-K for the fiscal year ended February 29, 1996 (the "ReadiCare 10-K"),
there are no options, warrants, or similar rights granted by ReadiCare or any
other agreements to which ReadiCare is a party providing for the issuance or
sale by it of any additional securities which would remain in effect after the
Effective Time, other than those reflected in the ReadiCare 10-K. There is no
liability for dividends declared or accumulated but
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unpaid with respect to any of the shares of ReadiCare Common Stock. ReadiCare
has not made any distributions to any holders of ReadiCare Common Stock or
participated in or effected any issuance, exchange or retirement of shares of
ReadiCare Common Stock, or otherwise changed the equity interests of holders of
ReadiCare Common Stock, in contemplation of effecting the Merger within the two
years immediately preceding the date of this Plan of Merger. Any shares of
ReadiCare Common Stock that ReadiCare has re-acquired during the two years
immediately preceding the date of this Plan of Merger have been so re-acquired
only for purposes other than "business combinations", as such term is defined in
Accounting Principles Board Opinion No. 16, as amended ("Business
Combinations").
3.3 Subsidiaries. Attached to the Disclosure Schedule as Exhibit 3.3 is
a list of all subsidiaries of ReadiCare (individually, a "ReadiCare Subsidiary",
and collectively, the "ReadiCare Subsidiaries") and their states of
incorporation. Except as set forth on Exhibit 3.3, ReadiCare does not own stock
or other equity interest in and does not control, directly or indirectly, any
other corporation, partnership, joint venture, limited liability company,
association or business organization.
3.4 Organization, Existence and Good Standing of ReadiCare
Subsidiaries. Each ReadiCare Subsidiary is a corporation or a professional
corporation duly organized, validly existing and in good standing under the laws
of its respective state of incorporation. Each ReadiCare Subsidiary has all
necessary corporate power to own its properties and assets and to carry on its
business as presently conducted.
3.5 Foreign Qualifications. Each of ReadiCare and each ReadiCare
Subsidiary is qualified to do business as a foreign corporation, foreign limited
partnership or foreign limited liability company, as the case may be, and is in
good standing in each jurisdiction where the nature or character of the property
owned, leased or operated by it or the nature of the business transacted by it
makes such qualification necessary, except where the failure to so qualify would
not have a material adverse effect on ReadiCare.
3.6 Power and Authority. Subject to the satisfaction of the conditions
precedent set forth herein, ReadiCare has the corporate power to execute,
deliver and perform the Plan of Merger and all agreements and other documents
executed and delivered or to be executed and delivered by it pursuant to the
Plan of Merger, and, subject to the satisfaction of the conditions precedent set
forth herein has
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taken all action required by its Certificate of Incorporation, Bylaws or
otherwise, to authorize the execution, delivery and performance of the Plan of
Merger and such related documents. Except as set forth on Exhibit 3.6 to the
Disclosure Schedule, the execution and delivery of the Plan of Merger does not
and, subject to the receipt of required stockholder and regulatory approvals and
any other required third-party consents or approvals, the consummation of the
Merger will not, violate any provisions of the Certificate of Incorporation of
ReadiCare or any provisions of, or result in the acceleration of any obligation
under, any material mortgage, lien, lease, agreement, instrument, order,
arbitration award, judgment or decree, to which ReadiCare or any ReadiCare
Subsidiary is a party, or by which it is bound, or violate any restrictions of
any kind to which it is subject which, if violated or accelerated, would have a
material adverse effect on ReadiCare. The execution and delivery of this
Agreement has been approved by the Board of Directors of ReadiCare. This
Agreement has been duly executed and delivered by ReadiCare and, assuming the
receipt of required stockholder and regulatory approvals and further assuming
that this Agreement constitutes a valid and binding obligation of HEALTHSOUTH
and the Subsidiary, as the case may be, constitutes a valid and binding
obligation of ReadiCare, enforceable against ReadiCare in accordance with its
terms.
3.7 ReadiCare Public Information. ReadiCare has heretofore furnished
HEALTHSOUTH with a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed by it with the Securities and
Exchange Commission (the "SEC") (as any such documents have since the time of
their original filing been amended, the "ReadiCare Documents") since January 1,
1995, which are all the documents (other than preliminary material) that it was
required to file with the SEC from such date through the date of this Plan of
Merger. As of their respective dates, the ReadiCare Documents did not contain
any untrue statements of material facts or omit to state material facts required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the ReadiCare Documents complied in all material respects with
the applicable requirements of the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated under such statutes. The financial statements contained in the
ReadiCare Documents, together with the notes thereto, have been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods indicated (except as may be indicated in the notes
thereto, or, in the case of the unaudited financial statements, as permitted by
Form 10-Q), reflect all known liabilities of ReadiCare required to be stated
therein, including all known contingent liabilities as of the end of each period
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reflected therein, and present fairly the financial condition of ReadiCare at
said dates and the consolidated results of operations and cash flows of
ReadiCare for the periods then ended. The consolidated balance sheet of
ReadiCare at May 31, 1996 included in the ReadiCare Documents is herein
sometimes referred to as the "ReadiCare Balance Sheet".
3.8 Revenue Analysis. Exhibit 3.8 to the Disclosure Schedule sets forth
an analysis of net patient revenues by facility for each facility operated by
ReadiCare or any ReadiCare Subsidiary describing net patient revenues for the
month ended May 31, 1996 and the three-month period ended May 31, 1996. Such
revenue analysis is true and correct in all material respects.
3.9 Legal Proceedings. Except as disclosed in the ReadiCare Documents
or on Exhibit 3.9 to the Disclosure Schedule, there is no material litigation,
governmental investigation or other proceeding pending or, so far as is known to
ReadiCare, threatened against or relating to ReadiCare, its properties or
business, or the transaction contemplated by the Plan of Merger and, so far as
is known to ReadiCare, no basis for any such action exists.
3.10 Contracts, etc. (a) All material contracts, leases, agreements and
arrangements to which ReadiCare or any of the ReadiCare Subsidiaries is a party
are legally valid and binding in accordance with their terms and in full force
and effect. To the knowledge of ReadiCare, no party is in default thereunder,
and no event has occurred which, but for the passage of time or the giving of
notice or both, would constitute a default thereunder, except, in each case,
where the invalidity of the lease, contract, agreement or arrangement or the
default or breach thereunder or thereof would not, individually or in the
aggregate, have a material adverse effect on ReadiCare.
(b) Except as set forth on Exhibit 3.10 to the Disclosure Schedule, no
contract or agreement to which ReadiCare or any ReadiCare Subsidiary is a party
will, by its terms, terminate as a result of the transactions contemplated
hereby or require any consent from any obligor thereto in order to remain in
full force and effect immediately after the Effective Time, except for contracts
or agreements which, if terminated, would not have a material adverse effect on
ReadiCare.
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(c) Except as set forth on Exhibit 3.10 to the Disclosure Schedule,
neither ReadiCare nor any ReadiCare Subsidiary has granted any right of first
refusal or similar right in favor of any third party with respect to any
material portion of its properties or assets or entered into any non-competition
agreement or similar agreement restricting its ability to engage in any business
in any location.
3.11 Subsequent Events. Except as set forth on Exhibit 3.11 to the
Disclosure Schedule or disclosed in the ReadiCare Documents, ReadiCare has not,
since the date of the last-filed ReadiCare Document:
(a) Incurred any material adverse change, including, but not
limited to, any material adverse change in patient visits from those
reflected on Exhibit 3.8.
(b) Discharged or satisfied any material lien or encumbrance,
or paid or satisfied any material obligation or liability (absolute,
accrued, contingent or otherwise) other than (i) liabilities shown or
reflected on the ReadiCare Balance Sheet or (ii) liabilities incurred
since the date of the last-filed ReadiCare Document in the ordinary
course of business, which discharge or satisfaction would have a
material adverse effect on ReadiCare.
(c) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor which would
have a material adverse effect on ReadiCare, except as may have been
required due to income or operations of ReadiCare since the date of the
last-filed ReadiCare Document.
(d) Mortgaged, pledged or subjected to any lien, charge or
other encumbrance any of the assets, tangible or intangible, which
assets are material to the consolidated business or financial condition
of ReadiCare.
(e) Sold or transferred any of the assets material to the
consolidated business of ReadiCare, cancelled any material debts or
claims or waived any material rights, except in the ordinary course of
business.
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(f) Granted any general or uniform increase in the rates of
pay of employees or any material increase in salary payable or to
become payable by ReadiCare to any officer or employee, consultant or
agent (other than normal merit increases), or by means of any bonus or
pension plan, contract or other commitment, increased in a material
respect the compensation of any officer, employee, consultant or agent.
(g) Except for this Plan of Merger and any other agreement
executed and delivered pursuant to this Plan of Merger, entered into
any material transaction other than in the ordinary course of business
or permitted under other Sections hereof.
(h) Issued any stock, bonds or other securities, other than
stock options granted to employees, directors or consultants of
ReadiCare or warrants granted to third parties, all of which are
disclosed on Exhibit 3.2 to the Disclosure Schedule or in the ReadiCare
Documents.
3.12 Accounts Receivable. (a) Since the date of the ReadiCare 10-K,
ReadiCare has not changed any material principle or practice with respect to the
recordation of accounts receivable or the calculation of reserves therefor, or
any material collection, discount or write-off policy or procedure. ReadiCare
(including the ReadiCare Subsidiaries) is in compliance with the terms and
conditions of all third-party payor arrangements relating to its accounts
receivable, except to the extent that such noncompliance would not have a
material adverse effect on ReadiCare.
(b) Without limiting the generality of the foregoing, ReadiCare and
each ReadiCare Subsidiary is in compliance with all Medicare and Medicaid
provider agreements to which it is a party, except to the extent that such
noncompliance would not have a material adverse effect on ReadiCare.
3.13 Tax Returns. ReadiCare has filed all tax returns required to be
filed by it, or requests for extensions to file such returns or reports have
been timely filed and granted and have not expired, except to the extent that
such failures to file, taken together, do not have a material adverse effect on
ReadiCare. ReadiCare has made all payments shown as due on such returns.
ReadiCare has not been notified that any tax returns of ReadiCare are currently
under audit by the Internal Revenue Service or any state or local tax agency. No
agreements have been made by ReadiCare for the extension of time
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or the waiver of the statute of limitations for the assessment or payment of any
federal, state or local taxes.
3.14 Commissions and Fees. Except for fees payable to Crowell, Weedon &
Co. ("Crowell Weedon"), there are no valid claims for brokerage commissions or
finder's or similar fees in connection with the transactions contemplated by
this Plan of Merger which may be now or hereafter asserted against HEALTHSOUTH
resulting from any action taken by ReadiCare or its stockholders, officers or
Directors, or any of them.
3.15 Employee Benefit Plans; Employment Matters. (a) Except as
described in the ReadiCare Documents or set forth on Exhibit 3.15(a) to the
Disclosure Schedule, ReadiCare has neither established nor maintains nor is
obligated to make contributions to or under or otherwise participate in (a) any
bonus or other type of incentive compensation plan, program, agreement, policy,
commitment, contract or arrangement (whether or not set forth in a written
document), (b) any pension, profit-sharing, retirement or other plan, program or
arrangement, or (c) any other employee benefit plan, fund or program, including,
but not limited to, those described in Section 3(3) of ERISA. All such plans
(individually, a "Plan" and collectively, the "Plans") have been operated and
administered in all material respects in accordance with, as applicable, ERISA,
the Internal Revenue Code of 1986, as amended, Title VII of the Civil Rights Act
of 1964, as amended, the Equal Pay Act of 1967, as amended, the Age
Discrimination in Employment Act of 1967, as amended, and the related rules and
regulations adopted by those federal agencies responsible for the administration
of such laws. No act or failure to act by ReadiCare has resulted in a
"prohibited transaction" (as defined in ERISA) with respect to the Plans that is
not subject to a statutory or regulatory exception. No "reportable event" (as
defined in ERISA) has occurred with respect to any of the Plans which is subject
to Title IV of ERISA. ReadiCare has not previously made, is not currently
making, and is not obligated in any way to make, any contributions to any
multi-employer plan within the meaning of the Multi-Employer Pension Plan
Amendments Act of 1980.
(b) Except as described in the ReadiCare Documents or set forth on
Exhibit 3.15(b) to the Disclosure Schedule, ReadiCare is not a party to any oral
or written (i) union, guild or collective bargaining agreement which agreement
covers employees in the United States (nor is it aware of any union organizing
activity currently being conducted in respect to any of its employees), (ii)
agreement with any executive officer or other key employee the benefits of which
are contingent, or the terms of
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which are materially altered, upon the occurrence of a transaction of the nature
contemplated by this Plan of Merger and which provides for the payment of in
excess of $50,000, or (iii) agreement or plan, including any stock option plan,
stock appreciation rights plan, restricted stock plan or stock purchase plan,
any of the benefits of which will be increased, or the vesting the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Plan of Merger or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Plan of Merger.
3.16 Compliance with Laws in General. Except as set forth on Exhibit
3.16 to the Disclosure Schedule or disclosed in the ReadiCare Documents,
ReadiCare has not received any notices of material violations of any federal,
state and local laws, regulations and ordinances relating to its business and
operations, including, without limitation, the Federal Environmental Protection
Act, the Occupational Safety and Health Act, the Americans with Disabilities
Act, the Medicare or applicable Medicaid statutes and regulations, the
California Workers' Compensation Health Care Provider Organization Act of 1993,
any other statutes or regulations relating to the provision of workers'
compensation healthcare services and any Environmental Laws, and no notice of
any pending inspection or violation of any such law, regulation or ordinance has
been received by ReadiCare which, if it were determined that a violation had
occurred, would have a material effect on ReadiCare.
3.17 Licenses, Accreditation and Regulatory Approvals. ReadiCare and
the ReadiCare Subsidiaries hold all licenses, permits, certificates of need and
other regulatory approvals which are needed or required by law with respect to
their businesses, operations and facilities as they are currently or presently
conducted, including, but not limited to, certification as a Workers'
Compensation Health Care Provider Organization in the State of California
(collectively, the "Licenses"), except where the failure to possess such
Licenses does not have a material adverse effect on ReadiCare. All such Licenses
are in full force and effect, and ReadiCare is in compliance in all material
respects with all conditions and requirements of the Licenses and with all rules
and regulations relating thereto. ReadiCare and the ReadiCare Subsidiaries are,
to the extent applicable to their operations, (i) eligible to receive payment
under Titles XVIII and XIX of the Social Security Act, (ii) providers under
existing provider agreements with the Medicare program through the applicable
intermediaries and (iii) in compliance with the conditions of participation in
the Medicare program except for such noncompliance as does not have a material
adverse effect on ReadiCare. ReadiCare and the ReadiCare Subsidiaries have
timely filed all
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requisite claims and other reports required to be filed in connection with the
Medicare, Medicaid and other governmental health programs due on or before the
date hereof, all of which were, when filed, complete and correct in all material
respects. There are no current claims, actions or appeals pending, and neither
ReadiCare nor the ReadiCare Subsidiaries have filed any claims or reports which
should result in such claims, actions or appeals, before any commission, board
or agency, including, without limitation, any intermediary or carrier, the
Provider Reimbursement Review Board or the Administrator of the Health Care
Financing Administration with respect to any Medicare claims, or any
disallowances in connection with any audit of claims, which could have a
material adverse effect on ReadiCare. The amounts established as provisions for
adjustments by Medicare, Medicaid and other third-party payors on the financial
statements set forth in the last-filed ReadiCare Document are sufficient to pay
any amounts for which ReadiCare may be liable. To the knowledge of ReadiCare,
neither ReadiCare nor the ReadiCare Subsidiaries nor their respective employees
have committed a violation of the Medicare and Medicaid fraud and abuse
provisions of the Social Security Act or any similar provisions of any other
federal or state law. Except as disclosed in the ReadiCare Documents, any and
all past litigation concerning such Licenses, regulatory approvals, and all
claims and causes of action raised therein, has been finally adjudicated. No
such License has been revoked, conditioned (except as may be customary) or
restricted, and, except as disclosed in the ReadiCare Documents, no action
(equitable, legal or administrative), arbitration or other process is pending,
or to the knowledge of ReadiCare, threatened, which in any way challenges the
validly of, or seeks to revoke, condition or restrict any such License. Subject
to compliance with applicable securities laws, the Hart Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and state or local
statutes, rules or regulations requiring notice, approval, or other action upon
the occurrence of a change in control of ReadiCare or any of the ReadiCare
Subsidiaries, the consummation of the Merger will not violate any law or
regulation to which ReadiCare is subject which, if violated, would have a
material adverse effect on ReadiCare.
3.18 Retirement or Re-Acquisition of HEALTHSOUTH Common Stock.
ReadiCare is not a party to any agreement the effect of which would be to
require HEALTHSOUTH directly or indirectly to retire or re-acquire all or part
of the shares of HEALTHSOUTH Common Stock issued pursuant to Section 2.1 hereof.
3.19 Disposition of Assets of Surviving Corporation. ReadiCare is not a
party to any plan to dispose of a significant part of the assets of the
Surviving Corporation within two years after the Closing
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Date, other than dispositions in the ordinary course of business of the
Surviving Corporation and dispositions intended to eliminate duplicate
facilities or excess capacity.
3.20 Vote Required. The affirmative vote of the holders of a majority
of the outstanding shares of the ReadiCare Common Stock entitled to vote thereon
is the only vote of the holders of any class or series of ReadiCare capital
stock necessary to approve this Plan of Merger, the Merger and the transactions
contemplated hereby.
3.21 Opinion of Financial Advisor. ReadiCare has received the oral
opinion of Crowell Weedon to the effect that, as of the date of this Agreement,
the Merger Consideration is fair to the holders of ReadiCare Shares from a
financial point of view, a written copy of which opinion will be delivered by
ReadiCare to HEALTHSOUTH prior to the date on which the definitive proxy
materials for the Proxy Statement (as defined in Section 7.4(a)) are filed with
the SEC.
3.22 No Untrue Representations. No representation or warranty by
ReadiCare in this Plan of Merger, and no Exhibit or certificate issued by
ReadiCare and furnished or to be furnished to HEALTH- SOUTH pursuant hereto, or
in connection with the transactions contemplated hereby, contains or will
contain any untrue statement of a material fact in response to the disclosure
requested, or omits or will omit to state a material fact necessary to make the
statements or facts contained therein in response to the disclosure requested
not misleading in light of all of the circumstances then prevailing.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE SUBSIDIARY AND HEALTHSOUTH.
The Subsidiary and HEALTHSOUTH, jointly and severally, hereby represent
and warrant to ReadiCare as follows:
4.1 Organization, Existence and Capital Stock. The Subsidiary is a
corporation duly organized and validly existing and is in good standing under
the laws of the State of Delaware. The Subsidiary's authorized capital consists
of 1,000 shares of Common Stock, par value $.01 per share, all of which shares
are issued and registered in the name of HEALTHSOUTH. The Subsidiary has not,
within the two years immediately preceding the date of this Plan of Merger,
owned, directly or indirectly, any shares of ReadiCare Common Stock.
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4.2 Power and Authority. The Subsidiary has corporate power to execute,
deliver and perform the Plan of Merger and all agreements and other documents
executed and delivered, or to be executed and delivered, by it pursuant to the
Plan of Merger, and, subject to the satisfaction of the conditions precedent set
forth herein, has taken all actions required by law, its Certificate of
Incorporation, its Bylaws or otherwise, to authorize the execution and delivery
of the Plan of Merger and such related documents. The execution and delivery of
the Plan of Merger does not and, subject to the receipt of required stockholder
and regulatory approvals and any other required third-party consents or
approvals, the consummation of the Merger contemplated hereby will not, violate
any provisions of the Certificate of Incorporation or Bylaws of the Subsidiary,
or any agreement, instrument, order, judgment or decree to which the Subsidiary
is a party or by which it is bound, violate any restrictions of any kind to
which the Subsidiary is subject, or result in the creation of any lien, charge
or encumbrance upon any of the property or assets of the Subsidiary.
4.3 No Subsidiaries. The Subsidiary does not own stock in, and does not
control directly or indirectly, any other corporation, association or business
organization. The Subsidiary is not a party to any joint venture or partnership.
4.4 Legal Proceedings. There are no actions, suits or proceedings
pending or threatened against the Subsidiary, at law or in equity, relating to
or affecting the Subsidiary, including the Merger. The Subsidiary does not know
or have any reasonable grounds to know of any justification for any such action,
suit or proceeding.
4.5 No Contracts or Liabilities. Other than the obligations created
under the Plan of Merger, the Subsidiary is not obligated under any contracts,
claims, leases, liabilities (contingent or otherwise), loans or otherwise.
Section 5. REPRESENTATIONS AND WARRANTIES OF HEALTHSOUTH.
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HEALTHSOUTH hereby represents and warrants to ReadiCare as follows:
5.1 Organization, Existence and Good Standing. HEALTHSOUTH is a
corporation duly organized and validly existing and is in good standing under
the laws of the State of Delaware. HEALTHSOUTH has all necessary corporate power
to own its properties and assets and to carry on its business as presently
conducted. HEALTHSOUTH is duly qualified to do business and is in good standing
in all jurisdictions in which the character of the property owned, leased or
operated or the nature of the business transacted by it makes qualification
necessary. HEALTHSOUTH is not, and has not been within the two years immediately
preceding the date of this Plan of Merger, a subsidiary or division of another
corporation, nor has HEALTHSOUTH within such time owned, directly or indirectly,
any shares of ReadiCare Common Stock.
5.2 Power and Authority. HEALTHSOUTH has corporate power to execute,
deliver and perform the Plan of Merger and all agreements and other documents
executed and delivered, or to be executed and delivered, by it pursuant to the
Plan of Merger, and, subject to the satisfaction of the conditions precedent set
forth herein has taken all actions required by law, its Certificate of
Incorporation, its Bylaws or otherwise, to authorize the execution and delivery
of the Plan of Merger and such related documents. The execution and delivery of
the Plan of Merger does not and, subject to the receipt of required stockholder
and regulatory approvals and any other required third-party consents or
approvals, the consummation of the Merger contemplated hereby will not, violate
any provisions of the Certificate of Incorporation or Bylaws of HEALTHSOUTH, or
any provision of, or result in the acceleration of any obligation under, any
mortgage, lien, lease, agreement, instrument, order, arbitration award, judgment
or decree to which HEALTHSOUTH is a party or by which it is bound, or violate
any restrictions of any kind to which HEALTHSOUTH is subject. The execution and
delivery of this Agreement has been approved by the Board of Directors of
HEALTHSOUTH. This Agreement has been duly executed and delivered by HEALTHSOUTH
and the Subsidiary and, assuming the receipt of required regulatory approvals
and further assuming that this Agreement constitutes a valid and binding
obligation of ReadiCare, constitutes a valid and binding obligation of
HEALTHSOUTH and the Subsidiary, enforceable against HEALTHSOUTH and the
Subsidiary in accordance with its terms.
5.3 HEALTHSOUTH Common Stock. On the Closing Date, HEALTHSOUTH will
have a sufficient number of authorized but unissued and/or treasury shares of
its Common Stock available for
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issuance to the holders of ReadiCare Shares in accordance with the provisions of
the Plan of Merger. The HEALTHSOUTH Common Stock to be issued pursuant to the
Plan of Merger will, when so delivered, be (i) duly and validly issued, fully
paid and nonassessable, (ii) issued pursuant to an effective registration
statement under the Securities Act of 1933, as amended, and (iii) authorized for
listing on the New York Stock Exchange, Inc. (the "Exchange") upon official
notice of issuance.
5.4 Capitalization. HEALTHSOUTH's authorized capital stock consists of
1,500,000 shares of Preferred Stock, par value $.10 per share, of which no
shares are issued and outstanding, and no shares are held in treasury, and
250,000,000 shares of Common Stock, par value $.01 per share, of which
155,051,946 shares are issued and outstanding, and 93,000 shares are held in
treasury. All of the issued and outstanding shares of HEALTHSOUTH Common Stock
have been duly and validly issued and are fully paid and non-assessable. Except
as disclosed in the HEALTHSOUTH Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, as amended (the "HEALTHSOUTH 10-K"), there are no
options, warrants, convertible debentures or similar rights granted by
HEALTHSOUTH or any other agreements to which HEALTHSOUTH is a party providing
for the issuance or sale by it of any additional securities, other than stock
options granted in the ordinary course since such date. There is no liability
for dividends declared or accumulated but unpaid with respect to any shares of
HEALTH- SOUTH Common Stock. HEALTHSOUTH has not made any distributions to any
holder of HEALTHSOUTH Common Stock or participated in or effected any issuance,
exchange or retirement of HEALTHSOUTH Common Stock, or otherwise changed the
equity interests of holders of HEALTHSOUTH Common Stock, in contemplation of
effecting the Merger within the two years immediately preceding the date of this
Plan of Merger. Any shares of HEALTHSOUTH Common Stock that HEALTHSOUTH has
re-acquired during the two years immediately preceding the date of this Plan of
Merger have been so re-acquired only for purposes other than Business
Combinations.
5.5 Subsidiary Common Stock. HEALTHSOUTH owns, beneficially and of
record, all of the issued and outstanding shares of Subsidiary Common Stock,
which are validly issued and outstanding, fully paid and nonassessable, free and
clear of all liens and encumbrances. HEALTHSOUTH has the corporate power to
endorse and surrender such Subsidiary Shares for cancellation pursuant to the
Plan of Merger. HEALTHSOUTH has taken all such actions as may be required in its
capacity as the sole stockholder of the Subsidiary to approve the Merger.
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5.6 HEALTHSOUTH Documents. HEALTHSOUTH has heretofore furnished
ReadiCare with a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed by it with the SEC (as any such
documents have since the time of their original filing been amended, the
"HEALTHSOUTH Documents") since January 1, 1995, which are all the documents
(other than preliminary material) that it was required to file with the SEC
since such date. As of their respective dates, the HEALTHSOUTH Documents did not
contain any untrue statements of material facts or omit to state material facts
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. As of
their respective dates, the HEALTHSOUTH Documents complied in all material
respects with the applicable requirements of the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated under such statutes. The financial statements contained
in the HEALTHSOUTH Documents, together with the notes thereto, have been
prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods indicated (except as may be
indicated in the notes thereto, or, in the case of the unaudited financial
statements, as permitted by Form 10-Q), reflect all known liabilities of
HEALTHSOUTH required to be stated therein, including all known contingent
liabilities as of the end of each period reflected therein, and present fairly
the financial condition of HEALTHSOUTH at said dates and the consolidated
results of operations and cash flows of HEALTHSOUTH for the periods then ended.
5.7 Investment Intent. HEALTHSOUTH is acquiring the shares of ReadiCare
Common Stock hereunder for its own account and not with a view to the
distribution or sale thereof, and HEALTHSOUTH has no understanding, agreement or
arrangement to sell, distribute, partition or otherwise transfer or assign all
or any part of the shares of ReadiCare Common Stock to any other person, firm or
corporation.
5.8 Legal Proceedings. Except as disclosed in the HEALTHSOUTH 10-K,
there is no material litigation, governmental investigation or other proceeding
pending or, so far as is known to HEALTHSOUTH, threatened against or relating to
HEALTHSOUTH, its properties or business, or the transaction contemplated by the
Plan of Merger and, so far as is known to HEALTHSOUTH, no basis for any such
action exists.
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5.9 No Violations. Subject to compliance with applicable securities
laws and the HSR Act, the consummation of the Merger will not violate any law or
restriction to which HEALTHSOUTH is subject.
5.10 Subsequent Events. Except as disclosed in the HEALTHSOUTH
last-filed HEALTHSOUTH Document, HEALTHSOUTH has not, since the date of the
last-filed HEALTHSOUTH Document:
(a) Incurred any material adverse change.
(b) Discharged or satisfied any material lien or encumbrance,
or paid or satisfied any material obligation or liability (absolute,
accrued, contingent or otherwise) other than (i) liabilities shown or
reflected on the March 31, 1996 Balance Sheet contained in the
HEALTHSOUTH Quarterly Report on Form 10-Q for the quarter ended June
30, 1996 (the "HEALTHSOUTH 10-Q") or (ii) liabilities incurred since
the date of the HEALTHSOUTH 10-Q in the ordinary course of business,
which discharge or satisfaction would have a material adverse effect on
HEALTHSOUTH.
(c) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor which would
have a material adverse effect on HEALTHSOUTH, except as may have been
required due to income or operations of HEALTHSOUTH since June 30,
1996.
(d) Mortgaged, pledged or subjected to any lien, charge or
other encumbrance any of the assets, tangible or intangible, which
assets are material to the consolidated business or financial condition
of HEALTHSOUTH.
(e) Sold or transferred any of the assets material to the
consolidated business of HEALTHSOUTH, cancelled any material debts or
claims or waived any material rights, except in the ordinary course of
business.
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(f) Granted any general or uniform increase in the rates of
pay of employees or any material increase in salary payable or to
become payable by HEALTHSOUTH to any officer or employee, consultant or
agent (other than normal merit increases), or by means of any bonus or
pension plan, contract or other commitment, increased in a material
respect the compensation of any officer, employee, consultant or agent.
(g) Except for this Plan of Merger and any other agreement
executed and delivered pursuant to this Plan of Merger, entered into
any material transaction other than in the ordinary course of business
or permitted under other Sections hereof.
(h) Issued any stock, bonds or other securities, other than
stock options granted to employees or consultants of HEALTHSOUTH or
warrants granted to third parties, all of which are described in the
HEALTHSOUTH Documents.
5.11 Retirement or Re-Acquisition of HEALTHSOUTH Common Stock.
HEALTHSOUTH has not agreed directly or indirectly to retire or re-acquire all or
part of the shares of HEALTHSOUTH Common Stock issued pursuant to Section 2.1
hereof.
5.12 Disposition of Assets of Surviving Corporation. HEALTHSOUTH does
not intend or plan to dispose of, or to cause the Surviving Corporation to
dispose of, a significant part of the assets of the Surviving Corporation within
two years after the Effective Time, other than dispositions in the ordinary
course of business of the Surviving Corporation and dispositions intended to
eliminate duplicate facilities or excess capacity.
5.13 No Untrue Representation. No representation or warranty by
HEALTHSOUTH in this Plan of Merger, and no Exhibit or certificate issued by
HEALTHSOUTH and furnished or to be furnished to ReadiCare pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact in response to the disclosure requested,
or omits or will omit to state a material fact necessary to make the statement
or facts contained therein in response to the disclosure requested not
misleading in light of all of the circumstances then prevailing.
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Section 6. ACCESS TO INFORMATION AND DOCUMENTS.
6.1 Access to Information. Between the date hereof and the Closing
Date, each of ReadiCare and HEALTHSOUTH will give to the other party and its
counsel, accountants and other representatives full access to all the
properties, documents, contracts, personnel files and other records of such
party and shall furnish the other party with copies of such documents and with
such information with respect to the affairs of such party as the other party
may from time to time reasonably request. Each party will disclose and make
available to the other party and its representatives all books, contracts,
accounts, personnel records, letters of intent, papers, records, communications
with regulatory authorities and other documents relating to the business and
operations of such party. In addition, ReadiCare shall make available to
HEALTHSOUTH all such banking, investment and financial information as shall be
necessary to allow for the efficient integration of ReadiCare's banking,
investment and financial arrangements with those of HEALTHSOUTH at the Effective
Time.
6.2 Return of Records. If the transactions contemplated hereby are not
consummated and this Plan of Merger terminates, each party agrees to promptly
return all documents, contracts, records or properties of the other party and
all copies thereof furnished pursuant to this Section 6 or otherwise. All
information disclosed by any party or any affiliate or representative of any
party shall be deemed to be "Confidential Information" under the terms of the
Confidentiality Agreement dated August 8, 1996, between ReadiCare and
HEALTHSOUTH (the "Confidentiality Agreement").
6.3 Effect of Access. (a) Nothing contained in this Section 6 shall be
deemed to create any duty or responsibility on the part of either party to
investigate or evaluate the value, validity or enforceability of any contract,
lease or other asset included in the assets of the other party.
(b) With respect to matters as to which any party has made express
representations or warranties herein, the parties shall be entitled to rely upon
such express representations and warranties irrespective of any investigations
made by such parties, except to the extent that such investigations result in
actual knowledge of the inaccuracy or falsehood of particular representations
and warranties.
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Section 7. COVENANTS.
7.1 Preservation of Business. ReadiCare will use its best efforts to
preserve the business organization of ReadiCare intact, to keep available to
HEALTHSOUTH and the Surviving Corporation the services of the present employees
of ReadiCare, and to preserve for HEALTHSOUTH and the Surviving Corporation the
goodwill of the suppliers, customers and others having business relations with
ReadiCare.
7.2 Material Transactions. Prior to the Effective Time, ReadiCare will
not (other than as required pursuant to the terms of the Plan of Merger and the
related documents, and other than with respect to transactions for which binding
commitments have been entered into prior to the date hereof which are described
on Exhibit 7.2 to the Disclosure Schedule), without first obtaining the written
consent of HEALTHSOUTH:
(a) Encumber any asset or enter into any transaction or make
any contract or commitment relating to the properties, assets and
business of ReadiCare, other than in the ordinary course of business or
as otherwise disclosed herein.
(b) Enter into any employment contract which is not terminable
upon notice of 30 days or less, at will, and without penalty to
ReadiCare except as provided herein.
(c) Enter into any contract or agreement (i) which cannot be
performed within three months or less, or (ii) which involves the
expenditure of over $50,000.
(d) Issue or sell, or agree to issue or sell, any shares of
capital stock or other securities of ReadiCare, except upon exercise of
currently outstanding stock options or warrants.
(e) Make any payment or distribution to the trustee under any
bonus, pension, profit-sharing or retirement plan or incur any
obligation to make any such payment or contribution which is not in
accordance with ReadiCare's usual past practice, or make any payment or
contributions or incur any obligation pursuant to or in respect
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of any other plan or contract or arrangement providing for bonuses,
executive incentive compensation, pensions, deferred compensation,
retirement payments, profit-sharing or the like, establish or enter
into any such plan, contract or arrangement, or terminate any Plan.
(f) Extend credit to anyone, except in the ordinary course of
business consistent with prior practices.
(g) Guarantee the obligation of any person, firm or
corporation, except in the ordinary course of business consistent with
prior practices.
(h) Amend its Certificate of Incorporation or Bylaws.
(i) Take any action of a character described in Section
3.11(a) to 3.11(h), inclusive.
7.3 Meeting of ReadiCare Stockholders. (a) ReadiCare will take all
steps necessary in accordance with their respective Certificates of
Incorporation and Bylaws to call, give notice of, convene and hold a meeting of
its stockholders (the "Special Meeting") as soon as practicable after the
effectiveness of the Registration Statement (as defined in Section 7.4 hereof),
for the purpose of approving this Plan of Merger and for such other purposes as
may be necessary. Unless this Plan of Merger shall have been validly terminated
as provided herein, the Board of Directors of ReadiCare (subject to the
provisions of Section 8.1(d) hereof) will (i) recommend to ReadiCare's
stockholders the approval of this Plan of Merger, the transactions contemplated
hereby and any other matters to be submitted to the stockholders in connection
therewith, to the extent that such approval is required by applicable law in
order to consummate the Merger, and (ii) use reasonable, good faith efforts to
obtain the approval by ReadiCare's stockholders of this Plan of Merger and the
transactions contemplated hereby.
(b) Nothing contained herein shall affect the right of ReadiCare to
take action by written consent in lieu of meeting to the extent permitted by
applicable law and its Certificate of Incorporation and Bylaws.
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7.4 Registration Statement. (a) HEALTHSOUTH shall prepare and file with
the Securities and Exchange Commission and any other applicable regulatory
bodies, as soon as reasonably practicable, a Registration Statement on Form S-4
with respect to the shares of HEALTHSOUTH Common Stock to be issued in the
Merger (the "Registration Statement"), and will otherwise proceed promptly to
satisfy the requirements of the Securities Act of 1933, including Rule 145
thereunder. Such Registration Statement shall contain a proxy statement of
ReadiCare containing the information required by the Securities Exchange Act of
1934 (the "Proxy Statement"). HEALTHSOUTH shall take all reasonable steps to
cause the Registration Statement to be declared effective and to maintain such
effectiveness until all of the shares covered thereby have been distributed.
HEALTHSOUTH shall promptly amend or supplement the Registration Statement to the
extent necessary in order to make the statements therein not misleading or to
correct any misstatements which have become false or misleading. HEALTHSOUTH
shall use its reasonable, good faith efforts to have the Proxy Statement
approved by the SEC under the provisions of the Securities Exchange Act of 1934.
HEALTHSOUTH shall provide ReadiCare with copies of all filings made pursuant to
this Section 7.4 and shall consult with ReadiCare on responses to any comments
made by the Staff of the SEC with respect thereto.
(b) The information specifically designated as being supplied by
ReadiCare for inclusion in the Registration Statement shall not, at the time the
Registration Statement is declared effective, at the time the Proxy Statement is
first mailed to holders of ReadiCare Common Stock, at the time of the Special
Meeting and at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading. The
information specifically designated as being supplied by ReadiCare for inclusion
in the Proxy Statement shall not, at the date the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to holders of ReadiCare
Common Stock, at the time of the Special Meeting and at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. If at any time prior to the Effective Time any event or circumstance
relating to ReadiCare, or its officers or directors, should be discovered by
ReadiCare which should be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement, ReadiCare shall promptly
inform HEALTHSOUTH. All documents, if any, that ReadiCare is responsible for
filing with the SEC in connection with the transactions contemplated herein will
comply as to form and substance in all material respects with the applicable
requirements of the
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Securities Act and the rules and regulations thereunder and the Exchange Act and
the rules and regulations thereunder.
(c) The information specifically designated as being supplied by
HEALTHSOUTH for inclusion in the Registration Statement shall not, at the time
the Registration Statement is declared effective, at the time the Proxy
Statement is first mailed to holders of ReadiCare Common Stock, at the time of
the Special Meeting and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. The
information specifically designated as being supplied by HEALTHSOUTH for
inclusion in the Proxy Statement to be sent to the holders of ReadiCare Common
Stock in connection with the Special Meeting shall not, at the date the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
holders of ReadiCare Common Stock, at the time of the Special Meeting or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading. If at any time prior to the Effective Time any event or
circumstance relating to HEALTHSOUTH or its officers or directors, should be
discovered by HEALTHSOUTH which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement, HEALTHSOUTH shall
promptly inform ReadiCare and shall promptly file such amendment to the
Registration Statement. All documents that HEALTHSOUTH is responsible for filing
with the SEC in connection with the transactions contemplated herein will comply
as to form and substance in all material respects with the applicable
requirements of the Securities Act and the rules and regulations thereunder and
the Exchange Act and the rules and regulations thereunder.
(d) Prior to the Closing Date, HEALTHSOUTH shall use its reasonable,
good faith efforts to cause the shares of HEALTHSOUTH Common Stock to be issued
pursuant to the Merger to be registered or qualified under all applicable
securities or Blue Sky laws of each of the states and territories of the United
States, and to take any other actions which may be necessary to enable the
Common Stock to be issued pursuant to the Merger to be distributed in each such
jurisdiction.
(e) Prior to the Closing Date, HEALTHSOUTH shall file an additional
listing application (the "Listing Application") with the Exchange relating to
the shares of HEALTHSOUTH Common Stock to be issued in connection with the
Merger, and shall use its reasonable, good faith efforts to cause such
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shares of HEALTHSOUTH Common Stock to be approved for listing on the Exchange,
upon official notice of issuance, prior to the Closing Date.
(f) ReadiCare shall furnish all information to HEALTHSOUTH with respect
to ReadiCare and the ReadiCare Subsidiaries and ReadiCare Other Entities as
HEALTHSOUTH may reasonably request for inclusion in the Registration Statement,
the Proxy Statement and the Listing Application, and shall otherwise cooperate
with HEALTHSOUTH in the preparation and filing of such documents.
7.5 Exemption from State Takeover Laws. ReadiCare shall take all
reasonable steps necessary to exempt the Merger from the requirements of any
state takeover statute or other similar state law which would prevent or impede
the consummation of the transactions contemplated hereby, by action of
ReadiCare's Board of Directors or otherwise.
7.6 HSR Act Compliance. HEALTHSOUTH and ReadiCare shall promptly make
their respective filings, and shall thereafter use their reasonable, good faith
efforts to promptly make any required submissions, under the HSR Act with
respect to the Merger and the transactions contemplated hereby. HEALTHSOUTH and
ReadiCare will use their respective reasonable, good faith efforts to obtain all
other permits, authorizations, consents and approvals from third parties and
governmental authorities necessary to consummate the Merger and the transactions
contemplated hereby.
7.7 Public Disclosures. HEALTHSOUTH and ReadiCare will consult with
each other before issuing any press release or otherwise making any public
statement with respect to the transactions contemplated by this Plan of Merger,
and shall not issue any such press release or make any such public statement
prior to such consultation except as may be required by applicable law or
requirements of the Exchange. The parties shall issue a joint press release,
mutually acceptable to HEALTHSOUTH and ReadiCare, promptly upon execution and
delivery of this Plan of Merger.
7.8 Resignation of ReadiCare Directors. On or prior to the Closing
Date, ReadiCare shall deliver to HEALTHSOUTH evidence satisfactory to
HEALTHSOUTH of the resignation of the Directors of ReadiCare, such resignations
to be effective on the Closing Date.
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7.9 Notice of Subsequent Events. Each party hereto shall notify the
other parties of any changes, additions or events which would cause any material
change in or material addition to any Exhibit to the Disclosure Schedule
delivered by the notifying party under this Plan of Merger, promptly after the
occurrence of the same. If the effect of such change or addition would,
individually or in the aggregate with the effect of changes or additions
previously disclosed pursuant to this Section 7.9, constitute a material adverse
effect on the notifying party, the non-notifying party may, within ten days
after receipt of such notice, elect to terminate this Plan of Merger. If the
non-notifying party does not give written notice of such termination within such
10-day period, the non-notifying party shall be deemed to have consented to such
change or addition and shall not be entitled to terminate this Plan of Merger by
reason thereof.
7.10 No Solicitations. ReadiCare may, directly or indirectly, furnish
information and access, in response to unsolicited requests therefor, to the
same extent permitted by Section 6.1, to any corporation, partnership, person or
other entity or group, pursuant to appropriate confidentiality agreements, and
may participate in discussions and negotiate with such corporation, partnership,
person or other entity or group concerning any proposal to acquire ReadiCare
upon a merger, purchase of assets, purchase of or tender offer for shares of
ReadiCare Common Stock or similar transaction (an "Acquisition Transaction"), if
the Board of Directors of ReadiCare determines in its good faith judgment in the
exercise of its fiduciary duties or the exercise of its duties under Rule 14e-2
under the Exchange Act, after consultation with legal counsel and its financial
advisors, that such action is appropriate in furtherance of the best interest of
its stockholders. Except as set forth above, ReadiCare shall not, and will
direct each officer, director, employee, representative and agent of ReadiCare
not to, directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with or provide any information to any corporation,
partnership, person or other entity or group (other than HEALTHSOUTH or an
affiliate or associate or agent of HEALTHSOUTH) concerning any merger, sale of
assets, sale of or tender offer for shares of ReadiCare Common Stock or similar
transactions involving ReadiCare. ReadiCare shall promptly notify HEALTHSOUTH if
it shall, on or after the date hereof, have entered into a confidentiality
agreement with any third party in response to any unsolicited request for
information and access in connection with a possible Acquisition Transaction
involving such party, such notification to include the identity of such third
party.
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7.11 Other Actions. Subject to the provisions of Section 7.10 hereof,
none of ReadiCare, HEALTHSOUTH and the Subsidiary shall knowingly or
intentionally take any action, or omit to take any action, if such action or
omission would, or reasonably might be expected to, result in any of its
representations and warranties set forth herein being or becoming untrue in any
material respect, or in any of the conditions to the Merger set forth in this
Plan of Merger not being satisfied, or (unless such action is required by
applicable law) which would materially adversely affect the ability of ReadiCare
or HEALTHSOUTH to obtain any consents or approvals required for the consummation
of the Merger without imposition of a condition or restriction which would have
a material adverse effect on the Surviving Corporation or which would otherwise
materially impair the ability of ReadiCare or HEALTHSOUTH to consummate the
Merger in accordance with the terms of this Plan of Merger or materially delay
such consummation.
7.12 Accounting Methods. Neither HEALTHSOUTH nor ReadiCare shall
change, in any material respect, its methods of accounting in effect at its most
recent fiscal year end, except as required by changes in generally accepted
accounting principles as concurred in such parties' independent accountants.
7.13 Pooling and Tax-Free Reorganization Treatment. Neither HEALTHSOUTH
nor ReadiCare shall intentionally take or cause to be taken any action, whether
on or before the Effective Time, which would disqualify the Merger as a "pooling
of interests" for accounting purposes or as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
7.14 Affiliate and Pooling Agreements. ReadiCare will use its
reasonable, good faith efforts to cause each of its Directors and executive
officers and each of its "affiliates" (within the meaning of Rule 145 under the
Securities Act of 1933, as amended) to execute and deliver to HEALTHSOUTH as
soon as practicable an agreement in the form attached hereto as Exhibit 7.14
relating to the disposition of shares of ReadiCare Common Stock and shares of
HEALTHSOUTH Common Stock held by such person and the shares of HEALTHSOUTH
Common Stock issuable pursuant to this Plan of Merger.
7.15 Cooperation. (a) HEALTHSOUTH and ReadiCare shall together, or
pursuant to an allocation of responsibility agreed to between them, (i)
cooperate with one another in determining whether any filings required to be
made or consents required to be obtained in any jurisdiction prior to the
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Effective Time in connection with the consummation of the transactions
contemplated hereby and cooperate in making any such filings promptly and in
seeking to obtain timely any such consents, (ii) use their respective best
efforts to cause to be lifted any injunction prohibiting the Merger, or any part
thereof, or the other transactions contemplated hereby, and (iii) furnish to one
another and to one another's counsel all such information as may be required to
effect the foregoing actions.
(b) Subject to the terms and conditions herein provided, and unless
this Plan of Merger shall have been validly terminated as provided herein, each
of HEALTHSOUTH and ReadiCare shall use all reasonable efforts (i) to take, or
cause to be taken, all actions necessary to comply promptly with all legal
requirements which may be imposed on such party (or any subsidiaries or
affiliates of such party) with respect to the Plan of Merger and to consummate
the transactions contemplated hereby, subject to the vote of ReadiCare's
stockholders described above, and (ii) to obtain (and to cooperate with the
other party to obtain) any consent, authorization, order or approval of, or any
exemption by, any governmental entity and/or any other public or private third
party which is required to be obtained or made by such party or any of its
subsidiaries or affiliates in connection with this Plan of Merger and the
transactions contemplated hereby Each of HEALTHSOUTH and ReadiCare will promptly
cooperate with and furnish information to the other in connection with any such
burden suffered by, or requirement imposed upon, either of them or any of their
subsidiaries or affiliates in connection with the foregoing.
7.16 ReadiCare Stock Options and Warrants. (a) As soon as reasonably
practicable after the Effective Time of the Merger (but in any event within two
weeks thereafter), HEALTHSOUTH shall deliver to the holders of ReadiCare stock
options and warrants appropriate notices setting forth such holders' rights
pursuant to any stock option plans under which such ReadiCare stock options were
issued and any stock option agreements or warrant agreements evidencing such
options or warrants, which shall continue in full force and effect on the same
terms and conditions (subject to the adjustments required by Sections 2.1(d) or
this Section 7.16 after giving effect to the Merger and the assumption of such
options and warrants by HEALTHSOUTH as set forth herein) as in effect
immediately prior to the Effective Time. HEALTHSOUTH shall comply with the terms
of the stock option plans, the stock option agreements and the warrant
agreements as so adjusted, and shall use its reasonable, good faith efforts to
ensure, to the extent required by, and subject to the provisions of, such plans
or agreements, that the ReadiCare stock options which qualified as incentive
stock options prior to the Effective Time shall continue to qualify as incentive
stock options after the Effective Time.
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(b) HEALTHSOUTH shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of HEALTHSOUTH Common Stock for
delivery upon exercise of the ReadiCare stock options and warrants assumed by
HEALTHSOUTH in accordance with Section 2.1(d). As soon as practicable after the
Effective Time (but in any event within two weeks thereafter), HEALTH- SOUTH
shall file with the SEC a registration statement on Form S-8 with respect to
shares of HEALTH- SOUTH Common Stock subject to such ReadiCare stock options and
shall use its best efforts to maintain the effectiveness of a registration
statement or registration statements covering such options (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as such ReadiCare stock options remain outstanding. HEALTHSOUTH shall administer
the plans assumed pursuant to Section 2.1(d) hereof in a manner that complies
with Rule 16b-3 promulgated under the Exchange Act to the extent the applicable
plan complied with such rule prior to the Merger.
(c) Except to the extent otherwise agreed to by the parties, all
restrictions or limitations on transfer and vesting with respect to the
ReadiCare stock options awarded under any plan, program, or arrangement of
ReadiCare or any of its subsidiaries, to the extent that such restrictions or
limitations shall not have already lapsed, shall remain in full force and effect
with respect to such options after giving effect to the Merger and the
assumption by HEALTHSOUTH as set forth above.
7.17 Publication of Combined Results. HEALTHSOUTH agrees that within 20
days after the end of the first calendar month following at least 30 days after
the Effective Time, HEALTHSOUTH shall cause publication of the combined results
of operations of HEALTHSOUTH and ReadiCare. For purposes of this Section 7.17,
the term "publication" shall have the meaning provided in SEC Accounting Series
Release No. 135.
7.18 ReadiCare Employees. HEALTHSOUTH shall retain all employees of
ReadiCare who are employed at the Effective Time as employees-at-will (except to
the extent that such employees are parties to contracts providing for other
employment terms, in which case such employees shall be retained in accordance
with the terms of such contracts) and shall provide such employees with the same
customary employee benefits as HEALTHSOUTH provides its existing employees.
7.19 Certain Information. For as long as any affiliate (as defined for
purposes of Rule 145 under the Securities Act of 1933) of ReadiCare holds shares
of HEALTHSOUTH Common Stock issued
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in the Merger (but not for a period in excess of two years from the date of
consummation of the Merger), HEALTHSOUTH shall file with the Securities and
Exchange Commission or otherwise make publicly available all information about
HEALTHSOUTH required pursuant to Rule 144(c) under the Securities Act of 1933 to
enable such affiliate to resell such shares under the provisions of Rule 145(d)
under the Securities Act of 1933.
7.20 Consulting and Non-Competition Agreement. On the Closing Date,
HEALTHSOUTH and Dennis G. Danko will enter into a Consulting and Non-Competition
Agreement in form and substance satisfactory to the parties.
Section 8. TERMINATION, AMENDMENT AND WAIVER.
8.1 Termination. This Plan of Merger may be terminated at any time
prior to the Effective Time, whether before or after approval of matters
presented in connection with the Merger by the holders of shares of ReadiCare
Common Stock:
(a) by mutual written consent of HEALTHSOUTH and ReadiCare;
(b) by either HEALTHSOUTH or ReadiCare:
(i) if, upon a vote at a duly held meeting of stockholders or
any adjournment thereof, any required approval of the holders of shares
of ReadiCare Common Stock shall not have been obtained;
(ii) if the Merger shall not have been consummated on or
before January 31, 1997, unless the failure to consummate the Merger is
the result of a willful and material breach of this Plan of Merger by
the party seeking to terminate this Plan of Merger; provided, however,
that the passage of such period shall be tolled for any part thereof
(but not exceeding 60 days in the aggregate) during which any party
shall be subject to a nonfinal order, decree, ruling or action
restraining, enjoining or otherwise prohibiting the
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consummation of the Merger or the calling or holding of a meeting of
stockholders;
(iii) if any court of competent jurisdiction or other
governmental entity shall have issued an order, decree or ruling or
taken any other action permanently enjoining, restraining or otherwise
prohibited the Merger and such order, decree, ruling or other action
shall have become final and nonappealable;
(iv) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in this
Plan of Merger which (A) would give rise to the failure of a condition
set forth in Section 9.2(a) or (b) or Section 9.3(a) or (b), as
applicable, and (B) cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of such
breach (a "Material Breach") (provided that the terminating party is
not then in Material Breach of any representation, warranty, covenant
or other agreement contained in this Plan of Merger); or
(v) if either HEALTHSOUTH or ReadiCare gives notice of
termination as a non-notifying party pursuant to Section 7.9;
(c) By either HEALTHSOUTH or ReadiCare in the event that (i)
all of the conditions to the obligation of such party to effect the
Merger set forth in Section 9.1 shall have been satisfied and (ii) any
condition to the obligation of such party to effect the Merger set
forth in Section 9.2 (in the case of HEALTHSOUTH) or Section 9.3 (in
the case of ReadiCare) is not capable of being satisfied prior to the
end of the period referred to in Section 8.1(b)(ii);
(d) By ReadiCare, if ReadiCare's Board of Directors shall have
(i) determined, in the exercise of its fiduciary duties under
applicable law, not to recommend the Merger to the holders of ReadiCare
Common Stock or shall have withdrawn such recommendation or (ii)
approved, recommended or endorsed any Acquisition Transaction
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(as defined in Section 7.10) other than this Plan of Merger or (iii)
resolved to do any of the foregoing; or
(e) By either HEALTHSOUTH or ReadiCare, if the condition
set forth in Section 9.1(g)(i) is not satisfied by September 30, 1996.
8.2 Effect of Termination. In the event of termination of this Plan of
Merger as provided in Section 8.1, this Plan of Merger shall forthwith become
void and have no effect, without any liability or obligation on the part of any
party, other than the provisions of Sections 6.2, 8.2 and 8.6, and except to the
extent that such termination results from the willful and material breach by a
party of any of its representations, warranties, covenants or other agreements
set forth in this Plan of Merger.
8.3 Amendment. This Plan of Merger may be amended by the parties at any
time before or after any required approval of matters presented in connection
with the Merger by the holders of ReadiCare Shares; provided, however, that
after any such approval, there shall be made no amendment that pursuant to
Section 251(d) of the DGCL requires further approval by such stockholders
without the further approval of such stockholders. This Plan of Merger may not
be amended except by an instrument in writing signed on behalf of each of the
parties.
8.4 Extension; Waiver. At any time prior to the Effective Time of the
Merger, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Plan of Merger or in any
document delivered pursuant to this Plan of Merger or (c) subject to the proviso
of Section 8.3, waive compliance with any of the agreements or conditions
contained in this Plan of Merger. Any agreement on the part of a party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this Plan of
Merger to assert any of its rights under this Plan of Merger or otherwise shall
not constitute a waiver of such rights, except as otherwise provided in Section
7.9.
8.5 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Plan of Merger pursuant to Section 8.1, an amendment of this
Plan of Merger pursuant to Section 8.3, or an extension or waiver pursuant to
Section 8.4 shall, in order to be effective, require in the case of
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HEALTHSOUTH, the Subsidiary or ReadiCare, action by its Board of Directors or
the duly authorized designee of the Board of Directors.
8.6 Expenses; Break-up Fees. (a) All costs and expenses incurred in
connection with this Plan of Merger and the transactions contemplated hereby
shall be paid by the party incurring such expense, except that expenses (other
than legal, accounting and investment banking costs, which shall be paid by the
party incurring such expenses) incurred in connection with preparing, filing,
printing and mailing the Proxy Statement and the Registration Statement shall be
shared equally by ReadiCare and HEALTHSOUTH.
(b) (i) If this Plan of Merger is terminated by ReadiCare pursuant to
Section 8.1(d), and within one year after the effective date of such termination
ReadiCare is the subject of a Third Party Acquisition Event with any Person (as
defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act) (other than a
party hereto), then at the time of consummation of such a Third Party
Acquisition Event, ReadiCare shall pay to HEALTHSOUTH a break-up fee of
$8,000,000 in immediately available funds, which fee represents the parties'
best estimates of the out-of-pocket costs incurred by HEALTHSOUTH and the value
of management time, overhead, opportunity costs and other unallocated costs of
HEALTH- SOUTH incurred by or on behalf of HEALTHSOUTH in connection with this
Plan of Merger. ReadiCare shall not enter into any agreement with respect to any
Third Party Acquisition Event which does not, as a condition precedent to the
consummation of such Third Party Acquisition Event, require such break-up fee to
be paid to HEALTHSOUTH upon such consummation.
(ii) As used herein, the term "Third Party Acquisition Event"
shall mean either of the following:
(A) ReadiCare shall enter into any agreement for, or otherwise
be the subject of, any Acquisition Transaction (as defined in Section
7.10) which is consummated (regardless of whether such consummation
occurs with the one-year period described in Section 8.6(b)(i); or
(B) any Person (other than a party hereto or its affiliates)
shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 under the Exchange Act) or
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the right to acquire beneficial ownership of, or a new group has been
formed which beneficially owns or has the right to acquire beneficial
ownership of, 30% or more of the outstanding ReadiCare Common Stock.
(c) In the event that this Plan of Merger shall be terminated by
HEALTHSOUTH for any reason other than as permitted under Section 8.1 (or if this
Plan of Merger shall be terminated by HEALTHSOUTH pursuant to Section 8.1(c) and
such termination is by reason of the failure of any condition to the obligation
of HEALTHSOUTH to effect the Merger which failure results from a breach by
HEALTHSOUTH of any representation, warranty or covenant contained herein),
HEALTHSOUTH shall pay ReadiCare a break-up fee in connection with this Plan of
Merger in the amount of $1,000,000 in immediately available funds within 15 days
of termination of the Plan of Merger.
(d) Each party acknowledges that the provisions for the payment of
break-up fees and allocation of expenses contained in this Section 8.6 are an
integral part of the transactions contemplated by this Plan of Merger and that,
without these provisions, the other party would not have entered into this Plan
of Merger. Accordingly, if a break-up fee shall become due and payable by a
party, and such party shall fail to pay such amount when due pursuant to this
Section, and, in order to obtain such payment, suit is commenced which results
in a judgment against such party therefor, such party shall pay the other
party's reasonable costs and expenses (including reasonable attorneys' fees) in
connection with such suit, together with interest computed on any amounts
determined to be due pursuant to this Section (computed from the date upon which
such amounts were due and payable pursuant to this Section) and such costs
(computed from the date incurred) at the prime rate of interest announced from
time to time by NationsBank, N.A. (Carolinas). The obligations of the parties
under this Section 8.6 shall survive any termination of this Plan of Merger.
Section 9. CONDITIONS TO CLOSING.
9.1 Mutual Conditions. The respective obligations of each party to
effect the Merger shall be subject to the satisfaction, at or prior to the
Closing Date of the following conditions (any of which may be waived in writing
by HEALTHSOUTH and ReadiCare):
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(a) None of HEALTHSOUTH, the Subsidiary or ReadiCare nor any
of their respective subsidiaries shall be subject to any order, decree
or injunction by a court of competent jurisdiction which (i) prevents
or materially delays the consummation of the Merger or (ii) would
impose any material limitation on the ability of HEALTHSOUTH
effectively to exercise full rights of ownership of the Common Stock of
the Surviving Corporation or any material portion of the assets or
business of ReadiCare and the ReadiCare Subsidiaries, taken as a whole.
(b) No statute, rule or regulation shall have been enacted by
the government (or any governmental agency) of the United States or any
state, municipality or other political subdivision thereof that makes
the consummation of the Merger and any other transaction contemplated
hereby illegal.
(c) Any waiting period (and any extension thereof) applicable
to the consummation of the Merger under the HSR Act shall have expired
or been terminated.
(d) The Registration Statement shall have been declared
effective and no stop order with respect to the Registration Statement
shall be in effect.
(e) The holders of ReadiCare Shares shall have approved the
adoption of this Plan of Merger and any other matters submitted to them
in accordance with the provisions of Section 7.3 hereof.
(f) The shares of HEALTHSOUTH Common Stock to be issued in
connection with the Merger shall have been approved for listing on the
Exchange and shall have been issued pursuant to an effective
registration statement (which is subject to no stop order).
(g) The Merger shall qualify for "pooling of interests"
accounting treatment, and HEALTHSOUTH and ReadiCare shall each have
received letters to that effect from Ernst & Young, LLP, independent
accountants for HEALTHSOUTH, dated (i) not later
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than September 30, 1996, (ii) the date of the mailing of the Proxy
Statement and (iii) the Closing Date.
(h) HEALTHSOUTH and the Subsidiary shall have obtained, or
obtained the transfer of, any licenses, certificates of need and other
regulatory approvals necessary to allow the Surviving Corporation to
operate the ReadiCare facilities, unless the failure to obtain such
transfer or approval would not have a material adverse effect on the
Surviving Corporation.
(i) HEALTHSOUTH and the Subsidiary shall have received all
consents, approvals and authorizations of third parties with respect to
all material leases and management agreements to which the ReadiCare
Subsidiaries and the ReadiCare Other Entities are parties, which
consents, approvals and authorizations are required of such third
parties by such documents, in form and substance acceptable to
HEALTHSOUTH, except where the failure to obtain such consent, approval
or authorization would not have a material effect on the business of
the Surviving Corporation.
9.2 Conditions to Obligations of HEALTHSOUTH and the Subsidiary. The
obligations of HEALTHSOUTH and the Subsidiary to consummate the Merger and the
other transactions contemplated hereby shall be subject to the satisfaction, at
or prior to the Closing Date, of the following conditions (any of which may be
waived by HEALTHSOUTH and the Subsidiary):
(a) Each of the agreements of ReadiCare to be performed at or
prior to the Closing Date pursuant to the terms hereof shall have been
duly performed in all material respects, and ReadiCare shall have
performed, in all material respects, all of the acts required to be
performed by it at or prior to the Closing Date by the terms hereof.
(b) The representations and warranties of ReadiCare set forth
in Section 3.11(a) shall be true and correct as of the date of this
Plan of Merger and as of the Closing Date. The representations and
warranties of ReadiCare set forth in this Plan of Merger that are
qualified as to materiality shall be true and correct, and those that
are not so qualified shall be true and correct in all material
respects, as of the date of this
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Plan of Merger and as of the Closing as though made at and as of such
time, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations
and warranties that are qualified as to materiality shall be true and
correct, and those that are not so qualified shall be true and correct
in all material respects, as of such earlier date); provided, however,
that ReadiCare shall not be deemed to be in breach of any such
representations or warranties by taking any action permitted (or
approved by HEALTHSOUTH) under Section 7.2. HEALTHSOUTH and the
Subsidiary shall have been furnished with a certificate, executed by a
duly authorized officer of ReadiCare, dated the Closing Date,
certifying in such detail as HEALTHSOUTH and the Subsidiary may
reasonably request as to the fulfillment of the foregoing conditions.
(c) HEALTHSOUTH shall have received an opinion from Haskell
Slaughter & Young, L.L.C., to the effect that the merger will
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended, which opinion may be based
upon reasonable representations of fact provided by officers of
HEALTHSOUTH, ReadiCare and the Subsidiary.
(d) HEALTHSOUTH shall have received an opinion from McIntyre,
Borges & Burns substantially to the effect set forth in Exhibit 9.2(d)
hereto.
9.3 Conditions to Obligations of ReadiCare. The obligations of
ReadiCare to consummate the Merger and the other transactions contemplated
hereby shall be subject to the satisfaction, at or prior to the Closing Date, of
the following conditions (any of which may be waived by ReadiCare):
(a) Each of the agreements of HEALTHSOUTH and the Subsidiary
to be performed at or prior to the Closing Date pursuant to the terms
hereof shall have been duly performed, in all material respects, and
HEALTHSOUTH and the Subsidiary shall have performed, in all material
respects, all of the acts required to be performed by them at or prior
to the Closing Date by the terms hereof.
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(b) The representations and warranties of HEALTHSOUTH set
forth in Section 5.10(a) shall be true and correct as of the date of
this Plan of Merger and as of the Closing Date. The representations and
warranties of HEALTHSOUTH set forth in this Plan of Merger that are
qualified as to materiality shall be true and correct, and those that
are not so qualified shall be true and correct in all material
respects, as of the date of this Plan of Merger and as of the Closing
as though made at and as of such time, except to the extent such
representations and warranties expressly relate to an earlier date (in
which case such representations and warranties that are qualified as to
materiality shall be true and correct, and those that are not so
qualified shall be true and correct in all material respects, as of
such earlier date). ReadiCare shall have been furnished with a
certificate, executed by duly authorized officers of HEALTHSOUTH and
the Subsidiary, dated the Closing Date, certifying in such detail as
ReadiCare may reasonably request as to the fulfillment of the foregoing
conditions.
(c) ReadiCare shall have received an opinion from McIntyre,
Borges & Burns to the effect that the Merger will constitute a
reorganization with the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended, which opinion may be based upon
reasonable representations of fact provided by officers of HEALTHSOUTH,
ReadiCare and the Subsidiary.
(d) ReadiCare shall have received an opinion from Haskell
Slaughter & Young, L.L.C., substantially to the effect set forth in
Exhibit 9.3(d) hereto.
Section 10. MISCELLANEOUS.
10.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Plan of Merger or in any instrument
delivered pursuant to this Plan of Merger shall survive the Effective Time.
10.2 Notices. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery
or by facsimile and overnight courier to the parties
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hereto at the following addresses, or at such other address as either party may
advise the other in writing from time to time:
If to HEALTHSOUTH:
HEALTHSOUTH Corporation
Two Perimeter Park South
Birmingham, Alabama 35243
Attention: Michael D. Martin
Facsimile: (205) 969-4719
with a copy to:
William W. Horton, Esq.
HEALTHSOUTH Corporation
Two Perimeter Park South
Birmingham, Alabama 35243
Facsimile: (205) 969-4732
If to ReadiCare:
ReadiCare, Inc.
1322 Orleans Drive
Sunnyvale, California 94089
Attention: Dennis G. Danko
Facsimile: (408) 734-4842
with a copy to:
Joel F. McIntyre, Esq.
McIntyre, Borges & Burns
3070 Bristol Street
Suite 450
Costa Mesa, California 92626
Facsimile: (714) 545-7524
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications with the overnight courier.
10.3 Further Assurances. Each party hereby agrees to perform any
further acts and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of this Plan of Merger.
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10.4 Indemnification. (a) ReadiCare shall, and from and after the
Effective Time HEALTHSOUTH and the Surviving Corporation shall, indemnify,
defend and hold harmless each person who is now, or has been at any time prior
to the date of this Plan of Merger or who becomes prior to the Effective Time,
an officer, director or employee of ReadiCare or any of its subsidiaries (the
"Indemnified Parties") against (i) all losses, claims, damages, costs, expenses,
liabilities or judgments, or amounts that are paid in settlement with the
approval of the indemnifying party (which approval shall not be unreasonably
withheld) of, or in connection with, any claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part out of
the fact that such person is or was a director, officer or employee of ReadiCare
or any of its subsidiaries, whether pertaining to any matter existing or
occurring at or prior to, or at or after, the Effective Time ("Indemnified
Liabilities") and (ii) all Indemnified Liabilities based in whole or in part on,
or arising in whole or in part out of, or pertaining to this Plan of Merger, the
Merger or any other transactions contemplated hereby or thereby, in each case to
the full extent a corporation is permitted under the DGCL to indemnify its own
directors, officers and employees, as the case may be (and HEALTHSOUTH and the
Surviving Corporation, as the case may be, will pay expenses in advance of the
final disposition of any such action or proceeding to each Indemnified Party to
the full extent permitted by law upon receipt of any undertaking contemplated by
Section 145(e) of the DGCL). Without limiting the foregoing, in the event any
such claim, action, suit, proceeding or investigation is brought against any
Indemnified Party (whether arising before or after the Effective Time), (i) the
Indemnified Parties may retain counsel satisfactory to them and ReadiCare (or
them and HEALTHSOUTH and the Surviving Corporation after the Effective Time),
(ii) ReadiCare (or after the Effective Time, HEALTHSOUTH and the Surviving
Corporation) shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received and (iii)
ReadiCare (or after the Effective Time, HEALTHSOUTH and the Surviving
Corporation) will use all reasonable efforts to assist in the vigorous defense
of any such matter, provided that none of ReadiCare, HEALTHSOUTH or the
Surviving Corporation shall be liable for any settlement of any claim effected
without its written consent, which consent, however, shall not be unreasonably
withheld. Any Indemnified Party wishing to claim indemnification under this
Section 10.4, upon learning of any such claim, action, suit, proceeding or
investigation, shall notify ReadiCare, HEALTHSOUTH or the Surviving Corporation
(but the failure so to notify an Indemnifying Party shall not relieve it from
any liability which it may have under this Section 10.4 except to the extent
such failure prejudices such party), and shall deliver to ReadiCare (or after
the Effective Time, HEALTHSOUTH and the Surviving Corporation) the undertaking
contemplated by
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Section 145(e) of the DGCL. The Indemnified Parties as a group may retain only
one law firm to represent them with respect to such matter unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
(b) The provisions of this Section 10.4 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
10.5 Governing Law. This Plan of Merger shall be interpreted, construed
and enforced in accordance with the laws of the State of Delaware, applied
without giving effect to any conflicts-of-law principles.
10.6 "Including". The word "including", when following any general
statement, term or matter, shall not be construed to limit such statement, term
or matter to the specific terms or matters as provided immediately following the
word "including" or to similar items or matters, whether or not non- limiting
language (such as "without limitation", "but not limited to", or words of
similar import) is used with reference to the word "including" or the similar
items or matters, but rather shall be deemed to refer to all other items or
matters that could reasonably fall within the broadest possible scope of the
general statement, term or matter.
10.7 "Knowledge". "To the knowledge", "to the best knowledge,
information and belief", or any similar phrase shall be deemed to refer to the
knowledge of the Chairman of the Board, Chief Executive Officer or Chief
Financial Officer of a party and to include the assurance that such knowledge is
based upon a reasonable investigation, unless otherwise expressly provided.
10.8 "Material adverse change" or "material adverse effect". "Material
adverse change" or "material adverse effect" means, when used in connection with
ReadiCare or HEALTHSOUTH, any change, effect, event or occurrence that has, or
is reasonably likely to have, individually or in the aggregate, a material
adverse impact on the business or financial position of such party and its
subsidiaries taken as a whole; provided, however, that "material adverse change"
and "material adverse effect" shall be deemed to exclude the impact of (i)
changes in generally accepted accounting principles and (ii) any changes
resulting from any restructuring or other similar charges or write-offs taken by
B-46
<PAGE>
ReadiCare with the consent of HEALTHSOUTH; provided, however, that no such
charges or write-offs will be taken if such would adversely affect
pooling-of-interests accounting treatment for the Merger.
10.9 "Hazardous Materials". The term "Hazardous Materials" means any
material which has been determined by any applicable governmental authority to
be harmful to the health or safety of human or animal life or vegetation,
regardless of whether such material is found on or below the surface of the
ground, in any surface or underground water, airborne in ambient air or in the
air inside any structure built or located upon or below the surface of the
ground or in building materials or in improvements of any structures, or in any
personal property located or used in any such structure, including, but not
limited to, all hazardous substances, imminently hazardous substances, hazardous
wastes, toxic substances, infectious wastes, pollutants and contaminants from
time to time defined, listed, identified, designated or classified as such under
any Environmental Laws (as defined in Section 10.10) regardless of the quantity
of any such material.
10.10 Environmental Laws. The term "Environmental Laws" means any
federal, state or local statute, regulation, rule or ordinance, and any judicial
or administrative interpretation thereof, regulating the use, generation,
handling, storage, transportation, discharge, emission, spillage or other
release of Hazardous Materials or relating to the protection of the environment.
10.11 Taxes. For purposes of this Agreement, the term "tax" or "taxes"
shall mean all taxes, charges, fees, levies, penalties or other assessment
imposed by any United States federal, state, local or foreign taxing authority,
including, but not limited to, income, excise, property, sales, transfer,
franchise, payroll, withholding, Social Security or other taxes, including any
interest, penalties or additions attributable thereto. For purposes of this
Agreement, the term "tax return" shall mean any return, report, information
return or other document (including any related or supporting information) with
respect to taxes.
10.12 Captions. The captions or headings in this Plan of Merger are
made for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this Plan of
Merger.
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<PAGE>
10.13 Integration of Exhibits. All Exhibits attached to this Plan of
Merger are integral parts of this Plan of Merger as if fully set forth herein,
and all statements appearing therein shall be deemed disclosed for all purposes
and not only in connection with the specific representation in which they are
explicitly referenced.
10.14 Entire Agreement. This instrument, including all Exhibits
attached hereto, together with the Confidentiality Agreement, contains the
entire agreement of the parties and supersedes any and all prior or
contemporaneous agreements between the parties, written or oral, with respect to
the transactions contemplated hereby. It may not be changed or terminated
orally, but may only be changed by an agreement in writing signed by the party
or parties against whom enforcement of any waiver, change, modification,
extension, discharge or termination is sought.
10.15 Counterparts. This Plan of Merger may be executed in several
counterparts, each of which, when so executed, shall be deemed to be an
original, and such counterparts shall, together, constitute and be one and the
same instrument.
10.16 Binding Effect. This Plan of Merger shall be binding on, and
shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and, except as provided in Section 10.4, no other person
shall acquire or have any right under or by virtue of this Plan of Merger. No
party may assign any right or obligation hereunder without the prior written
consent of the other parties.
10.17 No Rule of Construction. The parties acknowledge that this Plan
of Merger was initially prepared by HEALTHSOUTH, and that all parties have read
and negotiated the language used in this Plan of Merger. The parties agree that,
because all parties participated in negotiating and drafting this Plan of
Merger, no rule of construction shall apply to this Plan of Merger which
construes ambiguous language in favor of or against any party by reason of that
party's role in drafting this Plan of Merger.
B-48
<PAGE>
IN WITNESS WHEREOF, HEALTHSOUTH, the Subsidiary and ReadiCare have
caused this Plan and Agreement of Merger to be executed by their respective duly
authorized officers, and have caused their respective corporate seals to be
hereunto affixed, all as of the day and year first above written.
READICARE, INC.
By /s/Dennis G. Danko
-------------------------------------
Dennis G. Danko
Chairman, President
and Chief Executive Officer
ATTEST:
/s/Steve E. Busby
- -------------------------------------------
Steve E. Busby
Secretary
[ CORPORATE SEAL ]
HEALTHSOUTH Corporation
By /s/Michael D. Martin
-------------------------------------
Michael D. Martin
Executive Vice President
and Treasurer
ATTEST:
/s/Anthony J. Tanner
- -----------------------------------------
Anthony J. Tanner
Secretary
[ CORPORATE SEAL ]
B-49
<PAGE>
WARWICK ACQUISITION CORPORATION
By /s/Michael D. Martin
-----------------------------------
Michael D. Martin
Vice President
ATTEST:
/s/Anthony J. Tanner
- ------------------------------------
Anthony J. Tanner
Secretary
[ CORPORATE SEAL ]
B-50
EXHIBIT 7.14
Gentlemen:
I have been advised that I might be considered to be an "affiliate" of
ReadiCare, Inc. ("ReadiCare") for purposes of Rule 145 under the Securities
Exchange Act of 1933, as amended (the "1933 Act"), and for purposes of generally
accepted accounting principles as such term relates to pooling of interests
accounting treatment for certain business combinations or the Securities and
Exchange Commission's Staff Accounting Bulletin No. 65.
HEALTHSOUTH Corporation ("HEALTHSOUTH"), Warwick Acquisition
Corporation and ReadiCare have entered into a Plan and Agreement of Merger dated
as of the 11th day of September, 1996 (the "Plan of Merger"). Upon consummation
of the transactions contemplated by the Plan of Merger (the "Merger"), I will
receive shares of capital stock of HEALTHSOUTH for all of the shares of capital
stock of ReadiCare owned by me or as to which I may be deemed a beneficial
owner. I own _______ shares of common stock of ReadiCare. Such shares will be
converted in the Merger into shares of common stock of HEALTHSOUTH as described
in the Plan of Merger. The shares of ReadiCare capital stock and HEALTHSOUTH
capital stock owned by me or as to which I may deemed to be a beneficial owner
prior to the Merger are hereinafter collectively referred to as the "Pre-Merger
Stock" and the shares of HEALTHSOUTH capital stock received by me in the Merger
are hereinafter collectively referred to as the "Exchange Stock". This agreement
is hereinafter referred to as the "Letter Agreement".
I represent and warrant to, and agree with, HEALTHSOUTH, ReadiCare and
the Subsidiary that:
A. I have read this Letter Agreement and the Plan of Merger and have
discussed their requirements and other applicable limitations upon my ability to
sell, transfer or otherwise dispose of the Pre-Merger Stock and Exchange Stock,
to the extent I felt necessary, with my counsel or counsel for ReadiCare.
B. The shares of common stock of HEALTHSOUTH that I shall receive in
exchange for my shares of common stock of ReadiCare are not being acquired by me
with a view to their distribution except to the extent and in the manner
provided for in paragraph (d) of Rule 145 under the 1933 Act.
C. I agree with you not to dispose of any such shares of common stock
of HEALTHSOUTH in any manner that would violate Rule 145.
I further agree with you that the certificate or certificates
representing such shares of common stock of HEALTHSOUTH may bear a legend
referring to the restrictions on disposition thereof in accordance with the
provisions of the foregoing paragraph and that stop transfer instructions may be
filed with respect to such shares with the transfer agent for such shares.
D. I understand that stop transfer instructions will be given to
HEALTHSOUTH, ReadiCare and their respective transfer agents, as the case may be,
with respect to the shares of Pre-Merger Stock and the Exchange Stock in
connection with the restrictions set forth herein.
<PAGE>
E. Notwithstanding the foregoing and any other agreements on my part in
connection with the Pre-Merger Stock and the Exchange Stock, I hereby agree (i)
that I will not sell or otherwise reduce my risk relative to any shares of
Pre-Merger Stock during the period of thirty days prior to the effective date of
Merger and (ii) that I will not sell or otherwise reduce my risk relative to any
shares of Exchange Stock until financial results covering at least thirty days
of combined operations have been published following the effective date of the
Merger so as to ensure that the Merger qualified as a pooling of interests for
accounting purposes.
It is understood and agreed that this Letter Agreement shall terminate
and be of no further force and effect if the Plan of Merger is terminated
pursuant to the terms thereof.
The agreements made by me in the foregoing paragraphs are on the
understanding and condition that you agree, in the event that any shares may be
disposed of in accordance with the provisions of paragraph E above, to deliver
in exchange for the certificate or certificates representing such shares a new
certificate or certificates representing such shares not bearing the legend and
not subject to the stop transfer instruction referred to in paragraph D above,
and so long as I hold shares of stock subject to the provisions of the foregoing
paragraph (but not for a period in excess of two years from the date of
consummation of the Merger) to file with the Securities and Exchange Commission
or otherwise make publicly available all information about HEALTHSOUTH, to the
extent available to you without unreasonable effort or expense, necessary to
enable me to resell shares under the provisions of paragraph (d) of Rule 145.
This Letter Agreement shall be binding on my heirs, legal
representatives and successors.
Very truly yours,
-----------------------------------
[Name of Stockholder]
EXHIBIT 9.2(d)
[DATE]
HEALTHSOUTH Corporation
Two Perimeter Park South
Suite 224W
Birmingham, Alabama 35243
Re: Plan and Agreement of Merger Among
HEALTHSOUTH Corporation,
Warwick Acquisition Corporation
and ReadiCare, Inc.
Gentlemen:
We have acted as legal counsel for ReadiCare, Inc., a Delaware
corporation ("ReadiCare"), in connection with the transactions contemplated by
that certain Agreement and Plan of Merger (the "Plan of Merger"), dated as of
September 11, 1996, by and among HEALTHSOUTH Corporation, a Delaware
corporation, Warwick Acquisition Corporation, a Delaware corporation, and
ReadiCare. The Plan of Merger, along with the other documents evidencing the
transactions contemplated by the Plan of Merger, are referred to collectively as
the "Merger Documents".
This opinion is being delivered pursuant to the Plan of Merger. Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
set forth in the Plan of Merger.
In connection with the preparation of this opinion, we have examined
executed originals of the following documents:
(a) the Merger Documents; and
(b) the charter documents and bylaws of ReadiCare in effect
as of the date hereof.
We have also examined such other documents, certificates of public
officials and officers of ReadiCare, records and matters of law as we have
deemed necessary as a basis for the opinions hereinafter expressed. In our
examination, we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified or photostatic copies,
and the authenticity of the originals of such latter documents. Further, our
review of matters of law has been limited to the laws of the State of
California, the laws of the State of Delaware referred to herein and the Federal
laws of the United States in effect as of the date hereof.
Based upon the foregoing, and subject to the limitations hereinafter
set forth, we are of the opinion that:
<PAGE>
HEALTHSOUTH Corporation
[Date]
Page 2
1. ReadiCare has been duly incorporated and is validly existing as a
corporation in good standing under the General Corporation Law of the State of
Delaware (the "DGCL").
2. ReadiCare has full corporate power to execute and deliver the Plan
of Merger and to consummate the transactions contemplated thereby.
3. The Plan of Merger has been duly authorized and executed by
ReadiCare, and the Plan of Merger constitutes the valid and binding obligation
of ReadiCare, enforceable against ReadiCare in accordance with its terms, except
as limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting enforcement of creditors' rights generally and subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding at law or in equity).
4. The execution and delivery of the Plan of Merger by ReadiCare did
not, and the consummation of the transactions therein contemplated by ReadiCare
does not, constitute a breach or violation of, or a default under, any federal
law, rule or regulation of the United States or under any law, rule or
regulation of California or under the DGCL or, to our knowledge, any court
order, judgment or decree of any governmental or regulatory body of the United
States or of Delaware or California, in each case, to which ReadiCare is subject
or by which any of its material properties or assets are bound or affected, or
require any consent or approval of any other party under any federal law, rule
or regulation of the United States or under any law, rule or regulation of
California or Delaware to which ReadiCare is subject, except for required
approvals under the federal securities laws, under the state securities or blue
sky laws, and under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and except under laws, rules and regulations relating to the operation,
regulation, licensing, and accreditation of health care facilities, as to which
we express no opinion, which breach, violation or default would have a material
adverse effect on ReadiCare and the ReadiCare Subsidiaries and the ReadiCare
Other Entities, taken as a whole.
This opinion is furnished to you by this Firm as legal counsel for
ReadiCare, solely for your benefit in connection with the transactions
contemplated by the Plan of Merger, upon the understanding that we are not
hereby assuming any professional responsibility to any other person whatsoever
and that this opinion may not be used for any other purpose whatsoever.
Very truly yours,
McINTYRE, BORGES & BURNS
By
----------------------------------
EXHIBIT 9.3(d)
[DATE]
ReadiCare, Inc.
1322 Orleans Drive
Sunnyvale, California 94089
Re: Plan and Agreement of Merger Among
HEALTHSOUTH Corporation,
Warwick Acquisition Corporation
and ReadiCare, Inc.
Gentlemen:
We have acted as legal counsel for HEALTHSOUTH Corporation, a Delaware
corporation ("HEALTHSOUTH"), and Warwick Acquisition Corporation, a Delaware
corporation (the "Subsidiary"), in connection with the transactions contemplated
by that certain Agreement and Plan of Merger (the "Plan of Merger"), dated as
ofSeptember 11, 1996, by and among HEALTHSOUTH, the Subsidiary and ReadiCare,
Inc. ("ReadiCare"), a Delaware corporation. The Plan of Merger, along with the
other documents evidencing the transactions contemplated by the Plan of Merger,
are referred to collectively as the "Merger Documents".
This opinion is being delivered pursuant to the Plan of Merger. Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
set forth in the Plan of Merger.
In connection with the preparation of this opinion, we have examined
executed originals of the following documents:
(a) the Merger Documents;
(b) the charter documents and bylaws of HEALTHSOUTH in effect
as of the date hereof; and
(c) the charter documents and bylaws of the Subsidiary in
effect as of the date hereof.
We have also examined such other documents, certificates of public
officials and officers of HEALTHSOUTH and the Subsidiary, records and matters of
law as we have deemed necessary as a basis for the opinions hereinafter
expressed. In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies, and the authenticity of the originals of such latter
documents. Further, our review of matters of law has been limited to the laws of
the State of Alabama, the laws of the State of Delaware referred to herein and
the Federal laws of the United States in effect as of the date hereof.
<PAGE>
ReadiCare, Inc.
[Date]
Page 2
Based upon the foregoing, and subject to the limitations hereinafter
set forth, we are of the opinion that:
1. Each of HEALTHSOUTH and the Subsidiary has been duly incorporated
and is validly existing as a corporation in good standing under the General
Corporation Law of the State of Delaware (the "DGCL").
2. Each of HEALTHSOUTH and the Subsidiary has full corporate power to
execute and deliver the Plan of Merger and to consummate the transactions
contemplated thereby.
3. The Plan of Merger has been duly authorized and executed by
HEALTHSOUTH and the Subsidiary, and the Plan of Merger constitutes the valid and
binding obligation of HEALTHSOUTH and the Subsidiary, enforceable against
HEALTHSOUTH and the Subsidiary in accordance with its terms, except as limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors' rights generally and subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).
4. The execution and delivery of the Plan of Merger by HEALTHSOUTH and
the Subsidiary did not, and the consummation of the transactions therein
contemplated by HEALTHSOUTH and the Subsidiary does not, constitute a breach or
violation of, or a default under, any federal law, rule or regulation of the
United States or under any law, rule or regulation of Alabama or under the DGCL
or, to our knowledge, any court order, judgment or decree of any governmental or
regulatory body of the United States or of Delaware or Alabama, in each case, to
which HEALTHSOUTH or the Subsidiary is subject or by which any of their material
properties or assets are bound or affected, or require any consent or approval
of any other party under any federal law, rule or regulation of the United
States or under any law, rule or regulation of Alabama or Delaware to which
HEALTHSOUTH or the Subsidiary is subject, except for required approvals under
the federal securities laws, under the state securities or blue sky laws, and
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
except under laws, rules and regulations relating to the operation, regulation,
licensing, and accreditation of health care facilities, as to which we express
no opinion, which breach, violation or default would have a material adverse
effect on HEALTHSOUTH and its subsidiaries and affiliated partnerships, taken as
a whole.
5. The shares of HEALTHSOUTH Common Stock to be issued under the Plan
of Merger will be, when issued in accordance with the terms of the Plan of
Merger, validly issued, fully paid and nonassessable.
<PAGE>
ReadiCare, Inc.
[Date]
Page 3
This opinion is furnished to you by this Firm as legal counsel for
HEALTHSOUTH and the Subsidiary, solely for your benefit in connection with the
transactions contemplated by the Plan of Merger, upon the understanding that we
are not hereby assuming any professional responsibility to any other person
whatsoever and that this opinion may not be used for any other purpose
whatsoever.
Very truly yours,
HASKELL SLAUGHTER & YOUNG. L.L.C.
By
------------------------------------
