SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 9, 1995
Surgical Care Affiliates, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-13364 62-1149229
(State or Other (Commission (I.R.S Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
102 Woodmont Boulevard, Suite 610
Nashville, Tennessee 37205
(Address of Principal (Zip Code)
Executive Offices)
Registrant's Telephone Number,
Including Area Code: (615) 385-3541
Item 5. OTHER EVENTS
On October 9, 1995, Surgical Care Affiliates, Inc., a
Delaware corporation (the "Company"), entered into a Plan and
Agreement of Merger with HEALTHSOUTH Corporation, a Delaware
corporation ("HEALTHSOUTH"), and Cats Acquisition Corporation ("HS
Sub"), pursuant to which HS Sub will be merged into the Company,
with the Company to be the surviving corporation.
The Plan and Agreement of Merger attached hereto as
Exhibit 2, and the press releases describing the transaction
attached hereto as Exhibit 20, are incorporated herein by
reference.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
2. Plan and Agreement of Merger dated October 9,
1995 among HEALTHSOUTH Corporation, Cats
Acquisition Corporation and Surgical Care
Affiliates, Inc.
20. Form of press releases issued by Surgical Care
Affiliates, Inc. in connection with the above-
referenced transaction.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned hereunto duly authorized.
SURGICAL CARE AFFILIATES, INC.
Dated: October 16, 1995 By:/s/Joel C. Gordon
Joel C. Gordon
Chairman and Chief Executive
Officer
EXHIBIT 2
PLAN AND AGREEMENT OF MERGER
PLAN AND AGREEMENT OF MERGER (the "Plan of Merger"), made and
entered into as of the 9th day of October, 1995, by and among
HEALTHSOUTH Corporation, a Delaware corporation ("HEALTHSOUTH"),
CATS ACQUISITION CORPORATION, a Delaware corporation (the
"Subsidiary"), and SURGICAL CARE AFFILIATES, INC., a Delaware
corporation ("SCA") (the Subsidiary and SCA 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 SCA have approved the merger of the Subsidiary
with and into SCA (the "Merger"), upon the terms and conditions set
forth in this Plan of Merger, whereby all shares of Common Stock,
par value $.25 per share, of SCA (the "SCA Common Stock"), not
owned directly or indirectly by SCA, will be converted into the
right to receive the Merger Consideration (as hereinafter defined);
WHEREAS, each of HEALTHSOUTH, the Subsidiary and SCA 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:
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 SCA at the Effective Time (as defined in Section 1.3).
Following the Effective Time, the separate corporate existence of
the Subsidiary shall cease and SCA shall continue as the surviving
corporation (the "Surviving Corporation") under the name "SCA,
Inc." and shall succeed to and assume all the rights and
obligations of the Subsidiary and SCA in accordance with the DGCL.
1.2 The Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. Central Time on a date to be
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)), at the offices of Haskell Slaughter
Young & Johnston, Professional Association, Birmingham, Alabama,
unless another date or place 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 SCA
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.
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 SCA 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 SCA Common
Stock that is owned by SCA or by any subsidiary of SCA 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 SCA Shares. Subject to Section 2.2(d),
each issued and outstanding share of SCA Common Stock (other than
shares to be canceled in accordance with Section 2.1(b))
(collectively, the "Exchanging SCA Shares") shall be converted into
the right to receive 1.22 (the "Exchange Ratio") shares of
HEALTHSOUTH Common Stock, as may be adjusted as provided below (the
"Merger Consideration"); provided, however, that if the Base Period
Trading Price (as defined below) shall be greater than $28.00, then
the Exchange Ratio shall be equal to the quotient obtained by
dividing $34.16 by the Base Period Trading Price, computed to four
decimal places, and the Merger Consideration shall be adjusted
accordingly; and provided further, however, that if the Base Period
Trading Price shall be less than $22.00, then the Exchange Ratio
shall be equal to the quotient obtained by dividing $26.84 by the
Base Period Trading Price, computed to four decimal places, and the
Merger Consideration shall be adjusted accordingly; provided
further, however, that the Exchange Ratio shall in no event (other
than an adjustment pursuant to Section 2.1(e) or Section 8.7) be
greater than the quotient obtained by dividing $26.84 by $20.00,
computed to four decimal places. 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 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
Closing Date (such period being herein called the "Base Period").
As of the Effective Time, all such Exchanging SCA 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 SCA 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 HEALTH-
SOUTH 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 SCA Common Stock pursuant to any SCA stock
options or SCA 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 HEALTH-
SOUTH shall assume each SCA stock option or SCA 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
SCA stock option or warrant so assumed shall be exercisable for
that number of shares of HEALTHSOUTH Common Stock equal to the
number of SCA shares subject thereto multiplied by the Exchange
Ratio, and shall have an exercise price per share equal to the SCA
exercise price divided by the Exchange Ratio. All options issued
pursuant to SCA's Incentive Stock Plan of 1986 and 1990 Non-
Qualified Stock Option Plan for Non-Employee Directors, as amended,
shall be fully vested at the Effective Time to the extent permitted
under such Plans.
(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 $28.00,
$22.00 and $20.00 referred to in Section 2.1(c) and the amount
$20.00 referred to in Section 8.1(f), and the Exchange Ratio, shall
be appropriately adjusted 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 SCA 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, HEALTHSOUTH 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 SCA 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 SCA Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall cause the
Exchange Agent shall mail to each holder of record of a certificate
or certificates which immediately prior to the Effective Time
represented outstanding shares of SCA 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 SCA and
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 HEALTH-
SOUTH, 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 SCA Common Stock
which is not registered in the transfer records of SCA, a
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 SCA 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 SCA 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 HEALTHSOUTH 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 HEALTHSOUTH
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.
(d) No Further Ownership Rights in Exchanging SCA Shares.
All shares of HEALTHSOUTH 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 SCA 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 HEALTHSOUTH 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 SCA 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, SCA
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 HEALTHSOUTH 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 SCA shall be amended and
restated, effective at the Effective Time, in a manner satisfactory
to HEALTHSOUTH. The Certificate of Incorporation of SCA, 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 SCA 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 SCA 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.
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 SCA.
SCA hereby represents and warrants to HEALTHSOUTH and the
Subsidiary as follows:
3.1 Organization, Existence and Good Standing. SCA is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. SCA has all necessary
corporate power to own its properties and assets and to carry on
its business as presently conducted. SCA 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
SCA within such time owned, directly or indirectly, any shares of
HEALTHSOUTH Common Stock or Subsidiary Common Stock.
3.2 SCA Capital Stock. SCA's authorized capital consists of
100,000,000 shares of SCA Common Stock, par value $.25 per share,
of which 38,993,892 shares were issued and outstanding, as of
September 30, 1995, and 472,400 of which shares are issued and held
as treasury shares. All of the issued and outstanding shares of
SCA 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 SCA to HEALTHSOUTH simultaneously
with the execution and delivery hereof (the "Disclosure Schedule")
or otherwise disclosed in the SCA Quarterly Report on Form 10-Q for
the three months ended June 30, 1995 (the "SCA June 10-Q") (as
hereinafter defined), there are no options, warrants, or similar
rights granted by SCA or any other agreements to which SCA 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 SCA June 10-Q. There is no
liability for dividends declared or accumulated but unpaid with
respect to any of the shares of SCA Common Stock. SCA has not made
any distributions to any holders of SCA Common Stock or
participated in or effected any issuance, exchange or retirement of
shares of SCA Common Stock, or otherwise changed the equity
interests of holders of SCA Common Stock, in contemplation of
effecting the Merger within the two years immediately preceding the
date of this Plan of Merger. Any shares of SCA Common Stock that
SCA 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 and Affiliated Partnerships. (a) Attached
to the Disclosure Schedule as Exhibit 3.3 is a list of all
subsidiaries of SCA (individually, a "SCA Subsidiary", and
collectively, the "SCA Subsidiaries") and their states of
incorporation. Except as set forth on Exhibit 3.3, SCA does not
own stock in and does not control, directly or indirectly, any
other corporation, association or business organization other than
the SCA Other Entities (as defined below).
(b) Also disclosed on Exhibit 3.3 is a list of all general or
limited partnerships in which a general partner is SCA, a SCA
Subsidiary or another SCA Partnership (individually, a "SCA
Partnership" and collectively, the "SCA Partnerships"), and all
limited liability companies in which SCA, a SCA Subsidiary or a SCA
Partnership is a member (individually, a "SCA LLC" and
collectively, the "SCA LLCs") (the SCA Partnerships and the SCA
LLCs being collectively called the "SCA Other Entities"), and their
states of organization. Except as set forth on Exhibit 3.3,
neither SCA nor any SCA Subsidiary owns an equity interest in, nor
does such entity control, directly or indirectly, any other joint
venture, limited liability company or partnership.
3.4 Organization, Existence and Good Standing of SCA
Subsidiaries and SCA Other Entities. (a) Each SCA Subsidiary is
a corporation duly organized, validly existing and in good standing
under the laws of its respective state of incorporation. Each SCA
Subsidiary has all necessary corporate power to own its properties
and assets and to carry on its business as presently conducted.
(b) Each SCA Partnership that is a limited partnership is
validly formed, each SCA Partnership that is a general partnership
has been duly organized, and each SCA Partnership is in good
standing under the laws of its respective state of organization.
Each SCA Partnership has all necessary power to own its property
and assets and to carry on its business as presently conducted.
(c) Each SCA LLC is a limited liability company validly
formed and in good standing under the laws of its respective state
of organization. Each SCA LLC has all necessary power to own its
property and assets to carry on its business as presently
conducted.
3.5 Foreign Qualifications. SCA, each SCA Subsidiary and
each SCA Other Entity that is not a general partnership 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 SCA.
3.6 Power and Authority. Subject to the satisfaction of the
conditions precedent set forth herein, SCA 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 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, 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 SCA 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 SCA or any SCA Subsidiary or SCA Partnership 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 SCA. The execution and delivery
of this Agreement has been approved by the Board of Directors of
SCA. This Agreement has been duly executed and delivered by SCA
and, assuming 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 SCA, enforceable
against SCA in accordance with its terms.
3.7 SCA Public Information. SCA 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 "SCA Documents") since January 1, 1994, 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 SCA 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 SCA 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 SCA 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 SCA 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 SCA at said dates and the consolidated results of
operations and cash flows of SCA for the periods then ended. The
consolidated balance sheet of SCA at June 30, 1995 included in the
SCA Documents is herein sometimes referred to as the "SCA Balance
Sheet".
3.8 [Intentionally omitted.]
3.9 Legal Proceedings. Except as disclosed in the SCA June
10-Q 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 SCA, threatened against or
relating to SCA, its properties or business, or the transaction
contemplated by the Plan of Merger and, so far as is known to SCA,
no basis for any such action exists.
3.10 Contracts, etc. (a) All material contracts, leases,
agreements and arrangements to which SCA or any of the SCA
Subsidiaries or SCA Partnerships is a party are legally valid and
binding in accordance with their terms and in full force and
effect. All parties to such contracts, leases, agreements and
arrangements have complied with the provisions of such contracts,
leases, agreements and arrangements, and, to the knowledge of SCA,
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 hereunder, 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 SCA.
(b) Except as set forth on Exhibit 3.10 to the Disclosure
Schedule, no contract or agreement to which SCA or any SCA
Subsidiary or SCA Partnership 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 SCA.
(c) Except as set forth on Exhibit 3.10 to the Disclosure
Schedule, none of SCA, any SCA Subsidiary or any SCA Partnership
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 SCA June 10-Q, SCA
has not, since the date of the SCA June 10-Q:
(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 SCA
Balance Sheet or (ii) liabilities incurred since the date
of the SCA June 10-Q in the ordinary course of business,
which discharge or satisfaction would have a material
adverse effect on SCA.
(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
SCA, except as may have been required due to income or
operations of SCA since the date of the SCA June 10-Q.
(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 SCA.
(e) Sold or transferred any of the assets material
to the consolidated business of SCA, cancelled any
material debts or claims or waived any material rights,
except in the ordinary course of business.
(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 SCA 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 SCA or warrants granted to third parties,
all of which are disclosed on Exhibit 3.2 to the
Disclosure Schedule or in the SCA Documents.
3.12 Accounts Receivable. (a) Since the date of the SCA
June 10-Q, SCA 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. SCA (including the SCA
Subsidiaries and SCA Partnerships) 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 SCA.
(b) Without limiting the generality of the foregoing, SCA and
each SCA Subsidiary or SCA Partnership 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 SCA.
3.13 Tax Returns. SCA 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 SCA. SCA has made all
payments shown as due on such returns. SCA has not been notified
that any tax returns of SCA are currently under audit by the
Internal Revenue Service or any state or local tax agency. No
agreements have been made by SCA for the extension of time 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 Bear,
Stearns & Co. Inc. ("Bear, Stearns"), 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 SCA or its stockholders, officers or Directors, or
any of them.
3.15 Employee Benefit Plans; Employment Matters. (a) Except
as described in the SCA Documents or set forth on Exhibit 3.15(a)
to the Disclosure Schedule, SCA 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 SCA 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. SCA 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 SCA Documents or set forth on
Exhibit 3.15(b) to the Disclosure Schedule, SCA 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 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
$100,000, 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 SCA
Documents, SCA 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
and any Environmental Laws, and no notice of any pending inspection
or violation of any such law, regulation or ordinance has been
received by SCA which, if it were determined that a violation had
occurred, would have a material adverse effect on SCA.
3.17 Licenses, Accreditation and Regulatory Approvals. SCA
and the SCA Subsidiaries and SCA Other Entities 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 (collectively, the "Licenses"), except where the failure
to possess such Licenses does not have a material adverse effect on
SCA, the SCA Subsidiaries and the SCA Other Entities in the
aggregate. All such Licenses are in full force and effect, and SCA
is in compliance in all material respects with all conditions and
requirements of the Licenses and with all rules and regulations
relating thereto. SCA, the SCA Subsidiaries and the SCA Other
Entities 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 SCA, the SCA
Subsidiaries and the SCA Other Entities in the aggregate. SCA, the
SCA Subsidiaries and the SCA Other Entities have timely filed all
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 SCA nor the SCA Subsidiaries, nor the SCA Other Entities
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 SCA, the SCA
Subsidiaries and the SCA Other Entities in the aggregate. The
amounts established as provisions for adjustments by Medicare,
Medicaid and other third-party payors on the financial statements
set forth in the SCA June 10-Q are sufficient to pay any amounts
for which SCA may be liable. To the best knowledge of SCA, neither
SCA nor the SCA Subsidiaries nor the SCA Other Entities nor their
respective employees have committed a violation of the Medicare and
Medicaid fraud and abuse provisions of the Social Security Act.
Except as disclosed in the SCA Documents, any and all past
litigation concerning such licenses, certificates of need and
regulatory approvals, and all claims and causes of action raised
therein, has been finally adjudicated. No such license,
certificate of need or regulatory approval has been revoked,
conditioned (except as may be customary) or restricted, and, except
as disclosed in the SCA Documents, no action (equitable, legal or
administrative), arbitration or other process is pending, or to the
best knowledge of SCA, threatened, which in any way challenges the
validly of, or seeks to revoke, condition or restrict any such
license, certificate of need, or regulatory approval. 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 SCA or any of the SCA Subsidiaries, the consummation of
the Merger will not violate any law or regulation to which SCA is
subject which, if violated, would have a material adverse effect on
SCA.
3.18 Retirement or Re-Acquisition of HEALTHSOUTH Common Stock.
SCA 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. SCA 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 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 SCA Common Stock entitled
to vote thereon is the only vote of the holders of any class or
series of SCA capital stock necessary to approve this Plan of
Merger, the Merger and the transactions contemplated hereby.
3.21 Opinion of Financial Advisor. SCA has received the oral
opinion of Bear, Stearns to the effect that, as of the date of this
Agreement, the Merger Consideration is fair to the holders of SCA
Shares from a financial point of view, a written copy of which
opinion will be delivered by SCA 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 SCA in this Plan of Merger, and no Exhibit or certificate issued
by SCA and furnished or to be furnished to HEALTHSOUTH 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 SCA 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 SCA Common
Stock.
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 Commissions and Fees. Except for fees owed to Smith
Barney Inc. ("Smith Barney"), there are no claims for brokerage
commissions, investment bankers' fees or finder's fees in
connection with the transaction contemplated by the Plan of Merger
resulting from any action taken by the Subsidiary or any of its
officers, Directors or agents.
4.4 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.
4.5 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.
4.6 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.
HEALTHSOUTH hereby represents and warrants to SCA 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 SCA 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 this Agreement constitutes a valid and binding obligation
of SCA, 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. Subject to stockholder
approval of an increase in the authorized number of shares of
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 issuance to the holders of
SCA 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 150,000,000 shares of Common Stock, par
value $.01 per share, of which 93,466,441 shares are issued and
outstanding, and 182,000 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 Registration Statement on
Form S-3 (Registration No. 33-62475), declared effective by the SEC
on September 27, 1995 (the "HEALTHSOUTH September S-3"), 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. There is no liability for dividends
declared or accumulated but unpaid with respect to any shares of
HEALTHSOUTH 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.
5.6 HEALTHSOUTH Documents. HEALTHSOUTH has heretofore
furnished SCA 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, 1994, 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 SCA 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, parti-
tion or otherwise transfer or assign all or any part of the shares
of SCA Common Stock to any other person, firm or corporation.
5.8 Commissions and Fees. Except for fees owed to Smith
Barney, there are no claims for brokerage commissions, investment
bankers' fees or finder's fees in connection with the transactions
contemplated by the Plan of Merger resulting from any action taken
by HEALTHSOUTH or any of its officers, Directors or agents.
5.9 Legal Proceedings. Except as disclosed in the
HEALTHSOUTH September S-3, 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.
5.10 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.
5.11 Contracts, etc. (a) All material contracts, leases,
agreements and arrangements to which HEALTHSOUTH or any of its
subsidiaries or affiliated partnerships is a party are legally
valid and binding in accordance with their terms and in full force
and effect. All parties to such contracts, leases, agreements and
arrangements have complied with the provisions of such contracts,
leases, agreements and arrangements, and, to the knowledge of
HEALTHSOUTH, 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 hereunder, 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 HEALTHSOUTH.
(b) No contract or agreement to which HEALTHSOUTH or any of
its subsidiaries or affiliated partnerships 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 HEALTHSOUTH.
5.12 Subsequent Events. Except as disclosed in the HEALTH-
SOUTH September S-3, HEALTHSOUTH has not, since June 30, 1995:
(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 June
30, 1995 Balance Sheet contained in the HEALTHSOUTH
September S-3 or (ii) liabilities incurred since the
effective date of the HEALTHSOUTH September S-3 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, 1995.
(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 HEALTH-
SOUTH.
(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.
(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.
5.13 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.
5.14 Accounts Receivable. (a) Since June 30, 1995,
HEALTHSOUTH 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. HEALTHSOUTH (including
its subsidiaries and affiliated partnerships) 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
HEALTHSOUTH.
(b) Without limiting the generality of the foregoing,
HEALTHSOUTH and each of its subsidiaries and affiliated
partnerships 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
HEALTHSOUTH.
5.15 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.
5.16 Vote Required. An amendment to HEALTHSOUTH's Restated
Certificate of Incorporation is required to increase the authorized
number of shares of HEALTHSOUTH Common Stock to enable HEALTHSOUTH
to have an adequate number of authorized shares to consummate the
transactions contemplated hereby. The affirmative vote of the
holders of a majority of the outstanding shares of HEALTHSOUTH
Common Stock entitled to vote thereon is the only vote of the
holders in each class or series of HEALTHSOUTH capital stock
necessary to approve such amendment, this Plan of Merger, the
Merger and the transactions contemplated by this Plan of Merger.
5.17 Opinion of Financial Advisor. HEALTHSOUTH has received
the oral opinion of Smith Barney to the effect that, as of the date
of this Agreement, the Merger Consideration is fair to HEALTHSOUTH
from a financial point of view, a written copy of which opinion
will be delivered by HEALTHSOUTH to SCA 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.
5.18 Tax Returns. HEALTHSOUTH 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 HEALTHSOUTH.
HEALTHSOUTH has made all payments shown as due on such returns.
HEALTHSOUTH has not been notified that any tax returns of HEALTH-
SOUTH are currently under audit by the Internal Revenue Service or
any state or local tax agency. No agreements have been made by
HEALTHSOUTH for the extension of time or the waiver of the statute
of limitations for the assessment or payment of any federal, state
or local taxes.
5.19 Employee Benefit Plans; Employment Matters. (a) Except
as disclosed in the HEALTHSOUTH September S-3, HEALTHSOUTH 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 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 Discrimi-
nation 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
HEALTHSOUTH 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. Except as disclosed in the
HEALTHSOUTH September S-3, HEALTHSOUTH 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 disclosed in the HEALTHSOUTH September S-3,
HEALTHSOUTH 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
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 $100,000, 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 occur-
rence 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.
5.20 Compliance with Laws in General. Except as disclosed in
the HEALTHSOUTH September S-3, HEALTHSOUTH 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 and any Environmental
Laws, and no notice of any pending inspection or violation of any
such law, regulation or ordinance has been received by HEALTHSOUTH
with respect to any alleged violation which, if it were determined
that a violation occurred, would have a material adverse effect on
HEALTHSOUTH.
5.21 Licenses, Accreditation and Regulatory Approvals.
HEALTHSOUTH and its subsidiaries and affiliated partnerships hold
all Licenses which are needed or required by law with respect to
their businesses, operations and facilities as they are currently
or presently conducted, except where the failure to possess such
Licenses does not have a material adverse effect on HEALTHSOUTH and
its subsidiaries and affiliated partnerships in the aggregate. All
such Licenses are in full force and effect, and HEALTHSOUTH is in
compliance in all material respects with all conditions and
requirements of the Licenses and with all rules and regulations
relating thereto. HEALTHSOUTH and its subsidiaries and affiliated
partnerships 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 HEALTHSOUTH and its
subsidiaries in the aggregate. HEALTHSOUTH and its subsidiaries
and affiliated partnerships have timely filed all requisite cost
reports, 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 HEALTHSOUTH nor its subsidiaries nor its affiliated
partnerships 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
cost reports or claims, or any disallowances in connection with any
audit of such cost reports, which could have a material adverse
effect on HEALTHSOUTH and its subsidiaries and affiliated
partnerships in the aggregate. The amounts established as
provisions for adjustments by Medicare, Medicaid and other
third-party payors on the financial statements set forth in the
HEALTHSOUTH September S-3 are sufficient to pay any amounts for
which HEALTHSOUTH may be liable. To the best knowledge of
HEALTHSOUTH, neither HEALTHSOUTH nor its subsidiaries and
affiliated partnerships nor their respective employees have
committed a violation of the Medicare and Medicaid fraud and abuse
provisions of the Social Security Act. Except as disclosed in the
HEALTHSOUTH September S-3, any and all past litigation concerning
such licenses, certificates of need and regulatory approvals, and
all claims and causes of action raised therein, has been finally
adjudicated. No such license, certificate of need or regulatory
approval has been revoked, conditioned (except as may be customary)
or restricted, and, except as disclosed in the HEALTHSOUTH
September S-3, no action (equitable, legal or administrative),
arbitration or other process is pending, or to the best knowledge
of HEALTHSOUTH, threatened, which in any way challenges the validly
of, or seeks to revoke, condition or restrict any such license,
certificate of need, or regulatory approval. Subject to compliance
with applicable securities laws, the HSR Act and other or local
rules or regulations requiring notice, approval, or other action
upon the occurrence of a change in control of SCA or any of the SCA
subsidiaries or SCA Other Entities, the consummation of the Merger
will not violate any law or restriction to which HEALTHSOUTH is
subject.
5.22 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 SCA 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.
Section 6. Access to Information and Documents.
6.1 Access to Information. Between the date hereof and the
Closing Date, each of SCA 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 docu-
ments relating to the business and operations of such party. In
addition, SCA shall make available to HEALTHSOUTH all such banking,
investment and financial information as shall be necessary to allow
for the efficient integration of SCA'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 October 5, 1995,
between SCA 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.
Section 7. Covenants.
7.1 Preservation of Business. SCA will use its reasonable
best efforts to preserve the business organization of SCA intact,
to keep available to HEALTHSOUTH and the Surviving Corporation the
services of the present employees of SCA, and to preserve for
HEALTHSOUTH and the Surviving Corporation the goodwill of the
suppliers, customers and others having business relations with SCA.
7.2 Material Transactions. Prior to the Effective Time, SCA
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 and transactions described on Exhibit 7.2
to the Disclosure Schedule which do not vary materially from the
terms set forth on such Exhibit 7.2), 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 SCA, 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 SCA 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 $100,000.
(d) Issue or sell, or agree to issue or sell, any
shares of capital stock or other securities of SCA,
except upon exercise of currently outstanding stock
options or warrants (other than options or warrants to
purchase up to 400,000 shares of SCA Common Stock issued
in the ordinary course of SCA's business consistent with
its past practices).
(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 SCA's usual
past practice, or make any payment or contributions or
incur any obligation pursuant to or in respect 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 Meetings of Stockholders. (a) Each of HEALTHSOUTH and
SCA will take all steps necessary in accordance with their
respective Certificates of Incorporation and Bylaws to call, give
notice of, convene and hold meetings of their respective
stockholders (the "Special Meetings") 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 (including
any necessary increase in the number of authorized shares of
HEALTHSOUTH Common Stock required for the consummation of the
transactions contemplated hereby). Unless this Plan of Merger
shall have been validly terminated as provided herein, the Boards
of Directors of HEALTHSOUTH and SCA (subject, in the case of SCA,
to the provisions of Section 8.1(d) hereof) will (i) recommend to
their respective 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 their respective reasonable,
good faith efforts to obtain the approval by their respective
stockholders of this Plan of Merger and the transactions
contemplated hereby.
(b) Nothing contained herein shall affect the right of
HEALTHSOUTH, the Subsidiary and SCA to take action by written
consent in lieu of meeting to the extent permitted by applicable
law and their respective Certificates of Incorporation and Bylaws.
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
joint proxy statement of HEALTHSOUTH and SCA 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 SCA
with copies of all filings made pursuant to this Section 7.4 and
shall consult with SCA on responses to any comments made by the
Staff of the SEC with respect thereto.
(b) The information specifically designated as being supplied
by SCA 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 SCA Common
Stock and holders of HEALTHSOUTH Common Stock, at the time of the
Special Meetings 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 SCA 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 SCA Common Stock and holders of HEALTHSOUTH Common Stock, at the
time of the Special Meetings 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 SCA, or its
officers or directors, should be discovered by SCA which should be
set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement, SCA shall promptly inform
HEALTHSOUTH. All documents, if any, that SCA 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.
(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 SCA
Common Stock and holders of HEALTHSOUTH Common Stock, at the time
of the Special Meetings 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 SCA
Common Stock in connection with the SCA Stockholders' Meeting and
to the HEALTHSOUTH stockholders in connection with the HEALTHSOUTH
Stockholders' Meeting shall not, at the date the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to
holders of SCA Common Stock and holders of HEALTHSOUTH Common
Stock, at the time of the Special Meetings 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 SCA 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 shares of HEALTHSOUTH Common Stock
to be approved for listing on the Exchange, upon official notice of
issuance, prior to the Closing Date.
(f) SCA shall furnish all information to HEALTHSOUTH with
respect to SCA and the SCA Subsidiaries and SCA Partnerships 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. SCA 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 transac-
tions contemplated hereby, by action of SCA's Board of Directors or
otherwise.
7.6 HSR Act Compliance. HEALTHSOUTH and SCA 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 SCA 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 SCA 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 SCA, promptly
upon execution and delivery of this Plan of Merger.
7.8 Resignation of SCA Directors. On or prior to the Closing
Date, SCA shall deliver to HEALTHSOUTH evidence satisfactory to
HEALTHSOUTH of the resignation of the Directors of SCA, such
resignations to be effective on the Closing Date.
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 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. SCA 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
SCA upon a merger, purchase of assets, purchase of or tender offer
for shares of SCA Common Stock or similar transaction (an
"Acquisition Transaction"), if the Board of Directors of SCA
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, SCA shall not, and will direct each officer,
director, employee, representative and agent of SCA 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 SCA Common Stock or similar
transactions involving SCA. SCA 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.
7.11 Other Actions. Subject to the provisions of Section
7.10 hereof, none of SCA, 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 SCA 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 SCA 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 SCA 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 by
such parties' independent accountants.
7.13 Pooling and Tax-Free Reorganization Treatment. Neither
HEALTHSOUTH nor SCA 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. HEALTHSOUTH and SCA
will each use their respective reasonable, good faith efforts to
cause each of their respective Directors and executive officers and
each of their respective "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 SCA 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 SCA 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 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 SCA 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 votes of its
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 SCA 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 SCA Stock Options and Warrants. (a) As soon as
reasonably practicable after the Effective Time of the Merger,
HEALTHSOUTH shall deliver to the holders of SCA stock options and
warrants appropriate notices setting forth such holders' rights
pursuant to any stock option plans under which such SCA 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 SCA 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.
(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 SCA stock options
and warrants assumed by HEALTHSOUTH in accordance with Section
2.1(d). As soon as practicable after the Effective Time, HEALTH-
SOUTH shall file with the SEC a registration statement on Form S-8
with respect to shares of HEALTHSOUTH Common Stock subject to such
SCA 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 SCA 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 SCA stock options awarded under any plan, program,
or arrangement of SCA 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 SCA. For purposes of this Section 7.17, the term "publication"
shall have the meaning provided in SEC Accounting Series Release
No. 135.
7.18 SCA Employees. HEALTHSOUTH shall retain all employees of
SCA 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 HEALTHSOUTH Board of Directors. Immediately following
the Effective Time, HEALTHSOUTH shall cause Joel C. Gordon to be
appointed to the Board of Directors of HEALTHSOUTH.
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 SCA Common Stock and the holders of HEALTH-
SOUTH Common Stock:
(a) by mutual written consent of HEALTHSOUTH and
SCA;
(b) by either HEALTHSOUTH or SCA:
(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 SCA
Common Stock or the holders of HEALTHSOUTH Common
Stock shall not have been obtained;
(ii) if the Merger shall not have been
consummated on or before March 31, 1996, 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 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 SCA gives
notice of termination pursuant to Section 7.9;
(c) By either HEALTHSOUTH or SCA 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 SCA) is not capable of being satisfied prior to
the end of the period referred to in Section 8.1(b)(ii);
(d) By SCA, if SCA'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 SCA Common Stock or shall have withdrawn such
recommendation or (ii) approved, recommended or endorsed
any Acquisition Transaction (as defined in Section 7.10)
other than this Plan of Merger or (iii) resolved to do
any of the foregoing;
(e) By either HEALTHSOUTH or SCA, if the condition
set forth in Section 9.1(g)(i) is not satisfied by
October 31, 1995; or
(f) Subject to the provisions of Section 8.7 below,
by SCA, if the Base Period Trading Price shall be less
than $20.00.
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
SCA Shares or holders of HEALTHSOUTH Common Stock; 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 HEALTHSOUTH, the Subsidiary
or SCA, 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 SCA and
HEALTHSOUTH.
(b) (i) If this Plan of Merger is terminated by SCA pursuant
to Section 8.1(d), and within one year after the effective date of
such termination SCA 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, SCA shall
pay to HEALTHSOUTH a break-up fee of 3.25% of the aggregate Merger
Consideration (determined as it would have been calculated on the
effective date of termination of this Plan of Merger, substituting
the effective date of such termination for the Closing Date in
calculating the Base Period Trading Price) 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
HEALTHSOUTH incurred by or on behalf of HEALTHSOUTH in connection
with this Plan of Merger. SCA 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) SCA shall consummate any Acquisition
Transaction (as defined in Section 7.10); 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 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 SCA Common Stock.
(c) SCA 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, HEALTHSOUTH
would not have entered into this Plan of Merger. Accordingly, if
a break-up fee shall become due and payable by SCA, and SCA 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 SCA therefor, SCA shall pay HEALTHSOUTH 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 SCA under this
Section 8.6 shall survive any termination of this Plan of Merger.
8.7 Certain Rights of HEALTHSOUTH. If SCA proposes to
terminate this Plan of Merger pursuant to Section 8.1(f) hereof,
SCA shall first notify HEALTHSOUTH in writing of its intent to so
terminate this Plan of Merger. HEALTHSOUTH shall then have not
less than 48 hours (the exact deadline to be set by SCA) from the
time of receipt of written notice by SCA to submit a final and best
offer (a "Final Offer") for a change in the Merger Consideration.
If such Final Offer is accepted by SCA (as determined by SCA' Board
of Directors after consulting with its legal counsel and financial
advisers), SCA, the Subsidiary and HEALTHSOUTH shall amend this
Plan of Merger to reflect such Final Offer and shall make any
appropriate amendments to the Registration Statement and the Proxy
Statement.
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 SCA):
(a) None of HEALTHSOUTH, the Subsidiary or SCA 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 SCA, the SCA
Subsidiaries and the SCA Partnerships, 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 HEALTHSOUTH Common Stock and the
holders of SCA 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 SCA
shall each have received letters to that effect from
Ernst & Young, LLP, independent accountants for
HEALTHSOUTH, dated (i) not later than October 31, 1995,
(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 SCA 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 SCA Subsidiaries and
the SCA 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 SCA 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 SCA 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 SCA 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 SCA 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); provided, however, that SCA 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 SCA, 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 & Johnston, Professional
Association, 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 HEALTH-
SOUTH, SCA and the Subsidiary.
(d) HEALTHSOUTH shall have received an opinion from
Waller Lansden Dortch & Davis substantially to the effect
set forth in Exhibit 9.2(d) hereto.
(e) The Proxies dated of even date herewith
executed by those persons identified on Exhibit 9.1(e)
in favor of HEALTHSOUTH shall be and remain in full force
and effect.
9.3 Conditions to Obligations of SCA. The obligations of SCA
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 SCA):
(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.
(b) The representations and warranties of
HEALTHSOUTH set forth in Section 5.12(i) 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). SCA 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 SCA may reasonably request
as to the fulfillment of the foregoing conditions.
(c) SCA shall have received an opinion from
Skadden, Arps, Slate, Meagher & Flom 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, SCA and the Subsidiary.
(d) SCA shall have received an opinion from Haskell
Slaughter Young & Johnston, Professional Association,
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 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
and
J. Brooke Johnston, Jr., Esq.
Haskell Slaughter Young & Johnston,
Professional Association
1200 AmSouth/Harbert Plaza
1901 Sixth Avenue North
Birmingham, Alabama 35203
Facsimile: (205) 324-1133
If to SCA:
Surgical Care Affiliates, Inc.
102 Woodmont Boulevard
Suite 610
Nashville, Tennessee 37205
Attention: Tarpley B. Jones
Facsimile: (615) 298-5641
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Alan C. Myers, Esq.
Facsimile: (212) 735-3609
and
Waller Lansden Dortch & Davis
Nashville City Center
511 Union Street
Suite 2100
Nashville, Tennessee 37219-1760
Attention: J. Reginald Hill, Esq.
Facsimile: (615) 244-6804
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.
10.4 Indemnification. (a) SCA 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 SCA 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 SCA 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 SCA (or them and HEALTHSOUTH and
the Surviving Corporation after the Effective Time), (ii) SCA (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) SCA (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 SCA, 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 SCA,
HEALTHSOUTH or the Surviving Corporation (but the failure so to
notify an Indemnifying Party shall nor 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
SCA (or after the Effective Time, HEALTHSOUTH and the Surviving
Corporation) the undertaking contemplated by 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) For a period of three years after the Effective Time,
HEALTHSOUTH shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained
by SCA (provided that HEALTHSOUTH may substitute therefor policies
of at least the same coverage and amounts containing terms and
conditions which are no less advantageous) with respect to claims
arising from facts or events which occurred at or prior to the
Effective Time, to the extent such liability insurance can be
maintained at an annual cost not greater than 150% of SCA' 1995
annual premium for its directors' and officers' liability
insurance; provided, however, that if HEALTHSOUTH in unable to
maintain or obtain the insurance called for by this Section 10.4(b)
at such annual cost, HEALTHSOUTH shall obtain as much comparable
insurance as is available at such annual cost.
(c) 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 SCA 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 SCA with the consent of HEALTHSOUTH;
provided, however, that no such changes 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.
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 con-
templated 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.
IN WITNESS WHEREOF, HEALTHSOUTH, the Subsidiary and SCA 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.
SURGICAL CARE AFFILIATES, INC.
By /s/ Joel C. Gordon
Joel C. Gordon
Chairman and Chief Executive Officer
ATTEST:
/s/ Tarpley B. Jones
Tarpley B. Jones
Secretary
[ CORPORATE SEAL ]
HEALTHSOUTH Corporation
By /s/ Richard M. Scrushy
Richard M. Scrushy
Chairman of the Board and
Chief Executive Officer
ATTEST:
/s/ Anthony J. Tanner
Anthony J. Tanner
Secretary
[ CORPORATE SEAL ]
CATS ACQUISITION CORPORATION
By /s/ Richard M. Scrushy
Richard M. Scrushy
President
ATTEST:
/s/ Anthony J. Tanner
Anthony J. Tanner
Secretary
[ CORPORATE SEAL ]
EXHIBIT 20
SURGICAL CARE AFFILIATES, INC.
ANNOUNCES
MERGER WITH HEALTHSOUTH CORPORATION
NASHVILLE, TENNESSEE. October 10, 1995. Joel C. Gordon, Chairman and Chief
Executive Officer of Surgical Care Affiliates, Inc., announced today that
SCA has signed a definitive agreement with HEALTHSOUTH Corporation providing
for SCA to be acquired by HEALTHSOUTH in a stock-for-stock exchange valued at
approximately $1.2 billion. HEALTHSOUTH, based in Birmingham, Alabama, is
the nation's largest provider of rehabilitation services and operates a group
of 575 outpatient and inpatient health care facilities, including 54
outpatient surgery centers in 42 states.
Under the terms of the merger agreement, each share of SCA will be exchanged
for 1.22 shares of HEALTHSOUTH. If HEALTHSOUTH's stock price during a 20
trading day period ending 2 trading days prior to closing rises above $28 or
declines to below $22, the exchange ratio is subject to adjustment. SCA
currently has approximately 39 million shares outstanding. The total value of
the transaction, based upon yesterday's closing price of HEALTHSOUTH shares
is approximately $1.2 billion. The transaction will be accounted for as a
pooling of interests and is expected to be tax-free to SCA shareholders.
Gordon stated, "The combination of HEALTHSOUTH and SCA will create the
largest and most dynamic outpatient health care service company in America.
Both companies are leaders in providing efficient, low cost outpatient health
care. The combination will create tremendous opportunities to offer
integrated surgery and rehabilitation services, as well as diagnostic services
to managed care companies and other payors across the country." Gordon
further stated, "I am pleased with the opportunity to integrate HEALTHSOUTH's
54 surgery centers and SCA's 67 surgery centers,
creating the largest number of outpatient surgery centers operated by one
company in the country. I am extremely pleased that the headquarters for the
surgery center division will be in Nashville, Tennessee. SCA expects to add
to its staff, and additional employees will be relocated to Nashville from
other locations." At the closing of the transaction, Gordon will be appointed
to HEALTHSOUTH's Board of Directors.
Richard M. Scrushy, HEALTHSOUTH's Chairman of the Board and Chief Executive
Officer, said, "With this transaction, HEALTHSOUTH has established itself as
the leading provider of outpatient health care services in the United States
with almost 600 locations in 42 states. SCA has always been recognized as
having quality facilities and adding HEALTHSOUTH's rehabilitation facilities
to our network and eliminating duplicative costs will enable the combined
network of facilities to offer managed care, insurance companies and other
payors a more cost-effective and efficient integrated system of health care
delivery. We expect this transaction to be accretive to 1996 earnings per
share."
The merger has been approved by the Boards of Directors of both companies.
The transaction is subject to certain regulatory and government approvals,
including expiration of the Hart-Scott-Rodino waiting period, the approval
of the stockholders of both companies, and the receipt of certain consents.
The transaction is expected to close in the first quarter of 1996.
Surgical Care is the largest independent operator of outpatient surgery
centers with 67 facilities in 24 states. HEALTHSOUTH operates a network of
53 surgery centers, 400 outpatient rehabilitation facilities and 77 inpatient
rehabilitation facilities. Both companies are listed on the New York Stock
Exchange, Surgical Care Affiliates under the symbol SCA and HEALTHSOUTH under
the symbol HRC.
