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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): APRIL 5, 1999
RES-CARE, INC.
(Exact Name of Registrant as Specified in Charter)
KENTUCKY 0-20372 61-0875371
(State or Other Jurisdiction of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
10140 LINN STATION ROAD, LOUISVILLE, KENTUCKY 40223
(Address of Principal Executive Offices) (ZIP Code)
Registrant's telephone number, including area code (502) 394-2100
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
On April 2, 1999, Res-Care, Inc. (the "Company") entered into an
Agreement and Plan of Merger (the "Agreement") with Res-Care Sub, Inc., a
Delaware corporation and a wholly-owned subsidiary of the Company ("Res-Care
Sub") and PeopleServe, Inc., a Delaware corporation ("PeopleServe"), which
provides for PeopleServe to merge with and into Res-Care Sub (the "Merger") in a
pooling-of-interests transaction.
Under the Agreement, each of the issued and outstanding shares of
PeopleServe common stock, Series A redeemable preferred stock (together with
accrued and unpaid dividends) and Series B convertible preferred stock (together
with accrued and unpaid dividends) will be exchanged for common shares of the
Company ("Res-Care common shares"). In addition, all PeopleServe stock options
will be exchanged for Res-Care common shares.
The actual number of Res-Care common shares to be issued in the
Merger to the holders of PeopleServe common stock and Series B convertible
preferred stock will be based on the average of the closing sale prices of
Res-Care common shares for each of the fifteen trading days ending four trading
days prior to the closing date of the Merger. Assuming that the average closing
price of Res-Care common shares is in the range of $20 to $26 per share, the
holders of each share of PeopleServe common stock and each share of PeopleServe
Series B convertible preferred stock (excluding accrued and unpaid dividends)
will receive 0.4523 Res-Care common shares in the Merger. If the average
closing price is less than $20 per share or greater than $26 per share, this
exchange ratio will change as described in the Agreement.
In connection with the Agreement, certain PeopleServe stockholders
and the Company entered into a Registration Rights Agreement (the "Registration
Rights Agreement") and a Majority Shareholders' Agreement (the "Majority
Shareholders' Agreement").
Under the Registration Rights Agreement, the Company has agreed to
grant those PeopleServe stockholders certain registration rights with respect to
1,250,000 Res-Care common shares to be issued to these PeopleServe stockholders.
Under certain circumstances, these PeopleServe stockholders may include their
shares in a registration statement for a public offering filed by the Company
within two years of the effective date of the Merger. In addition, on or before
March 1, 2000, the Company will file a shelf registration statement covering any
or all of the 1,250,000 shares not included in a prior registration, plus an
additional 300,000 shares.
Under the Majority Shareholders' Agreement, substantially all of
the PeopleServe stockholders agreed, among other things, to vote their
outstanding shares of PeopleServe common stock, Series B convertible preferred
stock and Series A redeemable preferred stock, as of the record date, in favor
of the Agreement, to amend PeopleServe's certificate of incorporation and to
approve the contractual payments to Mr. Pettinelli, Mr. Vogel and Mr. Macomber
and the exchange of PeopleServe stock options by Mr. Vogel and Mr. Macomber for
Res-Care common shares.
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The foregoing descriptions of the Agreement, the Registration
Rights Agreement and Majority Shareholders' Agreement, and the transactions
contemplated thereby, do not purport to be complete and are qualified in their
entirety by reference to the Agreement, the Registration Rights Agreement and
Majority Shareholders' Agreement, filed as exhibits to the Company's
Registration Statement on Form S-4 filed on April 8, 1999 in connection
herewith. A press release issued by the Company on April 5, 1999 announcing the
execution of the Agreement is also attached hereto as Exhibit 99.03 and
incorporated by reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) and (b) Not Applicable
(c) Exhibits. The following exhibits are filed with this
report:
2.01 Agreement and Plan of Merger, dated April 2, 1999, among
Res-Care, Inc., Res-Care Sub, Inc. and PeopleServe, Inc.,
incorporated by reference to Exhibit 2.01 of the Registrant's
Form S-4 filed on April 8, 1999.
99.01 Registration Rights Agreement, dated April 2, 1999, by
and between Res-Care, Inc. and the Shareholders party thereto,
incorporated by reference to Exhibit 2.02 of the Registrant's
Form S-4 filed on April 8, 1999.
99.02 Majority Stockholders' Agreement, dated April 2, 1999,
by and between Res-Care, Inc. and the Shareholders party
thereto, incorporated by reference to Exhibit 2.03 of the
Registrant's Form S-4 filed on April 8, 1999.
99.03 Press Release, dated April 5, 1999 of Res-Care, Inc.,
filed herewith.
[Signature on following page.]
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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.
RES-CARE, INC.
/s/ Ronald G. Geary
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Ronald G. Geary
Chairman, President and Chief
Executive Officer
Date: April 7, 1999
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Exhibit 99.03
RESCARE AND PEOPLESERVE ANNOUNCE MERGER AGREEMENT
LOUISVILLE, Ky. and DUBLIN, Ohio, April 5 /PRNewswire/ -- ResCare,
Inc.(Nasdaq: RSCR) and PeopleServe, Inc. today jointly announced a definitive
agreement in which PeopleServe and its subsidiaries, EduCare of America and VOCA
of America, will merge with ResCare. PeopleServe, headquartered in Dublin, Ohio,
is one of the largest privately held providers of services to persons with
developmental disabilities, with operations in 12 states and Washington, D.C.,
and 1998 revenues of approximately $184 million. The transaction, which is
expected to be accounted for as a pooling-of-interests, is valued at
approximately $170 million, including common shares of ResCare and assumption of
indebtedness, based on the closing stock price on Thursday, April 1, 1999.
PeopleServe was founded in 1979 and serves approximately 4,300
individuals in community-based settings, including group homes and supported
living. Other services include supported employment and day habilitation
programs. The combined company, with estimated revenues in excess of $800
million, will serve approximately 26,000 individuals with special needs in 32
states, Washington, D.C. and Puerto Rico and employ approximately 25,300 people.
Under the terms of the agreement, ResCare will exchange between
approximately 4.7 million and 5.8 million shares of its common stock for all of
the ownership interests of PeopleServe, Inc. under a formula based upon the
market price of the ResCare stock prior to closing. ResCare currently has
approximately 26.0 million diluted shares outstanding. The merger is subject to
approval of the shareholders of both companies, expiration of the waiting period
under the Hart-Scott-Rodino Act, as well as regulatory and other customary
approvals. The Boards of Directors of both companies have approved the
transaction and it is expected to be completed by the third quarter of 1999.
Vincent D. Pettinelli, chairman and one of the founders of PeopleServe, will
join the Board of Directors of ResCare, bringing the number of Board members to
eight.
Ron Geary, chairman, president and chief executive officer of ResCare,
said, "There are growing pressures to expand the availability of services for
persons with developmental disabilities, evidenced by long waiting lists in most
states and the aging baby boomer generation of caregivers. The merger will bring
together the talents and resources necessary to team with state agencies and
others in the national effort to creatively address this increasing need.
PeopleServe has a corporate philosophy and culture that will fit well with
ResCare and we look forward to joining our forces in a common mission.
"The merger will solidify our position as the leading provider of these
services and will position ResCare to achieve our goal of annualized revenues in
excess of $1 billion during the calendar year 2000. The majority of
PeopleServe's operations are in states in which ResCare has
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current operations and we expect to realize annualized savings of approximately
$9 million within one year. Excluding one-time merger related expenses of $17
million to$20 million, we expect the transaction to be accretive to ResCare's
1999 earnings per share. The merger also will add depth to our operational
organization."
Vince Pettinelli, chairman of PeopleServe, said, "The transaction will
bring together two of the nation's leaders in providing services to persons with
mental retardation and other developmental disabilities and will create a
company especially well-positioned to extend new, flexible and innovative
services to these and other special needs populations. The merger assures that
the people we serve will continue to receive the highest quality care delivered
through caring, dedicated staff operating with an efficient, cost-effective
delivery system. This is more than a blending of two organizations. It is a
continued commitment to service excellence with a foundation of shared values in
providing supports to special population groups who deserve the best care anyone
has to offer."
J.C. Bradford & Co. served as financial advisor to ResCare and
BearStearns & Co. served as financial advisor to PeopleServe in this
transaction.
ResCare serves approximately 12,500 consumers in 25 states in its
Division for Persons with Disabilities and 9,200 at-risk and special needs youth
in17 states and Puerto Rico in its Division for Youth Services. ResCare, now in
its 25th year, employs approximately 18,900 people in 30 states and Puerto Rico.
More information about ResCare is available on the Company's web site at
http://www.rescare.com.
The Company from time to time makes forward-looking statements in its
public disclosures, including statements relating to revenues that might be
expected from new or acquired programs and facilities, other statements
regarding development and acquisition activities, statements regarding
reimbursement under federal and state programs and statements regarding various
trends favoring downsizing, deinstitutionalization and privatization of
government programs. In the Company's filings under the federal securities laws,
including its annual, periodic and current reports, the Company identifies
important factors that could cause the Company's results to differ materially
from those contained in such forward-looking statements. Reference is hereby
made to such disclosures.
