<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
ReLife, Inc.
- -------------------------------------------------------------------------------
(Name of Issuer)
Class A Common Stock
- -------------------------------------------------------------------------------
(Title of Class of Securities)
Class A Common Stock: 7595 2N 109
------------------------------------------------------
(CUSIP Number)
Richard M. Scrushy
HEALTHSOUTH Rehabilitation Corporation
Two Perimeter Park South, Suite 224W
Birmingham, Alabama 35243
(205) 967-7116
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
September 18, 1994
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box .
Check the following box if a fee is being paid with the statement . (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
CUSIP No. 7595 2N 109 Page 2 of ___ Pages
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
HEALTHSOUTH Rehabilitation Corporation
63-0860407
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) ___
(b) ___
3. SEC USE ONLY
4. SOURCE OF FUNDS*
00
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) ___
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7. SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY 8. SHARED VOTING POWER
EACH 3,738,700
REPORTING
PERSON 9. SOLE DISPOSITIVE POWER
WITH 0
10. SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,738,700
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* ___
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
31.56%
14. TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Item 1. Security and Issuer.
Class of Equity Securities: Class A Common Stock, par value $.01
per share
Name and Address of Issuer: ReLife, Inc.
813 Shades Creek Parkway
Suite 300
Birmingham, Alabama 35209
Item 2. Identity and Background.
Name: HEALTHSOUTH Rehabilitation Corporation
State of Organization: Delaware
Principal Business: Development, ownership and operation of
rehabilitation and other healthcare
facilities.
Address of Principal Business
and Principal Office: Two Perimeter Park South
Suite 224W
Birmingham, Alabama 35243
(d) No
(e) No
Item 3. Source and Amount of Funds or Other Consideration.
In connection with the execution of a Plan and Agreement of Merger
dated September 18, 1994 (the "Merger Agreement"), by and among ReLife, Inc.
("ReLife"), HEALTHSOUTH Rehabilitation Corporation ("HEALTHSOUTH") and RRS
Acquisitions Company, Inc. (the "Subsidiary"), Michael E. Stephens, Chairman of
the Board, President and Chief Executive Officer of ReLife, entered into a Proxy
Agreement dated September 18, 1994, between HEALTHSOUTH and Mr. Stephens (the
"Proxy Agreement"). In the Proxy Agreement, Mr. Stephens granted to HEALTHSOUTH
the right to vote each of the shares of ReLife Common Stock owned, controlled or
acquired by Mr. Stephens in favor of the merger contemplated in the Merger
Agreement and against any proposals for any recapitalization, merger, sale of
assets or other business combination between ReLife and any other person or
entity, as well as certain other matters.
In connection with the Merger Agreement, shares of ReLife will be
cancelled and the holders of such shares will be entitled to receive a fraction
of a share of HEALTHSOUTH Common Stock for each share of ReLife Common Stock so
held. One of the conditions of the willingness of HEALTHSOUTH to enter into the
Merger Agreement was Mr. Stephens execution and delivery of the Proxy Agreement.
The foregoing constituted the consideration for Mr. Stephens' executing and
delivering the Proxy Agreement.
Item 4. Purpose of Transaction.
HEALTHSOUTH entered into the Proxy Agreement as a part of the overall
transaction set forth in the Merger Agreement. By obtaining the right to vote
the shares owned or controlled by Mr. Stephens, HEALTHSOUTH obtained additional
assurance that the affirmative vote of ReLife stockholders to approve the Merger
Agreement may be obtained. Pursuant to the provisions of the Merger Agreement,
HEALTHSOUTH will seek to cause a merger to be effected between the Subsidiary
and ReLife, with Relife to be the surviving corporation, pursuant to which the
shares of Common Stock of ReLife will be surrendered and cancelled and the
holders of such shares will be entitled to receive a fraction of a share of
HEALTHSOUTH Common Stock for each share of the common stock of ReLife so held.
Item 5. Interest in Securities of the Issuer.
(a) The Proxy Agreement recites that Mr. Stephens currently owns, or
has the power to vote, no shares of ReLife Class A Common Stock, par value $.01
per share (the "Class A Common Stock") and 373,870 shares of ReLife Class B
Common Stock, par value $.01 per share (the "Class B Common Stock"). The Proxy
Agreement applies to those shares and any shares thereafter acquired by Mr.
Stephens prior to its termination.
Class B Common Stock is entitled to ten votes per share, and Class A
Common Stock is entitled to one vote per share, with respect to all matters to
be acted upon the stockholders of ReLife, voting as single class, except with
respect to the election of directors of ReLife, as to which the classes vote
separately, and each class is entitled to elect a fixed percentage of the total
number of directors. The Class B Common Stock is convertible into Class A Common
Stock on a share-for-share basis, but the Proxy Agreement does not grant
conversion rights to HEALTHSOUTH. Mr. Stephens retains all such conversion
rights.
Mr. Stephens currently has beneficial ownership of 564,600 shares of
the Class A Common Stock and 973,870 shares of the Class B Common Stock,
including shares held pursuant to options which are currently exercisable.
Pursuant to the Proxy Agreement, HEALTHSOUTH will obtain the right to vote such
shares upon their exercise, but the Proxy Agreement does not grant HEALTHSOUTH
the right to require that such shares be exercised and HEALTHSOUTH has been
informed that Mr. Stephens has no present intention to exercise any of the
options. As a result, those shares are not included in determining the total
number of shares which HEALTHSOUTH currently has the right to vote or the
percentage of class represented by the number of shares beneficially owned by
HEALTHSOUTH. Because each share of Class B Common Stock is entitled to ten votes
per shares, the right to vote such shares is equivalent to a right to vote a
total of 3,738,700 shares of the Class A Common Stock. That total constitutes
31.56% of the total votes available with respect to all issued and outstanding
shares of Class A Common Stock and Class B Common Stock, voting as one class.
(b) HEALTHSOUTH has sole voting power with respect to voting in favor
of the merger contemplated within the Merger Agreement and against any proposal
for any recapitalization, merger, sale of assets or other business combination
between ReLife and any other person or entity, as well as certain other matters.
HEALTHSOUTH does not have voting power with respect to any other matters to be
acted upon by the stockholders of ReLife. HEALTHSOUTH's voting power currently
extends to 373,870 shares of Class B Common Stock, which is the equivalent of
3,738,700 shares of Class A Common Stock for the purposes identified above. Any
other voting rights with respect to the foregoing shares of Class B Common Stock
are retained by Michael E. Stephens, Chairman of the Board, President and Chief
Executive Officer of ReLife. The principal business address of ReLife and the
business address of Mr. Stephens, are 813 Shades Creek Parkway, Suite 300,
Birmingham, Alabama 35209. Mr. Stephens is a citizen of the United States of
America. The answer to Items 2(d) and (e) with respect to Mr. Stephens is no.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
(a) Pursuant to Section 9.3(f) of the Merger Agreement, which Section
is incorporated herein by reference, HEALTHSOUTH and Mr. Stephens have agreed to
enter into a Registration Rights Agreement with respect to shares of HEALTHSOUTH
Common Stock which may be acquired by Mr. Stephens upon the exercise of that
certain Stock Option Agreement dated as of January 26, 1987, as amended.
(b) In connection with qualifying for "pooling of interests" treatment
for accounting purposes, it is expected that Mr. Stephens will execute a letter
to HEALTHSOUTH representing and covenanting that, within 30 days preceding the
consummation of the Merger Agreement, Mr. Stephens has not sold, transferred or
otherwise disposed of, and will not sell, transfer or otherwise dispose of, any
ReLife Common Stock.
Item 7. Materials to be filed as Exhibits.
Exhibit A: Proxy Agreement, dated September 18, 1994, by and between
HEALTHSOUTH Rehabilitation Corporation and Michael E.
Stephens.
Exhibit B: Plan and Agreement of Merger, dated September 18, 1994,
by and among HEALTHSOUTH Rehabilitation Corporation, RRS
Acquisitions Company, Inc. and ReLife, Inc., together
with Exhibits thereto.
<PAGE>
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: September 26, 1994 /s/ William W. Horton
_______________________ ______________________________________
William W. Horton
Group Vice President - Legal Services
<PAGE>
PROXY AGREEMENT
AGREEMENT, dated September 18, 1994, between HEALTHSOUTH Rehabilitation
Corporation, a Delaware Corporation ("HEALTHSOUTH"), and MICHAEL E. STEPHENS, a
resident of Birmingham, Alabama (the "Stockholder").
WHEREAS, as of the date hereof, the Stockholder owns, or has the power
to vote, no shares of Class A Common Stock, par value $0.01 per share, and
373,870 shares of Class B Common Stock, par value $0.01 per share (the Class A
and Class B Common Stock being herein together referred to as the "ReLife Common
Stock"), of ReLife, Inc., a Delaware corporation ("ReLife"), (all such shares
and any shares hereafter acquired by the Stockholder prior to the termination of
this Proxy Agreement being referred to herein as the "Shares");
WHEREAS, HEALTHSOUTH, a subsidiary of HEALTHSOUTH (the "HEALTHSOUTH
Subsidiary") and ReLife propose to enter into a Plan and Agreement of Merger,
dated as of the date hereof (as the same may be amended from time to time, the
"Plan of Merger"), which provides, upon the terms and subject to the conditions
thereof, for the merger of ReLife with and into HEALTHSOUTH by merging the
HEALTHSOUTH Subsidiary into ReLife (the "Merger"); and
WHEREAS, as a condition of the willingness of HEALTHSOUTH to enter into
the Plan of Merger, HEALTHSOUTH has requested that the Stockholder agree, and,
in order to induce HEALTHSOUTH to enter into the Plan of Merger, the Stockholder
has agreed, to grant HEALTHSOUTH his proxy to vote the Shares;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants set forth herein and in the Plan of Merger, the parties
hereto agree as follows:
Section 1. Representation and Warranties of the Stockholder. The
Stockholder hereby represents and warrants to HEALTHSOUTH as follows:
1.1 Authority, etc. The Stockholder has full power and authority to
execute and deliver this Proxy Agreement and to consummate the transactions
contemplated hereby and by the Plan of Merger. The execution and delivery of the
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of such Stockholder. This
Agreement has been approved by the Board of Directors of ReLife. This Agreement
has been duly executed and delivered by Stockholder and, assuming its due
authorization, execution and delivery by HEALTHSOUTH, constitutes a legal, valid
and binding obligation of the Stockholder, enforceable against the Stockholder
in accordance with its terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to the effect of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
1.2 Title to Shares. The Stockholder is the record or beneficial owner
of the Shares, free and clear of any proxy or voting restriction other than
pursuant to this Proxy Agreement, the Certificate of Incorporation of ReLife or
an agreement between the Stockholder and Lakeshore, Inc. requiring the
Stockholder to vote for a designee of Lakeshore, Inc. for election to the Board
of Directors of ReLife.
Section 2. Transfer and Voting of Shares.
2.1. Transfer or Conversion of Shares. During the Proxy Term (as
defined below), and except as otherwise provided herein, or in or permitted by
the Plan of Merger, the Stockholder shall not (a) sell, pledge or otherwise
dispose of any of the Shares, (b) deposit the Shares into a voting trust or
enter into a voting agreement or arrangement with respect to the Shares or grant
any proxy with respect thereto other than pursuant to this Proxy Agreement, (c)
enter into any contract, option or other arrangement or undertaking with respect
to the direct or indirect acquisition or sale, assignment, transfer or other
disposition of any ReLife Common Stock, or (d) convert any shares of ReLife
Class B Common Stock into ReLife Class A Common Stock.
2.2. Voting of Shares; Further Assurances. (a) The Stockholder, by this
Agreement, with respect to those Shares that he owns of record or for which he
has the power to vote, does hereby constitute and appoint HEALTHSOUTH, or any
nominee of HEALTHSOUTH, with full power of substitution, during and for the
Proxy Term, as his true and lawful attorney and proxy, for and in his name,
place and stead, to vote each of the Shares as his proxy, at every annual,
special or adjourned meeting of the stockholders of ReLife (including the right
to sign his name (as a stockholder) to any consent, certificate or other
document relating to ReLife that the law of the State of Delaware may permit or
require) (i) in favor of the adoption of the Plan of Merger and approval of the
Plan of Merger and the other transactions contemplated by the Plan of Merger,
(ii) against any proposal for any recapitalization, merger, sale of assets or
other business combination between ReLife and any person or entity (other than
the Merger) or any other action or agreement that would result in a breach of
any covenant, representation or warranty or any other obligation or agreement of
ReLife under the Plan of Merger or which could result in any of the conditions
to ReLife's obligations under the Plan of Merger not being fulfilled, and (iii)
in favor of any other matter relating to consummation of the transactions
contemplated by the Plan of Merger. The Stockholder further agrees to cause the
Shares owned by him beneficially to be voted in accordance with the foregoing.
(b) For the purposes of this Agreement, "Proxy Term" shall mean the
period from the execution of this Agreement until the termination of the Plan of
Merger, and following termination of the Plan of Merger, during such time as a
Third Party Acquisition Event (as defined in the Plan of Merger) exists with
respect to ReLife; provided that in no event shall the Proxy Term extend beyond
the close of business one year following the termination of the Plan of Merger.
(c) The Stockholder shall perform such further acts and execute such
further documents and instruments as may reasonably be required to vest in
HEALTHSOUTH the power to carry out the provisions of this Proxy Agreement.
Section 3. General Provisions.
3.1 Severability. If any term or other provision of this Proxy
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Proxy Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Proxy Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
Section 3.2. Entire Agreement. This Proxy Agreement constitutes the
entire agreement of the parties and supersedes all prior agreements and
undertakings, both written and oral, between the parties, or either of them,
with respect to the subject matter hereof.
Section 3.3. Assignment. This Proxy Agreement shall not be assigned by
operation of law or otherwise.
Section 3.4. Parties in Interest. This Proxy Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Proxy Agreement, express or implied, is intended to or shall confer upon any
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Proxy Agreement.
Section 3.5. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Proxy
Agreement is not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or in equity.
Section 3.6. Governing Law. Except to the extent that Delaware Law is
mandatorily applicable to the rights of the stockholders of ReLife, this Proxy
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Alabama applicable to contracts executed and to be performed
entirely within that state.
Section 3.7. Counterparts. This Proxy Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Proxy Agreement as
of the date first written above.
_______________________________________
Michael E. Stephens
HEALTHSOUTH Rehabilitation Corporation
By: ___________________________________
Michael D. Martin
Senior Vice President and Treasurer
ATTEST:
__________________________________
Anthony J. Tanner
Secretary
[CORPORATE SEAL]
<PAGE>
PLAN AND AGREEMENT OF MERGER
PLAN AND AGREEMENT OF MERGER (the "Plan of Merger"), made and entered
into as of the 18th day of September, 1994, by and among HEALTHSOUTH
Rehabilitation Corporation, a Delaware corporation ("HEALTHSOUTH"), RRS
ACQUISITIONS COMPANY, INC., a Delaware corporation (the "Subsidiary"), and
RELIFE, INC., a Delaware corporation ("ReLife") (the Subsidiary and ReLife being
sometimes collectively referred to herein as the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the Board of Directors of each of HEALTHSOUTH and ReLife has
determined that a business combination between HEALTHSOUTH and ReLife is in the
best interests of their respective companies and stockholders and presents an
opportunity for their respective companies to achieve long-term strategic and
financial benefits;
WHEREAS, the respective Boards of Directors of HEALTHSOUTH, the
Subsidiary and ReLife have approved the merger of the Subsidiary with and into
ReLife (the "Merger"), upon the terms and conditions set forth in this Plan of
Merger, whereby each share of Class A Common Stock, par value $0.01 per share,
of ReLife ("Class A Common Stock"), and each share of Class B Common Stock, par
value $0.01 per share, of ReLife ("Class B Common Stock", and together with the
Class A Common Stock, the "ReLife Common Stock"), not owned directly or
indirectly by ReLife, except Dissenting Shares (as hereinafter defined), will be
converted into the right to receive the Merger Consideration (as hereinafter
defined) (the shares of ReLife Common Stock to be so converted being hereinafter
collectively referred to as the "ReLife Shares");
WHEREAS, each of HEALTHSOUTH, the Subsidiary and ReLife desire 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 (as defined herein) shall qualify as a reorganization under the
provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"); 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 General Corporation Law of the State of
Delaware (the "DGCL"), the Subsidiary shall be merged with and into ReLife at
the Effective Time of the Merger (as defined in Section 1.3). Following the
Effective Time of the Merger, the separate corporate existence of the Subsidiary
shall cease and ReLife shall continue as the surviving corporation (the
"Surviving Corporation") under the name "ReLife, Inc." and shall succeed to and
assume all the rights and obligations of the Subsidiary and ReLife 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 of the conditions set forth in Section 9.1(c), (e) and
(f)(i), 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 Subsidiary and ReLife 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 of the Merger,
by virtue of the Merger and without any action on the part of any holder of
ReLife Shares 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 of the
Merger shall be converted into one fully paid and nonassessable share of ReLife
Common Stock.
(b) Cancellation of Treasury Stock. Each share of ReLife Common Stock
that is owned by ReLife or by any subsidiary of ReLife 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 ReLife Shares. As of the Effective Time of the
Merger, subject to Section 2.2(e), each issued and outstanding ReLife Share
(other than shares to be cancelled in accordance with Section 2.1(b) and
Dissenting Shares (as defined in Section 2.1(d))) shall be converted into a
right to receive a fraction of a share of HEALTHSOUTH Common Stock (the shares
of HEALTHSOUTH Common Stock to be issued to the holders of ReLife Shares being
herein called the "Merger Consideration") in accordance with the Exchange Ratio
(as set forth below). Each holder of ReLife Shares shall be entitled to receive
such number of shares of HEALTHSOUTH Common Stock as is determined by
multiplying the number of ReLife Shares owned by such Holder at the Effective
Time of the Merger by the Exchange Ratio. As used herein, "Exchange Ratio" shall
mean, and shall be calculated, as follows: (a) if the Base Period Trading Price
is greater than $39.00, the Exchange Ratio shall be equal to .6154 minus a
fraction, the numerator of which is .6154 minus (24/X), where X is the Base
Period Trading Price, and the denominator of which is 2, such fraction being
rounded to four decimals; (b) if the Base Period Trading Price is greater than
or equal to $31.45 but not greater than $39.00, the Exchange Ratio shall be the
quotient, rounded to four decimals, obtained by dividing $24.00 by the Base
Period Trading Price; and (c) if the Base Period Trading Price is less than
$31.45, the Exchange Ratio shall be .7631. For purposes of this Plan of Merger,
the term "Base Period Trading Price" shall mean the average of the daily closing
price per share of HEALTHSOUTH Common Stock for the 20-business day period
ending on the third business day before the Closing, rounded to the nearest
cent. The daily closing price per share shall be the closing price for
NYSE-Composite Transactions as reported by the New York Stock Exchange, Inc.
(the "Exchange"). As of the Effective Time of the Merger, all such ReLife 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
ReLife Shares shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration and any cash in lieu of fractional
shares of HEALTHSOUTH Common Stock to be issued or paid in consideration
therefor upon surrender of such certificate in accordance with Section 2.2,
without interest.
(d) Dissenting Shares. Notwithstanding anything in this Plan of Merger
to the contrary, ReLife Shares outstanding immediately prior to the Effective
Time of the Merger held by a holder (if any) who is entitled to demand, and who
properly demands, appraisal for such shares in accordance with Section 262 of
the DGCL ("Dissenting Shares") shall not be converted into a right to receive
the Merger Consideration and any cash in lieu of fractional shares of
HEALTHSOUTH Common Stock unless such holder fails to perfect or otherwise loses
such holder's right to appraisal, if any. If, after the Effective Time of the
Merger, such holder fails to perfect or loses any such right to appraisal, such
shares shall be treated as if they had been converted as of the Effective Time
of the Merger into the right to receive the Merger Consideration pursuant to
Section 2.1(c) and the cash in lieu of fractional shares of HEALTHSOUTH Common
Stock specified in Section 2.2.
(e) Stock Options. At the Effective Time, all rights with respect to
ReLife Common Stock pursuant to any ReLife stock options which are outstanding
at the Effective Time, whether or not then exercisable, shall be converted into
and become rights with respect to HEALTHSOUTH Common Stock and HEALTHSOUTH shall
assume each ReLife stock option in accordance with the terms of the stock option
agreement or plan, in each case as amended, under which it was issued and the
stock option agreement, as amended, by which it is evidenced such conversion to
be consistent with the Exchange Ratio. 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".
(f) Anti-Dilution Provisions. In the event that HEALTHSOUTH changes the
number of shares of HEALTHSOUTH Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, or similar
recapitalization with respect to such stock and the record date thereof (in the
case of a stock dividend) or the effective date thereof (in the case of a stock
split or similar recapitalization for which a record date is not established)
shall be prior to the Effective Time, (i) the Base Period Trading Price shall be
adjusted to appropriately adjust the Exchange Ratio, and (ii) if agreed upon
between the parties, the anticipated Effective Time shall be postponed for an
appropriate period of time agreed upon by the parties in order for the Base
Period Trading Price to reflect the market effect of such stock split, stock
dividend, or similar recapitalization.
2.2 Exchange of Certificates. (a) Exchange Agent.Prior to the Effective
Time of the Merger, 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 of the Merger, for the benefit of the holders of ReLife 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 of the Merger and
appropriate cash payments in lieu of fractional shares, being hereinafter
referred to as the "Exchange Fund") issuable pursuant to Section 2.1 in exchange
for outstanding ReLife Shares, and will deposit from time-to-time into the
Exchange Fund after the Effective Time such amounts of cash as may be required
to make the payments required pursuant to Sections 2.2(c) and 2.2(e). The
Exchange Agent shall, pursuant to irrevocable instructions, deliver the Merger
Consideration, cash in lieu of fractional shares of HEALTHSOUTH Common Stock and
any dividends or other distributions to which ReLife's stockholders shall be
entitled pursuant to the Plan of Merger contemplated to be delivered to ReLife's
stockholders pursuant to Section 2.1 out of the Exchange Fund. The Exchange Fund
shall not be used for any other purpose.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time of the Merger, HEALTHSOUTH shall cause the Exchange Agent to mail
to each holder of record of a certificate or certificates which immediately
prior to the Effective Time of the Merger represented outstanding ReLife Shares
(the "Certificates") whose shares were converted into the right to receive the
Merger Consideration pursuant to Section 2.1, (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as HEALTHSOUTH
may reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for certificates representing shares of
HEALTHSOUTH Common Stock. HEALTHSOUTH shall assure that forms of the letters of
transmittal are available for delivery to stockholders of ReLife prior to the
Effective Time of the Merger and shall use its best efforts to cause the
Exchange Agent to accept deliveries by hand of the Certificates, completed
letters of transmittal and related documentation beginning at the Effective Time
and to effect the exchange of such Certificates promptly. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by HEALTHSOUTH, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of HEALTHSOUTH Common Stock which such holder has the right to receive
pursuant to the provisions of this Section 2, cash in lieu of fractional shares
of HEALTHSOUTH Common Stock to which such holder is entitled pursuant to Section
2.2(e) and any dividends or other distributions to which such holder is entitled
pursuant to Section 2.2(c). The Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of ReLife Shares which is not
registered in the transfer records of ReLife, 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 of the Merger to represent only the right to receive upon such surrender
the certificate representing shares of HEALTHSOUTH Common Stock, cash in lieu of
any fractional shares of HEALTHSOUTH Common Stock and any other dividends or
distributions 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
ReLife shall be entitled to vote after the Effective Time of the Merger at any
meeting of HEALTHSOUTH stockholders the number of whole shares of HEALTHSOUTH
Common Stock into which their respective ReLife Shares 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 of the Merger 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 of the Merger 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 ReLife 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 ReLife Shares theretofore
represented by such Certificates. If, after the Effective Time of the Merger,
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 ReLife 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) Lost Certificates. In the event any Certificates shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of HEALTHSOUTH Common Stock and cash in lieu of
fractional shares, and unpaid dividends and distributions on shares of
HEALTHSOUTH Common Stock as provided in Section 2.2(c), deliverable in respect
thereof pursuant to this Plan of Merger; provided that no bond in excess of that
which would be required by HEALTHSOUTH with respect to its existing stockholders
in respect of lost certificates shall be required of any holder of ReLife
Shares.
(g) 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 of the Merger 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
HEALTHSOUTH Common Stock, any cash in lieu of fractional shares of HEALTHSOUTH
Common Stock and any dividends or distributions with respect to HEALTHSOUTH
Common Stock.
(h) No Liability. None of HEALTHSOUTH, the Subsidiary, ReLife 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 of the
Merger (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.
(i) Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by HEALTHSOUTH, on a daily
basis; provided, however, that all such investments shall be limited to the
types of investments contained in the definition "Permitted Investments" (other
than paragraphs (5), (8), (9), (10), (11), (12), (13), (15) and (16) of such
definition) contained in HEALTHSOUTH's Amended and Restated Credit Agreement,
dated as of June 7, 1994, among HEALTHSOUTH and NationsBank of North Carolina,
as Agent, and the Lenders signatory thereto. 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 ReLife shall be amended and restated, effective
at the Effective Time, in a manner satisfactory to HEALTHSOUTH. The Certificate
of Incorporation of ReLife, 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 of the Merger and until thereafter altered, amended or repealed in
accordance with the laws of the State of Delaware, the Certificate of
Incorporation of ReLife 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.
Section 3. Representations and Warranties of ReLife.
Except as set forth in the Disclosure Schedule delivered at or prior to
the execution hereof to HEALTHSOUTH by ReLife (the "Disclosure Schedule") or
otherwise disclosed in the ReLife Documents (hereinafter defined), ReLife hereby
represents and warrants to HEALTHSOUTH and the Subsidiary, as of the date of the
Plan of Merger, as follows:
3.1. Organization, Existence and Good Standing. ReLife is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. ReLife has all necessary corporate power to own its
properties and assets and to carry on its business as presently conducted.
ReLife 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 ReLife within such time owned, directly or indirectly, any shares of
HEALTHSOUTH Common Stock or Subsidiary Common Stock.
3.2 ReLife Capital Stock. ReLife's authorized capital consists of (i)
20,000,000 shares of Class A Common Stock, of which 5,212,242 shares are issued
and outstanding as of the date of this Plan of Merger and 80,000 of which shares
are issued and held as treasury shares, (ii) 3,000,000 shares of Class B Common
Stock, of which 663,372 shares are issued and outstanding as of the date of this
Plan of Merger and 20,000 of which shares are issued and held as treasury
shares, and (iii) 500,000 shares of Preferred Stock, par value $0.01 per share,
no shares of which are issued and outstanding as of the date of this Plan of
Merger and none of which shares are issued and held as treasury stock. All of
the issued and outstanding ReLife Shares are duly and validly issued, fully paid
and nonassessable. Except as set forth on Exhibit 3.2 of the Disclosure Schedule
or otherwise disclosed in the ReLife Documents (hereinafter defined), there are
no options, warrants, or similar rights granted by ReLife or any other
agreements to which ReLife 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 of the ReLife Shares. ReLife has not
made any distributions to any holders of ReLife Shares or participated in or
effected any issuance, exchange or retirement of ReLife Shares, or otherwise
changed the equity interests of holders of ReLife Shares, in contemplation of
effecting the Merger within the two years immediately preceding the date of this
Plan of Merger. Any ReLife Shares that ReLife 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) Exhibit 3.3 of the
Disclosure Schedule is a list of all subsidiaries of ReLife (individually, a
"ReLife Subsidiary", and collectively, the "ReLife Subsidiaries") and their
states of incorporation. Except as set forth on such Exhibit 3.3 of the
Disclosure Schedule, ReLife does not own stock in and does not control, directly
or indirectly, any other corporation, association or business organization other
than the ReLife Partnerships (as defined below).
(b) Also disclosed on Exhibit 3.3 of the Disclosure Schedule is a list
of all general or limited partnerships in which the general partner is ReLife or
a ReLife Subsidiary (individually, a "ReLife Partnership" and collectively, the
"ReLife Partnerships") and their states of organization. Except as set forth on
Exhibit 3.3 of the Disclosure Schedule, neither ReLife nor any ReLife Subsidiary
owns an equity interest in, nor does such entity control, directly or
indirectly, any other joint venture or partnership.
3.4 Organization, Existence and Good Standing of ReLife Subsidiary
and/or ReLife Partnerships. (a) Each ReLife Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its
respective state of incorporation. Each ReLife Subsidiary has all necessary
corporate power to own its properties and assets and to carry on its business as
presently conducted.
(b) Each ReLife Partnership is a general or limited partnership duly
organized, validly existing and in good standing under the laws of its
respective state of organization. Each ReLife Partnership has all necessary
power to own its property and assets and to carry on its business as presently
conducted.
3.5. Foreign Qualifications. ReLife, each ReLife Subsidiary and each
ReLife Partnership is qualified to do business as a foreign corporation or
foreign general or limited partnership, 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 such entity.
3.6. Power and Authority. Subject to the satisfaction of the conditions
precedent set forth herein, ReLife 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 corporate action on its part 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 of the Disclosure Schedule, the execution and delivery of
the Plan of Merger does not and, subject to the receipt of required stockholder
and regulatory approvals and any other required third-party consents or
approvals, the consummation of the Merger will not, violate any provisions of
the Certificate of Incorporation of ReLife or any provisions of, or result in
the acceleration of any obligation under, any mortgage, lien, lease, agreement,
instrument, order, arbitration award, judgment or decree, to which ReLife or any
ReLife Subsidiary or ReLife 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 ReLife.
3.7. ReLife Public Information. ReLife has heretofore furnished
HEALTHSOUTH with true and complete copies of ReLife's Annual Report on Form 10-K
for the fiscal year ended September 30, 1993 (the "ReLife 10-K"), the proxy
statement utilized by ReLife in soliciting proxies in connection with the Annual
Meeting of Stockholders of ReLife held on February 17, 1994 (the "ReLife Proxy
Statement") and ReLife's Quarterly Reports on Form 10-Q for the quarters ended
December 31, 1993 (the "ReLife December 10-Q"), March 31, 1994 (the "ReLife
March 10-Q") and June 30, 1994 (the "ReLife June 10-Q") (the ReLife 10-K, the
ReLife Proxy Statement, the ReLife December 10-Q, the ReLife March 10-Q and the
ReLife June 10-Q being hereinafter collectively called the "ReLife Documents").
The ReLife Documents, at the time they were filed or were initially mailed to
stockholders, respectively, were prepared in all material respects in accordance
with the applicable requirements of the Securities Exchange Act of 1934, as
amended and the rules and regulations of the Securities and Exchange Commission
(the "SEC") thereunder applicable thereto (the "Exchange Act") and did not, at
the time they were so filed or mailed, contain any untrue statement of a
material fact or omit to state a 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 were made, not misleading. As of the dates such
documents were so filed or mailed, the description of the business, operations
and financial condition of ReLife contained in the ReLife Documents complied in
all material respects with the applicable requirements of the Exchange Act. As
of their respective dates, the audited and unaudited consolidated financial
statements of ReLife contained in the ReLife Documents were prepared in
accordance with, and complied as to form in all material respects with,
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, were prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
indicated except to the extent required by changes in generally accepted
accounting principles and as may be indicated in the notes thereto, and fairly
presented the consolidated financial position of ReLife as at the dates thereof
and the consolidated results of operations and cash flows of ReLife for the
periods then ended except that (i) any unaudited interim financial statements
were subject to normal and recurring year-end adjustments which are not expected
to be material in amount and such statements are not necessarily indicative of
results for the full fiscal year and (ii) any pro forma financial information
contained in such consolidated financial statements is not necessarily
indicative of the consolidated financial position of ReLife as of the respective
dates thereof and the consolidated results of operations and cash flows for the
periods indicated. The consolidated balance sheet of ReLife at June 30, 1994
included in the ReLife June 10-Q is herein sometimes referred to as the "ReLife
Balance Sheet".
3.8. Properties and Assets. ReLife (including, as applicable, the
ReLife Subsidiaries and the ReLife Partnerships) owns all of the real and
personal property included in the ReLife Balance Sheet as being owned by ReLife
(except assets recorded under capital lease obligations and such property as has
been disposed of during the ordinary course of ReLife's business since the date
of the ReLife Balance Sheet), free and clear of any liens, claims, charges,
exceptions or encumbrances, except for those (i) if any, which in the aggregate
are not material and which do not materially affect continued use of such
property, or (ii) which are disclosed in the ReLife Documents or set forth in
Exhibit 3.8 of the Disclosure Schedule.
3.9. Legal Proceedings. Except as listed on Exhibit 3.9 of the
Disclosure Schedule or described in the ReLife Documents, to the knowledge of
ReLife, there is no litigation, governmental investigation, condemnation or
other proceeding threatened against or relating to ReLife, any ReLife Subsidiary
or ReLife Partnership, their properties or businesses, or the transaction
contemplated by the Plan of Merger for which an unfavorable outcome could have a
material adverse effect on the business of ReLife and, to the knowledge of
ReLife, no basis for any such action exists.. Except as listed on Exhibit 3.9 of
the Disclosure Schedule or described in the ReLife Documents, as of the date
which is 15 days prior to the date hereof, there was no litigation, governmental
investigation, condemnation or other proceeding pending, and subsequent to that
time, to the knowledge of ReLife, there is and has been no litigation,
governmental investigation, condemnation or other proceeding commenced which is
still pending against or relating to ReLife, any ReLife Subsidiary or ReLife
Partnership, their properties or businesses, or the transaction contemplated by
the Plan of Merger.
3.10 Contracts, etc. (a) ReLife has made available to HEALTHSOUTH true
and complete copies of all written, and has disclosed to HEALTHSOUTH all oral,
outstanding contracts, obligations and commitments of ReLife (including the
ReLife Subsidiaries and ReLife Partnerships) entered into in connection with and
related to the business and operations of ReLife (including the ReLife
Subsidiaries and ReLife Partnerships), which are material to the operations of
ReLife, or has otherwise disclosed such contracts, commitments or obligations in
an Exhibit hereto or to the ReLife Documents. Except as otherwise indicated on
Exhibit 3.10(a) of the Disclosure Schedule, all of such contracts, obligations
and commitments are valid, binding and enforceable in accordance with their
terms (assuming the other parties thereto are bound) and are in full force and
effect, except where such invalidity or unenforceability would not have a
material adverse effect on ReLife. Except as set forth or incorporated by
reference on such Exhibit, no default or alleged default by ReLife (including
the ReLife Subsidiaries and ReLife Partnerships) exists thereunder, except for
defaults or alleged defaults which would not have a material adverse effect on
ReLife.
(b) Except as set forth on Exhibit 3.10(b) of the Disclosure Schedule,
no contract or agreement to which ReLife or any ReLife Subsidiary or ReLife
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 ReLife.
(c) Except as set forth on Exhibit 3.10(c) of the Disclosure Schedule,
none of ReLife, any ReLife Subsidiary or any ReLife 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 (excluding liens described
in Section 3.8) 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 of the
Disclosure Schedule or disclosed in the ReLife June 10-Q, none of ReLife,
Lakeshore Systems Services, Inc., Rebound, Inc. and ReLife Acquisition
Corporation or the ReLife Partnership has, since the date of the ReLife Balance
Sheet:
(a) Experienced 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), which discharge or
satisfaction would have a material adverse effect on ReLife other than
(i) liabilities shown or reflected on the ReLife Balance Sheet or (ii)
liabilities incurred since the date of the ReLife Balance Sheet in the
ordinary course of business.
(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 ReLife, except as may have been
required due to income or operations of ReLife since the date of the
ReLife Balance Sheet.
(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 ReLife.
(e) Sold or transferred any of the assets material to the
consolidated business of ReLife, 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 ReLife to any officer or employee, consultant or
agent (other than increases consistent with past practices), or by
means of any bonus or pension plan, contract or other commitment (other
than the payment of cash bonuses to officers and employees pursuant to
and consistent with existing plans and programs), 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
Common Stock upon exercise of existing outstanding stock options or
conversion of Class B Common Stock into Class A Common Stock or stock
options granted to employees or consultants of ReLife, all of which are
set forth on Exhibit 3.2 of the Disclosure Schedule.
3.12 Accounts Receivable. (a) Except as set forth on Exhibit 3.12 of
the Disclosure Schedule, since the date of the ReLife Balance Sheet, ReLife has
not changed any 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. Accounts receivable are
recorded on the ReLife Balance Sheet (and the other consolidated balance sheets
of ReLife included in the ReLife Documents) in amounts estimated to be net of
contractual allowances related to third-party payor arrangements. ReLife
(including the ReLife Subsidiaries and ReLife 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 ReLife.
(b) Without limiting the generality of the foregoing, ReLife and each
ReLife Subsidiary or ReLife 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 ReLife.
3.13 Tax Returns. ReLife 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
ReLife. ReLife has made all payments shown as due on such returns. Except as set
forth on Exhibit 3.13 of the Disclosure Schedule, ReLife has not been notified
that any tax returns of ReLife are currently under audit by the Internal Revenue
Service or any state or local tax agency. Except as set forth on Exhibit 3.13 of
the Disclosure Schedule, no agreements have been made by ReLife 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 J.C. Bradford &
Co. ("Bradford"), detailed in an agreement, a copy of which has been delivered
to HEALTHSOUTH, 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 ReLife or its stockholders, officers or Directors, or any of
them.
3.15 Employee Benefit Plans; Employment Matters. (a) Except as set
forth on Exhibit 3.15(a) of the Disclosure Schedule, ReLife 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 the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). All such plans listed on such Exhibit 3.15(a) (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. Except as
indicated on Exhibit 3.15(a) of the Disclosure Schedule, the Internal Revenue
Service has issued a determination letter with respect to each such plan that
such plan is exempt from federal income taxation pursuant to Section 501(a) of
the Code. No act or failure to act by ReLife 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. ReLife 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 set forth on Exhibit 3.15(b) of the Disclosure Schedule,
Blue 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 of 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 of the Disclosure Schedule or disclosed in the ReLife Documents, (i) ReLife
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 in each case occurring since January 1, 1991 (or prior thereto if not
resolved), and (ii) no notice of any pending inspection or violation of any such
law, regulation or ordinance has been received by ReLife which, if it were
determined that a violation had occurred, would have a material adverse effect
on ReLife.
3.17 Regulatory Approvals. ReLife and each ReLife Subsidiary and
ReLife Partnership, as applicable, holds all licenses, certificates of need and
other regulatory approvals required or necessary to be applied for or obtained
in connection with its business as presently conducted or as proposed to be
conducted, except where the failure to obtain such license, certificate of need
or regulatory approval would not have a material adverse effect on ReLife. All
such licenses, certificates of need and other regulatory approvals relating to
the business, operations and facilities of ReLife and each Subsidiary and ReLife
Partnership are in full force and effect, except where any failure of such
license, certificate of need or regulatory approval to be in full force and
effect would not have a material adverse effect on ReLife. Except as disclosed
in the ReLife 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 ReLife
Documents, no action (equitable, legal or administrative), arbitration or other
process is pending, or to the best knowledge of ReLife, 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 and the Hart Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and obtaining all requisite
governmental consents, the consummation of the Merger will not violate any law
or governmental restriction to which ReLife is subject which, if violated, would
have a material adverse effect on ReLife.
3.18 Retirement or Re-Acquisition of HEALTHSOUTH Common Stock. ReLife
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. ReLife 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 Opinion of Financial Advisor. ReLife has received the oral
opinion of Bradford to the effect that, as of the date hereof, the Merger
Consideration is fair to the holders of ReLife Shares from a financial point of
view, a written copy of which opinion will be delivered by ReLife to HEALTHSOUTH
prior to the date on which the definitive proxy materials for the Proxy
Statement (as defined in Section 7.5(a)) are filed with the SEC.
3.21 No Untrue Representations. No representation or warranty by
ReLife in this Plan of Merger, and no Exhibit or certificate issued by ReLife
and furnished or to be furnished to HEALTHSOUTH pursuant hereto, or in
connection with the transactions contemplated hereby, contains or, at the time
furnished, will contain any untrue statement of a material fact, or omits or, at
the time furnished, will omit to state a material fact necessary to make the
statements or facts contained therein 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 ReLife 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 and is duly qualified to transact business as
a foreign corporation in the State of Alabama. 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 ReLife 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 subject to stockholder approval as
required by Delaware law, 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"), as detailed in the agreement which has been delivered to
ReLife, 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 ReLife 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 ReLife 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 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.
5.3 HEALTHSOUTH Common Stock. On the Closing Date, HEALTHSOUTH will
have a sufficient number of authorized but unissued and/or treasury shares of
its Common Stock available for issuance to the holders of ReLife 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 Exchange upon official notice
of issuance.
5.4. Capitalization. HEALTHSOUTH has an authorized capitalization 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
75,000,000 shares of Common Stock, par value $.01 per share, of which 29,913,358
shares are issued and outstanding, and 263,000 shares are held in treasury. All
of the issued and outstanding shares of HEALTHSOUTH Common Stock has been duly
and validly issued and are fully paid and non-assessable. Except as disclosed in
the HEALTHSOUTH Documents (as hereinafter defined) and except for the issuance
of options to purchase Common Stock under existing stock option plans of
HEALTHSOUTH, there are no options, warrants 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 Public Information. HEALTHSOUTH has heretofore
furnished ReLife with true and complete copies of HEALTHSOUTH's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993, as amended (the
"HEALTHSOUTH 10-K"), the proxy statement utilized by HEALTHSOUTH in soliciting
proxies in connection with the Annual Meeting of Stockholders of HEALTHSOUTH
held on April 14, 1994 (the "HEALTHSOUTH Proxy Statement") and HEALTHSOUTH's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1994, as amended
(the "HEALTHSOUTH March 10-Q") and June 30, 1994, as amended (the "HEALTHSOUTH
June 10-Q") (the HEALTHSOUTH 10-K, the HEALTHSOUTH Proxy Statement, the
HEALTHSOUTH March 10-Q and the HEALTHSOUTH June 10-Q being hereinafter
collectively called the "HEALTHSOUTH Documents"). The HEALTHSOUTH Documents, at
the time they were filed or were initially mailed to stockholders, respectively,
were prepared in all material respects in accordance with the applicable
requirements of the Exchange Act and did not, at the time they were so filed or
mailed, contain any untrue statement of a material fact or omit to state a
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 were
made, not misleading. As of the dates such documents were so filed or mailed,
the description of the business, operations and financial condition of
HEALTHSOUTH contained in the HEALTHSOUTH Documents complied in all material
respects with the applicable requirements of the Exchange Act. As of their
respective dates, the audited and unaudited consolidated financial statements of
HEALTHSOUTH contained in the HEALTHSOUTH Documents were prepared in accordance
with, and complied as to form in all material respects with, applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, were prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods indicated
except to the extent required by changes in generally accepted accounting
principles and as may be indicated in the notes thereto and fairly presented the
consolidated financial position of HEALTHSOUTH as at the dates thereof and the
consolidated results of operations and cash flows of HEALTHSOUTH for the periods
then ended and except (i) that any unaudited interim financial statements were
subject to normal and recurring year-end adjustments which are not expected to
be material in amount and (ii) such statements are not necessarily indicative of
results for the full fiscal year and any pro forma financial information
contained in such consolidated financial statements is not necessarily
indicative of the consolidated financial position of HEALTHSOUTH as of the
respective dates thereof and the consolidated results of operations and cash
flows for the periods indicated.
5.7 Commissions and Fees. Except for fees owed to Smith Barney,
detailed in an agreement, a copy of which has been delivered to ReLife, 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.
5.8 Legal Proceedings. Except as disclosed in the HEALTHSOUTH
Documents, 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.
5.9 No Violations. Subject to compliance with applicable securities
laws and the HSR Act, the consummation of the Merger will not violate any law or
restriction to which HEALTHSOUTH or its affiliates or their respective
properties or assets, is subject.
5.10 No Material Changes. Since June 30, 1994, there has not been (i)
any material adverse change in the financial condition, business, properties, or
assets of HEALTHSOUTH and its subsidiaries; (ii) any material loss or damage to
any of the properties or assets of HEALTHSOUTH and its subsidiaries (whether or
not covered by insurance) which affects or impairs the ability of HEALTHSOUTH
and its subsidiaries to conduct their businesses or any labor trouble or any
other event or condition of any character which has materially and adversely
affected HEALTHSOUTH's business or the business of any of its subsidiaries;
(iii) any mortgage or pledge of any of the properties or assets of HEALTHSOUTH
or any of its subsidiaries, or any indebtedness incurred by HEALTHSOUTH or any
of its subsidiaries maturing more than one year from the date the indebtedness
was incurred; (iv) any purchase, redemption, or other acquisition by HEALTHSOUTH
of any shares of its Common Stock; (v) any payment or declaration of a dividend
or any other distribution or payment in respect of HEALTHSOUTH Common Stock;
(vi) any issuance, sale, or other disposition of any shares, options or warrants
of HEALTHSOUTH Common Stock or of any shares of capital stock of any subsidiary
of HEALTHSOUTH or any evidence of indebtedness or securities of HEALTHSOUTH or
any of HEALTHSOUTH's subsidiaries, except upon exercise of previously
outstanding stock options or in the ordinary course of HEALTHSOUTH's business;
or (vii) any notice received by HEALTHSOUTH or any of its subsidiaries from any
state or federal taxing authorities notifying that HEALTHSOUTH or any of its
subsidiaries is subject to any material action or proceeding for assessment or
collection of taxes asserted against HEALTHSOUTH or any of its subsidiaries
other than actions or proceedings or claims for assessment or collection of
taxes which are being contested in good faith by appropriate proceedings.
5.11 Retirement or Re-Acquisition of HEALTHSOUTH Common Stock.
HEALTHSOUTH has not agreed directly or indirectly to retire or re-acquire all or
part of the shares of HEALTHSOUTH Common Stock to be issued pursuant to Section
2.1 hereof.
5.12 Disposition of Assets of Surviving Corporation. HEALTHSOUTH does
not intend or plan to dispose of, or to cause the Surviving Corporation to
dispose of, a significant part of the assets of the Surviving Corporation within
two years after the Effective Time, other than dispositions in the ordinary
course of business of the Surviving Corporation and dispositions intended to
eliminate duplicate facilities or excess capacity.
5.13 Opinion of Financial Advisor. HEALTHSOUTH has received the oral
opinion of Smith Barney to the effect that, as of the date hereof, 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 ReLife prior to the
date on which the definitive proxy materials for the Proxy Statement (as defined
in Section 7.5(a)) are filed with the SEC.
5.14 Accounting and Tax Matters. To the knowledge of HEALTHSOUTH,
neither HEALTHSOUTH nor any of its affiliates has taken or agreed to take any
action that would prevent the Merger from being effected as a pooling of
interests or would prevent the Merger from constituting a transaction qualifying
under Section 368(a) of the Code.
5.15 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 ReLife pursuant hereto, or in
connection with the transactions contemplated hereby, contains or, at the time
furnished, will contain any untrue statement of a material fact, or omits or, at
the time furnished, will omit to state a material fact necessary to make the
statement or facts contained therein not misleading in light of all of the
circumstances then prevailing.
Section 6. Access to Information and Documents.
6.1 Access to Information; Confidentiality Agreement. Each of ReLife
and HEALTHSOUTH are parties to a Letter Agreement, dated June 3, 1994 (the
"Confidentiality Agreement"), related to access to, and confidentiality of,
information to be exchanged between the parties with respect to the Merger
contemplated by this Agreement, which Confidentiality Agreement is hereby
confirmed by each of ReLife and HEALTHSOUTH and shall continue in full force and
effect.
6.2 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. ReLife will use its best efforts to
preserve the business organization of ReLife intact and to preserve for
HEALTHSOUTH and the Surviving Corporation the goodwill of the suppliers,
customers and others having business relations with ReLife.
7.2 Material Transactions. Except as set forth on Exhibit 7.2 of the
Disclosure Schedule, prior to the Closing Date, neither ReLife nor any ReLife
Subsidiary or ReLife Partnership will (other than as required pursuant to or
contemplated by the terms of the Plan of Merger and the related documents),
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 its properties, assets and
business of ReLife, 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 it,
except in the ordinary course of business.
(c) Except in connection with the ongoing construction or
development of new rehabilitation facilities as disclosed to
HEALTHSOUTH, or for service contracts and equipment leases entered into
in the ordinary course of business, 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 its
capital stock or other securities of ReLife, except upon exercise of
currently outstanding stock options or conversion privileges.
(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 ReLife'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, Bylaws or other
organizational documents.
(i) Take any action of a character described in Section 3.11(b)
to 3.11(g), inclusive.
7.3 Interim Operations of HEALTHSOUTH. Prior to the Closing Date,
except as contemplated by this Plan of Merger and except for the contemplated
change of HEALTHSOUTH's corporate name and increase in its authorized capital
stock anticipated to be carried out in December, 1994, without first obtaining
the written consent of ReLife, HEALTHSOUTH:
(a) Shall not conduct its operations other than in the ordinary
course and in substantially the same manner as heretofore conducted;
(b) Shall not amend its Certificate of Incorporation;
(c) Shall not sell, lease or otherwise dispose of any of its
assets (including capital stock of Subsidiaries) which are material,
individually or in the aggregate, except in the ordinary course of
business;
(d) Shall not redeem, purchase or otherwise acquire, or propose
to redeem, purchase or acquire, a material amount of the outstanding
HEALTHSOUTH Common Stock;
(e) Shall not declare any cash dividends on its capital stock
and shall not make any extraordinary distributions with respect to its
capital stock;
(f) Shall not amend any of the material terms or provisions of
its securities, except for any such amendments which affect equally all
shares of HEALTHSOUTH Common Stock;
(g) Shall not knowingly take any action which would result in a
failure to maintain the trading of HEALTHSOUTH Common Stock on the
Exchange;
(h) Shall not enter into an acquisition transaction which would
materially reduce the likelihood of the consummation of the Merger
within the time period contemplated by Section 8.1(b)(ii);
(i) Shall not issue any options to purchase its Common Stock at
less than the fair market value of the Common Stock on the date of
grant of such options; and
(j) Shall not agree in writing or otherwise to do any of the
foregoing.
7.4 Meeting of ReLife Stockholders. (a) ReLife will take all steps
necessary in accordance with its Certificate of Incorporation and Bylaws to
call, give notice of, convene and hold a meeting of its stockholders as soon as
practicable after the effectiveness of the Registration Statement (as defined in
Section 7.5(a) hereof), for the purpose of approving this Plan of Merger and for
such other purposes as may be necessary. Unless this Plan of Merger shall have
been validly terminated as provided herein, the Board of Directors of ReLife
will (i) recommend to its 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 its
reasonable, good faith efforts to obtain the approval by its stockholders of
this Plan of Merger and the transactions contemplated hereby.
(b) Nothing contained herein shall affect the right of ReLife to take
action by written consent in lieu of meeting to the extent permitted by
applicable law and its Certificate of Incorporation and Bylaws.
7.5 Registration Statement. (a) HEALTHSOUTH shall prepare and file with
the SEC 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, as amended, and the rules and regulations of the SEC
thereunder applicable thereto (the "Securities Act"), including Rule 145
thereunder. Such Registration Statement shall contain a proxy statement of
ReLife containing the information required by the Exchange Act (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 Registration Statement
declared effective by the SEC under the provisions of the Securities Act.
(b) The information specifically designated as being supplied by ReLife
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 ReLife's stockholders, at the time of the ReLife stockholders'
meeting and at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The information specifically
designated as being supplied by ReLife for inclusion in the Proxy Statement to
be sent to the stockholders of ReLife in connection with the meeting of the
holders of ReLife Shares to consider the Merger (the "Stockholders' Meeting")
shall not, at the date the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to ReLife's stockholders, at the time of the
Stockholders' Meeting and at the Effective Time, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. If at any time prior to
the Effective Time any event or circumstance relating to ReLife or any of the
ReLife Subsidiaries, or its or their respective officers or directors, should be
discovered by ReLife which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement, ReLife shall
promptly inform HEALTHSOUTH. All documents, if any, that ReLife 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 ReLife's stockholders, at the time of the ReLife
stockholders' meeting and at the Effective Time, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The information
specifically designated as being supplied by HEALTHSOUTH for inclusion in the
Proxy Statement to be sent to the Stockholders of ReLife in connection with the
Stockholders' Meeting shall not, at the date the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to Stockholders, at the
time of the Stockholders' Meeting or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event or circumstance relating to
HEALTHSOUTH or any of its Subsidiaries, or its or their respective 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 ReLife 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 ReLife 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 HEALTHSOUTH Common Stock to be issued pursuant to the Merger to be
distributed in each such jurisdiction.
(e) Prior to the mailing of the Proxy Statement to ReLife's
stockholders, 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 upon the Exchange upon official notice of issuance
prior to such mailing date.
(f) ReLife shall furnish all information to HEALTHSOUTH with respect to
ReLife and the ReLife Subsidiaries and ReLife Partnerships as HEALTHSOUTH may
reasonably request for inclusion in the Registration Statement and the Listing
Application, and shall otherwise cooperate with HEALTHSOUTH in the preparation
and filing of such documents.
(g) HEALTHSOUTH shall furnish all information to ReLife with respect to
HEALTHSOUTH as ReLife may reasonably request for inclusion in the Proxy
Statement, and shall otherwise cooperate with ReLife in the preparation and
filing of such documents.
7.6 Exemption from State Takeover Laws. ReLife shall take all
reasonable steps necessary to exempt ReLife and the Merger from the requirements
of any state takeover statute or other similar state law which would prevent or
impede the consummation of the transactions contemplated hereby, by action of
ReLife's Board of Directors or otherwise.
7.7 HSR Act Compliance. HEALTHSOUTH and ReLife 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
ReLife 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.
7.8 Public Disclosures. HEALTHSOUTH and ReLife 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 or the NASDAQ National Market. The parties shall issue a joint press
release, mutually acceptable to HEALTHSOUTH and ReLife, promptly upon execution
and delivery of this Plan of Merger.
7.9 Resignation of ReLife Directors. On or prior to the Closing Date,
ReLife shall deliver to HEALTHSOUTH evidence satisfactory to HEALTHSOUTH of the
resignation of the Directors of ReLife, such resignations to be effective on the
Closing Date.
7.10 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
7.10, 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 ten-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 (except to the
extent that a material adverse change with respect to the notifying party occurs
when the effect of such change or addition is aggregated with the effect of
subsequently-disclosed changes or additions).
7.11 No Solicitations. ReLife 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 ReLife upon a
merger, purchase of assets, purchase of or tender offer for ReLife Shares or
similar transaction (an "Acquisition Transaction"), if the Board of Directors of
ReLife 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 required by such fiduciary duties in furtherance of the best interest
of its stockholders. Except as set forth above, ReLife shall not, and will
direct each officer, director, employee, representative and agent of ReLife 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 ReLife Shares or similar transactions
involving ReLife. ReLife 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 and the proposed terms
of such possible Acquisition Transaction.
7.12 Other Actions. (a) Subject to the provisions of Section 7.11
hereof, ReLife shall not knowingly or intentionally take any action that 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 adversely affect the ability of ReLife 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.
(b) HEALTHSOUTH shall not knowingly or intentionally take any action
that 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 adversely affect the ability of HEALTHSOUTH or
ReLife 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.
7.13 Accounting Methods. Neither HEALTHSOUTH nor ReLife shall change
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.
7.14 Pooling and Tax-Free Reorganization Treatment. Neither HEALTHSOUTH
nor ReLife 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 Code.
7.15 Affiliate and Pooling Agreements. HEALTHSOUTH and ReLife 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) to
execute and deliver to HEALTHSOUTH as soon as practicable an agreement in the
form attached hereto as Exhibit 7.15 relating to the disposition of the ReLife
Shares and shares of HEALTHSOUTH Common Stock held by such person and the shares
of HEALTHSOUTH Common Stock issuable pursuant to this Plan of Merger.
7.16 Cooperation. (a) HEALTHSOUTH and ReLife shall together, or
pursuant to an allocation of responsibility agreed to between them, (i)
cooperate with one another in determining whether any filings are 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 ReLife shall use all reasonable efforts (i) to take, or cause
to be taken, all actions necessary to comply promptly with all legal
requirements which may be imposed on such party (or any subsidiaries or
affiliates of such party) with respect to the Plan of Merger and to consummate
the transactions contemplated hereby, subject to the vote of ReLife's
stockholders described above, (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, and (iii) to take all such other actions as
may be necessary or appropriate to effectuate the Merger within the time
specified in the Plan of Merger. Each of HEALTHSOUTH and ReLife 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.
7.17 ReLife Stock Options. (a) At or as soon as reasonably practicable
after the Effective Time of the Merger, HEALTHSOUTH shall deliver to the holders
of ReLife stock options appropriate notices setting forth such holders' rights
pursuant to the stock option plans under which such ReLife stock options were
issued and the stock option agreements evidencing such options, which shall
continue in full force and effect on the same terms and conditions (subject to
the adjustments required by Sections 2.1(e) or this Section 7.17 after giving
effect to the Merger and the assumption of such options 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, and the stock option
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 ReLife stock options which qualified as incentive stock
options prior to the Effective Time of the Merger shall continue to qualify as
incentive stock options after the Effective Time of the Merger.
(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 ReLife stock options and warrants assumed by
HEALTHSOUTH in accordance with Section 2.1(e). As soon as practicable after the
Effective Time, HEALTHSOUTH shall file with the SEC a registration statement on
Form S-8 with respect to shares of HEALTHSOUTH Common Stock subject to such
ReLife 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 ReLife stock options remain outstanding.
With respect to those individuals who subsequent to the Merger will be subject
to the provisions of Section 16 of the Exchange Act, where applicable,
HEALTHSOUTH shall administer the options and plans assumed pursuant to Section
2.1(e) hereof in a manner that complies with Rule 16b-3 promulgated under the
Exchange Act to the extent the applicable option or plan complied with such rule
prior to the Merger.
(c) (1) HEALTHSOUTH agrees that, upon the Effective Time, each ReLife
stock option, as converted into the right to purchase shares of HEALTHSOUTH
Common Stock as provided in Section 2.1(e), shall be fully-vested, shall have as
its term during which such option may be exercised the term specified in the
stock option plan under which it was issued, or as set forth in the stock option
agreement, both as amended as effective immediately prior to the Merger, and all
of such options are duly authorized, and binding on and enforceable against
HEALTHSOUTH in accordance with their terms, and are subject to no claim or right
of set-off or similar right on the part of HEALTHSOUTH or any other right to
refuse to honor any such exercise in accordance with the express terms of the
relevant stock option plan or stock option agreement, other than a failure to
pay the option price in the manner and in accordance with the terms of such
stock option agreements or stock option plans. HEALTHSOUTH agrees that it will
not assert any right or claim of set-off or any other similar right, unless
expressly permitted by any such option, that might in any way delay the
immediate exercise of any such stock option. Without limiting the foregoing,
HEALTHSOUTH acknowledges that the options held by Michael E. Stephens may be
exercised in accordance with the terms thereof, upon payment of the option
price, at any time or from time to time at any time during his lifetime, and
thereafter as permitted in such stock option agreement by his estate, whether or
not he is then an employee of HEALTHSOUTH or any affiliate, and whether or not
he and HEALTHSOUTH or any affiliate may then be in any controversy of any
nature.
(2) HEALTHSOUTH agrees that the provisions of Section 7.17(c)(1) are an
integral part of the transactions contemplated by this Plan of Merger and that
without these provisions ReLife would not have entered into this Plan of Merger.
Accordingly, if HEALTHSOUTH shall breach any provision of Section 7.17(c)(1)
then, whether suit is commenced by the optionholder or not, HEALTHSOUTH agrees
to pay all costs and expenses, including reasonable attorneys' fees incurred by
such optionholder in connection with such breach or suit, with such damages, if
any, as such optionholder may prove, and, in addition such optionholder may
claim punitive damages.
7.18 Publication of Combined Results. HEALTHSOUTH agrees that within 10
days after the end of the first calendar month following at least 30 days after
the Closing Date, HEALTHSOUTH shall cause publication of the combined results of
operations of HEALTHSOUTH and ReLife. For purposes of this Section 7.18, the
term "publication" shall have the meaning provided in SEC Accounting Series
Release No. 135.
7.19 Employee Benefits. HEALTHSOUTH agrees that following the Closing
Date, employees of ReLife shall be entitled to receive the same customary
employee benefits as HEALTHSOUTH provides its employees.
7.20 Non-Competition Agreement. On the Closing Date, HEALTHSOUTH and
Michael E. Stephens shall enter into a Non-Competition Agreement in
substantially the form of Exhibit 7.20 attached hereto.
7.21 Filing of Public Information. (a) From the date of the Plan of
Merger to the Closing Date, ReLife will timely file all forms, reports,
statements and other documents required to be filed with the SEC (collectively,
the "ReLife Subsequent Filings"). The ReLife Subsequent Filings will be prepared
in all material respects in accordance with the applicable requirements of the
Securities Act and the Exchange Act, and will not at the time they are filed
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the ReLife Subsequent Filings (i)
will be prepared in accordance with, and will comply as to form in all material
respects with, applicable accounting requirements and the published rules and
regulations of the SEC, (ii) will be prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods
except to the extent required by changes in generally accepted accounting
principles (and as may be indicated in the notes thereto), and (iii) will fairly
present the consolidated financial position of ReLife and the ReLife
Subsidiaries as at the respective dates thereof and the consolidated results of
operations and cash flows for the periods indicated, except that any unaudited
interim financial statements will be subject to normal and recurring year-end
adjustments which are not expected to be material in amount and will not
necessarily be indicative of results for the full fiscal year and any pro forma
financial information contained in such consolidated financial statements will
not necessarily be indicative of the consolidated financial position of ReLife
and the ReLife Subsidiaries as of the respective dates thereof and the
consolidated results of operations and cash flows for the periods indicated.
(b) From the date of the Plan of Merger to the Closing Date,
HEALTHSOUTH will timely file all forms, reports, statements and other documents
required to be filed with the SEC (collectively, the "HEALTHSOUTH Subsequent
Filings"). The HEALTHSOUTH Subsequent Filings will be prepared in all material
respects in accordance with the applicable requirements of the Securities Act
and the Exchange Act, and will not at the time they are filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. Each of the
consolidated financial statements (including, in each case, any related notes
thereto) contained in the HEALTHSOUTH Subsequent Filings (i) will be prepared in
accordance with, and will comply as to form in all material respects with,
applicable accounting requirements and the published rules and regulations of
the SEC, (ii) will be prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods except to the extent
required by changes in generally accepted accounting principles (and as may be
indicated in the notes thereto), and (iii) will fairly present the consolidated
financial position of HEALTHSOUTH as at the respective dates thereof and the
consolidated results of operations and cash flows for the periods indicated,
except that any unaudited interim financial statements will be subject to normal
and recurring year-end adjustments which are not expected to be material in
amount and will not necessarily be indicative of results for the full fiscal
year and any pro forma financial information contained in such consolidated
financial statements will not necessarily be indicative of the consolidated
financial position of HEALTHSOUTH as of the respective dates thereof and the
consolidated results of operations and cash flows for the periods indicated.
7.22 Obligations of Subsidiary. HEALTHSOUTH shall take all actions
necessary to cause the Subsidiary to perform its obligations under this Plan of
Merger and to consummate the Merger on the terms and conditions set forth in
this Plan of Merger.
Section 8. Termination, Amendment and Waiver.
8.1 Termination. This Plan of Merger may be terminated at any time
prior to the Effective Time of the Merger, whether before or after approval of
matters presented in connection with the Merger by the holders of ReLife Shares
and the holders of HEALTHSOUTH Common Stock:
(b) by mutual written consent of HEALTHSOUTH, the Subsidiary
and ReLife;
(a) by either HEALTHSOUTH or ReLife:
(i) if, upon a vote at a duly held meeting of stockholders
or any adjournment thereof, any required approval of the
holders of ReLife Shares shall not have been obtained;
(ii) if the Merger shall not have been consummated on or
before December 31, 1994, 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 prohibiting 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 ReLife gives notice of
termination pursuant to Section 7.10;
(c) by either HEALTHSOUTH or ReLife 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 ReLife) is not capable of being satisfied prior to the end
of the period referred to in Section 8.1(b)(ii);
(d) By ReLife, if ReLife'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 ReLife Shares or
shall have withdrawn such recommendation or (ii) approved, recommended
or endorsed any Acquisition Transaction (as defined in Section 7.11)
other than this Plan of Merger or (iii) resolved to do any of the
foregoing; or
(e) By HEALTHSOUTH, if the holders of more than 10% of the
ReLife Shares shall have given proper written demand for appraisal of
the value of such ReLife Shares as provided in Section 262 of the DGCL
before the taking of a vote on the Merger at any meeting of the holders
of ReLife Shares called for that purpose.
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 the Confidentiality Agreement, this Section
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 ReLife Shares; provided, however,
that after any such approval, there shall be made no amendment that pursuant to
Section 251(d) of the DGCL requires further approval by such stockholders
without the further approval of such stockholders. This Plan of Merger may not
be amended except by an instrument in writing signed on behalf of each of the
parties.
8.4 Extension; Waiver. At any time prior to the Effective Time of the
Merger, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Plan of Merger or in any
document delivered pursuant to this Plan of Merger or (c) subject to the proviso
set forth in 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 7.10.
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 ReLife, 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 ReLife and HEALTHSOUTH.
(b) (i) If this Plan of Merger is terminated by ReLife pursuant to
Section 8.1(d), and within one year after the effective date of such termination
ReLife 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 a such Third Party Acquisition
Event, ReLife shall pay to HEALTHSOUTH a break-up fee of $8,000,000 in
immediately available funds, which fee represents the parties' best estimates of
the out-of-pocket costs incurred by HEALTHSOUTH and the value of management
time, overhead, opportunity costs and other unallocated costs of HEALTHSOUTH
incurred by or on behalf of HEALTHSOUTH in connection with this Plan of Merger.
ReLife 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) ReLife shall consummate any Acquisition Transaction (as
defined in Section 7.11); or
(B) any Person (other than a party hereto or its affiliates or
present holders of ReLife Shares) 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 ReLife Shares.
The break-up fee provided for in this Section 8.6(b) shall not be payable if
ReLife shall enter into an Acquisition Transaction where the price per share to
be paid for the ReLife Common Stock or ReLife's business or assets shall be less
than $21.60.
Save this language per BDG:
(iii) If this Plan of Merger is terminated by Blue pursuant to
Section 8.1(b)(iv) as a result of a breach by HEALTHSOUTH as set forth
therein, then HEALTHSOUTH shall pay to Blue a break-up fee of
$_______________ in immediately available funds, which fee represents
the parties' best estimates of the out-of-pocket costs incurred by Blue
and the value of management time, overhead, opportunity costs and other
unallocated costs of Blue incurred by or on behalf of Blue in
connection with this Plan of Merger.
(c) In the event that this Plan of Merger shall be terminated by reason
of the failure of the condition set forth in Section 9.1(c), HEALTHSOUTH shall
pay ReLife a break-up fee in connection with this Plan of Merger in the amount
of $1,000,000 in immediately available funds within 15 days of the termination
of the Plan of Merger as a result of such failure of condition.
(d) Each party acknowledges that the provisions for the payment of
break-up fees and allocation of expenses contained in this Section 8.6 are an
integral part of the transactions contemplated by this Plan of Merger and that,
without these provisions, the other party would not have entered into this Plan
of Merger. Accordingly, if a break-up fee shall become due and payable by either
party, and such party shall fail to pay such amount when due pursuant to this
Section, and, in order to obtain such payment, suit is commenced which results
in a judgment against the other party therefor, such party shall pay the other
party's reasonable costs and expenses (including reasonable attorneys' fees) in
connection with such suit, together with interest computed on any amounts
determined to be due pursuant to this Section (computed from the date upon which
such amounts were due and payable pursuant to this Section) and such costs
(computed from the date incurred) at the prime rate of interest announced from
time to time by NationsBank of North Carolina, National Association. The
obligations of the parties under this Section 8.6 shall survive any termination
of this Plan of Merger.
Section 9. Conditions to Closing.
9.1 Mutual Conditions. The respective obligations of each party to
effect the Merger shall be subject to the satisfaction, at or prior to the
Closing Date of the following conditions (any of which may be waived in writing
by HEALTHSOUTH, the Subsidiary and ReLife):
(a) None of HEALTHSOUTH, the Subsidiary or ReLife nor any of
their respective subsidiaries shall be subject to any order, decree or
injunction by a court of competent jurisdiction which (i) prevents 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 ReLife.
(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 Merger and such other matters as counsel may reasonably
advise shall have been approved by such vote of the stockholders of
ReLife as may be required under the DGCL and under the Certificate of
Incorporation of ReLife, and such other vote as may be reasonably
required by the Board of Directors of ReLife upon the advice of counsel
in the exercise of its fiduciary obligations.
(f) The shares of HEALTHSOUTH Common Stock to be issued in
connection with the Merger (i) shall have been approved for listing on
the Exchange upon official notice of issuance and (ii) shall have been
issued pursuant to an effective registration statement (which is
subject to no stop order) or in transactions qualified or exempt from
registration under applicable securities or Blue Sky laws of such
states and territories of the United States as may be required.
(g) The Merger shall qualify for "pooling of interests"
accounting treatment, and HEALTHSOUTH and ReLife shall have received a
letter to that effect from Ernst & Young, independent accountants for
HEALTHSOUTH, dated (i) the date of the mailing of the Proxy Statement
to ReLife's stockholders and (ii) the Closing Date.
9.2 Conditions to Obligations of HEALTHSOUTH and the Subsidiary. The
obligations of HEALTHSOUTH and the Subsidiary to consummate the Merger and the
other trans-actions 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 ReLife 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 ReLife 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 ReLife set forth
in this Plan of Merger shall be true and correct as follows: (i) the
representations and warranties of ReLife 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; (ii) the representations and warranties of ReLife
set forth in Sections 3.1, 3.2, 3.6, 3.9, 3.17, 3.18 and 3.19 shall be
true and correct in all material respects as of the date of this Plan
of Merger and as of the Closing Date as though made on and as of the
Closing Date, except to the extent that such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct in all
material respects on and as of such earlier date); and (iii) the
representations and warranties of ReLife set forth in this Plan of
Merger (other than those set forth in Sections 3.11(a), 3.2, 3.6, 3.9,
3.17, 3.18 and 3.19), shall be true and correct as of the date of this
Plan of Merger and as of the Closing Date as though made on and as of
the Closing Date, (a) except to the extent that such representations
and warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct on and as of
such earlier date) and (b) except for breaches of representations and
warranties as to matters that do not have a material adverse effect on
ReLife; and HEALTHSOUTH and the Subsidiary shall have been furnished
with a certificate, executed by a duly authorized officer of ReLife,
dated the Closing Date, certifying in such detail as HEALTHSOUTH and
the Subsidiary may reasonably request as to the fulfillment of the
foregoing conditions (with such exceptions thereto as may be noted
therein); provided, however, that HEALTHSOUTH and the Subsidiary shall
not have the right to terminate this Plan of Merger by reason of the
failure of the condition set forth in this Section 9.2(b) if such
failure will not have a material adverse effect on the business of
ReLife.
(c) 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 ReLife facilities, unless the failure to obtain such
transfer or approval would not have a material adverse effect on the
business of ReLife.
(d) HEALTHSOUTH and the Subsidiary shall have received all
consents, approvals and authorizations of third parties with respect to
all leases and management agreements to which the ReLife Subsidiaries
and the ReLife Partnership are parties which are reasonably determined
by HEALTHSOUTH to be material and which 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
ReLife.
(e) 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 Code.
(f) HEALTHSOUTH shall have received an opinion from Bradley,
Arant, Rose & White substantially to the effect set forth in Exhibit
9.2(e) hereto.
(g) Michael E. Stephens and HEALTHSOUTH shall have entered
into the Non-Competition Agreement contemplated by Section 7.20 hereof.
(h) All consents, authorizations, orders and approvals of
(or filings or registrations with) any governmental commission, board
or other regulatory body required in connection with the execution,
delivery and performance of this Plan of Merger shall have been
obtained or made, except for filings in connection with the Merger and
any other documents required to be filed after the Effective Time and
except where the failure to have obtained or made any such consent,
authorization, order, approval, filing or registration would not have a
material adverse effect on the business of ReLife.
(i) The Proxy dated of even date herewith executed by
Michael E. Stephens in favor of HEALTHSOUTH shall have been approved by
the Board of Directors of ReLife.
(j) The Proxy dated of even date herewith executed by
Michael E. Stephens in favor of HEALTHSOUTH shall be and remain in full
force and effect.
(k) Section 203 of the DGCL shall not at any time since the
date of execution of this Plan of Merger have been applicable to the
Merger.
9.3 Conditions to Obligations of ReLife. The obligations of ReLife 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 ReLife):
(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 this Plan of Merger shall be true and correct as follows: (i)
the representations and warranties of HEALTHSOUTH set forth in Section
5.10(i) and of HEALTHSOUTH and the Subsidiary set forth in Section 4
shall be true and correct as of the date of this Plan of Merger and as
of the Closing Date; (ii) the representations and warranties of
HEALTHSOUTH set forth in Sections 5.1, 5.2, 5.3, 5.11 and 5.12 shall be
true and correct in all material respects, as of the date of this Plan
of Merger and as of the Closing Date as though made on and as of the
Closing Date, except to the extent that such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct in all
material respects on and as of such earlier date); and (iii) the
representations and warranties of HEALTHSOUTH set forth in this Plan of
Merger (other than those set forth in Sections 5.1, 5.2, 5.3, 5.10(i),
5.11 and 5.12) shall be true and correct as of the date of this Plan of
Merger and as of the Closing Date as though made on and as of the
Closing Date (a) except to the extent that such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct on and as of
such earlier date), and (b) except for breaches of representations and
warranties as to matters that do not have a material adverse effect on
HEALTHSOUTH. ReLife 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 ReLife may
reasonably request as to the fulfillment of the foregoing conditions
(with such exceptions thereto as may be noted therein); provided,
however, that ReLife shall not have the right to terminate this Merger
by reason of the failure of thes condition set forth in this Section
9.3(b) such failure will not have a material adverse effect on the
business of HEALTHSOUTH .
(c) ReLife shall have received an opinion from Bradley,
Arant, Rose & White to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code.
(d) ReLife shall have received an opinion from Haskell
Slaughter Young & Johnston, Professional Association, substantially to
the effect set forth in Exhibit 9.3(d) hereto.
(e) The Base Period Trading Price shall not be lower than
$31.45 per share.
(f) Michael E. Stephens and HEALTHSOUTH shall have executed
and delivered a Registration Rights Agreement with respect to shares of
HEALTHSOUTH Common Stock which may be acquired by Michael E. Stephens
upon the exercise of that certain Stock Option Agreement, dated as of
January 26, 1987, as amended, which Registration Rights Agreement shall
provide that Michael E. Stephens shall have the right, exercisable one
time per year for as long as such Stock Option Agreement shall remain
outstanding, to require HEALTHSOUTH to file a registration statement on
Form S-3 with the SEC (the effectiveness of which registration
statement shall be maintained for 90 days) covering the sale of not
fewer than 100,000 shares of HEALTHSOUTH Common Stock to be acquired
upon exercise of such Stock Option Agreement by Michael E. Stephens.
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.
There shall be no personal liability of any officer, director or stockholder of
a party for any breach discovered after 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 Rehabilitation 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 Rehabilitation Corporation
Two Perimeter Park South
Birmingham, Alabama 35243
Facsimile: (205) 969-4732
and to:
J. Brooke Johnston, Jr., Esq.
Haskell Slaughter Young & Johnston
1200 AmSouth/Harbert Plaza
1901 Sixth Avenue North
Birmingham, Alabama 35203
Facsimile: (205) 324-1133
If to ReLife:
ReLife, Inc.
813 Shades Creek Parkway
Birmingham, Alabama 35209
Attention: Michael E. Stephens, Chairman of the
Board, President and Chief Executive
Officer
Facsimile: (205) 870-8128
with a copy to:
Bradley, Arant, Rose & White
1400 Park Place Tower
2001 Park Place
Birmingham, Alabama 35203
Attention: Thomas N. Carruthers, Esq. and
John K. Molen, Esq.
Facsimile: (205) 252-0264
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 of Directors and Officers. (a) From and after
the Effective Time, HEALTHSOUTH shall, and shall cause the Surviving Corporation
to, jointly and severally, indemnify, defend and hold harmless the present and
former officers and directors of ReLife (collectively, the "Indemnified
Parties") against all losses, expenses (including attorneys' fees), claims,
damages, costs, liabilities or judgments or amounts that are paid in settlement
with the approval of HEALTHSOUTH (which approval shall not be unreasonably
withheld) arising out of actions or omissions occurring at or prior to the
Effective Time or required under the DGCL (and shall also pay expenses in
advance of the final disposition of any claim to each Indemnified Party, to the
fullest extent permitted under, and under the terms and conditions provided by,
the DGCL.
(b) HEALTHSOUTH shall use its best efforts to arrange to have the
Indemnified Parties named as insureds under, or otherwise covered by, its
officers' and directors' liability insurance policy (as long as any such policy
shall be in force), provided that such action shall not involve unreasonable
cost to HEALTHSOUTH.
(c) This Section 10.4 is intended to be for the benefit of, and shall
be enforceable by, the Indemnified Parties, their heirs and personal
representatives and shall be binding on HEALTHSOUTH and the Surviving
Corporation and their respective successors and assigns.
10.5 ReLife Line of Credit. ReLife shall use its best reasonable
efforts to obtain an appropriate waiver and/or consent to the Merger from
AmSouth Bank N.A., the lender under its Credit Agreement; provided, however, if
such a waiver or consent, satisfactory in form and substance to HEALTHSOUTH
cannot be obtained by the Closing Date, HEALTHSOUTH will provide ReLife with the
funds to pay all amounts due under such Credit Agreement.
10.6 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.
10.7 "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.
10.8 "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.
10.9 "Material adverse change" or "material adverse effect". "Material
adverse change" or "material adverse effect" means, when used in connection with
ReLife 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
or proposed changes in health care, health insurance or other similar Laws (as
defined below) or the interpretation thereof by courts or governmental
authorities, occurring after the date of the execution of this Plan of Merger,
(ii) changes in generally accepted accounting principles or regulatory
accounting principles, occurring after the date of execution of this Plan of
Merger; and (iii) changes prevailing in the economy or in the healthcare
industry generally, occurring after the date of execution of this Plan of
Merger. For purposes of this Plan of Merger, ""Law" shall mean any federal,
state or local law, statute, ordinance, rule, regulation, order, judgment or
decree.
10.10 "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 10.11) regardless of the quantity
of any such material.
10.11 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.
10.12 Captions. The captions or headings in this Plan of Merger and the
Disclosure Schedule 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 and the Disclosure Schedule 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, the Disclosure Schedule and the Confidentiality Agreement
contain the entire agreement of the parties and supersedes any and all prior or
contemporaneous agreements between the parties, written or oral, with respect to
the transactions contemplated hereby. It may not be changed or terminated
orally, but may only be changed by an agreement in writing signed by the party
or parties against whom enforcement of any waiver, change, modification,
extension, discharge or termination is sought.
10.15 Counterparts. This Plan of Merger may be executed in several
counterparts, each of which, when so executed, shall be deemed to be an
original, and such counterparts shall, together, constitute and be one and the
same instrument.
10.16 Binding Effect. This Plan of Merger shall be binding on, and
shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and 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.
<PAGE>
IN WITNESS WHEREOF, the parties 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.
HEALTHSOUTH Rehabilitation Corporation
By: ____________________________________
Michael D. Martin
Senior Vice President and Treasurer
ATTEST:
__________________________________
Anthony J. Tanner
Secretary
[CORPORATE SEAL]
RRS ACQUISITION COMPANY, INC.
By: ____________________________________
Michael D. Martin
Vice President
ATTEST:
____________________________________
Anthony J. Tanner
Secretary
[CORPORATE SEAL]
RELIFE, INC.
By: ____________________________________
Michael E. Stephens
Chairman of the Board, President
and Chief Executive Officer
ATTEST:
____________________________________
Thomas W. Marshall
Secretary
[CORPORATE SEAL]
<PAGE>
EXHIBIT 7.20
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT, made and entered into as of the _____ day of
______________, 1994, by and between HEALTHSOUTH Rehabilitation Corporation , a
Delaware corporation ("HEALTHSOUTH"), and MICHAEL E. STEPHENS, an individual
resident of the State of Alabama ("Stephens").
W I T N E S S E T H:
WHEREAS, Stephens has heretofore served as Chairman of the Board,
President and Chief Executive Officer of ReLife, Inc., a Delaware corporation
("ReLife");
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the transactions contemplated by that certain Plan and Agreement of
Merger, dated September ___, 1994, executed by ReLife, RRS Acquisition Company,
Inc. (the "Subsidiary") and HEALTHSOUTH (the "Plan of Merger") have been
consummated, pursuant to which ReLife has been merged with and into the
Subsidiary;
WHEREAS, HEALTHSOUTH recognizes the knowledge and experience of
Stephens as it relates to ReLife and desires to prevent Stephens from competing
with the business operated by HEALTHSOUTH by entering into an agreement
restricting the ability of Stephens to compete with HEALTHSOUTH during a
five-year period; and
WHEREAS, Stephens is agreeable to restrictions on his ability to
compete against HEALTHSOUTH in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the premises, the execution,
delivery and performance of the Plan of Merger, the mutual promises and
covenants herein and therein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
HEALTHSOUTH and Stephens hereby agree as follows:
1. Non-Competition of Stephens. (a) During the term of this Agreement,
Stephens shall not, without the prior written consent of HEALTHSOUTH, directly
or indirectly, own, operate, manage, be employed by, be an agent of, act as a
consultant for, financially support, lease property to or from or have a
proprietary interest in, any enterprise or business which is competitive with
the Rehabilitative Healthcare Services business of HEALTHSOUTH (including its
subsidiaries and affiliates), in any part of the United States of America.
Stephens acknowledges that the business of ReLife was conducted, and the
business of HEALTHSOUTH is conducted, on a national basis and agrees that such
geographic scope is reasonable. Stephens agree to execute and deliver such
certifications and other instruments as HEALTHSOUTH may reasonably request in
order to show compliance with the terms of this Agreement.
(b) As used in this Agreement, "Rehabilitative Healthcare Services"
shall mean any business which was conducted by ReLife prior to the consummation
of the transactions contemplated by the Plan of Merger, including, but not
limited to, the provision on an inpatient or outpatient basis of acute or
subacute rehabilitation, physical therapy, occupational therapy, head injury
treatment, spine injury treatment, sports medicine, orthopedic medicine or work
hardening.
(c) Notwithstanding any contrary provision of this Agreement, Stephens
shall not be prohibited from (i) serving in any capacity with, or being employed
by, the Lakeshore Foundation and its subsidiaries and affiliates or any
successor entity thereto which is an organization exempt from federal taxation
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or any
successor provision thereto, or (ii) owning less than 1% of the outstanding
equity securities of a publicly-held corporation.
2. Confidential Information. At no time during the term of this
Agreement or after the date that this Agreement shall terminate shall Stephens,
jointly or severally, directly or indirectly, disclose to others, or use, any
secret or confidential information, knowledge or data (oral, written or in
machine-readable form) of HEALTHSOUTH, ReLife or their affiliates, including,
but not limited to, information concerning (a) the business, affairs, protocols,
manuals, patients or operations of HEALTHSOUTH, ReLife or their affiliates, (b)
any trade secrets, new product developments, special or unique processes or
methods of HEALTHSOUTH, ReLife or their affiliates, or (c) any marketing, sales,
advertising or other concepts or plans of HEALTHSOUTH, ReLife or their
affiliates. The foregoing covenant shall include all such information, knowledge
or data whether or not developed by Stephens or by others or obtained by
HEALTHSOUTH, ReLife or any of their affiliates from third parties, and
irrespective of whether or not such information, knowledge or data have been
identified by HEALTHSOUTH, ReLife or any of their affiliates as secret or
confidential, unless and until, and then to the extent and only to the extent
that, such information, knowledge or data becomes available to the public
otherwise than by the act or omission of Stephens. All documents, records,
notes, computer software, computer programs, source codes, object codes,
magnetic tapes, printouts, samples, reports, customer lists, patient lists,
referral sources, photographs, catalogs and other writings, whether
copyrightable or not, relating to or dealing with the business, customers or
patients of HEALTHSOUTH, ReLife or their affiliates, and those of others
entrusted to HEALTHSOUTH, ReLife or their affiliates, which were or are prepared
or created by Stephens or which may come into their possession, are the property
of HEALTHSOUTH, and upon demand by HEALTHSOUTH, Stephens agree to return all
such matters and writings, and all copies thereof, to HEALTHSOUTH.
3. Term. The term of this Agreement shall be for five years commencing
on the day and year first above written.
4. Compensation. In consideration for the agreements of Stephens
contained herein, HEALTHSOUTH agrees to pay Stephens a total of $1,000,000 for
the entire five-year term of this Agreement, payable in arrears in five equal
annual installments, without interest, of $200,000 each, beginning on the first
anniversary of the date hereof.
5. Specific Performance. (a) Stephens acknowledge that the rights and
privileges granted to HEALTHSOUTH herein are of a special and unique character,
which gives them a peculiar value, the loss of which may not be reasonably or
adequately compensated for by damages in an action at law, and that a breach by
Stephens of this Agreement will cause HEALTHSOUTH irreparable injury and damage.
Accordingly, Stephens hereby agrees that HEALTHSOUTH shall be entitled to
remedies of injunction, specific performance or other equitable relief, without
bond, to prevent or cure a breach of this Agreement. This provision shall not be
construed as a waiver of any other rights or remedies HEALTHSOUTH may have for
damages or otherwise.
(b) Notwithstanding any contrary provision contained herein, nothing in
this Agreement shall abrogate the obligations of HEALTHSOUTH under Section
7.17(c) of the Plan of Merger, and any breach by Stephens of his obligations
hereunder shall not entitle HEALTHSOUTH to any remedies or rights which are
prohibited by such Section 7.17(c).
6. Partial Invalidity. The parties have entered into this Agreement in
good faith and for the reasons set forth in the recitals hereto and assume and
intend that this Agreement is legally binding. If, for any reason, this
Agreement is not binding because of its geographical scope or because of its
term, then the parties agree that this Agreement shall be deemed effective for
the widest geographical area and/or the longest period of time as may be legally
enforceable, it being understood that the compensation payable hereunder is for
the full term and geographic area stated herein, and for all the covenants of
Stephens. This provision shall not be construed as a waiver of any other rights
or remedies HEALTHSOUTH may have for damages or otherwise.
7. Enforcement Costs. HEALTHSOUTH shall pay all reasonable costs
incurred by Stephens, including reasonable attorneys' fees and court costs, to
enforce the terms of this Agreement against it or to obtain performance by it
hereunder. Stephens shall pay all reasonable costs incurred by HEALTHSOUTH,
including reasonable attorneys' fees and court costs, to enforce the terms of
this Agreement against him or to obtain performance by him of his obligations
hereunder.
8. Binding Effect and Modifications. This Agreement shall be binding
upon and shall inure to the benefit of the personal representatives, executors,
administrators, successors and assigns of the parties to this Agreement. This
Agreement contains the entire agreement of the parties and supersedes any and
all prior written agreements between the parties, and all prior and
contemporaneous oral statements with respect to the transaction contemplated
hereby. This Agreement 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.
9. Section Captions and Counterparts. Section and other captions
contained in this Agreement are for reference purposes only and are in no way
intended to describe, interpret, define or limit the scope, extent or intent of
this Agreement or any provision hereof. This Agreement 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. The parties may execute this Agreement, individually or in a
representative capacity, and forward an executed counterpart signature to one or
more other parties by telecopy, overnight express or other means, and the party
or parties receiving such executed counterpart signature shall be authorized to
attach it hereto as the legal and valid signature of such executing party. The
party or party receiving such executed counterpart signature, together with
their attorneys and counsel, shall be able to rely on the validity of such
executed counterpart signature as fully as if the original of such signature was
affixed hereon.
10. Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Alabama, applied without giving effect to any
conflicts-of-law principles.
11. No Rule of Construction. The parties acknowledge that this
Agreement was initially prepared by HEALTHSOUTH solely as a convenience and that
all parties and their counsel hereto have read and fully negotiated all the
language used in this Agreement. The parties acknowledge and agree that because
all parties and their counsel participated in negotiating and drafting this
Agreement, no rule of construction shall apply to this Agreement which construes
any language, whether ambiguous, unclear or otherwise, in favor of or against
any party by reason of that party's role in drafting this Agreement.
IN WITNESS WHEREOF, the undersigned parties have hereunto set their
hands as of the day and year first above written.
_________________________________ (SEAL)
Michael E. Stephens
HEALTHSOUTH Rehabilitation Corporation
By ___________________________________
Its ________________________________
<PAGE>
EXHIBIT 9.2(e)
[NOTE: Counsel for ReLife may limit its opinion to the laws of the
State of Alabama, the laws of the State of Delaware referred to herein and the
federal laws of the United States. Counsel shall also render such other opinions
related to the Plan of Merger and the Merger, as shall be reasonably requested
by HEALTHSOUTH and its counsel.]
1. ReLife and each of the Subsidiaries has been duly incorporated and
is validly existing as a corporation in good standing under the laws of its
state of incorporation.
2. ReLife and each of the Subsidiaries has full corporate power to
carry on its business as, to our knowledge, it is now being conducted and to own
all of its material properties and assets.
3. The ReLife Partnership is a Tennessee limited partnership duly
organized and validly existing and is in good standing under the laws of its
state of organization. The ReLife Partnership has all necessary power to own its
material properties and assets and to carry on its business as, to our
knowledge, it is now conducted.
4. The authorized capital stock of ReLife and the issued and
outstanding capital stock of ReLife is, as of the date of the Proxy Statement,
as set forth in the Proxy Statement on page __ under the caption
"_______________". All issued and outstanding shares of ReLife Common Stock and
all issued and outstanding shares of the capital stock of each corporate
Subsidiary of ReLife have been duly authorized and validly issued, are fully
paid and nonassessable by ReLife or such ReLife Subsidiary, as the case may be,
and were not issued in violation of any preemptive rights or, to our knowledge,
in violation of any other rights to purchase such shares. To our knowledge, all
partnership interests in the ReLife Partnership were issued in accordance with
the ReLife Partnership Agreement, and were not issued in violation of the
preemptive or other rights of any person to purchase such interests.
5. ReLife or a ReLife Subsidiary owns of record the issued and
outstanding shares of the capital stock of each of the ReLife Subsidiaries and
the interests in the ReLife Partnership, as indicated on Exhibit A hereto. To
our knowledge, all of the outstanding shares or partnership interests in the
ReLife Subsidiaries and the ReLife Partnership owned of record by ReLife or the
ReLife Subsidiaries are owned by it or them, free and clear of all liens,
security interests or pledges, except for pledges in favor of AmSouth Bank of
Alabama.
6. ReLife has full corporate power to execute and deliver the Plan of
Merger and to consummate the transactions contemplated thereby, and ReLife has
full corporate power to execute and file the Certificate of Merger with the
appropriate authorities of the State of Delaware and to consummate the
transactions contemplated thereby.
7. The execution, delivery and performance by ReLife of the Plan of
Merger and the Certificate of Merger and the transactions contemplated thereby
have been duly authorized by the necessary corporate action on the part of
ReLife.
8. The Plan of Merger has been duly executed by ReLife, the Certificate
of Merger has been duly executed by ReLife and the Plan of Merger (except for
the indemnity provisions and break-up fee provisions thereof, as to which we
express no opinion) constitutes the valid and binding obligation of ReLife
enforceable against ReLife in accordance with its terms, except as limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors' rights generally and subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).
9. The execution and delivery of the Plan of Merger by ReLife and the
execution of the Certificate of Merger by ReLife did not, and the consummation
of the transactions therein contemplated by ReLife does not, constitute a breach
or violation of, or a default under any federal law, rule or regulation of the
United States or under any law, rule or regulation of Alabama or under the DGCL
or, to our knowledge, any court order, judgment or decree of any governmental or
regulatory body of the United States or of Delaware or Alabama, in each case, to
which ReLife or any of the ReLife Subsidiaries or the ReLife Partnership is
subject or by which any of their material properties or assets are bound or
affected, or require any consent or approval of any other party under any
federal law, rule or regulations of the United States or under any law, rule or
regulation of Alabama or Delaware to which ReLife or any of the ReLife
Subsidiaries or the ReLife Partnership are subject, except for required
approvals under (a) the federal securities laws , (b) antitrust and unfair
competition and other similar laws, and (c) laws, rules and regulations relating
to the operation, regulation, licensing, and accreditation of health care
facilities, as to which we express no opinion, and except for any required
approvals which have been waived by HEALTHSOUTH, which breach, violation or
default would have a material adverse effect on ReLife and the ReLife
Subsidiaries and the ReLife Partnership, taken as a whole.
10. The execution and delivery of the Plan of Merger did not, and the
consummation of the transactions therein contemplated by ReLife will not,
constitute a breach or violation of, or constitute a default (or any event which
with notice or lapse of time or both would become a default) under (a) the
Certificate of Incorporation, Bylaws, Partnership Agreement or Certificate, as
the case may be, of ReLife or any of the ReLife Subsidiaries or the ReLife
Partnership, or (b) except as indicated in the Plan of Merger or the Disclosure
Schedule, any material contract (excluding any contracts which are terminable at
will upon fewer than __ days' notice), lease, or instrument (including any note,
mortgage, indenture or other evidence of indebtedness), known to us, to which
ReLife or any of the ReLife Subsidiaries or the ReLife Partnership or any of
their properties or assets are bound or affected, in each case, which breach,
violation or default would, in our judgment, have a material adverse effect on
ReLife, the ReLife Subsidiaries and the ReLife Partnership, taken as a whole.
11. To our knowledge, no actions, suits or proceedings are pending or
threatened against ReLife or the ReLife Subsidiaries or the ReLife Partnership
which challenge the validity of the Plan of Merger or any action required to be
taken by ReLife pursuant to the Plan of Merger, or which are not described in
the Plan of Merger in accordance with its terms.
12. Insofar as the Registration Statement and the Proxy Statement
relate to ReLife and the ReLife Subsidiaries and the ReLife Partnership (other
than the financial statements and other financial and statistical information
and data contained therein and other than information supplied by persons other
than ReLife for inclusion therein, as to which we express no opinion), the Proxy
Statement complies as to form as of the date of its mailing to the ReLife
Stockholders in all material respects with the applicable requirements under
Section 14 of the Exchange Act.
Although we have not undertaken to verify the accuracy or completeness
of the statements in the Registration Statement or the Proxy Statement and,
therefore, would not necessarily have become aware of any material misstatement
of fact or omission to state a material fact, we advise you that nothing has
come to our attention which would cause us to believe that the portions of the
Registration Statement and the Proxy Statement relating to ReLife, the ReLife
Subsidiaries and the ReLife Partnership (other than the financial statements and
other financial and statistical information and data contained therein and other
than information supplied by persons other than ReLife and the ReLife
Subsidiaries and the ReLife Partnership for inclusion therein, as to which we
express no opinion), as of the effective date of the Registration Statement, as
of the date of the mailing of the Proxy Statement to the ReLife stockholders, as
of the date of the ReLife stockholders' meeting or as of the Effective Time
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances in which they were made, not
misleading.
<PAGE>
EXHIBIT 9.3(d)
[NOTE: Counsel for HEALTHSOUTH may limit its opinion to the laws of the
State of Alabama, the laws of the State of Delaware referred to herein and the
federal laws of the United States. Counsel shall also render such other opinions
related to the Plan of Merger and the Merger, as shall be reasonably requested
by ReLife and its counsel.]
13. Each of HEALTHSOUTH and the Subsidiary has been duly incorporated
and is validly existing as a corporation in good standing under the General
Corporation Law of the State of Delaware (the "DGCL").
14. Each of HEALTHSOUTH and the Subsidiary has full corporate power to
carry on its business as, to our knowledge, it is now being conducted and to own
all of its material properties and assets.
15. The authorized capital stock of HEALTHSOUTH and the issued and
outstanding capital stock of HEALTHSOUTH is, as of the date of the Registration
Statement, is as set forth in the Registration Statement on page __ under the
caption "_______________". All issued and outstanding Common Stock, par value
$.01 per share, of HEALTHSOUTH, and all issued and outstanding shares of the
capital stock of the Subsidiary have been duly authorized and validly issued,
are fully paid and nonassessable by HEALTHSOUTH or the Subsidiary, as the case
may be, and were not issued in violation of any preemptive rights under the laws
of the DGCL, as the case may be, or, to our knowledge, in violation of any other
rights to purchase such shares.
16. HEALTHSOUTH owns of record the issued and outstanding shares of the
capital stock of the Subsidiary. All of the outstanding shares of the Subsidiary
owned of record by HEALTHSOUTH are owned by it free and clear of all liens,
security interests or pledges, except for pledges in favor of NationsBank of
North Carolina, National Association.
17. HEALTHSOUTH has full corporate power to execute and deliver the
Plan of Merger and to consummate the transactions contemplated thereby, and each
of HEALTHSOUTH and the Subsidiary has full corporate power to execute and file
the Certificate of Merger with the appropriate authorities of the State of
Delaware and to consummate the transactions contemplated thereby.
18. The execution, delivery and performance by HEALTHSOUTH of the Plan
of Merger and the transactions contemplated thereby have been duly authorized by
the necessary corporate action on the part of HEALTHSOUTH. The execution,
delivery and performance by the Subsidiary of the Plan of Merger and the
Certificate of Merger and the transactions contemplated thereby have been duly
authorized by the necessary corporate action on the part of the Subsidiary.
19. The Plan of Merger has been duly executed by HEALTHSOUTH and the
Subsidiary, the Certificate of Merger has been duly executed by the Subsidiary,
and the Plan of Merger (except for the indemnity provisions thereof, as to which
we express no opinion) constitutes the valid and binding obligation of
HEALTHSOUTH and the Subsidiary, enforceable against HEALTHSOUTH and the
Subsidiary in accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
enforcement of creditors' rights generally and subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding at law
or in equity).
20. The execution and delivery of the Plan of Merger by HEALTHSOUTH and
the Subsidiary and the execution of the Certificate of Merger by the Subsidiary
did not, and the consummation of the transactions therein contemplated by
HEALTHSOUTH and the Subsidiary does not constitute a breach or violation of, or
a default under any federal law, rule or regulation of the United States or
under any law, rule or regulation of Alabama or under the DGCL or, to our
knowledge, any court order, judgment or decree of any governmental or regulatory
body of the United States or of Delaware or Alabama, in each case, to which
HEALTHSOUTH or the Subsidiary is subject or by which any of their material
properties or assets are bound or affected, or require any consent or approval
of any other party under any federal law, rule or regulation of the United
States or under any law, rule or regulation of Alabama or Delaware to which
HEALTHSOUTH or the Subsidiary are subject, except for required approvals under
the federal securities laws and under state securities or blue sky laws and
except under laws, rules and regulations relating to the operation, regulation,
licensing, and accreditation of health care facilities, as to which we express
no opinion, which breach, violation or default would have a material adverse
effect on HEALTHSOUTH and its subsidiaries and affiliated partnerships, taken as
a whole.
21. The execution and delivery of the Plan of Merger did not, and the
consummation of the transactions therein contemplated by HEALTHSOUTH will not,
constitute a breach or violation of, or constitute a default (or any event which
with notice or lapse of time or both would become a default) under (a) the
Certificate of Incorporation or Bylaws of HEALTHSOUTH or the Subsidiary, or (b)
except as indicated in the Plan of Merger, any material contract (excluding any
contracts which are terminable at will upon fewer than __ days' notice), lease,
or instrument (including any note, mortgage, indenture or other evidence of
indebtedness), known to us, to which HEALTHSOUTH or any of its subsidiaries or
affiliated partnerships is a party or by which HEALTHSOUTH, any of its
subsidiaries or affiliated partnerships or any of their properties or assets are
bound or affected, in each case, which breach, violation or default would, in
our judgment, have a material adverse effect on HEALTHSOUTH and its subsidiaries
and affiliated partnerships, taken as a whole.
22. To our knowledge, no actions, suits or proceedings are pending or
threatened against HEALTHSOUTH or its subsidiaries or affiliated partnerships
which challenge the validity of the Plan of Merger or any action required to be
taken by HEALTHSOUTH pursuant to the Plan of Merger.
23. Insofar as the Registration Statement and the Proxy Statement
relate to HEALTHSOUTH and the Subsidiary (other than the financial statements
and other financial and statistical information and data contained therein and
other than information supplied by persons other than HEALTHSOUTH and the
Subsidiary for inclusion therein, as to which we express no opinion), the
Registration Statement complied as to form as of the effective date of the
Registration Statement in all material respects with the requirements of the
Securities Act.
24. The Common Stock, par value $.01 per share, of HEALTHSOUTH issued
pursuant to the Merger has been duly authorized and validly issued, and is fully
paid and non-assessable by HEALTHSOUTH.
25. The options to acquire shares of the capital stock of ReLife, Inc.
have been validly assumed by HEALTHSOUTH, and HEALTHSOUTH has reserved a
sufficient number of shares of its Common Stock, par value $.01 per share, for
issuance upon exercise of such options. Such shares, upon the exercise thereof,
payment of the exercise price therefor, and their issuance, will be validly
issued, fully paid and non-assessable by HEALTHSOUTH.
26. The Registration Statement of HEALTHSOUTH was declared effective by
the Securities and Exchange Commission prior to the mailing of the Proxy
Statement and has remained effective at all times subsequent to its having been
declared effective. There is no stop order in effect with respect to such
Registration Statement under the Securities Act of 1933 (the "Act") and, to our
knowledge, no proceedings for that purpose have been instituted or are
threatened. All filings required to be made pursuant to Rule 424 of the Act have
been made. The Common Stock, par value $.01 per share, of HEALTHSOUTH has been
registered or qualified, or is exempt from registration or qualification, under
all applicable state securities laws.
Although we have not undertaken to verify the accuracy or completeness
of the statements in the Registration Statement or the Proxy Statement and,
therefore, would not necessarily have become aware of any material misstatement
of fact or omission to state a material fact, we advise you that we do not
believe that the portions of the Registration Statement and the Proxy Statement
relating to HEALTHSOUTH and the Subsidiary (other than the financial statements
and other financial and statistical information and data contained therein and
other than information supplied by persons other than HEALTHSOUTH for inclusion
therein, as to which we express no opinion), as of the effective date of the
Registration Statement, as of the date of the mailing of the Proxy Statement to
ReLife's stockholders, as of the date of the ReLife stockholders' meeting or at
the Effective Time, contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances in which they were
made, not misleading.
<PAGE>
Gentlemen:
The undersigned, a holder of shares of (i) Class A Common Stock, par
value $.01 per share (the "Class A Common Stock") and/or (ii) Class B Common
Stock, par value $.01 per share (the "Class B Common Stock") (such Class A
Common Stock and Class B Common Stock referred to collectively as the "ReLife
Shares") of ReLife Inc., a Delaware corporation (the "Company"), is entitled to
receive in connection with the merger (the "Merger") of the Company and RRS
Acquisitions Company, Inc., a Delaware corporation, shares of Common Stock, par
value $.01 per share (the "HEALTHSOUTH Common Stock"), of HEALTHSOUTH
Rehabilitation Corporation, a Delaware corporation ("HEALTHSOUTH"), including
shares of HEALTHSOUTH Common Stock issuable upon the exercise of stock options
being assumed by HEALTHSOUTH. The undersigned acknowledges that the undersigned
may be deemed an "affiliate" of the Company within the meaning of Rule 145
("Rule 145") promulgated under the Securities Act of 1933 (the "Act") and
applicable pooling rules and regulations promulgated by the Securities and
Exchange Commission (the "SEC"), although nothing contained herein should be
construed as an admission of such fact.
If in fact the undersigned were an affiliate under the Act, the
undersigned's ability to sell, assign or transfer the shares of HEALTHSOUTH
Common Stock received by the undersigned in connection with the Merger might be
restricted unless such transaction were registered under the Act or an exemption
from such registration were available. The undersigned understands that such
exemptions are limited and the undersigned has obtained advice of counsel as to
the nature and conditions of such exemptions, including information with respect
to the applicability to the sale of such securities of Rules 144 and 145(d)
promulgated under the Act. The undersigned understands that HEALTHSOUTH will not
be required to maintain the effectiveness of any registration statement under
the Act for the purposes of resale of shares of HEALTHSOUTH Common Stock by the
undersigned except as contemplated in connection with the Merger.
The undersigned hereby represents to and covenants with HEALTHSOUTH
that the undersigned will not sell, assign or transfer any of the shares of
HEALTHSOUTH Common Stock received by the undersigned in connection with the
Merger except (i) pursuant to an effective registration statement under the Act
or (ii) in a transaction which, in the opinion of counsel reasonably
satisfactory to HEALTHSOUTH or as described in a "no-action" or interpretive
letter from the Staff of the SEC, is not required to be registered under the
Act.
The undersigned further represents to and covenants with HEALTHSOUTH
that, within 30 days preceding the consummation of the Merger, the undersigned
has not sold, transferred or otherwise disposed of, and will not sell, transfer
or otherwise dispose of, any ReLife Shares held by the undersigned, and that the
undersigned will not sell, transfer or otherwise dispose of any shares of
HEALTHSOUTH Common Stock received by the undersigned in connection with the
Merger until after such time as results covering at least 30 days of combined
operations of the Company and HEALTHSOUTH have been published by HEALTHSOUTH, in
the form of a quarterly earnings report, an effective registration statement
filed with the SEC, a report to the SEC on Form 10-K, Form 10-Q or Form 8-K, or
any other filing or announcement which includes such combined results of
operations, except in each case to the extent permitted by, and in connection
with, Accounting Series Release 135 and Staff Accounting Bulletins 65 and 76.
In the event of a sale or other disposition by the undersigned of
shares of HEALTHSOUTH Common Stock pursuant to Rule 145, the undersigned will
supply HEALTHSOUTH with evidence of compliance with such Rule, in the form of a
broker's letter in customary form or other evidence reasonably satisfactory to
HEALTHSOUTH. The undersigned understands that HEALTHSOUTH may instruct its
transfer agent to withhold the transfer of any shares of HEALTHSOUTH Common
Stock disposed of by the undersigned, but that upon receipt of such evidence of
compliance the transfer agent shall effectuate the transfer of the shares of
HEALTHSOUTH Common Stock sold as indicated in such evidence.
The undesigned acknowledges and agrees that the legends set forth below
will be placed on certificates representing shares of HEALTHSOUTH Common Stock
received by the undersigned in connection with the Merger or held by a
transferee thereof, which legends will be removed by delivery of substitute
certificates upon receipt of an opinion in form and substance reasonably
satisfactory to HEALTHSOUTH to the effect that such legends are no longer
required for purposes of the Act or to effect the agreements of the undersigned
contained herein.
There will be placed on the certificates for the shares of HEALTHSOUTH
Common Stock issued to the undersigned, or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of
1933 applies. The shares represented by this certificate may only be
transferred in accordance with the terms of an agreement dated
____________________, 1994 between the registered holder hereof and
HEALTHSOUTH Rehabilitation Corporation, a copy of which agreement is on
file at the principal office of HEALTHSOUTH Rehabilitation
Corporation."
Unless the transfer by the undersigned of shares of HEALTHSOUTH Common
Stock has been registered under the Act or is a sale made in conformity with the
provisions of Rule 145 and the terms hereof, HEALTHSOUTH reserves the right to
put the following legend on the certificates issued to any transferee of the
undersigned:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and were acquired from a
person who received such shares in a transaction to which Rule 145
promulgated under the Securities Act of 1933 applies. The shares have
been acquired by the holder not with a view to, or for resale in
connection with, any distribution thereof within the meaning of the
Securities Act of 1933 and may not be sold, pledged or otherwise
transferred except in accordance with an exemption from the
registration requirements of the Securities Act of 1933."
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the limitations
imposed upon the distribution, sale, transfer or other disposition of shares of
HEALTHSOUTH Common Stock and (ii) the receipt by HEALTHSOUTH of this letter is a
material inducement and a condition to HEALTHSOUTH's obligations to consummate
the Merger.
Very truly yours,
__________________________________
Signature of Stockholder
