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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
---------
Professional Sports Care Management, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
742939101
- --------------------------------------------------------------------------------
(CUSIP Number)
William W. Horton, Esq.
HEALTHSOUTH Corporation
Two Perimeter Park South, Suite 224W
Birmingham, Alabama 35243
(205) 967-7116
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
May 16, 1996
-----------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Check the following box if a fee is being paid with the statement |X| . (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
- --------------------------------------------------------------------------------
CUSIP No. 00755P101 Page 2 of 6 Pages
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
1 HEALTHSOUTH Corporation
63-0860407
- --------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
2
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
00
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) |_|
5
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- --------------------------------------------------------------------------------
NUMBER OF SOLE VOTING POWER
SHARES 7
BENEFICIALLY 0
OWNED BY
EACH ------------------------------------------------
REPORTING
PERSON
WITH SHARED VOTING POWER
8
1,933,840
------------------------------------------------
SOLE DISPOSITIVE POWER
9
0
------------------------------------------------
SHARED DISPOSITIVE POWER
10
0
- --------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,933,840
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
12
- --------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
26.7%
- --------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Item 1. Security and Issuer.
Class of Equity Securities: Common Stock, par value $.01 per share
Name and Address of Issuer: Professional Sports Care Management, Inc.
550 Mamaroneck Avenue
Harrison, New York 10528
Item 2. Identity and Background.
Name: HEALTHSOUTH Corporation
State of Organization: Delaware
Principal Business: Development, ownership and operation of
rehabilitation, outpatient surgery and
other healthcare facilities.
Address of Principal Business Two Perimeter Park South
and Principal Office: Suite 224W
Birmingham, Alabama 35243
(d) No.
(e) No.
Item 3. Source and Amount of Funds or Other Consideration.
In connection with the execution of a Plan and Agreement of Merger dated
May 16, 1996 (the "Merger Agreement"), by and among Professional Sports Care
Management, Inc. ("PSCM"), HEALTHSOUTH Corporation ("HEALTHSOUTH") and Empire
Acquisition Corporation (the "Subsidiary"), Ronnie P. Barnes, a Director of
PSCM, and certain investment partnerships (together with Mr. Barnes, the
"Stockholders") controlled by Russell F. Warren, M.D., Chairman of the Board of
PSCM, Russell F. Warren, Jr., President, Chief Executive Officer and a Director
of PSCM, and Patrick J. Wack, Jr., Executive Vice President, Chief Operating
Officer, Secretary, Treasurer and a Director of PSCM, entered into Proxy
Agreements dated May 16, 1996 (the "Proxy Agreements"). In the Proxy Agreements,
the Stockholders granted to HEALTHSOUTH the right to vote all of the shares of
Common Stock, par value $.01 per share, of PSCM (the "PSCM Common Stock") owned,
controlled or acquired by the Stockholders in favor of the merger contemplated
in the Merger Agreement and against any proposals for any recapitalization,
merger, sale of assets or other business combination between PSCM and any other
person or entity, as well as certain other matters.
In connection with the Merger Agreement, shares of PSCM will be canceled
and the holders of such shares will be entitled to receive 0.233 shares of the
Common Stock, par value $.01 per share, of HEALTHSOUTH (the "HEALTHSOUTH Common
Stock") per share of PSCM Common Stock surrendered, with adjustments in value
should the average price of the HEALTHSOUTH Common Stock
1
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during the measuring period exceed $38.625. One of the conditions of the
willingness of HEALTHSOUTH to enter into the Merger Agreement was the
Stockholders' execution and delivery of the Proxy Agreements. The foregoing
constituted the consideration for the Stockholders' executing and delivering the
Proxy Agreements.
Item 4. Purpose of Transaction.
HEALTHSOUTH entered into the Proxy Agreements as a part of the overall
transaction set forth in the Merger Agreement. By obtaining the right to vote
the shares owned or controlled by the Stockholders, HEALTHSOUTH obtained
additional assurance that the affirmative vote of PSCM stockholders to approve
the Merger Agreement might be obtained. Pursuant to the provisions of the Merger
Agreement, HEALTHSOUTH will seek to cause a merger to be effected between the
Subsidiary and PSCM, with PSCM to be the surviving corporation, pursuant to
which the shares of PSCM Common Stock will be surrendered and canceled and the
holders of such shares will be entitled to receive 0.233 shares of HEALTHSOUTH
Common Stock per share of PSCM Common Stock, with adjustments in value should
the average price of the HEALTHSOUTH Common Stock during the measuring period
exceed $38.625.
Item 5. Interest in Securities of the Issuer.
(a) The Proxy Agreements recite that the Stockholders currently own, or
have the power to vote, an aggregate of 1,933,840 shares of PSCM Common Stock.
The Proxy Agreements apply to those shares and any shares thereafter acquired by
the Stockholders prior to termination of the Proxy Agreements. The PSCM Common
Stock is entitled to one vote per share with respect to all matters to be acted
upon the stockholders of PSCM.
(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 PSCM 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 PSCM. Any other voting rights with respect to
the foregoing shares of Common Stock are retained by the Stockholders. The
principal business address of PSCM, which is also the business address of
Dr. Warren and Messrs. Warren, Wack and Barnes, is 550 Mamaroneck Avenue,
Harrison, New York 10528. Each Stockholder is a citizen of the United States of
America or is a partnership formed under the laws of a state of the United
States of America. The answer to Items 2(d) and (e) with respect to each
Stockholder is no.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
2
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Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
In connection with qualifying for "pooling of interests" treatment for
accounting purposes, it is expected that each Stockholder will execute a letter
to HEALTHSOUTH representing and covenanting that, within 30 days preceding the
consummation of the transactions contemplated by the Merger Agreement, such
Stockholder has not sold, transferred or otherwise disposed of, and will not
sell, transfer or otherwise dispose of, any PSCM Common Stock.
Item 7. Materials to be filed as Exhibits.
Exhibit A: Proxy Agreements, dated May 16, 1996, by and between
HEALTHSOUTH Corporation and each of Warren
Investments, L.P., R.F. Warren, Jr. & Co., L.P.,
Sculley, Wack & Co., L.P. and Ronnie P. Barnes.
Exhibit B: Plan and Agreement of Merger, dated May 16, 1996, by
and among HEALTHSOUTH Corporation, Empire
Acquisition Corporation and Professional Sports Care
Management, Inc., together with Exhibits thereto.
3
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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: May 28, 1996 /s/ William W. Horton
-------------------------------------------
William W. Horton
Senior Vice President and Corporate Counsel
<PAGE>
EXHIBIT A
PROXY AGREEMENT
AGREEMENT, dated May 16, 1996, between HEALTHSOUTH Corporation, a
Delaware corporation ("HEALTHSOUTH"), and WARREN INVESTMENTS, L.P., a limited
partnership (the "Stockholder").
W I T N E S S E T H:
-------------------
WHEREAS, as of the date hereof, the Stockholder owns, or has the power
to vote, 776,880 shares of Common Stock, par value $.01 per share (the "PSCM
Common Stock"), of Professional Sports Care Management, Inc., a Delaware
corporation ("PSCM") (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 PSCM 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 PSCM with and into HEALTHSOUTH by merging the
HEALTHSOUTH Subsidiary into PSCM (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 its 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 PSCM. This Agreement
has been duly executed and delivered by the Stockholder and, assuming its due
authorization, execution and delivery by HEALTHSOUTH, constitutes a legal, valid
and binding obligation of the Stockholder, enforceable against the Stockholder
in accordance with its terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to the effect of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
A-1
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1.2 Title to Shares. The Stockholder is the record or beneficial owner
of the Shares, free and clear of any proxy or voting restriction other than
pursuant to this Proxy Agreement.
Section 2. Transfer and Voting of Shares.
2.1. Transfer or Conversion of Shares. During the Proxy Term (as
defined below), and except as otherwise provided herein, or in or permitted by
the Plan of Merger, the Stockholder shall not (a) sell, pledge or otherwise
dispose of any of the Shares, (b) deposit the Shares into a voting trust or
enter into a voting agreement or arrangement with respect to the Shares or grant
any proxy with respect thereto other than pursuant to this Proxy Agreement, or
(c) enter into any contract, option or other arrangement or undertaking with
respect to the direct or indirect acquisition or sale, assignment, transfer or
other disposition of any PSCM Common Stock.
2.2. Voting of Shares; Further Assurances. (a) The Stockholder, by this
Agreement, with respect to those Shares that it owns of record or for which it
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 its true and lawful attorney and proxy, for and in its name,
place and stead, to vote each of the Shares as its proxy, at every annual,
special or adjourned meeting of the stockholders of PSCM (including the right to
sign its name (as a stockholder) to any consent, certificate or other document
relating to PSCM 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 PSCM 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
PSCM under the Plan of Merger or which could result in any of the conditions to
PSCM'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 it 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 PSCM; provided that in no event shall the Proxy Term
extend beyond the close of business one year following the termination of the
Plan of Merger.
(c) The Stockholder shall perform such further acts and execute
such further documents and instruments as may reasonably be required to vest in
HEALTHSOUTH the power to carry out the provisions of this Proxy Agreement.
Section 3. General Provisions.
3.1 Severability. If any term or other provision of this Proxy
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Proxy Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Proxy Agreement so as
A-2
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to effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
3.2. Entire Agreement. This Proxy Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between the parties, or either of them, with respect to
the subject matter hereof.
3.3. Assignment. This Proxy Agreement shall not be assigned by
operation of law or otherwise.
3.4. Parties in Interest. This Proxy Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this Proxy
Agreement, express or implied, is intended to or shall confer upon any person
any right, benefit or remedy of any nature whatsoever under or by reason of this
Proxy Agreement.
3.5. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Proxy Agreement is not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
3.6. Governing Law. This Proxy Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed and to be performed entirely within that state.
3.7. Counterparts. This Proxy Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Proxy Agreement as
of the date first written above.
WARREN INVESTMENTS, L.P.
By /s/RUSSELL F. WARREN, M.D.
--------------------------------------
General Partner
HEALTHSOUTH Corporation
By: /s/ RICHARD M. SCRUSHY
-------------------------------------
Richard M. Scrushy
Chairman of the Board and
Chief Executive Officer
A-3
<PAGE>
PROXY AGREEMENT
AGREEMENT, dated May 16, 1996, between HEALTHSOUTH Corporation, a
Delaware corporation ("HEALTHSOUTH"), and R.F. WARREN, JR. & CO., L.P., a
limited partnership (the "Stockholder").
W I T N E S S E T H:
-------------------
WHEREAS, as of the date hereof, the Stockholder owns, or has the power
to vote, 496,720 shares of Common Stock, par value $.01 per share (the "PSCM
Common Stock"), of Professional Sports Care Management, Inc., a Delaware
corporation ("PSCM") (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 PSCM 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 PSCM with and into HEALTHSOUTH by merging the
HEALTHSOUTH Subsidiary into PSCM (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 its 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 PSCM. This Agreement
has been duly executed and delivered by the Stockholder and, assuming its due
authorization, execution and delivery by HEALTHSOUTH, constitutes a legal, valid
and binding obligation of the Stockholder, enforceable against the Stockholder
in accordance with its terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to the effect of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
1.2 Title to Shares. The Stockholder is the record or beneficial owner
of the Shares, free and clear of any proxy or voting restriction other than
pursuant to this Proxy Agreement.
A-4
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Section 2. Transfer and Voting of Shares.
2.1. Transfer or Conversion of Shares. During the Proxy Term (as
defined below), and except as otherwise provided herein, or in or permitted by
the Plan of Merger, the Stockholder shall not (a) sell, pledge or otherwise
dispose of any of the Shares, (b) deposit the Shares into a voting trust or
enter into a voting agreement or arrangement with respect to the Shares or grant
any proxy with respect thereto other than pursuant to this Proxy Agreement, or
(c) enter into any contract, option or other arrangement or undertaking with
respect to the direct or indirect acquisition or sale, assignment, transfer or
other disposition of any PSCM Common Stock.
2.2. Voting of Shares; Further Assurances. (a) The Stockholder, by this
Agreement, with respect to those Shares that it owns of record or for which it
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 its true and lawful attorney and proxy, for and in its name,
place and stead, to vote each of the Shares as its proxy, at every annual,
special or adjourned meeting of the stockholders of PSCM (including the right to
sign its name (as a stockholder) to any consent, certificate or other document
relating to PSCM 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 PSCM 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
PSCM under the Plan of Merger or which could result in any of the conditions to
PSCM'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 it 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 PSCM; provided that in no event shall the Proxy Term
extend beyond the close of business one year following the termination of the
Plan of Merger.
(c) The Stockholder shall perform such further acts and
execute such further documents and instruments as may reasonably be required to
vest in HEALTHSOUTH the power to carry out the provisions of this Proxy
Agreement.
Section 3. General Provisions.
3.1 Severability. If any term or other provision of this Proxy
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Proxy Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Proxy Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
A-5
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3.2. Entire Agreement. This Proxy Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between the parties, or either of them, with respect to
the subject matter hereof.
3.3. Assignment. This Proxy Agreement shall not be assigned by
operation of law or otherwise.
3.4. Parties in Interest. This Proxy Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this Proxy
Agreement, express or implied, is intended to or shall confer upon any person
any right, benefit or remedy of any nature whatsoever under or by reason of this
Proxy Agreement.
3.5. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Proxy Agreement is not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
3.6. Governing Law. This Proxy Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed and to be performed entirely within that state.
3.7. Counterparts. This Proxy Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Proxy Agreement as
of the date first written above.
R.F. WARREN, JR. & CO., L.P.
By /s/ RUSSELL F. WARREN, JR.
-----------------------------------
General Partner
HEALTHSOUTH Corporation
By: /s/ RICHARD M. SCRUSHY
-----------------------------------
Richard M. Scrushy
Chairman of the Board and
Chief Executive Officer
A-6
<PAGE>
PROXY AGREEMENT
AGREEMENT, dated May 16, 1996, between HEALTHSOUTH Corporation, a
Delaware corporation ("HEALTHSOUTH"), and SCULLEY, WACK AND COMPANY, L.P., a
limited partnership (the "Stockholder").
W I T N E S S E T H:
--------------------
WHEREAS, as of the date hereof, the Stockholder owns, or has the power
to vote, 56,080 shares of Common Stock, par value $.01 per share (the "PSCM
Common Stock"), of Professional Sports Care Management, Inc., a Delaware
corporation ("PSCM") (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 PSCM 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 PSCM with and into HEALTHSOUTH by merging the
HEALTHSOUTH Subsidiary into PSCM (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 its 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 PSCM. This Agreement
has been duly executed and delivered by the Stockholder and, assuming its due
authorization, execution and delivery by HEALTHSOUTH, constitutes a legal, valid
and binding obligation of the Stockholder, enforceable against the Stockholder
in accordance with its terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to the effect of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
1.2 Title to Shares. The Stockholder is the record or beneficial owner
of the Shares, free and clear of any proxy or voting restriction other than
pursuant to this Proxy Agreement.
A-7
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Section 2. Transfer and Voting of Shares.
2.1. Transfer or Conversion of Shares. During the Proxy Term (as
defined below), and except as otherwise provided herein, or in or permitted by
the Plan of Merger, the Stockholder shall not (a) sell, pledge or otherwise
dispose of any of the Shares, (b) deposit the Shares into a voting trust or
enter into a voting agreement or arrangement with respect to the Shares or grant
any proxy with respect thereto other than pursuant to this Proxy Agreement, or
(c) enter into any contract, option or other arrangement or undertaking with
respect to the direct or indirect acquisition or sale, assignment, transfer or
other disposition of any PSCM Common Stock.
2.2. Voting of Shares; Further Assurances. (a) The Stockholder, by this
Agreement, with respect to those Shares that it owns of record or for which it
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 its true and lawful attorney and proxy, for and in its name,
place and stead, to vote each of the Shares as its proxy, at every annual,
special or adjourned meeting of the stockholders of PSCM (including the right to
sign its name (as a stockholder) to any consent, certificate or other document
relating to PSCM 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 PSCM 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
PSCM under the Plan of Merger or which could result in any of the conditions to
PSCM'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 it 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 PSCM; 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.
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3.2. Entire Agreement. This Proxy Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between the parties, or either of them, with respect to
the subject matter hereof.
3.3. Assignment. This Proxy Agreement shall not be assigned by
operation of law or otherwise.
3.4. Parties in Interest. This Proxy Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this Proxy
Agreement, express or implied, is intended to or shall confer upon any person
any right, benefit or remedy of any nature whatsoever under or by reason of this
Proxy Agreement.
3.5. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Proxy Agreement is not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
3.6. Governing Law. This Proxy Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed and to be performed entirely within that state.
3.7. Counterparts. This Proxy Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Proxy Agreement as
of the date first written above.
SCULLEY, WACK AND COMPANY, L.P.
By /s/ PATRICK F. WACK, JR.
-------------------------------------
General Partner
HEALTHSOUTH Corporation
By: /s/ RICHARD M. SCRUSHY
--------------------------------------
Richard M. Scrushy
Chairman of the Board and
Chief Executive Officer
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<PAGE>
PROXY AGREEMENT
AGREEMENT, dated May 16, 1996, between HEALTHSOUTH Corporation, a
Delaware corporation ("HEALTHSOUTH"), and RONNIE P. BARNES, a resident of the
State of New Jersey (the "Stockholder").
W I T N E S S E T H:
WHEREAS, as of the date hereof, the Stockholder owns, or has the power
to vote, 604,160 shares of Common Stock, par value $.01 per share (the "PSCM
Common Stock"), of Professional Sports Care Management, Inc., a Delaware
corporation ("PSCM") (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 PSCM 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 PSCM with and into HEALTHSOUTH by merging the
HEALTHSOUTH Subsidiary into PSCM (the "Merger"); and
WHEREAS, as a condition of the willingness of HEALTHSOUTH to enter into
the Plan of Merger, HEALTHSOUTH has requested that the Stockholder agree, and,
in order to induce HEALTH- SOUTH to enter into the Plan of Merger, the
Stockholder has agreed, to grant HEALTHSOUTH his proxy to vote the Shares;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants set forth herein and in the Plan of Merger, the parties
hereto agree as follows:
Section 1. Representation and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to HEALTHSOUTH as follows:
1.1 Authority, etc. The Stockholder has full power and authority to
execute and deliver this Proxy Agreement and to consummate the transactions
contemplated hereby and by the Plan of Merger. The execution and delivery of the
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of such Stockholder. This
Agreement has been approved by the Board of Directors of PSCM. This Agreement
has been duly executed and delivered by the Stockholder and, assuming its due
authorization, execution and delivery by HEALTHSOUTH, constitutes a legal, valid
and binding obligation of the Stockholder, enforceable against the Stockholder
in accordance with its terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to the effect of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
1.2 Title to Shares. The Stockholder is the record or beneficial owner
of the Shares, free and clear of any proxy or voting restriction other than
pursuant to this Proxy Agreement.
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Section 2. Transfer and Voting of Shares.
2.1. Transfer or Conversion of Shares. During the Proxy Term (as
defined below), and except as otherwise provided herein, or in or permitted by
the Plan of Merger, the Stockholder shall not (a) sell, pledge or otherwise
dispose of any of the Shares, (b) deposit the Shares into a voting trust or
enter into a voting agreement or arrangement with respect to the Shares or grant
any proxy with respect thereto other than pursuant to this Proxy Agreement, or
(c) enter into any contract, option or other arrangement or undertaking with
respect to the direct or indirect acquisition or sale, assignment, transfer or
other disposition of any PSCM 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 PSCM (including the right to
sign his name (as a stockholder) to any consent, certificate or other document
relating to PSCM 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 PSCM 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
PSCM under the Plan of Merger or which could result in any of the conditions to
PSCM'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 PSCM; 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.
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3.2. Entire Agreement. This Proxy Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between the parties, or either of them, with respect to
the subject matter hereof.
3.3. Assignment. This Proxy Agreement shall not be assigned by
operation of law or otherwise.
3.4. Parties in Interest. This Proxy Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this Proxy
Agreement, express or implied, is intended to or shall confer upon any person
any right, benefit or remedy of any nature whatsoever under or by reason of this
Proxy Agreement.
3.5. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Proxy Agreement is not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
3.6. Governing Law. This Proxy Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed and to be performed entirely within that state.
3.7. Counterparts. This Proxy Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Proxy Agreement as
of the date first written above.
/s/ RONNIE P. BARNES
----------------------------------------
Ronnie P. Barnes
HEALTHSOUTH Corporation
By: /s/ RICHARD M. SCRUSHY
-----------------------------------
Richard M. Scrushy
Chairman of the Board and
Chief Executive Officer
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EXHIBIT B
PLAN AND AGREEMENT OF MERGER
PLAN AND AGREEMENT OF MERGER (the "Plan of Merger"), made and entered
into as of the 16th day of May, 1996, by and among HEALTHSOUTH Corporation, a
Delaware corporation ("HEALTHSOUTH"), EMPIRE ACQUISITION CORPORATION, a Delaware
corporation (the "Subsidiary"), and PROFESSIONAL SPORTS CARE MANAGEMENT, INC., a
Delaware corporation ("PSCM") (the Subsidiary and PSCM being sometimes
collectively referred to herein as the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of HEALTHSOUTH, the
Subsidiary and PSCM have approved the merger of the Subsidiary with and into
PSCM (the "Merger"), upon the terms and conditions set forth in this Plan of
Merger, whereby all shares of Common Stock, par value $.01 per share, of PSCM
(the "PSCM Common Stock"), not owned directly or indirectly by PSCM, will be
converted into the right to receive the Merger Consideration (as hereinafter
defined);
WHEREAS, each of HEALTHSOUTH, the Subsidiary and PSCM desires to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe various conditions to the Merger;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section 368 of
the Internal Revenue Code of 1986, as amended; and
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a "pooling of interests".
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants and agreements contained herein, the parties hereto do hereby agree as
follows:
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Section 1. The Merger.
1.1 The Merger. Upon the terms and conditions set forth in this Plan of
Merger, and in accordance with the Delaware General Corporation Law (the
"DGCL"), the Subsidiary shall be merged with and into PSCM at the Effective Time
(as defined in Section 1.3). Following the Effective Time, the separate
corporate existence of the Subsidiary shall cease and PSCM shall continue as the
surviving corporation (the "Surviving Corporation") under the name "Professional
Sports Care Management, Inc." and shall succeed to and assume all the rights and
obligations of the Subsidiary and PSCM in accordance with the DGCL.
1.2 The Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m. Central Time on a date to be specified by the parties (the
"Closing Date"), which (subject to satisfaction or waiver of the conditions set
forth in Sections 9.2 and 9.3) shall be no later than the second business day
after satisfaction or waiver of the conditions set forth in Section 9.1 (other
than Section 9.1(a)), at the offices of Haskell Slaughter & Young, L.L.C.,
Birmingham, Alabama, unless another date or place is agreed to in writing by the
parties hereto.
1.3 Effective Time. Subject to the provisions of this Plan of Merger,
the parties shall file a certificate of merger (the "Certificate of Merger")
executed in accordance with the relevant provisions of the DGCL and shall make
all other filings or recordings required under the DGCL as soon as practicable
on or after the Closing Date. The Merger shall become effective at such time as
the Certificate of Merger is duly filed with the Delaware Secretary of State, or
at such other time as the Subsidiary and PSCM 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.
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2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of any holder of shares of PSCM Common
Stock or any shares of capital stock of the Subsidiary:
(a) Subsidiary Common Stock. Each share of capital stock of the
Subsidiary issued and outstanding immediately prior to the Effective Time shall
be converted into one fully paid and nonassessable share of common stock of the
Surviving Corporation.
(b) Cancellation of Treasury Stock. Each share of PSCM Common Stock
that is owned by PSCM or by any subsidiary of PSCM 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 PSCM Shares. Subject to Section 2.2(d), each issued
and outstanding share of PSCM Common Stock (other than shares to be canceled in
accordance with Section 2.1(b)) (collectively, the "Exchanging PSCM Shares")
shall be converted into the right to receive .2330 (the "Exchange Ratio") shares
of HEALTHSOUTH Common Stock, as may be adjusted as provided below (the "Merger
Consideration"); provided, however, that if the Base Period Trading Price (as
defined below) shall be greater than $38.625, then the Exchange Ratio shall be
equal to the quotient obtained by dividing $9.00 by the Base Period Trading
Price, computed to four decimal places, and the Merger Consideration shall be
adjusted accordingly. For purposes of this Plan of Merger, the term "Base Period
Trading Price" shall mean the average daily closing prices per share for the
shares of HEALTHSOUTH Common Stock for the 20 consecutive trading days on which
such shares are actually traded (as reported on the New York Stock Exchange
Composite Transaction Tape as reported in The Wall Street Journal, Eastern
Edition, or if not reported thereby, any other authoritative source) ending at
the close of trading on the second New York Stock Exchange trading day
immediately preceding the date of the Special Meeting (as defined in Section
7.3) (such period being herein called the "Base Period"). Promptly after the
close of trading on such day, the parties shall issue a joint press release
publicly announcing the Exchange Ratio. As of the Effective Time, all such
Exchanging PSCM Shares shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any Exchanging PSCM 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
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HEALTHSOUTH Common Stock to be issued or paid in consideration therefor upon
surrender of such certificate in accordance with Section 2.2, without interest.
(d) Stock Options and Warrants. At the Effective Time, all rights with
respect to PSCM Common Stock pursuant to any PSCM stock options or PSCM warrants
which are outstanding at the Effective Time, whether or not then exercisable,
shall be converted into and become rights with respect to HEALTHSOUTH Common
Stock, and HEALTHSOUTH shall assume each PSCM stock option or PSCM warrant, in
accordance with the terms of any stock option plan under which it was issued and
any stock option agreement or warrant agreement, as the case may be, by which it
is evidenced. It is intended that the foregoing provisions shall be undertaken
in a manner that will not constitute a "modification" as defined in Section 425
of the Code, as to any stock option which is an "incentive stock option". Each
PSCM stock option or warrant so assumed shall be exercisable for that number of
shares of HEALTHSOUTH Common Stock equal to the number of PSCM shares subject
thereto multiplied by the Exchange Ratio, and shall have an exercise price per
share equal to the PSCM exercise price divided by the Exchange Ratio.
(e) Anti-Dilution Provisions. If after the date hereof and prior to the
Effective Time HEALTHSOUTH shall have declared a stock split (including a
reverse split) of HEALTHSOUTH Common Stock or a dividend payable in HEALTHSOUTH
Common Stock, or any other distribution of securities or dividend (in cash or
otherwise) to holders of HEALTHSOUTH Common Stock with respect to their
HEALTHSOUTH Common Stock (including without limitation such a distribution or
dividend made in connection with a recapitalization, reclassification, merger,
consolidation, reorganization, reclassification, merger, consolidation,
reorganization or similar transaction) then (i) the amount $38.625 referred to
in Section 2.1(c) and the amount $31.00 referred to in Section 8.1(f), and the
Exchange Ratio, shall be appropriately adjusted to reflect such stock split or
dividend or other distribution of securities and (ii) if such stock split,
dividend or distribution has a record date during or after the Base Period and
prior to the Effective Time, then the number of shares of HEALTHSOUTH Common
Stock to be issued upon conversion of a share of PSCM Common Stock pursuant to
Section 2.1(c) shall be appropriately adjusted to reflect such stock split,
dividend or other distribution of securities.
2.2 Exchange of Certificates. (a) Exchange Agent. Prior to the
Effective Time, HEALTH- SOUTH shall enter into an agreement with such bank or
trust company as may be designated by
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HEALTHSOUTH (the "Exchange Agent") which provides that HEALTHSOUTH shall deposit
with the Exchange Agent as of the Effective Time, for the benefit of the holders
of Exchanging PSCM Shares, for exchange in accordance with this Section 2,
through the Exchange Agent, certificates representing the shares of HEALTHSOUTH
Common Stock (such shares of HEALTHSOUTH Common Stock, together with any
dividends or distributions with respect thereto with a record date after the
Effective Time, being hereinafter referred to as the "Exchange Fund") issuable
pursuant to Section 2.1 in exchange for outstanding shares of PSCM Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail
to each holder of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of PSCM Common Stock
(the "Certificates") whose shares were converted into the right to receive the
Merger Consideration pursuant to Section 2.1, (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as HEALTHSOUTH
may reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for certificates representing shares of
HEALTHSOUTH Common Stock. Upon surrender of a Certificate for cancellation to
the Exchange Agent or to such other agent or agents as may be appointed by
HEALTHSOUTH, together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Exchange Agent, the holder
of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of HEALTHSOUTH Common Stock
which such holder has the right to receive pursuant to the provisions of this
Section 2, and the Certificate so surrendered shall forthwith be canceled. In
the event of a transfer of ownership of shares of PSCM Common Stock which is not
registered in the transfer records of PSCM, a certificate representing the
proper number of shares of HEALTHSOUTH Common Stock may be issued to a person
other than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the issuance of shares of
HEALTHSOUTH Common Stock to a person other than the registered holder of such
Certificate or establish to the satisfaction of HEALTHSOUTH that such tax has
been paid or is not applicable. Until surrendered as contemplated by this
Section 2.2, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the certificate
representing shares of HEALTH-
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SOUTH Common Stock and cash in lieu of any fractional shares of HEALTHSOUTH
Common Stock as contemplated by this Section 2.2. No interest will be paid or
will accrue on any cash payable in lieu of any fractional shares of HEALTHSOUTH
Common Stock. To the extent permitted by law, former stockholders of record of
PSCM shall be entitled to vote after the Effective Time at any meeting of
HEALTHSOUTH stockholders the number of whole shares of HEALTHSOUTH Common Stock
into which their respective shares of PSCM Common Stock are converted,
regardless of whether such holders have exchanged their Certificates for
certificates representing HEALTHSOUTH Common Stock in accordance with this
Section 2.2.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to HEALTHSOUTH Common Stock with a record date
after the Effective Time of the Merger shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of HEALTHSOUTH Common Stock
represented thereby and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 2.2(e) until the surrender of such
Certificate in accordance with this Section 2. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificate representing whole shares of HEALTH- SOUTH
Common Stock issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of any cash payable in lieu of a fractional share of
HEALTHSOUTH Common Stock to which such holder is entitled pursuant to Section
2.2(e) and the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole shares of
HEALTH- SOUTH Common Stock, and (ii) at the appropriate payment date, the amount
of dividends or other distributions with a record date after the Effective Time
but prior to such surrender and with a payment date subsequent to such surrender
payable with respect to such whole shares of HEALTHSOUTH Common Stock.
(d) No Further Ownership Rights in Exchanging PSCM Shares. All shares
of HEALTH- SOUTH Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this Section 2 (including any cash
paid pursuant to Section 2.2(c) or 2.2(e) ) shall be deemed to have been issued
(and paid) in full satisfaction of all rights pertaining to the Exchanging PSCM
Shares theretofore represented by such Certificates. If, after the Effective
Time, Certificates are presented to the Surviving Corporation or the Exchange
Agent for any reason, they shall be canceled and exchanged as provided in this
Section 2, except as otherwise provided by law.
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(e) No Fractional Shares. No certificates or scrip representing
fractional shares of HEALTH- SOUTH Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to any rights of a stockholder of
HEALTHSOUTH. Notwithstanding any other provision of this Plan of Merger, each
holder of Exchanging PSCM Shares exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of HEALTHSOUTH
Common Stock (after taking into account all Certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an amount
equal to such fractional part of a share of HEALTHSOUTH Common Stock multiplied
by the Base Period Trading Price.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of the Certificates for six months
after the Effective Time shall be delivered to HEALTHSOUTH, upon demand, and any
holders of the Certificates who have not theretofore complied with this Section
2 shall thereafter look only to HEALTHSOUTH for payment of HEALTH- SOUTH Common
Stock, any cash in lieu of fractional shares of HEALTHSOUTH Common Stock and any
dividends or distributions with respect to HEALTHSOUTH Common Stock.
(g) No Liability. None of HEALTHSOUTH, the Subsidiary, PSCM or the
Exchange Agent shall be liable to any person in respect of any shares of
HEALTHSOUTH Common Stock (or dividends or distributions with respect thereto) or
cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificates shall
not have been surrendered prior to seven years after the Effective Time (or
immediately prior to such earlier date on which any shares of HEALTHSOUTH Common
Stock, any cash in lieu of fractional shares of HEALTHSOUTH Common Stock or any
dividends or distributions with respect to HEALTHSOUTH Common Stock in respect
of such Certificates would otherwise escheat to or become the property of any
governmental entity), any such shares, cash, dividends or distributions in
respect of such Certificates shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund in deposit accounts or short-term money
market instruments, as directed by
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HEALTHSOUTH, on a daily basis. Any interest and other income resulting from such
investments shall be paid to HEALTHSOUTH.
2.3 Certificate of Incorporation of Surviving Corporation. The
Certificate of Incorporation of PSCM shall be amended and restated, effective at
the Effective Time, in a manner satisfactory to HEALTHSOUTH. The Certificate of
Incorporation of PSCM, as so amended and restated, shall become the Certificate
of Incorporation of the Surviving Corporation from and after the Effective Time
and until thereafter amended as provided by law.
2.4 Bylaws of the Surviving Corporation. The Bylaws of the Subsidiary
shall be the Bylaws of the Surviving Corporation from and after the Effective
Time and until thereafter altered, amended or repealed in accordance with the
laws of the State of Delaware, the Certificate of Incorporation of PSCM and the
said Bylaws.
2.5 Directors and Officers of the Surviving Corporation. The Directors
and officers of the Subsidiary immediately prior to the Effective Time shall be
the Directors and officers of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation.
2.6 Assets, Liabilities, Reserves and Accounts. At the Effective Time,
the assets, liabilities, reserves and accounts of each of the Subsidiary and
PSCM shall be taken up on the books of the Surviving Corporation at the amounts
at which they respectively shall be carried on the books of said corporations
immediately prior to the Effective Time, except as otherwise set forth in the
Plan of Merger and subject to such adjustments, or elimination of intercompany
items, as may be appropriate in giving effect to the Merger in accordance with
generally accepted accounting principles.
2.7 Corporate Acts of the Subsidiary. All corporate acts, plans,
policies, approvals and authorizations of the Subsidiary, its sole stockholder,
its Board of Directors, committees elected or appointed by the Board of
Directors, and all officers and agents, valid immediately prior to the Effective
Time, shall be those of the Surviving Corporation and shall be as effective and
binding thereon as they were with respect to the Subsidiary. The employees and
agents of the Subsidiary shall become the
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employees and agents of the Surviving Corporation and continue to be entitled to
the same rights and benefits which they enjoyed as employees and agents of the
Subsidiary.
Section 3. Representations and Warranties of PSCM.
PSCM hereby represents and warrants to HEALTHSOUTH and the Subsidiary
as follows:
3.1 Organization, Existence and Good Standing. PSCM is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. PSCM has all necessary corporate power to own its properties
and assets and to carry on its business as presently conducted. PSCM 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 PSCM within
such time owned, directly or indirectly, any shares of HEALTHSOUTH Common Stock
or Subsidiary Common Stock.
3.2 PSCM Capital Stock. PSCM's authorized capital consists of
15,000,000 shares of PSCM Common Stock, par value $.01 per share, of which
7,774,500 shares were issued and outstanding as of May 1, 1996, and none of
which shares are issued and held as treasury shares, and 2,000,000 shares of
Preferred Stock, none of which shares are issued and outstanding or held as
treasury stock. All of the issued and outstanding shares of PSCM Common Stock
are duly and validly issued, fully paid and nonassessable. Except as set forth
on Exhibit 3.2 to the Disclosure Schedule delivered by PSCM to HEALTHSOUTH
simultaneously with the execution and delivery hereof (the "Disclosure
Schedule") or otherwise disclosed in the PSCM Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 (the "PSCM 10-K"), there are no options,
warrants, or similar rights granted by PSCM or any other agreements to which
PSCM is a party providing for the issuance or sale by it of any additional
securities which would remain in effect after the Effective Time, other than
those reflected in the PSCM 10-K. There is no liability for dividends declared
or accumulated but unpaid with respect to any of the shares of PSCM Common
Stock. PSCM has not made any distributions to any holders of PSCM Common Stock
or participated in or effected any issuance, exchange or retirement of shares of
PSCM Common Stock, or otherwise changed the equity interests of holders of PSCM
Common Stock, in contemplation of effecting the Merger within the two years
immediately preceding the date of this Plan of Merger. Other than in connection
with PSCM's initial public offering, at which time the Merger was not
contemplated, any shares of PSCM Common Stock that PSCM has re-acquired during
the two years
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immediately preceding the date of this Plan of Merger have been so re-acquired
only for purposes other than "business combinations", as such term is defined in
Accounting Principles Board Opinion No. 16, as amended ("Business
Combinations").
3.3 Subsidiaries and Affiliated Partnerships. (a) Attached to the
Disclosure Schedule as Exhibit 3.3 is a list of all subsidiaries (including, but
not limited to, professional corporations not owned by PSCM but over the assets
and operations of which PSCM exercises unilateral and perpetual control) of PSCM
(individually, a "PSCM Subsidiary", and collectively, the "PSCM Subsidiaries")
and their states of incorporation. Except as set forth on Exhibit 3.3, PSCM does
not own stock in and does not control, directly or indirectly, any other
corporation, association or business organization other than the PSCM Other
Entities (as defined below).
(b) Also disclosed on Exhibit 3.3 is a list of all general or limited
partnerships in which a general partner is PSCM, a PSCM Subsidiary or another
PSCM Partnership (individually, a "PSCM Partnership" and collectively, the "PSCM
Partnerships"), and all limited liability companies in which PSCM, a PSCM
Subsidiary or a PSCM Partnership is a member (individually, a "PSCM LLC" and
collectively, the "PSCM LLCs") (the PSCM Partnerships and the PSCM LLCs being
collectively called the "PSCM Other Entities"), and their states of
organization. Except as set forth on Exhibit 3.3, neither PSCM nor any PSCM
Subsidiary owns an equity interest in, nor does such entity control, directly or
indirectly, any other joint venture, limited liability company or partnership.
3.4 Organization, Existence and Good Standing of PSCM Subsidiaries and
PSCM Other Entities. (a) Each PSCM Subsidiary is a corporation or a professional
corporation duly organized, validly existing and in good standing under the laws
of its respective state of incorporation. Each PSCM Subsidiary has all necessary
corporate power to own its properties and assets and to carry on its business as
presently conducted.
(b) Each PSCM Partnership that is a limited partnership is validly
formed, each PSCM Partnership that is a general partnership has been duly
organized, and each PSCM Partnership is in good standing under the laws of its
respective state of organization. Each PSCM Partnership has all necessary power
to own its property and assets and to carry on its business as presently
conducted.
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(c) Each PSCM LLC is a limited liability company validly formed and in
good standing under the laws of its respective state of organization. Each PSCM
LLC has all necessary power to own its property and assets to carry on its
business as presently conducted.
3.5 Foreign Qualifications. PSCM, each PSCM Subsidiary and each PSCM
Other Entity that is not a general partnership is qualified to do business as a
foreign corporation, foreign limited partnership or foreign limited liability
company, as the case may be, and is in good standing in each jurisdiction where
the nature or character of the property owned, leased or operated by it or the
nature of the business transacted by it makes such qualification necessary,
except where the failure to so qualify would not have a material adverse effect
on PSCM, the PSCM Subsidiaries and the PSCM Other Entities, taken as a whole.
3.6 Power and Authority. Subject to the satisfaction of the conditions
precedent set forth herein, PSCM has the corporate power to execute, deliver and
perform the Plan of Merger and all agreements and other documents executed and
delivered or to be executed and delivered by it pursuant to the Plan of Merger,
and, subject to the satisfaction of the conditions precedent set forth herein
has taken all action required by its Certificate of Incorporation, Bylaws or
otherwise, to authorize the execution, delivery and performance of the Plan of
Merger and such related documents. Except as set forth on Exhibit 3.6 to the
Disclosure Schedule, the execution and delivery of the Plan of Merger does not
and, subject to the receipt of required stockholder and regulatory approvals and
any other required third-party consents or approvals, the consummation of the
Merger will not, violate any provisions of the Certificate of Incorporation of
PSCM or any provisions of, or result in the acceleration of any obligation
under, any material mortgage, lien, lease, agreement, instrument, order,
arbitration award, judgment or decree, to which PSCM or any PSCM Subsidiary or
PSCM Other Entity 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 PSCM, the PSCM Subsidiaries
and the PSCM Other Entities, taken as a whole. The execution and delivery of
this Agreement has been approved by the Board of Directors of PSCM. This
Agreement has been duly executed and delivered by PSCM and, assuming this
Agreement constitutes a valid and binding obligation of HEALTHSOUTH and the
Subsidiary, as the case may be, constitutes a valid and binding obligation of
PSCM, enforceable against PSCM in accordance with its terms.
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3.7 PSCM Public Information. PSCM has heretofore furnished HEALTHSOUTH
with a true and complete copy of each report, schedule, registration statement
and definitive proxy statement filed by it with the Securities and Exchange
Commission (the "SEC") (as any such documents have since the time of their
original filing been amended, the "PSCM Documents") since September 1, 1994,
which are all the documents (other than preliminary material) that it was
required to file with the SEC from such date through the date of this Plan of
Merger. As of their respective dates, the PSCM Documents did not contain any
untrue statements of material facts or omit to state material facts required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their respective
dates, the PSCM Documents complied in all material respects with the applicable
requirements of the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
under such statutes. The financial statements contained in the PSCM Documents,
together with the notes thereto, have been prepared in accordance with generally
accepted accounting principles consistently followed throughout the periods
indicated (except as may be indicated in the notes thereto, or, in the case of
the unaudited financial statements, as permitted by Form 10-Q), reflect all
known liabilities of PSCM required to be stated therein, including all known
contingent liabilities as of the end of each period reflected therein, and
present fairly the financial condition of PSCM at said dates and the
consolidated results of operations and cash flows of PSCM for the periods then
ended. The consolidated balance sheet of PSCM at March 31, 1996 included in the
PSCM Documents is herein sometimes referred to as the "PSCM Balance Sheet".
3.8 Visit Analysis. Exhibit 3.8 to the Disclosure Schedule sets forth a
visit analysis by facility for each facility operated by PSCM, any PSCM
Subsidiary or any PSCM Other Entity describing aggregate new patient and patient
visit information for (a) each quarter during the period January 1, 1995 through
December 31, 1995, (b) the period January 1, 1996 through March 31, 1996, and
(c) the period April 1, 1996 through May 5, 1996, which visit analysis is true
and correct in all material respects.
3.9 Legal Proceedings. Except as disclosed in the PSCM Documents or on
Exhibit 3.9 to the Disclosure Schedule, there is no material litigation,
governmental investigation or other proceeding pending or, so far as is known to
PSCM, threatened against or relating to PSCM, its properties or business, or the
transaction contemplated by the Plan of Merger and, so far as is known to PSCM,
no basis for any such action exists.
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3.10 Contracts, etc. (a) All material contracts, leases, agreements and
arrangements to which PSCM or any of the PSCM Subsidiaries or PSCM Other
Entities is a party are legally valid and binding in accordance with their terms
and in full force and effect.To the knowledge of PSCM, no party is in default
thereunder, and no event has occurred which, but for the passage of time or the
giving of notice or both, would constitute a default thereunder, except, in each
case, where the invalidity of the lease, contract, agreement or arrangement or
the default or breach thereunder or thereof would not, individually or in the
aggregate, have a material adverse effect on PSCM, the PSCM Subsidiaries and the
PSCM Other Entities, taken as a whole.
(b) Except as set forth on Exhibit 3.10 to the Disclosure Schedule, no
contract or agreement to which PSCM or any PSCM Subsidiary or PSCM Other Entity
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 PSCM, the PSCM Subsidiaries and the PSCM Other Entities, taken as a
whole.
(c) Except as set forth on Exhibit 3.10 to the Disclosure Schedule,
none of PSCM, any PSCM Subsidiary or any PSCM Other Entity has granted any right
of first refusal or similar right in favor of any third party with respect to
any material portion of its properties or assets or entered into any
non-competition agreement or similar agreement restricting its ability to engage
in any business in any location.
3.11 Subsequent Events. Except as set forth on Exhibit 3.11 to the
Disclosure Schedule or disclosed in the PSCM Documents, PSCM has not, since the
date of the last-filed PSCM Document:
(a) Incurred any material adverse change, including, but not
limited to, any material adverse change in patient visits from those
reflected on Exhibit 3.8.
(b) Discharged or satisfied any material lien or encumbrance,
or paid or satisfied any material obligation or liability (absolute,
accrued, contingent or otherwise) other than (i) liabilities shown or
reflected on the PSCM Balance Sheet or (ii) liabilities incurred since
the date of the last-filed PSCM Document in the ordinary course of
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business, which discharge or satisfaction would have a material adverse
effect on PSCM, the PSCM Subsidiaries and the PSCM Other Entities,
taken as a whole.
(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 PSCM, except as may have been
required due to income or operations of PSCM since the date of the
last-filed PSCM Document.
(d) Mortgaged, pledged or subjected to any lien, charge or
other encumbrance any of the assets, tangible or intangible, which
assets are material to the consolidated business or financial condition
of PSCM.
(e) Sold or transferred any of the assets material to the
consolidated business of PSCM, 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 employ ees or any material increase in salary payable or to
become payable by PSCM to any officer or employee, consultant or agent
(other than normal merit increases), or by means of any bonus or
pension plan, contract or other commitment, increased in a material
respect the compensation of any officer, employee, consultant or agent.
(g) Except for this Plan of Merger and any other agreement
executed and delivered pursuant to this Plan of Merger, entered into
any material transaction other than in the ordinary course of business
or permitted under other Sections hereof.
(h) Issued any stock, bonds or other securities, other than
stock options granted to employees, directors or consultants of PSCM or
warrants granted to third parties, all of which are disclosed on
Exhibit 3.2 to the Disclosure Schedule or in the PSCM Documents.
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3.12 Accounts Receivable. (a) Since the date of the PSCM 10-K, PSCM has
not changed any material principle or practice with respect to the recordation
of accounts receivable or the calculation of reserves therefor, or any material
collection, discount or write-off policy or procedure. PSCM (including the PSCM
Subsidiaries and PSCM Other Entities 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 PSCM, the PSCM Subsidiaries and the PSCM Other
Entities, taken as a whole.
(b) Without limiting the generality of the foregoing, PSCM and each
PSCM Subsidiary or PSCM Other Entity 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 PSCM, the PSCM
Subsidiaries and the PSCM Other Entities, taken as a whole.
3.13 Tax Returns. PSCM 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 PSCM.
PSCM has made all payments shown as due on such returns. PSCM has not been
notified that any tax returns of PSCM are currently under audit by the Internal
Revenue Service or any state or local tax agency. No agreements have been made
by PSCM 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 Unterberg Harris
and Wyndam Capital, L.P., 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 PSCM or its stockholders, officers or
Directors, or any of them.
3.15 Employee Benefit Plans; Employment Matters. (a) Except as
described in the PSCM Documents or set forth on Exhibit 3.15(a) to the
Disclosure Schedule, PSCM 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
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or other plan, program or arrangement, or (c) any other employee benefit plan,
fund or program, including, but not limited to, those described in Section 3(3)
of ERISA. All such plans (individually, a "Plan" and collectively, the "Plans")
have been operated and administered in all material respects in accordance with,
as applicable, ERISA, the Internal Revenue Code of 1986, as amended, Title VII
of the Civil Rights Act of 1964, as amended, the Equal Pay Act of 1967, as
amended, the Age Discrimination in Employment Act of 1967, as amended, and the
related rules and regulations adopted by those federal agencies responsible for
the administration of such laws. No act or failure to act by PSCM 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. PSCM has not previously made, is not cur-
rently making, and is not obligated in any way to make, any contributions to any
multi-employer plan within the meaning of the Multi-Employer Pension Plan
Amendments Act of 1980.
(b) Except as described in the PSCM Documents or set forth on Exhibit
3.15(b) to the Disclosure Schedule, PSCM 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 $50,000, or (iii) agreement or plan,
including any stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan, any of the benefits of which will be
increased, or the vesting the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Plan of Merger or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Plan of Merger.
3.16 Compliance with Laws in General. Except as set forth on Exhibit
3.16 to the Disclosure Schedule or disclosed in the PSCM Documents, PSCM has not
received any notices of material violations of any federal, state and local
laws, regulations and ordinances relating to its business and operations,
including, without limitation, the Federal Environmental Protection Act, the
Occupational Safety and Health Act, the Americans with Disabilities Act, the
Medicare or applicable Medicaid statutes and regulations and any Environmental
Laws, and no notice of any pending inspection or violation of any
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such law, regulation or ordinance has been received by PSCM which, if it were
determined that a violation had occurred, would have a material effect on PSCM,
the PSCM Subsidiaries and the PSCM Other Entities, taken as a whole.
3.17 Licenses, Accreditation and Regulatory Approvals. PSCM and the
PSCM Subsidiaries and PSCM Other Entities hold all licenses, permits,
certificates of need and other regulatory approvals which are needed or required
by law with respect to their businesses, operations and facilities as they are
currently or presently conducted (collectively, the "Licenses"), except where
the failure to possess such Licenses does not have a material adverse effect on
PSCM, the PSCM Subsidiaries and the PSCM Other Entities, taken as a whole. All
such Licenses are in full force and effect, and PSCM is in compliance in all
material respects with all conditions and requirements of the Licenses and with
all rules and regulations relating thereto. PSCM, the PSCM Subsidiaries and the
PSCM Other Entities are, to the extent applicable to their operations, (i)
eligible to receive payment under Titles XVIII and XIX of the Social Security
Act, (ii) providers under existing provider agreements with the Medicare program
through the applicable intermediaries and (iii) in compliance with the
conditions of participation in the Medicare program except for such
noncompliance as does not have a material adverse effect on PSCM, the PSCM
Subsidiaries and the PSCM Other Entities in the aggregate. PSCM, the PSCM
Subsidiaries and the PSCM Other Entities have timely filed all requisite claims
and other reports required to be filed in connection with the Medicare, Medicaid
and other governmental health programs due on or before the date hereof, all of
which were, when filed, complete and correct in all material respects. There are
no current claims, actions or appeals pending, and neither PSCM nor the PSCM
Subsidiaries, nor the PSCM Other Entities have filed any claims or reports which
should result in such claims, actions or appeals, before any commission, board
or agency, including, without limitation, any intermediary or carrier, the
Provider Reimbursement Review Board or the Administrator of the Health Care
Financing Administration with respect to any Medicare claims, or any
disallowances in connection with any audit of claims, which could have a
material adverse effect on PSCM, the PSCM Subsidiaries and the PSCM Other
Entities taken as a whole. The amounts established as provisions for adjustments
by Medicare, Medicaid and other third-party payors on the financial statements
set forth in the last-filed PSCM Document are sufficient to pay any amounts for
which PSCM may be liable. To the knowledge of PSCM, neither PSCM nor the PSCM
Subsidiaries nor the PSCM Other Entities nor their respective employees have
committed a violation of the Medicare and Medicaid fraud and abuse provisions of
the Social Security Act. Except as disclosed in the PSCM Documents, any and all
past litigation concerning such licenses,
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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 PSCM
Documents, no action (equitable, legal or administrative), arbitration or other
process is pending, or to the knowledge of PSCM, threatened, which in any way
challenges the validly of, or seeks to revoke, condition or restrict any such
license, certificate of need, or regulatory approval. Subject to compliance with
applicable securities laws, the Hart Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and state or local statutes, rules or
regulations requiring notice, approval, or other action upon the occurrence of a
change in control of PSCM or any of the PSCM Subsidiaries, the consummation of
the Merger will not violate any law or regulation to which PSCM is subject
which, if violated, would have a material adverse effect on PSCM.
3.18 Retirement or Re-Acquisition of HEALTHSOUTH Common Stock. PSCM 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. PSCM is not a
party to any plan to dispose of a significant part of the assets of the
Surviving Corporation within two years after the Closing Date, other than
dispositions in the ordinary course of business of the Surviving Corporation and
dispositions intended to eliminate duplicate facilities or excess capacity.
3.20 Vote Required. The affirmative vote of the holders of a majority
of the outstanding shares of the PSCM Common Stock entitled to vote thereon is
the only vote of the holders of any class or series of PSCM capital stock
necessary to approve this Plan of Merger, the Merger and the transactions
contemplated hereby.
3.21 Opinion of Financial Advisor. PSCM has received the oral opinion
of Unterberg Harris to the effect that, as of the date of this Agreement, the
Merger Consideration is fair to the holders of PSCM Shares from a financial
point of view, a written copy of which opinion will be delivered by PSCM to
HEALTHSOUTH prior to the date on which the definitive proxy materials for the
Proxy Statement (as defined in Section 7.4(a)) are filed with the SEC.
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3.22 No Untrue Representations. No representation or warranty by PSCM
in this Plan of Merger, and no Exhibit or certificate issued by PSCM and
furnished or to be furnished to HEALTH- SOUTH pursuant hereto, or in connection
with the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact in response to the disclosure requested, or omits
or will omit to state a material fact necessary to make the statements or facts
contained therein in response to the disclosure requested not misleading in
light of all of the circumstances then prevailing.
Section 4. Representations and Warranties of the Subsidiary and HEALTHSOUTH.
The Subsidiary and HEALTHSOUTH, jointly and severally, hereby represent
and warrant to PSCM as follows:
4.1 Organization, Existence and Capital Stock. The Subsidiary is a
corporation duly organized and validly existing and is in good standing under
the laws of the State of Delaware. The Subsidiary's authorized capital consists
of 1,000 shares of Common Stock, par value $.01 per share, all of which shares
are issued and registered in the name of HEALTHSOUTH. The Subsidiary has not,
within the two years immediately preceding the date of this Plan of Merger,
owned, directly or indirectly, any shares of PSCM Common Stock.
4.2 Power and Authority. The Subsidiary has corporate power to execute,
deliver and perform the Plan of Merger and all agreements and other documents
executed and delivered, or to be executed and delivered, by it pursuant to the
Plan of Merger, and, subject to the satisfaction of the conditions precedent set
forth herein, has taken all actions required by law, its Certificate of
Incorporation, its Bylaws or otherwise, to authorize the execution and delivery
of the Plan of Merger and such related documents. The execution and delivery of
the Plan of Merger does not and, subject to the receipt of required stockholder
and regulatory approvals and any other required third-party consents or
approvals, the consummation of the Merger contemplated hereby will not, violate
any provisions of the Certificate of Incorporation or Bylaws of the Subsidiary,
or any agreement, instrument, order, judgment or decree to which the Subsidiary
is a party or by which it is bound, violate any restrictions of any kind to
which the Subsidiary is subject, or result in the creation of any lien, charge
or encumbrance upon any of the property or assets of the Subsidiary.
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4.3 No Subsidiaries. The Subsidiary does not own stock in, and does not
control directly or indirectly, any other corporation, association or business
organization. The Subsidiary is not a party to any joint venture or partnership.
4.4 Legal Proceedings. There are no actions, suits or proceedings
pending or threatened against the Subsidiary, at law or in equity, relating to
or affecting the Subsidiary, including the Merger. The Subsidiary does not know
or have any reasonable grounds to know of any justification for any such action,
suit or proceeding.
4.5 No Contracts or Liabilities. Other than the obligations created
under the Plan of Merger, the Subsidiary is not obligated under any contracts,
claims, leases, liabilities (contingent or otherwise), loans or otherwise.
Section 5. Representations and Warranties of HEALTHSOUTH.
HEALTHSOUTH hereby represents and warrants to PSCM 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 PSCM 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
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documents. The execution and delivery of the Plan of Merger does not and,
subject to the receipt of required stockholder and regulatory approvals and any
other required third-party consents or approvals, the consummation of the Merger
contemplated hereby will not, violate any provisions of the Certificate of
Incorporation or Bylaws of HEALTHSOUTH, or any provision of, or result in the
acceleration of any obligation under, any mortgage, lien, lease, agreement,
instrument, order, arbitration award, judgment or decree to which HEALTHSOUTH is
a party or by which it is bound, or violate any restrictions of any kind to
which HEALTHSOUTH is subject. The execution and delivery of this Agreement has
been approved by the Board of Directors of HEALTHSOUTH. This Agreement has been
duly executed and delivered by HEALTHSOUTH and the Subsidiary and, assuming this
Agreement constitutes a valid and binding obligation of PSCM, constitutes a
valid and binding obligation of HEALTHSOUTH and the Subsidiary, enforceable
against HEALTHSOUTH and the Subsidiary in accordance with its terms.
5.3 HEALTHSOUTH Common Stock. On the Closing Date, HEALTHSOUTH will
have a sufficient number of authorized but unissued and/or treasury shares of
its Common Stock available for issuance to the holders of PSCM Shares in
accordance with the provisions of the Plan of Merger. The HEALTHSOUTH Common
Stock to be issued pursuant to the Plan of Merger will, when so delivered, be
(i) duly and validly issued, fully paid and nonassessable, (ii) issued pursuant
to an effective registration statement under the Securities Act of 1933, as
amended, and (iii) authorized for listing on the New York Stock Exchange, Inc.
(the "Exchange") upon official notice of issuance.
5.4 Capitalization. HEALTHSOUTH's authorized capital stock consists of
1,500,000 shares of Preferred Stock, par value $.10 per share, of which no
shares are issued and outstanding, and no shares are held in treasury, and
250,000,000 shares of Common Stock, par value $.01 per share, of which
154,734,263 shares are issued and outstanding, and 93,000 shares are held in
treasury. All of the issued and outstanding shares of HEALTHSOUTH Common Stock
have been duly and validly issued and are fully paid and non-assessable. Except
as disclosed in the HEALTHSOUTH Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 (the "HEALTHSOUTH 10-K"), there are no options,
warrants, convertible debentures or similar rights granted by HEALTHSOUTH or any
other agreements to which HEALTHSOUTH is a party providing for the issuance or
sale by it of any additional securities, other than stock options granted in the
ordinary course since such date. There is no liability for dividends declared or
accumulated but unpaid with respect to any shares of HEALTHSOUTH Common Stock.
HEALTHSOUTH has not made any distributions to any holder of HEALTHSOUTH Common
Stock or
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participated in or effected any issuance, exchange or retirement of HEALTHSOUTH
Common Stock, or otherwise changed the equity interests of holders of
HEALTHSOUTH Common Stock, in contemplation of effecting the Merger within the
two years immediately preceding the date of this Plan of Merger. Any shares of
HEALTHSOUTH Common Stock that HEALTHSOUTH has re-acquired during the two years
immediately preceding the date of this Plan of Merger have been so re-acquired
only for purposes other than Business Combinations.
5.5 Subsidiary Common Stock. HEALTHSOUTH owns, beneficially and of
record, all of the issued and outstanding shares of Subsidiary Common Stock,
which are validly issued and outstanding, fully paid and nonassessable, free and
clear of all liens and encumbrances. HEALTHSOUTH has the corporate power to
endorse and surrender such Subsidiary Shares for cancellation pursuant to the
Plan of Merger. HEALTHSOUTH has taken all such actions as may be required in its
capacity as the sole stockholder of the Subsidiary to approve the Merger.
5.6 HEALTHSOUTH Documents. HEALTHSOUTH has heretofore furnished PSCM
with a true and complete copy of each report, schedule, registration statement
and definitive proxy statement filed by it with the SEC (as any such documents
have since the time of their original filing been amended, the "HEALTHSOUTH
Documents") since January 1, 1995, which are all the documents (other than
preliminary material) that it was required to file with the SEC since such date.
As of their respective dates, the HEALTHSOUTH Documents did not contain any
untrue statements of material facts or omit to state material facts required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their respective
dates, the HEALTHSOUTH Documents complied in all material respects with the
applicable requirements of the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated under such statutes. The financial statements contained in the
HEALTHSOUTH Documents, together with the notes thereto, have been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods indicated (except as may be indicated in the notes
thereto, or, in the case of the unaudited financial statements, as permitted by
Form 10-Q), reflect all known liabilities of HEALTHSOUTH required to be stated
therein, including all known contingent liabilities as of the end of each period
reflected therein, and present fairly the financial condition of HEALTHSOUTH at
said dates and the consolidated results of operations and cash flows of
HEALTHSOUTH for the periods then ended.
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5.7 Investment Intent. HEALTHSOUTH is acquiring the shares of PSCM
Common Stock hereunder for its own account and not with a view to the
distribution or sale thereof, and HEALTHSOUTH has no understanding, agreement or
arrangement to sell, distribute, partition or otherwise transfer or assign all
or any part of the shares of PSCM Common Stock to any other person, firm or
corporation.
5.8 Legal Proceedings. Except as disclosed in the HEALTHSOUTH 10-K,
there is no material litigation, governmental investigation or other proceeding
pending or, so far as is known to HEALTHSOUTH, threatened against or relating to
HEALTHSOUTH, its properties or business, or the transaction contemplated by the
Plan of Merger and, so far as is known to HEALTHSOUTH, no basis for any such
action exists.
5.9 No Violations. Subject to compliance with applicable securities
laws and the HSR Act, the consummation of the Merger will not violate any law or
restriction to which HEALTHSOUTH is subject.
5.10 Subsequent Events. Except as disclosed in the
HEALTHSOUTHlast-filed HEALTHSOUTH Document, HEALTHSOUTH has not, since the date
of the last-filed HEALTHSOUTH Document:
(a) Incurred any material adverse change.
(b) Discharged or satisfied any material lien or encumbrance,
or paid or satisfied any material obligation or liability (absolute,
accrued, contingent or otherwise) other than (i) liabilities shown or
reflected on the March 31, 1996 Balance Sheet contained in the
HEALTHSOUTH Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996 (the "HEALTHSOUTH 10-Q") or (ii) liabilities incurred
since the date of the HEALTHSOUTH 10-Q in the ordinary course of
business, which discharge or satisfaction would have a material adverse
effect on HEALTHSOUTH.
(c) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor which would
have a material adverse effect on
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HEALTHSOUTH, except as may have been required due to income or
operations of HEALTHSOUTH since March 31, 1996.
(d) Mortgaged, pledged or subjected to any lien, charge or
other encumbrance any of the assets, tangible or intangible, which
assets are material to the consolidated business or financial condition
of HEALTHSOUTH.
(e) Sold or transferred any of the assets material to the
consolidated business of HEALTHSOUTH, cancelled any material debts or
claims or waived any material rights, except in the ordinary course of
business.
(f) Granted any general or uniform increase in the rates of
pay of employees or any material increase in salary payable or to
become payable by HEALTHSOUTH to any officer or employee, consultant or
agent (other than normal merit increases), or by means of any bonus or
pension plan, contract or other commitment, increased in a material
respect the compensation of any officer, employee, consultant or agent.
(g) Except for this Plan of Merger and any other agreement
executed and delivered pursuant to this Plan of Merger, entered into
any material transaction other than in the ordinary course of business
or permitted under other Sections hereof.
(h) Issued any stock, bonds or other securities, other than
stock options granted to employees or consultants of HEALTHSOUTH or
warrants granted to third parties, all of which are described in the
HEALTHSOUTH Documents.
5.11 Retirement or Re-Acquisition of HEALTHSOUTH Common Stock.
HEALTHSOUTH has not agreed directly or indirectly to retire or re-acquire all or
part of the shares of HEALTHSOUTH Common Stock issued pursuant to Section 2.1
hereof.
5.12 Disposition of Assets of Surviving Corporation. HEALTHSOUTH does
not intend or plan to dispose of, or to cause the Surviving Corporation to
dispose of, a significant part of the assets of the Surviving Corporation within
two years after the Effective Time, other than dispositions in the
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ordinary course of business of the Surviving Corporation and dispositions
intended to eliminate duplicate facilities or excess capacity.
5.13 No Untrue Representation. No representation or warranty by
HEALTHSOUTH in this Plan of Merger, and no Exhibit or certificate issued by
HEALTHSOUTH and furnished or to be furnished to PSCM pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact in response to the disclosure requested,
or omits or will omit to state a material fact necessary to make the statement
or facts contained therein in response to the disclosure requested not
misleading in light of all of the circumstances then prevailing.
Section 6. Access to Information and Documents.
6.1 Access to Information. Between the date hereof and the Closing
Date, each of PSCM and HEALTHSOUTH will give to the other party and its counsel,
accountants and other representatives full access to all the properties,
documents, contracts, personnel files and other records of such party and shall
furnish the other party with copies of such documents and with such information
with respect to the affairs of such party as the other party may from time to
time reasonably request. Each party will disclose and make available to the
other party and its representatives all books, contracts, accounts, personnel
records, letters of intent, papers, records, communications with regulatory
authorities and other documents relating to the business and operations of such
party. In addition, PSCM shall make available to HEALTHSOUTH all such banking,
investment and financial information as shall be necessary to allow for the
efficient integration of PSCM's banking, investment and financial arrangements
with those of HEALTHSOUTH at the Effective Time.
6.2 Return of Records. If the transactions contemplated hereby are not
consummated and this Plan of Merger terminates, each party agrees to promptly
return all documents, contracts, records or properties of the other party and
all copies thereof furnished pursuant to this Section 6 or otherwise. All
information disclosed by any party or any affiliate or representative of any
party shall be deemed to be "Confidential Information" under the terms of the
Confidentiality Agreement dated May 10, 1995, between PSCM and HEALTHSOUTH, as
amended (the "Confidentiality Agreement").
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6.3 Effect of Access. (a) Nothing contained in this Section 6 shall be
deemed to create any duty or responsibility on the part of either party to
investigate or evaluate the value, validity or enforceability of any contract,
lease or other asset included in the assets of the other party.
(b) With respect to matters as to which any party has made express
representations or warranties herein, the parties shall be entitled to rely upon
such express representations and warranties irrespective of any investigations
made by such parties, except to the extent that such investigations result in
actual knowledge of the inaccuracy or falsehood of particular representations
and warranties.
Section 7. Covenants.
7.1 Preservation of Business. PSCM will use its best efforts to
preserve the business organization of PSCM intact, to keep available to
HEALTHSOUTH and the Surviving Corporation the services of the present employees
of PSCM, and to preserve for HEALTHSOUTH and the Surviving Corporation the
goodwill of the suppliers, customers and others having business relations with
PSCM.
7.2 Material Transactions. Prior to the Effective Time, PSCM will not
(other than as required pursuant to the terms of the Plan of Merger and the
related documents, and other than with respect to transactions for which binding
commitments have been entered into prior to the date hereof which are described
on Exhibit 7.2 to the Disclosure Schedule), without first obtaining the written
consent of HEALTHSOUTH:
(a) Encumber any asset or enter into any transaction or make
any contract or commitment relating to the properties, assets and
business of PSCM, 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 PSCM
except as provided herein.
(c) Enter into any contract or agreement (i) which cannot be
performed within three months or less, or (ii) which involves the
expenditure of over $50,000.
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(d) Issue or sell, or agree to issue or sell, any shares of
capital stock or other securities of PSCM, except upon exercise of
currently outstanding stock options or warrants.
(e) Make any payment or distribution to the trustee under any
bonus, pension, profit-sharing or retirement plan or incur any
obligation to make any such payment or contribution which is not in
accordance with PSCM'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, except for the
payment of bonuses consistent with usual and customary practices of
PSCM, not to exceed $125,000 in the aggregate.
(f) Extend credit to anyone, except in the ordinary course of
business consistent with prior practices.
(g) Guarantee the obligation of any person, firm or
corporation, except in the ordinary course of business consistent with
prior practices.
(h) Amend its Certificate of Incorporation or Bylaws.
(i) Take any action of a character described in Section
3.11(a) to 3.11(h), inclusive.
7.3 Meeting of PSCM Stockholders. (a) PSCM will take all steps
necessary in accordance with their respective Certificates of Incorporation and
Bylaws to call, give notice of, convene and hold a meeting of its stockholders
(the "Special Meeting") as soon as practicable after the effectiveness of the
Registration Statement (as defined in Section 7.4 hereof), for the purpose of
approving this Plan of Merger and for such other purposes as may be necessary.
Unless this Plan of Merger shall have been validly terminated as provided
herein, the Board of Directors of PSCM (subject to the provisions of Section
8.1(d) hereof) will (i) recommend to PSCM's stockholders the approval of this
Plan of Merger,
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the transactions contemplated hereby and any other matters to be submitted to
the stockholders in connection therewith, to the extent that such approval is
required by applicable law in order to consummate the Merger, and (ii) use
reasonable, good faith efforts to obtain the approval by PSCM's stockholders of
this Plan of Merger and the transactions contemplated hereby.
(b) Nothing contained herein shall affect the right of PSCM to take
action by written consent in lieu of meeting to the extent permitted by
applicable law and its Certificate of Incorporation and Bylaws.
7.4 Registration Statement. (a) HEALTHSOUTH shall prepare and file with
the Securities and Exchange Commission and any other applicable regulatory
bodies, as soon as reasonably practicable, a Registration Statement on Form S-4
with respect to the shares of HEALTHSOUTH Common Stock to be issued in the
Merger (the "Registration Statement"), and will otherwise proceed promptly to
satisfy the requirements of the Securities Act of 1933, including Rule 145
thereunder. Such Registration Statement shall contain a proxy statement of PSCM
containing the information required by the Securities Exchange Act of 1934 (the
"Proxy Statement"). HEALTHSOUTH shall take all reasonable steps to cause the
Registration Statement to be declared effective and to maintain such
effectiveness until all of the shares covered thereby have been distributed.
HEALTHSOUTH shall promptly amend or supplement the Registration Statement to the
extent necessary in order to make the statements therein not misleading or to
correct any misstatements which have become false or misleading. HEALTHSOUTH
shall use its reasonable, good faith efforts to have the Proxy Statement
approved by the SEC under the provisions of the Securities Exchange Act of 1934.
HEALTHSOUTH shall provide PSCM with copies of all filings made pursuant to this
Section 7.4 and shall consult with PSCM on responses to any comments made by the
Staff of the SEC with respect thereto.
(b) The information specifically designated as being supplied by PSCM
for inclusion in the Registration Statement shall not, at the time the
Registration Statement is declared effective, at the time the Proxy Statement is
first mailed to holders of PSCM Common Stock, at the time of the Special Meeting
and at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading. The information
specifically designated as being supplied by PSCM for inclusion in the Proxy
Statement shall not, at the date the Proxy Statement (or any amendment thereof
or supplement
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<PAGE>
thereto) is first mailed to holders of PSCM Common Stock, at the time of the
Special Meeting and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. If at any time prior to
the Effective Time any event or circumstance relating to PSCM, or its officers
or directors, should be discovered by PSCM which should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy Statement,
PSCM shall promptly inform HEALTHSOUTH. All documents, if any, that PSCM is
responsible for filing with the SEC in connection with the transactions
contemplated herein will comply as to form and substance in all material
respects with the applicable requirements of the Securities Act and the rules
and regulations thereunder and the Exchange Act and the rules and regulations
thereunder.
(c) The information specifically designated as being supplied by
HEALTHSOUTH for inclusion in the Registration Statement shall not, at the time
the Registration Statement is declared effective, at the time the Proxy
Statement is first mailed to holders of PSCM Common Stock, at the time of the
Special Meeting and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. The
information specifically designated as being supplied by HEALTHSOUTH for
inclusion in the Proxy Statement to be sent to the holders of PSCM Common Stock
in connection with the Special Meeting shall not, at the date the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
holders of PSCM Common Stock, at the time of the Special Meeting or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading. If at any time prior to the Effective Time any event or
circumstance relating to HEALTHSOUTH or its officers or directors, should be
discovered by HEALTHSOUTH which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement, HEALTHSOUTH shall
promptly inform PSCM 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.
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(d) Prior to the Closing Date, HEALTHSOUTH shall use its reasonable,
good faith efforts to cause the shares of HEALTHSOUTH Common Stock to be issued
pursuant to the Merger to be registered or qualified under all applicable
securities or Blue Sky laws of each of the states and territories of the United
States, and to take any other actions which may be necessary to enable the
Common Stock to be issued pursuant to the Merger to be distributed in each such
jurisdiction.
(e) Prior to the Closing Date, HEALTHSOUTH shall file an additional
listing application (the "Listing Application") with the Exchange relating to
the shares of HEALTHSOUTH Common Stock to be issued in connection with the
Merger, and shall use its reasonable, good faith efforts to cause such shares of
HEALTHSOUTH Common Stock to be approved for listing on the Exchange, upon
official notice of issuance, prior to the Closing Date.
(f) PSCM shall furnish all information to HEALTHSOUTH with respect to
PSCM and the PSCM Subsidiaries and PSCM Other Entities as HEALTHSOUTH may
reasonably request for inclusion in the Registration Statement, the Proxy
Statement and the Listing Application, and shall otherwise cooperate with
HEALTHSOUTH in the preparation and filing of such documents.
7.5 Exemption from State Takeover Laws. PSCM shall take all reasonable
steps necessary to exempt the Merger from the requirements of any state takeover
statute or other similar state law which would prevent or impede the
consummation of the transactions contemplated hereby, by action of PSCM's Board
of Directors or otherwise.
7.6 HSR Act Compliance. HEALTHSOUTH and PSCM 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
PSCM will use their respective reasonable, good faith efforts to obtain all
other permits, authorizations, consents and approvals from third parties and
governmental authorities necessary to consummate the Merger and the transactions
contemplated hereby.
7.7 Public Disclosures. HEALTHSOUTH and PSCM 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
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statement prior to such consultation except as may be required by applicable law
or requirements of the Exchange. The parties shall issue a joint press release,
mutually acceptable to HEALTHSOUTH and PSCM, promptly upon execution and
delivery of this Plan of Merger.
7.8 Resignation of PSCM Directors. On or prior to the Closing Date,
PSCM shall deliver to HEALTHSOUTH evidence satisfactory to HEALTHSOUTH of the
resignation of the Directors of PSCM, such resignations to be effective on the
Closing Date.
7.9 Notice of Subsequent Events. Each party hereto shall notify the
other parties of any changes, additions or events which would cause any material
change in or material addition to any Exhibit to the Disclosure Schedule
delivered by the notifying party under this Plan of Merger, promptly after the
occurrence of the same. If the effect of such change or addition would,
individually or in the aggregate with the effect of changes or additions
previously disclosed pursuant to this Section 7.9, constitute a material adverse
effect on the notifying party, the non-notifying party may, within ten days
after receipt of such notice, elect to terminate this Plan of Merger. If the
non-notifying party does not give written notice of such termination within such
10-day period, the non-notifying party shall be deemed to have consented to such
change or addition and shall not be entitled to terminate this Plan of Merger by
reason thereof.
7.10 No Solicitations. PSCM 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 PSCM upon a
merger, purchase of assets, purchase of or tender offer for shares of PSCM
Common Stock or similar transaction (an "Acquisition Transaction"), if the Board
of Directors of PSCM determines in its good faith judgment in the exercise of
its fiduciary duties or the exercise of its duties under Rule 14e-2 under the
Exchange Act, after consultation with legal counsel and its financial advisors,
that such action is appropriate in furtherance of the best interest of its
stockholders. Except as set forth above, PSCM shall not, and will direct each
officer, director, employee, representative and agent of PSCM 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
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<PAGE>
HEALTHSOUTH) concerning any merger, sale of assets, sale of or tender offer for
shares of PSCM Common Stock or similar transactions involving PSCM. PSCM shall
promptly notify HEALTHSOUTH if it shall, on or after the date hereof, have
entered into a confidentiality agreement with any third party in response to any
unsolicited request for information and access in connection with a possible
Acquisition Transaction involving such party, such notification to include the
identity of such third party.
7.11 Other Actions. Subject to the provisions of Section 7.10 hereof,
none of PSCM, HEALTHSOUTH and the Subsidiary shall knowingly or intentionally
take any action, or omit to take any action, if such action or omission would,
or reasonably might be expected to, result in any of its representations and
warranties set forth herein being or becoming untrue in any material respect, or
in any of the conditions to the Merger set forth in this Plan of Merger not
being satisfied, or (unless such action is required by applicable law) which
would materially adversely affect the ability of PSCM or HEALTHSOUTH to obtain
any consents or approvals required for the consummation of the Merger without
imposition of a condition or restriction which would have a material adverse
effect on the Surviving Corporation or which would otherwise materially impair
the ability of PSCM or HEALTHSOUTH to consummate the Merger in accordance with
the terms of this Plan of Merger or materially delay such consummation.
7.12 Accounting Methods. Neither HEALTHSOUTH nor PSCM shall change, in
any material respect, its methods of accounting in effect at its most recent
fiscal year end, except as required by changes in generally accepted accounting
principles as concurred in such parties' independent accountants.
7.13 Pooling and Tax-Free Reorganization Treatment. Neither HEALTHSOUTH
nor PSCM shall intentionally take or cause to be taken any action, whether on or
before the Effective Time, which would disqualify the Merger as a "pooling of
interests" for accounting purposes or as a "reorganization" within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended.
7.14 Affiliate and Pooling Agreements. PSCM will use its reasonable,
good faith efforts to cause each of its Directors and executive officers and
each of its "affiliates" (within the meaning of Rule 145 under the Securities
Act of 1933, as amended) to execute and deliver to HEALTHSOUTH as soon as
practicable an agreement in the form attached hereto as Exhibit 7.14 relating to
the disposition of
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shares of PSCM Common Stock and shares of HEALTHSOUTH Common Stock held by such
person and the shares of HEALTHSOUTH Common Stock issuable pursuant to this Plan
of Merger.
7.15 Cooperation. (a) HEALTHSOUTH and PSCM shall together, or pursuant
to an allocation of responsibility agreed to between them, (i) cooperate with
one another in determining whether any filings required to be made or consents
required to be obtained in any jurisdiction prior to the Effective Time in
connection with the consummation of the transactions contemplated hereby and
cooperate in making any such filings promptly and in seeking to obtain timely
any such consents, (ii) use their respective best efforts to cause to be lifted
any injunction prohibiting the Merger, or any part thereof, or the other
transactions contemplated hereby, and (iii) furnish to one another and to one
another's counsel all such information as may be required to effect the
foregoing actions.
(b) Subject to the terms and conditions herein provided, and unless
this Plan of Merger shall have been validly terminated as provided herein, each
of HEALTHSOUTH and PSCM 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 PSCM's stockholders
described above, and (ii) to obtain (and to cooperate with the other party to
obtain) any consent, authorization, order or approval of, or any exemption by,
any governmental entity and/or any other public or private third party which is
required to be obtained or made by such party or any of its subsidiaries or
affiliates in connection with this Plan of Merger and the transactions
contemplated hereby Each of HEALTHSOUTH and PSCM will promptly cooperate with
and furnish information to the other in connection with any such burden suffered
by, or requirement imposed upon, either of them or any of their subsidiaries or
affiliates in connection with the foregoing.
7.16 PSCM Stock Options and Warrants. (a) As soon as reasonably
practicable after the Effective Time of the Merger, HEALTHSOUTH shall deliver to
the holders of PSCM stock options and warrants appropriate notices setting forth
such holders' rights pursuant to any stock option plans under which such PSCM
stock options were issued and any stock option agreements or warrant agreements
evidencing such options or warrants, which shall continue in full force and
effect on the same terms and conditions (subject to the adjustments required by
Sections 2.1(d) or this Section 7.16 after giving effect to the Merger and the
assumption of such options and warrants by HEALTHSOUTH as set forth herein)
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as in effect immediately prior to the Effective Time. HEALTHSOUTH shall comply
with the terms of the stock option plans, the stock option agreements and the
warrant agreements as so adjusted, and shall use its reasonable, good faith
efforts to ensure, to the extent required by, and subject to the provisions of,
such plans or agreements, that the PSCM stock options which qualified as
incentive stock options prior to the Effective Time shall continue to qualify as
incentive stock options after the Effective Time.
(b) HEALTHSOUTH shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of HEALTHSOUTH Common Stock for
delivery upon exercise of the PSCM stock options and warrants assumed by
HEALTHSOUTH in accordance with Section 2.1(d). 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 PSCM
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 PSCM stock options remain outstanding. HEALTHSOUTH shall
administer the plans assumed pursuant to Section 2.1(d) hereof in a manner that
complies with Rule 16b-3 promulgated under the Exchange Act to the extent the
applicable plan complied with such rule prior to the Merger.
(c) Except to the extent otherwise agreed to by the parties, all
restrictions or limitations on transfer and vesting with respect to the PSCM
stock options awarded under any plan, program, or arrangement of PSCM or any of
its subsidiaries, to the extent that such restrictions or limitations shall not
have already lapsed, shall remain in full force and effect with respect to such
options after giving effect to the Merger and the assumption by HEALTHSOUTH as
set forth above.
7.17 Publication of Combined Results. HEALTHSOUTH agrees that within 20
days after the end of the first calendar month following at least 30 days after
the Effective Time, HEALTHSOUTH shall cause publication of the combined results
of operations of HEALTHSOUTH and PSCM. For purposes of this Section 7.17, the
term "publication" shall have the meaning provided in SEC Accounting Series
Release No. 135.
7.18 PSCM Employees. HEALTHSOUTH shall retain all employees of PSCM who
are employed at the Effective Time as employees-at-will (except to the extent
that such employees are parties
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to contracts providing for other employment terms, in which case such employees
shall be retained in accordance with the terms of such contracts) and shall
provide such employees with the same customary employee benefits as HEALTHSOUTH
provides its existing employees.
7.19 Consulting and Non-Competition Agreements. At the Closing Date,
HEALTHSOUTH shall enter into Consulting and Non-Competition Agreements with each
of Russell F. Warren, Jr. and Patrick J. Wack, Jr., in form and substance
satisfactory to the parties thereto.
7.20 Certain Information. For as long as any affiliate (as defined for
purposes of Rule 145 under the Securities Act of 1933) of PSCM holds shares of
HEALTHSOUTH Common Stock issued in the Merger (but not for a period in excess of
two years from the date of consummation of the Merger), HEALTHSOUTH shall file
with the Securities and Exchange Commission or otherwise make publicly available
all information about HEALTHSOUTH required pursuant to Rule 144(c) under the
Securities Act of 1933 to enable such affiliate to resell such shares under the
provisions of Rule 145(d) under the Securities Act of 1933.
Section 8. Termination, Amendment and Waiver.
8.1 Termination. This Plan of Merger may be terminated at any time
prior to the Effective Time, whether before or after approval of matters
presented in connection with the Merger by the holders of shares of PSCM Common
Stock:
(a) by mutual written consent of HEALTHSOUTH and PSCM;
(b) by either HEALTHSOUTH or PSCM:
(i) if, upon a vote at a duly held meeting of stockholders
or any adjournment thereof, any required approval of the holders
of shares of PSCM Common Stock shall not have been obtained;
(ii) if the Merger shall not have been consummated on or
before September 30, 1996, unless the failure to consummate the
Merger is the
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result of a willful and material breach of this Plan of Merger by
the party seeking to terminate this Plan of Merger; provided,
however, that the passage of such period shall be tolled for any
part thereof (but not exceeding 60 days in the aggregate) during
which any party shall be subject to a nonfinal order, decree,
ruling or action restraining, enjoining or otherwise prohibiting
the consummation of the Merger or the calling or holding of a
meeting of stockholders;
(iii) if any court of competent jurisdiction or other
governmental entity shall have issued an order, decree or ruling
or taken any other action permanently enjoining, restraining or
otherwise prohibited the Merger and such order, decree, ruling or
other action shall have become final and nonappealable;
(iv) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in
this Plan of Merger which (A) would give rise to the failure of a
condition set forth in Section 9.2(a) or (b) or Section 9.3(a) or
(b), as applicable, and (B) cannot be or has not been cured within
30 days after the giving of written notice to the breaching party
of such breach (a "Material Breach") (provided that the
terminating party is not then in Material Breach of any
representation, warranty, covenant or other agreement contained in
this Plan of Merger); or
(v) if either HEALTHSOUTH or PSCM gives notice of
termination as a non-notifying party pursuant to Section 7.9;
c) By either HEALTHSOUTH or PSCM 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
PSCM) is not capable of being satisfied prior to the end of the period
referred to in Section 8.1(b)(ii);
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(d) By PSCM, if PSCM'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 PSCM Common Stock or
shall have withdrawn such recommendation or (ii) approved, recommended
or endorsed any Acquisition Transaction (as defined in Section 7.10)
other than this Plan of Merger or (iii) resolved to do any of the
foregoing;
(e) By either HEALTHSOUTH or PSCM, if the condition set forth
in Section 9.1(g)(i) is not satisfied by May 31, 1996; or
(f) Subject to the provisions of Section 8.7 below, by PSCM,
if the Base Period Trading Price shall be less than $31.00.
8.2 Effect of Termination. In the event of termination of this Plan of
Merger as provided in Section 8.1, this Plan of Merger shall forthwith become
void and have no effect, without any liability or obligation on the part of any
party, other than the provisions of Sections 6.2, 8.2 and 8.6, and except to the
extent that such termination results from the willful and material breach by a
party of any of its representations, warranties, covenants or other agreements
set forth in this Plan of Merger.
8.3 Amendment. This Plan of Merger may be amended by the parties at any
time before or after any required approval of matters presented in connection
with the Merger by the holders of PSCM Shares; provided, however, that after any
such approval, there shall be made no amendment that pursuant to Section 251(d)
of the DGCL requires further approval by such stockholders without the further
approval of such stockholders. This Plan of Merger may not be amended except by
an instrument in writing signed on behalf of each of the parties.
8.4 Extension; Waiver. At any time prior to the Effective Time of the
Merger, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Plan of Merger or in any
document delivered pursuant to this Plan of Merger or (c) subject to the proviso
of Section 8.3, waive compliance with any of the agreements or conditions
contained in this Plan of Merger. Any agreement on the part of a party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this Plan of
Merger to
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assert any of its rights under this Plan of Merger or otherwise shall not
constitute a waiver of such rights, except as otherwise provided in Section 7.9.
8.5 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Plan of Merger pursuant to Section 8.1, an amendment of this
Plan of Merger pursuant to Section 8.3, or an extension or waiver pursuant to
Section 8.4 shall, in order to be effective, require in the case of HEALTHSOUTH,
the Subsidiary or PSCM, 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 PSCM and HEALTHSOUTH.
(b) (i) If this Plan of Merger is terminated by PSCM pursuant to
Section 8.1(d), and within one year after the effective date of such termination
PSCM is the subject of a Third Party Acquisition Event with any Person (as
defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act) (other than a
party hereto), then at the time of consummation of such a Third Party
Acquisition Event, PSCM shall pay to HEALTHSOUTH a break-up fee of 5% of the
aggregate Merger Consideration (determined as it would have been calculated on
the effective date of termination of this Plan of Merger, substituting the
effective date of such termination for the date of the Special Meeting in
calculating the Base Period Trading Price) in immediately available funds, which
fee represents the parties' best estimates of the out- of-pocket costs incurred
by HEALTHSOUTH and the value of management time, overhead, opportunity costs and
other unallocated costs of HEALTHSOUTH incurred by or on behalf of HEALTHSOUTH
in connection with this Plan of Merger. PSCM 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.
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(ii) As used herein, the term "Third Party Acquisition Event"
shall mean either of the following:
(A) PSCM shall consummate any Acquisition Transaction (as
defined in Section 7.10); or
(B) any Person (other than a party hereto or its affiliates)
shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 under the Exchange Act) or the right to acquire beneficial
ownership of, or a new group has been formed which beneficially owns or
has the right to acquire beneficial ownership of, 30% or more of the
outstanding PSCM Common Stock.
(c) PSCM acknowledges that the provisions for the payment of break-up
fees and allocation of expenses contained in this Section 8.6 are an integral
part of the transactions contemplated by this Plan of Merger and that, without
these provisions, HEALTHSOUTH would not have entered into this Plan of Merger.
Accordingly, if a break-up fee shall become due and payable by PSCM, and PSCM
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
PSCM therefor, PSCM shall pay HEALTHSOUTH reasonable costs and expenses
(including reasonable attorneys' fees) in connection with such suit, together
with interest computed on any amounts determined to be due pursuant to this
Section (computed from the date upon which such amounts were due and payable
pursuant to this Section) and such costs (computed from the date incurred) at
the prime rate of interest announced from time to time by NationsBank, N.A.
(Carolinas). The obligations of PSCM under this Section 8.6 shall survive any
termination of this Plan of Merger.
8.7 Certain Rights of HEALTHSOUTH. If PSCM proposes to terminate this
Plan of Merger pursuant to Section 8.1(f) hereof, PSCM shall first notify
HEALTHSOUTH in writing of its intent to so terminate this Plan of Merger.
HEALTHSOUTH shall then have not less than 48 hours (the exact deadline to be set
by PSCM) from the time of receipt of written notice by PSCM to submit a final
and best offer (a "Final Offer") for a change in the Merger Consideration. If
such Final Offer is accepted by PSCM (as determined by PSCM's Board of Directors
after consulting with its legal counsel and financial advisors), PSCM, the
Subsidiary and HEALTHSOUTH shall amend this Plan of Merger to
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reflect such Final Offer and shall make any appropriate amendments to the
Registration Statement and the Proxy Statement.
Section 9. Conditions to Closing.
9.1 Mutual Conditions. The respective obligations of each party to
effect the Merger shall be subject to the satisfaction, at or prior to the
Closing Date of the following conditions (any of which may be waived in writing
by HEALTHSOUTH and PSCM):
(a) None of HEALTHSOUTH, the Subsidiary or PSCM nor any of
their respective subsidiaries shall be subject to any order, decree or
injunction by a court of competent jurisdiction which (i) prevents or
materially delays the consummation of the Merger or (ii) would impose
any material limitation on the ability of HEALTHSOUTH effectively to
exercise full rights of ownership of the Common Stock of the Surviving
Corporation or any material portion of the assets or business of PSCM,
the PSCM Subsidiaries and the PSCM Partnerships, taken as a whole.
(b) No statute, rule or regulation shall have been enacted by
the government (or any governmental agency) of the United States or any
state, municipality or other political subdivision thereof that makes
the consummation of the Merger and any other transaction contemplated
hereby illegal.
(c) Any waiting period (and any extension thereof) applicable
to the consummation of the Merger under the HSR Act shall have expired
or been terminated.
(d) The Registration Statement shall have been declared
effective and no stop order with respect to the Registration Statement
shall be in effect.
(e) The holders of PSCM Shares shall have approved the
adoption of this Plan of Merger and any other matters submitted to them
in accordance with the provisions of Section 7.3 hereof.
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(f) The shares of HEALTHSOUTH Common Stock to be issued in
connection with the Merger shall have been approved for listing on the
Exchange and shall have been issued pursuant to an effective
registration statement (which is subject to no stop order).
(g) The Merger shall qualify for "pooling of interests"
accounting treatment, and HEALTHSOUTH and PSCM shall each have received
letters to that effect from Ernst & Young, LLP, independent accountants
for HEALTHSOUTH, dated (i) not later than May 31, 1996, (ii) the date
of the mailing of the Proxy Statement and (iii) the Closing Date.
(h) HEALTHSOUTH and the Subsidiary shall have obtained, or
obtained the transfer of, any licenses, certificates of need and other
regulatory approvals necessary to allow the Surviving Corporation to
operate the PSCM facilities, unless the failure to obtain such transfer
or approval would not have a material adverse effect on the Surviving
Corporation.
(i) HEALTHSOUTH and the Subsidiary shall have received all
consents, approvals and authorizations of third parties with respect to
all material leases and management agreements to which the PSCM
Subsidiaries and the PSCM Other Entities are parties, which consents,
approvals and authorizations are required of such third parties by such
documents, in form and substance acceptable to HEALTHSOUTH, except
where the failure to obtain such consent, approval or authorization
would not have a material effect on the business of the Surviving
Corporation.
9.2 Conditions to Obligations of HEALTHSOUTH and the Subsidiary. The
obligations of HEALTHSOUTH and the Subsidiary to consummate the Merger and the
other transactions contemplated hereby shall be subject to the satisfaction, at
or prior to the Closing Date, of the following conditions (any of which may be
waived by HEALTHSOUTH and the Subsidiary):
(a) Each of the agreements of PSCM to be performed at or prior
to the Closing Date pursuant to the terms hereof shall have been duly
performed in all material
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respects, and PSCM 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 PSCM set forth in
Section 3.11(a) shall be true and correct as of the date of this Plan
of Merger and as of the Closing Date. The representations and
warranties of PSCM set forth in this Plan of Merger that are qualified
as to materiality shall be true and correct, and those that are not so
qualified shall be true and correct in all material respects, as of the
date of this Plan of Merger and as of the Closing as though made at and
as of such time, except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties that are qualified as to materiality
shall be true and correct, and those that are not so qualified shall be
true and correct in all material respects, as of such earlier date);
provided, however, that PSCM shall not be deemed to be in breach of any
such representations or warranties by taking any action permitted (or
approved by HEALTHSOUTH) under Section 7.2. HEALTHSOUTH and the
Subsidiary shall have been furnished with a certificate, executed by a
duly authorized officer of PSCM, dated the Closing Date, certifying in
such detail as HEALTHSOUTH and the Subsidiary may reasonably request as
to the fulfillment of the foregoing conditions.
(c) HEALTHSOUTH shall have received an opinion from Haskell
Slaughter & Young, L.L.C., to the effect that the merger will
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended, which opinion may be based
upon reasonable representations of fact provided by officers of
HEALTHSOUTH, PSCM and the Subsidiary.
(d) HEALTHSOUTH shall have received an opinion from Cahill
Gordon & Reindel substantially to the effect set forth in Exhibit
9.2(d) hereto.
9.3 Conditions to Obligations of PSCM. The obligations of PSCM 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 PSCM):
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(a) Each of the agreements of HEALTHSOUTH and the Subsidiary
to be performed at or prior to the Closing Date pursuant to the terms
hereof shall have been duly performed, in all material respects, and
HEALTHSOUTH and the Subsidiary shall have performed, in all material
respects, all of the acts required to be performed by them at or prior
to the Closing Date by the terms hereof.
(b) The representations and warranties of HEALTHSOUTH set
forth in Section 5.10(a) shall be true and correct as of the date of
this Plan of Merger and as of the Closing Date. The representations and
warranties of HEALTHSOUTH set forth in this Plan of Merger that are
qualified as to materiality shall be true and correct, and those that
are not so qualified shall be true and correct in all material
respects, as of the date of this Plan of Merger and as of the Closing
as though made at and as of such time, except to the extent such
representations and warranties expressly relate to an earlier date (in
which case such representations and warranties that are qualified as to
materiality shall be true and correct, and those that are not so
qualified shall be true and correct in all material respects, as of
such earlier date). PSCM 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 PSCM may
reasonably request as to the fulfillment of the foregoing conditions.
(c) PSCM shall have received an opinion from Cahill Gordon &
Reindel to the effect that the Merger will constitute a reorganization
with the meaning of Section 368(a) of the Internal Revenue Code of
1986, as amended, which opinion may be based upon reasonable
representations of fact provided by officers of HEALTHSOUTH, PSCM and
the Subsidiary.
(d) PSCM shall have received an opinion from Haskell
Slaughter & Young, L.L.C., substantially to the effect set forth in
Exhibit 9.3(d) hereto.
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Section 10. Miscellaneous.
10.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Plan of Merger or in any instrument
delivered pursuant to this Plan of Merger shall survive the Effective Time.
10.2 Notices. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery
or by facsimile and overnight courier to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
If to HEALTHSOUTH:
HEALTHSOUTH Corporation
Two Perimeter Park South
Birmingham, Alabama 35243
Attention: Michael D. Martin
Facsimile: (205) 969-4719
with a copy to:
William W. Horton, Esq.
HEALTHSOUTH Corporation
Two Perimeter Park South
Birmingham, Alabama 35243
Facsimile: (205) 969-4732
If to PSCM:
Professional Sports Care Management, Inc.
550 Mamaroneck Avenue
Harrison, New York 10528
Attention: Russell F. Warren, Jr.
Facsimile:
with a copy to:
Roger Meltzer, Esq.
Cahill Gordon & Reindel
Eighty Pine Street
New York, New York 10005
Facsimile: (212) 269-5420
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All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications with the overnight courier.
10.3 Further Assurances. Each party hereby agrees to perform any
further acts and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of this Plan of Merger.
10.4 Indemnification. (a) PSCM shall, and from and after the Effective
Time HEALTHSOUTH and the Surviving Corporation shall, indemnify, defend and hold
harmless each person who is now, or has been at any time prior to the date of
this Plan of Merger or who becomes prior to the Effective Time, an officer,
director or employee of PSCM or any of its subsidiaries (the "Indemnified
Parties") against (i) all losses, claims, damages, costs, expenses, liabilities
or judgments, or amounts that are paid in settlement with the approval of the
indemnifying party (which approval shall not be unreasonably withheld) of, or in
connection with, any claim, action, suit, proceeding or investigation based in
whole or in part on or arising in whole or in part out of the fact that such
person is or was a director, officer or employee of PSCM or any of its
subsidiaries, whether pertaining to any matter existing or occurring at or prior
to, or at or after, the Effective Time ("Indemnified Liabilities") and (ii) all
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to this Plan of Merger, the Merger or any other
transactions contemplated hereby or thereby, in each case to the full extent a
corporation is permitted under the DGCL to indemnify its own directors, officers
and employees, as the case may be (and HEALTHSOUTH and the Surviving
Corporation, as the case may be, will pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
full extent permitted by law upon receipt of any undertaking contemplated by
Section 145(e) of the DGCL). Without limiting the foregoing, in the event any
such claim, action, suit, proceeding or investigation is brought against any
Indemnified Party (whether arising before or after the Effective Time), (i) the
Indemnified Parties may retain counsel satisfactory to them and PSCM (or them
and HEALTHSOUTH and the Surviving Corporation after the Effective Time), (ii)
PSCM (or after the Effective Time, HEALTHSOUTH and the Surviving Corporation)
shall pay all reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received and (iii) PSCM (or after
the Effective Time, HEALTHSOUTH and the Surviving Corporation) will use all
reasonable efforts to assist in the vigorous defense of any such matter,
provided that none of PSCM,
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HEALTHSOUTH or the Surviving Corporation shall be liable for any settlement of
any claim effected without its written consent, which consent, however, shall
not be unreasonably withheld. Any Indemnified Party wishing to claim
indemnification under this Section 10.4, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify PSCM, HEALTHSOUTH or the
Surviving Corporation (but the failure so to notify an Indemnifying Party shall
not relieve it from any liability which it may have under this Section 10.4
except to the extent such failure prejudices such party), and shall deliver to
PSCM (or after the Effective Time, HEALTHSOUTH and the Surviving Corporation)
the undertaking contemplated by Section 145(e) of the DGCL. The Indemnified
Parties as a group may retain only one law firm to represent them with respect
to such matter unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two or
more Indemnified Parties.
(b) The provisions of this Section 10.4 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
10.5 Governing Law. This Plan of Merger shall be interpreted, construed
and enforced in accordance with the laws of the State of Delaware, applied
without giving effect to any conflicts-of-law principles.
10.6 "Including". The word "including", when following any general
statement, term or matter, shall not be construed to limit such statement, term
or matter to the specific terms or matters as provided immediately following the
word "including" or to similar items or matters, whether or not non- limiting
language (such as "without limitation", "but not limited to", or words of
similar import) is used with reference to the word "including" or the similar
items or matters, but rather shall be deemed to refer to all other items or
matters that could reasonably fall within the broadest possible scope of the
general statement, term or matter.
10.7 "Knowledge". "To the knowledge", "to the best knowledge,
information and belief", or any similar phrase shall be deemed to refer to the
knowledge of the Chairman of the Board, Chief Executive Officer or Chief
Financial Officer of a party and to include the assurance that such knowledge is
based upon a reasonable investigation, unless otherwise expressly provided.
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10.8 "Material adverse change" or "material adverse effect". "Material
adverse change" or "material adverse effect" means, when used in connection with
PSCM or HEALTHSOUTH, any change, effect, event or occurrence that has, or is
reasonably likely to have, individually or in the aggregate, a material adverse
impact on the business or financial position of such party and its subsidiaries
taken as a whole; provided, however, that "material adverse change" and
"material adverse effect" shall be deemed to exclude the impact of (i) changes
in generally accepted accounting principles and (ii) any changes resulting from
any restructuring or other similar charges or write-offs taken by PSCM with the
consent of HEALTHSOUTH; provided, however, that no such charges or write-offs
will be taken if such would adversely affect pooling-of-interests accounting
treatment for the Merger.
10.9 "Hazardous Materials". The term "Hazardous Materials" means any
material which has been determined by any applicable governmental authority to
be harmful to the health or safety of human or animal life or vegetation,
regardless of whether such material is found on or below the surface of the
ground, in any surface or underground water, airborne in ambient air or in the
air inside any structure built or located upon or below the surface of the
ground or in building materials or in improvements of any structures, or in any
personal property located or used in any such structure, including, but not
limited to, all hazardous substances, imminently hazardous substances, hazardous
wastes, toxic substances, infectious wastes, pollutants and contaminants from
time to time defined, listed, identified, designated or classified as such under
any Environmental Laws (as defined in Section 10.10) regardless of the quantity
of any such material.
10.10 Environmental Laws. The term "Environmental Laws" means any
federal, state or local statute, regulation, rule or ordinance, and any judicial
or administrative interpretation thereof, regulating the use, generation,
handling, storage, transportation, discharge, emission, spillage or other
release of Hazardous Materials or relating to the protection of the environment.
10.11 Taxes. For purposes of this Agreement, the term "tax" or "taxes"
shall mean all taxes, charges, fees, levies, penalties or other assessment
imposed by any United States federal, state, local or foreign taxing authority,
including, but not limited to, income, excise, property, sales, transfer,
franchise, payroll, withholding, Social Security or other taxes, including any
interest, penalties or additions attributable thereto. For purposes of this
Agreement, the term "tax return" shall mean any return, report,
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information return or other document (including any related or supporting
information) with respect to taxes.
10.12 Captions. The captions or headings in this Plan of Merger are
made for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this Plan of
Merger.
10.13 Integration of Exhibits. All Exhibits attached to this Plan of
Merger are integral parts of this Plan of Merger as if fully set forth herein,
and all statements appearing therein shall be deemed disclosed for all purposes
and not only in connection with the specific representation in which they are
explicitly referenced.
10.14 Entire Agreement. This instrument, including all Exhibits
attached hereto, together with the Confidentiality Agreement, contains the
entire agreement of the parties and supersedes any and all prior or
contemporaneous agreements between the parties, written or oral, with respect to
the transactions contemplated hereby. It may not be changed or terminated
orally, but may only be changed by an agreement in writing signed by the party
or parties against whom enforcement of any waiver, change, modification,
extension, discharge or termination is sought.
10.15 Counterparts. This Plan of Merger may be executed in several
counterparts, each of which, when so executed, shall be deemed to be an
original, and such counterparts shall, together, constitute and be one and the
same instrument.
10.16 Binding Effect. This Plan of Merger shall be binding on, and
shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and, except as provided in Section 10.4, no other person
shall acquire or have any right under or by virtue of this Plan of Merger. No
party may assign any right or obligation hereunder without the prior written
consent of the other parties.
10.17 No Rule of Construction. The parties acknowledge that this Plan
of Merger was initially prepared by HEALTHSOUTH, and that all parties have read
and negotiated the language used in this Plan of Merger. The parties agree that,
because all parties participated in negotiating and drafting this
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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.
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IN WITNESS WHEREOF, HEALTHSOUTH, the Subsidiary and PSCM 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.
PROFESSIONAL SPORTS CARE
MANAGEMENT, INC.
By /s/RUSSELL F. WARREN, JR
------------------------------------
Russell F. Warren, Jr.
President and Chief Executive Officer
ATTEST:
Patrick J. Wack, Jr.
- -------------------------------------------
Patrick J. Wack, Jr.
Secretary
[ CORPORATE SEAL ]
HEALTHSOUTH Corporation
By /s/ MICHAEL D. MARTIN
-----------------------------------
Michael D. Martin
Executive Vice President
and Treasurer
ATTEST:
/s/ ANTHONY J. TANNER
- -------------------------------------------
Anthony J. Tanner
Secretary
[ CORPORATE SEAL ]
B-50
<PAGE>
EMPIRE ACQUISITION CORPORATION
By /s/MICHAEL D. MARTIN
---------------------------------
Michael D. Martin
Vice President
ATTEST:
/s/ANTHONY J. TANNER
- ------------------------------------------
Anthony J. Tanner
Secretary
[ CORPORATE SEAL ]
B-51
<PAGE>
EXHIBIT 7.14
Gentlemen:
I have been advised that I might be considered to be an "affiliate" of
Professional Sports Care Management, Inc. ("PSCM") for purposes of Rule 145
under the Securities Exchange Act of 1933, as amended (the "1933 Act"), and for
purposes of generally accepted accounting principles as such term relates to
pooling of interests accounting treatment for certain business combinations or
the Securities and Exchange Commission's Staff Accounting Bulletin No. 65.
HEALTHSOUTH Corporation ("HEALTHSOUTH"), ____________ Acquisition
Corporation and PSCM have entered into a Plan and Agreement of Merger dated as
of the 16th day of May, 1996 (the "Plan of Merger"). Upon consummation of the
transactions contemplated by the Plan of Merger (the "Merger"), I will receive
shares of capital stock of HEALTHSOUTH for all of the shares of capital stock of
PSCM owned by me or as to which I may be deemed a beneficial owner. I own
_______ shares of common stock of PSCM. Such shares will be converted in the
Merger into shares of common stock of HEALTHSOUTH as described in the Plan of
Merger. The shares of PSCM capital stock and HEALTHSOUTH capital stock owned by
me or as to which I may deemed to be a beneficial owner prior to the Merger are
hereinafter collectively referred to as the "Pre-Merger Stock" and the shares of
HEALTHSOUTH capital stock received by me in the Merger are hereinafter
collectively referred to as the "Exchange Stock". This agreement is hereinafter
referred to as the "Letter Agreement".
I represent and warrant to, and agree with, HEALTHSOUTH, PSCM and the
Subsidiary that:
A. I have read this Letter Agreement and the Plan of Merger and have
discussed their requirements and other applicable limitations upon my ability to
sell, transfer or otherwise dispose of the Pre-Merger Stock and Exchange Stock,
to the extent I felt necessary, with my counsel or counsel for PSCM.
B. The shares of common stock of HEALTHSOUTH that I shall receive in
exchange for my shares of common stock of PSCM are not being acquired by me with
a view to their distribution except to the extent and in the manner provided for
in paragraph (d) of Rule 145 under the 1933 Act.
C. I agree with you not to dispose of any such shares of common stock
of HEALTHSOUTH in any manner that would violate Rule 145.
I further agree with you that the certificate or certificates
representing such shares of common stock of HEALTHSOUTH may bear a legend
referring to the restrictions on disposition thereof in accordance with the
provisions of the foregoing paragraph and that stop transfer instructions may be
filed with respect to such shares with the transfer agent for such shares.
D. I understand that stop transfer instructions will be given to
HEALTHSOUTH, PSCM and their respective transfer agents, as the case may be, with
respect to the shares of Pre-Merger Stock and the Exchange Stock in connection
with the restrictions set forth herein.
<PAGE>
E. Notwithstanding the foregoing and any other agreements on my part in
connection with the Pre-Merger Stock and the Exchange Stock, I hereby agree (i)
that I will not sell or otherwise reduce my risk relative to any shares of
Pre-Merger Stock during the period of thirty days prior to the effective date of
Merger and (ii) that I will not sell or otherwise reduce my risk relative to any
shares of Exchange Stock until financial results covering at least thirty days
of combined operations have been published following the effective date of the
Merger so as to ensure that the Merger qualified as a pooling of interests for
accounting purposes.
It is understood and agreed that this Letter Agreement shall terminate
and be of no further force and effect if the Plan of Merger is terminated
pursuant to the terms thereof.
The agreements made by me in the foregoing paragraphs are on the
understanding and condition that you agree, in the event that any shares may be
disposed of in accordance with the provisions of paragraph E above, to deliver
in exchange for the certificate or certificates representing such shares a new
certificate or certificates representing such shares not bearing the legend and
not subject to the stop transfer instruction referred to in paragraph D above,
and so long as I hold shares of stock subject to the provisions of the foregoing
paragraph (but not for a period in excess of two years from the date of
consummation of the Merger) to file with the Securities and Exchange Commission
or otherwise make publicly available all information about HEALTHSOUTH, to the
extent available to you without unrea- sonable effort or expense, necessary to
enable me to resell shares under the provisions of paragraph (d) of Rule 145.
This Letter Agreement shall be binding on my heirs, legal
representatives and successors.
Very truly yours,
---------------------------
[Name of Stockholder]
<PAGE>
EXHIBIT 9.2(d)
[DATE]
HEALTHSOUTH Corporation
Two Perimeter Park South
Suite 224W
Birmingham, Alabama 35243
Re: Plan and Agreement of Merger Among
HEALTHSOUTH Corporation, Empire Acquisition Corporation
and Professional Sports Care Management, Inc.
Gentlemen:
We have acted as legal counsel for Professional Sports Care Management,
Inc., a Delaware corporation ("PSCM"), in connection with the transactions
contemplated by that certain Agreement and Plan of Merger (the "Plan of
Merger"), dated as of May 16, 1996, by and among HEALTHSOUTH Corporation, a
Delaware corporation, Empire Acquisition Corporation, a Delaware corporation,
and PSCM. The Plan of Merger, along with the other documents evidencing the
transactions contemplated by the Plan of Merger, are referred to collectively as
the "Merger Documents".
This opinion is being delivered pursuant to the Plan of Merger. Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
set forth in the Plan of Merger.
In connection with the preparation of this opinion, we have examined
executed originals of the following documents:
(a) the Merger Documents; and
(b) the charter documents and bylaws of PSCM in effect as of
the date hereof.
We have also examined such other documents, certificates of public
officials and officers of PSCM, records and matters of law as we have deemed
necessary as a basis for the opinions hereinafter expressed. In our examination,
we have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such latter documents. Further, our review of
matters of law has been limited to the laws of the State of New York, the laws
of the State of Delaware referred to herein and the Federal laws of the United
States in effect as of the date hereof.
Based upon the foregoing, and subject to the limitations hereinafter
set forth, we are of the opinion that:
<PAGE>
1. PSCM has been duly incorporated and is validly existing as a
corporation in good standing under the General Corporation Law of the State of
Delaware (the "DGCL").
2. PSCM has full corporate power to execute and deliver the Plan of
Merger and to consummate the transactions contemplated thereby.
3. The Plan of Merger has been duly authorized and executed by PSCM,
and the Plan of Merger constitutes the valid and binding obligation of PSCM,
enforceable against PSCM in accordance with its terms, except as limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors' rights generally and subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).
4. The execution and delivery of the Plan of Merger by PSCM did not,
and the consum- mation of the transactions therein contemplated by PSCM 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
New York 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 New York, in each case, to which PSCM is subject or by which any of
its material properties or assets are bound or affected, or require any consent
or approval of any other party under any federal law, rule or regulation of the
United States or under any law, rule or regulation of New York or Delaware to
which PSCM is subject, except for required approvals under the federal
securities laws, under the state securities or blue sky laws, and under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and except
under laws, rules and regulations relating to the operation, regulation,
licensing, and accreditation of health care facilities, as to which we express
no opinion, which breach, violation or default would have a material adverse
effect on PSCM and the PSCM Subsidiaries and the PSCM Other Entities, taken as a
whole.
This opinion is furnished to you by this Firm as legal counsel for
PSCM, solely for your benefit in connection with the transactions contemplated
by the Plan of Merger, upon the understanding that we are not hereby assuming
any professional responsibility to any other person whatsoever and that this
opinion may not be used for any other purpose whatsoever.
Very truly yours,
CAHILL GORDON & REINDEL
By
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<PAGE>
EXHIBIT 9.3(d
[DATE]
Professional Sports Care Management, Inc.
550 Mamaroneck Avenue
Harrison, New York 10005
Re: Plan and Agreement of Merger Among
HEALTHSOUTH Corporation, Empire Acquisition Corporation
and Professional Sports Care Management, Inc.
Gentlemen:
We have acted as legal counsel for HEALTHSOUTH Corporation, a Delaware
corporation ("HEALTHSOUTH"), and Empire Acquisition Corporation, a Delaware
corporation (the "Subsidiary"), in connection with the transactions contemplated
by that certain Agreement and Plan of Merger (the "Plan of Merger"), dated as of
May 16, 1996, by and among HEALTHSOUTH, the Subsidiary and Professional Sports
Care Management, Inc. ("PSCM"), a Delaware corporation. The Plan of Merger,
along with the other documents evidencing the transactions contemplated by the
Plan of Merger, are referred to collectively as the "Merger Documents".
This opinion is being delivered pursuant to the Plan of Merger. Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
set forth in the Plan of Merger.
In connection with the preparation of this opinion, we have examined
executed originals of the following documents:
(a) the Merger Documents;
(b) the charter documents and bylaws of HEALTHSOUTH in effect
as of the date hereof; and
(c) the charter documents and bylaws of the Subsidiary in
effect as of the date hereof.
We have also examined such other documents, certificates of public
officials and officers of HEALTHSOUTH and the Subsidiary, records and matters of
law as we have deemed necessary as a basis for the opinions hereinafter
expressed. In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies, and the authenticity of the originals of such latter
documents. Further, our review of matters of law has been limited to the laws of
the State of Alabama, the laws of the State of Delaware referred to herein and
the Federal laws of the United States in effect as of the date hereof.
Based upon the foregoing, and subject to the limitations hereinafter
set forth, we are of the opinion that:
<PAGE>
1. Each of HEALTHSOUTH and the Subsidiary has been duly incorporated
and is validly existing as a corporation in good standing under the General
Corporation Law of the State of Delaware (the "DGCL").
2. Each of HEALTHSOUTH and the Subsidiary has full corporate power to
execute and deliver the Plan of Merger and to consummate the transactions
contemplated thereby.
3. The Plan of Merger has been duly authorized and executed by
HEALTHSOUTH and the Subsidiary, and the Plan of Merger constitutes the valid and
binding obligation of HEALTHSOUTH and the Subsidiary, enforceable against
HEALTHSOUTH and the Subsidiary in accordance with its terms, except as limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors' rights generally and subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).
4. The execution and delivery of the Plan of Merger by HEALTHSOUTH and
the Sub- sidiary did not, and the consummation of the transactions therein
contemplated by HEALTHSOUTH and the Subsidiary does not, constitute a breach or
violation of, or a default under, any federal law, rule or regulation of the
United States or under any law, rule or regulation of Alabama or under the DGCL
or, to our knowledge, any court order, judgment or decree of any governmental or
regulatory body of the United States or of Delaware or Alabama, in each case, to
which HEALTHSOUTH or the Subsidiary is subject or by which any of their material
properties or assets are bound or affected, or require any consent or approval
of any other party under any federal law, rule or regulation of the United
States or under any law, rule or regulation of Alabama or Delaware to which
HEALTHSOUTH or the Subsidiary is subject, except for required approvals under
the federal securities laws, under the state securities or blue sky laws, and
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
except under laws, rules and regulations relating to the operation, regulation,
licensing, and accreditation of health care facilities, as to which we express
no opinion, which breach, violation or default would have a material adverse
effect on HEALTHSOUTH and its subsidiaries and affiliated partnerships, taken as
a whole.
5. The shares of HEALTHSOUTH Common Stock to be issued under the Plan
of Merger will be, when issued in accordance with the terms of the Plan of
Merger, validly issued, fully paid and nonassessable.
This opinion is furnished to you by this Firm as legal counsel for
HEALTHSOUTH and the Subsidiary, solely for your benefit in connection with the
transactions contemplated by the Plan of Merger, upon the understanding that we
are not hereby assuming any professional responsibility to any other person
whatsoever and that this opinion may not be used for any other purpose
whatsoever.
Very truly yours,
HASKELL SLAUGHTER & YOUNG. L.L.C.
By
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