<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 31, 1997
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
--------------------------
REHABCARE GROUP, INC.
(Name of Issuer)
REHABCARE GROUP, INC.
(Name of Person Filing Statement)
--------------------------
COMMON STOCK, $.01 PAR VALUE
(Title of Class of Securities)
759148 10 9
(CUSIP Number of Class of Securities)
--------------------------
Alan C. Henderson
Executive Vice President and
Chief Financial Officer
RehabCare Group, Inc.
7733 Forsyth Boulevard, Suite 1700
St. Louis, Missouri 63105
(314) 863-7422
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Person Filing Statement)
--------------------------
Copy to:
ROBERT M. LaROSE, ESQ.
Thompson Coburn
One Mercantile Center
St. Louis, Missouri 63101
(314) 552-6000
January 31, 1997
(Date Tender Offer First published, Sent or Given to Security Holders)
<TABLE>
CALCULATION OF FILING FEE
================================================================================
<CAPTION>
Transaction valuation<F1> Amount of filing fee<F2>
<S> <C>
$20,812,500 $4,162.50
================================================================================
<FN>
<F1>Based upon the purchase of 925,000 shares at the maximum tender
offer price of $22.50 per share.
<F2>Estimated solely for purposes of computing the filing fee pursuant
to the provisions of Rule 0-11(b)(1), and based upon the $20,812,500
value of the 925,000 shares of common stock, $.01 par value, of
RehabCare Group, Inc. proposed to be acquired by RehabCare Group, Inc.
</TABLE>
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
-------------------- --------------------
Form or Registration No.: N/A Date Filed: N/A
------------------- ----------------------
================================================================================
<PAGE> 2
ITEM 1. SECURITY AND ISSUER.
(a) The issuer of the securities to which this Schedule 13E-4
Issuer Tender Offer Statement (this "Schedule 13E-4") relates is
RehabCare Group, Inc., a Delaware corporation (the "Company"), and
the address of its principal executive office is 7733 Forsyth
Boulevard, Suite 1700, St. Louis, Missouri 63105.
(b) This Schedule 13E-4 relates to the offer by the Company to
purchase up to 925,000 shares (or such lesser number of shares as are
validly tendered) of its common stock, $.01 par value per share
(including the associated preferred stock purchase rights, the
"Shares"), 4,707,598 of which Shares were outstanding as of
January 28, 1997, at prices, net to the seller in cash, not less than
$22.00 nor in excess of $22.50 per Share upon the terms and
conditions set forth in the Offer to Purchase dated January 31, 1997
(the "Offer to Purchase"), and in the related Letter of Transmittal
(which together constitute the "Offer"), copies of which are attached
as Exhibits (a)(1) and (a)(2), respectively, and incorporated herein
by reference. Officers and directors of the Company will not
participate in the Offer. The information set forth in
"Introduction," "Section 1. Number of Shares; Proration," and
"Section 2. Extension of Offer; Termination; Amendment," of the Offer
to Purchase is incorporated herein by reference.
(c) The information set forth in "Introduction" and "Section 8.
Certain Information Concerning the Company" of the Offer to Purchase
is incorporated herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in "Section 7. Source and
Amount of Funds" of the Offer to Purchase is incorporated herein by
reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE
ISSUER OR AFFILIATE.
(a)-(j) The information set forth in "Introduction" and "Section
7. Source and Amount of Funds," "Section 9. Background and Purpose
of the Offer; Certain Effects of the Offer," and "Section 10.
Transactions and Arrangements Concerning Shares" of the Offer to
Purchase is incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in "Section 10. Transactions and
Arrangements Concerning Shares" of the Offer to Purchase is
incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO THE ISSUER'S SECURITIES.
The information set forth in "Introduction" and "Section 7.
Source and Amount of Funds," "Section 9. Background and Purpose of
the Offer; Certain Effects of the Offer" and "Section 10.
Transactions and Arrangements Concerning Shares" of the Offer to
Purchase is incorporated herein by reference.
<PAGE> 3
ITEM 6. PERSONS RETAINED, EMPLOYED, OR TO BE COMPENSATED.
The information set forth in "Introduction" and "Section 12. Fees
and Expenses" of the Offer to Purchase is incorporated herein by
reference.
ITEM 7. FINANCIAL INFORMATION.
(a)-(b) The information set forth in "Section 8. Certain
Information Concerning the Company" of the Offer to Purchase is
incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) The information set forth in "Section 13. Miscellaneous" of
the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in "Section 9. Background and
Purpose of the Offer; Certain Effects of the Offer" of the Offer to
Purchase is incorporated herein by reference.
(d) Not applicable.
(e) Reference is hereby made to the Offer to Purchase and the
related Letter of Transmittal attached hereto as Exhibits (a)(1) and
(a)(2), respectively, and incorporated by reference herein.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
99.1 Form of Offer to Purchase dated January 31, 1997 is filed
herewith as Exhibit 99.1.
99.2 Letter of Transmittal is filed herewith as Exhibit 99.2.
99.3 Notice of Guaranteed Delivery is filed herewith as Exhibit 99.3.
99.4 Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees is filed herewith as Exhibit 99.4.
99.5 Letter to Clients for Use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees is filed herewith as Exhibit
99.5.
99.6 Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 is filed herewith as Exhibit 99.6.
99.7 Press Release issued by the Company on January 31, 1997 is filed
herewith as Exhibit 99.7.
99.8 Letter to the Company's Stockholders from James M. Usdan, Chief
Financial Officer and President is filed herewith as Exhibit 99.8.
99.9 The Commitment Letter, dated January 17, 1997, from Paul M. Porter,
Vice President, The Boatmen's National Bank of St. Louis, to Alan C.
Henderson, Executive Vice President and
<PAGE> 4
Chief Financial Officer, RehabCare Group, Inc. The Credit Facility
will be filed by amendment to this Schedule 13E-4 is filed herewith
as Exhibit 99.9.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
<PAGE> 5
SIGNATURE
After due 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.
January 31, 1997 REHABCARE GROUP, INC.
By:
----------------------------------------------------
Alan C. Henderson
Executive Vice President and Chief Financial Officer
<PAGE> 6
<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit Paper (D) or
Number Description Electronic (E)
------- ----------- --------------
<C> <S> <C>
99.1 Form of Offer to Purchase dated January 31, 1997.
99.2 Letter of Transmittal
99.3 Notice of Guaranteed Delivery
99.4 Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees
99.5 Letter to Clients for Use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees
99.6 Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9
99.7 Press Release issued by the Company on January 31, 1997
99.8 Letter to the Company's Stockholders from James M. Usdan, Chief
Financial Officer and President
99.9 The Commitment Letter, dated January 17, 1997, from Paul M. Porter,
Vice President, The Boatmen's National Bank of St. Louis, to
Alan C. Henderson, Executive Vice President and Chief Financial
Officer, RehabCare Group, Inc. The Credit Facility will be filed
by amendment to this Schedule 13E-4.
</TABLE>
<PAGE> 1
Offer by
REHABCARE GROUP, INC.
To Purchase for Cash Up To
925,000 Shares of Its Common Stock
- ------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME,
ON FEBRUARY 28, 1997 UNLESS THE OFFER IS EXTENDED
- ------------------------------------------------------------------------------
RehabCare Group, Inc., a Delaware corporation (the "Company"),
hereby invites the holders of its Common Stock, $.01 par value ("Shares"),
including the associated preferred stock purchase rights (the "Rights"), of
the Company to tender up to 925,000 Shares (constituting approximately 19.65%
of the shares currently outstanding) at prices, net to the Seller in cash,
not less than $20 nor in excess of $22 1/2 per Share, specified by holders
tendering their Shares, subject to the terms and conditions set forth herein
and in the related Letter of Transmittal (which together constitute the
"Offer"). The Company will determine the single purchase price, not less
than $20 nor in excess of $22 1/2 per Share (the "Purchase Price"), that it
will pay for Shares properly tendered pursuant to the Offer, taking into
account the number of Shares so tendered and the prices specified by
tendering stockholders. The Company will select the lowest Purchase Price
sufficient to purchase 925,000 Shares (or such lesser number of Shares as are
properly tendered) pursuant to the Offer. All Shares properly tendered at
prices at or below the Purchase Price and not withdrawn will be purchased at
the Purchase Price, net to the Seller in cash, subject to the terms and
conditions of the Offer, including the proration provisions. All Shares
acquired in the Offer will be acquired at the Purchase Price. Unless the
Rights are redeemed by the Company or become separately tradeable prior to
the Expiration Time (as defined herein), a tender of the Shares will also
constitute a tender of the associated Rights. Unless the context requires
otherwise, all references herein to the Shares shall include the associated
Rights.
The Shares are quoted on The Nasdaq National Market under the
symbol "RHBC." On January 28, 1997, the last practicable trading day prior
to the announcement of the Offer, the closing price per Shares as reported by
The Nasdaq National Market was $19 1/2. Stockholders are urged to obtain
current market quotations for these Shares. See Section 8.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED, BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
MAKING OF THE OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS
MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN
FROM TENDERING SHARES. EACH STOCKHOLDER MUST MAKE THE DECISION WHETHER TO
TENDER SHARES, AND, IF SO, HOW MANY SHARES AND AT WHAT PRICE TO TENDER.
SEE SECTION 3.
--------------------
THE DEALER MANAGER FOR THE OFFER IS:
COWEN & COMPANY
--------------------
January 31, 1997
<PAGE> 2
IMPORTANT
Any stockholder wishing to accept the Offer and tender all or any
portion of his Shares should either: (1) complete and sign the enclosed
Letter of Transmittal or a facsimile copy thereof in accordance with the
instructions in the Letter of Transmittal, mail or deliver it and any other
required documents to Boatmen's Trust Company (the "Depositary"), and either
mail or deliver the Stock certificates for such Shares to the Depositary or
follow the procedure for book-entry delivery set forth in Section 3; or (2)
request a broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for such stockholder. Holders of Shares registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such person if they desire to tender their Shares. Stockholders
who desire to tender shares and whose certificates for such Shares are not
immediately available or who cannot comply with the procedure for book entry
transfer by the expiration of the Offer must tender such Shares by following
the procedures for guaranteed delivery set forth in Section 3.
TO PROPERLY TENDER SHARES, STOCKHOLDERS MUST PROPERLY COMPLETE
THE ENCLOSED LETTER OF TRANSMITTAL, INCLUDING THE SECTION RELATING TO THE
PRICE AT WHICH THEY ARE TENDERING SHARES.
Questions and requests for assistance or for additional copies of
the Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to Georgeson & Company Inc. (the "Information
Agent") or the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF
OF THE COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER
OTHER THAN THOSE CONTAINED HEREIN OR IN THE RELATED LETTER OF TRANSMITTAL, IF
GIVEN OR MADE, SUCH RECOMMENDATION, INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
--------------------
<PAGE> 3
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Section Page
- ------- ----
<S> <C>
INTRODUCTION 1
THE OFFER 2
1. Number of Shares; Proration 2
2. Extension of Offer; Termination; Amendment 3
3. Procedures for Tendering Shares 4
4. Withdrawal Rights 6
5. Purchase of Shares and Payment of Purchase Price 7
6. Certain Conditions of the Offer 8
7. Source and Amount of Funds 9
8. Certain Information Concerning the Company 9
9. Background and Purpose of the Offer; Certain Effects of the Offer 16
10. Transactions and Arrangements Concerning Shares 17
11. Certain Federal Income Tax Consequences 17
12. Fees and Expenses 19
13. Miscellaneous 20
</TABLE>
<PAGE> 4
TO THE STOCKHOLDERS OF REHABCARE GROUP, INC.:
INTRODUCTION
RehabCare Group, Inc., a Delaware corporation (the "Company"), hereby
invites the holders of its Common Stock, $.01 par value (the "Shares"),
including the associated preferred stock purchase rights (the "Rights"), of
the Company, to tender up to 925,000 Shares (constituting approximately
19.65% of the Shares currently outstanding) at prices, net to the Seller in
cash, not less than $20 nor in excess of $22 1/2 per Share, as specified by
stockholders tendering their Shares, subject to the terms and conditions set
forth herein and in the related Letter of Transmittal (which together
constitute the "Offer"). The Company will determine the single purchase
price, not less than $20 nor in excess of $22 1/2 per Share (the "Purchase
Price"), that it will pay for Shares properly tendered pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified
by tendering stockholders. The Company will select the lowest Purchase Price
sufficient to purchase 925,000 Shares (or such lesser number of Shares as are
properly tendered) pursuant to the Offer. All Shares acquired in the Offer
will be acquired at the Purchase Price. All Shares properly tendered at
prices at or below the Purchase Price and not withdrawn will be purchased at
the Purchase Price, net to the Seller in cash, subject to the terms and
conditions of the Offer, including the proration provisions. The Company
reserves the right, in its sole discretion, to purchase more than 925,000
Shares. Unless the Rights are redeemed by the Company or become separately
tradeable prior to the Expiration Time (as defined herein), a tender of the
Shares will also constitute a tender of the associated Rights. Unless the
context requires otherwise, all references herein to the Shares shall include
the associated Rights.
THIS OFFER IS NOT CONDITIONED UPON THE TENDER OF ANY MINIMUM
NUMBER OF SHARES BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6.
If, before the Expiration Date (as defined in Section 1), more than
925,000 Shares (or such greater number of Shares as the Company may elect to
purchase pursuant to the Offer) are properly tendered at or below the
Purchase Price and not withdrawn, the Company will accept Shares for purchase
on a pro rata basis from all stockholders who properly tender Shares at or
below the Purchase Price (with appropriate adjustments to avoid purchases of
fractional Shares). See Section 1. All Shares not purchased pursuant to the
Offer, including Shares tendered at prices greater than the Purchase Price
and not withdrawn and Shares not purchased because of proration, will be
returned at the Company's expense to the stockholders who tendered such
Shares.
The Purchase Price will be paid to the tendering stockholder in cash
for all Shares purchased. Tendering stockholders will not be obligated to
pay brokerage commissions, solicitation fees or, subject to Instruction 7 of
the Letter of Transmittal, stock transfer taxes on the purchase of Shares by
the Company. HOWEVER, ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO
COMPLETE, SIGN AND RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9 THAT IS
INCLUDED IN THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO A REQUIRED BACKUP
FEDERAL INCOME TAX WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAYABLE TO SUCH
STOCKHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE SECTION 3. The
Company will pay all fees and expenses of Cowen & Company (the "Dealer
Manager"), Boatmen's Trust Company (the "Depositary") and Georgeson & Company
Inc. (the "Information Agent") incurred in connection with the Offer. See
Section 12.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY
APPROVED THE MAKING OF THE OFFER. HOWEVER, NEITHER THE COMPANY
NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
STOCKHOLDERS AS TO WHETHER TO TENDER ALL OR ANY PORTION OF THEIR
SHARES, OR AS TO THE PRICE AT WHICH THEY SHOULD TENDER. EACH
STOCKHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND,
IF SO, HOW MANY SHARES AND AT WHAT PRICE TO TENDER. STOCKHOLDERS
SHOULD CONSIDER THAT THE COMPANY INTENDS TO SELECT THE LOWEST
PURCHASE PRICE, NOT LESS THAN $20 NOR IN EXCESS OF $22 1/2 PER
SHARE, THAT WILL ENABLE IT TO PURCHASE 925,000 SHARES (OR SUCH
LESSER NUMBER OF SHARES AS ARE PROPERLY TENDERED) PURSUANT TO THE
OFFER. SEE SECTION 5.
<PAGE> 5
The Board of Directors believes the Company's financial condition,
outlook for continuing favorable cash generation and available credit
facilities will allow it to reinvest in the business and to use its excess
cash and debt capacity to fund the Offer. The Board of Directors believes
that the purchase of Shares is an attractive use of the Company's financial
resources and that the use of cash and borrowing to fund the Offering will
result in a more efficient capital structure for the Company. Accordingly,
the Board believes the Offer is consistent with the Company's long-term
corporate goal of increasing stockholder value. Following completion of the
repurchase, the Company will have ready access to sources of capital
sufficient to fund investments in the business, including through attractive
acquisition opportunities. At the same time, the Offer provides the
Company's stockholders with the opportunity to sell a portion of their Shares
(without the usual transaction costs associated with open-market sales),
while retaining a continuing equity interest in the Company if they so
desire.
As of January 28, 1997, there were 4,707,598 Shares outstanding and
1,287,022 Shares issuable upon exercise of outstanding stock options under
the Company's employee benefit plans. The 925,000 Shares that the Company is
offering to purchase represent approximately 19.65% of the Shares outstanding
as of January 28, 1997, and approximately 15.43% of the shares outstanding
assuming exercise of outstanding stock options. The Shares are traded on The
Nasdaq National Market under the symbol "RHBC." On January 29, 1997, the
last practicable trading day prior to the announcement of the Offer, the
closing price per share as reported by The Nasdaq National Market was $19
1/2. The Company urges stockholders to obtain current quotations of the
market price of the Shares.
THE OFFER
1. NUMBER OF SHARES; PRORATION. Upon the terms and subject to
the conditions of the Offer, the Company will purchase 925,000 Shares
(approximately 19.65% of the total Shares outstanding as of January 28,
1997), or such lesser number of Shares as are validly tendered, (and not
withdrawn in accordance with Section 4) on or prior to the Expiration Date at
a price not less than $20 nor in excess of $22 1/2 per Share in cash. The
term "Expiration Date" means 12:00 Midnight, Eastern Time, on Friday,
February 28, 1997, unless and until the Company, in its sole discretion,
shall have extended the period of time during which the Offer is open, in
which event the term "Expiration Date" shall refer to the latest time and
date at which time the Offer, as so extended by the Company, shall expire.
For a description of the Company's right to extend, delay, terminate or amend
the Offer, see Section 2. In the event of an over-subscription of the Offer
as described below, Shares tendered at or below the Purchase Price prior to
the Expiration Date may be subject to proration. The proration period also
expires on the Expiration Date.
THE OFFER IS NOT CONDITIONED UPON THE TENDER OF ANY MINIMUM
NUMBER OF SHARES, BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6.
In accordance with Instruction 5 of the Letter of Transmittal,
stockholders desiring to tender Shares must specify the price, not less than
$20 nor in excess of $22 1/2 per Share, at which they are willing to sell
their Shares to the Company. As promptly as practicable following the
Expiration Date, the Company will, in its sole discretion, determine the
Purchase Price that it will pay for Shares properly tendered pursuant to the
Offer and not withdrawn, taking into account the number of Shares tendered
and the prices specified by tendering stockholders. The Company intends to
select the lowest Purchase Price, not less than $20 nor in excess of $22 1/2
per Share in cash, that will enable it to purchase 925,000 Shares (or such
lesser number of Shares as are properly tendered) pursuant to the Offer.
Shares properly tendered pursuant to the Offer at or below the Purchase Price
and not withdrawn will be purchased at the Purchase Price, subject to the
terms and conditions of the Offer, including the proration provisions. The
Company reserves the right to purchase more than 925,000 Shares pursuant to
the Offer. All Shares tendered and not purchased pursuant to the Offer,
including Shares tendered at prices in excess of the Purchase Price and
Shares not purchased because of proration, will be returned to the tendering
stockholders at the Company's expense as promptly as practicable following
the Expiration Date.
If (i) the Company increases or decreases the price to be paid for
Shares, increases the number of Shares being sought and any such increase in
the number of Shares being sought exceeds 2% of the outstanding Shares, or
decreases the number of Shares being sought and (ii) the Offer is scheduled
to expire less than ten business days from and including the date that notice
of such increase or decrease is first published, sent or given in the manner
- 2 -
<PAGE> 6
specified in Section 12, the Offer will be extended for ten business days
from and including the date of such notice. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or federal holiday
and consists of the time period from 12:01 a.m. through 12:00 Midnight,
Eastern Time.
Priority of Purchases. Subject to the terms and conditions of the
Offer, if more than 925,000 Shares (or such greater number of Shares as the
Company elects to purchase) have been properly tendered at or below the
Purchase Price and not withdrawn prior to the Expiration Date, the Company
will purchase properly tendered Shares on a pro rata basis (with appropriate
adjustments to avoid purchases of fractional Shares).
Subject to the terms and conditions of the Offer, if less than 925,000
Shares (or such greater number of Shares as the Company elects to purchase)
have been properly tendered at or below the Purchase Price and not withdrawn
prior to the Expiration Date, the Company will purchase at the Purchase Price
all Shares so tendered.
In the event that proration of tendered Shares is required, because of
the difficulty in determining the number of Shares properly tendered and not
withdrawn, the Company does not expect that it will be able to announce the
final proration factor or to commence payment for any Shares purchased
pursuant to the Offer until approximately ten business days after the
Expiration Date. The preliminary results of any proration will be announced
by press release as promptly as practicable after the Expiration Date.
Stockholders may obtain such preliminary information from the Information
Agent.
On September 21, 1992, the Board of Directors of the Company declared a
dividend distribution of one Right for each Share outstanding as of October
1, 1992, and for each Share of issued thereafter until the Rights become
exercisable. Each Right, when exercisable, will entitle the holder to
purchase from the Company one one-hundredth of a share of the Company's
Series A Junior Participating Preferred Stock, $.10 par value, at a price of
$35 per one one-hundredth of a share, subject to certain adjustments. The
Rights are not currently exercisable and trade together with the Shares
associated therewith. The Rights will not become exercisable or separately
tradeable as a result of the Offer. Absent circumstances causing the Rights
to become exercisable or separately tradeable prior to the Expiration Date,
the tender of any Shares pursuant to the Offer will include the tender of the
associated Rights. No separate consideration will be paid for such Rights
pursuant to the Offer. Upon the purchase of Shares by the Company pursuant
to the Offer, the sellers of the Shares so purchased will no longer own the
Rights associated with such Shares.
This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares and will be furnished to brokers, banks
and similar persons whose names, or the names of whose nominees, appear on
the Company's stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
2. EXTENSION OF OFFER; TERMINATION; AMENDMENT. The Company
expressly reserves the right, in its sole discretion, at any time and from
time to time, and regardless of whether or not any of the events set forth in
Section 6 shall have occurred or been determined by the Company to have
occurred, (a) to extend the period of time during which the Offer is open by
giving oral or written notice of such extension to the Depositary and making
a public announcement thereof no later than 10:00 A.M., Eastern Time, on the
next business day after the previously scheduled Expiration Date, (b) to
delay payment for any Shares, regardless of whether any Shares were
theretofore accepted for payment, as the Company may deem necessary to
consummate the Offer, and (c) to amend the Offer in any respect (including,
without limitation, by increasing or decreasing the Purchase Price to be paid
for Shares or the number of Shares being sought in the Offer) by giving oral
or written notice of such amendment to the Depositary and, as promptly as
practicable thereafter, making a public announcement thereof. If (i) the
Company increases or decreases the Purchase Price to be paid for Shares or
the number of Shares being sought in the Offer and, in the event of an
increase in the number of Shares being sought, such increase exceeds two
percent of the outstanding Shares and (ii) the Offer is scheduled to expire
at any time earlier than the expiration of a period ending on the tenth
business day from, and including, the date that such notice of an increase or
decrease is first published, sent or given in the manner specified in this
Section 2, the Offer will be extended until the expiration of such period of
ten business days. For purposes of the Offer, a "business day" means any day
other than a Saturday, Sunday or federal holiday and consists of the time
period from 12:01 A.M. through 12:00 Midnight,
- 3 -
<PAGE> 7
Eastern Time. The Company also expressly reserves the right, in its sole and
absolute discretion, to terminate the Offer and not to accept for payment or
pay for Shares upon the occurrence of any of the conditions specified in
Section 6 by giving oral or written notice of such termination to the
Depositary and, as promptly as practicable thereafter, making a public
announcement thereof. Without limiting the manner in which the Company may
choose to make a public announcement, the Company shall have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than as required by applicable law (including Rule 13e-4(e) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")). The rights
reserved by the Company in this paragraph are in addition to the Company's
rights under Section 6. Payment for Shares accepted for payment pursuant to
the Offer may be delayed in the event of proration due to the difficulty of
determining the number of properly tendered Shares. See Sections 1 and 5.
3. PROCEDURES FOR TENDERING SHARES.
Proper Tender of Shares. For shares to be tendered properly pursuant
to the Offer, either (a) the certificates for such Shares (or confirmation of
receipt of such Shares pursuant to the procedures for book entry transfer set
forth below), together with a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) with any required
signature guarantees and any other documents required by the Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to 12:00 midnight,
Eastern Time, on the Expiration Date or (b) the tendering stockholder must
comply with the guaranteed delivery procedure set forth below. IN ACCORDANCE
WITH INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL, STOCKHOLDERS DESIRING TO
TENDER SHARES PURSUANT TO THE OFFER MUST PROPERLY INDICATE IN THE SECTION
CAPTIONED "PURCHASE PRICE PER SHARE AT WHICH SHARES ARE BEING TENDERED" ON
THE LETTER OF TRANSMITTAL THE PRICE (IN INCREMENTS OF $.125) AT WHICH THEIR
SHARES ARE BEING TENDERED. Stockholders who desire to tender Shares at more
than one price must complete a separate Letter of Transmittal for each price
at which Shares are tendered, provided that the same Shares cannot be
tendered (unless properly withdrawn previously in accordance with the terms
of the Offer) at more than one price. IN ORDER TO PROPERLY TENDER SHARES,
ONE AND ONLY ONE PRICE BOX MUST BE CHECKED IN THE APPROPRIATE SECTION ON EACH
LETTER OF TRANSMITTAL.
Signature Guarantees Method of Delivery. No signature guarantee is
required on the Letter of Transmittal (i) if the Letter of Transmittal is
signed by the registered holder of the Shares exactly as the name of the
registered holder (which term, for purposes of this Section 3, includes any
participant in The Depository Trust Company, the Midwest Securities Trust
Company or the Philadelphia Depository Trust Company (collectively, the "Book
Entry Transfer Facilities") whose name appears on a security position listing
as the holder of the Shares) appears on the certificate tendered therewith,
and payment and delivery are to be made directly to such registered holder,
or (ii) if Shares are tendered for the account of a member firm of a
registered national securities exchange or the National Association of
Securities Dealers, Inc. or by a commercial bank or trust company having an
office, branch or agency in the United States which is a member of one of the
Stock Transfer Association's approved medallion programs (such as Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchange Medallion Program) (each such entity,
an "Eligible Institution"). In all other cases, all signatures on the Letter
of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 1 of the Letter of Transmittal. If a certificate representing
Shares is registered in the name of a person other than the signer of a
Letter of Transmittal, or if payment is to be made, or Shares not purchased
or tendered are to be issued, to a person other than the registered holder,
the certificate must be endorsed or accompanied by an appropriate stock
power, in either case signed exactly as the name of the registered holder
appears on the certificate, with the signature on the certificate or stock
power guaranteed by an Eligible Institution.
In all cases, payment for shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the
Depositary of certificates for such Shares (or a timely confirmation of a
book entry transfer of such Shares into the Depositary's account at one of
the Book Entry Facilities), a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) with any required
signature guarantees and any other documents required by the Letter of
Transmittal. THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES
FOR SHARES, IS AT THE ELECTION AND RISK OF THE
- 4 -
<PAGE> 8
TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL, THEN REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
Backup Federal Income Tax Withholding. To prevent backup federal
income tax withholding on payments made to stockholders for Shares purchased
pursuant to the Offer, each stockholder who does not otherwise establish an
exemption from such withholding must provide the Depositary with the
stockholder's correct taxpayer identification number and provide certain
other information by completing the substitute Form W-9 included in the
Letter of Transmittal. Foreign stockholders may be required to submit Form
W-8, certifying non-United States status, in order to avoid backup
withholding. See Instruction 11 and 12 of the Letter of Transmittal.
Each stockholder should consult his own tax advisor as to whether such
stockholder is subject to or exempt from federal income tax withholding. For
a discussion of certain other federal income tax consequences to tendering
stockholders, see Section 11.
Book Entry Delivery. The Depositary will establish an account with
respect to the Shares at each of the Book Entry Transfer Facilities for
purposes of the Offer within two business days after the date of this Offer
to Purchase. Any financial institution that is a participant in the Book
Entry Transfer Facility's system may make book entry delivery of the Shares
by causing such facility to transfer such Shares into the Depositary's
account in accordance with such facility's procedure for such transfer. Even
though delivery of Shares may be effected through book entry transfer into
the Depositary's account at one of the Book Entry Transfer Facilities, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and other required documents
must, in any case, be transmitted to and received by the Depositary at one of
its addresses set forth on the back cover of this Offer to Purchase prior to
the Expiration Date, or the guaranteed delivery procedure set forth below
must be followed. Delivery of the Letter of Transmittal and any other
required documents to one of the Book Entry Transfer Facilities does not
constitute delivery to the Depositary.
Guaranteed Delivery. If a stockholder desires to tender Shares
pursuant to the Offer and such stockholder's certificates are not immediately
available (or the procedures for book entry transfer cannot be completed on a
timely basis) or time will not permit all required documents to reach the
Depositary by the Expiration Date, such Shares may nevertheless be tendered
provided that all of the following conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives (by hand, mail, telegram or
facsimile transmission), on or prior to the Expiration Date, a
properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form the Company has provided with this Offer to
Purchase (indicating the price at which the Shares are being
tendered), including a guarantee by an Eligible Institution in the
form set forth in such Notice; and
(c) the certificates for all tendered Shares in proper form for
transfer (or confirmation of book entry transfer of such Shares into
the Depositary's account at one of the Book Entry Transfer
Facilities), together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) with any required
signature guarantees and any other documents required by the Letter
of Transmittal, are received by the Depositary within five business
days after the date the Depositary receives such Notice of Guaranteed
Delivery.
Savings Plan. As of January 28, 1997, the Company's 401(k) Employee
Savings Plan (the "Savings Plan") owned 43,312 Shares, all of which were
allocated to the RehabCare Stock Fund for the benefit of the Savings Plan
participants. Shares representing a participant's proportional interest in
the RehabCare Stock Fund will, subject to the limitations of the Employee
Retirement Income Security Act of 1974, as amended, and applicable
regulations thereunder ("ERISA"), be tendered by the Trustee of the Savings
Plan, in the sole discretion of the Trustee in accordance with the Trustee's
exercise of its fiduciary duties. There is no assurance that the Trustee
will determine to tender any Shares currently held in the Savings Plan and,
if the Trustee determines to tender, the number of Shares that the Trustee
will tender.
- 5 -
<PAGE> 9
The portion of the proceeds, if any, received by the Trustee on account
of Shares purchased from the Savings Plan in the Offer that is attributable
to a participant's contributions to the Savings Plan will be reinvested by
the Trustee in the RehabCare Stock Fund.
Under ERISA, the Company will be prohibited from purchasing any Shares
from the Savings Plan (including Shares allocated to the accounts of
participants) if the Purchase Price is less than the prevailing market price
of the Shares on the date the Shares are accepted for payment pursuant to the
Offer. If Shares tendered from the Savings Plan would have been accepted
pursuant to the terms of the Offer except for this prohibition, such Shares
shall automatically be deemed to be properly withdrawn.
Any Shares tendered from the Savings Plan but not purchased will be
returned to the Savings Plan and reallocated to participants' accounts.
Tendering Stockholder's Representation and Warranty; Company's
Acceptance Constitutes an Agreement. A tender of Shares pursuant to any of
the procedures described above will constitute the tendering stockholder's
acceptance of the terms and conditions of the Offer, as well as the tendering
stockholder's representation and warranty to the Company that (a) such
stockholder has a net long position in the Shares being tendered within the
meaning of Rule 14e-4 promulgated by the Securities and Exchange Commission
(the "Commission") under the Exchange Act and (b) the tender of such Shares
complies with Rule 14e-4. It is a violation of Rule 14e-4 for a person,
directly or indirectly, to tender Shares for such person's own account
unless, at the time of tender and at the end of the proration period, the
person so tendering (i) has a net long position equal to or greater than the
amount of (x) Shares tendered or (y) other securities convertible into or
exchangeable or exercisable for the Shares tendered and will acquire such
Shares for tender by conversion, exchange or exercise and (ii) will cause
such Shares to be delivered in accordance with the terms of the Offer. Rule
14e-4 provides a similar restriction applicable to the tender or guarantee of
a tender on behalf of another person. The Company's acceptance for payment
of Shares tendered pursuant to the Offer will constitute a binding agreement
between the tendering stockholder and the Company upon the terms and
conditions of the Offer.
Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of
Shares to be accepted, the Purchase Price to be paid for Shares to be
accepted and the validity, form, eligibility (including time of receipt) and
acceptance of any tender of Shares will be determined by the Company, in its
sole discretion, and its determination shall be final and binding. The
Company reserves the absolute right to reject any or all tenders of any
Shares that it determines are not in appropriate form or the acceptance for
payment of or payment for which would, in the opinion of the Company's
counsel, be unlawful. The Company also reserves the absolute right to waive
any of the conditions of the Offer or any defect or irregularity in any
tender with respect to any particular Shares of any particular stockholder.
No tender of Shares will be deemed to have been properly made until all
defects or irregularities have been cured by the tendering stockholder or
waived by the Company. None of the Company, the Dealer Manager, the
Depositary, the Information Agent or any other person shall be obligated to
give notice of any defects or irregularities in tenders, nor shall any of
them incur any liability for failure to give any such notice.
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this
Section 4, tenders of Shares pursuant to the Offer are irrevocable. Shares
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by the Company
pursuant to the Offer, may also be withdrawn at any time after 12:00
Midnight, Eastern Time, on February 28, 1997.
To be effective, a notice of withdrawal must be in written,
telegraphic, telex or facsimile transmission form and must be received in a
timely manner by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase. Any such notice of withdrawal must specify
the name of the tendering stockholder, the name of the registered holder, if
different, the number of Shares tendered and the number of Shares to be
withdrawn. Prior to the release of such certificates, the tendering
stockholder must also submit the serial numbers shown on the particular
certificates for Shares to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution (except in the case
of Shares withdrawn by an Eligible Institution). None of the Company, the
Dealer Manager, the Depositary, the Information Agent or any other person
shall be obligated
- 6 -
<PAGE> 10
to give notice of any defects or irregularities in any notice of withdrawal
nor shall any of them incur liability for failure to give any such notice.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Company, in its sole
discretion, which determination shall be final and binding.
Withdrawals may not be rescinded and any Shares withdrawn will
thereafter be deemed not properly tendered for purposes of the Offer.
However, withdrawn Shares may be re-tendered prior to the Expiration Date by
again following one of the procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares
or is unable to purchase Shares pursuant to the Offer for any reason, then,
without prejudice to the Company's rights under the Offer, the Depositary
may, subject to applicable law, retain tendered Shares on behalf of the
Company for ten business days after the Expiration Date, and such Shares may
not be withdrawn except to the extent tendering stockholders are entitled to
withdrawal rights as described in this Section 4.
Participants in the Savings Plan should follow the procedures for
withdrawal included in the letter furnished to such participants by the
Trustee.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE. The
Company intends to select the lowest Purchase Price, not less than $20 nor in
excess of $22 1/2, that will enable it to purchase 925,000 Shares (or such
lesser number of Shares as are properly tendered) pursuant to the Offer. For
purposes of the Offer, the Company will be deemed to have purchased Shares
which are tendered at or below the Purchase Price and not withdrawn (subject
to the proration provisions of the Offer) when, as and if it gives oral or
written notice to the Depositary of its acceptance of such Shares for payment
pursuant to the Offer. Subject to the terms and conditions of the Offer, the
Company will purchase and pay for 925,000 Shares (or such lesser number of
Shares as are properly tendered) pursuant to the Offer and not withdrawn as
permitted in Section 4 as soon as practicable after the Expiration Date. The
Company will pay for Shares purchased pursuant to the Offer by depositing the
aggregate Purchase Price therefor with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payment from
the Company and transmitting payment to the tendering stockholders. In the
event of proration, the Company will determine the proration factor and pay
for those tendered Shares accepted for payment as soon as practicable after
the Expiration Date, but in any event does not expect to be able to announce
the final results of such proration and commence payment for Shares purchased
until at least ten business days after the Expiration Date. Certificates for
all Shares tendered and not purchased, including all Shares tendered at
prices in excess of the Purchase Price and Shares not purchased due to
proration, will be returned (or, in the case of Shares tendered by book entry
transfer, such Shares will be credited to the account maintained with one of
the Book Entry Transfer Facilities by the participant therein who delivered
such Shares) to the tendering stockholder at the Company's expense as
promptly as practicable after the Expiration Date. Under no circumstances
will interest on the Purchase Price be paid by the Company by reason of any
delay in making payment. In addition, if certain events occur, the Company
may not be obligated to purchase Shares pursuant to the Offer. See Section
6.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however,
payment of the Purchase Price is to be made to, or (in the circumstances
permitted by the Offer) if unpurchased Shares are to be registered in the
name of, any person other than the registered holder, or if tendered
certificates are registered in the name of any person other than the person
signing the Letter of Transmittal, the amount of all stock transfer taxes, if
any (whether imposed on the registered holder or such other person), payable
on account of the transfer to such person will be deducted from the Purchase
Price unless satisfactory evidence of the payment of the stock transfer
taxes, or exemption therefrom, is submitted. See Instruction 7 of the Letter
of Transmittal.
ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE, SIGN
AND RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER
OF TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX
WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAID TO SUCH STOCKHOLDER OR OTHER
PAYEE PURSUANT TO
- 7 -
<PAGE> 11
THE OFFER. SEE SECTION 3. ALSO SEE SECTION 11 REGARDING CERTAIN FEDERAL
INCOME TAX CONSEQUENCES.
6. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other
provision of the Offer, the Company shall not be required to accept for
payment, purchase or pay for any Shares tendered, and may terminate or amend
the Offer and may postpone the acceptance for payment of, the purchase of and
the payment for Shares tendered, if at any time on or after January 31, 1997
and prior to the time of payment for any such Shares (whether or not any
Shares have theretofore been accepted for payment, purchased or paid for
pursuant to the Offer) any of the following events shall have occurred (or
shall have been determined by the Company to have occurred) which, in the
Company's sole judgment in any such case and regardless of the circumstances
(including any action or any omission to act by the Company), makes it
inadvisable to proceed with the Offer or with such payment or purchase:
(a) there shall have been proposed (including any proposal or
pending legislation in existence as of the date hereof) or enacted
into law legislation that would materially increase the after-tax
cost of the Offer or the transactions contemplated thereby; or
(b) there shall have been any action threatened, pending or
taken, or any law, statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted,
entered, enforced or deemed to be applicable to the Offer, by any
court or any government or governmental, regulatory or administrative
agency or authority (federal, state, local or foreign) or tribunal,
domestic or foreign, which, in the sole judgment of the Company,
would or might directly or indirectly (i) make the acceptance for
payment of, or payment for, some or all of the Shares illegal or
otherwise restrict or prohibit the consummation of the Offer, (ii)
delay or restrict the ability of the Company, or render the Company
unable, to accept for payment or pay for some or all of the Shares or
(iii) materially impair the contemplated benefits of the Offer to the
Company; or
(c) there shall have occurred any of the following events: (i)
the commencement of any state of war, armed hostilities,
international crisis or international emergency, or crisis directly
or indirectly involving the United States, (ii) the declaration of
any banking moratorium or suspension of payments by banks in the
United States or any limitation on the extension of credit by lending
institutions in the United States, (iii) any general suspension of
trading or limitation of prices for securities on any securities
exchange or in the over-the-counter market in the United States, (iv)
any significant decrease in the market price of the Shares or in the
general level of market prices of equity securities in the United
States or abroad, (v) any change in the general political, market,
economic or financial conditions in the United States or abroad that
would have a material adverse effect on the Company's business,
operations or prospects or the trading in the Shares or that, in the
reasonable judgment of the Company, makes it inadvisable to proceed
with the Offer or (vi) in the case of any of the foregoing existing
at the time of the commencement of the Offer, in the sole judgment of
the Company, a material acceleration or worsening effect thereof; or
(d) a tender or exchange offer with respect to some or all of
the Shares (other than the Offer), or a merger or acquisition
proposal for the Company, shall have been proposed, announced or made
by another person or shall have been publicly disclosed, or the
Company shall have learned that (i) any person or "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) shall have acquired
or proposed to acquire beneficial ownership of more than five percent
of the outstanding Shares, other than acquisitions solely for bona
fide arbitrage purposes and other than as disclosed in a Schedule 13D
or 13G on file with the Commission on January 31, 1997, or (iii) any
such person or group which, prior to January 31, 1997, had filed such
a Schedule with the Commission thereafter has acquired or proposed to
acquire, through the acquisition of stock, the formation of a group
or otherwise, beneficial ownership of an additional one percent or
more of the Shares or shall have been granted any right, option or
warrant, conditional or otherwise, to acquire beneficial ownership of
an additional one percent or more of the Shares; or
(e) the Company does not obtain sufficient borrowings under the
Credit Facility (as defined in Section 7 below); or
- 8 -
<PAGE> 12
(f) there shall have occurred any event which, in the sole
judgment of the Company, has resulted in an actual or threatened
material adverse change in the business, financial condition, assets,
income, operations, prospects or stock ownership of the Company or
which may adversely affect the value of the Shares.
The foregoing conditions are for the sole benefit of the Company and
may be asserted by the Company regardless of the circumstances (including any
action or inaction by the Company) giving rise to any such condition, and may
be waived by the Company, in whole or in part, at any time and from time to
time in its sole discretion. Any determination by the Company concerning the
events described above will be final and binding.
7. SOURCE AND AMOUNT OF FUNDS. Assuming that the Company
purchases 925,000 Shares pursuant to the Offer at a price not less than $20
nor in excess of $22 1/2 per Share, the cost to the Company (including all
fees and expenses relating to the Offer, but excluding interest expense on
any funds borrowed to finance such purchase of the Shares) is estimated to be
between approximately $130,000 and $150,000. The Company presently intends
that funds for the purchase of the Shares pursuant to the Offer and the
payment of related fees and expenses will be provided from a combination of
(i) the Company's available cash and cash equivalents and retained earnings,
and (ii) secured borrowings. At November 30, 1996, the Company had cash,
cash equivalents and marketable securities of approximately $6.4 million.
The Company has obtained a commitment to secure borrowings under a $45
million senior credit facility, expiring February 2002 (the "Credit
Facility"). The Credit Facility will be comprised of a $25,000,000 term loan
and a $20,000,000 revolving credit facility and will be provided to the
Company by a syndicate of financial institutions, with The Boatmen's National
Bank of St. Louis as agent (the "Senior Lender"). The Credit Facility will
be secured by a first priority, senior security interest in and lien upon all
of the real and personal property of the Company and its subsidiaries. A
copy of the Credit Facility is filed as Exhibit (b)(1) to the Schedule 13e-4
and is incorporated herein by reference. The Company anticipates that the
borrowings under the Credit Facility used to purchase the Shares will bear
interest, at the Company's option, of either the London Interbank Offered
Rates plus 1.25% to 2.0%, or at the Bank's Corporate Base Rate, or a
combination of the two, such rates being dependent on the ratio of the
Company's indebtedness to operating cash flow.
The Credit Facility includes representations and warranties, covenants,
events of default and other terms customary to financings of this type.
The Company intends to repay the borrowings used to purchase the Shares
pursuant to the Offer through, depending on business and market conditions,
internally generated funds, public or private offerings of securities,
additional bank borrowings or other financings, or such combination of the
foregoing as the Company may deem appropriate. See "Summary Consolidated Pro
Forma Financial Information" for further information concerning the assumed
cost of funds for the Offer.
8. CERTAIN INFORMATION CONCERNING THE COMPANY. The Company
is based in St. Louis, Missouri and is a leading provider of acute
rehabilitation, subacute, outpatient and temporary therapist staffing
services on a contract basis in conjunction with over 750 hospitals, nursing
homes and contract therapy companies in all 50 of the United States.
The Company's principal executive offices are located at 7733 Forsyth
Boulevard, Suite 1700, St. Louis, Missouri 63105, and the Company's telephone
number is (314) 863-7422.
- 9 -
<PAGE> 13
Price Range of Shares. The Shares are traded principally on The Nasdaq
National Market under the symbol "RHBC." The following table sets forth for
the calendar quarters of the years indicated the high and low per Share sales
prices on The Nasdaq National Market as reported in published financial
sources.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
1995
----
1st Quarter 14 11 1/4
2nd Quarter 14 5/8 12 1/4
3rd Quarter 15 3/4 13 1/2
4th Quarter 19 5/8 12 7/8
1996
----
1st Quarter 19 1/2 15 1/8
2nd Quarter 18 14 3/4
3rd Quarter 18 7/8 15 1/4
4th Quarter 20 1/8 17
1997
----
1st Quarter 20 3/4 19 3/8
(through January 28, 1997)
</TABLE>
On January 28, 1997, the last practicable trading day prior to the
announcement and commencement of the Offer, the closing per Share sales price
as reported on The Nasdaq National Market was $19 1/2. THE COMPANY URGES
STOCKHOLDERS TO OBTAIN CURRENT QUOTATIONS OF THE MARKET PRICE OF THE SHARES.
Summary Historical Consolidated Financial Information. Set forth below
is certain summary historical consolidated financial information with respect
to the Company, excerpted or derived from the audited financial statements as
of and for the fiscal years ended the last day of February 1996 and 1995
which are contained in the Company's Annual Report on Form 10-K for the year
ended February 29, 1996, and from the unaudited financial statements as of
and for the nine months ended November 30, 1996 and 1995 which are contained
in the Company's Quarterly Report on Form 10-Q for the quarter ended November
30, 1996. The Company recently announced a change in its fiscal year end
from the last day of February to December 31, commencing for the fiscal year
beginning on March 1, 1996 and ending December 31, 1996. In the opinion of
management, the unaudited financial statements for the nine months ended
November 30, 1996 and 1995 reflect all adjustments necessary for a fair
statement of the results of operations for the interim periods. However, the
results of operations for any interim period are not necessarily indicative
of results for the full year. The summary historical consolidated financial
information should be read in conjunction with, and is qualified in its
entirety by reference to the consolidated financial statements and related
notes included in such reports. Copies of these reports may be inspected or
obtained at the offices of the Commission in the manner set under "Additional
Information" below.
- 10 -
<PAGE> 14
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED LAST
NOVEMBER 30 (UNAUDITED) DAY OF FEBRUARY
-------------------------------- --------------------------------
1996 1995 1996 1995
---- ---- ---- ----
(IN THOUSANDS EXCEPT PER SHARE AND RATIO AMOUNTS)
<S> <C> <C> <C> <C>
Statements of Earnings Data
Operating revenues $ 93,407 $ 66,883 $ 89,377 $ 83,210
Costs and expenses:
Operating expenses 66,383 49,076 65,487 62,912
General and administrative 15,110 8,612 11,202 9,601
Depreciation and
amortization 2,460 1,805 2,412 2,166
-------- -------- -------- --------
Total costs and expenses 83,953 59,493 79,101 74,679
-------- -------- -------- --------
Operating earnings 9,454 7,390 10,276 8,531
Interest income 137 192 344 112
Interest expense (1,101) (591) (759) (699)
Other income (expense) 11 13 26 (25)
-------- -------- -------- --------
Earnings before income taxes 8,501 7,004 9,887 7,919
Income taxes 3,422 2,857 4,009 3,184
-------- -------- -------- --------
Net earnings $ 5,079 $ 4,147 $ 5,878 $ 4,735
======== ======== ======== ========
Net earnings per common and
common equivalent share:
Primary $ 1.03 $ .90 $ 1.26 $ 1.05
======== ======== ======== ========
Assuming full dilution $ 1.00 $ .87 $ 1.23 $ 1.05
======== ======== ======== ========
Weighted average number of
common and common equivalent
shares outstanding:
Primary 4,913 4,588 4,650 4,464
Assuming full dilution 5,243 4,758 4,775 4,521
Ratio of earnings to
fixed charges<F1> 8.72 12.85 14.03 12.33
<FN>
- ------------------------
<F1> The ratios of earnings to fixed charges were computed by dividing
earnings before fixed charges by the fixed charges. Earnings consist of
income before income taxes plus fixed charges. Fixed charges consist of
interest expense.
</TABLE>
- 11 -
<PAGE> 15
<TABLE>
<CAPTION>
NOVEMBER 30, LAST DAY OF
(UNAUDITED) FEBRUARY
------------------------ ------------------------
1996 1995 1996 1995
---- ---- ---- ----
(IN THOUSANDS EXCEPT PER SHARE AND RATIO AMOUNTS)
<S> <C> <C> <C> <C>
Balance Sheet Data
Assets:
Cash and cash equivalents $ 1,076 $ 3,331 $ 6,174 $ 3,226
Marketable securities 5,279 4,000 4,495 --
Accounts receivable 21,884 12,017 10,847 12,916
Deferred tax asset 1,513 1,954 1,596 1,549
Other current assets 532 598 473 239
-------- -------- -------- --------
Total current assets 30,284 21,900 23,585 17,930
Equipment, net 3,057 1,547 1,601 1,664
Excess of net assets
acquired, net 45,114 27,077 27,085 27,635
Other assets 6,403 5,029 4,795 5,604
-------- -------- -------- --------
Total assets $ 84,858 $ 55,553 $ 57,066 $ 52,833
======== ======== ======== ========
Liabilities and Stockholders Equity:
Payables and accruals $ 20,486 $ 11,950 $ 11,767 $ 12,470
Other non-current liabilities 1,914 1,266 1,370 810
Long-term debt 14,500 5,625 5,032 7,122
Stockholders' equity 47,958 36,712 38,897 32,431
-------- -------- -------- --------
Total liabilities and
stockholders' equity $ 84,858 $ 55,553 $ 57,066 $ 52,833
======== ======== ======== ========
Book value per common share $ 10.24 $ 8.19 $ 8.61 $ 7.26
</TABLE>
Summary Unaudited Consolidated Pro Forma Financial Information. The
following summary unaudited consolidated pro forma financial information of
the Company as of and for the fiscal year ended February 29, 1996 and as of
and for the nine months ended November 30, 1996 sets forth the Company's
historical financial information as adjusted to give effect to the purchase
of 925,000 Shares pursuant to the Offer on the terms described in Section 1
at a purchase price of $20 per Share and $22 1/2 per Share, the minimum and
maximum possible Share Purchase Prices. The statement of earnings data give
effect to the purchase of Shares pursuant to the Offer as if it had occurred
at the beginning of each period presented. The balance sheet data give
effect to the purchase of Shares pursuant to the Offer as if it had occurred
as of the date of the respective balance sheets. The summary unaudited
consolidated pro forma statements of earnings and unaudited consolidated pro
forma balance sheets assume that the purchase of the shares was funded by the
Company's term and revolving credit facilities at an annualized interest rate
of 8%. Debt issuance costs were estimated at $487,000 and are amortized over
five years. The costs of the repurchase are estimated at $150,000. Debt
issuance and repurchase costs were assumed funded with cash and cash
equivalents with an annual yield of 5%. The provision for income taxes
related to the pro forma adjustments has been adjusted at an estimated
effective tax rate of 38%. The summary unaudited consolidated pro forma
financial information should be read in conjunction with the summary
historical consolidated financial information and accompanying notes and
audited and unaudited financial statements and related notes contained in the
Company's Annual Report on Form 10-K for the year ended February 29, 1996 and
Quarterly Report on Form 10-Q for the quarter ended November 30, 1996. The
summary unaudited consolidated pro forma financial information does not
purport to be indicative of the results that would actually have been
attained had the purchases of the Shares been completed at the dates
indicated or that may be attained in the future.
- 12 -
<PAGE> 16
<TABLE>
<CAPTION>
NINE MONTHS ENDED
NOVEMBER 30, 1996
----------------------------------
AT $20.00 AT $22.50
PURCHASE PURCHASE
HISTORICAL PRICE PRICE
---------- --------- ---------
(IN THOUSANDS EXCEPT PER SHARE
Statements of Earnings Data AND RATIO AMOUNTS)
<S> <C> <C> <C>
Operating revenues $ 93,407 $ 93,407 $ 93,407
Costs and expenses:
Operating expenses 66,383 66,383 66,383
General and administrative 15,110 15,110 15,110
Depreciation and amortization 2,460 2,460 2,460
-------- -------- --------
Total costs and expenses 83,953 83,953 83,953
-------- -------- --------
Operating earnings 9,454 9,454 9,454
Net interest expense 953 2,175 2,314
-------- -------- --------
Earnings before income taxes 8,501 7,279 7,140
Income taxes 3,422 2,958 2,905
-------- -------- --------
Net earnings $ 5,079 $ 4,321 $ 4,235
======== ======== ========
Net earnings per common
and common equivalent share:
Primary $ 1.03 $ 1.08 $ 1.06
======== ======== ========
Assuming full dilution $ 1.00 $ 1.04 $ 1.02
======== ======== ========
Weighted average number of common and
common equivalent shares outstanding:
Primary 4,913 3,988 3,988
Assuming full dilution 5,243 4,318 4,318
Ratios of earnings to fixed charges 8.72 4.17 3.93
</TABLE>
<TABLE>
<CAPTION>
NOVEMBER 30, 1996
----------------------------------
AT $20.00 AT $22.50
PURCHASE PURCHASE
HISTORICAL PRICE PRICE
---------- --------- ---------
(IN THOUSANDS EXCEPT PER SHARE
Balance Sheet Data AND RATIO AMOUNTS)
<S> <C> <C> <C>
Assets:
Cash and cash equivalents $ 1,076 $ 439 $ 439
Marketable securities 5,279 5,279 5,279
Accounts receivable 21,884 21,884 21,884
Deferred tax asset 1,513 1,513 1,513
Other current assets 532 532 532
-------- -------- --------
Total current assets 30,284 29,647 29,647
Equipment, net 3,057 3,057 3,057
Excess of net assets acquired, net 45,114 45,114 45,114
Other assets 6,403 6,890 6,890
-------- -------- --------
Total assets $ 84,858 $ 84,708 $ 84,708
======== ======== ========
Liabilities and Stockholders' Equity:
Payables and accruals $ 20,486 $ 21,486 $ 21,486
Other non-current liabilities 1,914 1,914 1,914
Long-term debt 14,500 32,000 34,313
Stockholders' equity 47,958 29,308 26,995
-------- -------- --------
Total liabilities and stockholders'
equity $ 84,858 $ 84,708 $ 84,708
======== ======== ========
Book value per common share $ 10.24 $ 7.80 $ 7.18
</TABLE>
- 13 -
<PAGE> 17
<TABLE>
<CAPTION>
YEAR ENDED
FEBRUARY 29, 1996
----------------------------------
AT $20.00 AT $22.50
PURCHASE PURCHASE
HISTORICAL PRICE PRICE
---------- --------- ---------
(IN THOUSANDS EXCEPT PER SHARE
Statements of Earnings Data AND RATIO AMOUNTS)
<S> <C> <C> <C>
Operating revenues $ 89,377 $ 89,377 $ 89,377
Costs and Expenses:
Operating expenses 65,487 65,487 65,487
General and administrative 11,202 11,202 11,202
Depreciation and amortization 2,412 2,412 2,412
-------- -------- --------
Total costs and expenses 79,101 79,101 79,101
-------- -------- --------
Operating earnings 10,276 10,276 10,276
Net interest expense 389 2,018 2,203
-------- -------- --------
Earnings before income taxes 9,887 8,258 8,073
Income taxes 4,009 3,391 3,320
-------- -------- --------
Net earnings 5,878 4,867 4,753
======== ======== ========
Net earnings per common
and common equivalent share:
Primary $ 1.26 $ 1.31 $ 1.28
======== ======== ========
Assuming full dilution $ 1.23 $ 1.26 $ 1.23
======== ======== ========
Weighted average number of common and
common equivalent shares outstanding:
Primary 4,650 3,725 3,725
Assuming full dilution 4,775 3,850 3,850
Ratios of earnings to fixed charges 14.03 4.51 4.18
</TABLE>
<TABLE>
<CAPTION>
FEBRUARY 29, 1996
----------------------------------
AT $20.00 AT $22.50
PURCHASE PURCHASE
HISTORICAL PRICE PRICE
---------- --------- ---------
(IN THOUSANDS EXCEPT PER SHARE
Balance Sheet Data AND RATIO AMOUNTS)
<S> <C> <C> <C>
Assets:
Cash and cash equivalents $ 6,174 $ 5,537 $ 5,537
Marketable securities 4,495 4,495 4,495
Accounts receivable 10,847 10,847 10,847
Deferred tax asset 1,596 1,596 1,596
Other current assets 473 473 473
-------- -------- --------
Total current assets 23,585 22,948 22,948
Equipment, net 1,601 1,601 1,601
Excess of net assets acquired, net 27,085 27,085 27,085
Other assets 4,795 5,282 5,282
-------- -------- --------
Total assets $ 57,066 $ 56,916 $ 56,916
======== ======== ========
Liabilities and Stockholders' Equity:
Payables and accruals $ 11,767 $ 12,767 $ 12,767
Other non-current liabilities 1,370 1,370 1,370
Long-term debt 5,032 22,532 24,845
Stockholders' equity 38,897 20,247 17,934
-------- -------- --------
Total liabilities and stockholders'
equity $ 57,066 $ 56,916 $ 56,916
======== ======== ========
Book value per common share $ 8.61 $ 5.64 $ 4.99
</TABLE>
- 14 -
<PAGE> 18
Additional Information.
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is obligated to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning
the Company's directors and officers, their remuneration, options granted to
them, the principal holders of the Company's securities and any material
interest of such persons in transactions with the Company is required to be
disclosed in proxy statements distributed to the Company's stockholders and
filed with the Commission. The Company has also filed an Issuers Tender
Offer Statement on Schedule 13e-4 with the Commission, which includes certain
additional information relating to the Offer. Such reports, proxy statements
and other information are available for inspection at the public reference
facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at the regional offices of the Commission,
located at Suite 1300, Seven World Trade Center, New York, New York 10048 and
Suite 1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois
60661. Copies of such materials may also be obtained from the Public
Reference Section of the Commission 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates or from the Commission's World Wide Web site on
the Internet at http://www.sec.gov.
Upon either written or oral request, any person receiving a copy of this
Offer to Purchase may obtain from the Company, without charge, a copy of any
of the documents incorporated by reference herein, except for the exhibits to
such documents (unless such exhibits are specifically incorporated by
reference into the information that this Offer to Purchase incorporates).
Written requests should be directed to: Investor Relations, RehabCare Group,
Inc., 7733 Forsyth Boulevard, St. Louis, Missouri 63105 (telephone number
(314) 863-7422).
The following documents filed with the Commission pursuant to applicable
statutes are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
February 29, 1996;
(2) The Company's Current Report on Form 8-K, dated January 27, 1997;
(3) The Company's Quarterly Report on Form 10-Q for the quarter ended May
30, 1996;
(4) The Company's Quarterly Report on Form 10-Q for the quarter ended
August 31, 1996;
(5) The Company's Quarterly Report on Form 10-Q for the quarter ended
November 30, 1996;
(6) The description of the Company's Common Stock set forth in the
Company's Registration Statement on Form 8-A, including any amendment or
report filed for the purpose of updating such description; and
(7) The description of the Company's Preferred Stock Purchase Right Plan
contained in the Company's Registration Statement on Form 8-A, dated
September 22, 1992, including any amendment or report filed for the purpose
of updating such descriptions.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Offer to
Purchase and prior to the filing of a post-effective amendment which
indicates that all such securities offered hereby have been sold or which
deregisters all securities then remaining to be sold shall be deemed
incorporated by reference into this Offer to Purchase and to be a part hereof
from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Offer to Purchase
to the extent that a statement contained herein, or in any other subsequently
filed document that also is or is deemed to be incorporated by reference
herein, modifies or supersedes such statement. Any statement contained in
this Offer to Purchase shall be deemed to be modified or superseded to the
extent that a statement contained in a subsequently filed document which is
or is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Offer to
Purchase.
- 15 -
<PAGE> 19
9. BACKGROUND AND PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE
OFFER. The Board of Directors believes the Company's financial condition,
outlook for continuing favorable cash generation and available credit
facilities will allow it to reinvest in the business and to use its excess
cash and debt capacity to fund the Offer. The Board of Directors believes
that the purchase of Shares is an attractive use of the Company's financial
resources and that the use of cash and borrowing to fund the Offering will
result in a more efficient capital structure for the Company. Accordingly,
the Board believes the Offer is consistent with the Company's long-term
corporate goal of increasing stockholder value. Following completion of the
repurchase, the Company will have ready access to sources of capital
sufficient to fund investments in the business, including through attractive
acquisition opportunities. At the same time, the Offer provides the
Company's stockholders with the opportunity to sell a portion of their Shares
(without the usual transaction costs associated with open-market sales),
while retaining a continuing equity interest in the Company if they so
desire.
The Company may in the future purchase additional Shares on the open
market, in private transactions, through tender offers or otherwise. Any
such purchases may be on the same terms or on terms which are more or less
favorable to stockholders than the terms of the Offer. However, Rule 13e-4
under the Exchange Act prohibits the Company and its affiliates from
purchasing any Shares, other than pursuant to the Offer, until at least 10
business days after the Expiration Date. Any possible future purchases by
the Company will depend on many factors, including the market price of the
Shares, the Company's business and financial position and general economic
and market conditions. Except as disclosed in this Offer to Purchase or in
the documents incorporated by reference herein, the Company has no current
plans or proposals which relate to or would result in any extraordinary
corporate transaction involving the Company, such as a merger, a
reorganization, a sale or transfer of a material amount of its assets, a
change in its present Board of Directors or management, any change in its
policy of paying dividends, a material change in its indebtedness or
capitalization, a material change in its Certificate of Incorporation or
By-laws, any other material change in its business or corporate structure, or
a change which would cause the Shares to become eligible for termination of
registration under the Exchange Act, or any action similar to any of the
foregoing.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED
THE MAKING OF THE OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS
BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO STOCKHOLDERS AS TO
WHETHER TO TENDER ALL OR ANY PORTION OF THEIR SHARES, OR AS TO THE
PRICE AT WHICH THEY SHOULD TENDER. STOCKHOLDERS ARE URGED TO
EVALUATE CAREFULLY ALL INFORMATION IN THE OFFER, CONSULT THEIR OWN
INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN DECISIONS WHETHER
TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE
PRICE OR PRICES AT WHICH SHARES SHOULD BE TENDERED.
THE COMPANY MAKES NO REPRESENTATION AS TO THE CURRENT FAIR
MARKET VALUE OF THE SHARES OR ITS RELATION TO THE RANGE OF
PURCHASE PRICES IN THE OFFER.
The reduction in the number of outstanding Shares pursuant to the Offer
will increase the interests in the Company of holders of Company's Common
Stock and of stockholders whose Shares are not tendered or not purchased in
the Offer, including such persons' interests in the Company's earnings.
After consummation of the Offer, future increases or declines in earnings per
share will be greater because of the decreased number of Shares outstanding.
In addition, to the extent the purchase of Shares pursuant to the Offer
results in a reduction in the number of stockholders of record, the costs to
the Company for services to stockholders will be reduced. The Company's
purchase of the Shares pursuant to the Offer will reduce the number of Shares
that might otherwise trade publicly and is likely to reduce the number of
stockholders. The Company anticipates that there will still be a sufficient
number of Shares outstanding and publicly traded following the Offer to
ensure a continued trading market in the Shares.
Based upon published guidelines of The Nasdaq National Market, the Company
believes that its purchase of Shares pursuant to the Offer will not cause its
remaining Shares to be delisted from The Nasdaq National Market. The Shares
are currently "margin securities" under the rules of the Federal Reserve
Board. Such designation has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. The Company
- 16 -
<PAGE> 20
believes that, following the purchase of the Shares pursuant to the Offer,
the Shares will continue to be "margin securities" for purposes of the
Federal Reserve Board's margin requirements.
Any Shares acquired by the Company pursuant to the Offer will be cancelled
and will be available for issuance by the Company without further stockholder
action except as required by applicable law. Such Shares could be issued in
connection with the acquisition of other businesses, the raising of
additional capital for use in the Company's business, the distribution of
stock dividends and the implementation of employee stock benefit programs.
The Shares are registered under the Exchange Act, which requires that the
Company furnish certain information to its stockholders and the Commission
and comply with the Commission's proxy rules in connection with meetings of
the Company's stockholders. The Company believes that the purchase of Shares
pursuant to the Offer will not result in the Shares becoming eligible for
deregistration under the Exchange Act.
10. TRANSACTIONS AND ARRANGEMENTS CONCERNING SHARES. As of
January 28, 1997, the Company's directors and executive officers as a group
beneficially owned (including Shares issuable upon the exercise of options
exercisable within 60 days) an aggregate of 877,375 Shares, which was
approximately 14.80% of the outstanding Shares, including Shares issuable
upon the exercise of options exercisable within 60 days. If the Company
purchases 925,000 Shares pursuant to the Offer and no executive officer or
director tenders Shares pursuant to the Offer, then after the purchase of
Shares pursuant to the Offer, the Company's executive officers and directors
as a group would beneficially own approximately 17.50% of the outstanding
Shares, including Shares issuable upon the exercise of options exercisable
within 60 days. The Company has been advised that no director or executive
officer intends to tender any Shares pursuant to the Offer.
Based upon the Company's records and upon information provided to the
Company by its directors, executive officers and affiliates, neither the
Company nor, to the best of the Company's knowledge, any of the directors or
executive officers of the Company, nor any associates of any of the
foregoing, has effected any transactions in the Shares during the 40 business
days prior to the date hereof.
Neither the Company nor, to the best of the Company's knowledge, any of
its directors or executive officers, is a party to any contract, arrangement,
understanding or relationship with any other person relating, directly or
indirectly, to the Offer including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the
voting of any such securities, joint venture, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies, consents or authorizations.
11. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following
discussion is a general summary of the material United States federal income
tax ("federal income tax") consequences of participating in the Offer and
does not purport to be a complete analysis or listing of all potential tax
considerations or consequences relevant to a decision whether to participate
in the Offer. The discussion does not address all aspects of federal income
taxation that may be applicable to stockholders in light of their status or
personal investment circumstances, nor does it address the federal income tax
consequences of the Offer that are applicable to stockholders subject to
special federal income tax treatment including (without limitation) foreign
persons, insurance companies, tax-exempt entities, retirement plans, dealers
in securities, persons who acquired their Shares pursuant to the exercise of
employee stock options or otherwise as compensation, and persons who hold
their Shares as part of a "straddle," "hedge" or "conversion transaction."
In addition, the discussion does not address the effect of any applicable
state, local or foreign tax laws, or the effect of any federal tax laws other
than those pertaining to the federal income tax. AS A RESULT, EACH
STOCKHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR TO
DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO SUCH
STOCKHOLDER. The discussion assumes that shares of Shares are held as
capital assets (within the meaning of Section 1221 of the Code) at the
Effective Time.
A sale of Shares pursuant to the Offer will be a taxable transaction.
Provided that a sale of Shares in return for the Purchase Price does not have
the effect of the distribution of a dividend, a stockholder will realize gain
or loss for federal income tax purposes in an amount equal to the difference
between (x) the Purchase Price and (y) such stockholder's tax basis for the
Shares surrendered in exchange therefor. Any such gain or loss will be
recognized for federal income tax purposes, and will be treated as capital
gain or loss. However, if a sale of Shares does have the effect of the
distribution of a dividend, the amount of taxable income recognized generally
will equal
- 17 -
<PAGE> 21
the amount of the Purchase Price received; such gain generally will be taxable
as a dividend; and no loss (or other recovery of such stockholder's tax basis
for the Shares surrendered in the exchange) will be recognized by such
stockholder.
The determination of whether a sale of Shares pursuant to the Offer has
the effect of the distribution of a dividend will be made in accordance with
the provisions and limitations of Section 302 of the Code, taking into
account the constructive ownership rules of Section 318 of the Code. A sale
of Shares to the Company pursuant to the Offer will be considered not to have
the effect of the distribution of a dividend under Section 302 of the Code
only if the sale (i) results in a "complete redemption" of Shares actually
and constructively owned by such stockholder, (ii) results in a
"substantially disproportionate" reduction of the percentage of Shares
actually and constructively owned by such stockholder, or (iii) is "not
essentially equivalent to a dividend." Under the constructive ownership
rules of Section 318 of the Code, a stockholder will be deemed to own stock
that is actually owned, and in some cases constructively owned, by certain
members of his or her family (spouse, children, grandchildren, and parents)
and other related parties including, for example, certain entities in which
such stockholder has a direct or indirect interest (including partnerships,
estates, trusts and corporations), as well as shares of stock that such
stockholder (or a related person) has the right to acquire upon exercise of
an option or conversion right. Moreover, Shares sold or acquired by a
stockholder or a related party in transactions contemporaneous with the Offer
may be taken into account in determining whether the stockholder satisfies
any of these tests.
A sale of Shares pursuant to the Offer will result in a "complete
redemption" of a stockholder's interest and such stockholder will recognize
capital gain or loss if such stockholder does not actually or constructively
own any Shares after the completion of the Offer. If a stockholder's sale of
Shares pursuant to the Offer includes all Shares actually owned by the
stockholder but the stockholder constructively owns Shares held by family
members after the Offer, such stockholder nevertheless may qualify for
"complete redemption" treatment if such stockholder is eligible under the
provisions of Section 302(c) of the Code to elect to disregard Shares owned
by family members. Stockholders in this position should consult their tax
advisors as to the availability and manner of such an election.
A sale of Shares pursuant to the Offer will result in a "substantially
disproportionate" reduction in a stockholder's interest and such
stockholder's recognized gain will be capital if the percentage of
outstanding Shares actually and constructively owned by such stockholder
after the completion of the Offer is less than four-fifths (i.e., 80%) of
----
the percentage of outstanding Shares actually and constructively owned by such
stockholder immediately prior to the Offer.
A sale of Shares pursuant to the Offer will not be "essentially equivalent
to a dividend" and such stockholder's recognized gain will be capital if the
sale of Shares results in a meaningful reduction in the percentage of
outstanding shares actually and constructively owned by such stockholder. No
specific tests apply to determine whether a reduction in a stockholder's
ownership interest is meaningful; rather, such determination will be made
based on all the facts and circumstances applicable to such stockholder. No
general guidelines dictating the appropriate interpretation of facts and
circumstances have been announced by the courts or issued by the Internal
Revenue Service (the "Service"). However, the Service has indicated in
Revenue Ruling 76-385 that a minority stockholder (i.e., a holder who
----
exercises no control over corporate affairs and whose proportionate stock
interest is minimal in relation to the number of shares outstanding)
generally is treated as having had a "meaningful reduction" in interest if
such holder's actual and constructive stock ownership is reduced by even a
small amount.
If any of the three tests described above is satisfied, the tendering
stockholder will recognize capital gain or loss equal to the difference
between the amount of cash received by the stockholder pursuant to the Offer
in exchange for the Shares and the stockholder's tax basis in the Shares
sold. Such gain or loss must be determined separately for each block of
Shares sold (i.e., Shares acquired at the same time in a single transaction)
and will be long-term capital gain or loss if the Shares were held for more
than one year. Long-term capital gains of individuals, estates and trusts
currently are subject to federal income tax at the maximum statutory rate of
28%, which rate may be changed during 1997, possibly with retroactive effect.
If none of the three tests described above is satisfied, the tendering
stockholder generally will be treated as having received a dividend in an
amount equal to the Purchase Price, if the Company has sufficient earnings
and profits. The Company presently anticipates that its current and
accumulated earnings and profits will be sufficient
- 18 -
<PAGE> 22
to cover the amount of all distributions pursuant to the Offer, if any, that
are taxable as dividends. Dividend income of individuals, estates and trusts
currently is subject to federal income tax at the maximum statutory rate of
39.6%, which rate may be changed during 1997, possibly with retroactive
effect. To the extent that the purchase of Shares from any stockholder
pursuant to the Offer is treated as a dividend, such stockholder's tax basis
in any Shares which the stockholder retains after consummation of the Offer
will be increased by the stockholder's tax basis in the Shares purchased
pursuant to the Offer.
Because the determination of whether a sale of Shares will be treated as
having the effect of the distribution of a dividend will generally depend
upon the facts and circumstances of each stockholder, stockholders are
strongly advised to consult their own tax advisors regarding the tax
consequences of participating in the Offer.
In the case of a corporate stockholder, if the cash paid pursuant to the
Offer is treated as a dividend, the dividend income may be eligible for the
70% dividends-received deduction. The dividends-received deduction is
subject to certain limitations and may not be available if the corporate
stockholder does not satisfy certain holding period requirements with respect
to the Shares or if the Shares are treated as "debt-financed portfolio
stock." If a dividends-received deduction is available, the dividend may be
treated as an "extraordinary dividend," as defined by Section 1059 of the
Code, in which case the corporate stockholder's tax basis in the Shares would
be reduced (but not below zero) by the amount of any "extraordinary
dividend," which is not taxed because of the dividends-received deduction.
Any amount in excess of the corporate stockholder's tax basis for the Shares
generally will be subject to tax on the sale or disposition of those Shares.
Corporate stockholders should consult their tax advisors as to the
availability of the dividends-received deduction and the application of
Section 1059 of the Code to the Offer.
Each stockholder should be aware that his or her ability to satisfy the
requirements of Code Section 302 may be affected by any proration pursuant to
the Offer. Therefore, a stockholder can be given no assurance, even if he
tenders all of his Shares, that the Company will purchase a sufficient number
of such Shares to permit him to satisfy such requirements.
SEE SECTION 3 WITH RESPECT TO THE APPLICATION OF BACKUP FEDERAL INCOME TAX
WITHHOLDING.
THE FOREGOING IS A GENERAL DISCUSSION OF THE MATERIAL FEDERAL
INCOME TAX CONSEQUENCES OF THE OFFER TO CERTAIN STOCKHOLDERS AND
IS INCLUDED FOR GENERAL INFORMATION ONLY. THE FOREGOING
DISCUSSION DOES NOT TAKE INTO ACCOUNT THE PARTICULAR FACTS AND
CIRCUMSTANCES OF EACH STOCKHOLDER'S TAX STATUS AND ATTRIBUTES. AS
A RESULT, THE FEDERAL INCOME TAX CONSEQUENCES ADDRESSED IN THE
FOREGOING DISCUSSION MAY NOT APPLY TO EACH STOCKHOLDER.
ACCORDINGLY, EACH STOCKHOLDER SHOULD CONSULT HIS OR HER OWN TAX
ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE OFFER,
INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL AND
OTHER TAX LAWS.
12. FEES AND EXPENSES. The Company has retained Cowen & Company
("Cowen") as its financial advisor and as Dealer Manager in connection with
the Offer. For its services in connection with the Offer, Cowen will receive
a fee of $50,000 plus $.06 for each Share purchased pursuant to the Offer
(except for Shares held by Cowen's asset management group). The Company will
also reimburse Cowen for reasonable out-of-pocket expenses relating to the
Offer. The Company has agreed to indemnify Cowen against certain liabilities
in connection with the Offer, including certain liabilities under the federal
securities laws.
The Company has retained Georgeson & Company Inc. to act as Information
Agent and Boatmen's Trust Company to act as Depositary in connection with the
Offer. The Information Agent may contact holders of Shares by mail,
telephone, telex, telegraph, facsimile and personal interviews and may
request brokers, dealers and other nominee stockholders to forward materials
relating to the Offer to beneficial owners. Georgeson & Company Inc. and
Boatmen's Trust Company will each receive reasonable and customary
compensation for their respective services, will be reimbursed by the Company
for their reasonable out-of-pocket expenses, including attorneys' fees,
- 19 -
<PAGE> 23
and will be indemnified against certain liabilities in connection with the
Offer, including certain liabilities under the federal securities laws.
No fees or commissions will be payable to brokers, dealers or other
persons (other than fees to the Dealer Manager, the Information Agent or the
Depositary as described above) for soliciting holders of Shares pursuant to
the Offer. The Company will, however, on request through the Information
Agent, reimburse such persons for customary handling and mailing expenses
incurred in forwarding materials with respect to the Offer to the beneficial
owners for which they act as nominees. No broker, dealer, commercial bank or
trust company has been authorized to act as the agent of the Company, the
Dealer Manager, the Information Agent or the Depositary for purposes of the
Offer. The Company will pay or cause to be paid all stock transfer taxes, if
any, on its purchase of Shares except as otherwise provided in Instruction 7
in the Letter of Transmittal.
13. MISCELLANEOUS. The Company is not aware of any license or
regulatory permit that appears to be material to the Company's business that
might be adversely affected by the Company's acquisition of Shares as
contemplated herein or of any approval or other action by any government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, that would be required for the acquisition or ownership of Shares by
the Company as contemplated herein. Should any such approval or other action
be required, the Company currently contemplates that such approval or other
action will be sought. The Company is unable to predict whether it may
determine that it is required to delay the acceptance for payment of or
payment for Shares tendered pursuant to the Offer pending the outcome of any
such matter. There can be no assurance that any such approval or other
action, if needed, would be obtained or would be obtained without substantial
conditions or that the failure to obtain any such approval or other action
might not result in adverse consequences to the Company's business. The
Company's obligations under the Offer to accept for payment and pay for
Shares are subject to certain conditions. See Section 6.
The Offer is not being made to, nor will the Company accept tenders from,
holders of Shares in any jurisdiction in which the Offer or its acceptance
would not comply with the securities or Blue Sky laws of such jurisdiction.
The Company is not aware of any jurisdiction in which the making of the Offer
or the tender of Shares would not be in compliance with the laws of such
jurisdiction. However, the Company reserves the right to exclude holders in
any jurisdiction in which it is asserted that the Offer cannot lawfully be
made. So long as the Company makes a good faith effort to comply with any
state law deemed applicable to the Offer, if it cannot do so, the Company
believes that the exclusion of holders residing in such jurisdiction is
permitted under Rule 13e-4(f)(9) promulgated under the Exchange Act. In any
jurisdiction that the securities or Blue Sky laws require the Offer to be
made by a licensed broker or dealer, the Offer shall be deemed to be made on
the Company's behalf by Cowen as Dealer Manager or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
Pursuant to Rule 13e-4 of the General Rules and Regulations under the
Exchange Act, the Company has filed with the Commission an Issuer Tender
Offer Statement on Schedule 13E-4 which contains additional information with
respect to the Offer. Such Schedule 13E-4, including the exhibits and any
amendments thereto, may be examined, and copies may be obtained, at the same
places and in the same manner as is set forth in Section 8 with respect to
information concerning the Company.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE
ANY REPRESENTATION ON BEHALF OF THE COMPANY IN CONNECTION WITH THE
OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN
THE RELATED LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY.
REHABCARE GROUP, INC.
January 31, 1997
- 20 -
<PAGE> 24
Facsimile copies of the Letter of Transmittal will be accepted. The
Letter of Transmittal and certificates for Shares and any other required
documents should be sent or delivered by each stockholder or his broker,
dealer, commercial bank, trust company or nominee to the Depositary at one of
its addresses set forth below.
The Depositary:
BOATMEN'S TRUST COMPANY
Telephone Number:
(800) 456-9852
Facsimile Transmission By Hand or
By Mail: Copy Numbers: Overnight Courier:
Boatmen's Trust Company (314) 466-2425 Boatmen's Trust Company
Corporate Trust Dept. Corporate Trust Dept.
510 Locust Street Second Floor
P.O. Box 14764 510 Locust Street
St. Louis, MO 63178-4764 Confirm Facsimile St. Louis, MO 63101
by Telephone:
(800) 456-9852
or
(314) 466-2425
----------------------
Any questions or requests for assistance or additional copies of this
Offer to Purchase and the Letter of Transmittal may be directed to the
Information Agent at the telephone number and location listed below. You may
also contact the Dealer Manager or your broker, dealer, commercial bank or
trust company for assistance concerning the Offer.
The Dealer Manager for the Offer is:
COWEN & COMPANY
One Financial Square
New York, New York 10005
(212) 495-8630
or
(800) 221-5616 (#8630)
The Information Agent for the Offer is:
GEORGESON & COMPANY INC.
Wall Street Plaza
New York, New York 10005
----------------------
For Information Call:
Banks and Brokers Call Collect:
(212) 440-9800
Call Toll Free:
1-800-223-2064
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED
PREFERRED STOCK PURCHASE RIGHTS)
OF
REHABCARE GROUP, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED JANUARY 31, 1997
- -------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, EASTERN TIME, ON FEBRUARY 28, 1997
UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
The Depositary for the Offer is:
BOATMEN'S TRUST COMPANY
Telephone Number:
(800) 456-9852
Facsimile Transmission By Hand or
By Mail: Copy Numbers: Overnight Courier:
Boatmen's Trust Company (314) 466-2425 Boatmen's Trust Company
Corporate Trust Dept Corporate Trust Dept
510 Locust Street Second Floor
P.O. Box 14764 Confirm Facsimile 510 Locust Street
St. Louis, MO 63178-4764 by Telephone: St. Louis, MO 63101
(800) 456-9852
or
(314) 466-1357
FOR INFORMATION CALL:
GEORGESON & COMPANY INC.
----------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION TO A TELEPHONE
OR TELEX NUMBER, OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A VALID
DELIVERY.
The Instructions accompanying this Letter of Transmittal should be read
carefully before the Letter of Transmittal is completed.
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTIONS 3 AND 4)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Name(s), address(es) and number of shares of registered holder(s). Tendered Certificates
Please fill in exactly as name(s) appear(s) on certificate(s). (Attach signed list if necessary)
- ------------------------------------------------------------------------------------------------------------------------------------
Certificate Total Number of Number of Shares
Number(s)<F*> Shares Evidenced Tendered<F**>
by Certificate<F*>
<S> <C> <C> <C>
------------ ----------------- ----------------
------------ ----------------- ----------------
------------ ----------------- ----------------
------------ ----------------- ----------------
TOTAL SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
Indicate in this box the order (by certificate number) in which Shares are to be purchased in the event of proration.<F***>
(Attach additional signed list if necessary). See Instruction 15. ______ 1st ______ 2nd ______ 3rd
<F*> Need not be completed by stockholder delivering Shares by book entry transfer.
<F**> Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share certificate delivered to the
Depositary are being tendered hereby. See Instruction 4.
<F***> If you do not designate an order, then in the event less than all Shares tendered are purchased due to proration, Shares will
be selected for purchase by the Depositary.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
PURCHASE PRICE PER SHARE AT WHICH SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5)
- -------------------------------------------------------------------------------
CHECK ONLY ONE BOX
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES.
/ / $20 / / $20 5/8 / / $21 1/8 / / $21 5/8 / / $22 1/8
/ / $20 1/8 / / $20 3/4 / / $21 1/4 / / $21 3/4 / / $22 1/4
/ / $20 1/4 / / $20 7/8 / / $21 3/8 / / $21 7/8 / / $22 3/8
/ / $20 3/8 / / $21 / / $21 1/2 / / $22 / / $22 1/2
/ / $20 1/2
===============================================================================
<PAGE> 2
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS.
This Letter of Transmittal is to be completed by stockholders either if
certificates evidencing Shares (as defined below) are to be forwarded
herewith or if delivery of Shares is to be made by book entry transfer to the
Depositary's account at The Depository Trust Company ("DTC"), the Midwest
Securities Trust Company ("MSTC"), or the Philadelphia Depository Trust
Company ("PDTC") (each a "Book Entry Transfer Facility" and collectively, the
"Book Entry Transfer Facilities") pursuant to the book entry transfer
procedure described in Section 3 of the Offer to Purchase (as defined below).
Delivery of documents to a Book Entry Transfer Facility does not constitute
delivery to the Depositary.
Absent circumstances causing the Rights (as defined below) to become
exercisable or separately tradeable prior to the Expiration Date (as defined
in Section 1 of the Offer to Purchase), a tender of Shares will also
constitute a tender of the associated Rights. Unless the context requires
otherwise, all references herein to Shares include the associated Rights.
Stockholders whose certificates evidencing Shares are not immediately
available or who cannot deliver their Share certificates and all other
documents required hereby to the Depository prior to the Expiration Date or
who cannot complete the procedure for delivery by book entry transfer on a
timely basis and who wish to tender Shares must do so pursuant to the
guaranteed delivery procedure described in Section 3 of the Offer to
Purchase. See Instruction 2.
/ / Check here if Shares are being delivered by book entry transfer
to the Depository's account at one of the Book Entry Transfer
Facilities and complete the following:
Name of Tendering Institution______________________________________
Check box of Applicable Book Entry Transfer Facility:
/ / DTC / / MSTC / / PDTC
Transaction Code No.________________________
Account No._________________________________
/ / Check here if Shares are being tendered pursuant to a Notice of
Guaranteed Delivery previously sent to the Depositary and complete
the following:
Name of Registered Holder(s)_______________________________________
Date of Execution of Notice of Guaranteed Delivery_________________
Name of Institution which Guaranteed Delivery______________________
If delivery is by book entry transfer:
Check Box of Applicable Book Entry Transfer Facility:
/ / DTC / / MSTC / / PDTC
Transaction Code No.________________
Account No._________________________
/ / LOST CERTIFICATES. Check here if you cannot locate your
certificates and require assistance in replacing them.
Upon receipt of this Letter of Transmittal, the Depositary will
contact you directly with replacement instructions.
- 2 -
<PAGE> 3
Boatmen's Trust Company:
The undersigned tenders to RehabCare Group, Inc. (the "Company") the
certificates described above representing shares of its Common Stock, $.01
par value per share ("Shares"), including associated preferred stock purchase
rights (the "Rights") of the Company at the price per Share indicated in this
Letter of Transmittal, net to the seller in cash, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated January 31, 1997
(the "Offer to Purchase"), receipt of which is acknowledged, and in this
Letter of Transmittal (which together constitute the "Offer"). Absent
circumstances causing the Rights to become exercisable or separately
tradeable prior to the Expiration Date, a tender of the Shares will also
constitute a tender of the associated Rights. Unless the context requires
otherwise, all references herein to the Shares include the associated Rights.
Subject to and effective upon acceptance for payment of the tendered
Shares, in accordance with the terms and subject to the conditions of the
Offer, the undersigned hereby sells, assigns and transfers to, or upon the
order of, the Company all right, title and interest in and to the all Shares
tendered hereby or orders the registration of such Shares tendered by book
entry transfer that are purchased pursuant to the Offer to or upon the order
of the Company and irrevocably constitutes and appoints the Depositary as the
true and lawful attorney-in-fact for the undersigned with respect to such
Shares, with full power of substitution (such power of attorney being deemed
to be an irrevocable power coupled with an interest), to (a) deliver
certificates for such Shares or transfer ownership of such Shares on the
account books maintained by a Book Entry Transfer Facility, together, in
either case, with all accompanying evidences of transfer and authenticity, to
or upon the order of the Company upon receipt by you, as the undersigned's
agent, of the Purchase Price (as defined below), (b) present such
certificates for transfer or cancellation of such Shares on the Company's
books and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, all in accordance with the terms and
subject to the conditions of the Offer.
The undersigned represents and warrants that (a) the undersigned has a
net long position in the Shares within the meaning of Rule 14e-4 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
(b) the tender of such Shares complies with Rule 14e-4, (c) when and to the
extent the Company accepts the Shares for purchase, the Company will acquire
good, marketable and unencumbered title to such Shares, free and clear of all
security interests, liens, charges, encumbrances, conditional sales
agreements or other obligations relating to their sale or transfer, and not
subject to any adverse claims, (d) on request, the undersigned will execute
and deliver any additional documents the Depositary or the Company deems
necessary or desirable to complete the assignment, transfer and purchase of
the Shares tendered hereby, (e) the undersigned has read and agrees to all
other terms of the Offer, and (f) the undersigned has full power and
authority to tender, sell, assign and transfer Shares tendered hereby.
The undersigned understands that the Company will determine the single
purchase price, not less than $20 nor in excess of $22 1/2 per Share (the
"Purchase Price"), that will enable it to purchase 925,000 Shares (or such
lesser number of Shares as are properly tendered) pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified
by tendering stockholders. The undersigned understands that the Company
expressly reserves the right, in its sole discretion, and regardless of
whether any of the events set forth in Section 6 of the Offer to Purchase
shall have occurred or been determined by the Company to have occurred, to
amend the Offer in any respect (including, without limitation, by increasing
or decreasing the range of prices which may be paid for the Shares or the
number of Shares being sought in the Offer). See Section 2 of the Offer to
Purchase. The undersigned understands that all Shares properly tendered at
prices at or below the Purchase Price and not withdrawn will be purchased at
the Purchase Price, upon the terms and subject to the conditions of the
Offer, including the proration provisions of the Offer to Purchase. The
Purchase Price will be paid to the tendering stockholder in cash for all
Shares purchased. The undersigned understands that all Shares tendered and
not purchased pursuant to the Offer, including Shares tendered at prices in
excess of the Purchase Price and Shares not purchased because of proration,
will be returned to the undersigned at the Company's expense as promptly as
practicable following the Expiration Date.
The undersigned recognizes that under certain circumstances set forth in
the Offer to Purchase, the Company may not be required to purchase any of the
Shares tendered hereby or may purchase, pro rata with Shares tendered by
other stockholders, fewer than all of the Shares tendered hereby. In either
event, the undersigned understands that the certificates for any Shares
tendered and not purchased by the Company will be returned to the undersigned
at the address indicated above unless otherwise indicated under the "Special
Payment Instructions" or the "Special Delivery Instructions" below.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in Section 3 of the Offer to Purchase or in the
accompanying Instructions will constitute an agreement between the
undersigned and the Company upon the terms and subject to the conditions of
the Offer.
The check for the Purchase Price for tendered Shares that are purchased
will be issued to the order of the undersigned and mailed to the address
above unless otherwise indicated under the "Special Payment Instructions" or
the "Special Delivery Instructions" below. Similarly, unless otherwise
indicated under
- 3 -
<PAGE> 4
"Special Payment Instructions," or "Special Delivery Instructions," any
certificates for Shares not tendered or accepted for payment (and any
accompanying documents, as appropriate) will be returned to the undersigned at
the address shown above. In the event that both the "Special Delivery
Instructions" and the "Special Payment Instructions" are completed, the check
for the Purchase Price and/or any Shares not tendered or accepted for payment
in the name(s) of, and said check and/or such Shares will be issued and
delivered to the person or persons so indicated. The undersigned recognizes
that the Company has no obligation pursuant to the "Special Payment
Instructions" to transfer any Shares from the name of the registered holder
thereof if the Company purchases none of the Shares so tendered.
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned, and any obligations of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned. Except as stated
in the Offer, this tender is irrevocable.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MAKING
OF THE OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES
ANY RECOMMENDATION TO STOCKHOLDERS AS TO WHETHER TO TENDER ALL OR ANY PORTION
OF THEIR SHARES, OR AS TO THE PURCHASE PRICE AT WHICH THEY SHOULD TENDER.
STOCKHOLDERS SHOULD CONSIDER THAT THE COMPANY INTENDS TO SELECT THE LOWEST
PURCHASE PRICE NOT LESS THAN $20 NOR IN EXCESS OF $22 1/2 PER SHARE THAT WILL
ENABLE IT TO PURCHASE 925,000 SHARES (OR SUCH LESSER NUMBER OF SHARES AS ARE
PROPERLY TENDERED) PURSUANT TO THE OFFER. SEE SECTION 5 OF THE OFFER TO
PURCHASE.
- 4 -
<PAGE> 5
- -------------------------------------------------------------------------------
SIGN HERE
(SEE INSTRUCTIONS 1 AND 6)
(IMPORTANT: COMPLETE SUBSTITUTE W-9 BELOW)
Must be signed by registered holder(s) exactly as name(s) appear(s) on stock
certificates(s) or on a security position listing or by person(s) authorized
to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by officers of a corporation, trustees, executors,
administrators, guardians, attorneys-in-fact or other acting in a fiduciary
or representative capacity, please set forth full title.
Holder Name(s):________________________________________________________________
(Please Type or Print)
X______________________________________________________________________________
X______________________________________________________________________________
(Signature(s) of Owner(s) or Representative(s))
Capacity (Full Title):_________________________________________________________
Dated:___________________________________________________________________, 1997
Address:_______________________________________________________________________
_______________________________________________________________________________
Zip Code
Area Code and Tel. No.:________________________________________________________
Taxpayer Identification or Social Security Number(s):__________________________
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED. SEE INSTRUCTIONS 1 AND 6)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE
IN SPACE BELOW.
Authorized Signature:__________________________________________________________
Name:__________________________________________________________________________
(Please Type or Print)
Title:_________________________________________________________________________
Name of Firm:__________________________________________________________________
Address:_______________________________________________________________________
_______________________________________________________________________________
Zip Code
Area Code and Tel. No.:________________________________________________________
Dated:___________________________________________________________________, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 8)
To be completed ONLY if certificates for Shares not tendered or not
purchased, or the check for the Purchase Price of Shares purchased, are to be
issued in the name of someone other than the undersigned.
Issue / / check and/or / / certificates to:
Name:__________________________________________________________________________
(Please Type or Print)
Address:_______________________________________________________________________
_______________________________________________________________________________
Zip Code
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7, AND 8)
To be completed ONLY if certificates for Shares not tendered or not
purchased, or any check issued in the name of the undersigned for the Purchase
Price of Shares to be purchased, are to be delivered to someone other than the
undersigned or to the undersigned at an address other than that shown above.
Mail / / check and/or / / certificates to:
Name___________________________________________________________________________
(Please Type or Print)
Address:_______________________________________________________________________
_______________________________________________________________________________
Zip Code
- -------------------------------------------------------------------------------
- 5 -
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder(s) of the Shares tendered herewith or on behalf of such
registered holder by an authorized officer, trustee, executor, administrator,
guardian, attorney-in-fact or another person acting in a fiduciary or
representative capacity, unless such holder has completed either the box
entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" or (ii) if Shares are tendered for the account of a
member firm of a registered national securities exchange, a member of the
National Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office, branch or agency in the United States which
is a member of one of the Securities Transfer Agents Medallion Program, the
New York Stock Exchange Medallion Signature Program or the Stock Exchange
Medallion Program (each being hereinafter referred to as an "Eligible
Institution"). In all other cases, all signatures on this Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 6.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used either if certificates representing the Shares are
to be forwarded herewith or if Shares are to be delivered by book entry
transfer pursuant to the procedure set forth in Section 3 of the Offer to
Purchase. Share certificates evidencing ALL physically tendered Shares, or
a confirmation of a book entry transfer into the Depositary's account at a
Book Entry Transfer Facility of all Shares delivered by book entry transfer
as well as a properly completed and duly executed Letter of Transmittal
(including all signature guarantees), must be received by the Depositary at
one of its addresses set forth herein prior to the Expiration Date. If
certificates representing the Shares are forwarded to the Depositary in
multiple deliveries, a properly completed and duly executed Letter of
Transmittal must accompany each such delivery. Stockholders who cannot
locate their certificates and require assistance in replacing them should
check the box for "Lost Certificates." Upon receipt of this Letter of
Transmittal, the Depositary will contact such stockholder directly with
replacement instructions.
Stockholders whose certificates are not immediately available, who cannot
deliver their certificates and all other required documents to the Depositary
prior to the Expiration Date or who cannot complete the procedure for
delivery by book entry transfer on a timely basis may tender their Shares
pursuant to the guaranteed delivery procedure described in Section 3 of the
Offer to Purchase. Pursuant to such procedure: (i) such tender must be made
by or through an Eligible Institution; (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form made
available by the Company, must be received by the Depositary prior to the
Expiration Date; and (iii) the Share Certificates evidencing all physically
delivered Shares in proper form for transfer by delivery, or a confirmation
of a book entry transfer into the Depositary's account at a Book Entry
Transfer Facility of all Shares delivered by book entry transfer, in each
case together with a Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, and any
other documents required by this Letter of Transmittal, must be received by
the Depositary within five New York Stock Exchange, Inc. ("NYSE") trading
days after the date of execution of such Notice of Guaranteed Delivery, all
as described in Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATES FOR
SHARES AND ALL OTHER REQUIRED DOCUMENTS INCLUDING DELIVERY THROUGH ANY BOOK
ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING
STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED
BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering stockholders, by
executing this Letter of Transmittal, waive any right to receive any notice
of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Tendered Shares" is inadequate, the certificate numbers, the
number of Shares represented by each certificate and the number of the Shares
tendered from each certificate (for partial tenders only) should be listed on
a separate signed schedule and attached to this Letter of Transmittal.
4. PARTIAL TENDERS AND UNPURCHASED SHARES (NOT APPLICABLE TO STOCKHOLDER
WHO TENDERS BY BOOK ENTRY TRANSFER). If fewer than all of the Shares evidenced
by any certificate submitted are to be tendered, fill in the number of Shares
that are to be tendered in the column entitled "No. of Shares Tendered" in the
box captioned "Description of Shares Tendered." In such case, if some or all
of the tendered Shares are purchased, new certificates for the remainder of the
Shares evidenced by your old certificates will be sent to you, unless otherwise
specified in the "Special Payment Instructions" or "Special Delivery
Instructions" boxes on this Letter of
- 6 -
<PAGE> 7
Transmittal, as soon as practicable after the Expiration Date of the Offer.
All Shares represented by certificates listed are deemed to have been tendered
unless otherwise indicated.
5. INDICATION OF PURCHASE PRICE FOR TENDERED SHARES. For Shares to be
tendered properly, stockholders must check the appropriate box indicating the
Purchase Price per Share at which they are tendering Shares under "Purchase
Price Per Share At Which Shares Are Being Tendered" on this Letter of
Transmittal. Stockholders must check one and only one box. IF MORE THAN
ONE BOX IS CHECKED OR IF NO BOX IS CHECKED, THE TENDER OF THE SHARES WILL BE
IMPROPER. Stockholders who desire to tender portions of their Shares at
different Purchase Prices must complete a separate Letter of Transmittal for
each price at which they wish to tender each such portion of their Shares. The
same Shares cannot be tendered (unless previously properly withdrawn as
provided in Section 4 of the Offer to Purchase) at more than one price.
6. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS.
(a) If this Letter of Transmittal is signed by the registered holder(s)
of the certificates tendered hereby, the signature(s) must correspond with
the name(s) as written on the face of the certificates without any change
whatsoever.
(b) If any of the Shares tendered hereby are held of record by two or
more joint holders, all such holders must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or manually signed facsimiles thereof) as
there are different registrations of certificates.
(d) When this Letter of Transmittal is signed by the registered
holder(s) of the certificates listed and tendered hereby, no endorsements of
certificates or separate stock powers are required. If, however, payment is
to be made or the certificates for unpurchased Shares are to be issued to a
person other than the registered holder(s), then the certificates transmitted
hereby must be endorsed or accompanied by appropriate stock powers, in either
case signed exactly as the name(s) of the registered holder(s) appear(s) on
the certificates. Signature(s) on such certificates or stock powers must be
guaranteed by an Eligible Institution. See also Instruction 1.
(e) If this Letter of Transmittal or any certificates or stock powers
are signed by trustees, executors, administrators, guardians, attorneys-in-fact
or others acting in a fiduciary or representative capacity, such persons should
so indicate when signing and must submit proper evidence satisfactory to the
Company of their authority so to act.
(f) If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificates listed and tendered hereby, the
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name(s) of the registered holder(s) appear
on the certificates. Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution. See also Instruction 1.
7. STOCK TRANSFER TAXES. The Company will pay all stock transfer taxes,
if any, payable on the transfer to it of Shares purchased pursuant to the
Offer. If, however, payment of the Purchase Price is to be made to, or (in
the circumstances permitted by the Offer) if unpurchased Shares are to be
registered in the name of, any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered holder(s) or such other
persons(s)) payable on account of the transfer to such person(s) will be
deducted from the Purchase Price unless satisfactory evidence of the payment
of such taxes, or exemption therefrom, is submitted to the Company.
8. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If checks are to be issued
in the name of, and/or certificates for unpurchased Shares are to be issued
to, a person other than the signer of the Letter of Transmittal, or if checks
are to be sent and/or such certificates are to be returned to someone other
than the signer of the Letter of Transmittal or to an address other than the
one shown above in the box captioned "Description of Shares Tendered," then
the boxes captioned "Special Payment Instructions" and/or "Special Delivery
Instructions" on this Letter of Transmittal should be completed.
9. IRREGULARITIES. All questions as to the number of Shares to be
accepted, the Purchase Price and the validity, form, eligibility (including
time of receipt) and acceptance of any tender of Shares will be determined by
the Company, in its sole discretion, which determination shall be final and
binding. The Company reserves the absolute right to reject any or all
tenders determined by it not to be in appropriate form or the acceptance for
payment of or payment for which would, in the opinion of the Company's
counsel, be unlawful. The Company also reserves the absolute right to waive
any of the conditions set forth in the Offer or any defect or irregularity in
any tender with respect to any particular Shares or any particular
stockholder.
- 7 -
<PAGE> 8
Neither the Company, the Dealer Manager, the Depositary, the Information
Agent nor any other person will be obligated to give notice of defects or
irregularities in tenders, nor shall any of them incur any liability for
failure to give any notice. Tenders will not be deemed to have been made
until all defects and irregularities have been cured by the tendering
stockholder or waived by the Company.
10. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions and requests for assistance and additional copies of the Offer to
Purchase and this Letter of Transmittal may be directed to the Information
Agent or the Dealer Manager at their respective addresses or telephone
numbers set forth below.
11. SUBSTITUTE FORM W-9. Stockholders other than corporations and
certain foreign individuals may be subject to backup federal income tax
withholding. Each such tendering stockholder or other payee who does not
otherwise establish to the satisfaction of the Depositary an exemption from
backup federal income tax withholding is required to provide the Depositary
with a correct taxpayer identification number ("TIN") on Substitute Form W-9,
which is provided as a part of this Letter of Transmittal, and to indicate that
the stockholder or other payee is not subject to backup withholding by
certifying the information in Part 2 of the Substitute Form W-9. For an
individual, his or her TIN will generally be his social security number.
Failure to complete and return the Substitute Form W-9 may subject the
tendering stockholder or other payee to 31% backup federal income tax
withholding on the payments made to the stockholder or other payee with respect
to Shares purchased pursuant to the Offer and to a $50.00 penalty imposed by
the Internal Revenue Service. Backup withholding is not an additional tax.
Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained. For additional information
concerning Substitute Form W-9, see the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9."
12. WITHHOLDING ON FOREIGN STOCKHOLDERS. The Depositary will withhold
federal income taxes equal to 30% of the gross payments payable to a foreign
stockholder unless the Depositary determines that a reduced rate of
withholding or an exemption from withholding is applicable. For this
purpose, a foreign stockholder is any stockholder that is not (i) a citizen
or resident of the United States, (ii) a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, or (iii) any estate or trust the income of
which is subject to United States federal income taxation regardless of the
source of such income. The Depositary will determine a stockholder's status
as a foreign stockholder and eligibility for a reduced rate of, or an
exemption from, withholding by reference to the stockholder's address and to
any outstanding certificates or statements concerning eligibility for a
reduced rate of, or exemption from, withholding unless facts and
circumstances indicate that reliance is not warranted. A foreign stockholder
who has not previously submitted the appropriate certificates or statements
with respect to a reduced rate of, or exemption from, withholding for which
such stockholder may be eligible should consider doing so in order to avoid
overwithholding.
13. LOST, STOLEN OR DESTROYED CERTIFICATES. Stockholders whose
certificates have been lost, stolen or destroyed should check the box on page
2 of this Letter of Transmittal for "Lost Certificates." Upon receipt of
this Letter of Transmittal, the Depositary will contact such stockholders
directly with replacement instructions.
14. ORDER OF PURCHASE IN EVENT OF PRORATION. As described in Section 1
of the Offer to Purchase, stockholders may designate the order in which their
Shares are to be purchased in the event of proration. The order of purchase
may have an effect on the federal income tax classification or any gain or
loss on the Shares purchased. See Section 1 of the Offer to Purchase.
------------------------------
- 8 -
<PAGE> 9
PAYER'S NAME: BOATMEN'S TRUST COMPANY
- -------------------------------------------------------------------------------
SUBSTITUTE Part I--PLEASE PROVIDE Social Security
Form W-9 YOUR TIN IN THE BOX AT No. OR Employer
Department of the Treasury RIGHT AND CERTIFY BY Identification
Internal Revenue Service SIGNING AND DATING BELOW Number _____________
-----------------------------------------------
Payer's Request for Taxpayer Part II--For Payees exempt from backup with-
Identification Number (TIN) holding, see the enclosed Guidelines for
Certification of Taxpayer Identification Number
on Substitute Form W-9.
- -------------------------------------------------------------------------------
Certification--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding because: (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal
Revenue Service that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (c) the IRS has notified
me that I am no longer subject to backup withholding.
Certification Instructions--You must cross out item (2) above if you have
been notified by the IRS that you are subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if
after being notified by the IRS that you were subject to backup withholding
you received another notification from the IRS that you are no longer subject
to backup withholding, do not cross out item (2).
- -------------------------------------------------------------------------------
SIGNATURE ________________________________________________DATE_________________
Name (printed)____________________________________
- -------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
--------------------
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE
THEREOF), TOGETHER WITH CERTIFICATES AND OTHER REQUIRED DOCUMENTS, MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE OF THE OFFER.
THE DEALER MANAGER FOR THE OFFER IS:
COWEN & COMPANY
One Financial Square
New York, New York 10005
(212) 495-8630
(800) 221-5616 (#8630)
THE INFORMATION AGENT FOR THE OFFER IS:
GEORGESON & COMPANY INC.
Wall Street Plaza
New York, New York 10005
FOR INFORMATION CALL:
Banks and Brokers Call Collect:
(212) 440-9800
Call Toll Free:
(800) 223-2064
- 9 -
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES
OF COMMON STOCK OF REHABCARE GROUP, INC.
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) if: (i) certificates
("Share Certificates") evidencing shares of common stock, par value $.01 per
share (the "Shares"), including the associated preferred stock purchase
rights (the "Rights"), of RehabCare Group, Inc., a Delaware corporation (the
"Company"), are not immediately available; (ii) Share certificates and all
other required documents cannot be delivered to Boatmen's Trust Company (the
"Depositary") prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase (as defined below)); or (iii) the procedure for delivery by
book entry transfer (as described in Section 3 of the Offer to Purchase)
cannot be completed on a timely basis. This Notice of Guaranteed Delivery
may be transmitted by telegram or facsimile transmission or delivered by mail
by hand or by overnight courier to the Depositary. See Section 3 of the
Offer to Purchase for more detailed information.
THE DEPOSITARY FOR THE OFFER IS:
Boatmen's Trust Company
Facsimile Transmission:
(314) 466-2425
Confirm by Telephone:
(800) 456-9852
or
(314) 466-1357
By Mail: By Hand: By Overnight Courier:
Boatmen's Trust Company Boatmen's Trust Company Boatmen's Trust Company
Corporate Trust Department Corporate Trust Department Corporate Trust Department
510 Locust Street Second Floor Second Floor
P.O. Box 14764 St. Louis, Missouri 63101 St. Louis, Missouri 63101
St. Louis, Missouri
63178-4764
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD
BE SENT WITH YOUR LETTER OF TRANSMITTAL.
Ladies and Gentlemen:
The undersigned hereby tenders to RehabCare Group, Inc., a Delaware
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated January 31, 1997 (the "Offer to
Purchase"), and the related Letter of Transmittal (which together constitute
the "Offer"), receipt of each of which is hereby acknowledged, shares of
common stock, par value $.01 per share, of the Company, including the
associated preferred stock purchase rights (the "Rights" and collectively
with the shares of Common Stock, the "Shares"), pursuant to the guaranteed
delivery procedures described in Section 3 of the Offer to Purchase. Unless
the Rights become exercisable or separately traceable prior to the Expiration
Date, a tender of Shares will also constitute a tender of the Rights. Unless
the context requires otherwise, all references herein to Shares include the
Rights.
<PAGE> 2
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED:
IF SHARES ARE BEING TENDERED AT MORE THAN ONE PRICE, USE A SEPARATE
NOTICE OF GUARANTEED DELIVERY FOR EACH PRICE SPECIFIED.
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED OR
IF NO BOX IS CHECKED, THERE IS NO PROPER TENDER OF SHARES.
<TABLE>
PRICE
<S> <C> <C> <C>
Percentage of --- % at $20 --- % at $20 7/8 --- % at $21 3/4
Shares Tendered --- % at $20 1/8 --- % at $21 --- % at $21 7/8
(The total of all --- % at $20 1/4 --- % at $21 1/8 --- % at $22
percentages must --- % at $20 3/8 --- % at $21 1/4 --- % at $22 1/8
be less than or --- % at $20 1/2 --- % at $21 3/8 --- % at $22 1/4
equal to 100%) --- % at $20 5/8 --- % at $21 1/2 --- % at $22 3/8
--- % at $20 3/4 --- % at $21 5/8 --- % at $22 1/2
</TABLE>
SIGNATURE
Number of Shares:----------------------- Signature:-----------------------
Certificate Nos.: (if available)-------- Date:----------------------------
- ---------------------------------------- Name: (please print)-------------
If Shares will be tendered by book
entry transfer: Address:-------------------------
Name of Tendering Institution:---------- ---------------------------------
- ---------------------------------------- Area Code and Telephone Number:
Company Account Number:----------------- ---------------------------------
At: (check one)
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust
GUARANTEE
The undersigned, a firm which is a member of a registered national securities
exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office, branch or agency in the
United States which is a member of one of the Stock Transfer Association's
approved medallion programs (such as Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Program or the Stock
Exchange Medallion Program) (each, an "Eligible Institution"), hereby: (i)
guarantees to deliver to the Depositary, at one of its addresses set forth
above, Share Certificates evidencing the Shares tendered hereby, in proper
form for transfer, or confirmation of book entry transfer of such Shares into
the Depositary's account at The Depository Trust Company, the Midwest
Securities Trust Company or the Philadelphia Depository Trust Company, in
each case with delivery of a Letter of Transmittal (or facsimile thereof)
properly completed and duly executed, and any other required documents, all
within five New York Stock Exchange, Inc. trading days of the date hereof;
(ii) represents that the undersigned has a net long position in Shares or
equivalent securities within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended, at least equal to the Shares
tendered; and (iii) represents that such tender of Shares complies with Rule
14e-4.
Name (please print):--------------------
Date:-----------------------------------
Name of Firm:---------------------------
Authorized Signature:-------------------
Address (including zip code):-----------
Area Code and Telephone Number:---------
Note: This form is not to be used to guarantee signatures. If a signature on
a Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
<PAGE> 1
[letterhead of Cowen & Company]
REHABCARE GROUP, INC. OFFER TO PURCHASE FOR CASH UP TO 925,000 SHARES OF ITS
COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) AT A
PURCHASE PRICE NOT GREATER THAN $22 1/2 NOR LESS THAN $20 PER SHARE
January 31, 1997
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
RehabCare Group, Inc., a Delaware corporation (the "Company"), has appointed
us to act as Dealer Manager in connection with its offer to purchase for cash
up to 925,000 shares of its common stock, par value $.01 per share (including
the associated Preferred Stock Purchase Rights (the "Rights"), the "Shares"),
at prices not greater than $22 1/2 nor less than $20 per Share and upon the
terms and subject to the conditions set forth in its Offer to Purchase, dated
January 31, 1997, and in the related Letter of Transmittal (which together
constitute the "Offer"). Unless the Rights become exercisable or separately
tradeable prior to the Expiration Date (as defined in Section 1 of the Offer
to Purchase), a tender of Shares will also constitute a tender of the
associated Rights. Unless the context otherwise requires all references
herein to Shares include the associated Rights. We enclose the materials
listed below relating to the Offer.
The Company will determine a single per Share price (not greater than $22 1/2
nor less than $20 per Share) (the "Purchase Price"), that it will pay for
Shares validly tendered pursuant to the Offer taking into account the number
of Shares so tendered and the prices specified by tendering stockholders.
The Company will select the Purchase Price which will allow it to buy 925,000
Shares (or such lesser number of Shares as are validly tendered at prices not
greater than $22 1/2 nor less than $20 per Share) pursuant to the Offer. All
Shares validly tendered at prices at or below the Purchase Price will be
purchased at the Purchase Price, net to the seller in cash, upon the terms
and subject to the conditions of the Offer, including the proration terms
thereof. See Section 1 of the Offer to Purchase.
If, prior to the Expiration Date, more than 925,000 Shares (or such greater
number of Shares as the Company may elect to purchase) are validly tendered,
the Company will, upon the terms and subject to the conditions of the Offer,
accept Shares for purchase on a pro rata basis from all stockholders whose
Shares are validly tendered at or below the Purchase Price.
The Offer is not conditioned upon any minimum number of Shares being
tendered. The Offer is, however, subject to certain other conditions set
forth in the Offer. See Section 6 of the Offer to Purchase.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offer to Purchase, dated January 31, 1997.
2. Letter to Clients which may be sent to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
3. Letter, dated January 31, 1997, from James M. Usdan, President and Chief
Executive Officer of the Company, to stockholders of the Company;
<PAGE> 2
4. Letter of Transmittal for your use and for the information of your
clients (together with accompanying Substitute Form W-9 Guidelines);
5. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available or if the procedure for
book entry transfer cannot be completed on a timely basis; and
6. Return envelope addressed to Boatmen's Trust Company, the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER,
PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, EASTERN
TIME, ON FRIDAY, FEBRUARY 28, 1997, UNLESS THE OFFER IS EXTENDED.
No fees or commissions will be payable to brokers, dealers or any other
persons (other than fees to the Dealer Manager as described in the Offer to
Purchase) for soliciting tenders of Shares pursuant to the Offer. The
Company will, however, upon request, reimburse you for customary mailing and
handling expenses incurred by you in forwarding any of the enclosed materials
to the beneficial owners of Shares held by you as a nominee or in a fiduciary
capacity. The Company will pay or cause to be paid any stock transfer taxes
on its purchase of Shares, except as otherwise provided in Instruction 7 of
the Letter of Transmittal.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be
sent to the Depositary with either certificate(s) representing the tendered
Shares, or confirmation of their book entry transfer, all in accordance with
the instructions set forth in the Letter of Transmittal and the Offer to
Purchase.
As described in Section 3 of the Offer to Purchase, tenders may be made
without the concurrent deposit of stock certificates or concurrent compliance
with the procedure for book entry transfer, if such tenders are made by or
through a broker or dealer which is a member firm of a registered national
securities exchange or the National Association of Securities Dealers, Inc.
or a commercial bank or trust company having an office, branch or agency in
the United States which is a member of one of the Stock Transfer
Association's approved medallion programs (such as Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Program or
the Stock Exchange Medallion Program). Certificates for Shares so tendered
(or a confirmation of a book entry transfer of such Shares into the
Depositary's account at one of the "Book Entry Transfer Facilities" described
in the Offer to Purchase), together with a properly completed and duly
executed Letter of Transmittal and any other documents required by the Letter
of Transmittal, must be received by the Depositary within five New York Stock
Exchange, Inc. trading days after timely receipt by the Depositary of a
properly completed and duly executed Notice of Guaranteed Delivery.
Any inquiries you may have with respect to the Offer should be addressed to
the Dealer Manager or to the Information Agent at their respective addresses
and telephone numbers set forth on the back cover page of the Offer to
Purchase.
Additional copies of the enclosed material may be obtained from the
Information Agent, Georgeson & Company Inc., telephone 1-800-223-2064 (toll
free).
Very truly yours,
Cowen & Company
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF THE COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE
DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE
ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER
THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
REHABCARE GROUP, INC. OFFER TO PURCHASE FOR CASH UP TO 925,000 SHARES OF ITS
COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) AT A
PURCHASE PRICE NOT GREATER THAN $22 1/2 NOR LESS THAN $20 PER SHARE
January 31, 1997
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated January 31,
1997, and the related Letter of Transmittal (which together constitute the
"Offer"), in connection with the Offer by RehabCare Group, Inc., a Delaware
corporation (the "Company"), to purchase for cash up to 925,000 shares of its
common stock, par value $.01 per share (including the associated Preferred
Stock Purchase Rights (the "Rights") (the "Shares"), at prices not greater
than $22 1/2 nor less than $20 per Share, upon the terms and subject to the
conditions of the Offer. Unless the Rights become exercisable or separately
tradeable prior to the Expiration Date (as defined in Section 1 of the Offer
to Purchase), a tender of Shares will also constitute a tender of the
associated Rights. Unless the context otherwise requires, all references
herein to the Shares include the associated Rights. Also enclosed herewith
is certain other material related to the Offer, including a letter, dated
January 31, 1997, from James M. Usdan, President and Chief Executive Officer
of the Company, to stockholders of the Company.
The Company will determine a single per Share price (not greater than $22 1/2
nor less than $20 per Share) (the "Purchase Price") that it will pay for
Shares validly tendered pursuant to the Offer taking into account the number
of Shares so tendered and the prices specified by tendering stockholders.
The Company will select the Purchase Price which will allow it to buy 925,000
Shares (or such lesser number of Shares as are validly tendered at prices not
greater than $22 1/2 nor less than $20 per Share) pursuant to the Offer. All
Shares validly tendered prior to the Expiration Date at prices at or below
the Purchase Price will be purchased at the Purchase Price, net to the seller
in cash, upon the terms and subject to the conditions of the Offer, including
the proration terms thereof. The Company will return all other Shares,
including Shares tendered at prices greater than the Purchase Price and
Shares not purchased because of proration. See Section 1 of the Offer to
Purchase.
If, prior to the Expiration Date, more than 925,000 Shares (or such greater
number of Shares as the Company may elect to purchase) are validly tendered,
the Company will, upon the terms and subject to the conditions of the Offer,
accept Shares for purchase on a pro rata basis from all stockholders whose
Shares are validly tendered at or below the Purchase Price.
WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT. AS SUCH, WE ARE
THE ONLY ONES WHO CAN TENDER YOUR SHARES, AND THEN ONLY PURSUANT TO THE
INSTRUCTIONS YOU SET FORTH ON THE ATTACHED INSTRUCTION FORM. WE ARE SENDING
YOU THE LETTER OF TRANSMITTAL FOR YOUR INFORMATION ONLY; YOU CANNOT USE IT TO
TENDER SHARES WE HOLD FOR YOUR ACCOUNT.
Please instruct us as to whether you wish us to tender any or all of the
Shares we hold for your account on the terms and subject to the conditions of
the Offer.
<PAGE> 2
We call your attention to the following:
1. You may tender Shares at prices (in multiples of $.125), not greater than
$22 1/2 nor less than $20 per Share, as indicated in the attached Instruction
Form, net to you in cash.
2. The Offer is not conditioned upon any minimum number of Shares being
tendered. The Offer is, however, subject to certain other conditions set
forth in the Offer.
3. The Offer, proration period, and withdrawal rights will expire at 12:00
Midnight, Eastern time, on Friday, February 28, 1997, unless the Company
extends the Offer.
4. The Offer is for up to 925,000 Shares, constituting approximately 19.65%
of the Shares outstanding as of January 28, 1997.
5. Tendering stockholders will not be obligated to pay any brokerage
commissions, solicitation fees or, subject to Instruction 7 of the Letter of
Transmittal, stock transfer taxes on the Company's purchase of Shares
pursuant to the Offer.
6. If you wish to tender portions of your Shares at different prices you
must complete a separate Instruction Form for each price at which you wish to
tender each portion of your Shares. We must submit separate Letters of
Transmittal on your behalf for each price you will accept.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, and returning to us the attached Instruction
Form. An envelope to return your Instruction Form to us is enclosed. If you
authorize us to tender your Shares, we will tender all such Shares unless you
specify otherwise on the attached Instruction Form.
YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO
SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION OF THE OFFER. THE
OFFER, PRORATION PERIOD, AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
EASTERN TIME, ON FRIDAY, FEBRUARY 28, 1997, UNLESS THE COMPANY EXTENDS THE
OFFER.
As described in Section 1 of the Offer to Purchase, if before the Expiration
Date more than 925,000 Shares (or such greater number of Shares as the
Company elects to purchase) are validly tendered at or below the Purchase
Price, the Company will accept Shares for purchase at the Purchase Price on a
pro rata basis, if necessary (with adjustments to avoid purchases of
fractional Shares).
The Offer is not being made to, nor will the Company accept tenders from,
holders of Shares in any jurisdiction in which the Offer or its acceptance
would not comply with the securities or Blue Sky laws of such jurisdiction.
The Company is not aware of any jurisdiction in which the making of the Offer
or the tender of Shares would not be in compliance with the laws of such
jurisdictions. However, the Company reserves the right to exclude holders in
any jurisdiction in which it is asserted that the Offer cannot lawfully be
made. So long as the Company makes a good faith effort to comply with any
state law deemed applicable to the Offer, if it cannot do so, the Company
believes that the exclusion of holders residing in such jurisdictions is
permitted under Rule 13e-4(f)(9) promulgated under the Exchange Act. In any
jurisdiction the securities or Blue Sky laws of which require the Offer to be
made by a licensed broker or dealer, the Offer shall be deemed to be made on
the Company's behalf by Cowen & Company as Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
- 2 -
<PAGE> 3
INSTRUCTION FORM WITH RESPECT TO OFFER TO PURCHASE FOR CASH UP TO 925,000
SHARES OF COMMON STOCK OF REHABCARE GROUP, INC. AT A PURCHASE PRICE NOT GREATER
THAN $22 1/2 NOR LESS THAN $20 PER SHARE.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated January 31, 1997, and the related Letter of Transmittal
(which together constitute the "Offer"), in connection with the offer by
RehabCare Group, Inc., a Delaware corporation (the "Company"), to purchase
for cash 925,000 shares of its common stock, par value $.01 per share
(including the associated Preferred Stock Purchase Rights (the "Rights"), the
"Shares"), at prices not greater than $22 1/2 nor less than $20 per Share,
upon the terms and subject to the conditions of the Offer. Unless the Rights
become exercisable or separately tradeable prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase), a tender of Shares will also
constitute a tender of the associated Rights. Unless the context otherwise
requires all references herein to Shares include the associated Rights.
The Company will determine a single per Share price (not greater than $22 1/2
nor less than $20 per Share) (the "Purchase Price") that it will pay for the
Shares validly tendered pursuant to the Offer taking into account the number
of Shares so tendered and the prices specified by tendering stockholders.
The Company will select the Purchase Price which will allow it to buy 925,000
Shares (or such lesser number of Shares as are properly tendered at prices
not greater than $22 1/2 nor less than $20 per Share) pursuant to the Offer.
All Shares validly tendered at prices at or below the Purchase Price will be
purchased at the Purchase Price, net to the seller in cash, upon the terms
and subject to the conditions of the Offer, including the proration terms
thereof. The Company will return all other Shares, including Shares tendered
at prices greater than the Purchase Price and Shares not purchased because of
proration. See Section 1 of the Offer to Purchase.
/ / By checking this box, all Shares held by us for your account will be
tendered. If fewer than all of the Shares are to be tendered, please check
the box and indicate below the aggregate number of Shares to be tendered by
us.
Shares<F1>_____________________________
[FN]
- ---------------------
<F1> Unless otherwise indicated, it will be assumed that all Shares, including
the associated Rights, held for the account of the undersigned are to be
tendered.
- 3 -
<PAGE> 4
PRICE (IN DOLLARS) PER SHARE AT
WHICH SHARES ARE BEING TENDERED
IF SHARES ARE BEING TENDERED AT MORE THAN ONE PRICE, USE A SEPARATE
INSTRUCTION FORM FOR EACH PRICE SPECIFIED.
- -------------------------------------------------------------------------------
CHECK ONLY ONE BOX
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES.
/ / 20 / / 20 1/2 / / 21 / / 21 1/2 / / 22 / / 22 1/2
/ / 20 1/8 / / 20 5/8 / / 21 1/8 / / 21 5/8 / / 22 1/8
/ / 20 1/4 / / 20 3/4 / / 21 1/4 / / 21 3/4 / / 22 1/4
/ / 20 3/8 / / 20 7/8 / / 21 3/8 / / 21 7/8 / / 22 3/8
===============================================================================
SIGNATURE BOX (PLEASE PRINT)
- -------------------------------------------------------------------------------
Signature(s):________________________________________________________
Dated:_______________________________________________________________
Name(s) and Address(es):_____________________________________________
_____________________________________________
_____________________________________________
Area Code and Telephone Number:______________________________________
Taxpayer Identification or Social Security Number:___________________
- -------------------------------------------------------------------------------
- 4 -
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER - Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- ------------------------------------------------------------ -------------------------------------------------------------
GIVE THE GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF - NUMBER OF -
- ------------------------------------------------------------ -------------------------------------------------------------
<S> <C> <C> <C>
1. An individual's account The individual 6. Sole proprietorship
7. A valid trust, estate or The legal entity (do not
pension trust furnish the identifying
number of the personal
representative or trustee
unless the legal entity
itself is not designated
in the account title)<F4>
2. Two or more individuals The actual owner of the 8. Corporate account The corporation
(joint account) account or, if combined
funds, any one of the
individuals<F1>
3. Custodian account of a The minor<F2> 9. Partnership account The partnership
minor (Uniform Gift to
Minors Act)
4. a. The usual revocable 10. Association, club, The organization
savings trust religious, charitable,
account (grantor is educational or other
also trustee) The tax-exempt organization
grantor-trustee<F1>
b. So-called trust The actual owner<F1> 11. A broker or registered The broker or nominee
account that is not a nominee
legal or valid trust
under state law
12. Account with the The public entity
Department of Agri-
culture in the name of
a public entity (such
as a state or local
government, school
district or prison) that
receives agricultural
program payments
- ------------------------------------------------------------ -------------------------------------------------------------
<FN>
<F1> List first and circle the name of the person whose number you furnish.
<F2> Circle the minor's name and furnish the minor's social security number.
<F3> Show the name of the owner. You may also enter your business name. You
may use your Social Security Number or Employer Identification Number.
<F4> List first and circle the name of the legal trust, estate or pension
trust.
</TABLE>
Note: If no name is circled when there is more than one name, the
number will be considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Card, or Form SS-4,
Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
* A corporation.
* A financial institution.
* An organization exempt from tax under section 501(a), an individual
retirement plan or a custodial account under section 403(b)(7).
* The United States or any agency or instrumentality thereof.
* A state, the District of Columbia, a possession of the United
States or any subdivision or instrumentality
thereof.
* A foreign government, a political subdivision of a
foreign government or any agency or instrumentality
thereof.
* An international organization or any agency or instrumentality
thereof.
* A registered dealer in securities or commodities registered in
the U.S. or a possession of the U.S.
* A futures commission merchant registered with the Commodity
Futures Trading Commission.
* A real estate investment trust.
* A common trust fund operated by a bank under section 584(a).
* Trust exempt from tax under section 664 or a non-exempt trust
described in section 4947(a)(1).
* An entity registered at all times during the tax year under the
Investment Company Act of 1940.
* A foreign central bank of issue.
* A middleman known in the investment community as a nominee or
listed in the most recent publication of the American Society
of Corporation Secretaries, Inc. Nominee List.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
* Payments to nonresident aliens subject to withholding under
section 1441.
* Payments to partnerships not engaged in a trade or business in
the U.S. and which have at least one nonresident partner.
* Payments of patronage dividends where the amount received is not
paid in money.
* Payments made by certain foreign organizations.
Payments of interest not generally subject to backup
withholding include the following:
* Payments of interest on obligations issued by individuals. Note:
You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and
you have not provided your correct taxpayer identification number to
the payer.
* Payments of tax-exempt interest (including exempt-interest
dividends under section 852).
* Payments described in section 6049(b)(5) to non-resident aliens.
* Payments on tax-free covenant bonds under section 1451.
* Payments made by certain foreign organizations.
* Mortgage interest paid by you.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM. Certain payments, other than interest, dividends and
patronage dividends, that are not subject to information reporting are also not
subject to backup withholding. For details, see sections 6041, 6041A(a), 6045
and 6050A and the regulations thereunder.
PRIVACY ACT NOTICE - Section 6109 requires you to furnish your correct TIN
to persons who must file information returns with the IRS to report interest,
dividends and certain other income paid to you, mortgage interest you paid,
the acquisition or abandonment of secured property or contributions you made
to an IRA. The IRS uses the numbers for identification purposes and to help
verify the accuracy of your tax return. You must provide your TIN whether or
not you are required to file a tax return. Payers must generally withhold
31% of taxable interest, dividends, and certain other payments to a payee who
does not furnish a TIN to a payer. Certain penalties may also apply.
PENALTIES
* PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION
NUMBER - If you fail to furnish your taxpayer identification
number to a payer, you are subject to a penalty of $50 for each
such failure unless your failure is due to reasonable cause and
not to willful neglect.
* CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO
WITHHOLDING - If you make a false statement with no
reasonable basis which results in no backup withholding, you
are subject to a penalty of $500.
* CRIMINAL PENALTY FOR FALSIFYING INFORMATION - Falsifying
certifications or affirmations may subject you to criminal
penalties including fines and/or imprisonment.
* MISUSE OF TAXPAYER IDENTIFICATION NUMBERS - If a payer
discloses or uses taxpayer identification numbers in violation
of federal law, the payer may be subject to civil and criminal
penalties.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE> 1
PRESS RELEASE
For Further Information, Contact:
James M. Usdan, President and Chief Executive Officer
Alan C. Henderson, Executive Vice President and Chief Financial Officer
or Betty Cammarata, Manager-Investor Relations
(314) 863-7422
FOR IMMEDIATE RELEASE
JANUARY 31, 1997
REHABCARE GROUP, INC. ANNOUNCES DUTCH AUCTION SELF TENDER OFFER FOR
UP TO 925,000 SHARES OF ITS COMMON STOCK
St. Louis, Mo., Jan. 31, 1997: RehabCare Group, Inc. (Nasdaq/NMS: RHBC)
announced today that its Board of Directors has authorized the purchase by
the Company of up to 925,000 shares of its common stock, representing
approximately 19.65% of its outstanding shares pursuant to a Dutch Auction
tender offer. The tender price range will be from $20 to $22 1/2 per share.
The offer commenced on Friday, January 31, 1997 and will expire at 12:00
Midnight, Eastern Time on Friday, February 28, 1997, unless extended. On
January 28, 1997, RehabCare had 4,707,598 shares outstanding.
The tender offer will be subject to various terms and conditions described in
offering materials being distributed to shareholders. The Company will use
available cash on hand and borrowings under its senior credit facility to
purchase the shares.
James M. Usdan, President & Chief Executive Officer of RehabCare, said "We
believe that the Company's financial condition, outlook for sustained
favorable cash generation and available credit facilities will allow it to
continue to meet the Company's first priority, which is to reinvest in the
business, including through acquisitions, and to use its excess cash and debt
capacity to fund the repurchase program." Usdan continued, "We further
believe that the purchase of shares is an attractive use of the Company's
financial resources and that the use of cash and borrowing to fund the tender
offer will result in a more efficient capital structure for the Company.
Accordingly, the tender offer is consistent with the Company's long term
corporate goal of increasing stockholder value."
Under the terms of the Dutch Auction offer, RehabCare shareholders will be
given the opportunity to specify prices not less than $20 nor in excess of
$22 1/2 per share at which they are willing to tender their shares. Upon
receipt of the tenders, RehabCare will determine a final purchase price that
enables it to purchase up to 925,000 shares from those shareholders who
agreed to sell at or below the purchase price. All shares purchased will be
at the purchase price determined, regardless of the prices at which the
shares accepted for purchase were tendered. If more than 925,000 shares are
tendered at or below the purchase price determined, there will be a
proration. The tender offer will not be contingent upon any minimum number
of shares being tendered.
Cowen & Company is the dealer manager for the tender offer and Georgeson &
Company Inc. is the information agent. To request a copy of the tender offer
documents or if you have questions concerning the offer, please contact
Georgeson & Company Inc. at 1-800-223-2064 or Cowen & Company at
1-800-221-5616 (#8630).
<PAGE> 2
RehabCare, based in St. Louis, Missouri, is a leading provider of acute
rehabilitation, subacute, outpatient and temporary therapist staffing
services on a contract basis in conjunction with over 750 hospitals, nursing
homes and contract therapy companies in all 50 of the United States.
- 2 -
<PAGE> 1
January 31, 1997
To Our Stockholders:
We are pleased to inform you that RehabCare Group, Inc. is offering to
purchase 925,000 shares (representing approximately 19.65% of the currently
outstanding shares) of its common stock from its stockholders through a
tender offer at prices not greater than $22 1/2 nor less than $20 per share.
The Company is conducting the tender offer through a procedure commonly
referred to as a "Dutch Auction." This procedure allows you to select the
price within that price range at which you are willing to sell your shares to
the Company. Based upon the number of shares tendered and the prices
specified by the tendering stockholders, the Company will determine the
single per share price within that price range that will allow it to buy
925,000 shares (or such lesser number of shares as are validly tendered).
All of the shares that are validly tendered at prices at or below that
purchase price will, subject to possible proration, be purchased at that
purchase price, net to the selling stockholder. All other shares which have
been tendered and not purchased will be returned to the stockholder. The
tender offer is not conditioned on any minimum number of shares being
tendered.
The Board of Directors believes the Company's financial condition, outlook
for continuing favorable cash generation and available credit facilities will
allow it to reinvest in the business and to use its excess cash and debt
capacity to fund the Offer. The Board of Directors believes that the
purchase of Shares is an attractive use of the Company's financial resources
and that the use of cash and borrowing to fund the Offering will result in a
more efficient capital structure for the Company. Accordingly, the Board
believes the Offer is consistent with the Company's long-term corporate goal
of increasing stockholder value. Following completion of the repurchase, the
Company will have ready access to sources of capital sufficient to fund
investments in the business, including through attractive acquisition
opportunities. At the same time, the Offer provides the Company's
stockholders with the opportunity to sell a portion of their Shares (without
the usual transaction costs associated with open-market sales), while
retaining a continuing equity interest in the Company if they so desire.
The tender offer provides stockholders the opportunity to sell shares for
cash without the usual transaction costs and is explained in detail in the
enclosed Offer to Purchase and Letter of Transmittal. If you wish to tender
your shares, detailed instructions on how to tender shares are also in the
enclosed materials. We encourage you to read these materials carefully
before making any decision with respect to the tender offer. Neither the
Company nor its Board of Directors makes any recommendation to any
stockholder as to whether to tender or refrain from tendering shares.
Please note that the tender offer is scheduled to expire at 12:00 Midnight,
Eastern Time, on Friday, February 28, 1997, unless extended by the Company.
Questions regarding the tender offer may be directed to Georgeson & Company
Inc., the Information Agent, at 1-800-223-2064 (toll free) or Cowen &
Company, the Dealer Manager, at 1-800-221-5616 (#8630) (toll free).
Sincerely,
/s/ James M. Usdan
James M. Usdan
President and Chief Executive Officer
RehabCare Group, Inc.
<PAGE> 1
[letterhead of Boatmen's National Bank]
January 17, 1997
Mr. Alan C. Henderson
Executive Vice President, Chief Financial Officer
RehabCare Group, Inc.
7733 Forsyth Boulevard
Suite 1700
St. Louis, MO 63105
RE: Senior Debt Financing
Dear Alan:
RehabCare Group, Inc. ("RehabCare") has requested a senior credit facility
(the "Requested Facility") in the aggregate principal amount of $45.0 million
(the "Aggregate Commitment") to provide funds for (i) working capital, (ii)
payment of expenses in connection with the Requested Facilities, (iii)
refinancing certain indebtedness, (iv) acquisitions, (v) financing of the buy
back of stock, and (vi) general corporate purposes.
The Boatmen's National Bank of St. Louis ("Boatmen's") is pleased to issue
its commitment (the "Commitment") to underwrite the Requested Facility on
the essential terms and conditions set forth in the Term Sheet and Fee
Letter, attached hereto, and the letter sent to you by NationsBanc Capital
Markets, Inc. dated December 10, 1996 as subsequently revised (the
"Syndication Letter") which is incorporated herein by reference and subject
to the conditions herein and the preparation, execution and delivery of a
mutually acceptable credit agreement and other loan documents (collectively
the "Loan Documents"), incorporating any other terms and conditions which are
customary for facilities similar to the Requested Facility.
Upon signing this Commitment Letter, RehabCare agrees to reimburse Boatmen's
for any reasonable legal, outside advisory and other out-of-pocket costs
and expenses incurred by it in connection therewith, whether or not the
transaction is consummated. RehabCare will also not disclose the contents
of this letter or the enclosed Term Sheet or Fee Letter or the Syndication
Letter to anyone other than your employees and legal and financial advisors
who have a need to know about them (except that Mercantile Bank of St. Louis
shall have access to the Term Sheet).
<PAGE> 2
Please indicate your acceptance of this Commitment Letter, in the space
indicated below and return a copy of this Commitment Letter and Fee Letter
so executed to Boatmen's. Boatmen's Commitment will expire at 5 p.m.
(St. Louis time) on January 21, 1997, unless on or prior to such time Boatmen's
has received a copy of this Commitment Letter executed by Borrower, a copy
of the Fee Letter executed by Borrower, and payment of the initial portion of
the Upfront Fee as described in paragraph 1(a) of the Fee Letter.
Notwithstanding timely acceptance of Boatmen's Commitment by Borrower as
provided above, Boatmen's Commitment will automatically terminate unless
definitive Loan Documents are executed on or before March 15, 1997.
Sincerely,
/s/ Paul M. Porter
Paul M. Porter
Vice President
The Boatmen's National Bank of St. Louis
Accepted and Agreed:
By: /s/ Alan C. Henderson
-------------------------------
Name: Alan C. Henderson
-----------------------------
Title: EVP
----------------------------
<PAGE> 3
TERM SHEET
================================================================================
Capitalized terms used and not otherwise defined herein shall have the
meanings set forth in the Proposal to which this Term Sheet is attached,
and if not defined therein, the meanings that will be defined in the Loan
Agreement.
BORROWER: RehabCare Group, Inc.
- ---------
GUARANTOR: All existing and subsequently formed subsidiaries.
- ----------
ADMINISTRATIVE The Boatmen's National Bank of St. Louis ("Boatmen's")
- --------------
AGENT:
- ------
SYNDICATION AGENT: NationsBanc Capital Markets, Inc. ("NCMI") (together
- ------------------ with Boatmen's, the "Agents")
LENDERS: A group of lenders to be determined as described in the
- -------- Proposal (collectively, together with Boatmen's in its
capacity as a lender, the "Lenders").
AMOUNT: Up to $45 million (the "Aggregate Commitment") to be
- ------- comprised of, (i) a Revolving Credit Facility, and (ii)
a Term Loan Facility (together the "Facilities") as
described below.
FACILITIES:
- -----------
REVOLVING CREDIT
- ----------------
FACILITY:
- ---------
PURPOSE: To provide funds for (i) working capital, (ii) for the
- -------- payment of expenses incurred in connection with the
Facilities, (iii) refinancing certain existing
indebtedness, (iv) acquisitions, and (v) general
corporate purposes.
AMOUNT: $20,000,000 (subject to a Borrowing Base, as described
- ------- below) from which the Borrower may borrow, repay and
reborrow in separate Loans.
MATURITY: Five years from closing.
- ---------
AMORTIZATION: Commitment is reduced by mandatory prepayments (see
- ------------- below), otherwise commitment reduces to zero at
Maturity.
BORROWING BASE: The aggregate of direct borrowings under the Revolving
- --------------- Credit Facility shall not exceed the lesser of: (1) a
borrowing base comprised of 85% of Eligible Accounts
Receivable or (2) the Revolving Commitment. Eligibility
requirements will be similar to those currently outlined
in the existing Boatmen's credit agreement.
================================================================================
1
<PAGE> 4
TERM SHEET
================================================================================
TERM LOAN:
- ----------
PURPOSE: To provide funds for (i) the financing of the stock
- -------- buyback, (ii) for the payment of expenses incurred in
connection with the Facilities, (iii) refinancing
certain existing indebtedness, (iv) acquisitions and
(v) general corporate purposes.
AMOUNT: $25,000,000
- -------
MATURITY: Five years from closing.
- ---------
TERM LOAN AMORTIZATION: Amortization of the Term Loan will begin March 31,
- ----------------------- 1997 and will consist of payments made on the last
day of each calendar quarter following closing in the
amounts shown below:
<TABLE>
<CAPTION>
DATE PAYMENT ($)
---- -----------
<S> <C>
March 31, 1997 750,000
June 30, 1997 750,000
September 30, 1997 750,000
December 31, 1997 750,000
March 31, 1998 1,000,000
June 30, 1998 1,000,000
September 30, 1998 1,000,000
December 31, 1998 1,000,000
March 31, 1999 1,250,000
June 30, 1999 1,250,000
September 30, 1999 1,250,000
December 31, 1999 1,250,000
March 31, 2000 1,500,000
June 30, 2000 1,500,000
September 30, 2000 1,500,000
December 31, 2000 1,500,000
March 31, 2001 1,750,000
June 30, 2001 1,750,000
September 30, 2001 1,750,000
Maturity Balance
</TABLE>
MANDATORY PREPAYMENTS: In addition to scheduled amortization, the Borrower
- ---------------------- will be required to reduce the Facilities using the
proceeds of the following: (1) 100% of the net cash
proceeds of the disposition of any assets in excess of
$100,000 in any fiscal year, other than inventory in
the ordinary course of business and rolling over of
cash management investments. For assets that are sold
and are investments that may appreciate in value, the
mandatory prepayment shall apply only to the basis
portion of the investment, and then only if the basis
exceeds $100,000; (2) 100% of the net cash proceeds of
any issuance of subordinated debt
================================================================================
2
<PAGE> 5
TERM SHEET
================================================================================
(other than subordinated debt issued to the owner of a
company to be acquired by RehabCare as part of an
acquisition permitted under the Credit Agreement)
subsequent to Closing; and (3) 100% of the net cash
proceeds of any issuance of equity securities in excess
of $1,000,000 subsequent to Closing. If the proceeds
referenced in item (3) above are from a stock option
exercise, and exceed $1,000,000 then 50% of the net
cash proceeds will be applied to the Term Loan.
Mandatory prepayments will be applied to reduce all
remaining scheduled payments of the Term Loan in
inverse order of maturity, then to reduction of the
Revolving Credit Commitment.
SYNDICATION
- -----------
MANAGEMENT: NCMI will manage all aspects of the syndication,
- ----------- including but not limited to the timing of offers to
potential Lenders, the amounts offered to potential
Lenders, the acceptance of Commitments from Lenders,
the allocation of Commitments and the compensation
provided.
DOCUMENTATION: The Facilities will be evidenced by a Loan Agreement
- -------------- and other Loan Documents satisfactory to Agents and
the Lenders.
INTEREST RATE: Interest on the Term Loan and Revolving Credit Facility
- -------------- shall be equal to (at the Borrower's option) CBR plus
a certain amount of LIBOR plus a certain amount, based
on a ratio of Total Funded Debt/EBITDA, as follows:
<TABLE>
<CAPTION>
TOTAL CBR LIBOR LEVEL
----- --- ----- -----
DEBT/EBITDA SPREAD (%) SPREAD (%)
----------- ---------- ----------
<S> <C> <C> <C>
greater than or equal to 2.5 0.0 2.00 IV
2.0 greater than or equal to 2.5 0.0 1.75 III
1.5 greater than or equal to 2.0 0.0 1.50 II
less than 1.5 0.0 1.25 I
</TABLE>
Each Loan may bear interest at either the CBR based
interest rate or the LIBOR based interest rate, as
Borrower selects. For all Loans that bear interest at
the LIBOR based rate, Borrower must select an Interest
Period of one, two, three or six months during which
the LIBOR based interest rate will be applicable. The
Lenders will have the option (but not the obligation)
to provide a twelve month Interest Period if requested
by Borrower. Each Loan may be converted from one type
to another, except that a Loan that bears interest at
the LIBOR based rate may only be converted at the end
of its Interest Period. There may be only ten separate
Loans outstanding at any one time that are accruing
interest at different rates or which have different
Interest Periods.
================================================================================
3
<PAGE> 6
TERM SHEET
==============================================================================
"CBR" means the corporate base rate of interest
established by Boatmen's from time to time, changing
when and as the corporate base rate changes. The
corporate base rate is not necessarily the lowest
rate charged by any Lender to its customers.
"LIBOR" means the rate at which Dollar deposits
approximately equal in amount to the Loan for the
applicable Interest Period are offered or available
in the London Interbank Market for Eurodollars, as
adjusted for maximum statutory reserves.
Interest on each CBR Loan shall be payable monthly in
arrears. In the case of a Loan accruing interest based
on LIBOR interest shall be paid at the end of the
Interest Period, except that, in the case of such
Loans with Interest Periods longer than three months,
interest is also payable at the end of each calendar
quarter. Interest is also payable upon any prepayment,
and at Maturity. Interest and fees will be computed
for actual days elapsed on a 360-day basis.
The spread shown above shall be calculated and applied
within 3 business days after the calculation of the
new ratio of Total Debt to EBITDA, such calculation
shall occur with receipt of the monthly financial
statements of Borrower for the last month on each
fiscal quarter.
The spread shown above shall also be calculated and
applied with the funding of any transaction that
needs Required Lenders approval.
DEFAULT INTEREST
- ----------------
RATE: After the occurrence of an Event of Default, the
- ----- interest rate on all the Loans shall be increased by
2.00% per annum. The default rate shall be in effect
until such Event of Default is waived or cured.
COMMITMENT FEE: A per annum fee paid on the unused portion of the
- -------------- Aggregate Commitment, payable quarterly in arrears and
on the termination of the facilities in an amount,
based on a ratio of Total Debt to EBITDA, as shown
below:
<TABLE>
<CAPTION>
TOTAL DEBT/EBITDA COMMITMENT FEE LEVEL
----------------- -------------- -----
<S> <C> <C>
greater than or equal to 2.5 .50% IV
2.0 greater than or equal to 2.5 .40% III
1.5 greater than or equal to 2.0 .35% II
less than 1.5 .30% I
</TABLE>
==============================================================================
4
<PAGE> 7
TERM SHEET
==============================================================================
INTEREST RATE
- -------------
PROTECTION: Borrower shall be required, within 60 days of closing,
- ----------- to acquire interest rate protection, either in the form
of an interest rate cap, interest rate swap or fixed
rate LIBOR (for sufficient period), covering at least
$12.5 million of the senior debt during calendar 1997,
$9.0 million during calendar 1998 and $5.0 million
during calendar 1999.
LETTER OF CREDIT
- ----------------
FEES: Letter of credit fees are due quarterly in advance,
- ----- to be shared proportionately by the Lenders. Fees will
be equal to the applicable LIBOR spread. With the
issuance of any new Letters of Credit, Borrower shall
pay to Letter of Credit Issuer a fronting fee equal to
.25% of the face amount of the Letter of Credit.
PERMITTED
- ---------
ACQUISITIONS: Borrower shall be permitted to draw on the Revolving
- ------------- Credit Facilities to make certain acquisitions. If (i)
senior debt required for the acquisition (including
expenses and payments made after the closing) exceeds
$10.0 million or (ii) total consideration for the
acquisition (including expenses and payments made after
closing) exceeds $17.0 million or (iii) the ratio of
total senior debt to proforma EBITDA for the trailing
12 months (assuming the target was part of the
Borrower for the trailing 12 month period) exceeds
2.5x, then Borrower must obtain approval of the
transaction from the Required Lenders. If none of the
above three items applies, no approval is required. No
acquisition may be made unless simultaneously with the
closing thereof, Boatmen's (on behalf of Lenders) shall
have a first priority lien on substantially all of the
assets of the acquired company, and if such acquisition
results in a subsidiary, Boatmen's (on behalf of
Lenders) shall have a pledge of the subsidiary's stock.
COLLATERAL: The Facilities will be secured by first priority, senior
- ----------- security interests in and lien upon all of the
Borrower's and subsidiaries' real and personal
property of every type and description including any
property acquired through acquisitions, whether now
owned or hereafter acquired and wherever located, and
the stock of all subsidiaries of RehabCare Group, Inc.
The foregoing security shall ratably secure the Senior
Credit Facilities and any interest rate swap/foreign
currency swap or similar agreements with a Lender
under the Facilities.
==============================================================================
5
<PAGE> 8
TERM SHEET
==============================================================================
INFORMATION: The Borrower shall provide such information (for
- ----------- RahabCare Group, Inc. and its subsidiaries) regarding
financial condition, income and loss, cash flows, and
properties, and in such format, as is reasonably
requested by Agents.
YIELD PROTECTION: The Loan Agreement shall include customary provisions
- ----------------- relating to yield protection, availability of funding,
and capital adequacy.
CONDITIONS OF
- -------------
LENDING: The Loan Documents shall be in form and substance
- -------- acceptable to Lenders. The Loan Agreement shall include,
without limitation conditions precedent, representations
and warranties, covenants, events of default,
indemnifications and other provisions customary for
transactions of this type.
COVENANTS: The Loan Documents will contain customary covenants
- ---------- for facilities of this type, including but not limited
to each of the following:
AFFIRMATIVE COVENANTS:
----------------------
1. Permitted use of Loan proceeds.
2. Maintenance of corporate existence.
3. Maintenance of Collateral.
4. Required Insurance.
5. Payment of Taxes.
6. Compliance with Laws, including environmental,
ERISA, Employment, and other.
7. Maintenance of Lenders' Security Interests.
8. Providing complete and accurate financial
statements and other financial information,
including financial projections and pro forma
financial statements, Accounts Receivable aging
reports and reconciliations.
9. Lenders having access to Borrower and their
officers and auditors, for audit purposes.
10. Provide Borrowing Base Certificates and
Compliance Certificates.
NEGATIVE COVENANTS:
-------------------
1. Restrictions on Investments.
2. Limitations on Indebtedness.
3. Limitations on prepayments of Indebtedness owed
to other Persons.
4. Limitations on Indirect Obligations.
5. Restrictions on Security Interests.
6. Restrictions on Acquisitions.
==============================================================================
6
<PAGE> 9
TERM SHEET
==============================================================================
7. Restrictions on Disposal of Property.
8. Restrictions on Distributions.
9. Change of Control.
10. Restrictions on changes in capital structure and
issuance of equity securities.
11. Limitation on transactions with Affiliates to
arms-length transactions.
12. Prohibitions against default under other
agreements and entering into conflicting
agreements.
13. Limitations on creating or acquiring new
Subsidiaries.
FINANCIAL The Loan Documents will contain customary financial
- --------- covenants for facilities of this type, including but
COVENANTS: not limited to the following (see Attachment A for
- ---------- covenants):
1. Minimum Interest Coverage.
2. Minimum Operating Cash Flow.
3. Minimum Net Worth.
4. Maximum Leverage.
5. Minimum Fixed Charge Coverage Ratio.
6. Limitation on Operating Leases.
7. Capital expenditures maximum.
8. Limitation on the payment of cash dividends.
EVENTS OF DEFAULT: The Loan Documents will contain customary Events of
- ------------------ Default, for facilities of this type, including but
not limited to each of the following:
1. Non-payment of any Loan Obligations, including
but not limited to principal, interest or fees.
2. Failure to pay material amounts owed to other
Persons.
3. Misrepresentation in any material respect.
4. Breach or non-performance of any covenant or
obligation under any Loan Document.
5. Default on or acceleration of any other
Indebtedness in an amount to be negotiated.
6. Insolvency; failure to pay debts as they become
due; commencement of voluntary or involuntary
bankruptcy or similar proceeding; assignment for
the benefit of creditors.
7. ERISA violations.
8. Environmental violations.
9. Judgment default in an amount to be negotiated.
10. Attachment of assets in an amount to be
negotiated.
11. Unenforceability of any Loan Document.
12. Liquidation or Dissolution.
==============================================================================
7
<PAGE> 10
TERM SHEET
===============================================================================
13. Seizure of Assets.
14. Racketeering proceeding.
15. Failure of any Security Interest.
16. Material Adverse Change in Borrower's condition.
17. Cross-default to occurrence of a default
(whether or not resulting in acceleration)
under any other agreement governing indebtedness
of the Borrower that is not cured or waived
within the applicable cure period.
REPRESENTATIONS &
- -----------------
WARRANTIES: The Loan Documents will contain representations and
- ----------- warranties customary for credit facilities of this type,
including but not limited to representations and
warranties regarding or to the effect of each of
the following:
1. Corporate existence.
2. Authorization, binding effect and absence of
conflicts with Charter Documents, Material
Agreements and judgments, decrees and orders.
3. Possession of material permits, licenses and
other intangibles necessary to conduct
business.
4. Absence of material adverse litigation, other
proceedings or judgments except as disclosed
prior to execution of the Loan Agreement.
5. Absence of material adverse change in financial
condition, business, affairs or properties.
6. Fair presentation of financial statements.
7. Payment of taxes.
8. Compliance with Environmental Laws.
9. Compliance with all Material Laws and Material
Agreements.
10. Compliance with all applicable requirements of
Regulations U, G, T and X of the Board of
Governors of the Federal Reserve System.
11. ERISA compliance.
12. Priority of Lenders' Security Interests.
13. Absence of Default or Event of Default.
CONDITIONS
- ----------
PRECEDENT Usual conditions to each advance (including the
- --------- initial advance) of each loan, including, without
APPLICABLE TO ALL limitation, those set forth below:
- -----------------
LOANS: 1. Closing. Closing shall occur no later than
- ------ --------
March 15, 1997 unless extended by Agents, subject
to all closing conditions being met.
2. Litigation. There is no pending litigation
-----------
seeking to prohibit the making of the Loans or
which, if adversely determined, would have a
===============================================================================
8
<PAGE> 11
TERM SHEET
===============================================================================
Material Adverse Effect on Borrower or Guarantors.
3. Material Adverse Change. No Material Adverse
------------------------
Change in the business condition (financial or
otherwise) of the Borrower as reflected the last
audited statements of RehabCare Group, Inc. dated
February 29, 1996 and the last unaudited statements
dated August 31, 1996, both of which were previously
delivered to the Agents.
4. Ownership Structure, Structure of the Facilities.
-------------------------------------------------
For the initial advance only, the ownership structure
of the Borrower shall be satisfactory to the Lenders,
and the Lenders must be satisfied the proposed
structure of the Facilities will not subject the
Lenders to unacceptable risks including, without
limitation, fraudulent conveyance risks.
5. Financial Statements. Agents shall have received
---------------------
(i) pro forma opening financial statements giving
---------
effect to the transaction, which must not be
materially less favorable, in the Agents' judgment,
than the projections previously provided to them and
which must demonstrate, in Agents' judgment, together
with all other information then available to the
Agents, that the Borrower and its subsidiaries can
repay their debts and satisfy their respective other
obligations as and when due, and can comply with
each of the financial covenants contained in the
Loan Agreement acceptable to the Agents, and (ii)
such information as the Agents and the Lenders
may reasonably request to confirm the tax, legal
and business assumptions made in such pro forma
---------
financial statements, and (iii) the prior three
year audit reports and any quarterly reports, all
of which must be satisfactory to the Agents.
6. Legal. All legal (including tax implications)
------
and regulatory matters shall be satisfactory to the
Agents. Borrower shall furnish satisfactory opinions
of the law to the Lenders regarding such matters.
7. Regulations. Compliance with all applicable
------------
requirements of Regulations U, G, T and X of the Board
of Governors of the Federal Reserve System.
8. Customary Documents. Receipt of other customary
--------------------
closing documentation, including, without limitation,
satisfactory evidence that Administrative Agent (on
behalf of Lenders) holds a perfected first priority
lien in all collateral for the Facilities and solvency
certificates from the Borrower, acceptable to the
Administrative Agent.
9. Due Diligence. Satisfactory results of due
--------------
diligence investigations of Borrower (which includes
RehabCare Group, Inc. and all their
================================================================================
9
<PAGE> 12
TERM SHEET
===============================================================================
subsidiaries) including, without limitation, review of
proposed structure, contingent liabilities and
contractual obligations, and all financial, accounting
and tax aspects.
10. No Event of Default. Borrower and its
--------------------
subsidiaries are in compliance with all existing
financial obligations.
11. Disruption in the Capital Markets. The absence
----------------------------------
of any disruption or adverse change in the financial
or capital markets generally which the Agents, in
their sole reasonable discretion, deems material
in connection with the syndication of the Facilities.
ASSIGNMENTS AND
- ---------------
PARTICIPATIONS: The Agents may, in their absolute discretion, sell
- --------------- participations and assign interests in the Loans and
Commitments and disclose information to prospective
participants and assignees and share, at its option,
any fees with such participants and assignees.
COSTS AND EXPENSES: Upon signing the Commitment Letter, Borrower shall
- ------------------- be responsible and pay all reasonable costs and
expenses incurred by Agents in their due diligence
review and in the preparation of Loan Documents
(including without limitation, this Term Sheet and
the accompanying Fee Letter, or other letter),
closing, administration and enforcement of the
transactions (regardless of whether or not the
Facilities are closed) contemplated hereby,
including but not limited to: (a) recording and
filing fees and legal fees and expenses, (b) title
and other insurance premiums, (c) survey fees, (d)
all taxes due and payable at the time of closing,
(e) appraisal, environmental and other report fees,
(f) all reasonable attorneys fees and expenses
including Agents' loan audits.
Boatmen's may (but does not have the obligation to)
incurr some expenses prior to signing the Commitment
Letter. The Borrower will be responsible for such
expenses upon signing the Commitment Letter.
OTHER: The Loan Documents will be governed by the laws of the
- ------ State of Missouri except with respect to the
attachment, priority, and enforcement of liens and
security interests on Collateral located in states
other than Missouri, in which case the law of such
states will apply. This term sheet is intended as
an outline only and does not purport to be a complete
list of all the conditions, covenants, representations,
warranties and other provisions which will be
contained in the definitive legal documentation for
the financing contemplated hereby.
===============================================================================
10
<PAGE> 13
RehabCare Attachment A
Covenants
Stock Repurchase
Capex
Max
Period Capex
---------------- ---------
Capital Expenditures Calendar 1997 $3.0 MM
and Deferred contract Calendar 1998 $3.5 MM
costs Calendar 1999 and after $3.8 MM
Min. EBITDA
Min.
Period EBITDA
-------------- -------
TTM from 3/31/97
to 6/30/98 $15.3MM
9/30/98 to 12/31/98 $16.0MM
3/31/99 to 6/30/99 $17.0MM
9/30/99 and after $18.0MM
Fixed Charge Coverage
Min.
Period Ratio
---------------- -------
TTM from 3/31/97
and after 1.25
Indebtedness to Operating Cash Flow Ratio
Max.
Period Ratio
---------------- -------
TTM from 3/31/97
to 12/31/97 2.65
3/31/98 to 6/30/98 2.50
9/30/98 to 12/31/98 2.25
3/30/99 to 6/30/99 2.00
9/30/99 and after 1.75
Minimum Interest Coverage (OCF to Interest)
Min.
Period Ratio
---------------- -------
TTM from 3/31/97
to 12/31/97 5.00
3/31/98 to 12/31/98 5.50
3/31/99 and after 6.00
Minimum Net Worth*
Min.
Period Ratio
---------------- -------
Close to 1/30/98 $24.0MM
1/31/98 to 1/30/99 $30.0MM
1/31/99 to 1/30/00 $36.0MM
1/31/00 and after $42.0MM
1
