PLAN AND AGREEMENT OF MERGER
PLAN AND AGREEMENT OF MERGER (this "Plan of Merger"), made and entered into
as of the 17th day of February, 1997, by and among HEALTHSOUTH CORPORATION, a
Delaware corporation ("HEALTHSOUTH"), XXXX ACQUISITION CORPORATION, a Delaware
corporation (the "Subsidiary"), and HORIZON/CMS HEALTHCARE CORPORATION, a
Delaware corporation ("Horizon/CMS") (the Subsidiary and Horizon/CMS being
sometimes collectively referred to herein as the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of HEALTHSOUTH, the Subsidiary
and Horizon/CMS have approved the merger of the Subsidiary with and into
Horizon/CMS (the "Merger"), upon the terms and subject to the conditions set
forth in this Plan of Merger, whereby each share of Common Stock, par value
$.001 per share, of Horizon/CMS (the "Horizon/CMS Common Stock"), not owned
directly or indirectly by Horizon/CMS, will be converted into the right to
receive the Merger Consideration (as hereinafter defined);
WHEREAS, each of HEALTHSOUTH, the Subsidiary and Horizon/CMS desires to
make certain representations, warranties, covenants and agreements in
connection with the Merger and also to prescribe various conditions to the
Merger; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the premises, and the mutual covenants
and agreements contained herein, the parties hereto do hereby agree as follows:
Section 1. THE MERGER.
1.1 THE MERGER. Upon the terms and conditions set forth in this Plan of
Merger, and in accordance with the Delaware General Corporation Law (the
"DGCL"), the Subsidiary shall be merged with and into Horizon/CMS at the
Effective Time (as defined in Section 1.3). At the Effective Time, the separate
corporate existence of the Subsidiary shall cease and Horizon/CMS shall continue
as the surviving corporation (the "Surviving Corporation") under the name
"Horizon/CMS Healthcare Corporation" and shall succeed to and assume all the
rights and obligations of the Subsidiary and Horizon/CMS in accordance with the
DGCL.
1.2 THE CLOSING. The closing of the Merger (the "Closing") will take
place at 10:00 a.m. Central Time on a date to be specified by the parties (the
"Closing Date"), which (subject to satisfaction or waiver of the conditions set
forth in Sections 9.2 and 9.3) shall be no later than the second business day
after satisfaction or waiver of the conditions set forth in Section 9.1, at the
offices of Xxxxxxx Xxxxxxxxx & Young, L.L.C., Birmingham, Alabama, unless
another date or place is agreed to in writing by the parties hereto.
1.3 EFFECTIVE TIME. Subject to the provisions of this Plan of Merger, the
parties shall file a certificate of merger (the "Certificate of Merger")
executed in accordance with the relevant provisions of the DGCL and shall make
all other filings or recordings required under the DGCL as soon as practicable
on or after the Closing Date. The Merger shall become effective at such time as
the Certificate of Merger is duly filed with the Delaware Secretary of State, or
at such other time as the Subsidiary and Horizon/CMS shall agree should be
specified in the Certificate of Merger (the "Effective Time").
1.4 EFFECT OF THE MERGER. The Merger shall have the effects set forth in
Section 259 of the DGCL.
Section 2. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES.
2.1 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of the
Merger and without any action on the part of any holder of shares of Horizon/CMS
Common Stock or any shares of capital stock of the Subsidiary:
(a) SUBSIDIARY COMMON STOCK. Each share of capital stock of the
Subsidiary issued and outstanding immediately prior to the Effective Time shall
be converted into one fully paid and nonassessable share of common stock of the
Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK. Each share of Horizon/CMS Common
Stock that is owned by Horizon/CMS or by any wholly-owned subsidiary of
Horizon/CMS shall automatically be canceled and retired and shall cease to
exist, and no Common Stock, par value $.01 per share, of HEALTHSOUTH
("HEALTHSOUTH Common Stock"), cash or other consideration shall be delivered in
exchange therefor.
(c) CONVERSION OF HORIZON/CMS SHARES. Subject to Section 2.2(e), each
issued and outstanding share of Horizon/CMS Common Stock (other than shares to
be canceled in accordance with Section 2.1(b)) (collectively, the "Exchanging
Horizon/CMS Shares") shall be converted into 0.42169 (the "Exchange Ratio") of a
share of HEALTHSOUTH Common Stock, as may be adjusted as provided in
Section 2.1(e) below (the "Merger Consideration"). All Exchanging Horizon/CMS
Shares shall, upon conversion thereof into shares of HEALTHSOUTH Common Stock at
the Effective Time, cease to be outstanding and shall automatically be cancelled
and retired, and each certificate previously evidencing Exchanging Horizon/CMS
Shares outstanding immediately prior to the Effective Time ("Certificates")
shall thereafter be deemed, for all purposes other than the payment of
dividends or distributions, to represent that number of shares of HEALTHSOUTH
Common Stock determined pursuant to the Exchange Ratio and, if applicable, the
right to receive cash pursuant to Section 2.2. The holders of certificates
previously evidencing Exchanging Horizon/CMS Shares shall cease to have any
rights with respect to such Exchanging Horizon/CMS Shares except as otherwise
provided herein or by law.
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(d) STOCK OPTIONS, WARRANTS AND CONVERTIBLE SECURITIES. At the
Effective Time, all rights with respect to Horizon/CMS Common Stock pursuant
to any Horizon/CMS stock options, stock purchase warrants or convertible
securities which are outstanding at the Effective Time (which, for purposes
of this Section 2.1(d), includes any rights to purchase Horizon/CMS Common
Stock pursuant to Horizon/CMS's 1996 Employee Stock Purchase Plan), whether
or not then exercisable, shall be converted into and become rights with
respect to HEALTHSOUTH Common Stock, and HEALTHSOUTH shall assume each
Horizon/CMS stock option, stock purchase warrant and convertible security, in
accordance with the terms of any stock option plan under which it was issued
and any stock option agreement, warrant agreement or convertible security by
which it is evidenced. It is intended that, unless otherwise agreed between
HEALTHSOUTH and a particular optionee, the foregoing provisions shall be
undertaken in a manner that will not constitute a "modification", as defined
in Section 424 of the Code, as to any stock option which is an "incentive
stock option". Each Horizon/CMS stock option, stock purchase warrant or
convertible security so assumed shall be exercisable for or convertible into
that number of shares of HEALTHSOUTH Common Stock equal to the number of
Horizon/CMS shares subject thereto multiplied by the Exchange Ratio, and
shall have an exercise price per share or conversion price per share equal to
the Horizon/CMS exercise price divided by the Exchange Ratio.
(e) ANTI-DILUTION PROVISIONS. If after the date hereof and prior to the
Effective Time HEALTHSOUTH shall have declared a stock split (including a
reverse split) of HEALTHSOUTH Common Stock, including the proposed two-for-one
split of the HEALTHSOUTH Common Stock scheduled for consideration by the
stockholders of HEALTHSOUTH at a meeting thereof scheduled to be held on March
12, 1997, or a dividend payable in HEALTHSOUTH Common Stock, or any other
distribution of securities or dividend (in cash or otherwise) to holders of
HEALTHSOUTH Common Stock with respect to their HEALTHSOUTH Common Stock or other
change or reclassification of the HEALTHSOUTH Common Stock (including without
limitation such a distribution, dividend or other change or reclassification of
the HEALTHSOUTH Common Stock made in connection with a recapitalization,
reclassification, merger, consolidation, reorganization, reclassification,
merger, consolidation, reorganization or similar transaction) then (i) the
Exchange Ratio shall be appropriately adjusted to reflect such stock split or
dividend or other distribution of securities and (ii) if such stock split,
dividend or distribution has a record date prior to the Effective Time, then the
number of shares of HEALTHSOUTH Common Stock to be issued upon conversion of a
share of Horizon/CMS Common Stock pursuant to Section 2.1(c) shall be
appropriately adjusted to reflect such stock split, dividend or other
distribution of securities.
2.2 EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT. Prior to the Effective
Time, HEALTHSOUTH shall enter into an agreement with such bank or trust company
as may be designated by HEALTHSOUTH (the "Exchange Agent") which shall provide
that HEALTHSOUTH shall deposit with the Exchange Agent as of the Effective Time,
for the benefit of the holders of Exchanging Horizon/CMS Shares, for exchange in
accordance with this Section 2, through the Exchange Agent, certificates
representing the shares of HEALTHSOUTH Common Stock (such shares of HEALTHSOUTH
Common Stock, together with any dividends or distributions with respect thereto
with a record date after the Effective Time and any other property issuable
pursuant to Section 2.1(e), being hereinafter referred to as the "Exchange
Fund") issuable pursuant to Section 2.1.
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(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail
to each holder of record of a Certificate or Certificates (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as HEALTHSOUTH may reasonably specify) and (ii) instructions for use
in effecting the surrender of Certificates in exchange for certificates
representing shares of HEALTHSOUTH Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by HEALTHSOUTH, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of HEALTHSOUTH Common Stock which such holder has the right to receive
pursuant to the provisions of this Section 2, and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of shares
of Horizon/CMS Common Stock which is not registered in the transfer records of
Horizon/CMS, a certificate representing the proper number of shares of
HEALTHSOUTH Common Stock may be issued to a person other than the person in
whose name the Certificate so surrendered is registered, if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer and the
person requesting such payment shall pay any transfer or other taxes required by
reason of the issuance of shares of HEALTHSOUTH Common Stock to a person other
than the registered holder of such Certificate or establish to the satisfaction
of HEALTHSOUTH that such tax has been paid or is not applicable.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions with respect to HEALTHSOUTH Common Stock with a record date
after the Effective Time of the Merger shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of HEALTHSOUTH Common Stock
represented thereby and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 2.2(e) until, in each such case, the
surrender of such Certificate in accordance with this Section 2. Subject to the
effect of applicable laws, following surrender of any such Certificate, there
shall be paid to the holder of the certificate representing whole shares of
HEALTHSOUTH Common Stock issued in exchange therefor, without interest, (i) at
the time of such surrender, the amount of any cash payable in lieu of a
fractional share of HEALTHSOUTH Common Stock to which such holder is entitled
pursuant to Section 2.2(e) and the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole shares of HEALTHSOUTH Common Stock, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to such surrender and with a payment date
subsequent to such surrender payable with respect to such whole shares of
HEALTHSOUTH Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN EXCHANGING HORIZON/CMS SHARES. All
shares of HEALTHSOUTH Common Stock issued upon the conversion of Horizon/CMS
Common Stock in accordance with the terms of this Section 2 (including any cash
paid pursuant to Section 2.2(c) or 2.2(e)) shall be deemed to have been issued
(and paid) in full satisfaction of all rights pertaining to the Exchanging
Horizon/CMS Shares. If, after the Effective Time, Certificates are presented to
the Surviving Corporation or the Exchange Agent for any reason, they shall be
canceled and exchanged as provided in this Section 2, except as otherwise
provided by law.
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(e) NO FRACTIONAL SHARES. No certificates or scrip representing
fractional shares of HEALTHSOUTH Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests
will not entitle the owner thereof to vote or to any rights of a stockholder
of HEALTHSOUTH. Notwithstanding any other provision of this Plan of Merger,
each holder of Exchanging Horizon/CMS Shares who would otherwise have been
entitled to receive a fraction of a share of HEALTHSOUTH Common Stock (after
taking into account all Exchanging Horizon/CMS Shares delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an amount
equal to such fractional part of a share of HEALTHSOUTH Common Stock
multiplied by the closing sale price per share of HEALTHSOUTH Common Stock on
the date on which the Effective Time occurs, as reported on the New York
Stock Exchange Composite Transactions Tape; provided, however, that, if there
is no sale of HEALTHSOUTH Common Stock on the New York Stock Exchange on such
date, then the closing sale price per share on the next preceding trading day
on which such a sale occurred.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
which remains undistributed to the holders of the Certificates for six months
after the Effective Time shall be delivered to HEALTHSOUTH, upon demand, and
any holders of the Certificates who have not theretofore complied with this
Section 2 shall thereafter look only to HEALTHSOUTH for payment of
HEALTHSOUTH Common Stock, any cash in lieu of fractional shares of
HEALTHSOUTH Common Stock and any dividends or distributions with respect to
HEALTHSOUTH Common Stock.
(g) NO LIABILITY. None of HEALTHSOUTH, the Subsidiary, Horizon/CMS or
the Exchange Agent shall be liable to any person in respect of any shares of
HEALTHSOUTH Common Stock (or dividends or distributions with respect thereto)
or cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificates
shall not have been surrendered prior to seven years after the Effective Time
(or immediately prior to such earlier date on which any shares of HEALTHSOUTH
Common Stock, any cash in lieu of fractional shares of HEALTHSOUTH Common
Stock or any dividends or distributions with respect to HEALTHSOUTH Common
Stock in respect of such Certificates would otherwise escheat to or become
the property of any governmental entity), any such shares, cash, dividends or
distributions in respect of such Certificates shall, to the extent permitted
by applicable law, become the property of the Surviving Corporation, free and
clear of all claims or interest of any person previously entitled thereto.
(h) INVESTMENT OF EXCHANGE FUND. The Exchange Agent may invest any cash
included in the Exchange Fund in deposit accounts or short-term money market
instruments, as directed by HEALTHSOUTH, on a daily basis. Any interest and
other income resulting from such investments shall be paid to HEALTHSOUTH.
HEALTHSOUTH shall deposit with the Exchange Agent as part of the Exchange
Fund cash in an amount equal to any loss of principal resulting from such
investments promptly after the incurrence of such a loss.
2.3 CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION. The
Certificate of Merger shall include such lawful amendments and restatement of
the Certificate of Incorporation of Horizon/CMS as HEALTHSOUTH may desire, such
amendments and restatement to become
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effective at the Effective Time. The Certificate of Incorporation of
Horizon/CMS, as so amended and restated, shall become the Certificate of
Incorporation of the Surviving Corporation from and after the Effective Time
and until thereafter amended as provided by law.
2.4 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of the Subsidiary
shall be the Bylaws of the Surviving Corporation from and after the Effective
Time and until thereafter altered, amended or repealed in accordance with the
laws of the State of Delaware, the Certificate of Incorporation of the
Surviving Corporation and the said Bylaws.
2.5 DIRECTORS OF THE SURVIVING CORPORATION. The Directors of the
Subsidiary immediately prior to the Effective Time shall be the Directors of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the Surviving Corporation.
2.6 ASSETS, LIABILITIES, RESERVES AND ACCOUNTS. At the Effective Time,
the assets, liabilities, reserves and accounts of each of the Subsidiary and
Horizon/CMS shall be taken up on the books of the Surviving Corporation at
the amounts at which they respectively shall be carried on the books of said
corporations immediately prior to the Effective Time, except as otherwise set
forth in the Plan of Merger and subject to such adjustments, or elimination
of intercompany items, as may be appropriate in giving effect to the Merger
in accordance with generally accepted accounting principles.
2.7 CORPORATE ACTS OF THE SUBSIDIARY. All corporate acts, plans,
policies, approvals and authorizations of the Subsidiary, its sole
stockholder, its Board of Directors, committees elected or appointed by the
Board of Directors, and all officers and agents, valid immediately prior to
the Effective Time, shall be those of the Surviving Corporation and shall be
as effective and binding thereon as they were with respect to the Subsidiary.
.
Section 3. REPRESENTATIONS AND WARRANTIES OF HORIZON/CMS.
Horizon/CMS hereby represents and warrants to HEALTHSOUTH and the
Subsidiary as follows:
3.1 ORGANIZATION, EXISTENCE AND GOOD STANDING. Horizon/CMS is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Horizon/CMS has all necessary corporate power
to own its properties and assets and to carry on its business as presently
conducted.
3.2 HORIZON/CMS CAPITAL STOCK. Horizon/CMS's authorized capital
consists of 150,000,000 shares of Horizon/CMS Common Stock, par value $.001
per share, of which 52,157,806 shares were issued and outstanding as of
January 31, 1997, and 641,413 shares were issued and held as treasury shares,
and 500,000 shares of Preferred Stock, par value $.001 per share, none of
which shares are issued and outstanding or held as treasury stock. All of
the issued and outstanding shares of Horizon/CMS Common Stock are duly and
validly issued, fully paid and nonassessable. Except as set forth on EXHIBIT
3.2 to the Disclosure Schedule delivered by Horizon/CMS to HEALTHSOUTH
simultaneously with the execution and delivery hereof
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(the "Disclosure Schedule") or otherwise disclosed in the Horizon/CMS Annual
Report on Form 10-K for the fiscal year ended May 31, 1996 (the "Horizon/CMS
10-K") or the Horizon/CMS Quarterly Report on Form 10-Q for the three months
ended November 30, 1996, there are no options, warrants, or similar rights
granted by Horizon/CMS, securities convertible into or exchangeable for
Horizon/CMS Common Stock, or any other agreements to which Horizon/CMS is a
party providing for the issuance or sale by it of any additional securities
which would remain in effect after the Effective Time. There is no liability
for dividends declared or accumulated but unpaid with respect to any of the
shares of Horizon/CMS Common Stock.
3.3 HORIZON/CMS SUBSIDIARIES AND HORIZON/CMS OTHER ENTITIES. (a) There
is included in the Disclosure Schedule, as EXHIBIT 3.3(a), a true and correct
list of all Subsidiaries of Horizon/CMS (individually, a "Horizon/CMS
Subsidiary", and collectively, the "Horizon/CMS Subsidiaries") and their
states of incorporation. Except as set forth on EXHIBIT 3.3(a), Horizon/CMS
does not own stock in and does not control, directly or indirectly, any other
corporation, association or business organization other than the Horizon/CMS
Other Entities (as defined below).
(b) There is included in the Disclosure Schedule, as EXHIBIT 3.3(b), a
true and correct list of all general or limited partnerships in which a
general partner is Horizon/CMS, a Horizon/CMS Subsidiary, a Horizon/CMS LLC
(as defined below) or another Horizon/CMS Partnership (individually, a
"Horizon/CMS Partnership" and collectively, the "Horizon/CMS Partnerships"),
and all limited liability companies in which Horizon/CMS, a Horizon/CMS
Subsidiary, another Horizon/CMS LLC or a Horizon/CMS Partnership is a member
(individually, a "Horizon/CMS LLC" and collectively, the "Horizon/CMS LLCs")
(the Horizon/CMS Partnerships and the Horizon/CMS LLCs being collectively
called the "Horizon/CMS Other Entities"), and their states of organization.
Except as set forth on EXHIBIT 3.3(b), neither Horizon/CMS nor any
Horizon/CMS Subsidiary owns an equity interest in, nor does such entity
control, directly or indirectly, any other joint venture, limited liability
company or partnership.
3.4 ORGANIZATION, EXISTENCE AND GOOD STANDING OF HORIZON/CMS
SUBSIDIARIES AND HORIZON/CMS OTHER ENTITIES. (a) Each Horizon/CMS Subsidiary
is a corporation duly organized, validly existing and in good standing under
the laws of its respective state of incorporation. Each Horizon/CMS
Subsidiary has all necessary corporate power to own its properties and assets
and to carry on its business as presently conducted.
(b) Each Horizon/CMS Partnership that is a limited partnership is
validly formed, each Horizon/CMS Partnership that is a general partnership
has been duly organized, and each Horizon/CMS Partnership is in good standing
under the laws of its respective state of organization. Each Horizon/CMS
Partnership has all necessary partnership power to own its property and
assets and to carry on its business as presently conducted.
(c) Each Horizon/CMS LLC is a limited liability company validly formed and
in good standing under the laws of its respective state of organization. Each
Horizon/CMS LLC has all necessary organizational power to own its properties and
assets to carry on its business as presently conducted.
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3.5 FOREIGN QUALIFICATIONS. Horizon/CMS, each Horizon/CMS Subsidiary
and each Horizon/CMS Other Entity that is not a general partnership is
qualified to do business as a foreign corporation, foreign limited
partnership or foreign limited liability company, as the case may be, and is
in good standing in each jurisdiction in which the nature or character of the
property owned, leased or operated by it or the nature of the business
transacted by it makes such qualification necessary, except where the failure
to so qualify would not have a material adverse effect on Horizon/CMS.
3.6 POWER AND AUTHORITY. Subject to the satisfaction of the conditions
precedent set forth herein, Horizon/CMS has the corporate power to execute,
deliver and perform this Plan of Merger and all agreements and other
documents executed and delivered or to be executed and delivered by it
pursuant to this Plan of Merger, and, subject to the satisfaction of the
conditions precedent set forth herein, has taken all action required by its
Certificate of Incorporation, Bylaws or otherwise, to authorize the
execution, delivery and performance of this Plan of Merger and such related
documents. The execution and delivery of this Plan of Merger does not and,
subject to the receipt of required stockholder and regulatory approvals and
any other required third-party consents or approvals, the consummation of the
Merger will not, violate any provisions of any statute or other law, any rule
or regulation of any governmental agency or authority, the Certificate of
Incorporation of Horizon/CMS or any provisions of, or result in the
acceleration of any obligation under, any mortgage, lien, lease, agreement,
instrument, order, arbitration award, judgment or decree, to which
Horizon/CMS or any Horizon/CMS Subsidiary or Horizon/CMS Other Entity is a
party, or by which it is bound, or violate any restrictions of any kind to
which it is subject which, if violated or accelerated, would have a material
adverse effect on Horizon/CMS. The execution and delivery of this Plan of
Merger has been approved by the Board of Directors of Horizon/CMS. This Plan
of Merger has been duly executed and delivered by Horizon/CMS and, assuming
this Plan of Merger constitutes a valid and binding obligation of each of
HEALTHSOUTH and the Subsidiary, constitutes a valid and binding obligation of
Horizon/CMS, enforceable against Horizon/CMS in accordance with its terms.
3.7 HORIZON/CMS PUBLIC INFORMATION; UNDISCLOSED LIABILITIES. (a)
Horizon/CMS has heretofore furnished HEALTHSOUTH with a true and complete
copy of each report, schedule, registration statement and definitive proxy
statement filed by it with the Securities and Exchange Commission (the "SEC")
(as any such documents have since the time of their original filing been
amended, the "Horizon/CMS Documents") since January 1, 1995, which are all
the documents (other than preliminary material) that it was required to file
with the SEC from such date through the date of this Plan of Merger. Except
as set forth in EXHIBIT 3.7(a) to the Disclosure Schedule, as of their
respective dates, the Horizon/CMS Documents did not contain any untrue
statements of material facts or omit to state material facts required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their
respective dates, the Horizon/CMS Documents complied in all material respects
with the applicable requirements of the Securities Act of 1933, as amended,
and the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated under such statutes. The financial statements
contained in the Horizon/CMS Documents, together with the notes thereto, have
been prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods indicated (except as may be
indicated in the notes thereto, or, in the case of the unaudited
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financial statements, as permitted by Form 10-Q), except as set forth in
EXHIBIT 3.7(a) to the Disclosure Schedule, reflect all known liabilities of
Horizon/CMS required to be stated therein, including all such known
contingent liabilities as of the end of each period reflected therein, and
present fairly the financial condition of Horizon/CMS at said dates and the
consolidated results of operations and cash flows of Horizon/CMS for the
periods then ended. The consolidated balance sheet of Horizon/CMS at November
30, 1996 included in the Horizon/CMS Documents is herein sometimes referred
to as the "Horizon/CMS Balance Sheet".
(b) Except as disclosed in the Horizon/CMS Documents or as set forth in
EXHIBIT 3.7(b) to the Disclosure Schedule and except for liabilities and
obligations incurred in the ordinary course of business consistent with past
practices, since the date of the Horizon/CMS Balance Sheet, neither
Horizon/CMS nor any of the Horizon/CMS Subsidiaries or the Horizon/CMS Other
Entities have incurred any liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise, that have, or would be reasonably
likely to have, a material adverse effect on Horizon/CMS. Except as
disclosed in the Horizon/CMS Documents or as set forth in EXHIBIT 3.7(b) to
the Disclosure Schedule and except for liabilities and obligations incurred
in the ordinary course of business consistent with past practices, since the
date of the Horizon/CMS Balance Sheet, neither Horizon/CMS nor any of the
Horizon/CMS Subsidiaries or the Horizon/CMS Other Entities have incurred any
liabilities or obligations of any nature, whether or not accrued, contingent
or otherwise, that would be required to be reflected or reserved against on a
consolidated balance sheet of Horizon/CMS (including the notes thereto)
prepared in accordance with generally accepted accounting principles as
applied in preparing the Horizon/CMS Balance Sheet.
3.8 SUPPORTING INFORMATION. All consolidated historical financial
information provided by Horizon/CMS to HEALTHSOUTH in connection with
HEALTHSOUTH's due diligence investigation prior to the date of this Plan of
Merger, and all such information provided to HEALTHSOUTH on or after the date
of this Plan of Merger, is supported by detailed information at the facility
or operating unit level and is in all respects consistent with and fairly
reflective of such detailed information.
3.9 LEGAL PROCEEDINGS. Except as disclosed in the Horizon/CMS Documents
or on EXHIBIT 3.9 to the Disclosure Schedule, there is no litigation,
governmental investigation or other proceeding pending or, so far as is known
to Horizon/CMS, threatened against or relating to Horizon/CMS or the
Horizon/CMS Subsidiaries or the Horizon/CMS Other Entities, their respective
properties or businesses, or the transactions contemplated by this Plan of
Merger, except for litigation, governmental investigations or other
proceedings that would not, individually or in the aggregate, have a material
adverse effect on Horizon/CMS.
3.10 CONTRACTS, ETC. (a) Except as set forth on EXHIBIT 3.10(a) to the
Disclosure Schedule, all material contracts, leases, agreements and
arrangements to which Horizon/CMS or any of the Horizon/CMS Subsidiaries or
Horizon/CMS Other Entities is a party are legally valid and binding in
accordance with their terms and in full force and effect, and, to the
knowledge of Horizon/CMS, no party is in default thereunder, and no event has
occurred which, but for the passage of time or the
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giving of notice or both, would constitute a default thereunder, except, in
each case, where the invalidity or unenforceablity of the lease, contract,
agreement or arrangement or the default or breach thereunder or thereof would
not, individually or in the aggregate, have a material adverse effect on
Horizon/CMS.
(b) Except as set forth on EXHIBIT 3.10(b) to the Disclosure Schedule,
no contract or agreement to which Horizon/CMS or any Horizon/CMS Subsidiary
or Horizon/CMS Other Entity is a party will, by its terms, terminate as a
result of the transactions contemplated hereby or require any consent from
any obligor thereto in order to remain in full force and effect immediately
after the Effective Time, except for contracts or agreements which, if
terminated or if their enforceability were otherwise adversely affected,
would not have a material adverse effect on Horizon/CMS.
(c) Except as set forth on EXHIBIT 3.10(c) to the Disclosure Schedule,
none of Horizon/CMS, any Horizon/CMS Subsidiary or any Horizon/CMS Other
Entity has granted any right of first refusal or similar right in favor of
any third party with respect to any material portion of its properties or
assets or entered into any non-competition agreement or similar agreement
restricting in any material manner its ability to engage in any material
business in any location.
3.11 SUBSEQUENT EVENTS. Except as (a) set forth on EXHIBIT 3.11 to the
Disclosure Schedule, (b) disclosed in the Horizon/CMS Documents (c) contemplated
by this Plan of Merger or (d) otherwise consented to in writing by HEALTHSOUTH,
none of Horizon/CMS, any Horizon/CMS Subsidiary nor any Horizon/CMS Other Entity
has, since the date of the Horizon/CMS Balance Sheet:
(i) Incurred any material adverse change;
(ii) except as required hereby, amended its Articles or
Certificate of Incorporation or Bylaws, if any;
(iii) extended credit to anyone or guaranteed the obligation
of any person, firm or corporation (other than Horizon/CMS or any
Horizon/CMS Subsidiary or Horizon/CMS Other Entity) in an amount that,
in either case, is material to Horizon/CMS except in the ordinary
course of business consistent with prior practice;
(iv) discharged or satisfied any material lien or encumbrance, or
paid or satisfied any material obligation or liability (absolute,
accrued, contingent or otherwise) other than (a) liabilities shown or
reflected on the Horizon/CMS Balance Sheet or (b) liabilities incurred
since the date of the Horizon/CMS Balance Sheet in the ordinary course
of business, which discharge or satisfaction would have a material
adverse effect on Horizon/CMS;
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(v) increased or established any reserve for taxes or any other
liability on its books or otherwise provided therefor which would have
a material adverse effect on Horizon/CMS, except as relates to the
consolidated results of operations of Horizon/CMS since the date of
the Horizon/CMS Balance Sheet;
(vi) sold or transferred any of its material assets, tangible or
intangible, cancelled any material debts or claims held by it or
waived any of its material rights, except in the ordinary course of
business;
(vii) mortgaged, pledged or subjected to any security
interest any of its material assets, tangible or intangible, other
than as required under the existing provisions of Horizon/CMS's
primary credit facility;
(viii) entered into any employment contract which is not
terminable upon notice of 30 days or less, at will, and without
penalty to Horizon/CMS except as provided herein or granted any
general or uniform increase in the rates of pay of employees or
granted any increase in salary payable or to become payable by
Horizon/CMS to any officer of Horizon/CMS or, by means of any bonus or
pension plan, contract or other commitment, increased the compensation
of any officer of Horizon/CMS or entered into any agreements providing
for compensation to any officer or employee of Horizon/CMS, any
Horizon/CMS Subsidiary or any Horizon/CMS Other Entity based upon a
change in control of Horizon/CMS;
(ix) made any contribution, payment or distribution to the
trustee under any Horizon/CMS Plan (as such term is defined in Section
3.15 herein), other than any such contribution, payment or
distribution that is in accordance with Horizon/CMS's past practice,
or established or terminated any Horizon/CMS Plan;
(x) issued any capital stock or other equity securities, other
than stock options granted to officers, employees, directors or
consultants of Horizon/CMS or warrants granted to third parties and
shares of Horizon/CMS Common Stock issuable upon the exercise thereof,
all of which options and warrants are disclosed on EXHIBIT 3.2 to the
Disclosure Schedule or reflected in the Horizon/CMS Documents; or
(xi) except for this Plan of Merger and any other agreement
executed and delivered pursuant to this Plan of Merger, entered into
any material transaction other than in the ordinary course of business
or permitted under other Sections hereof or entered into any contract
or agreement in the ordinary course of business (i) which cannot be
performed within three months or less or (ii) which involves the
expenditure by Horizon/CMS of over $250,000.
3.12 ACCOUNTS RECEIVABLE. (a) Since the date of the Horizon/CMS 10-K,
Horizon/CMS has not changed any material principle or practice with respect to
the recordation of accounts
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receivable or the calculation of reserves therefor, or any material
collection, discount or write-off policy or procedure. Horizon/CMS (including
the Horizon/CMS Subsidiaries and Horizon/CMS Other Entities) is in compliance
with the terms and conditions of all third-party payor arrangements relating
to its accounts receivable, except to the extent that such noncompliance
would not have a material adverse effect on Horizon/CMS.
(b) Without limiting the generality of the foregoing, each of Horizon/CMS
and the Horizon/CMS Subsidiaries and the Horizon/CMS Other Entities is in
compliance with all Medicare and Medicaid provider agreements to which it is a
party, except to the extent that such noncompliance would not have a material
adverse effect on Horizon/CMS.
3.13 TAX RETURNS. Horizon/CMS and each of the Horizon/CMS Subsidiaries and
the Horizon/CMS Other Entities has filed all tax returns required to be filed by
it or requests for extensions to file such returns or reports have been timely
filed and granted and have not expired, except to the extent that such failures
to file, taken together, do not have a material adverse effect on Horizon/CMS.
Horizon/CMS or the applicable entity has made all payments shown as due on such
returns. Except as set forth on EXHIBIT 3.13 to the Disclosure Schedule,
neither Horizon/CMS nor any Horizon/CMS Subsidiary or Horizon/CMS Other Entity
has been notified that any tax returns of Horizon/CMS or any Horizon/CMS
Subsidiary or Horizon/CMS Other Entity are currently under audit by the Internal
Revenue Service or any state or local tax agency. No agreements have been made
by Horizon/CMS for the extension of time or the waiver of the statute of
limitations for the assessment or payment of any federal, state or local taxes.
3.14 COMMISSIONS AND FEES. Except for fees payable to Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") as indicated in EXHIBIT
3.14 to the Disclosure Schedule, there are no valid claims for brokerage
commissions or finder's or similar fees in connection with the transactions
contemplated by this Plan of Merger which may be now or hereafter asserted
against HEALTHSOUTH resulting from any action taken by Horizon/CMS or its
officers or Directors, or any of them.
3.15 EMPLOYEE BENEFIT PLANS; EMPLOYMENT MATTERS. (a) Except as set forth
in EXHIBIT 3.15 to the Disclosure Schedule or as described in the Horizon/CMS
Documents, Horizon/CMS has neither established nor maintains nor is obligated to
make contributions to or under or otherwise participate in (a) any bonus or
other type of incentive compensation plan, program, agreement, policy,
commitment, contract or arrangement (whether or not set forth in a written
document), (b) any pension, profit-sharing, retirement or other plan, program or
arrangement, or (c) any other employee benefit plan, fund or program, including,
but not limited to, those described in Section 3(3) of ERISA. Except as set
forth in EXHIBIT 3.15 to the Disclosure Schedule, all such plans (individually,
a "Horizon/CMS Plan" and collectively, the "Horizon/CMS Plans") have been
operated and administered in accordance with, as applicable, ERISA, the Internal
Revenue Code of 1986, as amended, Title VII of the Civil Rights Act of 1964, as
amended, the Equal Pay Act of 1967, as amended, the Age Discrimination in
Employment Act of 1967, as amended, and the related rules and regulations
adopted by those federal agencies responsible for the administration of such
laws.
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No act or failure to act by Horizon/CMS has resulted in a "prohibited
transaction" (as defined in ERISA) with respect to the Horizon/CMS Plans that
is not subject to a statutory or regulatory exception. Except as set forth
in EXHIBIT 3.15 to the Disclosure Schedule, no "reportable event" (as defined
in ERISA) has occurred with respect to any of the Horizon/CMS Plans which is
subject to Title IV of ERISA. Except as set forth in EXHIBIT 3.15 to the
Disclosure Schedule, Horizon/CMS has not previously made, is not currently
making, and is not obligated in any way to make, any contributions to any
multi-employer plan within the meaning of the Multi-Employer Pension Plan
Amendments Act of 1980.
(b) Except as set forth in EXHIBIT 3.15 to the Disclosure Schedule or
described in the Horizon/CMS Documents, Horizon/CMS is not a party to any oral
or written (i) union, guild or collective bargaining agreement which agreement
covers employees in the United States (nor is it aware of any union organizing
activity currently being conducted in respect to any of its employees), (ii)
agreement with any executive officer or other key employee the benefits of which
are contingent, or the terms of which are altered, upon the occurrence of a
transaction of the nature contemplated by this Plan of Merger and which provides
for the payment of in excess of $50,000, or (iii) agreement or plan, including
any stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting the benefits of which will be accelerated, by the occurrence of any of
the transactions contemplated by this Plan of Merger or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Plan of Merger.
3.16 COMPLIANCE WITH LAWS IN GENERAL. Except as set forth on EXHIBIT 3.16
to the Disclosure Schedule or disclosed in the Horizon/CMS Documents,
Horizon/CMS has not received any notices of violations of any federal, state and
local laws, regulations and ordinances relating to its business and operations,
including, without limitation, the Occupational Safety and Health Act, the
Americans with Disabilities Act, the Medicare or applicable Medicaid statutes
and regulations and any Environmental Laws, which violation, if established,
would have a material effect on Horizon/CMS.
3.17 LICENSES, ACCREDITATION AND REGULATORY APPROVALS. Except as disclosed
in the Horizon/CMS Documents, Horizon/CMS and the Horizon/CMS Subsidiaries and
Horizon/CMS Other Entities hold all licenses, permits, certificates of need and
other regulatory approvals which are required by law with respect to their
businesses, operations and facilities as they are currently or presently
conducted or operated, except where the failure to possess such licenses would
not have a material adverse effect on Horizon/CMS (collectively, the
"Horizon/CMS Licenses"). Except with respect to those Horizon/CMS Licenses for
which renewal applications have been filed by Horizon/CMS, the Horizon/CMS
Subisidiaries or the Horizon/CMS Other Entities and which are being processed by
the applicable regulatory authorities, all such Horizon/CMS Licenses are in full
force and effect, and Horizon/CMS is in substantial compliance with all
conditions and requirements of the Horizon/CMS Licenses and with all rules and
regulations relating thereto. Horizon/CMS, the Horizon/CMS Subsidiaries and the
Horizon/CMS Other Entities are, to the extent applicable to their operations,
(i) eligible to receive payment under Titles XVIII and XIX of the Social
Security Act,
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(ii) providers under existing provider agreements with the Medicare program
through the applicable intermediaries and (iii) in substantial compliance
with the conditions of participation in the Medicare program except for such
matters as would not have a material adverse effect on Horizon/CMS. Except to
the extent that the failure to timely make such filings would not have a
material adverse effect on Horizon/CMS, and except as disclosed in the
Horizon/CMS Documents, Horizon/CMS, the Horizon/CMS Subsidiaries and the
Horizon/CMS Other Entities have timely filed all requisite claims and other
reports required to be filed in connection with the Medicare, Medicaid and
other governmental health programs due on or before the date hereof, all of
which were, when filed, complete and correct in all material respects.
Except as set forth on EXHIBIT 3.17 to the Disclosure Schedule, there are no
current claims, actions or appeals pending, and neither Horizon/CMS nor the
Horizon/CMS Subsidiaries nor the Horizon/CMS Other Entities have filed any
claims or reports which would result in such claims, actions or appeals,
before any commission, board or agency, including, without limitation, any
intermediary or carrier, the Provider Reimbursement Review Board or the
Administrator of the Health Care Financing Administration with respect to any
Medicare claims, or any disallowances in connection with any audit of claims,
which would have a material adverse effect on Horizon/CMS. The amounts
established as provisions for adjustments by Medicare, Medicaid and other
third-party payors set forth in the Horizon/CMS Balance Sheet are sufficient
to pay any amounts for which Horizon/CMS believes it will be liable. To the
knowledge of Horizon/CMS, except to the extent that alleged violations have
been disclosed in the Horizon/CMS Documents, neither Horizon/CMS nor the
Horizon/CMS Subsidiaries nor the Horizon/CMS Other Entities nor their
respective employees have committed a violation of the Medicare and Medicaid
fraud and abuse provisions of the Social Security Act or any similar
provisions of any federal, state or local law relating to referrals or
xxxxxxxx for healthcare services. Except for such litigation as would not,
if resolved adversely to Horizon/CMS or any Horizon/CMS Subsidiary or
Horizon/CMS Other Entity, have a material adverse effect on Horizon/CMS, any
and all past litigation concerning such Horizon/CMS Licenses, and all claims
and causes of action raised therein, have been finally adjudicated or
settled. Except as indicated in EXHIBIT 3.17 to the Disclosure Schedule, no
such License has been revoked, conditioned (except as may be customary) or
restricted, and no action (equitable, legal or administrative), arbitration
or other process is pending, or to the knowledge of Horizon/CMS, threatened,
which in any way challenges the validity of, or seeks to revoke, condition or
restrict any such License. Subject to compliance with applicable securities
laws, the Xxxx Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and state or local statutes, rules or regulations requiring
notice, approval, or other action upon the occurrence of a change in control
of Horizon/CMS or any of the Horizon/CMS Subsidiaries or any of the
Horizon/CMS Other Entities, the consummation of the Merger will not violate
any law or regulation to which Horizon/CMS is subject which, if violated,
would have a material adverse effect on Horizon/CMS.
3.18 VOTE REQUIRED. The affirmative vote of the holders of a majority of
the outstanding shares of the Horizon/CMS Common Stock entitled to vote thereon
is the only vote of the holders of any class or series of Horizon/CMS capital
stock necessary to approve this Plan of Merger, the Merger and the transactions
contemplated hereby.
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3.19 OPINION OF FINANCIAL ADVISOR. The Board of Directors of Horizon/CMS
has received the oral opinion of Xxxxxxx Xxxxx to the effect that, as of the
date of this Plan of Merger, the Exchange Ratio is fair to the holders of
Horizon/CMS Common Stock from a financial point of view, a written copy of which
opinion will be delivered by Horizon/CMS to HEALTHSOUTH prior to the date on
which the definitive proxy materials for the Proxy Statement (as defined in
Section 7.4(a)) are filed with the SEC.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE SUBSIDIARY AND HEALTHSOUTH.
The Subsidiary and HEALTHSOUTH, jointly and severally, hereby represent and
warrant to Horizon/CMS as follows:
4.1 ORGANIZATION, EXISTENCE AND CAPITAL STOCK. The Subsidiary is a
corporation duly organized and validly existing and is in good standing under
the laws of the State of Delaware. The Subsidiary's authorized capital consists
of 1,000 shares of Common Stock, par value $.01 per share, all of which shares
are issued and registered in the name of HEALTHSOUTH. The Subsidiary has not,
within the two years immediately preceding the date of this Plan of Merger,
owned, directly or indirectly, any shares of Horizon/CMS Common Stock.
4.2 POWER AND AUTHORITY. The Subsidiary has corporate power to execute,
deliver and perform this Plan of Merger and all agreements and other documents
executed and delivered, or to be executed and delivered, by it pursuant to this
Plan of Merger, and, subject to the satisfaction of the conditions precedent set
forth herein, has taken all actions required by law, its Certificate of
Incorporation, its Bylaws or otherwise, to authorize the execution and delivery
of this Plan of Merger and such related documents. The execution and delivery
of this Plan of Merger does not and, subject to the receipt of required
stockholder and regulatory approvals and any other required third-party consents
or approvals, the consummation of the Merger contemplated hereby will not,
violate any provisions of, any statute or other law, any rule or regulation of
any governmental agency or authority, the Certificate of Incorporation or Bylaws
of the Subsidiary, or mortgage, lien, lease, agreement, instrument, order,
arbitration award, judgment or decree to which the Subsidiary is a party or by
which it is bound, violate any restrictions of any kind to which the Subsidiary
is subject, or result in the creation of any lien, charge or encumbrance upon
any of the property or assets of the Subsidiary. The execution and delivery of
this Plan of Merger has been approved by the Board of Directors of the
Subsidiary.
4.3 NO SUBSIDIARIES. The Subsidiary does not own any equity interest in,
and does not control directly or indirectly, any other corporation, association
or business organization. The Subsidiary is not a party to any joint venture or
partnership.
4.4 LEGAL PROCEEDINGS. There are no actions, suits or proceedings pending
or threatened against the Subsidiary, at law or in equity, relating to or
affecting the Subsidiary, including the
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Merger. The Subsidiary does not know or have any reasonable grounds to know
of any justification for any such action, suit or proceeding.
4.5 NO CONTRACTS OR LIABILITIES. Other than the obligations created under
this Plan of Merger, the Subsidiary is not obligated under any contracts,
claims, leases, liabilities (contingent or otherwise), loans or otherwise.
Section 5. REPRESENTATIONS AND WARRANTIES OF HEALTHSOUTH.
HEALTHSOUTH hereby represents and warrants to Horizon/CMS as follows:
5.1 ORGANIZATION, EXISTENCE AND GOOD STANDING. HEALTHSOUTH is a
corporation duly organized and validly existing and is in good standing under
the laws of the State of Delaware. HEALTHSOUTH has all necessary corporate
power to own its properties and assets and to carry on its business as presently
conducted. HEALTHSOUTH is duly qualified to do business and is in good standing
in all jurisdictions in which the character of the property owned, leased or
operated or the nature of the business transacted by it makes qualification
necessary.
5.2 POWER AND AUTHORITY. HEALTHSOUTH has corporate power to execute,
deliver and perform this Plan of Merger and all agreements and other documents
executed and delivered, or to be executed and delivered, by it pursuant to this
Plan of Merger, and, subject to the satisfaction of the conditions precedent set
forth herein has taken all actions required by law, its Certificate of
Incorporation, its Bylaws or otherwise, to authorize the execution and delivery
of this Plan of Merger and such related documents. The execution and delivery
of this Plan of Merger does not and, subject to the receipt of required
stockholder and regulatory approvals and any other required third-party consents
or approvals, the consummation of the Merger contemplated hereby will not,
violate any provisions of, any statute or other law, any rule or regulation of
any governmental agency or authority, the Certificate of Incorporation or Bylaws
of HEALTHSOUTH, or any provision of, or result in the acceleration of any
obligation under, any mortgage, lien, lease, agreement, instrument, order,
arbitration award, judgment or decree to which HEALTHSOUTH or any HEALTHSOUTH
Subsidiary or HEALTHSOUTH Other Entity (as such terms are defined in Section
5.6(b)) is a party or by which it is bound, or violate any restrictions of any
kind to which HEALTHSOUTH is subject. The execution and delivery of this Plan
of Merger has been approved by the Board of Directors of HEALTHSOUTH, and no
approval by the holders of HEALTHSOUTH Common Stock is required by law, the
Certificate of Incorporation or Bylaws of HEALTHSOUTH, the rules of the New York
Stock Exchange, Inc. (the "Exchange") or otherwise. This Plan of Merger has
been duly executed and delivered by HEALTHSOUTH and the Subsidiary and, assuming
this Plan of Merger constitutes a valid and binding obligation of Horizon/CMS,
constitutes a valid and binding obligation of HEALTHSOUTH and the Subsidiary,
enforceable against HEALTHSOUTH and the Subsidiary in accordance with its terms.
- 16 -
5.3 HEALTHSOUTH COMMON STOCK. On the Closing Date, HEALTHSOUTH will have
a sufficient number of authorized but unissued and/or treasury shares of its
Common Stock available for issuance to the holders of Horizon/CMS Common Stock
in accordance with the provisions of this Plan of Merger. The HEALTHSOUTH
Common Stock to be issued pursuant to this Plan of Merger will, when so
delivered, be (i) duly and validly issued, fully paid and nonassessable, (ii)
issued pursuant to an effective registration statement under the Securities Act
of 1933, as amended, and (iii) authorized for listing on the Exchange upon
official notice of issuance.
5.4 CAPITALIZATION. HEALTHSOUTH's authorized capital stock consists of
1,500,000 shares of Preferred Stock, par value $.10 per share, of which no
shares are issued and outstanding, and no shares are held in treasury, and
250,000,000 shares of Common Stock, par value $.01 per share, of which
156,114,869 shares are issued and outstanding, and 93,000 shares are held in
treasury. HEALTHSOUTH has called a special meeting of its stockholders for
March 12, 1997, to approve an amendment to its Certificate of Incorporation to
increase its authorized number of shares of HEALTHSOUTH Common Stock to
500,000,000. All of the issued and outstanding shares of HEALTHSOUTH Common
Stock have been duly and validly issued and are fully paid and non-assessable.
Except as disclosed in the HEALTHSOUTH Annual Report on Form 10-K for the fiscal
year ended December 31, 1995, as amended (the "HEALTHSOUTH 10-K"), and except
for shares of HEALTHSOUTH Common Stock reserved for issuance in connection with
(i) its pending acquisition of Health Images, Inc. and (ii) its proposed
two-for-one stock split to be effected March 13, 1997 in the form of a 100%
stock dividend (subject to the approval of the proposed amendment to its
Certificate of Incorporation described above), there are no options,
warrants, convertible debentures or similar rights granted by HEALTHSOUTH or
any other agreements to which HEALTHSOUTH is a party providing for the
issuance or sale by it of any additional securities, other than stock options
granted in the ordinary course since such date. There is no liability for
dividends declared or accumulated but unpaid with respect to any shares of
HEALTHSOUTH Common Stock.
5.5 SUBSIDIARY COMMON STOCK. HEALTHSOUTH owns, beneficially and of
record, all of the issued and outstanding shares of Subsidiary Common Stock,
which are validly issued and outstanding, fully paid and nonassessable, free and
clear of all liens and encumbrances. HEALTHSOUTH has the corporate power to
endorse and surrender such Subsidiary Shares for cancellation pursuant to this
Plan of Merger. HEALTHSOUTH has taken all such actions as may be required in
its capacity as the sole stockholder of the Subsidiary to approve the Merger.
5.6 HEALTHSOUTH DOCUMENTS. (a) HEALTHSOUTH has heretofore furnished
Horizon/CMS with a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed by it with the SEC (as any such
documents have since the time of their original filing been amended, the
"HEALTHSOUTH Documents") since January 1, 1995, which are all the documents
(other than preliminary material) that it was required to file with the SEC
since such date. As of their respective dates, the HEALTHSOUTH Documents did
not contain any untrue statements of material facts or omit to state material
facts required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they
- 17 -
were made, not misleading. As of their respective dates, the HEALTHSOUTH
Documents complied in all material respects with the applicable requirements
of the Securities Act of 1933, as amended, and the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated under such
statutes. The financial statements contained in the HEALTHSOUTH Documents,
together with the notes thereto, have been prepared in accordance with
generally accepted accounting principles consistently followed throughout the
periods indicated (except as may be indicated in the notes thereto, or, in
the case of the unaudited financial statements, as permitted by Form 10-Q),
reflect all known liabilities of HEALTHSOUTH required to be stated therein,
including all known contingent liabilities as of the end of each period
reflected therein, and present fairly the financial condition of HEALTHSOUTH
at said dates and the consolidated results of operations and cash flows of
HEALTHSOUTH for the periods then ended. The consolidated balance sheet of
HEALTHSOUTH at December 31, 1996 included in the HEALTHSOUTH Documents is
herein sometimes referred to as the "HEALTHSOUTH Balance Sheet".
(b) Except as disclosed in the HEALTHSOUTH Documents and except for
liabilities and obligations incurred in the ordinary course of business
consistent with past practices, since the date of the HEALTHSOUTH Balance Sheet,
neither HEALTHSOUTH nor any of the HEALTHSOUTH Subsidiaries or the HEALTHSOUTH
Other Entities have incurred any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that have, or would be
reasonably likely to have, a material adverse effect on HEALTHSOUTH or would be
required to be reflected or reserved against on a consolidated balance sheet of
HEALTHSOUTH (including the notes thereto) prepared in accordance with generally
accepted accounting principles as applied in preparing the HEALTHSOUTH Balance
Sheet. As used in this Plan of Merger, the term "HEALTHSOUTH Subsidiaries"
means Subsidiaries of HEALTHSOUTH, and the term "HEALTHSOUTH Other Entities"
means any general or limited partnerships in which HEALTHSOUTH, a HEALTHSOUTH
Subsidiary, or any other HEALTHSOUTH Other Entity is a general partner and any
limited liability companies in which HEALTHSOUTH, a HEALTHSOUTH Subsidiary or
any other HEALTHSOUTH Other Entity is a member.
5.7 SUPPORTING INFORMATION. All consolidated historical financial
information provided by HEALTHSOUTH to Horizon/CMS in connection with
Horizon/CMS's due diligence investigation prior to the date of this Plan of
Merger, and all such information provided to Horizon/CMS on or after the date of
this Plan of Merger, is supported by detailed information at the facility or
operating unit level and is in all respects consistent with and fairly
reflective of such detailed information.
5.8 INVESTMENT INTENT. HEALTHSOUTH is acquiring the shares of Horizon/CMS
Common Stock hereunder for its own account and not with a view to the
distribution or sale thereof, and HEALTHSOUTH has no understanding, agreement or
arrangement to sell, distribute, partition or otherwise transfer or assign all
or any part of the shares of Horizon/CMS Common Stock to any other person, firm
or corporation.
- 18 -
5.9 LEGAL PROCEEDINGS. Except as disclosed in the HEALTHSOUTH Documents,
there is no material litigation, governmental investigation or other proceeding
pending or, so far as is known to HEALTHSOUTH, threatened against or relating to
HEALTHSOUTH, the HEALTHSOUTH Subsidiaries or the HEALTHSOUTH Other Entities,
their respective properties or businesses, or the transactions contemplated by
this Plan of Merger, except for litigation, governmental investigations or other
proceedings that would not, individually or in the aggregate, have a material
adverse effect on HEALTHSOUTH.
5.10 SUBSEQUENT EVENTS. Except as disclosed in the HEALTHSOUTH Documents,
none of HEALTHSOUTH, any HEALTHSOUTH Subsidiary nor any HEALTHSOUTH Other Entity
has, since the date of the HEALTHSOUTH Balance Sheet:
(i) Incurred any material adverse change;
(ii) subject to the proposed amendment to HEALTHSOUTH's
Certificate of Incorporation described in Section 5.4 above, amended
its Articles or Certificate of Incorporation or Bylaws, if any;
(iii) extended credit to anyone or guaranteed the obligation
of any person, firm or corporation in an amount that, in either case,
is material to HEALTHSOUTH except in the ordinary course of business
consistent with prior practice;
(iv) discharged or satisfied any material lien or encumbrance, or
paid or satisfied any material obligation or liability (absolute,
accrued, contingent or otherwise) other than (a) liabilities shown or
reflected on the HEALTHSOUTH Balance Sheet or (b) liabilities incurred
since the date of the HEALTHSOUTH Balance Sheet in the ordinary course
of business, which discharge or satisfaction would have a material
adverse effect on HEALTHSOUTH;
(v) increased or established any reserve for taxes or any other
liability on its books or otherwise provided therefor that would have
a material adverse effect on HEALTHSOUTH, except as relates to the
consolidated results of operations of HEALTHSOUTH since the date of
the HEALTHSOUTH Balance Sheet;
(vi) sold or transferred any of its material assets, tangible or
intangible, cancelled any material debts or claims held by it or
waived any of its material rights, except in the ordinary course of
business;
(vii) mortgaged, pledged or subjected to any security
interest any of its material assets, tangible or intangible;
(viii) issued or agreed to issue any capital stock or other
equity securities with respect to any merger, consolidation or other
business combination with any
- 19 -
corporation or other entity or the acquisition of all or any
significant part of the assets or capital stock or other equity
interests of any corporation or other entity, which merger,
consolidation, business combination or acquisition is material
to HEALTHSOUTH; or
(ix) except for this Plan of Merger and any other agreement
executed and delivered pursuant to this Plan of Merger, entered into
any material transaction other than in the ordinary course of business
or permitted under other Sections hereof.
5.11 TAX RETURNS. HEALTHSOUTH and each of the HEALTHSOUTH Subsidiaries and
HEALTHSOUTH Other Entities has filed all tax returns required to be filed by it
or requests for extensions to file such returns or reports have been timely
filed and granted and have not expired, except to the extent that such failures
to file, taken together, do not have a material adverse effect on HEALTHSOUTH.
HEALTHSOUTH or the applicable entity has made all payments shown as due on such
returns. Except for audits of HEALTHSOUTH's 1992 and 1993 federal income tax
returns and certain state and local tax audits not material to HEALTHSOUTH,
neither HEALTHSOUTH nor any HEALTHSOUTH Subsidiary or HEALTHSOUTH Other Entity
has been notified that any tax returns of HEALTHSOUTH or any HEALTHSOUTH
Subsidiary or HEALTHSOUTH Other Entity are currently under audit by the Internal
Revenue Service or any state or local tax agency. No agreements have been made
by HEALTHSOUTH for the extension of time or the waiver of the statute of
limitations for the assessment or payment of any federal, state or local taxes.
5.12 ACCOUNTS RECEIVABLE. (a) Since the date of the HEALTHSOUTH 10-K,
HEALTHSOUTH has not changed any material principle or practice with respect to
the recordation of accounts receivable or the calculation of reserves therefor,
or any material collection, discount or write-off policy or procedure.
HEALTHSOUTH (including the HEALTHSOUTH Subsidiaries and HEALTHSOUTH Other
Entities) is in compliance with the terms and conditions of all third-party
payor arrangements relating to its accounts receivable, except to the extent
that such noncompliance would not have a material adverse effect on HEALTHSOUTH.
(b) Without limiting the generality of the foregoing, each of HEALTHSOUTH
and the HEALTHSOUTH Subsidiaries and the HEALTHSOUTH Other Entities is in
compliance with all Medicare and Medicaid provider agreements to which it is a
party, except to the extent that such noncompliance would not have a material
adverse effect on HEALTHSOUTH.
5.13 EMPLOYEE BENEFIT PLANS; EMPLOYMENT MATTERS. (a) Except as described
in the HEALTHSOUTH Documents, HEALTHSOUTH has neither established nor maintains
nor is obligated to make contributions to or under or otherwise participate in
(a) any bonus or other type of incentive compensation plan, program, agreement,
policy, commitment, contract or arrangement (whether or not set forth in a
written document), (b) any pension, profit-sharing, retirement or other plan,
program or arrangement, or (c) any other employee benefit plan, fund or program,
including, but not limited to, those described in Section 3(3) of ERISA. All
such plans (individually, a
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"HEALTHSOUTH Plan" and collectively, the "HEALTHSOUTH Plans") have been
operated and administered in accordance with, as applicable, ERISA, the
Internal Revenue Code of 1986, as amended, Title VII of the Civil Rights Act
of 1964, as amended, the Equal Pay Act of 1967, as amended, the Age
Discrimination in Employment Act of 1967, as amended, and the related rules
and regulations adopted by those federal agencies responsible for the
administration of such laws. No act or failure to act by HEALTHSOUTH has
resulted in a "prohibited transaction" (as defined in ERISA) with respect to
the HEALTHSOUTH Plans that is not subject to a statutory or regulatory
exception. No "reportable event" (as defined in ERISA) has occurred with
respect to any of the HEALTHSOUTH Plans which is subject to Title IV of
ERISA. Except with respect to certain employees at its Toms River, New
Jersey inpatient facility, HEALTHSOUTH has not previously made, is not
currently making, and is not obligated in any way to make, any contributions
to any multi-employer plan within the meaning of the Multi-Employer Pension
Plan Amendments Act of 1980.
(b) Except as described in the HEALTHSOUTH Documents, HEALTHSOUTH is not a
party to any oral or written union, guild or collective bargaining agreement
which agreement covers employees in the United States (nor is it aware of any
union organizing activity currently being conducted in respect to any of its
employees), other than a collective bargaining agreement covering certain of its
employees at its Toms River, New Jersey inpatient facility.
5.14 COMPLIANCE WITH LAWS IN GENERAL. Except as disclosed in the
HEALTHSOUTH Documents, HEALTHSOUTH has not received any notices of violations of
any federal, state and local laws, regulations and ordinances relating to its
business and operations, including, without limitation, the Occupational Safety
and Health Act, the Americans with Disabilities Act, the Medicare or applicable
Medicaid statutes and regulations and any Environmental Laws, which violation,
if established, would have a material effect on HEALTHSOUTH.
5.15 LICENSES, ACCREDITATION AND REGULATORY APPROVALS. Except as disclosed
in the HEALTHSOUTH Documents, HEALTHSOUTH and the HEALTHSOUTH Subsidiaries and
HEALTHSOUTH Other Entities hold all licenses, permits, certificates of need and
other regulatory approvals which are required by law with respect to their
businesses, operations and facilities as they are currently or presently
conducted or operated, except where the failure to possess such licenses would
not have a material adverse effect on HEALTHSOUTH (collectively, the
"HEALTHSOUTH Licenses"). Except with respect to those HEALTHSOUTH Licenses for
which renewal applications have been filed by HEALTHSOUTH, the HEALTHSOUTH
Subisidiaries or the HEALTHSOUTH Other Entities and which are being processed by
the applicable regulatory authorities, all such HEALTHSOUTH Licenses are in full
force and effect, and HEALTHSOUTH is in substantial compliance with all
conditions and requirements of the HEALTHSOUTH Licenses and with all rules and
regulations relating thereto. HEALTHSOUTH, the HEALTHSOUTH Subsidiaries and the
HEALTHSOUTH Other Entities are, to the extent applicable to their operations,
(i) eligible to receive payment under Titles XVIII and XIX of the Social
Security Act, (ii) providers under existing provider agreements with the
Medicare program through the applicable intermediaries and (iii) in substantial
compliance with the conditions of participation in the Medicare program except
for such
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matters as would not have a material adverse effect on HEALTHSOUTH. Except to
the extent that the failure to timely make such filings would not have a
material adverse effect on HEALTHSOUTH, HEALTHSOUTH, the HEALTHSOUTH
Subsidiaries and the HEALTHSOUTH Other Entities have timely filed all
requisite claims and other reports required to be filed in connection with
the Medicare, Medicaid and other governmental health programs due on or
before the date hereof, all of which were, when filed, complete and correct
in all material respects. There are no current claims, actions or appeals
pending, and neither HEALTHSOUTH nor the HEALTHSOUTH Subsidiaries nor the
HEALTHSOUTH Other Entities have filed any claims or reports which would
result in such claims, actions or appeals, before any commission, board or
agency, including, without limitation, any intermediary or carrier, the
Provider Reimbursement Review Board or the Administrator of the Health Care
Financing Administration with respect to any Medicare claims, or any
disallowances in connection with any audit of claims, which would have a
material adverse effect on HEALTHSOUTH. The amounts established as
provisions for adjustments by Medicare, Medicaid and other third-party payors
set forth in the HEALTHSOUTH Balance Sheet are sufficient to pay any amounts
for which HEALTHSOUTH believes it will be liable. To the knowledge of
HEALTHSOUTH, neither HEALTHSOUTH nor the HEALTHSOUTH Subsidiaries nor the
HEALTHSOUTH Other Entities nor their respective employees have committed a
violation of the Medicare and Medicaid fraud and abuse provisions of the
Social Security Act or any similar provisions of any federal, state or local
law relating to referrals or xxxxxxxx for healthcare services. Except for
such litigation as would not, if resolved adversely to HEALTHSOUTH or any
HEALTHSOUTH Subsidiary or HEALTHSOUTH Other Entity, have a material adverse
effect on HEALTHSOUTH, any and all past litigation concerning such
HEALTHSOUTH Licenses, and all claims and causes of action raised therein,
have been finally adjudicated or settled. No such License has been revoked,
conditioned (except as may be customary) or restricted, and no action
(equitable, legal or administrative), arbitration or other process is pending
or, to the knowledge of HEALTHSOUTH, threatened, which in any way challenges
the validity of, or seeks to revoke, condition or restrict any, such License.
Subject to compliance with applicable securities laws, the HSR Act, and
state or local statutes, rules or regulations requiring notice, approval, or
other action upon the occurrence of a change in control of Horizon/CMS or any
of the Horizon/CMS Subsidiaries or any of the Horizon/CMS Other Entities, the
consummation of the Merger will not violate any law or regulation to which
HEALTHSOUTH is subject which, if violated, would have a material adverse
effect on HEALTHSOUTH.
Section 6. ACCESS TO INFORMATION AND DOCUMENTS.
6.1 ACCESS TO INFORMATION. Between the date hereof and the Closing Date,
each of Horizon/CMS and HEALTHSOUTH will give to the other party and its
counsel, accountants and other representatives full access to all the personnel,
properties, documents, contracts, personnel files and other records of such
party and shall furnish the other party with copies of such documents and with
such information with respect to the affairs of such party as the other party
may from time to time reasonably request. Each party will disclose and make
available to the other party and its representatives all books, contracts,
accounts, personnel records, letters of intent, papers, records,
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communications with regulatory authorities and other documents relating to
the business and operations of such party. In addition, Horizon/CMS shall
make available to HEALTHSOUTH all such banking, investment and financial
information as shall be necessary to allow for the efficient integration of
Horizon/CMS banking, investment and financial arrangements with those of
HEALTHSOUTH at the Effective Time.
6.2 RETURN OF RECORDS. If the transactions contemplated hereby are not
consummated and this Plan of Merger terminates, each party agrees to promptly
return all documents, contracts, records or properties of the other party and
all copies thereof furnished pursuant to this Section 6 or otherwise. All
information disclosed by any party or any affiliate or representative of any
party shall be deemed to be "Confidential Information" under the terms of the
Confidentiality Agreement dated January 27, 1997, between Horizon/CMS and
HEALTHSOUTH (the "Confidentiality Agreement").
6.3 EFFECT OF ACCESS. (a) Nothing contained in this Section 6 shall be
deemed to create any duty or responsibility on the part of either party to
investigate or evaluate the value, validity or enforceability of any contract,
lease or other asset included in the assets of the other party.
(b) With respect to matters as to which any party has made express
representations or warranties herein, the other party or parties shall be
entitled to rely upon such express representations and warranties irrespective
of any investigations made by such party or parties, except to the extent that
such investigations result in actual knowledge by such party or parties of the
inaccuracy or falsehood of particular representations and warranties.
Section 7. COVENANTS.
7.1 PRESERVATION OF BUSINESS. Horizon/CMS will use its commercially
reasonable efforts to preserve the business organization of Horizon/CMS intact,
to keep available to HEALTHSOUTH and the Surviving Corporation the services of
the present key employees of Horizon/CMS, and to preserve for HEALTHSOUTH and
the Surviving Corporation the goodwill of the suppliers, customers and others
having business relations with Horizon/CMS.
7.2 MATERIAL TRANSACTIONS. From the date hereof until the Effective Time,
Horizon/CMS will not (other than as required pursuant to the terms of this Plan
of Merger and the related documents, and other than with respect to (i)
transactions for which binding commitments have been entered into prior to the
date hereof which are described on EXHIBIT 7.2 to the Disclosure Schedule and
(ii) such other matters as are described on EXHIBIT 7.2 to the Disclosure
Schedule), without first obtaining the written consent of HEALTHSOUTH, take any
action of a character described in Sections 3.11(ii) to 3.11(xi), inclusive.
7.3 MEETING OF HORIZON/CMS STOCKHOLDERS. Horizon/CMS will take all steps
necessary in accordance with its Certificate of Incorporation and Bylaws to
call, give notice of, convene and
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hold a meeting of its stockholders (the "Special Meeting") as soon as
practicable after the effectiveness of the Registration Statement (as defined
in Section 7.4 hereof), for the purpose of considering the approval of this
Plan of Merger and the Merger and for such other purposes as may be
necessary. Unless this Plan of Merger shall have been validly terminated as
provided herein, the Board of Directors of Horizon/CMS (subject to the
provisions of Section 8.1(d) hereof) will (i) recommend to Horizon/CMS
stockholders the approval of this Plan of Merger, the transactions
contemplated hereby and any other matters to be submitted to the stockholders
in connection therewith, to the extent that such approval is required by
applicable law in order to consummate the Merger, and (ii) use reasonable,
good faith efforts to obtain the approval by Horizon/CMS stockholders of
this Plan of Merger and the transactions contemplated hereby.
7.4 REGISTRATION STATEMENT. (a) HEALTHSOUTH shall prepare and file with
the SEC and any other applicable regulatory bodies, as soon as reasonably
practicable, a Registration Statement on Form S-4 with respect to the shares of
HEALTHSOUTH Common Stock to be issued in the Merger (the "Registration
Statement"), and will otherwise proceed promptly to satisfy the requirements of
the Securities Act of 1933 (the "Securities Act"), including Rule 145
thereunder. Such Registration Statement shall contain a proxy statement of
Horizon/CMS (the "Proxy Statement") containing the information required by the
Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"). HEALTHSOUTH shall take
all reasonable steps to cause the Registration Statement to be declared
effective and to maintain such effectiveness until all of the shares covered
thereby have been distributed. HEALTHSOUTH shall promptly amend or supplement
the Registration Statement to the extent necessary in order to make the
statements therein not misleading or to correct any misstatements which have
become false or misleading. HEALTHSOUTH shall provide Horizon/CMS with copies
of all filings made pursuant to this Section 7.4 and shall consult with
Horizon/CMS on responses to any comments made by the Staff of the SEC with
respect thereto.
(b) The information specifically designated as being supplied by
Horizon/CMS for inclusion in the Registration Statement shall not, at the time
the Registration Statement is declared effective, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading.
The information specifically designated as being supplied by Horizon/CMS for
inclusion in the Proxy Statement shall not, at the date the Proxy Statement (or
any amendment thereof or supplement thereto) is first mailed to holders of
Horizon/CMS Common Stock, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading. If at any time prior to the Effective Time
any event or circumstance relating to Horizon/CMS, or its officers or directors,
should be discovered by Horizon/CMS that is required, under the applicable
provisions of the Securities Act or Exchange Act or the rules and regulations of
the SEC thereunder to be set forth in an amendment to the Registration Statement
or a supplement to the Proxy Statement, Horizon/CMS shall promptly so inform
HEALTHSOUTH. All documents, if any, that Horizon/CMS is responsible for filing
with the SEC in connection with the transactions contemplated herein will comply
as to form and substance in all material respects with the applicable
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requirements of the Securities Act and the rules and regulations thereunder and
the Exchange Act and the rules and regulations thereunder.
(c) The information specifically designated as being supplied by
HEALTHSOUTH for inclusion in the Registration Statement shall not, at the time
the Registration Statement is declared effective, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading.
The information specifically designated as being supplied by HEALTHSOUTH for
inclusion in the Proxy Statement to be sent to the holders of Horizon/CMS Common
Stock in connection with the Special Meeting shall not, at the date the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
holders of Horizon/CMS Common Stock, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. If at any time prior
to the Effective Time any event or circumstance relating to HEALTHSOUTH or its
officers or directors, should be discovered by HEALTHSOUTH that is required,
under the applicable provisions of the Securities Act or Exchange Act or the
rules and regulations of the SEC thereunder to be set forth in an amendment to
the Registration Statement or a supplement to the Proxy Statement, HEALTHSOUTH
shall promptly inform Horizon/CMS and shall promptly file such amendment to the
Registration Statement. All documents that HEALTHSOUTH is responsible for filing
with the SEC in connection with the transactions contemplated herein will comply
as to form and substance in all material respects with the applicable
requirements of the Securities Act and the rules and regulations thereunder and
the Exchange Act and the rules and regulations thereunder.
(d) Prior to the Closing Date, HEALTHSOUTH shall use its reasonable, good
faith efforts to cause the shares of HEALTHSOUTH Common Stock to be issued
pursuant to the Merger to be registered or qualified under all applicable
securities or Blue Sky laws of each of the states and territories of the United
States, and to take any other actions which may be necessary to enable the
Common Stock to be issued pursuant to the Merger to be distributed in each such
jurisdiction.
(e) Prior to the Closing Date, HEALTHSOUTH shall file an additional
listing application (the "Listing Application") with the Exchange relating to
the shares of HEALTHSOUTH Common Stock to be issued in connection with the
Merger, and shall use its reasonable, good faith efforts to cause such shares of
HEALTHSOUTH Common Stock to be approved for listing on the Exchange, upon
official notice of issuance, prior to the Closing Date.
(f) Horizon/CMS shall furnish all information to HEALTHSOUTH with respect
to Horizon/CMS and the Horizon/CMS Subsidiaries and Horizon/CMS Other Entities
as HEALTHSOUTH may reasonably request for inclusion in the Registration
Statement, the Proxy Statement and the Listing Application, and shall otherwise
cooperate with HEALTHSOUTH in the preparation and filing of such documents.
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7.5 EXEMPTION FROM STATE TAKEOVER LAWS; HORIZON/CMS RIGHTS. Horizon/CMS
shall take all reasonable steps necessary to (a) exempt the Merger from the
requirements of any state takeover statute or other similar state law which
would prevent or impede the consummation of the transactions contemplated
hereby, by action of Horizon/CMS's Board of Directors or otherwise, and (b)
to redeem the outstanding preferred share purchase rights ("Rights") of
Horizon/CMS or otherwise cause the Merger to be a transaction which does not
trigger the detachment and distribution of the Rights (otherwise than by
issuing shares of Horizon/CMS Common Stock or preferred stock in exchange for
the Rights).
7.6 HSR ACT COMPLIANCE. HEALTHSOUTH and Horizon/CMS shall promptly make
their respective filings, and shall thereafter use their reasonable, good
faith efforts to promptly make any required submissions, under the HSR Act
with respect to the Merger and the transactions contemplated hereby.
HEALTHSOUTH and Horizon/CMS will use their respective reasonable, good faith
efforts to obtain all other permits, authorizations, consents and approvals
from third parties and governmental authorities necessary to consummate the
Merger and the transactions contemplated hereby.
7.7 PUBLIC DISCLOSURES. HEALTHSOUTH and Horizon/CMS will consult with
each other before issuing any press release or otherwise making any public
statement with respect to the transactions contemplated by this Plan of
Merger, and shall not issue any such press release or make any such public
statement prior to such consultation except as may be required by applicable
law or requirements of the Exchange. The parties shall issue a joint press
release or simultaneous separate press releases, mutually acceptable to
HEALTHSOUTH and Horizon/CMS, promptly upon execution and delivery of this
Plan of Merger.
7.8 RESIGNATION OF HORIZON/CMS DIRECTORS. On or prior to the Closing
Date, Horizon/CMS shall deliver to HEALTHSOUTH evidence satisfactory to
HEALTHSOUTH of the resignation of the Directors of Horizon/CMS, such
resignations to be effective on the Closing Date. At the Effective Time,
Xxxx X. Xxxxxxx shall be added to the HEALTHSOUTH Board of Directors.
7.9 NOTICE OF SUBSEQUENT EVENTS. Each party hereto shall notify the
other parties of any changes, additions or events which would cause any
material change in or material addition to any Exhibit to the Disclosure
Schedule delivered by the notifying party under this Plan of Merger, promptly
after the occurrence of the same. If the effect of such change or addition
would, individually or in the aggregate with the effect of changes or
additions previously disclosed pursuant to this Section 7.9, constitute a
material adverse effect on the notifying party, the non-notifying party may,
within ten days after receipt of such notice, elect to terminate this Plan of
Merger. If the non-notifying party does not give written notice of such
termination within such 10-day period, the non-notifying party shall be
deemed to have consented to such change or addition and shall not be entitled
to terminate this Plan of Merger by reason thereof.
7.10 NO SOLICITATIONS. (a) Subject to the provisions of Section 7.10(b)
below, Horizon/CMS shall not, and shall not suffer any of the Horizon/CMS
Subsidiaries or the
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Horizon/CMS Other Entities or any of their respective directors, officers,
employees, agents or representatives to, directly or indirectly (i) solicit
or initiate (including by way of furnishing or publishing nonpublic
information) any inquiries or the making of any proposal with respect to any
merger, consolidation or other business combination involving Horizon/CMS or
any Horizon/CMS Subsidiary or Horizon/CMS Other Entity or the acquisition of
all or any significant part of the assets or capital stock or other equity
interests of Horizon/CMS or any Horizon/CMS Subsidiary or Horizon/CMS Other
Entity or any similar transaction (an "Acquisition Transaction"), (ii)
negotiate, explore or otherwise engage in discussions with any persons (other
than HEALTHSOUTH and its representatives) with respect to any Acquisition
Transaction or which may reasonably be expected to lead to a proposal for an
Acquisition Transaction or (iii) enter into any agreement, arrangement or
understanding with respect to any such Acquisition Transaction or which would
require Horizon/CMS to abandon, terminate or fail to consummate the Merger or
any other transaction contemplated by this Agreement. Except as may be
required by the fiduciary duties of Horizon/CMS's Board of Directors under
applicable law, Horizon/CMS agrees that, as of the date hereof, Horizon/CMS
and the Horizon/CMS Subsidiaries and the Horizon/CMS Other Entities and their
respective directors, officers, employees, agents and representatives shall
immediately cease and cause to be terminated any existing activities,
discussions or negotiations conducted heretofore with respect to any
Acquisition Transaction.
(b) Notwithstanding the provisions of Section 7.10(a) above, Horizon/CMS
may (i), directly or indirectly, furnish information and access, in response
to an unsolicited written proposal for a Superior Transaction (as defined
below), to the same extent permitted by Section 6.1, to any corporation,
partnership, person or other entity or group (in each case, a "person"),
pursuant to appropriate confidentiality agreements, and may participate in
discussions and negotiate with such corporation, partnership, person or other
entity or group concerning any proposal for a Superior Transaction, if the
Board of Directors of Horizon/CMS determines in its good faith judgment in
the exercise of its fiduciary duties, after consultation with legal counsel
and its financial advisors, that such action is appropriate in furtherance of
the best interest of its stockholders and (ii) comply with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Transaction.
Horizon/CMS shall promptly advise HEALTHSOUTH of the existence of any
inquiries or proposals received by, any requests for such information from,
or any negotiations or discussions initiated or continued with, Horizon/CMS
or any of the Horizon/CMS Subsidiaries or the Horizon/CMS Other Entities or
any of their respective directors, officers, employees, agents or
representatives, in each case from or by a person (other than HEALTHSOUTH and
its representatives) with respect to an Acquisition Transaction and the
identity of such person and, except as may otherwise be required pursuant to
the fiduciary duties of Horizon/CMS's Board of Directors under applicable
law, the terms, the proposed form of consideration and the general terms of
any financing arrangement or commitment in connection with such Acquisition
Transaction. As used herein, the term "Superior Proposal" means a bona fide,
written and unsolicited proposal or offer made by any person (other than
HEALTHSOUTH) with respect to an Acquisition Transaction on terms which the
Board of Directors of Horizon/CMS determines in good faith, and in the
exercise of reasonable judgment (based upon the advice of independent
financial advisors and legal counsel), to be more favorable
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to Horizon/CMS and its stockholders than the Merger (including taking into
account the consideration to be provided and any financing thereof).
7.11 OTHER ACTIONS. Subject to the provisions of Section 7.10 hereof,
none of Horizon/CMS, HEALTHSOUTH and the Subsidiary shall knowingly or
intentionally take any action, or omit to take any action, if such action or
omission would, or reasonably might be expected to, result in any of its
representations and warranties set forth herein being or becoming untrue in
any material respect, or in any of the conditions to the Merger set forth in
this Plan of Merger not being satisfied, or (unless such action is required
by applicable law) which would materially adversely affect the ability of
Horizon/CMS or HEALTHSOUTH to obtain any consents or approvals required for
the consummation of the Merger without imposition of a condition or
restriction which would have a material adverse effect on the Surviving
Corporation or which would otherwise materially impair the ability of
Horizon/CMS or HEALTHSOUTH to consummate the Merger in accordance with the
terms of this Plan of Merger or materially delay such consummation.
7.12 ACCOUNTING METHODS. Neither HEALTHSOUTH nor Horizon/CMS shall
change, in any material respect, its methods of accounting in effect at its
most recent fiscal year end, except as required by changes in generally
accepted accounting principles as concurred in such parties' independent
accountants.
7.13 TAX-FREE REORGANIZATION TREATMENT. Neither HEALTHSOUTH nor
Horizon/CMS shall take or cause to be taken any action, whether on or before
the Effective Time, which would disqualify the Merger as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended, which action is taken with the intention of disqualifying the Merger
as a reorganization.
7.14 AFFILIATE AGREEMENTS. Horizon/CMS will use its reasonable, good
faith efforts to cause each of its Directors and executive officers and each
of its "affiliates" (within the meaning of Rule 145 under the Securities Act
of 1933, as amended) to execute and deliver to HEALTHSOUTH as soon as
practicable an agreement in the form attached hereto as EXHIBIT 7.14 relating
to the disposition of shares of Horizon/CMS Common Stock and shares of
HEALTHSOUTH Common Stock held by such person and the shares of HEALTHSOUTH
Common Stock issuable pursuant to this Plan of Merger.
7.15 COOPERATION. (a) HEALTHSOUTH and Horizon/CMS shall together, or
pursuant to an allocation of responsibility agreed to between them, (i)
cooperate with one another in determining whether any filings are required to
be made or consents are required to be obtained in any jurisdiction prior to
the Effective Time in connection with the consummation of the transactions
contemplated hereby and in making any such filings promptly and in seeking to
obtain timely any such consents, (ii) use all commercially reasonable efforts
to cause to be lifted any injunction prohibiting the Merger, or any part
thereof, or the other transactions contemplated hereby, and (iii) furnish to
one another and to one another's counsel all such information as may be
required to effect the foregoing actions.
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(b) Subject to the terms and conditions herein provided, and unless this
Plan of Merger shall have been validly terminated as provided herein, each of
HEALTHSOUTH and Horizon/CMS shall use all commercially reasonable efforts (i)
to take, or cause to be taken, all actions necessary to comply promptly with
all legal requirements which may be imposed on such party (or any
subsidiaries or affiliates of such party) with respect to this Plan of Merger
and to consummate the transactions contemplated hereby, subject to the vote
of Horizon/CMS's stockholders described above, and (ii) to obtain (and to
cooperate with the other party to obtain) any consent, authorization, order
or approval of, or any exemption by, any governmental entity or any other
public or private third party which is required to be obtained by such party
or any of its subsidiaries or affiliates in connection with this Plan of
Merger and the transactions contemplated hereby. Each of HEALTHSOUTH and
Horizon/CMS will promptly cooperate with and furnish information to the other
in connection with any such burden suffered by, or requirement imposed upon,
either of them or any of their subsidiaries or affiliates in connection with
the foregoing.
7.16 HORIZON/CMS STOCK OPTIONS, WARRANTS AND CONVERTIBLE SECURITIES. (a)
As soon as reasonably practicable after the Effective Time of the Merger,
HEALTHSOUTH shall deliver to the holders of Horizon/CMS stock options (which,
for purposes of this Section 7.16, includes any rights to purchase
Horizon/CMS Common Stock pursuant to Horizon/CMS's 1996 Employee Stock
Purchase Plan), warrants and convertible securities appropriate notices
setting forth such holders' rights pursuant to any stock option plans under
which such Horizon/CMS stock options were issued, any stock option agreements
or warrant agreements evidencing such options or warrants and any instruments
governing such convertible securities, which shall continue in full force and
effect on the same terms and conditions (subject to the adjustments required
by Sections 2.1(d) or this Section 7.16 after giving effect to the Merger and
the assumption of such options, warrants and convertible securities by
HEALTHSOUTH as set forth herein) as in effect immediately prior to the
Effective Time. HEALTHSOUTH shall comply with the terms of the stock option
plans, the stock option agreements, the warrant agreements and the
instruments governing such convertible securities as so adjusted, and shall
use its reasonable, good faith efforts to ensure, to the extent required by,
and subject to the provisions of, such plans or agreements, that the
Horizon/CMS stock options which qualified as incentive stock options prior to
the Effective Time shall continue to qualify as incentive stock options after
the Effective Time.
(b) HEALTHSOUTH shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of HEALTHSOUTH Common Stock for
delivery upon exercise of the Horizon/CMS stock options and warrants and
conversion of convertible securities assumed by HEALTHSOUTH in accordance
with Section 2.1(d). As soon as practicable after the Effective Time,
HEALTHSOUTH shall file with the SEC a registration statement on Form S-8
with respect to shares of HEALTHSOUTH Common Stock subject to such
Horizon/CMS stock options and shall use its best efforts to maintain the
effectiveness of such registration statement (and to maintain the current
status of the prospectus or prospectus contained therein) for so long as such
Horizon/CMS stock options and warrants remain outstanding. HEALTHSOUTH shall
administer the plans assumed pursuant to Section 2.1(d) hereof in a manner
that complies with Rule 16b-3 promulgated
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under the Exchange Act to the extent the applicable plan complied with such
rule prior to the Merger.
(c) Except to the extent otherwise agreed to by the parties, all
restrictions or limitations on transfer with respect to the Horizon/CMS stock
options awarded under any plan, program, or arrangement of Horizon/CMS or any
of its subsidiaries, to the extent that such restrictions or limitations
shall not have already lapsed, shall remain in full force and effect with
respect to such options after giving effect to the Merger and the assumption
by HEALTHSOUTH as set forth above.
7.17 CERTAIN OPERATIONS OF HORIZON/CMS. HEALTHSOUTH hereby covenants and
agrees that, from and for a period of at least one year after the Closing
Date, the following existing operating divisions of Horizon/CMS shall be
operated and managed by the Surviving Corporation at or through Horizon/CMS's
existing corporate offices and, subject to the provisions of any applicable
employment agreements and to such standards of performance as are customarily
imposed by HEALTHSOUTH on its managerial employees, existing management in
Albuquerque, New Mexico and their current divisional operating locations,
subject to reasonable restraints on managerial overhead: Long-Term Care
Division, Specialty Hospital Division, Meridian Healthcare Management
Division, Contract Rehab Therapy Division, Horizon Medical Management
Division, Institutional Pharmacy Division, Diagnostic Group/Clinical Lab
Division, Medical Specialty Services Division, Medical Innovations Division,
Physician Services Division, Horizon Facilities Management Division and the
Cimarron HMO investment. Moreover, HEALTHSOUTH covenants and agrees that,
from and after the Closing Date, (i) it shall cause the Surviving Corporation
to complete the development and construction of Horizon/CMS's corporate
headquarters office building project currently under development and
construction in Albuquerque, New Mexico (the "Alameda Project"), and to take
occupancy of the Alameda Project at such time as it is available for
occupancy and (ii) the operation of the aircraft currently under contract
with Horizon/CMS shall be managed by Horizon/CMS's existing management in
Albuquerque, New Mexico.
7.18 HORIZON/CMS EMPLOYEES. HEALTHSOUTH shall retain all employees of
Horizon/CMS who are employed at the Effective Time as employees-at-will
(except to the extent that such employees are parties to contracts providing
for other employment terms, in which case such employees shall be retained in
accordance with the terms of such contracts) and shall provide such employees
with the same customary employee benefits as HEALTHSOUTH provides its
existing employees, except as may otherwise be agreed between HEALTHSOUTH and
Horizon/CMS.
7.19 CERTAIN INFORMATION. For as long as any affiliate (as defined for
purposes of Rule 145 under the Securities Act of 1933) of Horizon/CMS holds
shares of HEALTHSOUTH Common Stock issued in the Merger (but not for a period
in excess of two years from the date of consummation of the Merger),
HEALTHSOUTH shall file with the Securities and Exchange Commission or
otherwise make publicly available all information about HEALTHSOUTH required
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pursuant to Rule 144(c) under the Securities Act of 1933 to enable such
affiliate to resell such shares under the provisions of Rule 145(d) under the
Securities Act of 1933.
7.20 INDEMNIFICATION. (a) Horizon/CMS shall, and from and after the
Effective Time HEALTHSOUTH and the Surviving Corporation shall, indemnify,
defend and hold harmless each person who is now, or has been at any time
prior to the date of this Plan of Merger or who becomes prior to the
Effective Time, an officer, director or employee of Horizon/CMS or any of its
subsidiaries (the "Indemnified Parties") against (i) all losses, claims,
damages, costs, expenses, liabilities or judgments, or amounts that are paid
in settlement with the approval of the indemnifying party (which approval
shall not be unreasonably withheld) of, or in connection with, any claim,
action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or was a
director, officer or employee of Horizon/CMS or any of its subsidiaries,
whether pertaining to any matter existing or occurring at or prior to, or at
or after, the Effective Time ("Indemnified Liabilities") and (ii) all
Indemnified Liabilities based in whole or in part on, or arising in whole or
in part out of, or pertaining to this Plan of Merger, the Merger or any other
transactions contemplated hereby or thereby, in each case to the full extent
a corporation is permitted under the DGCL to indemnify its own directors,
officers and employees, as the case may be (and HEALTHSOUTH and the Surviving
Corporation, as the case may be, will pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
full extent permitted by law upon receipt of any undertaking contemplated by
Section 145(e) of the DGCL). Without limiting the foregoing, in the event
any such claim, action, suit, proceeding or investigation is brought against
any Indemnified Party (whether arising before or after the Effective Time),
(i) the Indemnified Parties may retain counsel satisfactory to them and
Horizon/CMS (or them and HEALTHSOUTH and the Surviving Corporation after the
Effective Time), (ii) Horizon/CMS (or after the Effective Time, HEALTHSOUTH
and the Surviving Corporation) shall pay all reasonable fees and expenses of
such counsel for the Indemnified Parties promptly as statements therefor are
received and (iii) Horizon/CMS (or after the Effective Time, HEALTHSOUTH and
the Surviving Corporation) will use all reasonable efforts to assist in the
vigorous defense of any such matter, provided that none of Horizon/CMS,
HEALTHSOUTH or the Surviving Corporation shall be liable for any settlement
of any claim effected without its written consent, which consent, however,
shall not be unreasonably withheld. Any Indemnified Party wishing to claim
indemnification under this Section 10.4, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify Horizon/CMS,
HEALTHSOUTH or the Surviving Corporation (but the failure so to notify an
Indemnifying Party shall not relieve it from any liability which it may have
under this Section 10.4 except to the extent such failure prejudices such
party), and shall deliver to Horizon/CMS (or after the Effective Time,
HEALTHSOUTH and the Surviving Corporation) the undertaking contemplated by
Section 145(e) of the DGCL. The Indemnified Parties as a group may retain
only one law firm to represent them with respect to such matter unless there
is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified
Parties.
(b) HEALTHSOUTH shall cause to be maintained in effect until six years
from the Effective Time the current policies of directors' and officers'
liability insurance maintained by
- 31 -
Horizon/CMS (or substitute policies providing at least the same coverage and
limits and conaining terms and conditions that are not materially less
advantageous) with respect to claims arising from facts or events which
occurred before the Effective Time; provided, however, that in no event shall
HEALTHSOUTH or the Surviving Corporation be required to expend more than 200
percent of the current annual premiums paid by Horizon/CMS for such
insurance; provided, further, that, if HEALTHSOUTH or the Surviving
Corporation is unable to obtain insurance for any period for 200 percent of
the current annual premiums, then the obligation of HEALTHSOUTH and the
Surviving Corporation pursuant hereto shall be to obtain the best coverage
reasonably available under the circumstances subject to the foregoing
limitations on premiums.
(c) The provisions of this Section 7.20 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives.
7.21 CERTAIN CHANGE IN CONTROL AGREEMENTS. HEALTHSOUTH hereby agrees
that, at the Closing, it will deliver to each of the officers of Horizon/CMS
listed in EXHIBIT 7.21 to the Disclosure Schedule a written acknowledgment
that, at the Effective Time, both of the conditions set forth in the sections
of the Change of Control Agreements of such officers specified in EXHIBIT
7.21 to the Disclosure Schedule shall have been fulfilled and that, if such
officer's employment by the Surviving Corporation is terminated by
HEALTHSOUTH or the Surviving Corporation or the officer within 18 months
after the Effective Time, the amounts specified in the Change of Control
Agreements shall be paid by the Surviving Corporation to the officer in
accordance with the terms thereof.
7.22 ASSUMPTION OF EMPLOYMENT AGREEMENT. At the Closing, HEALTHSOUTH
shall assume the obligations of Horizon/CMS under that certain Employment and
Change of Control Agreement dated as of January 1, 1997, between Horizon/CMS
and Xxxx X. Xxxxxxx.
Section 8. TERMINATION, AMENDMENT AND WAIVER.
8.1 TERMINATION. This Plan of Merger may be terminated at any time
prior to the Effective Time, whether before or after approval of matters
presented in connection with the Merger by the holders of shares of
Horizon/CMS Common Stock:
(a) by mutual written consent of HEALTHSOUTH and Horizon/CMS;
(b) by either HEALTHSOUTH or Horizon/CMS:
(i) if, upon a vote at a duly held meeting of stockholders
or any adjournment thereof, any required approval of this Plan of Merger
and the Merger by the holders of shares of Horizon/CMS Common Stock
shall not have been obtained;
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(ii) if the Merger shall not have been consummated on or before
December 31, 1997, unless the failure to consummate the Merger is the
result of a willful and material breach of this Plan of Merger by the
party seeking to terminate this Plan of Merger; provided, however,
that the passage of such period shall be tolled for any part thereof
(but not exceeding 60 days in the aggregate) during which any party
shall be subject to a nonfinal order, decree, ruling or action of any
court of competent jurisdiction or other governmental agency or
authority restraining, enjoining or otherwise prohibiting the
consummation of the Merger or the calling or holding of a meeting of
stockholders;
(iii) if any court of competent jurisdiction or other
governmental agency or authority shall have issued an order, decree or
ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have become final and nonappealable;
(iv) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in
this Plan of Merger which (A) would give rise to the failure of a
condition set forth in Section 9.2(a) or (b) or Section 9.3(a) or (b),
as applicable, and (B) cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of such
breach (a "Material Breach") (provided that the terminating party is
not then in Material Breach of any representation, warranty, covenant
or other agreement contained in this Plan of Merger); or
(v) if either HEALTHSOUTH or Horizon/CMS gives notice of
termination as a non-notifying party pursuant to Section 7.9;
(c) By either HEALTHSOUTH or Horizon/CMS if any of the
conditions to the obligation of such party to effect the Merger set
forth in Section 9.1, Section 9.2 (in the case of HEALTHSOUTH) or
Section 9.3 (in the case of Horizon/CMS) is not capable of being
satisfied prior to the end of the period referred to in Section
8.1(b)(ii); or
(d) By Horizon/CMS, if Horizon/CMS's Board of Directors shall
have (i) determined, in the exercise of its fiduciary duties under
applicable law, not to recommend the Merger to the holders of
Horizon/CMS Common Stock or shall have withdrawn such recommendation
or (ii) approved, recommended or endorsed any Acquisition Transaction
(as defined in Section 7.10) other than this Plan of Merger or (iii)
resolved to do any of the foregoing.
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8.2 EFFECT OF TERMINATION. In the event of termination of this Plan of
Merger as provided in Section 8.1, this Plan of Merger shall forthwith become
void and have no effect, without any liability or obligation on the part of
any party, other than the provisions of Sections 6.2, 8.2 and 8.6, and except
to the extent that such termination results from the willful and material
breach by a party of any of its representations, warranties, covenants or
other agreements set forth in this Plan of Merger.
8.3 AMENDMENT. This Plan of Merger may be amended by the parties at any
time before or after any required approval of matters presented in connection
with the Merger by the holders of shares of Horizon/CMS Common Stock;
provided, however, that, after any such approval, if any amendment pursuant
to Section 251(d) of the DGCL requires further approval by such stockholders,
the Merger shall not be consummated without the further approval of such
stockholders. This Plan of Merger may not be amended except by an instrument
in writing signed on behalf of each of the parties.
8.4 EXTENSION; WAIVER. At any time prior to the Effective Time of the
Merger, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Plan of Merger or in any
document delivered pursuant to this Plan of Merger or (c), subject to the
proviso of Section 8.3, and except for the provisions of subsections (a)
through (f) of Section 9.1, waive compliance with any of the agreements or
conditions contained in this Plan of Merger. Any agreement on the part of a
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any
party to this Plan of Merger to assert any of its rights under this Plan of
Merger or otherwise shall not constitute a waiver of such rights, except as
otherwise provided in Section 7.9.
8.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A
termination of this Plan of Merger pursuant to Section 8.1, an amendment of
this Plan of Merger pursuant to Section 8.3, or an extension or waiver
pursuant to Section 8.4 shall, in order to be effective, require in the case
of HEALTHSOUTH, the Subsidiary or Horizon/CMS, action by its Board of
Directors or the duly authorized designee of the Board of Directors.
8.6 EXPENSES; BREAK-UP FEES. (a) All costs and expenses incurred in
connection with this Plan of Merger and the transactions contemplated hereby
shall be paid by the party incurring such expense, except that expenses
(other than legal, accounting and investment banking costs, which shall be
paid by the party incurring such expenses, subject to the provisions of
Section 8.6(b)(i) below) incurred in connection with preparing, filing,
printing and mailing the Proxy Statement and the Registration Statement shall
be shared equally by Horizon/CMS and HEALTHSOUTH.
(b) (i) If this Plan of Merger is terminated by Horizon/CMS pursuant to
Section 8.1(d), and within one year after the effective date of such
termination Horizon/CMS is the subject of a Third Party Acquisition Event
with any Person (as defined in Sections 3(a)(9) and 13(d)(3) of the
- 34 -
Exchange Act) (other than a party hereto), then at the time of consummation
of such a Third Party Acquisition Event, Horizon/CMS shall pay to HEALTHSOUTH
a break-up fee of $35,000,000 in immediately available funds, which fee
represents the parties' best estimates of the out-of-pocket costs incurred by
HEALTHSOUTH and the value of management time, overhead, opportunity costs and
other unallocated costs of HEALTHSOUTH incurred by or on behalf of
HEALTHSOUTH in connection with this Plan of Merger, and shall further pay, or
reimburse HEALTHSOUTH for, Expenses (as defined below), actually incurred by
HEALTHSOUTH up to $5,000,000. Horizon/CMS shall not enter into any agreement
with respect to any Third Party Acquisition Event which does not, as a
condition precedent to the consummation of such Third Party Acquisition
Event, require such break-up fee and Expenses to be paid to HEALTHSOUTH upon
such consummation.
(ii) As used herein, the term "Third Party Acquisition Event" shall
mean either of the following:
(A) Horizon/CMS shall enter into any agreement for, or otherwise
be the subject of, any Acquisition Transaction (as defined in Section
7.10) which is consummated (regardless of whether such consummation
occurs within the one-year period described in Section 8.6(b)(i)); or
(B) any Person (other than a party hereto or its affiliates)
shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 under the Exchange Act) or the right to acquire beneficial
ownership of, or a new group has been formed which beneficially owns
or has the right to acquire beneficial ownership of, 30% or more of
the outstanding Horizon/CMS Common Stock.
(iii) As used herein, the term "Expenses" shall include all
reasonable out-of-pocket expenses (including without limitation all
reasonable fees and expenses of counsel, accountants, investment bankers,
experts and consultants) incurred by or on behalf of HEALTHSOUTH in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Plan of Merger, the preparation, printing,
filing and mailing of the Registration Statement and the Proxy Statement, and
all other matters related to the consummation of the transactions
contemplated hereby.
(c) Horizon/CMS acknowledges that the provisions for the payment of
break-up fees and Expenses contained in this Section 8.6 are an integral part
of the transactions contemplated by this Plan of Merger and that, without
these provisions, HEALTHSOUTH would not have entered into this Plan of
Merger. Accordingly, if a break-up fee and Expenses shall become due and
payable by Horizon/CMS, and Horizon/CMS shall fail to pay such amount when
due pursuant to this Section, and, in order to obtain such payment, suit is
commenced which results in a judgment against Horizon/CMS therefor,
Horizon/CMS shall pay HEALTHSOUTH reasonable costs and expenses (including
reasonable attorneys' fees) in connection with such suit, together with
interest computed
- 35 -
on any amounts determined to be due pursuant to this Section (computed from
the date upon which such amounts were due and payable pursuant to this
Section) and such costs (computed from the date incurred) at the prime rate
of interest announced from time to time by NationsBank, N.A. (South). The
obligations of Horizon/CMS under this Section 8.6 shall survive any
termination of this Plan of Merger.
Section 9. CONDITIONS TO CLOSING.
9.1 MUTUAL CONDITIONS. The respective obligations of each party to
effect the Merger shall be subject to the satisfaction, at or prior to the
Closing Date of the following conditions (any of which may be waived in
writing by HEALTHSOUTH and Horizon/CMS):
(a) None of HEALTHSOUTH, the Subsidiary or Horizon/CMS nor any
of their respective subsidiaries shall be subject to any order, decree
or injunction by a court of competent jurisdiction or governmental
agency or authority which (i) prevents or materially delays the
consummation of the Merger or (ii) would impose any material
limitation on the ability of HEALTHSOUTH effectively to exercise full
rights of ownership of the Common Stock of the Surviving Corporation
or any material portion of the assets or business of Horizon/CMS, the
Horizon/CMS Subsidiaries and the Horizon/CMS Other Entities, taken as
a whole.
(b) No statute, rule or regulation shall have been enacted by
the government (or any governmental agency) of the United States or
any state, municipality or other political subdivision thereof that
makes the consummation of the Merger and any other transaction
contemplated hereby illegal.
(c) Any waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act shall have expired or
been terminated.
(d) The Registration Statement shall have been declared
effective and no stop order with respect to the Registration Statement
shall be in effect.
(e) The holders of Horizon/CMS Common Stock shall have approved
the adoption of this Plan of Merger and any other matters submitted to
them in accordance with the provisions of Section 7.3 hereof.
(f) The shares of HEALTHSOUTH Common Stock to be issued in
connection with the Merger shall have been approved for listing on the
Exchange.
(g) HEALTHSOUTH and the Subsidiary shall have obtained, or
obtained the transfer of, any Licenses necessary to allow the
Surviving Corporation to operate
- 36 -
the Horizon/CMS facilities, unless the failure to obtain such transfer
or approval would not have a material adverse effect on the Surviving
Corporation.
(h) HEALTHSOUTH and the Subsidiary shall have received all
consents, approvals and authorizations of third parties with respect
to all material leases and management agreements to which the
Horizon/CMS Subsidiaries and the Horizon/CMS Other Entities are
parties, which consents, approvals and authorizations are required of
such third parties by such documents, in form and substance acceptable
to HEALTHSOUTH, except where the failure to obtain such consent,
approval or authorization would not have a material effect on the
business of the Surviving Corporation.
9.2 CONDITIONS TO OBLIGATIONS OF HEALTHSOUTH AND THE SUBSIDIARY. The
obligations of HEALTHSOUTH and the Subsidiary to consummate the Merger and
the other transactions contemplated hereby shall be subject to the
satisfaction, at or prior to the Closing Date, of the following conditions
(any of which may be waived by HEALTHSOUTH and the Subsidiary):
(a) Each of the agreements of Horizon/CMS to be performed at or
prior to the Closing Date pursuant to the terms hereof shall have been
duly performed in all material respects.
(b) The representations and warranties of Horizon/CMS set forth
in Section 3.11(a) shall be true and correct as of the date of this
Plan of Merger and as of the Closing Date. Each other representation
and warranty of Horizon/CMS set forth in this Plan of Merger that is
qualified as to materiality shall be true and correct, and each
representation and warranty that is not so qualified shall be true and
correct in all material respects, as of the date of this Plan of
Merger and as of the Closing as though made at and as of such time,
except to the extent that any such representation and warranty
expressly relates to an earlier date (in which case any such
representation and warranty that is qualified as to materiality shall
be true and correct, and any such representation and warranty that is
not so qualified shall be true and correct in all material respects,
as of such earlier date); provided, however, that Horizon/CMS shall
not be deemed to be in breach of any such representations or
warranties by taking any action permitted (or approved by HEALTHSOUTH)
under Section 7.2. For purposes of the foregoing sentence only, each
sentence in this Plan of Merger that is a representation and warranty
of Horizon/CMS shall be deemed to be a separate representation and
warranty. HEALTHSOUTH and the Subsidiary shall have been furnished
with a certificate, executed by a duly authorized officer of
Horizon/CMS, dated the Closing Date, certifying in such detail as
HEALTHSOUTH and the Subsidiary may reasonably request as to the
fulfillment of the foregoing conditions.
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(c) HEALTHSOUTH shall have received an opinion from Xxxxxxx
Xxxxxxxxx & Young, L.L.C., to the effect that the merger will
constitute a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended, which opinion may be
based upon reasonable representations of fact provided by officers of
HEALTHSOUTH, Horizon/CMS and the Subsidiary.
(d) HEALTHSOUTH shall have received an opinion from Xxxxxx &
Xxxxxx L.L.P., substantially to the effect set forth in EXHIBIT 9.2(d)
hereto.
9.3 CONDITIONS TO OBLIGATIONS OF HORIZON/CMS. The obligations of
Horizon/CMS to consummate the Merger and the other transactions contemplated
hereby shall be subject to the satisfaction, at or prior to the Closing Date,
of the following conditions (any of which may be waived by Horizon/CMS):
(a) Each of the agreements of HEALTHSOUTH and the Subsidiary to
be performed at or prior to the Closing Date pursuant to the terms
hereof shall have been duly performed in all material respects.
(b) The representations and warranties of HEALTHSOUTH set forth
in Section 5.10(a) shall be true and correct as of the date of this
Plan of Merger and as of the Closing Date. Each other representation
and warranty of HEALTHSOUTH or the Subsidiary set forth in this Plan
of Merger that is qualified as to materiality shall be true and
correct, and each representation and warranty that is not so qualified
shall be true and correct in all material respects, as of the date of
this Plan of Merger and as of the Closing as though made at and as of
such time, except to the extent that any such representation and
warranty expressly relates to an earlier date (in which case any such
representation and warranty that is qualified as to materiality shall
be true and correct, and any such representation and warranty that is
not so qualified shall be true and correct in all material respects,
as of such earlier date). For purposes of the foregoing sentence
only, each sentence in this Plan of Merger that is a representation
and warranty of HEALTHSOUTH or the Subsidiary shall be deemed to be a
separate representation and warranty. HEALTHSOUTH and the Subsidiary
shall have been furnished with a certificate, executed by a duly
authorized officer of Horizon/CMS, dated the Closing Date, certifying
in such detail as HEALTHSOUTH and the Subsidiary may reasonably
request as to the fulfillment of the foregoing conditions.
(c) Horizon/CMS shall have received an opinion from Xxxxxx &
Xxxxxx L.L.P. to the effect that the Merger will constitute a
reorganization with the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended, which opinion may be based upon
reasonable representations of fact provided by officers of
HEALTHSOUTH, Horizon/CMS and the Subsidiary.
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(d) Horizon/CMS shall have received an opinion from Xxxxxxx
Xxxxxxxxx & Young, L.L.C., substantially to the effect set forth in
EXHIBIT 9.3(d) hereto.
Section 10. MISCELLANEOUS.
10.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Plan of Merger or in any instrument
delivered pursuant to this Plan of Merger shall survive the Effective Time.
10.2 NOTICES. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand
delivery or by facsimile AND overnight courier to the parties hereto at the
following addresses, or at such other address as either party may advise the
other in writing from time to time:
If to HEALTHSOUTH:
HEALTHSOUTH Corporation
Xxx XxxxxxXxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxx
HEALTHSOUTH Corporation
Xxx XxxxxxXxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
If to Horizon/CMS:
Horizon/CMS Healthcare Corporation
0000 Xxxxxx Xxxxxx Xxxx, X.X.
Xxxxx 000
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention:
Facsimile:
- 39 -
with a copy to:
Xxxxxxx X. Xxxx III, Esq.
Xxxxxx & Xxxxxx L.L.P.
3600 First City Tower
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Facsimile:
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications with the overnight courier.
10.3 FURTHER ASSURANCES. Each party hereby agrees to perform any
further acts and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of this Plan of Merger.
10.4 GOVERNING LAW. This Plan of Merger shall be interpreted, construed
and enforced in accordance with the laws of the State of Delaware, applied
without giving effect to any conflicts-of-law principles.
10.5 "INCLUDING". The word "including", when following any general
statement, term or matter, shall not be construed to limit such statement,
term or matter to the specific terms or matters as provided immediately
following the word "including" or to similar items or matters, whether or not
non-limiting language (such as "without limitation", "but not limited to", or
words of similar import) is used with reference to the word "including" or
the similar items or matters, but rather shall be deemed to refer to all
other items or matters that could reasonably fall within the broadest
possible scope of the general statement, term or matter.
10.6 "KNOWLEDGE". "To the knowledge", "to the best knowledge,
information and belief", or any similar phrase shall be deemed to refer to
the knowledge of the Chairman of the Board, Chief Executive Officer, Chief
Operating Officer or Chief Financial Officer of a party and to include the
assurance that such knowledge is based upon a reasonable investigation,
unless otherwise expressly provided.
10.7 "MATERIAL", "MATERIAL ADVERSE CHANGE" OR "MATERIAL ADVERSE EFFECT".
"Material" means, when used in connection with one or more entities, material
to the business, prospects, assets, properties, operations, results of
operations or condition (financial or other) of such entity or entities and
all other entities with which such entity or entities are consolidated for
financial accounting purposes, taken as a whole. "Material adverse change"
or "material adverse effect" means, when used in connection with one or more
entities, any change, effect, event, circumstance or occurrence that has, or
is reasonably likely to have, individually or in the aggregate, a material
adverse impact on the business, prospects, assets, properties, operations,
results of operations or condition (financial
- 40 -
or other) of such entity or entities and all other entities with which such
entity or entities are consolidated for financial accounting purposes, taken
as a whole; provided, however, that "material adverse change" and "material
adverse effect" shall be deemed to exclude the impact of (i) changes in
generally accepted accounting principles, (ii) the public announcement of the
Merger and compliance with the provisions of this Plan of Merger, and (iii)
any changes resulting from any restructuring or other similar charges or
write-offs taken by Horizon/CMS in its consolidated financial statements with
the consent of HEALTHSOUTH.
10.8 "HAZARDOUS MATERIALS". The term "Hazardous Materials" means any
material which has been determined by any applicable governmental authority
to be harmful to the health or safety of human or animal life or vegetation,
regardless of whether such material is found on or below the surface of the
ground, in any surface or underground water, airborne in ambient air or in
the air inside any structure built or located upon or below the surface of
the ground or in building materials or in improvements of any structures, or
in any personal property located or used in any such structure, including,
but not limited to, all hazardous substances, imminently hazardous
substances, hazardous wastes, toxic substances, infectious wastes, pollutants
and contaminants from time to time defined, listed, identified, designated or
classified as such under any Environmental Laws (as defined in Section 10.9)
regardless of the quantity of any such material.
10.9 "ENVIRONMENTAL LAWS". The term "Environmental Laws" means any
federal, state or local statute, regulation, rule or ordinance, and any
judicial or administrative interpretation thereof, regulating the use,
generation, handling, storage, transportation, discharge, emission, spillage
or other release of Hazardous Materials or relating to the protection of the
environment.
10.10 "TAXES". For purposes of this Agreement, the term "tax" or
"taxes" shall mean all taxes, charges, fees, levies, penalties or other
assessment imposed by any United States federal, state, local or foreign
taxing authority, including, but not limited to, income, excise, property,
sales, transfer, franchise, payroll, withholding, Social Security or other
taxes, including any interest, penalties or additions attributable thereto.
For purposes of this Agreement, the term "tax return" shall mean any return,
report, information return or other document (including any related or
supporting information) with respect to taxes.
10.11 "SUBSIDIARY". For purposes of this Agreement, the term
"Subsidiary" shall mean a corporation of which 50% or more of the class of
capital stock having voting power in the election of directors is owned,
directly or indirectly, by Horizon/CMS or HEALTHSOUTH.
10.12 CAPTIONS. The captions or headings in this Plan of Merger are
made for convenience and general reference only and shall not be construed
to describe, define or limit the scope or intent of the provisions of this
Plan of Merger.
10.13 INTEGRATION OF EXHIBITS. All Exhibits attached to this Plan of
Merger are integral parts of this Plan of Merger as if fully set forth
herein, and all statements appearing therein shall be
- 41 -
deemed disclosed for all purposes and not only in connection with the
specific representation in which they are explicitly referenced.
10.14 ENTIRE AGREEMENT. This instrument, including all Exhibits
attached hereto, together with the Confidentiality Agreement, contains the
entire agreement of the parties and supersedes any and all prior or
contemporaneous agreements between the parties, written or oral, with respect
to the transactions contemplated hereby. It may not be changed or terminated
orally, but may only be changed by an agreement in writing signed by the
party or parties against whom enforcement of any waiver, change,
modification, extension, discharge or termination is sought.
10.15 COUNTERPARTS. This Plan of Merger may be executed in several
counterparts, each of which, when so executed, shall be deemed to be an
original, and such counterparts shall, together, constitute and be one and
the same instrument.
10.16 BINDING EFFECT. This Plan of Merger shall be binding on, and
shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and, except as provided in Sections 7.16 and 7.20, no
other person shall acquire or have any right under or by virtue of this Plan
of Merger. No party may assign any right or obligation hereunder without the
prior written consent of the other parties.
10.17 NO RULE OF CONSTRUCTION. The parties acknowledge that this Plan
of Merger was initially prepared by HEALTHSOUTH, and that all parties have
read and negotiated the language used in this Plan of Merger. The parties
agree that, because all parties participated in negotiating and drafting this
Plan of Merger, no rule of construction shall apply to this Plan of Merger
which construes ambiguous language in favor of or against any party by reason
of that party's role in drafting this Plan of Merger.
- 42 -
IN WITNESS WHEREOF, HEALTHSOUTH, the Subsidiary and Horizon/CMS have
caused this Plan and Agreement of Merger to be executed by their respective
duly authorized officers, and have caused their respective corporate seals to
be hereunto affixed, all as of the day and year first above written.
HORIZON/CMS HEALTHCARE
CORPORATION
By
----------------------------------
Its
------------------------------
ATTEST:
-------------------------------
Secretary
[CORPORATE SEAL]
HEALTHSOUTH CORPORATION
By
----------------------------------
Its
------------------------------
ATTEST:
-------------------------------
Xxxxxxx X. Xxxxxx
Assistant Secretary
[CORPORATE SEAL]
- 43 -
XXXX ACQUISITION CORPORATION
By
----------------------------------
Its
------------------------------
ATTEST:
----------------------------
Xxxxxxx X. Xxxxxx
Assistant Secretary
[CORPORATE SEAL]
- 44 -
EXHIBIT 7.14
Gentlemen:
I have been advised that I might be considered to be an "affiliate" of
Horizon/CMS Healthcare Corporation ("Horizon/CMS") for purposes of Rule 145
under the Securities Exchange Act of 1933, as amended (the "1933 Act").
HEALTHSOUTH Corporation ("HEALTHSOUTH"), Xxxx Acquisition Corporation and
Horizon/CMS have entered into a Plan and Agreement of Merger dated as of the
17th day of February, 1997 (the "Plan of Merger"). Upon consummation of the
transactions contemplated by the Plan of Merger (the "Merger"), I will
receive shares of capital stock of HEALTHSOUTH for all of the shares of
capital stock of Horizon/CMS owned by me or as to which I may be deemed a
beneficial owner. I own _______ shares of common stock of Horizon/CMS. Such
shares will be converted in the Merger into shares of common stock of
HEALTHSOUTH as described in the Plan of Merger. The shares of Horizon/CMS
capital stock and HEALTHSOUTH capital stock owned by me or as to which I may
deemed to be a beneficial owner prior to the Merger are hereinafter
collectively referred to as the "Pre-Merger Stock" and the shares of
HEALTHSOUTH capital stock received by me in the Merger are hereinafter
collectively referred to as the "Exchange Stock". This agreement is
hereinafter referred to as the "Letter Agreement".
I represent and warrant to, and agree with, HEALTHSOUTH, Horizon/CMS and
the Subsidiary that:
A. I have read this Letter Agreement and the Plan of Merger and have
discussed their requirements and other applicable limitations upon my ability
to sell, transfer or otherwise dispose of the Pre-Merger Stock and Exchange
Stock, to the extent I felt necessary, with my counsel or counsel for
Horizon/CMS.
B. The shares of common stock of HEALTHSOUTH that I shall receive in
exchange for my shares of common stock of Horizon/CMS are not being acquired
by me with a view to their distribution except to the extent and in the
manner provided for in paragraph (d) of Rule 145 under the 1933 Act.
C. I agree with you not to dispose of any such shares of common stock
of HEALTHSOUTH in any manner that would violate Rule 145. I further agree
with you that the certificate or certificates representing such shares of
common stock of HEALTHSOUTH may bear a legend referring to the restrictions
on disposition thereof in accordance with the provisions of the foregoing
paragraph and that stop transfer instructions may be filed with respect to
such shares with the transfer agent for such shares.
D. I understand that stop transfer instructions will be given to
HEALTHSOUTH, Horizon/CMS and their respective transfer agents, as the case
may be, with respect to the shares of Pre-Merger Stock and the Exchange Stock
in connection with the restrictions set forth herein.
It is understood and agreed that this Letter Agreement shall terminate
and be of no further force and effect if the Plan of Merger is terminated
pursuant to the terms thereof.
The agreements made by me in the foregoing paragraphs are on the
understanding and condition that you agree, in the event that any shares may
be disposed of in accordance with the provisions of Rule 145, to deliver in
exchange for the certificate or certificates representing such shares a new
certificate or certificates representing such shares not bearing the legend
and not subject to the stop transfer instruction referred to in paragraph D
above, and so long as I hold shares of stock subject to the provisions of the
foregoing paragraph (but not for a period in excess of two years from the
date of consummation of the Merger) to file with the Securities and Exchange
Commission or otherwise make publicly available all information about
HEALTHSOUTH, to the extent available to you without unreasonable effort or
expense, necessary to enable me to resell shares under the provisions of
paragraph (d) of Rule 145.
This Letter Agreement shall be binding on my heirs, legal representatives
and successors.
Very truly yours,
------------------------------------
[Name of Stockholder]
EXHIBIT 9.2(d)
[DATE]
HEALTHSOUTH Corporation
Xxx XxxxxxXxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
RE: PLAN AND AGREEMENT OF MERGER AMONG HEALTHSOUTH
CORPORATION, XXXX ACQUISITION CORPORATION
AND HORIZON/CMS HEALTHCARE CORPORATION
Gentlemen:
We have acted as legal counsel for Horizon/CMS Healthcare Corporation, a
Delaware corporation ("Horizon/CMS"), in connection with the transactions
contemplated by that certain Agreement and Plan of Merger (the "Plan of
Merger"), dated as of February 17, 1997, by and among HEALTHSOUTH
Corporation, a Delaware corporation, Xxxx Acquisition Corporation, a Delaware
corporation, and Horizon/CMS. The Plan of Merger, along with the other
documents evidencing the transactions contemplated by the Plan of Merger, are
referred to collectively as the "Merger Documents".
This opinion is being delivered pursuant to the Plan of Merger. Unless
otherwise defined herein, capitalized terms used herein shall have the
meanings set forth in the Plan of Merger.
In connection with the preparation of this opinion, we have examined
executed originals of the following documents:
(a) the Merger Documents; and
(b) the charter documents and bylaws of Horizon/CMS in effect as
of the date hereof.
We have also examined such other documents, certificates of public
officials and officers of Horizon/CMS, records and matters of law as we have
deemed necessary as a basis for the opinions hereinafter expressed. In our
examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or
photostatic copies, and the authenticity of the originals of such latter
documents. Further, our review of matters of law has been limited to the
laws of the
State of New Mexico, the laws of the State of Delaware referred to herein and
the Federal laws of the United States in effect as of the date hereof.
Based upon the foregoing, and subject to the limitations hereinafter set
forth, we are of the opinion that:
1. Horizon/CMS has been duly incorporated and is validly existing as a
corporation in good standing under the General Corporation Law of the State
of Delaware (the "DGCL").
2. Horizon/CMS has full corporate power to execute and deliver the Plan
of Merger and to consummate the transactions contemplated thereby.
3. The Plan of Merger has been duly authorized and executed by
Horizon/CMS, and the Plan of Merger constitutes the valid and binding
obligation of Horizon/CMS, enforceable against Horizon/CMS in accordance with
its terms, except as limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors' rights
generally and subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding at law or in equity).
4. The execution and delivery of the Plan of Merger by Horizon/CMS did
not, and the consummation of the transactions therein contemplated by
Horizon/CMS does not, constitute a breach or violation of, or a default
under, any federal law, rule or regulation of the United States or under the
DGCL or, to our knowledge, any court order, judgment or decree of any
governmental or regulatory body of the United States or of Delaware, in each
case, to which Horizon/CMS is subject or by which any of its material
properties or assets are bound or affected, or require any consent or
approval of any other party under any federal law, rule or regulation of the
United States or under the DGCL, except for required approvals under the
federal securities laws, under the state securities or blue sky laws, and
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended,
and except under laws, rules and regulations relating to the operation,
regulation, licensing, and accreditation of health care facilities, as to
which we express no opinion, which breach, violation or default would have a
material adverse effect on Horizon/CMS and the Horizon/CMS Subsidiaries and
the Horizon/CMS Other Entities, taken as a whole.
This opinion is furnished to you by this Firm as legal counsel for
Horizon/CMS, solely for your benefit in connection with the transactions
contemplated by the Plan of Merger, upon the understanding that we are not
hereby assuming any professional responsibility to any other person
whatsoever and that this opinion may not be used for any other purpose
whatsoever.
Very truly yours,
XXXXXX & XXXXXX L.L.P.
By
-----------------------------------
[DATE]
Horizon/CMS Healthcare Corporation
0000 Xxxxxx Xxxxxx Xxxx, X.X.
Xxxxx 000
Xxxxxxxxxxx, Xxx Xxxxxx 00000
RE: PLAN AND AGREEMENT OF MERGER AMONG
HEALTHSOUTH CORPORATION, XXXX ACQUISITION CORPORATION
AND HORIZON/CMS HEALTHCARE CORPORATION
Gentlemen:
We have acted as legal counsel for HEALTHSOUTH Corporation, a Delaware
corporation ("HEALTHSOUTH"), and Xxxx Acquisition Corporation, a Delaware
corporation (the "Subsidiary"), in connection with the transactions contemplated
by that certain Plan and Agreement of Merger (the "Plan of Merger"), dated as of
February 17, 1997, by and among HEALTHSOUTH, the Subsidiary and Horizon/CMS
Healthcare Corporation, a Delaware corporation. The Plan of Merger, along with
the other documents evidencing the transactions contemplated by the Plan of
Merger, are referred to collectively as the "Merger Documents".
This opinion is being delivered pursuant to the Plan of Merger. Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
set forth in the Plan of Merger.
In connection with the preparation of this opinion, we have examined
executed originals (or copies thereof) of the following documents:
(a) the Merger Documents;
(b) the charter documents and bylaws of HEALTHSOUTH in effect as
of the date hereof; and
(c) the charter documents and bylaws of the Subsidiary in effect
as of the date hereof.
We have also examined such other documents, certificates of public
officials and officers of HEALTHSOUTH and the Subsidiary, records and matters of
law as we have deemed necessary or appropriate in connection with the opinions
hereinafter expressed. In our examination, we have assumed the genuineness of
all signatures, the authenticity of all documents submitted to us as originals,
the conformity to original documents of all documents submitted to us as
certified or
photostatic copies, and the authenticity of the originals of such latter
documents. Further, our review of matters of law has been limited to the
laws of the State of Alabama, the laws of the State of Delaware referred to
herein and the Federal laws of the United States in effect as of the date
hereof.
Based upon the foregoing, and subject to the limitations hereinafter set
forth, we are of the opinion that:
1. Each of HEALTHSOUTH and the Subsidiary has been duly incorporated and
is validly existing as a corporation in good standing under the General
Corporation Law of the State of Delaware (the "DGCL").
2. Each of HEALTHSOUTH and the Subsidiary has the corporate power to
execute and deliver the Plan of Merger and to consummate the transactions
contemplated thereby.
3. The Plan of Merger has been duly authorized and executed by
HEALTHSOUTH and the Subsidiary, and the Plan of Merger (except for the
provisions thereof respecting indemnification, as to which we express no
opinion) constitutes the valid and binding obligation of HEALTHSOUTH and the
Subsidiary, enforceable against HEALTHSOUTH and the Subsidiary in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting enforcement of
creditors' rights generally and subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding at law or in
equity).
4. The execution and delivery of the Plan of Merger by HEALTHSOUTH and
the Subsidiary did not, and the consummation of the transactions therein
contemplated by HEALTHSOUTH and the Subsidiary, if performed today, would
not, constitute a breach or violation of any federal law, rule or regulation
of the United States or any law, rule or regulation of Alabama or the DGCL
or, to our knowledge, any court order, judgment or decree of any governmental
or regulatory body of the United States or of Delaware or Alabama, in each
case, to which HEALTHSOUTH or the Subsidiary is subject or by which any of
their material properties or assets are bound or affected, which breach,
violation or default would have a material adverse effect on HEALTHSOUTH and
its subsidiaries and affiliated partnerships, taken as a whole, or require
any consent or approval of any other party under any federal law, rule or
regulation of the United States or any law, rule or regulation of Alabama or
Delaware to which HEALTHSOUTH or the Subsidiary is subject (except for
required consents or approvals under the federal securities laws, the state
securities or blue sky laws, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, or any laws, rules and regulations relating to the
operation, regulation, licensing and accreditation of health care facilities,
as to all of which we express no opinion).
5. The shares of HEALTHSOUTH Common Stock to be issued under the Plan
of Merger will be, when issued in accordance with the terms of the Plan of
Merger, validly issued, fully paid and nonassessable.
This opinion is furnished to you by this Firm as legal counsel for
HEALTHSOUTH and the Subsidiary, solely for your benefit in connection with the
transactions contemplated by the Plan of Merger, upon the understanding that we
are not hereby assuming any professional responsibility to any other person
whatsoever and that this opinion may not be used for any other purpose
whatsoever.
Very truly yours,
XXXXXXX XXXXXXXXX & XXXXX, L.L.C.
By
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