EXHIBIT (2)-11
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"), ▇▇▇▇ 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 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & Young, L.L.C., Birmingham, Alabama, unless
another date or place is agreed to in writing by the parties hereto.
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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.
(d) Stock Options, Warrants and Convertible Securities. At the
Effective Time, all rights with respect to Horizon/CMS
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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 HEALTH- SOUTH 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.
(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
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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
HEALTH- SOUTH Common Stock issued in exchange therefor, without interest, (i) at
the time of such surrender, the amount of any cash payable in lieu of a
fractional share of HEALTHSOUTH Common Stock to which such holder is entitled
pursuant to Section 2.2(e) and the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole shares of 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.
(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
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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 HEALTH- SOUTH
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 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.
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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 (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).
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(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.
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
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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 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.
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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 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;
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(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;
(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
- 10 -
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 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 ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") 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
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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. 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
- 12 -
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, (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 ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇ 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
- 13 -
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.
3.19 Opinion of Financial Advisor. The Board of Directors of
Horizon/CMS has received the oral opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ 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.
- 14 -
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 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
- 15 -
HEALTHSOUTH and the Subsidiary, enforceable against HEALTHSOUTH and the
Subsidiary in accordance with its terms.
5.3 HEALTHSOUTH Common Stock. On the Closing Date, HEALTHSOUTH will
have a sufficient number of authorized but unissued and/or treasury shares of
its Common Stock available for issuance to the holders of 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
- 16 -
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their respective
dates, the HEALTHSOUTH Documents complied in all material respects with the
applicable requirements of the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated under such statutes. The financial statements contained in the
HEALTHSOUTH Documents, together with the notes thereto, have been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods indicated (except as may be indicated in the notes
thereto, or, in the case of the unaudited financial statements, as permitted by
Form 10-Q), reflect all known liabilities of HEALTHSOUTH required to be stated
therein, including all known contingent liabilities as of the end of each period
reflected therein, and present fairly the financial condition of HEALTHSOUTH at
said dates and the consolidated results of operations and cash flows of
HEALTHSOUTH for the periods then ended. 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.
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
- 17 -
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 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
- 18 -
(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 "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.
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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 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
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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 ▇▇▇▇▇▇▇▇ 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, 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
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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 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
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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 ▇▇▇▇ (▇▇▇
"▇▇▇▇▇▇▇▇ ▇▇▇"). 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. HEALTH- SOUTH
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
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
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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.
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
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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, ▇▇▇▇ ▇.
▇▇▇▇▇▇▇ 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 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
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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 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.
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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.
(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
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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
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
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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 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
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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 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
▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
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:
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(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;
(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
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Acquisition Transaction (as defined in Section 7.10) other than this
Plan of Merger or (iii) resolved to do any of the foregoing.
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 Exchange
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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 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).
- 33 -
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 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
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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.
(c) HEALTHSOUTH shall have received an opinion from ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, 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 ▇▇▇▇▇▇ &
▇▇▇▇▇▇ L.L.P., substantially to the effect set forth in Exhibit 9.2(d)
hereto.
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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 ▇▇▇▇▇▇ &
▇▇▇▇▇▇ 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.
(d) Horizon/CMS shall have received an opinion from ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & 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
- 36 -
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
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
HEALTHSOUTH Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Horizon/CMS:
Horizon/CMS Healthcare Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Facsimile:
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ III, Esq.
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
3600 First City Tower
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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.
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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 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.
- 38 -
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 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
- 39 -
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.
- 40 -
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 /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Its Chairman, President and CEO
---------------------------------
ATTEST:
/s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------------
Secretary
[ CORPORATE SEAL ]
HEALTHSOUTH Corporation
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Its Executive Vice President
and Treasurer
---------------------------------
ATTEST:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Assistant Secretary
[ CORPORATE SEAL ]
- 41 -
▇▇▇▇ ACQUISITION CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Its Vice President
----------------------
ATTEST:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Assistant Secretary
[ CORPORATE SEAL ]
- 42 -
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"), ▇▇▇▇ 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
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Plan and Agreement of Merger Among HEALTHSOUTH
Corporation, ▇▇▇▇ 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, ▇▇▇▇ 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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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,
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
By
EXHIBIT 9.3(d)
[DATE]
Horizon/CMS Healthcare Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Re: Plan and Agreement of Merger Among
HEALTHSOUTH Corporation, ▇▇▇▇ Acquisition Corporation
and Horizon/CMS Healthcare Corporation
Gentlemen:
We have acted as legal counsel for HEALTHSOUTH Corporation, a Delaware
corporation ("HEALTHSOUTH"), and ▇▇▇▇ 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 HEALTH- SOUTH 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 HEALTH- SOUTH or
the Subsidiary is subject (except for required consents or approvals under the
federal securities laws, the state securities or blue sky laws, the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & YOUNG, L.L.C.
By
