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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): October 9, 1997
Genesis Health Ventures, Inc.
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(Exact name of registrant as specified in its charter)
Pennsylvania 1-11666 06-1132947
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
148 West State Street, Suite 100
Kennett Square, Pennsylvania 19348
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(Address of principal executive
offices, including zip code)
610-444-6350
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Registrant's telephone number, including area code
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Item 2. Acquisition or Disposition of Assets.
Tender Offer and Merger
On October 9, 1997, Genesis ElderCare Acquisition Corp. ("Acquisition
Corp."), a wholly-owned subsidiary of Genesis ElderCare Corp. ("Genesis
ElderCare Corp."), a Delaware corporation formed by Genesis Health Ventures,
Inc. ("Genesis"), The Cypress Group L.L.C. (together with its affiliates,
"Cypress"), TPG Partners II, L.P. (together with its affiliates, "TPG") and
Nazem, Inc. (together with its affiliates, "Nazem"), acquired 32,790,495 shares
of The Multicare Companies, Inc. ("Multicare"), which represented approximately
99.65% of Multicare's outstanding shares of common stock, par value $.01 per
share (the "Shares"), for a cash price of $28.00 per Share, pursuant to a tender
offer commenced on June 20, 1997 (the "Tender Offer").
On October 10, 1997, Genesis ElderCare Corp. completed the merger (the
"Merger") of Acquisition Corp. with and into Multicare in accordance with the
Agreement and Plan of Merger (the "Merger Agreement") dated as of June 16, 1997
by and among Genesis ElderCare Corp., Acquisition Corp., Genesis and Multicare.
Upon consummation of the Merger, Multicare became a wholly-owned subsidiary of
Genesis ElderCare Corp. and the shareholders of Multicare who did not tender
their shares became entitled to receive $28.00 per Share. Acquisition Corp.
required approximately $1.497 billion to (i) purchase the Shares pursuant to the
Tender Offer and the Merger, (ii) pay fees and expenses incurred in connection
with the completion of the Tender Offer, Merger and the financing transactions
in connection therewith, (iii) refinance certain indebtedness of Multicare and
(iv) make certain cash payments to employees.
Multicare is in the business of providing high quality eldercare and
specialty medical services in selected geographic regions. Included among the
operations acquired by Genesis ElderCare Corp. are operations relating to the
provision of (i) eldercare services including skilled nursing care, assisted
living, Alzheimer's care and related support activities traditionally provided
in eldercare facilities, (ii) specialty medical services consisting of (1)
sub-acute care such as ventilator care, intravenous therapy and various forms of
coma, pain and wound management and (2) rehabilitation therapies such as
occupational, physical and speech therapy and stroke and orthopedic
rehabilitation and (iii) management services to 44 facilities and consulting
services to 14 facilities.
Source and Amount of Funds
Of the funds used to consummate the Tender Offer, Merger and related
transactions, (i) $745 million was furnished to Acquisition Corp.
as capital contributions by Genesis ElderCare Corp. from the sale by Genesis
ElderCare Corp. of its common stock to each of Cypress, TPG, Genesis and Nazem
(the "Equity Contributions"), (ii) $248.6 million was furnished from the
proceeds of the issuance of 9% Senior Subordinated Notes due 2007 (the "9%
Notes") sold by Acquisition Corp. on August 11, 1997, (iii) $24 million was
obtained from the proceeds of the Therapy Sale (as defined below) and (iv) the
remainder was furnished from the proceeds of three term loans and a revolving
credit facility of up to $525 million, in the aggregate (collectively, the
"Senior Facilities"), provided by a syndicate of banks and other financial
institutions (collectively, the "Lenders") led by Mellon Bank, N.A., as
administrative agent (the "Administrative Agent"), pursuant to a certain credit
agreement (the "Long Term Credit Agreement") dated as of October 14, 1997.
Equity Contributions. Pursuant to certain commitment letters dated as
of June 15, 1997, Cypress, TPG and Nazem purchased 210,000, 199,500 and 10,500
shares of common stock, par value $.01 per share,
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of Genesis ElderCare Corp., respectively, for an aggregate purchase price of
$420 million and Genesis purchased 325,000 shares of common stock, par value
$.01 per share, of Genesis ElderCare Corp. for an aggregate purchase price of
$325 million.
Senior Facilities. The Senior Facilities are being used for the purpose
of (i) refinancing certain short term facilities in the aggregate principal
amount of $431.6 million which were funded on October 9, 1997 to acquire the
Shares in the Tender Offer, refinance certain indebtedness of Multicare and pay
fees and expenses related to the transactions, (ii) funding interest and
principal payments on such facilities and on certain remaining indebtedness and
(iii) funding working capital and general corporate purposes.
The Senior Facilities consist of: (1) a $200 million six year term loan
(the "Tranche A Term Facility"); (2) a $150 million seven year term loan (the
"Tranche B Term Facility"); (3) a $50 million term loan maturing on June 1, 2005
(the "Tranche C Term Facility"); (4) a $125 million six year revolving credit
facility (the "Revolving Credit Facility"); and (5) one or more Swing Loans
(collectively, the "Swing Loan Facility") in integral principal multiples of
$500,000 up to an aggregate unpaid principal amount of $10 million. The Tranche
A Term Facility, Tranche B Term Facility and Tranche C Term Facility are subject
to amortization in quarterly installments, commencing at the end of the first
calendar quarter after the date of the consummation of the Merger (the "Closing
Date"). The Revolving Credit Facility will mature six years after the Closing
Date. All net proceeds received by Multicare from (i) the sale of assets of
Multicare or its subsidiaries other than sales in the ordinary course of
business (and other than the sale of Multicare's rehabilitation therapy
business) and (ii) any sale of common stock or debt securities of Multicare
(other than the 9% Notes and the Equity Contributions) in respect of common
stock will be applied as a mandatory prepayment. Fifty percent of Excess Cash
Flow must be applied to the Senior Facilities and shall be payable annually.
The Senior Facilities are secured by a first priority security interest
in all of the (i) stock of Multicare, (ii) stock, partnership interests and
other equity of all of Multicare's present and future direct and indirect
subsidiaries and of its stock in the pharmacy business of Genesis and (iii)
intercompany notes among Genesis ElderCare Corp. and any subsidiaries or among
any subsidiaries. All of the obligations of Multicare with respect to any
indebtedness under the Senior Facilities are guaranteed by Acquisition Corp.
Loans under the Senior Facilities bear, at Multicare's option, interest
at the per annum Prime Rate as announced by the Administrative Agent, or the
applicable Adjusted LIBO Rate. Loans under the Tranche A Term Facility bear
interest at a rate equal to LIBO Rate plus 2.5%; loans under the Tranche B Term
Facility bear interest at a rate equal to LIBO Rate plus 2.75%; loans under the
Tranche C Term Facility bear interest at a rate equal to LIBO Rate plus 3.0%;
loans under the Revolving Credit Facility bear interest at a rate equal to LIBO
Rate plus 2.5%; and loans under the Swing Loan Facility bear interest at the
Prime Rate unless otherwise agreed to by the parties. Five business days
following receipt of the quarterly and annual compliance certificates, changes
in interest rates will take effect. Subject to meeting certain financial
covenants, the above-referenced interest rates will be reduced.
The Long Term Credit Agreement contains a number of covenants that,
among other things, restrict the ability of Multicare and its subsidiaries to
dispose of assets, incur additional indebtedness, make loans and investments,
pay dividends, engage in mergers or consolidations, engage in certain
transactions with affiliates and change control of capital stock, prepay debt,
make material changes in accounting and reporting practices, create liens on
assets, give a negative pledge on assets, make acquisitions and amend or modify
documents. In addition, the Long Term Credit Agreement requires that Multicare
and its affiliates maintain the Management Agreement (as defined below) as well
as comply with certain financial covenants.
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Genesis Bank Financing. Genesis entered into a Third Amended and
Restated Credit Agreement dated October 9, 1997 (the "Genesis Credit Agreement")
with the Lenders pursuant to which the Lenders provided Genesis and its
subsidiaries with four loan facilities totaling $850 million (the "Genesis Bank
Financing") for the purpose of refinancing certain existing indebtedness of
Genesis; funding interest and principal payments on the facilities and certain
remaining indebtedness; funding permitted acquisitions; purchasing the common
stock of Genesis ElderCare Corp.; purchasing the rehabilitation therapy business
of Multicare; and funding Genesis' and its subsidiaries' working capital and
general corporate purposes, including fees and expenses of the transactions.
The facilities under the Genesis Bank Financing consist of (i) $200
million six year Term Loan (the "Genesis Tranche A Term Facility"), (ii) $200
million seven year Term Loan (the "Genesis Tranche B Term Facility"), (iii) $200
million Term Loan maturing on June 1, 2005 (the "Genesis Tranche C Term
Facility") and (iv) $250 million six year Revolving Credit Facility (the
"Genesis Revolving Credit Facility"), including a $25 million sublimit for
standby letters of credit ("Letters of Credit") (collectively, the "Genesis
Senior Facilities" and individually, a "Genesis Senior Facility").
Loans under the Genesis Senior Facilities bear, at the option of
Genesis, interest rates at the per annum Prime Rate as announced by the
Administrative Agent plus an applicable margin, or the applicable Adjusted LIBO
Rate. The initial applicable margins for Prime Rate loans are: .75% for loans
under the Genesis Tranche A Term Facility and under the Genesis Revolving Credit
Facility; 1.0% for loans under the Genesis Tranche B Term Facility; and 1.25%
for loans under the Genesis Tranche C Term Facility. The following are the
Adjusted LIBO Rates for the Genesis Senior Facilities: loans under the Genesis
Tranche A Term Facility will bear interest at a rate equal to LIBO Rate plus
2.5%; loans under the Genesis Tranche B Term Facility will bear interest at a
rate equal to LIBO Rate plus 2.75%; loans under Genesis Tranche C Term Facility
will bear interest at a rate equal to LIBO Rate plus 3.0%; and loans under the
Genesis Revolving Credit Facility will bear interest at a rate equal to LIBO
Rate plus 2.5%. Subject to meeting certain financial covenants, the interest
rate applicable to the Genesis Senior Facilities will be reduced.
The Genesis Tranche A Term Facility, Genesis Tranche B Term Facility
and Genesis Tranche C Term Facility are subject to amortization in quarterly
installments, commencing at the end of the first calendar quarter after the
Closing Date.
All the net cash proceeds received by Genesis from (i) the sale of
assets of Genesis or its subsidiaries other than sales in the ordinary course of
business and other specifically exempted assets that are to be sold to
ElderTrust, a healthcare real estate investment trust, and (ii) any sale of
common stock or debt securities of Genesis or its subsidiaries (other than the
proceeds of equity raised for purposes of complying with the Put/Call Agreement
(as defined below) or the proceeds of debt or equity used to refinance Genesis'
subordinated debt or to make permitted capital contributions or investments in
Multicare) will be applied as a mandatory prepayment pursuant to the Genesis
Senior Facilities. Fifty percent of Excess Cash Flow (as defined in the Genesis
Credit Agreement) must be applied to the repayment of the Genesis Senior
Facilities and shall be payable annually.
The Genesis Senior Facilities are secured by a first priority security
interest in all of the (i) stock, partnership interests and other equity of all
of Genesis' present and future direct and indirect subsidiaries (including,
without limitation, Genesis' and its subsidiaries' ownership interest in Genesis
ElderCare Corp.) other than stock of Acquisition Corp., Multicare and its direct
and indirect subsidiaries and (ii) all intercompany notes among Genesis and any
subsidiaries or among any subsidiaries.
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The Genesis Credit Agreement contains a number of covenants that, among
other things, restrict the ability of Genesis and its subsidiaries to dispose of
assets, incur additional indebtedness, make loans and investments, pay
dividends, engage in mergers or consolidations, engage in certain transactions
with affiliates and change control of capital stock, and to make capital
expenditures; prohibit the ability of Genesis and its subsidiaries to prepay
debt to other persons, make material changes in accounting and reporting
practices, create liens on assets, give a negative pledge on assets, make
acquisitions and amend or modify documents; cause Genesis and its affiliates to
maintain the Management Agreement, the Put/Call Agreement and corporate
separateness; and cause Genesis to comply with the terms of other material
agreements as well as comply with usual and customary covenants for transactions
of this nature.
9% Senior Subordinated Notes due 2007. On August 11, 1997, Acquisition
Corp. sold to Morgan Stanley & Co. Incorporated, Montgomery Securities, L.P. and
First Union Capital Markets Corp. (collectively, the "Placement Agents") $250
million principal amount of its 9% Senior Subordinated Notes due 2007 (the "9%
Notes") which were issued pursuant to an Indenture, dated as of August 7, 1997
(the "Indenture") by and between Acquisition Corp, as issuer, and PNC Bank,
National Association, as trustee. The 9% Notes bear interest at 9% per annum
from August 11, 1997, payable semiannually on February 1 and August 1 of each
year, commencing on February 1, 1998.
Under the terms of the Indenture, the issuer of the 9% Notes is
obligated to consummate an exchange offer (the "Exchange Offer") pursuant to an
effective registration statement or to cause resales of the 9% Notes to be
registered under the Securities Act of 1933, as amended (the "Securities Act")
pursuant to an effective shelf registration statement. In the event that the
Exchange Offer is not consummated and a shelf registration statement is not
declared effective on or prior to the earlier of (i) the date that is six months
after the Closing Date and (ii) March 31, 1998, the per annum interest rate on
the 9% Notes will be increased by .5% until the Exchange Offer is consummated or
the shelf registration statement is declared effective.
The 9% Notes are unsecured, general obligations of the issuer,
subordinated in right of payment to all existing and future Senior Indebtedness,
as defined in the Indenture, of the issuer, including indebtedness under the
Senior Facilities. The 9% Notes rank pari passu in right of payment with any
future senior subordinated indebtedness of the issuer and are senior in right of
payment to all future subordinated indebtedness of the issuer.
The 9% Notes are redeemable at the option of the issuer, in whole or in
part, at any time on or after August 1, 2002, initially at 104.5% of their
principal amount, plus accrued interest, declining ratably to 100% of their
principal amount, plus accrued interest, on or after August 1, 2004. The 9%
Notes are subject to mandatory redemption at 101%. Upon a Change in Control, as
defined in the Indenture, the issuer is required to make an offer to purchase
the 9% Notes at a purchase price equal to 101% of their principal amount, plus
accrued interest.
The Indenture contains a number of covenants that, among other things,
restrict the ability of the issuer of the 9% Notes to incur additional
indebtedness, pay dividends, redeem capital stock, make certain investments,
issue the capital stock of its subsidiaries, engage in mergers or consolidations
or asset sales, engage in certain transactions with affiliates, and create
dividend and other restrictions affecting its subsidiaries.
Upon the consummation of the Merger, Multicare assumed all obligations
of Acquisition Corp. with respect to and under the 9% Notes and the related
Indenture.
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Agreements between Genesis and Multicare
Management Agreement. On October 9, 1997, Multicare, Genesis and
Genesis ElderCare Network Services, Inc., a wholly-owned subsidiary of Genesis,
entered into a management agreement (the "Management Agreement") pursuant to
which Genesis will manage Multicare's operations. The Management Agreement has a
term of five years with automatic renewals for two years unless either party
terminates the Management Agreement. Genesis will be paid a fee of six percent
of Multicare's net revenues for its services under the Management Agreement
provided that payment of such fee in respect of any month in excess of the
greater of (i) $1,991,666 and (ii) four percent of Multicare's consolidated net
revenues for such month, shall be subordinate to the satisfaction of Multicare's
senior and subordinate debt covenants; and provided, further, that payment of
such fee shall be no less than $23.9 million in any given year. Under the
Management Agreement, Genesis is responsible for Multicare's non-extraordinary
sales, general and administrative expenses (other than certain specified
third-party expenses), and all other expenses of Multicare will be paid by
Multicare.
Therapy Sale Agreement. On October 10, 1997, Genesis entered into an
asset purchase agreement (the "Therapy Sale Agreement") with Multicare and
certain of its subsidiaries pursuant to which Genesis acquired all of the assets
used in Multicare's outpatient and inpatient rehabilitation therapy business for
$24 million, subject to adjustment (the "Therapy Sale").
Pharmacy Sale Agreement. On October 10, 1997, Genesis and one of its
wholly-owned subsidiaries entered into a stock purchase agreement (the "Pharmacy
Sale Agreement") with Multicare and certain of its subsidiaries pursuant to
which Genesis will acquire all of the outstanding capital stock and limited
partnership interests of certain subsidiaries of Multicare that are engaged in
the business of providing institutional pharmacy services to third parties for
$50 million, subject to adjustment.
Agreements among Genesis, Cypress, TPG and Nazem
Stockholders' Agreement. In connection with their investments in the
common stock of Genesis ElderCare Corp., Cypress, TPG, Genesis and Nazem entered
into a Stockholders' Agreement (the "Stockholders' Agreement") dated as of
October 9, 1997 relating to their respective ownership interests in Genesis
ElderCare Corp. Pursuant to the terms and conditions of the Stockholders'
Agreement, each of Cypress, TPG and Genesis, as holders of Genesis ElderCare
Corp. common stock, have at all times the right to designate one-third of the
members to Genesis ElderCare Corp.'s Board of Directors. The Stockholders'
Agreement places certain restrictions on the transfer of stock and also provides
that significant actions require the approval of at least one designee of each
of Cypress, TPG and Genesis.
Put/Call Agreement. In connection with the funding pursuant to their
respective equity commitments, Genesis, Cypress, TPG and Nazem entered into an
agreement (the "Put/Call Agreement") dated as of October 9, 1997 pursuant to
which, among other things, Genesis has the option, on the terms and conditions
set forth in the Put/Call Agreement, to purchase (the "Call") the common stock
of Genesis ElderCare Corp. held by Cypress, TPG and Nazem commencing on October
9, 2001 and for a period of 270 days thereafter, at a price determined pursuant
to the terms of the Put/Call Agreement. Cypress, TPG and Nazem have the option,
on the terms and conditions set forth in the Put/Call Agreement, to require
Genesis to purchase (the "Put") such common stock of Genesis ElderCare Corp.
commencing on October 9, 2002 and for a period of one year thereafter, at a
price determined pursuant to the Put/Call Agreement.
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The prices determined for the Put and Call are based on a formula that
calculates the equity value attributable to the common stock of Genesis
ElderCare Corp. held by Cypress, TPG and Nazem plus a portion of the Genesis
pharmacy business (the "Calculated Equity Value"). The Calculated Equity Value
is determined based upon a multiple of Genesis ElderCare Corp.'s earnings before
interest, taxes, depreciation, amortization and rental expenses, as adjusted
("EBITDAR") after deduction of certain liabilities plus a portion of the EBITDAR
related to the Genesis pharmacy business. The multiple to be applied to EBITDAR
depends on whether the Put or the Call is being exercised. Any payment to
Cypress, TPG or Nazem under the Call or the Put maybe in the form of cash or
Genesis common stock at Genesis' option.
Upon exercise of the Call, Cypress, TPG and Nazem will receive at a
minimum their original investment plus a 25% compound annual return thereon
regardless of the Calculated Equity Value. Any additional Calculated Equity
Value attributable to Cypress', TPG's or Nazem's Genesis ElderCare Corp. common
stock will be determined on the basis set forth in the Put/Call Agreement which
provides generally for additional Calculated Equity Value to be divided based
upon the proportionate share of the capital contributions of the stockholders to
Genesis ElderCare Corp. Upon exercise of the Put by Cypress, TPG or Nazem, there
will be no minimum return to Cypress, TPG or Nazem; any payment to Cypress, TPG
or Nazem will be limited to Cypress', TPG's or Nazem's share of the Calculated
Equity Value based upon a formula set forth in the terms of the Put/Call
Agreement which provides generally for the preferential return of the
stockholders' capital contributions (subject to certain priorities), a 25%
compound annual return on Cypress', TPG's and Nazem's capital contributions and
the remaining Calculated Equity Value to be divided based upon the proportionate
share of the capital contributions of the stockholders to Genesis ElderCare
Corp.
Cypress', TPG's and Nazem's rights to exercise the Put will be
accelerated upon an event of bankruptcy of Genesis, a change of control of
Genesis or an extraordinary dividend or distributions or the occurrence of the
leverage recapitalization of Genesis. Upon an event of acceleration or the
failure by Genesis to satisfy its obligations upon exercise of the Put, Cypress,
TPG and Nazem have the right, inter alia, to terminate the Stockholders'
Agreement and Management Agreement and to control the sale or liquidation of
Genesis ElderCare Corp. In the event of such sale, the proceeds from such sale
will be distributed among the parties as contemplated by the formula for the Put
option exercise price and Cypress, TPG and Nazem will retain a claim against
Genesis for the difference, if any, between the proceeds of such sale and the
put option exercise price. In the event of a bankruptcy or change of control of
Genesis, the option price shall be payable solely in cash provided any such
payment will be subordinated to the payment of principal and interest under the
Genesis Bank Financing.
Commencing on October 10, 2003, if the Put option has not been
exercised, subject to Genesis' right of first offer, Cypress and TPG have the
right to sell their stock of Genesis ElderCare Corp. Genesis shall have the
right to participate in such sale and Cypress and TPG shall have the right to
require Genesis to participate in such sale. Upon such sale, Genesis shall pay
to Cypress and TPG (in cash or Genesis common stock at Genesis' option) the
difference between the proceeds received by them and the amount they would have
received had they exercised the Put on October 9, 2003.
The Put/Call Agreement also contains certain restrictions on Genesis'
right to take certain corporate actions including its ability to sell all or a
portion of its pharmacy business.
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Agreements with Affiliates of Multicare
Non-Competition Agreement. Genesis, together with Genesis ElderCare
Corp. and Acquisition Corp. entered into Amended and Restated Noncompetition and
Consulting Agreements (collectively, the "Noncompetition Agreements"), dated
October 8, 1997, with each of Daniel E. Straus and Moshael J. Straus (each, a
"Consultant" and together, the "Consultants"). Pursuant to the Noncompetition
Agreements, Genesis ElderCare Corp. irrevocably appointed each Consultant, and
each Consultant agreed to act as, a consultant, for a period of 12 months
commencing on the date of the consummation of the Merger (the "Closing"), to
perform such reasonable consulting services as the chief executive officer of
Genesis ElderCare Corp. requests. As compensation for each Consultant's
services, Genesis ElderCare Corp. agreed to pay each Consultant a consulting fee
of $500,000 payable in immediately available funds at the Closing. In addition,
each Consultant will be reimbursed for all expenses actually incurred by such
Consultant in the performance of his duties. As consideration for each
Consultant's agreement to be bound by the Restrictive Covenants, as defined
therein, Genesis ElderCare Corp. agreed, among other things, to pay each
Consultant a cash payment in the amount of $2.625 million payable in immediately
available funds at the Closing.
Genesis ElderCare Corp. and Acquisition Corp. also entered into a
Noncompetition Agreement with Stephen R. Baker on terms identical in all
material respects to the terms of the Noncompetition Agreements described above,
except that the Noncompetition Agreement with Mr. Baker provides for a cash
payment in the amount of $2.0 million to Mr. Baker in immediately available
funds at the Closing as consideration for his agreement to be bound by the
Restrictive Covenants, as defined therein.
Colchester. Genesis Health Ventures of Bloomfield, Inc., a wholly-owned
subsidiary of Genesis, acquired from Straus Associates, a partnership which is
owned by Daniel E. Straus, Moshael J. Straus and certain other members of their
family, the land and buildings comprising an eldercare facility located in New
London, Connecticut for $8.4 million. The facility is leased to a subsidiary of
Multicare. At the closing of the acquisition of the facility, the lease was
amended to provide for a future monthly rent equal to the debt service paid on
the facility's mortgage as of October 1, 1997 plus the fixed amount set forth in
the original lease.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
a. Financial Statements of business acquired:
The Multicare Companies, Inc. and Subsidiaries
(1) Independent Auditors' Report (1)
(2) Consolidated Balance Sheets as of
December 31, 1995 and 1996 (1)
(3) Consolidated Statements of
Operations for the years ended
December 31, 1994, 1995 and 1996 (1)
(4) Consolidated Statements of
Stockholders' Equity for the years
ended December 31, 1994, 1995 and
1996 (1)
(5) Consolidated Statements of Cash
Flows for the years ended December
31, 1994, 1995 and 1996 (1)
(6) Notes to Consolidated Financial Statements (1)
(7) Consolidated Balance Sheet as of June 30, 1997 (1)
(8) Consolidated Statement of Operations for the three
and six months ended June 30, 1997 (1)
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(9) Consolidated Statement of Cash Flows for the six
months ended June 30, 1997 (1)
(10) Notes to Consolidated Financial Statements (1)
b. Pro Forma Financial Information:
(1) Unaudited Pro Forma Consolidated
Financial Statements of Operations
for the year ended September 30,
1996 and the nine months ended June
30, 1997 (1)
(2) Unaudited Pro Forma Consolidated Balance
Sheet as of June 30, 1997 (1)
c. Exhibits:
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Exhibit No. Description Page No.
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10.1 (2) Agreement and Plan of Merger dated June 16, 1997 by
and among Genesis ElderCare Corp., Genesis
ElderCare Acquisition Corp., Genesis Health Ventures,
Inc. and The Multicare Companies, Inc.
10.2 (3) Third Amended and Restated Credit Agreement dated
October 9, 1997 to Genesis Health Ventures, Inc. from
Mellon Bank, N.A., Citicorp USA, Inc., First Union
National Bank and NationsBank, N.A.
10.3 (3) Credit Agreement dated October 14, 1997 to The
Multicare Companies, Inc. from Mellon Bank, N.A.,
Citicorp USA, Inc., First Union National Bank and
NationsBank, N.A.
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10.4 Management Agreement dated October 9, 1997 among
The Multicare Companies, Inc., Genesis Health
Ventures, Inc. and Genesis ElderCare Network
Services, Inc. 12
10.5 (3) Stockholders' Agreement dated October 9, 1997 among
Genesis ElderCare Corp., The Cypress Group L.L.C.,
TPG Partners II, L.P., Nazem, Inc. and Genesis Health
Ventures, Inc.
10.6 (3) Put/Call Agreement dated October 9, 1997 among The
Cypress Group L.L.C., TPG Partners II, L.P., Nazem,
Inc. and Genesis Health Ventures, Inc.
10.7 Stock Purchase Agreement dated October 10, 1997
among Genesis Health Ventures, Inc., The Multicare
Companies, Inc., Concord Health Group, Inc., Horizon
Associates, Inc., Institutional Health Care Services,
Inc., Care4, L.P., Concord Pharmacy Services, Inc.,
Compass Health Services, Inc. and Encare of
Massachusetts, Inc. 38
10.8 Asset Purchase Agreement dated October 10, 1997
among Genesis Health Ventures, Inc., The Multicare
Companies, Inc., Health Care Rehab Systems, Inc.,
Horizon Rehabilitation, Inc., Progressive Rehabilitation
Centers, Inc. and Total Rehabilitation Center, L.L.C. 47
10.9 (2) Letter Agreement dated June 16, 1997 between
Genesis Health Ventures, Inc. and Straus Associates.
23.1 (1) Consent of Independent Public Accountants
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(1) To be filed by amendment.
(2) Incorporated by reference to the Tender Offer Statement on Schedule
14D-1 filed by Genesis ElderCare Corp. and Genesis ElderCare
Acquisition Corp. on June 20, 1997.
(3) Incorporated by reference to Amendment No. 7 to the Tender Offer
Statement on Schedule 14D-1 filed by Genesis ElderCare Corp. and
Genesis ElderCare Acquisition Corp. on June 20, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENESIS HEALTH VENTURES, INC.
By:/s/ George V. Hager, Jr.
--------------------------------
George V. Hager, Jr.
Senior Vice President and
Chief Financial Officer
Date: October 24, 1997
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EXHIBIT 10.4
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (the "Agreement"), dated as of October 9,
1997, by and between Genesis ElderCare Network Services, Inc., a Pennsylvania
corporation ("Manager") and Genesis ElderCare Corp., a Delaware corporation (the
"Owner").
BACKGROUND
A. Owner is a company formed at the direction of four equity sponsors
(the "Equity Sponsors"), including Genesis Health Ventures, Inc., a Pennsylvania
corporation and the parent of Manager ("Genesis").
B. Pursuant to the terms of an Agreement and Plan of Merger, dated June
16, 1997 (the "Merger Agreement"), among Owner, a subsidiary of Owner and The
Multicare Companies, Inc., a Delaware Corporation ("Multicare"), Owner will
acquire the business of Multicare, including (i) those certain eldercare
facilities, and the equipment and supplies at such facilities, at the locations
and containing the number of beds listed on Exhibit A hereto and (ii) those
certain service companies, management companies and other businesses identified
on Exhibit A hereto.
C. Owner desires to engage Manager to manage and operate the Business
on the basis, terms and conditions set forth below.
D. Manager and Genesis are in the business of operating and managing
eldercare facilities and health care service companies and providing
operational, accounting and financial services to such businesses, and Manager
is willing to provide management services with respect to the Business on the
basis, terms and conditions set forth below.
E. The parties and the Equity Sponsors intend that, with certain
exceptions as set forth herein, Manager will be responsible for all the
non-extraordinary sales, general and administrative expenses of the Business.
TERMS
NOW, THEREFORE, in consideration of the mutual
representations, covenants and agreements set forth below, and intending to be
legally bound, Manager and Owner agree as follows:
SECTION 1. Appointment of Manager. Owner hereby appoints and
employs Manager as operating manager of the Business, and Manager agrees to act
as operating manager of the Business, to supervise, direct and control the day
to day business activities, management and operation of the Business and all
phases of its operations in the name of and on behalf of Owner and for Owner's
account during the term of this Agreement.
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SECTION 2. Term. The term of this Agreement shall commence on
the date payment is made by Owner for shares of common stock of Multicare
pursuant to the Offer (as defined in the Merger Agreement) and shall continue
for a period of five (5) years (the "Initial Term"). After the expiration of the
Initial Term, this Agreement shall automatically renew for a period of two (2)
years (the "Second Term") unless either party provides the other party with
prior written notice of its intention to terminate this Agreement at the end of
the Initial Term, which notice shall be given at least one year prior to the
expiration of the Initial Term. After the expiration of the Second Term or any
subsequent term, this Agreement shall automatically renew for a period of one
(1) year unless either party provides the other party with prior written notice
of its intention to terminate this Agreement at the end of its current term,
which notice shall be given at least one year prior to the expiration of the
then-current term
SECTION 3. Responsibilities of Manager. In connection with the
supervision, direction and management of the Business, Manager shall (either
directly or through supervision of employees of the Business), as agent and on
behalf of Owner, perform or cause to be performed, the following services:
3.1 Manage the operation of the Business, including, but not
limited to, (i) the provision of long-term nursing care, specialty medical
services (including, but not limited to, rehabilitation and sub-acute care) and
assisted living services to customers at the Facilities, (ii) the provision of
staffing, accounting (but not external audit), billing, collection, rate setting
and general on-site administrative services at the Facilities and (iii) the
provision of health care (including, but not limited to, home care and mobile
x-ray), management services, staffing, accounting (but not external audit),
billing, collection and rate setting services for the Service Companies.
3.2 Use its reasonable efforts to (i) promote and expand
Owner's consulting and management businesses in those territories set forth on
Exhibit B and (ii) negotiate favorable renewals of Owner's existing contracts
relating to all of Owner's consulting and management businesses. Except as
provided below, neither Manager nor any of its Affiliates (other than Owner and
its Subsidiaries) shall expand their consulting or management businesses in
those territories set forth on Exhibit B (the "Restricted Territories") other
than on behalf of Owner. Manager and its Affiliates shall be entitled without
limitation hereunder to (i) renew existing contracts relating to their
management or consulting business in the Restricted Territories and (ii) acquire
or make investments in any Person if less than 30% of the revenues of such
Person are generated from consulting or management operations in the Restricted
Territories. Subject to the following provisions of this Section 3.2, Manager
and its Affiliates shall be entitled to acquire or make investments in Persons
which generate more than 30% of their revenues from consulting or management
operations in the Restricted Territories. In the event that Manager or any of
its Affiliates (other than Owner or its Subsidiaries) agrees to acquire or make
a controlling investment in any Person 30% or more of the revenues of which are
generated from consulting or management operations in the Restricted
Territories, Manager or such Affiliate shall as promptly as practicable make a
written offer to sell the management and consulting businesses of such Person in
the Restricted Territories to Owner at a price equal to the fair market value
thereof as mutually determined by Manager and Owner, acting through its board of
directors. In the event that Manager and Owner are unable to mutually determine
the fair market value of such management and consulting businesses after 30 days
from the date Manager first proposes to make an offer to Owner, each of Manager
and Owner shall promptly, but in any event within 10 days, select an investment
banking firm, which investment banking firms together shall in turn select a
third investment banking firm to make such determination. The determination of
such third investment banking firm shall be binding on Manager and Owner.
Manager or its Affiliate shall make available to Owner upon request any
diligence information relating to such management and consulting businesses
(including digests or summaries prepared by or for Manager or such Affiliate) in
its possession and shall use reasonable efforts to make available to Owner such
other information regarding such
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management and consulting businesses as Owner shall request. If Owner elects to
accept the offer (which, notwithstanding the provisions of Section 14.3, it may
do on behalf of itself or any of its Affiliates), (i) it shall accept the offer
in writing within 30 days of its receipt thereof and (ii) the closing of the
transaction shall take place at such time and place as shall be mutually agreed,
but not later than the later of (A) 45 days after Owner's acceptance of the
offer and (B) the time of the closing of Manager's acquisition or investment.
In connection with any such sale, Manager agrees that either
it or its Affiliate, as applicable, shall either (i) make provision for the
Owner to be a beneficiary of the representations and warranties made by the
seller with respect to the management and consulting businesses which are the
subject of such sale and the seller's agreement to indemnify the buyer or
(ii)(a) make such representations and warranties for the benefit of Owner or its
Affiliate, as applicable, with respect to the management and consulting
businesses which are the subject of such sale as Manager or such Affiliate shall
have received from the seller thereof (provided, that such representations and
warranties need not survive longer than the representations and warranties
received from the seller) and (b) agree to indemnify Owner or its Affiliate, as
applicable, with respect to the management and consulting businesses which are
the subject of such sale to the same extent as the seller thereof has agreed to
indemnify Manager or such Affiliate.
3.3 At the Facilities, select, supervise and train an adequate
staff, as required by law and subject to availability, of nurses, nurse aides,
office and other employees, including an administrator (the "Administrator") and
a registered nurse as director of nursing (the "Director of Nursing") (each of
whom may be replaced by Manager from time to time), and promote, direct, assign
and discharge all such employees at Manager's sole discretion. At the Service
Companies, select, supervise and train an adequate staff of employees, subject
to availability, including office and other employees (each of whom may be
replaced by Manager from time to time), and promote, direct, assign and
discharge all such employees at Manager's sole discretion. During the term of
this Agreement, Manager, in Manager's sole discretion, may directly employ any
Facility Administrator and Director of Nursing and any principal officer of a
Service Company (subject to the provisions of Medicare Conditions of
Participation for Home Health Agencies). All other employees shall be employees
of Owner and shall be carried on the payrolls of the appropriate Facility or
Service Company. Subject to Section 5.4, Owner agrees to reimburse Manager for
any and all employment related costs associated with the Administrator, Director
of Nursing or principal officer of a Service Company receiving any form of
compensation from Manager, including, without limitation, salary, bonuses,
reasonable business expense reimbursements approved by Manager, employer's FICA
payments, unemployment compensation and other employment taxes, bonuses,
automobile allowances, vacation, personal and sick leave benefits, workers'
compensation, group life, health and accident insurance premiums, disability and
other compensation and benefits (collectively, "Employment Costs"). The
compensation payable to any employee directly hired by Manager shall be
reasonable and in line with compensation payable by other similar eldercare
facility and service company operators to similar level employees in each
business' general market area. Such compensation shall also be in line with
compensation payable by Genesis to similar level employees of Genesis'
comparable businesses in each such business' general market area. If any Person
directly hired by Manager to perform services for the Business shall at any time
while Owner is responsible for the compensation or any employment related costs
for such person perform any services for Genesis or any of its Affiliates (other
than Owner or its subsidiaries), Manager shall reimburse Owner for Genesis' or
its Affiliates pro rata share of such employee's compensation and employment
related expenses. From the time notice of termination is given hereunder and
until one year following the termination of this Agreement, neither Manager nor
any of its Affiliates (other than Affiliates of Manager that are Affiliates of
The Cypress Group L.L.C. or TPG Partners II, L.P.) shall, directly or
indirectly, for Manager or on behalf of any other Person or business entity,
solicit, recruit, entice or persuade any Person who is then an employee of Owner
or such Affiliates to leave the employ of Owner or its Affiliates or to contract
with Manager or any other
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Person, nor shall Manager, directly or indirectly, hire any employee of the
Business discharged or replaced during such period by Manager pursuant to this
Section 3.3; provided, that the foregoing restriction shall not apply with
respect to any employee who approaches Manager on his or her own initiative
without any encouragement by Manager.
3.4 With the prior written consent of the Operating Committee
(as defined below), institute and amend from time to time, general salary
scales, personnel policies and appropriate employee benefits for all employees
of the Business.
3.5 Issue bills for services and materials furnished by the
Business and collect accounts receivable and monies owed to the Business; design
and maintain accounting, billing, customer and collection records; and prepare
and file, or supervise the preparation and filing of, insurance, Medicare,
Medicaid and any and all other necessary or desirable applications, reports and
claims related to revenue production. Owner expressly constitutes Manager, to
the extent permitted by applicable law, as its agent to administer, process and
collect, on Owner's behalf and in its name, all insurance and Medicare and
Medicaid receivables. Manager shall have the right to enforce Owner's rights as
creditor under any contract relating to the Business or in connection with
rendering any services for the purposes of collecting accounts receivable and
monies owed to any aspect of the Business, and Manager shall make reasonable
efforts to collect all such receivables and monies.
3.6 Plan, supervise and conduct a program of regular
maintenance and repair at the Facilities, except that any single physical
improvement or series of related improvements (other than budgeted capital items
or maintenance and repair items) costing more than Fifty Thousand Dollars
($50,000) for a single Facility or more than $500,000 for multiple Facilities
shall be subject to the prior written approval of the Operating Committee.
3.7 Purchase food, beverages, medical, cleaning and other
supplies, equipment, furniture and furnishings necessary for the operation and
maintenance of the Business and contract for all necessary services for the
account of Owner, except that the purchase of any single item or series of
related items of equipment, furniture or furnishings (other than budgeted or
emergency items at Manager's discretion) which cost more than Fifty Thousand
Dollars ($50,000) for a single Facility or Service Company or more than $500,000
for multiple Facilities or Service Companies shall be subject to the prior
written approval of the Operating Committee.
3.8 Administer, supervise, coordinate and schedule all
customer and other services of the Facilities, including the provision of food,
barber/beautician and other ancillary services. Subject to the terms of Section
9 hereof, Manager may contract with any of its Affiliates on an arms-length
basis, including, but not limited to, for the provision of the following
categories of service at, to the extent not included in SG&A Expense (as defined
below), Owner's expense: dietary, janitorial and housekeeping, contract
maintenance, data processing, group purchasing, pharmacy, diagnostic services,
medical and enteral feeding services.
3.9 Provide for the payment of accounts payable, employee
payroll, taxes, insurance premiums and other obligations of the Business.
3.10 With the prior approval of the Operating Committee,
institute standards, procedures and policies for admitting and discharging
customers, for charging customers for services and for collecting the charges
from customers or third parties. The parties contemplate that such standards,
procedures and policies
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shall be substantially the same as the standards, procedures policies employed
for such purposes in similar eldercare facilities and health care companies
managed, owned or operated (directly or indirectly) by Genesis.
3.11 Furnish to the Operating Committee for review and
approval, policy manuals discussing aspects of the operation of the Facilities
and propose revisions to such policy manuals from time to time.
3.12 Obtain and maintain at, to the extent not included in
SG&A Expense, Owner's expense insurance coverage for the Business, including
insurance coverage naming Owner, Manager and such other persons as may be
reasonably requested by Owner as additional insureds, with respect to services
that will be provided by the Business.
3.13 Subject to the terms of Section 9 hereof, negotiate and
enter into, in the name of and on behalf of Owner, such agreements, contracts
and orders as it may deem necessary or advisable for the furnishing of services,
concessions and supplies for the operation and maintenance of all aspects of the
Business, except that any single agreement, contract or order or series of
related agreements, contracts or orders (other than budgeted agreements,
contracts or orders) requiring payments of more than Fifty Thousand Dollars
($50,000) for a single Facility or Service Company or more than $500,000 for
multiple Facilities or Service Companies shall be subject to the prior written
approval of the Operating Committee. In entering into any such arrangements,
Manager shall use reasonable efforts to negotiate terms no less favorable to the
Business than the terms of similar arrangements at similar eldercare facilities
and health care companies managed, owned or operated (directly or indirectly) by
Genesis, including, without limitation, the terms of arrangements (including
those relating to rebates) for the provision by the Business of services to
third parties.
3.14 Handle and settle employee relation matters, union and
non-union, and negotiate on behalf of Owner (and in conjunction with Owner's
counsel) with any labor union lawfully entitled to represent employees who work
at any aspect of the Business; provided, however, any collective bargaining
agreement or labor contract must be submitted to the Operating Committee for its
prior written approval and, provided, further, that the institution of any labor
litigation and any labor settlement in excess of the sum of Fifty Thousand
Dollars ($50,000) for a single Facility or Service Company or more than $500,000
for multiple Facilities or Service Companies shall be subject to the prior
written approval of the Operating Committee.
3.15 As appropriate, file or contract for filing, annual and
semi-annual Medicare and Medicaid cost reports, budget cost reports for setting
each Facility's initial rate and interim rate increase requests.
3.16 Implement and maintain appropriate accounting and
internal control systems, including, without limitation, an annual internal
audit, using accounts and classifications and in scope consistent with those
used and performed in similar eldercare facilities and health care companies
managed, owned or operated (directly or indirectly) by Genesis. Manager shall
determine the scope of the internal control systems to be implemented and
maintained based on the entirety of the Business. The plan for the annual
internal audit to be performed on the Business shall be presented to the
Operating Committee each year. All reports prepared by Manager in connection
with, or relating to, accounting and internal control systems shall be promptly
provided to the Operating Committee. The parties acknowledge and agree that to
the extent the Operating Committee wishes to do so, it may, at Owner's expense,
engage an outside firm of independent accountants to perform such services as it
may request, including, without limitation, to review the calculation of Net
Revenues (as defined below) or the Management Fee (as defined below) or the
appropriateness of costs
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not absorbed by the Manager as SG&A Expense. Manager acknowledges that any
change in the Business' accounting policies shall require the approval of
Owner's Board of Directors.
3.17 Engage third-party consultants and professionals,
including outside legal counsel, as may be reasonably necessary in Manager's
business judgement. The parties agree that (i) the retention of outside legal
counsel shall be made on a basis consistent with Genesis' historical policies
and practices for the retention of outside counsel and with prior written notice
to the Operating Committee and (ii) any retention of third-party consultants and
professionals, including outside legal counsel for any matter or series of
related matters in which the fees and expenses are reasonably likely to exceed
Fifty Thousand Dollars ($50,000) in excess of any amounts expressly budgeted for
such purposes shall require the prior written approval of the Operating
Committee.
3.18 Implement and maintain a program to provide objective
measurements of the quality of healthcare provided at all aspects of the
Business. Manager may utilize customer questionnaires and interviews, periodic
inspection, and such other techniques as Manager may reasonably deem necessary
to maintain the quality of healthcare at the Facilities and Service Companies.
SECTION 4. Responsibilities of Owner. Owner makes the
following covenants which are material covenants and upon which Manager relies
as an inducement to enter into this Agreement:
4.1 Owner will cooperate reasonably with Manager in every
respect to allow Manager to perform its services under this Agreement and will
furnish Manager with all information reasonably required by it for the
performance of its services under this Agreement. Owner will permit Manager full
access to the Business and will allow Manager to examine and copy any data in
the possession and control of Owner affecting management and/or operation of the
Business.
4.2 The Operating Committee, on behalf of Owner, will examine
documents submitted by Manager to it and render reasonable decisions pertaining
thereto, when required, promptly, to avoid unreasonable delay in the progress of
Manager's work, and, in any event, if the Operating Committee, other than as a
result of any action or omission by Genesis or any of its representatives, shall
not respond negatively in writing to the notice within fifteen (15) days after
the notice is sent, the Operating Committee shall be deemed to have approved the
matter submitted. In any emergency situation (as reasonably determined by
Manager), Manager shall not be required to seek or obtain Owner's approval for
any actions which Manager, in its sole judgment, deems necessary or appropriate
to respond to such situations, provided, that Manager shall, if the situation
permits (as reasonably determined by Manager) first attempt to contact the
Operating Committee, and, provided, further, Manager shall promptly report any
such action to the Operating Committee in writing. Owner shall execute and
deliver any and all applications and other documents that may be reasonably
deemed by Manager to be necessary or proper to be executed by Owner in
connection with the operation of the Business.
4.3 Owner agrees that Manager retains all ownership and other
rights in all of Manager's proprietary systems, policy and other manuals and
materials, in whatever form; provided, however, that any such systems, policy or
other manuals and materials, in whatever form, developed by Manager in the
performance of its services under this Agreement specifically for the Business
shall be the property of Owner. Nothing contained in this Agreement shall be
construed as a license or transfer of any information either during the term of
this Agreement or otherwise. Upon termination of this Agreement, Owner shall
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immediately return to Manager all information that belongs to Manager, and
Manager shall return to Owner all information that belongs to Owner.
4.4 From the time notice of termination is given hereunder and
until one year following the termination of this Agreement, Owner shall not,
directly or indirectly, for Owner or on behalf of any other Person or business
entity, solicit, recruit, entice or persuade any Person who is then an employee
of Manager or its Affiliates (other than Affiliates of Manager that are
Affiliates of The Cypress Group L.L.C. or TPG Partners II, L.P.) to leave the
employ of Manager or its Affiliates or to contract with Owner or any other
Person, nor shall Owner, directly or indirectly, hire any such employee;
provided, that the foregoing restriction shall not apply with respect to any
employee who approaches Owner on his or her own initiative without any
encouragement by Owner or any employee who is or was an employee of Multicare or
any of its subsidiaries.
SECTION 5. Fees; SG&A Expense.
5.1 Management Fee. In consideration for the services rendered
by Manager under this Agreement, and subject to the provisions of this Section
5, Manager shall be paid a fee equal to six percent (6%) of Net Revenues for
each month while this Agreement is in effect; provided, that in no event may the
annual fee for any full calendar year be less than $23,900,000 (the "Management
Fee"). The Management Fee shall be payable monthly as provided below. Owner
shall pay to Manager $1,991,666 (the "Minimum Monthly Fee") in advance on the
first business day of each month. In the event that the Management Fee payable
for any month is greater than the Minimum Monthly Fee, the excess of the
Management Fee for such month over the Minimum Monthly Fee shall, subject to the
provisions of this Section 5, be paid (each such payment, an "Excess Payment")
on the first business day of the second following month in addition to the
Minimum Monthly Fee payable on such day (i.e., any excess payable in respect of
March shall be paid on the first business day in May, together with the Minimum
Monthly Fee payable for May). In the event that the Management Fee payable for
any month is less than the Minimum Monthly Fee, the Minimum Monthly Fee for the
second following month shall be reduced (each such reduction, a "Payment
Reduction") by the excess of the Minimum Monthly Fee over the Management Fee
(i.e., any overpayment in respect of March shall be deducted from the Minimum
Monthly Fee payable on the first business day in May); provided, that the
Minimum Monthly Fee for any month may only be so reduced to the extent that the
aggregate of the Excess Payments in respect of prior months in the same fiscal
year are greater than the aggregate of the Payment Reductions in respect of
prior months in the same fiscal year (it being the intention of this Agreement
that at no time during any fiscal year shall the aggregate of the Management
Fees paid to Manager hereunder be less than $1,991,667 times the number of
months passed in such fiscal year). To the extent that the Management Fee
payable in respect of any month exceeds the greater of (i) $1,991,666 and (ii)
4% of Net Revenues for such month, such Management Fee shall be paid only to the
extent that (a), both before and after giving effect thereto, there shall exist
no default under the Senior Debt Agreement (as defined below) or the
Subordinated Debt (as defined below) and (b) such payment does not result in a
violation of a covenant under the Senior Debt Agreement or the Subordinated
Debt. Any portion of the Management Fee not paid as a result of the immediately
preceding sentence shall accrue (without interest) and be owing to Manager.
In the event it is determined that the Management Fee paid or
accrued in respect of any month is based upon an incorrect calculation of Net
Revenues for such month, the parties agree, subject to the provisions of the
immediately preceding paragraph, promptly to make such cash payments or
adjustments to accrued amounts as may be appropriate to reflect the Management
Fee based upon the correct calculation of Net Revenues.
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Except for termination of this agreement as provided in
Section 11, neither party hereto shall enter into or suffer to exist any direct
or indirect restriction on the ability of (i) the Owner to make payment to the
Manager of the Minimum Monthly Fee on a timely basis hereunder or (ii) such
party to comply with the provisions of this Section 5.
5.2 Other Fees and Reimbursements. Owner shall reimburse
Manager each month while this Agreement is in effect for an amount equal to
52.0% of the Net Revenue from Owner's management and consulting businesses less
$115,250. Such reimbursement in respect of any month shall be paid on the first
business day of the second following month (i.e., any reimbursement in respect
of March shall be paid on the first business day in May. In the event it is
determined that the reimbursement paid in respect of any month is based upon an
incorrect calculation of Net Revenues for such month, the parties agree promptly
to make such cash payments as may be appropriate to reflect the reimbursement
based upon the correct calculation of Net Revenues.
The Management Fee and the reimbursement described in the
immediately preceding paragraph shall be in addition to any and all other
reimbursements due Manager, including, without limitation, to the extent not in
SG&A Expense, reimbursements for Employment Costs and tax contests. Except as
provided in the immediately preceding paragraph, Manager shall not be entitled
to reimbursement in respect of any expense or other amount that is an SG&A
Expense.
5.3 Overdue Invoices. Owner shall pay Manager interest on
amounts due to Manager which are not paid within thirty (30) days of their due
date (other than as a result of Manager's willful failure to pay such amounts
and other than with respect to the portion of the Management Fee which is
accrued and not then currently payable, if any, which shall be non-interest
bearing) at a rate per annum equal to the prime rate announced from time to time
by Mellon Bank, N.A. plus 1.00%.
5.4 SG&A Expense. Notwithstanding anything to the contrary,
all SG&A Expense of the Business shall be for the account of, and shall be borne
by, Manager. Manager shall promptly reimburse the Business for any SG&A Expense
paid by the Business. Notwithstanding the foregoing, Manager shall not be
responsible for any severance or bonus payments required to be made under
pre-existing obligations as a result of the Merger.
SECTION 6. Budgets and Reports.
6.1 Annual Budget; Five-Year Plan. Within ninety (90) days of
the date of this Agreement, and no later than sixty (60) days prior to the end
of each fiscal year of the Business, Manager shall submit to the Board of
Directors of Owner an annual budget (each an "Annual Budget"), including, but
not limited to, an income statement, a balance sheet, a statement of cash flows
and a schedule of all material assumptions, covering the operations of and
proposed capital expenditures to be made with respect to each aspect of the
Business for the applicable period. The Board of Directors of Owner shall
approve or disapprove the Annual Budget submitted by Manager no later than
thirty (30) days following the receipt thereof.
6.2 Capital Expenditures. The Annual Budget shall include a
capital budget (the "Capital Budget") outlining a program of capital
expenditures as may be required by applicable law, any lender of Owner or in
Manager's reasonable business judgment during the next fiscal year (or the
remainder of the current fiscal year, in the case of the initial budget), in
which each proposed capital expenditure will be designated as either mandatory,
highly recommended or desirable. The Board of Directors of Owner may
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approve or reject, in its discretion, each proposed capital expenditure, except
those indicated as mandatory. Owner shall not unreasonably withhold or delay its
consent to highly recommended capital expenditures. Manager shall be responsible
for designating as a "mandatory capital expenditure" any expenditure which, if
not made would, in Manager's reasonable judgment, (a) cause any aspect of the
Business to lose or put at risk its license, (b) place at risk the life of a
customer of the Business, (c) cause the ineligibility of any aspect of the
Business under any third party payor program applicable to the Business or (d)
cause the issuance of a formal notice that the operating license for any
material aspect of the Business or any substantial portion of the Business will
be revoked or suspended or qualified in any material adverse respect.
6.3 Operating Budget. The Annual Budget shall include an
operating budget (the "Operating Budget") setting forth an estimate of monthly
operating revenues and expenses for the Business for the next fiscal year (or
the remainder of the current fiscal year, in the case of the initial budget),
together with an explanation of anticipated changes in the Business.
6.4 Reports. As soon as available and in any event within
forty-five (45) days after the end of each month, Manager shall provide to the
Operating Committee a report reconciling the actual operating expenses incurred
during such month to the operating expenses shown on the Operating Budget for
such month. Manager shall also furnish or arrange for the preparation of such
other reports and information as may be reasonably requested from time to time
which may include (but shall not be limited to): (a) unaudited monthly financial
statements of the Owner for the month then ended, prepared on a basis consistent
with the annual statements; (b) at Owner's expense, audited annual financial
statements of the Owner prepared by a nationally recognized certified public
accounting firm, prepared in accordance with GAAP and including a balance sheet
and a statement of shareholders' equity as of the end of the fiscal year and
statements of income and cash flows for the year then ended; (c) monthly census
information of the Facilities as of the end of such month in sufficient detail
to show by payor mix (i.e., private, Medicare, Medicaid and V.A.) the average
monthly census of the Facilities; (d) an aged accounts receivable report from
each aspect of the Business in sufficient detail to show amounts due from each
class of customer-mix by the account age classifications of thirty (30) days,
sixty (60) days, ninety (90) days, one hundred twenty (120) days, and over one
hundred twenty (120) days; (e) all appropriate Medicare and Medicaid reports
necessary under such programs; (f) a monthly detailed roll forward of each
accounting reserve, presenting the beginning balance, provisions, cash payments
other debits and credits and the ending balance; (g) a five year plan; and (h)
any other operating statistics or financial information as the Board of
Directors of Owner may from time to time reasonably request. In addition,
Manager shall provide to the Board of Directors of Owner reports comparable in
scope and substance to those provided to the Board of Directors of Genesis in
respect of similar eldercare facilities and health care companies managed, owned
or operated (directly or indirectly) by Genesis.
SECTION 7. Bank Accounts and Working Capital.
7.1 Manager, in the name and on behalf of Owner, shall
transfer all revenues of the Business as promptly as practicable following
receipt thereof, but in no event less frequently than weekly, for deposit into a
bank account or accounts established exclusively for that purpose (the
"Operating Accounts") established in Owner's name. Manager shall supervise the
disbursements from the Operating Accounts on behalf of Owner of such amounts and
at such times as the same are required in Manager's reasonable business
judgment. Manager shall discharge such supervisory responsibilities in
accordance with reasonable and customary business standards and practices. All
costs and expenses (including the Management Fee and other
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amounts due Manager) incurred in the operation of the Business shall be paid out
of the Operating Accounts in accordance with, to the extent applicable, Sections
5.1 and 5.2. Manager shall specify, with the approval of the Operating
Committee, the signatory or signatories of Manager required on all checks or
other documents of withdrawal submitted by Manager on the Operating Accounts.
7.2 Taxes. Any federal, state or local income taxes, imposed
on the Business and arising from Owner's period of ownership are, to the extent
not included in SG&A Expense, the obligations of Owner, not of Manager, and
shall be paid out of the Operating Accounts of the Business. With the prior
written consent of the Operating Committee, Manager may (and at the Operating
Committee's direction, Manager shall) contest the validity or amount of any such
tax or imposition on the Business.
SECTION 8. Licenses, Permits, Certifications and Contests.
8.1 Manager, as agent of Owner, shall assist Owner in its
application for, in the name of Owner, and to obtain and maintain, on behalf of
Owner, all necessary licenses, permits and approvals to operate the Business to
substantially comply with all applicable laws, rules and regulations and to be
eligible for participation in the Medicaid Program and Federal Medicare Program.
8.2 Neither Owner nor Manager shall knowingly take any action
or fail to take any action which such party knows will cause any governmental
authority having jurisdiction over the operation of the Business to institute
any proceeding for the suspension, rescission or revocation of any necessary
license, permit or approval. Manager shall not take any action or fail to take
action which Manager knows will adversely affect the Owner's right to accept and
obtain payments under Medicare, Medicaid or any other public or private third
party medical payment programs.
8.3 Manager shall, with the approval of and, to the extent not
included in SG&A Expense, at the cost of Owner, have the right, on behalf of
Owner, to contest by appropriate legal proceedings, diligently conducted in good
faith in the name of Owner, the validity or application of any agreement, law,
ordinance, rule, ruling, regulation, order or requirement of any governmental
agency having jurisdiction over the operation of the Business. Owner shall
reasonably cooperate with Manager with regard to any such contest. Counsel for
any such contest shall be selected by Manager in accordance with Section 3.17.
Manager shall, with the consent of the Operating Committee and, to the extent
not included in SG&A Expense, at Owner's cost and expense, process all third
party payment claims and appeals for the services provided at the Business,
including without limitation, exhaustion of all applicable administrative
proceedings or procedures, adjustment and denials by governmental agencies or
their fiscal intermediaries and other third party payors.
8.4 Owner shall comply with all federal, state and local laws,
rules and regulations and requirements which are applicable to Owner provided
that Owner, at its sole expense and without cost to Manager, shall have the
right to contest by proper legal proceedings the validity, so far as applicable
to it, of any such law, rule, regulation or requirement, provided that such
contest shall not result in a suspension of operations of any aspect of the
Business, and provided, further, Owner shall not be deemed to be in breach of
this covenant if Owner's failure to comply with any such law, rule, regulation
or requirement is the result of the gross negligence or willful misconduct of
Manager.
SECTION 9. Transactions With Specialists and Affiliates.
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9.1 Staff Specialists. In addition to the other managerial
services provided for in this Agreement, Manager shall make available to the
Business for consultation and advice, when necessary or appropriate, specialists
in accounting, budgeting, management, nursing, personnel, purchasing, quality
assurance, policies and procedures, legal matters and third party reimbursement.
9.2 Transactions with Affiliates. (a) The parties contemplate
that Manager or its Affiliates may propose to provide certain contract services
to the Business, such as data processing, insurance, dietary and social service
consulting, contract maintenance, pharmacy, medical, medical supply and
diagnostic services. All such services shall be provided on competitive, arm's
length terms. Any single agreement or series of related agreements with
Affiliates of Manager requiring payments of more than Fifty Thousand Dollars
($50,000) shall require the approval of the Operating Committee. Owner agrees to
adopt provisions to its By-laws providing that for so long as this Agreement is
in effect, Owner, acting through the Operating Committee, shall, subject to
Section 9.2(b), review and approve as promptly as practicable all such proposed
agreements which are on terms reasonably determined by the Operating Committee
to be competitive with the then prevailing, arm's length market terms of
agreements for similar quality level of service in the same market area,
including, without limitation, terms regarding duration and termination, and
which, with respect to services that are then or could be provided by the
Business, are not, as reasonably determined by the Operating Committee, expected
to exceed the cost the Business would incur if such services were provided by
the Business. Notwithstanding anything to the contrary, each contract, agreement
or arrangement pursuant to which Manager or its Affiliates provide services to
Owner or its subsidiaries shall terminate, and shall contain provisions to the
effect that it so terminates, concurrently with any termination of this
Agreement.
(b) To the extent that services rendered by the Business the
costs of which are not included in SG&A Expense (including without limitation,
facility-based internal administrative functions, home health care services,
mobile x-ray services, therapy services and any other services that would
constitute contract services) are available locally on the date hereof for the
Business or its customers (including recently discharged customers), Manager
agrees that neither it nor its Affiliates (other than Owner or its subsidiaries)
shall provide such services to the Business or such customers in such localities
without prior written approval from the Operating Committee. Notwithstanding the
foregoing, Manager and Owner shall comply with all applicable laws, including
laws providing for patient/resident freedom of choice.
SECTION 10. Representations And Warranties. Owner and
Manager make the following representations and warranties to the other party:
10.1 Status. The representing party is a corporation duly
organized and validly existing in good standing under the laws of its state of
incorporation, and has all necessary power to carry on its business as now being
conducted, to operate its properties as now being operated, to carry on its
contemplated business, to enter into this Agreement and to observe and perform
its terms.
10.2 Authority and Due Execution. The representing party has
full power and authority to execute and to deliver this Agreement and all
related documents and to carry out the transactions contemplated by this
Agreement. The execution of this Agreement by such party will not, with the
passing of time, the giving of notice, or both, result in a default under or a
breach or violation of (i) such party's organizational documents; (ii) any law,
regulation, court order, injunction or decree of any court, administrative
agency or governmental body; or (iii) any mortgage, note, bond, indenture,
agreement, lease, license, permit or other instrument or obligation to which
such party is now a party or by which such party or any of its assets may
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be bound or affected. This Agreement constitutes a valid and binding obligation
of the representing party, enforceable against such party in accordance with its
terms, except to the extent that its enforceability is limited by applicable
bankruptcy, reorganization, insolvency, receivership or other laws of general
application or equitable principles relating to or affecting the enforcement of
creditors' rights.
10.3 Litigation. There is no litigation, claim, investigation,
challenge or other proceeding pending or, to the knowledge of the representing
party, threatened against such party, its properties or business which seeks to
enjoin or prohibit it from entering into this Agreement.
SECTION 11. Termination.
11.1 This Agreement shall be immediately terminable by Owner
upon the earliest of (i) failure by Genesis to comply with its obligations under
the Put Option (as defined in the Put/Call Agreement, dated October 9, 1997 (the
"Put/Call Agreement"), among the Equity Sponsors), (ii) an Event of Acceleration
(as defined in the Put/Call Agreement) and (iii) any sale by any Equity Sponsor
other than Genesis of common stock of Owner pursuant to Section 6.9 of the
Put/Call Agreement.
11.2 In the event of Manager's material failure to perform any
of the covenants of this Agreement, Owner may give Manager notice of its
intention to terminate this Agreement. If such failure to perform shall continue
for thirty (30) days after such notice, Owner may terminate this Agreement,
provided, however, that the Agreement shall not terminate pursuant to this
Section 11.2 until a court of competent jurisdiction has determined that Manager
has materially failed to perform such covenant and such failure is continuing;
provided, further, that notwithstanding any such judicial determination, this
Agreement shall not terminate prior to ninety (90) days after the notice of
termination if (i) Manager is diligently making all reasonable efforts to remedy
its failure to perform and (ii) such failure could not have been remedied
earlier solely for reasons beyond Manager's control.
11.3 In the event of any termination of this Agreement in
accordance with Section 11.2 above, Manager shall, to the extent required by the
lenders under the Senior Debt Agreement, immediately deliver to Owner, in the
manner hereafter provided, the sum of $30,000,000 (which may be in cash or in
the form of a letter of credit in form and substance reasonably satisfactory to
the Agent hereafter described) for the purpose of paying the following specified
expenses in connection with securing the services of a replacement manager. Such
cash or letter of credit shall be immediately deposited by Manager in an account
established for the benefit of Owner with Mellon Bank, N.A., or its successor,
as the administrative agent under the Senior Debt Agreement described in Section
14.13 hereof (the "Agent"). Disbursements from such account (including drawings
under the letter of credit) shall be made by Agent, upon the request of Owner
approved by the Agent, to pay or provide for the payment of the one-time
reasonable incremental costs and expenses incurred by Owner in connection with
the hiring of a replacement manager. Owner shall have no obligation to repay to
Manager any amounts expended from the account established in accordance
herewith; provided, that Manager, upon the earlier of (i) six months from the
date of the retention of the replacement manager and (ii) the conclusion of
arrangements reasonably satisfactory to the Agent for the securing of the
services of a replacement manager shall be entitled to the return of any
unexpended portion thereof. The provisions of this Section 11.3 are made by
Owner and Manager expressly for the sole benefit of the lenders under the Senior
Debt Agreement, and compliance with the provisions hereof may be waived at the
sole discretion of, and this Section 11.3 shall not be amended or modified in
any respect without the express written approval of, the Agent.
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SECTION 12. Notices.
Any notice, communication or demand requiring or permitted to
be given under this Agreement shall be in writing (including facsimile
communications) and shall be sent by first-class mail (return receipt
requested), nationally-recognized overnight courier, facsimile transmission or
personal delivery. All notices shall be sent to the applicable party addressed
as follows:
12.1 To Owner, by addressing the same to:
Genesis ElderCare Corp.
148 West State Street
Kennett Square, PA 19348
Attention: Chairman and CEO, Michael R. Walker
Attention: Law Department, Ira C. Gubernick, Esq.
Facsimile: (610) 444-7483
with a required copy to:
The Cypress Group L.L.C.
65 East 55th Street, 19th Floor
New York, New York 10022
Attention: William L. Spiegel
Facsimile: (212) 705-0199
with a required copy to:
TPG Partners II, L.P.
345 California Street, Suite 3300
San Francisco, CA 94104
Attention: Karl I. Peterson
Facsimile: (415) 743-1501
with a required copy to:
Nazem, Inc.
645 Madison Avenue
New York, NY 10022
Attention: Fred Nazem
Facsimile: (212) 371-2150
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with a required copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: William E. Curbow. Esq.
Facsimile: (212) 455-2502
12.2 To Manager, by addressing the same to:
Genesis ElderCare Network Services, Inc.
148 West State Street
Kennett Square, PA 19348
Attention: Chairman and CEO, Michael R. Walker
Attention: Law Department, Ira C. Gubernick, Esquire
Facsimile: (610) 444-7483
with a required copy to:
Blank Rome Comisky & McCauley
Four Penn Center Plaza
Philadelphia, PA 19103
Attention: Stephen E. Luongo, Esquire
Facsimile: (215) 569-5555
Any such properly given notice shall be effective on the earliest to occur of
receipt, telephone confirmation of receipt of facsimile communication, one
business day after delivery to a nationally recognized overnight courier, or
five business days after deposit in the mail, return receipt requested.
SECTION 13. Costs And Expenses; Indemnity.
13.1 Except as otherwise expressly provided in this Agreement,
(i) all costs, expenses and purchases arising out of, relating to or incurred in
the operation of the Business, including, without limitation, the fees, costs
and expenses of consultants and professionals, shall be the sole responsibility
of Owner and (ii) Manager, by reason of the execution of this Agreement or the
performance of its services under this Agreement, shall not be liable for or
deemed to have assumed any liability for such fees, costs and expenses, or any
other liability or debt of Owner whatsoever, arising out of or relating to the
Business or incurred at its central administrative offices in the performance of
its obligations hereunder. Manager shall have no obligations to advance any sums
required to maintain necessary licenses and permits and to otherwise keep any
aspect of the Business operating, without assurances that the necessary funds
for the discharge of any such liability of any such obligation will be
punctually paid by Owner.
13.2 To the fullest extent permissible by law, Owner shall
indemnify and hold Manager and its Affiliates harmless from and against any and
all claims, losses, costs, damages and liabilities, including
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reasonable attorneys' fees, incurred, caused or occasioned by, in connection
with or arising out of this Agreement due to the gross negligence or willful
misconduct of Owner, its agents, employees or contractors or Owner's violation
or failure to perform, or misrepresentation with respect to, any of the terms
covenants or conditions of this Agreement, except if, and to the extent that,
such claim, loss, cost, damage or liability results from the gross negligence or
willful misconduct of Manager.
13.3 To the fullest extent permissible by law, Manager and
Genesis shall indemnify and hold Owner and its Affiliates harmless from and
against any and all claims, losses, costs, damages and liabilities, including
reasonable attorneys' fees, incurred, caused or occasioned by, in connection
with or arising out of this Agreement due to the gross negligence or willful
misconduct of Manager, its agents, employees or contractors or Manager's
violation or failure to perform, or misrepresentation with respect to, any of
the terms, covenants or conditions of this Agreement, except if, and to the
extent that, such claim, loss, cost, damage or liability results from the gross
negligence or willful misconduct of Owner. Nothing in this paragraph shall be
deemed or construed to constitute, create or imply any standard of care for the
performance by the Manager of its obligations hereunder or limit in any respect
Owner's right to make a claim against Manager for the failure by Manager to
perform its obligations hereunder.
SECTION 14. Miscellaneous.
14.1 Government Regulations. In accordance with its
obligations under this Agreement, Owner and Manager shall operate and maintain
the Business in compliance with the requirements of any statute, ordinance, law,
rule, regulation or order of any governmental or regulatory body having
jurisdiction over the Business. If for any reason any term or condition of this
Agreement is found to be invalid or contrary to government laws, rules,
regulations or orders, Owner and Manager agree to immediately and in good faith
modify such term or condition to comply with such government law, rule,
regulation or order.
14.2 Good Faith Effort by Manager. Manager shall act in good
faith and use its reasonable efforts to perform its obligations under this
Agreement, but shall have no liability to Owner for any decisions made with
respect to, or any actions taken, or in the omission of any actions in
connection with, the Business' operations, so long as such decisions, actions or
omissions were made or taken in good faith and met the standard of care set
forth herein. Any action taken or omitted by Manager in reliance on written
advice from accountants with respect to financial reporting matters or legal
counsel with respect to legal questions shall be conclusively deemed to have
been taken in good faith. The liability of Manager and Genesis to Owner is
limited to actual damages suffered by Owner as a direct and proximate result of
Manager's breach under any provision of this Agreement. Manager makes no
warranties, express or implied, and shall not assume any financial or other
responsibilities in connection with its obligations under this Agreement, except
as specifically provided in this Agreement. Manager shall be responsible for
managing the Business with the same diligence and skill as is employed by it in
the management of its similar businesses, including the businesses managed,
owned or operated, directly or indirectly, by Genesis, and consistent with the
provisions of this Agreement and in substantial compliance with all obligations
imposed on Owner which are known to Manager.
14.3 Assignment. Neither Manager nor Owner shall assign its
rights or obligations under this Agreement without prior written consent of the
other, except that Manager may at any time assign its rights and obligations
under this Agreement to an Affiliate of Manager; provided, that no assignment by
Manager to any of its Affiliates shall relieve Manager from any of its
obligations hereunder. For purposes
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of this section, a change of control by a party or any parent entity of a party
by operation of law or through a change of a controlling interest of its stock
shall be deemed to be an assignment.
14.4 Retention of Control by Owner. Owner shall at all times
continue to exercise control over the assets and operations of each aspect of
the Business, and Manager shall perform its responsibilities as described in
this Agreement in accordance with written policies and directives adopted by
Owner. By entering into this Agreement, Owner does not delegate to Manager any
of the powers, duties and responsibilities vested in the Owner by law, or by its
governance documents. Owner may, according to the terms of this Agreement, (i)
direct Manager to implement existing Business policy, (ii) adopt as policy for
the Business, recommendations or proposals made by Manager or (iii) adopt as
policy for the Business the Owner's own proposals notwithstanding any objection
by Manager; provided, that any such policy shall be consistent with the terms of
this Agreement. The Board of Directors of Owner shall have the right to approve
the Annual Budget.
Notwithstanding anything to the contrary contained in this
Agreement, including, without limitation, the provisions of Sections 3.3 and
3.16 of this Agreement, with regard to the Facilities located in Rhode Island,
Owner shall retain authority to (i) hire and terminate the chief executive
officer or administrator, (ii) maintain and control the books and records, (iii)
dispose of assets and incur liabilities and (iv) adopt and enforce policies
regarding operation.
14.5 Books and Records. Manager shall make available to Owner
or its agents or designees (including the Operating Committee) for inspection
and copying by Owner upon request, all books and records and financial data
relating to all aspects of the Business. Manager shall provide Owner with copies
of all licensure and/or certification surveys conducted at the Facilities.
14.6 Force Majeure. Manager shall not be deemed to be in
violation of this Agreement if it is prevented from performing any of its
obligations under this Agreement for any reason beyond its control including,
without limitation, strikes, lockouts, acts of god, unavailability of customers,
personnel, supplies, unforeseen changes in statutes, regulations or rules of
appropriate governmental or other regulatory authorities.
14.7 Binding Agreement. The terms, covenants, conditions,
provisions and agreements contained in this Agreement shall be binding upon and
inure to the benefit of Owner and Manager, their successors and assigns.
14.8 Relationship of Parties. Nothing contained in this
Agreement shall constitute or be construed to be or to create a partnership,
joint venture, lease or any joint relationship between Owner and Manager with
respect to the Business.
14.9 Entire Agreement; Amendments. This Agreement contains the
entire agreement between the parties hereto with respect to the subject matter,
and no prior oral or written, and no contemporaneous oral, representations or
agreements between the parties with respect to the subject matter of this
Agreement shall be of any force and effect. Any additions, amendments or
modifications to this Agreement shall be of no force and effect unless in
writing and signed by both Owner and Manager.
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14.10 Governing Law; Venue. This Agreement is made under, and
shall be construed and enforced in accordance with, the laws of the Commonwealth
of Pennsylvania applicable to agreements made and to be performed solely
therein, without giving effect to principles of conflicts of law. The parties
irrevocably submit and consent to the jurisdiction of any Pennsylvania
commonwealth court sitting in Chester or Philadelphia Counties, Pennsylvania or
Federal court sitting in Philadelphia, Pennsylvania over any action or
proceeding arising out of or relating to this Agreement, and the parties hereby
irrevocably agree that all claims in respect of any such action or proceeding
may be heard and determined in such Pennsylvania commonwealth or Federal court.
14.11 Arbitration of Accounting Matters. If any controversy
should arise between the parties in the performance, interpretation and
application of this Agreement which involves accounting matters, including,
without limitation, the calculation of Net Revenue, the Management Fee and the
Offer Price, either party may serve upon the other a written notice stating that
such party desires to have the controversy reviewed by an arbitrator, who shall
be a representative of a firm specializing in accounting in the eldercare area
of medical services. If the parties cannot agree within fifteen (15) days from
the service of such notice, upon the selection of such an arbitrator, the
arbitrator (which shall not be the then existing auditors of either of the
parties) shall be selected or designated by the American Arbitration Association
upon the written request of either party hereto. Arbitration of such
controversy, disagreement or dispute shall be conducted in accordance with the
rules then in force of the American Arbitration Association and the decision and
award of the arbitrator so selected shall be binding upon Owner and Manager.
Each party shall be responsible for its respective costs and expenses in
connection with any such arbitration; provided, that the fees and expenses of
the arbitrator and of the American Arbitration Association shall be shared
equally by Owner and Manager.
14.12 Maintenance of Books, Records and Documents.
(a) Until the expiration of four (4) years after the
furnishing of services pursuant to this Agreement, Manager shall, as provided in
Section 952 of the Omnibus Reconciliation Act of 1980 and regulations
promulgated thereunder, make available, upon written request, to the Secretary
of the United States Department of Health and Human Services, or upon request,
to the Comptroller General of the United States, or any of their duly authorized
representatives, this Agreement, and all books, documents and records of Manager
that are necessary to verify the nature and extent of the costs of any services
furnished pursuant to this Agreement for which payment may be made under the
Federal Medicare Program.
(b) If Manager carries out any of the duties of this
Agreement through a subcontract or subcontracts with an aggregate value or cost
of Ten Thousand Dollars ($10,000) or more over a twelve (12) month period with a
related organization, such subcontract or subcontracts shall contain a clause to
the effect that until the expiration of four (4) years after the furnishing of
such services pursuant to such subcontract or subcontracts, the related
organization shall, as provided in Section 952, make available, upon written
request, to the above referenced Federal officials, or any of their duly
authorized representatives, the subcontract or subcontracts, and all books,
documents and records of such organization that are necessary to verify the
nature and extent of the costs of any services furnished pursuant to such
subcontract or subcontracts for which payment may be made under the Medicare
program.
14.13 Senior Debt Agreement. Manager acknowledges that
Multicare will be bound by the terms of (i) a senior debt Agreement (as from
time to time amended, restated, executed, renewed, supplemented or modified in
any manner, the "Senior Debt Agreement") with Mellon Bank, N.A., Citicorp USA,
Inc., First Union National Bank, NationsBank, N.A. and the lenders identified
therein and (ii) the terms
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of certain subordinated indebtedness (the "Subordinated Debt") issued pursuant
to the terms of an indenture, dated August 11, 1997, between Multicare and the
trustee thereunder. Manager agrees that it will not knowingly take action which
would cause Multicare to fail to comply with the terms of the Senior Debt
Agreement or the Subordinated Debt.
14.14 Further Assurances. At any time and from time to time
during the term of this Agreement, at either party's request, each party shall
promptly execute and deliver all such further agreements, certificates,
instruments and documents, including a certificate of Owner in a form reasonably
satisfactory to Manager, stating that this Agreement is in effect with respect
to, and is binding against, Owner, and each party shall perform such further
actions, as the other party may reasonably request in order to fully consummate
the transactions contemplated by this Agreement and carry out the purposes and
intent of this Agreement.
14.15 Certain Definitions.
(a) Affiliate. The term "Affiliate," as used in this
Agreement, means a person that, directly or indirectly, controls or is
controlled by, or is under common control with, the person specified.
(b) Business. The term "Business," as used in this
Agreement, means the collective reference to Facilities and Service Companies.
(c) Facilities. The term "Facilities," as used in
this Agreement, means the collective reference to all of the eldercare
facilities, and the equipment and supplies at such facilities, of Multicare at
the time of merger under the Merger Agreement, subject to the effect of
subsequent acquisitions and dispositions, including as of the date hereof,
without limitation, the facilities set forth on Exhibit A hereto.
(d) GAAP. The term "GAAP," as used in this Agreement,
means generally accepted accounting principles, as in effect in the United
States of America on the date hereof and applied on a basis consistent with the
manner in which such principles were applied in the preparation of the
historical financial statements of Genesis.
(e) Operating Committee. The term "Operating
Committee," as used in this Agreement, means the operating committee of the
Board of Directors of Owner as contemplated by the shareholders' agreement among
the Equity Sponsors.
(f) Person. The term "person," as used in this
Agreement means any individual, sole proprietorship, joint venture, corporation,
business unit, partnership, governmental body, regulatory agency or other entity
of any nature.
(g) Net Revenues. The term "Net Revenues," as used in
this Agreement, means the revenues of the Business after adequate provision for
contractual allowances and adjustments that may be required as a result of
audits or reviews by any rate setting authority, calculated in accordance with
GAAP.
(h) Service Companies. The term "Service Companies,"
as used in this Agreement, means the collective reference to the service
companies, management companies and other businesses of Multicare at the time of
merger under the Merger Agreement, subject to the effect of subsequent
acquisitions
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and dispositions, including as of the date hereof, without limitation, the
companies and businesses set forth on Exhibit A hereto.
(i) SG&A Expense. The term "SG&A Expense," as used in
the Agreement, means the non-extraordinary sales, general and administrative
expenses of the Business determined in a manner consistent with the manner for
making such determination in connection with the preparation of Multicare's
audited financial statements for the year ended December 31, 1996 and unaudited
financial statements for the six months ended June 30, 1997 as contained in
Multicare's Annual Report on form 10-K for the year then ended and Quarterly
Report on form 10-Q for the quarter then ended, respectively. Notwithstanding
the foregoing, third party expenses relating to (i) external auditing, (ii)
third party legal fees and expenses and (iii) public company filings (including
filing fees) shall not be included in SG&A Expense.
14.16 Severability. If any immaterial provision of this
Agreement is construed to be invalid, illegal or unenforceable, then the
remaining provisions hereof shall not be affected thereby and shall be
enforceable without regard thereto.
14.17 Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall
constitute an original hereof, and it shall not be necessary in making proof of
this Agreement to produce or account for more than one original counterpart
hereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed on their behalf their duly authorized representatives, as of the day
and year first above written.
OWNER:
GENESIS ELDERCARE CORP.
By: /s/ George V. Hager, Jr.
--------------------------
Name: George V. Hager, Jr.
Title: Senior Vice President and Chief Financial Officer
MANAGER:
--------
GENESIS ELDERCARE NETWORK
SERVICES, INC.
By: /s/ George V. Hager, Jr.
---------------------------
Name: George V. Hager, Jr.
Title: Senior Vice President and Chief Financial Officer
The undersigned hereby agrees to cause Genesis ElderCare
Network Services, Inc. and its Affiliates, as applicable, to comply with the
provisions of the foregoing agreement and agrees to be liable for any failure of
Genesis ElderCare Network Services, Inc. and its Affiliates, as applicable, to
comply with such provisions.
GENESIS HEALTH VENTURES INC.
By: /s/ George V. Hager, Jr.
--------------------------
Name: George V. Hager, Jr.
Title: Senior Vice President and Chief Financial Officer
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EXHIBIT A
THE MULTICARE COMPANIES, INC. FACILITIES
Academy Manor
American Therapy
Apple Valley
Applewood Nursing & Rehabilitation Center
Arbor Glen Care & Rehabilitation
Center Bel-Aire Quality Care
Belmont Nursing and Rehabilitation Center
Benjamin Health Center Berea Quality Care
Berkshire Healthcare Systems Berkshire Manor
Bethel Nursing & Rehabilitation Center
Boston Center for Rehabilitation
Brightwood Nursing and Rehabilitation
Cantebury of Shepherdstown, Ltd.
Capital City Care4, L.P.
Carehaven of Berkeley
Carehaven of Pleasants
Cedar Ridge Nursing and Rehabilitation
Chardon Quality Care
Chateau Village Nursing & Rehabilitation Center
Cinnaminson Manor Nursing Home
Colchester Health Care
Colonial Hall Nursing & Rehabilitation Center
Colonial House Nursing & Rehabilitation Center
Columbus Nursing and Rehabilitation Center
Columbus Quality Care
Columbus Nursing Care
Concord Pharmacy Services, Inc.
Coolidge House Nursing Care
Center Cortland Quality Care Courtyard Nursing Care Center
Cranbury Nursing and Rehabilitation
Center Dawn View Manor
Deer Park Nursing and Rehabilitation Center
Elmwood Nursing and Rehabilitation Center
Emery Nursing and Rehabilitation Center
Ewing Nursing & Rehabilitation Center
Falmouth Assisted Living Community
Farmington Country Home Care
Farmington Country Manor
Fox Hill Care and Rehabilitation Center
Fremont Quality Care
Glynn Memorial Nursing Home
Goddard Court Goddard House
Goddard House at Brookline
Goddard House in Brookline
Grand Islander Health Care Center
Grandview Nursing Home
Greenbriar Quality Care of Boardman
Groton Regency Nursing and Rehabilitation Center
Hampshire Health Care Center
Harbor House Nursing and Rehabilitation Center
Haverford Nursing and Rehabilitation Center
Heritage at Cleveland Circle
Heritage at Falmouth (ALF)
Heritage at Framingham (ALF)
Heritage at The Falls (ALF)
Heritage at North Andover (ALF)
Heritage at Vernon Court (ALF)
Heritage Nursing Care Center
Hillcrest Nursing Center
Holgate Quality Care
Holly Manor Nursing Home
Holy Trinity Eastern Orthodox NRC
Hopkins House Nursing and Rehabilitation Center
Horizon Mobile, Inc.
Inglemoor Nursing and Rehabilitation Center
Ingleside Nursing and Rehabilitation Center
Institutional Health Care Services
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Jackson Healthcare Center
Jersey Shore Nursing and Rehabilitation Center
Karmenta Healthcare Center
Kent Quality Care Kent Nursing and Rehabilitation Center
Lakeview Nursing and Rehabilitation Center
Laurel Nursing & Rehabilitation Center Laurel Ridge
Nursing and Rehabilitation
Lehigh Manor Lemont Nursing and Rehabilitation Center
Logan Health Village LTC Pharmacy Systems
Luther Ridge Personal Care Center
Madison Nursing and Rehabilitation Center
Main Line Nursing and Rehabilitation Center
Mansfield Center for Nursing and Rehabilitation
Maple Glen at Fair Lawn Nursing and Rehabilitation Center
Marcella Nursing and Rehabilitation Center
Marshfield Nursing & Rehabilitation Center
Mary Ann Morse Nursing Home
Mercerville Nursing and Convalescent Center
Meriden Nursing Home Miletree Health
Care Center Morris Hills Multicare Center
Multicare Home Health of Illinois
Neshaminy Manor New England Pediatric Care
Norwalk Care & Rehabilitation Center
Oak Grove Quality Care Orwigsburg Manor
Palm Manor Nursing Home
Paradise Oaks Quality Care
Pennypack Manor Nursing Home
Pocahontas Continuous Care Center
Point Pleasant Nursing and Rehabilitation
Presbyterian Manor Prescott House Nursing Home
Quakertown Manor Nursing and Convalescent Center
Rainbow Nursing Center
Raleigh Nursing and Rehabilitation Center
Ravenswood Village Health Care
Reservoir Nursing Home
Ridgeland Nursing & Rehabilitation Center
Ridgewood Manor Nursing Home
River Pines Nursing & Rehabilitation Center
Rivershores Nursing & Rehabilitation Center
Roseview Manor Rosewood Nursing and Rehabilitation
Salmon Brook Convalescent Center
Sanatoga Manor Saratoga Manor
Sarah Brayton Nursing Care Center
Schuylkill Manor
Seacoast Nursing and Retirement Center Senior
Source Home Health Senior Source
Sisterville Nursing and Rehabilitation
Skyview Nursing and Rehabilitation Center
Snow Valley Nursing & Rehabilitation Center
Somerset Quality Care
Southern Ocean Nursing and Rehabilitation Center
Summit Ridge Nursing and Rehabilitation Center
Sutton Hill Nursing and Rehabilitation Center
TCI at Quincy Hospital
TCU at Boston University Medical Center
TCU at Brockton Hospital
TCU at Charlton Memorial Hospital TCU at Deaconess Waltham Hospital
TCU at Emerson Hospital TCU at Holy Family
TCU at Jordan Hospital TCU at Lowell General Hospital
TCU at Melrose-Wakefield Hospital
TCU at MetroWest Medical Center - Framingham Union Campus
TCU at MetroWest Medical Center - Leonard Morse Campus
TCU at New England Baptist Hospital
TCU at New England Medical Center
TCU at Norwood Hospital
TCU at Somerville Hospital
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TCU at St. Elizabeth's Hospital of Boston
TCU at St. Vincent Hospital TCU at The Deaconess Hospital
TCU at Winchester Hospital Teays Valley Nursing and Rehabilitation Center
The Commons at The Greenbriar
The Court of Roseview
The Madison Nursing and Rehabilitation Center
The Northwestern Quality Care
The Willows Nursing and Rehabilitation Center
Thornton Hall
Troy Hills Nursing Center
University Commons Nursing Care Center
Valley Health Village
Village at Cabot Park
Village Manor Nursing Home
Waterview Nursing Center
Westford Nursing and Retirement Center
Westwood Health Care Center
White Sulphur Springs Family Care Center
Willard Quality Care
Willow Ridge Nursing and Rehabilitation Center
Willow Manor Nursing Home
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<PAGE>
THE MULTICARE COMPANIES, INC. SERVICE COMPANIES
ADS Apple Valley, Inc.
ADS Apple Valley Limited Partnership
ADS Consulting, Inc.
The ADS Group, Inc.
ADS Hingham Nursing Facility, Inc
ADS Hingham Limited Partnership
ADS Home Health, Inc.
ADS Management, Inc.
ADS Management, Inc.
ADS/Multicare, Inc.
ADS Recuperative Center, Inc.
ADS Recuperative Center Limited Partnership
ADS Senior Housing Inc.
The Apple Valley Limited Partnership
Automated Professional Accounts, Inc.
Care4 L.P. d/b/a Scotchwood Institutional Services
Century Care Management Inc.
CHG Investment Corp., Inc.
Charlton Nursing Care Center Partnership
Compass Health Services, Inc.
Concord Health Group, Inc.
Concord Home Health, Inc.
Concord Pharmacy Services, Inc.
Concord Rehab, Inc.
Courtyard Nursing Care Center Partnership
Encare of Massachusetts, Inc.
Glenmark Associates, Inc.
GMA Construction, Inc.
Health Resources of Farmington, Inc.
Hingham Healthcare Limited Partnership
Horizon Associates, Inc.
Horizon Medical Equipment and Supply, Inc.
Horizon Mobile, Inc.
Horizon Rehabilitation, Inc.
Institutional Health Care Services, Inc.
Multicare AUC., Inc.
Multicare Home Health of Illinois, Inc.
National Pharmacy Service, Inc.
Progressive Rehabilitation Centers, Inc.
The Recuperative Center Limited Partnership
Rose Healthcare, Inc.
Schuylkill Partnership Acquisition Corp.
Senior Source Inc.
Solomont Family Medford Venture, Inc.
Solomont Family Fall River Venture, Inc.
Total Rehabilitation Center, L.L.C.
Tri-State Mobile Medical Services Inc.
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EXHIBIT B
Territories
State County
Connecticut Fairfield
Middlesex
New London
Tolland
Windham
Massachusetts Barnstable
Bristol
Dukes
Essex
Middlesex
Nantucket
Norfolk
Plymouth
Suffolk
Worcester
New Jersey Bergen
Essex
Hudson
Hunterdon
Mercer
Middlesex
Monmouth
Morris
Passaic
Somerset
Sussex
Union
Warren
Ohio All
Illinois All
Pennsylvania Allegheny
Armstrong
Beaver
Butler
Cambria
Clarion
Clearfield
Crawford
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Elk
Erie
Fayette
Forest
Greene
Indiana
Jefferson
Lawrence
McKean
Mercer
Somerset
Venango
Warren
Washington
Westmoreland
Rhode Island All
West Virginia All
Wisconsin All
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EXHIBIT 10.7
STOCK PURCHASE AGREEMENT
This Agreement is made this 9th day of October, 1997, by and among
Genesis Health Ventures, Inc., a Pennsylvania corporation, and/or its designee
pursuant to Section 6.2 hereof (the "Buyer"), The Multicare Companies, Inc., a
Delaware corporation, Concord Health Group, Inc., a Delaware corporation, and
Horizon Associates, Inc., a West Virginia corporation (collectively, the
"Sellers"), and Institutional Health Care Services, Inc., a New Jersey
corporation, Care4, L.P., a Delaware limited partnership, Concord Pharmacy
Services, Inc., a Pennsylvania corporation, Compass Health Services, Inc., a
West Virginia corporation, and Encare of Massachusetts, Inc., a Delaware
corporation (each a "Company" and collectively, the "Companies").
BACKGROUND
WHEREAS, the Sellers and each of the Companies have agreed to sell and
Buyer has agreed to purchase, all of the issued and outstanding capital stock
and limited partnership interests, whichever is applicable, of each of the
Companies on the terms and conditions provided for in this Agreement.
AGREEMENT
NOW, THEREFORE, in order to consummate such transactions and in
consideration of the mutual agreements set forth herein, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE 1. DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, unless otherwise
defined herein or unless the context otherwise requires, the following terms
shall have the following meanings:
"Agreement" means this Stock Purchase Agreement, all schedules hereto
and all amendments, modifications, and supplements hereto.
"Buyer" is defined in the preamble hereto.
"Closing" has the meaning specified in Section 2.2 hereof.
"Closing Date" has the meaning specified in Section 2.2 hereof.
"Company" or "Companies" is defined in the preamble hereto.
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"Encumbrance" means any mortgage, claim, lien, pledge, option, charge,
security interest or other similar interest, easement, judgment or imperfection
of title of any nature whatsoever.
"Material Adverse Effect" means any change or effect that would or
would reasonably be expected to materially and adversely affect the financial
condition, results of operations, assets or business of each of the Companies,
the each of the Sellers, or Buyer and its subsidiaries taken as a whole, as the
case may be.
"Merger Agreement" means the Merger Agreement, dated as of June 16,
1997, by and among Genesis ElderCare Corp. (formerly known as Waltz Corp.), a
Delaware corporation, Genesis ElderCare Acquisition Corp. (formerly known as
Waltz Acquisition Corp.), a Delaware corporation, and The Multicare Companies,
Inc. pursuant to which Genesis ElderCare Acquisition Corp. shall merge with and
into The Multicare Companies, Inc.
"Purchase Price" means Fifty Million Dollars ($50,000,000) to be paid
by Buyer for the Shares in accordance with an allocation to be mutually
determined by the parties.
"Sellers" is defined in the preamble hereto.
"Shares" means all of the outstanding capital stock and limited
partnership interests, whichever is applicable, of each of the Companies.
ARTICLE 2. SALE OF SHARES AND PURCHASE PRICE
Section 2.1 Sale of Shares. On the terms and subject to the conditions
set forth in this Agreement, the Sellers shall cause the sale, transfer and
delivery to Buyer, and Buyer shall purchase, on the Closing Date, all right,
title and interest in and to all of the Shares.
Section 2.2 Closing. The closing of the purchase and sale of the Shares
(the "Closing") shall take place as soon as practicable after the closing under
the Merger Agreement at the offices of Blank Rome Comisky & McCauley, One Logan
Square, Philadelphia, Pennsylvania 19103, or at such other place as shall be
mutually agreeable to the parties hereto (which time and place are designated as
the "Closing Date"), subject to the satisfaction or waiver of the conditions
specified in Article 6; provided, however, that if acceptable to the parties,
the Closing may be effected by facsimile transmission of executed copies of the
documents (including without limitation, this Agreement) delivered at the
Closing and payment of the purchase price specified in Section 2.3 and by
sending original copies of the documents (including without limitation, this
Agreement) delivered at the Closing by reputable overnight delivery service,
postage or delivery charges prepaid, for delivery to the parties at their
respective addresses set forth in Section 9.1 herein by the third business day
following the Closing.
Section 2.3 Purchase Price. On the Closing Date, Buyer shall pay the
Purchase Price for the Shares. Buyer shall pay the Purchase Price, against
delivery of the certificates and the amended limited partnership agreement,
whichever is applicable, for the Shares required by Section 2.4, by wire
transfer of immediately available funds to such accounts as the Sellers shall
designate. The parties agree to allocate the Purchase Price among the Shares in
a manner to be mutually determined by the parties.
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Section 2.4 Delivery of Certificates, Amended Limited Partnership
Agreement.
(i) On the Closing Date, the Sellers and the
Companies shall cause to be delivered to Buyer certificates (with respect to
only those Companies that are corporations) evidencing all of the Shares, duly
endorsed in blank (or in such name as may be designated by Buyer), and
accompanied by stock powers duly executed in blank (or in such name as may be
designated by Buyer), in proper form to transfer all right, title and interest
in and to all Shares to Buyer. Buyer shall have no obligation to purchase any of
the Shares unless the Sellers and the Companies deliver certificates for all of
the Shares.
(ii) On the Closing Date, the Sellers and the
Companies shall cause to be delivered to Buyer an amended limited partnership
agreement (with respect to only those Companies that are limited partnerships)
stating, among other things, that Buyer is the sole limited partner for the
Company that is a partnership on and as of the Closing Date. Buyer shall have no
obligation to purchase any of the Shares unless the Sellers and the Companies
deliver such amended limited partnership agreement.
ARTICLE 3. CERTAIN UNDERSTANDINGS AND AGREEMENTS
Section 3.1 Conduct of Business. From the date of this Agreement to the
Closing Date, the Companies shall, and the Sellers shall cause the Companies to,
conduct their operations according to their ordinary and usual course of
business, to preserve their business organization intact, keep available the
services of their officers and employees and maintain satisfactory relationships
with suppliers, customers and others having business relationships with them.
Section 3.2 Pre-Closing Access to Properties and Records;
Confidentiality. Between the date hereof and the Closing Date, the Companies
shall, and the Sellers shall cause the Companies to, give authorized
representatives of Buyer, reasonable access to the premises, properties,
contracts, books, records and affairs of the Companies (including reasonable
access to the properties of the Companies for the purposes of conducting a Phase
1 environmental assessment of such properties) and will cause the Companies'
officers to furnish such financial, technical and operating data and other
information pertaining to the Companies' businesses as Buyer shall from time to
time reasonably request.
Section 3.3 Reasonable Efforts. Subject to the terms and conditions of
this Agreement, each party shall use all commercially reasonable efforts to
take, or cause to be taken, all actions necessary to consummate the transactions
contemplated by this Agreement. The parties shall cooperate with one another (a)
in determining whether any action by or in respect of, or filing with, any
governmental authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any contracts and (b)
subject to the terms and conditions of this Agreement, in taking such actions or
making any such filings, furnishing information required in connection therewith
and seeking to obtain in a timely fashion any such actions, consents approvals
or waivers.
Section 3.4 Notice of Certain Events. The Companies and, to the extent
known by it, the Sellers shall give notice to Buyer promptly of:
(a) any notice of breach or default received subsequent to the date of
this Agreement, or any instrument or agreement to which the Companies or any of
the Sellers is a party or by which it is bound; or
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(b) any suit, action, proceeding or investigation instituted or, to the
Companies' and the Sellers' knowledge, threatened against or affecting any of
the Sellers or Companies subsequent to the date of this Agreement and prior to
the Closing.
Section 3.5 Section 338(h)(10) Election. With respect to the Buyer's
acquisition of the Shares pursuant to this Agreement, Buyer and the Sellers
shall jointly make a timely election under Section 338(h)(10) of the Internal
Revenue Code of 1986, as amended (the "Code") (and any corresponding elections
under any state or local tax laws) (such elections being hereinafter
collectively referred to as the "338(h)(10) Election"). The Sellers shall
cooperate with Buyer and take such action as may be necessary to cause each of
the Companies to cooperate with Buyer and take any and all action reasonably
necessary or appropriate (including filing such forms, returns, elections,
schedules and other documents as may reasonably be required) to effect and
preserve a timely 338(h)(10) Election in accordance with Code Section 338 and
the applicable regulations thereunder. The allocation of values to the assets of
the Companies shall be in accordance with the allocation set forth in Schedule D
attached hereto. Thereafter, Buyer and the Sellers shall report the sale of the
stock and other equity interests of the Companies pursuant to this Agreement in
a manner which is consistent with the 338(h)(10) Election and shall take no
position contrary thereto or inconsistent therewith in any tax returns in any
discussion with or proceeding before any taxing authority or otherwise. The
Sellers will pay any tax attributable to the making of the Section 338(h)(10)
Election and arising out of a deemed sale of assets as of the Closing.
Section 3.6 Adjustment of Assets. It is the intention of the parties
that the Companies comprise the institutional pharmacy services companies of
Multicare which have generated year to date annualized revenues of $82.3 million
and EBITDAR of $13.4 million. To the extent that (i) any of the Companies are
not included in the institutional pharmacy services companies which generated
such annualized revenues and EBITDAR or (ii) other entities owned by Seller are
included in such annualized revenues or EBITDAR but are not sold to Buyer
hereunder, the parties agree to make appropriate adjustment of the assets sold
hereunder.
Section 3.7 Tax Adjustment. To the extent that any taxes are imposed
upon Seller as a result of the sale of the Companies hereunder, Buyer will pay
to Seller the amount of such taxes when Seller is required to pay such taxes. To
the extent that the sale of Companies hereunder generates tax losses to Seller,
Seller will pay to Buyer the tax savings realized from such tax losses when
Seller receives the benefit from such tax losses.
ARTICLE 4. CONDITIONS TO OBLIGATIONS OF EACH PARTY
The obligations of each party to consummate the transactions
contemplated hereby shall be subject to the fulfillment, at or prior to the
Closing Date, of the following conditions, each of which may be waived by the
parties in writing:
Section 4.1 No Action or Proceeding. No claim, action, suit or other
proceeding shall be pending or threatened by any public authority or person
before any court, agency or administrative body which creates a substantial
likelihood that the consummation of this Agreement or the transactions
contemplated hereby will be restrained, enjoined or otherwise prevented or that
any material damages will be recovered or other material relief obtained as a
result of the transactions contemplated hereby or as a result of any agreement
entered into in connection with, or as a condition precedent to, the
consummation of the transactions contemplated hereby.
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Section 4.2 Compliance with Law. No provision of any applicable law and
no judgment, injunction, order or decree shall prohibit the Closing. There shall
have been obtained any and all permits, approvals and consents of any
governmental body or agency which Buyer or the Sellers may reasonably deem
necessary so that consummation of the transactions contemplated by this
Agreement will be in compliance in all material respects with the applicable
laws.
Section 4.3 Hart-Scott-Rodino Requirements. The waiting periods (as
such may be extended by the governmental agencies involved) applicable to the
consummation of the transactions contemplated hereby under the provisions of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
thereunder shall have expired or have been terminated by the appropriate
governmental agency.
Section 4.4. Regulatory Approvals. Any material approval, permit,
authorization, consent or waiting period of any governmental authority
applicable to (i) the purchase of all of the outstanding shares of common stock,
par value $.01 per share, of Multicare at a purchase price of $28.00 per share
(the "Equity Tender Offer"), (ii) the merger of Genesis ElderCare Acquisition
Corp. with and into Multicare (the "Merger") pursuant to the terms and
conditions of the Merger Agreement or (iii) the ownership or operation by
Multicare, Genesis ElderCare Corp. or Genesis Health Ventures, Inc. of all or a
material portion of the business or assets of Multicare shall have been obtained
or satisfied on terms satisfactory to Genesis ElderCare Corp. in its reasonable
discretion.
ARTICLE 5. TERMINATION
This Agreement may be terminated at any time prior to the Closing Date
as follows:
(a) by mutual consent in writing of the parties hereto;
(b) at any time on or prior to the Closing Date, by either the Buyer,
on the one hand, or the Companies and Sellers, on the other hand, as the case
may be, if the other party(ies) has, in any material respect, breached any
covenant or undertaking contained herein and such breach has not been cured
within thirty days.
ARTICLE 6. MISCELLANEOUS
Section 6.1 Notices. All notices, requests, demands and other
communications hereunder shall be in writing (including telecopy or similar
writing) and shall be given:
If to Buyer:
Genesis Health Ventures, Inc.
148 West State Street
Kennett Square, Pennsylvania 19348
Attention: Michael R. Walker
Telephone: (610) 444-6350
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Facsimile: (610) 444-7438
with a copy to:
Blank Rome Comisky & McCauley
One Logan Square
Philadelphia, Pennsylvania 19103
Attention: Stephen E. Luongo, Esq.
Telephone: (215) 569-5500
Facsimile: (215) 569-5555
If to the Sellers or Companies:
Genesis ElderCare Corp.
148 West State Street
Kennett Square, Pennsylvania 19348
Attention: Michael R. Walker
Telephone: (610) 444-6350
Facsimile: (610) 444-7438
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attention: William E. Curbow, Esquire
Telephone: (212) 455-2000
Facsimile: (212) 455-2502
or to such other address or telecopy number and with such other copies as such
party may hereafter specify for the purpose of notice to the other party. Each
such notice, request, demand or other communication shall be effective (a) if
given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section and evidence of receipt is received or (b) if given by
any other means, upon delivery or refusal of delivery at the address specified
in this Section.
Section 6.2 Assignability; Parties in Interest. This Agreement shall
not be assignable by any of the parties hereto, except that this Agreement shall
be assignable in whole or in part by Buyer to any subsidiary or subsidiaries of
Buyer, provided that no such assignment shall relieve the assignor of its
obligations hereunder. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Except as specifically referred to herein, this Agreement is for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns and nothing in this Agreement is intended to confer, expressly or by
implication, upon any other person any legal or equitable rights, remedies or
claims under or by reason of this Agreement.
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<PAGE>
Section 6.3 Governing Law; Jurisdiction. This Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
Commonwealth of Pennsylvania, without regard to conflicts of laws. In any action
between or among any of the parties, whether arising out of this Agreement or
otherwise, (a) each of the parties irrevocably consents to the exclusive
jurisdiction and venue of the federal and state courts located in the
Commonwealth of Pennsylvania; (b) each of the parties irrevocably waives the
right to trial by jury; (c) each of the parties irrevocably consents to service
of process by first class certified mail, return receipt requested, postage
prepaid, to the address at which such party is to receive notice in accordance
with Section 11.1.
Section 6.4 Counterparts. This Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party shall have
received a counterpart signed by the other party.
Section 6.5 Publicity. The Sellers, the Companies and Buyer agree that
press releases and other announcements with respect to the transactions
contemplated hereby shall be subject to mutual agreement; provided, however,
that Buyer may make such announcements as in the opinion of its counsel, such
party is required to make pursuant to comply with law or the requirements of any
stock exchange or other applicable self-regulatory organization, but in such
event Buyer shall, to the extent practicable, give the Sellers and the Companies
reasonable prior notice and an opportunity to comment on the proposed
announcement.
Section 6.6 Complete Agreement. This Agreement, the exhibits hereto and
the schedules and documents delivered pursuant hereto or referred to herein
contain the entire agreement between the parties hereto with respect to the
transactions contemplated herein and supersede all previous negotiations,
commitments and writings.
Section 6.7 Amendments and Waivers. The parties hereto may (a) extend
the time for the performance of any of the obligations or other acts of the
parties hereto, (b) waive any inaccuracies in the representations and warranties
contained in this Agreement or in any or documents delivered pursuant hereto,
(c) waive compliance with any of the covenants or agreements contained in this
Agreement or (d) amend this Agreement, if and only, in the case of an extension
or amendment, if such action is set forth in a written agreement signed by both
parties, or, in the case of a waiver, if such waiver is signed by the party
against whom the waiver is to be effective.
Section 6.8 Expenses. Except as specifically provided in this
Agreement, each party shall bear the expenses incurred by it in connection with
the transactions contemplated by this Agreement.
Section 6.9 Consents. Notwithstanding anything herein to the contrary,
this Agreement shall not constitute an agreement to assign any contract,
license, lease, commitment or other arrangement if an attempted assignment would
constitute a breach thereof. Whenever such consent is required, the Sellers will
use commercially reasonable efforts to cause such consents to be obtained and
Buyer agrees to cooperate with the Sellers and to enter into any reasonable
arrangement designed to provide for Buyer the benefits under such contracts and
agreements.
Section 6.10 Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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Section 6.11 Severability. Any portion or provision of the Agreement
which is invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining portions or
provisions hereof in such jurisdiction or, to the extent permitted by law,
rendering that or any other portion or provision of the Agreement invalid,
illegal or unenforceable in any other jurisdiction.
Section 6.12 Further Assurances. Each party hereto agrees to execute
any and all documents and to perform such other acts as may be necessary or
expedient to further the purposes of this Agreement and the transactions
contemplated hereby.
Section 6.13. Waiver. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by their respective duly authorized officers as of the
date first above written.
<TABLE>
<CAPTION>
<S> <C>
GENESIS HEALTH VENTURES, INC., THE MULTICARE COMPANIES, INC.
and its designee
By: /s/ George V. Hager, Jr. By: /s/ George V. Hager, Jr.
-------------------------------- ----------------------------------
Name: George V. Hager, Jr. Name: George V. Hager, Jr.
Title: Senior Vice President and Title: Senior Vice President and
Chief Financial Officer Chief Financial Officer
CONCORD HEALTH GROUP, INC. HORIZON ASSOCIATES, INC.
By: /s/ George V. Hager, Jr. By: /s/ George V. Hager, Jr.
-------------------------------- ----------------------------------
Name: George V. Hager, Jr. Name: George V. Hager, Jr.
Title: Senior Vice President and Title: Senior Vice President and
Chief Financial Officer Chief Financial Officer
INSTITUTIONAL HEALTH CARE CARE4, L.P.
SERVICES, INC.
By: Institutional Health Care Services, Inc.,
By: /s/ George V. Hager, Jr. General Partner of Care4, L.P.
-------------------------------- ----------------------------------
Name: George V. Hager, Jr.
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Title: Senior Vice President and By: /s/ George V. Hager, Jr.
Chief Financial Officer ----------------------------------
Name: George V. Hager, Jr.
Title: Senior Vice President and
Chief Financial Officer
CONCORD PHARMACY SERVICES, INC. COMPASS HEALTH SERVICES, INC.
By: /s/ George V. Hager, Jr. By: /s/ George V. Hager, Jr.
-------------------------------- ----------------------------------
Name: George V. Hager, Jr. Name: George V. Hager, Jr.
Title: Senior Vice President and Title: Senior Vice President and
Chief Financial Officer Chief Financial Officer
ENCARE OF MASSACHUSETTS, INC.
By: /s/ George V. Hager, Jr.
--------------------------------
Name: George V. Hager, Jr.
Title: Senior Vice President and
Chief Financial Officer
</TABLE>
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EXHIBIT 10.8
ASSET ACQUISITION AGREEMENT
This Agreement is made this 9th day of October, 1997, by and among
Genesis Health Ventures, Inc., a Pennsylvania corporation, or its designee
pursuant to Section 4.2 hereof (the "Buyer"), The Multicare Companies, Inc., a
Delaware corporation (the "Seller"), and Health Care Rehab Systems, Inc., a
Pennsylvania corporation, Horizon Rehabilitation, Inc., a West Virginia
corporation, Progressive Rehabilitation Centers, Inc., a Delaware corporation,
and Total Rehabilitation Center, L.L.C., a New Jersey limited liability company
(each a "Company" and collectively, the "Companies").
BACKGROUND
WHEREAS, the Seller and the Companies have agreed to sell and Buyer has
agreed to purchase, all of the Assets of each of the Companies on the terms and
conditions provided for in this Agreement;
WHEREAS, all filings required pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended ("HSR Filings"), have been made
in connection with the purchase and sale of the Assets, and early termination of
the applicable waiting period was granted by the Federal Trade Commission and
the Department of Justice on July 7, 1997 with respect to the HSR Filings; and
WHEREAS, any and all permits, approvals and consents of any
governmental body or agency have been obtained which the Buyer, Seller and the
Companies reasonably deem necessary to consummate the transactions contemplated
by this Agreement so as to be in compliance in all material respects with the
applicable laws.
AGREEMENT
NOW, THEREFORE, in order to consummate such transactions and in
consideration of the mutual agreements set forth herein, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE 1. DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, unless otherwise
defined herein or unless the context otherwise requires, the following terms
shall have the following meanings:
"Agreement" means this Asset Acquisition Agreement, all schedules
hereto and all amendments, modifications, and supplements hereto.
"Assets" means all of the Companies' real, personal, mixed, tangible or
intangible property of any nature, including, without limitation, cash,
prepayments, deposits, escrows, accounts receivable, bank accounts, securities,
permits, vehicles, fixed assets, furniture, patents, trademarks, copyrights,
designs, formulae, real property, software, computers, equipment, contract
rights, intangibles, names, goodwill, claims, causes of action and other legal
rights and remedies.
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"Buyer" is defined in the preamble hereto.
"Closing" has the meaning specified in Section 2.2 hereof.
"Closing Date" has the meaning specified in Section 2.2 hereof.
"Company" or "Companies" is defined in the preamble hereto.
"Encumbrance" means any mortgage, claim, lien, pledge, option, charge,
security interest or other similar interest, easement, judgment or imperfection
of title of any nature whatsoever.
"Material Adverse Effect" means any change or effect that would or
would reasonably be expected to materially and adversely affect the financial
condition, results of operations, assets or business of each of the Companies,
the Seller, or the Buyer and its subsidiaries taken as a whole, as the case may
be.
"Merger Agreement" means the Merger Agreement, dated as of June 16,
1997, by and among Genesis ElderCare Corp. (formerly known as Waltz Corp.), a
Delaware corporation, Genesis ElderCare Acquisition Corp. (formerly known as
Waltz Acquisition Corp.), a Delaware corporation, and the Seller pursuant to
which Genesis ElderCare Acquisition Corp. shall merge with and into the Seller.
"Purchase Price" means Twenty-Four Million Dollars ($24,000,000) to be
paid by Buyer for the Assets.
"Seller" is defined in the preamble hereto.
ARTICLE 2. SALE OF ASSETS AND PURCHASE PRICE
Section 2.1 Sale of Assets. On the terms and subject to the conditions
set forth in this Agreement, the Companies shall cause the sale, transfer and
delivery to Buyer, and Buyer shall purchase, on the Closing Date, all right,
title and interest in and to all of the Assets, and Buyer shall assume all of
the liabilities of each of the Companies.
Section 2.2 Closing.
(a) The closing of the purchase and sale of the Assets (the
"Closing") shall take place simultaneous with the execution of this Agreement at
the offices of Blank Rome Comisky & McCauley, One Logan Square, Philadelphia,
Pennsylvania 19103, or at such other place as shall be mutually agreeable to the
parties hereto (which time and place are designated as the "Closing Date");
provided, however, that if acceptable to the parties, the Closing may be
effected by facsimile transmission of executed copies of the documents
(including without limitation, this Agreement) delivered at the Closing and
payment of the purchase price specified in Section 2.3 and by sending original
copies of the documents (including without limitation, this Agreement) delivered
at the Closing by reputable overnight delivery service, postage or delivery
charges prepaid, for delivery to the parties at their respective addresses set
forth in Section 7.1 herein by the third business day following the Closing.
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(b) At the Closing, the Seller and the Companies shall
deliver:
(1) Assets. Possession and control of all of the
Assets including, but not limited to, all
applicable keys, access cards and other
entry devices.
(2) Documents of Transfer. Such bills of sale, deeds,
assignments, releases, endorsements, affidavits, and other instruments and
documents of sale, transfer, assignment and conveyance as may be reasonably
required, in order to lawfully and effectively sell, transfer, assign and convey
to Buyer all right, title and interest in and to all of the Assets, in each case
in form acceptable to Buyer, dated as of the Closing Date, and duly executed
and, if necessary, acknowledged by the Seller and each of the Companies.
Section 2.3 Purchase Price. On the Closing Date, Buyer shall pay the
Purchase Price, against delivery of the Assets, by wire transfer of immediately
available funds to such accounts as the Seller shall designate.
ARTICLE 3. CERTAIN UNDERSTANDINGS AND AGREEMENTS
Section 3.1 Deliveries. The Seller and the Companies shall promptly
deliver to Buyer copies of all documents, instruments, notices, records,
certificates and other items relating to the Assets.
Section 3.2 Bulk Sales Notices. The Seller and the Companies shall (i)
execute and file all bulk sales filings and notices required by law and (ii)
cooperate with Buyer in its compliance with bulk sales laws applicable to it, as
reasonably requested by Buyer.
Section 3.3 Purchase Price Adjustment. To the extent that run rate
revenues or the EBITDA generated by the Assets sold hereunder as of August 31,
1997 vary materially from $19.5 million and $2.7 million, respectively, the
parties agree to make an appropriate adjustment in the purchase price.
Section 3.4 Tax Adjustment. To the extent that taxes in excess of $4.0
million are imposed upon Seller as a result of the sale of the Assets hereunder,
Buyer will pay to Seller the amount by which such taxes exceed $4.0 million when
Seller is required to pay such taxes. To the extent that the sale of Assets
hereunder generates taxes of less than $4.0 million to Seller, Seller will pay
to Buyer the tax savings realized from such taxes being less than $4.0 million
when Seller receives the benefit from such taxes being less than $4.0 million.
ARTICLE 4. MISCELLANEOUS
Section 4.1 Notices. All notices, requests, demands and other
communications hereunder shall be in writing (including telecopy or similar
writing) and shall be given:
If to Buyer:
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Genesis Health Ventures, Inc.
148 West State Street
Kennett Square, Pennsylvania 19348
Attention: Michael R. Walker
Telephone: (610) 444-6350
Facsimile: (610) 444-7438
with a copy to:
Blank Rome Comisky & McCauley
One Logan Square
Philadelphia, Pennsylvania 19103
Attention: Stephen E. Luongo, Esq.
Telephone: (215) 569-5500
Facsimile: (215) 569-5555
If to Seller or the Companies:
Genesis ElderCare Corp.
148 West State Street
Kennett Square, Pennsylvania 19348
Attention: Michael R. Walker
Telephone: (610) 444-6350
Facsimile: (610) 444-7438
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attention: William E. Curbow, Esquire
Telephone: (212) 455-2000
Facsimile: (212) 455-2502
or to such other address or telecopy number and with such other copies as such
party may hereafter specify for the purpose of notice to the other party. Each
such notice, request, demand or other communication shall be effective (a) if
given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section and evidence of receipt is received or (b) if given by
any other means, upon delivery or refusal of delivery at the address specified
in this Section.
Section 4.2 Assignability; Parties in Interest. This Agreement shall
not be assignable by any of the parties hereto, except that this Agreement shall
be assignable in whole or in part by Buyer to any subsidiary or subsidiaries of
Buyer, provided that no such assignment shall relieve the assignor of its
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obligations hereunder. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Except as specifically referred to herein, this Agreement is for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns and nothing in this Agreement is intended to confer, expressly or by
implication, upon any other person any legal or equitable rights, remedies or
claims under or by reason of this Agreement.
Section 4.3 Governing Law; Jurisdiction. This Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
Commonwealth of Pennsylvania, without regard to conflicts of laws. In any action
between or among any of the parties, whether arising out of this Agreement or
otherwise, (a) each of the parties irrevocably consents to the exclusive
jurisdiction and venue of the federal and state courts located in the
Commonwealth of Pennsylvania; (b) each of the parties irrevocably waives the
right to trial by jury; (c) each of the parties irrevocably consents to service
of process by first class certified mail, return receipt requested, postage
prepaid, to the address at which such party is to receive notice in accordance
with Section 7.1.
Section 4.4 Counterparts. This Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party shall have
received a counterpart signed by the other party.
Section 4.5 Publicity. Seller, the Companies and Buyer agree that press
releases and other announcements with respect to the transactions contemplated
hereby shall be subject to mutual agreement; provided, however, that Buyer may
make such announcements as in the opinion of its counsel, such party is required
to make pursuant to comply with law or the requirements of any stock exchange or
other applicable self-regulatory organization, but in such event Buyer shall, to
the extent practicable, give the Seller and the Companies reasonable prior
notice and an opportunity to comment on the proposed announcement.
Section 4.6 Complete Agreement. This Agreement, the exhibits hereto and
the schedules and documents delivered pursuant hereto or referred to herein
contain the entire agreement between the parties hereto with respect to the
transactions contemplated herein and supersede all previous negotiations,
commitments and writings.
Section 4.7 Amendments and Waivers. The parties hereto may (a) extend
the time for the performance of any of the obligations or other acts of the
parties hereto, (b) waive any inaccuracies in the representations and warranties
contained in this Agreement or in any or documents delivered pursuant hereto,
(c) waive compliance with any of the covenants or agreements contained in this
Agreement or (d) amend this Agreement, if and only, in the case of an extension
or amendment, if such action is set forth in a written agreement signed by both
parties, or, in the case of a waiver, if such waiver is signed by the party
against whom the waiver is to be effective.
Section 4.8 Expenses. Except as specifically provided in this
Agreement, each party shall bear the expenses incurred by it in connection with
the transactions contemplated by this Agreement.
Section 4.9 Consents. Notwithstanding anything herein to the contrary,
this Agreement shall not constitute an agreement to assign any contract,
license, lease, commitment or other arrangement if an attempted assignment would
constitute a breach thereof. Whenever such consent is required, the Seller will
use commercially reasonable efforts to cause such consents to be obtained and
Buyer agrees to cooperate with
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the Seller and to enter into any reasonable arrangement designed to provide for
Buyer the benefits under such contracts and agreements.
Section 4.10 Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 4.11 Severability. Any portion or provision of the Agreement
which is invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining portions or
provisions hereof in such jurisdiction or, to the extent permitted by law,
rendering that or any other portion or provision of the Agreement invalid,
illegal or unenforceable in any other jurisdiction.
Section 4.12 Further Assurances. Each party hereto agrees to execute
any and all documents and to perform such other acts as may be necessary or
expedient to further the purposes of this Agreement and the transactions
contemplated hereby.
Section 4.13. Waiver. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by their respective duly authorized officers as of the
date first above written.
THE MULTICARE COMPANIES, INC. GENESIS HEALTH VENTURES, INC.,
or its designee
By: /s/ George V. Hager, Jr. By: /s/ George V. Hager, Jr.
------------------------------ ------------------------------
Name: George V. Hager, Jr. Name: George V. Hager, Jr.
Title: Senior Vice President and Title: Senior Vice President and
Chief Financial Officer Chief Financial Officer
HEALTH CARE REHAB SYSTEMS, INC. HORIZON REHABILITATION, INC.
By: /s/ George V. Hager, Jr. By: /s/ George V. Hager, Jr.
------------------------------ ------------------------------
Name: George V. Hager, Jr. Name: George V. Hager, Jr.
Title: Senior Vice President and Title: Senior Vice President and
Chief Financial Officer Chief Financial Officer
PROGRESSIVE REHABILITATION TOTAL REHABILITATION CENTERS,
CENTER, INC. L.L.C.
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By: /s/ George V. Hager, Jr. By: /s/ George V. Hager, Jr.
------------------------------ ------------------------------
Name: George V. Hager, Jr. Name: George V. Hager, Jr.
Title: Senior Vice President and Title: Senior Vice President and
Chief Financial Officer Chief Financial Officer
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