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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_______________________________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________________________________
VITALINK PHARMACY SERVICES, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 37-0903482
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1250 EAST DIEHL ROAD, SUITE 208
NAPERVILLE, ILLINOIS 60563
(630) 245-4800
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
______________________________________
ROBERT W. HORNER III, ESQ.
VITALINK PHARMACY SERVICES, INC.
ONE RAVINIA DRIVE, SUITE 1240
ATLANTA, GEORGIA 30346
(770) 677-7915
(Name, Address, Including Zip Code, and Telephone Number of Agent for Service)
_________________________________________
COPIES OF COMMUNICATIONS TO:
KARL E. MAY, ESQ.
Buckingham, Doolittle & Burroughs
A LEGAL PROFESSIONAL ASSOCIATION
1375 East Ninth St., Suite 1700
Cleveland, OH 44114
(216) 621-5300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time following the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [___]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [___]
If this form is a post-effective amendment filed pursuant to Rule 462(b)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [___]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [___]
___________________________________________
CALCULATION OF REGISTRATION FEE
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PROPOSED
MAXIMUM PROPOSED
TITLE OF AGGREGATE MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER SHARE (1) OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, par
value $.01 per share 351,318 shares $22.31 $7,837,904.58 $2,375
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(1) The registration fee has been calculated based upon the average of the high
and low prices of the Registrant's Common Stock on October 16, 1997, as
reported on the New York Stock Exchange.
______________________________________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8 (a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8 (a),
MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PROSPECTUS SUBJECT TO COMPLETION DATED OCTOBER ___, 1997
351,318
VITALINK PHARMACY SERVICES, INC.
COMMON STOCK
_____________________________________________
This Prospectus ("Prospectus") relates to 351,318 shares of Common Stock,
par value $.01 per share (the "Common Stock"), of Vitalink Pharmacy Services,
Inc. ("Vitalink" or the "Company"), which have been registered for sale from
time to time by and for the account of the selling shareholders named herein
(the "Selling Shareholders"). The Common Stock was acquired by the Selling
Shareholders on September 30, 1997, in connection with the merger of Home Care
Medical Equipment, Inc., an Oklahoma corporation ("Home Care") with and into
Vitalink Subsidiary, Inc., an Oklahoma corporation and a wholly owned subsidiary
of Vitalink ("Sub"), in accordance with an Agreement and Plan of Reorganization
dated September 8, 1997 ("Agreement of Reorganization").
The Company has been advised by the Selling Shareholders that the Selling
Shareholders, acting as principals for their own accounts, directly, through
agents designated from time to time, or to or through dealers or underwriters
also to be designated, may sell all or a portion of the Common Stock offered
hereby from time to time on terms to be determined at the time of sale. The
aggregate proceeds to the Selling Shareholders from the sale of the Common Stock
sold by the Selling Shareholders pursuant to this Prospectus will be the
purchase price of such shares less any commissions. See "Plan of Distribution."
The Selling Shareholders and any broker-dealers, agents or underwriters that
participate with the Selling Shareholders in the distribution of the Common
Stock may be deemed "underwriters" within the meaning of the Securities Act of
1933, as amended (the "Securities Act"), in which event any commissions received
by such broker-dealers, agents or underwriters and any profit on the resale of
the Common Stock purchased by them may be deemed to be underwriting commissions
or discounts under the Securities Act. Vitalink will not receive any of the
proceeds of any sale of the Common Stock.
The Company has agreed to bear the expenses of preparing and filing this
Prospectus and the Registration Statement of which it forms a part, other than
underwriter's commissions and expenses and brokerage fees, if any, and the fees
and expenses of legal counsel to the Selling Shareholders. See "Plan of
Distribution".
The Company's Common Stock is listed on the New York Stock Exchange
("NYSE") under the symbol VTK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING AN
INVESTMENT IN THE COMMON STOCK OFFERED HEREBY.
_____________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
____________________________________________
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THIS DATE OF THIS PROSPECTUS IS OCTOBER ____, 1997.
No person has been authorized to give any information or to make any
representation not contained or incorporated by reference in this Prospectus,
including any prospectus supplement in connection with the offer contained in
this Prospectus, and, if given or made, such information or representation must
not be relied upon as having been authorized by the Company, the Selling
Shareholders, or any other person. This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
the information herein is correct as of any time subsequent to the date hereof.
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TABLE OF CONTENTS
PAGE PAGE
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Available Information 2 Risk Factors 4
Incorporation of Certain Documents by 2 Selling Shareholders 9
Reference
The Company 3 Plan of Distribution 9
Recent Developments 3 Legal Matters 10
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AVAILABLE INFORMATION
Vitalink is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission") relating to its business, financial position,
results of operations and other matters. Such reports, proxy statements and
other information can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549
and at its Regional Offices located at The Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511, and 7 World Trade Center, New
York, New York 10048. Copies of such material also can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Such reports, proxy statements
and other information can be reviewed through the Commission's Electronic Data
Gathering Analysis and Retrieval (EDGAR) System, which is publicly available
through the Commission's Web site (http://www.sec.gov). The Vitalink common
stock is listed on the NYSE. Such reports, proxy statements and other materials
can also be inspected at the offices of the NYSE at 20 Broad Street, New York,
New York 10005.
Vitalink has filed with the Commission the Registration Statement under the
Securities Act with respect to the Vitalink Common Stock offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission.
For further information with respect to the Company and the Common Stock
covered by this Prospectus, reference is made to the Registration Statement and
to the exhibits relating thereto, which can be inspected at the public reference
offices of the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company
(Commission File No. 1-12729) pursuant to the Exchange Act are incorporated
herein by reference.
1. Annual Report of the Company on Form 10-K for the year ended May 31,
1997 filed on August 29, 1997 and Form 10-K/A filed with the
Commission on September 29, 1997 and October 9, 1997.
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2. Quarterly Report of the Company on Form 10-Q for the quarter ended
August 31, 1997 filed with the Commission on October 15, 1997.
3. All other documents and reports filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date
of this Prospectus and prior to the termination of the offering of the
Common Stock offered hereby shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the dates of
filing of such documents or reports.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. Such documents (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference) are
available, without charge, to any person, including any beneficial owner, to
whom this Prospectus is delivered, upon the request of such person. Requests
for such copies shall be made to Vitalink Pharmacy Services, Inc., One Ravinia
Drive, Suite 1240, Atlanta, Georgia 30343, Attn: Secretary, telephone number
(770) 677-7915.
_____________________________________
This Prospectus, including the information incorporated by reference
herein, includes "forward-looking statements" within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act, and is subject to the
safe-harbor created by such sections. The Company's actual results may differ
significantly from the results discussed in such forward-looking statements.
Certain factors that might cause such differences include, but are not limited
to, the "Risk Factors" described herein.
THE COMPANY
Vitalink provides institutional pharmacy services to nursing facilities and
other institutions. Vitalink directly or through its wholly owned subsidiaries
presently operates 57 institutional pharmacies (including five regional infusion
pharmacies), and other pharmacy related businesses which, among other things,
specialize in pharmaceutical dispensing of individual medications, pharmacy
consulting (drug regimen review of potential medication interaction as well as
regulatory compliance with medication and administration guidelines), infusion
therapy and other ancillary products and services. The Company also provides
parenteral and enteral nutrition products to patients who qualify under Medicare
Part B and bills Medicare directly for these products.
RECENT DEVELOPMENTS
Effective September 30, 1997, Vitalink acquired Home Care Equipment, Inc.,
an Oklahoma corporation ("Home Care") through the merger of Home Care with and
into Vitalink Subsidiary, Inc., an Oklahoma corporation ("Sub"), a wholly owned
subsidiary of Vitalink, with Sub surviving the merger. The merger was completed
in accordance with an Agreement and Plan of Reorganization dated September 8,
1997 ("Agreement of Reorganization"). As a consequence of the merger, each Home
Care shareholder received 702.635 shares of Vitalink common stock for each share
of Home Care common stock owned immediately prior to the effective time of the
merger. Home Care provides infusion therapy, medical equipment and respiratory
services to patients at home throughout Oklahoma, and generates approximately
$4.5 million in annual revenues.
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The Agreement of Reorganization provides for an equity adjustment to be
made within seven months after September 30, 1997. At such time, the former
shareholders of Home Care are required to provide Vitalink with a closing
balance sheet ("Closing Balance Sheet") of Home Care. If the shareholders'
equity on the Closing Balance Sheet is less than $750,000, the shareholders are
required to pay to Vitalink their proportionate share of the shortfall in cash
within 30 days after receipt of the Closing Balance Sheet from Shareholders. If
the shareholders' equity on the Closing Balance Sheet is greater than $750,000,
Vitalink is required to pay the former Home Care shareholders their respective
proportionate share of the excess amount in additional shares of Vitalink common
stock. Any additional shares issued will not have registration rights , and will
not be included in this Registration Statement.
On September 5, 1997, the Company reached a settlement, pending the
fulfillment of certain conditions, of a lawsuit against GranCare, Inc.
("GranCare") to enforce a Non-Competition Agreement that the parties entered
into on February 12, 1997 as part of a transaction whereby the Company acquired
TeamCare, Inc. ("TeamCare"), the institutional pharmacy business of GranCare in
a merger. Under the terms of a Termination and Release Agreement dated September
3, 1997, by and between the Company, GranCare, Manor Care, Inc. ("Manor Care"),
Apollo Management L.P. and Living Centers of America, Inc., GranCare agreed to
pay $18,500,000 to Vitalink in consideration of the cancellation of and
termination of the Non-Competition Agreement.
The Non-Competition Agreement automatically terminates as of the closing of
the merger by and between Living Centers of America, Inc. and GranCare. In the
event that such merger does not close, GranCare may, at its sole discretion,
terminate the Non-Competition Agreement upon payment of the $18,500,000. In any
event, the termination of the Non-Competition Agreement is contingent on the
termination of the Shareholders Agreement. The Shareholders Agreement is
described in the Company's previously filed Form 10-K/A and herein.
On October 15, 1997, Manor Care, which owns approximately 51% of the
outstanding shares of Vitalink common stock, announced that it is exploring
strategic alternatives for its ownership interest in Vitalink, including
mergers, joint ventures or other business combinations. Vitalink's Board of
Directors, in response to Manor Care's decision, has authorized management to
engage the services of an investment banker to review strategic alternatives
available to Vitalink. The fact that Manor Care and Vitalink may explore
strategic alternatives does not mean that any transaction will be effected.
Effective August 1, 1997, Gene E. Burleson resigned as a Director and
Chief Executive Officer as set forth in Exhibit 10.16 to the Company's 10-K
(Separation Agreement and Mutual General Release dated July 24, 1997 between the
Company and Mr. Burleson).
RISK FACTORS
In addition to the other information included or incorporated by reference
in this Prospectus, prospective investors should consider carefully the
following information relating to the Company and the Common Stock before making
an investment in the Common Stock offered hereby.
DEPENDENCE ON KEY CUSTOMERS
Net revenue from Manor Care and its patients (including revenues pursuant
to government reimbursement programs) accounted for approximately 29%, 48% and
49% of total net revenues in fiscal 1997, 1996 and 1995, respectively. In
connection with the GranCare merger, the Company assumed existing pharmaceutical
supply agreements between TeamCare and GranCare to provide pharmaceutical
supplies and services to substantially all of GranCare's nursing facilities.
Included in the Company's net revenues for fiscal 1997 are net revenues from
GranCare facilities and their patients of approximately $20,369,000.
Under various master agreements with Manor Care which were amended on
September 19, 1997 and which are discussed below, the Company may at its option
provide pharmaceutical, consulting and infusion therapy products and services to
any and all nursing facilities owned or operated by Manor Care through at least
September 30, 2003 according to the terms of the agreements and subject to each
patient's right to designate his or her own pharmacy or infusion therapy
provider. Each master agreement, however, may be limited or terminated under
certain circumstances including with respect to any nursing facilities disposed
of by Manor Care. Any material loss of business from Manor Care would have a
material adverse effect on the Company.
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Pursuant to four agreements with Manor Care initially entered into on June
1, 1991, and three of which were amended on September 19, 1997, the Company
provides pharmaceutical products and services, enteral and parenteral therapy
supplies and services, urological and ostomy products, intravenous products and
services and pharmacy consulting services to all facilities operated by Manor
Care. The Company is not restricted from providing similar services to non-Manor
Care facilities. The master agreements for pharmacy services, infusion therapy
services, and pharmacy consulting services have an initial term of eleven years
and four months with an automatic accrual of one additional year as of each
October 1 during the remaining term of such agreements. The pharmacy services
consultant agreement has an initial term of ten years only.
Pursuant to the master agreement for pharmacy services and the master
agreement for infusion therapy services, the Company has the option to provide
pharmaceutical and infusion therapy products and services to all facilities
owned or licensed by Manor Care.
Pursuant to the master pharmacy consulting agreement, the Company provides
pharmacy consultant services to all facilities owned or licensed by Manor Care
that the Company is able to service. Each facility is billed monthly by the
Company based on the number of beds serviced.
Pursuant to the pharmacy services consultant agreement, the Company assists
Manor Care at the corporate level in establishing uniform pharmacy delivery
standards for all of its facilities including those not serviced by the Company.
Manor Care pays the Company an annual fee based on the number of beds operated
by Manor Care.
The Company does not believe that its present contractual arrangements with
Manor Care and GranCare with respect to the length of term are comparable to
those obtainable from third parties. Contracts with nursing facilities not
affiliated with Manor Care or GranCare are generally for a period of one to two
years and are terminable by either party for any reason upon thirty days notice.
Pursuant to certain pharmaceutical supply agreements between TeamCare and
GranCare discussed above, the Company provides and/or has the right to provide
substantially all pharmaceutical supplies and services to substantially all
GranCare nursing facilities and the residents thereof. The agreements referred
to in the prior sentence have a variety of commencement dates and five-year
rolling terms. Depending upon the payor source, either the Company will bill
the payor source directly or the Company will bill the nursing facility, which
will then bill the payor source directly. Any material loss of business from
GranCare would have a material adverse effect on the Company.
ASSUMPTION OF INDEBTEDNESS BY VITALINK AND RESTRICTIONS IMPOSED BY TERMS OF
INDEBTEDNESS
Prior to the Merger of GranCare with and into Vitalink, Vitalink's cash
requirements were provided by operating activities and proceeds from the initial
public offering in March 1992. As a result, Vitalink has effectively had no
third party indebtedness. Upon the consummation of the Merger, Vitalink assumed
approximately $8.5 million of GranCare's debt (consisting of approximately $10.9
million of long-term debt plus current maturities at December 31, 1996 less
approximately $2.4 million of TeamCare debt retired by GranCare prior to the
GranCare merger pursuant to the terms of the Distribution Agreement) and
refinanced or assumed $100 million of the indebtedness represented by the Senior
Subordinated Notes with proceeds from the new $200 million Vitalink Credit
Facility. The Vitalink Credit Facility contains certain covenants that restrict,
among other things, Vitalink's ability to incur additional indebtedness, incur
liens, make investments, pay dividends or make certain other restricted payments
or consummate mergers, acquisitions or asset sales. In addition, the Vitalink
Credit Facility also requires Vitalink to comply with certain financial ratios
and tests, under which Vitalink is required to achieve certain financial and
operating results. Vitalink's ability to meet these financial ratios and tests
may be affected by events beyond its control, and there can be no assurance that
they will be met. In addition, Vitalink's increased leverage could have the
following important consequences to holders of Vitalink common stock: (i) the
cost of obtaining future financing may be increased and the ability to obtain
such financing may be impaired, (ii) a significant portion of Vitalink's
earnings may be dedicated to paying interest on its indebtedness, thereby
potentially decreasing Vitalink's operational flexibility, (iii) Vitalink will
be exposed to interest rate fluctuations, and (iv) the covenants may limit
Vitalink's financial flexibility, including its ability to consummate
acquisitions. Also, in order to obtain a
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third party consent to HRPT, a creditor and landlord of GranCare, that was
required in connection with the Distribution and the GranCare merger, Vitalink
paid a Consent Fee of $10.0 million, which was reimbursed by New GranCare
immediately following the consummation of the Distribution and the GranCare
merger. Vitalink also entered into a limited guaranty of obligations of New
GranCare to HRPT. To support Vitalink's guaranty of New GranCare's obligations,
New GranCare provided an irrevocable letter of credit payable to Vitalink in the
event Vitalink makes any payments under the limited guaranty.
SIGNIFICANT MANOR CARE OWNERSHIP
Manor Care owns approximately 51% of the outstanding Vitalink common stock
and is therefore able to exert substantial control over Vitalink. Pursuant to
the terms of the GranCare merger agreement, Manor Care entered into a
Shareholders Agreement with Vitalink pursuant to which Manor Care agreed, among
other things, that (i) for a period of three years from the date of consummation
of the GranCare merger, the Board will consist of eight directors, and (ii)
Manor Care for a three-year period will vote its shares of Vitalink common stock
in favor of the election of Joel S. Kanter, Robert L. Parker and Gary U. Rolle
(the "GranCare Nominees"), or any successor to any such director designated by a
majority of the then remaining GranCare Nominees, as Vitalink directors. The
remaining four Vitalink directors are affiliates of Manor Care.
In addition, Vitalink has entered into certain agreements with Manor Care,
including (i) an Administrative Services Agreement, pursuant to which Manor Care
provides Vitalink with certain administrative services and (ii) the Master
Agreements referred to above, pursuant to which Vitalink provides institutional
pharmacy services to Manor Care. See "Dependence on Key Customers" above.
Under the terms of the Administrative Services Agreement, Manor Care charges
Vitalink on a favorable marginal cost basis for the services it provides to
Vitalink. It is anticipated that the Administrative Services Agreement will be
terminated within one year following the Merger of GranCare with and into
Vitalink and there can be no assurance that Vitalink will be able to replace
such services either internally or from third parties on an equally favorable
basis. The Master Agreements are of a significantly longer term and have higher
consulting fees than comparable agreements Vitalink has with non-affiliated
third parties. Although Vitalink intends to continue to operate under the
Master Agreements, future agreements for the provision of pharmacy services to
Manor Care may contain terms comparable to those that Vitalink could obtain from
third parties in an arms-length transaction. There can be no assurance that
termination of the existing Master Agreements or the terms of such future
agreements would not have an adverse effect on Vitalink's results of operations.
SHARES OF VITALINK COMMON STOCK ELIGIBLE FOR SALE BY MANOR CARE
Manor Care has announced that it is exploring strategic alternatives for
its approximately 51% interest in the Company. Manor Care said its options
include mergers, joint ventures or other business combination. There are no
assurances that any such transaction will take place. If Manor Care should
dispose of all or a substantial amount of its Vitalink common stock, the
prevailing market price of the Vitalink common stock could be affected. Under
the Shareholders Agreement, Manor Care and Vitalink agree that for a period of
three years after the GranCare merger, Manor Care will not, directly or
indirectly, offer, sell or otherwise dispose of any shares of Vitalink common
stock in a public offering, without the prior written consent of a majority of
GranCare Nominees. The Shareholders Agreement also provides that Manor Care will
not, for a period of three years, transfer an amount of shares of Vitalink
common stock that equals more than 10% of the outstanding Vitalink common stock
to any "person or group" (as such terms are defined in the Section 13(d) and the
relevant rules promulgated under the Exchange Act or any successor provision) (a
"Transferee") unless immediately prior to such transfer such Transferee shall
have agreed to be bound by the terms of the Shareholders Agreement. Private
sales by Manor Care to a Transferee of a number of shares of Vitalink common
stock that is less than 10% of the then total amount of outstanding shares of
Vitalink common stock will not result in the Transferee being required to be
bound by the terms of the Shareholders Agreement. Additionally, during such
three-year period, Manor Care may sell Vitalink common stock in the public
market to the extent permitted by the volume and manner of sale provisions of
Rule 144 promulgated under the Securities Act.
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UNCERTAINTY ASSOCIATED WITH GOVERNMENT REGULATION AND REIMBURSEMENT
Vitalink is subject to extensive federal, state and local regulations and
its pharmacies are required to be licensed by the states in which they are
located. The failure to obtain or renew any required regulatory approvals or
licenses could adversely affect the continued expansion of Vitalink's business
and could prevent it from offering its existing services to patients. Vitalink
cannot predict the extent to which it may be affected by legislative and other
regulatory developments concerning its pharmacies and the health care field
generally. In addition, the long-term care facilities that contract for
services with Vitalink and TeamCare are also subject to federal, state and local
regulations and are required to be licensed by the states in which they are
located. The failure of these institutions to comply with such regulations or to
obtain or renew any required licenses could result in the loss of Vitalink's
ability to provide pharmacy services to their residents.
In addition, the products and services provided by Vitalink are reimbursed
in part by third parties such as Medicare and Medicaid. See "Dependence on
Reimbursement by Third-Party Payors" below. For the year ended May 31, 1996,
approximately 34% of Vitalink's pharmacy service billings were paid by Medicare
Part B and Medicaid and 66% were paid by private individuals, long-term care
facilities that were in part reimbursed by Medicare, and other third party
payors. Reimbursements for Vitalink's products and services from Medicare and
Medicaid are regulated and in some cases limited, including with respect to
reimbursements for services and products provided to affiliates of Vitalink,
such as Manor Care. Changes in the Medicare and Medicaid programs, regulations,
reimbursement procedures, or interpretations of existing programs, regulations
or reimbursement procedures, including changes intended to limit or decrease the
growth of Medicare and Medicaid expenditures, or a failure by Vitalink and/or
its employees to comply with applicable reimbursement regulations, could
adversely affect Vitalink's business. See "Uncertainty Associated with Health
Care Reform" below.
Various federal and state laws provide nursing facility patients with the
freedom to choose their own pharmacy provider. Vitalink markets its services
primarily to nursing facilities and acts as the pharmacy provider to the
patients in such facilities who do not otherwise choose their own provider.
Such patients currently represent an aggregate of over 90% of the patients in
the facilities with which Vitalink contracts. There can be no assurance that
increases in the percentage of patients choosing their own provider or changes
in laws permitting patients to choose their own pharmacy provider will not
adversely affect Vitalink's business.
UNCERTAINTY ASSOCIATED WITH HEALTH CARE REFORM
Health care system reform and concerns over rising Medicare and Medicaid
costs continue to be high priorities for the federal and certain state
governments. Although comprehensive health care reform legislation, including
legislation that would impact Medicare or Medicaid, has not yet been
implemented, pressures to contain costs and initiatives by the current
administration, Congress and various other groups have impacted the health care
delivery system and may continue to do so for the foreseeable future. In
November 1995, Congress passed the 1995 Balanced Budget Act providing for, among
other things, the reshaping of the Medicare and Medicaid legislation. Each of
the legislative proposals offered by President Clinton and Congress provide for
significant reductions in the overall growth rate of Medicare and Medicaid
spending. There is active debate concerning this proposed legislation and the
form of any final legislation signed into law could differ significantly from
current proposals. The impact of currently proposed legislation on Vitalink is
not readily determinable. However, in its currently proposed form, such
legislation could have a material adverse effect on Vitalink's future financial
position, results of operations and cash flows.
In addition, several states are considering various health care reforms,
including reforms through Medicaid managed care demonstration projects. Several
states in which Vitalink or TeamCare operates have applied for, or received,
approval from the U.S. Department of Health and Human Services for waivers from
certain Medicaid requirements that are generally required for such managed care
projects. Although these demonstration projects generally exempt institutional
care, including long-term care facilities and institutional pharmacy services,
no assurance can be given that these waiver projects ultimately will not change
the reimbursement system for long-term care, including pharmacy services, from
fee-for-service to managed care negotiated or capitalized rates. It is not
possible to predict which reforms of the health care system will be adopted and
the effect, if any, the reforms will have on Vitalink's business.
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COMPETITION
The Company competes with numerous local and regional institutional
pharmacies, as well as the pharmacy operations owned by long-term care
providers. These competitors or potential competitors provide product and
service offerings similar to those provided by the Company. Two competitors are
larger and have greater financial resources than the Company. The competition
among pharmacies for long-term care customers and other patients has
intensified in recent years. Institutional pharmacies compete on the basis of
price, quality of service, breadth of service offerings and payment terms. The
Company currently has size, purchasing power, technical capabilities and
financial resources to compete in each of these areas, although there can be no
assurance that technological or market changes, consolidation in the long-term
care and institutional pharmacy industries or intensified competition will not
affect the Company's ability to maintain its current competitive position.
NO ASSURANCE OF SUCCESSFUL INTEGRATION OF ACQUISITIONS
In the past five years, Vitalink has made nine acquisitions of
institutional pharmacy businesses. The successful integration of all of such
acquisitions into Vitalink's operations is critical to Vitalink's future
performance. Potential obstacles to successful integration include, but are not
limited to: (i) cost containment measures; (ii) elimination of redundancies at
the corporate and field level; (iii) consolidation of financial and managerial
reporting functions; (iv) coordination of field managerial activities with
corporate management; (v) achievement of purchasing efficiencies; (vi) retention
and expansion of the customer base so acquired; (vii) rollout of new products
and services to new customers; and (viii) the addition and integration of key
personnel. There can be no assurance that TeamCare or any other past or future
acquisitions will be integrated successfully into Vitalink's operations or will
not have a material adverse effect upon Vitalink's results of operations,
financial condition or prospects. Although Vitalink conducts due diligence in
connection with potential acquisitions and attempts to identify and reject those
acquisitions that do not meet Vitalink's operational objectives, there can be no
assurance that the merger or any other acquisition will result in net sales or
earnings levels that would justify Vitalink's investment therein or the expenses
related thereto or that operational synergies will develop as projected.
DEPENDENCE ON ACQUISITIONS FOR GROWTH
A significant component of Vitalink's historical growth has come through
acquisitions of institutional pharmacy companies, and the success of Vitalink's
growth strategy is dependent on its ability to consummate additional
acquisitions. Vitalink will compete for acquisition candidates with buyers who
may have greater financial and other resources than Vitalink and may be able to
pay higher acquisition prices than Vitalink. No assurance can be given that
Vitalink will be able to identify suitable acquisition candidates or to
consummate desired acquisitions on terms acceptable to Vitalink. To the extent
that Vitalink is unable to acquire institutional pharmacy companies, or to
integrate such acquisitions successfully, its ability to expand its business may
be impaired.
DEPENDENCE ON REIMBURSEMENT BY THIRD-PARTY PAYORS
Vitalink derives, directly or indirectly, a majority of its net sales from
government-sponsored reimbursement programs. Vitalink's net sales and
profitability are, and will continue to be, affected by the efforts of all
payors to contain or reduce the cost of health care by lowering reimbursement
rates, narrowing the scope of covered services, increasing case management
review of service and negotiating reduced contract pricing. Any changes in
reimbursement levels under Medicare, Medicaid or private pay programs, including
managed care contracts, could have a material adverse effect on Vitalink's
results of operations, financial condition and prospects. Changes in the mix of
patients among Medicare, Medicaid and various private pay sources may also
adversely affect Vitalink's results of operations.
RISKS ASSOCIATED WITH INCREASING ROLE OF MANAGED CARE
Although managed care has not been a significant source of revenue for
Vitalink in the past, as managed care assumes an increasingly significant role
in the health care industry, Vitalink's future success will, in part, be
8
<PAGE>
dependent on obtaining and retaining managed care contracts. Competition for
such contracts is intense and, in most cases, will require Vitalink to compete
based on, among other factors, breadth of services offered, pricing, ability to
track and report patient outcomes, cost data, and its ability to provide value-
added pharmacy consulting services. In addition, reimbursement rates under
managed care contracts typically are significantly lower than those paid by
other private third party payors. Although Vitalink has been successful in the
past in obtaining terms that are favorable to Vitalink, there can be no
assurance that Vitalink will retain or obtain such managed care contracts in the
future.
SELLING SHAREHOLDERS
Vitalink has agreed to register the 351,318 shares held by the Selling
Shareholders, as set forth in the table below, pursuant to the provisions of the
Agreement of Reorganization dated as of September 8, 1997 among Vitalink, Sub,
Home Care and the Selling Shareholders. The Selling Shareholders are former
Shareholders of Home Care. The number of Shares which may actually be sold by
the Selling Shareholders will be determined from time to time by the Selling
Shareholders and will depend on a number of factors, including the market price
of the Company's common stock from time to time. The Company has agreed to
maintain the continuous effectiveness of the Registration Statement of which
this Prospectus is a part for a period of not less than one year. The following
table sets forth certain information regarding the beneficial ownership of
common stock by the Selling Shareholders as of October 16, 1997, and the number
of shares of common stock covered by this Prospectus. All information as to
beneficial ownership prior to this offering has been furnished by the respective
Selling Shareholders.
<TABLE>
<CAPTION>
NUMBER OF SHARES BENEFICIALLY OWNED NUMBER OF SHARES OF COMMON
AS OF OCTOBER 16, 1997 STOCK OFFERED HEREBY
NAME OF SELLING SHAREHOLDER NUMBER OF SHARES PERCENTAGE OUTSTANDING
<S> <C> <C> <C>
Al Willingham 167,930 * 167,930
Randy Willingham 167,930 * 167,930
Craig Anson 15,458 * 15,458
</TABLE>
* Indicates less than 1%
Because the Selling Shareholders may sell all or part of their shares no
estimate can be given as to the number of shares that will be held by any
Selling Shareholder upon the termination of any offering made hereby.
PLAN OF DISTRIBUTION
The Common Stock offered hereby are being offered by the respective Selling
Shareholders. The Company will receive no proceeds from the sale of any of the
Common Stock by the Selling Shareholders. The sale of the Common Stock may be
effected by the Selling Shareholders from time to time in transactions in the
over-the-counter market, on the NYSE on other exchanges on which the Common
Stock may be listed, in negotiated transactions, or a combination of such
methods of sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to prevailing market prices or
at negotiated prices. The Selling Shareholders may effect such transactions by
selling the Common Stock to or through broker-dealers, and such broker-dealers
may receive compensation in the form of discounts, concessions or commissions
from the Selling Shareholders and/or the purchasers of the Common Stock for whom
such broker-dealers may act as agents or to whom they sell as principals, or
both (which compensation as to a particular broker-dealer might be in excess of
customary commissions). To the extent required, the number of Common Stock to
be sold, the purchase price, the name of any such agent, dealer or underwriter
and any applicable commissions with respect to a particular offer will be set
forth in an accompanying prospectus supplement. The aggregate proceeds to the
Selling Shareholders from the sale of the Common Stock sold by the Selling
Shareholders hereby will be the purchase price of such Common Stock less any
broker's commissions. In order to comply with the securities laws of certain
states, if applicable, the Common Stock will be sold in such jurisdictions only
through registered or licensed brokers or dealers.
The Selling Shareholders and any broker-dealers, agents or underwriters
that participate with the Selling Shareholders in the distribution of the Common
Stock may be deemed to be "underwriters" within the meaning of the Securities
Act, in which event any commissions received by such broker-dealers, agents, or
underwriters and
9
<PAGE>
any profit on their sale of the Common Stock purchased by them may be deemed to
be underwriting commissions or discounts under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Common Stock may not simultaneously engage in
market making activities with respect to the Common Stock of the Company for a
period of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, each Selling Shareholder will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Rules 10b-6 and 10b-7,
which provisions may limit the timing of purchases and sales of shares of the
Common Stock by the Selling Shareholders.
LEGAL MATTERS
Certain legal matters with respect to the legality of the issuance of the
Common Stock offered hereby will be passed upon for the Company by Buckingham,
Doolittle & Burroughs, A Legal Professional Association, Cleveland, Ohio.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
It is estimated that Vitalink Pharmacy Services, Inc. (the "Company") will
incur the following expenses in connection with the offering of the securities
being registered. All of the amounts shown are estimated except for the
Securities and Exchange Commission registration fee and the NYSE fee, and all of
said amounts will be paid by the Company.
Registration Fee - Securities and Exchange Commission. $ 2,375
NYSE Fee.............................................. $ 1,500
Blue Sky fees and expenses............................ $ 500
Accounting fees and expenses.......................... $10,000
Legal fees and expenses............................... $10,000
Printing.............................................. $ 1,000
Miscellaneous Expenses................................ $ 500
Total............................................ $25,875
Item 15. Indemnification of Directors and Officers.
Vitalink is a Delaware corporation. Reference is made to Section 145 of
the Delaware General Corporation Law (the "DGCL"), which provides that a
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of such corporation), by reason of the fact that such person
is or was a director, officer, employee or agent of the corporation, or is or
was serving at its request in such capacity of another corporation or business
organization against expenses (including attorneys fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with
10
<PAGE>
such action, suit or proceeding if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interest of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that such person's conduct was
unlawful. A Delaware corporation may indemnify officers and directors in an
action by or in the right of a corporation under the same conditions, except
that no indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him or her against the
expenses that such officer or director actually and reasonably incurred.
Reference is also made to Section 102(b)(7) of the DGCL, which permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of the director's fiduciary duty as
a director, except for liability (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from which
the director derived an improper personal benefit.
Article Nine of the Restated Certificate of Incorporation of Vitalink
provides for the elimination of personal liability of a director for breach of
fiduciary duty as permitted by Section 102(b)(7) of the DGCL, and provides that
Vitalink shall indemnify its directors and officers to the full extent permitted
by Section 145 of the DGCL.
Vitalink maintains at its expense, a policy of insurance which insures its
directors and officers, subject to certain exclusions and deductions as are
usual in such insurance policies, against certain liabilities which may be
incurred in those capacities.
Item 16. Exhibits.
Exhibit No. Description
- ----------- -----------
+2.1 Agreement and Plan of Reorganization dated as of September 8, 1997,
between the Company, Vitalink Subsidiary, Inc., Home Care Medical
Equipment, Inc. and the Selling Shareholders.
4.3 Form of certificate for the Company's Common Stock, par value $0.01
per share (filed as Exhibit 4.1 of the Company's Registration
Statement on Form S-1 (Reg. No. 33-43261) and incorporated herein
by reference).
+5.1 Opinion of Robert W. Horner III regarding the legality of the
securities being registered hereby.
23.1 Consent of Robert W. Horner III (included in Exhibit 5.1).
+23.2 Consent of Arthur Andersen LLP.
+24.1 Power of Attorney of Donna L. DeNardo.
+24.2 Power of Attorney of Scott T. Macomber.
+24.3 Power of Attorney of Stewart Bainum, Jr.
+24.4 Power of Attorney of Essel W. Bailey, Jr.
+24.5 Power of Attorney of Joseph R. Buckley.
+24.6 Power of Attorney of Joel S. Kanter.
11
<PAGE>
+24.7 Power of Attorney of James A. MacCutcheon.
+24.8 Power of Attorney of Robert L. Parker.
+24.9 Power of Attorney of James H. Rempe.
+24.10 Power of Attorney of Gary U. Rolle.
*99.1 Vitalink Pharmacy Services, Inc. Master 401(k) Profit Sharing Plan.
*99.2 Vitalink Pharmacy Services, Inc. Amendment to Master 401(k) Profit
Sharing Plan, effective February 15, 1997.
*99.3 Vitalink Pharmacy Services, Inc. Amendment to Master 401(k) Profit
Sharing Plan, effective October 1, 1997.
*99.4 Vitalink Pharmacy Services, Inc. Non-Qualified Retirement Saving
and Investment Plan effective October 1, 1997.
__________________
+ Filed herewith
* To be filed by amendment
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to the registration statement: (i) to include
any prospectus required by Section 10(a)(3) of the Securities Act of 1933,
as amended (the "Securities Act"); (ii) to reflect in the Prospectus any
facts or events arising after the effective date of the Registration
Statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement,; and (iii) to include
any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change
to such information in the Registration Statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
registrant with or furnished to the Securities and Exchange Commission
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 ("Exchange Act") that are incorporated by reference in the
Registration Statement.
(2) that for the purpose of determining any liability under the
Securities Act each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be an
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Act of 1934 (and where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement relating to the
securities offered therein, and the offering of such securities at the time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the provisions described under Item 15 above or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer, or controlling person in connection
with the securities being registered, the Company will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
12
<PAGE>
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in the City of Atlanta, State of Georgia, on this 20th day of
October, 1997.
VITALINK PHARMACY SERVICES, INC.
By: /s/Robert W. Horner III
_________________________________
Robert W. Horner III
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- -----
<S> <C> <C>
* President and Chief Operating October 20, 1997
- ----------------------------- Officer (principal executive officer)
Donna L. DeNardo
* Senior Vice President, Chief October 20, 1997
- ----------------------------- Financial Officer and Treasurer
Scott T. Macomber (principal financial and accounting
officer)
* Chairman of the Board of Directors October 20, 1997
- -----------------------------
Stewart Bainum, Jr.
* Director October 20, 1997
- -----------------------------
Essel W. Bailey, Jr.
* Director October 20, 1997
- -----------------------------
Joseph R. Buckley
* Director October 20, 1997
- -----------------------------
Joel S. Kanter
* Director October 20, 1997
- -----------------------------
James A. MacCutcheon
* Director October 20, 1997
- -----------------------------
Robert L. Parker
* Director October 20, 1997
- -----------------------------
James H. Rempe
* Director October 20, 1997
- -----------------------------
Gary U. Rolle
</TABLE>
* By: /s/ Robert W. Horner III
------------------------
Robert W. Horner III
Attorney-in-Fact
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
+2.1 Agreement and Plan of Reorganization dated as of September 8, 1997,
between the Company, Vitalink Subsidiary, Inc., Home Care Medical
Equipment, Inc. and the Selling Shareholders.
4.3 Form of certificate for the Company's Common Stock, par value $0.01
per share (filed as Exhibit 4.1 of the Company's Registration
Statement on Form S-1 (Reg. No. 33-43261) and incorporated herein
by reference).
+5.1 Opinion of Robert W. Horner III regarding the legality of the
securities being registered hereby.
13
<PAGE>
23.1 Consent of Robert W. Horner III (included in Exhibit 5.1).
+23.2 Consent of Arthur Andersen LLP.
+24.1 Power of Attorney of Donna L. DeNardo.
+24.2 Power of Attorney of Scott T. Macomber.
+24.3 Power of Attorney of Stewart Bainum, Jr.
+24.4 Power of Attorney of Essel W. Bailey, Jr.
+24.5 Power of Attorney of Joseph R. Buckley.
+24.6 Power of Attorney of Joel S. Kanter.
+24.7 Power of Attorney of James A. MacCutcheon.
+24.8 Power of Attorney of Robert L. Parker.
+24.9 Power of Attorney of James H. Rempe.
+24.10 Power of Attorney of Gary U. Rolle.
*99.1 Vitalink Pharmacy Services, Inc. Master 401(k) Profit Sharing Plan.
*99.2 Vitalink Pharmacy Services, Inc. Amendment to Master 401(k) Profit
Sharing Plan, effective February 15, 1997.
*99.3 Vitalink Pharmacy Services, Inc. Amendment to Master 401(k) Profit
Sharing Plan, effective October 1, 1997.
*99.4 Vitalink Pharmacy Services, Inc. Non-Qualified Retirement Saving
and Investment Plan effective October 1, 1997.
__________________
+ Filed herewith
* To be filed by amendment
14
<PAGE>
Exhibit 5.1
October 20, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Vitalink Pharmacy Services, Inc.
Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
I have acted as general counsel to Vitalink Pharmacy Services, Inc. (the
"Company") in connection with the preparation of the Company's Registration
Statement on Form S-3 (the "Registration Statement") filed with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), concurrently herewith. The Registration
Statement relates to the registration under the Securities Act of 351,318 shares
(the "Shares") of the Company's Common Stock, par value $.01 per share.
In connection with rendering the opinion set forth below, I have reviewed
the records of the Company, the minutes of the meetings of the Shareholders and
directors of the Company, and such other records and documents as were
necessary in my judgment to so render the opinion set forth below.
Based upon the foregoing, I am of the opinion that:
1. The Company was duly incorporated and is validly existing under the
laws of the State of Delaware.
2. The Shares have been validly and issued, are fully paid and
nonassessable.
I hereby consent to the filing of this opinion with the Commission as an
Exhibit to the Registration Statement referred to above.
Very truly yours,
/s/ Robert W. Horner III
-----------------------------------------
Robert W. Horner III
Secretary and General Counsel
<PAGE>
Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of
September 8, 1997 among Vitalink Pharmacy Services, Inc., a Delaware corporation
("Vitalink"), Vitalink Subsidiary, Inc., an Oklahoma corporation ("Sub"), Home
Care Medical Equipment, Inc., an Oklahoma corporation ("Home Care"), and Al
Willingham, Randy Willingham, and Craig Anson (individually "Shareholder" and
collectively "Shareholders").
R E C I T A L S:
---------------
WHEREAS, the respective Boards of Directors of Vitalink, Sub and Home Care
have approved the merger of Home Care with and into Sub (the "Merger") with Sub
being the surviving corporation of the Merger and have approved and adopted the
Merger upon the terms and conditions set forth in this Agreement;
WHEREAS, upon consummation of the Merger, the Shareholders of Home Care
will receive shares of Common Stock, par value $0.01 per share, of Vitalink, all
as more particularly described herein;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall be a reorganization described in Section 368(a)(1)(A) and Section
368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the "Code"), and
the regulations thereunder;
WHEREAS, Vitalink, Sub, Home Care and Shareholders desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE 1
THE MERGER
----------
1.01 The Merger.
-----------
(a) The Merger. Upon the terms and subject to the conditions of this
----------
Agreement, Home Care shall be merged with and into Sub in accordance with
the provisions of Section 1081 of the Oklahoma General Corporation Act
("Oklahoma Act"). The separate corporate existence of Home Care shall
thereupon cease, and Sub shall be the surviving corporation of the Merger
(the "Surviving Corporation") and shall continue its existence under the
laws of the State of Oklahoma.
<PAGE>
(b) Effective Time of the Merger. The Merger shall become effective at
----------------------------
11:59 p.m. on September 30, 1997 ("Effective Time").
(c) Certificate of Incorporation. The Certificate of Incorporation of
-----------------------------
Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation and thereafter
may be amended in accordance with its terms and as provided by law.
(d) Bylaws. The Bylaws of Sub as in effect at the Effective Time shall be
------
the Bylaws of the Surviving Corporation.
(e) Directors. The directors of Sub at the Effective Time will be the
---------
directors of the Surviving Corporation until their respective successors
are duly elected and qualified in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation, or until their
earlier resignation or removal, or as otherwise provided by law.
(f) Officers. The officers of Sub at the Effective Time will be the
---------
officers of the Surviving Corporation until their successors are duly
elected and qualified in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation, or until their
earlier resignation or removal, or as otherwise provided by law.
(g) Employees of Home Care. At the Effective Time, the employees of Home
-----------------------
Care shall become employees of Vitalink or Sub. As soon as reasonably
practicable after the Effective Time, Vitalink shall provide employee
benefit plans and arrangements to the former employees of Home Care that
are the same as the employee benefit plans and arrangements of Vitalink or
its subsidiaries as in effect immediately prior to the Effective Time. The
former employees of Home Care shall be credited for their actual years of
service with Home Care for purposes of eligibility, vesting and benefit
accrual. Such employee benefits under the Vitalink medical plan shall not
be subject to any exclusions for any pre-existing conditions, and credit
shall be received for any deductibles or out-of-pocket amounts previously
paid.
2
<PAGE>
ARTICLE 2
CONVERSION OF SHARES; REGISTRATION RIGHTS;
------------------------------------------
AND REGULATORY APPROVALS
------------------------
2.01 Conversion of Shares. As of the Effective Time, by virtue of the
--------------------
Merger and without any action on the part of any holder:
(a) Merger Consideration. Each share of the common stock, par value $1.00
--------------------
per share, of Home Care (each a "Home Care Share" and together the "Home
Care Shares") issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive, and become exchangeable
for 702.635 shares of Vitalink common stock, par value $0.01 per share
("Vitalink Common Stock" or the "Merger Consideration") subject to
adjustment as provided in Section 2.02 below. The Merger Consideration has
been determined based on a price per share of Vitalink Common Stock of
$19.925 ("Stock Price"). The number of shares of Vitalink Common Stock
issued to each Shareholder under this Section 2.01 (a) shall be rounded to
the nearest whole share. At the Effective Time, all Home Care Shares shall
no longer be outstanding, shall be canceled and retired and shall cease to
exist, and each certificate (a "Certificate") formerly representing any of
such Home Care Shares shall thereafter represent only the right to receive
the Merger Consideration.
2.02 Stockholders' Equity Adjustment.
-------------------------------
(a) Within 45 days after Closing, Shareholders shall cause to be prepared
and will provide to Vitalink a preliminary closing balance sheet of Home
Care (the "Preliminary Closing Balance Sheet") together with the source
data that supports each material line item as of the Effective Time,
following the format, and including the line items, as shown on the balance
sheet as of June 30, 1997, attached to the Home Care Disclosure Statement,
which Preliminary Closing Balance Sheet shall set forth the assets
(excluding trade name and service agreements) and the liabilities of Home
Care prepared on a basis consistent with the June 30, 1997 balance sheet
(except as otherwise specifically provided) and reflecting the results of
the physical inventory described below, but shall also include an
adjustment assuming accrual of the income taxes payable on the Accounts
Receivable less all accounts, rents and other payables as of the Closing
Date at a combined federal and state rate of 40%. Home Care and Vitalink
shall select a mutually acceptable inventory management company to perform
a physical inventory of Home Care after the close of business on the day
prior to the Effective Time. Home Care's and Vitalink's representatives
may be present during the performance of such physical inventory.
3
<PAGE>
(b) Within 7 months after Closing, Shareholders shall cause to be prepared
and will provide to Vitalink a closing balance sheet of Home Care (the
"Closing Balance Sheet") together with the source data that supports each
material line item as of the Effective Time, following the format, and
including the line items, as shown on the Preliminary Closing Balance
Sheet, including an adjustment assuming accrual of the income taxes payable
on the Accounts Receivable balance listed on the Closing Balance Sheet less
all accounts, rents and other payables as of the Closing Date at a combined
federal and state rate of 40%. The Closing Balance Sheet's Accounts
Receivable balance shall be adjusted as follows. The Accounts Receivable
balance listed on the Closing Balance Sheet shall only reflect the portion
of the Accounts Receivable balance as of the Closing Date, which has been
collected within the six-month period after the Closing Date.
(c) If the stockholders' equity on the Closing Balance Sheet is less than
$750,000 (the "Target Value"), Shareholders will promptly pay to Vitalink
such shortfall by paying their proportionate share of the shortfall in cash
within 30 days after receipt of the Closing Balance Sheet from
Shareholders. If the stockholders' equity on the Closing Balance Sheet is
greater than the Target Value, Vitalink will pay the Shareholders their
respective proportionate share of such excess amount in additional shares
of Vitalink Common Stock valued at the Stock Price within 30 days of
receipt of the Closing Balance Sheet by Vitalink.
(d) In the event Vitalink disputes any item on the Preliminary Closing
Balance Sheet or disputes the Accounts Receivable balance on the Closing
Balance Sheet, Shareholders must be notified of such dispute within 25 days
of receipt by Vitalink of the respective Preliminary Closing Balance Sheet
or the Closing Balance Sheet, and such dispute shall be resolved by
submitting the issue to a mutually acceptable independent accountant whose
determination, which shall be issued within 30 days of submission, shall be
final, and binding on Vitalink and Shareholders. Vitalink shall pay one-
half and the Shareholders shall pay one-half of the accounting expenses
incurred in connection with the resolution of such dispute.
(e) The number of shares of Vitalink Common Stock issued to each
Shareholder under this Section 2.02, if any, shall be rounded to the
nearest whole share.
(f) Except with respect to the Accounts Receivable balance, the inventory
balance and the accrual of income taxes, the Preliminary Closing Balance
Sheet and the Closing Balance Sheet shall be prepared in accordance with
the generally acceptable accounting principles.
(g) Notwithstanding anything in this Agreement to the contrary, the sole
remedy of Vitalink or Sub with respect to the collection of the Accounts
Receivable
4
<PAGE>
as of the Closing Date will be the Stockholder's Equity Adjustment provided
in this Section 2.02.
2.03 Securities Laws Representations. Each of the Shareholders represents
--------------------------------
and agrees that:
(a) The Vitalink Common Stock being issued in the Merger has not been
registered under the Securities Act of 1933 ("Securities Act") or any
applicable state securities laws, and, therefore, cannot be resold,
pledged, assigned or otherwise transferred unless such shares are
subsequently registered under the Securities Act and under any applicable
state securities laws or unless an exemption from registration is
available. Stop-transfer instructions to that effect will be in effect
with respect to the Vitalink Common Stock acquired by each Shareholder.
This paragraph (a) constitutes written disclosure by Vitalink and Sub to
each Shareholder of the limitations on the resale of the Vitalink Common
Stock.
(b) The shares of Vitalink Common Stock that are being acquired by such
Shareholder in exchange for his Home Care Shares are being and will be
acquired for himself and not for other persons and are not being and will
not be acquired with a view to the transfer or distribution thereof, except
to the extent permitted by the Securities Act and the rules and regulations
thereunder, and each Shareholder has no present intention of selling or
otherwise distributing such shares of Vitalink Common Stock, except any
that may be sold pursuant to the Registration Statement contemplated by
Section 2.04(a).
(c) None of the shares of Vitalink Common Stock to be received by him in
the Merger will be sold, pledged, transferred or otherwise disposed of by
or through such Shareholder in violation of the registration requirements
of the Securities Act or any state securities laws.
(d) The certificates representing the shares of Vitalink Common Stock to
be issued, sold, exchanged, transferred, and delivered to the Shareholder
pursuant to this Agreement shall bear a restrictive legend in substantially
the following form, provided that such legend shall not be required if such
disposition is being made in connection with the Registration Statement or
in connection with a sale which is exempt from registration pursuant to
Rule 144 of the Securities Act and any applicable state securities law or
of an opinion of counsel satisfactory to Vitalink to the effect that
neither such legend nor the restriction on transfer set forth in this
Agreement are required to ensure compliance with the Securities Act, and an
appropriate stop transfer order will be placed against the transfer of the
share certificates with the transfer agent of such shares:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act") or any applicable state securities laws and may not
be sold, transferred or assigned, and the issuer is not required
5
<PAGE>
to give effect to any attempted sale, transfer or assignment, except
(i) pursuant to a current or then effective registration statement
under the Securities Act; (ii) in a transaction permitted by Rule 144
under the Securities Act and as to which the issuer has received
reasonably satisfactory evidence of compliance with the provisions of
Rule 144; or (iii) upon receipt of a legal opinion reasonably
acceptable to the issuer to the effect that the transaction does not
require registration under the Securities Act, or other evidence
reasonably satisfactory to the issuer, that such registration is not
required."
(e) The Shareholder has had access to all material information, including,
without limitation, the Vitalink Reports (as defined in Section 4.06),
concerning Vitalink which the Shareholder deems necessary or advisable in
order to evaluate the risks and merits of acquiring the Vitalink Common
Stock to be issued to the Shareholder under this Agreement. Vitalink has
made available to the Shareholder the opportunity to ask questions and
receive answers concerning the terms and conditions of the transactions
contemplated by this Agreement and to obtain additional information which
Vitalink possesses or could acquire without unreasonable effort or expense
that is necessary to verify the accuracy of the information furnished under
this Agreement and has obtained such additional information. Each
Shareholder acknowledges that such copies of the Vitalink Reports contain
lists of exhibits that were filed therewith and that Vitalink has made such
exhibits available to each Shareholder upon his written request.
(f) The Shareholder has such knowledge and experience in financial and
business matters that the Shareholder is capable of evaluating the merits
and risks of acquiring the Vitalink Common Stock.
(g) The Shareholder understands and has the ability to bear the economic
risk of investment in the Vitalink Common Stock for an indefinite period of
time because such shares have not been registered under the Securities Act
and, therefore, cannot be sold unless they are subsequently registered
under the Securities Act or an exemption from registration is available.
(h) Randy Willingham and Al Willingham are "accredited investors" as
defined in Regulation D, 17 C.F.R. (S) 230.501(a) under the Securities Act.
2.04 Registration of Vitalink Common Stock.
--------------------------------------
(a) As soon as reasonably practicable (but in any event, not later than
twenty (20) days after the Closing of the Merger, Vitalink shall file a
registration statement under the Securities Act on Form S-3 ("Registration
Statement") to register all of the shares of
6
<PAGE>
Vitalink Common Stock issued in connection with the Merger to permit sale
or transfer of the shares of Vitalink Common Stock by the Shareholders or
by their Permitted Transferees in non-underwritten transactions, including
open market or private transactions which may be with or through a broker-
dealer or agent, hedging transactions, loan transactions or other
transactions from time to time. Vitalink shall cause the Registration
Statement to become effective under the Securities Act as soon as
reasonably practical after the filing of the Registration Statement and to
maintain the effectiveness of the Registration Statement under the
Securities Act for a period of not less than one year following the date on
which the Registration Statement becomes effective or until the intended
distribution of the shares of Vitalink Common Stock is completed, whichever
occurs first. Vitalink shall also use its best efforts to register or
qualify the shares of Vitalink Common Stock for public sale under the
securities or blue sky laws of the state of principal residence of each
Shareholder, if such registration or qualification is necessary; provided,
however, that Vitalink shall not be required to qualify to do business as a
foreign corporation or otherwise to subject itself to taxation therein or
to file any general consent to service of process in any state.
(b) For so long as the Registration Statement is effective, Vitalink shall
use its best efforts to maintain its eligibility to use Form S-3. If,
during the effectiveness of the Registration Statement, an event should
occur which, in the reasonable opinion of Vitalink's counsel, makes the
prospectus included in the Registration Statement contain an untrue
statement of material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, after notice is given by Vitalink to the Shareholders of the
occurrence of such event, the Shareholders shall make no further sales or
other dispositions, or offers therefor, of the shares of Vitalink Common
Stock until the Shareholders receive from Vitalink copies of a new, amended
or supplemented prospectus complying with the Securities Act. Vitalink
shall keep the Shareholders fully informed as to the status of its efforts,
which shall be prompt and diligent, to cause such new, amended or
supplemented prospectus to be available for use by the Shareholders.
(c) Vitalink shall provide to the Shareholders the number of prospectuses
relating to the shares of Vitalink Common Stock as the Shareholders shall
reasonably request to enable Shareholders to comply with the applicable
prospectus delivery requirements under the Securities Act and shall at all
times keep Shareholders informed about the status of the Registration
Statement, including any comments relating thereto from the SEC, any
proposed amendment or any other matters related to the Registration
Statement or the effectiveness thereof.
(d) Vitalink shall bear all expenses of any registration except that the
Shareholders shall bear the underwriter's commissions and expenses and
brokerage fees, if any, with respect to Vitalink Common Stock sold by the
Shareholders and the fees and expenses of legal counsel to the
Shareholders.
7
<PAGE>
(e) The Shareholders and any Permitted Transferee then holding shares of
Vitalink Common Stock included or to be included in the Registration
Statement (herein "Other Holders") shall furnish Vitalink as promptly as
possible such information as may be reasonably requested from them by
Vitalink in connection with any Registration Statement filed pursuant
hereto and shall cooperate with Vitalink to the extent that it may be
reasonably required in order to cause any Registration Statement or any
amendment thereto to become effective.
(f) In connection with any Registration Statement filed pursuant to this
Section 2.04, each Shareholder and each Other Holder shall and hereby
agrees to severally indemnify and hold harmless Vitalink, its officers and
directors and the other shareholders and each Other Holder from and against
any and all losses, liabilities, claims, damages and expenses (including,
but not limited to, reasonable costs of investigation, counsel fees,
interest and penalties) arising out of or based upon any untrue statement
of a material fact in any writing furnished by such Shareholder or such
Other Holder for use in any such Registration Statement or by such
Shareholder's or such Other Holder's failure to furnish a material fact
pertaining to such Shareholder or such Other Holder and required to be
stated therein or necessary to make the statements therein not misleading.
Similarly, Vitalink shall indemnify and hold harmless the Shareholders or
such Other Holder from and against any and all such losses, liabilities,
claims, damages and expenses (including reasonable costs of investigation
and counsel fees) arising out of or based upon any untrue statement of a
material fact in any such Registration Statement or by its failure to
include in any such Registration Statement a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such liability arises out of or is based on any such
untrue statement or omission in any writing furnished to Vitalink by the
Shareholder, or the Other Holders for use therein.
(g) For purposes of this Section 2.04, Vitalink Common Stock means and
includes the Vitalink Common Stock issued at the Effective Time pursuant to
Section 2.01(a) (without any adjustment pursuant to Section 2.02) and any
securities issued or issuable with respect to the Vitalink Common Stock by
way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise.
(h) For purposes of this Agreement, the term Permitted Transferee shall
mean (a) spouses or family members of the Shareholders; trusts created by
the Shareholders for the benefit of the Shareholders or for the benefit of
family members of the Shareholders; or a corporation, partnership or
limited liability company, all of the capital stock or interests of which
is owned by the Shareholders, family members or their spouses; or (b)
pledgees of the shares of Vitalink Common Stock as security.
8
<PAGE>
For purposes of this Agreement, "family members" shall mean lineal or
adopted descendants of the Shareholders.
(i) Upon the sale of Vitalink Common Stock by Shareholders pursuant to an
effective registration statement or upon the expiration of the holding
period provided in Rule 144 in effect at the time of the transfer, Vitalink
shall instruct its transfer agent to permit said transfer, and shall
further cause Vitalink to remove, or cause to be removed, the legend
referred to in Section 2.03(d), with respect to the shares being
transferred under this provision and provided that for any shares which are
not transferred and continue to be restricted under federal and state
securities laws, Vitalink shall place a restrictive legend as provided in
Section 2.03(d) on the certificates for said shares.
2.05 Regulatory Approvals
--------------------
(a) As to Vitalink and Sub. Vitalink and Sub shall use their best efforts
----------------------
to obtain or satisfy, on or prior to Closing, all licenses, authorizations,
approvals, consents, certificates or other requirements of any governmental
department, bureau or agency or other board or authority necessary for the
execution and delivery by Vitalink and Sub of this Agreement, or any other
documents contemplated hereby, or for consummation by Vitalink and Sub of
the transactions contemplated herein.
(b) As to Shareholders and Home Care. Shareholders and Home Care shall
---------------------------------
use their best efforts to obtain or satisfy, on or prior to Closing, all
licenses, authorizations, approvals, consents, certificates or other
requirements of any governmental department, bureau or agency or other
board or authority necessary for the execution and delivery by Shareholders
and Home Care of this Agreement, or any other documents contemplated
hereby, or for the consummation by Shareholders and Home Care of the
transactions contemplated herein.
ARTICLE 3
CLOSING
-------
3.01 Closing; Closing Date.
----------------------
(a) Closing. Provided that all terms and conditions hereof required to be
-------
satisfied at or prior to Closing have been satisfied, or satisfaction
thereof have been waived by the party entitled to require satisfaction
thereof, the closing of the transactions contemplated hereby ("Closing")
shall take place at Crowe & Dunlevy, A Professional Corporation, 1800 Mid-
America Tower, 20 North Broadway, Oklahoma City, Oklahoma 73102, on
September 30, 1997, unless another date and place of Closing is agreed to
in writing by the parties. The date and time of the Closing are referred
to herein as the "Closing Date". The "Closing" shall mean the deliveries
to
9
<PAGE>
be made by Vitalink, Sub, Home Care and Shareholders on the Closing Date in
accordance with the provisions of this Agreement.
At the Closing, Vitalink, Sub, Home Care and Shareholders shall cause the
Certificate of Merger to be filed in accordance with the provisions of the
Oklahoma Act and shall take any and all other lawful actions, and do any and all
other lawful things, necessary to effect the Merger and to enable the Merger to
become effective as of the Effective Time.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF VITALINK AND SUB
-------------------------------------------------------------
Except as disclosed in a letter (the "Vitalink Disclosure Letter")
delivered to Home Care and Shareholders prior to this execution of this
Agreement, Vitalink and Sub severally represent, warrant and covenant to Home
Care and Shareholders that:
4.01 Organization and Corporate Authority of Vitalink. Vitalink is a
------------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has all requisite power and authority to enter into the
Agreement and to consummate the transactions contemplated hereby. The Agreement
and all other agreements to be executed by Vitalink in connection herewith have
been, or upon execution will have been, duly executed and delivered by Vitalink,
have been effectively authorized by all necessary action, corporate or
otherwise, and constitute, or upon execution will constitute, legal, valid and
binding and enforceable obligations of Vitalink and no other consents or
approvals are needed or necessary.
4.02 Organization and Corporate Authority of Sub. Sub is a corporation
--------------------------------------------
duly organized, validly existing and in good standing under the laws of Oklahoma
and has all requisite power and authority to enter into the Agreement and to
consummate the transactions contemplated hereby. The Agreement and all other
agreements to be executed by Sub in connection herewith have been, or upon
execution will have been, duly executed and delivered by Sub, have been
effectively authorized by all necessary action, corporate or otherwise, and
constitute, or upon execution will constitute, legal, valid and binding and
enforceable obligations of Sub and no other consents or approvals are needed or
necessary.
4.03 Authorized Shares. The shares of Vitalink Common Stock to be issued
------------------
to Shareholders under this Agreement have been duly authorized and when issued
pursuant to this Agreement will be validly issued, fully paid and nonassessable.
4.04 Capitalization of Sub. The authorized capital stock of Sub consists
----------------------
of 100 shares of Sub common stock ("Sub Common Stock"), par value $1.00 per
share, all of which are validly issued and outstanding. All of the issued and
outstanding Sub Common Stock of Sub is, and at the Effective Time will be, owned
by Vitalink. There are no outstanding or
10
<PAGE>
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
Sub to issue, sell or otherwise cause to become outstanding any of its capital
stock. There are no outstanding or authorized stock appreciation, phantom stock,
profit participation or similar rights with respect to Sub. There are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting of the capital stock of Sub.
4.05 Agreement Not in Breach of Other Instruments. Neither the execution,
---------------------------------------------
delivery, or performance of the Agreement by Vitalink and Sub or any other
agreement contemplated hereby, nor the consummation of the transactions
contemplated hereby or thereby and the fulfillment of the terms hereof by
Vitalink or Sub will (a) conflict with, result in a breach of any of the terms
of, constitute a default under, or require the consent of any other party to,
any agreement or instrument to which Vitalink or Sub is a party or is subject
to; (b) constitute a violation of any judgment, code, law, decree, order or
award of any court, governmental body or arbitrator, or any law, rule or
regulation applicable to Vitalink or Sub; or (c) violate Vitalink's or Sub's
Certificate of Incorporation or Bylaws.
4.06 Financial Statements and Reports. Vitalink has delivered to Home
--------------------------------
Care and each Shareholder, each registration statement, report, proxy statement
or information statement prepared by it pursuant to the Securities Act and the
Securities Exchange Act of 1934, since May 31, 1996 (including exhibits, annexes
and any amendments thereto), including, without limitation, its (i) Annual
Report on Form 10-K for the year ended May 31, 1997; (ii) Annual Report on Form
10-K for the year ended May 31, 1996; (iii) definitive proxy statement dated
August 28, 1996; and (iv) quarterly reports on Form 10-Q for the quarters ended
August 31, 1996, November 30, 1996 and February 28, 1997 (collectively,
including any filings not specifically named, the "Vitalink Reports"). As of
their respective dates, the Vitalink Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. Each of the consolidated
balance sheets included in or incorporated by reference into the Vitalink
Reports (including the related notes and schedules) fairly presents the
consolidated financial position of Vitalink and its subsidiaries as of its date
and each of the consolidated statements of income, cash flows and changes in
stockholders' equity included in or incorporated by reference into the Vitalink
Reports (including any related notes and schedules) fairly presents the results
of operations, retained earnings, cash flows and changes in stockholders'
equity, as the case may be, of it and its subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to notes and normal year-
end audit adjustments that will not be material in amount or effect), in each
case in accordance with generally accepted accounting principles consistently
applied during the periods involved, except as may be noted therein. To the
best of their knowledge, Vitalink's executive officers have disclosed to Home
Care all facts relating to the Vitalink and its operations and assets material
to the transactions contemplated by this Agreement. No representation or
warranty made by Vitalink in this Agreement and in any certificate furnished to
Home Care or the Shareholders pursuant to this
11
<PAGE>
Agreement and in the Vitalink Disclosure Letter contains or as of the Closing
Date will contain any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading. The representations and warranties made herein are made by Vitalink
with the knowledge and expectation that Home Care and the Shareholders are
placing reliance thereon.
4.07 No Pending Action. There is no action, suit or proceeding pending
-----------------
or, to Vitalink's knowledge, threatened, against Vitalink seeking to prevent or
postpone the consummation of any of the transactions contemplated by this
Agreement, or which is likely to materially adversely affect the ability of
Vitalink to perform its obligations pursuant to this Agreement or to carry on
its business and operations as they are currently conducted.
4.08 No Violation of Law. Vitalink and Sub have not violated and are not
--------------------
now in violation of any ordinance, statute or law of any government or any rule
or regulation issued thereunder, including but not limited to the Medicare and
Medicaid fraud and abuse provisions of the Social Security Act, the Civil
Monetary Penalties law of the Social Security Act, or any other federal or state
law, statute, rule or regulation relating to Vitalink or Sub or their business
operations, which may have a material adverse effect on the financial
conditions, results of operation business or prospects (a "Material Adverse
Effect") of Vitalink and Vitalink and Sub have not received any notice of any
such violation.
4.09 Reorganization. Vitalink, Sub and their respective executive
---------------
officers have not taken or agreed to take any actions as of the date of this
Agreement and as of the Closing Date, will not take or agree to take any
actions, whether before or after the Closing, and do not have any actual
knowledge of any fact or circumstance, that would prevent the Merger and the
other transactions contemplated by this Agreement from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
4.10 Effect. All of the preceding representations and warranties, except
-------
for those that by their terms relate to a specific period of time, shall be
true, correct and complete as of the date of this Agreement and as of the
Closing Date and shall survive the Closing as set forth in Section 10.05.
ARTICLE 5
SHAREHOLDERS' REPRESENTATIONS, WARRANTIES AND COVENANTS
-------------------------------------------------------
Except as disclosed in a letter (the "Home Care Disclosure Letter")
delivered to Vitalink prior to the execution of this Agreement, Home Care and
each Shareholder severally represents, warrants, and covenants to Vitalink and
Sub as follows:
5.01 Organization and Good Standing. Home Care is a corporation duly
------------------------------
organized and validly existing and in good standing under the laws of the State
of Oklahoma. Home Care is authorized to conduct, and in fact conducts, business
in the State of Oklahoma and in
12
<PAGE>
no other state. Home Care has full corporate power to carry on its business as
it is now conducted, and is entitled to own and operate the properties it
presently owns. Home Care does not, in whole or in part, own, either directly,
indirectly or beneficially, any other corporation, partnership, joint venture or
other entity.
5.02 Financial Statements.
---------------------
(a) Attached to the Home Care Disclosure Letter are copies of Home Care's
income tax cash basis balance sheets and income statements for the year
ended December 31, 1996 and the six-month period ending June 30, 1997 (the
"Financial Statements"), which have been adjusted to reflect accruals of
income and expenses (other than income taxes) as if Home Care were an
accrual method taxpayer. The balance sheet at June 30, 1997 shall be
hereinafter known as the "Balance Sheet." The Financial Statements fairly
present the financial condition and results of operations of Home Care at
the relevant dates thereof and for the periods covered thereby based on the
methods by which such Financial Statements were prepared.
(b) Since June 30, 1997, there has not been (i) any material adverse
change in the condition (financial or otherwise) of Home Care; (ii) any
material adverse change in or to the assets or liabilities of Home Care;
(iii) any material transaction by Home Care not in the normal course of
business; (iv) any material modification or termination of any Contract of
Home Care; (v) any new material Contract or commitment by Home Care
(whether in effect at present or in the future) which cannot be terminated
without penalty upon thirty (30) days notice; or (vi) any other event or
condition of any character which has had or may have a Material Adverse
Effect on Home Care.
(c) The business inventory reflected in the Balance Sheet consists of good
and usable, salable or rentable items owned by Home Care, being held for
resale or rental by Home Care in the normal course of business, or items
which are owned and directly used by Home Care in preparing products for
resale or rental (such as packaging material).
5.03 Authority.
---------
(a) Each Shareholder has the full and sole right, power and authority to
enter into and carry out their obligations under the Agreement and is
competent and under no legal restraint. This Agreement and all other
documents to be executed by each Shareholder in connection herewith,
whether at Closing or otherwise, have been (or upon execution will have
been) duly executed and delivered by each Shareholder, and constitute (or
upon execution will constitute) legal, valid and binding and enforceable
obligations of each Shareholder and no other consents or approvals are
needed or necessary.
13
<PAGE>
(b) This Agreement and the Merger and the execution, delivery and
performance by Home Care of this Agreement and of each other document to be
executed and delivered by Home Care in connection with the provisions of
this Agreement, have been duly and validly authorized and approved by all
necessary action on the part of Home Care, including the Board of Directors
of Home Care and the Shareholders. Upon execution, this Agreement will
constitute a legal, valid and binding agreement of Home Care enforceable
against Home Care in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
5.04 Capitalization. The authorized capital stock of Home Care consists
--------------
of 500 shares of common stock, par value $1.00 per share (the "Capital Stock").
All of the shares of Capital Stock are issued and outstanding (each a "Home Care
Share" and together the "Home Care Shares"). All of the Home Care Shares are
(i) duly authorized, validly issued and fully paid and non-assessable, and (ii)
owned by Shareholders, free and clear of all liens, claims, pledges, proxies,
restrictions, security interests, equities and other encumbrances whatsoever as
indicated by the following schedule:
Shareholder Number of Shares
----------- ----------------
Al Willingham 239
Randy Willingham 239
Craig Anson 22
---
Total Shares Outstanding 500
There are no, and shall at Closing be no, options, warrants, rights, calls
commitments or agreements of any character relating to the issued and
outstanding Home Care Shares, and there are no outstanding securities or other
instruments convertible into or exchangeable for the Home Care Shares or the
Capital Stock and no commitments to issue such securities or instruments.
5.05 Tax Return and Taxes. Attached to the Home Care Disclosure Letter
--------------------
are the federal, state and local income tax returns for Home Care's last three
tax years which contain, in all material respects, true, complete and accurate
information as may be required by such returns. Home Care has timely filed all
federal, state and local tax returns which it is required to file, and has made
all required quarterly income tax payments. Home Care is not subject to, nor,
to the best of Shareholders' knowledge, is it asserted to be subject to, any
penalty for any violation of any order, rule, or regulation, or default with
respect thereto, of any tax commission or similar taxing board, bureau or
instrumentality. Home Care has paid or has made full provision for payment of
all federal, state and local taxes, if any, due from it pursuant to the returns
in the Home Care Disclosure Letter or to assessments received with respect
thereto, and for the payment of all federal, state and local taxes which may
otherwise be due from it or which are accrued and unpaid as of the date of the
Balance Sheet, whether or not yet due and payable and
14
<PAGE>
whether or not disputed.
There are no claims pending or, to the best of Shareholders' knowledge,
threatened for taxes against Home Care with respect to any period ending as of
or prior to the date hereof. No deficiency has been assessed on the audited
federal or state tax returns of Home Care, and, as to any unaudited tax return
of Home Care, no deficiency has been threatened as of the date hereof and
Shareholders have no reasons to believe that any such deficiency will be
assessed. Home Care has not agreed to the extension of the statute of
limitations with respect to any tax return or tax claim, and Home Care is not
undergoing a tax audit nor has it been informed that a tax audit is
contemplated.
5.06 Pension and Employee Benefit Plans. Attached to the Home Care
----------------------------------
Disclosure Letter is a list of all employee benefit plans and all other material
employee obligations of Home Care. Shareholders will, at Closing, make a true
and accurate accounting of all accrued obligations of Home Care as of the
Closing Date applicable to its employees, officers and directors (hereinafter
collectively "Employees"), whether arising out of operation of law, by contract
or by past custom, if any, including trusts or any other amounts payable to any
governmental agency, with respect to unemployment compensation benefits, social
security benefits or any other similar benefits for salaries, vacation and
holiday pay, sick pay, bonuses and other forms of compensation payable with
respect to the services rendered by its Employees as of the Closing Date. Except
as disclosed in the Home Care Disclosure Letter, Home Care has no employee
welfare or pension benefit plan ("Plan") applicable to any Employee, within the
meaning of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), nor has Home Care had such Plans, nor participated in, nor has any
withdrawal liability with respect to, any multi-employer plan, as that term is
defined by ERISA. Any Plan noted on the Home Care Disclosure Letter complies in
all material respects with ERISA, the Internal Revenue Code of 1986, as amended,
and all other applicable statutes and regulations, and no "reportable event"
within the meaning of ERISA has occurred or is likely to occur based on the
condition of any such Plan as of the Closing Date. There are no suits or actions
or audits pending, or to Shareholders' knowledge threatened, against any such
Plan. There are no employment agreements to which Home Care is a party, whether
written or oral, covering any person, whether or not named thereon.
5.07 Insurance. Shareholders have delivered to Vitalink true, accurate
----------
and complete copies of all insurance policies covering Home Care and the
business of Home Care for worker's compensation, personal injury, general
liability, professional liability and property damage, as currently in effect.
Attached to the Home Care Disclosure Letter are Certificates of Insurance for
such insurance policies which are presently in force, and will be in force on
the Closing Date, as to Home Care. All premiums relating to such policies have
been paid on a timely basis, and Home Care has not been notified of the
existence of any grounds for cancellation or reduction of coverage.
5.08 Litigation and Adverse Claim There are no claims, disputes, actions,
----------------------------
proceedings or investigations of any nature (whether judicial, administrative or
otherwise) pending or, to the best of Shareholders' knowledge, threatened
against the Shareholders (as they may affect Vitalink, the Home Care Shares or
the transactions contemplated herein) or
15
<PAGE>
against Home Care, including but not limited to, worker's compensation claims.
There is, to the best of Shareholders' knowledge, no matter with respect to
which litigation is threatened and no claims by creditors or other parties
against Home Care or Shareholders, that would become a claim against Vitalink,
the Home Care Shares or Home Care following the Closing. As to any matters noted
in the Home Care Disclosure Letter relating to this Section 5.08, adequate
provision has been made in the Balance Sheet, or will be made in the Closing
Balance Sheet, for any loss, claim, expense, cost or liability that may occur or
be imposed.
5.09 Contracts. The Home Care Disclosure Letter sets forth a true and
---------
correct list of all Contracts and, if in writing, a copy of each such Contract.
For purposes of this Agreement, "Contract" means any contract, agreement, lease,
license, mortgage, loan agreement, indenture or commitment (whether written or
oral) relating to the Home Care Shares or to which Home Care is a party or is
otherwise bound. For purposes of this Section 5.09 only, the term Contracts
shall not include contracts relating to sales or rental of equipment executed in
the ordinary course of business or any Contract with any person or entity
involving total payments less than Ten Thousand Dollars ($ 10,000.00) in the
aggregate. Each Contract is a valid and binding agreement of Home Care. There
has not occurred a material default under any Contract on the part of Home Care.
Shareholders are not aware of any material default on the part of the other
party or parties to each such Contract. Shareholders do not have any knowledge
that an event has occurred which with the giving of notice or the passage of
time, or both, would constitute a material default under any Contract. As to any
Contract, to the best knowledge of Shareholders, there has taken place no event,
nor has there been any omission of an event, which will have a Material Adverse
Effect on Home Care;
5.10 Licenses. Attached to the Home Care Disclosure Letter is a list of
--------
all Licenses owned or held by Home Care, or used in the business of Home Care
which have previously been provided to Vitalink. For purpose of this Agreement,
"License" means any valid license, permit, certification, provider agreement, or
other governmental or regulatory authorization or approval which is used in the
business of Home Care. There are no other Licenses necessary to enable Home
Care to carry on its business as presently conducted or as is contemplated. All
such Licenses are valid, unrestricted and in full force and effect, and there
exists no default thereunder. There is no pending, or to the best of
Shareholders' knowledge, threatened litigation or other proceeding under which
any of such Licenses may be restricted, revoked, terminated or suspended and
there has taken place no event or occurrence which, to the best of Shareholders'
knowledge, could give rise to a default, restriction, revocation or termination
proceeding under which any of such Licenses may be revoked, restricted,
terminated or suspended.
5.11 Labor and Employment Matters The Home Care Disclosure Letter sets
----------------------------
forth a list of the names, rates of pay, social security number, full or part-
time status, hire date, position, vested and accrued benefits and all other
items of employment for all employees of Home Care. With respect to any
employees and as to Home Care, there is no (a) collective bargaining agreement
or other labor agreement; (b) employment, profit sharing, deferred compensation,
bonus, stock option, stock purchase, retainer, consulting, retirement, welfare,
or incentive plan or
16
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contract; (c) Contract with any employee; or (d) program,
arrangement, plan or agreement under which Home Care, or any other person on
behalf of Home Care, provides vacation, sick leave or other benefits to any
employees, other than as provided in the Home Care Disclosure Letter.
Home Care has complied in all material respects with all applicable laws,
rules and regulations relating to its employees or to the employment of labor,
including those relating to wages, hours, collective bargaining, and the payment
and withholding of taxes and other sums as required by appropriate governmental
authorities; Home Care has withheld and paid to the appropriate governmental
authorities or is holding for payment not yet due all amounts required to be
withheld from employees; and Home Care is not liable for any arrears of wages,
taxes, penalties. There is no unfair labor practice complaint pending, or to
the best of Shareholders' knowledge, threatened, against Home Care before the
National Labor Relations Board or any state or local agency, no pending labor
strike, and no other formal labor grievance or representation question. To the
best of Shareholders' knowledge, during the three (3) years prior to the date of
this Agreement, no organizational activity by any labor union has occurred with
respect to the employees.
5.12 No Violation of Law. Home Care has not violated and is not now in
-------------------
violation of any federal, state or local laws, regulations or orders, including,
but not limited to, the Medicare and Medicaid fraud and abuse provisions of the
Social Security Act, the Civil Monetary Penalties Law of the Social Security
Act, or any other federal or state law, statute, rule or regulation relating to
Home Care, and neither Home Care nor Shareholders has received any notice of any
such violation which may have a Material Adverse Effect on Home Care.
5.13 Agreement Not in Breach of Other Instruments. Neither the execution,
---------------------------------------------
delivery or performance of the Agreement nor the consummation of the
transactions contemplated hereby or thereby, will: (a) conflict with, or result
in a breach of, any of the terms, or constitute a default under, any Contract or
any instrument to which Shareholders or Home Care is a party or is subject to;
(b) constitute a violation of any code, law, regulation, ordinance, judgment or
order; (c) result in the creation or acceleration of any encumbrance pertaining
to or upon the Home Care Shares or upon Home Care; or (d) conflict with, or
constitute a violation of Certificate of Incorporation or By-Laws of Home Care.
5.14 Real Property and Personal Property. Home Care owns no real
-----------------------------------
property. Home Care has sufficient Personal Property to carry on its business
and operations as currently being conducted and has good and marketable title to
such Personal Property free and clear of all encumbrances, claims, liens,
security interests, leases and the like. Attached to the Home Care Disclosure
Letter is a description of all Personal Property owned by Home Care with a book
value as of June 30, 1997, in excess of Five Hundred Dollars ($500.00). There
are no taxes due and owing on the Personal Property. To the best of
Shareholders' knowledge, the Personal Property is in good condition and repair,
ordinary wear and tear accepted, and suitable to its intended and customary use,
and no material maintenance, repair or replacement has been deferred or
neglected. For purposes of this Agreement, "Personal Property" means the
tangible personal property (other than inventory), owned by Home Care
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as of the Closing Date including, without limitation, all files, books, business
and medical records pertaining to Home Care's business or customers.
5.15 Non-Owned Real and Personal Property. Attached to the Home Care
-------------------------------------
Disclosure Letter is a description of all of the non-owned real property and
Personal Property that is utilized by Home Care with a value in excess of Five
Hundred Dollars ($500.00), including the Contracts that evidence the
arrangements by which Home Care has possession of such real and personal
property.
5.16 Environmental Matters. Home Care has not been in the business of,
----------------------
nor assisted in, the disposal, storage, treatment or processing of toxic or
hazardous substances and has fully complied with all applicable laws governing
any such disposal, storage, treatment or processing. All disposal, storage,
treatment, handling, production or processing of any
hazardous, dangerous, toxic substances or solid waste by Home Care has been in
compliance with all applicable federal, state and local laws or regulations.
Home Care has been in compliance in all material respects with the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901, et seq.) as amended, the
-------
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601, et seq.) as amended, the Clean Water Act (33 U.S.C. Section 1241,
-------
et seq.) as amended, or any other federal, state or local environmental law,
- ------
ordinance, rule or regulation. Home Care has obtained all permits and licenses
required for the operation of its business required by any federal, state or
local environmental law, ordinance, rule or regulation.
5.17 Commitments. Neither Shareholders nor Home Care has made any
------------
agreement or any commitment that will or may limit the ability of Home Care to
conduct its business. Home Care has entered into no Contract or other
arrangement for the provision of goods or services with any Shareholder.
5.18 Tradename. To the best of Shareholders' knowledge, Home Care has the
----------
unrestricted and unconditional ownership of, and right to use, the name "Home
Care Medical" in the markets in which it currently conducts its business and, to
Shareholders' knowledge, such use does not infringe, and there is no reason to
believe that it will infringe, upon or violate any rights of any other person.
Attached to the Home Care Disclosure Letter are all trademark and service mark
registrations owned by Home Care and all fictitious name applications filed by
Home Care.
5.19 Accounts Receivable. To the best of Shareholders' knowledge (a) each
--------------------
account receivable reflected on the books and of records of Home Care as of the
Closing Date ("Accounts Receivable") represents an undisputed, bona fide
---- ----
indebtedness of the account debtor to Home Care for goods delivered or rented or
for services provided in the ordinary course of Home Care's business; (b) there
are no disputes, set-offs or counterclaims of any nature whatsoever against any
Account Receivable other than discounts for prompt payment made in the ordinary
course of business; (c) no Account Receivable is subject to any
18
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mortgage,
pledge, lien or security interest of any kind or nature (whether or not of
record); and (d) Home Care shall have, on the Closing Date, good right, title
and interest in and to the Accounts Receivable.
5.20 Governmental Billings. Home Care has delivered true and correct
----------------------
billing requests for reimbursement and underlying information to all
governmental programs, including but not limited to the Medicare and Medicaid
programs, in compliance with all rules, regulations, policies and procedures of
such governmental programs and of the fiscal intermediaries of such programs.
All such billings were for goods actually provided, and at appropriate charges
or costs, and Home Care has sufficient documentation to support such billing
requests.
5.21 Reorganization. Shareholders and Home Care have not taken or agreed
--------------
to take any actions as of the date of this Agreement and as of the Closing Date,
will not take or agree to take any actions, whether before or after the Closing,
and do not have any actual knowledge of any fact or circumstance, that would
prevent the Merger and the other transactions contemplated by this Agreement
from qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
5.22 Effect. All of the foregoing warranties and representations, except
------
for those that by their terms relate to a specific period of time, shall be
true, correct and complete as of the date of this Agreement and as of the
Closing Date and shall survive the Closing as set forth in Section 10.05.
ARTICLE 6
COVENANTS AND AGREEMENTS
------------------------
OF HOME CARE AND SHAREHOLDERS PENDING CLOSING
---------------------------------------------
6.01 Operation in Usual Manner. From and after the date of this Agreement
-------------------------
to the Closing Date, unless Home Care receives Vitalink's prior consent, which
shall not be unreasonably withheld, allowing Home Care to do otherwise, Home
Care shall:
(a) continue to conduct business in its usual and customary manner and
shall not engage in any transaction whatsoever affecting Home Care or its
business which is not in the usual and customary course of Home Care's
business; provided, however, Home Care may, on or before the Closing Date,
pay all accrued and unpaid rent payable up to the Effective Time.
(b) comply in all material respects with all laws, rules and regulations
applicable to Home Care and Home Care's business.
(c) perform all of Home Care's material contractual obligations.
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(d) maintain, and keep in full force and effect, all Licenses which are
now in existence and effect.
(e) not amend, or in any manner modify, Home Care's Certificate of
Incorporation or By-laws.
(f) not make any change or do any act, or fail to do any act, which would
have a Material Adverse Effect on Home Care, except as expressly
contemplated by this Agreement.
(g) not issue, sell, or otherwise dispose of, or create any obligation to
issue, sell or otherwise dispose of, shares of Capital Stock of Home Care.
(h) not create, or agree to create, any liability or commitment for
capital expenditures in excess of Ten Thousand Dollars (S10,000.00) in the
aggregate, on behalf of or by Home Care.
(i) not enter into any Contract or other commitment involving more than
Ten Thousand Dollars ($ 10,000.00) in the aggregate on behalf of or by Home
Care other than in the ordinary course of business, but in no event any
Contract or other commitment that cannot be canceled in thirty (30) days or
less.
(j) not create, or agree to create, any liability or commitment for non-
capital expenditures by or on behalf of Home Care, other than in the
ordinary course of business, but in no event any liability or commitment
greater than Ten Thousand Dollars ($10,000) individually or in the
aggregate. Notwithstanding the foregoing, the above restriction shall not
apply to routine drug orders taken by Home Care in the usual and customary
course of Home Care's business.
(k) allow Vitalink, upon 24 hours notice, to have reasonable access to the
books, records, contracts and documents of Home Care and reasonable access
to Home Care.
(1) not change any wages, fringe benefits or other terms and conditions of
employment of any employee, officer or director of Home Care, nor enter
into any employment agreement with any such person or prospective employee,
officer or director (provided, however, that Home Care shall have the
right, in the ordinary course of business, to terminate the employment of
any employee of Home Care and replace such employee at a comparable level
of salary and benefits), nor make any material change in Home Care's
charges for drugs.
(m) use its best efforts to reasonably preserve the business operations of
Home Care intact and at its present levels, to keep available the services
of the employees
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of Home Care and to reasonably preserve the good will of Home Care,
including without limitation with suppliers, customers and others having
business relations with Home Care.
(n) notify Vitalink immediately in the event there has been any breach of
the warranties, representations or covenants contained in this Agreement or
in the event there has occurred any event or circumstance that has caused
any Material Adverse Effect on Home Care.
6.02 Dividends. Home Care shall not declare, pay, set aside for payment,
----------
make or commit to make, any dividend or distribution on the Home Care Shares, or
make any distribution with respect thereto or directly or indirectly purchase,
redeem or otherwise acquire or agree to purchase, redeem or otherwise acquire,
any stock, including the Home Care Shares, except for such dividends as may be
necessary for Home Care to pay out all of its net income to Shareholders to the
extent Shareholders have been or will be subject to federal income tax thereon.
ARTICLE 7
DELIVERIES AND ACTS AT CLOSING
------------------------------
7.01 Home Care and Shareholders' Delivery to Vitalink. At Closing, Home
------------------------------------------------
Care and Shareholders shall deliver to Vitalink the following documents dated,
unless otherwise specifically stated, as of the Closing Date (the "Closing
Documents") and/or shall perform the following acts (the "Closing Acts"):
(a) A Certificate of Good Standing, issued and certified by the Secretary
of State of Oklahoma, and dated no earlier than three (3) days prior to
Closing, showing that Home Care is in good standing and is authorized to
transact business in such state.
(b) A copy of Home Care's current Certificate of Incorporation certified
by the Oklahoma Secretary of State, dated no later than three (3) days
prior to Closing, and a copy of the By-laws of Home Care, certified to be
true, complete and accurate by the Secretary of the Home Care.
(c) The complete minute books of Home Care, including a copy of the
resolutions of the Board of Directors of Home Care, certified by its
Secretary or an Assistant Secretary, authorizing the execution and delivery
of the Agreement and all documents or instruments relating hereto and the
consummation of the transactions hereby and a copy of the resolutions of
the Shareholders of Home Care authorizing the execution and delivery of the
Agreement and all documents or instruments relating hereto and the
consummation of the transactions hereby.
21
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(d) Delivery and surrender of the Certificates of the Home Care Shares,
duly endorsed by Shareholders for transfer to Vitalink or accompanied by an
assignment of the Home Care Shares to Vitalink, duly executed by
Shareholders, in such form as may be reasonably requested by Vitalink.
(e) Copies of Uniform Commercial Code Lien searches, dated no earlier than
three (3) days prior to Closing, under the name of Shareholders and Home
Care, which show that there are no financing statements, judgments, tax
liens or other liens or encumbrances outstanding against the Home Care
Shares, Home Care or against any of the Personal Property, except for those
set forth in the Home Care Disclosure Letter hereto, said searches being
done both locally and at the place of central filing in Oklahoma all Home
Care's sole expense.
(f) Tax certificates from all applicable taxing authorities which issue
such certificates evidencing that all taxes due and owing to such
authorities with respect to Home Care and the Personal Property have been
paid.
(g) A certificate of each of the Shareholders to the effect that the
representations, warranties, and covenants of Shareholders contained in the
Agreement or in any other document delivered pursuant hereto are true and
correct or have been fully complied with as of the date of this Agreement
and as of the Closing Date.
(h) Execution by Al Willingham and Randy Willingham of employment
agreements in the form attached hereto as Exhibit A and B, respectively,
(the "Employment Agreements") effective as of the Effective Time.
(i) Execution by Al Willingham and Randy Willingham of noncompete
agreements in the form attached hereto as Exhibit C and D, respectively,
(the "Noncompete Agreements") effective as of the Effective Time.
(j) Execution by Willingham Properties, L.L.C. of a lease in the form
attached hereto as Exhibit E (the "Lease") effective as of the Effective
Time.
7.02 Vitalink's Delivery to Home Care and Shareholders. At Closing,
-------------------------------------------------
Vitalink shall deliver or cause to be delivered to Home Care and Shareholders
the following documents dated as of the Closing Date (the "Closing Documents")
and/or shall perform the following acts (the "Closing Acts"):
(a) A copy of the resolutions of the Board of Directors of Vitalink and
Sub, certified by the Secretary or an Assistant Secretary, authorizing the
execution and delivery of the Agreement and all documents or instruments
relating hereto and the consummation of the transactions hereby, and a copy
of the resolutions of Sub's sole
22
<PAGE>
shareholder authorizing the execution and delivery of the Agreement and all
documents or instruments relating hereto.
(b) A certificate from Vitalink, to the effect that the representations,
warranties, and covenants of Vitalink contained in the Agreement or in any
other document delivered pursuant hereto shall be true and correct or have
been fully complied with, on the Closing Date.
(c) Delivery of the shares of Vitalink Common Stock due at Closing, as
stated in Section 2.01 of this Agreement, in accordance with instructions
provided by Shareholder.
(d) Execution by Vitalink of the Employment Agreements.
(e) Execution by Vitalink of the Noncompete Agreements.
(f) Execution by Vitalink of the Lease.
(g) Such other documents as Shareholders may reasonably request to
consummate the transactions contemplated by this Agreement.
ARTICLE 8
CONDITIONS PRECEDENT
--------------------
8.01 Conditions Precedent to Vitalink's and Sub's Obligations. The
---------------------------------------------------------
obligations of Vitalink and Sub to perform the covenants and obligations to be
performed by it at Closing shall be subject to fulfillment or compliance with
each of the following conditions (all or any of which may be waived in writing
by Vitalink and Sub):
(a) The representations, warranties and covenants made by Shareholders in
the Agreement shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date.
(b) Each of the obligations of Shareholders to be performed or complied
with on or before the Closing Date shall have been duly performed or
complied within all material respects on or before the Closing Date.
(c) On the Closing Date, none of the Home Care Shares nor any portion of
Home Care shall previously have been acquired by authority of any
government agency nor on the Closing Date shall there be any threat or
imminence of any such acquisition or purchase.
23
<PAGE>
(d) All actions required to be taken, and all documents required to be
delivered, by or on the part of Shareholders or Home Care to authorize the
execution, delivery and performance of the Agreement and to consummate the
transactions contemplated hereby shall have been duly and validly taken or
delivered, including the Closing Acts and the Closing Documents as
contemplated by Section 7.01.
(e) There shall have been no litigation or enforcement or regulatory
action commenced or threatened so as to have any effect on Home Care or
upon Vitalink's ownership of the Home Care Shares, or which shall seek to
obtain damages or to enjoin or otherwise affect the transactions
contemplated herein.
(f) All governmental or regulatory licenses, certifications, approvals,
consents, authorizations or other requirements necessary for Vitalink and
Sub to consummate the transactions contemplated hereby shall have been
obtained or satisfied.
(g) Since June 30, 1997, there shall have been no occurrence or
circumstance, including any federal or state proceedings, which might
reasonably be expected to result in a Material Adverse Effect on Home Care.
8.02 Conditions Precedent to Home Care's and Shareholders' Obligations.
-----------------------------------------------------------------
The obligations of Home Care and Shareholders to perform the covenants and
obligations to be performed by them at Closing shall be subject to fulfillment
and compliance with each of the following conditions (all or any of which may be
waived in writing by Home Care and all of the Shareholders):
(a) The representations, warranties, and covenants made by Vitalink in the
Agreement shall be true and correct as of the date of this Agreement and as
of the Closing Date.
(b) Each of the obligations of Vitalink to be performed or complied with
on or before the Closing Date shall have been duly performed or complied
with on or before the Closing Date.
(c) All actions required to be taken, and all documents required to be
delivered, by or on the part of Vitalink to authorize the execution,
delivery, and performance of the Agreement and to consummate the
transactions contemplated hereby shall have been duly and validly taken or
delivered, including the Closing Acts and the Closing Documents as
contemplated by Section 7.02.
(d) There shall have been no litigation or enforcement or regulatory
action commenced or threatened so as to have any effect on Vitalink, Home
Care or upon Vitalink's ownership of the Home Care Shares or which shall
seek to enjoin or otherwise affect the transactions contemplated herein.
24
<PAGE>
(e) All governmental or regulatory licenses, certifications, approvals,
consents, authorizations or other requirements necessary for Home Care and
Shareholders to consummate the transactions contemplated hereby shall have
been obtained or satisfied.
(f) Since May 31, 1997, until the Closing Date, there shall have been no
occurrence or circumstance, including any federal or state proceedings,
which might reasonably be expected to result in any Material Adverse Effect
on Vitalink.
ARTICLE 9
INDEMNIFICATION
---------------
9.01 Indemnification by Shareholders.
--------------------------------------
(a) Each Shareholder shall severally indemnify and hold harmless Vitalink
in respect to any and all monies, losses, damages, liabilities and expenses
(including, without limitation, settlement costs and any legal, accounting
and other expenses for investigating or defending any actions or threatened
actions) (hereinafter "Damages") reasonably incurred by Vitalink or by Sub
in connection with each and all of the following (a "Claim"):
(i) Any breach of any representation, warranty, or covenant made by Home
Care or Shareholders in the Agreement or in any document or instrument
attached to, or delivered pursuant to, the Agreement or any
misrepresentation contained therein; and
(ii) The breach of any agreement or obligation of Home Care or Shareholders
contained in the Agreement or in any document or instrument delivered
pursuant to the Agreement.
(b) Anything to the contrary herein notwithstanding, (i) Shareholders
shall not be liable for any such Claim if, at the Closing Date, Vitalink
had knowledge of such inaccuracy in representation, warranty or covenant of
Home Care or Shareholders which is the basis for the Claim or of Home
Care's or the Shareholders' failure to perform an obligation that is an
obligation required to be performed prior to the Closing Date which is the
basis for the Claim; (ii) the Shareholders shall only be liable to Vitalink
for inaccuracies in any representation, warranty or covenant of Home Care
or Shareholders contained in this Agreement to the extent the aggregate
amount of the Vitalink's Claims thereunder exceeds $25,000; (iii) each
Shareholder's several liability shall be limited to its proportionate share
of the Claims; (iv) the aggregate liability of the Shareholders pursuant to
this Section 9.01 shall not exceed in any event the total value of all the
shares of Vitalink Common Stock valued at the Stock Price which were
delivered to each Shareholder after reflecting the Stockholders' Equity
Adjustment; and (v) the Shareholders shall have no obligation hereunder
with respect to any particular Claim unless Vitalink shall have given
written notice thereof in the manner provided in Section 9.03 below no
later than one (1) year after the Closing Date, except that as to any tax
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<PAGE>
Claim, the notice to Shareholders shall be given prior to the expiration of
the applicable statute of limitations, without extensions, for assessment
of taxes under the Internal Revenue Code, and except as to any claim
arising from fraud or criminal activity, in which case notice shall be
given during the applicable statute of limitations (the "Release Date").
This subsection 9.01(b) does not apply to any Claim for breach of contract
arising from Shareholders' failure to make any payments under this or any
other agreement executed and delivered by Shareholders at Closing. A
Shareholder's proportionate share of Claims shall mean such Shareholder's
percentage (of the Claims) equal to the number of shares in the Home Care
held by such Shareholder immediately prior to the Effective Time divided by
the number of shares in Home Care held by all Shareholders immediately
prior to the Effective Time.
(c) Notwithstanding any other provision of this Agreement, the liability
of Shareholders under this Agreement, including any liability under the
foregoing indemnity provisions, shall be to reimburse Vitalink, on a dollar
for dollar basis, for the actual amount of the Damages. Any such Claim for
indemnification shall be adjusted, to take into account (a) the receipt of
any insurance proceeds by Vitalink or Sub with respect to any Claims and
(b) any tax benefit to, or tax burden on, Vitalink or Sub incident to the
matter giving rise to such Claim for indemnification or to the
indemnification payment hereunder.
9.02 Indemnification by Vitalink and Sub.
-----------------------------------
(a) Vitalink and Sub shall indemnify and hold harmless Shareholders, and
each of them, in respect of any and all Damages reasonably incurred by
Shareholders in connection with each and all of the following (a "Claim"):
(i) Any breach of any representation, warranty, or covenant made by
Vitalink or Sub in the Agreement or in any document or instrument
delivered pursuant to the Agreement or any misrepresentation contained
therein; and
(ii) The breach of any agreement or obligation of Vitalink or Sub contained
in the Agreement or in any document or instrument delivered pursuant
to the Agreement.
(b) Anything to the contrary herein notwithstanding, (i) Vitalink shall
not be liable for any such Claims if, at the Closing Date, the Shareholders
had knowledge of such inaccuracy in representation, warranty or covenant of
Vitalink which is the basis for the Claim or of Vitalink's failure to
perform an obligation that is an obligation required to be performed prior
to the Closing Date which is the basis for the Claim; (ii) Vitalink shall
only be liable to the Shareholders for inaccuracies in any representation,
warranty or covenant of Vitalink contained in this Agreement to the extent
the aggregate amount of the Shareholders' Claims thereunder exceed $25,000;
26
<PAGE>
and (iii) Vitalink shall have no obligation hereunder with respect to any
particular Claim unless the Shareholders shall have given written notice
thereof in the manner provided in Section 9.03 below no later than one (1)
year after the Closing Date (the "Release Date"). This subsection 9.02(b)
does not apply to any Claim for breach of contract arising from Vitalink's
failure to make any payments under this or any other agreement executed and
delivered by Vitalink at Closing.
(c) Notwithstanding any other provision of this Agreement, the liability
of Vitalink under this Agreement, including any liability under the
foregoing indemnity provisions, shall be to reimburse Shareholders, on a
dollar for dollar basis, for the actual amount of the Damages. Any such
Claim for indemnification shall be adjusted, to take into account (a) the
receipt of any insurance proceeds by Shareholders with respect to any
Claims and (b) any tax benefit to, or tax burden on, Shareholders incident
to the matter giving rise to such Claim for indemnification or to the
indemnification payment thereunder.
9.03 Procedure for Indemnification Claims.
-------------------------------------
(a) If, prior to the Release Date, a party shall incur or receive notice
of the existence of any Claim for which such party claims indemnity
hereunder (the "Indemnitee"), the Indemnitee shall promptly give written
notice thereof to the other party (the "Indemnitor"). The Indemnitee shall
furnish to the Indemnitor in reasonable detail such information as the
Indemnitee may have with respect thereto (including in any case, copies of
any summons, complaint or other pleading which may have been served on it
and any written claim, demand, invoice, billing or other document
evidencing or asserting the same); provided, however, that no failure or
delay by the Indemnitee in the performance of the foregoing prior to the
Release Date shall reduce or otherwise affect the obligation of the
Indemnitor to indemnify and hold the Indemnitee harmless, except to the
extent that such failure or delay shall have actually impaired the
Indemnitor's ability to defend against, settle or satisfy such liability,
damage, loss, claim or demand, or increased the cost thereof.
(b) In the event of asserted liabilities to and claims and demands of
third parties, including any action, suit or proceeding related thereto,
with respect to matters set forth in Section 9.01 and 9.02 hereof, the
Indemnitee shall have the right to pay, compromise, settle or otherwise
dispose of any claim or conduct the defense or settlement of any action,
suit or proceeding as the Indemnitee shall deem appropriate; provided,
however, that if the Indemnitee shall pay any claim or settle any suit,
action or proceeding without the prior written consent of the Indemnitor,
the right of the Indemnitee to make any claim against the Indemnitor shall
neither be deemed conclusively established nor conclusively denied. The
Indemnitor shall have the right to be represented by advisory counsel and
accountants (at its own expense) in connection with any action, suit or
proceeding, and the Indemnitor shall be kept reasonably informed by the
Indemnitee of such action, suit or proceeding at reasonable times at all
stages thereof, whether or not the Indemnitor is so
27
<PAGE>
represented. The Indemnitee and Indemnitor agree to make available to each
other, their counsel and accountants all information and documents
reasonably available to them which relate to such action, suit or
proceeding, and Indemnitee and Indemnitor agree to render to each other
such assistance as they may reasonably require of each other in order to
ensure the proper and adequate defense of any such action, suit or
proceeding.
(c) Notwithstanding anything in this Agreement to the contrary, any
liabilities of the Indemnitor on account of any indemnification hereunder
shall be satisfied solely by exercise of the Indemnitee's rights under this
Agreement, provided that nothing in this Agreement shall be deemed to limit
any right or remedy of the Indemnitee or any other person against any other
person for the fraud or criminal activity of such other person.
ARTICLE 10
MISCELLANEOUS
-------------
10.01 Notices. All notices, requests, demands, and other communications
--------
hereunder shall be in writing and shall be deemed given when delivered
personally or three (3) days after mailing by certified or registered mail,
postage prepaid, return receipt requested, or when delivered by next-day
delivery service, to the parties or their successors in interest at the
following addresses, or at such other addresses as the parties may designate by
written notice in the manner aforesaid:
(a) If to Shareholders:
Al Willingham
10800 S. Harvey
Oklahoma City, Oklahoma 73170
Randy Willingham
2540 Wilshire Boulevard
Oklahoma City, Oklahoma 73116
Craig Anson
9400 Key Lane
Mustang, Oklahoma 73064
With a copy to:
Michael M. Stewart
Crowe & Dunlevy
1800 Mid-America Tower
20 North Broadway
Oklahoma City, OK 73102-8273
28
<PAGE>
(b) If to Vitalink:
Vitalink Pharmacy Services, Inc.
1250 East Diehl Road, Suite 208
Naperville, IL 60563
Attn: President
With a Copy To:
Vitalink Pharmacy Services, Inc.
One Ravinia Drive, Suite 1240
Atlanta, GA 30346
Attn: General Counsel
10.02 Expenses. Except as herein specifically provided, Vitalink and Home
--------
Care shall each bear their own legal, accounting, and other expenses incurred in
connection with the Agreement and the consummation of transactions contemplated
herein.
10.03 Brokers or Finders Fees. Each party represents and warrants to the
------------------------
other party that there are no brokers or finders fees or other similar costs
that have been promised or incurred or due in connection with the transactions
contemplated by this Agreement.
10.04 Governing Law. The Agreement shall be governed by and construed and
--------------
enforced in accordance with the laws of the State of Oklahoma.
10.05 Survival. The warranties, representations and covenants contained
---------
herein shall survive Closing and shall continue in full force and effect until
the applicable Release Date as defined herein.
10.06 Counterparts. The Agreement may be executed simultaneously in one
-------------
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
10.07 Complete Agreement. The Agreement, the Exhibits, and the documents
------------------
delivered with or to be delivered pursuant to this Agreement contain or will
contain the entire agreement between the parties hereto with respect to the
transactions contemplated herein and shall supersede all previous oral and
written and all contemporaneous oral negotiations, commitments and
understandings.
10.08 Modifications, Amendments and Waivers. At any time prior to the
--------------------------------------
termination of the Agreement, the parties hereto may mutually agree to amend or
supplement any of the provisions of the Agreement, but only by written document.
29
<PAGE>
10.09 Suit. In the event suit is filed in respect to this Agreement, the
----
prevailing party shall be entitled to its reasonable attorney fees and costs
associated with such suit, as fixed by the court in which the case is tried and,
if appealed, by the appellate court.
10.10 Interpretation. The headings contained in the Agreement are for
--------------
reference purposes only shall not affect in any way the meaning or
interpretation of the Agreement.
10.11 Company Records. Vitalink shall retain all records of Home Care for
---------------
at least five (5) years after the Closing Date and shall allow Shareholders
access to those records during normal business hours on reasonable notice.
10. 12 Litigation. The parties submit to the jurisdiction of any state or
----------
federal court sitting in Oklahoma County, State of Oklahoma, in any action or
proceeding arising out of or relating to this Agreement, agree that all claims
in respect of the action or proceeding shall be heard and determined in any such
court and agree not to bring any action or proceeding arising out of or relating
to this Agreement in any other court. The parties waive any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and
waive any bond, surety or other security that might be required of any other
party with respect thereto.
10.13 Shareholders Guaranties. Notwithstanding anything to the contrary,
-----------------------
Vitalink shall use its best efforts to ensure that Shareholders are released
from their guaranty of obligations or debt of Home Care from financial
institutions and shall indemnify and hold harmless Shareholders in respect of
any liability of Shareholders arising subsequent to the Closing, resulting from
Shareholders' guaranty of such obligations or debts of Home Care.
[signature page begins on the following page]
30
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
"VITALINK"
Vitalink Pharmacy Services, Inc.
By: /s/Robert W. Horner III
-----------------------
Robert W. Horner, III,
Senior Vice President and
General Counsel
"SUB"
ATTEST: Vitalink Subsidiary, Inc.
BY: /s/ Robert W. Horner III By: /s/Robert W. Horner III
------------------------ -----------------------
Robert W. Horner, III, Secretary Robert W. Horner, III,
Vice President
"HOME CARE"
ATTEST: Home Care Medical Equipment, Inc.
BY: /s/ Al Willingham By: /s/Randy Willingham
----------------- -------------------
Al Willingham, Secretary Randy Willingham, President
"SHAREHOLDERS:
/s/ Al Willingham
-----------------
Al Willingham
/s/ Randy Willingham
--------------------
Randy Willingham
/s/ Craig Anson
---------------
Craig Anson
31
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated June 27, 1997
incorporated by reference in Vitalink Pharmacy Services, Inc.'s Form 10-K/A for
the year ended May 31, 1997 and to all references to our Firm included in this
registration statement.
/s/ Arthur Andersen LLP
- -----------------------------------
ARTHUR ANDERSEN LLP
Washington, D.C.
October 17, 1997
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Scott T. Macomber and Robert W. Horner III or
either of them, her true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for her and in her name, place and
stead, in any and all capacities to sign a registration statement on Form S-3,
and all amendments thereto, registering shares of the common stock, par value
$.01 per share (the "Common Stock"), of Vitalink Pharmacy Services, Inc.
("Vitalink") issued in connection with the merger (the "Merger") of Home Care
Medical Equipment, Inc. with and into Vitalink Subsidiary, Inc., a wholly owned
subsidiary of Vitalink, to the Selling Shareholders, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each of said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully as
to all intents and purposes as she might or could do in person, hereby ratifying
and confirming all that each of said attorneys-in-fact and agents, or her
substitute or substitutes, may lawfully of or cause to be done by virtue hereof.
/s/ Donna L. DeNardo
--------------------
Donna L. DeNardo
Date: October 20, 1997
<PAGE>
Exhibit 24.2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Robert W. Horner III his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign a
registration statement on Form S-3, and all amendments thereto, registering
shares of the common stock, par value $.01 per share (the "Common Stock"), of
Vitalink Pharmacy Services, Inc. ("Vitalink") issued in connection with the
merger (the "Merger") of Home Care Medical Equipment, Inc. with and into
Vitalink Subsidiary, Inc., a wholly owned subsidiary of Vitalink, to the Selling
Shareholders, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto each of said attorneys-in-fact and agents full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully as to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that each of
said attorneys-in-fact and agents, or his substitute or substitutes, may
lawfully of or cause to be done by virtue hereof.
/s/ Scott T. Macomber
-------------------------------------
Scott T. Macomber
Date: October 20, 1997
<PAGE>
Exhibit 24.3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Scott T. Macomber and Robert W. Horner III or
either of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities to sign a registration statement on Form S-3,
and all amendments thereto, registering shares of the common stock, par value
$.01 per share (the "Common Stock"), of Vitalink Pharmacy Services, Inc.
("Vitalink") issued in connection with the merger (the "Merger") of Home Care
Medical Equipment, Inc. with and into Vitalink Subsidiary, Inc., a wholly owned
subsidiary of Vitalink, to the Selling Shareholders, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each of said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully as
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that each of said attorneys-in-fact and agents, or his
substitute or substitutes, may lawfully of or cause to be done by virtue hereof.
/s/ Stewart Bainum, Jr.
-------------------------------------
Stewart Bainum, Jr.
Date: October 20, 1997
<PAGE>
Exhibit 24.4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Scott T. Macomber and Robert W. Horner III or
either of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities to sign a registration statement on Form S-3,
and all amendments thereto, registering shares of the common stock, par value
$.01 per share (the "Common Stock"), of Vitalink Pharmacy Services, Inc.
("Vitalink") issued in connection with the merger (the "Merger") of Home Care
Medical Equipment, Inc. with and into Vitalink Subsidiary, Inc., a wholly owned
subsidiary of Vitalink, to the Selling Shareholders, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each of said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully as
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that each of said attorneys-in-fact and agents, or his
substitute or substitutes, may lawfully of or cause to be done by virtue hereof.
/s/ Essel W. Bailey, Jr.
-------------------------------------
Essel W. Bailey, Jr.
Date: October 20, 1997
<PAGE>
Exhibit 24.5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Scott T. Macomber and Robert W. Horner III or
either of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities to sign a registration statement on Form S-3,
and all amendments thereto, registering shares of the common stock, par value
$.01 per share (the "Common Stock"), of Vitalink Pharmacy Services, Inc.
("Vitalink") issued in connection with the merger (the "Merger") of Home Care
Medical Equipment, Inc. with and into Vitalink Subsidiary, Inc., a wholly owned
subsidiary of Vitalink, to the Selling Shareholders, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each of said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully as
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that each of said attorneys-in-fact and agents, or his
substitute or substitutes, may lawfully of or cause to be done by virtue hereof.
/s/ Joseph R. Buckley
-------------------------------------
Joseph R. Buckley
Date: October 20, 1997
<PAGE>
Exhibit 24.6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Scott T. Macomber and Robert W. Horner III or
either of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities to sign a registration statement on Form S-3,
and all amendments thereto, registering shares of the common stock, par value
$.01 per share (the "Common Stock"), of Vitalink Pharmacy Services, Inc.
("Vitalink") issued in connection with the merger (the "Merger") of Home Care
Medical Equipment, Inc. with and into Vitalink Subsidiary, Inc., a wholly owned
subsidiary of Vitalink, to the Selling Shareholders, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each of said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully as
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that each of said attorneys-in-fact and agents, or his
substitute or substitutes, may lawfully of or cause to be done by virtue hereof.
/s/ Joel S. Kanter
-------------------------------------
Joel S. Kanter
Date: October 20, 1997
<PAGE>
Exhibit 24.7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Scott T. Macomber and Robert W. Horner III or
either of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities to sign a registration statement on Form S-3,
and all amendments thereto, registering shares of the common stock, par value
$.01 per share (the "Common Stock"), of Vitalink Pharmacy Services, Inc.
("Vitalink") issued in connection with the merger (the "Merger") of Home Care
Medical Equipment, Inc. with and into Vitalink Subsidiary, Inc., a wholly owned
subsidiary of Vitalink, to the Selling Shareholders, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each of said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully as
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that each of said attorneys-in-fact and agents, or his
substitute or substitutes, may lawfully of or cause to be done by virtue hereof.
/s/ James A. MacCutcheon
-------------------------------------
James A. MacCutcheon
Date: October 20, 1997
<PAGE>
Exhibit 24.8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Scott T. Macomber and Robert W. Horner III or
either of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities to sign a registration statement on Form S-3,
and all amendments thereto, registering shares of the common stock, par value
$.01 per share (the "Common Stock"), of Vitalink Pharmacy Services, Inc.
("Vitalink") issued in connection with the merger (the "Merger") of Home Care
Medical Equipment, Inc. with and into Vitalink Subsidiary, Inc., a wholly owned
subsidiary of Vitalink, to the Selling Shareholders, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each of said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully as
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that each of said attorneys-in-fact and agents, or his
substitute or substitutes, may lawfully of or cause to be done by virtue hereof.
/s/ Robert L. Parker
-------------------------------------
Robert L. Parker
Date: October 20, 1997
<PAGE>
Exhibit 24.9
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Scott T. Macomber and Robert W. Horner III or
either of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities to sign a registration statement on Form S-3,
and all amendments thereto, registering shares of the common stock, par value
$.01 per share (the "Common Stock"), of Vitalink Pharmacy Services, Inc.
("Vitalink") issued in connection with the merger (the "Merger") of Home Care
Medical Equipment, Inc. with and into Vitalink Subsidiary, Inc., a wholly owned
subsidiary of Vitalink, to the Selling Shareholders, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each of said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully as
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that each of said attorneys-in-fact and agents, or his
substitute or substitutes, may lawfully of or cause to be done by virtue hereof.
/s/ James H. Rempe
-------------------------------------
James H. Rempe
Date: October 20, 1997
<PAGE>
Exhibit 24.10
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints Scott T. Macomber and Robert W. Horner III or
either of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities to sign a registration statement on Form S-3,
and all amendments thereto, registering shares of the common stock, par value
$.01 per share (the "Common Stock"), of Vitalink Pharmacy Services, Inc.
("Vitalink") issued in connection with the merger (the "Merger") of Home Care
Medical Equipment, Inc. with and into Vitalink Subsidiary, Inc., a wholly owned
subsidiary of Vitalink, to the Selling Shareholders, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each of said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully as
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that each of said attorneys-in-fact and agents, or his
substitute or substitutes, may lawfully of or cause to be done by virtue hereof.
/s/Gary U. Rolle
-------------------------------------
Gary U. Rolle
Date: October 20, 1997
