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As filed with the Securities and Exchange Commission on April 9, 1997
Registration No. 333-_______
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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
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:
RICHARD H. MILLER, ESQ.
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
191 PEACHTREE STREET, N.E.
SIXTEENTH FLOOR
ATLANTA, GEORGIA 30303
(404) 572-6600
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. [_]
__________________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================================
Title of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered Aggregate Offering Price Aggregate Offering Registration Fee
Per Share/(1)/ Price /(1)/
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per
share .......................... 1,494,500 shares $ 19.00 $ 28,395,500 $ 8,605
==================================================================================================================================
</TABLE>
/(1)/ The registration fee has been calculated based upon the average of the
high and low prices of the Registrant's Common Stock on April 4, 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 APRIL 9, 1997
VITALINK PHARMACY SERVICES, INC.
COMMON STOCK
____________
This prospectus (this "Prospectus") relates to (i) the issuance of up to
917,759 shares (the "Option Shares") of Common Stock, par value $.01 per share
(the "Common Stock"), of Vitalink Pharmacy Services, Inc. ("Vitalink" or the
"Company") underlying outstanding options to purchase Common Stock of the
Company, (ii) the resale of up to 190,483 Option Shares (the "Resale Option
Shares") issuable to the Selling Shareholders named herein (the "Selling
Shareholders") and (iii) the resale of up to 576,741 shares of Common Stock held
by the Selling Shareholders (the "Merger Shares," collectively with the Resale
Option Shares, the "Resale Shares" and collectively with the Option Shares, the
"Shares").
Effective February 12, 1997, the Company acquired the institutional
pharmacy business of GranCare, Inc., a California corporation ("GranCare")
through the merger (the "Merger") of GranCare with and into the Company, with
the Company surviving the Merger. In connection with the Merger, the Company
assumed the options (as adjusted) pursuant to which the Option Shares are
issuable and issued the Merger Shares. See "Recent Developments".
The Company will receive proceeds upon the payment of the exercise price
for the issuance of the Option Shares. The Resale Shares, when sold, will be
sold by and for the account of the Selling Shareholders. The Company will not
receive any proceeds from the sale of the Resale Shares by the Selling
Shareholders. The Company's Common Stock is listed on the New York Stock
Exchange ("NYSE") under the symbol VTK. On April 4, 1997, the last sale
price for the Common Stock as reported on the NYSE was $19 per share.
All expenses relating to the distribution of the Shares shall be borne by
the Company, other than selling commissions and fees and expenses of counsel and
other representatives of the Selling Shareholders. See "Plan of Distribution."
SEE "RISK FACTORS" BEGINNING ON PAGE 6 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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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 Shares 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 Shares 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 Shares
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
Shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
__________________
THIS DATE OF THIS PROSPECTUS IS _____________________, 1997.
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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 Section
maintained by the Commission at Judiciary Plaza, 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. 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. Such reports, proxy statements and other information can be
reviewed through the Commission's Electronic Data Gathering Analysis and
Retrieval System, which is publicly available through the Commission's Web site
(http:/www.sec.gov).
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, 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.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company pursuant
to the Exchange Act are incorporated herein by reference.
1. The Company's Prospectus dated January 8, 1997 filed with the Commission
pursuant to Rule 424(b) promulgated under the Securities Act (Reg. No.
333-19097).
2. The Company's Annual Report on Form 10-K for the year ended May 31, 1996
and Forms 10-K/A filed with the Commission on December 23, 1996 (File
No. 1-0-19820).
3. The Company's Quarterly Report on Form 10-Q for the quarter ended August
31, 1996 (File No. 1-0-19820).
4. The Company's Quarterly Report on Form 10-Q for the quarter ended
November 30, 1996 (File No. 1-0-19820).
5. The Company's Current Report on Form 8-K, dated February 12, 1997 (File
No. 1-0-19820).
All 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 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. Requests for such copies shall be made to
Vitalink Pharmacy Services, Inc., One Ravinia Drive, Suite 1240, Atlanta,
Georgia 30346, 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.
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THE COMPANY
Vitalink provides institutional pharmacy services to nursing facilities and
other institutions. Vitalink presently operates 56 institutional pharmacies and
four regional infusion pharmacies, which 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) and infusion therapy products. Vitalink, through its
subsidiary, Vitalink Infusion Services, Inc., provides parenteral and enteral
nutrition products to patients who qualify under Medicare Part B and bills
directly for these products.
RECENT DEVELOPMENTS
Effective February 12, 1997, Vitalink acquired GranCare through the Merger
of GranCare with and into Vitalink, with Vitalink surviving the Merger. In
order to facilitate the Merger, GranCare's skilled nursing, home healthcare,
assisted living and contract management businesses and related assets (the
"Skilled Nursing Business") were transferred to New GranCare, Inc. ("New
GranCare"), a wholly-owned subsidiary of GranCare, and all of the issued and
outstanding common stock of New GranCare was distributed to the shareholders of
GranCare (the "Distribution" and together with the Merger, the "Transactions").
GranCare's only remaining business, its institutional pharmacy business, was
acquired by Vitalink in the Merger and is operated by TeamCare, Inc.
("TeamCare"), a wholly owned subsidiary of the Company. As a consequence of the
Merger, each GranCare shareholder received 0.478 of a share of Vitalink Common
Stock for each share of GranCare common stock owned as of the effective time of
the Merger. Vitalink also assumed certain items of GranCare's consolidated
indebtedness, including existing long-term indebtedness of GranCare associated
with the operation of its institutional pharmacy business (approximately $8.5
million at December 31, 1996). In addition, Vitalink incurred indebtedness
under a $200 million revolving credit facility executed prior to the effective
time of the Merger among Vitalink, certain of its subsidiaries and The Chase
Manhattan Bank, as agent, and the lenders party thereto (the "Vitalink Credit
Facility") to finance the repurchase of $98.2 million aggregate principal amount
of GranCare's 9.38% Senior Subordinated Notes due 2005 (the "Senior Subordinated
Notes"); currently approximately $1.8 million principal amount of Senior
Subordinated Notes remains outstanding which has been assumed by Vitalink.
As a consequence of the Distribution, each holder of options (the "GranCare
Options") to purchase shares of GranCare common stock received options (the "New
GranCare Options") to purchase such number of shares of New GranCare Common
Stock as was equal to the number of shares of GranCare common stock subject to
GranCare Options held by such holder as of the Distribution record date. The
exercise prices of all GranCare Options were allocated between the New GranCare
Options issued in respect of such GranCare Options and the existing GranCare
Options pursuant to a formula. As a result of the application of such formula,
approximately 38.4% of the exercise price of each GranCare Option was allocated
to, and became the exercise price of, each New GranCare Option, and
approximately 61.6% of such exercise price was allocated to and became the
exercise price of each existing GranCare Option (the "Adjusted GranCare
Options"). The terms and conditions of the New GranCare Options were the same
as the terms of the GranCare Options prior to the Distribution Period.
By virtue of the Merger, each Adjusted GranCare Option outstanding under a
GranCare employee benefit plan immediately prior to the Merger, whether or not
exercisable, was assumed by Vitalink in such manner that each such option was
exercisable under the same terms and conditions
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as under the applicable GranCare employee benefit plan and the applicable option
agreement issued thereunder, except that (i) each such option became exercisable
for that number of shares of Vitalink Common Stock into which the number of
shares of GranCare common stock subject to such option immediately prior to the
Merger would be converted as described above if such option were exercised prior
to the Merger, and (ii) the option price per share of Vitalink common stock
determined after giving effect to the Adjusted GranCare Options as described in
the preceding paragraph became an amount equal to such adjusted option price per
share of GranCare common stock subject to such option in effect immediately
prior to the Merger divided by 0.478 (the "Exchange Ratio").
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
Under various master agreements with Manor Care, Inc. ("Manor Care"),
Vitalink may at its option provide pharmaceutical, consulting and infusion
therapy products and services to any and all nursing facilities owned or
licensed by Manor Care through May 2001 in accordance with the terms of the
agreements and subject to each individual patient's right to designate his or
her own pharmacy or infusion therapy provider (the "Master Agreements"). Each
individual pharmacy service agreement entered into pursuant to the Master
Agreements, however, may be limited or terminated under certain circumstances,
including the disposition of any nursing facilities by Manor Care.
Under certain pharmaceutical supply agreements between New GranCare (as the
successor to GranCare's obligations under the agreements) and TeamCare (the
"Pharmaceutical Supply Agreements"), New GranCare has agreed to purchase for use
at substantially all of its facilities all of its pharmaceutical supplies and
related goods from TeamCare. The terms of the Pharmaceutical Supply Agreements
are for five years. Such agreements are terminable only upon a material breach
by TeamCare and a failure to cure such breach within 30 days of receipt of
notice. However, New GranCare has agreed that for so long as Vitalink's limited
guaranty of certain obligations of New GranCare to Health and Retirement
Properties Trust ("HRPT") is in effect, New GranCare will not terminate any of
the Pharmaceutical Supply Agreements. Accordingly, it is anticipated that the
Pharmaceutical Supply Agreements may extend through December 31, 2010, the date
when all present New GranCare obligations to HRPT will be satisfied. However,
there can be no assurance that the Pharmaceutical Supply Agreements will not be
earlier terminated following an early termination of Vitalink's limited guaranty
or otherwise.
Net revenues from Manor Care and its patients (including revenues pursuant
to government reimbursement programs) accounted for approximately 48%, 49% and
47% of total net revenues of Vitalink in fiscal 1996, 1995 and 1994,
respectively. On a pro forma basis, after giving effect to the Transactions,
net revenues from Manor Care and from New GranCare would have accounted for
approximately 31% of total combined revenues of Vitalink and TeamCare for the
year ended May 31, 1996. Consequently, a material loss of business from Manor
Care or New GranCare would have a material adverse effect on Vitalink.
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ASSUMPTION OF INDEBTEDNESS BY VITALINK AND RESTRICTIONS IMPOSED BY TERMS OF
INDEBTEDNESS
Prior to the Merger, 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 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 third party
consent to HRPT, a creditor and landlord of GranCare, that was required in
connection with the Distribution and the 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 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 45% of the outstanding Vitalink Common Stock
and is therefore able to exert substantial control over Vitalink. Pursuant to
the terms of the 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
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 Gene E. Burleson, 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 and there
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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
Although Manor Care has no present intent to dispose of any of its shares
of Vitalink Common Stock, Manor Care in the future may, subject to the
Shareholders Agreement, seek to effect such a disposition through a public
offering or a private sale to a third party or otherwise. 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 adversely
affected. Under the Shareholders Agreement, Manor Care and Vitalink agree that
for a period of three years after the 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
the 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.
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 35% of Vitalink's pharmacy service billings were paid by Medicare
Part B and Medicaid and 65% were paid by private individuals, long-term care
facilities that were in part reimbursed by Medicare, and other third party
payors. Reimbursements
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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 programs. In December
1995, President Clinton vetoed the 1995 Balanced Budget Act and proposed
alternative 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 operate 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 long-term care industry is highly competitive. Vitalink's competitive
position varies from facility to facility, from community to community and from
state to state. Vitalink's operations compete with services provided by
numerous local, regional and national institutional pharmacies, as well as the
pharmacy operations owned by long-term care providers other than Manor Care. A
number of these competitors are larger or have greater financial resources than
Vitalink. Vitalink also competes with other institutional pharmacies in the
acquisition and development of additional pharmacies. There can be no assurance
that Vitalink will not encounter increased competition which could adversely
affect its business, results of operations or financial condition. See
"Dependence on Acquisitions for Growth" below.
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
10
<PAGE>
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
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.
USE OF PROCEEDS
The net proceeds received by the Company in payment of the exercise price
for the Option Shares will be used for working capital and general corporate
purposes. The Resale Shares offered hereby are being offered for the accounts
of the respective Selling Shareholders. The Company will receive no proceeds
from the sale of the Resale Shares by the Selling Shareholders.
11
<PAGE>
SELLING SHAREHOLDERS
The Selling Shareholders are persons who were affiliates of GranCare at the
time the Merger was submitted for approval by the shareholders of GranCare and
therefore are subject to the provisions of Rule 145(c) under the Securities Act.
The following table sets forth certain information regarding the ownership of
the Common Stock by each of the Selling Shareholders. Unless otherwise
indicated, each of the Selling Shareholders has sole voting and investment power
with respect to such shares. The Resale Shares offered hereby represent the
Merger Shares issued in the Merger and the Resale Option Shares issuable upon
the exercise of options assumed in connection with the Merger. Because the
Selling Shareholders may offer all or some of the Resale Shares beneficially
owned by them pursuant to this Prospectus, no estimate can be given regarding
the number of shares of Common Stock that will be held by the Selling
Shareholders upon the completion of the offering.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED AS
OF MARCH 29, 1997
------------------------------------------
NAME OF SELLING PERCENTAGE NUMBER OF SHARES
SHAREHOLDER NUMBER OF SHARES OUTSTANDING OFFERED HEREBY
- ----------- ---------------- ----------- --------------
<S> <C> <C> <C>
Gene E. Burleson/(1)/ 416,845 2.5% 416,845
William G. Petty/(2)/ 350,379 2.1% 350,379
</TABLE>
___________________
/(1)/ Includes 275,950 Merger Shares and 140,895 Option Shares.
/(2)/ Includes 300,791 Merger Shares and 49,588 Option Shares. The 300,791
Merger Shares include (i) 220,296 shares held by a trust of which Mr.
Petty is a beneficiary and (ii) 80,070 shares owned by Mr. Petty's wife,
over which Mr. Petty has shared voting and investment power. Mr. Petty
disclaims beneficial ownership of such shares.
Gene E. Burleson has served as Chief Executive Officer and a Director of
Vitalink since the effective time of the Merger on February 12, 1997 (the
"Effective Time"). He has also served as Chairman of the Board since January
1994 and President and Chief Executive Officer of GranCare through the Effective
Time.
William G. Petty was a director of GranCare since GranCare's merger with
Evergreen Healthcare Inc. in July 1995 through the Effective Time.
12
<PAGE>
PLAN OF DISTRIBUTION
The Resale Shares offered hereby are being offered by the respective
Selling Shareholders. The Company will receive no proceeds from the sale of any
of the Resale Shares by the Selling Shareholders. The sale of the Resale Shares
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 Resale
Shares 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 Resale Shares 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 Resale Shares 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 Resale Shares
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 Resale Shares sold by
the Selling Shareholders hereby will be the purchase price of such Resale Shares
less any broker's commissions. In order to comply with the securities laws of
certain states, if applicable, the Resale Shares 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 Resale
Shares 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 any profit on their sale of the Resale Shares 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 Resale Shares 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
Shares offered hereby will be passed upon for the Company by Powell, Goldstein,
Frazer & Murphy LLP, Atlanta, Georgia.
13
<PAGE>
================================================================================
No person has been authorized to give any information or make any
representations in connection with this offering other than those contained in
this Prospectus and, if given or made, such other information and
representations must not be relied upon as having been authorized by the Company
or the Selling Shareholders. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of the Company subsequent to its date.
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, any securities other than the registered securities to which it
relates. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, such securities in any circumstances in which
such offer or solicitation is unlawful.
VITALINK PHARMACY SERVICES, INC.
COMMON STOCK
________________________________
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
Available Information..................................................... 3
Incorporation of Certain Documents by Reference........................... 4
The Company............................................................... 5
Recent Developments....................................................... 5
Risk Factors.............................................................. 6
Use of Proceeds........................................................... 11
Selling Shareholders...................................................... 12
Plan of Distribution...................................................... 13
Legal Matters............................................................. 13
Experts................................................................... 14
</TABLE>
________________________________
PROSPECTUS
________________________________
Dated April ___, 1997
================================================================================
<PAGE>
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 all of said amounts
will be paid by the Company.
<TABLE>
<S> <C>
Registration Fee - Securities and Exchange Commission.... $ 8,605
Blue Sky fees and expenses............................... 1,000
Accounting fees and expenses............................. 5,000
Legal fees and expenses.................................. 10,000
Printing................................................. 1,000
Miscellaneous Expenses................................... 395
=======
Total............................................... $26,000
=======
</TABLE>
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 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.
II-1
<PAGE>
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 Merger, dated as of September 3, 1996 (as amended),
between the Company and GranCare, Inc. (filed as Annex B to the Proxy
Statement/Prospectus contained in the Company's Registration Statement on
Form S-4 (Reg. No. 333-19097) and incorporated herein by reference).
2.2 Amended and Restated Agreement and Plan of Distribution, dated as of
September 3, 1996, between GranCare, Inc. and New GranCare, Inc. (filed
as Annex C to the Proxy Statement/Prospectus contained in the Company's
Registration Statement on Form S-4 (Reg. No. 333-19097) and incorporated
herein by reference).
2.4 Form of Shareholders Agreement, dated as of February 13, 1997, between
the Company and Manor Care, Inc. (filed as Exhibit 2.4 to the Company's
Registration Statement on Form S-4 (Reg. No. 333-19097) and incorporated
herein by reference).
4.1 Restated Certificate of Incorporation of the Company (filed as Exhibit
3.1 to the Company's Registration Statement on Form S-1 (Reg. No. 33-
43261) and incorporated herein by reference).
+4.2 Amended and Restated Bylaws of the Company.
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.
10.1 GranCare, Inc. Amended and Restated Stock Incentive Plan (incorporated by
reference to the Registration Statement on Form S-8 of GranCare, Inc.
(Reg. No. 33-47843) filed on May 13, 1992).
10.2 GranCare, Inc. Outside Directors Stock Incentive Plan (incorporated by
reference to the Annual Report on Form 10-K (File No. 1-1-19571) of
GranCare, Inc. for the year ended December 31, 1995).
II-2
<PAGE>
10.3 GranCare, Inc. Amended and Restated 1994 Stock Option/Stock Issuance Plan
(incorporated by reference to the Annual Report on Form 10-K (File No. 1-
1-19571) of GranCare, Inc. for the year ended December 31, 1995).
23.1 Consent of Robert W. Horner III (included in Exhibit 5.1).
+23.2 Consent of Ernst & Young LLP.
+23.3 Consent of Arthur Andersen LLP.
+24.1 Power of Attorney of Stewart Bainum, Jr.
+24.2 Power of Attorney of Gene E. Burleson.
+24.3 Power of Attorney of Joseph R. Buckley.
+24.4 Power of Attorney of Joel S. Kanter.
+24.5 Power of Attorney of James A. MacCutcheon.
+24.6 Power of Attorney of Robert L. Parker.
+24.7 Power of Attorney of James H. Rempe.
+24.8 Power of Attorney of Gary U. Rolle.
+24.9 Power of Attorney of Scott T. Macomber.
________________________
+ Filed herewith.
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.
II-3
<PAGE>
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 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 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 of 1933, 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 Securities Exchange Act of 1934)
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
of 1933 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 of the Company in
the successful defense of any action, suit or proceeding) is asserted against
the Company by such 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.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement 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.
(2) That, for purposes of determining any liability under the Securities
Act of 1933, each such post effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and an
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
II-4
<PAGE>
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
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in the City of Atlanta, State of Georgia, on this 9th day of April,
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>
* Chairman of the Board April 9, 1997
- ---------------------------
Stewart Bainum, Jr. of Directors
* Chief Executive Officer April 9, 1997
- ---------------------------
Gene E. Burleson and Director (Principal
Executive Officer)
* Director April 9, 1997
- ---------------------------
Joseph R. Buckley
* Director April 9, 1997
- ---------------------------
Joel S. Kanter
* Director April 9, 1997
- ---------------------------
James A. MacCutcheon
* Director April 9, 1997
- ---------------------------
Robert L. Parker
</TABLE>
II-5
<PAGE>
<TABLE>
<S> <C> <C>
* Director and April 9, 1997
- ---------------------------
James H. Rempe Secretary
* Director April 9, 1997
- ------------------------
Gary U. Rolle
* Vice President, Finance and April 9, 1997
- ------------------------
Scott T. Macomber Chief Financial Officer
(Principal Accounting and
Financial Officer)
</TABLE>
By: /s/ Robert W. Horner III
-------------------------------
Robert W. Horner III
Attorney-in-Fact
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
No. Description Number
- ----- ----------- ------
<S> <C> <C>
2.1 Agreement and Plan of Merger, dated as of September 3, 1996 (as
amended), between the Company and GranCare, Inc. (filed as Annex B to
the Proxy Statement/Prospectus contained in the Company's
Registration Statement on Form S-4 (Reg. No. 333-19097) and
incorporated herein by reference).
2.2 Amended and Restated Agreement and Plan of Distribution, dated as of
September 3, 1996, between GranCare, Inc. and New GranCare, Inc.
(filed as Annex C to the Proxy Statement/Prospectus contained in the
Company's Registration Statement on Form S-4 (Reg. No. 333-19097) and
incorporated herein by reference).
2.4 Form of Shareholders Agreement, dated as of February 13, 1997,
between the Company and Manor Care, Inc. (filed as Exhibit 2.4 to the
Company's Registration Statement on Form S-4 (Reg. No. 333-19097) and
incorporated herein by reference).
4.1 Restated Certificate of Incorporation of the Company (filed as
Exhibit 3.1 to the Company's Registration Statement on Form S-1 (Reg.
No. 33-43261) and incorporated herein by reference).
+4.2 Amended and Restated Bylaws of the Company.
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.
10.1 GranCare, Inc. Amended and Restated Stock Incentive Plan
(incorporated by reference to the Registration Statement on Form S-8
of GranCare, Inc. (Reg. No. 33-47843) filed on May 13, 1992).
10.2 GranCare, Inc. Outside Directors Stock Incentive Plan (incorporated
by reference to the Annual Report on Form 10-K (File No. 1-1-19571)
of GranCare, Inc. for the year ended December 31, 1995).
</TABLE>
<PAGE>
<TABLE>
<S> <C>
10.3 GranCare, Inc. Amended and Restated 1994 Stock Option/Stock Issuance
Plan (incorporated by reference to the Annual Report on Form 10-K
(File No. 1-1-19571) of GranCare, Inc. for the year ended December
31, 1995).
23.1 Consent of Robert W. Horner III (included in Exhibit 5.1).
+23.2 Consent of Ernst & Young LLP.
+23.3 Consent of Arthur Andersen LLP.
+24.1 Power of Attorney of Stewart Bainum, Jr.
+24.2 Power of Attorney of Gene E. Burleson.
+24.3 Power of Attorney of Joseph R. Buckley.
+24.4 Power of Attorney of Joel S. Kanter.
+24.5 Power of Attorney of James A. MacCutcheon.
+24.6 Power of Attorney of Robert L. Parker.
+24.7 Power of Attorney of James H. Rempe.
+24.8 Power of Attorney of Gary U. Rolle.
+24.9 Power of Attorney of Scott T. Macomber.
</TABLE>
________________________
+ Filed herewith.
<PAGE>
Annex A
-------
AMENDED AND RESTATED BYLAWS
OF
VITALINK PHARMACY SERVICES, INC.
(Hereinafter called the "Corporation")
---------------------------
ARTICLE I
OFFICES
Section 1. Office. The registered office of the Corporation shall be
------
in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. Additional Offices. The Corporation may also have offices
------------------
at such other places, both within and without the State of Delaware, as the
Board of Directors may from time to time determine or as the business of the
Corporation may require.
Section 3. Registered Agent. The registered agent of the Corporation
----------------
shall be United States Corporation Company.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Time and Place. Meetings of stockholders for any purpose
--------------
may be held at such time and place, within or without the State of Delaware, as
the Board of Directors may fix from time to time and as shall be stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meeting. Annual meetings of stockholders shall be
--------------
held on any date in the month of September or October in each year at 9:00 A.M.
<PAGE>
or at such other time and such date and time as shall be designated, from time
to time, by the Board of Directors and stated in the notice of the meeting. At
such annual meeting, the stockholders shall elect a board of directors and
transact such other business as may properly be brought before the meeting.
Section 3. Notice of Annual Meeting. Written notice of the annual
------------------------
meeting stating the place, date and time thereof shall be given to each
stockholder entitled to vote at such meeting not less than 10 nor more than 50
days prior to the meeting.
Section 4. List of Stockholders. The officer in charge of the stock
--------------------
ledger of the Corporation or the transfer agent shall prepare and make, at least
10 days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least 10 days prior to the meeting, either at
a place within the city where the meeting is to be held (other than the place of
the meeting), which place shall be specified in the notice of the meeting, or,
if not so specified, at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is present.
Section 5. Special Meetings. Special meetings of the stockholders,
----------------
for any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the Chairman of the Board or the
Chief Executive Officer or by a majority of the entire Board of Directors; and
shall be called by the Chief Executive Officer or Secretary at the request in
writing of a majority of the Board of Directors. Such request shall state the
purpose or purposes of the proposed meeting.
Section 6. Notice of Special Meeting. Written notice of a special
-------------------------
meeting stating the place, date and time thereof and the purpose or purposes for
which the special meeting is called, shall be given to each stockholder entitled
to vote at such meeting not less than 10 nor more than 50 days prior to the
meeting.
-2-
<PAGE>
Section 7. Presiding Officer; Order of Business.
------------------------------------
Meetings of stockholders shall be presided over by the Chief Executive
Officer, or if he is not present, by the Chairman of the Board, or, if he is not
present, by such person who may have been chosen by the Board of Directors or,
if none of such persons is present, by a chairman to be chosen by the
stockholders owning a majority of the shares of capital stock of the Corporation
issued and outstanding and entitled to vote at the meeting and who are present
in person or by proxy. The Secretary of the Corporation or, if he is not
present, an Assistant Secretary, or if he is not present, such person who may
have been chosen by the Board of Directors, shall act as secretary of meetings
of stockholders, but if none of such persons is present, the stockholders owning
a majority of the shares of capital stock of the Corporation issued and
outstanding and entitled to vote at the meeting and who are present in person or
by proxy shall choose any person present to act as secretary of the meeting.
Section 8. Quorum. The holders of a majority of shares of capital
------
stock of the Corporation issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall be necessary to, and shall
constitute a quorum for, the transaction of business at all meetings of the
stockholders, except as otherwise provided by statute or by the Certificate of
Incorporation. If, however, a quorum shall not be present or represented at any
meeting of the stockholders, the stockholders entitled to vote thereat, present
in person or represented by proxy, shall have the power to adjourn the meeting
from time to time, without notice of the adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken, until a
quorum shall be present or represented. Even if a quorum shall be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have the power to
adjourn the meeting from time to time, without notice of the adjourned meeting
if the time and place thereof are announced at the meeting at which the
adjournment is taken, until a date which is not more than 30 days after the date
of the original meeting. At such adjourned meeting, at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally called. If the adjournment is for more
than 30 days or, if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
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Section 9. Voting.
------
(a) At any meeting of stockholders, every stockholder having the right
to vote shall be entitled to vote in person or by proxy. Except as otherwise
provided by law or the Certificate of Incorporation, each stockholder of record
shall be entitled to one vote for each share of capital stock registered in his
name on the books of the Corporation.
(b) All elections shall be determined by a plurality vote and, except
as otherwise provided by law or the Certificate of Incorporation, all other
matters shall be determined by a vote of a majority of the shares present or
represented by proxy and actually voting on such other matters.
ARTICLE III
DIRECTORS
Section 1. General Powers; Number; Tenure. The business of the
------------------------------
Corporation shall be managed by its Board of Directors which may exercise all
powers of the Corporation and perform all lawful acts and things as are not by
law, the Certificate of Incorporation or these Bylaws directed or required to be
exercised or performed by the stockholders. The number of directors
constituting the whole Board of Directors shall be not less than 3 nor more than
8. Thereafter, within the limits above specified, the number of directors shall
be determined by the Board of Directors. The directors shall be elected at the
annual meeting of the stockholders, except as provided in Section 2 of this
Article, and each director elected shall hold office until his successor is
elected and shall qualify. Directors need not be stockholders.
Section 2. Vacancies. If any vacancies occur in the Board of
---------
Directors, or if any new directorships are created, they may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director. Each director so chosen shall hold office until the
next annual meeting of stockholders and until his successor is duly elected and
shall qualify. If there are no directors in office, any officer or stockholder
may call a special meeting of stockholders in accordance with the provisions of
the Certificate of Incorporation or these Bylaws, at which meeting such
vacancies shall be filled. A vacancy created by the removal of a director by
the stockholders may be filled by the stockholders.
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Section 3. Removal; Resignation.
--------------------
(a) A director may be removed for cause by the procedure hereinafter
provided. Before any director may be removed for cause, written charges
specifying the alleged cause, signed by at least one director, shall be filed
with the Secretary, a copy thereof shall be served on the director charged, and
he shall be given the opportunity, at a meeting of the Board of Directors held
not less than 5 days after such service, to be heard on the subject of such
charges. The affirmative vote of a majority of the entire Board of Directors
shall be necessary to effect such removal.
(b) Any director may resign at any time by giving written notice to
the Board of Directors, the Chairman of the Board or the Chief Executive Officer
of the Corporation. Unless otherwise specified in such written notice, a
resignation shall take effect upon delivery thereof to the Board of Directors or
the designated officer. It shall not be necessary for a resignation to be
accepted before it becomes effective.
Section 4. Place of Meeting. The Board of Directors may hold meetings
----------------
either within or without the State of Delaware.
Section 5. Meetings. Meetings of the Board of Directors may be called
--------
by the Chairman of the Board of Directors, the Chief Executive Officer or a
majority of the Board of Directors on at least 2 days' prior written notice
delivered to each director, either personally or by mail, by facsimile, or by
telegram. The notice shall set forth the time, date, place and purpose of each
such meeting.
Section 6. Quorum. At all meetings of the Board of Directors three-
------
quarters (3/4) of the number of directors then in office shall constitute a
quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors, except as may be otherwise specifically provided by law
or the Certificate of Incorporation or these Bylaws. If a quorum is not present
at any meeting of the Board of Directors, the directors present may adjourn the
meeting, from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 7. Compensation. Directors shall be entitled to such
------------
compensation for their services as directors and to such reimbursement for any
reasonable expenses incurred in attending directors' meetings as may from time
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to time be fixed by the Board of Directors. The compensation of directors may
be on such basis as is determined by the Board of Directors. Any director may
waive compensation for any meeting. Any director receiving compensation under
these provisions shall not be barred from serving the Corporation in any other
capacity and receiving reasonable compensation for such other services.
Section 8. Action by Consent. Any action required or permitted to be
-----------------
taken at any meeting of the Board of Directors may be taken without a meeting if
a written consent to such action is signed by all members of the Board of
Directors and such written consent is filed with the minutes of the proceedings.
ARTICLE IV
COMMITTEES
Section 1. Committees. The Board of Directors, by resolutions
----------
adopted by a majority of the whole Board, may appoint such committee or
committees as it shall deem advisable and with such functions and duties as the
Board of Directors shall prescribe.
Section 2. Vacancies; Changes; Discharge. The Board of Directors
-----------------------------
shall have the power at any time to fill vacancies in, to change the membership
of, and to discharge any such committee.
Section 3. Compensation. Members of any committee shall be entitled
------------
to such compensation for their services as members of any such committee and to
such reimbursement for any reasonable expenses incurred in attending committee
meetings as may from time to time be fixed by the Board of Directors. Any
member may waive compensation for any meeting.
Section 4. Action by Consent. Any action required or permitted to be
-----------------
taken at any meeting of any committee of the Board of Directors may be taken
without a meeting if a written consent to such action is signed by all members
of the committee and such written consent is filed with the minutes of its
proceedings.
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ARTICLE V
NOTICES
Section 1. Form; Delivery. Whenever, under the provisions of law, the
--------------
Certificate of Incorporation or these Bylaws, notice is required to be given to
any director or stockholder, it shall not be construed to mean personal notice
unless otherwise specifically provided, but such notice may be given in writing,
by mail, addressed to such director or stockholder, at his address as it appears
on the records of the Corporation, with postage thereon prepaid. Notice to a
director may also be given personally or by facsimile or telegram sent to his
address as it appears on the records of the Corporation. Notice given by mail
shall be deemed given three business days following the deposit of a notice in
the United States mail; notice given via personal delivery shall be deemed given
when actually received; notice given by telecopy shall be deemed given upon
receipt of a machine-generated confirmation of successful completion of
transmission of the telecopy message and notice delivered via overnight courier
will be deemed delivered the following business day.
Section 2. Waiver. Whenever any notice is required to be given under
------
the provisions of law, the Certificate of Incorporation or these Bylaws, a
written waiver thereof, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed to be
equivalent to such notice. In addition, any stockholder who attends a meeting
of stockholders in person, or is represented at such meeting by proxy, without
protesting prior to the commencement of the meeting the lack of notice thereof
to him, or any director who attends a meeting of the Board of Directors without
protesting, prior to the commencement of the meeting, such lack of notice, shall
be conclusively deemed to have waived notice of such meeting.
ARTICLE VI
OFFICERS
Section 1. Designations. The officers of the Corporation shall be
------------
chosen by the Board of Directors and shall be a Chairman of the Board, a Chief
Executive Officer, a President, a Secretary and a Treasurer. The Board of
Directors may also choose one or more Executive or Senior Vice Presidents, one
or more additional vice presidents, one or more assistant secretaries and
assistant treasurers, and such other officers and agents as it shall deem
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necessary. All officers of the Corporation shall hold their offices for such
terms and shall exercise such power and perform such duties as shall from time
to time be determined by the Board of Directors. Any number of offices may be
held by the same person, unless the Certificate of Incorporation or these Bylaws
otherwise provide.
Section 2. Term of Office; Removal. The Board of Directors at its
-----------------------
first meeting after each annual meeting of stockholders shall choose a Chairman,
a Chief Executive Officer, a President, a Secretary and a Treasurer and such
other officers as the Board of Directors shall deem appropriate. The officers
of the Corporation shall hold office until their successors are chosen and shall
qualify. Any officer elected or appointed by the Board of Directors may be
removed, with or without cause, at any time by the affirmative vote of a
majority of the directors then in office. Such removal shall not prejudice the
contract rights, if any, of the person so removed. Any vacancy occurring in any
office of the Corporation may be filled for the unexpired portion of the term by
the Board of Directors.
Section 3. Compensation. The salaries of all officers of the
------------
Corporation shall be fixed by the Board of Directors.
Section 4. The Chairman of the Board. The Chairman shall preside at
-------------------------
all meetings of the Board of Directors which he shall attend.
Section 5. (a) The Chief Executive Officer. The Chief Executive
---------------------------
Officer shall have general charge of the business and affairs of the Corporation
subject to the policies of the Board of Directors. It shall be the Chief
Executive Officer's duty to attend to the business of the Corporation and
maintain strict supervision over all of its affairs and interests. The Chief
Executive Officer shall keep the Board of Directors fully advised about the
affairs and conditions of the Corporation, and shall manage and operate the
business of the Corporation pursuant to and in accordance with such policies as
may be prescribed from time to time by the Board of Directors. The Chief
Executive Officer shall, subject to the approval of the Board, hire and fix the
compensation of all employees and agents of the Corporation (other than the
officers listed in this Article VI, unless such power is delegated to the Chief
Executive Officer by the Board of Directors), and any persons thus hired shall
be removable at the Chief Executive Officer's pleasure. Unless the Board of
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<PAGE>
Directors by resolution shall otherwise provide, the Chief Executive Officer may
delegate in writing such of the Chief Executive Officer's powers as the Chief
Executive Officer deems appropriate to other officers, employees, and agents of
the Corporation. The Chief Executive Officer shall preside at all meetings of
the stockholders. The Chief Executive Officer shall have and exercise direct
charge of the general supervision of all business and affairs of the Corporation
and subject to the control of the Board of Directors shall perform all duties
incident to the office of the Chief Executive Officer of a corporation, and such
other duties as may be assigned by the Board of Directors.
(b) Unless otherwise prescribed by the Board of Directors, the Chief
Executive Officer shall have full power and authority on behalf of the
Corporation to attend, act and vote at any meeting of security holders of other
corporations in which the Corporation may hold securities. At such meeting, the
Chief Executive Officer shall possess and may exercise any and all rights and
powers incident to the ownership of such securities which the Corporation might
have possessed and exercised if it had been present. The Board of Directors may
from time to time confer like powers upon any other person or persons.
Section 6. The President. The President shall be the Chief Operating
-------------
Officer of the Corporation and shall perform all duties incident to the office
of the President, subject to the direction of the Chief Executive Officer and
the Board of Directors.
Section 7. The Vice Presidents. The Vice President (or in the event
-------------------
there be more than one, the Vice Presidents in the order designated, or in the
absence of any designation, then in the order of their election) shall, in the
absence of the President or in the event of his disability, perform the duties
and exercise the powers of the President and shall generally assist the Chief
Executive Officer and the President and perform such other duties and have such
other powers as may from time to time be prescribed by the Chief Executive
Officer and the Board of Directors.
Section 8. The Secretary. The Secretary shall attend all meetings of
-------------
the Board of Directors and all meetings of stockholders and record all votes and
the proceedings of the meetings in a book to be kept for that purpose and shall
perform like duties for committees, if required. He shall give, or cause to be
given, notice of all meetings of stockholders and special meetings of the Board
of Directors, and shall perform such other duties as may from time to time be
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<PAGE>
prescribed by the Chief Executive Officer and the Board of Directors. He shall
have custody of the seal of the Corporation and he, or an Assistant Secretary,
shall have authority to affix the same to any instrument requiring it and, when
so affixed, the seal may be attested by his signature or by the signature of
such Assistant Secretary. The Board of Directors may give general authority to
any other officer to affix the seal of the Corporation and to attest the
affixing thereof by his signature.
Section 9. The Assistant Secretary. The Assistant Secretary (or in
-----------------------
the event there be more than one, the Assistant Secretaries in the order
designated, or in the absence of any designation, then in the order of their
election) shall, in the absence of the Secretary or in the event of his
disability, perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as may from time to
time be prescribed by the Chief Executive Officer and the Board of Directors.
Section 10. The Treasurer. The Treasurer shall have the custody of
-------------
the corporate funds and other valuable effects, including securities, and shall
keep full and accurate accounts of receipts and disbursements in books belonging
to the Corporation and shall deposit all moneys and other valuable effects in
the name and to the credit of the Corporation in such depositories as may from
time to time be designated by the Board of Directors. He shall disburse the
funds of the Corporation as may be ordered by the Chief Executive Officer and
the Board of Directors, taking proper vouchers for such disbursements, and shall
render to the Chief Executive Officer at annual meetings of the Board, or
whenever he may require it, an account of all of the Treasurer's transactions as
Treasurer and of the financial condition of the Corporation. The Treasurer
shall have such other duties and have such other powers as may from time to time
be prescribed by the Chief Executive Officer and the Board of Directors.
Section 11. The Assistant Treasurer. The Assistant Treasurer (or in
-----------------------
the event there shall be more than one, the Assistant Treasurers in the order
designated, or in the absence of any designation, then in the order of their
election) shall, in the absence of the Treasurer or in the event of his
disability, perform the duties and exercise the powers of the Treasurer and
shall perform such other duties and have such other powers as may from time to
time be prescribed by the Chief Executive Officer and the Board of Directors.
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ARTICLE VII
INDEMNIFICATION OF
OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
Section 1. Action, Other Than by or in the Right of the Corporation.
--------------------------------------------------------
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding or investigation, whether civil, criminal or administrative,
and whether external or internal to the Corporation (other than a judicial
action or suit brought by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or trustee of the
Corporation, or that, being or having been such a director, officer, employee or
trustee, he is or was serving at the request of the Corporation as a director,
officer, employee, trustee or agent of another corporation, partnership, joint
venture, trust or other enterprise (all such persons being referred to hereafter
as an "Agent"), against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding, or any appeal therein, if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding -- whether by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
---- ----------
its equivalent -- shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, that he had reasonable cause to believe that his
conduct was unlawful.
Section 2. Action, by or in the Right of the Corporation. The
---------------------------------------------
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed judicial action or suit
brought by or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that he is or was an Agent (as defined above) against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense, settlement or appeal of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
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<PAGE>
shall have been adjudged to be liable for gross negligence or misconduct in the
performance of his duty to the Corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or other such court shall deem proper.
Section 3. Determination of Right of Indemnification. No
-----------------------------------------
indemnification under Section 1 or 2 of this Article VII (unless ordered by a
court) shall be made by the Corporation unless a determination is reasonably and
promptly made (i) by the Board by a majority vote of directors who were not
parties to such action, suit or proceedings, even though less than a quorum or
(ii) if there are no such directors or if such directors so direct, by
independent legal counsel in a written opinion, or (iii) by the stockholders,
that such person did not act in good faith and in a manner that such person
reasonably believed to be in or not opposed to the best interests of the
Corporation, or, with respect to any criminal proceeding, that such person
believed or had reasonable cause to believe that his conduct was unlawful.
Section 4. Indemnification Against Expenses of Successful Party.
----------------------------------------------------
Notwithstanding the other provisions of this Article, to the extent that an
Agent has been successful on the merits or otherwise, including the dismissal of
an action without prejudice or the settlement of an action without admission of
liability, in defense of any proceeding or in defense of any claim, issue or
matter therein, or on appeal from any such proceeding, action, claim or matter,
such Agent shall be indemnified against all expenses incurred in connection
therewith.
Section 5. Advances of Expenses. Except as limited by Section 6 of
--------------------
this Article, expenses incurred in defending any civil, criminal, administrative
or investigative action, suit or proceeding or investigation or any appeal
therein shall be paid by the Corporation in advance of the final disposition of
such matter, if the Agent shall undertake to repay such amount in the event that
it is ultimately determined, as provided herein, that such person is not
entitled to indemnification. Notwithstanding the foregoing, no advance shall be
made by the Corporation if a determination is reasonably and promptly made by
the Board of Directors by a majority vote of disinterested directors, or (if
there are no such directors or such directors so direct) by independent legal
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counsel in a written opinion, that, based upon the facts known to the Board or
counsel at the time such determination is made, such person did not act in good
faith and in a manner that such person believed to be in or not opposed to the
best interests of the Corporation, or, with respect to any criminal proceeding,
that such person believed or had reasonable cause to believe his conduct was
unlawful. In no event shall any advance be made in instances where the Board or
independent legal counsel reasonably determines that such person deliberately
breached his duty to the Corporation or its shareholders.
Section 6. Right of Agent to Indemnification Upon Application;
---------------------------------------------------
Procedure Upon Application. Any indemnification under Sections 1, 2, and 4, or
- --------------------------
advance under Section 5 of this Article, shall be made promptly, and in any
event within ninety days, upon the written request of the Agent, unless with
respect to applications under Sections 1, 2, and 5, a determination is
reasonably and promptly made by the Board of Directors by a majority vote of
disinterested directors that such Agent acted in a manner set forth in such
Sections as to justify the Corporation's not indemnifying or making an advance
to the Agent. In the event there are no such disinterested directors, the Board
of Directors shall promptly direct that independent legal counsel shall decide
whether the Agent acted in the manner set forth in such Sections as to justify
the Corporation's not indemnifying or making an advance to the Agent. The right
to indemnification or advances as granted by this Article shall be enforceable
by the Agent in any court of competent jurisdiction, if the Board or independent
legal counsel denies the claim, in whole or in part, or if no disposition of
such claim is made within ninety days. The Agent's expenses incurred in
connection with successfully establishing his right to indemnification, in whole
or in part, in any such proceeding shall also be indemnified by the Corporation.
Section 7. Contribution. In order to provide for just and equitable
------------
contribution in circumstances in which the indemnification provided for in this
Article is held by a court of competent jurisdiction to be unavailable to an
indemnitee in whole or in part, the Corporation shall, in such an event, after
taking into account, among other things, contributions by other directors and
officers of the Corporation pursuant to indemnification agreements or otherwise,
and in the absence of personal enrichment, acts of intentional fraud or
dishonesty or criminal conduct on the part of the Agent, contribute to the
payment of Agent's losses to the extent that, after other contributions are
taken into account, such losses exceed: (i) in the case of a director of the
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Corporation or any of its subsidiaries who is not an officer of the Corporation
or any of such subsidiaries, the amount of fees paid to him for serving as a
director during the 12 months preceding the commencement of the suit, proceeding
or investigation; or (ii) in the case of a director of the Corporation or any of
its subsidiaries who is also an officer of the Corporation or any of such
subsidiaries, the amount set forth in clause (i) plus 5% of the aggregate cash
compensation paid to said director for service in such office(s) during the 12
months preceding the commencement of the suit, proceeding or investigation; or
(iii) in the case of an officer of the Corporation or any of the subsidiaries,
5% of the aggregate cash compensation paid to such officer for service in such
office(s) during the 12 months preceding the commencement of such suit,
proceeding or investigation.
Section 8. Other Rights and Remedies. The indemnification provided by
-------------------------
this Article shall not be deemed exclusive of, and shall not affect, any other
rights to which an Agent seeking indemnification may be entitled under any
Bylaws, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be an Agent and shall inure to the benefit of the heirs, executors and
administrators of such a person. All rights to indemnification under this
Article shall be deemed to be provided by a contract between the Corporation and
the Agent who serves in such capacity at any time while these Bylaws and other
relevant provisions of the general corporation law and other applicable law, if
any, are in effect. Any repeal or modification thereof shall not affect any
rights or obligations then existing.
Section 9. Insurance. Upon resolution passed by the Board, the
---------
Corporation may purchase and maintain insurance on behalf of any person who is
or was an Agent against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of this Article. The Corporation may create a trust fund, grant
a security interest or use other means (including, without limitation, a letter
of credit) to ensure the payment of such sums as may become necessary to effect
indemnification as provided herein.
Section 10. Constituent Corporations. For the purposes of this
------------------------
Article, references to "the Corporation" include all constituent corporations
absorbed in a consolidation or merger as well as the resulting or surviving
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<PAGE>
corporation, so that any person who is or was a director, officer, employee, or
trustee of such a constituent corporation or who, being or having been such a
director, officer, employee or trustee, is or was serving at the request of such
constituent corporation as a director, officer, employee, trustee of another
corporation, partnership, joint venture, trust or other enterprise shall stand
in the same position under the provisions of this Article with respect to the
resulting or surviving corporation as he would if he had served the resulting or
surviving corporation in the same capacity.
Section 11. Other Enterprises, Fines, and Serving at Corporation's
------------------------------------------------------
Request. For purposes of this Article, references to "other enterprises" in
- -------
Sections 1 and 7 shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a person with respect to any employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service by Agent as director, officer, employee, trustee or
agent of the Corporation which imposes duties on, or involves services by, such
Agent with respect to any employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interests of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this
Article.
Section 12. Savings Clause. If this Article or any portion hereof
--------------
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify each Agent as to expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
with respect to any action, suit, appeal, proceeding or investigation, whether
civil, criminal or administrative, and whether internal or external, including a
grand jury proceeding and an action or suit brought by or in the right of the
Corporation, to the full extent permitted by any applicable portion of this
Article that shall not have been invalidated, or by any other applicable law.
ARTICLE VIII
STOCK CERTIFICATES
Section 1. Form; Signatures.
----------------
(a) Every holder of stock in the Corporation shall be entitled to have
a certificate, signed by the Chief Executive Officer or the President and the
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Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary
of the Corporation, exhibiting the number, and class (and series, if any), of
shares owned by him, and bearing the seal of the Corporation. Such seal may be
a facsimile. Where a certificate is manually signed (i) by transfer agent other
than the Corporation or its employee or (ii) by a registrar other than the
Corporation or its employee, the signature of any such officer may be a
facsimile. In case any officer who has signed, or whose facsimile signature was
placed on, a certificate shall have ceased to be such officer before such
certificate is issued, it may nevertheless be issued by the Corporation with the
same effect as if he were such officer at the date of its issue.
(b) All stock certificates representing shares of capital stock which
are subject to restrictions on transfer or to other restrictions, may have
imprinted thereon a notation to such effect, as shall be determined by the Board
of Directors.
Section 2. Registration of Transfer. Upon surrender to the
------------------------
Corporation or any transfer agent of the Corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation or its transfer
agent to issue a new certificate to the person entitled thereto, to cancel the
old certificate and to record the transaction upon its books.
Section 3. Registered Stockholders.
-----------------------
(a) Except as otherwise provided by law, the Corporation shall be
entitled to recognize the exclusive right of a person who is registered on its
books as the owner of shares of capital stock to receive dividends or other
distributions and to vote as such owner, a person who is registered on its books
as the owner of shares of its capital stock. The Corporation shall not be bound
to recognize any equitable or legal claim to or interest in such shares on the
part of any other person.
(b) Stockholders are responsible for giving written notice to the
Corporation or the transfer agent and registrar, if any, of any change or name
or address, and failure to do so shall relieve the Corporation, its directors,
officers and agents, and its transfer agent and registrar, if any, of liability
for failure to send notices or pay dividends or other distributions to a name or
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address other than the name or address appearing on the stock ledger maintained
by the Corporation or by the transfer agent and registrar, if any.
Section 4. Record Date. In order that the Corporation may determine
-----------
the stockholders of record who are entitled to notice of or vote at any meeting
of stockholders or any adjournment thereof, or entitled to receive payment of
any dividend, or to make a determination of the stockholders of record for any
other proper purpose, the Board of Directors may, in advance, fix a date as the
record date for any such determination. Such date shall not be more than 60 nor
less than 10 days before the date of such meeting, nor more than 60 days prior
to the date of any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
Section 5. Lost, Stolen or Destroyed Certificates. The Board of
--------------------------------------
Directors may direct a new certificate to be issued in place of any certificate
theretofore issued by the Corporation which is claimed to have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate, or his legal
representative, to advertise the same in such manner as it shall require and/or
to give the Corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the Corporation with respect to the
certificate claimed to have been lost, stolen or destroyed.
ARTICLE IX
GENERAL PROVISIONS
Section 1. Dividends. Subject to the provisions of the Certificate of
---------
Incorporation, dividends upon the outstanding capital stock of the Corporation
may be declared by the Board of Directors at any meeting, pursuant to law, and
may be paid in cash, in property, or in shares of the Corporation's capital
stock.
Section 2. Reserves. The Board of Directors shall have full power,
--------
subject to the provisions of law and the Certificate of Incorporation, to
determine whether any, and, if so, what part, of the funds legally available for
-17-
<PAGE>
the payment of dividends shall be declared as dividends and paid to the
stockholders of the Corporation. The Board of Directors may fix a sum which may
be set aside or reserved over and above the paid-in capital of the Corporation
for working capital or as a reserve for any proper purpose, and may, from time
to time, increase, diminish or vary such fund in its absolute judgment and
discretion.
Section 3. Fiscal Year. The fiscal year of the Corporation shall
-----------
begin on June 1 in each calendar year and end on May 31 in the following
calendar year.
Section 4. Seal. The corporate seal shall have inscribed thereon the
----
name of the Corporation, and the words "Corporate Seal, Delaware".
ARTICLE X
AMENDMENTS
These Bylaws may be altered, amended or repealed or new Bylaws may be
adopted (a) at any annual or special meeting of stockholders at which a quorum
is present or represented, by the affirmative vote of a majority of the shares
entitled to vote, provided notice of the proposed alteration, amendment or
repeal be contained in the notice of such meeting; or (b) by the affirmative
vote of a majority of the whole Board of Directors at any meeting of the Board
provided that notice of the proposal to make, alter or repeal these Bylaws, or
to adopt new Bylaws, was included in the notice of the directors' meeting at
which such action takes place.
-18-
<PAGE>
EXHIBIT 5
---------
April 9, 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, concurrently herewith. The Registration Statement relates to (i) the
issuance of 917,759 shares (the "Option Shares") of Common Stock, par value $.01
per share (the "Common Stock"), of the Company underlying outstanding options to
purchase Common Stock of the Company, (ii) the resale of 190,483 Option Shares
issuable to certain selling shareholders named therein (the "Selling
Shareholders"), and (iii) the resale of 576,741 shares of Common Stock held by
the Selling Shareholders as a result of a merger between the Company and
GranCare, Inc. (the "Merger Shares").
In connection with rendering the opinion set forth below, I have reviewed
the records of the Company, the minutes of the meetings of the stockholders 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 Option Shares have been or will be legally issued, fully paid and
nonassessable when issued in accordance with the terms of the related option
grant.
3. The Merger Shares to be offered to third party purchasers have been
legally issued and are fully paid and nonassessable.
<PAGE>
Securities and Exchange Commission
April 9, 1997
Page 10
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 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated September 25, 1996 with respect to the combined
financial statements of TeamCare, Inc. at December 31, 1995 and 1994, and for
each of the three years in the period ended December 31, 1995, incorporated by
reference into the Registration Statement (Form S-3) and related Prospectus of
Vitalink Pharmacy Services, Inc. for the registration of 1,494,500 shares of its
common stock.
ERNST & YOUNG LLP
Atlanta, Georgia
April 7, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated June 25, 1996,
included and incorporated by reference in Vitalink Pharmacy Services, Inc.'s
Form 10-K/A for the year ended May 31, 1996 and to all references to our Firm
included in this registration statement.
/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP
Washington, D.C.
April 7, 1997
<PAGE>
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 Vitalink
into GranCare, Inc. ("GranCare") to (i) certain former affiliates of GranCare
and (ii) shares of Common Stock issuable upon the exercise of Vitalink stock
options issued to employees or former employees of GranCare in connection with
the Merger, 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: April 9, 1997
_______________________________
<PAGE>
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 Vitalink
into GranCare, Inc. ("GranCare") to (i) certain former affiliates of GranCare
and (ii) shares of Common Stock issuable upon the exercise of Vitalink stock
options issued to employees or former employees of GranCare in connection with
the Merger, 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/ Gene E. Burleson
--------------------------------------
Gene E. Burleson
Date: April 9, 1997
---------------------------------
<PAGE>
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 Vitalink
into GranCare, Inc. ("GranCare") to (i) certain former affiliates of GranCare
and (ii) shares of Common Stock issuable upon the exercise of Vitalink stock
options issued to employees or former employees of GranCare in connection with
the Merger, 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: April 9, 1997
-----------------------------
<PAGE>
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 Vitalink
into GranCare, Inc. ("GranCare") to (i) certain former affiliates of GranCare
and (ii) shares of Common Stock issuable upon the exercise of Vitalink stock
options issued to employees or former employees of GranCare in connection with
the Merger, 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: April 9, 1997
----------------------------
<PAGE>
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 Vitalink
into GranCare, Inc. ("GranCare") to (i) certain former affiliates of GranCare
and (ii) shares of Common Stock issuable upon the exercise of Vitalink stock
options issued to employees or former employees of GranCare in connection with
the Merger, 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: April 9, 1997
-------------------------------
<PAGE>
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 Vitalink
into GranCare, Inc. ("GranCare") to (i) certain former affiliates of GranCare
and (ii) shares of Common Stock issuable upon the exercise of Vitalink stock
options issued to employees or former employees of GranCare in connection with
the Merger, 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: April 9, 1997
-------------------------------
<PAGE>
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 Vitalink
into GranCare, Inc. ("GranCare") to (i) certain former affiliates of GranCare
and (ii) shares of Common Stock issuable upon the exercise of Vitalink stock
options issued to employees or former employees of GranCare in connection with
the Merger, 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: April 9, 1997
--------------------------------
<PAGE>
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 Vitalink
into GranCare, Inc. ("GranCare") to (i) certain former affiliates of GranCare
and (ii) shares of Common Stock issuable upon the exercise of Vitalink stock
options issued to employees or former employees of GranCare in connection with
the Merger, 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: April 9, 1997
-------------------------------
<PAGE>
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 Vitalink into GranCare, Inc. ("GranCare") to (i)
certain former affiliates of GranCare and (ii) shares of Common Stock issuable
upon the exercise of Vitalink stock options issued to employees or former
employees of GranCare in connection with the Merger, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent 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 said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully of or cause to be done by virtue hereof.
/s/ Scott T. Macomber
----------------------------------
Scott T. Macomber
Date: April 9, 1997
-----------------------------
