EXHIBIT 2.4
SHAREHOLDERS AGREEMENT
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AGREEMENT, dated as of February 12, 1997 (the "Agreement"), by and
between Vitalink Pharmacy Services, Inc., a Delaware corporation ("Vitalink"),
and Manor Care, Inc., a Delaware corporation ("Manor Care").
RECITALS
WHEREAS, pursuant to an Amended and Restated Agreement and Plan of
Merger (the "Merger Agreement") dated September 3, 1996 between Vitalink and
GranCare, Inc., a California corporation ("GranCare"), Vitalink and GranCare
will combine their respective pharmacy businesses and GranCare will be merged
with and into Vitalink (the "Merger") and Vitalink shall be the surviving
corporation (capitalized terms used herein and not otherwise defined shall have
the meaning set forth in the Merger Agreement); and
WHEREAS, Manor Care, Inc. currently owns beneficially 11,500,000
shares of Vitalink Common Stock, par value $.01 per share (collectively with any
Vitalink Common Stock acquired hereafter, the "Shares"); and
WHEREAS, to induce GranCare to enter into the Merger Agreement, Manor
Care as the majority stockholder of Vitalink has agreed to enter into this
Agreement for the purpose of regulating, for a period of three years from the
Effective Time, certain aspects of the relationships as a stockholder with
respect to Vitalink;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto agree as follows:
ARTICLE I
CORPORATE GOVERNANCE
Section 1.1. Composition of the Board. Manor Care acknowledges that, pursuant
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to the terms of the Merger Agreement, at the Effective Time the Board of
Directors of the Surviving Corporation (the "Board") shall consist of eight
directors, four of whom will be designated by GranCare (including successors as
provided in Section 1.3 below, the
"GranCare Nominees"), and the remaining number of whom shall be designated by
Manor Care as set forth in Section 1.4 of the Merger Agreement. Manor Care will,
at all times during the term of this Agreement, vote the Shares or execute
consents, as the case may be, and take all other necessary action (including,
without limitation, any action required in order to satisfy any quorum
requirement) in order to elect or reelect the GranCare Nominees. Manor Care
shall not vote the Shares or execute consents to change the number of Directors
unless such action shall have been recommended by a majority of the GranCare
Nominees.
Section 1.2. Removal. Manor Care agrees that if, at any time, during the term
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of this Agreement it is then entitled to vote any of the Shares for the removal
of Directors of the Surviving Corporation, it will not vote any of the Shares in
favor of the removal of any GranCare Nominee, unless such removal shall be
requested as set forth in the following sentence. Manor Care agrees that if (a)
a majority of the GranCare Nominees request removal of a GranCare Nominee in
writing or (b) a majority of the full Board of Directors requests the removal of
a Director for cause, Manor Care shall vote the Shares in favor of such removal.
Section 1.3. Vacancies. If, during the term of this Agreement, there shall
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exist or occur a vacancy of the Board and such vacancy shall be created by the
death, disability, retirement, resignation, removal of a GranCare Nominee:
(a) The remaining GranCare Nominees shall designate another individual
(the "Nominee") to fill such vacancy and serve as a director of the Surviving
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Corporation; and
(b) Manor Care, at all times during the term of this Agreement, will
vote its Shares, or execute a written consent, as the case may be, and take all
other necessary action (including, without limitation, any action required in
order to satisfy any quorum requirements) in order to ensure that the Nominee is
elected to the Board.
Section 1.4. Amendment of By-laws. Manor Care acknowledges that Vitalink's By-
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laws, in the form attached hereto as Annex 1 (the "By-laws"), reflect the
agreement between the parties to the Merger Agreement as to certain matters of
corporate governance. In furtherance of such agreement, during the term of this
Agreement, Manor Care will use al1 commercially reasonable efforts to cause
board members who are not GranCare Nominees to approve amendments
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to the By-laws only if such amendments are approved by a majority of the
GranCare Nominees.
ARTICLE II
RESTRICTIONS ON TRANSFER OF
COMMON STOCK
Section 2.1. Restriction on Public Transfer. Other than as provided in Section
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2.2 below or in the manner and to the extent permitted by the volume and manner
or sale provisions of Rule 144 (or any successor provisions under the Securities
Act) during the term of this Agreement Manor Care will not sell, assign,
transfer, pledge or otherwise dispose of (any such event, a "Transfer") the
Shares in the public market.
Section 2.2. Public Offering. During the term of this Agreement, Manor Care
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may, with the prior written consent of a majority of the GranCare Nominees,
Transfer the Shares in a public offering pursuant to a registration statement
declared effective by the SEC.
Section 2.3. Restriction on Private Transfer. During the term of this
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Agreement Manor Care shall not Transfer in a private transaction or series of
private transactions more than 10% of the outstanding Vitalink Common Stock to
any Person or group (as such terms are used in Section 13(d) and the relevant
rules promulgated under the Exchange Act or any successor provision) unless
immediately prior to such Transfer such Person shall have executed and delivered
to the Surviving Corporation a written agreement pursuant to which such Person
shall be bound by the terms of this Agreement. The total outstanding Vitalink
Common Stock shall be determined at the time of each transfer based on the most
recent Form 10-K or Form 10-Q available with respect to the Surviving
Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Representations and Warranties of Manor Care. Manor Care is duly
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organized, validly existing in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to carry on its
business as now being conducted. Manor Care has the requisite corporate power
and other authority to enter into
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this Agreement and consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Manor Care and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Manor Care. This Agreement has been duly
executed and delivered by Manor Care and constitutes a valid and binding
obligation of Manor Care enforceable against it in accordance with its terms.
Section 3.1. Representations and Warranties of Vitalink. Vitalink is duly
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organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to carry on its
business as now being conducted. Vitalink has the requisite corporate power and
other authority to enter into this Agreement and consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Vitalink
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Vitalink. This
Agreement has been duly executed and delivered by Vitalink and constitutes a
valid and binding obligation of Vitalink, enforceable against it in accordance
with its terms.
ARTICLE IV
MISCELLANEOUS
Section 4.1. Governinq Law. This Agreement shall be governed by the laws of
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the State of Delaware (regardless of the law that might otherwise govern under
applicable Delaware principles of conflicts of law) as to all matters, including
but not limited to matters of validity, construction, effect, performance and
remedies.
Section 4.2. Binding Effect. This Agreement shall be binding on and inure to
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the benefit of the parties hereto and their respective legal representatives,
successor and assigns. Nothing in this Agreement, expressed or implied is
intended to confer on any persons other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement. Notwithstanding the foregoing,
any GranCare Nominee shall have standing to assert any claim for any breach of
this Agreement or to otherwise take such action as may be deemed necessary or
appropriate to enforce the provisions of this Agreement. Any GranCare Nominee
taking action reasonably believed to be consistent with enforcing the provisions
of this Agreement shall be
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indemnified for the consequences of such action to the fullest extent permitted
by law and any expenses incurred in connection therewith shall be for the
account of and paid promptly by Vitalink.
Section 4.3. Severability. In case any one or more of the provisions contained
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in this Agreement should be invalid, illegal or unenforceable in any respect
against a party hereto, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and such invalidity, illegality or unenforceability shall only
apply as to such party in the specific jurisdiction where such judgment shall be
made.
Section 4.4. Recapitalization, Exchanges, Etc. All the provisions of this
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Agreement shall apply, to the full extent set forth herein with respect to the
Shares and any and all securities of the Surviving Corporation or any successor
or assign of the Surviving Corporation (whether by merger, consolidation, sale
of assets or otherwise) which may be issued in respect of, in exchange for, or
in substitution of the Shares or by reason of any stock dividend, split, reverse
split, combination, recapitalization, reclassification, merger, consolidation or
otherwise.
Section 4.5. Notices, Etc. All notices and other communications hereunder
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shall be in writing and shall be delivered in the manner and at the address
(unless subsequently notified to the contrary in the manner provided therein) as
provided in the Merger Agreement.
Section 4.6. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 4.7. Amendment. This Agreement may be amended, modified or
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supplemented only with the written agreement of Vitalink and Manor Care.
Section 4.8. Termination. This Agreement shall terminate and have no further
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force or effect on any party hereto on the date three years from the Effective
Time.
Section 4.9. Injunctive Relief. Each of the parties hereto recognizes and
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acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it
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would not have an adequate remedy at law for money damages, and therefore each
of the parties hereto agrees that in the event of any such breach the aggrieved
party shall be entitled to the remedy of specific performance of such covenants
and agreements and injunctive and other equitable relief in addition to any
other remedy to which it may be entitled, at law or in equity.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date above written.
MANOR CARE, INC.
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Senior Vice President
VITALINK PHARMACY SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: Vice President, Finance
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