EXHIBIT 2.4
SHAREHOLDERS AGREEMENT
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AGREEMENT, dated as of August , 1996 (the "Agreement"), by and between
[Explorer], a Delaware corporation ("Explorer"), and [Parent], a Delaware
corporation ("Parent").
RECITALS
WHEREAS, pursuant to an Agreement and Plan of Merger (the "Merger
Agreement") dated August , 1996 between Explorer and Scout, a California
corporation ("Scout"), Explorer and Scout will combine their respective pharmacy
businesses and Scout will be merged with and into Explorer (the "Merger") and
Explorer 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, Parent currently owns beneficially 11,500,000 shares of
Explorer Common Stock, par value $.01 per share (collectively with any Explorer
Common Stock acquired hereafter, the "Shares"); and
WHEREAS, to induce Scout to enter into the Merger Agreement, Parent as
the majority stockholder of Explorer 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 Explorer;
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. Parent acknowledges that,
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pursuant 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 Scout (including successors as
provided in Section 1.3 below, the "Scout Nominees"), and the remaining number
of whom shall be designated by Parent as set forth in Section 1.4 of the Merger
Agreement.
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Parent 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 Scout Nominees. Parent
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 Scout
Nominees.
Section 1.2 Removal. Parent agrees that if, at any time, during the
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term 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 Scout Nominee, unless such removal shall
be requested as set forth in the following sentence. Parent agrees that if (a) a
majority of the Scout Nominees request removal of a Scout Nominee in writing or
(b) a majority of the full Board of Directors requests the removal of a Director
for cause, Parent shall vote the Shares in favor of such removal.
Section 1.3 Vacancies. If, during the term of this Agreement, there
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shall exist or occur a vacancy of the Board and such vacancy shall be created by
the death, disability, retirement, resignation, removal of a Scout Nominee:
(a) The remaining Scout 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) Parent, 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. Parent acknowledges that
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Vitalink's By-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, Parent will use all commercially reasonable efforts to
cause board members who are not GranCare Nominees to approve amendments 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
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in Section 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 Parent will not
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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,
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Parent may, with the prior written consent of a majority of the Scout 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 Parent shall not Transfer in a private transaction or series of
private transactions more than 10% of the outstanding Explorer 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 Explorer
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 Parent. Parent is duly organized,
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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. Parent 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 Parent and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent. This Agreement has been duly executed
and delivered by Parent and constitutes a valid and binding obligation of Parent
enforceable against it in accordance with its terms.
Section 3.1 Representations and Warranties of Explorer. Explorer is
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duly 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. Explorer has the requisite
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corporate power and other authority to enter into this Agreement and consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Explorer and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Explorer. This Agreement has been duly executed and delivered by Explorer and
constitutes a valid and binding obligation of Explorer, enforceable against it
in accordance with its terms.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Governing Law. This Agreement shall be governed by the
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laws of 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
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inure to 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 Scout 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 Scout Nominee
taking action reasonably believed to be consistent with enforcing the provisions
of this Agreement shall be 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 Explorer.
Section 4.3 Severability. In case any one or more of the provisions
contained 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
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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
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this 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
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hereunder 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
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more 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 Explorer and Parent.
Section 4.8 Termination. This Agreement shall terminate and have no
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further 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
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and 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 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.
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IN WITNESS WHEREOF, the parties hereto have executed this agreement
as of the date above written.
[PARENT]
By: __________________________
Name:
Title:
[EXPLORER]
By: __________________________
Name:
Title:
