-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MkEj+MQbRlA65OlRNR6Vz1mMvrRCCmdQ8OLh5lJ+mwFPkYO8HCtao3mUyHgaaOKj N5snSUzuXRYXINXTRW9evw== 0000950116-97-002349.txt : 19971224 0000950116-97-002349.hdr.sgml : 19971224 ACCESSION NUMBER: 0000950116-97-002349 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971010 ITEM INFORMATION: FILED AS OF DATE: 19971223 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENESIS HEALTH VENTURES INC /PA CENTRAL INDEX KEY: 0000874265 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 061132947 STATE OF INCORPORATION: PA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-11666 FILM NUMBER: 97743605 BUSINESS ADDRESS: STREET 1: 148 W STATE ST STE 100 CITY: KENNETT SQUARE STATE: PA ZIP: 19348 BUSINESS PHONE: 6104446350 MAIL ADDRESS: STREET 1: 148 W STATE STREET CITY: KENNETT SQUARE STATE: PA ZIP: 19348 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 =============================================== FORM 8-K/A AMENDMENT NO. 1 TO CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 =============================================== Date of Report (Date of earliest event reported): October 10, 1997 Genesis Health Ventures, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Pennsylvania 1-11666 06-1132947 - ---------------------------- ----------- ------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 148 West State Street, Suite 100 Kennett Square, Pennsylvania 19348 ---------------------------------- (Address of principal executive offices, including zip code) 610-444-6350 -------------------------------------------------- Registrant's telephone number, including area code Item 7 is hereby amended as follows Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. 1. Financial Statements of business acquired: The Multicare Companies, Inc. and Subsidiaries (1) Independent Auditors' Report (1) (2) Consolidated Balance Sheets as of December 31, 1995 and 1996 (1) (3) Consolidated Statements of Operations for the years ended December 31, 1994, 1995 and 1996 (1) (4) Consolidated Statements of Stockholders' Equity for the years ended December 31, 1994, 1995 and 1996 (1) (5) Consolidated Statements of Cash Flows for the years ended December 31, 1994, 1995 and 1996 (1) (6) Notes to Consolidated Financial Statements (1) (7) Unaudited Consolidated Balance Sheet as of September 30, 1997 (2) (8) Unaudited Consolidated Statement of Operations for the three and nine months ended September 30, 1997 (2) (9) Unaudited Consolidated Statement of Cash Flows for the nine months ended September 30, 1997 (2) (10) Unaudited Notes to Consolidated Financial Statements (2) - ------------------------------- (1) Incorporated by reference to The Multicare Companies, Inc. Annual report on Form 10-K for the period ended December 31, 1996. (2) Incorporated by reference to The Multicare Companies, Inc. Quarterly Report on Form 10-Q for the period ended September 30, 1997. 2. Pro Forma Financial Information: GENESIS HEALTH VENTURES, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION SEPTEMBER 30, 1997 The Unaudited Pro Forma Condensed Consolidated Statement of Operations for the twelve months ended September 30, 1997 gives effect to the following transactions: (1) the Tender Offer, (2) the Merger (including the Conversion of Multicare's Convertible Debentures), (3) the sale of the 9% Notes and the application of proceeds therefrom, (4) the Equity Contributions and the application of proceeds therefrom, (5) the closing of the Credit Facility and the application of the proceeds therefrom, (6) the acquisition of the A.D.S Group ("A.D.S") by Multicare in December 1996 (the "A.D.S Acquisition"), as though the transaction had occurred as of October 1, 1996 and (7) the Therapy Sale and the Pharmacy Sale, as though the transactions had occurred as of October 1, 1996. The Unaudited Pro Forma Condensed Consolidated Balance Sheet gives effect to each of the foregoing transactions as though each transaction had occurred as of September 30, 1997. The contract therapy businesses sold by Multicare to Genesis pursuant to the Therapy Sale were primarily acquired by Multicare in April 1997; no adjustments have been made in the pro forma information to reflect the results of operations of the businesses sold in the Therapy Sale prior to their acquisition by Multicare. The proforma information should be read in conjunction with the Companies' historical consolidated financial statements. The columns entitled "Genesis Historical Results " and "Multicare Historical Results" represents the historical consolidated results of the respective companies as of September 30, 1997 and for the twelve months then ended. The column entitled "A.D.S Historical" represents the historical results of the A.D.S Group from the period of October 1, 1996 through December 31, 1996. In December 1996, Multicare acquired the A.D.S group and consolidated their operating results commencing on January 1, 1997. The pro forma adjustments are based upon available information and certain assumptions that management believes are reasonable and are described in the notes accompanying the Unaudited Pro Forma Condensed Consolidated Statement of Operations and the Unaudited Pro Forma Condensed Consolidated Balance Sheet. The Unaudited Pro Forma Condensed Consolidated Financial Information is provided for informational purposes only and does not purport to represent what the Company's results of operations or financial position would actually have been had the transactions in fact occurred at such dates or to project the Company's results of operations or financial position at or for any future date or period. The Unaudited Pro Forma Condensed Consolidated Financial Information has been prepared using the purchase method of accounting, whereby the total cost of the Tender Offer, Merger, Pharmacy Sale and Therapy Sale are allocated to the tangible and intangible assets acquired and liabilities assumed based upon their respective fair values at the effective date of the transactions. Such allocations are based on studies and valuations which have not yet been completed. Accordingly, the allocations and estimated lives reflected in the Unaudited Pro Forma Condensed Consolidated Financial Information are preliminary and subject to revision. However, the Company does not expect material changes to the allocation of purchase price. GENESIS HEALTH VENTURES, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 1997 (In thousands)
Pro Forma Genesis Multicare Adjusted for Debt Conversion Genesis Multicare Debt Transactions and Pharmacy Historical Historical Conversion Adjustments Therapy Sales ---------- ---------- ---------- ------------ --------------- Current assets $ 352,437 $ 146,254 $ - $ - $ 498,691 Property and equipment, net 578,397 460,800 - 254,000 (3) 1,293,197 Goodwill, net 359,956 171,324 - 690,680 (2)(3) 1,221,960 Other assets 143,323 44,755 - 51,000 (2)(3) 239,078 ---------- -------- ------- --------- ----------- Total assets $1,434,113 $823,133 $ - $ 995,680 $ 3,252,926 ========== ======== ======= ========= =========== Current liabilities $125,507 $ 94,432 $ - $ - $ 219,939 Long term debt, excluding current maturities 651,667 423,421 (55,420)(1) 792,674 (2)(3) 1,812,342 Deferred taxes 37,745 42,106 - 101,600(3) 181,451 Other liabilities 11,173 - - - 11,173 Minority interests - - - 420,000 (4) 420,000 Shareholders' equity 608,021 263,174 55,420 (1) (318,594)(3)(4) 608,021 ---------- -------- ------- --------- ----------- Total liabilities and shareholders equity $1,434,113 $823,133 $ - $ 995,680 $ 3,252,926 ========== ======== ======= ========= ===========
See Accompanying Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet GENESIS HEALTH VENTURES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET (in thousands) (1) Reflects the conversion of the 7% Senior Subordinated Convertible Debentures of Multicare into shares of Multicare common stock in connection with the Merger as follows: Long-term debt (55,420) Shareholders' Equity 55,420 (2) Reflects Genesis' financing of its equity investment in Multicare, the purchase prices of the Pharmacy Sale and Therapy Sale and other transaction costs. The Genesis equity investment in Multicare is eliminated in consolidation. Transaction Consolidation Adjustments Elimination Total ----------- ------------- ----- Investment in Multicare 325,000 (325,000) - Goodwill 65,000 65,000 Debt Issuance and Transaction Costs, net 27,000 27,000 Long-term debt 426,000 426,000 The assets and liabilities of the Multicare pharmacy and therapy businesses are reflected in the historical balance sheet of Multicare at September 30, 1997. Genesis agreed to purchase these businesses in connection with the Pharmacy and Therapy Sale. The pro forma effect of the Pharmacy Sale and Therapy sale on the consolidated balance sheet of Multicare and Genesis is not significant other than the elimination of Multicare's equity in those businesses, and the goodwill resulting from the allocation of purchase price, which is reflected in footnote 3 (3) Reflects the allocation of purchase price and financing for the Merger as follows:
Multicare Pharmacy & Consolidation Elimination Merger Therapy Sales Elimination Total ----------- ------ ------------- ------------- ----- Property and Equipment - 254,000 - - 254,000 Goodwill (171,324) 828,504 (31,500) - 625,680 Debt issuance costs, net - 24,000 24,000 Deferred taxes - 101,600 101,600 Long-term debt - 440,674 (74,000) - 366,674 Shareholders' equity (318,594) 745,000 - (325,000) 101,406
In connection with the allocation of excess purchase price to property and equipment, a deferred tax liability of $101,600 has been recorded using an effective tax rate of 40% for the difference between the tax and book bases. The Consolidation Elimination represents the elimination of Genesis' equity contribution in Multicare. (4) Represents the reclassification of the equity partners' equity interest in Multicare of $420,000 from shareholders' equity to minority interests. GENESIS HEALTH VENTURES, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS TWELVE MONTHS ENDED SEPTEMBER 30,1997 (In thousands, except per share data)
ADS Genesis/ Genesis Multicare ADS Pro Forma Multicare/ADS Historical Historical Historical (1) Adjustments Proforma ---------- ---------- -------------- ----------- ------------- Net Revenues $1,099,823 $679,292 $15,544 $ - $1,794,659 Expenses: Operating Expenses 858,916 515,576 13,258 1,387,750 Corporate, General & Administrative 41,039 31,984 2,047 (125)(2) 74,945 Special Charge 15,000 15,000 Lease Expense 28,587 15,929 49 861 (3) 45,426 Depreciation & Amortization 41,946 27,916 365 15 (4) 70,242 Interest Expense, Net 39,103 28,642 535 162 (5) 68,442 ---------- -------- ------- ------- ---------- Total Expenses $1,024,591 $620,047 $16,254 $ 913 $1,661,805 ---------- -------- ------- ------- ---------- Income Before Income Taxes and Extraordinary Item $ 75,232 $ 59,245 $ (710) $ (913) $ 132,854 Income Tax Expense (Benefit) 27,088 22,152 (273) (351) 48,616 ---------- -------- ------- ------- ---------- Income Before Extraordinary Item 48,144 37,093 (437) (561) 84,238 Extraordinary item 553 2,219 - - 2,772 ---------- -------- ------- ------- ---------- Net Income $ 47,591 $ 34,874 $ (437) $ (561) $ 81,466 Primary earnings per share before extraordinary item $ 1.35 Primary earnings per share $ 1.33 Weighted average shares of common stock and equivalents 35,643 Addition to income as a result of interest on convertible debt 303 Fully diluted earnings per share before extraordinary item $ 1.34 Fully diluted earnings per share $ 1.32 Weighted average shares of common stock and equivalents 36,306
(RESTUBBED TABLE)
Genesis / Multicare/ A.D.S Adjusted Transactions for Transactions Adjustments Pro Forma ----------- --------- Net Revenues $ (0) (6) $1,794,659 Expenses: Operating Expenses (16,469) (7) 1,371,281 Corporate, General & Administrative (14,200) (6) 60,745 Special Charge 15,000 Lease Expense (3,570) (8) 41,856 Depreciation & Amortization 27,021 (9) 97,263 Interest Expense, Net 64,962 (8) 133,404 -------- ---------- Total Expenses $ 57,744 $1,720,549 -------- ---------- Income Before Income Taxes and Extraordinary Item $(57,744) $ 75,110 Income Tax Expense (Benefit) (20,814) (10) 27,802 -------- ---------- Income Before Extraordinary Item (36,929) 47,308 Extraordinary item -- 2,772 -------- ---------- Net Income $(36,929) $ 44,536 Primary earnings per share before extraordinary item $ 1.33 Primary earnings per share $ 1.25 Weighted average shares of common stock and equivalents 35,643 Addition to income as a result of interest on convertible debt 303 Fully diluted earnings per share before extraordinary item $ 1.31 Fully diluted earnings per share $ 1.23 Weighted average shares of common stock and equivalents 36,306
See Accompanying Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations GENESIS HEALTH VENTURES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED PROFORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share data) (1) Represents the historical results of operations of A.D.S from October 1, 1996 through December 31, 1996. Multicare paid approximately $10,000, repaid or assumed approximately $29,800 in debt, financed $51,000 through a lease facility and issued 554,973 shares of its common stock for A.D.S. Total goodwill approximated $29,900. (2) Reflects the elimination of duplicative positions at A.D.S and the reduction of professional and accounting fees. (3) Reflects the additional lease expense associated with the $51,000 lease financing entered into in connection with the A.D.S Acquisition. The lease facility was repaid in connection with the Merger. (4) Reflects additional depreciation and amortization expense resulting from the amortization of goodwill incurred in the A.D.S Acquisition and depreciation resulting from the allocation of the purchase price for A.D.S to property, plant and equipment. Goodwill is being amortized over periods of 25 to 40 years. (5) Reflects the additional interest expense on the incremental debt incurred in connection with the A.D.S Acquisitions. (6) Represents the net reduction in corporate, general and administrative expense due to the elimination of Multicare / A.D.S Proforma corporate, general and administrative expense and the incurrence of management fees. The management fee, which is charged and recognized by Genesis as operating income, is eliminated in the consolidated operating results of Multicare and Genesis. As a result of the Mergers, certain corporate employees of Multicare are employed by Genesis. The overall reduction in corporate, general and administrative expense is the result of anticipated cost savings from the elimination of duplicative positions and other costs. Multicare Multicare / A.D.S Pro Forma corporate, general and administrative (33,976) Management fee 35,782 Genesis Corporate, general and administrative 19,776 Elimination of management fee (35,782) -------- Total corporate general and expense (14,200) ======== Genesis Management fee 35,782 Elimination of management fee (35,782) -------- Revenues, net (0) ======== (7) In connection with the Merger, Genesis' equity partners in the Multicare Transaction will absorb the first $40,000 of operating losses of Multicare. Consequently, $16,469 of estimated losses have been added back to other operating expenses. (8) Interest and lease expense has been adjusted to reflect the indebtedness incurred in connection with the Merger, the Pharmacy Sale, the Therapy Sale and the repayment of indebtedness (including the repayment of $54,000 under a lease financing facility). The estimated average interest rate for the Credit Facility and for the Notes is 8.4% and 9%, respectively. Multicare Credit Facility 33,207 Notes 22,500 Other debt 3,344 Multicare / ADS Pro Forma interest expense (29,874) Genesis Credit Facility 35,784 ------- Total Interest Expense 64,962 ------- Lease expense (3,570) ======= (9) The revenues and expenses of the Multicare pharmacy and rehabilitation businesses are included in the Multicare historical results for the twelve months ended September 30, 1997. With the exception of depreciation and amortization, the proforma effect of the Pharmacy Sale and the Therapy Sale on operating revenues and expenses is not expected to have a significant effect on the consolidated operating results of Multicare and Genesis, as those revenues and expenses formerly reflected in the operating results of Multicare will be reflected in the results of Genesis. In connection with the Merger, Pharmacy Sale and the Therapy Sale, depreciation and have been increased by the amortization of goodwill and depreciation resulting from the allocation of purchase price. As a result of the Merger, the preliminary allocation of the purchase price has resulted in an increase to property and equipment ($254,000) and goodwill ($657,180) which are amortized over 30 years and 40 years, respectively. The Therapy Sale and Pharmacy Sale have preliminarily resulted in additional goodwill of approximately $65,000 which is amortized over lives ranging from 20 to 40 years. ------- Depreciation and amortization 27,021 ======= (10) Represents income tax expense at an effective tax rate of 37%. The primary difference between expense calculated at statutory rates and the amount reflected in the pro forma statements is attributable to non-deductible goodwill and the provision for state income taxes. 3. Exhibits: Exhibit No. Description ----------- ----------- 10.1(3) Agreement and Plan of Merger dated June 16, 1997 by and among Genesis ElderCare Corp., Genesis ElderCare Acquisition Corp., Genesis Health Ventures, Inc. and The Multicare Companies, Inc. 10.2(4) Third Amended and Restated Credit Agreement dated October 9, 1997 to Genesis Health Ventures, Inc. from Mellon Bank, N.A., Citicorp USA, Inc., First Union National Bank and NationsBank, N.A. -1- Exhibit No. Description ----------- ----------- 10.3(4) Credit Agreement dated October 14, 1997 to The Multicare Companies, Inc. from Mellon Bank, N.A., Citicorp USA, Inc., First Union National Bank and NationsBank, N.A. 10.4* Management Agreement dated October 9, 1997 among The Multicare Companies, Inc., Genesis Health Ventures, Inc. and Genesis ElderCare Network Services, Inc. 10.5(4) Stockholders' Agreement dated October 9, 1997 among Genesis ElderCare Corp., The Cypress Group L.L.C., TPG Partners II, L.P., Nazem, Inc. and Genesis Health Ventures, Inc. 10.6(4) Put/Call Agreement dated October 9, 1997 among The Cypress Group L.L.C., TPG Partners II, L.P., Nazem, Inc. and Genesis Health Ventures, Inc. 10.7* Stock Purchase Agreement dated October 10, 1997 among Genesis Health Ventures, Inc., The Multicare Companies, Inc., Concord Health Group, Inc., Horizon Associates, Inc., Institutional Health Care Services, Inc., Care4, L.P., Concord Pharmacy Services, Inc., Compass Health Services, Inc. and Encare of Massachusetts, Inc. 10.8 Asset Purchase Agreement dated October 10, 1997 among Genesis Health Ventures, Inc., The Multicare Companies, Inc., Health Care Rehab Systems, Inc., Horizon Rehabilitation, Inc., Progressive Rehabilitation Centers, Inc. and Total Rehabilitation Center, L.L.C. 10.9(3) Letter Agreement dated June 16, 1997 between Genesis Health Ventures, Inc. and Straus Associates. 23.1 Consent of Independent Public Accountants - ---------- * Previously filed. (3) Incorporated by reference to the Tender Offer Statement on Schedule 14D-1 filed by Genesis ElderCare Corp. and Genesis ElderCare Acquisition Corp. on June 20, 1997. (4) Incorporated by reference to Amendment No. 7 to the Tender Offer Statement on Schedule 14D-1 filed by Genesis ElderCare Corp. and Genesis ElderCare Acquisition Corp. on June 20, 1997. -2- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GENESIS HEALTH VENTURES, INC. By: /s/ George V. Hager, Jr. ------------------------------------------------- George V. Hager, Jr. Senior Vice President and Chief Financial Officer Date: December 22, 1997 EX-10 2 EXHIBIT 10.8 Exhibit 10.8 AMENDED AND RESTATED STOCK PURCHASE AGREEMENT This Agreement is made this 10th day of October, 1997, by and among Genesis Health Ventures, Inc., a Pennsylvania corporation, and/or its designee pursuant to Section 9.2 hereof (the "Buyer"), The Multicare Companies, Inc., a Delaware corporation, Concord Health Group, Inc., a Delaware corporation, Horizon Associates, Inc., a West Virginia corporation, and Horizon Medical Equipment and Supply, Inc., a West Virginia corporation (collectively, the "Sellers"), and Institutional Health Care Services, Inc., a New Jersey corporation, Care4, L.P., a Delaware limited partnership, Concord Pharmacy Services, Inc., a Pennsylvania corporation, Compass Health Services, Inc., a West Virginia corporation, and Encare of Massachusetts, Inc., a Delaware corporation (each a "Company" and collectively, the "Companies"). BACKGROUND WHEREAS, the Sellers and each of the Companies have agreed to sell and Buyer has agreed to purchase, all of the issued and outstanding capital stock and limited partnership interests, whichever is applicable, of each of the Companies on the terms and conditions provided for in this Agreement. AGREEMENT NOW, THEREFORE, in order to consummate such transactions and in consideration of the mutual agreements set forth herein, the parties hereto, intending to be legally bound, agree as follows: ARTICLE 1. DEFINITIONS Section 1.1 Definitions. As used in this Agreement, unless otherwise defined herein or unless the context otherwise requires, the following terms shall have the following meanings: "Agreement" means this Stock Purchase Agreement, all schedules hereto and all amendments, modifications, and supplements hereto. "Buyer" is defined in the preamble hereto. "Closing" has the meaning specified in Section 2.2 hereof. "Closing Date" has the meaning specified in Section 2.2 hereof. "Company" or "Companies" is defined in the preamble hereto. "Encumbrance" means any mortgage, claim, lien, pledge, option, charge, security interest or other similar interest, easement, judgment or imperfection of title of any nature whatsoever. "Material Adverse Effect" means any change or effect that would or would reasonably be expected to materially and adversely affect the financial condition, results of operations, assets or business of each of the Companies, the each of the Sellers, or Buyer and its subsidiaries taken as a whole, as the case may be. "Merger Agreement" means the Merger Agreement, dated as of June 16, 1997, by and among Genesis ElderCare Corp. (formerly known as Waltz Corp.), a Delaware corporation, Genesis ElderCare Acquisition Corp. (formerly known as Waltz Acquisition Corp.), a Delaware corporation, and The Multicare Companies, Inc. pursuant to which Genesis ElderCare Acquisition Corp. shall merge with and into The Multicare Companies, Inc. "Purchase Price" means Fifty Million Dollars ($50,000,000) to be paid by Buyer for the Shares in accordance with an allocation to be mutually determined by the parties. "Sellers" is defined in the preamble hereto. "Shares" means all of the outstanding capital stock and limited partnership interests, whichever is applicable, of each of the Companies. ARTICLE 2. SALE OF SHARES AND PURCHASE PRICE Section 2.1 Sale of Shares. On the terms and subject to the conditions set forth in this Agreement, the Sellers shall cause the sale, transfer and delivery to Buyer, and Buyer shall purchase, on the Closing Date, all right, title and interest in and to all of the Shares. Section 2.2 Closing. The closing of the purchase and sale of the Shares (the "Closing") shall take place as soon as practicable after the closing under the Merger Agreement at the offices of Blank Rome Comisky & McCauley, One Logan Square, Philadelphia, Pennsylvania 19103, or at such other place as shall be mutually agreeable to the parties hereto (which time and place are designated as the "Closing Date"), subject to the satisfaction or waiver of the conditions specified in Article 6; provided, however, that if acceptable to the parties, the Closing may be effected by facsimile transmission of executed copies of the documents (including without limitation, this Agreement) delivered at the Closing and payment of the purchase price specified in Section 2.3 and by sending original copies of the documents (including without limitation, this Agreement) delivered at the Closing by reputable overnight delivery service, postage or delivery charges prepaid, for delivery to the parties at their respective addresses set forth in Section 9.1 herein by the third business day following the Closing. 2 Section 2.3 Purchase Price. On the Closing Date, Buyer shall pay the Purchase Price for the Shares. Buyer shall pay the Purchase Price, against delivery of the certificates and the amended limited partnership agreement, whichever is applicable, for the Shares required by Section 2.4, by wire transfer of immediately available funds to such accounts as the Sellers shall designate. The parties agree to allocate the Purchase Price among the Shares in a manner to be mutually determined by the parties. Section 2.4 Delivery of Certificates, Amended Limited Partnership Agreement. (i) On the Closing Date, the Sellers and the Companies shall cause to be delivered to Buyer certificates (with respect to only those Companies that are corporations) evidencing all of the Shares, duly endorsed in blank (or in such name as may be designated by Buyer), and accompanied by stock powers duly executed in blank (or in such name as may be designated by Buyer), in proper form to transfer all right, title and interest in and to all Shares to Buyer. Buyer shall have no obligation to purchase any of the Shares unless the Sellers and the Companies deliver certificates for all of the Shares. (ii) On the Closing Date, the Sellers and the Companies shall cause to be delivered to Buyer an amended limited partnership agreement (with respect to only those Companies that are limited partnerships) stating, among other things, that Buyer is the sole limited partner for the Company that is a partnership on and as of the Closing Date. Buyer shall have no obligation to purchase any of the Shares unless the Sellers and the Companies deliver such amended limited partnership agreement. ARTICLE 3. CERTAIN UNDERSTANDINGS AND AGREEMENTS Section 3.1 Conduct of Business. From the date of this Agreement to the Closing Date, the Companies shall, and the Sellers shall cause the Companies to, conduct their operations according to their ordinary and usual course of business, to preserve their business organization intact, keep available the services of their officers and employees and maintain satisfactory relationships with suppliers, customers and others having business relationships with them. Section 3.2 Pre-Closing Access to Properties and Records; Confidentiality. Between the date hereof and the Closing Date, the Companies shall, and the Sellers shall cause the Companies to, give authorized representatives of Buyer, reasonable access to the premises, properties, contracts, books, records and affairs of the Companies (including reasonable access to the properties of the Companies for the purposes of conducting a Phase 1 environmental assessment of such properties) and will cause the Companies' officers to furnish such financial, technical and operating data and other information pertaining to the Companies' businesses as Buyer shall from time to time reasonably request. Section 3.3 Reasonable Efforts. Subject to the terms and conditions of this Agreement, each party shall use all commercially reasonable efforts to take, or cause to be taken, all actions necessary to consummate the transactions contemplated by this Agreement. The parties shall 3 cooperate with one another (a) in determining whether any action by or in respect of, or filing with, any governmental authority is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any contracts and (b) subject to the terms and conditions of this Agreement, in taking such actions or making any such filings, furnishing information required in connection therewith and seeking to obtain in a timely fashion any such actions, consents approvals or waivers. Section 3.4 Notice of Certain Events. The Companies and, to the extent known by it, the Sellers shall give notice to Buyer promptly of: (a) any notice of breach or default received subsequent to the date of this Agreement, or any instrument or agreement to which the Companies or any of the Sellers is a party or by which it is bound; or (b) any suit, action, proceeding or investigation instituted or, to the Companies' and the Sellers' knowledge, threatened against or affecting any of the Sellers or Companies subsequent to the date of this Agreement and prior to the Closing. Section 3.5 Section 338(h)(10) Election. With respect to the Buyer's acquisition of the Shares pursuant to this Agreement, Buyer and the Sellers shall jointly make a timely election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended (the "Code") (and any corresponding elections under any state or local tax laws) (such elections being hereinafter collectively referred to as the "338(h)(10) Election"). The Sellers shall cooperate with Buyer and take such action as may be necessary to cause each of the Companies to cooperate with Buyer and take any and all action reasonably necessary or appropriate (including filing such forms, returns, elections, schedules and other documents as may reasonably be required) to effect and preserve a timely 338(h)(10) Election in accordance with Code Section 338 and the applicable regulations thereunder. The allocation of values to the assets of the Companies shall be in accordance with the allocation set forth in Schedule D attached hereto. Thereafter, Buyer and the Sellers shall report the sale of the stock and other equity interests of the Companies pursuant to this Agreement in a manner which is consistent with the 338(h)(10) Election and shall take no position contrary thereto or inconsistent therewith in any tax returns in any discussion with or proceeding before any taxing authority or otherwise. The Sellers will pay any tax attributable to the making of the Section 338(h)(10) Election and arising out of a deemed sale of assets as of the Closing. Section 3.6 Adjustment of Assets. It is the intention of the parties that the Companies comprise the institutional pharmacy services companies of Multicare which have generated year to date annualized revenues of $82.3 million and EBITDAR of $13.4 million. To the extent that (i) any of the Companies are not included in the institutional pharmacy services companies which generated such annualized revenues and EBITDAR or (ii) other entities owned by Seller are included in such annualized revenues or EBITDAR but are not sold to Buyer hereunder, the parties agree to make appropriate adjustment of the assets sold hereunder. Section 3.7 Tax Adjustment. To the extent that any taxes are imposed upon Seller as a result of the sale of the Companies hereunder, Buyer will pay to Seller the amount of such taxes 4 when Seller is required to pay such taxes. To the extent that the sale of Companies hereunder generates tax losses to Seller, Seller will pay to Buyer the tax savings realized from such tax losses when Seller receives the benefit from such tax losses. ARTICLE 4. CONDITIONS TO OBLIGATIONS OF EACH PARTY The obligations of each party to consummate the transactions contemplated hereby shall be subject to the fulfillment, at or prior to the Closing Date, of the following conditions, each of which may be waived by the parties in writing: Section 4.1 No Action or Proceeding. No claim, action, suit or other proceeding shall be pending or threatened by any public authority or person before any court, agency or administrative body which creates a substantial likelihood that the consummation of this Agreement or the transactions contemplated hereby will be restrained, enjoined or otherwise prevented or that any material damages will be recovered or other material relief obtained as a result of the transactions contemplated hereby or as a result of any agreement entered into in connection with, or as a condition precedent to, the consummation of the transactions contemplated hereby. Section 4.2 Compliance with Law. No provision of any applicable law and no judgment, injunction, order or decree shall prohibit the Closing. There shall have been obtained any and all permits, approvals and consents of any governmental body or agency which Buyer or the Sellers may reasonably deem necessary so that consummation of the transactions contemplated by this Agreement will be in compliance in all material respects with the applicable laws. Section 4.3 Hart-Scott-Rodino Requirements. The waiting periods (as such may be extended by the governmental agencies involved) applicable to the consummation of the transactions contemplated hereby under the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules thereunder shall have expired or have been terminated by the appropriate governmental agency. Section 4.4. Regulatory Approvals. Any material approval, permit, authorization, consent or waiting period of any governmental authority applicable to (i) the purchase of all of the outstanding shares of common stock, par value $.01 per share, of Multicare at a purchase price of $28.00 per share (the "Equity Tender Offer"), (ii) the merger of Genesis ElderCare Acquisition Corp. with and into Multicare (the "Merger") pursuant to the terms and conditions of the Merger Agreement or (iii) the ownership or operation by Multicare, Genesis ElderCare Corp. or Genesis Health Ventures, Inc. of all or a material portion of the business or assets of Multicare shall have been obtained or satisfied on terms satisfactory to Genesis ElderCare Corp. in its reasonable discretion. 5 ARTICLE 5. TERMINATION This Agreement may be terminated at any time prior to the Closing Date as follows: (a) by mutual consent in writing of the parties hereto; (b) at any time on or prior to the Closing Date, by either the Buyer, on the one hand, or the Companies and Sellers, on the other hand, as the case may be, if the other party(ies) has, in any material respect, breached any covenant or undertaking contained herein and such breach has not been cured within thirty days. ARTICLE 6. MISCELLANEOUS Section 6.1 Notices. All notices, requests, demands and other communications hereunder shall be in writing (including telecopy or similar writing) and shall be given: If to Buyer: Genesis Health Ventures, Inc. 148 West State Street Kennett Square, Pennsylvania 19348 Attention: Michael R. Walker Telephone: (610) 444-6350 Facsimile: (610) 444-7438 with a copy to: Blank Rome Comisky & McCauley One Logan Square Philadelphia, Pennsylvania 19103 Attention: Stephen E. Luongo, Esq. Telephone: (215) 569-5500 Facsimile: (215) 569-5555 If to the Sellers or Companies: Genesis ElderCare Corp. 148 West State Street Kennett Square, Pennsylvania 19348 Attention: Michael R. Walker Telephone: (610) 444-6350 Facsimile: (610) 444-7438 6 with a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017-3954 Attention: William E. Curbow, Esquire Telephone: (212) 455-2000 Facsimile: (212) 455-2502 or to such other address or telecopy number and with such other copies as such party may hereafter specify for the purpose of notice to the other party. Each such notice, request, demand or other communication shall be effective (a) if given by telecopy, when such telecopy is transmitted to the telecopy number specified in this Section and evidence of receipt is received or (b) if given by any other means, upon delivery or refusal of delivery at the address specified in this Section. Section 6.2 Assignability; Parties in Interest. This Agreement shall not be assignable by any of the parties hereto, except that this Agreement shall be assignable in whole or in part by Buyer to any subsidiary or subsidiaries of Buyer, provided that no such assignment shall relieve the assignor of its obligations hereunder. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Except as specifically referred to herein, this Agreement is for the sole and exclusive benefit of the parties to this Agreement and their successors and assigns and nothing in this Agreement is intended to confer, expressly or by implication, upon any other person any legal or equitable rights, remedies or claims under or by reason of this Agreement. Section 6.3 Governing Law; Jurisdiction. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the Commonwealth of Pennsylvania, without regard to conflicts of laws. In any action between or among any of the parties, whether arising out of this Agreement or otherwise, (a) each of the parties irrevocably consents to the exclusive jurisdiction and venue of the federal and state courts located in the Commonwealth of Pennsylvania; (b) each of the parties irrevocably waives the right to trial by jury; (c) each of the parties irrevocably consents to service of process by first class certified mail, return receipt requested, postage prepaid, to the address at which such party is to receive notice in accordance with Section 11.1. Section 6.4 Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party shall have received a counterpart signed by the other party. Section 6.5 Publicity. The Sellers, the Companies and Buyer agree that press releases and other announcements with respect to the transactions contemplated hereby shall be subject to mutual agreement; provided, however, that Buyer may make such announcements as in the opinion of its counsel, such party is required to make pursuant to comply with law or the requirements of any stock exchange or other applicable self-regulatory organization, but in such event Buyer shall, to the extent 7 practicable, give the Sellers and the Companies reasonable prior notice and an opportunity to comment on the proposed announcement. Section 6.6 Complete Agreement. This Agreement, the exhibits hereto and the schedules and documents delivered pursuant hereto or referred to herein contain the entire agreement between the parties hereto with respect to the transactions contemplated herein and supersede all previous negotiations, commitments and writings. Section 6.7 Amendments and Waivers. The parties hereto may (a) extend the time for the performance of any of the obligations or other acts of the parties hereto, (b) waive any inaccuracies in the representations and warranties contained in this Agreement or in any or documents delivered pursuant hereto, (c) waive compliance with any of the covenants or agreements contained in this Agreement or (d) amend this Agreement, if and only, in the case of an extension or amendment, if such action is set forth in a written agreement signed by both parties, or, in the case of a waiver, if such waiver is signed by the party against whom the waiver is to be effective. Section 6.8 Expenses. Except as specifically provided in this Agreement, each party shall bear the expenses incurred by it in connection with the transactions contemplated by this Agreement. Section 6.9 Consents. Notwithstanding anything herein to the contrary, this Agreement shall not constitute an agreement to assign any contract, license, lease, commitment or other arrangement if an attempted assignment would constitute a breach thereof. Whenever such consent is required, the Sellers will use commercially reasonable efforts to cause such consents to be obtained and Buyer agrees to cooperate with the Sellers and to enter into any reasonable arrangement designed to provide for Buyer the benefits under such contracts and agreements. Section 6.10 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Section 6.11 Severability. Any portion or provision of the Agreement which is invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining portions or provisions hereof in such jurisdiction or, to the extent permitted by law, rendering that or any other portion or provision of the Agreement invalid, illegal or unenforceable in any other jurisdiction. Section 6.12 Further Assurances. Each party hereto agrees to execute any and all documents and to perform such other acts as may be necessary or expedient to further the purposes of this Agreement and the transactions contemplated hereby. Section 6.13. Waiver. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such 8 right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by their respective duly authorized officers as of the date first above written. GENESIS HEALTH VENTURES, INC., THE MULTICARE COMPANIES, INC. or its designee By: /s/ Michael R. Walker By: /s/ Michael R. Walker - ------------------------------- ------------------------------- Name: Michael R. Walker Name: Michael R. Walker Title: Chairman and Chief Title: Chairman and Chief Executive Officer Executive Officer CONCORD HEALTH GROUP, INC. HORIZON ASSOCIATES, INC. By: /s/ Michael R. Walker By: /s/ Michael R. Walker - ------------------------------- ------------------------------- Name: Michael R. Walker Name: Michael R. Walker Title: Chairman and Chief Title: Chairman and Chief Executive Officer Executive Officer INSTITUTIONAL HEALTH CARE CARE4, L.P. SERVICES, INC. By: Institutional Health Care Services, Inc., By: /s/ Michael R. Walker General Partner of Care4, L.P. - ------------------------------- ------------------------------- Name: Michael R. Walker Title: Chairman and Chief By: /s/ Michael R. Walker Executive Officer Name: Michael R. Walker Title: Chairman and Chief Executive Officer CONCORD PHARMACY SERVICES, INC. COMPASS HEALTH SERVICES, INC. By: /s/ Michael R. Walker By: /s/ Michael R. Walker - ------------------------------- ------------------------------- Name: Michael R. Walker Name: Michael R. Walker Title: Chairman and Chief Title: Chairman and Chief Executive Officer Executive Officer ENCARE OF MASSACHUSETTS, INC. HORIZON MEDICAL EQUIPMENT AND SUPPLY, INC. By: /s/ Michael R. Walker - ------------------------------- ------------------------------- Name: Michael R. Walker By: /s/ Michael R. Walker Title: Chairman and Chief Name: Michael R. Walker Executive Officer Title: Chairman and Chief Executive Officer EX-23 3 EXHIBIT 23.1 Exhibit 23.1 Consent of Independent Certified Public Accountants The Board of Directors Genesis Health Ventures, Inc. We hereby consent to the incorporation by reference in the Prospectus constituting a part of the Registration Statements on Form S-8 which registers shares of your common stock issued under the Genesis Health Ventures, Inc. Amended and Restated Employee Stock Option Plan and 1992 Stock Option Plan for Non-Employee Director of our report dated February 4, 1997, relating to the consolidated financial statements of The Multicare Companies, Inc. and Subsidiaries as of December 31, 1996 and for each of the years in the three-year period ended December 31, 1996 in Amendment No. 1 to Genesis Health Ventures, Inc.'s current report on Form 8-K/A dated October 10, 1997 filed with the Securities and Exchange Commission. We also consent to us being named as "Experts" in the Prospectus. KPMG Peat Marwick LLP Short Hills, New Jersey December 22, 1997 -----END PRIVACY-ENHANCED MESSAGE-----