<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934
UNDER THE SECURITIES EXCHANGE ACT OF 1934
RENEX CORP.
(NAME OF SUBJECT COMPANY)
------------------------
RC ACQUISITION CORP. AND NATIONAL NEPHROLOGY ASSOCIATES, INC.
(BIDDERS)
COMMON STOCK, PAR VALUE $.001 PER SHARE
INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS
(TITLE OF CLASS OF SECURITIES)
------------------------
759683105
(CUSIP NUMBER OF CLASS OF SECURITIES)
DR. JEROME S. TANNENBAUM
C/O NATIONAL NEPHROLOGY ASSOCIATES, INC.
511 UNION STREET, SUITE 1800
NASHVILLE, TENNESSEE 37219
(615) 777-8200
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPY TO:
ADAM H. GOLDEN, ESQ.
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER, LLP
425 PARK AVENUE
NEW YORK, NY 10022
(212) 836-8000
------------------------
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE*
- ---------------------- ---------------------
<S> <C>
$85,630,840 $17,126.17
</TABLE>
- ---------------
* For purposes of calculating the filing fee only. This amount is based on a per
share offering price of $10 for 8,563,084 shares of common stock (including
shares issuable upon exercise of all options and warrants). Pursuant to the
Agreement and Plan of Merger, dated as of December 28, 1999, among Renex Corp.
(the "Company"), National Nephrology Associates, Inc. and RC Acquisition
Corp., the Company represented that, as of December 27, 1999, it had 6,926,901
shares of common stock issued and outstanding, 1,001,231 shares of common
stock reserved for issuance upon exercise of outstanding options and 634,952
shares of common stock reserved for issuance upon exercise of outstanding
warrants. The amount of the filing fee, calculated in accordance with Rule
0-11, equals 1/50th of one percent of the value of the transaction.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
<TABLE>
<S> <C>
Amount Previously Paid: N/A Form or Registration No.: N/A
Filing Party: N/A Date Filed: N/A
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
14D-1
CUSIP NO. 759683105 PAGE 2 OF 8 PAGES
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
RC Acquisition Corp.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS* BK, WC
- ---------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) or 2(f)
[ ]
- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Florida
- ---------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,631,239 shares of common stock. Includes 679,119 and
104,168 shares of common stock issuable upon exercise of
options and warrants, respectively. Such shares are owned by
executive officers and directors of Renex Corp. RC
Acquisition Corp. ("Purchaser") may be deemed to
beneficially own such shares as a result of its having
entered into a Shareholders Agreement, dated as of December
28, 1999, among National Nephrology Associates, Inc.
("Parent"), Purchaser and the directors and executive
officers of Renex Corp. Under the terms of such Shareholders
Agreement, the directors and executive officers of Renex
Corp. have agreed to tender the shares owned by them
(including shares issuable upon exercise of options and
warrants) in the offer, granted the Purchaser an option to
acquire such shares and granted Parent a proxy to vote such
shares in connection with the transactions contemplated by
the Merger Agreement.
- ---------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES*
[ ]
- ---------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 34.1%.
Calculated in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, as amended.
- ---------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON*
CO
- ---------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
2
<PAGE> 3
14D-1
CUSIP NO. 759683105 PAGE 3 OF 8 PAGES
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
National Nephrology Associates, Inc.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS* BK, WC
- ---------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) or 2(f)
[ ]
- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
- ---------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,631,239 shares of common stock. Includes 679,119 and
104,168 shares of common stock issuable upon exercise of
options and warrants, respectively. Such shares are owned by
directors and executive officers of Renex Corp. National
Nephrology Associates, Inc. ("Parent") may be deemed to
beneficially own such shares as a result of its having
entered into a Shareholders Agreement, dated as of December
28, 1999, among Parent, RC Acquisition Corp. ("Purchaser")
and the directors and executive officers of Renex Corp.
Under the terms of such Shareholders Agreement, the
directors and executive officers of Renex Corp. have agreed
to tender the shares owned by them (including shares
issuable upon exercise of options and warrants) in the
offer, granted the Purchaser an option to acquire such
shares and granted Parent a proxy to vote such shares in
connection with the transactions contemplated by the Merger
Agreement.
- ---------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES*
[ ]
- ---------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 34.1%.
Calculated in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, as amended.
- ---------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON* CO
- ---------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
3
<PAGE> 4
This Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1")
relates to a tender offer by RC Acquisition Corp. ("Purchaser"), a Florida
corporation and a wholly-owned subsidiary of National Nephrology Associates,
Inc., a Delaware corporation ("Parent"), to purchase all outstanding shares of
common stock, par value $.001 per share, of Renex Corp., a Florida corporation
(the "Company"), including the associated preferred stock purchase rights issued
pursuant to the Rights Agreement, dated as of November 6, 1998, by and between
the Company and Continental Stock Transfer and Trust Company, as Rights Agent,
as amended, for a purchase price of $10 per share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated December 30, 1999 (the "Offer to Purchase") and
in the related Letter of Transmittal (the "Letter of Transmittal" and, together
with the Offer to Purchase, as the same may be amended or supplemented from time
to time, the "Offer"), and is intended to satisfy the disclosure and filing
requirements of Section 14(d) of the Securities Exchange Act of 1934, as
amended. Copies of the Offer to Purchase and the related Letter of Transmittal
are filed with this Schedule 14D-1 as Exhibits (a)(1) and (a)(2) hereto,
respectively.
ITEM 1. SECURITIES AND SUBJECT COMPANY.
(a) The name of the subject company is Renex Corp., a Florida corporation,
which has its principal executive offices at 201 Alhambra Circle, Suite 800,
Coral Gables, Florida 33134.
(b) The title of the securities which are the subject of the Offer is the
Company's common stock, par value $.001 per share (the "Shares"), and the Offer
is for all outstanding Shares at a price of $10 per Share, net to the seller in
cash, without interest thereon. The information set forth in the "Introduction"
to the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Schedule 14D-1 is being filed jointly by Purchaser and
Parent. The information set forth in the "Introduction" to the Offer to
Purchase, in Section 9 of the Offer to Purchase and in Schedule I to the Offer
to Purchase is incorporated herein by reference.
(e) and (f) None.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the "Introduction" to the Offer to
Purchase, in Sections 9, 11 and 13 of the Offer to Purchase and in Schedule I to
the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 10 of the Offer to Purchase is
incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the "Introduction" to the Offer to
Purchase and in Sections 9 and 12 of the Offer to Purchase is incorporated
herein by reference.
(f) and (g) The information set forth in Sections 7 and 12 of the Offer to
Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in the "Introduction" to the Offer to
Purchase and in Sections 9 and 11 of the Offer to Purchase is incorporated
herein by reference.
4
<PAGE> 5
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the "Introduction" to the Offer to Purchase in
Sections 9, 11 and 13 of the Offer to Purchase and in Schedule I to the Offer to
Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 17 of the Offer to Purchase is
incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) None.
(b) and (c) The information set forth in Section 16 of the Offer to
Purchase is incorporated herein by reference.
(d) Not applicable.
(e) Not applicable.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Press Release dated December 28, 1999, the Commitment Letter,
dated December 27, 1999, among Lehman Commercial Paper Inc., Lehman Brothers
Inc., Credit Agricole Indosuez and Parent, with attached Summary of Terms and
Conditions, the Agreement and Plan of Merger, dated as of December 28, 1999,
among Parent, Purchaser and the Company, the Shareholders Agreement, dated as of
December 28, 1999, among Parent, Purchaser and the directors and executive
officers of the Company, the Confidentiality Letter, dated as of November 15,
1999, by Parent in favor of the Company and the Confidentiality Letter, dated as
of December 21, 1999, by the Company in favor of the Parent, copies of which are
attached hereto as Exhibits (a)(1), (a)(2), (a)(7), (b)(1), (c)(1), (c)(2),
(c)(3) and (c)(4), respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated December 30, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Text of Press Release dated December 28, 1999.
(a)(8) Form of summary advertisement to be published on January 3, 2000.
(b)(1) Commitment Letter, dated December 27, 1999, among Lehman Commercial
Paper Inc., Lehman Brothers Inc., Credit Agricole Indosuez and Parent, with
attached Summary of Terms and Conditions.
5
<PAGE> 6
(c)(1) Agreement and Plan of Merger, dated as of December 28, 1999, among
Parent, Purchaser and the Company.*
(c)(2) Shareholders Agreement, dated as of December 28, 1999, among Parent,
Purchaser and the directors and executive officers of the Company.*
(c)(3) Confidentiality Letter, dated as of November 15, 1999, by Parent in
favor of the Company.
(c)(4) Confidentiality Letter, dated as of December 21, 1999, by the
Company in favor of Parent.
(d) None.
(e) Not applicable.
(f) None.
- ---------------
* Incorporated by reference to Renex Corp.'s Current Report on Form 8-K dated
December 30, 1999 and filed with the Securities and Exchange Commission on
December 30, 1999.
6
<PAGE> 7
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
December 30, 1999
RC Acquisition Corp.
By /s/ LEIF MURPHY
------------------------------------
Title: Executive Vice President,
Chief Financial Officer
National Nephrology Associates, Inc.
By /s/ LEIF MURPHY
------------------------------------
Title: Executive Vice President,
Chief Financial Officer
7
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGES
- ------- ----------- --------------
<C> <S> <C>
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Text of Press Release dated December 28, 1999.
(a)(8) Form of summary advertisement to be published on January 3,
2000.
(b)(1) Commitment Letter, dated December 27, 1999, among Lehman
Commercial Paper Inc., Lehman Brothers Inc., Credit Agricole
Indosuez and Parent with attached Summary of Terms and
Conditions.
(c)(1) Agreement and Plan of Merger, dated as of December 28, 1999,
among Parent, Purchaser and the Company.*
(c)(2) Shareholders Agreement, dated as of December 28, 1999, among
Parent, Purchaser and the directors and executive officers
of the Company.*
(c)(3) Confidentiality Letter, dated as of November 15, 1999, by
Parent in favor of the Company
(c)(4) Confidentiality Letter, dated as of December 21, 1999 by the
Company in favor of Parent.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
- ---------------
* Incorporated by reference to Renex Corp.'s Current Report on Form 8-K dated
December 30, 1999 and filed with the Securities and Exchange Commission on
December 30, 1999.
8
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
RENEX CORP.
AT
$10 NET PER SHARE
BY
RC ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
-------------------------------------
NATIONAL NEPHROLOGY ASSOCIATES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON JANUARY 28, 2000, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER AMONG
NATIONAL NEPHROLOGY ASSOCIATES, INC. ("PARENT"), RC ACQUISITION CORP.
("PURCHASER") AND RENEX CORP. (THE "COMPANY"), DATED DECEMBER 28, 1999 (THE
"MERGER AGREEMENT"). THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY (1)
APPROVED AND ADOPTED THE MERGER AGREEMENT, THE OFFER AND THE MERGER DESCRIBED
HEREIN AND DEEMED THEM TO BE ADVISABLE, (2) DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS
OF THE COMPANY AND (3) RECOMMENDED THAT THE SHAREHOLDERS OF THE COMPANY ACCEPT
THE OFFER, AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES OF COMMON STOCK OF THE COMPANY WHICH, TOGETHER WITH THE SHARES THEN OWNED
BY PARENT AND PURCHASER, REPRESENTS AT LEAST A MAJORITY OF THE OUTSTANDING
SHARES ON A FULLY-DILUTED BASIS, (2) THE EXPIRATION OR TERMINATION OF ANY
APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT
OF 1976, AS AMENDED AND (3) THE FUNDS COMMITTED TO BE PROVIDED BY PARENT'S
LENDERS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT
HAVING BEEN MADE AVAILABLE TO PARENT IN ACCORDANCE WITH THE TERMS OF SUCH
COMMITMENT. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS DESCRIBED IN
SECTIONS 15 AND 16.
------------------------
IMPORTANT
Any shareholder desiring to tender all or a portion of such shareholder's
Shares should either (i) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, have such shareholder's signature thereon guaranteed if required by
Instruction 1 to the Letter of Transmittal, and mail or deliver the Letter of
Transmittal together with the certificate(s) representing tendered Shares and
all other required documents to Continental Stock Transfer & Trust Company,
which is acting as the Depositary (in such capacity, the "Depositary"), or
tender such Shares pursuant to the procedure for book-entry transfer set forth
in Section 3 or (ii) request such shareholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such shareholder.
Shareholders having Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such person if they
desire to tender their Shares. Any shareholder who desires to tender Shares and
whose certificates representing such Shares are not immediately available, or
who cannot comply with the procedures for book-entry transfer on a timely basis,
may tender such Shares pursuant to the guaranteed delivery procedure set forth
in Section 3.
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number set forth on the back cover.
Additional copies of this Offer to Purchase, the Letter of Transmittal, the
Notice of Guaranteed Delivery and other related materials may be obtained from
the Information Agent or from brokers, dealers, commercial banks and trust
companies.
------------------------
The Information Agent for the Offer is:
[MORROW & CO., INC. LOGO]
December 30, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
INTRODUCTION............................................................. 3
1. Terms of the Offer.......................................... 6
2. Acceptance for Payment and Payment for Shares............... 7
3. Procedure for Tendering Shares.............................. 8
4. Withdrawal Rights........................................... 11
5. Certain United States Federal Income Tax Consequences....... 12
6. Price Range of Shares....................................... 13
7. Effect of the Offer on the Market for the Shares, Inclusion
in the Nasdaq National Market and Exchange Act
Registration.............................................. 13
8. Certain Information Concerning the Company.................. 14
9. Certain Information Concerning Parent and Purchaser......... 18
10. Source and Amount of Funds.................................. 20
11. Background of the Offer; Past Contacts, Transactions or
Negotiations with the Company............................. 22
12. Purpose of the Offer and the Merger; Short Form Merger;
Plans for the Company; Appraisal Rights; Going Private
Transactions.............................................. 24
13. Merger Agreement; Certain Other Agreements.................. 25
14. Dividends and Distributions................................. 36
15. Certain Conditions of the Offer............................. 36
16. Certain Regulatory and Legal Matters........................ 38
17. Fees and Expenses........................................... 39
18. Miscellaneous............................................... 40
Schedule I. Directors and Executive Officers of the Parent and Purchaser
</TABLE>
2
<PAGE> 3
To the Holders of Common Stock of Renex Corp.:
INTRODUCTION
RC Acquisition Corp. ("Purchaser"), a Florida corporation and a
wholly-owned subsidiary of National Nephrology Associates, Inc., a Delaware
corporation ("Parent"), hereby offers to purchase all the outstanding shares of
common stock, par value $.001 per share (the "Shares"), of Renex Corp., a
Florida corporation (the "Company"), including the associated preferred stock
purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as
of November 6, 1998, by and between the Company and Continental Stock Transfer
and Trust Company, as Rights Agent, as amended, at a purchase price of $10 per
Share (the "Offer Price"), net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in this Offer to Purchase
and in the related Letter of Transmittal (which together, as the same may be
amended or supplemented from time to time, constitute the "Offer"). Unless the
context indicates otherwise, all references herein and in the Letter of
Transmittal to the Shares shall include the associated Rights.
Purchaser was formed by Parent for purposes of making the Offer. Parent is
a private company providing outpatient hemodialysis and ancillary services to
patients suffering from chronic kidney failure. Parent began operations in
December 1998 by acquiring nine dialysis clinics and a home training program
serving 642 patients in Tennessee and Georgia. Since the initial acquisitions,
Parent has grown its business by acquiring 22 other clinics and opening one de
novo clinic. See Section 9.
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the purchase of Shares by Purchaser pursuant to the Offer.
However, any tendering shareholder or other payee who fails to complete and sign
the Substitute Form W-9 that is included in the Letter of Transmittal may be
subject to a required backup federal income tax withholding of 31% of the gross
proceeds payable to such shareholder or other payee pursuant to the Offer. See
Section 2. Purchaser will pay all charges and expenses of Morrow & Co., Inc.,
which is acting as Information Agent (the "Information Agent"), and Continental
Stock Transfer & Trust Company, which is acting as Depositary (the
"Depositary"), incurred in connection with the Offer. See Section 17.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of December 28, 1999 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. The Merger Agreement provides, among other things, that as soon
as practicable after the purchase of Shares pursuant to the Offer and the
satisfaction or waiver of the other conditions set forth in the Merger
Agreement, and in accordance with the relevant provisions of the Florida
Business Corporation Act (the "FBCA"), Purchaser will be merged with and into
the Company (the "Merger"). See Section 13. Following consummation of the
Merger, the Company will continue as the surviving corporation (the "Surviving
Corporation") and will be a wholly-owned subsidiary of Parent. At the effective
time of the Merger (the "Effective Time"), by virtue of the Merger and without
any action on the part of the holders thereof, each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Parent,
Purchaser, the Company or any subsidiary of Parent, Purchaser or the Company,
which shall be canceled, and other than Shares with respect to which dissenters'
rights, if available, have been perfected) will be converted into and represent
the right to receive, without interest, the price paid for each Share in the
Offer (the "Merger Consideration"). The Merger Agreement is more fully described
in Section 13. Certain United States federal income tax consequences of the sale
of Shares pursuant to the Offer and the Merger, as the case may be, are
described in Section 5.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY (1) APPROVED AND
ADOPTED THE MERGER AGREEMENT, THE OFFER AND THE MERGER AND DEEMED THEM TO BE
ADVISABLE, (2) DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY AND (3)
RECOMMENDED THAT THE SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER, AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
3
<PAGE> 4
Prudential Securities Incorporated ("Prudential"), financial advisor to the
Company, has delivered to the Board of Directors of the Company a fairness
opinion with respect to the Offer and the Merger. The full text of the written
opinion of Prudential, is filed as an exhibit to the Company's
solicitation/recommendation statement on Schedule 14D-9, which is being mailed
to shareholders of the Company concurrently herewith. Shareholders of the
Company are urged to read the full text of such opinion in conjunction with the
Offer.
The Merger Agreement provides that effective upon the deposit by Purchaser
with the Depositary of payment for all Shares validly tendered and not withdrawn
pursuant to the Offer (including payment for all options and warrants in
accordance with the Merger Agreement) and payment of severance to certain
executive officers and directors of the Company, Purchaser shall be entitled to
designate such number of directors (rounded up to the next whole number) on the
Board of Directors of the Company (the "Board"), subject to compliance with
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), equal to the product of (i) the total number of directors on the Board
(giving effect to the election of any additional directors pursuant to this
sentence) and (ii) the percentage that the number of Shares owned by Parent and
Purchaser (including Shares accepted for payment) bears to the total number of
Shares outstanding, and the Company shall take all action necessary to cause
Purchaser's designees to be elected or appointed to the Board. The Company has
agreed to use its best efforts to cause individuals designated by Purchaser to
constitute the same percentage as such individuals represent on the Board of (A)
each committee of the Board (other than any committee of the Board established
to take action under the Merger Agreement), (B) each board of directors of each
subsidiary of the Company and (C) each committee of each such board.
Notwithstanding the foregoing, until such time as Purchaser's designees are
elected or appointed to the Board, the Company shall use its reasonable efforts
to ensure that at least two of the members of the Board and such boards and
committees as of the date of the Merger Agreement who are not employees of the
Company shall remain members of the Board and such boards and committees.
Following the election or appointment of Purchaser's designees to the Board and
until the Effective Time, the approval of the directors of the Company then in
office who were not designated by Purchaser shall be required to authorize (and
such authorization shall constitute the authorization of the Board and no other
action on the part of the Company, including any action by any other director or
the Company, shall be required to authorize) any termination of the Merger
Agreement by the Company, any amendment to the Merger Agreement requiring action
by the Board and any waiver of compliance with any of the agreements or
conditions contained in the Merger Agreement for the benefit of the Company.
If Purchaser acquires at least 80% of the Shares on a fully-diluted basis,
Florida law permits it to effect the Merger without a shareholders' meeting and
without the approval of or further notice to the other Company shareholders.
Purchaser intends to cause the Merger to become effective as soon as reasonably
practicable. Upon consummation of the Merger, Purchaser intends to cause the
Company to file applications to withdraw the Shares from listing and trading on
The Nasdaq National Market and to terminate the registration of the Shares under
the Exchange Act.
The total amount of funds required by Parent and Purchaser to acquire all
outstanding Shares (including Shares issuable upon exercise of options and
warrants) pursuant to the Offer and the Merger, to make severance payments to
certain employees of the Company and to pay related fees and expenses is
estimated to be approximately $85 million. In addition, Parent will require
approximately $55 million to repay amounts outstanding under its existing credit
facility. Purchaser intends to finance such amounts with borrowings under a
six-year senior term loan facility of $100 million, approximately $10 million in
cash on hand at the Company and the issuance of approximately $30 million in
equity to J.W. Childs Equity Partners II, L.P. and Credit Agricole Indosuez or
their affiliates and certain other investors. See Section 10.
The Offer does not constitute a solicitation of proxies for any meeting of
the Company's shareholders, nor does this Offer constitute a solicitation of
consents. Any such solicitation which Purchaser or Parent might make would only
be pursuant to separate proxy or consent materials, as the case may be, in
compliance with the requirements of the Exchange Act.
CERTAIN CONDITIONS TO THE OFFER
The Offer is subject to the fulfillment of certain conditions, including
the following:
THE MINIMUM CONDITION. THE CONSUMMATION OF THE OFFER IS CONDITIONED UPON
THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPI-
4
<PAGE> 5
RATION OF THE OFFER THAT NUMBER OF SHARES WHICH, TOGETHER WITH THE SHARES THEN
OWNED BY PARENT AND PURCHASER, WOULD CONSTITUTE A MAJORITY OF OUTSTANDING SHARES
ON A FULLY-DILUTED BASIS ON THE DATE OF PURCHASE (THE "MINIMUM CONDITION"). "On
a fully-diluted basis" means, as of the date of the purchase of Shares pursuant
to the Offer, the number of Shares outstanding, together with Shares issuable
pursuant to outstanding and unexpired options and warrants to purchase Shares,
whether or not exercisable.
The Company has represented to the Purchaser that, as of December 27, 1999,
6,926,901 Shares were issued and outstanding, 1,001,231 Shares were reserved for
issuance pursuant to outstanding options to acquire Shares and 634,952 Shares
were reserved for issuance pursuant to outstanding warrants to acquire Shares.
Based on the foregoing, there are 8,563,084 Shares outstanding on a
fully-diluted basis. Accordingly, as of such date, the Minimum Condition would
be satisfied if 4,281,543 Shares are validly tendered and not withdrawn. Parent
and Purchaser do not currently own any Shares, however, Parent and Purchaser may
be deemed to beneficially own the Shares subject to the Shareholders Agreement
(as defined below). See Section 13.
Pursuant to the Shareholders Agreement, dated as of December 28, 1999 (the
"Shareholders Agreement"), by and among Parent, Purchaser and the Shareholders
named on Exhibit A thereto, all of the Company's directors and executive
officers have agreed to tender pursuant to the Offer all Shares owned (or
issuable upon exercise of options and warrants and other securities convertible
into or exercisable or exchangeable for Shares) of record or beneficially by
such persons (the "Subject Shares"). In addition such shareholders have granted
Purchaser (or its designee) an irrevocable option (the "Option") to purchase
such shareholder's Subject Shares at a price per Share equal to $10. The Option
may be exercised by the Purchaser in whole but not in part at any time on or
prior to the thirtieth day after termination of the Merger Agreement, provided,
that the Option shall remain exercisable after such period if the Merger
Agreement is terminated under certain circumstances. The Company's directors and
executive officers currently beneficially own 2,631,239 Shares (including Shares
issuable upon exercise of options and warrants), representing approximately
34.1% of the outstanding Shares on a fully-diluted basis (calculated in
accordance with Rule 13d-3 under the Exchange Act). The Shareholders Agreement
is more fully described in Section 13.
THE HSR CONDITION. CONSUMMATION OF THE OFFER IS CONDITIONED UPON THE
EXPIRATION OR TERMINATION, PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION
1), OF THE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT
OF 1976, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER (THE "HSR ACT"),
APPLICABLE TO THE ACQUISITION OF THE SHARES PURSUANT TO THE OFFER AND THE
MERGER.
Purchaser caused its ultimate parent to file with the Federal Trade
Commission and the Antitrust Division of the Department of Justice a Premerger
Notification and Report Form under the HSR Act with respect to the Offer on
December 29, 1999. Accordingly, Parent anticipates that the waiting period under
the HSR Act applicable to the Offer will expire at 11:59 p.m., New York City
time, on January 13, 2000, unless extended. See Section 16.
THE FINANCING CONDITION. CONSUMMATION OF THE OFFER IS CONDITIONED UPON THE
FUNDS COMMITTED TO BE PROVIDED BY PARENT'S LENDERS IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT HAVING BEEN MADE AVAILABLE TO
PARENT IN ACCORDANCE WITH THE TERMS OF SUCH COMMITMENT. SEE SECTIONS 12 AND 15.
Certain other conditions to the consummation of the Offer are described in
Section 15. Parent and Purchaser expressly reserve the right, in their sole
discretion, to waive any one or more of the conditions to the Offer (other than
the Minimum Condition). See Section 15.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
5
<PAGE> 6
THE TENDER OFFER
1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of
the Offer (including, if the Offer is extended or amended, the terms and
conditions of any extension or amendment), Purchaser will accept for payment and
pay for all Shares validly tendered prior to the Expiration Date and not
theretofore withdrawn in accordance with Section 4. The term "Expiration Date"
means 12:00 Midnight, New York City time, on Friday, January 28, 2000, unless
Purchaser shall have extended the period of time for which the Offer is open, in
which event the term "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended by Purchaser, shall expire. UNDER NO
CIRCUMSTANCES WILL ANY INTEREST BE PAID ON THE PURCHASE PRICE FOR TENDERED
SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Securities and Exchange Commission (the "Commission"), Parent
and Purchaser expressly reserve the right, in their sole discretion, to waive
any of the conditions to the Offer (other than the Minimum Condition) and to
make any change in the terms and conditions of the Offer, provided that no
change may be made to the Minimum Condition or which changes the form of
consideration to be paid or decreases the price per Share or the number of
Shares sought in the Offer or which imposes conditions to the Offer in addition
to those conditions set forth in Section 15 or which otherwise materially and
adversely affects the Company or the holders of the Shares.
Pursuant to the Merger Agreement, Purchaser has agreed to accept for
payment and pay for all Shares that have been validly tendered and not withdrawn
pursuant to the Offer as soon as practicable following expiration of the Offer,
provided that all conditions to the Offer set forth in Section 15 shall have
been satisfied or waived by Purchaser.
If by 12:00 Midnight, New York City time, on Friday, January 28, 2000 (or
any other time then set as the Expiration Date), any or all of the conditions to
the Offer have not been satisfied or waived, Purchaser reserves the right (but
shall not be obligated), subject to the terms and conditions contained in the
Merger Agreement (including the limitations described above) and to the
applicable rules and regulations of the Commission, to (i) terminate the Offer
and not accept for payment or pay for any Shares and return all tendered Shares
to the tendering shareholders, (ii) waive all of the unsatisfied conditions,
other than the Minimum Condition, and accept for payment and pay for all Shares
validly tendered prior to the Expiration Date and not theretofore properly
withdrawn, (iii) extend the Offer in a manner permitted under the Merger
Agreement and, subject to the right of shareholders to withdraw Shares until the
Expiration Date, retain the Shares that have been tendered during the period or
periods for which the Offer is extended or (iv) delay acceptance for payment of,
or payment for, the Shares, subject to complying with applicable law, until
satisfaction or waiver of the conditions of the Offer. Notwithstanding the
foregoing, the Merger Agreement provides that if at the termination of the
Initial Offer Period (as defined below) the Minimum Condition has not been
satisfied or any waiting period applicable to the Offer, the Merger and the
transactions contemplated in the Merger Agreement pursuant to the HSR Act shall
not have expired or been terminated, the Offer shall remain open for a minimum
of an additional five business days.
Subject to the last sentence of the preceeding paragraph, there can be no
assurance that Purchaser will exercise its right to extend the Offer.
Subject to the applicable rules and regulations of the Commission and
subject to the limitations set forth in the Merger Agreement, Purchaser also
expressly reserves the right, at any time and from time to time, in its sole
discretion, to (i) postpone the acceptance for payment of and payment for any
Shares regardless of whether such Shares were theretofore accepted for payment
or (ii) terminate the Offer and not accept for payment, purchase or pay for any
Shares tendered pursuant to the Offer not theretofore accepted for payment or
paid for, if any of the conditions referred to in Section 15 have not been
satisfied or upon the occurrence of any of the events specified in Section 15,
and (iii) waive any condition, other than the Minimum Condition, or otherwise
amend the Offer in any respect, in each case by giving oral or written notice of
such delay, termination, waiver or amendment to the Depositary. Purchaser's
right to delay payment for any Shares or not to pay for any Shares theretofore
accepted for payment is subject to the applicable rules and regulations of the
6
<PAGE> 7
Commission, including Rule 14e-1(c) of the Exchange Act relating to Purchaser's
obligation to pay for or return tendered Shares promptly after the termination
or withdrawal of the Offer. The rights reserved by Purchaser in this paragraph
are in addition to Purchaser's rights to terminate the Offer pursuant to Section
15.
Any extension of the period during which the Offer is open, delay in
acceptance for payment or payment, or termination or amendment of the Offer,
will be followed, as promptly as practicable, by public announcement thereof,
such announcement, in the case of an extension, to be issued not later than 9:00
a.m., New York City time, on the next Business Day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rules 14d-4(c) and 14e-1(d) under the Exchange Act. Without
limiting the obligation of Purchaser under such rules or the manner in which
Purchaser may choose to make any public announcement, Purchaser currently
intends to make announcements by issuing a press release and making any
appropriate filing with the Commission. For the purposes of the Offer, "Business
Day" means any day other than a Saturday, Sunday or Federal holiday and consists
of the time period from 12:01 a.m. through 12:00 midnight, Eastern time.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will disseminate additional tender offer materials and extend
the Offer if and to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1
under the Exchange Act. The minimum period during which a tender offer must
remain open following material changes in the terms of the Offer or information
concerning the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
relative materiality of the changed terms or information. With respect to a
change in price or a change in percentage of securities sought, a minimum ten
Business Day period is generally required to allow for adequate dissemination to
shareholders and investor response. The requirement to extend the Offer will not
apply to the extent that the number of Business Days remaining between the
occurrence of the change and the then-scheduled Expiration Date equals or
exceeds the minimum extension period that would be required because of such
change.
The Offer shall remain open for at least 20 Business Days (the "Initial
Offer Period") and shall be subject to the satisfaction of the Minimum Condition
and to the other conditions to the Offer; provided that if at the termination of
the Initial Offer Period the Minimum Condition has not been satisfied or any
waiting period applicable to the Offer, the Merger and the transactions
contemplated by this Agreement pursuant to the HSR Act shall not have expired or
been terminated, the Offer shall remain open for a minimum of an additional five
Business Days.
In connection with the Offer, the Company has provided or will provide
Purchaser with the names and addresses of all record holders of Shares and
security position listings of Shares held in depositories for the purpose of
disseminating the Offer to holders of Shares. This Offer to Purchase, the
related Letter of Transmittal and other relevant materials will be mailed to
record holders of Shares whose names appear on the shareholder list and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the shareholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), Purchaser
will accept for payment, and will pay for, all Shares validly tendered prior to
the Expiration Date and not theretofore withdrawn in accordance with Section 4
promptly after the Expiration Date, provided the conditions set forth in Section
15 have been satisfied or waived at or prior to the Expiration Date. Subject to
compliance with Rule 14e-1(c) under the Exchange Act and any other applicable
rules and regulations of the Commission and the terms of the Merger Agreement,
Purchaser expressly reserves the right to delay payment for Shares in order to
comply in whole or in part with any applicable law, including the HSR Act. See
Section 16.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares or timely confirmation (a "Book-Entry Confirmation") of a book-entry
transfer of such Shares into the Depositary's account at The Depository Trust
7
<PAGE> 8
Company (the "Book-Entry Transfer Facility"), pursuant to the procedures set
forth in Section 3, (ii) a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof), with all required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message (as defined below) and (iii) any other documents required by the Letter
of Transmittal. The term "Agent's Message" means a message transmitted by a
Book-Entry Transfer Facility to, and received by, the Depositary and forming a
part of a Book-Entry Confirmation, which states that such Book-Entry Transfer
Facility has received an express acknowledgment from the participant in such
Book-Entry Transfer Facility tendering the Shares that are the subject of the
Book-Entry Confirmation that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that Purchaser may enforce
such agreement against the participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary, as agent for the tendering shareholders, of Purchaser's acceptance
of such Shares for payment. In all cases, payment for Shares purchased pursuant
to the Offer will be made by deposit of the purchase price with the Depositary,
which will act as agent for tendering shareholders for the purpose of receiving
payment from Purchaser and transmitting such payment to tendering shareholders.
Upon the deposit of funds with the Depositary for the purpose of making payments
to tendering shareholders, Purchaser's obligation to make such payment shall be
satisfied, and tendering shareholders must thereafter look solely to the
Depositary for payment of amounts owed to them by reason of the acceptance for
payment of Shares pursuant to the Offer. If, for any reason whatsoever,
acceptance for payment of any Shares tendered pursuant to the Offer is delayed,
or Purchaser is unable to accept for payment Shares tendered pursuant to the
Offer, then, without prejudice to the Purchaser's rights under this Offer to
Purchase, the Depositary may, nevertheless, on behalf of Purchaser, retain
tendered Shares, and, subject to compliance with the applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act,
such Shares may not be withdrawn, except to the extent that the tendering
shareholders are entitled to withdrawal rights as described in Section 4.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR THE
SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted
representing more Shares than are tendered, certificates representing such
unpurchased or untendered Shares will be returned (or, in the case of Shares
delivered by book-entry transfer to the Book-Entry Transfer Facility, such
Shares will be credited to an account maintained within such Book-Entry Transfer
Facility), without expense to the tendering shareholder as promptly as
practicable after the expiration, termination or withdrawal of the Offer.
If, prior to the Expiration Date, Purchaser increases the price being paid
for Shares accepted for payment pursuant to the Offer, such increased
consideration will be paid to all shareholders whose Shares are purchased
pursuant to the Offer, whether or not such Shares were tendered prior to such
increase in consideration.
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates, the right to purchase Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve Purchaser of its obligations under the Offer or prejudice the rights of
tendering shareholders to receive payment for Shares validly tendered and
accepted for payment.
3. PROCEDURE FOR TENDERING SHARES.
Valid Tenders. For Shares to be validly tendered pursuant to the Offer,
(i) a properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof), together with any required signature guarantees (or,
in the case of a book-entry transfer, an Agent's Message), and any other
documents required by the Transmittal Letter, must be received by the Depositary
at its address set forth on the back cover of this Offer to Purchase and either
certificates representing such Shares must be received by the Depositary along
with the Letter of Transmittal or such Shares must be tendered pursuant to the
procedure for
8
<PAGE> 9
book-entry transfer set forth below, and a Book-Entry Confirmation must be
received by the Depositary, in each case prior to the Expiration Date or (ii)
the guaranteed delivery procedure set forth below must be complied with. No
alternative, conditional or contingent tenders will be accepted. If Share
certificates are forwarded to the Depositary in multiple deliveries, a Letter of
Transmittal (or manually signed facsimile thereof), properly completed and duly
executed, must accompany each such delivery.
A tender of Shares pursuant to any one of the procedures described in the
paragraphs below will constitute the tendering shareholder's acceptance of the
terms and conditions of the Offer, as well as the tendering shareholder's
representation and warranty that (i) such shareholder has the full power and
authority to tender, sell, assign and transfer the tendered Shares (and any and
all other Shares or other securities issued or issuable in respect of such
Shares on or after December 30, 1999), and (ii) when the same are accepted for
payment by the Purchaser, the Purchaser will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claims. Purchaser's acceptance for payment of Shares
tendered pursuant to the Offer will constitute a binding agreement between the
tendering shareholder and Purchaser upon the terms and subject to the conditions
of the Offer.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two Business Days after the date of this Offer to Purchase. Any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry delivery of Shares by causing the Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account at the Book-Entry
Transfer Facility in accordance with such Book-Entry Transfer Facility's
procedures for transfer. Although delivery of Shares may be effected through
book-entry at the Book-Entry Transfer Facility prior to the Expiration Date, the
Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message in connection with a book-entry transfer, and any other required
documents, must, in any case, be transmitted to, and received by, the Depositary
at its address set forth on the back cover of this Offer to Purchase prior to
the Expiration Date or the guaranteed delivery procedures described below must
be complied with. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantee. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
the Book-Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal or (ii) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agent's Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution" and, collectively, "Eligible Institutions"). In all other
cases, all signatures on Letters of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal.
If the certificates for Shares are registered in the name of a person other
than the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the
9
<PAGE> 10
tendered certificates for such Shares must be endorsed or accompanied by
appropriate stock powers, in either case, signed exactly as the name or names of
the registered holders or owners appear on the certificates, with the signatures
on the certificates or stock powers guaranteed as described above. See
Instruction 5 to the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates for Shares are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, such Shares may nevertheless be tendered if all of
the following guaranteed delivery procedures are duly complied with:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser herewith, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation), together with a properly completed
and duly executed Letter of Transmittal (or a manually signed facsimile
thereof), and any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and any other documents required
by the Letter of Transmittal are received by the Depositary within three
trading days after the date of execution of such Notice of Guaranteed
Delivery. A "trading day" is any day on which The Nasdaq National Market
("Nasdaq") operated by the National Association of Security Dealers, Inc.
(the "NASD"), is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for such Shares or a timely
Book-Entry Confirmation, (ii) a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof), with all required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message) and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering shareholders may be paid at different times depending
upon when the Depositary actually receives certificates for Shares or Book-Entry
Confirmation with respect to Shares. Under no circumstances will interest be
paid on the purchase price to be paid by Purchaser for the Shares, regardless of
any extension of the Offer or any delay in making such payment.
Determination of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by Purchaser, in its sole discretion,
and its determination will be final and binding on all parties. Purchaser
reserves the absolute right to reject any or all tenders of any Shares that are
determined by it not to be in proper form or the acceptance of or payment for
which may, in the opinion of Purchaser, be unlawful. Purchaser also reserves the
absolute right, in its sole discretion, to waive any of the conditions of the
Offer subject to the limitations set forth in the Merger Agreement, or any
defect or irregularity in the tender of any Shares of any particular
shareholder, whether or not similar defects or irregularities are waived in the
case of other shareholders. Purchaser's interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
Instructions to the Letter of Transmittal) will be final and binding on all
parties. No tender of Shares will be deemed to have been validly made until all
defects and irregularities have been cured or waived. None of Purchaser, Parent,
the Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification.
Appointment of Proxies. By executing the Letter of Transmittal as set
forth above (including through delivery of an Agent's Message), a tendering
shareholder irrevocably appoints designees of Purchaser as such shareholder's
attorneys-in-fact and proxies, each with full power of substitution, in the
manner set forth in the
10
<PAGE> 11
Letter of Transmittal, to the full extent of such shareholder's right with
respect to the Shares tendered by such shareholder and accepted for payment by
Purchaser (and any and all non-cash dividends, distributions, rights, other
Shares or other securities or rights issued or issuable in respect of such
Shares on or after the date of this Offer to Purchase (collectively, the
"Distributions")). All such powers of attorney and proxies shall be considered
coupled with an interest in the tendered Shares. Such appointment is effective
only upon the acceptance for payment of the Shares by Purchaser. Upon acceptance
for payment, all prior powers of attorney and proxies given by the shareholder
with respect to such Shares or other securities or rights will, without further
action, be revoked and no subsequent proxies may be given or written consents
executed (and, if given or executed, will not be deemed effective). The
designees of Purchaser will, with respect to the Shares and any Distributions,
be empowered to exercise all voting and other rights of such shareholder with
respect to the Shares and any Distributions as they, in their sole judgment,
deem proper in respect of any annual or special meeting of the Company's
shareholders, any adjournment or postponement thereof, actions by written
consent in lieu of such meeting or otherwise. Purchaser reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon Purchaser's acceptance for payment of such Shares, Purchaser must be able
to exercise full voting, consent and other rights with respect to such Shares
and any Distributions, including voting at any meeting of shareholders (whether
annual or special or whether or not adjourned) or acting by written consent
without a meeting in respect of such Shares.
Backup Federal Income Tax Withholding. To prevent backup federal income
tax withholding with respect to payment for the Shares purchased pursuant to the
Offer, each tendering shareholder must provide the Depositary with his or her
correct taxpayer identification number ("TIN") and certify that such shareholder
is not subject to backup federal income tax withholding by completing the
Substitute Form W-9 included in the Letter of Transmittal. See Section 5 and
Instruction 8 of the Letter of Transmittal. If the shareholder is a nonresident
alien or foreign entity not subject to backup withholding, the shareholder must
give the Depositary a completed Form W-8 Certificate of Foreign Status prior to
receipt of any payments.
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4,
tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered
pursuant to the Offer may be withdrawn at any time prior to the Expiration Date
and, unless theretofore accepted for payment by Purchaser pursuant to the Offer,
may also be withdrawn at any time after 12:00 Midnight, New York City time, on
February 27, 2000. If purchase of or payment for Shares is delayed for any
reason or if Purchaser is unable to purchase or pay for Shares for any reason,
then, without prejudice to Purchaser's rights under the Offer, tendered Shares
may be retained by the Depositary on behalf of Purchaser and such Shares may not
be withdrawn except to the extent that tendering shareholders are entitled to
and duly exercise withdrawal rights as set forth in this Section 4. Any such
delay will be accompanied by an extension of the Offer to the extent required by
law.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at its address set forth on the back cover of this Offer to Purchase
and must specify the name of the person who tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name in which the certificates
representing such Shares are registered, if different from that of the person
who tendered the Shares. If certificates for Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and, unless such Shares have been tendered for
the account of an Eligible Institution, the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer set forth in Section
3, any notice of withdrawal must also specify the name and number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and
must otherwise comply with the Book-Entry Transfer Facility's procedures.
All questions as to the form and validity (including the time of receipt)
of any notice of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. None
of Purchaser, Parent, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification.
11
<PAGE> 12
Withdrawals of tenders of Shares may not be rescinded, and any Shares
properly withdrawn will be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered at any subsequent time prior
to the Expiration Date by following any of the procedures described in Section
3.
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. The following
is a summary of the principal United States federal income tax consequences of
the Offer and the Merger to holders all of whose Shares are purchased pursuant
to the Offer or converted to cash in the Merger (including pursuant to the
exercise of dissenter's rights, if any). This summary is for general information
only and does not purport to be a complete analysis of all the potential tax
effects of the Offer and the Merger. This summary is based on current law, which
is subject to change, possibly with retroactive effect. There can be no
assurance that the Internal Revenue Service ("IRS") will not take a contrary
view, and no ruling from the IRS has been or will be sought. Legislative,
judicial or administrative changes may be forthcoming that could alter or modify
the statements and conclusions set forth herein. Any such changes or
interpretations could be retroactive and could affect the tax consequences to
holders whose Shares are purchased pursuant to the Offer. The discussion does
not purport to deal with all aspects of United States federal income taxation
that may affect any particular holder in light of such holder's individual
investment circumstances, and is not intended for certain types of holders
subject to special treatment under the United States federal income tax law
(e.g., holders of Shares in whose hands Shares are not capital assets, holders
who received their Shares pursuant to the exercise of employee stock options or
otherwise as compensation, financial institutions, broker-dealers, insurance
companies, tax-exempt organizations, non-United States persons or persons who
hold their Shares as part of a hedge, straddle, or conversion transaction).
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH SHAREHOLDER SHOULD
CONSULT SUCH SHAREHOLDER'S OWN TAX ADVISOR REGARDING THE APPLICABILITY OF THE
RULES DISCUSSED BELOW TO SUCH SHAREHOLDER AND THE PARTICULAR TAX EFFECTS TO SUCH
SHAREHOLDER OF THE OFFER AND THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger
(including pursuant to the exercise of dissenter's rights, if any) will be a
taxable transaction for United States federal income tax purposes, and also may
be a taxable transaction under applicable state, local, foreign and other tax
laws. In general, for United States federal income tax purposes, a holder of
Shares that receives cash pursuant to the Offer or the Merger will recognize
gain or loss equal to the difference between his or her adjusted tax basis in
the Shares sold pursuant to the Offer or converted to cash in the Merger and the
amount of cash received therefor. Gain or loss must be determined separately for
each block of Shares (i.e., Shares acquired at the same cost in a single
transaction) sold pursuant to the Offer or converted to cash in the Merger. Such
gain or loss generally will be capital gain or loss, provided the Shares are a
capital asset in the hands of a shareholder and the shareholder retains no
interest in the Company, and will be long-term capital gain or loss if, on the
date of sale (or, if applicable, the date of the Merger), the Shares were held
for more than one year. If a holder exercises such holder's dissenters' rights,
if applicable, and receives an amount treated as interest for federal income tax
purposes, such amount will be taxed as ordinary income.
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" at a rate of 31%. Backup withholding generally applies if
the holder (a) fails to furnish such holder's social security number or taxpayer
identification number ("TIN"), (b) furnishes an incorrect TIN, (c) is subject to
backup withholding due to previous failures to file a federal income tax return
including reportable interest or dividend payments, or (d) under certain
circumstances, fails to provide a certified statement, signed under penalties of
perjury, that such holder is not subject to backup withholding due to previous
failures to file a federal income tax return including reportable interest or
dividend payments. Backup withholding is not an additional tax, but rather it is
an advance tax payment that is subject to refund if and to the extent that it
results in an overpayment of tax. Certain taxpayers are generally exempt from
backup withholding, including corporations and financial institutions. Certain
penalties apply for failure to furnish correct information and for failure to
include reportable payments in income. Each holder of Shares should consult with
his or her own tax advisor as to his or her qualification for exemption from
backup withholding and the procedure for obtaining such
12
<PAGE> 13
exemption. Tendering holders of Shares may be able to prevent backup withholding
by completing the Substitute Form W-9 included in the Letter of Transmittal. See
Section 3.
6. PRICE RANGE OF SHARES. The Shares have been included in Nasdaq under
the symbol "RENX" since October 8, 1997 when the Company completed its initial
public offering. The following table sets forth, for the periods indicated, the
reported high and low closing sales prices per Share on Nasdaq (i) as reported
in the Company's Annual Report on Form 10-K with respect to the fiscal years
ended December 31, 1998 and 1997 and (ii) as reported by published financial
sources with respect to the period after December 31, 1998.
<TABLE>
<CAPTION>
HIGH LOW
----- ------
<S> <C> <C>
1997:
Fourth Quarter............................................ $8.25 $4.875
1998:
First Quarter............................................. $7.38 $ 4.81
Second Quarter............................................ 7.19 5.25
Third Quarter............................................. 6.50 3.88
Fourth Quarter............................................ 7.25 4.00
1999:
First Quarter............................................. $7.25 $ 3.94
Second Quarter............................................ 5.75 3.50
Third Quarter............................................. 6.00 4.06
</TABLE>
On December 27, 1999, the last full day of trading prior to the public
announcement of the execution of the Merger Agreement, the closing sales price
per Share on Nasdaq as reported by published financial sources was $8 1/4. On
December 29, 1999, the last full day of trading prior to the commencement of the
Offer, the last reported sales price per Share was $9 3/8. HOLDERS OF SHARES ARE
URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
The Company has indicated in its public filings that it has never paid cash
dividends on the Shares. In addition, the Merger Agreement provides that the
Company will not declare, set aside or pay any dividends on, or make any other
distributions in respect of, its capital stock, including the Shares. See
Section 14.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, INCLUSION IN THE
NASDAQ NATIONAL MARKET AND EXCHANGE ACT REGISTRATION. The purchase of Shares
pursuant to the Offer will reduce the number of Shares that might otherwise
trade publicly and the number of holders of Shares, and could adversely affect
the liquidity and market value of the remaining Shares held by shareholders
other than Purchaser.
The Shares are currently listed on Nasdaq, which constitutes the principal
trading market for the Shares. Depending upon aggregate market value and the
number of Shares not purchased pursuant to the Offer, following consummation of
the Offer, the Shares may no longer meet the quantitative maintenance criteria
of Nasdaq for continued inclusion in Nasdaq and may cease to be authorized for
quotation on such market. If, as a result of the purchase of Shares pursuant to
the Offer, the Shares no longer meet the criteria for continuing inclusion in
Nasdaq, the market for the Shares could be adversely affected. According to
Nasdaq's published guidelines, in order for the Shares to be eligible for
continued inclusion in Nasdaq, there must continue to be, among other things,
(i) total assets and revenue of the Company and its subsidiaries of at least $50
million for the most recent fiscal year, at least 1,100,000 publicly held
Shares, held by at least 400 round lot shareholders, with a market value of at
least $15 million and a minimum bid price of $5 per share, or (ii) net tangibles
assets of the Company and its subsidiaries of at least $4 million, at least
750,000 publicly held Shares, held by at least 400 round lot shareholders, with
a market value of at least $5 million and a minimum bid price of $1 per share.
If the Shares are no longer eligible for inclusion in Nasdaq, they may
nevertheless continue to be included in the Nasdaq SmallCap Market unless, among
other things, the number of publicly held Shares is less than 500,000, or there
are fewer than 300 round lot shareholders in total. If the Shares are no longer
eligible for inclusion in Nasdaq or the Nasdaq SmallCap Market, the Shares might
still be quoted on the OTC Bulletin Board. According to the Company, there were
approximately 178 holders of record of Shares as of
13
<PAGE> 14
December 28, 1999. If, as a result of the purchase of Shares pursuant to the
Offer, the Shares no longer meet the requirements of Nasdaq for continued
listing and the listing of Shares is discontinued, the market for the Shares
could be adversely affected.
If Nasdaq were to delist the Shares, it is possible that the Shares would
trade on another securities exchange or in the over-the-counter market and that
price quotations for the Shares would be available from other sources. The
extent of the public market for the Shares and availability of such quotations
would, however, depend upon such factors as the number of holders and/or the
aggregate market value of the publicly held Shares at such time, the interest in
maintaining a market in the Shares on the part of securities firms, the possible
termination of registration of the Shares under the Exchange Act, as described
below, and other factors.
In the event that the Shares are delisted from Nasdaq prior to the
Effective Time, holders of Shares would be entitled to dissenters' rights under
the FBCA. See Section 12.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application by the Company to the Commission
if there are fewer than 300 record holders of such Shares. If such registration
were terminated, the Company would no longer legally be required to disclose
publicly, in proxy materials distributed to shareholders, the information which
it now must provide under the Exchange Act or to make public disclosure of
financial and other information in annual, quarterly and other reports required
to be filed with the Commission under the Exchange Act; the Company would no
longer be subject to Rule 13e-3 under the Exchange Act relating to "going
private" transactions; and the officers, directors and 10% shareholders of the
Company would no longer be subject to the "short swing" insider trading
reporting and profit recovery provisions of the Exchange Act. Furthermore, if
such registration were terminated, persons holding "restricted securities" of
the Company may be deprived of their ability to dispose of such securities under
Rule 144 or Rule 144A promulgated under the Securities Act of 1933, as amended.
If registration of the Shares has not been terminated prior to the Merger,
then following the consummation of the Merger the Shares will no longer be
included in any tier of The Nasdaq Stock Market, Inc. and the registration of
the Shares under the Exchange Act will be terminated.
The Shares are currently "margin securities" under the regulation of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of such Shares. Depending upon factors similar to those
described above regarding listing and market quotations, it is possible that,
following consummation of the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers. If registration of Shares under the Exchange Act were terminated,
such Shares would no longer be "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY. Except as otherwise set
forth herein, the information concerning the Company contained in this Offer to
Purchase, including financial information, has been furnished by the Company or
has been taken from or based upon publicly available documents and records on
file with the Commission and other public sources. Although neither the
Purchaser nor Parent has any knowledge that would indicate that statements
contained herein based upon such documents are untrue, neither the Purchaser nor
Parent assumes any responsibility for the accuracy or completeness of the
information concerning the Company furnished by the Company or contained in such
documents and records or for any failure by the Company to disclose events which
may have occurred or may affect the significance or accuracy of any such
information but which are unknown to Purchaser or Parent.
The Company is a Florida corporation with its principal executive offices
located at 201 Alhambra Circle, Coral Gables, Florida 33134. The Company has
described its business in its Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 (the "Company 10-K"), as follows:
"Renex Corp. is a high quality provider of dialysis and ancillary services
to patients suffering from chronic kidney failure, generally referred to as
end stage renal disease. The Company has grown through de
14
<PAGE> 15
novo development and acquisitions, and seeks to distinguish itself on the
basis of quality patient care and responsiveness to the professional needs
of its referring nephrologists."
The Company has publicly disclosed that as of December 28, 1999 it provided
dialysis services to approximately 1,300 patients in eight states, through 21
outpatient dialysis facilities and a staff assisted home dialysis program.
Additionally, as of such date, the Company provided inpatient dialysis services
at 21 hospitals.
Set forth below is certain summary consolidated financial data with respect
to the Company excerpted from financial information contained in the Company's
10-K. More comprehensive financial information is included in such report and
other documents filed by the Company with the Commission, and the following
summary is qualified in its entirety by reference to such report and such other
documents and all the financial information (including any related notes)
contained therein. Such report and other documents should be available for
inspection and copies thereof should be obtainable in the manner set forth
below.
RENEX CORP.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1994 1995 1996 1997 1998
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT SHARE AND OPERATING DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues......................... $ 2,746 $ 8,794 $ 18,569 $ 26,073 $ 37,811
Operating expenses:
Facilities...................... 2,405 6,809 14,625 20,182 28,311
General and administrative...... 1,025 1,682 2,581 2,991 4,754
Provision for doubtful
accounts...................... 93 495 1,293 962 1,096
Depreciation and amortization... 126 509 1,642 1,635 2,394
---------- ---------- ---------- ---------- ----------
Operating income (loss)....... (903) (701) (1,572) 303 1,256
Other income (expenses):
Gain (loss) on sale of assets... -- -- 264 (27) (22)
Net interest income (expense)... 61 (360) (915) (771) 271
Amortization of deferred
financing costs............... -- (126) (226) (162) (29)
---------- ---------- ---------- ---------- ----------
Income (loss) before taxes......... (842) (1,187) (2,449) (657) 1,476
Income tax expense.............. -- -- -- -- 106
---------- ---------- ---------- ---------- ----------
Income(loss) before extraordinary
item............................ (842) (1,187) (2,449) (657) 1,370
========== ========== ========== ========== ==========
Extraordinary charge for early
retirement of debt............ -- -- -- (1,441) --
---------- ---------- ---------- ---------- ----------
Net income (loss)............... $ (842) $ (1,187) $ (2,449) $ (2,098) $ 1,370
========== ========== ========== ========== ==========
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1994 1995 1996 1997 1998
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT SHARE AND OPERATING DATA)
<S> <C> <C> <C> <C> <C>
BASIC EARNINGS (LOSS) PER SHARE
Income (loss) per share before
extraordinary item.............. $ (0.48) $ (0.61) $ (0.84) $ (0.14) $ 0.19
Extraordinary charge for early
retirement of debt.............. -- -- -- (0.31) --
---------- ---------- ---------- ---------- ----------
Net income (loss).................. $ (0.48) $ (0.61) $ (0.84) $ (0.45) $ 0.19
========== ========== ========== ========== ==========
Weighted average shares
outstanding..................... 1,741,450 1,944,759 2,930,540 4,672,707 7,065,270
========== ========== ========== ========== ==========
DILUTED EARNINGS (LOSS) PER SHARE
Income (loss) per share before
extraordinary item.............. $ (0.48) $ (0.61) $ (0.84) $ (0.14) $ 0.19
Extraordinary charge for early
retirement of debt.............. -- -- -- (0.31) --
---------- ---------- ---------- ---------- ----------
Net income (loss).................. $ (0.48) $ (0.61) $ (0.84) $ (0.45) $ 0.19
========== ========== ========== ========== ==========
Weighted average shares
outstanding..................... 1,741,450 1,944,759 2,930,540 4,672,707 7,123,006
========== ========== ========== ========== ==========
OPERATING DATA:
Patients (at period end)........... 142 319 691 870 1,157
Treatments......................... 10,260 33,702 77,919 115,689 157,488
Number of facilities (at period
end)............................ 4 7 12 13 20
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------------------------------------------------
1994 1995 1996 1997 1998
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets....................... $ 2,527 $ 5,234 $ 6,059 $ 21,116 $ 17,850
Working capital.................... 2,136 3,051 2,389 15,638 9,569
Total assets....................... 4,020 11,815 15,161 30,680 36,887
Total debt......................... 220 6,375 7,743 1,954 2,204
Total shareholders' equity......... 3,482 4,164 4,317 23,690 27,087
</TABLE>
16
<PAGE> 17
Set forth below is certain unaudited summary consolidated financial data of
the Company for the three months ended September 30, 1999 and 1998 and as of
September 30, 1999 and December 31, 1998, excerpted from the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 1999:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1998 1999 1998 1999
----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net revenues................................ $10,177,000 $13,094,000 $27,279,000 $35,906,000
Operating expenses:
Facilities................................ 7,417,000 9,140,000 20,338,000 26,035,000
General and administrative.................. 1,397,000 1,165,000 3,681,000 4,036,000
Provision for doubtful accounts............. 254,000 308,000 748,000 988,000
Depreciation and amortization............... 658,000 673,000 1,732,000 2,001,000
----------- ----------- ----------- -----------
9,726,000 11,286,000 26,499,000 33,060,000
----------- ----------- ----------- -----------
Operating income............................ 451,000 1,808,000 780,000 2,846,000
----------- ----------- ----------- -----------
Other income (expense):
Net interest income....................... 32,000 69,000 265,000 167,000
Amortization of deferred financing
costs.................................. (11,000) (12,000) (18,000) (35,000)
----------- ----------- ----------- -----------
Income tax before taxes..................... 472,000 1,865,000 1,027,000 2,978,000
33,000 191,000 63,000 302,000
----------- ----------- ----------- -----------
Net Income................................ $ 439,000 $ 1,674,000 $ 964,000 $ 2,676,000
=========== =========== =========== ===========
BASIC EARNINGS PER SHARE
Net Income.................................. $ .06 $ .24 $ .14 $ .38
=========== =========== =========== ===========
Weighted average shares outstanding......... 6,977,372 6,903,974 6,977,372 7,103,822
DILUTED EARNINGS PER SHARE
Net Income.................................. $ .06 $ .24 $ .14 $ .37
=========== =========== =========== ===========
Weighted average shares outstanding......... 7,030,920 6,985,447 7,037,795 7,161,809
=========== =========== =========== ===========
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 9,115,000 $10,170,000
Accounts receivable, less allowance for doubtful accounts
of $1,793,000 and $1,728,000 at December 31, 1998 and
September 30, 1999, respectively....................... 7,606,000 8,253,000
Inventories............................................... 578,000 1,006,000
Prepaids and other........................................ 551,000 616,000
----------- -----------
Total current assets.............................. 17,850,000 20,045,000
Fixed assets, net........................................... 10,474,000 10,142,000
Intangible assets, net...................................... 7,914,000 8,209,000
Notes receivable from affiliates, interest rate at 8%....... 85,000 --
Other assets................................................ 564,000 678,000
----------- -----------
Total assets...................................... $36,887,000 $39,074,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 993,000 $ 975,000
Accrued expenses and other current liabilities............ 2,354,000 2,898,000
Due to third parties...................................... 4,249,000 6,180,000
Current portion of capital lease obligations.............. 685,000 699,000
----------- -----------
Total current liabilities......................... 8,281,000 10,752,000
Capital lease obligations, less current portion............. 1,519,000 1,000,000
Commitments
Shareholders' equity:
Common stock, $.001 par value, 30,000,000 shares
authorized, 7,422,966 shares -- 1998 and 6,819,566
shares -- 1999, issued and outstanding................. 7,000 7,000
Additional paid-in capital.................................. 32,645,000 32,679,000
Treasury stock (609,400 shares at cost)..................... -- (2,475,000)
Accumulated deficit......................................... (5,565,000) (2,889,000)
----------- -----------
Total shareholders' equity........................ 27,087,000 27,322,000
----------- -----------
Total liabilities and shareholders' equity........ $36,887,000 $39,074,000
=========== ===========
</TABLE>
Other Information. The Company is subject to the informational
requirements of the Exchange Act and in accordance therewith, files periodic
reports, proxy statements and other information with the Commission relating to
its business, financial condition and other matters. The Company is required to
disclose in such proxy statements certain information, as of particular dates,
concerning the Company's directors and officers, their remuneration, stock
options granted to them, the principal holders of the Company's securities and
any material interests of such persons in transactions with the Company. Such
reports, proxy statements and other information may be inspected at the public
reference facilities maintained by the Commission in Washington, D.C., and at
the regional offices of the Commission located in New York, New York and
Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for further
information on the public reference rooms. These Commission filings are also
available to the public from commercial document retrieval services. The
Commission filings are also available at the Internet web site maintained by the
Commission at "http://www.sec.gov".
9. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER. Parent is a
Delaware corporation formed on September 24, 1996. Purchaser is a Florida
corporation formed on December 20, 1999 by Parent for the
18
<PAGE> 19
purpose of acquiring the Company and has not conducted any activities since its
formation. All of the outstanding common stock of Purchaser is owned by Parent.
Parent owns and operates 32 dialysis clinics in five states. At September
30, 1999, Parent had consolidated assets of $123 million.
The business address of each of Parent and Purchaser is c/o National
Nephrology Associates, Inc., 511 Union Street, Suite 1800, Nashville Tennessee
37219. Schedule I to this Offer to Purchase contains information with respect to
the executive officers and directors of Parent and Purchaser.
Set forth below are the unaudited consolidated balance sheet of Parent and
its subsidiaries at September 30, 1999, the unaudited consolidated balance sheet
of the Company and its subsidiaries at September 30, 1999 and the unaudited pro
forma consolidated balance sheet of Parent and its subsidiaries and the Company
and its subsidiaries combined at September 30, 1999, adjusted to give effect to
the consummation of the Offer and the Merger and the other transactions
contemplated by the Merger Agreement (the "Transactions"). The unaudited
consolidated balance sheet of the Company and its subsidiaries at September 30,
1999 has been taken from the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1999, filed with the Commission on November
12, 1999. The unaudited pro forma consolidated balance sheet reflecting the
Transactions should be read in conjunction with the related notes below.
NATIONAL NEPHROLOGY ASSOCIATES, INC. AND SUBSIDIARIES (AND RENEX CORP.)
UNAUDITED CONSOLIDATED HISTORICAL AND PRO FORMA BALANCE SHEETS
(IN THOUSANDS)
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
NATIONAL PRO FORMA PRO FORMA AT
NEPHROLOGY ADJUSTMENTS SEPTEMBER 30,
ASSOCIATES, INC. RENEX CORP. REFLECTING 1999 REFLECTING
AND SUBSIDIARIES AT AND SUBSIDIARIES AT THE THE
SEPTEMBER 30, 1999 SEPTEMBER 30, 1999 TRANSACTIONS TRANSACTIONS
------------------- ------------------- ------------ ---------------
<S> <C> <C> <C> <C>
ASSETS
Current:
Cash and short-term
investments.................. $ 1,522 $10,170 $(10,170)(1) $ 1,522
Accounts receivable............ 19,588 8,253 27,841
Inventories.................... 1,861 1,006 2,867
Prepaid expenses and other
current assets............... 1,027 616 1,643
-------- ------- -------- --------
Total current assets...... 23,998 20,045 (10,170) 33,873
Net property, plant and equipment
and capitalized leases......... 14,825 10,142 0 24,967
Other non-current assets:
Net intangible assets.......... 84,653 8,887 58,623(2) 152,164
-------- ------- -------- --------
Total assets.............. $123,476 $39,074 $ 48,453 $211,003
======== ======= ======== ========
</TABLE>
19
<PAGE> 20
<TABLE>
<CAPTION>
NATIONAL PRO FORMA PRO FORMA AT
NEPHROLOGY ADJUSTMENTS SEPTEMBER 30,
ASSOCIATES, INC. RENEX CORP. REFLECTING 1999 REFLECTING
AND SUBSIDIARIES AT AND SUBSIDIARIES AT THE THE
SEPTEMBER 30, 1999 SEPTEMBER 30, 1999 TRANSACTIONS TRANSACTIONS
------------------- ------------------- ------------ ---------------
<S> <C> <C> <C> <C>
LIABILITIES
Current:
Accounts payable............... $ 6,529 $ 975 $ 7,504
Accrued liabilities............ 3,562 2,898 7,159
Taxes payable.................. 300 0 300
Due to third party............. 0 6,180 6,180
-------- ------- -------- --------
Total current
liabilities............. 10,391 10,053 0 21,143
Long-term debt.................... 51,900 1,699 43,301(3) 95,201
Other liabilities................. 567 0 0 1,567
-------- ------- -------- --------
Total liabilities......... 62,857 11,752 43,301 117,910
Common equity..................... 60,619 27,322 5,152(4) 93,039
-------- ------- -------- --------
Total equity.............. 60,619 27,322 5,152 93,039
-------- ------- -------- --------
Total liabilities and
equity.................. $123,476 $39,074 $ 48,453 $211,003
======== ======= ======== ========
Book value per share.............. $ 0.94 $ 3.85 $ 1.05
</TABLE>
- ---------------
Notes to Unaudited Pro Forma Balance Sheet at September 30, 1999
(1) Represents a reduction in cash associated with the payment of expenses
related to the Transactions.
(2) Represents an increase in net intangibles resulting from the excess of the
purchase price plus expenses related to the Transactions over net assets of
the Company.
(3) Represents an increase in long-term debt incurred in order to finance the
Transactions.
(4) Represents both a purchase accounting method adjustment and a portion of
equity issued in order to finance the Transactions.
Except as set forth in this Offer to Purchase, neither Parent nor
Purchaser, nor, to the best knowledge of Parent and Purchaser, any of the
persons listed in Schedule I hereto, owns or has any right to acquire any
Shares, and none of them has effected any transaction in the Shares during the
past 60 days.
Except as set forth in this Offer to Purchase, neither Parent nor
Purchaser, nor, to the best knowledge of Parent and Purchaser, any of the
persons listed in Schedule I hereto, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, without limitation, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any securities of the Company, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, neither
Parent nor Purchaser, nor, to the best knowledge of Parent and Purchaser, any of
the persons listed in Schedule I hereto, has had any transactions with the
Company or any of its executive officers, directors or affiliates that would
require reporting under the rules of the Commission.
Except as set forth in this Offer to Purchase, there have been no
contracts, negotiations or transactions between either Parent or Purchaser, or
their respective subsidiaries, or, to the best knowledge of Parent and
Purchaser, any of the persons listed in Schedule I hereto, on the one hand, and
the Company or its executive officers, directors or affiliates, on the other
hand, concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, election of directors, or a sale or other transfer of
a material amount of assets.
10. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by
Parent and Purchaser to acquire all outstanding Shares (including Shares
issuable upon exercise of options and warrants) pursuant to the Offer and the
Merger, to make severance payments to certain employees of the Company and to
pay
20
<PAGE> 21
related fees and expenses is estimated to be approximately $85 million. In
addition, Parent will require approximately $55 million to repay amounts
outstanding under its existing credit facility. Purchaser and Parent intend to
finance such amounts with borrowings under a six-year senior term loan facility
of $100 million (the "Tranche B Term Loan Facility"), approximately $10 million
in cash on hand at the Company and the issuance of approximately $30 million in
equity (the "Equity Financing") to J.W. Childs Equity Partners II, L.P. ("J.W.
Childs") and Credit Agricole Indosuez ("Indosuez") or their affiliates and
certain other investors.
In addition, upon consummation of the Offer, Parent intends to enter into a
loan agreement providing for a five-year senior term loan facility of $50
million (the "Delayed-Draw Term Loan Facility") and a five-year revolving credit
facility providing for borrowings of up to $25 million (the "Revolving Credit
Facility" and, together with the Tranche B Term Loan Facility and the
Delayed-Draw Term Loan Facility, the "Credit Facilities"). The Delayed-Term Loan
Facility will be available for the subsequent acquisition or construction of
other dialysis clinics and the payment of related expenses and the Revolving
Credit Facility will be available for general corporate purposes (other than
acquisitions) of the Parent and its subsidiaries. The Credit Facilities will be
secured by a lien on substantially all of the assets of Parent and its
subsidiaries. The Credit Facilities are to be provided pursuant to a commitment
letter dated December 27, 1999 (the "Commitment Letter") among Parent, Indosuez,
Lehman Commercial Paper Inc. ("LCPI") and Lehman Brothers, Inc. ("Lehman" and
together with Indosuez and LCPI, the "Lenders").
The Credit Facilities will bear interest at the rate of specified margins
over the applicable eurodollar rate or base rate. The applicable margin will be
3.75% per annum for borrowings under the Tranche B Term Loan Facility that are
based on the eurodollar rate and 2.75% per annum for borrowings under the
Tranche B Term Loan Facility that are based on the base rate. With respect to
borrowings under the Delayed-Draw Term Loan Facility and the Revolving Credit
Facility, the applicable margin will vary based on leverage of the Parent and
its subsidiaries and be determined in accordance with a specified pricing grid,
ranging between 2.75% and 3.25% for such loans that are based on the eurodollar
rate and between 2.25% and 1.75% for such loans that are based on the base rate.
The Offer is conditioned upon the availability of financing under the
Credit Facilities (the "Financing Condition"). Although Parent and Purchaser
expect that the Credit Facilities will be available to provide funds for the
consummation of the Offer and the Merger in accordance with their respective
terms, there can be no assurance that such funds will be available.
The funding of the Credit Facilities is subject to customary closing
conditions, including, among others, (i) the negotiation, execution and delivery
on or before February 15, 2000, of definitive documentation with respect to the
Credit Facilities satisfactory to the Lenders and their counsel, (ii) the
receipt by Parent of the Equity Financing, (iii) the absence of any material
adverse change in or affecting the business, results of operations, assets,
liabilities, condition (financial or otherwise) or prospects of the Parent and
its subsidiaries taken as a whole, or the Company and its subsidiaries, taken as
a whole, (iv) the Lenders not becoming aware after the date of the Commitment
Letter of any information or other matter affecting the Parent, the Company or
the Offer and Merger which is inconsistent in a material and adverse manner with
any such information disclosed to the Lenders as of the date of the Commitment
Letter, (v) the Lenders shall be satisfied with the final terms and conditions
of the Offer, including, without limitation, the price per Share and the number
of Shares to be acquired, and the proposed terms and conditions of the Merger,
(vi) the Lenders shall be satisfied that no preferred stock purchase rights or
other poison pills are applicable to the Offer or the Merger, (vii) the number
of outstanding Shares shall not have increased by a material amount since the
date of the Commitment Letter, (viii) the absence of a material disruption of or
material adverse change in financial, banking or capital market conditions that,
in the judgment of the Lenders, could materially impair the syndication of the
Credit Facilities and (ix) the receipt of all necessary governmental and third
party approvals in connection with the Credit Facilities and the consummation of
the Offer and the Merger.
In the event that (x) the Minimum Condition and all other conditions to the
Offer are satisfied, other than the Financing Condition, (y) the failure of the
Financing Condition to have been satisfied is due solely to the failure of
certain conditions to the consummation of the Credit Facilities specified in the
Merger
21
<PAGE> 22
Agreement (the "Buyer's Risk Conditions") to have been satisfied, and (z) the
Merger Agreement is terminated as a result of the Financing Condition not having
been satisfied, then the Parent shall be obligated to pay the Company $2,000,000
as liquidated damages. Such payment will be the Company's sole and exclusive
remedy for the failure of Parent and Purchaser to consummate the Offer as result
of the failure of the Financing Condition to have been satisfied. The Buyer's
Risk Conditions include, among other items, the conditions referred to in
clauses (i)-(iv) in the preceding paragraph; provided, that, in the case of
clause (iii), the failure of such condition shall constitute a Buyer's Risk
Condition solely to the extent that the material adverse condition or material
adverse change referred to therein is a material adverse condition or material
adverse change in the Parent and its subsidiaries, taken a whole, and that, in
the case of clause (iv), the failure of such condition shall constitute a
Buyer's Risk Condition solely to the extent that the information or other matter
referred to therein is information or other matters relating to the Parent.
It is anticipated that the definitive agreements relating to the Credit
Facilities will contain customary representations and warranties and certain
covenants, including limitations on indebtedness, liens, restricted payments and
similar matters, as well as certain mandatory prepayment obligations customary
for transactions of this nature.
The foregoing description of the terms and conditions of the Credit
Facilities is qualified in its entirety by reference to the Commitment Letter,
which has been filed as an exhibit to the Tender Offer Statement on Schedule
14D-1 and is incorporated herein by reference.
11. BACKGROUND OF THE OFFER; PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS
WITH THE COMPANY.
During October, 1998, a representative of Parent contacted James Shea,
President and Chief Executive Officer of the Company, and scheduled a meeting in
New York for November 18, 1998 to discuss potential business opportunities for
Parent and the Company. On November 18, 1998, Dr. Jerome Tannenbaum, Chief
Executive Officer and Chairman of Parent, Dr. Jeffrey Hymes, director, President
and Chief Medical Officer of Parent, Joseph Cashia, Executive Vice President and
Chief Operating Officer of Parent, Kenneth Kencel, director of Parent and
Managing Director of Indosuez Capital, a division of Indosuez, and Mr. Harrison
met at the Palace Hotel in New York with Mr. Shea and Milton Wallace, Chairman
of the Board of Directors of the Company. Mr. Shea presented a proposal for the
sale of the Company to Parent at a price between $10.00 and $14.00 per share
which the Board of Directors of the Company indicated it would consider. Based
on public information available at the time of the meeting, the group was unable
to determine if the purchase price proposed by the Company was fair and if the
Parent would have sufficient financing to consummate a transaction in that price
range.
During the first week of January, 1999, Mr. Harrison and Mr. Shea conducted
a series of telephone conversations regarding a potential transaction. In such
discussions, Mr. Harrison and Mr. Shea determined that the Company's asking
price was significantly greater than the price Parent was prepared to offer.
During the last week of January, 1999, Dr. Tannenbaum had several telephone
conversations with Mr. Wallace about a potential transaction between Parent and
the Company, none of which were conclusive. On February 10, 1999, Dr. Tannenbaum
met with Mr. Wallace in New York and further discussed the possibility of Parent
acquiring the Company.
At the end of March, 1999, Dr. Tannenbaum contacted Mr. Wallace and
scheduled a meeting in Coral Gables. On April 7, 1999, Dr. Tannenbaum visited
Mr. Wallace at his home in Coral Gables. They discussed the possibility of
pursuing a friendly transaction between Parent and the Company.
During the months of May and June, 1999, Dr. Tannenbaum had several
telephone conversations with Mr. Wallace and generally discussed Parent's
continued interest in the Company.
On May 25, 1999, Dr. Tannenbaum, Mr. Kencel and Steven Segal, director of
Parent and Senior Managing Director of J.W. Childs, met with Mr. Wallace and a
representative from Vector Securities International, now a part of Prudential
Securities Incorporated, at the offices of Indosuez in New York, in order to
discuss the possibility of Parent acquiring the Company. Parent's
representatives proposed a purchase price of $6.00 per share and that the
directors and executive officers of the Company enter into shareholder
22
<PAGE> 23
"lock-up" agreements with Parent in connection with any transaction. The Company
declined to pursue a transaction at that price.
On November 4, 1999, Dr. Tannenbaum telephoned Mr. Wallace to discuss
Parent's continued interest in acquiring the Company. Mr. Wallace informed Dr.
Tannenbaum that he would discuss Parent's interest in the Company at the
Company's next scheduled Board meeting.
On November 12, 1999, Dr. Tannenbaum telephoned Mr. Wallace to set up a
meeting for the following week. On November 15, 1999, Dr. Tannenbaum and other
directors of Parent met with Mr. Wallace and they jointly decided to pursue a
transaction. At that meeting, Parent executed a confidentiality letter in favor
of the Company.
On November 16, 1999, Leif Murphy, Executive Vice President and Chief
Financial Officer of Parent, Mr. Cashia and other representatives of Parent, as
well as attorneys from Baker, Donelson, Bearman & Caldwell, counsel to Parent
("BDB&C"), traveled to Florida to visit the Company's executive offices and
conduct due diligence.
On November 17, 1999, Dr. Tannenbaum telephoned Mr. Wallace in order to set
up a meeting at Parent's offices in Nashville, Tennessee, with the Board of
Directors of Parent and representatives of Parent's Lenders.
On November 18, 1999 Philip McSween, Esq. of BDB&C sent a letter to Orestes
Lugo of the Company including Parent's formal request for due diligence
materials with respect to the Company.
On November 19, 1999, Parent delivered certain terms for discussion to
Prudential Securities Incorporated, financial advisors to the Company
("Prudential") which contained a proposal to acquire all of the outstanding
Shares for $10.00 per share. Such terms were subject to several conditions,
including Parent's requirement to obtain financing for the Offer.
On December 2, 1999, Edward Yun, director of Parent and Vice President of
J.W. Childs, and Dr. Tannenbaum, Dr. Hymes and Messrs. Harrison, Murphy and
Cashia of Parent, met with Messrs. Shea and Lugo of the Company and
representatives of Lehman and Indosuez. During the course of that meeting, the
representatives of the Company gave a formal presentation regarding the business
and operations of the Company.
On December 3, 1999, Kaye, Scholer, Fierman, Hays & Handler, LLP, counsel
to Parent ("KSFH&H"), delivered a proposed agreement and plan of merger and
shareholders "lock-up" agreement (the "Proposed Agreements") to Prudential and
Wallace, Bauman, Fodiman & Shannon, P.A., counsel for the Company ("WBF&S"). On
December 8, 1999, WBF&S sent its initial comments on the Proposed Agreements to
KSFH&H.
On December 9, 1999, Christopher Kelly, Esq. of BDB&C sent a supplemental
letter to WBF&S detailing the Parent's request for due diligence materials.
On December 11, 1999, a telephone conference call was held to discuss
significant issues with respect to the proposed transaction. Representatives of
J.W. Childs, Indosuez, Prudential, KSFH&H, WBF&S, Prudential and Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to Prudential ("Skadden") participated
in the conference call.
On December 13, 1999, Dr. Tannenbaum, and Messrs. Segal, Yun, Kencel,
Murphy and Cashia on behalf of Parent met with Messrs. Wallace, Shea and Lugo of
the Company, together with representatives from KSFH&H, WBF&S, BDB&C, Prudential
and Skadden, at WBF&S's offices in Miami in order to discuss the Proposed
Agreements.
On December 14, 1999, and over the following several days, Dr. Tannenbaum
and Messrs. Murphy and Cashia of Parent had several telephone conference calls
with Messrs. Shea and Lugo of the Company and representatives from KSFH&H and
WBF&S in order to discuss certain terms of the Proposed Agreements.
23
<PAGE> 24
On December 16, 1999, KSFH&H delivered revised versions of the Proposed
Agreements to the Company and WBF&S.
During the period from December 16, 1999 through December 27, 1999, the
parties continued to negotiate terms of Proposed Agreements and Parent and its
representatives completed its due diligence inquiry with respect to the Company.
On December 21, 1999 the Company executed a confidentiality letter in favor of
Parent.
On December 27, 1999, Parent submitted final drafts of the Proposed
Agreements to the Company. The Board of Directors of the Company, Parent and
Purchasers each met to consider the Proposed Agreements and the transactions
contemplated thereby. At such meetings, the Boards approved the Proposed
Agreements and such transactions. Following such meetings, early in the morning
of December 28, 1999, the Company, Parent and Purchaser executed the Merger
Agreement, and concurrently with the execution of the Merger Agreement, the
directors and certain executive officers of the Company entered into the
Shareholders Agreement with Parent and Purchaser. The transaction was announced
prior to the opening of Nasdaq on December 28, 1999.
12. PURPOSE OF THE OFFER AND THE MERGER; SHORT FORM MERGER; PLANS FOR THE
COMPANY; APPRAISAL RIGHTS; GOING PRIVATE TRANSACTIONS.
Purpose of the Offer and the Merger; Possible Short Form Merger. The Offer
is being made pursuant to the Merger Agreement. The purpose of the Offer, the
Merger and the Merger Agreement is to enable Parent to acquire control of, and
to own the entire equity interest in, the Company. Upon consummation of the
Merger, the Company will become a wholly-owned subsidiary of Parent. The Offer
is intended to increase the likelihood that the Merger will be effected.
The Board has unanimously approved the Merger and adopted the Merger
Agreement. Depending upon the number of Shares purchased by Purchaser pursuant
to the Offer, the Board may be required to submit the Merger Agreement to the
Company's shareholders for approval at a shareholders' meeting convened for that
purpose in accordance with the FBCA. If shareholder approval is required, the
Merger Agreement must be approved by a majority of all votes entitled to be cast
at such meeting.
If the Minimum Condition is satisfied, Purchaser will have sufficient
voting power to approve the Merger Agreement at the shareholders' meeting
without the affirmative vote of any other shareholder.
If Purchaser acquires at least 80% of the Shares on a fully-diluted basis,
the FBCA permits Purchaser to consummate the Merger without a shareholders'
meeting and without the approval of, or prior notice to, the other Company
shareholders (a "short form merger"). If Purchaser acquires at least 80% of the
outstanding Shares on a fully-diluted basis, Purchaser anticipates that it will
take all necessary and appropriate action to cause the Merger to become
effective as soon as reasonably practicable after such acquisition without a
meeting of the Company's shareholders. If, however, after consummation of the
Offer, Purchaser owns less than such number of Shares, a vote of the Company's
shareholders will be required under the FBCA to approve the Merger, and a
significantly longer period will be required to effect the Merger.
After completion or termination of the Offer, Purchaser reserves the right,
but has no current intention, to acquire or sell Shares in open market or
negotiated transactions. There can be no assurance that Purchaser will acquire
any additional Shares in such circumstances or over what period of time such
additional Shares, if any, might be acquired. As a consequence, unless the
Minimum Condition is satisfied, no assurance can be given as to when the Merger
will be consummated and, similarly, no assurance can be given as to when the
Merger Consideration (as defined below in Section 13 under the caption "The
Merger Agreements; Certain Other Agreements -- The Merger Agreement") will be
paid to shareholders who do not tender their Shares in the Offer.
Plans for the Company. The Merger Agreement provides that Purchaser will
be merged with and into the Company following the Offer, and that the articles
of incorporation and bylaws of Purchaser will be the articles of incorporation
and bylaws of the Surviving Corporation following the Merger (except that the
name of the Surviving Corporation will be changed to Renex Corp.).
24
<PAGE> 25
Pursuant to the Merger Agreement, the officers of Purchaser immediately
prior to the Effective Time will be the initial officers of the Surviving
Corporation, and the directors of Purchaser immediately prior to the Effective
Time will be the directors of the Surviving Corporation, in each case until
their respective successors are duly elected or appointed and qualified in
accordance with applicable law.
Upon consummation of the Merger, it is the intention of Purchaser and
Parent to cause the Company to file applications to withdraw the Shares from
listing and trading on Nasdaq and to terminate the registration of the Shares
under the Exchange Act. See Section 7.
Except as otherwise described in this Offer to Purchase, Purchaser has no
current plans or proposals which relate to or would result in: (a) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation involving the Company or any of its Subsidiaries; (b) a sale or
transfer of a material amount of assets of the Company or any of its
Subsidiaries outside the ordinary course of business; (c) any change in the
Board or management of the Company; (d) any material change in the present
capitalization or the dividend policy of the Company; (e) any other material
change in the Company's corporate structure or business; or (f) a class of the
Company's securities being delisted from a national securities exchange or
ceasing to be authorized to be quoted in an inter-dealer quotation system of any
registered national securities association.
Dissenters' Rights. Shares outstanding immediately prior to the Effective
Time and held by a holder who has not voted in favor of the Merger or consented
thereto in writing and who has demanded dissenters' rights for such Shares in
accordance with the FBCA ("Dissenting Shares") shall be converted into the right
to receive such consideration as may be determined to be due to holders of
Dissenting Shares pursuant to the FBCA, unless and until such holder fails to
perfect or withdraws or otherwise loses such holder's right to dissenters'
rights. Notwithstanding the foregoing, if the Shares continue to be listed on
Nasdaq as of the record date set for the shareholders of the Company to vote on
the Merger or, if Purchaser and Parent own at least 80% of the outstanding
Shares on a fully-diluted basis, at such time as the record date would have been
set, the Company has represented to Parent and Purchaser that no dissenters'
rights, appraisal rights or similar rights will apply to the transactions
contemplated by the Merger Agreement. The Company has agreed not to take any
action prior to consummation of the Offer to delist the Shares from Nasdaq. See
Section 7.
Going Private Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act, which is applicable to certain "going private" transactions
and which may under certain circumstances be applicable to the Merger or another
business combination following the purchase of the Shares pursuant to the Offer
in which Purchaser seeks to acquire the remaining Shares not held by it. Rule
13e-3 should not be applicable to the Merger if the Merger is consummated within
one year after the expiration or termination of the Offer and the price paid in
the Merger is not less than the per Share price paid pursuant to the Offer.
However, in the event that Purchaser is deemed to have acquired control of the
Company pursuant to the Offer and if the Merger is consummated more than one
year after completion of the Offer or an alternative acquisition transaction is
effected whereby shareholders of the Company receive consideration less than
that paid pursuant to the Offer, in either case at a time when the Shares are
still registered under the Exchange Act, Purchaser may be required to comply
with Rule 13e-3 under the Exchange Act. If Rule 13e-3 were applicable to the
Merger, it would require, among other things, that certain financial information
concerning the Company, and certain information relating to the fairness of the
Merger or such alternative transaction and the consideration offered to the
shareholders of the Company other than Purchaser, Parent and their affiliates in
the Merger or such alternative transaction, be filed with the Commission and
disclosed to shareholders prior to consummation of the Merger or such
alternative transaction. If registration of the Shares under the Exchange Act
were terminated, Rule 13e-3 would be inapplicable to any such transaction.
13. MERGER AGREEMENT; CERTAIN OTHER AGREEMENTS. The following are
summaries of the material terms of the Merger Agreement, a shareholders
agreement between Parent, Purchaser and certain shareholders of the Company
dated as of December 28, 1999 (the "Shareholders Agreement"), a confidentiality
letter by Parent in favor of the Company dated November 15, 1999 (the "Company
Confidentiality Letter") and a confidentiality letter by the Company in favor of
Parent dated December 21, 1999 (the "Parent Confidentiality Letter"). These
summaries are not complete descriptions of the agreements and are qualified in
their entirety by reference to the complete text of the agreements, a copy of
each of which is filed as an exhibit to
25
<PAGE> 26
the Tender Offer Statement on Schedule 14D-1 filed jointly with the Commission
by Parent and Purchaser, and is incorporated by reference herein. Capitalized
terms not otherwise defined in this Offer to Purchase have the meanings set
forth in the Merger Agreement.
The Merger Agreement
The Offer. The Merger Agreement provides that Purchaser will commence the
Offer and that, upon the terms and subject to the prior satisfaction or waiver
of the conditions to the Offer, Purchaser will purchase all Shares validly
tendered and not withdrawn pursuant to the Offer. The Merger Agreement provides
that Parent and Purchaser expressly reserve the right, in their sole discretion,
to waive any of the conditions to the Offer (other than the Minimum Condition)
and to make any change in the terms and conditions of the Offer, provided that
no change may be made to the Minimum Condition or which changes the form of
consideration to be paid or decreases the price per Share or the number of
Shares sought in the Offer or which imposes conditions to the Offer in addition
to those conditions set forth in Section 15 or which otherwise materially and
adversely affects the Company or the holders of Shares.
The Merger. The Merger Agreement provides that, following the consummation
of the Offer and subject to the terms and conditions set forth therein, at the
Effective Time, Purchaser shall be merged with and into the Company and, as a
result of the Merger, the separate corporate existence of Purchaser shall cease,
and the Company shall continue as the Surviving Corporation as a direct
subsidiary of Parent.
The respective obligations of Parent and Purchaser, on the one hand, and
the Company, on the other hand, to consummate the Merger are subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions: (i) if required by the FBCA, the Merger Agreement shall have been
approved and adopted by the shareholders of the Company in accordance with the
FBCA; (ii) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated; (iii) no provision of any
applicable law or regulation and no judgment, injunction, statute, rule,
regulation, stay, order or decree enacted, entered, issued, promulgated or
enforced by any court or governmental authority shall prohibit or restrict the
consummation of the Merger; (iv) Parent and/or Purchaser shall have purchased at
least a majority of the Shares outstanding on a fully-diluted basis pursuant to,
and in accordance with, the Offer; and (v) all actions by or in respect of or
filings with any governmental authority required to permit the consummation of
the Merger shall have been obtained.
The obligations of Parent and Purchaser to consummate the Merger are
subject to the satisfaction of the following further conditions: (i) the Company
shall have performed in all material respects all obligations required under the
Merger Agreement to be performed by it at or prior to the Effective Time; and
(ii) Parent and Purchaser shall have received all documents they may reasonably
request relating to the existence of the Company and its Subsidiaries and the
authority of the Company for the Merger Agreement, all in form and substance
reasonably satisfactory to Parent and Purchaser.
At the Effective Time of the Merger, (i) each issued and outstanding Share
(other than Shares referred to in clause (ii) below or Shares for which
dissenters' rights have been perfected) shall be converted into the right to
receive $10 in cash or any higher price paid for each Share in the Offer,
without interest (the "Merger Consideration"), (ii) each Share held by the
Company or any subsidiary of the Company or owned by Parent, Purchaser or any
subsidiary of Parent or Purchaser immediately prior to the Effective Time shall
be canceled, and no payment shall be made with respect thereto and (iii) each
share of common stock of Purchaser outstanding immediately prior to the
Effective Time shall be converted into and become one share of common stock of
the Surviving Corporation with the same rights, powers and privileges as the
shares so converted and shall constitute the only outstanding shares of common
stock of the Surviving Corporation.
The Company's Board of Directors. The Merger Agreement provides that
effective upon the deposit by Purchaser with the Depositary of payment for all
Shares validly tendered and not withdrawn pursuant to the Offer (including
payment for all options and warrants in accordance with the Merger Agreement)
and payment of severance to certain executive officers and directors of the
Company, Purchaser shall be entitled to designate such number of directors
(rounded up to the next whole number) on the Board, subject to compliance with
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, equal
to the
26
<PAGE> 27
product of (i) the total number of directors on the Board (giving effect to the
election of any additional directors pursuant to this sentence) and (ii) the
percentage that the number of Shares owned by Parent and Purchaser (including
Shares accepted for payment) bears to the total number of Shares outstanding,
and the Company shall take all action necessary to cause Purchaser's designees
to be elected or appointed to the Board. The Company has agreed to use its best
efforts to cause individuals designated by Purchaser to constitute the same
percentage as such individuals represent on the Board of (A) each committee of
the Board (other than any committee of the Board established to take action
under the Merger Agreement), (B) each board of directors of each subsidiary of
the Company and (C) each committee of each such board. Notwithstanding the
foregoing, until such time as Purchaser's designees are elected or appointed to
the Board, the Company shall use its reasonable efforts to ensure that at least
two of the members of the Board and such boards and committees as of the date of
the Merger Agreement who are not employees of the Company shall remain members
of the Board and such boards and committees.
Following the election or appointment of Purchaser's designees to the Board
and until the Effective Time, the approval of a majority of the directors of the
Company then in office who were not designated by Purchaser shall be required to
authorize (and such authorization shall constitute the authorization of the
Board and no other action on the part of the Company, including any action by
any other director or the Company, shall be required to authorize) any
termination of the Merger Agreement by the Company, any amendment to the Merger
Agreement requiring action by the Board and any waiver of compliance with any of
the agreements or conditions contained in the Merger Agreement for the benefit
of the Company.
Shareholders' Meeting. Pursuant to the Merger Agreement, the Company will,
if required by the FBCA in order to consummate the Merger, cause a meeting of
its shareholders to be duly called and held as soon as reasonably practicable
after (and with a record date after) the purchase of Shares pursuant to the
Offer for the purpose of voting on the approval and adoption of the Merger
Agreement and the Merger. The Merger Agreement provides that the Company will,
in connection with such meeting, promptly file with the Commission, will use its
best efforts to have cleared by the Commission, and will mail to shareholders, a
proxy statement in connection with a meeting of the Company's shareholders to
vote upon the Merger Agreement and the transactions contemplated thereby. The
proxy statement shall include the recommendation of the Board that the
transactions contemplated by the Merger Agreement, including the Offer and the
Merger, are advisable and are fair to, and in the best interests of, the
shareholders of the Company, provided, that following receipt of an unsolicited
bona fide written Superior Proposal (as defined below under the caption "Other
Offers"), the Board may withdraw or modify its recommendation, but only to the
extent that the Board shall have concluded in good faith on the basis of advice
from outside counsel that such action is required in order to comply with its
fiduciary duties to the shareholders of the Company. If Purchaser acquires at
least a majority of the Shares, it will have sufficient voting power to approve
the Merger, even if no other shareholder votes in favor of the Merger.
Notwithstanding the foregoing, the Merger Agreement provides that in the
event that Purchaser acquires at least 80% of the Shares on a fully-diluted
basis, pursuant to the Offer or otherwise, the Company agrees, at the request of
Parent and Purchaser, to take all necessary and appropriate action to cause the
Merger to become effective as soon as reasonably practicable after such
acquisition and the satisfaction or waiver of the conditions to the Merger,
without a meeting of the shareholders of the Company.
Dissenters' Rights. Notwithstanding any contrary provision of the Merger
Agreement, Shares outstanding immediately prior to the Effective Time and held
by a holder who has not voted in favor of the Merger or consented thereto in
writing and who has demanded dissenters' rights for such Shares in accordance
with the FBCA ("Dissenting Shares") shall not be converted into a right to
receive the Merger Consideration, but such Dissenting Shares shall be converted
into the right to receive such consideration as may be determined to be due to
holders of Dissenting Shares pursuant to the FBCA, unless and until such holder
fails to perfect or withdraws or otherwise loses such holder's right to
dissenters' rights. If after the Effective Time such holder fails to perfect or
withdraws or loses his right to dissenters' rights, such Shares shall be treated
as if they had been converted as of the Effective Time into the right to receive
the Merger Consideration. Parent shall have the right to participate in all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to, or settle or offer to
27
<PAGE> 28
settle, any such demands. Notwithstanding the foregoing, if the Shares continue
to be listed on Nasdaq as of the record date set for the shareholders of the
Company to vote on the Merger or, if Purchaser and Parent own at least 80% of
the outstanding Shares on a fully-diluted basis, at such time as the record date
would have been set, the Company has represented to Parent and Purchaser that no
dissenters' rights, appraisal rights or similar rights will apply to the
transactions contemplated by the Merger Agreement. The Company has agreed not to
take any action prior to consummation of the Offer to delist the Shares from
Nasdaq.
Options. Each option to purchase Shares outstanding immediately prior to
the Effective Time (collectively, "Options") shall, at or immediately prior to
the Effective Time, be canceled and shall cease to exist, and each holder of any
such Option, whether or not then vested or exercisable, shall be paid by the
Company promptly after the Effective Time for each such Option an amount,
subject to applicable withholding, determined by multiplying (i) the excess, if
any, of the Merger Consideration per Share over the applicable exercise price of
such Option as in effect immediately prior to the Effective Time by (ii) the
number of Shares such holder could have purchased (assuming full vesting of all
Options) had such holder exercised such Option in full immediately prior to the
Effective Time.
Warrants. Each outstanding warrant to purchase Shares (collectively,
"Warrants") shall, from and after the Effective Time, be canceled by virtue of
the consummation of the Merger and shall cease to exist, and each such Warrant
shall be converted into the right to receive from the Company an amount, subject
to applicable withholding, determined by multiplying (i) the excess, if any, of
the Merger Consideration per Share over the applicable exercise price of such
Warrant as in effect immediately prior to the Effective Time by (ii) the number
of Shares such holder could have purchased had such holder exercised such
Warrant in full immediately prior to the Effective Time.
Severance. In the Merger Agreement, the Company has agreed that
simultaneously with the deposit by Purchaser with the Depositary of payment for
all Shares, options and warrants, the Company will deposit with the Exchange
Agent funds sufficient to pay (or pay directly to the intended recipients
thereof) certain severance payments to which executive officers and directors of
the Company shall become entitled pursuant to their employment agreements upon
consummation of the Offer (to the extent such payments are due and payable
immediately after giving effect to waivers of notice referred to in clause (ii)
below upon a Change in Control as defined in such employment agreements). The
payment of severance is conditioned upon each such executive officer or director
(i) confirming in writing to Parent and Purchaser (in a form reasonably
satisfactory to Parent and Purchaser that termination of such executive officer
or director upon consummation of the Offer (whether by resignation or by notice
of termination by the Company) shall constitute termination by the Company (and
not by such executive officer or director) for purposes of any non-competition,
non-solicitation or other restrictive covenants set forth in such executive
officer's or director's employment agreement with the Company and that such
covenants shall apply to such executive officer or director in accordance with
the terms thereof from and after such termination, (ii) waive any requirement
under such employment agreement or otherwise that notice be given prior to such
termination by the Company and (iii) execute a general release in favor of the
Company and its affiliates releasing the Company and its affiliates from any and
all claims against them other than (A) claims for benefits and other rights to
which such executive officer or director would be entitled under his employment
agreement with the Company, (B) claims relating to payment in accordance with
the Merger Agreement of options, warrants or Shares beneficially owned by such
executive officer or director and (C) director and other indemnification claims.
From and after consummation of the Offer, Parent will cause the Company and the
Surviving Corporation to pay as and when due for all other benefits to which
such executive officers or directors are entitled in accordance with the terms
of their employment agreements, subject to the continued compliance by such
executive officers and directors with the provisions of such employment
agreements.
Conduct of Business Pending the Merger. In the Merger Agreement, the
Company has agreed that, except as expressly required by the Merger Agreement or
with the prior consent of Parent, from the date of the Merger Agreement until
the Effective Time, the Company and its Subsidiaries will conduct their business
in the ordinary course consistent with past practice and will use their best
efforts to preserve intact their business organizations and relationships with
third parties and to keep available the services of their present officers and
employees. Without limiting the generality of the foregoing, from the date of
the Merger Agreement until the
28
<PAGE> 29
Effective Time, without the prior written consent of Parent, the Company has
agreed that it will not, and will cause its Subsidiaries not to:
(a) adopt or propose any change in its articles of incorporation or
bylaws;
(b) except pursuant to existing agreements or arrangements disclosed
to Parent and Purchaser in the schedules to the Merger Agreement:
(i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof;
(ii) sell, lease or otherwise dispose of a Subsidiary or assets or
securities, in one transaction or a series of related transactions, with
a book value in excess of $50,000 individually or $100,000 in the
aggregate;
(iii) make any investment, whether by purchase of stock or
securities, contributions to capital or any property transfer, other
than investments which mature in less than 30 days and are rated no
lower than A2/P2;
(iv) purchase for an amount in excess of $25,000 in the aggregate,
any property or assets of any other individual or entity other than
supplies or inventory purchased in the ordinary course consistent with
past practice;
(v) waive, release, grant or transfer any rights of value material
to the Company and the Subsidiaries taken as a whole;
(vi) modify or change in any material respect (A) any existing
license, lease, contract or other document material to the Company and
the Subsidiaries, taken as a whole or (B) any existing contract or other
document with any laboratory, physician, physician group, hospital or
other healthcare provider;
(vii) incur, assume or prepay an amount of long-term or short-term
debt, including obligations in respect of capital leases;
(viii) assume, guarantee, endorse (other than endorsements of
negotiable instruments in the ordinary course of business) or otherwise
become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person (other than any
Subsidiary);
(ix) make any loans or advances to any other person or persons
(other than any Subsidiary) in excess of $25,000 in the aggregate; or
(x) excluding capital expenditures associated with dialysis
facilities under development, make or commit to make any capital
expenditures which, individually, is in excess of $10,000 or, in the
aggregate (including any and all capital expenditures made from and
after November 30, 1999), are in excess of $200,000; or
(c) (i) split, combine or reclassify any shares of its capital stock,
(ii) declare, set aside or pay any dividend or other distribution (whether
in cash, stock or property or any combination thereof) in respect of its
capital stock, other than cash dividends and distributions by a
wholly-owned subsidiary of the Company to the Company or to another
wholly-owned subsidiary of the Company, (iii) issue, sell, deliver, grant,
pledge or encumber any shares of its capital stock or securities
convertible into or exchangeable or exercisable for, any shares of its
capital stock or the capital stock of any of its Subsidiaries (other than
the issuance of Shares upon the exercise of issued and outstanding Options
or Warrants), (iv) redeem, repurchase or otherwise acquire or offer to
redeem, repurchase, or otherwise acquire any of its securities or any
securities of its Subsidiaries, or (v) amend any term of any outstanding
security of the Company or any of its Subsidiaries;
(d) adopt or amend any benefit plan or any similar plan or arrangement
for the benefit and welfare of any director, officer or employee, or
(except for normal increases in the ordinary course of business that are
consistent with past practices and that, in the aggregate, do not result in
a material increase in benefits
29
<PAGE> 30
or compensation expense to the Company) increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any Benefit Plan or other existing plan or
arrangement (including, without limitation, the granting of stock options,
stock appreciation rights, phantom stock rights or any similar rights, the
removal of existing restrictions in any benefit plans or agreements or the
acceleration of the vesting or exercisability of any options to acquire
capital stock of the Company or any of its Subsidiaries);
(e) except as set forth in a Schedule to the Merger Agreement, revalue
in any material respect any of its assets, including, without limitation,
writing down the value of inventory in any material manner or writing off
of notes or accounts receivable in any material manner;
(f) pay, discharge or satisfy any material claims, liabilities or
obligations (whether absolute, accrued, asserted or unasserted, contingent
or otherwise) other than the payment, discharge or satisfaction in the
ordinary course of business, consistent with past practices, of liabilities
reflected or reserved against in the consolidated financial statements of
the Company or incurred since the most recent date thereof pursuant to an
agreement or transaction described in the Merger Agreement (including the
schedules hereto) or incurred in the ordinary course of business,
consistent with past practices;
(g) make or change any tax election, change any annual tax accounting
period, adopt or change any method of tax accounting, file any amended tax
return, enter into any closing agreement, settle any tax claim or
assessment, surrender any right to claim a tax refund, consent to the
extension or waiver of the limitations period applicable to any tax claim
or assessment, surrender any right to claim a tax refund, or take or omit
to take any other action if such action or omission would have the effect
of materially increasing the tax liability of the Company or any of its
Subsidiaries;
(h) take any action other than in the ordinary course of business and
consistent with past practices with respect to accounting policies or
procedures other than any change in accounting policies (that is not
material to the Company and its Subsidiaries taken as a whole) that is
required by regulations of the Commission;
(i) sell, transfer, mortgage, pledge, grant any security interest in,
or permit the imposition of any lien on, any asset or property of the
Company or any Subsidiary with a book value in excess of $50,000
individually or $100,000 in the aggregate, including, without limitation,
any real property owned by the Company or any of its Subsidiaries other
than in the ordinary course of business consistent with past practice;
(j) fail to maintain all insurance policies of the Company and its
Subsidiaries in full force and effect or fail to renew or replace with
equivalent coverage any such insurance policy which has expired;
(k) fail to operate, maintain, repair or otherwise preserve the real
property leased by the Company and its Subsidiaries substantially in
accordance with current practice and within the capital expenditure budget
of the Company previously disclosed to Parent and Purchaser;
(l) fail to comply with all applicable filing, payment and withholding
obligations under all applicable federal, state, local and foreign tax laws
or settle or compromise any material income tax liability;
(m) agree or commit to do any of the foregoing; or
(n) take or agree or commit to take any action that would make any
representation and warranty of the Company hereunder inaccurate in any
respect at, or as of any time prior to, the Effective Time.
Other Offers. The Merger Agreement provides that neither the Company nor
any of its Subsidiaries shall (whether directly or indirectly through advisors,
agents or other intermediaries), nor shall the Company or any of its
Subsidiaries authorize or permit any of its or their officers, directors,
employees, agents, investment bankers, financial advisors, attorneys,
accountants or other representatives or advisors (collectively,
"Representatives") to (i) directly or indirectly solicit, initiate or take any
action designed to facilitate the
30
<PAGE> 31
submission of inquiries, proposals or offers which constitute or would
reasonably be expected to lead to (A) any acquisition or purchase of 10% or more
of the consolidated assets of the Company and its Subsidiaries or any equity
securities of the Company or any of its Subsidiaries, (B) any tender offer
(including a self tender offer) or exchange offer other than the Offer, that if
consummated would result in any third party beneficially owning any equity
securities of the Company or any of its Subsidiaries, (C) any merger,
consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries, other than the transactions contemplated by
the Merger Agreement, or (D) any other transaction the consummation of which
would reasonably be expected to interfere with in a material way, prevent or
materially delay the Offer or the Merger or which would reasonably be expected
to materially dilute the benefits to Parent and Purchaser of the transactions
contemplated hereby (collectively, "Acquisition Proposals"), (ii) agree to,
endorse or recommend to its shareholders any Acquisition Proposal, (iii) enter
into or participate in any discussions or negotiations regarding any of the
foregoing, or furnish to any third party any information with respect to its
business, properties or assets or any of the foregoing, or otherwise cooperate
in any way with, or knowingly assist or participate in, facilitate or encourage,
any effort or attempt by any third party (other than Parent and Purchaser) to do
or seek any of the foregoing, or (iv) grant any waiver or release under any
standstill or similar agreement with respect to any class of equity securities
of the Company or any of its Subsidiaries; provided, however, that the foregoing
shall not prohibit the Company (either directly or indirectly through advisors,
agents or other intermediaries) from (W) furnishing information concerning the
Company and its businesses, properties or assets to a third party who has made
an unsolicited bona fide written Superior Proposal (as defined below), pursuant
to an appropriate confidentiality letter (which letter shall not be less
favorable to the Company than the Company Confidentiality Letter), (X) engaging
in discussions or negotiations with such a third party who has made an
unsolicited bona fide written Superior Proposal, (Y) following receipt of an
unsolicited bona fide written Superior Proposal, taking and disclosing to its
shareholders a position contemplated by Rule 14e-2(a) under the Exchange Act or
otherwise making disclosure to its shareholders and/or (Z) following receipt of
an unsolicited bona fide written Superior Proposal, failing to make or
withdrawing or modifying its recommendation to the shareholders that the
transactions contemplated by the Merger Agreement, including the Offer and the
Merger, are advisable and are fair to, and in the best interests of, the
shareholders of the Company, but in each case referred to in the foregoing
clauses (W) through (Z) only to the extent that the Board shall have concluded
in good faith on the basis of advice from outside counsel that such action by
the Board is required in order to comply with the fiduciary duties of the Board
to the shareholders of the Company under applicable law; provided, further, that
(1) the Board and the Company shall not take any of the foregoing actions
referred to in clauses (W) through (Y) until after reasonable notice has been
given to Parent and Purchaser with respect to such action, (2) the Board and the
Company shall not take any of the actions referred to in clause (Z) unless (i) a
Superior Proposal has been made and has not been withdrawn, (ii) the Company
provides Parent and Purchaser with at least 48 hours prior notice of any meeting
of the Board at which such Board is expected to consider such Superior Proposal,
and (iii) the Board does not withdraw, amend or modify its unanimous
recommendation in favor of the Offer or the Merger for at least 72 hours after
the Company provides Parent and Purchaser with the name of the person making
such Superior Proposal and a copy of such Superior Proposal and (3) the Board
shall continue to advise Parent and Purchaser as to the status of any
negotiations or discussions relating to any Acquisition Proposal after taking
such action. The term "Superior Proposal" means a bona fide proposal made by a
third party to acquire the Company pursuant to a tender or an exchange offer for
not less than a majority of the shares of capital stock of the Company, a merger
or the acquisition of all or substantially all of the Company's assets that, in
any case, the Board determines in its good faith judgment (based on the advice
of its financial advisor) to be more favorable (including with respect to price)
to the holders of Shares than the Merger; provided, however, that any such
proposal shall not be deemed to be a "Superior Proposal" unless any financing
required to consummate the transactions contemplated by such proposal is either
(i) in the possession of such third party at the time such proposal is made, or
(ii) committed on terms no less favorable than those set forth in the Commitment
Letter.
Board of Directors; Officers. The Merger Agreement provides that, promptly
upon the acceptance for payment by Purchaser of any Shares, Purchaser shall be
entitled to designate members of the Board, as
31
<PAGE> 32
further described above under the caption "The Company's Board of Directors."
After the time that Purchaser's designees are elected to the Board and until the
Effective Time, any amendment or termination of the Merger Agreement and any
exercise or waiver of the Company's rights under the Merger Agreement shall also
require the approval of a majority of the Continuing Directors.
Under the Merger Agreement, the directors of Purchaser at the Effective
Time will be the initial directors of the Surviving Corporation, and the
officers of Purchaser at the Effective Time will be the initial officers of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified in accordance with applicable law.
Access to Information. From the date of the Merger Agreement until the
Effective Time, the Company will give Parent, Purchaser, their counsel,
financial advisors, accountants, auditors and other authorized representatives
full access to the offices, dialysis clinics, properties, books and records of
the Company and its Subsidiaries, will furnish to Parent, Purchaser, their
counsel, financial advisors, accountants, auditors and other authorized
representatives such financial, tax and operating data and other information as
such persons may reasonably request and will instruct the Company's employees,
counsel and financial advisors to cooperate with Parent and Purchaser in their
investigation of the business of the Company and its Subsidiaries including,
without limitation, in connection with Parent's and Purchaser's obtaining title
reports, surveys, environmental reports and similar reports or studies with
respect to properties owned or leased by the Company and its Subsidiaries, and
will exercise all reasonable efforts to obtain from landlords such estoppel
certificates as Parent and Purchaser may request; provided, however, that no
such investigation shall affect any representation or warranty given by the
Company to Parent or Purchaser under the Merger Agreement.
Director and Officer Indemnification. For six years after the Effective
Time, Parent will cause the Surviving Corporation to (i) indemnify and hold
harmless the present and former officers and directors of the Company in respect
of acts or omissions occurring prior to the Effective Time (including, without
limitation, matters related to the transactions contemplated by the Merger
Agreement), (ii) advance expenses in respect of such indemnification and (iii)
retain limitations on personal liability of directors for monetary damages, in
each case, to the fullest extent provided under the Company's articles of
incorporation and bylaws in effect on the date hereof; provided, however, that
such indemnification shall be subject to any limitation imposed from time to
time under applicable law. For six years after the Effective Time, Parent will
cause the Surviving Corporation to use its best efforts to provide officers' and
directors' liability insurance in respect of acts or omissions occurring prior
to and including the Effective Time covering each such person currently covered
by the Company's officers' and directors' liability insurance policy on terms
with respect to coverage and amount no less favorable than those of such policy
in effect on the date hereof, provided that in satisfying its obligation under
this Section, Parent shall not be obligated to cause the Surviving Corporation
to pay premiums in excess of 150% of the amount per annum the Company paid in
its last full fiscal year (the "Maximum Premium"), which amount has been
disclosed to Parent; provided that if the premium exceeds the Maximum Premium,
the officers and directors covered by such insurance policy shall have the
opportunity, upon 30 days notice from the Surviving Corporation prior to renewal
of any such policy, to pay the difference between the Maximum Premium and the
actual premium.
Representations and Warranties. The Merger Agreement contains customary
representations and warranties with respect to the Company, including, without
limitation, (i) the Company's organization, authority and capitalization, (ii)
that the Board has approved the Merger Agreement and the transactions
contemplated thereby, (iii) noncontravention, (iv) Subsidiaries, (v) material
liabilities, (vi) compliance with laws, (vii) finder's fees, (viii) the
inapplicability of certain restrictions, (ix) insider interests, (x) required
consents, approvals and governmental filings, (xi) the accuracy of the Company's
documents and reports filed with the Commission, the Company's financial
statements and information provided to Parent and Purchaser, (xii) the absence
of certain changes, (xiii) the absence of certain litigation, (xiv) the
Company's employee benefit plans and other employment matters, (xv) title to
property, (xvi) tax matters, (xvii) environmental matters, (xviii) intellectual
property matters, (xix) insurance matters, (xx) business relationships and
restrictive agreements, (xxi) material contracts and (xxii) Year 2000
compliance. The Merger Agreement also includes representations and warranties
with respect to (i) cash and cash equivalents, (ii) indebtedness
32
<PAGE> 33
and capitalized lease obligations, (iii) due to third party obligations, (iv)
fees and expenses and (v) amending the Company's rights agreement.
In the Merger Agreement, Parent and Purchaser have made customary
representations and warranties, including, without limitation, relating to (i)
their respective corporate organization, (ii) their authority to execute,
deliver and perform the Merger Agreement, (iii) required consents, approvals and
governmental filings, (iv) accuracy of information provided to the Company and
of documents filed with the Commission in connection with the Offer, (v) absence
of certain litigation, (vi) financing, (vii) ownership of shares and (viii)
non-contravention.
Termination. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time (notwithstanding any approval
of the Merger Agreement by the shareholders of the Company):
(i) by mutual written consent of the Company and Parent;
(ii) by either the Company or Parent, if (A) the Offer has not been
consummated by the date that is 90 days after the commencement of the
Offer, (B) Parent terminates the Offer in accordance with its terms without
purchasing any Shares pursuant to the Offer or (C) there shall be any law
or regulation of any governmental authority that makes consummation of the
Merger illegal or otherwise prohibited or if any judgment, injunction,
order or decree enjoining Parent or the Company from consummating the
Merger is entered and such judgment, injunction, order or decree shall
become final and nonappealable; provided that the right to terminate the
Merger Agreement pursuant to this Section shall not be available to any
party whose failure to fulfill any of its obligations under the Merger
Agreement results in such failure to consummate the Offer or the Merger, as
the case may be;
(iii) by Parent, if the Board shall have (A) withdrawn or materially
modified its recommendation on Schedule 14D-9 or its recommendation to the
shareholders that the transactions contemplated by the Merger Agreement,
including the Offer and the Merger, are advisable and fair to, and in the
best interests of, the shareholders of the Company, in a manner adverse to
Parent, (B) failed to make or reconfirm either of such recommendations
within two business days after a written request to do so from Parent, (C)
approved or recommended any Superior Proposal or (D) shall have resolved to
do any of the foregoing; or
(iv) by the Company, if the Board shall have withdrawn or materially
modified its recommendation on Schedule 14D-9 or its recommendation to the
shareholders that the transactions contemplated by the Merger Agreement,
including the Offer and the Merger, are advisable and fair to, and in the
best interests of, the shareholders of the Company, if there exists at such
time a written Acquisition Proposal that constitutes a Superior Proposal,
provided that the right to terminate the Merger Agreement pursuant to this
Section shall not be available to the Company if it has breached in any
material respect any of its covenants and agreements set forth in the
Merger Agreement.
In the event of the termination of the Merger Agreement, the Merger
Agreement shall, except as set forth therein, become void and have no effect,
without any liability on the part of any party thereto, except that termination
of the Merger Agreement shall be without prejudice to any rights any party may
have thereunder against any other party for wilful breach of the Merger
Agreement.
Termination Fee. If a Payment Event (as defined below) occurs, the Company
shall pay to Parent concurrently with such Payment Event a fee of $2,000,000.
"Payment Event" means (A) the termination of the Merger Agreement by Parent
pursuant to Section (iii) under the caption "Termination" above, (B) the
termination of the Merger Agreement by the Company pursuant to Section (iv)
under the caption "Termination" above; (C) the termination of the Merger
Agreement by Parent pursuant to Section (ii) under the caption "Termination"
above as a result of a material breach by the Company of any representation,
warranty, covenant or agreement set forth in the Merger Agreement; or (D) the
occurrence of any of the following events within 12 months of the termination of
the Merger Agreement pursuant to Section (ii) under the caption "Termination"
above, whereby shareholders of the Company receive, pursuant to such event,
cash, securities or other consideration having an aggregate value, when taken
together with the value of any
33
<PAGE> 34
securities of the Company or its Subsidiaries otherwise held by the shareholders
of the Company after such event, in excess of $10 per Share: the Company is
acquired by merger or otherwise by a third party; a third party acquires more
than 50% of the total assets of the Company and its Subsidiaries, taken as a
whole; a third party acquires more than 50% of the outstanding Shares; or the
Company adopts a plan of liquidation, recapitalization or share repurchase
relating to more than 50% of the outstanding Shares or an extraordinary dividend
relating to more than 50% of the outstanding Shares or 50% of the assets of the
Company and its Subsidiaries, taken as a whole.
Liquidated Damages. In the event that (i) the Minimum Condition and all
other conditions to the Offer set forth below under the caption "Conditions to
the Offer" are satisfied, other than the condition set forth in paragraph (ix)
under the caption "Conditions to the Offer" providing that the Lenders shall
have provided the Required Amounts (as defined in Section 15 below) in
accordance with the Commitment Letter, (ii) the failure of the lenders to
provide the Required Amounts is due solely to the failure of one or more of the
Buyer's Risk Conditions (as defined below) to be satisfied in accordance with
the terms thereof set forth in the Commitment Letter and (iii) the Merger
Agreement is terminated pursuant to Section (ii)(A) or (ii)(B) under the caption
"Termination" above by Parent or the Company prior to consummation of the Offer
as a result of such condition in paragraph (ix) under the caption "Conditions to
the Offer" not having been satisfied, then, Parent shall pay to the Company
$2,000,000, as liquidated damages (the "Liquidated Damages") promptly upon such
termination of the Merger Agreement. In such event, payment of the Liquidated
Damages shall be the Company's sole and exclusive remedy and the Company shall
have no other remedy under the Merger Agreement or otherwise, whether for breach
of contract, in tort or otherwise resulting or arising from the Merger Agreement
or the transactions contemplated hereby. See Section 10, Source and Amount of
Funds, for a description of Buyer's Risk Conditions.
Amendments. Any provision of the Merger Agreement may be amended or waived
prior to the Effective Time if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by the Company, Parent and
Purchaser or, in the case of a waiver, by the party against whom the waiver is
to be effective, provided that after the adoption of the Merger Agreement by the
shareholders of the Company, no such amendment or waiver shall, without the
further approval of such shareholders, alter or change (i) the amount or kind of
consideration to be received in exchange for any shares of capital stock of the
Company, (ii) any term of the articles of incorporation of the Surviving
Corporation or (iii) any of the terms or conditions of the Merger Agreement if
such alteration or change would adversely affect the holders of any shares of
capital stock of the Company.
Conditions to the Offer. The Merger Agreement provides for the Minimum
Condition and the other conditions to the Offer set forth in Section 15 of this
Offer to Purchase.
The Shareholders Agreement
In connection with the Merger Agreement, Purchaser and Parent have entered
into the Shareholders Agreement with the executive officers and directors of the
Company pursuant to which each such director and executive officer has, among
other things, (a) agreed to tender (and not withdraw unless the Merger Agreement
is terminated in accordance with its terms) all Shares and all Shares issuable
upon exercise of any Options or Warrants held by it ("Subject Shares") into the
Offer, (b) granted to Purchaser an irrevocable option (the "Purchase Option") to
purchase such Shareholder's Subject Shares at a price per Share equal to the
Merger Consideration which Purchase Option may be exercised in whole but not in
part at any time on or prior to the 30th day after termination of the Merger
Agreement; provided, that, in the event that the Merger Agreement is terminated
by Parent or the Company pursuant to Section (ii), (iii) or (iv) above under the
caption "Termination" at any time after the Company has received an Acquisition
Proposal from a third party (a "Competing Proposal"), the Purchase Option shall
remain exercisable until such Competing Proposal shall have been withdrawn or
any agreement with such third party with respect to such Competing Proposal
shall have been terminated, (c) agreed to cause the Subject Shares to be voted
in favor of the Merger during the term of the Merger Agreement and against any
Acquisition Proposal during the term of the Shareholders Agreement, and (d) has
irrevocably appointed Parent and any nominee thereof, its proxy, during the term
of the Shareholders Agreement, to take such voting actions.
34
<PAGE> 35
If, after purchasing the Subject Shares pursuant to the Purchase Option,
Purchaser has not acquired the remaining outstanding shares of Common Stock and
Purchaser receives any cash or noncash consideration in respect of the Subject
Shares in connection with a Third Party Business Combination (as defined below)
during the period commencing on the date on which the Company purchases any
Subject Shares pursuant to Option and ending on the first anniversary thereof,
Purchaser shall promptly pay over to the Shareholders (pro rata, based on their
holdings of Shares), as an addition to the Merger Consideration, one-half of the
excess, if any, of (i) such consideration over (ii) the aggregate Merger
Consideration paid for the Subject Shares which are sold by Purchaser pursuant
to the Shareholders Agreement. The term "Third Party Business Combination" means
the occurrence of any of the following events: (A) the Company, or more than 50%
of the outstanding shares of the Company's capital stock, is acquired by merger
or otherwise by any Third Party; or (B) a Third Party acquires all or
substantially all of the total assets of the Company and its subsidiaries, taken
as a whole; provided, however, that in no event will any transaction in which
shares of the Company's capital stock or any of its assets are sold or
transferred directly or indirectly in connection with or as a part of a sale or
other transaction involving sale, merger or other similar transaction of Parent
or any of its material assets or business constitute a Third Party Business
Combination, and in no event will a sale of any division, line of business or
similar unit of the Company and its subsidiaries constitute a Third Party
Business Combination.
In the event that the Company enters into a definitive agreement with a
third party with respect to a Third Party Business Combination (i) intended to
qualify as a "pooling of interests" for accounting purposes and (ii) pursuant to
which holders of Common Stock would be entitled to receive at least $13 per
share of Common Stock (a "Qualifying Third Party Business Combination"), then,
Purchaser agrees that, prior to termination of the definitive agreement with
respect to such Qualifying Third Party Business Combination, it shall not
exercise the Purchase Option to the extent that the exercise of the Purchase
Option by Purchaser would prevent such Qualifying Third Party Business
Combination from qualifying as a "pooling of interests" for accounting purposes
(or take any other action the sole purpose of which is to prevent consummation
of such a "pooling of interests" transaction); provided, however, that each
Shareholder that receives any cash or noncash consideration in respect of such
Shareholder's Subject Shares in connection with a Qualifying Third Party
Business Combination shall promptly pay over to Purchaser one-half of the excess
of such consideration over the Merger Consideration.
The Shareholders Agreement also prohibits each Shareholder from soliciting
additional Acquisition Proposals from third parties on behalf of the Company
from engaging in any discussions with third parties regarding any Acquisition
Proposal.
The Shareholders Agreement and all rights and obligations of the parties
thereunder terminate immediately upon the earlier of (i) the date on which the
Purchase Option is no longer exercisable or (ii) the Effective Time.
The Company Confidentiality Letter
On November 15, 1999, Parent executed a confidentiality letter in favor of
the Company (the "Company Confidentiality Letter"). Pursuant to the Company
Confidentiality Letter, Parent has agreed, among other things, to keep
confidential certain nonpublic confidential or proprietary information of the
Company furnished to Parent and its representatives by or on behalf of the
Company, including notes, analyses, compilations, studies, interpretations or
other documents prepared by Parent and its representatives which contain,
reflect or are based upon such information ("Company Evaluation Material"), and
to use the Company Evaluation Material solely for the purpose of evaluating a
possible transaction with the Company. Parent has further agreed to maintain the
confidentiality of any discussions or negotiations with the Company and, upon
request, to redeliver or destroy all the Company Evaluation Material. Parent
also agreed that, without the prior written consent of the Company, Parent will
not directly or indirectly enter into any agreement, arrangement or
understanding or any discussions which might lead to an agreement, arrangement
or understanding, with any other person regarding a possible transaction
involving the Company for a period of three years from the date of the Company
Confidentiality Letter. The Company Confidentiality Letter further provides
that, for a period of three years from the date of the Company Confidentiality
Letter, without the prior written consent of the Board, neither Parent nor any
of its affiliates or representatives, acting alone or as a
35
<PAGE> 36
part of a group, may acquire or offer to agree to acquire, directly or
indirectly, by purchase or otherwise, any voting securities (or beneficial
ownership thereof) of the Company, or otherwise seek to influence or control, in
any manner whatsoever, the management or policies of the Company. For a period
of two years from the date of the Company Confidentiality Letter, neither Parent
nor any of its affiliates will solicit to employ any of the current officers or
employees or independent contractors (including medical directors) of the
Company so long as they are employed by the Company, without obtaining the prior
written consent of the Company.
The Parent Confidentiality Letter
On December 21, 1999, the Company executed a confidentiality letter in
favor of Parent (the "Parent Confidentiality Letter"). Pursuant to the Parent
Confidentiality Letter, the Company has agreed, among other things, to keep
confidential certain nonpublic confidential information of Parent ("Parent
Evaluation Material") furnished to the Company and its representatives by or on
behalf of Parent, and to use the Parent Evaluation Material solely for the
purpose of evaluating a possible transaction with Parent. The Company has
further agreed to maintain the confidentiality of any discussions or
negotiations with Parent and, upon request, to redeliver all of the Parent
Evaluation Material.
14. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement provides that from
the date of the Merger Agreement through the Effective Time, the Company will
not and will not permit any of its Subsidiaries to (i) split, combine or
reclassify any shares of its capital stock, (ii) declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, other than cash dividends
and distributions by a wholly-owned Subsidiary of the Company to the Company or
to another wholly-owned Subsidiary, (iii) issue, sell, deliver, grant, pledge or
encumber any shares of its capital stock or securities convertible into or
exchangeable or exercisable for, any shares of its capital stock or the capital
stock of any of the Subsidiaries (other than the issuance of Shares upon the
exercise of Options or Warrants), (iv) redeem, repurchase or otherwise acquire
or offer to redeem, repurchase, or otherwise acquire any of its securities or
any securities of the Subsidiaries, or (v) amend any term of any outstanding
security of the Company or any Subsidiary.
15. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision
of the Merger Agreement or the Offer, Purchaser shall not be required to accept
for payment, purchase or pay for any Shares tendered pursuant to the Offer, may
postpone the acceptance for payment of and payment for any tendered Shares, and
may terminate or, subject to the terms of the Merger Agreement, amend the Offer,
if
(a) the Minimum Condition is not satisfied;
(b) any waiting periods applicable to the Offer and the Merger and the
transactions contemplated by the Merger Agreement pursuant to the HSR Act shall
not have expired or been terminated;
(c) on or after the date of the Merger Agreement and prior to or at the
time of acceptance for payment of any such Shares in the Offer (whether or not
any Shares have theretofore been accepted for payment or paid for pursuant to
the Offer) any of the following conditions shall exist (each of paragraphs (i)
through (ix) providing a separate and independent condition to Parent's and
Purchaser's obligations pursuant to the Offer):
(i) there shall be instituted or pending any action or proceeding by
any Governmental Authority or by any other person, domestic or foreign,
before any court or Governmental Authority (A) challenging or seeking to
make illegal, to delay materially or otherwise directly or indirectly to
restrain or prohibit the making of the Offer, the acceptance for payment of
or payment for some of or all the Shares by Purchaser or the consummation
by the Company, Parent or Purchaser of the Merger, or seeking to obtain
material damages or imposing any material adverse conditions in connection
therewith, (B) seeking to restrain or prohibit the Company's, Parent's or
Purchaser's ownership or operation (or that of their respective
subsidiaries or affiliates) of all or any material portion of the business
or assets of the Company and the Subsidiaries, taken as a whole, or of
Parent and its subsidiaries, including, without limitation, Purchaser,
taken as a whole, or to compel the Company, Parent or any of their
subsidiaries or affiliates, including, without limitation, Purchaser, to
dispose of or hold separate all or any material portion of the business or
assets of the Company and the Subsidiaries, taken as a whole, or of Parent
and its subsidiaries, including,
36
<PAGE> 37
without limitation, Purchaser, taken as a whole, (C) seeking to impose or
confer limitations on the ability of Parent or any of its subsidiaries or
affiliates, including, without limitation, Purchaser, effectively to
exercise full rights of ownership of the Shares, including, without
limitation, the right to vote any Shares acquired or owned by Parent or any
of its subsidiaries or affiliates, including, without limitation,
Purchaser, on all matters properly presented to the Company's shareholders,
(D) seeking to require divestiture by Parent or any of its subsidiaries or
affiliates, including, without limitation, Purchaser, of any Shares, or (E)
that otherwise would reasonably be expected to materially adversely affect
the business, assets, liabilities, condition (financial or otherwise),
results of operations or prospects of the Company and the Subsidiaries, or
Parent and its subsidiaries, including, without limitation, Purchaser, in
each case taken as a whole; or
(ii) there shall be any action taken, or any statute, rule,
regulation, judgment, injunction, order or decree proposed, enacted,
enforced, promulgated, issued or deemed applicable to the Offer or the
Merger, by any court or Governmental Authority other than the application
of the waiting period provisions of the HSR Act to the Offer or the Merger,
that is likely, directly or indirectly, to result in any of the
consequences referred to in clauses (A) through (E) of paragraph (i) above;
or
(iii) any change or worsening of any existing condition shall have
occurred in the business, assets, liabilities, condition (financial or
otherwise), results of operations or prospects of the Company and the
Subsidiaries taken as a whole that is or is likely to have a material
adverse effect; or
(iv) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under the Merger
Agreement; or
(v) (A) the representations and warranties of the Company relating to
cash and cash equivalents and indebtedness and capitalized lease
obligations, or any of the representations and warranties of the Company
set forth in the Merger Agreement qualified by materiality or material
adverse effect, shall not be true in any respect, or (B) any of the other
representations and warranties set forth in the Merger Agreement shall not
be true in any material respect, in the case of either clause (A) or (B),
when the applicable representation or warranty is made or at any time prior
to consummation of the Offer as if made at and as of such time; or
(vi) the Merger Agreement shall have been terminated in accordance
with its terms; or
(vii) the Board shall have withdrawn or modified in a manner adverse
to Parent or Purchaser (including by amendment of the Schedule 14D-9) its
approval or recommendation of the Offer or the Merger, or failed to make or
reconfirm its recommendation within two business days after a written
request to do so from Parent or Purchaser, or shall have approved or
recommended any other tender or exchange offer or other Acquisition
Proposal; or
(viii) there shall have occurred (1) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange,
Inc., any other national securities exchange or Nasdaq or any decline in
either the Dow Jones Industrial Average or the Standard & Poor's Index of
500 Industrial Companies by an amount in excess of 20% measured from the
close of business on the date of the Merger Agreement, (2) the declaration
of a banking moratorium or any mandatory suspension of payments in respect
of banks in the United States, (3) the commencement of or escalation of a
war, armed hostilities or other international or national calamity directly
or indirectly involving the United States, or (4) in the case of any of the
foregoing existing on the date of the Merger Agreement, a material
acceleration or worsening thereof; or
(ix) the aggregate funds committed for use in connection with the
transactions contemplated by the Merger Agreement pursuant to the
Commitment Letter (the "Required Amounts") shall not have been made
available to Parent and Purchaser in accordance with the terms and
conditions of the Commitment Letter.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted by Parent or Purchaser regardless of the circumstances
(including any action or omission by Parent or Purchaser) giving
37
<PAGE> 38
rise to any such condition and may be waived by Purchaser or Parent, in whole or
in part in their sole discretion. The failure by Parent or Purchaser at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of such right with respect to any particular facts or
circumstances shall not be deemed a waiver with respect to any other facts or
circumstances, and each such right will be deemed an ongoing right which may be
asserted at any time and from time to time which, in the reasonable judgment of
Parent or Purchaser in any such case, and regardless of the circumstances giving
rise to any such condition (including any action or omission by Parent or
Purchaser), makes it inadvisable to proceed with such acceptance for payment,
purchase or payment.
16. CERTAIN REGULATORY AND LEGAL MATTERS.
General. Except as set forth in this Section 16, Parent and Purchaser are
not aware of any approval or other action by any governmental or administrative
agency which would be required for the acquisition or ownership of Shares by
Purchaser as contemplated herein. Should any such approval or other action be
required, it will be sought, but Purchaser has no current intention to delay the
purchase of Shares tendered pursuant to the Offer pending the outcome of any
such matter, subject, however, to Purchaser's right to decline to purchase
Shares if any of the conditions specified in Section 15 shall have occurred.
There can be no assurance that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions, or that
adverse consequences might not result to the Company's business or that certain
parts of the Company's business might not have to be disposed of if any such
approvals were not obtained or other action taken. If certain types of adverse
action are taken with respect to the matters discussed below, or certain
approvals, consents, licenses or permits identified below are not obtained,
Purchaser could decline to accept for payment or pay for any Shares tendered.
See Section 15.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, shareholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquirer from voting on the affairs of a target corporation without approval of
the remaining shareholders, provided that such laws were applicable only under
certain conditions.
The Company is incorporated under the laws of the State of Florida. Section
607.0901 of the FBCA provides that certain "business combinations" (defined to
include mergers and consolidations) involving a company and a shareholder owning
10% or more of its outstanding voting shares must generally be approved by the
affirmative vote of the holders of two-thirds of the Company's outstanding
shares of voting capital stock, other than those shares owned by the interested
shareholder. The two-thirds shareholder approval requirement does not apply to
the business combinations if the business combination is approved by a majority
of the company's disinterested directors. Section 607.0902 of the FBCA, the
control shares statute, provides that a person who acquires shares in excess of
certain specified thresholds, beginning at 20% of the Company's outstanding
capital stock, will generally not have any voting rights with respect to such
shares unless the voting rights are approved by the holders of a majority of the
shares entitled to vote, excluding interested shares. This statute will not
apply to acquisitions of shares of the Company if, prior to the pertinent
acquisition of shares, the acquisition is approved by the board of directors of
such company before the subject acquisition. On December 27, 1999, the Board
approved the purchase of Shares contemplated by the Offer and the Merger.
Accordingly, neither Section 607.0901 nor Section 607.0902 will prevent
consummation of the Merger.
Based on information supplied by the Company, Purchaser does not believe
that any other state takeover statutes purport to apply to the Offer or the
Merger. Neither Purchaser nor Parent has currently complied with any other state
takeover statute or regulation. Purchaser reserves the right to challenge the
applicability or validity of any state law purportedly applicable to the Offer
or the Merger, and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
38
<PAGE> 39
If it is asserted that any other state takeover statute is applicable to the
Offer or the Merger and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer or the Merger, Purchaser might
be required to file certain information with, or to receive approvals from, the
relevant state authorities, and the Purchaser might be unable to accept for
payment or pay for securities tendered pursuant to the Offer, or be delayed in
consummating the Offer or the Merger. In such case, Purchaser may not be
obligated to accept for payment or pay for any securities tendered pursuant to
the Offer.
Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the acquisition of Shares under the Offer may be consummated only following the
expiration or early termination of the applicable waiting period under the HSR
Act.
Under the provisions of the HSR Act applicable to the purchase of Shares
pursuant to the Offer, such purchase may not be made until the expiration of a
15-calendar day waiting period following the required filing of a Notification
and Report Form under the HSR Act by Purchaser's ultimate parent. The Merger
Agreement requires that such form be filed as promptly as possible after the
date of the Merger Agreement and that early termination of the applicable
waiting period be requested. Notification and Report Form was filed by
Purchaser's ultimate parent on December 29, 1999. Accordingly, the waiting
period under the HSR Act is anticipated to expire at 11:59 P.M., New York City
time, on January 13, 2000, unless early termination of the waiting period is
granted by the Federal Trade Commission ("FTC") and the Department of Justice,
Antitrust Division (the "Antitrust Division") or a request for additional
information or documentary material is received prior thereto. If either the FTC
or the Antitrust Division issues a request for additional information or
documentary material from Purchaser prior to the expiration of the 15-day
waiting period, the waiting period will be extended and will expire at 11:59
P.M., New York City time, on the tenth calendar day after the date of
substantial compliance by Purchaser's ultimate parent with such request unless
terminated earlier by the FTC and the Antitrust Division. If such a request is
issued, the purchase of and payment for Shares pursuant to the Offer will be
deferred until the additional waiting period expires or is terminated. Only one
extension of such waiting period pursuant to a request for additional
information or documentary material is authorized by the rules promulgated under
the HSR Act. Thereafter, the waiting period can be extended only by court order
or by consent of Purchaser's ultimate parent. Although the Company is required
to file certain information and documentary material with the Antitrust Division
and the FTC in connection with the Offer, neither the Company's failure to make
such filings nor a request to the Company from the Antitrust Division or the FTC
for additional information or documentary material will extend the waiting
period.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
the Company. At any time before or after Purchaser's purchase of Shares pursuant
to the Offer, the Antitrust Division or the FTC could take such action under the
antitrust laws as either deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or the
consummation of the Merger or seeking the divestiture of Shares acquired by
Purchaser or the divestiture of substantial assets of the Company or its
subsidiaries or Parent or its subsidiaries. Private parties and states'
Attorneys General may also bring legal action under the antitrust laws under
certain circumstances. If the Antitrust Division, the FTC, a state or a private
party raises antitrust concerns in connection with a proposed transaction, the
parties frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing these issues and may delay consummation
of the Offer or the Merger while such discussions are ongoing. There can be no
assurance that a challenge to the Offer on antitrust grounds will not be made,
or, if such a challenge is made, of the result thereof. See Section 15.
17. FEES AND EXPENSES. Parent and Purchaser have retained Morrow & Co.,
Inc. to act as the Information Agent and Continental Stock Transfer & Trust
Company to act as the Depositary in connection with the Offer. The Information
Agent and the Depositary will each receive reasonable and customary compensation
for their services hereunder, be reimbursed for their reasonable out-of-pocket
expenses and be indemnified against certain liabilities and expenses in
connection with the Offer including certain liabilities under the securities
laws.
39
<PAGE> 40
Neither Parent or Purchaser, nor any officer, director, shareholder, agent
or other representative of Parent or Purchaser, will pay any fees or commissions
to any broker, dealer or other person (other than the Information Agent) for
soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, commercial
banks and trust companies and other nominees will, upon request, be reimbursed
by the Purchaser for customary mailing and handling expenses incurred by them in
forwarding materials to their customers.
18. MISCELLANEOUS. Purchaser is not aware of any state where the making
of the Offer is prohibited by administrative or judicial action pursuant to any
valid state statute. If Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, Purchaser will make a good faith effort to comply with such state
statute. If, after such good faith effort, Purchaser cannot comply with such
state statute, the Offer will not be made to (nor will tenders be accepted from
or on behalf of) the holders of Shares in such state. In any jurisdiction where
the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of
Purchaser by one or more registered brokers or dealers licensed under the laws
of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR PARENT OTHER THAN AS CONTAINED IN THIS
OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND, IF ANY SUCH INFORMATION
OR REPRESENTATION IS GIVEN OR MADE, IT SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY PURCHASER OR PARENT.
Purchaser and Parent have jointly filed a Tender Offer Statement on
Schedule 14D-1 with the Commission, pursuant to Rule 14d-1 of the Exchange Act,
together with exhibits furnishing certain information with respect to the Offer.
Such Schedule 14D-1 and any amendments thereto, including all exhibits, may be
examined and copies may be obtained at the same places and in the same manner as
set forth with respect to the Company in Section 8 (except that they may not be
available at the regional offices of the Commission).
RC ACQUISITION CORP.
NATIONAL NEPHROLOGY ASSOCIATES, INC.
December 30, 1999
40
<PAGE> 41
SCHEDULE I
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND PURCHASER
AND PURCHASES OF COMPANY SHARES BY PARENT AND ITS AFFILIATES
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER. The following
table sets forth the name, age and positions of each director and executive
officer of Parent and Purchaser. Unless otherwise indicated, each such person is
a citizen of the United States and the business address of each such person is
c/o National Nephrology Associates, Inc., 511 Union Street, Suite 1800,
Nashville, Tennessee 37219. The positions set forth opposite each individual's
name refer to positions with each of Parent and Purchaser.
<TABLE>
<CAPTION>
NAME AGE PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT/OTHER POSITIONS
- ---- --- ----------------------------------------------------------
<S> <C> <C>
Jerome S. Tannenbaum, M.D.,
Ph.D. ............................ 49 Chairman and Chief Executive Officer
Jeffrey S. Hymes M.D. .............. 46 Director, President and Chief Medical Officer
Joseph A. Cashia.................... 43 Executive Vice President, Chief Operating Officer
M. Stephen Harrison................. 55 Executive Vice President, New Business Development
Leif Murphy......................... 31 Executive Vice President, Chief Financial Officer
Steven G. Segal..................... 39 Director of Parent; Senior Managing Director of J.W.
Childs Associates which he co-founded in July 1995 as a
Managing Director. Previously, Mr. Segal was a Managing
Director at Thomas H. Lee Company where he worked for nine
years.
Glenn A. Hopkins.................... 34 Director of Parent; Managing Director of J.W. Childs
Associates which he co-founded in July 1995 as a Vice
President. From 1989 to 1995 Mr. Hopkins was an Associate
at Thomas H. Lee Company.
Edward D. Yun....................... 32 Director of Parent; Vice President of J.W. Childs
Associates which he joined as an Associate in August 1996.
Prior to August 1996, Mr. Yun was an Associate at DLJ
Merchant Banking Partners from 1994 to 1996.
Kenneth J. Kencel................... 40 Director of Parent; Managing Director and Co-Head of
Indosuez Capital, a division of Credit Agricole Indosuez.
From April 1996 to September 1997, Mr. Kencel served as
Executive Director and Head of High Yield Finance for
Warburg Dillon Read. Mr. Kencel served as Managing
Director with Chase Securities' High Yield Finance Group
from April 1994 to April 1996.
Michael Cannizzaro.................. 50 Director of Parent; President and Chief Executive Officer
of Beltone Electronics Corporation since March 1998;
President of Caremark International's Prescription Service
Division from September 1994 to October 1997.
</TABLE>
The business address of Messrs. Segal, Hopkins and Yun is c/o J.W. Childs
Associates, One Federal Street, 21st Floor, Boston, Massachusetts 02110. The
business address for Mr. Kencel is c/o Indosuez Capital, 1211 Avenue of the
Americas, 7th Floor, New York, New York 10036. The business address of Michael
Cannizzaro is c/o Beltone Electronics Corporation, 4201 West Victoria Street,
Chicago, Illinois 60646.
41
<PAGE> 42
The Depositary for the Offer is:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
2 BROADWAY AVENUE
NEW YORK, NY 10004
Facsimile Copy Number:
(212) 616-7610
Confirm by Telephone:
(212) 509-4000 ext. 535
For Information Call:
(212) 509-4000 ext. 535
Any questions or requests for assistance or additional copies of the Offer to
Purchase and the related Letter of Transmittal, and other tender offer
materials, may be directed to the Information Agent at its telephone numbers and
address listed below. Shareholders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
The Information Agent for the Offer is:
[MORROW & CO., INC. LOGO]
445 Park Avenue, 5th Floor
New York, New York 10022
Call Collect (212) 754-8000
Banks and Brokerage Firms Please Call:
(800) 662-5200
SHAREHOLDERS PLEASE CALL: (800) 566-9061
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
RENEX CORP.
PURSUANT TO THE OFFER TO PURCHASE DATED DECEMBER 30, 1999
OF
RC ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
NATIONAL NEPHROLOGY ASSOCIATES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON JANUARY 28, 2000, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
Facsimile Copy Number:
(212) 616-7610
Confirm by Telephone:
(212) 509-4000 ext. 535
For Information Call:
(212) 509-4000 ext. 535
By First Class Mail, by Express Mail or Overnight Courier, or by Hand:
Continental Stock Transfer & Trust Company
2 Broadway Avenue
New York, NY 10004
------------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS
LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING
THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
<PAGE> 2
This Letter of Transmittal is to be completed by shareholders of Renex
Corp. (the "Company") if certificates representing Shares (as defined below) are
to be forwarded herewith or, unless an Agent's Message (as defined in the Offer
to Purchase) is utilized, if delivery of Shares is to be made by book-entry
transfer to the Depositary's account at The Depository Trust Company
(hereinafter referred to as the "Book-Entry Transfer Facility") pursuant to the
procedures set forth in Section 3 of the Offer to Purchase. Shareholders whose
stock certificates are not immediately available or who cannot deliver their
stock certificates and all other documents required hereby to the Depositary
prior to the Expiration Date (as defined in the Offer to Purchase), or who
cannot comply with the book-entry transfer procedures on a timely basis, may
nevertheless tender their Shares pursuant to the guaranteed delivery procedure
set forth in Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY
TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution:
Account Number: Transaction Code Number:
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
Window Ticket No. (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) STOCK CERTIFICATES AND SHARE(S) TENDERED
APPEAR(S) ON STOCK CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- --------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
STOCK OF SHARES NUMBER OF
CERTIFICATE EVIDENCED BY SHARES
NUMBER(S)* STOCK CERTIFICATE(S) TENDERED**
<S> <C> <C> <C>
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
TOTAL SHARES
- --------------------------------------------------------------------------------------------------------------------------
* Need not be completed by shareholders delivering Shares by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by each stock certificate delivered to the
Depositary are being tendered hereby. See Instruction 4.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The name(s) and address(es) of the registered holder(s) should be printed,
if not already printed above, exactly as they appear on the certificate(s)
representing the Shares tendered hereby. The certificates and number of Shares
that the undersigned wishes to tender should be indicated in the appropriate
box.
2
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
The undersigned hereby tenders to RC Acquisition Corp. ("Purchaser"), a
Florida corporation and a wholly-owned subsidiary of National Nephrology
Associates, Inc., a Delaware corporation, the above-described shares of Common
Stock, par value $.001 per share (the "Shares"), of Renex Corp., a Florida
corporation (the "Company"), including the associated preferred stock purchase
rights (the "Rights") issued pursuant to the Rights Agreement, dated as of
November 6, 1998, by and between the Company and Continental Stock Transfer and
Trust Company, as Rights Agent, as amended, pursuant to Purchaser's offer to
purchase all outstanding Shares at a purchase price of $10 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated December 30, 1999 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, together with the Offer to Purchase, as each may
be amended and supplemented from time to time, constitute the "Offer"). Unless
the context indicates otherwise, all references herein to the Shares shall
include the associated Rights.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, the undersigned hereby sells, assigns and transfers to or
upon the order of Purchaser all right, title and interest in and to all the
Shares that are being tendered hereby and any and all other Shares or other
securities issued or issuable in respect thereof on or after December 30, 1999
(each a "Distribution") and appoints the Depositary the true and lawful agent
and attorney-in-fact of the undersigned with respect to such Shares (and any
Distributions), with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (a) deliver
stock certificates (and any Distributions), or transfer ownership of such Shares
(and any Distributions) on the account books maintained by the Book-Entry
Transfer Facility, together, in any such case, with all accompanying evidences
of transfer and authenticity, to or upon the order of Purchaser, (b) present
such Shares (and any Distributions) for transfer on the books of the Company and
(c) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares (and any Distributions), all in accordance with the
terms and subject to the conditions of the Offer.
The undersigned hereby irrevocably appoints designees of Purchaser as the
attorneys and proxies of the undersigned, each with full power of substitution,
to exercise all voting and other rights of the undersigned in such manner as
each such attorney and proxy or his substitute shall in his sole judgment deem
proper, with respect to all of the Shares tendered hereby and any Distributions
which have been accepted for payment by Purchaser prior to the time of any vote
or other action at any meeting of shareholders of the Company (whether annual or
special and whether or not an adjourned meeting) or otherwise. This power of
attorney and proxy are irrevocable, are coupled with an interest in the Shares
tendered hereby and any Distributions, and are granted in consideration of, and
effective upon, the acceptance for payment of such Shares by Purchaser in
accordance with the terms of the Offer. Such acceptance for payment shall revoke
any other proxy or written consent granted by the undersigned at any time with
respect to such Shares (and any Distributions), and no subsequent proxies will
be given or written consents executed by the undersigned (and if given or
executed, will not be deemed effective).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any Distributions) and that when the same are accepted for
payment by Purchaser, Purchaser will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claims. The undersigned will, upon request, execute
and deliver any additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby (and any Distributions). All authority herein conferred
or agreed to be conferred shall survive the death or incapacity of the
undersigned, and any obligation of the undersigned hereunder shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute an agreement between the undersigned and
Purchaser upon the terms and subject to the conditions of the Offer. The
undersigned recognizes that, under certain circumstances set forth in the Offer
to Purchase, Purchaser may not be required to accept for payment any of the
Shares tendered
3
<PAGE> 4
hereby. The undersigned acknowledges that no interest will be paid on the
purchase price for tendered Shares regardless of any extension of the Offer or
any delay in making such payment.
Unless otherwise indicated in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of any Shares
purchased, and return any stock certificates evidencing any Shares not tendered
or not purchased, in the name(s) of the undersigned (and, in the case of Shares
tendered by book-entry transfer, by credit to the account at the Book-Entry
Transfer Facility). Similarly, unless otherwise indicated in the box entitled
"Special Delivery Instructions," please mail the check for the purchase price of
any Shares purchased and return any stock certificates evidencing any Shares not
tendered or not purchased (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signature(s). In the
event that the boxes entitled "Special Payment Instructions" and "Special
Delivery Instructions" are both completed, please issue the check for the
purchase price of any Shares purchased and return any stock certificates
evidencing any Shares not tendered or not purchased in the name(s) of, and mail
said check and stock certificates to, the person(s) so indicated. Shareholders
tendering Shares by book-entry transfer may request that any Shares not accepted
for payment be returned by crediting such account maintained at the Book-Entry
Transfer Facility as such shareholder may designate by making an appropriate
entry under "Special Payment Instructions." The undersigned acknowledges that
Purchaser has no obligation, pursuant to the "Special Payment Instructions," to
transfer any Shares from the name of the registered holder(s) thereof if
Purchaser does not accept for payment any of the Shares so tendered.
4
<PAGE> 5
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or stock certificates evidencing Shares not tendered or not
purchased are to be issued in the name of someone other than the
undersigned, or if Shares tendered hereby and delivered by book-entry
transfer which are not purchased are to be returned by credit to an
account at a Book-Entry Transfer Facility other than that designated
above.
Issue: [ ] Check [ ] Stock Certificate(s) to:
Name
-----------------------------------------------
(PLEASE PRINT)
Address
------------------------------------------
------------------------------------------------------------
(ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
[ ] Credit Shares delivered by book-entry transfer and not purchased to
the account set forth below:
------------------------------------------------------------
(ACCOUNT NUMBER)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or stock certificates evidencing Shares not tendered or not
purchased are to be mailed to someone other than the undersigned, or to
the undersigned at an address other than that shown under the
undersigned's signature.
Issue: [ ] Check [ ] Stock Certificate(s) to:
Name
-----------------------------------------------
(PLEASE PRINT)
Address
------------------------------------------
------------------------------------------------------------
(ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
------------------------------------------------------------
5
<PAGE> 6
IMPORTANT
SHAREHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Dated: ------------, 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on stock
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information and see
Instruction 5.)
Name(s): -----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title): ---------------------------------------------------------
Address: -----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.: ---------------------------------------------------
Taxpayer Identification or Social Security No.: --------------------------------
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY.
PLACE MEDALLION GUARANTEE IN SPACE BELOW
Authorized Signature: ----------------------------------------------------------
Name: --------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Title: -------------------------------------------------------------------------
Name of Firm: ------------------------------------------------------------------
Address: -----------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Telephone No.: ---------------------------------------------------
Dated: ------------, 1999
6
<PAGE> 7
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below,
signatures on this Letter of Transmittal must be guaranteed by a firm that is a
bank, broker, dealer, credit union, savings association or other entity which is
a member in good standing of the Securities Transfer Agents Medallion Program or
by any other bank, broker, dealer, credit union, savings association or other
entity which is an "eligible guarantor institution," as such term is defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (each of the
foregoing constituting an "Eligible Institution"), unless the Shares tendered
thereby are tendered (i) by the registered holder(s) of such Shares who has not
completed either the box labeled "Special Payment Instructions" or the box
labeled "Special Delivery Instructions" on this Letter of Transmittal or (ii)
for the account of an Eligible Institution. See Instruction 5. If stock
certificates are registered in the name of a person or persons other than the
signer of this Letter of Transmittal, or if payment is to be made or delivered
to, or certificates evidencing unpurchased Shares are to be issued or returned
to, a person other than the registered owner or owners, then the tendered stock
certificates must be endorsed or accompanied by duly executed stock powers, in
either case signed exactly as the name or names of the registered owner or
owners appear on the stock certificates, with the signatures on the stock
certificates or stock powers guaranteed by an Eligible Institution as provided
herein. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND STOCK CERTIFICATES. This Letter
of Transmittal is to be used either if stock certificates are to be forwarded
herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is
utilized, if the delivery of Shares is to be made by book-entry transfer
pursuant to the procedures set forth in Section 3 of the Offer to Purchase.
Certificates for all physically delivered Shares, or a confirmation of a
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility of all Shares delivered electronically, as well as a properly completed
and duly executed Letter of Transmittal (or a manually signed facsimile
thereof), or an Agent's Message in the case of a book-entry transfer, and any
other documents required by this Letter of Transmittal must be received by the
Depositary at one of its addresses set forth on the front page of this Letter of
Transmittal by the Expiration Date (as defined in the Offer to Purchase).
Shareholders who cannot deliver their stock certificates and all other required
documents to the Depositary by the Expiration Date must tender their Shares
pursuant to the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase. Pursuant to such procedure: (a) such tender must be made by
or through an Eligible Institution; (b) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form provided by Purchaser,
must be received by the Depositary prior to the Expiration Date; and (c) the
stock certificates for all tendered Shares, in proper form for tender, or a
confirmation of a book-entry transfer into the Depositary's account at the Book-
Entry Transfer Facility of all Shares delivered electronically, as well as a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof), or an Agent's Message in the case of a book-entry transfer,
and any other documents required by this Letter of Transmittal, must be received
by the Depositary within three trading days (as defined in Section 3 of the
Offer to Purchase) after the date of execution of such Notice of Guaranteed
Delivery, all as provided in Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, STOCK CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted. By
execution of this Letter of Transmittal (or a manually signed facsimile
thereof), all tendering shareholders waive any right to receive any notice of
the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
stock certificate numbers and/or the number of Shares should be listed on a
separate schedule attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY
BOOK-ENTRY TRANSFER). If fewer than all the Shares represented by any stock
certificate delivered to the Depositary are to be tendered, fill in the number
of Shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such case, a new stock certificate for the remainder of the Shares
represented by the old stock certificate will be sent to the person(s) signing
this Letter of
7
<PAGE> 8
Transmittal, unless otherwise provided in the box entitled "Special Payment
Instructions" or "Special Delivery Instructions," as promptly as practicable
following the expiration or termination of the Offer. All Shares represented by
stock certificates delivered to the Depositary will be deemed to have been
tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the stock certificates without alteration, enlargement or any other
change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different stock certificates, it will be necessary to complete, sign and submit
as many separate Letters of Transmittal as there are different registrations of
stock certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of stock certificate(s) or separate
stock powers are required, unless payment of the purchase price is to be made
to, or stock certificate(s) evidencing Shares not tendered or not purchased are
to be returned to or issued in the name of, any person other than the registered
holder(s). Signatures on any such stock certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the stock certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such stock certificate(s). Signature(s) on any
such stock certificate(s) or stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any stock certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing and proper evidence
satisfactory to Purchaser of the authority of such person so to act must be
submitted.
6. STOCK TRANSFER TAXES. Purchaser will pay any stock transfer taxes with
respect to the sale and transfer of any Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or stock
certificates evidencing Shares not tendered or not purchased are to be returned
to, or issued in the name of, any person other than the registered holder(s) of
such Shares, then the amount of any stock transfer taxes (whether imposed on the
registered holder(s), such other person or otherwise) payable on account of the
transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes, or exemption therefrom, is
submitted. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY
FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE STOCK CERTIFICATE(S) LISTED IN THIS
LETTER OF TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the
purchase price of any Shares purchased is to be issued, or any stock
certificates evidencing Shares not tendered or not purchased are to be returned,
in the name of a person other than the person(s) signing this Letter of
Transmittal or if the check or any stock certificates evidencing Shares not
tendered or not purchased are to be mailed to someone other than the person(s)
signing this Letter of Transmittal or to the person(s) signing this Letter of
Transmittal at an address other than that shown above, the appropriate boxes on
this Letter of Transmittal should be completed. Shareholders tendering Shares by
book-entry transfer may request that Shares not purchased be credited to such
account at the Book-Entry Transfer Facility as such shareholder may designate in
the box entitled "Special Payment Instructions." If no such instructions are
given, any such Shares not purchased will be returned by crediting the account
at the Book-Entry Transfer Facility.
8. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, or stolen, the shareholder should promptly
notify the Depositary. The shareholder will then be instructed as to the steps
that must be taken in order to replace the certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost or destroyed certificates have been followed.
8
<PAGE> 9
9. WAIVER OF CONDITIONS. Except in certain circumstances where the
Company's consent is required, in the case of any Shares tendered hereby the
conditions of the Offer may be waived by Purchaser, in whole or in part, at any
time and from time to time in Purchaser's sole discretion.
10. SUBSTITUTE FORM W-9. The tendering holder of Shares is required to
provide the Depositary with such holder's correct taxpayer identification number
("TIN") on Substitute Form W-9, which is provided below, unless an exemption
applies. In the case of such a holder who has completed the box entitled
"Special Payment Instructions," however, the correct TIN on Substitute Form W-9
should be provided for the recipient of the payment pursuant to such
instructions. Failure to provide the information on the Substitute Form W-9 may
subject the tendering holder of Shares to a $50 penalty and to 31% federal
income tax backup withholding on the payment of the purchase price for the
Shares.
11. FOREIGN HOLDERS. Foreign holders must submit a completed IRS Form W-8
to avoid backup withholding. IRS Form W-8 may be obtained by contacting the
Depositary at one of the addresses on the face of this Letter of Transmittal.
12. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent at its
address and telephone numbers set forth on the back cover of the Offer to
Purchase. Additional copies of the Offer to Purchase, the Letter of Transmittal,
the Notice of Guaranteed Delivery and other related materials may be obtained
from the Information Agent or from brokers, dealers, commercial banks and trust
companies.
THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE COPY HEREOF), OR
AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY TRANSFER, TOGETHER WITH STOCK
CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS, OR NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY
ON OR PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under the federal income tax law, a holder of Shares whose tendered Shares
are accepted for payment is required by law to provide the Depositary (as payor)
with such holder's correct TIN on Substitute Form W-9 below. The holder of
Shares must also state that (i) such holder has not been notified by the
Internal Revenue Service that such holder is subject to backup withholding as a
result of a failure to report all interest or dividends or (ii) the Internal
Revenue Service has notified such holder that such holder is no longer subject
to backup withholding. If the Depositary is not provided with the correct TIN,
the holder of Shares may be subject to a $50 penalty imposed by the Internal
Revenue Service and payments made to such holder may be subject to backup
withholding.
Certain holders of Shares (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, such individual must submit a statement, signed under
penalties of perjury, attesting to such individual's exempt status. Forms of
such statements can be obtained from the Depositary. See the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the holder of Shares. Backup withholding is not an
additional tax. Rather, the tax withheld pursuant to backup withholding rules
will be available as a credit against such holder's tax liabilities. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such shareholder's correct TIN by
completing the Substitute Form W-9 below certifying that the TIN provided on
such form is correct (or that such shareholder is awaiting a TIN) and that (i)
such holder is exempt from backup withholding, (ii) such holder has not been
notified by the IRS that such holder is subject to backup withholding as a
result of a failure to report all interest or dividends, or (iii) the IRS has
notified such holder that such holder is no longer subject to backup withholding
(see Part 2 of Substitute Form W-9).
9
<PAGE> 10
WHAT NUMBER TO GIVE THE DEPOSITARY
If the holder of Shares is an individual, the correct TIN is his or her
social security number. In other cases, the correct TIN may be the employer
identification number of the record holder of the Shares tendered hereby. If the
Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to report.
If the tendering holder of Shares has not been issued a TIN and has applied for
a number or intends to apply for a number in the near future, the holder should
write "Applied For" in the space provided for the TIN in Part I of the
Substitute Form W-9, and sign and date the Substitute Form W-9. If "Applied For"
is written in Part I of the Substitute Form W-9 and the Depositary is not
provided with a TIN within 60 days, the Depositary may withhold 31% of all
payments of the purchase price to such holder until a TIN is provided to the
Depositary.
10
<PAGE> 11
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: CONTINENTAL STOCK TRANSFER & TRUST COMPANY
- --------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I--Taxpayer Identification Number. For all accounts, PART III--
FORM W-9 enter taxpayer identification number in the box at right. -----------------------
(For most individuals, this is your social security SOCIAL SECURITY NUMBER
number. If you do not have a number, see OBTAINING A OR -----------------------
NUMBER in the enclosed Guidelines.) Certify by signing and EMPLOYER IDENTIFICATION NUMBER
dating below. NOTE: If the account is in more than one (IF AWAITING TIN
name, see chart in the enclosed Guidelines to determine WRITE "APPLIED FOR")
which number to give the payor.
---------------------------------------------------------------------------------------------
Department of the
Treasury, Internal PART II--For Payees exempt from backup withholding, see the enclosed Guidelines and
Revenue Service complete as instructed therein.
-------------------------------------------------------------------------------------------
PAYOR'S REQUEST FOR CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
TAXPAYER IDENTIFICATION
NUMBER ("TIN") (1) The number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me); and
(2) I am not subject to backup withholding either because (a) I have not been notified by
the Internal Revenue Service (IRS) that I am subject to backup withholding as a result
of a failure to report all interest or dividends, or (b) the IRS has notified me that
I am no longer subject to backup withholding.
- --------------------------------------------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are subject
to backup withholding because of underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding, you received another notification from the IRS that
you were no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed
Guidelines.)
SIGNATURE:
- --------------------------------------------------------------------------------------------------------------------------
DATE:
- --------------------------------------------------------------------------------------------------------------------------
NAME:
- --------------------------------------------------------------------------------------------------------------------------
ADDRESS:
- --------------------------------------------------------------------------------------------------------------------------
CITY-STATE-ZIP:
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THE SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER TO PURCHASE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING (OR WILL
SOON APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that, notwithstanding
the information I provided in Part III of the Substitute Form W-9 (and the fact
that I have completed this Certificate of Awaiting Taxpayer Identification
Number), if I do not provide a correct TIN to the Depositary within 60 days, 31%
of all reportable payments made to me pursuant to the Offer may be withheld.
Signature: Date:
- ------------------------------------------------------------ Date:
- ---------------------------------------
If you have any questions regarding the Offer, please contact the Information
Agent.
11
<PAGE> 12
The Information Agent for the Offer is:
[MORROW & CO., INC. LOGO]
445 Park Avenue, 5th Floor
New York, New York 10022
Call Collect (212) 754-8000
Banks and Brokerage Firms Please Call:
(800) 662-5200
SHAREHOLDERS PLEASE CALL: (800) 566-9061
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY FOR
TENDER OF SHARES OF COMMON STOCK
OF
RENEX CORP.
TO
RC ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
NATIONAL NEPHROLOGY ASSOCIATES, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) if certificates
evidencing shares of Common Stock, par value $.001 per share, including the
associated preferred stock purchase rights (the "Shares"), of Renex Corp., a
Florida corporation (the "Company"), are not immediately available, or if the
procedure for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach the Depositary on or prior to
the Expiration Date (as defined in the Offer to Purchase, dated December 30,
1999 (the "Offer to Purchase")). Such form may be delivered by hand, facsimile
transmission or mail to the Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
Facsimile Copy Number:
(212) 616-7610
Confirm by Telephone:
(212) 509-4000 EXT. 535
For Information Call:
(212) 509-4000 EXT. 535
By First Class Mail, By Express Mail or Overnight Courier, or By Hand
Continental Stock Transfer
& Trust Company
2 Broadway Avenue
New York, NY 10004
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to RC Acquisition Corp., a Florida
corporation, upon the terms and subject to the conditions set forth in the Offer
to Purchase and the related Letter of Transmittal (which together, as the same
may be amended as supplemented from time to time, constitute the "Offer"),
receipt of which is hereby acknowledged, the number of Shares specified below
pursuant to the guaranteed delivery procedures described in Section 3 of the
Offer to Purchase.
Number of Shares:
- --------------------------------------------------------------------------------
Certificate Nos. (If Available):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[] Check box if Shares will be delivered by book-entry transfer:
Account Number:
-----------------------------------------------------------------
Dated:
------------------------, 1999
SIGN HERE
Name(s) of Holders(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Signature(s))
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print Name(s))
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print Address(es))
- --------------------------------------------------------------------------------
(Area Code and Telephone Number(s))
- --------------------------------------------------------------------------------
(Taxpayer Identification or Social Security Number(s))
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member in good standing of the Security Transfer Agent's
Medallion Program, the New York Stock Exchange Medallion Signature Program or
the Stock Exchange Medallion Program (each, an "Eligible Institution"), (a)
represents that the above named person(s) own(s) the Shares tendered hereby
within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), (b) represents that such tender of
Shares complies with Rule 14e-4 under the Exchange Act, and (c) guarantees
delivery to the Depositary, at one of its addresses set forth above, of
certificates representing the Shares tendered hereby in proper form for
transfer, or confirmation of book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company, in each case with delivery
of a properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees, or an Agent's Message in the
case of a book-entry transfer, and any other required documents, within three
Nasdaq National Market trading days after the date hereof.
- --------------------------------------------------------------------------------
(Name of Firm)
- --------------------------------------------------------------------------------
(Authorized Signature)
- --------------------------------------------------------------------------------
(Address)
- --------------------------------------------------------------------------------
(Address)
- --------------------------------------------------------------------------------
(Title)
Name: --------------------------------------------------------------------------
(Please Type or Print)
- --------------------------------------------------------------------------------
(Area Code and Telephone No.)
Dated: ------------, 1999
NOTE: DO NOT SEND STOCK CERTIFICATES WITH THIS NOTICE. STOCK CERTIFICATES SHOULD
BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
RENEX CORP.
AT
$10 NET PER SHARE
BY
RC ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
NATIONAL NEPHROLOGY ASSOCIATES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON JANUARY 28, 2000, UNLESS THE OFFER IS EXTENDED.
December 30, 1999
To Broker, Dealers, Commercial Banks,
Trust Companies And Other Nominees:
We have been appointed by RC Acquisition Corp. ("Purchaser"), a Florida
corporation and a wholly-owned subsidiary of National Nephrology Associates,
Inc., a Delaware corporation ("Parent"), to act as Information Agent in
connection with the Purchaser's offer to purchase all of the outstanding shares
of common stock, par value $.001 per share (the "Shares"), of Renex Corp., a
Florida corporation (the "Company"), including the associated preferred stock
purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as
of November 6, 1998, by and between the Company and Continental Stock Transfer
and Trust Company, as Rights Agent, as amended, at a price of $10 per Share (the
"Offer Price"), net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated December 30, 1999 (the
"Offer to Purchase"), and the related Letter of Transmittal (which together
constitute the "Offer"), copies of which are enclosed herewith. The Offer is
being made in connection with the Agreement and Plan of Merger, dated as of
December 28, 1999, among Parent, Purchaser and the Company (the "Merger
Agreement"). Unless the context indicates otherwise, all references herein to
the Shares shall include the associated Rights.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH, TOGETHER WITH THE SHARES THEN OWNED BY PURCHASER AND ITS
AFFILIATES, WOULD CONSTITUTE A MAJORITY OF THE OUTSTANDING SHARES ON A
FULLY-DILUTED BASIS (AS DEFINED IN THE OFFER TO PURCHASE).
<PAGE> 2
For your information and for forwarding to your clients, we are enclosing
the following documents:
1. The Offer to Purchase.
2. The Letter of Transmittal to be used by shareholders of the Company
in accepting the Offer. Facsimile copies of the Letter of Transmittal (with
manual signatures) may be used to tender Shares.
3. A letter to shareholders of the Company from Milton J. Wallace,
Chairman of the Board of Directors of the Company, and James P. Shea, the
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed by the
Company with the Securities and Exchange Commission and mailed to the
shareholders of the Company.
4. A printed form of letter which may be sent to your clients for
whose account you hold Shares in your name or in the name of your nominee
with space provided for obtaining such clients' instructions with regard to
the Offer.
5. The Notice of Guaranteed Delivery to be used to accept the Offer if
certificates representing Shares are not immediately available or if time
will not permit all required documents to reach the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) or if
the procedures for book-entry transfer cannot be completed on a timely
basis.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to Continental Stock Transfer & Trust
Company, as Depositary.
Your attention is directed to the following:
1. The Offer Price is $10 per Share, net to the seller in cash.
2. The Board of Directors of the Company has unanimously (1) approved
and adopted the Merger Agreement, the Offer and the Merger and deemed them
to be advisable, (2) determined that the terms of the Offer and the Merger
are fair to, and in the best interests of, the shareholders of the Company
and (3) recommended that the shareholders of the Company accept the Offer,
and tender their shares pursuant to the Offer.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on January 28, 2000, unless the Offer is extended.
4. The Offer is being made for all of the outstanding Shares. The
Offer is conditioned upon, among other things, there being validly tendered
and not withdrawn prior to the expiration of the Offer that number of
Shares which, together with the Shares then owned by Purchaser and its
affiliates, would constitute a majority of the outstanding Shares on a
fully-diluted basis (as described in the Offer to Purchase) on the date of
purchase.
5. Shareholders who tender Shares will not be obligated to pay
brokerage fees, commissions or, except as set forth in Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Shares by
Purchaser pursuant to the Offer.
2
<PAGE> 3
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and pay for all Shares which
are validly tendered on or prior to the Expiration Date and not theretofore
withdrawn pursuant to the Offer. In all cases, payment for Shares accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates representing such Shares (or a timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company, pursuant to the procedures described in
Section 3 of the Offer to Purchase), (ii) a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) with any required signature
guarantees (or, in connection with a book-entry transfer, an Agent's Message (as
defined in Section 3 of the Offer to Purchase)), and (iii) all other documents
required by the Letter of Transmittal.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents prior to the expiration
of the Offer, a tender may be effected by following the guaranteed delivery
procedures specified under Section 3, "Procedure for Tendering Shares," in the
Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker or dealer or
to any other person (other than the Information Agent) in connection with the
solicitation of tenders of Shares pursuant to the Offer. Purchaser will,
however, upon request, reimburse you for customary mailing and handling expenses
incurred by you in forwarding the enclosed materials to your clients. Purchaser
will pay or cause to be paid any transfer taxes payable on the transfer of
Shares to it, except as otherwise provided in Instruction 6 of the enclosed
Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JANUARY 28, 1999, UNLESS THE
OFFER IS EXTENDED.
Any inquiries you may have with respect to the Offer should be directed to,
and additional copies of the enclosed materials may be obtained by contacting,
the undersigned at 212-754-8000.
Very truly yours,
MORROW & CO., INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY PERSON AS AN AGENT OF PURCHASER, PARENT, THE DEPOSITARY OR THE INFORMATION
AGENT, OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY OTHER
PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
RENEX CORP.
AT
$10 NET PER SHARE
BY
RC ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
NATIONAL NEPHROLOGY ASSOCIATES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON JANUARY 28, 2000, UNLESS THE OFFER IS EXTENDED.
December 30, 1999
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated December 30,
1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") relating to the offer by RC Acquisition Corp.
("Purchaser"), a Florida corporation and a wholly-owned subsidiary of National
Nephrology Associates, Inc., a Delaware corporation ("Parent"), to purchase all
of the outstanding shares of common stock, par value $.001 per share (the
"Shares"), of Renex Corp., a Florida corporation (the "Company"), including the
associated preferred stock purchase rights (the "Rights") issued pursuant to the
Rights Agreement, dated as of November 6, 1998, by and between the Company and
Continental Stock Transfer and Trust Company, as Rights Agent, as amended, at a
price of $10 per Share (the "Offer Price"), net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer. The Offer is being
made in connection with the Agreement and Plan of Merger, dated as of December
28, 1999, among Parent, Purchaser and the Company (the "Merger Agreement").
Unless the context indicates otherwise, all references herein to the Shares
shall include the associated Rights.
WE ARE THE HOLDER OF RECORD OF SHARES FOR YOUR ACCOUNT. A TENDER OF SUCH
SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR
INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION
ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, pursuant to the
terms and conditions set forth in the Offer.
Your attention is directed to the following:
1. The Offer Price is $10 per Share, net to you in cash.
2. The Board of Directors of the Company has unanimously (1) approved
and adopted the Merger Agreement, the Offer and the Merger and deemed them
to be advisable, (2) determined that the terms of the Offer and the Merger
are fair to, and in the best interests of, the shareholders of the Company
and (3) recommended that the shareholders of the Company accept the Offer,
and tender their shares pursuant to the Offer.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on January 28, 2000, unless the Offer is extended.
4. The Offer is being made for all of the outstanding Shares. The
Offer is conditioned upon, among other things, there being validly tendered
and not withdrawn prior to the expiration of the Offer that number of
Shares
<PAGE> 2
which, together with the Shares then owned by Purchaser and its affiliates,
would constitute a majority of the outstanding Shares on a fully-diluted
basis (as described in the Offer to Purchase) on the date of purchase.
5. Shareholders who tender Shares will not be obligated to pay
brokerage fees, commissions or, except as set forth in Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Shares by
Purchaser pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please complete,
sign and return the instruction form set forth below. An envelope to return your
instructions to us is enclosed. If you authorize the tender of your Shares, all
such Shares will be tendered unless otherwise specified on the instruction form
set forth below. PLEASE FORWARD YOUR INSTRUCTIONS TO US AS SOON AS POSSIBLE TO
ALLOW US AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION
OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements and amendments thereto. Purchaser is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. If Purchaser becomes aware
of any valid state statute prohibiting the making of the Offer or the acceptance
of Shares pursuant thereto, Purchaser will make a good faith effort to comply
with any such state statute or seek to have such statute declared inapplicable
to the Offer. If, after such good faith effort, Purchaser cannot comply with any
such state statute, the Offer will not be made to (nor will tenders be accepted
from or on behalf of) the holders of Shares in such state. In any jurisdiction
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of
Purchaser by one or more registered brokers or dealers licensed under the laws
of such jurisdiction.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
OF
RENEX CORP.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated December 30, 1999, and the related Letter of
Transmittal (which together constitute the "Offer") relating to the offer by RC
Acquisition Corp., a Florida corporation ("Purchaser"), to purchase all of the
outstanding shares of common stock, par value $.001 per share (the "Shares"), of
Renex Corp., a Florida corporation, at a price of $10 per Share, net to the
seller in cash.
This will instruct you to tender to Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) held by you for
the account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
<TABLE>
<S> <C>
Number of Shares to be Tendered:* SIGN HERE
- ------------------- Shares
-----------------------------------------------------------
-----------------------------------------------------------
SIGNATURE(S)
Account Number: ------------------------------- -----------------------------------------------------------
-----------------------------------------------------------
PLEASE PRINT NAME(S) AND ADDRESS(ES) HERE
-----------------------------------------------------------
Dated: , 1999 AREA CODE AND TELEPHONE NUMBER(S)
-----------------------------------------------------------
TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER
</TABLE>
- ---------------
* Unless otherwise indicated, it will be assumed that all of your Shares held by
us for your account are to be tendered in the Offer.
3
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYOR.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payor.
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------
GIVE THE TAXPAYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under State law
8. Sole proprietorship account The Owner(4)
- ------------------------------------------------------------
- ------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE TAXPAYER
IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
9. A valid trust, estate or pension The legal entity
trust (Do not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payor's trade or business and you have not provided
your correct taxpayer identification number to the payor.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYOR. FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYOR. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payors
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payors must be given the numbers whether or not
recipients are required to file a tax return. Payors must generally withhold 31%
of taxable interest, dividends, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payor. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payor, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will generally be treated as
being due to negligence and will be subject to a penalty of 20% on any portion
of an underpayment attributable to that failure.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
<PAGE> 1
Exhibit (a)(7)
Tuesday December 28, 9:14 am Eastern Time
Company Press Release
National Nephrology Associates to Acquire Renex
NASHVILLE, Tenn. and CORAL GABLES, Fla.--(BUSINESS WIRE)--Dec. 28,
1999--National Nephrology Associates, Inc. ("NNA") and Renex Corp. (Nasdaq NMS:
RENX news; "Renex") jointly announced today that they have entered into a
definitive agreement pursuant to which a wholly-owned subsidiary of NNA will
offer to purchase all of the outstanding shares of Renex for $10.00 per share in
cash. The total transaction value, including consideration for shares, stock
options and warrants is approximately $75 million. Pursuant to the agreement,
NNA's subsidiary will promptly commence a tender offer for all outstanding
shares of Renex. The definitive agreement has been approved by both parties'
Boards of Directors. If shares constituting a majority of Renex' outstanding
shares on a fully diluted basis are acquired pursuant to the offer and the other
conditions to the offer are satisfied, any remaining shares will be acquired at
the same price by means of a cash merger of NNA's subsidiary with and into
Renex.
Completion of the tender offer is subject to a number of conditions, including
there having been validly tendered shares constituting a majority of the
outstanding shares of Renex on a fully diluted basis, expiration or termination
of the Hart-Scott-Rodino waiting period, NNA having obtained financing in
accordance with the commitments issued by its lenders and other customary
conditions.
In connection with the merger agreement, NNA has entered into a shareholder
agreement with the directors and executive officers of Renex who collectively
own approximately 31% of the outstanding Renex shares on a fully diluted basis.
Pursuant to the shareholder agreement, these directors and executive officers
have agreed to tender their shares in the Offer and have granted NNA an option
to purchase their shares.
The Board of Directors of Renex has approved the Offer and determined that the
price to be paid in the Offer and in the subsequent merger is fair to its
shareholders and has recommended that Renex shareholders accept the offer and
tender their shares. In connection with the transaction, Renex was advised by,
and received a fairness opinion from, Prudential Vector Healthcare Group, a unit
of Prudential Securities Incorporated.
Milton J. Wallace, Chairman of the Board, said, "Our management is proud that
Renex Corp., established in 1993, is realizing value for its shareholders of
approximately $75 million. The Board
<PAGE> 2
of Directors recommends that the shareholders tender their shares in the Offer.
We look forward to the consummation of the transaction and the successful
integration of our company with NNA."
"Renex is an outstanding company with excellent clinical operations, " said
Jerome S. Tannenbaum, M. D., Chairman and Chief Executive Officer of NNA. "We
are pleased to be acquiring a provider of dialysis services which is known for
its high quality of care."
Renex Corp was formed in 1993 by Milton J. Wallace, Chairman and Arthur Shapiro,
M. D., Vice Chairman. James P. Shea is the President and Chief Executive
Officer.
Renex Corp. provides dialysis and ancillary services to approximately 1,300
patients suffering from kidney failure, generally referred to as end stage renal
disease. The Company provides dialysis services through 21 outpatient facilities
and a staff assisted home dialysis program. Additionally, the Company provides
in-patient acute dialysis services at 21 hospitals.
NNA owns and operates 32 dialysis clinics in 5 states. NNA commenced operations
in December 1998 and its principal shareholders are J. W. Childs Equity Partners
II, L. P., Credit Agricole Indosuez and the NNA management team.
The tender offer will be made only upon and subject to the terms and conditions
of the Offer to Purchase and the related Letter of Transmittal.
The foregoing information regarding the sale of Renex Corp. is preliminary and
constitutes forward-looking statements that involve risks, uncertainties and
other facts which may result in the sale of Renex not occurring or if it occurs,
not on the terms provided above.
Contact:
Renex Corp.
James P. Shea, President & CEO
Orestes L. Lugo, Sr. VP & CFO
(305) 448-2044
-or-
Renex Investor Relations Counsel
Loren Mortman (212) 836-9604
Linda Latman (212) 836-9609
The Equity Group Inc.
www.theequitygroup.com
-or-
National Nephrology Associates, Inc.
Lief Murphy
Executive VP & CFO
(615) 777-8085
<PAGE> 1
Exhibit (a)(8)
- --------------------------------------------------------------------------------
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated December
30, 1999 and the related Letter of Transmittal, and is being made to all holders
of Shares. Purchaser is not aware of any state where the making of the Offer
is prohibited by administrative or judicial action pursuant to any valid
state statute. If Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, Purchaser will make a good faith effort to comply with such
state statute. If, after such good faith effort, Purchaser cannot
comply with such state statute, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) the holders
of Shares in such state. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be
made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of Purchaser by one or more
registered brokers or dealers licensed under the laws
of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
RENEX CORP.
AT
$10 NET PER SHARE
BY
RC ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY OF
NATIONAL NEPHROLOGY ASSOCIATES, INC.
RC Acquisition Corp., a Florida corporation ("Purchaser") and a
wholly-owned subsidiary of National Nephrology Associates, Inc., a Delaware
corporation ("Parent"), is offering to purchase all outstanding shares of common
stock, par value $0.001 per share (the "Shares"), of Renex Corp., a Florida
corporation (the "Company"), at a purchase price of $10 per Share (the "Offer
Price"), net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated December 30,
1999 (the "Offer to Purchase") and in the related Letter of Transmittal (which,
as amended and supplemented from time to time, together constitute the "Offer").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JANUARY 28, 2000, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
<PAGE> 2
The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the expiration of the Offer that
number of Shares which, together with the Shares then owned by Parent and
Purchaser, represents at least a majority of the outstanding Shares on a
fully-diluted basis (as described in the Offer to Purchase), (ii) the expiration
or termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended and (iii) the funds committed to
be provided by Parent's lenders in connection with the transactions contemplated
by the Merger Agreement having been made available to Parent in accordance with
the terms of such commitment. The Offer is also subject to certain other
conditions described in Sections 15 and 16 of the Offer to Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of December 28, 1999 (the "Merger Agreement"), by and among Parent,
Purchaser and the Company. The Merger Agreement provides, among other things,
that as soon as practicable following the consummation of the Offer and the
satisfaction or waiver of the conditions set forth therein and in accordance
with the relevant provisions of Florida law, Purchaser will merge with and into
the Company (the "Merger"), with the Company continuing as the surviving
corporation. At the effective time of the Merger, each Share outstanding
immediately prior to the effective time of the Merger (other than Shares owned
by Parent, Purchaser, the Company or any subsidiary thereof) will, by virtue of
the Merger and without any action on the part of the holders thereof, be
converted into the right to receive an amount in cash equal to the Offer Price.
As a result of the Merger, the Company will become a wholly-owned subsidiary of
Parent. If Purchaser own at least 80% of the outstanding Shares on a
fully-diluted basis following the Offer, Purchaser will have the ability to
consummate the Merger without a meeting or vote of the shareholders of the
Company, pursuant to the "short form" merger provisions of Florida law. If
Purchaser owns less than 80% of the outstanding Shares on a fully-diluted basis
following the Offer, Florida law requires that the Merger Agreement be approved
at a Company shareholders' meeting by a majority of all votes entitled to be
cast at such meeting, and a significantly longer time period will be required to
effect the Merger. The timing and vote required for the Merger are described in
Section 12 of the Offer to Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED AND
ADOPTED THE MERGER AGREEMENT, THE OFFER AND THE MERGER AND THE TRANSACTIONS
CONTEMPLATED THEREBY AND DEEMED THEM TO BE ADVISABLE, HAS DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
SHAREHOLDERS OF THE COMPANY AND HAS RECOMMENDED THAT THE HOLDERS OF THE SHARES
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, Purchaser will be deemed to have accepted
for payment, and thereby purchased, the Shares validly tendered to Purchaser and
not withdrawn as, if and when Purchaser gives oral or written notice to
Continental Stock Transfer & Trust Company (the "Depositary") of Purchaser's
acceptance of such Shares for payment pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Shares accepted for payment
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for tendering shareholders for the
purpose of receiving payment from Purchaser and transmitting such payment to
tendering shareholders whose Shares have been accepted for payment. In all
cases, payment for Shares purchased pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) in the case of certificates
evidencing such Shares, such certificates, along with a properly completed and
duly executed Letter of Transmittal (or manually signed facsimile thereof), with
all required signature guarantees, (ii) in the case of Shares held in book-entry
form, timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility, along with an Agent's
Message, as such terms are defined in Section 2 of the Offer to Purchase, and
(iii) any other documents required by the Letter of Transmittal. Under no
2
<PAGE> 3
circumstances will interest be paid on the purchase price for the Shares,
regardless of any extension of the Offer or any delay in making such payment.
Purchaser expressly reserves the right (but will not be obligated), at
any time or from time to time in its sole discretion (with the Company's consent
in certain circumstances), to extend the period of time during which the Offer
is open, including upon the occurrence of any condition specified in Section 15
of the Offer to Purchase, by giving oral or written notice of such extension to
the Depositary. Any such extension will be followed, as promptly as practicable,
by public announcement thereof, such announcement, in the case of an extension,
to be issued not later than 9:00 a.m., New York City time, on the next business
day after the previously scheduled expiration date of the Offer. During any such
extension, all Shares previously tendered and not withdrawn will remain subject
to the Offer and to the rights of a tendering shareholder to withdraw such
shareholder's Shares.
Tenders of Shares made pursuant to the Offer are irrevocable except
that such Shares may be withdrawn at any time prior to 12:00 Midnight, New York
City time, on January 28, 2000 (or the latest time and date at which the Offer,
if extended by Purchaser, shall expire) and, unless theretofore accepted for
payment by Purchaser pursuant to the Offer, may also be withdrawn at any time
after February 27, 2000. For a withdrawal to be effective, a written,
telegraphic, telex or facsimile transmission notice of withdrawal must be timely
received by the Depositary at its address set forth on the back cover page of
the Offer to Purchase. Any such notice of withdrawal must also specify the name
of the person who tendered the Shares to be withdrawn, the number of Shares to
be withdrawn and the name of the registered holder of such Shares, if different
from that of the person who tendered such Shares. If certificates for Shares to
be withdrawn have been delivered or otherwise identified to the Depositary,
then, prior to the physical release of such certificates, the serial numbers
shown on such certificates must be submitted to the Depositary, and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in Section 2 of the Offer to Purchase), unless such
Shares have been tendered for the account of an Eligible Institution. If Shares
have been tendered pursuant to the procedure for book-entry transfer as set
forth in Section 3 of the Offer to Purchase, any notice of withdrawal must also
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares and must otherwise comply with the
Book-Entry Transfer Facility's procedures.
Withdrawals of tendered Shares may not be rescinded (without
Purchaser's consent), and any Shares properly withdrawn will be deemed not
validly tendered for purposes of the Offer. All questions as to the form and
validity (including time of receipt) of any notice of withdrawal will be
determined by Purchaser, in its sole discretion, whose determination will be
final and binding on all Parties. None of Parent, Purchaser, the Depositary,
Morrow & Co., Inc., the Information Agent for the Offer (the "Information
Agent"), or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liability for
failure to give any such notification. Any Shares properly withdrawn may be
retendered at any time prior to the expiration date of the Offer by following
any of the procedures described in Section 3 of the Offer to Purchase.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided Purchaser with the Company's list of holders
of the Shares and security position listings in respect of the Shares for the
purpose of disseminating the Offer to the holders of Shares. The Offer to
Purchase, the Letter of Transmittal and any other relevant materials will be
mailed to record
3
<PAGE> 4
holders of Shares whose names appear on the Company's list of holders of the
Shares and will be furnished for subsequent transmittal to beneficial owners of
Shares, to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
list of holders of the Shares, or if applicable, who are listed as participants
in a clearing agency's security position listing.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the
Information Agent as set forth below. Additional copies of the Offer to Purchase
and the related Letter of Transmittal and other tender offer materials may be
obtained from the Information Agent and will be furnished promptly at
Purchaser's expense. No fees or commissions will be paid to brokers, dealers or
other persons (other than the Information Agent) for soliciting tenders of
Shares pursuant to the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC.
445 Park Avenue, 5th Floor
New York, New York 10022
Banks and Brokerage Firms Call:
(800) 662-5200
Shareholders Please Call:
(800) 566-9061
4
<PAGE> 1
Exhibit (b)(1)
December 27, 1999
National Nephrology Associates, Inc.
Senior Secured Credit Facilities
Commitment Letter
National Nephrology Associates, Inc.
511 Union Street
Suite 1800
Nashville, TN 37219
Attention: Dr. Jerome Tannenbaum
Chairman, President and Chief Executive Officer
Ladies and Gentlemen:
You have advised Lehman Commercial Paper Inc. ("LCPI"), Lehman Brothers
Inc. ("LBI") and Credit Agricole Indosuez ("Indosuez" and, together with LCPI,
the "Initial Lenders") that National Nephrology Associates, Inc., a Delaware
corporation (the "Borrower"), intends to acquire through a tender offer (the
"Tender Offer") at least a majority (or such greater percentage of shares
sufficient to enable the Borrower, voting without any other shareholders of the
Target (as defined below), to approve a merger of the Target with a wholly owned
subsidiary of the Borrower) of the outstanding common stock of Renex Corp., a
Florida corporation (the "Target"). As promptly as practicable after the closing
of the Tender Offer, and in any event within four months after such closing, a
wholly owned subsidiary of the Borrower will consummate a merger (the "Merger")
with the Target in which the Target will be the surviving corporation. You have
also advised LCPI, LBI and Indosuez that, from time to time after the
acquisition of the Target (the "Initial Acquisition"), you intend to acquire or
construct (the "Subsequent Acquisitions"; together with the Initial Acquisition,
the "Acquisitions") other dialysis clinics. In that regard, you have requested
that LBI and Indosuez agree to structure, arrange and syndicate senior secured
credit facilities in an aggregate amount of up to $175,000,000 (the "Credit
Facilities"), that LCPI commit to provide, or to cause an affiliate thereof to
provide, a portion of the Credit Facilities and to serve as administrative agent
for the Credit Facilities (LCPI, in such capacity, the "Administrative Agent")
and that Indosuez commit to provide a portion of the Credit Facilities and to
serve as syndication agent for the Credit
<PAGE> 2
2
Facilities (in such capacity, the "Syndication Agent"). We understand that an
investment group consisting of affiliates of J.W. Childs Equity Partners II,
L.P. and of Indosuez and certain other investors reasonably acceptable to the
Initial Lenders (such investment group, collectively, the "Sponsors") will
invest at least $27,500,000 (the portion of such amount invested by such other
investors to be reasonably acceptable to the Initial Lenders) in cash in the
equity of the Borrower in connection with the closing of the Initial
Acquisition.
LBI and Indosuez (together, the "Co-Arrangers") are pleased to advise
you that they are willing to act as sole advisors, sole lead arrangers and sole
book managers for the Credit Facilities.
Furthermore, LCPI is pleased to advise you of its commitment to
provide, or to cause an affiliate thereof to provide, 50% of the principal
amount of each of the Credit Facilities, and Indosuez is pleased to advise you
of its commitment to provide 50% of the principal amount of each of the Credit
Facilities (the commitment of each such Initial Lender, an "Initial Lender
Commitment"), in each case on the terms and subject to the conditions set forth
or referred to in this commitment letter (the "Commitment Letter") and in the
Summary of Terms and Conditions attached hereto as Exhibit A (the "Term Sheet");
provided that the funding of each Initial Lender Commitment by the relevant
Initial Lender is conditioned upon the funding of the other Initial Lender
Commitments by the other Initial Lender.
It is agreed that the Co-Arrangers will act as the sole advisors, sole
lead arrangers and sole book managers for the Credit Facilities, that LCPI will
act as the sole Administrative Agent, that Indosuez will act as the sole
Syndication Agent and that each will, in such capacities, perform the duties and
exercise the authority customarily performed and exercised by it in such roles.
You agree that no other agents, co-agents, arrangers or book managers will be
appointed, no other titles will be awarded and no compensation (other than that
expressly contemplated by the Term Sheet and the Fee Letter referred to below)
will be paid in connection with the Credit Facilities unless you and we shall so
agree.
The Co-Arrangers intend to syndicate the Credit Facilities to a group
of financial institutions (together with the Initial Lenders, the "Lenders")
identified by the Co-Arrangers in consultation with you. The Co-Arrangers intend
to commence syndication efforts promptly upon the public announcement of the
Tender Offer, and you agree actively to assist the Co-Arrangers in completing a
syndication satisfactory to them. Such assistance shall include (a) your using
commercially reasonable efforts to ensure that the syndication efforts benefit
materially from your existing lending relationships and the existing lending
relationships of the Sponsors, (b) direct contact between senior management and
advisors of the Borrower and the Sponsors and the proposed Lenders, (c)
assistance in the preparation of a Confidential Information Memorandum and other
marketing materials to be used in connection with the syndication and (d) the
hosting, with the Co-Arrangers, of one or more meetings of prospective Lenders.
You also agree that, at your expense, you will work with the Co-Arrangers to
procure, upon their request following the public announcement of the Tender
Offer, a rating for the Credit Facilities by Moody's Investors Service, Inc. and
Standard & Poor's Ratings Group.
<PAGE> 3
3
The Co-Arrangers will manage all aspects of the syndication, including
decisions as to the selection of institutions to be approached and when they
will be approached, when their commitments will be accepted, which institutions
will participate, the allocations of the commitments among the Lenders and the
amount and distribution of fees among the Lenders; provided, however, that the
Co-Arrangers will obtain your prior approval (not to be unreasonably withheld)
with respect to which institutions will participate and will consult with you as
to the allocations of the commitments among the Lenders. It is understood that
the Co-Arrangers will provide you with a list of proposed syndicate members
prior to approaching such institutions. To assist the Co-Arrangers in their
syndication efforts, you agree to use commercially reasonable efforts to
promptly prepare and provide to the Co-Arrangers and the Initial Lenders all
information with respect to the Borrower, the Target, the Initial Acquisition
and the other transactions contemplated hereby, including all financial
information and projections (the "Projections"), as we may reasonably request in
connection with the arrangement and syndication of the Credit Facilities. You
hereby represent and covenant that, to your knowledge, (a) all such information
other than the Projections (the "Information") that has been or will be made
available to any of us by you or any of your representatives is or will be, when
furnished, complete and correct in all material respects and does not or will
not, when furnished, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which such
statements are made and (b) the Projections that have been or will be made
available to any of us by you or any of your representatives have been or will
be prepared in good faith based upon reasonable assumptions (it being understood
that the Projections as they relate to future events are not to be viewed as
fact and that actual results during the period or periods covered thereby may
differ from the projected results set forth therein by a material amount). You
understand that in arranging and syndicating the Credit Facilities we may use
and rely on the Information and Projections without independent verification
thereof.
As consideration for any portion of the commitments of LCPI and
Indosuez hereunder and the agreement of the Co-Arrangers to perform the services
described herein, you agree to pay to the Co-Arrangers, for the account of LBI,
LCPI and Indosuez, as agreed upon by them, the nonrefundable fees set forth in
Annex I to the Term Sheet and in the Fee Letter dated the date hereof and
delivered herewith (the "Fee Letter"); provided that any portion of such fees
may be shared among the Initial Lenders as determined by the Co-Arrangers.
The commitments and agreements of LBI, LCPI and Indosuez
described herein are subject to (a) there not occurring or becoming known to us
any material adverse condition or material adverse change in or affecting the
business, operations, property, condition (financial or otherwise) or prospects
of the Borrower and its subsidiaries, taken as a whole, or the Target and its
subsidiaries, taken as a whole, (b) our not becoming aware after the date hereof
of any information or other matter affecting the Borrower, the Target or the
transactions contemplated hereby which is inconsistent in a material and adverse
manner with any such information or other matter disclosed to us prior to the
date hereof, (c) there not having occurred since the date of this Commitment
Letter a material disruption of or material adverse change in financial, banking
or
<PAGE> 4
4
capital market conditions that, in our reasonable judgment, could materially
impair the syndication of the Credit Facilities, (d) our satisfaction that prior
to and during the syndication of the Credit Facilities there shall be no
competing offering, placement or arrangement of any debt securities or bank
financing by or on behalf of the Borrower or the Target or any affiliate thereof
(other than the Sponsors and their affiliates), (e) the negotiation, execution
and delivery on or before February 15, 2000 of definitive documentation with
respect to the Credit Facilities satisfactory to LCPI, Indosuez and their
respective counsel, (f) your compliance with your covenants and agreements
contained herein and the correctness of your representations and warranties
contained herein and (g) the other conditions set forth or referred to in the
Term Sheet. The terms and conditions of LCPI's and Indosuez's commitments
hereunder and of the Credit Facilities are not limited to those set forth herein
and in the Term Sheet. Those matters that are not covered by the provisions
hereof and of the Term Sheet are subject to the approval and agreement of LCPI,
Indosuez and the Borrower.
You agree (a) to indemnify and hold harmless (i) LBI, LCPI, Indosuez
and their respective affiliates, (ii) their respective officers, directors and
employees and (iii) their respective advisors and agents who are directly
involved in the consideration of this matter (each, an "Indemnified Person")
from and against any and all losses, claims, damages and liabilities to which
any such Indemnified Person may become subject arising out of or in connection
with this Commitment Letter, the Credit Facilities, the use of the proceeds
thereof, the Acquisitions or any related transaction or any claim, litigation,
investigation or proceeding relating to any of the foregoing, regardless of
whether any Indemnified Person is a party thereto, and to reimburse each
Indemnified Person upon demand for any legal or other expenses incurred in
connection with investigating or defending any of the foregoing, provided that
the foregoing indemnity will not, as to any Indemnified Person, apply to losses,
claims, damages, liabilities or related expenses to the extent they are found by
a final, non-appealable judgment of a court to arise from the willful misconduct
or gross negligence of such Indemnified Person, and (b) to reimburse LBI, LCPI,
Indosuez and their affiliates promptly upon written demand for all reasonable
out-of-pocket expenses (including reasonable due diligence expenses, syndication
expenses, consultant's fees and expenses, coach travel expenses, and reasonable
fees, charges and disbursements of counsel) incurred in connection with the
Credit Facilities and any related documentation (including this Commitment
Letter, the Term Sheet, the Fee Letter and the definitive financing
documentation) or the administration, amendment, modification or waiver thereof.
Neither you nor any Indemnified Person shall be liable for any indirect or
consequential damages in connection with its activities related to the Credit
Facilities.
You acknowledge that LBI and its affiliates (the term "LBI" being
understood to refer hereinafter in this paragraph to include such affiliates,
including LCPI) and/or Indosuez and its affiliates (the term "Indosuez" being
understood to refer hereinafter in this paragraph to include such affiliates)
may be providing debt financing, equity capital or other services (including
financial advisory services) to other companies in respect of which you may have
conflicting interests regarding the transactions described herein and otherwise.
Each of LBI and Indosuez agrees that it will use the confidential information
obtained from you by virtue of the transactions contemplated by this Commitment
Letter or its other relationships with you only in
<PAGE> 5
5
connection with the performance by LBI and Indosuez, as the case may be, of its
services for you set forth in this Commitment Letter and the Fee Letter and that
neither LBI nor Indosuez will disclose any confidential information to any other
person without the prior written consent of the Borrower except (a) to the
officers, agents and advisors of LBI and Indosuez who are directly involved in
the consideration of this matter or (b) as may be compelled in a judicial or
administrative proceeding or as otherwise required by law or regulation (in
which case each of LBI and Indosuez, as the case may be, agrees to inform you
promptly thereof); provided that any of LBI and the Initial Lenders may disclose
confidential information at the request of any regulatory authority or
self-regulatory organization without notice. You also acknowledge that LBI and
Indosuez have no obligation to use in connection with the transactions
contemplated by this Commitment Letter, or to furnish to you, confidential
information obtained from other companies.
This Commitment Letter shall not be assignable by you without the prior
written consent of LBI, LCPI and Indosuez (and any purported assignment without
such consent shall be null and void), is intended to be solely for the benefit
of the parties hereto and is not intended to confer any benefits upon, or create
any rights in favor of, any person other than the parties hereto and the
Indemnified Persons. This Commitment Letter may not be amended or waived except
by an instrument in writing signed by you, LBI, LCPI and Indosuez. This
Commitment Letter may be executed in any number of counterparts, each of which
shall be an original, and all of which, when taken together, shall constitute
one agreement. Delivery of an executed signature page of this Commitment Letter
by facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. This Commitment Letter (including the Term Sheet attached
hereto) and the Fee Letter are the only agreements that have been entered into
among us with respect to the Credit Facilities and set forth the entire
understanding of the parties with respect thereto. This Commitment Letter shall
be governed by, and construed in accordance with, the laws of the State of New
York.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Term Sheet or the Fee Letter nor any of
their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) to the officers, agents and advisors of the Borrower and
the Sponsors who are directly involved in the consideration of this matter or
(b) as may be compelled in a judicial or administrative proceeding or as
otherwise required by law (in which case you agree to inform us promptly
thereof), provided, that the foregoing restrictions shall cease to apply (except
in respect of the Fee Letter and its terms and substance) after this Commitment
Letter has been accepted by you.
The compensation, reimbursement, indemnification and confidentiality
provisions contained herein and in the Fee Letter shall remain in full force and
effect regardless of whether definitive financing documentation shall be
executed and delivered and notwithstanding the termination of this Commitment
Letter or any of LCPI's or Indosuez's commitments hereunder; provided, however,
that, except as expressly set forth in this Commitment Letter or the Fee Letter,
such provisions (other than those relating to fees and the syndication of the
Credit
<PAGE> 6
6
Facilities) shall be superseded from and after the Closing Date by the
provisions set forth in the Credit Documentation (each as defined in the Term
Sheet).
LBI, LCPI and Indosuez also will provide financial advisory services to
the Borrower with respect to the transaction to which this Commitment Letter
relates. The Borrower agrees that each of LBI, LCPI and Indosuez has the right
to place advertisements in financial and other newspapers and journals at its
own expense describing its services to the Borrower, provided that LBI, LCPI and
Indosuez, as the case may be, will submit a copy of any such advertisements to
the Borrower and the Sponsors for their prior written approval, which approval
shall not be unreasonably withheld. Furthermore, the Borrower agrees to include
a reference to the role of the Co-Arrangers as financial advisors in any press
release made by the Borrower announcing the transaction.
If the foregoing correctly sets forth our agreement, please indicate
your acceptance of the terms hereof and of the Term Sheet and the Fee Letter by
returning to LCPI and Indosuez executed counterparts hereof and of the Fee
Letter not later than 5:00 p.m., New York City time, on December 29, 1999. The
commitments and agreements of LBI, LCPI and Indosuez herein will expire at such
time in the event LCPI and Indosuez have not received such executed counterparts
in accordance with the immediately preceding sentence.
<PAGE> 7
7
LBI, LCPI and Indosuez are pleased to have been given the opportunity
to assist you in connection with this financing, and we look forward to working
with you.
Very truly yours,
LEHMAN COMMERCIAL PAPER INC.
By: /s/ William Gallagher
----------------------------
Title: Authorized Signatory
LEHMAN BROTHERS INC.
By: /s/ William Gallagher
----------------------------
Title: Authorized Signatory
CREDIT AGRICOLE INDOSUEZ
By: /s/ Mitchell Goldstein
----------------------------
Title: Vice President
By: /s/ Patricia Frankel
----------------------------
Title: First Vice President
Accepted and agreed to
as of the date first
written above by:
NATIONAL NEPHROLOGY ASSOCIATES, INC.
By: /s/ Leif Murphy
------------------------------
Title: Chief Executive Officer
<PAGE> 8
Exhibit A
NATIONAL NEPHROLOGY ASSOCIATES, INC.
CREDIT FACILITIES
Summary of Terms and Conditions
December 27, 1999
National Nephrology Associates, Inc., a Delaware corporation (the
"Borrower"), intends initially to acquire through a tender offer (the "Tender
Offer") at least a majority (or such greater percentage of shares sufficient to
enable the Borrower, voting without any other shareholders of the Target (as
defined below), to approve a merger of the Target with a wholly owned subsidiary
of the Borrower) of the shares (the "Minimum Number of Shares") of the
outstanding common stock of Renex Corp., a Florida corporation (the "Target").
As promptly as practicable after the closing of the Tender Offer, and in any
event within four months after such closing, a wholly owned subsidiary of the
Borrower will consummate a merger (the "Merger") with the Target in which the
Target will be the surviving corporation. In addition, from time to time after
the acquisition of the Target (the "Initial Acquisition"), the Borrower intends
to acquire or construct (the "Subsequent Acquisitions"; together with the
Initial Acquisition, the "Acquisitions") other dialysis clinics. To finance, in
part, the cash portion of the consideration for the Acquisitions, and to
refinance certain existing indebtedness of the Borrower, the Borrower is
establishing the senior secured credit facilities described below. Further, an
investment group consisting of affiliates of J.W. Childs Equity Partners II,
L.P. and of Credit Agricole Indosuez ("Indosuez") and certain other investors
identified to the Lenders (such investment group, collectively, the "Sponsors")
will invest at least $27,500,000 (the portion of such amount invested by such
other investors to be reasonably acceptable to the Administrative Agent and the
Syndication Agent, each as defined below) in cash in the equity of the Borrower
in connection with the closing of the Initial Acquisition.
IO Parties
Borrower: National Nephrology Associates, Inc. (the "Borrower").
Guarantors: Each of the Borrower's direct and indirect subsidiaries, including
the Target and its subsidiaries following the Merger (the
<PAGE> 9
"Guarantors"; the Borrower and the Guarantors,
collectively, the "Credit Parties").
Sole Advisors, Sole
Arrangers and Sole
Book Managers: Lehman Brothers Inc. ("LBI") and Indosuez (together
with LBI, in such capacity, the "Co-Arrangers").
Syndication Agent: Indosuez (in such capacity, the "Syndication Agent").
Administrative Agent: Lehman Commercial Paper Inc. ("LCPI"; in such
capacity, the "Administrative Agent").
Lenders: LCPI (or an affiliate thereof) and Indosuez
(collectively, the "Initial Lenders") and a syndicate
of banks, financial institutions and other entities
arranged by the Co-Arrangers (collectively, the
"Lenders").
IIO Types and Amounts of Credit Facilities
1 Term Loan Facilities
Types and Amounts of
Facilities: Term Loan Facilities (the "Term Loan Facilities") in
an aggregate amount of $150,000,000 (the loans
thereunder, the "Term Loans") as follows:
Tranche B Term Loan Facility: A six-year term loan
facility (the "Tranche B Term Loan Facility") in an
aggregate principal amount equal to $100,000,000 (the
loans thereunder, the "Tranche B Term Loans"). The
Tranche B Term Loans shall be repayable in quarterly
installments in an aggregate principal amount for
each year following the Closing Date (as defined
below) equal to the amount set forth opposite such
year below (with the installments in each such year
being equal in amount):
<TABLE>
<CAPTION>
Period Principal Amount
------ ----------------
<S> <C>
Years 1-3 $ 1,000,000
Year 4 $10,000,000
Year 5 $20,000,000
Year 6 $67,000,000
</TABLE>
Delayed-Draw Term Loan Facility: A delayed-draw term
loan facility (the "Delayed-Draw Term Loan Facility")
in an aggregate principal amount equal to $50,000,000
(the loans thereunder, the
<PAGE> 10
3
"Delayed Draw Term Loans"). The Delayed-Draw Term
Loans shall be repayable in quarterly installments in
an aggregate principal amount for each year following
the Closing Date equal to the percentage set forth
opposite such year below of the aggregate principal
amount of Delayed-Draw Term Loans outstanding on the
second anniversary of the Closing Date (with the
installments in each such year being equal in
amount):
<TABLE>
<CAPTION>
Period Percentage
------ ----------
<S> <C>
Years 1-2 0%
Year 3 10%
Year 4 20%
Year 5 70%
</TABLE>
Availability: The Tranche B Term Loans shall be made in a drawing
on the Closing Date (as defined below) and in a
drawing on the date of the consummation of the Merger
(the "Merger Date"). The amount of Tranche B Term
Loans made on the Closing Date shall be an amount
equal to (a) the cash portion of the consideration
for the Tender Offer (including guaranteed delivery
shares), plus (b) the amount necessary to refinance
the Borrower=s Existing Credit Agreement (as defined
below), plus (c) the amount necessary to make
severance payments of up to $4,100,000 to employees
of the Target, plus (d) the amount necessary to pay
related fees and expenses, less (e) the cash amount
received by the Borrower from the Equity Financing
(as defined below). The remaining Tranche B Term
Loans shall be made in a drawing on the Merger Date.
The Delayed-Draw Term Loans may be made during the
period from the Merger Date to the second anniversary
of the Closing Date.
Purpose: The proceeds of the Tranche B Term Loans shall be
used to finance, in whole or in part, the cash
portion of the consideration for the Initial
Acquisition (including guaranteed delivery shares),
to refinance the Borrower's existing senior secured
credit facility under which LCPI is administrative
agent (the "Existing Credit Agreement"), to make
severance payments of up to $4,100,000 to employees
of the Target and to pay related fees and expenses.
The proceeds of the Delayed-Draw Term Loans shall be
used to finance, in part, the cash portion of the
consideration for Acquisitions and to pay related
fees and expenses.
<PAGE> 11
4
2 Revolving Credit Facility
Type and Amount of
Facility: A five-year revolving credit facility (the "Revolving
Credit Facility") in an aggregate principal amount
equal to $25,000,000 (the loans thereunder, the
"Revolving Credit Loans").
Availability: The Revolving Credit Facility shall, subject to the
then-current Borrowing Base, be available on a
revolving basis during the period commencing on the
Closing Date and ending on the fifth anniversary
thereof (the "Revolving Credit Termination Date");
provided, that no more than $2,500,000 of Revolving
Credit Loans may be made on the Closing Date.
Letters of Credit: A portion of the Revolving Credit Facility not in
excess of $10,000,000 shall be available for the
issuance of letters of credit (the "Letters of
Credit") by a Lender to be selected in the
syndication process (in such capacity, the "Issuing
Lender"). No Letter of Credit shall have an
expiration date after the earlier of (a) one year
after the date of issuance and (b) five business days
prior to the Revolving Credit Termination Date,
provided that any Letter of Credit with a one-year
tenor may provide for the renewal thereof for
additional one-year periods (which shall in no event
extend beyond the date referred to in clause (b)
above).
Drawings under any Letter of Credit shall be
reimbursed by the Borrower (whether with its own
funds or with the proceeds of Revolving Credit Loans)
on the same business day. To the extent that the
Borrower does not so reimburse the Issuing Lender,
the Lenders under the Revolving Credit Facility shall
be irrevocably and unconditionally obligated to
reimburse the Issuing Lender on a pro rata basis.
Maturity: The Revolving Credit Termination Date.
Purpose: The proceeds of Revolving Credit Loans shall be used
for general corporate purposes (other than
acquisitions) of the Borrower and its subsidiaries in
the ordinary course of business.
Borrowing Base: The amount from time to time available under the
Revolving Credit Facility shall not exceed the
Borrowing Base (determined in accordance with the
Existing Credit Agreement).
<PAGE> 12
5
IIIO Certain Payment Provisions
Fees and Interest
Rates: As set forth on Annex I.
Optional Prepayments and
Commitment Reductions: Loans may be prepaid (without premium or penalty,
other than customary eurodollar breakage costs) and
commitments may be reduced by the Borrower in minimum
amounts to be agreed upon. Optional prepayments of
the Term Loans shall be applied to the Tranche B Term
Loans and the Delayed-Draw Term Loans ratably and to
the installments thereof ratably in accordance with
the then outstanding amounts thereof and may not be
reborrowed. Notwithstanding the foregoing, so long as
any Delayed-Draw Term Loans are outstanding, each
holder of Tranche B Term Loans shall have the right
to refuse all or any portion of such prepayment
allocable to its Tranche B Term Loans and the amount
so refused will be applied to prepay the Delayed-Draw
Term Loans.
Mandatory Prepayments and
Commitment Reductions: The following amounts shall be applied to prepay the
Term Loans and, except in the case of clause (d)
below, reduce the Revolving Credit Facility:
(a) 50% of the net proceeds of any sale or issuance
of equity after the Closing Date by the Borrower or
any of its subsidiaries (other than equity
contributed by the Sponsors, members of the
Borrower=s management, employees of the Borrower or
affiliated physicians and any equity issued to any
seller of a dialysis clinic or physician practice
management company to the Borrower in connection with
such sale);
(b) subject to baskets to be agreed upon, 100% of the
net proceeds of any incurrence of certain
indebtedness after the Closing Date by the Borrower
or any of its subsidiaries;
(c) subject to baskets to be agreed upon and to
customary reinvestment provisions, 100% of the net
proceeds of any sale or other disposition (including
as a result of casualty or condemnation) by the
Borrower or any of its subsidiaries of any
<PAGE> 13
6
assets (except for the sale of inventory in the
ordinary course of business and certain other
dispositions to be agreed on); and (d) 75% (which
percentage will be reduced to 50% when the ratio of
Total Debt to EBITDA is less than or equal to 3.00 to
1.00, and to 25% when such ratio is less than or
equal to 2.50 to 1.00) of excess cash flow (to be
defined in a mutually satisfactory manner) for each
fiscal year of the Borrower (commencing with the
fiscal year in which the Closing Date occurs).
All such amounts shall be applied, first, to the
prepayment of the Term Loans and, second, to the
permanent reduction of the Revolving Credit Facility
(except in the case of clause (d) above). Each such
prepayment of the Term Loans shall be applied to the
Tranche B Term Loans and the Delayed-Draw Term Loans
ratably and to the installments thereof ratably in
accordance with the then outstanding amounts thereof
and may not be reborrowed; provided, however, that,
with respect to the first $25,000,000 of mandatory
prepayments, such amounts shall be applied, first, to
the prepayment of outstanding Delayed-Draw Term Loans
and, second, to the prepayment of outstanding Tranche
B Term Loans. Notwithstanding the foregoing, so long
as any Delayed-Draw Term Loans are outstanding, each
holder of Tranche B Term Loans shall have the right
to refuse all or any portion of such prepayment
allocable to its Tranche B Term Loans and the amount
so refused will be applied to prepay the Delayed-Draw
Term Loans. The Revolving Credit Loans shall be
prepaid and the Letters of Credit shall be cash
collateralized or replaced to the extent such
extensions of credit exceed (i) the amount of the
Revolving Credit Facility or (ii) the then-current
Borrowing Base.
IV0 Collateral The obligations of each Credit Party in respect of
the Credit Facilities shall be secured by a perfected
first priority security interest in all of its
tangible and intangible assets (including, without
limitation, intellectual property, real property and
all of the capital stock of Target and each of the
Borrower's other direct and indirect subsidiaries),
in accordance with provisions substantially
equivalent to those set forth in the Existing Credit
Agreement.
V0 Certain Conditions
<PAGE> 14
7
Initial Conditions: The availability of the Credit Facilities shall be
conditioned upon satisfaction of, among other things,
the following conditions precedent (the date upon
which all such conditions precedent shall be
satisfied, the "Closing Date") on or before February
15, 2000 (with references to the Borrower and its
subsidiaries in this paragraph being deemed to refer
to and include the Target and its subsidiaries after
giving effect to the Initial Acquisition):
(a) Each Credit Party shall have executed and
delivered satisfactory definitive financing
documentation with respect to the Credit Facilities
(the "Credit Documentation"), and the Lenders shall
have received such other documents and instruments as
are customary for transactions of this type or as
they may reasonably request.
(b) The Borrower shall have received at least
$27,500,000 in cash from the issuance of its equity
to the Sponsors (of which at least $20,000,000 shall
have been contributed by J.W. Childs Equity Partners
II, L.P. and its affiliates) on satisfactory terms
and conditions (the "Equity Financing"). The capital
structure of each Credit Party after giving effect to
the Initial Acquisition and the financing
transactions contemplated hereby shall be
satisfactory in all respects to the Co-Arrangers.
(c) The Initial Lenders shall be satisfied with the
final terms and conditions of the Tender Offer,
including, without limitation, the price per share
and the number of shares to be acquired, and the
proposed terms and conditions of the Merger. All
documentation relating to the Tender Offer and the
Merger, including, without limitation, the offer to
purchase the common stock of the Target (the "Offer
to Purchase") and the merger agreement between the
Borrower (or a wholly owned subsidiary of the
Borrower) and the Target (the "Merger Agreement"),
shall be in form and substance (including, without
limitation, the environmental provisions set forth
therein) satisfactory to the Initial Lenders.
(d) The Merger Agreement shall have been executed and
delivered by each of the parties thereto and shall be
in full force and effect.
(e) All references to the financing contemplated
hereby and to the financing parties contained in any
documentation relating to the Tender Offer or the
Merger, including, without limitation, the
<PAGE> 15
8
Offer to Purchase and any other public document
relating to the Tender Offer or the Merger, shall be
reasonably satisfactory to the Co-Arrangers.
(f) The Co-Arrangers shall be satisfied that no
preferred stock purchase rights or other poison pills
are applicable to the Tender Offer or the Merger (it
being understood that severance payments to employees
of the Target are not poison pills for purposes of
this paragraph).
(g) The number of outstanding shares of common stock
of the Target shall not have increased by a material
amount since the date of the Commitment Letter.
(h) Shareholders holding at least 25% of the
outstanding shares of common stock of the Target
(calculated in accordance with the Securities
Exchange Act of 1934 and the regulations thereunder)
shall have entered into a binding agreement to tender
their shares pursuant to the Tender Offer.
(i) The Tender Offer shall have been consummated in
accordance with the Offer to Purchase and the Merger
Agreement, without any waiver, amendment, supplement
or other modification not consented to by the Initial
Lenders of any material provision thereof, and in
compliance with all applicable laws, and the Borrower
shall have acquired at least the Minimum Number of
Shares.
(j) The Lenders shall be satisfied that the
consummation of the Tender Offer and the financing
thereof will not violate Regulations T, U or X of the
Board of Governors of the Federal Reserve System.
(k) The Lenders shall be satisfied with the
sufficiency of amounts available under the Tranche B
Term Loan Facility following the consummation of the
Tender Offer to fund the remaining payments necessary
to effect the Merger.
(l) The Lenders, the Administrative Agent and the
Co-Arrangers shall have received all fees required to
be paid, and all expenses for which invoices have
been presented, on or before the Closing Date.
<PAGE> 16
9
(m) All governmental and third party approvals
necessary or advisable in connection with the Tender
Offer, the Merger, the financing contemplated hereby
and the continuing operations of the Borrower and its
subsidiaries shall have been obtained and be in full
force and effect, and all applicable waiting periods
shall have expired without any action being taken or
threatened by any competent authority which would
restrain, prevent or otherwise impose adverse
conditions on the Tender Offer, the Merger or the
financing thereof.
(n) The Lenders shall have received (i) satisfactory
audited consolidated financial statements of the
Target for the two most recent fiscal years ended
prior to the Closing Date as to which such financial
statements are available and (ii) satisfactory
unaudited interim consolidated financial statements
of the Target for each quarterly period ended
subsequent to the date of the latest financial
statements delivered pursuant to clause (i) of this
paragraph as to which such financial statements are
available (it being understood that the Lenders have
received audited consolidated financial statements of
the Target for the 1997 and 1998 fiscal years and
unaudited interim consolidated financial statements
of the Target for the fiscal quarters ended March 31,
1999, June 30, 1999 and September 30, 1999).
(o) The Lenders shall have received a satisfactory
pro forma consolidated balance sheet of the Borrower
as at September 30, 1999, adjusted to give effect to
the consummation of the Initial Acquisition and the
financings contemplated hereby (including the Equity
Financing) as if such transactions had occurred on
such date.
(p) The Lenders shall have received the results of a
recent lien search in each relevant jurisdiction with
respect to the Target and its subsidiaries, and such
search shall reveal no liens on any of the assets of
the Target or its subsidiaries except for liens
permitted by the Credit Documentation or liens to be
discharged on or prior to the Closing Date pursuant
to documentation satisfactory to the Administrative
Agent.
(q) All amounts outstanding under the Existing Credit
Agreement shall have been repaid in full.
<PAGE> 17
10
(r) The fees and expenses to be incurred in
connection with the Tender Offer, the Merger and the
financing thereof shall not exceed $10,000,000 in the
aggregate.
(s) The Lenders shall have received satisfactory
legal opinions (i) from counsel to the Borrower and
its subsidiaries and (ii) from such special and local
counsel as may be required by the Administrative
Agent.
On-Going Conditions: The making of each extension of credit shall be
conditioned upon (a) the accuracy of all
representations and warranties in the Credit
Documentation (including, without limitation, the
material adverse change and litigation
representations) and (b) there being no default or
event of default in existence at the time of, or
after giving effect to the making of, such extension
of credit. As used herein and in the Credit
Documentation a "material adverse change" shall mean
any event, development or circumstance that has had
or could reasonably be expected to have a material
adverse effect on (a) the business, assets, property
or condition (financial or otherwise) of the Borrower
and its subsidiaries taken as a whole, or (b) the
validity or enforceability of any of the Credit
Documentation or the rights and remedies of the
Administrative Agent and the Lenders thereunder.
VI. Certain Documentation
Matters The Credit Documentation shall contain
representations, warranties, covenants and events of
default customary for financings of this type and
other terms deemed appropriate by the Lenders,
including, without limitation:
Representations and
Warranties: As set forth in the Existing Credit Agreement (with
changes to be agreed upon to reflect the transactions
contemplated hereby), including: financial statements
(including pro forma financial statements); absence
of undisclosed liabilities; no material adverse
change; corporate existence; compliance with law;
corporate power and authority; enforceability of
Credit Documentation; no conflict with law or
contractual obligations; no material litigation; no
default; ownership of property; liens; intellectual
property; no burdensome restrictions; taxes; Federal
Reserve regulations; ERISA; Investment Company Act;
subsidiaries; environmental
<PAGE> 18
11
matters; solvency; accuracy of disclosure; and
creation and perfection of security interests.
Affirmative Covenants: As set forth in the Existing Credit Agreement (with
changes to be agreed upon to reflect the transactions
contemplated hereby), including: delivery of
financial statements, reports, accountants' letters,
projections, borrowing base certificates, officers'
certificates and other information reasonably
requested by the Lenders; payment of other
obligations; continuation of business and maintenance
of existence and material rights and privileges;
compliance with laws and material contractual
obligations; maintenance of property and insurance;
maintenance of books and records; right of the
Lenders to inspect property and books and records;
notices of defaults, litigation and other material
events; compliance with environmental laws; further
assurances (including, without limitation, with
respect to security interests in after-acquired
property); agreement to consummate, within four
months after the Closing Date, the Merger in
accordance with the terms of the Merger Agreement,
without any waiver, amendment, supplement or other
modification not consented to by the Initial Lenders
of any material provision thereof, and in compliance
with all applicable laws; and agreement to obtain,
within 180 days after the Closing Date, interest rate
protection for at least $50,000,000 of the Credit
Facilities on terms and conditions satisfactory to
the Administrative Agent.
Financial Covenants: As set forth in the Existing Credit Agreement, with
levels to be agreed; provided, that EBITDA will not
be adjusted to add operating expenses.
Negative Covenants: As set forth in the Existing Credit Agreement (with
changes to be agreed upon to reflect the transactions
contemplated hereby), including limitations on:
indebtedness (including preferred stock of
subsidiaries); liens; guarantee obligations; mergers,
consolidations, liquidations and dissolutions; sales
of assets; leases; dividends and other payments in
respect of capital stock; capital expenditures;
investments, loans and advances; optional payments
and modifications of subordinated and other debt
instruments; transactions with affiliates (excluding
(i) management fees (not to exceed an amount to be
agreed upon) payable to the Sponsors and (ii)
arm's-length transactions); sale and leasebacks;
<PAGE> 19
12
changes in fiscal year; negative pledge clauses; and
changes in lines of business.
Events of Default: As set forth in the Existing Credit Agreement (with
changes to be agreed upon to reflect the transactions
contemplated hereby), including: nonpayment of
principal when due; nonpayment of interest, fees or
other amounts after a grace period to be agreed upon;
material inaccuracy of representations and
warranties; violation of covenants (subject, in the
case of certain affirmative covenants, to a grace
period to be agreed upon); cross-default; bankruptcy
events; certain ERISA events; material judgments;
actual or asserted invalidity of any guarantee or
security document or security interest; and a change
of control (the definition of which is to be agreed).
Voting: Amendments and waivers with respect to the Credit
Documentation shall require the approval of Lenders
holding not less than a majority of the aggregate
amount of the outstanding Term Loans, Revolving
Credit Loans, participations in Letters of Credit and
unused commitments under the Credit Facilities (the
"Majority Lenders"), except that (a) the consent of
each Lender directly affected thereby shall be
required with respect to (i) reductions in the amount
or extensions of the scheduled date of amortization
or final maturity of any Loan, (ii) reductions in the
rate of interest or any fee, or extensions of any due
date thereof, (iii) increases in the amount, or
extensions of the expiry date, of any Lender's
commitment and (iv) modifications to the pro rata
provisions of the Credit Documentation and (b) the
consent of 100% of the Lenders shall be required with
respect to (i) modifications to any of the voting
percentages and (ii) releases of all or substantially
all of the Guarantors or all or substantially all of
the collateral. In addition, the consent of Lenders
holding a majority of the aggregate amount of the
Tranche B Term Loans or the Delayed-Draw Term Loans,
as the case may be, shall be required with respect to
certain modifications affecting the Term Loan
Facility, and the consent of Lenders holding a
majority of the aggregate amount of the undrawn
commitments under the Revolving Credit Facility shall
be required with respect to certain modifications
affecting the Revolving Credit Facility.
Assignments
<PAGE> 20
13
and Participations: The Lenders shall be permitted to assign and sell
participations in their Loans and commitments,
subject, in the case of assignments (other than
assignments (i) by the Administrative Agent or (ii)
to another Lender or to an affiliate of a Lender), to
the consent of the Administrative Agent and the
Borrower and, in the case of any assignment of
commitments under the Revolving Credit Facility, the
Issuing Lender and (which consent in each case shall
not be unreasonably withheld). Non-pro rata
assignments shall be permitted. In the case of
partial assignments (other than to another Lender or
to an affiliate of a Lender), the minimum assignment
amount shall be $5,000,000, unless otherwise agreed
by the Borrower and the Administrative Agent.
Participants shall have the same benefits as the
Lenders with respect to yield protection and
increased cost provisions. Voting rights of
participants shall be limited to those matters with
respect to which the affirmative vote of the Lender
from which it purchased its participation would be
required as described under "Voting" above. Pledges
of Loans in accordance with applicable law shall be
permitted without restriction. Promissory notes shall
be issued under the Credit Facilities only upon
request.
Yield Protection: The Credit Documentation shall contain customary
provisions (a) protecting the Lenders against
increased costs or loss of yield resulting from
changes in reserve, tax, capital adequacy and other
requirements of law and from the imposition of or
changes in withholding or other taxes and (b)
indemnifying the Lenders for "breakage costs"
incurred in connection with, among other things, any
prepayment of a Eurodollar Loan (as defined in Annex
I) on a day other than the last day of an interest
period with respect thereto.
Expenses and
Indemnification: The Borrower shall pay (a) all reasonable
out-of-pocket expenses of both the Administrative
Agent and the Co-Arrangers associated with the
syndication of the Credit Facilities and the
preparation, execution, delivery and administration
of the Credit Documentation and any amendment or
waiver with respect thereto (including the reasonable
fees, disbursements and other charges of counsel) and
(b) all reasonable out-of-pocket expenses of the
Administrative Agent and the Lenders (including the
fees, disbursements and other charges of counsel) in
connection with the enforcement of the Credit
Documentation.
<PAGE> 21
14
The Administrative Agent, the Syndication Agent, the
Co-Arrangers and the Lenders (and their affiliates
and their respective officers, directors, employees,
advisors and agents) will have no liability for, and
will be indemnified and held harmless against, any
loss, liability, cost or expense incurred in respect
of the financing contemplated hereby or the use or
the proposed use of proceeds thereof (except to the
extent resulting from the gross negligence or willful
misconduct of the indemnified party).
Governing Law and Forum: State of New York.
Counsel to the
Administrative Agent: Simpson Thacher & Bartlett.
<PAGE> 22
Annex I
Interest and Certain Fees
Interest Rate Options: The Borrower may elect that the Loans comprising each
borrowing bear interest at a rate per annum equal to:
the Base Rate plus the Applicable Margin; or the
Eurodollar Rate plus the Applicable Margin.
As used herein:
"Base Rate" means the highest of (i) the rate of
interest publicly announced by Deutsche Bank, New
York Office, as its prime rate in effect at its
principal office in New York City (the "Prime Rate"),
(ii) the secondary market rate for three-month
certificates of deposit (adjusted for statutory
reserve requirements) plus 1% and (iii) the federal
funds effective rate from time to time plus 0.5%.
"Applicable Margin" means (a) with respect to Tranche
B Term Loans, (i) 3.75% per annum, for such Loans
that are Eurodollar Loans (as defined below) and (ii)
2.75% per annum, for such Loans that are Base Rate
Loans (as defined below) and (b) with respect to
Delayed-Draw Term Loans and Revolving Credit Loans,
the per annum interest rate margins determined in
accordance with the Pricing Grid attached hereto as
Annex I-A.
"Eurodollar Rate" means the rate (adjusted for
statutory reserve requirements for eurocurrency
liabilities) at which eurodollar deposits for one,
two, three or six months (as selected by the
Borrower) are offered in the interbank eurodollar
market.
Interest Payment Dates: In the case of Loans bearing interest based upon the
Base Rate ("Base Rate Loans"), quarterly in arrears.
In the case of Loans bearing interest based upon the
Eurodollar Rate ("Eurodollar Loans"), on the last day
of each relevant interest period and, in the case of
any interest period longer than three months, on each
successive date three months after the first day of
such interest period.
<PAGE> 23
Commitment Fees: The Borrower shall pay a commitment fee calculated at
the rate of 0.50% per annum on the average daily
unused portion of the Revolving Credit Facility, and
1.25% per annum on the average daily unused portion
of the Delayed-Draw Term Loan Facility, in each case
payable quarterly in arrears.
Letter of Credit Fees: The Borrower shall pay a commission on all
outstanding Letters of Credit at a per annum rate
equal to the Applicable Margin then in effect with
respect to Revolving Credit Loans that are Eurodollar
Loans on the face amount of each such Letter of
Credit. Such commission shall be shared ratably among
the Lenders participating in the Revolving Credit
Facility and shall be payable quarterly in arrears.
In addition to letter of credit commission, a
fronting fee calculated at a rate per annum to be
agreed upon by the Borrower and the Issuing Lender on
the face amount of each Letter of Credit shall be
payable quarterly in arrears to the Issuing Lender
for its own account. In addition, customary
administrative, issuance, amendment, payment and
negotiation charges shall be payable to the Issuing
Lender for its own account.
Default Rate: At any time when the Borrower is in default in the
payment of any amount of principal due under the
Credit Facilities, such amount shall bear interest at
2% above the rate otherwise applicable thereto.
Overdue interest, fees and other amounts shall bear
interest at 2% above the rate applicable to Base Rate
Loans.
Rate and Fee Basis: All per annum rates shall be calculated on the basis
of a year of 360 days (or 365/366 days, in the case
of Base Rate Loans the interest rate payable on which
is then based on the Prime Rate) for actual days
elapsed.
<PAGE> 24
Annex I-A
Pricing Grid
<TABLE>
<CAPTION>
Ratio of Total Applicable Margin- Applicable Margin-
Debt to Eurodollar Loans* Base Rate Loans*
EBITDA ------------------ ------------------
- --------------
<S> <C> <C>
Less Than or Equal 3.25 3.25% 2.25%
Less Than 2.75 3.00% 2.00%
Greater Than 2.75 2.75% 1.75%
- ----------------------- -------------------------------- ----------------------
</TABLE>
*/ Notwithstanding the foregoing grid, until the delivery to the Lenders
of the Borrower=s financial statements for the first four full fiscal
quarters following the Closing Date, the Applicable Margins will be
those set forth above opposite a Leverage Ratio of Greater Than or
Equal To 3.25.
<PAGE> 1
Exhibit (c)(3)
November 15, 1999
Board of Directors
Renex Corp.
201 Alhambra Circle, Suite 800
Coral Gables, Florida 33134
Gentlemen:
In connection with National Nephrology Associates, Inc.'s ("NNA")
consideration of a possible negotiated transaction with Renex Corp. (the
"Company"), NNA understands the Company is prepared to make available to NNA
certain information concerning the business, financial position, operations,
assets and liabilities of the Company. As a condition to such information being
furnished to NNA and its employees or affiliates (as such term is defined under
the Securities Exchange Act of 1934, as amended (the "1934 Act")), agents or
advisors (including, without limitation, attorneys, accountants, consultants,
financing sources and financial advisors) (collectively, "Representatives"), NNA
agrees to treat any information concerning the Company (whether prepared by the
Company, its advisors or otherwise and irrespective of the form of
communication) which is furnished to NNA or to its Representatives now or in the
future by or on behalf of the Company (herein collectively referred to as the
"Evaluation Material") in accordance with the provisions of this letter
agreement, and to take or abstain from taking certain other actions hereinafter
set forth.
The term "Evaluation Material" also shall be deemed to include all
reproductions, summaries, notes, analyses, compilations, studies,
interpretations or other documents prepared by NNA or its Representatives which
contain, reflect or are based upon, in whole or in part, the information
furnished to NNA or its Representatives pursuant hereto ("Derivative Material").
The term "Evaluation Material" does not include information which (i) is or
becomes generally available to the public other than as a result of a disclosure
by NNA or its Representatives, or (ii) as shown by written records, was lawfully
within NNA's possession prior to it being furnished to NNA by or on behalf of
the Company, provided that the source of such information was not known by NNA
to be bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to the Company or any other party with
respect to such information.
NNA hereby agrees that all Evaluation Material furnished or disclosed
to NNA by the Company shall remain the property of the Company (unless otherwise
agreed in writing), that the Company is only loaning the Evaluation Material to
NNA, that NNA has not received and will not receive any rights or claims with
respect to the Evaluation Material, that the Evaluation Material will be kept
confidential, and that NNA and its Representatives will not use, duplicate,
disclose, or permit the use, duplication or disclosure of any of the Evaluation
Material in any manner whatsoever, other than for the sole purpose of evaluating
a possible negotiated transaction between NNA and the Company; provided, that
(i) NNA may make any disclosure of such information to which the Company gives
its prior written consent and (ii) any of such information may be disclosed
<PAGE> 2
Renex Corp.
November 15, 1999
Page 2
to NNA's Representatives who need to know such information for the sole purpose
of evaluating a possible negotiated transaction with the Company. NNA further
agrees that all Derivative Material shall become and remain the property of the
Company immediately upon its creation. NNA agrees to inform each of its
Representatives of the confidential nature of the Evaluation Material prior to
delivery to such Representative and that, by receiving such materials, such
Representative will be deemed to have agreed to be bound by this letter
agreement. In any event, NNA shall be responsible for any breach of this letter
agreement by any of its Representatives, and NNA agrees, at its sole expense, to
take all reasonable measures (including, without limitation, court proceedings)
to restrain its Representatives from prohibited or unauthorized disclosure or
use of the Evaluation Material.
NNA and its Representatives will not disclose to any other person the
fact that the Evaluation Material has been made available to NNA, that
discussions or negotiations are taking place concerning a possible transaction
involving the Company, or any of the terms, conditions or other facts with
respect thereto (including the status thereof), provided that NNA may make such
disclosure if NNA has received the written opinion of outside counsel that such
disclosure must be made by NNA in order that NNA not commit a violation of law.
The term "persona" as used in this letter agreement shall be broadly interpreted
to include the media and any individual, corporation, partnership, group, or
other entity.
In the event that NNA or any of its Representatives are requested or
required (by oral questions, interrogatories, requests for information or
documents in legal proceedings, subpoena, civil investigative demand or other
similar process) to disclose any of the Evaluation Material, NNA shall provide
the Company with prompt written notice of any such request or requirement so
that the Company may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this letter agreement. If, in the
absence of a protective order or other remedy or the receipt of a waiver by the
Company, NNA or any of its Representatives are nonetheless, in the written
opinion of NNA's outside counsel, legally compelled to disclose Evaluation
Material to any tribunal, NNA or its Representatives may, without liability
hereunder, disclose to such tribunal only that portion of the Evaluation
Material which such counsel advises NNA is legally required to be disclosed.
If NNA decides that it does not wish to proceed with a transaction with
the Company, it will promptly inform the Company of that decision. In that case,
or at any time upon the request of the Company for any reason, NNA will promptly
deliver to the Company or certify destruction of all Evaluation Material (and
all copies thereof) furnished to NNA or its Representatives by or on behalf of
the Company, and all other Evaluation Material (including all Derivative
Material) prepared by NNA or its Representatives shall be destroyed, and no copy
thereof shall be retained. Notwithstanding the return or destruction of the
Evaluation Material, NNA and its Representatives will continue to be bound by
the obligations of confidentiality and other obligations hereunder.
<PAGE> 3
Renex Corp.
November 15, 1999
Page 3
NNA agrees that neither the Company, nor any of its Representatives
shall be deemed to have made any representation or warranty, express or implied,
as to the accuracy or completeness of the Evaluation Material, and neither the
Company, nor any of its Representatives shall have any liability to NNA or to
any of NNA's Representatives relating to or resulting from the use of the
Evaluation Material or any errors therein or omissions therefrom.
NNA understands and agrees that no contract or agreement providing for
any transaction involving the Company shall be deemed to exist with NNA unless
and until a final definitive agreement has been executed and delivered. NNA also
agrees that unless and until a final definitive agreement regarding a
transaction between NNA and the Company has been executed and delivered, neither
NNA or the Company will be under any legal obligation of any kind whatsoever
with respect to such a transaction by virtue of this letter agreement, except
for the matters specifically agreed to herein.
NNA further acknowledges and agrees that the Company reserves the
right, in its sole discretion, to reject any and all proposals made by NNA or
any of its Representatives with regard to a transaction between NNA and the
Company, and to terminate discussions and negotiations with NNA at any time. NNA
further understands that (i) the Company and its Representatives shall be free
to conduct any process for any transaction involving the Company, if and as they
in their sole discretion shall determine, including, without limitation,
negotiating with any other interested parties and entering into a definitive
agreement, without prior notice to NNA or any other person), (ii) any procedures
relating to such process or transaction may be changed at any time without
notice to NNA or any other person, and (iii) NNA shall not have any claims
whatsoever against the Company, its Representatives and each of their respective
directors, officers, owners, affiliates or agents arising out of or relating to
any transaction involving the Company, unless a definitive agreement is entered
into with NNA. NNA agrees that neither this paragraph nor any other provision in
this agreement can be waived or amended except by written consent of the
Company.
NNA hereby acknowledges that the Evaluation Material is being furnished
to NNA in consideration of NNA's agreement that, for a period of three years
from the date of this agreement neither NNA nor any of its Representatives will
in any manner, directly or indirectly, (a) effect or seek, offer or propose
(whether publicly or otherwise) to effect, or cause or participate in or in any
way assist any other person to effect or seek, offer or propose (whether
publicly or otherwise) to effect or participate in, (i) any acquisition of any
securities (or beneficial ownership thereof) or assets of the Company, (ii) any
tender or exchange offer, merger or other business combination involving the
Company, (iii) any recapitalization, restructuring, liquidation, dissolution or
other extraordinary transaction with respect to the Company, or (iv) any
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
Securities and Exchange Commission) or consents to vote any voting securities of
the Company, (b) form, join or in any way participate in a "group" (as defined
under the 1934 Act), (c) otherwise act, alone or in concert with others, to seek
to control or influence the
<PAGE> 4
Renex Corp.
November 15, 1999
Page 4
management, Board of Directors or policies of the Company, (d) take any action
which might force the Company to make a public announcement regarding any of the
types of matters set forth in (a) above, or (e) enter into any discussions or
arrangements with any third party with respect to any of the foregoing. NNA also
agrees during such period not to request the Company (or its directors,
officers, employees, advisors or agents), directly or indirectly, to amend or
waive any provision of this paragraph (including this sentence).
NNA acknowledges that it is aware that the United States securities
laws prohibit NNA, its Representatives, and any person who has received material
non-public information about the Company from purchasing or selling the
Company's securities or from communicating such information to any other person
under circumstances in which it is reasonably foreseeable that such person is
likely to purchase or sell such securities in reliance on such information.
In consideration of the Evaluation Material being furnished to NNA, NNA
hereby agrees that, for a period of two years from the date hereof, neither NNA
nor any of its affiliates will solicit to employ any of the current officers,
employees or independent contractors (including medical directors) of the
Company so long as they are employed by the Company, without obtaining the prior
written consent of the Company.
NNA understands and agrees that no failure or delay by the Company in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
future exercise thereof or the exercise of any other right, power or privilege
hereunder.
NNA agrees that the restrictions contained herein are fair and
reasonable and necessary to protect the legitimate interests of the Company and
its stockholders. NNA agrees that the Company and its stockholders would suffer
irreparable injury if NNA or its Representatives were to violate any provision
of this letter and that in the event of a breach or threatened breach of this
letter by NNA or its Representatives, the Company, without prejudice to any
rights to judicial relief it may otherwise have, shall be entitled to equitable
relief, including injunction and specific performance, in the event of any
breach of the provisions of this letter agreement and that NNA shall not oppose
the granting of such relief. NNA also waives (and will use its reasonable
efforts to cause its Representatives to waive) any requirement for the securing
or posting of a bond in connection with the Company seeking or obtaining such
relief. In the event of litigation relating to this letter agreement, if a court
of competent jurisdiction determines that NNA or any of its Representatives have
breached this letter agreement, then NNA shall be liable and pay to the Company
the reasonable legal fees incurred by the Company in connection with such
litigation, including any appeal therefrom.
<PAGE> 5
Renex Corp.
November 15, 1999
Page 5
If any one or more provisions of this letter agreement are declared
void or otherwise unenforceable, such provisions shall be declared separate from
this letter agreement and this letter agreement shall otherwise remain in full
force and effect.
This letter agreement is for the benefit of the Company, it
stockholders and their Representatives, officers and directors, and shall be
construed (both as to validity and performance) and enforced in accordance with,
and governed by, the laws of the State of Florida applicable to agreements made
and to be performed wholly within such jurisdiction. The parties acknowledge
that a substantial portion of the negotiations, anticipated performance and
execution of this Agreement occurred or shall occur in Miami-Dade County,
Florida and that, therefore, each party irrevocably and unconditionally agree
that: (a) any suit, action or legal proceeding arising out of or relating to
this Agreement and the subject matter thereof shall be brought in the courts of
record of the State of Florida in Miami-Dade County or the United States
District Court Southern District of Florida; (b) consents to the jurisdiction of
each such court in any suit, action or proceeding, and (c) waives any objection
to the venue of any suit, action or proceeding in any such court.
Very truly yours,
NATIONAL NEPHROLOGY ASSOCIATES, INC.
Date: November 15, 1999 By /s/Steven Harrison
-----------------------------
Name: Steven Harrison
-----------------------------
Title: Executive Vice President
-----------------------------
<PAGE> 1
Exhibit (c)(4)
December 21, 1999
National Nephrology Associates, Inc.
511 Union Street, Suite 1800
Nashville, TN 37219
Gentlemen:
In connection with our consideration of a possible transaction with
National Nephrology Associates, Inc. (the "Company"), we have requested
information concerning the Company. As a condition to your furnishing of that
information to us, we agree, as set forth below, to treat confidentially that
information and any other information (collectively, "Evaluation Data")
furnished to us (at any time on, before or after the date of this agreement) by
the Company or its affiliates or representatives concerning the Company.
We will not use the Evaluation Data for any purpose other than the
evaluation of the possible transaction with the Company and the Evaluation Data
shall be kept confidential by us and our agents; however, Evaluation Data may be
disclosed to those of our directors, officers and representatives who need to
have access to such Evaluation Data for our evaluation of a possible transaction
with the Company (we shall (x) inform such directors, officers and
representatives of the confidential nature of such information and (y) direct
and cause them (i) to keep such information confidential, and (ii) not to use
such information for any purpose other than the evaluation of the possible
transaction between us and the Company).
In addition, without the prior written consent of the Company, we shall
not, and shall direct and cause our directors, officers and representatives not
to, disclose to any person the fact that discussions or negotiations are taking
place concerning a possible transaction between us and the Company or any of the
terms, conditions or other facts with respect to any such possible transaction,
including, but not limited to, the status thereof. The term "person" as used in
this agreement shall be interpreted very broadly and shall include, but not be
limited to, any individual, corporation, company, partnership, limited liability
company, governmental body or agency, or other legal entity.
At any time at the request of the Company, we shall promptly deliver to
the Company all documents and other material in our possession (or in the
possession of any of our directors, officers and representatives) containing or
based upon any of the Evaluation Data, whether prepared by the Company, us or
any other person at any time before or after the date of this agreement, without
retaining any copies thereof.
This agreement shall not apply to particular portions of the Evaluation
Data that (x) are or become matters of general public knowledge other than as a
result of a disclosure by us or our directors, officers, employees or
representatives or (y) are disclosed to us on a non-confidential basis by a
source (other than the Company or its agents) not thereby violating any
agreement with or other duty to the Company.
<PAGE> 2
We acknowledge that, although the Company has endeavored to provide the
Evaluation Data requested by us, the Company and its agents make no
representation or warranty as to the accuracy or completeness of the Evaluation
Data. We agree that none of the Company, its affiliates, and their respective
directors, officers, employees and representatives shall have any liability to
us or any of our representatives resulting from or in connection with the use of
any of the Evaluation Data by us or our representatives.
No failure or delay by the Company to exercise any right or remedy
under or with respect to this agreement shall operate as a waiver nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right or remedy. This agreement may not be
changed or terminated orally; all waivers hereunder must be in writing and
executed by the Company. This agreement shall be governed and construed in
accordance with the internal laws of the State of New York and we hereby consent
to the jurisdiction of the courts of the State of New York (and the federal
courts located therein) for purposes of any action or proceeding to enforce, or
otherwise relating to, this agreement and agree that process in any such action
or proceeding may be served on us anywhere in the world.
Very truly yours,
Renex Corp.
By: /s/ James P. Shea
---------------------------------
Name: James P. Shea
Title: President and Chief Executive Officer
2
