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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Renal Care Group, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
RENAL CARE GROUP, INC.
2100 WEST END AVENUE, SUITE 800
NASHVILLE, TENNESSEE 37203
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, JUNE 4, 1998
To the Stockholders of Renal Care Group, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Renal Care Group, Inc. (the "Company" or "RCG"), will be held at
Vanderbilt Plaza, 2100 West End Avenue, Nashville, Tennessee, on Thursday, June
4, 1998 at 9:00 a.m. (Central Standard Time) for the following purposes:
(1) To elect two Class II Directors to serve for a term of three (3) years
and until their successors are elected;
(2) To consider and vote upon a proposal to approve an amendment to the
Renal Care Group, Inc. Third Amended and Restated 1996 Stock Incentive
Plan (the "Plan") to increase the number of shares available for
issuance thereunder; and
(3) To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on April 10, 1998 are
entitled to notice of and to vote at the Annual Meeting or any adjournment or
postponement thereof.
Your attention is directed to the Proxy Statement accompanying this Notice
for more complete information regarding the matters to be acted upon at the
Annual Meeting.
The Board of Directors of RCG unanimously recommends that stockholders vote
FOR the director nominees named in the Proxy Statement and FOR approval of the
proposed amendment to the Company's Plan.
Stockholders are cordially invited to attend the meeting in person.
By Order of the Board of Directors
Ronald Hinds,
Secretary
April 30, 1998
IMPORTANT
YOUR PROXY IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO BE PERSONALLY PRESENT
AT THE ANNUAL MEETING, PLEASE BE SURE THAT THE ENCLOSED PROXY CARD IS PROPERLY
COMPLETED, DATED, SIGNED, AND RETURNED WITHOUT DELAY IN THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 3
RENAL CARE GROUP, INC.
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 4, 1998
This Proxy Statement is being furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Renal Care Group, Inc. (the
"Company" or "RCG") from holders of the Company's shares of common stock, $.01
par value (the "Common Stock") to be voted at the 1998 annual meeting of
stockholders of the Company (the "Annual Meeting") to be held at 9:00 a.m.
(Central Standard Time) on Thursday, June 4, 1998, at Vanderbilt Plaza, 2100
West End Avenue, Nashville, Tennessee, and at any adjournments or postponements
thereof. The mailing address of the principal executive offices of the Company
is 2100 West End Avenue, Suite 800, Nashville, Tennessee 37203.
Only holders of record of the 26,487,579 shares of Common Stock outstanding
as of the close of business on April 10, 1998 (the "Record Date"), are entitled
to notice of and to vote on each matter submitted to a vote at the Annual
Meeting and any adjournment(s) or postponement(s) thereof. Each share of Common
Stock is entitled to one vote on all matters presented at the Annual Meeting.
Stockholders do not have the right to cumulate their votes for directors. The
Notice of Annual Meeting, this Proxy Statement, and the proxy are being first
mailed to stockholders on or about April 29, 1998.
A majority of the outstanding shares of Common Stock entitled to vote at
the meeting, represented in person or by proxy, is required to constitute a
quorum. If a quorum is not present at the Annual Meeting, or if for any reason
the Company believes that additional time should be allowed for the solicitation
of proxies, the Company may adjourn or postpone the Annual Meeting with or
without a vote of the stockholders. If adjournment is proposed by the Company,
the person named on the enclosed proxy will vote such shares for which they have
voting authority in favor of adjournment.
All shares of Common Stock represented at the Annual Meeting by properly
executed proxies received prior to or at the Annual Meeting and not properly
revoked will be voted at the Annual Meeting in accordance with the instructions
indicated thereon. If no specification is made, the proxies will be voted in
favor of the matters listed on the proxy card. Directors must be elected by a
plurality of votes cast (in person or by proxy) by the holders of Common Stock
entitled to vote at the Annual Meeting if a quorum is present. All other matters
shall be determined based upon the vote of the majority of votes cast (in person
or by proxy) by the holders of Common Stock entitled to vote at the Annual
Meeting if a quorum is present.
Shares represented by proxies that are marked "withhold authority" or
"abstain" will be counted as shares present for purposes of establishing a
quorum. Shares represented by proxies, which include broker nonvotes, will also
be counted as shares present for purposes of establishing a quorum. A broker
nonvote occurs when a broker or nominee holding shares for a beneficial owner
votes on one proposal but does not vote on another proposal because the broker
or nominee does not have discretionary voting power and has not received
instructions from the beneficial owner. Neither withholding authority to vote
with respect to one or more nominees or a broker nonvote will have an effect on
the outcome of the election of directors. Abstentions will have the same effect
as a vote against approval of the amendment to the Plan. Broker nonvotes,
however, will have no effect on the approval of the amendment to the Plan.
All expenses of the Annual Meeting, including the cost of soliciting
proxies, will be paid by the Company. The Company may reimburse persons holding
shares in their names for others, or holding shares for others who have the
right to give voting instructions, such as brokers, banks, fiduciaries and
nominees, for such persons' reasonable expenses in forwarding the proxy
materials to their principals.
Any stockholder returning the accompanying proxy card may revoke such proxy
at any time prior to its exercise by (a) giving written notice to the Company of
such revocation, (b) voting in person at the meeting, or (c) executing and
delivering to the Company a proxy card bearing a later date.
<PAGE> 4
PROPOSALS FOR STOCKHOLDER ACTION
PROPOSAL 1
ELECTION OF CLASS II DIRECTORS
The Company's Board of Directors is composed of three classes, designated
Class I, Class II, and Class III. The term of the Class II Directors expires at
the Annual Meeting. The Board of Directors has designated Joseph C. Hutts and
Thomas A. Lowery, M.D. to continue as the two nominees for election as Class II
directors at the Annual Meeting. The term of the Class III directors is until
the 1999 annual meeting of the stockholders of the Company and the term of the
Class I Directors is until the 2000 annual meeting of the stockholders of the
Company. Each succeeding term of a director in Class I, Class II, or Class III
shall be for three years or until his or her successor is elected. Currently,
the members of the three classes are as follows: Class I -- Sam A. Brooks and
Stephen D. McMurray, M.D.; Class II -- Joseph C. Hutts and Thomas A. Lowery,
M.D.; and Class III -- Harry R. Jacobson, M.D., John D. Bower, M.D., W. Tom
Meredith, M.D., and Kenneth E. Johnson, Jr., M.D.
The Amended and Restated Certificate of Incorporation of the Company
presently provides that the Board of Directors shall consist of not less than
five or more than twelve members, and that the actual number of directors
comprising the Board of Directors shall be determined within such minimum and
maximum by resolutions adopted by an affirmative vote of at least two-thirds
( 2/3) of the total number of directors then in office. The Amended and Restated
Certificate of Incorporation of the Company further provides that any vacancy in
the Board created by an increase in the number of directors, death, resignation,
retirement, disqualification, removal from office, or otherwise, may be filled,
until the next election of directors by the stockholders, by the affirmative
vote of at least two-thirds ( 2/3) of the total number of directors then
remaining in office, though they may constitute less than a quorum of the Board.
Each Class II nominee has consented to be a candidate and to be so named in
this Proxy Statement and to serve, if elected. If any nominee becomes unable or
unwilling to serve, although not anticipated, the persons named as proxies will
have the discretionary authority to vote for a substitute. Directors will be
elected by a plurality of the votes cast by the shares of Common Stock
represented in person or by proxy at the Annual Meeting. Therefore, the two
nominees for election as Class II directors to the Board of Directors who
receive the greatest number of votes cast at the Annual Meeting will be elected
to the Board of Directors as Class II directors. The accompanying proxy, unless
otherwise specified, will be voted FOR Mr. Hutts and Dr. Lowery.
Information as to each nominee and as to directors continuing as Class I
directors and Class III directors follows:
CLASS II DIRECTORS -- NOMINEES FOR ELECTION AT THE ANNUAL MEETING -- TERM
EXPIRING AT THE 2001 ANNUAL MEETING
JOSEPH C. HUTTS
Age -- 56
Mr. Hutts has been a director of the Company since December 1995. He has
been Chairman of the Board, President and Chief Executive Officer of PhyCor,
Inc., an operator of multi-specialty medical clinics, since 1988. Mr. Hutts was
formerly with Hospital Corporation of America in various positions, the last of
which was President, HCA Health Plans. From 1986 to 1988, Mr. Hutts was Vice
Chairman and Chief Operating Officer of Equitable HCA Corporation d/b/a Equicor.
Mr. Hutts serves on the board of directors of Quorum Health Group, Inc.
THOMAS A. LOWERY, M.D.
Age -- 54
Dr. Lowery has been a director of the Company since January 1996. He is a
board-certified nephrologist trained at Baylor College of Medicine and the
University of Alabama, Birmingham. He has served on the Executive Committee of
Southwest Organ Bank and has been the Director of the Renal Transplant Program
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<PAGE> 5
of East Texas Medical Center in Tyler, Texas. In addition, he has been
practicing as a partner of Tyler Dialysis & Transplant Associates, P.A. since
1979. Dr. Lowery was also a founder of Tyler Nephrology Associates, P.A., one of
the companies included in the formation of the Company in February 1996.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
ABOVE NOMINEES AS CLASS II DIRECTORS.
CURRENT DIRECTORS WHOSE TERMS HAVE NOT EXPIRED AND WHO ARE THEREFORE NOT UP FOR
REELECTION:
CLASS III DIRECTORS -- TERM EXPIRING AT THE 1999 ANNUAL MEETING
HARRY R. JACOBSON, M.D.
Age -- 50
Dr. Jacobson was Chairman of the Board of Directors of the Company from
June 1995 to October 1997. He currently serves as Vice Chancellor for Health
Affairs at Vanderbilt University, a position he has held since October 1997. He
also currently serves as Professor of Medicine in the Division of Nephrology,
Department of Medicine, Vanderbilt University Medical Center, and Staff
Physician/Nephrologist at the Veterans Administration Hospital in Nashville,
positions he has held since 1985. Dr. Jacobson received a B.S. degree from the
University of Illinois and his M.D. from the University of Illinois Abraham
Lincoln School of Medicine. He completed his internal medicine training at Johns
Hopkins Hospital and his nephrology training at Southwestern Medical School in
Dallas, Texas.
JOHN D. BOWER, M.D.
Age -- 66
Dr. Bower has been a director of the Company since January 1996. He is a
board-certified nephrologist trained at the Medical College of Virginia and has
been practicing in Mississippi since 1972. He has been a Professor of Medicine
and Chief, Division of Nephrology at University of Mississippi Medical Center
since June 1976 and June 1990, respectively. In addition, he served as Chairman
of the Board and President of Medical Enterprises Ltd., a Mississippi
corporation ("MEL"), and served as Chief Executive Officer of MEL from December
1993 to January 1995. He also has served as Chairman of the Board and President
of Kidney Care, Inc., a Mississippi nonprofit corporation ("Kidney Care") since
August 1973. MEL and Kidney Care were related dialysis providers included in the
formation of the Company in February 1996.
KENNETH E. JOHNSON, JR., M.D.
Age -- 53
Dr. Johnson has been a director of the Company since September 1996. He is
a board-certified nephrologist trained at the University of Utah. In 1975, Dr.
Johnson was a founding partner of Arizona Nephrology Associates and RenalWest,
L.C. ("RenalWest"). RenalWest was acquired by the Company in September 1996. Dr.
Johnson has served as the director of the critical care units of two hospitals
and serves as chairman of several Departments of Medicine in the East Valley
area of Mesa, Arizona. Dr. Johnson is a member of the Medical Review Board of
the Regional End Stage Renal Disease Network.
W. TOM MEREDITH, M.D.
Age -- 62
Dr. Meredith has been a director of the Company since January 1996. He is a
board-certified nephrologist and has been practicing in Wichita, Kansas, since
1969. He has been Clinical Associated Professor, Department of Internal
Medicine, The University of Kansas School of Medicine, Wichita, since 1977. In
addition, he served as the President of Kansas Nephrology Association from
November 1979 until it was acquired in the formation of the Company in February
1996 and has been the President of Kansas Nephrology Physicians, P.A. since
August 1990.
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CLASS I DIRECTORS -- TERM EXPIRING AT THE 2000 ANNUAL MEETING
SAM A. BROOKS
Age -- 58
Mr. Brooks has been President and Chief Executive Officer of the Company
since June 1995, Chairman since October 1997, and served as Treasurer from June
1995 to November 1995. He also currently serves as President of MedCare
Investments, Inc., a health care investment company, and has held such position
since June 1991. Mr. Brooks is a director of Quorum Health Group, Inc., an
owner, operator and manager of acute care hospitals; Nationwide Health
Properties, Inc., a health care real estate investment trust; and PhyCor, Inc.,
an operator of multi-specialty medical clinics.
STEPHEN D. MCMURRAY, M.D.
Age -- 50
Dr. McMurray has been a director of the Company since January 1996. He is a
board-certified nephrologist trained at Indiana University Medical Center and
has been practicing nephrology in Fort Wayne, Indiana, since 1977. He has been
President of the Medical Staff at Lutheran Hospital in Fort Wayne, Indiana, and
has been affiliated with Indiana Dialysis Management, P.C. since 1991. Dr.
McMurray was also a founder of D.M.N. Professional Corporation, one of the
companies included in the formation of the Company in February 1996.
BOARD COMMITTEES, ATTENDANCE, AND COMPENSATION OF DIRECTORS
COMMITTEES
The Board of Directors has established three Committees, the Audit
Committee, the Compensation Committee, and the Nominating Committee, each of
which is briefly described below.
The Company's Audit Committee, composed solely of non-employee directors,
recommends the annual appointment of the Company's independent auditors, and, in
conjunction with such auditors, reviews the scope of audit and other assignments
and related fees, accounting principles used by the Company in financial
reporting and internal auditing procedures, and the adequacy of the Company's
internal control procedures. The Audit Committee currently consists of Mr.
Hutts, Dr. Johnson, Dr. Lowery, and Dr. Meredith.
The Company's Compensation Committee, composed solely of non-employee
directors, is responsible for establishing salaries, bonuses, and other
compensation for the Company's executive officers and administering any stock
option and other employee benefit plans of the Company. The Compensation
Committee currently consists of Mr. Hutts, Dr. McMurray, and Dr. Meredith.
The Company's Nominating Committee is responsible for considering
nominations of Directors of the Company's Board of Directors and currently
consists of Dr. Jacobson, Mr. Brooks and Dr. Bower. The Nominating Committee
will consider nominees recommended by stockholders provided that the names of
such persons are submitted no later than the date established for the submission
of stockholder proposals for action at the Company's next annual meeting of
stockholders.
MEETINGS
During 1997, the Board of Directors of the Company held four regularly
scheduled meetings and two special meetings. In addition, the Compensation
Committee met twice and the Audit Committee met once. Each director attended 75%
or more of the aggregate number of meetings held by the Board of Directors and
its committees on which he served.
COMPENSATION OF DIRECTORS
Employees of the Company who are members of the Board of Directors of the
Company do not receive any compensation for serving on the Company's Board of
Directors. Each non-employee member of the Board
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of Directors, other than members who serve as Medical Directors, receives a fee
of $2,000 for each meeting of the Board of Directors attended by such director,
and $1,000 for each committee meeting not attended on the same day as a meeting
of the Board of Directors. All directors of the Company, including members who
are employees, receive reimbursement of out-of-pocket expenses incurred in
connection with attending Board of Directors or committee meetings thereof.
In January 1996, the Company adopted the Renal Care Group, Inc. 1996 Stock
Option Plan for Outside Directors (the "Outside Director Plan") to provide for
grants of options to its non-employee directors. Prior to the Company's initial
public offering and adoption of the Outside Director Plan, (a) Mr. Hutts was
granted options to purchase an aggregate of 22,500 shares of Common Stock, of
which 15,000 are exercisable at a price of $5.00 per share and 7,500 are
exercisable at $12.00 per share, and (b) Dr. Jacobson was granted options to
purchase an aggregate of 112,500 shares of Common Stock, of which 37,500 are
exercisable at a price of $5.00 per share and 75,000 are exercisable at $12.00
per share.
The Outside Director Plan provides for automatic grants to Directors of the
Company who are (i) not employees of the Company, (ii) not the Chairman or Vice
Chairman of the Board of Directors of the Company, and (iii) not a party to, and
whose medical practices are not a party to, a then current effective medical
director agreement with the Company (each an "Eligible Director"). The Outside
Director Plan provides for an initial grant to each Eligible Director of 7,500
shares on the date such person first becomes a Director and subsequent annual
grants of options to purchase 3,750 shares of Common Stock following each annual
meeting. The annual grants are made on the day following each annual meeting of
stockholders beginning with the 1997 Annual Meeting. The Option Price for each
option granted under the Outside Director Plan is the "Fair Market Value," as
that term is defined in the Outside Director Plan, of the shares of Common Stock
subject to the option on the date the option is granted. Such options are
immediately exercisable and will have a term of ten years. Accordingly, on the
date after the Annual Meeting to which this Proxy Statement relates, Mr. Hutts
and Dr. Jacobson will each receive a grant of an option to purchase 3,750 shares
of Common Stock with an exercise price of the Fair Market Value on such date.
PROPOSAL 2
APPROVAL OF PROPOSED AMENDMENT TO THE
THIRD AMENDED AND RESTATED 1996 STOCK INCENTIVE PLAN
The Renal Care Group, Inc. 1996 Third Amended and Restated Stock Incentive
Plan (the "Plan") was adopted by the Board of Directors and approved by the then
sole stockholder of RCG effective January 15, 1996. On August 15, 1996 the Board
of Directors approved amendments to the Plan which became effective upon
approval by the stockholders of the Company at a special meeting held on
September 27, 1996. Amendments to the Plan were approved by the Board of
Directors on April 10, 1997 and became effective upon approval by the
stockholders of the Company at the annual meeting held on June 4, 1997. On
September 4, 1997, amendments to the Plan were approved by the Board of
Directors which amendments did not require approval of the stockholders of the
Company. Under the Plan, restricted stock awards or options to purchase (an
"Award") a total of 3,000,000 shares of Common Stock are reserved for grant to
eligible employees and consultants of the Company. The Board of Directors has
adopted resolutions approving and recommending to the stockholders for their
approval an amendment to the Plan which would increase the number of shares of
Common Stock reserved for issuance under the Plan from 3,000,000 to 4,000,000
shares. If approved by the stockholders, the proposed Amendment will be
effective as of the date of the Annual Meeting.
The following is a brief description of the material terms of the Plan.
Such description is qualified in its entirety by reference to the full text of
the Plan, a copy of which, in the form of the Fourth Amended and Restated 1996
Stock Incentive Plan reflecting the amendment described above, may be obtained,
free of charge, upon written request to the Office of Secretary, Renal Care
Group, Inc., 2100 West End Avenue, Suite 800, Nashville, Tennessee 37203.
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GENERAL
Eligible Participants. Awards may be granted under the Plan only to
individuals who are officers or other key employees (including employees who
also are directors or officers) of RCG or a subsidiary, or bona fide
consultants, as determined by the Compensation Committee (as defined below).
Certain restrictions apply to holders of ten percent or more of the Common
Stock. The number of eligible participants in the Plan as of March 31, 1998 was
approximately 242 persons.
Administration. The Plan is currently administered by a committee (the
"Committee") appointed by the Board of Directors from time to time and
consisting of at least two members of the Board, each of whom shall be both (i)
a "nonemployee director" as such term is defined in Rule 16b-3 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and (ii) an "outside
director" as that term is used in Section 162 of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations thereunder. In the absence of
an appointment of a Committee, the RCG Board of Directors shall serve as the
Committee.
Subject to the terms of the Plan, the Committee has the exclusive power,
authority, and discretion to (a) designate participants; (b) determine the type
or types of Awards to be granted to each participant; (c) determine the number
of Awards to be granted and number of shares of Common Stock to which an Award
will relate; (d) determine the terms and conditions of any Award granted under
the Plan, including but not limited to, the exercise price, any restrictions or
limitations on the Award, any schedule for lapse of forfeiture restrictions or
restrictions on the exercisability of an Award, and accelerations or waivers
thereof, based in each case on such considerations as the Committee in its sole
discretion determines; (e) determine whether, to what extent, and under what
circumstances an Award may be settled in, or the exercise price of an Award may
be paid in, cash, shares of Common Stock, or other property, or an Award may be
canceled, forfeited, or surrendered; (f) prescribe the form of each award
agreement, which need not be identical for each participant; (g) decide all
other matters that must be determined in connection with an Award; (h)
establish, adopt, or revise any rules and regulations as it may deem necessary
or advisable to administer the Plan; and (i) make all other decisions and
determinations that may be required under the Plan or as the Committee deems
necessary or advisable to administer the Plan.
Number of Shares Available. The maximum number of shares of Common Stock
for which Awards may be granted under the Plan currently is 3,000,000 and, if
the proposed Amendment is approved by the stockholders at the Annual Meeting,
will be increased to 4,000,000. To the extent that an Award is canceled,
terminates, expires, or lapses for any reason, any shares of stock subject to
the Award will again be available for the grant of Awards under the Plan. The
maximum number of shares of stock with respect to one or more Awards that may be
granted to any one participant in any one taxable year is 150,000, subject to
adjustment as set forth in the Plan. The number of shares of Common Stock
available under the Plan is subject to adjustment in the event of a stock split,
stock dividend, recapitalization, or other similar action. The shares of Common
Stock distributed pursuant to an Award may consist, in whole or in part, of
authorized and unissued stock, treasury stock, or stock purchased on the open
market.
Amendment and Termination. With the approval of the Board, at any time and
from time to time, the Committee may terminate, amend, or modify the Plan
without stockholder approval; provided, however, that the Committee may
condition any amendment on the approval of stockholders if such approval is
necessary or deemed advisable with respect to tax, securities, or other
applicable laws, policies, or regulations. No termination, amendment, or
modification of the Plan shall adversely affect any Award previously granted
under the Plan, without the written consent of the participant.
STOCK OPTIONS
Stock Options. The Committee is authorized to grant options, which may be
incentive stock options or nonqualified stock options, to participants. All
options will be evidenced by a written option agreement between RCG and the
participant, which will include such provisions as may be specified by the
Committee. The terms of any incentive stock option must meet the requirements of
Sections 421, 422, and 424 of the Code.
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Option Price. The exercise price of each incentive stock option granted
under the Plan will not be less than 100% of the fair market value of Common
Stock on the date the option is granted. The Committee may elect to grant
nonqualified stock options with an exercise price of less than the fair market
value of the Common Stock on the date such option is granted. The closing price
for RCG's Common Stock on the Nasdaq National Market was $38.50 per share as of
April 9, 1998.
Duration of Options. The Committee may provide in the option agreement for
the termination of all or any portion of the options under certain
circumstances, including, without limitation, the termination of a participant's
employment, provided that the Committee may distinguish among various causes of
termination as the Committee deems appropriate. In addition, the Committee may
provide that if a Participant's employment is terminated: (i) such participant's
option(s) may be exercised for specified periods thereafter, but no later than
the expiration date of such option; (ii) to the extent not fully exercisable on
the date of termination of employment, such option may continue to become
exercisable within the term of the option; or (iii) some or all of the options
not fully exercisable on the date of termination of employment may be deemed
fully exercisable.
Exercise. Each option may be exercised at such time or times as may be
determined by the Board or the Committee. The Committee also shall determine the
performance or other conditions, if any, that must be satisfied before all or
part of an option any be exercised.
Payment. The Committee shall determine the methods by which the exercise
price of an option may be paid, the form of payment, including, without
limitation, cash, shares of Common Stock, or other property (including "cashless
exercise" arrangements), and the methods by which shares of Common Stock shall
be delivered or deemed to be delivered to participants. The Committee may, in
the exercise of its discretion, allow a participant to pay the exercise price of
an option by directing RCG to withhold from the shares of Common Stock that
would otherwise be issued upon exercise of the option that number of shares of
Common Stock having fair market value on the exercise date equal to the exercise
price, all as determined pursuant to rules and procedures established by the
Committee.
Restricted Stock Awards. The Committee may make awards of restricted stock
to participants under the Plan, which will be subject to such restrictions on
transferability and other restrictions as the Committee may impose (including,
without limitation, limitations on the right to vote such restricted stock or
the right to receive dividends, if any, on the restricted stock). The
restrictions may lapse separately or in combination at such time, under such
circumstances, in such installments, upon the satisfaction of performance goals
or otherwise as the Committee determines at the time of the grant or thereafter.
Except as may be designated by the Committee, upon termination of
employment during an applicable restriction period or upon failure to satisfy
performance goals, any restricted stock that is subject to remaining
restrictions shall be forfeited and reacquired by the Company, provided the
Committee may provide for such restrictions or forfeiture conditions to be
waived in whole or in part in the event of a termination resulting from
specified causes, and the Committee may, in other cases, waive in whole or in
part restrictions or forfeiture conditions relating to restricted stock.
GENERAL PROVISIONS
Restrictions on Transfer. No right or interest of a participant in any
Award may be pledged, encumbered, or hypothecated to or in favor of, or be
subjected to any lien, obligation, or liability of such participant to, any
party other than RCG or a subsidiary. No Award is assignable or transferable by
a participant other than by will or the laws of descent and distribution or,
except in the case of an Incentive Stock Option, pursuant to a qualified
domestic relations order. However, a participant may, in the manner determined
by the Committee, designate a beneficiary to exercise the rights of the
participant upon the participant's death. Any Incentive Stock Option shall be
exercisable during the lifetime of the person to whom the option is granted only
by such person.
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Adjustments. If any change is made in the stock subject to the Plan or
subject to any Award granted thereunder (through recapitalization,
reclassification, stock split, combination of shares, stock dividend, or
transaction having similar effect), the Plan and outstanding options will be
appropriately adjusted.
Acceleration Upon Change in Control. In the event of a Change in Control
(as defined in the Plan) followed by a participant's termination of employment
(other than by reason of participant's death, disability, resignation without
good reason or termination for cause) within twelve months thereafter, then all
of such participant's unexercised Awards (whether vested or not vested) shall
automatically vest and become unforfeitable and shall be cashed out at the
greater of (i) the highest closing price per share paid for the purchase of
Common Stock in a national securities market during the 90 day period ending on
the date of the Change in Control (the "Change in Control Price") or (ii) the
fair market value of the Common Stock on the date of such termination. Upon a
Change in Control that results directly or indirectly in the Common Stock (or
the stock of any successor received in exchange therefor) ceasing to be publicly
traded in a national securities market, all unexercised Awards (whether vested
or not vested) shall automatically vest and become unforfeitable and shall be
cashed out at the Change in Control Price. Upon a Change in Control, no action
may be taken that would adversely affect the rights of any participant or the
operation of the Plan with respect to any Award to which a participant may be
entitled on or prior to the date, or as a result, of the Change in Control.
Under certain conditions, the Board of Directors may determine that events
otherwise constituting a Change in Control shall not be so considered.
Modification and Renewal. The Committee may modify, renew, or accept the
surrender of outstanding Awards issued under the Plan (or surrender of similar
grants issued under any other Plan of RCG or a subsidiary), including the
acceleration or waiver of any vesting or other restrictions or limitations, or
the conversion of such Awards (with appropriate adjustments) to be applicable to
the securities of any successor corporation to RCG, and the Committee may
authorize new Awards pursuant to the Plan in substitution for any outstanding
Awards. Any substituted, modified, or converted Awards may bear such different
or additional terms and conditions as the Committee shall deem appropriate
within the limitations of the Plan. The determination of the Committee as to the
terms of any of the foregoing may be made without regard to whether a Change in
Control has or has not occurred (or whether the Board of Directors has
determined that any event shall not be considered to be a Change in Control) and
shall be conclusive and binding notwithstanding the provisions of the respective
agreements regarding exercisability. No modification of an Award shall, without
the consent of the participant, adversely affect the rights or obligations of
such participant with respect to such Award.
FEDERAL INCOME TAX CONSEQUENCES
Non-qualified Stock Options. Under present federal income tax regulations,
there will be no federal income tax consequences to either RCG or the
participant upon the grant of a non-discounted non-qualified option. However,
the participant will realize ordinary income on the exercise of a non-qualified
option in an amount equal to the excess of the fair market value of the Common
Stock acquired upon the exercise of such option over the exercise price, and RCG
will receive a corresponding deduction. The gain, if any, realized upon the
subsequent disposition by the participant of the Common Stock will constitute
either short-term or long-term capital gain, depending on the participant's
holding period. If a non-qualified option is granted with an exercise price
substantially less than the fair market value of the Common Stock on the date of
the grant, it is possible that the Internal Revenue Service could take the
position that the participant will realize ordinary income on the date of grant
in an amount equal to the excess of the fair market value of the stock on the
date of grant over the exercise price. If so, RCG should receive a corresponding
deduction.
Incentive Stock Options. Under present federal income tax regulations,
there will be no federal income tax consequences to either RCG or the
participant upon the grant of an incentive stock option or the exercise thereof
by the participant. If the participant holds the shares for the greater of two
years after the date the option was granted or one year after the acquisition of
such shares (the "required holding period"), the difference between the
aggregate option price and the amount realized upon disposition of the shares
will constitute a long-term capital gain or loss, and RCG will not be entitled
to a federal income tax deduction. If the shares are disposed of in a sale,
exchange, or other "disqualifying disposition" during the required holding
8
<PAGE> 11
period, the grantee will realize taxable ordinary income in an amount equal to
the excess of the fair market value of the shares purchased at the time of
exercise over the aggregate option price and RCG will be entitled to a federal
income tax deduction equal to such amount.
Restricted Stock. Under present federal income tax regulations, and unless
the participant makes an election to accelerate recognition of the income to the
date of grant, a participant receiving a restricted stock Award will not
recognize income, and the Company will not be allowed a tax deduction, at the
time the Award is granted. When the restrictions lapse or applicable performance
goals are obtained, the participant will recognize ordinary income equal to the
fair market value of the Common Stock underlying the Award, and the Company will
be entitled to a corresponding tax deduction at that time.
BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
As of March 31, 1998, Awards had been granted under the Plan to the persons
and groups shown in the table below. The Committee has not yet made any
determination as to which eligible participants will be granted Awards under the
Plan in the future. Consequently, it is not presently possible to determine,
with respect to the persons and groups shown in the table below, the benefits or
amounts that will be received in the future by such person or groups pursuant to
the Plan.
THIRD AMENDED AND RESTATED 1996 STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
STOCK OPTION GRANTS(1) RESTRICTED STOCK AWARDS(2)
------------------------- ---------------------------
DOLLAR VALUE NUMBER OF
DOLLAR VALUE NUMBER OF OF SHARES SHARES
NAME AND POSITION OF OPTIONS OPTIONS AWARDED AWARDED
----------------- ------------ --------- ------------- ----------
<S> <C> <C> <C> <C>
Sam A. Brooks............................... (3) 150,000 (4) 8,700
Chairman of the Board, Chief Executive
Officer and President
Gary A. Brukardt............................ (3) 225,000 (4) 4,350
Executive Vice President and Chief
Operating Officer
Ronald Hinds................................ (3) 135,000 (4) 7,000
Executive Vice President, Chief Financial
Officer, Treasurer and Secretary
Raymond Hakim, M.D., Ph.D................... 0 (4) 4,350
Executive Vice President, Chief Medical
Officer
All Executive Officers as a Group........... (3) 510,000 (4) 24,400
All Non-Executive Directors as a Group...... (3) 105,000 (4) 24,400
All Non-Executive Officer Employees as a
Group..................................... (3) 1,956,247 (4) 0
</TABLE>
- ---------------
(1) The options granted to such persons named herein became exercisable as to
20% of the shares as of the respective grant dates, and will become
exercisable with respect to an additional 20% of the shares on each of the
first four anniversaries of the date of grant. The exercise price per share
for options granted to executive officers of the Company ranges from $5.00
to $32.625 per share.
(2) Restrictions with respect to the shares of restricted stock awarded to the
persons named herein will lapse on December 23, 2002.
(3) The dollar value of the above options is dependent on the difference between
the exercise price and the fair market value of the underlying shares on the
date of exercise.
(4) The dollar value of the above restricted stock awards will depend on the
fair market value of the shares on the date the restrictions with respect
thereto lapse.
REASONS FOR AMENDMENT OF PLAN
Management believes that the grant of Awards under the Plan is necessary to
attract, retain, and motivate qualified employees and consultants, including but
not limited to individuals who have been or will be
9
<PAGE> 12
employed by RCG or engaged by RCG as Medical Directors in connection with
acquisitions or joint ventures. As of the Record Date, the Company had granted
Awards covering 2,620,047 of the 3,000,000 shares currently authorized and
reserved for issuance pursuant to the Plan.
Accordingly, the proposed amendment to increase the shares of Common Stock
reserved for issuance is necessary to allow the Company to meet its foreseeable
future needs for Awards under the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO
THE PLAN
10
<PAGE> 13
SECURITY OWNERSHIP OF DIRECTORS,
OFFICERS AND PRINCIPAL STOCKHOLDERS
The following table sets forth the number of shares of Common Stock held
beneficially, directly or indirectly, as of the Record Date by (a) each person
known by the Company to be the beneficial owner of more than five percent of the
Common Stock, (b) each director of the Company, (c) the Company's Chief
Executive Officer and the Company's four most highly compensated executive
officers other than the Chief Executive Officer whose total salary and bonus for
1997 exceeded $100,000 (collectively, the "Named Executive Officers"), and (d)
all directors and officers of the Company as a group, together with the
percentage of the outstanding shares of Common Stock which such ownership
represents. In July 1997, the Company authorized a 3-for-2 stock split on its
Common Stock, effective July 25, 1997. All references to the Common Stock are on
a post-split basis.
COMMON STOCK
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
------------------------
NAME AND ADDRESS NUMBER PERCENT
- ---------------- ----------- ---------
<S> <C> <C>
Laidlaw Inc.(2)............................................. 2,135,730 8.1
T. Rowe Price(3)............................................ 1,759,149 6.6
Franklin Resources, Inc.(4)................................. 1,172,940 4.4
Sam A. Brooks(5)............................................ 573,267 2.2
Gary A. Brukardt(6)......................................... 41,117 *
Raymond Hakim, M.D., Ph.D.(7)............................... 96,756 *
Ronald Hinds(8)............................................. 67,163 *
John D. Bower(9)............................................ 1,136,536 4.3
Joseph C. Hutts(10)......................................... 13,500 *
Harry R. Jacobson, M.D.(11)................................. 270,645 1.0
Kenneth E. Johnson, Jr., M.D................................ 375,462 1.4
Thomas A. Lowery, M.D.(12).................................. 229,386 *
Stephen D. McMurray, M.D.(13)............................... 134,942 *
W. Tom Meredith, M.D........................................ 268,503 1.0
All executive officers and directors as a group (11
persons)(14).............................................. 3,207,277 12.1
</TABLE>
- ---------------
* Less than 1% of the outstanding Common Stock.
(1) Information relating to the beneficial ownership of Common Stock by the
above individuals is based upon information furnished by each such
individual using "beneficial ownership" concepts set forth in rules
promulgated by the Securities and Exchange Commission (the "Commission")
under Section 13(d) of the Exchange Act. Beneficial ownership includes
shares as to which such person or group, directly or indirectly, through
any contract, management, understanding, relationship, or otherwise has or
shares voting power and/or investment power as those terms are defined in
Rule 13d-3(a) of the Exchange Act. Except as indicated in other footnotes
to this table, the above individuals possess sole voting and investment
power with respect to all shares set forth by their names, except to the
extent such power is shared by a spouse under applicable law. Any security
that any person named above has the right to acquire within 60 days is
deemed to be outstanding for purposes of calculating the ownership
percentage by the particular person or group, but are not deemed
outstanding for any other purpose.
(2) The address of Laidlaw Inc. ("Laidlaw") is 3221 North Service Road,
Burlington, Ontario, Canada L7R 3Y8. Laidlaw has sole voting power as to
all of the shares. Information is based solely on the Schedule 13D filed by
Laidlaw with the Commission in December 1997.
(3) The address of T. Rowe Price Associates, Inc. is 100 East Pratt Street,
Baltimore Maryland 21202. Includes shares owned by various individual and
institutional investors, including T. Rowe Price New Horizons Fund (which
owns 1,250,000 shares), which T. Rowe Price Associates, Inc. ("Price
Associates") serves as investment adviser with power to direct investments
and/or sole power to vote
11
<PAGE> 14
the shares. For purposes of the reporting requirements of the Securities
Exchange Act of 1934, Price Associates is deemed to be a beneficial owner
of such shares; however, Price Associates expressly disclaims that it is,
in fact the beneficial owner of such securities." Such information is based
solely on the Schedule 13G filed by Price Associates with the Commission in
February 1998.
(4) The address of Franklin Resources, Inc. is 777 Mariners Island Boulevard,
San Mateo, California 94403. Includes shares owned by one or more open or
closed-end investment companies or other managed accounts which are advised
by direct and indirect investment advisory subsidiaries of Franklin
Resources, Inc. ("FRI"), including Franklin Advisers, Inc., which has sole
voting power as to 1,168,500 shares. Such information is based solely on
the Schedule 13G filed by FRI with the Commission in February 1998.
(5) Includes 135,000 shares of Common Stock which may be acquired upon exercise
of immediately exercisable warrants and 435,000 shares of Common Stock
which may be acquired upon exercise of options exercisable within 60 days.
Does not include 90,000 shares of Common Stock that are not exercisable
within 60 days.
(6) Includes 40,000 shares of Common Stock which may be acquired upon exercise
of options. Does not include 135,000 shares of Common Stock that are not
exercisable within 60 days.
(7) Includes 90,000 shares of Common Stock which may be acquired upon exercise
of options exercisable within 60 days. Does not include 60,000 shares of
Common Stock which may be acquired upon exercise of options that will not
be exercisable within 60 days.
(8) Includes 62,500 shares of Common Stock which may be acquired upon exercise
of options exercisable within 60 days. Does not include 109,500 shares of
Common Stock which may be acquired upon exercise of options that will not
be exercisable within 60 days.
(9) Includes 31,500 shares of Common Stock which may be acquired upon exercise
of options that will be exercisable within 60 days. Does not include 24,750
shares of Common Stock which may be acquired upon exercise of options that
will not be exercisable within 60 days.
(10) Includes 13,500 shares of Common Stock which may be acquired upon exercise
of options exercisable within 60 days. Does not include 9,000 shares of
Common Stock which may be acquired upon exercise of options that will not
be exercisable within 60 days.
(11) Includes 105,000 shares of Common Stock which may be acquired upon exercise
of immediately exercisable warrants. Includes 67,500 Shares of Common Stock
which may be acquired upon exercise of options exercisable within 60 days.
Does not include 45,000 shares of Common Stock which may be acquired upon
the exercise of options not exercisable within 60 days.
(12) Includes 18,000 shares of Common Stock which may be acquired upon exercise
of options exercisable within 60 days. Does not include 12,000 shares of
Common Stock which may be acquired upon exercise of options that will not
be exercisable within 60 days.
(13) Does not include 12,000 shares of Common Stock which may be acquired upon
exercise of options that will not be exercisable within 60 days.
(14) Includes 998,000 shares of Common Stock which may be acquired upon exercise
of options and warrants.
12
<PAGE> 15
MANAGEMENT
The Named Executive Officers of the Company are as follows. Biographical
information concerning those executive officers of the Company who are also
directors of the Company is set forth under Proposal 1 in this Proxy Statement.
Biographical information concerning all other executive officers of the Company
is set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Sam A. Brooks............................. 58 Chairman of the Board, President, Chief Executive
Officer and Director
Gary A. Brukardt.......................... 52 Executive Vice President, Chief Operating Officer
Ronald Hinds.............................. 50 Executive Vice President, Chief Financial Officer,
Treasurer and Secretary
Raymond Hakim, M.D., Ph.D. ............... 52 Executive Vice President and Chief Medical Officer
</TABLE>
Mr. Brukardt has been Executive Vice President and Chief Operating Officer
of the Company since August 1996. From 1991 to August 1996, Mr. Brukardt served
as Executive Vice President of Baptist Health Care Affiliates in Nashville,
Tennessee, where he was responsible for the development and operation of
physician practice management organizations and the management of four hospitals
and 22 outpatient facilities. In addition, from 1991 to August 1996, Mr.
Brukardt served as Chairman and President of HealthNet Management, Inc., a
managed care company.
Mr. Hinds has been an Executive Vice President and Chief Financial Officer
of the Company since August 1995. He was an audit partner with Deloitte & Touche
LLP from 1981 to 1994 where he managed the health care practice of the Nashville
office. During his tenure at Deloitte & Touche, Mr. Hinds also served as a
Regional Health Care Partner for the firm. Mr. Hinds received his B.A. in
accounting from Middle Tennessee State University.
Dr. Hakim has been Executive Vice President and Chief Medical Officer of
the Company since June 1995. He has published extensively on the adequacy of
dialysis and the clinical aspects of bio-compatibility. From 1992 to 1995, Dr.
Hakim served as Medical Director for the Vanderbilt Dialysis Program. He served
as a member of the Medical Board of Vanderbilt in 1992, as Chairman of the
Ambulatory Services Committee of Vanderbilt in 1990 and 1991, and as Director,
Clinical Nephrology of Vanderbilt from 1987 to 1991. He received his M.S. from
Rensselaer Polytechnic Institute, his Ph.D. from Massachusetts Institute of
Technology and his M.D. from McGill University. Dr. Hakim performed his
residency at Royal Victoria Hospital and his renal fellowship at Brigham and
Women's Hospital.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with certain of its
principal executive officers, including Messrs. Brooks, Hinds, Brukardt, and Dr.
Hakim, and certain other key personnel. Each Named Executive Officers'
employment agreement contains restrictive covenants prohibiting such officer
from competing with the Company for a period of one year after the end of the
employment term. The terms of the employment agreements commenced on January 15,
1998 and will continue for a term of three years and successive one year renewal
terms thereafter.
The annual salaries of the Named Executive Officers as set forth in the
employment agreements are $300,000, $250,000, $225,000, and $200,000 for Messrs.
Brooks, Brukardt, Hinds, and Dr. Hakim, respectively. Each Named Executive
Officer is eligible under his employment agreement for bonuses at the sole
discretion of the Company.
The employment agreements of Messrs. Brooks, Brukardt, and Hinds, also
provide for severance for each such Named Executive Officer of (i) his salary
(plus prior year bonus in the case of Mr. Brooks) for 12 months if such officer
is terminated without cause, (ii) his salary for one month if such officer is
terminated for cause, or (iii) his salary (plus prior year bonus) for 36 months
if such officer is terminated within 12 months of certain changes in control of
the Company either (A) without cause, or (B) by resignation of the officer as a
result of declining to accept reassignment to a job that is not the equivalent
of his then current
13
<PAGE> 16
position. Dr. Hakim's employment agreement contains similar severance provisions
that become operative if he enters into a non-competition agreement. If any of
the above officers receives severance that would result in the imposition of
excise tax under Section 4999 of the Code, he will be entitled to the above
amount plus a gross-up payment, if necessary, to reimburse him for any such
excise tax plus all federal, state, and local income and excise taxes imposed on
such gross-up payment. In addition, following a change in control of the
Company, if any of the above officers resigns for any reason or is terminated
without cause, the non-competition covenants set forth in his employment
agreement will become null and void.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee are Joseph C. Hutts,
Stephen D. McMurray, M.D., and W. Tom Meredith, M.D. Mr. Brooks, the Chairman of
the Board, Chief Executive Officer, President, and a Director of the Company, is
a member of the board of directors of PhyCor, Inc., of which Mr. Hutts is the
Chairman of the Board, President, and Chief Executive Officer.
Dr. McMurray is a member of Indiana Dialysis Management, P.C., a practice
group currently consisting of five nephrologists. The Company entered into a
Medical Director agreement dated February 12, 1996 with such practice group that
has a term of seven years with successive renewal terms of three years each and
provides for medical director fees of $228,000 in year one, $277,000 in year
two, and $326,000 in year three and each year thereafter in effect.
The Company entered into an Independent Contractor Agreement with Dr.
McMurray, dated November 20,1997, pursuant to which Dr. McMurray will receive
$10,000 per month in connection with services to be provided to the Company. Dr.
McMurray received an award of 8,700 shares of restricted stock subject to
restrictions and other terms and conditions set forth in that certain Restricted
Stock Award Agreement effective December 23, 1997.
Dr. Meredith is a member of Kansas Nephrology Physicians, P.A., a practice
group currently consisting of four nephrologists. The Company entered into a
Medical Director agreement dated February 12, 1996 with such practice group that
has a term of seven years with successive renewal terms of three years each and
provides for medical director fees of $245,000 in year one, $289,000 in year
two, and $350,000 in year three and each year thereafter in effect.
Dr. Meredith owns a one-third interest in a partnership that subleases to
the Company approximately 4,100 square feet for its Dodge City, Kansas center.
The sublease, dated February 12, 1996, has a term of five years, with five
additional options to renew for periods of five years. The sublease is a double
net sublease with a base rent payment of approximately $3,300 per month,
adjusted at the commencement of each extended term by a factor based on the
consumer price index.
14
<PAGE> 17
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual salaries paid to the Company's
Chief Executive Officer and the Company's Named Executive Officers for the
fiscal years ended December 31, 1995, 1996, and 1997.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-----------------------
SECURITIES
ANNUAL COMPENSATION RESTRICTED UNDERLYING
------------------- STOCK OPTIONS/
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(1) SARS
- --------------------------- ---- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Sam A. Brooks............................................ 1997 $300,000 $225,000 $125,000 150,000
Chairman of the Board and 1996 250,000 287,500 -- --
President 1995 -- -- -- 375,000
Gary A. Brukardt......................................... 1997 250,000 125,000 $ 62,500 75,000
Executive Vice President, 1996 220,000 35,585 -- 150,000
Chief Operating Officer 1995 -- -- -- --
Ronald Hinds............................................. 1997 225,000 112,500 $100,000 97,500
Executive Vice President, 1996 200,000 105,000 -- 37,500
Chief Financial Officer, 1995 -- -- -- 90,000
Treasurer and Secretary
Raymond Hakim, M.D., Ph.D. .............................. 1997 200,000 80,000 $ 62,500 --
Executive Vice President and 1996 200,000 53,552 -- --
Chief Medical Officer 1995 -- -- -- 150,000
</TABLE>
- ---------------
(1) Messrs. Brooks, Brukardt, Hinds, and Hakim were granted restricted stock
awards of 8,700, 4,350, 7,000, and 4,350 shares respectively, on December
23, 1997 and the values in the above table are based on a closing price of
$26.125 on such date. The awards contain restrictions that lapse on December
23, 2002.
OPTION GRANTS IN 1997
The following table is a summary of all stock options granted during the
year ended December 31, 1997. Individual grants are listed separately for each
Named Executive Officer. In addition, this table shows the potential gain that
could be realized if the fair market value of the Common Stock was to appreciate
at either 5% or 10% annual rate over the period of the option term.
<TABLE>
<CAPTION>
% OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED ANNUAL
NUMBER OF OPTIONS RATES OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OR OPTION TERM(1)
OPTIONS IN FISCAL BASE PRICE EXPIRATION -----------------------
NAME GRANTED(2) YEAR ($/SHARE) DATE 5% 10%
---- ---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sam A. Brooks................... 150,000 11.6 $20.00 4/30/07 $1,886,683 $4,781,277
Gary A. Brukardt................ 75,000 5.8 $20.00 4/30/07 943,341 2,390,613
Ronald Hinds.................... 97,500 7.5 $20.00 4/30/07 1,226,344 3,107,797
Raymond Hakim, M.D., Ph.D. ..... 0 0.0 N/A N/A N/A N/A
</TABLE>
- ---------------
(1) The potential realizable value through the expiration date of the options
has been determined on the basis of the market price per share at the time
of grant compounded annually over the term of the option, net of the
exercise price. These values have been determined based upon assumed rates
of appreciation mandated by the Securities and Exchange Commission (the
"Commission") and are not intended to forecast the possible future
appreciation, if any, of the price or value of the Common Stock.
(2) Options become exercisable as to 20% of the shares as of the grant date, and
an additional 20% of the shares will vest on each of the first four
anniversaries of April 30, 1997.
15
<PAGE> 18
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END VALUES
Set forth below is information with respect to exercises of options by the
Named Executive Officers during 1997 and information with respect to unexercised
options held by the Named Executive Officers as of December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES HELD AT DECEMBER 31, 1997 AT DECEMBER 31, 1997(2)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sam A. Brooks................... 0 0 405,000 120,000 $10,485,000 $1,440,000
Gary A. Brukardt................ 20,000 298,400 55,000 150,000 686,680 1,860,030
Ronald Hinds.................... 23,000 655,500 73,000 129,000 1,521,000 2,208,000
Raymond Hakim, M.D., Ph.D. ..... 0 0 90,000 60,000 2,340,000 1,620,000
</TABLE>
- ---------------
(1) These amounts represent the market value of the underlying Common Stock on
the date of exercise, less the applicable exercise price.
(2) The market value of the Common Stock was $32.00 per share as of December 31,
1997 (the last trading day in 1997) based on the closing price per share on
Nasdaq stock market.
REPORTS OF BENEFICIAL OWNERSHIP
UNDER SECTION 16(A) OF THE EXCHANGE ACT
Under the securities laws of the United States, the Company's directors,
executive officers and any person holding more than ten percent of the Common
Stock are required to report their ownership of the Common Stock and any changes
in that ownership to the Securities and Exchange Commission (the "Commission")
and the Nasdaq National Market System ("Nasdaq"). These persons also are
required by SEC regulations to furnish the Company with copies of these reports.
Specific due dates for these reports have been established and the Company is
required to report in this Proxy Statement any failure to file by these dates in
1997. Based solely on a review of the reports furnished to the Company or
written representations from the Company's directors, officers, and ten percent
beneficial owners, all reporting requirements were satisfied, with the exception
of a Form 4 that was filed late by Kenneth E. Johnson, Jr., M.D. in connection
with the sale of 66,750 shares of Common Stock.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
This report is submitted by the Company's Compensation Committee at the
direction of the Board of Directors. This report provides certain data and
information regarding the compensation and benefits provided to the Company's
Chief Executive Officer and other executive officers. The Compensation Committee
of the Board of Directors is responsible for all decisions regarding
compensation for the Company's executive officers. The Compensation Committee is
composed of three non-employee directors. Because the Compensation Committee
believes that each executive officer has the potential to affect the short-term
and long-term profitability of the Company, the Committee places considerable
importance on the task of creating and implementing the Company's executive
compensation program.
The Company's executive compensation program is focused on stockholder
value, the overall performance of the Company, success of the Company as
affected by the executive's performance, and the individual performance of the
particular executive.
COMPENSATION PHILOSOPHY
The Compensation Committee's philosophy is to integrate the compensation of
the Company's executive officers with corporate performance. The Committee's
objectives are to measure executive performance
16
<PAGE> 19
against short-term and long-term goals, reward performance, recognize individual
initiative and achievements, assist the Company in attracting, motivating, and
retaining qualified executives, and align the incentives of management with the
interests of stockholders. The compensation policies and programs utilized by
the Compensation Committee and endorsed by the Board of Directors generally
consists of the following:
- recommend executive officer total compensation in relation to Company
performance;
- align compensation amounts with comparable levels paid to executive
officers of companies comparable in size and performance to the Company;
and
- provide long-term incentive compensation in the form of stock option and
restricted stock awards and cash bonuses based upon a percentage of
annual salary to motivate and retain high quality executive officers.
The compensation program of the Company currently consists of base salary,
annual incentive compensation in the form of cash bonuses, restricted stock
awards, and options. In 1997, the Company's executive compensation was reviewed
by the Compensation Committee and the Board of Directors relative to executive
compensation of peer groups. Because the Company's compensation plan involves
incentives contingent upon the Company's performance and individual performance,
an executive officer's actual compensation level in any particular year may be
above or below that of an officer of competitors of the Company. The
Compensation Committee will review each element of executive compensation on an
annual basis.
The 1997 compensation package for the executive officers included salary
and cash bonuses as well as restricted stock awards and stock options. The key
components of the Company's executive compensation plan are described below.
BASE SALARY
The Compensation Committee, along with the CEO of the Company, reviews and
approves an annual salary plan for the Company's executive officers. The salary
plan is developed by the Company's CEO. Many subjective factors are included in
determining base salaries such as the responsibilities born by the executive
officer, the scope of the position, length of service with the Company,
corporate and individual performance, and the salaries paid by competitive
companies to officers in similar positions. While these subjective factors are
then integrated with other objective factors, including the Company's net
income, earnings per share, return on equity, and growth, the overall assessment
is primarily a subjective one, intended to reflect the level of responsibility
and individual performance of the particular executive officer.
BONUSES
The Compensation Committee is of the view that a significant portion of the
total cash compensation for executive officers should be subject to the
attainment by the Company of specific performance criteria, including earnings.
Executive officers of the Company receive a cash bonus based on a percentage of
annual base salary, in the event the Company meets an annual performance target.
This means that a significant part of the compensation package is at risk.
Participation in the cash bonus plan is limited to a select group of management
who have a material impact on Company performance. The participants are selected
by the Compensation Committee and include the executive officers, other members
of senior management, and regional chief operating officers.
LONG-TERM COMPONENT -- STOCK INCENTIVE PLANS
To date, the Company has relied primarily upon stock option and restricted
stock awards to provide long-term incentives for executives. The Compensation
Committee continues to believe that stock options and restricted stock awards
have been and remain an excellent vehicle for providing financial incentives for
management. The Company's Third Amended and Restated 1996 Stock Incentive Plan
(the "Plan") authorizes the issuance of stock options and restricted stock
awards to officers, key employees, and consultants of the Company. Subject to
general limits prescribed by the Plan, the Compensation Committee has the
authority to determine the individuals to whom stock options and restricted
stock awards are awarded, the
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<PAGE> 20
terms of the options and restricted stock awards, and the number of shares
subject to each option or restricted stock award. The size of any particular
stock option or restricted stock award is based upon position and the individual
performance during the related evaluation period. With respect to stock options,
because the option exercise price is the price of stock on the date of grant and
the options generally carry a ten year life, employees benefit only if the value
of the Company's Common Stock increases. Thus, employees with stock options are
rewarded for their efforts to improve long-term stock market performance. In
this way, the financial interests of management are aligned with those of the
Company's stockholders, and it is for this reason that the Company uses stock
options as its predominate long-term incentive program.
Executive officers of the Company may also participate in the Company's
Employee Stock Purchase Plan (the "Stock Purchase Plan"). Executive officers
participate in the Stock Purchase Plan on the same terms as non-executive
employees who meet the applicable eligibility criteria, subject to any legal
limitations on the amounts that may be contributed or the benefits that may be
payable under the Stock Purchase Plan. All contributions to the Stock Purchase
Plan are made or invested in the Company's Common Stock. These features are
intended to align further the employees' and stockholders' long-term financial
interests.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee's basis for compensation of the CEO is derived
from the same considerations addressed above. Mr. Brooks participates in the
same executive compensation plans available to the other executive officers. In
1997, the Board of Directors determined that the salary of Mr. Brooks, the
Company's Chief Executive Officer, would be $300,000 and determined to grant
options for the purchase of 150,000 shares of Common Stock and 8,700 shares of
restricted stock. The compensation levels established for Mr. Brooks were in
response to the Committee's and the Board's assessments of the Company's
performance and accomplishments in 1997 as well as Mr. Brooks' position in the
Company and the nature of his responsibilities. The Committee considered Mr.
Brooks' performance in terms of the Company's success in meeting its performance
targets, from both an operational and a financial standpoint, and in executing
its strategic plan. The Committee also considered the Company's performance
relative to its peers and competitors in the industry in evaluating Mr. Brooks'
compensation.
FEDERAL INCOME TAX DEDUCTIBILITY LIMITATIONS
The Compensation Committee intends to use its best efforts to structure
future compensation so that executive compensation paid by the Company is fully
deductible in accordance with Section 162(m) of the Internal Revenue Code
enacted in 1993, which generally disallows a tax deduction to public companies
for compensation over $1 million paid to certain executive officers unless
certain conditions are met.
SUMMARY
The Committee believes that this mix of base salaries, variable cash
incentives and the potential for equity ownership in the Company represents a
balance that will motivate the management team to continue to produce strong
returns. The Committee further believes this program strikes an appropriate
balance between the interests and needs of the Company in operating its business
and appropriate rewards based on stockholder value.
Submitted by the Compensation Committee of the Company's Board of Directors.
Stephen D. McMurray, M.D., Chairman
W. Tom Meredith, M.D.
Joseph C. Hutts
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STOCKHOLDER RETURN
PERFORMANCE GRAPH
The following is a comparative performance graph which compares the
percentage change of cumulative total stockholder return on the Company's Common
Stock with (a) the performance of a broad equity market indicator and (b) the
performance of a published industry index or peer group. The following graph
compares the percentage change of cumulative total stockholder return on the
Company's Common Stock with (a) the Standard & Poor's 500 Composite Index (the
"Broad Index") and (b) Standard & Poor's Health Care Diversified Index (the
"Industry Index"). The graph begins on February 7, 1996, the date on which the
Company's Common Stock first began trading on the Nasdaq Stock Market, and
assumes the investment on such date of $100 in the Company's Common Stock, the
Broad Index and the Industry Index and assumes that all dividends, if any, were
reinvested at the time they were paid.
The comparison in the graph below is based on historical data and is not
intended to forecast the possible future performance of the Company's Common
Stock.
<TABLE>
<CAPTION>
Measurement Period S&P Health Care
(Fiscal Year Covered) Renal Care Group S&P 500 Index Div.
<S> <C> <C> <C>
2/7/96 100 100 100
6/28/96 137.23 103.09 104.66
12/31/96 134.57 115.14 116.43
6/30/97 177.39 138.85 160.73
12/31/97 204.25 153.54 170.08
</TABLE>
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MEDICAL DIRECTOR ARRANGEMENTS
Dr. Lowery is a member of Tyler Dialysis & Transplant Associates, P.A., a
practice group currently consisting of six nephrologists. The Company entered
into a Medical Director agreement with such practice group dated February 12,
1996 that has a term of seven years with successive renewal terms of three years
each and provides for medical director fees of $274,000 in year one, $333,000 in
year two, and $392,000 in year three and each year thereafter in effect.
Dr. Bower is a party to an agreement with the Company dated February 12,
1996 to serve as Chief Medical Officer of the Company's centers in Mississippi
for which he is compensated $100,000 annually through February 2000. The
agreement has a term of four years with successive annual renewals.
Dr. Johnson is a party to a Medical Director Services Agreement with
several additional nephrologists dated September 30, 1996 that has a term of
seven years with successive renewal terms of three years each and provides for
medical director fees of $840,000 per year.
The Company believes that each of the foregoing Medical Director Agreements
were obtained on terms no less favorable to the Company than could be obtained
from unaffiliated third parties. The terms of each such Medical Director
Agreement were determined by arm's-length negotiations between the Company and
the practices. "See Compensation Committee Interlocks and Insider Participation
for the terms of the Medical Directors Agreements between the Company and Drs.
McMurray and Meredith."
LEASES OF REAL PROPERTY
Pursuant to a lease agreement dated February 12, 1996, the Company leases
from an affiliate of Dr. Bower approximately 20,000 square feet of
administrative and other space used by the Company for the operation of the
centers acquired from Kidney Care. The lease is a triple net lease at a rate of
approximately $6.00 per square foot per year, or a gross payment of
approximately $10,000 per month. The lease contains an initial term of ten years
and two five-year renewal options.
Dr. Lowery owns a 25% interest in certain real property and improvements
used in connection with the operation of two of Tyler's centers. Pursuant to a
lease agreement dated February 12, 1996, the Company leases those centers which
are located in Carthage and Tyler, Texas. Each lease is a triple net lease with
rent payable at $12.00 per square foot per year. The Tyler lease requires a
gross payment of $20,092 per month, and the Carthage lease requires a gross
payment of $2,479 per month. Each lease has an initial term of ten years with
two additional five-year renewal options. The amount of rent is subject to a
consumer price index adjustment after the initial five-year period. In addition,
the Company has subleased back to Tyler Nephrology Associates, Inc. a portion of
the Tyler center on terms substantially similar to those contained in the lease
of such center to the Company.
Dr. Meredith owns a one-third interest in a partnership that subleases to
the Company approximately 4,100 square feet for its Dodge City, Kansas center.
The sublease, dated February 12, 1996, has a term of five years, with five
additional options to renew for periods of five years. The sublease is a double
net sublease with a base rent payment of approximately $3,300 per month,
adjusted at the commencement of each extended term by a factor based on the
consumer price index.
The Company believes that each of the foregoing Leases were obtained on
terms no less favorable to the Company than could be obtained from unaffiliated
third parties.
RESTRICTED STOCK AWARD AGREEMENTS
Dr. Jacobson received 12,200 shares of restricted stock subject to
restrictions and other terms and conditions set forth in that certain Restricted
Stock Award Agreement effective December 23, 1997. Dr. Jacobson also received a
bonus of $25,000 for services provided in connection with acquisitions.
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Dr. Lowery received 3,500 shares of restricted stock subject to
restrictions and other terms and conditions set forth in that certain Restricted
Stock Award Agreement effective December 23, 1997. "See Compensation Committee
Interlocks and Insider Participation for the terms of the Restricted Award
Agreement between the Company and Dr. McMurray."
EMPLOYMENT AGREEMENTS
Anne N. Bower, Dr. Bower's daughter, is a party to an employment agreement
dated February 7, 1996 with the Company with an annual base salary of $125,000
and having a term of three years, renewable thereafter for successive one-year
terms. Ms. Bower serves as the chief operating officer of the Company's
Mississippi operations.
Barbara McMurray, Dr. McMurray's spouse, is a party to an employment
agreement dated February 6, 1996 with the Company with an annual base salary of
$115,000 and having a term of three years, renewable thereafter for successive
one-year terms. Ms. McMurray serves as the Vice President, Program/Facility
Operations of the Company.
RELATIONSHIP WITH VANDERBILT UNIVERSITY
Dr. Jacobson currently serves as Vice Chancellor for Health Affairs at
Vanderbilt University and as Professor of Medicine in the Division of
Nephrology, Department of Medicine, Vanderbilt University. On February 12, 1996,
the Company assumed a Dialysis Center Management Agreement with Vanderbilt
University Medical Center pursuant to which the Company manages its outpatient
dialysis center. The Company received revenues of approximately $398,232
pursuant to this agreement for the year ended December 31, 1997. Such agreement
has a one-year term that is automatically renewed each year unless either party
cancels the agreement at least 90 days prior to the end of the current term.
Vanderbilt University owns approximately 369,154 of the outstanding shares of
the Company.
COMPANY POLICY
The Company has adopted a policy pursuant to which transactions with
affiliates (other than those entered into pursuant to the Combination) must be
reviewed by the Audit Committee and approved by a majority of the disinterested
members of the Board of Directors and will be made on terms no less favorable to
the Company than could be obtained from unaffiliated third parties.
AUDITORS
The firm of Ernst & Young LLP has served as the Company's independent
public accountants since inception and, while not yet approved by the audit
committee is expected to be selected to serve in such capacity for the fiscal
year ended December 31, 1998. A representative of Ernst & Young LLP is expected
to attend the Annual Meeting to respond to questions from stockholders and to
make a statement if he so desires.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Stockholders of the Company wishing to submit a proposal for action at the
Company's 1999 annual meeting of stockholders and to have the proposal included
in the Company's proxy materials relating to that meeting, must deliver their
proposals to the Company at its principal offices not later than January 1,
1999. Additional legal requirements apply to any inclusion of stockholder
proposals in proxy materials of the Company.
ANNUAL REPORTS
The Company's 1997 Annual Report to stockholders is being mailed to the
Company's stockholders with this Proxy Statement. The Annual Report is not part
of the proxy soliciting material.
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A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997 as filed with the Securities and Exchange Commission may
be obtained by any stockholder, free of charge, upon written request to the
Office of the Secretary, Renal Care Group, Inc., 2100 West End Avenue, Suite
800, Nashville, Tennessee 37203.
OTHER MATTERS
The management of the Company knows of no other matters to be presented and
acted upon at the Annual Meeting other than those set forth in the accompanying
notice. However, if any other matters requiring a vote of the stockholders
should properly come before the Annual Meeting or any adjournment thereof, each
proxy will be voted with respect thereto in accordance with the best judgment of
the proxy holder.
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APPENDIX A
RENAL CARE GROUP, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 4, 1998
RENAL CARE GROUP, INC.
FOURTH AMENDED AND RESTATED 1996 STOCK INCENTIVE PLAN
ARTICLE 1
PURPOSE
1.1 GENERAL. The purpose of the Renal Care Group, Inc. Amended and
Restated 1996 Stock Incentive Plan (the "Plan") is to promote the success, and
enhance the value, of Renal Care Group, Inc. (the "Company"), by linking the
personal interests of its key employees and consultants to those of Company
stockholders and by providing its key employees and consultants with an
incentive for outstanding performance. The Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract, and retain the
services of employees and consultants upon whose judgment, interest, and special
effort the successful conduct of the Company's operation is largely dependent.
Accordingly, the Plan permits the grant of restricted stock and stock options
from time to time to selected officers and key employees and consultants.
ARTICLE 2
EFFECTIVE DATE
2.1 EFFECTIVE DATE. The Plan first became effective upon approval of the
same by the Board of Directors of the Company (January 15, 1996) (the "Effective
Date"), as approved by the sole stockholder of the Company. The first amendments
to the Plan were approved by the Board of Directors of the Company on August 15,
1996, and became effective upon approval thereof by the stockholders of the
Company at the special meeting of stockholders held on September 27, 1996. The
second amendments to the Plan were approved by the Board of Directors on April
10, 1997, and became effective upon approval thereof by the stockholders of the
Company at the annual meeting held on June 4, 1997. The third amendments to the
Plan were approved by the Board of Directors of the Company on September 4,
1997, which amendments did not require approval by the stockholders of the
Company and became effective as of September 4, 1997. The fourth amendments to
the Plan were approved by the Board of Directors on January 15, 1998, subject to
approval thereof by the stockholders of the Company at the annual meeting held
on June 4, 1998.
ARTICLE 3
DEFINITIONS
3.1 DEFINITIONS. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section or in Sections 1.1 or 2.1 unless a clearly different meaning is required
by the context. The following words and phrases shall have the following
meanings:
(a) "Award" means any Option or Restricted Stock Award granted to a
Participant under the Plan.
(b) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means the continued failure by a Participant to
substantially perform such Participant's duties of employment after written
warnings identifying the lack of substantial performance are communicated
to the Participant by the employer that identify the manner in which the
employer
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believes that the Participant has not substantially performed such duties,
or the engaging by an Participant in illegal conduct that is materially and
demonstrably injurious to the Company, unless otherwise defined in an
employment agreement between the Participant and the Company or a
Subsidiary in effect on the date of termination in which case "Cause" shall
be defined as set forth therein.
(e) "Change in Control" means a change in control of the Company after
the closing of an initial public offering of Stock registered under the
Securities Act on a Registration Statement on Form S-1 of a nature that
would be required to be reported (assuming such event has not been
"previously reported") in response to Item 1(a) of a Current Report on Form
8-K pursuant to Section 13 or 15(d) of the Exchange Act; provided that,
without limitation, a Change in Control shall also be deemed to have
occurred at such time as:
(i) any "person" within the meaning of Section 14(d) of the
Exchange Act, other than the Company, a Subsidiary, or any employee
benefit plan(s) sponsored by the Company or any Subsidiary, is or has
become the "beneficial owner," as defined in Rule 13d-3 under the
Exchange Act, directly or indirectly, of 25% or more of the combined
voting power of the outstanding securities of the Company ordinarily
having the right to vote at the election of directors;
(ii) individuals who constitute the Board immediately prior to any
meeting of stockholders (the "Incumbent Board") have ceased for any
reason to constitute at least a majority thereof, provided that any
person becoming a director whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least
three-quarters (3/4) of the directors comprising the Incumbent Board
(either by a specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for director without
objection to such nomination) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent Board;
(iii) upon approval by the Company's stockholders of a
reorganization, merger, share exchange or consolidation, other than one
with respect to which those persons who were the beneficial owners,
immediately prior to such reorganization, merger, share exchange or
consolidation, of outstanding securities of the Company ordinarily
having the right to vote in the election of directors own, immediately
after such transaction, more than 75% of the outstanding securities of
the resulting corporation ordinarily having the right to vote in the
election of directors; or
(iv) upon approval by the Company's stockholders of a complete
liquidation and dissolution of the Company or the sale or other
disposition of all or substantially all of the assets of the Company
other than to a Subsidiary.
Notwithstanding the occurrence of any of the foregoing, the Board
may determine, if it deems it to be in the best interest of the Company,
that an event or events otherwise constituting a Change in Control shall
not be so considered. Such determination shall be effective if it is
made by the Board prior to the occurrence of an event that otherwise
would be or probably will lead to a Change in Control or after such
event if made by the Board a majority of which is composed of directors
who were members of the Board immediately prior to the event that
otherwise would be or probably will lead to a Change in Control. Upon
such determination, such event or events shall not be deemed to be a
Change in Control for any purposes hereunder, including but not limited
to, Section 9.6.
(f) "Change in Control Price" means the highest closing price per
share paid for the purchase of Stock in a national securities market during
the ninety (90) day period ending on the date the Change in Control occurs.
(g) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(h) "Committee" means the committee of the Board described in Article
4.
(i) "Company" means Renal Care Group, Inc., a Delaware corporation.
(j) "Covered Employee" means a covered employee as defined in Code
Section 162(m)(3).
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(k) "Disability" shall mean any permanent disability as defined by
Section 22(e)(3) of the Code. The Committee may require such medical or
other evidence as it deems necessary to judge the nature and permanency of
a Participant's Disability.
(l) "Effective Date" has the meaning assigned such term in Section
2.1.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(n) "Fair Market Value" means the closing price of the shares of Stock
on the New York Stock Exchange or other national securities exchange on the
day on which such value is to be determined or, if no shares were traded on
such day, on the next preceding day on which shares were traded, as
reported by the National Quotation Bureau, Inc. or other national quotation
service. If the shares are not traded on an exchange but are traded in the
over-the-counter market, Fair Market Value means the closing "asked" price
of the shares in the over-the-counter market on the day on which such value
is to be determined or, if such "asked" price is not available, the last
sales price on such day or, if no shares were traded on such day, on the
next preceding day on which the shares were traded, as reported by the
National Association of Securities Dealers Automatic Quotation System
(NASDAQ) or other national quotation service.
(o) "Incentive Stock Option" means an Option that is intended to meet
the requirements of Section 422 of the Code or any successor provision
thereto.
(p) "Non-Qualified Stock Option" means an Option that is not an
Incentive Stock Option.
(q) "Option" means a right granted to a Participant under Article 7 of
the Plan to purchase Stock at a specified price during specified time
periods. An Option may be either an Incentive Stock Option or a
Non-Qualified Stock Option.
(r) "Participant" means a person who, as an officer or key employee or
consultant of the Company or any Subsidiary, has been granted an Award
under the Plan.
(s) "Plan" means the Renal Care Group, Inc. Amended and Restated 1996
Stock Incentive Plan, as amended from time to time.
(t) "Restricted Stock Award" means Stock granted to a Participant
under Article 8 that is subject to certain restrictions and to risk of
forfeiture.
(u) "Securities Act" means the Securities Act of 1933, as amended from
time to time.
(v) "Stock" means the $0.01 par value common stock of the Company and
such other securities of the Company as may be substituted for Stock
pursuant to the terms of the Plan including but not limited to Article 10
hereof.
(w) "Subsidiary" means any corporation that qualifies as a subsidiary
of a corporation under the definition of "subsidiary corporation" contained
in Section 424(f) of the Code.
ARTICLE 4
ADMINISTRATION
4.1 The Plan shall be administered by a committee of directors of the
Company (the "Committee") appointed by the Board from time to time and
consisting of at least two members of the Board, each of whom shall be both (i)
a "non-employee director" as such term is defined in Rule 16b-3 promulgated
under Section 16 of the Exchange Act or any successor provision, and (ii) an
"outside director" as that term is used in Section 162 of the Code and the
regulations promulgated thereunder. In the absence of an appointment of a
Committee, the Board shall serve as the Committee.
4.2 AUTHORITY OF COMMITTEE. The Committee has the exclusive power,
authority and discretion to:
(a) Designate Participants;
(b) Determine the type or types of Awards to be granted to each
Participant;
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(c) Determine the number of Awards to be granted and the number of
shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted under the
Plan, including but not limited to, the exercise price, any restrictions or
limitations on the Award, any schedule for lapse of forfeiture restrictions
or restrictions on the exercisability of an Award, and accelerations or
waivers thereof, based in each case on such considerations as the Committee
in its sole discretion determines;
(e) Determine whether, to what extent, and under what circumstances an
Award may be settled in, or the exercise price of an Option may be paid in,
cash, Stock, or other property, or an Award may be canceled, forfeited, or
surrendered;
(f) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(g) Decide all other matters that must be determined in connection
with an Award;
(h) Establish, adopt or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan; and
(i) Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to
administer the Plan.
4.3. DECISIONS BINDING. The Committee's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.
ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1. NUMBER OF SHARES. Subject to adjustment as provided in Section 10.1,
the aggregate number of shares of Stock reserved and available for Awards shall
be 4,000,000.
5.2. LAPSED AWARDS. To the extent that an Award is canceled, terminates,
expires or lapses for any reason, any shares of Stock subject to the Award will
again be available for the grant of an Award under the Plan.
5.3. STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.
5.4. LIMITATION ON NUMBER OF SHARES SUBJECT TO AWARDS. Notwithstanding
any provision in the Plan to the contrary, the maximum number of shares of Stock
with respect to one or more Options that may be granted to any one Covered
Employee in any one taxable year shall be 150,000 (which reflects a 3 for 2
stock split in the form of a dividend with a record date of July 7, 1997),
subject to adjustment as set forth in Article 10 hereto.
ARTICLE 6
ELIGIBILITY
6.1. GENERAL. Awards may be granted only to individuals who are
(i) officers or other key employees (including employees who also are directors
or officers) of the Company or a Subsidiary, or (ii) bona fide consultants to
the Company or a Subsidiary, as determined by the Committee.
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ARTICLE 7
STOCK OPTIONS
7.1. GENERAL. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(a) EXERCISE PRICE. The exercise price per share of Stock under an
Option shall be determined by the Committee. The Committee may elect to
grant Non-Qualified Stock Options with an exercise price per share of Stock
less than the Fair Market Value of a share of Stock on the date any such
Non-Qualified Stock Option is granted.
(b) TIME AND CONDITIONS OF EXERCISE.
(i) The Committee shall determine the time or times at which an
Option may be exercised in whole or in part. The Committee also shall
determine the performance or other conditions, if any, that must be
satisfied before all or part of an Option may be exercised.
(ii) In connection with the grant of any Options, the Committee may
provide in the Option Agreement for the termination of all or any
portion of the Options under certain circumstances, including, without
limitation, termination of a Participant's employment, provided that the
Committee may distinguish among various causes of termination as the
Committee deems appropriate. In addition, the Committee may provide,
through the Option Agreement or otherwise, that if a Participant's
employment is terminated: (i) such Participant's Option(s) may be
exercised for specified periods thereafter but no later than the
expiration date of such Option; (ii) to the extent not fully exercisable
on the date of termination of employment, such Option may continue to
become exercisable within the term of the Option; or (iii) some or all
of the Options not fully exercisable on the date of termination of
employment may be deemed fully exercisable. A Participant's employment
shall be deemed to terminate on the last date for which he or she
receives a regular wage or salary payment (excluding severance payments
unless otherwise provided in the Option Agreement). Whether military,
government or other service or other leave of absence shall constitute a
termination of employment shall be determined in each case by the
Committee at its discretion, and any determination by the Committee
shall be final and conclusive. A termination of employment shall not
occur where the Participant transfers from the Company to one of its
Subsidiaries, transfers from a Subsidiary to the Company or transfers
from one Subsidiary to another Subsidiary.
(c) PAYMENT. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including,
without limitation, cash, shares of Stock, or other property (including
"cashless exercise" arrangements), and the methods by which shares of Stock
shall be delivered or deemed to be delivered to Participants. Without
limiting the power and discretion conferred on the Committee pursuant to
the preceding sentence, the Committee may, in the exercise of its
discretion, but need not, allow a Participant to pay the exercise price of
an Option by directing the Company to withhold from the shares of Stock
that would otherwise be issued upon exercise of the Option that number of
shares having a Fair Market Value on the exercise date equal to the
exercise price, all as determined pursuant to rules and procedures
established by the Committee.
(d) EVIDENCE OF GRANT. All Options shall be evidenced by a written
Option Agreement between the Company and the Participant. The Option
Agreement shall include such provisions as may be specified by the
Committee.
7.2. INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:
(a) EXERCISE PRICE. The exercise price per share of Stock shall be
set by the Committee, provided that the exercise price for any Incentive
Stock Option shall not be less than the Fair Market Value as of the date of
the grant.
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(b) EXERCISE. In no event may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.
(c) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market Value
(determined as of the time an Option is made) of all shares of Stock with
respect to which Incentive Stock Options are first exercisable by a
Participant in any calendar year may not exceed $100,000.
(d) TEN PERCENT OWNERS. No Incentive Stock Option shall be granted to
any individual who, at the date of grant, owns stock possessing more than
ten percent of the total combined voting power of all classes of stock of
the Company or any Subsidiary unless the exercise price per share of such
Option is at least 110% of the Fair Market Value per share of Stock at the
date of grant and the Option expires no later than five years after the
date of grant.
(e) EXPIRATION OF INCENTIVE STOCK OPTIONS. No award of an Incentive
Stock Option may be made pursuant to the Plan on or after the tenth
anniversary of the Effective Date.
(f) RIGHT TO EXERCISE. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant.
(g) INTERPRETATION OF INCENTIVE STOCK OPTIONS. In interpreting this
Section 7.2 of the Plan and the provisions of individual Option Agreements
granting Incentive Stock Options, the Committee shall be governed by the
principles and requirements of Sections 421, 422 and 424 of the Code, and
applicable Treasury Regulations.
ARTICLE 8
RESTRICTED STOCK AWARDS
8.1. GRANT OF RESTRICTED STOCK. The Committee is authorized to make
Awards of Restricted Stock to Participants in such amounts and subject to such
terms and conditions as may be selected by the Committee. All Awards of
Restricted Stock shall be evidenced by a Restricted Stock Award Agreement.
8.2. ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, upon the satisfaction of performance
goals or otherwise, as the Committee determines at the time of the grant of the
Award or thereafter.
8.3. FORFEITURE. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of employment
during the applicable restriction period or upon failure to satisfy a
performance goal during the applicable restriction period, Restricted Stock that
is at that time subject to restrictions shall be forfeited and reacquired by the
Corporation; provided, however, that the Committee may provide in any Award
Agreement that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in whole or in
part restrictions or forfeiture conditions relating to Restricted Stock.
8.4. CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock.
ARTICLE 9
GENERAL PROVISIONS APPLICABLE TO AWARDS
9.1. STAND-ALONE, TANDEM, AND SUBSTITUTE AWARDS. Awards granted under the
Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for,
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any other Award granted under the Plan. If an Award is granted in substitution
for another Award, the Committee may require the surrender of such other Award
in consideration of the grant of the new Award. Awards granted in addition to or
in tandem with other Awards may be granted either at the same time as or at a
different time from the grant of such other Awards.
9.2. EXCHANGE PROVISIONS. The Committee may at any time offer to exchange
or buy out any previously granted Award for a payment in cash, Stock, or another
Award (subject to Section 9.1), based on the terms and conditions the Committee
determines and communicates to the Participant at the time the offer is made.
9.3. TERM OF OPTION. The term of each Option shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option exceed a period of ten years from the date of grant.
9.4. LIMITS ON TRANSFER. No right or interest of a Participant in any
Award may be pledged, encumbered, or hypothecated to or in favor of any party
other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. No Award shall be assignable or transferable by a
Participant other than by will or the laws of descent and distribution or,
except in the case of an Incentive Stock Option, pursuant to a domestic
relations order as defined in Section 414(p)(1)(B) of the Code, if the order
satisfies Section 414(p)(1)(A) of the Code.
9.5. STOCK CERTIFICATES. All Stock certificates delivered under the Plan
are subject to any stop-transfer orders and other restrictions as the Committee
deems necessary or advisable to comply with federal or state securities laws,
rules and regulations and the rules of any national securities exchange or
automated quotation system on which the Stock is listed, quoted, or traded. The
Committee may place legends on any Stock certificate to reference restrictions
applicable to the Stock.
9.6. CHANGES IN CONTROL.
(a) Change in Control Followed by Employment Termination. In the
event that a Change in Control shall occur and an employee Participant's
employment shall terminate, except as provided in the next sentence, within
twelve (12) months after the Change in Control, then (i) all unexercised
Awards (whether vested or not vested) shall automatically become one
hundred percent (100%) vested immediately, (ii) no other terms, conditions,
restrictions or limitations shall be imposed upon any such Awards after
such date, and in no circumstance shall an Award be forfeited on or after
such date, and (iii) all such Awards shall be valued on the basis of the
greater of the Change in Control Price or the Fair Market Value on the date
of such termination, and such value shall promptly be paid to the
Participant in cash by the Company or its successor. The foregoing shall
not apply if employment termination is due to (i) death, (ii) disability
entitling the Participant to benefits under the Company's or its
successor's long-term disability plan, (iii) Cause, or (iv) resignation
(other than (A) resignation from a declined reassignment to a job that is
not reasonably equivalent in responsibility or compensation or that is not
in the same geographic area, or (B) resignation within 30 days following a
reduction in base pay).
(b) Automatic Acceleration and Cash-Out. Upon a Change in Control
that results directly or indirectly in the Stock (or the stock of any
successor to the Company received in exchange for Stock) ceasing to be
publicly traded in a national securities market, (i) all unexercised Awards
(whether vested or not vested) shall automatically become one hundred
percent (100%) vested immediately, (ii) no other terms, conditions,
restrictions or limitations shall be imposed upon any such Awards after
such date, and in no circumstance shall an Award be forfeited on or after
such date, and (iii) all such Awards shall be valued on the basis of the
Change in Control Price, and such value shall promptly be paid to the
Participant in cash by the Company or its successor.
(c) Miscellaneous. Upon a Change in Control, no action, including,
without limitation, the amendment, suspension or termination of the Plan,
shall be taken that would adversely affect the rights of any Participant or
the operation of the Plan with respect to any Award to which a Participant
may have
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become entitled hereunder on or prior to the date of the Change in Control
or to which such Participant may become entitled as a result of such Change
in Control.
9.7. MODIFICATION, EXTENSION AND RENEWAL. The Committee may modify, renew
or accept the surrender of outstanding Awards issued under the Plan (or the
surrender of similar grants issued under any other plan of the Company or a
Subsidiary), including the acceleration or waiver of any vesting or other
restrictions or limitations, or the conversion of such Awards (with appropriate
adjustments) to be applicable to the securities of any successor corporation to
the Company, and the Committee may authorize new Awards pursuant to the Plan in
substitution for any outstanding Awards. Any substituted, modified or converted
Awards may bear such different or additional terms and conditions as the
Committee shall deem appropriate within the limitations of the Plan. The
determination of the Committee as to the terms of any of the foregoing may be
made without regard to whether a Change in Control has or has not occurred (or
whether the Committee has determined that any event shall not be considered to
be a Change in Control) and shall be conclusive and binding notwithstanding the
provisions of the respective agreements regarding exercisability. Any fractional
shares resulting from any of the foregoing adjustments under this Section shall
be disregarded and eliminated. However, no modification of an Award shall,
without the consent of the Participant holding the Award, adversely affect the
rights or obligations of such Participant with respect to such Award.
ARTICLE 10
CHANGES IN CAPITAL STRUCTURE
10.1. GENERAL. If the Company's outstanding shares of Stock are increased
or decreased or changed into or exchanged for a different number or kind of
shares or other securities of the Company by reason of any recapitalization,
reclassification, stock split, combination of shares, stock dividend, or
transaction having similar effect, the Board shall proportionately and
appropriately adjust (i) the number of shares of Stock authorized and reserved
for grants under the Plan as set forth in Section 5.1, (ii) the number of shares
of Stock that may be subject to one or more Options granted to any one
Participant in any one taxable year as set forth in Section 5.4, and (iii) the
number and kind of shares that are subject to each Option and the exercise price
per share, without any change in the aggregate price to be paid therefor upon
exercise of each Option.
ARTICLE 11
AMENDMENT, MODIFICATION AND TERMINATION
11.1. AMENDMENT, MODIFICATION AND TERMINATION. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend or
modify the Plan without stockholder approval; provided, however, that the
Committee may condition any amendment on the approval of stockholders of the
Company if such approval is necessary or deemed advisable with respect to tax,
securities or other applicable laws, policies or regulations.
11.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or
modification of the Plan shall adversely affect any Award previously granted
under the Plan, without the written consent of the Participant.
ARTICLE 12
GENERAL PROVISIONS
12.1. NO RIGHTS TO AWARDS. No Participant or employee shall have any
claim to be granted any Award under the Plan, and neither the Company nor the
Committee is obligated to treat Participants and employees uniformly.
12.2. NO STOCKHOLDER RIGHTS. No Award gives the Participant any of the
rights of a stockholder of the Company unless and until shares of Stock are in
fact issued to such person in connection with such Award.
12.3. WITHHOLDING. The Company or any Subsidiary shall have the authority
and the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, and local taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any
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taxable event arising as a result of the Plan. With respect to withholding
required upon any taxable event under the Plan, the Committee may, at the time
the Award is granted or thereafter, require that any such withholding
requirement be satisfied, in whole or in part, by withholding shares of Stock
having a Fair Market Value on the date of withholding equal to the amount to be
withheld for tax purposes, all in accordance with such procedures as the
Committee establishes.
12.4. NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any Award Agreement
shall interfere with or limit in any way the right of the Company or any
Subsidiary to terminate any Participant's employment at any time, nor confer
upon any Participant any right to continue in the employ of the Company or any
Subsidiary.
12.5. UNFUNDED STATUS. The Plan is intended to be an "unfunded" plan for
incentive and deferred compensation. With respect to any payments not yet made
to a Participant pursuant to the Plan, nothing contained in the Plan or any
Award Agreement shall give the Participant any rights that are greater than
those of a general creditor of the Company or any Subsidiary.
12.6. RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or benefit plan of the Company
or any Subsidiary.
12.7. EXPENSES. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries.
12.8. TITLES AND HEADINGS. The titles and headings of the Sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.
12.9. GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
12.10. FRACTIONAL SHARES. No fractional shares of Stock shall be issued
and the Committee shall determine, in its discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up.
12.11. SECURITIES LAW COMPLIANCE. It is intended that the provisions of
the Plan and any grant of Awards hereunder shall comply in all respects with the
terms and conditions of Rule 16b-3 under the Exchange Act, or any successor
provisions, as it relates to persons subject to the reporting requirements of
Section 16(a) of the Exchange Act. Any agreement granting any Awards shall
contain such provisions as are necessary or appropriate to assure such
compliance. To the extent that any provision hereof is found not to be in
compliance with such Rule as it relates to such Act, such provision shall be
deemed to be modified so as to be in compliance with such Rule, or if such
modification is not possible, shall be deemed to be null and void, as it relates
to such Participant.
12.12. GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to
make payment of awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by government agencies as
may be required. The Company shall be under no obligation to register under the
Securities Act any of the shares of Stock paid under the Plan. If the shares
paid under the Plan may in certain circumstances be exempt from registration
under the Securities Act, the Company may restrict the transfer of such shares
in such manner as it deems advisable to ensure the availability of any such
exemption.
12.13. GOVERNING LAW. To the extent not governed by federal law, the Plan
and all Award Agreements shall be construed in accordance with and governed by
the laws of the State of Delaware.
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IN WITNESS WHEREOF, Renal Care Group, Inc., acting by and through its duly
authorized officers, has executed this instrument as of the 15th day of January
1998.
<TABLE>
<S> <C>
ATTEST: RENAL CARE GROUP, INC.
By: /s/ RONALD HINDS By: /s/ SAM A. BROOKS, JR.
- --------------------------------------------- ---------------------------------------------
Ronald Hinds Sam A. Brooks, Jr.
Secretary President and
Chief Executive Officer
</TABLE>
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APPENDIX B
RENAL CARE GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Sam A. Brooks and Ronald Hinds as Proxies,
each with power to appoint his substitute, and hereby authorizes either one or
both of them to represent and to vote, as designated below, all the shares of
Common Stock of Renal Care Group, Inc. held of record by the undersigned on
April 10, 1998, at the Annual Meeting of Stockholders to be held on June 4,
1998.
The Board of Directors recommends a vote "FOR" all of the following
proposals:
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C> <C> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees
(except as marked to the contrary) listed below
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
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(Joseph C. Hutts, Thomas A. Lowery, M.D.)
2. PROPOSAL TO: approve an amendment to the Renal Care Group, Inc. Third
Amended and Restated 1996 Stock Incentive Plan that would increase the
number of shares of RCG Common Stock reserved for issuance under the Plan
from 3,000,000 shares to 4,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued and to be dated and signed on reverse side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL NOMINEES FOR DIRECTOR LISTED ABOVE AND FOR PROPOSAL 2 ABOVE.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated: , 1998
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Signature
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Signature if held jointly
