UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): January 31, 2006
Renal Care Group, Inc.
(Exact name of Registrant as specified in its charter)
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Delaware
(State or Other
Jurisdiction of
Incorporation)
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0-27640
(Commission
File Number)
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62-1622383
(I.R.S. Employer
Identification No.) |
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2525 West End Avenue, Suite 600,
Nashville, Tennessee
(Address of Principal Executive Offices)
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37203
(Zip Code) |
(615) 345-5500
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c)) |
TABLE OF CONTENTS
Item 1.01 Entry into a Material Definitive Agreement.
Thomas A. Lowery, M.D. (“Dr. Lowery”) is a director of Renal Care Group, Inc. (the “Company”)
and a member of Tyler Nephrology Associates, P.A. (“Tyler Nephrology”), a practice group consisting
of ten nephrologists. As previously disclosed in the Company’s proxy statement for its 2005
annual meeting of shareholders (the “2005 Proxy Statement”), one of the Company’s subsidiaries,
Renal Care Group Texas, Inc. (“RCG Texas”) entered into a Medical Director Services Agreement with
Tyler Nephrology effective as of February 12, 2003 (the “Texas MDSA”) and as amended by Amendment
Number 1 dated March 1, 2004, pursuant to which Tyler Nephrology provides medical director services
for certain of RCG Texas’ dialysis facilities. On February 1, 2006, RCG Texas and Tyler
Nephrology entered into Amendment Number 2 to the Texas MDSA pursuant to which the initial term was
extended to December 31, 2015 for two facilities and to February 12, 2010 for the other facilities
covered by the Texas MDSA.
Stephen D. McMurray, M.D. (“Dr. McMurray”) is a director of the Company and a member of
Indiana Dialysis Management, P.C. (“Indiana Dialysis”), a division of Indiana Medical Associates
which is a multi-specialty practice group. As previously disclosed in the 2005 Proxy Statement,
one of the Company’s subsidiaries, RCG Indiana, L.L.C. (“RCG Indiana”) entered into a Medical
Director Services Agreement with Indiana Dialysis, dated February 12, 1996 (the “Indiana MDSA”) and
as amended by Amendment Number 1 dated January 1, 1999 and Amendment Number 2 dated February 12,
2002, pursuant to which Indiana Dialysis provided medical director services for certain of RCG
Indiana’s dialysis facilities located in and near Ft. Wayne, Indiana. On January 31, 2006, RCG
Indiana and Indiana Dialysis entered into Amendment Number 3 to the Indiana MDSA pursuant to which
the initial term was extended to December 31, 2015 for all facilities covered by the Indiana MDSA.
In addition, effective as of January 1, 2006, Amendment Number 3 amended the annual compensation to
Indiana Dialysis under the Indiana MDSA to $650,000 payable in substantially equal monthly
installments. Furthermore, Amendment Number 3 amended the duration of Indiana Dialysis’ noncompete
covenant from two (2) to three (3) years following termination of the Indiana MDSA. In
consideration of Indiana Dialysis’ and each of its physician members’ execution of Amendment Number
3 and their covenants and agreements pursuant thereto, RCG Indiana agreed to pay Indiana Dialysis a
signing bonus of $1,560,000.
In addition, as previously disclosed in the 2005 Proxy Statement, RCG Indiana and Indiana
Dialysis formed two joint ventures in 2001, Maumee Dialysis Services, LLC (“Maumee Dialysis”) and
Three Rivers Dialysis Services, LLC (“Three Rivers Dialysis”). Each of Maumee Dialysis and Three
Rivers Dialysis owns and operates one dialysis center in or near Fort Wayne, Indiana. On January
31, 2006, RCG Indiana entered into a Membership Interest Purchase Agreement (the “Maumee Purchase
Agreement”) with Maumee Dialysis, Indiana Dialysis and the shareholders of Indiana Dialysis
pursuant to which Indiana Dialysis sold its 30% membership interest in Maumee Dialysis to RCG
Indiana. In consideration for the sale of its membership interest, Indiana Dialysis received a
payment of $1,106,978 from RCG Indiana. On January 31, 2006, RCG Indiana entered into a Membership
Interest Purchase Agreement (the “Three Rivers Purchase Agreement”) with Three Rivers Dialysis,
Indiana Dialysis and the shareholders of Indiana Dialysis pursuant to which Indiana Dialysis sold
its 40% membership interest in Three Rivers Dialysis to RCG Indiana. In consideration for the sale
of its membership interest, Indiana Dialysis received a payment of $1,035,447 from RCG Indiana.
Furthermore, Indiana Dialysis and its shareholders agreed pursuant to each of the Maumee Purchase
Agreement and the Three Rivers Purchase Agreement to a non-competition covenant for a period of 10
years following the effective date of each purchase agreement and covering a territory consisting
of a geographic area within a 75-mile radius of each dialysis facility owned by either Maumee
Dialysis or Three Rivers Dialysis, as applicable.
The Company believes that the terms of each of the Texas MDSA, Indiana MDSA, Maumee Purchase
Agreement and Three Rivers Purchase Agreement (collectively the “Agreements”) were determined by
arm’s length negotiations between the parties, with neither of Dr. Lowery or Dr. McMurray taking
part in the Company’s review or negotiation of the Agreements related to Tyler Nephrology or
Indiana Dialysis, respectively. In addition, the Agreements were reviewed and approved by the
Company’s audit committee, acting on behalf of the full board of directors, with neither of Dr. Lowery
or Dr. McMurray taking part in the deliberations related to Tyler Nephrology or Indiana Dialysis,
respectively.
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