---------------------
[LOGO] TheraTx(R)
February 14, 1997
To Our Stockholders:
We are pleased to inform you that on February 9, 1997, TheraTx, Incorporated
(the "Company") entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Vencor, Inc. ("Vencor") and Peach Acquisition Corp., a wholly
owned subsidiary of Vencor (the "Purchaser"), pursuant to which the Purchaser
has today commenced a tender offer to purchase all of the outstanding shares
of the Company's common stock, par value $0.001 per share (the "Shares") (and
the associated rights to purchase Series A Junior Participating Preferred
Stock (the "Rights")), at a cash price of $17.10 per Share (the "Offer"). The
Offer is conditioned upon the tender of at least a majority of the Shares (and
the associated Rights) outstanding on a fully diluted basis. Subject to the
conditions of the Offer, the Merger Agreement provides that the Offer will be
followed by a merger (the "Merger") in which the Purchaser will be merged with
and into the Company and those Shares that are not acquired in the Offer will
be converted into the right to receive $17.10 per share in cash.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AGREEMENT
AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER. The Board of Directors has
reached these conclusions after consideration of the terms of the Merger
Agreement, the opinion of The Beacon Group Capital Services, LLC ("The Beacon
Group") (the financial advisor to the Board of Directors) dated as of February
9, 1997, that the consideration to be received by the stockholders of the
Company pursuant to the Offer and the Merger Agreement was fair from a
financial point of view to such stockholders as of such date and the other
factors described in the attached Schedule 14D-9 filed today by the Company
with the Securities and Exchange Commission. A copy of The Beacon Group's
written opinion, which sets forth the assumptions made, procedures followed
and matters considered in, and the limitation on, the review by The Beacon
Group in rendering its opinion is attached to the Schedule 14D-9 as Schedule
I.
Accompanying this letter, in addition to the Schedule 14D-9, is the Offer to
Purchase of the Purchaser, dated February 14, 1997, together with related
materials including a letter of transmittal for use in tendering your shares.
These documents set forth the terms and conditions of the Offer and provide
instructions as to how to tender your shares. We urge you to read the enclosed
materials carefully in making your decision whether to tender your shares to
the Purchaser.
Very truly yours,
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
President and Chief Executive
Officer
TheraTx, Inc. . 0000 Xxxxxxxxx Xxxxxxx . Suite 100 . Alpharetta, Ga 30201 .
000-000-0000 . FAX 000-0000 . 0-000-XXXXXXX
