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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 9)*
RESPONSE ONCOLOGY, INC.
(Name of Issuer)
Common Stock $.01 Par Value (1)
(Title of Class of Securities)
761232-107
(CUSIP Number)
Lathrop M. Gates, 2345 Grand Blvd., Suite 2800,
Kansas City, MO 64108, (816) 292-2000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
10/4/96
(Date of Event which Requires Filing of this Statement)
If the reporting person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b) (3) or (4), check the following box.
_________
Check the following box if a fee is being paid with this statement. _______ (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1 (a) for other parties to whom copies are to be
sent.
(Continued on following pages)
(Page 1 of ___ pages)
____________________
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Seafield Capital Corporation
43-1039532
(2) Check the Appropriate Box (a) ____
if a Member of a Group* (b) ____
(3) SEC Use Only
(4) Source of funds*
WC
(5) Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(d) or 2(e) ____
(6) Citizenship or Place of Organization
Missouri
Number of Shares (7) Sole Voting Power
Beneficially Owned 6,709,361_1/
by Each Reporting
Person With (8) Shared Voting Power
26,067
(9) Sole Dispositive Power
6,709,361_1/
(10) Shared Dispositive Power
26,067
(11) Aggregate Amount Beneficially Owned By Each Reporting Person
6,735,428_1/
(12) Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares*
__X__
_____________________
1 Includes 1,678,571 shares which the Report Person could have had the
right to acquire on the date hereof pursuant to that certain Adjustable Rate
Convertible Note ("Convertible Note") described in Item 4 hereafter.
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(13) Percent of Class Represented by Amount in Row (11)
63.7%_2/
(14) Type of Reporting Person*
CO
* See Instructions before Filling Out!
________________________________
2 Percentage would be 56.9% if shares which the Reporting Person has the
right to acquire pursuant to the Convertible Note are excluded.
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Item 1. Security and Issuer.
This Amendment No. 9 ("Amendment No. 9") to Schedule 13D concerns the
common stock, par value $.01 per share ("Common Stock") of Response Oncology,
Inc. (formerly named Response Technologies, Inc.) ("Response"), whose principal
executive offices are at 1775 Moriah Woods Boulevard, Memphis, Tennessee 38117.
Amendment No. 9 amends an original report (the "Original Report") on Schedule
13D respecting a purchase of shares of Common Stock on October 31, 1990, as
amended by Amendment No. 1 to Schedule 13D, dated August 2, 1991 ("Amendment No.
1"), Amendment No. 2 to Schedule 13D, dated November 11, 1991 ("Amendment No.
2"), Amendment No. 3 to Schedule 13D, dated June 9, 1992 ("Amendment No. 3"),
Amendment No. 4 to Schedule 13D dated, August 4, 1992 ("Amendment No. 4"),
Amendment No. 5 to Schedule 13D, dated May 13, 1993 ("Amendment No. 5"),
Amendment No. 6 to Schedule 13D, dated February 17, 1995 ("Amendment No. 6"),
Amendment No. 7 to Schedule 13D, dated June 24, 1996 ("Amendment No. 7") and
Amendment No. 8 to Schedule 13D, dated September 4, 1996 ("Amendment No. 8")
(collectively, Amendments No.1, No. 2, No.3, No. 4, No. 5, No.6, No. 7 and No. 8
are sometimes referred to as the "Prior Amendments"). The Issuer is the same
Issuer referred to in the Original Report and in the Prior Amendments; the
current name of the Issuer reflects a change effective November 1995. The Common
Stock is the same class of stock reported on in the Original Report and in the
Prior Amendments; the par value of the common stock was changed in November 1995
as a result of a 1 for 5 reverse stock split.
Item 2. Identity and Background.
This report is filed by Seafield Capital Corporation ("Seafield")
(formerly named BMA Corporation). Seafield is a Missouri corporation; the
address of its principal executive office is 2600 Grand Boulevard, Suite 500,
P.O. Box 410949, Kansas City, Missouri 64141. Seafield is a holding company
engaged through its subsidiaries in various activities. Its principal interests
are its 82% owned subsidiary, LabOne, Inc. (formerly named Home Office Reference
Laboratory, Inc.), a provider of clinical, substance abuse and insurance
laboratory testing services whose offices are located at 10310 West 84th
Terrace, Lenexa, Kansas 66214, and its interest in Response. Through
subsidiaries, Seafield also owns oil and gas, venture capital and real estate
investments, as well as short-term and intermediate-term investment grade
securities.
Set forth in Schedule 1 hereto are the names, business addresses and
principal occupations or employment of the executive officers and directors of
Seafield. Each person listed on Schedule 1 is a United States citizen.
During the past five years, neither Seafield nor to its knowledge,
any of the persons identified in Schedule 1 has been (i) convicted in a criminal
proceeding, or (ii) a party to a civil proceeding of a judicial or
administrative body as a result of which such person was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
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Item 3. Source and Amount of Funds or Other Consideration.
On October 4, 1996 Seafield entered into a Loan Agreement (the "Loan
Agreement") with Response; pursuant to the Loan Agreement Response may borrow
from Seafield up to $23.5 Million. At Seafield's option, amounts borrowed under
the Loan Agreement and evidenced by that certain Adjustable Rate Convertible
Note of Response, dated October 4, 1996 (the "Convertible Note") can be
converted into shares of Response Common Stock (See Item 4 for a description of
the terms pursuant to which such conversion can occur). On the date hereof
Response's borrowings under the Loan Agreement aggregate $15,520,693. The
balance of the available loan amount can be borrowed by Response from
time-to-time through December 31, 1996. Seafield anticipates that all funds
available under the Loan Agreement will be borrowed by Response. The funds used
to make advances to Response under the Loan Agreement were part of, and the
funds used to make future advances will come out of, Seafield's working capital.
Item 4. Purpose of the Transaction.
Seafield entered into the Loan Agreement with Response for the purpose
of providing financing to enable Response to further its business strategy of
acquiring assets of and managing the non-medical aspects of physicians or groups
of physicians practicing in the fields of oncology and hematology. The
indebtedness provided for in the Loan Agreement and evidenced by the Convertible
Note matures August 31, 1998 or earlier in the event (i) Response receives
proceeds from either a sale of its equity securities or an issuance of its
senior subordinated indebtedness and (ii) if such proceeds are received after
December 31, 1996, Seafield requests repayment. The Convertible Note bears
interest until April 1, 1997 at the rate of 8% per annum; thereafter, until July
1, 1997, at the rate per annum of 10%; and after June 30, 1997 at the rate per
annum of 12%. Pursuant to a Subordination Agreement dated as of October 4, 1996,
Seafield has subordinated the indebtedness evidenced by the Convertible Note as
to rights of payment, security, collection and collection in bankruptcy to
obligations (up to $35 Million in principal amount) of Response to certain
banks. The indebtedness evidenced by the Convertible Note may be prepaid in full
by Response prior to April 1, 1997 without penalty or premium; thereafter,
prepayment requires Seafield's consent.
The outstanding principal amount of the indebtedness evidenced by the
Convertible Note may be converted in whole or in part and from time to time, at
the option of Seafield, into shares of Response Common Stock. The conversion
price, which when divided into the principal of the Convertible Note to be
converted determines the number of shares of Response Common Stock to be issued
as a consequence of such conversion, is, until December 31, 1996, the market
price of Response Common Stock on the last trading day before the day upon which
a conversion notice is given to Response, and after December 31, 1996 is $11.00.
The maximum number of shares of Response Common Stock which could be acquired by
Seafield if it were to elect to convert the Convertible Note depends upon the
aggregate amount of funds ultimately advanced to Response pursuant to the Loan
Agreement and, until January 1, 1997, depends upon the market price of Response
Common Stock at the time of conversion. At the date hereof, the outstanding
principal amount of the Convertible Note is $15,520,693 and the market price of
Response Common Stock is approximately $14 per share. If the outstanding
principal amount of the Convertible Note were converted on this date (which has
not occurred) approximately 1,108,620 shares of Response Common Stock would be
acquired by Seafield as a result thereof. If all funds available under the
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Loan Agreement had been advanced to Response and the entire principal amount of
the Convertible Note were converted prior to January 1, 1997 at a time when the
market price of Response Common Stock is the same as the market price on the
date hereof, then approximately 1,678,571 shares of Response Common Stock would
be acquired by Seafield as a result of conversion; this is the number included
on the cover page as the number of shares which Seafield has rights to acquire.
If all funds available under the Loan Agreement are advanced to Response and
conversion of the entire principal amount of the Convertible Note occurs after
December 31, 1996, Seafield would acquire 2,136,363 shares of Response Common
Stock as a result of conversion.
No forecast or estimate of future market prices of Response Common
Stock is intended or made by this Amendment No. 9, and no assurances can be or
are being given as to the number of shares of Response Common Stock which would
be issued to Seafield if it were to exercise the conversion option in the
Convertible Note. Furthermore, nothing contained in this Amendment No. 9 is
intended to suggest whether or not Seafield might exercise such conversion
option; its exercise is entirely within Seafield's discretion and Seafield has
not made any decision respecting any such exercise. Seafield negotiated for the
inclusion of the conversion provisions in the Convertible Note in order to
increase the flexibility it has respecting the nature of its investment in
Response.
Pursuant to the Loan Agreement, if at January 1, 1997 either the
indebtedness evidenced by the Convertible Note remains outstanding or Seafield's
current ownership of Response Common Stock has not been reduced by at least
909,000 shares, then, at Seafield's request, Response has agreed to take certain
actions to seek a vote of its shareholders respecting a Recapitalization Plan
(as defined in the Convertible Note) for Response, if one is proposed by
Seafield, and two members of Response's Board of Directors have agreed to vote
approximately 735,000 shares of Response Common Stock in favor of such a
Recapitalization Plan, if proposed. The specific terms of a Recapitalization
Plan, other than those set forth in the Loan Agreement, have not been developed
by Seafield. Furthermore, Seafield has not decided whether it will propose a
Recapitalization Plan, even if the conditions requiring Response to take certain
actions in connection therewith exist, nor has Seafield decided whether or not
it will request that Response take actions specified in the Loan Agreement
relating to a vote of Response's shareholders on a Recapitalization Plan.
If, following a valid request by Seafield for consideration of a
Recapitalization Plan, Response should fail to take required actions respecting
a shareholder vote on such a Recapitalization Plan or Response's Board of
Directors does not recommend the Recapitalization Plan as proposed, then
Response has agreed to issue a warrant (the "Warrant") to Seafield granting
Seafield the right for three years to acquire 1,000,000 shares of Response
Common Stock at a price per share equal to the lesser of $11 and the average of
the closing prices of Response Common Stock for the five trading days
immediately preceding the date on which the Warrant is to be issued.
Pursuant to the Loan Agreement, Seafield has certain registration
rights respecting the Convertible Note, the Warrant and any shares of Response
Common Stock issued upon a conversion of any part of the Convertible Note or an
exercise of any part of the Warrant.
The Convertible Note has been, and it is Seafield's present intent that
the Warrant and any shares of Response Common Stock acquired by Seafield
pursuant to a conversion of any part of the Convertible Note or exercise of any
part of the Warrant would be, acquired as an investment.
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It was recited in Amendment No. 8, that Response had filed a
Registration Statement with the Securities and Exchange Commission in July, 1996
which relates in part to shares of Response Common Stock owned by Seafield, and
that, in connection with any offering pursuant to said Registration Statement,
Seafield anticipated granting the underwriters an option to acquire additional
Response shares from Seafield. However, no assurances can be or are given that
the Registration Statement will become effective or that any shares of Response
Common Stock will be sold by Seafield or others pursuant thereto.
Recently, Response has announced that it is continuing to evaluate a
number of financing options, both private and public. Consistent with Seafield's
previously reported anticipation that any merger of Seafield with its 82% owned
subsidiary, LabOne, Inc., would be preceded by a distribution to Seafield
shareholders, or other disposition by Seafield, of its Response shares, Seafield
intends to discuss with any party demonstrating an interest in providing
financing to Response the possible acquisition by such party of some or all of
Seafield's Response shares. However, no assurances can be or are given that any
such acquisition will occur.
Seafield has stated in the Original Report and the Prior Amendments
that, except for rights granted to Seafield in the Securities Purchase Agreement
filed as Exhibit (a) to Amendment No. 6, which rights are no longer material, it
had no plans or proposals which relate to or would result in (i) the acquisition
by any person of additional securities of Response, or the disposition of
securities of Response; (ii) an extraordinary corporate transaction involving
Response or any of its subsidiaries; (iii) a sale or transfer of a material
amount of assets of Response or any of its subsidiaries; (iv) any change in the
present board of directors or management of Response; (v) any material change in
the present capitalization or dividend policy of Response; (vi) any other
material change in Response's business or corporate structure; (vii) any change
in Response's charter or bylaws which may impede the acquisition of control of
Response by any person; (viii) causing a class of Response's securities to be
delisted from a national securities exchange or to cease to be authorized to be
quoted in an inter-dealer quotation system of a registered national securities
association; (ix) a class of equity securities of Response being eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934; or (x) any act similar to any of those enumerated above.
The foregoing statement remains accurate, except as otherwise set forth herein.
Item 5. Interest in Securities of the Issuer.
(a), (b), (c) and (d)
At present, Seafield beneficially owns 6,735,428 shares of Response
Common Stock; of which Seafield currently has sole power to vote and dispose of
6,709,361 shares; however, both of those numbers include 1,678,571 shares which
Seafield could have the right to acquire pursuant to the conversion option in
the convertible Note if all of the funds available under the Loan Agreement are
advanced to Response and the conversion price were equal to the market price for
Response Common Stock on the date hereof (i.e., $14.00). With respect to 26,067
shares which have been pledged to Seafield ("Pledged Shares") to secure an
indebtedness of a member of Response's management to Seafield, Seafield does not
have the right to exercise any voting or other rights (including the right to
dividends) unless a default under the note evidencing such indebtedness
("Secured Note") or the pledge agreement respecting such indebtedness ("Pledge
Agreement") occurs. All such rights, including the right to dividends on such
shares are retained by the owner of
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such shares, who was the beneficiary of such indebtedness, unless and until a
default occurs. Defaults include (i) failure to pay any obligation under the
Secured Note or Pledge Agreement when the same is due, (ii) the death of the
beneficiary of such indebtedness, the failure of the beneficiary to pay his
debts or the institution of bankruptcy proceedings by or against the
beneficiary, or (iii) the breach of any representation, warranty or agreement
made by the beneficiary in the Secured Note or the Pledge Agreement. If such a
default occurs, Seafield has rights under the Pledge Agreement which include the
right to (a) receive all cash dividends payable with respect to the Pledged
Shares, (b) exercise any and all voting and other rights with respect to the
Pledged Shares, and (c) cause the Pledged Shares to be transferred of record
into Seafield's name or the name of Seafield's nominee.
The number of shares beneficially owned by Seafield constitutes
approximately 63.7% of Response's outstanding Common Stock, calculated in
accordance with Exchange Act Rule 13d-3(d)(1). The percentage would be 56.9% if
the number of shares which Seafield has the right to acquire pursuant to the
conversion option in the Convertible Note is excluded. These percentages do not
reflect shares subject to issue upon exercise of warrants, stock options or upon
conversion of shares of Series A Convertible Preferred Stock of Response
presently outstanding and owned by persons other than Seafield.
Certain of the persons named in Schedule 1 are known by Seafield to
beneficially own shares of Response stock. To Seafield's knowledge, these shares
were acquired by such persons solely for investment purposes and, except as
noted below with respect to Mr. Herman, such persons have sole power to vote and
dispose of such shares. Seafield disclaims any beneficial ownership in any of
such shares. The persons known to Seafield to beneficially own such shares and
the number of such shares beneficially owned by such persons (with an indication
of the shares which there is a right to acquire) are as follows:
Name Number of Shares
Joseph T. Clark 226,640
W. Thoms Grant, II 8,400
Michael E. Herman 360
P. Anthony Jacobs 12,400
James R. Seward 12,400
Of the number of shares shown above, the following numbers consist of options
which the indicated individuals have the right to exercise either presently or
within 60 days: for Joseph T. Clark, 221,840; for W. Thomas Grant II, 8,000; for
P. Anthony Jacobs, 8,000 and for James R. Seward, 8,000. Of the number of shares
shown above as beneficially owned by Mr. Herman, all are owned by his wife, and
he disclaims beneficial ownership.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understanding or Relationships with Respect
to Securities of the Issuer.
In the event a Recapitalization Plan is proposed by Seafield and
submitted for approval by Response shareholders (see Item 4 for a discussion of
the circumstances under which a Recapitalization Plan might be so proposed and
submitted), two of the members of Response's Board
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of Directors have agreed, pursuant to Voting Agreements dated October 4, 1996,
to vote an aggregate of approximately 735,000 shares of Response Common Stock in
favor of such a Recapitalization Plan.
Item 7. Exhibits.
99.1 Loan Agreement between Seafield and Response, dated as of
October 4, 1996.
99.2 Adjustable Rate Convertible Note of Response, dated October 4,
1996.
99.3 Subordination Agreement, among Response, Seafield and
NationsBank of Tennessee, N.A., as Agent, dated as of October
4, 1996.
99.4 Form of Voting Agreement, dated October 4, 1996; one between
Seafield and William H. West, M.D. relates to approximately
635,000 shares of Response Common Stock and one between
Seafield and Frank M. Bumstead relates to approximately
100,000 shares of Response Common Stock.
99.5 Form of Warrant, relating to rights which Seafield could
acquire to purchase shares of Response Common Stock if the
circumstances referred to in Item 4 occur so as to cause
Response to issue the Warrant.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
SEAFIELD CAPITAL CORPORATION
By: /s/ P. Anthony Jacobs
----------------------------
P. Anthony Jacobs, President
Date: October 16, 1996
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SCHEDULE 1
Directors of Seafield Capital Corporation
Name, Occupation and Business Address
Lan C. Bentsen, Managing Partner
Remington Partners (investments)
3040 Post Oak Boulevard, Suite 200
Houston, Texas 77056
John C. Gamble, Managing Partner
Allen, Matkins Leck, Gamble and Mallory (law)
18400 Von Karmen, 4th Floor
Irvine, California 92715
William D. Grant, Consultant
Seafield Capital Corporation
2600 Grand Boulevard, Suite 500
Post Office Box 410949
Kansas City, Missouri 64141
W. Thomas Grant, II, Chairman of the Board and Chief Executive Officer/Seafield
Capital Corporation; Chairman of the Board, President and Chief Executive
Officer/LabOne, Inc.
2600 Grand Boulevard, Suite 500
Post Office Box 410949
Kansas City, Missouri 64141
Michael E. Herman
Private Investor
9300 Ward Parkway
Post Office Box 8480
Kansas City, Missouri 64114
P. Anthony Jacobs, President and Chief Operating Officer
Seafield Capital Corporation, 2600 Grand Boulevard, Suite 500
Post Office Box 410949
Kansas City, Missouri 64141
David W. Kemper, Chairman, President and Chief Executive Officer
Commerce Bancshares, Inc. (banking)
1000 Walnut Street, 18th Floor
Kansas City, Missouri 64106
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John H. Robinson, Jr., Managing Partner
Black & Veatch (design and construction)
Corporate Woods, Building 27
10975 Grandview
Overland Park, Kansas 66210
James R. Seward, Executive Vice President and Chief Financial Officer
Seafield Capital Corporation
2600 Grand Boulevard, Suite 500
Post Office Box 410949
Kansas City, Missouri 64141
Dennis R. Stephen, Chief Operating Officer
Tennessee Farmers Insurance Companies (insurance)
Post Office Box 307
Columbia, Tennessee 38401
Executive Officers of Seafield Capital Corporation
Name, Position and Business Address
W. T. Grant, II
Chairman of the Board and Chief Executive Officer/Seafield Capital Corporation
Chairman of the Board, President and Chief Executive Officer/LabOne, Inc.
2600 Grand Boulevard, Suite 500
Post Office Box 410949
Kansas City, Missouri 64141
P. Anthony Jacobs, President and Chief Operating Officer
Seafield Capital Corporation
2600 Grand Boulevard, Suite 500
Post Office Box 410949
Kansas City, Missouri 64141
James R. Seward, Executive Vice President and Chief Financial Officer
Seafield Capital Corporation
2600 Grand Boulevard, Suite 500
Post Office Box 410949
Kansas City, Missouri 64141
Steve K. Fitzwater, Vice President, Chief Accounting Officer and Secretary
Seafield Capital Corporation
2600 Grand Boulevard, Suite 500
Post Office Box 410949
Kansas City, Missouri 64141
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Joseph T. Clark, President and Chief Executive Officer
Response Oncology, Inc.
1775 Moriah Woods Boulevard
Memphis, Tennessee 38117
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EXHIBIT INDEX
Ex. 99.1 Loan Agreement between Seafield and Response, dated as of
October 4, 1996.
Ex. 99.2 Adjustable Rate Convertible Note of Response, dated October 4,
1996.
Ex. 99.3 Subordination Agreement, among Response, Seafield and
NationsBank of Tennessee, N.A., as Agent, dated as of
October 4, 1996.
Ex. 99.4 Form of Voting Agreement, dated October 4, 1996; one between
Seafield and William H. West, M.D. relates to approximately
635,000 shares of Response Common Stock and one between
Seafield and Frank M. Bumstead relates to approximately
100,000 shares of Response Common Stock.
Ex. 99.5 Form of Warrant, relating to rights which Seafield could
acquire to purchase shares of Response Common Stock if the
circumstances referred to in Item 4 occur so as to cause
Response to issue the Warrant.
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EXHIBIT 99.1
LOAN AGREEMENT
This Loan Agreement is made as of the 4th day of October, 1996, between
Response Oncology, Inc., a Tennessee corporation ("Company") and Seafield
Capital Corporation, a Missouri corporation ("Lender").
WHEREAS, the Company has requested the Lender to loan up to
Twenty-Three Million Five Hundred Thousand Dollars ($23,500,000) to the Company,
in one or more installments, primarily to provide acquisition financing in
connection with the Company's acquisitions of the New Oncology Practices; and
WHEREAS, the Lender is willing to make the loan to the Company upon the
terms and conditions set forth herein and in the Adjustable Rate Convertible
Note ("Note"), a copy of which is attached hereto as Exhibit A.
NOW, THEREFORE, in consideration of the premises, the mutual promises
herein contained and for other good and valuable consideration the receipt
whereof is hereby acknowledged, the parties agree as follows:
1. Definitions. Capitalized terms used in this Loan Agreement which
are not defined herein shall have the meanings ascribed to them in the Note.
2. Loan; Advances. Subject to the terms and conditions of this Loan
Agreement and the Note and provided there does not exist an Event of Default
hereunder or under the Note or any event or condition which with notice, lapse
of time or the advance of funds would constitute such an Event of Default,
Lender agrees to loan up to $23,500,000 to the Company, in one or more
installments, as requested by the Company, subject to the following:
(a) Each request for an advance of funds hereunder must include
the Company's representation as to the use to be made of the funds
requested.
(b) No more than $3,000,000 of funds advanced hereunder can be
used for Company working capital.
(c) Except for funds to be used for working capital, as specified
above, all funds advanced hereunder must be used to pay a portion of the
acquisition price for one or more of the New Oncology Practices and funds
to be used for such purposes must be applied to such purposes within one
business day after an advance.
(d) No advance of funds will be made hereunder after December 31,
1996.
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(e) No advance of funds will be made hereunder if at the time
there exists an Event of Default hereunder or under the Note or an event
or condition which with notice, lapse of time or the advance of funds
would constitute such an Event of Default.
(f) No advance of funds will be made after the Company has given
written notice to Lender of a redemption of all or a part of the Note.
(g) The aggregate of all funds advanced hereunder shall not exceed
$23,500,000.
All loans and advances by the Lender to the Company under this Loan Agreement
and the Note, constitute one loan and all indebtedness and obligations of the
Company under this Loan Agreement and the Note shall constitute one general
obligation of the Company which will be evidenced by the Note and governed by
the terms and conditions of the Note and this Loan Agreement.
3. Subordination. The loan evidenced by the Note will be subject to
that certain Subordination Agreement dated as of October 4, 1996, among the
Company, the Lender and NationsBank of Tennessee, N.A., as Agent. Reference is
made to said Subordination Agreement for the terms and provisions pursuant to
which the indebtedness evidenced by the Note is subordinated to obligations of
the Company to the Lenders under that certain Loan Agreement dated as of May 31,
1996, among the Company and the banking institutions which are a party thereto.
4. Shareholder Approval of Conversion Price and Warrant. As soon as
practicable, and in any event within 15 days after the date of this Loan
Agreement, the Company shall call a special meeting of its shareholders, and
within 30 days after such a special meeting has been called the Company shall
hold such special meeting, for the purpose of obtaining the Shareholder
Approval.
5. Recapitalization Plan.
(a) Unless all principal of and interest on the Note is paid in
full prior to January 1, 1997 and simultaneously therewith 909,000 shares
of the Company's Common Stock are purchased from the Lender at a price
per share of $11.00, the Company shall, within 30 days after the later of
(i) the earlier of (x) January 1, 1997 and (y) the date upon which the
principal of and interest on the Note is paid in full, and (ii) the date
upon which the Lender submits to the Company in writing a request for and
the terms of a Recapitalization Plan (such later date being the "Notice
Date"), file a preliminary proxy statement with the Securities and
Exchange Commission providing for, among other things, a meeting of the
Company's shareholders, to be held not later than 120 days after the
Notice Date, for the
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purpose of obtaining all Required Approvals by said shareholders of the
Recapitalization Plan.
(b) The Company agrees to use its best efforts to hold a meeting
of its shareholders on or before the 120th day following the Notice Date
for the purpose of obtaining all Required Approvals by said shareholders
of the Recapitalization Plan.
(c) When the Company becomes obligated pursuant to this Section 5
to call a meeting of the Company's shareholders, the Company shall, to
the extent reasonably requested by Seafield forthwith and thereafter use
its best efforts to: (i) cause the recapitalization of the Company
pursuant to the Recapitalization Plan to be tax-free for federal and
state income tax purposes, including without limitation cooperating with
Seafield to develop and set forth in the Recapitalization Plan a
statement of the Company's purposes for carrying out the recapitalization
contemplated therein; (ii) permit the Capital Stock of the Company to
continue to be listed by the National Association of Securities Dealers,
Inc. on its National Market Quotation System; and (iii) cause any
distribution by Seafield to its shareholders of the Capital Stock of the
Company owned by Seafield immediately after the recapitalization to be
tax-free under Section 355 of the Code; provided, the Company's
obligations pursuant to this Section 5(c) shall cease if and when the
Recapitalization Plan is disapproved by a vote of a majority of the
Company's shareholders other than Lender; and provided further, that such
acts of the Company do not cause any violation by the board of directors
of its fiduciary responsibilities to all shareholders of the Company or
cause a material departure from the business plans of the Company as
established by its board of directors or materially impair its future
prospects. A request made by Seafield shall be deemed to be reasonable if
it is, in the opinion of Seafield's counsel, necessary or appropriate
either to satisfy the substantive requirements of the Code and the
regulations thereunder or other law or to obtain advance administrative
approval of transactions by the Internal Revenue Service, the National
Association of Securities Dealers, Inc., or other administrative
authority, so long as such request is not inconsistent with the second
proviso above.
(d) In the event of a Warrant Issuance Event, the Company shall
immediately issue to the Lender a Warrant in the form of Exhibit B
attached hereto pursuant to which Lender would have the right to purchase
1,000,000 shares of the Company's Common Stock for a price per share
equal to the lesser of (i) the average of the closing prices of the
Common Stock on the NASDAQ Stock Market's National Market for the five
(5) consecutive trading days ending one (1) trading day prior to the date
on which the Warrant Issuance Event occurs (for purposes of computing
such average, such closing trading prices shall be appropriately adjusted
to eliminate the impact of any dividend, whether in cash, securities or
other property, stock split, reclassification, recapitalization, reverse
split or similar event, announced or
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<PAGE>
occurring with respect to the Company's Common Stock during such five (5)
trading day period) and (ii) $11.00. The Warrant shall be exercisable for
three years from the Warrant Issuance Event and shall otherwise be upon
such terms and conditions as are set forth in the form of warrant
attached as Exhibit B hereto. Notwithstanding anything contained in this
subsection (c) to the contrary, the number of warrants which the Company
shall be obligated to issue to the Lender shall not exceed the number
specified above, notwithstanding that more than one Warrant Issuance
Event may occur; said Warrant shall be issued by the Company to the
Lender upon the occurrence of the first Warrant Issuance Event to occur.
6. Representations, Warranties and Covenants. The Company represents,
warrants and covenants to the Lender as follows:
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Tennessee,
and is duly qualified to transact business and is in good standing in
each jurisdiction where the nature and extent of its business and
property require the same.
(b) The Company has all requisite power and authority to enter
into this Loan Agreement, the Note and any other documents executed and
delivered by it in connection with the transaction contemplated by this
Loan Agreement and the Note. No authorization, consent, approval, license
or exemption of, and no registration, qualification, designation,
declaration or filing with, any court or governmental department,
commission, board, bureau, agency or instrumentality, and no vote,
authorization, consent or approval of shareholders of the Company is or
was necessary to the valid execution, delivery and performance of this
Loan Agreement and the Note, the making of the borrowing contemplated by
the provisions hereof and thereof, the execution, delivery and
performance of all other agreements and instruments contemplated by the
provisions of this Loan Agreement or the Note to be executed, delivered
and performed by the Company, or the consummation of the transactions
herein or therein contemplated, except for the shareholder votes required
in connection with the Recapitalization Plan and in order to obtain the
Shareholder Approval. Each of this Loan Agreement, the Note and the other
documents and instruments executed and delivered by the Company in
connection with the transactions contemplated hereby have been duly
authorized on behalf of the Company and when executed and delivered by
the Company, each will constitute the legal, valid and binding obligation
of the Company, enforceable in accordance with their respective terms.
(c) Except as described in the Officer's Certificate, the
execution, delivery and performance of this Loan Agreement, the Note and
any other documents or instruments executed and delivered by the Company
in connection with the transactions contemplated by this Loan Agreement
and the performance by the
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<PAGE>
Company of its obligations under this Loan Agreement, the Note and such
other documents and instruments do not conflict with any provision of
law, rule or regulation, or the articles of incorporation or the bylaws
of the Company or of any material agreement binding upon the Company or
to which any property of the Company may be subject.
(d) If the conversion privilege afforded to the Lender in the Note
is exercised, all shares of Common Stock to be issued to the Lender
pursuant thereto will, when issued, constitute duly authorized, validly
issued and outstanding, fully paid and non-assessable shares of Common
Stock of the Company. Furthermore, in the event of a Warrant Issuance
Event, the Warrant will, when issued to the Lender, constitute the legal,
valid and binding obligation of the Company to issue the number of shares
of Common Stock specified therein upon exercise of the Warrant by the
Lender in accordance with the provisions thereof. In the event the
Warrant is exercised in whole or in part, the shares of Common Stock
issued pursuant thereto will, when issued, be duly authorized, validly
issued and outstanding, fully paid and non-assessable shares of Common
Stock of the Company.
(e) The Company covenants that during the respective periods that
the conversion rights contained in the Note exist and during which the
Warrant may be exercised, the Company will reserve from its authorized
and unissued shares of Common Stock a sufficient number of shares to
provide for the issuance of Common Stock upon the conversion of the Note
and the exercise of the Warrant, as the case may be. The Company agrees
that its issuance of the Note and the Warrant shall constitute full
authority to its officers and agents who are charged with the duty of
executing stock certificates to execute and issue the necessary
certificates for shares of Common Stock upon the conversion of the Note
or any part thereof, or the exercise of the Warrant or any part thereof.
(f) The Company covenants and agrees that upon any exercise of the
conversion right afforded the Lender in the Note, the Company shall cause
an opinion of counsel acceptable to the Lender to be issued to the Lender
to the effect that the shares of Common Stock issued in connection with
said conversion constitute duly authorized, validly issued and
outstanding, fully and non-assessable shares of the Company's Common
Stock. Further, upon the exercise of the Warrant or any part thereof, the
Company covenants and agrees that it will cause an opinion of counsel
acceptable to the Lender to be issued to the Lender to the effect that
the shares of Common Stock issued in connection with such exercise
constitute duly authorized, validly issued and outstanding, fully paid
and non-assessable shares of Common Stock of the Company.
7. Conditions to the Lender's Obligations. The obligation of the
Lender to make any advances hereunder or under the Note is subject to the
accuracy of and
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compliance with, as of the date hereof, the representations and warranties and
covenants herein contained and to the satisfaction of the following further
conditions:
(a) The Company and all other appropriate parties shall duly
execute and deliver to Lender the Loan Agreement, the Note and the
Subordination Agreement.
(b) William H. West, M.D. and Frank M. Bumstead shall duly execute
and deliver to the Lender a Voting Agreement in the form of Exhibit C
hereto.
(c) The Company shall deliver to Lender an opinion of counsel
acceptable to the Lender dated the date of the Loan Agreement, to the
following effect:
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Tennessee.
(ii) The Company has the corporate power and authority to
enter into, execute and deliver the Loan Agreement and the Note
and to perform its obligations under the Loan Agreement and the
Note.
(iii) The execution and delivery by the Company of the Loan
Agreement and the Note and the performance by the Company of its
obligations thereunder have been duly authorized by all requisite
corporate action, and will not conflict with any federal or state
law, rule or regulation, and any rule or regulation of any
regulatory or self-regulatory agency or body, any provision of the
charter or bylaws of the Company or any term or provision of any
material agreement of the Company known to said counsel.
(iv) The Loan Agreement and the Note are the legal, valid
and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, subject to
customary exceptions for insolvency laws and equitable principles.
8. Events of Default. Each of the following shall constitute an
Event of Default under this Loan Agreement:
(a) The occurrence or existence of Event of Default under the
Note.
(b) A breach of any representation or warranty of the Company
contained in this Loan Agreement.
(c) A default in the performance, or breach, of any covenant or
agreement of the Company under this Loan Agreement, and continuance of
such default or breach for a period of thirty (30) days after there has
been given to the Company by the
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<PAGE>
Lender a written notice specifying such default or breach and stating
that such notice is a "Notice of Default."
9. Remedies. In the case of one or more Events of Default under this
Loan Agreement, subject to the Subordination Agreement, the Lender shall have
all remedies provided to it under the Note and in addition may proceed to
protect and enforce its rights by suit and equity, or by action at law, or by
other appropriate proceeding, whether for the specific performance of any
covenant or agreement contained in this Loan Agreement or in the Note or in any
of the other agreements or instruments executed by the Company in connection
herewith, or in aid of the exercise of any power granted in this Loan Agreement,
in the Note or in such other documents or instruments upon the occurrence of an
Event of Default as defined herein, or may proceed to enforce the payment of the
Note or to enforce any other legal or equitable right of the holder of the Note
or under this Loan Agreement. In particular, without limiting the generality of
the foregoing, but subject to the Subordination Agreement, the Lender or any
other subsequent holder of the Note shall have the right to declare the entire
unpaid principal of and all interest accrued on, the indebtedness evidenced by
the Note then outstanding to be and such indebtedness and the Note evidencing
said indebtedness shall thereupon become, forthwith due and payable, without any
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived, and the Company will forthwith pay to the holder of the
Note the entire outstanding principal of and interest on the Note, and other
charges or obligations provided for in this Loan Agreement or in the Note. In
case any one or more Events of Default shall have occurred and be continuing,
the Lender or any subsequent holder of the Note may, at its option, rectify or
cure such Event of Default for the account and at the expense of the Company and
all sums so advanced for such purpose, together with interest thereon at the
Note Rate, from the date of expenditure to the date of repayment, shall be
deemed part of the indebtedness evidenced by the Note and, subject to the
Subordination Agreement, shall be due and payable upon demand. No course of
dealing on the part of the holder of the Note or any delay or failure on the
part of such holder to exercise any right shall operate as a waiver of such
right or otherwise prejudice such holder's rights, powers and remedies. If the
Company fails to pay when due the principal of or interest on the Note, or other
charges or obligations provided for in this Loan Agreement or in the Note, or
fails to comply with any other provision of this Loan Agreement or the Note, the
Company will pay to the holder of the Note, to the extent permitted by law, such
further amounts as shall be sufficient to cover the costs and expenses,
including but not limited to reasonable attorneys' fees, incurred by such holder
in collecting any sums due on or on account of the indebtedness evidenced by the
Note or this Loan Agreement or otherwise in enforcing any of its rights.
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<PAGE>
10. Registration Rights.
(a) The Note. Subject to the terms and provisions set forth in
Section 5.1 of that certain Securities Purchase Agreement, dated
September 26, 1990, between the Company and the Lender, as amended (as
amended, the "Securities Purchase Agreement"), in the event that the
Lender shall so request by written notice to the Company, the Company
shall, at the Company's cost and expense (except for underwriting
discounts and commissions), as soon as practical after the receipt of
such written notice, file with the Securities and Exchange Commission
(the "Commission") a Registration Statement under the Securities Act of
1933, as amended (as then in effect or any similar statute then in
effect) or under the Securities Exchange Act of 1934, as amended (as then
in effect or any similar statute then in effect), as requested by the
Lender, covering in a single Registration Statement the offering and sale
or other assignment of the Note requested to be covered by such
Registration Statement, and the Company will use its best efforts to
cause such Registration Statement to become effective as expeditiously as
possible.
(b) Common Stock. The Company shall have the same demand
registration rights and piggyback registration rights with respect to all
shares of the Company's Common Stock issued upon a conversion of the Note
or any part thereof or upon the exercise of the Warrant or any part
thereof as are afforded to the Lender in the Securities Purchase
Agreement.
(c) Warrant. Subject to the terms and conditions set forth in
Section 5.1 of the Securities Purchase Agreement, in the event that the
Lender shall so request by written notice to the Company, the Company
shall, at the Company's costs and expense (except for underwriting
discounts and commissions), as soon as practical after the receipt of
such written notice, file with the Commission a Registration Statement
under the Securities Act of 1933, as amended (as then in effect or any
similar statute then in effect) or the Securities Exchange Act of 1934,
as amended (as then in effect or any similar statute then in effect)
covering the offering and sale or other distribution of the Warrant
requested to be covered by such Registration Statement, and the Company
will use its best efforts to cause such Registration Statement to become
effective as expeditiously as possible.
11. General.
(a) Notices. Any communications concerning this Loan Agreement
or the Note shall be addressed as follows:
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As to Lender:
Seafield Capital Corporation
Attention: P. Anthony Jacobs
2600 Grand Boulevard, Suite 500
Kansas City, MO 64108
Telecopier: (816) 842-2101
With a Copy to:
Lathrop M. Gates
Lathrop & Gage L.C.
2345 Grand Boulevard
Kansas City, MO 64108
Telecopier: (816) 292-2001
As to Company:
Response Oncology, Inc.
Attention: Joseph P. Clark
1775 Moriah Woods Blvd.
Memphis, Tennessee 38117
Telecopier: (901) 683-7277
With a copy to:
Waring Cox PLC
Attention: Sam D. Chafetz
50 N. Front Street, Suite 1300
Memphis, TN 38103
Telecopier: 901-543-8036
(b) Severability. Any provision of this Loan Agreement or of the
Note which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
enforceability without invalidating the remaining provisions hereof or
thereof or affecting the validity or enforceability of such provision in
any other jurisdiction, it being the intent of the parties hereto that
the remaining provisions hereof or thereof shall be construed in such a
manner as to give maximum meaning and effect thereto as if the invalid or
unenforceable provision were never a part of this Loan Agreement or the
Note.
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<PAGE>
(c) Law. This Loan Agreement shall be a contract made under,
governed by and construed in accordance with the internal laws (without
giving effect to the conflict of laws rules) of the State of Missouri.
(d) Successors. This Loan Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall
inure to the benefit of such parties and their respective successors and
assigns; provided, however, that Company shall not assign this Agreement
or any of its rights or duties hereunder or under the Note, without the
prior written consent of the Lender.
(e) Section Headings. The section headings and captions in this
Loan Agreement are for convenience only and shall not affect the
construction hereof.
(f) Counterparts. This Loan Agreement may be executed in multiple
counterparts and by the parties hereto on separate, identical
counterparts; each shall be considered an original, but all of which
shall constitute one single agreement.
(g) Entire Agreement. All negotiations between the parties hereto
are merged in this Loan Agreement and in the Note, and there are no
understandings or agreements other than those incorporated herein or in
the Note.
(h) Assignment and Transfer. The Lender shall have the right to
assign and transfer any or all of its rights and privileges pursuant to
this Loan Agreement or the Note, which assignment may be in whole or in
part (including without limitation an assignment of certain rights and
retention of other rights under this Loan Agreement notwithstanding that
the Note may be assigned or otherwise transferred by the Lender), at any
time and from time to time. The Company may not assign this Loan
Agreement or any of its rights or duties hereunder or under the Note,
without the prior written consent of the Lender.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto cause this Loan Agreement to be
duly executed as of the date first above written.
LENDER
SEAFIELD CAPITAL CORPORATION
By: /s/ James R. Seward
------------------------------
Name: James R. Seward
Title: EVP Chief Financial Officer
COMPANY
RESPONSE ONCOLOGY, INC.
By: /s/ Joseph P. Clark
-------------------------------
Name: Joseph P. Clark
Title: President
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<PAGE>
EXHIBIT 99.2
THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS RESPONSE ONCOLOGY, INC.
HAS BEEN FURNISHED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH
TRANSACTION WILL NOT VIOLATE SUCH REGISTRATION REQUIREMENTS.
THIS NOTE IS SUBJECT TO THE PROVISIONS OF THAT CERTAIN SUBORDINATION AGREEMENT,
DATED OCTOBER 4, 1996, AMONG RESPONSE ONCOLOGY, INC., NATIONSBANK OF TENNESSEE,
N.A., AS AGENT, AND SEAFIELD CAPITAL CORPORATION.
RESPONSE ONCOLOGY, INC.
NO. 1996A-1 $23,500,000
ADJUSTABLE RATE CONVERTIBLE NOTE
DUE AUGUST 31, 1998
Dated October 4, 1996
For value received, RESPONSE ONCOLOGY, INC., a Tennessee corporation
(the "Company"), hereby promises to pay to SEAFIELD CAPITAL CORPORATION, a
Missouri corporation ("Seafield"), or its registered assigns, the principal sum
of TWENTY-THREE MILLION FIVE HUNDRED THOUSAND DOLLARS ($23,500,000), or such
lesser amount of principal as is outstanding under this Note, together with
interest on the unpaid principal portion thereof, as herein provided.
The principal amount of this Note, together with any accrued and unpaid
interest thereon, shall be payable in full on the earliest of (i) August 31,
1998 (ii) the first date prior to January 1, 1997 on which the Company receives
proceeds from an offering or other sale of its Capital Stock or Senior
Subordinated Indebtedness, or (iii) such date after December 31, 1996 as is
specified by the Holder, provided that such date is on or after a date on which
the Company receives proceeds from an offering of its Capital Stock or Senior
Subordinated Indebtedness. Payments under (ii) and (iii) may be made only from
the proceeds of such offering or sale.
Principal of this Note shall bear interest from the date principal is
advanced at a rate per annum equal to the Note Rate as in effect from time to
time. Interest on this Note shall be paid on the last day of each quarter (i.e.,
December 31, March 31, June 30 and September 30) and at maturity or upon
redemption or conversion. Interest hereunder shall be calculated for the actual
number of days elapsed on the basis of a year consisting of 360 days.
Such principal and interest payments shall be made to Seafield or to
such other person in whose name this Note is registered (Seafield or such other
person being referred to as the "Holder") on the register maintained by the
Secretary of the Company ("Note Register") at the close of business
<PAGE>
on the "Record Date" for such principal and interest installment. Such
Record Date shall be the fifth day (whether or not a Business Day) next
preceding such principal and interest payment date.
Payment of the principal of and interest on this Note will be made to
the Holder at the Principal Executive Office of the Company in Memphis,
Tennessee, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
provided, however, that at the request of the Holder made on or before the
Record Date payment may be made by check mailed to the address of the Holder as
such address shall appear in the Company's Note Register or by wire transfer to
such account as may be specified to the Company in writing by the Holder.
This Note is that certain promissory note referred to in and issued
pursuant to the Loan Agreement dated October 4, 1996, between the Company and
Seafield and this Note is entitled to the benefit of said Loan Agreement, to
which reference is hereby made for a statement of the terms and conditions under
which the loan evidenced hereby is made. This Note is designated as the
Company's Adjustable Rate Convertible Note, No. 1996A-1, due August 31, 1998
(the "Note") and when issued was in the principal amount of $23,500,000. This
Note is convertible as provided in Section 3 hereof.
The books and records of the Holder shall be presumptive (i) as to the
amount and date of each advance of monies hereunder and under the Loan
Agreement, and (ii) as to the amount from time to time of the unpaid principal
amount of this Note.
This Note was originally issued to fund the acquisition by the Company
of the New Oncology Practices, as herein defined, and to fund $3 million of
Company working capital.
The following terms apply to this Note:
SECTION 1. Certain Definitions.
As used in this Note:
"Affiliate" means (i) with respect to any specified Person, any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting stock, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Boca Assumed Debt" means Indebtedness of The Center for
Hematology-Oncology, P.A., a Florida professional association, aggregating
$76,000, assumed by the Company as partial payment of the acquisition price for
assets of said professional association.
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<PAGE>
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the City of New York
are authorized or obligated by law or executive order to close.
"Capital Lease" means any lease of property, real or personal, in
respect of which the present value of the minimum rental commitment would be
capitalized on a balance sheet of the lessee in accordance with generally
accepted accounting principles; provided that any such lease will not be deemed
a Capital Lease for purposes of this Note or the Loan Agreement if the
obligations and rental commitments thereunder do not or will not exceed $25,000
in any year and if the aggregate of the obligations and rental commitments under
all such leases do not or will not exceed $500,000 in any year.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock of
such Person.
"Common Stock" means the Company's Common Stock, par value $ .01 per
share, or any shares of Capital Stock of the Company into which such stock shall
hereafter be changed or reclassified.
"Credit Facility" means the credit facility provided for in the Senior
Debt Agreements, as that term is defined in the Subordination Agreement.
"Indebtedness" of any Person means (i) any liability of such Person (a)
for borrowed money, (b) evidenced by a note, debenture or similar instrument
(including a purchase money obligation or deferred payment obligation) given in
connection with the acquisition of any services, property or assets (other than
inventory, other accrued current liabilities or similar property acquired in the
ordinary course of business), including securities (but excluding reverse
repurchase agreements entered into in the ordinary course of business), (c) for
the payment of a Capital Lease obligation of such person or (d) with respect to
the reimbursement of any letter of credit, banker's acceptance or similar credit
transaction (other than trade letters of credit issued in the ordinary course of
business; provided, that failure to make prompt reimbursement of any trade
letter of credit shall be deemed to be the incurrence of Indebtedness); (ii) any
guarantee by such Person of any liability of others described in clause (i)
above or any obligation of such Person with respect to any liability of others
described in clause (i) above, including liability of others secured by a lien
on the property of such Person, whether or not the liability so secured has been
assumed by such Person; and (iii) all Interest Rate Protection Obligations of
such Person. Indebtedness shall not include operating leases or trade accounts
payable.
"Interest Rate Protection Obligations" means the obligations of any
Person pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include without limitation, interest rate swaps, caps,
floors, collars and similar agreements.
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<PAGE>
"Knoxville Assumed Debt" means Indebtedness of the Knoxville Oncology
Practice under Capital Lease obligations aggregating $93,475 assumed by the
Company as partial payment of the acquisition price of the Knoxville Oncology
Practice.
"Knoxville Oncology Practice" means Knoxville Hematology-Oncology
Associates, whose principal business office is located in Knoxville, Tennessee.
"Loan Agreement" means the Loan Agreement dated October 4, 1996 between
the Company and Seafield, pursuant to which this Note has been issued.
"New Oncology Practices" means Weinreb, Weisberg & Weiss, M.D., P.A.;
Drs. Antonucci, McCormack, Haraf & Kerns; Hematology Oncology of the Treasure
Coast, P.A.; The Center for Hematology-Oncology, P.A.; and Lawrence A. Snetman,
M.D., P.A.
"Note Rate" means, at all times prior to April 1, 1997, eight percent
(8%) per annum; at all times after March 31, 1997 and prior to July 1, 1997, ten
percent (10%) per annum; and at all times after June 30, 1997, twelve percent
(12%) per annum.
"pari passu" when used with respect to the ranking of any indebtedness
of any Person in relation to other Indebtedness of such Person, means that each
such indebtedness (a) either (i) is not subordinated in right of payment to any
other Indebtedness of such Person or (ii) is subordinate in right of payment to
the same Indebtedness of such Person as is the other and is so subordinate to
the same extent, and (b) is not subordinate in right of payment to the other or
to any Indebtedness of such Person as to which the other is not so subordinate.
"Person" means an individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or agency or political
subdivision thereof.
"Physician Assumed Debt" means the Knoxville Assumed Debt, the Boca
Assumed Debt and the Weinreb, Weisberg & Weiss Assumed Debt.
"Physician Notes" means (i) the note payable to the partners of the
Knoxville Oncology Practice, in the principal amount of $150,000, as partial
payment of the acquisition price therefor, (ii) the note payable to the
shareholders of Oncology Hematology Group of South Florida, P.A., in the
principal amount of $5,959,972, as partial payment of the acquisition price
therefor, (iii) the note payable to the shareholders of St. Petersburg Oncology,
Inc., in the principal amount of $5,100,000, as partial payment of the
acquisition price therefor, (iv) the note payable to the shareholders of
Rosenberg & Kalman, M.D., P.A., in the principal amount of $1,900,000, as
partial payment of the acquisition price therefor, (v) the note payable to the
shareholders of Weinreb, Weisberg & Weiss, M.D., P.A., in the principal amount
of $417,812, as partial payment of the acquisition price therefor, (vi) the note
payable to the partners of Drs. Antonucci, McCormack, Haraf & Kerns, a Tennessee
partnership, in the principal amount of $725,000, as partial payment of the
acquisition price therefor, (vii) the note payable to the shareholders of
Hematology Oncology of the Treasure Coast, P.A., in the principal amount of
$1,362,500, as partial payment of the acquisition price therefor, (viii) the
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<PAGE>
note payable to The Center for Hematology-Oncology, P.A., in the principal
amount of $4,000,000, as partial payment of the acquisition price for the assets
thereof, and (ix) the note payable to the shareholders of Lawrence A. Snetman,
M.D., P.A., in the principal amount of $90,000, as partial payment of the
acquisition price therefor.
"Principal Executive Office" means 1775 Moriah Woods Boulevard,
Memphis, Tennessee 38117.
"Recapitalization Plan" means a plan submitted to the Company by
Seafield for the recapitalization of the Company's Capital Stock which (i)
provides (A) that the Capital Stock of the Company owned by Seafield immediately
after consummation of the recapitalization which was derived from Capital Stock
of the Company which immediately before consummation of the recapitalization had
been owned by Seafield for at least 5 years would constitute Capital Stock
possessing at least 80% of the total combined voting power of all classes of
Capital Stock of the Company entitled to vote and (B) that the Company will not
have authorized or outstanding any shares of a class of Capital Stock which are
not Voting Stock, and (ii) makes no changes in the capital structure of the
Company except as necessary to accomplish the foregoing. For purposes of this
definition, "Capital Stock" shall have the same meaning as the term "stock" in
Section 368(c) of the Internal Revenue Code of 1986, as amended (the "Code") and
percentages of voting power shall be determined in a manner consistent with the
requirements of Section 355 of the Code.
"Required Approvals" means all approvals required under state and
federal laws, rules or regulations or under rules of applicable regulatory and
self-regulatory agencies or bodies to enable the Company to effect the
Recapitalization Plan.
"Senior Subordinated Indebtedness" means Indebtedness of the Company
which is subordinated in right of payment to any other Indebtedness of the
Company unless such Indebtedness is either evidenced by one of the Physician
Notes or is also subordinated in right of payment, in a manner satisfactory to
the Holder, to the Indebtedness evidenced by this Note.
"Shareholder Approval" means approval by the holders (including without
limitation Seafield) of a majority of the issued and outstanding shares of the
Company's Common Stock (i) of a change in the Conversion Price (as defined in
Section 3 hereof) to $11.00 and the issuance of shares of Company Common Stock
pursuant to the Conversion Privilege contained in Section 3 hereof based upon a
Conversion Price of $11.00, and (ii) of the issuance of the Warrant provided for
in Section 5(d) of the Loan Agreement and shares of the Company's Common Stock
in connection with one or more exercises of said Warrant pursuant to the terms
thereof.
"Subordination Agreement" means the Subordination Agreement dated
October 4, 1996, among the Company, Seafield and NationsBank of Tennessee, N.A.,
as Agent.
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<PAGE>
"Subsidiary" means a corporation more than 50% of the outstanding
Voting Stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries and which is a "significant subsidiary" as defined in
Rule 1-01 (w) of Regulation S-X of the Securities and Exchange Commission.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of stock has such voting power by reason of any contingency.
"Warrant Issuance Event" means any of the following, unless all
principal of and interest on the Note is paid in full prior to January 1, 1997
and simultaneously therewith 909,000 shares of the Company's Common Stock are
purchased from Seafield at a price per share of $11.00: (i) the failure by the
Company to file with the Securities and Exchange Commission within 30 days after
the later of (A) the earlier of (x) the date upon which the principal of and
interest on this Note is paid in full, and (y) January 1, 1997 and (B) the date
upon which Seafield submits to the Company in writing a request for and the
terms of a Recapitalization Plan (such later date being the "Notice Date"), a
preliminary proxy statement providing for, among other things, a meeting of the
Company's shareholders, to be held not later than 120 days after the Notice
Date, for the purpose of obtaining all Required Approvals by said shareholders
(including shareholders other than Seafield) of the Recapitalization Plan; or
(ii) the failure by the Company's Board of Directors to unconditionally
recommend the Recapitalization Plan by way of a statement of such recommendation
in the definitive proxy statement and other materials sent to the Company's
shareholders in connection with the shareholders meeting contemplated herein; or
(iii) any change in or withdrawal of the recommendation of the Recapitalization
Plan by the Company's Board of Directors after the date of the definitive proxy
statement; or (iv) a failure to hold the contemplated meeting of the Company's
shareholders by the 120th day following the Notice Date.
"Weinreb, Weisberg & Weiss Assumed Debt" means Indebtedness of Weinreb,
Weisberg & Weiss, M.D., P.A., under Capital Note obligations aggregating
$13,000, assumed by the Company as partial payment of the acquisition price of
Weinreb, Weisberg & Weiss, M.D., P.A., located in Tamarac, Florida.
SECTION 2. Limitation on Other Indebtedness. Neither the Company nor
any Subsidiary of the Company will issue, assume, guarantee or otherwise become
liable for, directly or indirectly, or suffer to exist, any Indebtedness unless
(i) such Indebtedness (other than the Physician Notes, the Physician Assumed
Debt, and borrowings under the Credit Facility) is subordinated in right of
payment to this Note in a manner satisfactory to the Holder and (ii) such
Indebtedness (other than the Physician Assumed Debt and borrowings under the
Credit Facility) is unsecured. The Company covenants that Indebtedness under the
Physician Notes and the Physician Assumed Debt is or when issued will be pari
passu in right of payment with Indebtedness under this Note except that
Indebtedness under the Physician Assumed Debt may remain secured by property of
the Knoxville Oncology Practice to the extent so secured on April 1, 1996 and by
property of one or more of the
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<PAGE>
New Oncology Practices, to the extent so secured on the date a New Oncology
Practice is acquired by the Company or a Subsidiary of the Company.
SECTION 3. Conversion Rights.
(a) The Holder shall have the option, exercisable in writing
at any time until the time this Note is paid in full or redeemed in full (and
whether this Note has been called for redemption prior to the exercise of such
option) to convert this Note in its entirety or in part into shares of the
Company's fully paid and non-assessable Common Stock at the conversion price
determined as provided herein (the "Conversion Price".) Upon the surrender of
this Note, accompanied by a conversion notice in the form attached hereto
properly completed and duly executed by the Holder (a "Conversion Notice"), the
Company shall issue and, within three business days after such surrender of this
Note with the Conversion Notice, deliver to or upon the order of the Holder (i)
that number of shares of Common Stock as shall be determined in accordance
herewith and (ii) payment of the accrued and unpaid interest on the part of this
Note which is the subject of the Conversion Notice. The number of shares of
Common Stock to be issued upon conversion of this Note or a part thereof shall
be determined by dividing the principal amount of the Note to be converted, as
specified in the Conversion Notice, by the Conversion Price in effect on the
date the Conversion Notice is delivered by the Holder to the Secretary of the
Company at its Principal Executive Office; provided that if the number of shares
of Common Stock so to be issued would be equal to or exceed 20% of the number of
shares of Common Stock outstanding at the time the Conversion Notice is
delivered ("20% of the Outstanding Shares"), then the Conversion Notice will be
deemed to be modified so as to specify an amount of principal of the Note for
conversion which would result in the issuance by the Company of the largest
number of shares of Common Stock which is less than 20% of the Outstanding
Shares. The Holder shall be entitled to all rights of a shareholder of the
Company as of such date.
(b) The Conversion Price shall be the highest bid price for
the Company's Common Stock at the close of trading on the last trading day
before a Conversion Notice is delivered by the Holder to the Secretary of the
Company, as posted on the National Association of Securities Dealers automated
quotation system; provided that after December 31, 1996, subject to the
Shareholder Approval, the Conversion Price shall be $11.00. The Conversion Price
will be appropriately adjusted to eliminate the impact of any dividend or other
distribution (whether in cash, securities or property), stock split,
reclassification, recapitalization, reverse stock split or similar event the
record date for which is after the date of this Note and prior to the date a
Conversion Notice is received by the Company.
(c) If pursuant to the Conversion Notice, the Holder elects to
convert less than all of the Note, the Company will issue a new Note of like
tenor to the Holder for the unconverted portion hereof, with appropriate changes
to reflect the reduced principal amount after giving effect to such conversion.
(d) The Company covenants that during the period the foregoing
conversion right exists, the Company will reserve from its authorized and
unissued Common Stock a sufficient
7
<PAGE>
number of shares to provide for the issuance of Common Stock upon the conversion
of this Note or any part thereof. The Company represents that upon issuance,
such shares will be duly and validly issued, fully paid and non-assessable. The
Company agrees that its issuance of this Note shall constitute full authority to
its officers and agents who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the conversion of this Note or any part thereof.
(e) Except as otherwise provided in this Note or agreed by the
Holder, this Note may be converted by the Holder by (i) submitting to the
Borrower a Conversion Notice in the form attached to this Note and (ii)
surrendering this Note at the Principal Executive Office of the Company.
(f) The Shares of Common Stock issuable upon the conversion of
this Note or any part thereof may not be sold or transferred unless either (i)
they first shall have been registered under the Securities Act ot 1933, as
amended (the "Act") and applicable state securities laws or (ii) the Company
shall have been furnished with an opinion of legal counsel experienced in
securities laws matters (which counsel and opinion shall be reasonably
acceptable to the Company) to the effect that such sale or transfer is exempt
from the registration requirements of the Act and all applicable state
securities laws. Each certificate for shares of Common Stock issuable upon
conversion of this Note that have not been so registered and that have not been
sold pursuant to an exemption that permits removal of the legend, shall bear a
legend substantially in the following form, as appropriate:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
Upon the request of a holder of a certificate representing any shares of Common
Stock issuable upon conversion of this Note, the Company shall remove the
foregoing legend from the certificate or issue to such holder a new certificate
therefor, free of any transfer legend, if, with such request, the Company shall
have received either (i) an opinion of counsel experienced in securities laws
matters (which counsel and opinion are reasonably acceptable to the Company) to
the effect that any such legend may be removed from such certificate, or (ii) if
the present paragraph (k) of Rule 144 or a substantially similar successor rule
remains in force and effect, satisfactory representations from the holder that
such holder is not then, and has not been during the preceding three (3) months,
an affiliate of the Company, and that a period of at least three (3) years has
elapsed since the later of the date the securities were acquired (as determined
under Rule 144) from the Company or an affiliate of the Company.
8
<PAGE>
SECTION 4. Events of Default. "Event of Default", wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of any interest upon this Note when
it becomes due and payable, and continuance of such default for a period of 5
days;
(b) default in the payment of the principal of this Note when
due and payable;
(c) failure by the Company to use substantially all of the
proceeds of any advance under this Note and the Loan Agreement to acquire one or
more of the New Oncology Practices; provided that up to $3,000,000 of the
Indebtedness evidenced by this Note may be used for general working capital of
the Company;
(d) failure by the Company to issue to the Holder the number
of shares of Common Stock issuable upon exercise by the Holder of the conversion
rights of the Holder in accordance with the terms of this Note;
(e) the occurrence of an Event of Default under the Loan
Agreement;
(f) default in the performance, or breach, of any covenant or
agreement of the Company under this Note (other than a default in the
performance, or breach, of a covenant or agreement that is specifically dealt
with elsewhere in this Section), and continuance of such default or breach for a
period of thirty (30) days after there has been given, by registered or
certified mail, to the Company by the Holder a written notice specifying such
default or breach and stating that such notice is a "Notice of Default";
(g) (i) an event of default shall have occurred under any
mortgage, bond, indenture, loan agreement or other document evidencing any
Indebtedness of the Company or any Subsidiary for money borrowed, which
Indebtedness has an aggregate outstanding principal amount of not less than
$500,000, and such default shall result in such Indebtedness becoming, whether
by declaration or otherwise, due and payable prior to the date on which it would
otherwise become due and payable or (ii) a default in any payment when due at
final stated maturity of any such Indebtedness outstanding in an aggregate
principal amount of not less than $500,000 and, in each case, ten (10) Business
Days shall have elapsed after such event during which period such event shall
not have been cured or rescinded or such Indebtedness shall not have been
satisfied;
(h) final judgments or orders shall have been rendered against
the Company or any Subsidiary by a court or regulatory agency of competent
jurisdiction which require the payment in money, either individually or in an
aggregate amount, that is more than $ 500,000 (other than any judgment as to
which a reputable insurance company has accepted full liability) and such
judgment or order shall not be discharged and either (i) any creditor shall have
commenced an enforcement proceeding upon such judgment or order, which
enforcement proceeding shall have remained
9
<PAGE>
unstayed for a period of ten (10) days, or (ii) a period of sixty (60) days
during which a stay of enforcement shall not be in effect shall have elapsed
following the date on which any period for appeal has expired;
(i) a decree or order shall have been entered by a court
having jurisdiction for relief in respect of the Company or any Subsidiary in an
involuntary case or proceeding under the Federal Bankruptcy Code or any other
federal or state bankruptcy, insolvency, reorganization or similar law or
adjudging the Company or any Subsidiary a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or composition of or in respect of the
Company or any Subsidiary under the Federal Bankruptcy Code or any other
applicable federal or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of the
Company or any Subsidiary or of any substantial part of any of their properties,
or ordering the winding up or liquidation of any of their affairs, and any such
decree or order remains unstayed and in effect for a period of sixty (60)
consecutive days; or
(j) the Company or any Subsidiary shall have instituted a
voluntary case or proceeding under the Federal Bankruptcy Code or any other
applicable federal or state law or any other case or proceedings to be
adjudicated a bankrupt or insolvent, or the Company or any Subsidiary shall have
consented to the entry of a decree or order for relief in respect of the Company
or any Subsidiary in any involuntary case or proceeding under the Federal
Bankruptcy Code or any other applicable federal or state law or to the
institution of bankruptcy or insolvency proceedings against the Company or any
Subsidiary, or the Company or any Subsidiary shall have filed a petition or
answer or consent seeking reorganization or relief under the Federal Bankruptcy
Code or any other applicable federal or state law, or consented to the filing of
any such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of any of the Company or any Subsidiary or of any substantial part of
its property, or shall have made an assignment for the benefit of creditors, or
admitted in writing its inability to pay its debts generally as they become due
or taken corporate action in furtherance of any such action;
Upon the occurrence of an Event of Default, then, in the case of an event
described in (i) or (j) above, this Note shall immediately become due and
payable, together with interest accrued hereon or, in the case of any other
event described above, the Holder of the Note may declare this Note, together
with all interest accrued hereon to be due and payable and, upon such
declaration, this Note together with accrued interest hereon shall be due and
payable on the date specified in the declaration, in each case without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company. The holder of this Note may also proceed to
protect and enforce its rights either by suit in equity and/or by action at law,
or by other appropriate proceedings, or may proceed to enforce the payment of
this Note or to enforce any other legal or equitable right of the Holder of this
Note, including its right to convert this Note.
SECTION 5. Registration of Transfers. The Company shall register the
transfer of this Note upon records to be maintained by the Company for that
purpose, upon surrender of this Note, with the Form of Assignment attached
hereto duly filled in and signed, and, if the transfer is prior to
10
<PAGE>
January 1, 1997, with the Form of Assumption attached hereto duly signed by the
transferee, to the Secretary of the Company at the Company's Principal Executive
Offices. Any such request for transfer must be accompanied by an opinion of
counsel satisfactory to the Company that such transfer will not violate the
registration requirements of the Securities Act of 1933. Upon any such
registration of transfer, a new Note, in substantially the form of this Note,
evidencing the Note so transferred, shall be issued to the transferee.
SECTION 6. Payment of Taxes. The Company shall not be required to pay
any tax in respect of the transfer of the Note.
SECTION 7. Redemption. The Note is subject to complete redemption at
the option of the Company, at any time prior to April 1, 1997, upon not less
than 20 nor more than 40 days' written notice, at a redemption price equal to
100% of the principal amount of this Note together with accrued interest on this
Note to the redemption date. This Note is not subject to partial redemption at
any time, and is not subject even to complete redemption at the option of the
Company after March 31, 1997.
This Note does not have the benefit of any sinking fund obligations.
SECTION 8. Mutilated or Missing Note. If this Note shall be mutilated,
lost, stolen or destroyed, upon request by the Holder hereof, the Company will
issue, in exchange for and upon cancellation of the mutilated Note, or in
substitution for the lost, stolen or destroyed Note, a new Note, in
substantially the form of this Note, of like tenor and maturity and having the
same principal amount, but, in the case of loss, theft or destruction, only upon
receipt of evidence satisfactory to the Company of such loss, theft or
destruction of this Note and, if requested by the Company, indemnity reasonably
satisfactory to it.
SECTION 9. Restriction on Transfer.
(a) This Note shall not be transferred unless the Company has
been furnished an opinion of counsel satisfactory to it that such transaction
will not violate the registration provisions of the Securities Act of 1933 or
any applicable state securities law.
(b) This Note may not be transferred prior to January 1, 1997
unless the proposed transferee assumes in writing the obligations of Seafield
under the Loan Agreement to advance funds as set forth in the Loan Agreement.
(c) This Note and each Note issued upon transfer or exchange
shall bear a legend (the "Restrictive Legend") as to the restrictions on resale
contained or provided for in this Section 9 in substantially the form set forth
at the beginning of this Note.
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<PAGE>
SECTION 10. Financial Information. Until this Note is paid in full, if
at any time the Company ceases to be a reporting company under the Securities
Exchange Act of 1934, the Company agrees to furnish to the registered Holder, at
the address specified in the Note Register, within forty-five (45) days after
the end of each quarter, a copy of the Company's quarterly unaudited financial
statements, and within one hundred twenty (120) days after the end of the
Company's fiscal year, a copy of the Company's annual audited consolidated
financial statements.
SECTION 11. Notices. All notices, requests, demands and other
communications relating to the Note shall be in writing, including by telex,
telegram or cable, addressed, if to the registered holder hereof, to it or them
at the address(es) furnished by said registered holder(s) to the Company, and if
to the Company, to it at the Principal Executive Office, Attention: Secretary,
or to such other address as any party shall notify the other party in writing,
and, except as provided in Section 3(a), shall be effective, in the case of
written notice by mail, upon placement into the mails (first class, postage
prepaid), and in the case of notice by telex, telegram or cable, on the day
sent.
SECTION 12. Binding Effect. This Note shall be binding upon and inure
to the sole and exclusive benefit of the Company, its successors and assigns,
and the registered holder or holders from time to time of this Note.
SECTION 13. Survival of Rights and Duties. This Note shall terminate
and be of no further force and effect on the date the principal hereof and all
interest hereon shall have been paid in full.
SECTION 14. Governing Law. This Note shall be construed in accordance
with and governed by the internal laws of the State of Missouri.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal by its officers thereunto duly authorized as of the
date hereof.
RESPONSE ONCOLOGY, INC.
[CORPORATE SEAL]
By: ____________________________
Joseph P. Clark
President and Chief Executive
ATTEST: Officer
_____________________________
Secretary
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<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, ________________________ hereby sells, assigns and
transfers to the assignee set forth below all of the rights of the undersigned
in and to this Note:
Name of Assignee Address
Name of Holder
_______________________________
Dated:__________________, 199__ By: ___________________________
Title: -----------------------
FORM OF ASSUMPTION
In consideration of the transfer to it of this Note, the undersigned
transferee hereby assumes and agrees to perform all remaining obligations of the
Lender under the Loan Agreement to advance monies. The transferee, the
transferor and the Company each acknowledge that the amount of such remaining
obligations is $ ______________________.
Name of Transferee
Dated: _________________________ ______________________________
By: __________________________
Title: _______________________
Name of Transferor
______________________________
Dated: _________________________ By: __________________________
Title: _______________________
RESPONSE ONCOLOGY, INC.
Dated: _________________________ By: __________________________
Title: _______________________
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<PAGE>
CONVERSION NOTICE
To Response Oncology, Inc.
The undersigned Holder of this Note irrevocably exercises the option to
convert either all of this Note, or the portion noted below, into shares of
Common Stock of Response Oncology, Inc. in accordance with the terms of this
Note, and directs that the shares issuable and deliverable upon the conversion,
together with any check in payment for fractional shares, be issued and
delivered to the registered Holder of this Note unless a different name has been
indicated below. If shares are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto.
Convert the entire principal Name Of Holder
_________ amount of this Note
Convert $ __________ of the _________________________
_________ principal of this Note, and issue By: _____________________
a new Note for the unconverted Title: __________________
portion, in accordance with Section
3(c) of this Note
Dated ________________, 19__
Fill in for registration of shares of Common Stock if to be issued
otherwise than to the registered Holder.
________________________________ ____________________________________
Name of Person to Whom Shares (Social Security or Other Taxpayer
are to be issued and payment for Identifying Number)
fractional shares is to be made (if
other than registered holder)
_________________________________
Address including zip code number
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<PAGE>
<PAGE>
EXHIBIT 99.3
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT ("Agreement") is entered into as of the
4th day of October, 1996, by and among RESPONSE ONCOLOGY, INC. ("Borrower"), a
Tennessee corporation; NATIONSBANK OF TENNESSEE, N.A. ("Agent"), a national
banking association, in its capacity as Agent for the "Lenders," as defined in
that Loan Agreement dated as of May 31, 1996, among Borrower, Union Planters
National Bank, a national banking association, and NationsBank of Tennessee,
N.A., as such Loan Agreement may be amended from time to time: and SEAFIELD
CAPITAL CORPORATION ("Subordinated Lender"), a Missouri corporation.
RECITALS:
WHEREAS, Senior Lenders (as defined below) and Subordinated Lender have
both extended or agreed to extend credit to Borrower, on certain terms and
conditions; and
WHEREAS, one condition to Senior Lenders' agreement to extend credit to
Borrower is that Subordinated Lender must agree that certain obligations of
Borrower to Subordinated Lender shall be subordinate to the obligations of
Borrower to Senior Lenders on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises; as an inducement to
cause Senior Lenders to extend credit to Borrower; and for other valuable
consideration, the receipt and sufficiency of which are acknowledged, it is
agreed as follows:
1. DEFINITIONS. As used below in this Agreement, the following
capitalized terms have the meanings set forth below:
"Acquisition Debt" means obligations of the Borrower to either
(i) one or more of the entities engaged in a medical practice the assets of
which have been acquired by the Borrower or one of its Affiliates, or (ii) the
owners or former owners of such practice.
"Affiliate" means, with respect to any Person, a second Person
that, directly or indirectly, (i) owns a majority of the equity interest in the
first Person, (ii) is owned in equity interest, in any degree, by the first
Person, or (iii) is owned, as to a majority of its equity interest, by a third
Person who is an Affiliate of the first Person under provisions (i) or (ii)
hereof.
"Agent" means Nationsbank of Tennessee, N.A., a national
banking association, in its capacity as Agent for the Senior Lenders pursuant to
the Senior Loan Agreement.
"Blockage Notice" means a written notice given by Agent to
Subordinated Lender
<PAGE>
stating that an Event of Default exists under the Senior Debt Agreements, which
notice shall remain in effect (i) in the case of an Event of Default for
nonpayment of principal or interest by Borrower or an Event of Default arising
from the filing of a proceeding under an Insolvency Law, from the date of
issuance of the Blockage Notice until the earlier of the Full Payment of the
Senior Debt or Agent's written notice to Subordinated Lender that the Event of
Default has been waived by or cured to the satisfaction of Agent, (ii) in the
case of any other Event of Default, from the date of issuance of the Blockage
Notice until the earlier of (a) one hundred seventy-nine (179) days after the
issuance thereof, (b) Agent's written notice to Subordinated Lender that the
Event of Default has been waived by or cured to the satisfaction of Agent or
otherwise ceased to exist, or (c) the date of Full Payment of the Senior Debt;
provided, however, that (x) no Blockage Notice under (ii) hereof may be imposed
more than twice in any rolling 360-day period and (y) there must be at least 180
consecutive days in each rolling 360-day period in which no Blockage Notice
under (ii) above is in effect.
"Bona Fide Purchaser" means a Person that (i) is not liable
for the Senior Debt (either generally or by the encumbrance of property
therefor), (ii) is not an Affiliate of any Person who is liable for the Senior
Debt (either generally or by the encumbrance of property therefor), and (iii)
purchases all or any portion of the Subordinated Debt in compliance with the
provisions of this Agreement. A wholly-owned subsidiary of Subordinated Lender
(other than Borrower) shall be regarded as a Bona Fide Purchaser.
"Borrower" means Response Oncology, Inc., a Tennessee
corporation, and its successors.
"Equity Securities" means common or preferred stock issued by
Borrower, which stock is not subject to any obligation of redemption or other
obligation of Borrower or any subsidiary of Borrower to purchase or cause the
purchase of such stock.
"Full Payment" of the Senior Debt means the payment of all
principal (in an amount not to exceed ($35,000,000.00), interest and expenses
arising under the Senior Debt Agreements.
"Insolvency Law" means the United States Bankruptcy Code and
any other present or future federal or state law constituting liquidation,
conservatorship, moratorium, receivership, rearrangement, reorganization or
similar debtor relief laws.
"Payment" means any money, security interest or other value or
benefit directly or indirectly given by or on behalf of Borrower to or for the
benefit of Subordinated Lender on account of the Subordinated Debt, or received
directly or indirectly by Subordinated Lender from any other source on account
of the Subordinated Debt, whether such money, etc. is characterized as a payment
to reduce the Subordinated Debt, as a reserve for the payment of the
Subordinated
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<PAGE>
Debt, as consideration for the purchase of the Subordinated Debt or any interest
therein, or otherwise, except that consideration received by Subordinated Lender
from a Bona Fide Purchaser shall not be considered a Payment.
"Permitted Payments" means Payments that are paid in U.S. Dollars
and which meet either of the following additional criteria:
(a) Payments that (i) represent only interest accrued on the
Subordinated Debt, (ii) are paid by Borrower directly to Subordinated
Lender no earlier than the scheduled due dates thereof as provided in the
Subordinated Note, and (iii) are made when no Blockage Notice is in
effect.
(b) Payments made when an Event of Default has occurred and is
continuing under the Subordinated Note after the applicable Standstill
Period for such Event of Default has ended, whether or not a Blockage
Notice is then in effect, which Payments are otherwise made in full
accordance with the provisions of this Agreement (including turnover
provisions).
(c) Payments made by the issuance to Subordinated Lender of Equity
Securities or warrants to purchase Equity Securities, either pursuant to
the Subordinated Loan Agreement or in satisfaction of Subordinated Debt
pursuant to the conversion feature thereof or otherwise.
(d) Payments made with the proceeds of an issuance of Equity
Securities or Senior Subordinated Debt, which payments are made within
ten (10) days of Borrower's issuance thereof.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government, governmental agency or political subdivision thereof, or any other
form of entity.
"Senior Debt" means all present and future obligations of
Borrower to Senior Lenders and Agent under the Credit Facilities described in
the Senior Loan Agreement, including, but not limited to, the obligations to pay
principal (in an amount not to exceed $35,000,000.00), interest, expenses, fees
and other amounts arising under, and to perform all other obligations stated in,
the Senior Debt Agreements, and all refinancings thereof.
"Senior Debt Agreements" mean (i) the Senior Loan Agreement,
(ii) each "Note," as defined in the Loan Agreement, (iii) all other "Loan
Documents," as defined in the Loan Agreement, in existence as of the date
hereof, (iv) any other document hereafter arising that further evidences or
secures the "Obligations" (as defined in the Loan Agreement); and (v) all
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amendments, modifications, restatements, renewals, increases and extensions of
any of the foregoing.
"Senior Lenders" means the "Lenders," as defined in the Senior
Loan Agreement from time to time.
"Senior Loan Agreement" means that Loan Agreement dated as of
May 31, 1996, among Borrower, Agent, Union Planters National Bank, a national
banking association, and NationsBank of Tennessee, N.A., a national banking
association.
"Senior Subordinated Debt" means obligations of the Borrower
for principal, interest, expenses and any other amounts which are subordinated
in right of payment to the Senior Debt to at least the extent herein provided
pursuant to a subordination agreement in form and substance acceptable to Agent,
but which are not either Acquisition Debt or obligations subordinated in right
of payment to the obligations of the Borrower evidenced by the Subordinated Note
and the Subordinated Loan Agreement.
"Standstill Period" means a period of time commencing upon the
date on which an Event of Default occurs under the Subordinated Note (as defined
therein) and ending upon the earlier of (i) one hundred twenty (120) days after
the date on which Subordinated Lender gives written notice to Agent of the
occurrence of the Event of Default under the Subordinated Note other than an
Event of Default resulting from a proceeding under an Insolvency Law or an Event
of Default arising from an action described in (v) below), (ii) sixty (60) days
after the institution of a proceeding by a party other than Agent against
Borrower under an Insolvency Law, if such proceeding has not been dismissed
within that time, (iii) ten (10) days after the institution of a proceeding by
Agent against Borrower under an Insolvency Law, (iv) ten (10) days after the
institution of a proceeding by Borrower under an Insolvency Law, or (v) ten (10)
days after Agent's filing of judicial debt enforcement proceedings or its
exercise of other remedies against collateral for the Senior Debt.
"Subordinated Debt" means the obligations of Borrower for
principal, interest, expenses and any other amounts arising under the
Subordinated Note.
"Subordinated Loan Agreement" means that Loan Agreement dated
as of October 4, 1996, between Borrower and Subordinated Lender.
"Subordinated Lender" means Seafield Capital Corporation, a
Missouri corporation, its successors and its assigns.
"Subordinated Note" means that Adjustable Rate Convertible
Note made by Borrower dated October 4, 1996, in the original principal amount of
Twenty-Three Million Five
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Hundred Thousand and No/100 Dollars ($23,500,000), a copy of which is attached
hereto as Exhibit A, and all modifications, extensions and renewals thereof
entered into in accordance with the terms of this Agreement.
2. OWNERSHIP OF SUBORDINATED DEBT. Subordinated Lender warrants to
Senior Lenders and Agent that Subordinated Lender is the lawful owner of the
Subordinated Debt and the lawful holder of the Subordinated Note, free of any
security interest, lien, participation interest or other claim of any kind.
3. SUBORDINATION. Subordinated Lender hereby agrees that the
Subordinated Debt shall hereafter be subordinate to the Senior Debt with respect
to the rights of payment, security, collection and collection in bankruptcy, as
and to the extent expressly set forth in this Agreement.
4. SUBORDINATION OF PAYMENTS. Except for Permitted Payments,
Subordinated Lender shall not accept, and Borrower shall not pay, any Payments
with respect to the Subordinated Debt (of principal, interest, expenses or
otherwise) unless Agent gives its express prior written consent to Subordinated
Lender, which consent may be granted or withheld in Agent's discretion.
5. SUBORDINATION OF SECURITY. The Subordinated Debt shall be
unsecured.
6. SUBORDINATION OF RIGHT OF COLLECTION. Notwithstanding the
existence of an Event of Default under the Subordinated Note (as defined
therein), acceleration thereunder or any other occurrence whatsoever,
Subordinated Lender shall take no judicial or other action to collect the
Subordinated Debt, to secure additional collateral therefor, to create a reserve
for its payment, or to seek relief under any Insolvency Law, and Borrower shall
not voluntarily participate in any such collection action, provide additional
collateral or create a reserve for the payment of the Subordinated Debt, without
the prior written approval of Agent, which consent may be granted or withheld in
Agent's discretion. Any such action, collateral or reserve purportedly
established for the Subordinated Debt without Lender's prior written consent
shall be void. Notwithstanding the foregoing, following the occurrence of an
Event of Default under the Subordinated Note and the end of the Standstill
Period for such Event of Default, even though Full Payment of the Senior Debt
may not have occurred, and provided that the Event of Default has not been
waived or cured, Subordinated Lender may seek enforcement of Borrower's
obligations with respect to the Subordinated Debt through judicial debt
collection proceedings or through the commencement of a proceeding under an
Insolvency Law, with all recoveries accomplished thereby to be paid to Agent for
application to the Senior Debt until the Full Payment of the Senior Debt, as and
to the extent provided in this Agreement.
7. SUBORDINATION OF COLLECTION IN BANKRUPTCY. If Borrower becomes
a party to a voluntary or involuntary bankruptcy proceeding, reorganization
proceeding or any
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other action under an Insolvency Law, following any applicable Standstill
Period, Subordinated Lender agrees to timely file a claim for the amount of the
Subordinated Debt, in form and substance approved by Agent (which approval Agent
shall not unreasonably withhold). Subordinated Lender hereby irrevocably
authorizes and empowers Agent to file claims in the Agent's own name and
claiming through the Subordinated Lender, as may be necessary or advisable for
the enforcement of this Agreement in any proceeding under an Insolvency Law and
to collect and receive any and all payments or distributions which may be
payable or deliverable at any time upon or with respect to the Subordinated Debt
until Full Payment of the Senior Debt. Agent will provide Subordinated Lender
with copies of any documents filed naming and claiming through the Subordinated
Lender. Subordinated Lender shall retain the right to vote and otherwise act in
any such proceeding, including without limitation, the right to file claims in
its own behalf, and to vote to accept or reject any plan of partial or complete
liquidation, reorga nization, arrangement, composition, or extension.
8. TURNOVER OF PAYMENTS. Notwithstanding any other provision of this
Agreement, any Payment made with respect to the Subordinated Debt prior to the
Full Payment of the Senior Debt, with the exception only of Payments under
subsections (a), (c) and (d) of the above definition of Permitted Payments and
those permitted by Agent's consent under Section 4 hereof, shall be held by
Subordinated Lender in trust for Agent, shall not be commingled with other
property of Subordinated Lender, and shall immediately upon receipt be remitted
to Agent (or to the trustee or similar official if received in connection with a
proceeding under an Insolvency Law) in kind with any necessary endorsement
affixed for application to the Senior Debt, without the need of demand by Agent.
9. ACCELERATION OF SUBORDINATED DEBT. Prior to accelerating the
Subordinated Debt, Subordinated Lender shall give Agent written notice of any
Event of Default under the Subordinated Debt (a notice commencing a Standstill
Period shall be regarded as a notice under this Section) and allow Agent the
lesser of (i) the period of time equal to the applicable Standstill Period, or
(ii) twenty (20) days after receipt of such notice to cure or cause the cure
thereof, unless the Event of Default arises from the filing of a voluntary
proceeding by a Borrower under any Insolvency Law, in which case no obligation
of notice or right to cure shall apply.
10. SUBORDINATION OF SUBORDINATED LENDER. Should any Payments made with
respect to the Subordinated Debt be applied to the Senior Debt pursuant to the
provisions of this Agreement, then, upon the Full Payment of the Senior Debt (as
determined including such redirected Payments), Subordinated Lender shall be
subrogated to any remaining rights of Agent with respect to the Senior Debt.
This provision does not create or evidence any obligation on the part of Agent
to exercise diligence in collection, prevent the impairment of collateral or
otherwise act in any respect for the benefit of Subordinated Lender in Agent's
dealings with Borrower or any collateral securing the Senior Debt, it being the
essence of this
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Agreement that no such duties exist on the part of Agent. For purposes of the
subrogation provided for in this Section 10, no payment or distribution to any
Agent of any cash, property or securities to which Subordinated Lender would be
entitled except for the provisions of this Agreement, and no payment over
pursuant to the provisions of this Agreement to any Agent by Subordinated Lender
will, as among the Borrower, its creditors (other than Agent) and the
Subordinated Lender be deemed to be a payment or distribution by Borrower to or
on account of any Senior Debt. If other lenders are similarly subordinated to
the Senior Debt at the time of its Full Payment, and if they are also subrogated
to the rights of Senior Lenders, all such subrogated subordinated lenders shall
share in the rights of lender on a pari passu basis.
11. LEGEND. The Subordinated Note shall bear a legend stating
that it is subject to the provisions of this Agreement.
12. TRANSFER. Subordinated Lender shall not negotiate, sell, assign, or
transfer the Subordinated Note or any interest in the Subordinated Debt without
the prior written approval of Lender, except that prior approval shall not be
necessary if a transfer is (i) made to a Bona Fide Purchaser, and (ii) made
pursuant to documents that are expressly subject to the terms and conditions of
this Agreement and by which the transferee agrees to be regarded as a
Subordinated Lender hereunder, which are delivered to Lender within five (5)
days after they become effective (such transfer to become effective under this
Agreement only upon Agent's receipt thereof). No transfer of the Subordinated
Debt shall release Subordinated Lender from liability for any obligations to
Agent or Lenders hereunder arising prior to the transfer thereof.
13. UNCONDITIONAL SUBORDINATION. The enforceability of this Agreement
in accordance with its terms is not subject to any condition and the validity
and continuing effect hereof shall not be impaired by any event whatsoever,
including, but not limited to, the merger, consolidation, cessation of business
or liquidation of Borrower; the financial decline or bankruptcy of Borrower;
Agent's compromise or settlement with or release of any party liable for the
Senior Debt; Agent's release of any collateral for the Senior Debt; Agent's
failure to give Subordinated Lender notice of any default, Event of Default or
Unmatured Default by Borrower; the extension, amendment, modification, waiver,
increase or renewal of any of the Senior Debt Agreements without notice to
Subordinated Lender; or Agent's failure to exercise diligence in collection.
Subordinated Lender agrees that this Agreement shall be valid and binding upon
Subordinated Lender upon the delivery of this executed Agreement to Subordinated
Lender by or on behalf of Agent. Subordinated Lender and Agent shall each act in
good faith under this Agreement.
14. MODIFICATION OF SUBORDINATED NOTE. Subordinated Lender and Borrower
agree that they shall give Agent written notice as promptly as is practicable of
any modification, amendment or waiver of any provision of the Subordinated Note
and agree further that no such modification, amendment or waiver shall be given
effect absent Agent's prior written consent thereto if the effect thereof would
be to (i) modify covenants as to make them more
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restrictive on Borrower including, but not limited to, the modification of
financial covenants against the interests of Borrower, (ii) create new Events of
Default or make existing Events of Default more restrictive on Borrower, (iii)
increase the interest rate thereunder or to create or increase non-interest
payment obligations of Borrower, or (iv) provide for the payment of any amount
of principal or interest of the Subordinated Debt prior to its originally
scheduled maturity.
15. EXPENSES. In any effort to enforce this Agreement between
Agent and Subordinated Lender, the prevailing party shall be entitled to recover
all court costs and reasonable attorney's fees and other expenses reasonably
associated therewith.
16. TERMINATION. Following the Full Payment of the Senior Debt,
this Agreement shall be terminated in writing by Agent.
17. NO MARSHALING OF ASSETS. Agent may proceed against collateral
securing the Senior Debt and against parties liable therefor in such order as it
may elect, and neither Subordinated Lender nor Borrower nor any surety or
guarantor for Borrower nor any other creditor of Borrower shall be entitled to
require Agent to marshall assets. The benefit of any rule of law or equity to
the contrary is hereby expressly waived.
18. NOTICES. Any communications concerning this Agreement or the
credit described herein shall be addressed as follows:
As to Subordinated Lender:
Seafield Capital Corporation
Attn.: P. Anthony Jacobs
2600 Grand Boulevard, Suite 500
Kansas City, MO 64108
Telecopier: (816) 842-2101
With a Copy To:
Lathrop Gates
Lathrop & Gage L. C.
2345 Grand Boulevard
Kansas City, MO 64108-2684
Telecopier: (816) 292-2001
8
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As to Borrower:
Response Oncology, Inc.
Attn: Joseph Clark
1775 Moriah Woods Blvd.
Memphis, Tennessee 38117
Telecopier: (901) 683-7277
With a Copy To:
Baker, Donelson, Bearman & Caldwell
Attn: John A. Good, Esq.
165 Madison Ave., 20th Floor
Memphis, Tennessee 38103
Telecopier: (901) 577-2303
As to Agent:
NationsBank of Tennessee, N.A., Agent
Attn: David H. Dupuy
1 NationsBank Plaza
Nashville, TN 37239
With a Copy To:
Boult, Cummings, Conners & Berry
Attn: John E. Murdock III, Esq.
414 Union Street, Suite 1600
Nashville, Tennessee 37219
Telecopier: (615) 252-2380
Communications shall only be effective when set forth in writing and actually
delivered to the addresses stated above. Any party may change its address for
receipt of notices by submitting the change in writing to the other parties.
19. PAYMENTS OTHERWISE PERMITTED. Nothing contained in this Agreement,
the Senior Debt Agreements or the Subordinated Note will prevent Borrower, at
any time, from making Payments at any time of principal of or interest on, or
any other Payment in respect of, Subordinated Debt, except as expressly provided
in this Agreement.
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20. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The provisions of
this Agreement are and are intended solely for the purpose of defining the
relative rights of Agent, on the one hand, and Subordinated Lender, on the other
hand. Nothing contained in this Agreement, the Senior Debt Agreements, the
Subordinated Loan Agreement or the Subordinated Note is intended to or will (i)
impair, as among the Borrower, its creditors (other than the Agent and the
Senior Lenders) and Subordinated Lender, the obligations of the Borrower, which
are absolute and unconditional, to pay to Subordinated Lender the principal of,
or interest on, the Subordinated Debt, or any other amount payable by or any
other security issuable by Borrower under the Subordinated Note or the
Subordinated Loan Agreement, as and when the same becomes due and payable in
accordance with their terms; (ii) affect the relative rights against Borrower of
Subordinated Lender and creditors of such Borrower other than the Agent and the
Senior Lenders; or (iii) prevent Subordinated Lender from accelerating any
amount payable pursuant to the Subordinated Note and exercising all other
remedies otherwise permitted by applicable law upon default thereunder, except
as expressly provided in this Agreement.
21. AMENDMENT AND WAIVER IN WRITING. No provision of this Agreement
can be amended or waived, except by a statement in writing signed by the party
against which enforcement of the amendment or waiver is sought.
22. ENTIRE AGREEMENT. This Agreement represents the entire agreement
among the parties concerning the subordination of the Subordinated Debt.
23. SEVERABILITY. Should any provision of this Agreement be invalid
or unenforceable for any reason, the remaining provisions hereof shall remain in
full effect.
24. APPLICABLE LAW. The validity and construction of this Agreement
and all other documents executed with respect to the Senior Debt shall be
determined according to the substantive laws of Tennessee, in which state this
Agreement has been executed and delivered.
25. GENDER AND NUMBER. Words used herein indicating gender or number
shall be read as the context may require.
26. CAPTIONS NOT CONTROLLING. Captions and headings have been
included in this Agreement for the convenience of the parties, and shall not be
construed as affecting the content of the respective paragraphs.
27. CONSENT TO JURISDICTION. Subordinated Lender, Agent and Borrower
hereby irrevocably consent to the jurisdiction of the United States District
Court for the Middle District of Tennessee and of all Tennessee state courts
sitting in Davidson County, Tennessee, for the purpose of any litigation to
which Agent or Borrower may be a party and which concerns this Agreement or the
Senior Debt. It is further agreed that venue for any such action shall lie
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exclusively with courts sitting in Davidson County, Tennessee, unless Agent
agrees to the contrary in writing. Matters between Borrower and Agent shall be
determined by binding arbitration as provided in the Senior Debt Agreements.
28. JOINDER OF BORROWER; PARTIES TO AMENDMENTS. Borrower joins in
the execution of this Agreement to acknowledge and agree to the provisions
hereof, but no rights in favor of Borrower arise under this Agreement and
provisions hereof may be amended, waived or restated as between Agent and
Subordinated Lender without the joinder of Borrower.
29. CONSENT TO SENIOR DEBT. Subordinated Lender hereby consents to
Borrower's incurring of the Senior Debt and waives any Event of Default that
would arise under the Subordinated Note on account of Borrower's incurring the
Senior Debt.
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30. SIGNATURES BY FACSIMILE. This Agreement shall be effective upon the
parties' exchange by telecopier of copies hereof showing the signatures of the
other parties; provided, however, each party shall immediately forward an
executed original hereof to Agent. The failure of any party to so provide Agent
with an original hereof shall not impair the validity of this Agreement, but
shall entitle Agent to obtain specific performance of the obligation to provide
an executed original of this Agreement.
Signature Page to Subordination Agreement
Executed the date first written above.
THE UNDERSIGNED ACKNOWLEDGE A
THOROUGH UNDERSTANDING OF THE TERMS
OF THIS AGREEMENT AND AGREE TO BE
BOUND THEREBY:
NATIONSBANK OF TENNESSEE, N.A., Agent
By: _____________________________________
Title: __________________________________
RESPONSE ONCOLOGY, INC., Borrower
By: /s/ Joseph P. Clark
--------------------------------
Title: President
SEAFIELD CAPITAL CORPORATION,
Subordinated Lender
By: /s/ James R. Seward
---------------------------------
Title: EVP Chief Financial Officer
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<PAGE>
EXHIBIT 99.4
VOTING AGREEMENT
This Voting Agreement is made this ___ day of October, 1996, between
Seafield Capital Corporation, a Missouri corporation ("Seafield") and
_____________________________("Shareholder").
WHEREAS, the Shareholder is a substantial shareholder of Response
Oncology, Inc., a Tennessee corporation ("Response"), owning approximately
________ shares of Response Common Stock which constitutes ____% of all issued
and outstanding shares of Response Common Stock; and
WHEREAS, Response has requested that Seafield loan to Response $23.5
Million (the "Loan") on terms and conditions set forth in the Adjustable Rate
Convertible Note (the "Note"), the Loan Agreement (the "Loan Agreement") and the
other loan documents, copies of which are attached hereto as Exhibit A; and
WHEREAS, the Shareholder, as a shareholder of Response, has joined in
the request to Seafield for the Loan because receipt of the proceeds of the Loan
will further the interests of Response and therefore the interests of the
Shareholder as a Response shareholder; and
WHEREAS, Seafield is willing to make the Loan to Response subject to
the provisions of the Note, the Loan Agreement and the other loan documents, all
attached as Exhibit A and the undertaking by the Shareholder to vote and hold
shares of Response Common Stock as herein provided;
WHEREAS, the Shareholder is willing to enter into and consummate this
Voting Agreement in order to induce Seafield to make the Loan;
NOW, THEREFORE, in consideration of the premises and in order to induce
Seafield to make the Loan to Response, the Shareholder agrees with Seafield as
follows:
1. Definitions. Capitalized terms used in this Voting Agreement which
are not defined herein shall have the meanings ascribed to them in the Note or
the Loan Agreement.
2. Agreement as to Voting. In the event Seafield proposes a
Recapitalization Plan, the Shareholder agrees to vote or cause to be voted in
favor of the Recapitalization Plan all shares of Response Common Stock as to
which the Shareholder has directly or indirectly (including without limitation
through entities or relationships which are controlled by the Shareholder) the
right or power to vote.
<PAGE>
3. Representations. The Shareholder represents and warrants to Seafield
that he owns of record _____________ shares of Response Common Stock and has the
right directly or indirectly to vote or cause the voting of not fewer than an
additional ___________ shares of Response Common Stock.
4. Restriction on Transfer. The Shareholder agrees not to sell, convey,
transfer, or otherwise dispose of any shares of Response Common Stock, or any
interest therein, which are owned of record or beneficially by the Shareholder
on the date hereof or are hereafter acquired, and the Shareholder agrees to
cause all shares of Response Common Stock, and all interests therein, which are
owned of record or beneficially by other persons or entities on the date hereof
or are hereafter acquired by them, but as to which the Shareholder has directly
or indirectly (including without limitation through entities or relationships
which are controlled by the Shareholder) the power to control the disposition or
investment, not to be sold, conveyed, transferred or otherwise disposed of.
5. Termination. This Voting Agreement and all rights and obligations
hereunder shall terminate and be null and void from and after the earliest of
(a) payment in full of all prinicipal of and interest on the Note, (b) the date
upon which the Recapitalization Plan is consummated, and (c) December 31, 1997.
6. Miscellaneous. This Voting Agreement shall be a contract made under,
governed by and construed in accordance with the internal laws (without giving
effect to the conflict of law rules, of the State of Tennessee). Any provision
of this Voting Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or thereof or affecting the validity or enforceability of such
provision in any other jurisdiction, it being the intent of the parties hereto
that the remaining provisions hereof or thereof shall be construed in such a
manner as to give maximum meaning and effect thereto as if the invalid or
unenforceable provision were not a part of this Voting Agreement. This Voting
Agreement shall be binding upon the parties hereto and their respective heirs,
personal representatives, successors and assigns and shall inure to the benefit
of such parties and their respective heirs, personal representatives, successors
and assigns. This Voting Agreement may be executed in multiple counterparts and
by the parties hereto on separate, identical counterparts; each shall be
considered an original, but all of which shall constitute one single agreement.
Seafield shall have the right to assign and transfer any and all of its rights
and privileges pursuant to this Voting Agreement, which assignment may be in
whole or in part and at any time and from time to time.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed or caused to
be executed this Voting Agreement as of the date first above written.
SHAREHOLDER
__________________________________
(Name)
__________________________________
SEAFIELD CAPITAL CORPORATION
By: ______________________________
Name: ____________________________
Title: ___________________________
3
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<PAGE>
EXHIBIT 99.5
Exhibit B
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED UNTIL (1) A REGISTRATION STATEMENT UNDER SUCH SECURITIES
LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (2) IN THE
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY REGISTRATION UNDER SUCH
SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED
TRANSFER.
RESPONSE ONCOLOGY, INC.
Warrant to Purchase Common Stock
--------------------------------
Response Oncology, Inc., a Tennessee corporation (the "Company"),
hereby certifies that Seafield Capital Corporation, a Missouri corporation
("Seafield") is entitled, subject to the terms and conditions set forth below,
to purchase from the Company upon surrender of this Warrant 1,000,000 fully paid
and non-assessable shares of the Common Stock, par value $.01 per Share, of the
Company (the "Shares"), at an exercise price per share equal to the lesser of
(i) the average of the closing prices of the Common Stock on the NASDAQ Stock
Market's National Market for the five (5) consecutive trading days ending one
(1) trading day prior to the date on which the Warrant Issuance Event occurs
(for purposes of computing such average, such closing trading prices shall be
appropriately adjusted to eliminate the impact of any dividend, whether in cash,
securities or other property, stock split, reclassification, recapitalization,
reverse split or similar event, announced or occurring with respect to the
Company's Common Stock during such five (5) trading day period) and (ii) $11.00.
This Warrant shall be exercisable for the three (3) year period
commencing on [date of Warrant Issuance Event] and ending at the close of
business on [3rd Anniversary of Warrant Issuance Date], and no rights herein
given to the holder of this Warrant shall exist thereafter.
As used herein, the term "Company" includes any corporation which shall
succeed to or assume the obligations of the Company hereunder, and the term
"Shares" which may be purchased upon exercise of this Warrant includes stock of
any class or classes (however designated) of the Company, the holders of which
shall have the right (without limitation as to amount) either to all or to a
portion of the balance of current dividends and liquidating distributions after
the payment of dividends and distributions on any securities entitled to
preference.
<PAGE>
The number and character of the Shares which may be purchased upon
exercise of this Warrant and the exercise price per Share are subject to
adjustment from time to time as hereinafter provided.
1. Compliance with the Securities Act of 1933.
------------------------------------------
(a) The holder of this Warrant agrees that the Company, if it so
desires, may permit transfers of this Warrant and all Shares purchased upon
exercise hereof only when the securities which the holder of this Warrant
desires to transfer have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), and any applicable state or other jurisdiction's
securities laws, or when the request for transfer is accompanied by an opinion
of counsel (which opinion and the counsel rendering such opinion shall be
reasonably acceptable to the Company) to the effect that the sale or proposed
transfer does not require registration under the Securities Act or any state or
other jurisdiction's securities laws. The holder of this Warrant further agrees
that the following legend, if the Company so desires, may be placed on the
certificate or certificates representing any of the Shares purchased upon
exercise of this Warrant and a stop transfer order may be placed with respect
thereto:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED UNTIL (1) A
REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (2)
IN THE OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER
SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER.
The holder of this warrant understands that the Company shall have no obligation
to permit the transfer of this Warrant to any person if such transfer would
constitute a violation of any applicable federal or state securities law,
including the Securities Act.
(b) In the event of a transfer of this Warrant in accordance with the
provisions of this Section 1 and upon surrender of this Warrant to the Company
or its transfer agent's principal office for such purpose, the Company, at its
expense, will issue and deliver a new Warrant of like tenor in the name of such
holder or holders (upon payment of any applicable transfer taxes) as the holder
hereof may direct. Until this Warrant is transferred on the books of the
Company, the Company may treat the registered holder hereof as absolute owner
for all purposes, without being affected by any notice to the contrary.
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<PAGE>
(c) The holder of this Warrant agrees that upon exercise of this
Warrant, the holder shall deliver written investment representations to the
Company in form reasonably satisfactory to the Company and shall otherwise
reasonably comply with any current requirements of the Securities and Exchange
Commission and any applicable state securities laws as may be required in the
reasonable opinion of counsel for the Company at the time of the exercise of
this Warrant to allow the issuance of the shares to the holder in compliance
with such laws.
2. Adjustments of Number of Shares Issuable Upon Exercise of Warrants.
------------------------------------------------------------------
(a) In the event of any change in the outstanding Shares of Common
Stock of the Company by reason of a stock dividend, split or combination in
which the Company is the surviving corporation or other similar change affecting
the capital structure of the Company, the number of Shares issuable upon the
exercise of this Warrant and the exercise price per Share shall be appropriately
adjusted by the Company to reflect such change.
(b) In case of any capital reorganization or reclassification of
Shares, or in case of any consolidation or merger of the Company with or into
any other corporation, or in case of any sale to another corporation of the
properties and assets of the Company as or substantially as an entirety, then,
and in each such case, the holder of this Warrant shall have the right to
receive upon the exercise hereof as provided in Section 7 hereof, at any time
after the consummation of such reorganization, reclassification, consolidation,
merger or sale, the kind and amount of shares of stock or other securities or
property receivable upon such reorganization, reclassification, consolidation,
merger or sale by a holder of the number of Shares issuable upon exercise of
this warrant immediately prior to such reorganization, reclassification,
consolidation, merger or sale; and in any such case, if necessary, the
provisions set forth herein with respect to the rights and interests thereafter
of the holder of this Warrant shall be appropriately adjusted so as to be
applicable, as nearly as may reasonably be, to any shares of stock or other
securities or property thereafter receivable upon the exercise of this Warrant.
The above provisions of this subparagraph (b) shall similarly apply to
successive reclassifications and changes of Shares and to successive
consolidations, mergers, sales or conveyances.
(c) Anything in this Section 2 to the contrary notwithstanding, no
adjustment in the number of Shares shall be required unless such adjustment
would require an increase or decrease of at least 1% in such number; provided,
however, that any adjustments which by reason of this Section 2 are not required
to be made shall be carried forward and taken into account (together with any
other adjustments so carried forward) in any subsequent adjustment. All
calculations under this Section 2 shall be made to the nearest one-hundredth of
a Share, as the case may be, but in no event shall the Company be obligated to
issue fractional Shares upon the exercise of this Warrant.
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(d) Immediately upon any adjustment pursuant to this Section 2, the
Company shall send written notice thereof to the holder of this Warrant (as
provided in Section 9 hereof), which notice shall state the increase or decrease
in the number of Shares to be acquired upon exercise of this Warrant, and in the
exercise price per Share, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
3. Notice of Reclassifications, Consolidations, Mergers, etc.
---------------------------------------------------------
In case of any capital reorganization or reclassification of the
capital stock of the Company or a consolidation or merger of the Company with
another corporation, or the full dissolution, liquidation or winding up of the
Company, or a sale of all or substantially all its assets (whether voluntary or
involuntary), then in any one or more of said cases, the Company shall mail (as
provided in Section 9 hereof) a notice to the holder of this Warrant at the
address of said holder on the records of the Company, at least 10 days prior to
the date such reorganization, reclassification, consolidation, merger,
dissolution, liquidation, winding up or sale shall take place. Such notice shall
also specify the date as of which shareholders of record shall be entitled to
exchange their Shares for other securities or property pursuant to such
reorganization, reclassification, consolidation or merger, or to receive their
respective distributive Shares in the event of such dissolution, liquidation,
winding up or sale, as the case may be. Such notice shall also set forth a
statement of the effect of such action (to the extent then known) on the kind
and amount of shares of capital stock and property receivable upon exercise of
this Warrant.
4. Covenants of the Company.
------------------------
The Company covenants and agrees that all Shares which may be issued
upon the exercise of this Warrant shall, upon issuance, be duly authorized,
validly issued, fully paid and non-assessable and free from all preemptive
rights of any shareholder and all taxes, liens and charges with respect to the
issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).
5. Warrant Holder Not Deemed a Shareholder.
---------------------------------------
No holder of this Warrant, as such, shall be entitled to vote or
receive dividends or be deemed the holder of Shares for any purpose, nor shall
anything contained in this Warrant be construed to confer upon the holder
hereof, as such, any of the rights of a shareholder of the company or any right
to vote, give or withhold consent to any corporate action, receive notice of
meetings, receive dividends, or subscription rights, or otherwise, prior to the
issuance of record to the holder of this Warrant of the Shares which he is then
entitled to receive upon the due exercise of this Warrant.
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6. No Limitation on Corporate Action.
---------------------------------
No provisions of this Warrant and no right or option granted or
conferred hereunder shall in any way limit, affect or abridge the exercise by
the Company of any of its corporate rights or powers to recapitalize, amend its
Charter, reorganize, consolidate or merge with or into another corporation, or
to transfer all or any part of its property or assets, or the exercise of any
other of its corporate rights and powers.
7. Exercise of Warrant.
-------------------
(a) This Warrant may be exercised in whole or in multiples of 25,000
shares. The holder of this Warrant may exercise the same by surrendering this
Warrant, with the form of subscription at the end hereof duly executed by such
holder, to the Company at the principal office of the Company, until such time
as the Company may appoint a transfer agent and thereafter at the principal
office of the transfer agent, accompanied by payment in cash or by certified or
official bank check, payable to the order of the Company, of the sum obtained by
multiplying the number of Shares being purchased (giving effect to any
adjustments therein) by the exercise price per Share, plus any applicable
transfer tax. If the Company appoints a transfer agent, the Company agrees to
notify the holder of this Warrant of the address of such agent's principal
office.
(b) As soon as practicable after exercise of this Warrant and payment
of the sum payable upon such exercise, and in any event within 20 days
thereafter, the Company will cause to be issued in the name of and delivered to
the holder hereof, or as such holder may direct (upon payment by such holder of
any applicable transfer taxes), a certificate or certificates for the number of
fully paid and non-assessable Shares or other securities or property to which
such holder shall be entitled upon such exercise, plus, in lieu of any
fractional Shares to which such holder would otherwise be entitled, cash equal
to such fraction multiplied by the then current fair market value of one full
Share. Issuance and delivery of the Shares deliverable on the due exercise of
this Warrant may be postponed by the Company and its transfer agent during any
period, not exceeding 40 days, for which the transfer books of the Company for
its Common Stock are closed between (1) the record date set by the Board of
Directors for the determination of shareholders entitled to vote at or to
receive notice of any shareholders' meeting, or entitled to receive payment of
any dividends or to any allotment of rights or to exercise rights in respect of
any change, conversion or exchange of capital stock, and (2) the date of such
allotment of rights, or the date when any such change or conversion or exchange
of capital stock shall go into effect, as the case may be.
(c) If this Warrant is exercised in part as permitted hereunder, the
Company, at its expense, will issue and deliver a new Warrant of like tenor
(giving effect to all prior exercises) in the name of the holder.
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8. Registration Rights.
-------------------
The original holder of this Warrant and its permitted successors and
assigns are entitled to the registration rights granted with respect to this
Warrant and the Shares issued upon exercise of this Warrant in accordance with
that certain Loan Agreement, dated as of October 4, 1996, between the Company
and Seafield.
9. Notices.
-------
All communications hereunder shall be in writing and, if sent to the
Company, shall be mailed by registered or certified mail or delivered or
telegraphed and confirmed in writing to 1775 Moriah Woods Blvd., Memphis,
Tennessee 38117; Attention: Joseph P. Clark, President, and if sent to the
holder hereof, shall be mailed by registered or certified mail or delivered or
telegraphed and confirmed in writing to the address of such holder as set forth
in the Company's records. The Company or any such holder may change its address
by proper notice to all holders or the Company, as the case may be.
Dated: _______________, 199__
RESPONSE ONCOLOGY INC.
Attest: ________________________ By: ______________________________
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ASSIGNMENT
FOR VALUE RECEIVED __________________________ hereby sells, assigns and
transfers unto ____________________________ the within Warrant, and does hereby
irrevocably constitute and appoint _________________________, Attorney-in-Fact,
to transfer the said Warrant on the books of the within-named corporation with
full power of substitution.
Dated: _____________________, 199__
Person to Receive New Warrant:
_______________________________
Name
_______________________________
Address
_______________________________
_______________________________
Tax Identification Number
_________________________________
Signature
_________________________________
Signature
NOTICE: The signature(s) to this Assignment must correspond with the name(s) as
written upon the face of the Certificate, in every particular, without
alteration or enlargement or any change whatever.
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SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THIS WARRANT
RESPONSE ONCOLOGY, INC.
The undersigned hereby exercises the right to purchase ____________
Shares of Common Stock or other securities or property covered by this Warrant.
The undersigned hereby exercises such right to purchase in accordance with the
conditions of the Warrant and herewith makes payment in full of the Purchase
Price of such Shares of Common Stock or other securities or property.
Dated: _______________________, 199__
_________________________________
Signature
_________________________________
Signature
_________________________________
Address
_________________________________
Number of Shares of Common Stock Being
Purchased or Description of other
Securities or Property
$________________________________
Purchase Price
NOTICE: The signatures to this Subscription Form must correspond with
the name(s) as written upon the face of the Certificate, in
every particular, without alteration or enlargement or any
change whatever.
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