<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
RESPONSE ONCOLOGY
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
RESPONSE ONCOLOGY, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 5, 1997
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of the
Shareholders of Response Oncology, Inc. (the "Annual Meeting") will be held at
the offices of Response Oncology, Inc. (the "Company"), 1755 Moriah Woods
Blvd., Memphis, Tennessee 38117 on Thursday, June 5, 1997, at 11:00 a.m., local
time, for the following purposes:
1. To elect three Class II directors to serve two year terms
ending in 1999 and three Class III directors to serve one year
terms ending in 1998, or until their successors have been duly
elected and qualified.
2. To ratify the selection of KPMG Peat Marwick LLP as the
Company's independent auditors for 1997; and
3. To consider and act upon a proposal to amend the Company's
1996 Stock Incentive Plan authorizing the issuance to
officers, employees, directors, consultants and other
designated persons of up to an additional 500,000 shares of
the Company's common stock.
Only shareholders of the Company of record as of the close of business
on April 20, 1997, will be entitled to notice of, and to vote at, the Annual
Meeting and any adjournment thereof.
There is enclosed, as a part of this Notice, a Proxy Statement which
contains further information regarding the meeting and the above proposals.
BY ORDER OF THE BOARD OF DIRECTORS
Mary E. Clements
Secretary
April 30, 1997
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE
MEETING ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. SHAREHOLDERS WHO
ATTEND THE MEETING MAY VOTE IN PERSON EVEN IF THEY HAVE ALREADY
SENT IN A PROXY.
<PAGE> 3
RESPONSE ONCOLOGY, INC.
1775 MORIAH WOODS BLVD.
MEMPHIS, TENNESSEE 38117
----------
PROXY STATEMENT
----------
GENERAL INFORMATION
THIS PROXY STATEMENT is provided in connection with the solicitation
of proxies by the Board of Directors of Response Oncology, Inc. (the "Company")
for use at the annual meeting of shareholders to be held on June 5, 1997, (the
"Annual Meeting") and any adjournment thereof. The mailing address of the
principal executive offices of the Company is 1775 Moriah Woods Blvd., Memphis,
Tennessee 38117. This Proxy Statement and the Proxy Form, Notice of Meeting
and the Company's Annual Report, all enclosed herewith, are first being mailed
to the shareholders of the Company on or about May 9, 1997.
THE PROXY
The solicitation of proxies is being made primarily by the use of the
mails. The cost of preparing and mailing this Proxy Statement and accompanying
material, and the cost of any supplementary solicitation, which may be made by
mail, telephone, telegraph or personally by officers and employees of the
Company, will be borne by the Company. The shareholder giving the proxy has
the power to revoke it by delivering written notice of such revocation to the
Secretary of the Company prior to the Annual Meeting or by attending the
meeting and voting in person. The proxy will be voted as specified by the
shareholder in the spaces provided on the Proxy Form or, if no specification is
made, it will be voted in accordance with the terms thereof.
Shares of the Company's common stock, $.01 par value per share
("Common Stock") represented by properly executed proxies, unless previously
revoked, will be voted in accordance with the instructions on such proxies. If
no instruction is indicated on the proxy, the named holders of the proxies will
vote such shares of Common Stock (i) FOR the election of all Class II director
nominees and all Class III director nominees named in the Proxy Statement; (ii)
FOR the ratification and selection of KPMG Peat Marwick LLP as the Company's
independent auditors for 1997; and (iii) FOR the amendment to the Company's
1996 Incentive Stock Plan providing an additional 500,000 shares of Common
Stock for issuance pursuant thereto. The named holders of proxies also will
use their discretion in voting the shares of Common Stock in connection with
any other business that properly may come before the Annual Meeting.
VOTING RIGHTS
Each outstanding share of Common Stock is entitled to one vote. Only
shareholders of record at the close of business on April 20, 1997 will be
entitled to notice of, and to vote at, the Annual Meeting and any adjournment
thereof. As of the close of business on April 20, 1997, the Company had
outstanding 11,967,543 shares of Common Stock. Of the total number of
outstanding shares of Common Stock on April 20, 1997, the directors and
executive officers of the Company, consisting of 13 persons, owned 744,781
shares comprising 6.22% of such total.
2
<PAGE> 4
REQUIRED VOTE
Approval of each matter submitted to the shareholders of the Company
for a vote at the Annual Meeting will require the affirmative vote of a
majority of the shares of Common Stock voting at the Annual Meeting in person
or by proxy.
OWNERSHIP OF THE COMPANY'S COMMON STOCK
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.
The following table sets forth information as of April 20, 1997,
regarding each person known to the Company to be the beneficial owner of more
than five percent of its Common Stock:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS (1)
------------------------ -------------------- --------------------
<S> <C> <C>
William H. West, M.D. 818,760 (2) 6.84%
Seafield Capital Corporation
P.O. Box 410949 8,077,392 (3) 67.49%
Kansas City, Missouri 64141
</TABLE>
(1) The percentages shown are based on 11,967,543 shares of Common Stock
outstanding on April 20, 1997 plus, as to each individual and group
listed, the number of shares of Common Stock deemed to be owned by
such holder, for purposes of Rule 13d-3 under the Securities Exchange
Act of 1934, assuming conversion of the Company's Series A Preferred
Stock and exercise of all options and warrants held by such holder,
which stock, options and warrants may be converted or exercised
within sixty (60) days of April 20, 1997.
(2) Includes 177,780 shares of Common Stock which Dr. West has the right
to acquire pursuant to the exercise of options.
(3) W. Thomas Grant, P. Anthony Jacobs, and James R. Seward, directors of
the Company, are officers and directors of Seafield Capital
Corporation. Each such director disclaims beneficial ownership in the
Common Stock owned by Seafield Capital Corporation.
3
<PAGE> 5
The following table sets forth, as of February 28, 1997, certain
information regarding the beneficial ownership of common stock of Seafield
Capital Corporation ("Seafield") by each director (including the nominees for
election as directors) of the Company and by all directors and executive
officers of the Company as a group. Messrs. Bumstead, Bovender, Clark,
Kugelman, Scott, Weaver, and Winokur, Ms. Clements, and Drs. Kalman and West
were not beneficial owners of any Seafield common stock as of February 28,
1997.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (5) PERCENT OF CLASS (1)
------------------------ ------------------------ --------------------
<S> <C> <C>
W. Thomas Grant II 146,880 (2) 2.3%
P. Anthony Jacobs 50,112 (3) *
James R. Seward 36,779 (4) *
All directors and executive 1,419,606 21.9%
officers as a group (12 persons)
</TABLE>
(1) The percentages shown are based on 6,489,103 shares of Seafield common
stock outstanding on February 28, 1997 plus, as to each individual
listed, the number of shares of Seafield common stock deemed to be
owned by such holder for purposes of Rule 13d-3 under the Securities
Exchange Act of 1934, assuming exercise of all stock options held by
such holder(s) which may be exercised on or within sixty (60) days of
February 28, 1997.
(2) Includes 31,259 shares held by Mr. Grant as custodian for his
children; includes 45,000 shares held in a family trust for which Mr.
Grant serves as a co-trustee, and, in that capacity, shares voting and
investment power; and includes 11,870 shares owned by Mr. Grant's
spouse, with respect to which Mr. Grant disclaims beneficial
ownership.
(3) Includes 1,000 shares owned by Mr. Jacobs' spouse, with respect to
which Mr. Jacobs disclaims beneficial ownership.
(4) Includes 1,500 shares held in a family trust for which Mr. Seward
serves as a co-trustee, and in that capacity shares voting and
investment powers.
(5) With respect to each listed individual and directors and executive
officers as a group, includes the following numbers of shares of
Seafield common stock held in their respective accounts under the
Seafield Capital Corporation 401(k) Plan and Trust as of December 31,
1996 (based upon the Plan statement as of that date), as to which
shares of common stock the individual shares investment power but,
except in the case of Mr. Seward, who shares voting power with respect
to all 6,848 shares held in the Plan, does not have voting power: Mr.
Grant, 1,190 shares; Mr. Jacobs, 2,261 shares; Mr. Seward, 665 shares
(plus an additional 6,183 shares with respect to which Mr. Seward
shares voting power as a member of the 401(k) Plan Administrative
Committee).
4
<PAGE> 6
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of Common
Stock all as of April 20, 1997 by (i) each director, (ii) each director
nominee, (iii) each executive officer named in the Summary Compensation Table,
and (iv) all directors, nominees and executive officers as a group. None of
the Company's executive officers or directors is a beneficial owner of any of
the Company's Series A Preferred Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS (1)
------------------------ -------------------- ---------
<S> <C> <C>
Jack O. Bovender, Jr 9,000 (3) *
Director
Frank M. Bumstead 107,981 (4) *
Director
Joseph T. Clark 231,640 (5) 1.94%
Director, President and Chief
Executive Officer
W. Thomas Grant II (2) 9,400 (6) *
Director
Lawrence N. Kugelman 3,000 (7) *
Director
P. Anthony Jacobs (2) 13,400 (8) *
Director
Debbie K. Elliott - -
Executive Vice President of
Finance
Leonard A. Kalman, M.D. 107,105 (9) *
Director
James R. Seward (2) 13,400 (10) *
Director
Charles H. Weaver, M.D. 48,000 (11) *
Chief Medical Officer
William H. West, M.D. 818,760 (12) 6.84%
Chairman
Jeffrey H. Winokur 46,000 (13) *
Executive Officer
ALL DIRECTORS AND OFFICERS AS
A GROUP (12 PERSONS) 1,427,686 (14) 11.93%
</TABLE>
5
<PAGE> 7
(1) The percentages shown are based on 11,967,543 shares of Common Stock
outstanding on April 20, 1997 plus, as to each individual and group
listed, the number of shares of Common Stock deemed to be owned by
such holder, for purposes of Rule 13d-3 under the Securities Exchange
Act of 1934, assuming conversion of the Company's Series A Preferred
Stock and exercise of all options held by such holder, which stock
options may be converted or exercised within sixty (60) days of
April 20, 1997.
(2) W. Thomas Grant, P. Anthony Jacobs, and James R. Seward, directors of
the Company, are officers and directors of Seafield. Each such
director disclaims beneficial ownership in the Common Stock owned by
Seafield.
(3) Represents shares of Common Stock which Mr. Bovender has the right to
acquire pursuant to the exercise of options.
(4) Includes 9,000 shares of Common Stock which Mr. Bumstead has a right
to acquire pursuant to the exercise of options and warrants.
(5) Includes 226,840 shares of Common Stock which Mr. Clark has the right
to acquire pursuant to the exercise of options.
(6) Includes 9,000 shares of Common Stock which Mr. Grant has the right to
acquire pursuant to the exercise of options.
(7) Represents shares of Common Stock which Mr. Kugelman has the right to
acquire pursuant to the exercise of options.
(8) Includes 9,000 shares of Common Stock which Mr. Jacobs has the right
to acquire pursuant to the exercise of options.
(9) Includes 73,085 shares of Common Stock which Dr. Kalman has the right,
pursuant to a power of attorney, to acquire pursuant to the conversion
of convertible debt issued in connection with the acquisition of the
assets of the Group, 34,000 shares of Common Stock which Dr. Kalman
has the right to acquire pursuant to the exercise of options, and 20
shares held by his wife in an IRA.
(10) Includes 9,000 shares of Common Stock which Mr. Seward has the right
to acquire pursuant to the exercise of options.
(11) Represents shares of Common Stock which Dr. Weaver has the right to
acquire pursuant to the exercise of options and warrants.
(12) Includes 177,780 shares of Common Stock which Dr. West has the right
to acquire pursuant to the exercise of options.
(13) Represents shares of Common Stock which Mr. Winokur has the right to
acquire pursuant to the exercise of options.
(14) Includes 682,905 shares of Common Stock as to which various officers
and directors have rights to acquire pursuant to the exercise of
options and conversion rights on note payments.
* Represents less than 1% of total outstanding Common Stock
6
<PAGE> 8
PROPOSAL NO. 1
ELECTION OF DIRECTORS
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
Director Meetings. The business of the Company is under the general
management of its Board of Directors as provided by the Company's by-laws and
the laws of Tennessee, the Company's state of incorporation. The Board of
Directors regularly meets quarterly during the Company's fiscal year. There
are presently nine directors, seven of whom are not executive officers or
employees of the Company ("Independent Directors"). The Board of Directors
held four meetings during fiscal 1996. No director attended fewer than 75% of
the meetings of the Board of Directors and committees during the year.
Executive Committee. The Board of Directors has established an
Executive Committee, which currently consists of Messrs. Bumstead, Jacobs and
Seward, each of whom is an Independent Director. The Executive Committee was
created to have more routine, detailed meetings with management and is
empowered to act on behalf of the Board of Directors between meetings when such
action is considered necessary. The Executive Committee met twice during fiscal
1996.
Audit Committee. The Board of Directors has established an Audit
Committee, which currently consists of Messrs. Bovender, Bumstead, Jacobs and
Seward (Chairman) each of whom is an Independent Director. The Audit Committee
provides assistance and advice to the board of directors on auditing and
related matters and reviews management's selection of independent auditors. The
Audit Committee met one time during fiscal 1996.
Nominating and Compensation Committee. The Board of Directors has
established a Compensation Committee, which currently consists of Messrs.
Bovender, Bumstead, Kugelman, Jacobs (Chairman) and Seward each of whom is
an Independent Director. The Compensation Committee reviews compensation,
including stock incentives, of the Company's executive officers, and makes
recommendations to the Board of Directors with respect to such compensation
matters. The Compensation Committee also administers the Company's 1990
Non-Qualified Stock Option Plan and the 1996 Stock Incentive Plan. The
Compensation Committee serves as the Nominating Committee of the Company. The
Compensation Committee met one time during fiscal 1996.
COMPENSATION OF DIRECTORS
Directors who are executive officers or employees of the Company do
not receive additional remuneration as directors. Independent Directors who
are not also executive officers or directors of Seafield receive an annual
retainer fee of $10,000, $1,500 for each board meeting attended, and $750 for
each committee meeting attended. Such compensation is payable in respect of
all duly noticed meetings and is payable whether the director attends in person
or by telephone. Such compensation may be deferred at the election of the
director and paid later in cash or in shares of Common Stock. Independent
Directors are granted options to purchase 1,000 shares of Common Stock during
each calendar quarter of service as a director of the Company. To ensure
compliance with Rule 16b-3 under the Securities Exchange Act of 1934, no
options granted to such Independent Directors may be exercised earlier than six
months from the date of the grant. All directors of the Company are eligible
to receive reimbursement of expenses, if any, incurred in attending meetings of
the board of directors and committees thereof.
NOMINEES FOR DIRECTORS.
The Company's Charter divides the board of directors into three
classes, with each having not less than one director nor more than five
directors. Class I directors are elected for terms of three years; Class II
directors for terms of two years; and Class III directors for terms of one
year. The Board of Directors has set at nine the number of directors
constituting the full Board of Directors.
7
<PAGE> 9
The following six individuals have been nominated for election to
serve as directors of the Company. Mr. Kugelman was appointed to the Board of
Directors in August 1996 to fill a vacancy as a Class II director for the
balance of a two year term expiring at the 1997 annual meeting and is standing
for election by the shareholders for the first time. Messrs. Bovender, Clark,
Jacobs, Seward and Grant are currently directors of the Company. Messrs.
Jacobs, Seward and Grant are designees of Seafield. Dr. Kalman is a
stockholder of Oncology Hematology Group of South Florida, P.A., with whom the
Company has entered a long term contract to provide management services. See
"Certain Transactions with Directors" and "Business Relationships between
Company and Directors." The remaining members of the Board of Directors listed
below will continue as members thereof until their respective terms expire as
indicated below.
Unless a shareholder specifies otherwise, it is intended that such
shareholder's shares of Common Stock will be voted FOR the election of the
nominees to serve as directors until the expiration of their respective terms
and until their successors are elected and qualified. If any nominee shall
become unavailable or unwilling to serve the Company as a director for any
reason, the persons named in the Proxy Form are expected to consult with the
management of the Company in voting the shares represented by them. The Board
of Directors has no reason to doubt the availability of any of the nominees,
and each has indicated his willingness to serve as a director of the Company if
elected.
DIRECTOR NOMINEES - CLASS III
(TERMS EXPIRING 1998)
- - --------------------------------------------------------------------------------
JOSEPH T. CLARK, age 41, has been a director of the Company since 1988. Mr.
Clark has served as the Chief Executive Officer of the Company since January
1996 and as President of the Company since February 1993. Mr. Clark was
formerly the Executive Vice President and Chief Operating Officer of the Company
from May 1989 to February 1993 and Secretary of the Company from September 1988
to February 1993. Mr. Clark also served as Chief Financial Officer of the
Company from March 1988 to May 1989.
Committees: None
- - --------------------------------------------------------------------------------
JAMES R. SEWARD, age 44, has been a director of the Company since 1990. Mr.
Seward has served as the Executive Vice President of Seafield since May 1993 and
was the Senior Vice President of Seafield from August 1990 to May 1993. Mr.
Seward has also served as the Chief Financial Officer of Seafield since February
1991. Mr. Seward is a director of Seafield and Lab One, Inc. (approximately 82%
of the Common stock of which is owned by Seafield) and SLH Corporation.
Committees: Compensation, Executive, and Audit (Chairman)
- - --------------------------------------------------------------------------------
W. THOMAS GRANT II, age 46, has been a director of the Company since 1991. Mr.
Grant is the Chief Executive Officer of Seafield and has served as the Chairman
of the Board of Seafield since May 1993, prior to which time he served as the
President. Mr. Grant serves as a director for AMC Entertainment, Inc., Kansas
City Power & Light Company, Commerce Bancshares, Inc., Seafield, Lab One, Inc.
and SLH Corporation.
Committees: None
- - --------------------------------------------------------------------------------
8
<PAGE> 10
DIRECTOR NOMINEES - CLASS II
(TERMS EXPIRING 1999)
- - --------------------------------------------------------------------------------
P. ANTHONY JACOBS, age 55, has been a director of the Company since 1990. Mr.
Jacobs has served as the President of Seafield since May 1993 and the Chief
Operating Officer of Seafield since August 1990. Mr. Jacobs was the Executive
Vice President of Seafield from August 1990 to May 1993 and has been a Director
of Seafield since 1987. Mr. Jacobs is a director for Trenwick Group Inc.,
serving on its compensation committee, Seafield, Lab One, Inc. and SLH
Corporation.
Committees: Compensation (Chairman), Executive, and Audit
- - --------------------------------------------------------------------------------
JACK O. BOVENDER, age 51, has been a director of the Company since 1994. Mr.
Bovender formerly served as the Chief Operating Officer of Hospital Corporation
of America from December 1992 until his retirement in March 1994. He was also
the President, Eastern Group Operations, Hospital Corporation of America from
June 1987 to December 1992. Mr. Bovender is also a Director of Quorum Health
Group and America Service Group.
Committees: Compensation
- - --------------------------------------------------------------------------------
LAWRENCE N. KUGELMAN, age 54, has been a director of the Company since August
1996. Mr. Kugelman has been a self-employed health care consultant since
October 1996. From December 1995 to October 1996, he served as President and
Chief Executive Officer of Coventry Corp. From April 1995 to December 1995,
Mr. Kugelman was a self-employed health care consultant. From January 1993 to
April 1995, he was Executive Vice President of American Medical International,
and prior to that he was President and Chief Executive Officer of Health Plan
of America. Mr. Kugelman is also a director of Coventry Corp.
Committees: Compensation
- - --------------------------------------------------------------------------------
INCUMBENT DIRECTOR - CLASS I
(TERMS EXPIRING 1998)
- - --------------------------------------------------------------------------------
WILLIAM H. WEST, M.D., age 49, has been a director of the Company since 1985.
He has served as Chairman of the Board of Directors of the Company since
February 1993. Dr. West served as Chief Executive Officer of the Company from
May 1989 to January 1996 and Medical Director of the Company from 1985 to
February 1996. Dr. West served as President of the Company from May 1989 to
February 1993.
Committees: None
- - --------------------------------------------------------------------------------
9
<PAGE> 11
FRANK M. BUMSTEAD, age 55, has been a director of the Company since 1985. He
has served as the Vice-Chairman of the Board of the Company since February
1993. Mr. Bumstead was the Chairman of the Board of the Company from January
1989 to February 1993. He has been the Chairman and Chief Executive Officer of
FBMS Financial, Inc., a financial management and business consulting firm,
since January 1990. Prior to that, Mr. Bumstead was the President of Bumstead
Co., a financial consulting company, from 1986 to December 1990. Mr. Bumstead
is also a director of First Union National Bank of Tennessee, Nashville Country
Club, Inc., and Veritus Music Entertainment, Inc., serving on the compensation
committees of the latter two companies.
Committees: Compensation, Executive (Chairman), and Audit
- - --------------------------------------------------------------------------------
LEONARD A. KALMAN, M.D., age 46, has been a director of the Company since 1996.
Dr. Kalman is a practicing medical oncologist with Oncology Hematology Group of
South Florida, P.A., where he has practiced for more than five years.
Committees: None
- - --------------------------------------------------------------------------------
CERTAIN TRANSACTIONS WITH DIRECTORS
In January 1996, the Company acquired from Dr. Kalman all common stock
owned by Dr. Kalman in Oncology Hematology Group of South Florida, P.A. (the
"Group") for an aggregate purchase price of approximately $1,540,000. As
partial consideration for the acquisition, the Company executed a promissory
note payable to the stockholders of the Group in the principal amount of
approximately $5,960,000, of which Dr. Kalman's beneficial interest is
approximately $745,000. The note bears interest at the rate of 9% per annum
and is payable in 59 consecutive equal amortized installments of principal and
interest. Payments on the note may be received, at the election of the Group,
in shares of Common Stock based on a conversion rate of $15.00 per share.
In April 1996, the Company borrowed the principal amount of
$10,000,000 from Seafield in order to finance physician practice affiliations.
The Company executed an unsecured promissory note for the entire principal
amount of the loan, which note bore interest at the annual rate of prime plus
1% and matured on December 31, 1996. The promissory note was exchanged for
909,090 shares of Common Stock in August 1996.
In October 1996, the Company obtained a $23.5 million credit line from
Seafield to finance additional physician practice affiliations and for working
capital. The Company executed an unsecured promissory note for the entire
amount of the credit line. The outstanding principal on the credit line was
payable upon the earlier of the closing of an offering of equity securities by
the Company or August 1998. The credit line note bore interest at a rate of 8%
escalating at certain points during the term of the loan, was unsecured and was
convertible at the election of Seafield into shares of the Company's Common
Stock at a conversion price equal to the market price of the Common Stock at
the date of conversion; provided, however, that after December 31, 1996, the
conversion price would be the lower of market or $11.00 per share. On February
26, 1997, Seafield exchanged the note, the outstanding principal amount of
which was $23.5 million, and accrued interest thereon, for 3,020,536 shares of
Common Stock.
BUSINESS RELATIONSHIPS BETWEEN COMPANY AND DIRECTORS
In September 1991, the Company and Seafield executed an agreement (the
"Offering Agreement") pursuant to which Seafield purchased a controlling block
of the Common Stock and warrants to purchase additional shares of Common Stock.
Pursuant to the Offering Agreement, the Company is required to obtain
Seafield's
10
<PAGE> 12
consent prior to any of the following: (i) the sale or issuance of any options,
warrants, convertible securities or other equity or ownership interests in the
Company, other than specified options and warrants; (ii) declaration of any
dividend or other distribution in respect of any class of the Company's capital
stock, except for dividends in respect of the Company's Class A Preferred
Stock; (iii) taking any action, except to the extent required by the fiduciary
obligations of the board of directors of the Company, which would result in the
vesting of any dissenters' or appraisal rights in favor of any holder of the
Company's capital stock; (iv) consummation of any transaction which any
officer, director or affiliate of the Company on terms and conditions less
favorable than those available to the Company from unaffiliated third parties;
or (v) taking any action that would cause the Company to become subject to the
Tennessee Control Share Act. Pursuant to the Offering Agreement, the Company
is required to use its best efforts to nominate at least two representatives
designated by Seafield for election to the Company's board of directors.
Presently, Messrs. Grant, Jacobs and Seward are Seafield designees serving as
directors of the Company, with Messrs. Grant and Seward being nominated for
reelection to a term of one year.
The Company and the Group, of which Dr. Kalman is a stockholder, are
parties to a management services agreement, executed in January 1996 in
connection with the above-described physician practice affiliation transaction,
pursuant to which the Group pays the Company service fees in exchange for the
Company managing all of the non-medical aspects of the Group's oncology
practice. The agreement presently provides for the payment by the Group of
service fees equal to $720,000 per year plus clinic expenses, plus incentive
fees in the event certain performances criteria are met by the Group. During
1996, the Group paid the Company aggregate service fees of $6,031,630 .
EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS OF THE COMPANY
MARY E. CLEMENTS, age 33, has served as Executive Vice President of Finance of
the Company since March 1997 and has served as Secretary of the Company since
April 1997. Prior to being appointed to her current positions, Ms. Clements
was Chief Operating Officer -- Practice Management Divison of the Company from
September 1996 until March 1997, and was Director of Development - Practice
Management Division from June 1996 until September 1996. Prior to joining the
Company, Ms. Clements served in various capacities as an employee of the
international accounting firm of Coopers & Lybrand L.L.P.
KENNETH L. SCOTT, age 43, has served as Chief Operating Officer of the Company
since January 1997. Prior to being appointed to his current position, Mr.
Scott served as Chief Operating Officer of the Company's IMPACT(R) Division
from February 1996 until January 1997. From June 1993 until February 1996, he
was President and Chief Executive Officer of America Health Care Management
Services, Inc., an oncology health care management consulting company. From
May 1987 until June 1993, Mr. Scott was President, Chief Executive Officer and
a director of Cancer Treatment Holdings, Inc., a company that provides
chemotherapy, home infusion, home nursing and radiation therapy services to
cancer patients.
CHARLES H. WEAVER, M.D. age 35, has served as the Chief Medical Officer of the
Company since February 1996. Prior to being appointed to his current position,
Dr. Weaver was the Scientific Director of the Company from February 1994 until
February 1996. Prior to joining the Company, Dr. Weaver was the Acting
Instructor, Department of Internal Medicine at the University of Washington
from 1991 until 1994.
JEFFREY H. WINOKUR, age 38, has served as Executive Vice President of Marketing
of the Company since February 1996. Prior to joining the Company at that time,
Mr. Winokur served as Vice President of Managed Care with Medpartners/Mullikin,
Inc., a physician practice management company, from December 1993 until
February 1996. From March 1991 until December 1993, Mr. Winokur served as a
consultant for Performance Group, a healthcare consulting firm.
EMPLOYMENT CONTRACTS; CHANGE OF CONTROL ARRANGEMENTS
11
<PAGE> 13
The Company has employment agreements with Mr. Clark, Dr. West and Dr.
Weaver that expire December 31, 1997, subject to extension for consecutive one
year periods at the election of the parties. Pursuant to such contracts, Mr.
Clark, Dr. West and Dr. Weaver are paid base salaries of $200,000, $225,000 and
$208,000, respectively, subject to increase by the Board of Directors. Mr.
Clark and Dr. West participate in a bonus plan that potentially pays them up to
100% of their base salary upon achievement of certain predetermined goals. The
agreements are terminable by the Company only for cause. In the event of a
change in control of the Company, if the officer's employment is terminated
within one year after such change in control, Mr. Clark, Dr. West and Dr.
Weaver will be entitled to severance payments equal to 300%, 300% and 200%,
respectively, of their then-current base salary, subject to limitations
consistent with the provisions of Section 280G of the Internal Revenue Code of
1986, as amended. In the event the officer's employment is terminated by the
Company without cause then the officer will be entitled to receive his base
compensation for the duration of the term of the agreement, provided he does
not compete with the Company during such period. However, the officer may, in
his sole discretion, waive his right to receive additional compensation
following such termination of employment, in which event there will be no
restriction upon his competing with the Company. At December 31, 1996, the
base salaries of Dr. West , Mr. Clark and Dr. Weaver, were $225,000, $225,000
and $208,000, respectively.
COMPENSATION TABLES
The following table sets forth the compensation for services rendered
for each of the Company's last three fiscal years, of the Chief Executive
Officer and the Company's other most highly compensated executive officers
whose total annual salary and bonus exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation Awards
- - -------------------------------------------------------------------------------------------
ANNUAL
COMPENSATION
- - -------------------------------------------------------------------------------------------
NAME AND PRINCIPAL OPTIONS/ LTIP ALL OTHER
POSITION YEAR SALARY BONUS SARs PAYOUTS COMPENSATION
- - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph T. Clark, 1996 $205,231 50,800 25,000 0 $ 1,358 (2)
President and CEO 1995 182,343 135,000 83,400 0 1,102 (2)
1994 155,000 0 0 0 852 (2)
- - ----------------------------------------------------------------------------------------------------------------
Debbie Elliott 1996 $82,000 $71,500 51,000 0 $ 1,250
Executive Vice 1995 64,046 21,500 0 0 $ 1,000
President of Finance 1994 51,850 5,000 4,000 0 $ 743
and CFO
- - ----------------------------------------------------------------------------------------------------------------
Charles H. Weaver, 1996 $223,702 $68,660 55,000 0 $ 1,358 (2)
M.D., Chief Medical 1995 214,398 77,250 15,000 0 2,995 (2)
Officer 1994 182,154 11,640 10,000 0 27,013 (4)
- - ----------------------------------------------------------------------------------------------------------------
William H. West, 1996 $230,885 $ 49,300 25,000 0 $ 108 (2)
M.D. Chairman 1995 209,726 148,250 62,500 0 102 (2)
1994 185,000 0 0 0 102 (2)
- - ----------------------------------------------------------------------------------------------------------------
Jeffrey Winokur 1996 $154,187 $47,731 115,000 0 $ 9,638 (3)
Executive Vice 1995 0 0 0 0 0
President of 1994 0 0 0 0 0
Marketing
- - ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Reflects adjustment for a one-for-five reverse stock split effected by
the Company on November 1, 1995.
12
<PAGE> 14
(2) Reflects Company contributions paid or accrued to the named
executive's account in the Company's 401(k) Profit Sharing Plan and
Trust and premiums paid for term life insurance.
(3) Includes $8,280 of reimbursement for moving expenses, with balance
reflecting Company contributions paid or accrued to the named
executive's account in the Company's 401(k) Profit Sharing Plan and
Trust and premiums paid for term life insurance.
(4) Includes $26,342 of reimbursement for moving expenses, with balance
reflecting Company contributions paid or accrued to the named
executive's account in the Company's 401(k) Profit Sharing Plan and
Trust and premiums paid for term life insurance.
Option Grants as of December 31, 1996. The following table provides
information on option grants during the 1996 fiscal year to the executive
officers listed in the table above.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
=========================================================================================================
Individual Grants
-----------------
Potential
RealizationValue at
Assumed Rates of
Annual Stock Price
% of Total Options Appreciation for
Granted to Exercise Option Term(2)
Options Employees in Price Expiration --------------
Granted(3) Fiscal Year ($/Share)(1) Date 5% 10%
---------- ----------- ------------ ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------------
Joseph T. Clark 25,000 4.9% $12.50 04/19/06 $ 196,530 $ 246,163
- - ------------------------------------------------------------------------------------------------------------
Debbie Elliott 21,000 4.2% $12.50 04/19/06 $ 165,085 $ 206,777
- - ------------------------------------------------------------------------------------------------------------
Debbie Elliott 30,000 5.9% $ 9.75 12/19/06 $ 183,950 $ 230,408
- - ------------------------------------------------------------------------------------------------------------
Charles H. Weaver 55,000 10.9% $12.50 04/19/96 $ 432,362 $ 541,558
- - ------------------------------------------------------------------------------------------------------------
William H. West 25,000 4.9% $12.50 04/19/06 $ 196,530 $ 246,163
- - ------------------------------------------------------------------------------------------------------------
Jeffery Winokur - - - - - -
============================================================================================================
</TABLE>
(1) Exercise price represents fair market value of the Common Stock at the date
the stock option was granted.
(2) The amounts reflected were computed pursuant to instruction 7 to Item 402(c)
of Regulation S-K and are not intended to be a prediction of future
appreciation in market value of the Common Stock. No gain to the recipient
of the foregoing options is realizable by the named executive without an
increase in the market value of the Common Stock that benefits all
shareholders.
(3) Options are vested in and exercisable by the recipient upon the achievement
of certain performance goals established by the Compensation Committee and
set forth in individual option agreements between the Company and the named
executives.
Aggregated Option Exercises through December 31, 1996. The following
table provides information with respect to the value of each of their
unexercised options at December 31, 1996. No executive officer exercised any
options during the year ended December 31, 1996.
14
<PAGE> 15
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Shares Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Exercised Options at Fiscal Year End (#)(2) at December 31, 1996(1)
----------------- ------------------------- -----------------------
Shares
acquired on Value
Name exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph T. Clark - - 221,840 53,360 $302,150 $-
Debbie Elliott - - 16,600 43,400 - $-
Charles H. Weaver - - 48,000 52,000 $ 27,000 $6,750
William H. West - - 177,780 34,720 $293,800 $-
Jeffery Winokur - - 46,000 69,000 - -
</TABLE>
(1) Based upon the closing price of $9.50 per share the Common Stock on
the National Market of The Nasdaq Stock Market on December 31, 1996.
(2) Adjusted for one-for-five reverse stock split in November 1995.
13
<PAGE> 16
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Committee")
is composed entirely of independent outside directors. The Committee meets
periodically to review and recommend for Board approval the Company's
compensation program for senior executives and other key employees and
independently administers the stock option and other incentive plans of the
Company.
The guiding principle of the Committee is to establish a compensation
program which aligns executive compensation with the Company's objectives,
business strategies and financial and operational performance. In connection
with this principle, the Committee seeks to:
(1) Attract and retain qualified executives in the highly competitive
health care industry who will play a significant role in the achievement of the
Company's goals.
(2) Create a performance orientated environment that rewards
performance with respect to the financial and operational goals of the Company
and which takes into account industry-wide trends and performance levels.
(3) Reward executives for the strategic management and the long-term
enhancement of stockholder value.
Compensation for the key executives consists of three elements: base
salary and benefits, a performance based annual cash bonus and stock-based
compensation.
While the Committee seeks to weigh each element separately, it is
their collective value that is considered in ensuring that the executive
officers are appropriately compensated in a manner that advances both the
short-term and long-term interests of the stockholders.
The base salary for each executive officer is set on the basis of the
salary levels in effect for comparable positions in the industry, adjusted for
the executive's experience and performance level and internal comparability
considerations. The Company monitors industry salary levels with the
assistance of a compensation consultant. For 1996, executive officers' base
salaries were competitive with salaries for individuals in comparable positions
based on an industry survey commissioned by the Compensation Committee.
INCENTIVE COMPENSATION
An executive officer's performance-based annual cash bonus is based
upon pre-established financial goals as well as the achievement of strategic
objectives and milestones. The primary financial goals set by the Compensation
Committee have been achievement of target levels of earnings before interest
and taxes (EBIT). An aggregate incentive pool is determined by taking a
percentage of EBIT and allocating it among participants. In establishing a
minimum level of EBIT before any bonuses are earned the Compensation Committee
considers prior fiscal year performance and the amount of increase budgeted for
the coming year. The percentage of EBIT credited to the bonus pool may be
increased if actual EBIT exceeds budgeted EBIT. Based upon the CEO's
recommendation as to the participant's contribution to the overall success in
achieving the EBIT results, officers may earn from 10% to 100% of base salary.
Achievement of strategic objectives and milestones may also be a portion of an
individual's performance-based annual cash bonus, including the number of new
IMPACT Center openings, development of infrastructure necessary to sustain
future growth, obtaining financing on favorable terms, or more recently with
diversification into the physician practice management business and the number
of physicians under management. For 1996, the Compensation Committee placed
significant emphasis on the efforts of certain executive officers in
repositioning the Company from a strategic and financial point of view for
transition from being a direct provider of specialized cancer care to
management of physician practices covering a full range of cancer care.
15
<PAGE> 17
STOCK INCENTIVES
Pursuant to the Company's various stock option and incentive plans,
the Compensation Committee periodically awards stock options to executive
officers, key employees, and consultants to the Company and its subsidiaries.
Pursuant to the 1996 Stock Incentive Plan the Compensation Committee has the
ability to award shares of restricted stock and stock appreciation rights
(whether separate or in tandem with stock options) in addition to stock
options. Such stock based compensation provides for an incentive for each
participant to become a meaningful stockholder of the Company and provides a
mechanism for aligning those participants's interests with those of the
stockholders. The Compensation Committee believes that such stock option
grants are the foundation in the overall compensation packages because such
grants recognize both productivity and profitability, while at the same time
giving recipients a vested long term interest in the success of the Company
through stock ownership.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Clark assumed the title of Chief Executive Officer in January 1996
to provide focused leadership of the Company's diversification into the
physician practice management business. Mr. Clark's base salary is set using
the same criteria as all other executive officers and is approximately 90% of
the median of the range of salaries for comparable positions in the 1996
industry survey data. His 1996 cash bonus primarily reflected the achievement
of strategic and financing objectives related to the Company's repositioning
from a direct provider of specialized cancer care to management of physician
practices. Mr. Clark's bonus was related to the Company's procuring
approximately $60 million in financing, its recruiting additional management
depth and its consummating practice management affiliations during 1996 with
ten medical oncology practices consisting of 38 physicians in key markets. Mr.
Clark's cash bonus was approximately 25% of the maximum bonus provided in his
employment agreement.
COMPENSATION COMMITTEE
Jack O. Bovender
Frank M. Bumstead
P. Anthony Jacobs (Chairman)
Lawrence Kugelman
James R. Seward
PERFORMANCE GRAPH
The graph below sets forth the cumulative total return to Response
Oncology, Inc.'s shareholders during the five year period ended December 31,
1996, as well as an overall stock market index (Nasdaq Stock Market Total
Return Index) and a peer group index (S&P Health Care Composite Index). The
stock performance graph assumes $100 was invested on December 31, 1991:
RESPONSE ONCOLOGY RELATIVE PRICE PERFORMANCE
<TABLE>
<CAPTION>
Relative Indices
- - ----------------
As of December 31,
------------------------------------------------------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Response Oncology $100.00 $ 58.70 $ 28.26 $ 29.35 $ 43.48 $ 33.04
Nasdaq Composite $100.00 $115.45 $132.48 $128.25 $179.44 $220.18
S&P H.C. Composite $100.00 $ 86.81 $ 76.65 $ 83.55 $129.04 $152.89
</TABLE>
16
<PAGE> 18
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
During the year ended December 31, 1996, the Compensation Committee of
the Board of Directors of the Company consisted of Messrs. Bovender, Bumstead,
Jacobs, Kugelman and Seward, each of whom is an Independent Director. Messrs.
Jacobs and Seward are executive officers of Seafield, which as of February 28,
1997 beneficially owned 67.49% of the Common Stock. No executive officer of
the Company participates in the compensation decisions of Seafield.
COMPLIANCE WITH SECTION 16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and persons who own more than 10% of
the registered class of the Company's equity securities to file reports of
ownership with the Securities and Exchange Commission. Such directors,
executive officers and shareholders are required pursuant to Securities and
Exchange Commission regulations to furnish the Company with copies of all
reports filed pursuant to Section 16(a) of the Securities Exchange Act of 1934.
Based solely on a review of the Forms 3 and 4, and amendments thereto,
furnished to the Company during the fiscal year ended December 31, 1996 and
Form 5, and amendments thereto, furnished to the Company with respect to such
fiscal year, and certain representations furnished to the Company, the Company
believes that during the fiscal year ended December 31, 1996 all reports under
Section 16(a) of the Securities Exchange Act of 1934 required to be filed by
directors, executive officers and 10% shareholders of the Company were timely
filed.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF PROPOSAL NO. 1.
17
<PAGE> 19
PROPOSAL 2.
RATIFICATION OF SELECTION OF KPMG PEAT MARWICK LLP
AS THE 1997 INDEPENDENT ACCOUNTANTS AND AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP as the
Company's independent auditors for 1997. The selection is subject to approval
by the shareholders not later than the date of the Annual Meeting. KPMG Peat
Marwick LLP served as independent auditors of the Company for the years ended
December 31, 1993, 1994, 1995 and 1996. Representatives of the firm will be
present at the Annual Meeting, have an opportunity to make a statement if they
so desire and are expected to be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock entitled to vote at the Meeting is required to ratify
the selection of KPMG Peat Marwick LLP as the Company's independent auditors
for 1997.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF PROPOSAL NO. 2.
18
<PAGE> 20
PROPOSAL NO. 3
AMENDMENT TO 1996 INCENTIVE AND STOCK PLAN
In April 1997, the Company's Board of Directors approved an amendment
to the 1996 Incentive Stock Plan (the "1996 Plan") to increase the number of
shares issuable under the 1996 Plan from 630,000 shares to 1,130,000 shares of
Common Stock, to reserve the additional 500,000 shares for issuance, and to
amend correlating limitations in Section 3.1 of the 1996 Plan. The purpose of
the amendment is to provide the Company with additional long-term performance
based incentives for motivating, attracting, and retaining personnel of
exceptional ability and to provide directors, key employees, medical directors,
consultants and certain advisors with additional incentives by increasing their
proprietary interest in the Company. If the Amendment is approved by the
shareholders, the total number of shares of Common Stock issuable under the
1996 Plan will be 1,130,000. There is no pre-determined allocation of such
shares among potential recipients, and the Company cannot determine how many
shares would have been issued in 1996 had the amendment been in effect.
The 1996 Plan provides for the grant of (i) shares of restricted stock
("Restricted Stock"); (ii) stock appreciation rights (SARs); (iii) incentive
stock options ("ISOs") as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"); and (iv) non-qualified stock options
("NQSOs") (collectively "Awards"). The 1996 Plan is administered by the
Compensation Committee. The Compensation Committee has, subject to the terms
of the 1996 Plan, the sole authority to grant Awards under the 1996 Plan, to
construe and interpret the Plan and to make all other determinations and take
any and all actions necessary or advisable for the administration of the 1996
Plan.
All of the Company's directors, officers, medical directors,
consultants employees, and advisors are eligible to receive Awards under the
1996 Plan, but only employees of the Company are eligible to receive ISOs.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF PROPOSAL NO. 3.
19
<PAGE> 21
SHAREHOLDER PROPOSALS FOR 1998
Pursuant to the Securities Exchange Act of 1934, shareholder proposals
intended to be presented at the 1998 annual meeting of shareholders of the
Company must be received by the Company at its executive offices on or before
December 15, 1997.
OTHER MATTERS
The Board of Directors knows of no other business to be brought
before the meeting. If any other matters properly come before the meeting, the
proxies will be voted on such matters in accordance with the judgment of the
persons named as proxies therein, or their substitutes, present and acting at
the meeting.
INCORPORATION BY REFERENCE
The consolidated financial statements of the Company, included in the
Company's 1997 Annual Report which accompanies this Proxy Statement, are hereby
incorporated by reference into this Proxy Statement as if stated verbatim
herein.
BY ORDER OF THE BOARD OF DIRECTORS
MARY E. CLEMENTS
Secretary
April 30, 1997
20
<PAGE> 22
EXHIBIT A
AMENDMENT NO. 1 TO
RESPONSE ONCOLOGY, INC.
1996 STOCK INCENTIVE PLAN
The following amendment to the Response Oncology, Inc. 1996 Stock
Incentive Plan (the "Plan") is adopted by the Compensation Committee of the
Board of Directors of the Company effective April 4, 1997, subject to approval
by the shareholders of the Company (as defined in the Plan) at its Annual
Meeting to be held on June 5, 1997. Capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Plan.
Section 3.1 of the Plan is amended by substituting the number
1,130,000 for the number 630,000 in the third line of that section.
In all other respects, the Plan shall remain in full force and effect
as originally adopted.
As Adopted by the Compensation Committee of the Board of Directors on April 4,
1997, to be approved by the shareholders no later than December 31, 1997.
21
<PAGE> 23
APPENDIX A
RESPONSE ONCOLOGY, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
JUNE 5, 1997
The Undersigned hereby appoints Mary E. Clements as true and lawful
attorney or attorney-in-fact of the undersigned, with full power of
substitution, to vote a proxy for the undersigned at the Annual Meeting of the
Shareholders for Response Oncology, Inc. (the "Company") to be held at the
Company's corporate offices located at 1775 Moriah Woods Boulevard, Memphis,
Tennessee at 11:00 a.m., local time, on June 5, 1997, and all adjournments
thereof, the number of shares of which the undersigned would be entitled to
vote if then personally present for the following purposes:
<TABLE>
<S> <C>
1. To elect three Class II directors to serve two year terms ending in 1999 and three Class III directors to serve
one year terms ending in 1998, or until their successors have been duly elected and qualified.
FOR all nominees listed below AGAINST all nominees listed below ABSTAIN
- - ------ ----- -----
(except as marked to the contrary below)
INSTRUCTION: To withhold authority to vote for any individual nominee, strike a line through the nominee's name in
the list below:
Class II Directors: P. Anthony Jacobs Jack O. Bovender Lawrence N. Kugelman
Class III Directors: Joseph T. Clark W. Thomas Grant, II James R. Seward
2. To ratify the selection of KPMG Peat Marwick LLP as the Company's independent auditors for 1997.
FOR AGAINST ABSTAIN
---- ---- ----
3. To consider and act upon a proposal to amend the Company's 1996 Stock Incentive Plan authorizing the issuance
to officers, employees, directors, consultants and other designated persons of up to an additional 500,000
shares of the Company's common stock.
FOR AGAINST ABSTAIN
---- ---- ----
4. To transact such other business as may properly be brought before the Annual Meeting or any adjourment thereof.
(Continued on reverse side)
</TABLE>
<PAGE> 24
(Continued from other side)
This proxy, which is solicited on behalf of the Board of Directors of
Response Oncology, Inc. will be voted in the manner described herein. If no
direction is made, this proxy will be voted FOR all the proposals listed.
DATE: , 1997
--------------
-------------------------------
SIGNATURE
-------------------------------
Signature if Held Jointly
NOTE: Please date and sign exactly as name appears hereon. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign full name by authorized officer.
