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.
(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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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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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) Xxxxxxx X. Xxxx, M.D. and Xxxxx X. Xxxxxxxx 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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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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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. Xxxxxxx Xxxxxx
0000 Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Telecopier: (000) 000-0000
With a Copy to:
Xxxxxxx X. Xxxxx
Xxxxxxx & Xxxx X.X.
0000 Xxxxx Xxxxxxxxx
Xxxxxx Xxxx, XX 00000
Telecopier: (000) 000-0000
As to Company:
Response Oncology, Inc.
Attention: Xxxxxx X. Xxxxx
0000 Xxxxxx Xxxxx Xxxx.
Xxxxxxx, Xxxxxxxxx 00000
Telecopier: (000) 000-0000
With a copy to:
Waring Xxx PLC
Attention: Xxx X. Xxxxxxx
00 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telecopier: 000-000-0000
(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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(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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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/ Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Title: EVP Chief Financial Officer
COMPANY
RESPONSE ONCOLOGY, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
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