<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 21, 1996
REGISTRATION NO. 333-
============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------------------
PHYCOR, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
TENNESSEE 62-1344801
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
30 BURTON HILLS BOULEVARD, SUITE 400
NASHVILLE, TENNESSEE 37215
(615) 665-9066
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
-----------------------
JOSEPH C. HUTTS
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
PHYCOR, INC.
30 BURTON HILLS BOULEVARD, SUITE 400
NASHVILLE, TENNESSEE 37215
(615) 665-9066
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-----------------------
Copies of communications to:
J. CHASE COLE, ESQ.
WALLER LANSDEN DORTCH & DAVIS
2100 NASHVILLE CITY CENTER, 511 UNION STREET
NASHVILLE, TENNESSEE 37219-1760
(615) 244-6380
-----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
[ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
[ ]
------------------------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------------------------
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
===========================================================================================================
<S> <C> <C>
Title of each class of securities Proposed maximum Amount of
to be registered aggregate offering price registration fee
- -----------------------------------------------------------------------------------------------------------
Common Stock, no par value per share . . . . . . $75,750,000 $26,121(1)
===========================================================================================================
</TABLE>
(1) Calculated pursuant to Rule 457 of the rules and regulations under the
Securities Act of 1933, as amended, on the basis of the average high and
low sales prices of PhyCor, Inc. Common Stock on May 14, 1996, as
reported on The Nasdaq Stock Market.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
================================================================================
<PAGE> 2
PROSPECTUS
MAY __, 1996
1,500,000 SHARES
PHYCOR, INC.
1996 AFFILIATE STOCK PURCHASE PLAN
COMMON STOCK
PhyCor, Inc. (the "Company") is a physician practice management
company that operates multi-specialty medical clinics and independent practice
associations. The Company, through its 1996 Affiliate Stock Purchase Plan
(the "Plan"), is offering to eligible Affiliates (as defined herein) the
opportunity to share in the growth and prosperity of the Company by acquiring
shares of the Company's Common Stock, no par value per share (the "Common
Stock"). For the purposes hereof, the term "Affiliates" shall mean eligible
(i) employees of limited liability companies and partnerships in which the
Company has an equity interest of at least 50% (each a "PhyCor-Related
Entity"), (ii) physician employees and other personnel employed by a medical
clinic with which the Company, a subsidiary thereof or a PhyCor-Related Entity
has entered into a management or service agreement (an "Affiliated Clinic")
and (iii) members, partners or shareholders of Affiliated Clinics.
The Plan will be administered by the Company's Board of Directors (the
"Board") or any committee thereof which the Board may designate. Eligible
Affiliates may participate in the Plan by completing an enrollment form
supplied by Equitable Securities Corporation (the "Administration Agent"), a
registered broker-dealer who will act as the Company's agent in relation to the
operation of the Plan. Pursuant to the enrollment form, each eligible
Affiliate will authorize a deduction in the Affiliates' salary or Affiliated
Clinic partnership distributions ranging from a minimum of $10 per month to a
maximum of $1,770 per month. Such funds will be delivered to the Company and
promptly deposited in a money market mutual fund maintained by the
Administration Agent pending investment. On the last trading day of each Plan
Year (as defined herein), such funds will be used to purchase whole shares of
Common Stock (the "Plan Shares") on behalf of a participating Affiliate (a
"Plan Participant").
The purchase price of each Plan Share will be the lesser of (i) 85% of
the Market Price (as defined herein) of the Common Stock on the first trading
date of a Plan Year or (ii) 85% of the Market Price of the Common Stock on the
last trading date of a Plan Year. As used herein, the term "Market Price" is
defined as the average high and low sales prices of the Common Stock on The
Nasdaq Stock Market ("Nasdaq") on a specific trading day. If there are no
sales on such day, then the Market Price is defined as the average of the bid
and the asked quotations for the Common Stock on such day. See "The Plan."
The Common Stock is listed on Nasdaq under the symbol "PHYC." On May 17,
1996, the closing price of the Company's Common Stock on Nasdaq was $51 1/4 per
share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 3
AVAILABLE INFORMATION
The Company has filed a Registration Statement on Form S-3, including
amendments thereto, relating to the Common Stock offered hereby (the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission"). This Prospectus does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto.
Statements contained in this Prospectus as to the contents of any contract or
other document referred to are not necessarily complete and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement or as previously filed with the
Commission and incorporated herein by reference. For further information with
respect to the Company and the Common Stock offered hereby, reference is made
to such Registration Statement, exhibits and schedules. A copy of the
Registration Statement may be inspected by anyone without charge at the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C.
20549, and copies of all or any part thereof may be obtained from the
Commission upon payment of certain fees prescribed by the Commission.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. The reports, proxy statements and other information may be
inspected and copied at the offices of the Commission as stated above or at its
regional offices located in the Northwestern Atrium Center, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661 and Seven World Trade Center,
Suite 1300, New York, New York 10048. Copies of such material also can be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Company's Common Stock
is listed on Nasdaq, and such reports, proxy statements and other information
can also be inspected at the offices of Nasdaq Operations, 1735 K Street, N.W.,
Washington, D.C. 20006.
------------------
The Company was incorporated in Tennessee in January 1988. The Company's
executive offices are located at 30 Burton Hills Boulevard, Suite 400,
Nashville, Tennessee 37215, and its telephone number is (615) 665-9066.
2
<PAGE> 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions of documents filed by the Company
(0-19786) with the Commission are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the year
ended December 31, 1995;
(2) The Company's Quarterly Report on Form 10-Q for the
three months ended March 31, 1996; and
(3) The description of the Company's Common Stock
contained in the Company's Registration Statements on
Form 8-A, dated January 8, 1992 and March 8, 1994,
respectively.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering of the Common Stock hereunder
shall be deemed to be incorporated by reference in this Prospectus and to be
part hereof from the filing date of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein, or in any other subsequently filed document that also is incorporated
or is deemed to be incorporated by reference herein, modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus. Subject to the foregoing, all information appearing in this
Prospectus is qualified in its entirety by the information appearing in the
documents incorporated herein by reference.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON
WRITTEN OR ORAL REQUEST, AT NO CHARGE, FROM THE COMPANY. REQUESTS SHOULD BE
DIRECTED TO THE COMPANY, 30 BURTON HILLS BOULEVARD, SUITE 400, NASHVILLE,
TENNESSEE 37215, ATTENTION: JOHN K. CRAWFORD, CHIEF FINANCIAL OFFICER.
3
<PAGE> 5
INTRODUCTION
The Plan was adopted and approved by the Company's Board of Directors on
May 10, 1996 to provide an opportunity for Affiliates to own shares of the
Company's Common Stock and to increase the Affiliates' interest in the
Company's economic future by providing a convenient and commission-free way to
purchase shares of Common Stock at a modest discount.
It is suggested that this Prospectus be retained by Affiliates for future
reference.
THE PLAN
The following is a question and answer discussion of the provisions of
the Plan.
1. WHAT IS THE PURPOSE OF THE PLAN?
The purpose of the Plan is to provide Affiliates with a simple and
convenient method to purchase shares of Common Stock at a modest discount.
2. ARE THERE ANY EXPENSES TO PLAN PARTICIPANTS IN CONNECTION WITH
THE PLAN SHARES?
Yes. Plan Participants will incur certain fees associated with the
maintenance of the brokerage accounts into which Plan Shares will be
deposited. (see Question 14). Plan Participants, however, will not incur
brokerage commissions or service charges for Plan Purchases.
3. WHO ADMINISTERS THE PLAN FOR PLAN PARTICIPANTS?
The Plan will be administered by the Board or any committee thereof
designated by the Board. The Administration Agent, however, will operate the
Plan on a day-to-day basis. Affiliates interested in participating in the
Plan should direct all questions relating to the Plan or the Company to either
the Affiliates' Affiliated Clinic administrative staff or the following:
----------------------------------------------
Equitable Securities Corporation
511 Union Street, Suite 800
Nashville, Tennessee 37219
Attention: Thomas R. Steele
Telephone: (615) 780-9300
Telecopy: (615) 780-4160
or
PhyCor, Inc.
30 Burton Hills Boulevard, Suite 400
Nashville, Tennessee 37215
Attention: John K. Crawford, Chief Financial Officer
Telephone: (615) 665-9066
Telecopy: (615) 665-9088
----------------------------------------------
4
<PAGE> 6
4. WHEN IS THE PLAN IN EFFECT?
The Plan operates on a yearly basis. Each Plan year begins on July 1 and
ends on the following June 30 (a "Plan Year").
5. WHO MAY PARTICIPATE IN THE PLAN?
All Affiliates are eligible to participate in the Plan as long as certain
eligibility requirements are met. Each Affiliate (except members, partners, or
shareholders of Affiliated Clinics) whose customary work schedule is at least
hours twenty (20) per week and more than five (5) months in a calendar year and
who is employed on or before June 1 prior to the beginning of a given Plan Year
is eligible to participate in the Plan during such Plan Year. Each member,
partner, or shareholder of an Affiliated Clinic who is a member, partner or
shareholder of such Affiliated Clinic on or before June 1 prior to the
beginning of a Plan Year is eligible to participate during such Plan Year.
6. HOW DOES AN AFFILIATE PARTICIPATE IN THE PLAN?
An Affiliate participates in the Plan by completing an enrollment form
supplied by the Administration Agent. On that form, an Affiliate will
authorize his or her Affiliated Clinic or applicable PhyCor-Related Entity to
deduct from the Affiliate's pay or withhold from the Affiliate's Affiliated
Clinic distributions an amount that is at least $10.00 per month, but not more
than $1,770 per month. The funds withheld will then be remitted by the
Affiliated Clinics and PhyCor-Related Entities to the Company, and the Company
shall promptly transmit such funds to a money market mutual fund account
maintained by the Administration Agent pending investment (a "Contribution
Account"). The deduction must be in whole dollars. The maximum authorized
number of Plan Shares a Plan Participant may purchase in any Plan Year is
1,000.
7. MAY A PLAN PARTICIPANT ALTER HIS OR HER CONTRIBUTION RATE?
During a Plan Year, a Plan Participant may not change his or her
contribution rate. The Plan Participant's contribution rate will continue to
apply until he or she makes a written request to change it for the next Plan
Year. A Plan Participant may make a change in his or her contribution rate by
submitting a new enrollment form to the Administration Agent at least fifteen
(15) days prior to the beginning of the next Plan Year. The requested change
will not take effect until the next Plan Year.
8. MAY A PLAN PARTICIPANT CEASE MAKING CONTRIBUTIONS PURSUANT TO
THE PLAN DURING A PLAN YEAR?
Yes. A Plan Participant may suspend his or her contributions during a
Plan Year. If a Plan Participant decides to suspend his or her contributions,
he or she must submit a new enrollment form to the Administration Agent
indicating that such Plan Participant wishes to cease making contributions
pursuant to the Plan. Once a Plan Participant elects to suspend contributions
during a Plan Year, he or she may not again contribute to the Plan during that
Plan Year. Suspension from participation will occur not more than thirty (30)
days after the Administration Agent receives a Plan Participant's request to
suspend contributions.
9. MAY A PLAN PARTICIPANT WITHDRAW FUNDS HELD IN HIS OR HER
CONTRIBUTION ACCOUNT DURING A PLAN YEAR?
Yes. A Plan Participant may withdraw funds held in a Contribution
Account during a Plan Year. If a Plan Participant decides to withdraw funds
from his or her Contribution Account at any time during a Plan Year, he or she
must submit a written withdrawal request to the Administration Agent. Forms
are available from a Plan Participant's local administrator or the
Administration Agent. If a Plan Participant withdraws funds, he or she may not
make additional contributions pursuant to the Plan during the remainder of that
Plan Year.
5
<PAGE> 7
10. WHEN ARE PLAN SHARES PURCHASED?
Plan Shares are purchased for a Plan Participant after the end of a Plan
Year following the determination of the applicable purchase price (see Question
11). The funds held in a Participant's Contribution Account will purchase the
maximum number of whole Plan Shares possible or, if applicable, the maximum
number of Plan Shares authorized by the Company for each Plan Participant. For
example:
Participant A elects to contribute $50 per month to purchase Plan Shares.
The Market Price of the Common Stock was $14 on the first trading day of the
Plan Year and $15 on the last trading day of the Plan Year. Participant A's
total contributions for the year are $600. As seen in Question 11, the
purchase price of Plan Shares equals 85% of the lesser of $14 and $15, or
$11.90. The number of Plan Shares purchased is 50 ($600/$11.90 per share)
whole shares and the cash remaining in Participant A's Contribution Account is
$5 ($600 - 50 shares x $11.90 per share).
11. WHAT WILL BE THE PRICE OF THE PLAN SHARES?
The price of each Plan Share will be equal to the lesser of:
(1) Eighty-five percent (85%) of the Market Price of PhyCor's
Common Stock on the first trading date of a Plan Year, or
(2) Eighty-five percent (85%) of the Market Price of PhyCor's
Common Stock on the last trading date of such Plan Year.
For example, for the Plan Year ending June 30, 1996, assume the Market Price on
the first trading date of the Plan Year (July 1, 1995) was $25 and the Market
Price on the last trading date of the Plan Year (June 30, 1996) was $30. The
purchase price of Plan Shares for the Plan Year ending June 30, 1996 will be
$21.25 ($25 x 85%). If the price determined by this formula is less than the
Common Stock's book value on the June 30 prior to the start of any Plan Year,
no Plan Shares will be issued for such Plan Year, and a Plan Participant's
contributions will be returned by the Administration Agent as soon as possible.
12. PRIOR TO THE PURCHASE OF PLAN SHARES, DOES A PLAN
PARTICIPANT'S CONTRIBUTION ACCOUNT EARN INTEREST DURING THE PLAN YEAR?
No. Plan Shares are offered at a 15% discount with no commission charged
on the purchase of such shares. Consequently, no interest is credited.
6
<PAGE> 8
13. HOW DOES A PLAN PARTICIPANT ACCESS PLAN SHARES IF SUCH SHARES
ARE DEPOSITED WITH THE ADMINISTRATION AGENT?
A Plan Participant's Plan Shares will be placed in a special individual
account with the Administration Agent. The Administration Agent will offer a
24-hour system that a Plan Participant may access by telephone that will allow
the Plan Participant to receive information about his or her account. A Plan
Participant may also use this system to sell any or all of his or her Plan
Shares held in such account at any time after the account has been credited
with Plan Shares. A Plan Participant will be provided with the telephone
number and instructions on the use of the telephone system as well as a
personal identification number (PIN), which the Plan Participant must use to
access his or her account. This special account may only be used by a Plan
Participant in connection with his or her participation in the Plan.
14. ARE THERE ANY CHARGES ASSOCIATED WITH A PLAN PARTICIPANT'S
INDIVIDUAL ACCOUNT WITH THE ADMINISTRATION AGENT?
Yes, a fee of $10 will be deducted from a Plan Participant's Contribution
Account on the last day of a Plan Year. In addition, a Plan Participant
will be charged a commission by the Administration Agent when a Plan
Participant sells any of the Plan Shares held in his or her account. It is
currently anticipated that a sales commission equal to the greater of $.06 per
share sold or $50 will be charged for Plan Share transactions. A Plan
Participant should confirm commission charges with the Administration Agent
prior to selling any Plan Shares to confirm that such charges have not changed
since the date of this Prospectus.
15. MAY A PLAN PARTICIPANT TERMINATE PARTICIPATION IN THE PLAN?
Yes, a Plan Participant may cease participation in the Plan at any time
by submitting an enrollment form to the Administration Agent indicating the
Plan Participant's desire to terminate participation in the Plan. Termination
of participation will occur not more than thirty (30) days after the
Administration Agent receives a Plan Participant's enrollment form. Any cash
remaining in the Plan Participant's Contribution Account will be returned at
that time.
16. WHAT HAPPENS IF A PLAN PARTICIPANT LEAVES A PHYCOR-RELATED
ENTITY OR AN AFFILIATED CLINIC?
RETIREMENT: A Plan Participant can choose to withdraw the
accumulated cash in his or her Contribution Account
or to leave the money in the Contribution Account to
purchase Plan Shares at the end of the Plan Year. If
a Plan Participant decides to purchase Plan Shares,
any cash remaining in the Contribution Account after
the purchase of Plan Shares will be returned to such
Plan Participant.
DEATH: The executor of a Plan Participant's estate can
choose to withdraw the accumulated cash in a Plan
Participant's Contribution Account or to leave the
money in the Plan Participant's Contribution Account
to purchase Plan Shares at the end of the Plan Year.
If a Plan Participant's beneficiary decides to
purchase
7
<PAGE> 9
Plan Shares, any cash remaining in a Plan
Participant's Contribution Account after the purchase
of the Plan Shares will be distributed to the
beneficiary.
DISABILITY: A Plan Participant can choose to withdraw the
accumulated cash in his or her Contribution Account
or to leave the money in such account to purchase
Plan Shares at the end of the Plan Year. If a Plan
Participant decides to purchase Plan Shares, any cash
remaining in such account after the purchase of Plan
Shares will be returned to the Plan Participant.
TERMINATION
OF
EMPLOYMENT: The accumulated cash in a Plan Participant's
Contribution Account will be returned to the Plan
Participant as soon as possible following the Plan
Participant's termination of employment. The
Participant will not be able to purchase Plan Shares
through the Plan.
WITHDRAWAL: The accumulated cash in a Plan Participant's
Contribution Account will be returned to the Plan
Participant as soon as possible following the Plan
Participant's withdrawal for any reason (other than
retirement, death or disability) as a member, partner
or shareholder of an Affiliated Clinic. The Plan
Participant will not be able to purchase Plan Shares
through the Plan.
17. WHAT CONSTITUTES RETIREMENT AND DISABILITY FOR PURPOSES OF THE
PLAN?
For purposes of the Plan, "retirement" means a Plan Participant is either
(i) sixty (60) years old and has been continuously employed by an Affiliated
Clinic or a PhyCor-Related Entity for at least five (5) years or (ii)
fifty-five (55) years old and has been continuously employed by an Affiliated
Clinic or a PhyCor-Related Entity for at least twenty (20) years. "Disability"
means a permanent disability within the meaning of any disability policy
provided for a Plan Participant or, if there is no policy, as such term is
defined in Section 422(c)(7) of the Internal Revenue Code.
18. MAY THE PLAN BE CHANGED OR DISCONTINUED?
The Company reserves the right to suspend, modify or terminate the Plan
at any time. All Plan Participants will receive notice of any such suspension,
modification or termination. Upon termination of the Plan by the Company, any
funds remaining in a Plan Participant's Contribution Account will be returned
by the Administration Agent to the Plan Participant.
19. ARE THERE ANY RESTRICTIONS ON A PLAN PARTICIPANT'S ABILITY TO
SELL PLAN SHARES?
The Plan Shares are registered in accordance with the Securities Act of
1933, as amended. Consequently, the Plan Shares are not subject to any resale
restrictions. The Company, however, has adopted a trading policy which limits
the ability of Company employees and others with material, non-public
information about the Company from selling or purchasing shares of Common Stock
under certain circumstances. A Plan Participant should consult the
administrative staff of his or her Affiliated Clinic or PhyCor-Related Entity
for more information about these restrictions.
20. ARE CONTRIBUTIONS PURSUANT TO THE PLAN TREATED DIFFERENTLY FOR
TAX PURPOSES THAN CONTRIBUTIONS TO A RETIREMENT PLAN, LIKE THE PHYCOR SAVINGS
AND PROFIT SHARING PLAN (THE "SAVINGS PLAN") OR AN AFFILIATED CLINIC'S
RETIREMENT PLAN?
Yes, a Plan Participant's contributions to either the Savings Plan or
other Affiliated Clinic retirement plan (if such Affiliated Clinic has not
adopted the Savings Plan) are pre-tax contributions. Consequently, Plan
Participant contributions to a retirement plan are deducted before FICA and
FUTA, federal income taxes and state income taxes, if any, are deducted from
adjusted compensation. Plan Participant
8
<PAGE> 10
contributions to the Plan are after-tax contributions. This means that the
taxes described above are deducted from compensation before contributions to
the Plan are deducted.
21. DOES A PLAN PARTICIPANT PAY TAXES UPON THE PURCHASE OF PLAN
SHARES?
A Plan Participant will recognize income and pay federal income tax, and
any applicable state income tax, when he or she receives Plan Shares in an
amount equal to the discount from the market value of the shares purchased at
the end of the Plan Year. The adjusted tax basis of a Plan Participant's Plan
Shares will be the fair market value of the Plan Shares on the date the Plan
Participant receives such shares. When a Plan Participant sells or exchanges
Plan Shares, the Plan Participant must pay income tax on the difference
between the basis of such Plan Shares and the amount the Plan Participant
receives as a result of the sale or other exchange of such Plan Shares.
If a Plan Participant holds the Plan Shares more than twelve (12) months
before he or she sells or exchanges the Plan Shares, the gain is defined for
tax purposes as a long-term capital gain which may result in a lower tax rate
being applied against such gain.
STOCK SALE EXAMPLE 1:
Assume the same facts used in Question 10. Participant A purchases 50
Plan Shares. These Plan Shares are issued to Participant A shortly after
the end of the Plan Year. For tax purposes, the purchase occurs on June
30. Participant A purchases Plan Shares worth $750 (50 shares x
$15/share) for $595 (50 shares x $11.90/share). Therefore, Participant A
will have taxable income of $155 ($750 - $595) on June 30. The $155 will
be ordinary income and will be included in Participant A's W-2 if he or
she is an employee of a PhyCor-Related Entity. If Participant A is
employed by, or is a member, partner or shareholder of an Affiliated
Clinic, Participant A's income will be reported on Form 1099.
Participant A will report this income on his or her income tax return for
the taxable year in which the purchase occurs. Participant A's cost
basis in the 50 Plan Shares is $750. On December 1 of the same year
Participant A decides to sell his Plan Shares when the stock price is
$18. The amount realized on Participant A's sale is $900. The brokerage
commission on the sale is $50; therefore Participant A receives cash of
$850. Participant A's taxable income on the sale is $100 ($900 - $50 -
$750). Participant A must include this gain (classified as a short-term
capital gain) on his tax return for the taxable year in which the sale
occurs.
STOCK SALE EXAMPLE 2:
Assume the same facts as the previous example, except that Participant A
decides to hold his Plan Shares until December 1 of the calendar year
following the purchase.
For tax purposes, Participant A will still recognize the $155 of ordinary
income in the year Participant A purchased the Plan Shares. Participant
A's subsequent gain of $100 upon sale of the Plan Shares will be
recognized in the year of sale and will be considered a long-term capital
gain (since it was held for more than one year).
Employees of PhyCor Related Entities will also be subject to income tax
withholding at the supplemental wage rate which is currently 28% and will be
required to pay FICA and related taxes which are currently withheld at a rate
of 7.65% on the value of the discount received. In the examples above, the
discounted amount is $155. Therefore, the amount of federal income taxes
withheld will be $43.40 ($155 x 28%) and the amount of FICA taxes withheld will
be $11.86 ($155 x 7.65%). The actual amount withheld for FICA taxes may be
less if a Plan Participant's salary exceeds certain IRS thresholds. These
taxes will be withheld from a Plan Participant's regular paycheck and will be
remitted to the Internal Revenue Service by his or her employer.
9
<PAGE> 11
USE OF PROCEEDS
The Company is unable to estimate the amount of proceeds from the Plan
Shares to be sold pursuant to the Plan. The Company intends to use any
proceeds from the sale of such Plan Shares for general corporate purposes.
PLAN OF DISTRIBUTION
The Plan Shares are being offered by the Administration Agent on a
best-efforts basis. The only fees the Administration Agent will receive in
connection with its administration of the Plan are maintenance fees charged to
Plan Participants relating to their individual accounts and commissions on
sales of Plan Shares (see Question 14). The Administration Agent may
engage in other transactions with and perform services for the Company in the
ordinary course of business.
Some Affiliates may be residents of jurisdictions in which the Company
determines that it may not legally or economically offer its Common Stock under
the Plan, and the Company may preclude such residents from participating in the
Plan. The Company has no present plans to limit participation in the Plan by
any Affiliate for any reason other than set forth above, but reserves such
right in the event that it determines such limitation to be in its interest for
any reason. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, any shares of Common Stock or other securities
in any state or any other jurisdiction to any person to whom it is unlawful to
make such offer in such jurisdiction.
LEGAL MATTERS
Certain legal matters with respect to the validity of the shares of
Common Stock will be passed upon for the Company by Waller Lansden Dortch &
Davis, Nashville City Center, 511 Union Street, Suite 2100, Nashville,
Tennessee 37219-8966.
EXPERTS
The Consolidated Financial Statements of the Company incorporated herein
by reference have been included in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, upon the authority of
such firm as experts in accounting and auditing.
10
<PAGE> 12
<TABLE>
<S> <C>
====================================================== ======================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION 1,500,000 Shares
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
THE COMPANY OR BY ANY OTHER PERSON. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A PHYCOR, INC.
SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE 1996 Affiliate Stock Purchase Plan
IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION MAY
NOT LAWFULLY BE MADE. NEITHER THE DELIVERY OF THIS Common Stock
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAD BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY -----------------
SINCE THE DATE HEREOF.
PROSPECTUS
-----------------
-----------------
TABLE OF CONTENTS
Page
----
Available Information . . . . . . . . . . . . . 2
Incorporation of Certain Documents
by Reference . . . . . . . . . . . . . . . . 3
Introduction . . . . . . . . . . . . . . . . . 4
The Plan . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . 10
Plan of Distribution . . . . . . . . . . . . . 10
Legal Matters . . . . . . . . . . . . . . . . . 10 May __, 1996
Experts . . . . . . . . . . . . . . . . . . . . 10
====================================================== =====================================
</TABLE>
<PAGE> 13
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses of this offering are estimated as follows:
<TABLE>
<S> <C>
Commission Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26,121
Nasdaq Additional Listing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,500
State Qualification Expenses (including legal fees) . . . . . . . . . . . . . . . . . . . . . 23,000
Printing Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,500
Transfer Agent Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
Miscellaneous Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 879
--------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 95,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) Article 8 of the Registrant's Amended Bylaws provides
as follows:
The Corporation may indemnify, and upon request may advance
expenses to, any person (or the estate of any person) who was or is a
party to, or is threatened to be made a party to, any threatened, pending
or completed action, suit or proceeding, whether or not by or in the
right of the Corporation, and whether civil, criminal, administrative,
investigative or otherwise, by reason of the fact that such person is or
was a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer,
partner, trustee, employee or agent of another corporation, partnership,
joint venture, trust employee benefit plan or other enterprise, against
any liability incurred in the action, suit or proceeding, despite the
fact that such person has not met the standard of conduct set forth in
Section 48-18-502(a) of the Tennessee Business Corporation Act (the
"Act") or would be disqualified for indemnification under Section
48-18-502(d) of the Act, if a determination is made by the person or
persons enumerated in Section 48-18-502(b) of the Act that the director
or officer seeking indemnification is liable for (i) any breach of the
duty of loyalty to the Corporation or its shareholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law or (iii) voting for or assenting to a
distribution in violation of the Act.
Section 7 of the Registrant's Restated Charter provides as follows:
The Corporation shall indemnify, and upon request shall
advance expenses to, in the manner and to the full extent permitted by
law, any person (or the estate of any person) who was or is a party to,
or is threatened to be made a party to, any threatened, pending or
completed action, suit or proceeding, whether or not by or in the right
of the Corporation, and whether civil, criminal, administrative,
investigative or otherwise, by reason of the fact that such person is or
was a director, officer, or employee of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
partner, trustee, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise (an "indemnitee"). The
indemnification provided herein shall not be deemed to limit the right of
the Corporation to indemnify any other person for any such expenses to
the full extent permitted by law, nor shall it be deemed exclusive of any
other rights to which any person seeking indemnification from the
Corporation may have or hereafter acquire under this Charter or the
Bylaws of the Corporation or under any agreement
II-1
<PAGE> 14
or vote of shareholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity
while holding such office; provided, however, that the Corporation shall
not indemnify any such indemnitee in connection with a proceeding (or
part thereof) if a judgment or other final adjudication adverse to the
indemnitee establishes his liability (i) for any breach of the duty of
loyalty to the Corporation or its shareholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law or (iii) under Section 48-18-304 of the
Tennessee Business Corporation Act.
(b) In addition to the foregoing provision of the Amended
Bylaws and Restated Charter of the Registrant, directors, officers,
employees and agents of the Registrant may be indemnified by the
Registrant, pursuant to the provisions of Section 48-18-501 et seq. of
the Tennessee Code Annotated.
(c) In addition, the Registrant maintains directors and
officers liability insurance.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits
------ -----------------------
<S> <C> <C>
4.1 - Restated Charter of the Registrant (2)
4.2 - Amendment to Restated Charter of the Registrant (3)
4.3 - Amended Bylaws of the Registrant (2)
4.4 - Specimen of Common Stock certificate (4)
5.1 - Opinion of Waller Lansden Dortch & Davis, including consent (1)
23.1 - Consent of KPMG Peat Marwick LLP (1)
23.2 - Consent of Waller Lansden Dortch & Davis (included in Exhibit 5.1) (1)
24.1 - Power of Attorney (set forth on page II - 4) (1)
99.1 - Affiliate Stock Purchase Plan (1)
</TABLE>
- -----------
(1) Filed herewith.
(2) Incorporated by reference to Exhibit 3.2 filed with the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994,
Commission No. 0-19786.
(3) Incorporated by reference to Exhibit 4.2 filed with the Registrant's
Registration Statement on Form S-3, Registration No. 33-93018.
(4) Incorporated by reference to Exhibit 4.2 filed with the Registrant's
Registration Statement on Form S-1, Registration No. 33-44123.
II-2
<PAGE> 15
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in the
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described in Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
repayment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-3
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Nashville, State of Tennessee, on May 20, 1996.
PHYCOR, INC.
By: /s/ Joseph C. Hutts
-----------------------------
Joseph C. Hutts,
Chairman of the Board, President
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Joseph C. Hutts and John K. Crawford, and each
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him in his name, place and stead, in any
and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully and to all intents and purposes as he might or
could do in person hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C>
/s/ Joseph C. Hutts Chairman of the Board, President May 20, 1996
- ------------------------------- Chief Executive Officer (Principal
Joseph C. Hutts Executive Officer) and Director
/s/ Derril W. Reeves Executive Vice President, May 20, 1996
- ------------------------------- Development and Director
Derril W. Reeves
/s/ John K. Crawford Treasurer (Principal Financial May 20, 1996
- ------------------------------- Officer and Principal
John K. Crawford Accounting Officer)
/s/ Thompson S. Dent Executive Vice President, May 20, 1996
- ------------------------------- Corporate Services and
Thompson S. Dent Director
/s/ Richard D. Wright Executive Vice President, May 20, 1996
- ------------------------------- Operations and Director
Richard D. Wright
/s/ Ronald B. Ashworth Director May 20, 1996
- -------------------------------
Ronald B. Ashworth
/s/ Sam A. Brooks, Jr. Director May 20, 1996
- -------------------------------
Sam A. Brooks, Jr.
</TABLE>
II-4
<PAGE> 17
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ Winfield Dunn Director May 20, 1996
- -------------------------------
Winfield Dunn
/s/ C. Sage Givens Director May 20, 1996
- -------------------------------
C. Sage Givens
/s/ Joseph A. Hill, M.D. Director May 20, 1996
- -------------------------------
Joseph A. Hill, M.D.
/s/ James A. Moncrief, M.D. Director May 20, 1996
- -------------------------------
James A. Moncrief, M.D.
</TABLE>
II-5
<PAGE> 1
EXHIBIT 5.1
WALLER LANSDEN DORTCH & DAVIS
NASHVILLE CITY CENTER
511 UNION STREET, SUITE 2100
POST OFFICE BOX 198966
NASHVILLE, TENNESSEE 37219-8966
FACSIMILES (615) 244-6380 809 SOUTH MAIN STREET
(615) 244-6804 P.O. BOX 1035
(615) 244-5656 COLUMBIA, TN 38402-1035
(615) 388-6031
May 21, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: PhyCor, Inc.
Registration Statement on Form S-3
Ladies and Gentlemen:
We are acting as counsel to PhyCor, Inc., a Tennessee corporation (the
"Company"), in connection with the registration under the Securities Act of
1933 (the "Act") of an aggregate of 1,500,000 shares of the Company's Common
Stock, no par value per share (the "Shares"), pursuant to a Registration
Statement on Form S-3 (the "Registration Statement"). We have examined and
relied upon such records, documents and other instruments as in our judgment
are necessary and appropriate in order to express the opinion hereinafter set
forth, and have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals, and the conformity to original
documents of all documents submitted to us as certified or photostatic copies.
Based upon the foregoing, we are of the opinion that the Shares, when
issued and delivered in the manner and on the terms described in the
Registration Statement (after the Registration Statement is declared
effective), will be duly authorized, validly issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and further consent to the reference to us under the
caption "Legal Matters" in the prospectus included in the Registration
Statement.
Very truly yours,
WALLER LANSDEN DORTCH & DAVIS
<PAGE> 1
EXHIBIT 23.1
The Board of Directors
PhyCor, Inc.:
We consent to incorporation by reference in this registration statement on Form
S-3 of PhyCor, Inc. of our report dated February 13, 1996, relating to the
consolidated balance sheets of PhyCor, Inc. and subsidiaries as of December 31,
1995 and 1994 and the related consolidated statements of income, shareholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 1995, which report appears in the December 31, 1995 annual report
on Form 10-K of PhyCor, Inc.
KPMG PEAT MARWICK LLP
Nashville, Tennessee
May 20, 1996
<PAGE> 1
EXHIBIT 99.1
PHYCOR, INC.
1996 AFFILIATE STOCK PURCHASE PLAN
PhyCor, Inc., a Tennessee corporation (the "Company"), hereby adopts
this 1996 Affiliate Stock Purchase Plan for the benefit of eligible (i)
employees of limited liability companies and partnerships in which PhyCor has
an equity interest of at least 50% (each a "PhyCor-Related Entity"), (ii)
physician employees and other personnel employed by an Affiliated Clinic (as
defined below) and (iii) members, partners or shareholders of an Affiliated
Clinic (each of the individuals described in (i), (ii) and (iii) being
hereinafter referred to as an "Affiliate"). The purpose of this plan is to
provide an opportunity for Affiliates to share in the growth and prosperity of
the Company by acquiring a proprietary interest in the Company through
acquisition of shares of the Company's Common Stock.
ARTICLE I
DEFINITIONS
As used herein, the following words and phrases shall have the
meanings specified below, unless a different meaning is plainly required by the
context:
1.1 "Affiliated Clinic" shall mean any medical clinic with which
the Company, a subsidiary thereof or a PhyCor-Related Entity has entered into a
management or service agreement.
1.2 "Administration Agent" shall mean such registered
broker-dealer selected by the Board to provide the administrative services with
respect to the Plan as set forth herein.
1.3 "Anniversary Date" shall mean July 1 of each year.
1.4 "Board" shall mean the Board of Directors of the Company or
any committee thereof designated by the Board.
1.5 "Common Stock" shall mean the Company's Common Stock, no par
value per share.
1.6 The "Company" shall mean PhyCor, Inc., a Tennessee
corporation, or its successors.
1.7 "Contribution Account" shall mean a money market mutual fund
account established on behalf of a Participating Affiliate to which the
Participating Affiliate's contributions made pursuant to Article IV shall be
credited.
1.8 "Effective Date" shall mean July 1, 1996.
<PAGE> 2
1.9 "Eligibility Date" shall mean June 1 of each year.
1.10 "Purchase Date" shall mean the Nasdaq Stock Market's last
trading date during each Plan Year.
1.11 "Issue Price" shall mean the purchase price of shares of the
Company's Common Stock to be charged to Participating Affiliates on the
Purchase Date. The Issue Price shall be subject to a Minimum Issue Price as
outlined in Section 5.2.
1.12 "Market Price" shall mean the average of the highest and
lowest sales price for the day upon which the Market Price is to be determined
or if there are no sales on such date, the average of the highest bid and
lowest asked prices of the Common Stock on such date, in either case as
reported on the Nasdaq Stock Market. Notwithstanding the foregoing, if there
shall be any material alteration in the present system of reporting sales
prices of the Common Stock, or if the Common Stock shall no longer be quoted on
the Nasdaq Stock Market, the Market Price of the Company's Common Stock as of a
particular date shall be determined using such method as shall be determined by
the Board.
1.13 "Participating Affiliate" shall mean any Affiliate opting to
participate in the Plan.
1.14 "Participating Affiliate's Contribution Rate" shall be the
amount selected by the Participating Affiliate to be contributed by payroll or
partnership distribution deduction to his Contribution Account, as outlined in
Section 4.1.
1.15 "Plan" shall mean the PhyCor, Inc. 1996 Affiliate Stock
Purchase Plan, as set forth herein and all subsequent amendments hereto.
1.16 "Plan Year" shall mean a 12 month period beginning on July 1
and ending on June 30 of each year.
ARTICLE II
ISSUANCE OF STOCK
The Company hereby reserves 1,500,000 shares of Common Stock for
issuance hereunder; provided, that the class and aggregate number of shares
which may be issued hereunder shall be subject to adjustment in accordance with
the provisions of Article VIII of the Plan. These shares shall be authorized
and unissued shares.
2
<PAGE> 3
ARTICLE III
ELIGIBILITY
3.1 Every Affiliate (other than members, partners or shareholders
of Affiliated Clinics) on June 1, 1996 whose customary employment is at least
twenty (20) hours per week and more than five (5) months in a calendar year
shall be eligible to participate as of the Effective Date. Every other
Affiliate (other than members, partners or shareholders of Affiliated Clinics)
whose customary employment is at least twenty (20) hours per week and more than
five (5) months in a calendar year and who is employed on an Eligibility Date
shall be eligible to participate as of the next Anniversary Date. All members,
partners or shareholders of Affiliated Clinics who are members, partners or
shareholders of Affiliated Clinics on June 1, 1996 shall be eligible to
participate as of the Effective Date. All other members, partners or
shareholders of Affiliated Clinics who are members, partners or shareholders of
Affiliated Clinics on an Eligibility Date after the Effective Date shall be
eligible to participate as of the next Anniversary Date.
3.2 Upon becoming a Participating Affiliate, the Affiliate shall
be bound by the terms of the Plan, including any amendments hereto. The
Administration Agent shall furnish information relating to the Plan and a form
for requesting participation to each Affiliate who becomes eligible to
participate. If the Affiliate elects to participate, he shall complete such
form and file it with the Administration Agent no later than fifteen (15) days
prior to the first Effective Date or the next Anniversary Date, as applicable
(or the date specified by the Board in the case of the first Plan Year). The
completed request for participation shall indicate the amount of the
Affiliate's Contribution Rate authorized by the Affiliate in accordance with
Section 4.1. If an Affiliate does not elect to participate in any given Plan
Year, he may elect to participate as of any future Anniversary Date if he
continues to meet the eligibility requirements and files a request for
participation at least fifteen (15) days prior to such Anniversary Date.
ARTICLE IV
ENROLLMENT
4.1 In order to participate in the Plan, an Affiliate must file
with the Administration Agent an election to participate in accordance with
Section 3.2 and must authorize an Affiliated Clinic or a PhyCor-Related Entity,
as applicable, to deduct from payroll or partnership distributions, as
applicable, and to remit to the Company on behalf of such Affiliate an amount
per month, but not less than $10.00 per month. The maximum monthly deduction
which a Participating Affiliate may authorize shall be $1,770. Such
authorization shall be in writing and on such forms as provided by the
Administration Agent. The Company shall promptly transmit such funds to the
Administration Agent. Deductions shall begin as of the first business day on
3
<PAGE> 4
or after the first day of the Plan Year. For all purposes of the Plan, a
Participating Affiliate's contributions shall be allocated to and deemed a part
of the Participating Affiliate's Contribution Account. Participating Affiliate
contributions will not be permitted to begin at any time other than the
beginning of a Plan Year. No interest shall accrue or be paid on any amounts
withheld under the Plan.
4.2 The Participating Affiliate's Contribution Rate, once
established, shall remain in effect for all Plan Years unless changed by the
Participating Affiliate in writing on such forms as provided by the
Administration Agent and filed with the Administration Agent at least fifteen
(15) days prior to the next Anniversary Date.
4.3 At any time during the Plan Year, a Participating Affiliate
may notify the Administration Agent that he wishes to discontinue his
contributions for a given Plan Year. This notice shall be in writing and on
such forms as provided by the Administration Agent and shall become effective
as of a date not more than thirty (30) days following its receipt by the
Administration Agent.
4.4 At any time, a Participating Affiliate may notify the
Administration Agent that he wishes to discontinue participation in the Plan.
This notice shall be in writing and on such forms as provided by the
Administration Agent and shall become effective as of a date not more than
thirty (30) days following its receipt by the Administration Agent.
ARTICLE V
PURCHASE OF COMMON STOCK
5.1 On each Purchase Date, the Participating Affiliate's
Contribution Account shall be used to purchase the lesser of (i) a number of
shares of Common Stock as determined by the Board or (ii) the maximum number of
whole shares of Common Stock determined by dividing the Issue Price into the
balance of the Participating Affiliate's Contribution Account (subject to the
limitations set forth in Section 5.2). Any money remaining in a Participating
Affiliate's Contribution Account shall be returned to the Participating
Affiliate without interest. Any money remaining in a Participating Affiliate's
Contribution Account solely as a result of an amount representing a fractional
share, however, shall remain in the Participating Affiliate's Contribution
Account unless the return of such amount is requested by the Participating
Affiliate in writing on a form supplied by the Administration Agent. If such
return is not requested, the balance will remain in the Participating
Affiliate's Contribution Account to be used in the next Plan Year along with
new contributions made in that Plan Year.
If the total number of shares to be purchased by all Participating
Affiliates exceeds the number of shares authorized under Article II of the
Plan, a pro-rata allocation of the available shares will be made among all
Participating Affiliates based on the amount of their respective payroll or
partnership distribution deductions through the Purchase Date.
4
<PAGE> 5
5.2 The Issue Price of the shares of Common Stock issued under the
Plan shall be equal to the lesser of: (i) 85% of the Market Price on the
Purchase Date of a Plan Year or (ii) 85% of the Market Price on the first
trading date of a Plan Year. The Issue Price is subject, however, to a
"Minimum Issue Price" for each Plan Year. The "Minimum Issue Price" for any
Plan Year shall be the book value of the Common Stock as of the June 30 prior
to the beginning of a Plan Year. Notwithstanding any provision to the contrary,
if the Issue Price for any Plan Year is less than the Minimum Issue Price, no
shares of Common Stock will be issued pursuant to the Plan and the deductions
credited to the Participating Affiliate's Contribution Account shall be
returned to the Participating Affiliate without interest.
5.3 A Participating Affiliate's shares of Common Stock will be
deposited in a brokerage account opened on behalf of the Participating
Affiliate with the Administration Agent. All fees and commissions associated
with the operation of such brokerage account shall be the responsibility of
the Participating Affiliate.
ARTICLE VI
TERMINATION OF AFFILIATE STATUS
6.1 Except as noted below, any Participating Affiliate who ceases
to qualify for Affiliate status during the Plan Year shall cease participation
in the Plan immediately. For example, termination of Affiliate status shall
occur as a result of the termination during a Plan Year of any service or
management agreement between (i) the Company, any of its subsidiaries, or any
PhyCor-Related Entity and (ii) the Affiliated Clinic at which the Affiliate is
employed or is a shareholder, member or partner. The balance of the
Participating Affiliate's Contribution Account shall be paid without interest
to such Participating Affiliate, or his legal representative, as soon as
practicable after termination of the Affiliate's status as an Affiliate. Such
Participating Affiliate may no longer participate in the Plan.
6.2 If a Participating Affiliate shall die during a Plan Year no
further contributions on behalf of the deceased Participating Affiliate shall
be made. The personal representative of the estate of the deceased
Participating Affiliate may elect to withdraw the balance in the Participating
Affiliate's Contribution Account by notifying the Administration Agent in
writing prior to the Purchase Date. In the event no election to withdraw has
been made, the balance accumulated in the deceased Participating Affiliate's
Contribution Account shall be used to purchase shares of Common Stock in
accordance with Article V.
5
<PAGE> 6
6.3 If an Affiliate shall retire for reasons of age or disability
as described herein during a Plan Year, no further contributions on behalf of
the retired Affiliate shall be made. The Affiliate may elect to withdraw the
balance in the Affiliate's Contribution Account by notifying the Administration
Agent in writing prior to the Purchase Date. In the event no election to
withdraw has been made, the balance accumulated in the retired Affiliate's
Contribution Account shall be used to purchase shares of Common Stock in
accordance with Article V. For purposes hereof, retirement shall mean (i) the
Affiliate is at least sixty (60) years old and has been continuously employed
by his or her Affiliated Clinic or PhyCor-Related Entity for a period of at
least five (5) years or (ii) the Affiliate is at least fifty-five (55) years
old and has been continuously employed by his or her Affiliated Clinic or
PhyCor-Related Entity for a period of at least twenty (20) years. Disability
shall mean the cessation of employment by reason of permanent disability,
within the meaning of such term under and disability policy provided for the
Affiliate or, if no such policy exists, then under Section 422(c)(7) of the
Internal Revenue Code of 1986, as amended.
ARTICLE VII
ADMINISTRATION
The Plan shall be administered by the Board. No Board member shall be
eligible to participate in the Plan while a member of the Board. All questions
of interpretation and application of the Plan shall be subject to the
determination of the Board, which shall be final and binding. Notwithstanding
the foregoing, however, the Administration Agent shall have such
responsibilities with respect to the Plan as are set forth herein.
ARTICLE VIII
CHANGES IN COMPANY'S CAPITAL STRUCTURE
8.1 The existence of the Plan shall not affect in any way the
right or power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issuance of bonds, debentures, preferred or prior
preference stock senior to or affecting the Common Stock or rights thereof, or
the dissolution or liquidation of the Company, or any sale or transfer of all
or part of its assets or business, or any other corporate act or proceeding,
whether of similar character or otherwise.
8.2 In the event of a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend or other increase
or reduction of the number of shares of Common Stock outstanding without
receiving compensation in money, services or property, then the class of the
shares of Common Stock set forth herein and the number of shares of Common
Stock reserved pursuant to Article II shall be appropriately adjusted as
6
<PAGE> 7
determined by the Board. The Board's determination shall be final, binding
and conclusive.
ARTICLE IX
MISCELLANEOUS
9.1 The Board may at any time or from time to time amend the Plan
in any respect. The Company may terminate the Plan at any time. If the Plan
is terminated, the date of termination shall be treated as the Purchase Date
and all funds in a Participating Affiliate's Contribution Account not expended
to purchase shares of Common Stock shall be refunded to the Participating
Affiliate without interest.
9.2 The Company will pay all expenses that may arise in connection
with the administration of the Plan.
9.3 Any headings or subheadings in the Plan are inserted for
convenience of reference only and are to be ignored in the construction of any
provisions hereof. All references in the Plan to Articles and Sections are to
Articles and Sections of the Plan unless specified otherwise.
9.4 The Plan shall be construed in accordance with the laws of the
State of Tennessee.
9.5 The Plan will not be deemed to constitute a contract between
the Company and any Affiliate.
9.6 No liability whatsoever shall attach to or be incurred by any
past, present or future stockholders, officers or directors, as such, of the
Company, under or by reason of any of the terms, conditions or agreements
contained in the Plan or implied therefrom, and any and all liabilities of, and
any and all rights and claims against the Company, or any stockholder, officer
or director, as such, whether arising at common law or in equity or created by
statute or constitution or otherwise, pertaining to the Plan, are hereby
expressly waived and released by every Participating Affiliate, as a part of
the consideration for any benefits provided by the Company under the Plan.
9.7 With respect to administration of the Plan, the Company shall
indemnify each present and future member of the Board in accordance with the
provisions of the Company's Amended Bylaws and Restated Charter.
9.8 The Company's obligation to offer Common Stock through the
Administration Agent pursuant to the terms of the Plan is at all times subject
to all approvals of and compliance with any governmental authorities required
in connection with the authorization, issuance, sale or delivery of such stock
as well as state and federal securities laws.
7
<PAGE> 8
9.9 Whenever any notice is required or permitted hereunder, such
notice must be in writing and personally delivered or sent by mail. Any notice
required or permitted to be delivered hereunder shall be deemed to be delivered
on the date which it is personally delivered, or, whether actually received or
not, on the third business day after it is deposited in the United States mail,
certified or registered, postage prepaid, addressed to the person who is to
receive it at the address which such person has theretofore specified by
written notice delivered in accordance herewith. Notwithstanding any of the
foregoing, any notice required or permitted to be given by or on behalf of a
Participating Affiliate under Section 6.2, Section 6.3 or Article IV hereof,
shall only be effective as of the date of its actual receipt. Any party may
change, at any time and from time to time, by written notice to the other, the
address which it or he had theretofore specified for receiving notices. Until
changed in accordance herewith, the Administration Agent shall be entitled to
use the address of a Participating Affiliate in the Administration Agent's
records. Any person entitled to notice hereunder may waive such notice.
9.10 Any words herein used in the masculine shall be read and
construed in the feminine where they would so apply. Words in the singular
shall be read and construed as though in the plural in all cases where they
would so apply.
IN WITNESS WHEREOF, the Company, acting by and through its duly
authorized officers, has executed this instrument this the 10th day of May,
1996.
ATTEST: PHYCOR, INC.
By: /s/ Thompson S. Dent By: /s/ Joseph C. Hutts
---------------------------- -----------------------------
Secretary President
8
