<PAGE> 1
As filed with the Securities and Exchange Commission on July 8, 1998
Registration No. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
--------------------
PHYCOR, INC.
(Exact name of registrant as specified in its charter)
TENNESSEE 62-1344801
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
30 BURTON HILLS BOULEVARD, SUITE 400
NASHVILLE, TENNESSEE 37215
(Address of Principal Executive
Offices)(Zip Code)
-----------------------
PHYCOR, INC. NONQUALIFIED STOCK OPTION PLAN
PHYCOR, INC. CAREWISE STOCK OPTION PLAN
(Full title of the Plans)
<TABLE>
<S> <C>
JOSEPH C. HUTTS Copy to:
CHAIRMAN OF THE BOARD, J. CHASE COLE, ESQ.
PRESIDENT AND CHIEF EXECUTIVE OFFICER WALLER LANSDEN DORTCH & DAVIS,
PHYCOR, INC. A PROFESSIONAL LIMITED LIABILITY COMPANY
30 BURTON HILLS BOULEVARD, SUITE 400 2100 NASHVILLE CITY CENTER
NASHVILLE, TENNESSEE 37215 511 UNION STREET
(Name and Address of Agent For Service) NASHVILLE, TENNESSEE 37219
(615) 665-9066
(Telephone Number, Including
Area Code, of Agent For Service)
</TABLE>
<TABLE>
<CAPTION>
===================================================================================================================================
Title of Each Class of Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Amount to be Registered Offering Price Per Share Aggregate Offering Price Registration Fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value 2,097,881 shares $16.75(3) $35,139,507 $10,367
(1)(2)
===================================================================================================================================
</TABLE>
(1) The PhyCor, Inc. Nonqualified Stock Option Plan authorizes the issuance of
1,500,000 shares of Common Stock and the PhyCor, Inc. CareWise Stock Option
Plan authorizes the issuance of 597,881 shares of Common Stock.
(2) Includes shares reserved for issuance under the PhyCor, Inc. Nonqualified
Stock Option Plan and shares reserved for issuance under the PhyCor, Inc.
CareWise Stock Option Plan.
(3) Estimated solely for purposes of determining the amount of the registration
fee, in accordance with Rules 457(h)(1) and (c) under the Securities Act of
1933, as amended, and based upon the average high and low reported sales
prices of the Common Stock on the Nasdaq Stock Market's National Market on
July 6, 1998.
<PAGE> 2
EXPLANATORY NOTE
The Reoffer Prospectus which is filed as a part of this Registration
Statement has been prepared in accordance with the requirements of Part I of
Form S-3 and may be used for reoffers or resales of the common stock, no par
value per share (the "Common Stock"), of PhyCor, Inc., a Tennessee corporation
(the "Company"), acquired by "affiliates" (as such term is defined in Rule 405
promulgated under the Securities Act of 1933, as amended (the "Securities
Act")).
<PAGE> 3
Reoffer Prospectus
2,097,881 SHARES
PHYCOR, INC.
COMMON STOCK
This Reoffer Prospectus (the "Prospectus") is being used in connection
with the offering by certain selling shareholders (the "Selling Shareholders")
of 2,097,881 shares of Common Stock, no par value per share (the "Common
Stock"), of PhyCor, Inc., a Tennessee corporation (the "Company"), who may be
deemed to be "affiliates" of the Company (as such term is defined in Rule 405
promulgated under the Securities Act of 1933, as amended (the "Securities
Act")).
The shares may be offered by the Selling Shareholders from time to time
in transactions through the Nasdaq Stock Market's National Market ("Nasdaq
National Market"), in negotiated transactions, through the writing of options on
the shares, or a combination of such methods of sale, at prices related to
prevailing market prices, or at negotiated prices. The Selling Shareholders may
effect such transactions by selling the shares to or through broker-dealers, and
such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholders and/or the purchasers
of the shares for whom such broker-dealers may act as agent or to whom they sell
as principal, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions).
None of the proceeds from the sale of the shares by any of the Selling
Shareholders will be received by the Company. The Company has agreed to bear all
expenses (other than underwriting discounts and selling commissions and fees and
expenses of counsel and other advisors to the Selling Shareholders) in
connection with the registration of the shares being offered by such Selling
Shareholders.
---------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------------------------
JULY 8, 1998
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). The Company has furnished and intends to furnish
reports to its shareholders, which will include financial statements audited by
its independent certified public accountants, and such other reports as it may
determine to furnish or as required by law, including Sections 13(a) and 15(d)
of the Exchange Act. Proxy statements, reports and other information concerning
the Company can be inspected and copied at the Commission's office at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and at its regional offices
located in the Northwestern Atrium Center, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661; and 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of such material can be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains an Internet Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically, and the address of such site is
http://www.sec.gov. The Company's Common Stock is quoted on the Nasdaq National
Market. Proxy statements, reports and other information concerning the Company
can be inspected and copied at the offices of the Nasdaq Stock Market National
Market located at 1735 K Street NW, Washington, D.C. 20006-1500.
The Company has filed a registration statement (the "Registration
Statement") on Form S-8 with the Commission registering the Common Stock offered
hereby in compliance with the Securities Act. This Prospectus, which constitutes
a part of the Registration Statement, does not contain all of the information
set forth in the Registration Statement, certain items of which are contained in
schedules and exhibits to the Registration Statement as permitted by the rules
and regulations of the Commission. Statements contained in this Prospectus as to
the contents of any agreement, instrument or other document referred to are not
necessarily complete. With respect to each such agreement, instrument or other
document filed as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference.
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERINGS HEREIN CONTAINED AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE SELLING SHAREHOLDERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF ANY OFFER TO BUY, THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT ANY INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE.
2
<PAGE> 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company are
incorporated herein by reference as of the dates thereof:
(1) Annual Report on Form 10-K for the year ended December 31, 1997, as
amended by the Annual Report on Form 10-K/A, as filed on May 14, 1998;
(2) Quarterly Report on Form 10-Q for the quarter ended March 31, 1998;
(3) Current Reports on Form 8-K filed January 8, 1998, January 16,
1998, March 23, 1998, April 29, 1998 and June 3, 1998; and
(4) 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 and 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the termination of the offering registered
hereby shall be deemed to be incorporated by reference into this Prospectus and
to be a part hereof from the date of the filing 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 hereof to the extent that a statement contained herein (or in any
other subsequently filed document which is also incorporated or deemed to be
incorporated by reference herein) modifies or supersedes such statement. Any
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 herein 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 PHYCOR, INC., 30 BURTON HILLS BOULEVARD, SUITE 400, NASHVILLE,
TENNESSEE 37215, ATTENTION: N. CAROLYN FOREHAND, VICE PRESIDENT AND GENERAL
COUNSEL (TELEPHONE NUMBER (615) 665-9066). IN ORDER TO ENSURE TIMELY DELIVERY OF
THE DOCUMENTS, ANY REQUEST SHOULD BE MADE FIVE BUSINESS DAYS PRIOR TO THE DATE
ON WHICH THE FINAL INVESTMENT DECISION MUST BE MADE.
3
<PAGE> 6
PHYCOR, INC.
The Company is a physician practice management company that acquires
and operates multi-specialty medical clinics, develops and manages IPAs and
provides health care decision-support services, including demand management and
disease management services to managed care organizations, health care
providers, employers and other group associations. The Company's objective is to
organize physicians into professionally managed networks that assist physicians
in assuming increased responsibility for delivering cost-effective medical care
while attaining high-quality clinical outcomes and patient satisfaction. As of
the date of this Prospectus, the Company operates, or will operate upon closing
of pending transactions, 61 clinics with approximately 4,200 physicians in 29
states. The Company also manages IPAs, which are networks of independent
physicians, that include over 26,000 physicians in 36 markets. The Company
provides health care decision-support services to more than approximately 1.8
million individuals within the United States and an additional 500,000 under
foreign country license agreements.
The Company believes that primary care-oriented physician organizations
are a critical element of organized health care systems, because physician
decisions determine the cost and quality of care. The Company believes that
physician-driven organizations, including multi-specialty medical clinics, IPAs
and the combination of such organizations, present more attractive alternatives
for physician consolidation than hospital or insurer/HMO-controlled
organizations. The combination of the Company's multi-specialty medical clinic
and IPA management capabilities and new group-formation efforts enables the
Company to offer physician practice management services to substantially all
types of physician organizations.
Upon the acquisition by the Company of a clinic's operating assets, the
affiliated physician group simultaneously enters into a long-term service
agreement with the Company. The Company, under the terms of the service
agreement, provides the physician group with the equipment and facilities used
in its medical practice, manages clinic operations, employs most of the clinic's
non-physician personnel, other than certain diagnostic technicians, and receives
a service fee. Under substantially all of its service agreements, the Company
receives a service fee equal to the clinic expenses it has paid plus percentages
of operating income of the clinic (net clinic revenue less certain contractually
agreed upon clinic expenses before physician distributions) plus, in some cases,
percentages of net clinic revenue. As clinic operating income improves, whether
as a result of increased revenue or lower expenses, the Company's service fees
increase.
The affiliated physicians maintain full professional control over their
medical practices, determine which physicians to hire or terminate and set their
own standards of practice in order to promote high quality health care. Pursuant
to its service agreements with physician groups, the Company manages all aspects
of the clinic other than the provision of medical services, which is controlled
by the physician groups. At each clinic, a joint policy board equally comprised
of physicians and Company personnel focuses on strategic and operational
planning, marketing, managed care arrangements and other major issues facing the
clinic.
4
<PAGE> 7
The physician groups offer a wide range of primary and specialty
physician care and ancillary services. Approximately 53% of the Company's
affiliated physicians are primary care providers. The primary care physicians
are those in family practice, general internal medicine, obstetrics, pediatrics
and emergency and urgent care. The Company works closely with its affiliated
physician groups to recruit new physicians and merge sole practices or single
specialty groups, especially primary care groups, into the clinics' physician
groups. Substantially all of the physicians practicing in the clinics are
certified or eligible to be certified by applicable specialty boards.
The Company established its presence in the IPA management business in
1995 and believes that a significant opportunity exists to develop and manage
IPAs. IPAs consolidate independent physicians by providing general
organizational structure and management to the physician network. IPAs provide
or contract for medical management services to assist physician networks in
obtaining and servicing managed care contracts and enable previously
unaffiliated physicians to assume and more effectively manage capitated risk.
The Company provides health care decision-support services through its
wholly-owned subsidiary, CareWise, Inc. ("CareWise"). CareWise's customers
include managed care organizations, health care providers, indemnity health
insurers, employers and other group associations. In addition to traditional
demand management services, CareWise also offers a disease management program
for certain health conditions, diseases and chronic illnesses. CareWise's demand
and disease management programs are designed to (i) reduce inappropriate care
and unnecessary expenses; (ii) promote health and prevention; (iii) improve
program compliance with treatment regimens and support self-care; (iv) enhance
member satisfaction and (v) improve the overall quality of care through member
health education.
The executive offices of the Company are located at 30 Burton Hills
Boulevard, Suite 400, Nashville, Tennessee 37215, and the Company's telephone
number is (615) 665-9066.
The shares of Common Stock offered hereby have been or will be
purchased by the Selling Shareholders upon exercise of options granted to them
and will be sold for the account of the Selling Shareholders.
USE OF PROCEEDS
All of the shares of Common Stock to be offered or sold pursuant to
this Prospectus are being offered and sold by the Selling Shareholders, and the
Company will not receive any proceeds from the sale of shares of Common Stock as
contemplated herein.
5
<PAGE> 8
SELLING SHAREHOLDERS
This Prospectus relates to the resale of shares of Common Stock issued
(i) pursuant to the PhyCor, Inc. Nonqualified Stock Option Plan (the
"Nonqualified Plan") or upon the exercise, subsequent to the date of this
reoffer prospectus, of stock options granted pursuant to the Nonqualified Plan,
or (ii) upon the exercise, subsequent to the date of this reoffer prospectus, of
stock options granted pursuant to the PhyCor, Inc. CareWise Stock Option Plan
(the "CareWise Plan," and together with the Nonqualified Plan, the "Plans").
This Prospectus is to be used in connection with any resales by persons who may
be considered "affiliates" of the Company within the meaning of the Securities
Act of the Company's Common Stock acquired pursuant to the Plans after the date
of the Registration Statement and other persons who, although not affiliates,
may hold restricted securities previously issued through an employee benefit
plan.
At the date of this Prospectus, the Company does not know the names of
persons who intend to resell shares of Common Stock of the Company acquired
pursuant to the Plans. The Selling Shareholders will be either (a) employees or
executive officers of the Company or its subsidiaries who have been or may be
granted options to purchase the Company's Common Stock under the Nonqualified
Plan or (b) certain employees of the Company or its subsidiaries who may be
granted options to purchase shares of the Company's Common Stock under the
CareWise Plan. The Company will supplement this Prospectus with the names of the
Selling Shareholders and the amount of shares of Common Stock to be reoffered by
them as that information becomes known.
The shares may be offered by the Selling Shareholders from time to time
in transactions through the Nasdaq National Market, in negotiated transactions,
through the writing of options on the shares, or a combination of such methods
of sale, at prices related to prevailing market prices or at negotiated prices.
The Selling Shareholders may effect such transactions by selling the shares to
or through broker-dealers, and such broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the Selling Shareholders
and/or the purchasers of the shares for which such broker-dealers may act as
agent or to whom they sell as principal, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions).
There is no assurance that any of the Selling Shareholders will sell
any or all of the Common Stock offered by them hereunder. This Prospectus may be
amended or supplemented from time to time to add or delete Selling Shareholders
or the number of shares of Common Stock offered by any Selling Shareholder.
6
<PAGE> 9
PLAN OF DISTRIBUTION
The shares of Common Stock being offered by the Selling Shareholders
are offered for their own accounts. The Company will not receive any of the
proceeds from any eventual sales of such shares of Common Stock. The shares may
be offered by the Selling Shareholders from time to time in transactions through
the Nasdaq National Market, in negotiated transactions, through the writing of
options on the shares, or a combination of such methods of sale, at prices
related to prevailing market prices, or at negotiated prices. The Selling
Shareholders may effect such transactions by selling the shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Shareholders and/or the
purchasers of the shares for which such broker-dealers may act as agent or to
whom they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
LEGAL MATTERS
Certain legal matters with respect to the validity of the shares of
Common Stock offered hereby have been passed upon by Waller Lansden Dortch &
Davis, A Professional Limited Liability Company, Nashville, Tennessee, counsel
to the Company.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1997 and 1996, and for each of the years in the three-year period ended December
31, 1997, have been incorporated herein by reference in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, upon the
authority of said firm as experts in accounting and auditing.
7
<PAGE> 10
Prospectus
2,097,881 SHARES
PHYCOR, INC.
COMMON STOCK
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents incorporated by reference into Item 3 of Part II of this
Registration Statement (excluding exhibits to such incorporated documents,
unless such exhibits are specifically incorporated by reference into the
documents incorporated by reference into this Registration Statement) are
incorporated by reference into this Section 10(a) prospectus, and are available
to the participants, without charge, upon written or oral request to N. Carolyn
Forehand, Vice President and General Counsel, PhyCor, Inc., 30 Burton Hills
Boulevard, Suite 400, Nashville, Tennessee 37215 (telephone number
615-665-9066).
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange
Commission by the Registrant are incorporated herein by reference as of the
dates thereof:
(1) Annual Report on Form 10-K for the year ended December 31,
1997, as amended by the Annual Report on Form 10-K/A, as filed on May
14, 1998;
(2) Quarterly Report on Form 10-Q for the quarter ended March
31, 1998;
(3) Current Reports on Form 8-K filed January 8, 1998, January
16, 1998, March 23, 1998, April 29, 1998 and June 3, 1998; and
(4) The description of the Company's Common Stock contained in
the Registration Statements on Form 8-A, dated January 8, 1992 and
March 8, 1994, respectively.
All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing such documents. Any statements contained in a
document incorporated by reference herein shall be deemed to be modified or
superseded for purposes hereof to the extent that a statement contained herein
(or in any
<PAGE> 11
other subsequently filed document which is also incorporated by
reference herein) modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed to constitute a part hereof except as
so modified or superseded.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. 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
II-2
<PAGE> 12
agreement 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 provisions 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 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4.1 - Restated Charter of the Registrant (a)
4.2 - Amendment to Restated Charter of the Registrant (b)
4.3 - Amendment to Restated Charter of the Registrant (c)
4.4 - Amended Bylaws of the Registrant (a)
4.5 - Form of Common Stock Certificate (d)
5 - Opinion of Waller Lansden Dortch & Davis, A Professional Limited
Liability Company
23.1 - Consent of KPMG Peat Marwick LLP
23.2 - Consent of Waller Lansden Dortch & Davis, A Professional Limited
Liability Company (included in Exhibit 5)
24 - Power of Attorney (included on the signature page)
99.1 - PhyCor, Inc. Nonqualified Stock Option Plan
99.2 - PhyCor, Inc. CareWise Stock Option Plan
- --------------------
(a) Incorporated by reference to the exhibits filed with the Registrant's
Annual Report on Form 10-K, for the year ended December 31, 1994,
Commission No. 0-19786
II-3
<PAGE> 13
(b) Incorporated by reference to the exhibits filed with the Registrant's
Registration Statement on Form S-3, Registration No. 33-93018.
(c) Incorporated by reference to the exhibits filed with the Registrant's
Registration Statement on Form S-4, Registration No. 33-66210.
(d) Incorporated by reference to the exhibits filed with the Registrant's
Registration Statement on Form S-1, Registration No. 33-44123.
ITEM 9. UNDERTAKINGS.
(a) 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 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 of such
information in the Registration Statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commissioner by the Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Registration
Statement.
(2) That, for the purposes 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.
II-4
<PAGE> 14
(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.
(b) 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 Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act) 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.
(c) 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 foregoing provisions, 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 payment 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-5
<PAGE> 15
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-8 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 July 7, 1998.
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 each of Joseph C. Hutts and John K.
Crawford his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement (including post-effective amendments and amendments thereto) and any
new Registration Statement relating to the same offering as this Registration
Statement that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, 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 each might or could do in person hereby ratifying and confirming all that
said attorneys-in-fact and agents, or their substitute or 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> <C>
/s/ Joseph C. Hutts Chairman of the Board, President, Chief July 7, 1998
- ---------------------------------------- Executive Officer (Principal Executive
Joseph C. Hutts Officer) and Director
/s/ John K. Crawford Chief Financial Officer (Principal Financial July 7, 1998
- ---------------------------------------- and Accounting Officer)
John K. Crawford
Director
- ----------------------------------------
Ronald B. Ashworth
</TABLE>
II-6
<PAGE> 16
<TABLE>
<S> <C> <C>
Director
- ----------------------------------------
Sam A. Brooks, Jr.
/s/ Thompson S. Dent Executive Vice President, Operations and July 7, 1998
- ---------------------------------------- Director
Thompson S. Dent
/s/ Winfield Dunn Director July 7, 1998
- ----------------------------------------
Winfield Dunn
/s/ C. Sage Givens Director July 7, 1998
- ----------------------------------------
C. Sage Givens
Director
- ----------------------------------------
Joseph A. Hill, M.D.
Director
- ----------------------------------------
Kay Coles James
/s/ James A. Moncrief, M.D. Director July 7, 1998
- ----------------------------------------
James A. Moncrief, M.D.
/s/ Derril W. Reeves Executive Vice President, Development and July 7, 1998
- ---------------------------------------- Director
Derril W. Reeves
Executive Vice President, Corporate Services
- ---------------------------------------- and Director
Richard D. Wright
</TABLE>
II-7
<PAGE> 17
EXHIBIT INDEX
Exhibit
Number
4.1 - Restated Charter of the Registrant (a)
4.2 - Amendment to Restated Charter of the Registrant (b)
4.3 - Amendment to Restated Charter of the Registrant (c)
4.4 - Amended Bylaws of the Registrant (a)
4.5 - Form of Common Stock Certificate (d)
5 - Opinion of Waller Lansden Dortch & Davis, A Professional Limited
Liability Company
23.1 - Consent of KPMG Peat Marwick LLP
23.2 - Consent of Waller Lansden Dortch & Davis, A Professional Limited
Liability Company (included in Exhibit 5)
24 - Power of Attorney (included on the signature page)
99.1 - PhyCor, Inc. Nonqualified Stock Option Plan
99.2 - PhyCor, Inc. CareWise Stock Option Plan
- --------------------
(a) Incorporated by reference to the exhibits filed with the Registrant's
Annual Report on Form 10-K, for the year ended December 31, 1994,
Commission No. 0-19786
(b) Incorporated by reference to the exhibits filed with the Registrant's
Registration Statement on Form S-3, Registration No. 33-93018.
(c) Incorporated by reference to the exhibits filed with the Registrant's
Registration Statement on Form S-4, Registration No. 33-66210.
(d) Incorporated by reference to the exhibits filed with the Registrant's
Registration Statement on Form S-1, Registration No. 33-44123.
<PAGE> 1
EXHIBIT 5
July 8, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: PhyCor, Inc.
Registration Statement on Form S-8
Ladies and Gentlemen:
In our capacity as counsel to PhyCor, Inc., a Tennessee corporation
(the "Company"), we have examined the Registration Statement on Form S-8 (the
"Registration Statement") in the form proposed to be filed by the Company under
the Securities Act of 1933, as amended, relating to the registration of
2,097,881 shares of the Common Stock, no par value per share, of the Company
(the "Common Stock"), pursuant to the terms of the PhyCor, Inc. Nonqualified
Stock Option Plan and the PhyCor, Inc. CareWise Stock Option Plan (collectively,
the "Plans"). In this regard, we have examined and relied upon such records,
documents and other instruments as in our judgment are necessary or appropriate
in order to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that the shares of
Common Stock referred to in the Registration Statement, to the extent actually
issued pursuant to the Plans and in the manner and on the terms described in the
Plans, will be duly and validly issued, fully paid and nonassessable shares of
the Common Stock of the Company.
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,
A Professional Limited Liability Company
<PAGE> 1
EXHIBIT 23.1
The Board of Directors
PhyCor, Inc.
We consent to the use of our reports incorporated by reference herein and to the
reference to our firm under the heading "Experts" in the registration statement.
KPMG PEAT MARWICK LLP
Nashville, Tennessee
July 8, 1998
<PAGE> 1
Exhibit 99.1
PHYCOR, INC.
NONQUALIFIED STOCK OPTION PLAN
1. Name of the Plan. This stock option plan has been established by
action of the board of directors of PhyCor, Inc. (the "Board") on July 2, 1998,
as the PhyCor, Inc. NonQualified Stock Option Plan.
2. The Purpose of the Plan. The Plan is intended to provide an
opportunity for employees of PhyCor, Inc., a Tennessee corporation (the
"Corporation"), including officers, directors and key employees of the
Corporation and its subsidiaries ("Subsidiaries"), as subsidiaries are defined
in Section 424(f) of the Internal Revenue Code of 1986 (the "Code"), to acquire
shares of the Corporation's common stock, no par value per share ("Common
Stock"). The Plan provides for the grant of stock options ("Options"), which
Options provide an equity interest in the Corporation's business as an incentive
for service or continued service with the Corporation and to aid the Corporation
in retaining and obtaining key personnel of outstanding ability.
3. Stock Subject to the Plan. The maximum numbers of shares of Common
Stock which may be issued under Options granted under the Plan is 1,500,000
(subject to adjustments pursuant to Section 7), which may be either authorized
and unissued shares or shares that are held in the treasury of the Corporation,
as shall be determined by the Board. If an Option expires or terminates for any
reason without being exercised in full, the shares of Common Stock represented
by such Option shall again be available for purposes of the Plan.
4. Administration of the Plan. This Plan shall be administered by a
committee composed of at least two individuals (or such number that satisfies
section 162(m)(4)(C) of the Code and Rule 16b-3 of the Securities Exchange Act
of 1934) who are members of the Board and are not employees of the Corporation
or an Affiliate, and who are designated by the Board as the "compensation
committee" or are otherwise designated to administer the Plan (the "Committee").
The Committee shall have full authority in its discretion to determine the
eligible persons to whom Options shall be granted and the terms and provisions
thereof. In making such determinations, the Committee may take into account the
nature of the services rendered and to be rendered by such persons, their
present and potential contributions to the Corporation and any other factors
which the Committee deems relevant. Subject to the provisions of the Plan, the
Committee shall have full and conclusive authority to interpret the Plan; to
prescribe, amend and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of the respective agreements which represent
each Option (hereinafter, an "Agreement"), which need not be identical; to
determine the restrictions on transferability of Common Stock acquired upon
exercise of Options; and to make all other determinations necessary or advisable
for the proper administration of the Plan.
The Committee may delegate authority to the president or chief
executive officer of the Corporation to amend any Agreement in the manner
specified in a written delegation to modify the exercisability or vesting of the
Option or in any other manner that is specified in a written delegation by the
Committee.
<PAGE> 2
5. Eligibility and Limits. Options may be granted to employees and
directors as are selected by the Committee. No employee of the Corporation or a
Subsidiary may receive Options with respect to more than 750,000 shares of
Common Stock during any calendar year (which number of shares shall be subject
to adjustments pursuant to Section 7 herein).
6. Terms and Conditions of Options. Subject to the following
provisions, all Options shall be in such form and upon such terms and conditions
as the Committee, in its discretion, may from time to time determine.
(a) Option Price.
(i) NonQualified Options. The Option price per share shall not
be less than 50% of the fair market value per share of the Common
Stock on the date the Option is granted.
(ii) Fair Market Value. For purposes of this Plan, and as used
herein, the "fair market value" of a share of Common Stock is the
closing sales price on the date in question (or, if there was no
reported sale on such date, on the last preceding day on which any
reported sale occurred) of the Common Stock as reported on the
Nasdaq National Market System (or such other exchange that is at the
time, the primary exchange on which the Common Stock is traded).
(b) Date of Grant. The date the Option is granted shall be the
date on which the Committee has determined the recipient of the Option, the
number of shares covered by the Option and has taken all such other action as is
necessary to complete the grant of the Option. Accordingly, the date an Option
is granted may be deemed to be prior to the approval of this Plan or an
amendment by the shareholders of the Corporation and prior to the time that an
Agreement is executed by a Participant and the Corporation.
(c) Option Term. No Option shall be exercisable after the expiration
of ten years from the date the Option is granted, unless provided otherwise in
an Agreement that covers the Option.
(d) Payment. Unless otherwise provided by the Agreement, payment of
the exercise price of an Option shall be made in cash, Common Stock that was
acquired at least six months prior to the exercise of the Option, other
consideration acceptable to the Committee, or a combination thereof. Such
payment shall be made at the time that the Option or any part thereof is
exercised, and no shares shall be issued until full payment therefor has been
made.
(e) Status of Option Holder. The holder of an Option shall, as such,
have none of the rights of a stockholder.
(f) Nontransferability of Options. In general, Options shall not be
transferable or assignable except by will or by the laws of descent and
distribution and shall be exercisable, during the holder's lifetime, only by
him. Provided, however, that a Participant may transfer an Option to the extent
permitted by the Committee and set forth in the Agreement evidencing the Option.
2
<PAGE> 3
(g) Termination of Employment; Disability; Retirement or Death.
Except as provided below, an Option may not be exercised by a holder unless he
has been an employee continually from the date of the grant until the date
ending three months before the date of exercise. If the holder of an Option
dies, such Option may be exercised by a legatee or legatees of the holder under
his last will, or by his personal representative or distributee, at any time
during the twelve-month period following his death. If a holder is discharged as
an employee, or removed as a director, for cause, as determined by the
Committee, Options held by him shall not be exercisable after such discharge or
removal, unless otherwise provided herein. If a holder ceases to be an employee
by reason of permanent disability, within the meaning of section 22(e)(3) of the
Code ("Disability"), all Options held by the holder may be exercised at any time
during the twelve-month period following the Disability. Upon a holder's
Retirement (as defined below), Disability or Death, all Options held by the
holder shall become fully exercisable as to the full number of shares covered
thereby notwithstanding any vesting schedule contemplated in the Option. As used
herein, "Retirement" shall mean (i) the holder is at least 60 years old and has
continuously been employed by the Corporation or a Subsidiary for a period of at
least five years, or is at least 55 years old and has continuously been employed
by the Corporation or a Subsidiary for a period of at least twenty years, and
(ii) the holder has given written notice in a form satisfactory to the Committee
of his permanent retirement. For purposes of this subparagraph (g), a holder
shall be deemed to be an employee or director so long as the holder is an
employee or director of a parent or Subsidiary of the Corporation or by another
corporation (or a parent or subsidiary corporation of such other corporation)
which has assumed the Option of the holder in a transaction to which section
424(a) of the Code is applicable. The provisions of this Section 6(g) shall be
deemed to apply to any outstanding Option without regard to when such Option was
granted by the Committee.
(h) Limited Rights of Exercise. Notwithstanding any vesting schedule
contained in an Agreement, an Option may be exercised during the Option term as
to the full number of shares covered by the Option if: (1) a tender offer or
exchange offer has been made for shares of Common Stock, provided that the
corporation, person or other entity making such offer purchases or otherwise
acquires shares of Common Stock pursuant to such offer; (2) the stockholders of
the Corporation have approved a definitive agreement (a "Merger Agreement") to
merge or consolidate with or into another corporation pursuant to which the
Corporation will not survive or will survive only as a subsidiary of another
corporation (the "Transaction"), or to sell or otherwise dispose of all or
substantially all of its assets, (3) any person or group (as such terms are
defined in section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Act")), becomes the beneficial owner (as such term is defined in Rule 13(d)
pursuant to the Act) of 50% or more of the outstanding shares of Common Stock,
or (4) the individuals who, as of the date of this Plan, are members of the
Board (the "Incumbent Board"), cease for any reason to constitute at least a
majority of the members of the Board; provided, however, that if the election,
or nomination for election by the Corporation's stockholders, of any new
director was approved by a vote of at least a majority of the Incumbent Board,
such new director shall, for purposes of this Plan, be considered as a member of
the Incumbent Board; provided, further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board (a "Proxy Contest") including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy
3
<PAGE> 4
Contest. If any of the events specified in this subparagraph (h) (a "Change in
Control") have occurred, the Option shall be fully exercisable: (x) in the event
of a tender offer or exchange offer as described in clause (1) above, during the
term of the tender or exchange offer and for a period of 30 days thereafter; (y)
in the event of execution of a Merger Agreement as defined in clause (2) above,
within a 30-day period commencing on the date of execution of a Merger
Agreement, and the Option holder may condition such exercise upon the
consummation of the Transaction; (z) in the event of an event described in
clause (3) above, within a 30-day period commencing on the date upon which the
Corporation is provided a copy of Schedule 13D or 13G (filed pursuant to section
13(d) or 13(g) of the Act and the rules and regulations promulgated thereunder)
indicating that any person or group has become the beneficial owner of 50% or
more of the outstanding shares of Common Stock or, if the Corporation is not
subject to section 13(d) of the Act, within a 30-day period commencing on the
date upon which the Corporation receives written notice that any person or group
has become the beneficial owner of 50% or more of the outstanding shares of
Common Stock or (a) if a change in the Incumbent Board occurs pursuant to clause
(4) above, within a 30 day period commencing upon the date the Option holder was
given notice of the change in the Board composition. The provisions of this
Section 6(h) shall be deemed to apply to any outstanding Option without regard
to when such Option was granted by the Committee. Moreover, unless the Option
holder specifically elects otherwise, if the Option holder exercises less than
all the Options as to which vesting is accelerated pursuant to this Section
6(h), the Options exercised shall be deemed to be those which had the latest
vesting date.
(i) Upon exercise of an Option by a Participant who is an
employee of the Corporation or a Subsidiary, the Participant shall, upon
notification of the amount due and prior to or concurrently with the delivery of
the certificates representing the shares, pay to the Corporation amounts
necessary to satisfy applicable federal, state and local withholding tax
requirements or shall otherwise make arrangements satisfactory to the
Corporation for such requirements.
7. Changes in Capitalization, Merger or Liquidation.
(a) The number of shares of Common Stock as to which Options may be
granted, the number of shares covered by each outstanding Option, and the price
per share in each outstanding Option, shall be proportionately adjusted for (i)
any increase or decrease in the number of issued shares of Common Stock
resulting from a subdivision or combination of shares, (ii) the payment of a
stock dividend in shares of Common Stock to holders of outstanding shares of
Common Stock or (iii) any other increase or decrease in the number of such
shares effected without receipt of consideration by the Corporation.
(b) If the Corporation shall be the surviving corporation in any
merger, share exchange or consolidation, recapitalization, reclassification of
shares or similar reorganization, the holder of each outstanding Option shall be
entitled to receive or purchase, as applicable, at the same times and upon the
same terms and conditions as are then provided in the relevant Agreement, the
number and class of shares of Common Stock or other securities to which a holder
of the number of options or shares of Common Stock at the time of such
transaction would have been entitled to receive as a result of such transaction.
4
<PAGE> 5
(c) In the event of any such changes in capitalization of the
Corporation, the Committee may make such additional adjustments in the number
and class of shares of Common Stock or other securities with respect to which
outstanding Options are exercisable as the Committee in its sole discretion
shall deem equitable or appropriate, subject to the provisions of this
Section 7.
(d) A dissolution or liquidation of the Corporation shall cause each
outstanding Option to terminate.
(e) Upon a merger, share exchange, consolidation or other business
combination in which the Corporation is not the surviving corporation, the
surviving corporation shall substitute another award of stock options with
equivalent value as to an outstanding Option in a transaction described in
section 424(a) of the Code. In the event of a change of the Corporation's shares
of Common Stock with par value in or the same number of shares with a different
par value or without par value, the shares resulting from any such change shall
be deemed to be the Common Stock within the meaning of the Plan. Except as
expressly provided in this Section 7, the holder of a Option shall have no
rights by reason of any subdivision or combination of shares of Common Stock of
any class or the payment of any stock dividend or any other increase or decrease
in the number of shares of Common Stock of any class or by reason of any
dissolution, liquidation, merger, share exchange or consolidation or
distribution to the Corporation's stockholders of assets of stock of another
corporation, and any issue by the Corporation of shares of Common Stock of any
class, or securities convertible into shares of Common Stock of any class, shall
not affect, and no adjustment by reasons thereof shall be made with respect to,
the number or price of shares of Common Stock subject to the Option. The
existence of the Plan and the Options granted pursuant to the Plan shall not
affect in any way the right or power of the Corporation to make or authorize any
adjustment, reclassification, reorganization or other change in its capital or
business structure, any merger, share exchange or consolidation of the
Corporation, any issue of debt or equity securities having preferences or
priorities as to the Common Stock or the rights thereof, the dissolution or
liquidation of the Corporation, any sale or transfer of all or any part of its
business or assets, or any other corporate act or proceeding.
8. Termination and Amendment of the Plan. The Plan shall remain in
effect until terminated by the Board. Upon termination of the Plan, no Options
shall be granted under the Plan after that date, but any Options granted before
termination of the Plan shall remain exercisable thereafter until they expire or
lapse according to their terms. The Board may amend or terminate this Plan at
any time; provided, however, an amendment that would have a material adverse
effect on the rights of a Participant under an outstanding Option is not valid
with respect to such Option without the Participant's consent.
9. Effective Date of Plan. This Plan is effective upon its adoption by
the Board.
5
<PAGE> 6
IN WITNESS WHEREOF, the undersigned officer of the Corporation has
executed this instrument on this the ___ day of ___________, 1998, but to be
effective on the date first written above.
PHYCOR, INC.
By: _________________________________
Its: _________________________________
6
<PAGE> 1
EXHIBIT 99.2
PHYCOR, INC.
CAREWISE STOCK OPTION PLAN
(FORMERLY ADOPTED BY CAREWISE, INC. AS THE CAREWISE, INC.
AMENDED AND RESTATED 1989 STOCK OPTION PLAN)
SECTION 1. PURPOSE
This PhyCor, Inc. CareWise Stock Option Plan (the "Plan") was
established by CareWise, Inc. in order to provide a means whereby selected
employees, directors, officers, agents, consultants, advisors and independent
contractors of CareWise, Inc., or of any parent or subsidiary (as defined in
subsection 5.8 and referred to hereinafter as "related corporations") thereof,
could be granted incentive stock options and/or nonqualified stock options to
purchase the Common Stock (as defined in Section 3) of CareWise, Inc., in order
to attract and retain the services or advice of such employees, directors,
officers, agents, consultants, advisors and independent contractors and to
provide added incentive to such persons by encouraging stock ownership in
CareWise, Inc.
Pursuant to a merger transaction that became effective on July 1, 1998,
CareWise, Inc. has become a wholly-owned subsidiary of PhyCor, Inc. (the
"Company") and the Company desires to adopt the Plan in order to provide for the
continuation of the options that were granted under the Plan and were not
exercised or forfeited at or prior to such merger transaction. The Company
intends that the assumption of the options previously granted hereunder be
treated as the assumption of a stock option in a transaction to which section
424(a) of the Internal Revenue Code of 1986, as amended (the "Code"), applies.
SECTION 2. ADMINISTRATION
This Plan shall be administered by the compensation committee of the
board of directors of the Company (the "Board") or any such other committee that
is designated by the Board to administer the Plan. The administrator of this
Plan shall hereinafter be referred to as the "Plan Administrator."
In the event a member of the Plan Administrator may be eligible,
subject to the restrictions set forth in Section 4, to participate in this Plan,
no member of the Plan Administrator shall vote with respect to the granting of
an option hereunder to himself or herself, as the case may be, and, if state
corporate law does not permit a committee to grant options to directors, then
any option granted under this Plan to a director for his or her services as such
shall be approved by the full Board.
The members of any committee serving as Plan Administrator shall be
appointed by the Board for such term as the Board may determine. The Board may
<PAGE> 2
from time to time remove members from or add members to the committee. Vacancies
on the committee, however caused, shall be filled by the Board.
2.1 PROCEDURES
The Plan Administrator is empowered to adopt administrative rules to
govern the administration of the Plan.
2.2 RESPONSIBILITIES
Except for the terms and conditions explicitly set forth in this Plan,
the Plan Administrator shall have the authority, in its discretion, to determine
all matters relating to the options to be granted under this Plan, including
selection of the individuals to be granted options, the number of shares to be
subject to each option, the exercise price, and all other terms and conditions
of the options. Grants under this Plan need not be identical in any respect,
even when made simultaneously. The interpretation and construction by the Plan
Administrator of any terms or provisions of this Plan or any option issued
hereunder, or of any rule or regulation promulgated in connection herewith,
shall be conclusive and binding on all interested parties, so long as such
interpretation and construction with respect to incentive stock options
correspond to the requirements of Section 422 of the Code, the regulations
thereunder and any amendments thereto.
2.3 RULE 16B-3 COMPLIANCE AND BIFURCATION OF PLAN
It is the intention of the Company that this Plan shall comply in all
respects with Rule 16b-3 under the Exchange Act. If any Plan provision is later
found not to be in compliance with such Section, the provision shall be deemed
null and void, and in all events this Plan shall be construed in favor of its
meeting the requirements of Rule 16b-3. Notwithstanding anything in this Plan to
the contrary, the Board, in its absolute discretion, may bifurcate this Plan so
as to restrict, limit or condition the application of any provision of this Plan
to participants who are subject to Section 16 of the Exchange Act without so
restricting, limiting or conditioning this Plan with respect to other
participants.
SECTION 3. SHARES SUBJECT TO THIS PLAN
The shares subject to this Plan shall be the Company's Common Stock, no
par value per share (the "Common Stock"), currently authorized but unissued or
now held or subsequently acquired by the Company as treasury shares. Subject to
adjustment as provided in Section 7, the aggregate amount of Common Stock to be
delivered upon the exercise of all options granted under this Plan shall not
exceed 597,881 shares of Common Stock. If any option granted under this Plan
shall expire or be surrendered, exchanged for another option, canceled or
terminated for any reason without having been exercised in full, the unpurchased
shares subject thereto shall thereupon again be available for purposes of this
Plan, including for
2
<PAGE> 3
replacement options which may be granted in exchange for such expired,
surrendered, exchanged, canceled or terminated options.
SECTION 4. ELIGIBILITY
An incentive stock option may be granted only to an individual who, at
the time the option is granted, is an employee of the Company or a related
corporation. A nonqualified stock option may be granted to any employee,
director, officer, agent, consultant, advisor or independent contractor of the
Company or any related corporation, whether an individual or an entity. Any
party to whom an option is granted under this Plan shall be referred to
hereinafter as an "Optionee."
SECTION 5. TERMS AND CONDITIONS OF OPTIONS
Options granted under this Plan shall be evidenced by written
agreements which shall contain such terms, conditions, limitations and
restrictions as the Plan Administrator shall deem advisable and which are not
inconsistent with this Plan. Notwithstanding the foregoing, options shall
include or incorporate by reference the following terms and conditions:
5.1 NUMBER OF SHARES AND PRICE
The maximum number of shares that may be purchased pursuant to the
exercise of each option and the price per share at which such option is
exercisable (the "exercise price") shall be as established by the Plan
Administrator; provided, however, that the maximum number of shares with respect
to which an option or options may be granted to any Optionee in any one fiscal
year of the Company shall not exceed 300,000 shares (the "Maximum Annual
Optionee Grant"), and provided further that the Plan Administrator shall act in
good faith to establish an exercise price which shall be not less than the fair
market value per share of the Common Stock at the time the option is granted
with respect to incentive stock options and not less than 85% of the fair market
value of the Common Stock at the time the option is granted with respect to
nonqualified stock options, and that, with respect to incentive stock options
granted to greater than 10% stockholders, the exercise price shall be as
required by subsection 6.1.
5.2 TERM AND MATURITY
Subject to the restrictions contained in Section 6 with respect to
granting incentive stock options to greater than 10% stockholders, the term of
each incentive stock option shall be as established by the Plan Administrator
and, if not so established, shall be 10 years from the date it is granted but in
no event shall it exceed 10 years. The term of each nonqualified stock option
shall be as established by the Plan Administrator and, if not so established,
shall be 10 years. All options which were granted by CareWise, Inc. and which
are assumed hereunder by the Company shall be immediately exercisable. All terms
of maturity and expiration
3
<PAGE> 4
described herein with respect to options shall be calculated by reference to the
original grant date of the respective options by CareWise, Inc. prior to the
assumption of this Plan by the Company.
5.3 EXERCISE.
Each option may be exercised in whole or in part at any time and from
time to time; provided, however, that no fewer than 100 shares (or the remaining
shares then purchasable under the option, if less than 100 shares) may be
purchased upon any exercise of option hereunder and that only whole shares will
be issued pursuant to the exercise of any option. An Option shall be exercised
by delivery to the Company of notice of the number of shares with respect to
which the option is exercised, together with payment of the exercise price.
5.4 PAYMENT OF EXERCISE PRICE
Payment of the option exercise price shall be made in full at the time
the notice of exercise of the option is delivered to the Company and shall be in
cash, bank certified or cashier's check, or personal check (unless at the time
of exercise the Plan Administrator in a particular case determines not to accept
a personal check) for the shares being purchased.
The Plan Administrator can determine at any time before exercise that
additional forms of payment will be permitted. To the extent permitted by the
Plan Administrator and applicable laws and regulations (including, but not
limited to, federal tax and securities laws and regulations and state corporate
law), an option may be exercised by:
(a) delivery of shares of Common Stock of the Company held by
an Optionee having a fair market value equal to the exercise price,
such fair market value to be determined in good faith by the Plan
Administrator; provided, however, that payment in stock held by an
Optionee shall not be made unless the stock shall have been owned by
the Optionee for a period of at least six months; or
(b) delivery of a properly executed exercise notice, together
with irrevocable instructions to a broker, all in accordance with the
regulations of the Federal Reserve Board, to promptly deliver to the
Company the amount of sale or loan proceeds to pay the exercise price
and any federal, state or local withholding tax obligations that may
arise in connection with the exercise.
5.5 WITHHOLDING TAX REQUIREMENT
The Company or any related corporation shall have the right to retain
and withhold from any payment of cash or shares of Common Stock under this Plan
the
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amount of taxes required by any government to be withheld or otherwise deducted
and paid with respect to such payment. At its discretion, the Company may
require an Optionee receiving shares of Common Stock to reimburse the Company
for any such taxes required to be withheld by the Company and withhold any
distribution in whole or in part until the Company is so reimbursed. In lieu
thereof, the Company shall have the right to withhold from any other cash
amounts due or to become due from the Company to the Optionee an amount equal to
such taxes. The Company may also retain and withhold or the Optionee may elect,
subject to approval by the Company at its sole discretion, to have the Company
retain and withhold a number of shares having a market value not less than the
amount of such taxes required to be withheld by the Company to reimburse the
Company for any such taxes and cancel (in whole or in part) any such shares so
withheld. Any such election must satisfy all applicable requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
5.6 HOLDING PERIODS
The Plan Administrator may require an Optionee to give the Company
prompt notice of any disposition of shares acquired by the exercise of an
incentive stock option prior to one year after the option is exercised and two
years after the option is granted.
5.7 TRANSFERABILITY OF OPTIONS
Options granted under this Plan and the rights and privileges conferred
hereby may not be transferred, assigned, pledged or hypothecated in any manner
(whether by operation of law or otherwise) other than by will or by the
applicable laws of descent and distribution and shall not be subject to
execution, attachment or similar process. During an Optionee's lifetime, any
options granted under this Plan are personal to him or her and are exercisable
solely by such Optionee. Any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of any option under this Plan or of any right or privilege
conferred hereby, contrary to the Code or to the provisions of this Plan, or the
sale or levy or any attachment or similar process upon the rights and privileges
conferred hereby shall be null and void. Notwithstanding the foregoing, to the
extent permitted by Rule 16b-3 under the Exchange Act and other applicable law
and regulation, the Plan Administrator may permit an Optionee to (i) during the
Optionee's lifetime, designate a person who may exercise the option after the
Optionee's death by giving written notice of such designation to the Company
(such designation may be changed from time to time by the Optionee by giving
written notice to the Company revoking any earlier designation and making a new
designation) or (ii) with respect to nonqualified stock options, transfer the
option and the rights and privileges conferred hereby.
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5.8 TERMINATION OF RELATIONSHIP
If the Optionee's relationship with the Company or any related
corporation ceases for any reason other than termination for cause, death or
total disability, and unless by its terms the option sooner terminates or
expires, then the Optionee may exercise, for a three-month period that portion
of the Optionee's option which is exercisable at the time of such cessation, but
the Optionee's option shall terminate at the end of such period following such
cessation as to all shares for which it has not theretofore been exercised,
unless such provision is waived in the agreement evidencing the option. If, in
the case of an incentive stock option, an Optionee's relationship with the
Company or any related corporation changes (i.e., from employee to nonemployee,
such as a consultant), such change shall constitute a termination of an
Optionee's employment with the Company or any related corporation and the
Optionee's incentive stock option shall terminate in accordance with this
subsection 5.8. Upon the expiration of the three-month period following
cessation of employment in the case of an incentive stock option, or at any time
prior to the expiration of the option in the case of a nonqualified stock
option, the Plan Administrator shall have sole discretion in a particular
circumstance to extend the exercise period following such cessation to any date
up to the termination or expiration of the option. If, however, in the case of
an incentive stock option, the Optionee does not exercise the Optionee's option
within three months after cessation of employment the option will no longer
qualify as an incentive stock option under the Code.
If an Optionee is terminated for cause, each option granted hereunder
shall automatically terminate as of the first discovery by the Company of any
reason for termination for cause, and such Optionee shall thereupon have no
right to purchase any shares pursuant to such option. "Termination for cause"
shall mean dismissal for dishonesty, conviction or confession of a crime (except
minor violations), fraud, misconduct or disclosure of confidential information.
If an Optionee's relationship with the Company or any related corporation is
suspended pending an investigation of whether or not the Optionee shall be
terminated for cause, the Optionee's rights under each option granted hereunder
likewise shall be suspended during the period of investigation.
If an Optionee's relationship with the Company or any related
corporation ceases because of a disability (as defined in section 22(e)(3) of
the Code), the Optionee's option shall not terminate until the end of the
12-month period following such cessation (unless by its terms it sooner
terminates or expires). In the case of incentive stock options, cessation of an
Optionee's relationship shall occur upon termination of employment with the
Company and related corporations.
Options granted under the Plan shall not be affected by any change of
relationship with the Company so long as the Optionee continues to be an
employee, director, officer, agent, consultant, advisor or independent
contractor of
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the Company or of a related corporation; however, a change in an Optionee's
status from an employee to a nonemployee (e.g., consultant or independent
contractor) shall result in the termination of an outstanding incentive stock
option held by such Optionee. The Plan Administrator, in its absolute
discretion, may determine all questions of whether particular leaves of absence
constitute a termination of services; provided, however, that with respect to
incentive stock options, such determination shall be subject to any requirements
contained in the Code. The foregoing notwithstanding, with respect to incentive
stock options, employment shall not be deemed to continue beyond the first 90
days of such leave, unless the Optionee's reemployment rights are guaranteed by
statute or by contract.
As used herein, the term "related corporation," when referring to a
subsidiary corporation shall mean any corporation (other than the Company) in,
at the time of the granting of the option, an unbroken chain of corporations
ending with the Company, if stock possessing 50% or more of the total combined
voting power of all classes of stock of each of the corporations other than the
Company is owned by one of the other corporations in such chain. When referring
to a parent corporation, the term "related corporation" shall mean any
corporation in an unbroken chain of corporations ending with the Company if, at
the time of the granting of the option, each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
5.9 DEATH OF OPTIONEE
If an Optionee dies while he or she has a relationship with the Company
or any related corporation or within the three-month period (or 12-month period
in the case of totally disabled Optionees) following cessation of such
relationship, any option held by such Optionee to the extent that the Optionee
would have been entitled to exercise such option, may be exercised within one
year after his or her death by the personal representative of his or her estate
or by the person or persons to whom the Optionee's rights under the option shall
pass (i) by will or by the applicable laws of descent and distribution or (ii)
by a designation or transfer pursuant to Section 5.7.
5.10 NO STATUS AS STOCKHOLDER
Neither the Optionee nor any party to which the Optionee's rights and
privileges under the option may pass shall be, or have any of the rights or
privileges of, a stockholder of the Company with respect to any of the shares
issuable upon the exercise of any option granted under this Plan unless and
until such option has been exercised.
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5.11 CONTINUATION OF RELATIONSHIP
Nothing in this Plan or in any option shall confer upon any Optionee
any right to continue in the employ or other relationship of the Company or of a
related corporation, or to interfere in any way with the right of the Company or
of any such related corporation to terminate his or her employment or other
relationship with the Company at any time.
5.12 MODIFICATION AND AMENDMENT OF OPTION
Subject to the requirements of Code Section 422 with respect to
incentive stock options and to the terms and conditions and within the
limitations of this Plan, the Plan Administrator may modify or amend any
outstanding option granted under this Plan. The modification or amendment of an
outstanding option shall not, without the consent of the Optionee, impair or
diminish any of his or her rights or any of the obligations of the Company under
such option. Except as otherwise provided in this Plan, no outstanding option
shall be terminated without the consent of the Optionee.
5.13 LIMITATION ON VALUE FOR INCENTIVE STOCK OPTIONS
As to all incentive stock options granted under the terms of this Plan,
to the extent that the aggregate fair market value of the shares (determined at
the time the incentive stock option is granted) with respect to which incentive
stock options are exercisable for the first time by the Optionee during any
calendar year (under this Plan and all other incentive stock option plans of the
Company, a related corporation or a predecessor corporation) exceeds $100,000,
such options shall be treated as nonqualified stock options. The previous
sentence shall not apply if the Internal Revenue Service issues a public rule,
issues a private ruling to the Company, any Optionee or any legatee, personal
representative or distributee of an Optionee or issues regulations changing or
eliminating such annual limit.
SECTION 6. GREATER THAN 10% STOCKHOLDERS
6.1 EXERCISE PRICE AND TERM OF INCENTIVE STOCK OPTIONS
If an incentive stock option is granted under this Plan to any employee
who owns more than 10% of the total combined voting power of all classes of
stock of the Company or any related corporation, the term of such incentive
stock options shall not exceed five years and the exercise price shall be not
less than 110% of the fair market value of the shares at the time the incentive
stock option is granted. This provision shall control notwithstanding any
contrary teens contained in an option agreement or any other document.
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6.2 ATTRIBUTION RULE
For purposes of subsection 6.1, in determining stock ownership, an
employee shall be deemed to own the shares owned, directly or indirectly, by or
for his or her brothers, sisters, spouse, ancestors and lineal descendants.
Shares owned, directly or indirectly, by or for a corporation, partnership,
estate or trust shall be deemed to be owned proportionately by or for its
stockholders, partners or beneficiaries. If an employee or a person related to
the employee owns an unexercised option or warrant to purchase shares of the
Company, the shares subject to that portion of the option or warrant which is
unexercised shall not be counted in determining stock ownership. For purposes of
this Section 6, shares owned by an employee shall include all shares actually
issued and outstanding immediately before the grant of the incentive stock
option to the employee.
SECTION 7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
The aggregate number and class of shares for which options may be
granted under this Plan, the Maximum Annual Optionee Grant set forth in Section
5.1, the number and class of shares covered by each outstanding option and the
exercise price per share thereof (but not the total price), and each such
option, shall all be proportionately adjusted for any increase or decrease in
the number of issued shares of Common Stock of the Company resulting from a
split-up or consolidation of shares or any like capital adjustment, or the
payment of any stock dividend.
7.1 EFFECT OF LIQUIDATION OR REORGANIZATION
7.1.1 CASH, STOCK OR OTHER PROPERTY FOR STOCK
Except as provided in subsection 7.1.2, upon a merger
(other than a merger of the Company in which the holders of
shares of Common Stock immediately prior to the merger have
the same proportionate ownership of shares of Common Stock in
the surviving corporation immediately after the merger),
consolidation, acquisition of property or stock, separation,
reorganization (other than a mere reincorporation or the
creation of a holding company) or liquidation of the Company,
as a result of which the stockholders of the Company receive
cash, stock or other property in exchange for or in connection
with their shares of Common Stock, any option granted
hereunder shall terminate, but the Optionee shall have the
right immediately prior to any such merger, consolidation'
acquisition of property or stock, separation, reorganization
or liquidation to exercise such Optionee's option in whole or
in part whether or not the vesting requirements set forth in
the option agreement have been satisfied.
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7.1.2 CONVERSION OF OPTIONS ON STOCK FOR STOCK EXCHANGE
If the stockholders of the Company receive capital
stock of another corporation ("Exchange Stock") in exchange
for their shares of Common Stock in any transaction involving
a merger (other than a merger of the Company in which the
holders of Common Stock immediately prior to the merger have
the same proportionate ownership of Common Stock in the
surviving corporation immediately after the merger),
consolidation, acquisition of property or stock, separation or
reorganization (other than a mere reincorporation or the
creation of a holding company), all options granted hereunder
shall be converted into options to purchase shares of Exchange
Stock unless the Company and the corporation issuing the
Exchange Stock, in their sole discretion, determine that any
or all such options granted hereunder shall not be converted
into options to purchase shares of Exchange Stock but instead
shall terminate in accordance with the provisions of
subsection 7.1.1. The amount and price of converted options
shall be determined by adjusting the amount and price of the
options granted hereunder in the same proportion as used for
determining the number of shares of Exchange Stock the holders
of the shares of Common Stock receive in such merger,
consolidation, acquisition of property or stock, separation or
reorganization. The converted options shall be fully vested
whether or not the vesting requirements set forth in the
option agreement have been satisfied.
7.2 FRACTIONAL SHARES
In the event of any adjustment in the number of shares covered by any
option, any fractional shares resulting from such adjustment shall be
disregarded and each such option shall cover only the number of full shares
resulting from such adjustment.
7.3 DETERMINATION OF BOARD TO BE FINAL
All Section 7 adjustments shall be made by the Plan Administrator, and
its determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive. Unless an Optionee agrees otherwise, any
change or adjustment to an incentive stock option shall be made in such a manner
so as not to constitute a "modification" as defined in Code Section 424(h) and
so as not to cause his or her incentive stock option issued hereunder to fail to
continue to qualify as an incentive stock option as defined in Code Section
422(b).
SECTION 8. SECURITIES REGULATION
Shares shall not be issued with respect to an option granted under this
Plan unless the exercise of such option and the issuance and delivery of such
shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, any applicable state securities laws, the
Securities Act of 1933,
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as amended, the Exchange Act, the rules and regulations promulgated thereunder,
and the requirements of any stock exchange upon which the shares may then be
listed, and shall be further subject to the approval of counsel for the Company
with respect to such compliance, including the availability, if applicable, of
an exemption from registration for the issuance and sale of any shares
hereunder. Inability of the Company to obtain, from any regulatory body having
jurisdiction, the authority deemed by the Company's counsel to be necessary for
the lawful issuance and sale of any shares hereunder or the unavailability of an
exemption from registration for the issuance and sale of any shares hereunder
shall relieve the Company of any liability in respect of the nonissuance or sale
of such shares as to which such requisite authority shall not have been
obtained.
As a condition to the exercise of an option, the Company may require
the Optionee to represent and warrant at the time of any such exercise that the
shares are being purchased only for investment and without any present intention
to sell or distribute such shares if, in the opinion of counsel for the Company,
such a representation is required by any relevant provision of the
aforementioned laws. At the option of the Company, a stop-transfer order against
any shares of stock may be placed on the official stock books and records of the
Company, and a legend indicating that the stock may not be pledged, sold or
otherwise transferred, unless an opinion of counsel is provided (concurred in by
counsel for the Company) stating that such transfer is not in violation of any
applicable law or regulation, may be stamped on stock certificates in order to
assure exemption from registration. The Plan Administrator may also require such
other action or agreement by the Optionees as may from time to time be necessary
to comply with the federal and state securities laws.
SECTION 9. AMENDMENT AND TERMINATION
9.1 BOARD ACTION
The Board may at any time suspend, amend or terminate this Plan,
provided that, the Company's shareholders must approve any amendment which will
increase the number of shares that may be issued under this Plan.
Such shareholder approval must be obtained within 12 months of the
adoption by the Board of such amendment.
Any amendment made to this Plan which would constitute a "modification"
to incentive stock options outstanding on the date of such amendment, shall not
be applicable to such outstanding incentive stock options, but shall have
prospective effect only, unless the Optionee agrees otherwise.
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9.2 AUTOMATIC TERMINATION
Except for options that are assumed by the Company that were previously
granted by CareWise, Inc., no new options shall be granted under this Plan after
it is adopted by the Board. Otherwise, this Plan shall continue to govern all
options that were granted hereunder until such options are terminated, exercised
or assumed in a subsequent transaction. Any other amendment or termination of
this Plan shall not, without the consent of the option holder, alter or impair
any rights or obligations under any option theretofore granted under this Plan.
SECTION 10. EFFECTIVENESS OF THIS PLAN
This Plan shall become effective upon adoption by the Board.
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