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EXHIBIT 8
April 8, 1998
CareWise, Inc. PhyCor, Inc.
Suite 2600 Suite 400
701 Fifth Avenue 30 Burton Hills Boulevard
Seattle, WA 98104-7015 Nashville, TN 37219
ATTN: John E. Gebhart III, President and ATTN: Joseph C. Hutts, President and
Chief Executive Officer Chief Executive Officer
RE: TAX OPINION REGARDING MERGER OF PHYCOR/HEALTH MERGER CORP. INTO
CAREWISE, INC.
Ladies and Gentlemen:
We have been asked, as counsel to CareWise, Inc., a Delaware
corporation ("CareWise"), to render this opinion regarding certain matters
related to the U.S. federal income tax consequences of the merger (the "Merger")
of PhyCor/Health Merger Corp. (the "Subsidiary"), a Delaware corporation and
100% subsidiary of PhyCor, Inc., a Tennessee corporation ("PhyCor"), pursuant to
that certain Agreement and Plan of Merger, dated as of December 22, 1997 by and
between CareWise, the Subsidiary and PhyCor (the "Agreement"). Capitalized terms
not otherwise defined herein shall have the same meanings given to them in the
Agreement or, if not defined therein, as described in the Registration Statement
on Form S-4 initially filed with the Securities and Exchange Commission on
January 27, 1998 relating to the Merger (the "S-4"). This opinion letter is
rendered pursuant to Section 8.1(h) of the Agreement.
In connection with our opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
the relevant documents related to the Merger, including the Agreement and the
S-4. Furthermore, we have examined that certain PhyCor Tax Matters Certificate,
dated as of the date hereof, the form of which is attached hereto as Exhibit A,
(the "PhyCor Tax Certificate"), that certain CareWise Tax Matters Certificate,
dated as of the date hereof, the form of which is attached hereto as Exhibit B,
(the "CareWise Tax Certificate") and the representations of certain stockholders
contained in those Stockholders Representation Letters regarding the Merger from
certain significant CareWise stockholders to Perkins Coie LLP, the form of which
is attached hereto as Exhibit C (the "Stockholder Representation Letters").
Our opinion is conditioned on, among other things, the initial and
continuing accuracy of the facts, information, covenants and representations set
forth in the documents referred to above, the representations given by PhyCor in
the PhyCor Tax Certificate, the representations given by CareWise in the
CareWise Tax Certificate, and the representations of certain CareWise
stockholders in the Stockholder Representation Letters. In rendering our
opinion, we have assumed the accuracy of all information and representations and
the performance of all undertakings contained in the reviewed documents as set
forth above, the conformity of all copies to the original documents, and the
genuineness of all signatures. We have not attempted to verify independently the
accuracy of any information in any such document, and we have assumed that such
documents accurately and completely set forth all material facts relevant to
this opinion. If any of these facts or assumptions are not correct, please
advise us at once as our advice may be affected by a change in such facts or
assumptions.
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Opinion. It is the opinion of Tax Counsel that, subject to the
foregoing and the limitations discussed below:
(i) The Merger will be treated as a reorganization within
the meaning of Section 368(a) of the Code;
ii) Each of PhyCor, the Subsidiary and CareWise will be a
party to the reorganization within the meaning of Section 368(b) of the
Code;
(iii) No gain or loss will be recognized by CareWise, PhyCor
or the Subsidiary as a result of the Merger; and
(iv) No gain or loss will be recognized by a stockholder of
CareWise as result of the Merger with respect to CareWise Capital Stock
converted solely into PhyCor Common Stock (other than with respect to
cash issued in lieu of fractional PhyCor Common Stock).
Furthermore, in our opinion, the material federal income tax
consequences of the Merger for CareWise stockholders who are citizens or
residents of the United States are as follows:
(i) No gain or loss will be recognized by a stockholder of
CareWise as result of the Merger with respect to CareWise Capital Stock
converted solely into PhyCor Common Stock (other than with respect to
cash issued in lieu of fractional PhyCor Common Stock);
(ii) The tax basis of PhyCor Common Stock received by a
stockholder in the Merger will be same as the tax basis of CareWise
Capital Stock surrendered in exchange therefor, reduced by any basis
allocable to fractional share interests in PhyCor Common Stock for
which cash is received;
(iii) The holding period of the PhyCor Common Stock received
in the Merger will include the period during which the shares of
CareWise Capital Stock surrendered in exchange therefor were held,
provided that such shares of CareWise Capital Stock were held as
capital assets at the Effective Time, and
(iv) Cash received by a holder of CareWise Capital Stock in
lieu of a fractional share interest in PhyCor Common Stock or upon the
exercise of dissenters rights will result in the recognition of gain or
loss for federal income tax purposes, measured by the difference
between the amount of cash received and the portion of the basis of the
share of CareWise Capital Stock allocable to such fractional share
interest. Such gain or loss will be capital gain or loss, provided that
such share of CareWise Capital Stock was held as a capital asset at the
Effective Time and the receipt of cash is not essentially equivalent to
a dividend. Such gain or loss will be a long-term capital gain or loss
if such share of CareWise Capital Stock has been held for more than
one-year and any such capital gain will be eligible for taxation at a
lower rate if such share of CareWise Capital Stock was held for more
than eighteen months.
Finally, we have reviewed the discussion under the headings "SUMMARY -
Material Federal Income Tax Consequences" and "THE MERGER - Material Federal
Income Tax Consequences" in the Proxy Statement/Prospectus, and, in our opinion,
the information contained therein accurately describes material federal income
tax consequences of the Merger for CareWise stockholders. However, as discussed
above and as indicated in the S-4, if any of the assumptions or representations
set forth above prove incorrect, then the conclusions set forth above may not be
accurate, with the consequences discussed in the S-4 under the heading "THE
MERGER - Material Federal Income Tax Consequences - Consequences of Failure to
Qualify as a Tax-Free Reorganization."
Limitations. Our opinion is limited to the specific matters described
in the S-4 under the caption "THE MERGER - Material Federal Income Tax
Consequences." We give no opinion with
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respect to other tax matters, whether federal, state or local, that may relate
to the Merger. Our opinion may not address issues that are material to an
individual stockholder based on his or her particular tax situation. No ruling
will be requested from the Internal Revenue Service ("IRS") regarding the
Merger. Our opinion is not binding on the IRS and does not constitute a
guarantee that the IRS will not challenge the tax treatment of the Merger.
In rendering our opinion, we have considered the applicable provisions
of the Code, Treasury Regulations promulgated thereunder the pertinent judicial
authorities and interpretative rulings of the IRS. We caution that our opinion
is based on the federal income tax laws as they exist on the date hereof. It is
possible that subsequent changes in the tax law could be enacted and applied
retroactively to the Merger and that such changes could result in a materially
different result than the result described in the opinions above.
This opinion is furnished in connection with the Merger. We consent to
the reference to our firm under the caption "SUMMARY - Material Federal Income
Tax Consequences" and "THE MERGER - Material Federal Income Tax Consequences"
and to the filing of this opinion as an exhibit to the S-4.
Very truly yours,
/s/ PERKINS COIE LLP
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EXHIBIT A
PHYCOR, INC.
TAX MATTERS CERTIFICATE
PHYCOR, INC. ("PhyCor"), a Tennessee corporation, submits this
certificate (this "Certificate") to be relied upon in, and as a condition for,
Perkins Coie's deliverance of its opinions regarding the tax consequences of the
proposed merger (the "Merger") of PhyCor/Health Merger Corporation, a newly
formed Delaware corporation that is wholly owned by PhyCor ("Merger Sub"), into
CareWise, Inc., a Delaware Corporation ("CareWise") pursuant to an Agreement and
Plan of Merger by and among PhyCor, MergerSub and CareWise dated as of December
22, 1997 (the "Merger Agreement"). Capitalized terms not otherwise defined here
have the meaning stated in the Merger Agreement or if not defined there, in the
Registration Statement on Form S-4 filed with the Securities and Exchange
Commission relating to the Merger (the "S-4").
PhyCor certifies that the facts and assumptions relating to the Merger,
insofar as they relate to PhyCor and Merger Sub, that are described in the
opinion letter from Perkins Coie to PhyCor dated the date hereof (a copy of
which you acknowledge has been provided to you), and the following statements,
are true, correct and complete in all material respects as of the date of this
letter:
1. The fair market value of the PhyCor Common Shares and other
consideration received by each CareWise shareholder will be approximately equal
to the fair market value of the common stock, par value $.001 per share, of
CareWise (the "CareWise Common Stock") and the CareWise Series C, D, E and F
Preferred Stock, par value $.001 per share, (collectively, the "CareWise
Preferred Stock" and, together with the CareWise Common Stock, the "CareWise
Capital Stock") surrendered in the Merger.
2. PhyCor has no plan or intention to cause CareWise to issue
additional shares of CareWise Capital Stock that would result in PhyCor owning
less than 80 percent of the total combined voting power of all classes entitled
to vote and 80 percent of the total number of shares of each other class of
CareWise Capital Stock.
3. Following the Merger, CareWise will hold at least 90 percent of the
fair market value of its net assets and at least 70 percent of the fair market
value of its gross assets and at least 90 percent of the fair market value of
Merger Sub's net assets and at least 70 percent of the fair market value of
Merger Sub's gross assets held immediately prior to the Merger. For purposes of
this representation, amounts paid by CareWise or Merger Sub to dissenters,
amounts paid by CareWise or Merger Sub to shareholders who receive cash or other
property, amounts used by CareWise or Merger Sub to pay reorganization expenses,
and all redemptions and distributions (except for regular, normal dividends)
made by CareWise will be included as assets of CareWise or Merger Sub,
respectively, immediately prior to the Merger.
4. PhyCor has no plan or intention to redeem or otherwise reacquire any
of the PhyCor Common Shares issued in the Merger.
5. Except as otherwise provided in the Merger Agreement, PhyCor,
CareWise and the CareWise shareholders will pay their respective expenses, if
any, incurred in connection with the Merger.
6. In the Merger, shares of CareWise Capital Stock representing at
least 80 percent of the total combined voting power of all classes of CareWise
Capital Stock entitled to vote and at least 80 percent of the shares of each
other class of CareWise Capital Stock will be exchanged solely for voting stock
of PhyCor. For purposes of this representation, shares of CareWise Capital Stock
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exchanged for cash or other property originating with PhyCor will be treated as
outstanding CareWise stock on the date of the Merger.
7. PhyCor does not own, directly or indirectly, nor has it owned,
directly or indirectly, during the past five years, any shares of CareWise
Capital Stock.
8. No intercorporate indebtedness exists between PhyCor and CareWise
or between Merger Sub and CareWise that was issued or acquired at a discount and
there is no plan or intention to settle any such debt at a discount or otherwise
forgive such debt, in whole or in part. The terms of any such indebtedness were
negotiated at arms'-length and are commercially reasonable.
9. Following the Merger, PhyCor will cause CareWise to continue its
historic business or continue to use a significant portion of its historic
business assets.
10. Neither PhyCor nor Merger Sub is a regulated investment company,
real estate investment trust, or a corporation fifty percent or more of the
value of whose total assets are stock and securities, and eighty percent or more
of the value of whose total assets are assets held for investment. In making the
percentage determinations under the preceding sentence, stock and securities of
any subsidiary corporation are disregarded and the parent corporation is deemed
to own its ratable share of the subsidiary's assets, and a corporation is
considered a subsidiary if the parent owns fifty percent or more of the combined
voting power of all classes of stock entitled to vote or fifty percent or more
of the total value of shares of all classes of stock outstanding.
11. None of the compensation to be received by any CareWise
shareholder-employee from PhyCor will be separate consideration for, or
allocable to, any of such shareholder-employee's shares of CareWise Capital
Stock; none of the PhyCor Common Shares received by any CareWise
shareholder-employee will be separate consideration for, or allocable to, any
employment agreement; and the compensation paid to any shareholder-employee will
be for services actually rendered and commensurate with amounts paid to third
parties bargaining at arm's-length for similar services.
12. At all times prior to the Merger, PhyCor has owned and will own all
the outstanding Merger Sub stock. Merger Sub was formed by PhyCor solely for the
purposes of engaging in the transactions contemplated by the Agreement. Merger
Sub will have no liabilities assumed by CareWise, and Merger Sub will not
transfer to CareWise any assets subject to liabilities, in the Merger.
13. Prior to the Effective Time, Merger Sub did not own any asset other
than an amount of cash necessary to incorporate Merger Sub and to pay the
expenses of the Merger attributable to Merger Sub.
14. The Merger is being undertaken primarily for reasons germane to the
business of PhyCor and neither PhyCor nor Merger Sub has as one of its
significant reasons for the Merger the avoidance of federal income taxes..
15. PhyCor has no plan or intention to liquidate CareWise, to merge
CareWise into another corporation, or to cause CareWise to sell or otherwise
dispose of any of its assets except possibly for dispositions of assets made in
the ordinary course of business or transfers of assets to a corporation in which
PhyCor directly owns stock with at least 80 percent of the total combined voting
power of all classes of stock and at least 80 percent of the shares of each
other class of stock outstanding (a "controlled corporation"). PhyCor has no
plan or intention to sell or otherwise dispose of any of the CareWise Capital
Stock acquired in the transaction, except possibly for transfers of CareWise
Capital Stock to a controlled corporation. In no event will PhyCor cause or
permit CareWise to be merged or liquidated into PhyCor or a PhyCor subsidiary
within one year of the Effective Time.
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16. To the extent they impact the qualification of the Merger as a
reorganization under Section 368(a)(1) of the Code or the tax consequences
arising from the Merger, the factual statements of or about PhyCor or Merger Sub
contained in the S-4 Registration Statement are true, and correct in all
material respects. Furthermore, the representations, warranties, and covenants
of PhyCor and Merger Sub contained in the Merger Agreement are true and correct
in all material respects.
17. PhyCor will not, directly or indirectly, permit CareWise to take
any action after the Effective Time that would cause the representations
contained in that CareWise Tax Certificate executed as of the date hereof to be
untrue or inaccurate in any respect.
18. The undersigned will reaffirm as of the Effective Time the contents
of this Certificate in a writing to be dated and delivered to Perkins Coie
immediately prior to the Effective Time. Furthermore, between the date of this
Certificate and the Effective Time, the undersigned will immediately notify
Perkins Coie of any change or event that would cause this Certificate to be
untrue or inaccurate in any respect.
IN WITNESS WHEREOF, PhyCor has caused this Certificate to be duly
executed on this ____ day of April, 1998.
PHYCOR, INC.
By
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Name
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Title
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EXHIBIT B
CAREWISE, INC.
TAX MATTERS CERTIFICATE
CAREWISE, INC., a Delaware corporation ("CareWise"), submits this
certificate (this "Certificate") to be relied upon in, and as a condition for,
Perkins Coie's deliverance of its opinions regarding the tax consequences of the
proposed merger (the "Merger") of PhyCor/Health Merger Corporation, a newly
formed Delaware corporation ("Merger Sub") that is wholly owned by PhyCor Inc.,
a Tennessee corporation ("PhyCor"), into CareWise pursuant to an Agreement and
Plan of Merger by and among PhyCor, Merger Sub and CareWise dated as of December
22, 1997 (the "Merger Agreement"). Capitalized terms not otherwise defined here
have the meaning stated in the Merger Agreement or if not defined there, in the
Registration Statement on Form S-4 filed with the Securities and Exchange
Commission relating to the Merger (the "S-4").
CareWise certifies that the facts and assumptions relating to the
Merger, insofar as they relate to CareWise, that are described in the opinion
letter from Perkins Coie to CareWise dated the date hereof (a copy of which you
acknowledge has been provided to you), and the following statements, are true,
correct and complete in all material respects as of the date of this letter:
1. The fair market value of the PhyCor Common Shares received by each
CareWise shareholder will be approximately equal to the fair market value of the
common stock, par value $.001 per share, of CareWise (the "CareWise Common
Stock") and the CareWise Series C, D, E and F Preferred Stock, par value $.001
per share, (collectively, the "CareWise Preferred Stock" and, together with the
CareWise Common Stock, the "CareWise Capital Stock") surrendered in the Merger.
There are no shares of stock of CareWise authorized or issued or outstanding
other than the CareWise Capital Stock.
2. There is no plan or intention by any holder of CareWise Capital
Stock who owns five percent or more of CareWise Capital Stock, and to the
knowledge of the CareWise management, there is no plan or intention on the part
of the remaining holders of CareWise Capital Stock to sell, exchange, or
otherwise dispose of a number of PhyCor Common Shares received in the Merger
that would reduce the CareWise shareholders' ownership of PhyCor to a number of
shares having a value, as of the date of the Merger, of less than 50 percent of
the value of all of the formerly outstanding CareWise Capital Stock as of the
same date. For purposes of this representation, shares of CareWise Capital Stock
surrendered by dissenters or exchanged for cash in lieu of fractional PhyCor
Common Shares will be treated as outstanding CareWise Capital Stock on the
Merger date. Shares of CareWise Capital Stock and PhyCor Common Shares held by
CareWise shareholders and otherwise sold, redeemed or disposed of prior or
subsequent to the transaction will be considered as having been disposed of in
making this representation.
3. Following the Merger, CareWise will hold at least 90 percent of the
fair market value of its net assets and at least 70 percent of the fair market
value of its gross assets and at least 90 percent of the fair market value of
Merger Sub's net assets and at least 70 percent of the fair market value of
Merger Sub's gross assets held immediately prior to the Merger. For purposes of
this representation, amounts paid by CareWise or Merger Sub to dissenters,
amounts paid by CareWise or Merger Sub to shareholders who receive cash or other
property, amounts used by CareWise or Merger Sub to pay reorganization expenses,
and all redemptions and distributions (except for regular, normal dividends)
made by CareWise will be included as assets of CareWise or Merger Sub,
respectively, immediately prior to the Merger.
4. CareWise has no plan or intention to issue additional shares of its
stock that would result in PhyCor owning less than 80 percent of the total
combined voting power of all classes
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entitled to vote and 80 percent of the total number of shares of each other
CareWise Capital Stock class.
5. No intercorporate indebtedness exists between PhyCor and CareWise
or between Merger Sub and CareWise that was issued, acquired or will be settled
at a discount.
6. Except as otherwise provided in the Merger Agreement, PhyCor,
CareWise and the CareWise shareholders will pay their respective expenses, if
any, incurred in connection with the Merger.
7. In the Merger, shares of CareWise Capital Stock representing at
least 80 percent of the total combined voting power of all classes of CareWise
Capital Stock entitled to vote and at least 80 percent of the shares of each
other class of CareWise Capital Stock will be exchanged solely for voting stock
of PhyCor. For purposes of this representation, shares of CareWise Capital Stock
exchanged for cash or other property originating with PhyCor will be treated as
outstanding CareWise Capital Stock on the date of the Merger.
8. At the time of the Merger, CareWise will not have outstanding
warrants, options, convertible securities, or any other type of right pursuant
to which any person could acquire CareWise Capital Stock that, if exercised or
converted, would affect PhyCor's acquisition or retention of at least 80 percent
of the total combined voting power of all classes of CareWise Capital Stock
entitled to vote and at least 80 percent of the total number of shares of each
other class of CareWise Capital Stock.
9. Following the Merger, CareWise intends to continue its historic
business or use a significant portion of its historic business assets.
10. CareWise is not a regulated investment company, real estate
investment trust, or a corporation fifty percent or more of the value of whose
total assets are stock and securities, and eighty percent or more of the value
of whose total assets are assets held for investment. In making the percentage
determinations under the preceding sentence, stock and securities in any
subsidiary corporation are disregarded and the parent corporation is deemed to
own its ratable share of the subsidiary's assets, and a corporation is
considered a subsidiary if the parent owns fifty percent or more of the combined
voting power of all classes of stock entitled to vote or fifty percent or more
of the total value of shares of all classes of stock outstanding.
11. On the date of the Merger, the fair market value of the assets of
CareWise will exceed the sum of its liabilities, plus the amount of liabilities,
if any, to which its assets are subject.
12. CareWise is not under the jurisdiction of a court in a case under
Title 11 of the United States Code or a receivership, foreclosure, or similar
proceeding of a federal or state court.
13. None of the compensation to be received by any CareWise
shareholder-employee will be separate consideration for, or allocable to, any of
the shareholder-employee's shares of CareWise Capital Stock; none of the PhyCor
Common Shares received by any CareWise shareholder-employee will be separate
consideration for, or allocable to, any employment agreement; and the
compensation paid to any shareholder-employee will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's-length for similar services.
14. The Merger is being undertaken primarily for reasons germane to the
business of CareWise and CareWise does not have as one of its reasons for the
Merger the avoidance of federal income taxes.
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15. To the extent they impact the qualification of the Merger as a
reorganization under Section 368(a)(1) of the Code or the tax consequences
arising from the Merger, the factual statements of or about CareWise contained
in the S-4 Registration Statement are true, and correct in all material
respects. Furthermore, the representations, warranties, and covenants of
CareWise contained in the Merger Agreement are true and correct in all material
respects.
16. CareWise is not aware of any plan or intention on the part of
PhyCor to cause CareWise to take any such actions after the Effective Time that
would cause any of the representations contained herein to be untrue or
inaccurate.
17. The undersigned will reaffirm as of the Effective Time the contents
of this Certificate in a writing to be dated and delivered to Perkins Coie
immediately prior to the Effective Time. Furthermore, between the date of this
Certificate and the Effective Time, the undersigned will immediately notify
Perkins Coie of any change or event that would cause this Certificate to be
untrue or inaccurate in any respect.
IN WITNESS WHEREOF, CareWise has caused this Certificate to be duly
executed this ___ day of April, 1998.
CAREWISE, INC.
By
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Name
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Title
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EXHIBIT C
CAREWISE, INC.
STOCKHOLDERS REPRESENTATION LETTER
In connection with, and as a condition to, Perkins Coie LLP's
deliverance of its opinion regarding the tax consequences of the proposed merger
(the "Merger") of PhyCor/Health Merger Corp., a newly formed Delaware
corporation ("Merger Sub") that is wholly-owned by PhyCor Inc., a Tennessee
corporation ("PhyCor"), into CareWise, Inc. ("CareWise") pursuant to an
Agreement and Plan of Merger by and among PhyCor, Merger Sub and CareWise dated
as of December 22, 1997 (the "Merger Agreement") the undersigned stockholder of
CareWise makes the following representations and warranties, now and as of the
effective time of the Merger (the "Effective Time"):
(A) TAX REPRESENTATION REGARDING CONTINUITY OF INTEREST
Except as provided in paragraph (b), the undersigned has no present
plan or intention to sell, transfer or otherwise dispose of a number of shares
of common stock of PhyCor ("PhyCor Common Shares") to be received by the
undersigned in the Merger that would reduce the undersigned's ownership of
PhyCor Common Shares to a number of shares having a value, as of the date of the
Merger, of less than 90% of the value of all of the formerly outstanding capital
stock of CareWise ("CareWise Shares") held by the undersigned immediately prior
to the Effective Time. Furthermore, the undersigned represents and warrants that
for a one-year period following the Effective Time it will not sell, transfer or
otherwise dispose of more than 10% of the PhyCor Common Shares received by the
undersigned in the Merger (excluding transfers described in paragraph (b))
without first providing a written opinion of Waller Lansden Dortch & Davis
(obtained at the expense of CareWise) in form and substance reasonably
satisfactory to CareWise that such transfer will not cause the Merger to fail to
constitute a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
Finally, if the undersigned is a partnership for federal income tax
purposes, the undersigned represents and warrants, now and as of the Effective
Time, that neither it nor, to the best of its knowledge, any partner of the
undersigned has any present plan or intention to sell, transfer or otherwise
dispose of a number of PhyCor Common Shares to be received by the undersigned in
the Merger that would, taken together with any sales, transfers or dispositions
by the undersigned described in the previous paragraph, reduce the aggregate
number of PhyCor Common Shares received in the Merger and held by the
undersigned and its partners to a number having a value, as of the Effective
Time, of less than 90% of the value all of the formerly outstanding CareWise
Shares held by the undersigned immediately prior the Effective Time.
For purposes of the preceding representations and warranties, CareWise
Shares exchanged for cash or other property in the Merger (including cash in
lieu of fractional PhyCor Common Shares) will be treated as outstanding CareWise
Shares immediately prior to the Effective Time, and any CareWise Shares held by
the undersigned on December 10, 1997 (or acquired subsequent to that date and
prior to the Effective Time) and otherwise sold, redeemed or disposed of prior
to the Effective Time will be considered in making this representation.
(B) CERTAIN PARTNERSHIPS
After the Effective Time, if the undersigned is and has been since its
formation a partnership for federal income tax purposes, as determined under
Section 7701 of the Code, the undersigned may distribute all or part of the
PhyCor Common Shares received by the undersigned in the Merger to all of its
partners for no additional consideration and in a transaction in which no gain
or loss is recognized for income tax purposes; provided, however, that (i) any
such transfer is made pro rata
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based on each partner's ownership interest in the undersigned; (ii) the
partnership interest in the undersigned held by each partner at the time of the
distribution has been continuously held by such partner, and is unchanged from
the proportionate interest held by such partner, since December 10, 1997; and
(iii) at the time of the distribution the undersigned is not aware of any
then-present plan or intention on the part of its partners to sell the PhyCor
Common Shares to be distributed that would cause the representations and
warranties set forth in paragraph (a) to be untrue if such then-present plan or
intention had existed at the Effective Time.
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The undersigned understands that the preceding representations and
warranties will be relied upon by Perkins Coie LLP in connection with the
opinion regarding certain federal income tax consequences contemplated by
Section 8.1(h) of the Merger Agreement.
Individual Stockholder:
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Signature
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Name of Stockholder
Entity Stockholder:
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Name of Stockholder
By:
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Name
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Title
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