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REGISTRATION NO. 33-98528
RULE 424(B)(5)
SUPPLEMENT TO PROSPECTUS,
DATED AUGUST 28, 1996
PHYCOR, INC.
3,000,000 SHARES
COMMON STOCK
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The Prospectus, dated August 28, 1996 (the "Prospectus"), to
which this Supplement, dated December 13, 1996, is attached (the "Supplement"),
relates to the resale by the holders thereof of up to an aggregate of 3,000,000
shares of Common Stock, no par value per share ("Common Stock") of PhyCor, Inc.
(the "Company"), issued upon the conversion of subordinated convertible notes
issued or to be issued by the Company without registration under the Securities
Act of 1933, as amended (the "Act"), in connection with the acquisition of the
assets of single and multi-specialty medical clinics, the assets of individual
physician practices and the assets of related businesses, including, but not
limited to, management services organizations, consulting firms and other
physician management companies. In addition, this Prospectus also relates to
the resale by certain holders of Common Stock issued upon the exercise of
options granted by the Company prior to the adoption by the Company of its
stock incentive plans and warrants issued as consideration for (i) consulting
or other services provided or to be provided to the Company and (ii) the
execution of a management or service agreement with the Company or an
affiliate.
This Supplement relates to the proposed resale by Burns Clinic
Medical Center, P.C., a Michigan professional corporation (the "Clinic"), of
145,985 shares of the Company's Common Stock issued to the Clinic upon the
partial conversion of a 7.0% Subordinated Convertible Note with a principal
amount of $4,962,263 (the "Purchase Note"). The Company issued the Purchase
Note and six other 7% Subordinated Convertible Notes having an aggregate
principal amount of $3,000,000 (collectively, the "Other Notes") to the Clinic
in connection with the acquisition by PhyCor of Northern Michigan, Inc., a
Tennessee corporation and wholly-owned subsidiary of the Company
("PhyCor-Michigan"), of certain assets of the Clinic pursuant to an Asset
Purchase Agreement between PhyCor and the Clinic dated as of October 1, 1994
(the "Purchase Agreement").
Terms defined in the Prospectus have the same meaning in this
Supplement unless the context requires otherwise. All share numbers used
herein give effect to a three-for-two stock split of the Common Stock effected
on June 14, 1996 in the form of a 50% stock dividend and all prior stock
dividends.
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The date of this Supplement is December 13, 1996.
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THIS SUPPLEMENT 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.
Selling Shareholder
The Clinic operates a multi-specialty medical clinic in
Petoskey, Michigan and maintains 11 satellite locations in the area. The
Clinic's principal office is located at 560 West Mitchell, Petoskey, Michigan
49770.
The Company, through PhyCor-Michigan, acquired substantially
all of the assets of the Clinic pursuant to the Purchase Agreement. In
connection therewith, the Company issued the Purchase Note and the Other Notes
to the Clinic in a transaction exempt from the registration requirements of the
Act. On December 12, 1995, the Clinic partially converted the Purchase Note in
accordance with its terms, into an aggregate of 187,629 shares of PhyCor Common
Stock. The Clinic resold the 187,629 shares in accordance with the terms of a
Prospectus Supplement dated December 13, 1995. On December 6, 1996, the Clinic
partially converted the Purchase Note, in accordance with its terms, into an
aggregate of 145,985 shares of PhyCor Common Stock (the "Shares"). The Clinic
intends to resell the Shares in accordance with the terms of the Prospectus.
In connection with the acquisition of the assets of the
Clinic, PhyCor-Michigan entered into a Service Agreement, effective as of
October 1, 1994 (the "Service Agreement") with the Clinic. Pursuant to the
Service Agreement, PhyCor-Michigan will provide the Clinic with the equipment
and facilities used in the medical practice of the Clinic, manage Clinic
operations and employ the Clinic's non-medical professional personnel in
exchange for a service fee. The Service Agreement is for a term of 40 years
and may only be terminated in limited circumstances.
Plan of Distribution
This Supplement relates to the reoffering of the Shares by the
Clinic. The Clinic has designated Alex. Brown & Sons Incorporated ("Alex.
Brown"), a registered broker-dealer, as agent for the resale of the Shares.
The Shares will be sold in private or block transactions in the
over-the-counter market (including the Nasdaq Stock Market (National Market
System)) or otherwise at fixed prices which may be charged, at market prices
prevailing at the time of the sale, at prices related to such prevailing market
price, or at negotiated prices. Alex. Brown has agreed to use its best efforts
to sell such shares on behalf of the Clinic. The Clinic and/or Alex. Brown may
effect such transactions by selling such shares to or through other
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Clinic, Alex. Brown and/or the
purchasers of the shares for whom such broker-dealers may act as agent or to
whom they may sell as principal or both (which compensation as to a particular
broker-dealer may be in excess of customary commissions). The
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Clinic and/or Alex. Brown and any broker-dealers that act in connection with
the sale of the shares being sold hereby may be deemed to be an "underwriter"
within the meaning of Section 2(11) of the Act, and any commissions received by
(or discounts allowed to) them and any profit on the resale of the shares as
principal may be deemed to be underwriting discounts and commissions.
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