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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 October 29, 1997, 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 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 79,485
shares of the Company's Common Stock issued to the Clinic upon the partial
conversion of certain 7.0% Subordinated Convertible Notes with an aggregate
principal amount of $7,962,263 (collectively, the "Purchase Notes"). The Company
issued the Purchase 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.
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.
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The date of this Supplement is October 29, 1997.
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Selling Shareholder
The Clinic operates a multi-specialty medical clinic in Petoskey, Michigan
and maintains seven 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 Notes to the Clinic in a transaction
exempt from the registration requirements of the Act. From December 12, 1995 to
March 7, 1997, the Clinic partially converted certain of the Purchase Notes in
accordance with their terms into an aggregate of 542,164 shares of PhyCor
Common Stock. The Clinic resold such shares pursuant to the Prospectus and
various Prospectus Supplements. On October 20, 1997, the Clinic partially
converted certain of the Purchase Notes, in accordance with their terms, into an
aggregate of 79,485 shares of PhyCor Common Stock (the "Shares"). The Clinic
intends to resell the Shares in the over-the-counter market and through the
writing of options on 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 BT Alex. Brown 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 or through the
writing of options. Alex. Brown has agreed to use its best efforts to sell and
write options on the 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 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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