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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
The Prospectus, dated August 28, 1996 (the "Prospectus"), to which
this Supplement, dated May 12, 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 (the "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 (i) single and multi-specialty medical clinics, (ii) the assets of
individual physician practices and (iii) 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.
On May 12, 1997, the Company issued an aggregate of 206,050 shares of
Common Stock to PAPP Clinic, P.C., a Georgia professional corporation (the
"Clinic"), upon the conversion of twenty-two 7.0% Subordinated Convertible
Notes with an aggregate principal amount of $2,612,839.36 (collectively, the
"Purchase Notes"). The Company issued the Purchase Notes to the Clinic in
connection with the acquisition by PhyCor of Newnan, Inc., a Tennessee
corporation and wholly-owned subsidiary of the Company ("PhyCor-Newnan"), of
certain assets of the Clinic pursuant to an Asset Purchase Agreement between
the Company and the Clinic dated as of May 1, 1995 (the "Purchase Agreement").
Upon conversion of the Purchase Notes and pursuant to this Supplement, the
Clinic intends to sell 111,376 shares of Common Stock (the "Resale Shares") and
distribute the remaining 94,674 shares of Common Stock (the "Distribution
Shares") to certain of its physician shareholders (the "Physicians").
Capitalized terms used in this Supplement shall have the meanings
given to them in the Prospectus, unless the context requires otherwise.
The date of this Supplement is May 12, 1997.
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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 Newnan,
Georgia and maintains four satellite locations in the area. The Clinic's
principal office is located at 15 Cavender Street, Newnan, Georgia 30263.
The Company 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. On May 12, 1997, the Clinic converted the Purchase
Notes in accordance with their terms, into an aggregate of 206,050 shares of
Common Stock. The Clinic intends to resell the Resale Shares in the
over-the-counter market in accordance with the terms of the Prospectus. The
Clinic intends to distribute the Distribution Shares to the Physicians.
In connection with the acquisition of the assets of the Clinic,
PhyCor-Newnan entered into a Service Agreement, effective as of May 1, 1995
(the "Service Agreement") with the Clinic. Pursuant to the Service Agreement,
PhyCor-Newnan 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 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 Resale Shares and the
Distribution Shares by the Clinic. The Clinic has designated Alex. Brown & Sons
Incoporated ("Alex. Brown"), a registered broker-dealer, as agent for the
resale of the Resale Shares. The Resale 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 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 the
Resale Shares on behalf of the Clinic. The Clinic and/or Alex. Brown may effect
such transactions by selling the Resale 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 Resale 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 Resale Shares 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 Resale Shares as principal may be
deemed to be underwriting discounts and commissions.
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