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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 February 20, 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.
This Supplement relates to the proposed resale of 116,565 shares of the
Company's Common Stock by South Texas Medical Clinics, P.A., a Texas
professional association (the "Clinic"). Such shares were issued to the Clinic
upon the conversion of a 7.0% Subordinated Convertible Note in the aggregate
principal amount of $2,823,214 (the "Conversion Note"). The Company issued the
Conversion Note and one additional 7.0% Convertible Subordinated Note in the
principal amount of $2,850,000 (the "First Note" and collectively with the
Conversion Note, the "Purchase Notes") to the Clinic in connection with the
acquisition by PhyCor of Wharton, Inc., a Tennessee corporation and wholly-
owned subsidiary of the Company ("PhyCor-Wharton"), of certain assets of the
Clinic pursuant to an Asset Purchase Agreement between PhyCor and the Clinic
effective as of November 1, 1995 (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 June 14, 1996 in the
form of a 50% stock dividend.
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The date of this Supplement is February 20, 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 Wharton, Texas and
maintains six satellite locations in the area. The Clinic's principal office is
located at 2100 Regional Medical Drive, Wharton, Texas 77488.
The Company, through PhyCor-Wharton, 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 November 1, 1996, the
Clinic converted the First Note, in accordance with its terms,into an aggregate
of 117,671 shares of Common Stock. The Clinic resold such shares pursuant to a
Prospectus Supplement dated November 1, 1996. On February 18, 1997, the Clinic
converted the Conversion Note, in accordance with its terms, into an aggregate
of 116,565 shares of 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-Wharton entered into a Service Agreement, effective as of November 1,
1995 (the "Service Agreement") with the Clinic. Pursuant to the Service
Agreement, PhyCor-Wharton 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 will be 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 Equitable Securities Corporation ("Equitable"), 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. Equitable has agreed to use its best efforts to sell the Shares on
behalf of the Clinic. The Clinic and/or Equitable may effect such transactions
by selling the 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,Equitable 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 Equitable and any
broker-dealers that act in connection with the sale of the 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 Shares as principal may be deemed to be underwriting discounts
and commissions.
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