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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 5, 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 97,170 shares of the
Company's Common Stock by Northeast Arkansas Internal Medicine Clinic, P.A., an
Arkansas professional association (the "Clinic"). Such shares were issued to the
Clinic upon the partial conversion of a 7.0% Subordinated Convertible Note in
the aggregate principal amount of $1,925,736 (the "Conversion Note"). The
Company issued the Conversion Note and two additional 7.0% Convertible
Subordinated Notes in the principal amount of $2,167,113 (collectively with the
Conversion Note, the "Purchase Notes") to the Clinic in connection with the
acquisition by PhyCor of Northeast Arkansas, Inc., a Tennessee corporation and
wholly-owned subsidiary of the Company ("PhyCor-Arkansas"), of certain assets of
the Clinic pursuant to an Asset Purchase Agreement between PhyCor and the Clinic
effective as of March 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 5, 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 Jonesboro, Arkansas
and maintains four satellite locations in the area. The Clinic's principal
office is located at 311 East Matthews, Jonesboro, Arkansas 72401.
The Company, through PhyCor-Arkansas, 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 April 15, 1996, the
Clinic converted certain of the Purchase Notes, in accordance with their terms,
into an aggregate of 151,636 shares of PhyCor Common Stock. The Clinic resold
such shares pursuant to a Prospectus Supplement dated April 15, 1996. On October
21, 1996, the Clinic converted certain of the Purchase Notes, in accordance with
their terms, into an aggregate of 11,724 shares of PhyCor Common Stock. The
Clinic resold such shares pursuant to a Prospectus Supplement dated October 21,
1996. On January 24, 1997, the Clinic partially converted the Conversion Note,
in accordance with its terms, into an aggregate of 128,101 shares of Common
Stock. At such time, 14,112 of such shares were distributed to certain existing
shareholders of the Clinic on a pro rata basis based on such shareholders'
ownership of the Clinic. The Clinic resold 16,819 of the shares issued upon
conversion of the Note pursuant to a Prospectus Supplement dated January 29,
1997. The Clinic intends to resell the remaining 97,170 shares (the "Shares")
pursuant to the terms of the Prospectus and this Prospectus Supplement.
In connection with the acquisition of the assets of the Clinic,
PhyCor-Arkansas entered into a Service Agreement, effective as of March 1, 1995
(the "Service Agreement") with the Clinic. Pursuant to the Service Agreement,
PhyCor-Arkansas 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
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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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