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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 January 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 (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 16,819
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 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 aggregate 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 January 29, 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. The Clinic intends to resell 16,819 of such shares (the
"Shares") pursuant to the terms of the Prospectus and this Prospectus
Supplement. 14,112 of the remaining shares will be distributed to certain
existing shareholders of the Clinic on a pro rata basis based on such
shareholders' ownership of the Clinic.
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
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"
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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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