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REGISTRATION NO. 33-98528
RULE 424(b)(5)
SECOND SUPPLEMENT
TO PROSPECTUS, DATED NOVEMBER 25, 1997
PhyCor, Inc.
3,000,000 Shares
Common Stock
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The Prospectus, dated November 25, 1997 (the "Prospectus"), to which
this Second Supplement, dated March 23, 1998, is attached, relates to the resale
by the holders thereof (the "Selling Shareholders") of up to 3,000,000 shares of
the Common Stock, no par value per share ("Common Stock"), of PhyCor, Inc. (the
"Company"), issued without registration under the Securities Act of 1933, as
amended (the "Securities Act"), in transactions not involving public offerings
in connection with the Company's affiliation and long-term relationships with
single- and multi-specialty medical clinics, individual physician practices and
related businesses, including, but not limited to, management services
organizations, consulting firms and other physician management companies. In
addition, the Prospectus also relates to the resale by certain Selling
Shareholders of Common Stock issued without registration under the Securities
Act in transactions not involving public offerings upon the exercise of (i)
options granted by the Company prior to the adoption by the Company of its stock
incentive plans; and (ii) stock purchase warrants issued, or to be issued from
time to time, in connection with financing activities, acquisitions and related
transactions, including, but not limited to, (A) warrants issued as
consideration for consulting or other services provided or to be provided to the
Company and the execution of a management or service agreement with the Company
or an affiliate and (B) warrants issued by the Company to holders of shares of
Common Stock of PhyCor Management Corporation, an entity in which the Company
owns a minority equity interest.
This Second Supplement amends the Amendment to Supplement filed with
the Securities and Exchange Commission on December 23, 1997. This Second
Supplement relates to the proposed resale by Burns Clinic Medical Center, P.C.,
a Michigan professional corporation (the "Clinic"), of 57,500 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 Second
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.
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The date of this Second Supplement is March 23, 1998.
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THIS SECOND 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 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 Securities 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 Clinic
resold 21,985 shares pursuant to the Prospectus and prior prospectus
supplements. The Clinic intends to resell the remaining 57,500 shares (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 and this Second
Supplement.
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 Second Supplement relates to the reoffering of the Shares by the
Clinic. The Clinic has designated Interstate/Johnson Lane, Inc., a registered
broker-dealer, or such other broker-dealer as may be designated from time to
time (the "Broker"), 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. The Broker has agreed to use its best efforts to
sell and write options on the Shares on behalf of the Clinic. The Clinic and/or
the Broker 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, the Broker 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 the
Broker 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.
