<PAGE> 1
As filed with the Securities and Exchange Commission on December 15, 1998.
Registration No. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------
FIRST HEALTH GROUP CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3307583
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3200 HIGHLAND AVENUE, DOWNERS GROVE, ILLINOIS 60515
(Address of principal executive offices) (Zip Code)
FIRST HEALTH GROUP CORP. 1998 STOCK OPTION PLAN
(Full title of the plan)
WILLIAM M. HOLZMAN, ESQ.
NEAL, GERBER & EISENBERG
2 NORTH LASALLE STREET
CHICAGO, ILLINOIS 60602
(Name and address of agent for service)
(312) 269-8000
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
================================================================================
Proposed
Maximum Amount of
Title of Securities Aggregate Registration
To be Registered Offering Price Fee (1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Common Stock,
par value $.01
per share $43,400,000.00 $12,066.00
================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rules 457(c) and 457(h) promulgated pursuant to the Securities
Act of 1933, as amended, on the basis of the average of the high and low
prices of the Company's Common Stock as reported by NASDAQ National Market
System on December 14, 1998.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are incorporated in this Registration
Statement by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, as amended by Form 10-K/A as filed
June 5, 1998.
2. The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1998, June 30, 1998 and September 30, 1998.
3. The description of the Company's Common Stock set forth
under the caption "Description of Registrant's Securities
to be Registered" in the Company's Registration Statement
on Form 8-A (No. 0-15846) filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),
and any reports or amendments to the foregoing filed with
the Securities and Exchange Commission for the purpose of
updating such description.
4. All documents filed by the Company pursuant to Sections
13, 14 or 15(d) of the Exchange Act subsequent to the
date of this Registration Statement and before the
Company files a post-effective amendment hereto which
indicates that all shares of Common Stock being offered
pursuant to this Registration Statement have been sold or
which deregisters all shares of Common Stock then
remaining unsold.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Burton W. Kanter, a director of the Company and a member of the Audit
Committee, is of counsel to the law firm of Neal, Gerber & Eisenberg, which firm
performs legal services for the Company on a regular basis. Mr. Kanter holds
options to purchase an aggregate of 72,000 shares of Common Stock pursuant to
the 1991 Directors' Stock Option Plan, including 10,000 shares at an exercise
price of $8.6250 per share, 8,000 shares at an exercise price of $13.3125 per
share, 8,000 shares at an exercise price of $7.3750 per share,
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<PAGE> 3
8,000 shares at an exercise price of $9.6875 per share, 8,000 shares at an
exercise price of $6.2500 per share, 10,000 shares at an exercise price of
$23.5625 per share, 10,000 shares at an exercise price of $22.6875 per share and
10,000 shares at an exercise price of $29.5625 per share and an option to
purchase 400 shares of Common Stock at an exercise price of $29.5625 per share,
which option was granted pursuant to the 1998 Directors' Stock Option Plan.
Additionally, William M. Holzman, a partner of Neal, Gerber & Eisenberg, is an
Assistant Secretary of the Company. Furthermore, certain partners of and
attorneys associated with Neal, Gerber & Eisenberg own shares of Common Stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law empowers the
Company to indemnify officers and directors in certain instances. Article
Seventh, Section 2 of the Restated Certificate of Incorporation of the Company
provides as follows: "The directors, as well as the officers, employees and
agents of the Company shall be indemnified by the Company to the fullest extent
permitted by the Delaware General Corporation Law as the same exists or may
hereafter be amended." As a consequence, directors of the Company will be
insulated for liability for monetary damages for breach of fiduciary duty as a
director, including monetary liabilities for negligent or grossly negligent
business decisions, except for liability (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) for the payment of unlawful dividends or unlawful stock
repurchases or redemptions, or (iv) for transactions in which the director
received an improper personal benefit. The exculpation provided with respect to
liability by the foregoing is effective for actions taken after April 16, 1987.
The By-laws of the Company contain provisions whereby the Company will
indemnify its directors, officers, employees and agents against liabilities
incurred in connection with, and related expenses resulting from, any claim,
action or suit brought against such persons as a result of their relationship
with the Company's, provided that it is determined that such persons acted in
accordance with a stated standard of conduct in connection with the acts or
events upon which such claim, action or suit is based. Such determination will
be made either by a quorum of disinterested directors, if available, or by
independent legal counsel in a written opinion, or by the vote of the Company's
stockholders. The finding of either criminal or civil liability on the part of
such persons in connection with such acts or events is not necessarily
determinative of the question of whether such persons have met the required
standard of conduct and are, accordingly, entitled to be indemnified.
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<PAGE> 4
The Company has purchased for the benefit of its officers and
directors an insurance policy, whereby the insurance company agrees, among other
things, to make payment to the Company in the event any such officer or director
becomes legally obligated to make a payment in connection with an alleged
wrongful act. Wrongful acts means any breach of duty, neglect, error,
misstatement, misleading statement, omission or other act done or wrongfully
attempted by an officer or director of the Company.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8. EXHIBITS
Exhibit
Number Description of Document Page No.
- ------ ----------------------- --------
4 1998 Stock Option Plan .............
5 Opinion of Neal, Gerber &
Eisenberg...........................
23.1 Consent of Deloitte & Touche LLP....
23.2 Consent of Neal, Gerber &
Eisenberg (included in Exhibit 5
to this Registration Statement)
24 Powers of Attorney..................
ITEM 9. UNDERTAKINGS
The undersigned hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement to include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, as amended (the "Act"), each
post-effective amendment to this Registration Statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the
II-3
<PAGE> 5
offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
4. That, for purposes of determining any liability under the
Act, each filing of the Company's annual report pursuant
to Sections 13(a) or 15(d) of the Exchange Act that is
incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement
relating to the securities offered therein, and the
offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
5. To deliver or cause to be delivered with the prospectus,
to each employee to whom the prospectus is sent or given,
a copy of the Company's annual report to stockholders for
its last fiscal year, unless such employee has otherwise
received a copy of such report, in which case the Company
shall state in the prospectus that it will promptly
furnish, without charge, a copy of such report on the
written request of the employee. If the last fiscal year
of the Company has ended within 120 days prior to the use
of the prospectus, the annual report of the Company for
the preceding fiscal year may be so delivered, but within
such 120-day period the annual report for the last fiscal
year will be furnished to each such employee.
6. To transmit or cause to be transmitted to all employees
participating in the plan who do not otherwise receive such
material as stockholders of the Company, at the time and in
the manner as such material is sent to its stockholders,
copies of all reports, proxy statements and other
communications distributed to its stockholders generally.
Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers or persons controlling the Company pursuant
to the Delaware General Corporation Law, the Restated Certificate of
Incorporation of the Company, the By-laws of the Company or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel
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<PAGE> 6
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Downers Grove, State of Illinois, on the 15th day of
December, 1998.
FIRST HEALTH GROUP CORP., a Delaware
corporation
By:/s/ Joseph E. Whitters
-------------------------------------
Joseph E. Whitters, Vice
President, Finance and Chief
Financial Officer
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<PAGE> 7
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 15th day of December, 1998.
Signature Title
--------- -----
/s/ Thomas J. Pritzker* Chairman of the Board and
- ------------------------------------- Director
Thomas J. Pritzker
/s/ James C. Smith President, Chief Executive
- ------------------------------------- Officer and Director (Principal
James C. Smith Executive Officer)
/s/ Ronald H. Galowich* Secretary and Director
- -------------------------------------
Ronald H. Galowich
/s/ Joseph E. Whitters Vice President, Finance and
- ------------------------------------- Chief Financial Officer
Joseph E. Whitters (Principal Accounting and
Principal Financial Officer)
/s/ Daniel S. Brunner* Executive Vice President and
- ------------------------------------- Director
Daniel S. Brunner
/s/ Michael J. Boskin* Director
- -------------------------------------
Michael J. Boskin, Ph.D.
/s/ Director
- -------------------------------------
Robert S. Colman
/s/ Harold S. Handelsman* Director
- -------------------------------------
Harold S. Handelsman
/s/ Burton W. Kanter* Director
- -------------------------------------
Burton W. Kanter
/s/ Don Logan* Director
- -------------------------------------
Don Logan
/s/ David E. Simon* Director
- -------------------------------------
David E. Simon
*By:/s/ Joseph E. Whitters
---------------------------------
Joseph E. Whitters,
Attorney-in-fact
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<PAGE> 1
EXHIBIT 4
FIRST HEALTH GROUP CORP.
1998 STOCK OPTION PLAN
1. PURPOSE. The purpose of the 1998 Stock Option Plan (the "Plan") is
to aid First Health Group Corp. and its subsidiaries (collectively, the
"Company"), in securing and retaining salaried officers and other key employees
and consultants and to motivate such persons to exert their best efforts on
behalf of the Company In addition, the Company expects that it will benefit from
the added interest which the respective optionees will have in the welfare of
the Company as a result of their proprietary interest in the Company's success .
2. ADMINISTRATION.
(a) The Compensation Committee (the "Committee") of the Board
of Directors (the "Board") which shall at all times be comprised of
two or more directors, appointed by the Board from time to time to
serve at the pleasure of the Board shall have full power and
authority, subject to such orders or resolutions not inconsistent with
the provisions of the Plan as may from time to time be issued or
adopted by the Board, to interpret the provisions and supervise the
administration of the Plan. Each member of the Committee shall be (i)
a "Non- Employee Director" as determined under Rule 16b-3(b)(3)(i) of
the Securities Exchange Act of 1934, as amended and (ii) an outsider
director as determined under Treasury Regulation 26, CFR Section
1.162-27(e)(3).
(b) In accordance with the provisions of this Plan, the
Committee shall select the key employees and consultants to whom
options shall be granted, shall determine, in the case of key
employees, whether such options shall be incentive stock options
("Incentive Options") granted pursuant to Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or nonstatutory stock
options ("Nonstatutory Options"), and shall determine the number of
shares of Common Stock, $.01 par value, of the Company (the "Common
Stock") to be subject to each option and the time at which the option
is to be granted. Subject to the express provisions of the Plan, the
Committee shall have authority to adopt administrative regulations and
procedures which are consistent with the terms of the Plan; to adopt
and amend option agreements as they deem advisable; to determine the
terms and provisions of such option agreements (including the period
during which the option is exercisable, the option price, and the
manner in which options become exercisable) to construe and interpret
such option agreements; to impose such limitations and restrictions as
are deemed necessary or advisable by counsel for the Company so that
compliance with the Federal securities and tax laws and with the
securities laws of the various states may be assured; and to make all
other determinations necessary or advisable for administering the
Plan. The Committee may designate any officers or employees of the
Company to assist the Committee
<PAGE> 2
in the administration of the Plan and to execute documents on its
behalf, and the Committee may delegate to them such other ministerial
and limited discretionary duties as it sees fit. All determinations
and selections made by the Committee shall be by the affirmative vote
of a majority of its members, but any determination reduced to writing
and signed by a majority of the members shall be fully as effective as
if it had been made by a majority vote at a meeting duly called and
held.
(c) Each option shall be evidenced by a written instrument
duly executed by the Company and optionee which shall contain such
terms and conditions not inconsistent with the Plan as the Committee,
upon the advice of counsel for the Company, shall determine; provided,
however, that such terms need not be identical as between any two
agreements.
(d) All determinations and selections made by the Committee
pursuant to the provisions of the Plan shall be final and conclusive.
3. ELIGIBILITY AND PARTICIPATION. The group of persons eligible to
receive options shall consist of salaried officers and other key employees of,
and consultants to the Company (whether or not such persons are directors of the
Company). As used herein, the terms "key employee" and "key consultant" shall
mean any employee of, or consultant to, the Company who, in the opinion of the
Committee, has demonstrated a capacity for contributing in a substantial measure
to the success of the Company. No Incentive Option may be granted to a key
consultant nor may an Incentive Option be granted to an officer or employee of
the Company who, immediately after such grant, owns directly or indirectly stock
possessing more than 10% of the total combined voting power or value of all
classes of outstanding stock of the Company or any subsidiary or parent
corporation, unless, in the case of an individual who is not a consultant, the
option exercise price is at least 110% of the fair market value (as of the date
of the grant) of the Common Stock subject thereto and the term of the option is
limited to five years from the date of grant. No purported grant of an option to
any person whose employment or consulting arrangement with the Company has
terminated on or before the date on which the grant of such option is approved
by the Committee shall be effective.
4. SHARES SUBJECT TO THE PLAN. The stock subject to the Plan shall be
shares of the Company's authorized Common Stock and may be authorized but
unissued shares or treasury shares, as the Board may from time to time determine
in its sole discretion. Subject to adjustment as provided in paragraph 9 hereof,
the aggregate number of shares to be delivered upon exercise of all options
shall not exceed 1,400,000 shares; and, subject to like adjustment, the
aggregate number of shares for which options may be granted to any one optionee
shall not exceed 10% of the total number of shares permitted to be issued under
the Plan. If an option expires or terminates for any reason during the period in
which options may be granted under the Plan and prior to the
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<PAGE> 3
exercise thereof in full, the shares subject to, but not delivered under, such
option shall, except as hereinafter provided, be available for options
thereafter granted.
5. EXERCISE PRICE; FAIR MARKET VALUE. Nonstatutory Options granted
hereunder shall have a per share exercise price of not less than 85% of the
"fair market value" of a share of Common Stock on the date on which the grant of
such option is approved by the Committee (such date being the effective date of
the grant of such option). Incentive Options granted hereunder shall have a per
share exercise price of not less than 100% of the "fair market value" of a share
of Common Stock on the effective date of the grant of such option; provided,
however, if an optionee owns (including constructive ownership pursuant to
Section 494(d) of the Code) more than 10% of the total combined voting power or
value of all classes of outstanding shares of stock of the Company or any
subsidiary or parent corporation (within the meaning of Section 424(d) of the
Code), then an Incentive Option granted under this Plan to such optionee shall
by its terms fix the option price per share of Common Stock to be at least 110%
of the fair market value of the shares of Common Stock on the date of the grant
of such option and such Incentive Option shall terminate and become
non-exercisable upon the expiration of five years from the date of the grant of
such option. Subject to the foregoing, the option price shall be determined by
the Committee.
For purposes of this Plan, "fair market value" of a share of Common
Stock shall mean: (i) if the Common Stock is traded on a national stock exchange
on the effective date of the grant of such option, fair market value shall be
the closing price reported by the applicable composite transactions report on
such day, or if the Common Stock is not traded on such date, the mean between
the closing bid-and-asked prices thereof on such exchange; (ii) if the Common
Stock is traded over-the-counter and is classified as a National Market Issue
(under the NASD National Market System) on the date of the grant of such option,
fair market value shall be the closing sale price on that day; (iii) if the
Common Stock is traded over-the-counter and is not classified as a National
Market Issue on the date of the grant of such option, fair market value shall be
the mean between the last representative bid-and-asked prices quoted by the
Nasdaq on that day: or (iv) if none of the foregoing provisions is applicable,
fair market value shall be determined by the Committee in good faith on such
basis as it deems appropriate. In all cases, the determination of fair market
value shall be binding and conclusive on all persons.
6. TERM AND EXERCISE OF OPTIONS.
(a) Options shall be exercisable in such installments and
during such period as may be fixed by the Committee at the time of
grant, but no option shall be exercisable after the expiration of ten
years from the date of grant of such option and, in the case of an
individual who, immediately after the grant of an Incentive Option,
owns directly or indirectly stock possessing more than 10% of the
total combined voting
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<PAGE> 4
power or value of all classes of outstanding stock of the Company or
any subsidiary, after the expiration of five years from the date of
grant of such option; further provided that in the case of Incentive
Options which are exercisable in more than one installment, the
aggregate fair market value (determined at the time the option is
granted) of the Common Stock with respect to which such Incentive
Options are exercisable for the first time by any optionee during any
calendar year may not exceed $100,000.
(b) No option shall be granted hereunder and no option
granted hereunder shall be exercisable, unless, at the time of any
grant or exercise of an option, such grant or exercise is in full
compliance with all Federal and state securities laws. Upon the
exercise of an option, the optionee shall be required to make payment
in full to the Company of the exercise price therefor (and any
required tax withholding payment relative to Nonstatutory Options) (i)
in cash or (ii) with previously acquired shares of Common Stock or a
combination of cash and Common Stock having an aggregate fair market
value equal to the exercise price (and any required tax withholding
payment). The Committee may permit the holder of an option to elect to
pay the exercise price of such option by authorizing a third-party to
sell shares of Common Stock (or a sufficient portion of the shares)
acquired upon exercise of such option and remit to the Company a
sufficient portion of the sale proceeds to pay the entire exercise
price and any tax withholding resulting from such exercise. No holder
of any option, or his legal representative, legatee, or distributee
shall be or be deemed to be a holder of any shares of Common Stock
subject to such option unless and until he has received a certificate
or certificates therefor. If, on the date on which any option granted
hereunder is exercised, a registration statement relating to the
shares of Common Stock issuable pursuant to the Plan is not in effect,
as a condition to the exercise of such option, the Company may require
the person exercising such option to represent and warrant at the time
of any such exercise that the Common Stock is being purchased for
investment purposes only and without any present intention to sell or
distribute such Common Stock. and the certificate evidencing shares of
Common Stock acquired upon exercise of such option shall contain upon
its face, or on the reverse thereof, the following legend:
"These shares have not been registered under the Securities
Act of 1933, as amended, or under any applicable state law.
They may not be offered for sale, sold, transferred, or
pledged without (1) registration under the Securities Act of
1933, as amended, and any applicable state law, or (2) an
opinion (satisfactory to the corporation) that registration
is not required."
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<PAGE> 5
(c) The proceeds received by the Company from the sale of
stock subject to an option are to be added to the general funds of the
Company and used for general business purposes as the Board shall, in
its sole discretion, determine.
(d) No later than the date as of which an amount first
becomes includible in the gross income of the optionee for Federal
income tax purposes with respect to any grant under the Plan, the
optionee shall pay to the Company, or make arrangements satisfactory
to the Company regarding the payment of, any Federal, state, local or
foreign taxes of any kind required by law to be withheld with respect
to such amount. Unless otherwise determined by the Committee,
withholding obligations may be settled with Common Stock, including
Common Stock that is part of the grant that gives rise to the
withholding requirement. The obligations of the Company under the Plan
shall be conditional on such payment or arrangements, and the Company
shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment otherwise due to the optionee. The
Committee may establish such procedures as it deems appropriate,
including the making of irrevocable elections, for the settlement of
withholding obligations with Common Stock.
(e) If an Option granted hereunder is exercised or
transferred or stock issued pursuant to the exercise of an Incentive
Option disposed of within (i) two years from the date of granting of
the Incentive Option or (ii) one year from the date of issuing such
stock, the holder of the Option must notify the Company within five
(5) business days of the exercise or transfer, as the case may be.
7. TRANSFERABILITY OF OPTIONS. Incentive Options may only be
transferred by will or pursuant to the laws or descent or distribution and may
only be exercised by the optionholder. Nonstatutory Options granted under the
Plan may not be transferred except by will, pursuant the laws of descent and
distribution or pursuant to a domestic relations order as defined by the Code
and, during the lifetime of the holder, may be exercised only by the
optionholder; provided, however, that, if permitted by an optionholder's option
agreement, a Nonstatutory Option may be transferred by the optionee to, and
exercised by, (i) member(s) of the optionee's immediate family (as such term is
defined in Rule 16a-1 (e) or any successor rule promulgated under the Securities
Exchange Act of 1934, as amended, (ii) one or more trusts for the benefit of
such persons or (iii) one or more partnerships in which such family members are
the only partners, so long as the optionee does not receive any consideration
for the transfer.
8. DEATH, DISABILITY, RETIREMENT AND TERMINATION OF EMPLOYMENT. Any
option, the exercise period of which has not theretofore expired, shall
terminate at the time of an optionee's death, the optionee's disability or
termination of an optionee's employment or consulting arrangement with the
Company, and no
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<PAGE> 6
shares of Common Stock may thereafter be delivered pursuant to such option
except as set forth below:
(a) In the case of any employee or consultant who has been
employed or retained by the Company continuously from the effective
date of the grant of such option to the date of termination due to
disability (as defined in Section 22(e)(3) of the Code), such optionee
may, within two years (or such shorter period of time as is specified
in the Option Agreement) after the date of such termination (one year
in the case of an Incentive Option in order for such option to qualify
for treatment as an incentive stock option under the Code) but before
expiration of the original exercise period, purchase some or all of
the shares subject to an option immediately prior to such termination,
to the extent the optionee was then entitled to exercise such option,
giving effect to any acceleration of exercisability triggered by such
disability; and
(b) Upon the death of any such employee while in active
service or of any such disabled or retired employee within such
two-year period (or such shorter period of time as is specified in the
Option Agreement), the person or persons to whom his rights under the
option are transferred by will or the laws of descent and distribution
may within two years after the date of death, but before the
expiration of the original exercise period, purchase some or all of
the shares with respect to which the optionee was then entitled to
exercise such option immediately prior thereto, giving effect to any
acceleration of exercisability triggered by such death. Leaves of
absence for those periods and purposes conforming to the personnel
policy of the Company and as may be approved by the Committee, shall
not be deemed terminations or interruptions of employment.
In the case of any optionee who has been employed or retained by the
Company continuously from the date of grant to the date of termination and whose
employment or consulting arrangement is terminated due to retirement,
resignation or termination, such optionee may, within two years (or such shorter
period of time as is specified in the Option Agreement) after the date of any
such termination not "due to cause" (three months in the case of an Incentive
Option in order for such option to qualify for treatment as an incentive stock
option under the Code), but before the expiration of the original exercise
period, purchase some or all of the shares with respect to which the optionee
was then entitled to exercise such option immediately prior to retirement,
resignation or termination, giving effect to any acceleration of exercisability
triggered by such termination; provided, however, in the case of a termination
of employment or consulting arrangement of an optionee "due to cause", all
outstanding options of the optionee shall be cancelled and terminated as of the
date on which such optionee is given notice of termination. For purposes of this
Plan, termination "due to cause" shall have the same meaning as ascribed thereto
in any employment, consulting or similar agreement then in
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<PAGE> 7
effect between the optionee and the Company, or if none, shall mean, in the
reasonable belief of the Committee, the commission of fraud, embezzlement or
theft against: (i) the Company; (ii) employees of the Company; or (iii) a
customer or business associate of the Company.
9. CHANGES IN COMMON STOCK. In the event that, prior to the delivery
by the Company of all of the shares of Common Stock which may be delivered
hereunder and after the effective date of the Plan, there shall be any change in
the outstanding Common Stock of the Company by reason of the recapitalization,
merger, reorganization, consolidation, stock split, stock dividend or stock
right distribution, the number and kind of shares deliverable hereunder and the
exercise price shall be adjusted (but without regard to fractions) in a fair and
equitable manner by the Committee, which determination in each case shall be
conclusive and binding on the Company and the optionee and his legal
representative.
10. MERGER, CONSOLIDATION, OR SALE OF ASSETS. In the event that
provision is not made in connection with any merger, reorganization,
consolidation or other change in corporate structure, for the continuation of
the Plan and assumption of the options theretofore granted hereunder (or the
substitution of substantially identical options of the surviving corporation or
successor employer or a parent thereof), then each holder of an Option shall be
entitled, prior to the effective date of any such transaction, to exercise such
option for the full number of shares of Common Stock covered thereby which the
holder would otherwise have been entitled to acquire during the remaining term
of such option.
11. RIGHTS AS A STOCKHOLDER. No person participating in the Plan shall
have any rights of a stockholder of the Company as to shares subject to an
option until such option is exercised and certificates representing such shares
are received by the optionee.
12. IMPLIED CONSENT OF OPTIONEE. Every optionee, by his acceptance of
an option under the Plan, shall be deemed to have consented to be bound, on his
own behalf and on behalf of his heirs and legal representatives, by all of the
terms and conditions of the Plan.
13. THE COMPANY'S RESPONSIBILITY. All expenses of the Plan, including
the cost of maintaining records hereunder, shall be borne by the Company. The
Company shall have no responsibility or liability (other than under applicable
securities laws) for any act or thing done or left undone with respect to the
determination to grant (or not grant) an option hereunder or the exercise price,
number of shares or other terms and conditions of any option granted under the
Plan, so long as the Company acts in good faith.
14. AMENDMENT AND DISCONTINUANCE. The Board may alter, suspend, or
discontinue the Plan at any time and from time to time, without obtaining the
approval of the Company's stockholders, but
-7-
<PAGE> 8
may not, without the approval of the holders of a majority of the Company's
outstanding capital stock, make any alteration or amendment thereof which
operates to (a) increase the total number of shares reserved for purposes of
this Plan except as provided in paragraph 9 hereof or (b) increase the total
number of shares for which an option or options may be granted to any single
employee or consultant. No amendment to or termination of the Plan shall affect
outstanding options theretofore granted under the Plan, and, unless the option
agreements relating to such options are amended, such options shall remain in
full force and effect as if the Plan had not been amended or terminated.
15. EFFECTIVE DATE. Subject to stockholder approval, the Plan shall
become effective on May 19, 1998.
16. TERMINATION. The period during which options may be granted under
the Plan expires on May 19, 2008 unless the Plan is terminated by the Board
prior to such date.
-8-
<PAGE> 1
EXHIBIT 5
NEAL, GERBER & EISENBERG
2 NORTH LASALLE STREET
SUITE 2200
CHICAGO, ILLINOIS 60602
(312) 269-8000
December 14, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: First Health Group Corp.
Registration Statement on Form S-8
Ladies and Gentleman:
We are counsel to First Health Group Corp., a Delaware corporation
(the "Company"), filing with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act"), of the Company's Registration
Statement on Form S-8 (the "Registration Statement") relating to the issuance
pursuant to the Company's 1998 Stock Option Plan (the "Plan") of up to an
aggregate of 2,800,000 shares of Common Stock, $.01 par value (the "Common
Stock"), of the Company.
As such counsel, we have examined the Plan, the Company's Restated
Certificate of Incorporation, as amended, and the Amended and Restated By-laws,
as amended, the minute books of the Company, and such other documents as we
deemed relevant and necessary as the basis for the opinions hereafter expressed.
In such examinations, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity to
original documents of all documents submitted to us as conformed or photostatic
copies.
Based upon the foregoing, we are of the opinion that (i) the issuance
by the Company of up to an aggregate of 2,800,000 shares of Common Stock upon
the exercise of options to be granted pursuant to the Plan has been duly and
validly authorized by all necessary corporate action on the part of the Company
and (ii) when issued and paid for as described in the Plan and the respective
option agreements, such shares will be duly and validly issued and outstanding,
fully paid and non-assessable shares of Common Stock.
<PAGE> 2
Securities and Exchange Commission
December 14, 1998
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference of our firm under the caption
"Interests of Named Experts and Counsel" in item 5 of the Registration
Statement.
Please be advised that Burton W. Kanter, of counsel to our firm, is a
director of the Company. In addition, William M. Holzman, a partner of our firm,
is an Assistant Secretary of the Company, and certain other partners of, and
attorneys associated with, our firm own shares of Common Stock.
Very truly yours,
Neal, Gerber & Eisenberg
<PAGE> 1
EXHIBIT 23.1
[D&T LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
First Health Group Corp.:
We consent to the incorporation by reference in this Registration Statement of
First Health Group Corp. on Form S-8 relating to the First Health Group Corp.
1998 Stock Option Plan of our reports dated February 23, 1998, appearing in and
incorporated by reference in the Annual Report on Form 10-K of First Health
Group Corp. and subsidiaries for the year ended December 31, 1997.
DELOITTE & TOUCHE LLP
Chicago, Illinois
December 15, 1998
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of FIRST HEALTH GROUP CORP., a Delaware corporation (the
"Company"), which is about to file a Registration Statement on Form S-8 (or
other appropriate form) with respect to the shares of common stock, $.01 par
value per share to be issued upon the exercise of options granted and to be
granted pursuant to the Company's 1998 Stock Option Plan (the "Plan") with the
Securities and Exchange Commission under the provisions of the Securities Act of
1933, as amended, whose signature appears below hereby constitutes and appoints
James C. Smith, Ronald H. Galowich and Joseph E. Whitters and each of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign such Registration Statement and any or all amendments
thereto (including, without limitation, any post-effective amendments), and all
other documents in connection therewith to be filed with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney as of the 14th day of December, 1998.
/s/ Don Logan
-----------------------------
Don Logan
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of FIRST HEALTH GROUP CORP., a Delaware corporation (the
"Company"), which is about to file a Registration Statement on Form S-8 (or
other appropriate form) with respect to the shares of common stock, $.01 par
value per share to be issued upon the exercise of options granted and to be
granted pursuant to the Company's 1998 Stock Option Plan (the "Plan") with the
Securities and Exchange Commission under the provisions of the Securities Act of
1933, as amended, whose signature appears below hereby constitutes and appoints
James C. Smith, Ronald H. Galowich and Joseph E. Whitters and each of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign such Registration Statement and any or all amendments
thereto (including, without limitation, any post-effective amendments), and all
other documents in connection therewith to be filed with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney as of the 14th day of December, 1998.
/s/ Daniel S. Brunner
--------------------------
Daniel S. Brunner
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of FIRST HEALTH GROUP CORP., a Delaware corporation (the
"Company"), which is about to file a Registration Statement on Form S-8 (or
other appropriate form) with respect to the shares of common stock, $.01 par
value per share to be issued upon the exercise of options granted and to be
granted pursuant to the Company's 1998 Stock Option Plan (the "Plan") with the
Securities and Exchange Commission under the provisions of the Securities Act of
1933, as amended, whose signature appears below hereby constitutes and appoints
James C. Smith, Ronald H. Galowich and Joseph E. Whitters and each of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign such Registration Statement and any or all amendments
thereto (including, without limitation, any post-effective amendments), and all
other documents in connection therewith to be filed with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney as of the 14th day of December, 1998.
--------------------------
Robert S. Colman
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of FIRST HEALTH GROUP CORP., a Delaware corporation (the
"Company"), which is about to file a Registration Statement on Form S-8 (or
other appropriate form) with respect to the shares of common stock, $.01 par
value per share to be issued upon the exercise of options granted and to be
granted pursuant to the Company's 1998 Stock Option Plan (the "Plan") with the
Securities and Exchange Commission under the provisions of the Securities Act of
1933, as amended, whose signature appears below hereby constitutes and appoints
James C. Smith, Ronald H. Galowich and Joseph E. Whitters and each of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign such Registration Statement and any or all amendments
thereto (including, without limitation, any post-effective amendments), and all
other documents in connection therewith to be filed with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney as of the 14th day of December, 1998.
/s/ Ronald H. Galowich
----------------------
Ronald H. Galowich
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of FIRST HEALTH GROUP CORP., a Delaware corporation (the
"Company"), which is about to file a Registration Statement on Form S-8 (or
other appropriate form) with respect to the shares of common stock, $.01 par
value per share to be issued upon the exercise of options granted and to be
granted pursuant to the Company's 1998 Stock Option Plan (the "Plan") with the
Securities and Exchange Commission under the provisions of the Securities Act of
1933, as amended, whose signature appears below hereby constitutes and appoints
James C. Smith, Ronald H. Galowich and Joseph E. Whitters and each of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign such Registration Statement and any or all amendments
thereto (including, without limitation, any post-effective amendments), and all
other documents in connection therewith to be filed with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney as of the 14th day of December, 1998.
/s/ Michael J. Boskin
---------------------------
Michael J. Boskin, Ph.D.
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of FIRST HEALTH GROUP CORP., a Delaware corporation (the
"Company"), which is about to file a Registration Statement on Form S-8 (or
other appropriate form) with respect to the shares of common stock, $.01 par
value per share to be issued upon the exercise of options granted and to be
granted pursuant to the Company's 1998 Stock Option Plan (the "Plan") with the
Securities and Exchange Commission under the provisions of the Securities Act of
1933, as amended, whose signature appears below hereby constitutes and appoints
James C. Smith, Ronald H. Galowich and Joseph E. Whitters and each of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign such Registration Statement and any or all amendments
thereto (including, without limitation, any post-effective amendments), and all
other documents in connection therewith to be filed with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney as of the 14th day of December, 1998.
/s/ Burton W. Kanter
--------------------------
Burton W. Kanter
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of FIRST HEALTH GROUP CORP., a Delaware corporation (the
"Company"), which is about to file a Registration Statement on Form S-8 (or
other appropriate form) with respect to the shares of common stock, $.01 par
value per share to be issued upon the exercise of options granted and to be
granted pursuant to the Company's 1998 Stock Option Plan (the "Plan") with the
Securities and Exchange Commission under the provisions of the Securities Act of
1933, as amended, whose signature appears below hereby constitutes and appoints
James C. Smith, Ronald H. Galowich and Joseph E. Whitters and each of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign such Registration Statement and any or all amendments
thereto (including, without limitation, any post-effective amendments), and all
other documents in connection therewith to be filed with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney as of the 14th day of December, 1998.
/s/ Thomas J. Pritzker
----------------------
Thomas J. Pritzker
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of FIRST HEALTH GROUP CORP., a Delaware corporation (the
"Company"), which is about to file a Registration Statement on Form S-8 (or
other appropriate form) with respect to the shares of common stock, $.01 par
value per share to be issued upon the exercise of options granted and to be
granted pursuant to the Company's 1998 Stock Option Plan (the "Plan") with the
Securities and Exchange Commission under the provisions of the Securities Act of
1933, as amended, whose signature appears below hereby constitutes and appoints
James C. Smith, Ronald H. Galowich and Joseph E. Whitters and each of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign such Registration Statement and any or all amendments
thereto (including, without limitation, any post-effective amendments), and all
other documents in connection therewith to be filed with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney as of the 14th day of December, 1998.
/s/ David E. Simon
-------------------------
David E. Simon
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of FIRST HEALTH GROUP CORP., a Delaware corporation (the
"Company"), which is about to file a Registration Statement on Form S-8 (or
other appropriate form) with respect to the shares of common stock, $.01 par
value per share to be issued upon the exercise of options granted and to be
granted pursuant to the Company's 1998 Stock Option Plan (the "Plan") with the
Securities and Exchange Commission under the provisions of the Securities Act of
1933, as amended, whose signature appears below hereby constitutes and appoints
James C. Smith, Ronald H. Galowich and Joseph E. Whitters and each of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign such Registration Statement and any or all amendments
thereto (including, without limitation, any post-effective amendments), and all
other documents in connection therewith to be filed with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney as of the 14th day of December, 1998.
/s/ James C. Smith
-------------------------
James C. Smith
<PAGE> 10
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director
and/or officer of FIRST HEALTH GROUP CORP., a Delaware corporation (the
"Company"), which is about to file a Registration Statement on Form S-8 (or
other appropriate form) with respect to the shares of common stock, $.01 par
value per share to be issued upon the exercise of options granted and to be
granted pursuant to the Company's 1998 Stock Option Plan (the "Plan") with the
Securities and Exchange Commission under the provisions of the Securities Act of
1933, as amended, whose signature appears below hereby constitutes and appoints
James C. Smith, Ronald H. Galowich and Joseph E. Whitters and each of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign such Registration Statement and any or all amendments
thereto (including, without limitation, any post-effective amendments), and all
other documents in connection therewith to be filed with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney as of the 14th day of December, 1998.
/s/ Joseph E. Whitters
------------------------------
Joseph E. Whitters
<PAGE> 11
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director and/or
officer of FIRST HEALTH GROUP CORP., a Delaware corporation (the "Company"),
which is about to file a Registration Statement on Form S-8 (or other
appropriate form) with respect to the shares of common stock, $.01 par value per
share to be issued upon the exercise of options granted and to be granted
pursuant to the Company's 1998 Stock Option Plan (the "Plan") with the
Securities and Exchange Commission under the provisions of the Securities Act of
1933, as amended, whose signature appears below hereby constitutes and appoints
James C. Smith, Ronald H. Galowich and Joseph E. Whitters and each of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign such Registration Statement and any or all amendments
thereto (including, without limitation, any post-effective amendments), and all
other documents in connection therewith to be filed with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of the 14th day of December, 1998.
/s/ Harold S. Handelsman
-----------------------------
Harold S. Handelsman
