<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT /X/
- --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(E)(2))
HEALTHSOURCE, INC.
(Name of Registrant as Specified In Its Charter)
Daniel N. Gregoire, Esq.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2) or
ITEM 22(a)(2) OF SCHEDULE 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (SET FORTH THE AMOUNT ON WHICH THE
FILING FEE IS CALCULATED AND STATE HOW IT WAS DETERMINED):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
HEALTHSOURCE, INC.
TWO COLLEGE PARK DRIVE
HOOKSETT, NEW HAMPSHIRE 03106
NOTICE OF THE 1995 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 9, 1995
To the Shareholders of
HEALTHSOURCE, INC.
Notice is hereby given that the 1995 Annual Meeting of Shareholders (the
"Meeting") of Healthsource, Inc. (the "Company") will be held on Tuesday, May 9,
1995 at 7:00 p.m. at the Center of New Hampshire, Holiday Inn, 700 Elm Street,
Manchester, New Hampshire. The purposes of the Meeting are:
1. To elect three directors to hold office until the 1998 Annual
Meeting of Shareholders and one director to hold office until the 1997
Annual Meeting of Shareholders, and until their successors shall have been
elected and qualified.
2. To transact such other business as may properly be brought before
the Meeting and any adjournment, continuation, or postponement thereof.
The Board of Directors has fixed the close of business on March 21, 1995 as
the record date for the determination of the shareholders entitled to notice of
and to vote at the Meeting.
The By-Laws require that the holders of a majority of the stock issued,
outstanding and entitled to vote be present or be represented by proxy at the
Meeting in order to constitute a quorum for the transaction of business.
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING REGARDLESS OF
THE NUMBER OF SHARES YOU MAY HOLD. IF YOU ARE UNABLE TO BE PRESENT IN PERSON,
PLEASE SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
IF YOU ATTEND THE MEETING AND WISH TO VOTE YOUR SHARES IN PERSON AT THAT TIME,
YOU WILL BE ABLE TO DO SO, EVEN THOUGH YOU HAVE SENT IN YOUR PROXY.
This Notice, the Proxy and the Proxy Statement enclosed herewith are sent
to you by order of the Board of Directors.
JON S. RICHARDSON
Secretary
Hooksett, New Hampshire
March 28, 1995
<PAGE> 3
HEALTHSOURCE, INC.
TWO COLLEGE PARK DRIVE
HOOKSETT, NEW HAMPSHIRE 03106
PROXY STATEMENT
1995 ANNUAL MEETING OF SHAREHOLDERS
MAY 9, 1995
GENERAL MATTERS
The enclosed Proxy is solicited by the Board of Directors of Healthsource,
Inc. (the "Company"), for use at the 1995 Annual Meeting of Shareholders (the
"Meeting") to be held on Tuesday, May 9, 1995 at 7:00 p.m. at the Center of New
Hampshire, Holiday Inn, 700 Elm Street, Manchester, New Hampshire, and any
adjournment, continuation, or postponement thereof. The shares represented by
Proxies will be voted as instructed on the Proxies and, in the absence of
instructions, as set forth herein. Proxies may be revoked at any time before
they are exercised, by written notice delivered either to the Company's office
at Two College Park Drive, Hooksett, New Hampshire 03106, Attention: Tracey T.
Turner, Investor Relations, or in person at the time of the Meeting. This Proxy
Statement and the enclosed form of Proxy are being mailed to shareholders of the
Company on or after March 28, 1995.
The cost of solicitation of Proxies will be borne by the Company. In
addition to the solicitation of Proxies by mail, officers and employees of the
Company may solicit Proxies in person or by telephone without compensation other
than reimbursement for their actual expenses. The Company will, upon request,
reimburse persons holding shares in their names, or those of their nominees for
the benefit of others, for their reasonable expenses in sending Proxy materials
to such others.
VOTING RIGHTS
Only shareholders of record at the close of business on the record date,
March 21, 1995, will be entitled to notice of and to vote at the Meeting and at
any adjournment, continuation, or postponement thereof. On March 21, 1995, there
were 31,331,347 shares of the Company's Common Stock, par value $.10 per share
("Common Stock"), outstanding and entitled to vote; each share of Common Stock
is entitled to one vote. A majority of all the Common Stock outstanding on March
21, 1995 constitutes a quorum for the Meeting. Shareholders will not be entitled
to cumulative voting rights at the Meeting, which means that the holders of more
than 50% of the Common Stock voting for the election of directors can elect all
of the nominees for election to the Board of Directors if they choose to do so.
In such event the holders of the remaining shares will not have the power to
elect any person to the Board of Directors. The affirmative votes of the holders
of a plurality of the Common Stock voting are sufficient to elect directors.
Shares not voting (including broker non-votes) and shares abstaining from the
vote will not be counted toward the number of affirmative or negative votes on
any matter.
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 21, 1995, certain information
as to those persons who were beneficial owners of more than 5% of the
outstanding shares of Common Stock and as to the shares of Common Stock
beneficially owned by each of the named executive officers and by all officers
and directors of the Company as a group. Persons who beneficially own in excess
of 5% of the Common Stock are required to file certain reports disclosing such
ownership pursuant to the Securities Exchange Act of 1934. Based upon
1
<PAGE> 4
such reports, management knows of no person, other than those set forth below,
who owns more than 5% of the outstanding shares of Common Stock. The information
below was derived solely from such reports.
<TABLE>
<CAPTION>
NUMBER
OF
SHARES PERCENTAGE
BENEFICIALLY OF CLASS
NAME OF BENEFICIAL OWNER OWNED(1) OUTSTANDING
---------------------------------------------------- -------- ----------
<S> <C> <C>
Norman C. Payson, M.D.
President and Chief Executive Officer
Two College Park Drive
Hooksett, NH 03106.................................. 2,466,380 7.8%
Putnam Investments, Inc.(2)
One Post Office Square
Boston, MA 02109 and
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, NY 10036.................................. 2,070,039 6.6%
The Equitable Companies Incorporated(3)
787 Seventh Avenue
New York, NY 10019.................................. 2,025,470 6.5%
Sally W. Crawford................................... 131,600 *
Charles M. Schneider................................ 16,000 *
Thomas M. Congoran.................................. 61,500 *
Directors and Officers as a Group (12 persons)...... 3,364,291(4) 10.5%
<FN>
- ---------------
* Less than 1%.
(1) The listed figures include options exercisable within 60 days to purchase 450,000, 67,500, 16,000, 36,000 and 722,500 shares
held by Dr. Payson, Ms. Crawford, Mr. Schneider, Mr. Congoran and all directors and officers as a group, respectively.
(2) Certain Putnam investment managers (together with their parent corporations, Putnam Investments, Inc. and Marsh & McLennan
Companies, Inc.) are considered "beneficial owners" of the Company's voting Common Stock, which shares, the Company is
advised, were acquired for investment purposes by such investment managers for certain of their advisory clients.
(3) Certain subsidiaries (together with their parent corporations) of The Equitable Companies Incorporated are considered
"beneficial owners" of the Company's voting Common Stock. The Company is advised that certain insurance company subsidiaries
acquired Company shares solely for investment purposes and that certain investment adviser subsidiaries acquired Company shares
solely for investment purposes on behalf of client discretionary investment advisory accounts.
(4) Includes 10,150 shares owned by spouses and minor children of directors and officers and shares held or owned by
custodians for the benefit of such minors, as to which beneficial ownership may be disclaimed.
On March 21, 1995, Cede & Co., a nominee for the Depository Trust Company, was the record holder of 27,145,277 (86.6%)
shares of Common Stock. The Depository Trust Company is a stock clearing corporation which holds securities for the accounts of
various brokerage firms, banks and similar institutions, none of which, to the knowledge of the Company, beneficially owned more
than 5% of the Common Stock at such date.
</TABLE>
2
<PAGE> 5
MATTERS TO BE ACTED UPON
I. ELECTION OF DIRECTORS
At the Meeting, three Class III Directors and one Class II Director are to
be elected. The Class III Directors will be elected to hold office until the
1998 Annual Meeting of Shareholders and the Class II Director will be elected to
hold office until the 1997 Annual Meeting of Shareholders, and until their
respective successors shall have been elected and qualified. The Board of
Directors at its February 21, 1995 meeting designated as nominees for election
as Class III Directors Merwyn Bagan, M.D., M.P.H., Paul D. Baron, M.D. and
Francis G. Middleton, M.D. and designated as nominee for election as a Class II
Director Robert H. Bilbro, M.D. Dr. Bilbro was appointed a Director following
the 1994 Annual Meeting of Shareholders and, pursuant to the Company's By-Laws,
must stand for election at the Meeting. All nominees have indicated to the
Company, in writing, both their willingness to be nominated and to serve as
directors, if elected.
On March 31, 1994, the Company acquired the remaining 70% interest in
Coordinated Medical Services of North Carolina, Inc. ("CMS") (currently named
Healthsource Health Plans, Inc.), the holding company for Carolina Physicians'
Health Plan, Inc. (currently named Healthsource North Carolina, Inc.), in a
merger transaction. In connection with the merger, the Company agreed to
nominate one member of the former CMS Board for election as a Class II Director
of the Company for two consecutive three year terms. Dr. Bilbro was chosen by
the Company to serve on the Company's Board pursuant to this arrangement.
On December 20, 1994, the Company entered into a definitive agreement to
acquire the group health, HMO and third-party administration business of
Provident Life and Accident Insurance Company of America, Inc. ("Provident").
Under the terms of the agreement, following the closing, the Company has agreed
to appoint Provident's President and Chief Executive Officer, J. Harold
Chandler, to serve on the Company's Board of Directors. It is expected that Mr.
Chandler will be appointed a Class I Director with a term expiring at the 1996
Annual Meeting. The transaction is subject to receipt of required licensure and
other regulatory approvals and certain other conditions. Closing is expected to
occur during the second quarter of 1995.
The enclosed form of Proxy lists three persons nominated on behalf of the
Board of Directors for election at the Meeting as Class III Directors and one
person nominated for election as a Class II Director. Proxies may not be voted
for more than three nominees for Class III Directors or more than one nominee
for Class II Director. The Board of Directors does not contemplate that any of
its proposed nominees will become unavailable for any reason. However, should
any proposed nominee of the Board of Directors become unavailable or unwilling
to accept nomination and election, Proxies which do not withhold authority to
vote for that proposed nominee will be voted for another nominee to be selected
by the Board of Directors.
IT IS INTENDED THAT THE SHARES REPRESENTED BY THE ENCLOSED PROXY WILL BE
VOTED, IN THE ABSENCE OF CONTRARY INSTRUCTIONS, FOR THE ELECTION OF THE NOMINEES
FOR DIRECTOR NAMED BELOW.
3
<PAGE> 6
A. INFORMATION ABOUT DIRECTORS AND NOMINEES FOR DIRECTOR
The following table sets forth certain information concerning the nominees
for election as directors and each other person whose term of office as director
will continue after the Meeting, including: (i) name and age; (ii) principal
occupation; (iii) positions with the Company and subsidiaries during 1994; (iv)
the year in which each first became a director of the Company; and (v) number of
shares of Common Stock beneficially owned on March 21, 1995. The table has been
prepared from information obtained from the directors. All nominees are
currently serving as directors of the Company. There are no family relationships
between any director or executive officer of the Company and any other such
person.
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OF
COMMON STOCK
OWNED
BENEFICIALLY
TO ALL
NUMBER OF SHARES OUTSTANDING
NAME, AGE, POSITIONS WITH COMPANY OF COMMON STOCK SHARES OF
AND SUBSIDIARIES, AND PRINCIPAL OWNED BENEFICIALLY AS OF COMMON STOCK
OCCUPATION DURING PAST FIVE YEARS(1) MARCH 21, 1995(2) (31,331,347)
- -------------------------------------------------- ------------------------- ----------------
<S> <C> <C>
NOMINEES FOR DIRECTOR
NOMINEES FOR CLASS III DIRECTORS -- TERMS EXPIRING AT THE 1998 ANNUAL MEETING
MERWYN BAGAN, M.D., M.P.H.
Merwyn Bagan, M.D., M.P.H., age 59, has
served as the Chairman of the Board of the
Company since 1985. Dr. Bagan served as President
of Healthsource New Hampshire, Inc. from 1985
until July 1993. He is a board certified
neurosurgeon and practiced for 23 years in Concord
and Manchester, New Hampshire prior to his
retirement in July 1993. He subsequently earned an
M.P.H. degree and presently works as a consultant
in international health. Dr. Bagan is a past
President of both the New Hampshire Medical
Society and the American Association of
Neurological Surgeons............................. 329,800(3) 1.1%
PAUL D. BARON, M.D.
Paul D. Baron, M.D., age 54, has been a
director of the Company since 1985. He is a
board certified anatomic and clinical pathologist
and has practiced for 20 years, the last fifteen
years at Concord Hospital in Concord, New
Hampshire. Dr. Baron is the Chairman of the
Department of Pathology at Concord Hospital....... 42,500(3) *
FRANCIS G. MIDDLETON, M.D.
Francis G. Middleton, M.D., age 55, has
served as a director of the Company since
September 1989, and as Medical Director of
Healthsource South Carolina, Inc. from 1986 until
January 1995. He is board certified in internal
medicine and infectious disease and practiced for
17 years in Charleston, South Carolina. He ceased
private practice in July, 1991 and since then has
been an employee of the Company. Since January
1995 Dr. Middleton has served as President of
Healthsource South, Inc. and conducts development
activities for the Company throughout the southern
United States..................................... 95,500(4) *
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OF
COMMON STOCK
OWNED BENEFICIALLY
NUMBER OF SHARES TO ALL OUTSTANDING
NAME, AGE, POSITIONS WITH COMPANY OF COMMON STOCK SHARES OF
AND SUBSIDIARIES, AND PRINCIPAL OWNED BENEFICIALLY AS OF COMMON STOCK
OCCUPATION DURING PAST FIVE YEARS(1) MARCH 21, 1995(2) (31,331,347)
------------------------------------ ------------------------ ------------------
<S> <C> <C>
NOMINEE FOR CLASS II DIRECTOR -- TERM EXPIRING AT THE 1997 ANNUAL MEETING
ROBERT H. BILBRO, M.D.
Robert H. Bilbro, M.D., age 54, has been a
director of the Company since May 1994 and since
March 1994 has served as President and Chairman of
the Board of Directors of Healthsource Health
Plans, Inc. Prior thereto, he was a Vice
President, President, Director and from October
1987 to March 1994 Chairman of the Board of CMS.
Dr. Bilbro is President of the Wake County Medical
Society. Dr. Bilbro is engaged in the practice of
internal medicine and cardiology at Raleigh
Medical Group, P.A., Raleigh, North Carolina where
he has practiced for 22 years. ................... 23,087(3) *
</TABLE>
<TABLE>
<CAPTION>
DIRECTORS WHOSE TERMS CONTINUE
CLASS I DIRECTORS -- TERM EXPIRING AT THE 1996 ANNUAL MEETING
<S> <C> <C>
ROBERT S. CATHCART III, M.D.
Robert S. Cathcart III, M.D., age 56, has
served as a director of the Company since May,
1993 and as President of Healthsource South
Carolina, Inc. since May 1992. Dr. Cathcart is a
board certified general surgeon employed by
Surgical Associates of Charleston, South Carolina,
P.A. and has practiced for 23 years in Charleston,
South Carolina. Dr. Cathcart was nominated by the
Board of Directors pursuant to the agreement under
which the Company acquired Physicians' Health
Systems, Inc. in March 1993. ..................... 16,650(3) *
ROBERT A. LEIPOLD, M.D.
Robert A. Leipold, M.D., age 44, has served
as a director of the Company since 1985 and as
President of Healthsource New Hampshire, Inc.
since July 1993. Dr. Leipold is a board certified
obstetrician/gynecologist and has practiced for 14
years in Dover, New Hampshire..................... 140,200(3) *
NORMAN C. PAYSON, M.D.
Norman C. Payson, M.D., age 46, has been
President and Chief Executive Officer and a
director of the Company since 1985. He was a
practicing physician and has been extensively
involved in HMOs since 1975. Since 1980, Dr.
Payson's principal occupation has been in health
care and HMO management. ......................... 2,466,380(5) 7.8%
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OF
COMMON STOCK
OWNED
BENEFICIALLY
TO ALL
NUMBER OF SHARES OUTSTANDING
NAME, AGE, POSITIONS WITH COMPANY OF COMMON STOCK SHARES OF
AND SUBSIDIARIES, AND PRINCIPAL OWNED BENEFICIALLY AS OF COMMON STOCK
OCCUPATION DURING PAST FIVE YEARS(1) MARCH 21, 1995(2) (31,331,347)
- -------------------------------------------------- ------------------------- ----------------
<S> <C> <C>
CLASS II DIRECTORS -- TERM EXPIRING AT THE 1997 ANNUAL MEETING
DANIEL F. EUBANK, M.D.
Daniel F. Eubank, M.D., age 47, has been a
director of the Company since 1985. Since July
1994, Dr. Eubank has been the Director of NH
Dartmouth Family Practice Residency and has also
been employed by Capitol Region Health Services
Corp. Dr. Eubank was a Partner in Concord Family
Medicine from 1983 to 1995. He is board certified
in family medicine and has practiced for 15 years
in the Concord, New Hampshire area................ 18,574(3) *
DAVID W. SCHALL, M.D.
David W. Schall, M.D., age 51, has been a
director of the Company since September 1989 and
the President of Healthsource Maine, Inc. since
1986. Since January 1994, Dr. Schall has been
employed as President, Chief Executive Officer and
a Director of Bowdoin Medical Group and as
Managing Partner of Bowdoin Medical Associates. He
is board certified in family medicine and has
practiced for 23 years in Brunswick, Maine........ 22,500(3) *
<FN>
- ---------------
* Less than 1%.
(1) Directorships of majority-owned subsidiaries are omitted.
(2) Includes shares owned by spouses and minor children of directors and shares
held or owned by custodians for the benefit of such minors, as to which
beneficial ownership may be disclaimed.
(3) Includes 22,500 shares of Company Common Stock issuable upon exercise of
options to each of Drs., Baron, Leipold and Schall, 18,500 shares issuable
upon exercise of options to Dr. Eubank, 12,000 shares issuable upon exercise
of options to Dr. Cathcart and 7,500 shares issuable upon exercise of
options to each of Drs. Bagan and Bilbro. All such options are exercisable
within 60 days and have been granted pursuant to the Healthsource, Inc. 1992
Director Stock Option Plan.
(4) Includes 40,000 shares of Company Common Stock issuable upon exercise of
options exercisable within 60 days to Dr. Middleton.
(5) Includes 450,000 shares of Company Common Stock issuable upon exercise of
options exercisable within 60 days to Dr. Payson.
</TABLE>
B. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Background
This report provides information regarding the compensation and benefits
provided to the Company's Chief Executive Officer and the three other most
highly compensated executive officers (the "named executive officers"). The
Compensation Committee determines the compensation of the Chief Executive
Officer and sets policies for, reviews and approves the recommendations of,
management with respect to the
6
<PAGE> 9
compensation awarded to other corporate officers (including the other named
executive officers), including decisions about base salary, annual bonuses and
awards under the Company's 1994 Stock Option Plan.
In 1994, the Compensation Committee concluded a full review of the
Company's executive compensation program and received a comprehensive report
from independent compensation consultants assessing the competitiveness of the
Company's compensation program by comparing it to other leading,
growth-oriented, managed care organizations of a similar business profile. The
Compensation Committee believes that these companies represent the Company's
most direct competitors for executive talent. They include companies included in
the Value Line Medical Service Index, as well as a number of other health care
services companies deemed comparable, including regional and national HMO
companies, hospital service companies and other healthcare-related companies
(the "Comparable Companies").
The Compensation Committee has adopted the following objectives for the
Company's total compensation program: (i) to attract and retain high quality
employees critical to the continuing success of the Company; (ii) to support a
performance-oriented environment that closely aligns compensation with Company
profitability and contribution to business results; (iii) to reinforce a strong
team orientation; (iv) to motivate and reward achievements in meeting critical
short-term goals and longer term business development; and (v) to provide
competitive total compensation opportunities in line with the practices of other
leading managed care organizations. There are no specific quantitative measures
of corporate performance used either in 1994 or proposed to be used in 1995 for
determining executive officer cash compensation. The Committee determined that,
given the responsibilities of executive officers, it is more suitable for the
CEO to make a subjective appraisal of their individual contributions towards the
Company's progress in meeting certain operating goals for the Company (the
"Goals"). The Goals are a combination of certain business objectives, goals and
plans for the Company which are not purely objective and necessarily involve
many qualitative and subjective issues which the Company considers to be
proprietary in nature. The Committee believes that disclosure of the Goals could
adversely affect the Company. The Committee believes that providing incentives
to executive officers to meet the Goals should maximize shareholder value by
contributing to consistent and sustained growth, control of health care costs
and other expenses, increased market share in existing markets, expansion into
new markets and expansion of the range of managed care services offered by the
Company.
The key elements of the Company's executive compensation program consist of
base salary, annual bonus and long-term stock incentives.
Base Salary
Base salaries are determined by evaluating the responsibilities of the
position, the experience of the individual, the salaries for comparable
positions in the competitive marketplace and the individual's contribution to
the Goals. Base salary levels for the Company's executive officers are generally
positioned at competitive levels for comparable positions with the Comparable
Companies. The Compensation Committee annually reviews each executive officer's
base salary for purposes of assessing whether an adjustment is appropriate. The
Compensation Committee exercises considerable discretion in setting base
salaries within the guidelines discussed above.
Annual Bonus
In 1994, the Company adopted an annual bonus plan which covers officers and
other key executives of the Company. Bonus award opportunities under this plan
are positioned somewhat below the bonus practices of the Comparable Companies.
Annual bonus awards for participants other than the Chief Executive Officer are
reviewed and approved by the Compensation Committee based on the Chief Executive
Officer's subjective appraisal of their individual contributions towards the
Company's progress in meeting the Goals.
7
<PAGE> 10
Long-Term Stock Incentives
Long-term stock incentives are designed to encourage and create significant
ownership of Company stock by key executives, thereby promoting a close identity
of interests between the Company's management and its shareholders. Another
objective of long-term stock incentives is to encourage and reward executives
for long-term strategic management and the enhancement of shareholder value. The
Company's grant practices are designed to provide a larger component of total
compensation through stock incentives than the Comparable Companies.
The Company's 1994 Stock Option Plan provides for the granting of
nonqualified stock options and incentive stock options at the discretion of the
Compensation Committee at the end of each year or early the following year.
Stock options are granted with an exercise price of not less than 110% of the
market price of the Common Stock on the date of grant. The Compensation
Committee has established a philosophy of guideline ranges for determining the
size of grants, based on the executive officer's managerial responsibilities and
contributions to the Company, as well as the practices of the Comparable
Companies. The Chief Executive Officer makes recommendations to the Committee
based on his subjective assessment of each named executive officer's performance
of those responsibilities. The amount of prior option grants is not a factor in
granting options in any year.
CEO Compensation
For 1994, Dr. Payson's base salary was established at $385,000, which was
somewhat below base salary levels paid by the Comparable Companies. As part of
the adoption of the 1994 Stock Option Plan by the Company's shareholders at the
1994 Annual Meeting, Dr. Payson was granted options to purchase 1,000,000 shares
in May 1994 which are exercisable at 130% of the market value on the date of
grant and which vest at the rate of 20% each year over a five year period. The
Committee believes that this option grant will provide a significant incentive
for Dr. Payson to increase the value of the Company's stock over the next
several years and will totally align Dr. Payson's interests with those of the
shareholders. Dr. Payson declined any cash bonus for 1994. In light of the
Company's strong performance during 1994 relative to shareholder value, net
income and HMO membership growth, as well as the Company's successful
acquisitions of Healthsource Maine, Healthsource North Carolina and Patients'
Choice and the negotiation of an agreement to acquire the group health business
of Provident, and in order to enhance Dr. Payson's incentive to increase
shareholder value over the next several years, the Compensation Committee on
February 21, 1995 awarded Dr. Payson options to purchase 100,000 shares under
the 1994 Stock Option Plan which are exercisable at 110% of the market value on
the date of grant ($45.65) and vest at the rate of 20% each year over a five
year period. The option grants to Dr. Payson were not based upon any specific
quantitative formula or information from the Comparable Companies.
Compliance with Internal Revenue Code Section 162(m)
It is anticipated that in 1995, all compensation to the named executive
officers will be fully deductible under Section 162(m) of the Internal Revenue
Code and therefore the Committee determined that a policy with respect to
qualifying compensation paid to executive officers for deductibility is not
necessary.
Paul D. Baron, M.D. (Chairman)
Merwyn Bagan, M.D., M.P.H.
Robert A. Leipold, M.D.
8
<PAGE> 11
C. PERFORMANCE GRAPH
The following performance graph shows the Company's cumulative total
shareholder return on its Common Stock as compared to the Standard & Poor's
Mid-Cap 400 Index and the Value Line Medical Services Industry Index ("MSI
Index"). The Russell 2000 Index also appears in the performance graph as such
Index was used in prior years for comparative purposes. The graph assumes a $100
investment on December 29, 1989 in Company Common Stock, the Standard & Poor's
Mid-Cap 400 Index and the MSI Index. The cumulative total returns shown assume
reinvestment of dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
HEALTHSOURCE, S&P MIDCAP AND VALUE LINE'S MEDICAL SERVICES INDEX
(PERFORMANCE RESULTS THROUGH 12/31/94)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD MEDICAL
(FISCAL YEAR COVERED) HEALTHSOURCE S&P MIDCAP SERVICES RUSSELL 2000
<S> <C> <C> <C> <C>
1989 100.00 100.00 100.00 100.00
1990 115.79 94.88 109.79 80.49
1991 191.23 142.42 171.42 117.56
1992 402.63 159.38 196.70 139.21
1993 581.58 176.39 230.90 165.52
1994 860.53 170.97 257.55 162.24
</TABLE>
Source: Value Line, Inc.
The Company has elected to use the Standard & Poor's Midcap 400 Index
beginning for 1994 for comparative purposes in lieu of the Russell 2000 Index.
Such index is deemed more appropriate for comparative purposes due to the
increase in the Company's market capitalization and the Company's listing on the
New York Stock Exchange.
9
<PAGE> 12
D. EXECUTIVE COMPENSATION
Summary Compensation Table. The following Summary Compensation Table sets
forth for the fiscal years ended December 31, 1994, 1993 and 1992 information as
to the total compensation received by each of the Chief Executive Officer and
the four highest paid executive officers who received total compensation in
excess of $100,000 in all capacities.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------------- ------------
NAME AND OTHER ANNUAL STOCK
PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION OPTIONS
- ---------------------------------- ---- --------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Norman C. Payson, M.D............. 1994 $ 387,604 -0- $ 10,000(2) 1,100,000(3)
President, Chief Executive Officer 1993 $ 419,964 -0- $ 10,000(2) 100,000
and Director 1992 $ 377,000 -0- $ 10,000(2) 100,000
Sally W. Crawford................. 1994 $ 289,530 $28,500 $ 10,000(2) 50,000
Chief Operating Officer 1993 $ 250,000 -0- $ 10,000(2) 30,000
1992 $ 210,000 -0- $ 10,000(2) 45,000
Charles M. Schneider.............. 1994 $ 210,865 $21,500 -0- 75,000(4)
Executive Vice President 1993 $ 175,000 -0- -0- 30,000
1992 $ 122,920 -0- -0- 16,000
Thomas M. Congoran................ 1994 $ 164,808 $16,000 -0- 20,000
Chief Financial Officer 1993 $ 150,000 -0- -0- 10,000
1992 $ 137,500 -0- -0- 16,000
David A. Jensen................... 1994 $ 104,297 -0- -0- -0-
President, Healthsource 1993 $ 245,000 -0- -0- 10,000
Management, Inc.(5) 1992 $ 241,635 -0- -0- 16,000
- ---------------
<FN>
(1) Includes amounts deferred pursuant to the Company's 401(k) Plan.
(2) Compensation paid to each of Dr. Payson and Ms. Crawford, part of which was
used to defray automobile and other business expenses.
(3) Includes options to purchase 1,000,000 shares granted to Dr. Payson in May
1994 as part of the adoption of the 1994 Stock Option Plan by shareholders
at the 1994 Annual Meeting of Shareholders.
(4) Includes options to purchase 25,000 shares of the Company's Common Stock
granted in connection with Mr. Schneider's relocation to Chattanooga,
Tennessee as part of the Provident transaction.
(5) Mr. Jensen terminated his employment with the Company in April, 1994.
</TABLE>
Stock Option Plans. The Company's 1991 Non-Qualified Stock Option Plan
(the "1991 Plan") authorizes the Company, upon recommendation of the
Compensation Committee, to grant options to purchase a total of 1,200,000 shares
of Common Stock, to selected officers and other key employees of the Company and
its subsidiaries. Pursuant to the 1991 Plan, the optionee generally may exercise
the option only during his/her employment with the Company. No option is
exercisable, however, after 10 years from the date on which it is granted. The
exercise price of the options is set at 110% of the fair market value of the
underlying shares of Common Stock on the date of grant. The options are
exercisable only for cash and are not transferable, except upon death. As of
March 21, 1995, there were outstanding to employees of the Company options to
purchase a total of 1,020,500 shares of Common Stock and 6,500 shares remain
available for grant.
On May 11, 1994 the shareholders of the Company approved the Company's 1994
Stock Option Plan (the "1994 Plan"). Options granted under the 1994 Plan may be
options which are either qualified as Incentive Stock Options under Section 422
of the Internal Revenue Code ("ISOs") or non-qualified
10
<PAGE> 13
thereunder. The 1994 Plan provides for the grant of options to purchase
1,000,000 shares by Dr. Payson, plus a formula amount of stock equal to 1 1/2%
of the outstanding Common Stock of the Company on the prior December 31, for
each fiscal year. Any options not granted in a given year may be carried forward
and granted in future years. The maximum number of options permitted to be
qualified during the life of the 1994 Plan as ISOs is 1,000,000. The 1994 Plan
provides for a term of five years, after which no options may be granted. The
optionee may generally exercise an option only during his period of employment
with the Company and within 30 days of termination of employment, except in the
case of termination of employment due to death or disability, in which case the
options may be exercised pursuant to their terms without regard to vesting
requirements. The option price may not be less than 110% (130% for the initial
option grant to Dr. Payson) of the fair market value of the Common Stock on the
date of grant and no option is exercisable after the expiration of ten years
from the date it is granted.
Shown in the table below is information on stock options granted to the
President and Chief Executive Officer and to the three named executive officers
shown in the Summary Compensation Table who received options to purchase Company
Common Stock for fiscal year 1994.
OPTION GRANTS FOR FISCAL YEAR 1994
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OF OPTIONS
SHARES GRANTED TO
UNDERLYING EMPLOYEES IN
OPTIONS 1994 GRANT DATE EXERCISE EXPIRATION GRANT DATE
NAME GRANTED (1,655,500) CLOSING PRICE PRICE DATE PRESENT VALUE(5)
- ------------------------ ----------- ------------- ------------- -------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Norman C. Payson, M.D... 1,000,000(1) 66% $ 30.50 $39.65(1) 5/11/2004 $ 11,390,000
President, Chief 100,000(2) 6% $ 41.50 $45.65(4) 2/21/2005 $ 1,797,000
Executive Officer
and Director
Sally W. Crawford....... 50,000(2) 3% $ 41.50 $45.65(4) 2/21/2005 $ 898,500
Chief Operating Officer
Charles M. Schneider.... 75,000( )(3) 3% $ 41.50 $45.65(4) 2/21/2005 $ 1,347,750
Executive Vice President
Thomas M. Congoran...... 20,000(2) 1% $ 41.50 $45.65(4) 2/21/2005 $ 359,400
Chief Financial Officer
</TABLE>
- ---------------
(1) Exercise price is 130% of the closing price for the Company's Common Stock
at May 11, 1994, the date of grant. The option becomes exercisable at the
rate of 200,000 shares per year beginning May 11, 1995.
(2) Options are exercisable 20% per year over a five year period.
(3) Includes options to purchase 25,000 shares of the Company's Common Stock
granted in connection with Mr. Schneider's relocation to Chattanooga,
Tennessee as part of the Provident transaction.
(4) Exercise price is 110% of the closing price for the Company's Common Stock
at February 21, 1995, the date of grant.
(5) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. Assumptions made for the named executives are:
expected option term of six years; risk-free interest rate of 7%; annual
dividend rate of zero; and annualized volatility of 33.51%.
11
<PAGE> 14
Shown in the table below, with respect to the President and Chief Executive
Officer and the four named executive officers shown in the Summary Compensation
Table, are exercised and unexercised options to purchase the Company's Common
Stock granted in fiscal year 1994 and prior years pursuant to the Company stock
option plans.
AGGREGATE OPTION EXERCISES IN FISCAL YEAR 1994
AND 1994 FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SHARES UNDERLYING IN-THE-MONEY OPTIONS
UNEXERCISED OPTIONS AT DECEMBER 31, 1994(1)(2)
SHARES AT DECEMBER 31, 1994(1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Norman C. Payson, M.D......... -- -- 150,000 1,300,000 $5,113,500 $4,263,000
President, Chief Executive
Officer and Director
Sally W. Crawford............. 57,000(3) $ 883,725 67,500 75,000 $2,301,075 $1,207,500
Chief Operating Officer
Charles M. Schneider.......... -- -- -- 46,000 -- $ 632,140
Executive Vice President
Thomas M. Congoran............ 12,000(3) $ 257,613 30,000 26,000 $1,023,900 $ 422,340
Chief Financial Officer
David A. Jensen(4)............ 125,000 $2,980,500 -- -- $ -- $ --
President, Healthsource
Management, Inc.
- ---------------
(1) Does not include options granted in 1995.
(2) Based upon the closing price of $40.88 for the Company's Common Stock at
December 30, 1994.
(3) Ms. Crawford and Mr. Congoran sold 30,000 shares and 10,000 shares,
respectively.
(4) Mr. Jensen terminated his employment with the Company in April, 1994.
</TABLE>
Employment Agreements. In January 1986, Dr. Payson entered into an
employment agreement with the Company, which provides for his employment through
December 31, 1995 at an annual salary which is subject to periodic review. Dr.
Payson's base salary for 1994 was fixed at $385,000. Dr. Payson's base salary
for 1995 is fixed at $485,000 and he will be eligible to receive a bonus of up
to 30%. The Company has agreed to nominate Dr. Payson for election as a director
for the duration of the agreement. Dr. Payson is permitted to receive up to
$20,000 per year in honoraria or consulting fees from third parties. Dr. Payson
has accepted no such honoraria or fees in 1994. The agreement is terminable by
the Company only for specified and limited cause.
E. COMPENSATION OF DIRECTORS
Each director of the Company (except Drs. Payson and Middleton), currently
receives a $25,000 annual director's fee plus $1,000 per Board meeting and $750
($1,000 beginning in 1995) for each committee meeting attended. The Company also
reimburses the directors for their travel expenses and Drs. Schall, Cathcart and
Bilbro for lost practice time in travel to meetings.
Pursuant to the Healthsource, Inc. 1992 Director Stock Option Plan (the
"Director Plan"), each non-employee director of the Company receives annually,
at no cost, options to purchase 7,500 shares of the Common Stock of the Company
after each annual meeting of shareholders beginning with the 1992 Annual Meeting
and ending with the 1996 Annual Meeting. Each option is exercisable for a period
of five (5) years and vests and becomes exercisable one year after the date of
grant of the option. In 1994, Drs. Bagan, Baron, Bilbro, Cathcart, Eubank and
Leipold received options under the Director Plan. The current directors of the
Company who are eligible to receive options under the Director Plan are: Drs.
Bagan, Baron, Bilbro, Cathcart, Eubank and Leipold. Assuming that each such
director remains a director through and including the 1996
12
<PAGE> 15
Annual Meeting of Shareholders, Directors Bagan, Baron, Eubank and Leipold each
will have received options to purchase a total of 37,500 shares, Director
Cathcart would have received options to purchase 30,000 shares, Director Bilbro
would have received options to purchase 22,500 shares and Director Schall would
have received options to purchase 15,000 shares.
The exercise price of options granted pursuant to the Director Plan is set
at one hundred ten percent (110%) of the fair market value of the shares on the
date of grant and no option may be exercised after the expiration of five years
from the date of grant. Vested options are exercisable provided that the option
holder remains a director of the Company. In the event of the death, retirement
or permanent and total disability of a director, such director may exercise
vested options through the date of expiration of the option. In the event of
termination of a director's service on the Board of Directors for other reasons,
such director's options will terminate within 30 days of the date of termination
of service and all then outstanding options that have vested will be exercisable
during such period.
F. CERTAIN TRANSACTIONS BETWEEN MANAGEMENT AND THE COMPANY AND ITS SUBSIDIARIES
Dr. Middleton. During 1994 and through January 1995, Dr. Middleton served
as the Medical Director of Healthsource South Carolina ("HSC") pursuant to an
employment agreement entered into in July 1991. He received $171,475 as salary
from HSC during 1994 for his services in that capacity. Through January 1994,
Dr. Middleton also served as a consultant to Healthsource Management, Inc.
("HMI") pursuant to an independent contractor agreement. In February 1994, Dr.
Middleton entered into a five year employment agreement with the Company
pursuant to which he provided consulting services to the Company similar to
those previously provided to HMI. During 1994, he received $60,307 under those
agreements. In January 1995, Dr. Middleton ceased acting as Medical Director of
HSC and entered into a new five year employment agreement with the Company under
which he serves as President of Healthsource South, Inc. at an annual salary of
$285,000, plus a stipend of $35,000 in lieu of directors' fees, and will be
eligible to receive a performance bonus. Under this agreement, Dr. Middleton
will conduct development activities for the Company throughout the southern
United States. The employment agreement is terminable by the Company or Dr.
Middleton without cause on 60 days' notice and provides for a severance benefit
of $300,000 plus two months' base pay for each year completed under the
agreement, up to a maximum of 12 months, in the event of termination without
cause by the Company, or $500,000 plus two months' base pay for each year under
the agreement, up to a maximum of 12 months, in the event of a change of control
of the Company. He is also eligible to receive stock options under the Company's
employee stock option plans and was granted options to purchase 50,000 shares of
the Company's Common Stock on February 21, 1995 at an exercise price of $45.65
per share vesting at 20% per year over a five year period.
Dr. Schall. On January 13, 1994, the Company acquired the 60% interest in
Healthsource Maine, Inc. ("HM") which it did not previously own through a merger
pursuant to which the holders of HM Common Stock received $9.512 in cash for
each share of HM Common Stock. Dr. Schall received $703,888 in exchange for his
shares of HM Common Stock in the merger. He also entered into an employment
agreement with HM which provides for a three year term at an annual salary of
$50,000. Dr. Schall received $50,673 as salary under his employment agreement
during 1994. The agreement may be terminated at any time with cause or without
cause upon six months notice.
Dr. Bilbro. On March 31, 1994, the Company acquired the 70% interest in
CMS (currently named Healthsource North Carolina Health Plans, Inc.) which it
did not previously own through a merger pursuant to which the holders of CMS
Class A Common Stock received 3.895 shares of Company Common Stock for each CMS
share. Dr. Bilbro received 19,054 shares of Company Common Stock in exchange for
his CMS shares in the merger.
13
<PAGE> 16
Dr. Leipold. The Company is currently discussing with Garrison Medical
Professional Association ("Garrison"), the group of which Dr. Leipold is a
shareholder and practices medicine, the making of a loan to Garrison by the
Company in the amount of $1,500,000 which would be repaid by deductions from
provider fees and would bear interest at the prime rate of interest minus one
percent. The loan would be secured by certain real estate and accounts
receivable of Garrison.
Participating Physician Agreements. Each director of the Company, other
than Drs. Payson, Bagan and Middleton, provides medical services as a
participating physician to one of the Company's HMOs. Each such director's
participating physician agreement conforms with the standard agreements for all
participating physicians in the respective HMOs.
G. MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
There were ten meetings of the Board of Directors held during 1994. All
directors attended at least 75% of the total number of meetings of the Board and
of all committees of the Board on which they serve.
The Audit Committee reviews the examination reports of state and federal
regulatory agencies and the reports of the independent auditors. Directors Baron
and Eubank serve on this committee. The Audit Committee met two times during
1994.
The Compensation Committee determines the compensation of executive
officers and stock options to be granted to employees of the Company. Directors
Bagan, Baron, and Leipold serve on this committee. The Compensation Committee
met three times during 1994.
H. REPORTS OF BENEFICIAL OWNERSHIP
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
the Company's Common Stock, to file with the Securities and Exchange Commission
("SEC") and the New York Stock Exchange ("NYSE") initial reports of ownership
and reports of changes in beneficial ownership of Common Stock and other equity
securities of the Company. Officers, directors and greater than ten percent
shareholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to the
officers, directors and greater than ten percent beneficial owners were complied
with during 1994, other than one late report regarding one gift transaction to
charitable institutions by Dr. Bilbro and one late report regarding two sales
transactions by Dr. Eubank.
II. OTHER MATTERS TO COME BEFORE THE MEETING
At the date of this Proxy Statement, the Board of Directors is unaware of
any other matters which will be presented for action at the Meeting. Should any
such matters be presented, the Proxies grant power to the Proxyholders to vote
the shares represented by the Proxies in the discretion of such Proxyholders. It
is intended that the shares represented by the enclosed Proxy will be voted with
respect to any such matters in a manner as the Proxyholders determine to be in
the best interests of the Company and its shareholders.
14
<PAGE> 17
INDEPENDENT ACCOUNTANTS
The Board of Directors, upon recommendation of the Audit Committee, has
selected Deloitte & Touche as the Company's independent public accountants for
the fiscal year ending December 31, 1995. It is expected that representatives of
Deloitte & Touche will be available at the Meeting and such representatives will
have an opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions.
MISCELLANEOUS
A copy of the Company's Annual Report for the fiscal year ended December
31, 1994 (including financial statements) is being mailed together with this
Proxy Statement to all shareholders. The Annual Report is not to be regarded as
proxy soliciting material, except to the extent specifically incorporated by
reference in this Proxy Statement.
THE COMPANY WILL SUPPLY FREE OF CHARGE TO ANY PERSON SOLICITED BY THE PROXY
STATEMENT, UPON WRITTEN OR ORAL REQUEST THEREFOR, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K INCLUDING THE FINANCIAL STATEMENTS AND THE FINANCIAL
SCHEDULES (EXCLUSIVE OF EXHIBITS) REQUIRED TO BE FILED WITH THE SEC FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1994; SUCH REQUEST MUST BE ADDRESSED TO TRACEY T.
TURNER, INVESTOR RELATIONS, HEALTHSOURCE, INC., TWO COLLEGE PARK DRIVE,
HOOKSETT, NEW HAMPSHIRE 03106, TELEPHONE NUMBER (603) 268-7000.
SHAREHOLDER PROPOSALS
Any proposal by a shareholder of the Company intended to be presented at
the 1996 Annual Meeting of Shareholders of the Company must be received by the
Company at Two College Park Drive, Hooksett, New Hampshire 03106 not later than
November 29, 1995, unless the date of the next Annual Meeting shall be advanced
by more than 30 days before May 9, 1996 or delayed by more than 90 days after
such date. In the event of any such change, the Company will receive shareholder
proposals a reasonable time before the solicitation is made.
NORMAN C. PAYSON, M.D.
President and Chief Executive Officer
15
<PAGE> 18
HEALTHSOURCE, INC.
P
R TWO COLLEGE PARK DRIVE
O
X HOOKSETT, NH 03106
Y
The undersigned shareholder(s) of Healthsource, Inc. hereby appoint(s)
Merwyn Bagan, M.D. and Norman C. Payson, M.D. as Proxies, each with the power
to appoint his substitute, and hereby authorizes them to represent and to vote
and act for the undersigned at the 1995 Annual Meeting of Shareholders of
Healthsource, Inc. to be held on Tuesday, May 9, 1995 at 7:00 p.m. at the
Center of New Hampshire, Holiday Inn, 700 Elm Street, Manchester, New
Hampshire, and any adjournment, continuation, or postponement thereof,
according to the number of votes which the undersigned is now, or may then be,
entitled to cast, hereby revoking any proxies heretofore executed by the
undersigned for such meeting.
All powers may be exercised by both of said Proxies or substitutes
voting or acting or, if only one votes and acts, then by that one. The
undersigned instructs such Proxies or their substitutes to vote as specified
on the reverse side on the proposals set forth in the Proxy Statement.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF HEALTHSOURCE, INC.
/ SEE REVERSE SIDE /
/ X / PLEASE MARK
VOTES AS IN
THIS EXAMPLE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1.
1. ELECTION OF DIRECTORS
CLASS III NOMINEES: Merwyn Bagan, M.D., Paul E. Baron, M.D.,
Francis G. Middleton, M.D.
CLASS II NOMINEE: Robert H. Bilbro, M.D.
FOR WITHHELD
/ / / /
________________________________________________________
(INSTRUCTION: To withhold authority to vote for any individual
nominee write that nominee's name in the space provided above.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
2. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the
meeting.
MARK HERE / /
FOR ADDRESS
CHANGE AND
NOTE AT LEFT
Please sign exactly as name(s) appear(s) hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign the full corporate name by President or other authorized corporate
officer. If a partnership please, sign the partnership name by authorized
person(s).
Signature: ___________________________________________ Date __________________
Signature: ___________________________________________ Date __________________
