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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT (PURSUANT TO SECTION 13(E)(1) OF
THE SECURITIES EXCHANGE ACT OF 1934)
(AMENDMENT NO. )
HEALTHSOURCE, INC.
(NAME OF ISSUER)
HEALTHSOURCE, INC.
(NAME OF PERSON(S) FILING STATEMENT)
5% CONVERTIBLE SUBORDINATED NOTES
DUE 2003 OF
HEALTHSOURCE, INC.
(TITLE OF CLASS OF SECURITIES)
42221AC8
42221EAA2
(CUSIP NUMBER OF CLASS OF SECURITIES)
DAVID C. KOPP, ESQ.
HEALTHSOURCE, INC.
TWO COLLEGE PARK DRIVE
HOOKSETT, NEW HAMPSHIRE 03106
(603) 268-7000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS OF BEHALF OF PERSON(S) FILING STATEMENT)
Copies to:
DAVID G. POMMERENING, ESQ.
O'MELVENY & MYERS LLP
555 13TH STREET, N.W., SUITE 500 WEST
WASHINGTON, D.C. 20004
(202) 383-5300
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
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$249,388,951.39 $49,877.79
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* The transaction value shown is only for the purpose of calculating the filing
fee. The amount shown reflects the cost of purchasing $246,175,000 principal
amount of Notes at the purchase price (101% of the principal amount of the
Notes, plus accrued and unpaid interest up to but excluding the date of
payment) as of September 23, 1997 (the expected date of payment). The amount
of the filing fee is calculated in accordance with Section 13(e)(3) of the
Securities Exchange Act of 1934, as amended.
[ ] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE 0-11(A)(2)
AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM
OR SCHEDULE AND THE DATE OF ITS FILING.
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Amount previously paid: Filing party:
Form or registration no.: Date filed:
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Instruction. When submitting this statement in paper format, ten copies of this
statement, including all exhibits, shall be filed with the Commission.
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INTRODUCTORY STATEMENT
This Schedule 13E-4 relates to a change of control offer (the "Offer") by
Healthsource, Inc., a New Hampshire corporation ("Healthsource"), to purchase
for cash, on the terms and subject to the conditions set forth in the attached
Change of Control Notice and Offer to Purchase dated July 25, 1997 (the "Offer
to Purchase") and the related Letter of Transmittal (the "Letter of
Transmittal"), all of the outstanding 5% Convertible Subordinated Notes Due 2003
of Healthsource (the "Notes"). Prior to the Effective Time (as defined in the
Offer to Purchase), the Notes are convertible into shares of common stock, par
value $0.10 per share, of Healthsource (the "Common Stock"), at a conversion
price of $46.965 per share of Common Stock. Copies of the Offer to Purchase and
the Letter of Transmittal are filed as exhibits (a)(1) and (a)(2) hereto.
ITEM 1. SECURITY AND ISSUER.
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(a) The issuer of the Notes is Healthsource. The address of Healthsource's principal
executive office is Two College Park Drive, Hooksett, New Hampshire 03106.
(b) The securities which are the subject of the Offer are the 5% Convertible
Subordinated Notes Due 2003 issued by Healthsource. The Notes are convertible into
shares of Common Stock at a conversion price of $46.965 per share of Common Stock.
As of July 25, 1997, there was $246,175,000 aggregate principal amount of Notes
outstanding. The Offer is for any and all Notes, in denominations of $1,000 or
integral multiples thereof, at 101% of the principal amount of the Notes, plus
accrued and unpaid interest up to but excluding the date of payment. To the best
knowledge of Healthsource, no Notes are being purchased from any officer, director
or affiliate of Healthsource.
(c) The information set forth in the section of the Offer to Purchase entitled "Market
Price Information" is incorporated herein by reference.
(d) Healthsource is filing this statement. The address of Healthsource is set forth in
Item 1(a).
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ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
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(a)-(b) The information set forth in the section of the Offer to Purchase entitled "Sources
and Amount of Funds" is incorporated herein by reference.
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ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
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The information set forth in the section of the Offer to Purchase entitled "The
Offer -- Purpose and Effects of the Offer" is incorporated herein by reference.
Upon purchase, the Notes will cease to be outstanding and will be delivered to The
Bank of New York, as trustee, for cancellation immediately after such purchase.
(a)-(j) The information set forth in the sections of the Offer to Purchase entitled "The
Offer -- General," "Recent and Future Developments -- The Tender Offer" and
"Available Information" is incorporated herein by reference.
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ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
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Not applicable.
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ITEM 5. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
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The information set forth in the cover page to the Offer to Purchase and the
sections of the Offer to Purchase entitled "The Offer -- General," "The
Offer -- Purpose and Effects of the Offer" and "Recent and Future Developments" is
incorporated herein by reference.
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ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
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The information set forth in the section of the Offer to Purchase entitled "The
Depositary and the Information Agent" is incorporated herein by reference.
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ITEM 7. FINANCIAL INFORMATION.
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(a)-(b) The information set forth in the section of the Offer to Purchase entitled
"Selected Financial Data" is incorporated herein by reference.
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ITEM 8. ADDITIONAL INFORMATION.
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(a) None.
(b) None, except for compliance with the Exchange Act and the rules and regulations
promulgated thereunder and compliance with applicable requirements of state
securities or "blue sky" laws.
(c) None.
(d) None.
(e) Reference is hereby made to the exhibits hereto which are incorporated in their
entirety herein by reference.
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
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(a) Exhibit (a)(1) Change of Control Notice and Offer to Purchase, dated July 25, 1997.
Exhibit (a)(2) Letter of Transmittal.
Exhibit (a)(3) Notice of Guaranteed Delivery.
Exhibit (a)(4) Letter to clients.
Exhibit (a)(5) Letter to brokers, dealers, commercial banks, trust companies and
other nominees.
Exhibit (a)(6) Notice published in The Wall Street Journal on July 25, 1997.
(b) Not applicable.
(c)(1) Indenture, dated as of March 6, 1996, between Healthsource, as issuer, and The Bank
of New York, as trustee (incorporated by reference to Exhibit 4.1 to Healthsource's
Form S-3 Registration Statement No. 333-05223 dated June 4, 1996).
(c)(2) First Supplemental Indenture, dated as of June 3, 1996, between Healthsource, as
issuer, and The Bank of New York, as trustee.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
HEALTHSOURCE, INC.
By: /s/ BARRY R. MCHALE
------------------------------------
Name: Barry R. McHale
Title: Vice President and Assistant
Treasurer
Dated: July 25, 1997
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EXHIBIT INDEX
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EXHIBIT DESCRIPTION
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(a)(1) -- Change of Control Notice and Offer to Purchase, dated July 25, 1997.
(a)(2) -- Letter of Transmittal.
(a)(3) -- Notice of Guaranteed Delivery.
(a)(4) -- Letter to clients.
(a)(5) -- Letter to brokers, dealers, commercial banks, trust companies and other nominees.
(a)(6) -- Notice published in The Wall Street Journal on July 25, 1997.
(c)(2) -- First Supplemental Indenture, dated as of June 3, 1996.
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Exhibit(a)(1)
CHANGE OF CONTROL NOTICE
AND OFFER TO PURCHASE
HEALTHSOURCE, INC.
OFFER TO PURCHASE
FOR CASH ANY AND ALL OF THE OUTSTANDING
5% CONVERTIBLE SUBORDINATED NOTES DUE 2003
OF HEALTHSOURCE, INC.
AT
101% OF THE PRINCIPAL AMOUNT
OF THE NOTES
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THIS CHANGE OF CONTROL NOTICE
AND OFFER TO PURCHASE, THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON SEPTEMBER 18, 1997, AND MAY NOT BE EXTENDED EXCEPT AS
REQUIRED BY APPLICABLE LAW (THE "EXPIRATION DATE"). NOTES TENDERED IN THE OFFER
MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
Healthsource, Inc. ("Healthsource") hereby offers (the "Offer") to purchase
for cash at the Purchase Price (as defined below), upon the terms and subject to
the conditions set forth in this Change of Control Notice and Offer to Purchase
(this "Offer to Purchase") and in the accompanying Letter of Transmittal (the
"Letter of Transmittal"), any and all of the outstanding 5% Convertible
Subordinated Notes due 2003 of Healthsource (the "Notes"). The "Purchase Price"
equals 101% of the principal amount of the Notes, plus accrued and unpaid
interest up to but excluding September 23, 1997 (the "Payment Date"), or
$1,013.06 per $1,000 principal amount of Notes, unless the Expiration Date is
extended as set forth herein under "The Offer -- Expiration Date; Extensions;
Amendments; Termination." The Purchase Price assumes that Healthsource pays in
full the interest due on the Notes on September 1, 1997 in accordance with the
terms of the Indenture (as defined below). Unless Healthsource fails to pay the
Purchase Price, any Notes properly tendered pursuant to the Offer and accepted
for payment will cease to accrue interest on the Payment Date. Any Notes not
tendered in the Offer (or tendered and withdrawn prior to the Expiration Date)
will remain obligations of Healthsource and will continue to accrue interest and
have all of the benefits of the Indenture. Healthsource may at its option elect
to defease any Notes not tendered in the Offer in accordance with the terms of
the Indenture.
Any holder of Notes (a "Holder") desiring to tender all or any portion of
such Holder's Notes must comply with the procedures for tendering Notes set
forth herein in "Procedures for Tendering Notes" and in the Letter of
Transmittal. Tenders of Notes may be withdrawn at any time prior to the
Expiration Date. In the event of a withdrawal of Notes, the Notes so withdrawn
will be returned to the Holder promptly.
The Offer is being made pursuant to the Indenture, dated as of March 6,
1996, as amended by a First Supplemental Indenture, dated as of June 3, 1996
(the "Indenture"), between Healthsource and The Bank of New York, as trustee
(the "Trustee"), which provides that, following a Change of Control (as defined
below), each Holder will have the right, at such Holder's option, to require
Healthsource to repurchase in whole or in part such Holder's Notes at the
Purchase Price (a "Change of Control Right"). A Change of Control occurred on
June 25, 1997, as a result of the consummation of the tender offer (the "Equity
Tender Offer") by CHC Acquisition Corp., a New Hampshire corporation
("Acquisition") and an indirect wholly owned subsidiary of CIGNA Corporation, a
Delaware corporation ("CIGNA"), pursuant to which Acquisition purchased
approximately 98% of the issued and outstanding shares of common stock, par
value $0.10 per share, of Healthsource (the "Common Stock"), for a purchase
price of $21.75 in cash per share of Common Stock.
(text continued on next page)
THE DATE OF THIS CHANGE OF CONTROL NOTICE AND OFFER TO PURCHASE IS JULY 25, 1997
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(text continued from prior page)
The Equity Tender Offer was made pursuant to an Agreement and Plan of
Merger, dated as of February 27, 1997, by and among Healthsource, CIGNA and
Acquisition (the "Merger Agreement"), which provided for the merger (the
"Merger") of Acquisition with and into Healthsource. At the effective time (the
"Effective Time") of the Merger, each outstanding share of Common Stock will be
converted into the right to receive the purchase price per share of Common Stock
paid in the Equity Tender Offer. It is currently anticipated that the Effective
Time will be on or about July 31, 1997.
Prior to the Effective Time, the Notes are convertible into shares of
Common Stock at a conversion price of $46.965 per share of Common Stock. Any
shares of Common Stock issued upon a conversion of Notes prior to the Effective
Time will be converted in the Merger into the right to receive $21.75 in cash
per share of Common Stock. The Indenture provides that from and after the
Effective Time the Notes will no longer be convertible into shares of Common
Stock; instead, the Notes will be convertible, at the option of the Holder, into
the amount of cash that the Holder would have received in the Merger had such
Holder converted the Notes into shares of Common Stock immediately prior to the
Effective Time. Therefore, based on the current conversion price of $46.965 per
share, each $1,000 principal amount of Notes that was convertible into
approximately 21.29 shares of Common stock immediately prior to the Effective
Time will be convertible into approximately $463.06 in cash from and after the
Effective Time. Under the terms of the Indenture, Healthsource and the Trustee
must execute a supplemental indenture evidencing the effect of the Merger on the
Notes.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment) and applicable law, Healthsource will purchase, by accepting for
payment, and will pay for all Notes validly tendered (and not properly
withdrawn) pursuant to the Offer, promptly after the Expiration Date, such
payment to be made by the deposit of immediately available funds by Healthsource
with IBJ Schroder Bank & Trust Company (the "Depositary"), which will act as
agent for tendering Holders for the purpose of receiving payment from
Healthsource and transmitting such payment to tendering Holders.
No person has been authorized to give any information or to make any
representations other than those contained in this Offer to Purchase and, if
given or made, such information or representations must not be relied upon as
having been authorized. This Offer to Purchase and related documents do not
constitute an offer to buy or the solicitation of an offer to sell securities in
any circumstances in which such offer or solicitation is unlawful. The delivery
of this Offer to Purchase shall not, under any circumstances, create any
implication that the information contained herein is current as of any time
subsequent to the date of such information.
Healthsource makes no recommendation as to whether or not Holders should
exercise their Change of Control Right and tender Notes pursuant to the Offer.
Any questions or requests for assistance or for additional copies of this
Offer to Purchase or related documents may be directed to Georgeson & Company
Inc., the information agent (the "Information Agent") for the Offer, at one of
its telephone numbers set forth on the back cover page hereof. Any beneficial
owner owning interests in Notes may also contact such beneficial owner's broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
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AVAILABLE INFORMATION
Healthsource is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information concerning Healthsource can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Office at Seven World Trade Center, Suite 1300, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material also can be obtained, at prescribed
rates, from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission maintains a site on the Internet's
World Wide Web at http://www.sec.gov. that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission, including Healthsource. The Notes are listed
and traded on the New York Stock Exchange ("NYSE") and such reports, proxy
statements and other information concerning Healthsource may also be inspected
at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
Following the Effective Time, the Notes will be delisted from the NYSE and
application will be made pursuant to the Exchange Act to terminate the
registration of the Notes and other securities of Healthsource under the
Exchange Act. Such termination will substantially reduce the information
required to be furnished by Healthsource to the Commission.
This Offer to Purchase constitutes a part of an Issuer Tender Offer
Statement on Schedule 13E-4 (the "Schedule 13E-4") filed with the Commission by
Healthsource pursuant to Section 13(e) of the Exchange Act and the rules and
regulations promulgated thereunder. The Schedule 13E-4 and all exhibits thereto
are incorporated in this Offer to Purchase by reference.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
This Offer to Purchase, including the information incorporated by reference
herein, contains certain forward looking statements with respect to the
financial condition, results of operations and businesses of Healthsource. See
"Certain Information Concerning Healthsource and CIGNA." These forward looking
statements involve certain risks and uncertainties. Factors that may cause
actual results to differ materially from those contemplated by such forward
looking statements include, among others, the following possibilities: (1)
heightened competition, including specifically the intensification of price
competition, the entry of new competitors and the formation of new products by
new and existing competitors; (2) adverse state and federal legislation and
regulation, including limitations on premium levels, increases in minimum
capital and reserves and other financial viability requirements, prohibition or
limitation of capitated arrangements or provider financial incentives, benefit
mandates (including mandatory length of stay and emergency room coverage),
limitations on the ability to manage care and utilization and any willing
provider or pharmacy laws; (3) increases in medical costs, including increases
in utilization and costs of medical services and the effects of actions by
competitors or groups of providers; (4) termination of provider contracts or
renegotiation thereof at less cost-effective rates or terms of payment; (5)
failure to obtain new customers, retain existing customers or reductions in
force by existing customers; (6) significant litigation matters; and (7) that
the effects of the Merger could be different than anticipated.
Many of the foregoing factors have been discussed in Healthsource's prior
filings with the Commission. The foregoing review of factors pursuant to the
Private Securities Litigation Reform Act of 1995 should not be construed as
exhaustive.
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TABLE OF CONTENTS
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PAGE
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AVAILABLE INFORMATION................................................................. iii
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS....................................... iii
THE OFFER............................................................................. 1
General............................................................................. 1
Purpose and Effects of the Offer.................................................... 1
Expiration Date; Extensions; Amendments; Termination................................ 2
Acceptance for Payment.............................................................. 2
PROCEDURES FOR TENDERING NOTES........................................................ 3
Tendering Notes..................................................................... 3
Guaranteed Delivery Procedures...................................................... 5
Withdrawal Rights................................................................... 6
CERTAIN INFORMATION CONCERNING
HEALTHSOURCE AND CIGNA................................................................ 7
Healthsource........................................................................ 7
CIGNA; Relationship between CIGNA and Healthsource.................................. 7
CERTAIN RECENT AND FUTURE DEVELOPMENTS................................................ 7
The Tender Offer.................................................................... 7
The Merger.......................................................................... 8
SOURCES AND AMOUNT OF FUNDS........................................................... 8
MARKET PRICE INFORMATION.............................................................. 9
The Notes........................................................................... 9
Shares of Common Stock.............................................................. 9
SELECTED FINANCIAL DATA............................................................... 10
CERTAIN FEDERAL INCOME TAX CONSEQUENCES............................................... 10
General............................................................................. 10
Sale of Notes Pursuant to the Offer................................................. 10
THE DEPOSITARY AND THE INFORMATION AGENT.............................................. 11
MISCELLANEOUS......................................................................... 11
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THE OFFER
GENERAL
Healthsource hereby offers, upon the terms and subject to the conditions
set forth in this Offer to Purchase, to purchase for cash at the Purchase Price
($1,013.06 per $1,000 principal amount of Notes) any and all Notes that are
properly tendered (and not properly withdrawn), pursuant to the terms and
conditions set forth herein, prior to the Expiration Date. Healthsource will
accept only tenders of Notes or a portion thereof which are in an amount equal
to $1,000 principal amount of Notes or integral multiples thereof. Tenders of
Notes may be withdrawn at any time prior to the Expiration Date. In the event of
a withdrawal of Notes, the Notes so withdrawn will be returned to the tendering
Holders promptly.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment) and applicable law, Healthsource will purchase, by accepting for
payment, and will pay for, all Notes validly tendered (and not properly
withdrawn) pursuant to the Offer, on the Payment Date, unless the Expiration
Date is extended as set forth herein under "The Offer -- Expiration Date;
Extensions; Amendments; Termination." Such payment will be made by the deposit
of immediately available funds by Healthsource with the Depositary, which will
act as agent for tendering Holders for the purpose of receiving payment from
Healthsource and transmitting such payment to tendering Holders.
If less than all the principal amount of Notes held by a Holder is tendered
and accepted pursuant to the Offer, Healthsource shall issue, and the Trustee
shall authenticate and deliver to or on the order of the Holder thereof, at the
expense of Healthsource, new Notes of authorized denominations, in a principal
amount equal to the portion of the Notes not tendered or not accepted, as the
case may be, as promptly as practicable after the Expiration Date.
Prior to the Effective Time, a Note may be converted into shares of Common
Stock until, but not after, such Note is properly tendered to the Depositary
unless the tender of such Note is properly withdrawn. Any shares of Common Stock
issued upon a conversion of Notes prior to the Effective Time will be converted
in the Merger into the right to receive $21.75 in cash per share of Common
Stock. The Indenture provides that from and after the Effective Time the Notes
will no longer be convertible into shares of Common Stock; instead, the Notes
will be convertible, at the option of the Holder, into the amount of cash that
the Holder would have received in the Merger had such Holder converted the Notes
into shares of Common Stock immediately prior to the Effective Time. Therefore,
based on the current conversion price of $46.965 per share, each $1,000
principal amount of Notes that was convertible into approximately 21.29 shares
of Common stock immediately prior to the Effective Time will be convertible into
approximately $463.06 in cash from and after the Effective Time. Under the terms
of the Indenture, Healthsource and the Trustee must execute a supplemental
indenture evidencing the effect of the Merger on the Notes.
PURPOSE AND EFFECTS OF THE OFFER
The Offer is being made pursuant to the Indenture, which provides that,
following a Change of Control, each Holder of Notes will have the right, at such
Holder's option, to require Healthsource to repurchase all or a portion of such
Holder's Notes, in integral multiples of $1,000, at a purchase price equal to
101% of the principal amount thereof plus accrued and unpaid interest up to but
excluding the Payment Date. A "Change of Control" is defined in the Indenture as
an event or series of events pursuant to which (i) any "person" or "group" (as
such terms are used in Section 13(d) and 14(d) of the Exchange Act) acquires
"beneficial ownership" (as determined in accordance with Rule 13d-3 under the
Exchange Act), directly or indirectly, of more than 50% of the total voting
stock of Healthsource at an acquisition price less than the conversion price
then in effect with respect to the Notes and (ii) holders of the Common Stock
receive consideration that is not all or substantially all common stock that is
(or upon consummation of or immediately following such event or events shall be)
listed on a United States national securities exchange or approved for quotation
on the NASDAQ National Market or any similar United States system of automated
dissemination of quotations of securities' prices; provided, however, that any
such person or group shall not be deemed to be the beneficial
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owner of, or to beneficially own, any voting stock tendered into a tender offer
until such tendered voting stock is accepted for purchase under the tender
offer.
A "Change of Control" occurred on June 25, 1997 as a result of the
consummation of the Equity Tender Offer, pursuant to which Acquisition purchased
approximately 98% of the outstanding shares of Common Stock for a purchase price
of $21.75 in cash per share of Common Stock. This Offer to Purchase serves as
the Change of Control notice required by Section 3.5(b) of the Indenture.
The Notes purchased in the Offer will cease to be outstanding and will be
delivered to the Trustee for cancellation immediately after such purchase. Any
Notes which remain outstanding after consummation of the Offer will be
convertible into cash at the option of the Holder at a conversion price of
approximately $463.06 for each $1,000 principal amount of Notes, which is the
consideration the Holder would have received in the Merger for each $1,000 in
principal of Notes if such Notes had been converted into Common Stock
immediately prior to the Merger.
Holders of Notes that are not tendered pursuant to the Offer will not have
the right after the Expiration Date to exercise their Change of Control Rights
in respect of such Notes in connection with the Equity Tender Offer and the
Merger. Because the Notes will no longer be convertible into shares of Common
Stock following the Effective Time, the Notes are likely to trade at a discount
compared to current trading prices. In addition, depending upon, among other
things, the amount of Notes outstanding after the consummation of the Offer, the
liquidity of untendered Notes may be adversely affected by the Offer. If there
is a market for such Notes following the Offer, such Notes may also trade at a
discount compared to current trading prices depending on prevailing interest
rates, the market for securities with similar credit features, the performance
of Healthsource and other factors. In addition, following the Effective Time,
the Notes will be delisted from the NYSE. Healthsource may also at its option
elect to defease any Notes not tendered in the Offer in accordance with the
terms of the Indenture. Accordingly, there is no assurance that an active market
in the Notes following consummation of the Offer will exist and no assurance as
to the prices at which such Notes may trade.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The Offer will expire on September 18, 1997 and may not be extended except
as required by applicable law. During any extension of the Offer, all Notes
previously tendered pursuant to the Offer (and not properly withdrawn) will
remain subject to the Offer and may be accepted for payment by Healthsource,
subject to the withdrawal rights of Holders.
Healthsource also expressly reserves the right, subject to the requirements
of the Indenture, to amend the terms of the Offer in any respect.
Any extension, termination or amendment of the Offer will be followed as
promptly as practicable by a public announcement thereof. Without limiting the
manner in which Healthsource may choose to make a public announcement of any
extension, termination or amendment of the Offer, Healthsource shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement, other than by issuing a release to the Dow Jones News Service,
except in the case of an announcement of an extension of the Offer, in which
case Healthsource shall have no obligation to publish, advertise or otherwise
communicate such announcement other than by issuing a notice of such extension
by press release or other public announcement, which notice shall be issued no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date.
ACCEPTANCE FOR PAYMENT
Upon the terms and subject to the conditions to the Offer (including if the
Offer is extended or amended, the terms of such extension or amendment) and
applicable law, Healthsource will purchase, by accepting for payment, and will
pay for all Notes properly tendered (and not properly withdrawn) pursuant to the
Offer, promptly after the Expiration Date. In all cases, payment by the
Depositary to tendering Holders will be made
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only after timely receipt by the Depositary of the documentation described under
"Procedures for Tendering Notes -- Tendering Notes."
For purposes of the Offer, Healthsource shall be deemed to have accepted
for payment (and thereby to have purchased) tendered Notes as, if and when
Healthsource gives oral or written notice to the Depositary of Healthsource's
acceptance of such Notes for payment. Subject to the terms and conditions of the
Offer, payment for Notes so accepted will be made by deposit of the
consideration therefor with the Depositary. The Depositary will act as agent for
tendering Holders for the purpose of receiving payment from Healthsource and
then transmitting payment to such tendering Holders.
PROCEDURES FOR TENDERING NOTES
TENDERING NOTES
The tender of Notes pursuant to any of the procedures set forth in this
Offer to Purchase and in the Letter of Transmittal will constitute a binding
agreement between the tendering Holder and Healthsource upon the terms and
subject to the conditions of the Offer. The tender of Notes will constitute an
agreement to deliver good and marketable title to all tendered Notes prior to
the Expiration Date free and clear of all liens, charges, claims, encumbrances,
interests and restrictions of any kind.
EXCEPT AS PROVIDED IN "-- GUARANTEED DELIVERY PROCEDURES," UNLESS THE NOTES
BEING TENDERED ARE DEPOSITED BY THE HOLDER WITH THE DEPOSITARY PRIOR TO THE
EXPIRATION DATE (ACCOMPANIED BY A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL), HEALTHSOURCE MAY, AT ITS OPTION, REJECT SUCH TENDER. PAYMENT FOR
NOTES WILL BE MADE ONLY AGAINST DEPOSIT OF TENDERED NOTES AND DELIVERY OF ALL
OTHER REQUIRED DOCUMENTS.
Only record Holders of Notes are authorized to exercise a Change of Control
Right and tender their Notes pursuant to the Offer. Accordingly, to properly
exercise a Change of Control Right and tender Notes or cause Notes to be
tendered, the following procedures must be followed:
Notes held through DTC. Each beneficial owner of Notes held through a
participant (a "DTC Participant") of the Depository Trust Company ("DTC") (i.e.,
a custodian bank, depositary, broker, trust company or other nominee) must
instruct such DTC Participant to cause its Notes to be tendered in accordance
with the procedures set forth in this Offer to Purchase.
Pursuant to an authorization given by DTC to the DTC Participants, each DTC
Participant that holds Notes through DTC must (i) transmit its acceptance
through the DTC Automated Tender Offer Program ("ATOP") (for which the
transaction will be eligible), and DTC will then edit and verify the acceptance,
execute a book-entry delivery to the Depositary's account at DTC and send an
Agent's Message (as defined below) to the Depositary for its acceptance, or (ii)
comply with the guaranteed delivery procedures set forth in this Offer to
Purchase. The Depositary will (promptly after the date of this Offer to
Purchase) establish accounts at DTC for purposes of the Offer with respect to
Notes held through DTC, and any financial institution that is a DTC Participant
may make book-entry delivery of interests in Notes into the Depositary's account
through ATOP. However, although delivery of interests in the Notes may be
effected through book-entry transfer into the Depositary's account through ATOP,
an Agent's Message in connection with such book-entry transfer and any other
required documents must be, in any case, transmitted to and received by the
Depositary at its address set forth on the back cover of this Offer to Purchase,
or the guaranteed delivery procedures set forth below must be complied with, in
each case, prior to the Expiration Date. Delivery of documents to DTC does not
constitute delivery to the Depositary. The confirmation of a book-entry transfer
into the Depositary's account at DTC as described above is referred to herein as
a "Book-Entry Confirmation".
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Depositary and forming a part of the Book-Entry Confirmation,
which states that DTC has received an express acknowledgment from each DTC
Participant tendering through ATOP that such DTC Participants have
3
<PAGE> 8
received a Letter of Transmittal and agree to be bound by the terms of the
Letter of Transmittal and that Healthsource may enforce such agreement against
such DTC Participants.
All of the Notes currently held through DTC have been issued in the form of
a global note registered in the name of Cede & Co. ("Cede"), DTC's nominee (the
"Global Note"). At or as of the close of business on the second business day
after the Expiration Date, DTC will deliver to the Depositary the Global Note.
At or as of the close of business on the second business day after the
Expiration Date, DTC will deliver the aggregate principal amount of Notes as to
which it has delivered Agent's Messages in respect of Notices of Guaranteed
Delivery as described under "-- Guaranteed Delivery Procedures." Thereafter, the
aggregate principal amount of the Global Note will be reduced to represent the
aggregate principal amount of Notes held through DTC and not tendered pursuant
to the Offer and the Global Note will be returned to Cede.
Notes held by Record Holders. Each record Holder must complete and sign a
Letter of Transmittal, and mail or deliver such Letter of Transmittal, and any
other documents required by the Letter of Transmittal, together with
certificate(s) representing all tendered Notes, to the Depositary at its address
set forth on the back cover page of this Offer to Purchase, or the Holder must
comply with the guaranteed delivery procedures set forth in this Offer to
Purchase.
All signatures on a Letter of Transmittal must be guaranteed by a
recognized participant in the Securities Transfer Agents Medallion Program, the
NYSE Medallion Signature Program or the Stock Exchange Medallion Program;
provided, however, that signatures on a Letter of Transmittal need not be
guaranteed if such Notes are tendered for the account of an Eligible Institution
(as defined below). If a Letter of Transmittal or any Note is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of
a corporation or other person acting in a fiduciary or representative capacity,
such person must so indicate when signing, and proper evidence satisfactory to
Healthsource of the authority of such person so to act must be submitted.
No alternative, conditional, irregular or contingent tenders will be
accepted (unless waived). By executing a Letter of Transmittal or transmitting
an acceptance through ATOP, each tendering Holder waives any right to receive
any notice of the acceptance for purchase of its Notes.
Lost or Missing Certificates. If a record Holder desires to tender Notes
pursuant to the Offer, but the certificates representing such Notes have been
mutilated, lost, stolen or destroyed, such Holder should write to or telephone
the Information Agent about procedures in accordance with the provision of the
Indenture for obtaining replacement certificates representing such Notes.
Backup Federal Income Tax Withholding. Under the "backup withholding"
provisions of Federal income tax law, unless a tendering Holder, or his or her
assignee (in either case, the "Payee"), satisfies the conditions described in
Instruction 5 of the Letter of Transmittal or is otherwise exempt, the aggregate
purchase price may be subject to backup withholding tax at a rate of 31%. To
prevent backup withholding, each Payee should complete and sign the Substitute
Form W-9 provided in the Letter of Transmittal. See Instruction 5 of the Letter
of Transmittal.
Effect of Letter of Transmittal. Subject to and effective upon the
acceptance for payment of the Notes tendered thereby, by executing and
delivering a Letter of Transmittal a tendering Holder of Notes (i) irrevocably
sells, assigns and transfers to Healthsource all right, title and interest in
and to all the Notes tendered thereby, (ii) waives any and all rights with
respect to the Notes (including without limitation any existing or past defaults
and their consequences in respect of the Notes and the Indenture under which the
Notes were issued), (iii) releases and discharges Healthsource from any and all
claims such Holder may have now, or may have in the future arising out of, or
related to, the Notes including without limitation any claims that such Holder
is entitled to receive additional principal or interest payments with respect to
the Notes or to participate in any redemption or defeasance of the Notes and
(iv) irrevocably constitutes and appoints the
4
<PAGE> 9
Depositary the true and lawful agent and attorney-in-fact of such Holder with
respect to any such tendered Notes, with full power of substitution and
resubstitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest) to (a) deliver certificates representing such Notes,
or transfer ownership of such Notes on the account books maintained by DTC,
together, in any such case, with all accompanying evidences of transfer and
authenticity, to Healthsource, (b) present such Notes for transfer on the
relevant security register and (c) receive all benefits or otherwise exercise
all rights of beneficial ownership of such Notes (except that the Depositary
will have no rights to, or control over, funds from Healthsource, except as
agent for Healthsource, for the Purchase Price for any tendered Notes that are
purchased by Healthsource), all in accordance with the terms of the Offer.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Notes will be resolved by Healthsource,
whose determination will be final and binding. Healthsource reserves the
absolute right to reject any or all tenders that are not in proper form or the
acceptance of which may, in the opinion of counsel for Healthsource, be
unlawful. Healthsource also reserves the absolute right to waive any condition
to the Offer and any irregularities or conditions of tender as to particular
Notes. Healthsource's interpretation of the terms and conditions of the Offer
(including the instructions in the Letter of Transmittal) will be final and
binding. Unless waived, any irregularities in connection with tenders must be
cured within such time as Healthsource shall determine. Healthsource and the
Depositary shall not be under any duty to give notification of defects in such
tenders and shall not incur liabilities for failure to give such notification.
Tenders of Notes will not be deemed to have been made until such irregularities
have been cured or waived. Any Notes received by the Depositary that are not
properly tendered and as to which the irregularities have not been cured or
waived will be returned by the Depositary to the tendering Holder, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
LETTERS OF TRANSMITTAL AND NOTES MUST BE SENT ONLY TO THE DEPOSITARY. DO
NOT SEND LETTERS OF TRANSMITTAL OR NOTES TO HEALTHSOURCE.
THE METHOD OF DELIVERY OF NOTES AND LETTERS OF TRANSMITTAL, ANY REQUIRED
SIGNATURE GUARANTEES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY
THROUGH DTC AND ANY ACCEPTANCE THROUGH ATOP, IS AT THE ELECTION AND RISK OF THE
PERSONS TENDERING AND DELIVERING ACCEPTANCES OR LETTERS OF TRANSMITTAL AND,
EXCEPT AS OTHERWISE PROVIDED IN THE LETTER OF TRANSMITTAL, DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, IT IS SUGGESTED THAT THE HOLDER USE PROPERLY INSURED, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE
OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE DEPOSITARY PRIOR TO THE
EXPIRATION DATE.
GUARANTEED DELIVERY PROCEDURES
DTC Participants. A DTC Participant who wishes to cause its Notes to be
tendered, but who cannot transmit its acceptance through ATOP prior to the
Expiration Date, may cause a tender to be effected if:
(a) guaranteed delivery is made by or through a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act (an "Eligible
Institution"), including (as such terms are defined therein): (i) a bank;
(ii) a broker, dealer, municipal securities dealer, municipal securities
broker, government securities dealer or government securities broker; (iii)
a credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings institution that is a
participant in a Securities Transfer Association recognized program;
(b) prior to 12:00 a.m., New York City time, on the Expiration Date,
the Depositary receives from such Eligible Institution a properly completed
and duly executed Notice of Guaranteed Delivery (by mail, hand delivery,
facsimile transmission or overnight courier) substantially in the form
provided herewith; and
5
<PAGE> 10
(c) Book-Entry Confirmation of the transfer into the Depositary's
account at DTC, and all other documents required by the Letter of
Transmittal, are received by the Depositary within three NYSE trading days
after the date of receipt by the Depositary of such Notice of Guaranteed
Delivery.
Record Holders. A record Holder who wishes to tender its Notes but (i)
whose Notes are not immediately available and will not be available for
tendering prior to the Expiration Date, or (ii) who cannot deliver its Notes,
the Letter of Transmittal or any other required documents to the Depositary
prior to the Expiration Date, may effect a tender if:
(a) the tender is made by or through an Eligible Institution;
(b) prior to 12:00 a.m., New York City time, on the Expiration Date,
the Depositary receives from such Eligible Institution a properly completed
and duly executed Notice of Guaranteed Delivery (by mail, hand delivery,
facsimile transmission or overnight courier) substantially in the form
provided herewith; and
(c) a properly completed and executed Letter of Transmittal, as well
as the certificate(s) representing all tendered Notes in proper form for
transfer, and all other documents required by the Letter of Transmittal,
are received by the Depositary within three NYSE trading days after the
date of receipt by the Depositary of such Notice of Guaranteed Delivery.
Under no circumstances will interest be paid by Healthsource by reason of
any delay in making payment to any person using the guaranteed delivery
procedures described above.
WITHDRAWAL RIGHTS
Tenders of Notes (or any portion of such Notes in integral multiples of
$1,000) may be withdrawn at any time prior to the Expiration Date.
Notes held through DTC. A DTC Participant who has transmitted its
acceptance through ATOP in respect of Notes held through DTC may, prior to the
Expiration Date, withdraw the instruction given thereby by (i) withdrawing its
acceptance through ATOP, or (ii) delivering to the Depositary by mail, hand
delivery or facsimile transmission a notice of withdrawal of such instruction.
Such notice of withdrawal must contain the name and number of the DTC
Participant, the principal amount of Notes to which such withdrawal relates and
the signature of the DTC Participant. Withdrawal of such an instruction will be
effective upon receipt of such notice of withdrawal by the Depositary.
Notes held by Record Holders. A Holder may withdraw its tender of Notes
prior to the Expiration Date by delivering to the Depositary by mail, hand
delivery or facsimile transmission a notice of withdrawal. Any such notice of
withdrawal must (i) specify the name of the person who tendered the Notes to be
withdrawn, (ii) contain a description of the Notes to be withdrawn and identify
the certificate number or numbers shown on the particular certificates
evidencing such Notes and the aggregate principal amount represented by such
Notes and (iii) be signed by the Holder of such Notes in the same manner as the
original signature on the Letter of Transmittal by which such Notes were
tendered (including any required signature guarantees), or be accompanied by (x)
documents of transfer in a form acceptable to Healthsource, in its sole
discretion, and (y) a properly completed irrevocable proxy that authorized such
person to effect such revocation on behalf of such Holder. If the Notes to be
withdrawn have been delivered or otherwise identified to the Depositary, a
signed notice of withdrawal is effective immediately upon receipt by the
Depositary even if physical release is not yet effected. Any Notes properly
withdrawn will be deemed to be not validly tendered for purposes of the Offer.
All signatures on a notice of withdrawal must be guaranteed by a recognized
participant in the Securities Transfer Agents Medallion Program, the NYSE
Medallion Signature Program or the Stock Exchange Medallion Program; provided,
however, that signatures on the notice of withdrawal need not be guaranteed if
the Notes being withdrawn are held for the account of an Eligible Institution.
A withdrawal of an instruction or a withdrawal of a tender must be executed
by a DTC Participant or a Holder, as the case may be, in the same manner as the
person's name appears on its transmission through
6
<PAGE> 11
ATOP or Letter of Transmittal, as the case may be, to which such withdrawal
relates. If a notice of withdrawal is signed by a trustee, partner, executor,
administrator, guardian, attorney-in-fact, agent, officer of a corporation or
other person acting in a fiduciary or representative capacity, such person must
so indicate when signing and must submit with the revocation appropriate
evidence of authority to execute the notice of withdrawal. A Holder or DTC
Participant may withdraw a tender only if such withdrawal complies with the
provisions of this Offer to Purchase.
A withdrawal of an instruction previously given pursuant to the
transmission of an acceptance through ATOP or a withdrawal of a tender by a
Holder may be rescinded only by (i) a new transmission of acceptance through
ATOP, or (ii) execution and delivery of a new Letter of Transmittal, as the case
may be, in accordance with the procedures described herein.
CERTAIN INFORMATION CONCERNING
HEALTHSOURCE AND CIGNA
HEALTHSOURCE
Healthsource is a diversified provider of a range of managed health care
services. Healthsource provides managed care through health maintenance
organizations in Arkansas, Connecticut, Georgia, Indiana, Kentucky, Maine,
Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Ohio, South
Carolina, Tennessee and Texas. Healthsource also offers point of service plans,
preferred provider organization plans, utilization review services, managed
workers compensation services, pharmacy benefit management services and other
managed care consulting and administrative services to other health care payors.
Healthsource also owns insurance companies that are domiciled in Indiana,
Tennessee, New Hampshire and South Carolina. As a result of the Merger,
Healthsource will become an indirect wholly owned subsidiary of CIGNA.
Healthsource's principal executive offices are located at Two College Park
Drive, Hooksett, New Hampshire 03106, and its telephone number is (603)
268-7000.
CIGNA; RELATIONSHIP BETWEEN CIGNA AND HEALTHSOURCE
CIGNA is a Delaware corporation with its principal executive offices
located at One Liberty Place, Philadelphia, Pennsylvania 19192. With
shareholders' equity of $7.2 billion, revenues of $19.0 billion and assets of
$98.9 billion as of December 31, 1996, CIGNA and its subsidiaries constitute one
of the largest investor-owned insurance organizations in the United States and
one of the principal United States companies in the financial services industry.
Although CIGNA is not an insurance company, its subsidiaries are major providers
of group life and health insurance, managed care products and services,
retirement products and services, individual financial services, and property
and casualty insurance. CIGNA is one of the largest international insurance
organizations based in the United States, measured by international revenues,
and one of the largest investor-owned health maintenance organizations in the
United States, based on the number of members. CIGNA's major insurance
subsidiaries, Connecticut General Life Insurance Company ("CG Life") and
Insurance Company of North America ("ICNA"), are among the oldest insurance
companies in the United States, with ICNA tracing its origins to 1792 and CG
Life to 1865. CIGNA was incorporated in the State of Delaware in 1981.
For a description of the relationship between CIGNA and Healthsource, see
"Certain Recent and Future Developments" and "Sources and Amount of Funds."
CERTAIN RECENT AND FUTURE DEVELOPMENTS
THE TENDER OFFER
On June 25, 1997, the Equity Tender Offer was consummated, pursuant to
which 98% of the issued and outstanding shares of Common Stock were purchased by
Acquisition for a purchase price of $21.75 per share of Common Stock.
7
<PAGE> 12
THE MERGER
At the Effective Time, pursuant to the Merger Agreement (i) Acquisition
will be merged with and into Healthsource, with Healthsource being the surviving
corporation of the Merger and (ii) each outstanding share of Common Stock
(including shares of Common Stock issued upon conversion of Notes prior to the
Effective Time) will be converted into the right to receive $21.75 per share of
Common Stock.
The consummation of the Merger (and thus the determination of the Effective
Time) is subject to the satisfaction or waiver of certain conditions, including
the approval and adoption of the Merger Agreement and the Merger by the
affirmative vote of a majority of the outstanding shares of Common Stock. A
meeting of Healthsource stockholders to consider the Merger Agreement and the
Merger has been scheduled for July 31, 1997 (the "Stockholders Meeting").
Because Acquisition owns in excess of a majority of the outstanding shares of
Common Stock, constituting sufficient voting power to approve and adopt the
Merger Agreement and the Merger without the vote of any other stockholder, and
because CIGNA has agreed in the Merger Agreement to cause Acquisition to vote
the shares in favor of the approval and adoption of the Merger and the Merger
Agreement, the approval and adoption of the Merger Agreement and the Merger at
the Stockholders Meeting is assured. It is currently expected that the Effective
Time will be on or about July 31, 1997.
Any Notes not tendered in the Offer (or tendered and withdrawn prior to the
Expiration Date) will remain obligations of Healthsource and will continue to
accrue interest and have all of the benefits of the Indenture, unless
Healthsource, at its option, elects to defease any Notes not tendered in the
Offer in accordance with the terms of the Indenture. The Indenture provides that
from and after the Effective Time the Notes will no longer be convertible into
shares of Common Stock; instead, the Notes will be convertible, at the option of
the Holder, into the amount of cash that the Holder would have received in the
Merger had such Holder converted the Notes into shares of Common Stock
immediately prior to the Effective Time. Therefore, based on the current
conversion price of $46.965 per share, each $1,000 principal amount of Notes
that was convertible into approximately 21.29 shares of Common stock immediately
prior to the Effective Time will be convertible into approximately $463.06 in
cash from and after the Effective Time. Under the terms of the Indenture,
Healthsource and the Trustee must execute a supplemental indenture evidencing
the effect of the Merger on the Notes.
CIGNA is conducting a detailed review of Healthsource and its assets,
corporate structure, dividend policy, capitalization, operations, properties,
policies, management and personnel and is considering what, if any, changes
would be desirable in light of the circumstances which exist. Although CIGNA
does not have any specific plans with respect to Healthsource, CIGNA generally
intends to integrate Healthsource's operations with the operations of CIGNA's
health care division as soon as practicable, in order to achieve operating
synergies. At this time, CIGNA has not determined how this integration will be
structured. The combining of Healthsource's business with CIGNA's health care
business could, among other things, involve consolidating and streamlining
certain operations and reorganizing other businesses and operations.
Except as noted in this Offer to Purchase, and except as may be effected in
connection with the integration of operations referred to above, CIGNA does not
have any present plans or proposals that would result in any extraordinary
corporate transaction, such as a merger, reorganization, liquidation, relocation
of operations, or sale or transfer of assets, involving Healthsource or any of
its subsidiaries, or any material changes in Healthsource's corporate structure
or business or the composition of Healthsource's management or personnel.
SOURCES AND AMOUNT OF FUNDS
The precise amount of funds required by Healthsource to purchase Notes
tendered pursuant to the Offer and to pay the fees and expenses related to the
Offer will not be known until the Expiration Date. If all outstanding Notes were
tendered and purchased, the aggregate amount of funds required to pay the
Purchase Price would be approximately $249,388,951.39. Such funds are expected
to be provided through a capital contribution by CIGNA to Healthsource. CIGNA
intends to provide such capital contribution from internally generated funds.
8
<PAGE> 13
MARKET PRICE INFORMATION
THE NOTES
The Notes are listed and traded on the NYSE under the symbol "HS5C03." The
following tables set forth the high and low sales prices per $100 principal
amount of the Notes, as reported by the NYSE Composite Tape, for the periods
indicated (prior to September 6, 1996, in the fourth quarter of the fiscal year
ended December 31, 1996, and from July 1 to July 23, 1997, no Notes were
publicly traded):
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
Fiscal Year Ended December 31, 1997
First Quarter.................................................... $ 98.50 $ 80.50
Second Quarter................................................... $ 99.50 $ 98.00
Fiscal Year Ended December 31, 1996
Third Quarter (from September 6, 1996)........................... $ 79.00 $ 78.00
</TABLE>
On May 28, 1997, the last day the Notes traded, the closing sales price per
$100 principal amount of Notes, as reported by the NYSE Composite Tape, was
$99.50 .
HOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE NOTES PRIOR
TO MAKING ANY DECISION WITH RESPECT TO THE OFFER.
Following the Effective Time, the Notes will be delisted from the NYSE and
application will be made pursuant to the Exchange Act to terminate the
registration of the Notes and other securities of Healthsource under the
Exchange Act. Such termination will substantially reduce the information
required to be furnished by Healthsource to the Commission.
SHARES OF COMMON STOCK
Shares of Common Stock are listed and traded on the NYSE under the symbol
"HS." The following table sets forth the high and low sales prices per share of
Common Stock, as reported on the NYSE Composite Tape, for the periods indicated:
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Fiscal Year Ended December 31, 1997
First Quarter..................................................... $21 3/8 $11 5/8
Second Quarter.................................................... $21 7/8 $20 1/2
Third Quarter (to July 23, 1997).................................. $21 7/8 $21 5/8
Fiscal Year Ended December 31, 1996
First Quarter..................................................... $40 1/8 $29 1/4
Second Quarter.................................................... $40 $17 3/8
Third Quarter..................................................... $17 3/4 $11
Fourth Quarter.................................................... $14 3/4 $10 7/8
Fiscal Year Ended December 31, 1995
First Quarter..................................................... $23 5/8 $19 1/4
Second Quarter.................................................... $23 $15 1/8
Third Quarter..................................................... $24 1/2 $17 1/4
Fourth Quarter.................................................... $36 $21
</TABLE>
On July 23, 1997, the closing sales price of the Common Stock, as reported
on the NYSE Composite Tape, was $21 3/4 per share.
9
<PAGE> 14
SELECTED FINANCIAL DATA
The following table presents selected historical financial data and pro
forma financial information for Healthsource for the periods indicated. The
financial data for the periods ended December 31, 1995 and December 31, 1996
have been audited. The financial data for the three months ended March 31, 1997
and March 31, 1996 are unaudited, but in the opinion of Healthsource reflect all
adjustments necessary for a fair presentation of such data. More comprehensive
financial information is included in such reports and other documents filed by
Healthsource with the Commission and the following summary is qualified in its
entirety by reference to such reports and other documents and all of the
financial information (including any related notes) contained therein. Such
reports and other documents may be inspected and copies may be obtained from the
Commission in the manner set forth above under "Available Information."
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
----------------------- -------------------
1996 1995 1997 1996
---------- ---------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues................................... $1,713,963 $1,166,697 $476,761 $419,902
Net income (loss).......................... (3,940) 56,271 6,976 15,562
Net income (loss) per share................ (0.08) 0.81 0.11 0.22
BALANCE SHEET DATA:
Total assets............................... 1,006,900 873,039 1,053,137 990,236
Total long-term debt....................... 247,250 95,000 247,250 257,250
Shareholders' equity....................... 385,425 488,082 392,503 401,051
</TABLE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following discussion is for general information only and is based on
the federal income tax law now in effect, which is subject to change, possibly
retroactively. This summary does not discuss all aspects of federal income
taxation which may be relevant to any particular Holder of the Notes in light of
such Holder's individual investment circumstances or to certain types of Holders
subject to special tax rules (e.g., financial institutions, broker-dealers,
insurance companies, tax-exempt organizations and foreign taxpayers), nor does
it address specific state, local or foreign tax consequences. This summary
assumes that the Holders of the Notes have held their Notes as "capital assets"
as defined under the Internal Revenue Code of 1986, as amended. EACH HOLDER IS
URGED TO CONSULT SUCH HOLDER'S TAX ADVISOR REGARDING THE SPECIFIC FEDERAL,
STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE OFFER.
SALE OF NOTES PURSUANT TO THE OFFER
The receipt of cash by a Holder in exchange for the Notes will be a taxable
transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local or foreign tax laws. Such Holder will
recognize gain or loss in an amount equal to the difference between (i) the
amount of cash received (other than in respect of accrued interest) and (ii)
such Holder's adjusted tax basis in the Notes. Subject to the rules discussed
below, such gain or loss will be capital gain or loss and will be long-term gain
or loss if such Holder has held such Notes for more than one year.
The payment of interest or amounts treated as interest for tax purposes
with respect to a Note generally will be treated as ordinary income.
An exception to the capital gain treatment described above applies to a
Holder who holds a Note with a "market discount." Market discount is the amount
by which the Holder's basis in the Note immediately after its acquisition is
exceeded by the stated redemption price of the Note at maturity. (However, a
Note will be
10
<PAGE> 15
considered to have no market discount if such excess is less than 1/4 of 1% of
the stated redemption price of the Note at maturity multiplied by the number of
complete years from the Holder's acquisition date of the Note to its maturity
date.) The gain realized by the Holder of a market discount Note on its purchase
by Healthsource will be treated as ordinary income to the extent that market
discount has accrued (on a straight line basis or, at the election of the
Holder, on a constant interest basis) from the Holder's acquisition date to the
date of sale, unless the Holder has elected to include market discount in income
currently as it accrues. Gain in excess of such accrued market discount will be
subject to the capital gains rules described above.
THE DEPOSITARY AND THE INFORMATION AGENT
The Depositary for the Offer is IBJ Schroder Bank & Trust Company. All
deliveries and correspondence sent or presented to the Depositary relating to
the Offer should be directed to one of the addresses or the telephone numbers of
the Depositary set forth on the back cover of this Offer to Purchase. The
Information Agent for the Offer is Georgeson & Company Inc. All correspondence
and questions sent or presented to the Information Agent should be directed to
the address or one of the telephone numbers of the Information Agent set forth
on the back cover of this Offer to Purchase. Requests for information or
additional copies of the Offer to Purchase and the related Letter of Transmittal
should be directed to the Information Agent.
Healthsource will pay the Depositary and the Information Agent reasonable
and customary compensation for their services in connection with the Offer, plus
reimbursement for reasonable out-of-pocket expenses. Healthsource will indemnify
the Depositary and the Information Agent against certain liabilities and
expenses in connection therewith, including liabilities under the Federal
securities laws.
Brokers, dealers, commercial banks and trust companies will be reimbursed
by Healthsource for customary mailing and handling expenses incurred by them in
forwarding material to their customers. Healthsource will not pay any fees or
commissions to any broker, dealer or other person (other than the Depositary and
the Information Agent) in connection with the solicitation of tenders of Notes
pursuant to the Offer.
MISCELLANEOUS
Healthsource is not aware of any jurisdiction where the making of the Offer
is not in compliance with the laws of such jurisdiction. If Healthsource becomes
aware of any jurisdiction where the making of the Offer would not be in
compliance with such laws, Healthsource will make a good faith effort to comply
with any such laws or seek to have such laws declared inapplicable to the Offer.
If, after such good faith effort, Healthsource cannot comply with any such
applicable laws, the Offer will not be made to (nor will tenders be accepted
from or on behalf of) the Holders of the Notes residing in such jurisdiction.
11
<PAGE> 16
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand/Overnight:
IBJ Schroder Bank & Trust Company (For Eligible Institutions Only) IBJ Schroder Bank & Trust Company
P.O. Box 84 (212) 858-2611 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Confirm by Telephone: Attn: Securities Processing
Window,
Attn: Reorganization Operations Subcellar One, (SC-1)
Department (212) 858-2103
</TABLE>
The Information Agent for the Offer is:
GEORGESON & COMPANY INC.
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
<PAGE> 1
Exhibit(a)2
LETTER OF TRANSMITTAL
TO TENDER
5% CONVERTIBLE SUBORDINATED NOTES DUE 2003
OF HEALTHSOURCE, INC.
PURSUANT TO THE CHANGE OF CONTROL
NOTICE AND OFFER TO PURCHASE
DATED JULY 25, 1997
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE CHANGE OF CONTROL NOTICE
AND OFFER TO PURCHASE, THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON SEPTEMBER 18, 1997, AND MAY NOT BE EXTENDED EXCEPT AS
REQUIRED BY APPLICABLE LAW (THE "EXPIRATION DATE"). NOTES TENDERED IN THE OFFER
MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand/Overnight Courier:
IBJ Schroder Bank & Trust Company (For Eligible Institutions Only) IBJ Schroder Bank & Trust Company
P.O. Box 84 (212) 858-2611 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Confirm by Telephone: Attn: Securities Processing Window
Attn: Reorganization Operations (212) 858-2103 Subcellar One, (SC-1)
Department
</TABLE>
Delivery of this Letter of Transmittal to an address, or transmission of
instructions via facsimile, other than as set forth above will not constitute
valid delivery. THE INSTRUCTIONS CONTAINED HEREIN AND IN THE OFFER TO PURCHASE
(AS DEFINED BELOW) SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS
COMPLETED.
By execution hereof, the undersigned acknowledges receipt of the Change of
Control Notice and Offer to Purchase, dated July 25, 1997 (as the same may be
amended from time to time, the "Offer to Purchase"), of Healthsource, Inc.
("Healthsource") and this Letter of Transmittal and instructions hereto (the
"Letter of Transmittal"), which together constitute Healthsource's offer to
purchase (the "Offer") all of the outstanding 5% Convertible Subordinated Notes
due 2003 of Healthsource (the "Notes"), upon the terms and subject to the
conditions set forth in the Offer to Purchase.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE PAYMENT FOR NOTES TO BE
PURCHASED PURSUANT TO THE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR
NOTES TO THE DEPOSITARY PRIOR TO THE EXPIRATION DATE.
This Letter of Transmittal is to be used by holders of Notes if
certificates representing Notes are to be physically delivered to the Depositary
herewith by holders of Notes. This Letter of Transmittal is also being supplied
for informational purposes only to persons who hold notes in book-entry form
through the facilities of The Depository Trust Company ("DTC"). Tender of Notes
held through DTC must be made pursuant to the procedures described under
"Procedures for Tendering Notes -- Tendering Notes -- Notes held through DTC" in
the Offer to Purchase.
<PAGE> 2
In order to properly complete this Letter of Transmittal, a holder of Notes
must (i) complete the box entitled "Description of Notes;" (ii) if appropriate,
check and complete the boxes relating to Guaranteed Delivery, Special Issuance
Instructions and Special Delivery Instructions; (iii) sign the Letter of
Transmittal; and (iv) complete Substitute Form W-9. Each holder of Notes should
carefully read the detailed Instructions contained herein prior to completing
this Letter of Transmittal.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Offer.
If holders desire to tender Notes pursuant to the Offer and (i)
certificates representing such holder's Notes are not lost but are not
immediately available or time will not permit this Letter of Transmittal,
certificates representing such Notes or other required documents to reach the
Depositary prior to the Expiration Date, or (ii) the procedures for book-entry
transfer cannot be completed prior to the Expiration Date, such holders may
effect a tender of such Notes in accordance with the guaranteed delivery
procedures described under "Procedure for Tendering Notes -- Guaranteed Delivery
Procedures" in the Offer to Purchase. See Instruction 1 below.
All capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Offer to Purchase.
Your bank or broker can assist you in completing this form. The
instructions included with this Letter of Transmittal must be followed.
Questions and requests for assistance or for additional copies of the Offer to
Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Georgeson & Company Inc., the information agent (the
"Information Agent") for the Offer. See Instruction 9 below.
Healthsource is not aware of any jurisdiction where the making of the Offer
would not be in compliance with applicable laws. If Healthsource becomes aware
of any jurisdiction where the making of the Offer would not be in compliance
with such laws, Healthsource will make a good faith effort to comply with any
such laws or seek to have such laws declared inapplicable to the Offer. If after
such good faith effort, Healthsource cannot comply with any such applicable
laws, the Offer will not be made to, nor will tenders be accepted from or on
behalf of, the holders of Notes residing in such jurisdiction.
2
<PAGE> 3
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL CAREFULLY
BEFORE CHECKING ANY BOX BELOW
List below the Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, list the certificate numbers and principal
amounts on a separately executed schedule and affix the schedule to this Letter
of Transmittal.
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
DESCRIPTION OF NOTES
- -------------------------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL
NAME(S) AND ADDRESS(ES) OF HOLDER(S) CERTIFICATE AMOUNT PRINCIPAL AMOUNT
(PLEASE FILL IN, IF BLANK) NUMBERS* REPRESENTED** TENDERED**
- -------------------------------------------------------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
TOTAL PRINCIPAL
AMOUNT OF NOTES
- -------------------------------------------------------------------------------------------------
* Need not be completed by Holders tendering by book-entry transfer (see below).
** Unless otherwise indicated in the column labeled "Principal Amount Tendered" and subject to
the terms and conditions of the Offer to Purchase, a Holder will be deemed to have tendered
the entire aggregate principal amount represented by the Notes indicated in the column
labeled "Aggregate Principal Amount Represented." See Instruction 2.
- -------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder:
----------------------------------------------------------------------------
Window Ticket Number (if any):
-------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-----------------------------------------------------
Name of Eligible Institution which Guaranteed Delivery:
------------------------------------------------
3
<PAGE> 4
LADIES AND GENTLEMEN:
Upon the terms and subject to the conditions of the Offer, the undersigned
hereby tenders to Healthsource the principal amount of Notes indicated above.
Subject to and effective upon the acceptance for payment of Notes tendered
hereby, by executing and delivering a Letter of Transmittal a tendering holder
of Notes (i) irrevocably sells, assigns and transfers to Healthsource, all
right, title and interest in and to all the Notes tendered thereby, (ii) waives
any and all rights with respect to the Notes (including without limitation any
existing or past defaults and their consequences in respect of the Note and the
Indenture under which the Notes were issued), (iii) releases and discharges
Healthsource from any and all claims such holder may have now, or may have in
the future arising out of, or related to, the Notes including without limitation
any claims that such holder is entitled to receive additional principal or
interest payments with respect to the Notes or to participate in any repurchase,
redemption or defeasance of the Notes and (iv) irrevocably constitutes and
appoints the Depositary the true and lawful agent and attorney-in-fact of such
holder with respect to any such tendered Notes, will full power of substitution
and resubstitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest) to (a) deliver certificates representing such
Notes, or transfer ownership of such Notes, on the account books maintained by
DTC, together, in any such case, with all accompanying evidences of transfer and
authenticity, to Healthsource, (b) present such Notes for transfer on the
relevant security register and (c) receive all benefits or otherwise exercise
all rights of beneficial ownership of such Notes (except that the Depositary
will have no rights to, or control over, funds from Healthsource, except as
agent for Healthsource, for the purchase price for any tendered Notes that are
purchased by Healthsource), all in accordance with the terms of the Offer.
The undersigned understands that tenders of Notes may be withdrawn by
written notice of withdrawal received by the Depositary at any time prior to the
Expiration Date. See Instruction 1.
The undersigned hereby represents and warrants that the undersigned (i)
owns the Notes tendered and is entitled to tender such Notes and (ii) has full
power and authority to tender, sell, assign and transfer the Notes tendered
hereby and that when such Notes are accepted for purchase and payment by
Healthsource, Healthsource will acquire good title thereto, free and clear of
all liens, restrictions, charges and encumbrances and not subject to any adverse
claim or right. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Depositary or Healthsource to be necessary or
desirable to complete the sale, assignment and transfer of the Notes tendered
hereby.
For the purposes of the Offer, the undersigned understands that
Healthsource will be deemed to have accepted for purchase validly tendered Notes
(or defectively tendered Notes with respect to which Healthsource has waived
such defect) only if, as and when Healthsource gives oral or written notice
thereof to the Depositary. Payment for Notes purchased pursuant to the Offer
will be made by deposit of the purchase price for such Notes with the
Depositary, which will act as agent for tendering holders for the purpose of
receiving payments from Healthsource and transmitting such payments to such
holders.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death or incapacity of the undersigned and every
obligation of the undersigned under this Letter of Transmittal shall be binding
upon the undersigned's heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives.
The undersigned understands that valid tender of Notes pursuant to any one
of the procedures described under "Procedures for Tendering Notes" in the Offer
to Purchase and in the instructions hereto will constitute a binding agreement
between the undersigned and Healthsource upon the terms and subject to the
conditions of the Offer, including the undersigned's waiver of any existing
defaults and their consequences in respect of the Notes and the Indenture
(including, without limitation, a default in the payment of interest).
The undersigned understands that the delivery and surrender of the Notes is
not effective, and the risk of loss of the Notes does not pass to the
Depositary, until receipt by the Depositary of this Letter of Transmittal, or a
facsimile hereof, properly completed and duly executed, together with all
accompanying evidences of authority and any other required documents in form
satisfactory to Healthsource. All questions as to the
4
<PAGE> 5
validity, form, eligibility (including time of receipt) and acceptance for
payment of any tender of Notes pursuant to the procedures described in the Offer
to Purchase and the form and validity (including time of receipt of notices of
withdrawal) of all documents will be determined by Healthsource, in its sole
direction, which determination shall be final and binding on all parties.
Unless otherwise indicated herein under "Special Issuance Instructions,"
the undersigned hereby requests that any Notes representing principal amounts
not tendered be issued in the name(s) of the undersigned, and checks
constituting payments for Notes purchased in connection with the Offer be issued
to the order of the undersigned. Similarly, unless otherwise indicated herein
under "Special Delivery Instructions," the undersigned hereby requests that any
Notes representing principal amounts not tendered and checks constituting
payments for Notes to be purchased in connection with the Offer be delivered to
the undersigned at the address(es) shown herein. In the event that the "Special
Issuance Instructions" box or the "Special Delivery Instructions" box, or both,
are completed, the undersigned hereby requests that any Notes representing
principal amounts not tendered be issued in the name(s) of, certificates for
such Notes be delivered to, and checks constituting payments for Notes purchased
in connection with the Offer be issued in the name(s) of, and be delivered to,
the person(s) at the address(es) so indicated, as applicable.
5
<PAGE> 6
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 2 THROUGH 6)
To be completed ONLY if any checks and/or any certificates for Notes in a
principal amount not tendered are to be issued in the name of and sent to
someone other than the person(s) whose name(s) appear(s) in the "Description of
Notes Tendered" box above.
Issue: [ ] Notes [ ] Checks
(Complete as applicable)
Name:
- -------------------------------------------
(PLEASE PRINT)
Address:
- -----------------------------------------
---------------------------------------------------
---------------------------------------------------
TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 HEREIN)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 2 THROUGH 6)
To be completed ONLY if any checks and/or any certificates for Notes in a
principal amount not tendered are to be sent to someone other than the
undersigned or to the undersigned at an address other than that shown in the
"Description of Notes Tendered" box above.
Deliver: [ ] Notes [ ] Checks
(Complete as applicable)
Name:
- -------------------------------------------
(PLEASE PRINT)
Address:
- -----------------------------------------
---------------------------------------------------
---------------------------------------------------
TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 HEREIN)
HOLDERS WHO WISH TO ACCEPT THE OFFER AND TENDER THEIR NOTES MUST COMPLETE
THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
6
<PAGE> 7
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF NOTES
PURSUANT TO THE OFFER REGARDLESS OF WHETHER
NOTES ARE BEING PHYSICALLY DELIVERED HEREWITH)
This Letter of Transmittal must be signed by the holder(s) of Notes exactly as
their name(s) appear(s) on certificate(s) for Notes or by person(s) authorized
to become holder(s) by endorsements and documents transmitted with this Letter
of Transmittal. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title below
under "Capacity" and submit evidence satisfactory to Healthsource of such
person's authority to so act. See Instruction 3 below.
If the signature appearing below is not of the holder(s) of the Notes, then the
holder(s) must sign a valid power of attorney.
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
SIGNATURE(S) OF HOLDER(S) OR AUTHORIZED SIGNATORY
Date:
- ---------------------------
Name(s):
-----------------------------------------------------------------------
(PLEASE PRINT)
Capacity:
- --------------------------------------------------------------------------------
Address:
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(INCLUDING ZIP CODE)
Area Code and Telephone Number:
---------------------------------------------------------------------
SIGNATURE GUARANTEE
(SEE INSTRUCTION 3 BELOW)
Certain Signatures Must Be Guaranteed by an Eligible Institution.
- --------------------------------------------------------------------------------
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
- --------------------------------------------------------------------------------
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
FIRM)
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
- --------------------------------------------------------------------------------
(PRINTED NAME)
- --------------------------------------------------------------------------------
(TITLE)
Date:
- ---------------------------
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Procedures for Tendering Notes; Guaranteed Delivery Procedures;
Withdrawal of Tenders. To tender the Notes in the Offer, certificates
representing such Notes, together with a properly completed and duly executed
copy (or facsimile) of this Letter of Transmittal, and any other documents
required by this Letter of Transmittal must be received by the Depositary at one
of its addresses set forth herein prior to the Expiration Date. The method of
delivery of this Letter of Transmittal, certificates for Notes and all other
required documents to the Depositary is at the election and risk of holders. If
such delivery is to be made by mail, it is suggested that holders use properly
insured registered mail, return receipt requested, and that the mailing be made
sufficiently in advance of the Expiration Date to permit delivery to the
Depositary prior to such date. Except as otherwise provided below, the delivery
will be deemed made when actually received or confirmed by the Depositary. THIS
LETTER OF TRANSMITTAL AND NOTES SHOULD BE SENT ONLY TO THE DEPOSITARY, AND NOT
TO HEALTHSOURCE OR THE TRUSTEE.
This Letter of Transmittal is also being supplied for informational
purposes only to persons who hold notes in book-entry form through the
facilities of DTC. Tender of Notes held through DTC must be made pursuant to the
procedures described under "Procedures for Tendering Notes -- Tendering
Notes -- Notes held through DTC" in the Offer to Purchase.
Except as provided herein for the book-entry or guaranteed delivery
procedures, unless the Notes being tendered are deposited with the Depositary on
or prior to the Expiration Date (accompanied by the appropriate, properly
completed and duly executed Letter of Transmittal and any required signature
guarantees and other documents required by this Letter of Transmittal),
Healthsource may, in its sole discretion, reject such tender. Payment for Notes
will be made only against deposit of tendered Notes.
By executing this Letter of Transmittal (or a facsimile thereof), a
tendering holder waives any right to receive any notice of the acceptance for
payment of tendered Notes.
For a full description of the procedures for tendering Notes, see
"Procedures for Tendering Notes -- Tendering Notes" in the Offer to Purchase.
If a holder desires to tender Notes pursuant to the Offer and (i)
certificates representing such holder's Notes are not lost but are not
immediately available or time will not permit this Letter of Transmittal,
certificates representing Notes or other required documents to reach the
Depositary on or prior to the Expiration Date or (ii) the procedures for
book-entry transfer cannot be completed on or prior to the Expiration Date, such
holder may effect a tender of such Notes in accordance with the guaranteed
delivery procedures described under "Procedures for Tendering
Notes -- Guaranteed Delivery Procedures" in the Offer to Purchase.
Tenders of Notes may be withdrawn at any time prior to the Expiration Date
pursuant to the procedures described under "Procedures For Tendering
Notes -- Withdrawal Rights" in the Offer to Purchase.
2. Partial Tenders. Tenders of Notes pursuant to the Offer will be
accepted only in principal amounts equal to $1,000 or integral multiples
thereof. If less than the entire principal amount of any Notes evidenced by a
submitted certificate is tendered, the tendering holder must fill in the
principal amount tendered in the last column of the box entitled "Description of
Notes" herein. The entire principal amount represented by the certificates for
all Notes delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated. If the entire principal amount of all Notes is not
tendered, certificates for the principal amount of Notes not tendered will be
sent to the holder unless otherwise provided in the appropriate box on this
Letter of Transmittal (see Instruction 4), promptly after the Notes are accepted
for purchase.
3. Signatures on this Letter of Transmittal, Bond Powers and Endorsement:
Guarantee of Signatures. If this Letter of Transmittal is signed by the
registered holder(s) of the Notes tendered hereby, the signature(s) must
correspond with the name(s) as written on the face of the certificate(s) without
alteration, enlargement or any change whatsoever.
8
<PAGE> 9
IF THIS LETTER OF TRANSMITTAL IS EXECUTED BY A HOLDER OF NOTES WHO IS NOT
THE REGISTERED HOLDER, THEN THE REGISTERED HOLDER MUST SIGN A VALID POWER OF
ATTORNEY, WITH THE SIGNATURE OF SUCH REGISTERED HOLDER GUARANTEED BY AN ELIGIBLE
INSTITUTION.
If any of the Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal. If any
tendered Notes are registered in different names on several certificates, it
will be necessary to complete, sign and submit as many copies of this Letter of
Transmittal and any necessary accompanying documents as there are different
names in which certificates are held.
If this Letter of Transmittal is signed by the holder, and the certificates
for any principal amount of Notes not tendered for purchase are to be issued (or
if any principal amount of Notes that is not tendered for purchase is to be
reissued or returned) to the holder, and checks constituting payments for Notes
to be purchased in connection with the Offer are to be issued to the order of
the holder, then the holder need not endorse any certificates for tendered Notes
nor provide a separate bond power. In any other case (including if this Letter
of Transmittal is not signed by the holder), the holder must either properly
endorse the certificates for Notes tendered or transmit a separate properly
completed bond power with this Letter of Transmittal (in either case, executed
exactly as the name(s) of the registered holder(s) appear(s) on such Notes),
with the signature on the endorsement or bond power guaranteed by an Eligible
Institution, unless such certificates or bond powers are executed by an Eligible
Institution.
If this Letter of Transmittal or any certificates representing Notes or
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
proper evidence satisfactory to Healthsource of their authority so to act must
be submitted with this Letter of Transmittal.
Endorsements on certificates for Notes and signatures on bond powers
provided in accordance with this Instruction 3 by registered holders not
executing this Letter of Transmittal must be guaranteed by an Eligible
Institution.
No signature guarantee is required if: (i) this Letter of Transmittal is
signed by the registered holder(s) of the Notes tendered herewith and the
payments for the Notes to be purchased are to be made, or any Notes for
principal amounts not tendered for purchase are to be issued, directly to such
registered holder(s) and neither the "Special Issuance Instructions" box nor the
"Special Delivery Instructions" box of this Letter of Transmittal has been
completed; or (ii) such Notes are tendered for the account of an Eligible
Institution. In all other cases, all signatures on Letters of Transmittal
accompanying Notes must be guaranteed by an Eligible Institution.
4. Special Issuance and Special Delivery Instructions. Tendering holders
should indicate in the applicable box or boxes the name and address to which
Notes for principal amounts not tendered or not accepted for purchase or checks
constituting payments for Notes to be purchased in connection with the Offer are
to be issued or sent, if different from the name and address of the holder
signing this Letter of Transmittal. In the case of issuance in a different name,
the taxpayer identification or social security number of the person named must
also be indicated. If no instructions are given, Notes not tendered or not
accepted for purchase will be returned to the holder of the Notes tendered.
5. Taxpayer Identification Number and Substitute Form W-9. Each tendering
holder is required to provide the Depositary with the holder's correct taxpayer
identification number ("TIN"), generally the holder's social security or federal
employer identification number, on Substitute Form W-9, which is provided under
"Important Tax Information" below, or, alternatively, to establish another basis
for exemption from backup withholding. A holder must cross out item (2) in the
Certification box on Substitute Form W-9 if such holder is subject to backup
withholding. Failure to provide the information on the form may subject the
tendering holder to 31% federal income tax backup withholding on the payments
made to the holder or other payee with respect to Notes purchased pursuant to
the Offer. The box in Part 3 of the form should be checked if the tendering
holder has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 3 is checked and the Depositary
is not provided with a TIN within 60 days,
9
<PAGE> 10
thereafter the Depositary will withhold 31% from all such payments with respect
to the Notes to be purchased until a TIN is provided to the Depositary.
6. Transfer Taxes. Healthsource will pay all transfer taxes, if any,
payable on the purchase and transfer of Notes purchased pursuant to the Offer,
except in the case of deliveries of certificates for Notes for principal amounts
not tendered for payment that are to be registered or issued in the name of any
person other than the holder of Notes tendered hereby, in which case the amount
of any transfer taxes (whether imposed on the registered holder or such other
person) payable on account of the transfer to such person will be deducted from
the purchase price unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. Irregularities. All questions as to the validity, form, eligibility
(including the time of receipt) and acceptance for payment of any tenders of
Notes pursuant to the procedures described in the Offer to Purchase and the form
and validity (including the time of receipt of notices of withdrawal) of all
documents will be determined by Healthsource, in its sole discretion, which
determination shall be final and binding on all parties. Healthsource reserves
the absolute right to reject any or all tenders determined by it not to be in
proper form or the acceptance of or payment for which may be unlawful.
Healthsource also reserves the absolute right to waive any of the conditions of
the Offer and any defect or irregularity in the tender of any particular Notes.
Healthsource's interpretations of the terms and conditions of the Offer
(including without limitation the instructions in this Letter of Transmittal)
shall be final and binding. No alternative, conditional or contingent tenders
will be accepted. Unless waived, any irregularities in connection with tenders
must be cured within such time as Healthsource shall determine. None of
Healthsource, the Depositary or any other person will be under any duty to give
notification of any defects or irregularities in such tenders or will incur any
liability to holders for failure to give such notification. Tenders of such
Notes shall not be deemed to have been made until such irregularities have been
cured or waived. Any Notes received by the Depositary that are not properly
tendered and as to which the irregularities have not been cured or waived will
be returned by the Depositary to the tendering holders, unless such holders have
otherwise provided herein, as promptly as practical following the Expiration
Date.
8. Mutilated, Lost, Stolen or Destroyed Certificates for Notes. Any
holder of Notes whose certificates for Notes have been mutilated, lost, stolen
or destroyed should contact the Information Agent for further instruction at the
address or telephone numbers included herein.
9. Requests for Assistance or Additional Copies. Questions relating to
the procedure for tendering Notes and requests for assistance or additional
copies of the Offer to Purchase and this Letter of Transmittal may be directed
to, and additional information about the Offer may be obtained from the
Information Agent, whose address and telephone number appears herein.
IMPORTANT TAX INFORMATION
Under federal income tax laws, a holder whose tendered Notes are accepted
for payment is required by law to provide the Depositary (as payer) with such
holder's correct TIN on Substitute Form W-9 included herein or otherwise
establish a basis for exemption from backup withholding. If such holder is an
individual, the TIN is his social security number. If the Depositary is not
provided with the correct TIN, a penalty may be imposed by the Internal Revenue
Service, and payments made with respect to Notes purchased pursuant to the Offer
may be subject to backup withholding. Failure to comply truthfully with the
backup withholding requirements also may result in the imposition of severe
criminal and/or civil fines and penalties.
Certain holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt holders should furnish their TIN, write "Exempt" on the
face of the Substitute Form W-9, and sign, date and return the Substitute Form
W-9 to the Depositary. A foreign person, including a foreign entity, may qualify
as an exempt recipient by submitting to the Depositary a properly completed
Internal Revenue Service Form W-8, signed under penalties of perjury,
10
<PAGE> 11
attesting to that holder's foreign status. A Form W-8 can be obtained from the
Depositary. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the holder or other payee. Backup withholding is not an
additional federal income tax. Rather, the federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made with respect to Notes
purchased pursuant to the Offer, the holder is required to provide the
Depositary with either: (i) the holder's correct TIN by completing the form
included herein, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such holder is awaiting a TIN) and that (A) the holder has not
been notified by the Internal Revenue Service that the holder is subject to
backup withholding as a result of failure to report all interest or dividends or
(B) the Internal Revenue Service has notified the holder that the holder is no
longer subject to backup withholding; or (ii) an adequate basis for exemption.
NUMBER TO GIVE THE DEPOSITARY
The holder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the registered holder of
the Notes. If the Notes are held in more than one name or are held not in the
name of the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
11
<PAGE> 12
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
PAYER'S NAME: IBJ SCHRODER BANK & TRUST COMPANY, AS DEPOSITARY
- -----------------------------------------------------------------------------------------------
SUBSTITUTE PART 1: PLEASE PROVIDE YOUR TIN IN THE BOX -------------------------
FORM W-9 TO THE RIGHT AND CERTIFY BY SIGNING AND Social Security Number
DATING BELOW OR
-------------------------
Employer
Identification No.
----------------------------------------------------------------------
PAYER'S REQUEST FOR PART 2: For Payees NOT subject to backup withholding under the
TAXPAYER IDENTIFICATION provisions of section 340(a)(1)(C) of the Internal Revenue Code, see
NUMBER (TIN) the enclosed Guidelines for Certification Taxpayer Identification
Number on Substitute Form W-9 and complete as instructed therein.
----------------------------------------------------------------------
PART 3: Awaiting TIN [ ]
- -----------------------------------------------------------------------------------------------
CERTIFICATION. Under penalties of perjury, I certify that (1) the number above on this form
is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me)
and (2) I am not subject to backup withholding either because (a) I am exempt from backup
withholding or (b) I have not been notified by the IRS that I am subject to backup withholding
as a result of a failure to report all interest or dividends, or (c) the IRS has notified me
that I am no longer subject to backup withholding.
Certification Instructions. You must cross out item (2) above if you have been notified by the
IRS that you are subject to backup withholding because of underreporting interest or dividends
on you tax return. However, if after being notified by the IRS that you were subject to backup
withholding, you received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). (Also see the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9)
- -----------------------------------------------------------------------------------------------
SIGNATURE ------------------------------------------------------------- DATE
-------------------------------
NAME
----------------------------------------------------------------------------------------------
(Please Print)
ADDRESS
----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
(Include Zip Code)
- -----------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER AND THE
SOLICITATION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION' NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
12
<PAGE> 13
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate IRS
Center or Social Security Administration Office or (b) I intend to mail or
deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number within sixty (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a
taxpayer identification number.
========================================================
SIGNATURE DATE
--------------------------------------------------------
NAME (PLEASE PRINT)
- --------------------------------------------------------------------------------
13
<PAGE> 14
Facsimile copies of this Letter of Transmittal, properly completed and duly
executed, will be accepted. This Letter of Transmittal, certificates for the
Notes and any other required documents should be sent or delivered by each
holder of Notes or such person's broker, dealer, commercial bank or other
nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
By Mail:
P.O. Box 84
Bowling Green Station
New York, New York 10274-0084
Attn: Reorganization Operations Department
By Facsimile Transmission:
(212) 858-2611
Confirm by telephone:
(212) 858-2103
By Hand or Overnight Delivery:
One State Street
New York, New York 10004
Attn: Securities Processing Window,
Subcellar One (SC-1)
Any questions or requests for assistance may be directed to the Information
Agent at the telephone numbers and location listed below. Additional copies of
this Letter of Transmittal, the Offer to Purchase and the Notice of Guaranteed
Delivery may be obtained from the Information Agent at its address and telephone
numbers set forth below. You may also contact your broker, dealer, commercial
bank or trust company or nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
GEORGESON & COMPANY INC.
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
14
<PAGE> 1
Exhibit(a)3
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF CERTIFICATES FOR
5% CONVERTIBLE SUBORDINATED NOTES DUE 2003
OF
HEALTHSOURCE, INC.
Capitalized terms used but not defined herein have the meanings given them
in the Change of Control Notice and Offer to Purchase, dated July 25, 1997 (the
"Offer to Purchase").
This Notice of Guaranteed Delivery may be used to cause a tender of 5%
Convertible Subordinated Notes due 2003 of Healthsource, Inc. (the "Notes") by
(i) a record holder of Notes if certificates for the notes are not immediately
available or time will not permit all required documents to reach the Depositary
on or prior to the Expiration Date or (ii) by a DTC Participant if the
procedures for book-entry transfer described in the Offer to Purchase cannot be
completed on a timely basis.
The Depositary for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: Facsimile Transmission: By Hand/Overnight:
IBJ Schroder Bank & Trust Company (For Eligible Institutions Only) IBJ Schroder Bank & Trust Company
P.O. Box 84 (212) 858-2611 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Confirm by Telephone: Attn: Securities Processing Window
Attn: Reorganization Operations (212) 858-2103 Subcellar One, (SC-1)
Department
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE OFFER TO PURCHASE, THE
OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
SEPTEMBER 18, 1997, AND MAY NOT BE EXTENDED EXCEPT AS REQUIRED BY APPLICABLE LAW
(THE "EXPIRATION DATE"). NOTES TENDERED IN THE OFFER MAY BE WITHDRAWN AT ANY
TIME PRIOR TO THE EXPIRATION DATE.
<PAGE> 2
LADIES AND GENTLEMEN:
By execution hereof, the undersigned acknowledges receipt of the Offer to
Purchase and the Letter of Transmittal. On the terms and subject to the
conditions of the Offer to Purchase and the Letter of Transmittal, the
undersigned hereby represents that it is the holder of the Notes (or the holder
of interests in the Global Note) being tendered (or caused to be tendered)
hereby and is entitled to tender (or cause to be tendered) such Notes as
contemplated by the Offer and, pursuant to the guaranteed delivery procedures
described in the Offer to Purchase and Letter of Transmittal, hereby tenders (or
causes a tender) to Healthsource of the aggregate principal amount of Notes
indicated below.
Except as stated in the Offer to Purchase, all authority herein conferred
or agreed to be conferred shall survive the death or incapacity of the
undersigned, and any obligation of the undersigned hereunder shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned.
A record holder must execute this Notice of Guaranteed Delivery exactly as
its name appears on its Notes and a DTC Participant must execute this Notice of
Guaranteed Delivery exactly as its name is registered with DTC. If signature is
by a trustee, executor, administrator, guardian, attorney-in-fact, agent,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person must set forth his or her name, address and capacity as
indicated below and submit evidence to Healthsource of such person's authority
so to act.
Signed:
- --------------------------------------------------------------------------------
Name(s):
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Company:
- --------------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
Aggregate Principal
Amount of Notes Tendered:
- -----------------------------------------------------------------------------
Certificate Nos. for
Notes (if applicable):
- --------------------------------------------------------------------------------
If being executed by a DTC Participant:
DTC Participant's Number:
- -----------------------------------------------------------------------------
Account Number:
- --------------------------------------------------------------------------------
Transaction Code Number:
- ------------------------------------------------------------------------------
THE GUARANTEE ON THE NEXT PAGE MUST BE COMPLETED
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of a registered national securities exchange or
of the National Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United States or another
"Eligible Guarantor Institution" as defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended, hereby guarantees that, within three New York
Stock Exchange trading days from the date of receipt by the Depositary of this
Notice of Guaranteed Delivery, a properly completed and validly executed Letter
of Transmittal (or a facsimile thereof), together with Notes tendered hereby in
proper form for transfer, (or confirmation of the book-entry transfer of such
Notes into the Depositary's account at the Depositary Trust Company, pursuant to
the procedures for book-entry transfer set forth under "Procedure for Tendering
Notes" in the Offer to Purchase) and all other required documents will be
delivered by the undersigned to the Depositary.
<TABLE>
<S> <C>
Name of Firm:
---------------------------------- ------------------------------------------
AUTHORIZED SIGNATURE
Address:
----------------------------------------- Name:
------------------------------------------
(Please Type or Print)
Title:
- ------------------------------------------ ------------------------------------------
Zip Code
Area Code and Date:
------------------------------------------
Telephone No.:
---------------------------------
</TABLE>
The institution which completes this form must deliver to the Depositary
the guarantee, the Letter of Transmittal (or facsimile thereof) and certificates
for Notes within the time periods specified herein. Failure to do so could
result in a financial loss to such institution.
DO NOT SEND CERTIFICATES FOR NOTES WITH THIS FORM -- THEY SHOULD BE SENT WITH
THE LETTER OF TRANSMITTAL.
3
<PAGE> 1
Exhibit(a)4
HEALTHSOURCE, INC.
OFFER TO PURCHASE
FOR CASH ANY AND ALL OF THE OUTSTANDING
5% CONVERTIBLE SUBORDINATED NOTES DUE 2003
OF HEALTHSOURCE INC.
AT 101% OF THE PRINCIPAL AMOUNT
OF THE NOTES
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE CHANGE OF CONTROL NOTICE
AND OFFER TO PURCHASE, THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON SEPTEMBER 18, 1997, AND MAY NOT BE EXTENDED EXCEPT AS
REQUIRED BY APPLICABLE LAW (THE "EXPIRATION DATE"). NOTES TENDERED IN THE OFFER
MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
July 25, 1997
To Our Clients:
Enclosed for your consideration is a Change of Control Notice and Offer to
Purchase, dated July 25, 1997 (as the same may be amended from time to time, the
"Offer to Purchase"), and a Letter of Transmittal and instructions thereto (the
"Letter of Transmittal"), relating to the offer (the "Offer") by Healthsource,
Inc. ("Healthsource") to purchase for cash all of its outstanding 5% Convertible
Subordinated Notes due 2003 (the "Notes") at 101% of the principal amount
thereof, plus accrued and unpaid interest thereon up to but excluding the date
of payment.
The materials are being forwarded to you as the beneficial owner of Notes
carried by us for your account or benefit but not registered in your name. A
tender of any Notes may only be made by us as the registered holder and pursuant
to your instructions.
Accordingly, we request instructions as to whether you wish us to tender
any or all such Notes held by us for your account or benefit pursuant to the
terms and conditions set forth in the Offer to Purchase and the Letter of
Transmittal. We urge you to read carefully the Offer to Purchase and Letter of
Transmittal before instructing us to tender your Notes.
Your instructions to us should be forwarded as promptly as possible in
order to permit us to tender Notes on your behalf in accordance with the
provisions of the Offer. Notes tendered pursuant to the Offer may be validly
withdrawn, subject to the procedures described in the Offer to Purchase, at any
time prior to the Expiration Date.
Your attention is directed to the following:
1. The Offer is for all outstanding Notes.
2. The Offer will expire on the Expiration Date.
3. Any transfer taxes incident to the transfer of Notes from the tendering
holder to Healthsource will be paid by Healthsource, except as provided
in the Offer to Purchase and the instructions to the Letter of
Transmittal.
<PAGE> 2
If you wish to have us tender any or all of your Notes held by us for your
account or benefit, please so instruct us by completing, executing and returning
to us the instruction form that appears below. If you authorize the tender of
your Notes, all such Notes will be tendered unless otherwise specified below.
The accompanying Letter of Transmittal is furnished to you for informational
purposes only and may not be used by you to tender Notes held by us and
registered in our name for your account or benefit.
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Offer.
This will instruct you to tender the principal amount of Notes indicated
below held by you for the account or benefit of the undersigned pursuant to the
terms of and conditions set forth in the Offer to Purchase and the Letter of
Transmittal.
Box 1 [ ] Please tender ALL my Notes held by you for my account or benefit.
Box 2 [ ] Please tender LESS than all my Notes. I wish to tender $
principal amount of Notes (tenders must be in increments of $1,000
principal amount).
Box 3 [ ] Please do not tender any Notes held by you for my account or benefit.
Date:
- -----------------------------------------------
Signature:
- --------------------------------------------------------------------------------
Name (please print):
- --------------------------------------------------------------------------------
UNLESS A SPECIFIC CONTRARY INSTRUCTION IS GIVEN, YOUR SIGNATURE(S) HEREON SHALL
CONSTITUTE AN INSTRUCTION TO US TO TENDER ALL OF YOUR NOTES.
2
<PAGE> 1
Exhibit(a)5
HEALTHSOURCE, INC.
OFFER TO PURCHASE
FOR CASH ANY AND ALL OF THE OUTSTANDING
5% CONVERTIBLE SUBORDINATED NOTES DUE 2003
OF HEALTHSOURCE, INC.
AT 101% OF THE PRINCIPAL AMOUNT OF THE NOTES
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE CHANGE OF CONTROL NOTICE
AND OFFER TO PURCHASE, THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON SEPTEMBER 18, 1997, AND MAY NOT BE EXTENDED EXCEPT AS
REQUIRED BY APPLICABLE LAW (THE "EXPIRATION DATE"). NOTES TENDERED IN THE OFFER
MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
July 25, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Enclosed for your consideration is a Change of Control Notice and Offer to
Purchase, dated July 25, 1997 (as the same may be amended from time to time, the
"Offer to Purchase"), and a form of Letter of Transmittal and instructions
thereto (the "Letter of Transmittal") relating to the offer (the "Offer") by
Healthsource, Inc. ("Healthsource") to purchase for cash all of the outstanding
5% Convertible Subordinated Notes due 2003 of Healthsource (the "Notes") at 101%
of the principal amount thereof, plus accrued and unpaid interest thereon up to
but excluding the date of payment.
We are asking you to contact your clients for whom you hold Notes
registered in your name or in the name of your nominee. In addition, we ask you
to contact your clients who, to your knowledge, hold Notes registered in their
own name. You will be reimbursed by Healthsource for customary mailing and
handling expenses incurred by you in forwarding any of the enclosed materials to
your clients. Healthsource will pay all transfer taxes, if any, applicable to
the tender of Notes, except as otherwise provided in the Offer to Purchase and
the Letter of Transmittal.
Enclosed is a copy of each of the following documents for forwarding to
your clients:
1. The Offer to Purchase.
2. A Letter of Transmittal, including Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9, for your use in
connection with the tender of Notes by record holders and for the
information of your clients.
3. A form of letter addressed "To Our Clients" that may be sent to your
clients for whose accounts you hold Notes registered in your name or
the name of your nominee, with space provided for obtaining the
clients' instructions with regard to the Offer.
4. A Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Notes are not lost but not immediately available, or
if the procedure for book-entry transfer cannot be completed on or
prior to the Expiration Date.
5. A return envelope addressed to IBJ Schroder Bank & Trust Company, the
Depositary (the "Depositary").
<PAGE> 2
Your prompt action is requested. Notes tendered pursuant to the Offer may
be validly withdrawn, subject to the procedures described in the Offer to
Purchase, at any time prior to the Expiration Date.
Please refer to "Procedures for Tendering Notes" in the Offer to Purchase
for a description of the procedures which must be followed to tender Notes in
the Offer.
Additional copies of the enclosed materials may be obtained from Georgeson
& Company Inc., the Information Agent for the Offer, at (212) 440-9800.
Very truly yours,
HEALTHSOURCE, INC.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF HEALTHSOURCE, THE TRUSTEE, OR THE DEPOSITARY, OR AUTHORIZE
YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH
RESPECT TO THE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE OFFER TO
PURCHASE OR THE LETTER OF TRANSMITTAL.
2
<PAGE> 1
EXHIBIT (a)(6)
[NOTICE PUBLISHED IN WALL STREET JOURNAL]
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell these securities. The Offer is made only in the Offer to Purchase
and the related Letter of Transmittal and is not being made to (nor will tenders
be accepted from) holders of Notes in any jurisdiction in which the Offer or the
acceptance thereof would not be in compliance with the securities laws of such
jurisdiction.
HEALTHSOURCE, INC.
CHANGE OF CONTROL NOTICE AND OFFER TO PURCHASE FOR CASH
ANY AND ALL OF THE OUTSTANDING
5% CONVERTIBLE SUBORDINATED NOTES DUE 2003
OF
HEALTHSOURCE, INC.
AT 101% OF THE PRINCIPAL AMOUNT OF THE NOTES
Healthsource, Inc. ("Healthsource") is offering to purchase for cash at the
Purchase Price (as defined), upon the terms and subject to the conditions set
forth in the Change of Control Notice and Offer to Purchase, dated July 25, 1997
(the "Offer to Purchase"), and in the related Letter of Transmittal, any and all
of the outstanding 5% Convertible Subordinated Notes Due 2003 of Healthsource
(the "Notes"). The Purchase Price is 101% of the principal amount of the Notes,
plus accrued and unpaid interest up to but excluding September 23, 1997, the
date of payment (the "Payment Date"). See the Offer to Purchase for capitalized
terms used but not defined herein.
The Offer is being made pursuant to the Indenture, which provides that,
following a Change of Control, Healthsource is required to purchase at the
Purchase Price any and all Notes from each Holder that properly exercises its
Change of Control Right. A Change of Control occurred on June 25, 1997 as a
result of the consummation of the tender offer by CHC Acquisition Corp.
("Acquisition"), an indirect wholly owned subsidiary of CIGNA Corporation, for
all outstanding shares of common stock, par value $0.10 per share, of
Healthsource (the "Common Stock"), pursuant to which Acquisition purchased
approximately 98% of the issued and outstanding shares of Common Stock.
Any Notes not tendered in the Offer will continue to accrue interest and to
have all of the benefits of the Indenture. Unless Healthsource defaults in the
payment of the Purchase Price, any Notes accepted for payment pursuant to the
Offer will cease to accrue interest on the Payment Date.
Any questions or requests for assistance or for copies of the Offer to
Purchase or related documents may be directed to the Information Agent at the
telephone numbers set forth below. Any beneficial owner owning interests in
Notes may contact such beneficial owner's broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Offer.
<PAGE> 2
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE CHANGE OF CONTROL NOTICE
AND OFFER TO PURCHASE, THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON SEPTEMBER 18, 1997, AND MAY NOT BE EXTENDED EXCEPT AS
REQUIRED BY APPLICABLE LAW (THE "EXPIRATION DATE"). NOTES TENDERED IN THE OFFER
MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
The Information Agent for the Offer is:
GEORGESON & COMPANY INC.
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
July 25, 1997
2
<PAGE> 1
EXHIBIT (c)(2)
================================================================================
HEALTHSOURCE, INC.
Issuer
AND
THE BANK OF NEW YORK
Trustee
FIRST SUPPLEMENTAL INDENTURE
DATED AS OF JUNE 3, 1996
TO
INDENTURE
DATED AS OF MARCH 6, 1996
5% CONVERTIBLE SUBORDINATED NOTES DUE 2003
================================================================================
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE dated as of June 3, 1996, between
HEALTHSOURCE, INC., a New Hampshire corporation (the "Company"), and THE BANK OF
NEW YORK, a New York banking corporation (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Company and the Trustee have heretofore executed and delivered
a certain indenture dated as of March 6, 1996 (the "Indenture"), pursuant to
which 5% Convertible Subordinated Notes Due 2003 (the "Notes") in an aggregate
principal amount of $247,250,000 have been issued;
WHEREAS, Section 10.1(f) of the Indenture provides, among other things,
that, without the consent of the holders of the Notes, the Company, when
authorized by Board Resolutions, and the Trustee, may enter into an indenture
supplemental to the Indenture to cure any ambiguity or to correct or supplement
any provision contained therein or in any supplemental indenture that may be
defective or inconsistent with any other provision contained therein or in any
supplemental indenture, or to make such other provisions in regard to matters or
questions arising under the Indenture that shall not adversely affect the
interests of the holders of the Notes;
WHEREAS, the Company and the Trustee join in the execution of this First
Supplemental Indenture for the purpose of amending certain provisions of the
Indenture as hereinafter set forth;
WHEREAS, the execution and delivery of this First Supplemental Indenture
has been authorized by Board Resolutions and the Trustee; and
WHEREAS, all conditions precedent and requirements necessary to make this
First Supplemental Indenture a valid and legally binding instrument in
accordance with its terms have been complied with, performed and fulfilled and
the execution and delivery hereof have been in all respects duly authorized;
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and intending to be legally bound
hereby, it is mutually covenanted and agreed, for the equal and proportionate
benefit of all holders of the Notes, as follows:
ARTICLE I.
AMENDMENTS
SECTION 1.1 The first sentence of the fifth paragraph of Section 14.2 of
the Indenture is hereby amended to read as follows:
"Any Note or portion thereof surrendered for conversion during the period
from the close of business on the record date for any interest payment date
through the opening of business on the next succeeding interest payment date
shall (unless such Note or portion thereof being converted shall have been
called for redemption on a date during the period from the close of business on
or after any record date to the opening of business on the business day
following the corresponding payment date) be accompanied by payment, in funds
acceptable to the Company, of an amount equal to the interest otherwise payable
on such interest payment date on the principal amount being converted; provided,
however, that no such payment need be made if there shall exist at the time of
conversion a default in the payment of interest on the Notes.
SECTION 1.2 The second sentence of the thirteenth paragraph within the
"FORM OF REVERSE OF NOTE" portion of Exhibit A of the Indenture (which paragraph
begins "Subject to the provisions of the Indenture") is hereby amended to read
as follows:
"No adjustment in respect of interest or dividends will be made upon any
conversion; provided that if this Note shall be surrendered for conversion
during the period from the close of business on any record date for the payment
of interest through the opening of business on the next succeeding interest
payment date, this Note (unless it or the portion being converted shall have
been called for redemption on a date during the period from the close of
business on or after any record date to the opening of business on the business
day
2
<PAGE> 3
following the corresponding payment date) must be accompanied by an amount, in
funds acceptable to the Company, equal to the interest payable on such interest
payment date on the principal amount being converted."
SECTION 1.3 The second sentence of the thirteenth paragraph within the
"FORM OF REVERSE OF RESTRICTED GLOBAL NOTE" portion of Exhibit B of the
Indenture (which paragraph begins "Subject to the provisions of the Indenture")
is hereby amended to read as follows:
"No adjustment in respect of interest or dividends will be made upon any
conversion; provided that if this Restricted Global Note shall be surrendered
for conversion
IN WITNESS WHEREOF, the parties hereto have caused this first Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested all as of the day and year first above written.
HEALTHSOURCE, INC.
By /s/ NORMAN C. PAYSON
------------------------------------
Name: Norman C. Payson
Title: President
Attest:
/S/ JOHN S. RICHARDSON
- ---------------------------------------------------
Name: John S. Richardson
Title: Secretary
<TABLE>
<S> <C>
THE BANK OF NEW YORK
as Trustee
By LUCILLE FIRRINCIELE
--------------------------------------------
Name: Lucille Firrinciele
Title: Assistant Vice President
Attest:
/s/ NANCY GILL
-------------------------------------------
Name: Nancy Gill
Title: Assistant Treasurer
</TABLE>
3
