<PAGE> 1
As filed with the Securities and Exchange Commission
on April 25, 1997
Registration No. 333-_______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
HEALTHSOURCE, INC.
(Exact name of issuer as specified in its charter)
New Hampshire 02-0387748
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Two College Park Drive
Hooksett, New Hampshire 03106
(Address of principal executive offices)
1995 CONCORD AREA PHYSICIAN
NON-QUALIFIED STOCK OPTION PLAN
(Full title of the plan)
----------------------------------
NORMAN C. PAYSON, M.D.
President and Chief Executive Officer
HEALTHSOURCE, INC.
Two College Park Drive
Hooksett, New Hampshire 03106
(603) 268-7000
(Name, address and telephone number of agent for service)
Copy to:
DANIEL N. GREGOIRE, ESQ.
Sheehan Phinney Bass + Green,
Professional Association
1000 Elm Street
Manchester, New Hampshire 03101
================================================================================
<PAGE> 2
<TABLE>
CALCULATION OF REGISTRATION FEE
================================================================================
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Offering Aggregate Amount of
to be Amount to be Price Per Offering Registration
Registered Registered Share Price Fee
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 49,694 $17.46(2) $867,657(2) $263
$.10 par shs (1)
value
- --------------------------------------------------------------------------------
<FN>
(1) Represents the maximum number of shares of Healthsource, Inc. Common Stock
issuable pursuant to in-the-money options previously granted under the 1995
Concord Area Physician Non-Qualified Stock Option Plan.
(2) Pursuant to Rule 457(h)(i), the registration fee has been calculated on the
basis of the exercise price of the 49,694 shares of Healthsource, Inc.
Common Stock issuable pursuant to in-the-money options previously granted
pursuant to the 1995 Concord Area Physician Non-Qualified Stock Option
Plan.
</TABLE>
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
There are hereby incorporated by reference in this Registration Statement
the following documents and information previously filed with the Securities and
Exchange Commission:
(a) The Healthsource, Inc. (the "Company") Annual Report on Form 10-K for
the Fiscal Year Ended December 31, 1996.
(b) The Company's Current Reports on Form 8-K dated January 10, 1997 and
March 4, 1997.
(c) The description of the Company's Common Stock to be offered hereby
contained in the Company's Form 8-A Registration Statement filed November 12,
1992.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") after the
date of this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be part hereof
from the date of filing such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
The legality of the shares ("Shares") of Common Stock of the Company to be
issued upon exercise of the options ("Options") granted pursuant to the 1995
Concord Area Physicians Non-Qualified Stock Option Plan is the subject of an
opinion of Sheehan Phinney Bass + Green, Professional Association. Certain
members and associates of Sheehan Phinney Bass + Green, Professional Association
beneficially own an aggregate of 59,140 Shares as of the date hereof.
Item 6. Indemnification of Directors and Officers.
The By-Laws of the Company and the New Hampshire Business Corporation Act
provide that the Company shall indemnify any person who is or was a party to any
pending or completed action, other than an action by or in the right of the
Company, by reason of the fact that he is or was a director, officer, employee
or agent of the Company, against expenses, judgments, fines and amounts paid in
II-2
<PAGE> 4
settlement if he acted in good faith and he reasonably believed, (i) in the case
of conduct in his official capacity that his conduct was in the best interests
of the Company, or (ii) in all other cases, that his conduct was not opposed to
its best interests; or, in the case of a criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful. Any such director,
officer, employee or agent shall be indemnified by the Company in an action by
or in the right of the Company to the same extent and under the same
circumstances, except that no indemnification may be made for any claim as to
which the person shall have been adjudged to be liable to the Company. The
Company also may not indemnify any such director, officer, employee or agent in
connection with any proceeding charging improper personal benefit to him if he
is adjudged liable on that basis. Prior to and as a condition of any
indemnification by the Company of any such director, officer, employee or agent,
the Board of Directors must make a determination that under the facts of the
matter, the person seeking indemnification met the applicable standard of
conduct. However, the Company must indemnify a director who is wholly
successful, on the merits or otherwise, in the defense of any proceeding to
which he was a party because he is or was a director of the Company. In the case
of the advancement by the Company of expenses before the final disposition of a
proceeding involving any such person, such person must affirm his good faith
belief that his conduct met the applicable standard of conduct and must
undertake to repay the advance if it is ultimately determined that he did not
meet the applicable standard of conduct, and the Board of Directors must make a
determination that the facts then known would not preclude indemnification of
such person. The Company is obligated pursuant to indemnity agreements with its
directors and executive officers to indemnify them to the full extent permitted
by law. Insofar as indemnification for liabilities under the Securities Act may
be permitted to directors, officers or persons controlling the Company pursuant
to the foregoing provisions, the Company has been informed that, in the opinion
of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
In connection with the Agreement and Plan of Merger (the "Merger
Agreement") dated February 27, 1997 among the Company, CIGNA Corporation
("CIGNA") and CHC Acquisition Corp., CIGNA agreed to provide additional
indemnification rights to certain officers, directors, employees and agents of
the Company. The Merger Agreement provides that from and after the consummation
of the tender offer contemplated therein, CIGNA will, and will cause the Company
(or the surviving corporation if after the effective time of the merger
contemplated therein) to indemnify, defend and hold harmless any current or
former officer, director, employee and agent of the Company and its subsidiaries
against all losses, claims, damages, liabilities, costs and expenses (including
attorney's fees and expenses), judgments, fines, losses, and amounts paid in
settlement in connection with any actual or threatened action, suit, claim,
proceeding or investigation to the extent that any such claim is based on, or
arises out of, (i) the fact that such person is or was a director, officer,
II-3
<PAGE> 5
employee or agent of the Company or any of its subsidiaries or is or was serving
at the request of the Company or any of its subsidiaries as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or (ii) the Merger Agreement, or any of the transactions
contemplated thereby, in each case to the extent that any such claim pertains to
any matter or fact arising, existing, or occurring prior to or at the effective
time of the merger, regardless of whether such claim is asserted or claimed
prior to, at or after the effective time, to the full extent permitted under New
Hampshire law or the Company's Articles of Incorporation, By-Laws or existing
indemnification agreements, including provisions relating to advancement of
expenses incurred in the defense of any action or suit. All rights to
indemnification and all limitations on liability existing in favor of the
indemnified party as provided in the Company's Articles of Incorporation and
By-Laws as in effect as of the Merger Agreement will survive the merger and will
continue in full force and effect, without any amendment thereto, for a period
of six years from the effective time. CIGNA or the surviving corporation after
the merger are obligated to maintain the Company's existing officers' and
directors' liability insurance policy for a period of not less than six years
after the effective date of the merger.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit
Number Document Reference
- ------- -------- ---------------------
4.1 1995 Concord Area Physician Non- Filed herewith
Qualified Stock Option Plan
5.1 Opinion of Sheehan Phinney Bass + Filed herewith
Green, Professional Association as
to legality of securities being
registered
23.1 Consent of Deloitte & Touche, LLP, Filed herewith
Independent Auditors
23.2 Consent of Sheehan Phinney Bass + Contained in Exhibit 5.1
Green, Professional Association
24.1 Power of Attorney See page II-7
Item 9. Undertakings.
The Company hereby undertakes:
II-4
<PAGE> 6
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to include any
prospectus required by Section 10(a)(3) of the Securities Act; to reflect in the
Prospectus any facts or events arising after the effective date of this
Registration Statement (or the most recent post-effective amendment hereof)
which, individually, or in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement; and to include any
material information with respect to the plan of distribution not previously
disclosed in this Registration Statement or any material change to such
information in this Registration Statement, unless the information required to
be included in a post-effective amendment by the foregoing is contained in
periodic reports filed by the Company pursuant to Section 13 or Section 15(d) of
the Exchange Act and are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Company's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) To transmit or cause to be transmitted to all participants in the 1995
Concord Area Physician Non-Qualified Stock Option Plan, at the time and in the
manner such material is sent to its shareholders, copies of all reports, proxy
statements and other communications distributed to its shareholders generally.
(6) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the New Hampshire Business Corporation Act, the Articles of
Incorporation or the Bylaws of the Company, Indemnification Agreements entered
into between the Company and its officers and directors, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director,
II-5
<PAGE> 7
officer or controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered hereunder, the Company
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-6
<PAGE> 8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Healthsource,
Inc. certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Hooksett, State of New Hampshire, on this 25th day of
April, 1997.
HEALTHSOURCE, INC.
By: /s/ Norman C. Payson, M.D.
---------------------------------------
Norman C. Payson, M.D.
President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Joseph M. Zubretsky
----------------------------------------
Joseph M. Zubretsky
Chief Financial Officer
(Principal Financial and Accounting
Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Norman C. Payson, M.D. and Joseph M.
Zubretsky, jointly and severally, his attorney-in-fact, each with the power of
substitution, for him and in any and all capacities, to sign any amendments to
this Registration Statement on Form S-8, and to file the same, with exhibits
hereto and other documents in connection herewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
II-7
<PAGE> 9
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Merwyn Bagan, M.D. Chairman of the Board April 25, 1997
- ----------------------------------- of Directors
Merwyn Bagan, M.D.
/s/ Paul D. Baron, M.D. Director March 22, 1997
- -----------------------------------
Paul D. Baron, M.D.
/s/ Robert A. Leipold, M.D. Director March 21, 1997
- -----------------------------------
Robert A. Leipold, M.D.
/s/ Francis G. Middleton, M.D. Director April 25, 1997
- -----------------------------------
Francis G. Middleton, M.D.
/s/ Robert H. Bilbro, M.D. Director March 21, 1997
- -----------------------------------
Robert H. Bilbro, M.D.
/s/ Norman C. Payson, M.D. President, Chief April 25, 1997
- ----------------------------------- Executive Officer and
Norman C. Payson, M.D. Director
/s/ Daniel F. Eubank, M.D. Director March 23, 1997
- -----------------------------------
Daniel F. Eubank, M.D.
/s/ David W. Schall, M.D. Director March 21, 1997
- -----------------------------------
David W. Schall, M.D.
/s/ Robert S. Cathcart III, M.D. Director March 21, 1997
- -----------------------------------
Robert S. Cathcart III, M.D.
/s/ J. Harold Chandler Director April 25, 1997
- -----------------------------------
J. Harold Chandler
</TABLE>
II-8
<PAGE> 10
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------
EXHIBITS
--------------------------------------
Registration Statement on Form S-8
HEALTHSOURCE, INC.
April 25, 1997
II-9
<PAGE> 11
<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit
Number Document Reference
- ------- -------- ---------
<S> <C> <C>
4.1 1995 Concord Area Physician Non-Qualified Stock Option
Plan.................................................. Filed herewith
5.1 Opinion of Sheehan Phinney Bass + Green,
Professional Association as to legality of
securities being registered........................... Filed herewith
23.1 Consent of Deloitte & Touche, LLP Independent
Auditors ............................................. Filed herewith
23.2 Consent of Sheehan Phinney Bass + Green,
Professional Association.............................. Contained in Exhibit 5.1
24.1 Power of Attorney..................................... See page II-7
</TABLE>
<PAGE> 1
EXHIBIT 4.1
HEALTHSOURCE, INC.
1995 CONCORD AREA PHYSICIAN NON-QUALIFIED STOCK OPTION PLAN
-----------------------------------------------------------
A. Purpose and Scope.
-----------------
This Plan is created in conjunction with the acquisition of certain primary
care practices in the Concord, New Hampshire area by Community Choice
Physicians, Inc. ("CCP"), an affiliate of the Company, pursuant to
Agreements with the following physician practices:
Concord Family Physicians
Family Physicians of Pembroke
Penacook Family Physicians
(hereafter the "Agreements"). Pursuant to a series of Agreements, 10
primary care physicians, as individuals, partners or otherwise will sell
the assets of their practices (or their entire interests therein) to
Concord Community Physicians, Inc. ("CCP") and become employees of CCP
(such physicians being collectively called the "Concord PCPs" herein).
The purpose of this Plan is to provide an incentive for the Concord PCPs to
expand and improve the services and profitability of CCP, the Company and
their affiliates, and to assist CCP, the Company and their affiliates in
attracting and retaining key physician employees through the grant of
options to purchase shares of the Company's common stock.
B. Definitions.
-----------
Unless otherwise required by the context:
1. "Board" shall mean the Board of Directors of the Company.
2. "Committee" shall mean the Stock Option Plan Committee, which is
appointed by the Board.
3. "Company" shall mean Healthsource, Inc., a New Hampshire
corporation.
4. "Code" shall mean the Internal Revenue Code of 1986, as amended.
5. "Concord PCP" shall mean the primary care physicians who have
sold the assets of his/her medical practice, or stock or
partnership interest therein, to CCP and is employed by CCP and
listed in Exhibit A.
<PAGE> 2
6. "Fair Market Value" shall mean: (i) if the Stock is listed on a
national securities exchange or the NASDAQ National Market
System, then the value per share shall be not less than the
closing price on the date of determination of fair market value,
or if there were no sales on said date, then the value shall be
not less than the closing price on the date next preceding the
date of determination of fair market value on which there were
sales; or (ii) if the Stock is not so listed on a national
securities exchange or the NASDAQ National Market System, then
the fair market value per share shall be as determined by the
Committee in good faith from time-to-time, but in no event to be
less than the book value of the Stock.
7. "Option" shall mean a right to purchase Stock, granted pursuant
to the Plan.
8. "Option Price" shall mean the purchase price for Stock under an
Option, as determined in SECTION F below.
9. "Participant" shall mean the individuals listed in Exhibit A.
10. "Plan" shall mean this Healthsource, Inc. 1995 Concord Area
Physician Non-Qualified Stock Option Plan.
11. "Stock" shall mean the common stock of the Company, par value
$.10 per share.
C. Stock to be Optioned.
--------------------
Subject to the provisions of SECTION L of the Plan, the maximum number of
shares of Stock that may be optioned or sold under the Plan is one hundred
fifty thousand (150,000) shares. Such shares may be authorized but unissued
shares of Stock of the Company.
D. Administration.
--------------
The Plan shall be administered by the Committee. Two members of the
Committee shall constitute a quorum for the transaction of business. The
Committee shall be responsible to the Board for the operation of the Plan.
The interpretation and construction of any provision of the Plan by the
Committee shall be final. The Committee shall also have the authority to
provide Participants, in any Option granted under the Plan, the right to
require the Company to repurchase options or to reacquire shares of Stock
acquired through exercise of an Option, on terms which the Committee in its
sole discretion shall deem necessary and appropriate. No member of the
Board or the Committee shall be liable for any action or determination made
in good faith.
E. Eligibility and Issuance.
------------------------
2
<PAGE> 3
Within sixty (60) days after the date that the Agreements are fully
executed (the "Signing Date"), the Board shall issue Options to each
Concord PCP listed in Exhibit A to purchase the number of shares of Stock
of the Company set forth opposite such Concord PCP's name in Exhibit A in
accordance with the terms and conditions of the Plan. Thereafter, on or
about each of the next four (4) anniversaries of the Signing Date, the
Board shall issue Options to each Concord PCP listed in Exhibit A who is,
as of such anniversary date, an employee of CCP, to purchase the number of
shares of Stock of the Company set forth opposite such Concord PCP's name
(adjusted, if required, pursuant to Section L) in Exhibit A pursuant to the
terms and conditions of the Plan.
F. Option Price.
------------
The purchase price for Stock under each Option shall be one hundred ten
percent (110%) of the fair market value of the Stock at the time the Option
is granted, but in no event less than the par value of the Stock.
G. Terms and Conditions of Options.
-------------------------------
Options granted pursuant to the Plan have been authorized by the Board and
shall be evidenced by agreements in the form annexed hereto as Exhibit B.
Such agreements shall comply with and be subject to the following terms and
conditions:
1. EMPLOYMENT AGREEMENT. The Participant shall agree to remain in
the employ of, and to render services to, the Company or any of
its subsidiaries in accordance with his/her employment agreement
entered into on or about August 31, 1995. No such agreement shall
impose upon the Company or any of its subsidiaries, however, any
obligation to employ the Participant for any period of time.
2. TIME AND METHOD OF PAYMENT. Unless the Board otherwise provides
for "cashless exercise" of the Options, the Option Price shall be
paid in full in cash (or in the case of an immediate sale, by
Participants, a 10 day note coupled with an arrangement of the
process of the sale) at the time an Option is exercised under the
Plan. Otherwise, an exercise of any Option granted under the Plan
shall be invalid and of no effect. Promptly after the exercise of
an Option and the payment of the full Option Price (unless
cashless exercise has been authorized), the Participant shall be
entitled to the issuance of a stock certificate evidencing his
ownership of such Stock. A Participant shall have none of the
rights of a shareholder until shares are issued to him, and no
adjustment will be made for dividends or other rights for which
the record date is prior to the date such stock certificate is
issued.
3
<PAGE> 4
3. NUMBER OF SHARES. Each Option shall state the total number of
shares of Stock to which it pertains.
4. OPTION PERIOD AND GENERAL LIMITATIONS ON EXERCISE OF OPTIONS. No
Option may be exercised prior to the expiration of two years from
the grant thereof; as of the second anniversary date after each
grant under the plan, a pro rata number of the options granted
shall vest, such that the entire annual grant will be vested on
the anniversary date of the grant in the year 2002; the Board may
also provide that an Option may not be exercised in whole or in
part for such longer periods of time specified in the individual
Option agreement. Except as so provided herein or in the Option
agreement, an Option may be exercised in whole or in part at any
time during its term. No Option may be exercised after the
expiration of ten (10) years from the date it is granted. No
Option may be exercised for a fractional share of Stock.
5. CHANGE IN CONTROL OF THE COMPANY, HEALTHSOURCE NEW HAMPSHIRE,
INC. OR CCP. In the event (i) of a change of control in the
Company, defined as one person or entity owning a greater than
50% interest in the Company, or a transaction involving the
purchase and sale of more than ten percent of the Company's
shares of voting stock and pursuant to which there is a change of
more than one-half of the Company's Board of Directors (including
the election of new directors) (ii) the sale of a majority of the
capital stock of CCP or Healthsource New Hampshire, Inc. to a
third-party, or (iii) the sale of substantially all of the assets
of CCP or Healthsource New Hampshire, Inc. to a third-party, then
all Options then granted hereunder shall be immediately
exercisable in full without regard to any vesting or delay
provision contained therein.
6. CONSIDERATION. The consideration for issuance of Options by the
Company shall be determined by the Board and the judgment of the
Board as to the consideration and the sufficiency thereof shall
be conclusive.
H. Termination of Employment.
-------------------------
Except as provided in SECTION I, below, if a Participant ceases to be
employed by the Company or any of its subsidiaries, his/her Options shall
terminate immediately; PROVIDED, HOWEVER, that if a Participant's cessation
of employment with the Company and its subsidiaries is due to his/her
retirement with the consent of the Company or any of its subsidiaries, the
Participant may, at any time within three (3) months after such cessation
of employment, exercise his/her Options to the extent that he/she was
entitled to exercise them on the date of cessation of employment, but in no
event shall any Option be exercisable more than ten (10) years from the
date it was granted. The Board may cancel an Option during the three-month
period referred to in this paragraph, if the Participant engages in
employment or activities contrary, in the opinion of the Board, to the best
4
<PAGE> 5
interests of the Company or any of its subsidiaries. The Board shall
determine in each case whether a termination of employment shall be
considered a retirement with the consent of the Company or a Subsidiary,
and, subject to applicable law, whether a leave of absence shall constitute
a termination of employment. Any such determination of the Board shall be
final and conclusive.
I. Rights in Event of Death/Disability.
-----------------------------------
If a Participant dies or becomes permanently disabled while employed by the
Company or any of its subsidiaries, or within three months after having
retired with the consent of the Company or any of its subsidiaries, and
without having fully exercised his Options, all Options granted to the
Participant shall become immediately vested and the Participant or his/her
executors or administrators, or legatees or heirs, of his estate shall have
the right to exercise such Options without regarding to any future vesting
requirement in such Options; PROVIDED, HOWEVER, that in no event shall the
Options be exercisable more than ten (10) years from the date they were
granted.
J. No Obligation to Exercise Option.
--------------------------------
The granting of an Option shall impose no obligation upon the Participant
to exercise such Option.
K. Nonassignability.
----------------
Options shall not be transferable other than by will or by the laws of
descent and distribution, and during a Participant's lifetime shall be
exercisable only by such Participant.
L. Effect of Change in Stock Subject to the Plan.
---------------------------------------------
The aggregate number of shares of Stock available for Options under the
Plan, the shares subject to any Option and the price per share shall all be
proportionately adjusted for any increase or decrease in the number of
issued shares of Stock subsequent to the effective date of the Plan
resulting from: (i) a subdivision or consolidation of shares or any other
capital adjustment, (ii) the payment of a stock dividend; or, (iii) other
increase or decrease in such shares effected without receipt of
consideration by the Company. If the Company shall be a party to any merger
or consolidation, any Option shall pertain, apply, and relate to the
securities to which a holder of the number of shares of Stock subject to
the Option would have been entitled under the agreements governing the
merger or consolidation. Upon dissolution or liquidation of the Company,
all Options outstanding under the Plan shall terminate, PROVIDED, HOWEVER,
that each Participant (and each other person entitled under SECTION I to
exercise an Option) shall have the right, immediately prior to such
dissolution or liquidation to exercise such Participant's Options in whole
or in part.
M. Amendment and Termination.
-------------------------
5
<PAGE> 6
Any Options not granted as of the sixtieth (60th) business day following
the fourth (4th) anniversary of the Signing Date shall be null and void.
In the event of a change in control, as defined in Section G.5, this Stock
Option Plan shall, subject to applicable state and federal law, terminate
automatically, provided, however that unless prohibited by applicable state
and federal law, in lieu of options not yet granted under the Plan to the
Concord PCPs listed in Exhibit A who are employees of CCP as of the date of
the change in control, the Company shall pay to each such Concord PCP who
is an employee of CCP as of the date of the change in control an amount
equal to One Million Dollars ($1,000,000) multiplied by a fraction, the
numerator of which is the number of Options set forth opposite such Concord
PCP's name in Exhibit A and the denominator of which is 24,847.
The Board, by resolution, may terminate, amend, or revise the Plan with
respect to any shares as to which Options have not been granted. The Board
may alter, suspend or discontinue the Plan except that no action of the
Board may materially increase the benefits accruing to Participants under
the Plan, increase (other than as provided in SECTION L) the maximum number
of shares permitted to be optioned under the Plan, or materially modify the
requirements as to eligibility for participation in the Plan, unless such
action of the Board shall be subject to approval or ratification by the
shareholders of the Company. Neither the Board nor the Committee may,
without the consent of the holder of an Option, alter or impair any Option
previously granted under the Plan, except as authorized herein. Unless
sooner terminated, the Plan shall remain in effect until December 31, 2000.
Termination of the Plan shall not affect any Option previously granted.
N. Agreement and Representation of Employee.
----------------------------------------
As a condition to the exercise of any portion of an Option, the Company may
require the person exercising such Option to represent and warrant at the
time of such exercise that any shares of Stock acquired at exercise are
being acquired only for investment and without any present intention to
sell or distribute such stock, if, in the opinion of counsel for the
Company, such a representation is required under the Securities Act of 1933
or any other applicable law, regulation, or rule or any government agency;
provided, however, that under existing regulations such a representation
will not be required. Inability of the Company to obtain from any
regulatory body or authority the approvals deemed by the Company's counsel
to be necessary to the lawful issuance and sale of any shares of Stock
shall relieve the Company of any liability in respect of the non-issuance
or sale of such shares of Stock unless and until said approvals are
obtained.
O. Reservation of Shares of Stock.
------------------------------
The Company, during the term of this Plan, will at all times reserve and
keep available, and will seek or obtain from any regulatory body having
jurisdiction any requisite
6
<PAGE> 7
authority necessary to issue and to sell, the number of shares of Stock
that shall be sufficient to satisfy the requirements of this Plan.
P. Registration of Options and Stock.
---------------------------------
Inability of the Company to obtain from any regulatory body or authority
the approvals deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any shares of Stock shall relieve the Company of any
liability in respect of the non-issuance or sale of such shares of Stock
unless and until said approvals are obtained; provided the Company shall
use its best efforts to obtain any such approvals and specifically shall
register with the SEC all Options (and Stock issuable thereunder) on Form
S-8 or other applicable SEC forms, shall list such Stock with the New York
Stock Exchange and shall maintain such registration and listing in effect
for the duration of the Options.
Q. Withholding of Additional Income Taxes
--------------------------------------
Upon the exercise of an Option, the Company, in accordance with Section
3402 of the Code, may require the optionee to pay additional withholding
taxes in respect of the amount that is considered compensation includable
in such person's gross income. Alternatively, the Company, at its option,
may issue shares of Stock net of the number of shares sufficient to satisfy
the additional withholding taxes due. The Board in its discretion may
condition the exercise of an Option on the purchaser's or recipient's
payment of such additional withholding taxes.
R. Governing Law, Construction
---------------------------
The validity and construction of the Plan and the instruments evidencing
Options shall be governed by the internal, substantive laws of the State of
New Hampshire. In construing this Plan, the singular shall include the
plural and the masculine gender shall include the feminine and neuter,
unless the context otherwise requires.
S. Effective Date of Plan
----------------------
The Plan shall be effective from the date that the Plan is approved by the
Board.
7
<PAGE> 8
EXHIBIT A
PARTICIPANTS IN 1995 CONCORD AREA STOCK OPTION PLAN
Name Number of Options
---- -----------------
Joel C. Berman, M.D. 2,380
Elizabeth A. Clardy, M.D. 1,600
Robert D. Gabrielli, M.D. 2,815
Francis E. Hayes, M.D. 2,380
Steven H. Kaitz, M.D. 2,380
Richard S. Nelson, M.D. 1,600
Carol A. Niegisch, M.D. 2,380
Robert W. Niegisch, M.D. 3,683
Eric F. Pollack, M.D. 2,380
Gary A. Sobelson, M.D. 3,249
8
<PAGE> 9
EXHIBIT B
HEALTHSOURCE, INC.
STOCK OPTION
This Stock Option is hereby granted by HEALTHSOURCE, INC., a New Hampshire
corporation with an office at Two College Park Drive, Hooksett, New Hampshire
(the "Company") to _______________, M.D. (the "Optionee") pursuant to the
HEALTHSOURCE, INC. 1995 CONCORD AREA PHYSICIAN NON-QUALIFIED STOCK OPTION PLAN
(the "Plan"), approved by the Company's Board of Directors on September __, 1995
in consideration of Optionee's agreement to accept employment with a wholly
owned subsidiary of the Company concurrently with the closing referenced in
Section 5 of this Agreement.
1. GRANT OF OPTION.
---------------
The Company hereby grants on the date hereof (the "Option Date") the
Optionee an option to purchase on the terms contained herein, a total of
_____________ (____) shares of the Common Stock, $.10 par value, of the Company,
at a price of _______________ Dollars and Cents ($_______) per share (the
"Option Price"). This option shall become vested and exercisable after the
second anniversary of the Option Date in accordance with the following schedule
Anniversary of Option Date Number of Shares Vested
-------------------------- -----------------------
1996 ____0____
1997 _________
1998 _________
1999 _________
2000 _________
2001 _________
2001 _________
and must be exercised before the tenth anniversary of the Option Date, except as
set forth in Paragraph 3, below. The Option granted hereunder is subject to the
limitations set forth in Paragraph 4, below.
2. EXERCISE, PAYMENT FOR AND DELIVERY OF STOCK.
-------------------------------------------
Each election to exercise this Option in whole or in part shall be made in
accordance with the provisions of the Plan. Payment in full shall be made in
accordance with Section G(2) of the Plan and no shares shall be issued and
delivered until payment therefor has been made. The Optionee shall have none of
the rights of a stockholder until shares are issued or delivered to him/her.
3. CHANGE OF CONTROL OF THE COMPANY.
--------------------------------
9
<PAGE> 10
In the event that there is a change in control of the Company, or the sale
of a majority of the stock or assets of Healthsource New Hampshire, Inc. or
Community Choice Physicians, Inc. to a non-Company affiliated third party, all
as defined in the Plan, (each a "change-of-control"), the Options granted
hereunder shall become immediately vested and exercisable.
4. TERMS OF THE OPTION.
-------------------
THIS OPTION IS SUBJECT TO AND GOVERNED BY ALL OF THE TERMS AND CONDITIONS
OF THE PLAN. A COPY OF THE PLAN IS ATTACHED HERETO AS APPENDIX A AND IS
INCORPORATED HEREIN BY REFERENCE. In particular, Optionee acknowledges and
agrees that upon termination of employment with Community Choice Physicians (or
other affiliates of the Company), any options granted under this Agreement, but
not exercised are null, void and forfeited as of the termination date.
IN WITNESS WHEREOF, Healthsource, Inc. has caused this Option to be
executed by its duly authorized officer.
Dated as of
----------------, ------
HEALTHSOURCE, INC.
By:
------------------------------------
Norman C. Payson, M.D.
President and Chief Executive Officer
Duly Authorized
The undersigned Optionee hereby accepts and agrees to the terms of the
foregoing Option, as of the above date.
By:
--------------------------------
, M.D.
-----------------------------
<PAGE> 1
EXHIBIT 5.1
[SHEEHAN
PHINNEY
BASS +
GREEN
LETTERHEAD] April 25, 1997
Healthsource, Inc.
Two College Park Drive
Hooksett, NH 03106
RE: 1995 CONCORD AREA PHYSICIAN NON-QUALIFIED STOCK OPTION PLAN
Gentlemen:
We have acted as your counsel in connection with the registration under the
Securities Act of 1933 (the "Act") on Form S-8 regarding the Healthsource, Inc.
1995 Concord Area Physician Non-Qualified Stock Option Plan (the "Plan"), and
49,694 shares of Common Stock, $.10 par value per share (the "Shares"), of
Healthsource, Inc. (the "Company"), a New Hampshire corporation, to be issued
thereunder.
In connection therewith, we have examined originals, or photostatic or
certified copies, of all such corporate records of the Company and of all such
agreements, communications and other documents as we have deemed relevant and
necessary as a basis for the opinion hereinafter expressed. In such examination,
we have assumed the genuineness of all signatures and the authenticity of all
documents submitted to us as originals, and the conformity to original documents
of all documents submitted to us as certified or photostatic copies.
Based upon the foregoing, and having regard for such legal considerations
as we have deemed relevant, we are of the opinion that the Shares, when issued
in accordance with the terms of the Plan and when the consideration therefor has
been received by the Company, will be legally issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an Exhibit to the
above-referenced registration statement.
Very truly yours,
SHEEHAN PHINNEY BASS + GREEN,
PROFESSIONAL ASSOCIATION
By: /s/ Michael J. Drooff
-------------------------------
Michael J. Drooff
<PAGE> 1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Healthsource, Inc. on Form S-8 of our report dated February 26, 1997 (February
28, 1997 as to Note 15), appearing in the Annual Report on Form 10-K of
Healthsource, Inc. for the year ended December 31, 1996.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
April 25, 1997
