1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
HEALTHSOURCE, INC.
AT
$21.75 NET PER SHARE
BY
CHC ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
CIGNA CORPORATION
--------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, APRIL 2, 1997, UNLESS THE OFFER IS EXTENDED.
--------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated March 6,
1997 (the "Offer to Purchase") and the related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer") and
other materials relating to the Offer by CHC Acquisition Corp. (the
"Purchaser"), a New Hampshire corporation and an indirect wholly owned
subsidiary of CIGNA Corporation, a Delaware corporation ("Parent"), to purchase
all of the outstanding shares of common stock, par value $.10 per share (the
"Shares"), of Healthsource, Inc., a New Hampshire corporation (the "Company"),
at $21.75 per Share, net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer. Also enclosed is the
letter to stockholders of the Company from the Chairman of the Board and the
President and Chief Executive Officer of the Company accompanied by the
Company's Solicitation/Recommendation Statement on Schedule 14D-9. This material
is being sent to you as the beneficial owner of Shares held by us for your
account but not registered in your name. A tender of such Shares can be made
only by us as the holder of record and pursuant to your instructions. The Letter
of Transmittal accompanying this letter is furnished to you for your information
only and cannot be used by you to tender Shares held by us for your account.
We request instructions as to whether you wish to have us tender any or all
of the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $21.75 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions of the
Offer.
2. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Wednesday, April 2, 1997, unless the Offer is extended.
3. The Offer is being made pursuant to an Agreement and Plan of
Merger, dated as of February 27, 1997 (the "Merger Agreement"), by and
among the Company, Parent and the Purchaser. The Merger Agreement provides
that, among other things, following the consummation of the Offer and the
satisfaction or waiver of the other conditions set forth in the Merger
Agreement, the Purchaser will be merged with and into the Company (the
"Merger"). At the effective time of the Merger, each outstanding Share
(other than Shares held in the treasury of the Company, owned by Parent,
the Purchaser or any other wholly owned subsidiary of Parent or held by
stockholders who perfect their
2
dissenter's rights under New Hampshire law) will be converted into the
right to receive the per Share price paid in the Offer, without interest.
4. In connection with the execution of the Merger Agreement, Parent
and the Purchaser entered into a Tender Agreement and Irrevocable Proxy,
dated as of February 27, 1997 (the "Tender Agreement"), with Xxxxxx X.
Xxxxxx, M.D., the Company's Chief Executive Officer and President and the
owner of an aggregate of 4,332,760 Shares, or approximately 6.1% of the
Company's outstanding Shares on a fully diluted basis. Pursuant to the
Tender Agreement, Xx. Xxxxxx has agreed to validly tender pursuant to the
Offer, and not withdraw, all such Shares.
5. Pursuant to the Merger Agreement, the rights issued pursuant to the
Rights Agreement between the Company and The Bank of New York, dated as of
July 29, 1996, will be redeemed by the Company prior to the consummation of
the Offer.
6. The Board of Directors of the Company has unanimously approved the
Merger Agreement, the Offer and the Merger, has determined that the Offer
and the Merger are fair to and in the best interests of the stockholders of
the Company and unanimously recommends that stockholders accept the Offer
and tender their Shares pursuant to the Offer.
7. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer,
that number of Shares which, together with any Shares beneficially owned by
Parent or the Purchaser, represent at least a majority of the Shares
outstanding on a fully diluted basis. Subject to the terms of the Merger
Agreement, the Offer is also subject to other terms and conditions,
including receipt of certain regulatory approvals, set forth in the Offer
to Purchase. Pursuant to the Merger Agreement, the Purchaser has agreed to
extend the Offer from time to time until September 27, 1997 (as such date
may be extended pursuant to the terms of the Merger Agreement), if at the
initial Expiration Date (as defined in the Offer to Purchase), or any
extension thereof, all conditions to the Offer have not been satisfied or
waived. Any or all conditions to the Offer may be waived by the Purchaser.
8. Any stock transfer taxes applicable to the sale of Shares to the
Purchaser pursuant to the Offer will be paid by the Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
In order to tender Shares pursuant to the Offer, a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message (in the case of any book-entry
transfer), and any other documents required by the Letter of Transmittal, should
be sent to the Depositary, and either certificates representing the tendered
Shares should be delivered or such Shares must be delivered to the Depositary
pursuant to the procedures for book-entry transfers, all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
The Offer is being made to all holders of Shares. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares in
any jurisdiction in which the making of the Offer or acceptance thereof would
not be in compliance with the laws of such jurisdiction. In any jurisdiction
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by Xxxxxxx, Xxxxx & Co. or one or more registered brokers or dealers
licensed under the laws of such jurisdictions.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing and returning to us the
instruction form set forth below. Please forward your instructions to us in
ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer. If you authorize the tender of your Shares, all such
Shares will be tendered unless otherwise specified on the instruction form set
forth below.
2
3
INSTRUCTIONS WITH RESPECT TO
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
HEALTHSOURCE, INC.
BY
CHC ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
CIGNA CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated March 6, 1997 and the related Letter of Transmittal, in
connection with the offer by CHC Acquisition Corp., a New Hampshire corporation
and an indirect wholly owned subsidiary of CIGNA Corporation, a Delaware
corporation, to purchase for cash all outstanding shares of common stock, par
value $.10 per share (the "Shares"), of Healthsource, Inc., a New Hampshire
corporation.
This will instruct you to tender the number of Shares indicated below (or
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer and the related Letter of Transmittal.
Dated: , 1997
NUMBER OF SHARES TO BE TENDERED:
......................... SHARES*
---------------------------------------------------------
---------------------------------------------------------
Signature(s)
---------------------------------------------------------
Please Print Name(s)
---------------------------------------------------------
Please Print Address(es)
---------------------------------------------------------
Area Code and Telephone Number(s)
---------------------------------------------------------
Tax Identification or Social Security Number(s)
---------------
* I (We) understand that if I (we) sign this instruction form without indicating
a lesser number of Shares in the space above, all Shares held by you for my
(our) account will be tendered.
