8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 11, 2007 (September 17, 2007)

HEALTHSPRING, INC.

(Exact name of registrant as specified in charter)

Delaware	001-32739	20-1821898
(State or other jurisdiction of incorporation)	(Commission file number)	(IRS employer identification no.)

9009 Carothers Parkway Building B, Suite 501 Franklin, Tennessee	37067
(Address of principal executive offices)	(Zip code)

(615) 291-7000
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

As previously disclosed on June 20, 2007, Craig S. Schub notified HealthSpring, Inc. (the “Company”) of his decision to terminate his existing Employment Agreement, dated as of April 17, 2006, and to resign as Senior Vice President and Chief Marketing Officer of the Company effective September 30, 2007.

Consulting Agreement

In connection with his resignation from full-time employment with the Company, Mr. Schub and the Company have entered into a Consulting Agreement, to be effective as of October 1, 2007 (the “Consulting Agreement”), whereby Mr. Schub will provide sales and marketing consulting services as directed by the Chief Operating Officer of the Company. The Company will pay Mr. Schub $15,000 per month; in return Mr. Schub has committed to an estimated approximately forty hours of work per month through December 31, 2007. Beginning January 1, 2008, Mr. Schub’s services and the fees for such services will be as Mr. Schub and the Chief Operating Officer of the Company mutually agree.

The foregoing summary is qualified by reference to the full text of the Consulting Agreement, which is attached hereto as Exhibit 10.1.

Amended and Restated Non-Qualified Stock Option Agreement

Simultaneously with the execution of the Consulting Agreement, Mr. Schub and the Company entered into an Amended and Restated Non-Qualified Stock Option Agreement (the “Amended Stock Option Agreement”). The Amended Stock Option Agreement modified the terms of Mr. Schub’s original Non-Qualified Stock Option Agreement (the “Original Agreement”) to allow Mr. Schub to exercise the option to purchase 37,500 shares of Company common stock that vested prior to the date of termination of his employment (September 30, 2007) anytime before April 17, 2016. The Original Agreement provided that, after a separation from employment for reasons other than those permitted by the Original Agreement, such as a voluntary resignation, Mr. Schub could exercise options vested as of the separation date only within three months of such separation.

The foregoing summary is qualified by reference to the full text of the Amended Stock Option Agreement, which is attached hereto as Exhibit 10.2.

Item 9.01. Financial Statements and Exhibits.

(d)   Exhibits.

Exhibit Number	Description
10.1	Consulting Agreement, dated as of October 1, 2007, by and between Craig S. Schub and HealthSpring, Inc.
10.2	Amended and Restated Non-Qualified Stock Option Agreement, dated as of October 1, 2007, by and between Craig S. Schub and HealthSpring, Inc.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

HEALTHSPRING, INC.
By:	/s/ J. Gentry Barden
	J. Gentry Barden
	Senior Vice President, Corporate General Counsel, and Secretary

Date: September 17, 2007

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EX-10.1

EXHIBIT 10.1

CONSULTING AGREEMENT

     THIS CONSULTING AGREEMENT (the “Agreement”) is made as of October 1, 2007 (the “Effective Date”), by and between Craig S. Schub (“Consultant”) and HealthSpring, Inc., a Delaware corporation (the “Company”).

     WHEREAS, Consultant has given the Company notice of his intent to resign and to terminate the Employment Agreement dated as of April 17, 2006 (the “Employment Agreement”) and Consultant’s status as an executive officer and employee of the Company, both effective as of September 30, 2007;

     WHEREAS, Company has accepted Consultant’s resignation;

     WHEREAS, based on Consultant’s prior service to the Company in the capacity of Senior Vice President and Chief Marketing Officer and his knowledge of the Medicare program generally and the Company’s sales and marketing plans and programs particularly, the Company desires to continue to receive certain services of Consultant and to be assured of his services on the terms and conditions hereinafter set forth; and

     WHEREAS, Consultant is willing to provide his services on such terms and conditions.

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, representations and agreements set forth below, the Company and Consultant, intending to be legally bound, hereby agree as follows:

     1. Retention as Consultant. The Company hereby retains Consultant, and Consultant hereby agrees to render services to the Company, upon the terms and conditions contained in this Agreement.

     2. Services to be Provided by Consultant. Consultant agrees to provide consulting services as from time to time directed by the Chief Operating Officer of the Company relating to the Company’s sales and marketing activities. The services will be performed at times and places selected by the Company, with reasonable consideration given to the availability of Consultant and with the mutual understanding that Consultant’s physical presence in one or more of the Company’s plan markets may be requested from time to time. It will be the duty of Consultant in rendering the services to make such reports to the Company relating to the services as the Chief Operating Officer of the Company may, from time to time, reasonably request.

     3. Compensation.

     3.1 As compensation for the services to be provided by Consultant to the Company, the Company shall pay to Consultant compensation at the rate of $15,000 per month through December 31, 2007. It is the current understanding of the parties that the monthly compensation is based on an estimation of approximately 40 hours of work per month by Consultant. Consultant shall not be entitled to any other compensation for the services to be provided hereunder (except as set forth in this section), nor shall Consultant have any further obligations, except as provided herein. As Consultant is an independent contractor, the Company shall not be responsible for withholding from the compensation payable to Consultant any amounts for federal, state, or local income taxes, social security, or state disability or unemployment insurance.

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     3.2 Beginning January 1, 2008, Consultant shall perform such services and on such terms as Consultant and the Chief Operating Officer of the Company may mutually agree.

     3.3 Simultaneously with the execution of this Agreement, Consultant and the Company shall enter into an Amended and Restated Non-Qualified Stock Option Agreement.

     4. Expenses. Upon the receipt of itemized vouchers, expense account reports, and supporting documents submitted to the Company in accordance with the Company’s procedures then in effect, the Company will reimburse Consultant for reasonable and necessary business expenses (including travel expenses relating to travel requested by the Company) actually incurred by Consultant directly related to the performance of Consultant’s duties hereunder.

     5. Termination. Termination by either party shall become effective on the 30^th day following receipt by Consultant or the Company of written notice from the Company or Consultant, as the case may be, of such termination. Upon a termination of this Agreement for any reason pursuant to this Section 5, Consultant shall be entitled to (i) all compensation accrued hereunder and (ii) expense reimbursement pursuant to Section 4, through the date of termination, with no further payment obligation hereunder on the part of the Company. It is understood that termination of this Agreement shall not relieve a party hereto from any liability that, at the time of such termination, has already accrued hereunder. The provisions of this Section 5 and Sections 6 through 8 shall survive any expiration or termination of this Agreement. Except as otherwise expressly provided in this Section 5 or Section 6, all other rights and obligations of the parties under this Agreement shall terminate upon termination of this Agreement.

     6. Survival of Employment Agreement Provisions.

     6.1 The Consultant acknowledges and agrees that in accordance with paragraph 10 of the Employment Agreement certain provisions of the Employment Agreement (including, without limitation, provisions regarding “Confidential Information” and “Work Product” as such terms are defined therein) survive the termination of the Employment Agreement and the termination of Consultant’s employment by the Company.

     6.2 The foregoing notwithstanding, and in lieu and replacement of any provision of Section 7(a) of the Employment Agreement to the contrary, Consultant agrees, until December 31, 2007, not to directly or indirectly own any interest in, manage, control, participate in, consult with, render services for, be employed in an executive, managerial, or administrative capacity by, or in any manner engage in any business within the United States engaging in the businesses of the Company or its subsidiaries, as such businesses exist at any time during the term of this Agreement. Nothing herein or in the Employment Agreement shall prohibit Consultant from (i) being a passive owner of not more than 2% of the outstanding stock of any class of a corporation which is publicly traded, so long as Consultant has no active participation in the business of such corporation, or (ii) becoming employed, engaged, associated, or otherwise participating with a separately managed division or subsidiary of a competitive business that does not engage in the health insurance or managed care business (provided that Consultant’s services are provided only to such division or subsidiary).

     7. Relationship of the Parties.

     7.1 Consultant enters into this Agreement as, and shall continue to be, an independent contractor. The parties agree that no employment relationship, partnership, joint venture, or other association shall be deemed created by this Agreement. Under no circumstances

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shall Consultant look to the Company as his employer, or as a partner, agent, or principal. Consultant shall not be entitled to any benefits accorded to the Company’s employees including, without limitation, workers’ compensation, disability insurance, vacation or sick pay, except as set forth in Section 4 of this Agreement.

     7.2 Consultant shall have the entire responsibility to discharge any and all of his (and not the Company’s) obligations under federal, state, and local laws, regulations, and orders now or hereafter in effect, relating to taxes, unemployment compensation or insurance, social security, workers’ compensation, disability pensions, and tax withholdings (the “Tax Obligations”). Consultant hereby agrees to indemnify and hold the Company harmless from and for any and all claims, losses, costs, fees, liabilities, damages or injuries suffered by the Company arising out of Consultant’s failure to properly discharge the Tax Obligations.

     8. Severability and Governing Law.

     8.1 Should any of the provisions in this Agreement be declared or be determined to be illegal or invalid, all remaining parts, terms, or provisions shall be valid, and the illegal or invalid part, term or provision shall be deemed not to be a part of this Agreement.

     8.2 This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Tennessee without giving effect to any choice or conflict of law provision or rule (whether of the State of Tennessee or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Tennessee.

     9. Notices. All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if delivered personally, sent by nationally recognized overnight courier, or sent by registered or certified mail, return receipt requested, postage prepaid, or sent by facsimile (receipt acknowledged) and addressed to the intended recipient as set forth below:

If to the Company:	HealthSpring, Inc. 9009 Carothers Parkway Building B, Suite 501 Franklin, TN 37067 Attn: Gerald V. Coil
If to Consultant:	Craig S. Schub 32 Coral Reef Newport Coast, CA 92657

Any party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other parties notice in the manner herein set forth.

     10. Amendments. This Agreement may not be amended, supplemented, canceled, or discharged except by written instrument executed by the parties hereto.

     11. Waivers. All waivers hereunder shall be in writing. No waiver by any party hereto of any breach or anticipated breach of any provision of this Agreement by any other party shall be deemed a

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waiver of any other contemporaneous, preceding, or succeeding breach or anticipated breach, whether or not similar, on the part of the same or any other party.

     12. Assignment. Consultant’s rights and obligations under this Agreement are personal to Consultant and cannot be assigned. This Agreement shall be binding on and inure to the benefit of any successor to the business or the assets of the Company.

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     IN WITNESS WHEREOF, the parties hereto have hereby executed this Agreement as of the day and year first written above.

HEALTHSPRING, INC.
By:	/s/ Gerald V. Coil
	Name:	Gerald V. Coil
	Title:	Executive Vice President and Chief Operating Officer
CONSULTANT
/s/ Craig S. Schub
Craig S. Schub

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EX-10.2

EXHIBIT 10.2

HEALTHSPRING, INC.
AMENDED AND RESTATED
NON-QUALIFIED STOCK OPTION AGREEMENT

     THIS AMENDED AND RESTATED NON-QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) is made and entered into as of this 1st day of October, 2007, by and between HealthSpring, Inc., a Delaware corporation (together with its Subsidiaries and Affiliates, the “Company”), and Craig S. Schub (the “Optionee”). Capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the HealthSpring, Inc. 2006 Equity Incentive Plan (the “Plan”).

     WHEREAS, the Company has adopted the Plan, which permits the issuance of stock options for the purchase of shares of the common stock, par value $0.01 per share, of the Company (the “Shares”);

     WHEREAS, the Company and Optionee previously entered into that certain Non-Qualified Stock Option Agreement dated as of April 17^th, 2006 (the “Grant Date”), pursuant to which Company granted to Optionee an option to purchase 150,000 Shares (the “Original Agreement);

     WHEREAS, Optionee has notified Company of his intent to resign his employment with the Company effective as of September 30, 2007, and simultaneously with the execution hereof, the Company and Optionee are entering into a Consulting Agreement; and

     WHEREAS, the Company desires to amend and restate the Original Agreement in its entirety to confirm the number of Shares which have vested prior to the date hereof, to provide that the option to purchase shares not vested under the Original Agreement have terminated, and provide for the exercise thereof to afford the Optionee an opportunity to purchase Shares as hereinafter provided in accordance with the provisions of the Plan.

     NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

     1. Grant of Option.

          (a) The Company confirms the grant as of the Grant Date of the right and option (the “Option”) to purchase 37,500 Shares, in whole or in part (the “Option Stock”), at an exercise price of Seventeen and 15/100 Dollars ($17.15) per Share, on the terms and conditions set forth in this Agreement and subject to all provisions of the Plan. The option to purchase the 112,500 unvested shares under the Original Agreement are terminated. The Optionee, holder or beneficiary of the Option shall not have any of the rights of a shareholder with respect to the Option Stock until such person has become a holder of such Shares by the due exercise of the Option and payment of the Option Payment (as defined in Section 3 below) in accordance with this Agreement.

          (b) The Option shall be a non-qualified stock option. In order to provide the Company with the opportunity to claim the benefit of any income tax deduction which may be available to it upon the exercise of the Option, and in order to comply with all applicable federal or state tax laws or regulations, the Company may take such action as it deems appropriate to insure that, if necessary, all applicable federal, state or other taxes are withheld or collected from the Optionee.

     2. Exercise of Option. Except as otherwise provided herein, your Option with respect to the Option Stock as set forth in this Agreement is vested. If the Optionee dies prior to the expiration of the Term, this Option may thereafter be exercised by the legal representative of the estate or by the legatee of the Optionee under the will of the Optionee until the expiration of the Term of the Option. If the Optionee becomes disabled, this Option may thereafter be exercised by the personal representative or guardian of the Optionee, as applicable, until the expiration of the Term of the Option.

     3. Manner of Exercise. The Option may be exercised in whole or in part at any time within the period permitted hereunder for the exercise of the Option, with respect to whole Shares only, by serving written notice of intent to exercise the Option delivered to the Company at its principal office (or to the Company’s designated agent), stating the number of Shares to be purchased, the person or persons in whose name the Shares are to be registered and each such person’s address and social security number. Such notice shall not be effective unless accompanied by payment in full of the Option Price for the number of Shares with respect to which the Option is then being exercised (the “Option Payment”) and cash equal to the required withholding taxes as set forth by Internal Revenue Service and applicable State tax guidelines for the employer’s minimum statutory withholding. The Option Payment shall be made in cash or cash equivalents or in whole Shares that have been held by the Optionee for at least six (6) months prior to the date of exercise valued at the Shares’ Fair Market Value on the date of exercise (or next succeeding trading date if the date of exercise is not a trading date) or the actual sales price of such Shares, together with any applicable withholding taxes, or by a combination of such cash (or cash equivalents) and Shares. The Optionee shall not be entitled to tender Shares pursuant to successive, substantially simultaneous exercises of the Option or any other stock option of the Company. Subject to applicable securities laws, the Optionee may also exercise the Option by delivering a notice of exercise of the Option and by simultaneously selling the Shares of Option Stock thereby acquired pursuant to a brokerage or similar agreement approved in advance by proper officers of the Company, using the proceeds of such sale as payment of the Option Payment, together with any applicable withholding taxes. For purposes of this Agreement, “Fair Market Value” means the closing sales price of the Shares on the New York Stock Exchange or the actual sales price of such Shares.

     4. Termination of Option. The Option will expire on April 17, 2016 which is ten (10) years from the Grant Date (the “Term”) with respect to any then unexercised portion thereof.

     5. No Right to Continued Employment. The grant of the Option shall not be construed as giving Optionee the right to be retained in the employ of the Company, and the Company may at any time dismiss Optionee from employment, free from any liability or any claim under the Plan.

     6. Adjustment to Option Stock. The Committee shall make equitable and appropriate adjustments in the terms and conditions of, and the criteria included in, this Option in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.2 of the Plan) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations or accounting principles in accordance with the Plan.

     7. Amendments to Option. Subject to the restrictions contained in the Plan, the Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, the Option, prospectively or retroactively; provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would adversely affect the rights of the Optionee or any holder or beneficiary of the Option shall not to that extent be effective without the consent of the Optionee, holder or beneficiary affected.

     8. Limited Transferability. During the Optionee’s lifetime, this Option can be exercised only by the Optionee. This Option may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by Optionee other than by will or the laws of descent and distribution. Any attempt to otherwise transfer this Option shall be void. No transfer of this Option by the Optionee by will or by laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and an authenticated copy of the will and/or such other evidence as the Committee may deem necessary or appropriate to establish the validity of the transfer.

     9. Reservation of Shares. At all times during the term of this Option, the Company shall use its best efforts to reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of this Agreement.

     10. Plan Governs. The Optionee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof. The terms of this Agreement are governed by the terms of the Plan, and in the case of any inconsistency between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall govern.

     11. Severability. If any provision of this Agreement is, or becomes, or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or the Award, or would disqualify the Plan or Award under any laws deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award, and the remainder of the Plan and Award shall remain in full force and effect.

     12. Notices. All notices required to be given under this Option shall be deemed to be received if delivered or mailed as provided for herein to the parties at the following addresses, or to such other address as either party may provide in writing from time to time.

To the Company: HealthSpring, Inc.
9009 Carothers Parkway
Building B, Suite 501

	Franklin, Tennessee 37067 Attn: Corporate Secretary
To the Optionee:	The address then maintained with respect to the Optionee in the Company’s records.

     13. Governing Law. The validity, construction and effect of this Agreement shall be determined in accordance with the laws of the State of Delaware without giving effect to conflicts of laws principles.

     14. Resolution of Disputes. Any dispute or disagreement which may arise under, or as a result of, or in any way related to, the interpretation, construction or application of this Agreement shall be determined by the Committee. Any determination made hereunder shall be final, binding and conclusive on the Optionee and the Company for all purposes.

     15. Successors in Interest. This Agreement shall inure to the benefit of and be binding upon any successor to the Company. This Agreement shall inure to the benefit of the Optionee’s legal representative and assignees. All obligations imposed upon the Optionee and all rights granted to the Company under this Agreement shall be binding upon the Optionee’s heirs, executors, administrators, successors and assignees.

     IN WITNESS WHEREOF, the parties have caused this Non-Qualified Stock Option Agreement to be duly executed effective as of the day and year first above written.

HEALTHSPRING, INC.
By:	/s/ Gerald V. Coil
Optionee: Craig S. Schub
	/s/ Craig S. Schub
	Signature