<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Amendment No. 6)
Under the Securities Exchange Act of 1934
Coventry Health Care, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $0.01
- --------------------------------------------------------------------------------
(Title of Class of Securities)
222862104
- --------------------------------------------------------------------------------
(CUSIP Number of Class of Securities)
Stephen Distler
E.M. Warburg, Pincus & Co., LLC
466 Lexington Avenue
New York, New York 10017
(212) 878-0600
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
Copies to:
Steven J. Gartner, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
(212) 728-8000
May 5, 2000
- --------------------------------------------------------------------------------
(Date of Event which Requires
Filing of this Schedule)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box: [ ]
<PAGE>
SCHEDULE 13D
- ------------------- ------------------
CUSIP No. 222853103 Page 1 of 15 Pages
- ------------------- ------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warburg, Pincus Equity Partners, L.P.
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF --------- ------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
EACH --------- ------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
0
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.9%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ------------------- ------------------
CUSIP No. 222853103 Page 2 of 15 Pages
- ------------------- ------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warburg, Pincus Netherlands Equity Partners I, C.V.
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Netherlands
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF --------- ------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
EACH --------- ------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
0
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.9%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ------------------- ------------------
CUSIP No. 222853103 Page 3 of 15 Pages
- ------------------- ------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warburg, Pincus Netherlands Equity Partners II, C.V.
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Netherlands
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF --------- ------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
EACH --------- ------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
0
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.9%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ------------------- ------------------
CUSIP No. 222853103 Page 4 of 15 Pages
- ------------------- ------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warburg, Pincus Netherlands Equity Partners III, C.V.
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF --------- ------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
EACH --------- ------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
0
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.9%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ------------------- ------------------
CUSIP No. 222853103 Page 5 of 15 Pages
- ------------------- ------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warburg, Pincus Ventures, L.P. I.D. #13-3784037
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF --------- ------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
EACH --------- ------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
0
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.9%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ------------------- ------------------
CUSIP No. 222853103 Page 6 of 15 Pages
- ------------------- ------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Warburg, Pincus & Co. I.D. #13-6358475
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF --------- ------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
EACH --------- ------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
0
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.9%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ------------------- ------------------
CUSIP No. 222853103 Page 7 of 15 Pages
- ------------------- ------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
E.M. Warburg, Pincus & Co., LLC I.D. #13-3536050
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF --------- ------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
EACH --------- ------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
0
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.9%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ------------------- ------------------
CUSIP No. 222853103 Page 8 of 15 Pages
- ------------------- ------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Patrick T. Hackett
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
5,000
NUMBER OF --------- ------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 10,294,987 (See Item 5)
EACH --------- ------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
5,000
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
10,299,987 (See Item 5)
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.9%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ------------------- ------------------
CUSIP No. 222853103 Page 9 of 15 Pages
- ------------------- ------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Joel Ackerman
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF --------- ------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 10,294,987 (See Item 5)
EACH --------- ------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
0
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.9%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ------------------- -------------------
CUSIP No. 222853103 Page 10 of 15 Pages
- ------------------- -------------------
- ----------- --------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Jonathan S. Leff
- ----------- --------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- ----------- --------------------------------------------------------------------
3 SEC USE ONLY
- ----------- --------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- ----------- --------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- ----------- --------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------- --------- ------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF --------- ------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 10,294,987 (See Item 5)
EACH --------- ------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
0
--------- ------------------------------------------------
10 SHARED DISPOSITIVE POWER
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
10,294,987 (See Item 5)
- ----------- --------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- ----------- --------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.9%
- ----------- --------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ----------- --------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
This Amendment No. 6 amends the Schedule 13D filed on September 3, 1999 (as
amended, the "Schedule 13D") on behalf of Warburg, Pincus Ventures, L.P., a
Delaware limited partnership ("Ventures"), E.M. Warburg, Pincus & Co., LLC, a
New York limited liability company ("EMW"), Warburg, Pincus Equity Partners,
L.P., a Delaware limited partnership ("WPEP"), Warburg, Pincus Netherlands
Equity Partners I, C.V., a Netherlands limited partnership ("WPNEPI"), Warburg,
Pincus Netherlands Equity Partners II, C.V., a Netherlands limited partnership
("WPNEPII"), Warburg, Pincus Netherlands Equity Partners III, C.V., a
Netherlands limited partnership ("WPNEPIII" and together with WPEP, WPNEPI, and
WPNEPII, the "Equity Partners"), Warburg, Pincus & Co., a New York general
partnership ("WP"), and Patrick T. Hackett, Joel Ackerman and Jonathan S. Leff
(the "Trustees"), as trustees of a voting trust (the "Voting Trust") under a
voting trust agreement, dated as of April 15, 1997 (as supplemented on November
12, 1997, the "Voting Trust Agreement"), relating to the common stock, par value
$0.01 per share, of Coventry Health Care, Inc., a Delaware corporation (the
"Company") (the Trustees, collectively with Ventures, WPEP, WPNEPI, WPNEPII,
WPNEPIII, WP and EMW, the "Reporting Persons"). Unless the context otherwise
requires, references herein to the "Common Stock" are to the Common Stock of
Coventry Health Care, Inc., par value $.01 per share.
The Voting Trust has the sole irrevocable power to vote all of the shares
of Common Stock which Ventures may acquire upon conversion or exercise of the
Securities until April 15, 2007; provided, however, that Ventures may terminate
the Voting Trust upon written notice to the trustees thereunder if Ventures is
deemed to own beneficially (within the meaning of Rule 13d-3 under the Exchange
Act, as defined below) less than ten percent (10%) of the then outstanding
shares of Common Stock.
The Reporting Persons are making this single, joint filing because they may
be deemed to constitute a "group" within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The agreement
among the Reporting Persons to file jointly (the "Joint Filing Agreement") is
attached hereto as Exhibit 4. Each Reporting Person disclaims beneficial
ownership of all shares of Common Stock (as defined below), other than those
reported herein as being owned by it.
Unless otherwise indicated herein, each capitalized term used but not
defined herein shall have the meaning assigned to such term in the Schedule 13D.
Item 2. Identity and Background.
Item 2 of the Schedule 13D is hereby amended and restated in its entirety
by the following:
This statement is filed by Ventures, WP, EMW, the Equity Partners and the
Trustees. The sole general partner of Ventures and the Equity Partners is WP.
EMW manages Ventures and the Equity Partners. Lionel I. Pincus is the managing
partner of WP and the managing member of EMW and may be deemed to control both
WP and EMW. The general partners of WP and the members of EMW, and their
respective principal business addresses and principal occupations are set forth
on
Page 11 of 15
<PAGE>
Schedule I hereto. As discussed above, Ventures has vested the power to vote all
of the shares of Common Stock which it may acquire from the Company in the
Voting Trust. The Voting Trust Agreement is incorporated herein by reference to
Exhibit 2 of the Schedule 13D filed on May 19, 1997 on behalf of certain of the
Reporting Persons.
(b) The address of the principal business and principal office of each of
the Reporting Persons is 466 Lexington Avenue, New York, New York 10017.
(c) The principal business of Ventures and the Equity Partners is that of
partnerships engaged in making venture capital and related investments. The
principal business of WP is acting as general partner of the Equity Partners,
Ventures, Warburg Pincus Investors, L.P., Warburg, Pincus Capital Company, L.P.
and certain related funds. The principal business of EMW is acting as manager of
the Equity Partners, Ventures, Warburg, Pincus Investors, L.P., and Warburg,
Pincus Capital Company, L.P. The sole purpose of the Voting Trust is to exercise
the power to vote all of the shares of Common Stock which Ventures may acquire
until April 15, 2007.
(d) None of the Reporting Persons, nor, to the best of their knowledge, any
of the directors, executive officers, general partners or members referred to in
paragraph (a) has, during the last five years, been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors).
(e) None of the Reporting Persons nor, to the best of their knowledge, any
of the directors, executive officers, general partners or members referred to in
paragraph (a) above has, during the last five years, been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
(f) Except as otherwise indicated on Schedule I hereto, each of the
individuals referred to in paragraph (a) above is a United States citizen.
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 of the Schedule 13D is hereby amended by adding the following:
"The total amount of funds required to purchase the Common Stock pursuant
to the Purchase Agreement (as defined below) will be approximately $100,000,000,
and will be furnished from the working capital of the Equity Partners."
Item 4. Purpose of Transaction.
Item 4 of the Schedule 13D is hereby amended by adding the following:
"See also Item 6."
Item 5. Interest in Securities of the Issuer.
The Reporting Persons, including the Equity Partners, are making this
single, joint filing because they may be deemed to constitute a "group" within
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Each Reporting
Page 12 of 15
<PAGE>
Person disclaims beneficial ownership of all shares of Common Stock, other than
those reported herein as being owned by it.
Upon consummation of the acquisition of shares of Common Stock pursuant to
the Purchase Agreement (defined below), the Reporting Persons will beneficially
own 20,294,987 shares of Common Stock, or 31.3% of the shares of Common Stock
(based on the number of shares of Common Stock outstanding as of April 2000).
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer.
Item 6 of the Schedule 13D is hereby amended by adding the following:
On May 5, 2000, the Equity Partners and Principal Health Care, Inc.
("Principal") entered into a purchase agreement (the "Purchase Agreement")
whereby the Equity Partners have agreed to purchase 10,000,000 shares of Common
Stock currently owned by Principal at a purchase price of $10.00 per share for
an aggregate purchase price of $100,000,000. The Purchase Agreement is subject
to certain conditions including, without limitation, the receipt of regulatory
and governmental approvals. The foregoing summary of the Purchase Agreement is
qualified in its entirety by reference to the Purchase Agreement which is filed
as Exhibit 1 hereto and incorporated by reference.
In connection with the execution of the Purchase Agreement and in order to
obtain the Company's consent to the transaction with Principal, the Company,
Ventures and the Equity Partners entered into a shareholders agreement dated May
5, 2000 (the "Shareholders Agreement"). The Shareholders Agreement provides that
Ventures and the Equity Partners will not, directly or indirectly, sell or
otherwise Transfer (as defined in the Shareholders Agreement) any shares of
Common Stock Owned (as defined in the Shareholders Agreement) by them, except
pursuant to an effective registration under the Securities Act (as defined in
the Shareholders Agreement) or in a transaction which, in the opinion of counsel
reasonably satisfactory to the Company, qualifies as an exempt transaction under
the Securities Act and the rules and regulations promulgated thereunder. The
Shareholders Agreement further provides that on or before the fifth anniversary
of the Closing Date (as defined in the Shareholders Agreement), they will not,
directly or indirectly, sell or otherwise Transfer, or permit any of their
Affiliates (as defined in the Shareholders Agreement), directly or indirectly,
to sell or to Transfer any shares of Common Stock Owned by them to any person if
such person (together with the Affiliates of such person) would Own, after
giving effect to such sale or Transfer, more than 9.9% of the outstanding shares
of Common Stock, provided, however, that the Equity Partners and Ventures the
may sell or Transfer shares of Common Stock to one of their Affiliates if such
Affiliate agrees to be bound by the terms of this Agreement. The foregoing
restrictions shall not apply to any sale or Transfer made (A) pursuant to an
effective registration under the Securities Act, (B) pursuant to and in
compliance with Rule 144 under the Securities Act, (C) pursuant to a pro rata
distribution by any of Ventures, the Equity Partners to their partners or (D)
with the written consent of the Company's Board of Directors.
In addition, Ventures and the Equity Partners also covenanted and agreed
that, on or before the fifth anniversary of the Closing Date, they would not,
and would cause their respective Affiliates to not, without the prior written
consent of a majority of the members of the Company's Board of Directors, do any
of the following: (i) acquire, offer
Page 13 of 15
<PAGE>
or agree to acquire any shares of Common Stock (or options or warrants to
acquire, or securities convertible into or exchangeable for, shares of Common
Stock) if, as a result of such acquisition, the Equity Partners and Ventures
(together with any of their respective Affiliates) would Own more than a number
of shares of Common Stock in excess of a number equal to 34.9% of the
outstanding shares of Common Stock on a fully diluted basis; (ii) directly or
indirectly commence or participate in a solicitation of proxies either to oppose
the election of any person to the Board of Directors or to seek the removal of
any Person from the Board of Directors, which person has been nominated by the
Nominating Committee of the Board of Directors (as defined in the Shareholders
Agreement); or (iii) directly or indirectly make or solicit or assist any third
party to make a tender or exchange offer to purchase any shares of Common Stock
or make any public announcement concerning, or submit any written proposal to
the Board of Directors of the Company for a merger, share exchange, acquisition
of substantially all of the assets or similar transaction involving the Company.
The foregoing summary of the Shareholders Agreement is qualified in its entirety
by reference to the Shareholders Agreement which is filed as Exhibit 2 hereto
and incorporated by reference.
In addition, the Company amended the Rights Agreement between the Company
and ChaseMellon Shareholder Services, LLC to permit the acquisition by the
Equity Partners of the Common Stock referenced above as provided in the
Shareholders Agreement. The foregoing summary of the Rights Agreement is
qualified in its entirety by reference to the Rights Agreement which is filed as
Exhibit 3 hereto and incorporated by reference.
Item 7. Material to be Filed as Exhibits.
1. Purchase Agreement by and among Principal Health Care, Inc. and the
Equity Partners, dated May 5, 2000.
2. Shareholders Agreement between and among the Company, Ventures and the
Equity Partners, dated May 5, 2000
3. Amendment No. 2 to Rights Agreement between the Company and ChaseMellon
Shareholder Services, LLC, dated May 5, 2000.
4. Joint Filing Agreement among the Reporting Persons, dated May 12, 2000.
Page 14 of 15
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
Dated: May 11, 2000 WARBURG, PINCUS VENTURES, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
------------------------------
Partner
Dated: May 11, 2000 WARBURG, PINCUS & CO.
By: /s/ Stephen Distler
------------------------------
Partner
Dated: May 11, 2000 E.M. WARBURG, PINCUS & CO., LLC
By: /s/ Stephen Distler
------------------------------
Member
Dated: May 11, 2000 WARBURG, PINCUS EQUITY PARTNERS, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
------------------------------
Member
Dated: May 11, 2000 By: /s/ Joel Ackerman
------------------------------
Name: Joel Ackerman
Trustee
Dated: May 11, 2000 By: /s/ Patrick Hackett
------------------------------
Name: Patrick Hackett
Trustee
Dated: May 11, 2000 By: /s/ Jonathan Leff
------------------------------
Name: Jonathan Leff
Trustee
Page 15 of 15
<PAGE>
SCHEDULE I
Set forth below is the name, position and present principal occupation of
each of the general partners of Warburg, Pincus & Co., L.P. ("WP") and members
of E.M. Warburg, Pincus & Co., LLC ("EMW LLC"). The sole general partner of
Warburg, Pincus Equity Partners, L.P. ("WPEP") is WP. WPEP, WP and EMW LLC are
hereinafter referred to as the "Reporting Persons". Except as otherwise
indicated, the business address of each of such persons is 466 Lexington Avenue,
New York, New York 10017, and each of such persons is a citizen of the United
States.
GENERAL PARTNERS OF WP
----------------------
- --------------------------- ----------------------------------------------------
PRESENT PRINCIPAL OCCUPATION IN ADDITION
TO POSITION WITH WP, AND POSITIONS
NAME WITH THE REPORTING ENTITIES
- --------------------------- ----------------------------------------------------
Joel Ackerman Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Alan E. Baratz Partner of WP; Member and Managing Director of EMW
LLC
- --------------------------- ----------------------------------------------------
Harold Brown Partner of WP; Member and Senior Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
W. Bowman Cutter Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Cary J. Davis Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Stephen Distler Partner of WP; Member, Managing Director and
Treasurer of EMW LLC
- --------------------------- ----------------------------------------------------
Stewart K. P. Gross Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Patrick T. Hackett Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Jeffrey A. Harris Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
William H. Janeway Partner of WP; Member and Senior Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Douglas M. Karp Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Charles R. Kaye Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Henry Kressel Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Joseph P. Landy Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Sidney Lapidus Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Kewsong Lee Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
S-1
<PAGE>
- --------------------------- ----------------------------------------------------
PRESENT PRINCIPAL OCCUPATION IN ADDITION
TO POSITION WITH WP, AND POSITIONS
NAME WITH THE REPORTING ENTITIES
- --------------------------- ----------------------------------------------------
Jonathan S. Leff Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Reuben S. Leibowitz Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
David E. Libowitz Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Nancy Martin Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Edward J. McKinley Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Rodman W. Moorhead III Partner of WP; Member and Senior Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Howard H. Newman Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Gary D. Nusbaum Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Dalip Pathak Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Lionel I. Pincus Managing Partner of WP; Managing Member, Chairman of
the Board, and Chief Executive Officer of EMW LLC
- --------------------------- ----------------------------------------------------
John D. Santoleri Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Henry B. Schact Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Steven G. Schneider Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
John L. Vogelstein Partner of WP; Member and Vice Chairman of
EMW LLC
- --------------------------- ----------------------------------------------------
Elizabeth H. Weatherman Partner of WP; Member and Managing Director
of EMW LLC
- --------------------------- ----------------------------------------------------
Pincus & Co.*
- --------------------------- ----------------------------------------------------
NL & Co.**
- --------------------------- ----------------------------------------------------
- ---------------------
* New York limited partnership; primary activity is ownership interest in WP
and EMW LLC.
** New York limited partnership; primary activity is ownership interest in WP.
As of 5/00
S-2
<PAGE>
MEMBERS OF EMW LLC
------------------
- ---------------------------- ---------------------------------------------------
PRESENT PRINCIPAL OCCUPATION IN ADDITION
TO POSITION WITH EMW AND POSITIONS
NAME WITH THE REPORTING ENTITIES
- ---------------------------- ---------------------------------------------------
Joel Ackerman Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Alan E. Baratz Member and Managing Director of EMW LLC; Partner
of WP
- ---------------------------- ---------------------------------------------------
Frank M. Brochin (3) Member and Managing Director of EMW LLC
- ---------------------------- ---------------------------------------------------
Harold Brown Member and Senior Managing Director of EMW LLC
LLC; Partner of WP
- ---------------------------- ---------------------------------------------------
W. Bowman Cutter Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Cary J. Davis Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Stephen Distler Member, Managing Director, and Treasurer of
EMW LLC; Partner of WP
- ---------------------------- ---------------------------------------------------
Tetsuya Fukagawa (5) Member and Managing Director of EMW LLC
- ---------------------------- ---------------------------------------------------
Stewart K. P. Gross Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Alf Grunwald (4) Member and Managing Director of EMW LLC
- ---------------------------- ---------------------------------------------------
Patrick T. Hackett Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Jeffrey A. Harris Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Roberto Italia (6) Member and Managing Director of EMW LLC
- ---------------------------- ---------------------------------------------------
William H. Janeway Member and Senior Managing Director of EMW
LLC; Partner of WP
- ---------------------------- ---------------------------------------------------
Douglas M. Karp Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Charles R. Kaye Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Henry Kressel Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
S-3
<PAGE>
- ---------------------------- ---------------------------------------------------
PRESENT PRINCIPAL OCCUPATION IN ADDITION
TO POSITION WITH EMW AND POSITIONS
NAME WITH THE REPORTING ENTITIES
- ---------------------------- ---------------------------------------------------
Rajiv B. Lall (1) Member and Managing Director of EMW LLC
- ---------------------------- ---------------------------------------------------
Joseph P. Landy Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Sidney Lapidus Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Kewsong Lee Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Jonathan S. Leff Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Reuben S. Leibowitz Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
David E. Libowitz Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Nicholas J. Lowcock (3) Member and Managing Director of EMW LLC
- ---------------------------- ---------------------------------------------------
John W. MacIntosh (2) Member and Managing Director of EMW LLC
- ---------------------------- ---------------------------------------------------
Nancy Martin Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Edward J. McKinley Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
James McNaught-Davis (3) Member and Managing Director of EMW LLC
- ---------------------------- ---------------------------------------------------
Rodman W. Moorhead III Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Howard H. Newman Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Gary D. Nusbaum Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Dalip Pathak Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Lionel I. Pincus Managing Member, Chairman of the Board and
Chief Executive of EMW LLC; Managing
Partner of WP
- ---------------------------- ---------------------------------------------------
John D. Santoleri Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Henry B. Schact Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
S-4
<PAGE>
- ---------------------------- ---------------------------------------------------
PRESENT PRINCIPAL OCCUPATION IN ADDITION
TO POSITION WITH EMW AND POSITIONS
NAME WITH THE REPORTING ENTITIES
- ---------------------------- ---------------------------------------------------
Steven G. Schneider Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Dominic H. Shorthouse (3) Member and Managing Director of EMW LLC
- ---------------------------- ---------------------------------------------------
Chang Q. Sun (4) Member and Managing Director of EMW LLC
- ---------------------------- ---------------------------------------------------
John L. Vogelstein Member and Vice Chairman of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Elizabeth H. Weatherman Member and Managing Director of EMW LLC;
Partner of WP
- ---------------------------- ---------------------------------------------------
Jeremy S. Young (3) Member and Managing Director of EMW LLC
- ---------------------------- ---------------------------------------------------
Pincus & Co.*
- ---------------------------- ---------------------------------------------------
- ---------------------
(1) - Citizen of India
(2) - Citizen of Canada
(3) - Citizen of United Kingdom
(4) - Citizen of Germany
(5) - Citizen of China
(6) - Citizen of Italy
* New York limited partnership; primary activity is ownership interest in WP
and EMW
S-5
<PAGE>
EXHIBIT 1
PURCHASE AGREEMENT
May 5, 2000
Warburg, Pincus Equity Partners, L.P.
Warburg, Pincus Netherlands Equity Partners I, C.V.
Warburg, Pincus Netherlands Equity Partners II, C.V.
Warburg, Pincus Netherlands Equity Partners III, C.V.
466 Lexington Avenue
New York, New York 10017
Gentlemen:
Principal Health Care, Inc., an Iowa corporation (the "Seller"), hereby
agrees with Warburg, Pincus Equity Partners, L.P., a Delaware limited
partnership, Warburg, Pincus Netherlands Equity Partners I, C.V., a Netherlands
limited partnership, Warburg, Pincus Netherlands Equity Partners II, C.V., a
Netherlands limited partnership, and Warburg, Pincus Netherlands Equity Partners
III, C.V., a Netherlands limited partnership (collectively, the "Purchasers"),
as follows:
1. PURCHASE AND SALE OF SECURITIES.
(a) Subject to the terms and conditions hereof, on the Closing Date, as
defined herein, the Seller shall sell to the Purchasers and the Purchasers shall
purchase from the Seller, the equity securities (the "Securities") listed hereto
on Schedule I hereto of Coventry Health Care, Inc., a Delaware corporation (the
"Company"), for the aggregate amount in cash set forth on Schedule I hereto (the
"Purchase Price"). The Purchase Price is a joint and several obligation of the
Purchasers.
(b) Such sales and purchases shall be effected by the Seller delivering to
the Purchasers duly executed certificates or other instruments evidencing the
Securities to be purchased, in each case with appropriate instruments of
transfer attached (duly endorsed or otherwise in form sufficient for transfer),
against delivery by the Purchasers to the Seller of the Purchase Price. The
Purchase Price shall be paid by wire transfer of immediately available funds to
such account or accounts as the Seller shall designate in writing.
(c) The closing of the purchases and sales referred to above hereto shall
take place on the third business day after the satisfaction or waiver of the
conditions set forth in Sections 5 and 6 hereof (the "Closing Date"), at the
offices of Willkie Farr & Gallagher, 787 Seventh Avenue, New York, New York
10019, at 10:00 a.m., New York time, or on such other date, and at such other
place and time as the parties hereto shall mutually agree.
<PAGE>
2. WARRANTIES AND REPRESENTATIONS OF THE SELLER.
The Seller represents and warrants to each of the Purchasers that:
(a) The Seller is a corporation duly organized and validly existing under
the laws of the State of Iowa.
(b) The Seller has authorized the execution, delivery and performance of
this Agreement, and each of the transactions contemplated hereby. No other
action is necessary to authorize such execution, delivery and performance, and
upon such execution and delivery, this Agreement shall constitute a valid and
binding obligation of the Seller, enforceable against the Seller in accordance
with its terms.
(c) No consent, approval, authorization or order of any court, governmental
agency or body or arbitrator having jurisdiction over the Seller is required for
the execution, delivery or performance by the Seller of its obligations
hereunder, including without limitation the sale of the Securities.
(d) Neither the sale of the Securities nor the performance of the Seller's
obligations hereunder will violate, conflict with, result in a breach of, or
constitute a default (or an event that, with the giving of notice or the lapse
of time, or both, would constitute a default) under (i) the certificate of
incorporation, bylaws or other organizational documents of the Seller, (ii) any
decree, judgment, order, law, treaty, rule, regulation or determination of any
court, governmental agency or body or arbitrator having jurisdiction over the
Seller, as applicable, or any of its assets or properties or (iii) the terms of
any material agreement to which the Seller is a party or to which any of the
Seller's properties are subject.
(e) The Seller has good and marketable title to the Securities. The
Securities are owned by the Seller free and clear of any security interest,
lien, claim or other encumbrance or any restriction on transfer, other than
those imposed by the Securities Act and will be transferred to the Purchasers
free of any Encumbrances.
(f) The sale of the Securities by the Seller is not part of a plan or
scheme to evade the registration requirements of the Securities Act. Neither the
Seller nor any person acting on behalf of the Seller has offered or sold any of
the Securities by any form of general solicitation or general advertising.
3. PURCHASERS REPRESENTATIONS.
Each Purchaser represents and warrants to the Seller that:
2
<PAGE>
(a) Offering Exemption. Each Purchaser understands that the Securities have
not been registered under the Securities Act, nor qualified under any state
securities laws, and that they are being offered and sold pursuant to an
exemption from such registration and qualification based in part upon the
representations of the Purchasers contained herein.
(b) Knowledge of Offer. Each Purchaser is familiar with the business and
operations of the Company and has been given the opportunity to obtain from the
Company all information that it has requested regarding its business plans and
prospects. Each Purchaser has had full access to all information relating to the
Company including without limitation access to the deliberations of the Board of
Directors of the Company through its affiliate Warburg, Pincus Ventures, L.P., a
Delaware limited partnership. The Seller has no obligation to provide further
information about the Company to the Purchasers in connection with the
transactions contemplated hereby.
(c) Knowledge and Experience; Ability to Bear Economic Risks. Each
Purchaser is an "accredited investor" as such term is defined in Rule 501(a) of
the Securities Act and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
investment contemplated by this Agreement; each Purchaser is able to bear the
economic risk of its investment in the Company (including a complete loss of its
investment).
(d) Limitations on Disposition. Each Purchaser understands that it must
bear the economic risk of this investment indefinitely unless its Securities are
registered pursuant to the Securities Act or an exemption from such registration
is available, and unless the disposition of such securities is qualified under
applicable state securities laws or an exemption from such qualification is
available. Each Purchaser further understands that there is no assurance that
any exemption from the Securities Act will be available, or, if available, that
such exemption will allow such Purchaser to Transfer any or all of the
Securities, in the amounts, or at the time such Purchaser might propose.
(e) Investment Purpose. Each Purchaser is acquiring the Securities solely
for its own account for investment and not with a view toward the resale,
Transfer, or distribution thereof, nor with any present intention of
distributing the Securities. No other person has any right with respect to or
interest in the Securities to be purchased by each Purchaser, nor has any
Purchaser agreed to give any person any such interest or right in the future.
(f) Capacity. Each Purchaser has full power and legal right to execute and
deliver this Agreement and to perform its obligations hereunder. Each Purchaser
has authorized the execution, delivery and performance of this Agreement, and
each of the transactions contemplated hereby. No other action is necessary to
authorize such execution, delivery and performance, and upon such execution and
delivery, this Agreement shall constitute a valid and
3
<PAGE>
binding obligation of each Purchaser, on a joint and several basis, enforceable
against such Purchaser in accordance with its terms.
4. COVENANTS OF THE PARTIES.
(a) Securities Act Restrictions. Each Purchaser acknowledges that the
certificates evidencing the Securities will bear a legend reflecting the
restrictions on the transfer of such securities under the Securities Act.
(b) Further Assurances. From and after the Closing Date, the Seller shall
execute all certificates, instruments, documents or agreements and shall take
any other action which it is reasonably requested to execute or take to further
effectuate the transactions contemplated hereby.
(c) Best Efforts. Each of the parties hereto will use commercially
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable consistent with
applicable law to consummate and make effective in the most expeditious manner
practicable the transactions contemplated hereby, including without limitation,
making all required regulatory filings as promptly as practicable after the date
hereof.
5. PURCHASERS' CONDITIONS TO CLOSING.
The obligation of the Purchasers to purchase and pay for the Securities on
the Closing Date shall be subject to the satisfaction or waiver (to the extent
permitted by law), prior thereto or concurrently therewith, of the following
conditions:
(a) Representations and Warranties. The representations and warranties of
the Seller contained in this Agreement shall be true and correct in all material
respects on and as of the Closing Date as though such warranties and
representations were made at and as of such date, except as otherwise affected
by the transactions contemplated hereby.
(b) Compliance with Agreement. The Seller shall have performed and complied
with all agreements, covenants and conditions contained in this Agreement which
are required to be performed or complied with by the Seller prior to or on the
Closing Date.
(c) Injunction. There shall be no effective injunction, writ, preliminary
restraining order or any order of any nature issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of them
not be consummated as herein provided.
(d) Regulatory Approvals and Consents. All applicable waiting periods (and
any extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, shall have expired or otherwise been terminated without
objection of any of the
4
<PAGE>
relevant federal authorities and all governmental consents, permits,
authorizations, approvals and waivers which are required to consummate the
transactions contemplated hereby shall have been obtained, including without
limitation all consents or approvals required of any insurance regulator having
jurisdiction over the business or assets of the Company or any of its
subsidiaries.
6. SELLER'S CONDITIONS TO CLOSING.
The obligation of the Seller to sell the Securities to the Purchasers on
the Closing Date shall be subject to the satisfaction or waiver (to the extent
permitted by law), prior thereto or concurrently therewith, of the following
conditions:
(a) Representations and Warranties. The representations and warranties of
each of the Purchasers contained in this Agreement shall be true and correct in
all material respects on and as of the Closing Date as though such warranties
and representations were made at and as of such date, except as otherwise
affected by the transactions contemplated hereby.
(b) Compliance with Agreement. The Purchasers shall have performed and
complied with all agreements, covenants and conditions contained in this
Agreement which are required to be performed or complied with by the Purchasers
prior to or on the Closing Date.
(c) Injunction. There shall be no effective injunction, writ, preliminary
restraining order or any order of any nature issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of them
not be consummated as herein provided.
7. TERMINATION AND ABANDONMENT.
This Agreement may be terminated and the transactions contemplated hereby
may be abandoned at any time before the Closing Date:
(a) by the mutual written consent of the Seller and the Purchasers;
(b) by the Seller or the Purchasers if the other party or parties hereto
fail to comply in any material respect with any of its or their covenants or
agreements contained herein, or breaches its or their representations and
warranties in any material way and such failure or breach, if capable of being
cured, is not cured within 30 days of the receipt of written notice of such
failure or breach from the terminating party;
(c) by the Seller or the Purchasers if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action (which order, decree
or ruling the parties hereto shall use their best efforts to lift), which
permanently restrains, enjoins or otherwise prohibits the transactions
contemplated by this Agreement; or
5
<PAGE>
(d) by the Seller or the Purchasers at any time after September 30, 2000;
provided however, that if the Closing Date has not occurred on or before
September 30, 2000 as a result of a material breach of this Agreement, the
breaching party shall not be entitled to terminate this Agreement pursuant to
this Section 7(d).
In the event of termination and abandonment of this Agreement pursuant to
this Section 7, written notice thereof shall forthwith be given to the other
party or parties and this Agreement shall terminate and the transactions
contemplated hereby shall be abandoned, without further action by the Seller or
the Purchasers; provided, that no party shall be relieved of any liability it
may have to any other party as a result of any breach of its obligations
hereunder.
8. INDEMNIFICATION.
(a) The Seller agrees to indemnify and hold harmless each of the
Purchasers, each person, if any, who controls any of the Purchasers within the
meaning of Section 15 of the Securities Act and each officer, director, employee
and agent of each Purchaser and of any such controlling person against any and
all losses, liabilities, claims, damages or expenses whatsoever, as incurred,
arising out of or resulting from any breach or alleged breach or other violation
or alleged violation of any representation, warranty, covenant or undertaking by
the Seller contained in this Agreement, and the Seller will reimburse each
Purchaser for its reasonable legal and other expenses (including the cost of any
investigation and preparation, and including the reasonable fees and expenses of
counsel) incurred in connection therewith.
(b) Each Purchaser jointly and severally agrees to indemnify and hold
harmless the Seller, each person, if any, who controls the Seller within the
meaning of Section 15 of the Securities Act and each officer, director, employee
and agent of the Seller and of any such controlling person against any and all
losses, liabilities, claims, damages or expenses whatsoever, as incurred,
arising out of or resulting from any breach or alleged breach or other violation
or alleged violation of any representation, warranty, covenant or undertaking by
the Purchasers contained in this Agreement, and each Purchaser will reimburse
the Seller for its reasonable legal and other expenses (including the cost of
any investigation and preparation, and including the reasonable fees and
expenses of counsel) incurred in connection therewith.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective agreements,
representations, warranties, indemnities and other statements made by or on
behalf each party hereto pursuant to this Agreement shall remain in full force
and effect, regardless of any investigation made by or on behalf of any party,
and shall survive delivery of any payment for the Securities.
10. INTERPRETATION OF THIS AGREEMENT.
6
<PAGE>
(a) Terms Defined. As used in this Agreement, the following terms have the
respective meaning set forth below:
person: an individual, partnership, joint-stock company, corporation, trust
or unincorporated organization, and a government or agency or political
subdivision thereof.
Securities Act: the Securities Act of 1933, as amended.
Transfer: any sale, assignment, pledge, hypothecation, or other disposition
or encumbrance.
(b) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State.
(c) Section Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
(d) Notices.
(i) All communications under this Agreement shall be in writing and
shall be delivered by hand or facsimile or mailed by overnight courier or
by registered or certified mail, postage prepaid:
(1) if to any of the Purchasers, at 466 Lexington Avenue, New York,
New York 10017, Attention: Joel Ackerman (facsimile: (212) 878-9351), or at
such other address or facsimile number as any of the Purchasers may have
furnished the Seller in writing;
(2) if to the Seller, at 711 High Street, Des Moines, Iowa 50392,
Attention: Karen Shaff (facsimile: (515) 235-9852), or at such other
address or facsimile number as they may have furnished in writing to the
Purchasers.
(ii) Any notice so addressed shall be deemed to be given: if delivered
by hand or facsimile, on the date of such delivery; if mailed by courier,
on the first business day following the date of such mailing; and if mailed
by registered or certified mail, on the third business day after the date
of such mailing.
(e) Expenses and Taxes. The Seller will pay, and save the Purchasers
harmless from any and all liabilities (including interest and penalties) with
respect to, or resulting from any delay or failure in paying, stamp and other
taxes (other than income taxes), if any,
7
<PAGE>
which may be payable or determined to be payable on the execution and delivery
of this Agreement.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties.
(g) Entire Agreement; Amendment and Waiver. This Agreement constitutes the
entire understanding of the parties hereto and supersede all prior understanding
among such parties. This Agreement may be amended, and the observance of any
term of this Agreement may be waived, with (and only with) the written consent
of the Seller and the Purchasers.
8
<PAGE>
(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
Very truly yours,
PRINCIPAL HEALTH CARE, INC.
By: /s/ Karen Schaff
------------------------------
ACCEPTED & AGREED:
WARBURG, PINCUS EQUITY PARTNERS, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
------------------------------
WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS I, C.V.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
------------------------------
WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS II, C.V.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
------------------------------
9
<PAGE>
WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS III, C.V.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
------------------------------
10
<PAGE>
<TABLE>
SCHEDULE I
<CAPTION>
- ----------------------------------------- --------------------------- -----------------
Name of Purchasers Number of Shares of Purchase Price
Company Common Stock
- ----------------------------------------- --------------------------- -----------------
<S> <C> <C>
Warburg, Pincus Equity 9,450,000 $94,500,000.00
Partners, L.P.
- ----------------------------------------- ---------------------------------------------
Warburg, Pincus Netherlands 300,000 3,000,000
Equity Partners I, C.V.
- ----------------------------------------- ---------------------------------------------
Warburg, Pincus Netherlands 200,000 2,000,000
Equity Partners II, C.V.
- ----------------------------------------- ---------------------------------------------
Warburg, Pincus Netherlands 50,000 500,000
Equity Partners III, C.V.
- ----------------------------------------- ---------------------------------------------
Total 10,000,000 $100,000,000.00
- ----------------------------------------- ---------------------------------- ----------
</TABLE>
<PAGE>
EXHIBIT 2
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (this "Agreement"), dated as of May 5, 2000,
is by and among Coventry Health Care, Inc., a Delaware corporation (the
"Company"), Warburg, Pincus Ventures, L.P., a Delaware limited partnership
("WPV"), Warburg, Pincus Equity Partners, L.P., a Delaware limited partnership
("WPEP"), Warburg, Pincus Netherlands Equity Partners I, C.V., a Netherlands
limited partnership ("WPNI"), Warburg, Pincus Netherlands Equity Partners II,
C.V., a Netherlands limited partnership ("WPNII"), and Warburg, Pincus
Netherlands Equity Partners III, C.V., a Netherlands limited partnership
("WPNIII" and, together with WPV, WPEP, WPNI and WPNII, the "Warburg Entities").
R E C I T A L S:
- - - - - - - -
WHEREAS, pursuant to the terms of a Purchase Agreement, dated as of the
date hereof (the "Purchase Agreement"), by and among WPEP, WPNI, WPNII, WPNIII
and Principal Health Care, Inc. ("Principal"), WPEP, WPNI, WPNII and WPNIII have
agreed to purchase an aggregate of 10,000,000 shares of Common Stock, par value
$.01 per share, of the Company ("Common Stock"); and
WHEREAS, pursuant to the terms of the Amended and Restated Securities
Purchase Agreement, dated as of April 2, 1997, as amended, by and among WPV,
Franklin Capital Associates III, L.P. and the Company (the "Warburg Agreement"),
and the Shareholders' Agreement, dated as of April 1, 1998, by and among the
Company, Principal and Principal Mutual Life Insurance Company (the "Principal
Agreement"), the consent of the Company is required for the purchase and sale of
the Common Stock as contemplated by the Purchase Agreement; and.
WHEREAS, the Company has agreed to consent to the purchase and sale of the
Common Stock in accordance with the terms of the Purchase Agreement, subject to
the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
SECTION 1. RESTRICTION ON RESALE; LEGEND.
(a) RESALE OF SECURITIES. The Warburg Entities hereby covenant that:
(i) they will not, directly or indirectly, sell or otherwise Transfer
any shares of Common Stock Owned by them, except pursuant to an
effective registration under the Securities Act or in a
transaction which, in the opinion of counsel reasonably
satisfactory to the Company, qualifies as an exempt transaction
under the Securities Act and the rules and regulations
promulgated thereunder; and
<PAGE>
(ii) on or before the fifth anniversary of the Closing Date, they will
not, directly or indirectly, sell or otherwise Transfer, or
permit any of their Affiliates, directly or indirectly, to sell
or to Transfer any shares of Common Stock Owned by them to any
person if such person (together with the Affiliates of such
person) would Own, after giving effect to such sale or Transfer,
more than 9.9% of the outstanding shares of Common Stock,
provided, however, that the Warburg Entities may sell or Transfer
shares of Common Stock to one of their Affiliates if such
Affiliate agrees to be bound by the terms of this Agreement. The
foregoing restrictions shall not apply to any sale or Transfer
made (A) pursuant to an effective registration under the
Securities Act, (B) pursuant to and in compliance with Rule 144
under the Securities Act, (C) pursuant to a pro rata distribution
by any of the Warburg Entities to its partners or (D) with the
written consent of the Company's Board of Directors.
(b) STOCK LEGEND. The stock certificates evidencing ownership of the shares
of Common Stock acquired by WPEP, WPNI, WPNII and WPNIII under the Purchase
Agreement will bear substantially the following legends:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
LAW, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT OR IN A TRANSACTION
WHICH, IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY, IS
EXEMPT FROM SUCH REGISTRATION.
THE SECURITIES EVIDENCED HEREBY ARE SUBJECT TO RESTRICTIONS ON TRANSFER
CONTAINED IN THAT CERTAIN SHAREHOLDERS' AGREEMENT, DATED MAY 5, 2000,
BETWEEN THE COMPANY AND WARBURG, PINCUS EQUITY PARTNERS, L.P. AND CERTAIN
OF ITS AFFILIATES, A COPY OF WHICH AGREEMENT IS ON FILE AT THE OFFICE OF
THE SECRETARY OF THE COMPANY. ANY ATTEMPTED TRANSFER OF THE SECURITIES IN
VIOLATION OF THE PROVISIONS OF THE SHAREHOLDERS' AGREEMENT SHALL BE VOID AB
INITIO AND SHALL NOT BE RECOGNIZED BY THE COMPANY.
The legend in the first paragraph above shall be removed by the Company
from and after the expiration of the holding period for restricted securities
under the Securities Act, if the Company shall receive an opinion of counsel,
from counsel reasonably acceptable to the Company, that such legend is not
required under the
2
<PAGE>
Securities Act or any state securities laws. In addition, whenever any shares
cease to be subject to this Agreement and are not otherwise restricted
securities, the shareholder thereof shall be entitled to receive from the
Company, without expense, upon surrender to the Company of the certificate
representing such shares, a new certificate representing such shares, of like
tenor but without a legend of the character set forth above.
SECTION 2. STANDSTILL. The Warburg Entities hereby covenant and agree that,
on or before the fifth anniversary of the Closing Date, they will not, and will
cause their respective Affiliates to not, without the prior written consent of a
majority of the members of the Company's Board of Directors, do any of the
following:
(a) acquire, offer or agree to acquire any shares of Common Stock (or
options or warrants to acquire, or securities convertible into or exchangeable
for, shares of Common Stock) if, as a result of such acquisition, the Warburg
Entities (together with any of their respective Affiliates) would Own more than
a number of shares of Common Stock in excess of a number equal to 34.9% of the
outstanding shares of Common Stock on a fully diluted basis;
(b) directly or indirectly commence or participate in a solicitation of
proxies either to oppose the election of any person to the Board of Directors or
to seek the removal of any Person from the Board of Directors, which person has
been nominated by the Nominating Committee of the Board of Directors;
(c) directly or indirectly make or solicit or assist any third party to
make a tender or exchange offer to purchase any shares of Common Stock or make
any public announcement concerning, or submit any written proposal to the Board
of Directors of the Company for a merger, share exchange, acquisition of
substantially all of the assets or similar transaction involving the Company.
SECTION 3. SUSPENSION OF COVENANTS. The provisions of Section 1(a)(ii) and
2 hereof shall thereafter cease to apply in the event of any of the following:
(a) the Company issues voting securities in an acquisition by the Company
of another corporation or entity by merger, consolidation, exchange offer,
purchase of substantially all of the assets or stock, or other form of business
combination ("Company Acquisition") to any person as a result of which such
person, together with its affiliates, shall own a number of shares of voting
securities that shall equal or exceed the number of such shares owned by the
Warburg Entities and their respective Affiliates in the aggregate;
(b) the number of shares of Common Stock then owned by the Warburg Entities
and its Affiliates, in the aggregate, shall be less than 10% of the then issued
and outstanding shares of Common Stock; or
(c) the number of shares of Common Stock then owned by any person (other
than Mutual, or a person who acquired a number of shares of Common Stock in a
Company Acquisition which did not equal or exceed the number of shares owned by
3
<PAGE>
Mutual and its Affiliates in the aggregate, so long as the Company does not
permit such person to acquire additional shares of Common Stock) and the
Affiliates of such person, in the aggregate, shall be greater than 15% of the
issued and outstanding shares of Common Stock
SECTION 4. MISCELLANEOUS.
4.1. DEFINITIONS. Capitalized terms used but not defined herein shall have
the meaning assigned to such terms in the Purchase Agreement. As used in this
Agreement, the following terms have the respective meaning set forth below:
(a) Affiliate: as to the Warburg Entities, any person a majority of the
voting securities of which are Owned by the Warburg Entities, and as to any
other person, as defined in Rule 12b-2 under the Exchange Act.
(b) Exchange Act: the Securities Exchange Act of 1934, as amended.
(c) person: an individual, partnership, joint-stock company, limited
liability company, corporation, trust or unincorporated organization, and a
government or agency or political subdivision thereof.
(d) Securities Act: the Securities Act of 1933, as amended.
(e) Owns, Own or Owned: shall mean beneficial ownership, within the meaning
of Rule 13d-3 under the Exchange Act.
(f) Transfer: shall mean any sale, assignment, pledge, hypothecation, or
other disposition or encumbrance.
4.2. NOTICES. Any notice required to be given hereunder shall be sufficient
if in writing, and sent by facsimile and by courier service (with proof of
service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed: (x) if to the Company, at
the Company's principal business address at 6705 Rockledge Drive, Suite 100,
Bethesda, Maryland 20817, Attention: Dale Wolf (Facsimile: (301) 493-0760) or
(y) if to any of the Warburg Entities, at 466 Lexington Avenue, New York, NY
10019, Attention: Joel Ackerman (Facsimile: 212-878-9351), or (z) to such other
address as any party shall specify by written notice so given, and such notice
shall be deemed to have been delivered as of the date so telecommunicated,
personally delivered or if mailed, the date of receipt.
4.3. ASSIGNMENT, BINDING EFFECT; BENEFIT. Unless expressly provided in this
Agreement, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
4
<PAGE>
4.4. ENTIRE AGREEMENT. This Agreement and the Warburg Agreement (except for
Section 6.6 of the Warburg Agreement, which is superceded in its entirety by
this Agreement) constitute the entire agreement among the parties with respect
to the subject matter hereof and supersedes all prior agreements and
understandings among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any party
hereto unless made in writing and signed by all parties hereto.
4.5. AMENDMENT. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
4.6. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to its rules
of conflict of laws.
4.7. HEADINGS. Headings of the sections of this Agreement are for the
convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
4.8. INTERPRETATION. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
4.9. WAIVERS. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
4.10. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
4.11. ENFORCEMENT OF AGREEMENT. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof, this being in addition to any other remedy to
which they are entitled at law or in equity.
5
<PAGE>
4.12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
6
<PAGE>
EXHIBIT 2
IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf on the day and year first written
above.
COVENTRY HEALTH CARE, INC.
By: /s/ Allen F. Wise
------------------------------
Name: Allen F. Wise
Title: President and Chief Executive
Officer
WARBURG, PINCUS VENTURES, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
------------------------------
Name: Stephen Distler
WARBURG, PINCUS EQUITY PARTNERS, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
------------------------------
Name: Stephen Distler
WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS I, C.V.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
------------------------------
Name: Stephen Distler
WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS II, C.V.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
------------------------------
Name: Stephen Distler
<PAGE>
WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS III, C.V.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
------------------------------
Name: Stephen Distler
2
<PAGE>
EXHIBIT 3
AMENDMENT NO. 2 TO RIGHTS AGREEMENT
AMENDMENT NO.2 TO RIGHTS AGREEMENT (this "Amendment") is made as of May 5,
2000 by and among COVENTRY HEALTH CARE, INC., a Delaware corporation (the
"Company"), and CHASEMELLON SHAREHOLDER SERVICES, LLC (the "Rights Agent").
Reference is made herein to that certain Rights Agreement, dated as of March 30,
1998, by and among COVENTRY HEALTH CARE, INC., a Delaware corporation, and
CHASEMELLON SHAREHOLDER SERVICES, LLC, as amended by Amendment No. 1 to Rights
Agreement dated as of December 18, 1998 (as amended, the "Rights Agreement").
Capitalized terms not herein defined shall have the meanings ascribed thereto in
the Rights Agreement.
RECITALS
WHEREAS, Warburg, Pincus Equity Partners, L.P., a Delaware limited
partnership, Warburg, Pincus Netherlands Equity Partners I, C.V., a Netherlands
limited partnership, Warburg, Pincus Netherlands Equity Partners II, C.V., a
Netherlands limited partnership, and Warburg, Pincus Netherlands Equity Partners
III, C.V., a Netherlands limited partnership (collectively, the "Warburg
Entities"), Principal Health Care Inc., an Iowa corporation intend to enter into
the Purchase Agreement of even date herewith pursuant to which the Warburg
Entities have agreed to acquire 10,000,000 shares of the Company's Common Stock
(the "Purchase Agreement");
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Rights
Agreement may be amended by the parties hereto;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreement herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Amendment of Section 1(a). Section 1(a) of the Rights Agreement is
hereby amended and restated in its entirety as follows:
(a) "Acquiring Person" means any Person which (or which together with all
its Affiliates and Associates) shall be the Beneficial Owner of 15% or more of
the shares of Common Stock then outstanding. Notwithstanding the foregoing, (x)
the term "Acquiring Person" shall not include the Company, any Subsidiary of the
Company, any employee benefit plan maintained by the Company or any of its
Subsidiaries, or any trustee or fiduciary with respect to such plan acting in
such capacity; and (y) no Person shall become an "Acquiring Person" as the
result of (A) the acquisition of Common Stock (or other securities convertible
into shares of Common Stock or other rights with respect to Common Stock)
directly from the Company, or (B) an acquisition of Common Stock by the Company
which, by reducing the number of shares outstanding, increases the proportionate
number of shares Beneficially Owned by such Person (alone or together with all
Affiliates and Associates) to 15% or more of the Shares of Common Stock then
outstanding; provided, however, that if a Person (together with its Affiliates
or Associates) becomes the Beneficial Owner of 15% or more of the Common Stock
then outstanding by reason of share purchases by the Company, and such Person
(or an Affiliate or Associate) subsequently becomes the Beneficial Owner of any
additional Common Stock,
<PAGE>
then such Person shall be deemed to be an "Acquiring Person." Notwithstanding
the foregoing, if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an "Acquiring Person," as defined pursuant
to the foregoing provisions of this paragraph (a) has become such inadvertently,
and such Person divests as promptly as practicable a sufficient number of shares
of Common Stock so that such Person would no longer be an "Acquiring Person" as
defined pursuant to the foregoing provisions of this paragraph (a), then any
such Person shall not be deemed to be an "Acquiring Person" for purposes of this
Agreement. Notwithstanding anything to the contrary in this Agreement:
(i) None of Warburg, Pincus Ventures, L.P., a Delaware limited partnership,
Warburg, Pincus Equity Partners, L.P., a Delaware limited partnership, Warburg,
Pincus Netherlands Equity Partners I, C.V., a Netherlands limited partnership,
Warburg, Pincus Netherlands Equity Partners II, C.V., a Netherlands limited
partnership, Warburg, Pincus Netherlands Equity Partners III, C.V., a
Netherlands limited partnership (collectively, "Warburg") and any Affiliate or
Associate of Warburg shall be deemed an "Acquiring Person" hereunder for so long
as none of Warburg and any Affiliate or Associate thereof shall have breached,
in any material respect, any provision of Sections 1(a) or 2 of that certain
Shareholder's Agreement dated as of May 5, 2000 by and among Warburg and the
Company (the "Warburg Shareholders Agreement") and, after the Warburg
Shareholders Agreement shall no longer be effective, until such time as Warburg
and any of its Affiliates and Associates shall Beneficially Own less than 15% of
the Common Stock.
(ii) None of Principal Mutual Life Insurance Company, an Iowa corporation
now known as Principal Life Insurance Company ("Mutual") and any Affiliate or
Associate of Mutual shall be deemed an "Acquiring Person" hereunder for so long
as none of Mutual and any Affiliate or Associate thereof shall have breached, in
any material respect, any provision of Sections 1(a) or 4 of that certain
Shareholder's Agreement dated as of April 1, 1998 by and among Mutual, Principal
Health Care, Inc. and the Company (the "Shareholders Agreement") and, after the
Shareholders Agreement shall no longer be effective, until such time as Mutual
and any of its Affiliates and Associates shall Beneficially Own less than 15% of
the Common Stock.
2. Rights Agreement Otherwise Unamended. The terms of the Rights Agreement
not amended hereby shall, except as the context unambiguously requires, remain
in full force and effect.
3. Rights Agreement Otherwise Unamended. This Amendment, together with the
provisions of the Rights Agreement not amended hereby, constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersede all other prior agreements, whether written or oral, between the
parties hereto.
4. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same document.
-2-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be executed in its respective corporate name by one of its duly authorized
officers, all as of the date first above written.
COVENTRY HEALTH CARE, INC.
By: /s/ Allen F. Wise
------------------------------
Name: Allen F. Wise
Title: President, Chief Executive
Officer
CHASEMELLON SHAREHOLDER SERVICES, LLC.
By: /s/ Rita A. Schwartz
------------------------------
Name: Rita A. Schwartz
Title: Vice President
<PAGE>
EXHIBIT 4
Joint Filing Agreement
The undersigned hereby agree that the statement on Schedule 13D with
respect to the shares of Common Stock of Coventry Health Care, Inc. is, and any
amendment thereto signed by each of the undersigned shall be, filed on behalf of
each undersigned pursuant to and in accordance with the provisions of 13d-1(k)
under the Securities Exchange Act of 1934, as amended.
Dated: May 11, 2000 WARBURG, PINCUS VENTURES, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
------------------------------
Partner
Dated: May 11, 2000 WARBURG, PINCUS & CO.
By: /s/ Stephen Distler
------------------------------
Partner
Dated: May 11, 2000 E.M. WARBURG, PINCUS & CO., LLC
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
------------------------------
Partner
Dated: May 11, 2000 WARBURG, PINCUS EQUITY PARTNERS, L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Stephen Distler
------------------------------
Partner
Dated: May 11, 2000 By: /s/ Joel Ackerman
------------------------------
Name: Joel Ackerman
Trustee
1
<PAGE>
Dated: May 11, 2000 By: /s/ Patrick Hackett
------------------------------
Name: Patrick Hackett
Trustee
Dated: May 11, 2000 By: /s/ Jonathan Leff
------------------------------
Name: Jonathan Leff
Trustee
2
