<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(AMENDMENT NO. 6)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
COVALENT GROUP, INC.
--------------------
(NAME OF THE ISSUER)
COMMON STOCK, $0.001 PAR VALUE PER SHARE
----------------------------------------
(TITLE OF CLASS OF SECURITIES)
222815 10 2
-----------
(CUSIP NUMBER)
JOEL E. HAND, ESQ.
COVALENT PARTNERS, LLC
4350 LA JOLLA VILLAGE DRIVE
SUITE 970
SAN DIEGO, CALIFORNIA 92122
(858) 558-7851
--------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
AUGUST 29, 2000
--------------
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
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 Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Page 1 of 14 Pages)
(Continued on following pages)
1.
<PAGE>
CUSIP NO. 222815 10 2 13D PAGE 2 OF 13 PAGES
--- ------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
COVALENT PARTNERS, LLC
33-08-78998
-----------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X] (B) [ ]
3 SEC USE ONLY
------------
4 SOURCE OF FUNDS
WC, 00
------
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
--------
NUMBER 7 SOLE VOTING POWER
OF -0-
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY -0-
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH -0-
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
-0- - SEE ITEM 5
----------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES
[X]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0% - SEE ITEM 5
----- ----------
14 TYPE OF REPORTING PERSON CO
------------------------ --
* Calculated pursuant to Rule 13d-3 of the Securities Exchange Act of
1934, as amended. Includes any rights to acquire beneficial ownership of
securities of the Issuer within 60 days of the date of the filing of this
Schedule 13D.
** Based upon 12,174,577 shares of Common Stock issued and outstanding
as reported on the Issuer's Quarterly Report filed on Form 10-QSB for the
quarter ended June 30, 2000.
2.
<PAGE>
CUSIP NO. 22815 10 2 13D PAGE 3 OF 13 PAGES
--- ------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
RICHARD D. PROPPER
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X] (b) [ ]
3 SEC USE ONLY
------------
4 SOURCE OF FUNDS
PF
--
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [X]
------------------ ---
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
-------------
NUMBER 7 SOLE VOTING POWER
OF 1,185,919
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY -0-
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH 1,185,919
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,185,919 - SEE ITEM 5
--------- ----------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES
[X]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.74% - SEE ITEM 5
------ ----------
14 TYPE OF REPORTING PERSON IN
------------------------ --
* Calculated pursuant to Rule 13d-3 of the Securities Exchange Act of
1934, as amended. Includes any rights to acquire beneficial ownership of
securities of the Issuer within 60 days of the date of the filing of this
Schedule 13D.
** Based upon 12,174,577 shares of Common Stock issued and outstanding
as reported on the Issuer's Quarterly Report filed on Form 10-QSB for the
quarter ended June 30, 2000.
3.
<PAGE>
CUSIP NO. 22815 10 2 13D PAGE 4 OF 13 PAGES
--- ------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
MICHAEL D. CHERMAK
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X] (b) [ ]
3 SEC USE ONLY
------------
4 SOURCE OF FUNDS
PF
--
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
-------------
NUMBER 7 SOLE VOTING POWER
OF 669,062
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY -0-
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH 669,062
----
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
669,062 - SEE ITEM 5
--------- ----------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES
[X]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.49% - SEE ITEM 5
--- ----------
14 TYPE OF REPORTING PERSON IN
------------------------ --
* Calculated pursuant to Rule 13d-3 of the Securities Exchange Act of
1934, as amended. Includes any rights to acquire beneficial ownership of
securities of the Issuer within 60 days of the date of the filing of this
Schedule 13D.
** Based upon 12,174,577 shares of Common Stock issued and outstanding
as reported on the Issuer's Quarterly Report filed on Form 10-QSB for the
quarter ended June 30, 2000.
4.
<PAGE>
CUSIP NO. 22815 10 2 13D PAGE 5 OF 13 PAGES
--- ------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SALMAN J. CHAUDHRY
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X] (b) [ ]
3 SEC USE ONLY
------------
4 SOURCE OF FUNDS
PF
--
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
------------------ ---
6 CITIZENSHIP OR PLACE OF ORGANIZATION
PAKISTAN
--------
NUMBER 7 SOLE VOTING POWER
OF 12,700
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY -0-
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH 12,700
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,700 - SEE ITEM 5
------ ----------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES
[X]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) LESS THAN
1% - SEE ITEM 5
---------------
14 TYPE OF REPORTING PERSON IN
------------------------ --
* Calculated pursuant to Rule 13d-3 of the Securities Exchange Act of
1934, as amended. Includes any rights to acquire beneficial ownership of
securities of the Issuer within 60 days of the date of the filing of this
Schedule 13D.
** Based upon 12,174,577 shares of Common Stock issued and outstanding
as reported on the Issuer's Quarterly Report filed on Form 10-QSB for the
quarter ended June 30, 2000.
5.
<PAGE>
This Amendment No. 6 amends and restates the Schedule 13D filed by the Reporting
Persons (as defined in Item 2) on November 10, 1999, as amended by Amendment No.
1 to Schedule 13D filed on November 27, 1999, and Amendment No. 2 to Schedule
13D filed on January 26, 2000, and as amended by Amendment No. 3 filed on July
15, 2000, and Amendment number 4 filed on August 7, 2000, and Amendment number 5
filed on August 24, 2000.
ITEM 1. SECURITY AND THE ISSUER
(a) TITLE OF SECURITY:
Common Stock, $0.001 par value per share.
(b) NAME OF THE ISSUER:
Covalent Group, Inc., a Nevada corporation.
(c) THE ISSUER'S PRINCIPAL EXECUTIVE OFFICE:
One Glenhardie Corp. Center 1275 Drummers Lane, Suite 100 Wayne, PA
19087
ITEM 2. IDENTITY AND BACKGROUND
(a) This statement is being filed jointly on behalf of (i)
Covalent Partners, LLC, a Delaware limited liability company
("Covalent Partners"), (ii) Richard D. Propper ("Propper"),
(iii) Michael D. Chermak ("Chermak") and (iv) Salman J.
Chaudhry ("Chaudhry") (collectively, the "Reporting Persons").
Covalent Partners is principally in the business of acquiring
equity securities of the Issuer, including without limitation,
the right to vote and dispose of such securities.
(b)-(c) Set forth in Schedule I to this Schedule 13D is
information concerning the Reporting Persons as required to be
disclosed in response to this Item 2.
(d) To the best knowledge of the Reporting Persons, during the
last five years, there have been no criminal proceedings
against the Reporting Persons.
(e) On June 24, 1996, the SEC initiated an administrative
proceeding against Propper and others alleging that Propper
violated Sections 13(d), 13(g) and 16(a) of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and Rules
13d-1, 13d-2; 16a-2, 16a-3 and former Rule 16a-1 promulgated
thereunder, by untimely filing Schedules 13D and 13G, and
Forms 3, 4 and 5 with respect to certain transactions relating
to the beneficial ownership of securities held by Montgomery
Medical Ventures, L.P., Montgomery Medical Ventures II, L.P.,
Montgomery Medical Partners, L.P. and Montgomery Medical
Partners II, L.P. The Commission accepted an offer of
settlement submitted by Propper
6.
<PAGE>
whereby Propper agreed to the Commission's order to cease and
desist from committing or causing any violation or future
violation of, Sections 13(d), 13(g) and 16(a) of the Exchange
Act and Rules 13d-1, 13d-2, 16a-2 and 16a-3 promulgated
thereunder.
Other than described in the foregoing paragraph, during the
last five years, to the best knowledge of the Reporting
Persons none of the Reporting Persons has been a party to any
civil proceeding of a judicial or administrative body of
competent jurisdiction resulting in 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) Propper and Chermak are citizens of the United States.
Chaudhry is a citizen of Pakistan.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Pursuant to an Option Agreement, dated as of November 1, 1999,
by and between Bruce LaMont ("LaMont") and Covalent Partners
(the "Option Agreement"), LaMont granted Covalent Partners the
option to purchase 6,015,500 shares of the outstanding common
stock of the Issuer held by LaMont (the "Shares"), at a per
share price of $2.00 (the "Option"). On November 1, 1999
pursuant to the terms of the Option Agreement, Covalent
Partners elected to purchase 1,000,000 Shares of the Issuer
for an aggregate purchase price of $2,000,000. On November 27,
1999, pursuant to the terms of the Option Agreement, Covalent
Partners elected to purchase 250,000 Shares of the Issuer for
an aggregate purchase price of $500,000. On January 15, 2000,
pursuant to the terms of the Option Agreement, Covalent
Partners elected to purchase the remaining 4,765,500 shares of
the Issuer for an aggregate purchase of $9,531,000.
Covalent Partners obtained funds to make the purchases on
November 1, 1999 and November 27, 1999 through capital
contributions and loan agreements with its members. Chermak,
through personal funds, made a loan to Covalent Partners in
the amount of $1,000,000. Propper made a loan to Covalent
Partners in the amount of $1,000,000. Propper obtained such
funds through a loan agreement with California Bank & Trust
whereby interest accrues monthly at a prime rate plus .5% and
principal and interest is due and payable on April 15, 2000.
Covalent Partners obtained funds to make the final purchase
pursuant to the Option Agreement through capital contributions
from Propper and promissory notes (the "Promissory Notes")
with the following entities and individuals: (i) Acorn
Technology Fund, in the amount of $1,800,000; (ii) Bedford Oak
Partners, L.P., in the amount of $1,800,000; (iii) Thomas
Hodapp, in the amount of $1,500,000; (iv) Hassan Nemazee, in
the amount of $1,125,000; (v) Houston Ventures, Inc., in the
amount of $1,125,000; (vi) Montpellier International LDC,
7.
<PAGE>
in the amount of $360,000; (vii) Maxwell H. Gluck Foundation,
in the amount of $300,000; (viii) David Smith, in the amount
of $225,000; (ix) Gerry Beemiller, in the amount of $150,000;
(x) Emerald International, in the amount of $105,000; (xi)
Ashish Vibhakar, in the amount of $100,000; (xii) U.S. Equity
Portfolio LP, in the amount of $75,000; and (xiii) United
Congregation Mesorah, in the amount of $60,000 (each
individually, the "Lender" and collectively, the "Lenders").
Pursuant to the terms of the Promissory Notes, the loans were
repayable by Covalent Partners by either (i) payment of the
outstanding principal plus accrued interest on the unpaid
principal at the rate of 5.88% per annum; or (ii) provided
that the Shares were purchased under the Option Agreement,
delivery of Shares of Common Stock of the Issuer. Covalent
Partners elected to purchase the Shares pursuant to the Option
Agreement and each of the Lenders received Shares held by
Covalent Partners in full payment of the outstanding principal
and accrued interest under the Promissory Notes.
The foregoing summary of the source of the funds used by
Covalent Partners to purchase the shares of Common Stock of
the Issuer is qualified in its entirety by reference to a copy
of (i) the Promissory Note between Chermak and Covalent
Partners included as Exhibit 99.1 and incorporated herein in
its entirety by reference, (ii) the Promissory Note between
Propper and Covalent Partners included as Exhibit 99.2 and
incorporated herein in its entirety by reference, (iii) the
loan agreement between Propper and California Bank and Trust
included as Exhibit 99.3 and incorporated herein in its
entirety by reference, and (iv) the form of Promissory Note
attached hereto as Exhibit 99.8 and incorporated herein in its
entirety by reference.
Covalent Partners purchased 204,000 shares of the Issuer in
open market, transactions for an aggregate approximate amount
of $505,871. Covalent Partners obtained funds to make such
purchases through capital contributions from its
non-controlling members.
Propper purchased, through personal funds, 468,100 shares of
Common Stock of the Issuer in open market transactions for an
aggregate approximate amount of $1,302,688.
Chermak purchased, through personal funds, 65,500 shares of
Common Stock of the Issuer in open market transactions for an
aggregate approximate amount of $163,971.
Chaudhry purchased, through personal funds, 16,700 shares of
Common Stock of the Issuer in open market transactions for an
aggregate approximate amount of $32,838.
8.
<PAGE>
ITEM 4. PURPOSE OF THE TRANSACTION
The sixth amendment reports:
1. The termination of the Voting Agreement contained in Covalent Partners,
LLC Shareholder Agreement, whereby the parties agreed to vote their
shares as directed by Covalent Partners, or in the alternative, Richard
Propper, M.D. The agreement was terminated on August 29, 2000;
2. The transfer of shares from Covalent Partners, LLC to previously
identified Purchasers pursuant to the terms of the Covalent Partners
Stockholder Agreement. Certain Purchasers were promised additional
shares from Covalent Partners if registration of shares held by
Covalent Partners was not completed by May 15, 2000. The Purchasers
subject to this agreement, the number of shares promised and to be
transferred to them are:
Bedford Oak 60,000
Maxwell Gluck 10,000
Montpellier International, LDC 12,000
Emerald International 3,500
US Equity Portfolio 2,500
United Congregation Mesorah 2,000
Thomas Hodapp 59,701
The fifth amendment stated share totals on page two for Covalent
Partners, LLC that reflected these transfers;
3. The private transaction sale of 325,000 shares of Covalent Group, Inc.
by Richard Propper to Marble Mountain, Ltd. for 3.00 per share.
The August 23, 2000 transaction that is the subject of the fifth amendment of
this Form 13D reports the sales of stock in Covalent Group by Covalent Partners,
LLC to the following individuals in the quantities indicated. Agreement was
reached with Cerami and Borow for the sale of shares on August 20, 2000.
Covalent Partners reached agreement with all other individuals listed below on
August 23, 2000. Instructions will be given to the transfer agent for Covalent
Group to transfer the shares to Borow, Cerami and the other individuals listed
below on August 24, 2000.
Kenneth Borow, M.D. 460,000
Anthony Cerami 75,000
Javed I. Chaudhry 231,500
Kerry Propper 300,000
Patti Davis 10,000
Daniel Beharry 25,000
Joel Hand 7,500;
40,000 shares of the stock were transferred to John Belknap on August 24, 1000.
In addition, Covalent Partners, LLC transferred the shares indicated below on or
about August 23, 2000 to the Members of Covalent Partners, LLC, representing a
pro rata distribution of the individuals' membership interest in the LLC:
Richard Propper 338,819
Michael Chermak 53,399
9.
<PAGE>
Also, the number of shares reported as purchased in open market transactions on
the fourth amendment to this 13D by Michael Chermak should have been reported as
65,500 shares.
The August 4, 2000 transaction that is the subject of the
fourth amendment of this Form 13D reports the transfer of
159,422 shares of Covalent Group, Inc. from Covalent Partners,
LLC to Michael Chermak. The transferred shares are a pro rata
distribution of Chermak's interest in Covalent Partners, LLC.
The number of shares transfered to Chermak in the July 13
transaction were miscalculated, and this transfer corrects
that error.
The July 13, 2000 transaction that is the subject of the third
amendment of this Form 13D relates to the transfer of shares
from Covalent Partners, LLC to certain Lenders previously
identified in prior filings of this 13D. Covalent Partners has
transferred additional shares (as identified below) to certain
of the Lenders based upon a feature of their agreement with
Covalent Partners that if a private transaction by which those
lenders could recover the entire amount of their investment
yet retain a substantial portion of their stock (roughly 50%)
did not occur by a certain date, these Lenders would receive
an additional number of shares that would reduce the effective
purchase price of the stock that they had acquired from $3 per
share down to $2.68.
The amounts are
David H. Smith 4,975
Interim Advantage 1,990
Contra VC, LLC 1,990
Bedford Oak Partners 71,642
Montpellier International LDC 14,328
Maxwell H. Gluck Foundation 11,940
Emerald International 4,179
US Equity Portfolio LP 2,985
United Congregation Mesorah 2,388
In addition to these above distributions, Propper and Chermak
are members of Covalent Partners; the shares being transferred
to Propper and Chermak represent a partial, prorata
distribution of their membership interest.
Richard Propper 704,000
Michael Chermak 390,741
Total distributions 1,211,158
Propper, Chermak and Chaudhry originally acquired shares of
the Issuer for general investment purposes.
Propper initiated discussions with LaMont regarding an
extraordinary transaction involving the acquisition of all of
the outstanding Common Stock of the Issuer held by LaMont. On
September 1, 1999, LaMont entered into a No-Shop Agreement
with Propper through his related investment firm, RP
Associates, LLC. A copy of the No-Shop Agreement is attached
hereto as Exhibit 99.4. In connection with such discussions,
Covalent Partners was formed for the purpose of acquiring the
shares of the Issuer in order to change the management and
Board of Directors of the Issuer (the "Board").
10.
<PAGE>
Pursuant to the Option Agreement, and subject to the
conditions set forth therein, LaMont granted Covalent Partners
the Option. On November 1, 1999, pursuant to the terms of the
Option Agreement, Covalent Partners elected to purchase
1,000,000 shares of the Issuer held by LaMont for an aggregate
purchase price of $2,000,000. On November 27, 1999, Covalent
Partners elected to exercise its rights to purchase 250,000
additional Shares. On January 15, 2000, Covalent Partners
elected to exercise its rights to purchase the remaining
4,765,500 shares pursuant to the Option. Upon completion of
the purchase of the Shares and as payment in full of the
principal amounts and all accrued and unpaid interest pursuant
to the Promissory Notes, Covalent Partners delivered to each
of the Lenders, shares of common stock of the Issuer in the
following amounts: (i) Acorn Technology Fund, in the amount of
600,000 shares; (ii) Bedford Oak Partners, L.P., in the amount
of 600,000 shares; (iii) Thomas Hodapp, in the amount of
500,000 shares; (iv) Hassan Nemazee, in the amount of 500,000
shares; (v) Houston Ventures, Inc., in the amount of 500,000
shares; (vi) Montpellier International LDC, in the amount of
120,000 shares; (vii) Maxwell H. Gluck Foundation, in the
amount of 100,000 shares; (viii) David Smith, in the amount of
75,000 shares; (ix) Gerry Beemiller, in the amount of 50,000
shares; (x) Emerald International, in the amount of 35,000
shares; (xi) Ashish Vibhakar, in the amount of 33,333 shares;
(xii) U.S. Equity Portfolio LP, in the amount of 25,000
shares; and (xiii) United Congregation Mesorah, in the amount
of 20,000 shares.
Upon Covalent Partners' election to exercise the Option in
full on January 15, 2000, LaMont was required to immediately
resign as a Board member, Chief Executive Officer, President
and employee of the Issuer.
The foregoing summary of the Option Agreement is qualified in
its entirety by reference to the copy of the Option Agreement
included as Exhibit 99.5 to this Schedule 13D and incorporated
herein in its entirety by reference.
11.
<PAGE>
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) - (b) Based on the Issuer's Quarterly Report on Form
10-QSB for the quarter ended March 31, 2000, there were
12,174,577 shares of Common Stock outstanding. The following
summarizes the shares of the Issuer beneficially owned by the
Reporting Persons:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF NUMBER OF SHARES OF
STOCK (BUT FOR STOCK BENEFICIALLY PERCENTAGE OF CLASS
INVESTOR RULE 13D-5(b)(1)) OWNED BENEFICIALLY OWNED
-------- ----------------- ----- ------------------
<S> <C> <C> <C>
Covalent Partners, LLC -0- -0- -0-
Richard D. Propper 1,185,919 -0- 9.74%
Michael D. Chermak 669,062 -0- 5.49%%
Salman J. Chaudhry 12,700 12,700 Less than 1%
</TABLE>
Beneficial ownership of -0- shares of Common Stock of the
Issuer otherwise beneficially owned by Covalent Partners is
attributed to Propper and Chermak by virtue of Rule
13d-5(b)(1) of the Exchange Act. Pursuant to Rule 13d-4 of the
Exchange Act, Covalent Partners disclaims beneficial ownership
of any shares of Common Stock of the Issuer beneficially owned
by Propper, any shares beneficially owned by Chermak and any
shares beneficially owned by Chaudhry; Propper disclaims
beneficial ownership of any shares of Common Stock of the
Issuer beneficially owned by Chermak and any shares held by
Chaudhry; Chermak disclaims beneficial ownership of any shares
of Common Stock of the Issuer beneficially owned by Propper
and any shares beneficially owned by Chaudhry; Chaudhry
disclaims beneficial ownership of any shares of Common Stock
of the Issuer beneficially owned by Covalent Partners, any
shares beneficially owned by Propper and any shares
beneficially owned by Chermak.
Propper has sole voting and dispositive power with respect to
1,185,919 shares of Common Stock of the Issuer. Chermak has
sole voting and dispositive power with respect to 669,062
shares of Common Stock of the Issuer. Chaudhry has sole voting
and dispositive power with respect to 12,700 shares of Common
Stock of the Issuer. Covalent Partners shares voting power
with its managing members with respect to any shares of
Common Stock of the Issuer and shares dispositive power with
its managing members with respect to any shares of
Common Stock of the Issuer.
12.
<PAGE>
Pursuant to Section 6(b) of the Option Agreement, until the
earlier of (i) January 31, 2000 or (ii) the date Covalent
Partners exercises the Option in full, Covalent Partners
agreed to grant voting rights to LaMont with respect to all of
the shares of Common Stock of the Issuer purchased by Covalent
Partners, including 1,250,000 shares purchased by Covalent
Partners pursuant to the Option Agreement. The grant of such
voting rights terminates immediately prior to a lawful sale of
the shares purchased by Covalent Partners in the public
market. In addition, if Covalent Partners fails to exercise
the option in full by January 15, 2000, LaMont has the right
to buy back from Covalent Partners, on or before January 31,
1999, any and all the Shares acquired by Covalent Partners'
exercise of the Option at a price of $2.00 per share. Covalent
Partners exercised the Option in full thereby terminating the
grant of voting rights to LaMont with respect to the Shares.
Pursuant to Stockholder Agreements, dated as of January 20,
2000, entered into by and between Covalent Partners and each
of the Lenders, the Lenders have agreed to vote the Shares
delivered pursuant to the Promissory Notes in accordance with
those voted by Covalent Partners. The agreement to vote
terminates with respect to any shares being sold immediately
prior to the lawful sale of such shares in the public market.
The foregoing summary of such voting requirements is qualified
in its entirety by reference to a copy of a form of
Stockholder Agreement included as Exhibit 99.9 and
incorporated in its entirety by reference.
Set forth in Schedule II to this Schedule 13D is the name of
and certain information regarding the individuals with whom
Covalent Partners shares the power to vote or to direct the
vote or to dispose or direct the disposition of Common Stock
of Issuer.
During the past five years, to the Reporting Persons'
knowledge, no person named in Schedule II to this Schedule
13D, has been convicted in a criminal proceeding.
During the past five years, to the Reporting Persons'
knowledge, no person named in Schedule II to this Schedule 13D
was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of
which such person was or is subject to a judgment, decree or
final order enjoining future violations of or prohibiting or
mandating activity subject to federal or state securities laws
or finding any violation with respect to such laws.
To Covalent Partners' knowledge, all persons named in Schedule
II to this Schedule 13D are citizens of the United States.
(c) Set forth in Schedule III to this Schedule 13D are the
transactions, other than the Option Agreement as described in
this Schedule, involving the Common Stock of the Issuer,
entered into by the Reporting Persons within the last 60 days.
All such transactions were made for cash in open market
transactions.
13.
<PAGE>
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
In connection with the Option Agreement, Kenneth M. Borow
("Borow") and Covalent Partners entered into a Letter
Agreement dated November 1, 1999 (the "Letter Agreement").
Pursuant to the Letter Agreement, Borow agreed to remain
employed as the President, Chief Operating Officer and Chief
Medical Office of the Issuer until the earlier of Covalent
Partners' exercise of the Option in full and January 15, 2000.
In consideration of the above, Covalent Partners agreed to
grant an option to Borow to acquire from Covalent Partners
460,000 shares of the Issuer's Common Stock at a price of
$2.00 per share upon Covalent Partners' exercise of the Option
in full ("Borow Option"). Prior to the exercise of the Option
in full by Covalent Partners, Borow waived all rights to
receive the Borow Option and any Common Stock thereunder.
Covalent Partners and Borow have agreed that the Issuer will
not grant any options to Borow pursuant to the Letter
Agreement.
The foregoing summary of the Letter Agreement is qualified in
its entirety by reference to a copy of the Letter Agreement
included as Exhibit 99.7 to this Schedule 13D and incorporated
herein in its entirety by reference.
Other than as described in the foregoing paragraphs and in
Item 4 above, to Covalent Partners' knowledge, there are no
contracts, arrangements, understandings or relationships
(legal or otherwise) among the persons named in Item 2 and
between such persons and any person with respect to any
securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division
of profits or loss, or the giving or withholding of proxies.
14.
<PAGE>
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
*99.1 Promissory Note dated October 29, 1999 by and between
Michael D. Chermak and Covalent Partners, LLC.
*99.2 Promissory Note dated October 29, 1999 by and between
Richard D. Propper and Covalent Partners, LLC.
*99.3 Business Loan Agreement dated October 26, 1999 by and
between Richard D. Propper and California Bank &
Trust.
*99.4 No-Shop Agreement dated September 1, 1999 by and
between Bruce LaMont and RP Associates, LLC.
*99.5 Option Agreement dated November 1, 1999 by and
between Bruce LaMont and Covalent Partners, LLC.
*99.6 Form of Employment Agreement to be entered into by
and between Kenneth M. Borow and the Issuer.
*99.7 Letter Agreement dated November 1, 1999 by and
between Kenneth M. Borow and Covalent Partners, LLC.
*99.8 Form of Promissory Note.
*99.9 Form of Stockholder Agreement.
* Previously filed by the Reporting Persons.
15.
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
DATED: August 29, 2000
COVALENT PARTNERS, LLC,
a Delaware limited liability company
By: /s/ RICHARD D. PROPPER
---------------------------------------
Dr. Richard D. Propper
Managing Member
/s/ RICHARD D. PROPPER, M.D.
---------------------------------------
RICHARD D. PROPPER
/s/ MICHAEL D. CHERMAK
-------------------------------
MICHAEL D. CHERMAK
/s/ SALMAN J. CHAUDHRY
-------------------------------
SALMAN J. CHAUDHRY
16.
<PAGE>
SCHEDULE I
REPORTING PERSONS,
CONTROLLING MEMBERS AND MANAGERS OF
COVALENT PARTNERS, LLC
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS PRINCIPAL OCCUPATION OR EMPLOYMENT
----------------------------------
<S> <C>
Covalent Partners, LLC N/A
4350 La Jolla Village Drive, Suite 970
San Diego, CA 92121
Dr. Richard D. Propper Member and Manager of Covalent Partners, LLC
4350 La Jolla Village Drive, Suite 970
San Diego, CA 92122
Michael D. Chermak Member and Manager of Covalent Partners, LLC
4350 La Jolla Village Drive, Suite 970
San Diego, CA 92122
Salman Chaudhry Financial Consultant
4350 La Jolla Village Drive, Suite 970
San Diego, CA 92122
</TABLE>
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT
----------------------------------
<S> <C>
Acorn Technology Fund, LP N/A
Five Vaughn Drive
Princeton, NJ 08540-6313
Bedford Oak Partners, L.P., N/A
a Delaware limited partnership
100 South Bedford Road
Mt. Kisco, NY 10549
Thomas Hodapp Investment Advisor
254 Glenn Drive
Sausalito, CA 94965
Hassan Nemazee Investment Advisor
720 5th Avenue
New York, NY 10019
Houston Venture Inc., N/A
a Texas corporation
720 5th Avenue
New York, NY 10019
Montpellier International, LDC N/A
Harbour Chambers, 3rd Floor
P.O. 1348 Harbour Center
Georgetown, Grand Caymen Islands
Maxwell H. Gluck Foundation N/A
10375 Wilshire Boulevard
Los Angeles, CA 90024
David Smith Investment Advisor
82 Beachside Ave.
Greens Farms, CT 06436
Gerry Beemiller Senior Vice President of Sales,
3300 Zaker Rd. Sony Semiconductor Company of
Maildrop 5J 3C 4 America
San Jose, CA 95134
Emerald International N/A
Strategic Restructuring Partners
1114 Avenue of the Americas, 38th Floor
New York, NY 10036
Ashish Vibhakar Chief Executive Officer,
23639 Hawthorne Boulevard Cyberoffice.com, Inc.
Torrance, CA 90505
</TABLE>
<PAGE>
US Equity Portfolio LP N/A
Strategic Restructuring Partners
1114 Avenue of the Americas, 38th Floor
New York, New York 10036
United Congregation Mesorah N/A
1 State Street
New York, New York 10004
2.
<PAGE>
<TABLE>
SCHEDULE III
<CAPTION>
AMOUNT OF
DATE OF THE COMMON STOCK
INVESTOR TRANSACTION OF ISSUER PRICE PER SHARE ($) TYPE OF TRADE BROKER
----------- --------- ------------------- ------------- ------
<S> <C> <C> <C> <C> <C>
Propper
05/10/00 900 4.41666 Purchase RJ*
05/19/00 3,000 4.15420 Purchase BOA**
05/22/00 2,000 4.12500 Purchase BOA
05/24/00 1,000 4.00000 Purchase BOA
05/25/00 2,000 3.75000 Purchase BLC***
05/26/00 2,000 4.03133 Purchase BOA
06/02/00 5,500 4.82840 Purchase BOA
06/30/00 900 4.43750 Purchase BOA
07/19/00 1,000 4.25000 Purchase BOA
08/02/00 5,000 2.7500 Purchase BLC
08/07/00 5,000 3.275 Purchase BLC
08/14/00 3,000 3.08 Purchase BOA
08/15/00 2,500 2.975 Purchase BLC
08/16/00 5,000 2.803 Purchase BOA
08/24/00 460,000 2.75 Sale to Borow none
08/24/00 75,000 3.00 Sale to Cerami none
08/24/00 300,000 2.75 Sale to K. Propper none
08/24/00 10,000 3.00 Sale to Davis none
08/24/00 25,000 3.00 Sale to Beharry none
08/24/00 7,500 3.00 Sale to Hand none
Chaudhry 07/26/00 4,000 3.9375 Sale ML****
</TABLE>
* Raymond James ("RJ")
** Bank of America ("BOA")
*** Baliss/Bear Stearns ("BLS")
**** Merrill Lynch ("ML")
<PAGE>
JOINT FILING AGREEMENT
In accordance with Rule 13d-(1)(k) under the Securities Exchange Act of 1934, as
amended, each of the persons named below agrees to the joint filing of a
Statement on Schedule 13D (including amendments thereto) with respect to the
acquisition of Common Stock, par value $0.001, of Covalent Group, Inc., a
Delaware corporation, and further agrees that this Joint Filing Agreement be
included as an exhibit to such filings provided that, as contemplated by Section
13d-1(k)(ii), no person shall be responsible for the completeness or accuracy of
the information concerning the other persons making the filing, unless such
person knows or has reason to believe that such information is inaccurate. This
Joint Filing may be executed in any number of counterparts, all of which
together shall constitute one and the same instrument.
August 29, 2000
COVALENT PARTNERS, LLC,
a Delaware limited liability company
By: /s/ RICHARD D. PROPPER M.D.
----------------------------------------
Dr. Richard D. Propper
Managing Member
/s/ RICHARD D. PROPPER M.D.
---------------------------------------
RICHARD D. PROPPER
/s/ MICHAEL D. CHERMAK
---------------------------------------
MICHAEL D. CHERMAK
/s/ SALMAN J.CHAUDHRY
---------------------------------------
SALMAN J. CHAUDHRY
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF DOCUMENT
-----------------------
*99.1 Promissory Note dated October 29, 1999 by and between
Michael D. Chermak and Covalent Partners, LLC.
*99.2 Promissory Note dated October 29, 1999 by and between
Richard D. Propper and Covalent Partners, LLC.
*99.3 Business Loan Agreement dated October 26, 1999 by and
between Richard D. Propper and California Bank &
Trust.
*99.4 No-Shop Agreement dated September 1, 1999 by and
between Bruce LaMont and RP Associates, LLC.
*99.5 Option Agreement dated November 1, 1999 by and
between Bruce LaMont and Covalent Partners, LLC.
*99.6 Form of Employment Agreement to be entered into by
and between Kenneth M. Borow and the Issuer.
*99.7 Letter Agreement dated November 1, 1999 by and
between Kenneth M. Borow and Covalent Partners, LLC.
*99.8 Form of Promissory Note.
*99.9 Form of Stockholder Agreement.
* Previously filed by the Reporting Persons
