SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
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)
Patrick T. Hackett
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
Willkie Farr & Gallagher
153 East 53rd Street
New York, NY 10022
(212) 821-8000
April 1, 1998
- --------------------------------------------------------------------------------
(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 Rule 13d-1(b)(3) or (4), check the following: [ ]
<PAGE>
SCHEDULE 13D
CUSIP No. 222853103 Page 2 of 21 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 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH
REPORTING 0
PERSON WITH
10 SHARED DISPOSITIVE POWER
6,645,047
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
6,645,047
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN [ ]
SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.3%
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 21 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 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
6,645,047
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
6,645,047
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.3%
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 21 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 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
6,645,047
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
6,645,047
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.3%
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 5 of 21 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 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 6,645,047
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH 5,000
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
6,650,047
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.3%
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 6 of 21 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 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 6,645,047
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
6,645,047
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.3%
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 7 of 21 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 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 6,645,047
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH 0
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
6,645,047
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.3%
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 Schedule 13D is being filed on behalf of Warburg, Pincus
Ventures, L.P., a Delaware limited partnership ("Ventures"), Warburg, Pincus &
Co., a New York general partnership ("WP"), E.M. Warburg, Pincus & Co., LLC, a
New York limited liability company ("EMW"), 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"). Unless the context otherwise requires,
references herein to the "Common Stock" are to the Common Stock of Coventry
Corporation, par value $.01 per share, prior to the consummation of the Merger
(as defined below), and to the Common Stock of the Company, par value $.01 per
share, after the consummation of the Merger (as defined below).
Of the Reporting Entities (as defined below), only Ventures has
acquired indirect ownership of the Common Stock through its ownership of an 8.3%
Convertible Exchangeable Senior Subordinated Note of the Company, Warrants to
purchase Common Stock and certain shares of Common Stock purchased on the open
market. 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 (as defined below) 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
8 of 21
<PAGE>
under the Exchange Act, as defined below) less than ten percent (10%) of the
then outstanding shares of Common Stock.
Item 1. Security and Issuer.
This statement on Schedule 13D relates to the Common Stock of the
Company, and is being filed pursuant to Rule 13d-1 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). The address of the principal
executive offices of the Company is 501 Corporate Centre Drive, Suite 400,
Franklin, TN 37067.
Item 2. Identity and Background.
(a) This statement is filed by Ventures, WP, EMW and the Trustees. The
sole general partner of Ventures is WP. EMW manages Ventures. 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. WP has a 15% interest in the profits of Ventures as
the general partner, and also owns approximately 1.2% of the limited partnership
interests in Ventures. 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. Ventures, WP and EMW are hereinafter collectively referred to as
the "Warburg Entities" and the Warburg Entities and the Trustees are hereinafter
collectively referred to as the "Reporting Entities." The general partners of WP
and the members of EMW are described in Schedule I hereto. The Voting Trust
Agreement is incorporated herein by reference to Exhibit 2 of the Schedule 13D
filed on May 19, 1997 on behalf of the Reporting Entities as amended by
Amendment No. 1 to the Schedule 13D filed on
9 of 21
<PAGE>
July 3, 1997 and by Amendment No. 2 to the Schedule 13D filed on November,
18, 1997 (the "Original Schedule 13D").
(b) The address of the principal business and principal office of each
of the Reporting Entities is 466 Lexington Avenue, New York, New York 10017.
(c) The principal business of Ventures is that of a partnership engaged
in making venture capital and related investments. The principal business of WP
is acting as general partner of Ventures, Warburg Pincus Investors, L.P.,
Warburg, Pincus Capital Company, L.P. and Warburg, Pincus Capital Partners, L.P.
The principal business of EMW is acting as manager of Ventures, Warburg, Pincus
Investors, L.P., Warburg, Pincus Capital Company, L.P. and Warburg, Pincus
Capital Partners, 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 Entities, 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 Entities 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
10 of 21
<PAGE>
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.
The total amount of funds required by Ventures to purchase the
Securities (as defined below), was $40,215,513.40, and was furnished from the
working capital of Ventures.
Item 4. Purpose of Transaction.
As of April 2, 1997, Coventry Corporation entered into an Amended and
Restated Securities Purchase Agreement (the "Purchase Agreement") with Ventures
and Franklin Capital Associates III L.P. ("Franklin") pursuant to which Ventures
agreed to purchase, subject to certain conditions, a 8.3% Convertible
Exchangeable Senior Subordinated Note of the Company (the "Notes") in the
aggregate principal amount of $36,000,000 and 2,117,647 Warrants to purchase
Common Stock for an aggregate purchase price of $38,117,647 (the "Purchase") in
two tranches. The Notes have since been amended and consolidated into a single
note (the "Note") with substantially the same terms as the Notes.
In addition, Ventures has purchased a total of 773,000 shares of
Coventry Common Stock (together with the Note and the Warrants, the
"Securities"). In addition, Mr. Hackett, one of the Voting Trustees, owns 5,000
shares of Common Stock.
11 of 21
<PAGE>
As a result of the merger of Coventry Corporation with a wholly owned
subsidiary of Coventry Health Care, Inc., which was consummated as of April 1,
1998 (the "Merger"), Ventures' beneficial ownership interest in the voting
securities of Coventry Corporation was converted into a beneficial ownership in
the voting securities of the Company. None of the terms of the Common Stock, the
Note nor the terms of the Warrants (as described below) have changed as a result
of the Merger.
The Note is convertible into shares of Common Stock at any time at the
option of Ventures, or upon automatic conversion of all of the outstanding Notes
with the consent of the holders of a majority in aggregate principal amount of
the outstanding Notes. Additionally, the Note may be exchanged at any time at
the option of the Company or Ventures into shares of Series A Preferred Stock of
the Company. In the event that the Note is exchanged for Series A Preferred
Stock, the Series A Preferred Stock is also convertible into shares of Common
Stock at any time at the option of Ventures or upon automatic conversion of all
the outstanding shares of Series A Preferred Stock with the consent of the
holders of record of a majority of the outstanding shares of Series A Preferred
Stock. Shares of Series A Preferred Stock are initially convertible on a share
for share basis into shares of Common Stock and have the right to vote with the
Common Stock on an as converted basis except with respect to the election of
directors (as discussed below).
For two years following the purchase date of the Note (the "Second
Anniversary"), the holders of Series A Preferred Stock are
12 of 21
<PAGE>
entitled to receive, if, when and as declared out of the net profits of the
Company dividends at the rate of $0.83 per share per annum, payable in
additional shares of Series A Preferred Stock, valued at $10.00 per share,
before any dividends are set apart for or paid upon the Common Stock or any
other stock ranking on liquidation junior to the Series A Preferred Stock in any
year. Dividends through the Second Anniversary will be cumulative. At all times
after the Second Anniversary when the Board of Directors of the Company (the
"Board") declares any cash dividend on the shares of Common Stock, the Board
will be required to declare a cash dividend on each share of Series A Preferred
Stock.
The Warrants are exercisable for shares of Common Stock at any time at
the option of Ventures at an exercise price of $10.625 per share of Common
Stock; provided, however, that Ventures may not exercise the Warrants if, as a
result of such exercise, Ventures would beneficially own ten (10%) or more of
the outstanding voting securities of the Company, unless certain regulatory
approvals have been obtained.
Voting Trust. Until April 15, 2007, Ventures has irrevocably vested the
power to vote all of the shares of Common Stock which it may acquire, as a
result of the conversion or exchange of the Note, the exercise of the Warrants
or otherwise, in the Voting Trust. However, if at any time Ventures is deemed to
own beneficially (within the meaning of Rule 13d-3 under the Exchange Act) less
than ten percent (10%) of the then outstanding shares of Common Stock, Ventures
may upon written notice to the trustees under the Voting Trust terminate the
Voting Trust.
13 of 21
<PAGE>
Board Representation. Under the Purchase Agreement, for so long as the
Note shall remain outstanding, the Company will recommend to the nominating
committee of the Board and use its best efforts to elect (including recommending
the election of Ventures' nominees to the stockholders of the Company) and to
cause to remain as directors on the Board two (2) individuals that the holders
of a majority in aggregate principal amount of the outstanding Notes (the
"Majority Holders") will designate. As of the date hereof, Ventures is the
Majority Holder under the Purchase Agreement.
If any event of default under the Purchase Agreement shall occur and be
continuing, the Company will nominate and use its best efforts to elect and
cause to remain as a director on the Board for so long as such event of default
continues, one (1) additional nominee designated by the Majority Holders. For so
long as the Warburg and Franklin own beneficially (within the meaning of Rule
13d-3 under the Exchange Act) at least 50% of the shares of Common Stock
beneficially owned by them as of the Second Closing Date under the Purchase
Agreement, the Company will nominate and use its best efforts to elect and cause
to remain as directors on the Board at least one (1) nominee designated by the
Majority Holders.
Alternatively, in the event that the Company exercises its option to
exchange the Note for shares of Series A Preferred Stock, for so long as at
least 1,000,000 shares of Series A Preferred Stock remain outstanding (subject
to adjustment), the holders of Series A Preferred Stock shall have the exclusive
14 of 21
<PAGE>
right, voting separately as a class, to elect two directors to the Board.
If the number of directors on the Board is increased to more than nine
directors, the Majority Holders or the holders of record of a majority of the
outstanding shares of Series A Preferred Stock, as the case may be, shall have
the right to elect a proportionate number of nominees to the Board.
Any vacancy created by the death, disability, retirement or removal of
any such individual may be filled by Ventures. The initial designees of Ventures
were Patrick T. Hackett and Rodman W. Moorhead III, who are both general
partners of WP and Managing Directors and members of EMW, and who were elected
on May 7, 1997 to the Board.
Registration Rights. The Note, the shares of Series A Preferred Stock
and the Warrants are not be registered under the Securities Act of 1933, as
amended (the "Securities Act"). Pursuant to the Purchase Agreement, the Company
has granted Ventures and Franklin demand and piggy-back registration rights with
respect to the shares of Common Stock issuable upon conversion of the Notes or
conversion of the shares of Series A Preferred Stock and upon exercise of the
Warrants ("Registrable Securities"). The Company has agreed to use its best
efforts to effect any registration requested by the holders of more than 50% of
the then outstanding Registrable Securities and has agreed to give the holders
of Registrable Securities the opportunity to sell their Registrable Securities
pursuant to certain other registration
15 of 21
<PAGE>
statements that may be filed by the Company under the Securities Act.
The foregoing descriptions of the Purchase Agreement and the Voting
Trust are qualified in their entirety by reference to the Purchase Agreement and
the Voting Trust Agreement, which are incorporated herein by reference to
Exhibits 1 and 2, respectively, to the Original Schedule 13D.
The purchase by Ventures of Common Stock was effected because of the
Reporting Entities' belief that Coventry Corporation represented, and that the
Company continues to represent, an attractive investment. As contemplated by the
terms of the Purchase Agreement, Patrick T. Hackett and Rodman W. Moorhead, III,
both of whom are general partners of WP and Managing Directors and members of
EMW, were elected to the Company's Board of Directors on May 7, 1997. Both Mr.
Hackett (except in his capacity as a Trustee) and Mr. Moorhead disclaim
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of the Common Stock owned by Ventures. The Reporting Entities presently expect
to limit their involvement in the management of the Company to representation on
the Board.
The Reporting Entities may from time to time acquire shares of Common
Stock or dispose of shares of Common Stock through open market or privately
negotiated transactions or otherwise, depending on existing market conditions
and other considerations discussed below. The Reporting Entities intend to
review their investment in the Company on a continuing basis and, depending upon
the price and availability of shares of Common Stock, subsequent developments
16 of 21
<PAGE>
affecting the Company, the Company's business and prospects, other investment
and business opportunities available to the Reporting Entities, general stock
market and economic conditions, tax considerations and other factors considered
relevant, may decide at any time not to increase, or to decrease, the size of
their investment in the Company.
None of the Reporting Entities nor, to the best of their knowledge, any
person listed in Schedule I hereto, has any plans or proposals which relate to
or would result in: (a) the acquisition by any person of additional securities
of the Company, or the disposition of securities of the Company; (b) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries; (c) a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries; (d) any change in the present Board of Directors or management of
the Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board; (e) any material
change in the present capitalization or dividend policy of the Company; (f) any
other material change in the Company's business or corporate structure; (g)
changes in the Company's charter, By-Laws or instruments corresponding thereto
or other actions which may impede the acquisition of control of the Company by
any person; (h) causing a class of securities of the Company to be delisted from
a national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) a class of equity securities of the
17 of 21
<PAGE>
Company becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Exchange Act; or (j) any action similar to any of those
enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) As of April 1, 1998, Ventures beneficially owned 6,645,047 shares
of Common Stock, subject to adjustment. By reason of their respective
relationships with Ventures, each of the Reporting Entities may be deemed under
Rule 13d-3 under the Exchange Act to own beneficially all of the shares of
Common Stock which Ventures beneficially owns. As of April 1, 1998, 6,645,047
shares of Common Stock represented approximately 10.3% of the outstanding shares
of Common Stock, based on the 58,443,261 shares of Common Stock outstanding as
of such date, as reported to the Reporting Entities by the Company.
(b) Until April 15, 2007, the Voting Trust has the sole irrevocable
power to vote or to direct the vote of the shares of Common Stock which Warburg
may acquire; provided, however, that Ventures may terminate the Voting Trust if
at any time Ventures is deemed to own beneficially (within the meaning of Rule
13d-3 under the Exchange Act) less than ten percent (10%) of the then
outstanding shares of Common Stock. In the event that the Voting Trust is so
terminated, the Warburg Entities would share the power to vote or to direct the
vote of the shares of Common Stock which Ventures may acquire.
The Warburg Entities together share the power to dispose or to direct
the disposition of all shares of Common Stock acquired by Ventures.
18 of 21
<PAGE>
(c) In addition to the shares of Common Stock owned by Ventures as a
result of the cancellation and conversion of the Securities pursuant to the
Merger, Ventures has made certain recent open market purchases of Common Stock,
which purchases are reflected in Schedule II hereto.
(d) Except as set forth in this Item 5, no person other than each
respective record owner referred to herein of securities is known to have the
right to receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, such securities.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
Pursuant to Rule 13d-1(f) promulgated under the Exchange Act, the
Reporting Persons have entered into an agreement with respect to the joint
filing of this statement, and any amendment or amendments hereto, which
agreement is incorporated herein by reference to Exhibit 3 of the Original
Schedule 13D.
The information set forth in Item 4 above is incorporated herein by
reference.
Except as described herein and by reference to Item 4 above, there are
no contracts, arrangements, understandings or relationships among the persons
named in Item 2 or between such persons and any other person with respect to any
securities of the Company.
19 of 21
<PAGE>
By virtue of the relationships among the Reporting Entities as
described in Item 2, the Reporting Entities may be deemed to be a "group" under
the Federal securities laws. Lionel I. Pincus disclaims any beneficial ownership
of the Securities and the shares of Common Stock which may be acquired upon
conversion or exercise of the Securities reported herein as being beneficially
owned by the Reporting Entities.
Item 7. Material to be Filed as Exhibits.
1. The Amended and Restated Securities Purchase Agreement, dated as of
April 2, 1997, by and between Coventry Corporation, Ventures and Franklin, is
incorporated herein by reference to Exhibit 1 to the Original Schedule 13D.
2. Voting Trust Agreement, dated as of April 15, 1997, by and among
Ventures and the Trustees named therein, is incorporated herein by reference to
Exhibit 2 to the Original Schedule 13D.
3. Joint Filing Agreement, dated as of May 16, 1997, by and among the
Reporting Entities, is incorporated herein by reference to Exhibit 3 to the
Original Schedule 13D.
20 of 21
<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: April 9, 1998 WARBURG, PINCUS VENTURES, L.P.
By: Warburg, Pincus & Co.,
General Partner
By:/s/ Stephen Distler
--------------------------------
Partner
Dated: April 9, 1998 WARBURG, PINCUS & CO.
By:/s/ Stephen Distler
--------------------------------
Partner
Dated: April 9, 1998 E.M. WARBURG, PINCUS & CO., LLC
By:/s/ Stephen Distler
--------------------------------
Member
Dated: April 9, 1998 By:/s/ Patrick T. Hackett
--------------------------------
Trustee
Dated: April 9, 1998 By:/s/ Joel Ackerman
--------------------------------
Trustee
Dated: April 9, 1998 By:/s/ Jonathan S. Leff
--------------------------------
Trustee
<PAGE>
SCHEDULE I
Set forth below is the name, position and present principal occupation of each
of the general partners of Warburg, Pincus & Co. ("WP") and each of the members
of E.M. Warburg, Pincus & Co., LLC ("EMW"). The sole general partner of Warburg,
Pincus Ventures, L.P. ("Ventures") is WP. WP, EMW and Ventures are hereinafter
collectively referred to as the "Reporting Entities." 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 with the
Name Reporting Entities
- ---- ------------------
Joel Ackerman Managing Director and Member, EMW
Susan Black Managing Director and Member, EMW
Christopher W. Brody Managing Director and Member, EMW
Harold Brown Senior Managing Director and Member,
EMW
Errol M. Cook Managing Director and Member, EMW
W. Bowman Cutter Managing Director and Member, EMW
Elizabeth B. Dater Managing Director and Member, EMW
Stephen Distler Managing Director, Member and
Treasurer, EMW
Harold W. Ehrlich Managing Director and Member, EMW
Louis G. Elson Managing Director and Member, EMW
S-1
<PAGE>
John L. Furth Vice Chairman of the Board and
Member, EMW
Stewart K.P. Gross Managing Director and Member, EMW
Patrick T. Hackett Managing Director and Member, EMW
Jeffrey A. Harris Managing Director and Member, EMW
A. Michael Hoffman Managing Director and Member, EMW
William H. Janeway Managing Director and Member, EMW
Douglas M. Karp Managing Director and Member, EMW
Charles R. Kaye Managing Director and Member, EMW
Henry Kressel Managing Director and Member, EMW
Joseph P. Landy Managing Director and Member, EMW
Sidney Lapidus Managing Director and Member, EMW
Kewsong Lee Managing Director and Member, EMW
Reuben S. Leibowitz Managing Director and Member, EMW
S. Joshua Lewis Managing Director and Member, EMW
David E. Libowitz Managing Director and Member, EMW
Brady T. Lipp Managing Director and Member, EMW
Stephen J. Lurito Managing Director and Member, EMW
Spencer S. Marsh III Managing Director and Member, EMW
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<PAGE>
Lynn S. Martin Managing Director and Member, EMW
Edward J. McKinley Managing Director and Member, EMW
Rodman W. Moorhead III Senior Managing Director and Member,
EMW
Maryanne Mullarkey Managing Director and Member, EMW
Howard H. Newman Managing Director and Member, EMW
Gary D. Nusbaum Managing Director and Member, EMW
Sharon B. Parente Managing Director and Member, EMW
Dalip Pathak Managing Director and Member, EMW
Daphne D. Philipson Managing Director and Member, EMW
Lionel I. Pincus Chairman of the Board, CEO, and
Managing Member, EMW; and Managing
Partner, Pincus & Co.
Eugene L. Podsiadlo Managing Director and Member, EMW
Ernest H. Pomerantz Managing Director and Member, EMW
Brian S. Posner Managing Director and Member, EMW
Arnold M. Reichman Managing Director and Member, EMW
Roger Reinlieb Managing Director and Member, EMW
John D. Santoleri Managing Director and Member, EMW
S-3
<PAGE>
Steven G. Schneider Managing Director and Member, EMW
Sheila N. Scott Managing Director and Member, EMW
Eugene J. Siembieda Managing Director and Member, EMW
James E. Thomas Managing Director and Member, EMW
John L. Vogelstein Vice Chairman of the Board and
Member, EMW
Elizabeth H. Weatherman Managing Director and Member, EMW
Pincus & Co.*
NL & Co.**
* New York limited partnership; its primary activity is
ownership in WP and EMW.
** New York limited partnership; its primary activity is
ownership in WP.
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<PAGE>
Members of EMW
--------------
Present Principal Occupation
in Addition to Position with
EMW, and Positions with the
Name Reporting Entities
- ---- ------------------
Joel Ackerman Partner, WP
Susan Black Partner, WP
Christopher W. Brody Partner, WP
Harold Brown Partner, WP
Dale C. Christensen(1)
Errol M. Cook Partner, WP
W. Bowman Cutter Partner, WP
Elizabeth B. Dater Partner, WP
Stephen Distler Partner, WP
P. Nicholas Edwards(2) Partner, WP
Harold W. Ehrlich Partner, WP
Louis G. Elson Partner, WP
John L. Furth Partner, WP
Stewart K.P. Gross Partner, WP
Patrick T. Hackett Partner, WP
Jeffrey A. Harris Partner, WP
A. Michael Hoffman Partner, WP
William H. Janeway Partner, WP
Douglas M. Karp Partner, WP
Charles R. Kaye Partner, WP
Richard H. King(2)
Henry Kressel Partner, WP
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<PAGE>
Joseph P. Landy Partner, WP
Sidney Lapidus Partner, WP
Kewsong Lee Partner, WP
Reuben S. Leibowitz Partner, WP
S. Joshua Lewis Partner, WP
David E. Libowitz Partner, WP
Brady T. Lipp Partner, WP
Stephen J. Lurito Partner, WP
Spencer S. Marsh III Partner, WP
Lynn S. Martin Partner, WP
Edward J. McKinley Partner, WP
Rodman W. Moorhead III Partner, WP
Maryanne Mullarkey Partner, WP
Howard H. Newman Partner, WP
Gary D. Nusbaum Partner, WP
Sharon B. Parente Partner, WP
Dalip Pathak Partner, WP
Daphne D. Philipson Partner, WP
Lionel I. Pincus Managing Partner, WP; Chairman
of the Board and CEO, EMW;
Managing Partner, Pincus & Co.
Eugene L. Podsiadlo Partner, WP
Ernest H. Pomerantz Partner, WP
Brian S. Posner Partner, WP
Arnold M. Reichman Partner, WP
Roger Reinlieb Partner, WP
John D. Santoleri Partner, WP
Steven G. Schneider Partner, WP
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<PAGE>
Sheila N. Scott Partner, WP
Eugene J. Siembieda Partner, WP
Dominic H. Shorthouse(2)
Chang Q. Sun(3)
James E. Thomas Partner, WP
John L. Vogelstein Partner, WP
Elizabeth H. Weathermen Partner, WP
Pincus & Co.*
(1) Citizen of Canada
(2) Citizen of United Kingdom
(3) Citizen of People's Republic of China
* New York limited partnership; its primary activity is
ownership in WP.
S-7
<PAGE>
Schedule II
-----------
Recent Purchases and Sales of the
Voting Securities of Coventry Corporation
Following the Merger*
Name of
Purchaser Number of Shares Unit Price Date of Trade
- --------- ---------------- ---------- -------------
Ventures Purchased: 65,000 16.1250 04/01/98
Ventures Purchased: 5,000 16.1250 04/03/98
* As of April 1, 1998, as a result of the Merger, all of the shares of Common
Stock, the Note and the Warrants originally issued by Coventry Corporation were
canceled and converted into the Common Stock, the Note and the Warrants of
Coventry Health Care, Inc.
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<PAGE>
