UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Amendment No. 3
Under the Securities Exchange Act of 1934
THE WELLCARE MANAGEMENT GROUP, INC.
-----------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
--------------------------------------
(Title of Class of Securities)
949470108
---------
(CUSIP Number)
LAWRENCE C. TUCKER
Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
(212) 493-8400
--------------------------------------
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
June 11, 1999
---------------------------------------
(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 Rules 13d-1(e), 13d-1(f) or 13-d1(g), 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>
2
CUSIP No. 949470108
1 NAME OF REPORTING PERSON
THE 1818 FUND II, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |_|
(b) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E)
6 CITIZENSHIP OR PLACE OR ORGANIZATION
DELAWARE
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 11,250,000*/ (assuming full conversion of the
EACH Senior Convertible Preferred Stock, Series B
REPORTING ("Series B Preferred Stock"))
PERSON WITH 9 SOLE DISPOSITIVE POWER
-0-
10 SHARED DISPOSITIVE POWER
11,250,000*/ (assuming full conversion of the
Series B Preferred Stock)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,250,000*/ (assuming full conversion of the Series B Preferred Stock)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
- -------------------------
*/ This number includes the number of shares of Common Stock, par value
- - $0.01 per share ("Common Stock"), of the WellCare Management Group,
Inc. (the "Company") issuable upon conversion of the Series B Preferred
Stock plus the number of shares of Common Stock currently owned by The
1818 Fund II, L.P. (the "Fund").
<PAGE>
3
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
67.6%*/
-
14 TYPE OF REPORTING PERSON
PN
- -------------------------
*/ This percentage is based upon the number of shares of Common Stock
- - outstanding on May 28, 1999, which the Company represented was
6,635,999, plus the total number of shares of Common Stock into which
the Series B Preferred Stock are convertible. If the percentage were
also based on the number of shares of Common Stock issuable upon the
conversion of shares of Senior Convertible Preferred Stock, Series A
("Series A Preferred Stock"), owned by Kiran C. Patel, which is
9,288,200 shares of Common Stock (subject to certain adjustments), the
percentage owned by the Fund would be 43.4%.
<PAGE>
4
CUSIP No. 949470108
1 NAME OF REPORTING PERSON
BROWN BROTHERS HARRIMAN & CO.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |_|
(b) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E)
6 CITIZENSHIP OR PLACE OR ORGANIZATION
NEW YORK
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 11,250,000*/ (assuming full conversion of the
EACH Series B Preferred Stock)
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH -0-
10 SHARED DISPOSITIVE POWER
11,250,000*/ (assuming full conversion of the
Series B Preferred Stock)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,250,000*/ (assuming full conversion of the Series B Preferred Stock)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
- -------------------------
*/ This number includes the number of shares of Common Stock issuable upon
- - conversion of the Series B Preferred Stock plus the number of shares of
Common Stock currently owned by the Fund.
<PAGE>
5
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
67.6%*/
-
14 TYPE OF REPORTING PERSON
PN
- -------------------------
*/ This percentage is based upon the number of shares of Common Stock
- - outstanding on May 28, 1999, which the Company represented was
6,635,999 plus the total number of shares of Common Stock into which
the Series B Preferred Stock are convertible. If the percentage were
also based on the number of shares of Common Stock issuable upon the
conversion of shares of Series A Preferred Stock owned by Kiran C.
Patel, which is 9,288,200 shares of Common Stock (subject to certain
adjustments), the percentage owned by the Fund would be 43.4%.
<PAGE>
6
CUSIP No. 949470108
1 NAME OF REPORTING PERSON
T. MICHAEL LONG
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |_|
(b) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
6 CITIZENSHIP OR PLACE OR ORGANIZATION
UNITED STATES OF AMERICA
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 11,250,000*/ (assuming full conversion of the
EACH Series B Preferred Stock)
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH -0-
10 SHARED DISPOSITIVE POWER
11,250,000*/ (assuming full conversion of the
Series B Preferred Stock)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,250,000*/ (assuming full conversion of the Series B Preferred Stock)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
- -------------------------
*/ This number includes the number of shares of Common Stock issuable upon
- - conversion of the Series B Preferred Stock plus the number of shares of
Common Stock currently owned by the Fund.
<PAGE>
7
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
67.6*/
-
14 TYPE OF REPORTING PERSON
IN
- -------------------------
*/ This percentage is based upon the number of shares of Common Stock
- - outstanding on May 28, 1999, which the Company represented was
6,635,999 plus the total number of shares of Common Stock into which
the Series B Preferred Stock are convertible. If the percentage were
also based on the number of shares of Common Stock issuable upon the
conversion of shares of Series A Preferred Stock owned by Kiran C.
Patel, which is 9,288,200 shares of Common Stock (subject to certain
adjustments), the percentage owned by the Fund would be 43.4%.
<PAGE>
8
CUSIP No. 949470108
1 NAME OF REPORTING PERSON
LAWRENCE C. TUCKER
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |_|
(b) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
6 CITIZENSHIP OR PLACE OR ORGANIZATION
UNITED STATES OF AMERICA
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 11,250,000*/ (assuming full conversion of the
EACH Series B Preferred Stock)
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH -0-
10 SHARED DISPOSITIVE POWER
11,250,000*/ (assuming full conversion of the
Series B Preferred Stock)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,250,000*/ (assuming full conversion of the Series B Preferred Stock)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
- -------------------------
*/ This number includes the number of shares of Common Stock issuable upon
- - conversion of the Series B Preferred Stock plus the number of shares of
Common Stock currently owned by the Fund.
<PAGE>
9
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
67.6%*/
-
14 TYPE OF REPORTING PERSON
IN
- -------------------------
*/ This percentage is based upon the number of shares of Common Stock
- - outstanding on May 28, 1999, which the Company represented was
6,635,999 plus the total number of shares of Common Stock into which
the Series B Preferred Stock are convertible. If the percentage were
also based on the number of shares of Common Stock issuable upon the
conversion of shares of Series A Preferred Stock owned by Kiran C.
Patel, which is 9,288,200 shares of Common Stock (subject to certain
adjustments), the percentage owned by the Fund would be 43.4%.
<PAGE>
10
This statement constitutes Amendment No. 3 to a statement on
Schedule 13D, as amended by Amendment No. 1 and Amendment No. 2 (the "Schedule
13D"), filed with the Securities and Exchange Commission with respect to the
Common Stock, par value $.01 per share, of The WellCare Management Group, Inc.,
on behalf of The 1818 Fund II, L.P., Brown Brothers Harriman & Co., T. Michael
Long and Lawrence C. Tucker.
The information set forth in the Schedule 13D is hereby
amended and restated in its entirety as follows:
Item 1. Security and Issuer.
Item 1 is hereby amended and restated in its entirety to read
as follows:
The securities to which this Statement on Schedule 13D relates
are the shares of common stock, par value $.01 per share (the "Common Stock"),
of The WellCare Management Group, Inc., a New York corporation (the "Company"),
whose principal executive office is located at Park West/Hurley Avenue
Extension, Kingston, New York 12401. Although no person identified in Item 2 has
acquired more than 1,250,000 shares of Common Stock, such persons may be deemed
to be the beneficial owners of additional shares of Common Stock reported in
Item 5 by virtue of their acquisition of beneficial ownership of 100,000 shares
of Senior Convertible Preferred Stock Series B, par value $.01 per share, of the
Company ("Series B Preferred Stock") on June 11, 1999. Such shares of Series B
Preferred Stock will automatically be converted into 10,000,000 shares (subject
to certain anti-dilution adjustments) of Common Stock on the later of (i)
<PAGE>
11
the amendment to the Company's Certificate of Incorporation increasing the total
number of authorized shares of Common Stock by 55,000,000 shares or (ii) the
obtainment of all governmental and regulatory approvals necessary for the
conversion of shares of Series B Preferred Stock into shares of Common Stock.
Item 2. Identity and Background.
Item 2 is hereby amended and restated in its entirety to read
as follows:
(a), (b), (c) and (f). This Statement on Schedule 13D is being
filed by The 1818 Fund II, L.P., a Delaware limited partnership (the "Fund"),
Brown Brothers Harriman & Co., a New York limited partnership and general
partner of the Fund ("BBH & Co."), T. Michael Long ("Long") and Lawrence C.
Tucker ("Tucker") (the Fund, BBH & Co., Long and Tucker are referred to
collectively herein as the "Reporting Persons").
The Fund was formed to provide a vehicle for institutional and
substantial corporate investors to acquire significant equity interests in
medium-sized publicly owned United States corporations that could benefit from
the presence of a large, management supportive shareholder with a relatively
long-term investment goal. BBH & Co. is a private bank. Pursuant to a resolution
adopted by the partners of BBH & Co., BBH & Co. has designated and appointed
Long and Tucker, or either of them, the sole and exclusive partners of BBH & Co.
having voting power (including the power to vote or to direct the voting) and
investment power (including the power to dispose or to direct the disposition)
with respect to the shares of Common Stock into which the shares of Series B
Preferred Stock are convertible.
<PAGE>
12
The address of the principal business and principal offices of
each of the Fund and BBH & Co. is 59 Wall Street, New York, New York 10005.
The business address of each of Long and Tucker is 59 Wall
Street, New York, New York 10005. The present principal occupation or employment
of each of Long and Tucker is as a general partner of BBH & Co. Long and Tucker
are citizens of the United States.
The name, business address, present principal occupation or
employment (and the name, principal business and address of any corporation or
other organization in which such employment is conducted) and the citizenship of
each general partner of BBH & Co. is set forth on Schedule I hereto and is
incorporated herein by reference.
(d) and (e). During the last five years, neither any Reporting Person
nor, to the best knowledge of each Reporting Person, any person identified on
Schedule I has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
which any such person 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.
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 is hereby amended and restated in its entirety to read
as follows:
<PAGE>
13
Pursuant to the Note Purchase Agreement (which was filed as
Exhibit 1 to the Schedule 13D and is incorporated herein by reference), dated as
of January 19, 1996, as amended by Amendment 1 (which was filed as Exhibit 4 to
the Schedule 13D and is incorporated herein by reference) and further amended by
Amendment 2 (which was filed as Exhibit 5 to the Schedule 13D and is
incorporated herein by reference), (the "Note Purchase Agreement"), by and
between the Company and the Fund, the Company issued, and the Fund acquired from
the Company, the Note (which was filed as Exhibit 2 to the Schedule 13D and is
incorporated herein by reference), for a purchase price (the "Purchase Price")
of $20,000,000, upon the terms and subject to the conditions set forth in the
Note Purchase Agreement.
The funds used by the Fund to pay the Purchase Price were
obtained by the Fund from capital contributions made by its partners pursuant to
pre-existing capital commitments. Effective December 31, 1997, the Fund
converted $5,000,000 of the Note into 1,250,000 shares of Common Stock.
On June 11, 1999, pursuant to an Exchange Agreement, dated
June 11, 1999, by and between the Company and the Fund (the "Exchange
Agreement") (which is filed as Exhibit 6 to the Schedule 13D and is incorporated
herein by reference) the Fund exchanged the Note for 100,000 shares of Series B
Preferred Stock. Such shares of Series B Preferred Stock will automatically be
converted into 10,000,000 shares (subject to certain anti-dilution adjustments)
of Common Stock on the later of (i) the amendment to the Company's Certificate
of Incorporation increasing the total number of authorized shares of Common
Stock by 55,000,000 shares or (ii) the obtainment of all governmental and
regulatory
<PAGE>
14
approvals necessary for the conversion of shares of Series B Preferred Stock
into shares of Common Stock.
Item 4. Purpose of Transaction.
Item 4 is hereby amended and restated in its entirety to read
as follows:
The Fund has acquired the shares of Series B Preferred Stock
for investment purposes.
The Reporting Persons may from time to time acquire additional
shares of Common Stock in the open market or in privately negotiated
transactions, subject to availability of the shares of Common Stock at prices
deemed favorable, the Company's business or financial condition and to other
factors and conditions the Reporting Persons deem appropriate. Alternatively,
the Reporting Persons may sell all or a portion of their shares of Series B
Preferred Stock or shares of Common Stock in the open market or in privately
negotiated transactions.
No Reporting Person has any present plans or proposals that
relate to or would result in: (a) the acquisition by any person of additional
securities of the issuer, or the disposition of securities of the issuer; (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 of 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
such directors or to fill any existing vacancies on such board; (e) any material
change in the present capitalization or dividend policy of the Company; (f) any
other material change in the Company's
<PAGE>
15
business or corporate structure; (g) changes in the Company's charter, by-laws
or instruments corresponding thereto or other actions that may impede the
acquisition of control of the Company by any person; (h) the 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 Company
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act of 1934; or (j) any action similar to any of
those enumerated above.
Item 5. Interest in Securities of the Issuer.
Item 5 is hereby amended and restated in its entirety to read
as follows:
(a) through (c). As set forth above, effective December 31,
1997, the Fund converted $5,000,000 of the Note into 1,250,000 shares of Common
Stock and on June 11, 1999, pursuant to the Exchange Agreement, the Company
issued to the Fund, and the Fund acquired from the Company, 100,000 shares of
Series B Preferred Stock in exchange for and cancellation of the Note, which was
in the principal amount of $15,000,000.
Giving effect to the conversion of the Series B Preferred
Stock, the Fund beneficially owns 11,250,000 shares of Common Stock,
representing approximately 67.6% of the outstanding shares of Common Stock. This
percentage is based upon the number of shares of Common Stock outstanding as of
May 28, 1999 as reported by the Company in Schedule 3.5 to the Exchange
Agreement, which was 6,635,999 plus the total number of shares of Common Stock
into which the Series B Preferred Stock are convertible. If the percentage
<PAGE>
16
were also based on the number of shares of Common Stock issuable upon conversion
of the shares of Senior Convertible Preferred Stock, Series A, owned by Kiran C.
Patel, which is 9,288,200 shares of Common Stock (subject to certain
adjustments), the percentage owned by the Fund would be 43.4%
By virtue of BBH & Co.'s relationship with the Fund, BBH & Co.
may be deemed to own beneficially the shares of Common Stock beneficially owned
by the Fund. By virtue of the resolution adopted by BBH & Co. designating Long
and Tucker, or either of them, as the sole and exclusive partners of BBH & Co.
having voting power (including the power to vote or to direct the voting) and
investment power (including the power to dispose or to direct the disposition)
with respect to the Notes, and the Common Stock issuable upon conversion or
exchange of the Notes, each of Long and Tucker may be deemed to own beneficially
the shares of Common Stock beneficially owned by the Fund.
Except as set forth above, no Reporting Person nor, to the
best knowledge of each Reporting Person, any person identified on Schedule I,
beneficially owns any shares of Common Stock or has effected any transaction in
shares of Common Stock during the preceding 60 days.
(d) To the best knowledge of the Reporting Persons, no person
other than the Reporting Persons has the right to receive or the power to direct
the receipt of dividends from, or the proceeds from the sale of, the shares of
Common Stock owned by the Fund directly or upon conversion or exchange of the
Notes.
(e) Not applicable.
<PAGE>
17
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
Item 6 is hereby amended and restated in its entirety to read
as follows:
The Company has entered into the Registration Rights
Agreement, as amended, with the Fund, on the terms and conditions set forth
therein, giving the Fund, among other things, the right, on the terms and
conditions set forth therein, to require the Company to register for sale to the
public any shares of Common Stock acquired by the Fund upon conversion or
exchange of the Notes (including shares acquired upon conversion of the Series B
Preferred Stock.)
The Fund is a party to a letter agreement, dated June 11,
1999, pursuant to which Kiran C. Patel promises to vote all shares of Senior
Convertible Preferred Stock, Series A, and all shares of Common Stock held of
record or beneficially owned (as determined pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) by him in favor of the amendment to
the Company's certificate of incorporation to increase the number of authorized
shares of the Common Stock by 55,000,000 shares. The Fund disclaims any
membership in a group with Kiran C. Patel or any other person.
Item 7. Material To Be Filed as Exhibits.
Item 7 is hereby amended and restated in its entirety to read
as follows:
<PAGE>
18
1. Note Purchase Agreement, dated as of January 19,
1996, by and between the Company and the Fund.*/
2. Subordinated Convertible Note Due December 31, 2002
in the aggregate principal amount of $20,000,000 as issued to the Fund on
January 19, 1996.*/
3. Registration Rights Agreement, dated as of January
19, 1996, between the Company and the Fund.*/
4. Letter Agreement, dated as of February 28, 1997, by
and between the Company and the Fund.**/
5. Letter Agreement, dated as of January 14, 1998, by
and between the Company and the Fund.***/
6. Exchange Agreement, dated as of June 11, 1999, by and
between the Company and the Fund.****/
7. Letter Agreement, dated as of June 11, 1999, by and
between the Fund and Kiran C. Patel.****/
- -------------------------
*/ Filed as Exhibits to the original Schedule 13D filed by the Reporting
Persons on January 29, 1996 (the "Schedule 13D").
**/ Filed as an Exhibit to Amendment No. 1 to the Schedule 13D.
***/ Filed as an Exhibit to Amendment No. 2 to the Schedule 13D.
****/ Filed herewith.
<PAGE>
19
SIGNATURE
---------
After reasonable inquiry and to the best of its knowledge and
belief, each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: June 18, 1999
THE 1818 FUND II, L.P.
By: Brown Brothers Harriman & Co.,
General Partner
By: /s/ Lawrence C. Tucker
------------------------------
Name: Lawrence C. Tucker
Title: Partner
BROWN BROTHERS HARRIMAN & CO.
By: /s/ Lawrence C. Tucker
------------------------------
Name: Lawrence C. Tucker
Title: Partner
/s/ T. Michael Long
-----------------------------------
T. Michael Long
/s/ Lawrence C. Tucker
-----------------------------------
Lawrence C. Tucker
<PAGE>
20
SCHEDULE I
----------
Set forth below are the names and positions of all of the
general partners of BBH & Co. The principal occupation or employment of each
person listed below is private banker, and, unless otherwise indicated, the
business address of each person is 59 Wall Street, New York, New York 10005.
Unless otherwise indicated, each person listed below is a citizen of the United
States.
Business Address
(if other than as
Name indicated above)
- ---- ----------------
J. William Anderson
Peter B. Bartlett
Brian A. Berris
Taylor Bodman
John J. Borland
Douglas A. Donahue, Jr. 40 Water Street
Boston, Massachusetts 02109
Anthony T. Enders
Alexander T. Ercklentz
Terrence M. Farley
John A. Gehret 525 Washington Boulevard
Jersey City, New Jersey 07310-1692
Elbridge T. Gerry, Jr.
Kristen F. Giarrusso
Robert R. Gould
Kyosuke Hashimoto 8-14 Nihonbashi 30-Chome Chuo-ku
(citizen of Japan) Tokyo 103, Japan
Ronald J. Hill
Landon Hilliard
<PAGE>
21
Business Address
(if other than as
Name indicated above)
- ---- ----------------
Radford W. Klotz
Michael Kraynak, Jr.
Susan C. Livington 40 Water Street
Boston, Massachusetts 02109
T. Michael Long
Hampton S. Lynch, Jr.
Michael W. McConnell
William H. Moore III
Donald B. Murphy
John A. Nielsen
Eugene C. Rainis
A. Heaton Robertson 40 Water Street
Boston, Massachusetts 02109
Jeffrey A. Schoenfeld 40 Water Street
Boston, Massachusetts 02109
Stokley P. Towles 40 Water Street
Boston, Massachusetts 02109
Andrew J.F. Tucker
Lawrence C. Tucker
Maarten van Hengel
Douglas C. Walker 1531 Walnut Street
Philadelphia, Pennsylvania 19102
Laurence F. Whittemore
Richard H. Witmer, Jr.
<PAGE>
22
INDEX TO EXHIBITS
-----------------
Page
Exhibit Description Number
- ------- ----------- ------
6 Exchange Agreement, dated as of June 11,
1999, by and between the Company and the
Fund
7 Letter Agreement, dated as of June 11,
1999, by and between the Fund and Kiran
C. Patel
Exhibit 6
EXECUTION COPY
EXCHANGE AGREEMENT
------------------
EXCHANGE AGREEMENT (this "Agreement"), dated as of June 11,
1999, by and between The Wellcare Management Group, Inc., a New York corporation
(the "Company"), and The 1818 Fund II, L.P., a Delaware limited partnership (the
"Fund").
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to the Note Purchase Agreement (the "Note
Purchase Agreement"), dated January 19, 1996, by and between the Company and the
Fund, as amended, the Company issued and delivered to the Fund, and the Fund
purchased from the Company, 8.0% Subordinated Convertible Notes (the "Notes") in
the aggregate principal amount of $15,000,000 (the "Principal Amount"), due
December 31, 2002;
WHEREAS, the Company and the Fund have determined that it is
in each of their best interest to convert the Principal Amount and all interest
accrued and unpaid thereon (together, the "Note Indebtedness") into 100,000
shares of Series B Preferred Stock, par value $0.01, of the Company.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and promises herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Exchange of Notes for Series B Preferred Stock.
1.1 Exchange. The Fund shall acquire from the
Company, and the Company shall issue to the Fund, at the Closing 100,000 shares
of Series B Preferred Stock, par value $0.01 per share, of the Company (the
"Series B Preferred Stock"), and in exchange therefor the Company shall acquire
from the Fund the Notes and all Note Indebtedness shall be canceled.
1.2 Powers, Preferences and Rights of the Series A
Preferred Stock and Series B Preferred Stock. Shares of Series B Preferred Stock
shall be pari passu, except as set forth in the Certificate of Designations
attached hereto as Exhibits A and B, with shares of Series A Preferred Stock,
par value $0.01 per share, of the Company (the "Series A Preferred Stock") to be
received by Dr. Kiran C. Patel on the date hereof. The shares of Series A
Preferred Stock and Series B Preferred Stock shall have the powers, preferences,
rights, qualifications and limitations set forth in the Certificate of
Designations attached hereto as Exhibits A and B, respectively.
<PAGE>
2
2. The Closing. The closing of the sale and purchase of the
Series B Preferred Stock contemplated hereby (the "Closing") shall take place at
the offices of Epstein, Becker & Green, P.C., 250 Park Avenue, New York, New
York, at 10:00 a.m. local time on June 11, 1999 (the "Closing Date"). At the
Closing, the Fund shall deliver to the Company the Notes with the appropriate
notation that such Notes have been canceled, and simultaneously at the Closing,
the Company shall deliver to the Fund certificates, in the name of the Fund or
its successors, assigns or designees, evidencing the acquisition by the Fund of
the Series B Preferred Stock. Upon the exchange of the Series B Preferred Stock
for the Notes, the Fund shall release, fully acquit and forever discharge the
Company, its subsidiaries, stockholders, officers, directors, successors and
assigns from any and all debt, late fees, penalties, interest and causes of
action with respect to the Notes.
3. Representations and Warranties of the Company. The Company
represents and warrants to the Fund as follows:
3.1 Due Incorporation and Qualification. Each of the
Company and each of its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has the corporate power and lawful authority to own, lease and
operate its assets, properties and business and to carry on its business as now
conducted. Each of the Company and each of its subsidiaries is qualified to
transact business and is in good standing as a foreign corporation in each of
the jurisdictions in which it is required to be so qualified, except for such
jurisdictions in which the failure to be so qualified is not reasonably likely
to have, individually or in the aggregate, a material adverse effect on the
financial condition of the Company or such subsidiary.
3.2 Corporate Authorization; No Contravention. Except
as set forth on Schedule 3.2, the execution, delivery and performance by the
Company of this Agreement and the transactions contemplated hereby, including
without limitation the issuance of the shares of Series B Preferred Stock and
the Common Stock issuable upon the conversion of the shares of Series B
Preferred Stock:
(a) is within the Company's corporate power and
authority and has been duly authorized by all necessary corporate action;
(b) will not violate, conflict with or result in any
breach or contravention of or the creation of any lien under, any contractual
obligation of the Company or any of its subsidiaries, or any order or decree
directly relating to the Company or any of its subsidiaries; and
(c) has been duly authorized by the Board of
Directors of the Company and no other corporate proceedings on the part of the
Company or its stockholders are necessary to authorize or approve the Agreement
or the transactions contemplated hereby.
<PAGE>
3
3.3 Governmental Authorization; Third Party Consents.
Except as set forth on Schedule 3.3, no approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
governmental authority or any other person, is necessary or required in
connection with the execution, delivery or performance by the Company or
enforcement against the Company of this Agreement, the Series B Preferred Stock
or the transactions contemplated hereby or thereby.
3.4 Binding Effect. This Agreement, upon execution
and delivery by the Company, will be duly executed and delivered by the Company
and (assuming due execution and delivery hereof by the other party hereto) will
be valid and binding obligations of the Company enforceable against the Company
in accordance with its respective terms.
3.5 Capitalization.
(a) Schedule 3.5 sets forth the authorized,
issued and outstanding capital stock of the Company as of the date hereof.
Except as set forth on Schedule 3.5, as of the date hereof, there are no shares
of common stock or other equity securities of the Company issued, reserved for
issuance or outstanding and no warrants, convertible or exchangeable securities,
subscriptions, rights (including any preemptive rights), stock appreciation
rights, calls or commitments of any character whatsoever to which the Company is
a party or may be bound requiring the issuance or sale of shares of any capital
stock of the Company.
(b) All of the issued and outstanding shares
of capital stock of the Company have been duly authorized and are validly
issued, fully paid and non-assessable, and free of any preemptive rights in
respect thereto. The shares of Series B Preferred Stock, when issued to the
Fund, and the shares of Common Stock, par value $0.01 of the Company ("Common
Stock"), when issued upon conversion of the Series B Preferred Stock (assuming
conversion after the amendment to the Company's certificate of incorporation
referred to in Section 4.1), will be duly authorized and, in each case, validly
issued, fully paid and non-assessable, and free of any preemptive rights in
respect thereto.
3.6 Financial Condition. The Company has delivered to
the Fund true and correct copies of the unaudited financial statements of the
Company and its subsidiaries dated as of April 30, 1999 (the "Financials"),
showing the financial position at April 30, 1999 and the pro forma financial
position adjusted for the transactions contemplated hereby, for the transactions
contemplated by the Stock Purchase Agreement, dated May 19, 1999, between Dr.
Kiran C. Patel and the Company and for the sale by the Company's subsidiary,
Wellcare of New York, Inc., of its commercial business to Group Health
Incorporated. The Financials have been prepared in accordance with generally
accepted accounting principles in the United States ("GAAP") applied
consistently throughout the periods covered thereby, with only such deviations
from GAAP as are identified in the footnotes of the Financials,
<PAGE>
4
and present fairly the consolidated financial condition of the Company as of the
date thereof, and the consolidated results of operations of the Company for the
period, or portion thereof, then ended.
4. Post-Closing Covenants of the Company.
4.1 Increase in Number of Authorized Shares. The
Company shall as soon as possible, but in no event later than 150 days of the
Closing Date, amend the Company's certificate of incorporation to increase the
total number of authorized shares of Common Stock by 55,000,000 shares.
4.2 Issue Taxes. The Company shall pay, or cause to
be paid, all documentary and similar taxes levied under the laws of any
applicable jurisdiction in connection with the issuance of the shares of Series
B Preferred Stock, the issuance of the Common Stock upon conversion of the
shares of Series B Preferred Stock and the cancellation of the Notes.
4.3 Registration and Listing. If any shares of Common
Stock required to be reserved for purposes of conversion of the shares of Series
B Preferred Stock as provided in the Certificate of Designation of the Series B
Preferred Stock require registration with or approval of any governmental
authority under any Federal or state or other applicable law before such Common
Stock may be issued or delivered upon conversion, the Company will in good faith
and as expeditiously as possible endeavor to cause such Common Stock to be duly
registered or approved, as the case may be. So long as the Common Stock is
quoted or listed on any national securities exchange, the Company will, if
permitted by the rules of such system or exchange, quote or list and keep quoted
or listed on such exchange, upon official notice of issuance, all shares of
Common Stock issuable or deliverable upon conver sion of the Series B Preferred
Stock.
4.4 Balance Sheet. The Company shall as soon as
possible, but in any event not later than 15 days of the Closing Date, deliver
to the Fund a true and correct copy of the unaudited balance sheet of the
Company and its subsidiaries dated as of April 30, 1999, showing the pro forma
financial position (i) adjusted for the transactions contemplated hereby, for
the transactions contemplated by the Stock Purchase Agreement, dated May 19,
1999, between Dr. Kiran C. Patel and the Company and for the sale by the
Company's subsidiary, Wellcare of New York, Inc., of its commercial business to
Group Health Incorporated, (ii) adjusted for the three adjustments (the
"Adjustments") noted on Schedule 3.6 (the "Adjusted Balance Sheet"), and (iii)
fully reflecting actual claim reductions to date. The Adjusted Balance Sheet
shall be prepared in accordance with GAAP applied consistently throughout the
periods covered thereby, with only such deviations from GAAP as are identified
in the footnotes of the Adjusted Balance Sheet, and shall present fairly the
consolidated financial condition of the Company as of the date thereof.
<PAGE>
5
4.5 Income Statement. The Company shall as soon as
possible, but in any event not later than 15 days of the Closing Date, deliver
to the Fund a true and correct copy of the unaudited statement of income of the
Company and its subsidiaries for the period ended April 30, 1999, showing the
financial position at April 30, 1999 and the pro forma financial position
adjusted for the transactions contemplated hereby, for the transactions
contemplated by the Stock Purchase Agreement, dated May 19, 1999, between Dr.
Kiran C. Patel and the Company and for the sale by the Company's subsidiary,
Wellcare of New York, Inc., of its commercial business to Group Health
Incorporated, assuming that all transactions reflected by the adjustments
occurred prior to January 1, 1999 (the "Income Statement"). The Income Statement
shall be prepared in accordance with GAAP applied consistently throughout the
periods covered thereby, with only such deviations from GAAP as are identified
in the footnotes of the Income Statement, and shall present fairly the
consolidated results of operations of the Company for the period, or portion
thereof, then ended.
4.6 Financial Statements. The Company shall deliver
to the Fund, in form and substance satisfactory to the Fund:
(a) as soon as available, but not later than
100 days after the end of each fiscal year of the Company, a copy of the audited
consolidated balance sheet of the Company and its subsidiaries as of the end of
such year and the related consolidated statements of income and cash flows for
such fiscal year, setting forth in each case in comparative form the figures for
the previous year, all in reasonable detail and accompanied by a management
summary and analysis of the operations of the Company and its subsidiaries for
such fiscal year and by the opinion of Deloitte & Touche LLP (or any successor
thereto) or another nationally recognized independent public accounting firm,
which report shall state that such consolidated financial statements present
fairly the financial position for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years; provided, however, that the
delivery of a copy of the Company's Annual Report on Form 10-K shall satisfy the
requirements of this Section 4.6(a);
(b) as soon as available, but in any event
not later than 50 days after the end of each of the first three fiscal quarters
of each year, the unaudited consolidated balance sheet of the Company and its
subsidiaries, and the related consolidated statements of income and cash flow
for such quarter and for the period commencing on the first day of the fiscal
year and ending on the last day of such quarter, all certified by the Company's
Chief Financial Officer; provided, however, that the delivery of a copy of the
Company's Quarterly Report on Form 10- Q shall satisfy the requirements of this
Section 4.6(b);
(c) budgets and projections of the Company
and its subsidiaries commencing within 60 days of the Closing Date, and then
thereafter, annually according to the Company's planning cycle; and
<PAGE>
6
(d) at any time when it is not subject to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, upon
request, to the Fund and prospective purchasers of the Series B Preferred Stock,
information of the type that would satisfy the requirement of subsection
(d)(4)(i) of Rule 144A of the Securities Act of 1933, as amended (the
"Securities Act").
4.7 Additional Information. The Company shall deliver
to the Fund, as soon as available but no later than the 15th day of each month,
a notice specifying or attaching the following information as to the Company,
all certified by the Company's Chief Financial Officer:
(a) statement of cash receipts and
disbursements for the preceding
month;
(b) statement of cash balances at
preceding month end for the Company
and each of its subsidiaries; and
(c) enrollment changes by category and
region for the preceding month.
5. Other Provisions.
5.1 Notices. Any notice or other communication
required or permitted hereunder shall be in writing and shall be delivered
personally, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid or by overnight delivery service. Any such notice
shall be deemed given when so delivered personally, or sent by facsimile
transmission or, if mailed, five days after the date of deposit in the United
States mail, or, if sent by any other means, when delivered at the address
specified herein, in each such case, as follows:
(i) if to Company, to:
The Wellcare Management Group, Inc.
Park West/Hurley Avenue Extension
P.O. Box 4059
Kingston, New York 12401
Attention: Chief Executive Officer
Facsimile: (914) 334-7820
with a copy to:
Epstein Becker & Green, P.C.
250 Park Avenue
New York, New York 10177
Attention: Seth Truwit, Esq.
<PAGE>
7
Facsimile: 212-661-0989
with a copy to:
6800 N. Dale Mabry, Suite 268
Tampa, Florida 33614
Attention: Kiran C. Patel, M.D.
Facsimile: (813) 290-6306
with a copy to:
Patel, Moore & O'Connor, P.A.
2240 Belleair Road
Suite 160
Clearwater, Florida 33764
Attention: Sandip I. Patel, Esq.
Facsimile: (727) 536-5936
(ii) if to the Fund:
The 1818 Fund II, L.P.
c/o Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
Attention: Mr. Walter W. Grist
Facsimile: (212) 493-8429
with a copy to:
Paul, Weiss, Rifkind, Wharton &
Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Marilyn Sobel, Esq.
Facsimile: (212) 757-3990
Any party may change its address for notice hereunder by
notice to the other parties hereto.
5.2 Entire Agreement. This Agreement contains the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements, written or oral, with respect thereto,
including the Note Purchase Agreement; provided that the Registration Rights
Agreement (the "Registration Rights Agreement"), dated January 19, 1996, between
the Company and the Fund, remains in full force and effect and not affected by
this Agreement or the transactions contemplated hereby except to the extent set
forth in Section 5.3.
<PAGE>
8
Notwithstanding the foregoing, the definitions set
forth in the Note Purchase Agreement shall remain in full force and effect and
is not affected by this Agreement or the transactions contemplated hereby solely
to the extent such definitions are used in the Registration Rights Agreement.
5.3 Amendment of Registration Rights Agreement. The
Company and the Fund hereby amend the Registration Rights Agreement to replace
the term "Notes" with "Series B Preferred Stock, par value $0.01 per share, of
the Company," and to replace the existing definition of Conversion Shares with
the following definition:
"Conversion Shares" mean the shares of common stock,
par value $0.01 per share, of the Company issued or issuable
upon the conversion of the Series B Preferred Stock, par value
$0.01 per share, of the Company.
5.4 Waivers and Amendments. This Agreement may be
amended or modified, and the terms and conditions hereof may be waived, only by
a written instrument signed by the parties or, in the case of a waiver, by the
party waiving compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any right, power or privilege hereunder,
nor any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.
5.5 Fund Representation. The Fund represents and
warrants to the Company that the shares of Series B Preferred Stock (including,
for purposes of this Section 5.5, the shares of Common Stock issuable upon
conversion of the Series B Preferred Stock) to be acquired by such Fund pursuant
to this Agreement are being acquired for its own account and with no intention
of distributing or reselling such securities or any part thereof in any
transaction that would be in violation of the securities laws of the United
States of America, or any state, without prejudice, however, to the rights of
such Fund at all times to sell or otherwise dispose of all or any part of the
shares of Series B Preferred Stock under an effective registration statement
under the Securities Act, or under an exemption from such registration available
under the Securities Act, and subject, nevertheless, to the disposition of such
Fund's property being at all times within its control.
5.6 Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of Florida applicable to
agreements made and to be performed entirely within such State.
5.7 Counterparts. This Agreement may be executed in
two counterparts, each of which shall be deemed an original but both of which
together shall constitute one and the same instrument.
<PAGE>
9
5.8 Headings. The headings in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
5.9 Successors and Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties named herein and their
respective successors and permitted assigns. The Company may not assign its
rights or obligations hereunder without the prior written consent of the Fund.
5.10 Severability. Any term or provision of this
Agreement that is invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.
5.11 Expenses. Each of the parties will bear its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
5.12 Variations in Pronouns. All pronouns and any
variations thereof refer to the masculine, feminine or neuter, singular or
plural, as the identity of the person or persons may require.
[Signature Page Follows]
<PAGE>
10
IN WITNESS WHEREOF, the Company and the Fund have executed
this Agreement as of the date first written above.
THE WELLCARE MANAGEMENT GROUP, INC.
By: /s/ Craig S. Dupont
------------------------------
Name: Craig S. Dupont
Title: Acting President and Chief
Executive Officer
THE 1818 FUND II, L.P.
By: Brown Brothers Harriman & Co.,
general partner
By: /s/ Walter W. Grist
------------------------------
Name: Walter W. Grist
Title: Senior Manager
Exhibit 7
Kiran C. Patel, M.D.
6800 N. Dale Mabry, Suite 268
Tampa, FL 33614
June 11, 1999
The 1818 Fund II, L.P.
c/o Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
Gentlemen:
Reference is made to the Exchange Agreement, dated as of June
11, 1999 (the "Exchange Agreement"), by and between The Wellcare Management
Group, Inc., a New York corporation (the "Company"), and The 1818 Fund II, L.P.,
a Delaware limited partnership (the "Fund"). Capitalized terms used herein but
not otherwise defined shall have the respective meanings assigned thereto in the
Exchange Agreement.
The undersigned hereby agrees, at any meeting of the
shareholders of the Company, however called, and in any action by consent of the
shareholders of the Company, to vote (or cause to be voted) all shares of Senior
Convertible Preferred Stock, Series A and all shares of Common Stock held of
record or beneficially owned (as determined pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) by the undersigned in favor of the
amendment to the Company's Certificate of Incorporation contemplated by Section
4.1 of the Exchange Agreement. The undersigned acknowledges receipt and review
of a copy of the Exchange Agreement.
<PAGE>
2
This letter may be executed in counterparts, each of which
shall be an original and all of which, when taken together, shall constitute one
and the same instrument.
/s/ Kiran C. Patel
------------------------
Kiran C. Patel, M.D.
Accepted and Agreed
The 1818 Fund II, L.P.
By: Brown Brothers Harriman & Co.,
its General Partner
By: /s/ Walter W. Grist
------------------------
Name: Walter W. Grist
Title: Senior Manager
