-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I2GssmjlRlszEqALNfIuUke4LGEvJHs6tk4NEypdrNHZU//as5pxGk24Z3ob+QDr I0859VQ9oH8PQtzaOBwpGQ== 0000936392-99-001408.txt : 19991206 0000936392-99-001408.hdr.sgml : 19991206 ACCESSION NUMBER: 0000936392-99-001408 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19991203 GROUP MEMBERS: COVALENT PARTNERS LLC GROUP MEMBERS: MICHAEL D. CHERMAK GROUP MEMBERS: RICHARD D. PROPPER GROUP MEMBERS: SALMAN J. CHAUDHRY SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: COVALENT GROUP INC CENTRAL INDEX KEY: 0000856569 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 561668867 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-54209 FILM NUMBER: 99768541 BUSINESS ADDRESS: STREET 1: ONE GLENHARDIE CORPORATE CENTER STREET 2: 1275 DRUMMERS LANE STE 201 CITY: WAYNE STATE: PA ZIP: 19087 BUSINESS PHONE: 6109759533 MAIL ADDRESS: STREET 1: ONE GLENHARDIE CORPORATE CENTER STREET 2: 1275 DRUMMERS LANE, SUITE 100 CITY: WAYNE STATE: PA ZIP: 19087 FORMER COMPANY: FORMER CONFORMED NAME: FUTURE MEDICAL TECHNOLOGIES INTERNATIONAL INC DATE OF NAME CHANGE: 19950801 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: COVALENT PARTNERS LLC CENTRAL INDEX KEY: 0001081278 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 330878998 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 4350 LA JOLLA VILLAGE DR STREET 2: STE 970 CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 8584537702 MAIL ADDRESS: STREET 1: 4350 LA JOLLA VILLAGE DR STREET 2: STE 970 CITY: SAN DIEGO STATE: CA ZIP: 92121 SC 13D/A 1 AMENDMENT NO. 1 TO SCHEDULE 13D 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- SCHEDULE 13D AMENDMENT NO. 1 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) BRUCE LAMONT COVALENT GROUP, INC. ONE GLENHARDIE CORP. CENTER 1275 DRUMMERS LANE, SUITE 100 WAYNE, PA 19087 (610) 975-9533 - -------------------------------------------------------------------------------- (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS) NOVEMBER 27, 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 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 13 Pages) (Continued on following pages) 1. 2 CUSIP NO. 222815 10 2 SCHEDULE 13D Page 2 of 13 Pages --------------------- -------- -------- (1) NAMES 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 PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] --------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE --------------------------------------------------------------------- (7) SOLE VOTING POWER NUMBER OF -0- SHARES -------------------------------------------------------- BENEFICIALLY (8) SHARED VOTING POWER OWNED BY 204,000 REPORTING -------------------------------------------------------- PERSON WITH (9) SOLE DISPOSITIVE POWER -0- -------------------------------------------------------- (10) SHARED DISPOSITIVE POWER 1,454,000 -------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,219,500 - SEE ITEM 5 --------------------------------------------------------------------- (12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] --------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 51.6% - 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 12,059,693 shares of Common Stock issued and outstanding as reported on the Issuer's Quarterly Report filed on Form 10-QSB for the quarter ended September 30, 1999. 2. 3 CUSIP NO. 222815 10 2 SCHEDULE 13D Page 3 of 13 Pages --------------------- -------- -------- (1) NAMES 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 PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [X] --------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES --------------------------------------------------------------------- (7) SOLE VOTING POWER NUMBER OF 310,000 SHARES -------------------------------------------------------- BENEFICIALLY (8) SHARED VOTING POWER OWNED BY 204,000 REPORTING -------------------------------------------------------- PERSON WITH (9) SOLE DISPOSITIVE POWER 310,000 -------------------------------------------------------- (10) SHARED DISPOSITIVE POWER 1,454,000 -------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,529,500 - SEE ITEM 5 --------------------------------------------------------------------- (12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] --------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 54.1% - 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 12,059,693 shares of Common Stock issued and outstanding as reported on the Issuer's Quarterly Report filed on Form 10-QSB for the quarter ended September 30, 1999. 3. 4 CUSIP NO. 222815 10 2 SCHEDULE 13D Page 4 of 13 Pages --------------------- -------- -------- (1) NAMES 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 PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] --------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES --------------------------------------------------------------------- (7) SOLE VOTING POWER NUMBER OF 43,000 SHARES -------------------------------------------------------- BENEFICIALLY (8) SHARED VOTING POWER OWNED BY 204,000 REPORTING -------------------------------------------------------- PERSON WITH (9) SOLE DISPOSITIVE POWER 43,000 -------------------------------------------------------- (10) SHARED DISPOSITIVE POWER 1,454,000 -------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,262,500 - SEE ITEM 5 --------------------------------------------------------------------- (12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] --------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 51.9% - 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 12,059,693 shares of Common Stock issued and outstanding as reported on the Issuer's Quarterly Report filed on Form 10-QSB for the quarter ended September 30, 1999. 4. 5 CUSIP NO. 222815 10 2 SCHEDULE 13D Page 5 of 13 Pages --------------------- -------- -------- (1) NAMES 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 PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [X] --------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION PAKISTAN --------------------------------------------------------------------- (7) SOLE VOTING POWER NUMBER OF 16,700 SHARES -------------------------------------------------------- BENEFICIALLY (8) SHARED VOTING POWER OWNED BY -0- REPORTING -------------------------------------------------------- PERSON WITH (9) SOLE DISPOSITIVE POWER 16,700 -------------------------------------------------------- (10) SHARED DISPOSITIVE POWER -0- -------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 16,700 - SEE ITEM 5 --------------------------------------------------------------------- (12) CHECK BOX IF 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 12,059,693 shares of Common Stock issued and outstanding as reported on the Issuer's Quarterly Report filed on Form 10-QSB for the quarter ended September 30, 1999. 5. 6 This Amendment No. 1 amends and restates the Schedule 13D filed by the Reporting Persons (as defined in Item 2) on November 10, 1999. 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 (collectively, the "Reporting Persons") 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"). 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 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. 6. 7 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 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. Covalent Partners obtained funds to make the purchase described in the foregoing paragraph through loan agreements with its members. Chermak, through capital contributions and 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. 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 and (iii) the loan agreement between Propper and California Bank and Trust included as Exhibit 99.3 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, 310,000 shares of Common Stock of the Issuer in open market transactions for an aggregate approximate amount of $616,795. 7. 8 Chermak purchased, through personal funds, 43,000 shares of Common Stock of the Issuer in open market transactions for an aggregate approximate amount of $90,093. 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. ITEM 4. PURPOSE OF THE TRANSACTION 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"). 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. Covalent Partners has the option to purchase, on the terms and subject to the conditions set forth in the Option Agreement, the remaining Shares on or prior to January 15, 2000. If Covalent Partners exercises the Option in full and acquires 6,015,500 shares of Common Stock of the Issuer from LaMont, a substantial majority of the outstanding shares of Common Stock of the Issuer would be exchanged for cash at a per share price of $2.00. Covalent Partners, Propper, Chermak, affiliates of one or both, or some combination thereof, would hold a majority of the outstanding shares of Common Stock of the Issuer upon exercise of the Option in full. In furtherance of Covalent Partners' acquisition of the Common Stock of the Issuer, Covalent Partners purchased 204,000 shares of Common Stock of the Issuer in open market transactions. See Item 3. Until January 15, 2000, LaMont is required to invite Propper to all Board meetings of the Issuer. In the event that Covalent Partners fails to exercise the option in full by January 15, 2000, LaMont is required to use his best efforts in his capacity as a member of the Board and a stockholder of the Issuer to appoint one additional member, as designated by Propper, to the Board. In addition, upon Covalent Partners' exercise of the 8. 9 Option in full on or before January 15, 2000, LaMont must 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. 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 September 30, 1999, there were 12,059,693 shares of Common Stock outstanding. The following summarizes the shares of the Issuer beneficially owned by the Reporting Persons:
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 - ---------------------- -------------------- ------------------- ------------------- Covalent Partners, LLC 6,219,500 6,219,500 51.6% Richard D. Propper 310,000 6,529,500 54.1% Michael D. Chermak 43,000 6,262,500 51.9% Salman J. Chaudhry 16,700 16,700 Less than 1%
Beneficial ownership of 6,219,500 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 310,000 shares of Common Stock of the Issuer beneficially owned by Propper, 36,000 shares beneficially owned by Chermak and 16,700 shares beneficially owned by Chaudhry; Propper disclaims beneficial ownership of 43,000 shares of Common Stock of the Issuer beneficially owned by Chermak and 16,700 shares held by Chaudhry; Chermak disclaims beneficial ownership of 310,000 shares of Common Stock of the Issuer beneficially owned by Propper and 16,700 shares beneficially owned by Chaudhry; Chaudhry disclaims beneficial ownership of 6,219,500 shares of Common Stock of the Issuer beneficially owned by Covalent Partners, 6,529,500 shares beneficially owned by Propper and 6,262,500 shares beneficially owned by Chermak. Propper has sole voting and dispositive power with respect to 310,000 shares of Common Stock of the Issuer. Chermak has sole voting and dispositive power with respect to 43,000 shares of Common Stock of the Issuer. Chaudhry has sole voting and dispositive power with respect to 16,700 shares of Common Stock of the Issuer. Covalent Partners shares voting power with its managing members with respect to 204,000 shares of Common Stock of the Issuer and shares dispositive power with its managing members with respect to 1,454,000 shares of Common Stock of the Issuer. 9. 10 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. Set forth in Schedule II to this Schedule 13D is the name of and certain information regarding the individual 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 since September 10, 1999. All such transactions were made for cash in open market transactions. (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 has agreed to remain employed as the President, Chief Operating Officer and Chief Medical 10. 11 Office of the Issuer until the earlier of Covalent Partners' exercise of the Option in full and January 15, 2000. In addition, upon Covalent Partners' exercise of the Option in full and subject to the approval of the Issuer's Board, Borow will enter into an employment agreement with the Issuer in the form attached hereto as Exhibit 99.6. In consideration of the above, Covalent Partners is required to grant an option to acquire from Covalent Partners 460,000 shares of the Issuer's Common Stock at a price of $2.00 per share to Borow upon Covalent Partners' exercise of the Option in full. 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. 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. - ------------ * Previously filed by the Reporting Persons with the Schedule 13D on November 10, 1999. 11. 12 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. December 3, 1999 COVALENT PARTNERS, LLC, a Delaware limited liability company By: /s/ Richard D. Propper ----------------------------------------- Dr. Richard D. Propper Managing Member /s/ Richard D. Propper -------------------------------------------- RICHARD D. PROPPER /s/ Michael D. Chermak -------------------------------------------- MICHAEL D. CHERMAK /s/ Salman Chaudhry -------------------------------------------- SALMAN J. CHAUDHRY 12. 13 SCHEDULE I REPORTING PERSONS, CONTROLLING MEMBERS AND MANAGERS OF COVALENT PARTNERS, LLC
NAME AND BUSINESS ADDRESS PRINCIPAL OCCUPATION OR EMPLOYMENT - ------------------------- ---------------------------------- 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 2890 Moon Ridge Drive La Jolla, CA 92037 Michael D. Chermak Member and Manager of Covalent Partners, LLC 14 Sandpiper Strand Coronado, CA 92118 Salman Chaudhry Financial Consultant 8503A Villa La Jolla Drive San Diego, CA 92037
14 SCHEDULE II
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT - ---- ---------------------------------- Bruce LaMont Chairman of the Board, President and Chief Executive Covalent Group, Inc. Officer of Covalent Group, Inc. One Glenhardie Corp. Center 1275 Drummers Lane, Suite 100 Wayne, PA 19087
15 SCHEDULE III
AMOUNT OF PRICE PER DATE OF THE COMMON STOCK SHARE INVESTOR TRANSACTION OF ISSUER ($) TYPE OF TRADE BROKER -------- ----------- --------- --------- ------------- ------- Propper 09/10/99 6,000 1.875 Purchase BLC* 09/13/99 4,500 1.75 Purchase BLC 09/14/99 5,000 1.75 Purchase BLC 09/16/99 5,000 1.75 Purchase BLC 09/16/99 5,000 1.75 Purchase BOA** 09/17/99 16,500 1.8523 Purchase BLC 09/17/99 10,000 1.9906 Purchase BOA 09/21/99 3,500 2.1027 Purchase BLC 09/22/99 3,000 2.00 Purchase BLC 09/22/99 5,000 2.03125 Purchase BLC 09/22/99 3,000 2.125 Purchase BOA 09/23/99 5,000 2.00 Purchase BLC 09/27/99 2,000 1.875 Purchase BOA 09/27/99 3,000 1.9896 Purchase BLC 10/05/99 14,000 1.9464 Purchase BOA 10/06/99 5,000 2.0625 Purchase BLC 10/07/99 3,000 2.125 Purchase BOA 10/14/99 10,000 1.9031 Purchase BLC 10/14/99 5,000 2.00 Purchase BOA 10/20/99 5,000 2.25 Purchase BLC 11/11/99 10,000 2.4844 Purchase BLC 11/12/99 7,000 2.8571 Purchase BOA 11/19/99 16,000 2.6914 Purchase BLC 11/19/99 10,000 2.7125 Purchase BOA 11/22/99 5,000 2.3125 Purchase BOA 11/24/99 5,000 2.6094 Purchase BOA Chermak 11/19/99 6,000 2.50 Purchase RJA*** 11/19/99 1,000 2.5625 Purchase RJA Chaudhry 09/23/99 3,700 2.00 Purchase ML**** 09/24/99 4,000 1.9375 Purchase ML 09/27/99 5,000 1.9375 Purchase ML 10/08/99 4,000 2.00 Purchase ML Covalent Partners 10/27/99 20,000 2.025 Purchase BLC 10/28/99 49,300 2.419 Purchase BLC 10/29/99 45,000 2.5313 Purchase BLC 11/01/99 41,000 2.6509 Purchase BLC 11/02/99 2,000 2.5625 Purchase BLC 11/03/99 16,000 2.4883 Purchase BLC 11/04/99 11,500 2.5924 Purchase BLC 11/05/99 15,200 2.5341 Purchase BLC
16
AMOUNT OF PRICE PER DATE OF THE COMMON STOCK SHARE INVESTOR TRANSACTION OF ISSUER ($) TYPE OF TRADE BROKER -------- ----------- --------- --------- ------------- ------- 11/09/99 4,000 2.5625 Purchase BLC
* Balis, Lewittes & Coleman Inc. ("BLC") ** Bank of America ("BOA") *** Raymond James & Associates ("RJA") **** Merrill Lynch ("ML") 17 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. December 3, 1999 COVALENT PARTNERS, LLC, a Delaware limited liability company By: /s/ Dr. Richard D. Propper ---------------------------------------- Dr. Richard D. Propper Managing Member /s/ Richard D. Propper ------------------------------------------- RICHARD D. PROPPER /s/ Michael D. Chermak ------------------------------------------- MICHAEL D. CHERMAK /s/ Salman J. Chaudhry ------------------------------------------- SALMAN J. CHAUDHRY 18 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.
- ------------ * Previously filed by the Reporting Persons with the Schedule 13D on November 10, 1999. -----END PRIVACY-ENHANCED MESSAGE-----