-----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, MfqKUgF3W5G7p5mbKR2Uc1ALyN0ViVwAnm2Aj4SuG8NrtP6ni5hv4ea2PfOT+CJA F1UdESpgSTBZyygiNwQ3NA== 0000950144-98-014064.txt : 19981222 0000950144-98-014064.hdr.sgml : 19981222 ACCESSION NUMBER: 0000950144-98-014064 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981221 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981221 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COVENTRY HEALTH CARE INC CENTRAL INDEX KEY: 0001054833 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-OFFICES & CLINICS OF DOCTORS OF MEDICINE [8011] IRS NUMBER: 522073000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-29676 FILM NUMBER: 98773166 BUSINESS ADDRESS: STREET 1: 6705 ROCKLEDGE DR STE 100 CITY: BETHESDA STATE: MD ZIP: 20817 BUSINESS PHONE: 3015810600 MAIL ADDRESS: STREET 1: 6705 ROCKLEDGE DR SUITE 100 STREET 2: STE 250 CITY: BETHESDA STATE: MD ZIP: 20817 8-K/A 1 COVENTRY HEALTH CARE INC 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A (Amendment No. 1) CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 21, 1998 (December 18, 1998) COVENTRY HEALTH CARE, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-29676 52-2073000 - ---------------------------- ------------------------ ------------------- (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification No.) 6705 Rockledge Drive, Suite 900 Bethesda, MD 20817 - --------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (301) 581-0600 Not Applicable - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) 2 This Current Report on Form 8-K/A amends and supersedes, to the extent set forth herein, the Current Report on Form 8-K filed by the Registrant with the Securities and Exchange Commission on April 23, 1998 as follows: Item 5. Other Events - Description of Registrant's Securities to be Registered. Item 5 is hereby amended by adding the following: Distribution of Rights. Each holder of shares of Coventry Health Care, Inc. Common Stock as of the Record Date will receive, a distribution of one Stock Purchase Right per share of Coventry Health Care, Inc. Common Stock in accordance with and pursuant to the Rights Agreement (a "Right"). A Right will also accompany each share of Coventry Common Stock issued following the Record Date. Each Right, when it first becomes exercisable, entitles the holder to purchase from Coventry Health Care, Inc. one-tenth of one share of Common Stock at an initial exercise price of $80 per tenth of one share (the "Exercise Price"), subject to adjustment. Exercisability of Rights. Initially, the Rights will not be exercisable or transferable apart from the shares of Coventry Common Stock with respect to which they were distributed, and will be evidenced only by the certificates representing such shares. The Rights will become exercisable and transferable apart from the Coventry Common Stock on a date (the "Exercisability Date") that is the earlier of (a) the close of business on the tenth day after the Stock Acquisition Date, defined as the first date of a public announcement that a person or group of affiliated or associated persons has become an Acquiring Person (as defined below), or (b) the close of business on such date as a majority of the Coventry Board of Directors shall determine, which date shall follow the commencement of a tender or exchange offer that, if consummated, would result in a person or group becoming an Acquiring Person. The Rights will be exercisable from the Exercisability Date until the Expiration Date (which is the earlier of the close of business on February 7, 2006 (the "Final Expiration Date") or the date the Rights are redeemed by Coventry Health Care, Inc. (the "Redemption Date")), at which time they will expire. With certain exceptions described in the Rights Agreement, a person or group becomes an Acquiring Person when such person or group acquires or obtains the rights to acquire beneficial ownership of 15% or more of the then outstanding shares of Coventry Common Stock. Transferability of Rights. Prior to the Exercisability Date, the Rights will not be transferable apart from the shares of Coventry Common Stock to which they are attached. Thus, the surrender or transfer of any Coventry Common Stock certificate prior to that date will also constitute the transfer of the Rights associated with the shares represented by such certificate. As soon as practicable after the Exercisability Date, separate certificates evidencing the Rights ("Rights Certificates") will be mailed to each record holder of shares of Coventry Common Stock as of the close of business on the Exercisability Date and, in certain circumstances, holders of certain shares issued after the Exercisability Date. 2 3 Flip-In Rights. Upon the acquisition of 15% of Coventry Common Stock by an Acquiring Person (a "Flip-In Event"), each holder of a Right will thereafter have the right (the "Flip-In Right") to receive, upon exercise, the number of shares of Coventry Common Stock having a market value immediately prior to the Flip-In Event equal to two times the then current Exercise Price of the Right, provided, however, that any Right that is (or, in certain circumstances specified in the Rights Agreement, was) beneficially owned by an Acquiring Person (or any of its affiliates or associates) will become null and void upon the occurrence of the Flip-In Event. Cash will be paid in lieu of issuing fractional shares. Flip-Over Rights. If, at any time following an Exercisability Date, either (i) Coventry is acquired in a merger or other business combination transaction or (ii) Coventry sells or otherwise transfers more than 50% of its aggregate assets or earning power, each holder of a Right (except Rights previously voided as described above) will thereafter have the right (the "Flip-Over Right") to receive, upon exercise, shares of common stock of the Acquiring Person having a value equal to two times the then current Exercise Price of the Right. The Flip-Over Right shall be exercisable apart from, and regardless of the exercise or surrender of, the Flip-In Right. Redemption of the Rights. At any time prior to the earlier of (i) the close of business on the tenth day following the Stock Acquisition Date, or (b) the close of business on the Final Expiration Date, and in certain other circumstances, the Coventry Board of Directors may redeem the Rights in whole but not in part at a Redemption Price of $.001 per Right. Exchange of the Rights. At any time after any person becomes an Acquiring Person, the Board of Directors of the Company may exchange the Rights (other than Rights owned by such Acquiring Person which have become void), in whole or in part, at an exchange ratio of one share of Common Stock per right. Notwithstanding the foregoing, the Board of Directors shall not be empowered to effect such exchange at any time after any Acquiring Person becomes the beneficial owner of 50% or more of the shares of Common Stock then outstanding. Amendment of the Rights Agreement. At any time prior to the Exercisability Date, the Coventry Board of Directors may amend any provision of the Rights Agreement in any manner. Thereafter, the Board may amend the Agreement in certain respects, including generally to shorten or lengthen any time period under the Agreement or in any manner that the Board deems necessary or desirable, so long as such amendment is consistent with and for the purpose of fulfilling the objectives of the Board in originally adopting the Rights Plan. Certain amendments (including changes to the Redemption Price, Exercise Price, Expiration Date, or number of shares for which a Right is exercisable), whether prior to the Exercisability Date or thereafter, are permitted only upon approval by a majority of the Coventry Board. Effective December 18, 1998, the Company and the Rights Agent executed Amendment No. 1 to Rights Agreement ("Amendment No. 1"). The following paragraphs summarize the principal amendments to the Rights Agreement effectuated through Amendment No. 1. Capitalized terms used without definition below have the meanings assigned to them in the Rights Agreement. 3 4 Allowance for Inadvertent Acquisitions. Amendment No. 1 excludes from the definition of Acquiring Person any Person who, in the good faith belief of the Company's Board of Directors, inadvertently becomes an Acquiring Person and who promptly thereafter divests themselves of a sufficient number of shares so as to no longer be an Acquiring Person. Removal of Continuing Director Provisions. Amendment No. 1 deletes the term Continuing Director from the Rights Agreement. Consistent with such deletion, the Rights Agreement, as amended, removes all references to Continuing Director decision making, such decision making now being vested in the Board of Directors. Item 7. Exhibits. 1. Rights Agreement, dated as of March 30, 1998, between Coventry Health Care, Inc. and ChaseMellon Shareholder Services, L.L.C., as Rights Agent, (incorporated by reference to the Company's Current Report on Form 8-K dated April 8, 1998). 2. Amendment No. 1 to Rights Agreement, dated as of December 18, 1998, between Coventry Health Care, Inc. and ChaseMellon Shareholder Services, L.L.C., as Rights Agent. 4 5 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized. COVENTRY HEALTH CARE, INC. Date: December 21, 1998 By: /s/ Dale B. Wolf ----------------------------- Name: Dale B. Wolf Title: Executive Vice President 5 6 EXHIBIT INDEX 1. Rights Agreement, dated as of March 30, 1998, between Coventry Health Care, Inc. and ChaseMellon Shareholder Services, L.L.C., as Rights Agent, (incorporated by reference to the Company's Current Report on Form 8-K dated April 8, 1998). 2. Amendment No. 1 to Rights Agreement, dated as of December 18, 1998, between Coventry Health Care, Inc. and ChaseMellon Shareholder Services, L.L.C., as Rights Agent. 6 EX-2 2 RIGHTS AGREEMENT AMENDMENT #1 1 EXHIBIT 2 AMENDMENT NO. 1 TO RIGHTS AGREEMENT Amendment No. 1 to Rights Agreement dated as of December 18, 1998 ("Amendment No.1"), amending the Rights Agreement dated March 30, 1998, between Coventry Health Care, Inc., a Delaware corporation (the "Company"), and ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent"). WHEREAS, on March 30, 1998, the Company and the Rights Agent entered into the Rights Agreement; and WHEREAS, Section 27 of the Rights Agreement provides that prior to the Exercisability Date, the Company may amend the Rights Agreement without the approval of any holders of certificates representing shares of Common Stock; and WHEREAS, the Company has determined that this Amendment No. 1 is necessary or desirable and consistent with the objectives of the Board of Directors in adopting the Rights Agreement; and WHEREAS, the Company and the Rights Agent wish to amend the Rights Agreement; NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the parties hereby agree as follows: 1. Section 1(a) of the Rights Agreement is hereby amended in its entirety to read as follows: (a) "Acquiring Person" means any Person which (or which, together with all its Affiliates and Associates) shall be the Beneficial Owner of 15% or more of the shares of Common Stock then outstanding. Notwithstanding the foregoing, (x) the term "Acquiring Person" shall not include the Company, any Subsidiary of the Company, any employee benefit plan maintained by the Company or any of its Subsidiaries, or any trustee or fiduciary with respect to such plan acting in such capacity; and (y) no Person shall become an "Acquiring Person" as the result of (A) the acquisition of Common Stock (or other securities convertible into shares of Common Stock or other rights with respect to Common Stock) directly from the Company, or (B) an acquisition of Common Stock by the Company which, by reducing the number of shares outstanding, increases the proportionate number of shares beneficially owned by such Person (alone or together with all Affiliates and Associates) to 15% or more of the shares of Common Stock then outstanding; provided, however, that if a Person (together with its Affiliates and Associates) becomes the Beneficial Owner of 15% or more of the Common Stock then outstanding by reason of share purchases by the Company, and such Person (or an Affiliate or Associate) subsequently becomes the Beneficial Owner of any additional Common Stock, then such Person shall be deemed to be an "Acquiring Person." Notwithstanding the foregoing, if the Board of Directors of the Company determines in good faith that a Person who would otherwise be an "Acquiring Person," as defined pursuant to the foregoing provisions of this paragraph (a) has become such inadvertently, and such Person divests as 2 promptly as practicable a sufficient number of shares of Common Stock so that such Person would no longer be an "Acquiring Person," as defined pursuant to the foregoing provisions of this paragraph (a), then such Person shall not be deemed to be an "Acquiring Person" for any purposes of this Agreement. Notwithstanding anything to the contrary in this Agreement, (i) Warburg, Pincus Ventures, L.P. (the "Purchaser") shall not be deemed an "Acquiring Person" hereunder as a result of the transactions contemplated by that certain Amended and Restated Securities Purchase Agreement, dated as of April 2, 1997, by and among the Company, the Purchaser and Franklin Capital Associates III L.P. (the "Purchase Agreement") unless and until the Purchaser without the prior written consent of the Board of Directors of the Company: (A) shall become (or together with all its Affiliates and Associates shall become) the Beneficial Owner of more than 30% of the shares of Common Stock outstanding on a fully diluted basis; or (B) directly or indirectly (or any of its Affiliates or Associates directly or indirectly), commences or participates in a solicitation of proxies in opposition to any written proposal to shareholders by the Company's Board of Directors or in favor of any shareholder proposal opposed by the Company's Board of Directors, or (ii) solicits or assists any third party to make a tender or exchange offer to purchase any shares of Common Stock or submit any written proposal to the Board of Directors of the Company for a merger, share exchange (other than any exercise, exchange or conversion of the shares pursuant to the Purchase Agreement), acquisition of substantially all assets or similar transaction involving the Company; provided, however, that the provisions of this sentence apply only to the Purchaser and any Affiliate or Associate of the Purchaser to whom the Purchaser may transfer the shares of Common Stock or securities convertible into, or exercisable for, shares of Common Stock acquired by the Purchaser; and (ii) None of Principal Mutual Life Insurance Company, an Iowa mutual life insurance company ("Mutual"), and any Affiliate or Associate of Mutual shall be deemed an "Acquiring Person" hereunder for so long as none of Mutual and any Affiliate or Associate thereof shall have breached, in any material respect, any provision of Sections 1(a) or 4 of that certain Shareholders' Agreement, dated as of April 1, 1998, by and among Mutual, Principal Health Care, Inc. and the Company (the "Shareholders' Agreement"), and, after the Shareholder Agreement shall no longer be effective, until such time as Mutual and any of its Affiliates or Associates shall Beneficially Own less than 15% of the Common Stock. 2. Section 1(i) of the Rights Agreement is hereby amended in its entirety to read as follows: (i) [intentionally left blank]. 3 3. Section 1(t) of the Rights Agreement is hereby amended in its entirety to read as follows: (t) [intentionally left blank]. 4. Section 3(c) of the Rights Agreement is hereby amended in its entirety to read as follows: (c) Rights shall, without any further action, be issued in respect of all shares of Common Stock which are issued (including any shares of Common Stock held in treasury) after the Record Date but prior to the earlier of the Exercisability Date and the Expiration Date. Certificates representing such shares of Common Stock issued after the Record Date shall bear the following legend: This certificate also evidences and entitles the holder hereof to certain rights as set forth in the Rights Agreement between Coventry Health Care, Inc. (the "Company") and ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent") dated as of March 30, 1998, as amended by Amendment No. 1 dated December 18, 1998 (the "Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal office of the stock transfer administration office of the Rights Agent. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. The Company will mail to the holder of this certificate a copy of the Rights Agreement, as in effect on the date of mailing, without charge promptly after receipt of a written request therefor. Under certain circumstances set forth in the Rights Agreement, Rights issued to, or held by, any Person who is, was or becomes an Acquiring Person or any Affiliate or Associate thereof (as such terms are defined in the Rights Agreement), whether currently held by or on behalf of such Person or by any subsequent holder, may become null and void. With respect to certificates representing shares of Common Stock (whether or not such certificates include the foregoing legend), until the earlier of the Exercisability Date and the Expiration Date, (i) the Rights associated with the shares of Common Stock represented by such certificates shall be evidenced by such certificates alone, (ii) registered holders of the shares of Common Stock shall also be the registered holders of the associated Rights, and (iii) the transfer of any of such certificates shall also constitute the transfer of the Rights associated with the shares of Common Stock represented by such certificates. 5. Section 18(a) of the Rights Agreement is hereby amended to add the following three sentences at the end of the paragraph: The indemnity provided herein shall survive termination of this Agreement and the termination and expiration of the Rights. The costs and expenses incurred in enforcing this right of indemnification shall be paid by the Company. Anything to the contrary notwithstanding, in no event shall the Rights Agent be liable for special, punitive, indirect, consequential or incidental loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Rights Agent has been advised of the likelihood of such loss or damage. 6. Section 23(b) of the Rights Agreement is hereby amended in its entirety to read as follows: (b) The Board of Directors of the Company may, at its option, at any time prior to the 4 Close of Business on the tenth Business Day after the Stock Acquisition Date, redeem all, but not less than all, the then outstanding Rights at a redemption price of $.001 per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the "Redemption Price"). The redemption of the Rights by the Board of Directors of the Company may be made effective at such time, on such basis and with such conditions as the Board of Directors of the Company, in its sole discretion, may establish. 7. Section 24(a) of the Rights Agreement is hereby amended in its entirety to read as follows: (a) The Board of Directors of the Company may, at its option, at any time after any Person becomes an Acquiring Person, exchange all or any part of the then outstanding and exercisable Rights (which shall not include Rights that have become void pursuant to the provisions of Section 11(a)(ii) hereof) for shares of Common Stock at an exchange ratio of one share of Common Stock per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such exchange ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding the forgoing, the Board of Directors of the Company shall not be empowered to effect such exchange at any time after any Acquiring Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or any such Subsidiary, or any entity holding Common Shares for or pursuant to the terms of any such plan), together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or more of the Common Shares then outstanding. 8. Section 26 of the Rights Agreement is hereby amended in its entirety to read as follows: Notices. All notices and other communications provided for hereunder shall, unless otherwise stated herein, be in writing (including by telex, telegram or cable) and be mailed or sent or delivered, if to the Company, at the following address (until another address is filed in writing by the Company): Dale Wolf Coventry Health Care, Inc. 6705 Rockledge Drive, Ste. 900 Bethesda, Maryland 20817 with a copy to: Bob F. Thompson, Esq. Bass, Berry & Sims PLC 2700 First American Center Nashville, Tennessee 37238 Telecopy Number: (615) 742-6298 5 and, if to the Rights Agent, at the following address (until another address is filed in writing by the Rights Agent): ChaseMellon Shareholder Services, L.L.C. Four Station Square, 3rd Floor Pittsburgh, PA 15219-1173 Attention: Rita Swartz Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Rights Certificate (or, if prior to the Exercisability Date, to the holder of certificates representing shares of Common Stock) shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company. IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to Rights Agreement to be executed as of the date first written above. COVENTRY HEALTH CARE, INC. By: /s/ Shirley R. Smith ----------------------------- Name: Shirley R. Smith Title: Senior Vice President CHASEMELLON SHAREHOLDER SERVICES, L.L.C. By: /s/ Kathryn M. Gallagher ----------------------------- Name: Kathryn M. Gallagher Title: Vice President -----END PRIVACY-ENHANCED MESSAGE-----