SC 13D/A FILED WITH SEC 12/3/99
sec.gov
IDENTITY AND BACKGROUND
(a) This statement is being filed jointly..... on behalf of (i) Covalent Partners, LLC, a Delaware limited liability company ("Covalent Partners"), (ii) Richard D. Propper ("Propper"), (iii) Michael D. Chermak ("Chermak") and (iv) Salman J. Chaudhry ("Chaudhry").
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.....
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......
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.
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.... 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...
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 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...... |
