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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13G
UNDER THE SECURITIES EXCHANGE ACT OF 1934
HIGHLANDS INSURANCE GROUP, INC.
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(Name of issuer)
COMMON STOCK, $0.001 PAR VALUE
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431032 10 1
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(Cusip Number)
JULY 22, 1998
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(Date of Event which Requires Filing of this Statement)
Check the appropriate box to designate the rule pursuant
to which this Schedule is filed:
[X] Rule 13d-(c) [X] Rule 13d-1(d)
*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).
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CUSIP NO. 431032101 SCHEDULE 13G PAGE 2 OF 10 PAGES
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. IDENTIFICATION
NO. OF ABOVE PERSON
METROPOLITAN CAPITAL ADVISORS, INC.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) [X]
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3. SEC USE ONLY
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4. CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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5. SOLE VOTING POWER
0
NUMBER OF --------------------------------------------------
SHARES 6. SHARED VOTING POWER
BENEFICIALLY
OWNED BY 400,000
EACH --------------------------------------------------
REPORTING 7. SOLE DISPOSITIVE POWER
PERSON
WITH: 0
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8. SHARED DISPOSITIVE POWER
400,000
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9. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
400,000
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10. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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11. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3%
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12. TYPE OF REPORTING PERSON
CO
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CUSIP NO. 431032101 SCHEDULE 13G PAGE 3 OF 10 PAGES
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. IDENTIFICATION
NO. OF ABOVE PERSON
KJ ADVISORS, INC.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) [X]
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3. SEC USE ONLY
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4. CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
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5. SOLE VOTING POWER
0
NUMBER OF --------------------------------------------------
SHARES 6. SHARED VOTING POWER
BENEFICIALLY
OWNED BY 28,500
EACH --------------------------------------------------
REPORTING 7. SOLE DISPOSITIVE POWER
PERSON
WITH: 0
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8. SHARED DISPOSITIVE POWER
28,500
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9. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
28,500
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10. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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11. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.02%
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12. TYPE OF REPORTING PERSON
CO
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CUSIP NO. 431032101 SCHEDULE 13G PAGE 4 OF 10 PAGES
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. IDENTIFICATION
NO. OF ABOVE PERSON
METROPOLITAN CAPITAL III, INC.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) [X]
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3. SEC USE ONLY
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4. CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
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5. SOLE VOTING POWER
0
NUMBER OF --------------------------------------------------
SHARES 6. SHARED VOTING POWER
BENEFICIALLY
OWNED BY 350,000
EACH --------------------------------------------------
REPORTING 7. SOLE DISPOSITIVE POWER
PERSON
WITH: 0
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8. SHARED DISPOSITIVE POWER
350,000
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9. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
350,000
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10. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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11. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.6%
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12. TYPE OF REPORTING PERSON
CO
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CUSIP NO. 431032101 SCHEDULE 13G PAGE 5 OF 10 PAGES
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. IDENTIFICATION
NO. OF ABOVE PERSON
JEFFREY E. SCHWARZ
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) [X]
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3. SEC USE ONLY
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4. CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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5. SOLE VOTING POWER
0
NUMBER OF --------------------------------------------------
SHARES 6. SHARED VOTING POWER
BENEFICIALLY
OWNED BY 814,000
EACH --------------------------------------------------
REPORTING 7. SOLE DISPOSITIVE POWER
PERSON
WITH: 0
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8. SHARED DISPOSITIVE POWER
814,000
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9. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
814,000
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10. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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11. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.2%
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12. TYPE OF REPORTING PERSON
IN
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CUSIP NO. 431032101 SCHEDULE 13G PAGE 6 OF 10 PAGES
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. IDENTIFICATION
NO. OF ABOVE PERSON
KAREN FINERMAN
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) [X]
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3. SEC USE ONLY
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4. CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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5. SOLE VOTING POWER
0
NUMBER OF --------------------------------------------------
SHARES 6. SHARED VOTING POWER
BENEFICIALLY
OWNED BY 463,500
EACH --------------------------------------------------
REPORTING 7. SOLE DISPOSITIVE POWER
PERSON
WITH: 0
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8. SHARED DISPOSITIVE POWER
463,500
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9. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
463,500
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10. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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11. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.5%
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12. TYPE OF REPORTING PERSON
IN
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PAGE 7 OF 10 PAGES
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ITEM 1.
(a) Name of Issuer: Highlands Insurance Group, Inc.
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(b) Address of Issuer's Principal Executive Offices:
10370 Richmond Ave. Houston, Tx. 77042-4123
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ITEM 2.
(a) Name of Persons Filing:
(b) Address of Principal Business Office or, if none, Residence:
(c) Citizenship:
(i) Metropolitan Capital Advisors, Inc., a New York corporation,
("Metropolitan Capital").
(ii) KJ Advisors, Inc., a New York corporation ("KJ Advisors").
(iii) Metropolitan Capital III, Inc., a Delaware corporation.
(iv) Jeffrey E. Schwarz, a United States citizen.
(v) Karen Finerman, a United States citizen.
(b), (c) and (f) Each of the Reporting persons has a business
address of 660 Madison Avenue, New York, New York 10021.
(d) Title of Class of Securities: common stock, $0.001 par value
--------------------------------
(e) CUSIP Number: 431032101
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ITEM 3. IF THIS STATEMENT IS FILED PURSUANT TO RULE 13D-1(B), OR 13D-2(B), CHECK
WHETHER THE PERSON FILING IS A:
(a) [ ] Broker or Dealer registered under Section 15 of the Act
(b) [ ] Bank as defined in section 3(a)(6) of the Act
(c) [ ] Insurance Company as defined in section 3(a)(19) of the Act
(d) [ ] Investment Company registered under section 8 of the Investment
Company Act of 1940
(e) [ ] Investment Adviser registered under section 203 of the Investment
Advisers Act
(f) [ ] Employee Benefit Plan, Pension fund which is subject to the
provisions of the Employee Retirement Income Security Act of
1974 or Endowment Fund; see ss.240.13d-1(b)(1)(ii)(F)
(g) [ ] Parent Holding Company, in accordance with ss.240.13d-1(b)(ii)(G)
(Note: See Item 7)
(h) [ ] A Savings Association as defined in Section 3(b) of the Federal
Deposit Insurance Act
(i) [ ] A Church Plan that is excluded from the definition of an
investment company under Section 3(c)(14) of the Investment
Company Act of 1940
(j) [ ] Group, in accordance with ss.240.13d-1(b)(1)(ii)(J)
If this statement is filed pursuant to ss.240.13d-1(c), check this box [ X ].
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PAGE 8 OF 10 PAGES
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ITEM 4. OWNERSHIP
Provide the following information as of that date and identify those
shares which there is a right to acquire.
METROPOLITAN CAPITAL ADVISORS, INC.
(a) Amount Beneficially Owned: 400,000
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(b) Percent of Class: 3%
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(c) Number of shares as to which such person has:
(i)sole power to vote or to direct the vote: 0
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(ii)shared power to vote or to direct the vote: 400,000
----------------------
(iii)sole power to dispose or to direct the disposition of: 0
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(iv) shared power to dispose or to direct the disposition of: 400,000
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KJ ADVISORS, INC.
(a) Amount Beneficially Owned: 28,500
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(b) Percent of Class: .02%
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(c) Number of shares as to which such person has:
(i) sole power to vote or to direct the vote: 0
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(ii) shared power to vote or to direct the vote: 28,500
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(iii)sole power to dispose or to direct the disposition of: 0
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(iv) shared power to dispose or to direct the disposition of: 28,500
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METROPOLITAN CAPITAL III, INC.
(a) Amount Beneficially Owned: 350,000
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(b) Percent of Class: 2.6%
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(c) Number of shares as to which such person has:
(i) sole power to vote or to direct the vote: 0
-----------------------
(ii) shared power to vote or to direct the vote: 350,000
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(iii)sole power to dispose or to direct the disposition of: 0
----------
(iv) shared power to dispose or to direct the disposition of: 350,000
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JEFFREY E. SCHWARZ
(a) Amount Beneficially Owned: 814,000
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(b) Percent of Class: 6.2%
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(c) Number of shares as to which such person has:
(i) sole power to vote or to direct the vote: 0
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(ii) shared power to vote or to direct the vote: 814,000
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(iii)sole power to dispose or to direct the disposition of: 0
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(iv) shared power to dispose or to direct the disposition of: 814,000
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PAGE 9 OF 10 PAGES
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KAREN FINERMAN
(a) Amount Beneficially Owned: 463,500
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(b) Percent of Class: 3.5%
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(c) Number of shares as to which such person has:
(i) sole power to vote or to direct the vote: 0
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(ii) shared power to vote or to direct the vote: 463,500
---------------------
(iii)sole power to dispose or to direct the disposition of: 0
----------
(iv) shared power to dispose or to direct the disposition of: 463,500
--------
Instruction: For computations regarding securities which represent a right to
acquire an underlying security see Rule 13d-3(d)(1).
ITEM 5. OWNERSHIP OF FIVE PERCENT OR LESS OF A CLASS
If this statement is being filed to report the fact that as of the date
hereof the reporting person has ceased to be the beneficial owner of more than
five percent of the class of securities, check the following [ ].
ITEM 6. OWNERSHIP OF MORE THAN FIVE PERCENT ON BEHALF OF ANOTHER PERSON
(i) Metropolitan Capital is the owner of shares of Common Stock of the
Issuer solely by reason of its position as General Partner of
Metropolitan Capital Advisors, L.P., which by reason of its position
as General Partner of Bedford Falls Investors, L.P. has discretionary
voting and dispositive power over assets of Bedford Fall Investors,
L.P. Thus, by virtue of being the General Partner of Metropolitan
Capital Advisors, L.P., the General Partner of Bedford Falls
Investors, L.P., Metropolitan Capital may be deemed to have shared
voting and dispositive power over the 400,000 shares representing 3%
of Common Stock of the Issuer beneficially owned by Bedford Falls
Investors, L.P.
(ii)KJ Advisors, Inc. is the owner of shares of Common Stock of the Issuer
solely by reason of its position as General Partner of Metropolitan
Capital Partners II, L.P. which has discretionary voting and
dispositive power over assets held in a managed account. Thus, by
virtue of being the General Partner of Metropolitan Capital Partners
II, L.P., KJ Advisors, Inc. may be deemed to have shared voting and
dispositive power over the 28,500 shares representing .02% of Common
Stock of the Issuer held for the managed account.
(iii)Metropolitan Capital III, Inc. has purchased no shares of Common Stock
of the Issuer solely for its own account. However, by reason of its
position as General Partner of Metropolitan Capital Partners III, L.P.
which has discretionary voting and dispositive power over the assets
of Metropolitan Capital Advisors International Limited, Metropolitan
Capital III, Inc. may be deemed to have shared voting and dispositive
power over the 350,000 shares representing 2.6% of the Common Stock of
the Issuer owned by Metropolitan Capital Advisors International
Limited.
(iv)Jeffrey Schwarz may be deemed the beneficial owner of 814,000 shares
of Common Stock, which represents 6.2% of the Common Stock of the
Issuer as a result of his being a director, executive officer and
controlling stockholder of Metropolitan Capital and Metropolitan
Capital III, Inc., and a director, executive officer, and controlling
stockholder of KJ Advisors. Jeffrey Schwarz also exercises
discretionary authority over and therefore may be deemed an indirect
beneficiary of the 4,300 shares of Common Stock held in the Schwarz
Family Foundation Trust, the 2,600 shares of Common Stock held in the
Jeffrey Schwarz Childrens Trust, and the 9,500 shares of Common Stock
held by his father, Shepwood Schwarz. Jeffrey Schwarz individually,
directly and beneficially own 19,100 shares of Common Stock of the
Issuer other than through such positions.
(v) Karen Finerman may be deemed the beneficial owner of 463,500 shares of
Common Stock which represents 3.5% of the Common Stock of the Issuer
as a result of her being a director and executive officer of
Metropolitan Capital, a director, executive officer and stockholder of
Metropolitan Capital III, Inc., and a director, executive officer, and
controlling stockholder of KJ Advisors. Karen Finerman does not
beneficially owns any shares of Common Stock of the Issuer other than
through such positions.
ITEM 7. IDENTIFICATION AND CLASSIFICATION OF THE SUBSIDIARY WHICH ACQUIRED THE
SECURITY BEING REPORTED ON BY THE PARENT HOLDING COMPANY
Not Applicable
ITEM 8. IDENTIFICATION AND CLASSIFICATION OF MEMBERS OF THE GROUP
Not Applicable
ITEM 9. NOTICE OF DISSOLUTION OF GROUP
Not Applicable
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PAGE 10 OF 10 PAGES
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ITEM 10. CERTIFICATION
By signing below, I certify that, to the best of my knowledge and
belief, the securities referred to above were not acquired and are not held for
the purpose of or with the effect of changing or influencing the control of the
issuer of the securities and were not acquired and are not held in connection
with or as a participant in any transaction having that purpose or effect.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I hereby
certify that the information set forth in this statement is true, complete and
correct.
Dated this 29th day of July, 1998.
JEFFREY E. SCHWARZ
By: /s/ Jeffrey E. Schwarz
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Jeffrey E. Schwarz
KAREN FINERMAN
By: /s/ Karen Finerman
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Karen Finerman
METROPOLITAN CAPITAL ADVISORS, INC.
By: /s/ Karen Finerman
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President
KJ ADVISORS, INC.
By: /s/ Karen Finerman
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President
METROPOLITAN CAPITAL III, INC.
By: /s/ Karen Finerman
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President
