SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D**
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
Highlands Insurance Group, Inc.
(Name of Issuer)
Common Stock, Par Value $.01 per Share
(Title of Class of Securities)
431032101
(Cusip Number)
Insurance Partners, L.P.
201 Main Street
Fort Worth, Texas 76102
<PAGE>
with a copy to:
Robert A. Spass
c/o Insurance Partners Advisors, L.P.
One Chase Manhattan Plaza, 44th Floor
New York, New York 10005
(212) 898-8703
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 23, 1996
(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(e), 13d-1(f) or 13d-1(g), check
the following box [ ].
*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).
**The total number of shares reported herein is 7,068,768 shares, which
constitutes approximately 34.8% of the total number of shares outstanding.
All ownership percentages set forth herein assume, pursuant to Rule 13d-
3(1)(i) under the Act, that there are 20,287,599 shares outstanding.
(Continued on following pages(s))
<PAGE>
<PAGE>
1. Name of Reporting Person:
Insurance Partners, L.P.
2. Check the Appropriate Box if a Member of a Group: (a) [ ]
(b) [X]
3. SEC Use Only
4. Source of Funds: 00 - Contributions from Partners
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: -0-
Number of
Shares
Beneficially 8. Shared Voting Power: -0-
Owned By
Each
Reporting 9. Sole Dispositive Power: -0-
Person
With
10. Shared Dispositive Power: -0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
4,568,759 (1)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares: [ ]
13. Percent of Class Represented by Amount in Row (11): 25.7% (2)
14. Type of Reporting Person: PN
- ---------------
(1) Represents 2,260,799 shares of the Stock obtainable upon
conversion of $36,534,505.46 principal amount of the Debentures
(as defined in Item 6) and 2,307,960 shares of the Stock
obtainable upon exercise of Class A Warrants (as defined in
Item 6).
(2) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Act, that
there are 17,769,590 shares of the Stock outstanding.<PAGE>
<PAGE>
1. Name of Reporting Person:
Insurance GenPar, L.P.
2. Check the Appropriate Box if a Member of a Group: (a) [ ]
(b) [X]
3. SEC Use Only
4. Source of Funds: Not Applicable
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: -0-
Number of
Shares
Beneficially 8. Shared Voting Power: -0-
Owned By
Each
Reporting 9. Sole Dispositive Power: -0-
Person
With
10. Shared Dispositive Power: -0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
4,568,759 (1)(2)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares: [ ]
13. Percent of Class Represented by Amount in Row (11): 25.7% (3)
14. Type of Reporting Person: PN
- ---------------
(1) Represents 2,260,799 shares of the Stock obtainable upon
conversion of $36,534,505.46 principal amount of the Debentures
(as defined in Item 6) and 2,307,960 shares of the Stock
obtainable upon exercise of Class A Warrants (as defined in
Item 6).
(2) Solely in its capacity as the sole general partner of Insurance
Partners, L.P.
(3) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Act, that
there are 17,769,590 shares of the Stock outstanding.<PAGE>
<PAGE>
1. Name of Reporting Person:
Insurance GenPar MGP, L.P.
2. Check the Appropriate Box if a Member of a Group: (a) [ ]
(b) [X]
3. SEC Use Only
4. Source of Funds: Not Applicable
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: -0-
Number of
Shares
Beneficially 8. Shared Voting Power: -0-
Owned By
Each
Reporting 9. Sole Dispositive Power: -0-
Person
With
10. Shared Dispositive Power: -0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
4,568,759 (1)(2)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares: [ ]
13. Percent of Class Represented by Amount in Row (11): 25.7% (3)
14. Type of Reporting Person: PN
- ---------------
(1) Represents 2,260,799 shares of the Stock obtainable upon
conversion of $36,534,505.46 principal amount of the Debentures
(as defined in Item 6) and 2,307,960 shares of the Stock
obtainable upon exercise of Class A Warrants (as defined in
Item 6).
(2) Solely in its capacity as sole general partner of Insurance
GenPar, L.P., which is the sole general partner of Insurance
Partners, L.P.
(3) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Act, that
there are 17,769,590 shares of the Stock outstanding.<PAGE>
<PAGE>
1. Name of Reporting Person:
Insurance GenPar MGP, Inc.
2. Check the Appropriate Box if a Member of a Group: (a) [ ]
(b) [X]
3. SEC Use Only
4. Source of Funds: Not Applicable
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: -0-
Number of
Shares
Beneficially 8. Shared Voting Power: -0-
Owned By
Each
Reporting 9. Sole Dispositive Power: -0-
Person
With
10. Shared Dispositive Power: -0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
4,568,759 (1)(2)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares: [ ]
13. Percent of Class Represented by Amount in Row (11): 25.7%(3)
14. Type of Reporting Person: CO
- ---------------
(1) Represents 2,260,799 shares of the Stock obtainable upon
conversion of $36,534,505.46 principal amount of the Debentures
(as defined in Item 6) and 2,307,960 shares of the Stock
obtainable upon exercise of Class A Warrants (as defined in
Item 6).
(2) Solely in its capacity as sole general partner of Insurance
GenPar MGP, L.P., which is the sole general partner of
Insurance GenPar, L.P., which in turn is the sole general
partner of Insurance Partners, L.P.
(3) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Act, that
there are 17,769,590 shares of the Stock outstanding.<PAGE>
<PAGE>
1. Name of Reporting Person:
Insurance Partners Offshore (Bermuda), L.P.
2. Check the Appropriate Box if a Member of a Group: (a) [ ]
(b) [X]
3. SEC Use Only
4. Source of Funds: 00 - Contributions from Partners
5. Check box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e):
[ ]
6. Citizenship or Place of Organization: Bermuda
7. Sole Voting Power: -0-
Number of
Shares
Beneficially 8. Shared Voting Power: -0-
Owned By
Each
Reporting 9. Sole Dispositive Power: -0-
Person
With
10. Shared Dispositive Power: -0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
2,518,009 (1)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares: [ ]
13. Percent of Class Represented by Amount in Row (11): 16.0% (2)
14. Type of Reporting Person: PN
- ---------------
(1) Represents 1,246,008 shares of the Stock obtainable upon
conversion of $20,135,494.54 principal amount of the Debentures
(as defined in Item 6) and 1,272,001 shares of the Stock
obtainable upon exercise of Class A Warrants (as defined in
Item 6).
(2) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Act, that
there are 15,718,840 shares of the Stock outstanding.<PAGE>
<PAGE>
1. Name of Reporting Person:
Insurance GenPar (Bermuda), L.P.
2. Check the Appropriate Box if a Member of a Group: (a) [ ]
(b) [X]
3. SEC Use Only
4. Source of Funds: Not Applicable
5. Check box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e):
[ ]
6. Citizenship or Place of Organization: Bermuda
7. Sole Voting Power: -0-
Number of
Shares
Beneficially 8. Shared Voting Power: -0-
Owned By
Each
Reporting 9. Sole Dispositive Power: -0-
Person
With
10. Shared Dispositive Power: -0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
2,518,009 (1)(2)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares: [ ]
13. Percent of Class Represented by Amount in Row (11): 16.0% (3)
14. Type of Reporting Person: PN
- ---------------
(1) Represents 1,246,008 shares of the Stock obtainable upon
conversion of $20,135,494.54 principal amount of the Debentures
(as defined in Item 6) and 1,272,001 shares of the Stock
obtainable upon exercise of Class A Warrants (as defined in
Item 6).
(2) Solely in its capacity as sole general partner of Insurance
Partners Offshore (Bermuda), L.P.
(3) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Act, that
there are 15,718,840 shares of the Stock outstanding.<PAGE>
<PAGE>
1. Name of Reporting Person:
Insurance GenPar (Bermuda) MGP, L.P.
2. Check the Appropriate Box if a Member of a Group: (a) [ ]
(b) [X]
3. SEC Use Only
4. Source of Funds: Not Applicable
5. Check box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e):
[ ]
6. Citizenship or Place of Organization: Bermuda
7. Sole Voting Power: -0-
Number of
Shares
Beneficially 8. Shared Voting Power: -0-
Owned By
Each
Reporting 9. Sole Dispositive Power: -0-
Person
With
10. Shared Dispositive Power: -0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
2,518,009 (1)(2)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares: [ ]
13. Percent of Class Represented by Amount in Row (11): 16.0% (3)
14. Type of Reporting Person: PN
- ---------------
(1) Represents 1,246,008 shares of the Stock obtainable upon
conversion of $20,135,494.54 principal amount of the Debentures
(as defined in Item 6) and 1,272,001 shares of the Stock
obtainable upon exercise of Class A Warrants (as defined in
Item 6).
(2) Solely in its capacity as sole general partner of Insurance
GenPar (Bermuda), L.P., which is the sole general partner of
Insurance Partners Offshore (Bermuda), L.P.
(3) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Act, that
there are 15,718,840 shares of the Stock outstanding.<PAGE>
<PAGE>
1. Name of Reporting Person:
Insurance GenPar (Bermuda) MGP, Ltd.
2. Check the Appropriate Box if a Member of a Group: (a) [ ]
(b) [X]
3. SEC Use Only
4. Source of Funds: Not Applicable
5. Check box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e):
[ ]
6. Citizenship or Place of Organization: Bermuda
7. Sole Voting Power: -0-
Number of
Shares
Beneficially 8. Shared Voting Power: -0-
Owned By
Each
Reporting 9. Sole Dispositive Power: -0-
Person
With
10. Shared Dispositive Power: -0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
2,518,009 (1)(2)
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares: [ ]
13. Percent of Class Represented by Amount in Row (11): 16.0% (3)
14. Type of Reporting Person: CO
- ---------------
(1) Represents 1,246,008 shares of the Stock obtainable upon
conversion of $20,135,494.54 principal amount of the Debentures
(as defined in Item 6) and 1,272,001 shares of the Stock
obtainable upon exercise of Class A Warrants (as defined in
Item 6).
(2) Solely in its capacity as sole general partner of Insurance
GenPar (Bermuda) MGP, L.P., which is the sole general partner
of Insurance GenPar (Bermuda), L.P., which in turn is the sole
general partner of Insurance Partners Offshore (Bermuda), L.P.
(3) Assumes, pursuant to Rule 13d-3(d)(1)(i) under the Act, that
there are 15,718,840 shares of the Stock outstanding.<PAGE>
<PAGE>
Pursuant to Rule 13d-2(a) of Regulation 13D-G of the General
Rules and Regulations under the Securities Exchange Act of 1934, as
amended (the "Act"), the undersigned hereby amend their Schedule 13D
Statement dated January 31, 1996 (the "Schedule 13D"), relating to the
Common Stock, par value $.01 per share, of Highlands Insurance Group,
Inc. Pursuant to Item 101(a)(2)(ii) of Regulation S-T, this filing
restates in its entirety the Reporting Persons' (as hereinafter
defined) Schedule 13D with respect to Highlands Insurance Group, Inc.
Item 1. Security and Issuer.
Item 1 is hereby restated in its entirety to read as follows:
This statement relates to shares of Common Stock, par value
$.01 per share (the "Stock"), of Highlands Insurance Group, Inc. (the
"Issuer"). The principal executive offices of the Issuer are located
at 10370 Richmond, Houston, Texas 77042.
Item 2. Identity and Background.
Item 2 is hereby amended and restated in its entirety to read
as follows:
(a) Pursuant to Rules 13d-1(f)(1)-(2) of Regulation 13D-G of
the General Rules and Regulations under the Act, this Schedule 13D
Statement is hereby filed by Insurance Partners, L.P., a Delaware
limited partnership ("IP"), Insurance GenPar, L.P., a Delaware limited
partnership ("IG"), Insurance GenPar MGP, L.P., a Delaware limited
partnership ("IMGPLP"), Insurance GenPar MGP, Inc., a Delaware
corporation ("IMGPI"), Insurance Partners Offshore (Bermuda), L.P., a
Bermuda limited partnership ("IPO"), Insurance GenPar (Bermuda), L.P.,
a Bermuda limited partnership ("IGB"), Insurance GenPar (Bermuda) MGP,
L.P., a Bermuda limited partnership ("IBMGPLP") and Insurance GenPar
(Bermuda) MGP, Ltd., a Bermuda corporation ("IBMGPI"). IP, IG, IMGPLP,
IMGPI, IPO, IGB, IBMGPLP and IBMGPI are sometimes hereinafter
collectively referred to as the "Reporting Persons". The Reporting
Persons are making this single, joint filing because they may be deemed
to constitute a "group" within the meaning of Section 13(d)(3) of the
Act, although neither the fact of this filing nor anything contained
herein shall be deemed an admission by the Reporting Persons that a
group exists.
(b)-(c)
IP
IP is a Delaware limited partnership, formed to invest in
securities of insurance entities to be selected by its investment
committee. The principal business address of IP, which also serves as
its principal office, is 201 Main Street, Fort Worth, Texas 76102.
Pursuant to Instruction C to Schedule 13D of the Act, information with
respect to IG, the sole general partner of IP, is set forth below.
IG
IG is a Delaware limited partnership, the principal business of
which is serving as the sole general partner of IP. The principal
business address of IG, which also serves as its principal office, is
201 Main Street, Fort Worth, Texas 76102. Pursuant to Instruction C to
Schedule 13D of the Act, information with respect to IMGPLP, the sole
general partner of IG, is set forth below.
IMGPLP
IMGPLP is a Delaware limited partnership, the principal
business of which is serving as the sole general partner of IG. The
principal business address of IMGPLP, which also serves as its
principal office, is 201 Main Street, Fort Worth, Texas 76102.
Pursuant to Instruction C to Schedule 13D of the Act, information with
respect to IMGPI, the sole general partner of IMGPLP, is set forth
below.
IMGPI
IMGPI is a Delaware corporation, the principal business of
which is serving as the sole general partner of IMGPLP. The principal
business address of IMGPI, which also serves as its principal office,
is 201 Main Street, Fort Worth, Texas 76102. Pursuant to Instruction
C to Schedule 13D of the Act, the name, residence or business address,
and present principal occupation or employment of each director,
executive officer and controlling person of IMGPI are as follows:
RESIDENCE OR PRINCIPAL OCCUPATION
NAME BUSINESS ADDRESS OR EMPLOYMENT
Robert A. Spass One Chase Manhattan Plaza Managing Partner of
44th Floor IPA (see below)
New York, NY 10005
Daniel L. Doctoroff 65 E. 55th Street Managing Director of
New York, NY 10022 Oak Hill Partners, Inc.
Steven B. Gruber 65 E. 55th Street Managing Director of
New York, NY 10022 Oak Hill Partners, Inc.
Oak Hill Partners, Inc. is a Delaware corporation, the
principal business of which is serving as an investment consultant to
Acadia Partners, L.P. ("Acadia"). Acadia is a Delaware limited
partnership, formed to invest in public and private debt and equity
securities. The principal business address of Oak Hill Partners, Inc.
is 65 E. 55th Street, New York, NY 10022.
IPO
IPO is a Bermuda limited partnership, formed to invest in
securities of insurance entities to be selected by its investment
committee. The principal business address of IPO, which also serves as
its principal office, is Cedar House, 41 Cedar Avenue, P.O. Box 4M1179,
Hamilton, HMEX, Bermuda. Pursuant to Instruction C to Schedule 13D of
the Act, information with respect to IGB, the sole general partner of
IPO, is set forth below.
IGB
IGB is a Bermuda limited partnership, the principal business of
which is serving as the general partner of IPO. The principal business
address of IGB, which also serves as its principal office, is Cedar
House, 41 Cedar Avenue, P.O. Box 4M1179, Hamilton, HMEX, Bermuda.
Pursuant to Instruction C to Schedule 13D of the Act, information with
respect to IBMGPLP, the sole general partner of IGB, is set forth
below.
IBMGPLP
IBMGPLP is a Bermuda limited partnership, the principal
business of which is serving as the sole general partner of IGB. The
principal business address of IBMGPLP, which also serves as its
principal office, is Cedar House, 41 Cedar Avenue, P.O. Box 4M1179,
Hamilton, HMEX, Bermuda. Pursuant to Instruction C to Schedule 13D of
the Act, information with respect to IBMGPI, the sole general partner
of IBMGPLP, is set forth below.
IBMGPI
IBMGPI is a Bermuda corporation, the principal business of
which is serving as the sole general partner of IBMGPLP. The principal
business address of IBMGPI, which also serves as its principal office,
is Cedar House, 41 Cedar Avenue, P.O. Box 4M1179, Hamilton, HMEX,
Bermuda. Pursuant to Instruction C to Schedule 13D of the Act, the
name, residence or business address, and present principal occupation
or employment of each director, executive officer and controlling
person of IBMGPI are as follows:
RESIDENCE OR PRINCIPAL OCCUPATION
NAME BUSINESS ADDRESS OR EMPLOYMENT
Robert A. Spass See above. See above.
Daniel L. Doctoroff See above. See above.
Steven B. Gruber See above. See above.
(d) None of the entities or persons identified in this Item 2
has, during the last five years, been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors).
(e) None of the entities or persons identified in this Item 2
has, during the last five years, been a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and as a
result of such proceeding 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.
(f) All of the natural persons identified in this Item 2 are
citizens of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 is hereby amended and restated in its entirety as
follows:
As more fully described in Item 6, IP expended $36,843,956 and
IPO expended $20,306,044 to purchase Debentures, along with detachable
Class A Warrants and Class B Warrants. Both IP and IPO used
contributions from their respective partners to fund these purchases.
Item 4. Purpose of Transaction.
Item 4 is hereby restated in its entirely to read as follows:
The Reporting Persons consummated the transactions described
herein in order to acquire a significant interest in the Issuer and for
general investment purposes.
The Reporting Persons intend to review continuously their
position in the Issuer. Depending upon future evaluations of the
business prospects of the Issuer and upon other developments,
including, but not limited to, general economic and business conditions
and money market and stock market conditions, each of the Reporting
Persons may determine to exercise the Warrants (or other securities
convertible or exercisable into shares of the Stock) or to dispose of
all or a portion of its holdings, subject to any applicable legal and
contractual restrictions on its ability to do so.
In addition, the matters set forth in Item 6 hereof hereby are
incorporated in this Item 4 by reference as if fully set forth herein.
Except as set forth in this Item 4, the Reporting Persons have
no present plans or proposals that relate to or that would result in
any of the actions specified in clauses (a) through (j) of Item 4 of
Schedule 13D of the Act.
Item 5. Interest in Securities of the Issuer.
Item 5 is hereby amended and restated in its entirety to read
as follows:
(a)
IP
Because IP has the right to acquire 2,307,960 shares of the
Stock within sixty days upon exercise of Class A Warrants and 2,260,799
shares of the Stock within sixty days upon conversion of Debentures, IP
may, pursuant to Rule 13d-3 of the Act, be deemed to be the beneficial
owner of 4,568,759 shares of the Stock, which constitutes approximately
25.7% of the 17,769,590 shares of the Stock deemed outstanding pursuant
to Rule 13d-3(d)(1)(i) of the Act. Pursuant to Rule 13d-4 under the
Act, IP disclaims beneficial ownership of all such Stock.
IG
Because of its position as the sole general partner of IP,
which has the right to acquire 2,307,960 shares of the Stock within
sixty days upon exercise of Class A Warrants and 2,260,799 shares of
the Stock within sixty days upon conversion of Debentures, IG may,
pursuant to Rule 13d-3 of the Act, be deemed to be the beneficial owner
of 4,568,759 shares of the Stock, which constitutes approximately 25.7%
of the 17,769,590 shares of the Stock deemed outstanding pursuant to
Rule 13d-3(d)(1)(i) of the Act. Pursuant to Rule 13d-4 under the Act,
IG disclaims beneficial ownership of all such Stock.
IMGPLP
Because of its position as the sole general partner of IG,
which is the sole general partner of IP, which has the right to acquire
2,307,960 shares of the Stock within sixty days upon exercise of Class
A Warrants and 2,260,799 shares of the Stock within sixty days upon
conversion of Debentures, IMGPLP may, pursuant to Rule 13d-3 of the
Act, be deemed to be the beneficial owner of 4,568,759 shares of the
Stock, which constitutes approximately 25.7% of the 17,769,590 shares
of the Stock deemed outstanding pursuant to Rule 13d-3(d)(1)(i) of the
Act. Pursuant to Rule 13d-4 under the Act, IMGPLP disclaims beneficial
ownership of all such Stock.
IMGPI
Because of its position as the sole general partner of IMGPLP,
which is the sole general partner of IG, which is the sole general
partner of IP, which has the right to acquire 2,307,960 shares of the
Stock within sixty days upon exercise of Class A Warrants and 2,260,799
shares of the Stock within sixty days upon conversion of Debentures,
IMGPI may, pursuant to Rule 13d-3 of the Act, be deemed to be the
beneficial owner of 4,568,759 shares of the Stock, which constitutes
approximately 25.7% of the 17,769,590 shares of the Stock deemed
outstanding pursuant to Rule 13d-3(d)(1)(i) of the Act. Pursuant to
Rule 13d-4 under the Act, IMGPI disclaims beneficial ownership of all
such Stock.
IPO
Because IPO has the right to acquire 1,272,001 shares of the
Stock within sixty days upon exercise of Class A Warrants and 1,246,008
shares of the Stock within sixty days upon conversion of Debentures,
IPO may, pursuant to Rule 13d-3 of the Act, be deemed to be the
beneficial owner of 2,518,009 shares of the Stock, which constitutes
approximately 16.0% of the 15,718,840 shares of the Stock deemed
outstanding pursuant to Rule 13d-3(d)(1)(i) of the Act. Pursuant to
Rule 13d-4 under the Act, IPO disclaims beneficial ownership of all
such Stock.
IGB
Because of its position as the sole general partner of IPO,
which has the right to acquire 1,272,001 shares of the Stock within
sixty days upon exercise of Class A Warrants and 1,246,008 shares of
the Stock within sixty days upon conversion of Debentures, IGB may,
pursuant to Rule 13d-3 of the Act, be deemed to be the beneficial owner
of 2,518,009 shares of the Stock, which constitutes approximately 16.0%
of the 15,718,840 shares of the Stock deemed outstanding pursuant to
Rule 13d-3(d)(1)(i) of the Act. Pursuant to Rule 13d-4 under the Act,
IGB disclaims beneficial ownership of all such Stock.
IBMGPLP
Because of its position as the sole general partner of IGB,
which is the sole general partner of IPO, which has the right to
acquire 1,272,001 shares of the Stock within sixty days upon exercise
of Class A Warrants and 1,246,008 shares of the Stock within sixty days
upon conversion of Debentures, IBMGPLP may, pursuant to Rule 13d-3 of
the Act, be deemed to be the beneficial owner of 2,518,009 shares of
the Stock, which constitutes approximately 16.0% of the 15,718,840
shares of the Stock deemed outstanding pursuant to Rule 13d-3(d)(1)(i)
of the Act. Pursuant to Rule 13d-4 under the Act, IBMGPLP disclaims
beneficial ownership of all such Stock.
IBMGPI
Because of its position as the sole general partner of IBMGPLP,
which is the sole general partner of IGB, which is the sole general
partner of IPO, which has the right to acquire 1,272,001 shares of the
Stock within sixty days upon exercise of Class A Warrants and 1,246,008
shares of the Stock within sixty days upon conversion of Debentures,
IBMGPI may, pursuant to Rule 13d-3 of the Act, be deemed to be the
beneficial owner of 2,518,009 shares of the Stock, which constitutes
approximately 16.0% of the 15,718,840 shares of the Stock deemed
outstanding pursuant to Rule 13d-3(d)(1)(i) of the Act. Pursuant to
Rule 13d-4 under the Act, IBMGPI disclaims beneficial ownership of all
such Stock.
(b) At present, none of the Reporting Persons has any power to
vote or to direct the vote or to dispose or to direct the disposition
of any shares of the Stock.
(c) Except as set forth in Item 6 or in the Exhibits filed
herewith, to the best of the knowledge of the Reporting Persons, none
of the persons named in response to paragraph (a) has effected any
transactions in shares of the Stock during the past 60 days.
(d) Each of the Reporting Persons affirms that no person other
than such Reporting Person 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 the Stock owned by such Reporting Person.
(e) Not applicable.
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:
On October 10, 1995, IP, IPO, the Issuer and Halliburton
Company ("Halliburton") entered into an Investment Agreement (as
amended, the "Investment Agreement") pursuant to which the Issuer
agreed to issue to IP, IPO and their permitted assigns $60.0 million in
principal amount of 10% Convertible Subordinated Debentures of the
Issuer (the "Debentures"), Common Stock Purchase Warrants, Series A, of
the Issuer evidencing the right to purchase an aggregate of 3,610,285
shares of the Stock (the "Series A Warrants") and Common Stock Purchase
Warrants, Series B, of the Issuer evidencing the right to purchase an
aggregate of 950,075 shares of the Stock (the "Series B Warrants").
The description of the Investment Agreement that follows does not, and
does not purport to be, complete and is qualified in its entirety by
reference to the Investment Agreement and the amendments thereto,
copies of which are attached here as Exhibits 99.2, 99.3 and 99.4. The
Investment Agreement provides in pertinent part as follows:
On January 23, 1996, the Issuer issued to IP and IPO Debentures
in the aggregate principal amount of $57.15 million and a proportionate
amount of the Class A Warrants and the Class B Warrants for a total
price of $57.15 million. The Investment Agreement permitted IP and IPO
to assign the right to purchase up to $2.85 million of the $60.0
million in principal amount of the Debentures, along with a
proportionate amount of the Class A Warrants and Class B Warrants, to
certain members of the Issuer's management. Both IP and IPO exercised
this right, and the remaining $2.85 million in principal amount of the
Debentures, along with a proportionate amount of Class A Warrants and
Class B Warrants, were purchased on January 23, 1996 by the management
of the Issuer. The proceeds from the sales were used by the Issuer as
follows: (i) $10.0 million was contributed to the surplus of certain
subsidiaries of the Issuer, (ii) $5.6 million was paid to IP and IPO
and their advisors for transaction fees and reimbursement of out-of-
pocket expenses incurred in connection with the issuance of the
Debentures, the Class A Warrants and the Class B Warrants and (iii)
$44.4 million was retained by the Company for working capital and other
general corporate purposes. The Debentures mature on December 31, 2005
with interest at a 10% annual rate, payable semi-annually. The
Debentures are convertible at the option of the holder at any time
following January 23, 1997 (or earlier in the event of certain change
of control events) and prior to maturity. The Debentures are
convertible into shares of Stock at a conversion price of $16.16 per
share (subject to adjustment upon the occurrence of certain events).
The Debentures may be redeemed at the option of the Issuer at any time
after December 31, 2002 at specified redemption prices plus accrued but
unpaid interest. Upon the occurrence of certain specified change of
control events, the holders of the Debentures have the right to require
the Issuer to repurchase the Debentures at a price equal to the
principal amount plus accrued but unpaid interest. The Series A
Warrants are exercisable at any time until December 31, 2005 and
provide for the purchase initially of 3,790,325 shares of Stock at an
initial exercise price of $14.69 per share. The exercise price and the
number of shares of Stock for which such Series A Warrants are
exercisable are subject to adjustment in certain circumstances. The
Series B Warrants are exercisable only in the following circumstances:
(i) if the average closing price of the Stock exceeds 1.6 times the
exercise price (as adjusted) for any thirty consecutive trading days
during a period beginning on January 1, 1999 and ending on December 31,
2000, the Series B Warrants will be exercisable at any time from the
end of such thirty consecutive day trading period until December 31,
2005; and (ii) if a change of control (defined in the Series B
Warrants) occurs prior to December 31, 2000 and in connection with such
change of control the offer price for the Stock pursuant to such change
of control is a price at least equal to the exercise price (as
appropriately adjusted) compounded over the period from January 23,
1996 to the date of such offer at a 10% annual rate, the Series B
Warrants will become exercisable upon such change of control. The
Series B Warrants provide in the aggregate for the purchase initially
of 997,454 shares of Stock at the exercise price of $14.69 per share.
Notwithstanding the foregoing, the Debentures, Series A
Warrants and Series B Warrants to be issued to IPO pursuant to the
Investment Agreement initially will be convertible or exercisable for
shares of the Issuer's Series B Common Stock. The terms of the Series
B Common Stock are substantially identical to those of the Stock,
except that the Series B Common Stock will be entitled only to 0.41 of
one vote per share. Upon the transfer of any Debentures, Class A
Warrants or Class B Warrants by IPO or the occurrence of certain other
events, such securities will become convertible or exercisable into
shares of the Stock; similarly, upon the transfer of any Series B
Common Stock or upon the occurrence of certain other events, such
shares of Series B Common Stock will automatically be converted into
shares of the Stock.
Halliburton has agreed to take all action necessary to cause
the election of Robert A. Spass, Bradley E. Cooper and Richard M.
Haverland to the Board of Directors of the Issuer. The Debentures
obligate the Issuer to nominate, and recommend the election of, persons
designated by a majority in interest of the holders of the Debentures
so that the number of persons so designated, if elected, shall at all
times constitute at least 20% of the Issuer's Board of Directors.
Until January 23, 1998, IP and IPO have agreed to refrain, and
will cause their affiliates that they control to refrain, from (i)
initiating or engaging in a tender or exchange offer for all or
substantially all of the shares of Stock, any other securities issued
by the Issuer having the ordinary power to vote in the election of
directors of the Issuer, or any rights, warrants or options therefor
(collectively "Voting Securities"); or (ii) making any "solicitation"
of "proxies" (as such terms are used in the proxy rules of the
Securities and Exchange Commission) with respect to all or
substantially all of the Voting Securities. Notwithstanding the
foregoing, IP, IPO and their affiliates may initiate or engage in any
of the foregoing transactions if any person or group, other than the
Issuer and any affiliates of IP or IPO not controlled by either IP or
IPO, (a) initiates or engages (or attempts to or agrees to initiate or
engage) in any tender or solicitation offer for any Voting Securities;
(b) makes (or attempts or agrees to make) any solicitation of proxies
with respect to any Voting Securities; (c) otherwise acquires (or
attempts or agrees to acquire) any Voting Securities or any voting
securities of any significant subsidiaries of the Issuer; or (d)
agrees, attempts, seeks or proposes to acquire all or substantially all
of the assets of the Issuer or any of its significant subsidiaries, or
to merge, consolidate, or combine with the Issuer any of its
significant subsidiaries, which in the case of clauses (a) through (c)
above, results (or could reasonably be expected to result) in such
person or group beneficially owning or having the right to acquire more
than 10% of the shares of Voting Securities (or voting securities of
the significant subsidiaries, as the case may be) then outstanding
(unless such person or group, considering its investment intent, is
eligible to file a Schedule 13G under the Securities Exchange Act of
1934, as amended, in respect of its investment in the Issuer).
Halliburton has agreed pursuant to the Investment Agreement
that for a period of five years following the closing date, neither
Halliburton nor any of its affiliates controlled by it will directly or
indirectly (i) make any open market purchases of the equity securities
of the Issuer, (ii) initiate or engage in any tender or exchange offer
for any of the equity securities of the Issuer, or (iii) make any
solicitation of proxies with respect to any equity securities of the
Issuer.
In connection with the Investment Agreement, the Issuer, IP and
IPO have entered into a registration rights agreement pursuant to which
beginning on January 23, 1997, IP and IPO will have the right to
require the Issuer to register under the Securities Act of 1933, as
amended, at the Issuer's expense and subject to certain limitations,
any and all of the Debentures or shares of Stock owned by IP, IPO or
certain management investors, and any shares of Stock to be issued upon
exercise or conversion of the Class A Warrants, the Class B Warrants,
the Debentures and certain securities owned by management of the
Issuer. The Issuer is not required to effect (i) any demand
registration in which the proposed aggregate gross offering price is
less than $10.0 million, (ii) more than two demand registrations with
respect to the Debentures or the shares of Stock issued or to be issued
upon conversion of the Debentures, (iii) more than two demand
registrations with respect to shares of Stock issued or to be issued
upon exercise of the Series A Warrants and (iv) more than one demand
registration with respect to shares of Stock issued or to be issued
upon exercise of the Series B Warrants. IP and IPO also have certain
piggyback registration rights in connection with registrations by the
Issuer under the Securities Act of 1933, as amended, occurring after
January 23, 1997.
On January 23, 1996, the Issuer, IP, IPO and MCLPI Limited
Partnership ("MCLP") entered into a letter agreement (the "Securities
Purchase Agreement"), pursuant to which IP and IPO sold Debentures,
Class A Warrants and Class B Warrants to MCLP for aggregate
consideration of $480,000. The foregoing description of the Securities
Purchase Agreement is not, and does not purport to be, complete and is
qualified in its entirety by reference to the Securities Purchase
Agreement, a copy of which is attached hereto as Exhibit 99.5.
Except as set forth herein or in the Exhibits filed herewith,
there are no contracts, arrangements, understandings or relationships
with respect to shares of the Stock owned by the Reporting Persons.
Item 7. Material to be Filed as Exhibits.
Item 7 is hereby amended and restated in its entirety to read
as follows:
Exhibit 99.1 -- Agreement pursuant to Rule 13d-1(k)(1)(iii).
Exhibit 99.2 -- Investment Agreement dated as of October 10,
1995 by and among Highland Insurance Group, Inc., Halliburton Company
and Insurance Partners, L.P. and Insurance Partners Offshore (Bermuda),
L.P. (previously filed)
Exhibit 99.3 -- Amendatory Agreement dated November 10, 1995 by
and among Halliburton Company, Highlands Insurance Group, Inc.,
Insurance Partners, L.P., Insurance Partners Offshore (Bermuda), L.P.,
Robert A. Spass and Bradley E. Cooper. (previously filed)
Exhibit 99.4 -- Amendment and Acknowledgment dated as of
January 23, 1996 by and among Insurance Partners, L.P., Insurance
Partners Offshore (Bermuda), L.P., Highlands Insurance Group, Inc. and
Halliburton Company. (previously filed)
Exhibit 99.5 -- Securities Purchase Agreement dated January 23,
1996 by and among Insurance Partners, L.P., Insurance Partners Offshore
(Bermuda), L.P., Highlands Insurance Group, Inc. and MCLP I Limited
Partnership.
<PAGE>
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.
DATED: September 21, 1998
INSURANCE PARTNERS, L.P.,
a Delaware limited partnership
By: Insurance GenPar, L.P.,
a Delaware limited partnership,
General Partner
By: Insurance GenPar MGP, L.P.,
a Delaware limited partnership,
General Partner
By: Insurance GenPar MGP, Inc.,
a Delaware corporation,
General Partner
By: /s/ Daniel L. Doctoroff
Daniel L. Doctoroff,
Vice President
INSURANCE GENPAR, L.P., a
Delaware limited partnership
By: Insurance GenPar MGP, L.P.,
a Delaware limited partnership,
General Partner
By: Insurance GenPar MGP, Inc.,
a Delaware corporation,
General Partner
By: /s/ Daniel L. Doctoroff
Daniel L. Doctoroff,
Vice President
INSURANCE GENPAR MGP, L.P.,
a Delaware limited partnership
By: Insurance GenPar MGP, Inc.,
a Delaware corporation,
General Partner
By: /s/ Daniel L. Doctoroff
Daniel L. Doctoroff,
Vice President
INSURANCE GENPAR MGP, INC.,
a Delaware corporation
By: /s/ Daniel L. Doctoroff
Daniel L. Doctoroff,
Vice President
INSURANCE PARTNERS OFFSHORE
(Bermuda), L.P., a Bermuda limited
partnership
By: Insurance GenPar (Bermuda),
L.P., a Bermuda limited
partnership, General Partner
By: Insurance GenPar (Bermuda)
MGP, L.P., a Bermuda limited
partnership, General Partner
By: Insurance GenPar (Bermuda)
MGP, Ltd., a Bermuda
corporation, General Partner
By: /s/ Daniel L. Doctoroff
Daniel L. Doctoroff,
Vice President
INSURANCE GENPAR (BERMUDA), L.P., a
Bermuda limited partnership
By: Insurance GenPar (Bermuda)
MGP, L.P., a Bermuda limited
partnership, General Partner
By: Insurance GenPar (Bermuda)
MGP, Ltd., a Bermuda
corporation, General Partner
By: /s/ Daniel L. Doctoroff
Daniel L. Doctoroff,
Vice President
INSURANCE GENPAR (BERMUDA) MGP,
L.P., a Bermuda limited partnership
By: Insurance GenPar (Bermuda)
MGP, Ltd., a Bermuda
corporation, General Partner
By: /s/ Daniel L. Doctoroff
Daniel L. Doctoroff,
Vice President
INSURANCE GENPAR (BERMUDA) MGP,
LTD., a Bermuda corporation
By: /s/ Daniel L. Doctoroff
Daniel L. Doctoroff,
Vice President
<PAGE>
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
99.1 Agreement pursuant to Rule 13d-1(k)(1)(iii)
99.2 Investment Agreement dated as of October 10,
1995 by and among Highland Insurance Group,
Inc., Halliburton Company and Insurance
Partners, L.P. and Insurance Partners Offshore
(Bermuda), L.P. (previously filed)
99.3 Amendatory Agreement dated November 10, 1995
by and among Halliburton Company, Highlands
Insurance Group, Inc., Insurance Partners,
L.P., Insurance Partners Offshore (Bermuda),
L.P., Daniel L. Doctoroff and Bradley E.
Cooper. (previously filed)
99.4 Amendment and Acknowledgment dated as of
January 23, 1996 by and among Insurance
Partners, L.P., Insurance Partners Offshore
(Bermuda), L.P., Highlands Insurance Group,
Inc. and Halliburton Company. (previously
filed)
99.5 Securities Purchase Agreement dated January
23, 1996 by and among Insurance Partners, L.P.
Insurance Partners Offshore (Bermuda), L.P.,
Highlands Insurance Group, Inc. and MCLP I
Limited Partnership.
Exhibit 99.1
Pursuant to Rule 13d-1(k)(1)(iii) of Regulation 13D-G of the General
Rules and Regulations of the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, the undersigned agrees that the
statement to which this Exhibit is attached is filed on behalf of each of
them in the capacities set forth below.
INSURANCE PARTNERS, L.P.,
a Delaware limited partnership
By: Insurance GenPar, L.P.,
a Delaware limited partnership,
General Partner
By: Insurance GenPar MGP, L.P.,
a Delaware limited partnership,
General Partner
By: Insurance GenPar MGP, Inc.,
a Delaware corporation,
General Partner
By: /s/ Daniel L. Doctoroff
Daniel L. Doctoroff,
Vice President
INSURANCE GENPAR, L.P., a Delaware
limited partnership
By: Insurance GenPar MGP, L.P.,
a Delaware limited partnership,
General Partner
By: Insurance GenPar MGP, Inc.,
a Delaware corporation,
General Partner
By: /s/ Daniel L. Doctoroff
Daniel L. Doctoroff,
Vice President
INSURANCE GENPAR MGP, L.P.,
a Delaware limited partnership
By: Insurance GenPar MGP, Inc.,
a Delaware corporation,
General Partner
By: /s/ Daniel L. Doctoroff
Daniel L. Doctoroff,
Vice President
INSURANCE GENPAR MGP, INC.,
a Delaware corporation
By: /s/ Daniel L. Doctoroff
Daniel L. Doctoroff,
Vice President
INSURANCE PARTNERS OFFSHORE
(Bermuda), L.P., a Bermuda limited
partnership
By: Insurance GenPar (Bermuda), L.P., a
Bermuda limited partnership,
General Partner
By: Insurance GenPar (Bermuda) MGP,
L.P., a Bermuda limited partnership,
General Partner
By: Insurance GenPar (Bermuda) MGP,
Ltd., a Bermuda
corporation, General Partner
By: /s/ Daniel L. Doctoroff
Daniel L. Doctoroff,
Vice President
INSURANCE GENPAR (BERMUDA), L.P., a
Bermuda limited partnership
By: Insurance GenPar (Bermuda) MGP,
L.P., a Bermuda limited partnership,
General Partner
By: Insurance GenPar (Bermuda) MGP,
Ltd., a Bermuda
corporation, General Partner
By: /s/ Daniel L. Doctoroff
Daniel L. Doctoroff,
Vice President
INSURANCE GENPAR (BERMUDA) MGP, L.P., a
Bermuda limited partnership
By: Insurance GenPar (Bermuda) MGP,
Ltd., a Bermuda
corporation, General Partner
By: /s/ Daniel L. Doctoroff
Daniel L. Doctoroff,
Vice President
INSURANCE GENPAR (BERMUDA) MGP, LTD., a
Bermuda corporation
By: /s/ Daniel L. Doctoroff
Daniel L. Doctoroff,
Vice President
Exhibit 99.5
SECURITIES PURCHASE AGREEMENT
AGREEMENT, dated as of January 23, 1996 (this "Agreement"), between
Insurance Partners, L.P., a Delaware limited partnership ("IP") and Insurance
Partners Offshore (Bermuda), L.P., a Bermuda limited partnership ("IPB" and,
together with IP, "Sellers"), and MCLP I Limited Partnership, a Massachusetts
limited partnership ("Purchaser").
IP and IPB are the beneficial and record owners of the IP Securities and
the IPB Securities, respectively (each as defined herein). IP and IPB wish
to sell the IP Securities and the IPB Securities, respectively, and Purchaser
wishes to purchase such securities upon the terms and conditions set forth in
this Agreement.
Sellers and Purchaser desire to set forth herein the allocation of
certain rights under the Registration Rights Agreement, dated as of January
23, 1996 (as clarified, supplemental or otherwise amended, the "Registration
Rights Agreement"), by and among IP, IPB and Highland Insurance Group, a
Delaware corporation ("Highlands").
In consideration of the premises and the respective representations,
warranties and agreements contained herein, the parties hereto agree as
follows:
I. Sale and Purchase of Securities.
1.1 IP does hereby sell, convey, transfer, assign and deliver to
Purchaser, and Purchaser does hereby purchase, assume and accept from IP,
$309,450.54 principal amount (the "IP Debentures") of Highland's 10%
Convertible Subordinated Debentures due December 31, 2005 (the "Debentures"),
together with Highland's Common Stock Purchases Warrants, Series A (the
"Series A Warrants"), initially exercisable to purchase 19,549 shares (the
"IP Series A Warrants") of Highland's Common Stock, par value $.01 per share
(the "Common Stock"), and Highland's detachable Common Stock Purchase
Warrants, Series B (the "Series B Warrants"), initially exercisable to
purchase 5,144 shares of Common Stock (the "IP Series B Warrants"), for the
purchase price set forth on Annex I hereto, the receipt of which is hereby
acknowledged by IP. The IP Debentures, the IP Series A Warrants and the IP
Series B Warrants are hereinafter referred to as the "IP Securities."
1.2 IPB does hereby sell, convey, transfer, assign and deliver to
Purchaser, and Purchaser does hereby purchase, assume and accept from IPB,
$170,549.46 principal amount of the Debentures (the "IPB Debentures"),
together with Series A Warrants initially exercisable to purchase 10,774
shares of Common Stock (the "IPB Series A Warrants") and Series B Warrants
initially exercisable to purchase 2,835 shares of Common Stock (the "IPB
Series B Warrants), for the purchase price set forth on Annex I hereto, the
receipt of which is hereby acknowledged by IPB. The IPB Debentures, the IPB
Series A Warrants and the IPB Series B Warrants are hereinafter referred to
as the "IPB Securities," and, together with the IP Securities, the
"Securities."
2. Representations and Warranties.
2.1 Of Sellers. Each Seller represents and warrants to Purchaser
that such Seller has good and valid title to the Securities sold by such
Seller hereunder free and clear of any lien, encumbrance or other adverse
claim (other than as set forth in the Investment Agreement, dated as of
October 10, 1995, by and among Highlands, Haliburton Company, a Delaware
corporation, IP and IPB) and Purchaser will acquire good and valid title to
such Securities free and clear of any lien, encumbrance or other adverse
claim (except any restrictions imposed by the IP Pledge Agreement, the IP
Note, the IPB Pledge Agreement or the IPB Note (each as defined below), or
federal or state securities laws).
2.2 Of Purchaser.
2.2.1 Purchaser is able to bear the substantial economic
risks of investments made hereunder and can afford a complete loss of such
investments.
2.2.2 Purchaser shall make investments hereunder for its own
account for investment purposes only and not with a view to resale,
assignment or other distribution, in whole or in part. No other person has
or will have a direct or indirect beneficial interest in the Purchaser's
investments made hereunder.
2.2.3 Purchaser has such knowledge and experience in
financial, investment and business matters so as to enable it to evaluate the
merits and risks of the investments made hereunder and to make an informed
investment decision with respect thereto. Purchaser has carefully considered
and has, to the extent he believes such discussion necessary, discussed with
Purchaser's professional legal, tax, accounting and financial advisors the
suitability of the investments made hereunder for Purchaser's particular tax
and financial situation and has determined that the investments made
hereunder are suitable investments for the Purchaser.
3. Ancillary Documents. Concurrently with the execution and delivery
of this Agreement, (i) IP and Purchaser shall execute and deliver a pledge
agreement substantially in the form of Exhibit A hereto (the "IP Pledge
Agreement"), (ii) Purchaser shall execute and deliver a limited recourse
promissory note in favor of IP substantially in the form of Exhibit B hereto
(the "IP Note"), (iii) IPB and Purchaser shall execute and deliver a pledge
agreement substantially in the form of Exhibit C hereto (the "IPB Pledge
Agreement") and (iv) Purchaser shall execute and deliver a limited recourse
promissory note substantially in the form of Exhibit D hereto (the "IP
Note").
4. Registration Rights Agreement.
4.1 Purchaser hereby agrees that Sellers shall retain the sole
right under the Registration rights Agreement to (i) initiate or withdraw a
Demand Request (as defined in the Registration Rights Agreement) and (ii)
select the investment banking firm or firms to manage an underwritten
offering in the case of any Demand Registration (as defined in the
Registration Rights Agreement).
4.2 In the case of any Demand Registration, Sellers shall give
prompt initial notice to Purchaser of their intention to effect a Demand
Registration (which notice shall be given not less than fifteen (15) days
prior to the making of the Demand Request therefor) and such notice shall
offer Sellers the opportunity to have any or all of the Securities included
in such registration statement, subject to the limitations contained herein
and in the Registration Rights Agreement. In the event Sellers desire to
have Securities registered pursuant to such Demand Registration, Sellers will
so advise Purchasers in writing within ten (10) days after the date of
receipt of such notice from Purchasers. In the event that all Registrable
Securities (as defined in the Registration Rights Agreement) of Purchaser and
Sellers cannot be included in such Demand Registration in accordance with the
terms of the Registration Rights Agreement, the number of such Registrable
Securities requested to be included therein by Purchaser and Sellers shall be
reduced on a pro rata basis, based on their respective holdings of
Registrable Securities.
5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS.
6. Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written agreement
of each of the parties hereto with respect to any of the terms contained
herein.
7. Entire Agreement. This Agreement, together with the agreements
referenced herein, constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
SELLERS:
INSURANCE PARTNERS, L.P.
By: Insurance GenPar, L.P., its
general partner
By: Insurance GenPar MGP, L.P.,
its general partner
By: Insurance GenPar MGP, Inc.,
its general partner
By: /s/ Daniel L. Doctoroff
Name: Daniel L. Doctoroff
Title: Vice President
INSURANCE PARTNERS OFFSHORE
(BERMUDA), L.P.
By: Insurance GenPar (Bermuda), L.P., its
general partner
By: Insurance GenPar (Bermuda) MGP, L.P.,
its general partner
By: Insurance GenPar (Bermuda) MGP, Ltd.,
its general partner
By: /s/ Daniel L. Doctoroff
Name: Daniel L. Doctoroff
Title: Vice President
PURCHASER:
MCLP I LIMITED PARTNERSHIP
By: MCLP I Corp., its general
partner
By: /s/ David A. Kaplan
Name: David L. Kaplan
Title: Treasurer
<PAGE>
ANNEX I
PURCHASE PRICES
SECURITY PRICE
IP Securities $309,450.54
IPB Securities $170,549.46
