UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _____)*
Central Reserve Life Corporation
(NAME OF ISSUER)
Shares of Common Stock
(TITLE OF CLASS OF SECURITIES)
155055-10-6
(CUSIP NUMBER)
Stanley H. Meadows, P.C.
McDermott, Will & Emery
227 West Monroe
Chicago, IL 60606
(312) 372-2000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS)
December 16, 1997
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement and Schedule 13G to report
the acquisition which is the subject of the Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the act (however, see the
Notes).
SCHEDULE 13D
CUSIP NO. 155055-10-6
___________________________________________________________________________
1 NAMES OF REPORTING PERSONS S.S. OR
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Peter W. Nauert
___________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
___________________________________________________________________________
3 SEC USE ONLY
___________________________________________________________________________
4 SOURCE OF FUNDS*
PF
___________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
___________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
___________________________________________________________________________
7 SOLE VOTING POWER
NUMBER OF SHARES 560,000
BENEFICIALLY ______________________________________________________
OWNED BY 8 SHARED VOTING POWER
EACH 640,000
REPORTING _______________________________________________________
PERSON 9 SOLE DISPOSITIVE POWER
WITH 560,000
_______________________________________________________
10 SHARED DISPOSITIVE POWER
0
___________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,200,000
___________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* / /
___________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.0%
___________________________________________________________________________
14 TYPE OF REPORTING PERSON*
IN
___________________________________________________________________________
This original Schedule 13D Statement is filed on behalf of Peter W.
Nauert for the purpose of reporting (i) the acquisition of warrants (the
"Warrants") to purchase 560,000 shares of common stock, without par value (the
"Common Shares"), of Central Reserve Life Corporation, an Ohio corporation
("CRLC") and (ii) the acquisition of beneficial ownership of an additional
640,000 Common Shares.
ITEM 1. SECURITY AND ISSUER.
This Schedule 13D Statement relates to the Common Shares of CRLC. The
principal executive offices of CRLC are located at 17800 Royalton Road,
Strongsville, Ohio 44136.
ITEM 2. IDENTITY AND BACKGROUND.
(a) The person filing this Schedule 13D Statement is Peter W. Nauert,
an individual.
(b) The business address of Mr. Nauert is 1750 East Golf Road, Suite
210, Schaumburg, Illinois 60173.
(c) The principal occupation of Mr. Nauert is Principal of Geneva
Consulting, Inc., a company providing consulting services to small group and
life insurance companies. The address of Geneva Consulting, Inc. is 1750 East
Golf Road, Suite 210, Schaumburg, Illinois 60173.
(d) Negative with respect to Mr. Nauert.
(e) Negative with respect to Mr. Nauert.
(f) Mr. Nauert is a citizen of the United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS AND OTHER CONSIDERATION.
The Warrants were issued by CRLC to Mr. Nauert in consideration for
the guarantee (the "Guarantee") delivered by Mr. Nauert to American National
Bank and Trust Company of Chicago (the "Bank") to facilitate a $20.0 million
interim loan to CRLC. See Item 4.
ITEM 4. PURPOSE OF TRANSACTION.
On November 26, 1997, Strategic Acquisition Partners LLC ("Strategic
Partners"), a limited liability company in which Mr. Nauert is an investor,
entered into a Stock Purchase Agreement (the "Purchase Agreement") with CRLC
pursuant to which CRLC agreed to issue 5.0 million Common Shares and warrants to
acquire an additional 2.5 million Common Shares to Strategic Partners for an
aggregate purchase price of $27.5 million. In connection with the Stock
Purchase Agreement, Strategic Partners agreed to arrange for an interim loan to
CRLC.
Mr. Nauert delivered the Guarantee to the Bank to facilitate a $20.0
million loan from the Bank to Strategic Partners. Strategic Partners then
extended the proceeds of the Bank loan to CRLC, approximately $14.0 million of
which was invested in CRLC's insurance subsidiary, Central Reserve Life
Insurance Company. The balance of the Bank loan was used to satisfy an
outstanding loan of CRLC in the amount of $5.2 million, to establish an interest
reserve, and to pay transaction expenses. CRLC issued the Warrants to
Mr. Nauert in consideration for the Guarantee.
On Decmeber 16, 1997, Mr. Nauert, Strategic Partners, Turkey Vulture
Fund XIII, Ltd. (the "Fund") and Richard M. Osborne, controlling investor in the
Fund, entered into an agreement (the "Investors Agreement"; a copy of which is
attached as Exhibit 7.1) pursuant to which Mr. Osborne could co-invest with
Strategic Partners for 30% of the Common Shares and warrants issued by CRLC in
connection with the Purchase Agreement and related transactions. The parties
also agreed to vote their respective Common Shares in favor of the transactions
contemplated by the Purchase Agreement. Mr. Nauert may be deemed the beneficial
owner of the Common Shares beneficially owned by Strategic Partners and the Fund
as a result of the Investors Agreement to which Mr. Nauert, Strategic Partners
and the Fund are parties. Mr. Nauert disclaims such beneficial ownership.
On March 30, 1998, Strategic Partners entered an Amended and Restated
Stock Purchase Agreement (the "Amended Purchase Agreement") with CRLC and
certain additional investors pursuant to which Strategic Partners and such
investors would acquire 7.3 million Common Shares and warrants to acquire an
additional 3.65 million Common Shares for an aggregate purchase price of $40.15
million. Contemporaneously with the execution of the Amended Purchase
Agreement, Strategic Partners and Mr. Osborne agreed that the Fund's investment
in CRLC would be limited to 10% of the Common Shares and warrants issued by CRLC
in connection with the Amended Purchase Agreement.
ITEM 5. INTEREST IN SECURITIES OF ISSUER.
(a) Mr. Nauert is the beneficial owner of the 560,000 Common Shares
issuable upon exercise of the Warrants. In addition, Mr. Nauert may be deemed
the beneficial owner of 640,000 Common Shares beneficially owned by the Fund.
Mr. Nauert disclaims beneficial ownership of the Common Shares beneficially
owned by the Fund.
According to the most recently available filing by CRLC with the
Securities and Exchange Commission, there are 4,195,172 Common Shares
outstanding. If the Warrants and certain warrants to purchase Common Shares
beneficially owned by the Fund were fully exercised, there would be 4,995,172
Common Shares outstanding (the "Outstanding Shares"). The Common Shares
issuable upon exercise of the Warrants, together with the Common Shares
beneficially owned by the Fund, constitute 24.0% of the Outstanding Shares.
(b) Mr. Nauert has shared power to vote, or to direct the voting of,
and the sole power to dispose or to direct the disposition of, the Warrants and
the Common Shares issuable upon exercise of the Warrants. Mr. Nauert shares
such voting power with Strategic Partners, the Fund and Mr. Osborne.
The information required by Item 2 with respect to the Fund and Mr. Osborne is
as follows:
(i) Item 2(a): Turkey Vulture Fund XIII, Ltd., an Ohio
limited liability company; Richard M. Osborne, an individual.
(ii) Item 2(b): The address of the Fund and the business
address of Mr. Osborne, is 7001 Center Street, Mentor, Ohio 44060.
(iii) Item 2(c): The principal business of the Fund is to
acquire, hold, sell or otherwise invest in all types of securities and other
instruments. Mr. Osborne's pricipal occupation is President and Chairman of the
Board of OsAir, Inc., a property developer and manufacturer of industrial gases
for pipeline delivery. OsAir, Inc. is located at 7001 Center Street, Mentor,
Ohio 44060.
(iv) Item 2(d): Negative with respect to the Fund and
Mr. Osborne.
(v) Item 2(e): Negative with respect to the Fund and Mr.
Osborne.
(vi) Item 2(f): The Fund is a limited liability company
organized under the laws of the state of Ohio. Mr. Osborne is a citizen of the
United States of America.
The information required by Item 2 with respect to the Strategic Partners is as
follows:
(i) Item 2(a): Strategic Acquisition Partners, LLC, a Nevada
limited liability company.
(ii) Item 2(b): The business address of Strategic Partners is
20 North Wacker Drive, Suite 3118, Chicago, Illinois 60606.
(iii) Item 2(c): Strategic Partners was formed for the purpose
of consummating the transactions referred to in Item 4 and has no current
operations. The principal office of Strategic Partners is located at 20 North
Wacker Drive, Chicago, Illinois 60606.
(iv) Item 2(d): Negative with respect to Strategic
Partners.
(v) Item 2(e): Negative with respect to Strategic Partners.
(vi) Item 2(f): Strategic Partners is a limited liability
company organized under the laws of the state of Nevada. Mr. Osborne is a
citizen of the United States of America.
(c) Not Applicable.
(d) Not Applicable.
(e) Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
See Item 4.
ITEM 7. MATERIAL TO FILED AS EXHIBITS.
Exhibit 7.1 Agreement, dated December 16, 1997 among Mr. Nauert,
Strategic Partners, the Fund and Mr. Osborne.
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: March 20, 1998 /s/ Peter W. Nauert
Peter W. Nauert
EXHIBIT 7.1
This Agreement is entered into as of the 16th day of December, 1997 by and
between Peter W. Nauert ("NAUERT"), Strategic Acquisition Partners, LLC, a
Nevada limited liability company ("PARTNERS") and Richard M. Osborne,
individually and on behalf of Turkey Vulture Fund XIII, Ltd., an Ohio limited
liability company (collectively, "OSBORNE").
WHEREAS, Nauert and Osborne have agreed to provide credit enhancement to
Partners (the "GUARANTEES"), to induce American National Bank and Trust Company
of Chicago ("ANB") to extend to Partners a loan in the aggregate principal
amount of $20,000,000 (the "BANK LOAN");
WHEREAS, Partners intends to enter into a Credit Agreement (the "CREDIT
AGREEMENT") with Central Reserve Life Corporation, an Ohio corporation ("CRLC"),
pursuant to which Partners would extend a loan to CRLC in the aggregate
principal amount of $20,000,000;
WHEREAS, (i) as a condition precedent to Partners making its loan to CRLC,
CRLC would issue warrants to purchase 800,000 shares of common stock, without
par value, of CRLC at a purchase price of $6.00 per share, and (ii) subject to
approval by the shareholders of CRLC, CRLC would issue warrants to purchase an
additional 200,000 shares of common stock, without par value, of CRLC at a
purchase price of $6.00 per share (the warrants referred to in (i) and (ii),
collectively, the "WARRANTS") to Nauert or his designees; and
WHEREAS, Partners is a party to that certain Stock Purchase Agreement,
dated November 26, 1997, between Partners and CRLC (the "PURCHASE AGREEMENT").
NOW THEREFORE, for good and valuable consideration, the parties hereto
hereby agree as follows:
At the closing of the transactions contemplated by the Credit Agreement, 70% of
the Warrants shall be issued to Nauert or his designees, and 30% of the Warrants
shall be issued to Osborne or his or its designees.
The parties hereto covenant and agree, in their capacities as shareholders of
CRLC, to vote all of their respective shares of CRLC common stock in favor of
the transactions contemplated by the Purchase Agreement. At the closing of the
transactions contemplated by the Purchase Agreement (the "CLOSING"), (i) Osborne
covenants and agrees to pay 30% of the purchase price as defined in the Purchase
Agreement (the "PURCHASE PRICE") in accordance with the provisions of Section
2.2 thereof upon receipt of a certificate representing 30% of the Stock, as
defined in the Purchase Agreement (the "STOCK") and 30% of the warrants pursuant
to the Warrant Agreement, as defined in the Purchase Agreement (the "WARRANT
AGREEMENT"), (ii) Partners covenants and agrees to pay 70% of the Purchase Price
in accordance with the provisions of Section 2.2 thereof upon receipt of a
certificate representing 70% of the Stock and 70% of the warrants pursuant to
the Warrant Agreement and (iii) Nauert covenants and agrees to use his best
efforts to cause Partners to comply with the foregoing. In addition, the
parties hereto covenant and agree to comply with all of their respective
obligations under the documents (including, without limitation, any guarantee
obligation) evidencing the Bank Loan.
In the event Osborne or Nauert breaches its or their covenants set forth in
clauses (i) and (ii) of the second sentence of paragraph 2 hereof, the party in
breach shall promptly assign, transfer and convey to the other party (free and
clear of all liens, encumbrances or Adverse Claims) Warrants to purchase 300,000
shares of common stock of the Company following such breach. Neither Osborne nor
Nauert shall transfer Warrants so that after giving effect to such transfer such
party will have Warrants to purchase less than 300,000 shares of common stock of
the Company, in the aggregate, prior to the earlier to occur of (i) the Closing
or (ii) the valid termination of the Purchase Agreement in accordance with its
terms. Each party covenants and agrees to execute and deliver such additional
instruments, documents and certificates and take such other actions necessary to
accomplish any of the foregoing.
Partners shall promptly pay to ANB all receipts of interest and principal
collected by it under the Credit Agreement and related documents; provided that
if the applicable interest rate under the Credit Agreement exceeds the
applicable interest rate under the ANB Loan, Partners shall pay to ANB the
interest due on the ANB Loan and shall pay to Osborne 30% of the excess of
interest payments actually received from the Company over the interest payments
due on the ANB Loan. Partners hereby indemnifies and holds harmless Osborne
for any loss arising out of Osborne's liability to ANB relating to the Bank Loan
to the extent that Partners fails to comply with the covenant contained in the
previous sentence.
Partners agree to pay Osborne 30% of any fees collected by it under Section 7.5
of the Purchase Agreement promptly upon receipt by it of any such fees.
Notwithstanding the terms of their respective Guaranties, Nauert and Osborne
shall indemnify and hold harmless each other against any amount either of them
actually pays under their respective Guarantees to ANB in excess of the
following percentages of the total amount actually paid under the Guarantees:
(i) Nauert 70% and (ii) Osborne 30%. Each of Nauert and Osborne assumes and
shall be responsible to each other in proportion to the foregoing percentages of
said percentage assumption and responsibility, Nauert and Osborne shall
indemnify and hold harmless each other from any and all fees and expenses
(including reasonable attorney fees and collection costs) actually paid by
either of them in excess of the percentages set forth above.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Illinois.
This Agreement may be executed by any one or more of the parties hereto in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same instrument. The
execution of counterparts shall not be deemed to constitute delivery of this
Agreement by any party until all of the parties have executed and delivered
their respective counterparts.
Each party agrees that the other party will have the right to enforce this
Agreement and any of its provisions by injunction, specific performance or other
equitable relief without prejudice to any other rights and remedies that it may
have for breach of this Agreement.
This Agreement shall bind and inure to the benefit of the parties named herein
and their respective successors and assigns. Neither party shall assign this
Agreement, or any part hereof, without the consent of the other.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first above written.
__________________________________
Peter W. Nauert
__________________________________
Richard M. Osborne
Turkey Vulture Fund XIII, Ltd.
By: _____________________________
Richard M. Osborne
Manager
Strategic Acquisition Partners, LLC
By:
Val Rajic
Manager
