<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------
SCHEDULE 13D
(RULE 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13D-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13D-2(a)
(AMENDMENT NO. 1)1
CERES GROUP, INC.
- ------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $0.001 PER SHARE
- ------------------------------------------------------------------------------
(Title of Class of Securities)
156772105
- ------------------------------------------------------------------------------
(CUSIP Number)
Insurance Partners Advisors, L.P.
One Chase Manhattan Plaza, 44th Floor
New York, New York 10005
Attention: Mr. Bradley E. Cooper
(212) 898-5700
- ------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 17, 1999
- ------------------------------------------------------------------------------
(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 that 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: [ ]
Note. Schedule filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 17 Pages)
- ---------------------------
(1) 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 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).
<PAGE> 2
- --------------------- ------------------------------
CUSIP No. 156772105 13D Page 2 of 17 Pages
- --------------------- ------------------------------
==============================================================================
1 NAMES OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
INSURANCE PARTNERS, L.P.
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
[ ] (a)
[X] (b)
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO -- CONTRIBUTIONS FROM PARTNERS
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) or 2(e)
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- ------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED BY EACH
REPORTING PERSON WITH 0
------------------------------------------
8 SHARED VOTING POWER
5,149,018(1)
------------------------------------------
9 SOLE DISPOSITIVE POWER
0
------------------------------------------
10 SHARED DISPOSITIVE POWER
5,149,018(1)
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,149,018(1)
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
34.6%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
==============================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
(1) INCLUDES WARRANTS TO ACQUIRE AN AGGREGATE OF 1,399,733 SHARES OF COMMON
STOCK.
<PAGE> 3
- --------------------- ------------------------------
CUSIP No. 156772105 13D Page 3 of 17 Pages
- --------------------- ------------------------------
==============================================================================
1 NAMES OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
INSURANCE GENPAR, L.P.
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
[ ] (a)
[X] (b)
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO - CONTRIBUTIONS FROM PARTNERS
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) or 2(e)
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- ------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED BY EACH
REPORTING PERSON WITH 0
------------------------------------------
8 SHARED VOTING POWER
5,149,018(1)(2)
------------------------------------------
9 SOLE DISPOSITIVE POWER
0
------------------------------------------
10 SHARED DISPOSITIVE POWER
5,149,018(1)(2)
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,149,018(1)(2)
- ------------------------------------------------------------------------------v
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
34.6%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
==============================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
-----------------------------------------------------------
(1) INCLUDES WARRANTS TO ACQUIRE AN AGGREGATE OF 1,399,733 SHARES OF COMMON
STOCK.
(2) SOLELY IN ITS CAPACITY AS SOLE GENERAL PARTNER OF INSURANCE PARTNERS, L.P.
<PAGE> 4
- --------------------- ------------------------------
CUSIP No. 156772105 13D Page 4 of 17 Pages
- --------------------- ------------------------------
==============================================================================
1 NAMES OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
INSURANCE GENPAR MGP, L.P.
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
[ ] (a)
[X] (b)
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO - CONTRIBUTIONS FROM PARTNERS
N/A
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) or 2(e)
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- ------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED BY EACH
REPORTING PERSON WITH 0
------------------------------------------
8 SHARED VOTING POWER
5,149,018(1)(2)
------------------------------------------
9 SOLE DISPOSITIVE POWER
0
------------------------------------------
10 SHARED DISPOSITIVE POWER
5,149,018(1)(2)
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,149,018(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)
34.6%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
==============================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
---------------------------------------------------------------
(1) INCLUDES WARRANTS TO ACQUIRE AN AGGREGATE OF 1,399,733 SHARES OF COMMON
STOCK.
(2) SOLELY IN ITS CAPACITY AS SOLE GENERAL PARTNER OF INSURANCE GENPAR MGP,
L.P., THE SOLE GENERAL PARTNER OF INSURANCE GENPAR, L.P., WHICH IS THE SOLE
GENERAL PARTNER OF INSURANCE PARTNERS, L.P.
<PAGE> 5
- --------------------- ------------------------------
CUSIP No. 156772105 13D Page 5 of 17 Pages
- --------------------- ------------------------------
==============================================================================
1 NAMES OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
INSURANCE GENPAR MGP, INC.
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
[ ] (a)
[X] (b)
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO - CONTRIBUTIONS FROM PARTNERS
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) or 2(e)
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- ------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED BY EACH
REPORTING PERSON WITH 0
------------------------------------------
8 SHARED VOTING POWER
5,149,018(1)(2)
------------------------------------------
9 SOLE DISPOSITIVE POWER
0
------------------------------------------
10 SHARED DISPOSITIVE POWER
5,149,018(1)(2)
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,149,018(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)
34.6%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
==============================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
-----------------------------------------------------------
(1) INCLUDES WARRANTS TO ACQUIRE AN AGGREGATE OF 1,399,733 SHARES OF COMMON
STOCK.
(2) SOLELY IN ITS CAPACITY AS SOLE GENERAL PARTNER OF INSURANCE GENPAR MGP,
L.P., THE SOLE GENERAL PARTNER OF INSURANCE GENPAR, L.P., WHICH IS THE SOLE
GENERAL PARTNER OF INSURANCE PARTNERS, L.P.
<PAGE> 6
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CUSIP No. 156772105 13D Page 6 of 17 Pages
- --------------------- ------------------------------
==============================================================================
1 NAMES OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
INSURANCE PARTNERS OFFSHORE (BERMUDA), L.P.
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
[ ] (a)
[X] (b)
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO - CONTRIBUTIONS FROM PARTNERS
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) or 2(e)
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
BERMUDA
- ------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED BY EACH
REPORTING PERSON WITH 0
------------------------------------------
8 SHARED VOTING POWER
2,599,166(1)
------------------------------------------
9 SOLE DISPOSITIVE POWER
0
------------------------------------------
10 SHARED DISPOSITIVE POWER
2,599,166(1)
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,599,166(1)
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.2%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
==============================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
------------------------------------------------------------------
(1) INCLUDES WARRANTS TO ACQUIRE AN AGGREGATE OF 772,995 SHARES OF COMMON
STOCK.
<PAGE> 7
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CUSIP No. 156772105 13D Page 7 of 17 Pages
- --------------------- ------------------------------
==============================================================================
1 NAMES OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
INSURANCE GENPAR (BERMUDA), L.P.
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
[ ] (a)
[X] (b)
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO - CONTRIBUTIONS FROM PARTNERS
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) or 2(e)
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
BERMUDA
- ------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED BY EACH
REPORTING PERSON WITH 0
-------------------------------------------
8 SHARED VOTING POWER
2,599,166(1)(2)
-------------------------------------------
9 SOLE DISPOSITIVE POWER
0
-------------------------------------------
10 SHARED DISPOSITIVE POWER
2,599,166(1)(2)
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,599,166(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)
18.2%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
==============================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
---------------------------------------------------------------------
(1) INCLUDES WARRANTS TO ACQUIRE AN AGGREGATE OF 772,995 SHARES OF COMMON
STOCK.
(2) SOLELY IN ITS CAPACITY AS SOLE GENERAL PARTNER OF INSURANCE PARTNERS
OFFSHORE (BERMUDA), L.P.
<PAGE> 8
- --------------------- --------------------------
CUSIP No. 156772105 13D Page 8 of 17 Pages
- --------------------- --------------------------
==============================================================================
1 NAMES OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
INSURANCE GENPAR (BERMUDA) MGP, L.P.
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
[ ] (a)
[X] (b)
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO - CONTRIBUTIONS FROM PARTNERS
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) or 2(e)
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
BERMUDA
- ------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED BY EACH
REPORTING PERSON WITH 0
-------------------------------------------
8 SHARED VOTING POWER
2,599,166(1)(2)
-------------------------------------------
9 SOLE DISPOSITIVE POWER
0
-------------------------------------------
10 SHARED DISPOSITIVE POWER
2,599,166(1)(2)
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,599,166(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)
18.2%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
==============================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
---------------------------------------------------------------------
(1) INCLUDES WARRANTS TO ACQUIRE AN AGGREGATE OF 772,995 SHARES OF COMMON
STOCK.
(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.
<PAGE> 9
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CUSIP No. 156772105 13D Page 9 of 17 Pages
- --------------------- ------------------------------
==============================================================================
1 NAMES OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
INSURANCE GENPAR (BERMUDA) MGP, LTD.
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
[ ] (a)
[X] (b)
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO - CONTRIBUTIONS FROM PARTNERS
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) or 2(e)
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
BERMUDA
- ------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED BY EACH
REPORTING PERSON WITH 0
-------------------------------------------
8 SHARED VOTING POWER
2,599,166(1)(2)
-------------------------------------------
9 SOLE DISPOSITIVE POWER
0
-------------------------------------------
10 SHARED DISPOSITIVE POWER
2,599,166(1)(2)
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,599,166(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)
18.2%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
==============================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
--------------------------------------------------------------------
(1) INCLUDES WARRANTS TO ACQUIRE AN AGGREGATE OF 772,995 SHARES OF COMMON
STOCK.
(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 IS THE SOLE GENERAL PARTNER OF INSURANCE PARTNERS
OFFSHORE (BERMUDA), L.P.
<PAGE> 10
ITEM 1. SECURITY AND ISSUER.
The title of the class of equity securities of Ceres Group, Inc. (the
"Company"), to which this Schedule 13D Amendment relates is the Company's
common stock, par value $0.001 per share (the "Common Stock"). The address of
the principal executive offices of the Company is located 17800 Royalton Road,
Strongsville, Ohio 44136.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As more fully described in Item 3 below, (i) IP Delaware (hereinafter
defined) purchased 949,819 shares of Common Stock for a purchase price of
$7,123,635, and (ii) IP Bermuda (hereinafter defined) purchased 280,181 shares
of Common Stock for a purchase price of $2,101,365. Such purchases were
consummated on February 17, 1999. Both IP Delaware and IP Bermuda used
contributions from their respective partners to fund such purchases.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 of Schedule 13D is hereby amended and supplemented by adding
the following:
The Reporting Persons consummated the transaction described herein in
order to acquire additional interests in the Company and for investment
purposes.
Pursuant to a certain Stock Subscription Agreement dated as of
February 17, 1999, the Company agreed to sell to Insurance Partners, L.P. ("IP
Delaware") and Insurance Partners Offshore (Bermuda), L.P. ("IP Bermuda") (IP
Delaware and IP Bermuda are collectively referred to as, the "Investor"),
1,230,000 shares of Common Stock, par value $0.001 per share, of the Company
(the "Subscription Shares"), pursuant to the Company's private placement
offering of 2,000,000 shares of Common Stock, and Investor agreed to purchase
from the Company for investment, the Subscription Shares for a purchase price
of $7.50 per share.
ITEM 5. INTEREST IN SECURITIES OF ISSUER.
Item 5 of Schedule 13D is hereby amended and supplemented by adding
the following:
IP Delaware
IP Delaware may, pursuant to Rule 13d-3 of the Exchange Act, be deemed
to be the beneficial owner of 5,149,018 shares of Common Stock, which
constitutes approximately 34.6% of the 14,894,905 shares of Common Stock deemed
outstanding pursuant to Rule 13d-3(a)(2) and Rule 13d-3(d)(1)(i) of the
Exchange Act.
Insurance GenPar, L.P., a Delaware limited partnership ("Insurance
GenPar")
In its capacity as the sole general partner of IP Delaware, Insurance
GenPar may, pursuant to Rule 13d-3 of the Exchange Act, be deemed to be the
beneficial owner of 5,149,018 shares of Common Stock, which constitutes
approximately 34.6% of the 14,894,905 shares of Common Stock deemed outstanding
pursuant to Rule 13d-3(a)(2) and Rule 13d-3(d)(1)(i) of the Exchange Act.
10 of 17
<PAGE> 11
Insurance GenPar MGP, L.P., a Delaware limited partnership ("IMGPLP")
In its capacity as the sole general partner of Insurance GenPar, which
is the sole general partner of IP Delaware, IMGPLP may, pursuant to Rule 13d-3
of the Exchange Act, be deemed to be the beneficial owner of 5,149,018 shares
of Common Stock, which constitutes approximately 34.6% of the 14,894,905 shares
of Common Stock deemed outstanding pursuant to Rule 13d-3(a)(2) and Rule
13d-3(d)(1)(i) of the Exchange Act.
Insurance GenPar MGP, Inc., a Delaware corporation ("IMGPI")
In its capacity as the sole general partner of IMGPLP, which is the
sole general partner of Insurance GenPar, which is the sole general partner of
IP Delaware, IMGPI may, pursuant to Rule 13d-3 of the Exchange Act, be deemed
to be the beneficial owner of 5,149,018 shares of Common Stock, which
constitutes approximately 34.6% of the 14,894,905 shares of Common Stock deemed
outstanding pursuant to Rule 13d-3(a)(2) and Rule 13d-3(d)(1)(i) of the
Exchange Act.
IP Bermuda
IP Bermuda, may, pursuant to Rule 13d-3 of the Exchange Act, be deemed
to be the beneficial owner of 2,599,166 shares of Common Stock, which
constitutes approximately 18.2% of the 14,268,167 shares of Common Stock deemed
outstanding pursuant to Rule 13d-3(a)(2) and Rule 13d-3(d)(1)(i) of the
Exchange Act.
Insurance GenPar (Bermuda), L.P., a Bermuda limited partnership
("Insurance GenPar Bermuda")
In its capacity as the sole general partner of IP Bermuda, Insurance
GenPar Bermuda may, pursuant to Rule 13d-3 of the Exchange Act, be deemed to be
the beneficial owner of 2,599,166 shares of Common Stock, which constitutes
approximately 18.2% of the 14,268,167 shares of Common Stock deemed outstanding
pursuant to Rule 13d-3(a)(2) and Rule 13d-3(d)(1)(i) of the Exchange Act.
Insurance GenPar (Bermuda) MGP, L.P., a Bermuda limited partnership
("IBMGPLP")
In its capacity as the sole general partner of Insurance GenPar
Bermuda, which is the sole general partner of IP Bermuda, IBMGPLP may, pursuant
to Rule 13d-3 of the Exchange Act, be deemed to the beneficial owner of
2,599,166 shares of Common Stock, which constitutes approximately 18.2% of the
14,268,167 shares of Common Stock deemed outstanding pursuant to Rule
13d-3(a)(2) and Rule 13d-3(d)(1)(i) of the Exchange Act.
Insurance GenPar (Bermuda) MGP, Ltd., a Bermuda corporation ("IBMGPI")
In its capacity as the sole general partner of IBMGPLP, which is the
sole general partner of Insurance GenPar Bermuda, which is the sole general
partner of IP Bermuda, IBMGPI may, pursuant to Rule 13d-3 of the Exchange Act,
be deemed to be the beneficial owner of 2,599,166 shares of Common Stock, which
constitutes approximately 18.2% of the 14,268,167 shares of Common Stock deemed
outstanding pursuant to Rule 13d-3(a)(2) and Rule 13d-3(d)(1)(i) of the
Exchange Act.
The Reporting Persons may be deemed to beneficially own as part of a
group (as used in Section 13(d)(3) of the Exchange Act) 7,748,184 shares of
Common Stock, which constitutes approximately 57.4% of the shares of Common
Stock deemed outstanding pursuant to Rule 3d-3(d)(1)(i) of the Exchange Act.
Because each of IP Delaware and IP Bermuda is a party to the Voting
Agreement dated July 1, 1998 by and among the Company and the security holders
listed on the signature pages thereof (which is incorporated herein by
reference to Exhibit 1 of the Company's Schedule 13D Statement dated July 14,
1998), it may, as of July 1, 1998, be deemed to beneficially own as part of a
group (as used in Section 13(d)(3) of the Exchange Act), 15,289,750(2) shares of
Common Stock, which constitutes approximately
- -----------------------------------------
(2) Includes 3,749,285 shares of Common Stock and warrants to acquire
1,399,733 shares of Common Stock (which are immediately exercisable)
owned by IP Delaware. Includes 1,826,171 shares of Common Stock and
warrants to acquire 772,995 shares of Common Stock (which are
immediately exercisable) owned by IP Bermuda. Also, includes (i)
2,954,244 shares of Common Stock and warrants to acquire 1,477,272
shares of Common Stock owned severally by the Assignees, (ii) 1,000
shares of Common Stock and guarantee warrants (which are immediately
exercisable) to acquire 660,000 shares of Common Stock owned by Peter W.
Nauert, and (iii) 400,000 shares of Common Stock and guarantee warrants
(which are immediately exercisable) to acquire 340,000 shares of Common
Stock owned by the Fund.
11 of 17
<PAGE> 12
80.5% of the shares of Common Stock deemed outstanding pursuant to Rule
13d-3(a)(1)(i) of the Exchange Act. Each of IP Delaware and IP Bermuda
disclaims beneficial ownership of all Common Stock owned by Strategic
Acquisition Partners, LLC ("SAP"), Turkey Vulture Fund XIII, Ltd. (the "Fund"),
and the Assignees (as that term is more fully defined in the Company's Schedule
13D Statement dated July 14, 1998).
(b) Prior to the closing of the transactions contemplated by the
Amended and Restated Stock Purchase Agreement dated as of March 30, 1998 by and
among the Company, IP Delaware, IP Bermuda, and SAP, as amended by that First
Amendment thereto dated June 30, 1998, as further amended by the
Indemnification and Closing Agreement dated as of July 1, 1998, among the
Company, IP Delaware, IP Bermuda, and each of the persons listed on Schedule 1
thereto (which is incorporated herein by reference to Exhibit 4 of the
Company's Schedule 13D Statement dated July 14, 1998), none of the Reporting
Persons had any power to vote or direct the vote or to dispose or to direct the
disposition of any shares of Common Stock.
(c) Except as set forth herein or in the Exhibits filed herewith, none
of the Reporting Persons has effected any transactions in shares of Common
Stock during the past 60 days.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Reference is hereby made to the Stock Subscription Agreements,
attached hereto as Exhibit 7.1 and Exhibit 7.2, which are incorporated herein
by this reference. Additionally, Investor and the Company acknowledge that the
Subscription Shares are bound by and subject to the Stockholders Agreement
dated as of July 1, 1998 by and among the Company and the security holders
listed on the signature pages thereof (which is incorporated by reference to
Exhibit 3 of the Company's Schedule 13D Statement dated July 14, 1998), and the
Voting Agreement dated as of July 1, 1998, by and among the Company and the
security holders listed on the signature pages thereof (which is incorporated
hereto by reference to Exhibit 1 of the Company's Schedule 13D Statement dated
July 14, 1998). Investor and the Company also acknowledge that the Subscription
Shares are "Registrable Shares" as that term is defined in the Registration
Rights Agreement dated as of July 1, 1998 by and among the Company and the
persons and entities set forth on the signature pages thereof (which is
incorporated hereto by reference to Exhibit 2 of the Company's Schedule 13D
Statement dated July 14, 1998), and as amended through Amendment No. 1 to the
Registration Rights Agreement, by and among the Company and the persons and
entities set forth on the signature page attached thereto (which is
attached hereto as Exhibit 7.3 and incorporated herein by this reference).
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
Incorporated by reference to Voting Agreement dated as of July 1,
Exhibit 1 of the Company's Schedule 1998, by and among Central Reserve Life
13D Statement dated July 14, 1998 Corporation, Insurance Partners, L.P.,
Insurance Partners Offshore (Bermuda),
L.P. and each of the security holders
listed on the signature page thereto.
Incorporated by reference to Registration Rights Agreement dated as
Exhibit 2 of the Company's Schedule of July 1, 1998, by and among Central
13D Statement dated July 14, 1998 Reserve Life Corporation, Insurance
Partners, L.P., Insurance Partners
Offshore (Bermuda), L.P., and each of
the persons and entities set forth on the
signature pages thereto.
Incorporated by reference to Stockholders Agreement dated as of July
Exhibit 3 of the Company's Schedule 1, 1998, by and among Central Reserve
13D Statement dated July 14, 1998 Life Corporation, Insurance Partners,
L.P., Insurance Partners Offshore
(Bermuda), L.P., and each of the
security holders listed on the signature
pages thereto.
Incorporated by reference to Indemnification and Closing Agreement
Exhibit 4 of the Company's Schedule dated as of July 1, 1998, by and among
13D Statement dated July 14, 1998 Central Reserve Life corporation,
Insurance Partners, L.P., Insurance
Partners Offshore (Bermuda), L.P., and
each of the persons identified on
Schedule 1 thereto.
</TABLE>
12 of 17
<PAGE> 13
<TABLE>
<S> <C>
Exhibit 7.1 Stock Subscription Agreement, dated as of February 17,
1999, by and among, Ceres Group, Inc. and Insurance
Partners, L.P.
Exhibit 7.2 Stock Subscription Agreement, dated as of February 17,
1999, by and among, Ceres Group, Inc. and Insurance
Partners Offshore (Bermuda), L.P.
Exhibit 7.3 Amendment No. 1 to the Registration Rights Agreement,
dated as of February 16, 1999, by and among Ceres Group,
Inc. and the persons and entities set forth on the
signature pages attached thereto.
</TABLE>
13 of 17
<PAGE> 14
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true and correct.
February 17, 1999
-------------------------------------
(Date)
INSURANCE PARTNERS, L.P., a Delaware
limited partnership
By: Insurance GenPar, L.P.,
a Delaware limited partnership,
its sole General Partner
By: Insurance GenPar MGP, L.P.,
a Delaware limited partnership,
its sole General Partner
By: Insurance GenPar MGP, Inc.,
a Delaware corporation, its
sole General Partner
By: /s/ STEVEN B. GRUBER
-------------------------
Name: Steven B. Gruber
-----------------------
Title:
----------------------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true and correct.
February 17, 1999
---------------------------------------
(Date)
INSURANCE GENPAR, L.P., a Delaware
limited partnership
By: Insurance GenPar MGP, L.P.,
a Delaware limited partnership, its
sole General Partner
By: Insurance GenPar MGP, Inc.,
a Delaware corporation, its
sole General Partner
By: /s/ STEVEN B. GRUBER
-------------------------
Name: Steven B. Gruber
-----------------------
Title:
----------------------
14 of 17
<PAGE> 15
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true and correct.
February 17, 1999
------------------------
(Date)
INSURANCE GENPAR MGP, L.P., a Delaware
limited partnership
By: Insurance GenPar MGP, Inc.,
a Delaware corporation, its sole
General Partner
By: /s/ STEVEN B. GRUBER
-------------------------
Name: Steven B. Gruber
-----------------------
Title:
----------------------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true and correct.
February 17, 1999
------------------------
(Date)
INSURANCE GENPAR MGP, Inc., a Delaware
corporation
By: /s/ STEVEN B. GRUBER
-------------------------
Name: Steven B. Gruber
-----------------------
Title:
----------------------
15 of 17
<PAGE> 16
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true and correct.
February 17, 1999
---------------------------
(Date)
INSURANCE PARTNERS OFFSHORE (BERMUDA), L.P.,
a Bermuda limited partnership, its sole
General Partner
By: Insurance GenPar (Bermuda), L.P., a
Bermuda limited partnership, its sole
General Partner
By: Insurance GenPar (Bermuda) MGP, L.P.,
a Bermuda limited partnership, its
sole General Partner
By: Insurance GenPar (Bermuda) MGP,
Ltd., a Bermuda corporation, its
sole General Partner
By: /s/ STEVEN B. GRUBER
---------------------------
Name: Steven B. Gruber
-------------------------
Title:
------------------------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true and correct.
February 17, 1999
------------------------
(Date)
INSURANCE GENPAR (BERMUDA), L.P.,
a Bermuda limited partnership
By: Insurance GenPar (Bermuda) MGP, L.P.,
a Bermuda limited partnership, its
sole General Partner
By: Insurance GenPar (Bermuda) MGP,
Ltd., a Bermuda corporation, its
sole General Partner
By: /s/ STEVEN B. GRUBER
-----------------------------
Name: Steven B. Gruber
---------------------------
Title:
--------------------------
16 of 17
<PAGE> 17
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true and
correct.
February 17, 1999
-----------------------------
(Date)
INSURANCE GENPAR (BERMUDA) MGP, L.P.,
a Bermuda limited partnership
By: Insurance GenPar (Bermuda) MGP,
Ltd., a Bermuda corporation, its
sole General Partner
By: /s/ STEVEN B. GRUBER
-----------------------------------
Name: Steven B. Gruber
---------------------------------
Title:
--------------------------------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true and correct.
February 17, 1999
---------------------------------
(Date)
INSURANCE GENPAR (BERMUDA) MGP, LTD.,
a Bermuda corporation
By: /s/ STEVEN B. GRUBER
---------------------------------------
Name: Steven B. Gruber
-------------------------------------
Title:
------------------------------------
17 of 17
<PAGE> 18
INDEX TO EXHIBITS
<TABLE>
<S> <C>
Incorporated by reference to Voting Agreement dated as of July 1,
Exhibit 1 of the Company's Schedule 1998, by and among Central Reserve Life
13D Statement dated July 14, 1998 Corporation, Insurance Partners, L.P.,
Insurance Partners Offshore (Bermuda),
L.P. and each of the security holders
listed on the signature page thereto.
Incorporated by reference to Registration Rights Agreement dated as
Exhibit 2 of the Company's Schedule of July 1, 1998, by and among Central
13D Statement dated July 14, 1998 Reserve Life Corporation, Insurance
Partners, L.P., Insurance Partners
Offshore (Bermuda), L.P., and each of
the persons and entities set forth on the
signature pages thereto.
Incorporated by reference to Stockholders Agreement dated as of July
Exhibit 3 of the Company's Schedule 1, 1998, by and among Central Reserve
13D Statement dated July 14, 1998 Life Corporation, Insurance Partners,
L.P., Insurance Partners Offshore
(Bermuda), L.P., and each of the
security holders listed on the signature
pages thereto.
Incorporated by reference to Indemnification and Closing Agreement
Exhibit 4 of the Company's Schedule dated as of July 1, 1998, by and among
13D Statement dated July 14, 1998 Central Reserve Life corporation,
Insurance Partners, L.P., Insurance
Partners Offshore (Bermuda), L.P., and
each of the persons identified on
Schedule 1 thereto.
Exhibit 7.1 Stock Subscription Agreement, dated as of February 17,
1999, by and among, Ceres Group, Inc. and Insurance
Partners, L.P.
Exhibit 7.2 Stock Subscription Agreement, dated as of February 17,
1999, by and among, Ceres Group, Inc. and Insurance
Partners Offshore (Bermuda), L.P.
Exhibit 7.3 Amendment No. 1 to the Registration Rights Agreement,
dated as of February 16, 1999, by and among Ceres Group,
Inc. and the persons and entities set forth on the
signature pages attached thereto.
</TABLE>
<PAGE> 1
EXHIBIT 7.1
STOCK SUBSCRIPTION AGREEMENT
January 20, 1999
Insurance Partners, L.P. (the "Investor")
One Chase Manhattan Plaza
44th Floor
New York, New York 10005
Attn: Brad Cooper
Gentlemen:
Ceres Group, Inc., a Delaware corporation and successor-in-interest to
Central Reserve Life Corporation, an Ohio corporation (the "Company"), agrees
with Investor as follows:
1. Sale and Purchase of Subscription Shares. Pursuant to the
Company's private placement offering (the "Offering") of 2,000,000 shares of
common stock, par value $0.001 per share, of the Company (the "Common Shares"),
and subject to the terms and conditions set forth in this Agreement, the Company
agrees to sell to Investor, and by its acceptance of the Agreement Investor
agrees to purchase from the Company for investment, on the Closing Date referred
to below, the number of Common Shares set forth opposite Investor's signature
below. As consideration for the purchase of Common Shares, Investor shall pay to
the Company the sum of $7.50 multiplied by the number of Common Shares set forth
opposite Investor's signature below (the "Purchase Price"). The Common Shares
being purchased by Investor are referred to as the "Subscription Shares."
The time and date of such sale and purchase of Subscription Shares
shall be February 4, 1999 or such other time and date (the "Closing Date") as
the Company may fix on two business day's notice to Investor.
On or before the Closing Date, Investor shall deliver to Company or its
designated representatives, the Purchase Price by wire transfer of immediately
available funds. The closing shall take place at the Company's offices, 17800
Royalton Road, Strongsville, Ohio 44136. Within five days of the Closing Date or
as soon as practicable thereafter, the Company will deliver a certificate to
Investor for the Subscription Shares. The Company will bear all expenses in
connection with the preparation, issuance and delivery of the certificates
representing the Subscription Shares.
2. Representation and Warranty of the Company. The Company
represents and warrants to Investor as follows:
(a) Issuance of Shares. The Subscription Shares, when issued,
will be duly authorized, validly issued, fully paid and nonassessable and free
of preemptive rights pursuant to law, by contract, in the Company's Certificate
of Incorporation or otherwise.
(b) Same Terms. All Common Shares offered or sold in the Offering
will be offered and sold at the same price and otherwise on the same terms.
<PAGE> 2
(c) Authority. The Company has all requisite corporate power and
authority, without the consent of any other person, to execute and deliver this
Agreement and the agreements to be delivered by the Company, if any, on the
Closing Date and to carry out the transactions contemplated hereby and thereby.
All corporate acts or proceedings required to be taken by the Company to
authorize the execution, delivery and performance of this Agreement and all
transactions contemplated hereby have been or will be duly and properly taken.
(d) Validity. This Agreement has been, and the documents to be
delivered on the Closing Date by the Company, if any, will be, duly executed and
delivered and constitute lawful, valid and legally binding obligations of the
Company, enforceable in accordance with their respective terms, except as
enforcement may be limited by applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors' rights generally and by general
equitable principles. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
creation of any lien, charge or encumbrance of any kind or the acceleration of
any indebtedness or other obligation of the Company and are not prohibited by,
do not violate or conflict with any provision, and do not constitute a default
under or a breach of (i) the Company's Certificate of Incorporation, Bylaws, or
other governing documents, (ii) any note, bond, indenture, contract, agreement,
permit, license or other instrument to which the Company is a party or by which
the Company or any of its assets is bound, (iii) any order, writ, injunction,
decree or judgment of any court or governmental agency applicable to the
Company, or (iv) any law, rule or regulation applicable to the Company.
(e) Due Organization. The Company is a corporation duly
organized and validly existing under the laws of the State of Delaware, and has
full power and authority to carry on the business in which it is engaged.
(f) Brokers. The Company has not retained any broker or finder or
incurred any liability or obligation for any brokerage fees, commissions or
finders' fees with respect to this Agreement or the transactions contemplated
hereby.
(g) No Material Adverse Change. From December 31, 1998 until the
Closing Date, there shall not have occurred any Material Adverse Effect in
respect of the Company, Continental General, or any of their respective
subsidiaries. From the date of this Agreement until the Closing Date, there
shall not have occurred any material disruption of or material adverse change in
U.S. financial, banking or capital market conditions. For purposes of this
Agreement, "Material Adverse Effect" means any event, circumstance, condition,
fact, effect, or other matter that has had or could reasonably be expected to
have a material adverse effect on the business, assets, financial condition,
prospects, or results of operations of the Company, Continental General, and
their respective subsidiaries taken as a whole.
3. Representations and Warranties of Investor. Investor represents
and warrants to the Company as follows:
(a) Authority. If Investor is a natural person, Investor has all
requisite power and authority, without the consent of any other person, to
execute and deliver this Agreement and the agreements to be delivered by
Investor, if any, on the Closing Date and to carry out the transactions
contemplated hereby and thereby. If Investor is a corporation, limited liability
company, partnership or other entity, Investor has all requisite corporate,
limited liability company, partnership or other, as applicable, power and
authority, without the consent of any other person, to execute and deliver this
Agreement and the agreements to be delivered by Investor, if any, on the Closing
Date and to carry out the transactions contemplated hereby and
2
<PAGE> 3
thereby. All corporate, limited liability company, partnership, as applicable,
and other acts or proceedings required to be taken by Investor to authorize the
execution, delivery and performance of this Agreement and all transactions
contemplated hereby have been duly and properly taken.
(b) Validity. This Agreement has been, and the documents to be
delivered on the Closing Date by Investor, if any, will be, duly executed and
delivered and constitute lawful, valid and legally binding obligations of
Investor, enforceable in accordance with their respective terms, except as
enforcement may be limited by applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors' rights generally and by general
equitable principles. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
creation of any lien, charge or encumbrance of any kind or the acceleration of
any indebtedness or other obligation of Investor and are not prohibited by, do
not violate or conflict with any provision, and do not constitute a default
under or a breach of (i) Investor's certificate or articles of incorporation of
formation, bylaws, or other governing documents, (ii) any note, bond, indenture,
contract, agreement, permit, license or other instrument to which Investor is a
party or by which Investor or any of its assets is bound, (iii) any order, writ,
injunction, decree or judgment of any court or governmental agency applicable to
such Investor, or (iv) any law, rule or regulation applicable to Investor.
(c) Due Organization. Investor is a corporation, limited
liability company, partnership or other entity, as applicable, duly organized
and validly existing under the laws of its state of formation, and has full
power and authority to carry on the business in which it is engaged.
(d) Brokers. Investor has not retained any broker or finder or
incurred any liability or obligation for any brokerage fees, commissions or
finders' fees with respect to this Agreement or the transactions contemplated
hereby.
(e) Investment Representation.
(i) Investor understands that the Subscription Shares have
not been, and will not be, registered under the Securities Act of
1933, as amended (the "Securities Act"), as of the Closing Date
or under any state securities laws and are being offered and sold
in reliance upon federal and state exemptions for transactions
not involving any public offering.
(ii) Investor represents that:
(A) it is acquiring the Subscription Shares solely for
its own account for investment purposes and not with a view
to the distribution thereof within the meaning of the
Securities Act;
(B) it is a sophisticated investor with knowledge and
experience in business and financial matters;
(C) it has had access to all reports filed by the
Company during the current year and the year preceding the
current year pursuant to the Securities Exchange Act of
1934, as amended, and has had the opportunity to obtain
additional information, including the November 1998
Confidential Information Memorandum prepared by Chase
Manhattan Bank in connection with the debt
3
<PAGE> 4
financing to be obtained for the acquisition of Continental
General Corporation, a Nebraska corporation ("Continental
General"), an actuarial analysis of Continental General
dated November 2, 1998 prepared by Milliman & Robertson,
Inc. and an actuarial analysis of the insurance business of
the Company's subsidiary updated on September 28, 1998
prepared by Milliman & Robertson, Inc. in order to evaluate
the merits and risks inherent in holding the Subscription
Shares;
(D) it has not been offered the Subscription Shares by
any form of general advertising or general solicitation;
(E) it is able to bear the economic risk and lack of
liquidity inherent in holding the subscription Shares;
(F) it has been given the opportunity to ask questions
of, and to receive answers from, the Company, or a person or
persons acting on its behalf, concerning, the terms and
conditions of the Offering and the acquisition of
Continental General; and it has obtained all such
information deemed necessary or appropriate in order to
evaluate whether to purchase the Subscription Shares; and
(G) it is an "accredited investor" (as defined in the
Securities Act).
(iii) The certificate(s) representing the Subscription
Shares shall bear the following legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS, AND ANY TRANSFER HEREOF IS SUBJECT TO
COMPLIANCE WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS
AND REGULATIONS.
(g) Qualification and Conflicts. To the knowledge of Investor,
neither Investor nor any person holding any interest in Investor, directly or
indirectly, is disqualified from holding a direct or indirect interest in the
Company and its subsidiaries under the regulations of any state or other
governmental entity regulating the Company or any subsidiaries of the Company or
the business thereof nor is subject to any regulation, agreement or other
restriction that limits or precludes their ownership of an interest in the
Company or its subsidiaries or restricts their right to participate in the
management thereof.
4. Conditions to Purchase and Sale of Subscription Shares.
(a) Investor's obligation to purchase and pay for the
Subscription Shares shall be subject to the following conditions:
(i) The accuracy on the Closing Date of the representations
and warranties of the Company herein contained;
(ii) The Offering is fully subscribed and on the Closing
Date the Company has received payment in full for all Common
Shares;
4
<PAGE> 5
(iii) the proceeds of the Offering will be used for the
purchase of Continental General and fees and expenses related
thereto;
(iv) Each investor who is acquiring Common Shares in the
Offering who was not a party to each of the Stockholders
Agreement (as defined below), the Voting Agreement (as defined
below), and the Registration Rights Agreement (as defined below)
as of the date of such agreements, has executed and delivered to
the Company one or more agreements whereby such investor has
agreed to be bound by the terms of each such agreement; and
(v) Any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
will have expired without action by the Justice Department or the
Federal Trade Commission to prevent consummation of this
Agreement or the transactions contemplated hereby or any
applicable waiting period will have been terminated prior to
expiration.
(b) The Company's obligation to sell the Subscription Shares is
subject to the following conditions;
(i) the accuracy on the Closing Date of the representations
and warranties of Investor contained in this Agreement;
(ii) receipt by the Company of the Purchase Price;
(iii) receipt by the Company of a fairness opinion from
Advest, Inc. with respect to the fairness, from a financial point
of view, to the Company's stockholders of the consideration to be
received in the Offering; and
(iv) Any applicable waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, will have
expired without action by the Justice Department or the Federal
Trade Commission to prevent consummation of this Agreement or the
transactions contemplated hereby or any applicable waiting period
will have been terminated prior to expiration.
5. Additional Agreements. Investor and the Company acknowledge that
the Subscription Shares are bound by and subject to the Stockholders Agreement
by and among the Company and the security holders listed on the signatures pages
thereof, dated as of July 1, 1998 (the "Stockholders Agreement"), and the Voting
Agreement, dated as of July 1, 1998, by and among the Company and the security
holders listed on the signatures pages thereof (the "Voting Agreement").
Investor and the Company also acknowledge that the Subscription Shares are
"Registrable Shares" as that term is defined in the Registration Rights
Agreement, dated as of July 1, 1998, between the Company and the persons and
entities set forth on the signature pages attached thereto and as amended
through Amendment No. 1 to the Registration Rights Agreement attached hereto as
Exhibit A. The certificate(s) representing the Subscription Shares shall also
bear the following restrictive legends as set forth in Section 3.2 of the Voting
Agreement and Section 3.5 of the Stockholders Agreement:
THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE, SUBJECT
TO TRANSFER INSTRUCTIONS, VOTING LIMITATIONS, AND OTHER TERMS AND
CONDITIONS CONTAINED IN A VOTING AGREEMENT DATED JULY 1, 1998 BY
5
<PAGE> 6
AND AMONG THE COMPANY AND CERTAIN OF ITS STOCKHOLDERS, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
THIS SECURITY IS SUBJECT TO CERTAIN RIGHTS AND RESTRICTIONS SET
FORTH IN THE STOCKHOLDERS AGREEMENT DATED AS OF JULY 1, 1998. A
COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL
EXECUTIVE OFFICES.
6. Acceptance of Subscription. Investor acknowledges that
subscriptions will not necessarily be accepted in the order in which they are
received, and that the Company may reject any subscription in its sole
discretion. In the event that the Company rejects part but not all of the
Subscription Shares subscribed for herein, Investor acknowledges that it will be
obligated to purchase the balance of the Subscription Shares that are accepted.
7. Covenants and Representations to Survive Delivery; Assignment.
All covenants, agreements, representations and warranties made in this Agreement
and in the certificates delivered pursuant to this Agreement will survive the
delivery to Investor of the Subscription Shares and payment therefor and,
notwithstanding any investigation previously or in the future made by Investor
or on Investor's behalf, shall continue in full force and effect. Investor may
not assign any of its rights hereunder without the prior written consent of the
Company, which consent will not be unreasonably conditioned, delayed or
withheld. Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the heirs, successors and permitted
assigns of such party, and all covenants, promises and agreements in this
agreement by or on behalf of the Company, or by or on behalf of Investor, shall
bind and inure to the benefit of the heirs, successors and permitted assigns of
such party hereto.
8. Governing Law; Amendments. This Stock Subscription Agreement
shall be construed and enforced in accordance with the domestic substantive laws
of the State of Ohio without giving effect to any choice or conflict of laws
provision or rule that would cause the application of the domestic substantive
laws of any other state. This Stock Subscription Agreement cannot be changed
orally, and can be changed only by an instrument in writing signed by the party
against whom enforcement of such change is sought.
9. Execution in Counterparts. This Stock Subscription Agreement may
be executed by any one or more of the parties in any number of counterparts,
each of which will be deemed to be an original, but all such counterparts will
together constitute one and the same instrument.
6
<PAGE> 7
10. Variations in Pronouns. All pronouns and nouns and any variations
thereof refer to the masculine, feminine, neuter, singular or plural, as the
context may require.
If the terms and conditions of this Agreement are satisfactory to you,
please sign the form of acceptance on the enclosed counterpart and return it to
the Company, whereupon this letter shall become a binding agreement between you
and the Company.
Very truly yours,
CERES GROUP,INC.
/s/ VAL RAJIC
-----------------------------
By: Val Rajic
Its: Executive Vice President
The foregoing agreement is hereby accepted as of the date first above
written.
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
/s/ ROBERT A SPASS
Number of Subscription Shares: 949,818 ------------------------------
Purchase Price: $7,123,635 By: Robert A Spass
($7.50 x number of Subscription Shares) Its: President
7
<PAGE> 1
EXHIBIT 7.2
STOCK SUBSCRIPTION AGREEMENT
January 20, 1999
Insurance Partners Offshore (Bermuda), L.P. (the "Investor")
One Chase Manhattan Plaza
44th Floor
New York, New York 10005
Attn: Brad Cooper
Gentlemen:
Ceres Group, Inc., a Delaware corporation and successor-in-interest to
Central Reserve Life Corporation, an Ohio corporation (the "Company"), agrees
with Investor as follows:
1. Sale and Purchase of Subscription Shares. Pursuant to the Company's
private placement offering (the "Offering") of 2,000,000 shares of common stock,
par value $0.001 per share, of the Company (the "Common Shares"), and subject to
the terms and conditions set forth in this Agreement, the Company, agrees to
sell to Investor, and by its acceptance of the Agreement Investor agrees to
purchase from the Company for investment, on the Closing Date referred to below,
the number of Common Shares set forth opposite Investor's signature below. As
consideration for the purchase of Common Shares, Investor shall pay to the
Company the sum of $7.50 multiplied by the number of Common Shares set forth
opposite Investor's signature below (the "Purchase Price"). The Common Shares
being purchased by Investor are referred to as the "Subscription Shares."
The time and date of such sale and purchase of Subscription Shares
shall be February 4, 1999 or such other time and date (the "Closing Date") as
the Company may fix on two business day's notice to Investor.
On or before the Closing Date, Investor shall deliver to Company or its
designated representatives, the Purchase Price by wire transfer of immediately
available funds. The closing shall take place at the Company's offices, 17800
Royalton Road, Strongsville, Ohio 44136. Within five days of the Closing Date or
as soon as practicable thereafter, the Company will deliver a certificate to
Investor for the Subscription Shares. The Company will bear all expenses in
connection with the preparation, issuance and delivery of the certificates
representing the Subscription Shares.
2. Representation and Warranty of the Company. The Company represents
and warrants to Investor as follows:
(a) Issuance of Shares. The Subscription Shares, when issued, will
be duly authorized, validly issued, fully paid and nonassessable and free of
preemptive rights pursuant to law, by contract, in the Company's Certificate of
Incorporation or otherwise.
(b) Same Terms. All Common Shares offered or sold in the Offering
will be offered and sold at the same price and otherwise on the same terms.
<PAGE> 2
(c) Authority. The Company has all requisite corporate power
and authority, without the consent of any other person, to execute and deliver
this Agreement and the agreements to be delivered by the Company, if any, on the
Closing Date and to carry out the transactions contemplated hereby and thereby.
All corporate acts or proceedings required to be taken by the Company to
authorize the execution, delivery and performance of this Agreement and all
transactions contemplated hereby have been or will be duly and properly taken.
(d) Validity. This Agreement has been, and the documents to be
delivered on the Closing Date by the Company, if any, will be, duly executed and
delivered and constitute lawful, valid and legally binding obligations of the
Company, enforceable in accordance with their respective terms, except as
enforcement may be limited by applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors' rights generally and by general
equitable principles. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
creation of any lien, charge or encumbrance of any kind or the acceleration of
any indebtedness or other obligation of the Company and are not prohibited by,
do not violate or conflict with any provision, and do not constitute a default
under or a breach of (i) the Company's Certificate of Incorporation, Bylaws, or
other governing documents, (ii) any note, bond, indenture, contract, agreement,
permit, license or other instrument to which the Company is a party or by which
the Company or any of its assets is bound, (iii) any order, writ, injunction,
decree or judgment of any court or governmental agency applicable to the
Company, or (iv) any law, rule or regulation applicable to the Company.
(e) Due Organization. The Company is a corporation duly
organized and validly existing under the laws of the State of Delaware, and has
full power and authority to carry on the business in which it is engaged.
(f) Brokers. The Company has not retained any broker or
finder or incurred any liability or obligation for any brokerage fees,
commissions or finders' fees with respect to this Agreement or the transactions
contemplated hereby.
(g) No Material Adverse Change. From December 31, 1998 until
the Closing Date, there shall not have occurred any Material Adverse Effect in
respect of the Company, Continental General, or any of their respective
subsidiaries. From the date of this Agreement until the Closing Date, there
shall not have occurred any material disruption of or material adverse change in
U.S. financial, banking or capital market conditions. For purposes of this
Agreement, "Material Adverse Effect" means any event, circumstance, condition,
fact, effect, or other matter that has had or could reasonably be expected to
have a material adverse effect on the business, assets, financial condition,
prospects, or results of operations of the Company, Continental General, and
their respective subsidiaries taken as a whole.
3. Representations and Warranties of Investor. Investor represents and
warrants to the Company as follows:
(a) Authority. If Investor is a natural person, Investor has
all requisite power and authority, without the consent of any other person, to
execute and deliver this Agreement and the agreements to be delivered by
Investor, if any, on the Closing Date and to carry out the transactions
contemplated hereby and thereby. If Investor is a corporation, limited liability
company, partnership or other entity, Investor has all requisite corporate,
limited liability company, partnership or other, as applicable, power and
authority, without the consent of any other person, to execute and deliver this
Agreement and the agreements to be delivered by Investor, if any, on the Closing
Date and to carry out the transactions contemplated hereby and
2
<PAGE> 3
thereby. All corporate, limited liability company, partnership, as applicable,
and other acts or proceedings required to be taken by Investor to authorize the
execution, delivery and performance of this Agreement and all transactions
contemplated hereby have been duly and properly taken.
(b) Validity. This Agreement has been, and the documents to be
delivered on the Closing Date by Investor, if any, will be, duly executed and
delivered and constitute lawful, valid and legally binding obligations of
Investor, enforceable in accordance with their respective terms, except as
enforcement may be limited by applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors' rights generally and by general
equitable principles. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
creation of any lien, charge or encumbrance of any kind or the acceleration of
any indebtedness or other obligation of Investor and are not prohibited by, do
not violate or conflict with any provision, and do not constitute a default
under or a breach of (i) Investor's certificate or articles of incorporation or
formation, bylaws, or other governing documents, (ii) any note, bond, indenture,
contract, agreement, permits, license or other instrument to which Investor is a
party or by which Investor or any of its assets is bound, (iii) any order, writ,
injunction, decree or judgment of any court or governmental agency applicable to
such Investor, or (iv) any law, rule or regulation applicable to Investor.
(c) Due Organization. Investor is a corporation, limited
liability company, partnership or other entity, as applicable, duly organized
and validly existing under the laws of its state of formation, and has full
power and authority to carry on the business in which it is engaged.
(d) Brokers. Investor has nor retained any broker or finder or
incurred any liability or obligation for any brokerage fees, commissions or
finders' fees with respect to this Agreement or the transactions contemplated
hereby.
(e) Investment Representation.
(i) Investor understands that the Subscription Shares
have not been, and will not be, registered under the
Securities Act of 1933, as amended (the "Securities Act"), as
of the Closing Date or under any state securities laws and are
being offered and sold in reliance upon federal and state
exemptions for transactions not involving any public offering.
(ii) Investor represents that:
(A) it is acquiring the Subscription Shares
solely for its own account for investment purposes
and not with a view to the distribution thereof
within the meaning of the Securities Act;
(B) it is a sophisticated investor with
knowledge and experience in business and financial
matters;
(C) it has had access to all reports filed by
the Company during the current year and the year
preceding the current year pursuant to the Securities
Exchange Act of 1934, as amended, and has had the
opportunity to obtain additional information,
including the November 1998 Confidential Information
Memorandum prepared by Chase Manhattan Bank in
connection with the debt
3
<PAGE> 4
financing to be obtained for the acquisition of
Continental General Corporation, a Nebraska
corporation ("Continental General"), an actuarial
analysis of Continental General dated November 2,
1998 prepared by Milliman & Robertson, Inc. and an
actuarial analysis of the insurance business of the
Company's subsidiary updated on September 28, 1998
prepared by Milliman & Robertson, Inc. in order to
evaluate the merits and risks inherent in holding the
Subscription Shares;
(D) it has not been offered the Subscription
Shares by any form of general advertising or general
solicitation;
(E) it is able to bear the economic risk and
lack of liquidity inherent in holding the
Subscription Shares;
(F) it has been given the opportunity to ask
questions of, and to receive answers from, the
Company, or a person or persons acting on its behalf,
concerning the terms and conditions of the Offering
and the acquisition of Continental General; and it
has obtained all such information deemed necessary or
appropriate in order to evaluate whether to purchase
the Subscription Shares; and
(G) it is an "accredited investor" (as
defined in the Securities Act).
(iii) The certificate(s) representing the
Subscription Shares shall bear tile following legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS, AND ANY TRANSFER HEREOF
IS SUBJECT TO COMPLIANCE WITH ALL APPLICABLE FEDERAL AND STATE
SECURITIES LAWS AND REGULATIONS.
(g) Qualification and Conflicts. To the knowledge of Investor,
neither Investor nor any person holding any interest in Investor, directly or
indirectly, is disqualified from holding a direct or indirect interest in the
Company and its subsidiaries under the regulations of any state or other
governmental entity regulating the Company or any subsidiaries of the Company or
the business thereof nor is subject to any regulation, agreement or other
restriction that limits or precludes their ownership of an interest in the
Company or its subsidiaries or restricts their right to participate in the
management thereof.
4. Conditions to Purchase and Sale of Subscription Shares.
(a) Investor's obligation to purchase and pay for the
Subscription Shares shall be subject to the following conditions:
(i) The accuracy on the Closing Date of the representations
and warranties of the Company herein contained;
(ii) The Offering is fully subscribed and on the Closing
Date the Company has received payment in full for all Common
Shares;
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<PAGE> 5
(iii) The proceeds of the Offering will be used for
the purchase of Continental General and fees and expenses
related thereto;
(iv) Each investor who is acquiring Common Shares in
the Offering who was not a party to each of the Stockholders
Agreement (as defined below), the Voting Agreement (as
defined below), and the Registration Rights Agreement (as
defined below) as of the date of such agreements, has executed
and delivered to the Company one or more agreements whereby
such investor has agreed to be bound by the terms of each such
agreement; and
(v) Any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, will have expired without action by the Justice
Department or the Federal Trade Commission to prevent
consummation of this Agreement or the transactions
contemplated hereby or any applicable waiting period will have
been terminated prior to expiration.
(b) The Company's obligation to sell the Subscription Shares is
subject to the following conditions:
(i) the accuracy on the Closing Date of the
representations and warranties of Investor contained in this
Agreement;
(ii) receipt by the Company of the Purchase Price;
(iii) receipt by the Company of a fairness opinion
from Advest, Inc. with respect to the fairness, from a
financial point of view, to the Company's stockholders of the
consideration to be received in the Offering; and
(iv) Any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, will have expired without action by the Justice
Department or the Federal Trade Commission to prevent
consummation of this Agreement or the transactions
contemplated hereby or any applicable waiting period will have
been terminated prior to expiration.
5. Additional Agreements. Investor and the Company acknowledge that the
Subscription Shares are bound by and subject to the Stockholders Agreement by
and among the Company and the security holders listed on the signatures pages
thereof, dated as of July 1, 1998 (the "Stockholders Agreement"), and the Voting
Agreement, dated as of July 1, 1998, by and among the Company and the security
holders listed on the signatures pages thereof (the "Voting Agreement").
Investor and the Company also acknowledge that the Subscription Shares are
"Registrable Shares" as that term is defined in the Registration Rights
Agreement, dated as of July 1, 1998, between the Company and the persons and
entities set forth on the signature pages attached thereto and as amended
through Amendment No. 1 to the Registration Rights Agreement attached hereto as
Exhibit A. The certificate(s) representing the Subscription Shares shall also
bear the following restrictive legends as set forth in Section 3.2 of the Voting
Agreement and Section 3.5 of the Stockholders Agreement:
5
<PAGE> 6
THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE
SUBJECT TO TRANSFER INSTRUCTIONS, VOTING LIMITATIONS, AND
OTHER TERMS AND CONDITIONS CONTAINED IN A VOTING AGREEMENT
DATED JULY 1, 1998 BY AND AMONG THE COMPANY AND CERTAIN OF ITS
STOCKHOLDERS, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY.
THIS SECURITY IS SUBJECT TO CERTAIN RIGHTS AND RESTRICTIONS
SET FORTH IN THE STOCKHOLDERS AGREEMENT DATED AS OF JULY 1,
1998, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS
PRINCIPAL EXECUTIVE OFFICES.
6. Acceptance of Subscription. Investor acknowledges that subscriptions
will not necessarily be accepted in the order in which they are received, and
that the Company may reject any subscription in its sole discretion. In the
event that the Company rejects part but not all of the Subscription Shares
subscribed for herein, Investor acknowledges that it will be obligated to
purchase the balance of the Subscription Shares that are accepted.
7. Covenants and Representations to Survive Delivery; Assignment. All
covenants, agreements, representations and warranties made in this Agreement and
in the certificates delivered pursuant to this Agreement will survive the
delivery to Investor of the Subscription Shares and payment therefor and,
notwithstanding any investigation previously or in the future made by Investor
or on Investor's behalf, shall continue in full force and effect. Investor may
not assign any of its rights hereunder without the prior written consent of the
Company, which consent will not be unreasonably conditioned, delayed or
withheld. Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the heirs, successors and permitted
assigns of such party, and all covenants, promises and agreements in this
agreement by or on behalf of the Company, or by or on behalf of Investor, shall
bind and inure to the benefit of the heirs, successors and permitted assigns of
such party hereto.
8. Governing Law; Amendments. This Stock Subscription Agreement shall
be construed and enforced in accordance with the domestic substantive laws of
the State of Ohio without giving effect to any choice or conflict of laws
provision or rule that would cause the application of the domestic substantive
laws of any other state. This Stock Subscription Agreement cannot be changed
orally, and can be changed only by an instrument in writing signed by the party
against whom enforcement of such change is sought.
9. Execution in Counterparts. This Stock Subscription Agreement may be
executed by any one or more of the parties in any number of counterparts, each
of which will be deemed to be an original, but all such counterparts will
together constitute one and the same instrument.
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<PAGE> 7
10. Variations in Pronouns. All pronouns and nouns and any variations
thereof refer to the masculine, feminine, neuter, singular or plural, as the
context may require.
If the terms and conditions of this Agreement are satisfactory to you,
please sign the form of acceptance on the enclosed counterpart and return it to
the Company, whereupon this letter shall become a binding agreement between you
and the Company.
Very truly yours,
CERES GROUP, INC.
/s/ VAL RAJIC
------------------------------------
By: Val Rajic
Its: Executive Vice President
The foregoing agreement is hereby accepted as of the date first above
written.
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
/s/ ROBERT A. SPASS
Number of -------------------------------------
Subscription Shares: 280,182 By: Robert A. Spass
--------- Its: President
Purchase Price: $2,101,365
----------------
($7.50 x number of Subscription Shares)
7
<PAGE> 1
EXHIBIT 7.3
AMENDMENT NO. 1 TO
REGISTRATION RIGHTS AGREEMENT
This AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT is made and
entered into this __ day of February, 1999, by and between Ceres Group, Inc., a
Delaware corporation and successor-in-interest to Central Reserve Life
Corporation, an Ohio corporation (the "Company"), and the persons and entities
set forth on the signature page attached hereto.
WHEREAS, the Company and Insurance Partners, L.P., Insurance Partners
Offshore (Bermuda), L.P., Peter W. Nauert, Michael A. Cavataio, Mercantile Bank
of Northern Illinois, Trustee of the Conseco Stock Option Director Plan FBO
Michael Cavataio #08590033, Mercantile Bank of Northern Illinois, Trustee of the
Conseco Stock Option Director Plan FBO Michael Cavataio #08590034, Karon Hill,
Val Rajic, Turkey Vulture Fund XIII, Ltd., Marc C. Krantz, Krantz Family Limited
Partnership, Medical Mutual of Ohio, United Payors and United Providers, Inc.,
Howard R. Conant, Joseph Cusimano IRA, and LEG Partners SBIC, L.P. (collectively
the "Investors"), executed a Registration Rights Agreement, dated July 1, 1998
(the "Registration Rights Agreement") pursuant to which the Investors would have
certain registration rights relating to shares of the Company's common stock,
par value $0.001 per share (the "Common Shares"), owned by the Investors;
WHEREAS, the Company has offered 2,000,000 Common Shares (the "Offering
Shares") in a private placement offering of even date herewith (the "Offering");
WHEREAS, the Company desires to include the Offering Shares in the
Registration Rights Agreement and make the purchasers of the Offering Shares
subject to and bound by the Registration Rights Agreement;
WHEREAS, the purchasers of the Offering Shares have agreed to be bound
by and subject to, and have the Offering Shares be included in the definition of
"Registrable Shares" in, the Registration Rights Agreement; and
WHEREAS, the Company and the Investors listed on the signature page
attached hereto (together the "Parties") have agreed to modify the Registration
Rights Agreement upon the terms and conditions set forth herein:
NOW, THEREFORE, the Parties agree as follows:
1. The Investors listed on the signature page attached hereto, which
are holders of at least a majority of the Registerable Shares (as that term is
defined in the Registration Rights Agreement), hereby consent to this amendment
to the Registration Rights Agreement pursuant to Section 10.3 thereof.
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<PAGE> 2
2. The term "Investor" as defined in the Registration Rights
Agreement is modified to include the purchasers of Offering Shares that were not
"Investors" under the Registration Rights Agreement as of July 1, 1998.
3. The terms "Offering" and "Offering Shares" shall be added to
Section 1 of the Registration Rights Agreement and shall be as follows:
"Offering" means the offering by the Company of 2,000,000 Common Shares
in a private placement offering in connection with the acquisition of
Continental General Corporation, a Nebraska corporation.
"Offering Shares" means the 2,000,000 Common Shares offered by the
Company in the Offering.
4. The definition of "Registerable Shares" in Section 1 of the
Registration Rights Agreement is modified, in its entirety, as follows:
"Registrable "Shares" means at any time (i) any Common Shares then
outstanding which were issued pursuant to the Stock Purchase Agreement; (ii)
any Common Shares then outstanding which were issued pursuant to the Offering;
(iii) any Common Shares then outstanding and held by any Investor (including
the Common Shares issuable upon exercise of the Warrants (as defined in the
Stock Purchase Agreement)); (iv) any Common Shares then outstanding which were
issued as, or were issued directly or indirectly upon the conversion or
exercise of other securities issued as, a dividend or other distribution with
respect or in replacement of any shares referred to in (i), (ii) or (iii); and
(v) any Common Shares then issuable directly or indirectly upon the conversion
or exercise of other securities which were issued as a dividend or other
distribution with respect to or in replacement of any shares referred to in
(i), (ii) or (iii); provided, however that Registrable Shares shall not include
any shares which have been registered pursuant to the Securities Act or which
have been sold to the public pursuant to Rule 144 of the Commission under the
Securities Act. For purposes of this Agreement, a Person will be deemed to be a
holder of Registrable Securities whenever such Person has the then-existing
right to acquire such Registrable Shares, whether or not such acquisition
actually has been effected.
5. All questions concerning the construction, validity and
interpretation of this Amendment No. 1 to the Registration Rights Agreement, and
the performance of the obligations imposed by this Amendment No. 1, shall be
governed by the laws of the State of Ohio applicable to contracts made and
wholly performed in that state.
6. Except as specifically provided herein, all other terms of the
Registration Rights Agreement shall apply and shall remain unmodified and in
full force and effect.
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<PAGE> 3
IN WITNESS WHEREOF, the Parties hereby execute this Amendment No. 1 to
the Registration Rights Agreement as of the date set forth above.
CERES GROUP, INC.
/s/ VAL RAJIC
-------------------------------------
By: VAL RAJIC
Its: PRESIDENT
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<PAGE> 4
AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT
CONSENT OF HOLDERS OF A MAJORITY OF REGISTRABLE SHARES
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
/s/ ROBERT A. SPASS
-----------------------------------------
By: Robert A. Spass
Its: 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
/s/ ROBERT A. SPASS
-----------------------------------------
By: Robert A. Spass
Its: President
/s/ PETER W. NAUERT
-----------------------------------------------------
PETER W. NAUERT
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<PAGE> 5
SIGNATURE PAGE TO AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT
/s/ GLEN A. LAFFOON
-------------------------------------
GLEN A. LAFFOON
/s/ CHARLES E. MILLER, JR.
-------------------------------------
CHARLES E. MILLER, JR.
LUNN-CERES, LP
/s/ ROBERT J. LUNN
-------------------------------------
By: ROBERT J. LUNN
Its: MANAGING MEMBER
/s/ JOHN COCHRANE
-------------------------------------
JOHN COCHRANE
/s/ BRUCE HENRY
-------------------------------------
BRUCE HENRY
/s/ ANDREW A. BOEMI
-------------------------------------
ANDREW A. BOEMI
/s/ SALLY J. KROGH
-------------------------------------
SALLY J. KROGH
MICHAEL A. CAVATAIO IRA
By: Stifel, Nicolaus & Co., Inc., Custodian
/s/ CATHY FASSEL
-------------------------------------
By: CATHY FASSEL
Its: VICE PRESIDENT
KENNETH A. MANNINO IRA
By: Stifel, Nicolaus & Co., Inc., Custodian
/s/ CATHY FASSEL
-------------------------------------
By: CATHY FASSEL
Its: VICE PRESIDENT
5
