SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
Financial Institutions Insurance Group, Ltd.
(Name of Issuer)
Common Stock, par value $1.00 per share
(Title of Class of Securities)
317588-10-1
(CUSIP Number)
Scott E. Pickens, Esq.,
Schiff Hardin & Waite, 7200 Sears Tower, Chicago, Illinois, 60606,
Telephone (312) 876-1000
and
Andre Weiss, Esq.,
Schulte Roth & Zabel, 900 Third Ave, New York, New York, 10022
Telephone (212) 758-0404
(Name, address and telephone number of person
authorized to receive notices and communications)
January 4, 1996
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [X].
Check the following box if a fee is being paid with the statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such
class.) (See Rule 13d-7.)
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 the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for purposes 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).
PAGE 1 OF 34 PAGES
<PAGE>
CUSIP No. 317588-10-1
_____________________________________________________________________________
(1) NAME OF REPORTING PERSON: John A. Dore
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON: ###-##-####
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [ ]
(b) [X]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS**: PF, OO, SC, BK
_____________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): N/A [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION: United States
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER: 126,282
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER: 56,382
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER: 126,282
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER: 56,382
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON: 182,664
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11): 6.8%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **: IN
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
PAGE 2 OF 34 PAGES
<PAGE>
CUSIP No. 317588-10-1
_____________________________________________________________________________
(1) NAME OF REPORTING PERSON: Castle Harlan Partners II, L.P.
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON:
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [ ]
(b) [X]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS**: N/A
_____________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): N/A [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER: 0
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER: 0
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER: 0
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER: 0
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON: 0
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11): 0%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **: PN
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
PAGE 3 OF 34 PAGES
<PAGE>
CUSIP No. 317588-10-1
_____________________________________________________________________________
(1) NAME OF REPORTING PERSON: Castle Harlan, Inc.
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON:
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [ ]
(b) [X]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS**: N/A
_____________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): N/A [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER: 0
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER: 0
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER: 0
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER: 0
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON: 0
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11):0%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **: CO
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
PAGE 4 OF 34 PAGES
<PAGE>
CUSIP No. 317588-10-1
_____________________________________________________________________________
(1) NAME OF REPORTING PERSON: John K. Castle
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON:
_____________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
(a) [ ]
(b) [X]
_____________________________________________________________________________
(3) SEC USE ONLY
_____________________________________________________________________________
(4) SOURCE OF FUNDS**: N/A
_____________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e): N/A [ ]
_____________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION: United States
_____________________________________________________________________________
NUMBER OF (7) SOLE VOTING POWER: 0
SHARES ______________________________________________________________
BENEFICIALLY (8) SHARED VOTING POWER: 0
OWNED BY ______________________________________________________________
EACH (9) SOLE DISPOSITIVE POWER: 0
REPORTING ______________________________________________________________
PERSON WITH (10) SHARED DISPOSITIVE POWER: 0
_____________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON: 0
_____________________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ]
_____________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11): 0%
_____________________________________________________________________________
(14) TYPE OF REPORTING PERSON **: IN
_____________________________________________________________________________
** SEE INSTRUCTIONS BEFORE FILLING OUT!
PAGE 5 OF 34 PAGES
<PAGE>
Item 1. Security and Issuer.
This statement relates to the Common Stock, par value $ 1.00
per share (the "Common Stock"), issued by Financial Institutions Insurance
Group, Ltd. ("FIIG"), a Delaware corporation, whose principal executive
offices are located at 300 Delaware Avenue, Suite 1704, Wilmington,
Delaware 19801-1612.
Item 2. Identity and Background.
(a) This statement is filed by John Dore ("Dore"), with
respect to shares of Common Stock beneficially owned by him. This
statement is also filed by (i) Castle Harlan Partners II, L.P. ("CHP II"),
a Delaware limited partnership, (ii) Castle Harlan, Inc. ("CHI"), a
Delaware corporation, and (iii) John K. Castle ("Castle"), with respect to
shares of Common Stock beneficially owned by Dore. Dore, CHP II, CHI and
Castle are hereinafter referred to collectively as the "Reporting Persons".
The General Partner of CHP II is Castle Harlan Associates, L.P.
("CHALP"), a Delaware limited partnership. The General Partner of CHALP is
Castle Harlan Partners II GP, Inc. ("CHPI"), a Delaware corporation. The
executive officers of CHPI are (i) Castle - Chairman and Chief Executive
Officer and controlling stockholder, (ii) Leonard M. Harlan - President,
(iii) Howard Weiss - Treasurer, and (iv) David Pittaway - Secretary
(collectively, the "CHPI Officers").
CHI is the investment manager for CHP II and has the
discretion, without the need for additional approval, to direct CHP II's
investments. The executive officers of CHI are (i) Castle - Chairman and
controlling stockholder, (ii) Leonard M. Harlan - President, (iii) David
Pittaway - Managing Director, Vice President and Secretary, (iv) Howard
Weiss - Vice President, Treasurer and Chief Financial Officer, (v) David
Chow - Managing Director, and (vi) Jeffrey Siegal - Managing Director
(collectively, the "CHI Officers").
The Reporting Persons are making a joint filing pursuant to the
requirements of Rule 13d-1(f) promulgated under the Securities Exchange Act
of 1934, as amended (the "1934 Act"), because, by reason of their
relationship as described herein, they may be deemed to be a "group" and
"deemed to have acquired beneficial ownership" within the meaning of Rules
13d-3 and 13d-5 promulgated under the 1934 Act with respect to acquiring,
holding and disposing of shares of Common Stock.
(b) Dore's business address is c/o First Re Management
Company, Inc., 10 North Dearborn Street, 8th Floor, Chicago, Illinois,
60602-4202. The address of the principal business and offices of CHP II,
CHALP and CHPI is c/o Castle Harlan, Inc., 150 East 58th Street, 37th
Floor, New York, NY 10155. The address of the principal business and
offices of CHI is 150 East 58th Street, 37th Floor, New York, NY 10155.
The business address of the CHPI Officers and CHI Officers is c/o Castle
Harlan, Inc., 150 East 58th Street, 37th Floor, New York, NY 10155.
(c) Dore's present principal employment is as President and
Chief Executive Officer of FIIG and First Re Management Company, Inc. The
address of First Re Management Company is 10 North Dearborn Street, 8th
Floor, Chicago, Illinois, 60602-4202. The principal business of FIIG and
First Re Management Company, Inc. is the insurance business.
The principal business of CHP II is that of making investments.
The
Page 6 of 34 Pages
<PAGE>
principal business of CHALP is being the general partner of CHP II. The
principal business of CHPI is being the general partner of CHALP. The
principal business of CHI is to provide business and organizational
strategy, financial and investment management, and merchant and investment
banking services for various limited partnerships. The principal
employment of the CHPI Officers and CHI Officers is that of being executive
officers of CHPI and CHI, respectively.
(d) None of the Reporting Persons, nor to the best of their
knowledge, any of the other persons referred to in paragraph (a) above has,
during the last five years, been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors).
(e) None of the Reporting Persons, nor to the best of their
knowledge, any of the other persons referred to in paragraph (a) above has,
during the last five years, been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
(f) Each of the individuals referred to in paragraph (a)
above is a citizen of the United States.
Item 3. Source and Amount of Funds.
Of the 182,664 fn1 shares of Common Stock beneficially owned by
Dore, the source and amount of funds for the acquisition of such shares are
as follows:
(i) 90,966 shares were purchased from time to time in the
over-the-counter market during the period October 24, 1990 to January 23,
1995; and a total of $510,046 was paid as the purchase price for such
shares of which $155,000 was and is financed by use of margin accounts with
stock brokerage firms, borrowing on the standard terms for such margin
accounts with such firms, and the balance was paid from personal funds of
Dore.
(ii) 3,000 shares were acquired from FIIG as of January 1,
1992, 6,000 shares were acquired as of each January 1 thereafter to and
including January 1, 1995, and 3000 shares were acquired as of January 1,
1996, for a total of 24,000 shares, as part of Dore's compensation for his
employment services for FIIG and First Re Management Company, Inc.
(iii) Dore holds stock options presently exercisable, or
exercisable within 60 days hereafter, to acquire from FIIG 31,800 shares at
prices ranging from $3.75 per share to $11.06 per share, payable to FIIG
upon exercise of such options.
(iv) 36,000 shares were purchased from FIIG on January 2,
1991, upon commencement of Dore's present employment in accordance with the
terms of his employment contract with FIIG, for a price of $150,00, payable
on October 1, 1995, or within 60 days after earlier termination of
employment, if not sooner prepaid, with interest payable annually at a rate
equal to the average yield on five year United States Treasury obligations;
this indebtedness has been paid in full by Dore with borrowed funds
consisting of $100,000 which was financed through margin accounts with a
stock brokerage firm, borrowing on the standard terms for such margin
accounts with such firm, and $50,000 which was financed with the proceeds
of a mortgage loan on his home from Private Bank (Chicago, Illinois) on
standard terms from such lender.
__________
fn1 All share numbers are adjusted for stock splits and stock dividends
since date of acquisition.
Page 7 of 34 Pages
<PAGE>
Item 4. Purpose of Transaction.
The shares of Common Stock beneficially owned by Dore were
originally acquired by Dore in the ordinary course for investment purposes.
None of the members of the Group, except Dore, owns shares of the Common
Stock. The Group currently intends to acquire FIIG.
Dore has secured permission from FIIG to try to develop a
proposal to acquire FIIG, alone or with a party with which he will be
associated, subject to Dore's obligation to present any proposal for such
transaction to FIIG's Board of Directors, or an appropriate committee
thereof. To this end, CHI and Dore have entered a joint exclusivity
agreement (the "Joint Exclusivity Agreement") to make a joint proposal to
acquire 100% of the Common Stock of FIIG. A copy of the Joint Exclusivity
Agreement is filed as Exhibit 1 to this Schedule and is hereby incorporated
by reference into Item 4 in its entirety. On January 5, 1996, CHP II and
Dore sent a letter to the Board of Directors of FIIG requesting
consideration of a proposal for acquisition of FIIG by CHP II and Dore (the
"Proposal"). A copy of the Proposal is filed as Exhibit 2 to this Schedule
and is hereby incorporated by reference into Item 4 in its entirety.
Item 5. Interest in Securities of the Issuer.
(a) Dore owns beneficially a total of 182,664 shares of the
Common Stock (6.8% of the total shares deemed outstanding, based on figures
reported by FIIG as outstanding at September 30, 1995), consisting of the
following:
(i) 89,262 shares are presently owned by Dore individually;
(ii) 5,220 shares are presently beneficially owned by Dore as
custodian or trustee for his minor children;
(iii) 56,382 shares are owned by Dore's wife as to which Dore
may be deemed to be a beneficial owner, sharing voting and
dispositive powers with respect to such shares; and
(iv) 31,800 shares are not presently owned, but Dore has the
right to acquire such shares pursuant to presently exercisable
stock options granted to him by FIIG.
Dore has the sole power to vote (or to direct the vote) and to
dispose (or to direct the disposition) all of such shares (subject, in the
case of those shares subject to options not as yet exercised, to his
exercising such options and acquiring such shares), except such voting and
dispositive powers as to the 56,382 shares owned by his wife, Mrs. Nancy
Dore ("Mrs. Dore"), which is shared with Mrs. Dore. By reasons of the
provisions of Rule 13d-3 promulgated under the 1934 Act, Dore and Mrs. Dore
may be deemed as part of a "Group," however Dore disclaims participation in
a "Group" as so defined.
Dore has not had any transactions in the Common Stock during
the past 60 days, except the receipt of 3,000 shares as of January 1, 1996
as part of his compensation by FIIG.
(b) CHP II, CHALP, CHPI, CHI and the CHPI Officers and CHI
Officers do not own directly any shares of Common Stock. By reason of the
provisions of Rule 13d-3 and Rule 13d-5 promulgated under the 1934 Act,
they may be deemed as part of a "Group," however each of them disclaims
participation in a "Group" as so defined and beneficial ownership of any of
the 182,664 shares beneficially owned by Dore.
Page 8 of 34 Pages
<PAGE>
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer.
(a) Dore has entered into the Joint Exclusivity Agreement
with CHI, attached as Exhibit 1, which is hereby incorporated by reference
in its entirety in response to the requirements of Item 6.
(b) Dore and CHP II have made the Proposal to the FIIG Board
of Directors, attached as Exhibit 2, which is hereby incorporated by
reference in its entirety in response to the requirements of Item 6.
(c) Dore is a party to an employment agreement with FIIG
dated October 1, 1990 (the "Employment Agreement"), and has obtained
options to purchase common stock under a stock option agreement under the
Financial Institutions Insurance Fund, Incorporated's Stock Option Plan
(the "Stock Option Agreement"). The Employment Agreement and Stock Option
Agreement are filed as Exhibit 3 and Exhibit 4, respectively, to this
Schedule and are hereby incorporated by reference in their entirety in
response to the requirements of Item 6.
Item 7. Material to be Filed as Exhibits.
The following documents are exhibits filed herewith:
1. Letter, dated January 4, 1996, addressed to Mr. John A.
Dore from CHI, defined above as the Joint Exclusivity Agreement.
2. Letter, dated January 5, 1996, addressed to the Board of
Directors of FIIG from CHP II, defined above as the Proposal.
3. Employment Agreement dated October 1, 1990 between John
A. Dore and Financial Institutions Insurance Fund, Incorporated.
4. Form of Stock Option Agreement for stock options granted
to John A. Dore under Financial Institutions Insurance Fund, Incorporated's
Stock Option Plan.
5. There is filed as Exhibit 5 the Power of Attorney
appointing Jeffrey M. Siegal as attorney-in-fact for John K. Castle.
Page 9 of 34 Pages
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned certify that the information set
forth in this statement is true, complete and correct.
Dated: January 12, 1996
/s/ John A. Dore
JOHN A. DORE
CASTLE HARLAN PARTNERS II, L.P.
By: CASTLE HARLAN, INC., its Investment
Manager
By: /s/ Jeffrey M. Siegal
Jeffrey M. Siegal, Managing Director
CASTLE HARLAN, INC.
By: /s/ Jeffrey M. Siegal
Jeffrey M. Siegal, Managing Director
/s/ John K. Castle
JOHN K. CASTLE
Page 10 of 34 Pages
<PAGE>
EXHIBIT INDEX
Description of Location of
Exhibit Number Document Exhibit
1 Letter dated Page 13 of 34
January 4, 1996
addressed to
John A. Dore
from CHI, defined
as the Joint
Exclusivity Agreement
2 Letter dated Page 16 of 34
January 5, 1996
addressed to the
Board of Directors
of FIIG from CHP II,
defined as the Proposal
3 Employment Agreement Page 18 of 34
dated October 1, 1990
between John A. Dore
and Financial
Institutions Insurance
Fund, Incorporated
4 Form of Stock Option Page 31 of 34
Agreement for Stock
Options granted to
John A. Dore under
Financial Institutions
Insurance Fund, Incorporated's
Stock Option Plan.
5 Power of Attorney Page 34 of 34
appointing Jeffrey M. Siegal
as attorney-in-fact
and agent for
John K. Castle
Page 11 of 34 Pages
<PAGE>
JOINT ACQUISITION STATEMENT
PURSUANT TO RULE 13d-1(f)(1)
The undersigned acknowledge and agree that the foregoing statement
on Schedule 13D is filed on behalf of each of the undersigned and that all
subsequent amendments to this statement on Schedule 13D shall be filed on
behalf of each of the undersigned without the necessity of filing additional
joint acquisition statements. The undersigned acknowledge that each shall be
responsible for the timely filing of such amendments, and for the completeness
and accuracy of the information concerning it contained therein, but shall not
be responsible for the completeness and accuracy of the information concerning
the others, except to the extent that it knows or has reason to believe that
such information is inaccurate.
Dated: January 12, 1996
/s/ John A.Dore
JOHN A. DORE
CASTLE HARLAN PARTNERS II, L.P.
By: CASTLE HARLAN, INC., its Investment
Manager
By: /s/ Jeffrey M. Siegal
Jeffrey M. Siegal, Managing Director
CASTLE HARLAN, INC.
By: /s/ Jeffrey M. Siegal
Jeffrey M. Siegal, Managing Director
/s/ John K. Castle
JOHN K. CASTLE
Page 12 of 34 Pages
<PAGE>
EXHIBIT 1
January 4, 1996
Mr. John Dore
c/o First Re Management Company, Inc.
10 North Dearborn Street
8th Floor
Chicago, IL 60602-4202
Dear Mr. Dore:
This letter sets forth the mutual understanding between you and
Castle Harlan, Inc. ("CHI") regarding our agreement to make a joint proposal to
acquire, through an entity to be jointly formed by us, Financial Institutions
Insurance Group, Ltd. ("FIIG"). We understand that if FIIG were acquired, CHI's
fund, Castle Harlan Partners II, L.P. ("CHP II"), would join with you as the
primary equity provider in financing this acquisition.
Terms of Joint Arrangement. As part of our joint efforts, you and
we agree to share all material information concerning the business and affairs
of FIIG which is, or comes to be, in the possession of either of us, except
information obtained by you as an officer or director of FIIG for which you do
not have this permission of that company to share such information. In addition
we will jointly develop and implement a program of due diligence as well as all
other significant matters that would be attendant to pursuing and financing an
acquisition of FIIG and operating FIIG thereafter.
As we discussed, it will be necessary to retain legal and financial
advisors. We reserve the right, in consultation with you, to retain such
advisors. If the transaction is completed then you and we will be reimbursed
for these expenses and your separate expenses by the new company. If no
proposal is made or if the transaction is not completed then you will be
responsible for your legal fees and disbursements, and we will be responsible
for our legal fees and disbursements as well as any financial or accounting
advisors that are retained.
Exclusivity. You, as an individual, and we agree that neither you,
as an individual, nor we will commit to, solicit, encourage, or propose to any
other institution or party the purchase of FIIG or any of its parts or assets
without the consent of the other signatory to this letter. Furthermore, other
than performing your obligations under your current employment agreement, you
will not solicit, negotiate or enter into any agreement with i) FIIG or any
affiliate of FIIG or ii) any such other institution or party to be employed by
FIIG, or any such other institution or party, in the event of the purchase of
FIIG by such other institution or party. You understand that the arrangement
covered in this letter is exclusive to CHI. The acquisition by another party of
FIIG or the cessation of efforts to sell FIIG shall not terminate the
exclusivity arrangement. This exclusivity provision can only be terminated
or modified with the mutual consent of both parties hereto.
Terms of the Proposal. The proposal to be submitted will be in a
mutually agreeable form and will cover 100% of the stock of FIIG other than $1
million of stock owned by you, valued at the acquisition price. Any such
proposal
Page 13 of 34 Pages
<PAGE>
would not be subject to financing but would be subject to completion of a review
confirming the accuracy and completeness of FIIG public reports. It is
recognized that you have a grant of permission by the Executive Committee of the
Board of Directors of FIIG upon which you are relying in entering into this
agreement. It is agreed that our joint proposal will be handled in accordance
with the requirements of that grant of permission. Further, it is recognized
that such grant of permission, if withdrawn at any time, may require termination
of your actively collaborating with CHI on the acquisition and such termination
of active collaboration will not constitute a breach of this agreement. Such
termination would not affect your exclusivity obligations or our obligations
hereunder. Nothing contained herein is intended to or shall have the effect of
constituting a breach of your obligations under your existing employment
agreement with FIIG.
Future FIIG Employment. It is contemplated that you would serve as
Chief Executive Officer and be elected as a director of the acquiring company
and all of its subsidiaries (including FIIG) unless, with respect to any such
subsidiary (other than FIIG), good reason exists for someone else to serve in
such capacity. We would expect to have the acquiring company enter into a three
year employment contract with you on that basis providing for, among other
things, a salary of $300,000 per annum. Such employment arrangement would
not require you to relocate from the Chicago area. We would also cause the
acquiring company to adopt an incentive based bonus plan directed to all
members of senior management. It is also contemplated that employment
contracts would be offered to selected senior management of FIIG as you may
specify.
Your employment arrangement would provide for the acquiring company to
pay a lump sum severance payment to you equal to twice your annual base salary
at the time of termination in the event the company terminates your employment
prior to the end of the contract term for any reason other than death,
disability or cause. In the event of termination upon death, your salary
would continue to be paid for the period ending on the last day of the month
in which such death occurs. In the event of termination upon disability or
for cause, you would be entitled to receive your base salary for the period
ending on the date such termination occurred.
Investment Opportunity. We understand that you are prepared to
invest in the new company by rolling-over the stock owned by you and not covered
by the purchase of FIIG, as discussed above. In addition, you and key employees
will also have the right to invest additional amounts at the time of closing.
Such investments will be made at the acquisition price and the acquiring company
would provide loans to such key employees for such investment up to an aggregate
amount of $500,000.
CHI Arrangement. We agree that CHI will not receive any front end
fee in connection with the acquisition or financing but may receive a fee in
exchange for providing investment banking and advisory services in the future.
You also agree that CHI may charge an annual management fee to the new company
commensurate with CHI's customary practice.
If the foregoing is acceptable to you, please execute a copy of the
letter enclosed herewith and return it to us.
We look forward to working with you.
Page 14 of 34 Pages
<PAGE>
Very truly yours,
CASTLE HARLAN, INC.
By: /s/Jeffrey M. Siegal
Jeffrey M. Siegal
Managing Director
AGREED AND ACCEPTED as of the
date first above written:
By: /s/John A. Dore
Page 15 of 34 Pages
<PAGE>
EXHIBIT 2
January 5, 1996
Financial Institutions Insurance
Group, Ltd.
300 Delaware Avenue
Suite 1704
Wilmington, Delaware 19801-1612
Attention: Board of Directors
Re:<PAGE>
Financial Institutions Insurance Group, Ltd.
Gentlemen:
We are pleased to submit to you this proposal by Castle Harlan Partners
II, L.P. ("CHP II") and John A. Dore to acquire, through a new corporation to be
organized and owned by them, Financial Institutions Insurance Group, Ltd.
("FIIG"), at a price of $18 per share of outstanding FIIG Common Stock (the
"Per Share Purchase Price") on a pre-split basis ($15 per share post the
announced split and dividend). We would also pay, with respect to each
outstanding option to purchase FIIG Common Stock, the excess of the Per Share
Purchase Price over the exercise price of such option. CHP II and Mr. Dore
have entered into an exclusive agreement pursuant to which CHP II and Mr.
Dore have agreed to jointly form a new company to pursue the acquisition of
FIIG.
This proposal is subject to negotiation and finalization of a
definitive purchase agreement. CHP II is a $250 million private equity
investment limited partnership. Castle Harlan, Inc., as investment manager
for CHP II, has the discretion, without the need for additional approval, to
direct CHP II's investments. Accordingly, the definitive purchase agreement
would not be conditioned upon financing. Consummation of such acquisition
would only be subject to receipt of any regulatory approvals and other
customary conditions to closing for a transaction of this type. The
definitive purchase agreement will contain such other terms as are customary
for a transaction of this type and as the parties may agree.
Following execution of the enclosed counterpart of this letter by
FIIG, FIIG agrees that it shall not, directly or indirectly, solicit any
acquisition proposal or, cooperate with, furnish or cause to be furnished any
information concerning the business, financial condition, properties or assets
of FIIG to, or enter into any discussion, negotiation, agreement or
understanding concerning any acquisition proposal with, any person making any
acquisition proposal, except that FIIG shall be permitted to consider and
negotiate any unsolicited acquisition proposal and enter into an acquisition
agreement with a third party if the Board of Directors of FIIG determines in
good faith, based upon a written opinion of outside counsel, that its
fiduciary duties require it to do so. The provisions of this paragraph
shall expire at 5:00 p.m. New York City time on March 15, 1996, unless a
definitive purchase agreement is executed and delivered on or before that
date, or such later date as the parties may agree. As
Page 16 of 34 Pages
<PAGE>
used in this paragraph, "acquisition proposal" shall mean any proposal, offer or
indication of interest for a merger or other business combination or joint
venture involving FIIG or for the acquisition of a substantial portion of the
assets or the stock of FIIG.
We request access to FIIG's books and records and personnel in order to
commence as soon as practicable a confirmatory review of FIIG to confirm that
all public information concerning FIIG is correct in all material respects and
that there are no material omissions in such information. CHP II is prepared
to move expeditiously and begin immediately its review of FIIG and the
process of negotiating a definitive purchase agreement.
If the foregoing is acceptable to you, please sign the attached
enclosed counterpart of this letter in the space provided and return the
counterpart to CHP II no later than 5:00 p.m. New York City time, January 31,
1996.
Very truly yours,
Castle Harlan Partners II, L.P.
By: Castle Harlan, Inc., as
Investment Manager
By: /s/ Jeffrey M. Siegal
Jeffrey M. Siegal,
Managing Director
/s/ John A. Dore
John A. Dore
ACCEPTED AS OF
____________ __, 199_:
FINANCIAL INSTITUTIONS INSURANCE
GROUP, LTD.
By:__________________________________
Title:
Page 17 of 34 Pages
<PAGE>
EXHIBIT 3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), made and entered into
this 1st day of October, 1990 by and between Financial Institutions Insurance
Fund, Incorporated, an Illinois corporation ("FIIF"), and Mr. John A. Dore (the
"Executive").
WITNESSETH:
WHEREAS, the Executive has extensive and intensive experience in the
management of insurance companies;
WHEREAS, FIIF desires to employ the Executive as a key senior
executive officer, anticipating that the Executive will contribute materially to
the management and policies of FIIF and thus to its continued success;
WHEREAS, the Executive desires to be employed by FIIF in a senior
management capacity, anticipating that he so will contribute to FIIF's
management, policies, and success;
WHEREAS, the Executive is accepting employment with FIIF on the
expectation that Financial Institutions Insurance Group, Ltd. ("FIIG") will
continue as an independent company, all because of the success of FIIG as an
independent company and because of the opportunities that will be afforded the
Executive in the future if FIIG continues to be successful as an independent
company;
WHEREAS, as a condition to his accepting employment the Executive
desires the opportunity to participate on an equity basis in FIIF's future
success through stock ownership of, stock grants of, and stock options for
shares of FIIG common stock, equity participation that can be assured only so
long as FIIG remains an independent company; and
WHEREAS, FIIF desires to employ the Executive in a manner that
accommodates the desires and expectations set forth above, but can make no
commitment to that effect because of the possibility that FIIG may be acquired
and then compelled to discontinue some or all of the equity benefits and
opportunities afforded the Executive by FIIG as an independent company.
NOW THEREFORE, in consideration of the premises and of the mutual
promises herein set forth, the parties hereto agree as follows:
1. Employment.
1.1 Term. FIIF agrees to employ the Executive and the
Executive agrees to be employed by FIIF pursuant to the provisions and
conditions set forth herein for a period commencing on the date of this
Agreement and continuing from month to month thereafter, subject to termination
on the last day of any month (a "Termination Date") by either FIIF or the
Executive giving written notice of termination to the other at least 60 days
prior to a Termination Date.
1.2 Duties. The Executive agrees faithfully and to the best
of his ability to contribute to the management and operations of FIIF's
corporate
Page 18 of 34 Pages
<PAGE>
group (the "Group") by performing the duties reasonably ordered from time to
time by the Group's respective boards of directors consistent with the offices
described below. The Executive's duties so will include his serving in the
following positions, and the Group agrees to support his continuing election to
such positions:
- President and Chief Executive Officer of FIIF.
- President and Chief Executive Officer of FIIG.
- President and Chief Executive Officer of F/I Insurance
Agency, Incorporated ("F/I Agency").
- A member of the board of directors of FIIF.
- A member of the board of directors of F/I Agency.
- A member of the board of directors of FIIG, subject to
his election from time to time by the stockholders of
FIIG. The Executive will be included among the persons
nominated front time to time by the board of directors
of FIIG.
- A member of the Executive and Investment Committees of
FIIF.
- A member of the Executive and Investment Committees of
FIIG.
- A member of the Executive Committee of F/I Agency.
The Executive further agrees to devote his full time during normal working hours
to the duties so described. Material changes in the duties of the Executive
will not be ordered by the Group's respective boards of directors unless the
Executive consents to the changes.
1.3 Exclusivity. In order to assure the impartial attention
of the Executive to the duties and responsibilities set forth in this Agreement,
so long as employed by FIIF pursuant to the Agreement the Executive will not
serve on the board of directors or as an officer of any savings institution,
savings institution subsidiary, savings institution holding company, or any
affiliated or related financial service-type organization (including an
insurance company) without the specific approval of the board of directors of
FIIF; will notify the board of directors of FIIF of his service as an officer
or director of any other corporation; and will not engage in any outside
business or activity contrary to the business, activities, or best interests
of the Group.
2. Compensation.
2.1 Base Salary. As compensation for the services to be
performed by the Executive, FIIF agrees to pay to the Executive a base salary at
the rate of $175,000 per year for each year of his employment hereunder, payable
in substantially equal semi-monthly installments and reduced pro rata for any
fraction of a year during which he is not so employed. It is understood that
the Executive's base salary may be increased in conjunction with annual reviews
of executive compensation or otherwise, provided that the Executive will have no
Page 19 of 34 Pages
<PAGE>
right to increases in compensation hereunder except that his base salary will
not be reduced below any level to which it so may be increased. Changes in the
Consumer Price Index, U.S. City Average for All Items/All Urban Consumers during
the preceding 12 months will be considered but need not be given effect in each
annual review. The initial annual review will determine the increase, if any, in
the Executive's base salary commencing January 1, 1992. The annual reviews will
be conducted by an executive compensation committee of the board of directors of
FIIF, or in the absence of an executive compensation committee by a committee
consisting of the chairman and vice chairman of the board of directors of
FIIF and of a third member of the board of directors of FIIF selected by the
chairman and vice chairman (in each instance, the "Executive Compensation
Committee").
2.2 Incentive Compensation. Effective December 31 of each
year commencing December 31, 1991, the Executive Compensation Committee will
determine the amount of incentive compensation to be paid the Executive in
respect to his services on behalf of the Group during the 12 months then ending.
The incentive compensation will be paid as soon as practical after the end of
each 12 month period. In determining or developing a plan for the incentive
compensation, the Executive Compensation Committee will take into account
whatever performance criteria it deems to be relevant and will consider
bonus and incentive compensation arrangements generally applicable to
similarly situated reinsurance and special risk insurance companies.
2.3 Section 401(k) Plan. The Executive has participated in
the 401(k) Plan sponsored by his former employer. To the extent reasonable
under the circumstances, FIIF will assist the Executive in preserving the tax
deferrals available to the Executive thereunder. In addition, it is anticipated
that the Executive will forfeit his non-vested interest in the 401(k) Plan by
reason of his change of employment to FIIF. FIIF will pay the Executive up
to a maximum of $23,000 forthwith to reimburse him on an after tax basis for
losses under the 401(k) Plan arising out of his change of employment.
2.4 Shares of FIIG Common Stock. The following number of
shares of FIIG common stock will be issued to the Executive at the dates
indicated as additional compensation for his services hereunder:
Date of Issuance Number of Shares
January 1, 1992 1,250
January 1, 1993 2,500
January 1, 1994 2,500
January 1, 1995 2,500
January 1, 1996 1,250
Provided, however, that any of the 10,000 shares then unissued will be issued to
the Executive forthwith in the event of Structural Change. The Executive's
employment hereunder on the December 31 immediately preceding a date of issuance
is a condition to the issuance of shares of FIIG common stock to the Executive
on that date of issuance, unless express provision to the contrary is included
in this Agreement.
2.5 Employee Benefits. The Executive will be eligible to
participate in employee benefit programs of FIIF (the "Benefit Programs") to the
same extent as other senior executive officers of the Group. It is anticipated
Page 20 of 34 Pages
<PAGE>
that the Benefit Programs will include but not be limited to the following:
- Short-term and long-term disability insurance.
- Four weeks paid vacation each calendar year commencing
1991.
- Medical payments insurance.
- Term life insurance.
- Pension plan participation.
3. Business Expenses. FIIF will provide for the payment of or
reimburse the Executive for travel, entertainment, and other out-of-pocket
expenses reasonably incurred by the Executive as a result of his employment
hereunder. FIIF also will pay the Executive $450 per month as an automobile
allowance and will reimburse the Executive for his membership dues in the Union
League Club of Chicago, Illinois and in the Indian Hill Club of Winnetka,
Illinois, or in reasonable substitutions therefor, provided that the aggregate
amount so payable as an automobile allowance and as membership dues will not
exceed $10,000 in any calendar year.
4. Purchase of shares of FIIG Common Stock. The Executive will
purchase forthwith from FIIG 15,000 shares of FIIG common stock at a purchase
price of $10.00 per share. The entire $150,000 purchase price will be funded
through a loan from FIIF to the Executive, all on the following terms and
conditions;
-The $150,000 principal amount will be due and payable at the
end of five years following the date hereof, at the end of 60 days
following voluntary termination of his employment hereunder by the
Executive other than (i) for Material Breach or (ii) within the six
months immediately following Structural Change, or upon the
repurchase of shares of FIIG common stock described at Section 8,
whichever occurs first. The Executive will have the right to
prepay all or any part of the $150,000 principal amount at any time
without penalty.
-The principal amount from time to time outstanding will bear
interest at a rate equal to the average yield on five year United
States Treasury obligations during the period for which the
interest is computed.
-Interest will be due and payable annually in arrears no
later than 60 days after December 31. The initial payment of
interest thus will be due and payable no later than March 1, 1991.
5. Stock Options. The Executive will have options to purchase
10,000 shares of FIIG common stock in accordance with the terms and provisions
of the FIIG Stock Option Plan. The options may be exercised in whole or in
part, provided that no option may be exercised for fewer than 625 shares. The
exercise price for the Executive's stock options will be $10.00 per share. The
options are granted on the date hereof and are exercisable as follows:
Page 21 of 34 Pages
<PAGE>
-For 1,250 shares between January 1, 1992 and December 31,
1996.
-For an additional 2,500 shares between January 1, 1993 and
December 31, 1997.
-For an additional 2,500 shares between January 1, 1994 and
December 31, 1998.
-For an additional 2,500 shares between January 1, 1995 and
December 31, 1999.
-For an additional 1,250 shares between January 1, 1996 and
December 31, 2000.
Provided, however, that any options for the 10,000 shares not yet exercisable
will become exercisable immediately in the event of Structural Change. In the
event of the Executive's death or permanent disability while employed
hereunder but before the date of expiration of an option, the option will
terminate on the earlier of the date of expiration or 120 days following the
date of the Executive's death or commencement of his permanent disability.
After the Executive's death or permanent disability, the Executive or his
executor, administrator, or any person to whom his option may be transferred
by will or by the laws of descent and distribution will have the right at any
time prior to termination to exercise the option, in whole or in part.
6. Restricted Securities. The Executive acknowledges that the
shares at FIIG common stock and options for the shares (together the
"Securities") described at Sections 2.4, 4, and 5 are restricted securities that
have not been registered under the Securities Act of 1933 or under the
securities laws of any state.
6.1 Investment Representations. The Executive represents to
FIIG and the Group that the Securities he is acquiring are being acquired for
his own account, for investment, and not with a view to resale and that the
Executive will not transfer the Securities except pursuant to a registration
statement in effect under the Securities Act of 1933 or pursuant to an
exemption from registration thereunder.
6.2 Transfer Legend. FIIG will cause all certificates
representing the Securities to include the following legend or any other legend
that is necessary or advisable to assure compliance with the Securities Act of
1933:
The shares of stock represented by this
certificate have not been registered under the Securities Act
of 1933 or under the securities laws of any state and may not
be sold or transferred except upon such registration or upon
receipt by the Company of an opinion of counsel in form and
substance satisfactory to the Company that registration is
not required for the sale or transfer.
6.3 Registration. FIIG may register but will not be
Page 22 of 34 Pages
<PAGE>
obligated to register any of the Securities pursuant to the Securities Act of
1933, except that FIIG at the Executive's request will include the Securities in
any future registration of shares of its common stock to the extent reasonable
under the circumstances. In the event any of the Securities so are registered,
FIIG will waive the requirements for investment representations and transfer
legends at Sections 6.1 and 6.2.
6.4 Compliance. FIIG will make reasonable efforts under the
circumstances to cause its issuance of the Securities to comply with all
provisions of applicable laws and regulations of governmental authorities,
including but not limited to the Securities and Exchange Commission.
7. Section 16. The Executive undertakes to make any filings
required under Section 16(a) of the Exchange Act and the regulations thereunder
to report his ownership of the Securities. The Executive acknowledges that any
profit realized by him from the purchase and sale of equity securities of FIIG
within any period of less than six months may inure to and be recoverable by
FIIG pursuant to Section 16(b) of the Exchange Act unless an exemption is
available, whether pursuant to Rule 16b-3 of the Exchange Act Regulations or
otherwise.
8. Stock Repurchases.
8.1 Initiated by FIIG. In the event during the three years
following the date of this Agreement the Executive voluntarily terminates his
employment hereunder other than for Material Breach or other than within the six
months immediately following Structural Change or FIIF terminates the
Executive's employment hereunder for Cause, FIIG will have the right but not an
obligation for 30 days following the date of termination to repurchase
forthwith for cash at $10.00 per share all shares of FIIG common stock
issued to the Executive pursuant to Sections 2.4, 4, and 5 which are owned by
the Executive at the time of purchase. Provided, however, that the Executive
will have the right to defer any repurchase hereunder by FIIG for up to seven
months following the date of termination of the Executive's employment.
8.2 Initiated by the Executive. In the event the Executive
terminates his employment hereunder for Material Breach or within the six months
immediately following Structural Change, or in the event FIIF terminates the
Executive's employment hereunder other than for Cause, the Executive for seven
months following the date of termination of his employment will have the right
but not an obligation to require FIIG to repurchase forthwith for cash at $10.00
per share all shares of FIIG common stock issued to the Executive pursuant to
Sections 2.4, 4, and 5 which are owned by the Executive at the time of purchase.
In the event of the Executive's death or permanent disability while employed
hereunder, for seven months following the Executive's death or the
commencement of his permanent disability the Executive or his personal
representative likewise will have the right but not an obligation to require
FIIG to repurchase forthwith for cash at $10.00 per share all shares of FIIG
common stock issued to the Executive pursuant to Sections 2.4, 4, and 5.
9. Capital Adjustments. In the event of a capital adjustment
resulting from a stock dividend, stock split, reorganization, merger,
consolidation, or a combination or exchange of shares, the number of Securities
and the price for the Securities will be adjusted equitably in a manner
consistent with the capital adjustment.
Page 23 of 34 Pages
<PAGE>
10. Termination of Employment.
10.1 Definitions. As used at this Section 10 and throughout
this Agreement, the following terms have the meanings indicated:
-"Exchange Act" means the Securities Exchange Act of
1934, as from time to time amended.
-"Cause" means (i) any act of fraud, misappropriation,
embezzlement, or like act of dishonesty, (ii) conviction of a
felony, or (iii) material failure to perform the services and
duties described herein, material violation of any other
provisions set forth herein, or material breach of any
fiduciary duty to FIIF or any other member of the Group, if
the material failure, violation, or breach continues
following 60 days detailed written notice thereof to the
Executive by the board of directors of FIIG
-"Material Breach" means material violation by FIIF or
any other member of the Group of any of the provisions and
conditions set forth herein if such violation continues
following 60 days detailed written notice thereof to the
board of directors of FIIF by the Executive. Material
Breach includes but is not limited to material changes in
the Executive's duties that are inconsistent with the
provisions at Section 1.2, material reductions in the
Executive's authority and responsibility as the President
and Chief Executive Officer of FIIG, FIIF, and F/I Agency,
and relocations of the Executive that are inconsistent
with the provisions at Section 11.
-"Change-In-Control" means the occurrence of both of
the following events:
Any individual,
corporation, partnership, or other person or entity,
together with his or its "Affiliates" and "Associates"
(as defined on the date hereof at Rule 12b-2 under the
Exchange Act), becomes the "Beneficial Owner" (as
defined on the date hereof at Rule 13d-3 under the
Exchange Act) in the aggregate of 37-1/2 percent or
more of the outstanding shares of the common stock of
FIIG, and
At the time of any
specific action or series of actions by which the
37-1/2 percent position in FIIG common stock is
acquired, the board of directors by majority vote
does not approve or recommend acceptance by the
FIIG stockholders of the specific action or series
of actions. Resolutions duly adopted by the FIIG board
of directors will be deemed to evidence such action by
the board of directors.
-"Structural Change" means the occurrence of any of
the following events:
Page 24 of 34 Pages
<PAGE>
Any individual,
corporation, partnership, or other person or entity,
together with his or its "Affiliates" and "Associates"
(as defined on the date hereof at Rule 12b-2 under the
Exchange Act), becomes the "Beneficial Owner" (as
defined on the date hereof at Rule 13d-3 under the
Exchange Act) in the aggregate of 37-1/2 percent or
more of the outstanding shares of the common stock of
FIIG;
The stockholders of FIIG
approve a plan of complete liquidation of FIIG, approve
an agreement for the sale or disposition by FIIG of all
or substantially all of FIIG's assets, or approve a
merger or consolidation of FIIG with any other
corporation, other than a merger or consolidation that
results in the voting securities of FIIG outstanding
immediately prior thereto continuing to represent
(whether by remaining outstanding or by being converted
into voting securities of the surviving entity) at
least 70 percent of the combined voting power of the
voting securities of FIIG or the surviving entity that
are outstanding immediately after the merger or
consolidation;
During any period of 24
consecutive months subsequent to the date of this
Agreement (the "Period") individuals who constitute the
FIIG board of directors at the beginning of the Period
together with any new director (other than a director
designated by a person who has entered into an
agreement with FIIG to give effect to a transaction
described at either of the two preceding paragraphs)
whose election by the FIIG board of directors or
nomination for election by FIIG's stockholders was
approved by a vote of at least two-thirds of the
directors then in office who either were directors
at the beginning of the Period or whose election or
nomination for election previously so was approved,
cease for any reason to constitute a majority of the
FIIG board of directors; or
FIIG ceases to have a
class of security registered under Section 12 of the
Exchange Act.
10.2 Termination by FIIF. The Executive's employment
hereunder will be terminable by FIIF in accordance with Section
1.1for any reason, including but not limited to Cause.
10.3 Termination by the Executive. The Executive's
employment hereunder will be terminable by him in accordance with Section 1.1
for any reason, including but not limited to (i) Material Breach by FIIF or
any other member of the Group and (ii) Structural Change.
10.4 Termination Payment. None of the payments described at
this Section 10.4 will be affected in any respect by the Executive's decision to
tender or not tender shares of FIIG common stock that he beneficially owns or
Page 25 of 34 Pages
<PAGE>
otherwise controls in connection with acquisition of the 37-1/2 percent position
in FIIG common stock described at Section 10.1. For any period during which the
Executive is entitled to receive payments from the Group under this Section 10.4
(whether or not the Executive elects to receive the present value of the
payments) but is not eligible for benefits from another source that serve to
replace benefits under the Benefit Programs, the Executive will continue to
receive benefits under and in accordance with the provisions of the Benefit
Programs.
(i) In the event the Executive
elects to terminate his employment hereunder at any time for
Material Breach (other than during the 36 months following a
Change-In-Control) or within the six months immediately
following Structural Change, or in the event FIIF elects
prior to or more than 36 months after a Change-In-Control to
terminate the Executive's employment hereunder other than for
Cause, FIIF will pay to the Executive in cash equivalents
whichever of the following amounts the Executive elects to
receive:
-An amount each month equal to the Executive's
base salary from FIIF for the month immediately
preceding the effective date of his termination, to be
paid to the Executive or in the event of death to his
successor in interest. The monthly termination payments
will continue for a period consisting of one month for
each full year and final fraction of a year of the
Executive's employment hereunder, subject to a minimum
payment period of 12 months.
-The present value of the monthly termination
payments so described, calculated at the current
Corporate Base Rate then in effect at The First
National Bank of Chicago and paid to the Executive on
the effective date of his termination.
(ii) In the event FIIF elects at any
time during the 36 months following a Change-In-Control to
terminate the Executive's employment hereunder other than for
Cause, or the Executive elects to terminate his employment
hereunder for Material Breach at any time during the 36
months following a Change-In-Control, FIIF will pay to the
Executive in cash equivalents whichever of the following
amounts the Executive elects to receive:
-An amount each month equal to the Executive's
base salary from FIIF for the month immediately
preceding the effective date of his termination, to be
paid to the Executive or in the event of death to his
successor in interest. The monthly termination
payments will continue for a period ending 36 months
after the Change-In-Control.
-The present value of the monthly termination
payments so described, calculated at the current
Corporate Base Rate then in effect at The First
Page 26 of 34 Pages
<PAGE>
NationalBank of Chicago and paid to the Executive on the
effective date of his termination.
(iii) In the event FIIF elects at any
time during the 36 months following a Change-In-Control to
terminate the Executive's employment hereunder other than for
Cause, FIIF on the effective date of termination also will
pay to the Executive in cash equivalents for each share of
FIIG common stock that is subject to any unexercised option
to purchase granted to the Executive by FIIG an amount (an
"Option Payment") equal to the difference between the
exercise price and fair market value for the share of stock.
-For purposes of determining the amount of an
Option Payment, fair market value for a share of stock
will be the greater of (a) the cash equivalent of the
maximum price per share paid in acquiring the 37-1/2
percent position in FIIG common stock (if any)
described at Section 10.1 and (b) the mean of the
latest inside bid and asked quotations for FIIG
common stock in the over-the-counter market prior
to the date the Change-In-Control became effective.
-An Option Payment will be made only for options
granted prior to public announcement of any tender
offer that results in the 37-1/2 percent position in
common stock described at Section 10.1.
-The Executive will have the right to receive an
Option Payment for any option, to exercise the option
according to its terms, or to continue the option
according to its terms. No Option Payment will be made
in respect to any option so exercised or continued.
(iv) In the event the Executive
elects at any time to terminate his employment hereunder
other than (a) for Material Breach or (b) within the six
months immediately following Structural Change, FIIF will pay
to the Executive in cash equivalents on the effective date of
his termination an amount equal to two times the Executive's
base salary from FIIF for the month immediately preceding
the effective date of his termination.
(v) In the event FIIF elects at any
time to terminate the Executive's employment hereunder for
Cause, no compensation will be paid hereunder to the
Executive after the effective date of the termination for
Cause.
11. Relocation. At the present time FIIF has no plans to move
its corporate headquarters and principal place of business from Chicago,
Illinois, nor are any such plans contemplated. Accordingly, it is anticipated
that the Executive as a senior executive officer of FIIF will continue to be
employed in Chicago, Illinois. FIIF agrees that the Executive will not be
relocated outside the Chicago, Illinois metropolitan area during the 36
months following a Change-In-
Page 27 of 34 Pages
<PAGE>
Control or at any other time without 12 months prior written notice, unless the
Executive consents to the relocation.
12. Freedom to Execute Agreement. The Executive represents and
warrants that he is free to enter into this Agreement; that he is not subject to
any obligation or disability that will or might prevent him from or interfere
with his fully keeping and performing all of the covenants and conditions to be
kept and performed by him hereunder; and that he has not made and will not
make any grant or assignment or other agreement that will or might conflict
with or impair the complete enjoyment by FIIF and the Group of the rights and
privileges granted to FIIF and the Group hereunder.
13. Assignments and Successors.
13.1 FIIG. FIIG will require any successor (whether direct
or indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business or assets of FIIG to assume expressly and
agree to perform this Agreement in the same manner and to the same extent that
FIIG would be required to perform the Agreement if no succession had taken
place. Failure of FIIG to obtain the assumption and agreement prior to
effectiveness of the succession will constitute Material Breach. As used in
this Agreement, "FIIG" means FIIG as defined in the Agreement and any
successor to all or substantially all of FIIG's business or assets that
assumes and agrees to perform the Agreement, whether by operation of law or
otherwise.
13.2 The Executive. This Agreement will inure to the benefit
of and be enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees. In the event the Executive dies while any amount still would be
payable to the Executive hereunder if the Executive had continued to live,
the amount, unless otherwise provided herein, will be paid in accordance with
the terms of this Agreement.
14. Non-Waiver. No waiver by either of the parties hereto of any
failure by the other party to keep or perform any covenant or condition of this
Agreement will be deemed to be a waiver of any preceding or succeeding breach of
the same or of any other covenant or condition.
15. Notices. Any notices given hereunder will be in writing and
sent by registered mail, return receipt requested, if to FIIF then to FIIF at
400 North Michigan Avenue, Suite No. 904, South Tower, Chicago, IL 60611
(Attention: Board of Directors) and if to the Executive then to his attention at
1507 Highland Avenue, Wilmette, IL 60091, or to such other person or address as
may be designated in writing by the respective parties hereto.
16. Severability. In the event a provision of this Agreement is
held invalid for any reason, the invalidity will not affect any other provision
of the Agreement not so held invalid, and the other provision will continue in
full force and effect to the full extent permitted by law. In the event a
provision of this Agreement is held invalid in part, the invalidity will not
affect the remainder of the provision not so held invalid, and the remainder
of the provision together with all other provisions of this Agreement not so
held invalid will continue in full force and effect to the full extent
permitted by law.
Page 28 of 34 Pages
<PAGE>
17. Section Headings. The headings of sections herein are for the
purpose of convenient reference only and are not deemed to govern, limit,
modify, or in any other manner affect the provisions of this Agreement, nor will
the headings otherwise be given any legal effect whatsoever.
18. Entire Agreement. This Agreement is the entire agreement of
the parties hereto in respect to the subject matter hereof and will remain the
entire agreement until and unless otherwise agreed by the parties in writing.
No officer, employee, or representative of FIIF or any other member of the
Group has any authority to make any representation or promise in connection with
the Agreement or the subject matter hereof that is not contained herein and the
Executive represents and warrants he has not executed this Agreement in reliance
upon any such representation or promise.
19. Applicable Law. This Agreement and all of the terms and
provisions set forth herein and the rights and responsibilities of the parties
hereunder will be determined pursuant to the laws of the State of Illinois.
20. Guaranty. FIIG hereby guarantees to the Executive the timely
performance by FIIF and by F/I Agency of their respective obligations hereunder,
and each member of the Group will be responsible to the Executive for
performance of the respective obligations of FIIF and F/I Agency to the same
extent that FIIF and F/I Agency so are responsible.
21. Legal Expense. FIIG will pay all reasonable legal fees and
related expenses that the Executive may incur as a result of the Group's
contesting the validity or enforceability of this Agreement. In the event of
any delay in payment of the fees and expenses by the Group, the Executive will
be entitled to receive interest thereon for the period of the delay at a rate
equal to the Corporate Base Rate in effect from time to time at The First
National Bank of Chicago plus two percentage points.
22. Mitigation. In the event FIIF elects at any time during the 36
months following a Change-In-Control to terminate the Executive's employment
hereunder other than for Cause or in the event the Executive elects to terminate
his employment hereunder for Material Breach or within the six months
immediately following Structural Change, the Executive will not be required to
mitigate the amount of any payment to him under this Agreement by seeking
employment elsewhere or otherwise. In either event, any amount the Executive
receives from employment elsewhere or otherwise will not offset to any extent
the obligations of the Group hereunder.
Page 29 of 34 Pages
<PAGE>
IN WITNESS WHEREOF, the parties hereto duly have executed this Agreement as of
the date first above written.
FINANCIAL INSTITUTIONS INSURANCE
FUND, INCORPORATED
By /s/ John B. Zellers
John B. Zellars
Chairman
EXECUTIVE
/s/ John A. Dore
John A. Dore
AGREED AND APPROVED:
FINANCIAL INSTITUTIONS INSURANCE
GROUP, LTD.
By /s/ John B. Zellers
John B. Zellars
Chairman
F/I INSURANCE AGENCY, INCORPORATED
By /s/ John B. Zellers
John B. Zellars
Chairman
Page 30 of 34 Pages
<PAGE>
EXHIBIT 4
OPTION AGREEMENT
This OPTION AGREEMENT, made and entered into this day of
, 199____ by and between Financial Institutions Insurance Group, Ltd.
(together with its subsidiaries, "FIIG") and
(the "Optionee"), a salaried officer or other salaried key employee of
FIIG, all pursuant to FIIG's Stock Option Plan dated February 18, 1991 (the
"Stock Option Plan").
1. Grant of Stock Options. The Committee (as defined in the Stock Option
Plan) hereby grants options to the Optionee to purchase
shares of FIIG common stock in accordance with the terms and provisions
of the Stock Option Plan. The options may be exercised in whole or in
part, provided that no option may be exercised for fewer than
shares (sic). The exercise price for the options will be $
per share, which the Committee has determined is not less than the fair
market value per share of FIIG common stock on the date hereof. The
options are granted to the Optionee on the date hereof and except as
provided at Section 2 below are exercisable as follows:
- For shares between (date) and (date) .
- For an additional shares between (date)
and (date)
- For an additional shares between (date)
and (date)
- For an additional shares between (date)
and (date)
- For an additional shares between (date)
and (date)
In the event of the Optionee's death or permanent disability while employed
by FIIG but before the date of expiration of an option, the option will
terminate on the earlier of the date of expiration or 120 days following
the date of the Optionee's death or commencement of his (her) permanent
disability. After the Optionee's death or permanent disability, the
Optionee or his (her) executor, administrator, or any person to whom his
(her) option may be transferred by will or by the laws of descent and
distribution will have the right at any time prior to termination to
exercise the option, in whole or in part.
2. Structural Change. Options for shares not yet exercisable, if any, will
become exercisable immediately in the event of "Structural Change," which
is defined to mean the occurrence of any of the following events:
Any individual, corporation, partnership or other person or entity,
together with his or its "Affiliates" and "Associates" (as defined on
the date hereof at Rule 12b-2 under the Securities Exchange Act of
1934),
Page 31 of 34 Pages
<PAGE>
becomes the "Beneficial Owner" (as defined on the date hereof at Rule
13d-3 under the Securities Exchange Act of 1934) in the aggregate of
37-1/2 percent or more of the outstanding shares of the common stock
of FIIG;
The stockholders of FIIG approve a plan of complete liquidation of FIIG,
approve an agreement for the sale or disposition by FIIG of all or
substantially all of FIIG's assets, or approve a merger or consolidation
of FIIG with any other corporation, other than a merger or consolidation
that results in the voting securities of FIIG outstanding immediately
prior thereto continuing to represent (whether by remaining outstanding
or by being converted into voting securities of the surviving entity) at
least 70 percent of the combined voting power of the voting securities
of FIIG or the surviving entity that are outstanding immediately after
the merger or consolidation;
During any period of 24 consecutive months subsequent to the date of
this Option Agreement (the "Period") individuals who constitute the FIIG
board of directors at the beginning of the Period together with any new
director (other than a director designated by a person who has entered
into an agreement with FIIG to give effect to a transaction described at
either of the two preceding paragraphs) whose election by the FIIG board
of directors or nomination for election by FIIG's stockholders was
approved by a vote of at least two-thirds of the directors then in
office who either were directors at the beginning of the Period or whose
election or nomination for election previously so was approved, cease
for any reason to constitute a majority of the FIIG board of directors;
or
FIIG ceases to have a class of security registered under Section 12 of
the Securities Exchange Act of 1934.
3. Restricted Securities. The Optionee acknowledges that the options
described herein and the shares of FIIG common stock to be issued upon
exercise of the options (together the "Securities") are restricted
securities and have not been registered under the Securities Act of 1933
or under the securities laws of any state.
4. Investment Representations. The Optionee represents to FIIG that the
Securities he is acquiring are being acquired for his own account, for
investment, and not with a view to resale and that the Optionee will not
transfer the Securities except pursuant to a registration statement in
effect under the Securities Act of 1933 or pursuant to an exemption from
registration thereunder.
5. Transfer Legend. FIIG will cause all certificates representing the
Securities to include the following legend or any other legend that is
necessary or advisable to assure compliance with the Securities Act of
1933:
The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities laws
of any state and may not be sold or transferred except upon such
registration or upon receipt by the Company of an opinion of counsel
in form and substance satisfactory to the Company that registration is
not required for the sale or transfer.
Page 32 of 34 Pages
<PAGE>
6. Registration. FIIG may register but will not be obligated to register
any of the Securities pursuant to the Securities Act of 1933, except that
FIIG at the Optionee's request will include the Securities in any future
registration of shares of its common stock to the extent reasonable under
the circumstances. In the event any of the Securities so are registered,
FIIG will waive the requirements for investment representations and
transfer legends at Section 4 and 5 above.
7. Compliance. FIIG will make reasonable efforts under the circumstances
to cause its issuance of the Securities to comply with all provisions of
applicable laws and regulations of governmental authorities, including
but not limited to the Securities and Exchange Commission.
8. Section 16. The Optionee undertakes to make any filings required under
Section 16(a) of the Securities Exchange Act of 1934 and the regulations
thereunder to report his ownership of the Securities. The Optionee
acknowledges that any profit realized by him from the purchase and sale of
equity securities of FIIG within any period of less than six months may
inure to and be recoverable by FIIG pursuant to Section 16(b) of the
Securities Exchange Act of 1934 unless an exemption is available, whether
pursuant to Rule 16b-3 under the Securities Exchange Act of 1934 or
otherwise.
IN WITNESS WHEREOF, this Option Agreement has been duly executed this
day of
, 199 .
FINANCIAL INSTITUTIONS INSURANCE GROUP, LTD.
By ______________________________________
Chairman
______________________________________
Optionee
ATTEST:
___________________________
Secretary
Page 33 of 34 Pages
<PAGE>
EXHIBIT 5
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that John K. Castle ("Castle"),
whose signature appears below, appoints Jeffrey M. Siegal, the undersigned's
true and lawful attorney-in-fact, acting individually with full power of
substitution and revocation, for Castle in Castle's name, place and stead,
in Castle's capacity as: (i) Chairman and Chief Executive Officer of Castle
Harlan, Inc., a Delaware corporation; (ii) as Chairman and Chief Executive
Officer of Castle Harlan Partners II GP, Inc., a Delaware Corporation; and
(iii) an individual to execute and deliver on behalf of Castle all Schedule
13D's filed pursuant to the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder and any amendments to said
Schedule 13D's, and any and all instruments, affidavits and exhibits
necessary or desirable in connection therewith, and to take all other
necessary and lawful action in connection therewith.
This Power of Attorney shall remain in effect with respect to Mr.
Siegal until January 21, 1996. The Power of Attorney hereby granted shall
survive and shall not be affected by the subsequent disability, incompetency
or death of the undersigned.
/s/ John K. Castle
January 10, 1996
John K. Castle
Page 34 of 34 Pages
