-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P5KH9to25XHqkYhlmaW0mX8MpucSsFo6lfPFefc9wF9TMJV3JEbhcV4vTgwdPc9Z azopSvcWqJ9NEsjbHLEdOw== 0000950134-99-001388.txt : 19990302 0000950134-99-001388.hdr.sgml : 19990302 ACCESSION NUMBER: 0000950134-99-001388 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19990301 GROUP MEMBERS: INSURANCE GENPAR (BERMUDA) LP GROUP MEMBERS: INSURANCE GENPAR (BERMUDA) MGP LP GROUP MEMBERS: INSURANCE GENPAR (BERMUDA) MGP LTD GROUP MEMBERS: INSURANCE GENPAR LP GROUP MEMBERS: INSURANCE GENPAR MGP INC GROUP MEMBERS: INSURANCE GENPAR MGP LP GROUP MEMBERS: INSURANCE PARTNERS LP GROUP MEMBERS: INSURANCE PARTNERS OFFSHORE (BERMUDA) LP SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CERES GROUP INC CENTRAL INDEX KEY: 0000215403 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 341017531 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-36346 FILM NUMBER: 99554487 BUSINESS ADDRESS: STREET 1: 17800 ROYALTON RD CITY: STRONGSVILLE STATE: OH ZIP: 44136 BUSINESS PHONE: 2165722400 MAIL ADDRESS: STREET 1: 17800 ROYALTON RD CITY: STRONGSVILLE STATE: OH ZIP: 44136 FORMER COMPANY: FORMER CONFORMED NAME: CENTRAL RESERVE LIFE CORP DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: INSURANCE PARTNERS LP CENTRAL INDEX KEY: 0001012376 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133753044 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 201 MAIN ST CITY: FORT WORTH STATE: TX ZIP: 76102 BUSINESS PHONE: 8173908500 MAIL ADDRESS: STREET 1: 201 MAIN STREET CITY: FORT WORTH STATE: TX ZIP: 76102 SC 13D/A 1 AMENDMENT NO.1 TO SCHEDULE 13D 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). 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. 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. 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. 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. 6 - --------------------- ------------------------------ 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. 7 - --------------------- ------------------------------ 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. 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. 9 - --------------------- ------------------------------ 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. 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 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 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. 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.
12 of 17 13 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.
13 of 17 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 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 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 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 18 INDEX TO EXHIBITS 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.
EX-7.1 2 STOCK SUBSCRIPTION AGREEMENT 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. 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 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 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 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 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 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 EX-7.2 3 STOCK SUBSCRIPTION AGREEMENT 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. 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 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 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; 4 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 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. 6 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 EX-7.3 4 AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT 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. 1 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. 2 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 3 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 4 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 -----END PRIVACY-ENHANCED MESSAGE-----