The
following constitutes Amendment No. 1 (“Amendment No. 1”) to the Schedule 13D
filed by the undersigned. This Amendment No. 1 amends the Schedule
13D as specifically set forth.
Item
3.
Source and Amount of Funds
or Other Consideration
.
Item 3 is
hereby amended in its entirety to read as follows:
The net
investment cost (including commissions, if any) of the shares of Common Stock
held by the Reporting Persons was approximately $7,058,356.10 in the aggregate,
all of which was obtained from cash on hand of the applicable Reporting
Person. The net investment cost of Hallmark was approximately
$113,139.30, the net investment cost of AHIC was approximately $6,452,714.80 and
the net investment cost of HSIC was $492,502.00.
Item
4.
Purpose of
Transaction
.
Item 4 is
hereby amended to add the following:
As
previously disclosed, on June 16, 2008, Hallmark delivered to the Company’s
Board of Directors a proposal with respect to a transaction (the “Proposal”)
pursuant to which each outstanding share of Common Stock of the Company would be
converted into Hallmark common stock at a pre-determined formula. The
Company publicly announced on June 26, 2008 that its Board of Directors
unanimously concluded not to accept the Proposal. On July 1, 2008,
Hallmark delivered to the Company’s Board of Directors a letter reaffirming the
Proposal (the “July 1 Letter”). The offer price of $6.50 in Hallmark
stock for each outstanding share of the Company represents a significant 37%
premium to the Company’s trailing 30-day average closing price of $4.74 per
share on June 13, 2008, the business day prior to delivery of the
Proposal. In the July 1 Letter, Hallmark stated that it remains
committed to its Proposal and strongly believes that the Proposal offers
significant and compelling benefits to the Company’s
shareholders. Hallmark reiterated that its senior management stands
ready to meet with the members of the Board of the Company and answer any
questions concerning the Proposal. A copy of the Proposal and the
July 1 Letter are attached as exhibits hereto and are incorporated herein by
reference.
Item
5.
Interest in Securities of
the Issuer
.
Item
5(a)-(c) is hereby amended in its entirety to read as follows:
(a) The
aggregate percentage of shares of Common Stock reported to be owned by the
Reporting Persons is based upon 14,697,355 shares outstanding, which is the
total number of shares of Common Stock outstanding as reported in the Company’s
Form 10-Q for the quarter ended March 31, 2008 as filed with the Securities and
Exchange Commission on May 12, 2008.
As of the
filing date of this Amendment No. 1, AHIC beneficially owned 1,308,615 shares of
Common Stock, representing approximately 8.9% of the Company’s issued and
outstanding Common Stock.
As of the
filing date of this Amendment No. 1, HSIC beneficially owned 100,000 shares of
Common Stock, representing approximately 0.7% of the Company’s issued and
outstanding Common Stock.
As of the
filing date of this Amendment No. 1, Hallmark owned 21,000 shares of Common
Stock, representing 0.1% of the Company’s issued and outstanding Common
Stock. As the parent of AHIC and HSIC, Hallmark may be deemed to
beneficially own an additional 1,308,615 shares of Common Stock owned by AHIC
and an additional 100,000 shares of Common Stock owned by HSIC, representing
(together with shares owned directly by Hallmark) an aggregate of 1,429,615
shares of Common Stock or approximately 9.7% of the issued and outstanding
Common Stock.
(b) Each
of the Reporting Persons has the sole power to vote and dispose of the shares of
Common Stock reported as beneficially owned by them in this
Statement.
(c) Schedule
B annexed hereto lists all the transactions in the Company’s Common Stock by the
Reporting Persons during the past 60 days. Such transactions in the
Common Stock were effected in the open market.
Item
7.
Materials to be Filed as
Exhibits
.
Item 7 is
hereby amended to add the following exhibits:
|
99.1
|
Proposal
Letter from Hallmark Financial Services, Inc. to the Board of Directors of
Specialty Underwriters’ Alliance Inc., dated June 16,
2008.
|
|
99.2
|
Letter
from Hallmark Financial Services, Inc. to the Board of Directors of
Specialty Underwriters’ Alliance Inc., dated July 1,
2008.
|
SIGNATURES
After due
inquiry and to the best of his knowledge and belief, each of the undersigned
certifies that the information set forth in this statement is true, complete and
correct.
Dated:
July 1, 2008
|
Hallmark
Financial Services, Inc.
|
|
|
|
By:
|
/s/
Mark E. Schwarz
|
|
Name:
|
Mark
E. Schwarz
|
|
Title:
|
Executive
Chairman
|
|
American
Hallmark Insurance Company of Texas
|
|
|
|
|
By:
|
/s/
Mark E. Schwarz
|
|
Name:
|
Mark
E. Schwarz
|
|
Title:
|
Director
|
|
Hallmark
Specialty Insurance Company
|
|
|
|
By:
|
/s/
Mark E. Schwarz
|
|
Name:
|
Mark
E. Schwarz
|
|
Title:
|
Director
|
SCHEDULE
B
Transactions in the Common
Stock During the Past 60 Days
Shares
of Common Stock Purchased
|
|
|
Hallmark
Financial Services, Inc.
|
15,000
|
5.35
|
6/30/08
|
6,000
|
5.40
|
6/30/08
|
American
Hallmark Insurance Company of Texas
|
7,011
|
4.79
|
6/03/08
|
2,500
|
4.80
|
6/04/08
|
100
|
4.80
|
6/05/08
|
150,100
|
4.85
|
6/06/08
|
304,900
|
4.85
|
6/09/08
|
200,000
|
4.85
|
6/10/08
|
291,400
|
4.92
|
6/12/08
|
100
|
4.90
|
6/16/08
|
10,724
|
4.90
|
6/18/08
|
6,500
|
4.99
|
6/19/08
|
318,980
|
5.04
|
6/20/08
|
Hallmark
Specialty Insurance Company
|
70,000
|
4.85
|
6/11/08
|
30,000
|
5.04
|
6/20/08
|