SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 7)*
Fairfield Communities, Inc.
(Name of Issuer)
Common Stock, $.01 par value per share
(Title of Class of Securities)
304231301
(CUSIP Number)
James F. Mosier, Corporate Secretary and General Counsel
Physicians Insurance Company of Ohio
13515 Yarmouth Drive, NW
Pickerington, Ohio 43147
(614) 864-7100
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 21, 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. [ ]
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP NO. 304231301
SCHEDULE 13D
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
PICO Holdings, Inc.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
(a) X
(b) ____
3. SEC USE ONLY:
4. SOURCE OF FUNDS (SEE INSTRUCTIONS):
Not applicable
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e): ____
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
California
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER: 311,573 shares
8. SHARED VOTING POWER: None
9. SOLE DISPOSITIVE POWER: 311,573 shares
10. SHARED DISPOSITIVE POWER: None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
311,573 shares
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS): ____
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
2.9%
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
HC
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SCHEDULE 13D
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Physicians Insurance Company of Ohio
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
(a) X
(b) ____
3. SEC USE ONLY:
4. SOURCE OF FUNDS (SEE INSTRUCTIONS):
Not applicable
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e): ____
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
Ohio
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER: 311,573 shares
8. SHARED VOTING POWER: None
9. SOLE DISPOSITIVE POWER: 311,573 shares
10. SHARED DISPOSITIVE POWER: None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
311,573 shares
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS): ____
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
2.9%
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
IC
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SCHEDULE 13D
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
American Physicians Life Insurance Company
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
(a) X
(b) ____
3. SEC USE ONLY:
4. SOURCE OF FUNDS (SEE INSTRUCTIONS):
Not applicable
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e): ____
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
Ohio
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER: None
8. SHARED VOTING POWER: None
9. SOLE DISPOSITIVE POWER: None
10. SHARED DISPOSITIVE POWER: None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
None
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS): ____
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
0%
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
IC
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SCHEDULE 13D
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Physicians Investment Company
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
(a) X
(b) ____
3. SEC USE ONLY:
4. SOURCE OF FUNDS (SEE INSTRUCTIONS):
Not applicable
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e): ____
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
Ohio
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER: None
8. SHARED VOTING POWER: None
9. SOLE DISPOSITIVE POWER: None
10. SHARED DISPOSITIVE POWER: None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
None
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (SEE INSTRUCTIONS): ____
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
0%
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
HC
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Item 1. Security and Issuer.
This Amendment No. 7 to the Schedule 13D (the "Schedule 13D") filed by the
reporting person Physicians Insurance Company of Ohio ("Physicians") on March
24, 1994 with the Securities and Exchange Commission (the "SEC") relates to the
Common Stock, $.01 par value per share (the "Common Stock"), of Fairfield
Communities, Inc. (the "Issuer"). The address of the principal executive offices
of the Issuer is 2800 Cantrell Road, Little Rock, Arkansas 72202. This Amendment
No. 7 amends certain information set forth in the Schedule 13D, as amended by
Amendment No. 1 filed by Physicians on February 9, 1995, Amendment No. 2 filed
by Physicians and American Physicians Life Insurance Company ("APL") on August
8, 1995, Amendment No. 3 filed by Physicians, APL and Physicians Investment
Company ("PIC") on February 13, 1996, Amendment No. 4 filed by Physicians, APL
and PIC on July 26, 1996, Amendment No. 5 by Physicians, APL and PIC on October
29, 1996, and Amendment No. 6 by Physicians, APL and PIC filed on November 7,
1996.
Item 2. Identity and Background.
The persons filing this Amendment No. 7 are Physicians, APL, PIC and PICO
Holdings, Inc., formerly known as Citation Insurance Group ("Holdings").
A. Holdings is a California insurance holding company which became the
parent of Physicians on November 20, 1996 as a result of the merger (the
"Merger") of Citation Holdings, Inc., a wholly-owned subsidiary of Holdings
("Holdings Sub"), with and into Physicians as contemplated by the Agreement and
Plan of Reorganization (the "Merger Agreement"), dated as of May 1, 1996, as
amended, by and among Physicians, Holdings and Holdings Sub. Upon consummation
of the Merger, Holdings' name was changed from "Citation Insurance Group" to
"PICO Holdings, Inc." In addition to being the parent of Physicians, Holdings is
the direct parent of Citation Insurance Company and the indirect parent of
Citation National Insurance Company, which are principally engaged in writing
workers' compensation and commercial property and casualty insurance. Holdings'
business address is 875 Prospect Street, Suite 301, La Jolla, California 92037.
The directors of Holdings include:
(i) S. Walter Foulkrod, III, Esq., whose business address is S. Walter
Foulkrod, III & Associates, P.O. Box 6600, Harrisburg, Pennsylvania 17112-0600.
Mr. Foulkrod is an attorney and the owner of S. Walter Foulkrod, III &
Associates, Attorneys at Law. Mr. Foulkrod is a citizen of the United States.
(ii) Richard D. Ruppert, MD, whose residence address is 2710 Falmouth
Drive, P.O. Box 352855, Toledo, Ohio 43635-2855. Dr. Ruppert is a physician and
serves as Chairman of the Boards of APL and PIC. Dr. Ruppert is a citizen of the
United States.
(iii) Dr. Gary H. Weiss, whose business address is Level 24, 2 Market
Street, Sydney 2000 Australia. Dr. Weiss is a barrister and solicitor and serves
as Executive Director of Guinness Peat Group plc, an investment holding company.
Dr. Weiss is a citizen of Australia and New Zealand.
(iv) John R. Hart, whose business address is 875 Prospect Street, Suite
301, La Jolla, California 92037. Mr. Hart serves as President and Chief
Executive Officer of Holdings and Physicians. Mr. Hart is a citizen of the
United States.
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(v) Ronald Langley, whose business address is 875 Prospect Street, Suite
301, La Jolla, California 92037. Mr. Langley serves as Chairman of the Boards of
Holdings and Physicians. Mr. Langley is a citizen of Australia.
(vi) John D. Weil, whose business address is 200 North Broadway, Suite 825,
St. Louis, Missouri 63102-2573. Mr. Weil serves as President of Clayton
Management Company, a strategic investment company. Mr. Weil is a citizen of the
United States.
(vii) Marshall J. Burak, whose business address is College of Business, San
Jose State University, One Washington Square, San Jose, California 95192-0065.
Mr. Burak is Professor of Finance and Dean of the College of Business of San
Jose State University. Mr. Burak is a citizen of the United States.
(viii) Paul M. Bancroft, whose business address is 655 Montgomery Street,
Suite 920, San Francisco, California 94111. Mr. Bancroft is a private investor.
Mr. Bancroft is a citizen of the United States.
(ix) Robert R. Broadbent, whose business address is Tower City Center, 2900
Terminal Tower, Cleveland, Ohio 44113-2204. Mr. Broadbent is a retail
consultant. Mr. Broadbent is a citizen of the United States.
The executive officers of Holdings, in addition to Messrs. Langley and
Hart, are:
(i) Richard H. Sharpe, whose business address is Physicians Insurance
Company of Ohio, 13515 Yarmouth Drive, N.W., Pickerington, Ohio 43147. Mr.
Sharpe serves as Chief Operating Officer of Holdings and Physicians. He is a
citizen of the United States.
(ii) Gary W. Burchfield, whose business address is Physicians Insurance
Company of Ohio, 13515 Yarmouth Drive, N.W., Pickerington, Ohio 43147. Mr.
Burchfield serves as Chief Financial Officer and Treasurer of Holdings and
Physicians. He is an United States citizen.
(iii) James F. Mosier, Esq., whose business address is Physicians Insurance
Company of Ohio, 13515 Yarmouth Drive, N.W., Pickerington, Ohio 43147. Mr.
Mosier serves as General Counsel and Corporate Secretary of Holdings and
Physicians. He is an United States citizen.
B. Physicians is an Ohio licensed insurance corporation which operates
primarily as a diversified investment and insurance company. Physicians'
business address is 13515 Yarmouth Drive, N.W., Pickerington, Ohio 43147.
The directors of Physicians include:
(i) S. Walter Foulkrod, III, Esq., whose background is described in Item
2(A) above.
(ii) Richard D. Ruppert, MD, whose background is described in Item 2(A)
above.
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(iii) Dr. Gary H. Weiss, whose background is described in Item 2(A) above.
(iv) John R. Hart, whose background is described in Item 2(A) above.
(v) Ronald Langley, whose background is described in Item 2(A) above.
(vi) John D. Weil, whose background is described in Item 2(A) above.
The executive officers of Physicians, in addition to Messrs. Langley and
Hart, are:
(i) Richard H. Sharpe, whose background is described in Item 2(A) above.
(ii) Martha G. Althauser, Esq., whose business address is Physicians
Insurance Company of Ohio, 13515 Yarmouth Drive, N.W., Pickerington, Ohio 43147.
Ms. Althauser serves as Vice President, Claims of Physicians. She is an United
States citizen.
(iii) Gary W. Burchfield, whose background is described in Item 2(A) above.
(iv) James F. Mosier, Esq., whose background is described in Item 2(A)
above.
C. APL is an Ohio corporation which is a wholly-owned indirect subsidiary
of Physicians. APL's principal business is selling life and health insurance.
APL's business address is 13515 Yarmouth Drive, N.W., Pickerington, Ohio 43147.
The directors of APL are Ronald Langley, John R. Hart, Richard H. Sharpe,
Richard D. Ruppert, MD and Dr. Gary H. Weiss. Each of their backgrounds has been
described in Item 2(A).
The executive officers of APL include:
(i) Richard D. Ruppert, MD, who serves as Chairman of the Board of APL;
(ii) Richard H. Sharpe, who serves as President and Chief Executive Officer
of APL;
(iii) James F. Mosier, Esq., who serves as General Counsel and Secretary of
APL;
(iv) Loman H. Hartley, whose business address is American Physicians Life
Insurance Company, 13515 Yarmouth Drive, N.W., Pickerington, Ohio 43147. Mr.
Hartley serves as Vice President, Controller and Treasurer of APL. He is an
United States citizen.
(v) Joyce M. Domijan, whose business address is American Physicians Life
Insurance Company, 13515 Yarmouth Drive, N.W., Pickerington, Ohio 43147. Ms.
Domijan serves as Vice President, Operations of APL. She is an United States
citizen.
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D. PIC is an Ohio corporation which is a wholly-owned direct subsidiary of
Physicians and the parent of APL. PIC was formed for the purpose of holding the
shares of APL and conducts no other business. PIC's business address is 13515
Yarmouth Drive, N.W., Pickerington, Ohio 43147.
The directors of PIC are Ronald Langley, John R. Hart, Richard H. Sharpe,
Richard D. Ruppert, MD and Dr. Gary H. Weiss. Each of their backgrounds has been
described in Item 2(A).
The executive officers of PIC include Richard D. Ruppert, MD, who serves as
Chairman of the Board; Richard H. Sharpe, who serves as President and Treasurer;
and James F. Mosier, Esq., who serves as Secretary. Each of their backgrounds
has been described in Item 2(A) above.
E. Holdings is controlled by Guinness Peat Group plc ("GPG"), an English
investment holding company whose business address is Second Floor, 21-26 Garlick
Hill, London EC4V 2AU England, as a result of GPG's ownership of shares of
Holdings. Based upon information contained in the Schedule 13D, and Amendments
No. 1, 2, 3 and 4 thereto, filed by GPG in respect of its beneficial ownership
of shares of Class A Common Stock of Physicians prior to the Merger whereby
Physicians became a wholly-owned subsidiary of Holdings (collectively, the "GPG
Schedule 13D"), Physicians is aware that the directors and executive officers of
GPG are as follows:
Directors and Executive Officers of GPG
(i) Maurice William Loomes, who is a citizen of Australia and whose
business address is Level 24, 2 Market Street, Sydney 2000 Australia. Mr. Loomes
is a director of GPG.
(ii) Anthony Ian Gibbs, who is a citizen of New Zealand and whose business
address is c/o Registry Managers (New Zealand Limited), Private Bag 92119,
Auckland 1030 New Zealand. Mr. Gibbs is a director of GPG.
(iii) Sir Ron Brierley, who is a citizen of New Zealand and whose business
address is Guinness Peat Group plc, Second Floor, 21-26 Garlick Hill, London
EC4V 2AU England. Sir Ron is Chairman of the Board and a director of GPG.
(iv) Trevor J.N. Beyer, who is a citizen of New Zealand and whose business
address is Guinness Peat Group plc, Second Floor, 21-26 Garlick Hill, London
EC4V 2AU England. Mr. Beyer is a director of GPG.
(v) Blake A. Nixon, who is a citizen of New Zealand and whose business
address is Guinness Peat Group plc, Second Floor, 21-26 Garlick Hill, London
EC4V 2AU England. Mr. Nixon is a director and Executive Director in the United
Kingdom of GPG.
(vi) Dr. Gary H. Weiss, who is a director and Executive Director in
Australia of GPG. Dr. Weiss' background is described in Item 2(A) above.
(vii) J. Richard Russell, who is a citizen of Great Britain and whose
business address is Guinness Peat Group plc, Second Floor, 21-26 Garlick Hill,
London EC4V 2AU England. Mr. Russell is Secretary of GPG.
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F. During the last five years, none of Holdings, Physicians, APL, PIC and,
to the best knowledge of Physicians, the individuals named in Items 2(A), 2(B),
2(C) and 2(D), has been convicted in a criminal proceeding. To the best
knowledge of Physicians, based upon the information contained in the GPG
Schedule 13D, none of GPG and the individuals named in Item 2(E) has been
convicted in a criminal proceeding.
G. During the last five years, none of Holdings, Physicians, APL, PIC and,
to the best knowledge of Physicians, the individuals named in Items 2(A), 2(B),
2(C) and 2(D), was a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction resulting in 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. To the best knowledge of Physicians, based upon the information
contained in the GPG Schedule 13D, none of GPG and the individuals named in Item
2(E) has been a party to such a civil proceeding.
Item 3. Source and Amount of Funds or Other Consideration.
As noted in Item 2(A) above, on November 20, 1996, Physicians became a
wholly-owned subsidiary of Holdings' as a result of the Merger of Holdings Sub
into Physicians as contemplated under the terms of the Merger Agreement.
Item 4. Purpose of Transaction.
See Items 2(A) and 3 above.
Item 5. Interest in Securities of the Issuer.
(a)(b) As of the date of this Amendment No. 7, Physicians directly owned
beneficially 311,573 shares of the Issuer's Common Stock, in respect of which it
has sole voting and investment power. Based on 10,874,553 shares of the Issuer's
Common Stock outstanding as of November 21, 1996, Physicians directly owns
beneficially approximately 2.9% of the Issuer's outstanding Common Stock. By
virtue of its ownership of all of the outstanding shares and voting power of
Physicians, Holdings may also be deemed to indirectly beneficially own the
311,573 shares of the Issuer's Common Stock (or approximately 2.9% of the
Issuer's outstanding Common Stock) reported herein as beneficially owned by
Physicians. To the best knowledge of Physicians, none of the other persons named
in Item 2 beneficially owns any shares of the Issuer's Common Stock.
(c) On November 21, 1996, pursuant to an Underwriting Agreement, dated
November 21, 1996 (the "Underwriting Agreement"), among the Issuer, Physicians
and APL and Stephens Inc. and Donaldson, Lufkin & Jenrette Securities
Corporation (the "Underwriters"), APL sold all of its 235,000 shares of the
Issuer's Common Stock and Physicians sold 942,153 of its shares of the Issuer's
Common Stock in a secondary offering of the Issuer's Common Stock underwritten
by the Underwriters. The public offering price for all of the shares was $21 5/8
per share and the amount of proceeds received by Physicians and APL was $20 3/8
per share.
Pursuant to the terms of the Underwriting Agreement, Physicians has given
the Underwriters an option to purchase the remaining 311,573 shares of the
Issuer's Common Stock owned by Physicians on the same terms as in the original
offering. Such option must be exercised on or before December 21, 1996.
Physicians anticipates that the option will be exercised in full prior to its
expiration date. If the option is exercised in full, none of the reporting
persons will own any shares of the Issuer's Common Stock.
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(d) See Items 5(a) and 5(b) above.
(e) As a result of the sales of the shares of the Issuer's Common
Stock described in Item 5(c) above, each of Holdings, Physicians,
APL and PIC ceased to be the beneficial owner, individually or as
part of a group, of more than 5% of the Issuer's Common Stock on
November 21, 1996.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
See Items 2(A), 5(a), 5(b) and 5(c) above.
Item 7. Material to be Filed as Exhibits:
Exhibit A - Joint Filing Agreement, dated November 27, 1996, among PICO
Holdings, Inc., Physicians Insurance Company of Ohio, American Physicians Life
Insurance Company and Physicians Investment Company [Page 13].
Exhibit B - Agreement and Plan of Reorganization by and among Citation
Insurance Group, Citation Holdings, Inc. and Physicians Insurance Company of
Ohio, dated as of May 1, 1996, and Amendment to Agreement and Plan of
Reorganization, dated August 14, 1996; and related Agreement of Merger, dated as
of August , 1996, by and between Citation Holdings, Inc. and Physicians
Insurance Company of Ohio [Incorporated herein by reference to Exhibit 2.2 to
Amendment No. 1 to Form S-4 filed with the SEC by Citation Insurance Group on
September 20, 1996 [Registration No. 333-06671]]
Exhibit C - Second Amendment to Agreement and Plan of Reorganization, dated
as of November 12, 1996, by and among Citation Insurance Group, Citation
Holdings, Inc. and Physicians Insurance Company of Ohio. [Page 14].
Exhibit D - Underwriting Agreement, dated November 21, 1996, among
Fairfield Communities, Inc., Physicians Insurance Company of Ohio, American
Physicians Life Insurance Company, and Stephens Inc. and Donaldson, Lufkin &
Jenrette Securities Corporation. [Page 17].
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Signature.
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Date: December 2, 1996 PICO HOLDINGS, INC.
By: /s/ James F. Mosier
____________________________________
James F. Mosier,
General Counsel and Secretary
PHYSICIANS INSURANCE COMPANY OF OHIO
By: /s/ James F. Mosier
____________________________________
James F. Mosier,
General Counsel and Secretary
AMERICAN PHYSICIANS LIFE INSURANCE
COMPANY
By: /s/ James F. Mosier
____________________________________
James F. Mosier,
General Counsel and Secretary
PHYSICIANS INVESTMENT COMPANY
By: /s/ James F. Mosier
____________________________________
James F. Mosier, Secretary
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EXHIBIT A
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f)(1) under the Securities Exchange Act of 1934,
the persons named below hereby agree to the joint filing on behalf of each of
them of a statement on Schedule 13D (including any amendments thereto) with
respect to the shares of Common Stock of Fairfield Communities, Inc.
beneficially owned by each of them and further agree that this Joint Filing
Agreement be included as an exhibit to such joint filings.
IN WITNESS WHEREOF, the undersigned hereby execute this Joint Filing Agreement
as of the 2nd day of December, 1996.
PICO HOLDINGS, INC.
By: /s/ James F. Mosier
__________________________________
James F. Mosier,
General Counsel and Secretary
PHYSICIANS INSURANCE COMPANY OF OHIO
By: /s/ James F. Mosier
__________________________________
James F. Mosier,
General Counsel and Secretary
AMERICAN PHYSICIANS LIFE
INSURANCE COMPANY
By: /s/ James F. Mosier
__________________________________
James F. Mosier,
General Counsel and Secretary
PHYSICIANS INVESTMENT COMPANY
By: /s/ James F. Mosier
__________________________________
James F. Mosier, Secretary
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EXHIBIT C
Second Amendment to Agreement and Plan of Reorganization,
dated as of November 12, 1996, by and among Citation
Insurance Group, Citation Holdings, Inc. and Physicians
Insurance Company of Ohio
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SECOND AMENDMENT TO
AGREEMENT AND PLAN OF REORGANIZATION
This Second Amendment to Agreement and Plan of Reorganization (this "Second
Amendment") is made and entered into as of November 12, 1996, by and among
Citation Insurance Group, a California corporation ("Citation"), Citation
Holdings, Inc., an Ohio corporation ("Newco"), and Physicians Insurance Company
of Ohio, an Ohio corporation ("PICO"), for the purpose of amending that certain
Agreements and Plan of Reorganization (the "Reorganization Agreement"), dated as
of May 1, 1996, among Citation, Newco and PICO.
RECITALS
WHEREAS, Citation, Newco and PICO previously have entered into that certain
Amendment to Agreement and Plan of Reorganization, dated August 14, 1996;
WHEREAS, Citation has advised PICO that its consolidated stockholders'
equity has decreased; and
WHEREAS, the parties wish to further amend the Reorganization Agreement to
account for this decrease.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. Clause (B) of Section 5.3(h) is amended to read in full as follows: "As
of November 15, 1996, there has been no increase in long-term debt of Citation
or any Citation Subsidiary, as compared with long-term debt on December 31,
1995, or any increase in the outstanding capital stock of Citation or any
Citation Subsidiary (other than issuances of additional stock pursuant to vested
Citation Options) as compared with original stock on December 31, 1995, or any
decrease in Citation's consolidated stockholders' equity below $34 million."
2. Capitalized terms used but not defined herein shall have the meaning
given thereto in the Reorganization Agreement, as amended.
3. Except as expressly modified hereby, the Reorganization Agreement, as so
amended, shall continue in full force and effect.
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4. The interpretation, performance and enforcement of this Second Amendment
and the legal relations among the parties shall be governed by and construed in
accordance with the internal laws of the State of California applicable to
contracts made and to be wholly performed in such state.
5. This Second Amendment may be executed in counterparts with the same
effect as if all parties hereto had signed the same document. All counterparts
so executed shall be deemed to be an original, shall be construed together and
shall constitute one agreement.
IN WITNESS WHEREOF, Citation, Newco and PICO have executed this Agreement
as of the date first written above.
CITATION INSURANCE GROUP
By: /s/ Paul M. Bancroft
___________________________________
Paul M. Bancroft
Vice Chairman, Board of Directors
CITATION HOLDINGS, INC.
By: /s/ Robert M. Erickson
___________________________________
Robert M. Erickson
President
PHYSICIANS INSURANCE COMPANY
OF OHIO
By: /s/ John R. Hart
___________________________________
John R. Hart
President & CEO
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EXHIBIT D
Underwriting Agreement, dated November 21, 1996, among
Fairfield Communities, Inc., Physicians Insurance Company of
Ohio, American Physicians Life Insurance Company, and
Stephens Inc. and Donaldson, Lufkin & Jenrette Securities
Corporation
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CONFORMED COPY
FAIRFIELD COMMUNITIES, INC.
2,077,153 SHARES*
Common Stock
($.01 par value)
UNDERWRITING AGREEMENT
November 21, 1996
STEPHENS INC. and DONALDSON, LUFKIN
& JENRETTE SECURITIES CORPORATION
As Representatives of the several
Underwriters named in Schedule I hereto.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
Gentlemen:
Fairfield Communities, Inc., a Delaware corporation (the "Company"), and
the Company's stockholders named on the signature page hereof (the
"Stockholder") confirm their agreement with the several underwriters (the
"Underwriters") for whom you are acting as representatives (the
"Representatives") for the Company and the Stockholder to issue and sell 900,000
shares and 1,177,153 shares, respectively, of the Company's common stock, par
value $.01 per share (the "Underwritten Shares") to the Underwriters. The
Company's common stock is more fully described in the Registration Statement and
the Prospectus hereinafter mentioned.
For the sole purpose of covering over-allotments in connection with the
sale of the Underwritten Shares, the Stockholder shall grant to the Underwriters
the option (the "Option") described in Section 2 hereof to purchase all or any
part of 311,573 shares of the Company's common stock (the "Option Shares" and,
together with the 1,177,153 of the Underwritten Shares to be sold by the
Stockholder, the "Stockholder Shares") owned by it. The Underwritten Shares and
the Option Shares purchased pursuant to this Underwriting Agreement (this
"Agreement") are herein called the "Shares" and the proposed offering of the
Shares by the Underwriters is hereinafter referred to as the "Public Offering."
The Company has filed with the Securities and Exchange Commission (the
"Commission"), pursuant to the Securities Act of 1933, as amended (the "Act"),
and published rules and regulations adopted by the Commission under the Act (the
"Rules"), a registration statement on Form S-3 ("Form S-3") (File No.
333-14875), including a Preliminary Prospectus, relating to the Shares, and such
____________________
* Plus up to 311,573 additional shares of common stock to cover over-allotments.
<PAGE>
amendments to such registration statement as may have been filed with the
Commission to the date of this Agreement. The Company will also file with the
Commission one of the following: (A) prior to effectiveness of such registration
statement, a further amendment to such registration statement, including the
form of final prospectus, and/or (B) after effectiveness of such registration
statement, a final prospectus in accordance with Rules 430A and 424(b). The
Company has furnished to the Representatives copies of such registration
statement, each amendment to it filed by the Company with the Commission, and
each Preliminary Prospectus filed by the Company with the Commission. The
registration statement as amended at the time it becomes or became effective
(the "Effective Date"), including financial statements and all exhibits and any
information deemed to be included by Rule 430A, is called the "Registration
Statement." The term "Preliminary Prospectus" means any Preliminary Prospectus
(as referred to in Rule 430 or Rule 430A of the Rules) included at any time as a
part of the registration statement and the term "Prospectus" means the
prospectus relating to the Shares that is first filed pursuant to Rule 424(b)
after the date hereof.
Any reference herein to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any
documents incorporated by reference therein on or before the Effective Date or
the date of such Preliminary Prospectus or the Prospectus, as the case may be.
As the Representatives, you have advised the Company and the Stockholder
that (a) you are authorized to enter into this Agreement on behalf of the
several Underwriters and (b) the Underwriters are willing, acting severally and
not jointly, to purchase the amounts of the Underwritten Shares set forth
opposite their respective name in Schedule I hereto, plus their pro rata portion
of the Option Shares if you elect to exercise the over- allotment Option in
whole or in part for the accounts of the several Underwriters.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the Company,
the Stockholder and the Underwriters hereby agree as follows:
1. Representations, Warranties and Agreements of the Company and the
Stockholder
(a) The Company represents and warrants to, and agrees with, each
Underwriter as follows:
(i) The Company has been duly organized, is in compliance with its
Certificate of Incorporation, and is validly existing as a corporation in
good standing under the laws of the State of Delaware, with full power and
authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus. Each significant subsidiary (as
defined by the Act) of the Company (each a "Subsidiary" and collectively,
the "Subsidiaries") has been duly incorporated and is validly existing as
a corporation, in good standing under the laws of the jurisdiction of its
organization, with full power and authority (corporate and other) to own
or lease its properties, and conduct its business. The Company and the
Subsidiaries are duly qualified to transact business in all jurisdictions
in which the conduct of its business or the ownership or lease of its
properties requires such qualifications except where the failure to be so
qualified would not reasonably be expected to have a Material Adverse
Effect (as defined below). The Company owns all of the outstanding capital
stock of its Subsidiaries free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest other than the pledge
of the shares of stock of Fairfield River Ridge, Inc. and Fairfield St.
Croix, Inc.
(ii) The outstanding shares of common stock of the Company have been
duly and validly authorized and issued and are fully paid and
non-assessable; the Shares are duly and validly authorized, and, if not
<PAGE>
now issued, when issued and paid for as contemplated herein, will be fully
paid and non-assessable. There are no preemptive or other similar rights
to subscribe for or to purchase, or any restriction upon the voting or
transfer of the Shares pursuant to the Company's Certificate of
Incorporation, Bylaws, or other governing documents or any agreement or
other instrument to which the Company or any of its Subsidiaries is a
party or by which any of them may be bound other than the Company's Rights
Agreement. Neither the filing of the Registration Statement nor the
offering of the Shares as contemplated by this Agreement gives rise to any
rights, other than those which have been waived or satisfied, for or
relating to the registration of any shares of any class of the Company's
capital stock. The Shares have been approved for listing on the New York
Stock Exchange (the "NYSE"), subject to official notice of issuance.
(iii) The Shares conform in all material respects with the
statements concerning them in the Prospectus. As of the Closing Date (as
defined below) and any Option Closing Date (as defined below), if
applicable, the Company will have the authorized capital stock set forth
under the caption "Description of Capital Stock" in the Prospectus. No
further corporate approval or authority on behalf of the Company will be
required for the issuance and sale of the Shares to be sold by the Company
as contemplated herein.
(iv) Any Preliminary Prospectus, the Prospectus and the Registration
Statement comply as to form with the requirements of the Act and the
Rules, including Form S-3. The Company meets the requirements of, and is
entitled to use, Form S-3 for the Public Offering. The Registration
Statement has been filed with the Commission pursuant to the Act.
(v) Neither the Commission nor any other agency, body, authority,
court or arbitrator of competent jurisdiction has, by order or otherwise,
prohibited or suspended the use of any Preliminary Prospectus or the
Prospectus relating to the proposed offering of the Shares or, to the
Company's knowledge, instituted proceedings for that purpose. The
Registration Statement, the Prospectus and any Preliminary Prospectus and
any amendments or supplements thereto at the time they became or become
effective or were filed or are filed with the Commission contained or will
contain all statements which are required to be stated therein by, and in
all material respects conformed or will conform to the requirements of,
the Act and the Rules. Neither the Registration Statement nor any
Preliminary Prospectus nor any amendment thereto, and neither the
Prospectus nor any supplement thereto, as of its date contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that the Company does not make any representations or
warranties as to information contained in or omitted from the Registration
Statement or any Preliminary Prospectus or the Prospectus, or any such
amendment or supplement, in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of any Underwriter
through the Representatives, expressly for use in the preparation thereof
as hereinafter set forth in Section 13, or by or on behalf of the
Stockholder.
(vi) The consolidated financial statements of the Company and the
Subsidiaries, together with related notes and schedules as set forth in
the Registration Statement, present fairly the consolidated financial
condition and the results of operations of the Company and the
Subsidiaries, at the indicated dates and for the indicated periods. Such
financial statements have been prepared in accordance with generally
<PAGE>
accepted accounting principles ("GAAP"), consistently applied throughout
the periods involved, and all adjustments necessary for a fair
presentation of results for such periods have been made. The summary
financial information and the selected financial data included in the
Prospectus present fairly in accordance with GAAP the information shown
therein and have been compiled on a basis consistent with that of the
audited and unaudited financial statements from which they were derived.
(vii) Except as is disclosed in the Prospectus, there is no action
or proceeding pending or, to the knowledge of the Company, threatened
against the Company, any of its Subsidiaries or any of their respective
officers or any of their properties, assets or rights before any court or
administrative or governmental agency or other body which reasonably would
be expected to (A) result in any material adverse change in the financial
condition, or in the earnings, business, affairs, properties, business
prospects or results of operations of the Company and its Subsidiaries
taken as a whole ("Material Adverse Change" or "Material Adverse Effect,"
as the case may be), whether or not arising in the ordinary course of
business, (B) adversely affect the performance of this Agreement or the
consummation of the transactions herein contemplated, except as disclosed
in the Prospectus and for which the Company maintains a reserve in an
amount which it believes is adequate to cover potential liabilities, or
(C) be required to be disclosed in the Registration Statement.
(viii) The Company and each of its Subsidiaries are not in violation
of any law, ordinance, governmental rule or regulation or court decree to
which they may be subject which violation reasonably would be expected to
have a Material Adverse Effect.
(ix) The Company and its Subsidiaries have good and marketable title
to all of the real properties and valid title to all other assets
reflected in the consolidated financial statements hereinabove described
or as described in the Prospectus as being owned by them, subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except those
securing indebtedness described in such financial statements or as
described in the Prospectus or which do not materially affect the present
or proposed use of such properties or assets or would not cause a Material
Adverse Effect. The Company and its Subsidiaries occupy their leased
properties under valid, subsisting and binding leases with only such
exceptions as in the aggregate are not material and do not interfere with
the conduct of the business of the Company and its Subsidiaries. There
exists no default under the provisions of any lease, contract or other
obligation to which the Company is a party which may result in a Material
Adverse Change.
(x) The Company and its Subsidiaries have filed all federal, state
and other tax returns and reports which have been required to be filed and
have paid all taxes indicated by said returns and all assessments received
by them to the extent that such taxes have become due and there is no tax
deficiency that has been or, to the Company's knowledge, might be asserted
against the Company or any of its Subsidiaries that might have a Material
Adverse Effect. All material tax liabilities are adequately provided for
on the books of the Company and its Subsidiaries.
(xi) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, as they may be amended or
supplemented, (A) there has not been any Material Adverse Change nor, to
the knowledge of the Company, is any such change threatened, (B) there has
not been any transaction entered into by the Company or its Subsidiaries
that is material to the earnings, business, affairs, properties, business
prospects or operations of the Company and its Subsidiaries taken as a
whole, other than transactions in the ordinary course of business and
changes and transactions contemplated by the Registration Statement and
the Prospectus, as they may be amended or supplemented, (C) other than
changes in the amounts outstanding under the Company's and its
<PAGE>
Subsidiaries' revolving credit facilities, there has not been any material
change in the capital stock, long term debt or material liabilities of the
Company or its Subsidiaries, and (D) there has not been any dividend or
distribution of any kind declared, paid or made on the capital stock of
the Company or any of its Subsidiaries. Neither the Company nor any
Subsidiary has any contingent obligations or liabilities which are
required to be but are not disclosed in the Registration Statement and the
Prospectus.
(xii) The filing of the Registration Statement and related
Prospectus and the execution and delivery of this Agreement have been duly
authorized by the Board of Directors of the Company; this Agreement
constitutes a valid and legally binding obligation of the Company
enforceable in accordance with its terms except as enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other laws affecting creditors' rights generally and by
general principles of equity and federal and state securities laws. The
Company is not in breach or violation of or default under any indenture,
mortgage, deed of trust, lease, contract, note or other agreement or
instrument to which it is a party or by which it or any of its properties
is bound and which breach, violation or default would reasonably be
expected to have a Material Adverse Effect. The consummation of the
transactions herein contemplated and the fulfillment of the terms hereof
will not result in a breach or violation of any of the material terms and
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, lease, contract, note or other agreement or instrument to
which the Company or any Subsidiary is a party, or of the Company's or any
Subsidiary's Certificate of Incorporation or bylaws or any law, decree,
order, rule, writ, injunction or regulation applicable to the Company or
any Subsidiary of a court or of any regulatory body or administrative
agency or other governmental body having jurisdiction over the Company and
its Subsidiaries except for such breaches, violations or defaults as would
not reasonably be expected to have a Material Adverse Effect.
(xiii) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and performance of its obligations
hereunder (except such additional steps as may be necessary to qualify the
Shares for public offering by the Underwriters under state securities or
Blue Sky laws, and filing the Prospectus under Rule 424(b)) has been
obtained or made and is in full force and effect.
(xiv) The Company and each Subsidiary hold all material licenses,
authorizations, charters, certificates and permits from governmental
authorities which are necessary to the conduct of their businesses and
neither the Company nor any Subsidiary has received notice of any
proceeding relating to the revocation or modification of any of such
licenses, authorizations, charters, certificates or permits. The Company
and its Subsidiaries own or otherwise possess rights to the patents,
patent rights, licenses, inventions, copyrights, trademarks, service marks
and trade names presently employed by them in connection with the
businesses now operated by them as described in the Prospectus, and
neither the Company nor any of its Subsidiaries has infringed or received
any notice of infringements of or conflict with asserted rights of others
with respect to any of the foregoing, except where such infringement or
conflict would not reasonably be expected to result in a Material Adverse
Effect.
(xv) Ernst & Young LLP, independent auditors, who have certified
certain of the financial statements filed with the Commission and included
as part of the Registration Statement and Prospectus, are independent
public accountants within the meaning of the Act, the Rules and Regulation
S-X of the Commission and Rule 101 of the Code of Professional Ethics of
the American Institute of Certified Public Accountants.
<PAGE>
(xvi) There are no agreements, contracts or other documents of a
character required to be described in the Registration Statement or the
Prospectus or required by Form S-3 to be filed as exhibits to the
Registration Statement or incorporated by reference in the Registration
Statement which are not described, filed or incorporated as required.
(xvii) No labor dispute is pending or, to the knowledge of the
Company, threatened by the Company's or any Subsidiary's employees which
could result in a Material Adverse Effect. No collective bargaining
agreement exists with any of the Company's employees and, to the Company's
knowledge, no agreement is imminent.
(xviii) Except as contemplated by Section 2 hereof and as disclosed
in the Prospectus and permitted by the Rules, the Company has not (itself
or through any person) taken and will not take, directly or indirectly,
any action designed to or which might reasonably be expected to, cause or
result in a violation of Section 5 of the Act or Rule 10b-6 under the
Exchange Act ("Rule 10b-6") or in stabilization or manipulation of the
price of the Company's common stock.
(xix) Without limiting the generality of any of the foregoing
representations and warranties and except to the extent no Material
Adverse Effect would reasonably be expected to occur, (a) none of the
operations of the Company or its Subsidiaries is in violation of any
environmental law, regulation or any permit; (b) neither the Company nor
any of its Subsidiaries has been notified that it is under investigation
or under review by any governmental agency with respect to compliance
therewith or with respect to the generation, use, treatment, storage or
release of hazardous material; (c) neither the Company nor any of its
Subsidiaries have any liability or contingent or potential liability in
connection with the past generation, use, treatment, storage, disposal or
release of any hazardous material; (d) there is no hazardous material that
may reasonably be expected to pose any material risk to safety, health, or
the environment, on, under or about any property owned, leased or operated
by the Company or any of its Subsidiaries or, to the knowledge of the
Company, any property adjacent to any such property; and (e) there has
heretofore been no release of any hazardous material on, under or about
such property, or, to the knowledge of the Company, any such adjacent
property. None of the present or, to the knowledge of the Company, past
property of the Company or any of its Subsidiaries is listed or proposed
for listing on the National Priorities List pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA") or on the Comprehensive Environmental Response Compensation
Liability Information System List ("CERCLIS") or any similar state list of
sites requiring remedial action. Neither the Company nor any of its
Subsidiaries is subject to any Environmental Property Transfer Act, or to
the extent that any such statute is applicable to any property, the
Company and its Subsidiaries have fully complied with their obligations
under such statute(s), and neither has any outstanding obligations or
liabilities under any Environmental Property Transfer Act.
(xx) The Company and its Subsidiaries maintain insurance of the
types and in the amounts customary for their businesses, including, but
not limited to, insurance covering liability and real and personal
property owned or leased by the Company against theft, damage,
destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect.
<PAGE>
(xxi) Neither the Company nor any Subsidiary has at any time during
the last five years (a) made any unlawful contribution to any candidate
for foreign office, or failed to disclose fully any contribution in
violation of law, or (b) made any payment to any federal or state
governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted
by the laws of the United States or any jurisdiction thereof.
(xxii) Each executive officer and director of the Company has
executed a lock-up agreement, a form of which is attached hereto as
Exhibit "A" (the "Lock-Up Agreement").
(b) Any certificate signed by any officer of the Company or by the
Stockholder, as the case may be, and delivered to you or counsel for the
Underwriters shall be deemed a representation and warranty by the Company or the
Stockholder, as the case may be, to the Underwriters as to the matters covered
thereby.
(c) The Stockholder represents and warrants to, and agrees with, each
Underwriter as follows:
(i) As of the Effective Date, the Stockholder shall be the lawful
owner of the number of Shares to be sold by it, and has or at such time or
times, as required, will have good and valid title to all such Shares,
free of all restrictions on transfer (other than those imposed by the Act,
the Company's Certificate of Incorporation and Bylaws and the securities
or Blue Sky laws of certain jurisdictions) liens, encumbrances, security
interests and claims whatsoever, except for claims created hereunder, the
Power of Attorney (as defined below) or Custody Agreement (as defined
below).
(ii) The Stockholder has full legal right, power and authority, and
any approvals required by law and any agreement or instrument to which the
Stockholder is a party, to enter into this Agreement, and this Agreement
has been fully executed and delivered by the Stockholder.
(iii) Upon delivery of payment for the Shares to be sold by the
Stockholder pursuant to this Agreement, good and valid title to such
Shares will pass, free of all restrictions on transfer (other than those
imposed by the Act, the Company's Certificate of Incorporation and the
securities or Blue Sky laws of certain jurisdictions) liens, encumbrances,
security interests and claims whatsoever, to each Underwriter.
(iv) The Stockholder has duly authorized (if applicable), executed
and delivered a power of attorney, a form of which is attached hereto as
Exhibit "B" and included herein (the "Power of Attorney"), appointing
attorneys-in-fact as named therein (collectively the "Attorneys" and
individually the "Attorney"), and a custody agreement, a form of which is
attached hereto as Exhibit "C" and included herein (the "Custody
Agreement"), with the custodian named therein (the "Custodian"). Each of
the Power of Attorney and the Custody Agreement constitutes a valid and
binding agreement of the Stockholder, enforceable in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
or affecting creditors' rights generally or by general equitable
principles; and the Stockholder's Attorney, acting alone, is authorized to
execute and deliver this Agreement and the certificate referred to in
Section 6(j) hereof, on behalf of the Stockholder to determine the
purchase price to be paid by the several Underwriters to the Stockholder
as provided in Section 2 hereof, to authorize the delivery of the
Stockholder Shares under this Agreement and to duly endorse (in blank or
otherwise) the certificate or certificates representing such Shares or a
stock power or powers with respect thereto, to accept payment therefor,
and otherwise to act on behalf of the Stockholder in connection with this
Agreement.
<PAGE>
(v) All authorizations, approvals, consents and orders necessary for
the execution and delivery by the Stockholder of the Power of Attorney and
the Custody Agreement, the execution and delivery by or on behalf of the
Stockholder of this Agreement and the sale and delivery of the Stockholder
Shares under this Agreement (other than, at the time of the execution
hereof (if the Registration Statement has not yet been declared effective
by the Commission), the issuance of the order of the Commission declaring
the Registration Statement effective and such authorizations, approvals or
consents as may be necessary under state or other securities or Blue Sky
laws) have been obtained and are in full force and effect; the Stockholder
has been duly organized and is validly existing and in good standing under
the laws of the jurisdiction of its organization as the type of entity
that it purports to be; and the Stockholder has full right, power and
authority to enter into and perform its obligations under this Agreement
and such Power of Attorney and Custody Agreement, and to sell, assign,
transfer and deliver the Shares to be sold by the Stockholder under this
Agreement.
(vi) The Stockholder will not for a period of 120 days after the
effective date of the Registration Statement, offer to sell, contract to
sell or otherwise sell or dispose of any shares of common stock, any
options or warrants to purchase any shares of common stock, or any
securities convertible into or exchangeable for shares of common stock,
owned directly by the Stockholder or with respect to which the Stockholder
has the power of disposition, otherwise than hereunder or with the prior
written consent of Stephens Inc., which consent will not unreasonably be
withheld. The Stockholder agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent against the
transfer of shares of common stock held by the Stockholder except in
compliance with the foregoing restrictions.
(vii) Certificates in negotiable form for all Shares to be sold by
the Stockholder under this Agreement, together with a stock power or
powers duly endorsed in blank by the Stockholder, have been placed in
custody with the Custodian for the purpose of effecting delivery
hereunder.
(viii) This Agreement has been duly authorized by the Stockholder
and has been duly executed and delivered by or on behalf of the
Stockholder and is a valid and binding agreement of the Stockholder,
enforceable in accordance with its terms, except as the indemnification
and contribution provisions hereunder may be limited by applicable law and
except as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles; and the
performance of this Agreement and the consummation of the transactions
herein contemplated will not result in a breach of or default under any
material bond, debenture, note or other evidence of indebtedness, or any
material contract, indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which the Stockholder is a party
or by which the Stockholder or any Stockholder Shares hereunder may be
bound or, to the best of the Stockholder's knowledge, result in any
violation of any law, order, rule, regulation, writ, injunction or decree
of any court or governmental agency or body or result in any violation of
any provisions of the charter, bylaws or other organizational documents of
the Stockholder.
(ix) The Stockholder has not distributed and will not distribute any
prospectus or other offering material in connection with the offering and
sale of the Shares.
<PAGE>
(x) All information furnished by or on behalf of the Stockholder
relating to the Stockholder and the Stockholder Shares that is contained
in the representations and warranties of the Stockholder in such
Stockholder's Power of Attorney or set forth in the Registration Statement
and any Preliminary Prospectus or the Prospectus and any amendments or
supplements thereto is, and on the Closing Date and on any later date on
which Option Shares are to be purchased as the case may be, will be, true,
correct and complete, and does not, and on the Closing Date and on any
later date on which Option Shares are to be purchased, as the case may be,
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make such
statements not misleading.
(xi) The Stockholder will review the Prospectus and will comply with
all agreements and satisfy all conditions on its part to be complied with
or satisfied pursuant to this Agreement on or prior to the Closing Date,
or any later date on which Option Shares are to be purchased, as the case
may be, and will advise one of its Attorneys prior to the Closing Date or
such later date on which Option Shares are to be purchased, as the case
may be, if any statement to be made on behalf of the Stockholder in the
certificate contemplated by Section 6(j) would be inaccurate if made as of
the Closing Date or such later date on which Option Shares are to be
purchased, as the case may be.
(xii) The Stockholder does not have, or has waived prior to the date
hereof, any preemptive right, co-sale right or right of first refusal or
other similar right to purchase any of the Shares that are to be sold by
the Company to the Underwriters pursuant to this Agreement; and the
Stockholder does not own any warrants, options or similar rights to
acquire, and does not have any right or arrangement to acquire, any
capital stock, rights, warrants, options or other securities from the
Company, other than those described in the Registration Statement and any
Preliminary Prospectus or the Prospectus and any amendments or supplements
thereto.
(xiii) The Stockholder is not aware that any representations and
warranties of the Company set forth in Section 2 above is untrue or
inaccurate.
(xiv) The Stockholder has not taken, nor will it take, directly or
indirectly, any action designed to, or which might reasonably be expected
to, cause or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares
owned by it pursuant to the distribution contemplated by this Agreement.
(xv) The Stockholder will pay or cause to be paid all transfer
taxes, if any, with respect to the Shares to be sold by it.
2. Purchase, Sale and Delivery of the Underwritten Shares. On the basis of
the representations, warranties and covenants herein contained, and subject to
the terms and conditions herein set forth, the Company and the Stockholder agree
to sell each Underwriter, severally and not jointly, and each Underwriter
agrees, severally and not jointly, to purchase, at a price of $20.375 per share,
the number of the Underwritten Shares set forth on Schedule I attached hereto,
subject to adjustment in accordance with Section 10 hereof.
Payment for the Underwritten Shares shall be made by wire transfer of
immediately available U.S. Funds to designated accounts of the Company and the
Stockholder, to the order of the Company or the Stockholder, as applicable,
against delivery of certificates for the Shares to the Representatives for the
accounts of the several Underwriters. Delivery of certificates shall be to the
Representatives c/o Stephens Inc. ("Stephens"), 111 Center Street, Little Rock,
Arkansas 72201, or at such other address as Stephens may designate in writing.
<PAGE>
Payment will be made at the offices of Stephens, or at such other place as shall
be agreed upon by Stephens and the Company, at approximately 9:00 a.m., central
time, on November 27, 1996, such time and date being herein referred to as the
"Closing Date." The certificates for the Underwritten Shares will be delivered
in such denominations and in such registrations as Stephens requests in writing
and will be made available for inspection at such locations as Stephens may
reasonably request at least one full business day prior to the Closing Date.
The certificates in negotiable form for the Stockholder Shares have been
placed in custody (for delivery under this Agreement) under the Custody
Agreement. The Stockholder agrees that the certificates for the Stockholder
Shares so held in custody are subject to the interests of the Underwriters
hereunder, that the arrangements made by the Stockholder for such custody,
including the Power of Attorney, is to that extent irrevocable and that the
obligations of the Stockholder hereunder shall not be terminated by the act of
the Stockholder or by operation of law, or the occurrence of the Stockholder's
bankruptcy or any other event, except as specifically provided herein or in the
Custody Agreement. If any such event should occur before the delivery of the
certificates for the Stockholder Shares hereunder, the Stockholder Shares to be
sold by the Stockholder shall, except as specifically provided herein or in the
Custody Agreement, be delivered by the Custodian in accordance with the terms
and conditions of this Agreement as if such event had not occurred, regardless
of whether the Custodian shall have received notice of such event.
In addition, on the basis of the representations, warranties, agreements
and covenants herein contained and subject to the terms and conditions herein
set forth, the Stockholder hereby grants the Option to the several Underwriters
to purchase the Option Shares at the price per share as set forth in the first
paragraph of this Section 2. The Option may be exercised in whole or in part on
one occasion upon written notice (or oral notice, subsequently confirmed in
writing) given not more than thirty (30) days following the date of this
Agreement, by Stephens, on behalf of the Representatives of the several
Underwriters, to the Company and the Stockholder setting forth the number of
Option Shares as to which the several Underwriters are exercising the Option and
the names and denominations in which the Option Shares are to be registered.
Closing on the purchase of the Option Shares (the "Option Closing Date"), if
any, shall occur no later than three (3) business days following the date upon
which notice of exercise of the Option is given to the Company and the
Stockholder, and shall take place at the offices of Stephens, or at such other
place as shall be agreed upon by Stephens and the Stockholder. Subject to
Section 10, the number of Option Shares to be purchased by each Underwriter
shall be in the same proportion to the total number of shares of the common
stock being purchased by such Underwriter bears to 2,077,153 shares, adjusted by
you in such manner as to avoid fractional shares. The Option may be exercised
only to cover over-allotments in the sale of the Underwritten Shares by the
Underwriters. Stephens, on behalf of the Representatives of the several
Underwriters, may cancel such option at any time prior to its expiration by
giving written notice (or oral notice, subsequently confirmed in writing) of
such cancellation to the Stockholder. To the extent, if any, that the Option is
exercised, payment for the Option Shares shall be made by wire transfer of
immediately available U.S. Funds to a designated account of the Stockholder, to
the order of the Stockholder. Certificates for the Option Shares shall be
delivered in the same manner and upon the same terms as the Underwritten Shares.
3. Offering by the Underwriters. It is understood that the Public Offering
of the Underwritten Shares is to be made as soon as the Representatives deem it
advisable to do so after the Registration Statement has become effective. The
Underwritten Shares are to be initially offered to the public at the public
offering price set forth in the Prospectus. The Representatives may from time to
time thereafter change the public offering price and other selling terms. To the
extent, if at all, that any Option Shares are purchased pursuant to Section 2
hereof, the Underwriters will offer them to the public on the foregoing terms.
<PAGE>
It is further understood that you will act as the Representatives for the
Underwriters in the offering and sale of the Shares, in accordance with an
Agreement Among Underwriters which has been entered into by you and the several
other Underwriters.
4. Covenants of the Company. The Company covenants and
agrees with each of the several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective and will not, either before or after
effectiveness, file any amendment thereto or supplement to the Prospectus
(including a prospectus filed pursuant to Rule 424(b) which differs from
the Prospectus on file at the time the Registration Statement becomes
effective) or file any documents under the Exchange Act before the earlier
to occur of (A) the 35th day following the Effective Date or (B) the
closing date of the Underwriters' purchase of the Option Shares if such
document would be deemed to be incorporated by reference into the
Registration Statement, the Preliminary Prospectus or the Prospectus of
which the Representatives shall not previously have been advised and
furnished with a copy or to which the Representatives shall have
reasonably objected in writing or which is not in compliance with the Act
or Rules; provided, however, the Company may make filings on Form S-8
relating to its stock purchase plan.
(b) The Company will advise the Representatives promptly of any
request of the Commission or other securities regulatory agency ("Other
Securities Regulator") for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, or of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the use of the Prospectus or of the
institution of any proceedings for that purpose, or comparable action
taken or initiated by any Other Securities Regulator, and the Company will
use its reasonable efforts to prevent the issuance of any such stop order
preventing or suspending the use of the Prospectus and to obtain as soon
as possible the lifting thereof, if issued.
(c) The Company will use its reasonable efforts with the
Representatives in endeavoring to qualify the Shares for sale under the
securities laws of such jurisdictions (including foreign jurisdictions) as
the Representatives may reasonably designate, and will make such
applications, file such documents, and furnish such information as may be
reasonably required for that purpose; provided however, the Company shall
not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not so
qualified or required to file such a consent. The Company will, from time
to time, prepare and file such statements, reports, and other documents,
as are or may be required to continue such qualifications in effect for so
long a period as the Representatives may reasonably request for
distribution of the Shares.
(d) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary
Prospectus or the Prospectus as the Representatives may reasonably
request. The Company will deliver to, or upon the order of, the
Representatives, on the Trade Date and thereafter from time to time during
the period necessary to effect the distribution of the Shares as many
copies of the Prospectus in final form, or as thereafter amended or
supplemented, as the Representatives may reasonably request. The Company
will deliver to the Representatives at or before the Closing Date, three
(3) manually signed copies of the Registration Statement and all
amendments thereto including all exhibits filed therewith (including any
document filed under the Exchange Act and deemed to be incorporated by
<PAGE>
reference into the Registration Statement, the Preliminary Prospectus or
the Prospectus) and will deliver to the Representatives such number of
copies of the Registration Statement, but without exhibits, and of all
amendments thereto, as the Representatives may reasonably request.
(e) During the time necessary to effect the distribution of the
Shares, the Company shall comply with all requirements imposed upon it by
the Act, as now and hereafter amended, and by the Rules, as from time to
time in force, so far as is necessary to permit the continuance of sales
of or dealings in the Shares as contemplated by the provisions hereof and
the Prospectus. If, during the period necessary to effect the distribution
of the Shares, any event shall occur as a result of which, in the judgment
of the Company or in the opinion of counsel for the Underwriters, it
becomes necessary to amend or supplement the Prospectus in order to make
the statements therein, in the light of the circumstances existing at the
time the Prospectus is delivered to a purchaser, not misleading, or, if it
is necessary at any time to amend or supplement the Prospectus to comply
with any law or to file under the Exchange Act any document which would be
deemed to be incorporated by reference in the Prospectus in order to
comply with the Act or the Exchange Act, the Company promptly will notify
the Representatives and, subject to the Representatives' prior review,
prepare and file with the Commission and any appropriate Other Securities
Regulator an appropriate amendment or supplement to the Prospectus (at the
expense of the Company) so that the Prospectus as so amended or
supplemented will not, in light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with the
law.
(f) The Company will make generally available to its security
holders in the manner contemplated by Rule 158(b) under the Act, as soon
as it is practicable to do so, but in any event not later than the 90th
day after the fiscal quarter first occurring one year after the Effective
Date, an earnings statement in reasonable detail, covering a period of at
least twelve consecutive months beginning after the Effective Date, which
earnings statement shall satisfy the requirements of Section 11(a) of the
Act and will advise you in writing when such statement has been so made
available.
(g) For a period of three years from the date of this Agreement, the
Company will furnish to the Representatives (a) concurrently with
furnishing of such reports to its stockholders, statements of income of
the Company for each quarter in the form furnished to the Company's
stockholders and certified by the Company's principal financial or
accounting officer; (b) concurrently with furnishing to its stockholders,
a balance sheet of the Company as at the end of such fiscal year, together
with statements of earnings, stockholders' equity and cash flow of the
Company for such fiscal year, all in reasonable detail and accompanied by
a copy of the certificate or report thereon of independent public
accountants; (c) as soon as they are available, copies of all reports
(financial or other) mailed to stockholders; (d) as soon as they are
available, copies of all reports and financial statements furnished to or
filed with the Commission; (e) every press release which was released or
prepared by the Company; and (f) any additional information of a public
nature concerning the Company or its business which you may reasonably
request. During such period, if the Company shall have active subsidiaries
the foregoing financial statements shall be on a consolidated basis to the
extent that the accounts of the Company and its subsidiaries are
consolidated, and shall be accompanied by similar financial statements for
any significant subsidiary (as defined by the Act) which is not so
consolidated.
(h) Promptly after the Company is advised thereof, it will advise
the Representatives, and confirm in writing, that the Registration
Statement and any amendments shall have become effective.
<PAGE>
(i) The Company will use the net proceeds from the sale of the
Shares substantially in the manner set forth in the Prospectus under the
caption "Use of Proceeds."
(j) Other than as permitted by the Act and the Rules, the Company
will not distribute any prospectus or offering materials in connection
with the offering and sale of the Shares and prior to the Closing Date or
the Option Closing Date will not issue any press releases or other
communications directly or indirectly and will hold no press conferences
with respect to the Company, the financial condition, results of
operations, business, properties, assets or liabilities of the Company, or
the offering of the Shares, without the prior written consent of Stephens.
(k) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar for
its common stock and will, use its best efforts to maintain the listing of
the Shares on the NYSE.
(l) Except as contemplated hereby or by the Prospectus, the Company
will not, for a period of one hundred twenty (120) days after the
Effective Date of the Registration Statement, offer to sell, contract to
sell, sell or otherwise dispose of any shares of the Company's common
stock or securities convertible into shares of the Company's common stock
without the prior written consent of Stephens, which consent will not be
unreasonably withheld; provided, however, the Company may sell, transfer
or issue shares of Common Stock under (i) the Company's plan of
reorganization, (ii) the First Amended and Restated 1992 Warrant Plan,
(iii) the restricted stock agreement between the Company and John W.
McConnell, (iv) the employee stock purchase plan contemplated by the
Company, and (v) the 10% Senior Subordinated Secured Notes ("FCI Notes").
The foregoing covenants and agreements shall apply to any successor of the
Company, including without limitation, any entity into which the Company might
consolidate or merge.
5. Costs and Expenses. Whether or not the Registration Statement becomes
effective, the Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Company under this Agreement, including,
without limiting the generality of the foregoing, the following: accounting fees
of the Company; the fees and disbursements of counsel for the Company; the cost
of printing and delivering to Underwriters copies of the Registration Statement,
any Preliminary Prospectus, the Prospectus, this Agreement, the Agreement Among
Underwriters, the Selected Dealer Agreement, Underwriters' Questionnaire and
Power of Attorney, and the Blue Sky Survey and any supplements thereto; the
filing fees of the Commission; the filing fees incident to securing any required
review by the National Association of Securities Dealers, Inc. ("NASD") of the
terms of the sale of the Shares; the cost of printing certificates representing
the Shares; the cost and charges of any transfer agent or registrar; provided,
however, the Stockholder will pay all fees and disbursements of its counsel and
reimburse to the Company the Stockholder's pro rata portion of the Commission
filing fee, Blue Sky fees and the NASD fee; plus $15,000 of other expenses and
will promptly reimburse the Company for any other amounts advanced by the
Company on behalf of the Stockholder. Any transfer taxes imposed on the sale of
the Shares to the Underwriters will be paid by the Company or the Stockholder as
the case may be. The Company shall not, however, be required to pay for any of
Underwriters' expenses (other than those related to qualification under State
securities or Blue Sky laws) except that, if the Public Offering shall not be
consummated because the conditions in Section 7 hereof are not satisfied, or
because this Agreement is terminated by the Representatives pursuant to Section
6 hereof, or by reason of any failure, refusal or inability on the part of the
Company to perform any undertaking or satisfy any condition of this Agreement or
to comply with any of the terms hereof on their part to be performed, unless
such failure to satisfy said condition or to comply with said terms is due to
the default or omission of any Underwriter, then the Company shall reimburse the
<PAGE>
several Underwriters for all costs and expenses, including attorney fees and
out-of-pocket expenses, reasonably incurred in connection with investigating,
marketing and proposing to market the Shares or in contemplation of performing
their obligations hereunder but the Company shall not in any event be liable to
any of the several Underwriters for damages on account of loss of anticipated
profits from the sale by them of the Shares.
6. Conditions of Obligations of the Underwriters. The obligations of the
several Underwriters to purchase and pay for the Shares as provided herein, are
subject to the accuracy, as of the Closing Date and as of the Option Closing
Date, of the representations and warranties and agreements of the Company and
the Stockholder contained herein, to the performance by the Company and the
Stockholder of their obligations hereunder and to the following additional
conditions:
(a) The Registration Statement shall have become effective not later
than 11:00 a.m., central time, on the date of this Agreement, unless a
later time and date is agreed to by the Representatives, and no stop order
or other order suspending the effectiveness thereof or the qualification
of the Shares under the State securities or Blue Sky laws of any
jurisdiction shall have been issued and no proceeding for that purpose
shall have been taken or, to the knowledge of the Company, shall be
contemplated or threatened by the Commission or any Other Securities
Regulator. If the Company has elected to rely upon Rule 430A of the Rules,
the price of the Shares and any price-related information previously
omitted from the effective Registration Statement pursuant to such Rule
430A shall have been transmitted to the Commission for filing pursuant to
Rule 424(b) of the Act within the prescribed time period, and prior to the
Closing Date the Company shall have provided evidence satisfactory to the
Representatives of such timely filing, or a post-effective amendment
providing such information shall have been promptly filed and declared
effective in accordance with the requirements of Rule 430A under the Act.
All requests for additional information on the part of the Commission or
any other government or regulatory authority with jurisdiction (to be
included in the Registration Statement or Prospectus or otherwise) shall
be complied with to the satisfaction of the Commission or such
authorities.
(b) The Representatives shall have received on the Closing Date and
on the Option Closing Date the opinions of Jones, Day, Reavis & Pogue,
counsel for the Company, and James F. Mosier, counsel for the Stockholder,
with respect to matters set forth below in subparagraphs (i) through (ix)
and subparagraphs (x) through (xiii), respectively, each dated the Closing
Date and the Option Closing Date, as the case may be, addressed to the
Underwriters in form and substance satisfactory to Wright, Lindsey &
Jennings, counsel to the Underwriters, to the effect that:
(i) The Company and FAC have been duly organized and are
validly existing as corporations in good standing under the laws of
the state(s) of their organization with full corporate power and
authority to own their properties and conduct their business as
described in the Registration Statement and Prospectus; the Company
and FAC are duly qualified to transact business in those
jurisdictions listed in such counsel's opinion (which list shall
include, with respect to the Company, each state in which the
Company owns resort properties as shown in the Prospectus; and all
of the outstanding shares of capital stock of the Company have been
validly authorized and issued, are fully paid and non-assessable,
and except as set forth in the Prospectus and the Registration
Statement and except for directors' qualifying shares, if any, no
options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into
any shares of capital stock of the Company are outstanding other
<PAGE>
than shares of Common Stock to be issued or sold pursuant to (i) the
Company's plan of reorganization, (ii) the First Amended and
Restated 1992 Warrant Plan, (iii) the restricted stock agreement
between the Company and John W. McConnell, (iv) the employee stock
purchase plan contemplated by the Company, and (v) the FCI Notes.
(ii) The Company has authorized and, to the knowledge of such
counsel, outstanding the capital stock set forth under the caption
"Description of Capital Stock" in the Registration Statement and
Prospectus, except for issuances subsequent to the date of the
Prospectus, if any, pursuant to reservations, commitments, employee
benefit plans or other existing agreements; all of the Shares
conform to the description thereof contained in the Prospectus; the
certificates for the Shares are in due and proper form, the
Underwritten Shares to be sold pursuant to this Agreement have been
duly authorized and will be validly issued, fully paid and
non-assessable when issued and paid for as contemplated by this
Agreement; there are no preemptive or other restrictive rights to
subscribe for or to purchase or any restriction upon the voting or
transfer of the Shares pursuant to the Company's Certificate of
Incorporation, Bylaws, other governing documents or, to such
counsel's knowledge, any material agreement or other instrument to
which the Company is a party or by which it is bound, other than the
Rights Agreement; and, to such counsel's knowledge, neither the
filing of the Registration Statement nor the offering or sale of the
Shares as contemplated by this Agreement gives rise to any rights,
other than those which have been waived or satisfied, for or
relating to the registration of any class of the Company's capital
stock.
(iii) The Registration Statement has become effective under
the Act and to the knowledge of such counsel no stop order
proceedings with respect thereto have been instituted or are pending
or threatened under the Act and any and all filings required by Rule
424 and Rule 430A of the Rules have been made.
(iv) The Registration Statement, all Preliminary Prospectuses,
the Prospectus and each amendment or supplement thereto, as of their
respective effective or issue dates, complied as to form in all
material respects with the requirements of the Act and the Rules,
except that such counsel need express no opinion as to the financial
statements, schedules and other financial or statistical information
included therein.
(v) The Company meets the requirements of, and is entitled to
use, Form S-3 for the Public Offering.
(vi) Except as set forth in the Registration Statement and the
Prospectus, there are no contracts, agreements or understandings
known to such counsel between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the
Company owned or to be owned by such person or to require the
company to include such securities in the securities being
registered pursuant to a registration statement filed by the Company
under the Act, except for any rights under employee stock
compensation plans, which registration rights are not exercisable
with respect to the transactions contemplated by this Agreement.
<PAGE>
(vii) To the knowledge of such counsel, neither the Company
nor FAC is, nor with the giving of notice or lapse of time or both
would be, in violation of or in default under, nor will the
execution or delivery hereof or consummation of the sale of the
Shares by the Company as contemplated hereby result in a violation
of, or constitute a default under, the Certificate of Incorporation,
Bylaws or other governing documents of the Company or FAC, or any
material agreement, indenture or other instrument filed with the
Commission, to which the Company or FAC is a party or by which
either of them is bound, or to which their properties are subject,
nor will the performance by the Company of its obligations hereunder
violate any U.S. Federal statute or the Delaware General Corporation
Law, any rule, administrative regulation or decree known by such
counsel issued pursuant to U.S. Federal statute or Delaware General
Corporation Law by any court or any governmental agency or body
having jurisdiction over the Company or FAC or their properties, or
to such counsel's knowledge result in the creation or imposition of
any lien, charge, claim or encumbrance upon any property or asset of
the Company or FAC, except where any such violation, default, lien,
charge, claim or encumbrance would not have a Material Adverse
Effect.
(viii) This Agreement has been duly
authorized, executed and delivered by the Company and is a valid
and binding obligation of the Company.
(ix) No approval, consent, order, authorization, designation,
declaration or filing by or with any U.S. Federal governmental
regulatory, administrative or other governmental body or any State
of Delaware court or governmental agency or body under the Delaware
General Corporation Law is necessary in connection with the
execution and delivery of this Agreement and the consummation of the
sale of the Shares by the Company herein contemplated (other than
required by NASD regulation or state securities and Blue Sky laws,
as to which such counsel need express no opinion) except such as
have been obtained or made, specifying the same.
(x) The Stockholder has full right, power and authority to
enter into and to perform its obligations under the Power of
Attorney and Custody Agreement to be executed and delivered by it in
connection with the transactions contemplated herein; the Power of
Attorney and Custody Agreement of the Stockholder have been duly
authorized by the Stockholder; the Power of Attorney and the Custody
Agreement of the Stockholder have been duly executed and delivered
by or on behalf of the Stockholder; and the Power of Attorney and
the Custody Agreement of the Stockholder constitute valid and
binding agreements of the Stockholder, enforceable in accordance
with their terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or
by general equitable principles.
(xi) The Stockholder has full right, power and authority to
enter into and to perform its obligations under this Agreement and
to sell, transfer, assign and deliver the Shares to be sold by the
Stockholder hereunder.
(xii) This Agreement has been duly authorized by the
Stockholder and has been duly executed and delivered by or on behalf
of the Stockholder and, assuming due authorization, execution and
delivery by the Underwriters, is a valid and binding agreement of
the Stockholder, enforceable in accordance with its terms, except as
rights to indemnity which may be limited by Federal or state
securities laws and except as to all applicable bankruptcy,
<PAGE>
insolvency, fraudulent conveyance, moratorium, receivership and
other laws relating to or affecting the rights of creditors
generally and subject to the discretion of a court of equity in
administering any such rights or remedies.
(xiii) Upon the delivery and payment for the Shares as
contemplated in this Agreement, each of the Underwriters will
receive valid title to the Shares purchased by it from the
Stockholder, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest. In rendering such opinion,
such counsel may assume that the Underwriters are without notice of
any defect in the title of any of the Stockholder Shares being
purchased from the Stockholder.
In addition to the matters set forth above, such counsel shall also
include a statement to the effect that such counsel has participated in
the preparation of the Registration Statement and the Prospectus and,
based on such participation, no facts have come to the attention of such
counsel which cause such counsel to believe that any part of the
Registration Statement or any amendment thereto (other than the financial
statements and other financial data contained therein, as to which such
counsel may express no belief), as of its effective date, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus or any amendment or supplement
thereto (other than the financial statements and other financial data
contained therein, as to which such counsel may express no belief),
contains any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. However,
such counsel has not independently verified, and assumes no responsibility
for the accuracy, completeness or fairness of the Registration Statement
or the Prospectus, including any document incorporated or deemed to be
incorporated therein by reference. The descriptions in the Registration
Statement and Prospectus of statutes, regulations, legal and governmental
proceedings, matters of law and contracts and other documents are accurate
in all material respects and fairly present the information required to be
shown. Such counsel does not know of any legal or governmental proceedings
required to be described in the Registration Statement or the Prospectus
which are not described as required or of any contracts or documents of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement which
are not described and filed as required; it being understood that such
counsel need express no opinion as to the financial statements or other
financial data contained in the Registration Statement or the Prospectus.
Such counsel may state that its opinion is limited to the applicable law
of the United States of America and the Delaware General Corporation Law
and that such counsel renders no opinion with respect to the law of any
other jurisdiction. Such opinion may state further that whenever such
opinion is based on factual matters to such counsel's knowledge or known
to such counsel, such counsel has relied exclusively on certificates of
officers (after discussion of the contents thereof with such officers) of
the Company or certificates of others as to the existence or nonexistence
of factual matters on which such opinion is predicated but has no reason
to believe that any such certificate is untrue or inaccurate in any
material respect.
Such opinion shall contain only those qualifications as Wright,
Lindsey & Jennings, counsel to the Underwriters, may reasonably request or
allow.
<PAGE>
(c) The Representatives shall have received from Wright, Lindsey &
Jennings, counsel to the Underwriters, an opinion dated the Closing Date,
substantially to the effects specified in subparagraph (iii) and (iv) of
paragraph (b) of this Section 6, and that the Company is a validly
organized and existing corporation under the laws of the State of
Delaware. In rendering such opinion, Wright, Lindsey & Jennings may rely
as to all matters governed other than by Federal law on the opinions of
counsel referred to in paragraphs (b) and (c) of this Section 6. In
addition to the matters set forth above, such opinion shall also include a
statement to the effect that nothing has come to the attention of such
counsel which leads them to believe that the Registration Statement or any
amendment thereto at the time the Registration Statement or amendment
became effective or the Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto as of their respective dates contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
not misleading (except that such counsel need express no view as to
financial statements, schedules and other financial or statistical
information included therein).
(d) The Representatives shall have received at or prior to the
Closing Date from Wright, Lindsey & Jennings a memorandum or summary, in
form and substance satisfactory to the Representatives, with respect to
the qualification or exemption therefrom for offering and sale by the
Underwriters of the Shares under the State securities or Blue Sky laws of
such jurisdictions as the Representatives may reasonably have designated.
(e) The Representatives shall have received on the Closing Date and
on the Option Closing Date, as the case may be, signed letters from Ernst
& Young LLP, addressed to the Underwriters dated as of the Effective Date
and again dated as of the Closing Date and as of the Option Closing Date,
as the case may be, with respect to the financial statements and certain
financial and statistical information contained in the Registration
Statement and the Prospectus. All such letters shall be in form and
substance satisfactory to the Representatives and Wright, Lindsey &
Jennings, counsel to the Underwriters.
(f) The Representatives shall have received on the Closing Date and
on the Option Closing Date, as the case may be, a certificate or
certificates of the President & Chief Executive Officer and Senior Vice
President and Chief Financial Officer of the Company to the effect that,
on and as of the Closing Date and on and as of the Option Closing Date, as
the case may be, each of them severally represents as follows:
(i) (A) the representations and warranties of the Company in
this Agreement are true and correct on and as of the Closing Date
and on and as of the Option Closing Date, as the case may be, and
(B) the Company has complied with all of its agreements and
covenants and has satisfied all of the conditions on its part to be
performed or satisfied at or prior to the Closing Date and at or
prior to the Option Closing Date, as the case may be.
(ii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion, since the Effective Date,
(A) the statements contained in the Registration Statement and the
Prospectus remain true and correct, and (B) such Registration
Statement and Prospectus did not omit to state a material fact
necessary in order to make the statements therein not misleading.
<PAGE>
(g) The Company and the Stockholder shall have furnished to the
Representatives such additional information and further certificates and
documents confirming the representations and warranties contained herein
and related matters as the Representatives may reasonably have requested.
(h) Since the respective dates as of which information is given in
the Prospectus, there shall not have been any Material Adverse Change.
(i) The Shares shall have been approved for listing on the NYSE,
subject to official notice of issuance.
(j) The Representatives shall have received from the Stockholder a
certificate or certificates, dated as of the Closing Date, or the Option
Closing Date, as the case may be, to the effect that as of such date, it
represents as follows:
(i) The representations and warranties of the Stockholder in
this Agreement are true and correct as of the Closing Date or the
Option Closing Date, as the case may be.
(ii) The Stockholder has in all material respects complied
with all the agreements and has satisfied all of the conditions on
its part to be performed or satisfied at or prior to the Closing
Date or the Option Closing Date, as the case may be.
(iii) The Stockholder has carefully examined the Registration
Statement and the Prospectus, and to the Stockholder's knowledge, as
of the date of the Prospectus and as of the Closing Date or the
Option Closing Date, as the case may be, neither the Registration
Statement nor the Prospectus, nor any amendment or supplement
thereto include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading and, since
the date of the Prospectus, no event has occurred to the
Stockholder's knowledge which should have been set forth in an
amendment or supplement to the Registration Statement or Prospectus,
which has not been set forth, and since the respective date as of
which such information is given in the Registration Statement and
Prospectus there has not been to the Stockholder's knowledge any
Material Adverse Change.
The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in all material
respects satisfactory to the Representatives and Wright, Lindsey & Jennings,
counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Representatives by notifying the Company of such termination in writing or by
confirmed telefax at or prior to the Closing Date. In such event, the Company
and the Underwriters shall not be under any obligation to each other (except to
the extent provided in Sections 5 and 8 hereof).
7. Conditions of the Obligations of the Company. The obligations of the
Company and the Stockholder to sell and deliver the Shares are subject to the
conditions that (a) at or before 11:00 a.m., central time, on the date of this
Agreement, or such later time and date as the Company and the Representatives
may from time to time consent to in writing or by confirmed telefax, the
Registration Statement shall have become effective, and (b) at the Closing Date
no stop order suspending the effectiveness of the Registration Statement shall
have been issued or proceedings therefor initiated or threatened. If either of
<PAGE>
the conditions hereinabove provided for in this Section 7 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, this Agreement
may be terminated by the Company or the Stockholder by notifying the
Representatives of such termination in writing or by confirmed telefax at or
prior to the Closing Date.
8. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of the Act,
the Rules and the Exchange Act from and against any and all losses, claims,
damages, liabilities, joint or several, to which such Underwriter or such
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon any breach of any
representation, warranty, agreement, or covenant of the Company, or any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; and the
Company will reimburse each Underwriter and each such controlling person for
legal and other expenses reasonably incurred in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement made in, or omission or
alleged omission from, the Registration Statement, any Preliminary Prospectus,
the Prospectus, or such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by or through the
Representatives specifically for use in the preparation thereof, it being
understood and agreed that the only such information furnished by any
Underwriter consists of the information described as such in Section 13 below,
or furnished to the Company by the Stockholder specifically for use in the
preparation thereof; and provided further, that with respect to any untrue
statement or alleged untrue statement in or omission or alleged omission from
any Preliminary Prospectus, the indemnity agreement contained in this Section
8(a) shall not inure to the benefit of any Underwriter from whom the person
asserting any such losses, claims, damages or liabilities purchased the Shares
concerned, to the extent that a prospectus relating to such Shares was required
to be delivered by such Underwriter under the Act in connection with such
purchase and any such loss, claim, damage or liability of such Underwriter,
results from the fact that there was not sent or given to such person, at or
prior to the written confirmation of the sale of such Shares to such person, a
copy of the Prospectus as then amended or supplemented (excluding any documents
incorporated by reference therein) if the Company had previously furnished
copies thereof to such Underwriter. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
(b) The Stockholder (i.e., Physicians Insurance Company of Ohio and
American Physicians Life Insurance Company, jointly) agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of the Act, the Rules and the Exchange Act from
and against any and all losses, claims, damages or liabilities, joint or
several, to which such Underwriter or such controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon any breach of any representation, warranty, agreement, or covenant of
the Stockholder, or any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Stockholder will reimburse each Underwriter and
<PAGE>
each such controlling person for legal and other expenses reasonably incurred in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding; provided, however, that the Stockholder will be
liable in any such case only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement, or alleged untrue
statement made in, or omission or alleged omission from, the Registration
Statement, any Preliminary Prospectus, the Prospectus, or such amendment or
supplement, (a) of which the Stockholder had knowledge at the time of any
certificate given by the Stockholder pursuant to Section 6(j) hereof or (b) in
reliance upon and in conformity with information furnished to the Company by the
Stockholder specifically for use in the preparation thereof. This indemnity
agreement will be in addition to any liability which the Stockholder may
otherwise have.
Notwithstanding anything herein to the contrary, any amounts payable by
the Stockholder pursuant to the indemnification and contribution provisions set
forth in this Section 8 shall be limited to an amount not exceeding net proceeds
received by the Stockholder from the sale of Shares hereunder.
(c) Each Underwriter severally, but not jointly, will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, the Stockholder, and each person, if any, who
controls the Company, within the meaning of the Act, the Rules and the Exchange
Act from and against any losses, claims, damages or liabilities to which the
Company, the Stockholder or any such director, officer, or controlling person
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made;
and will reimburse any legal or other expenses reasonably incurred by the
Company, the Stockholder or any such director, officer, or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding; provided, however, that each Underwriter will
be liable in such case only to the extent that such untrue statement, or alleged
untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with information
furnished to the Company by or through the Representatives expressly for use in
the preparation thereof, which information is described in Section 13. This
indemnity agreement will be in addition to any liability which such Underwriter
may otherwise have.
(d) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action or proceeding, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 8, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 8, except to the extent that the indemnifying party is
substantially prejudiced by the omission of such notification. In case any such
action or proceeding is brought against any party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding. Any indemnified party shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the employment of such counsel has
<PAGE>
been specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party has failed to assume the defense and employ counsel, or (iii)
the named parties to any such action (including any impleaded parties) include
such indemnified party and the indemnifying party, as the case may be, and such
indemnified party shall have been advised in writing by such counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party, in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, that (A) the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all such indemnified parties, which firm shall be designated in
writing by the indemnified parties, and that (B) all such fees and expenses
shall be reimbursed as they are incurred. Subject to the foregoing provisions of
this Section 8(d), the indemnifying party shall not be liable for the costs and
expenses of any settlement of any action without the consent of the indemnifying
party.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 8 is for
any reason held to be unavailable to an indemnified party under subsection (a),
(b) or (c) above in respect to any losses, claims, damages, liabilities or
expenses referred to therein, then each applicable indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities and expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Stockholder on the one hand
and the Underwriters on the other hand from the offering of the Shares or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
parties in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Stockholder on the one hand and the Underwriters on the other hand shall be
deemed to be in the same proportion as the total proceeds from the offering (net
of underwriting discounts and commissions but before deducting expenses)
received by the Company bears to the underwriting discounts and commissions
received by the Underwriters. The relative fault of a party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by each party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any such
action or claim.
The Company, the Stockholder and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 8 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 8, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages that such
<PAGE>
Underwriters have otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(d) to contribute shall be several in proportion to their respective
underwriting obligations and not joint.
(f) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
9. Representations, Warranties and Agreements to Survive Delivery. All
representations, warranties and agreements of the Company, the Stockholder and
the officers of the Company herein or in certificates delivered pursuant hereto,
and the indemnity and contribution agreements contained in Section 8 hereof,
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriters or any controlling
person, or by or on behalf of the Company or any of its officers, directors or
controlling persons or the Stockholder, and shall survive delivery of the
Underwritten Shares and, if appropriate, the Option Shares to the
Representatives or termination of this Agreement.
10. Default by Underwriters. If any Underwriter shall fail to purchase and
pay for the Shares which such Underwriter has agreed to purchase and pay for
hereunder (otherwise than by reason of any default on the part of the Company or
the Stockholder), you, as the Representatives of the Underwriters, shall use
your best efforts to procure within twenty-four hours thereafter one or more of
the other Underwriters, or any others, to purchase from the Company and the
Stockholder such amounts as may be agreed upon and upon the terms set forth
herein, the Shares which the defaulting Underwriter or Underwriters failed to
purchase. If during such twenty-four hours you, as such Representatives, shall
not have procured such other Underwriters, or any others, to purchase the Shares
agreed to be purchased by the defaulting Underwriter or Underwriters, then (a)
if the aggregate number of Shares with respect to which such default shall occur
does not exceed 10% of the Shares which the Underwriters are obligated to
purchase hereby, the other Underwriters shall be obligated, severally, in
proportion to the respective number of Shares which they are obligated to
purchase hereunder, to purchase the Shares which such defaulting Underwriter or
Underwriters failed to purchase, or (b) if the aggregate number of Shares with
respect to which such default shall occur exceeds 10% of the Company's common
stock covered hereby, the Company or you, as the Representatives of the
Underwriters will have the right, by written notice given within the next
twenty- four hour period to the parties to this Agreement, to terminate this
Agreement without liability on the part of the non-defaulting Underwriters, the
Company or the Stockholder except to the extent provided in Section 8 hereof. In
the event of a default by any Underwriter or Underwriters, as set forth in this
Section 10, the time of closing may be postponed for such period, not to exceed
seven days, as you, as the Representatives, may determine in order that the
required changes in the Registration Statement, the Prospectus or in any other
documents or arrangements may be effected. The term "Underwriters" includes any
person substituted for a defaulting Underwriter. Any action taken under Section
10 shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
11. Notices. All communications hereunder shall be in writing and, except
as otherwise provided in, will be mailed, delivered or telefaxed and confirmed
as follows: if to the Underwriters, c/o the Representatives as follows: to
Stephens Inc., 111 Center Street, Little Rock, Arkansas 72201, Attention: Sandra
Farmer, with a copy to C. Douglas Buford, Jr., Wright, Lindsey & Jennings, 200
<PAGE>
West Capitol Avenue, Suite 2200, Little Rock, Arkansas 72201; if to the Company,
to Fairfield Communities, Inc., 2800 Cantrell Road, Little Rock, Arkansas 72202,
Attention: Marcel J. Dumeny through December 1, 1996 and thereafter 11001
Executive Center Drive, Little Rock, Arkansas 72211, Attention: Marcel J.
Dumeny, with a copy to Mark V. Minton, Jones, Day, Reavis & Pogue, 2300 Trammell
Crow Center, 2001 Ross Avenue, Dallas, Texas 75201; and if the Stockholder, to
Physicians Insurance Company of Ohio, 13515 Yarmouth Drive, NW, Pickerington,
Ohio 43147, Attention: James Mosier.
12. Termination. This Agreement may be terminated by notice to the Company
as follows:
(a) at any time prior to the earlier of (i) the time the Shares are
released by you for sale by notice to the Underwriters, or (ii)
twenty-four (24) hours following the time at which the Registration
Statement becomes effective;
(b) at any time prior to the Closing Date if any of the following
has occurred: (i) since the respective dates as of which information is
given in the Registration Statement and the Prospectus, any Material
Adverse Change which would, in your reasonable judgment, materially impair
the investment quality of the Shares, (ii) any outbreak of hostilities or
other national or international calamity or crisis or change in economic
or political conditions if the effect of such outbreak, calamity, crisis
or change on the financial markets of the United States would, in your
reasonable judgment, make the offering or delivery of the Shares
impracticable, (iii) suspension of trading or general trading halts in
securities on the New York Stock Exchange, the American Stock Exchange,
The Nasdaq National Market or the over-the-counter market or limitation on
prices (other than limitations on hours or numbers of days or trading) for
securities on either such Exchange, The Nasdaq National Market or the
over-the-counter market, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of
any court or other governmental authority which in your reasonable opinion
materially and adversely affects or will materially or adversely affect
the business or operations of the Company, (v) declaration of a banking
moratorium by either federal or state authorities, or (vi) the taking of
any action by any federal, state or local government or agency in respect
of its monetary or fiscal affairs which in your reasonable opinion has a
material adverse effect on the securities markets in the United States; or
(c) as provided in Sections 6 and 10 of this Agreement.
13. Information Furnished by Underwriters. The information set forth in
the Prospectus: (a) in the last paragraph on the cover page, (b) on page 2
regarding stabilization, and (c) (i) in the table under the caption
"Underwriting" on page 39, listing the Underwriters and the number of shares
each has agreed to purchase, and (ii) in the first paragraph below said table on
page 39, relating to the concession to dealers and the reallowance to certain
other dealers under the caption "Underwriting" in the Prospectus, constitute the
written information furnished by or on behalf of any Underwriters referred to in
paragraph (a) (v) of Section 1 hereof and in paragraphs (a) and (c) of Section 8
hereof.
14. Successors. This Agreement has been and is made solely for the benefit
of the Underwriters, the Company, the Stockholder and their respective
successors, executors, administrators, heirs, and assigns, and the officers,
directors and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. The term "successors" shall not include
any purchaser of the Shares merely because of such purchase.
<PAGE>
15. Miscellaneous. The Representatives will act for the several
Underwriters in connection with this offering, and any action under this
Agreement taken by the Representatives jointly or by Stephens Inc. will be
binding upon all of the Underwriters.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Arkansas, without giving effect to the choice of law or
conflict of law principles thereof.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company and the several Underwriters in
accordance with its terms.
Very truly yours,
FAIRFIELD COMMUNITIES, INC.
By: /S/ ROBERT W. HOWETH
____________________________________________________
Name: Robert W. Howeth
Title: Senior Vice President and Chief Financial Officer
STOCKHOLDER:
PHYSICIANS INSURANCE COMPANY OF OHIO
By: /S/ JAMES F. MOSIER
____________________________________________________
Name: James F. Mosier
Title: Secretary
AMERICAN PHYSICIANS LIFE INSURANCE COMPANY
By: /S/ JAMES F. MOSIER
____________________________________________________
Name: James F. Mosier
Title: Secretary
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
STEPHENS INC. and DONALDSON, LUFKIN
& JENRETTE SECURITIES CORPORATION
By: /S/ MICHAEL R. SMITH, SR.
____________________________________
Stephens Inc., Senior Manager
Name: Michael R. Smith, Sr.
Title: Senior Vice President
As Representatives of the several Underwriters
named in Schedule I hereto
<PAGE>
SCHEDULE I
Name No. of Underwritten Shares
Stephens Inc. 548,577
Donaldson, Lufkin & Jenrette Securities Corporation 548,576
Alex Brown & Sons Incorporated 70,000
A.G. Edwards & Sons, Inc. 70,000
Goldman, Sachs & Co. 70,000
Montgomery Securities 70,000
Morgan Stanley & Co. Incorporated 70,000
Oppenheimer & Co., Inc. 70,000
Schroder Wertheim & Co. Incorporated 70,000
Allen & Company 70,000
EQUITABLE Securities Corporation 30,000
Jefferies & Company, Inc. 30,000
EVEREN Securities, Inc. 30,000
Gerard Klauer Mattison & Co., LLC 30,000
Edward D. Jones & Co., L.P. 30,000
Josephthal Lyon & Ross Incorporated 30,000
Ladenburg, Thalmann & Co., Inc. 30,000
Morgan Keegan & Company, Inc. 30,000
Pennsylvania Merchant Group Ltd. 30,000
Rauscher Pierce Refsnes, Inc. 30,000
The Robinson-Humphrey Company, Inc. 30,000
Sanders Morris Mundy 30,000
Scott & Stringfellow, Inc. 30,000
Southwest Securities, Inc. 30,000
Total 2,077,153
- ----- ---------
<PAGE>
EXHIBIT A
November 1, 1996
Stephens Inc. and Donaldson, Lufkin & Jenrette
As Representatives of the Several Underwriters
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
Re: Agreement Not to Sell Fairfield Communities, Inc. Stock
- ----------------------------------------------------------
Ladies and Gentlemen:
This letter is provided, at the request of Fairfield Communities, Inc.
(the "Company"), for the benefit of the Company and the Underwriters in
connection with the proposed public offering of 2,000,000 shares of Fairfield
Communities, Inc. Common Stock (plus an additional 300,000 shares if the
Underwriters choose to exercise their over-allotment option) pursuant to a
Registration Statement on Form S-3 (File No. 333-14875). As an inducement to the
Underwriters to (a) enter into an Underwriting Agreement with the Company and
its selling stockholder, Physicians Insurance Company of Ohio and one or more of
its subsidiaries, and (b) consummate the transactions contemplated in such
Underwriting Agreement, the undersigned hereby represents and agrees as follows:
1. The undersigned beneficially owns the number of shares of the Company's
Common Stock set forth below opposite the signature of the undersigned (the
"Shares"), and no others.
2. The undersigned agrees that, for a period of 120 days from the
effective date of the Registration Statement, except for bona fide gifts to
persons who agree with you in writing to be bound by this letter, the
undersigned will not offer, sell or otherwise dispose of any of the Shares,
directly or indirectly, without your written consent as Representatives of the
Underwriters, which consent will not be unreasonably withheld; except that (a)
such Shares may be pledged as collateral against loans of the undersigned
without such written consent, and (b) if loans secured by Shares are called, the
undersigned and any applicable pledgee will have the right to sell the shares
pledged on such loans to the extent necessary to satisfy such loans.
Shares of Common Stock:
Very truly yours,
__________________________________________
<PAGE>
EXHIBIT B
CUSTODY AGREEMENT
FAIRFIELD COMMUNITIES, INC.
(A Delaware Corporation)
[CUSTODIAN]
[CUSTODIAN ADDRESS]
Gentlemen:
WHEREAS, Physicians Insurance Company of Ohio (the "Undersigned" or the
"Selling Shareholder") is the owner of duly authorized, issued and outstanding
shares of Common Stock, $.01 par value (the "Common Stock"), of Fairfield
Communities, Inc., a Delaware corporation (the "Company"); and
WHEREAS, concurrently with the execution of this Custody Agreement, the
Undersigned is executing and delivering a Power of Attorney (the "Power of
Attorney"), naming _______________ as attorney-in-fact (the "Attorney-in-Fact")
of the Undersigned, to arrange, among other things, for the sale by the
Undersigned of up to 1,100,000 (1,400,000 if the over-allotment option granted
by the Selling Shareholder is exercised in full) shares of Common Stock (the
"Shares") to Stephens Inc., Donaldson Lufkin & Jenrette Securities Corporation
and certain other underwriters (collectively, the "Underwriters") named in the
underwriting agreement to be executed by and among the Company, the Selling
Shareholder, other selling shareholders (if any) and the Underwriters in
connection with such sale (the "Underwriting Agreement"), and to execute and
deliver the Underwriting Agreement;
NOW, THEREFORE, for the purpose of carrying out the sale of the Shares
pursuant to the Underwriting Agreement, a custodial relationship is hereby
established with you, as custodian (the "Custodian"), and as Custodian, you are
hereby instructed to act in accordance with this Agreement and any amendments or
supplements hereto given to you in writing and signed by the Attorney-in-Fact
acting on behalf of the Undersigned.
1. The Undersigned hereby delivers to you as Custodian a certificate or
certificates (the "Certificates") representing not less than the number of the
shares of the Undersigned to be sold pursuant to the Underwriting Agreement,
which Certificates have been endorsed in blank or are accompanied by stock
powers duly executed in blank. The Certificates are to be held by the Custodian
for the account of the Undersigned and are to be disposed of by the Custodian in
accordance with this Custody Agreement. The Custodian agrees that it waives any
liens, claims or security interests that it may have with respect to the Shares
deposited herewith. The Undersigned agrees that the Shares represented by the
Certificates deposited herewith are subject to the interests of the Underwriters
under the Underwriting Agreement.
2. You, as Custodian, are authorized and directed to hold the Certificates
in your custody and (i) on or immediately prior to the Closing Date referred to
in the Underwriting Agreement (the "Closing Date") or, as applicable, the Option
<PAGE>
Closing Date referred to in the Underwriting Agreement (the "Option Closing
Date"), to cause the number of Shares which are to be sold by the Undersigned
pursuant to the Underwriting Agreement to be transferred on the books of the
Company into such name or names as the Underwriters shall have instructed you,
as Custodian; to cause to be issued, against surrender of the certificate or
certificates representing such Shares a new certificate or certificates for such
Shares registered in such name or names; to deliver such new certificate or
certificates representing such Shares to the Underwriters on the Closing Date or
the Option Closing Date, as applicable, for the accounts of the Underwriters
under the Underwriting Agreement, against payment therefor in accordance with
the Underwriting Agreement; and to give receipt for such payment and to deposit
the same to your account, as Custodian; and (ii) as soon as practicable, to draw
upon such account to pay (or reimburse yourself for) such expenses (including,
without limitation, your fees and expenses as Custodian and any stock transfer
taxes and other expenses allocable to the Undersigned in connection with the
sale of the Shares) as you may be instructed to pay by the Attorney-in-Fact
acting on behalf of the Undersigned, and to remit to the Undersigned the
balance, after deducting such expenses, of the amount received by you as payment
for the Shares. As soon as practicable after the Option Closing Date, you shall
return to the Undersigned a new certificate representing the number of Shares,
if any, deposited herewith which are not sold by the Undersigned pursuant to the
Underwriting Agreement. Delivery of new certificates shall be made to the
Undersigned at the address listed below.
3. If you receive written notice from the Attorney-in-Fact that the
Underwriting Agreement shall not be entered into on behalf of the Undersigned,
or if it shall not become effective pursuant to its terms, or if it shall be
terminated pursuant to its terms, then, subject to the provisions of the Power
of Attorney, you are to return to the Undersigned the Certificates deposited
herewith, together with any stock powers, and you shall have no further
responsibility hereunder.
4. This Custody Agreement is for the express benefit of the Company, the
Underwriters and the Undersigned and is irrevocable, subject to the provisions
of paragraph 3 hereof. The obligations and authorizations of the Undersigned
hereunder shall not be terminated by operation of law or the occurrence of any
event whatsoever; and, if any such event should occur before the delivery
hereunder to the representatives for the accounts of the Underwriters of the
Shares, said Shares shall be delivered to the Underwriters in accordance with
the terms and conditions of this Custody Agreement and the Underwriting
Agreement as if such event had not occurred, regardless of whether the Custodian
shall have received notice of such event.
5. Until payment of the purchase price for the Shares being sold by the
Undersigned pursuant to the Underwriting Agreement has been made to you by or
for the account of the Underwriters, the Undersigned shall remain the owner of
the Shares deposited herewith and shall have the right to vote such Shares and
to receive all dividends and distributions thereon. However until such payment
in full has been made or until the Underwriting Agreement has been terminated,
the Undersigned agrees that the Undersigned will not give, sell, pledge,
hypothecate, grant any lien on, transfer, deal with or contract with respect to
the Shares to be sold by the Undersigned pursuant to the Underwriting Agreement
or any interest therein, except in accordance with the Underwriting Agreement.
6. You shall assume no responsibility or liability to any person other
than to deal with the Certificates and the proceeds from the sale of the Shares
in accordance with the provisions hereof, and the Undersigned hereby agrees to
indemnify and hold you harmless against any and all expenses, losses, claims,
damages or liabilities to which you may become subject insofar as such expenses,
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any act taken or omitted to be taken by you pursuant hereto
<PAGE>
or pursuant to instructions given to you by the Attorney-in-Fact, except if such
expenses, losses, claims, damages or liabilities shall result from gross
negligence or willful malfeasance on your part. The Undersigned further agrees
that you may consult with counsel of your choice (who may be counsel for the
Company), and you shall have full and complete authorization and protection for
any action taken or suffered by you hereunder in good faith and in accordance
with the opinion of such counsel.
7. The Undersigned represents and warrants that the Undersigned has, and at
the time of delivery of the Shares to the Underwriters pursuant to the
Underwriting Agreement will have, full legal right, power and capacity and all
authorizations and approvals required by law or otherwise to enter into this
Custody Agreement, the Power of Attorney and the Underwriting Agreement, to
carry out the terms and provisions hereof and of the Underwriting Agreement and
to make all of the representations, warranties and agreements contained herein
and therein. This Custody Agreement and the Power of Attorney are, and the
Underwriting Agreement, when executed by the Attorney-in-Fact, will be, valid
and binding obligations of the Undersigned, enforceable in accordance with their
respective terms. The Undersigned further represents and warrants that the
execution and delivery of this Custody Agreement, the Power of Attorney and the
Underwriting Agreement and the consummation of the transactions contemplated
hereby and thereby and the fulfillment of the terms hereof and thereof will not
conflict with or result in the breach of any of the terms, provisions or
conditions of, or constitute a default under, any note, indenture, mortgage,
deed or declaration of trust, agreement, will or other instrument, if any, to
which the Undersigned is a party or by which the Undersigned is bound, or, to
the best of the Undersigned's knowledge, information and belief, any existing
law, order, rule, regulation, writ, injunction, judgment or decree of any
government, governmental instrumentality, agency or body, arbitration tribunal,
or court, domestic or foreign, having jurisdiction over the Undersigned or the
Undersigned's property.
8. Your acceptance of this Custody Agreement by the execution hereof shall
constitute an acknowledgment by you of receipt of the Certificates, and the
acceptance by you of the authorization herein conferred and shall evidence your
agreement to carry out and perform this Custody Agreement in accordance with its
terms.
9. This Custody Agreement may be executed in any number of counterparts,
which together shall constitute one and the same instrument. Execution by you of
one counterpart hereof and its delivery thereof to the Attorney-in-Fact for the
account of the Undersigned shall constitute the valid execution and delivery of
this Custody Agreement by you.
10. This Custody Agreement shall be binding upon each of the Undersigned
and the Undersigned's successors and assigns.
11. This Custody Agreement for all purposes shall be governed by and
construed in accordance with the laws of the State of Arkansas.
12. You shall be entitled to act and rely upon any statement, request or
notice with respect to this Custody Agreement given to you on behalf of the
Undersigned if the same shall be made or given to you by the Attorney-in-Fact
acting on behalf of the Undersigned.
Please acknowledge your acceptance of this Custody Agreement as Custodian
and receipt of the Certificates deposited herewith by executing and returning
one of the enclosed copies of this Custody Agreement to the Undersigned at the
address set forth below.
<PAGE>
IN WITNESS WHEREOF, the Undersigned has executed this Custody Agreement
this _____ day of __________, 1996.
Very truly yours,
PHYSICIANS INSURANCE COMPANY OF OHIO
By: ____________________________________
Name:
Title:
ADDRESS: ____________________________________
____________________________________
ACKNOWLEDGMENT
STATE OF ________________
COUNTY OF _______________
On this the _____ day of ____________, 1996, before me, a Notary Public,
personally appeared _________________________, who acknowledged himself to be
the _________________________ of Physicians Insurance Company of Ohio, a
corporation, and that he, as such officer, being authorized so to do, executed
the foregoing instrument for the purposes therein contained, by signing the name
of the corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
_______________________________________
Notary Public
My Commission Expires:
__________________________________
<PAGE>
ACKNOWLEDGMENT AND RECEIPT
[CUSTODIAN] acknowledges acceptance of the duties of Custodian under the
foregoing Custody Agreement and receipt of the Certificates for Common Stock
referred to therein and stock powers relating thereto.
[CUSTODIAN]
Dated: ___________________________ By: ________________________________
Name
________________________________
Title
<PAGE>
EXHIBIT C
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes
and appoints _______________ and _______________, and each of them acting alone,
its true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, for it and in its name, place and stead, in any
and all capacities, to sign the Underwriting Agreement relating to the sale by
the undersigned of shares of the common stock of Fairfield Communities, Inc. and
any amendments thereto, and to act on behalf of the undersigned pursuant to a
Custody Agreement given in connection with such shares, granting unto said
attorneys-in-fact and agents, or either of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully for all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do and cause to be done by virtue hereof.
PHYSICIANS INSURANCE COMPANY OF OHIO
By: ________________________________
Name:
Title:
Date: November __, 1996
ACKNOWLEDGMENT
STATE OF ____________________
COUNTY OF ___________________
On this the _____ day of ____________, 1996, before me, a Notary Public,
personally appeared _________________________, who acknowledged himself to be
the _________________________ of Physicians Insurance Company of Ohio, a
corporation, and that he, as such officer, being authorized so to do, executed
the foregoing instrument for the purposes therein contained, by signing the name
of the corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
__________________________________________
Notary Public
My Commission Expires:
___________________________________
