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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
PICO HOLDINGS, INC.
(Name of Issuer)
Common Stock, $.001 Par Value
(Title of Class of Securities)
693366-10-6
(CUSIP Number)
Rebecca K. Schmitt, Esq.
Gray Cary Ware & Freidenrich
4365 Executive Drive, Suite 1600
San Diego, California 92121
(619) 677-1446
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 20, 1994
(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.
/ /
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CUSIP NO. 693366-10-6
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
JOHN R. HART
###-##-####
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)
(a) / /
(b) /X/
3. SEC USE ONLY
4. SOURCE OF FUNDS (See Instructions)
OO
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e)
/ /
6. CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
Number of Shares 7. SOLE VOTING POWER
Beneficially Owned 1,908,847
by Each Reporting
Person With 8. SHARED VOTING POWER
-0-
9. SOLE DISPOSITIVE POWER
1,908,847
10. SHARED DISPOSITIVE POWER
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,908,847
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions)
/X/
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.7%
14. TYPE OF REPORTING PERSON
IN
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Item 1. Security and Issuer.
This statement relates to the acquisition by the reporting person of
options to purchase up to 1,908,847 shares of Pico Holdings, Inc. ("Pico")
common stock, par value $0.001. The principal executive offices of Pico are
located at 13515 Yarmouth Drive N.W., Pickerington, Ohio 43147.
Item 2. Identity and Background.
This statement is being filed on behalf John R. Hart, 875 Prospect
Street, Suite 301, La Jolla, CA 92037. Mr. Hart is a self-employed investor and
serves as the President and Chief Executive Officer of (i) Pico and certain of
its subsidiaries, and (ii) Global Equity Corporation ("GEC").
The address of Pico is given in response to Item 1. The address of GEC
is 30A Hazelton Avenue, 4th Floor, Toronto, Ontario, Canada M5R2E2.
Approximately 38% of the outstanding shares of GEC are owned by a
wholly-owned subsidiary of Pico. GEC owns 4,258,415 shares of Pico Common Stock.
Mr. Hart, as president and a director of GEC, may be deemed to share dispositive
power with respect to the Pico shares owned by GEC. Such shares have no voting
rights under California law. Mr. Hart does not affirm the existence of a group
with respect to GEC and disclaims beneficial ownership of all shares of Pico
Common Stock held by GEC.
During the last five years Mr. Hart has not been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
During the last five years, Mr. Hart has not been party to a civil proceeding of
a judicial or administrative body of competent jurisdiction where the result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws, or finding any violation with respect to such laws.
Mr. Hart is a citizen of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
Mr. Hart acquired the securities pursuant to a merger in which
Physicians Insurance Company of Ohio, an Ohio corporation ("Physicians"), was
merged with Citation Holdings, Inc., an Ohio corporation and a wholly-owned
subsidiary of Pico (the "Merger"). Pursuant to the Merger, Mr. Hart's options to
acquire stock of Physicians were assumed by or converted into options to acquire
shares of Pico.
Item 4. Purpose of the Transaction.
The securities were acquired pursuant to the Merger as described in
Item 3, above. Mr. Hart may purchase common stock of Pico pursuant to the
exercise of the outstanding options but has no current plan or proposal relating
to (i) the acquisition of any other securities of Pico or the disposition of any
securities of Pico, or (ii) except as have previously occurred pursuant to the
Merger, any of the actions enumerated in items (b) through (j) of Item 5 of
Schedule 13D. The effects of the Merger have been described in detail in Pico's
Registration Statement No. 333-06671 on Form S-4.
Item 5. Interest in Securities of PICO.
(a) As of November 1996, Mr. Hart had the right to acquire 1,908,847
shares of the Common Stock of Pico pursuant to the exercise of outstanding
options. Such shares, if acquired, would constitute approximately 5.7% of the
issued and outstanding shares of the Common Stock of Pico, based upon the most
recently available filing by Pico with the Securities and Exchange Commission.
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(b) Mr. Hart presently has no power to vote any shares of Pico. If and
when Mr. Hart exercises his options to purchase shares of Pico Common Stock, Mr.
Hart will have sole power to direct the vote with respect to, and to dispose or
to direct the disposition of, the shares of Pico Common Stock acquired upon
exercise.
(c) No transactions in the Common Stock of Pico were effected by Mr.
Hart within the 60 days prior to the date of the Merger.
(d) If Mr. Hart's options were exercised currently, no person other
than Mr. Hart would have the right to receive or the power to direct the receipt
of dividends from the shares of Common Stock thereby acquired, or the right to
receive or the power to direct the receipt of the proceeds from the sale of such
shares; provided, however, that Mr. Hart has borrowed $280,000 pursuant to a
note due September 3, 2001 from Physicians, which note is secured by his option
to acquire shares from Pico.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of PICO.
Mr. Hart holds two options to purchase shares of Pico Common Stock. The
first option is to acquire 876,732 shares of common stock from Pico at an
exercise price of $2.695 per share pursuant to an option grant made under the
Physicians' 1995 Non-Qualified Stock Option Plan, which option was assumed by
Pico pursuant to the Merger.. The option to acquire shares from Pico expires on
August 24, 2005. The second option is to acquire up to 1,032,115 shares of Pico
Common Stock from Guinness Peat Group plc ("GPG"). 715,699 shares may be
purchased from GPG at an exercise price of $.70 per share and 316,416 shares may
be purchased at an exercise price of $.948 per share. The option to acquire
shares from GPG expires on December 10, 2003.
Mr. Hart's option to purchase shares from Pico is subject to the loan
agreement with Physicians as described in Item 5(d) above.
Item 7. Material to be Filed as Exhibits.
Exhibit No. Exhibit
1 Call Option Agreement between Guinness Peat Group plc and John
Hart dated November 23, 1993.
2 Letter Agreement dated May 10, 1996 among GPG, Ronald Langley
and John Hart regarding Call Option Agreements.
3. Physicians Insurance Company of Ohio 1995 Stock Option Plan
(incorporated by reference to exhibit filed with Physicians
Insurance Company of Ohio Registration Statement No. 33-99352
on Form S-1 filed with the SEC on November 14, 1995).
4. Option Grant Agreement dated August 24, 1995 between
Physicians Insurance Company of Ohio and John Hart.
5. Stock Option Assumption Agreement dated November 20, 1996
between Pico Holdings, Inc. (formerly known as Citation
Insurance Group) and John Hart.
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SIGNATURE
After reasonable inquiry and to the best of his knowledge and
belief, the undersigned hereby certifies that the information set forth in this
statement is true, complete and correct.
Dated: December 2, 1996
/s/ John R. Hart
----------------
John R. Hart
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EXHIBIT INDEX
Exhibit No. Exhibit
1 Call Option Agreement between Guinness Peat Group plc and John
Hart dated November 23, 1993.
2 Letter Agreement dated May 10, 1996 among GPG, Ronald Langley
and John Hart regarding Call Option Agreements.
3 Physicians Insurance Company of Ohio 1995 Stock Option Plan
(incorporated by reference to exhibit filed with Physicians
Insurance Company of Ohio Registration Statement No. 33-99352
on Form S-1 filed with the SEC on November 14, 1995).
4 Option Grant Agreement dated August 24, 1995 between
Physicians Insurance Company of Ohio and John Hart.
5 Stock Option Assumption Agreement dated November 20, 1996
between Pico Holdings, Inc. (formerly known as Citation
Insurance Group) and John Hart.
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EXHIBIT 1
THIS AGREEMENT is made on 23 November 1993
BETWEEN:
(1) GUINNESS PEAT GROUP PLC whose registered office is at Plumtree Court
London EC4A 4HT ("GPG"); and
(2) JOHN HART whose address is ___________________________________________,
United States of America ("Optionholder").
RECITALS:
A. Physicians Insurance Company of Ohio (the "Company") is an Ohio for
profit corporation having its principal place of business at 13515
Yarmouth Drive, N.W. Pickerington, Ohio 43147, United States of
America.
B. Quaker (as defined herein) has agreed to acquire 1,428,571 Class A
Common Shares of the Company on the terns and subject to the conditions
set out in the PICO Acquisition Agreement (as defined herein).
C. GPG has agreed to purchase the entire issued share capital of Quaker on
the terms and subject to the conditions set out in the Quaker
Acquisition Agreement (as defined herein).
D. GPG has agreed to grant an option to the Optionholder in respect of its
interest in the Class A Common Shares of the Company to be acquired
pursuant to the PICO Acquisition Agreement and the Quaker Acquisition
Agreement on the terms and subject to the conditions set out in this
Agreement.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement and the Schedule the following definitions
are used (in addition to the definitions used above):
"agreed form" in relation to any document, the draft or
document initialled by or on behalf of the
parties to this Agreement for the purposes
of identification
"Completion" completion of the sale and purchase of any
Option Shares upon any exercise of the
Option;
"GPG Group" GPG and its subsidiaries;
"Initial Option 142,857 Class A Common Shares in the capital
Shares of the Company (representing 10 percent of
the Class A Common Shares in the Capital of
the Company to be acquired by the GPG Group
on completion of both the PICO Acquisition
Agreement and the Quaker Acquisition
Agreement);
"Non-Dilution such number of equity securities of the
Company of
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Shares any class or type, or securities
exchangeable for or convertible into any
such equity securities, or warrants or other
instruments or rights evidencing or
constituting rights or options to purchase
or otherwise acquire any such equity
securities (if any) as equals 10 per cent of
any such securities, warrants, instruments
or rights acquired by any member of the GPG
Group pursuant to the exercise of its rights
set out in clause 7.02 of the PICO
Acquisition Agreement at any time during the
Option Period;
"Option" the option granted by GPG to the
Optionholder to purchase, whether in a
single trance or otherwise, in accordance
with the Agreement all or any of the Option
Shares pursuant to Clause 2.1 of this
Agreement;
"Option the later of:
Commencement (a) the date of completion of the PICO
"Date" Acquisition Agreement; and
(b) the date of completion of the Quaker
Acquisition Agreement;
each in accordance with its terms;
"Option-Exercise the price payable in respect of the Option
Price" Shares upon exercise of the Option
determined as follows:
(a) in respect of each Initial Option Share,
US$3.50 per share;
(b) in respect of each Second Option Share
(if any), the higher of:
(i) US$3.50 per share; and
(ii) the average price per Second Option
Share paid by the GPG Group upon
the exercise of the Option set out
in clause 7.01 of the PICO
Acquisition Agreement;
(c) in respect of each Non-Dilution Share,
the average price par Non-Dilution share
paid by the GPG Group upon the exercise
of its rights set out in clause 7.02 of
the PICO Acquisition Agreement;
as varied, if applicable, from time to time
in accordance with clause 2.4 of this
Agreement.
"Option Notice" a notice exercising the Option, in whole or
in part, pursuant to Clause 2.2 of this
Agreement;
"Option Period" the period commencing on the Option
Commencement Date and terminating on the
tenth anniversary of the Option Commencement
Date (both dates inclusive);
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"Option Shares" the aggregate of the Initial Option Shares
and, if acquired by GPG pursuant to the
applicable agreement, the Second Option
Shares and the Non-Dilution Shares;
"PICO the agreement to be entered into in the
Acquisition agreed form between Quaker and the Company
Agreement" for the initial acquisition by Quaker of
1,428,571 Class A Common Shares in the
capital of the Company;
"Quaker" Quaker Holdings Limited, an international
business corporation incorporated in the
Bahamas;
"Quaker the agreement to be entered into in the
Acquisition agreed form between GPG and the Optionholder
Agreement" for the acquisition by the GPG Group of the
entire issued capital of Quaker;
"Related Party" in relation to the Optionholder, means
(a) his wife; or
(b) any child of the Optionholder, or
(c) the trustees, managers or administrators
of any trust or settlement established
solely for the benefit of any or all of
the Optionholder, his wife and children;
"Second-Option such number of Class A Common Shares in the
Shares" capital of the Company (if any) as equals 10
percent of any such shares acquired by any
member of the GPG Group pursuant to the
exercise of the option set out in clause
7.01 of the PICO Acquisition Agreement at
any time during the Option Period;
"Subsidiary" has the meaning as defined in Section 736
and 736A of the Companies Act 1985.
1.2 In this Agreement, unless the contrary intention appears:
(A) words in the singular shall include the plural, and
vice versa;
(B) a reference to a clause or sub-clause shall be a
reference to a clause or sub- clause (as the case may
be) or to this Agreement;
(C) the headings in this Agreement are for convenience
any and shall not affect the interpretation of any
provision of this Agreement.
2. GRANT AND EXERCISE OF OPTIONS.
2.1 In consideration of the sum of US$1 paid by the Optionholder,
GPG grants to the Optionholder an irrevocable right,
conditional upon completion of the PICO Acquisition Agreement
and the Quaker Acquisition Agreement, each in accordance with
its terms, to purchase the Option Shares for the Option
Exercise Price.
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2.2 The Option shall be exercisable at any time during the Option
Period by a notice in writing to GPG from the Optionholder.
2.3 The Option may be exercised over all the Option Shares or, at
the Optionholder's sole discretion, from time to time in one
or more tranches provided that the Optionholder shall be
entitled to exercise the Option only once in each calendar
year in respect of any number of Option Shares over which the
Option remains unexercised. The relevant Option Notice shall
specify the number and class of Option Shares which are
subject to exercise. If no such details are contained in the
Option Notice, it shall be deemed to relate to all the Option
Shares held by the GPG Group at the date of the Option Notice.
2.4 If the issued share capital of the Company is the subject of
any reduction, repayment to shareholders, sub-division,
consolidation or variation of the rights attaching to any
class of share capital or is increased by means of a rights
issue or bonus or capitalization issue, GPG and the
Optionholder shall agree to the variation of the number of
shares in the Company to which the Option shall continue to
apply and/or the price per share for each Option Share (as so
varied). In default of agreement, either party may apply to
the auditors of the Company to, and GPG and the Optionholder
shall use their respective reasonable endeavors to procure
that on such application the auditors shall, made such
determination as they, in their sole discretion, acting as
experts and not as arbitrators, may think appropriate in the
circumstances regarding the number of shares to which the
Option shall continue to apply and/or the price per share for
each Option Share (as so varied). The determination of the
auditors shall be final and binding on the parties. The costs
of the auditors in making such determination shall be borne
and paid equally between the parties. If the auditors decline
to accept any proposed appointment for the purposes of this
clause, the parties shall agree to appoint such other expert
as may be appropriate and the provisions of this clause shall
apply mutatis mutandis.
2.5 If at any time during the Option Period:
(A) (1) the Company makes an assignment for the
benefit of creditors or admits in writing
its inability to pay its debts generally as
they become due; the Company petitions or
applies to any tribunal for the appointment
of a custodian, trustee, receiver or
liquidator of the Company; or the Company
commences any proceeding relating to the
Company under any bankruptcy,
reorganization, arrangement, insolvency,
readjustment of debt, dissolution or
liquidation law of any jurisdiction; and
(2) the Company is insolvent within the meaning
of such terms under the Ohio Insurance Code
or the United States Federal Bankruptcy
Code; or
(B) any such petition or application is filed, or any
such proceeding is commenced against the Company; an
order, judgment or decree is entered adjudicating the
Company bankrupt or insolvent; or any order for
relief with respect to the Company is entered under
the United States Federal Bankruptcy Code;
the Option will lapse forthwith in respect of any Option
Shares which are not the subject of the Option Notice received
by GPG prior to the date of such event.
2.6 If at any time during the Option Period, GPG becomes aware
that the Company is proposing to commence any proceeding
relating to the Company under any
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reorganization, arrangement, readjustment of debt, dissolution
or liquidation law of any jurisdiction; and the Company is not
insolvent within the meaning of such terms under the Ohio
Insurance Code or the United States Federal Bankruptcy Code,
GPG shall use reasonable endeavors to notify the Optionholder
that such proceedings are proposed. If having been so
notified, the Option holder exercises the Option in accordance
with clauses 2.2 and 2.3 above, GPG shall cooperate with the
Optionholder so far as is reasonably practicable to complete
the sale and purchase of the Option Shares prior to
commencement of the proceedings referred to in this clause.
2.7 Irrespective of whether GPG becomes aware that the Company is
proposing to commence any proceedings referred to in clause
2.6 above, if completion of the sale and purchase of the
Option Shares shall not take place prior to the commencement
of such proceedings, and GPG or any member of the GPG Group
receives on any subsequent dissolution or liquidation of the
Company an amount in respect of each Option Share greater than
the relevant Option Exercise Price, GPG shall pay or procure
that there shall be paid to the Optionholder an amount in
respect of each Option Share equal to that difference. Upon
such payment, all obligations of GPG hereunder shall cease.
3. SALE AND PURCHASE
3.1 The parties shall be bound to complete the sale and purchase
of the Option Shares referred to in an Option Notice within 30
days after the date of service of an Option Notice.
3.2 The Optionholder shall not be obliged to complete the purchase
of any of the relevant Option Shares unless GPG completes
simultaneously the sale of all those Option Shares, but he
Completion of the purchase of some of the Option Shares shall
not affect the rights of the Optionholder in respect to the
purchase of the others.
4. COMPLETION OF EXERCISE
4.1 Completion of the sale and purchase of the Option Shares shall
take place at the offices of GPG specified in clause 10.1(C),
or at such other place as the parties may agree, not later
than 3 p.m. on the relevant day.
4.2 At Completion:
(A) GPG shall deliver or procure the delivery to the
Optionholder:
(1) a duly executed transfer to the Optionholder
or his nominee of the relevant Option
Shares; and
(2) in the case of GPG or any of its
subsidiaries not being registered as the
holder of the relevant Option Shares,
evidence to the satisfaction of the
Optionholder of its title or right to sell
those shares.
(B) GPG shall take such action as shall be within its
power to vest in the Optionholder the full beneficial
ownership of the relevant Option Shares and to enable
the Optionholder to procure that such shares are
registered in his name or that of his nominee.
(C) The Optionholder shall deliver to GPG a bankers draft
drawn on a town branch of a United Kingdom clearing
bank in the City of London in respect of
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an amount in US$ equal to the number of Option Shares
acquired by him multiplied by the Option Exercise
Price.
5. DEFAULT UNDER CLAUSE 4.
5.1 The Optionholder shall not be obliged to complete the purchase
of the Option Shares until GPG complies fully with the
requirements of sub-clause 4.2(A).
5.2 If, in any respect, the requirements of sub-clause 4.2(A) are
not complied with on the date set for Completion, the
Optionholder may:
(A) defer completion with respect to some or all of the
relevant Option Shares to a date not more than 28
days after the date (in which case this clause will
apply to Completion as so deferred); or
(B) proceed to Completion so far as practicable
(including, at the option of the Optionholder,
Completion of the purchase of some only of the
relevant Option Shares) and, in any case, without
prejudice to his rights under this Agreement; or
(C) rescind this Agreement without liability to GPG.
6. INVESTMENT UNDERTAKINGS.
6.1 The Optionholder represents and warrants to GPG, and with
respect to any Option Shares covenants to GPG, that he is
acquiring the Option, and that he will acquire any Option
Shares, for his own account for investment purposes only, and
not with a view to, or for resale in connection with, any
distribution thereof except (A) pursuant to an effective
registration statement filed with the United States Securities
and Exchange Commission under the Securities Act of 1993, as
amended ("1993 Act"), or (B) pursuant to and in compliance
with Rule 144 under the 1933 Act or any other exemption from
registration afforded by the 1933 Act or the rules and
regulations thereunder, and in any case, in compliance with
any applicable securities laws.
6.2 Neither the Option nor any Option Shares may be sold, assigned
or otherwise transferred in the absence of registration under
the 1933 Act or any other necessary qualification under other
applicable securities laws or an opinion of counsel
satisfactory to GPG that such registration and qualification
are not required. Any certificates for Option Shares may, at
GPG's option, bear a legend to the effect of the foregoing and
any other legend that may be required by the Company.
6.3 The Optionholder acknowledges that in reliance on one or more
exemptions from the 1933 Act and any other applicable
securities laws, the Option and the Option Shares are not and
(subject to any intervening registraTion or qualification of
the Option Shares) will not be registered or qualified under
the 1933 Act or such other applicable securities laws, and
that such reliance is based in part on the representation,
warranties, covenants and agreements of the Optionholder set
forth in clauses 6.1 and 6.2.
7. GPG'S UNDERTAKINGS.
7.1 Subject to the provisions of clause 7.2 and 7.3 below, GPG
shall not, and agrees to procure that none of its subsidiaries
shall, prior to the exercise of expiry of the Option and (if
appropriate) Completion, transfer, dispose of, charge, pledge
or encumber in
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any way its interest in any of the Option Shares, and the
Option Shares, shall, upon completion, be sold free of any
option, charge, lien, equity, encumbrance, rights of
preemption or any other third party rights and together with
all rights attached to them at the date of service of the
relevant Option Notice including the right to receive all
dividends or other distributions declared, made or paid in
respect of the relevant Option Shares at any time on or after
the date of service of the Option Notice.
7.2 GPG or any of its subsidiaries shall be permitted to transfer
its interest in any of the Option Shares to any other member
of the GPG Group.
7.3 Before transferring or procuring the transfer by any member of
the GPG Group of all or any of the Option Shares other than as
permitted by clause 7.2 above, GPG shall give notice in
writing to the Optionholder that it proposes to transfer or
procure the transfer of such Option Shares stating the number
of Option Shares the subject of the proposed transfer and the
price at which such shares are to be transferred. If within 10
days after the notice of the proposed transfer is given, the
Optionholder does not exercise the Option in respect of the
Option Shares the subject to the proposed transfer, GPG shall
be permitted to transfer such Option Shares to any person it
so desires.
7.4 If in respect of a transfer permitted by clause 7.3 above, any
member of the GPG Group shall receive an amount in respect of
each Option Share so transferred greater that the relevant
Option Exercise Price, GPG shall pay or procure that there
shall be paid to the Optionholder an amount in respect of each
Option Share so transferred equal to that difference. Upon
such payment, the obligations of GPG hereunder shall cease in
respect of the Option Shares transferred by GPG or any member
of the GPG Group in accordance with clause 7.3 above.
8. MISCELLANEOUS.
8.1 This Agreement shall be binding on and enure for the benefit
of the successors of each of the parties but, subject to
clause 8.2, no party may assign his rights under it.
8.2 The Optionholder may, subject to the prior written consent of
GPG (such consent not to be unreasonably withheld) assign his
rights under this Agreement to a Related Party provided that:
(A) the Related Party shall, prior to such assignment,
undertake in a form and on terms satisfactory to GPG
that it will accept the obligations and discharge the
liabilities of the Optionholder as if it were an
original party to this Agreement; and
(B) the Related Party shall reassign to the Optionholder
or to another Related Party of the Optionholder, in
each case subject to the terms of this Agreement, its
rights under this Agreement if it ceases for any
reason to be a Related Party.
8.3 In relation to its subject matter, this Agreement represents
the entire understanding and constitutes the whole agreement,
and supersedes any previous agreement, between the parties and
no party has relied on any representation made by any other
party which is not a party to this Agreement.
8.4 So far as it remains to be fulfilled, this Agreement will
continue in full force and affect notwithstanding Completion.
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8.5 GPG shall from time to time and at all times, both before and
after Completion, execute all such deeds and documents and do
all such things as the Optionholder may reasonable require for
perfecting the transactions intended to be effected under or
pursuant to this Agreement.
9. COSTS.
The Parties will pay their own costs in connection with the preparation
and negotiation of this Agreement.
10. NOTICES.
10.1 An Option Notice or other communication in connection with
this Agreement:
(A) must be in writing;
(B) in the case of GPG must be marked for the attention
of the Company Secretary;
(C) must be left at the address of the addressee, or sent
by pre-paid ordinary post (airmail if posted to or
from a place outside the United Kingdom) to the
address of the addressee or sent by or facsimile to
the facsimile number of the addressee which is
specified in this clause or if the addressee notifies
another address or facsimile number then to that
address or facsimile number.
The address and facsimile number of each party is:
GPG
Address: 2nd floor, 21-26 Garlick Hill,
London EC4A 4HT
Facsimile: 071-329-8870
The Optionholder
Address:
Facsimile:
10.2 An Option Notice or other communication takes effect from the
time it is deemed to be received pursuant to clause 10.3
unless a later time is specified in it.
10.3 A letter or facsimile is deemed to be received:
(A) in the case of a posted letter, on the 3rd (7th if
posted to or from a place outside the United Kingdom)
day after posting; and
(B) in the case of a facsimile on production of a
transmission report by the machine from which the
facsimile wa sent which indicates that the facsimile
was sent in its entirety to the facsimile number of
the recipient.
11. GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS.
11.1 This Agreement and the transactions contemplated by this
Agreement shall be governed by and construed in accordance
with English law.
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11.2 Each party irrevocably and unconditionally submits to the
non-exclusive jurisdiction of the English courts for
determining any dispute concerning this Agreement or the
transactions contemplated by this Agreement. Each party waives
any right it has to object to an action being brought in those
courts, to claim that the action has been brought in an
inconvenient forum, or to claim that those courts do not have
jurisdiction. The Optionholder hereby irrevocably authorizes
and appoints Frances Dewhurst of 79 Knightsbridge, London SW1X
7RB to accept service of all legal process arising out of or
connected with this Agreement and service on such person shall
be deemed to be service on the Optionholder.
11.3 Without preventing any other mode of service, any document in
an action (including, but not limited to, any writ of summons
or other originating process or any third party or other party
notice) may be served on any party by being delivered to or
left for that party at its address for service under clause
10.
IN WITNESS of which the parties have executed this Agreement on the date first
mentioned above.
SIGNED by )
for and on behalf of ) /s/ Blake Nixon
GUINNESS PEAT GROUP PLC in )
the presence of )
SIGNED by )
JOHN HART in the presence ) /s/ John Hart
of: )
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EXHIBIT 2
Guinness Peat Group plc
2nd Floor
21-26 Garlick Hill
London EC4V 2AU
England
May 10, 1996
Mr. Ronald Langley
Mr. John Hart
c/o Physicians Insurance Company of Ohio
13515 Yarmouth Drive, N.W.
Pickerington, Ohio 43147
Gentlemen:
Reference is made to the Call Option Agreements dated November 23, 1993
between Ronald Langley and Guinness Peat Group plc ("GPG"), and John Hart and
GPG, respectively (the "Option Agreements").
The Ondaatje Corporation ("O"), a 38.2% owned subsidiary of Physicians
Insurance Company of Ohio ("PICO"), is today purchasing 665,000 shares of PICO
common stock owned by Guinness Peat Group plc ("GPG") under an Agreement for
Purchase and Sale of Shares dated as of May 9, 1996 (the "TOC Sale").
This will confirm GPG's agreement, and by signing where provided below
each of you also confirm your agreement, that the 665,000 shares included in the
TOC Sale shall not be deemed to be Option Shares as defined in the Option
Agreements, and that each of you shall continue to have the option pursuant to
the respective Option Agreements to purchase up to 206,015 of Option Shares held
by GPG (for a total of 412,030) after its sale of the 665,000 shares in the TOC
Sale.
GUINNESS PEAT GROUP PLC
/s/ Blake Nixon
-------------------------
Name: Blake Nixon
Title: Executive Director
Agreed by:
/s/ Ronald Langley /s/ John Hart
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Ronald Langley John Hart
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<PAGE> 17
EXHIBIT 4
PHYSICIANS INSURANCE COMPANY OF OHIO
1995 NON-QUALIFIED STOCK OPTION PLAN (THE "PLAN")
OPTION GRANT
Grantee: John R. Hart August 24, 1995
At the direction of the Non-Qualified Stock Option Plan Committee
established pursuant to the Plan, you are hereby notified that you have been
granted the following Options with respect to Class A common shares of
Physicians Insurance Company of Ohio (the "Company") pursuant to the Plan:
Number of Shares in Grant: 175,000 shares
Date of Grant: August 24, 1995
Option Price: $13.50 per share
Exercisability: All shares are exercisable on or after
August 24, 1995
All shares must be exercised no later
than the expiration of 10 years from the
Date of Grant.
Termination: The Options shall terminate by reason of
termination of your association with the
Company in accordance with the
provisions of Section 5(c) of the Plan.
The Options may terminate in the event
of a merger, consolidation or sale of
assets in accordance with Section 11 of
the Plan.
Attached is a copy of the Plan which governs the Options granted to
you. At the time or times when you wish to exercise this Option in whole or in
part, please refer to this Notice and the Plan, in particular those provisions
addressing methods and formalities of exercise.
Sincerely,
The Non-Qualified Stock Option Plan
Committee
By: /s/ John D. Weil
----------------
Name (Print): John D. Weil
Receipt Acknowledged:
/s/ John R. Hart
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John R. Hart
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<PAGE> 18
EXHIBIT 5
CITATION INSURANCE GROUP
STOCK OPTION ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT is made as of November 20, 1996 by and
between Citation Insurance Group, a California corporation ("Citation"), and
John Hart ("Optionee").
RECITALS
A. Effective on November 20, 1996 (the "Closing Date"), Citation
Holdings, Inc., an Ohio corporation ("Sub") will be merged with and into
Physicians Insurance Company of Ohio, an Ohio corporation ("PICO") (the
"Merger") pursuant to an Agreement and Plan of Reorganization dated May 1, 1996,
by and between Citation, Sub and PICO (the "Merger Agreement").
B. Pursuant to the terms of the Merger Agreement, each outstanding
share of PICO Common Stock will be converted into 5.0099 shares of Citation
Common Stock (the "Exchange Ratio").
C. By the terms of a certain Stock Option Grant by PICO to Optionee
pursuant to a grant document dated August 24, 1995 (the "Option Agreement"),
PICO granted to Optionee a stock option (the "Option") to purchase up to 175,000
shares of PICO Common Stock (the "PICO Shares"), at an exercise price per share
of $13.50, subject to the terms of the Option Agreement and PICO's 1995
Non-qualified Stock Option Plan (the "PICO Plan").
D. Pursuant to the Merger Agreement, Citation will assume as of the
Closing Date the obligations of PICO under the Option Agreement, substituting
shares of Citation Common Stock for the PICO Shares based on the Exchange Ratio
and making appropriate adjustments to the number of shares and the exercise
price per share of Citation Common Stock issuable upon exercise of the Option
(the "Assumption").
E. By executing this Assumption Agreement, Optionee agrees to the
Assumption in accordance with the terms and conditions of this Assumption
Agreement.
AGREEMENT
NOW, THEREFORE, the parties hereto agree as follow:
1. Subject to the terms and conditions contained herein, Citation
hereby confirms that effective upon the Closing of the Merger, it assumes the
obligations of PICO under the Option Agreement and PICO Plan with respect to the
PICO Shares.
2. The Option hereby assumed by Citation will continue to be on the
same terms and conditions as set forth in the Option Agreement, except that:
(a) The Option shall be exercisable for 876,732 shares of
Citation Common Stock.
(b) The exercise price per share for each share of Citation
Common Stock purchasable under the Option will be $2.695.
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<PAGE> 19
(c) Continuous employment with PICO and/or Citation, whether
occurring before or after the Effective Date, shall be credited to Optionee for
purposes of determining the number of shares subject to exercise, vesting or
repurchase after the Effective Date.
(d) At the time the Option is exercised, in whole or in part,
or at any time thereafter as requested by Citation, Optionee hereby authorizes
payroll withholding and otherwise agrees to make adequate provision for foreign,
federal, state and local tax withholding obligations, if any, which arise in
connection with the Option, including, without limitation, obligations arising
upon (i) the exercise, in whole or in part, of the Option, (ii) the transfer, in
whole or in part, of any shares acquired on exercise of the Option, or (iii) the
lapsing of any restriction with respect to any shares acquired on exercise of
the Option.
3. The Merger shall not accelerate any right of exercise of vesting or
the lapsing of any repurchase option in favor of Citation under the Option.
4. The shares of Citation Common Stock to be issued upon the exercise
of the Option shall not be issued against the share reserve under a Citation
stock option plan. Citation shall separately reserve for issuance the number of
shares of Citation's authorized but unissued Common Stock subject to the PICO
Options assumed by Citation.
5. Optionee represents to Citation that Optionee is a bona fide
resident of the State of [ ] Ohio / [ ] California / [ ] other (specify)
_____________________________, and files income tax returns as a resident of
such state.
6. This Assumption Agreement shall be governed by the laws of the State
of California as such laws are applied to agreements between California
residents entered into and to be performed entirely within the State of
California.
7. Capitalized terms used herein and not otherwise defined shall have
the meanings given them in the Merger Agreement.
8. This Assumption Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
9. Optionee has confirmed the number of PICO Shares subject to the
Option Agreement and verifies and agrees that this Assumption Agreement
(together with any other stock option assumption agreement of the same date
provided to Optionee by Citation) represents and reflects assumption by Citation
of any and all options or other rights to purchase or receive stock of PICO held
by Optionee.
IN WITNESS WHEREOF, the parties have executed this Assumption Agreement
as of the date first written above.
CITATION INSURANCE GROUP OPTIONEE
/s/ Robert Erickson /s/ John R. Hart
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