<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 23, 1996
NATIONAL INSURANCE GROUP
(Exact name of registrant as specified in its charter)
California 0-16332 94-3031790
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
395 Oyster Point Boulevard, Suite 500
South San Francisco, California 94080
(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 872-6772
<PAGE> 2
ITEM 5. OTHER EVENTS.
The Registrant's Employment Contract with C. Alan Paylor dated August
26, 1996 is filed as Exhibit 10.1 and is incorporated herein by
reference.
The Registrant's Consulting Agreement with Scorpion Holdings, Inc.,
dated September 11, 1996, is filed as Exhibit 10.2 and is incorporated
herein by reference.
The Registrant's press release, dated October 22, 1996, is filed as
Exhibit 99.1 hereto and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statement of businesses acquired.
Inapplicable.
(b) Pro forma financial information.
Inapplicable.
(c) Exhibits.
10.1 Employment Agreement with C. Alan Paylor dated,
August 26, 1996.
10.2 Consulting Agreement with Scorpion Holdings, Inc.
dated, September 11, 1996.
99.1 Press release, dated October 22, 1996.
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<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
NATIONAL INSURANCE GROUP
(Registrant)
Dated: October 23, 1996 /s/ Robert P. Barbarowicz
-----------------------------------
Robert P. Barbarowicz, Executive Vice
President, General Counsel and Secretary
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<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.1 Employment Agreement with C. Alan Paylor dated, August 26, 1996.
10.2 Consulting Agreement with Scorpion Holdings, Inc. dated, September 11, 1996.
99.1 Press release, dated October 22, 1996.
</TABLE>
<PAGE> 1
August 26, 1996
National Insurance Group
395 Oyster Point Blvd., Suite 500
South San Francisco, CA 94080
Attention: Mr. Bruce A. Cole, President
Dear People:
This letter agreement (the "Agreement") confirms my understanding and agreement
that (i) the following terms and conditions were discussed with me prior to
being offered employment, and (ii) I agreed to them at that time and I accept
them as terms and conditions of my employment as an employee of National
Insurance Group, or any of its subsidiaries which currently exist or may exist
in the future. The current subsidiaries of the Company are Fastrac Systems,
Inc., Fastrac Systems Inc. Insurance Agent & Broker; and Pinnacle Data
Corporation. Any references in this Agreement to the Company shall mean
National Insurance Group and its subsidiaries collectively.
I understand and agree that this Agreement supersedes any prior understanding,
agreement, discussions or negotiations and that any such prior understanding,
agreement, discussion or negotiation does not constitute an agreement between
the Company and me and is void as being any such agreement.
My employment by the Company shall be as an employee of the Company
("Employment") and is subject to the terms and conditions set forth in this
Agreement, together with all written rules, policies and procedures of the
Company that may be in effect from time to time during my employment
("Policies and Procedures").
1. Compensation.
1.1 Salary Compensation. My bi-weekly salary shall be $5,000
("Salary Compensation"), which shall be paid to me in accordance with payroll
practices and procedures of the Company, less any applicable withholdings,
taxes as required by law and any deductions authorized by me. My Salary
Compensation shall accrue from the first day of my Employment, which shall be
September 8, 1996. My Salary Compensation may be adjusted, to be increased or
decreased on or after the first anniversary of my Employment if I am an
employee of the Company at such time.
1.2 Incentive Compensation. In addition to my Salary
Compensation, I shall also be paid additional incentive compensation
("Incentive Compensation") from (i) flood zone determination revenues received
by the Company, (ii) fees received by the Company from vehicle and property
insurance tracking; and (iii) forced placed hazard property and collateral
protection insurance net earned premiums which became earned by the Company and
any subsidiaries of the Company, as such revenues and fees are received by the
Company and such premiums are earned by the Company during the period from
January 1, 1997 until December 31, 1997 (the "Incentive Compensation Period")
as follows:
A. 00.35 of one percent of the flood zone determination revenues received
by Pinnacle Data Corporation which are in excess of $21,000,000;
provided, however, that the term "revenues" shall mean fees and
charges received by Pinnacle Data Corporation;
B. 00.55 of one percent of the vehicle and property insurance tracking
fees received by Fastrac Systems, Inc. in excess of $6,000,000;
provided, however, that any fees and revenues paid to the Company or
Fastrac Systems, Inc. by Ford Motor Company or any of its affiliates,
including without limitation Ford Motor Credit Company (collectively
"Ford"), shall be excluded from the calculation of additional
incentive compensation payable to me; provided, further, that the fees
and revenues received by the Company or Fastrac Systems, Inc. for
vehicle and property insurance tracking fees shall not include any
commissions paid to the Company; and
<PAGE> 2
C. 00.60 of one percent of the net earned premiums (net of any
reinsurance premiums or return premiums), of Great Pacific Insurance
Company for forced placed property and vehicle collateral protection
insurance in excess of $15,000,000; provided, however, that flood
insurance shall not be considered to be forced placed property
insurance or vehicle collateral protection insurance.
Notwithstanding the foregoing, no revenues, fees, net earned premiums or any
other forms of revenues received by the Company from Transamerica Corporation
or its subsidiaries or affiliates shall be included in the determination of
revenues, fees, net earned premiums or other forms of revenues received by the
Company in the determination of Incentive Compensation. Incentive Compensation
that may be payable to me pursuant to this Section shall be determined by the
Company and paid to me not later than April 30, 1998.
In the event that I am not employed by the Company at December 31, 1997 in the
capacity of Executive Vice President - Sales, I will be paid a portion of the
Incentive Compensation determined in accordance with the foregoing; provided,
however, that any such payment due me shall be pro-rated based upon the actual
number of months or partial months that I was employed by the Company during
the Incentive Compensation Period divided by the total number of months in the
Incentive Compensation Period; unless, however, I cease to be employed by the
Company by reason of the termination of my Employment for cause. In the event
that my Employment is terminated for cause, I shall have no right to any
Incentive Compensation under this Agreement. It is understood and agreed that
"cause" shall have the meaning ascribed to the phrase "discharge for cause" in
the Personnel Policy and Procedures Manual of the Company now in effect or as
revised from time to time or as otherwise used by the Company in the
administration of its personnel policies.
It is further understood that any Incentive Compensation payable to me shall be
subject to the policies and procedures of the Company now in effect, or as may
be implemented; and such policies and procedures may be revised from time to
time, including specifically, the determination of any revenues, fees, charges
and premiums earned by the Company shall be net of any rebates, returns or
discounts. Any such Incentive Compensation shall be subject to the
definitions, conditions and terms of the Sales Administration Memoranda issued
by the Company and in effect from time to time, including specifically, but not
limited to, Sales Administration Memorandum 96-1 of Pinnacle Data Corporation
which is attached to this Agreement as Exhibit "A" as it relates to payments
due on Delinquent Amounts.
It is understood and agreed that the Incentive Compensation shall be only for
the revenues and fees received by the Company during the Incentive Compensation
Period and net premiums earned by Great Pacific Insurance Company for forced
placed property and vehicle collateral protection insurance during the
Incentive Compensation Period. The Company and I do not have any
understanding, arrangement or undertaking with respect to any additional
incentive compensation for any period after the expiration of the Incentive
Compensation Period. I confirm that no representation or promise has been made
to me with respect to additional incentive compensation for any period after
the expiration of the Incentive Compensation Period.
1.3 Compensation In Event of Change of Control Under Certain
Circumstances. In the event that (i) the Company is acquired by First American
Financial at any time during the twelve months following the date of this
Agreement, and (ii) I am terminated as an employee of the Company following any
such acquisition; and (iii) that any such termination of my employment is not
for cause, then in such event, I will be paid, in addition to any other
compensation due me (a) Salary Compensation equal to 13 bi-weekly periods and
(b) a pro-rata portion of any Incentive Compensation payable to me from the
date of this Agreement to the date of the termination of my employment. For
purposes of this Section cause shall have the meaning as cause is defined in
the phrase "discharged for cause" in the Personnel Policy and Procedures Manual
of the Company now in effect or as revised from time to time or as otherwise
used by the Company in the administration of its personnel policies.
1.4 Eligibility to Participate in Bonus Plans for Senior
Management. In addition to my Salary Compensation, and any Incentive
Compensation, I understand that I shall be eligible to
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participate in and may receive awards made by the Company under a bonus plan
for senior management of the Company as the same may be adopted by the Company.
I further understand that any such participation in any such plan shall
commence with calender year 1997. I understand that there is no guarantee or
assurance that I will be granted any award under any such bonus plan or that
any award granted to me would be equal to those granted to other employees of
the Company, including but not limited to, officers who hold the same or
similar titles or offices or who perform the same or similar duties as me.
1.5 Reimbursement for Reasonable Business Expenses. I further
understand that the Company will reimburse me for any reasonable business
related expenses incurred by me for travel, entertainment or other business
expenses in accordance with the Policies and Procedures of the Company. All
requests for reimbursements or any advances by the Company for expenses shall
be on such forms as the Company may require with documentation or
substantiation of any such expenses. All requests for reimbursement of
expenses or advances shall be approved by one of the following officers of the
Company (i) the Chairman of the Board and Chief Executive Officer, (ii) the
President; or (iii) any Executive Vice President as may be designated by the
Chairman or the President. I understand that I may be issued one or more
credit cards issued to me on the account of the Company. I agree that I will
use any such charge only for business purposes or, in the event that I use any
such credit cards for personal purposes, I will identify any such expense as
personal in nature and pay to the Company the amount of any such charges at the
time the account is rendered to the Company for payment by the credit card
entity. The Company may revoke, modify or suspend its issuance of credit cards
to its employees, including me.
2. Position and Title. My position shall be Executive Vice President -
Sales of the Company and I understand that I will be elected as an officer of
the Company and may be elected as an officer of one or more of the subsidiaries
of the Company. I shall have such duties as may be assigned to me by the
Chairman of the Board and Chief Executive Officer or the President of the
Company at any time or from time to time. I shall report to the Chairman of
the Board and Chief Executive Officer or to the President of the Company if the
Chairman so designates.
3. Work Hours; Exempt Employee Status. I agree that I will work at least
forty hours per week, during the normal business hours of the Company,
prevailing local time, however, I understand that I will not receive any
additional compensation for any hours that I work in excess of eight hours per
day and forty hours per week. As an executive officer of the Company with my
duties as Executive Vice President of the Company I understand and agree that
my duties may require my services in excess of the services performed by other
employees of the Company. I agree that I will devote my full time and
attention to the performance of my duties during normal business hours. I
further agree that I will not engage in any civic or other activities that
would materially interfere with the performance of my duties under this
Agreement or as an employee of the Company. I will not engage in any other
business or commercial activity.
4. At Will Employment. I understand and agree that my Employment will be
"at-will." This means that the Company has the right to and can terminate my
Employment at any time, with or without cause, and without notice, and I can
terminate my Employment at any time, with or without cause, and without notice.
There is no promise that my Employment will continue for a specific period of
time, duration or term and there is not there any promise that my employment
will be terminated only under particular circumstances. NO POSITION WITHIN THE
COMPANY IS CONSIDERED PERMANENT. This Section 4 constitutes the entire
agreement between me and the Company regarding the term of my Employment.
5. Vacations. The following is the vacation policy of the Company
applicable to me.
a. My paid vacation time ("Vacation Time") will accrue on the
following basis: (i) .0625 of a vacation day for each full working day worked
at the Company during each Working Year until such Vacation Time is modified by
the Company. A "Working Year" begins on the first day of my Employment and
ends 365 continuous days thereafter.
b. If I do not take any Vacation Time within 180 days from the
end of each Working Year of my Employment, the Company will require that I take
my accrued Vacation Time and will assign me Vacation Time that must be used by
me. I am required to take Vacation Time within the
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<PAGE> 4
180 day period described in Section 5.b because a stacking of accrued Vacation
Time beyond one Working Year into an extended vacation may be a hardship on the
Company.
c. I will give advance written notice of the dates my Vacation
Time is to begin and end by completing the Company's Vacation Request Form then
in effect ("Vacation Request") and submitting it to my supervisor, no less than
60 days before my proposed Vacation Time will begin. I will be given a written
receipt for the Vacation Request and my supervisor will review my Vacation
Request with the Company's payroll supervisor. If my supervisor and the
payroll supervisor are unable to agree mutually to approve the Vacation
Request, my Vacation Request shall be forwarded to the Chief Executive Officer
or President of the Company for review (my supervisor, the payroll supervisor,
and/or the Chief Executive Officer or President shall be referred to herein as
the "Designated Persons"). The Designated Persons can, in their discretion,
turn down my request for the proposed dates of Vacation Time in my Vacation
Request, but the Designated Persons must provide me with alternative dates
which I must use instead. The Designated Persons will provide me with a
written acceptance or rejection of the Vacation Request no more than 30 days
after I present it to my supervisor.
6. Health/Life/Welfare Plans.
a. I will be eligible for coverage under the Company's
health/life/welfare plans ("plans"), as may be amended from time-to-time, on
the thirty-first consecutive day of my Employment. Even though I will be
eligible for the plans on the thirty-first consecutive day of my Employment,
the actual date coverage would go into effect on the plans, as respects me or
my dependents eligible for coverage, is at the sole discretion of the plans'
provider (i.e., the insurance company or plans' trust).
b. Once I am covered by the plans I will be covered until the
earlier of the following:
i. The date my Employment ceases, subject to Federal and
State laws and regulations regarding the termination date of such coverage, or
ii. Coverage for me or the Companies under the plans is
terminated by the insurance company or other organization providing these
benefits, or
iii. The insurance company or other organization providing
these benefits refuses to cover me under any of the plans.
7. Sick Time.
a. If I do not work because of illness, sickness, disease,
accident or disability, at option of the Company, the Company, in its sole
discretion, may require me to bring a written notice from my physician,
addressed to the Company, on the day I return to work (i) indicating the reason
I was unable to work on the days that I missed work and stating "I have
determined that (my name) was too ill, sick, diseased, injured or disabled to
report to work and perform his duties from (insert date) to (insert date)", and
(ii) stating that I am now able to resume the duties I performed and work the
number of hours I was employed to work prior to such absence. I consent to the
disclosure by my physician to the Company of such medical information as the
Company may be legally entitled to obtain regarding my ability to perform my
job.
b. If sick time pay ("Sick Time") is provided by the Company, it
is only payable to me for the times when I am too ill, sick, diseased, injured
or disabled to do the work which I was then employed by the Company to do.
c. Currently, the Company provides me with six (6) Sick Time days
during my Working Year. The Sick Time accrues at one-half day per each two
consecutive pay periods. At the end of any Working Year, all accrued unused
Sick Time is transferred to the next concurrent Working Year. No more than six
(6) Sick Time days may be used in any Working Year. If unused Sick Time days
are carried over from one Working Year to the next concurrent Working Year,
then the amount of Sick Time days I can accrue in that next concurrent Working
Year shall be limited to the difference between the unused Sick Time days
carried forward to the next concurrent Working Year and six (6)
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days.
d. The Company reserve the right to eliminate Sick Time upon 30
days' notice to its employees.
e. Normal visits to my doctor or dentist, which are not due to
illness, sickness, disease, accident or disability of a nature which prevented
me from performing the work which I was then employed by the Company to do,
shall not be considered Sick Time and I shall prearrange such visit with my
supervisor.
8. Unpaid Absences. Any absence from work for any reason that is not
expressly compensated pursuant to this Agreement will result in a deduction
from my salary compensation, for the appropriate pay period, of an amount equal
to the salary compensation I would have been paid for the time of such absence
and, in the Company's discretion, I may not be allowed to make up time in this
regard. Nothing herein shall operate to authorize an unpaid absence.
9. Car Allowance; Cellular Telephone, Travel Expectations, Office
Location and Equipment.
9.1 Car Allowance.
I understand and agree that I will be paid a car allowance in the
amount of $400 per month. Such amount shall be the total compensation or
reimbursement due me from the Company for the use of my motor vehicle for
business purposes, whether for mileage, wear and tear, depreciation, repairs,
maintenance, upkeep, servicing, replacement or otherwise. I agree to maintain
and to keep in force insurance for liability, property damage, and other
coverages as the Company may reasonably require.
9.2 Cellular Telephone Expenses. I shall be reimbursed for
cellular telephone expenses related to the business of the Company.
9.3 Travel Required in Connection with Duties. I understand that
my duties as an employee shall require that I travel during the term of my
employment with the Company. The areas of the United States to which I shall
travel and the frequency of my travel to perform my duties as an employee may
be changed from time to time in the sole discretion of the Company.
9.4 Office Equipment.
a. The Company shall furnish me with certain office
equipment reasonably necessary to perform my duties, such as, a lap top
computer, printer, fax machine and telephone answering machine (collectively
"Office Equipment"), or the Company shall advance funds to me in a reasonable
amount to purchase the Office Equipment. I agree that the Office Equipment is
and shall remain the Company's personal property even though it may become
attached or affixed to realty, and title thereto shall remain in the Company
exclusively. The Company may require plates or markings to be affixed to or
placed on the Office Equipment to indicate the Company's ownership. I shall
not sell, assign, sublet, pledge, hypothecate or otherwise encumber or suffer a
lien upon or against the Office Equipment loaned hereunder and any such
attempt, without the Company's prior written consent, shall be null and void.
I shall not remove any Office Equipment from its installation site without the
Company's prior written consent. The Company shall have the right to inspect
the Office Equipment and observe its use upon reasonable notice of its
intention to so inspect.
b. The Company shall pay all shipping charges for
delivery of the Office Equipment to me. Upon termination of my employment and
unless otherwise agreed upon in writing, I shall promptly return the Office
Equipment to the Company in the same condition as when delivered, ordinary wear
and tear excepted, at such location as the Company shall designate. The
Company shall reimburse me for the shipping charges for delivery of the Office
Equipment to the Company.
c. I shall not make any alterations, modifications or
attachments to the Office Equipment without the prior written consent of the
Company. I shall maintain the Office Equipment in good condition, repair and
working order.
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9.5 Office Location. I agree that during my Employment by the
Company, the Company will provide me with an "office" in which to perform my
duties as an employee, the cost, location and lease terms of which are to be
approved in advance by the Company. The office shall be located within
reasonable commuting distance of my residence.
10. Proprietary Information. I agree to be bound by the terms of the
Proprietary Information Agreement and exhibits thereto, which are attached as
Exhibit "B" and incorporated by this reference ("Proprietary Agreement"), and,
by the rules of confidentiality promulgated by the Company from time to time
and applicable to employees of the Company.
11. Outside Activities. Unless I receive official notification to the
contrary in writing from either the Chairman of the Board and Chief Executive
Officer of the Board or President of the Company ("Official Notice"), the
Company does not now nor will it in the future sponsor any kind of event or
activity for employees or others, including, without limitation any athletic
events. Any participation in an activity by any officer, manager or director
of the Company does not in any way signify or imply a change to the foregoing.
I assume personal risk for any injury or loss associated with any activity or
event, whether I, or my dependents are participants or spectators, unless I
have received Official Notice that such activity or event is sponsored by the
Company, in which case the activity or event shall be subject to the terms and
conditions of that Official Notice.
12. No Promises or Representations With Respect to Career, Advancement,
Stock Ownership and other Employment Issues.
a. No promises of a career opportunity at the Company have been
made to me.
b. No promises of future increases in Salary Compensation, or
other compensation payable by the Company have been made to me.
c. No promises of being able to obtain ownership in the Company
have been made to me.
d. No promises of sharing the profits of the Company have been
made to me
e. No promises of advancement in the Company have been made to
me.
f. No promises of a review of my work and/or performance at the
Company have been made to me, but the Company reserve the right to do so at any
time.
13. Constitutional Rights and Offensive Conduct. The Company has advised
me that it does not condone or approve any matter or thing, written or oral:
a. that denigrates any person, creed, color, sex, race, religion,
national origin, personal persuasion, derivation or political belief;
b. or anything else that, to the reasonable employer or employee,
would be considered offensive.
14. Consequences of Breach by Employee. Any breach by me of the terms
and/or conditions of employment set forth in this Agreement or the Policies and
Procedures, may result in discipline up to and including termination of my
Employment. Timely performance of my duties of Employment is very important to
the Company. I agree that I shall be subject to, among other things, the sales
and marketing objectives and budgets of the Company which may be applicable to
me from time to time and that achieving such objectives, within the time period
specified by the Company, is a condition of my employment by the Company.
15. References. If and when the Company is asked for references of any
kind on prior or current employees, including me, the Company may withhold any
references for any reason.
16. Conditions of Offer. This Agreement and the terms and conditions
described in it are subject to (i) my first completing, signing and submitting
an Application for Employment to the
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Company, and (ii) the receipt of the following, which the Company may then deem
acceptable: my references and background information received from any present
or past employer or supervisor, educational institution, law enforcement
agency, state and/or federal administrator, credit bureau, collection agency,
military branch, the National Personnel Records Center and/or for the purpose
of obtaining my motor vehicle history, credit history and/or criminal history.
I hereby release any person and/or entity from any and all liability relating
to their furnishing any such information to the Company; provided, that such
information relating to me is factually correct.
17. Modifications to this Agreement.
a. No promises or changes in my Employment status or concerning
any of the terms and conditions of this Agreement or any other matter affecting
or relating to my relationship with the Company have been be made to me and I
agree that no such promises, or changes are valid unless they are made to me in
writing and signed by the Chairman of the Board and Chief Executive Officer or
President of the Company, or the person designated in writing by either of them
to make such promises or changes.
b. This Agreement and the terms and conditions described in it
cannot be changed orally or by any conduct of either me or the Company or any
course of dealings between me or another and the Company. Oral agreements are
not binding on the Company. This Agreement is a fully-integrated agreement
that stands on its own and requires no other document to interpret its meaning,
and is binding by itself and covers all the issues raised within it.
18. Worker's Compensation Insurance. I have been informed that the
Company carries Workers' Compensation Insurance, as required by law.
19. Miscellaneous. If my Employment changes from the Company to any
subsidiary of the Company, then all of the above terms and conditions remain in
force with respect to my Employment by the entity for whom I previously worked
and by the entity for whom I am then working. If any term or condition, or any
part of a term or condition, of this Agreement or the Policies and Procedures
shall prove to be invalid, void or illegal, it shall in no way affect, impair
or invalidate any of the other terms or conditions of this Agreement or the
Policies and Procedures, which shall remain in full force and effect. The
captions to this Agreement are for purposes of reference only and will be
ignored in interpreting or construing the meaning of this Agreement. Any
waiver by the Company of any breach by me of any term or condition of this
Agreement or the Policies and Procedures shall not be construed as a waiver of
any subsequent breach by me of this Agreement or the Policies and Procedures.
I acknowledge that I have received a copy of this Agreement.
20. Arbitration. Any dispute between me and the Company relating to this
Agreement, the Policies and Procedures or my Employment shall be resolved by
binding arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, except as otherwise mandated by law or
governmental regulation. Any such arbitration shall occur in San Francisco,
California. The fees and expenses of the arbitrator for any arbitration under
this Agreement shall be paid by the Company.
21. Governing Law. This Agreement shall be governed by the laws of the
State of California.
22. Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable, such provision shall be full, severable,
and this Agreement shall be construed and enforced as if such illegal, invalid,
or unenforceable provision were never a part of this Agreement; and the
remaining provisions of this Agreement shall remain in full force and effect
and shall not be affected by the illegal, invalid, or unenforceable provision
or by its severance. In lieu of any such provision that is illegal, invalid or
unenforceable, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
23. Headings. The headings for the various sections and provisions of
this Agreement are solely for the purpose of ease of reference for the parties
and will not be considered in any manner as affecting the construction or
interpretation of this Agreement. I have read the foregoing provisions of this
Agreement, consisting of this and the preceding twelve pages and I fully
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understand and agree to the terms and conditions of this Agreement as a
condition to my employment by the Company.
Dated: August 26, 1996
- ----------------------------------
C. Alan Paylor
ACCEPTED and AGREED
NATIONAL INSURANCE GROUP
By: Dated: August 28, 1996
-------------------------------
Mark A. Speizer
Chairman and Chief Executive Officer
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09/11/96
CONSULTING AGREEMENT
Consulting Agreement dated as of September 11, 1996 between National Insurance
Group, Inc., a California corporation (the "Company"), and Scorpion Holdings,
Inc., a Delaware corporation ("Scorpion").
AGREEMENT
The parties hereby agree as follows:
1. SERVICES.
--------
a) The Company hereby retains Scorpion to render
consulting services to the Company, and Scorpion
hereby agrees to render such services, for the period
commencing on the date hereof and continuing during
the term of this Agreement. Such consulting services
shall be rendered by employees or representatives of
Scorpion reasonably satisfactory to the Company, it
being understood that Nuno Brandolini and Kevin
McCarthy are satisfactory. Scorpion shall render such
consulting services to the Company in connection with
(i) management and strategic planning, (ii) the
identification of financing, acquisition and
divestiture opportunities for the Company and (iii)
other matters relating to the day-to-day business and
operations of the Company, or any of its subsidiaries
or affiliated companies, as the Board of Directors of
the Company may from time to time reasonably request.
b) In the event that the Company, or any of its
subsidiaries or affiliated companies, at any time or
from time to time during the term of this Agreement
engages in any (i) merger, consolidation or sale of
any its assets (other than in the ordinary course of
business) or outstanding securities, or (ii)
acquisition of assets or stock of another company
(each of which is hereinafter referred to as a
"Transaction"), Scorpion shall have the right to act
as a financial advisor to the Company in connection
with such Transaction pursuant to an engagement
agreement, the terms and conditions of which shall be
mutually agreed upon by the Company and Scorpion
acting in good faith (in each case, as appropriately
completed, an "Engagement Agreement"). The parties
acknowledge that Scorpion is not a broker/dealer,
securities underwriter or placement agent and,
accordingly, if a Transaction consists of a public or
private offering or other placement of securities,
Scorpion shall have the right to act as a financial
advisor to the Company and such investment banking
firm(s) as the Board of
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<PAGE> 2
Directors of the Company may select shall be engaged
as underwriter(s) or placement agents(s). Each
Engagement Agreement shall provide for the payment to
Scorpion of a transaction fee for services rendered
by Scorpion or any of its affiliates in respect of
organizing, developing and consummating the
applicable Transaction. Such fee shall be mutually
agreed upon by the Company and Scorpion acting in
good faith; provided however, that in the case of a
public or private offering or other placement of
securities, such amount shall be subject to an
adjustment, by mutual agreement of Scorpion and the
Company acting in good faith, after taking into
account the scope of Scorpion's engagement with
respect thereto.
2. Term.
This Agreement shall be for a term of one year and
shall expire on the first anniversary date of its
date of execution. This term of this Agreement shall
be extended for an additional period of one year from
the first anniversary date of its execution unless
written notice of termination is given by either
party not less than sixty (60) days prior to the
first anniversary date of this Agreement.
Notwithstanding any termination of this Agreement,
Scorpion shall be compensated in accordance with
Section 1 (b) for (i) transactions in progress at the
date of termination and (ii) transactions completed
within (1) one year of the date of termination of
this Agreement between the Company and any party
introduced by Scorpion to the Company prior to the
date of termination of this Agreement. In either
case, Scorpion will be compensated in accordance with
Section 1 (b) above.
3. Fees and Expenses.
a) As compensation for Scorpion's consulting services
rendered pursuant to Section 1 (a), the Company shall
pay to Scorpion an annual fee (the "Consulting Fee")
of $300,000 (the "Base Amount"), which shall be
payable monthly in advance, commencing September 11,
1996.
b) In addition, the Company shall reimburse Scorpion for
reasonable out-of-pocket costs and expenses incurred
in connection with the performance of the consulting
services rendered under this Agreement. Such
reimbursement shall be made by the Company from time
to time within thirty (30) days following its receipt
of a written statement from Scorpion. If requested by
the Company, Scorpion shall provide appropriate
copies of invoices or a reasonably detailed
description of the costs and expenses incurred.
4. Indemnity.
(a) The Company shall indemnify and hold harmless
Scorpion and its affiliates, and their respective
stockholders, partners, directors, officers, agents
and employees, to the full extent lawful, from and
against all losses, claims, damages and liabilities
related to or arising out of this Agreement or the
performance of any consulting services contemplated
hereby,
<PAGE> 3
including any such services performed prior to the
date hereof and any services performed by any officer
or employee of Scorpion or any of its affiliates, and
shall promptly reimburse (and/or advance to the
extent reasonably requested) Scorpion and any other
party entitled to be indemnified hereunder for all
reasonable out-of-pocket expenses (including counsel
fees and expenses) as incurred by Scorpion or any
such other party in connection with investigating,
preparing or defending any such claim, whether or not
in connection with pending or threatened litigation
in which Scorpion or any other party entitled to be
indemnified hereunder is or may be a party. The
Company will not, however, be responsible for any
losses, claims, damages, liabilities or expenses
which are finally determined to have resulted
primarily from the willful misconduct, gross
negligence or bad faith of Scorpion or any other
party entitled to be indemnified hereunder. The
foregoing agreement shall be in addition to any
rights that Scorpion or any other party entitled to
be indemnified hereunder may have at common law or
otherwise.
(b) Scorpion and each party entitled to be indemnified
hereunder shall have no liability to the Company
related to or arising out of this Agreement or the
performance of any consulting services contemplated
hereby unless a loss results to the Company that is
finally determined to have resulted primarily from
the willful misconduct, gross negligence or bad faith
of Scorpion or any such other party. The Company
hereby consents to personal jurisdiction, service and
venue in any court in which any claim, action or suit
that may give rise to an indemnification obligation
of the Company under this Section 4 is brought
against Scorpion or any other party entitled to be
indemnified hereunder. The provisions of this Section
4 shall survive the expiration or termination of this
Agreement.
5. Notices. Any notice required or permitted to be given hereunder shall
be in writing and shall be deemed to have been delivered on the date
(i) delivered in person or by overnight delivery service, (ii) mailed
by certified or registered mail (return receipt requested) or (iii)
sent by facsimile transmission, with a copy sent simultaneously by the
U.S. mail, if addressed to the respective parties as follows:
If to the Company, to:
National Insurance Group, Inc.
395 Oyster Point Blvd., Suite 500
South San Francisco, CA 94080
Attention: Mark Speizer
<PAGE> 4
If to Scorpion, to:
Scorpion Holdings, Inc.
599 Lexington Ave.
Suite 2700
New York, NY 10022
Attention: Kevin McCarthy
Either party, by notice to the other party given in accordance with this
Section 5, may designate additional or different addresses for subsequent
notices or communications. Notices on behalf of a party may be signed and sent
by an attorney for that party.
6. Permissible Activities. Nothing herein shall in any way preclude
Scorpion from engaging in any other business activities or from
performing any other services for its own account or for the account
of others.
7. No Waiver; Amendments. This Agreement supersedes all prior agreements
between the parties with respect to its subject matter, is intended as
a complete and exclusive statement of the terms of the agreement
between the parties with respect thereto and cannot be changed or
terminated orally. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be
considered a waiver or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this
Agreement. A waiver by either party of any breach of this Agreement
shall not operate as, or be construed to be, a waiver of any
subsequent breach. Any waiver must be in writing.
8. Consulting Relationship. It is understood and agreed that Scorpion
shall for all purposes hereof be deemed to be an independent
contractor and shall not, unless otherwise expressly authorized in
writing by the Company, have any authority to act for or represent the
Company in any way, execute any transaction on behalf of the Company
or otherwise be deemed an agent of the Company. No federal, state or
local withholding deductions shall be withheld from the fees and other
amounts payable to Scorpion pursuant to this Agreement unless
otherwise required by law.
9. Jurisdiction. Any action or proceeding to seek a provisional remedy
pursuant under this Agreement shall be brought against either of the
parties either in the State of California or in the State of New York,
or if it has or can acquire jurisdiction, in the United States
District Court for the Southern District of New York or the Northern
District of California, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts)
solely for the purpose of any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on either party
anywhere in the world, whether within or without the States of
California or New York.
10. Miscellaneous. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns, including any corporation into which the Company
shall consolidate or merge or to which it shall transfer all or
substantially all of its assets. This Agreement may not be assigned by
either
<PAGE> 5
party, except that this Agreement may be assigned by Scorpion to any
corporation or other entity controlling, controlled by or under common
control with Scorpion provided that the individuals providing the
consulting services are satisfactory to the Company. This Agreement
shall be governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and to performed
entirely within such State.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
NATIONAL INSURANCE GROUP, INC.
By:
--------------------------------
Name:
Title:
SCORPION HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
<PAGE> 1
NATIONAL INSURANCE GROUP
395 Oyster Point Boulevard, Suite 500
South San Francisco, California 94080-1933
Contact: Date: October 22, 1996
Bruce Cole Time: 1:00 p.m.
415-872-6772 Pacific Daylight Time
NATIONAL INSURANCE GROUP REPURCHASES ADDITIONAL 100,000 SHARES
South San Francisco, California, October 22, 1996; National Insurance Group
(NASDAQ National Market: NAIG) announced today that it had repurchased 100,000
shares of the Company's common stock from an institutional investor in a
privately negotiated transaction. The shares were purchased for $6.95 per
share.
The repurchase will reduce the number of common shares outstanding to 3,896,897
and represents a reduction of 2.5% of the Company's outstanding stock. The
repurchase follows a previous repurchase of 705,300 shares of the Company's
stock last month in another privately negotiated transaction. A spokesman for
the Company said that the Company has no present intention to make any further
repurchases of its stock.
National Insurance Group furnishes specialized information services, technology
and insurance products to financial institutions, mortgage bankers and others.
Those services include flood zone determination services, mortgage and lease
collateral insurance and other tracking services and forced-order hazard and
collateral protection insurance.
