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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
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NATIONAL INSURANCE GROUP
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(Name of Issuer)
COMMON STOCK
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(Title of Class of Securities)
636525107
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(CUSIP Number)
JOHN F. HARTIGAN, ESQ. MORGAN, LEWIS & BOCKIUS LLP
801 SOUTH GRAND AVENUE, LOS ANGELES, CA 90017
(213) 612-2500
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
MAY 23, 1996
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(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 / /.
Check the following box if a fee is being paid with the statement / /. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
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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SCHEDULE 13D
CUSIP NO. 636525107 PAGE OF PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MARK A. SPEIZER
________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /X
________________________________________________________________________________
3 SEC USE ONLY
________________________________________________________________________________
4 SOURCE OF FUNDS*
OO
________________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or (E) / /
________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
________________________________________________________________________________
7 SOLE VOTING POWER
NUMBER OF 1,918,529 SHARES
SHARES _______________________________________________________________
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 7,200 SHARES
EACH
________________________________________________________________________________
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 1,918,429 SHARES
WITH
________________________________________________________________________________
10 SHARED DISPOSITIVE POWER
7,200 SHARES
________________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,925,629 SHARES
________________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
41.2%
________________________________________________________________________________
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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STATEMENT PURSUANT TO RULE 13d-1
OF THE
GENERAL RULES AND REGULATIONS
UNDER THE
SECURITIES EXCHANGE ACT OR 1934, AS AMENDED
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ITEM 1. SECURITY AND ISSUER.
The title of the class of equity securities to which this
statement relates is:
National Insurance Group
Common Stock (the "Common Stock")
The name and address of the principal executive office of the
issuer of such securities are:
National Insurance Group
400 Oyster Point Blvd., Suite 115
South San Francisco, CA 94080-1933
National Insurance Group (the "Company") is a corporation
incorporated under the laws of the state of California.
ITEM 2. IDENTITY AND BACKGROUND.
The name and principal business address of the person filing this
statement are:
Mark A. Speizer
395 Oyster Point Blvd., Suite 500
South San Francisco, CA 94080-1933
Mr. Speizer is a member of the Board of Directors of the Company
and each of its subsidiaries. Mr. Speizer was Chairman of the Board, Chief
Executive Officer, and President of the Company until October 19, 1995. Since
then, his principal occupation has
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been as an individual investor and businessman (and member of the Board of
Directors of the Company).
In the past five years, Mr. Speizer has not been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) and,
has not been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a 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. Speizer is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Mr. Speizer agreed to purchase a total of 824,295 shares (the
"Herman Shares") pursuant to the Option and Stock Purchase Agreement entered
into as of May 1, 1996, as amended (the "Stock Purchase Agreement"), between
Howard L. Herman and Marcia E. Herman, Bradley Herman, Barbara Herman and the
Joel Franklin Herman Trust (collectively, the "Sellers") and Mr. Speizer. Of
those shares, 788,795 were purchased on May 31, 1996 ("First Closing Shares") in
Los Angeles, California. The remaining 35,500 shares (the "Second Closing
Shares") will be purchased no later than June 15, 1996 (subject to certain
extensions provided in the Stock Purchase Agreement) in Los Angeles, California.
At the time of Mr. Speizer's purchase of the First Closing Shares, Mr. Speizer
acquired all right, title and power to vote such shares and in connection
therewith, each of the Sellers gave Mr. Speizer a proxy to vote the shares
pending transfer of the shares into his name (collectively, the "Herman
Proxies").
Mr. Speizer's agreement to purchase the Herman Shares pursuant to
the Stock Purchase Agreement was expressly conditioned upon receipt of an
approval, or an exemption from the full filing and prior approval requirements
of California Insurance Code Section 1215.2, from the California Department of
Insurance (the "Department"). On May 23, 1996, the Department granted such
exemption.
Pursuant to the Stock Purchase Agreement, Mr. Speizer paid the
Sellers $50,000 for an option, subject to condition subsequent as described
above, to purchase the Herman Shares. The purchase price for the Herman Shares
was $8,605,098 (the "Purchase Price"), allocable $8,232,348 ($10.44 per share)
to the First Closing Shares and $372,750 ($10.50 per share) to the Second
Closing Shares. The price for the First Closing Shares was paid by
$2,892,382.05 in cash and promissory notes payable by Mr. Speizer to the Sellers
in the total principal amount of $5,339,965.45, and the price for the Second
Closing Shares will be paid by $132,422.95 in cash and promissory notes payable
by Mr. Speizer to the Sellers in the total principal amount of $240,327.05 (such
promissory notes, collectively, the "Speizer Notes").
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As collateral for the Speizer Notes, Mr. Speizer is required to
pledge to the Sellers pursuant to Security Agreements and Stock Pledges (the
"Stock Pledge Agreements") the Herman Shares and 400,000 additional shares of
the Company's Common Stock currently owned by Mr. Speizer (together, the
"Pledged Shares"). The Pledged Shares are required to be held in escrow by City
National Bank (of Beverly Hills, California), as pledgeholder, pursuant to the
terms of that certain Escrow Agreement dated as of May 31, 1996 by and among Mr.
Speizer, the Sellers and City National Bank as escrow agent.
Mr. Speizer has obtained from Arabella S.A. ("Arabella"), a
Luxembourg company whose shares are publicly listed on the Luxembourg stock
exchange, a line of credit for up to $4.2 million. Advances under the line of
credit from Arabella are evidenced by a one-year term note bearing interest at
10% per annum (the "Arabella Note"). The Arabella Note is unsecured and no
principal or accrued interest will be due and payable by Mr. Speizer until the
end of the term. Such line of credit is available to fund the purchase of the
Herman Shares and amounts necessary for Mr. Speizer to make any regularly
scheduled payments of principal and interest coming due under the Speizer Notes
during the term of the Arabella Note and certain other expenses.
ITEM 4. PURPOSE OF TRANSACTION.
Mr. Speizer co-founded the Company and was Chairman of the Board
of the Company, and of its wholly owned subsidiary, Great Pacific Insurance
Company ("Great Pacific"), from its formation until October, 1995. He was also
the Company's President and Chief Executive Officer until that date. He is a
current member of its Board of Directors. Immediately prior to the acquisition
described in Item 3 above, Mr. Speizer had beneficial ownership of approximately
22.5% of the outstanding shares of the Company's common stock and was its
largest shareholder. As a result of the aforementioned acquisition, Mr. Speizer
has beneficial ownership of approximately 40% of the outstanding shares of the
Company's common stock.
Mr. Speizer plans to propose a slate of directors which the
current Board of Directors has agreed to nominate at its Annual Meeting of
Shareholders expected to take place in July, 1996, provided that Mr. Speizer has
purchased the Second Closing Shares on or before June 12, 1996. Mr. Speizer
anticipates that such slate of directors will include Bruce Cole, Kevin R.
McCarthy, Nuno D'Adda Brandolini, Saul Jodel, and himself. Bruce Cole is the
Executive Vice President and General Counsel of J.B. Oxford & Company. Kevin
McCarthy and Nuno D'Adda Brandolini are President and Managing Director,
respectively, of Scorpion Holdings. Saul Jodel is the Chairman of Toymakers,
Inc. Mr. Speizer also intends to seek the offices of Chairman of the Board and
Chief Executive Officer of the Company, and will seek to have his nominee
selected as President upon resignation of the current President.
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Mr. Speizer is acquiring the Herman Shares with a view towards actively managing
the company and considering actions that would enhance shareholder value. Mr.
Speizer believes that the Company's Common Stock is currently undervalued, and
he believes that the Board of Directors of the Company should be evaluating
alternatives available to the Company to maximize the value of the Company for
all shareholders. If Mr. Speizer's nominees for Director are elected, the
Speizer nominees intend to conduct a detailed review of the Company and its
assets, corporate structure, dividend policy, capitalization, holdings,
operations, properties, policies and personnel, and to consider alternative
strategies to enhance stockholder value.
As of May 31, 1996, Mr. Speizer has agreed to the terms of an option
agreement set forth on the Speizer/LLC Term Sheet for Option Agreement (the
"Term Sheet") which require him to negotiate in good faith to enter into an
option agreement with Scorpion Acquisition, LLC, a Delaware limited liability
company (the "LLC"). The Term Sheet provides that, subject to obtaining
Department approval of the acquisition, the LLC will acquire from Mr. Speizer
the Pledged Shares and assume Mr. Speizer's obligations under the Speizer Notes
and the Arabella Note pursuant to a 6 month option to be granted by Mr. Speizer
to the LLC (the "LLC Option"). Upon exercise of the LLC Option, Mr. Speizer
will receive a 22.5% profits interest in the LLC (after return of capital to
certain members of the LLC and the payment of certain expenses by the LLC).
Such Term Sheet was agreed to in Los Angeles, California.
Subject to the foregoing, Mr. Speizer intends to review on a
continuing basis his investment in the Common Stock of the Company and may,
subject to the continuing evaluation of the factors discussed herein, acquire or
dispose from time to time additional shares in the open market or in privately
negotiated transactions. Depending on the factors discussed herein, Mr. Speizer
may, from time to time, retain or sell all or a portion of his holdings of the
shares in the open market or in privately negotiated transactions. Any action
that he might undertake with respect to the shares will be dependent upon his
individual review of numerous factors, including, among other things, the
availability of shares for purchase and the price levels of such shares, general
market and economic conditions, ongoing evaluation of the Company's business,
financial condition, operations and prospects, the relative attractiveness of
alternative business and investment opportunities, the actions of the management
and the Board of Directors of the Company, and other future developments.
Other than as described above, Mr. Speizer does not have plans to
dispose of the Herman Shares, however, Mr. Speizer retains the right at all
times to sell or otherwise dispose of all or any part of the Herman Shares
pursuant to an effective registration statement under the Securities Act and
applicable state securities laws, or under an exemption from such registration
available under the Securities Act (including Rule 144 and Rule 144A) and
applicable state securities laws and subject, nevertheless, to the disposition
of his property being at all times within its control. Although the foregoing
reflects activities currently
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contemplated by Mr. Speizer with respect to the Company, the foregoing is
subject to change at any time, and there can be no assurance that he will
purchase or dispose of additional shares or take any of the other actions
referred to above. Except as set forth above, he has no present plans or
intentions that would result in or relate to any of the transactions described
in subparagraphs (a) through (j) in Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Mr. Speizer is the beneficial owner of 1,925,629 shares (41.2%) of the
Company's outstanding Common Stock (the "Speizer Shares"). Of the foregoing,
40,520 are shares Mr. Speizer may acquire by exercise of certain options, which
are fully vested and may be exercised at any time. 35,500 of the Speizer Shares
are the Second Closing Shares (as previously defined), which will be acquired by
Mr. Speizer on or before June 15, 1996 (subject to certain extensions) pursuant
to the Stock Purchase Agreement. (See Item 2 above.) 2,400 of the Speizer
Shares are owned by Mr. Speizer's wife, Linda Speizer, and 2,400 of the Speizer
Shares are owned by each of Mr. Speizer's two daughters (Stacey M. Speizer and
Stephanie L. Speizer), for a total of 7,200 shares. Mr. Speizer disclaims any
beneficial ownership of those 7,200 shares. Mr. Speizer has sole dispositive
and voting power as to 1,918,429 of the Speizer Shares and may be considered to
have shared dispositive and voting power with his wife and daughters, as
applicable, as to 7,200 of the Speizer Shares.
See Items 3 and 4 above for a description of the transactions in the
Speizer by Mr. Speizer occurring during the past 60 days.
Of the Speizer Shares, the following amounts have been (or will be)
pledged: (i) 200,000 to The Pacific Bank, (ii) 436,514 to The Commercial Bank of
South San Francisco, and (iii) 1,224,295 to the Sellers in connection with the
Stock Purchase Agreement.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SECURITIES OF THE ISSUER.
See Item 3 above for a description of the Stock Purchase Agreement,
the Speizer Notes, the Stock Pledge Agreements, the Herman Proxies, and the
Escrow Agreement.
See Item 4 above for a description of the LLC Option. Messrs. Kevin
R. McCarthy and Nuno D'Adda Brandolini are the current members and managers of
the LLC. It is anticipated that the LLC will have additional members, including
Mr. Speizer (who also will act as manager) upon approval by the Department of
the transfer of the Pledged Shares to the LLC. It also is anticipated that,
assuming the LLC acquires the Pledged Shares, the LLC will not sell the Pledged
Shares before December 1, 1996 and, if the LLC receives an offer to purchase
such shares after December 1, 1996, Mr. Speizer will have the first right to
purchase
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such shares at the price offered to the LLC by a third party. In addition, it
is anticipated that the LLC will give a proxy to Mr. Speizer to vote the Pledged
Shares.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Option and Stock Purchase Agreement, as amended
2. Escrow Agreement
3. Speizer Notes
4. Stock Pledge Agreements
5. Herman Proxies
6. Credit Agreement by and between Mark A. Speizer and Arabella S.A., dated as
of May 31, 1996
7. Arabella Note
8. Term Sheet
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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.
Dated: June 3, 1996
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Mark A. Speizer
