Modification Of At Will Employment (gerry Gauer)

RETENTION AND MODIFICATION OF AT WILL EMPLOYMENT AGREEMENT


THIS RETENTION AND MODIFICATION OF AT WILL EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of the 3rd day of February, 1999, by and between NATIONAL INFORMATION GROUP, a California corporation (the "Company"), and GERRY GAUER, an individual (the "Employee").


Recitals


A. The Employee is an at will employee of the Company pursuant to that
certain letter agreement dated as of July 1, 1996, together with any and
all amendments (the "Current At Will Employment Agreement"), between the
Employee and National Information Group ("NAIG").


B. On or about November 18, 1998, NAIG entered into that certain Agreement
and Plan of Merger by and among The First American Financial Corporation
("First American"), Pea Soup Acquisition, Inc., a wholly owned affiliate
of First American ("Pea Soup"), and NAIG (the "Agreement of Merger"),
pursuant to which NAIG will be merged with and into Pea Soup and the
Company will become an indirect subsidiary of First American (the
"Merger").


C. The Merger is subject to certain conditions precedent, including,
without limitation, regulatory approvals and approval of the
shareholders of NAIG. For purposes of this Agreement, the date on which
the Merger shall occur and become effective shall be referred to as the
"Effective Date of the Merger".


D. The Company and First American desire to provide an incentive to
Employee in order to keep the services of Employee available to the
Company during the pendency of the Merger and thereafter, in each case
subject to the terms and conditions of this Agreement.


Agreement


NOW, THEREFORE, the Company and the Employee agree as follows:


1. CURRENT AT WILL EMPLOYMENT AGREEMENT. The Current At Will Employment Agreement continues in full force and effect except as modified by this Agreement.


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2 2. TERM.


2.1 Section 4 of the Current At Will Employment Agreement (regarding at will employment) is deleted in its entirety and replaced with the agreement set forth in Paragraph 2.2 below.


2.2 Employee shall be employed by the Company for fifteen (15) months, commencing as of January 1, 1999 and ending on March 31, 2000 (the "Initial Term"), unless sooner terminated in accordance with the provisions of this Agreement, including without limitation, Paragraph 4 of this Agreement. Upon expiration of the Initial Term, the provisions of Section 4 of the Current At Will Employment Agreement in effect immediately before the execution of this Agreement shall once again govern and Employee's employment shall continue on an "at will" basis in accordance with the provisions of the Current At Will Employment Agreement. Notwithstanding Employee's at will employment status at the expiration of the Initial Term, the Company agrees that it will provide Employee four (4) months notice prior to terminating Employee unless such termination is for Cause as set forth in Paragraph 4 of this Agreement. If Employee is terminated other than for Cause, then Employee shall for the Initial Term continue to be treated as an employee of the Company for all purposes including, payment of salary and benefits and the vesting of any stock options granted to Employee, but excluding the accrual of any bonus pursuant to Section 3.3.3. Notwithstanding the foregoing sentence, during any such termination period, Employee shall not have or exercise any of the powers or authority granted to employees and/or officers by the Company and/or by its subsidiaries and/or by law or regulation.


2.3 During the Initial Term, unless sooner terminated in accordance with the provisions of this Agreement, including without limitation, Paragraph 4 of this Agreement, and unless the Employee is promoted to a higher office, Employee's title shall be Executive Vice President and General Manager of Pinnacle Management Solutions Insurance Services, and Employee shall not be assigned to any duties that materially diminish such position, duties, responsibilities or status.


3. COMPENSATION.


3.1. Base Salary. The bi-weekly salary currently in effect for Employee shall continue to be paid during the Initial Term in accordance with the payroll practices and procedures of the Company; provided, however, the Company may, at the option of the Company, increase the bi-weekly salary of the Employee during the Initial Term.


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3.2. Retention and Non-Competition Payment. Subject to the terms, covenants, agreements, and conditions set forth below, Employee shall be entitled to a retention and non-competition payment in the aggregate amount of $100,000 less any applicable withholdings, taxes as required by law and/or regulation and deductions authorized by Employee or required by law and/or regulation(the "Retention Payment"), payable as follows:


3.2.1 The Company shall pay to Employee an amount equal to twenty percent of the Retention Payment upon execution of this Agreement; provided, however, such amount shall not be paid prior to January 1, 1999 and shall be paid with Employee's first regular pay check in January 1999.


3.2.2 In the event that (i) Employee remains employed by the Company on a full-time basis until the expiration of this Agreement or Employee has been terminated by the Company without Cause, regardless of whether the Merger is successfully consummated, the Company shall pay to Employee an amount equal to eighty percent of the Retention Payment upon the expiration of the Initial Term.


3.2.3 If Employee (i) resigns, retires, goes on leave, or is terminated for Cause before the expiration of the Initial Term, the eighty percent payment referred to herein will not be earned or paid.


3.2.3 In the event Employees dies during the Initial Term while he is employed by the Company, the Company will pay to his estate an amount equal to eighty percent of the Retention Payment. Employee will not, however, be entitled to any remaining payments that would have otherwise be paid to him under Paragraph 2.1 or any other provision of this Agreement, except for any fully earned but unpaid bonus.


3.3 Bonus. In addition to Base Salary, but subject to the terms, covenants, agreements and conditions set forth below, Employee shall be entitled to a bonus as follows:


3.3.1 Employee shall be paid a guaranteed bonus for the calendar year 1999 of One Hundred Thousand Dollars ($100,000) payable with the first pay check paid to Employee by the Company in January 2000. This guaranteed bonus shall not be prepaid by the Company. If Employee resigns, retires, goes on leave, or is terminated for Cause before December 31, 1999, the foregoing guaranteed bonus will not be earned or paid.


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