Exhibit
10.1


 


EMPLOYMENT
AGREEMENT


 


This EMPLOYMENT AGREEMENT (the “Agreement”) is entered into on
January 23, 2006 between ZENITH NATIONAL INSURANCE
CORP., a Delaware corporation (the “Company”), and MICHAEL E. JANSEN (the “Executive”);


 


WHEREAS, the parties
desire to enter into this Agreement setting forth the terms and conditions for
the employment relationship of the Executive with Zenith Insurance Company, a
California corporation and a wholly-owned subsidiary of Company (“Zenith
Insurance”).


 


NOW, THEREFORE, it is
AGREED as follows:


 


1.                                       Employment.


 


(a)                                  Subject to earlier termination as
provided herein, the Executive is employed as Executive Vice President and
General Counsel of Zenith Insurance from January 23, 2006 (the “Effective Date”)
through the Term of this Agreement (as defined below).  The Executive shall also serve as Executive
Vice President and General Counsel of the Company without additional
compensation.  In addition, if requested
by the Company, the Executive shall serve in such other capacities as an
officer of any of the Company’s subsidiaries and affiliates without additional
compensation.  The Executive shall be the
chief legal officer of the Company, its 


 

















 


subsidiaries and affiliates and shall be
responsible for the general corporate legal affairs (excluding claims-related
matters) of the Company, its subsidiaries and affiliates, as well as their
compliance with applicable regulations, including those relating to securities,
insurance, and corporate governance(such as under the Sarbanes-Oxley Act of
2002).  The Executive shall have such
other duties and responsibilities and such executive power and authority as is
customary for an officer in his position and as shall be allocated to him in
such capacity.  He may also be assigned
other duties and responsibilities by the Board of Directors of the Company (the
“Board”) or the chief executive officer of the Company (the “Chief Executive
Officer”) from time to time provided such assignments are not inconsistent with
the Executive’s position with the Company. 
In his capacity as Executive Vice President and General Counsel of
Zenith Insurance and the Company, the Executive shall devote his full business
time and energy to the business, affairs and interests of the Company, its
subsidiaries and affiliates and matters related thereto.  During the Term of the Agreement, the
Executive shall have no other employment other than with the Company or a
subsidiary or affiliate of the Company, except with the prior written approval
of the Board.  The Company hereby
acknowledges and agrees that the Executive shall have the right to serve in any
capacity with civic, educational, charitable and professional organizations and
to make and manage personal business investments that do not violate the
non-competition provisions of Section 10 of this Agreement, so long as
such activities do not interfere with the discharge of his duties to the
Company hereunder.


 


(b)                                 During
his employment hereunder, the Executive shall report to the Chief Executive
Officer or his designee.


 


2.                                       Term.  This Agreement shall be in effect for a term
commencing on the Effective Date and expiring on October 31, 2009 (“Expiration
Date”), and such period 


 

















 


shall
be referred to herein as the “Term of this Agreement,” and such term shall not
be affected by the termination of the Executive’s employment hereunder.


 


3.                                       Salary.  Commencing as of the Effective Date, the
Executive’s minimum annual base salary shall be $500,000, which shall be
payable in installments in conformity with Zenith Insurance’s policy relating
to salaried employees.  The Executive’s
base salary may be subject to annual adjustment (but not below the then current
amount) in the sole discretion of the Board.


 


4.                                       Discretionary
Bonuses.  During the Term of this Agreement, the
Executive shall be eligible for such discretionary bonuses as may be
authorized, declared, and paid by the Board in its sole discretion and shall
also be eligible for such bonuses under the Company’s Executive Officer Bonus
Plan, as may be awarded by the Board pursuant to the terms of such plan.


 


5.                                       Participation
in Retirement and Executive Benefit Plans.  During his employment hereunder, the
Executive shall be eligible to participate in any plan of the Company relating
to stock options, restricted stock, stock purchases, pension, thrift, profit
sharing, life insurance, medical coverage, disability insurance, education, and
other retirement or employee benefits that the Company has adopted, may adopt,
or caused to be adopted for the benefit of Zenith Insurance’s executive
employees generally.  The Company shall
also provide the Executive with such insurance or other provisions for
indemnification, defense or hold-harmless of officers that are generally in
effect for senior executive officers of the Company.  Notwithstanding the foregoing, nothing
contained in this Agreement shall prohibit or limit the right of the Company to



 

















 


discontinue,
modify or amend any plan or benefit in its absolute discretion at any time;
provided, however, that any such discontinuance, modification or amendment
shall apply to employees of Zenith Insurance generally or to a defined group of
such employees and shall not apply solely to the Executive.


 


In
addition, the Company will recommend to the Compensation Committee of the Board
at its next meeting following execution of this Agreement that the Executive be
awarded 10,000 shares of “restricted” common stock pursuant to the Zenith
National Insurance Corp. Amended and Restated 2004 Restricted Stock Plan.


 


6.                                       Fringe
Benefits and Automobile.  In addition to the benefit plans referred to
in Section 5 hereof, the Executive shall be eligible to participate in any
other fringe benefits that are now or may be or become applicable to Zenith
Insurance’s executive employees, any other benefits that are commensurate with
the duties and responsibilities to be performed by the Executive under this
Agreement and reimbursement for reasonable expenses incurred in the course of
his duties hereunder in accordance with the Company’s policy with respect
thereto.  In addition, the Company shall
provide Executive with a $1,300 per month automobile allowance.  The benefits provided under this Section 6
shall cease upon the Executive’s Date of Termination (as defined below).


 


7.                                       Vacation;
Memberships.  During his employment hereunder, the
Executive shall be entitled to an annual paid vacation in accordance with the
Zenith Insurance’s standard employment practices; provided, however, Executive
shall be treated for purposes of vacation as an employee with more than 120
months of service.


 

















 


  Upon termination of the Executive’s
employment for any reason, the Executive shall be entitled to payment for any
accrued but unused vacation time based upon his then current salary.  The timing of paid vacations shall be scheduled
in a reasonable manner by the Executive.


 


During
his employment hereunder, the Executive shall be entitled to appropriate
professional association and business club memberships, including reimbursement
of payment of dues and assessments pertaining thereto.


 


8.                                       Termination.


 


(a)                                  Disability.  If, as a result of the Executive’s incapacity
due to physical or mental illness, injury or similar incapacity, he shall have
been absent from the full-time performance of his duties with the Company, its
subsidiaries and affiliates for six months within any eighteen-month period,
and have exhausted his Family Medical Leave and its California equivalent, his
employment may be terminated by written notice (as provided below) from the
Company for “Disability.”


 


(b)                                 Cause.  Subject to the notice provisions set forth
below, the Company may terminate the Executive’s employment for “Cause” at any
time.  Termination for “Cause” shall mean
termination upon (1) the Executive’s
continued willful failure to substantially perform
his duties with the Company, its subsidiaries or affiliates or his other
willful breach of this Agreement (other than any such failure or breach
resulting from his incapacity due to the physical or mental illness, injury or
similar incapacity) after a written demand for substantial performance is
delivered to him by the Board or the Chief Executive Officer, which demand
specifically identifies 


 

















 


the
manner in which the Board believes that he has failed to substantially perform
his duties, or has otherwise breached this Agreement, (2) the Executive’s
conviction of a felony, (3) the Executive’s willful misconduct that is
materially and demonstrably injurious to the Company, (4) the Executive’s violation
of Section 10 hereof; or (5)  the Executive’s failure to remain an active
member in good standing of the State Bar of California;
provided, however, that the Executive shall not be terminated for “Cause”
unless and until the Board or the Chief Executive Officer has given the
Executive written notice of the Company’s intended actions and the alleged
events or activities upon which such termination for “Cause” is based and, with
respect to those events or activities for which a cure is possible, a
reasonable opportunity to cure such breach.


 


(c)                                  Constructive
Termination.  If at any time during the Term of this
Agreement, any of the following events shall occur, the Executive shall be
entitled to terminate his employment hereunder and be treated as if his
employment had been terminated by the Company other than for Cause:


 


(i)                               The
Executive is removed or otherwise prohibited or restricted in the performance
of his duties as set forth in Section 1 hereof, other than through fault of the Executive;


 


(ii)                            Any payment due under this Agreement
shall remain unpaid for more than 60 days, after notice of non-payment and
request for payment have been given to the Company by the Executive pursuant to
Section 12;


 


(iii)                         A
Change in Control of the Company (as defined below) shall occur during the Term
of this Agreement, and within 180 days after the effective 


 

















 


date
of any such Change in Control, the Executive delivers to the Company a written
notice of his election to terminate the Agreement effective as of the date set
forth in such notice, which effective date shall not be less than 30 days nor
more than 90 days after the date of delivery of any such written notice.  For purposes of this Section 8(c)(iii), a
Change in Control shall mean either (i) a merger or consolidation of the
Company with or into another company or corporation, other than (a) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 75% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation or (b) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which
no “person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) acquires more than 50%
of the combined voting power of the Company’s then outstanding securities; or
(ii) the sale of all or substantially all of the Company’s assets; or (iii) a
change in the identities of a majority of the members of the Company’s Board of
Directors within a one-year period or less; or (iv) the acquisition, directly
or indirectly, by any person or related group of persons (other than the
Company or a person that is controlled by the Company), of beneficial ownership
of securities possessing more than fifty percent (50%) of the total combined
voting power of the Company’s outstanding securities.


 


(d)                                 Notice
of Termination.  Any purported termination of the Executive’s
employment by the Company or
by him shall be communicated by a 


 

















 


written
notice (“Notice of Termination”) that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of the Executive’s employment under the provision so indicated.


 


(e)                                  Date
of Termination, Etc.  “Date of Termination” shall mean (1) if
the Executive’s employment is terminated by his death, the date of his death;
(2) if the Executive’s employment is terminated for Disability, thirty
days after Notice of Termination is given; (3) if the Executive’s
employment is terminated for Cause, the date specified in the Notice of
Termination; and (4) if the Executive’s employment is terminated for any
other reason, the date specified in the Notice of Termination.


 


9.                                       Compensation
Upon Termination or During Disability.  The Executive shall be entitled to the
following benefits during a period of disability, or upon termination of his
employment, as the case may be, if such period or termination occurs during the
Term of this Agreement:


 


(a)                                  During
any period that the Executive fails to perform his full-time duties with the
Company as a result of incapacity due to physical or mental illness, injury or
similar incapacity, he shall continue to receive his compensation and other
benefits payable to him under this Agreement at the rate in effect at the
commencement of any such period, less amounts payable to him under the Company’s
disability plan or program or other similar plan during such period, or under any governmental program, until
his employment is terminated pursuant to Section 8(a) hereof.  If, during any period of disability, the
Executive’s employment shall be 


 

















 


terminated by reason of his death, disability or
the expiration of this Agreement, notwithstanding the provisions of this
section, his pay shall cease and his benefits,
if any, shall be determined solely under the Company’s retirement, insurance
and other compensation programs then in effect in accordance with the terms of
such programs, and the Company shall have no further obligations to him under
this Agreement.


 


(b)                                 If
at any time the Executive’s employment shall be terminated (i) by reason
of his death, (ii) by the Company for Cause or Disability, or
(iii) by him (other than by reason of a constructive termination pursuant
to Section 8(c) hereof), the Company shall pay him (or his appropriate
payee, as determined in accordance with Section 11(c) hereof) his full
base salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given, plus all other amounts to which he is entitled
from the Company through
the Date of Termination under any compensation plan in each case at
the time such payments are due, and the Company shall have no further
obligations to him under this Agreement. 
In addition, in the event the Executive’s employment is terminated by
reason of the Executive’s death or Disability, the Executive (or his
appropriate payee) shall be entitled to receive a pro rata portion of any bonus
that would otherwise have been payable to the Executive with respect to the
year in which the Executive’s employment is terminated.  For purposes of this provision, if the
Executive’s bonus for such year has not been determined, the Executive shall be
deemed to have been entitled to a bonus equal to the bonus paid or payable to
the Executive with respect to the immediately preceding year.


 


(c)                                  If
the Executive’s employment should be terminated by the Company other than for
Cause or Disability or by the Executive by reason of a 


 

















 


constructive
termination pursuant to Section 8(c) hereof, he shall receive the payments and
benefits provided below (“Severance Payments”); provided, however, in
order to be entitled to any payments or benefits other than those specified in
subparagraph (i) below Executive must execute a release, in a form acceptable
to the Company, of the Company and any subsidiaries and affiliates of the
Company and their respective officers, directors, stockholders, employees and
agents:


 


(i)                               The
Company shall pay to the Executive his full base salary through the Date of
Termination, at the rate in effect at the time Notice of Termination is given,
plus all other amounts to which he is entitled under any compensation plan of
the Company, in each case at the time such payments are due;


 


(ii)                                  In addition:


 


(A)  in the event of either (1) a termination by
the Company other than for Cause or Disability or (2) a constructive
termination pursuant to Section 8(c) pursuant to any subsection other than
(iii) (Change in Control), the Company shall pay the Executive, at the time
such payments would have been made had the Executive’s employment not been
terminated hereunder, all salary payments that would have been payable to the
Executive pursuant to this Agreement had the Executive continued to be employed
for the greater of (x) the remaining Term of this Agreement or
(y) six months (the “Severance Period”) (assuming for the purpose of such
continuing payments that 


 





















 


the Executive’s salary for such period is to be
based on his rate of salary at the Date of Termination), plus any bonus that
would otherwise have been payable to the Executive with respect to the
Severance Period; provided, however, that to the extent the Executive’s bonus
for any portion of such Severance Period had not been determined, the Executive
shall be deemed to have been entitled to a bonus equal to the bonus paid or
payable to the Executive with respect to the calendar year ended immediately
prior to the Date of Termination OR


 


(B)  in the event of a constructive termination
pursuant to Section 8(c)(iii) (Change in Control), the Company shall pay the
Executive in a lump sum, all salary payments that would have been payable to
the Executive pursuant to this Agreement had the Executive continued to be
employed for the greater of (x) the remaining Term of this Agreement or
(y) two years (the “Severance Period”) (assuming for the purpose of such
continuing payments that the Executive’s salary for such period is to be based
on his rate of salary at the Date of Termination), plus any bonus that would otherwise
have been payable to the Executive with respect to the Severance Period;
provided, however, that to the extent the Executive’s bonus for any portion of
such Severance Period had not been determined, the 


 





















 


Executive shall be deemed to have been entitled to a
bonus equal to the bonus paid or payable to the Executive with respect to the
calendar year ended immediately prior to the Date of Termination;


 


(iii)                         Notwithstanding
any provisions in the applicable plans governing them, all stock option rights,
stock appreciation rights and any and all other similar rights theretofore
granted to the Executive, including, but not limited to, the Executive’s right
to receive cash in lieu of exercising stock options, as may be provided in his
stock option agreements, shall vest and shall then be exercisable in full, and
the Executive shall have 90 days following his termination within which to
exercise any and all such rights and the restrictions on any and all shares of
restricted stock granted to the Executive that are outstanding on the Date of
Termination shall lapse as of the Date of Termination;


 


(iv)                        The Company’s group health plans allow
for benefits to extend beyond employment, under certain circumstances and for a
specified length of time, as defined by the federal law called the Consolidated
Omnibus Budget Reconciliation Act of 1985 (commonly known as “COBRA”).  During the Severance Period, if the Executive
and his family are eligible for COBRA coverage, the Company shall, at its cost,
pay the Executive’s COBRA premium for his and his family’s coverage, as
applicable, under the medical, dental, vision and the employee assistance plan,
up until the Executive is no longer eligible for COBRA, or the end of the
Severance Period, whichever occurs first. 
If upon completion of federal COBRA, the Executive and his family are
then eligible for the corresponding California COBRA law, AB 1401 (“Cal-COBRA”),
which applies to medical coverage only, the Company shall, at its cost, 


 

















 


pay the Executive’s Cal-COBRA premium for
his and his family’s coverage, as applicable, up until the Executive is no
longer eligible for Cal-COBRA, or the end of the Severance Period, whichever
occurs first.  During the Severance
Period, the Company shall, at its cost, arrange to provide the Executive with
life insurance (excluding accidental death and dismemberment).  The amount of life insurance coverage will be
equal to that in effect for the Executive on the Date of Termination under the
Company’s group life insurance program (subject to the age reduction
schedule).  The Company agrees to pay an
additional amount necessary to reimburse the Executive for any taxes imposed
solely by reason of his receipt of such benefits following termination of his
employment as stated herein.


 


(d)                                 The
Company shall continue in effect for the benefit of the Executive all insurance
or other provisions for the indemnification, defense or hold-harmless of
officers or directors of the Company that are in effect on the date the Notice
of Termination is given by the Executive or by the Company with respect to all
of his acts and omissions while an officer as fully and completely as if such
termination had not occurred, and until the final expiration or running of all
periods of limitation against actions that may be applicable to such acts or
omissions.


 


(e)                                  Notwithstanding anything to the contrary
in this Agreement, in the event that the Executive becomes entitled to the
Severance Payments, if any of the Severance Payments will be subject to the tax
(the “Excise Tax”) imposed by section 4999 of the Internal Revenue Code of
1986, as amended (the “Code”), the Company shall pay to the Executive an
additional amount (the “Gross-Up Payment”) such that the net amount retained by
the Executive, after payment of any Excise Tax on the Total Payments (as
hereinafter defined) and any federal, state and local income and other tax 


 

















 


and Excise Tax upon the Gross-Up Payment
provided for by this Section 9(e), shall be equal to the Total
Payments.  For purposes of determining
whether any of the Total Payments will be subject to the Excise Tax and the
amount of such Excise Tax, (i) any other payments or benefits received or
to be received by the Executive in connection with a Change in Control or the
Executive’s termination of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any
person whose actions result in a Change in Control or any person affiliated
with the Company or such person (which, together with Severance Payments, shall
constitute “Total Payments”)), shall be treated as “parachute payments” within
the meaning of section 280G(b)(2) of the Code, and all “excess parachute
payments” within the meaning of section 280G(b)(1) shall be treated as
subject to the Excise Tax, unless in the opinion of tax counsel selected by the
Company and acceptable to the Executive, such other payments or benefits (in
whole or in part) do not constitute parachute payments, or such excess
parachute payments (in whole or in part) represent reasonable compensation for
services actually rendered within the meaning of section 280G(b)(4) of the
Code, within the meaning of section 280G(b)(3) of the Code, or are
otherwise not subject to the Excise Tax, (ii) the amount of the Total
Payments which shall be treated as subject to the Excise Tax shall be equal to
the lesser of (A) the total amount of the Total Payments or (B) the
amount of excess parachute payments within the meaning of
section 280G(b)(1) (after applying clause (i), above), and (iii) the value
of any non-cash benefits or any deferred payment or benefit shall be determined
by the Company’s independent auditors in accordance with the principles of
sections 280G(d)(3) and (4) of the Code. 
For purposes of determining the amount of the Gross-Up Payment, the
Executive shall be 


 

















 


deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Executive’s
residence on the date of termination of employment, net of the maximum
reduction in federal income taxes which could be obtained from deduction of
such state and local taxes.  In the event
that the Excise Tax is subsequently determined to be less than the amount taken
into account hereunder at the time of termination of the Executive’s
employment, the Executive shall repay to the Company, at the time that the
amount of such reduction in Excise Tax is finally determined, the portion of
the Gross-Up Payment attributable to such reduction plus interest on the amount
of such repayment at the rate provided in section 1274(b)(2)(B) of the
Code.  In the event that the Excise Tax
is determined to exceed the amount taken into account hereunder at the time of
the termination of the Executive’s employment (including by reason of any
payment the existence or amount of which cannot be determined at the time of
the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in
respect of such excess (plus any interest, penalties or additions payable by
the Executive with respect to such excess) at the time that the amount of such
excess is finally determined.


 


10.                                 Confidential
Information and Non-Competition.


 


(a)                      During
the Term of this Agreement and thereafter, the Executive shall not, except as
may be required to perform his duties hereunder or as required by applicable
law, disclose to others or use, whether directly or indirectly, any
Confidential Information regarding the Company. 
“Confidential Information” shall mean information about the Company, its
subsidiaries and affiliates, and their respective clients and 


 

















 


customers
that is not available to the general public and that was learned by the
Executive in the course of his employment by the Company, including (without
limitation) any data, formulae, information, proprietary knowledge, trade
secrets and client and customer lists and all papers, resumes, records and the
documents containing such Confidential Information.  The Executive acknowledges that such
Confidential Information is specialized, unique in nature and of great value to
the Company, and that such information gives the Company a competitive
advantage.  Upon the termination of his
employment for any reason whatsoever, the Executive shall promptly deliver to
the Company all documents (and all copies hereof) containing any Confidential
Information.


 


(b)                     During
the term of this Agreement and any period the Executive is entitled to benefits
hereunder, the Executive shall not, directly or indirectly, without the prior
written consent of the Company, provide consultative service (with or without
pay) to, own, manage, operate, join, control, participate in, or be connected
(as a stockholder, partner, or otherwise) with, any business, individual,
partner, firm, corporation, or other entity that is then in competition with
the Company or any of its subsidiaries or affiliates (a “Competitor of the
Company”); provided, however, that the “beneficial ownership” by the Executive,
either individually or as a member of a “group,” as such terms are used in
Rule 13d of the General Rules and Regulations under the Exchange Act, of
not more than one percent (1%) of the voting stock of any publicly held
corporation shall not be a violation of this Agreement.  It is further expressly agreed that the
Company will or would suffer irreparable injury if the Executive were to
compete with the Company or any subsidiary or affiliate of the Company in
violation of this Agreement.


 

















 


(c)                      During
the Term of this Agreement or for the period ending on the last day of the
one-year period following termination of his employment, the Executive shall
not, directly or indirectly, influence or attempt to influence customers or
suppliers of the Company or any of its subsidiaries or affiliates, to divert
their business to any Competitor of the Company.


 


(d)                     The
Executive recognizes that he will possess confidential information about other
employees of the Company, its subsidiaries and affiliates relating to their
education, experience, skills, abilities, compensation and benefits, and
interpersonal relationships with customers of the Company, its subsidiaries and
affiliates.  The Executive recognizes
that the information he will possess about these other employees is not
generally known, is of substantial value to the Company, its subsidiaries and
affiliates in developing their products and in securing and retaining
customers, and will be acquired by him because of his business position with
the Company, its subsidiaries or affiliates. 
The Executive agrees that, during the Term of this Agreement and for the
period ending on the last day of the one-year period following termination of
his employment, the Executive will not, directly or indirectly, solicit or
recruit any employee of the Company, its subsidiaries and affiliates for the
purpose of being employed by him, or any business, individual, partner, firm,
corporation or other entity that is then a Competitor of the Company.  The Executive further agrees that he will not
convey any such confidential information or trade secrets about other employees
of the Company, its subsidiaries and affiliates to any Competitor of the Company
or to anyone affiliated with him or with any Competitor of the Company.


 

















 


(e)                      The
Executive further acknowledges that the remedy at law for any breach by him of
the covenants contained in this Section 10 will be inadequate and that in
the event of a breach, or threatened breach, by the Executive of the covenants
contained therein, the Company shall be entitled to provisional relief or an
injunction restraining the Executive from using, for his own benefit, and/or
from disclosing, in whole or in part, the list of the customers of the Company,
its subsidiaries and affiliates and/or trade secrets or other confidential
information of the Company, its subsidiaries and affiliates, and/or from
rendering any services to any person, firm, corporation, association or other
entity to whom such a list, and/or such trade secrets or other confidential
information, in whole or in part, have been disclosed, or are threatened to be
disclosed and such other declaratory relief as is proper to cause the Executive
to return to the Company any and all memoranda, specifications, documents and
all other material relating to the business of the Company, its subsidiaries
and affiliates that he may have under his possession or control.  Nothing herein shall be construed as prohibiting
the Executive from pursuing professional employment or investments utilizing
his own skills and knowledge or the Company from pursuing any other remedies
available to the Company from such breach or threatened breach, including the
recovery of damages from the Executive. 
The provisions of this Section 10 shall survive the expiration or
termination, for any reason, of this Agreement and of the Executive’s
employment.


 


11.                                 Assignments/Mitigation.


 


(a)                                  This
Agreement and the rights, interest and benefits hereunder are personal to the
Executive and shall not be assigned, transferred, pledged, or hypothecated in
any way by the Executive, and shall not be subject to execution,


 

















 


 attachment or similar process.  Any attempted assignment, transfer, pledge,
or hypothecation, or the levy of any execution, attachment or similar process
thereon, shall be null and void and without effect.


 


(b)                                 The
Company shall have the right to assign this Agreement and to delegate all of
its rights, duties and obligations hereunder, whether in whole or in part, to any
parent, affiliate, successor or subsidiary organization of the Company or
corporation with which the Company may merge or consolidate or which acquires
by purchase or otherwise all or substantially all of the Company’s consolidated
assets, but such assignment shall not release the Company from its obligations
under this Agreement.


 


(c)                                  This
Agreement shall inure to the benefit of and be enforceable by the Executive and
his personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. 
If the Executive should die while any amount would still be payable to
him hereunder had he continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement
to his devisee, legatee or other designees, or, if there is no such designee,
to his estate.


 


(d)                                 The
Executive shall have no duty to mitigate the Company’s obligations hereunder by
seeking other employment or by becoming self-employed; provided, however, that
compensation, including life, disability, dental, accident, group health
insurance and other health and welfare benefits as well as salary, wage or other compensation,
received by the Executive during or with respect to the Severance 


 

















 


Period
and attributable to services rendered during such period by the Executive to
persons or entities other than the Company shall be applied to reduce the
Company’s obligation to provide compensation and benefits
under this Agreement.  The Executive shall promptly notify the Company
of his securing other employment or his becoming self-employed and shall
account to the Company as to the amount of such compensation and benefits; if
the Company has paid amounts in excess of those to which the Executive was entitled
(after giving effect to the offsets provided above), the Executive shall
reimburse the Company promptly thereafter for such excess.


 


12.                                 Notice.  Notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or five business days after being mailed by United States
certified mail, return receipt requested, postage prepaid, addressed
(a) if to the Executive, to Michael E. Jansen, 29463 Malibu View Court,
Agoura Hills, CA 91301 and (b) if to the Company, to 21255 Califa Street,
Woodland Hills, CA 91367, Attention: 
Stanley R. Zax, Chief Executive Officer, with a copy to the Secretary of
the Company; or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt thereof.


 


13.                                 Section
Headings.  The Section headings used in this Agreement
are included solely for convenience and shall not affect, or be used in
connection with. the interpretation of this Agreement.


 

















 


14.                                 Severability.  Any provision of this Agreement which is deemed
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this section be ineffective to the extent of such
invalidity, illegality or unenforceability, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or any other
provisions of this Agreement invalid, illegal, or unenforceable in any other
jurisdiction.  Moreover, if any provision
should be deemed invalid, illegal or unenforceable because its scope is
considered excessive, such provision shall be modified so that the scope of the
provision is reduced only to the minimum extent necessary to render the
modified provision valid, legal and enforceable.


 


15.                                 Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.


 


16.                                 Arbitration.  In the event there is any dispute between the
Executive and the Company which the parties are unable to resolve themselves,
including any dispute with regard to the application, interpretation or
validity of this Agreement or any dispute with regard to any aspect of the
Executive’s employment or the termination of the Executive’s employment, both
the Executive and the Company agree by entering into this Agreement that the
exclusive remedy for determining any such dispute, regardless of its nature,
will be by arbitration in accordance with the then most applicable rules of the
American Arbitration Association. 
Arbitration shall be the exclusive remedy for determining any such
dispute, regardless of its nature. 
Notwithstanding the foregoing, either party may in an appropriate matter
apply to a court pursuant to California Code of Civil Procedure Section 1281.8,
or any 


 

















 


comparable
provision, for provisional relief, including a temporary restraining order or a
preliminary injunction, on the ground that the award to which the applicant may
be entitled in arbitration may be rendered ineffectual without provisional
relief.


 


In
the event the parties are unable to agree upon an arbitrator, the parties shall
select a single arbitrator from a list designated by the Los Angeles office of
the American Arbitration Association of seven arbitrators all of whom shall be
retired judges who have had experience in the employment law, who are actively
involved in hearing private cases and who are resident in the greater Los
Angeles area.  If the parties are unable
to select an arbitrator from the list provided by the American Arbitration
Association, then the parties shall each strike names alternatively from the
list, with the first to strike being determined by lot.  After each party has used three strikes, the
remaining name on the list shall be the arbitrator.  Any arbitration shall be administered by the
American Arbitration Association only if both parties so agree.


 


This
agreement to resolve any disputes by binding arbitration shall extend to claims
against any shareholder or partner of the Company, any brother-sister company,
parent, subsidiary or affiliate of the Company, any officer, director,
employee, or agent of the Company, or of any of the above, and shall apply as
well to claims arising out of state and federal statutes and local ordinances
as well as to claims arising under the common law.  In the event of a dispute subject to this Section,
the parties shall be entitled to reasonable discovery, including deposition
discovery, subject to the discretion of the arbitrator.  The arbitrator shall apply the same
substantive law as would be applied by a court having jurisdiction over the
parties and their dispute and the remedial authority of the arbitrator shall be
the same as, but no greater than, would 


 

















 


be
the remedial power of a court having jurisdiction over the parties and their
dispute.  The arbitrator shall, upon an
appropriate motion, dismiss any claim brought in arbitration if the arbitrator
determines that the claim does not state a claim or a cause of action which
could have been properly pursued through court litigation.  In the event of a conflict between the then
most-applicable rules of the American Arbitration Association and these procedures,
the provisions of these procedures shall govern.


 


Each
party may be represented by counsel or other representative of the party’s
choice and each party shall initially be responsible for the costs and fees of
its counsel or other representative.  Any
filing or administrative fees shall be borne initially by the party requesting
arbitration; provided, however, if such fees should exceed those applicable in
Superior Court (or other state court of general jurisdiction if in a state
other than California) the excess shall be borne by the employer party to this
agreement. The employer party to this agreement shall be responsible for the
costs and fees of the arbitrator, unless the employee wishes to contribute (up
to 50%) of the costs and fees of the arbitrator.  The prevailing party in such arbitration
proceeding, as determined by the arbitrator, and in any enforcement or other
court proceedings, shall be entitled to the extent permitted by law, to
reimbursement from the other party for all of the prevailing party’s costs
(including but not limited to the arbitrator’s compensation), expenses and
attorneys’ fees.


 


The
arbitrator shall render an award and opinion in the form typical of that
rendered in labor arbitrations and the award of the arbitrator shall be final
and binding upon the parties.  If any of
the provisions of this Section
are determined to be unlawful or otherwise unenforceable, in whole or in part,
such determination shall not affect the 


 

















 


validity
of the remainder of these provisions and this Section
shall be reformed to the extent necessary to insure that the resolution of all
conflicts between the Executive and the Company including those arising out of
statutory claims, shall be resolved by neutral, binding arbitration.  In the event a court finds that the
arbitration procedure set forth herein is not absolutely binding, then it is
the intent of the parties that any arbitration decision should be fully
admissible in evidence, given great weight by any finder of fact and treated as
determinative to the maximum extent permitted by law.


 


Unless
mutually agreed by the parties otherwise, any arbitration shall take place in
Los Angeles.  In the event the parties
are unable to agree upon a location for the arbitration, the location within
Los Angeles shall be determined by the arbitrator.


 


In
the event of a good faith dispute regarding the payment of salary or benefits
under this Agreement, the Company shall make the disputed payments to the
Executive as if such dispute did not exist during the pendency of such good
faith dispute, and, following the resolution of such dispute, the Executive
shall reimburse the Company for any overpayments.


 


17.                                 Company
Property.  The Executive agrees that at the time he
leaves the employment of the Company he will deliver to the Company, and will
not keep or deliver to anyone else, all notebooks, memoranda, documents,
computer discs, and any and all other material relating to the business of the
Company, its subsidiaries and affiliate or constituting the property of the
Company, its subsidiaries and affiliates, whether or not the Executive was the
author or recipient of such material.


 

















 


18.                                 Miscellaneous.


 


(a)                                  Certain actions set out herein to be
taken by the Board of the Company may, as appropriate or required, be taken by
its duly appointed committees.  Further,
the Company, at its option, may cause it subsidiaries and/or affiliates to
perform and discharge certain of the actions or obligations undertaken by the
Company.


 


(b)                                 No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by the
Executive and such officer as may be specifically designated by the Board.  No waiver by either party hereto at any time
of any breach by the other party hereto of or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the time or at
any prior or subsequent time.


 


(c)                                  This
instrument contains the entire agreement of the parties hereto relating to the
subject matter hereof and it replaces and supersedes all prior agreements and
understandings, oral and written, between the parties hereto.  No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.


 


(d)                                 The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of California, without regard to its
conflicts of law principles.


 


(e)                                  All
references to Sections of the Exchange Act or the Code shall be deemed also to
refer to any successor provisions to such Sections.


 

















 


(f)                                    Any
payments provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local law.


 


(g)                                 The
obligations created under the provisions of Sections 9, 10, 11, 16 and 17
shall survive the expiration, suspension or termination, for any reason, of
this Agreement or the Executive’s employment hereunder until such obligations
created thereunder are fully satisfied.  This
provision is not intended to create additional rights or obligations or to
expand or otherwise alter rights and obligations created by this Agreement.


 


IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first written above.


 


	
   

  	
  ZENITH
  NATIONAL INSURANCE 

  CORP.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Stanley R. Zax

  	
   

  
	
   

  	
   

  	
  STANLEY
  R. ZAX

  
	
   

  	
   

  	
  Chairman
  of the Board and President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Michael E. Jansen

  	
   

  
	
   

  	
   

  	
  MICHAEL
  E. JANSEN