Document:

Exhibit 10.1

 

FORM OF
VOTING AGREEMENT

 

THIS VOTING AGREEMENT, dated as of February 17,
2010 (this “Agreement”), between Fairfax Financial Holdings Limited, a
Canadian corporation (“Parent”), and                                         
(“Stockholder”), solely in Stockholder’s capacity as an owner of common
stock, par value $1.00 per share (“Company Common Stock”) of Zenith
National Insurance Corp., a Delaware corporation (the “Company”).

 

WHEREAS, on February 17,
2010, Parent, the Company, and Fairfax Investments II USA Corp., a Delaware
corporation and an indirect wholly owned subsidiary of Parent (“Merger Sub”),
entered into an Agreement and Plan of Merger (the “Merger Agreement”) (capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed to such terms in the Merger Agreement); and

 

WHEREAS, as a
condition to the willingness of Parent and Merger Sub to enter into the Merger
Agreement, Parent and Merger Sub have required that Stockholder enter into this
Agreement, and in order to induce Parent and Merger Sub to enter into the
Merger Agreement, Stockholder has agreed to enter into this Agreement.

 

NOW, THEREFORE, in
consideration for the mutual covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:

 

1.                                       Agreement to Vote.  Subject to Section 6, at every meeting
of the stockholders of the Company, and at every postponement or adjournment
thereof, Stockholder irrevocably agrees to appear at such meeting and vote (in
person or by proxy) all Voting Shares (as hereinafter defined) entitled to be
voted thereat or to cause all Voting Shares to be voted (i) in favor of
the adoption of the Merger Agreement; (ii) against any action, agreement
or transaction (other than the Merger Agreement or the transactions
contemplated thereby) or proposal (including a Takeover Proposal) that would
result in a material breach of any covenant, representation or warranty or any
other obligation or agreement of the Company under the Merger Agreement or that
could result in any of the conditions to the Company’s obligations under the
Merger Agreement not being fulfilled, and (iii) in favor of any other
matter necessary to the consummation of the transactions contemplated by the
Merger Agreement and voted upon by the stockholders of the Company.  Stockholder acknowledges receipt and review
of a copy of the Merger Agreement.

 

2.                                       Grant of Proxy.  In
furtherance of the agreements contained in Section 1 of this Agreement and
as security for such agreements, Stockholder hereby irrevocably appoints
Parent, the executive officers of Parent, and each of them individually, as the
sole and exclusive attorneys-in-fact and proxies of Stockholder, for and in the
name, place and stead of Stockholder, with full power of substitution and
resubstitution, to vote, grant a consent or approval in respect of, or execute
and deliver a proxy to vote, if and to the extent Stockholder fails to comply
with the agreements contained in Section 1 of this Agreement, the Voting
Shares, (i) in favor of the adoption of the Merger Agreement; (ii) against
any action, agreement or transaction (other than the Merger Agreement or the
transactions contemplated thereby) or proposal (including a

 

 

Takeover Proposal) that
would result in a material breach of any covenant, representation or warranty
or any other obligation or agreement of the Company under the Merger Agreement
or that could result in any of the conditions to the Company’s obligations
under the Merger Agreement not being fulfilled, and (iii) in favor of any
other matter necessary to the consummation of the transactions contemplated by
the Merger Agreement and voted upon by the stockholders of the Company.  THIS PROXY IS IRREVOCABLE AND COUPLED WITH AN
INTEREST.

 

3.                                       Representations and Warranties of
Stockholder.  Parent acknowledges that neither Stockholder
nor any person on behalf of Stockholder makes any representation or warranty, whether
express or implied, of any kind or character except as expressly set forth in
this Agreement.  Stockholder represents
and warrants, as of the date hereof, that:

 

(a)                                  (i) Stockholder
is the beneficial owner of, and has the sole power to vote, all of the shares
of Company Common Stock reported as directly owned (or indirectly owned with
the power to vote) on the most recent report filed by Stockholder with the
Securities and Exchange Commission pursuant to Section 16 of the
Securities Exchange Act of 1934, as amended (which, together with any shares of
Company Common Stock acquired by Stockholder on or after the date of this
Agreement, are referred to as the “Voting Shares”); (ii) the most
recent report filed by Stockholder with the Securities and Exchange Commission
pursuant to Section 16 of the Securities Exchange Act of 1934, as amended,
is accurate in all material respects; and (iii) no proxies if heretofore
given in respect of any or all of the Voting Shares are irrevocable and that
any such proxies have heretofore been revoked;

 

(b)                                 (i) Stockholder
has the full legal right and authority, to enter into this Agreement and to
consummate the transactions contemplated hereby; (ii) this Agreement has
been duly and validly executed and delivered by Stockholder and, assuming due
authorization, execution and delivery by Parent, constitutes a legal, valid and
binding obligation of Stockholder, enforceable against Stockholder in
accordance with its terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws
affecting creditors’ rights generally and general principles of equity,
including good faith and fair dealing, regardless of whether in a proceeding at
equity or at law); and (iii) the failure of the spouse, if any, of
Stockholder to be a party or signatory to this Agreement shall not (x) prevent
Stockholder from performing Stockholder’s obligations contemplated hereunder or
(y) prevent this Agreement from constituting the legal, valid and binding
obligation of Stockholder in accordance with its terms (subject to such laws
and principles); and

 

(c)                                  (i) no
filing with, and no permit, authorization, consent or approval of, any state,
federal or foreign governmental authority is necessary on the part of
Stockholder for the execution and delivery of this Agreement by Stockholder
and, except as contemplated by the Merger Agreement, the consummation by
Stockholder of the transactions contemplated hereby and (ii) neither the
execution and delivery of this Agreement by Stockholder nor the consummation by
Stockholder of the transactions contemplated hereby nor compliance by
Stockholder with any of the provisions hereof shall (x) result in the
creation of a lien on any of the Voting Shares or (y) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to
Stockholder or any of the Voting Shares, except in the case of (x) or (y) for
liens,

 

2

 

violations, breaches or defaults that would
not in the aggregate materially impair the ability of Stockholder to perform
Stockholder’s obligations hereunder.

 

4.                                       Representations and Warranties of Parent.  Stockholder
acknowledges that neither Parent nor any person on behalf of Parent makes any
representation or warranty, whether express or implied, of any kind or
character except as expressly set forth in this Agreement.  Parent represents and warrants, as of the
date hereof, that:

 

(a)                                  (i) Parent
is duly organized and validly existing and in good standing under the laws of
the jurisdiction of its organization and has full corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby; (ii) the execution, delivery and performance by Parent of this Agreement
and the consummation by Parent of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Parent;
and (iii) this Agreement has been duly and validly executed and delivered
by Parent and, assuming due authorization, execution and delivery by
Stockholder, constitutes a legal, valid and binding obligation of Parent,
enforceable against Parent in accordance with its terms (subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
other similar laws affecting creditors’ rights generally and general principles
of equity, including good faith and fair dealing, regardless of whether in a
proceeding at equity or at law); and

 

(b)                                 (i) no
filing with, and no permit, authorization, consent or approval of, any state,
federal or foreign governmental authority is necessary on the part of Parent
for the execution and delivery of this Agreement by Parent and, except as
contemplated by the Merger Agreement, the consummation by Parent of the
transactions contemplated hereby and (ii) neither the execution and
delivery of this Agreement by Parent nor the consummation by Parent of the
transactions contemplated hereby nor compliance by Parent with any of the
provisions hereof shall (x) result in the creation of a lien on any of its
assets, (y) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Parent or any of its assets, or (z) contravene,
conflict with, or result in any violation or breach of any provision of its
certificate of incorporation or bylaws, except in the case of (x) or (y) for
liens, violations, breaches or defaults that would not in the aggregate
materially impair the ability of Parent to perform Parent ‘s obligations
hereunder.

 

5.               Remedies.  Each party
acknowledges and agrees that each party hereto will be irreparably damaged in
the event any of the provisions of this Agreement are not performed by the
parties in accordance with their specific terms or are otherwise breached.  Accordingly, it is agreed that each party
hereto shall be entitled to an injunction to prevent breaches of this
Agreement, and to specific enforcement of this Agreement and its terms and
provisions in any action instituted in any court of the United States or any
state having subject matter jurisdiction. 
All remedies, either under this Agreement or by law or otherwise
afforded to any party, shall be cumulative and not alternative.

 

6.               Termination. 
Notwithstanding any other provision of this Agreement or any other
agreement, this Agreement and all rights and obligations of the parties under
this Agreement shall terminate and cease to have any force or effect, without
any further action by any party, upon the earliest of (i) the termination
of the Merger Agreement in accordance with its

 

3

 

terms, (ii) the
occurrence of an Adverse Recommendation Change under the Merger Agreement  and (iii) the Effective Time (such
earliest occurrence, the “Expiration Time”), except for the provisions
of Section 10, which shall survive the Expiration Time.  Nothing in this Section 6 shall relieve
any party of liability for any knowing and deliberate breach of this Agreement.

 

7.               Transfer of Shares. 
Except as contemplated by the Merger Agreement, Stockholder agrees that
it shall not, directly or indirectly, on or after the date hereof (a) sell,
assign, transfer (including by operation of law), pledge, dispose of or
otherwise encumber any of the Voting Shares or otherwise agree to do any of the
foregoing (each, a “Transfer”), (b) deposit any Voting Shares into
a voting trust or enter into a voting agreement or arrangement or grant any
proxy or power of attorney with respect thereto that is inconsistent with this
Agreement, (c) enter into any contract, option or other arrangement or
undertaking with respect to the Transfer of any Voting Shares or (d) knowingly
take any action that would make any representation or warranty of Stockholder
herein untrue or incorrect in any material respect or have the effect of
preventing or disabling Stockholder from performing Stockholder’s obligations
hereunder.  Notwithstanding the
foregoing, Stockholder may Transfer any or all of the Voting Shares to any
person who shall have executed and delivered to Parent a joinder to this
Agreement pursuant to which such person shall be bound by all of the terms and
provisions of this Agreement.

 

8.               No Solicitation of Transactions. 
Stockholder shall (a) not, except as expressly permitted by Section 6.04
of the Merger Agreement, directly or indirectly, through any officer, director,
agent or otherwise, engage in any action that the Company is prohibited from
taking under Section 6.04 of the Merger Agreement, and (b) direct or
cause Stockholder’s representatives and agents not to engage in any action
prohibited by Section 6.04 of the Merger Agreement.  Stockholder shall promptly advise the Company
orally and in writing of (x) any Takeover Proposal or any request for
information with respect to any Takeover Proposal, the material terms and
conditions of such Takeover Proposal or request, and the identity of the person
making such Takeover Proposal or request and (y) any material changes in
any such Takeover Proposal or request.

 

9.               Agreement Solely as Stockholder. 
Notwithstanding anything in this Agreement to the contrary, Stockholder
is not entering into this Agreement or making any agreement herein in any
capacity other than as record holder or beneficial owner of the Voting Shares,
and nothing herein shall be construed to limit or affect any action or inaction
by Stockholder, in Stockholder’s capacity as a director, officer or fiduciary
of the Company (or a Company Subsidiary), and any such action or inaction shall
not be deemed to be a breach of this Agreement.

 

10.         Miscellaneous.

 

(a)                                  Notices.  Any notice, request, instruction or other
communication provided to a party pursuant to this Agreement shall be in
writing and delivered by hand or overnight courier service or by facsimile, if
to Parent, to the address or facsimile number set forth in the Merger
Agreement, or if to Stockholder, to the address or facsimile number set forth
below Stockholder’s name on the signature page hereto, or to such other
persons, addresses or facsimile numbers as may be designated in writing by the
party entitled to receive such

 

4

 

communication as provided above.  Each such communication will be effective (i) if
delivered by hand or overnight courier service, when such delivery is made at
the address specified on the signature page hereto, or (ii) if
delivered by facsimile, when such facsimile is transmitted to the facsimile
number specified on the signature page hereto and appropriate confirmation
is received.

 

(b)                                 Assignment.  Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto, in whole
or part (whether by operation of law or otherwise), without the prior written
consent of the other party hereto and any attempt to do so shall be null and void;
provided, that Stockholder may assign it rights and obligations hereunder,
other than its obligations under Section 8, in connection with any
Transfer of Voting Shares that complies with the terms of Section 7.

 

(c)                                  Successors and
Assigns.  The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. 
Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by
reason of this Agreement, except as expressly provided in this Agreement.

 

(d)                                 Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed in that State.  Each of the parties hereto hereby irrevocably
and unconditionally submits, for itself and its property, to the jurisdiction
of the Court of Chancery of the State of Delaware and any appellate court
thereof, in any action or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby or for recognition or
enforcement of any judgment relating thereto, and each of the parties hereby
irrevocably and unconditionally (i) agrees not to commence any such action
except in such court, (ii) agrees that any claim in respect of any such
action or proceeding may be heard and determined in such court, (iii) waives,
to the fullest extent it may legally and effectively do so any objection which
it may now or hereafter have to venue of any such action or proceeding in such
court, and (iv) waives, to the fullest extent permitted by law, the
defense of any inconvenient forum to the maintenance of such action or
proceeding in such court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Each of the parties to this Agreement irrevocably consents to
service of process in any such action or proceeding in the manner provided for
notices in Section 10(a) of this Agreement; provided, however,
that nothing in this Agreement shall affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

 

(e)                                  Waiver of Jury
Trial.  EACH OF THE PARTIES HERETO
HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.  EACH OF THE PARTIES HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD

 

5

 

NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE MERGER, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 10(e).

 

(f)                                    Counterparts;
Facsimile.  For the
convenience of the parties hereto, this Agreement may be executed in any number
of separate counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts will together constitute the same
agreement.  Executed signature pages to
this Agreement may be delivered by facsimile and such facsimiles will be deemed
as sufficient as if actual signature pages had been delivered.

 

(g)                                 Titles and
Subtitles.  The titles
and subtitles used in this Agreement are used for convenience only and are not
to be considered in construing or interpreting this Agreement.

 

(h)                                 Amendment.  This Agreement may not be amended except by
an instrument in writing signed by each of the parties hereto.

 

(i)                                     Severability.  If any provision of this Agreement or the
application thereof to any person (including, the officers and directors of the
Company) or circumstance is determined by a court of competent jurisdiction to
be invalid, void or unenforceable, the remaining provisions hereof, or the
application of such provision to persons or circumstances other than those as
to which it has been held invalid or unenforceable, will remain in full force
and effect and shall in no way be affected, impaired or invalidated thereby, so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party.  Upon such determination, the parties shall
negotiate in good faith in an effort to agree upon a suitable and equitable
substitute provision to effect the original intent of the parties.

 

(j)                                     Entire
Agreement.  This
Agreement and the agreements referred to herein constitute the full and entire
understanding and agreement between the parties and supersedes all prior
written or oral agreements and understandings between the parties with respect
to the subject matter hereof.

 

[signature page follows]

 

6

 

IN WITNESS WHEREOF,
Parent and
Stockholder have caused this Agreement to be executed as of the date first
written above.

 

 

	
   

  	
  Fairfax
  Financial Holdings Limited

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [STOCKHOLDER]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  [Address]

  
	
   

  	
  [Address]

  
	
   

  	
  [FAX]Exhibit 10.2

 

Execution Copy

 

NONCOMPETITION AGREEMENT

 

This NONCOMPETITION AGREEMENT, (this “Agreement”)
is made and entered into as of this 17th day of
February, 2010, between Fairfax Financial Holdings Limited, a Canadian
corporation (“Parent”), and Stanley R. Zax (“Covenantor”).

 

WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated
as of February 17, 2010 (the “Merger Agreement”), among Parent,
Fairfax Investments II USA Corp., a Delaware corporation and a wholly owned
subsidiary of Parent (“Merger Sub”), and Zenith National Insurance
Corp., a Delaware corporation (the “Company”), Merger Sub shall be
merged with and into the Company, upon the terms and subject to the conditions
set forth in the Merger Agreement (the “Sale Transaction”);

 

WHEREAS, Covenantor is a significant stockholder of
the Company, and, as a result of the Sale Transaction, Covenantor will receive
significant consideration in connection with the Sale Transaction;

 

WHEREAS, Covenantor is the Chairman and Chief
Executive Officer of the Company, and Covenantor acknowledges that he has
detailed knowledge of the Proprietary Information (as defined below);

 

WHEREAS, the parties agree that it is their
intention that the entire goodwill of the Company and its business be transferred
to Parent as part of the Sale Transaction and acknowledge that they explicitly
considered the value of the goodwill transferred and was valued as a component
of the consideration for the Sale Transaction;

 

WHEREAS, the parties agree that Parent’s failure to
receive the entire goodwill contemplated by the Sale Transaction would have the
effect of reducing the value of the Sale Transaction to Parent;

 

WHEREAS, the parties acknowledge that the life
expectancy of the Company’s workers’ compensation insurance business (the “Business”) is at least
three (3) years;

 

WHEREAS, the parties acknowledge that the relevant
market for the Company is throughout the United States and that intense
competition exists throughout the United States for the products and services
of the Company; and

 

WHEREAS, as a condition and mutual inducement to the
Sale Transaction, and to preserve the value of the business being acquired by
Parent after the Sale Transaction, the Merger Agreement contemplates, among
other things, that Covenantor shall enter into this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing
and of the mutual covenants and agreements contained herein and in the Merger
Agreement, and intending to be legally bound hereby, Covenantor hereby agrees
as follows:

 

 

1.  
Confidentiality, Non-Disparagement.

 

(a)                                  Covenantor recognizes that by reason of his provision of
services to the Company, Covenantor has acquired confidential information and
trade secrets concerning research and development, know-how, processes and
techniques, technical data, customers, sales prospects, distribution, pricing
and cost information, and marketing plans and proposals, financial data and the
intellectual property of the Company (collectively, the “Proprietary
Information”), the use or disclosure of which could cause Parent
substantial loss and damages that could not be readily calculated and for which
no remedy at law would be adequate; provided that Proprietary
Information does not include any information that (i) is or becomes available
to the general public or is generally available within the relevant business or
industry other than as a result of an action by Covenantor in breach of this
Agreement or (ii) Covenantor receives or has received on a
non-confidential basis from a source other than the Company.  Accordingly, Covenantor covenants and agrees
with Parent that, for the period commencing at the Effective Time (as defined
in the Merger Agreement) and ending on the second anniversary of the date that
Covenantor ceases to be a director, officer or employee of the Company he will
not at any time, except in performance of his obligations to the Company or
with the prior written consent of Parent, directly or indirectly, disclose or
reveal to any person, entity or other organization or use for Covenantor’s own
benefit any Proprietary Information known to him unless disclosure is required
by law, regulation or legal process (including, without limitation, by
deposition, interrogatory, request for documents, subpoena, civil investigative
demand or similar process) in connection with any proceeding by or before a
governmental or judicial authority, regulatory or administrative body or
securities exchange.  For purposes of
this Agreement, Proprietary Information may be in any medium or form,
including, without limitation, physical documents, computer files or disks,
videotapes, audiotapes, and oral communications.

 

(b)                                 In the event that Covenantor is requested or required by
law, regulation or legal process to disclose any Proprietary Information,
Covenantor shall provide Parent with prompt written notice so that Parent may,
at its own cost, seek a protective order or other appropriate remedy.  In the event that such protective order or
other remedy is not obtained or Parent waives its right to seek such an order
or remedy, Covenantor shall, without liability under this Agreement, furnish
only that portion of such Proprietary Information or take only such action
that, in the opinion of Covenantor’s counsel, 
Covenantor is required to disclose under applicable law, regulation or
legal process; provided that Covenator shall exercise his commercially
reasonable efforts to obtain assurance that confidential treatment shall be
accorded any such Proprietary Information.

 

(c)                                  Covenantor agrees he will not make, or cause or assist any
other person to make, any statement or other communication, written or
otherwise, to any third party, including, without limitation, books, articles
or writings of any other kind, as well as film, videotape, audio tape,
computer/internet format or any other medium, which impugns, attacks or
criticizes, is misleading or untrue with respect to, or is otherwise
disparaging (or that constitutes trade libel) of the reputation, business,
prospects, products, services or character of any of the Company or Parent or
any of their affiliates or any of their respective directors, officers or
employees or the 

 

2

 

Sale
Transaction.  Nothing in this Section 1(d) shall
prohibit Covenantor from providing truthful information in response to a
subpoena or other legal process.

 

(d)                                 The parties hereto agree that the covenants contained in
this Section 1 impose a reasonable restraint on Covenantor.  The covenants contained in this Section 1
are independent covenants and shall be enforceable by Parent regardless of any
claims that any Covenantor shall have against Parent or any of its affiliates,
whether under this Agreement or otherwise.

 

2.  Non-Competition;
Non-Solicitation.

 

(a)                                  In consideration of Parent
entering into the Merger Agreement and in order that Parent may enjoy the full
benefit of the Business, for the period commencing at the Effective Time and
ending on the third anniversary of the Effective Time (as extended pursuant to Section 2(d),
the “Restricted Period”), Covenantor shall not, directly or indirectly,
whether as principal, agent, partner, officer, director, stockholder, employee,
consultant, advisor or otherwise, alone or in association with any other
person, own, manage, operate, control, participate in, invest in (other than an
investment that results in such person owning less than 3% of the outstanding
voting stock of a publicly traded company), or carry on, a business (located or
selling in the United States) that is in direct competition with the products
and services offered by the Company at the Effective Time or by the Company in
the Business as conducted by the Company in the United States (or in direct
competition with those same products and/or services as they continue to be
offered by the Parent in the Business in the United States) (the “Competing
Activities”).

 

(b)                                 Covenantor agrees that during the Restricted Period,
without the prior written consent of Parent, Covenantor shall not, and shall
not authorize or direct any of his affiliates to, directly or indirectly:  (i) solicit for the purpose of offering
employment to or hire or recommend that any person solicit for the purpose of
offering employment to or hiring, whether as an employee, consultant, agent,
independent contractor or otherwise, any of the employees and officers of the
Company or any of its subsidiaries or any individual who was an employee or
officer of the Company during the immediate prior six-month period; or (ii) solicit,
induce or attempt to solicit or induce any customer, client, supplier, licensee
or other business relation (including banks and accountants and other resellers
of Company products) of the Company or any of its affiliates related to the
Business as conducted by the Company or any customer, client, supplier,
licensee or other business relation of Parent or any of its affiliates related
to the Business as conducted by Parent (or, in each case, any party which
provided services to the Business during the immediate prior six-month period)
to enter into any business relationship with Covenantor or an affiliate of
Covenantor in a manner that negatively impacts the Business as conducted by the
Company or Parent, reduce such person’s business with the Company, Parent or
any of their respective affiliates or cease doing business with the Company,
Parent or any of their respective affiliates. 
As used in this Section 2(b), the term “indirectly” shall include,
without limitation, Covenantor’s permitting the use of Covenantor’s name by any
competitor of the Company or Parent or any of their affiliates to induce or
interfere with any employee or business relationship of the Company or Parent
or any of their respective affiliates.

 

3

 

(c)                                  Covenantor acknowledges and agrees that the remedy at law
for any breach of any of the provisions of this Section 2 may be
inadequate and, accordingly, Covenantor covenants and agrees that Parent shall,
in addition to any other rights and remedies which Parent and the Company may
have under applicable law, be entitled to equitable relief, including
injunctive relief, without bond or other necessity, and to the remedy of
specific performance with respect to any breach or threatened breach of such
covenant, as may be available from any court of competent jurisdiction.  In addition, Covenantor and Parent expressly
agree that the terms of the covenants, including the duration, scope and
geographic area of restriction, in this Section 2 are fair and reasonable
in light of Parent’s plans for the Business as conducted by the Company and are
necessary to accomplish the full transfer of the goodwill and other intangible
assets contemplated by the Merger Agreement. 
In the event that any of the covenants contained in this Section 2
shall be determined by any court of competent jurisdiction to be unenforceable
for any reason whatsoever, then any such provision or provisions shall not be
deemed void, and the parties hereto agree that said limits may be modified by
the court and that said covenant contained in this Section 2 shall be
amended in accordance with said modification, it being specifically agreed by
the parties that it is their continuing desire that this covenant be enforced
to the full extent of its terms and conditions or if a court finds the scope of
the covenant unenforceable, the court should redefine the covenant so as to
comply with applicable law.

 

(d)                                 In addition to the remedies Parent and the Company may seek
and obtain pursuant to Section 2(c), the Restricted Period shall be
extended, regardless of whether the initial period set forth in Section 2(a) has
otherwise expired, by any and all periods during which Covenantor shall be
found by a court of competent jurisdiction to have been in violation of the
covenants contained in this Section 2.

 

3.  Responsibilities.  Parent agrees that during the Restricted
Period, Covenantor shall, subject to the last sentence of this Section 3,
manage the business and operations of the Company and its subsidiaries with the
same level of responsibility, control and discretion that Covenantor exercised
at the time the Merger Agreement was executed and delivered.  In the event that Parent fails to permit
Covenantor to exercise such responsibility, control or discretion as provided
in the preceding sentence, Covenantor may terminate this Agreement on written
notice to Parent, which termination shall be Covenantor’s sole remedy for a
breach of this Section 3; provided, however, that inquiries
or actions by Parent or its representatives related to the consolidated
accounts of Parent or inquiries by Parent or its representatives regarding the
business and operations of the Company and its subsidiaries shall not be (or be
deemed to be) a breach by Parent of this Section 3.  Notwithstanding anything to the contrary
contained in this Section 3, (a) all matters and decisions in respect
of the investment of the assets of the Company and its subsidiaries shall be at
the sole discretion of Parent and (b) all other matters and decisions
related to financing activities and capital allocation of the Company and its
subsidiaries (including the declaration and payment of dividends) shall be
determined by the board of directors of the Company.

 

4.  Term.  If the Merger Agreement is terminated
pursuant to Section 8.01 thereof, this Agreement shall terminate
automatically at the time the Merger Agreement is terminated.  Upon termination pursuant to the preceding
sentence, this Agreement shall forthwith become void.

 

4

 

5.  Miscellaneous.

 

(a)                                  Notices.  All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission) and shall be given,

 

if to Parent, to:

 

Fairfax Financial Holdings Limited

95 Wellington Street West, Suite 800

Toronto, ON M5J 2N7

Attention: Paul Rivett, Esq.

Vice President and Chief Legal Officer

Facsimile No: 416-367-2201

e-mail: p_rivett@fairfax.ca

 

with a copy (which shall not constitute notice) to:

 

Shearman & Sterling LLP

199 Bay Street

Suite 4405

Toronto, Ontario M5L 1E8

Canada

Facsimile No:  (416) 360-2958

Attention:  Adam Givertz

Email:  agivertz@shearman.com

 

if to Covenantor, to the address set forth on the
signature page hereto

 

or to such other address or
facsimile number as such party may hereafter specify for the purpose by notice
to the other parties hereto.  All such
notices, requests and other communications shall be deemed received on the date
of receipt by the recipient thereof if received prior to 5:00 p.m. on a
business day in the place of receipt. 
Otherwise, any such notice, request or communication shall be deemed to
have been received on the next succeeding business day in the place of receipt.

 

(b)                                 Entire Agreement.  This Agreement, together with the Merger
Agreement referenced herein, constitutes the entire agreement between the
parties with respect to the subject matter of this Agreement and supersede all
prior agreements and understandings, both oral and written, between the parties
with respect to the subject matter of this Agreement.

 

(c)                                  Amendments and Waiver.  Any provision of this Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and
is signed, in the case of an amendment, by each party to this Agreement or, in
the case of a waiver, by the party against whom the waiver is to be
effective.  No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any other 

 

5

 

right,
power or privilege.  The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by applicable law.

 

(d)                                 Binding Effect; Benefits; Assignment.  The provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, successors and assigns.  Except as set forth below in this Section 5(d),
no provision of this Agreement is intended to confer any rights, benefits,
remedies, obligations or liabilities hereunder upon any person other than the
parties hereto and their respective successors and assigns.  No party may assign or otherwise transfer any
of its rights or obligations under this Agreement, without the consent of each
other party hereto, except that Parent may transfer or assign its rights and
obligations under this Agreement, in whole or from time to time in part, to any
person; provided that such transfer or assignment shall not relieve
Parent of its obligations hereunder or enlarge, alter or change any obligation
of any other party hereto or due to Parent.

 

(e)                                  Severability.  It is the desire and intent of the parties hereto
that the provisions of this Agreement be enforced to the fullest extent
permissible under applicable law and public policies applied in each
jurisdiction in which enforcement is sought. 
Accordingly, if any particular provision of this Agreement shall be
adjudicated by a court of competent jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.  Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.

 

(f)                                    Expenses.  The parties shall bear their own respective
expenses (including all compensation and expenses of counsel, financial
advisors, consultants, actuaries and independent accountants) incurred with
respect hereto.

 

(g)                                 Counterparts; Effectiveness.  This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.  Delivery of an executed counterpart by
facsimile or other means of electronic transmission will be as effective as
manual delivery of an original thereof. 
Until and unless each party has received a counterpart hereof signed by
the other party hereto, this Agreement shall have no effect and no party shall
have any right or obligation hereunder (whether by virtue of any other oral or
written agreement or other communication).

 

(h)                                 Remedies Cumulative.  No remedy made available by any of the
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity.

 

6

 

(i)                                     Governing Law.  ALL PROVISIONS OF THIS AGREEMENT SHALL BE SUBJECT
TO AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

 

[remainder of page intentionally left blank]

 

7

 

IN
WITNESS WHEREOF, Parent and Covenantor have caused this Agreement to be executed
as of the date first written above.

 

 

	
   

  	
  FAIRFAX FINANCIAL
  HOLDINGS LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Rivett

  
	
   

  	
   

  	
  Title: Chief Legal
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STANLEY R. ZAX

  
	
   

  	
   

  
	
   

  	
  /s/ Stanley R. Zax

  
	
   

  	
       Chairman
  and President

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o Zenith National
  Insurance Corp.

  
	
   

  	
   

  	
  21255 Califa Street

  
	
   

  	
   

  	
  Woodland
  Hills, California 91367

  
				

 

[Signature page to
Noncompetition Agreement]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00168-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00168-of-00352.parquet"}]]