Document:

EX-10.1

 

 Exhibit 10.1

SUPPLEMENTAL BENEFITS AGREEMENT

          This SUPPLEMENTAL BENEFITS AGREEMENT is dated as of August 19, 2004, and
is entered into by and between W. R. Berkley Corporation, a Delaware
corporation (the “Company”), and William R. Berkley (“Executive”).

          WHEREAS, Executive currently serves as the Company’s Chief Executive
Officer and as the Chairman of the Board; and

          WHEREAS, each of Executive and the Company wish to enter into an agreement
(this “Agreement”) providing for certain benefits upon Executive’s retirement
as the Company’s Chief Executive Officer, subject to the terms and conditions
contained herein.

          NOW, THEREFORE, the parties hereto agree as follows:

     Section 1. Definitions.

          (a) “Auditors” shall have the meaning set forth in Section 3 hereof.

          (b) “Board” means the Company’s Board of Directors.

          (c) “Cause” means (i) Executive is convicted of, or pleads guilty or no
contest to any felony; or (ii) Executive engages in conduct that constitutes
willful gross neglect or willful gross misconduct in carrying out his duties to
the Company, resulting, in either case, in material economic harm to the
Company. For purposes of clause (ii) above, no act or failure to act by
Executive shall be considered “willful” unless done or omitted to be done by
Executive in bad faith and without reasonable belief that Executive’s action or
omission was in the best interests of the Company. Any act, or failure to act,
based upon authority given pursuant to a resolution duly adopted by the Board
or based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by Executive in good faith and in
the best interests of the Company.

          (d) “Code” means the Internal Revenue Code of 1986, as amended.

          (e) “Enhanced Retirement Benefit” means the Retirement Benefit calculated
on the date Executive attains age 72, actuarially increased to reflect the
passage of time from the date Executive attained age 72 until the date of such
Qualifying Termination, where such actuarial increase is determined on the
following basis:

          Mortality: Based on the mortality rates under the 1994 Uninsured
Pensioner Mortality Table (UP-94)

          Interest Rate: 6%

          (f) “Final Average Five-Year Compensation” means the average of
Executive’s base salary and regular annual bonus (excluding any amounts paid
under the

 

 

Company’s Long-Term Incentive Plan), earned in respect of each of the five
fiscal years of the Company prior to the fiscal year in which a Qualifying
Termination occurs.

          (g) “Good Reason” means, in each case without Executive’s consent, (i) any
change in Executive’s title (including his position as Chairman of the Board)
or any diminution in Executive’s authority or responsibility; (ii) the
assignment of duties or responsibilities that are inconsistent in any material
respect with Executive’s position or status as Chief Executive Officer of the
Company; (iii) a reduction by the Company in Executive’s rate of annual base
salary or a material reduction in the value of Executive’s annual bonus
opportunity, each as in effect on the date hereof or as the same may be
increased from time to time thereafter; (iv) any requirement of the Company
that Executive be based anywhere more than twenty (20) miles from the office
where Executive is located as of the date hereof; or (v) the failure of the
Company to obtain the assumption in writing of its obligation to perform this
Agreement by any successor, as contemplated in Section 8 hereof.

          (h) “Gross-Up Payment” shall have the meaning set forth in Section 3
hereof.

          (i) “Highest Average Three-Year Compensation” means the greatest three
fiscal year average of Executive’s base salary and regular annual bonus earned
in respect of each such fiscal year (excluding any amounts paid under the
Company’s Long-Term Incentive Plan), determined by using any three consecutive
fiscal years over the ten fiscal year period prior to the year in which a
Qualifying Termination occurs.

          (j) “Parachute Tax” shall have the meaning set forth in Section 3 hereof.

          (k) “Payment” shall have the meaning set forth in Section 3 hereof.

          (l) “Qualifying Termination” means the earliest to occur of (i)
Executive’s resignation from employment as Chief Executive Officer of the
Company for any reason; (ii) any termination of Executive’s employment by the
Company other than for Cause; provided, however, that, in each case, Executive
shall not be required to resign from his position as Chairman of the Board
following any termination of employment in order for a Qualifying Termination
to occur; or (iii) termination of Executive’s employment by reason of his
death.

          (m) “Restricted Period” means the period commencing on the date of
Executive’s resignation from employment as Chief Executive Officer without Good
Reason and ending on the second anniversary thereof.

          (n) “Retirement Benefit” means an annual benefit equal to the greater of
(i) $1,000,000, or (ii) fifty percent (50%) of Highest Average Three-Year
Compensation, which in the case of clause (ii) shall in no event exceed one
hundred fifty percent (150%) of Final Average Five-Year Compensation; provided,
however, than in the event a Qualifying Termination occurs following the date
upon which Executive attains age 72, the Retirement Benefit shall equal the
greater of the Retirement Benefit or the Enhanced Retirement Benefit.

 

 

     Section 2. Benefits upon a Qualifying Termination.

          (a) Retirement Benefit. As soon as practicable following a Qualifying
Termination, but in no event more than thirty (30) days following such
Qualifying Termination, Executive shall be paid the first annual Retirement
Benefit. Thereafter, Executive shall be paid the Retirement Benefit on each
anniversary of the date of such Qualifying Termination for the remainder of his
life. In the event that Executive’s Qualifying Termination occurs as a result
of Executive’s death, or Executive’s death occurs following a Qualifying
Termination, and if Executive’s spouse has not predeceased him, Executive’s
spouse shall thereafter be entitled to receive fifty percent (50%) of the
Retirement Benefit on each anniversary of such Qualifying Termination for the
remainder of her life (and upon such Qualifying Termination, if it occurred as
a result of Executive’s death). Notwithstanding the foregoing, within ten (10)
business days following any Qualifying Termination, Executive may elect to have
his spouse receive one hundred percent (100%) of the Retirement Benefit;
provided, that, in such event, the Retirement Benefit shall be reduced by an
amount such that the payments made to Executive and his spouse following such
election will be the actuarial equivalent to the payments that would otherwise
been made to Executive and his spouse had no such election occurred. The
following actuarial assumptions shall be applied for purposes of determining
the reduction described in the preceding sentence:

          Mortality: Based on the mortality rates under the 1994 Uninsured
Pensioner Mortality Table (UP-94)

          Interest Rate: 6%

          (b) Continued Health Benefits. Following a Qualifying Termination, (i)
for the remainder of Executive’s life, in the case of Executive, and for the
remainder of his spouse’s life, in the case of Executive’s spouse, the Company
shall provide Executive and Executive’s spouse with health insurance coverage
with substantially the same level of benefits as provided to Executive and his
spouse immediately prior to such Qualifying Termination; provided, that if
Executive and/or his spouse become eligible to participate in any government
provided health care coverage, Executive and/or his spouse shall participate in
such coverage to the extent reasonably practicable, and, in such case, the
level of benefits provided under this subsection (b) shall be reduced to avoid
duplication of benefits. Notwithstanding the foregoing, following the date
Executive and/or his spouse participate in such government provided coverage,
Executive and/or his spouse shall have the right to elect not to use such
government provided coverage with respect to any procedure if Executive and/or
his spouse reasonably believe, in the Executive’s and/or the spouse’s
discretion, that the same quality of care can not be provided through use of
such coverage as the quality of care available through the Company provided
coverage. Benefits provided to Executive and his spouse under this subsection
(b) shall be paid by the Company; provided, however, that with respect to
Executive’s spouse, until such time that Executive’s spouse participates in the
government health care coverage described above, Executive and/or his spouse
shall be responsible for payment to the Company of an amount equal to any
“co-pay” applicable to spouses of other employees of the Company receiving the
same level of benefits.

 

 

     (c) Perquisites.

     (i) For the period commencing on a Qualifying Termination and ending
on the latest to occur of (A) two (2) years following the date of such
Qualifying Termination, (B) the date on which Executive ceases to serve
as Chairman of the Board, or (C) the date upon which Executive ceases to
provide consulting services to the Company, the Company shall provide
Executive with:

               (1) continued use of the Company airplane, in a manner
consistent with Executive’s historical use of such airplane prior
to such Qualifying Termination; and

               (2) a car and driver at a level consistent with that provided
to Executive prior to such Qualifying Termination.

     (ii) Following a Qualifying Termination, for so long as Executive
requests, the Company shall provide Executive with office accommodations
and support, which shall include computer and telecommunication office
equipment (e.g., fax machine, copy machine, telephones, etc.), reasonable
office supplies and full-time secretarial support in a manner consistent
with the office accommodations and support provided to him prior to such
Qualifying Termination.

     Section 3. Additional Payments.

          (a) If it is determined by a nationally recognized United States public
accounting firm selected by the Company and approved in writing by Executive
(the “Auditors”) that any payment or benefit made or provided to Executive in
connection with this Agreement or otherwise (collectively, a “Payment”), would
be subject to the excise tax imposed by Section 4999 of the Code (the
“Parachute Tax”), then Company shall pay to the Executive, prior to the time
the Parachute Tax is payable with respect to such Payment, an additional
payment (a “Gross-Up Payment”) in an amount such that, after payment by
Executive of all taxes (including any Parachute Tax) imposed upon the Gross-Up
Payment, Executive retains an amount of the Gross-Up Payment equal to the
Parachute Tax imposed upon the Payment. The amount of any Gross-Up Payment
shall be determined by the Auditors, subject to adjustment, as necessary, as a
result of any Internal Revenue Service position. For purposes of making the
calculations required by this Agreement, the Auditors may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code, provided that the Auditors’ determinations must be
made with substantial authority (within the meaning of Section 6662 of the
Code).

          (b) The federal tax returns filed by Executive (and any filing made by a
consolidated tax group which includes the Company) shall be prepared and filed
on a basis consistent with the determination of the Auditors with respect to
the Parachute Tax payable by Executive. Executive shall make proper payment of
the amount of any Parachute Tax, and at the request of the Company, provide to
the Company true and correct copies (with any amendments) of his federal income
tax return as filed with the Internal Revenue Service and such other

 

 

documents reasonably requested by the Company evidencing such payment.
If, after the Company’s payment to Executive of the Gross-Up Payment, the
Auditors determine in good faith that the amount of the Gross-Up Payment should
be reduced or increased, or such determination is made by the Internal Revenue
Service, then within ten business days of such determination, Executive shall
pay to the Company the amount of any such reduction, or the Company shall pay
to Executive the amount of any such increase; provided, however, that in no
event shall the Executive have any such refund obligation if it is determined
by the Company (with its counsel) that to do so would violate the
Sarbanes-Oxley Act of 2002, as it may be amended from time to time; and
provided, further, that if Executive has prior thereto paid such amounts to the
Internal Revenue Service, such refund shall be due only to the extent that a
refund of such amount is received by Executive.

          (c) The fees and expenses of the Auditors (and any other legal and
accounting fees) incurred for services rendered in connection with the
Auditors’ determination of the Parachute Tax or any challenge by the Internal
Revenue Service or other taxing authority relating to such determination shall
be paid by the Company.

     Section 4. Non-Competition; Consulting during the Restricted Period.

          (a) Non-Competition. In the event that Executive resigns from employment
without Good Reason, Executive covenants and agrees that during the Restricted
Period, with respect to any State of the United States of America or any other
jurisdiction in which the Company engages in business at the time of such
termination, Executive shall not, directly or indirectly, individually or
jointly, own any interest in, operate, join, control or participate as a
partner, director, principal, officer, or agent of, enter into the employment
of, act as a consultant to, or perform any services for any entity that engages
in activities that are materially competitive with the Company or its
subsidiaries.

          (b) Blue Pencil. If any court of competent jurisdiction shall at any time
deem the duration or the geographic scope of the provisions of subsection (a)
above unenforceable, the other provisions of this Agreement shall nevertheless
stand, and the duration and/or geographic scope set forth herein shall be
deemed to be the longest period and/or greatest size permissible by law under
the circumstances, and the parties hereto agree that such court shall reduce
the time period and/or geographic scope to permissible duration or size.

          (c) Injunctive Relief. Without intending to limit the remedies available
to the Company, but subject to subsection (e) below, Executive acknowledges
that a breach of any of the covenants contained in subsection (a) above may
result in material irreparable injury to the Company or its subsidiaries for
which there is no adequate remedy at law; that it will not be possible to
measure damages for such injuries precisely; and that, in the event of such a
breach or threat thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction, without the
necessity of proving irreparable harm or injury as a result of such actual or
threatened breach of subsection (a) above, restraining Executive from engaging
in activities prohibited by subsection (a) above or such other relief as may be
required specifically to enforce any of the covenants in hereof.

 

 

          (d) Consulting Arrangement. During the Restricted Period, Executive
agrees to be reasonably available to provide consulting services, at the
request of the Board, for not more than twenty (20) hours per month. In
connection with any request for Executive’s services hereunder, the Board shall
give reasonable notice to Executive prior to time such services are to be
performed and shall accommodate the Employee’s other professional or personal
commitments to the extent reasonably possible. Executive shall not be
entitled to additional compensation or fees as a result of providing such
services.

          (e) No Set-Off. A breach by Executive of subsections (a) or (d) above
shall not affect the right of Executive or his spouse to receive and continue
to receive the Retirement Benefit and the other benefits and perquisites
described in Section 2 hereof, and the Company shall have no right of set-off
against any such amounts.

     Section 5. Taxes.

          The Company may withhold from any payments made under this Agreement all
applicable taxes, including but not limited to income, employment and social
insurance taxes, as shall be required by law.

     Section 6. Legal Fees.

          If any legal action or proceeding is commenced to enforce or interpret the
provisions of this Agreement, or any plan, agreement or arrangement referenced
in this Agreement, or to recover damages for breach thereof, all reasonable
legal fees, disbursements, costs and expenses paid or incurred by Executive in
connection with any such action or proceeding shall be paid or reimbursed by
the Company, irrespective of the outcome thereof, provided that if such action
or proceeding is initiated by Executive or in his name, Executive shall not be
entitled to such payment or reimbursement if it is finally determined by a
court of competent jurisdiction that such action or proceeding was frivolous
and brought by Executive (or in his name) in bad faith.

     Section 7. No Mitigation.

          Executive shall not be required to mitigate the amount of any payment
provided for pursuant to this Agreement by seeking other employment or
otherwise and the amount of any payment provided for pursuant to this Agreement
shall not be reduced by any compensation earned as a result of Executive’s
other employment or otherwise.

     Section 8. Successors and Assigns.

          (a) This Agreement shall inure to the benefit of and be enforceable by,
and may be assigned by the Company to, any purchaser of all or substantially
all of the Company’s business or assets, any successor to the Company or any
assignee thereof (whether direct or indirect, by purchase, merger,
consolidation or otherwise). The Company will require any such purchaser,
successor or assignee to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such purchase, succession or assignment had taken place.

 

 

     Section 9. Waiver and Amendments.

          Any waiver, alteration, amendment or modification of any of the terms of
this Agreement shall be valid only if made in writing and signed by the parties
hereto; provided, however, that any such waiver, alteration, amendment or
modification is consented to on the Company’s behalf by the Board. No waiver
by either of the parties hereto of their rights hereunder shall be deemed to
constitute a waiver with respect to any subsequent occurrences or transactions
hereunder unless such waiver specifically states that it is to be construed as
a continuing waiver.

     Section 10. Severability.

          In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect to the fullest extent permitted by law.

     Section 11. Governing Law.

          THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO THE CHOICE OF LAW
PRINCIPLES THEREOF) APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE.

     Section 12. Section Headings.

          The headings of the sections and subsections of this Agreement are
inserted for convenience only and shall not be deemed to constitute a part
thereof, affect the meaning or interpretation of this Agreement or of any term
or provision hereof.

     Section 13. Entire Agreement.

          This Agreement constitutes the entire understanding and agreement of the
parties hereto regarding the subject matter of this Agreement and supersedes
all prior negotiations, discussions, correspondence, communications,
understandings and agreements between the parties relating thereto.

     Section 14. Counterparts.

          This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original but all of which together shall constitute
one and the same instrument. The execution of this Agreement may be by actual
or facsimile signature.

* * *

[Signatures to appear on the following page.]

 

 

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

	 	 	 	 	 
	 	 	W. R. BERKLEY CORPORATION
	 
	 	 	 	 
	

	 	By:
	 	/S/ Richard G. Merrill
	

	 	 	 	
 
	

	 	 	 	Name: Richard G. Merrill
	

	 	 	 	Title: Chairman, Compensation Committee
	 
	 	 	 	 
	 	 	William R. Berkley
	 
	 	 	 	 
	

	 	 	 	/S/ William R. BerkleyEX-10.A

 

EXHIBIT 10(a)

CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE SYMBOL “****” HAS BEEN
INSERTED IN PLACE OF THE PORTIONS SO OMITTED.

	 	 	 
	 

	 	February 20, 1997, as amended
	

	 	     effective September 1, 2004

Ford/Hertz Framework Supply Agreement

Agreement Objective - Ford Motor Company (“Ford”) agrees to provide vehicles to
The Hertz Corporation (“Hertz”) for use in its daily rental business and Hertz
agrees to acquire such vehicles. Ford and Hertz agree to negotiate in good
faith on an annual basis to provide and acquire vehicles at an adequate volume
and with the best possible terms and conditions. Effective September 1, 2004,
this Framework Supply Agreement (i) shall only apply to Hertz U.S. Domestic
fleet requirements and (ii) the term “Ford Vehicles” shall apply only to new
vehicles offered for sale in the United States under the “Ford”, “Lincoln” or
“Mercury” brands.

Term of Contract - September 1, 1997 to August 31, 2007 (10 years).

Ford Volume Commitment Prior to September 1, 2004, Ford agrees to provide for
Hertz acquisition the lesser of 150,000 units or 55% of Hertz’ U.S. domestic
fleet annually for use in its daily rental business. Ford will make its best
efforts to supply 35% of Hertz European fleet and 55% of Hertz fleet
requirements in its other non-U.S. operations.

Effective September 1, 2004, Ford agrees to provide for Hertz acquisition Ford
Vehicles in the following volumes: **** model year 2005 Ford Vehicles; ****
model year 2006 Ford Vehicles; and **** model year 2007 Ford Vehicles.

A minimum of 50% of all such vehicles shall be non-risk units (repurchase).

Hertz Volume Commitment - Prior to September 1, 2004, Hertz agrees to acquire
from Ford the lesser of 150,000 units or 55% of its U.S. domestic fleet
annually for use in its daily rental business. Hertz also agrees to acquire 35%
of its European fleet from Ford and 55% of its fleet for other non-U.S.
operations from Ford.

Effective September 1, 2004, Hertz agrees to acquire from Ford the following
volumes of Ford Vehicles: **** model year 2005 Ford Vehicles; **** model year
2006 Ford Vehicles; and
**** model year 2007 Ford Vehicles.

A minimum of 50% of all such vehicles shall be non-risk units (repurchase).

 

 

and $255 million was
long-term. At September 30,

Competitive Supply - Ford will strive to develop fleet offerings for use in the
daily rental business that shall be competitive with those similar offerings by
other automotive manufacturers, as to terms and conditions. In addition, Ford
will make available to Hertz, Ford vehicles on terms that are no less favorable
than Ford makes available to other daily rental companies, excluding franchised
Ford and Lincoln-Mercury Dealers.

Other Automotive
Manufacturers - Hertz and its affiliates, in their discretion,
may enter into vehicle supply agreements with other automotive manufacturers in
the U.S. and in other countries, including Ford brands in other countries,
effective September 1, 2004. Any such agreements may not alter or affect
Hertz’s obligations under this Framework Supply Agreement.

	 	 	 
	FORD MOTOR COMPANY

	 	     THE HERTZ CORPORATION
	 
	 	 
	By: /s/ James G. O’Connor

	 	By: /s/ Craig R. Koch          
	James G. O’Connor     9/7/04

	 	     Craig R. Koch     9/10/04
	Ford Motor Company

	 	     The Hertz Corporation

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