Document:

EX-10.2

 

Exhibit 10.2

Final Version

W. R. BERKLEY CORPORATION

DEFERRED COMPENSATION PLAN FOR DIRECTORS

AS AMENDED AND RESTATED DECEMBER 3, 2007

Section 1. Effective Date; Purpose

The effective date of this Plan is May 3, 2005 (the “Effective Date”). This Plan was created as a
spin-off from the W. R. Berkley Corporation Deferred Compensation Plan for Directors, as adopted
March 7, 1996 (the “Original Deferral Plan”) to allow members of the Board of Directors (the
“Board”) of W. R. Berkley Corporation (the “Company”) to defer their compensation for the calendar
years 2005 and beyond, and was amended and restated December 3, 2007 (the “Restatement Date”).
Accordingly, as of the Effective Date, deferral elections made under the Original Deferral Plan and
deferral accounts established under the Original Deferral Plan with respect to 2005 director
compensation (“2005 Compensation”) have been transferred to this Plan and shall be governed under
the terms of this Plan. The terms of the Plan effective as of the Restatement Date shall govern
all deferrals made hereunder with respect to calendar years 2005 and thereafter, including
deferrals under the Original Deferral Plan as provided herein.

Section 2. Eligibility

Any member of the Board, including any person otherwise participating in the W. R. Berkley
Corporation Deferred Compensation Plan for Officers, is eligible to participate in the Plan.

Section 3. Deferral Election

Prior to the beginning of each calendar year, each member of the Board may elect to defer receipt
of all or a portion of the retainer and/or meeting fees otherwise payable to such person for that
year on account of serving on the Board.

Notwithstanding the foregoing, for the calendar year in which a person first becomes a member of
the Board, such person may elect, not later than thirty days after the date such person first
becomes a member of the Board to defer the receipt of all or a portion of the retainer and/or
meeting fees otherwise payable to such person for serving on the Board subsequent to the date of
making such election through December 31st of such year.

Members of the Board who choose to defer amounts pursuant to this Section 3 will be “Participants”
including any such member who elected to defer his or her 2005 Compensation pursuant to the
Original Deferral Plan. All amounts deferred hereunder, as increased or decreased as a result of
the deemed investment of such amounts pursuant to Section 6 herein, will be classified as “Deferred
Compensation.”

Section 4. Type of Plan

The Plan is a non-qualified voluntary deferred compensation plan. The Plan is not intended to be
subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). To the
extent the Plan is determined to be so subject, it is intended, to the extent that any

 

 

Participant is otherwise an employee of the Company or of any subsidiary to constitute a “plan
which is unfunded and is maintained by the employer primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees,” as such phrase is
used in ERISA, and the terms of the Plan shall be interpreted consistent with such intent.

Section 5. No Funding; Participant’s Rights Unsecured

The Company will not fund the amount of any Participant’s Deferred Compensation. The amount of each
Participant’s Deferred Compensation will be separately accounted for in the bookkeeping records of
the Company by setting up for each Participant a Deferred Compensation account (“Deferred
Compensation Account”).

The amount of Deferred Compensation is secured only by the Company’s promise to pay it from the
assets of the Company and Participants will have the status of general unsecured creditors of the
Company with respect to their Deferred Compensation. The Company will not be required to establish
any special or separate fund or to make any segregation of assets to assure the payment of any
amounts under the Plan.

Section 6. Deemed Investment of Deferred Compensation

Within thirty calendar days following the Effective Date, Participants may elect to have all or a
portion of their Deferred Compensation for 2005 deemed invested in the common stock of the Company,
$0.20 par value per share (the “Stock”) (the “Stock Investment”). Thereafter, at the time an
initial election to defer director compensation for any calendar year hereunder is made, a
Participant may elect to have his or her Deferred Compensation (i) credited with a reasonable rate
of interest (the “Interest Investment”) or (ii) deemed invested in the Stock. Deferred
Compensation shall be credited with a reasonable rate of interest (compounded quarterly) or deemed
invested in Stock at the fair market value of the Stock, as elected by the Participant, commencing
on the first day of the month following the date of the initial deferral date until the
distribution date. If no investment election is made by a Participant, such Participant’s Deferred
Compensation shall automatically be deemed invested in the Interest Investment. The interest rate
which shall apply under the Interest Investment with respect to each year shall be such rate of
interest which is in effect for such year under Section 6 of the W. R. Berkley Corporation Deferred
Compensation Plan for Officers, as amended and restated December 3, 2007. On each date that
dividends are paid (each a “Dividend Payment Date”) on shares of Stock with respect to which the
record date (the “Record Date”) occurs during the deferral period, the Company will credit to an
account for the Participant an amount equal to the dividend paid on a share of the Stock multiplied
by the number of shares of Stock into which such Participant’s Deferred Compensation is deemed
invested as of such Record Date. These dividend equivalent amounts shall be deemed invested in the
Interest Investment until payment of the Deferred Compensation to the Participant as provided in
Section 6 herein. Any remaining dividend equivalent amounts subsequently credited to the account
of a Participant with respect to a Record Date that occurs during the deferral period but for which
the Dividend Payment Date occurs following the deferral period, shall be paid to the Participant on
the next March 31, June 30, September 30 or December 31, whichever is closer, immediately following
such Dividend Payment Date.

 

 

Section 7. Deferral Period

Each Participant may elect to defer the receipt of his/her Deferred Compensation until a specified
date or dates in the future, but not later than such person’s “separation from service” with the
Company (as such term is defined in Treasury Regulation § 1.409A-1(h), and hereinafter referred to
as a “Separation from Service”). A separate such election will be made with respect to that
portion of his/her Deferred Compensation attributable to retainer and/or meeting fees otherwise
deferred with respect to each separate year. The actual payment of the Deferred Compensation will
be made or will commence on the earlier of (i) the specified date and (ii) the date (the “Final
Distribution Date”) of such Participant’s Separation from Service (or if such Participant is a
“specified employee,” as such term is defined in Treasury Regulation § 1.409A-1(i), the six-month
anniversary of such Separation from Service), or as soon as reasonably practicable following such
specified date or Final Distribution Date. In no event shall any such payment of Deferred
Compensation begin later than the later of (i) the last day of the year in which the specified date
or Final Distribution Date, as applicable, occurs and (ii) the 15th day of the third
calendar month following the specified date or Final Distribution Date, as applicable. In any
event, the Participant shall not be permitted, directly or indirectly, to designate the taxable
year of the payment.

Section 8. Form of Payment

A Participant may elect to receive his/her Deferred Compensation in either a lump sum payment or in
annual installment payments (not to exceed five), on the date or dates specified by the Participant
at the time the election to defer is made. Installment payments shall begin on the date elected by
the Participant and thereafter shall be made in annual installments on the anniversaries of the
initial distribution date. Payments of Deferred Compensation made on account of a Separation from
Service shall be made in a lump sum. Deferred Compensation deemed invested in the Interest
Investment at the time of payment shall be paid in cash and Deferred Compensation deemed invested
in the Stock Investment at the time of payment shall be paid in (i) cash, (ii) whole shares of
Stock rounded down to the nearest whole share with the remainder paid in cash or (iii) any
combination of cash and Stock, in each case as determined by the Company.

Section 9. Death Prior to Receipt

Notwithstanding anything herein to the contrary, in the event that a Participant dies prior to
receipt of any or all of the amounts payable to him/her pursuant to this Plan, any amounts that are
then credited as Deferred Compensation will be paid to his/her designated beneficiary in a lump sum
upon the Company’s notification of the Participant’s death. Such payment shall be made no later
than the later of (i) the last day of the year in which death occurred and (ii) the 15th
day of the third calendar month following the date of such death. In the event the Company is not
notified of the Participant’s death at least twenty (20) days prior to the later of such dates, the
Participant’s Deferred Compensation hereunder shall continue to be paid in accordance with
Sections 7 and 8 hereof. The Participant (or his/her designated beneficiary or estate) shall not
be permitted, directly or indirectly, to designate the taxable year of the payment.

 

 

At the time the election to defer is made, a Participant may designate a beneficiary under this
Plan. The Participant may change the beneficiary by writing to the General Counsel of the Company.
If a beneficiary is not named, the value of the Participant’s Deferred Compensation Account will be
paid to his/her estate.

Section 10. Effect of Election

An election to defer director compensation hereunder for any year will be irrevocable once the year
to which it applies has commenced, and, except as provided in Section 9 above or in Section 11
below, the amounts deferred hereunder shall not be paid earlier than the distribution date or dates
elected by the Participant, or upon the Final Distribution Date, if earlier.

Section 11. Accelerated Payment upon Unforeseeable Emergency

Notwithstanding anything herein to the contrary, a Participant may petition the Compensation and
Stock Option Committee of the Board (the “Compensation Committee”) for a distribution with respect
to his or her Deferred Compensation on account of an “unforeseeable emergency” (an “Unforeseeable
Emergency”), as defined in Treasury Regulation § 1.409A-3(i)(3); provided that such a distribution
shall be allowed only to the extent it complies with the distribution requirements set forth
therein. Upon such petition by a Participant and the approval of such application by the
Compensation Committee, the Company shall distribute to the Participant as soon as practicable
following such approval only the amount of Deferred Compensation necessary to satisfy such
Unforeseeable Emergency; provided, however, that in no event may such amount exceed
the balance of all of the Deferred Compensation Accounts identified to such Participant; and
further provided, however, that no Participant requesting a distribution for an
Unforeseeable Emergency shall have any involvement in making the determination to approve such
distribution on the part of the Compensation Committee. Distributions made on account of an
Unforeseeable Emergency shall reduce the amounts credited to a Participant’s Deferred Compensation
Account.

Section 12. Redeferral Election

Upon application by a Participant, the Company may, in its sole discretion, allow for a redeferral
election whereby all or a portion of the Deferred Compensation may be further deferred for no less
than an additional five (5) years from the distribution date in effect for such Deferred
Compensation immediately prior to such redeferral election, but no later than the Final
Distribution Date, upon such terms and conditions that the Company deems appropriate to ensure that
the amounts subject to redeferral are not taxable to the Participant until the time of actual
distribution; provided, however, that (i) an election to redefer all or a portion of such Deferred
Compensation must be made at least twelve months prior to the distribution date for such Deferred
Compensation in effect immediately prior to the redeferral election, and (ii) such an election
shall not take effect until the twelve-month anniversary of the date on which it is made.

Section 13. Statement of Account

Statements will be sent to each Participant by February 15th each year as to the value of his/her
Deferred Compensation Account as of the end of the preceding December.

 

 

Section 14. Assignability

No right to receive payments hereunder will be transferable or assignable by a Participant, except
by will or by the laws of descent and distribution.

Section 15. Administration

This Plan will be administered on a day-to-day basis on behalf of the Compensation Committee by the
General Counsel of the Company, who will have the authority to adopt rules and regulations for
carrying out the Plan. The Compensation Committee will have the authority to interpret, construe
and implement the provisions of the Plan and to prescribe the form of the request for deferral of
compensation under the Plan. Notwithstanding the foregoing, in the case of any Participant who is
also a member of the Compensation Committee, such person shall not participate in any action by the
Compensation Committee which affects only such individual Participant’s rights under the Plan.

Section 16. Amendment/Termination

This Plan may at any time or from time to time be amended, modified or terminated by the Board;
provided, however, that any termination of the Plan must comply with the
requirements of Treasury Regulation § 1.409A-3(j)(4)(ix). No amendment, modification or
termination will, without the consent of the Participant, adversely affect any amounts credited to
such Participant’s Deferred Compensation Account; unless the Board determines, in its sole
discretion, that such amendment, modification or termination is appropriate or necessary to cause
this Plan to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), and the Treasury Regulations thereunder (including the distribution requirements
thereunder), or any Deferred Compensation to be exempt from the tax penalty under Section
409A(a)(1)(B) of the Code.

Section 17. Tax Treatment

Deferred Compensation is taxed as ordinary income when payment is actually received. Distributions
received from the Plan are not eligible for favorable tax treatment or rollovers as permitted under
qualified plans.

Section 18. Other Benefits

The compensation and basis for other Company provided benefits in the case of any member of the
Board who is also an employee of the Company or of any affiliate may be affected if a Participant
elects to defer a portion of his/her retainer and/or meeting fees.

 

 

W. R. BERKLEY CORPORATION

DEFERRED COMPENSATION PLAN FOR DIRECTORS

ELECTION FORM

In accordance with and subject to the W. R. Berkley Corporation Deferred Compensation Plan for
Directors (the “Plan”), I hereby request to defer the receipt of my annual retainer and/or meeting
fees for the year ending December 31, ___, as follows:

	 	 	 	 	 
	Amount to be Deferred:
	 
	 	 	 	 
	I.	 	Annual Retainer:
	 
	 	 	 	 
	 

	 	(a)
	 	ALL (100%), OR
	 
	 	 	 	 
	 

	 	(b)
	 	$___(multiples of $1,000)
	 
	 	 	 	 
	 
	 	 	 	 
	II.	 	Meeting Fees:
	 
	 	 	 	 
	 

	 	(a)
	 	ALL (100%), OR
	 
	 	 	 	 
	 

	 	(b)
	 	$___(multiples of $1,000)
	 
	 	 	 	 
	 
	 	 	 	 
	Deemed Investment
	 
	 	 	 	 
	I.	 	Stock Investment
	 
	 	 	 	 
	 

	 	(a)
	 	ALL (100%), OR
	 
	 	 	 	 
	 

	 	(b)
	 	$___(multiples of $1,000)
	 
	 	 	 	 
	 
	 	 	 	 
	II.	 	Interest Investment
	 
	 	 	 	 
	 

	 	(a)
	 	ALL (100%), OR
	 
	 	 	 	 
	 

	 	(b)
	 	$___(multiples of $1,000)
	 
	 	 	 	 
	 
	 	 	 	 
	Period of Deferral:
	 
	 	 	 	 
	 

	 	(a)
	 	Indicate Date on which payments should be
made or commence (not later than the date
of my Separation from Service with
	 

	 	 
	 	 W. R.
Berkley Corporation (as such term is used
in Section 409A of the Code)                     
(Date), OR
	 
	 	 	 	 
	 

	 	(b)
	 	Until the date of my Separation from
Service with W. R. Berkley Corporation
	 
	 	 	 	 
	Form of Distribution:

	 	 	 	 	 
	 

	 	Lump sum, OR	 	 
	 
	 	 	 	 
	 

	 	Annual
installments                                  
	 	(not to exceed 5 — annual installments will be distributed on the anniversaries of the initial

	 
	 	 	 	 distribution date selected above)

 

 

A Participant should contact his/her tax advisor prior to making an election to defer his/her
annual retainer and/or meeting fees. I have received a copy of the Plan. I understand that, in
the event of my death prior to receipt of all amounts payable to me pursuant to the Plan, the
amount credited to my Deferred Compensation Account will be paid to my designated beneficiary in
the form of a lump sum.

	 	 	 	 	 	 	 
	Beneficiary Name

	 	 	 	Participant Name	 	 
	 

	 	 
	 	 	 	 
	 
	Address

	 	 	 	Address	 	 
	 

	 	 
	 	 	 	 
	 
	Beneficiary

	 	 	 	Participant	 	 
	Social Security No.

	 	 	 	Social Security No.	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Date	 	 
	 	 	 	 	 
	Signature of ParticipantEX-10.3

 

Exhibit 10.3

SUPPLEMENTAL BENEFITS AGREEMENT

Amended and Restated as of December 17, 2007

          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;

          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;

          WHEREAS, this Agreement was entered into as of August 19, 2004, at which time Executive became
earned and vested in, and entitled to a legally binding right to, certain payments and benefits
hereunder;

          WHEREAS, pursuant to Treasury Regulation § 1.409A-6(a)(3)(i), Section 409A of the Code does
not apply with respect to amounts deferred prior to January 1, 2005; to wit, in the case of the
Retirement Benefit, the Gross-Up Payment, and the continued health benefits (each a payment of a
non-account balance plan under Section 409A of the Code) under this Agreement, the present value of
the amount to which the Executive would have been entitled hereunder upon a voluntary termination
for any reason on December 31, 2004, and in the case of the perquisites (part of a separate plan
under Section 409A of the Code), the right to the in-kind benefits as of December 31, 2004;

          WHEREAS, all payments and benefits under this Agreement, other than (i) the increase in the
present value of the Retirement Benefit after December 31, 2004, and (ii) the Gross-Up Payment, are
grandfathered from the application of Section 409A of the Code pursuant to the operation of
Treasury Regulation § 1.409A-6(a)(3)(i);

          WHEREAS, the Gross-Up Payment complies with Section 409A of the Code;

          WHEREAS, the Company and Executive wish to amend this Agreement effective as of December 17,
2007, only with respect to the Retirement Benefit, in order that the calculation, determination,
and payment of such Retirement Benefit be in all respects compliant with the requirements of
Section 409A of the Code; and

          WHEREAS, the amendments to this Agreement effective as of December 17, 2007, are being made
for the sole purpose of making the Retirement Benefit compliant with Section 409A of the Code (and
therefore do not constitute a material modification of any part of this Agreement under
Section 409A of the Code), and shall in no way amend or affect the calculation, determination,
distribution, or provision of, any payments or benefits hereunder other than the Retirement
Benefit.

          NOW, THEREFORE, the parties hereto agree as follows:

 

 

          Section 1. Definitions.

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

          “Benefit Calculation Date” means the earliest to occur of (i) October 31, 2013, (ii) the date
of Executive’s Qualifying Termination, and (iii) the date of a Change in Control.

          “Benefit Commencement Date” means the earliest to occur of (i) October 31, 2013, (ii) the date
of Executive’s death, and (iii) the date of a Change in Control.

          “Board” means the Company’s Board of Directors.

          “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.

          “Change in Control” means any transaction that constitutes either (i) a change in the
ownership of the Company within the default meaning under Treasury Regulation
Section 1.409A-3(i)(5)(v) (i.e., the acquisition by a person or group of persons of stock of the
Company constituting more than 50% of the total fair market value or total voting power of the
stock of the Company), (ii) a change in the effective control of the Company within the default
meaning under Treasury Regulation Section 1.409A-3(i)(5)(vi) (i.e., either (x) the acquisition by a
person or group of persons of stock of the Company possessing 30% or more of the total voting power
of the stock of the Company or (y) the replacement during any 12-month period of a majority of the
members of the Board by members whose appointment or election is not endorsed by a majority of the
members of the Board before the date of the appointment or election), or (iii) a change in the
ownership of a substantial portion of the Company’s assets within the default meaning of Treasury
Regulation Section 1.409A-3(i)(5)(vii) (i.e., the acquisition by a person or group of persons of
assets from the Company that have a total gross fair market value equal to or greater than 40% of
the total gross fair market value of all of the assets of the Company immediately before such
acquisition).

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

          “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
the Benefit Calculation Date occurs.

          “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.

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

          “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 the
Benefit Calculation Date occurs.

          “Make-up Account” means a notional account which, during the period commencing upon the date
of a Qualifying Termination and ending on the Benefit Commencement Date, shall be credited on each
monthly anniversary of the date of such Qualifying Termination with an amount equal to one twelfth
(1/12th) of the Retirement Benefit plus interest on the balance in such
account at the interest rate then in effect under Section 6 of the W. R. Berkley Corporation
Deferred Compensation Plan for Officers, as amended and restated December 3, 2007. For purposes of
clarity, in the event the Benefit Calculation Date and the Benefit Commencement Date occur on the
same date, Executive shall not be entitled to a Make-up Account.

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

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

          “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.

          “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.

          “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.

 

 

          Section 2. Benefits.

          (a) Retirement Benefit. Within thirty (30) days following the Benefit Commencement Date,
Executive shall be paid the first annual Retirement Benefit, plus a lump sum amount equal to the
accrued balance in the Make-up Account, if any. Thereafter, Executive shall be paid the annual
Retirement Benefit on each anniversary of the Benefit Commencement Date for the remainder of his
life. Upon Executive’s death, and if Executive’s spouse has not predeceased him, Executive’s
spouse shall thereafter be entitled to receive, in lieu of the full Retirement Benefit that would
have been payable to the Executive absent his death, fifty percent (50%) of the annual Retirement
Benefit on each anniversary of the Benefit Commencement Date for the remainder of her life (and in
the event that the Benefit Commencement Date occurred as a result of Executive’s death, Executive’s
spouse shall also receive within thirty (30) days following the Executive’s death a lump sum
payment equal to the sum of (i) fifty percent (50%) of the annual Retirement Benefit and (ii) the
accrued balance in the Make-up Account, if any). Notwithstanding the foregoing, within ten (10)
business days following the Benefit Commencement Date, Executive may elect for him and his spouse
to receive, in lieu of the yearly Retirement Benefit set forth in this Section 2(a), an annual
lifetime annuity benefit under a joint and survivor annuity based on the lives of Executive and his
spouse that is the actuarial equivalent of one hundred percent (100%) of the yearly Retirement
Benefits that would have otherwise been made to Executive and his spouse had no such election
occurred. Notwithstanding anything herein to the contrary, in the event the Benefit Commencement
Date occurs as the result of a Change in Control, Executive shall receive within thirty (30) days
of such Change in Control, in lieu of the yearly Retirement Benefits provided by this Section 2(a),
a lump sum amount equal to the actuarial present value of one hundred percent (100%) of the yearly
Retirement Benefits that would have otherwise been made to Executive following a Benefit
Commencement Date that was not a Change in Control. The following actuarial assumptions shall be
applied for purposes of the preceding two sentences:

			
	     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/ Philip J. Ablove
 	 
	 	 	Name:  	Philip J. Ablove 	 
	 	 	Title:  	Chairman, Compensation Committee 	 

	 	 	 	 	 
	 

	 	William R. Berkley	 	 
	 
	 	 	 	 
	 

	 	/s/ William R. Berkley

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