Document:

EXHIBIT 10.5

 

RESTORATION HARDWARE, INC.

NOTICE OF GRANT OF STOCK OPTION

 

Notice is hereby
given of the following option grant (the “Option”) to purchase shares of Common
Stock of Restoration Hardware, Inc. (the “Corporation”):

 

	
  Optionee:

  	
  John W. Tate

  
	
   

  	
   

  
	
  Grant Date:

  	
  August 24,
  2004

  
	
   

  	
   

  
	
  Vesting
  Commencement Date:

  	
  August 24,
  2004

  
	
   

  	
   

  
	
  Exercise
  Price:

  	
  $5.70

  
	
   

  	
   

  
	
  Number of
  Option Shares:

  	
  329,828

  
	
   

  	
   

  
	
  Expiration
  Date:

  	
  August 24,
  2014

  
	
   

  	
   

  
	
  Type of
  Option:

  	
  Non
  Statutory Option

  

 

Exercise Schedule:  The Option shall become exercisable for
twenty-five percent (25%) of the Option Shares upon Optionee’s completion of
each of the four (4) years of Service measured from and after the Vesting
Commencement Date, with the first such installment to become exercisable on the
first anniversary of the Vesting Commencement Date.  In no event shall the Option become
exercisable for any additional Option Shares after Optionee’s cessation of
Service.

 

Optionee
understands and agrees that the Option is granted subject to and in accordance
with the terms of the Restoration Hardware, Inc. 1998 Stock Incentive Plan
Amended and Restated on October 9, 2002 (the “Plan”).  Optionee further agrees to be bound by the
terms of the Plan and the terms of the Option as set forth in the Stock Option
Agreement attached hereto as Exhibit A.  A copy of the Plan is available upon request
made to the Secretary of the Corporation at the Corporation’s principal
offices.

 

No Employment or
Service Contract. 
Nothing in this notice or in the attached Stock Option Agreement or in
the Plan shall confer upon Optionee any right to continue in Service for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Parent or Subsidiary employing or
retaining Optionee) or of Optionee, which rights are hereby expressly reserved
by each, to terminate Optionee’s Service at any time for any reason, with or
without cause.

 

 

Definitions.  All capitalized terms in this notice shall
have the meaning assigned to them in this notice or in the attached Stock
Option Agreement.

 

	
  DATED:
  August 24, 2004

  	
   

  
	
   

  	
   

  
	
   

  	
  RESTORATION HARDWARE, INC.

  
	
   

  	
  By: 

  	
  /s/Patricia A. McKay

  
	
   

  	
   

  
	
   

  	
  Title: Executive Vice
  President and Chief Financial

  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ John W. Tate

  
	
   

  	
  John W. Tate, Optionee

  
	
   

  	
   

  
	
   

  	
  Address: 

  	
  530 Belmeade Way Trail

  
	
   

  	
  Lewisville, NC
  27023

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTACHMENTS

  	
   

  
	
  Exhibit
  A - Stock Option Agreement

  	
   

  
				

 

 

RESTORATION HARDWARE, INC.

STOCK OPTION AGREEMENT

 

RECITALS

 

A.           The Board has adopted the Plan for the purpose of
retaining the services of selected Employees, non-employee members of the Board
or of the board of directors of any Parent or Subsidiary and consultants and
other independent advisors who provide services to the Corporation (or any
Parent or Subsidiary).

 

B.             Optionee is to render valuable services to the
Corporation (or a Parent or Subsidiary), and this Agreement is executed
pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the Corporation’s grant of an option to Optionee.

 

C.             All capitalized terms in this Agreement shall have
the meaning assigned to them in the attached Appendix.

 

NOW,
THEREFORE, it is hereby agreed as follows:

 

1.               Grant of Option.  The Corporation hereby grants to Optionee, as
of the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice.  The
Option Shares shall be purchasable from time to time during the option term
specified in Paragraph 2 below at the Exercise Price.

 

2.               Option Term.  This option shall have a maximum term of
ten (10) years measured from the Grant Date and shall accordingly expire
at the close of business on the Expiration Date, unless sooner terminated in
accordance with Paragraph 5 or 6 below.

 

3.               Limited Transferability.  This option shall be neither transferable nor
assignable by Optionee other than by will or by the laws of descent and
distribution following Optionee’s death and may be exercised, during Optionee’s
lifetime, only by Optionee.  However, if
this option is designated a Non-Statutory Option in the Grant Notice, then this
option may, in connection with the Optionee’s estate plan, be assigned in whole
or in part during Optionee’s lifetime to one or more members of the Optionee’s
immediate family or to a trust established for the exclusive benefit of the
Optionee and/or one or more such family members.  The assigned portion shall be exercisable
only by the person or persons who acquire a proprietary interest in the option
pursuant to such assignment.  The terms
applicable to the assigned portion shall be the same as those in effect for
this option immediately prior to such assignment.

 

4.               Date of Exercise.  This option shall become exercisable for the
Option Shares in one or more installments as specified in the Grant
Notice.  As the option becomes exercisable
for such installments, those installments shall accumulate and the option shall
remain exercisable for the accumulated installments until the Expiration Date
or sooner termination of the option term under Paragraph 5 or 6 below.

 

 

5.               Cessation of Service.  The option term specified in Paragraph 2
above shall terminate (and this option shall cease to be outstanding) prior to
the Expiration Date should any of the following provisions become applicable:

 

(a)          Should
Optionee cease to remain in Service for any reason (other than death, Permanent
Disability or Cause) while this option is outstanding, then the period for
exercising this option shall be reduced to a three (3)-month period
commencing with the date of such cessation of Service, but in no event shall
this option be exercisable at any time after the Expiration Date.

 

(b)         Should
Optionee die while holding this option, then the personal representative of
Optionee’s estate or the person or persons to whom the option is transferred
pursuant to Optionee’s will or in accordance with the laws of inheritance shall
have the right to exercise this option. 
Such right shall lapse, and this option shall cease to be outstanding,
upon the earlier of (i) the expiration of the
twelve (12)-month period measured from the date of Optionee’s death or
(ii) the Expiration Date.

 

(c)          Should
Optionee cease Service by reason of Permanent Disability while this option is
outstanding, then the period for exercising this option shall be reduced to a
twelve (12)-month period commencing with the date of such cessation of
Service, but in no event shall this option be exercisable at any time after the
Expiration Date.

 

(d)         During the
limited period of post-Service exercisability, this option may not be exercised
in the aggregate for more than the number of vested Option Shares for which the
option is exercisable at the time of Optionee’s cessation of Service.  Upon the expiration of such limited exercise
period or (if earlier) upon the Expiration Date, this option shall terminate
and cease to be outstanding for any otherwise exercisable Option Shares for
which the option has not been exercised. 
However, this option shall, immediately upon Optionee’s cessation of
Service for any reason, terminate and cease to be outstanding with respect to
any Option Shares for which this option is not otherwise at that time
exercisable.

 

(e)          Should
Optionee’s Service be terminated for Cause, then this option shall terminate
immediately and cease to remain outstanding.

 

6.               Special Acceleration of Option.

 

(a)          Change
of Control.

 

(i)                                     This
option to the extent outstanding at the time of a Change of Control transaction
but not otherwise fully exercisable, shall automatically accelerate so that
this option shall, immediately prior to the effective date of such Change of
Control, become exercisable for all of the Option Shares at the time subject to
this option and may be exercised for any or all of those Option Shares as fully
vested shares of Common Stock.  However,
this option shall not become exercisable on such an

 

2

 

accelerated basis
if and to the extent:  (i) this
option is, in connection with the Change of Control, to be assumed by the
successor corporation (or parent thereof) or otherwise continued in full force
and effect pursuant to the terms of the Change of Control transaction; or
(ii) this option is to be replaced with a cash incentive program of the
successor corporation which preserves the spread existing at the time of the
Change of Control on the Option Shares for which this option is not otherwise
at that time exercisable (the excess of the Fair Market Value of those Option
Shares over the aggregate Exercise Price payable for such shares) and provides
for subsequent payout in accordance with the same option exercise/vesting
schedule set forth in the Grant Notice.

 

(ii)                                  Immediately
following the Change of Control, this option shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof) or otherwise continued in full force and effect pursuant to the
terms of the Change of Control transaction.

 

(iii)                               If
this option is assumed in connection with a Change of Control (or otherwise
continued in full force and effect), then this option shall be appropriately
adjusted, immediately after such Change of Control, to apply to the number and
class of securities or other property which would have been issuable to
Optionee in consummation of such Change of Control had the option been exercised
immediately prior to such Change of Control, and appropriate adjustments shall
also be made to the Exercise Price, provided the aggregate Exercise
Price shall remain the same.

 

(iv)                              If
this option is assumed in connection with a Change of Control (or otherwise
continued in full force and effect) and the Optionee’s Service is terminated
Not for Cause by the Company or the successor corporation (or parent thereof)
within eighteen (18) months after the Change of Control, this option
automatically shall become vested and exercisable for all of the Option Shares
at the time represented by this option.

 

(b)         This
Agreement shall not in any way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.

 

7.               Adjustment in Option Shares.

 

Should any change
be made to Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation’s
receipt of consideration, appropriate adjustments shall be made to (i) the
total number and/or class of securities subject to this option and
(ii) the Exercise Price in order to reflect such change and thereby
preclude a dilution or enlargement of benefits hereunder.

 

8.               Stockholder Rights.  The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have

 

3

 

exercised the
option, paid the Exercise Price and become a holder of record of the purchased
shares.

 

9.               Manner of Exercising Option.

 

(a)          In order to
exercise this option with respect to all or any part of the Option Shares for
which this option is at the time exercisable, Optionee (or any other person or
persons exercising the option) must take the following actions:

 

(i)                                     Execute
and deliver to the Corporation a Notice of Exercise for the Option Shares for
which the option is exercised;

 

(ii)                                  Pay
the aggregate Exercise Price for the purchased shares in one or more of the
following forms, subject to Applicable Laws:

 

(A)      Cash or check
made payable to the Corporation; or

 

(B)        Shares of
Common Stock held by Optionee (or any other person or persons exercising the
option) for the requisite period necessary to avoid a charge to the
Corporation’s earnings for financial reporting purposes and valued at their
Fair Market Value on the Exercise Date; or

 

(C)        Through a
special sale and remittance procedure pursuant to which Optionee (or any other
person or persons exercising the option) shall concurrently provide irrevocable
instructions (I) to a Corporation-designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the Corporation, out of the
sale proceeds available on the settlement date, sufficient funds to cover the
aggregate Exercise Price payable for the purchased shares plus all applicable
federal, state and local income and employment taxes required to be withheld by
the Corporation by reason of such exercise and (II) to the Corporation to
deliver the certificates for the purchased shares directly to such brokerage
firm in order to complete the sale.

 

Except to the extent the
sale and remittance procedure is utilized in connection with the option
exercise, payment of the Exercise Price must accompany the Notice of Exercise
delivered to the Corporation in connection with the option exercise;

 

(iii)                               Furnish
to the Corporation appropriate documentation that the person or persons
exercising the option (if other than Optionee) have the right to exercise this
option; and

 

(iv)                              Make
appropriate arrangements with the Corporation (or Parent or Subsidiary employing
or retaining Optionee) for the satisfaction of all federal, state and local
income and employment tax withholding requirements applicable to the option
exercise.

 

4

 

(b)         As soon as
practical after the Exercise Date, the Corporation shall issue to or on behalf
of Optionee (or any other person or persons exercising this option) a
certificate for the purchased Option Shares, with the appropriate legends, if
any, affixed thereto.

 

(c)          In no event
may this option be exercised for any fractional shares of Common Stock.

 

10.         Compliance with Laws and Regulations.

 

(a)          The
exercise of this option and the issuance of the Option Shares upon such
exercise shall be subject to compliance by the Corporation and Optionee with
all applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange (or the Nasdaq National Market, if
applicable) on which Common Stock may be listed for trading at the time of such
exercise and issuance.

 

(b)         The
inability of the Corporation to obtain approval from any regulatory body having
authority deemed by the Corporation to be necessary to the lawful issuance and
sale of any Common Stock pursuant to this option shall relieve the Corporation
of any liability with respect to the non-issuance or sale of Common Stock as to
which such approval shall not have been obtained.  The Corporation, however, shall use its best
efforts to obtain all such approvals.

 

11.         Successors and Assigns.  Except to the extent otherwise provided in
Paragraphs 3 and 6 above, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the Corporation and its successors and
assigns and Optionee, Optionee’s assigns and the legal representatives, heirs
and legatees of Optionee’s estate.

 

12.         Notices.  Any notice required to be given or delivered
to the Corporation under the terms of this Agreement shall be in writing and
addressed to the Corporation at its principal corporate offices.  Any notice required to be given or delivered
to Optionee shall be in writing and addressed to Optionee at the address
indicated below Optionee’s signature line on the Grant Notice.  All notices shall be deemed effective upon
personal delivery or upon deposit in the U.S. mail, postage prepaid and
properly addressed to the party to be notified.

 

13.         Construction.  This Agreement and the option evidenced
hereby are made and granted pursuant to the Plan and are in all respects
limited by and subject to the terms of the Plan.  All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this
option.  For purposes of this Agreement,
whenever the context requires, the singular number shall include the plural,
and vice versa.

 

14.         Governing Law.  The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
California without resort to that State’s conflict-of-laws rules.

 

5

 

15.         Excess Shares.  If the Option Shares covered by this
Agreement exceed, as of the Grant Date, the number of shares of Common Stock
which may without stockholder approval be issued under the Plan, then this
option shall be void with respect to those excess shares, unless stockholder
approval of an amendment sufficiently increasing the number of shares of Common
Stock issuable under the Plan is obtained in accordance with the provisions of
the Plan.

 

6

 

EXHIBIT I

NOTICE OF EXERCISE

 

I hereby notify
Restoration Hardware, Inc. (the “Corporation”) that I elect to purchase
                     
shares of the Corporation’s common stock (the “Purchased Shares”) at the option
exercise price of
$                     
per share (the “Exercise Price”) pursuant to that certain option (the “Option”)
granted to me on August 24, 2004 under the Corporation’s 1998 Stock
Incentive Plan Amended and Restated on October 9, 2002.

 

Concurrently with
the delivery of this Exercise Notice to the Corporation, I shall hereby pay to
the Corporation the Exercise Price for the Purchased Shares in accordance with
the provisions of my agreement with the Corporation (or other documents)
evidencing the Option and shall deliver whatever additional documents may be
required by such agreement as a condition for exercise.  Alternatively, I may utilize the special
broker-dealer sale and remittance procedure specified in my agreement to effect
payment of the Exercise Price.

 

	
                                          ,
  20     

  	
   

  
	
  Date

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Optionee

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Print name
  in exact manner

  	
   

  
	
  it is to
  appear on the

  	
   

  
	
  stock
  certificate:

  	
   

  
	
   

  	
   

  
	
  Address to which certificate

  	
   

  
	
  is to be sent, if different

  	
   

  
	
  from address
  above:

  	
   

  
	
   

  	
   

  
	
  Social Security Number:

  	
   

  
	
  Employee
  Number:

  	
   

  

 

 

APPENDIX

 

The following
definitions shall be in effect under the Agreement:

 

A.                                   Agreement shall mean this Stock
Option Agreement.

 

B.                                     Applicable Laws shall mean the
legal requirements relating to the administration of stock option plans, if
any, under applicable provisions of federal securities laws, state corporate
and securities laws, the Code, the rules of any applicable stock exchange or
national market system, and the rules of any foreign jurisdiction applicable to
the granting of stock options and the issuance of shares of Common Stock to
residents therein.

 

C.                                     Board shall mean the Corporation’s
Board of Directors.

 

D.                                    Cause shall mean, in connection with the termination
of the Optionee’s Service by the Corporation, (a) the Optionee has been
convicted of a felony involving fraud, dishonesty or personal injury to another
human being, or (b) the termination of Service is evidenced by a
resolution adopted in good faith by a majority of the members of the Board to
the effect that the Optionee (i) intentionally and continually failed
substantially to perform the Optionee’s reasonably assigned duties with the
Corporation, which failure continued for a period of at least thirty (30) days
after a written notice of demand for substantial performance has been delivered
to the Optionee specifying the manner in which the Optionee has failed
substantially to perform, or (ii) intentionally engaged in conduct which
is demonstrably and materially injurious to the Corporation; provided, that no
termination of the Optionee’s Service shall be for Cause as set forth in clause
(ii) above until there shall have been delivered to the Optionee a copy of a
written notice setting forth that the Optionee was guilty of the conduct set
forth in clause (ii) and specifying the particulars thereof in detail. No act,
nor failure to act, on the Optionee’s part shall be considered “intentional”
unless the Optionee has acted, or failed to act, with a lack of good faith and
with a lack of reasonable belief that the Optionee’s action or failure to act
was in the best interest of the Corporation. 
A termination of the Optionee’s Service shall also be considered for
“Cause” if the termination is evidenced by a resolution adopted in good faith
by a majority of the members of the Board following a notification from the
Optionee, or following the occurrence, of any of the following events: (w) the
Optionee becomes a named subject of a pending criminal proceeding (excluding
traffic violations and other minor offenses); (x) the Optionee becomes the
subject of any order, judgment or decree of any legal tribunal of competent
jurisdiction, permanently or temporarily enjoining the Optionee from, or
otherwise limiting, the following activities: (i) engaging in any type of
business practice; or (ii) engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of federal or state securities laws or federal commodities laws; (y)
the Optionee is found by a court of competent jurisdiction in a civil action or
by the Securities and Exchange Commission to have violated any federal or state
securities law; or (z) the Optionee receives a “Wells
notice”.

 

A-1

 

E. Change of Control shall mean any of
the following:

 

(a)                                  A
merger or consolidation in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Corporation’s outstanding
securities are transferred to a person or persons different from the persons
holding those securities immediately prior to such transaction; or

 

(b)                                 The
sale, transfer or other disposition of all or substantially all of the
Corporation’s assets in complete liquidation or dissolution of the Corporation;
or

 

(c)                                  The
acquisition, directly or indirectly, by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls,
is controlled by, or is under common control with, the Corporation) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the 1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation’s outstanding securities pursuant
to a tender or exchange offer made directly to the Corporation’s stockholders;
or

 

(d)                                 A
change in the composition of the Board over a period of thirty-six (36)
consecutive months or less such that a majority of the Board members ceases, by
reason of one or more contested elections for Board membership, to be comprised
of individuals who either (i) have been Board members continuously since
the beginning of such period or (ii) have been elected or nominated for
election as Board members during such period by at least a majority of the
Board members described in clause (i) who were still in office at the time
the Board approved such election or nomination.

 

F.                                      Code shall mean the Internal
Revenue Code of 1986, as amended.

 

G.                                     Common Stock shall mean shares of
the Corporation’s common stock.

 

H.                                    Corporation shall mean Restoration
Hardware, Inc., a Delaware corporation.

 

I.                                       Employee shall mean an individual
who is in the employ of the Corporation (or any Parent or Subsidiary), subject
to the control and direction of the employer entity as to both the work to be
performed and the manner and method of performance.

 

J.                                        Exercise Date shall mean the date
on which the option shall have been exercised in accordance with
Paragraph 9 of the Agreement.

 

K.                                    Exercise Price shall mean the
exercise price per Option Share as specified in the Grant Notice.

 

A-2

 

L.                                      Expiration Date shall mean the date
on which the option expires as specified in the Grant Notice.

 

M.                                 Fair Market Value per share of
Common Stock on any relevant date shall be determined in accordance with the
following provisions:

 

(a)                                  If
Common Stock is at the time traded on the Nasdaq National Market, then the Fair
Market Value shall be deemed equal to the closing selling price per share of
Common Stock on the date in question, as the price is reported by the National
Association of Securities Dealers on the Nasdaq National Market.  If there is no closing selling price for Common
Stock on the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which a closing selling price is
reported; or

 

(b)                                 If
Common Stock is at the time listed on any Stock Exchange, then the Fair Market
Value shall be deemed equal to the closing selling price per share of Common
Stock on the date in question on the Stock Exchange determined by the Plan
Administrator to be the primary market for Common Stock, as such price is
officially quoted in the composite tape of transactions on such exchange.  If there is no closing selling price for
Common Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such quotation
exists.

 

N.                                    Grant Date shall mean the date of
grant of the option as specified in the Grant Notice.

 

O.                                    Grant Notice shall mean the Notice
of Grant of Stock Option accompanying the Agreement, pursuant to which Optionee
has been informed of the basic terms of the option evidenced hereby.

 

P.                                      1934 Act shall mean the Securities
Exchange Act of 1934, as amended.

 

Q.                                    Non-Statutory Option shall mean an
option not intended to satisfy the requirements of Section 422 of the
Code.

 

R.                                     Not for Cause shall mean
termination of the Optionee’s Service by the Corporation for reasons other than
for Cause.

 

S.                                      Notice of Exercise shall mean the
notice of exercise in the form attached hereto as Exhibit I.

 

T.                                     Option Shares shall mean the number
of shares of Common Stock subject to the option as specified in the Grant
Notice.

 

U.                                    Optionee shall mean the person to
whom the option is granted as specified in the Grant Notice.

 

A-3

 

V.                                     Parent shall mean any corporation
(other than the Corporation) in an unbroken chain of corporations ending with
the Corporation, provided each corporation in the unbroken chain (other than
the Corporation) owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

 

W.                                Permanent Disability shall mean
that the Optionee is unable to carry out the responsibilities and functions of
the position held by the Optionee by reason of any physical or mental
impairment for more than 120 days in any twelve-month period.

 

X.                                    Plan shall mean the Corporation’s
1998 Stock Incentive Plan Amended and Restated on October 9, 2002.

 

Y.                                     Plan Administrator shall mean
either the Board or a committee of the Board acting in its capacity as
administrator of the Plan.

 

Z.                                     Service shall mean the Optionee’s
performance of services for the Corporation (or any Parent or Subsidiary) in
the capacity of an Employee, a non-employee member of the board of directors or
a consultant or independent advisor.

 

AA.                         Stock Exchange shall mean the
American Stock Exchange or the New York Stock Exchange.

 

BB.                             Subsidiary shall mean any
corporation (other than the Corporation) in an unbroken chain of corporations
beginning with the Corporation, provided each corporation (other than the last
corporation) in the unbroken chain owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.

 

A-4Exhibit 10.1

 

FIRST
AMENDMENT

TO

ZENITH NATIONAL INSURANCE CORP.

2003 NON-EMPLOYEE DIRECTOR DEFERRED COMPENSATION PLAN

 

Zenith National Insurance
Corp., a Delaware corporation (the “Company”), hereby amends the Zenith
National Insurance Corp. 2003 Non-Employee Director Deferred Compensation Plan
(the “Plan”), effective December 2, 2004, with reference to the following:

 

WHEREAS, the Company
maintains the Plan for the benefit of its non-employee directors; and

 

WHEREAS, Section 10.7(a) of
the Plan provides that the Board of Directors of the Company (the “Board”) may
amend the Plan at any time; and

 

WHEREAS, Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), places restrictions as
to the timing of distributions from nonqualified deferred compensation plans;
and

 

WHEREAS, the Board desires
to amend the Plan to comply with Section 409A of the Code.

 

NOW THEREFORE, Section
10.7(b) of the Plan is hereby amended and restated in its entirety as follows:

 

Notwithstanding the
foregoing paragraph or any other provision in this Plan to the contrary, the
Board may terminate the Plan at any time. 
Upon termination of the Plan, Benefits shall not be distributed earlier
than otherwise due to Participants in accordance with the terms of the Plan and
applicable Deferred Compensation Agreements. 
Any amounts not distributed after payment in full of all Benefits
hereunder shall revert to the Company.

 

IN
WITNESS HEREOF, the
Company has executed this First Amendment to the Plan effective as of the date
written above.

 

	
   

  	
  ZENITH NATIONAL INSURANCE
  CORP.

  
	
   

  	
   

  
	
   

  	
  by:

  	
  /s/ Stanley R. Zax

  	
   

  
	
   

  	
   

  	
  Stanley R. Zax

  
	
   

  	
   

  	
  President and Chairman of
  the Board

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}]]