Document:

Exhibit 10.1

 

EXECUTION COPY

 

EMPLOYMENT
AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”)
between ZENITH NATIONAL INSURANCE CORP., a Delaware corporation (hereinafter
referred to as “Zenith”), and Janet Frank (hereinafter referred to as “Employee”)
is hereby entered into as of January 11, 2010 (the “Execution Date”).

 

RECITALS

 

WHEREAS, the parties desire
to enter into this Agreement setting forth the terms and conditions for the
employment of Employee as President and Chief Operating Officer of Zenith Insurance
Company (“ZIC”), a subsidiary of Zenith, as Executive Vice President of Zenith
and as an officer of certain of its other subsidiaries (Zenith and all of its
subsidiaries collectively referred to hereinafter as “Employer”), which
employment and officerships shall commence on March 15, 2010 or such other
date mutually agreed to between the parties (the “Effective Date”); and

 

NOW, THEREFORE, it is agreed
as follows:

 

1.         Engagement and Duties.  During the Term of Employment as defined in Paragraph 2 of this
Agreement:

 

1.1   Employer
shall employ Employee and Employee agrees to be employed by Employer as
Executive Vice President of Zenith and as President and Chief Operating Officer
of ZIC, and in such other capacities at Zenith and at each of the corporations
which comprise Employer as shall hereafter be agreed upon by Employee and the
Chief Executive Officer of Zenith (“CEO”) or the Board of Directors of Zenith (“Board”)
and the boards of directors of such other corporations.

 

1.2   During the
Term of Employment, Employee shall report to the CEO.  Employee shall perform the normal duties of
such offices and such other executive duties as may from time to time be
assigned to her by and in accordance with instructions and directions of the
CEO or the Board.  Both Employee and
Employer hereby expressly recognize that the services described herein shall be
performed to the reasonable satisfaction of the CEO and the Board.

 

1.3   Employee
shall perform the duties contemplated hereunder at her principal office located
in Los Angeles County, California; provided, however, Employee shall travel
outside of the Los Angeles area to the extent she reasonably deems it necessary
or appropriate in the performance of her duties hereunder.

 

1.4   Employee,
during the Term of Employment, shall devote her time, attention, energies,
skills and best efforts to the performance of her duties for and on behalf of
Employer.

 

 

1.5   Employee
represents and warrants that she is not subject to any contractual or other
agreement, restriction or arrangement (whether written or verbal) that would
prevent her from entering into this Agreement as of the Execution Date or
commencing employment with the Employer (and performing her duties and
responsibilities set forth herein) as of the Effective Date.

 

2.         Term of Employment. 
The term of
employment hereunder shall be a period commencing on the Effective Date and
terminating on March 15, 2015 (“Expiration Date”), unless sooner
terminated as elsewhere provided herein (“Term of Employment”).

 

3.         Compensation.  As full and complete consideration for the
performance of her duties and the rendition of any and all services under this
Agreement, Employee shall be compensated as follows:

 

3.1   Employee
shall be paid $750,000 per year, subject to such increases as the Compensation
Committee of the Board (“Compensation Committee”) may from time to time
determine (“Base Compensation”).

 

3.2   In
addition to the Base Compensation, Employee shall be eligible for such bonuses
under Zenith’s Executive Officer Bonus Plan as may be awarded by the
Compensation Committee pursuant to the plan, and may also be awarded
discretionary bonuses by the Compensation Committee.

 

3.3   Employee
shall also receive a one-time sign-on bonus in the amount of $100,000, which shall
be paid to Employee within five (5) days of her commencement of employment
on the Effective Date.

 

3.4   All
compensation hereunder shall commence on the Effective Date and shall be paid
by Employer, as may be allocated by Employer from time to time among the
different corporations which comprise Employer, and shall comply with all
relevant governmental directives, rules and regulations which may be in
effect from time to time.  All Base
Compensation shall be payable ratably twice each month, or more or less often
in accordance with the normal payroll practices of Employer.

 

4.         Restricted Stock Grant.   On March 15,
2010 (or such other date to which the Effective Date of her employment may be
changed), Employee shall be awarded 50,000 shares of restricted common stock,
$1 par value per share, of Zenith pursuant to the Third Amended and Restated
Zenith National Insurance Corp. 2004 Restricted Stock Plan (“Plan”) and subject
to her executing the Company’s standard form of Restricted Stock Award
Agreement for Time-based Vesting pursuant to which half of the award will vest
two and one-half (2 1⁄2) years after the date of grant and the balance of the
award will vest five (5) years after the date of grant.

 

5.         Business Expenses. 
Employee shall
be reimbursed for reasonable and necessary expenses duly incurred in connection
with the duties to be performed and the services to be rendered by Employee to
Employer under and pursuant to this Agreement, upon submission of itemized
expense statements in the manner and at times specified by Employer for
officers of Employer.  In addition, the
Company shall provide Executive 

 

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with either (at her election) a $1,300 per
month automobile allowance or the use of a luxury automobile of her choice
(with such automobile periodically replaced in conformance with Employer’s
policies).

 

6.                                    Employee Benefits.

 

6.1   Employee
shall be entitled to participate in all employee insurance, retirement and
other benefit plans for which she qualifies and which may be in effect from
time to time.  Notwithstanding the
foregoing, nothing contained in this Agreement shall prohibit or limit the
right of Employer to discontinue, modify or amend any plan or benefit in its
absolute discretion at any time, provided, however, that any such
discontinuance, modification or amendment shall apply to employees of Employer
generally, or to a defined group of such employees, and shall not apply solely
to Employee.

 

6.2   Employee
shall be entitled each year to vacation in accordance with standard employment
practices at the same level afforded to other senior executives of Employer,
during which time her compensation shall be paid in full.  In this connection, Employee shall be treated
for purposes of vacation accrual as an employee with more than 120 months of
service, which is the highest level of accrual under Employer’s current policy
and which provides for twenty (20) days of vacation each year.  Each vacation shall be taken during a period
mutually satisfactory to both Employer and Employee.

 

6.3   Zenith
shall also provide Employee with such insurance or other provisions for
indemnification, defense or hold harmless of officers that are generally in
effect for senior executive officers of Zenith.

 

6.4   Employer
shall provide Employee with relocation benefits for her to relocate her
personal residence to the Los Angeles area in accordance with Employer’s
Relocation Policy applicable to Executive Officers.

 

6.5   Employee
may use Employer’s aircraft from time to time for business purposes.  Employee shall also be afforded personal use
of the Employer’s aircraft to the extent it is available, for which personal
use Employee will be imputed income at the Standard Industry Fare Level (“SIFL”).  To the extent Employee uses the Employer’s
aircraft to travel to/from the Denver area while she is in the process of
relocating her personal residence to the Los Angeles area, such travel will be
at the cost of the Employer.

 

7.         Death During Employment.  If Employee should die during the Term of Employment, Employer shall
pay (a) to Employee’s spouse, if living or (b) if her spouse is not
then living, to her then living issue by right of representation or (c) if
none of the above are then living, to her estate a cash lump sum payment equal
to:  (1) one year’s Base
Compensation at the rate in effect at her death and (2) one year’s
bonus.  (For these purposes, “bonus”
shall mean the highest annual bonus paid or payable to Employee for the three
calendar years immediately preceding the year of Employee’s death.)  In 

 

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addition, for a period of two years from
Employee’s death, Employer shall continue to provide Employee’s family with the
same level of medical, dental and vision insurance benefits that they were
receiving through Employer immediately prior to Employee’s death.

 

8.         Termination by Employer.

 

8.1   Termination by Employer due to Disability.  Should Employer terminate the Term of
Employment prior to the Expiration Date due to “Disability” (as defined
below) Employer shall pay to Employee a cash lump sum payment equal
to:  (1) one year’s Base
Compensation at the rate in effect at termination (reduced by any amounts
payable to Employee pursuant to any long-term disability plan in effect at the
time of such termination) and (2) one year’s bonus.  (For these purposes, “bonus” shall mean the
highest annual bonus paid or payable to Employee for the three calendar years
immediately preceding the year of termination.) 
In addition, for a period of two
years from Employee’s termination of employment, Employer shall
continue to provide Employee and her family with the same level of life,
medical, dental and vision insurance benefits that they were receiving through
Employer immediately prior to Employee’s termination of employment.

 

Definition of Disability.  For the purposes of this Agreement, “Disability”
shall mean Employee’s absence from employment with Employer which: (i) was
due to her inability to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not
less than twelve (12) months; or (ii) resulted from a medically determinable
physical or mental impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than twelve (12)
months, and caused Employee to receive income replacement benefits for a
period of not less than three (3) months under an accident and health plan
covering Employer’s employees or (iii) qualifies as a disability under
Employer’s Long Term Disability Plan.

 

8.2   Termination by Employer  For Cause.  Should Employer terminate the Term of
Employment prior to the Expiration Date “For Cause” (as defined below),
Employer shall pay to Employee in complete satisfaction of Employer’s
obligations under this Agreement and without waiving any rights which it or its
subsidiaries may have against Employee, the compensation which would otherwise
be payable to her pursuant to Paragraph 4.1 of this Agreement up to the end of
the month in which such termination occurs and Employer shall not be obligated
to make any payments to Employee pursuant to Paragraph 4.2 of this Agreement.

 

Definition of For Cause.  For the purposes of this Agreement, “For
Cause” shall mean (1) Employee’s failure to substantially perform her
duties or any other material breach of this Agreement by Employee (other than a
failure or breach resulting from her incapacity due to physical or mental
illness, injury or similar incapacity), which failure or breach is not cured
after the passage of a reasonable period of time to cure contained in a written
demand from the CEO and/or Board that specifically describes 

 

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such
failure or breach; (2) Employee’s participation in activities that are
competitive with Employer’s business, which participation is not cured after
the passage of a reasonable period of time to cure contained in a written
demand from the CEO and/or Board that specifically describes such conduct; (3) Employee’s
conviction of a felony; or (4) Employee’s violation of her duty to
maintain confidentiality as required by Paragraph 15.

 

8.3   Termination by Employer other than due to Disability or For Cause.  Should Employer terminate the Term of
Employment prior to the Expiration Date for any reason other than due to
Disability pursuant to Paragraph 8.1 or For Cause pursuant to Paragraph
8.2, Employer shall pay to Employee a cash lump sum payment equal to:  (1) two years’ Base Compensation at the
rate in effect at termination and (2) two years’ bonus.  (For these purposes, “bonus” shall mean the
highest annual bonus paid or payable to Employee for the three calendar years
immediately preceding the year of termination.) 
In addition, for a period of two years from Employee’s termination of
employment, Employer shall continue to provide Employee and her family with the
same level of life, medical, dental and vision insurance benefits that they
were receiving through Employer immediately prior to Employee’s termination of
employment.

 

9.         Termination by Employee.

 

9.1   Termination by Employee for Good Reason.  Should Employee terminate the Term of
Employment prior to the Expiration Date for “Good Reason” (as defined below),
Employer shall pay to Employee a cash lump sum payment equal to:  (1) two years’ Base Compensation at the
rate in effect at termination and (2) two years’ bonus.  (For these purposes, “bonus” shall mean the
highest annual bonus paid or payable to Employee for the three calendar years
immediately preceding the year of termination.) 
In addition, for a period of two years from Employee’s termination of
employment, Employer shall continue to provide Employee and her family with the
same level of life, medical, dental and vision insurance benefits that they
were receiving through Employer immediately prior to Employee’s termination of
employment.

 

Definition of Good Reason.  For the purposes of this Agreement, “Good
Reason” shall mean (a) material diminution in Employee Base Compensation; (b) material
diminution in authority, duties, responsibilities or reporting relationship; (c) material
diminution in the budget over which Employee has authority; (d) material
change in geographic work location; or (e) any other material breach of
this Agreement by Employer.

 

9.2   Other Termination by Employee. 
Should Employee terminate the Term of Employment prior
to the Expiration Date for any reason other than set forth above, Employee will
not be entitled to the additional payments set forth above.

 

10.       Prorated and Prior Year Bonus Payments.

 

10.1  
If a termination under Sections 7, 8 or 9, other than
under Section 8.2 (Termination by Employer For Cause) or under Section 9.2
(Other Termination by Employee) occurs in a given year on a date on or after July 1
of such year, Employee 

 

5

 

shall be
entitled to receive a prorated bonus payment for such year .  The prorated bonus payment will be an amount
that is (1) equal to the highest annual bonus paid to Employee for the
three calendar years immediately preceding the year of termination and (2) prorated
from the beginning of the year of termination to the date of termination.

 

10.2  
If a termination under Sections 7, 8 or 9, other than
under Section 8.2 (Termination by Employer For Cause) or under Section 9.2
(Other Termination by Employee) occurs after the end of a given year but before
the annual bonus for such year has been paid, Employee shall be entitled to
receive such annual bonus.  In the event
the amount of the annual bonus has already been determined in good faith by the
Compensation Committee prior to Employee’s termination, then the annual bonus
paid to Employee shall be equal to the amount so determined.  If, however, the annual bonus for such year
has not yet been so determined, then the amount of annual bonus shall be equal
to the highest annual bonus paid to Employee for the three calendar years immediately
preceding such given year.

 

10.3  
It is agreed that the bonus amounts referred to in Section 10.1
and 10.2 above shall be in addition to the other bonus payments that may become
payable pursuant to other sections of this Agreement.

 

11.       Release by Employee. 
In order to be
entitled to any payment or benefit payable or receivable that are provided for
in this Agreement upon termination of employment, Employee must execute a
release in a form acceptable to Employer, of Employer and its respective officers,
directors, stockholders, employees and agents.

 

12.       Change in Control. 
In the event
of a Change in Control (as defined below) at any time during the Term of
Employment, all stock option rights, stock appreciation rights, restricted
stock and any and all other similar rights theretofore granted to Employee
shall vest and, if applicable, become exercisable in full.

 

For purposes of this Agreement, a Change in
Control shall mean either (i) a merger or consolidation of Zenith with or
into another company or corporation, other than (a) a merger or
consolidation which would result in the voting securities of Zenith outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) at least 75% of the combined voting power of the voting securities of
Zenith or such surviving entity outstanding immediately after such merger or
consolidation or (b) a merger or consolidation effected to implement a
recapitalization of Zenith (or similar transaction) in which no “person” (as
such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) acquires more than 50% of the combined voting
power of Zenith’s then outstanding securities; or (ii) an assignment of
this Agreement by Zenith under the provisions of Paragraph 19.2 hereof; or (iii) the
sale of all or substantially all of Zenith’s assets; or (iv) a change in
the identities of a majority of the members of the Board within a one-year period
or less; or (v) any other transaction involving a material change of
ownership in Zenith which would require any party or affiliated group of
parties to obtain approval from, or require such transactions to be 

 

6

 

presented for approval by, the California
Insurance Commissioner (assuming there is no preemption of California insurance
laws by Federal Law).

 

13.       Excise Tax.  Notwithstanding anything to the
contrary in this Agreement, in the event that Employee becomes entitled to
severance payments, if any of the severance payments will be subject to the tax
(the “Excise Tax”) imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the “Code”), Zenith shall pay to Employee an additional amount
(the “Gross-Up Payment”) such that the net amount retained by Employee, after
deduction of any Excise Tax on the Total Payments (as hereinafter defined) and
any federal, state and local income and other tax and Excise Tax upon the
payment provided for herein, shall be equal to the Total Payments.  For purposes of determining whether any of
the Total Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) any other payments or benefits received or to be received
by Employee in connection with a Change in Control or Employee’s termination of
employment (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with Employer, any person whose actions result in a
Change in Control or any person affiliated with Employer or such person (which,
together with severance payments, shall constitute “Total Payments”)), shall be
treated as “parachute payments” within the meaning of Section 280G(b)(2) of
the Code, and all “excess parachute payments” within the meaning of Section 280G(b)(1) shall
be treated as subject to the Excise Tax, unless in the opinion of tax counsel
selected by Zenith’s independent auditors and acceptable to Employee, such
other payments or benefits (in whole or in part) do not constitute parachute
payments, or such excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of
the Code in excess of the base amount, within the meaning of Section 280G(b)(3) of
the Code, or are otherwise not subject to the Excise Tax, (ii) the amount
of the Total Payments which shall be treated as subject to the Excise Tax shall
be equal to the lesser of (A) the total amount of the Total Payments or (B) the
amount of excess parachute payments within the meaning of Section 280G(b)(1) (after
applying clause (i), above), and (iii) the value of any non-cash benefits
or any deferred payment or benefit shall be determined by Zenith’s independent
auditors in accordance with the principles of Sections 280G(d)(3) and (4) of
the Code.  For purposes of determining
the amount of the Gross-Up Payment, Employee shall be deemed to pay federal
income taxes at the highest marginal rate of federal income taxation in the
calendar year in which the Gross-Up Payment is to be made and state and local
income taxes at the highest marginal rate of taxation in the state and locality
of Employee’s residence on the date of termination of employment, net of the
maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes. 
In the event that the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the time of termination of
Employee’s employment, Employee shall repay to Zenith, at the time that the
amount of such reduction in Excise Tax is finally determined, the portion of
the Gross-Up Payment attributable to such reduction (plus that portion of the
Gross-Up Payment attributable to the Excise Tax and federal, state and local
income tax imposed on the Gross-Up Payment being repaid by Employee to the
extent that such repayment results in a reduction in Excise Tax and/or a
federal, state or local income tax deduction) plus interest on the amount of
such repayment at the rate provided in Section 1274(b)(2)(B) of the
Code.  In the event that the Excise Tax
is determined to exceed the amount taken into account

 

7

 

hereunder at the time of the termination of
Employee’s employment (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment),
Zenith shall make an additional Gross-Up Payment in respect of such excess
(plus any interest, penalties or additions payable by Employee with respect to
such excess) at the time that the amount of such excess is finally determined.

 

The
Gross-Up Payment shall be made not later than the fifth day following the date of
termination of employment, provided, however, that if the amounts of such
payments cannot be finally determined on or before such day, Zenith shall pay
to Employee on such day an estimate, as determined in good faith by Zenith, of
the minimum amount of such payments to which Employee is clearly entitled and
shall pay the remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the thirtieth (30th) day
after the date of termination of employment. 
In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall constitute a
loan by Zenith to Employee, payable on the fifth (5th) business day after
demand by Zenith (together with interest at the rate provided in Section 1274(b)(2)(B)
of the Code).  At the time that payments
are made under this Paragraph, Zenith shall provide Employee with a written
statement setting forth the manner in which such payments were calculated and
the basis for such calculations including, without limitation, any opinions or
other advice Zenith has received from outside counsel, auditors or consultants
(and any such opinions or advice which are in writing shall be attached to the
statement).

 

14.       Acknowledgment of Peculiar Value of Services.

 

14.1  
Employee acknowledges that the services which she has
agreed to render during the Term of Employment under this Agreement are
special, unique, unusual, extraordinary and of an intellectual character, and
therefore are of peculiar value to Employer.

 

14.2  
Employee further acknowledges that because of the
character of said services the remedy at law for any breach by him of this
Agreement may be enforced by an injunction in a suit in equity, without the
necessity of proving actual damage, and that a temporary injunction may be
granted immediately upon the commencement of any such suit.  Nothing herein contained shall be construed
as prohibiting Employer from pursuing any other remedies available to Employer
from such breach or threatened breach, including the recovery of damages from
Employee.

 

15.       Confidential Information and
Non-Competition.

 

15.1  
During the Term of Employment and thereafter, Employee
shall not, except as may be required to perform her duties hereunder or as
required by applicable law, disclose to others or use, whether directly or
indirectly, any Confidential Information regarding Employer.  “Confidential Information” shall mean
information about Employer and its clients and
customers that is not available to the general public and that was learned by
Employee in the course of her employment by Employer,
including (without 

 

8

 

limitation)
any data, formulae, information, proprietary knowledge, trade secrets and
client and customer lists and all papers, resumes, records and the documents
containing such Confidential Information. 
Employee acknowledges that such Confidential Information is specialized,
unique in nature and of great value to Employer, and that such information
gives Employer a competitive
advantage.  Upon the termination of her
employment for any reason whatsoever, Employee shall promptly deliver to Employer all documents
(and all copies hereof) containing any Confidential Information.

 

15.2  
During the term of this Agreement and for two years
following termination of employment, Employee shall not, directly or
indirectly, without the prior written consent of Employer, provide
consultative service (with or without pay) to, own, manage, operate, join,
control, participate in, or be connected (as a stockholder, partner, or
otherwise) with, any business, individual, partner, firm, corporation or other
entity that is then in competition with Employer (a “Competitor of Employer”);
provided, however, that the “beneficial ownership” by Employee, either
individually or as a member of a “group,” as such terms are used in Rule 13d
of the General Rules and Regulations under the Securities Exchange Act of
1934, of not more than one percent (1%) of the voting stock of any publicly
held corporation shall not be a violation of this Agreement.  It is further expressly agreed that Employer will or
would suffer irreparable injury if Employee were to compete with Employer or any
affiliate of Employer in violation of this
Agreement.  Employer hereby acknowledges
and agrees that Employee shall have the right to serve in any capacity with
civic, educational, charitable and professional organizations and to make and
manage personal business investments that do not violate the provisions of this
Paragraph 15, so long as such activities do not interfere with the discharge of
Employee’ duties to Employer hereunder.

 

15.3  
During the Term of Employment and for one year
following termination of employment, Employee shall not, directly or
indirectly, influence or attempt to influence customers or suppliers of Employer to divert
their business to any Competitor of Employer.

 

15.4  
Employee recognizes that she will possess confidential
information about other employees of Employer relating to their
education, experience, skills, abilities, compensation and benefits, and
interpersonal relationships with customers of Employer.  Employee recognizes that the information she
will possess about these other employees is not generally known, is of
substantial value to Employer in developing its products
and in securing and retaining customers, and will be acquired by him because of
her business position with Employer. 
Employee agrees that, during the Term of Employment and for one year
following termination of employment, Employee will not, directly or indirectly,
solicit or recruit any employee of Employer for the purpose of being
employed by her, or any business, individual, partner, firm, corporation or
other entity that is then a Competitor of Employer.  Employee further agrees that she will not
convey any such confidential information or trade secrets about other employees
of Employer to any
Competitor of Employer or to anyone affiliated with her or with any Competitor
of Employer.

 

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15.5  
Employee further acknowledges that the remedy at law
for any breach by her of the covenants contained in this Paragraph 15 will
be inadequate and that in the event of a breach, or threatened breach, by
Employee of the covenants contained therein, Employer shall be entitled to an
injunction restraining Employee from using, for her own benefit, and/or from
disclosing, in whole or in part, the list of the customers of Employer and/or
trade secrets or other confidential information of Employer, and/or from
rendering any services to any person, firm, corporation, association or other
entity to whom such a list, and/or such trade secrets or other confidential
information, in whole or in part, have been disclosed, or are threatened to be
disclosed and such other declaratory relief as is proper to cause Employee to
return to Employer any and all memoranda, specifications, documents and all
other material relating to the business of Employer that she may have under her
possession or control.  Nothing herein
shall be construed as prohibiting Employer from pursuing any other remedies
available to Employer from such breach or threatened breach, including the
recovery of damages from Employee.  The
provisions of this Paragraph 15 shall survive the expiration or termination,
for any reason, of this Agreement and of Employee’s employment.

 

16.       Attorney’s Fees. 
In the event
that any action at law or in equity, for injunctive or declaratory relief, is
brought to enforce or interpret the provisions of this Agreement, if Employee
is the prevailing party, she shall be entitled to reasonable attorney’s fees in
addition to any other relief to which she may be entitled.

 

17.       Applicable Law.  This Agreement and the rights and obligations
of the parties hereunder shall be construed, interpreted and enforced in
accordance with, and governed by, the laws of the State of California
applicable to agreements executed and to be fully performed thereunder.

 

18.       Notices.  Any notice required to be given hereunder
shall be in writing sent by registered or certified mail, return receipt
requested, to either Zenith or employee at the addresses listed below, or at such
other addresses as either Zenith or Employee may hereafter designate in writing
to the other:

 

	
  To Zenith:

  	
  Zenith National
  Insurance Corp.

  
	
   

  	
  21255 Califa Street

  
	
   

  	
  Woodland Hills,
  California 91367

  
	
   

  	
  Attention:  Corporate Secretary

  
	
   

  	
   

  
	
  To Employee:

  	
  Janet Frank

  
	
   

  	
  5224 Knobcone Drive

  
	
   

  	
  Castle Rock,
  Colorado  80108

  

 

 

19.       Assignment.

 

19.1  
This Agreement and the rights, interests and benefits
hereunder are personal to Employee and shall not be assigned, transferred,
pledged or hypothecated in any way by Employee, and shall not be subject to
execution, attachment or similar 

 

10

 

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

 

19.2  
Zenith shall have the right to assign this Agreement
and to delegate all of its rights, duties and obligation hereunder, whether in
whole or in part, to any parent, affiliate, successor, or subsidiary
organization or company of Zenith or corporation with which Zenith may merge or
consolidate or which acquires by purchase or otherwise all or substantially all
of Zenith’s consolidated assets, but such assignment shall not release Employer
from its obligations under this Agreement.

 

20.       Entire Agreement. 
This Agreement
constitutes the entire understanding of the parties hereto related to the
subject matter hereof and supersedes any and all prior agreements and
understanding, whether oral or written between the parties.  This Agreement may only be modified by an
agreement in writing executed by Employee and one of Zenith’s duly authorized
officers (other than Employee), with the approval of the Compensation
Committee.

 

21.       Waiver of Breach. 
The waiver by
Employee of a breach of any provision of this Agreement by Employee shall not
operate or be construed as a waiver of any subsequent breach by Employee.

 

22.       Arbitration.

 

22.1  
In the event there is any dispute between Employee and
Employer which the parties are unable to resolve themselves, including any
dispute with regard to the application, interpretation or validity of this
Agreement or any dispute with regard to any aspect of Employee’s employment or
the termination of Employee’s employment, both Employee and Employer agree by
entering into this Agreement that the exclusive remedy for determining any such
dispute, regardless of its nature, will be by arbitration in accordance with
the then most applicable rules of the American Arbitration Association.  Arbitration shall be the exclusive remedy for
determining any such dispute, regardless of its nature.  Notwithstanding the foregoing, either party
may in an appropriate matter apply to a court pursuant to California Code of
Civil Procedure Section 1281.8, or any comparable provision, for
provisional relief, including a temporary restraining order or a preliminary
injunction, on the ground that the award to which the applicant may be entitled
in arbitration may be rendered ineffectual without provisional relief.

 

22.2  
In the event the parties are unable to agree upon an
arbitrator, the parties shall select a single arbitrator from a list designated
by the Los Angeles office of the American Arbitration Association of seven
arbitrators all of whom shall be retired judges who have had experience in the
employment law, who are actively involved in hearing private cases and who are
resident in the greater Los Angeles area. 
If the parties are unable to select an arbitrator from the list provided
by the American Arbitration Association, then the parties shall each strike
names alternatively from the list, with the first to strike being determined by
lot.  After each party has used three
strikes, the 

 

11

 

remaining
name on the list shall be the arbitrator. 
Any arbitration shall be administered by the American Arbitration
Association only if both parties so agree.

 

22.3  
This agreement to resolve any disputes by binding
arbitration shall extend to claims against any shareholder or partner of
Employer, any brother-sister company, parent, or affiliate of Employer, any
officer, director, employee, or agent of Employer, or of any of the above, and
shall apply as well to claims arising out of state and federal statutes and
local ordinances as well as to claims arising under the common law.  In the event of a dispute subject to this
Paragraph, the parties shall be entitled to reasonable discovery, including
deposition discovery, subject to the discretion of the arbitrator.  The arbitrator shall apply the same
substantive law as would be applied by a court having jurisdiction over the
parties and their dispute and the remedial authority of the arbitrator shall be
the same as, but no greater than, would be the remedial power of a court having
jurisdiction over the parties and their dispute.  The arbitrator shall, upon an appropriate
motion, dismiss any claim brought in arbitration if the arbitrator determines
that the claim does not state a claim or a cause of action which could have
been properly pursued through court litigation. 
In the event of a conflict between the then most-applicable rules of
the American Arbitration Association and these procedures, the provisions of
these procedures shall govern.

 

22.4  
Each party may be represented by counsel or other
representative of the party’s choice and each party shall initially be
responsible for the costs and fees of its counsel or other representative.  Any filing or administrative fees shall be
borne initially by the party requesting arbitration; provided, however, if such
fees should exceed those applicable in Superior Court (or other state court of
general jurisdiction if in a state other than California) the excess shall be
borne by Employer.  Employer shall be
responsible for the costs and fees of the arbitrator, unless Employee wishes to
contribute (up to 50%) of the costs and fees of the arbitrator.  The prevailing party in such arbitration
proceeding, as determined by the arbitrator, and in any enforcement or other
court proceedings, shall be entitled to the extent permitted by law, to
reimbursement from the other party for all of the prevailing party’s costs
(including but not limited to the arbitrator’s compensation), expenses and
attorneys’ fees.

 

22.5  
The arbitrator shall render an award and opinion in
the form typical of that rendered in labor arbitrations and the award of the
arbitrator shall be final and binding upon the parties.  If any of the provisions of this Paragraph
are determined to be unlawful or otherwise unenforceable, in whole or in part,
such determination shall not affect the validity of the remainder of these
provisions and this Paragraph shall be reformed to the extent necessary to
insure that the resolution of all conflicts between Employee and Employer
including those arising out of statutory claims, shall be resolved by neutral,
binding arbitration.  In the event a
court finds that the arbitration procedure set forth herein is not absolutely
binding, then it is the intent of the parties that any arbitration decision
should be fully admissible in evidence, given great weight by any finder of
fact and treated as determinative to the maximum extent permitted by law.

 

22.6  
Unless mutually agreed by the parties otherwise, any
arbitration shall take place in Los Angeles. 
In the event the parties are unable to agree upon a 

 

12

 

location
for the arbitration, the location within Los Angeles shall be determined by the
arbitrator.

 

22.7  
In the event of a good faith dispute regarding the
payment of salary or benefits under this Agreement, Employer shall make the
disputed payments to Employee as if such dispute did not exist during the
pendency of such good faith dispute, and, following the resolution of such
dispute, Employee shall reimburse Employer for any overpayments.

 

23.                            Miscellaneous.

 

23.1  
The titles of the paragraphs of this Agreement are for
convenience of reference only, and are not to be considered in construing this
Agreement.

 

23.2  
The unenforceability or invalidity of any paragraph or
subparagraph of this Agreement shall not affect the enforceability and validity
of the balance of this Agreement.

 

23.3  
Each party hereto shall make, execute and deliver such
other instruments or documents as may be reasonably required in order to
effectuate the purpose of this Agreement.

 

23.4  
Employer shall also pay any additional amount
necessary to reimburse Employee and/or her family for any taxes imposed solely
by reason of receipt of life, medical, dental or vision insurance benefits
following Employee’s termination of employment or death, as applicable.

 

Notwithstanding
the foregoing, Employer shall not provide any medical, dental or vision benefit
otherwise receivable by Employee and/or her family pursuant to Paragraphs 7,
8.1, 8.3 and 9 if an equivalent benefit is actually received by Employee and/or
her family at any time during the period of coverage, and any such benefit
actually received shall be reported to Zenith by Employee and/or her family.

 

23.5  
It is the understanding and intent of the parties
hereto, and Employer represents and warrants, that no payment or distribution
that could be made pursuant to the provisions of this Agreement constitutes an
item of deferred compensation under Section 409A of the Code (“Deferred
Compensation”).  Nevertheless, the
following provision is included in this Agreement for technical compliance with
409A of the Code:

 

Notwithstanding any provision to the contrary in this
Agreement, no payment or distribution under this Agreement which constitutes “409A
Deferred Compensation” and becomes payable by reason of Employee’s termination
of employment with Employer will be made to Employee unless Employee’s
termination of employment constitutes a “separation from service” (as such term
is defined in Treasury Regulations issued under Section 409A of the
Code).  In addition, no such payment or
distribution of 409A Deferred Compensation will be made to Employee 

 

13

 

prior to the earlier of (i) the expiration of the
six (6)-month period measured from the date of Employee’s “separation from
service” (as such term is defined in Treasury Regulations issued under Section 409A
of the Code) or (ii) the date of Employee’s death, if Employee is deemed
at the time of such separation from service to be a “key employee” within the
meaning of that term under Section 416(i) of the Code and such
delayed commencement is otherwise required in order to avoid a prohibited
distribution under Section 409A(a)(2) of the Code.  Upon the expiration of the applicable Code Section 409A(a)(2) deferral
period, all payments and benefits deferred pursuant to this Paragraph 23.5
(whether they would have otherwise been payable in a single sum or in installments
in the absence of such deferral) shall be paid or reimbursed to Employee in a
lump sum, and any remaining payments due under this Agreement will be paid in
accordance with the normal payment dates specified for them herein.  It is intended that this Agreement shall
comply with the provisions of Section 409A of the Code and the Treasury
Regulations relating thereto so as not to subject Employee to the payment of
additional taxes and interest under Section 409A of the Code.  In furtherance of this intent, this Agreement
shall be interpreted, operated and administered in a manner consistent with
these intentions.

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the Execution Date set forth
above.

 

 

	
   

  	
  ZENITH NATIONAL
  INSURANCE CORP.

  
	
   

  	
  (“Zenith”)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Stanley R. Zax

  	
   

  
	
   

  	
   

  	
   Stanley
  R. Zax

  
	
   

  	
   

  	
   Chairman
  and President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Janet Frank
  (“Employee”)

  
	
   

  	
   

  
	
   

  	
  /s/ Janet Frank

  	
   

  

 

14Exhibit 10.2

 

AMENDMENT NO. 1

TO

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

 

1.  Zenith National Insurance Corp. (“Zenith”)
and Jack D. Miller (“Employee”) are parties to an Amended and Restated Employment
Agreement with an Effective Date of June 3, 2009 (the “Employment
Agreement”).  Capitalized terms used but
not defined herein have the meaning set forth in the Employment Agreement.

 

2.  This Amendment dated January 11, 2010 is
hereby made a part of, and expressly incorporated into, the Employment Agreement
as an amendment thereto.  In the event
any provision of this Amendment and any provision of the Employment Agreement
are inconsistent or conflicting, the inconsistent or conflicting provision of
this Amendment shall control.

 

3.  Employee is presently serving as President of
Zenith Insurance Company.  Upon Janet
Frank’s commencement of employment with Zenith Insurance Company, Employee will
become Vice Chairman of Zenith Insurance Company and will continue as an
Executive Vice President of Zenith.  As
Vice Chairman, Employee will be responsible for strategic matters, including
expanding the Employer’s agricultural business to lines of insurance other than
workers’ compensation, as well as having such other executive duties assigned
by the CEO, his designee or the Board.

 

Except
as specifically modified herein, the parties expressly reaffirm the terms and
conditions of the Employment Agreement.

 

	
   

  	
  Zenith
  National Insurance Corp.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  by:

  	
  /s/ Stanley R. Zax

  	
   

  
	
   

  	
   

  	
  Stanley R. Zax

  
	
   

  	
   

  	
  Chairman and President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Jack D. Miller

  	
   

  
	
   

  	
   

  	
  Jack D. Miller

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