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Exhibit 10.2  

 
 

WAIVER AND AMENDMENT    
    

        THIS WAIVER AND AMENDMENT (this "Waiver and Amendment") is entered into as of March 19, 2003, between  ZENITH NATIONAL INSURANCE CORP., a Delaware corporation (the "Company"), and  BANK OF AMERICA, N.A., a national
banking association (the "Bank"). 

RECITALS  

        A.    The Company and the Bank are party to that certain Amended and Restated Credit Agreement dated as of September 30, 2002 (as heretofore
modified, amended or supplemented, the "Credit Agreement"). Unless otherwise defined herein, defined terms used herein shall have the meanings given
such terms in the Credit Agreement. 

        B.    The
Company has requested that the Bank waive its obligation to observe and comply with Section 6.12 of the Credit
Agreement for the period from the date hereof to and including June 30, 2003. 

        C.    The
Company has advised the Bank of its intention to issue up to $125,000,000 of Senior Convertible Notes due 2023 (the "Convertible Debt
Issuance"). In connection with the Convertible Debt Issuance and other debt and equity issuances by the Company, the Company has requested that the Credit Agreement be amended
in certain respects. 

        D.    The
Bank has agreed to waive the Company's compliance with Section 6.12 of the Credit Agreement and to amend the
Credit Agreement in certain respects, in each case upon and subject to the terms and conditions set forth herein. 

        NOW
THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Bank agree
as follows: 

        1.    Waiver. Subject to satisfaction of the conditions precedent set forth in  Section 3 hereof, the Bank hereby waives the Company's compliance with Section 6.12 of the
Credit Agreement for the period from the date hereof through and including June 30, 2003 and agrees not to exercise any rights or remedies under the Credit Agreement solely as a result of the
Company's non-compliance with such Section during such period. 

        2.    Amendments. Subject to satisfaction of the conditions precedent set forth in  Section 4 hereof, the Credit Agreement is hereby amended as follows:

        (a)    A
new Section 2.7(c) is added as follows: 

        "(c)    Issuances of Indebtedness. Promptly after the incurrence or issuance by the Company of any Indebtedness for borrowed
money evidenced by notes, bonds, debentures, or similar instruments (other than Indebtedness for borrowed money incurred hereunder or incurred in the ordinary course of business), the net cash
proceeds realized by the Company from such incurrence or issuance shall be applied first to prepay the outstanding principal amount of all Tranche A Loans and Tranche B Loans, together with accrued
interest thereon, until such amounts are repaid in full, then to the use by the Company of such net cash proceeds for any other purpose allowed hereunder (it being understood that any prepayment made
pursuant to this Section 2.7(c) shall not affect the Commitments in any respect)." 

        (b)    A
new Section 2.7(d) is added as follows: 

        "(d)    Equity Issuances. Promptly after the issuance by the Company of any shares of any class of stock, warrants, or other
equity investments (other than issuances to officers, directors, and employees of the Company as part of compensation arrangements), the net cash proceeds realized by the Company from such equity
issuances shall be applied first to prepay the 

 

outstanding
principal amount of all Tranche A Loans and Tranche B Loans, together with accrued interest thereon, until such amounts are repaid in full, then to the use by the Company of such net cash
proceeds for any other purpose allowed hereunder (it being understood that any prepayment made pursuant to this Section 2.7(d) shall not affect
the Commitments in any respect)." 

        (c)    Section 6.12 of the Credit Agreement is deleted in its entirety. 

        3.    Conditions Precedent to Waiver. The waiver in Section 1 hereof
shall be effective as of the date hereof when the Bank receives: 

        (a)    counterparts
of this Waiver and Amendment duly executed by the Company and the Bank; 

        (b)    payment
of all expenses, including legal fees and expenses of counsel to the Bank, incurred by the Bank in connection with this Waiver and Amendment, to the extent
invoiced to the Company on or prior to the date hereof; and 

        (c)    such
other agreements, documents, instruments, and items as the Bank may reasonably request, including, without limitation, documents evidencing the due authorization of
the execution, delivery and performance by the Company of this Waiver and Amendment, the incumbency of the officer of the Company executing this Waiver and Amendment, and any other matters relevant
thereto. 

        4.    Conditions Precedent to Amendments. Promptly after the receipt by the Company of the net cash proceeds of the Convertible
Debt Issuance, the Company shall prepay the then outstanding principal amount of all Tranche A Loans and Tranche B Loans, together with accrued interest thereon, with such net cash proceeds, prior to
the use of such net cash proceeds for any other purpose (it being understood that any prepayment made pursuant to this Section 4 shall not affect
the Commitments in any respect). Upon receipt of such prepayment, the amendments in Section 2 hereof shall become effective, and the Bank shall
notify the Company of the effective date of such amendments. 

        5.    Representations and Warranties. The Company represents and warrants to the Bank as follows: 

        (a)    the
execution, delivery and performance by Company of this Waiver and Amendment and the Credit Agreement, as amended hereby, have been duly authorized by all necessary
corporate action and do not and will not (i) require any consent or approval not heretofore obtained of any director, stockholder, security holder, or creditor of the Company,
(ii) violate or conflict with any provision of the Company's certificate of incorporation or bylaws, (iii) violate any laws applicable to the Company, or
(iv) result in a breach of or constitute a default under, or cause or permit the acceleration of any obligation owed under, any indenture or loan or credit agreement or any other material
agreement to which the Company is a party or by which the Company or any of its property is bound or affected; 

        (b)    all
representations and warranties made or deemed made by the Company in the Loan Documents are true and correct as of the date hereof and will be true and correct on
the date the amendments in Section 2 become effective, except to the extent that such representations and warranties expressly relate solely to
an earlier date (in which case such representations and warranties were true and accurate on and as of such earlier date) and except for changes in factual circumstances not prohibited by the Credit
Agreement; and 

        (c)    no
Default or Event of Default has occurred and is continuing as of the date hereof or will have occurred and be continuing on the date the amendments in  Section 2 become effective. 

        6.    Effect of Waiver and Amendment.    This Waiver and Amendment is a Loan Document. The waiver of the Bank
hereunder is expressly limited to the matter contained herein and shall not 

2

 

constitute
the consent or waiver by the Bank to, of or with respect to any other matter now or hereafter requiring its consent or waiver under the Loan Documents. Except as amended hereby, the Credit
Agreement and the other Loan Documents are unchanged and are hereby ratified and confirmed. 

        7.    Counterparts.    This Waiver and Amendment may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. 

        8.    Governing Law.    This Waiver and Amendment shall be governed by and construed in accordance with the laws of
the State of California, without regard to conflict of laws principles. 

        9.    ENTIRETY.    THIS WAIVER AND AMENDMENT, THE CREDIT AGREEMENT, AND THE OTHER LOAN DOCUMENTS EMBODY THE ENTIRE
AGREEMENT BETWEEN THE PARTIES AND SUPERCEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS, IF ANY, RELATING TO THE SUBJECT MATTER HEREOF. THESE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

        10.    Parties.    This Waiver and Amendment binds and inures to the benefit of the Company, the Bank, and their
respective successors and permitted assigns. 

[Remainder of Page Intentionally Left Blank.

Signature Page Follows.] 

3

 

	ZENITH NATIONAL INSURANCE CORP.,

as the Company	 
	

By:	
 	

/s/  STANLEY R. ZAX      
 Name: Stanley R. Zax

Title: Chairman of the Board and President	

 
	
BANK OF AMERICA, N.A.,

as the Bank	

 
	

By:	
 	

/s/  JOAN L. D'AMICO      
 Name: Joan L. D'Amico

Title: Managing Director	

 

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Exhibit 10.5  

 
  Zenith National Insurance Corp.
  Executive Officer Bonus Plan
  (As Amended and Restated February 12, 2003)    
    

	1.
	Defined Terms

        "Company"
shall mean Zenith National Insurance Corp. and any successor thereto. 

        "Company
Combined Ratio" for any fiscal year shall mean the total combined ratio for the workers' compensation operations of the Zenith National Insurance Group for such fiscal year as
determined from the consolidated statutory financial statements of the property and casualty insurance subsidiaries of the Zenith National Insurance Group. 

        "Industry
Combined Ratio" for any fiscal year shall mean the combined ratio for the workers' compensation insurance industry, as a whole, based on statutory financial statements for such
fiscal year. 

        "Executive
Officer" shall have the meaning given thereto in Regulation S-K promulgated under the Securities Act of 1933, as amended. 

	2.
	Amount of Bonus

        If
the Company Combined Ratio is at least three percentage points, but less than five percentage points below the Industry Combined Ratio (as published or announced by any independent
organization prior to the last day of the third month of the following year) for any fiscal year, then each Executive Officer shall be paid a bonus for such fiscal year in an amount equal to 100% of
such Executive Officer's base salary in effect at the beginning of such fiscal year, which bonus amount shall, on a case by case basis, be subject to reduction or elimination in the sole discretion of
the Compensation Committee of the Board of Directors of the Company. 

        If
the Company Combined Ratio is at least five percentage points below the Industry Combined Ratio (as published or announced by any independent organization prior to the last day of the
third month of the following year) for any fiscal year, then each Executive Officer shall be paid a bonus for such fiscal year in an amount equal to 150% of such Executive Officer's base salary in
effect at the beginning of such fiscal year, which bonus amount shall, on a case by case basis, be subject to reduction or elimination in the sole discretion of the Compensation Committee of the Board
of Directors of the Company. 

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Zenith National Insurance Corp. Executive Officer Bonus Plan (As Amended and Restated February 12, 2003)

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