Document:

Exhibit 10.4

 

DESCRIPTION OF COMPENSATION
OF NON-EMPLOYEE DIRECTORS

(updated February 2006)

 

The following is a
description of the compensation payable to non-employee Directors of Zenith
National Insurance Corp. (the “Company”). It is provided pursuant to Paragraph
10(iii) to Item 601 of Regulation S-K, which requires a written description of
a compensatory arrangement when no formal document contains the compensation
information.

 

Directors
of the Company are elected annually.

 

Employee Directors
receive no additional compensation for serving on the Board of Directors. Non-employee
Directors are compensated as follows:

 

For
service as a Director:

 

An annual cash fee of
$75,000 plus an annual award of 2,250 shares of restricted Company Common Stock
to be granted after each annual election (or a prorated number of shares if a
Director is appointed other than at the annual meeting). Each such award would
vest 750 shares per year for three years, so long as the recipient remains a
Director.

 

In
addition to the above compensation, the following fees are paid for committee
service:

 

	
  Committees, other than
  the Audit Committee:

  	
   

  	
  An annual cash fee of
  $31,250

  
	
   

  	
   

  	
   

  
	
  Audit Committee, other
  than Chairman:

  	
   

  	
  An annual cash fee of
  $33,750

  
	
   

  	
   

  	
   

  
	
  Audit Committee
  Chairman:

  	
   

  	
  An annual cash fee of
  $41,250

  

 

 

Directors are also
reimbursed all out of pocket expenses incurred by them in connection with their
service.Exhibit 10.5

 

FORM OF

ZENITH NATIONAL INSURANCE CORP.

RESTRICTED STOCK AWARD AGREEMENT

FOR NON-EMPLOYEE DIRECTORS

 

THIS
RESTRICTED STOCK AWARD AGREEMENT (the “Award Agreement”)
is made and entered into as of [                             ]
(the “Date of Grant”), by and between Zenith
National Insurance Corp., a Delaware corporation (the “Company”),
and [                        ]
(the “Grantee”). Capitalized terms not
defined herein shall have the meaning ascribed to them in the Zenith National
Insurance Corp. 2004 Restricted Stock Plan, as may be amended and restated from
time to time and in effect at the time of this Award Agreement (the “Plan”). Where the context permits, references to the Company
or any of its Subsidiaries shall include the successors to the foregoing.

 

Pursuant to
the Plan, the Administrator has determined that the Grantee is to be granted
Restricted Stock, subject to the terms, conditions and restrictions set forth
in the Plan and herein, and hereby grants such Restricted Stock.

 

1.             Grant
of Restricted Stock. The Company hereby grants to the Grantee [                        ]
shares of Restricted Stock (the “Award”) on the
terms, conditions and restrictions set forth in this Award Agreement and as
otherwise provided in the Plan.

 

2.             Purchase
Price; Method of Payment. The purchase price per share of Restricted Stock
shall be $1.00. The purchase price may be paid (i) in cash or its equivalent,
(ii) shares of unrestricted Stock owned by the Grantee for greater than six (6)
months, the Fair Market Value of which on the purchase date is equal to the
purchase price of the Restricted Stock, (iii) to the extent permitted by law,
cancellation of indebtedness, (iv) services rendered or (v) any combination of
the foregoing. In the absence of any other form of payment tendered by the
Grantee, the purchase price shall be paid by services rendered.

 

3.             Restrictions
with Respect to Restricted Stock.

 

(a)   Restrictions. The
Restricted Stock granted hereunder and any interest therein, may not be sold,
transferred, pledged, hypothecated, assigned or otherwise disposed of, except
by will or the laws of descent and distribution, prior to the lapsing of
restrictions set forth in the Plan and this Award Agreement. Any attempt to
dispose of any Restricted Stock in contravention of any such restrictions shall
be null and void and without effect.

 

(b)   Restricted Period; Lapse
of Restrictions. Except as otherwise provided in the Plan or this
Award Agreement, the restrictions set forth in Paragraph 3(a) shall lapse on
(A) the first (1st) anniversary of the Date of Grant with respect to
one-third (1/3) of the shares of Restricted Stock subject to such Award, (B)
the second (2nd) anniversary of the Date of Grant with respect to an
additional one-third (1/3) of the shares of Restricted Stock subject to such
Award, and (C) the third (3rd) anniversary of the Date of Grant with
respect to the remaining one-third (1/3) of the shares of Restricted Stock
subject to such Award, so long as the Grantee is serving on the Board of Directors
of the Company as of each such anniversary, except where termination of service
arises from Grantee’s Disability.

 

 

4.             Form
of Restricted Stock. The Company may, in its discretion, reflect ownership
of Restricted Stock through the issuance of stock certificates, in book-entry
form or any combination thereof, in accordance with Section 5(e) of the Plan.

 

5.             Unrestricted
Shares. Promptly after each lapse of restrictions relating to the
Restricted Stock without forfeiture, and provided that the Grantee shall have
complied with his or her obligations under Paragraph 9 hereof, the Company
shall, with respect to such Unrestricted Shares:

 

(a)   If such Unrestricted Shares were initially
issued in certificated form, issue to the Grantee or the Grantee’s personal
representative a stock certificate representing a number of shares of Stock,
free of the restrictive legend described in Paragraph 7, equal to the number of
shares of Restricted Stock with respect to which such restrictions have lapsed.
If certificates representing such Restricted Stock shall have theretofore been
delivered to the Grantee, such certificates shall be returned to the Company,
complete with any necessary signatures or instruments of transfer prior to the
issuance by the Company of such unlegended shares of Stock; or

 

(b)   If such Unrestricted Shares were initially
issued in book-entry form, transfer such Unrestricted Shares to the Grantee in
the form and registration as indicated by the Grantee.

 

6.             Rights
as a Stockholder. Subject to the restrictions set forth in the Plan and
this Award Agreement, the Grantee shall possess all incidents of ownership with
respect to the Restricted Stock granted hereunder, including the right to vote
such Restricted Stock and the right to receive dividends with respect to such
Restricted Stock; provided however, that extraordinary or non-cash dividends
shall be subject to the same restrictions that apply to the underlying
Restricted Stock.

 

7.             Certificate;
Restrictive Legend. Any certificate issued for Restricted Stock prior to
the lapse of any outstanding restrictions relating thereto shall be inscribed
with the following legend, or such other legend as determined by the
Administrator:

 

THIS
CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS
AND CONDITIONS, INCLUDING FORFEITURE PROVISIONS AND RESTRICTIONS AGAINST
TRANSFER (THE “RESTRICTIONS”), CONTAINED IN THE ZENITH NATIONAL INSURANCE CORP.
AMENDED AND RESTATED 2004 RESTRICTED STOCK PLAN AND THE RESTRICTED STOCK AWARD
AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND THE COMPANY. ANY
ATTEMPT TO DISPOSE OF THESE SHARES IN CONTRAVENTION OF THE RESTRICTIONS,
INCLUDING BY WAY OF SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION OR
OTHERWISE, SHALL BE NULL AND VOID AND WITHOUT EFFECT.

 

8.             Termination
of Service.

 

(a)   Upon the Grantee’s death or termination of
service due to Disability, the restrictions set forth in Paragraph 3(a) shall
lapse.

 

 

(b)   Upon termination of the Grantee’s service
with the Company or any Subsidiary thereof for any reason (other than death or
Disability) prior to the lapsing of restrictions with respect to any portion of
the Restricted Stock granted hereunder, the Grantee shall forfeit any rights to
the shares of Restricted Stock with respect to which the restrictions have not
lapsed and shall have no further rights thereto.

 

(c)   Upon forfeiture of any shares of Restricted
Stock, to the extent the Grantee paid the purchase price of such forfeited
shares in a manner other than services rendered, the Company shall repurchase
such shares from the Grantee at a price per share equal to the lesser of (i)
the Fair Market Value of such shares at the time of forfeiture or (ii) the
price Grantee paid for such shares initially.

 

9.             Taxes.
Pursuant to Section 9(d) of the Plan, the Company (or Subsidiary, as the case
may be) may require the Grantee to remit to the Company (or Subsidiary, as the
case may be) in cash an amount sufficient to satisfy any federal, state and
local tax withholding requirements related to the Award. With the approval of
the Administrator, the Grantee may satisfy the foregoing requirement by
electing to have the Company withhold from delivery shares of Stock or by
delivering shares of Stock already owned by the Grantee for at least 6 months,
in each case, having a value equal to the minimum amount of tax required to be
withheld. Such shares shall be valued at their Fair Market Value on the date on
which the amount of tax to be withheld is determined, and fractional share
amounts shall be settled in cash. Such an election may be made with respect to
all or any portion of the shares of Stock to be delivered pursuant to the
Award.

 

If no federal,
state or local tax withholding is required, the foregoing paragraph of this
Section 9 shall not apply and the Grantee shall be responsible for the payment
of all tax liability.

 

The Grantee
shall promptly notify the Company of any election made pursuant to Section
83(b) of the Internal Revenue Code of 1986, as amended.

 

10.           Adjustments.
The Award and all rights and obligations under this Award Agreement are subject
to Section 3 of the Plan.

 

11.           Notices.
Whenever any notice is required or permitted hereunder, such notice shall be in
writing and shall be given by personal delivery or first class, certified or
registered mail with return receipt requested. Any notice required or permitted
to be delivered hereunder shall be deemed to have been duly given on the date
which it is personally delivered or, whether actually received or not, on the
third business day after mailing to the respective parties named below.

 

If to the
Company:               Zenith National
Insurance Corp.

21255 Califa St

Woodland Hills, CA 91367

Attn.:  William J. Owen, Sr. Vice
President

and Chief Financial Officer

Facsimile:  818-592-0480

 

 

If to the
Grantee:                  [Name of
Grantee]

[Address]

 

Either party
may change such party’s address for notices by duly giving notice pursuant
hereto.

 

12.           Compliance
with Laws.

 

(a)   Shares of Stock shall not be issued pursuant
to the Award granted hereunder unless the issuance or delivery of such shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933 (the “Securities
Act”) and the Exchange Act, shall be subject to the requirements of
any stock exchange upon which the Stock may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance. The Company shall be under no obligation to effect the registration
pursuant to the Securities Act, of any interests in the Plan or any shares of
Stock to be issued hereunder or to effect similar compliance under any state
laws.

 

(b)   All certificates for shares of Stock
delivered under the Plan shall be subject to such stop-transfer orders and other
restrictions as the Administrator may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Stock may then be listed, and any applicable
federal or state securities law, and the Administrator may cause a legend or
legends to be placed on any such certificates to make appropriate reference to
such restrictions. The Administrator may require, as a condition of the
issuance or delivery of certificates evidencing shares of Stock pursuant to the
terms hereof, that the recipient of such shares make such agreements and
representations as the Administrator, in its sole discretion, deems necessary
or desirable.

 

13.           Protections
Against Violations of Agreement. No purported sale, assignment, mortgage,
hypothecation, transfer, pledge, encumbrance, gift, transfer in trust (voting
or other) or other disposition of, or creation of a security interest in or
lien on, any of the shares of Stock underlying the Award by any holder thereof
in violation of the provisions of this Award Agreement, the Plan or the
certificate of incorporation or the bylaws of the Company, will be valid, and
the Company will not transfer any such shares on its books nor will any such
shares be entitled to vote, nor will any dividends be paid thereon, unless and
until there has been full compliance with such provisions to the satisfaction
of the Company. The foregoing restrictions are in addition to and not in lieu
of any other remedies, legal or equitable, available to enforce said
provisions.

 

14.           Failure
to Enforce Not a Waiver. The failure of the Company to enforce at any time
any provision of the Award Agreement shall in no way be construed to be a
waiver of such provision or of any other provision hereof.

 

15.           Governing
Law. The Award Agreement shall be governed by and construed according to
the laws of the State of Delaware without regard to its principles of conflict
of laws.

 

16.           Incorporation
of the Plan. The Plan, as it exists on the date of the Award Agreement and
as amended from time to time, is hereby incorporated by reference and made a

 

 

part hereof, and the Award and this Award
Agreement shall be subject to all terms and conditions of the Plan. In the
event of any conflict between the provisions of the Award Agreement and the
provisions of the Plan, the terms of the Plan shall control, except as
expressly stated otherwise. The term “Section” generally refers to provisions
within the Plan (except where denoted otherwise); provided, however, the term “Paragraph”
shall refer to a provision of this Award Agreement.

 

17.           Amendments.
This Award Agreement may be amended or modified at any time, but only by an
instrument in writing signed by each of the parties hereto.

 

18.           Counterparts.        This
Award Agreement may be executed in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.

 

19.           Invalid
Provision. The invalidity or unenforceability of any particular provision
hereof shall not affect the other provisions hereof, and this Award Agreement
shall be construed in all respects as if such invalid or unenforceable
provision had been omitted.

 

20.           Entire
Agreement. This Award Agreement and the Plan, as it exists on the date of
this Award Agreement and as amended from time to time, contain the entire
agreement and understanding of the parties hereto with respect to the subject
matter contained herein and therein and supersede all prior communications,
representations and negotiations in respect thereto.

 

21.           Captions
and Headings. The captions and headings of the paragraphs and subparagraphs
of this Award Agreement are provided for convenience only and are not to serve
as a basis for interpreting or construing this Award Agreement.

 

22.           Agreement
Not a Contract of Employment. Neither the Plan, the granting of the Award,
the Award Agreement nor any other action taken pursuant to the Plan shall
constitute or be evidence of any agreement or understanding, express or
implied, that the Grantee has a right to be employed by, or to provide services
as a director, consultant or advisor to, the Company, any Subsidiary or
affiliate thereof for any period of time or at any specific rate of
compensation.

 

23.           Authority
of the Administrator. The Administrator shall have full authority to
interpret and construe the terms of the Plan and the Award Agreement. The
determination of the Administrator as to any such matter of interpretation or
construction shall be final, binding and conclusive.

 

24.           Binding
Effect. The Award Agreement shall apply to and bind the Grantee and the
Company and their respective permitted assignees or transferees, heirs,
legatees, executors, administrators and legal successors.

 

25.           Tax
Representation. The Grantee has reviewed with his or her own tax advisors
the federal, state, local and foreign tax consequences of the transactions
contemplated by this Award Agreement. The Grantee is relying solely on such
advisors and not on any statement or representations of the Company or any of
its agents. The Grantee understands that he or she (and not the Company) shall
be responsible for any tax liability that may arise as a result of the
transactions contemplated by the Award Agreement.

 

 

26.           Acceptance.
The Grantee hereby acknowledges receipt of a copy of the Plan, the prospectus
and this Award Agreement. Grantee has read and understands the terms and
provisions thereof, and accepts the Award subject to all the terms and
conditions of the Plan and the Award Agreement.

 

IN WITNESS
WHEREOF, the parties hereto have executed and delivered the Award Agreement as
of the day and year first above written.

 

	
   

  	
  ZENITH NATIONAL INSURANCE CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GRANTEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
  Social Security No.:

  	
   

  	
   

  
	
   

  	
  Date:

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