EXHIBIT 10.3
EXECUTION COPY
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (“Agreement”) between ZENITH NATIONAL
INSURANCE CORP., a Delaware corporation (hereinafter referred to as
“Zenith”), and Robert E. Meyer (hereinafter referred to
as “Employee”) is hereby amended and restated in its
entirety effective on the last date of execution set forth below
(the “Effective Date”).
RECITALS
WHEREAS, Employee is presently
employed as Executive Vice President and Chief Actuary of Zenith
Insurance Company, a subsidiary of Zenith, pursuant to a written
Employment Agreement dated October 12, 2004, as previously
modified, and is also employed as Senior Vice President of Zenith
and is an officer of certain of its other subsidiaries (Zenith and
all of its subsidiaries collectively referred to hereinafter as
“Employer”); and
WHEREAS, Zenith and Employee deem it
in their respective best interests to extend the term of the
Employment Agreement at the present time and modify certain other
provisions thereof;
NOW, THEREFORE, it is agreed as
follows:
1.
Amended and Restated
Employment Agreement . The Agreement is hereby amended and restated in
its entirety and the term thereof is hereby extended as hereinafter
provided.
2.
Engagement and
Duties . During the Term of Employment as defined in
Paragraph 3 of this Agreement:
2.1
Employer hereby employs Employee
and Employee does hereby agree to be employed by Employer as Senior
Vice President of Zenith 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.
2.2
During the Term of Employment,
Employee shall report to the CEO or his
designee. Employee shall perform the normal duties of such
offices and such other executive duties as may from time to time be
assigned to him by and in accordance with instructions and
directions of the CEO, his designee 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, his designee and the Board.
2.3
Employee shall perform the duties
contemplated hereunder at his principal office located in Los
Angeles County, California; provided, however, Employee shall
travel outside Los Angeles County to the extent he reasonably deems
it necessary or appropriate in the performance of his duties
hereunder.
2.4
Employee, during the Term of
Employment, shall devote his time, attention, energies, skills and
best efforts to the performance of his duties for and on behalf of
Employer.
3.
Term of
Employment . The term of employment hereunder shall be a
period commencing on the Effective Date and terminating
December 31, 2012 (“Expiration Date”), unless
sooner terminated as elsewhere provided herein (“Term of
Employment”).
4.
Compensation
. As full and complete consideration for the
performance of his duties and the rendition of any and all services
under this Agreement, Employee shall be compensated as
follows:
4.1
Employee shall be paid $497,750 per
year, subject to such increases as the Compensation Committee of
the Board (“Compensation Committee”) may from time to
time determine (“Base Compensation”).
4.2
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.
4.3
All compensation hereunder 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.
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 with a $1,300 per month automobile
allowance.
6.
Employee
Benefits .
6.1
Employee shall be entitled to
participate in all employee insurance, retirement and other benefit
plans for which he 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
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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,
during which time his compensation shall be paid in full.
Employee shall be treated for purposes of vacation accrual as an
employee with more than 120 months of service. 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.
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 his spouse is not then living, to his then
living issue by right of representation or (c) if none of the
above are then living, to his estate a cash lump sum payment equal
to: (1) one year’s Base Compensation at the rate
in effect at his 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 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 his
family with the same level of life, medical, dental a nd 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 his 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
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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 him 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 his
duties or any other material breach of this Agreement by Employee
(other than a failure or breach resulting from his 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 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
his 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 his 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 his family with the
same level of life,
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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 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.
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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 s
