Document:

exv10w5

Exhibit 10.5

AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT

     This Amended and Restated Executive Employment Agreement (“Agreement”) is entered into as of
September 8, 2008 (the “Effective Date”), by and between PRS Group, Inc. and Patriot Risk Management,
Inc. (collectively the “Company”), a corporation organized under the laws of Delaware, with its
principal administrative office at 301 East Las Olas Boulevard, 7th Floor, Fort
Lauderdale, Florida 33301, and Timothy J. Ermatinger (“Executive”).

     WHEREAS, the Company and Executive previously entered into an Executive Employment Agreement
on May 9, 2008; and

     WHEREAS, both parties deem it advisable to amend and restate the Agreement as follows.

     NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other
terms and conditions hereinafter provided, the parties hereby agree as follows:

	1.	 	Position and Responsibilities. The Company is agreeing to employ Executive and Executive
accepts employment as the Chief Executive Officer of PRS Group, Inc., on the terms and
conditions set forth herein. Executive shall perform the duties and accept the
responsibilities and authority commensurate with this position. He shall report to the Chief
Executive Officer and the Board of Directors of the Patriot Risk Management, Inc. (referred
to collectively herein as “PRMI”) Executive shall also perform such other duties as may from
time to time be assigned to Executive by the Chairman of the Board or the Board itself.
Executive also agrees to serve, if elected, as an officer or director of any direct or
indirect subsidiary of the Company (individually, a “Subsidiary” or collectively, the
“Subsidiaries”).

	2.	 	Term. The period of Executive’s employment under this Agreement shall commence as of the
Effective Date and shall continue for a period of 36 full calendar months thereafter (the
“Initial Term”) provided that such term shall be automatically extended for an additional
12-month period commencing at the end of the Initial Term, and successively thereafter for
additional 12 month periods (each such period an “Additional Term”), unless either party gives
notice at least 90 days prior to the end of the applicable Term. The date of expiration of
the Employment Term shall be referred to herein as the “Termination Date.”

	3.	 	Extent of Services. During the term of this Agreement, Executive shall not accept or be
employed by any other entity or individual without the Company’s written consent. Executive
may volunteer his time for any charitable or not-for-profit enterprise so long as his
involvement does not impair or interfere with his duties, responsibilities and authority of
the position. Executive will comply with all codes of conduct, personnel policies and
procedures applicable to senior executives of the Company including, without limitation,
policies regarding sexual harassment, conflicts of interest and insider trading.

 

 

	4.	 	Compensation.

	 	(a)	 	Salary. During the term of this Agreement, the Company shall pay Executive an
annual salary of $225,000, payable in accordance with the Company’s regular
payroll procedures. Annually, the Company will review possible increases in
Executive’s salary with any such increases\ subject to the determination of PRMI.
	 
	 	(b)	 	Bonus. Executive shall be eligible to receive an annual bonus in an amount to
be determined by the Board. Executive’s potential bonus may be up to 50% of
Executive’s Annual Salary, subject to the attainment of such goals as PRMI shall
establish.
	 
	 	(c)	 	Business Expenses. Executive shall receive prompt reimbursement of all
reasonable business expenses consistent with his duties, responsibilities and
authority. Reimbursement is subject to timely accounting by the executive according
to the Company’s reimbursement procedures for executive officers.
	 
	 	(d)	 	Vacation. Executive will be provided four (4) weeks of vacation per calendar
year, prorated based on date of hire, with additional weeks in accordance with the
anniversary dates pursuant to the Company’s vacation policy.
	 
	 	(e)	 	Stock Options. Executive shall be entitled to receive stock options in the
amount and frequency set forth in Executive’s Offer Letter. All option grants and
stock awards shall be upon such terms as may be set forth in the stock option plan and
accompanying stock option agreement pursuant to which such options will be granted, and
such terms to include a three (3) year vesting period, ten (10) year duration, and a 90
day period to exercise vested options upon termination of Executive’s employment with
the Company for reasons other than Cause (as defined below). In connection with the
Company’s initial public offering, and subject to Board approval, Executive shall
receive a grant of thirty thousand (30,000) stock options concurrent with the initial
public offering, with an exercise price equal to the initial public offering price set
by the Company and its underwriters.
	 
	 	(f)	 	Other Benefits. Executive shall be entitled to participate in all medical and
other employee plans of the Company, if any, on the same basis as other executives of
the Company, subject in all cases to the respective terms of such plans.

	5.	 	Termination.

	 	(a)	 	Death. This Agreement and Executive’s employment hereunder shall terminate
immediately upon Executive’s death. In such event, the Company shall be obligated to
pay only Executive’s salary to the date of Executive’s death and any earned but unpaid
bonus with respect to any calendar year ended prior to the date of termination.
	 
	 	(b)	 	Incapacity. To the extent permitted by law, if Executive is absent from his
employment for reasons of illness or other physical or mental incapacity which

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	 	 	 	renders Executive unable to perform the essential functions of his position, with or
without reasonable accommodation, for more than an aggregate of 90 days, whether or
not consecutive, in any period of twelve consecutive months, then upon at least 60
days’ prior written notice to Executive, if such is consistent with applicable law,
the Company may terminate this Agreement and Executive’s employment hereunder,
unless, within that notice period, Executive shall have resumed performance of the
essential functions of his positions, with or without reasonable accommodation.

	 	(c)	 	Termination by the Company.

	 	(i)	 	Termination for Cause. The Company may terminate this
Agreement and Executive’s employment hereunder at any time for Cause. As used
herein, “Cause” shall mean:

	 	(A)	 	A material breach by Executive of Executive’s
duties and obligations hereunder, including but not limited to gross
negligence in the performance of his duties and responsibilities or the
willful failure to follow the directions of the Company or PRMI. The
Company may provide thirty (30) days to cure such material breach.
	 
	 	(B)	 	Willful misconduct by Executive which in the
reasonable determination of the Board or PRMI has caused or is likely
to cause material injury to the reputation or business of the Company
or PRMI;
	 
	 	(C)	 	Any act of fraud, material misappropriation or
other dishonesty by Executive; or
	 
	 	(D)	 	Executive’s conviction of a felony.

	 	 	 	Executive shall be considered to have been discharged for Cause if PRMI or the
Company determines within 30 days after his resignation or discharge that discharge
for Cause was warranted. In the event of termination for Cause, the Company shall
be obligated to pay Executive only Executive’s salary up to the date of termination
and any earned but unpaid bonus with respect to any calendar year ended prior to the
date of termination.

	 	(ii)	 	Termination Without Cause.

	 	(A)	 	The Company may terminate this Agreement and
Executive’s employment hereunder for reason other than death,
incapacity or Cause upon no less than 60 days’ prior written notice to
Executive. In the event the Company terminates this Agreement pursuant
to the provisions of this Section, Executive shall be entitled to
receive a severance payment equal to Executive’s Annual Salary at the
time of termination (the “Severance Payment”). Subject to Section

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	 	 	 	10 below, the Severance Payment shall be payable in a series of 12
monthly installments commencing on the first day of the month
following the date of termination.

	 	(B)	 	If the Company is obligated by law (including
the WARN Act or any similar state or foreign law) to pay Executive
severance pay, a termination indemnity, notice pay, or the like, then
the amount of such legally required pay shall reduce the Severance
Payment hereunder.
	 
	 	(C)	 	Notwithstanding anything herein to the
contrary, the payment of any Severance Payments hereunder to Executive
shall be subject to the execution by Executive (and failure to revoke)
of a general release and hold harmless of the Company and its
affiliates of any and all claims under this Agreement or related to or
arising out of Executive’s employment hereunder, in a form and manner
satisfactory to the Company and Executive.
	 
	 	(D)	 	Executive will not be entitled to receive
Severance Payments under this Section in the event this Agreement is
terminated as a result of the Company’s giving notice of non-renewal
prior to the end of the Initial Term or any Additional Term as provided
in Section 2 above.
	 
	 	(E)	 	In the event of termination by the Company
without Cause, the Company shall be obligated to pay Executive only
Executive’s salary up to the date of termination and any earned but
unpaid bonus with respect to any calendar year ended prior to the date
of termination.

	 	(d)	 	Termination by Executive Without Good Reason. Executive may terminate this
Agreement and his employment hereunder for any reason whatsoever, upon no less than 120
days’ prior written notice to the Company. In the event that Executive terminates this
Agreement pursuant to the provisions of this Section 5(d) without “Good Reason” as
hereinafter defined, the Company shall be obligated to pay Executive only Executive’s
salary up to the date of termination and any earned but unpaid bonus with respect to
any calendar year ended prior to the date of termination.
	 
	 	(e)	 	Termination by Executive For Good Reason. If Executive resigns for Good
Reason, then Executive’s termination shall be treated as a termination by the Company
without Cause pursuant to Section 5(c)(ii) hereof. As used herein, a resignation for
“Good Reason” shall mean a resignation by Executive within 90 days following the
initial existence of one or more of the following conditions arising without
Executive’s consent:

	 	(i)	 	A material reduction in Executive’s Annual Salary;

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	 	(ii)	 	A relocation of Executive’s principal place of employment by
more than 50 miles from its location at the Effective Date of this Agreement;
or
	 
	 	(iii)	 	Any other action or inaction that constitutes a material
breach by the Company of this Agreement;
	 
	 	 	 	Provided, however, that Good Reason shall not exist unless Executive has provided
the Company with a written notice setting forth the reason(s) for the existence of
Good Reason within 30 days of the initial existence of the condition(s), and the
Company has not cured the reason(s) for the existence of Good Reason within 30 days
after receiving such notice.

	6.	 	Change in Control.

	 	(a)	 	Change in Control Severance Compensation. If within twelve months following a
Change in Control (as defined below) Executive’s employment with the Company is
terminated by the Company without Cause or Executive resigns for Good Reason, then
Executive shall be entitled to terminate this Agreement and employment hereunder and
receive from the Company a payment equal to 100% of the amount of the Severance Payment
specified in Section 5(c)(ii) or 5(e) of this Agreement (the “Change in Control
Compensation”). Subject to Section 10 hereof, the Change in Control Compensation shall
be payable in 12 monthly installments commencing on the first day of the month
following the date of termination. If for any reason any court determines that any of
the restrictions contained in Section 8 hereof are not enforceable, the Company shall
have no obligation to pay the Change in Control Compensation or any remaining
installment thereof to Executive. The Company agrees it will not petition any court to
determine that any of the restrictions contained in Section 8 hereof are not
enforceable in order to avoid the obligation to pay the Change of Control Compensation
referenced above.
	 
	 	(b)	 	Change in Control. For purposes of this Agreement, “Change in Control” shall
mean the occurrence of any of the following events:

	 	(i)	 	The date any one person, or more than one “person” acting as a
group, acquires (or has acquired during the twelve-month period ending on the
date of the most recent acquisition by such person(s)) ownership of common
stock possessing 51% or more of the total voting power of the common stock of
the Company;

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	 	(ii)	 	individuals who at any time during the term of this Agreement
constitute the board of directors of the Company (the “Incumbent Board”) cease
for any reason to constitute at least a majority thereof, provided that any
person becoming a director subsequent to the date hereof whose election or
nomination for election was approved by a vote of at least three-quarters of
the directors comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is named as
a nominee for director, without objection to such nomination) shall be, for
purposes of this clause (ii) considered as though such person were a member of
the Incumbent Board;
	 
	 	(iii)	 	any consolidation or merger to which the Company is a party,
if following such consolidation or merger, stockholders of the Company
immediately prior to such consolidation or merger shall not beneficially own
securities representing at least 51% of the combined voting power of the
outstanding voting securities of the surviving or continuing corporation; or
	 
	 	(iv)	 	any sale, lease, exchange or other transfer (in one transaction
or in a series of related transactions) of all, or substantially all, of the
assets of the Company, other than to an entity (or entities) of which the
Company or the stockholders of the Company immediately prior to such
transaction beneficially own securities representing at least 51% of the
combined voting power of the outstanding voting securities.

	 	(c)	 	Nonduplication of Benefits. If Executive receives any Change in Control
Compensation under this Section 6, he or she shall not be entitled to receive any
Severance Payments under Section 5(c)(ii) or 5(e) hereof.
	 
	 	(d)	 	General Release. Notwithstanding anything herein to the contrary, the payment
of any Change in Control Compensation hereunder to Executive shall be subject to the
execution by Executive (and failure to revoke) of a general release and hold harmless
of the Company and its affiliates of any and all claims under this Agreement or related
to or arising out of Executive’s employment hereunder, in a form and manner
satisfactory to the Company and Executive.

	7.	 	Tax and Other Restrictions. Notwithstanding anything herein to the contrary:

	 	(a)	 	Excess Parachute Payments. In the event that payment of any amount under this
Agreement, including, but not limited to, any Severance Payment under Section 5(c)(ii)
or 5(e) or Change in Control Compensation under Section 6, would cause Executive to be
the recipient of an excess parachute payment within the meaning of section 280G(b) of
the Code, the amount of the payments to be made to Executive pursuant to this Agreement
shall be reduced to an amount equal to 299% of Executive’s “base amount” within the
meaning of Code section 280G. The manner in which such reduction occurs, including the
items of payment and amounts thereof to be reduced, shall be determined by the Company.

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	 	(b)	 	Payments in Excess of $1 Million. If any payment hereunder, including but not
limited to, a Severance Payment under Section 5(c)(ii) or 5(e) or Change in Control
Compensation under Section 6, would not be deductible by the Company for federal income
tax purposes by reason of Code section 162(m), or any similar or successor statute
(excluding Code section 280G), such payment shall be deferred and the amount thereof
shall be paid to Executive at the earliest time that such payment shall be deductible
by the Company.

	8.	 	Covenants of the Executive.

	 	(a)	 	Nonsolicitation. During the Employment Term and for a period of one year
thereafter, Executive shall not, directly or indirectly, (i) employ, solicit for
employment or otherwise contract for the services of any individual who is or was an
employee of the Company or any of its Subsidiaries during the Employment Term; (ii)
otherwise induce or attempt to induce any employee of the Company or its Subsidiaries
to leave the employ of the Company or such Subsidiary, or in any way knowingly
interfere with the relationship between the Company or any such Subsidiary and any
employee respectively thereof, provided, however, that this clause (ii) shall not
prohibit the activities described in the preceding clause (i) following termination of
the Employment Term with respect to any individual who was not an employee of the
Company or its Subsidiaries during the Employment Term; or (iii) induce or attempt to
induce any customer, supplier, broker, agent, licensee or other business relation of
the Company or any Subsidiary of the Company to cease doing business with the Company
or such Subsidiary, or interfere in any way with the relationship between any such
customer, supplier, broker, agent, licensee or business relation and the Company or any
subsidiary thereof.
	 
	 	(b)	 	Nondisclosure. For the Employment Term and thereafter, (i) Executive shall not
divulge, transmit or otherwise disclose (except as legally compelled by court order,
and then only to the extent required, after prompt notice to the Company’s Chief
Executive Officer and Chief Legal Officer of any such order), directly or indirectly,
other than in the regular and proper course of business of the Company and its
Subsidiaries, any confidential knowledge or information with respect to the operations
or finances of the Company or any of its Subsidiaries or with respect to confidential
or secret processes, methods, services, techniques, reinsurance arrangements, customers
or plans with respect to the Company or its Subsidiaries and (ii) Executive will not
use, directly or indirectly, any confidential information for the benefit of anyone
other than the Company and its Subsidiaries; provided, however, that Executive has no
obligation, express or implied, to refrain from using or disclosing to others any
knowledge or information which is or hereafter shall become available to the general
public other than through disclosure by Executive, or as requested by regulatory bodies
or as required by judicial courts. All new processes, techniques, know-how, methods,
inventions, plans, products, patents and devices developed, made or invented by
Executive, alone or with others, while an employee of the Company which are related to
the business of the Company and its Subsidiaries shall be and

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	 	 	 	become the sole property of the Company, unless released in writing by the Board,
and Executive hereby assigns any and all rights therein or thereto to the Company.

	 	(c)	 	Nondisparagement. During the Employment Term and thereafter, Executive shall
not take any action to disparage or criticize the Company or its Subsidiaries or their
respective employees, directors, owners or customers or to engage in any other action
that injures or hinders the business relationships of the Company or its Subsidiaries.
During the Employment Term and thereafter, the Company shall not take any action to
disparage or criticize Executive to any third parties. Nothing contained in this
Section 8(c) shall preclude either Executive or the Company from (i) making truthful
statements or disclosures that are required by applicable law, regulation or legal
process or (ii) enforcing their respective rights under this Agreement.
	 
	 	(d)	 	Noncompetition. In consideration of the payment to Executive of the Severance
payments pursuant to Section 5(c)(ii) or 5(e) or Change in Control Compensation
pursuant to Section 6, Executive hereby agrees that, from and after the Termination
Date, and for 12 months thereafter, Executive shall not participate as a partner, joint
venturer, proprietor, shareholder, employee or consultant, or have any other direct or
indirect financial interest (other than a less than 10% interest in a corporation whose
            shares are regularly traded on a national securities exchange or in the
over-the-counter market), including, without limitation, the interest of a creditor in
any form, in, or in connection with, any business competing directly or indirectly with
the business of the Company and its Subsidiaries in any geographic area where the
Company and its Subsidiaries are actively engaged in conducting business as of the
Termination Date. The purpose of this restrictive covenant is to protect the Company’s
trade secrets and other confidential information, including, without limitation, its
business plans, processes and customer information.
	 
	 	(e)	 	Return of Company Property. All files, records, correspondence, memoranda,
notes or other documents (including, without limitation, those in computer-readable
form) or property relating or belonging to the Company or its Subsidiaries or
affiliates, whether prepared by Executive or otherwise coming into Executive’s
possession in the course of the performance of his services under this Agreement, shall
be the exclusive property of the Company and shall be delivered to the Company, and not
retained by Executive (including without limitations, any copies thereof), promptly
upon request by the Company and, in any event, within 60 days following the Termination
Date.
	 
	 	(f)	 	Scope. The Company and Executive further acknowledge that the time, scope,
geographic area and other provisions of this Section 8 have been specifically
negotiated by sophisticated commercial parties and agree that all such provisions are
reasonable under the circumstances of the activities contemplated by this Agreement.
In the event that the agreements in this Section 8 shall be determined by any court of
competent jurisdiction to be unenforceable by reason of their

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	 	 	 	extending for too great a period of time or over too great a geographical area or by
reason of their being too extensive in any other respect, they shall be interpreted
to extend only over the maximum geographical area as to which they may be
enforceable and/or to the maximum extent in all other respect as to which they may
be enforceable, all as determined by such court in such action.

	 	(g)	 	Enforcement. Both parties recognize that the services to be rendered under
this Agreement by Executive are special, unique and of extraordinary character and that
in the event of the breach by Executive of any of the terms and conditions of this
Section 8 to be performed by him, then the Company shall be entitled, if it so elects,
to institute and prosecute proceedings in any court of competent jurisdiction, either
in law or in equity, to obtain damages for any breach hereof, or to enforce the
specific performance hereof by Executive or to enjoin Executive from performing acts
prohibited above during the period herein covered, but nothing herein contained shall
be construed to prevent such other remedy in the courts as the Company may elect to
invoke.
	 
	 	(h)	 	Other. If Executive competes with the Company or otherwise violates any of the
restrictions contained in this Section 8, the Company shall have no obligation to pay
the Severance Payment or Change of Control Compensation or any remaining installment
thereof to Executive.

	9.	 	Indemnification. The Company shall provide Executive (including Executive’s heirs, executors
and administrators) with coverage under a standard directors’ and officers’ liability
insurance policy at its expense, and shall indemnify Executive (and Executive’s heirs,
executors and administrators) to the fullest extent permitted under Delaware law against all
expenses and liabilities reasonably incurred by Executive in connection with or arising out of
any action, suit or proceeding in which Executive may be involved by reason of Executive’s
having been a director or officer of the Company (whether or not Executive continues to be a
director or officer at the time of incurring such expenses or liabilities), such expenses and
liabilities to include, but not be limited to, judgments, court costs and attorneys’ fees and
the cost of reasonable settlements.
	 
	10.	 	Application of Code Section 409A.

	 	(a)	 	General. To the extent applicable, it is intended that this Agreement comply
with the provisions of Code section 409A, so as to prevent inclusion in gross income of
any amounts payable or benefits provided hereunder in a taxable year that is prior to
the taxable year or years in which such amounts or benefits would otherwise actually be
distributed, provided or otherwise made available to Executive. This Agreement shall
be construed, administered, and governed in a manner consistent with this intent and
the following provisions of this Section shall control over any contrary provisions of
this Agreement.
	 
	 	(b)	 	Restrictions on Specified Employees. In the event Executive is a “specified
employee” within the meaning of Code section 409A(a)(2)(B)(i) and delayed payment of
any amount or commencement of any benefit under this Agreement is

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	 	 	 	required to avoid a prohibited distribution under Code section 409A(a)(2), then
amounts payable in connection with Executive’s termination of employment will be
delayed and paid, with interest at the short term applicable federal rate as in
effect as of the termination date, in a single lump sum six months thereafter (or if
earlier, the date of Executive’s death); provided, however, that payments to which
Executive is entitled under Section 5(c)(ii), 5(e) and 6(a) of this Agreement need
not be delayed under this Section 10(b) to the extent those payments would comply
with the requirements of 1.409A-1(a)(b)(9), which generally requires that such
payments not exceed two times the lesser of (1) Executive’s annualized compensation
based on his annual rate of pay in the year before the date of termination or (2)
the Code section 401(a)(17) limit applicable to qualified plans during the year of
Executive’s date of termination.

	 	(c)	 	Separation from Service. Payments and benefits hereunder upon Executive’s
termination or severance of employment with the Company that constitute deferred
compensation under Code section 409A payable shall be paid or provided only at the time
of a termination of Executive’s employment which constitutes a “separation from
service” within the meaning of Code section 409A (subject to a possible six-month delay
pursuant to the subsection (b) above).
	 
	 	(d)	 	Installment Payments. For purposes of Code section 409A, the right to a series
of payments under this Agreement shall be treated as a right to a series of separate
payments so that each payment hereunder is designated as a separate payment for
purposes of Code section 409A.
	 
	 	(e)	 	Reimbursements. All reimbursements and in kind benefits provided under this
Agreement, including, but not limited to, payments under Sections 4(c) and 9, shall be
made or provided in accordance with the requirements of Code section 409A, including,
where applicable, the requirement that (i) any reimbursement is for expenses incurred
during Executive’s lifetime (or during a shorter period of time specified in this
Agreement), (ii) the amount of expenses eligible for reimbursement, or in kind benefits
provided, during a calendar year may not affect the expenses eligible for
reimbursement, or in kind benefits to be provided, in any other calendar year, (iii)
the reimbursement of an eligible expense will be made on or before the last day of the
calendar year following the year in which the expense is incurred, and (iv) the right
to reimbursement or in kind benefits is not subject to liquidation or exchange for
another benefit.
	 
	 	(f)	 	References to Code Section 409A. References in this Agreement to Code section
409A include both that section of the Code itself and any guidance promulgated
thereunder.

	11.	 	Miscellaneous.

	 	(a)	 	Modification. This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.

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	 	(b)	 	Waiver. No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision of
this Agreement, except by written instrument of the party charged with such waiver or
estoppel. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to the specific
term or condition waived and shall not constitute a waiver of such term or condition
for the future as to any act other than that specifically waived.
	 
	 	(c)	 	Notices. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by registered or certified mail to
Executive or the Company at the address set forth below or to such other address as
they shall notify each other in writing:
	 
	 	 	 	If to the Company:

John Brant

V.P., Director of Human Resources

Patriot Risk Management, Inc.

401 East Las Olas Boulevard, Suite 1540

Fort Lauderdale, Florida 33301

	 	 	 	If to Executive:

To the last mailing address on file with the Company.

	 	(d)	 	Assignment. This Agreement shall be binding upon and inure to the benefit of
the Company and its successors and permitted assigns and Executive and personal
representatives, heirs, legatees and beneficiaries. This Agreement may be assigned by
the Company with the consent of Executive to a fiscally responsible entity that assumes
the obligations set forth herein, but shall not be assignable by Executive.
	 
	 	(e)	 	Applicable Law. This Agreement shall be construed in accordance with the laws
of the State of Florida in every respect, including, without limitation, validity,
interpretation and performance. Any dispute between the parties hereto, arising under
or relating to this Agreement (as hereinafter defined), or Executive’s employment with
the Company, other than for an action by the Company for specific performance,
injunction or other equitable remedy to enforce Section 8 hereof shall be settled by
arbitration in Fort Lauderdale, Florida in accordance with the then applicable rules of
the American Arbitration Association. The prevailing party may be awarded in such
arbitration its reasonable attorneys’ fees and expenses, and judgment upon the award
rendered may be entered in any court having jurisdiction thereof.
	 
	 	(f)	 	Headings. Section headings and numbers herein are included for convenience of
reference only and this Agreement is not to be construed with reference thereto. If
there be any conflict between such numbers and headings and the text hereof, the text
shall control.

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	 	(g)	 	Severability. If for any reason any portion of this Agreement shall be held
invalid or unenforceable, it is agreed that the same shall not affect the validity or
enforceability of the remainder hereof. The portion of the Agreement which is not
invalid or unenforceable shall be considered enforceable and binding on the parties and
the invalid or unenforceable provision(s), clause(s) or sentence(s) shall be deemed
excised, modified or restricted to the extent necessary to render the same valid and
enforceable and this Agreement shall be construed as if such invalid or unenforceable
provision(s), clause(s), or sentences(s) were omitted. The provisions of this Section
11(g), as well as Sections 8 and 9 hereof, shall survive the termination of this
Agreement.
	 
	 	(h)	 	Entire Agreement. This Agreement contain the entire agreement of the parties
with respect to its subject matter and supersedes all previous agreements between the
parties. No officer, employee, or representative of the Company has any authority to
make any representation or promise in connection with this Agreement or the subject
matter thereof that is not contained therein, and Executive represents and warrants he
has not executed this Agreement in reliance upon any such representation or promise.
No modification of this Agreement shall be valid unless made in writing and signed by
the parties hereto.
	 
	 	(i)	 	Waiver of Breach. The waiver by either party of a breach of any provision of
this Agreement by the other party shall not operate or be construed as a waiver of any
subsequent breach by the breaching party.
	 
	 	(j)	 	Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which together shall constitute
one agreement.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer and Executive has signed this Agreement all on the day and year first above
written.

	 	 	 	 	 	 	 	 	 
	PATRIOT RISK MANAGEMENT, INC.

	 	 
	 	 	EXECUTIVE	 	 	 
	 

	a Delaware corporation	 	 	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:
	 	/s/ Steven M. Mariano	 	 	 	 	/s/ Timothy J. Ermatinger 	 
	 

	 	 
	 	 	 	 	 
	Name:

	 	Steven M. Mariano
	 	 	 	 	Timothy J. Ermatinger	 	 
	Title:

	 	C.E.O. and Chairman of the Board	 	 	 	 	 	 

12exv10w27

Exhibit 10.27

4th AMENDMENT TO COMMERCIAL LOAN AGREEMENT

     THIS 4th AMENDMENT dated as of September 11 , 2008 (the “Agreement”) is made to
and a part of the Commercial Loan Agreement (the “CLA”) and Addendum thereto dated March 30, 2006
(the “CLA Addendum” and together with the CLA, the “Loan Agreement”) by and between ALERITAS
CAPITAL CORPORATION f/k/a BROOKE CREDIT CORPORATION (“LENDER”) and PATRIOT RISK MANAGEMENT, INC.
(formerly known as SUNCOAST HOLDINGS, INC.), a Delaware corporation (“PRM”), GUARANTEE INSURANCE
GROUP, INC. (formerly known as BRANDYWINE INSURANCE HOLDINGS, INC.), a Delaware corporation
(“GIG”), and PATRIOT RISK SERVICES, INC., a Delaware corporation (“PRS”), as amended by that
certain Amendment to Commercial Loan Agreement dated as of September 27, 2007 (“1st
Amendment”) by and among Lender, SH, BIH, PRS, SUNCOAST CAPITAL, INC. (“SCI”), PRS GROUP, INC.
(formerly known as PATRIOT RISK MANAGEMENT, INC.) (“PRG”), and PATRIOT RISK MANAGEMENT OF FLORIDA,
INC. (“PRMF”) (PRM, GIG, PRS, SCI, PRG and PRMF collectively referred to hereinafter as
“Borrower”), as further amended by that certain 2nd Amendment to Commercial Loan
Agreement dated as of November 16, 2007 (“2nd Amendment”) and as further amended by that certain
3rd Amendment to Commercial Loan Agreement dated as of February 12, 2008 by and between
Lender and Borrower (“3rd Amendment”).

     WHEREAS, SH, BIH and PRS have collectively executed the Loan Agreement and related “Loan
Documents” (as defined in the Loan Agreement) dated March 30, 2006, including, but not limited to,
a Commercial Promissory Note (the “Original Note”), Guaranty of Steven M. Mariano (the
“Guaranty”), Commercial Security Agreement (the “First Security Agreement”), Stock Pledge
Agreement (the “Stock Pledge Agreement”), and Irrevocable Proxy together with a Consent dated
August 2, 2007;

     WHEREAS, Borrower has executed the 1st Amendment, the 2nd Amendment,
the 3rd Amendment and related subsequent Loan Documents including, but not limited to,
a Commercial Security Agreement (the “Second Security Agreement” together with all other loan
related documents the “Loan Documents”); and

     WHEREAS, Borrower is contemplating raising new capital by means of a public offering of
common stock (the “Proposed Offering”) and proposes to use all, or a substantial portion of, the
proceeds from the overallotment, if any, to pre-pay Lender, either in part or in full and in
connection with the Proposed Offering desires to obtain certain waivers and consents pursuant to
the CLA Addendum.

     FOR GOOD AND VALUABLE CONSIDERATION, the sufficiency and receipt of which are acknowledged,
it is agreed as follows:

	 	1.	 	With respect to Paragraph 8(d) of the CLA Addendum, Lender hereby consents to
issuance of additional shares of common stock of PRM related to the Proposed Offering,
and hereby consents and acknowledges that following the consummation of the Proposed
Offering, Steven M. Mariano shall no longer hold

 

 

	 	 	 	an unencumbered 51% or more of the ownership and profit interest in PRM, or more than 51%
of the voting control of PRM.
	 
	 	2.	 	With respect to Paragraph 30(g) of the CLA Addendum, Lender hereby acknowledges notification
of the transactions contemplated by, and on the terms contained within, that certain Stock
Purchase Agreement for Madison Insurance Company by and between SunTrust Bank Holding Company
and PRM dated March 4, 2008, attached as Exhibit A hereto. PRM plans to rename
Madison Insurance Company to Guarantee Fire and Casualty post acquisition.
	 
	 	3.	 	With respect to Paragraph 30(f) of the CLA Addendum, Lender hereby consents to the loan made
by PRM to Tarheel Group, Inc. (“Tarheel”), in the principal amount of $750,000 made on June
30, 2006.
	 
	 	4.	 	With respect to Paragraph 30(e) of the CLA Addendum, Lender hereby waives any failure of
Borrower to notify Lender of board meetings and shareholder meetings of GIC and PRM up to the
date this Agreement is executed. Nothing in this section 2 shall operate to, in any way,
waive the obligation of Borrower to provide Lender notice of any future board meetings or
shareholder meetings, pursuant to the terms of the Loan Documents.
	 
	 	5.	 	With respect to Paragraph 30(g) and (k) of the CLA Addendum, Lender hereby acknowledges
notification of and hereby consents to the contribution of Tarheel and its subsidiary,
Tarheel Insurance Management Company to PRM as of April 7, 2007.
	 
	 	6.	 	With respect to Paragraph 30(d) of the CLA Addendum, Lender hereby approves the payment of a
dividend from PRG to PRM in the amount of $3,510,770.35.
	 
	 	7.	 	With respect to Paragraph 30(a) of the CLA Addendum, Lender hereby acknowledges that
Borrowers stockholder equity on a consolidated basis in the aggregate on a GAAP basis was
$5.4 million as of December 31, 2007 and not, as required by Paragraph 
30(a) at $5.5 million.
However, Lender further acknowledges this is not an Event of Default because, pursuant to
Paragraph 8(a)(ii), no Event of Default occurred because the failure was reasonably capable
of being cured, Borrower diligently pursued a cure, Lender’s position was not materially
adversely affected during Borrower’s pursuit to cure, and the deviation was in fact cured as
of March 31, 2007 because Borrower’s stockholder equity on a consolidated basis in the
aggregate on a GAAP basis is at $6.5 million.
	 
	 	8.	 	Borrower hereby ratifies and adopts this 4th Amendment and agrees that the
4th Amendment and Loan Documents, as may be modified herein, are enforceable
against Borrower in accordance with the above terms.

 

 

	 	9.	 	Borrower further agrees that this 4th Amendment may be affixed to each and every
Loan Document as evidence of the 4th Amendment thereof in accordance
with the above terms.
	 
	 	10.	 	Unless specifically amended hereby, all provisions, terms and conditions in
the Stock Pledge Agreement shall otherwise remain unaltered and in full force and
effect, and the respective terms, conditions and covenants thereof are hereby ratified
and confirmed in all respects as originally executed. Upon effectiveness of this
Agreement, all references to the Stock Pledge Agreement shall be a reference to the
Stock Pledge Agreement as amended hereby.
	 
	 	11.	 	This Agreement shall be construed and governed by the laws of the State of
Kansas, except to the extent that the laws of a jurisdiction other than the State of
Kansas are required to govern any enforcement or foreclosure action with respect to any
of the Pledged Shares.
	 
	 	12.	 	Borrower acknowledges that payment servicing is now being performed by Security
Bank and Trust, Miami OK. Borrower agrees that all proceeds from the overallotment, if
any, will be used to retire debt to the Lender to the extent permitted by the amount of
the overallotment. Debt retirement proceeds will be paid directly to Security Bank and
Trust, Miami OK for the benefit of participating lenders. In lieu of paragraph 11 of
the CLA Addendum and any other section addressing Borrower’s obligation to pay a
prepayment premium, Borrower agrees and Lender approves in the event of full retirement
of loan prior to March 30, 2009, there will be a total payment of a prepayment premium
of $200,000 payable to Security Bank and Trust, Miami, OK for the benefit of
participating lenders. The $200,000 prepayment premium amount replaces and supercedes
any other requirement or obligation on the part of Borrower to pay a prepayment
premium.

     This Agreement may be executed in any number of 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 agreement.

     Unless specifically amended hereby, all provisions, terms and conditions shall remain as set
forth in the Agreement and Loan Documents. Borrower hereby ratifies and approves the Loan
Documents, as modified herein.

     THIS AGREEMENT is executed on this 11th day of September, 2008.

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above
written.

[Signature Follow on Next Page]

 

 

	 	 	 	 	 	 	 	 	 	 	 
	BORROWER:	 	 	 	LENDER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	PATRIOT RISK MANAGEMENT,	 	 	 	ALERITAS CREDIT	 	 
	INC., a Delaware corporation	 	 	 	CORPORATION, a Delaware 
corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Steven M. Mariano
	 	 	 	By:	 	/s/ Anita Larson 	 	 
	Name:

	 	 

Steven M. Mariano
	 	 
	 	Name:
	 	 

Anita Larson	 	 
	Title:

	 	President & C.E.O
	 	 	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	GUARANTEE INSURANCE GROUP,	 	 	 	SUNCOAST CAPITAL, INC., a	 	 
	INC., a Delaware corporation	 	 	 	Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 

Name:

	 	/s/ Steven M. Mariano
 

Steven M. Mariano
	 	 
	 	By:

Name:
	 	/s/ Steven M. Mariano
 

Steven M. Mariano
	 	 
	Title:

	 	President & C.E.O
	 	 	 	Title:
	 	President & C.E.O	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	PRS GROUP, INC., a Delaware	 	 	 	PATRIOT RISK SERVICES, INC., a	 	 
	corporation	 	 	 	Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 

Name:

	 	/s/ Timothy J. Ermatinger
 

Timothy J. Ermatinger
	 	 
	 	By:

Name:
	 	/s/ Timothy J. Ermatinger
 

Timothy J. Ermatinger
	 	 
	Title:

	 	Chief Executive Officer
	 	 	 	Title:
	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	PATRIOT RISK
MANAGEMENT OF	 	 	 	 	 	 	 	 
	FLORIDA, INC., a Delaware corporation	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Timothy J. Ermatinger	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	Name:

	 	Timothy J. Ermatinger	 	 	 	 	 	 	 	 
	Title:

	 	Chief Executive Officer	 	 	 	 	 	 	 	 

 

 

Exhibit A

Madison Insurance Company

Stock Purchase Agreement

[Omitted]

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