Document:

Unassociated Document

    

    

    

    August 5,
2009

    

    Mr. E.A.
Kratzman, III

    544 North
Street

    Greenwich,
CT  06830

    

    Dear Mr.
Kratzman:

    

    This
letter will confirm the terms of your continuing employment with Katonah Debt
Advisors, L.L.C. (“the “Company”), under the terms and conditions that
follow.  This letter supersedes the letter agreement dated February
26, 2008 between you and the Company in its entirety and is effective as of
August 5, 2009.  This letter agreement is also intended to be read in
conjunction with the terms of a letter agreement dated August 5, 2009 (the
“Kohlberg Agreement”) between you and Kohlberg Capital Corporation (“Kohlberg
Capital”), which shall supplement these terms.  Any conflict between
this letter agreement and the Kohlberg Agreement shall be controlled by the
terms herein.

    

    1.  Term, Position and
Duties.

    

    (a) Subject
to earlier termination as hereafter provided, your employment shall continue
through December 31, 2011, and will be automatically extended for one year on
January 1, 2012 and on each succeeding January 1 unless previously terminated in
writing by you or an expressly authorized representative of the
Company.  The term of this agreement, as from time to time extended is
hereafter referred to as “the term of this agreement” or “the term
hereof”.  You will be employed by the Company as its
President.  You will report to the Management Committee of the Company
(the “Committee”).  You will continue to serve as Vice President of
Kohlberg Capital as those duties, responsibilities and compensation are outlined
in the Kohlberg Agreement.

    

    (b) You
agree to perform the duties of your position and such other duties as may
reasonably be assigned to you from time to time including, but not limited
to:  management of the entire KDA platform, structuring various types
of collateralized loan obligation (“CLO”) funds, synthetic collateralized debt
obligation (“CDO”) funds, and other credit-based funds (collectively “Funds”) as
directed by the Committee; implementing and investing “warehouse” lines;
negotiating, documenting, and selling debt and equity securities of Funds; and
purchasing and trading non-investment grade loans, high yield bonds, and other
permitted securities on behalf of Funds.  Additionally, you will be
responsible for overseeing, but not the day-to-day management, of the Katonah
Scott’s Cove business. You will also be responsible for increasing assets under
management for all of the KDA platforms which may entail initiating and
structuring strategic acquisitions and other initiatives. You also agree that
you will devote your full business time and your best efforts, business
judgment, skill and knowledge exclusively to the advancement of the business and
interests of the Company and its Affiliates.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Mr. E.A.
Kratzman, III

    Page
2

    
      August 5,
2009

    

    
      
        

      

    

    

    (c) From time to
time, you may be employed by one or more Affiliates of the Company in a similar
capacity to your employment with the Company.  The terms and
conditions of your employment by such Affiliates will be the same as the terms
and conditions of your employment with the Company, except that your aggregate
compensation and benefits will not exceed the amounts set forth in Section 2 of
this agreement.  In that regard, that portion of the compensation and
benefits that are allocable to your services to an Affiliate shall be the
responsibility of the Affiliate, though we note the Company intends to provide
benefits provided to employees generally on a centralized basis among its
Affiliates.  To the extent that you are employed by an Affiliate,
references in this agreement to the Company shall mean the Affiliate, where
appropriate.  To effectuate such employment with any Affiliate, the
Affiliate will provide to you a letter confirming your employment
status.  The allocation of your working time between duties for the
Company and any of the Affiliates may be adjusted from time to time by the
Company as it determines appropriate.  As a condition to your
employment with the Company and the Affiliates, it is required that you keep
complete and accurate records of the time you spend performing your duties under
this agreement and the nature thereof.

    

    2.  Compensation and
Benefits.  During your employment, as compensation for all
services performed by you for the Company and its Affiliates, the Company will
provide you the following pay and benefits:

    

    (a) Base
Salary.  The Company will pay you a base salary at the rate of
Four Hundred Thousand Dollars ($400,000) per year, payable in accordance with
the regular payroll practices of the Company and subject to increase from time
to time by the Committee in its discretion.

    

    (b) Bonus
Compensation.  During employment, you will be considered for a
discretionary bonus in the amount of not less than Six Hundred Fifty Thousand
Dollars ($650,000) and not more than One Million Dollars ($1,000,000) for the
2009 fiscal year, subject to increase in subsequent fiscal years during the term
of this agreement in the sole discretion of the Committee.  Bonus
awards will be determined by the Committee, based on your achievement of a
financial target established annually by the Committee after consultation with
you (and consistent with those set forth in the Company’s annual budget and/or
strategic plan) and will be paid not later than March 15 of the calendar year
following the year for which the bonus was earned.  Payment of your
bonus for the 2009 fiscal year will be subject to the terms set forth in Exhibit
A.  Except as otherwise provided in Section 5 hereof, you must remain
continuously employed by the Company through the end of the calendar year in
order to be eligible for a bonus for that calendar year.  In addition
to your discretionary bonus described above, you will be entitled to receive up
to three special bonuses of One Hundred Fifty Thousand Dollars ($150,000) each,
paid individually upon the receipt in cash by the Company of all of the deferred
subordinated fees of each of the Katonah VII, VIII, and IX CLO Funds,
respectively to be paid as soon as practicable following the receipt of such
deferred fees; and provided further that you remain continuously employed by the
Company through the date of the receipt of such deferred fees.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

      Mr. E.A.
Kratzman, III

      Page
3

      
        August 5,
2009

      

      
        
          

        

      

    (c) Purchased
Equity.  Subject to all policies (including any policies
implemented by the Company which restrict the ability of officers, directors and
other Affiliates to invest in the Funds), agreements, plans and conditions that
are generally applicable to such investments, as determined by the Company, you
will have the right, but not the obligation, to purchase equity of Funds on
terms equivalent to those received by other investors.

    

          (d) Participation in Employee
Benefit Plans.  You will be entitled to participate in all
employee benefit plans from time to time in effect for employees of the Company
generally, except to the extent such plans are duplicative of benefits otherwise
provided you under this agreement.  Your participation will be subject
to the terms of the applicable plan documents and generally applicable Company
policies.

    

     3. Confidential Information and
Restricted Activities.

    

          (a) Confidential
Information.  During the course of your employment with the
Company or its Affiliates, you have learned and will learn of Confidential
Information, as defined below, and you may develop Confidential Information on
behalf of the Company or its Affiliates.  You agree that you will not
use or disclose to any Person (except as required by applicable law or for the
proper performance of your regular duties and responsibilities for the Company)
any Confidential Information obtained by you incident to your employment or any
other association with the Company or any of its Affiliates, whether prior or
subsequent to effective date of this agreement.  You understand that
this restriction shall continue to apply after your employment terminates,
regardless of the reason for such termination.

    

          (b) Protection of
Documents.  All documents, records and files, in any media of
whatever kind and description, relating to the business, present or otherwise,
of the Company or any of its Affiliates, and any copies, in whole or in part,
thereof (the “Documents”), whether or not prepared by you shall be the sole and
exclusive property of the Company. You agree to safeguard all Documents and to
surrender to the Company, at the time your employment terminates or at such
earlier time or times as the Committee or its designee may specify, all
Documents then in your possession or control.

    

          (c)  Non-Competition.  You
acknowledge that in your employment with the Company you have had access and
will have access to Confidential Information which, if disclosed, would assist
in competition against the Company and its Affiliates and that you also have
generated and will generate goodwill for the Company and its Affiliates in the
course of your employment. Therefore, you agree that the following restrictions
on your activities during and after your employment are necessary to protect the
goodwill, Confidential Information and other legitimate interests of the Company
and its Affiliates:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

      Mr. E.A.
Kratzman, III

      Page
4

      
        August 5,
2009

      

      
        
          

        

      

     (i)   While you
are employed by the Company or its Affiliates and for the greater of (x) the
remaining term of this agreement or (y) one (1) year after your employment (or
service with an Affiliate, if later) terminates (in the aggregate, the
“Non-Competition Period”), you agree that you will not, without the prior
written consent of the Company, directly or indirectly, own, manage, operate,
join, control, finance, or participate in the ownership, marketing, management,
operation, control, fundraising or financing of, or be connected as an officer,
director, employee, partner, principal, agent, representative, consultant, or
otherwise use or permit your name to be used in connection with any business or
enterprise engaged in the United States in the business of structuring CDO or
CLO securitization vehicles or hedge funds or other funds which invest in
corporate debt instruments (such vehicles and funds, collectively, “Investment
Vehicles”), analyzing and acquiring loans and other assets to be held by any
Investment Vehicles, arranging for the issuance of debt and preferred securities
by any Investment Vehicles, acting as collateral managers for such
securitizations or funds, or performing similar functions.

    

    (ii)   You agree that
during the Non-Competition Period, you will not, directly or through any other
Person, (i) hire any employee of the Company or any of its Affiliates or seek to
persuade any employee of the Company or any of its Affiliates to discontinue
employment, (ii) solicit or encourage any customer or investor of the Company or
any of its Affiliates or independent contractor providing services to the
Company or any of its Affiliates to terminate or diminish its relationship with
them or (iii) seek to persuade any customer or investor or prospective customer
or investor of the Company or any of its Affiliates to conduct with anyone else
any business or activity that such customer or investor or prospective customer
or investor conducts or could conduct with the Company or any of its
Affiliates.

    

          (d) In
signing this agreement, you give the Company assurance that you have carefully
read and considered all the terms and conditions of this agreement, including
the restraints imposed on you under this Section 3.  You agree without
reservation that these restraints are necessary for the reasonable and proper
protection of the Company and its Affiliates and that each and every one of the
restraints is reasonable in respect to subject matter, length of time and
geographic area.  You further agree that, were you to breach any of
the covenants contained in this Section 3, the damage to the Company and its
Affiliates would be irreparable.  You therefore agree that the
Company, in addition to any other remedies available to it, shall be entitled to
preliminary and permanent injunctive relief against any breach or threatened
breach by you of any of those covenants, without having to post
bond.  You and the Company further agree that, in the event that any
provision of this Section 3 is determined by any court of competent jurisdiction
to be unenforceable by reason of its being extended over too great a time, too
large a geographic area or too great a range of activities, that provision shall
be deemed to be modified to permit its enforcement to the maximum extent
permitted by law.  It is also agreed that each of the Company’s
Affiliates shall have the right to enforce all of  your obligations to
that Affiliate under this agreement, including without limitation pursuant to
this Section 3.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

      Mr. E.A.
Kratzman, III

      Page
5

      
        August 5,
2009

      

      
        
          

        

      

    4. Termination of
Employment.   Your employment under this agreement may be
terminated prior to the expiration of the term hereof pursuant to this Section
4.

    

          (a) The
Company may terminate your employment for Cause upon notice to you setting forth
in reasonable detail the nature of the cause.  The following shall
constitute Cause for termination:  (i) your repeated material failure
to perform (other than by reason of disability), or gross negligence in the
performance of, your duties and responsibilities to the Company or any of its
Affiliates which failure is not cured within thirty (30) days after written
notice of such failure or negligence is delivered to you; (ii) your material
breach of this agreement or any other agreement between you and the Company or
any of its Affiliates which breach is not cured within thirty (30) days after
written notice of such breach is delivered to you; or (iii) commission by you of
a felony involving moral turpitude or fraud with respect to the Company or any
of its Affiliates.  The Company also may terminate your employment at
any time without cause upon notice to you.

    

          (b) This
agreement shall automatically terminate in the event of your death during
employment, and you shall be entitled to the severance payments set forth under
5 (a) below.  In the event of your death, any amounts owed to you
under this agreement will be paid to the beneficiary designated in writing by
you or, if no beneficiary has been so designated by you, to your
estate.  In the event you become disabled during employment and, as a
result, are unable to continue to perform substantially all of your duties and
responsibilities under this agreement, the Company will continue to pay you your
base salary and to provide you benefits in accordance with Section 2(a) above,
to the extent permitted by plan terms, for up to twelve (12) weeks of disability
during any period of three hundred and sixty-five (365) consecutive calendar
days.  If you are unable to return to work after twelve (12) weeks of
disability, the Company may terminate your employment, upon written notice to
you, and you shall be entitled to the severance payments set forth under 5 (a)
below.  If any question shall arise as to whether you are disabled to
the extent that you are unable to perform substantially all of your duties and
responsibilities for the Company and its Affiliates, you shall, at the Company’s
request, submit to a medical examination by a physician selected by the Company
to whom you or your guardian, if any, has no reasonable objection to determine
whether you are so disabled and such determination shall for the purposes of
this agreement be conclusive of the issue.  If such a question arises
and you fail to submit to the requested medical examination, the Company’s
determination of the issue shall be binding on you.

    

    (c) You may terminate your
employment hereunder for “Good Reason” by providing written notice to the
Company of the condition giving rise to the Good Reason no later than thirty
(30) days following the occurrence of the condition; by giving the Company
thirty (30) days to remedy the condition; and, if the Company fails to remedy
the condition, by terminating your employment within ten (10) days following the
expiration of such thirty (30) day period.  For purposes of this
letter agreement, the term “Good Reason” means, without your consent, the
occurrence of one or more of the following events:  (i) material
diminution in the nature or scope of your responsibilities, duties or authority
as contemplated by this letter agreement; (ii) failure by the Company to pay the
minimum Bonus Compensation set forth in 2(b) above in any year under this letter
agreement if you have achieved the annual financial target referenced therein;
or (iii) your being required to relocate to a principal place of employment
outside of the New York metropolitan area.  For purposes of this
paragraph 4(c) a change in reporting relationships resulting from a Change in
Control will constitute Good Reason.  In addition, a termination of
your employment by you for any reason during the 90-day period immediately
following a Change in Control shall be deemed to be a termination for Good
Reason for all purposes of this letter agreement.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

      Mr. E.A.
Kratzman, III

      Page
6

      
        August 5,
2009

      

      
        
          

        

      

    5. Severance Payments and Other
Matters Related to Termination.

    

          (a) In
the event of termination of your employment by the Company without Cause, by
death or disability, or a termination by you for Good Reason, for the remainder
of the then current term of this agreement, the Company will continue to pay you
your base salary (“severance payments”) and will continue to contribute to the
premium cost of your health insurance on the same terms and conditions as it
contributes for active employees provided that you make a timely election under
the federal law known as “COBRA” and provided further that you are entitled to
continue participation in the Company’s group health plan under applicable law
and plan terms.  The Company may, in its sole discretion, elect to
cease the continuation of base salary and contributions toward health insurance
premiums at any point after you have received one (1) year of base salary
continuation and health insurance contributions (or eighteen (18) months if you
are terminated by the Company within ninety (90) days of the completion of a
Change in Control) provided that it also releases you from your remaining
obligation under Section 3(c)(i) above.  The Company will also pay you
on the date of termination any base salary earned but not paid through the date
of termination and pay for any vacation time accrued but not used to that
date.  In addition, the Company will pay you any discretionary bonus
compensation to which you are entitled in accordance with Section 2(b) above,
but in no case less than $650,000, prorated to the date of termination and
payable at the time such monies are payable to Company executives
generally.  Any obligation of the Company to provide you severance
payments or other payments or benefits under this Section 5(a) is conditioned,
however, upon your signing and not revoking a release of claims in the form
provided by the Company (the “Employee Release”), which shall be delivered to
you not later than ten (10) business days following the date of termination and
you shall be required to execute the Employee Release and return it to the
Company, if at all, not later than the date determined by the Company to be the
last day of the period it must provide to you by law to consider the Employee
Release.  All severance payments will be in the form of salary
continuation, payable in accordance with the normal payroll practices of the
Company, and will begin at the Company’s next regular payroll period following
the effective date of the Employee Release (as specified in the Employee
Release), but shall be retroactive to the date of
termination.  Notwithstanding anything else contained in this
agreement, no bonus or severance payments or other payments or benefits will be
due and payable under any provision of this Section 5(a) until the next regular
Company payday following the effective date of the Employee
Release.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

      Mr. E.A.
Kratzman, III

      Page
7

      
        August 5,
2009

      

      
        
          

        

      

    (b) In the event of termination
of your employment by the Company for Cause or by you for any reason, the
Company will pay you any base salary earned but not paid through the date of
termination and pay for any vacation time accrued but not used to that
date.  The Company shall have no obligation to you for any bonus
compensation, benefits continuation or severance payments.

    

    (c) In the event of termination
of your employment by expiration of the term hereof or non-renewal of this
agreement, the Company will pay you any base salary earned but not paid through
the date of termination, pay for any vacation time accrued but not used to that
date, and any discretionary bonus compensation to which you are entitled in
accordance with Section 2(b) above, prorated to the date of termination and
payable at the time such bonuses are payable to Company executives
generally.  The Company shall have no obligation to you for any
severance payments or benefits continuation.

    

    (d) Except for any rights you
may have under Section 5(a) above or under the federal law known as “COBRA” to
continue participation in the Company’s group health and dental plans at your
cost, benefits shall terminate in accordance with the terms of the applicable
benefit plans based on the date of termination of your employment, without
regard to any continuation of base salary or other payment to you following
termination.

    

    (e) Provisions of this
agreement shall survive any termination if so provided in this agreement or if
necessary or desirable to accomplish the purposes of other surviving provisions,
including without limitation your obligations under Section 3 of
this  agreement.  The obligation of the Company to make
payments to you under this Section 5 is expressly conditioned upon your
continued full performance of obligations under Section 3
hereof.   Upon termination by either you or the Company, all
rights, duties and obligations of you and the Company to each other shall cease,
except as otherwise expressly provided in this agreement.

    

    6. Definitions.  For
purposes of this agreement, the following
definitions  apply:

    

    “Affiliates”
means all persons and entities directly or indirectly controlling, controlled by
or under common control with the Company or Kohlberg Capital (as applicable),
where control may be by management authority, equity interest or
otherwise.

    

    “Change
in Control” means:

    

    
      	
            	
              (i)

            	
              The
      acquisition by any person, entity or “group”, within the meaning of
      Section 13(d)(3) or 14(d)(2) of the Exchange Act (excluding, for this
      purpose, Kohlberg Capital or its Affiliates) of beneficial ownership of
      33% or more of either the then outstanding shares of Kohlberg Capital’s
      common stock or the combined voting power of the Kohlberg Capital’s then
      outstanding voting securities entitled to vote generally in the election
      of directors.

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Mr. E.A.
Kratzman, III

    Page
8

    
      August 5,
2009

    

    
      
        

      

    

    
      	
            	
              (ii)

            	
              Individuals
      who, as of the date hereof, constitute the Board of Directors of Kohlberg
      Capital (the “Incumbent Board”) cease for any reason to constitute at
      least a majority of the Board of Directors of Kohlberg Capital, provided
      that any person who first becomes a director subsequent to the date hereof
      whose recommendation, election or nomination for election by Kohlberg
      Capital’s stockholders was approved by a vote of at least a majority of
      the directors then comprising the Incumbent Board (other than an election
      or nomination of an individual whose initial assumption of office is in
      connection with an actual or threatened election contest relating to the
      election of the directors of Kohlberg Capital as described in Rule 14a-11
      of Regulation 14A promulgated under the Exchange Act) shall be, for the
      purposes of this Agreement, considered as though such person were a member
      of the Incumbent Board; or

            

    

     

    
      	
            	
              (iii)

            	
              Approval
      by the stockholders of Kohlberg Capital of a reorganization,
      share  exchange, merger or consolidation with respect to which,
      in any such case, the persons who were the stockholders of Kohlberg
      Capital immediately prior to such reorganization, share exchange, merger
      or consolidation do not, immediately thereafter, own more than 50% of the
      combined voting power entitled to vote in the election of directors of the
      reorganized, merged or consolidated company;
or

            

    

     

    
      	 	
              (iv)

            	
              Liquidation or
      dissolution of Kohlberg Capital or a sale of all or substantially
      all of the assets of Kohlberg
Capital.

            

    

    

     “Confidential
Information” means any and all information of the Company and its Affiliates
that is not generally available to the public. Confidential Information also
includes any information received by the Company or any of its Affiliates from
any Person with any understanding, express or implied, that it will not be
disclosed.  Confidential Information does not include information that
enters the public domain, other than through your breach of your obligations
under this agreement.

    

    “Person”
means an individual, a corporation, a limited liability company, an association,
a partnership, an estate, a trust or any other entity or organization, other
than the Company or any of its Affiliates.

    

    7. Conflicting
Agreements. You hereby represent and warrant that your signing of this
agreement and the performance of your obligations under it will not breach or be
in conflict with any other agreement to which you are a party or are bound and
that you are not now subject to any covenants against competition or similar
covenants or any court order that could affect the performance of your
obligations under this agreement.  You agree that you will not
disclose to or use on behalf of the Company any proprietary information of a
third party without that party’s consent.

    

    8. Withholding.  All
payments made by the Company under this agreement shall be reduced by any tax or
other amounts required to be withheld by the Company under applicable
law.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

      Mr. E.A.
Kratzman, III

      Page
9

      
        August 5,
2009

      

      
        
          

        

      

    9. Applicability of Section
409A.  If at the time of your separation from service, you are
a “specified employee,” as hereinafter defined, any and all amounts payable
under this agreement in connection with such separation from service that
constitute deferred compensation subject to Section 409A of the Internal Revenue
Code of 1986, as amended (“Section 409A”), including without limitation by
reason of the safe harbor set forth in Treasury Regulations 1.409A-1(b)(9)(iii)
and 1.409A-1(b)(4), as determined by the Company in its sole discretion, and
that would (but for this sentence) be payable within six months following such
separation from service, shall instead be paid on the date that follows the date
of such separation from service by six (6) months.  For purposes of
the preceding sentence, “separation from service” shall be determined in a
manner consistent with subsection (a)(2)(A)(i) of Section 409A and the term
“specified employee” shall mean an individual determined by the Company to be a
specified employee as defined in subsection (a)(2)(B)(i) of Section
409A.  For the avoidance of doubt, the payments and benefits described
in this agreement are intended either to comply with Section 409A (to the extent
they are subject to such section) or to be exempt from the requirements of such
section (where an exemption is available), and shall be construed
accordingly.

    

    10. Assignment.  Neither
you nor the Company may make any assignment of this agreement or any interest in
it, by operation of law or otherwise, without the prior written consent of the
other; provided, however, that the Company may assign its rights and obligations
under this agreement without your consent to one of its Affiliates or to any
Person with whom the Company shall hereafter affect a reorganization,
consolidate with, or merge into or to whom it transfers all or substantially all
of its properties or assets.  This agreement shall inure to the
benefit of and be binding upon you and the Company, and each of your and its
respective successors, executors, administrators, heirs and permitted
assigns.

    

    11. Severability.  If
any portion or provision of this agreement shall to any extent be declared
illegal or unenforceable by a court of competent jurisdiction, then the
remainder of this agreement, or the application of such portion or provision in
circumstances other than those as to which it is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision of
this agreement shall be valid and enforceable to the fullest extent permitted by
law.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Mr. E.A.
Kratzman, III

    Page
10

    
      August 5,
2009

    

    
      
        

      

    

    12. Miscellaneous.  This
agreement sets forth the entire agreement between you and the Company and
replaces all prior and contemporaneous communications, agreements and
understandings, written or oral, with respect to the terms and conditions of
your employment; provided, however, that this agreement shall not shall not
constitute a waiver by the Company or any of its Affiliates of any existing
right any of them now has or might now have under any agreement imposing
obligations on you with respect to confidentiality, non-competition,
non-solicitation or similar obligations with respect to conduct or events prior
to the effective date of this agreement.  This agreement may not be
modified or amended, and no breach shall be deemed to be waived, unless agreed
to in writing by you and an expressly authorized representative of the
Committee.  The headings and captions in this agreement are for
convenience only and in no way define or describe the scope or content of any
provision of this agreement.  This agreement may be executed in two or
more counterparts, each of which shall be an original and all of which together
shall constitute one and the same instrument. This is a Delaware contract and
shall be governed and construed in accordance with the laws of the State of
Delaware, without regard to the conflict of laws principles
thereof.

    

    13. Notices.  Any
notices provided for in this agreement shall be in writing and shall be
effective when delivered in person or deposited in the United States mail,
postage prepaid, and addressed to you at your last known address on the books of
the Company or, in the case of the Company, to it at its principal place of
business, attention of the Committee, or to such other address as either party
may specify by notice to the other actually received.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Mr. E.A.
Kratzman, III

    Page
11

    
      August 5,
2009

    

    
      
        

      

    

    If the
foregoing is acceptable to you, please sign this letter in the space provided
and return it to me.  We will provide a countersigned copy for your
records.

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	
                                      Sincerely
      yours,

                                    	 
      
	 
      	 
      
	/s/
      Christopher
      Lacovara	 
	
                                      Christopher
      Lacovara

                                    	 
      
	
                                      Vice
      President

                                    	 
      
	 	 
	
                                      Accepted
      and Agreed:

                                    	 
      
	 
      	 
      
	/s/
      E.A. Kratzman, III        	 
	
                                      E.A.
      Kratzman, III

                                    	 
      
	 
      	 
      
	                                         
       	 
	
                                      Date

                                    	 
      

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    cc:  Michael
I. Wirth, Kohlberg Capital CorporationUnassociated Document

    

    AMENDMENT
NO. 1 TO

    EMPLOYMENT
AGREEMENT

    

    This
Amendment No. 1 (“Amendment”), dated as of March 27, 2009 (the “Effective
Date”), hereby amends the Employment Agreement dated June 1, 2005 (“the
Agreement”), by and between AmTrust North America, Inc., 59 Maiden Lane, 6th floor,
New York, New York, a Delaware corporation (the “Company”) and Michael J. Saxon,
and individual residing at 514 Brookstone Court, Copley, Ohio 44321
(Executive”).

    

    WHEREAS, in consideration of
good and valuable consideration, which is  hereby
acknowledged, the Company and Executive desire to amend the Agreement as set
 forth
herein.

    

    NOW, THEREFORE, the parties
hereto agree as follows:

    

    
      1.    
Section 5
(Disability) of
the Agreement is hereby deleted and replaced in its
entirety with the following:

    

    
      
      

    

    

    5.   
Disability.    
In the event that Executive shall be unable to perform because of illness or
incapacity, physical or mental, all the functions, duties and responsibilities
to be performed by him hereunder for a consecutive period of two (2) months or
for a total period of three (3) months during any consecutive twelve (12) month
period, the Company may terminate this Agreement effective on or after the
expiration of such period (the “Disability Period”) upon five (5) business days’
written notice to Executive specifying the termination date (the “Disability
Termination Date”).  Disability under this paragraph shall be
determined by a physician who shall be selected by the Company and approved by
Executive.  Such approval shall not be unreasonably withheld or
delayed, and a physician shall be deemed to be approved unless he or she is
disapproved in writing by Executive within ten (10) days after his or her name
is submitted.  The Company may obtain disability income insurance for
the benefit of Executive in such amounts as the Company may
determine.  Executive shall be entitled to receive his Salary payable
for the remainder of the Employment Period or one year, whichever is greater, at
the rate in effect immediately before such termination and any reimbursement of
expenses due him through the date of termination, except that Salary shall be
offset by the amount of any long term disability benefits the Company may have
elected to provide for him.

    

    
      2.    
Section 6
(Death) of the Agreement is hereby deleted and replaced in its entirety with the
following:

    

    

    6.    
Death.  In
the event of the death of Executive during the Employment Period, this Agreement
and the employment of Executive hereunder shall terminate on the date of death
of Executive.  Executive’s heirs or legal representatives shall be
entitled to receive his Salary payable for the remainder of the Employment
Period or one year, whichever is greater, at the rate in effect immediately
before such termination and any reimbursement of expenses due him through the
date of termination.

     

    
      3.    
All
other provisions of the Agreement shall remain in effect in accordance with
their terms.

    

    

    AMTRUST
NORTH AMERICA, INC.

     

    
      
        	
                By:

              	
                /s/ Stephen Ungar

              	 	
                /s/ Michael J. Saxon

              
	 
      	
                Stephen
      Ungar

              	 	
                Michael
      J. Saxon

              
	 
      	
                Secretary

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