Exhibit 10.4
AMENDMENT NO. 1
TO EMPLOYMENT AGREEMENT
-----------------------
This Amendment No. 1 is entered into on this 26th day of September,
1996, between XXXXXXX X. XXXXXXXX ("Employee") and THE MOUNTBATTEN SURETY
COMPANY, INC. (the "Corporation"). In consideration of the mutual covenants
herein, and intending to be legally bound hereby, the parties agree as follows:
1. Background. The parties entered into an Employment Agreement dated
March 15, 1992 (the "Agreement"), and Employee commenced his employment with the
Corporation on April 16, 1992. In May 1994, the Corporation changed its name
from the Mountbatten Environmental Insurance & Surety Company, Inc. to its
present name. Thereafter, the Corporation became a public company and the
parties now desire to amend the Agreement on the terms set forth below.
2. Amendment. Paragraph 5 of the Agreement shall be amended to read in
its entirety as follows: ---------
"5. At-will Employment
"(a) Employee's employment with Corporation began on April 16,
1992 and will continue until terminated as hereafter set forth.
"(b) This Agreement and all of Employee's rights hereunder
shall terminate upon the death of Employee, and neither Employee nor his
estate shall have any further rights hereunder except for any unpaid
compensation and reimbursements through the date of death.
"(c)Employee's employment hereunder shall be "at will" and
except as set forth in paragraph (d) and (e) below, either party shall have
the right to terminate this Agreement at any time, pursuant to the
following terms and conditions:
(1) Corporation shall have the right to terminate Employee's
employment and rights to compensation hereunder by providing to Employee
either (a) 90 days' prior written notice of such termination or (b)
immediate notice of termination together with an undertaking to continue
payment of Employee's compensation under this Agreement for 90 days,
provided that Employee abides by all obligations of his under this
Agreement. Upon the effective date of termination specified in such notice,
this Agreement shall terminate except for the provisions which expressly
survive termination, and Employee shall vacate the offices of the
Corporation.
(2) Employee shall have the right to terminate his employment
hereunder by providing ninety (90) days' written notice to the Board of
Directors. Thereafter, this Agreement shall terminate except for the
provisions which expressly survive termination.
"(d) Corporation shall have the right at any time upon prior
written notice immediately to terminate Employee's employment hereunder for
just cause. For the purpose of this Agreement, "termination for just cause"
shall mean termination only for personal dishonesty, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties (if Corporation gives Employee written notice thereof
and he fails to correct such failure within 30 days), willful violation of
any law, rule or regulation or final cease-and-desist order to be enforced
by any regulatory agency with jurisdiction over Corporation or any of its
affiliates or material breach of any provision of this Agreement (if
Corporation gives Employee written notice thereof and he fails to correct
such failure within 30 days). For purposes of this paragraph, no act or
failure to act on the Employee's part shall be considered "willful" or
"intentional" unless done or omitted to be done by him in bad faith and
without reasonable belief that his action or omission was in the best
interest of Corporation; provided that any act or omission to act on the
Employee's behalf in reliance upon an opinion of counsel to Corporation
shall not be deemed to be willful or intentional. In the event employment
is terminated for just cause, Employee shall have no right to compensation
or other benefits for any period after such date of termination.
"(e) Employee may terminate his employment hereunder for good
reason. For purposes of this Agreement, "good reason" shall mean any of the
following occurrences without Employee's express written consent within one
year subsequent to a change in control of the Corporation:
(1) the assignment to Employee of any duties inconsistent with
Employee's positions, duties, responsibilities and status with the
Corporation;
(2) a change in Employee's reporting responsibilities, titles
or offices as in effect immediately prior to a change in control of the
Corporation;
(3) any removal of Employee from, or any failure to re-elect
Employee to, any of such positions, except in connection with a termination
of employment for just cause, death, or retirement;
(4) a reduction by the Corporation in Employee's annual salary
as in effect immediately prior to a change in control or as the same may be
increased from time to time; or
(5) the failure of the Corporation to continue effect any
bonus, benefit or compensation plan, life insurance plan, health and
accident plan or disability plan in which Employee is participating at the
time of a change in control of the Corporation, or the taking of any action
by the Corporation which would adversely affect Employee's participation in
or materially reduce Employee's benefits under any such plans.
"(f) For purposes of this Agreement, a "change in control of
the Corporation" shall mean a change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") whether or not the Corporation is then subject
to such reporting requirement; provided that, without limitation, such a
change in control shall be deemed to have occurred if (i) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act in effect
on the date first written above), other than the Corporation or any
"person" who on the date hereof is a director or officer of the
Corporation, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 25% or more of the combined voting power of the
Corporation's then outstanding securities, or (ii) during any period of two
consecutive years during the term of this Agreement, individuals who at the
beginning of such period constitute the Board of Directors of the
Corporation cease for any reason to constitute at least a majority thereof,
unless the election of each director who was not a director at the
beginning of such period has been approved in advance by directors
representing at least two-thirds of the directors then in office who were
directors at the beginning of the period.
"(g) If Employee shall terminate his Employment for good
reason pursuant to paragraph (e) or if the Corporation terminates Employee
other than for just cause within one year after a change in control of the
Corporation, then in lieu of any further salary payments to Employee for
periods subsequent to the date of termination, the Corporation shall pay as
severance to Employee an amount equal to (i) the average aggregate annual
compensation paid to the Employee and includable in the Employee's gross
income for federal income tax purposes during the five calendar years
preceding the taxable year in which the date of termination occurs (or such
lesser amount of time if the Employee has not been employed by the
Corporation for five years at the time of termination) by the Corporation
and any of its subsidiaries subject to United States income tax, multiplied
by (ii) 2.99, such payment to be made in a lump sum on or before the fifth
day following the date of termination; provided, however, that if the lump
sum severance payment under this paragraph, either alone or together with
other payments which the Employee has the right to receive from the
Corporation, would constitute an "excess parachute payment" as defined in
Section 280G of the Internal Revenue Code of 1986 (the "Code"), such that
Employee has or may have liability for any excise tax under Section 4999 of
the Code, at the time payment is due or at the time of determination that
the same includes an "excess parachute payment", whichever is later, that
portion characterized as "excess" shall be treated as a loan by the
Corporation to the Employee, repayable on the following terms: the
principal shall be payable on the tenth annual anniversary of the actual
date of payment or the date of determination of the "excess", whichever is
later, with interest until paid, fixed at the applicable federal rate in
effect under Section 7872(f) (2) for the month in which such date occurs
and which shall accrue annually if not paid and thereupon be added to
principal, subject to the Employee's right to prepay interest or principal
in whole or in part at any time without premium or penalty. The
determination of the amount of any "excess parachute payment" shall be made
by independent counsel to the Corporation in consultation with the
independent certified public accountants of the Corporation. If for any
reason the basis for termination of this Agreement or payment of amounts
under this paragraph is disputed by either party to this Agreement or any
other person or agency, then pending resolution of any such dispute, within
five days after the due date of such payment, the Corporation shall deliver
the entire amount calculated in accordance with this paragraph to an
independent trustee to hold in an interest-bearing account in trust for the
benefit of the Employee and the Corporation, whichever may be ultimately
entitled to the same. The trustee shall be a bank or savings institution
(other than the Corporation) with deposits of at least $50,000,000,
unrelated to any parties in the dispute, and disinterested in any
transaction arising out of or engendering the dispute. If the parties are
unable to agree upon a trustee within the foregoing time period, then
either party may seek immediate relief from a court of competent
jurisdiction. In addition, the Corporation agrees that Employee would have
no adequate remedy at law for breach of the foregoing obligations, and
Employee shall be entitled to immediate injunctive and other appropriate
equitable relief to enforce the same."
3. Notices. Subparagraph (b) of Paragraph 9 is amended with regard to
notice to the Corporation as follows:
"(b) If to Corporation to:
The Mountbatten Surety Company, Inc.
00 Xxxx Xxxx Xxxx
Xxxx Xxxxxx, XX 00000
with a required copy to:
Xxxx X. Xxxxx, Esquire
X'Xxxxx, Xxxxx & Xxxxxxx, P.C.
000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000"
4. Effect. Except as set forth in this Amendment No. 1, the Agreement
shall remain in full force and effect, and as Amended hereby, the Agreement is
hereby ratified and confirmed by the parties.
IN WITNESS WHEREOF, the parties have executed or caused to be executed
this Amendment No. 1 on the date first written above.
"Employee":
/s/ Xxxxxxx X. Xxxxxxxx
-------------------
Xxxxxxx X. Xxxxxxxx
"Corporation":
THE MOUNTBATTEN SURETY
COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------
Xxxxxxx X. Xxxxx,
President
