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EXHIBIT 10.4
October 28, 1996
Xx. Xxxxxx X. Xxxxxx
North East Insurance Company
P.O. Box 1418
Scarborough, Maine 04070-1418
Re: Special Payments
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Dear Xxx,
This letter memorializes the actions taken by the Board of Directors of North
East Insurance Company (the "Board" of the "Company") on October 28, 1996, to
resolve any and all questions over your entitlements for services to date under
your Employment Agreement dated March 26, 1991 (the "Employment Agreement"), and
to secure your future services to the Company. When countersigned by you, this
letter will constitute an agreement between you and the Company whereby the
Company agrees to provide you with certain compensation (the "Compensation")
described below. In return, you agree to release the Board, the Company, its
agents and employees from any and all claims for relief or damages of any kind
that you may have against them to date under the scope and terms of the
Employment Agreement.
The Compensation shall be as follows:
(1) The Company shall make a lump sum cash payment to you in the amount of
$60,000 on or before December 31, 1996.
(2) For each of the ten calendar years commencing in 1997 and ending in
2006, the Company will make a special bonus payment to you, on or
before the last day of each such year. Each special bonus shall be in
the amount of $33,996.85. If your employment termination is the result
of (a) a voluntary termination by you, other than a termination for
"Good Reason" as defined in Section 4 of the Employment Continuity
Agreement executed between the Company and you on December 11, 1996
(the "ECA"), or (b) a termination by the Company for "Good Cause" as
defined in Section 6 of the ECA, you shall forfeit any rights to any
remaining unpaid special bonuses.
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Xx. Xxxxxx X. Xxxxxx
October 28, 1996
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(3) You have been awarded an option to purchase up to 200,000 shares of
the common stock of the Company at an exercise price of $1.6875. If
the Company's Shareholders fail to approve this Option on or before
the next annual meeting of the Shareholders, the Option and this
Agreement shall terminate, and your release of claims as described
above shall have no effect, provided you agree that any compensation
actually paid hereunder shall be offset against any such claims.
If you agree to the terms of this letter, please indicate your agreement by
writing the date and your signature on the lines provided below.
Sincerely yours,
NORTH EAST INSURANCE COMPANY
By: /s/ Xxxxxx Xxxxx
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Xxxxxx X. Xxxxx, Secretary
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
Executive Committee Member
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, President
December 11, 1996
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Date
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