Document:

EMPLOYMENT AGREEMENT

 

Exhibit 10.2

[Computer Associates Logo]

June 14, 2004

Kenneth V. Handal

1075 Park Avenue

New York, NY 10128

Dear Ken:

Congratulations! Computer Associates
International, Inc. (CA) is pleased to offer you the
position of Executive Vice President and General Counsel, in our
office in Islandia, NY, with a direct report to the Chief Executive
Officer. Please note this offer is
contingent on upon the successful completion and acceptance of
our background verification. We expect your start date to be on
or about July 1, 2004.

Your compensation will be an annual base salary
of $500,000 paid semi-monthly. Your compensation plan includes
an annual bonus with an incentive target of $435,000 and an
annual Long Term Incentive Compensation (LTIC) Plan with a
$825,000 target, in accordance with the Executive Compensation
Plan guidelines and vesting schedule.

The position offered is an exempt position and as
such you will not be compensated for overtime. In addition, the
executive management of CA will recommend to the Stock Option
and Compensation Committee (SO&C) of the Board of Directors
(BOD) that they award you (i) an option grant for
55,000 shares (at fair market value), and (ii) a restricted
stock grant of 10,000 shares, both upon hire. These CA stock
options and restricted stock are subject to the terms and
conditions of the Option Plan and/or the Incentive Plan, and are
granted at the sole discretion of the SO&C Committee.

Attached is a brief description of your benefits
at CA. You will receive more information concerning your benefit
program during your orientation on your first day of employment.
Also attached is a “Terms and Conditions” rider
setting forth other provisions concerning your employment. Note
that paragraph 2(b) of the attached “Description of
Employment Policies and Procedures” shall not apply with
respect to the period of July 1, 2004 through July 1,
2006, as those matters shall be governed by the Terms and
Conditions.

This offer is contingent upon your presentation
of the original documentation required to establish your
identity and permission to work in the United States in
accordance with United States immigration law. We have attached
the information required to identify the documentation you will
need to bring with you on your first day. In the event you
cannot produce proper documentation as outlined on the I-9
within 3 business days of your start date, this offer will
be considered to have expired.

We look forward to having you join us and we
expect that our relationship will be mutually rewarding. To
confirm your acceptance of this offer, please forward this
document directly back to me via e-mail within five days of
receipt. If I have not received your confirmation within five
days, this offer will be considered to have expired.

We realize that this is an important decision and
want to be certain you have all of the information that you
require. Should you have questions or require information beyond
what we have already discussed or what is contained in this
letter, please call me at 631-342-3288

Sincerely,

 

Description of Employment Policies and
Procedures

These benefits and policies may be modified,
changed or terminated at anytime in Computer Associate’s
sole discretion. None of these benefits are guaranteed by
Computer Associates. Except as required by law, the Plan
Administrator of any Computer Associates benefit which is
covered by the Employment Retirement Income Security Act of
1974, as amended, shall have the discretionary authority to
determine eligibility for benefits and construe the terms of
plans. In the event of any discrepancy between this document and
any other summary of plan benefits, the particular plan document
terms shall govern.

		
	1. 	
    As a full-time employee of Computer Associates,
    you must enroll in the company’s Long-Term Disability
    Income Plan in order to be covered by our medical and dental
    insurance plans. On your first day with us, you will be provided
    with details of the Disability Income Plan. If you do enroll,
    your insurance coverage will commence as of the date you begin
    work for Computer Associates. You will be eligible to
    participate in our employee benefit programs as described in our
    current Employee Handbook, which will be provided to you during
    your initial orientation.
    
	 
	2. 	
    You should understand and be aware of certain
    policies of Computer Associates, which are applicable to all of
    our employees as follows. Please note that CA may change these
    policies at anytime during your employment.
    

			
	 	a. 	
    Computer Associates is an Equal Employment
    Opportunity Employer and, as such, it is Computer
    Associates’ corporate policy to fill positions with
    qualified candidates regardless of race, color, sex, age,
    religion, ancestry, national origin, marital status, sexual
    preference, disability, veteran status or other protected group
    status, except where there is a bona fide qualification.
    

			
	 	b. 	
    Employment with Computer Associates is not for
    any specific period of time. You are free to resign at any time
    and, likewise, Computer Associates may terminate its employment
    arrangement with you at any time with or without cause or
    advance notice. Neither your offer letter nor this description
    should be construed as an employment contract or a guarantee of
    employment for any period in any way.
    

			
	 	c. 	
    Since our business involves highly confidential
    proprietary material, we require all employees to execute a
    standard confidentiality and non-competition agreement. Our
    offer of employment is subject to your acceptance and execution
    of this agreement. You will be given a copy to look over and
    sign on your first day with us.
    

			
	 	d. 	
    Regular pay is determined by dividing your annual
    salary by 24 pay periods. Paychecks are direct deposited
    semi-monthly. Please bring a voided check from your personal
    bank account on your first day of employment, and you will be
    asked to fill out an authorization agreement. You are also
    eligible to become a member of Bethpage Federal Credit Union
    (“BFCU”). BFCU offers convenient direct deposit
    checking and other banking services.
    

		
	3. 	
    We are required by the immigration laws to verify
    each employee’s identity and that each employee is entitled
    to work in the United States. Therefore, on your first day with
    us, we will ask you to give us identification (such as a Social
    Security Card or U.S. birth certificate, plus a valid
    driver’s license with photograph) and/or documents
    establishing your right to be employed in the U.S.A. (such as a
    U.S. passport, a certificate of U.S. citizenship, a valid
    foreign passport endorsed to permit employment in the U.S.A. or
    a resident alien “green” card). We are required by law
    to have this documentation before you may begin to work for
    Computer Associates. You may view the list of acceptable
    documents by going to
    http://www.ins.usdoj.gov/graphics/formsfee/files/i-9.pdf.
    
	 
	4. 	
    In order for CA to comply with its reporting
    obligations, prior to beginning work, we invite you to consider
    voluntarily self-identifying yourself to your Human Resources
    Representative as a disabled veteran, veteran of the Vietnam era
    or an individual with a disability. Self-identification is not
    mandatory; it is completely voluntary.
    

 

TERMS AND CONDITIONS RIDER

     Terms and Conditions Rider (“Rider”) attached to and made a part of the
letter of Computer Associates International, Inc., (“CA” or the “Company”) to
Kenneth V. Handal (“Executive”) dated June 14, 2004 (“Offer Letter”). As used
herein, this “Agreement” means the Offer Letter and attachments thereto,
including this Rider. Notwithstanding anything in the Offer Letter (and any
other attachments thereto) to the contrary, the parties agree as follows:

1. Employment. The Company shall employ Executive, and Executive accepts
employment with the Company, upon the additional terms and conditions set forth
herein for the period beginning on or about July 1, 2004 (“Commencement Date”)
and ending as provided in Section 5 hereof (the “Employment Period”). For all
purposes herein, the date Executive ceases to be employed by the Company shall
be the referred to herein as the “Termination Date”.

2. Annual Bonus. As used herein, “Annual Bonus” means the annual “Targeted Cash
Compensation” (or similar cash incentive compensation bonus) payable, if any,
pursuant to the Company’s annual Executive Compensation Plan in effect for the
applicable fiscal year. If Executive is employed on the last day of the
Company’s fiscal year, then Executive shall have earned the Annual Bonus, if
any, for such fiscal year.

3. Acceleration Events. Notwithstanding anything to the contrary herein, or in
any other agreement, policy or plan affecting the equity awards referenced in
the first two paragraphs of the Offer Letter and future equity awards granted
to Executive (collectively “Equity Awards”), all Equity Awards shall be 100%
vested upon the occurrence of either of the following: (a) if Executive’s
Employment Period is terminated for any reason other than pursuant to Section
5(a) (By Company for Cause), or Section 5(d) (By Executive at will); or (b)
upon a “Change of Control” (as defined in the 2002 Incentive Plan). “Equity
Awards” includes, without limitation, all long term incentive compensation
awards paid in the form of stock options, restricted stock or other equity
security-based compensation in accordance with the Executive Compensation Plan
in effect for the applicable fiscal year (the “Annual LTIC”). With respect to
any Annual LTIC grant pursuant to Section 6(a)(iii) hereof, such Annual LTIC
Award shall be exercisable for a minimum of twelve (12) months after the date
such equity awards are granted.

4. Additional Benefits. The Company shall provide the Executive with the
following:

     (a) Transportation. For so long as Executive resides in New York City, the
Company shall provide a stipend of not less than $4,000 per month for
transportation to and from the Company’s offices from Executive’s residence in
the metropolitan New York area.

     (b) Legal Fees. Upon the execution of this Agreement, the Company shall
pay to Executive’s attorneys legal fees and expenses incurred by Executive in
the negotiation and consummation of this Agreement in the amount of $5,000.

5. Term; Early Termination. The Employment Period shall commence on or about
July 1, 2004 and expire on July 1, 2006 (the “Contract Expiration Date”). The
Employment Period may terminate prior to the Contract Expiration Date by reason
of any of the following:

     (a) By Company for Cause. The Company may terminate the Employment Period
“for cause”, as set forth in this Section 5(a) (“Cause”). For purposes of this
Agreement, termination “for cause” shall mean that the Company terminates
Executive’s employment for any of the following reasons: (i) Executive’s
continued failure, either due to willful action or as a result of gross
neglect, to substantially perform his duties with the Company (other than any
such failure resulting from his incapacity due to physical or mental illness)
that, if capable of being cured, has not been cured within thirty (30) days
after written notice is delivered to Executive by the Company, which notice
specifies in reasonable detail the manner in which the Company believes that
Executive has not substantially

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performed his duties, (ii) the engaging by
Executive in conduct which is demonstrably and materially injurious to
the Company or its affiliates, monetarily or otherwise, unless the conduct
in question was undertaken in good faith on an informed basis with due care and
with a rational business purpose and based upon the honest belief that such
conduct was in the best interest of the Company or its affiliates, as the case
may be, (iii) Executive’s indictment or conviction (or plea of guilty or nolo
contedere) for any felony or any other crime involving dishonesty, fraud or
moral turpitude, (iv) Executive’s breach of fiduciary duty to the Company or
its affiliates which may reasonably be expected to have a material adverse
effect on the Company or its affiliates, (v) violation of the Company’s
policies relating to compliance with applicable laws which may reasonably be
expected to have a material adverse effect on the Company or its affiliates,
(vi) violation of the Company’s policies on discrimination, unlawful harassment
or substance abuse, (vii) violation of the Company’s Workplace Violence Policy,
or (viii) unauthorized use or disclosure of confidential or proprietary
information, or related materials, or the violation of any of the terms of the
Company’s standard confidentiality policies and procedures, in the case of any
item identified in this clause (viii) which may reasonably be expected to have
a material adverse effect on the Company or its affiliates and that, if capable
of being cured, has not been cured within thirty (30) days after written notice
is delivered to Executive by the Company, which notice specifies in reasonable
detail the alleged unauthorized use or disclosure or violation. For purposes
of clause (i) of this definition, no act, or failure to act, on Executive’s
part shall be deemed “willful” unless done, or omitted to be done, by Executive
not in good faith and without reasonable belief that his act, or failure to
act, was in the best interest of the Company or its affiliates, as the case may
be.

     (b) By Executive for Good Reason. The Executive may terminate the
Employment Period for good reason, as follows (“Good Reason”):

            (i) the assignment to the Executive of any duties inconsistent in any
material respect with the Executive’s position, authority, duties or
responsibilities as general counsel with ultimate authority and responsibility
for hiring, evaluating, promoting and/or dismissing attorneys of the Legal
Department of the Company, or which results in a significant diminution in such
position, authority, duties or responsibilities; or

            (ii) a material breach by the Company of any provision of this Agreement,
provided, however, that no alleged action, diminution or breach set forth in
preceding clause (i) or in this clause (ii), respectively, shall be deemed to
constitute “Good Reason” unless such action, diminution or breach remains
uncured, as the case may be, after the expiration of thirty (30) days following
delivery to Company from the Executive of a written notice, setting forth such
course of conduct deemed by Executive to constitute “Good Reason”; or

            (iii) any other action by the Company which, in the reasonable judgment of
the Executive, would cause him to violate his ethical or professional
obligations (after written notice of such judgment has been provided by the
Executive to the Board’s audit committee and the Company has been given a
thirty (30) day period within which to cure such action); or

            (iv) upon a Change of Control; or

            (v) the relocation of the Company’s corporate headquarters to a site
outside of a ninety (90) mile radius of Manhattan; or

     (c) By Company at will. The Company may terminate the Employment Period
other than for Cause pursuant to Section 5(a) at any time, upon notice to the
Executive.

     (d) By Executive at will. The Executive may terminate the Employment
Period other than for Good Reason pursuant to Section 5(b) at any time, upon
notice to the Company.

     (e) Death or Disability of Executive. The Employment Period shall
terminate immediately upon the death of Executive, or in the event of
Executive’s Disability, as hereafter defined. Disability shall mean Executive’s
inability to perform his responsibilities under this Agreement due to
physical/mental disease and/or injury, for (i) a period

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of six consecutive
months or (ii) shorter periods aggregating six months during any twelve month
period, if at the end of
such disability period, there is no reasonable probability of Executive
promptly resuming services pursuant to the terms of this Agreement. If the
Company wishes to seek to terminate this Agreement because of any alleged
Disability, the Company shall give Executive at least thirty (30) days written
notice of its intention to seek to terminate the Agreement by reason of
Disability. Upon the giving of such notice of intention, Executive may cure
any previous disability period by promptly resuming his services pursuant to
this Agreement within seven (7) days. In the event Executive cannot or does
not so resume his services following such notice, then the Company may
terminate the Employment Period for Disability.

6. Severance Payments.

     (a) Amount. If the Employment Period is terminated for any reason other
than pursuant to Section 5(a) (By Company for Cause), Section 5(d) (By
Executive at will) or Section 5(e) (Death or Disability of Executive) then (in
addition to payment of “Accrued Benefits” as defined and set forth in Section 7
hereof):

     (i) the Company shall pay Executive the Executive’s then current Base
Salary for the period commencing the day after the Termination Date and
continuing to the date twenty-four (24) months after the Termination Date (such
period hereinafter referred to as the “Severance Period”). Said payments shall
be made in equal installments in accordance with the Company’s normal payroll
practices applicable to its senior executives.; plus

     (ii) the Company shall pay to Executive a pro-rata portion of the
Executive’s Annual Bonus for the performance year in which the Executive’s
termination occurs at the time that annual bonuses are paid to other senior
executives (determined by multiplying the amount the Executive would have
received had employment continued through the end of the performance year by a
fraction, the numerator of which is the number of days during the performance
year of termination that the Executive is employed by the Company and the
denominator of which is 365); plus

     (iii) a pro-rata portion of the Annual LTIC for the performance year in
which the Executive’s termination occurs shall be granted (as determined by
multiplying all amounts of equity and cash the Executive would have received
from said Annual LTIC had employment continued through the end of the
performance year by a fraction, the numerator of which is the number of days
during the performance year of termination that the Executive is employed by
the Company and the denominator of which is 365); plus

     (iv) subject to the Executive’s continued copayment of premiums, if
applicable, at the contribution level paid by active employees, the Company
shall at its expense provide for Executive to continue participation for all
health and welfare plans which cover the Executive (and eligible dependents)
pursuant to and in accordance with the Executive’s rights under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”),
for the maximum period of time beyond the Termination Date for which Executive
(and any eligible dependant) is eligible for COBRA benefits (generally,
eighteen (18) months).

     (b) Mitigation and Setoff. Executive shall not be required to mitigate (by
seeking any other employment, self employment or any other income producing
pursuit) any amounts or benefits payable to him upon termination of the
Employment Period under this Agreement. Further, Executive shall not be
required to set off against any amounts or benefits payable to him upon
termination of the Employment Period under this Agreement, any compensation for
other employment, consultancy or unemployment benefits received while he is
receiving payments and benefits under this Agreement.

7. Salary and Benefits on Termination.

     (a) Accrued Benefits. If the Employment Period is terminated pursuant to
Section 5 then the Company shall pay to Executive all Base Salary through the
Termination Date, plus any unpaid but earned Annual Bonus for any completed
prior fiscal year of the Company, plus all unpaid benefits, including but not
limited to payment for unused vacation accrued or incurred through the
Termination Date.

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     (b) Extension of Medical Benefits. If the Employment Period is terminated
pursuant to Section 5(e)(due to Executive’s death or Disability), then the
Executive (and/or any immediate family eligible for the following coverage)
also shall be entitled to continue participation in the Company’s group health
plans on the same terms as set forth in Section 6(a)(iv) above.

8. Notice of Default. A party shall not be in default of this Agreement and/or
any other agreement related to Executive’s employment with the Company
(collectively, the “Employment Agreements”) until and unless the party alleging
a default (the “Non-Defaulting Party”) shall first give written notice,
specifying the nature of the alleged default, to the party or parties against
which the default is alleged (the “Defaulting Party”) and to any other parties,
and such default continues uncorrected for a period of thirty (30) days after
receipt by the Defaulting Party of such notice. The notice and opportunity to
cure procedure set forth in this Section 8 shall be a condition precedent to
the initiation of any arbitration (if subsequently agreed to by the parties
hereto) or litigation regarding the Employment Agreements.

9. Other Provisions.

     (a) The Company will indemnify Executive and hold Executive harmless, to
the maximum extent permitted by applicable law (including advancement of
expenses) and to the extent not covered by insurance, against all costs,
charges and expenses incurred or sustained by Executive (including but not
limited to reasonable legal fees) in connection with (i) any action, suit or
proceeding to which Executive may be made a party, brought by any shareholder
of the Company directly or derivatively or by any third party by reason of any
act or omission of Executive as an officer, director or employee of the Company
or of any parent, subsidiary or affiliate of the Company and/or (ii) any
governmental or quasi governmental investigation of or relating to the Company
(regardless of whether Executive is named, as a target of any such
investigation or otherwise). Such indemnification shall be in addition to any
rights of indemnification Executive may have under applicable law or under the
Certificate of Incorporation or By-Laws of the Company.

     (b) In the event of any dispute arising out of or under this Agreement or
the Executive’s employment with the Company, if the arbitrator or court of
competent jurisdiction, as applicable, determines that the Executive has
prevailed, the Company shall, upon presentment of appropriate documentation, at
the Executive’s election, pay or reimburse the Executive for all reasonable
legal and other professional fees, costs of arbitration, court proceedings and
other reasonable expenses incurred in connection therewith by the Executive.

     (c) Terms Defined under the 2002 Incentive Plan. As used in this
Agreement, all terms defined herein by reference to the Company’s 2002
Incentive Plan shall mean the definitions in said plan as were effective on the
date of execution of this Agreement.

     (d) Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of New York, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of New York or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.

     SIGNATURE PAGE FOLLOWS

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

	 	 	 	 	 
	 	 	Computer Associates International, Inc.
	 
	 	 	 	 
	

	 	By:
	 	/s/Andrew Goodman
	

	 	 	 	
 
	

	 	 	 	Senior Vice President, HR
	 
	 	 	 	 
	 
	 	 	 	 
	

	 	 	 	/s/Kenneth V. Handal
	

	 	 	 	
 
	

	 	 	 	Kenneth V. Handal

5FORM OF AGENCY AGREEMENTS

 

Exhibit 10.1

AGENCY AGREEMENT

     This Agreement is effective as of                                       , 2003, between
                                       (the “Agent”), having an address at
                                                          and PROFORMANCE INSURANCE COMPANY, having an
address at 4 Paragon Way, Freehold, New Jersey 07728 (the “Company”).

RECITALS

     A. The Company is a New Jersey insurance company authorized to transact
property and casualty insurance in the State of New Jersey.

     B. The Agent is a New Jersey licensed insurance agent who is also a
shareholder of National Atlantic Holdings Corp. (which corporation is the sole
shareholder of the Company) or whose employees are shareholders of National
Atlantic Holdings Corp.

     C. The Agent wishes to become an independent contractor of the Company and
the Company wishes to secure the Agent’s services as an independent contractor.

     NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereby agree as follows:

1. AGENT’S AUTHORITY

     1.1. The Agent is an independent contractor who will exercise his or her
own judgment in the conduct of the business conducted pursuant to this
Agreement. The Agent is not an employee of the Company and is free to
represent such other companies as the Agent shall consider appropriate. The
Agent shall have exclusive control of his or her time and of the conduct of his
or her agency and shall be responsible for all expenses incurred in the
operation of his or her agency.

     1.2. During the term of this Agreement, the Agent is authorized on behalf
of the Company to:

          (a) Solicit and submit applications for insurance;

          (b) Issue and deliver policies, certificates and endorsements as
authorized by the Company in manual rules and rates, underwriting guides,
bulletins or other written instructions;

          (c) Collect and receipt for premiums in compliance with Company
procedures;

          (d) Cancel policies at his or her discretion where cancellation is legally
permissible;

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          (e) Bind coverage and execute insurance contracts in accordance with the
guidelines furnished from time to time by the Company or as authorized by the
Company with respect to specific risks.

     1.3. The Agent shall forward copies of all policies, certificates and
binders issued by the Agent or otherwise notify the Company in writing of all
liability accepted, not later than the seventh (7th) day following the
inception date of coverage.

     1.4. The manuals and the policy, endorsement and binder forms furnished to
the Agent by the Company shall remain the property of the Company and shall be
accounted for or returned upon request.

     1.5. All accounting records pertaining to the Agent’s business with the
Company shall be subject to inspection and audit at any time with or without
prior notice, by the Company’s representative.

     1.6. The Agent shall not publish or distribute any advertisements,
circulars or other materials referring to the Company or containing the
Company’s name without first securing written approval from the Company.

     1.7. The Agent shall not bind coverage nor issue, renew or deliver on the
Company’s behalf any policy covering a risk located in a state in which the
Agent is not a licensed resident agent, unless the Agent is otherwise
authorized to engage in the insurance business in such state.

     1.8. This Agreement does not give the Agent the exclusive right to
represent the Company in any area.

2. UNDERWRITING CONTROL OF THE COMPANY

     The Company reserves the right to refuse to write any policy at any time
or to cancel any policy where legally permissible, subject to the provisions of
Section 4 of this Agreement.

3. INDEMNIFICATION OF AGENT

     3.1. The Company shall indemnify and hold the Agent harmless:

          (a) Against any claims, liabilities or costs of defense which the Agent
may become obligated to pay as a result of loss to policyholders caused
directly by an error of the Company in the processing of policies under this
Agreement, except to the extent that the Agent has caused, contributed to or
compounded such error, directly or indirectly; and

          (b) Against any and all civil liability for damages and expenses,
including the cost of defense, that the Agent may be obligated to pay as a
direct result of the failure of the Company to comply with the requirements of
the Fair Credit Reporting Act, Federal Truth In Lending Law and Fair Credit
Billing Act, except to the extent that such failure to comply has been caused
or contributed to by any negligence, willful or intentional act or omission of
the Agent.

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          (c) Against liability, including cost of defense and settlements, imposed
on the Agent by law for damages sustained and caused by acts or omissions of
the Company in connection with the performance of loss control counseling,
inspections or similar related work for the Agent’s clients or customers,
provided the Agent has not caused or contributed to such liability by his own
acts, errors or omissions.

     3.2. The Company’s obligation to indemnify shall be conditioned upon
prompt notification by the Agent to the Company of any claim made or legal
action brought against the Agent which is subject to indemnification as set
forth above and the Company shall have the right to direct the investigation,
settlement and defense of any such claim or action.

4. COMMISSIONS

     4.1. The Company shall pay commissions to the Agent in accordance with the
rates and conditions set forth in the current Commission Schedule attached to
this Agreement, as modified from time to time.

     4.2. Commission rates may be revised by mutual agreement of the Agent and
the Company, or by the Company giving the Agent at least sixty (60) days
advance notice of the revisions and the effective date thereof.

     4.3. Undistributed commissions in the hands of the Company at any time may
be applied to and constitute an offset against any monies due the Company from
the Agent.

     4.4. In the event that the Company shall either during the term of this
Agreement or after its termination, refund premiums under any policy by reason
of cancellation or otherwise, the Agent shall immediately return to the Company
the commission received on the premium refunded.

     4.5. Nothing contained in this Section 4 shall prohibit the negotiation of
special commission rates on individual policies.

5. PREMIUM COLLECTION

     5.1. With respect to direct-billed policies:

          (a) The Agent agrees to collect and remit to the Company, the initial
premium together with the completed application declaration within the time
period set forth in the established Company procedure.

          (b) The Agent assumes responsibility for the payment of the initial
premium on policies issued by or through the agency whether or not such premium
is collected or collectible.

          (c) The Company shall bill all renewal or adjustment premiums direct to
the insured or to a designated lending institution or servicing agency holding
premiums in escrow or reserve. These premiums are payable to the Company in
gross.

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          (d) Should any renewal, additional or endorsement premiums on business
written pursuant to the agreement come into the Agent’s hands, the Agent will
remit the premium in gross to this Company within the time period set forth in
the established Company procedures.

          (e) The Company shall pay the Agent, as full compensation on premiums
remitted to or collected by the Company, commissions at the rates and in the
manner specified on the commission schedule attached to this Agreement.

     5.2. With respect to agency billed policies, the Agent has the authority
and responsibility to collect, receive and receipt for premiums on business
written by the Agent and to retain out of the premiums collected commissions at
the rate indicated on the current commission schedule attached to this
Agreement. This provision does not apply to business written on a
direct-billed basis.

     5.3. The Company shall render a premium accounting to the Agent and the
Agent shall pay to the Company, net premiums due on all agency-billed insurance
placed by or through the Agent with the Company not later than forty-five (45)
days after the close of the month in which the business becomes affective,
whether such premiums are collected or collectible. If the Agent is unable to
collect an additional premium developed by adjustment or audit and provided
there is no premium development on other policies issued by the Company to the
insured which may be used as a set-off, the Agent may request the Company to
undertake direct collection of the premium and relieve the Agent of the
responsibility for the premium. However, the Agent must make this request to
the Company in writing within forty-five (45) days from the date the Agent
receives written notification that the additional premium is due. No
commission will be paid to the Agent on any premium returned to the Company for
direct collection. It is agreed and understood that the Agent’s failure to
request such direct collection within said forty-five (45) day period shall
obligate the Agent to remit the premium regardless of whether or not the Agent
collects the premium from the insured.

     5.4. All premiums received by the Agent pursuant to the authority granted
by this Agreement shall be held by the Agent in a fiduciary capacity as trustee
for the Company. The privilege of deducting commissions from premium monies
received by the Agent shall not be construed as an alteration of this fiduciary
capacity.

     5.5. If the Agent is delinquent in either accounting or payment of monies
due, the Company may by written notice to the Agent, immediately terminate,
suspend, or modify any provision of this Agreement. The Company shall not take
such action where only minor differences occur between the Company’s and the
Agent’s accounting records. Where major differences occur between accounting
systems, the Company, at its discretion, shall not take such action without an
opportunity for an exchange of information with the Agent concerning such
differences.

     5.6. The Company shall clearly and prominently identify the Agent by name
when transmitting policies, endorsements, premium notices, cancellation notices
and other communications to policyholders. The Company shall also provide the
Agent with a copy of all such items sent to policyholders.

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     5.7. In the event of termination of this Agreement by the Company,
provided the Agent is not in default, the Company will at the Agent’s request,
furnish a list of policyholders, with the expiration dates of the policies, and
will mail appropriate non-renewal notification to policyholders, as required by
law.

6. POLICY CANCELLATIONS

     6.1. The Company shall honor any request by the Agent for cancellation of
any insurance contract provided that such cancellation is not in violation of
statutory or policy provisions.

     6.2. The Company shall not initiate cancellation of any insurance contract
written for a six (6) month or annual term after the contract has been in force
for sixty (60) days, except:

          (a) For failure to furnish reports required by the policy terms, or

          (b) For non-payment of premium, or

          (c) When in the Company’s opinion there is a material change or increase
in exposure, or a material fact has been either misrepresented or not disclosed
to the Company.

7. OWNERSHIP OF EXPIRATIONS

     7.1. In the event of termination of this Agreement, provided the Agent has
promptly accounted for and paid over premiums which are due the Company, the
Agent’s records and expirations shall remain the property of the Agent and be
left in his undisputed possession; otherwise the records and expirations shall
be vested in the Company.

     7.2. Should there be a dispute over the extent of the Agent’s liability to
the Company, such dispute shall not prevent application of the above ownership
of expirations clause in favor of the Agent, provided the Agent promptly
furnishes collateral security acceptable to the Company in the amount of the
difference, to be held by the Company until the difference is resolved.

     7.3. In the event of termination of this Agreement, where the ownership of
expirations clause applies in favor of the Company, and the amount realized by
the Company from the records and expirations exceeds the total obligations of
the Agent to the Company plus the expenses of such realization, such excess as
determined by the Company will be promptly paid to the Agent.

     7.4. Except in the case of default by the Agent as set forth in Section
7.1 above, the Company shall not refer or communicate the expiration or the
Agent’s work product to any other agent or broker.

8. CONFIDENTIALITY

     8.1. While working with the Company, the Agent may acquire Proprietary
Information. As used herein, “Proprietary Information” is understood to
include the Company’s

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manner of operation, business methods, premiums, products, servicing
techniques, customers, underwriting guidelines and other information that is
not clearly public knowledge.

     8.2. The Agent hereby agrees:

          (a) It will use Proprietary Information only in the performance of its
duties to the Company. It will not use Proprietary Information at any time
(during or after the term of this Agreement) for its personal benefit, for the
benefit of any other person or firm, or in any manner adverse to the Company’s
interests.

          (b) Agent shall not disclose Proprietary Information at any time (during
or after the term of this Agreement) except to authorized Company personnel,
unless the Company consents in advance in writing.

          (c) Agent shall return all material relating to Proprietary Information to
the Company at the termination of this Agreement.

9. REHABILITATION

     Prior to taking any steps to terminate this Agreement pursuant to Section
10.1(c), the Agent and Company may by mutual Agreement enter into a
rehabilitation program to avoid termination. This program will specify what
the Agent must do to avoid termination and how the Company intends to assist
the Agent to avoid termination.

10. TERMINATION PROVISIONS

     10.1. This Agreement shall terminate:

          (a) Automatically if any public authority cancels or declines to renew the
Agent’s license or Certificate of Authority.

          (b) Automatically on the effective date of sale, transfer or merger of the
Agent’s business provided, however, that the Company at its discretion may
offer an Agency Agreement to any successor who meets the Company’s requirements
for appointment.

          (c) Upon either party giving at least ninety (90) days advance written
notice to the other.

          (d) Immediately upon either party giving written notice to the other in
the event of abandonment, fraud, insolvency, or gross negligence or willful
misconduct on the part of such other party.

     10.2. Subject to requirements imposed by law, if this Agreement is
terminated as provided in Section 10.1(c) above:

          (a) The Company shall not, except at the Agent’s request, refuse to renew
any policy during the twelve (12) month period immediately following
termination of this Agreement, or cancel any policy after it has been in effect
for sixty (60) days except:

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	 	(i)	 	(For non-payment of premium or
non-reporting of the basis for premium calculations; or
	 
	 	(ii)	 	When in the Company’s opinion, there
is:

	 	(A)	 	An increase in hazard; or
	 
	 	(B)	 	The risk does not meet
the Company’s normal underwriting standards; or
	 
	 	(C)	 	A material fact was
misrepresented or not disclosed to the Company at
the time of
acceptance.

	 	 	 	On such renewals during the twelve (12) months following
termination, the Company shall pay commissions at the rate in
effect at that time, in conjunction with the provisions of
Section 4 of this Agreement.

          (b) All provisions of this Agreement shall remain in full force and effect
including Section 4 commissions, except Section 4 and the authority granted to
the Agent under Section 1.2, (a), (b), (c) and (f), until all in-force
insurance contracts have expired and been terminated and premiums collected.

          (c) The Agent is authorized to issue and countersign appropriate
endorsements on contracts of insurance in force excluding endorsements on
fidelity or surety bonds. The endorsements, however, shall not increase or
extend the Company’s liability or extend the term of any insurance contract
without the Company’s prior approval.

          (d) The Company shall continue to provide to the policyholders all normal
and appropriate services on all in-force insurance contracts without
interruption.

11. AGENT’S SUCCESSOR

     This Agreement may only be assigned with the prior expressed, written
consent of the Company to the Agent’s successor or successors, provided such
successor or successors meet the Company’s requirements for appointment as set
forth in this Agreement, the Share Repurchase Agreement between the Agent and
National Atlantic Holdings Corp. or any other communication provided to the
Agent by the Company. No other assignment of this Agreement may be made by the
Agent without the prior written consent of the Company, which consent shall not
be unreasonably withheld.

12. CHANGES IN THIS AGREEMENT

     12.1. This Agreement may be supplemented, amended or revised only in
writing by mutual agreement of the Agent and the Company except as provided in
Sections 1.2(b) and 4.2. Revisions of this Agreement, including commission
changes, are limited to three (3) times per calendar year except where mutually
agreed upon or mandated by government authority.

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     12.2. Failure of the Company for any reason to insist upon compliance by
the Agent with the provisions of this Agreement or the rules and regulations of
the Company shall not be construed as or constitute a waiver thereof.

13. ARBITRATION

     13.1. In the event of a dispute arising out of or under this Agreement,
the Agent and the Company shall make every effort to meet and resolve such
dispute in good faith, informally. If the parties cannot agree upon a
settlement to the dispute within thirty (30) days after it arises, or within
such longer period agreed on by the parties, then by mutual consent of the
parties, the matter in controversy shall be settled by arbitration. The
parties may agree to submit the dispute to one (1) arbitrator; otherwise, three
(3) arbitrators shall be selected: one by the Agent, one by the Company, and
the third by the other two (2) arbitrators or, should they disagree, from a
panel of the Board of Governors, Insurance Arbitration Forums. The
determination of any two of the arbitrators shall be final and binding provided
it is made in writing and signed by a majority of the arbitrators, and judgment
upon the determination may be entered in any court having jurisdiction.

     13.2. The costs of arbitration shall be borne equally by the parties,
provided, however, that the arbitrators may assess one party more heavily than
the other for these costs upon a finding that the party did not make a good
faith effort to settle the dispute informally when it first arose.

     13.3. The terms and provisions of this Section 13 (“Arbitration”) do not
apply to Section 4 hereof.

14. GENERAL PROVISIONS

     14.1. Whenever under the provisions of this Agreement notice is required
to be given, it shall be in writing and shall be deemed given when mailed,
postage prepaid, by registered or certified mail, return receipt requested,
addressed to the Agent at his address as set forth herein, or to such other
address as may appear on the record books of the Company, and addressed to the
Company at its principal business office.

     14.2. The Company shall include all credits for salvage and subrogation
recoveries on agency premium and loss exhibits.

     14.3. Should a conflict exist as to which producer is authorized to
represent an insured with respect to any insurance policy issued by the
Company, the insured’s most recent written statement designating as accepted by
the Company the insured’s Agent shall be controlling.

     14.4. The Agent shall have no authority to admit liability on the part of
the Company in any manner except in accordance with specific claim settlement
authority extended to the Agent in writing.

     14.5. The Agent agrees to comply with all laws affecting his operation and
to maintain his qualifications for licensing by appropriate authorities.

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     14.6. If any provision of this Agreement should be invalid under or in
conflict with the laws of any state, such laws shall control; but in all other
respects the remainder of this Agreement shall not be affected.

     14.7. The following Schedules or Addenda have been issued simultaneously
with this Agreement and have become a part hereof:

15. PRIOR AGREEMENTS

     This Agreement replaces and supersedes all Agency Agreements, written or
oral, which may have existed between the Agent and the Company. It constitutes
the full agreement of the parties.

Executed this                     day of                                       ,2003.

	 	 	 	 	 
	 	 	PROFORMANCE INSURANCE COMPANY
	 
	 	 	 	 
	

	 	BY:	 	 
	

	 	 	 	
 
	 
	 	 	 	 
	 	 	AGENT:
	 
	 	 	 	 
	 	 	
 
	 
	 	 	 	 
	

	 	BY:	 	 
	

	 	 	 	
 

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