Exhibit 10.16

 

AMENDMENT NO. 1 TO THE
AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This Amendment No. 1 (the “Amendment”) to the Amended and Restated Employment
Agreement, dated as of December 31, 2008 (the “Employment Agreement”), is by and
between George M. Murphy (the “Executive”), and Safety Insurance Group, Inc., a
Delaware corporation (the “Company”), and is effective as of the latest date
specified below.

 

W I T N E S S E T H:

 

WHEREAS, the Executive and the Company previously entered into the Employment
Agreement; and

 

WHEREAS, in the interests of good corporate governance and to reflect best
practices in executive compensation, the Executive and the Company desire to
amend the Employment Agreement to remove provisions relating to the automatic
renewal of the term of the Employment Agreement in Section 3(a) and the excise
tax gross-up payments in Section 10.

 

NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, and other good and valuable consideration (including, but not limited
to, the grant of equity awards by the Company to the Executive for fiscal year
2013), the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:

 

1.                                      Section 3(a) of the Employment Agreement
shall be deleted in its entirety and replaced with the following:

 

(a)                                 The “Term of Employment” shall commence on
October 1, 2005 and shall continue until December 31, 2013; provided, that,
should the Executive’s employment by the Company be earlier terminated pursuant
to Section 3(b) or by the Executive pursuant to Section 3(c), the Term of
Employment shall end on the date of such earlier termination. The Company may
extend the Term of Employment by an additional twelve months (“Additional Term”)
pursuant to formal action by the Compensation Committee of the Board of
Directors at least 90 days prior to the scheduled expiration date of the Term of
Employment, unless the Executive notifies the Company of his or her decision to
decline any additional term before at least 120 days prior to the scheduled
expiration date of the Term of Employment.

 

2.                                      Section 3(f)(ii) of the Employment
Agreement is hereby amended in its entirety to read as follows:

 

(ii)                                  the Company shall pay or cause to be paid
to the Executive, within thirty business days after the date of termination, a
lump-

 

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sum payment equal to the annual base salary (in effect immediately prior to the
date of termination) the Executive would have received (a) over the remaining
Term of Employment or (b) in the event that Executive receives notification that
the Term of Employment is extended by an Additional Term, the annual base salary
Executive would have received through the end of the Additional Term. 
“Severance Period” shall mean the period from the date of termination through
the remaining current Term of Employment, or, in the event that Executive
receives notification of an Additional Term, the period from the date of
termination to the end of the Additional Term; and

 

3.                                      Section 10 of the Employment Agreement
is hereby amended in its entirety to read as follows:

 

10.                               Code Section 280G Cutback

 

(a)                                 If any payments or benefits paid or provided
or to be paid or provided to the Executive or for his benefit pursuant to the
terms of this Agreement or otherwise in connection with, or arising out of, his
employment with the Company or the termination thereof (a “Payment”) would be
subject to the excise tax (the “Excise Tax”) imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the “Code”), then the Payments shall
be reduced to the extent necessary to prevent any portion of the Payments from
becoming nondeductible by the Company under Section 280G of the Code or subject
to the Excise Tax, but only if, by reason of that reduction, the net after-tax
benefit received by the Executive exceeds the net after-tax benefit the
Executive would receive if no reduction was made. For this purpose, “net
after-tax benefit” means (i) the total of all Payments that would constitute
“excess parachute payments” within the meaning of Section 280G of the Code, less
(ii) the amount of all federal, state, and local income taxes payable with
respect to the Payments calculated at the maximum marginal income tax rate for
each year in which the Payments shall be paid to the Executive (based on the
rate in effect for that year as set forth in the Code as in effect at the time
of the first payment of the Payments), less (iii) the amount of the Excise Tax
imposed on the Payments described in clause (i) above. If a reduction in
Payments is necessary under this Section 10(a), the reduction shall be made in a
manner set forth in (b).

 

(b)                                 Any reduction of the Payments required under
Section 10(a) shall be made in the following order: (i) first, any

 

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cash amounts payable to the Executive as a severance benefit as provided in
Section 3(f)(ii), (g)(ii), (h)(ii), or (i)(ii) or otherwise; (ii) second, any
amounts payable on behalf of the Executive for continued health insurance
coverage under Section 3(f)(iii), g(iii), (h)(iii), or i(iii) or otherwise;
(iii) third, any other cash amounts payable to or on behalf of the Executive
under the terms of this Agreement or otherwise; (iv) fourth, any outstanding
performance-based equity grants; and (v) finally, any time-vesting equity
grants; in each case, the Payments shall be reduced beginning with Payments that
would be made last in time.

 

(c)                                  All determinations required to be made
under this Section 10 shall be made by the public accounting firm that is
retained by the Company (the “Accounting Firm”).  The Accounting Firm shall
provide detailed supporting calculations both to the Company and Executive
within fifteen (15) business days of the receipt of notice from the Company or
Executive that there has been a Payment, or such earlier time as is requested by
the Company.  All fees, costs and expenses (including, but not limited to, the
costs of retaining experts) of the Accounting Firm shall be borne by the
Company.  The determination by the Accounting Firm shall be binding upon the
Company and Executive.

 

4.                                      In all other respects, the Employment
Agreement is hereby ratified and confirmed.

 

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IN WITNESS WHEREOF, this Amendment has been executed as of the last date written
below.

 

 

 

EXECUTIVE:

 

 

 

 

 

/s/George M. Murphy

 

Name:

George M. Murphy

 

Date:

December 17, 2012

 

 

 

 

 

 

 

SAFETY INSURANCE GROUP, INC.:

 

 

 

 

 

 

 

/s/David F. Brussard

 

Name:

David F. Brussard

 

Title:

President, CEO and Chairman of the Board

 

Date:

December 17, 2012

 

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