EX-10.1






Exhibit 10.1




EMPLOYMENT AGREEMENT




     THIS AGREEMENT (the “Agreement”), dated as of March 23, 2009, is by and between Tower Group,
Inc., a Delaware corporation (the “Company”), and Richard Barrow (the “Executive”).



WITNESSETH THAT




     WHEREAS, the Executive and the Company wish to enter into a written agreement setting forth
the terms and conditions of the Executive’s employment with the Company; and



     WHEREAS, this Agreement is the entire agreement between the parties concerning the subject
matter hereof and supersedes all prior agreements concerning the same subject.



     NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein,
the Company and the Executive hereby agree as follows:



     1. Term.



          (a) Term of Employment.




               (i) The Company shall employ the Executive, and the Executive shall serve the Company, on the
terms and subject to the conditions set forth in this Agreement, commencing on or prior to March
23, 2009 (the “Effective Date”) and, unless sooner terminated pursuant to section 4, continuing
until the date that is the two-year anniversary of the Effective Date or such later date as
provided in subsection 1(a)(ii) below (the “Term of Employment”).



               (ii) The Term of Employment shall be extended automatically for one additional year on the
last day before the second anniversary of the Effective Date and for one additional year on each
anniversary thereafter unless and until either party gives written notice to the other not to
extend this Agreement at least one year before such extension would be effectuated.



          (b) Term of the Agreement. This Agreement shall become effective on the Effective
Date and shall continue in effect throughout the Term of Employment; provided, however, the
restrictive covenants contained in section 10 of this Agreement and, as applicable, the Company’s
and the Executive’s obligations under the other provisions of this Agreement shall survive the Term
of Employment and shall continue in effect through the periods provided therein and/or until the
Company’s and/or the Executive’s obligations, as applicable, thereunder are satisfied.




     2. Position and Duties.



          (a) Positions, Duties, and Responsibilities. The Executive shall serve as the Senior
Vice President, Chief Accounting Officer of the Company with such duties and responsibilities as
are customarily assigned to such position, and such other duties and responsibilities not
inconsistent therewith as may from time to time be assigned to him by the Chief Financial Officer
(the “CFO”) of the Company. The Executive shall report solely to the CFO unless the CFO, Chief
Executive Officer (CEO) or the Board of Directors of the Company (the “Board”) determines
otherwise. The Executive agrees to serve without additional compensation in such capacities
(including, without limitation, as an employee or director) with Company affiliates as the CFO, CEO
or the Board may in its discretion prescribe; provided, that upon termination of the Executive’s
employment with the Company, any employment,
board membership or other service relationship with such affiliate shall automatically
terminate unless otherwise determined by the parties hereto.




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          (b) Time and Attention. Excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive shall devote substantially all of his attention and time
during normal working hours to the business and affairs of the Company and its affiliates. It
shall not be considered a violation of the foregoing, however, for the Executive to (i) serve on
corporate, industry, educational, religious, civic, or charitable boards or committees or (ii) make
and attend to passive personal investments in such form as will not require any material time or
attention to the operations thereof during normal working time and will not violate the provisions
of section 10 hereof, so long as such activities in clauses (i) and (ii) do not materially
interfere with the performance of the Executive’s responsibilities as an employee of the Company in
accordance with this Agreement or violate section 10 of this Agreement.




     3. Compensation. Except as otherwise expressly set forth below, the Executive’s
compensation shall be determined by, and in the sole discretion of, the Board.



          (a) Annual Base Salary. Subject to adjustment pursuant to this subsection 3(a), the
Executive shall receive an annual base salary of $326,000 during the Term of Employment (the annual
base salary in effect from time to time, “Annual Base Salary”). The Annual Base Salary shall be
payable in accordance with the Company’s regular payroll practice for its senior officers, as in
effect from time to time. The Annual Base Salary shall be reviewed from time to time, but not less
frequently than annually, and, in the sole discretion of the Board, may be adjusted but not
decreased below the amount set forth in the first sentence of this subsection 3(a). To the extent
Annual Base Salary is adjusted, then such adjusted salary shall be the Executive’s Annual Base
Salary for all purposes of this Agreement.




          (b) Adjusted Base Salary.: For purposes of calculating the annual bonus award and the
annual equity award the Executive’s adjusted base salary will be $286,000. The Adjusted Base
Salary shall be reviewed from time to time, but not less frequently than annually, and, in the sole
discretion of the Board, may be adjusted but not decreased below the amount set forth in the first
sentence of this subsection 3(b). To the extent Adjusted Base Salary is adjusted, then such
adjusted salary shall be the Executive’s Adjusted Base Salary for all purposes of this Agreement.




          (c) Annual Bonus Plan. The Executive shall have an opportunity to receive an annual
bonus during the Term of Employment (the “Annual Bonus”), subject to such terms and conditions as
the Board or a delegatee thereof shall prescribe. The Executive’s target Annual Bonus opportunity
shall be equal to 30% of his Adjusted Base Salary, it being understood that the actual Annual Bonus
received by the Executive will depend on the level of attainment of performance and other factors
used by the Company to determine Annual Bonus amounts and that there is no guarantee that an Annual
Bonus will be earned.




          (d) Annual Equity Award. The Executive shall have an opportunity to receive an annual
equity award (the “Annual Equity Award”) under the Company’s long-term incentive plan
during the Term of Employment, subject to such terms and conditions as the Board or a delegate
thereof shall prescribe. The Executive’s target Annual Equity Award opportunity shall be equal to
30% of his Adjusted Base Salary, it being understood that the actual Annual Equity Award received
by the Executive will depend on the level of attainment of performance and other factors used by
the Company to determine Annual Equity Awards and there is no guarantee that an Annual Equity Award
will be granted.




          (e) Employee Benefits; Fringe Benefits. In addition to the foregoing, during the Term
of Employment,




               (i) to the extent not duplicative of the specific benefits provided herein, the Executive
shall be eligible to participate in all incentive compensation, retirement, supplemental



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executive
retirement, and deferred compensation plans, policies and arrangements that are provided generally
to other senior officers of the Company;




               (ii) the Executive and, as applicable, the Executive’s covered dependents shall be eligible to
participate in all of the Company’s health and welfare benefit plans (within the meaning of Section
3(1) of the Employee Retirement Income Security Act of 1974, as amended); and



               (iii) the Executive shall be entitled to receive the fringe benefits that are provided
generally to other senior officers of the Company, and shall be entitled to avail himself of paid
holidays, as determined from time to time by the Company.



          (f) Paid Time Off. The Executive shall be entitled to not less than twenty-eight paid
time off (“PTO”) days per calendar year during the Term of Employment. PTO days not used
within the year shall be carried forward to subsequent years, as determined by the Company;
provided, however, that the maximum carry forward of PTO shall be two weeks.




          (g) Expenses. The Executive shall be reimbursed by the Company for reasonable
business expenses actually incurred in rendering to the Company the services provided for hereunder
during the Term of Employment, payable in accordance with customary Company practice, after the
Executive presents written expense statements or such other supporting information as the Company
may require of its senior officers for reimbursement of such expenses.




          (h) Executive Medical Reimbursements: The Company will reimburse the Executive for
uncovered medical expenses, up to $5,000 per calendar year, subject to receipt by the Company of
appropriate documentation from the Executive. Expenses that do not meet the IRS criteria cannot be
submitted for reimbursement.




     4. Termination of Employment.



          (a) The Company or the Executive may terminate the Executive’s employment at any time and for
any reason in accordance with subsection 4(b) below. The Term of Employment shall be deemed to
have ended on the last day of the Executive’s employment. The Term of Employment shall terminate
upon the Executive’s death.




          (b) Notice of Termination. Any purported termination of the Executive’s employment
(other than by reason of death) shall be communicated by written Notice of Termination from one
party hereto to the other party hereto in accordance with the notice provisions contained in
subsection 16(b) below. For purposes of this Agreement, a “Notice of Termination” shall mean a
notice that indicates the Date of Termination (as that term is defined in subsection 4(c) below)
and, with respect to a termination due to Disability, Cause or Good Reason, sets forth in
reasonable detail the facts and circumstances that are alleged to provide a basis for such
termination. A Notice of Termination from the Company shall specify whether the termination is
with or without Cause or due to the Executive’s Disability. A Notice of Termination from the
Executive shall specify whether the termination is with or without Good Reason or due to the
Executive’s Disability or retirement.




          (c) Date of Termination. For purposes of this Agreement, “Date of Termination” shall
mean the date specified in the Notice of Termination (but in no event shall such date be earlier
than the 30th day following the date the Notice of Termination is given, unless expressly agreed to
by the parties hereto) or the date of the Executive’s death.




          (d) No Waiver. The failure to set forth any fact or circumstance in a Notice of
Termination, which fact or circumstance was not known to the party giving the Notice of Termination




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when the notice was given, shall not constitute a waiver of the right to assert such fact or
circumstance in an attempt to enforce any right under or provision of this Agreement.




          (e) Cause. For purposes of this Agreement, “Cause” means: (i) the Executive’s gross
negligence or gross misconduct or (ii) the Executive’s having been convicted of, or entered a plea
of nolo contendere to, a felony involving moral turpitude. No act or failure to act directly
related to Company action or inaction that constitutes Good Reason (as that term is defined in
subsection 4(g) below) shall constitute Cause under this Agreement if the Executive has provided a
Notice of Termination based on such Good Reason event prior to the Company’s giving of the Notice
of Termination for Cause. The Executive’s termination for Cause shall be effective when and if a
resolution is duly adopted by an affirmative vote of the entire Board (less the Executive), stating
that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in
the Notice of Termination, and such conduct constitutes Cause under this Agreement; provided,
however, that the Executive shall have been given the opportunity (i) to cure any act or omission
that constitutes Cause if capable of cure and (ii) together with counsel, during the 30-day period
following the receipt by the Executive of the Notice of Termination and prior to the adoption of
the Board’s resolution, to be heard by the Board.




          (f) Disability. For purposes of this Agreement, the Executive shall be deemed to have
a Disability if the Executive is entitled to long-term disability benefits under the Company’s
long-term disability plan or policy, as the case may be, as in effect on the Date of Termination
(as that term is defined in subsection 4(c) above)




          (g) Good Reason. For purposes of this Agreement, the term “Good Reason” means the
occurrence (without the Executive’s express written consent) of any of the following acts or
failures to act by the Company:




               (i) the assignment to the Executive of duties materially inconsistent with the Executive’s
position of Senior Vice President, Chief Accounting Officer, or a substantial diminution in the
Executive’s authority and duties;



               (ii) any reduction in the Executive’s Annual Base Salary, Adjusted Base Salary, target Annual
Bonus opportunity or target Annual Equity Award opportunity;



               (iii) requiring the Executive to be based more than 50 miles away from the Company’s
headquarters in New York, New York;



               (iv) the material breach by the Company of any of its other obligations under this Agreement;
or



               (v) the failure of the Company to obtain the assumption of this Agreement as contemplated in
Subsection 13(b) hereof.



               The Executive’s continued employment shall not constitute consent to, or a waiver of rights
with respect to, any act or failure to act constituting Good Reason hereunder; provided, however,
that no such event described above shall constitute Good Reason unless the Executive has given a
Notice of Termination to the Company specifying the condition or event relied upon for such
termination within 90 days from the Executive’s actual knowledge of the occurrence of such event
and, if
capable of cure, the Company has failed to cure the condition or event constituting Good
Reason within the 30 day period following receipt of the Executive’s Notice of Termination.



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     5. Obligations of the Company upon Termination.



          (a) Termination by the Company for other than Cause or by the Executive for Good
Reason. If the Executive’s employment is terminated by the Company for any reason other than
Cause or Disability or by the Executive for Good Reason:




               (i) The Company shall pay to the Executive, within thirty business days of the Date of
Termination, any earned but unpaid Annual Base Salary;



               (ii) The Company shall pay to the Executive, within thirty business days of the Date of
Termination, a prorated Annual Bonus based on (A) the target Annual Bonus opportunity in the year
in which the Date of Termination occurs or the prior year if no target Annual Bonus opportunity has
yet been determined (disregarding any reduction in target Annual Bonus opportunity that was the
basis for a termination by the Executive for Good Reason) and (B) the fraction of the year the
Executive was employed.



               (iii) The Company shall pay to the Executive, within thirty business days of the Date of
Termination, a lump-sum payment equal to the sum of 100% of (x) the Executive’s Annual Base Salary
in effect immediately prior to the Date of Termination (disregarding any reduction in Annual Base
Salary that was the basis for a termination by the Executive for Good Reason), and (y) the
Executive’s target Annual Bonus opportunity for the year in which the Date of Termination occurs or
the prior year if no target Annual Bonus opportunity has yet been determined (disregarding any
reduction in target Annual Bonus opportunity that was the basis for a termination by the Executive
for Good Reason);



               (iv) For a one (1) year period after the Date of Termination, the Company will arrange to
provide the Executive (and any covered dependents), without cost to the Executive, with life,
accident and health insurance benefits substantially similar to those the Executive and any covered
dependents were receiving immediately prior to the Notice of Termination, except for any such
benefits that were waived by the Executive in writing. If the Company arranges to provide the
Executive and covered dependents with life, accident and health insurance benefits, those benefits
will be reduced to the extent comparable benefits are actually received by, or made available to,
the Executive by a subsequent employer without cost during the one (1) year period following the
Executive’s Date of Termination. The Executive must report to the Company any such benefits that
he actually receives or are made available. In lieu of the benefits described in this subsection
5(a)(iv), the Company, in its sole discretion, may elect to pay to the Executive a lump sum cash
payment equal to the annual premium that would have been paid by the Company to provide such
benefits to the Executive and any covered dependents. Nothing in this subsection 5(a)(iv) will
affect the Executive’s right to elect COBRA continuation coverage in accordance with applicable law
or extend the COBRA continuation coverage period; and



               (v) The Executive’s vested outstanding stock options shall remain exercisable until the
earlier of (i) the three month anniversary of the Date of Termination and (ii) the last day of the
option term under the applicable option award agreement.



          (b) Termination in Connection with a Change in Control.




               (i) If, in anticipation of or within the 24 month period following a Change in Control (as
defined below), the Executive’s employment is terminated by the Company for any reason other than
Cause or Disability or by the Executive for Good Reason, the Executive shall receive the
payments and benefits described in subsection 5(a) and, in addition, all of the Executive’s
outstanding equity-based awards shall become fully vested on the Date of Termination.



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               (ii) For purposes of this Agreement, the term “Change in Control” shall mean the occurrence of
any of the following events:



                    (A) any “person” (within the meaning ascribed to such term in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended from time to time (the “Exchange Act”) and used in
Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof), other
than the Company, any trustee or other fiduciary holding securities under an employee benefit plan
of the Company, or any corporation owned directly or indirectly by the stockholders of the Company
in substantially the same proportion as the ownership of stock of the Company, (a “Person”) that is
not on the Effective Date the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing more than 20% of the combined
voting power of the Company’s then outstanding securities becomes after the Effective Date the
beneficial owner, directly or indirectly, of securities of the Company representing more than 20%
of the combined voting power of the Company’s then outstanding securities;



                    (B) individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board of the Company, provided that
any person becoming a director subsequent to the date hereof whose election, or nomination for
election by the Company’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 the Company) shall be, for purposes
of this definition, considered as though such person were a member of the Incumbent Board;



                    (C) consummation of a merger, consolidation, reorganization, share exchange or similar
transaction (a “Transaction”) of the Company with any other entity, other than (I) a Transaction
that would result in the voting securities of the Company outstanding immediately prior thereto
directly or indirectly continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or a parent company) more than 80% of the
combined voting power of the voting securities of the Company or such surviving entity or parent
company outstanding immediately after such Transaction or (II) a Transaction effected to implement
a recapitalization of the Company (or similar transaction) in which no Person acquires more than
20% of the combined voting power of the Company’s then outstanding securities;



                    (D) the sale, transfer or other disposition (in one transaction or a series of related
transactions) of more than 50% of the operating assets of the Company; or



                    (E) the approval by the shareholders of a plan or proposal for the liquidation or dissolution
of the Company.



          (c) Termination by the Company for Cause or by the Executive without Good Reason. If
the Executive’s employment is terminated by the Company for Cause the Company shall pay to the
Executive, within thirty business days of the Date of Termination, any earned but unpaid Annual
Base Salary and all outstanding stock options (whether or not then exercisable), unvested stock and
other incentive awards shall be forfeited. If the Executive’s employment is terminated by the
Executive without Good Reason (and not due to death, Disability or Retirement), the Company shall
pay to the Executive, within thirty business days of the Date of Termination, any earned but unpaid
Annual Base Salary, all of the Executive’s unvested equity-based awards shall be forfeited as of
the Date of Termination and the Executive’s vested outstanding stock options shall remain
exercisable until the earlier of (i) the three
month anniversary of the Date of Termination or (ii) the last day of the option term under the
applicable option award agreement.




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          (d) Termination due to death or Disability. If the Executive’s employment is
terminated due to death or Disability, (i) the Company shall pay to the Executive (or to the
Executive’s estate or personal representative in the case of the Executive’s death), within thirty
business days after the Date of Termination, (A) any earned but unpaid Annual Base Salary and (B) a
prorated Annual Bonus based on (I) the target Annual Bonus opportunity in the year in which the
Date of Termination occurs or the prior year if no target Annual Bonus opportunity has yet been
determined and (II) the fraction of the year the Executive was employed, and (ii) all of the
Executive’s outstanding equity-based awards shall vest on the Date of Termination and the
Executive’s outstanding stock options shall remain exercisable until the earlier of (x) the one
year anniversary of the Date of Termination or (y) the last day of the option term under the
applicable option award agreement.




          (e) Retirement. If the Executive retires after attaining age 55 but before attaining
age 62, (i) the Company shall pay to the Executive, within thirty business days after the Date of
Termination, any earned but unpaid Annual Base Salary, (ii) the Executive shall receive applicable
retiree benefits, if any, provided at such time by the Company to retirees or as the Company shall
determine, and (iii) the Executive’s stock options that are vested as of the Date of Termination
shall remain exercisable through the earlier of the third anniversary of the Date of Termination or
the last day of the option term, with any outstanding unvested equity-based awards expiring on the
Date of Termination. If the Executive retires after attaining age 62, (i) the Company shall pay to
the Executive, within thirty business days after the Date of Termination, any earned but unpaid
Annual Base Salary, (ii) the Executive shall receive applicable retiree benefits, if any, provided
at such time by the Company to retirees or as the Company shall determine, (iii) the Executive’s
outstanding equity-based awards shall vest on the Date of Termination, and (iv) the Executive’s
stock options shall remain exercisable until the last day of the option term under the applicable
option award agreement.




     6. Certain Tax Consequences.



          (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 (a “Payment” or “Payments”) would be subject to any excise
tax (the “Excise Tax”) imposed by section 4999 of the Internal Revenue Code of 1986, as amended
(the “Code”), then the Executive will be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Executive of all taxes (including any
interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise
Tax), including any such taxes imposed upon the Gross-Up Payment, the Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.




          (b) An initial determination as to whether a Gross-Up Payment is required pursuant to this
Agreement and the amount of such Gross-Up Payment will be made at the Company’s expense by an
accounting firm selected by the Company. The accounting firm will provide its determination,
together with detailed supporting calculations and documentation, to the Company and the Executive
within 10 days after the Date of Termination, or such other time as requested by the Company or by
the Executive. If the accounting firm determines that no Excise Tax is payable by the Executive
with respect to a Payment or Payments, it will furnish the Executive with an opinion reasonably
acceptable to the Executive to that effect. The Gross-Up Payment, if any, will be paid by the
Company to the Executive within thirty business days of the receipt of the accounting firm’s
determination. Within 10 days after the accounting firm delivers its determination to the
Executive, the Executive will have the right to dispute the determination. The existence of a
dispute will not in any way affect the Executive’s right to receive the Gross-Up Payment in
accordance with the determination. If there is no dispute, the determination will
be binding, final, and conclusive upon the Company and the Executive. If there is a dispute,
the Company and the Executive will together select a second accounting firm, which will review the
determination and the Executive’s basis for the dispute and then will render its own determination, which



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will be binding, final, and conclusive on the Company and on the Executive. The Company will
bear all costs associated with that determination, unless the determination is not greater than the
initial determination, in which case all such costs will be borne by the Executive.




          (c) For purposes of determining the amount of the Gross-Up Payment, the Executive will be
deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the
calendar year in which the Gross-Up Payment is to be made and applicable state and local income
taxes at the highest marginal rate of taxation in the state and locality of the Executive’s
residence on the Date of Termination, net of the maximum reduction in federal income taxes that
would be obtained from deduction of those state and local taxes.




          (d) Notwithstanding anything contained in this Agreement to the contrary, in the event that,
according to the accounting firm’s determination, an Excise Tax will be imposed on any Payment or
Payments, the Company will pay to the applicable government taxing authorities as Excise Tax
withholding, the amount of the Excise Tax that the Company has actually withheld from the Payment
or Payments in accordance with law.




     7. Release. Notwithstanding any provision herein to the contrary, no payments under
section 5 of this Agreement (other than payments due by reason of the Executive’s death) shall
become payable to the Executive unless and until the Executive executes a complete release of
claims against the Company and its affiliates and related parties in such form as is reasonably
required by the Company, and any waiting periods contained in such release shall have expired.



     8. Non-Exclusivity of Rights. Except as otherwise provided in this Agreement, nothing
in this Agreement shall prevent or limit the Executive’s continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its affiliated companies for
which the Executive may qualify (other than severance policies). Vested benefits and other amounts
that the Executive is otherwise entitled to receive under any other plan, program, policy, or
practice of, or any contract or agreement with, the Company or any of its affiliated companies on
or after the Date of Termination shall be payable in accordance with the terms of each such plan,
program, policy, practice, contract or agreement, as the case may be, except as expressly modified
by this Agreement.



     9. Full Settlement. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and, except as otherwise provided in subsections
5(a)(iv) and 16(e), the amount of any payment or benefit provided for in this Agreement shall not
be reduced by any compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive
to the Company, or otherwise.



     10. Confidential Information; and Non-Solicitation.



          (a) Confidential Information. The Executive shall hold in a fiduciary capacity for
the benefit of the Company all secret or confidential information, knowledge, trade secrets,
methods, know-how or data relating to the Company or its affiliates and their businesses or
acquisition prospects that the Executive obtained or obtains during the Executive’s employment by
the Company (“Confidential Information”), provided that “Confidential Information” shall not
include any secret or confidential information, knowledge, trade secrets, methods, know-how or data
that is or becomes generally known to the public (other than as a result of the Executive’s
violation of this section 10). Except as may be
required and appropriate in connection with carrying out his duties under this Agreement, the
Executive shall not communicate, divulge, or disseminate any material Confidential Information at
any time during or after the Executive’s employment with the Company, except with the prior written
consent of the



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Company or as otherwise required by law or legal process; provided, however, that if
so required, the Executive will provide the Company with reasonable notice to contest such
disclosure.




          (b) Non-Solicitation. During the Term of Employment and for the one (1) year period
following the Date of Termination for any reason, the Executive will not, directly or indirectly,
initiate any action to solicit or recruit anyone who is then an employee of the Company for the
purpose of being employed by him or by any business, individual, partnership, firm, corporation or
other entity on whose behalf he is acting as an agent, representative, employee or otherwise.




          (c) Non-Interference with Customers or Producers. During the Term of Employment and
for the one (1) year period following the Date of Termination for any reason, the Executive will
not interfere with any business relationship between the Company and any of its customers or agents
or brokers that produce insurance business for the Company.




          (d) Remedies; Severability.




               (i) The Executive acknowledges that if the Executive shall breach or threaten to breach any
provision of subsections 10(a) through (c), the damages to the Company may be substantial, although
difficult to ascertain, and money damages will not afford the Company an adequate remedy.
Therefore, if the provisions of subsections 10(a) through (c) are violated, in whole or in part,
the Company shall be entitled to specific performance and injunctive relief, without prejudice to
other remedies the Company may have at law or in equity.



               (ii) If any term or provision of this section 10, or the application thereof to any person or
circumstances shall, to any extent, be invalid or unenforceable, the remainder of this section 10,
or the application of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby, and each term and
provision of this section 10 shall be valid and enforceable to the fullest extent permitted by law.
Moreover, if a court of competent jurisdiction deems any provision of subsections 10(a) through
(c) to be too broad in time, scope, or area, it is expressly agreed that such provision shall be
reformed to the maximum degree that would not render it unenforceable.



     11. Attorneys’ Fees. Each party shall pay its own legal fees, court costs, litigation
expenses and/or arbitration expenses (as applicable) in connection with any dispute, litigation or
arbitration regarding the validity or enforceability of, or liability under or otherwise involving,
any provision of this Agreement, except that if the Executive prevails on the majority of material
claims disputed, the Company shall pay all reasonable legal fees, court cost, litigation expenses
and/or arbitration expenses.



     12. Indemnification. The Executive shall be indemnified by the Company for actions
taken in his position as an officer, director, employee and agent of the Company to the greatest
extent permitted by applicable law. The Executive shall also be covered as an insured by a
liability insurance policy secured by and maintained by the Company covering acts of officers and
members of the Board.



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     13. Successors.



          (a) Assignment of Agreement. This Agreement is personal to the Executive and, without
the prior written consent of the Company, shall not be assignable by the Executive otherwise than
by will or the laws of descent and distribution.




          (b) Successors of the Company. No rights or obligations of the Company under this
Agreement may be assigned or transferred except that the Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the Company would be required
to perform it if no such succession had taken place. As used in this Agreement, “Company” shall
mean the Company as herein before defined and any successor that executes and delivers the
agreement provided for in this section 13 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.




     14. Arbitration. Except for matters covered under section 10, in the event of any
dispute or difference between the Company and the Executive with respect to the subject matter of
this Agreement and the enforcement of rights hereunder, either the Executive or the Company may, by
written notice to the other, require such dispute or difference to be submitted to arbitration.
The arbitrator or arbitrators shall be selected by agreement of the parties or, if they cannot
agree on an arbitrator or arbitrators within 30 days after the date arbitration is required by
either party, then the arbitrator or arbitrators shall be selected by the American Arbitration
Association (the “AAA”) upon the application of the Executive or the Company. The determination
reached in such arbitration shall be final and binding on both parties without any right of appeal
or further dispute. Execution of the determination by such arbitrator may be sought in any court
of competent jurisdiction. The arbitrators shall not be bound by judicial formalities and may
abstain from following the strict rules of evidence and shall interpret this Agreement as an
honorable engagement and not merely as a legal obligation. Unless otherwise agreed by the parties,
any such arbitration shall take place in New York, New York.



     15. Applicability of Section 409A of the Code.



          (a) To the extent applicable, it is intended that this Agreement and any payment made
hereunder shall comply with the requirements of Section 409A of the Code, and any related
regulations or other guidance promulgated with respect to such Section by the U.S. Department of
the Treasury or the Internal Revenue Service (“Code Section 409A”). Any provision that
would cause this Agreement or any payment hereof to fail to satisfy Code Section 409A shall have no
force or effect until amended to comply with Code Section 409A, which amendment may be retroactive
to the extent permitted by Code Section 409A. Without limiting the generality of the foregoing:
(i) for all purposes under this Agreement, reference to Executive’s “termination of employment”
(and corollary terms) with the Company shall be construed to refer to Executive’s “separation from
service” (as determined under Treasury Regulation Section 1.409A-1(h), as uniformly applied by the
Company) with the Company; and (ii) to the extent that any reimbursement, fringe benefit or other,
similar plan or arrangement in which Executive participates during the Term of Employment or
thereafter provides for a “deferral of compensation” within the meaning of Code Section 409A, (x)
the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for
another benefit, (y) the amount eligible for reimbursement or payment under such plan or
arrangement in one calendar year may not affect the amount eligible for reimbursement or payment in
any other calendar year, and (z) subject to any shorter time periods provided in any expense
reimbursement policy of the Company, any reimbursement or payment of an expense under such plan or
arrangement must be made on or before the last day of the calendar year following the calendar year
in which the expense was incurred. In addition, whenever a provision under this Agreement
specifies a payment period with reference to a number of days, the actual date of payment within
the specified period shall be within the sole discretion of the Company.




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          (b) Notwithstanding any provision to the contrary in this Agreement, if the Executive is
deemed on the date of termination to be a “specified employee” within the meaning of that term
under Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit
that is specified as subject to this section, such payment or benefit shall not be made or provided
(subject to the last sentence of this section 15(b)) prior to the earlier of (i) the expiration of
the six (6)-month period measured from the date of the Executive’s “separation from service” (as
such term is defined under Code Section 409A), and (ii) the date of Executive’s death (the “Delay
Period”). All payments and benefits delayed pursuant to this section 15(b) (whether they would
have otherwise been payable in a single sum or in installments in the absence of such delay) shall
be paid or reimbursed to the Executive in a lump sum on the first business day following the
expiration of the Delay Period, and any remaining payments and benefits due under this Agreement
shall be paid or provided in accordance with the normal payment dates specified for them herein.




     16. Miscellaneous.



          (a) Governing Law and Captions. This Agreement shall be governed by, and construed in
accordance with, the laws of New York without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof and shall have no force or effect.




          (b) Notices. All notices and other communications under this Agreement shall be in
writing and shall be given by hand delivery or by facsimile (provided confirmation of receipt of
such facsimile is received) to the other party or by registered or certified mail, return receipt
requested, postage prepaid, or by Federal Express or other nationally-recognized overnight courier
that requires signatures of recipients upon delivery and provides tracking services, addressed as
follows:




If to the Executive:




Richard Barrow

1955 Brook Park Drive

Merrick, NY 11566




If to the Company:




Tower Group, Inc.

120 Broadway, 31st Floor

New York, New York 10271

Attention: General Counsel

Facsimile: 212-271-5492



or to such other address as either party furnishes to the other in writing in accordance with this
subsection 16(b). Notices and communications shall be effective when actually received by the
addressee.




          (c) Amendment. This Agreement may not be amended or modified except by a written
agreement executed by the parties hereto or their respective successors and legal representatives.




          (d) Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
If any provision of this Agreement shall be held invalid or unenforceable in part, the remaining
portion of such provision, together with all other provisions of this Agreement, shall remain valid
and enforceable and continue in full force and effect to the fullest extent consistent with law.




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          (e) Withholding. Notwithstanding any other provision of this Agreement, the Company
may withhold from amounts payable under this Agreement all federal, state, local, and foreign taxes
that are required to be withheld by applicable laws or regulations.




          (f) Waiver. The Executive’s or the Company’s failure to insist upon strict compliance
with any provision of, or to assert any right under, this Agreement (including, without limitation,
the right of the Executive to terminate employment for Good Reason) shall not be deemed to be a
waiver of such provision or right or of any other provision of or right under this Agreement.




          (g) Entire Understanding; Counterparts. The Executive and the Company acknowledge
that this Agreement supersedes and terminates any other severance and employment agreements between
the Executive and the Company or any Company affiliates. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument.




          (h) Rights and Benefits Unsecured. The rights and benefits of the Executive under
this Agreement may not be anticipated, assigned, alienated, or subject to attachment, garnishment,
levy, execution, or other legal or equitable process except as required by law. Any attempts by
the Executive to anticipate, alienate, assign, sell, transfer, pledge or encumber the same shall be
void. Payments hereunder shall not be considered assets of the Executive in the event of
insolvency or bankruptcy.




          (i) Noncontravention. The Company represents that the Company is not prevented from
entering into, or performing this Agreement by the terms of any law, order, rule or regulation, its
by-laws or declaration of trust, or any agreement to which it is a party.




          (j) Section and Subsection Headings. The section and subsection headings in this
Agreement are for convenience of reference only; they form no part of this Agreement and shall not
affect its interpretation.




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     IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the
authorization of the Board, the Company has caused this Agreement to be executed, all as of the day
and year first above written.



	 	 	 	 	 
	 	TOWER GROUP, INC.

 	 
	 	By:  	/s/ Elliott S. Orol
 	 
	 	 	Its SVP, General Counsel & Secretary 	 
	 	 	 	 
	 	 	RICHARD BARROW

 	 
	 	 	/s/ Richard Barrow