**Exhibit 10.7**

**SafetyInsurance Group, Inc.**

**2002Management Omnibus Incentive Plan, as Amended**

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**Tableof Contents**

 
| ** ** | ** **                                               | **Page** |
|------------|----------------------------------------------------------|----------|
|       |                                                     |     |
|       | ARTICLE 1  Establishment, Objectives, and Duration       |     | 1 |
|       | ARTICLE 2  Definitions                                   |     | 1 |
|       | ARTICLE 3  Administration                                |     | 5 |
|       | ARTICLE 4 Shares  Subject to the Plan and Maximum Awards |     | 5 |
|       | ARTICLE 5  Eligibility and Participation                 |     | 6 |
|       | ARTICLE 6 Options                                        |     | 7 |
|       | ARTICLE 7 Stock  Appreciation Rights                     |     | 8 |
|       | ARTICLE 8  Restricted Stock                              |     | 10 |
|       | ARTICLE 9  Termination of Service                        |     | 11 |
|       | ARTICLE 10  Restrictions on Shares                       |     | 12 |
|       | ARTICLE 11  Performance Measures                         |     | 12 |
|       | ARTICLE 12  Beneficiary Designation                      |     | 13 |
|       | ARTICLE 13  Rights of Participants                       |     | 13 |
|       | ARTICLE 14  Change in Control                            |     | 13 |
|       | ARTICLE 15  Amendment, Modification, and Termination     |     | 14 |
|       | ARTICLE 16  Withholding                                  |     | 15 |
|       | ARTICLE 17  Indemnification                              |     | 15 |
|       | ARTICLE 18  Successors                                   |     | 15 |
|       | ARTICLE 19 Legal  Construction                           |     | 16 |
|            |                                                          |          |  |

 

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**SafetyInsurance Group, Inc.**

**2002Management Omnibus Incentive Plan, as Amended**

# **ARTICLE 1**

# **Establishment, Objectives, and Duration**

## **1.1         ****Establishment of the Plan**. Safety Insurance Group, Inc., a corporation organized and existing underDelaware law (hereinafter referred to as the “Company”), hereby establishes anincentive compensation plan to be known as the “Safety Insurance Group, Inc.2002 Management Omnibus Incentive Plan, as amended” (hereinafter referred to asthe “Plan”), as set forth in this document. The Plan permits the grant of Nonqualified Stock Options, IncentiveStock Options, Stock Appreciation Rights, and Restricted Stock.

## The Plan first became effective when approvedby the Board on June 25, 2002.  The Plan,as amended, will become effective on May 19, 2006 if it is approved by thestockholders at the 2006 annual meeting. The Plan shall remain in effect as provided in Section 1.3 hereof.

## **1.2         ****Objectives of the Plan**. The objectives of the Plan are to optimize the profitability and growthof the Company through incentives which are consistent with the Company’s goalsand which link the personal interests of Participants to those of the Company’sshareholders; to provide Participants with an incentive for excellence inindividual performance; and to promote teamwork among Participants.

The Plan is further intended to provide flexibility tothe Company in its ability to motivate, attract, and retain the services ofParticipants who make significant contributions to the Company’s success and toallow Participants to share in the success of the Company.

## **1.3         ****Duration of the Plan**. The Plan shall remain in effect, subject to the right of the Board toamend or terminate the Plan at any time pursuant to Article 15 hereof, untilall Shares subject to it shall have been purchased or acquired according to thePlan’s provisions.

# **ARTICLE 2**

# **Definitions**

Whenever used in the Plan, the following terms shallhave the meanings set forth below, and, when the meaning is intended, theinitial letter of the word shall be capitalized:

 

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## **2.1         ****“Affiliate”** means any person or entity which, at the time ofreference, directly, or indirectly through one or more intermediaries, controlsor is controlled by the Company.

## **2.2         ****“Award”** means, individually or collectively, a grant underthis Plan of Nonqualified Stock Options, Incentive Stock Options, StockAppreciation Rights, or Restricted Stock.

## **2.3         ****“Award Agreement”** means an agreement entered into by theCompany and each Participant setting forth the terms and provisions applicable toAwards granted under the Plan.

## **2.4         ****“Board”** means the Board of Directors of the Company.

## **2.5         ****“Cause”** means (i) the willful engaging by the Participant inmisconduct that is demonstrably injurious to the Company (monetarily orotherwise), as determined by the Board in its sole discretion, (ii) theParticipant’s conviction of, or pleading guilty or nolo contendere to, a felonyinvolving moral turpitude, (iii) the Participant’s violation of anyconfidentiality, non-solicitation, or non-competition covenant to which theParticipant is subject, or (iv) the Participant’s poor performance, asdetermined by the Board, based on reasonable business objectives, after writtennotice from the Company and a reasonable opportunity to correct such poorperformance.

## **2.6         ****“Change in Control”** will be deemed to have occurred as ofthe first day any of the following events occurs:

### (a)           theclosing of any merger, combination, consolidation or similar businesstransaction involving the Company in which the holders of Shares immediatelyprior to such closing are not the holders, directly or indirectly, of amajority of the ordinary voting securities of the surviving Person in suchtransaction immediately after such closing;

### (b)           theclosing of any sale or transfer by the Company of all or substantially all ofits assets to an acquiring Person in which the holders of Shares immediatelyprior to such closing are not the holders of a majority of the ordinary votingsecurities of the acquiring Person immediately after such closing; or

### (c)           theclosing of any sale by the holders of Shares of an amount of Shares that equalsor exceeds a majority of the Shares immediately prior to such closing to aPerson in which the holders of the Shares immediately prior to such closing arenot the holders of a majority of the ordinary voting securities of such Personimmediately after such closing.

## **2.7         ****“Code”** means the Internal Revenue Code of 1986, as amendedfrom time to time.

## **2.8         ****“Committee”** means the Compensation Committee of the Board,as specified in Article 3 herein, or such other Committee appointed by theBoard to administer the Plan with respect to grants of Awards.

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## **2.9         ****“Company”** means Safety Insurance Group, Inc., a corporationorganized and existing under Delaware law, and any successor thereto asprovided in Article 19 herein.

## **2.10       ****“Consultant”** means an independent contractor who isperforming consulting services for one or more entities in the Group and who isnot an employee of any entity in the Group.

## **2.11       ****“Director”** means a member of the Board or a member of theboard of directors of an Affiliate.

## **2.12       ****“Disability”** shall have the meaning ascribed to such term inthe long-term disability plan maintained by the Company, or if no such planexists, at the discretion of the Committee.

## **2.13       ****“Employee”** means any employee of the Group, including anyemployees who are also Directors. Nonemployee Directors and Consultants shall not be considered Employeesunder this Plan.

## **2.14       ****“Exchange Act”** means the Securities Exchange Act of 1934, asamended from time to time, or any successor act thereto.

## **2.15       ****“Exercise Price”** means the price at which a Share may bepurchased by a Participant pursuant to an Option.

## **2.16       ****“Fair Market Value”** shall be determined in good faith by theCommittee.

## **2.17       ****“Freestanding SAR”** means an SAR that is grantedindependently of any Options, as described in Article 7 herein.

## **2.18       ****“Good Reason”** means, with respect to an Employee, (a) amaterial reduction in an Employee’s authority, perquisites, position orresponsibilities (other than such a reduction in perquisites which affects allof the Company’s senior executives on a substantially equal or proportionatebasis), (b) the relocation of the Employee’s primary place of business or therelocation of the Employee to another Company (or Affiliate) office more than75 miles from the location of the Employee’s principal office, or, ifapplicable, (c) the Employee’s employer’s willful, material violation of itsobligations under his or her employment agreement, in each case, after 60 daysprior written notice to the Employee’s employer and its board of directors andthe Employee’s employer’s failure thereafter to cure such reduction orviolation.

## **2.19       ****“Group”** means the Company and the Affiliates.

## **2.20       ****“Incentive Stock Option”** or **“ISO”**means an option to purchase Shares granted under Article 6 herein and which isdesignated as an Incentive Stock Option intended to meet the requirements ofCode Section 422.

## **2.21       ****“Named Executive Officer”** means a Participant who, as of thedate of vesting and/or payout of an Award, as applicable, is one of the groupof “covered

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## employees,” as defined in the regulationspromulgated under Code Section 162(m), or any successor statute.

## **2.22       ****“Nonemployee Director”** shall have the meaning ascribed tosuch term in Rule 16b-3 of the Exchange Act.

## **2.23       ****“Nonqualified Stock Option”** or **“NQSO”**means an option to purchase Shares granted under Article 6 herein and which isnot intended to meet the requirements of Code Section 422.

## **2.24       ****“Option”** means an Incentive Stock Option or a NonqualifiedStock Option, as described in Article 6 herein.

## **2.25       ****“Outside Director”** shall have the meaning ascribed to suchterm under the regulations promulgated with respect to Code Section 162(m).

## **2.26       ****“Participant”** means a current or former Employee, Director,or Consultant who has outstanding an Award granted under the Plan.

## **2.27       ****“Performance-Based Exception”** means the performance-basedexception from the tax deductibility limitations of Code Section 162(m).

## **2.28       ****“Period of Restriction”** means the period during which thetransfer of Shares of Restricted Stock is limited in some way (based on thepassage of time, the achievement of performance goals, or upon the occurrenceof other events as determined by the Committee, at its discretion), and theShares are subject to a substantial risk of forfeiture, as provided in Article8 herein.

## **2.29       ****“Person”** shall have the meaning ascribed to such term inSection 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)thereof, including a “group,” as defined in Section 13(d) thereof.

## **2.30       ****“Restricted Stock”** means an Award granted to a Participantpursuant to Article 8 herein.

## **2.31       ****“Shares”** means the shares of common stock of the Company,par value $0.01 per share, subject to adjustment pursuant to Section 4.2herein.

## **2.32       ****“Stock Appreciation Right”** or **“SAR”**means an Award, granted alone or in connection with a related Option,designated as an SAR, pursuant to the terms of Article 7 herein.

## **2.33       ****“Tandem SAR”** means an SAR that is granted in connection witha related Option pursuant to Article 7 herein.

## **2.34       ****“Termination of Service”** means, if an Employee, terminationof employment with all entities in the Group, if a Director, termination ofservice on the Board and the board of directors of any Affiliate, as applicable,and if a Consultant, termination of the consulting relationship with allentities in the Group.

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# **ARTICLE 3**

# **Administration**

## **3.1         ****The Committee**.  ThePlan shall be administered by the Committee. To the extent the Company deems it to be necessary or desirable withrespect to any Awards made hereunder, the members of the Committee may belimited to Nonemployee Directors or Outside Directors, who shall be appointedfrom time to time by, and shall serve at the discretion of, the Board.

## **3.2         ****Authority of the Committee**. Except as limited by law or by the Articles of Incorporation or theBy-laws of the Company, and subject to the provisions herein, the Committeeshall have full power to select the persons who shall participate in the Plan;determine the sizes and types of Awards; determine the terms and conditions ofAwards in a manner consistent with the Plan; construe and interpret the Planand any agreement or instrument entered into under the Plan as they apply toParticipants; establish, amend, or waive rules and regulations for the Plan’sadministration as they apply to Participants; and (subject to the provisions ofArticle 15 herein) amend the terms and conditions of any outstanding Award tothe extent such terms and conditions are within the discretion of the Committeeas provided in the Plan.  Further, theCommittee shall make all other determinations which may be necessary oradvisable for the administration of the Plan, as the Plan applies toParticipants.  As permitted by law, theCommittee may delegate its authority as identified herein.

## **3.3         ****Decisions Binding**. All determinations and decisions made by the Committee pursuant to theprovisions of the Plan and all related orders and resolutions of the Boardshall be final, conclusive and binding on all persons, including the Company,its shareholders, Affiliates, Participants, and their estates andbeneficiaries.

# **ARTICLE 4**

# **Shares Subject to the Plan and Maximum Awards**

## **4.1         ****Number of Shares Available for Grants**.

### (a)           Subjectto Section 4.2 herein, the maximum number of Shares that may be issued pursuantto Awards under the Plan shall be 2,500,000. Shares underlying lapsed or forfeited Awards of Restricted Stock shallnot be treated as having been issued pursuant to an Award under the Plan.  Shares withheld from an Award of RestrictedStock to satisfy tax withholding obligations shall be counted as Shares issuedpursuant to an Award under the Plan. Shares that are potentially deliverable under an Award that expires oris canceled, forfeited, settled in cash or otherwise settled without thedelivery of Shares shall not be treated as having been issued under thePlan.  Shares that are withheld tosatisfy the Exercise Price of an Option or tax withholding obligations relatedto an Option or SAR shall not be deemed to be Shares issued under the Plan.

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### (b)           Unlessthe Committee determines that Code Section 162(m) will not apply to an Award,or that an Award should not be designed to comply with the Performance-BasedException, the following limitations shall apply to grants of Awards under thePlan:

#### (1)           **Options**:  The maximumaggregate number of Shares with respect to which Options may be granted in anyone calendar year to any one Participant shall be 1,250,000;

#### (2)           **SARs**:  The maximumaggregate number of Shares with respect to which Stock Appreciation Rights maybe granted in any one calendar year to any one Participant shall be 1,250,000;and

#### (3)           **Restricted Stock**:  Themaximum aggregate number of Shares of Restricted Stock that may be granted inany one calendar year to any one Participant shall be 1,250,000.

## **4.2         ****Adjustments in Authorized Shares**.  In the event of any change in corporatecapitalization, such as a stock split or a stock dividend, or a corporatetransaction, such as any merger, consolidation, separation, including aspin-off, or other distribution of stock or property of the Company, anyreorganization (whether or not such reorganization comes within the definitionof such term in Code Section 368) or any partial or complete liquidation of theCompany, an adjustment shall be made to the number and kind of Shares which maybe delivered pursuant to Section 4.1, to the number, kind and/or price ofShares subject to outstanding Awards granted under the Plan, and to theindividual Award limitations set forth in subsections 4.1(b)(1) through4.1(b)(3), as may be determined to be appropriate and equitable by theCommittee, in its sole discretion, to prevent dilution or enlargement ofrights; provided, however, that the number of Shares subject to any Award shallalways be rounded to the nearest whole number, with one-half (1⁄2) of a Sharerounded up to the next whole number.

# **ARTICLE 5**

# **Eligibility and Participation**

## **5.1         ****Eligibility**.  Personseligible to participate in this Plan include all Employees, Directors and Consultantsof the Group, as determined by the Committee.

## **5.2         ****Actual Participation**. Subject to the provisions of the Plan, the Committee may, from time totime, select from all eligible Employees, Directors and Consultants those towhom Awards shall be granted and shall determine the nature and amount of eachAward.

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# **ARTICLE 6**

# **Options**

## **6.1         ****Grant of Options**. Subject to the terms and provisions of the Plan, Options may be grantedto Participants in such number (subject to Article 4 herein), and upon suchterms, and at any time and from time to time as shall be determined by theCommittee; provided, however, that ISOs may be granted only to Employees.

## **6.2         ****Award Agreement**.  EachOption grant shall be evidenced by an Award Agreement that shall specify theExercise Price, the duration of the Option, the number of Shares to which theOption pertains, and such other provisions as the Committee shalldetermine.  The Award Agreement alsoshall specify whether the Option is intended to be an ISO or an NQSO.

## **6.3         ****Exercise Price**.  TheExercise Price for each grant of an Option under this Plan shall be at leastequal to one hundred percent (100%) of the Fair Market Value of a Share on thedate the Option is granted.  However, inthe case of an ISO granted to a Participant who, at the time the Option isgranted, owns stock representing more than ten percent (10%) of the votingpower of all classes of stock of the Company or any subsidiary, the ExercisePrice for each grant of an Option shall be not less than one hundred ten percent(110%) of the Fair Market Value of a Share on the date the Option isgranted.  The Exercise Price will besubject to adjustment in accordance with the provisions of Section 4.2 of thePlan.

## **6.4         ****Duration of Options**. Each Option granted to a Participant shall expire at such time as theCommittee shall determine at the time of grant; provided, however, that noOption shall be exercisable later than the tenth (10th) anniversary date of itsgrant.  However, in the case of an ISOgranted to a Participant who, at the time the Option is granted, owns stockrepresenting more than ten percent (10%) of the voting power of all classes ofstock of the Company or any subsidiary, such Option shall not be exercisableafter the expiration of five (5) years from the date such Option is granted orsuch shorter term as the Committee may determine.

## **6.5         ****Exercise of Options**. Options granted under this Article 6 shall be exercisable at such timesand be subject to such restrictions and conditions as set forth in the AwardAgreement and as the Committee shall in each instance approve, which need notbe the same for each grant or for each Participant.

## **6.6         ****Payment**.

### (a)           Optionsgranted under this Article 6 shall be exercised by the delivery of a writtennotice of exercise to the Company, setting forth the number of Shares withrespect to which the Option is to be exercised, accompanied by full payment forthe Shares.

### (b)           The Exercise Price of any Option shall bepayable to the Company in full (i) in cash or its equivalent, (ii) if permittedby the Committee, by tendering

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### previously acquired Shares having an aggregate Fair Market Value at thetime of exercise equal to the total Exercise Price (provided that the Shares,other than Shares purchased by the Participant on the open market, must havebeen held by the Participant for at least six (6) months prior to theirtender), or (iii) by a combination of (i) and (ii).

### (c)           Ifthe Company’s shares are publicly traded, an Option may be exercised by meansof a cashless exercise with the assistance of a broker or by any other meanspermitted by the Committee in accordance with such terms and conditions as theCommittee, in its sole discretion, shall determine to be consistent with thePlan’s purpose and applicable law.

### (d)           Subjectto any governing rules or regulations, as soon as practicable after receipt ofa written notification of exercise of an Option, provisions for full paymenttherefor and satisfaction or provision for satisfaction of any tax withholdingor other obligations, the Company shall (i) deliver to the Participant, in theParticipant’s name or the name of the Participant’s designee, a Sharecertificate or certificates in an appropriate amount based upon the number ofShares purchased under the Option, or (ii) cause to be issued in theParticipant’s name or the name of the Participant’s designee, in book-entryform, an appropriate number of Shares based upon the number of Shares purchasedunder the Option.

## **6.7         ****Nontransferability of Options**.

### (a)           **Incentive Stock Options**. No ISO granted under the Plan may be sold, transferred, pledged,assigned, or otherwise alienated or hypothecated, other than by will or by thelaws of descent and distribution. Further, during the lifetime of aParticipant, all ISOs granted to such Participant under the Plan shall beexercisable only by such Participant.

### (b)           **Nonqualified Stock Options**. Except as otherwise provided in a Participant’s Award Agreement, no NQSOgranted under the Plan may be sold, transferred, pledged, assigned, orotherwise alienated or hypothecated, other than by will or by the laws ofdescent and distribution.  Further,except as otherwise provided in a Participant’s Award Agreement, during thelifetime of a Participant, all NQSOs granted to such Participant under the Planshall be exercisable only by such Participant.

# **ARTICLE 7**

# **Stock Appreciation Rights**

## **7.1         ****Grant of SARs**.

### (a)           Subjectto the terms and conditions of the Plan, SARs may be granted to Participants atany time and from time to time as shall be determined by the Committee.  The Committee may grant Freestanding SARs,Tandem SARs, or any combination of these forms of SAR.

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### (b)           TheCommittee shall have complete discretion in determining the number of SARsgranted to each Participant (subject to Article 4 herein) and, consistent withthe provisions of the Plan, in determining the terms and conditions pertainingto such SARs.

### (c)           Thegrant price of a Freestanding SAR shall equal the Fair Market Value of a Shareon the date of grant of the SAR.  Thegrant price of Tandem SARs shall equal the Exercise Price of the relatedOption.

## **7.2         ****Exercise of Tandem SARs**.

### (a)           TandemSARs may be exercised for all or part of the Shares subject to the relatedOption upon the surrender of the right to exercise the equivalent portion ofthe related Option.  A Tandem SAR may beexercised only with respect to the Shares for which its related Option is thenexercisable.

### (b)           Notwithstandingany other provision of this Plan to the contrary, with respect to a Tandem SARgranted in connection with an ISO: (i) the Tandem SAR will expire no later thanthe expiration of the underlying ISO; (ii) the value of the payout with respectto the Tandem SAR may be for no more than one hundred percent (100%) of thedifference between the Exercise Price of the underlying ISO and the Fair MarketValue of the Shares subject to the underlying ISO at the time the Tandem SAR isexercised; and (iii) the Tandem SAR may be exercised only when the FairMarket Value of the Shares subject to the ISO exceeds the Exercise Price of theISO.

## **7.3         ****Exercise of Freestanding SARs**.  Freestanding SARs may be exercised uponwhatever terms and conditions the Committee, in its sole discretion, imposesupon them and sets forth in the Award Agreement.

## **7.4         ****SAR Agreement**.  EachSAR grant shall be evidenced by an Award Agreement that shall specify the grantprice, the term of the SAR, and such other provisions as the Committee shalldetermine.

## **7.5         ****Term of SARs**.  Theterm of an SAR granted under the Plan shall be determined by the Committee, inits sole discretion; provided, however, that such term shall not exceed ten(10) years.

## **7.6         ****Payment of SAR Amount**. Upon exercise of an SAR, a Participant shall be entitled to receivepayment from the Company in an amount determined by multiplying:

### (a)           thedifference between the Fair Market Value of a Share on the date of exerciseover the grant price; by

### (b)           thenumber of Shares with respect to which the SAR is exercised.

At the discretion of the Committee, the payment uponSAR exercise may be in cash, in Shares of equivalent value, or in somecombination thereof.

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## **7.7         ****Nontransferability of SARs**. Except as otherwise provided in a Participant’s Award Agreement, no SARgranted under the Plan may be sold, transferred, pledged, assigned, orotherwise alienated or hypothecated, other than by will or by the laws ofdescent and distribution.  Further,except as otherwise provided in a Participant’s Award Agreement, during thelifetime of a Participant, all SARs granted to such Participant under the Planshall be exercisable only by such Participant.

# **ARTICLE 8**

# **Restricted Stock**

## **8.1         ****Grant of Restricted Stock**. Subject to the terms and provisions of the Plan, the Committee, at anytime and from time to time, may grant Shares of Restricted Stock toParticipants in such amounts as the Committee shall determine.

## **8.2         ****Restricted Stock Agreement**. Each Restricted Stock grant shall be evidenced by an Award Agreementthat shall specify the Period(s) of Restriction, the number of Shares ofRestricted Stock granted, and such other provisions as the Committee shalldetermine.

## **8.3         ****Transferability**. Except as provided in this Article 8, the Shares of Restricted Stockgranted herein may not be sold, transferred, pledged, assigned or otherwisealienated or hypothecated until the end of the applicable Period of Restrictionestablished by the Committee and specified in the Award Agreement, or uponearlier satisfaction of any other conditions, as specified by the Committee inits sole discretion and set forth in the Award Agreement.  During the lifetime of a Participant, allrights with respect to the Restricted Stock granted to such Participant underthe Plan shall be available only to such Participant.

## **8.4         ****Restrictions**.

### (a)           Subjectto the terms hereof, the Committee shall impose such conditions and/orrestrictions on any Shares of Restricted Stock granted pursuant to the Plan asit may deem advisable and as are set forth in the Award Agreement including,without limitation, a requirement that Participants pay a stipulated purchaseprice for each Share of Restricted Stock, restrictions based upon theachievement of specific performance goals (Company-wide, divisional, and/orindividual), time-based restrictions on vesting following the attainment of theperformance goals, and/or restrictions under applicable federal or statesecurities laws.

### (b)           TheCompany shall retain the certificates representing Shares of Restricted Stockin the Company’s possession until such time as all conditions and/orrestrictions applicable to such Shares have been satisfied.

### (c)           Exceptas otherwise provided in this Article 8, Shares of Restricted Stock covered byeach Restricted Stock grant made under the Plan shall become freelytransferable by the Participant after the last day of the applicable Period ofRestriction.

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## **8.5         ****Voting Rights**.  Duringthe Period of Restriction, subject to any limitations imposed under the By-lawsof the Company, Participants holding Shares of Restricted Stock grantedhereunder may exercise full voting rights with respect to those Shares.

## **8.6         ****Dividends and Other Distributions**.  Subject to the Committee’s right to determineotherwise at the time of grant, during the Period of Restriction, Participantsholding Shares of Restricted Stock granted hereunder may receive or be creditedwith regular dividends paid with respect to the underlying Shares while theyare so held.  The Committee may apply anyrestrictions to the dividends that the Committee deems appropriate and as areset forth in the Award Agreement. Without limiting the generality of the preceding sentence, if the grantor vesting of Restricted Stock awarded to a Named Executive Officer is designedto comply with the requirements of the Performance-Based Exception, theCommittee may apply any restrictions it deems appropriate to the payment of dividendsdeclared with respect to such Restricted Stock, such that the dividends and/orthe Restricted Stock maintain eligibility for the Performance-Based Exception.

# **ARTICLE 9**

# **Termination of Service**

Each AwardAgreement shall set forth the extent to which the Participant shall have theright to exercise Options and SARs, and receive unvested Shares of RestrictedStock, following Termination of Service with the Group.  Such provisions shall be determined in thesole discretion of the Committee, shall be included in the Award Agreemententered into with each Participant, need not be uniform among all Awards issuedpursuant to the Plan, and may reflect distinctions based on the reasons forTermination of Service; provided, however, that the following shall automaticallyapply to the extent different provisions are not set forth in a Participant’sAward Agreement:

### (a)           Ifthe Termination of Service is by the Company for Cause, by a NonemployeeDirector or Consultant for any reason, or by an Employee without Good Reason,all previously unexercised Options and SARs shall expire and all unvestedRestricted Stock shall be forfeited upon the date of Termination of Service.

### (b)           Ifthe Participant is an Employee and the Termination of Service is by theParticipant for Good Reason, all previously unexercised Options and SARs may beexercised for a period of three (3) months after the date of the Participant’sTermination of Service and all unvested Restricted Stock shall be forfeited asof such date.

### (c)           Ifthe Termination of Service is a result of the Participant’s death orDisability, all previously unexercised Options and SARs may be exercised for aperiod of 12 months after the date of the Participant’s Termination of Serviceand all unvested Restricted Stock shall vest.

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### (d)           Ifthe Termination of Service is by the Company for any reason other than Cause orthe Participant’s Disability, all previously unexercised Options and SARs maybe exercised for a period of three (3) months after the date of the Participant’sTermination of Service and all unvested Restricted Stock which was not grantedduring the year in which such Termination of Service occurs shall vest.  Any Restricted Stock granted during the yearof Termination of Service shall be forfeited.

# **ARTICLE 10**

# **Restrictions on Shares**

All Sharesacquired pursuant Awards granted hereunder, and Participants’ right to exerciseOptions and SARS and/or receive Shares upon exercise or vesting of an Award,shall be subject to all applicable restrictions contained in the Company’s By-laws,shareholders agreement or insider trading policy, and any other restrictionsimposed by the Committee, including, without limitation, restrictions underapplicable securities laws, under the requirements of any stock exchange ormarket upon which such Shares are then listed and/or traded, and restrictionsunder any blue sky or state securities laws applicable to such Shares.

# **ARTICLE 11**

# **Performance Measures**

If Awards under the Plan are subject to Code Section162(m) and the Committee determines that such Awards should be designed tocomply with the Performance-Based Exception, the performance measure(s), theattainment of which determine the degree of payout and/or vesting, to be usedfor purposes of such Awards shall be chosen from among earnings per share,economic value added, market share (actual or targeted growth), net income(before or after taxes), operating income, return on assets (actual or targetedgrowth), return on capital (actual or targeted growth), return on equity(actual or targeted growth), return on investment (actual or targeted growth),gross or net underwriting results, revenue (actual or targeted growth), shareprice, stock price growth, total shareholder return, or such other performancemeasures as are approved by the Committee and the Company’s shareholders.

The Committee shall have the discretion to adjust thedeterminations of the degree of attainment of the pre-established performancegoals; provided, however, that Awards which are designed to qualify for thePerformance-Based Exception, and which are held by Named Executive Officers,may not be adjusted upward (the Committee shall retain the discretion to adjustsuch Awards downward).

In the event that applicable tax laws change to permitthe Committee to alter the governing performance measures without obtainingshareholder approval of such changes, the Committee shall have sole discretionto make such changes without obtaining shareholder approval.  In addition, Awards that are not intended toqualify for the Performance-Based Exception may be based on these or such otherperformance measures as the Committee may determine.

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# **ARTICLE 12**

# **Beneficiary Designation**

Subject to the terms and conditions of the Plan andapplicable Award Agreement, each Participant may, from time to time, name anybeneficiary or beneficiaries (who may be named contingently or successively) towhom any benefit under the Plan is to be paid in case of his or her deathbefore he or she receives any or all of such benefit.  Each such designation shall revoke all priordesignations by the same Participant, shall be in a form prescribed by theCompany, and will be effective only when filed by the Participant in writingduring the Participant’s lifetime with the party chosen by the Company, fromtime to time, to administer the Plan.  Inthe absence of any such designation, benefits remaining unpaid at theParticipant’s death shall be paid to the Participant’s estate.

# **ARTICLE 13**

# **Rights of Participants**

## **13.1       ****Continued Service**. Nothing in the Plan shall:

### (a)           interferewith or limit in any way the right of the Company to terminate any Participant’semployment, service as a Director, or service as a Consultant with the Group atany time, or

### (b)           conferupon any Participant any right to continue in the service of any member of theGroup as an Employee, Director or Consultant.

## **13.2       ****Participation**. Participation is determined by the Committee. No person shall have theright to be selected to receive an Award under the Plan, or, having been soselected, to be selected to receive a future Award.

# **ARTICLE 14**

# **Change in Control**

## **14.1        Treatment of Outstanding Awards**.  Upon the occurrence of a Change in Control,unless otherwise specifically prohibited under applicable laws, or by the rulesand regulations of any governing governmental agencies or national securitiesexchanges:

### (a)           anyand all Options and SARs granted hereunder shall become immediatelyexercisable; and

### (b)           anyrestriction periods and restrictions imposed on Restricted Stock shall lapse.

## **14.2       ****Termination, Amendment, and Modifications of Change-in-ControlProvisions**.  Notwithstandingany other provision of this Plan or any Award Agreement

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## provision, the provisions of this Article 14may not be terminated, amended, or modified on or after the date of a Change inControl to affect adversely any Award theretofore granted under the Planwithout the prior written consent of the Participant with respect to saidParticipant’s outstanding Awards; provided, however, that the Board, uponrecommendation of the Committee, may terminate, amend, or modify this Article14 at any time and from time to time prior to the date of a Change in Control.

# **ARTICLE 15**

# **Amendment, Modification, and Termination**

## **15.1       ****Amendment, Modification, and Termination**.  The Board may at any time and from time totime, alter, amend, suspend or terminate the Plan or any Award hereunder inwhole or in part; provided, however, that no amendment which requiresshareholder approval in order for the Plan to continue to comply with anyapplicable tax or securities or the rules of any securities exchange on whichthe securities of the Company are listed, shall be effective unless suchamendment shall be approved by the requisite vote of shareholders of theCompany entitled to vote thereon; provided further that no such shallalteration, amendment, suspension or termination shall adversely affect anyAward hereunder without the consent of the Participant to whom such Award shallhave been made.

## **15.2       ****Adjustment of Awards Upon the Occurrence of Certain Unusual orNonrecurring Events**.  TheCommittee may make adjustments in the terms and conditions of, and the criteriaincluded in, Awards in recognition of unusual or nonrecurring events(including, without limitation, the events described in Section 4.2 hereof)affecting the Company or the financial statements of the Company or of changesin applicable laws, regulations, or accounting principles, whenever theCommittee determines that such adjustments are appropriate in order to preventdilution or enlargement of the benefits or potential benefits intended to bemade available under the Plan; provided that no such adjustment shall beauthorized to the extent that such authority would be inconsistent with thePlan’s meeting the requirements, if applicable, of Code Section 162(m), asamended from time to time.

## **15.3       ****Compliance with Code Section 162(m)**.  At all times when Code Section 162(m) isapplicable, all Awards granted under this Plan to Named Executive Officers, orto Participants who will likely become Named Executive Officers at the time ofvesting or payment, shall be awarded and administered to comply with therequirements of Code Section 162(m), unless the Committee determines that suchcompliance is not desired.  In addition,if changes are made to Code Section 162(m) or the regulations promulgatedthereunder to permit greater flexibility with respect to any Award or Awardsavailable under the Plan, the Committee may, subject to this Article 15, makeany adjustments it deems appropriate.

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# **ARTICLE 16**

# **Withholding**

## **16.1       ****Tax Withholding**.  TheCompany shall have the power and the right to deduct or withhold, or require aParticipant to remit to the Company, an amount (in cash or Shares) sufficientto satisfy any taxes required by federal, state, or local law or regulation tobe withheld with respect to any taxable event arising as a result of this Plan.

## **16.2       ****Share Withholding**. Participants may elect, subject to the approval of the Committee, tosatisfy all or part of such withholding requirement by having the Companywithhold Shares having a Fair Market Value equal to the amount to be withheldup to the minimum statutory total tax withholding rate (or such other rate thatwill not result in a negative accounting impact).  All such elections shall be irrevocable, madein writing, signed by the Participant, and shall be subject to any restrictionsor limitations that the Committee, in its sole discretion, deems appropriate.

# **ARTICLE 17**

# **Indemnification**

Each person who is or shall have been a member of theCommittee, or of the Board, shall be indemnified and held harmless by theCompany to the fullest extent permitted by applicable law against and from anyloss, cost, liability, or expense that may be imposed upon or reasonablyincurred by him or her in connection with or resulting from any claim, action,suit, or proceeding to which he or she may be a party or in which he or she maybe involved by reason of any action taken or failure to act under the Plan andagainst and from any and all amounts paid by him or her in settlement thereof, withthe Company’s approval, or paid by him or her in satisfaction of any judgmentin any such action, suit, or proceeding against him or her, provided he or sheshall give the Company an opportunity, at its own expense, to handle and defendthe same before he or she undertakes to handle and defend it on his or her ownbehalf.  The foregoing right ofindemnification is subject to the person having been successful in the legalproceedings or having acted in good faith and what is reasonably believed to bea lawful manner in the Company’s best interests.  The foregoing right of indemnification shallnot be exclusive of any other rights of indemnification to which such personsmay be entitled under the Company’s Articles of Incorporation or Bylaws, as amatter of law, or otherwise, or any power that the Company may have toindemnify them or hold them harmless.

# **ARTICLE 18**

# **Successors**

All obligations of the Company under the Plan withrespect to Awards granted hereunder shall be binding on any successor to theCompany, whether the existence of

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such successor is the result of a direct or indirectpurchase, merger, consolidation, or otherwise, of all or substantially all ofthe business and/or assets of the Company.

# **ARTICLE 19**

# **Legal Construction**

## **19.1       ****Gender and Number**. Except where otherwise indicated by the context, any masculine term usedherein also shall include the feminine; the plural shall include the singularand the singular shall include the plural.

## **19.2       ****Severability**.  In theevent any provision of the Plan shall be held illegal or invalid for anyreason, the illegality or invalidity shall not affect the remaining parts ofthe Plan, and the Plan shall be construed and enforced as if the illegal orinvalid provision had not been included.

## **19.3       ****Requirements of Law**. The granting of Awards and the issuance of Shares under the Plan shallbe subject to, and may be made contingent upon satisfaction of, all applicablelaws, rules, and regulations, and to such approvals by any governmentalagencies or national securities exchanges as may be required.

## **19.4       ****Governing Law**.  To theextent not preempted by federal law, the Plan, and all agreements hereunder,shall be construed in accordance with and governed by the laws of the state ofNew York, excluding any conflicts or choice of law rule or principle that mightotherwise refer construction or interpretation of this Plan to the substantivelaw of another jurisdiction.

## **19.5       ****Code Section 409A Compliance**.  To the extent applicable, it is intended thatthis Plan and any Awards granted hereunder comply with the requirements ofSection 409A of the Code and any related regulations or other guidancepromulgated with respect to such Section by the U.S. Department of the Treasuryor the Internal Revenue Service (“Section 409A”).  Any provision that would cause the Plan orany Award granted hereunder to fail to satisfy Section 409A shall have no forceor effect until amended to comply with Section 409A, which amendment may beretroactive to the extent permitted by Section 409A.

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