Exhibit 10.3


 


AMENDED
AND RESTATED EMPLOYMENT AGREEMENT


 


This Amended and Restated
Employment Agreement, dated as of December 31, 2008 (this “Agreement”),
is by and between Daniel D. Loranger (the “Executive”) and Safety
Insurance Group, Inc., a Delaware corporation (the “Company”);


 


W  I  T
N  E  S  S  E  T  H:


 


WHEREAS, the Company wishes
to obtain the future services of the Executive for and on behalf of the
Companies (as defined in Section 11);


 


WHEREAS, the Executive is
willing upon the terms and conditions herein set forth, to provide services to
the Companies hereunder; and


 


WHEREAS, the Company wishes
to secure the Executive’s non-interference with the Companies’ business, upon
the terms and conditions herein set forth;


 


WHEREAS, the Executive and
the Company entered into an Employment Agreement, dated November 8, 2004
(the “Prior Employment Agreement”); and


 


WHEREAS, the Executive and
the Company desire to amend and restate the Prior Employment Agreement.


 


NOW, THEREFORE, in
consideration of the mutual promises and covenants contained herein, and
intending to be legally bound hereby, the parties hereto agree as follows:


 


1.                                       Nature of
Employment


 


Subject to Section 3,
the Company shall continue to employ Executive, and Executive shall serve the
Company, in accordance with the terms of this Agreement, during the Term of
Employment (as defined in Section 3(a)), as Vice President of the
Company with such duties and responsibilities as are customarily assigned to an
executive in such position and such other duties and responsibilities not
inconsistent therewith as may from time to time reasonably be assigned to the
Executive by the Board of Directors and/or Chairman of the Board, President and
Chief Executive Officer of the Company. 
The Executive also agrees to serve without additional compensation in
such capacities (including, without limitation, as an officer or director) with
Company affiliates as the Board of Directors and/or Chairman of the Board,
President and Chief Executive Officer of the Company may prescribe.  Upon termination of the Executive’s
employment with the Company, the Executive’s employment, board membership or
other service relationship with any Company affiliate shall automatically
terminate unless otherwise agreed to by the parties.


 

















 


2.                                       Extent of
Employment


 


(a)                                  During the Term
of Employment, the Executive shall perform his obligations hereunder faithfully
and to the best of his ability at the principal executive offices of the
Company, under the direction of the Board of Directors and/or Chairman of the
Board, President and Chief Executive Officer of the Company, and shall abide by
the rules, customs and usages from time to time established by the Companies.


 


(b)                                 During the Term
of Employment, the Executive shall devote all of his business time, energy and
skill as may be reasonably necessary for the performance of his duties,
responsibilities and obligations hereunder (except for vacation periods and
reasonable periods of illness or other incapacity), consistent with past
practices and norms in similar positions.


 


(c)                                  Nothing
contained herein shall require Executive to follow any directive or to perform
any act which would violate any laws, ordinances, regulations or rules of
any governmental, regulatory or administrative body, agent or authority, any
court or judicial authority, or any public, private or industry regulatory
authority (collectively, the “Regulations”).  Executive shall act in good faith in
accordance with all Regulations.


 


3.                                       Term of
Employment; Termination


 


(a)                                  The “Term of
Employment” shall commence on November 8, 2004 and shall continue
until December 31, 2007 (the “Initial Term”); provided,
that, (i) such term shall continue for the twelve month period following
such Initial Term, and for each twelve month period thereafter (each, an “Additional
Term”), unless at least 180 days prior to the scheduled expiration date of
the Initial Term or any Additional Term, either the Executive or the Company
notifies the other of its decision not to continue such term and (ii) 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.


 


(b)                                 Subject to the
payments contemplated by Sections 3(f) through 3(i), the
Term of Employment may be terminated at any time by the Company:


 


(i)                                     upon the death
of Executive;


 


(ii)                                  in the event
that because of physical or mental disability Executive is unable to perform,
and does not perform, in the view of the Company and as certified in writing by
a competent medical physician, his duties hereunder for a continuous period of
three consecutive months or any sixty working days out of any consecutive six
month period;


 


(iii)                               for Cause (as
defined in Section 3(d)) or Material Breach (as defined in Section 3(e));


 


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(iv)                              upon the
continuous poor or unacceptable performance of the Executive’s duties to the
Companies (other than due to a physical or mental disability), which has
remained uncured for a period of 90 days after delivery of notice by the
Company to the Executive of such dissatisfaction with Executive’s performance,
which notice shall describe in reasonable detail the areas of dissatisfaction;
or


 


(v)                                 for any other
reason or no reason, it being understood that no reason is required.


 


Executive acknowledges that
no representations or promises have been made concerning the grounds for
termination or the future operation of the Companies’ business, and that
nothing contained herein or otherwise stated by or on behalf of any of the
Companies modifies or amends the right of the Company to terminate Executive at
any time, with or without Material Breach or Cause.  Termination shall become effective upon the delivery
by the Company to the Executive of notice specifying such termination and the
reasons therefor (i.e., Section 3 (b)(i)-(v)), subject to the
requirements for advance notice and an opportunity to cure provided in this
Agreement, if and to the extent applicable. 
Notwithstanding anything to the contrary in this Agreement, for purposes
of this Agreement, any reference to “termination,” as it relates to a
termination of the Executive’s employment, shall refer to a termination of
employment which constitutes a “separation from service” within the meaning of Section 409A
of the Internal Revenue Code of 1986, as amended and the regulations
promulgated thereunder (“Section 409A”).


 


(c)                                  Subject to the
payments contemplated by Section 3(f) and 3(i), the
Term of Employment may be terminated at any time by the Executive:


 


(i)                                     upon the death
of Executive;


 


(ii)                                  as a result of
a material reduction in Executive’s authority, perquisites, position or
responsibilities (other than such a reduction in perquisites which affects all
of the Company’s senior executives on a substantially equal or proportionate
basis), the relocation of the Company’s primary place of business or the
relocation of Executive by any of the Companies to another office more than 75
miles from Boston, Massachusetts, or the Company’s willful, material violation
of its obligations under this Agreement, in each case, after 60 days’ prior
written notice to the Company and its Board of Directors and the Company’s
failure thereafter to cure such reduction or violation; or


 


(iii)                               as a result of
the Company’s willful and material violation of this Agreement, the 2002
Management Omnibus Incentive Plan (the “Incentive Plan”), or any
agreement between Executive and any of the Companies pertaining to awards made pursuant
to the Incentive Plan or the Executive Incentive Compensation Plan, in each
case as such agreements or plans may be amended from time to time.


 


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(d)                                 For the
purposes of this Section 3, “Cause” shall mean any of the
following:


 


(i)                                     Executive’s
commission or conviction of any crime or criminal offense involving monies or
other property or any felony;


 


(ii)                                  Executive’s
commission or conviction of fraud or embezzlement;


 


(iii)                               Executive’s
material and knowing violation of any obligations imposed upon Executive,
personally, as opposed to upon the Company, whether as a stockholder or
otherwise, under this Agreement, the Incentive Plan or any other agreement
between the Executive, on the one hand, and any of the Companies, on the other
hand, the Amended and Restated Certificate of Incorporation, or the By-Laws of
the Company, in each case as may be amended from time to time; provided,
that the Executive has been given written notice describing any such violation
in reasonable detail and fails to cure the violation within 90 days from such
notice; or


 


(iv)                              Executive
engages in egregious misconduct involving serious moral turpitude to the extent
that Executive’s credibility and reputation no longer conform to the standard
of the Company’s executives.


 


(e)                                  For the
purposes of this Section 3, “Material Breach” shall mean
any of the following:


 


(i)                                     Executive’s
breach of any of his fiduciary duties to the Companies or their stockholders or
making of a willful misrepresentation or omission which breach,
misrepresentation or omission would reasonably be expected to materially
adversely affect the business, properties, assets, condition (financial or
other) or prospects of the Companies;


 


(ii)                                  Executive’s
willful, continual and material neglect or failure to discharge his duties,
responsibilities or obligations prescribed by this Agreement or any other
agreement between the Executive and any of the Companies (other than arising
solely due to physical or mental disability);


 


(iii)                               Executive’s
habitual drunkenness or substance abuse which materially interferes with
Executive’s ability to discharge his duties, responsibilities or obligations
prescribed by this Agreement or any other agreement between the Executive and
any of the Companies; and


 


(iv)                              Executive’s
willful and material violation of any non-competition, non-disparagement, or
confidentiality agreement with any of the Companies, including without
limitation, those set forth in Sections 7, 8 and 9 of this
Agreement, or any other agreements with any of the Companies;


 


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in each case, for purposes
of clauses (i) through (iv), after the Company or the Board of Directors
of the Company has provided Executive with 60 days’ written notice describing
such circumstances and the possibility of a Material Breach in reasonable
detail, and Executive fails to cure such circumstances and Material Breach
within those 60 days.  No act or omission
shall be deemed willful if done, or omitted to be done, in good faith by the
Executive based upon a resolution duly adopted by the Company’s Board of
Directors.


 


(f)                                    In the event
Executive’s employment is terminated by the Company under any circumstances
described in Section 3(b)(v) or by Executive under the
circumstances described in Section 3(c)(ii) or (iii),


 


(i)                                     the Company
shall pay or cause to be paid to the Executive, (A) within five business
days after the date of termination, any earned but unpaid base salary and,
subject to the provisions of Section 5, any expense reimbursement payments
owed to the Executive, and (B) any earned but unpaid annual bonus payments
relating to the prior year to be paid in accordance with the terms and
conditions of the Safety Insurance Group, Inc. Annual Performance
Incentive Plan, or any successor plan thereto (collectively, the “Accrued
Obligations”);


 


(ii)                                  the Company
shall pay or cause to be paid to the Executive, within thirty business days
after the date of termination, a lump-sum payment equal to the annual base
salary the Executive would have received over the remaining Term of Employment
if his employment had not terminated, assuming for this purpose that a notice
not to extend the Term of Employment was provided on the date of termination
(the “Severance Period”), based on the Executive’s base salary in effect
immediately prior to the date of termination; and


 


(iii)                               subject to the
provisions of Section 5, during the Severance Period, the Company
will provide or cause to be provided to the Executive (and any covered
dependents), with life and health insurance benefits (but not disability
insurance benefits) substantially similar to those the Executive and any
covered dependents were receiving immediately prior to the date of termination
and at the same dollar cost to the Executive as in effect immediately prior to
the termination of employment.  Nothing
in this Section 3(f)(iii) will extend the COBRA continuation
coverage period.


 


(g)                                 In the event
the Executive’s employment is terminated within three years after a Change of
Control (provided the Term of Employment has not already expired) under any
circumstances described in Section 3(b)(v) or by Executive
under the circumstances described in Section 3(c)(ii) or (iii),


 


(i)                                     the Company
shall pay or cause to be paid to the Executive any Accrued Obligations in
accordance with Section 3(f)(i);


 


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(ii)                                  the Company
shall pay or cause to be paid to the Executive, within thirty business days
after the date of termination, a lump-sum payment equal to two (2) times
the sum of (A) the Executive’s annual base salary in effect immediately
prior to the date of termination and (B) the most recent annual bonus paid
to the Executive prior to the Change in Control; and


 


(iii)                               subject to the
provisions of Section 5, for a two (2) year period after the
date of termination, the Company will provide or cause to be provided to the
Executive (and any covered dependents), with life and health insurance benefits
(but not disability insurance benefits) substantially similar to those the
Executive and any covered dependents were receiving immediately prior to the
date of termination and at the same dollar cost to the Executive as in effect
immediately prior to the termination of employment.  Nothing in this Section 3(g)(iii) will
extend the COBRA continuation coverage period.


 


(h)                                 In the event
Executive’s employment is terminated by the Company under the circumstances
described in Section 3(b)(iv),


 


(i)                                     the Company
shall pay or cause to be paid to the Executive any Accrued Obligations in
accordance with Section 3(f)(i);


 


(ii)                                  the Company
shall pay or cause to be paid to the Executive, within thirty business days
after the date of termination, a lump-sum payment equal to three (3) months
base salary, based on the Executive’s base salary in effect immediately prior
to the date of termination; and


 


(iii)                               subject to the
provisions of Section 5, for a three (3) month period after
the date of termination, the Company will provide or cause to be provided to
the Executive (and any covered dependents), with life and health insurance
benefits (but not disability insurance benefits) substantially similar to those
the Executive and any covered dependents were receiving immediately prior to
the date of termination and at the same dollar cost to the Executive as in
effect immediately prior to the termination of employment.  Nothing in this Section 3(h)(iii) will
extend the COBRA continuation coverage period.


 


(i)                                     In the event
Executive’s employment is terminated by the Company under the circumstances
described in Section 3(b)(i) or (ii) or by the
Executive under Section 3(c)(i),


 


(i)                                     the Company
will pay or cause to be paid to the Executive (or the Executive’s estate or
representative, as the case may be) any Accrued Obligations in accordance with Section 3(f)(i);


 


(ii)                                  the Company
will pay or cause to be paid to the Executive (or the Executive’s estate or
representative, as the case may be), within thirty business days after the date
of termination, a lump-sum payment equal to 100% of the 


 


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Executive’s annual base
salary in effect immediately prior to the date of termination; and


 


(iii)                               subject to the
provisions of Section 5, for a one (1) year period after the
date of termination, the Company will provide or cause to be provided to the
Executive (and any covered dependents), with life and health insurance benefits
(but not disability insurance benefits) substantially similar to those the
Executive and any covered dependents were receiving immediately prior to the
date of termination and at the same dollar cost to the Executive as in effect
immediately prior to the termination of employment.  Nothing in this Section 3(i)(iii) will
extend the COBRA continuation coverage period.


 


(j)                                     In the event
Executive’s employment is terminated by the Company under any circumstances
described in Section 3(b)(iii) or by Executive as a result of
resignation or voluntary termination due to any circumstance other than the
material reductions, relocation or violations described in Section 3(c)(ii) above,
there will be no amounts owed to the Executive under Section 4 or
any other part of this Agreement, from and after the effectiveness of
termination.


 


(k)                                  The payments
and benefits required by Section 3(f), 3(g), 3(h) or 3(i), as
applicable, constitute severance and liquidated damages, and, except for
payments that may be required pursuant to Section 10, the Company
will be obligated to pay or cause to be paid any further amounts to Executive
under this Agreement or otherwise be liable to Executive in connection with any
termination.


 


(l)                                     All
determinations pursuant to this Section 3 shall be made by the
Company’s Board of Directors (not including Executive) in good faith.


 


(m)                               Termination of
the Term of Employment will not terminate Sections 7 through 10
and 12 through 23, or any other provisions not associated
specifically with the Term of Employment.


 


(n)                                 In the event
the Term of Employment is terminated and the Company is obligated to make or
cause to be made payments pursuant to Section 3(f), the Executive
will use his reasonable efforts to seek and obtain alternative employment; provided,
however, that the Executive shall not be required to accept a position
or positions of a substantially different character than the position(s) held
by him under this Agreement; and provided  further, if the
Executive shall become physically or mentally disabled, he will not be under
such duty.  Moreover, in the event that
after the Restricted Period pursuant to Section 8(a), Executive is
employed by or engaged in a Competitive Business as contemplated by Section 8(a)(i),
then the payments under Section 3(f) will thereupon cease.


 


(o)                                 Notwithstanding
any provision herein to the contrary, as a condition to payment of any amounts
or provision of any benefits pursuant to Sections 3(f) through 3(i) or
10 of this Agreement (other than due to the Executive’s death), the
Executive shall


 


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be required to have executed
a complete release of the Companies and related parties in such form as is
reasonably required by the Company. 
Subject to Section 3(p), all payments and benefits under
this Section 3 shall be paid or commenced on the sixtieth (60th)
day following the date of termination of the Executive’s employment, provided
that the release described in the preceding sentence becomes irrevocable prior
to such sixtieth (60th) day.


 


(p)                                 Notwithstanding the foregoing, if the Executive is a “specified employee”
within the meaning of Section 409A at the time of a termination, any
portion of the payments under this Section 3 due hereunder during
the first six months following the date of the Executive’s termination, to
extent that such payments constitute “deferred compensation” under
Section 409A, shall not be paid during such six-month period and instead
shall be paid on the first business day following the expiration of such
six-month period.  The remaining portion
of the payments due hereunder shall be paid as provided in the applicable
provisions of this Section 3.


 


4.                                       Compensation


 


The Company shall pay or
cause to be paid to Executive the following compensation:


 


(a)                                  During the Term
of Employment, the Company shall pay or cause to be paid to Executive as base
compensation for his services hereunder, in monthly installments, a base salary
at a rate of $330,000 per annum, as increased on an annual basis to reflect the
increase in the United States Cost of Living Index for All Urban Consumer
(CPI-U) for the Boston, Massachusetts area (the “CPI-U Index”). 
The January 2004 CPI-U Index shall provide the basis for calculations of
such increases.  Notwithstanding the
minimum increase set forth above, the Board of Directors of the Company or a
committee thereof may establish a higher compensation level.


 


(b)                                 During the Term
of Employment, the Company shall pay or cause to be paid to Executive an annual
bonus based on Executive’s performance, as determined and approved by the Board
of Directors of the Company or a committee thereof under the Safety Insurance
Group, Inc. Annual Performance Incentive Plan, or any successor
thereto.  Such bonus will be at the full
discretion of the Board of Directors of the Company or a committee thereof, and
may not be paid at all.  Executive acknowledges
that no bonus has been agreed upon or promised.


 


5.                                       Reimbursement
of Expenses


 


During the Term of
Employment, the Company shall reimburse or cause Executive to be reimbursed for
documented travel, entertainment and other expenses reasonably incurred by
Executive in connection with the performance of his duties hereunder and, in
each case, in accordance with applicable rules, customs and usages promulgated
by the Companies from time to time in effect. 
All reimbursements and in-kind
benefits provided under this Agreement, shall be made or provided in accordance


 


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with
the requirements of Section 409A, including, where applicable, the
requirement that (a) any reimbursement shall be for expenses incurred
during a specified period, (b) the amount of expenses eligible for
reimbursement, or in-kind benefits provided, during a calendar year may not
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other calendar year, (c) the reimbursement of an eligible
expense shall be made on or before the last day of the calendar year following
the year in which the expense is incurred (or such earlier date if specified in
this Agreement), and (d) the right to reimbursement or in-kind benefits is
not subject to liquidation or exchange for another benefit.


 


6.                                       Benefits


 


During the Term of
Employment, the Executive shall be entitled to perquisites, paid vacations and
benefits (including health, short and long term disability, pension and life
insurance benefits consistent with past practice, or as increased from time to
time) established from time to time, by the Board of Directors of the Company
for executives of the Companies, subject to the policies and procedures in
effect regarding participation in such benefits.


 


7.                                       Confidential
Information


 


During and after the Term of
Employment, Executive will not, directly or indirectly in one or a series of
transactions, disclose to any person, or use or otherwise exploit for the
Executive’s own benefit or for the benefit of anyone other than the Companies,
any Confidential Information, whether prepared by Executive or not; provided,
however, that any Confidential Information may be disclosed to officers,
representatives, employees and agents of the Companies who need to know such
Confidential Information in order to perform the services or conduct the
operations required or expected of them in the Business (as defined in Section 11).  Executive shall use his best efforts to
prevent the removal of any Confidential Information from the premises of the
Companies, except as required in his normal course of employment by the
Company.  Executive shall use
commercially reasonable efforts to cause all persons or entities to whom any
Confidential Information shall be disclosed by him hereunder to observe the
terms and conditions set forth herein as though each such person or entity was
bound hereby. Executive shall have no obligation hereunder to keep confidential
any Confidential Information if and to the extent disclosure of any thereof is
specifically required by law;  provided,
however, that in the event disclosure is required by applicable law, the
Executive shall provide the Companies with prompt notice of such requirement,
prior to making any disclosure, so that the Companies may seek an appropriate
protective order.  At the request of the
Companies, Executive agrees to deliver to the Companies, at any time during the
Term of Employment, or thereafter, all Confidential Information which he may possess
or control.  Executive agrees that all Confidential Information of the Companies
(whether now or hereafter existing) conceived, discovered or made by him during
the Term of Employment exclusively belongs to the Companies (and not to
Executive).  Executive will promptly
disclose such Confidential Information to the


 


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 Companies and perform all actions reasonably
requested by the Companies to establish and confirm such exclusive ownership.


 


8.                                       Non-Interference


 


(a)                                  Executive
acknowledges that the services to be provided give him the opportunity to have
special knowledge of the Companies and their Confidential Information and the
capabilities of individuals employed by or affiliated with the Companies and that
interference in these relationships would cause irreparable injury to the
Companies.  In consideration of this
Agreement, Executive covenants and agrees that:


 


(i)                                     During the
Restricted Period (which shall not be reduced by any period of violation of this
Agreement by Executive or period which is required for litigation to enforce
the rights hereunder), Executive will not, without the express written approval
of the Board of Directors of the Company, anywhere in the Market, directly or
indirectly, in one or a series of transactions, own, manage, operate, control,
invest or acquire an interest in, or otherwise engage or participate in,
whether as a proprietor, partner, stockholder, lender, director, officer,
employee, joint venturer, investor, lessor, supplier, customer, agent,
representative or other participant, in any business which competes, directly
or indirectly, with the Business in the Market (“Competitive Business”)
without regard to (A) whether the Competitive Business has its office,
manufacturing or other business facilities within or without the Market, (B) whether
any of the activities of the Executive referred to above occur or are performed
within or without the Market or (C) whether the Executive resides, or
reports to an office, within or without the Market; provided, however,
that (x) the Executive may, anywhere in the Market, directly or
indirectly, in one or a series of transactions, own, invest or acquire an
interest in up to five percent (5%) of the capital stock of a corporation whose
capital stock is traded publicly, or that (y) Executive may accept
employment with a successor company to the Company.


 


(ii)                                  During the
Restricted Period (which shall not be reduced by any period of violation of
this Agreement by Executive or period which is required for litigation to
enforce the rights hereunder), Executive will not without the express prior
written approval of the Board of Directors of the Company (A) directly or
indirectly, in one or a series of transactions, recruit, solicit or otherwise
induce or influence any proprietor, partner, stockholder, lender, director,
officer, employee, sales agent, joint venturer, investor, lessor, supplier,
customer, agent, representative or any other person which has a business
relationship with the Companies or had a business relationship with the
Companies within the 24 month period preceding the date of the incident in
question, to discontinue, reduce or modify such employment, agency or business
relationship with the Companies, or (B) employ or seek to employ or cause
any Competitive Business to employ or seek to employ any person or agent who is
then (or was at any time within 24 months prior to the date the Executive or
the Competitive Business employs or seeks to employ such person) employed or
retained by the Companies.


 


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Notwithstanding
the foregoing, nothing herein shall prevent the Executive from providing a
letter of recommendation to an employee with respect to a future employment
opportunity.


 


(iii)                               The
scope and term of this Section 8 would not preclude Executive from
earning a living with an entity that is not a Competitive Business.


 


(b)                                 In
the event that Executive breaches his obligations in any material respect under
Section 7, this Section 8 or Section 9, the
Company, in addition to pursuing all available remedies under this Agreement,
at law or otherwise, and without limiting its right to pursue the same shall
cease or cause to be ceased all payments to the Executive under this Agreement
or any other agreement.


 


9.                                       Non-Disparagement


 


During and
after the Term of Employment, the Executive agrees that he shall not make any
false, defamatory or disparaging statements about the Companies or the officers
or directors of the Companies.  During
and after the Term of Employment, the Company agrees, on behalf of the Companies
that neither the officers nor the directors of the Companies shall make any
false, defamatory or disparaging statements about the Executive.


 


10.                                 Excise
Tax Gross-up Payments


 


(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
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
income taxes, employment taxes and any Excise Tax imposed upon the Gross-Up
Payment (including any related interest and penalties), the Executive retains
an amount of the Gross-Up Payment equal to the Excise Tax (including any
related interest and penalties) imposed upon the Payments.


 


(b)                                 An
initial determination of 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 of Executive’s employment, or such
other time as may be requested by the Company or 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
to that effect.  If a Gross-Up Payment becomes payable, such Gross-Up
Payment shall be paid to the Executive within thirty business days of the
receipt of the accounting firm’s determination.  Within 10 days after the
accounting firm


 


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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 will be binding, final, and conclusive on the
Company and on the Executive for purposes of determining whether a Gross-Up
Payment is required pursuant to this Section 10(b).  If as a result of any dispute pursuant to
this Section 10(b) additional Gross-Up Payments are made, such
additional Gross-Up Payment will be paid to the Executive within thirty
business days of the receipt of the second accounting firm’s
determination.  The Company will pay or
caused to be paid all costs associated with the second accounting firm’s
determination, unless such determination does not result in additional Gross-Up
Payments to the Executive, in which case all such costs will be borne by the
Executive.  Notwithstanding anything
contained herein to the contrary, any such Gross-Up Payment shall be paid no
later than the end of the Executive’s taxable year next following the Executive’s
taxable year in which the Executive remits the related taxes.


 


(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 of Executive’s employment, net of the maximum reduction in
federal income taxes that would be obtained from deduction of those state and
local taxes.


 


(d)                                 As
a result of the uncertainty in the application of Section 4999 of the
Code, it is possible that Gross-Up Payments which will not have been made
should have been made (“Underpayment”) or Gross-Up Payments are made
which should not have been made (“Overpayment”).  If it is determined that an Underpayment has
occurred, the accounting firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid
to or for the benefit of Executive. 
Notwithstanding anything contained herein to the contrary, any such
Underpayment shall be paid no later than the end of the Executive’s taxable
year next following the Executive’s taxable year in which the Executive remits
the related taxes.  If the Gross-Up
Payment exceeds the amount necessary to reimburse the Executive for his Excise
Tax, the Accounting Firm shall determine the amount of the Overpayment that has
been made and any such Overpayment (together with interest at the rate provided
in Section 1274(b)(2) of the Code) shall be promptly paid by
Executive (to the extent he has received a refund if the applicable Excise Tax
has been paid to the Internal Revenue Service) to or for the benefit of the
Company; provided, however, that if the Company determines that such repayment
obligation would be or result in an unlawful extension of credit under Section 13(k) of
the Securities Exchange Act, repayment shall not be required.  The Executive shall cooperate, to the extent
his expenses are reimbursed in


 


12

















 


accordance
with this Section 10, with any reasonable requests by the Company in
connection with any contest or disputes with the Internal Revenue Service in
connection with the Excise Tax.


 


(e)                                  The
Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment of an
Underpayment.  Such notification shall be
given as soon as practicable but no later than ten (10) business days
after the Executive is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid.  The Executive
shall not pay such claim prior to the expiration of the thirty (30) day period
following the date on which he gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to
such claim is due).  If the Company
notifies the Executive in writing prior to the expiration of such period that
it desires to contest such claim, the Executive shall:


 


(i)                                     give
the Company any information reasonably requested by the Company relating to
such claim,


 


(ii)                                  take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,


 


(iii)                               cooperate
with the Company in good faith in order effectively to contest such claim, and


 


(iv)                              permit the Company to
participate in any proceeding relating to such claim;


 


provided,
however, that the Company shall pay or cause to be paid all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax (including related interest and
penalties) imposed as a result of such representation and payment of costs and
expenses no later than 60 days after the end of the taxable year following the
year in which the Executive incurs such costs and expenses.  Without limitation on the foregoing
provisions of this Section 10(e), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, such payment
shall be advanced to the Executive, on an interest-free basis and the Executive
shall be indemnified and held harmless, on an after-tax basis, from any


 


13

















 


Excise Tax or
income tax (including related interest or penalties) imposed with respect to
such advance or with respect to any imputed income with respect to such
advance.  The Company’s control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.


 


(f)                                    If,
after the receipt by the Executive of an amount advanced pursuant to Section 10(e),
the Executive becomes entitled to receive any refund with respect to such
claim, the Executive shall (subject to the Company’s complying with the
requirements of Section 10(e)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto).  If,
after the receipt by the Executive of an amount advanced pursuant to Section 10(e) hereof,
a determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid.


 


11.                                 Definitions


 


Capitalized
terms used in this Agreement but not otherwise defined shall have the meanings
set forth below:


 


“Business”
means any business conducted, or engaged in, by the Companies prior to the date
hereof or at any time during the Term of Employment.


 


“Cause”
is defined in Section 3(c).


 


“Change of
Control” means any of the following: (i) the closing of any merger,
combination, consolidation or similar business transaction involving the
Company in which the holders of Company Common Stock immediately prior to such
closing are not the holders, directly or indirectly, of a majority of the
ordinary voting securities of the surviving person in such transaction
immediately after such closing, (ii) the closing of any sale or transfer
by the Company of all or substantially all of its assets to an acquiring person
in which the holders of Company Common Stock immediately prior to such closing
are not the holders of a majority of the ordinary voting securities of the
acquiring person immediately after such closings, or (iii) the closing of
any sale by the holders of Company Common Stock of an amount of Company Common
Stock that equals or exceeds a majority of the shares of Company Common Stock
immediately prior to such closing to a person in which the holders of the
Company Common Stock immediately prior to such closing are not the holders of a
majority of the ordinary voting securities of such person immediately after
such closing.


 


“Companies”
means the Company and its successors or any of its direct or indirect parents
or direct or indirect subsidiaries, now or hereafter existing.


 


14

















 


“Company”
is defined in the introduction.


 


“Competitive
Business” is defined in Section 8(a)(i).


 


“Confidential
Information” means any confidential information including, without
limitation, any study, data, calculations, software storage media or other
compilation of information, patent, patent application, copyright, trademark,
trade name, service mark, service name, “know-how”, trade secrets, customer
lists, details of client or consultant contracts, pricing policies, operational
methods, marketing plans or strategies, product development techniques or
plans, business acquisition plans or any portion or phase of any scientific or
technical information, ideas, discoveries, designs, computer programs
(including source of object codes), processes, procedures, formulas,
improvements or other proprietary or intellectual property of the Companies,
whether or not in written or tangible form, and whether or not registered, and
including all files, records, manuals, books, catalogues, memoranda, notes,
summaries, plans, reports, records, documents and other evidence thereof.  The term “Confidential Information”
does not include, and there shall be no obligation hereunder with respect to,
information that becomes generally available to the public other than as a
result of a disclosure by the Executive not permissible hereunder.


 


“Executive”
means Daniel D. Loranger or his estate, if deceased.


 


“Market”
means any state in the United States of America and each similar jurisdiction
in any other country in which the Business was conducted by or engaged in by
the Companies prior to the date hereof or is conducted or engaged in, or in
which the Companies are seeking authorization to conduct Business at any time
during the Term of Employment.


 


“Regulations”
is defined in Section 2(c).


 


“Restricted
Period” means the date commencing on the date of this Agreement and ending
on the later of (x) the date of termination of the Term of Employment or (y) the
end of the applicable severance period provided under Section 3(f);
provided, however, that the “Restricted Period” may be extended,
in the sole discretion of the Company, for an additional period of up to
twenty-four (24) months if the Company continues to pay or to cause to be paid
to the Executive (i) the full amounts to which he would be entitled as
base compensation under Section 4(a) and (ii) customary
benefits, in each case during such extended period.


 


“Term of
Employment” is defined in Section 3(a).


 


12.                                 Notice


 


Any notice,
request, demand or other communication required or permitted to be given under
this Agreement shall be given in writing and if delivered personally, or sent 


 


15

















 


by certified
or registered mail, return receipt requested, as follows (or to such other
addressee or address as shall be set forth in a notice given in the same
manner):


 


	
  If to
  Executive:

  	
   

  	
  Daniel D.
  Loranger

  
	
   

  	
   

  	
  c/o Safety
  Insurance Group, Inc.

  
	
   

  	
   

  	
  20 Custom
  House Street

  
	
   

  	
   

  	
  Boston,
  Massachusetts 02110

  
	
   

  	
   

  	
   

  
	
  If to
  Company:

  	
   

  	
  Safety
  Insurance Group, Inc.

  
	
   

  	
   

  	
  20 Custom
  House Street

  
	
   

  	
   

  	
  Boston,
  Massachusetts 02110

  
	
   

  	
   

  	
  Attention:  David Brussard

  



 


Any such
notices shall be deemed to be given on the date personally delivered or such
return receipt is issued.


 


13.                                 Executive’s
Representation


 


Executive
hereby warrants and represents to the Company that Executive has carefully
reviewed this Agreement and has consulted with such advisors as Executive
considers appropriate in connection with this Agreement, and is not subject to
any covenants, agreements or restrictions, including without limitation any
covenants, agreements or restrictions arising out of Executive’s prior
employment which would be breached or violated by Executive’s execution of this
Agreement or by Executive’s performance of his duties hereunder.


 


14.                                 Other
Matters


 


(a)                                  Executive
agrees and acknowledges that the obligations owed to Executive under this
Agreement are solely the obligations of the Company, and that none of the
Companies’ stockholders, directors, officers, affiliates, representatives,
agents or lenders will have any obligations or liabilities in respect of this
Agreement and the subject matter hereof.


 


(b)                                 Notwithstanding
anything contained herein to the contrary, the Companies may withhold from any
amounts payable under, or benefits provided pursuant to, this Agreement all
federal, state, local, and foreign taxes that are required to be withheld by
applicable laws or regulations.


 


(c)                                  In
addition to any obligations imposed by law upon any successor to the Company,
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.


 


16

















 


15.                                 Validity


 


If, for any
reason, any provision hereof shall be determined to be invalid or
unenforceable, the validity and effect of the other provisions hereof shall not
be affected thereby.


 


16.                                 Severability


 


Whenever
possible, each provision of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or any other
jurisdiction, but this Agreement will be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.  If any court determines that any provision
of Section 8 or any other provision hereof is unenforceable and
therefore acts to reduce the scope or duration of such provision, the provision
in its reduced form shall then be enforceable.


 


17.                                 Waiver
of Breach; Specific Performance


 


The waiver by
the Company or Executive of a breach of any provision of this Agreement by the
other party shall not operate or be construed as a waiver of any other breach
of such other party.  Each of the parties
(and third party beneficiaries) to this Agreement will be entitled to enforce
its respective rights under this Agreement and to exercise all other rights
existing in its favor.  The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of Sections 7,  8 and 9 of
this Agreement and that any party (and third party beneficiaries) may in its
sole discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief, including temporary
restraining orders, preliminary injunctions and permanent injunctions in order
to enforce or prevent any violations of the provisions of this Agreement.  In the event either party takes legal action
to enforce any of the terms or provisions of this Agreement, the nonprevailing
party shall pay the successful party’s costs and expenses, including but not
limited to, attorneys’ fees, incurred in such action.  If the Executive prevails, the Company will
reimburse the Executive’s legal fees no later than 60 days after the end of the
taxable year following the year in which the Executive incurs such the costs
and expenses.


 


18.                                 Assignment;
Third Parties


 


Neither the
Executive nor the Company may assign, transfer, pledge, hypothecate, encumber
or otherwise dispose of this Agreement or any of his or its respective rights
or obligations hereunder, without the prior written consent of the other.  The parties agree and acknowledge that each
of the Companies and the stockholders and investors therein are intended to be
third party beneficiaries of, and have rights and interests in respect of,
Executive’s agreements set forth in Sections 7, 8 and 9.


 


17

















 


19.                                 Amendment;
Entire Agreement


 


This Agreement
may not be changed orally but only by an agreement in writing agreed to by the
party against whom enforcement of any waiver, change, modification, extension
or discharge is sought.  This Agreement
embodies the entire agreement and understanding of the parties hereto in
respect of the subject matter of this Agreement, and supersedes and replaces
all prior agreements, understandings and commitments with respect to such
subject matter, including, without limitation, the Prior Employment Agreement
and that certain Employment Agreement, dated October 16, 2001, between
Executive and Safety Insurance Company.


 


20.                                 Litigation


 


THIS AGREEMENT
SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, EXCEPT THAT NO DOCTRINE OF CHOICE OF
LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF MASSACHUSETTS, AND NO
DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY
OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT, MODIFICATION OR
REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF ANY FOREIGN JURISDICTION,
BE INTERPOSED IN ANY ACTION HEREON. 
EXECUTIVE AND THE COMPANY AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE
OR ARISING OUT OF THIS AGREEMENT SHALL BE COMMENCED IN THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS LOCATED IN BOSTON, MASSACHUSETTS OR THE UNITED
STATES DISTRICT COURTS IN BOSTON, MASSACHUSETTS.  EXECUTIVE AND THE COMPANY CONSENT TO SUCH
JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY
OBJECTIONS BASED UPON FORUM NON CONVENIENS.  THE CHOICE OF FORUM
SET FORTH IN THIS SECTION 20 SHALL NOT BE DEEMED TO PRECLUDE THE
ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER JURISDICTION.


 


21.                                 Further
Action


 


Executive and
the Company agree to perform any further acts and to execute and deliver any
documents which may be reasonable to carry out the provisions hereof.


 


22.                                 Counterparts


 


This Agreement
may be executed in counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.


 


18

















 


23.                                 Section 409A


 


To the extent
applicable, it is intended that this Plan comply with, and should be
interpreted consistent with, the requirements of Section 409A.


 


IN WITNESS
WHEREOF, this Agreement has been executed as of the date first written above.


 


	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/Daniel D.
  Loranger

  
	
   

  	
  Name:

  	
  Daniel D.
  Loranger

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SAFETY INSURANCE GROUP, INC.:

  
	
   

  	
   

  
	
   

  	
  /s/David F.
  Brussard

  
	
   

  	
  Name:

  	
  David F.
  Brussard

  
	
   

  	
  Title:

  	
  President,CEO
  and Chairman of the

  
	
   

  	
   

  	
  Board

  
					



 


19