Exhibit 10.1


 


EMPLOYMENT AGREEMENT


THIS AGREEMENT
(the “Agreement”), dated as of November 12, 2006, is by and between Tower
Group, Inc., a Delaware corporation (the “Company”), and Patrick J. Haveron
(the “Executive”).


WITNESSETH THAT


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


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


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


1.             Term.


(a)           Term of Employment.


(i)            The Company shall
employ the Executive, and the Executive shall serve the Company, on the terms
and subject to the conditions set forth in this Agreement, commencing on the
date the Stock Purchase Agreement by and among Certain Named Sellers therein,
Preserver Group, Inc. and Tower Group, Inc. closes (the “Effective Date”) and,
unless sooner terminated pursuant to section 4, continuing until the date that
is the (2) two-year anniversary of the Effective Date or such later date as
provided in subsection 1(a)(ii) below (the “Term of Employment”).


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


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


2.             Position and Duties.


(a)           Positions,
Duties, and Responsibilities.  The
Executive shall serve as the Senior Vice President, Chief Operating Officer of
the Company with such duties and responsibilities as











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


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


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


(a)           Annual Base
Salary.  Subject to adjustment
pursuant to this subsection 3(a), the Executive shall receive an annual base
salary of $350,000 during the Term of Employment (the annual base salary in
effect from time to time, “Annual Base Salary”).  The Annual Base Salary shall be payable in
accordance with the Company’s regular payroll practice for its senior officers,
as in effect from time to time.  The
Annual Base Salary shall be reviewed from time to time, but not less frequently
than annually, and, in the sole discretion of the Board, may be adjusted but
not decreased below the amount set forth in the first sentence of this
subsection 3(a).  To the extent Annual
Base Salary is adjusted, then such adjusted salary shall be the Executive’s
Annual Base Salary for all purposes of this Agreement.


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











(c)           Sign-On Equity:  The Executive shall be entitled to receive a
one-time, sign-on equity grant valued in the amount of $175,000 priced as of
the effective date of this Agreement and vesting in equal installments over three
(3) years.


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


(i)            to the extent not
duplicative of the specific benefits provided herein, the Executive shall be
eligible to participate in all incentive compensation, retirement, supplemental
retirement, and deferred compensation plans, policies and arrangements that are
provided generally to other senior officers of the Company;


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


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


(e)           Vacation.  The Executive shall be entitled to not less
than four weeks of paid vacation per calendar year during the Term of Employment.  Vacation days not used within the year shall
be carried forward to subsequent years, as determined by the Company; provided, however, that the maximum carry
forward of vacation shall be two weeks.


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


(g)           Executive Medical Reimbursements:
The plan will reimburse the Executive for uncovered medical expenses, up to
$5,000 per calendar year.  Expenses that
do not meet the IRS criteria cannot be submitted for reimbursement.


(h)           Automobile Allowance:  The Executive shall be entitled to receive an
annual automobile allowance of a maximum of Twelve Thousand Dollars ($12,000)
during the Term of Employment.


4.             Termination of Employment.


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











 


Executive’s employment.  The Term
of Employment shall terminate upon the Executive’s death.


(b)           Notice of
Termination.  Any purported
termination of the Executive’s employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with the notice provisions contained in
subsection 15(b) below.  For purposes of
this Agreement, a “Notice of Termination” shall mean a notice that indicates
the Date of Termination (as that term is defined in subsection 4(c) below) and,
with respect to a termination due to Disability, Cause or Good Reason, sets
forth in reasonable detail the facts and circumstances that are alleged to
provide a basis for such termination.  A
Notice of Termination from the Company shall specify whether the termination is
with or without Cause or due to the Executive’s Disability.  A Notice of Termination from the Executive
shall specify whether the termination is with or without Good Reason or due to
the Executive’s Disability or retirement.


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


(d)           No Waiver.  The failure to set forth any fact or
circumstance in a Notice of Termination, which fact or circumstance was not
known to the party giving the Notice of Termination when the notice was given,
shall not constitute a waiver of the right to assert such fact or circumstance
in an attempt to enforce any right under or provision of this Agreement.


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











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


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


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


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


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


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


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


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


5.             Obligations of the Company upon Termination.


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


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


(ii)           The Company shall
pay to the Executive, within thirty business days of the Date of Termination, a prorated Annual Bonus based on (A)
the target Annual Bonus opportunity in the year in which the Date of
Termination occurs or the prior year
if no target Annual Bonus opportunity has yet been determined (disregarding any
reduction in target Annual Bonus 











 


opportunity that was the basis for a
termination by the Executive for Good Reason) and (B) the
fraction of the year the Executive was employed.


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


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


(v)           The Executive shall have at least three (3)
months or until the last day of the equity term, whichever occurs first to
exercise any then vested equity awards.


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


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


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











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


(B)           individuals who, as
of the Effective Date, constitute the Board (the “Incumbent Board”) cease for
any reason to constitute at least a majority of the Board of the Company,
provided that any person becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the Company)
shall be, for purposes of this definition, considered as though such person
were a member of the Incumbent Board;


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


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


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


Notwithstanding anything
to the contrary contained in the foregoing definition, an initial public
offering of the Company’s shares shall not constitute a Change in Control for
purposes of this Agreement.











(c)           Termination by
the Company for Cause or by the Executive without Good Reason.  If the Executive’s employment is terminated
by the Company for Cause the Company shall pay to the Executive, within thirty
business days of the Date of Termination, any earned but unpaid Annual Base
Salary and all outstanding stock options (whether or not then exercisable),
restricted stock and other incentive awards shall be forfeited.  If the Executive’s employment is terminated
by the Executive without Good Reason (and not due to death, Disability or
Retirement), the Company shall pay to the Executive, within thirty business
days of the Date of Termination, any earned but unpaid Annual Base Salary, the
Executive shall have three months to exercise any outstanding vested stock
options and all of the Executive’s unvested equity-based awards shall be
forfeited as of the Date of Termination.


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


(e)           Retirement.  If the Executive retires with at least 15
years of service and after attaining age 55, (i) the Company shall pay to the
Executive, within thirty business days after the Date of Termination, any
earned but unpaid Annual Base Salary, (ii) the Company shall pay to the
Executive, within thirty business days after the Date of Termination, a
prorated Annual Bonus based on (A) the target Annual Bonus opportunity in
the year in which the date of Termination occurs or the prior year if no Target
Annual Bonus opportunity has yet been determined and (B) the fraction of
the year the Executive was employed, (iii) the Executive shall receive
applicable retiree benefits, if any, provided at such time by the Company to
retirees or as the Company shall determine, and (iv) the Executive’s
outstanding equity-based awards shall vest on the Date of Termination, and (v)
the Executive’s vested equity-awards shall remain exercisable until the last
day of the option term thereof. For avoidance of doubt, the Executive shall not
be entitled to receive benefits pursuant to this Section 5(e) if he
receives benefits under Section 5(a), (b), (c) and (d).


6.             Certain Tax Consequences.


(a)           If any payments or
benefits paid or provided or to be paid or provided to the Executive or for his
benefit pursuant to the terms of this Agreement or otherwise in connection
with, or arising out of, his employment with the Company (a “Payment” or “Payments”)
would be subject to any excise tax (the “Excise Tax”) imposed by section 4999
of the Internal Revenue Code of 1986, as amended (the “Code”), then the















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


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


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


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


7.             Release.  Notwithstanding any provision herein to the
contrary, the Company will require that, prior to payment of any amount or
provision of any benefit under section 5 of this Agreement (other than due to
the Executive’s death), the Executive











shall have executed a
complete release of the Company and its affiliates and related parties in such
form as is reasonably required by the Company, and any waiting periods
contained in such release shall have expired.


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


9.             Full Settlement. 
In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and, except as
otherwise provided in subsections 5(a)(iv) and 15(e), the amount of any payment
or benefit provided for in this Agreement shall not be reduced by any
compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company, or otherwise.


10.           Non-Competition; Confidential
Information; and Non-Solicitation.


(a)           Non-Competition.  During the Term of Employment and for the one
(1) year period following the Date of Termination for any reason, the Executive
shall not, without the prior written consent of the Company, as a shareholder,
officer, director, partner, consultant, employee or otherwise, engage in any
business or enterprise which is “in competition” (as defined below) with the
Company, its affiliates, or their successors or assigns (such entities
collectively referred to hereinafter in this section 10 as the “Company”) in
the states of New York and New Jersey; provided, however, that the Executive’s
ownership of less than five percent of the issued and outstanding voting
securities of a publicly traded company shall not, in and of itself, be deemed
to constitute such competition.  A
business or enterprise is deemed to be “in competition” if it is engaged in any
business in which the Company either (i) is engaged in as of the Date of
Termination or (ii) as of the Date of Termination, contemplates engaging in
within one (1) year following the Date of Termination.


(b)           Confidential Information.  The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge, trade secrets, methods, know-how or data relating to the Company or
its affiliates and their businesses or acquisition prospects that the Executive
obtained or obtains during the Executive’s employment by the Company (“Confidential
Information”), provided that “Confidential Information” shall not include any
secret or confidential information, knowledge, trade secrets, methods, know-how
or data that is or becomes generally known











to the public (other than as a result of the Executive’s violation of
this section 10).  Except as may be
required and appropriate in connection with carrying out his duties under this
Agreement, the Executive shall not communicate, divulge, or disseminate any
material Confidential Information at any time during or after the Executive’s
employment with the Company, except with the prior written consent of the
Company or as otherwise required by law or legal process; provided, however,
that if so required, the Executive will provide the Company with reasonable
notice to contest such disclosure.


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


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


(e)           Remedies;
Severability.


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


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


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











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


13.           Successors.


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


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


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











15.           Miscellaneous.


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


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


If to the Executive:


Patrick J. Haveron

147 Fernwood Drive

Old Tappan, New Jersey 07675


If to the Company:


Tower Group, Inc. 

120 Broadway, 31st Floor

New York, New York 10271

Attention:  General Counsel

Facsimile:  212-271-5492


or to such other address as either party furnishes to
the other in writing in accordance with this subsection 15(b).  Notices and communications shall be effective
when actually received by the addressee.


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


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


(e)           Withholding.  Notwithstanding any other provision of this
Agreement, the Company may withhold from amounts payable under this Agreement
all











federal, state, local, and foreign taxes that are required to be withheld
by applicable laws or regulations.


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


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


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


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


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


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


	
  

  	
  TOWER
  GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Michael
  H. Lee

  
	
   

  	
  Its:

  	
    President
  and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PATRICK
  J. HAVERON

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/  
  Patrick J. Haveron