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Exhibit 4.3  

 
 

Safety Insurance Group, Inc.
  2002 Management Omnibus Incentive Plan    
    

 
 

ARTICLE 1—Establishment, Objectives, and Duration    
    

	1.1
	Establishment of the Plan. Safety Insurance Group, Inc., a corporation organized and existing under Delaware law
(hereinafter referred to as the "Company"), established the Safety Insurance Group, Inc. 2002 Management Omnibus Incentive Plan (hereinafter referred to as the "Plan") effective July 1,
2002 (the "Effective Date"). In accordance with the terms of the Plan, the Board has amended and restated the Plan, effective September 17, 2002 (the "Restatement Date"). The Plan shall remain
in effect as provided in Section 1.3 hereof. 

The
Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, and Restricted Stock. 

	1.2
	 Objectives of the Plan. The objectives of the Plan are to optimize the profitability and growth of the Company through incentives which are
consistent with the Company's goals and which link the personal interests of Participants to those of the Company's shareholders; to provide Participants with an incentive for excellence in individual
performance; and to promote teamwork among Participants. 

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

	1.3
	 Duration of the Plan. The Plan shall remain in effect, subject to the right of the Board to amend or terminate the Plan at any time pursuant to
Article 15 hereof, until (a) all Shares subject to it shall have been purchased or acquired according to the Plan's provisions, or, if an initial public offering of the Company's common
stock is not consummated by December 31, 2002, (b) December 31, 2002. However, in no event may an Award of Incentive Stock Options be granted under the Plan after the tenth
anniversary of the Effective Date. 

 
 

ARTICLE 2—Definitions    
    

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

	2.1
	 "Affiliate" means any person or entity which, at the time of reference, directly, or indirectly through one or more intermediaries, controls or
is controlled by the Company.   

 
	2.2
	 "Award" means, individually or collectively, a grant under this Plan of Nonqualified
Stock Options, Incentive Stock Options, Stock Appreciation
Rights, or Restricted Stock.   

 
	2.3
	 "Award Agreement" means an agreement entered into by the Company and each Participant
setting forth the terms and provisions applicable to Awards
granted under the Plan.   

 
	2.4
	 "Board" means the Board of Directors of the Company.   

	2.5
	 "Cause" means (i) the willful engaging by the Participant in misconduct that is demonstrably injurious to the Company (monetarily or
otherwise), as determined by the Board in its sole discretion, (ii) the Participant's conviction of, or pleading guilty or nolo contendere to, a felony involving moral turpitude,
(iii) the Participant's violation of any confidentiality, non-solicitation, or non-competition covenant to which the Participant is subject, or (iv) the
Participant's poor performance, as determined by the Board, based on reasonable business objectives, after written notice from the Company and a reasonable opportunity to correct such poor
performance. 

	2.6
	 "Change in Control" will be deemed to have occurred as of the first day any of the following events occurs:

	(a)
	the
closing of any merger, combination, consolidation or similar business transaction involving the Company in which the holders of Shares 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;

	(b)
	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 Shares immediately prior to such closing
are not the holders of a majority of the ordinary voting securities of the acquiring Person immediately after such closing; or

	(c)
	the
closing of any sale by the holders of Shares of an amount of Shares that equals or exceeds a majority of the Shares immediately prior to such closing to a Person in which the
holders of the Shares immediately prior to such closing are not the holders of a majority of the ordinary voting securities of such Person immediately after such closing.   

 

	2.7
	 "Code" means the Internal Revenue Code of 1986, as amended from time to time.   

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

 
	2.9
	 "Company" means Safety Insurance Group, Inc., a
corporation organized and existing under Delaware law, and any successor thereto as
provided in Article 19 herein.   

 
	2.10
	 "Consultant" means an independent contractor who are performing consulting
services for one or more entities in the Group and who is not an
employee of any entity in the Group.   

 
	2.11
	 "Director" means a member of the Board or a member of the board of directors
of an Affiliate.   

 
	2.12
	 "Disability" shall have the meaning ascribed to such term in the long-term disability plan maintained by the Company, or if no such
plan exists, at the discretion of the Committee.   

 
	2.13
	 "Effective Date" shall have the meaning ascribed to such term in
Section 1.1 hereof.   

 
	2.14
	 "Employee" means any employee of the Group, including any employees who are also
Directors. Nonemployee Directors and Consultants shall not be
considered Employees under this Plan.   

 
	2.15
	 "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor act thereto.   

 
	2.16
	 "Exercise Price" means the price at which a Share may be purchased by a
Participant pursuant to an Option.   

 
	2.17
	 "Fair Market Value" shall be determined in good faith by the Committee. 
 

 
	2.18
	 "Freestanding SAR" means an SAR that is granted independently of any Options, as described in Article 7 herein.
   

 
	2.19
	 "Good Reason" means, with respect to an Employee, (a) a material reduction in an Employee'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), (b) the relocation of the
Employee's primary place of business or the relocation of the Employee to another Company (or Affiliate) office more than 75 miles from the location of the Employee's principal office, or, if
applicable, (c) the Employee's employer's willful, material violation of its obligations under his or her employment agreement, in each case, after 60 days' prior written notice to the
Employee's employer and its board of directors and the Employee's employer's failure thereafter to cure such reduction or violation.   

 
	2.20
	
"Group" means the Company and the Affiliates. 

	2.21
	 "Incentive Stock Option" or "ISO" means an option to purchase Shares granted under
Article 6 herein and which is designated as an Incentive Stock Option intended to meet the requirements of Code Section 422.   

 
	2.22
	
"Named Executive Officer" means a Participant who, as of the date of vesting and/or payout of an Award, as applicable, is one of the group of
"covered employees," as defined in the regulations promulgated under Code Section 162(m), or any successor statute.   

 
	2.23
	 "Nonemployee
Director" shall have the meaning ascribed to such term in Rule 16b-3 of the Exchange Act.   

 
	2.24
	 "Nonqualified Stock
Option" or "NQSO" means an option to purchase Shares granted under
Article 6 herein and which is not intended to meet the requirements of Code Section 422.   

 
	2.25
	 "Option" means
an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6 herein.   

 
	2.26
	 "Outside Director"
shall have the meaning ascribed to such term under the regulations promulgated with respect to Code Section 162(m).   

 
	2.27
	
"Participant" means a current or former Employee, Director, or Consultant who has outstanding an Award granted under the Plan.   

 
	2.28
	 "Performance-Based Exception" means the performance-based exception from the tax deductibility limitations of Code Section 162(m).   

 
	2.29
	 "Period of Restriction" means the period during which the transfer of Shares of Restricted Stock is limited in some way (based on the passage of
time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, at its discretion), and the Shares are subject to a substantial risk of forfeiture,
as provided in Article 8 herein.   

 
	2.30
	 "Person" shall have the meaning ascribed to such term in Section 3(a)(9)
of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group," as defined in Section 13(d) thereof.   

 
	2.31
	 "Restricted Stock" or "Restricted Share" means an Award granted to a Participant pursuant to
Article 8 herein.   

 
	2.32
	 "Shares" means the shares of common stock of the Company, par value
$            per share.   

 
	2.33
	 "Stock Appreciation Right" or
"SAR" means an Award, granted alone or in connection with a
related Option, designated as an SAR, pursuant to the terms of Article 7 herein.   

 
	2.34
	 "Tandem SAR" means an SAR
that is granted in connection with a related Option pursuant to Article 7 herein.   

 
	2.35
	 "Termination of Service"
means, if an Employee, termination of employment with all entities in the Group, if a Director, termination of service
on the Board and the board of directors of any Affiliate, as applicable, and if a Consultant, termination of the consulting relationship with all entities in the Group. 

 
 

ARTICLE 3—Administration    
    

	3.1
	The Committee. The Plan shall be administered by the Committee. To the extent the Company deems it to be necessary or
desirable with respect to any Awards made hereunder, the members of the Committee may be limited to Nonemployee Directors or Outside Directors, who shall be appointed from time to time by, and shall
serve at the discretion of, the Board.   

 
	3.2
	 Authority of the Committee. Except as limited by law or by the Articles of
Incorporation or the By-laws of the Company, and subject
to the provisions herein, the Committee shall have full power to select the persons who shall participate in the Plan; determine the sizes and types of Awards; determine the terms and conditions of
Awards in a manner consistent with the Plan; construe and 

interpret
the Plan and any agreement or instrument entered into under the Plan as they apply to Participants; establish, amend, or waive rules and regulations for the Plan's administration as they
apply to Participants; and (subject to the provisions of Article 15 herein) amend the terms and conditions of any outstanding Award to the extent such terms and conditions are within the
discretion of the Committee as provided in the Plan. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan, as the Plan
applies to Participants. As permitted by law, the Committee may delegate its authority as identified herein. 

	3.3
	 Decisions Binding. All determinations and decisions made by the Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all persons, including the Company, its shareholders, Affiliates, Participants, and their estates and beneficiaries. 

 
 

ARTICLE 4—Shares Subject to the Plan and Maximum Awards    
    

4.1   Number of Shares Available for Grants.

	(a)
	Subject
to further adjustment as provided in Section 4.2 herein, the maximum number of Shares available for grants to Participants under the Plan shall be 25,000, provided that
this limit shall automatically be increased in accordance with Section 4.2 to 1,250,000 to reflect the stock dividend declared in conjunction with the Company's initial public offering. In the
event any Award under the Plan is forfeited or if any outstanding Award for any reason expires, is terminated, or cancelled without exercise, the Shares subject to such Award shall again be available
for grant or issuance under the Plan. Except for purposes of determining the maximum number of Shares that may be subject to ISOs, Shares tendered by a Participant to satisfy applicable tax
withholding obligations or Exercise Price shall again be available for grant or issuance under the Plan.

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

 

	1.
	 Options: The maximum aggregate number of Shares with respect to which Options may be granted in any one calendar year to any one Participant shall
be 25,000, provided that this limit shall automatically be increased in accordance with Section 4.2 to 1,250,000 to reflect the stock dividend declared in conjunction with the Company's initial
public offering.              

 
	2.
	 SARs: The maximum aggregate number of Shares with respect to which Stock Appreciation Rights may be granted in any one calendar year to any
one
Participant shall be 25,000, provided that this limit shall automatically be increased in accordance with Section 4.2 to 1,250,000 to reflect the stock dividend declared in conjunction with the
Company's initial public offering.              

 
	3.
	 Restricted Stock: The maximum aggregate number of Shares of Restricted Stock that may be granted in any one calendar year to any one
Participant
shall be 25,000, provided that this limit shall automatically be increased in accordance with Section 4.2 to 1,250,000 to reflect the stock dividend declared in conjunction with the Company's
initial public offering.   

 
	4.2
	 Adjustments in Authorized Shares. In the event of any change in corporate capitalization,
such as a stock split or a stock dividend, or a
corporate transaction, such as any merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Company, any reorganization (whether or not
such reorganization comes within the definition of such term in Code Section 368) or any partial or complete liquidation of the Company, an adjustment shall be made in the number and kind of
Shares which may be delivered pursuant to Section 4.1, in the number and kind of and/or price of Shares subject to outstanding Awards granted under the Plan, and in the Award limits set forth
in subsections 4.1(b)(1) through 4.1(b)(3), as may be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or 

enlargement
of rights; provided, however, that the number of Shares subject to any Award shall always be rounded to the nearest whole number, with one-half (1/2) of a share
rounded up to the next higher number. 

 
 

ARTICLE 5—Eligibility and Participation    
    

	5.1
	Eligibility. Persons eligible to participate in this Plan include all Employees, Directors and Consultants of the Group.   

	5.2
	 Actual Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select from all eligible Employees, Directors
and Consultants those to whom Awards shall be granted and shall determine the nature and amount of each Award. 

 
 

ARTICLE 6—Options    
    

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

	6.2
	 Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify the Exercise Price, the duration of the Option,
the number of Shares to which the Option pertains, and such other provisions as the Committee shall determine. The Award Agreement also shall specify whether the Option is intended to be an ISO or an
NQSO.   

 
	6.3
	 Exercise Price. The Exercise Price for each grant of an Option under this Plan shall be at least equal to one
hundred percent (100%) of the Fair
Market Value of a Share on the date the Option is granted.   

 
	6.4
	 Duration of Options. Each Option granted to a Participant
shall expire at such time as the Committee shall determine at the time of grant;
provided, however, that no Option shall be exercisable later than the tenth (10th) anniversary date of its grant.   

 
	6.5
	 Exercise of
Options. Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and
conditions as set forth in the Award Agreement and as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant. 

6.6   Payment.  

	(a)
	Options
granted under this Article 6 shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares with respect to which
the Option is to be exercised, accompanied by full payment for the Shares.

	(b)
	The
Exercise Price of any Option shall be payable to the Company in full (i) in cash or its equivalent, (ii) if permitted by the Committee, by tendering previously
acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Exercise Price (provided that the Shares, other than Shares purchased by the Participant on the open
market, must have been held by the Participant for at least six (6) months prior to their tender), or (iii) by a combination of (i) and (ii).

	(c)
	If
the Company's shares are publicly traded, an Option may be exercised by means of a cashless exercise with the assistance of a broker or by any other means permitted by the
Committee in accordance with such terms and conditions as the Committee, in its sole discretion, shall determine to be consistent with the Plan's purpose and applicable law.

	(d)
	Subject
to any governing rules or regulations, as soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver to the
Participant, in the 

Participant's
name, either individually or jointly, Shares in an appropriate amount based upon the number of Shares purchased under the Option(s). 

6.7   Nontransferability of Options.

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

	(b)
	Nonqualified Stock Options. Except as otherwise provided in a Participant's Award Agreement, no NQSO granted under this
Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise
provided in a Participant's Award Agreement, during the lifetime of a Participant, all NQSOs granted to such Participant under the Plan shall be exercisable only by such Participant. 

 
 

ARTICLE 7—Stock Appreciation Rights    
    

7.1   Grant of SARs.

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

	(b)
	The
Committee shall have complete discretion in determining the number of SARs granted to each Participant (subject to Article 4 herein) and, consistent with the provisions of
the Plan, in determining the terms and conditions pertaining to such SARs.

	(c)
	The
grant price of a Freestanding SAR shall equal the Fair Market Value of a Share on the date of grant of the SAR. The grant price of Tandem SARs shall equal the Exercise Price of
the related Option. 

7.2   Exercise of Tandem SARs.  

	(a)
	Tandem
SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A
Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable.

	(b)
	Notwithstanding
any other provision of this Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (i) the Tandem SAR will expire no later than
the expiration of the underlying ISO; (ii) the value of the payout with respect to the Tandem SAR may be for no more than one hundred percent (100%) of the difference between the Exercise Price
of the underlying ISO and the Fair Market Value of the Shares subject to the underlying ISO at the time the Tandem SAR is exercised; and (iii) the Tandem SAR may be exercised only when the Fair
Market Value of the Shares subject to the ISO exceeds the Exercise Price of the ISO.   

 

	7.3
	 Exercise of Freestanding SARs. Freestanding SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion,
imposes upon them and sets forth in the Award Agreement.   

 
	7.4
	 SAR Agreement. Each SAR grant shall be evidenced by an
Award Agreement that shall specify the grant price, the term of the SAR, and such other
provisions as the Committee shall determine.   

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

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

	(a)
	the
difference between the Fair Market Value of a Share on the date of exercise over the grant price; by

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

At
the discretion of the Committee, the payment upon SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof. 

	7.7
	 Nontransferability of SARs. Except as otherwise provided in a Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant's Award
Agreement, during the lifetime of a Participant, all SARs granted to such Participant under the Plan shall be exercisable only by such Participant. 

 
 

ARTICLE 8—Restricted Stock    
    

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

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

 
	8.3
	
Transferability. Except as provided in this Article 8, the Shares of Restricted Stock granted herein may not be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the Award Agreement, or upon earlier
satisfaction of any other conditions, as specified by the Committee in its sole discretion and set forth in the Award Agreement. During the lifetime of a Participant, all rights with respect to the
Restricted Stock granted to such Participant under the Plan shall be available only to such Participant. 

8.4   Restrictions.  

	(a)
	Subject
to the terms hereof, the Committee shall impose such conditions and/or restrictions on any Shares of Restricted Stock granted pursuant to the Plan as it may deem advisable and
as are set forth in the Award Agreement including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock, restrictions based upon the
achievement of specific performance goals (Company-wide, divisional, and/or individual), time-based restrictions on vesting following the attainment of the performance goals,
and/or restrictions under applicable federal or state securities laws.

	(b)
	The
Company shall retain the certificates representing Shares of Restricted Stock in the Company's possession until such time as all conditions and/or restrictions applicable to such
Shares have been satisfied.

	(c)
	Except
as otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall become freely transferable by the
Participant after the last day of the applicable Period of Restriction.   

 

	8.5
	 Voting Rights. During the Period of Restriction, subject to any limitations imposed under the By-laws of the Company, Participants
holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares.   

 
	8.6
	 Dividends and Other
Distributions. During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may be
credited with regular dividends paid with respect to the underlying Shares while they are so held. The Committee may apply any restrictions to the 

dividends
that the Committee deems appropriate and as are set forth in the Award Agreement. Without limiting the generality of the preceding sentence, if the grant or vesting of Restricted Shares
granted to a Named Executive Officer is designed to comply with the requirements of the Performance-Based Exception, the Committee may apply any restrictions it deems appropriate to the payment of
dividends declared with respect to such Restricted Shares, such that the dividends and/or the Restricted Shares maintain eligibility for the Performance-Based Exception. 

 
 

ARTICLE 9—Termination of Service    
    

        Each Award Agreement shall set forth the extent to which the Participant shall have the right to exercise Options and SARs, and receive unvested Shares of
Restricted Stock, following Termination of Service with the Group. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into
with each Participant, need not be uniform among all Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for Termination of Service; provided, however, that the
following shall automatically apply to the extent different provisions are not set forth in a Participant's Award Agreement: 

	(a)
	If
the Termination of Service is by the Company for Cause, by a Nonemployee Director or Consultant for any reason, or by an Employee without Good Reason, all previously unexercised
Options and SARs shall expire and all unvested Restricted Shares shall be forfeited upon the date of Termination of Service.

	(b)
	If
the Participant is an Employee and the Termination of Service is by the Participant for Good Reason, all previously unexercised Options and SARs may be exercised for a period of
three (3) months after the Participant's date of termination and all unvested Restricted Shares shall be forfeited as of such date.

	(c)
	If
the Termination of Service is a result of the Participant's death or Disability, all previously unexercised Options and SARs may be exercised for a period of 12 months after
the Participant's date of termination and all unvested Restricted Shares shall vest.

	(d)
	If
the Company terminates a Nonemployee Director's or Consultant's service for any reason other than the Participant's Disability, or terminates an Employee's employment for any
reason other than Cause or the Participant's Disability, all previously unexercised Options and SARs may be exercised for a period of three (3) months after the Participant's date of
Termination of Service and all unvested Restricted Shares which were not granted during the year in which such Termination of Service occurs shall vest. Any Restricted Shares granted during the year
of Termination of Service shall be forfeited. 

 
 

ARTICLE 10—Restrictions on Shares    
    

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

 
 

ARTICLE 11—Performance Measures    
    

        If Awards under the Plan are subject to Code Section 162(m) and the Committee determines that such Awards should be designed to comply with the
Performance-Based Exception, the performance measure(s), the attainment of which determine the degree of payout and/or vesting, to be used for purposes of such Awards shall be chosen from among
earnings per share, economic value added, market share (actual or targeted growth), net income (before or after taxes), operating income, return on assets (actual or targeted growth), return on
capital (actual or targeted growth), return on equity 

(actual
or targeted growth), return on investment (actual or targeted growth), gross or net underwriting results, revenue (actual or targeted growth), share price, stock price growth, total
shareholder return, or such other performance measures as are approved by the Committee and the Company's shareholders. 

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

        In
the event that applicable tax laws change to permit the Committee to alter the governing performance measures without obtaining shareholder approval of such changes, the Committee
shall have sole discretion to make such changes without obtaining shareholder approval. In addition, if the Committee determines that it is advisable to grant Awards that do not qualify for the
Performance-Based Exception, the Committee may make such grants without satisfying the requirements thereof. 

 
 

ARTICLE 12—Beneficiary Designation    
    

        Subject to the terms and conditions of the Plan and applicable Award Agreement, each Participant may, from time to time, name any beneficiary or beneficiaries
(who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation
shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing during the Participant's
lifetime with the party chosen by the Company, from time to time, to administer the Plan. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to
the Participant's estate. 

 
 

ARTICLE 13—Rights of Participants    
    

	13.1
	Continued Service. Nothing in the Plan shall:

	(a)
	interfere
with or limit in any way the right of the Company to terminate any Participant's employment, service as a Director, or service as a consultant with the Group at any time, or

	(b)
	confer
upon any Participant any right to continue in the service of any member of the Group as an Employee, Director or Consultant.   

 

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

 
 

ARTICLE 14—Change in Control    
    

	14.1
	Treatment of Outstanding Awards. Upon the occurrence of a Change in Control, unless otherwise specifically prohibited
under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges:

	(a)
	any
and all Options and SARs granted hereunder shall become immediately exercisable; and

	(b)
	any
restriction periods and restrictions imposed on Restricted Shares shall lapse.   

 

	14.2
	 Termination, Amendment, and Modifications of Change-in-Control Provisions. Notwithstanding any other provision of this
Plan or any Award Agreement provision, the provisions of this Article 14 may not be terminated, amended, or modified on or after the date of a Change in Control to affect adversely any Award
theretofore granted under the Plan without the prior written consent of the Participant with respect to said Participant's outstanding Awards; provided, however, that the Board, upon recommendation of
the Committee, may terminate, amend, or modify this Article 14 at any time and from time to time prior to the date of a Change in Control. 

 
 

ARTICLE 15—Amendment, Modification, and Termination    
    

	15.1
	Amendment, Modification, and Termination. The Board may at any time and from time to time, alter, amend, suspend or
terminate the Plan or any Award hereunder in whole or in part; provided, however, that no amendment which requires shareholder approval in order for the Plan to continue to comply with any applicable
tax or securities or the rules of any securities exchange on which the securities of the Company are listed, shall be effective unless such amendment shall be approved by the requisite vote of
shareholders of the Company entitled to vote thereon; provided further that no such shall alteration, amendment, suspension or termination shall adversely affect any Award hereunder without the
consent of the Participant to whom such Award shall have been made.   

 
	15.2
	 Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee may make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.2 hereof) affecting the
Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan; provided that no such adjustment shall be authorized to the extent that
such authority would be inconsistent with the Plan's meeting the requirements, if applicable, of Code Section 162(m), as amended from time to time.   

 
	15.3
	 Compliance with Code Section 162(m). At all times when Code Section 162(m) is applicable, all Awards granted under this Plan to
Named Executive Officers, or to Participants who will likely become Named Executive Officers at the time of vesting or payment, shall be awarded and administered to comply with the requirements of
Code Section 162(m), unless the Committee determines that such compliance is not desired. In addition, if changes are made to Code Section 162(m) or the regulations promulgated
thereunder to permit greater flexibility with respect to any Award or Awards available under the Plan, the Committee may, subject to this Article 15, make any adjustments it deems appropriate. 

 
 

ARTICLE 16—Withholding    
    

	16.1
	Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit
to the Company, an amount sufficient to satisfy any taxes required by federal, state, or local law or regulation to be withheld with respect to any taxable event arising as a result of this Plan.   

	16.2
	 Share Withholding. Participants may elect, subject to the approval of the Committee, to satisfy all or part of such withholding requirement by
having the Company withhold Shares having a Fair Market Value equal to the minimum statutory total tax which could be imposed on the transaction. All such elections shall be irrevocable, made in
writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate. 

 
 

ARTICLE 17—Indemnification    
    

        Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by the Company to the fullest extent
permitted by applicable law against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid
by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she
shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on 

his
or her own behalf. The foregoing right of indemnification is subject to the person having been successful in the legal proceedings or having acted in good faith and what is reasonably believed to
be a lawful manner in the Company's best interests. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. 

 
 

ARTICLE 18—Successors    
    

        All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of
such successor is the result of a
direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. 

 
 

ARTICLE 19—Legal Construction    
    

	19.1
	Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include
the feminine; the plural shall include the singular and the singular shall include the plural.   

 
	19.2
	 Severability. In the
event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.   

 
	19.3
	 Requirements of Law. The granting of Awards and the issuance of Shares under the Plan shall be subject to, and may be made contingent upon
satisfaction of, all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.   

 
	19.4
	 Governing Law. To the extent not preempted by federal law, the Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the state of New York. 

QuickLinks

Safety Insurance Group, Inc. 2002 Management Omnibus Incentive Plan

ARTICLE 1—Establishment, Objectives, and Duration

ARTICLE 2—Definitions

ARTICLE 3—Administration

ARTICLE 4—Shares Subject to the Plan and Maximum Awards

ARTICLE 5—Eligibility and Participation

ARTICLE 6—Options

ARTICLE 7—Stock Appreciation Rights

ARTICLE 8—Restricted Stock

ARTICLE 9—Termination of Service

ARTICLE 10—Restrictions on Shares

ARTICLE 11—Performance Measures

ARTICLE 12—Beneficiary Designation

ARTICLE 13—Rights of Participants

ARTICLE 14—Change in Control

ARTICLE 15—Amendment, Modification, and Termination

ARTICLE 16—Withholding

ARTICLE 17—Indemnification

ARTICLE 18—Successors

ARTICLE 19—Legal ConstructionExhibit 10.24

 

"***"        MEANS THAT THE MATERIAL OMITTED HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION WITH AN
APPLICATION REQUESTING CONFIDENTIAL TREATMENT.

 

	
  MANUFACTURE AND SUPPLY
  AGREEMENT

  
	
  INDUSTRIAL RESEARCH

  LIMITED

  	
  AGREEMENT TO MANUFACTURE
  AND SUPPLY DECK CHECKER MACHINES AND SUPPLY COMPONENTS

  

 

	
  Industrial
  Research

  Limited  

  “Industrial
  Research”

  	
  Contract
  Authority:

  	
  C.E.O.
  / Designated General Manager

  
	
   

  	
   

  
	
  Project
  Manager:

  	
  Sunny
  Hill

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address
  for service:

  	
  24
  Balfour Rd

  Parnell

  Auckland,
  New Zealand

  
	
   

  	
   

  
	
  Phone
  number:

  	
  +649
  303 4116

  
	
   

  	
   

  
	
  Email
  address:

  	
  s.hill@irl.cri.nz

  
	
  VendingData
  Corporation

  “The
  Purchaser”

  	
  Contract
  Authority:

  	
  Steven
  Blad

  
	
   

  	
   

  
	
  Project
  Manager:

  	
  Julie
  Guy

  
	
   

  	
   

  
	
  Manufacturing  Contact:

  	
  William
  Roquemore

  
	
   

  	
   

  
	
  Address
  for service:

  	
  6830
  Spencer Street, Las Vegas, NV 89119, USA

  
	
   

  	
   

  
	
  Phone
  number:

  	
  + 1
  702 733 7195

  
	
   

  	
   

  
	
  Email
  address:

  	
  paula@VendingData.com

  

 

	
  General Provisions

  	
  The
  parties agree to the terms and conditions set out in Part A and Part B of this
  agreement.

  

 

	
  SIGNATURE

  	
   

  	
  For
  Industrial Research Limited

  	
   

  	
  For
  VendingData Corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/Liz Coutts

  	
   

  	
  /s/Steven J. Blad

  
	
   

  	
  Authorised
  signatory

  	
   

  	
  Authorised
  signatory

  
	
  Name:

  	
  Elizabeth
  M. Coutts

  	
  Name:

  	
  Steven
  J. Blad

  
	
  Date:

  	
  12/12/02

  	
  Date:

  	
  11/25/02

  President
  & CEO

  
	
   

  	
   

  	
  /s/Nigel Kirkpatrick

  	
   

  	
  /s/Julie
  Guy

  
	
   

  	
  Authorised
  Signatory

  	
   

  	
  Authorised
  Signatory

  
	
  Name:

  	
  Nigel
  Kirkpatrick

  	
  Name:

  	
  Director
  of Purchasing

  
	
  Date:

  	
  19/12/02

  	
  Date:

  	
  11/25/02

  

 

 

 

“CONFIDENTIAL MATERIAL REDACTED AND
FILED SEPARATELY WITH

THE SECURITIES AND EXCHANGE
COMMISSION”

 

	
   

  	
   

  	
  INTRODUCTION

  
	
  A.

  	
   

  	
  Industrial Research carries out research and
  development and manufactures products in relation to imaging and sensing
  technologies, including optical character software.

  
	
  B.

  	
   

  	
  The Purchaser carries out business relating to the
  design, manufacture and supply of products to the gaming industry.

  
	
  C.

  	
   

  	
  Industrial Research has previously developed for
  Dolphin Advanced Technology, certain intellectual property in an
  electromechanical device which uses optical character verification software
  to check decks of playing cards (“Deckchecker”).

  
	
   

  D.

  	
   

  	
   

  The Purchaser has acquired the rights to and
  intellectual property embodied in the Deckchecker.

  
	
   

  E.

  	
   

  	
   

  The parties wish to enter this agreement to govern
  Industrial Research’s:

  
	
   

  	
  •

  	
  upgrade and supply of 11 Mk 2.9 Deckcheckers —(VendingData
  will ship 5 earlier version Deckchecker machines to Industrial Research for
  upgrading)

  
	
   

  	
  •

  	
  manufacture and supply of 100 Mk 3 Deckcheckers;

  
	
   

  	
  •

  	
  supply of 100 pre-assembly kits to the Purchaser;
  and 

  
	
   

  	
  •

  	
  supply of a further *** pre-assembly kits subject to the terms &
  conditions outlined in Part B, in particular Clause 20.

  
	
   

  	
   

  	
   

  

 

 

 

	
  PART A

  

 

	
  SPECIFICATION  

  
	
  See Appendix 1.  
  

  

 

	
  SERVICES  

  
	
  A  10 Working Day training course on the
  assembly & operation of the Deckcheckers to be held in Las Vegas, Nevada,
  USA. The Purchaser will incur the costs relating to the travel and
  accommodation for the appointed trainer for the duration of the course.

  
	
  B.  VendingData will send 1-2 employees to New
  Zealand at a time agreed upon for training in assembly & manufacture of
  the units.  The Purchaser will incur
  the costs relating to the travel and accommodations, and Industrial Research
  will provide such training at no additional cost to the Purchaser. 

  

 

	
  Agreement-Commencement
  Date

  	
  26th November, 2002.

  

 

	
  CONTACT PERSONS  

  
	
   Industrial
  Research Ltd: James Downey Tel: + 64 9 373 8668, Email:
  j.downey@irl.cri.nz 

  
	
   

  
	
  VendingData Corporation: Steven Blad Tel: + 1 702 733 7195, Email:
  paula@VendingData.com

  

 

 

“CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH

THE SECURITIES AND EXCHANGE COMMISSION”

 

PRICE

1) Upgrade & supply of
eleven  Mk2.9 Deckcheckers

	
  Item

  	
  Qty

  	
  Unit
  Price

  	
  Total

  
	
  Deck Checker
  Mk2.9 Upgrade

  	
  11

  	
  ***

  	
  ***

  

Payment structure 

              •30% payment down to commence work

              •30% upon shipping

              •40% Net 30 days

2) Manufacture &
supply of one hundred Mk3 Deckcheckers

	
  Item

  	
  Qty

  	
  Unit
  Price

  	
  Total

  
	
  * Deck
  Checker Mk3

  	
  100

  	
  ***

  	
  ***

  

*
excludes front & back covers and output box

Payment structure

              •30% payment down to commence work

              •25% by January 20th, 2003 (with
verification that would indicate completion is on schedule)

              •20% upon shipping

              •25% Net 30 days

3) Supply of one hundred Pre-assembly Kits

	
  Item

  	
  Qty

  	
  Unit
  Price

  	
  Total

  
	
  *
  Pre-assembly Kits

  	
  100

  	
  ***

  	
  ***

  

* excludes front & back covers and output box

Payment structure

              •30% payment down to commence work

              •25%  by
January 20th, 2003 (with verification that would indicate completion
is on schedule)

              •20% upon shipping

              •25% Net 30 days

All prices are in New Zealand dollars.. Prices are exclusive
of taxes, duties, shipping & handling. 

 

 

DELIVERY

Upgrade & supply of eleven Mk2.9 Deckcheckers

Completed ready for shipping — December 31st,
2002.

Manufacture & supply of one hundred Mk3 Deckcheckers

Completed ready for shipping:

              •10 units by February 21st , 2003

              •20 units by February 28th, 2003

              •20 units March 7th, 2003

              •25 units 
March 14, 2003

              •25 units March 21st, 2003

Supply of one hundred Pre-assembly Kits

Ready for shipping:

              •25 units by March 28th, 2003

              •25 units by April 4th, 2003

              •25 units by April 11th, 2003

              •25 units by April 18th, 2003

 

 

	
  PART B

  
	
  STANDARD TERMS AND CONDITIONS

  

 

1.                INTERPRETATION

 

1.1              Definitions:  In this agreement unless the context
otherwise requires:

 

                   “Commencement Date” means the
date specified in Part A.

 

                   “Deckchecker”
means the product manufactured and supplied by IRL in accordance with the
Specification set out in Part A.

 

                   “Delivery”
means the delivery of the items listed in Part A by IRL to the Purchaser.  “Deliver” and “Delivered” have a similar
meaning.

 

                   “Delivery Date” means the date
for the delivery of the items specified by the Purchaser in Part A.

 

                   “Delivery
Point” means the Purchaser’s warehouse or grocery trade central
distribution centre where Delivery is to be made, as specified to IRL by the
Purchaser.  A Delivery Point must not be
a retail store.

 

                   “Factory” means the Industrial
Research manufacturing facility.

 

                   “Packaging Materials” means
packaging and labelling materials for the items as specified in the
Specifications.

 

                   “Person” includes any body
corporate, association or partnership.

 

                   “Preassembly Kits” means the
components in the pre-assembly kit as specified in the Specification.

 

                   “Price” means the price set
out in Part A.

 

                   “Quarter” means the period in a Season 1
June to 31 August, 1 September to 30 November, 1 December to 28 or 29 February
or 1 March to 31 May.

 

                   “Services” means the services
to be provided by Industrial Research as specified in Part A.

 

                   “Specifications” means the
specifications set out in Part A.

 

                   “Working Day” means any day
other than Saturday, Sunday or a public holiday in Wellington, New Zealand.

 

1.2              General:

 

                   a)                A reference to any party to this
agreement includes that party’s successors and permitted assigns.

 

                   b)               Words importing the singular include the plural and
vice versa;

 

                   c)                Headings are inserted for convenience and do not
affect interpretation of this agreement.

 

                   d)               Amounts are in NZ$ unless otherwise stated and exclude
every tax and duty.

 

2.                SUPPLY
AND PURCHASE

 

2.1              Industrial
Research will manufacture, package and supply to the Purchaser, and the
Purchaser shall purchase from Industrial Research, 100 Deckcheckers and 11
Deckcheckers upgraded in accordance with the Specification on the terms and
conditions contained in this agreement.

 

 

2.2              Industrial
Research will package and supply to the Purchaser, and the Purchaser shall
purchase from Industrial Research, 100 Pre-assembly Kits on the terms and
conditions contained in this agreement.

 

2.3              Industrial
Research will provide to the Purchaser the Services specified in Part A.  The Purchaser shall notify Industrial
Research within a reasonable time necessary for Industrial Research to arrange
all travel, training and documentation, the schedule for the training.

 

2.4              The
Purchaser acknowledges that the Price does not include the costs of airfare,
lodging and $30/day per diem but that the Price does include the cost of
delivering 2 trainers over that 10 day period.

 

2.5              The
Purchaser agrees to pay on an actual and reasonable basis the costs excluded
from the Price as recorded in clause 2.4.

 

3.                DELIVERY,
PROPERTY AND RISK

 

3.1              Industrial
Research will inform the Purchaser when any goods are available to be
despatched from Industrial Research’s premises, and the Purchaser will arrange
and meet the cost of transporting the same from Industrial Research to the
Purchaser.

 

3.2              The Purchaser assumes all risk in
the goods once they are despatched to the Purchaser.

 

3.3              The
Purchaser shall inspect any goods delivered to it as soon as practicable after
delivery and shall promptly notify Industrial Research of any defects in the
goods.  If the Purchaser does not notify
Industrial Research of any defects within 10 days of delivery to the Purchaser,
the Purchaser shall be deemed to have accepted the goods.

 

3.4              If
the Purchaser fails to take delivery of the goods within seven days of
receiving written notification of their readiness for despatch, Industrial
Research may charge the Purchaser for any costs incurred by it in storing the
goods, providing the delivery schedule is within the agreed upon schedule
dates.  Industrial Research shall be
entitled to sell or otherwise dispose of the goods after giving the Purchaser a
further thirty days notice.  Any surplus
upon a sale of goods pursuant to this clause after deducting Industrial
Research’s storage costs and all of its costs incurred in selling the goods
shall be offset against moneys owing from the Purchaser to Industrial Research.  Any balance shall be refunded to the
Purchaser.  If the price received by
Industrial Research is insufficient to cover all of its storage and selling
costs, the Purchaser shall immediately pay the excess to Industrial Research.  The Purchaser reserves the right to apply
any monies paid for rejected goods to be applied towards non-rejected goods at
the discretion of the Purchaser.

 

3.5              Legal
and equitable title in any goods supplied by Industrial Research pursuant to
this agreement shall be retained by Industrial Research until all amounts
payable to Industrial Research under this agreement have been paid.  If the goods have not been paid for in full
within 30 days of the date on which payment was due Industrial Research may
enter the Purchaser’s premises at any reasonable time and seize the goods.

 

4.                PRICE
AND PAYMENT

 

4.1              The
Purchaser shall pay Industrial Research the Price for any Deckchecker or
Pre-assembly Kit and any Services ordered by, and despatched to, the Purchaser
as specified in Part A.

 

4.2              Industrial
Research shall invoice to the Purchaser upon notifying the Purchaser in
accordance with clause 3.1  Interest
shall be payable on overdue amounts at a rate equal to 5 percent above the base
lending rate of the Bank of New Zealand from time to time from the due date
until the date payment is received. 
Such interest shall accrue on a daily basis and be payable on demand.

 

4.3              Without
limiting any of Industrial Research’s other rights and remedies under this
agreement, if any payment under this agreement is not made on the due date
Industrial Research shall be entitled to suspend manufacturing or despatching
goods or performing any Service until such overdue payment is made.

 

5.                QUALITY

 

5.1              Industrial
Research will comply with the Specification when manufacturing and supplying
Deckcheckers and when supplying Pre-assembly Kits.

 

5.2              If
any goods supplied by Industrial Research does not comply with the
Specifications or any other requirement referred to in this agreement at
despatch and the Purchaser notifies Industrial Research within 10 days of
Delivery of such non-compliance, then the Purchaser shall be entitled to reject
such non-complying goods and Industrial Research shall, at the option of the
Purchaser, either use best endeavours to promptly replace such goods, or credit
the Purchaser with an amount equal to the Price of such goods.

 

 

5.3              Industrial
Research shall exercise reasonable care and skill in manufacturing the
Deckcheckers, consistent with standards generally accepted in the scientific
professions.

 

6.                INDEMNITY
AND LIABILITY

 

6.1              In
no circumstances will Industrial Research be liable to the Purchaser for any
loss of profits or any consequential, indirect or special loss or damage of any
kind whatsoever.

 

6.2              Industrial
Research shall not be liable for any claim, proceeding, loss, cost, damage or
expense arising out of or in connection with:

 

                   a)                any error or omission in any
information obtained from any third party (including the  Purchaser);

 

                   b)               any act or omission of any third party (including the
Purchaser);

 

                   c)                any infringement by the Purchaser of any intellectual
property rights of third parties.

 

6.3              No
claim shall be made by the Purchaser against Industrial Research in respect of
the goods or services provided by Industrial Research under this agreement
unless notice of the claim has been given by the Purchaser to Industrial
Research in good faith and in reasonable detail within a period of 12 months
commencing on the date of expiry or termination of this agreement.

 

6.4              Notwithstanding
any other provision in this agreement, the liability of Industrial Research
(whether in contract, tort including negligence of otherwise) to the Purchaser
in any calendar year for any loss or damage suffered by the Purchaser
(howsoever arising) shall not, in aggregate in that calendar year, exceed the
amount (exclusive of goods and services tax, if any) paid for goods by the
Purchaser to Industrial Research under this agreement.

 

6.5              The
Purchaser agrees that, for the benefit of Industrial Research’s subsidiaries,
officers, employees and subcontractors, the Purchaser will not make any claim
against any such subsidiaries, officers, employees or subcontractors for any
loss or damage sustained by the Purchaser arising out of or in connection with
the Work to be carried out by Industrial Research under this agreement.

 

6.6              Clause
6.5 is enforceable at the suit of Industrial Research and its subsidiaries,
officers, employees and contractors.

 

6.7              Industrial
Research warrants that clear title to any goods provided to the Purchaser
pursuant to this agreement will pass to the Purchaser when title passes.  To the extent allowed by law every other
warranty or guarantee implied by custom or law in relation to the goods or
services provided by Industrial Research under this agreement is excluded
including, without limitation, any warranty that the goods or services provided
are fit for their intended purpose.  the
Purchaser agrees that the services and goods (if any) provided by Industrial
Research are supplied for business purposes.

 

6.8              If
a third party alleges any liability (whether actual or contingent) or commences
any proceedings against Industrial Research or the Purchaser (“third party
claim”) in respect of which that party (“claiming party”) makes, or is
in a position where it could reasonably anticipate that it might seek to make,
any claim against the other party (“defending party”), the following procedures
shall apply:

 

                   a)                the claiming party shall
immediately give notice of the third party claim to the defending party;

 

                   b)               the claiming party will not make
any payment or admission of liability in respect of the third party claim
without the prior written consent of the defending party;

 

                   c)                the defending party  may elect to defend in the name of the
claiming party any third party claim involving any litigation.  The defending party must notify the claiming
party of its election within 14 days of receiving notice of the third party
claim.  The claiming party shall provide
or procure to be provided such assistance as the defending party may reasonably
require provided that the defending party agrees to pay the costs of the
claiming party in providing assistance in defending the third party claim; and

 

                   d)               the claiming party shall take all
reasonable steps to avoid or mitigate any loss or liability which might give
rise to a claim and will not take any active steps which would or could
directly and inevitably result in the occurrence of an indemnifiable event.

 

 

7.                CONTACT
PERSON

 

7.1              Each
party shall nominate in writing a representative who shall represent it in all
matters pertaining to this agreement (“Contact
Person”). The initial Contact Person for each party is set out in
Part A.  The Contact Person may be
altered by its appointing party at any time by written notice.

 

8.                CONFIDENTIAL
INFORMATION

 

8.1              During
the term of this agreement it may be necessary for one party to disclose to the
other certain confidential information including, but not limited to, research
and development information, product information, manufacturing information,
testing methods or results, materials of any kind which can reasonably be
regarded as being sensitive to and/or of commercial value to the other party,
any materials designated by the disclosing party as being “confidential”, and
quality assurance requirements (“Confidential Information”).

 

8.2              Each
party (including its employees and all persons under its control) that receives
any such Confidential Information from the other party (including its employees
and all persons under its control) shall exercise due care at all times to
prevent the unauthorised disclosure or use of that Confidential Information.

 

8.3              Confidential
Information shall only be used by the other party for the purposes of
performing its obligations under this agreement or for such other purpose as
may be agreed by the disclosing party. 
These obligations shall not apply to:

 

                   a)                information which is or becomes
(through no breach or fault of the receiving party) patented, published or
otherwise part of the public domain; and

 

                   b)               information which is required to
be provided under penalty of law provided 
that the receiving party has taken such steps as are available under law
(but not the institution of legal action) to protect such information and
notifies the disclosing party hereunder of its obligation to make such
disclosure prior to the time such disclosure is made.

 

8.4              The
obligations contained in this clause 8 shall be in full force and effect from
the date of this agreement and shall continue in full force and effect after
the termination or expiration of this agreement.

 

8.5              The provisions of this clause 8
are subject to the provisions of clause 9.

 

9.                INTELLECTUAL
PROPERTY RIGHTS

 

9.1              Unless
otherwise agreed in writing, all intellectual property rights and other rights
of a proprietary nature subsisting in each party prior to the commencement of
this agreement shall remain with that party.

 

9.2              Industrial
Research acknowledges that all patents, patent applications, trade marks, trade
mark applications and other intellectual property rights and other rights of a
proprietary nature subsisting in or relating to the Deckchecker are the sole
and exclusive property of the Purchaser (“Product
IP”).  Nothing in this
agreement shall be construed as providing, or otherwise transferring, any of
the Product IP to Industrial Research.

 

9.3              For
the term of this agreement, only, the Purchaser grants Industrial Research a
non-exclusive licence to the Product IP for the sole purpose of manufacturing,
for the sole and exclusive benefit of the Purchaser, the Deckchecker in New
Zealand, including the application of any of the Purchaser’s trade marks to the
Deckchecker.  Notwithstanding any other
term or condition of this agreement, the Purchaser may revoke this
non-exclusive license, in its sole discretion, at anytime, for any reason, or
for no reason whatsoever.

 

9.4              Industrial
Research shall not, at any time during the term of this agreement or after the
termination or expiration of this agreement, contest or challenge in any legal
proceedings or otherwise, the Purchaser’s ownership of the Product IP.

 

10.             TERMINATION

 

10.1            Without
prejudice to any other right or remedy it may have, either party (“the Terminating Party”) may terminate this
agreement forthwith by written notice to the other party (“the Defaulting Party”) on the happening of any
of the following:

 

 

                   a)                the commission of a material
breach of this agreement by the Defaulting Party provided that, if such breach
is capable of remedy, notice of termination shall not take effect unless the
Defaulting Party has failed to remedy such breach to the reasonable
satisfaction of the Terminating Party within 30 days  following receipt by the Defaulting Party of notice of
termination specifying the breach concerned. 
For the purposes of this clause, the following shall be deemed to be a
material breach of this agreement: i. a failure to pay any sum of money on the
due date, and ii. a failure to provide the Deckchecker or pre-assembly kits on
or before the dates specified herein.

 

                   b)               the commencement of a winding up
of the Defaulting Party (otherwise than for the purposes of a solvent
reconstruction of the Defaulting Party) or the appointment of a receiver,
statutory manager or other similar functionary over any of the assets or
undertakings of the Defaulting Party.

 

10.2            The
termination of this agreement shall not relieve a party of due performance by
such party of any obligation assumed by or imposed on that party under this
agreement at any time prior to termination.

 

11.             DISPUTES

 

11.1            In
the event of any dispute or disagreement between the parties arising out of or
in connection with this agreement (“Dispute”), the Contact Person of each party
will negotiate in good faith in an attempt to resolve the Dispute.

 

11.2            If
the Contact Persons are unable to resolve a Dispute within 14 days (or such
longer period as the parties may agree) of both Contacts Persons being made
aware of the existence of the Dispute, the matter shall be referred to senior
representatives of both parties who shall then negotiate in good faith in an
attempt to resolve the Dispute.

 

11.3            Other
than in the case of urgent interlocutory relief, no party will instigate any
arbitration or court proceedings in relation to a Dispute, unless and until the
dispute resolution procedures set out in clauses 11.1 and 11.2 have been
exhausted.

 

11.4            If
the senior representatives of both parties are unable to resolve a Dispute
within 14 days of the Dispute being referred to them in accordance with clause
11.2, either party may refer the Dispute to mediation or arbitration, as they
determine.

 

12.             FORCE
MAJEURE

 

12.1            Each
party shall promptly notify the other in writing of any situation or event
arising from circumstances beyond the reasonable control of that party which
makes it impossible for that party to carry out in whole or in part its
obligations under this agreement. 
Neither party shall be liable for any failure to perform its obligations
hereunder if prevented from doing so by reason of any such situation or event,
provided that it shall have used all reasonable endeavours to perform its
obligations notwithstanding such situation or event.

 

13.             MODIFICATION
AND ASSIGNMENT

 

13.1            No
modification of this agreement shall be valid unless in writing and signed by
an authorised signatory of each party.

 

13.2            Industrial
Research shall not assign or otherwise transfer its rights or obligations under
this agreement without the prior written consent of the Purchaser (such consent
not to be unreasonably withheld).

 

14.             WAIVER

 

14.1            A
failure by a party to enforce a provision of this agreement shall not
constitute a waiver of any right to future enforcement of that or any other
provision.

 

15.             NOTICES

 

15.1            Any
notice required or permitted to be given to a party under this agreement shall
be delivered or sent by registered post addressed to the registered office to
Steven J. Blad, and a copy to Stacie L. Brown , with a supplemental copy to be
sent by facsimile transmission or electronic mail.  Any notice sent by registered post shall be deemed to have been received
on the fifth business day following posting by registered post.

 

 

“CONFIDENTIAL MATERIAL REDACTED AND FILED
SEPARATELY WITH

THE SECURITIES AND EXCHANGE COMMISSION”

 

16.             BINDING
NATURE, SEVERABILITY

 

16.1            This agreement shall be binding upon
the successors and permitted assigns of the parties.

 

16.2            In
the event that any term or provision of this agreement is unlawful, such
provision shall be severed to the extent of such violation and the remaining
provisions enforceable, but only if the severance does not materially affect
the purpose of, or frustrate, this agreement.

 

17.             ENTIRE AGREEMENT/VARIATIONS

 

17.1            This contract records the entire agreement, and
prevails over any earlier agreement, concerning its subject.  A variation is only effective if signed by
each party.

 

18.             APPLICABLE
LAW

 

18.1            This agreement shall be governed by, and construed in
accordance with, the laws of New Zealand and each party submits to the
non-exclusive jurisdiction of New Zealand.

 

19.             SUPPLY
AND PURCHASE OF FURTHER ***
PRE-ASSEMBLY KITS

 

19.1            The
Purchaser warrants to Industrial Research that it will purchase a further *** Pre-assembly Kits
from Industrial Research during the twelve month period following delivery of
the items outlined in Part A.

 

19.2            The parties agree that the price for
the further ***
Pre-assembly Kits will be:

 

                   a)                negotiated in good faith by the parties during the
performance of this agreement;

 

                   b)               based on the formula (x + 15%) + *** per unit where x is
the actual and reasonable cost to Industrial Research to supply the
Pre-assembly Kits; and

 

                   c)                no greater than the price quoted
by Industrial Research to the Purchaser on 15th November, 2002 of *** NZD.

 

19.3            The
parties agree that the supply of the *** Pre-assembly Kits shall be in accordance with this
agreement. 

 

 

Appendix
1

 

 

 

 

 

 

 

Deck Checker Mk3 Production

 

 

Functional Specification and Operational Guarantee

 

 

Contents

 

	
  Contents i

  
	
  1.

  	
  Introduction

  	
  2

  
	
   

  	
  1.1

  	
  Overview

  	
  2

  
	
  2.

  	
  Physical Specification

  	
  3

  
	
  3.

  	
  Card Handling Specification

  	
  3

  
	
   

  	
  3.1

  	
  Required Conditions

  	
  3

  
	
   

  	
  3.2

  	
  Guaranteed Operation

  	
  3

  
	
  4.

  	
  Inspection Specification

  	
  4

  
	
   

  	
  4.1

  	
  Required Conditions

  	
  4

  
	
   

  	
  4.2

  	
  Guaranteed Operation

  	
  4

  
	
  5.

  	
  Operational Functionality

  	
  5

  
	
  6.

  	
  Operational
  Output

  	
  6

  
	
  7.

  	
  Unit
  Maintenance

  	
  7

  
	
   

  	
  7.1

  	
  Maintenance

  	
  7

  
	
   

  	
  7.2

  	
  Consumables

  	
  7

  

2

 

 

 

 

1.              INTRODUCTION

 

 

 

1.1             Overview

 

This document
is intended as a conservative specification of the operational limits of the
Mk3 Deck Checker machine.  This acts as
a specification of the deliverable functionality of the first 100 units
produced and the eleven units upgraded.  During
production of the first 100 units, the details in this specification will be
refined to produce a specification for the operational limits of future
manufactured machines.  In the future
case, the specification will do no worse than the details contained in this
document.  That is: the performance that
we will guarantee to achieve, under specified conditions, may improve over that
which is guaranteed by this specification.

 

3

 

 

 

 

2.              PHYSICAL SPECIFICATION

 

2.1             Supply
power voltage anywhere in the range 100-240VAC

2.2             Supply
power frequency anywhere in the range 50-60Hz

2.3             Supply
current draw no more than 2A (fused)

2.4             Extrema
dimensions, infeed door closed, wxdxh = 340x300x420mm

2.5             Width
required to open the infeed door = 500mm

2.6             Dimension
between mounting points for output box = 160mm

2.7             Weight,
excluding cards, in the range 20-22kg

2.8             Wiring
assembled according to NZ electrical wiring standards

 

 

 

 

3.              CARD HANDLING SPECIFICATION

 

3.1             Required Conditions

 

3.1.1          The entire deck checker unit must be adjusted in
accordance with documented operating procedures

3.1.2          Length of the cards must be in the range 85-90mm

3.1.3          Width of the cards must be in the range 60-65mm

3.1.4          Thickness of the cards must be in the range
0.25-0.35mm

3.1.5          Thickness variability of the cards must be less than
0.05mm

3.1.6          Card stack at infeed must be less than 140mm
uncompressed

3.1.7          Cards must be in reasonably clean condition

3.1.8                              Deformation of cards must be insufficient to prevent
a card from passing under the first gate (~3mm) without compression*

3.1.9          Card design/type must be individually approved by
IRL**

 

3.2             Guaranteed Operation

 

3.2.1          Throughput
in the range 200-280 cards per minute, depending upon condition of cards

3.2.2          Card
singulation guaranteed (the drive motor will stall rather than double feed
cards)

 

*                                                  The
unit will perform considerably better than this specification, but there may be
specific circumstances  (outside of
those specified here) in which feeding cannot be guaranteed

 

**                                           Card
design/type is considered unique for feeding if any of the following is
different from a previously approved card type:  any dimensions, texture of card surface front or back, material
of card construction, coating of card material

 

4

 

 

 

 

4.              INSPECTION SPECIFICATION

 

4.1             Required Conditions

 

4.1.1          The
entire deck checker unit must be adjusted in accordance with documented
operating procedures

4.1.2          Symbol
template training must be performed in accordance with documented operating
procedures

4.1.3                              Cards
must meet the card handling required conditions

4.1.4          Card
design/type must be individually approved by IRL**

 

4.2             Guaranteed Operation

 

4.2.1          Legal
characters recognised Ace, 2 through 10, Jack, Queen, King, Heart, Diamond,
Club, Spade

4.2.2          Inspection
throughput matches card handling specification

4.2.3          False
accepts† 0%, inspection will fail safe

4.2.4                              False
rejects less than 1 in 50,000 cards, depending upon condition of cards and
state of unit maintenance

 

**                                           Card
design/type is considered unique for inspection if any of the following is
different from a previously approved card type:  position of printing on face of card, colour of printing on face
of card, texture of face surface of card, colour of card material or
coating.  Approval is based upon: colour
of printing, colour of card material, texture of card surface, position of
characters, separation of characters, printing consistency as determined by IRL
in controlled trials using a test inspection unit

 

†                                                   A
false accept is a Pass result for an inspection batch‡ which does
not contain a full compliment of correct playing cards.  That is; it was not correctly detected that
there was an extra card present and/or a required card missing and/or a card
facing the wrong way up

 

‡                                                 An
inspection batch is up to a maximum of 8 decks of playing cards all of the same
manufacture.  That is; all of the same
make, model and colour of IRL approved playing cards**

 

5

 

 

 

 

5.              OPERATIONAL FUNCTIONALITY

 

5.1                                        Communication
with the deck checker unit during normal operation is via 16 character keypad
and 4 line LCD display

5.2                                        Communication
with the deck checker unit during template training is via 16 character keypad
and standard video monitor

5.3                                        An
optical sensor checks for presence of cards at the infeed at all times, when no
cards are present inspection is stopped

5.4                                        A
microswitch sensor checks for presence of a correctly fitted output box at all
times during inspection, if no box is present inspection is aborted

5.5                                        A card jam is reported if the camera detects
no cards for a given delay, when there are cards still present at the infeed
sensor

5.6             A card jam is reported if the camera detects
a single card for more than a given delay

5.7                                        A
card is reported as boxed if the
image of the card was confusing or noisy to the camera due to complex patterns
on the card surface

5.8                                        A
card is reported as unrecognised
if the characters detected are outside the user set tolerance values to match
any trained template

5.9             The
card manufacturer must be specificied at initiation of inspection

5.10           The
game must be specificied at initiation of inspection

5.11           An
operator number may be specificied at initiation of inspection

5.12           An
table/pit number may be specificied at initiation of inspection

5.13           Up
to 8 decks may be processed at one time

5.14           Decks
may be processed in multiple batches without discontinuity of inspection
tracking

5.15           A
seal number must be entered before completetion of a successful inspection

5.16                                 A
printed report will always attend a successful inspection, and may also attend
an failed inspection upon request

5.17           A
red light will light up upon the completion of a failed inspection

5.18           A
green light will light up upon the completion of a successful inspection

 

6

 

 

 

 

6.              OPERATIONAL OUTPUT

 

6.1             On-board
memory retains a record of the following data:

 

              •                 Unit
serial number

              •                 Cardometer
reading

              •                 Time and Date

              •                 Supervisor PIN
number

              •                 Game name (x6)

              •                 Card
manufacturer/type (x6)

              •                 Deck symbol
configuration  (x1 per game)

              •                 Inspection region
(x1 per card type)

              •                 Lighting
threshold value

              •                 Suit match
tolerance value (1x per card type)

              •                 Symbol match
tolerance value (1x per card type)

 

6.2             At
the completion of a failed inspection the following details can be read from
the LCD, and may be printed upon request:

 

              •                 Inspection result
(FAIL)

              •                 Time and Date

              •                 Suit and symbol
of cards missing from the inspection count

              •                 Suit and symbol
of extra cards found in the inspection count

              •                 Number of cards
detected with unrecognised characters

              •                 Number of cards
detected deemed to be boxed

 

6.3             At
the completion of a successful inspection the following details will be printed
on the inspection report:

 

              •                 Inspection result
(PASS)

              •                 Time and Date

              •                 Operator number

              •                 Table/pit number

              •                 Number of decks
inspected

              •                 Seal number

 

7

 

 

 

 

7.              UNIT MAINTENANCE

 

7.1             Maintenance

 

7.1.1          Vaccumm
dust — monthly or more often as required

7.1.2          Card
floor surfaces clean — monthly or more often as required

7.1.3          Optical
sensor surface clean — monthly or more often as required

7.1.4          Rollers
clean — monthly or more often as required

7.1.5          General
exterior clean — monthly or more often as required

7.1.6          Gate
adjustment tested — monthly or more often as required

 

7.2             Consumables

 

7.2.1          Printer
paper

7.2.2          Fuses

7.2.3          Light
bulbs

7.2.4          O-rings

7.2.5          Adjustable
(floating) weight

7.2.6          Roller
brushes

7.2.7          Antistatic
brush

7.2.8          Main
Drive Belt

7.2.9          Elevator
Drive Belt

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