Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement, dated as of November 8,
2004 (this “Agreement”), is by and between William J. Begley, Jr. (the “Executive”)
and Safety Insurance Group, Inc., a Delaware corporation (the “Company”);

 

W  I  T  N  E  S  S  E  T  H:

 

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

 

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

 

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

 

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

 

1.                                       Nature
of Employment

 

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

 

2.                                       Extent
of Employment

 

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

 

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

 

 

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

 

3.                                       Term
of Employment; Termination

 

(a)                                  The
“Term of Employment” shall commence on the date hereof and shall
continue until December 31, 2007 (the “Initial Term”); provided,
that, (i) such term shall continue for the twelve month period following such
Initial Term, and for each twelve month period thereafter (each, an “Additional
Term”), unless at least 180 days prior to the scheduled expiration date of
the Initial Term or any Additional Term, either the Executive or the Company
notifies the other of its decision not to continue such term and (ii) should the
Executive’s employment by the Company be earlier terminated pursuant to Section 3(b)
or by the Executive pursuant to Section 3(c), the Term of
Employment shall end on the date of such earlier termination.

 

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

 

(i)                                     upon
the death of Executive;

 

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

 

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

 

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

 

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

 

Executive acknowledges that no representations or
promises have been made concerning the grounds for termination or the future
operation of the Companies’ business, and that nothing contained herein or
otherwise stated by or on behalf of any of the Companies modifies or amends the
right of the Company to terminate Executive at any time, with or without
Material Breach or Cause.  Termination
shall become effective upon the delivery by the Company to the Executive of
notice specifying such termination and the reasons therefor (i.e., Section 3(b)(i)-(v)),
subject

 

2

 

to the requirements for
advance notice and an opportunity to cure provided in this Agreement, if and to
the extent applicable.

 

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

 

(i)                                     upon
the death of Executive;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)                                     the
Company shall pay or cause to be paid to the Executive, (A) within five
business days after the date of termination, any earned but unpaid base salary
and any expense reimbursement payments owed to the Executive, and (B) within
five business days after the date of termination or, if later, within 30 days
after the issuance of audited financial statements for the Company for the
prior year, any earned but unpaid annual bonus payments relating to the prior
year (the “Accrued Obligations”);

 

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

 

4

 

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

 

(iii)                               during
the Severance Period, the Company will provide or cause to be provided to the
Executive (and any covered dependents), with life and health insurance benefits
(but not disability insurance benefits) substantially similar to those the
Executive and any covered dependents were receiving immediately prior to the
date of termination and at the same dollar cost to the Executive as in effect
immediately prior to the termination of employment.  If the Company provides or arranges to
provide the Executive and covered dependents with life and health insurance
benefits, those benefits will be reduced to the extent comparable benefits are
received by, or made available to, the Executive (at no greater cost to the Executive)
by another employer during the Severance Period following the Executive’s date
of termination.  The Executive must
report to the Company any such benefits that he receives or that are made
available.  In lieu of the benefits
described in this Section 3(f)(iii), the Company, in its sole
discretion, may elect to pay or cause to be paid to the Executive a lump sum
cash payment equal to the monthly premiums that would have been paid to provide
such benefits to the Executive for each month such coverage is not provided
under this Section 3(f)(iii). 
Nothing in this Section 3(f)(iii) will extend the COBRA
continuation coverage period.

 

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

 

(i)                                     the
Company shall pay or cause to be paid to the Executive any Accrued Obligations;

 

(ii)                                  the
Company shall pay or cause to be paid to the Executive, within thirty business
days after the date of termination, a lump-sum payment equal to three (3) times
the sum of (A) the Executive’s annual base salary in effect immediately prior to
the date of termination and (B) the most recent annual bonus paid to the
Executive prior to the Change in Control; and

 

(iii)                               for
a three (3) year period after the date of termination, the Company will provide
or cause to be provided to the Executive (and any covered dependents), with
life and health insurance benefits (but not disability insurance benefits)
substantially similar to those the Executive and any covered dependents were
receiving immediately prior to the date of termination and at the same dollar
cost to the Executive as in effect immediately prior to the termination of
employment.  If the Company provides or
arranges to provide the Executive and covered dependents with life and health
insurance benefits, those benefits will be reduced to the extent comparable
benefits are received by, or made available to, the Executive (at no greater
cost to the Executive) by another employer during the three (3) year period
following the Executive’s date of termination. 
The Executive must report to the Company any such benefits that he
receives or that are made available.  In
lieu of the benefits described in this Section 3(g)(iii), the
Company, in its sole discretion, may elect to pay or cause to be paid to the
Executive a lump sum cash

 

5

 

payment equal to the
monthly premiums that would have been paid to provide such benefits to the
Executive for each month such coverage is not provided under this Section 3(g)(iii).  Nothing in this Section 3(g)(iii)
will extend the COBRA continuation coverage period.

 

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

 

(i)                                     the
Company shall pay or cause to be paid to the Executive any Accrued Obligations;

 

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

 

(iii)                               for
a three (3) month period after the date of termination, the Company will
provide or cause to be provided to the Executive (and any covered dependents),
with life and health insurance benefits (but not disability insurance benefits)
substantially similar to those the Executive and any covered dependents were
receiving immediately prior to the date of termination and at the same dollar
cost to the Executive as in effect immediately prior to the termination of
employment.  If the Company provides or
arranges to provide the Executive and covered dependents with life and health
insurance benefits, those benefits will be reduced to the extent comparable
benefits are received by, or made available to, the Executive (at no greater
cost to the Executive) by another employer during the three (3) month period
following the Executive’s date of termination. 
The Executive must report to the Company any such benefits that he
receives or that are made available.  In
lieu of the benefits described in this Section 3(h)(iii), the Company, in
its sole discretion, may elect to pay or cause to be paid to the Executive a
lump sum cash payment equal to the monthly premiums that would have been paid
to provide such benefits to the Executive for each month such coverage is not
provided under this Section 3(h)(iii). 
Nothing in this Section 3(h)(iii) will extend the COBRA
continuation coverage period.

 

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

 

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

 

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

 

(iii)                               for
a one (1) year period after the date of termination, the Company will provide
or cause to be provided to the Executive (and any covered dependents), with
life and health insurance benefits (but not disability insurance benefits)
substantially similar

 

6

 

to those the Executive
and any covered dependents were receiving immediately prior to the date of
termination and at the same dollar cost to the Executive as in effect
immediately prior to the termination of employment.  If the Company provides or arranges to
provide the Executive and covered dependents with life and health insurance
benefits, those benefits will be reduced to the extent comparable benefits are
received by, or made available to, the Executive (at no greater cost to the
Executive) by another employer 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 receives or that
are made available.  In lieu of the
benefits described in this Section 3(i)(iii), the Company, in its sole
discretion, may elect to pay or cause to be paid to the Executive a lump sum
cash payment equal to the monthly premiums that would have been paid to provide
such benefits to the Executive for each month such coverage is not provided
under this Section 3(i)(iii). 
Nothing in this Section 3(i)(iii) will extend the COBRA
continuation coverage period.

 

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

 

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

 

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

 

(m)                               Termination
of the Term of Employment will not terminate Sections 7 through 10
and 12 through 22, or any other provisions not associated
specifically with the Term of Employment.

 

(n)                                 In
the event the Term of Employment is terminated and the Company is obligated to
make or cause to be made payments pursuant to Section 3(f), the
Executive will use his reasonable efforts to seek and obtain alternative
employment; provided, however, that the Executive shall not be
required to accept a position or positions of a substantially different
character than the position(s) held by him under this Agreement; and provided
further, if the Executive shall become physically or mentally disabled,
he will not be under such duty.  If
Executive thereafter obtains alternative employment, then if and to the extent
Executive obtains such employment, the payment obligations under Section 3(f),
including the obligation to provide insurance coverage, if any, will be
mitigated and reduced by and to the extent of Executive’s compensation under
such alternative employment during the period for which payments are owed
pursuant to Section 3(f). 
Moreover, in the event that after the Restricted

 

7

 

Period pursuant to Section 8(a), Executive
is employed by or engaged in a Competitive Business as contemplated by Section 8(a)(i),
then the payments under Section 3(f) will thereupon cease.

 

(o)                                 Notwithstanding
any provision herein to the contrary, as a condition to payment of any amounts
or provision of any benefits pursuant to Sections 3(f) through 3(i)
or 10 of this Agreement (other than due to the Executive’s death), the
Executive shall be required to have executed a complete release of the
Companies and related parties in such form as is reasonably required by the
Company, and any waiting periods contained in such release shall have expired.

 

4.                                       Compensation

 

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

 

(a)                                  During
the Term of Employment, the Company shall pay or cause to be paid to Executive
as base compensation for his services hereunder, in monthly installments, a
base salary at a rate of $250,000 per annum, as increased on an annual basis to
reflect the increase in the United States Cost of Living Index for All Urban
Consumer (CPI-U) for the Boston, Massachusetts area (the “CPI-U Index”).  The January 2004 CPI-U Index shall
provide the basis for calculations of such increases.  Notwithstanding the minimum increase set
forth above, the Board of Directors of the Company or a committee thereof may
establish a higher compensation level.

 

(b)                                 During
the Term of Employment, the Company shall pay or cause to be paid to Executive
an annual bonus based on Executive’s performance, as determined and approved by
the Board of Directors of the Company or a committee thereof.  Such bonus will be at the full discretion of
the Board of Directors of the Company or a committee thereof, and may not be
paid at all.  Executive acknowledges that
no bonus has been agreed upon or promised. 
If the Board of Directors of the Company or a committee thereof decides
to pay a bonus, it is to be paid within 30 days after the issuance of audited
financial statements for the Company.

 

5.                                       Reimbursement
of Expenses

 

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

 

6.                                       Benefits

 

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

 

8

 

7.                                       Confidential
Information

 

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

 

8.                                       Non-Interference

 

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

 

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

 

9

 

whether the Executive
resides, or reports to an office, within or without the Market; provided,
however, that (x) the Executive may, anywhere in the Market, directly or
indirectly, in one or a series of transactions, own, invest or acquire an
interest in up to five percent (5%) of the capital stock of a corporation whose
capital stock is traded publicly, or that (y) Executive may accept employment
with a successor company to the Company.

 

(ii)                                  During
the Restricted Period (which shall not be reduced by any period of violation of
this Agreement by Executive or period which is required for litigation to
enforce the rights hereunder), Executive will not without the express prior
written approval of the Board of Directors of the Company (A) directly or
indirectly, in one or a series of transactions, recruit, solicit or otherwise
induce or influence any proprietor, partner, stockholder, lender, director,
officer, employee, sales agent, joint venturer, investor, lessor, supplier,
customer, agent, representative or any other person which has a business
relationship with the Companies or had a business relationship with the
Companies within the 24 month period preceding the date of the incident in
question, to discontinue, reduce or modify such employment, agency or business
relationship with the Companies, or (B) employ or seek to employ or cause any
Competitive Business to employ or seek to employ any person or agent who is
then (or was at any time within 24 months prior to the date the Executive or
the Competitive Business employs or seeks to employ such person) employed or retained
by the Companies.  Notwithstanding the
foregoing, nothing herein shall prevent the Executive from providing a letter
of recommendation to an employee with respect to a future employment
opportunity.

 

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

 

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

 

9.                                       Non-Disparagement

 

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

 

10.                                 Excise
Tax Gross-up Payments

 

(a)                                  If
any payments or benefits paid or provided or to be paid or provided to the
Executive or for his benefit pursuant to the terms of this Agreement or
otherwise in connection with, or arising out of, his employment with the
Company or the termination thereof (a “Payment”) would be subject to the
excise tax (the “Excise Tax”) imposed by Section 4999 of

 

10

 

the
Internal Revenue Code of 1986, as amended (the “Code”), then the
Executive will be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Executive of all
income taxes, employment taxes and any Excise Tax imposed upon the Gross-Up
Payment (including any related interest and penalties), the Executive retains
an amount of the Gross-Up Payment equal to the Excise Tax (including any
related interest and penalties) imposed upon the Payments.

 

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

 

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

 

(d)                                 As
a result of the uncertainty in the application of Section 4999 of the
Code, it is possible that Gross-Up Payments which will not have been made
should have been made (“Underpayment”) or Gross-Up Payments are made
which should not have been made (“Overpayment”).  If it is determined that an Underpayment has
occurred, the accounting firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid to
or for the benefit of Executive.  If the
Gross-Up Payment exceeds the amount

 

11

 

necessary to reimburse
the Executive for his Excise Tax, the Accounting Firm shall determine the
amount of the Overpayment that has been made and any such Overpayment (together
with interest at the rate provided in Section 1274(b)(2) of the Code)
shall be promptly paid by Executive (to the extent he has received a refund if
the applicable Excise Tax has been paid to the Internal Revenue Service) to or
for the benefit of the Company; provided, however, that if the Company
determines that such repayment obligation would be or result in an unlawful
extension of credit under Section 13(k) of the Securities Exchange Act,
repayment shall not be required.  The
Executive shall cooperate, to the extent his expenses are reimbursed in
accordance with this Section 10, with any reasonable requests by the
Company in connection with any contest or disputes with the Internal Revenue
Service in connection with the Excise Tax.

 

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

 

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

 

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

 

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

 

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

 

provided, however, that
the Company shall pay or cause to be paid all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any
Excise Tax or income tax (including related interest and penalties) imposed as
a result of such representation and payment of costs and expenses.  Without limitation on the foregoing
provisions of this Section 10(e), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to

 

12

 

pay such claim and sue
for a refund, such payment shall be advanced to the Executive, on an
interest-free basis and the Executive shall be indemnified and held harmless,
on an after-tax basis, from any Excise Tax or income tax (including related
interest or penalties) imposed with respect to such advance or with respect to
any imputed income with respect to such advance.  The Company’s control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

 

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

 

11.                                 Definitions

 

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

 

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

 

“Cause” is defined in Section 3(c).

 

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

 

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

 

13

 

“Company” is defined in the introduction.

 

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

 

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

 

“Executive” means William J. Begley, Jr. or his
estate, if deceased.

 

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

 

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

 

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

 

“Stockholders Agreement” means the Stockholders
Agreement, dated as of October 16, 2001, by and between Safety Holdings,
Inc. and the stockholders signatory thereto.

 

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

 

12.                                 Notice

 

Any notice, request, demand or other communication
required or permitted to be given under this Agreement shall be given in
writing and if delivered personally, or sent by certified or registered mail,
return receipt requested, as follows (or to such other addressee or address as
shall be set forth in a notice given in the same manner):

 

14

 

	
  If to Executive:

  	
  William J. Begley, Jr.

  
	
   

  	
  c/o Safety Insurance Group, Inc.

  
	
   

  	
  20 Custom House Street

  
	
   

  	
  Boston, Massachusetts 02110

  
	
   

  	
   

  
	
  If to Company:

  	
  Safety Insurance Group, Inc.

  
	
   

  	
  20 Custom House Street

  
	
   

  	
  Boston, Massachusetts 02110

  
	
   

  	
  Attention: David F. Brussard

  

 

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

 

                                                13.                                 Executive’s
Representation

 

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

 

14.                                 Other
Matters

 

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

 

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

 

(c)                                  In
addition to any obligations imposed by law upon any successor to the Company,
the Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.

 

15.                                 Validity

 

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

 

15

 

16.                                 Severability

 

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

 

17.                                 Waiver
of Breach; Specific Performance

 

The waiver by the Company or Executive of a breach of
any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any other breach of such other party.  Each of the parties (and third party
beneficiaries) to this Agreement will be entitled to enforce its respective
rights under this Agreement and to exercise all other rights existing in its
favor.  The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of Sections 7,  8 and 9 of this Agreement
and that any party (and third party beneficiaries) may in its sole discretion
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions in order to enforce or
prevent any violations of the provisions of this Agreement.  In the event either party takes legal action
to enforce any of the terms or provisions of this Agreement, the nonprevailing
party shall pay the successful party’s costs and expenses, including but not
limited to, attorneys’ fees, incurred in such action.

 

18.                                 Assignment;
Third Parties

 

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

 

19.                                 Amendment;
Entire Agreement

 

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

 

16

 

20.                                 Litigation

 

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

 

21.                                 Further
Action

 

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

 

22.                                 Counterparts

 

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

 

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

 

 

	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ WILLIAM J. BEGLEY, JR.

  	
   

  
	
   

  	
  Name:

  	
  William J.
  Begley, Jr.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SAFETY INSURANCE GROUP, INC.:

  
	
   

  	
   

  
	
   

  	
  /s/ DAVID F. BRUSSARD

  	
   

  
	
   

  	
  Name:

  	
  David F. Brussard

  
	
   

  	
  Title:

  	
  President, CEO
  and Chairman of the Board

  
						

 

17Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

This Employment
Agreement, dated as of November 8, 2004 (this “Agreement”), is by
and between David F. Brussard (the “Executive”) and Safety Insurance
Group, Inc., a Delaware corporation (the “Company”);

 

W  I  T  N  E  S  S  E  T  H:

 

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

 

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

 

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

 

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

 

1.                                       Nature
of Employment

 

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

 

2.                                       Extent
of Employment

 

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

 

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

 

(c)                                  Nothing
contained herein shall require Executive to follow any directive or to perform
any act which would violate any laws, ordinances, regulations or rules of any

 

 

governmental, regulatory or administrative body, agent
or authority, any court or judicial authority, or any public, private or
industry regulatory authority (collectively, the “Regulations”).  Executive shall act in good faith in
accordance with all Regulations.

 

3.                                       Term
of Employment; Termination

 

(a)                                  The
“Term of Employment” shall commence on the date hereof and shall
continue until December 31, 2009 (the “Initial Term”); provided,
that, (i) such term shall continue for the twelve month period following such Initial
Term, and for each twelve month period thereafter (each, an “Additional Term”),
unless at least 180 days prior to the scheduled expiration date of the Initial
Term or any Additional Term, either the Executive or the Company notifies the
other of its decision not to continue such term and (ii) should the Executive’s
employment by the Company be earlier terminated pursuant to Section 3(b)
or by the Executive pursuant to Section 3(c), the Term of
Employment shall end on the date of such earlier termination.

 

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

 

(i)                                     upon
the death of Executive;

 

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

 

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

 

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

 

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

 

Executive acknowledges
that no representations or promises have been made concerning the grounds for
termination or the future operation of the Companies’ business, and that
nothing contained herein or otherwise stated by or on behalf of any of the
Companies modifies or amends the right of the Company to terminate Executive at
any time, with or without Material Breach or Cause.  Termination shall become effective upon the
delivery by the Company to the Executive of notice specifying such termination
and the reasons therefor (i.e., Section 3(b)(i)-(v)), subject to
the requirements for advance notice and an opportunity to cure provided in this
Agreement, if and to the extent applicable.

 

2

 

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

 

(i)                                     upon
the death of Executive;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)                                     the
Company shall pay or cause to be paid to the Executive, (A) within five
business days after the date of termination, any earned but unpaid base salary
and any expense reimbursement payments owed to the Executive, and (B) within
five business days after the date of termination or, if later, within 30 days
after the issuance of audited financial statements for the Company for the
prior year, any earned but unpaid annual bonus payments relating to the prior year
(the “Accrued Obligations”);

 

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

 

4

 

(iii)                               during
the Severance Period, the Company will provide or cause to be provided to the
Executive (and any covered dependents), with life and health insurance benefits
(but not disability insurance benefits) substantially similar to those the
Executive and any covered dependents were receiving immediately prior to the
date of termination and at the same dollar cost to the Executive as in effect
immediately prior to the termination of employment.  If the Company provides or arranges to
provide the Executive and covered dependents with life and health insurance
benefits, those benefits will be reduced to the extent comparable benefits are
received by, or made available to, the Executive (at no greater cost to the
Executive) by another employer during the Severance Period following the
Executive’s date of termination.  The
Executive must report to the Company any such benefits that he receives or that
are made available.  In lieu of the
benefits described in this Section 3(f)(iii), the Company, in its
sole discretion, may elect to pay or cause to be paid to the Executive a lump
sum cash payment equal to the monthly premiums that would have been paid to
provide such benefits to the Executive for each month such coverage is not
provided under this Section 3(f)(iii).  Nothing in this Section 3(f)(iii)
will extend the COBRA continuation coverage period.

 

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

 

(i)                                     the
Company shall pay or cause to be paid to the Executive any Accrued Obligations;

 

(ii)                                  the
Company shall pay or cause to be paid to the Executive, within thirty business
days after the date of termination, a lump-sum payment equal to three (3) times
the sum of (A) the Executive’s annual base salary in effect immediately prior
to the date of termination and (B) the most recent annual bonus paid to the
Executive prior to the Change in Control; and

 

(iii)                               for
a three (3) year period after the date of termination, the Company will provide
or cause to be provided to the Executive (and any covered dependents), with
life and health insurance benefits (but not disability insurance benefits)
substantially similar to those the Executive and any covered dependents were
receiving immediately prior to the date of termination and at the same dollar
cost to the Executive as in effect immediately prior to the termination of
employment.  If the Company provides or
arranges to provide the Executive and covered dependents with life and health
insurance benefits, those benefits will be reduced to the extent comparable
benefits are received by, or made available to, the Executive (at no greater
cost to the Executive) by another employer during the three (3) year period
following the Executive’s date of termination. 
The Executive must report to the Company any such benefits that he
receives or that are made available.  In
lieu of the benefits described in this Section 3(g)(iii), the
Company, in its sole discretion, may elect to pay or cause to be paid to the
Executive a lump sum cash payment equal to the monthly premiums that would have
been paid to provide such benefits to the Executive for each month such
coverage is not provided under this Section 3(g)(iii).

 

5

 

Nothing in this Section 3(g)(iii)
will extend the COBRA continuation coverage period.

 

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

 

(i)                                     the
Company shall pay or cause to be paid to the Executive any Accrued Obligations;

 

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

 

(iii)                               for
a three (3) month period after the date of termination, the Company will
provide or cause to be provided to the Executive (and any covered dependents),
with life and health insurance benefits (but not disability insurance benefits)
substantially similar to those the Executive and any covered dependents were
receiving immediately prior to the date of termination and at the same dollar
cost to the Executive as in effect immediately prior to the termination of
employment.  If the Company provides or
arranges to provide the Executive and covered dependents with life and health
insurance benefits, those benefits will be reduced to the extent comparable
benefits are received by, or made available to, the Executive (at no greater
cost to the Executive) by another employer during the three (3) month period
following the Executive’s date of termination. 
The Executive must report to the Company any such benefits that he
receives or that are made available.  In
lieu of the benefits described in this Section 3(h)(iii), the Company, in
its sole discretion, may elect to pay or cause to be paid to the Executive a
lump sum cash payment equal to the monthly premiums that would have been paid
to provide such benefits to the Executive for each month such coverage is not
provided under this Section 3(h)(iii). 
Nothing in this Section 3(h)(iii) will extend the COBRA
continuation coverage period.

 

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

 

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

 

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

 

(iii)                               for
a one (1) year period after the date of termination, the Company will provide
or cause to be provided to the Executive (and any covered dependents), with
life and health insurance benefits (but not disability insurance benefits)
substantially similar to those the Executive and any covered dependents were
receiving immediately prior to the date of termination and at the same dollar
cost to the Executive as in effect

 

6

 

immediately prior to the
termination of employment.  If the
Company provides or arranges to provide the Executive and covered dependents
with life and health insurance benefits, those benefits will be reduced to the
extent comparable benefits are received by, or made available to, the Executive
(at no greater cost to the Executive) by another employer 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 receives or that are made available.  In lieu of the benefits described in this Section 3(i)(iii),
the Company, in its sole discretion, may elect to pay or cause to be paid to
the Executive a lump sum cash payment equal to the monthly premiums that would
have been paid to provide such benefits to the Executive for each month such
coverage is not provided under this Section 3(i)(iii).  Nothing in this Section 3(i)(iii) will
extend the COBRA continuation coverage period.

 

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

 

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

 

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

 

(m)                               Termination
of the Term of Employment will not terminate Sections 7 through 10
and 12 through 22, or any other provisions not associated
specifically with the Term of Employment.

 

(n)                                 In
the event the Term of Employment is terminated and the Company is obligated to
make or cause to be made payments pursuant to Section 3(f), the
Executive will not be required to seek or obtain alternative employment or to
mitigate damages under this agreement. 
Payments from, or benefits in connections with, alternative employment
shall not reduce any payment or benefit obligations hereunder; provided,
however, if Executive obtains alternative employment and is provided
medical coverage in connection therewith, the medical coverage the Company
provides pursuant to Section 3(f), shall be secondary to the medical
coverage provided in connection with the alternative employment;   and provided  further, that,
any provision herein to the contrary notwithstanding, if  Executive is employed by or engaged in a
Competitive Business as contemplated by Section 8(a)(i), then the
payments under Section 3(f) will thereupon cease.

 

(o)                                 Notwithstanding
any provision herein to the contrary, as a condition to payment of any amounts
or provision of any benefits pursuant to Sections 3(f) through 3(i)
or 10 of this

 

7

 

Agreement (other than due to the Executive’s death),
the Executive shall be required to have executed a complete release of the
Companies and related parties in such form as is reasonably required by the
Company, and any waiting periods contained in such release shall have expired.

 

4.                                       Compensation

 

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

 

(a)                                  During
the Term of Employment, the Company shall pay or cause to be paid to Executive
as base compensation for his services hereunder, in monthly installments, a
base salary at a rate of $675,000 per annum, as increased on an annual basis to
reflect the increase in the United States Cost of Living Index for All Urban
Consumer (CPI-U) for the Boston, Massachusetts area (the “CPI-U Index”).  The January 2004 CPI-U Index shall
provide the basis for calculations of such increases.  Notwithstanding the minimum increase set
forth above, the Board of Directors of the Company or a committee thereof may
establish a higher compensation level.

 

(b)                                 During
the Term of Employment, the Company shall pay or cause to be paid to Executive
an annual bonus based on Executive’s performance, as determined and approved by
the Board of Directors of the Company or a committee thereof; provided that,
for any year as to which such bonus is paid, such bonus shall not be less than
35% of the total amount of bonuses paid to the officers of the Company who, on
the date hereof, hold the position of vice president or higher.  Except as set forth in the proviso to the
preceding sentence, such bonus will be at the full discretion of the Board of
Directors of the Company or a committee thereof, and may not be paid at
all.  Executive acknowledges that no
bonus has been agreed upon or promised. 
If the Board of Directors of the Company or a committee thereof decides
to pay a bonus, it is to be paid within 30 days after the issuance of audited
financial statements for the Company.

 

5.                                       Reimbursement
of Expenses

 

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

 

6.                                       Benefits

 

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

 

(b)                                 In
recognition of the use of an automobile for the efficient and expeditious
performance of the Executive’s duties and obligations on behalf of the Company,
the Company, at its cost, shall supply to the Executive for such use an
automobile of such make and model and upon such terms and conditions as the
Board of Directors shall determine from time to time.

 

8

 

7.                                       Confidential
Information

 

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

 

8.                                       Non-Interference

 

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

 

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

 

9

 

whether the Executive
resides, or reports to an office, within or without the Market; provided,
however, that (x) the Executive may, anywhere in the Market, directly or
indirectly, in one or a series of transactions, own, invest or acquire an
interest in up to five percent (5%) of the capital stock of a corporation whose
capital stock is traded publicly, or that (y) Executive may accept employment
with a successor company to the Company.

 

(ii)                                  During
the Restricted Period (which shall not be reduced by any period of violation of
this Agreement by Executive or period which is required for litigation to
enforce the rights hereunder), Executive will not without the express prior
written approval of the Board of Directors of the Company (A) directly or
indirectly, in one or a series of transactions, recruit, solicit or otherwise
induce or influence any proprietor, partner, stockholder, lender, director,
officer, employee, sales agent, joint venturer, investor, lessor, supplier,
customer, agent, representative or any other person which has a business
relationship with the Companies or had a business relationship with the Companies
within the 24 month period preceding the date of the incident in question, to
discontinue, reduce or modify such employment, agency or business relationship
with the Companies, or (B) employ or seek to employ or cause any Competitive
Business to employ or seek to employ any person or agent who is then (or was at
any time within 24 months prior to the date the Executive or the Competitive
Business employs or seeks to employ such person) employed or retained by the
Companies.  Notwithstanding the foregoing,
nothing herein shall prevent the Executive from providing a letter of
recommendation to an employee with respect to a future employment opportunity.

 

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

 

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

 

9.                                       Non-Disparagement

 

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

 

10.                                 Excise
Tax Gross-up Payments

 

(a)                                  If
any payments or benefits paid or provided or to be paid or provided to the
Executive or for his benefit pursuant to the terms of this Agreement or
otherwise in connection with, or arising out of, his employment with the
Company or the termination thereof (a “Payment”) would be subject to the
excise tax (the “Excise Tax”) imposed by Section 4999 of

 

10

 

the
Internal Revenue Code of 1986, as amended (the “Code”), then the
Executive will be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Executive of all
income taxes, employment taxes and any Excise Tax imposed upon the Gross-Up
Payment (including any related interest and penalties), the Executive retains
an amount of the Gross-Up Payment equal to the Excise Tax (including any
related interest and penalties) imposed upon the Payments.

 

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

 

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

 

(d)                                 As
a result of the uncertainty in the application of Section 4999 of the
Code, it is possible that Gross-Up Payments which will not have been made
should have been made (“Underpayment”) or Gross-Up Payments are made
which should not have been made (“Overpayment”).  If it is determined that an Underpayment has
occurred, the accounting firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid to
or for the benefit of Executive.  If the
Gross-Up Payment exceeds the amount

 

11

 

necessary
to reimburse the Executive for his Excise Tax, the Accounting Firm shall
determine the amount of the Overpayment that has been made and any such
Overpayment (together with interest at the rate provided in Section 1274(b)(2)
of the Code) shall be promptly paid by Executive (to the extent he has received
a refund if the applicable Excise Tax has been paid to the Internal Revenue
Service) to or for the benefit of the Company; provided, however, that if the
Company determines that such repayment obligation would be or result in an
unlawful extension of credit under Section 13(k) of the Securities
Exchange Act, repayment shall not be required. 
The Executive shall cooperate, to the extent his expenses are reimbursed
in accordance with this Section 10, with any reasonable requests by the
Company in connection with any contest or disputes with the Internal Revenue
Service in connection with the Excise Tax.

 

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

 

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

 

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

 

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

 

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

 

provided, however, that the Company shall pay or cause to be paid all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
related interest and penalties) imposed as a result of such representation and
payment of costs and expenses.  Without
limitation on the foregoing provisions of this Section 10(e), the
Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall determine;
provided, however, that if the Company directs the Executive to

 

12

 

pay such claim and sue for a refund, such payment shall be advanced to
the Executive, on an interest-free basis and the Executive shall be indemnified
and held harmless, on an after-tax basis, from any Excise Tax or income tax
(including related interest or penalties) imposed with respect to such advance
or with respect to any imputed income with respect to such advance.  The Company’s control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

 

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

 

11.                                 Definitions

 

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

 

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

 

“Cause” is defined
in Section 3(c).

 

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

 

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

 

13

 

“Company” is
defined in the introduction.

 

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

 

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

 

“Executive” means
David F. Brussard or his estate, if deceased.

 

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

 

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

 

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

 

“Stockholders
Agreement” means the Stockholders Agreement, dated as of October 16,
2001, by and between Safety Holdings, Inc. and the stockholders signatory
thereto.

 

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

 

12.                                 Notice

 

Any notice, request,
demand or other communication required or permitted to be given under this
Agreement shall be given in writing and if delivered personally, or sent by
certified or registered mail, return receipt requested, as follows (or to such
other addressee or address as shall be set forth in a notice given in the same
manner):

 

14

 

	
  If to Executive:

  	
  David F.
  Brussard

  
	
   

  	
  c/o Safety
  Insurance Group, Inc.

  
	
   

  	
  20 Custom House
  Street

  
	
   

  	
  Boston,
  Massachusetts 02110

  
	
   

  	
   

  
	
  If to Company:

  	
  Safety Insurance
  Group, Inc.

  
	
   

  	
  20 Custom House
  Street

  
	
   

  	
  Boston,
  Massachusetts 02110

  
	
   

  	
  Attention: David
  K. McKown, Compensation Committee Chairman

  

 

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

 

                                                13.                                 Executive’s
Representation

 

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

 

14.                                 Other
Matters

 

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

 

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

 

(c)                                  In
addition to any obligations imposed by law upon any successor to the Company,
the Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.

 

15.                                 Validity

 

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

 

15

 

16.                                 Severability

 

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

 

17.                                 Waiver
of Breach; Specific Performance

 

The waiver by the Company
or Executive of a breach of any provision of this Agreement by the other party
shall not operate or be construed as a waiver of any other breach of such other
party.  Each of the parties (and third
party beneficiaries) to this Agreement will be entitled to enforce its
respective rights under this Agreement and to exercise all other rights
existing in its favor.  The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of Sections 7,  8 and 9 of
this Agreement and that any party (and third party beneficiaries) may in its
sole discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief, including temporary
restraining orders, preliminary injunctions and permanent injunctions in order
to enforce or prevent any violations of the provisions of this Agreement.  In the event either party takes legal action
to enforce any of the terms or provisions of this Agreement, the nonprevailing
party shall pay the successful party’s costs and expenses, including but not
limited to, attorneys’ fees, incurred in such action.

 

18.                                 Assignment;
Third Parties

 

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

 

19.                                 Amendment;
Entire Agreement

 

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

 

16

 

20.                                 Litigation

 

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

 

21.                                 Further
Action

 

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

 

22.                                 Counterparts

 

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

 

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

 

 

	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ DAVID F. BRUSSARD

  	
   

  
	
   

  	
  Name:

  	
  David F. Brussard

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SAFETY INSURANCE GROUP, INC.:

  
	
   

  	
   

  
	
   

  	
  /s/ DAVID K. MCKOWN

  	
   

  
	
   

  	
  Name:

  	
  David K. McKown

  
	
   

  	
  Title:

  	
  Compensation Committee Chairman

  
					

 

17

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}]]