exv10w16



 




Exhibit
10.16




Symetra Financial Corporation Equity Plan




	 	1.	 	PURPOSE






The purpose of the Symetra Financial Corporation Equity Plan (the “Plan”) is to advance the
interests of Symetra Financial Corporation (the “Company”) and its stockholders by providing
long-term incentives to certain employees, directors and consultants of the Company and its
subsidiaries.




	 	2.	 	ADMINISTRATION






The Plan shall be administered by the Compensation Committee (the “Committee”) of the Board
of Directors (the “Board”) of the Company; provided that, following the initial public
offering of the Company’ common shares (the “IPO”), each member of the Committee shall
qualify as (a) a “non-employee director” under Rule 16b-3 of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), (b) an “outside director” under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the “Code”), and (c) otherwise meets the
independence requirements of the New York Stock Exchange (the “NYSE”). In the event that,
following the IPO, any member of the Committee does not so qualify, the Plan shall, to the
extent practicable, be administered by a sub-committee of Committee members who do so
qualify. If it is later determined that one or more members of the Committee do not so
qualify, actions taken by the Committee prior to such determination shall be valid despite
such failure to qualify.




The Committee shall have exclusive authority to select the employees, directors and
consultants to be granted awards under the Plan (“Awards”), to determine the type, size and
terms of the Awards and to prescribe the form of the instruments embodying Awards. With
respect to Awards made to directors and consultants, the Committee shall, and with respect
to employees may, specify the terms and conditions applicable to such Awards in an Award
agreement (each, an “Award Agreement”). The Committee is hereby authorized to interpret the
Plan, Award Agreements and the Awards granted under the Plan, to establish, amend and
rescind any rules and regulations relating to the Plan and to make any other determinations
which it believes necessary or advisable for the administration of the Plan. In connection
with any Award, the Committee in its sole discretion may provide for vesting provisions that
are different from the default vesting provisions that are contained in the Plan and such
alternative provisions shall not be deemed to conflict with the Plan. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in the Plan or in
any Award or Award Agreement in the manner and to the extent the Committee deems desirable
to carry it into effect. Any decision of the Committee in the administration of the Plan,
as described herein, shall be final and conclusive. The Committee may act only by a
majority of its members, except that the members thereof may authorize any one or more of
their number or any officer of the Company to execute and deliver documents on behalf of the
Committee. No member of the Committee shall be liable for anything done or omitted to be
done by him or her or by any other member of the Committee in connection with the Plan,
except for his or her own willful misconduct or as expressly provided by statute.




The Committee may delegate, on such terms and conditions as it determines in its sole and
plenary discretion, to one or more executive officers of the Company the authority to



 









 






make grants of Awards to officers (other than executive officers), employees and consultants
of the Company and its affiliates (including any prospective officer, employee or
consultant) and all necessary and appropriate decisions and determinations with respect
thereto.




	 	3.	 	PARTICIPATING SUBSIDIARIES






If a subsidiary of the Company wishes to participate in the Plan and its participation shall
have been approved by the Board, the Board of Directors of the subsidiary (the “Subsidiary
Board”) shall adopt a resolution in form and substance satisfactory to the Committee
authorizing participation by the subsidiary in the Plan. As used herein, “subsidiary” shall
mean a “subsidiary corporation” as defined in Section 424(f) of the Code.




A subsidiary may cease to participate in the Plan at any time by action of the Board or by
action of the Subsidiary Board, which latter action shall be effective not earlier than the
date of delivery to the Secretary of the Company of a certified copy of a resolution of the
Subsidiary Board taking such action. Termination of participation in the Plan shall not
relieve a subsidiary of any obligations theretofore incurred by it under the Plan.




	 	4.	 	AWARDS






	 	(a)	 	Eligible Participants. Any employee, director or consultant of the Company or
any of its subsidiaries is eligible to receive an Award hereunder. The Committee shall
select which eligible employees, directors or consultants shall be granted Awards
hereunder. No employee, director or consultant shall have a right to receive an Award
hereunder and the grant of an Award to an employee, director or consultant shall not
obligate the Committee to continue to grant Awards to such employee, director or
consultant in subsequent periods or to grant Awards to any other person at any time.
	 
	 	(b)	 	Type of Awards. Awards shall be limited to the following seven types:
(i) “Stock Options,” (ii) “Stock Appreciation Rights,” (iii) “Restricted Stock,”
(iv) “Restricted Stock Units,” (v) “Performance Shares,” (vi) “Performance Units” and
(vii) other stock-based awards.
	 
	 	(c)	 	Maximum Number of Shares That May Be Issued. A maximum of nine hundred
thousand
(900,000)* shares of common stock of the Company, $0.01 par value
(“Shares”), may be issued by the Company in satisfaction of its obligations with
respect to Award grants.  The maximum aggregate number of Shares with respect to which
Awards may be issued to any participant in any fiscal year of the Company is fifty
thousand (50,000*), subject to adjustment as provided in Section 17. For purposes of
the foregoing, the exercise of a Stock Appreciation Right shall constitute the issuance
of Shares equal to the Shares delivered under such Stock Appreciation Right. If any
Shares issued as Restricted Stock shall be







 




			
	*	 	To be adjusted to give effect to the stock split or
stock dividend to be implemented in connection with the Company’s initial
public offering.
	 
	*	 	To be adjusted to give effect to the stock split or stock dividend to be
implemented in connection with the Company’s initial public offering.




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	 	 	 	repurchased pursuant to the Company’s option described in Section 6 below, or if any
Shares issued under the Plan shall be reacquired pursuant to restrictions imposed at
the time of issuance or pursuant to the satisfaction of tax withholding or related
obligations, such Shares may again be issued under the Plan.






	 	(d)	 	Rights With Respect to Shares.






	 	(i)	 	A participant to whom Restricted Stock has been issued shall
have, prior to the expiration of the Restricted Period or the earlier
repurchase of such Shares as herein provided, ownership of such Shares,
including the right to vote the same and to receive dividends thereon, subject,
however, to the options, restrictions and limitations imposed thereon pursuant
hereto.
	 
	 	(ii)	 	A participant to whom Stock Options, Stock Appreciation Rights,
Restricted Stock Units, Performance Shares or Performance Units are granted
(and any person succeeding to such participant’s rights pursuant to the Plan)
shall have no rights as a shareholder with respect to any Shares issuable
pursuant thereto until the date of the issuance of a stock certificate (whether
or not delivered) therefor. Except as provided in Section 17, no adjustment
shall be made for dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property) the record
date for which is prior to the date such stock certificate is issued.
	 
	 	(iii)	 	The Company, in its discretion, may hold custody during the
Restricted Period of any Shares of Restricted Stock.






	 	5.	 	STOCK OPTIONS AND STOCK APPRECIATION RIGHTS






	 	(a)	 	Stock Options, which include “Incentive Stock Options” and other stock options
or combinations thereof, are rights to purchase shares of Common Stock of the Company.
A Stock Appreciation Right is an unfunded and unsecured promise to deliver Shares,
cash, other securities, other Awards or other property equal in value to the excess, if
any, of the Fair Market Value per Share over the exercise price per Share of the Stock
Appreciation Right, subject to the terms of the applicable Award Agreement. The
maximum number of Shares with respect to which Incentive Stock Options may be issued to
a participant in one year is, fifty thousand (50,000) *subject to adjustment
pursuant to Section 17. Each Stock Option shall comply with the following terms and
conditions:






	 	(i)	 	The Committee shall determine the participants to whom Stock
Options shall be granted, the number of shares to be covered by each Stock
Option, whether the Stock Option will be an Incentive Stock Option and the
conditions and limitations applicable to the vesting and exercise of the
Option. Unless otherwise set forth in the applicable Award Agreement, the per
share exercise price shall not be less than the greater of (i) the Fair Market
Value per Share at the time of grant and (ii) the par value per







 




			
	*	 	To be adjusted to give effect to the stock split or
stock dividend to be implemented in connection with the Company’s initial
public offering.





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	 	 	 	Share. However, the exercise price of an Incentive Stock Option granted to
a participant who owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or of a subsidiary (a
“Ten Percent Participant”) shall not be less than 110% of the greatest of
(i) the Fair Market Value per share at the time of grant, and (ii) the par
value per Share.
	 
	 	(ii)	 	The Stock Option shall not be transferable by the optionee
otherwise than by will or the laws of descent and distribution, and shall be
exercisable during such optionee’s lifetime only by such optionee, unless
otherwise set forth in the applicable Award Agreement.
	 
	 	(iii)	 	The Stock Option shall not be exercisable unless payment in
full is made for the Shares being acquired thereunder at the time of exercise
(including any Federal, state or local income or other taxes which the
Committee determines are required to be withheld in respect of such Shares),
and such payment shall be made in United States dollars by cash or check or, if
permitted by the Committee, (A) by tendering to the Company Shares owned by the
person exercising the Stock Option and having an aggregate Fair Market Value
equal to the aggregate cash exercise price thereof, (B) if there shall be a
public market for the Shares at such time, subject to such rules as may be
established by the Committee, through delivery of irrevocable instructions to a
broker to sell a number of Shares otherwise deliverable upon the exercise of
the Stock Option and to deliver promptly to the Company an amount equal to the
aggregate exercise price, or (C) by a combination of United States dollars and
Shares pursuant to (A) and/or (B) above.
	 
	 	(iv)	 	The aggregate Fair Market Value of Shares (determined at the
time of grant of the Stock Option pursuant to Section 5(a)(i) of the Plan) with
respect to which Incentive Stock Options granted to any participant under the
Plan are exercisable for the first time by such participant during any calendar
year may not exceed the maximum amount permitted under Section 422(d) of the
Code at the time of the Award grant. In the event this limitation would be
exceeded in any year, the optionee may elect either (i) to defer to a
succeeding year the date on which some or all of such Incentive Stock Options
would first become exercisable (but no longer than the term specified in
Section 5(c)(i) herein) or (ii) to convert some or all of such Incentive Stock
Options into non-qualified Stock Options.






	 	(b)	 	Each Stock Appreciation Right shall comply with the following terms and
conditions:






	 	(i)	 	The Committee shall determine the participants to whom Stock
Appreciation Rights shall be granted, the number of shares to be covered by
each Stock Appreciation Right and the conditions and limitations applicable to
the vesting and exercise of the Stock Appreciation Right. Unless otherwise set
forth in the applicable Award Agreement, the per





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	 	 	 	share exercise price shall not be less than the greater of (i) the Fair
Market Value per Share at the time of grant and (ii) the par value per
Share.
	 
	 	(ii)	 	The Stock Appreciation Right shall not be transferable by the
awardee otherwise than by will or the laws of descent and distribution, and
shall be exercisable during such awardee’s lifetime only by such awardee,
unless otherwise set forth in the applicable Award Agreement.
	 
	 	(iii)	 	A Stock Appreciation Right shall entitle the Participant to
receive an amount equal to the excess, if any, of the Fair Market Value of a
Share on the date of exercise of the Stock Appreciation Right over the exercise
price thereof. The Committee shall determine, in its sole and plenary
discretion, whether a Stock Appreciation Right shall be settled in cash,
Shares, other securities, other Awards, other property or a combination of any
of the foregoing.
	 
	 	(iv)	 	No fractional Shares shall be delivered under this
Section 5(b), but in lieu thereof a cash adjustment may be made as determined
by the Committee.






	 	(c)	 	Each Stock Option or Stock Appreciation Right shall not be exercisable:






	 	(i)	 	after the expiration of ten years from the date it is granted
(or such earlier date specified in the grant of the Stock Option or Stock
Appreciation Right or applicable Award Agreement) and may be exercised during
such period only at such time or times as the Committee may establish; or
	 
	 	(ii)	 	unless otherwise set forth in the applicable Award Agreement,
by participants who were employees of the Company or one of its subsidiaries at
the time of the grant of the Stock Option or Stock Appreciation Right unless
such participant has been, at all times during the period beginning with the
date of grant of the Stock Option or Stock Appreciation Right and ending on the
date three months prior to such exercise, an officer or employee of the Company
or any of its subsidiaries, or of a corporation, or a parent or subsidiary of a
corporation, issuing or assuming the Stock Option or Stock Appreciation Right
in a transaction to which Section 424(a) of the Code is applicable, except
that:






	 	(A)	 	unless otherwise set forth in the applicable
Award Agreement, if such person shall cease to be an officer or
employee of the Company or one of its subsidiaries solely by reason of
a period of Related Employment (as defined in Section 12), he or she
may, during such period of Related Employment (but in no event after
the Stock Option or Stock Appreciation Right has expired under the
provisions of Section 5(c)(i) hereof), exercise such Stock Option or
Stock Appreciation Right as if he or she continued to be such an
officer or employee; or
	 
	 	(B)	 	unless otherwise set forth in the applicable
Award Agreement, if an optionee shall become Disabled (as defined in
Section 10) he or





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	 	 	 	she may, at any time within three years of the date he or she becomes
disabled (but in no event after the Stock Option or Stock
Appreciation Right has expired under the provisions of
Section 5(c)(i) hereof), exercise the Stock Option or Stock
Appreciation Right with respect to (i) any Shares as to which he or
she could have exercised the Stock Option or Stock Appreciation Right
on the date he or she became disabled and (ii) if the Stock Option or
Stock Appreciation Right is not fully exercisable on the date he or
she becomes disabled, the number of additional Shares as to which the
Stock Option or Stock Appreciation Right would have become
exercisable had he or she remained an employee through the next date
on which additional Shares were scheduled to become exercisable under
the Stock Option or Stock Appreciation Right; or
	 
	 	(C)	 	unless otherwise set forth in the applicable
Award Agreement, if an optionee shall die while holding a Stock Option
or Stock Appreciation Right, his executors, administrators, heirs or
distributees, as the case may be, at any time within one year after the
date of such death (but in no event after the Stock Option or Stock
Appreciation Right has expired under the provisions of Section 5(c)(i)
hereof), may exercise the Stock Option or Stock Appreciation Right with
respect to any Shares as to which the decedent could have exercised the
Stock Option or Stock Appreciation Right at the time of his or her
death, and if the Stock Option or Stock Appreciation Right is not fully
exercisable on the date of his or her death, the number of additional
Shares as to which the Stock Option or Stock Appreciation Right would
have become exercisable had he or she remained an employee through the
next date on which additional Shares were scheduled to become
exercisable under the Stock Option or Stock Appreciation Right;
provided, however, that if death occurs during the three-year period
following a Disability as described in Section 5(c)(ii)(B) hereof or
any period following a voluntary termination (including retirement) in
respect of which the Committee has exercised its discretion to grant
continuing exercise rights as provided in Section 5(c)(ii)(D) hereof,
the Stock Option or Stock Appreciation Right shall not become
exercisable as to any Shares in addition to those as to which the
decedent could have exercised the Stock Option or Stock Appreciation
Right at the time of his or her death; or
	 
	 	(D)	 	unless otherwise set forth in the applicable
Award Agreement, if such person shall voluntarily terminate his or her
employment with the Company (including retirement), the Committee, in
its sole discretion, may determine that such optionee may exercise the
Stock Option or Stock Appreciation Right with respect to some or all of
the Shares subject to the Stock Option or Stock Appreciation Right as
to which it would not otherwise be exercisable on the date





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	 	 	 	of his or her voluntary termination provided, however, that in no
event may such exercise take place after the Stock Option or Stock
Appreciation Right has expired under the provisions of
Section 5(c)(i) hereof.
	 
	 	(E)	 	notwithstanding anything herein to the contrary
and subject to Section 13, unless otherwise set forth in the applicable
Award Agreement, in the event a Change in Control (as defined in
Section 13(a)) occurs and within 12 months thereafter: (A) there is a
Termination Without Cause (as defined in Section 14) of an optionee’s
or awardee’s employment or (B) there is a Constructive Termination (as
defined in Section 15) of an optionee’s or awardee’s employment (any
such Termination Without Cause or Constructive Termination, a “Trigger
Event”), the optionee or awardee may exercise the entire Stock Option
or Stock Appreciation Right at any time within 30 days following such
Trigger Event (but in no event after the Stock Option or Stock
Appreciation Right has expired under the provisions of
Sections 5(c)(i)).






	 	6.	 	RESTRICTED STOCK






	 	 	 	Each Award of Restricted Stock shall comply with the following terms and conditions, unless
otherwise set forth in the applicable Award Agreement:






	 	(a)	 	The Committee shall determine the number of Shares to be issued to a
participant pursuant to the Award.
	 
	 	(b)	 	Shares issued may not be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of, except by will or the laws of descent and distribution, for such
period from the date on which the Award is granted as the Committee shall determine
(the “Restricted Period”). The Company shall have the option to repurchase the Shares
subject to the Award at such price as the Committee shall have fixed (including zero
consideration), in its sole discretion, when the Award was made, which option will be
exercisable on such terms, in such manner and during such period as shall be determined
by the Committee when the Award is made (which may include, for illustration, the
participant’s cessation of continuous employment or the failure to satisfy performance
conditions). Certificates for Shares issued pursuant to Restricted Stock Awards shall
bear an appropriate legend referring to the foregoing option and other restrictions.
Any attempt to dispose of any such Shares in contravention of the foregoing option and
other restrictions shall be null and void and without effect. If Shares issued
pursuant to a Restricted Stock Award shall be repurchased pursuant to the option
described above, the participant to whom the Award was granted, or in the event of his
or her death after such option became exercisable, his or her executor or
administrator, shall forthwith deliver to the Secretary of the Company any certificates
for the Shares awarded to the participant, accompanied by such instruments of transfer,
if any, as may reasonably be required by the Secretary of the Company. If the option
described above is not exercised by the Company,






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	 	 	 	such option and the restriction imposed pursuant to the first sentence of this
Section 6(b) shall terminate and be of no further force and effect.
	 
	 	(c)	 	Unless otherwise set forth in the applicable Award Agreement, if a participant
who has been in the continuous employment of the Company or of a subsidiary shall:






	 	(i)	 	die or become Disabled during the Restricted Period, the option
of the Company to repurchase (and any and all other restrictions on) a pro rata
portion of the Shares awarded to such participant under such Award shall lapse
and cease to be effective as of the date on which his or her death or
disability occurs which shall be determined as follows: (A) the number of
Shares awarded under the Award multiplied by (B) a percentage,
the numerator of which is equal to the number of months elapsed in the
Restricted Period as of the date of death or disability (counting the month in
which the death or disability occurred as a full month) and the denominator of
which is equal to the number of months in the Restricted Period; or
	 
	 	(ii)	 	voluntarily terminate his or her employment with the Company
(including retirement) during the Restricted Period, the Committee may
determine that all or any portion of the option to repurchase and any and all
other restrictions on some or all of the Shares awarded to him or her under
such Award, if such option and other restrictions are still in effect, shall
lapse and cease to be effective as the date on which such voluntary termination
or retirement occurs.






	 	(d)	 	Unless otherwise set forth in the applicable Award Agreement, in the event
within 12 months after a Change in Control and during the Restricted Period there is a
Trigger Event, then the option to repurchase (and any and all other restrictions on)
all Shares awarded to the participant under his or her Restricted Stock Award shall
lapse and cease to be effective as of the date on which such Trigger Event occurs.






	7.	 	RESTRICTED STOCK UNITS
	 
	 	 	The grant of a Restricted Stock Unit Award to a participant will entitle him or her to
receive, without payment to the Company, an amount equal to the number of Shares underlying
such Restricted Stock Unit Award multiplied by the Fair Market Value of a Share on the date
of vesting of the Restricted Stock Unit Award, if the terms and conditions specified herein
and in the Award are satisfied. Payment in respect of a Restricted Stock Unit Award shall
be made as provided in Section 7(e). Each Restricted Stock Unit Award shall be subject to
the following terms and conditions:






	 	(a)	 	The Committee shall determine the number of Shares underlying the Restricted
Stock Units to be granted to a participant.
	 
	 	(b)	 	Restricted Stock Unit Awards shall be subject to the vesting schedule
determined by the Committee and set forth in the applicable Award Agreement. Payment
in




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	 	 	 	respect of a vested Restricted Stock Unit may be made in cash, stock or any
combination thereof, as specified in the applicable Award Agreement.
	 
	 	(c)	 	Except as otherwise determined by the Committee or in an Award Agreement,
Restricted Stock Units shall be cancelled if the participant’s continuous employment
with the Company or any of its subsidiaries shall terminate for any reason prior to the
vesting of the Restricted Stock Units, except solely by reason of a period of Related
Employment, and except as otherwise specified in this Section 7(c) or in Section 7(d).
Notwithstanding the foregoing, unless otherwise set forth in the applicable Award
Agreement, if an employee participant shall:






	 	(i)	 	while in such employment, die or become Disabled prior to the
vesting of the Restricted Stock Units, such Restricted Stock Units shall be
immediately canceled and the participant, or the participant’s legal
representative, as the case may be, shall receive a payment in respect of such
canceled Restricted Stock Units equal to the product of (A)(i) the number of
Shares underlying such Restricted Stock Units multiplied by (ii) a fraction,
the numerator of which is equal to the number of full or partial months within
the period commencing on the grant date of such Restricted Stock Units and such
death or Disability (including, for this purpose, the month in which the death
or Disability occurs), and the denominator of which is equal to the total
number of months from the grant date to the date when such Restricted Stock
Units were intended to vest; or
	 
	 	(ii)	 	retire with the approval of the Committee in its sole
discretion prior to the vesting of the Restricted Stock Units, the Restricted
Stock Units shall be immediately canceled; provided that the Committee in its
sole discretion may determine to make a payment to the participant in respect
of some or all of such canceled Restricted Stock Units.






	 	(d)	 	Unless otherwise set forth in the applicable Award Agreement, if within
12 months after a Change in Control there is a Trigger Event, then with respect to
Restricted Stock Unit Awards that were outstanding on the date of the Trigger Event
(each, an “Applicable Award”), each such Applicable Award shall be immediately canceled
and, in respect thereof, such participant shall be entitled to receive a cash payment
equal to the product of (A) the number of Shares underlying such Applicable Awards and
(B) the Fair Market Value of a Share on the date the applicable Trigger Event occurs.
	 
	 	(e)	 	Unless payment is deferred in accordance with an election made by the
participant in accordance with procedures adopted by the Company in its sole discretion
(if any), payment of any amount in respect of any Restricted Stock Units shall be made
by the Company no later than 60 days after the end of the calendar year in which such
Restricted Stock Units vest or become payable.




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	8.	 	PERFORMANCE SHARES
	 
	 	 	The grant of a Performance Share Award to a participant will entitle such participant to
receive, without payment to the Company, all or part of the value (the “Actual Value”) of a
specified number of hypothetical Shares (“Performance Shares”) determined by the Committee,
if the terms and conditions specified herein and in the Award are satisfied. Payment in
respect of a Performance Share Award shall be made as provided in Section 8(h). Each
Performance Share Award shall be subject to the following terms and conditions:






	 	(a)	 	The Committee shall determine the target number of Performance Shares to be
granted to a participant. Performance Share Awards may be granted in different classes
or series having different terms and conditions.
	 
	 	(b)	 	The Actual Value of a Performance Share Award shall be the product of (i) the
target number of Performance Shares subject to the Performance Share Award, (ii) the
Performance Percentage (as determined below) applicable to the Performance Share Award
and (iii) the Fair Market Value of a Share on the date the Award is paid or becomes
payable to the participant. The “Performance Percentage” applicable to a Performance
Share Award shall be a percentage of no less than 0% and no more than 200%, which
percentage shall be determined by the Committee based upon the extent to which the
Performance Objectives (as determined below) established for such Award are achieved
during the Award Period (as defined below). The method for determining the applicable
Performance Percentage shall also be established by the Committee.
	 
	 	(c)	 	At the time each Performance Share Award is granted, the Committee shall
establish performance objectives (“Performance Objectives”) to be attained within the
Award Period as the means of determining the Performance Percentage applicable to such
Award. The Performance Objectives shall be approved by the Committee (i) while the
outcome for that Award Period is substantially uncertain and (ii) no more than 90 days
after the commencement of the Award Period to which the Performance Objective relates
or, if less than 90 days, the number of days which is equal to 25 percent of the
relevant Award Period. The Performance Objectives established with respect to a
Performance Share Award shall be specific performance targets established by the
Committee with respect to one or more of the following criteria selected by the
Committee: (i) consolidated earnings before or after taxes (including earnings before
interest, taxes, depreciation and amortization); (ii) net income; (iii) operating
income; (iv) earnings per Share; (v) book value per Share; (vi) return on stockholders’
equity; (vii) expense management; (viii) return on investment; (ix) improvements in
capital structure; (x) share price; (xi) combined ratio; (xii) operating ratio;
(xiii) profitability of an identifiable business unit or product; (xiv) maintenance or
improvement of profit margins; (xv) market share; (xvi) revenues or sales;
(xvii) costs; (xviii) cash flow; (xix) working capital; (xx) return on assets;
(xxi) customer satisfaction; (xxii) employee satisfaction; (xxiii) economic value per
Share, (xxiv) underwriting return on capital and (xxv) underwriting return on equity.
The foregoing criteria may relate to the Company, one or more of its subsidiaries or
one or more of its divisions, units, partnerships, joint ventures or




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	 	 	 	minority
investments, product lines or products or any combination of the foregoing, and may be
applied on an absolute basis and/or be relative to one or more peer group companies or
indices, or any combination thereof, all as the Committee shall determine. In
addition, to the degree consistent with Section 162(m) of the Code (or any successor
section thereto), the Performance Objectives may be calculated without regard to
extraordinary items.
	 
	 	(d)	 	The award period (the “Award Period”) in respect of any grant of a Performance
Share Award shall be such period as the Committee shall determine commencing as of the
beginning of the fiscal year of the Company in which such grant is made. An Award
Period may contain a number of performance periods; each performance period shall
commence on or after the first day of the Award Period and shall end no later than the
last day of the Award Period. If the Committee does not specify in a Performance Share
Award agreement or elsewhere the performance periods contained in an Award Period, each
12-month period beginning with the first day of such Award Period shall be deemed to be
a performance period.
	 
	 	(e)	 	Except as otherwise determined by the Committee or in an Award Agreement,
Performance Shares shall be canceled if the participant’s continuous employment with
the Company or any of its subsidiaries shall terminate for any reason prior to the end
of the Award Period, except by reason of a period of Related Employment as defined in
Section 11, and except as otherwise specified in this Section 8(e) or in Section 8(f).
Notwithstanding the foregoing, unless otherwise set forth in the applicable Award
Agreement, if an employee participant shall:






	 	(i)	 	while in such employment, die or become Disabled prior to the
end of an Award Period, the Performance Share Award for such Award Period shall
be immediately canceled and he or she, or his or her legal representative, as
the case may be, shall receive a payment in respect of such canceled
Performance Share Award equal to the product of (A)(i) the target number of
Performance Shares for such Award multiplied by (ii) a fraction, the numerator
of which is equal to the number of full or partial months within the Award
Period during which employee was continuously employed by the Company or its
subsidiaries (including, for this purpose, the month in which the death or
Disability occurs), and the denominator of which is equal to the total number
of months within such Award Period, multiplied by (B) the Fair Market
Value of a Share on the last day of the performance period in which the death
or Disability occurred, multiplied by (C) the Performance Percentage
determined by the Board to have been achieved through the end of the
performance period in which the death or Disability occurred (but which in no
event shall be less than 50%); or
	 
	 	(ii)	 	retire with the approval of the Committee in its sole
discretion prior to the end of the Award Period, the Performance Share Award
for such Award Period shall be immediately canceled; provided that the
Committee in its sole discretion may determine to make a payment to the
participant in respect of some or all of such canceled Performance Share Award.




11









 












	 	(f)	 	Unless otherwise set forth in the applicable Award Agreement, if within
12 months after a Change in Control there is a Trigger Event, then with respect to
Performance Share Awards that were outstanding on the date of the Trigger Event (each,
an “Applicable Award”), each such Applicable Award shall be immediately canceled and,
in respect thereof, such participant shall be entitled to receive a payment equal to
the product of (A) (i) the target number of Performance Shares for such Applicable
Award multiplied by (ii) a fraction, the numerator of which is equal to
the number of full months within the Award Period during which the participant was
continuously employed by the Company or its subsidiaries, and the denominator of which
is equal to the total number of months within such Award Period, multiplied
by (B) the Fair Market Value of a Share on the date the applicable Trigger
Event occurs, multiplied by (C) a Performance Percentage equal to 100%.
Unless otherwise set forth in the applicable Award Agreement, if following a Change in
Control, a Participant’s employment remains continuous through the end of an Award
Period, then the Participant shall be paid with respect to such Awards for which he
would have been paid had there not been a Change in Control and the Actual Value shall
be determined in accordance with Section 8(g) below.
	 
	 	(g)	 	Except as otherwise provided in Section 8(f), as soon as practicable after the
end of the Award Period or such earlier date as the Committee in its sole discretion
may designate, the Committee shall (i) determine, based on the extent to which the
applicable Performance Objectives have been achieved, the Performance Percentage
applicable to an Award of Performance Shares, (ii) calculate the Actual Value of the
Performance Share Award and (iii) shall certify the foregoing to the Board. The
Committee shall cause an amount equal to the Actual Value of the Performance Shares
earned by the participant to be paid to him or his beneficiary. The Committee shall
determine, in its sole and plenary discretion, whether Performance Shares shall be
settled in cash, Shares, other securities, other Awards, other property or a
combination of any of the foregoing.
	 
	 	(h)	 	Unless payment is deferred in accordance with an election made by the
participant in accordance with procedures adopted by the Company in its sole discretion
(if any), payment of any amount in respect of any Performance Shares shall be made by
the Company no later than 60 days after the end of the calendar year in which such
Performance Shares are earned.






	9.	 	PERFORMANCE UNITS
	 
	 	 	The grant of a Performance Unit Award to a participant will entitle such participant to
receive, without payment to the Company, all or part of a specified amount (the “Earned
Value”) determined by the Committee, if the terms and conditions specified herein and in the
Award are satisfied. Payment in respect of a Performance Unit Award shall be made as
provided in Section 9(h). Each Performance Unit Award shall be subject to the following
terms and conditions:






	 	(a)	 	The Committee shall determine the target number of Performance Units to be
granted to a participant. The maximum Earned Value that may be earned by a participant
for Performance Units for any single Award Period of one year or




12









 






	 	 	 	longer shall not
exceed $25,000,000. Performance Unit Awards may be granted in different classes or
series having different terms and conditions.
	 
	 	(b)	 	The Earned Value of an Award of Performance Units shall be the product of
(i) the target number of Performance Units subject to the Performance Unit Award,
(ii) the Performance Percentage (as determined below) applicable to the Performance
Unit Award and (iii) the Value (as defined below) of a Performance Unit on the date the
Award is paid or becomes payable to the employee. The “Performance Percentage”
applicable to a Performance Unit Award shall be a percentage of no less than 0% and no
more than 200%, which percentage shall be determined by the Committee based upon the
extent to which the Performance Objectives (as determined below) established for such
Award are achieved during the Award Period (as defined below). The method for
determining the applicable Performance Percentage shall also be established by the
Committee. The “Value” of a Performance Unit shall be a fixed dollar value (or a
dollar value determined pursuant to a formula or similar process) specified by the
Committee and set forth in the applicable Award Agreement.
	 
	 	(c)	 	At the time each Performance Unit Award is granted the Committee shall
establish performance objectives (“Performance Objectives”) to be attained within the
Award Period as the means of determining the Performance Percentage applicable to such
Award. The Performance Objectives shall be approved by the Committee (i) while the
outcome for that Award Period is substantially uncertain and (ii) no more than 90 days
after the commencement of the performance period to which the performance objective
relates or, if less than 90 days, the number of days which is equal to 25 percent of
the relevant performance period. The Performance Objectives established with respect
to a Performance Unit Awards shall be specific performance targets established by the
Committee with respect to one or more of the following criteria selected by the
Committee: (i) consolidated earnings before or after taxes (including earnings before
interest, taxes, depreciation and amortization); (ii) net income; (iii) operating
income; (iv) earnings per Share; (v) book value per Share; (vi) return on stockholders’
equity; (vii) expense management; (viii) return on investment; (ix) improvements in
capital structure; (x) share price; (xi) combined ratio; (xii) operating ratio;
(xiii) profitability of an identifiable business unit or product; (xiv) maintenance or
improvement of profit margins; (xv) market share; (xvi) revenues or sales;
(xvii) costs; (xviii) cash flow; (xix) working capital; (xx) return on assets;
(xxi) customer satisfaction; (xxii) employee satisfaction; (xxiii) economic value per
Share, (xxiv) underwriting return on capital and (xxv) underwriting return on equity.
The foregoing criteria may relate to the Company, one or more of its subsidiaries or
one or more of its divisions, units, partnerships, joint ventures or minority
investments, product lines or products or any combination of the foregoing, and may be
applied on an absolute basis and/or be relative to one or more peer group companies or
indices, or any combination thereof, all as the Committee shall determine. In
addition, to the degree consistent with Section 162(m) of the Code (or any successor
section thereto), the Performance Objectives may be calculated without regard to
extraordinary items.




13









 






	 	(d)	 	The award period (the “Award Period”) in respect of any grant of a Performance
Unit Award shall be such period as the Committee shall determine commencing as of the
beginning of the fiscal year of the Company in which such grant is made. An Award
Period may contain a number of performance periods; each performance period shall
commence on or after the first day of the Award Period and shall end no later than the
last day of the Award Period. If the Committee does not specify in a Performance Unit
Award Agreement or elsewhere the performance periods contained in an Award Period, each
12-month period beginning with the first day of such Award Period shall be deemed to be
a performance period.
	 
	 	(e)	 	Except as otherwise determined by the Committee or in an Award Agreement,
Performance Units shall be cancelled if the participant’s continuous employment with
the Company or any of its subsidiaries shall terminate for any reason prior to the end
of the Award Period, except solely by reason of a period of Related Employment, and
except as otherwise specified in this Section 9(e) or in Section 9(f). Notwithstanding
the foregoing, unless otherwise set forth in the applicable Award Agreement, if an
employee participant shall:






	 	(i)	 	while in such employment, die or become Disabled prior to the
end of an Award Period, the Performance Unit Award for such Award Period shall
be immediately canceled and the participant, or his or her legal
representative, as the case may be, shall receive a payment in respect of such
canceled Performance Unit Award equal to the product of (A)(i) the target
number of Performance Units for such Award multiplied by (ii) a fraction, the
numerator of which is equal to the number of full or partial months within the
Award Period during which employee was continuously employed by the Company or
its subsidiaries (including, for this purpose, the month in which the death or
disability occurs), and the denominator of which is equal to the total number
of months within such Award Period, multiplied by (B) the value of a
Performance Unit on the last day of the performance period in which the death
or disability occurred, multiplied by (C) the Performance Percentage
determined by the Board to have been achieved through the end of the
performance period in which the death or disability occurred; or
	 
	 	(ii)	 	retire with the approval of the Committee in its sole
discretion prior to the end of the Award Period, the Performance Unit Award for
such Award Period shall be immediately canceled; provided that the Committee in
its sole discretion may determine to make a payment to the participant in
respect of some or all of such canceled Performance Unit Award.






	 	(f)	 	Unless otherwise set forth in the applicable Award Agreement, if within 12
months after a Change in Control there is a Trigger Event, then with respect to
Performance Unit Awards that were outstanding on the date of the Trigger Event (each,
an “Applicable Award”), each such Applicable Award shall be immediately canceled and,
in respect thereof, such participant shall be entitled to receive a payment equal to
the product of (A) (i) the target number of Performance Units for such Applicable Award
multiplied by (ii) a fraction, the




14









 






	 	 	 	numerator of which is equal to the
number of full months within the Award Period during which the participant was
continuously employed by the Company or its subsidiaries, and the denominator of which
is equal to the total number of months within such Award Period, multiplied
by (B) the Value of a Performance Unit on the date the applicable Trigger Event
occurs, multiplied by (C) a Performance Percentage equal to 100%. If
following a Change in Control, unless otherwise set forth in the applicable Award
Agreement, a Participant’s employment remains continuous through the end of an Award
Period, then the Participant shall be paid with respect to such Awards for which he or
she would have been paid had there not been a Change in Control and the Earned Value
shall be determined in accordance with Section 9(g) below.
	 
	 	(g)	 	Except as otherwise provided in Section 9(f), as soon as practicable after the
end of the Award Period or such earlier date as the Committee in its sole discretion
may designate, the Committee shall (i) determine, based on the extent to which the
applicable Performance Objectives have been achieved, the Performance Percentage
applicable to an Award of Performance Units, (ii) calculate the Earned Value of the
Performance Unit Award and (iii) shall certify all of the foregoing to the Board of
Directors. The Committee shall cause an amount equal to the Earned Value of the
Performance Units earned by the participant to be paid to him or her or his or her
beneficiary. The Committee shall determine, in its sole and plenary discretion,
whether a Performance Unit shall be settled in cash, Shares, other securities, other
Awards, other property or a combination of any of the foregoing.
	 
	 	(h)	 	Unless payment is deferred in accordance with an election made by the
participant in accordance with procedures adopted by the Company in its sole discretion
(if any), payment of any amount in respect of any Performance Units shall be made by
the Company no later than 60 days after the end of the calendar year in which such
Performance Units are earned.






	10.	 	OTHER STOCK-BASED AWARDS
	 
	 	 	Subject to the provisions of the Plan, the Committee shall have the sole and plenary
authority to grant to participants other equity-based or equity-related Awards (including,
but not limited to, fully-vested Shares) in such amounts and subject to such terms and
conditions as the Committee shall determine.
	 
	11.	 	DISABILITY
	 
	 	 	For the purposes of this Plan, unless otherwise specified in the applicable Award Agreement,
a participant shall be deemed to be “Disabled” if the Committee shall determine that the
physical or mental condition of the participant is such as would entitle him or her to
payment of long-term disability benefits under any disability plan of the Company or a
subsidiary in which he or she is a participant.




15









 






	12.	 	RELATED EMPLOYMENT
	 
	 	 	For the purposes of this Plan, Related Employment shall mean the employment of a participant
by an employer which is neither the Company nor a subsidiary provided: (i) such employment
is undertaken by the participant and continued at the request of the Company or a
subsidiary; (ii) immediately prior to undertaking such employment, the participant was an
officer or employee of the Company or a subsidiary, or was engaged in Related Employment as
herein defined; and (iii) such employment is recognized by the Committee, in its sole
discretion, as Related Employment for the purposes of this Section 12. The death or
Disability of a participant during a period of Related Employment as herein defined shall be
treated, for purposes of this Plan, as if the death or onset of disability had occurred
while the participant was an officer or employee of the Company.
	 
	13.	 	CHANGE IN CONTROL






	 	(a)	 	For purposes of this Plan, unless otherwise specified in the applicable Award
Agreement, a “Change in Control” within the meaning of this Section 13(a) shall occur
if:






	 	(i)	 	Any person or group (within the meaning of Section 13(d) and
14(d)(2) of the Exchange Act), other than (x) White Mountains Insurance Group,
Ltd., Berkshire Hathaway, Inc. or the respective wholly owned subsidiaries
thereof, as applicable (the “Significant Investors”), (y) an underwriter
temporarily holding Shares in connection with a public issuance thereof or (z)
an employee benefit plan of the Company or its affiliates, becomes the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
thirty-five percent (35%) or more of the Company’s then outstanding Shares and
such ownership percentage exceeds the beneficial ownership percentage of the
Significant Investors in the Company’s then outstanding Shares;
	 
	 	(ii)	 	the Continuing Directors, as defined in Section 13(b), cease
for any reason to constitute a majority of the Board of the Company; or
	 
	 	(iii)	 	the business of the Company and its subsidiaries is disposed
of by the Company pursuant to a sale or other disposition of all or
substantially all of the business or business-related assets of the Company and
its subsidiaries.






	 	(b)	 	For the purposes of this Plan, “Continuing Director” shall mean a member of the
Board  who either was a member of the Board on the Effective Date (as defined below) or
subsequently became a director of the Company and whose election, or nomination for
election, by the Company’s shareholders was approved by a vote of a majority of the
Continuing Directors then on the Board (which term, for purposes of this definition,
shall mean the whole Board and not any committee thereof), but excluding any such
individual whose initial assumption of office occurred pursuant to an actual or
threatened proxy contest or consent solicitation with respect to the election or
removal of directors.




16









 






	 	(c)	 	In the event of a Change in Control, the Committee as constituted immediately
prior to the Change in Control shall determine the manner in which “Fair Market Value”
of Shares will be determined following the Change in Control.






	14.	 	TERMINATION WITHOUT CAUSE
	 
	 	 	For purposes of this Plan, unless otherwise specified in the applicable Award Agreement,
“Termination Without Cause” shall mean a termination of the participant’s employment with
the Company or subsidiary or business unit of the Company by the Company (or subsidiary or
business unit, as applicable) or, by a purchaser of the participant’s subsidiary or business
unit after a Change in Control as described in Subsection 13(a)(iii), other than (i) for
death or Disability or (ii) for Cause. “Cause” shall mean, unless otherwise set forth in
the applicable Award Agreement, (a) an act or omission by the participant that constitutes a
felony or any crime involving moral turpitude; or (b) willful gross negligence or willful
gross misconduct by the participant in connection with his employment which causes, or is
likely to cause, material loss or damage to the Company, subsidiary or business unit.
Notwithstanding anything herein to the contrary, if the participant’s employment with the
Company, subsidiary or business unit shall terminate due to a Change in Control as
described in Subsection 13(a)(iii), where the purchaser (the “Purchaser”), as described in
such subsection, formally assumes the Company’s obligations under this Plan or places the
participant in a similar or like plan with no diminution of the value of the awards, such
termination shall not be deemed to be a “Termination Without Cause.”
	 
	15.	 	CONSTRUCTIVE TERMINATION
	 
	 	 	“Constructive Termination” shall mean, unless otherwise set forth in the applicable Award
Agreement, a termination of employment with the Company or a subsidiary at the initiative of
the participant that the participant declares by prior written notice delivered to the
Secretary of the Company to be a Constructive Termination by the Company or a subsidiary and
which follows (a) a material decrease in his total compensation opportunity or (b) a
material diminution in the authority, duties or responsibilities of his position with the
result that the participant makes a determination in good faith that he or she cannot
continue to carry out his or her job in substantially the same manner as it was intended to
be carried out immediately before such diminution. Notwithstanding anything herein to the
contrary, Constructive Termination shall not occur within the meaning of this Section 15
until and unless (a) the participant provides 30 days written notice of termination to the
company of the occurrence of the circumstances described in this Section 15 within 30 days
following such occurrence and (b) 30 days have elapsed from the date the Company receives
such written notice from the participant without the Company curing or causing to be cured
the circumstance or circumstances described in this Section 15 on the basis of which the
declaration of Constructive Termination is given.




17









 






	16.	 	[RESERVED]
	 
	17.	 	DILUTION AND OTHER ADJUSTMENTS






	 	(a)	 	In the event of any change in the outstanding Shares of the Company by reason
of any stock split, stock or extraordinary cash dividend, recapitalization, merger,
consolidation, reorganization, combination or exchange of Shares or other similar
event, and if the Committee shall determine, in its sole discretion, that such change
equitably requires an adjustment in the number or kind of Shares that may
be issued under the Plan pursuant to Section 4, in the number or kind of Shares subject
to, or the Stock Option or Stock Appreciation Right price per Share under, any
outstanding Award, in the number or kind of Shares which have been awarded as
Restricted Stock or in the repurchase option price per share relating thereto, in the
target number of Performance Shares or Performance Units which have been awarded to any
participant, or in any measure of performance, then such adjustment shall be made by
the Committee and shall be conclusive and binding for all purposes of the Plan.
	 
	 	(b)	 	The Committee is hereby authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, any extraordinary dividend or other
extraordinary distribution (whether in the form of cash, Shares, other securities or
other property), recapitalization, stock split, reverse stock split, split-up or
spin-off, merger, consolidation, stock sale, asset sale or the occurrence of a Change
of Control) affecting the Company, any affiliate, or the financial statements of the
Company or any affiliate, or of changes in applicable rules, rulings, regulations or
other requirements of any governmental body or securities exchange, accounting
principles or law (i) whenever the Committee, in its sole and plenary discretion,
determines that such adjustments are appropriate or desirable, including, without
limitation, providing for a substitution or assumption of Awards, accelerating the
exercisability of, lapse of restrictions on, or termination of, Awards or providing for
a period of time for exercise prior to the occurrence of such event, (ii) if deemed
appropriate or desirable by the Committee, in its sole and plenary discretion, by
providing for a cash payment to the holder of an Award in consideration for the
cancelation of such Award, including, in the case of an outstanding Option or Stock
Appreciation Right, a cash payment to the holder of such Option or Stock Appreciation
Right in consideration for the cancelation of such Option or Stock Appreciation Right
in an amount equal to the excess, if any, of the Fair Market Value (as of a date
specified by the Committee) of the Shares subject to such Option or Stock Appreciation
Right over the aggregate Exercise Price of such Option or Stock Appreciation Right and
(iii) if deemed appropriate or desirable by the Committee, in its sole and plenary
discretion, by canceling and terminating any Option or Stock Appreciation Right having
a per Share exercise price equal to, or in excess










18












 






	 	 	 	of, the Fair Market Value of a Share subject to such Option or Stock Appreciation
Right without any payment or consideration therefor.






	18.	 	DESIGNATION OF BENEFICIARY BY PARTICIPANT
	 
	 	 	A participant may name a beneficiary to receive any payment to which he may be entitled in
respect of Restricted Stock Units, Performance Shares, Performance Units or Stock
Appreciation Rights under the Plan in the event of his death, on a form to be provided by
the Committee. A participant may change his beneficiary from time to time in the same
manner. If no designated beneficiary is living on the date on which any amount becomes
payable to a participant’s executors or administrators, the term “beneficiary” as used in
the Plan shall include such person or persons.
	 
	19.	 	CERTAIN ADDITIONAL DEFINITIONS
	 
	 	 	As used in the Plan, the term “Fair Market Value” shall mean (a) with respect to any
property other than Shares, the fair market value of such property determined by such
methods or procedures as shall be established from time to time by the Committee and
(b) with respect to Shares, as of any date, (i) the closing per share sales price of the
Shares (A) as reported by the NYSE for such date or (B) if the Shares are listed on any
other national stock exchange, as reported on the stock exchange composite tape for
securities traded on such stock exchange for such date or, with respect to each of clauses
(A) and (B), if there were no sales on such date, on the closest preceding date on which
there were sales of Shares or (ii) in the event there shall be no public market for the
Shares on such date, the fair market value of the Shares as determined in good faith by the
Committee.






	20.	 	MISCELLANEOUS PROVISIONS






	 	(a)	 	No employee or other person shall have any claim or right to be granted an
Award under the Plan. Neither the Plan nor any action taken hereunder shall be
construed as giving an employee any right to be retained in the employ of the Company
or any subsidiary.
	 
	 	(b)	 	A participant’s rights and interest under the Plan may not be assigned or
transferred in whole or in part either directly or by operation of law or otherwise
(except in the event of a participant’s death), including but not limited to,
execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner and
no such right or interest of any participant in the Plan shall be subject to any
obligation or liability or such participant.
	 
	 	(c)	 	No Shares shall be issued hereunder unless counsel for the Company shall be
satisfied that such issuance will be in compliance with applicable Federal and state
securities laws.
	 
	 	(d)	 	The Company and its subsidiaries shall have the right to deduct from any
payment made under the Plan any Federal, state or local income or other taxes required
by law to be withheld with respect to such payment. It shall be a condition to the
obligation of the Company to issue Shares upon exercise of a Stock Option, upon
settlement of a Stock Appreciation Right, or upon payment of a Restricted Stock





19









 






	 	 	 	Unit, Performance Share or a Performance Unit that the participant (or any
beneficiary or person entitled to payment under Section 5(c)(ii)(C) hereof) pay to
the Company, upon its demand, such amount as may be required by the Company for the
purpose of satisfying any liability to withhold Federal, state or local income or
other taxes. If the amount requested is not paid, the Company may refuse to issue
Shares.
	 
	 	(e)	 	The Plan shall be unfunded. The Company shall not be required to establish any
special or separate fund or to make any other segregation of assets to assure the
payment of any Award under the Plan.
	 
	 	(f)	 	By accepting any Award or other benefit under the Plan, each participant and
each person claiming under or through him or her shall be conclusively deemed to have
indicated his or her acceptance and ratification of, and consent to, any action taken
under the Plan by the Company, the Board or the Committee.






	21.	 	AMENDMENT
	 
	 	 	The Plan may be amended at any time and from time to time by the Board, but no amendment
which increases the aggregate number of Shares which may be issued pursuant to the Plan or
the class of employees eligible to participate shall be effective unless and until the same
is approved by the shareholders of the Company. No amendment of the Plan shall adversely
affect any right of any participant with respect to any Award previously granted without
such participant’s written consent.
	 
	22.	 	TERMINATION
	 
	 	 	This Plan shall terminate upon the earlier of the following dates or events to occur:






	 	(a)	 	the adoption of a resolution of the Board terminating the Plan; or
	 
	 	(b)	 	ten years from the Effective Date.






	 	 	No termination of the Plan shall alter or impair any of the rights or obligations of any
person, without his consent, under any Award previously granted under the Plan.






	23.	 	EFFECTIVE DATE
	 
	 	 	The Plan shall be effective as of the date of its adoption by the Board and approval by the
Company’s shareholders (such date, the “Effective Date”); provided,
however, that no Incentive Share Options may be granted under the Plan unless it is
approved by the Company’s shareholders within twelve (12) months before or after the date
the Plan is adopted by the Board.





20









 





[FORM OF]

SYMETRA FINANCIAL CORPORATION




NON-QUALIFIED STOCK OPTION AGREEMENT




     AGREEMENT (this “Agreement”) made as of this                     th day of                      2007, by and between Symetra
Financial Corporation (the “Company”), and                      (the “Optionee”).



W I T N E S S E T H :




          WHEREAS, the Optionee is now employed by the Company or a subsidiary of the Company and the
Company desires to promote the interests of the Company and its subsidiaries by providing the
Optionee with incentives to continue and increase his or her efforts with respect to, and remain in
the employ of, the Company and its subsidiaries and, as an inducement thereto, the Company has
determined to grant to the Optionee an option pursuant to the Symetra Financial Corporation Equity
Plan (the “Plan”). Capitalized terms not otherwise defined in this Agreement shall have the
meanings assigned to such terms in the Plan.




          NOW, THEREFORE, it is agreed between the parties as follows:




          i) Grant of Option. Subject to the terms and conditions hereof, the Company hereby
grants to the Optionee the right and option to purchase from the Company up to, but not exceeding
in the aggregate,                      Shares, at an exercise price of $                     per Share (the “Option”). The Option
is not intended to be an incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”).




          ii) Vesting of Right to Exercise Option. The Optionee may purchase from the Company
the following aggregate number of Shares covered by the Option (“Option Shares”) on and after each
of the following dates during the term of the Option:




	 	 	 
	 	 	Number of Option Shares Vested
	Date	 	On a Cumulative Basis   
	Third anniversary of the date the
Company consummates the initial
public offering of its Common Shares
(the “IPO Date”)

	 	   One-half of all Option Shares,
rounded down to the nearest whole
number of Shares
	 

	 	 
	Fifth anniversary of the IPO Date

	 	100% of all Option Shares






21









 





          The Option, to the extent vested, shall be exercisable in whole or in part at any time during
the term of the Option. The term of the Option shall be seven (7) years from the IPO Date or such
shorter period as is prescribed in paragraph 3.




          iii) Termination of Employment. If at any time the Optionee’s employment with the
Company or any subsidiary shall be terminated for any reason other than death or Disability (as
described below), the Optionee shall have the right to exercise this Option to the extent of the
Shares with respect to which the Option could have been exercised by the Optionee as of the date of
his or her termination of employment in accordance with its terms but in no event beyond the
earlier of (i) three months after the date of termination of employment or (ii) the scheduled
expiration of the term of such Option. If the Optionee shall voluntarily terminate his or her
employment with the Company (including retirement), the Board may determine that the Optionee may
exercise his or her Option with respect to some or all of the shares subject to the Option as to
which it would not otherwise be exercisable on the date of his or her voluntary termination;
provided, however, that in no event may the Option be exercised after the scheduled
expiration of the term of the Option.




          If the Optionee shall become Disabled, he or she may, at any time within three years of the
date he or she becomes Disabled (but in no event after the scheduled expiration of the term of the
Option), exercise the Option with respect to (i) any Shares as to which he or she could have
exercised the Option on the date he became Disabled and (ii) if the Option is not fully exercisable
on the date he or she becomes Disabled, the number of additional Shares as to which the Option
would have become exercisable had he or she remained an employee through the next date on which
additional Shares were scheduled to become exercisable under the Option. 




          If the Optionee shall die while holding an Option, his or her executors, administrators, heirs
or distributees, as the case may be, at any time within one year after the date of such death (but
in no event after the scheduled expiration of the term of the Option), may exercise the Option with
respect to (i) any Shares as to which the decedent could have exercised the Option at the time of
his or her death, and (ii) if the Option is not fully exercisable on the date of his or her death,
the number of additional Shares as to which the Option would have become exercisable had he or she
remained an employee through the next date on which additional Shares were scheduled to become
exercisable under the Option; provided, however, that if death occurs during the
three-year period following a Disability or any period following a retirement or voluntary
termination in respect of which the Board has exercised its discretion to grant continuing exercise
rights, the Option shall not become exercisable as to any Shares in addition to those as to which
the decedent could have exercised the Option at the time of his or her death.




          [If the Optionee ceases to be employed by the Company or one of its subsidiaries by reason of
Related Employment, he or she shall not be considered to have incurred a termination of employment
for purposes of this Agreement.]




          iv) Exercise of Option. The Optionee, from time to time during the period when the
Option hereby granted may by its terms be exercised, may exercise the Option by delivering to the
Company a written notice signed by the Optionee stating the number of Shares that the Optionee has
elected to purchase and the manner of payment for such Shares. The notice shall be accompanied by
payment in full by [(a)] cash or




22









 




check [or (b) delivery of Shares, duly endorsed for transfer (or with duly executed stock
powers attached), (c) if there shall be a public market for the Common Shares at such time, subject
to such rules as may be established by the Committee, through delivery of irrevocable instructions
to a broker to sell a number of Shares otherwise deliverable upon the exercise of the Option and to
deliver promptly to the Company an amount equal to the exercise price or (d) any combination of the
foregoing], for an amount equal to the purchase price of the Shares then to be purchased (including
any withholding taxes as determined by the Committee). [Shares surrendered as payment for Shares
purchased pursuant to the exercise of this Option will be valued, for such purposes, at Fair Market
Value on the date of such Option exercise.] As soon as practicable after receipt of the foregoing,
the Company shall issue the shares in the name of the Optionee and deliver the certificates
therefor to the Optionee.




          Anything to the contrary herein notwithstanding, the Company’s obligation to sell and deliver
Shares under this Option is subject to such compliance with Federal and state laws, rules and
regulations applying to the authorization, issuance or sale of securities as the Company deems
necessary or advisable. The Company shall not be required to sell and deliver stock pursuant
hereto unless and until it receives satisfactory proof that the provisions of the Securities Act of
1933 or the Securities Exchange Act of 1934 or the rules and regulations of the Securities and
Exchange Commission promulgated thereunder or the provisions of any state law governing the sale of
securities, or that there has been compliance with the provisions of such acts, rules, regulations
and state laws.




          v) Non-Assignability. The Option shall not be transferable by the Optionee other
than by will or the laws of descent and distribution and may be exercised during the Optionee’s
lifetime only by the Optionee or by his or her guardian or legal representative. Any transferee of
the Option shall be subject to the terms and conditions of this Agreement. No such transfer of the
Option shall be effective to bind the Company unless the Company shall have been furnished with
written notice thereof and a copy of the will and/or such other evidence as the Company may deem
necessary to establish the validity of the transfer and the acceptance by the transferee or
transferees of the terms and conditions of this Agreement. No assignment or transfer of this
Option, or of the rights represented thereby, whether voluntary or involuntary, by operation of law
or otherwise except a transfer by the Optionee by will or by the laws of descent and distribution,
shall vest in the purported assignee or transferee any interest or right herein whatsoever.




          vi) Disputes. As a condition of the granting of the Option, the Optionee and the
Optionee’s successors and assigns agree that any dispute or disagreement which shall arise under or
as a result of this Agreement shall be determined by the Committee in its sole discretion and
judgment and that any such determination and any interpretation by such Committee of the terms of
this Agreement shall be final and shall be binding and conclusive for all purposes.




          vii) Dilution and Other Adjustments. In the event of any change in the Outstanding
Shares of the Company by reason of any stock split, stock dividend, recapitalization, merger,
consolidation, reorganization, combination or exchange of shares or other similar event, [and if
the Committee shall determine, in its sole discretion, that such change equitably requires an
adjustment] in the number of Shares subject to, or




23









 




the Option price per Share under, any outstanding Option, which has been awarded to any
participant Optionee, then such adjustment shall be made by the Committee and shall be conclusive
and binding for all purposes of the Plan.




          viii) Rights as Shareholder. The Optionee shall have no rights as a shareholder of
the Company with respect to any of the unexercised Shares until the issuance of a stock certificate
or certificates upon the exercise of the Option in full or in part and the payment or withholding
of any applicable withholding taxes is made, and then only with respect to the shares represented
by such certificate or certificates.




          ix) Notices. Every notice relating to this Agreement shall be in writing and if
given by mail shall be given by registered or certified mail with return receipt requested. All
notices to the Company shall be delivered to the Vice President of Human Resources at 777
108th Avenue NE, Suite 1200, Bellevue, Washington, 98004. All notices by the Company to
the Optionee shall be delivered to the Optionee personally or addressed to the Optionee at the
Optionee’s last address as then contained in the records of the Company or such other address as
the Optionee may designate. Either party by notice to the other may designate a different address
to which notices shall be addressed. Any notice given by the Company to the Optionee at the
Optionee’s last designated address shall be effective to bind any other person who shall acquire
rights hereunder.




          x) Provisions of Plan Controlling. The provisions hereof are subject to the terms
and conditions of the Plan. In the event of any conflict between the provisions of this Option and
the provisions of the Plan, the provisions of the Plan shall control. All capitalized concerning
this Agreement shall have the same meaning, as in the Plan unless otherwise defined in this
Agreement.




* * * * *




24









 





          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.




	 	 	 
	 

	 	SYMETRA FINANCIAL CORPORATION:
	 
	 	 
	 

	 	By:                                                             
	 

	 	Name:
	 

	 	Its:
	 
	 	 
	 

	 	OPTIONEE:
	 
	 	 
	 

	 	By:                                                             
	 

	 	Name:






25









 





[FORM OF]

SYMETRA FINANCIAL CORPORATION




RESTRICTED STOCK UNIT AGREEMENT




     AGREEMENT (this “Agreement”) made as of this ___th day of                      2007, by and between Symetra
Financial Corporation (the “Company”), and                      (the “Awardee”).



W I T N E S S E T H :




          WHEREAS, the Awardee is now employed by the Company or a subsidiary of the Company and the
Company desires to promote the interests of the Company and its subsidiaries by providing the
Awardee with incentives to continue and increase his or her efforts with respect to, and remain in
the employ of, the Company and its subsidiaries and, as an inducement thereto, the Company has
determined to grant to the Awardee an award of restricted stock units pursuant to the Symetra
Financial Corporation Equity Plan (the “Plan”).




          Capitalized terms not otherwise defined in this Agreement shall have the meanings assigned to such
terms in the Plan.




          NOW, THEREFORE, it is agreed between the parties as follows:




          xi) Grant of RSUs. Subject to the terms and conditions hereof, the Company hereby
grants to the Awardee restricted stock units with respect to [NUMBER] Shares (the “RSUs”).




          xii) Vesting of RSUs. The RSUs shall vest on each of the following dates and shall
be settled in Shares as set forth in Section xiv), immediately upon vesting:




	 	 	 
	 	 	Number of Shares Underlying the RSUs
	Date	 	Vesting on such Date
	Second anniversary of the date the
Company consummates the initial
public offering of its Shares (such
date, the “IPO Date”)

	 	   One-half of all Shares underlying the
RSUs, rounded down to the nearest
whole number of Shares
	 

	 	 
	Fourth anniversary of the IPO Date

	 	   All remaining Shares underlying the RSUs






          xiii) Termination of Employment. If at any time the Awardee’s employment with the
Company or any subsidiary shall be terminated for any reason other than death or Disability, any
unvested RSUs shall be forfeited and terminated.




          If the Awardee ceases to be employed by the Company and its subsidiaries by reason of death or
Disability, a portion of the RSUs (to the extent not already vested




26









 




pursuant to paragraph 2) shall immediately vest thereupon. Such portion shall be the number
of Shares underlying the RSUs equal to the product of (i) the total number of Shares underlying the
RSUs and (ii) a fraction, the numerator of which is the number of full or partial months within the
period commencing on the IPO Date and ending on the month in which such termination occurs, and
the denominator of which is equal to the number of full or partial months within the period
commencing on the IPO Date and ending on the fourth anniversary of the IPO Date. For the avoidance
of doubt, the vesting provided in this paragraph will only apply to the extent such portion of the
RSUs did not previously vest in accordance with paragraph 2.




          If the Awardee ceases to be employed by the Company or one of its subsidiaries by reason of
Related Employment, he or she shall not be considered to have incurred a termination of employment
for purposes of this Agreement.




          xiv) Settlement of RSU. Upon the vesting of any portion of the RSUs, the Company
shall issue a number of Shares equal to the number of Shares underlying such vested portion of the
RSUs in the name of the Awardee and deliver the certificates therefor to the Awardee.




          Anything to the contrary herein notwithstanding, the Company’s obligation to sell and deliver
Shares under this Agreement is subject to such compliance with Federal and state laws, rules and
regulations applying to the authorization, issuance or sale of securities as the Company deems
necessary or advisable. The Company shall not be required to sell and deliver stock pursuant
hereto unless and until it receives satisfactory proof that the provisions of the Securities Act of
1933 or the Securities Exchange Act of 1934 or the rules and regulations of the Securities and
Exchange Commission promulgated thereunder or the provisions of any state law governing the sale of
securities, or that there has been compliance with the provisions of such acts, rules, regulations
and state laws.




          xv) Non-Assignability. The RSUs shall not be transferable by the Awardee other than
by will or the laws of descent and distribution and may be exercised during the Awardee’s lifetime
only by the Awardee or by his or her guardian or legal representative. Any transferee of the RSUs
shall be subject to the terms and conditions of this Agreement. No such transfer of the RSUs shall
be effective to bind the Company unless the Company shall have been furnished with written notice
thereof and a copy of the will and/or such other evidence as the Company may deem necessary to
establish the validity of the transfer and the acceptance by the transferee or transferees of the
terms and conditions of this Agreement. No assignment or transfer of the RSUs, or of the rights
represented thereby, whether voluntary or involuntary, by operation of law or otherwise except a
transfer by the Awardee by will or by the laws of descent and distribution, shall vest in the
purported assignee or transferee any interest or right herein whatsoever.




          xvi) Disputes. As a condition of the granting of the RSUs, the Awardee and the
Awardee’s successors and assigns agree that any dispute or disagreement which shall arise under or
as a result of this Agreement shall be determined by the Committee in its sole discretion and
judgment and that any such determination and any interpretation by such Committee of the terms of
this Agreement shall be final and shall be binding and conclusive for all purposes.




27









 





          xvii) Dilution and Other Adjustments. In the event of any change in the Outstanding
Shares of the Company by reason of any stock split, stock dividend, recapitalization, merger,
consolidation, reorganization, combination or exchange of shares or other similar event, [and if
the Committee shall determine, in its sole discretion, that such change equitably requires an
adjustment] in the number of shares subject to any outstanding RSU, which has been awarded to any
participant Awardee, then such adjustment shall be made by the Committee and shall be conclusive
and binding for all purposes of the Plan.




          xviii) Rights as Shareholder. The Awardee shall have no rights as a shareholder of
the Company with respect to any Shares underlying the RSUs [until the issuance of a stock
certificate or certificates upon the settlement of the RSUs in full or in part and the payment or
withholding of any applicable withholdings taxes is made, and then only with respect to the shares
represented by such certificate or certificates].




          xix) Notices. Every notice relating to this Agreement shall be in writing and if
given by mail shall be given by registered or certified mail with return receipt requested. All
notices to the Company shall be delivered to the Vice President of Human Resources at 777
108th Avenue NE, Suite 1200, Bellevue, Washington, 98004. All notices by the Company to
the Awardee shall be delivered to the Awardee personally or addressed to the Awardee at the
Awardee’s last address as then contained in the records of the Company or such other address as the
Awardee may designate. Either party by notice to the other may designate a different address to
which notices shall be addressed. Any notice given by the Company to the Awardee at the Awardee’s
last designated address shall be effective to bind any other person who shall acquire rights
hereunder.




          xx) Provisions of Plan Controlling. The provisions hereof are subject to the terms
and conditions of the Plan. In the event of any conflict between the provisions of this Agreement
and the provisions of the Plan, the provisions of the Plan shall control. All capitalized
concerning this Agreement shall have the same meaning, as in the Plan unless otherwise defined in
this Agreement.




* * * * *




28









 





          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.




	 	 	 
	 

	 	SYMETRA FINANCIAL CORPORATION:
	 
	 	 
	 

	 	By:                                                             
	 

	 	Name:
	 

	 	Its:
	 
	 	 
	 

	 	AWARDEE:
	 
	 	 
	 

	 	By:                                                             
	 

	 	Name:







29