Exhibit 99.2
February 21,
2008
[Name]
Safety National Casualty Corporation
2043 Woodland Parkway, Suite 200
St. Louis, Missouri 63146
Re:
Stock Option Award Agreement
Dear
[Name]:
We are pleased to inform you that,
pursuant to action taken by the Compensation Committee (the
“Committee”) of the Board of Directors of Delphi
Financial Group, Inc. (“Delphi”) under Section 5
of the 2003 Employee Long-Term Incentive and Share Award Plan, as
amended (the “Plan”), you have been granted options to
purchase up to
shares of Delphi’s Class A Common Stock (the
“Stock”) at the price of $29.14 per share (the
“Options”), which was the fair market value of the
Stock as of February 15, 2008, the effective date of such
grant, as determined under the Plan. Such option grant is subject
in all respects to the terms and conditions described herein. This
agreement, once countersigned by you, shall constitute an
“Award Agreement” as defined in Section 2(c) of the
Plan.
The Options will become exercisable,
in accordance with the procedures described herein, if and to the
extent that SIG Holdings, Inc. and its consolidated subsidiaries
(collectively, “SIG”) meet the following financial
performance goals, as measured and determined in accordance with
the provisions of Exhibit A hereto:
(a) If
SIG’s aggregate Pre-Tax Operating Income (as such term is
defined in Exhibit A hereto) for the period consisting of
Delphi’s 2008, 2009 and 2010 fiscal years is at least
$473,459,000, 135,000 Options shall become exercisable.
Alternatively, if SIG’s aggregate Pre-Tax Operating Income
for such period does not reach $473,459,000, but is greater
than
$431,681,000, a reduced number of the Options shall become
exercisable, to be determined by interpolating between zero and
135,000 in relation to the point at which the Pre-Tax Operating
Income amount falls in the range between $431,681,000 and
$473,459,000 and rounding the number obtained to the nearest whole
number. For example, if Pre-Tax Operating Income for such period
were exactly $452,570,000, 67,500 Options would become
exercisable.
(b) If SIG’s aggregate
Pre-Tax Operating Income for the period consisting of
Delphi’s 2008, 2009, 2010, 2011 and 2012 fiscal years is at
least $919,293,000, 225,000 Options, less the number of Options, if
any, as shall previously have become exercisable pursuant to the
preceding clause (a) (the “Previously Vested Options”),
shall become exercisable. Alternatively, if SIG’s aggregate
Pre-Tax Operating Income for such period does not reach
$919,293,000, but is greater than $796,211,000, a reduced number of
the Options shall become exercisable, such number to be determined
by interpolating between zero and 225,000 in relation to the point
at which the Pre-Tax Operating Income amount falls in the range
between $796,211,000 and $919,293,000, rounding the number obtained
to the nearest whole number, and subtracting from such number the
number of the Previously Vested Options. For example, if Pre-Tax
Operating Income for such period was $857,752,000, and the number
of the Previously Vested Options was 50,000, 62,500 Options would
become exercisable. If, in such example, there were no Previously
Vested Options, 112,500 Options would become exercisable.
(c) In addition:
(i) If your employment with
Delphi’s subsidiary, Safety National Casualty Corporation
(“SNCC”), terminates due to your death or Disability or
is terminated by SNCC without Cause (other than a termination
pursuant to the Annual Termination Option or to which clause
(ii) of this paragraph (c) applies) or by you for Good
Reason (excluding a termination to which clause (ii) of this
paragraph (c) applies), then, notwithstanding any provisions
hereof or of the Plan to the contrary, with respect to Options that
have not become exercisable prior to such termination pursuant to
the provisions of the preceding clauses
(a) and/or (b), such Options will become exercisable at such
times, if any, as would have been the case pursuant to such
clause(s) if not for such termination; provided ,
however , that the number of Options that becomes
exercisable will, in each case, be reduced by a percentage equal to
the applicable percentage of the three-year period (in the case of
clause (a)) and the five-year period (in the case of clause (b))
during which you were not employed by SNCC by reason of such
termination.
(ii) If, subsequent to the
occurrence of a Change of Ownership, (i) SNCC terminates your
employment without Cause (except where such termination is pursuant
to the Annual Termination Option) or (ii) you terminate your
employment with SNCC for Good Reason, and all or a portion of the
Options remain outstanding as of the Date of Termination (whether
such Options are then exercisable for shares of Delphi or another
company, cash or other property), then, so long as the Performance
Condition has then been satisfied, the Options shall become
exercisable in their entirety, effective as of the Date of
Termination. For this purpose, “Performance Condition”
shall mean the attainment by SIG, for the period commencing on
January 1, 2008 through and including the full calendar
quarter most recently having been completed as of the Date of
Termination, of aggregate Pre-Tax Operating Income in an amount
representing a compound average annualized growth rate of at least
ten percent (10%), as compared with the 2007 Pre-Tax Operating
Income base amount of $118,561,257. For example, as to a Date of
Termination occurring on May 1, 2009, the Performance
Condition would relate to the period from January 1, 2008
through March 31, 2009, and would require that aggregate
Pre-Tax Operating Income for such period be equal at least
$133,677,817.
(iii) For purposes of this
clause (c), the terms “Disability,”
“Cause,” “Annual Termination Option,”
“Good Reason” and “Date of Termination”
shall have the definitions set forth in the Employment Agreement
between SNCC and you dated as of February 14, 2008 (the
“Employment Agreement”).
Options which do not become
exercisable pursuant to the provisions of the preceding clauses
(a), (b), and/or (c), as applicable, shall expire and terminate in
their entirety without
becoming
exercisable.
For purposes of application of the
foregoing provisions relating to the exercisability of the Options,
the following procedures shall apply:
Each determination of Pre-Tax
Operating Income for the applicable period shall be made by Delphi,
based upon a statement of operations of SIG for the applicable
period in form and substance reasonably acceptable to Delphi, which
statement shall be prepared by SIG in accordance with the
calculation methodology set forth in Exhibit A hereto and
shall be provided to Delphi within 40 days of the close of such
period.
Delphi shall notify you in writing,
within 65 days following the close of each of the multi-year
periods referenced in the preceding clauses (a) and (b) (or,
if later, within 10 days from the date on which Delphi
receives the statement of operations with respect to such period
pursuant to the preceding paragraph) of its determination as to the
level of aggregate Pre-Tax Operating Income achieved and, based on
such determination, the extent to which (if any) the Options have
become exercisable pursuant to the applicable provision of such
clauses (a) and (b) or, if applicable, clause (c). Options
having become exercisable, as described in such notice, shall for
all purposes of the Plan be exercisable immediately as of the date
of such notice.
Options that become exercisable as
provided herein will, if not sooner exercised or terminated
pursuant to the provisions hereof, terminate at the close of
business on February 15, 2018. The Options are in all respects
subject to each of the terms and conditions of the Plan, a copy of
which is attached hereto as Exhibit B, except as otherwise
provided herein and except that: (i) notwithstanding
Section 5(b)(iv) of the Plan, the exercisability of the
Options shall not be accelerated by reason of your death or
disability while in the employ of SNCC; (ii) the provisions of
Sections 5(b)(iii), (iv), (vi) and (viii) of the
Plan will not limit your ability to exercise, following a
termination of your employment by SNCC or for the other reasons set
forth therein, Options that have become exercisable as of the date
of such termination or that become exercisable
thereafter pursuant to the provisions of clause (c) above;
subject, however, to the provisions of Section 5.4 of the
Employment Agreement; (iii) for purposes of
Section 5(b)(v) of the Plan, a determination that you have
been discharged for cause shall be made only where the Committee
determines that the discharge was based upon the commission of
fraud or intentional misrepresentation, embezzlement,
misappropriation or conversion of assets or opportunities of Delphi
or any Subsidiary thereof, any unauthorized disclosure of
confidential information or trade secrets of Delphi or any
Subsidiary thereof or other commission of a Section 5 Breach
(as such term is defined in the Empl
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