Form of Non-Qualified Stock Option Agreement under The Hanover Insurance Group 2014 Long-Term Incentive Plan for Chief Financial Officer

Grant of Option.  The Administrator hereby grants to Participant a non-statutory stock option (the “Stock Option”) to purchase <NUMBER OF OPTIONS> shares of Stock (the “Shares”), for a price of <GRANT PRICE> per share (the “Option Price”), which is not less than the per-Share fair market value on the Grant Date.  The Stock Option is intended to be, and is hereby designated, a non-statutory option that does not qualify as an incentive stock option as defined in Section 422.

Expiration of Option.  To the extent not earlier terminated, forfeited or expired, the Stock Option shall automatically terminate and cease being exercisable on the tenth anniversary of the Grant Date (the “Expiration Date”).  

Vesting.  Subject to the terms of this Agreement and the Plan, and provided Participant remains continuously an Employee of the Company or one of its Affiliates (the Company and its Affiliates hereinafter referred to as “THG”) through the applicable vesting date except as set forth in Section 4 below, the Stock Option shall vest and become exercisable in the following cumulative installments:

As to one third (33.33%) of the total number of Shares, on the first anniversary of the Grant Date;

As to an additional one third (33.33%) of the total number of Shares, on the second anniversary of the Grant Date; and

As to the remaining Shares, on the third anniversary of the Grant Date.  

Termination of Employment and Other Events.  

Termination for Cause.  If Participant's Employment is terminated for “Cause” (as defined in Section 20) or occurs in circumstances that would have constituted grounds for Participant’s Employment to be terminated for Cause, effective immediately prior to such termination, the Stock Option, whether or not vested, shall be automatically cancelled and forfeited and shall be returned to the Company for no consideration.

Voluntary Termination. If Participant voluntarily terminates his Employment (other than for “Good Reason” (as defined in Section 20) or Retirement (as defined in Section 4(f)), effective immediately

prior to such termination, any portion of the Stock Option that is not then vested shall be automatically cancelled and forfeited and shall be returned to the Company for no consideration, and such portion of the Stock Option that is then vested and exercisable shall remain exercisable until the earlier of (i) three (3) months following the date of termination, or (ii) the Expiration Date.

Disability.  If Participant is Disabled prior to the date this Stock Option becomes fully vested and exercisable pursuant to Section 3 of this Agreement, this Stock Option, to the extent then outstanding and unvested, shall automatically vest in full and become exercisable on the date Participant is Disabled. To the extent all or any portion of this Stock Option is outstanding and exercisable on the date Participant is Disabled (after giving effect to the preceding sentence), the Stock Option (or portion thereof) shall remain exercisable until the earlier of (x) one (1) year following the date Participant is Disabled, or (y) the Expiration Date. For purposes of this subsection, Participant shall be “Disabled” if he has been unable, for a period of twelve consecutive months, to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment and has been receiving income replacement benefits for a period of twelve consecutive months under the Company’s Long-Term Disability Program.  The date that Participant is Disabled for purposes of this Agreement is the twelve-month anniversary of the date Participant commences receiving such benefits under the Company’s Long-Term Disability Program.  

Death.  If Participant’s Employment is terminated due to his death prior to the date this Stock Option becomes fully vested and exercisable pursuant to Section 3 of this Agreement, this Stock Option to the extent the outstanding and unvested shall automatically vest in full and become exercisable on the date of Participant’s death. To the extent all or any portion of the Stock Option is outstanding and exercisable on the date Participant dies (determined after giving effect to the preceding sentence), the Stock Option (or portion thereof) shall remain exercisable until the earlier of (x) one (1) year following the date Participant dies, or (y) the Expiration Date.  

Covered Transaction/Change in Control. In the event of a Covered Transaction (other than a Change in Control, whether or not it is a Covered Transaction), the Administrator shall, with respect to the Stock Option, take one of the actions set forth in Sections 7(a)(1), 7(a)(2) or 7(a)(3) of the Plan. Notwithstanding the terms of the Plan, in the event of a Change in Control (whether or not it is a Covered Transaction), the following rules shall apply:  

Retirement. If, prior to the date this Stock Option becomes fully vested and exercisable pursuant to Section 3 of this Agreement, Participant’s Employment terminates as a result of his Retirement, (i) a prorated portion (as determined below) of the Stock Option shall automatically vest on the date of such termination due to Retirement, and (ii) the remaining unvested portion of the Stock Option shall be automatically canceled and forfeited and returned to the Company for no consideration. To the extent all or any portion of the Stock Option is outstanding and exercisable on the date of Participant’s Retirement (determined after giving effect to the preceding sentence), the Stock Option (or portion thereof) shall remain exercisable until the earlier of (x) three (3) years following the date of such Retirement, or (y) the Expiration Date.  For purposes of this subsection, the prorated portion of the Stock Option that vests on the date of Participant’s Retirement shall be determined by (A) dividing the number of days of Participant’s Employment since the Grant Date prior to such Retirement by 1,096, (B) multiplying the percentage determined under clause (A) by the number of Shares subject to the Stock Option, and then (C) deducting from the resulting number of Shares the number of Shares subject to the Stock Option that had already vested prior to such Retirement, with the number of Shares that vest rounded up to the nearest whole Share.  

Involuntary/Constructive Termination. In the event Participant’s Employment is terminated by the Company (other than as a result of, or in connection with, the events set forth above in this Section 4), or Participant terminates Employment for Good Reason, effective immediately prior to such termination, subject to the last sentence of this Section 4(g), the portion of the Stock Option that would have vested under Section 3 had Participant remained employed during the twelve (12)-month period following the date of such termination of Employment shall automatically vest as of the date of such termination of Employment (such accelerated vesting, the “Vesting Credit”), and after the application of such Vesting Credit, any portion of the Stock Option that is not then vested shall be automatically cancelled and forfeited and be returned to the Company for no consideration, and such portion of the

Stock Option that is then vested (including any such additional Stock Options that vest as a result of the Vesting Credit) shall remain exercisable until the earlier of (i) three (3) months following the date of termination, or (ii) the Expiration Date. Any entitlement to the Vesting Credit is expressly conditioned on, and shall only be effective upon, Participant’s execution of the separation agreement required pursuant to Section 7 of that certain Offer Letter dated September 21, 2016, by and between the Company and Participant (the “Offer Letter”).

Notice of Exercise and Payment for Shares.  This Stock Option may be exercised by Participant or, if appropriate, Participant’s legal representative, estate or beneficiary, by giving written notice to the Administrator stating the number of Shares to be purchased.  Such notice must be accompanied by payment in full of the Option Price for the Shares to be purchased.

Delivery of Shares.  Upon receipt of notice and payment as provided hereunder, the Company shall make delivery of the Shares for which the Stock Option was exercised within a reasonable period, but in no event later than 30 days thereafter.

Non-Hire/Solicitation/Confidentiality/Code of Conduct.  As a condition of Participant’s eligibility to receive this Stock Option and regardless of whether such Stock Option vests or is exercised, Participant agrees that he or she will (a) not, directly or indirectly, during the term of Participant’s Employment, and for a period of one year (two years if terminate Employment by reason of Retirement) thereafter, hire, solicit, entice away or in any way interfere with THG’s relationship with, any of its officers or employees, or in any way attempt to do so or participate with, assist or encourage a third party to do so, (b) neither disclose any of THG’s confidential and proprietary information to any third party, nor use such information for any purpose other than for the benefit of THG and in accordance with THG’s policies; (c) not, during the term of Participant’s Employment, and for a period of one year (two years if terminate Employment by reason of Retirement) thereafter, interfere with or seek to interfere with, THG’s relationships with any of its policyholders, customers, clients, agents or vendors; and (d) at all times comply with (i) THG’s Code

of Conduct and other policies and procedures as in effect from time to time, and (ii) any non-competition, non-disclosure, non-solicitation or similar agreement he or she may have with the Company or any of its Affiliates.  The terms of this Section 7 shall survive the expiration or earlier termination of this Agreement.

Specific Performance/Damages.

Participant hereby acknowledges and agrees that in the event of any breach of Section 7 of this Agreement, the Company would be irreparably harmed and could not be made whole by monetary damages.  Participant accordingly agrees to waive the defense in any action for injunctive relief or specific performance that a remedy at law would be adequate and that the Company, in addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to an injunction or to compel specific performance of Section 7 of this Agreement.

In addition to any other remedy to which the Company may be entitled at law or in equity (including the remedy provided in the preceding paragraph), Participant hereby acknowledges and agrees that in the event of any breach of Section 7 of this Agreement, Participant shall be required to refund to the Company the value received by Participant upon exercise of the Stock Option measured by the amount that the “Stock Value” exceeds the Option Price paid on exercise of the Stock Option; provided, however, that the Company makes any such claim, in writing, against Participant alleging a violation of Section 7 of this Agreement not later than two years following Participant’s termination of Employment.  For purposes of this Agreement, the Stock Value shall be the sale price of the Shares issued upon exercise of the Stock Option, if and to the extent such Shares were sold on the date of such exercise; otherwise, the Stock Value shall be the closing price of Shares as reported on the New York Stock Exchange (or such other exchange or facility as is determined by the Administrator if the Shares are not then traded on the New York Stock Exchange) on the date of the exercise of the Stock Option.

Successors.  The provisions of this Agreement will benefit and will be binding upon the permitted assigns, successors in interest, personal representatives, estates, heirs and legatees of each of the parties hereto. However, the Stock Option is non-assignable, except as may be permitted by the Plan.

Interpretation.  The terms of the Stock Option are as set forth in this Agreement and in the Plan. The Plan is incorporated into this Agreement by reference, which means that this Agreement is limited by and subject to the express terms and provisions of the Plan. In the event of a conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.

Facsimile or Electronic Signature.  The parties may execute this Agreement by means of a facsimile or electronic signature.

Entire Agreement; Counterparts.  This Agreement, the Plan and the Offer Letter contain the entire understanding between the parties concerning the subject contained in this Agreement.  Except for the Agreement, the Plan and the Offer Letter, there are no representations, agreements, arrangements, or understandings, oral or written, between or among the parties hereto, relating to the subject matter of this Agreement, that are not fully expressed herein.  This Agreement may be signed in one or more counterparts, all of which shall be considered one and the same agreement.

Further Assurances.  Each party to this Agreement agrees to perform all further acts and to execute and deliver all further documents as may be reasonably necessary to carry out the intent of this Agreement.  

Severability.  In the event that any of the provisions, or portions thereof, of this Agreement are held to be unenforceable or invalid by any court of competent jurisdiction, the validity and enforceability of the remaining provisions, or portions thereof, will not be affected, and such unenforceable provisions shall be automatically replaced by a provision as similar in terms as may be valid and enforceable.

Construction.  Whenever used in this Agreement, the singular number will include the plural, and the plural number will include the singular, and the masculine or neuter gender shall include the masculine, feminine,

or neuter gender.  The headings of the Sections of this Agreement have been inserted for purposes of convenience and shall not be used for interpretive purposes.  The Administrator shall have full discretion to interpret and administer this Agreement.  Any actions or decisions by the Administrator in connection with this Agreement shall be conclusive and binding upon Participant.

No Effect on Employment.  Nothing contained in this Agreement shall be construed to limit or restrict the right of THG to terminate Participant’s Employment at any time, with or without cause, or to increase or decrease Participant’s compensation from the rate of compensation in existence at the time this Agreement is executed.

Taxes.  The exercise of this Stock Option will give rise to “wages” subject to withholding.  Participant expressly acknowledges and agrees that Participant’s rights hereunder, including the right to be issued Shares upon exercise, are subject to Participant promptly remitting to the Company in cash (or by such other means as may be acceptable to the Administrator in its discretion) any amounts determined by the Company to be required to be withheld. No Shares will be transferred pursuant to the exercise of this Stock Option unless and until the person exercising this Stock Option has remitted to the Company an amount sufficient to satisfy any federal, state, or local withholding tax requirements, or has made other arrangements satisfactory to the Company with respect to such taxes.  Participant authorizes the Company to withhold such amount from any amounts otherwise owed to Participant. The Company may, at its option, withhold a sufficient number of Shares to satisfy the minimum federal, state and local tax withholding due (or such greater amount as would not result in adverse accounting consequences to the Company, as determined by, and in the sole discretion of, the Company) and remit the balance of the Shares to Participant.  If this Stock Option is automatically exercised as provided in the last paragraph of Section 5 above or if Participant pays the Option Price through a “net exercise” of this Stock Option as provided by Section 5 above, the minimum federal, state and local tax withholding due in connection with the exercise of this Stock Option shall be satisfied by the Company withholding a sufficient number of Shares to satisfy with minimum federal, state and local tax withholding due (or such greater amount as would not result in adverse accounting consequences to the Company, as determined by, and in the sole discretion of, the Company).  

The Company makes no representations to Participant with respect to the tax treatment of any amount paid or payable pursuant to this Award.  While this Award is intended to be interpreted and operated to the extent possible so that any such amounts shall be exempt from the requirements of Section 409A, in no event shall the Company be liable to Participant for or with respect to any taxes, penalties and/or interest which may be imposed upon any such amounts pursuant to Section 409A or any other federal or state tax law.  To the extent that any such amount should be subject to Section 409A (or any other federal or state tax law), Participant shall bear the entire risk of any such taxes, penalties and or interest.

Waiver of Jury Trial.  By accepting this Award under the Plan, Participant waives any right to a trial by jury in any action, proceeding or counterclaim concerning any rights under (a) the Plan, (b) any Award, or (c) any amendment, waiver, consent, instrument, document or other agreement delivered or which in the future may be delivered in connection with any of the foregoing, and agrees that any such action, proceedings or counterclaim shall be tried before a court and not before a jury.

Additional Restrictions.  The Administrator may cancel, rescind, withhold or otherwise limit or restrict the Stock Options (in whole or in part) at any time if Participant is not in compliance with all applicable provisions of this Agreement and the Plan, or if Participant breaches any agreement with THG, including with respect to the Code of Conduct or other policies of THG, or any non-competition, non-solicitation, confidentiality or other similar provisions.  Without limiting the generality of the foregoing, the Administrator may recover the Stock Options and payments under or gain in respect thereto to the extent required to comply with Section 10D of the Securities Exchange Act of 1934, as amended, or any stock exchange or similar rule adopted under said Section.  In addition, rights, payments and benefits under this Award shall be subject to repayment to, or recoupment by, THG in accordance with any clawback or recoupment policies and procedures that THG may adopt from time to time.

Definitions.  As used herein, the terms “Cause” and “Good Reason” shall have the meanings set forth in the Offer Letter.

Notice and Opportunity to Cure.  In the event Participant believes that a “Good Reason” event has been triggered, Participant must give the Company written notice within 30 days of the first occurrence of such triggering event and a proposed termination date which shall be not sooner than 60 days nor later than 90 days after the date of such notice. Such notice shall specify Participant’s basis for determining that “Good Reason” has been triggered.  The Company shall have the right to cure a purported “Good Reason” within 30 days of receipt of said notice and, if so cured, a termination of Participant’s Employment shall not be considered to be for “Good Reason” as a result of such event. To the extent that the Company does not cure such event within this thirty (30) day period, Participant shall be required to terminate his Employment within the time frame set forth in his notice in order to have his termination of Employment treated as a Good Reason termination hereunder.