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Exhibit 10.197

MODEL FORM OF
STOCK OPTION GRANT NOTIFICATION AND AGREEMENT

Rollover Option Award

Participant:				Grant Date:
Number of Shares:				Option Price:
Expiration Date:				Vesting Dates:		Set forth in Exhibit B

1. Grant of Option. This option is granted pursuant to Liberty Mutual Agency Corporation 2010 Executive Long -Term Incentive Plan (the “Plan”), by Liberty Mutual Agency Corporation (the “Company”) to the Participant as an employee of _________. The Company hereby grants to the Participant as of the Grant Date (set forth above) a non-qualified stock option (the “Option”) to purchase the number of shares set forth above of the Company’s Class A common stock, $0.01 par value (“Common Stock”), at an option price per share (the “Option Price”) set forth above, pursuant to the Plan, as it may be amended from time to time, and subject to the terms, conditions, and restrictions set forth herein. The Option granted pursuant to this grant notification and award agreement (the “Award Agreement”) replaces the appreciation units that were previously granted to the Participant under the Liberty Mutual Group Inc. Executive Partnership Plan for dedicated service to the Agency Markets strategic business unit and remain outstanding as of the Grant Date (collectively, the “Appreciation Units”). Capitalized terms in this Award Agreement shall have the meaning specified in the Plan, unless a different meaning is specified herein.

2. Terms and Conditions. The terms, conditions, and restrictions applicable to the Option are specified in the Plan, this Award Agreement, including Exhibit A – Option Rules and Exhibit B – Vesting Dates, and the prospectus dated _____________ 2010, and any applicable prospectus supplement (together, the “Prospectus”). The terms, conditions and restrictions in the Plan and Prospectus include, but are not limited to, provisions relating to amendment, vesting, cancellation, and exercise, all of which are hereby incorporated by reference into this Award Agreement to the extent not otherwise set forth herein.

By accepting the Option, the Participant acknowledges receipt of the Prospectus and that he or she has read and understands the Prospectus.

The Participant understands that the Option and all other incentive awards are entirely discretionary and that no right to receive an award exists absent a prior written agreement with the Company to the contrary. The Participant also understands that the value that may be realized, if any, from the Option is contingent, and depends on the future market price of the Common Stock, among other factors. The Participant further confirms the Participant’s understanding that the Option is intended to promote employee retention and stock ownership and to align employees’ interests with those of shareholders, is subject to vesting conditions and will be cancelled if the vesting conditions are not satisfied. Thus, the Participant understands that (a) any monetary value assigned to the Option in any communication regarding the Option is contingent, hypothetical, or for illustrative purposes only, and does not express or imply any promise or intent by the Company to deliver, directly or indirectly, any certain or determinable cash value to the Participant; (b) receipt of the Option or any incentive award in the past is neither an indication nor a guarantee that an incentive award of any type or amount will be made in the future, and that absent a written agreement to the contrary, the Company is free to change its practices and policies regarding incentive awards at any time; (c) vesting may be subject to confirmation and final determination by the Committee that the vesting conditions have been satisfied; and (d) Shares received upon exercise of the Option shall be subject to lock-up restrictions as described in Section 15 of this Award Agreement. The Participant shall have no rights as a stockholder of the Company with respect to any shares covered by the Option unless and until the Option vests, is properly exercised and shares of Common Stock are issued.

3. Vesting. The Option shall vest in full and become exercisable as to the number of Shares corresponding to the Vesting Dates set forth in Exhibit B attached hereto provided the Participant remains continuously employed by

a member of the LMAC Group (as defined in Section 14 below) or an Affiliated Employer (as defined under the Plan) on such date; provided, however, that the Option shall vest and become exercisable on an accelerated basis as follows:

     (a) the Option shall vest in full immediately if the Participant dies while employed by either the LMAC Group or an Affiliated Employer;

     (b) the Option shall vest on the Vesting Dates after Retirement (as defined in Section 14 below); provided that the Participant has signed an Agreement not to Compete on or prior to such termination in a form acceptable to the Committee and the Participant is in compliance with the Agreement not to Compete on such Vesting Dates; and

     (c) the Administrator, in its sole discretion, may accelerate the vesting of all or a portion of the Option if the Participant suffers a Disability (as defined in Section 14 below).

Notwithstanding the foregoing, vesting of the Option shall be prohibited to the extent that it would violate applicable law.

4. Term. A Participant’s rights to purchase shares of Common Stock under the Option shall in all events expire not later than the applicable date(s) date set forth on Exhibit C – Term of Option, attached hereto. If the Participant has a termination of, or break in, employment prior to exercise or expiration of the Option, the Participant’s rights to exercise the vested portion of the Option shall be determined under the Option Rules set forth in Exhibit A, which shall be enforceable as if set forth in this Award Agreement. Notwithstanding the foregoing, the unvested portion of the Option as determined under Section 3 above shall expire and be permanently forfeited upon employment termination with the LMAC Group and its Affiliated Employers. For avoidance of doubt, a Participant who does not timely sign an Agreement not to Compete on or prior to Retirement as described in Section 3(b) above shall forfeit any unvested portion of his Option immediately prior to Retirement.

5. Exercise of Option.

     (a) Subject to Section 7 below, the portion of the Option that is vested under this Award Agreement may be exercised in whole or in part by the Participant upon notice to the Company in accordance with any form of exercise that may be permitted under the Plan by the Committee in its sole discretion, which satisfies in full payment of the Option Price and applicable withholding taxes; provided, however, that no part of a vested Option may be exercised prior to July 1, 2011. For avoidance of doubt, the Committee may, in its discretion, require that the Option only be exercised using a net exercise (as described under the Plan) to the extent it determines appropriate or advisable in order to prevent the Company from inadvertently ceasing to be a member of an “affiliated group” (within the meaning of Section 1504 of the Code) with Liberty Mutual Group Inc. Such notice shall be given in the manner prescribed by the Company and shall specify the date of exercise and the number of shares being exercised.

     (b) The Committee may suspend the right to exercise the Option during any period for which (1) there is no registration statement under the Securities Act of 1933, as amended, in effect with respect to the shares of Common Stock issuable upon exercise of the Option, (2) the Committee determines, in its sole discretion, that such suspension would be necessary or advisable in order to comply with the requirements of (i) any applicable federal securities law or rule or regulation thereunder; (ii) any rule of a national securities exchange, national securities association, or other self-regulatory organization; or (iii) any other federal or state law or regulation, or (3) the Committee determines, in its sole discretion, that such suspension would be necessary or advisable in order to prevent the Company from inadvertently ceasing to be a member of an “affiliated group” (within the meaning of Section 1504 of the Code) with Liberty Mutual Group Inc. (each an “Option Exercise Suspension”). Notwithstanding the foregoing, no Option Exercise Suspension shall extend the term of the Option in a manner that would result in the Option becoming nonqualified deferred compensation subject to Section 409A of the Code.

6. Compensation Recovery. The Shares subject to the Option and any proceeds realized from the sale of Shares acquired under the Option shall be subject to being recovered under any compensation recovery policy that may be adopted from time to time by the Company or any of its Affiliated Employers. For avoidance of doubt,

compensation recovery rights to Shares shall also apply against any third party who may receive the Shares from the Participant by voluntary transfer or otherwise.

7. Taxes. The exercise of the Option is conditioned on the Participant making arrangements reasonably satisfactory to the Company for the withholding of all applicable federal, state, local or foreign taxes as may be required under applicable law. The Participant shall bear all expense of, and be solely responsible for, all federal, state, local or foreign taxes due with respect to any payment received under the Agreement. The Committee, in its sole discretion, may satisfy the Participant’s withholding tax obligations by reducing the amount of Common Stock to which the Participant is entitled under the Award.

8. Consent to Electronic Delivery. In lieu of receiving documents in paper format, the Participant agrees, to the fullest extent permitted by law, to accept electronic delivery of any documents that the Company may be required to deliver (including, but not limited to, prospectuses, prospectus supplements, grant or award notifications and agreements, account statements, annual and quarterly reports, and all other agreements, forms and communications) in connection with this and any other prior or future incentive award or program made or offered by the Company or its predecessors or successors. Electronic delivery of a document to the Participant may be via a Company e-mail system or by reference to a location on a Company intranet site to which the Participant has access.

9. Administration. In administering the Plan, or to comply with applicable legal, regulatory, tax, or accounting requirements, it may be necessary for a member of the LMAC Group to transfer certain Participant data to another member of the LMAC Group, an Affiliated Employer, or to its outside service providers or governmental agencies. By accepting the Option, the Participant consents, to the fullest extent permitted by law, to the use and transfer, electronically or otherwise, of the Participant’s personal data to such entities for such purposes.

10. Entire Agreement/Amendment/Survival/Assignment. The terms, conditions and restrictions set forth in the Plan, this Award Agreement and the Prospectus, constitute the entire understanding between the parties hereto regarding the Option and supersede all previous written, oral, or implied understandings between the parties hereto about the subject matter hereof. This Award Agreement may be amended by a subsequent writing (including e-mail or other electronic form) agreed to between the Company and the Participant. Section headings herein are for convenience only and have no effect on the interpretation of this Award Agreement. The provisions of this Award Agreement that are intended to survive a Participant’s termination of employment shall survive such date. The Company may assign this Award Agreement and its rights and obligations hereunder to any current or future member of the LMAC Group or an Affiliated Employer.

11. No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment with the LMAC Group or an Affiliated Employer for a definite period of time. The employment relationship is “at will,” which affords the Participant or the Company the right to terminate the relationship at any time for any reason or no reason not otherwise prohibited by applicable law. The LMAC Group retains the right to decrease the Participant’s compensation and/or benefits, transfer or demote the Participant or otherwise change the terms or conditions of the Participant’s employment.

12. Transfer Restrictions. The Participant may not sell, assign, transfer, pledge, encumber or otherwise alienate, hypothecate or dispose of the Option or the Participant’s right under the Option to receive shares of Common Stock, except as otherwise provided in the Committee’s sole discretion consistent with the Plan and applicable securities laws.

13. Conflict. This Award Agreement is subject to the terms and provisions of the Plan, including but not limited to the adjustment provisions under Section 12 of the Plan. In the event of a conflict between the Plan, this Award Agreement and/or the Prospectus, the documents shall control in that order (that is, the Plan, this Award Agreement and then the Prospectus).

14. Definitions. For purposes of this Award Agreement, the following terms shall be as defined below:

     (a) “Disability” shall mean a physical or mental condition of an apparently permanent nature which prevents a Participant from performing the principal duties of the Participant’s regular occupation with the Company or an Affiliated Employer, as determined to the sole satisfaction of the Committee.

     (b) “LMAC Group” shall mean the Company and its direct and indirect subsidiaries.

     (c) “Retirement” shall mean the Participant’s termination of employment with the LMAC Group on or following the date that the Participant has both attained age 55 and completed five years of continuous service with the LMAC Group and its Affiliated Employers (including but not limited to Liberty Mutual Group Inc.) since the Participant’s most recent date of hire with Liberty Mutual Group Inc. prior to the date of this Award.

     (d) “Termination Date” shall mean the Participant’s “separation from service” with the LMAC Group and its Affiliated Employers (whether voluntary or involuntary) within the meaning of Section 409A of the Code. References to “terminate employment” or “termination of employment” mean the cessation of the Participant’s services with the LMAC Group and the Affiliated Employers on the Termination Date.

15. Lock-up Restriction The Participant agrees that, if the Company proposes to offer for sale any Shares pursuant to a public offering under the Securities Act of 1933 and if requested by the Company and any underwriter engaged by the Company for a reasonable period of time specified by the Company or such underwriter following the effective date of the registration statement filed with respect to such offering, the Participant will not, directly or indirectly, offer, sell, pledge, contract to sell (including any short sale), grant any option to purchase, or otherwise dispose of any securities of the Company held by the Participant or enter into any Hedging Transaction (as defined below) relating to any securities of the Company held by the Participant. For purposes of this Section, a “Hedging Transaction” means any short sale (whether or not against the box) or any purchase, sale or grant of any right (including, without limitation, any put or call option) with respect to any security (other than a broad-based market basket or index) that includes, relates to or derives any significant part of its value from the Shares.

16. Governing Law. This Award Agreement shall be legally binding and shall be executed and construed and its provisions enforced and administered in accordance with the laws of the Commonwealth of Massachusetts.

[Signature Page to Follow]

     IN WITNESS WHEREOF, the Company by one of its duly authorized officers has executed this Award Agreement as of the day and year first above written.

     Please indicate your acceptance of the terms and conditions of this Award Agreement by signing in the space provided below and returning a signed copy of this Award Agreement to the Company. IF A FULLY EXECUTED COPY OF THIS AWARD AGREEMENT HAS NOT BEEN RECEIVED BY THE COMPANY BY _____________ __, ____, THE OPTION UNDER THIS AWARD AGREEMENT SHALL BE CANCELLED.

BY SIGNING BELOW, YOU AGREE THAT THE OPTION UNDER THIS AWARD AGREEMENT SATISFIES IN FULL ANY RIGHT OR INTEREST THAT YOU MAY HAVE HAD OR MAY HAVE, AS OF THE EFFECTIVE DATE OF THIS AWARD AGREEMENT, WITH RESPECT TO ANY APPRECIATION UNITS PREVIOUSLY GRANTED UNDER THE LIBERTY MUTUAL GROUP INC. EXECUTIVE PARTNERSHIP PLAN. YOU FURTHER ACKNOWLEDGE AND AGREE THAT YOU HAVE RECEIVED A COPY OF THE PLAN AND ARE FAMILIAR WITH THE TERMS AND PROVISIONS THEREOF, INCLUDING THE TERMS AND PROVISIONS OF THIS AWARD AGREEMENT. YOU HAVE REVIEWED THE PLAN AND THIS AWARD AGREEMENT IN THEIR ENTIRETY, HAVE HAD AN OPPORTUNITY TO OBTAIN THE ADVICE OF COUNSEL PRIOR TO EXECUTING THIS AWARD AGREEMENT AND FULLY UNDERSTAND ALL PROVISIONS OF THIS AWARD AGREEMENT. FINALLY, YOU HEREBY AGREE TO ACCEPT AS BINDING, CONCLUSIVE AND FINAL ALL DECISIONS OR INTERPRETATIONS OF THE ADMINISTRATOR UPON ANY QUESTIONS ARISING UNDER THE PLAN OR THIS AWARD AGREEMENT.

The undersigned hereby accepts, and agrees to, all terms and provisions of this Award Agreement, and the Plan as they pertain hereto.

EXHIBIT A — Option Rules

To Stock Option Grant Notification and Agreement

When you terminate covered employment

References to “you” or “your” are to the Participant. If you terminate your employment or if there is a break in your employment, your Option may be cancelled before the end of the vesting period and the vesting and exercisability of your Option may be affected.

The provisions in the chart below apply to the Option granted to you in this Award Agreement under the Plan.

If any Option exercisability period set forth in the chart below would otherwise expire during an Option Exercise Suspension (as defined in Section 5(b) of the Award Agreement), the Option shall remain exercisable for a period of 30 days after the Option Exercise Suspension is lifted by the Company (but no later than the original option expiration date, which is the tenth (10th) anniversary of the Grant Date).

To the extent that the Option became vested on or before June 30, 2011 and could not be exercised until on or after July 1, 2011 under Section 5(a) of the Award Agreement, the Option shall remain exercisable until August 1, 2011.

If you:		Here’s what happens to Your Option:
Resign (other than due to Retirement)		Vesting stops and the unvested portion of your Option is cancelled effective on the Termination Date. You may exercise the vested portion of your Option for up to 90 days after the Termination Date but no later than the original option expiration date.
Incur a Disability		Any portion of your Option which vests under Section 3(c) of this Award Agreement may be exercised for up to one year after Disability, but no later than the original option expiration date.
Take an approved personal leave of absence		For the first six (6) months of an approved personal leave, vesting continues. If the approved leave exceeds six (6) months, vesting is suspended until you return to work and remain actively employed for 30 calendar days, after which time vesting will be restored retroactively. The vested portion of your Option may be exercised during approved leave, but no later than the original option expiration date. If you terminate employment for any reason during the first year of an approved leave, the termination of employment provisions will apply. If the leave exceeds one year, your Option will be cancelled immediately.
Are on an approved family and medical leave, military leave, or other statutory leave of absence		Your Option will continue to vest on schedule, and you may exercise the vested portion of your Option during the leave but no later than the original option expiration date.
Die while employed		Your Option shall fully vest upon death. Your estate may exercise your Option for up to one year from your death but no later than the original option expiration date.
Terminate employment involuntarily by action of the Company		Vesting stops on the Termination Date. You may exercise any vested portion of your Option for up to 90 days after the Termination Date but no later than the original option expiration date.

If you:		Here’s what happens to Your Option:
Terminate Employment due to Retirement		The portion of your Option which vests on a Vesting Date because you meet the requirements of Section 3(b) of this Award Agreement will be exercisable for up one year after such Vesting Date, but no later than the original option expiration date, provided that you do not violate your Agreement not to Compete. For example, if your Retirement occurs on January 1, 2011 and you have a Vesting Date of May 15, 2011, the Shares that vested on May 15, 2011 under Section 3(b) of the Award Agreement will be exercisable until March 14, 2012.
		When you exercise any portion of the Option which becomes vested due to Retirement, your exercise will represent and constitute your certification to the Company that you have not engaged in any activities that violate the Agreement not to Compete since your Termination Date. You may be required to provide the Company with other evidence of your compliance with the Agreement not to Compete as the Company may require in its discretion.

EXHIBIT B — Vesting Dates

This Exhibit B sets forth the Vesting Dates under the Option and the number of Shares applicable to the Vesting Dates. Whether and how you may be eligible to purchase Shares on a Vesting Date under the Option is determined under the terms and conditions of the Award Agreement.

Vesting Dates		Number of Shares
Grant Date

EXHIBIT C — Term of Option

Option Tranche		Number of Shares		Option Expiration Date