Exhibit 10.31

 

Please review this agreement and scroll to the bottom to accept or to return to
the Equity Compensation Web.

 

TRAVELERS
PERFORMANCE SHARE AWARD NOTIFICATION AND AGREEMENT

 

(THIS AWARD MUST BE ACCEPTED BY 11:59 P.M. ON                       , OR IT WILL
BE FORFEITED. REFER BELOW TO SECTION 17.)

 

Participant:                  XXXXXX

Grant Date:

xxx

Number of Performance Shares: XXX

Performance Period:

 

1.                                      Grant of Performance Shares. This
performance share award is granted pursuant to The Travelers Companies, Inc.
Amended and Restated 2004 Stock Incentive Plan (the “Plan”), by The Travelers
Companies, Inc. (the “Company”) to you as an employee of the Company or an
affiliate of the Company (together, the “Travelers Group”). The Company hereby
grants to the Participant as of the Grant Date an award (“Award”) for the
initial number of Performance Shares 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.

 

2.                                      Terms and Conditions. The terms,
conditions, and restrictions applicable to the Award are specified in the Plan,
this grant notification and agreement, including Exhibits A, B and C (the “Award
Agreement”), and the prospectus dated February 3, 2009 (titled “Travelers Equity
Awards”) and any applicable prospectus supplement (together, the “Prospectus”).
The terms, conditions and restrictions in the Plan and the Prospectus include,
but are not limited to, provisions relating to amendment, vesting, cancellation
and settlement, all of which are hereby incorporated by reference into this
Award Agreement to the extent not otherwise set forth herein.

 

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

 

The Participant understands that the Award 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 Award is
contingent, and depends on the future financial performance of the Company,
among other factors. The Participant further confirms his or her understanding
that the Award is intended to promote employee retention and stock ownership and
to align employees’ interests with those of shareholders, is subject to
performance conditions and will be cancelled if the performance conditions are
not satisfied. Thus, the Participant understands that (a) any monetary value
assigned to the Award in any communication regarding the Award 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 Award
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; and (c)
performance may be subject to confirmation and final determination by the
Company’s Board of Directors or its Compensation Committee (the “Committee”)
that the performance conditions have been satisfied. The Participant shall have
no rights as a stockholder of the Company with respect to any shares covered by
the Award unless and until the Award is vested and settled in shares of Common
Stock.

 

--------------------------------------------------------------------------------

 

3.                                      Performance Period. For purposes of the
Award, the Performance Period shall be defined as the three-year period
commencing                              and ending                             .

 

4.                                      Vesting. The Award shall vest in full on
the last day of the Performance Period, provided the Participant remains
continuously employed within the Travelers Group. If the Participant has a
termination of, or break in, employment prior to the last day of the Performance
Period, the Participant’s rights are determined under the Award Rules of Exhibit
A.

 

5.                                      Settlement of Award. The number of
Performance Shares vested (which shall include any additional Performance Shares
credited to the Participant’s account pursuant to Section 6) shall be calculated
based on the Performance Share Vesting Grid set forth in Exhibit B. The Company
shall deliver to the Participant, subject to any certification of satisfaction
of the performance goal as required by the Plan in order to comply with Section
162(m) of the Internal Revenue Code, a number of shares of Common Stock equal to
the number of vested Performance Shares on January 1 of the year following the
end of the Performance Period or as soon as administratively practicable
thereafter (but no later than March 15 of the year following the end of the
Performance Period). The number of shares of Common Stock delivered to the
Participant shall be reduced by a number of shares of Common Stock having a Fair
Market Value on the date of delivery equal to the tax withholding obligation,
unless the Plan administrator is notified in advance of the Award settlement and
the Participant elects another method for tax withholding.

 

6.                                      Dividend Equivalents. The Participant
shall be entitled to receive additional Performance Shares with respect to any
cash dividends declared by the Company. The number of additional Performance
Shares shall be determined by multiplying the number of Performance Shares
credited to the Participant’s account (which shall include the number of
Performance Shares set forth above, plus any Performance Shares credited in
connection with dividend payments under this Section 6), times the dollar amount
of the cash dividend per share of Common Stock, and then dividing by the Fair
Market Value of the Common Stock as of the dividend payment date. The
Participant’s right to any Performance Shares credited to the Participant’s
account in connection with dividends shall vest in the same manner described in
Section 4. As described in Section 5, such additional Performance Shares shall
be included in the total number of Performance Shares credited to the
Participant’s account for purposes of applying the Performance Share Vesting
Grid.

 

7.                                      Acceptance of Exhibit A – Award Rules.
The Participant agrees to be bound by the terms of the Award Rules set forth in
Exhibit A (“Award Rules”).

 

8.                                      Acceptance of Exhibit C – Principles of
Employment Agreement. The Participant agrees to be bound by the terms of the
Principles of Employment Agreement (including all later versions thereof which
the Participant may agree to at a later time; for example, as an exhibit to a
subsequent equity grant), the current version of which is attached hereto as
Exhibit C (the “POE Agreement”).

 

9.                                      Acceptance of Non-Solicitation
Conditions. The Participant agrees to be bound by the following conditions (the
“Non-Solicitation Conditions”):

 

(a)                                  The Company and the Participant understand,
intend and agree that the Non-Solicitation Conditions of this Section 9 are
intended to protect the Travelers Group against the Participant raiding its
employees and/or its business during the twelve (12) month period (the
“Restricted Period”) following the date of the conclusion of the Participant’s
employment with the Travelers Group (whether voluntary or involuntary) as
reflected on the books and records of the

 

--------------------------------------------------------------------------------

 

Travelers Group (the “Termination Date”), while recognizing that after the
Termination Date, the Participant is still permitted to freely compete with the
Travelers Group, except to the extent “Confidential Information” (which means
any technical or business information developed by, for, or at the expense of
the Travelers Group, or assigned or entrusted to the Travelers Group, unless
such information is generally known outside of the Travelers Group) is used in
such solicitation and subject to certain restrictions set forth below. Further,
nothing in this Section 9 is intended to grant or limit any rights or claims as
to any future employer of the Participant.

 

(b)                                 During the Restricted Period, the
Participant will not seek to recruit or solicit, or assist, participate in or
promote the recruiting or solicitation of, interfere with, attempt to influence
or otherwise affect the employment of any person who was or is employed by the
Travelers Group at any time during the last three months of the Participant’s
employment or during the Restricted Period. Further, the Participant shall not,
on behalf of himself or herself or any other person, hire, employ or engage any
such person. The Participant shall not directly engage in the aforesaid conduct
through a third party for the purpose of colluding to avoid the restrictions in
this Section 9. However, the Non-Solicitation Conditions do not preclude the
Participant from directing a third party (including but not limited to employees
of his/her subsequent employer or a search firm) to broadly solicit, recruit,
and hire individuals, some of whom may be employees of the Travelers Group,
provided that the Participant does not specifically direct such third party
specifically to target employees of the Travelers Group generally or specific
individual employees of the Travelers Group.

 

(c)                                  If, after the Termination Date, the
Participant accepts a position as an employee, consultant or contractor with a
direct competitor of the Company, then, during the Restricted Period, the
Participant will not use Confidential Information to seek to recruit or solicit,
or assist, participate in or promote the recruiting or solicitation of,
interference with, attempt to influence or otherwise affect any person or entity
who is a client, customer, policyholder, or agent of the Travelers Group, to
discontinue business with the Travelers Group, and/or move that business
elsewhere. The Participant also agrees not to be directly and personally
involved in the negotiation, competition for, solicitation or execution of any
individual book roll over(s) or other book of business transfer arrangements
involving the transfer of business away from Travelers Group, at any time after
the Termination Date, even if Confidential Information is not involved. The
Participant may, at any time after the Termination Date, direct a third party
(including but not limited to employees of his/her subsequent employer) to
negotiate,  compete for, solicit and execute such book roll over(s) or other
book of business transfer arrangements, provided that (i) Confidential
Information is not involved, (ii) the Participant is not personally and directly
involved in such activities, and (iii) the Participant does not direct such
third party specifically to target agents of Travelers Group.

 

(d)                                 Subject to the non-competition obligations
in the Award Rules that apply to Participants meeting the “Retirement Rule,” at
any time after the Termination Date, the Participant may otherwise freely
compete with the Travelers Group, including but not limited to competing on an
account by account or deal by deal basis, to the extent that he or she does not
violate the provisions of subsection (c) above.

 

--------------------------------------------------------------------------------

 

10.                               Forfeiture of Performance Share Award.

 

(a)                                   Participant acknowledges and agrees as
follows:

 

(i)                                       The Participant acknowledges that the
receipt of the Award constitutes good, valuable and independent consideration
for the Participant’s acceptance of and compliance with the provisions of the
Award Agreement, including the forfeiture and recapture provision below, the
Non-Solicitation Conditions and the POE Agreement.

 

(ii)                                    To the extent that the terms of the POE
Agreement attached hereto as Exhibit C differ from the terms of any prior POE
Agreement (or similar agreement) that the Participant has agreed to in
connection with any prior equity grant by the Company, the Participant
understands that his or her acceptance of the Award will result in the terms of
the POE Agreement attached hereto as Exhibit C applying under his or her prior
equity grant(s) as well as the current Award.

 

(b)                                 The Participant agrees that, during the term
of his or her employment with the Travelers Group and during the Restricted
Period, if the Participant breaches the Non-Solicitation Conditions and/or the
POE Agreement, in addition to all rights and remedies available to the Company
at law and in equity (including without limitation those set forth in the Award
Rules for involuntary termination), the Participant will immediately forfeit any
award issued pursuant to this Award Agreement that has not yet been paid,
exercised or vested. The Company may also recapture from the Participant any and
all compensatory value that the Participant received for the last twelve (12)
months of his or her employment and through the end of the Restricted Period
from any such award (including without limitation the amount of any cash payment
made to the Participant upon exercise or settlement of the award, and/or the
amount included as compensation in the taxable income of the Participant upon
vesting or exercise of the award). The Participant will promptly pay the full
amount due upon demand by the Company, in the form of cash or shares of Common
Stock at current fair market value.

 

(c)                                  The forfeiture and recapture remedies under
paragraph (b) shall not limit or modify the Company’s rights and remedies with
respect to any breaches of the Award Agreement at any time after the end of the
Restricted Period.

 

(d)                                 The Award Rules provide a right to payment,
subject to certain conditions, following the Participant’s Termination Date if
the Participant meets the Retirement Rule which, among other conditions,
requires that the Participant not engage in any activities that complete with
the business operations of the Travelers Group through the settlement date of
the Award (such non-compete condition may extend beyond the Restricted Period).
The remedies for a violation of such non-compete conditions are specified in the
Award Rules and are in addition to any remedies of the Travelers Group under
this Section 10.

 

11.                               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.

 

--------------------------------------------------------------------------------

 

12.                               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 Travelers Group to transfer certain
Participant data to another member of the Travelers Group, or to its outside
service providers or governmental agencies. By accepting the Award, the
Participant consents, to the fullest extent permitted by law, to the use and
transfer, electronically or otherwise, of his or her personal data to such
entities for such purposes.

 

13.                               Entire
Agreement/Amendment/Survival/Assignment. The terms, conditions and restrictions
set forth in the Plan, this Award Agreement, the Prospectus, and POE Agreement
in effect from time to time, as later agreed to by the Participant, and other
Company policies in effect from time to time relating to the Plan, constitutes
the entire understanding between the parties hereto regarding the Award and
supersedes 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 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 the Award Agreement that are intended to survive
the Termination Date of a Participant 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 Travelers Group.

 

14.                               No Right to Employment. The Participant agrees
that nothing in this Award Agreement constitutes a contract of employment with
the Company for a definite period of time. The employment relationship is “at
will,” which affords the Participant or the Travelers Group the right to
terminate the relationship at any time for any reason or no reason not otherwise
prohibited by applicable law. The Travelers 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 with the Travelers Group.

 

15.                               Transfer Restrictions. The Participant may not
sell, assign, transfer, pledge, encumber or otherwise alienate, hypothecate or
dispose of the Award or his or her right hereunder to receive any Performance
Shares, except as otherwise provided in the Prospectus.

 

16.                               Conflict. In the event of a conflict between
the Plan, the Award Agreement and/or the Prospectus, the documents shall control
in that order (that is, the Plan, the Award Agreement and the Prospectus).

 

17.                               Acceptance and Agreement by the Participant;
Forfeiture upon Failure to Accept. By clicking the button after the text of
Exhibit C, the Participant accepts the Award and agrees to be bound by the
terms, conditions, and restrictions set forth in the Award Agreement. The
Participant’s rights under the Award will lapse at 12:00 a.m. on
                , and the Award will be forfeited on such date if the
Participant does not accept the Award by clicking the button on or before 11:59
p.m. on                   . For the avoidance of doubt, the Participant’s
failure to accept the Award Agreement shall not affect his or her continuing
obligations under any other agreement between the Company and the Participant.

 

--------------------------------------------------------------------------------

 

EXHIBIT A—Award Rules

To Travelers’ Performance Share Award Notification and Agreement

 

WHEN YOU LEAVE THE COMPANY

 

References to “you” or “your” are to the Participant. “Termination Date” is
defined in Section 9(a) of the Award Agreement and means the date of the
conclusion of your employment with the Travelers Group (whether voluntary or
involuntary) as reflected on the books and records of the Travelers Group.

 

If you terminate your employment or if there is a break in your employment, your
Award may be cancelled before the end of the Performance Period and the vesting
and settlement of your Award may be affected.

 

The provisions in the chart below apply to Awards granted under the Plan.
Special rules apply for vesting and settlement of your Award in cases of
termination of employment if you satisfy certain age and years of service
requirements (“Retirement Rule”), as set forth in “Retirement Rule” below.

 

If You:

 

Here’s What Happens to Your Award:

 

Resign (but do not meet the Retirement Rule)

 

Your rights under the Award are cancelled, and your right to the Performance
Shares is forfeited.

 

 

 

 

 

Become disabled (as defined under the Company’s applicable long-term disability
plan)

 

You will be entitled to receive the number of shares of Common Stock you would
have received, if any, if your employment had not terminated due to disability,
multiplied by a fraction equal to the number of days from the first day of the
Performance Period to the Termination Date, divided by the total number of days
in the Performance Period. Any such shares will be received at the time of
settlement of the Performance Shares after the end of the Performance Period.

 

 

 

 

 

Take an approved personal leave of absence

 

Your rights under the Award continue when you are on such leave of absence for
up to three months. Once your approved leave of absence exceeds three months,
your rights under the Award are suspended until you return to work and remain
actively employed for 30 calendar days, after which your rights under the Award
will be restored retroactively. If you terminate employment during the leave for
any reason, the termination of employment provisions will apply. If your
personal leave of absence exceeds one year, your rights under the Award are
cancelled, and your right to the Performance Shares is forfeited.

 

 

 

 

 

Are on an approved family leave, medical leave, dependent care leave, military
leave, or other statutory leave of absence

 

Your rights under the Award continue when you are on such leave of absence.

 

 

 

 

 

Die while employed or following employment while your Award is outstanding

 

Your estate will be entitled to receive a number of shares of Common Stock equal
to the initial number of Performance Shares set forth at the beginning of the
Award, plus any Performance Shares credited as dividend equivalents in
connection with the dividends paid or payable as of the date of your death),
multiplied by a fraction equal to the number of days in the Performance Period
from the first day of the Performance Period to your date of death,

 

 

--------------------------------------------------------------------------------

 

 

 

divided by the total number of days in the Performance Period. Any such shares
will be delivered as soon as administratively possible following your death. No
Performance Shares shall be credited with respect to any cash dividends paid by
the Company after the date of the Participant’s death but prior to the
distribution with respect to Performance Shares already credited to the
Participant’s account.

 

 

 

 

 

Are terminated involuntarily for gross misconduct or for cause*

 

Your rights under the Award are cancelled, and your right to the Performance
Shares is forfeited.

 

 

 

 

 

Are terminated involuntarily other than for gross misconduct or for cause
(including under the Company’s applicable separation pay plan or any successor
or comparable arrangement)

 

Your rights under the Award are cancelled, and your right to the Performance
Shares is forfeited.

 

 

 

 

 

While employed and at any time during the Restricted Period, breach the
Non-Solicitation Conditions and/or the POE Agreement

 

As set forth in Section 10 of the Award Agreement, in addition to all rights and
remedies available to the Company at law and in equity (including the above
rights and remedies relating to involuntary termination), you will immediately
forfeit any award to you under the Award Agreement that has not yet been paid,
exercised or vested. The Company may also recapture from you any and all
compensatory value that you received for the last 12 months of your employment
and through the end of the Restricted Period from any such award (including the
amount of any cash payment made to you upon settlement of the Award, and/or the
amount included as compensation in your taxable income upon settlement of the
Award). You will promptly pay the full amount due upon demand, in the form of
cash or shares of Common Stock at current fair market value.

 

 

Retirement Rule

 

If, as of your Termination Date, you are at least (i) age 65, (ii) age 62 with
one or more full years of service, or (iii) age 55 with 10 or more full years of
service, then you meet the “Retirement Rule.”  If you are terminated under the
Company’s applicable separation pay plan or any successor or comparable
arrangement, if any, your Termination Date for purposes of determining whether
you qualify under the Retirement Rule is your last day of active employment with
the Company.

 

The Retirement Rule does not apply if you were involuntarily terminated for
gross misconduct or for cause. If you retire and do not meet the Retirement
Rule, you will be considered to have resigned.

 

If you are terminated under the Company’s applicable separation pay plan or
successor or comparable arrangement, if any, your Termination Date for purposes
of determining whether you qualify under the Retirement Rule is your last day of
active employment with the Company.

 

--------------------------------------------------------------------------------

*                                         The Committee, in its sole discretion,
determines what constitutes “gross misconduct” and “cause.”

 

--------------------------------------------------------------------------------

 

If you:

 

 

 

Meet the Retirement Rule

 

You will be entitled to receive a number of shares of Common Stock equal to the
shares you would have received, if any, if your employment had not terminated
due to retirement in accordance with the Retirement Rule, multiplied by a
fraction equal to the number of days from the first day of the Performance
Period to the Termination Date, divided by the total number of days in the
Performance Period. Any such shares will be received at the time of settlement
of the Performance Shares after the end of the Performance Period. You will have
a right to payment under the Retirement Rule provided that, prior to the time of
settlement, you do not engage in any activities that compete with the business
operations of the Travelers Group, including, but not limited to, working for
another insurance company engaged in the property casualty insurance business as
either an employee or independent contractor. You are not subject to this
competition provision if you are terminated involuntarily, but you remain
subject to Sections 9 and 10 of the Award Agreement, and the POE Agreement.

 

 

When called for under the above rules, as a condition to receiving payment, you
will be required to certify to the Company that you have not engaged in any
activities that compete with the business operations of the Travelers Group
since your Termination Date, and provide such other evidence of your compliance
with the Retirement Rule as the Company may require.

 

--------------------------------------------------------------------------------

EXHIBIT B—Performance Share Vesting Grid

To Travelers’ Performance Share Award Notification and Agreement

 

Performance Period ROE*

 

% of Performance Shares Vested

 

 

 

 

 

> 16.0%

 

160

%

(Maximum)

 

15.5

 

150

 

 

15.0

 

140

 

 

14.5

 

130

 

 

14.0

 

120

 

 

13.0

 

110

 

 

12.0

 

100

 

 

10.0

 

75

 

 

8.0

 

50

 

(Threshold)

 

< 8.0

 

0

 

 

 

--------------------------------------------------------------------------------

* For any Performance Period ROE (as defined below) that is at least 8.0%, but
falls between two Performance Period ROE performance levels, the percentage of
Performance Shares vested shall be interpolated (for example, if Performance
Period ROE is 13.5%, 115% of the Performance Shares would be vested).

 

Definitions:

 

“Performance Period ROE” is defined as the sum of the Adjusted ROE for each of
the three years in the Performance Period, divided by three.

 

“Adjusted ROE” is defined as Adjusted Operating Income divided by Adjusted
Shareholders’ Equity.

 

“Adjusted Operating Income” for each year in the Performance Period is defined
as the Company’s net income from continuing operations as reported in the
Company’s financial statements (including accompanying footnotes and
management’s discussion and analysis), adjusted as set forth in the immediately
following sentence.  In calculating Adjusted Operating Income, net income from
continuing operations shall be adjusted as follows: first (A) remove the
after-tax effects of the following items: (i) losses (net of reinsurance) from
catastrophes (as designated by the Insurance Service Office’s Property Claims
Service Group, the Lloyd’s Claim Office, Swiss Reinsurance Company’s sigma
report, or a comparable report or organization generally recognized by the
insurance industry, and reported by the Company as a catastrophe); asbestos and
environmental reserve charges (or releases); net realized investment gains or
losses in the fixed maturities and real estate portfolios; and
(ii) extraordinary items, the cumulative effect of accounting changes and
federal income tax rate changes, and restructuring charges, each as defined by
generally accepted accounting principles in the United States, and each as
reported in the Company’s financial statements (including accompanying footnotes
and management’s discussion and analysis); and (B) reduced, as to the first year
in the Performance Period (2009), by $360.0 million, as to the second year in
the Performance Period (2010), by $360.0 million times the ratio of:  the
Company’s 2010 consolidated personal lines homeowners net written premium plus
commercial lines property net written premium plus 50% of commercial lines multi
peril net written premium divided by the Company’s 2009 consolidated personal
lines homeowners net written premium plus commercial lines property net written
premium plus 50% of commercial lines multi peril net written premium, and as to
the third year in the Performance Period (2011), by $360.0 million times the
ratio of:  the Company’s 2011 consolidated personal

 

--------------------------------------------------------------------------------

 

lines homeowners net written premium plus commercial lines property net written
premium plus 50% of commercial lines multi peril net written premium divided by
the Company’s 2009 consolidated personal lines homeowners net written premium
plus commercial lines property net written premium plus 50% of commercial lines
multi peril net written premium.

 

“Adjusted Shareholders’ Equity” for each year in the Performance Period is
defined as the sum of the Company’s total common stockholders’ equity as
reported in the Company’s balance sheet as of the beginning and end of the year
(excluding net unrealized appreciation or depreciation of investments and
adjusted as set forth in the immediately following sentence), divided by two. In
calculating Adjusted Shareholders’ Equity, the Company’s total common
shareholders’ equity as of the beginning and end of the year shall be adjusted
to remove the cumulative after-tax impact of the following items during the
Performance Period: (i) discontinued operations and (ii) the adjustments and
reductions made in calculating Adjusted Operating Income.

 

EXHIBIT C —

To Travelers’ Performance Share Award Notification and Agreement

 

PRINCIPLES OF EMPLOYMENT AGREEMENT

 

As a condition and in consideration of your employment with The Travelers
Companies, Inc. or one of its subsidiaries, affiliates, successors or assigns
(together, the “Company” or “Travelers”), the Company wishes to set forth and
obtain your agreement on certain matters that are important to both of us.

 

Your acceptance of this Principles of Employment Agreement (the “POE
Agreement”), if you have not already accepted its provisions in their current
form pursuant to a prior Company option agreement or employment agreement or
policy, constitutes your acknowledgment and acceptance of and agreement to the
provisions set forth below and the Travelers’ (i) Employee Policies [LINK],
(ii) Internal Dispute Resolution Policy (“IDR Policy”) [LINK] and
(iii) Employment Arbitration Policy (the “Arbitration Policy”) [LINK], each of
which the Company may amend or supplement from time to time.

 

You may print and retain a hard copy of the Employee Policies, the IDR Policy
and the Arbitration Policy at any time.   Please review this POE Agreement and
these other documents carefully.  If you have any questions about them at any
time, please ask your manager.

 

--------------------------------------------------------------------------------

 

Arbitration/Dispute Policies

 

1.  While the Company hopes that disputes with its employees will never arise,
the Company wants them resolved promptly if they do.  The IDR and Arbitration
Policy (together, the “Arbitration Policies”) cover any employment and
compensation-related disputes that you may have with the Company and its current
and former officers, directors, employees and agents, including disputes
regarding termination of employment, but excluding certain specific claims
described in these policies.  The Arbitration Policies do not preclude the
Company from taking disciplinary action against you (including termination) at
any time, but if you dispute such action, you and the Company agree that the
disagreement will be resolved solely through the processes set forth in the
Arbitration Policies.

 

2.  For claims covered by the Arbitration Policies, the process is divided into
two parts.  First, under the IDR, you may seek internal review of any action
regarding your employment or termination of your employment that you think is
unfair.  Second, in the unusual situation when this internal process does not
fully resolve an employment-related dispute and the dispute is based upon
legally protected rights, you and the Company agree to submit the dispute to
binding arbitration in accordance with the Arbitration Policy.

 

3.  As set forth in the Arbitration Policies, you acknowledge and agree that any
breach or threatened breach of the Intellectual Property and Confidentiality
provisions set forth below will constitute a violation of your covenants and
obligations to the Company with respect to intellectual property and/or
confidentiality/non-disclosure and, therefore, the Company has the right (but
not the obligation) to bring a court action, rather than arbitration, to seek
injunctive relief or specific performance.  You and the Company agree that any
such action will be brought solely in the state or federal courts located in St.
Paul, Minnesota, and you submit to the exclusive jurisdiction of these courts
and agree not to challenge such venue.  You agree that this POE Agreement shall
be construed in accordance with and governed for all purposes by the laws of the
State of Minnesota.

 

Intellectual Property and Confidentiality

 

4.  You agree that you will not, either during or after your employment, use,
publish, make available, or otherwise disclose, except for the Company’s benefit
in the course of such employment, any technical or business information
developed by, for, or at the expense of the Company, or assigned or entrusted to
the Company, unless such information is generally known outside of the

 

--------------------------------------------------------------------------------

 

Company. In addition, you will keep at all times subject to the Company’s
control and will deliver to or leave with the Company all written and other
materials in any form or medium (including, but not limited to, print, tape,
digital, computerized and electronic data, parts, tools, or equipment)
containing such information upon termination of your employment.  You also agree
to cooperate to remedy any unauthorized use of such information and not to
violate any Company policy regarding same.

 

5.  You agree that all records, reports, notes, compilations, or other recorded
matter, and copies or reproductions thereof, relating to the Company’s
operations, activities or business, made or received by you during your
employment with the Company are, and shall be, the property of the Company
exclusively, and you will keep the same at all times subject to the Company’s
control and will deliver to or leave with the Company the same at the
termination of your employment.

 

6.  You agree that all trade secrets, inventions, works of authorship
(including, without limitation, illustrations, writings, multimedia works,
software and computer programs), improvements, systems, apparatuses, designs,
practices, processes, analytical models, ways of doing business, formulae and
all other business or technical information (collectively, “Inventions”)
created, conceived, or reduced to practice, by you, either alone or with others,
while employed by the Company and related to the existing or anticipated
business, research, or development of the Company, or resulting from your work
with the Company, belong solely to the Company, including all intellectual
property rights therein.

 

7.  You are hereby notified that the assignment and ownership provisions herein
do not apply to any Inventions: (i) that you create, conceive or reduce to
practice entirely on your own time, without using the Company’s equipment,
supplies, facilities or trade secret information, and that do not (a) relate
directly at the time of such creation, conception, or reduction to practice to
the Company’s business or actual or demonstrably anticipated research or
development or (b) result from any work you perform for the Company; and/or
(ii) for which such provisions would be unenforceable under any state statute.

 

8.  You agree to: (i) promptly disclose to the Company all Inventions that
belong to the Company under this POE Agreement; (ii) cooperate with the Company
regarding the filing and prosecution of any patent applications relating to such
Inventions; (iii) assign, and you hereby assign, to the Company, or to others as
directed by the Company, all of your interest (if any) in such Inventions and
all intellectual property rights therein; and (iv) execute any papers and do any
acts which the Company may consider necessary to secure to it and perfect any
and all rights relating to such Inventions, including all patents and copyrights
(and

 

--------------------------------------------------------------------------------

 

renewals thereof) in any country (without charge to the Company, but at the
expense of the Company). You hereby waive all “moral rights” and the like with
respect to all such works of authorship to the extent allowed by applicable law.
Until proven otherwise, any Invention shall be presumed to have been conceived
during your employment with the Company if within three (3) months after
termination of such employment with the Company it is disclosed to others, or it
is completed, or it has a patent application filed thereon.

 

9.  You represent that you have provided to the Company a complete list of all
Inventions (if any) that you have made or conceived prior to your employment by
the Company that (i) relate to the business, research or development of the
Company and (ii) are owned or controlled by you personally.  You further
represent that you are not a party to any other agreement that conflicts with
your obligations under this POE Agreement.

 

Miscellaneous

 

10.  You agree that you have accepted this POE Agreement in the belief that its
provisions are reasonable and enforceable.  However, if any one or more of the
provisions contained in this POE Agreement shall be held to be invalid or
unenforceable, then such provisions shall be deemed to be modified or restricted
to the minimum extent necessary to render them valid and enforceable, and this
POE Agreement will be construed and enforced to the maximum extent permitted by
law.

 

11.  You agree that nothing herein constitutes a contract of employment for a
definite period of time.  The employment relationship is “at will,” which
affords you 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
Company retains the right to decrease your compensation and/or benefits,
transfer or demote or otherwise change the terms or conditions of your
employment with the Company.

 

12.  You agree that your obligations under this POE Agreement shall survive the
termination of your employment with the Company regardless of the reason.

 

--------------------------------------------------------------------------------

 

THE TRAVELERS COMPANIES, INC.

 

THE PARTICIPANT’S ACCEPTANCE

 

(Click on the button below to accept the terms of this Award Agreement,
including Exhibits thereto. You will not be able to undo this change.)

 

o            Agree/Accept

 

(Click on the button below to return to ECW and accept the terms of this Award
Agreement at another time.)

 

o            Return to Equity Compensation Web

 

--------------------------------------------------------------------------------