Exhibit 10.39

 

TRAVELERS

RESTRICTED STOCK UNIT AWARD NOTIFICATION AND AGREEMENT

 

(This award must be accepted within 90 days after the Grant Date shown below or
it will be forfeited. Refer below to Section 16.)

 

Participant:

 

Grant Date:

 

Number of Award Shares:

 

Vesting Date:

3 years from Grant Date

 

1.                                      Grant of Restricted Stock Units. This
restricted stock unit award (“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 (the “Participant”) 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”) consisting of a right to receive the number of shares set forth
above (“Award Shares”) of the Company’s common stock, no par value (“Common
Stock”), upon the Vesting Date, pursuant to the Plan, as it may be amended from
time to time, and subject to the terms, conditions, and restrictions set forth
herein, including, without limitation, the conditions set forth in Section 5.

 

2.                                      Terms and Conditions. The terms,
conditions, and restrictions applicable to the Award are specified in the Plan,
this grant notification and agreement, including Exhibit A (the “Award
Agreement”), and the prospectus dated February 5, 2013 (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 market price of the Common Stock, 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 participants’ 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
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) vesting
may be subject to confirmation and final determination by the Company’s Board of
Directors or its Compensation Committee (the “Committee”) that the vesting
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.                                      Vesting. The Award shall vest in full on
the Vesting Date set forth above provided the Participant remains continuously
employed within the Travelers Group. If the Participant has a termination of, or
break in, employment prior to the Vesting Date, the Participant’s rights are
determined under the Award Rules of Exhibit A.

 

4.                                      Settlement of Award. The Company shall
deliver to the Participant a number of shares of Common Stock equal to the
number of vested Award Shares on the Vesting Date or as soon as administratively
practicable thereafter. The number of shares of Common Stock delivered to the

 

1

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

 

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.

 

5.                                      Grant Conditioned on Principles of
Employment Agreement.

 

(a)                                 Notwithstanding any contrary provision in
this Award Agreement, the grant of the Award shall not be effective and shall be
null and void unless the Participant has agreed, in the manner prescribed by the
Company and no later than the date immediately preceding the Grant Date, to be
bound by the Company’s Principles of Employment Agreement in effect on the date
immediately preceding the Grant Date (the “POE Agreement”), as published on the
Company’s intranet site or previously distributed in hard copy to the
Participant.

 

(b)                                 By accepting the Award, the Participant
agrees that the POE Agreement shall supersede and replace the form of Principles
of Employment Agreement contained or referenced in any prior equity award made
by the Company to the Participant, and, accordingly, such prior equity award
shall become subject to the terms and conditions of the POE Agreement.

 

(c)                                  In the case of a Participant who has
received this grant upon or in connection with the commencement of his or her
employment with the Travelers Group, 5(a) and 5(b) shall not apply. While the
grant to such Participant is not conditioned on prior execution of the POE
Agreement, the Participant shall forfeit the grant and it shall be cancelled and
of no further force and effect if the Participant fails to sign and deliver the
POE Agreement to the Company by the deadline set forth in his or her offer
letter or employment agreement, or in the absence of such deadline, by the close
of the fifth (5th) business day of his or her employment with the Travelers
Group.

 

6.                                      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”).

 

7.                                      Acceptance of and Agreement to
Non-Solicitation Conditions. In consideration for the award of Restricted Stock
Units under this Award Agreement, 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 7 are
intended to protect the Travelers Group and other participants in the Plan
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 compete with the Travelers Group,
except to the extent “Confidential Information” is used in such competitive
activity and subject to the restrictions set forth below. Further, nothing in
this Section 7 is intended to grant or limit any rights or claims as to any
future employer of the Participant.  For purposes of this Award Agreement,
“Confidential Information” includes, but is not limited to, highly sensitive
non-public information such as social security numbers; medical information;
internal information about Travelers’ business, such as non-public financial,
sales, marketing, technical and business information, including profit and loss
statements, business/marketing strategy and trade secrets; employee, client,
customer, policyholder, vendor, consultant and agent information; legal advice
obtained; product and system information; and any compilation of this
information or employee information obtained solely through the course of
employment at Travelers.  Nothing in this definition should be construed as
prohibiting non-managerial employees from sharing information concerning their
own wages or other terms and conditions of employment, or for purposes of
otherwise pursuing their legal rights.  The Participant’s obligations with
respect to Confidential Information under this Section 7 are in addition to, and
do not relieve the Participant of, any obligations that the Participant has with
respect to Confidential Information under other agreements, Company plans or
policies, or applicable law.

 

(b)                                 Non-Solicitation of Employees. 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,

 

2

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

 

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 7. 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)                                  Non-Solicitation of Business. 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 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 or any other contractual, statutory or common
law obligations to the Company.

 

(e)                                  Notwithstanding anything herein to the
contrary, if the Participant breaches any of the Non-Solicitation Conditions of
this Section 7, then one day of additional time shall be added to the
restriction (and to the definition of Restricted Period) for each day of
noncompliance, so that the Company is given the benefit of Participant’s
compliance with the restriction for a full twelve (12) months.

 

(f)                                   If the final judgment of a court of
competent jurisdiction declares that any term or provision of this Section 7 is
invalid or unenforceable, the parties agree that (i) the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or geographic area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, (ii) the parties shall request that the court exercise that power,
and (iii) this Award Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment or decision may be appealed.

 

(g)                                  During the Restricted Period or any
extension thereof, the Participant shall notify any subsequent employer of his
or her obligations under this Award Agreement prior to commencing employment. 
During the Restricted Period or any extension thereof, the Participant will
provide the Company fourteen (14) days advance written notice prior to becoming
employed by any person or entity or engaging in any business of any type or
form.

 

3

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

 

(h)                                 As consideration for and by accepting the
Award, the Participant agrees that the Non-Solicitation Conditions of this
Section 7 shall supersede any non-solicitation covenants contained or
incorporated in any prior equity award made by the Company to the Participant
under The Travelers Companies, Inc. Amended and Restated 2004 Stock Incentive
Plan, the Travelers Property Casualty Corp. 2002 Stock Incentive Plan, or The
St. Paul Companies, Inc. Amended and Restated 1994 Stock Incentive Plan (“Prior
Equity Awards”); accordingly, such Prior Equity Awards shall become subject to
the terms and conditions of the Non-Solicitation Conditions of this Section 7. 
However, these Non-Solicitation Conditions shall be in addition to, and shall
not supersede, any non-solicitation, non-competition or other restrictive
covenants contained or incorporated in (i) any Non-Competition Agreement between
the Company and the Participant arising out of the Participant’s service as a
Management Committee member, (ii) any other agreement between the Company and
the Participant (other than such Prior Equity Awards), or (iii) any other
Company plan or policy that covers the Participant (other than such Prior Equity
Awards).

 

8.                                      Forfeiture of Restricted Stock Unit
Award.

 

(a)                                 Participant’s Agreement.  The Participant
expressly acknowledges that the terms of Section 7 and this Section 8 are
material to this Agreement and reasonable and necessary to protect the
legitimate interests of the Company, including without limitation, the Company’s
Confidential Information, trade secrets, customer and supplier relationships,
goodwill and loyalty, and that any violation of these Non-Solicitation
Conditions by the Participant would cause substantial and irreparable harm to
the Company and other Participants in the Plan.  The Participant further
acknowledges and agrees that:

 

(i)                                     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 of subsection 8(b) below and the
Non-Solicitation Conditions of Section 7 above, and the amendment of prior
equity award provisions of subsection 8(f) and Section 18, below.

 

(ii)                                  The Participant’s rights with respect to
the Award are conditioned on his or her timely acceptance of the POE Agreement
and his or her compliance with the POE Agreement at all times thereafter.

 

(iii)                               The scope, duration and activity
restrictions and limitations described in this Agreement are reasonable and
necessary to protect the legitimate business interests of the Company, even if
any provision of Section 7 or this Section 8 may limit the Participant’s ability
to earn a livelihood for some period of time.  The Participant acknowledges that
all restrictions and limitations relating to the Restricted Period will apply
regardless of the reason the Participant’s employment ends.  The Participant
further agrees that any alleged claims the Participant may have against the
Company do not excuse the Participant’s obligations under this Award Agreement.

 

(b)                                 Remedies for Breach.  The Participant agrees
that, prior to the Termination Date 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 portion
of the Award made under this Award Agreement that has not yet been paid, settled
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 Common Stock
distribution or cash payment made to the Participant upon the vesting,
distribution, or settlement of the Award, and/or any consideration received by
the Participant upon the sale or transfer of the Common Stock acquired through
vesting, distribution, or settlement 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.

 

4

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

 

(c)                                  No Limitation on Company’s Rights or
Remedies. The forfeiture and recapture remedies under subsection 8(b) shall not
limit or modify the Company’s rights and remedies to obtain other monetary,
equitable or injunctive relief as a result of breach of, or in order to enforce,
the terms and conditions of this Agreement or with respect to any other
covenants or agreements between the Company and the Participant or the
Participant’s obligations under applicable law.

 

(d)                                 Award Rules. 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, may require that the Participant not engage in any activities that
compete with the business operations of the Travelers Group through the Vesting
Date (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 8.

 

(e)                                  Severability. If any court determines that
any of the terms and conditions of Section 7 or this Section 8 are invalid or
unenforceable, the remainder of the terms and conditions shall not thereby be
affected and shall be given full effect, without regard to the invalid
portions.  If any court determines that any of the terms and conditions are
unenforceable because of the duration of such terms and conditions or the area
covered thereby, such court shall have the power to reduce the duration or area
of such terms and conditions and, in their reduced form, the terms and
conditions shall then be enforceable and shall be enforced.

 

(f)                                   Awards Subject to Recoupment. Except to
the extent prohibited by law, an outstanding Award may be forfeited, and the
compensatory value received under the Award (including without limitation the
amount of any Common Stock distribution or cash payment made to the Participant
upon the vesting, distribution, or settlement of the Award, or consideration
received by the Participant upon the sale or transfer of the Common Stock
acquired through vesting, distribution, or settlement of the Award) may be
subject to recoupment by the Company, in accordance with the Company’s executive
compensation recoupment policy and other policies in effect from time to time
with respect to forfeiture and recoupment of bonus payments, retention awards,
cash or stock-based incentive compensation or awards, or similar forms of
compensation, and the terms of any such policy, while it is in effect, are
incorporated herein by reference.  As consideration for and by accepting the
Award Agreement, the Participant agrees that all the remedy and recoupment
provisions of this Section 8 shall apply to any prior equity award made by the
Company to the Participant, shall be in addition to and shall not supersede any
other remedies contained or referenced in any such prior equity award, and,
accordingly, such prior equity award shall become subject to both those other
remedies and the terms and conditions of this Section 8.

 

(g)                                  Survival of Provisions.  The agreements,
covenants, obligations, and provisions contained in Section 7 and this Section 8
shall survive the Participant’s Termination Date and the expiration of this
Award Agreement, and shall be fully enforceable thereafter.

 

9.                                      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 desires or 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.

 

10.                               Administration. The Company’s Administrative
Committee administers the Plan and this Award Agreement and has the authority to
interpret any ambiguous or inconsistent terms in its sole discretion.  The
Participant’s rights under this Award Agreement are expressly subject to the
terms and conditions of the Plan and to any guidelines the Administrative
Committee adopts from time to time.  The interpretation and construction by the
Administrative Committee of the Plan and this Award Agreement, and such
rules and regulations as the Administrative Committee may adopt for purposes of
administering the Plan and this Award Agreement, will be final and binding upon
the Participant.  In administering the Plan, or to comply with applicable legal,
regulatory, tax, or accounting requirements, it may be necessary for a

 

5

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

 

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.

 

11.                               Entire
Agreement/Amendment/Survival/Assignment. The terms, conditions and restrictions
set forth in the Plan, this Award Agreement, the Prospectus and other Company
policies in effect from time to time relating to the Plan, constitute the entire
understanding between the parties hereto regarding the Award 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 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, specifically including Sections 7 and 8 hereof, 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.

 

12.                               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.

 

13.                               No Limitation on the Company’s Rights.  The
Participant agrees that nothing in this Award Agreement shall in any way affect
the Company’s right or power to make adjustments, reclassifications or changes
in its capital or business structure or to merge, consolidate, reincorporate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

 

14.                               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 Award Shares,
except as otherwise provided in the Prospectus.

 

15.                               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).

 

16.                               Acceptance and Agreement by the Participant;
Forfeiture upon Failure to Accept.  By accepting this Award, the Participant
agrees to be bound by the terms, conditions, and restrictions set forth in the
Prospectus, the Plan, this Award Agreement, and the Company’s policies, as in
effect from time to time, relating to the Plan.  The Participant’s rights under
the Award will lapse ninety (90) days from the Grant Date, and the Award will be
forfeited on such date if the Participant does not accept the Award by such
date. In the case of a grant issued upon or in connection with commencement of
employment with the Travelers Group, forfeiture may occur as of the date
referenced or specified in Section 5(c) of this Award Agreement if the
Participant has not by then agreed to be bound by the POE Agreement. In the case
of any other grant, this grant is null and void if the Participant has not by
the date immediately preceding the Grant Date agreed to be bound by the POE
Agreement. 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.

 

17.                               Waiver; Cumulative Rights.  The Company’s
failure or delay to require performance by the Participant of any provision of
this Award Agreement will not affect its right to require performance of such
provision unless and until the Company has waived such performance in writing. 
Each right under this Award Agreement is cumulative and may be exercised in part
or in whole from time to time.

 

18.                               Governing Law and Forum for Disputes. The
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
State of Minnesota.  The jurisdiction and venue for any disputes arising under,
or any action

 

6

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

 

brought to enforce (or otherwise relating to), this Agreement will be
exclusively in the courts in the State of Minnesota, City and County of St.
Paul, including the Federal Courts located therein (should Federal jurisdiction
exist).  The parties consent to and submit to the personal jurisdiction and
venue of courts of Minnesota and irrevocably waive any claim or argument that
the courts in Minnesota are an inconvenient forum.  The Participant agrees to
accept service of any court filings and process by delivery to his or her most
current home address on record with the Company via first class mail or other
nationally recognized overnight delivery provider, or by any third party
regularly engaged in the service of process.  As consideration for and by
accepting the Award, the Participant agrees that the Governing Law and Forum for
Disputes provision of this Section 18 shall supersede any governing law, forum
or similar provisions contained or referenced in any prior equity award made by
the Company to the Participant, and, accordingly, such prior equity award shall
become subject to the terms and conditions of the Governing Law and Forum for
Disputes provisions of this Section 18.

 

7

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

 

EXHIBIT A

 

AWARD RULES

TO TRAVELERS’ RESTRICTED STOCK UNIT AWARD NOTIFICATION AND AGREEMENT

 

When you leave the Company

 

References to “you” or “your” are to the Participant. “Termination Date” is
defined in Section 7(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 Vesting Date 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)

 

Vesting stops and all outstanding unvested restricted stock unit Awards are
cancelled effective on the Termination Date.

 

 

 

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

 

During the first 9 months of approved long-term disability leave and until your
employment is terminated following such leave, outstanding restricted stock unit
Awards will continue to vest on schedule. Your approved long-term disability
leave does not commence until you have completed your approved short-term
disability leave (generally 13 weeks). Upon the Termination Date after your
disability leave period ends (which occurs 9 months after your transition to
long-term disability or your transition to unpaid leave if you do not have
long-term disability coverage under the long-term disability component of the
Travelers disability program), all outstanding restricted stock unit Awards will
vest immediately.

 

Shares will be distributed to you as soon as practical after the Termination
Date. However, if you are considered a “specified employee” under the tax laws
(which generally includes the top 50 officers ranked by included compensation),
your restricted stock unit Awards will vest upon your Termination Date, but
shares of Common Stock will not be issued and distributed to you until six
months following your Termination Date or, if earlier, on the originally
scheduled vesting date for the restricted stock unit Awards.

 

 

 

Take an approved personal leave of absence approved by the Company under its
Personal Leave Policy

 

The vesting of outstanding restricted stock unit Awards will continue during the
first three months of an approved personal leave of absence. Once the approved
leave of absence exceeds three months, vesting is suspended until you return to
work with the Company and remain actively employed for 30 calendar days, after
which time vesting will be restored retroactively. If you terminate employment
during the leave for any reason, the termination of employment provisions will
apply. If leave exceeds one year, all restricted stock unit Awards will be
cancelled.

 

 

 

Are on an approved family leave,

 

Outstanding unvested restricted stock unit Awards will continue

 

8

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

 

medical leave, dependent care leave, military leave, or other statutory leave of
absence

 

to vest while you are on an approved leave.

 

 

 

Die while you are employed or following employment while your Award is
outstanding

 

Outstanding unvested restricted stock unit Awards will vest immediately and the
shares will be issued and distributed to your estate as soon as practical
thereafter.

 

 

 

Are terminated involuntarily for gross misconduct or for cause*

 

Vesting stops and all outstanding unvested restricted stock unit Awards are
cancelled on the Termination Date.

 

 

 

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)

 

Vesting stops and all outstanding unvested restricted stock unit Awards are
cancelled on the Termination Date.

 

 

 

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 8 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,
settled 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 or Common Stock distribution made to you upon
settlement of the Award, or sale or transfer of the Common Stock, 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.

 

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

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

 

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:

 

 

 

 

 

Meet the Retirement Rule

 

Your restricted stock unit Award Shares will be multiplied by a fraction, the
numerator of which is the number of days from the Grant Date to the Termination
Date, and the denominator of which is the number of days in the original vesting
period for the restricted stock unit Award. At your retirement, any Award Shares
in excess of that amount determined under the immediately preceding sentence
will be forfeited and cancelled.

 

The restricted stock unit Award Shares that you retain will continue to vest and
the shares

 

9

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

 

 

 

will be issued and distributed to you upon the Vesting Date for the Award,
provided that, during the period prior to the Vesting Date, 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 non-compete provision if you are
terminated involuntarily, but you remain subject to Sections 7 and 8 of the
Award Agreement, and the POE Agreement.

 

If you meet the Retirement Rule and are terminated involuntarily, the restricted
stock unit Awards that you retain (as determined using the proration fraction
set forth above) generally will be distributed as soon as practicable following
your Termination Date. However, if you are considered a “specified employee”
under the tax laws (which generally includes the top 50 officers ranked by
included compensation) and you are terminated involuntarily, the shares of
Common Stock represented by your retained restricted stock unit Awards will not
be issued and distributed to you until six months following your Termination
Date or, if earlier, on the originally scheduled Vesting Date for the Award,
provided you comply with the non-compete requirement during that delayed period.

 

When called for under the above rules, 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. You may
be required to provide the Company with other evidence of your compliance with
the Retirement Rule as the Company may require.

 

10

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