Exhibit 10.38

 

TRAVELERS
STOCK OPTION GRANT 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 Shares:

 

Grant Price:

$

Expiration Date:

 

Vesting Date:

3 years from Grant Date

 

1.                                      Grant of Option. This option 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 a non-qualified stock option (the “Option”) to
purchase the number of shares set forth above of the Company’s common stock, no
par value (“Common Stock”), at an option price per share (the “Grant 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, including,
without limitation, the conditions set forth in Section 5.

 

2.                                      Terms and Conditions. The terms,
conditions, and restrictions applicable to the Option 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 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 his or her understanding that
the Option 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 or other 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; 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 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 on the Vesting Date set forth above, provided the
Participant remains continuously employed within the Travelers Group. The Option
shall in all events expire on the tenth (10th) anniversary of the Grant Date set
forth above. If the Participant has a termination of, or break in, employment
prior to exercise or expiration of the Option, the Participant’s rights are
determined under the Option Rules of Exhibit A.

 

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4.                                      Exercise of Option. The Option may be
exercised in whole or in part by the Participant after the Vesting Date upon
notice to the Company together with provision for payment of the Grant Price and
applicable withholding taxes. Such notice shall be given in the manner
prescribed by the Company and shall specify the date and method of exercise and
the number of shares being exercised. The Participant acknowledges that the laws
of the country in which the Participant is working at the time of grant or
exercise of the Option (including any rules or regulations governing securities,
foreign exchange, tax, or labor matters) or Company accounting or other policies
dictated by such country’s political or regulatory climate, may restrict or
prohibit any one or more of the stock option exercise methods described in the
Prospectus, that such restrictions may apply differently if the Participant is a
resident or expatriate employee, and that such restrictions are subject to
change at any time. The Committee may suspend the right to exercise the Option
during any period for which (a) 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, or (b) 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 the New York
Stock Exchange or other self-regulatory organization; or (iii) any other federal
or state law or regulation (an “Option Exercise Suspension”).  To the extent the
vested and exercisable portion of the Option remains unexercised as of the close
of business on the date the Option expires (the Expiration Date or such earlier
date that is the last date on which the Option may be exercised under the Option
Rules of Exhibit A if the Participant’s employment with the Travelers Group has
ended), that portion of the Option will be exercised without any action by the
Participant in accordance with Section 7.5 of the Plan if the Fair Market Value
of a share of Common Stock on that date is at least $0.01 greater than the Grant
Price, and the exercise will result in Participant receiving at least one
incremental share, no Option Exercise Suspension is then in effect.

 

5.                                      Grant Conditioned on Principles of
Employment Agreement.

 

(a)                                 Notwithstanding any contrary provision in
this Award Agreement, the grant of the Option 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
Participant.

 

(b)                                By accepting the Option, 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 - Option Rules.
The Participant agrees to be bound by the terms of the Option Rules set forth in
Exhibit A (“Option Rules”).

 

7.                                      Acceptance of and Agreement to
Non-Solicitation Conditions. In consideration for the Award of Options 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

 

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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, 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 the Travelers
Group.

 

(d)                                 Subject to the non-competition obligations
in the Option 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

 

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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.

 

(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 Option Awards.

 

(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 Option 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 Option 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

 

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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 Option 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,
exercised, 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, exercise, 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, exercise, 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.

 

(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)                                 Option Rules. The Option 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
settlement or exercise 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 Option 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, exercise or settlement of the Award, or
consideration received by the Participant upon the sale or transfer of the
Common Stock acquired through vesting, distribution, exercise 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.

 

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(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 may desire or 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 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 Option, 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 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 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 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 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 Company.

 

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 Option or his or her right under the Option to receive shares of
Common Stock, 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).

 

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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 Option will lapse ninety (90) days from the Grant Date, and the Option will
be forfeited on such date if the Participant does not accept the Option 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 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.

 

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EXHIBIT A

 

OPTION RULES
TO TRAVELERS’ STOCK OPTION GRANT 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
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 Options granted under the Plan.
Special rules apply for vesting and exercisability of your Option 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 any Option exercisability period set forth in the chart below or under
“Retirement Rule” below would otherwise expire during an Option Exercise
Suspension, the Option shall remain exercisable for a period of 30 days after
the Option Exercise Suspension (as defined in Section 4 of the Award Agreement)
is lifted by the Company (but no later than the original option expiration date,
which is the tenth (10th) anniversary of the Grant Date).

 

If You:

 

Here’s What Happens to Your Options:

Resign (but do not meet the Retirement Rule)

 

Vesting stops and unvested options are cancelled effective on the Termination
Date. You may exercise your vested options for up to 90 days after the
Termination Date but no later than the original option expiration date.

 

 

 

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

 

Options continue to vest on schedule through an approved disability leave (which
includes approximately 13 weeks of short-term disability and 9 months of
long-term disability). 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), your unvested options will vest immediately, and you may exercise
options for up to one year from the Termination Date, but no later than the
original option expiration date.

 

 

 

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

 

For the first three months of an approved personal leave, vesting continues. If
the approved leave 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. Vested options 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, all options will be cancelled immediately.

 

 

 

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

 

Options will continue to vest on schedule, and you may exercise vested options
during the leave but no later than the original option expiration date.

 

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Die while employed or following employment while your option is still
outstanding

 

Options fully vest upon death. Your estate may exercise options for up to one
year from the date of death but no later than the original option expiration
date.

 

 

 

Are terminated involuntarily for gross misconduct or for cause*

 

Vesting stops and all outstanding options are cancelled on the Termination Date.
You may exercise vested options on or before the Termination Date but no later
than the original option expiration 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 on the Termination Date. You may exercise vested options for up to
90 days after the Termination Date but no later than the original option
expiration 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,
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 or Common Stock distribution made to you upon
exercise or settlement of the award, or sale or transfer of the Common Stock,
and/or the amount included as compensation in your taxable income upon vesting
or exercise 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.

 

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*                 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

 

Unvested options fully vest on the Termination Date. Vested options may be
exercised for up to three years from the Termination Date, but no later than the
original option expiration date, provided that 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.

 

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When you exercise any options subject to the Retirement Rule, your exercise will
represent and constitute your certification 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.

 

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