Exhibit 10.1


 


THE ST. PAUL TRAVELERS COMPANIES, INC.

385 Washington Street

St. Paul, Minnesota 55102


 


As of April 1, 2004


 


 


Jay S. Fishman

1200 Mount Curve Avenue

Minneapolis, Minnesota 55403


 


Dear Jay:


 


I am writing this letter on behalf of the Board of Directors (the “Board”)
of The St. Paul Travelers Companies, Inc. (the “Company”) to confirm the
terms and conditions of your employment with the Company.


 


1.             Term of Employment.  Your employment under this Letter Agreement
commenced as of the effective date (the “Effective Date”) of the consummation of the
combination transaction contemplated by the Agreement of Plan and Merger
effective as of November 16, 2003 among The St. Paul Companies, Inc. (“The St. Paul”),
Travelers Property Casualty Corp. and Adams Acquisition Corp. (as amended)
(such transaction, the “Merger”) and, subject to termination as
provided in Section 9, will end on the fifth anniversary of the Effective
Date; provided
that on the fourth and each subsequent anniversary of the Effective Date, the
term of your employment will automatically be extended by an additional year
unless the Company or you give the other party written notice, at least 30 days
prior to the applicable anniversary of the Effective Date, that you do not or
it does not want the term to be so extended. 
Such employment period, as may be extended, will hereinafter be referred
to as the “Term”.


 


2.             Title and Duties.


 


(a)   Position.  During the Term, you will serve as Chief
Executive Officer of the Company, and, beginning as of January 1, 2006 or,
if earlier, the date that the current Chairman of the Board steps down from
such position (the earlier of such dates is hereinafter referred to as the “Relevant
Date”) so long as you are employed by the Company on the Relevant
Date, you will also serve as Chairman of the Board of the Company.  You will have such duties and
responsibilities and power and authority as those normally associated with such
position or positions, as applicable, in public companies of a similar stature,
plus any additional duties, responsibilities and/or power and authority
assigned to you by the Board which are consistent with such position(s).  You will report solely and directly to the
Board, and all other executives, other than the executive Chairman of the Board
during the period commencing on the Effective Date and ending on the Relevant
Date (the “Relevant Period”), will report to you.


 


(b)   Board and Committees.  During the Term, the Company will use its
best efforts to cause you to be nominated for and elected to the Board, as well
as to the Executive Committee of the Board, including any successor committee
performing a similar function (the “Executive Committee”).  During the Relevant Period, you will jointly
preside with the executive Chairman of the Board at meetings of the Board and
of the Executive Committee, and thereafter during the Term, you will solely
preside at such meetings.


 

















 


(c)   Outside Interests.  Nothing contained in this Letter Agreement
shall preclude you from (i) serving on the board of directors of any
business corporation; (ii) serving on the board of or working for any
charitable or community organization or (iii) pursuing your personal financial
and legal affairs, so long as the foregoing activities, individually or
collectively, do not materially interfere with the performance of your duties
hereunder and do not violate the provisions of Section 12(b) hereof.


 


3.             Base Salary.  During the Term, the Company will pay you a
minimum base salary at the annual rate of $1,000,000 (the “Base Salary”), payable in
accordance with the Company’s regular payroll practices.  The Compensation Committee (the “Committee”)
of the Board will review your Base Salary annually and may, in its sole
discretion, increase the Base Salary based on your performance and the
Company’s performance.


 


4.             Bonus.  During the Term, you will be eligible to
receive an annual bonus (the “Annual Bonus”) pursuant to the Company’s
annual incentive plan, with a target bonus opportunity of one hundred fifty
percent (150%) of Base Salary (the “Target Bonus”).  The performance objectives for your Annual Bonus will be
determined by the Committee in consultation with you as promptly as practicable
after the Effective Date, but will nevertheless be consistent with performance
objectives set for other senior executives of the Company.


 


5.             Annual Long-Term
Incentive Grant.  In
February 2005 and in each calendar year of the Term thereafter, you will
receive a long-term incentive grant, consisting of stock options, restricted
stock, other equity-based awards, or a combination thereof, as determined by
the Committee, (the “Annual Equity Grant”) with a then present
value equal to not less than $6.25 million (such value to be based on a
Black-Scholes valuation, in the case of options and similar awards, and on a
valuation method mutually acceptable to you and the Committee, in the case of
other awards).  Any annual cash
incentive earned pursuant to Section 4 hereof and paid in the form of
equity-based awards shall not be considered in valuing your entitlement under
this Section 5.  Subject to the
specific terms of this Letter Agreement, the terms and conditions of your
Annual Equity Grant will provide for four (4) year vesting in equal
installments and will otherwise be determined in accordance with the Company’s
1994 Stock Incentive Plan as it exists on the date hereof or as amended in any
respect that is not materially unfavorable to you or in accordance with any
successor plan to the extent not materially less favorable to you, and the Company’s
policy governing similar awards to other senior executives as in effect from
time to time.  Any portion of an Annual
Equity Grant that is not fully vested will become fully vested upon termination
of your employment due to death or Disability (as defined below in
Section 8), or in the event you terminate your employment for Good Reason
(as defined below in Section 8) or in the event you are terminated by the
Company without Cause (as defined below in Section 8).


 


6.             Prior Stock Option
Grants.  You affirm and acknowledge
that (a) so long as you remain employed as Chief Executive Officer by the
Company, and so long as on and after the Relevant Date, you also remain
employed thereafter as Chairman of the Board of the Company, you would not
intend to exercise any of the stock options that were granted to you by The St.
Paul before 2004 until after they would have been exercisable in accordance
with their terms and vesting schedules in effect on November 16, 2003 and
(b) the stock option granted to you by The St. Paul on February 2, 2004
will not become exercisable in connection with the Merger, notwithstanding the
terms of the Letter Agreement dated as of October 11, 2001 between The St.
Paul and you (the “Old Letter Agreement”), and will, instead,
become exercisable in accordance with the terms contained in the term sheet
governing such stock option.


 


7.             Other Benefits.


 


(a)   Employee Benefits.  You will be eligible to participate in the
employee benefit plans, programs and arrangements maintained by the Company, on
terms and conditions that are no less favorable than those applicable to any
other senior executive of the Company. 
The Company acknowledges that in connection with your commencement of
employment with The St. Paul pursuant to the Old Letter Agreement, you received
four (4) years of service credit as of the effective date of such 


 


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commencement under all such
plans, programs and arrangements (except with respect to any tax-qualified or
stock-based plans, programs and arrangements) and that The St. Paul waived any
waiting periods or similar requirements for all medical, dental and other
health plans.


 


(b)   Vacation.  You will be entitled to four (4) weeks paid
vacation per calendar year in accordance with the Company’s vacation policy as
in effect from time to time.


 


(c)   Legal and Other Fees.  The Company will reimburse you for
reasonable legal and other professional and out-of-pocket expenses incurred by
you in connection with the preparation and negotiation of this Letter
Agreement.


 


(d)   Transportation.  You will be required for security purposes
to use the Company aircraft for all business travel and personal travel; provided,
however, that if you use the aircraft for international personal
travel you will compensate the Company for such use at the then applicable
first class rate.  The Company will
provide you with other transportation on a basis consistent with that
customarily provided to executives of a similar stature and will gross you up
for any income taxes incurred by you as a result of the provision of such other
transportation.  The Company will also
gross you up for any income taxes incurred by you as a result of any imputation
of income in connection with the use of the aircraft for business travel
between the New Jersey region and St. Paul, Minnesota, Baltimore, Maryland and
Hartford, Connecticut and of Company-arranged ground transportation for
business travel when you are on the East Coast.


 


(e)   Reimbursement.  The Company will reimburse you for all
reasonable expenses and disbursements in carrying out your duties and
responsibilities under this Letter Agreement in accordance with Company policy
for senior executives as in effect from time to time.


 


(f)    Professional Fees.  The Company will reimburse you for all
reasonable financial planning and tax preparation expenses up to $25,000
annually.


 


8.             Termination of
Employment.


 


(a)   Resignation for Good Reason or
Termination Without Cause. 
If you terminate your employment for Good Reason or you are terminated
by the Company without Cause, you will receive, immediately upon the
effectiveness of any such termination, a lump-sum cash payment equal to the sum
of


 


(i)   any earned but unpaid Base
Salary or other amounts (including reimbursable expenses and any vested amounts
or benefits owing under or in accordance with the Company’s otherwise
applicable employee benefit plans or programs, including retirement plans and
programs) accrued or owing through the date of termination and


 


(ii)  three (3) times the sum of your
(A) then Base Salary and (B) the greater of your then Target
Bonus and Annual Bonus for the immediately preceding year; provided that you execute a
release substantially in the form attached hereto as Exhibit A
concurrently with such payment.


 


In addition to the foregoing lump-sum
payment,


 


(x)            the Company will continue your
participation in the Company’s medical and dental plans (or if you are
ineligible to continue to participate under the terms thereof, in substitute
arrangements adopted by the Company providing substantially comparable
benefits), but only until, in the case of such medical and dental plans, the
earlier of three (3) years following the date of such termination of 


 


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employment and the date on which you become
covered by a similar plan maintained by any subsequent employer,


 


(y)           all unvested stock options, restricted stock
and other equity awards then held by you will fully vest and become
exercisable, if applicable, as of the effective date of such termination,


 


(z)            with respect to options and any similar
equity awards (i.e. containing or requiring an exercise or similar action)
held by you at the time of such termination, such awards will remain
exercisable (as if you had remained in your initial position with the Company
throughout such term) for the lesser of five (5) years and the remainder of the
full term of such options, except that, in the case of the termination of your
employment by the Company without Cause, any such awards granted to you after
the date hereof will remain exercisable (as if you had remained in your initial
position with the Company throughout such term) for the lesser of one (1) year
and the remaining term of such options.


 


Notwithstanding the foregoing and the
Company’s Amended and Restated Special Severance Policy (as it exists on the
date hereof, regardless of whether or not it is subsequently modified or
terminated, the “Policy”), you affirm and acknowledge that you will not
exercise your right to terminate your employment for any reason during the
twelve (12) month period following the Effective Date or to terminate your
employment for any reason during the thirty (30) day period commencing one year
after the Effective Date and to have such termination be treated as a
termination for Good Reason under the Old Letter Agreement or a Qualifying
Termination (as defined in the Policy) under the Policy; provided that you reserve
the right to terminate your employment for Good Reason under this Letter
Agreement.


 


(b)   Termination Other than for Good Reason
or for Cause.  If you
terminate your employment other than for Good Reason or if your employment is
terminated by the Company for Cause, you will receive no further payments,
compensation or benefits under this Letter Agreement, except you will be
eligible to receive, immediately upon the effectiveness of such termination,
amounts (including reimbursable expenses and any vested amounts or benefits
owing under or in accordance with the Company’s otherwise applicable employee
benefit plans or programs, including retirement plans and programs) accrued or
owing prior to the effectiveness of your termination and such compensation or
benefits that have been earned and will become payable without regard to future
services.  In addition, if your
employment is terminated by you other than for Good Reason, any vested stock
options then outstanding will remain exercisable for thirty (30) days after
such termination (although no further stock options will vest during such
additional thirty (30) day period); provided that an option will not otherwise
be exercisable beyond the stated term of such stock option.


 


(c)   Disability or Death.  If your employment terminates by reason of
death or Disability, you or your beneficiaries will receive (i) a pro rata portion
of your Base Salary and Target Bonus for the year, calculated by multiplying
your Base Salary and Target Bonus by a fraction, the numerator of which is the
number of days in the year elapsed prior to such death or Disability and the
denominator of which is 365, and (ii) all other unpaid amounts (including
reimbursable expenses and any vested amounts or benefits owing under or in
accordance with the Company’s otherwise applicable employee benefit plans or
programs, including retirement plans and programs) accrued or owing prior to
the effectiveness of such termination. 
In addition, all unvested stock options, restricted stock and other
stock awards will immediately vest and, along with previously vested stock
options, will remain exercisable (as if you had remained in your initial
position with the Company throughout such term) for (x) three (3) years, in the
case of termination due to Disability and (y) one (1) year, in the case of
termination due to death (provided that a stock option will not
otherwise be exercisable beyond the stated term of such stock option).


 


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(d)   Retirement.  In addition to benefits to which you may be
entitled pursuant to this Letter Agreement, your entitlements in connection
with a termination of your employment pursuant to your retirement under the
Company’s otherwise applicable employee benefit and retirement plans and
programs, including without limitation under the Company’s stock option and
equity award plans, shall be determined in accordance with such applicable
employee benefit and retirement plans and programs and stock option and equity
award plans, as applicable, including with respect to the vesting of and
exercise period of stock options and awards, and the characterization of your
termination of employment for purposes of this Letter Agreement shall not
affect any benefit to which you may be entitled upon “retirement” meeting the
conditions set forth in such plan or program and impacted by this Agreement.


 


For purposes of this Letter Agreement, “Cause” means (i) your willful
and continued failure to substantially perform your duties hereunder; (ii) your
conviction of, or plea of guilty or nolo contendere to, a felony or other crime
involving moral turpitude; or (iii) your engagement in any malfeasance or fraud
or dishonesty of a substantial nature in connection with your position with the
Company or other willful act that materially damages the reputation of the
Company; provided,
however, no such act, omission or event will be treated as “Cause”
under this Letter Agreement unless (A) you have been provided a detailed,
written statement of the basis for the Company’s belief that such act, omission
or event constitutes “Cause” and an opportunity to meet with the Board
(together with your counsel if you choose to have your counsel present at such
meeting) after you have had a reasonable period in which to review such
statement and if the allegation is made under clause (i) or (iii) above, have
had at least a thirty (30) day period to take corrective action and (B) the
Board after such meeting (if you meet with the Board) and after the end of such
thirty (30) day correction period determines reasonably and in good faith and
by the affirmative vote of at least two-thirds (2/3) of the members of the
Board then in office at a meeting called and held for such purpose that “Cause”
continues to exist under this Letter Agreement.  For purposes of this paragraph, (X) no act or failure to act will
be considered “willful” unless it is done, or omitted to be done, in bad
faith and without reasonable belief that the action was in the best interest of
the Company and (Y) it shall be understood that poor Company performance, in
and of itself, shall not constitute Cause under this paragraph in the absence
of evidence of the conduct specified above on your part.


 


For purposes of the Letter Agreement, “Good Reason” means (i) the
Company reduces your Base Salary or your Target Bonus or reduces the value of your
Annual Equity Grant without your express written consent; (ii) (A) the Board
fails to elect you as a member of the Board as of the Effective Date or during
the Term fails to nominate you for reelection to the Board or fails to elect
you to the Executive Committee or effects any removal of you as a member of the
Board or a member of the Executive Committee (unless removal from the Executive
Committee is due to a change in law or regulation or is in accordance with
widely accepted corporate governance practices), (B) in the event you are not
elected to the Board at any annual or special meeting of the stockholders, the
Board does not immediately thereafter elect you to the Board (to the extent
legally permitted to do so) or (C) you do not become Chairman of the Board of
the Company on the Relevant Date, as defined in Section 2 (for the
avoidance of doubt, your not being Chairman of the Board of the Company during
the Relevant Period will not constitute “Good Reason” under this Letter
Agreement); (iii) the Company reduces the scope of your duties,
responsibilities or authority without your express written consent (it being
understood, without limitation, that such a reduction will be deemed to have
occurred in all events if, following a Change in Control as defined in the
Policy(1), (X) the Company or any entity that may have succeeded it ceases to
have a class of voting equity securities registered under Section 12 of
the Securities Exchange Act of 1934 or (Y) a person or group beneficially owns,
as such terms are used for purposes of section 13(d) of such act,  more than 40% of the voting power of the
voting securities of the Company); (iv) the Company requires you to report to
anyone other than the Board or appoints any other person (other than the
executive Chairman of the Board during the Relevant Period) to a position of
equal or higher authority or having a direct reporting responsibility to the
Board (other than the Company’s 


 












(1) 
For ease of reference, this definition is reproduced in its entirety in
Exhibit B.


 


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internal auditors); (v) the Company breaches any other provision of
this Letter Agreement, or (vi) the Company elects not to extend the Term
pursuant to Section 1 prior to the time when you shall have attained age
65; provided,
however, that if you voluntarily consent to any reduction described
above in lieu of exercising your right to resign for Good Reason and deliver
such consent to the Company in writing then such reduction, transfer or change
will not constitute “Good Reason” hereunder, but you will have the right to
resign for Good Reason under this Letter Agreement as a result of any
subsequent reduction described above.


 


For purposes of this Letter Agreement, “Disability” will mean “total
and permanent disability” as defined in the Company’s long-term disability plan
for senior executives (or such other Company-provided long-term disability
benefit plan sponsored by the Company in which you participate at the time the
determination of Disability is made).


 


9.             Indemnification.


 


(a)   The Company will indemnify and
make permitted advances to you to the fullest extent permitted by applicable
law, if you are made or threatened to be made a party to a proceeding by reason
of your being or having been an officer, director or employee of the Company or
any of its subsidiaries or affiliates or your having served on any other
enterprise as a director, officer or employee at the request of the
Company.  In addition, the Company will
maintain insurance, at its expense, to protect you against any such expense,
liability or loss to which you would be entitled to indemnification or
reimbursement under the foregoing sentence.


 


(b)   The Company will indemnify you
and hold you harmless from and against any and all losses, costs, expenses,
liabilities, penalties, claims and other damages incurred or resulting from any
claim brought by your immediately prior employer, Citigroup Inc. (or an
affiliate thereof); provided, however, that you promptly
notify the Company in writing of the commencement of any action or other
assertion of a claim.  The Company will
assume the defense of any such action or claim with counsel selected by it and
reasonably acceptable to you (the fees and expenses of such counsel will be
paid by the Company).  You will have the
right to participate in such defense and to employ counsel reasonably
acceptable to the Company at the Company’s expense.  You agree to cooperate with the Company in the defense of any
such action or claim, including providing it with records and information that
are reasonably relevant thereto.  You
agree not to admit any liability with respect to, or settle, compromise or
discharge such action or claim without the Company’s written consent (which
will not be unreasonably withheld).


 


10.           Change in Control.


 


(a)   General.  In the event of a Change in Control, you
will be entitled to the benefits provided under the Policy as if your
employment terminated under the circumstances provided under the Policy.  For purposes of the Policy, you will be
deemed to be a Tier 1 Employee (as defined in the Policy).


 


(b)   Tax Indemnity.


 


(i)           If the Company or the
Company’s independent accountants determine that any payments and benefits
called for under this Letter Agreement together with any other payments and
benefits made available to you by the Company or an affiliate of the Company
will result in you being subject to an excise tax under § 4999 of the
Internal Revenue Code (the “Code”) or if such an excise tax is assessed
against you as a result of any such payments and other benefits, the Company
will make a Gross Up Payment (as defined below) to or on behalf of you as and
when any such determination or assessment is made; provided you take such
action (other than 


 


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waiving your right to any
payments or benefits) as the Company reasonably requests under the
circumstances to mitigate or challenge such tax.


 


(ii)          Any determinations under
this Section 10 will be made in accordance with § 280G of the Code
and any applicable related regulations (whether proposed, temporary or final)
and any related Internal Revenue Service rulings and any related case law.  If the Company reasonably requests that you
take action to avoid assessment of, or to mitigate or challenge, any such tax
or assessment, including restructuring your right to receive any payments or
benefits under this Letter Agreement (other than under this Section 10),
you agree to consider such request (but in no event to waive or limit your
right to any payments or benefits in a manner that would not be neutral to you
from a financial point of view), and in connection with any such consideration,
the Company will provide you with such information and such expert advice and
assistance from the Company’s independent accountants, lawyers and other
advisors as you may reasonably request and will pay for all expenses incurred
in effecting your compliance with such request and any related taxes, fines,
penalties, interest and other assessments.


 


(iii)         Nothing in this
Section 10 is intended to violate the Sarbanes-Oxley Act and to the extent
that any advance or payment obligation hereunder would do so, such obligation
shall be modified so as to make the advance a nonrefundable payment to you and the
payment obligation null and void.


 


(iv)        The term “Gross Up
Payment” for purposes of this Section 10 will mean a payment to
or on behalf of you which will be sufficient to pay (A) any excise tax
described in this Section 10 in full, (B) any interest or penalties
assessed by the Internal Revenue Service on you which are related to the
payment of such excise tax and (C) any federal, state and local income tax and
social security and other employment tax on the payment made to pay such excise
tax and any related interest or penalties and on any payments made to avoid
assessment of, or mitigate or challenge, the payment of such tax as well as any
additional taxes on such payments.


 


(v)         Finally, you and the
Company acknowledge and agree that a Gross Up Payment is intended to put you in
the same after-tax position which you would have been in if there was no excise
tax under § 4999 of the Code on any of your payments or benefits described
in this Section 10.  Therefore, you
agree to return to the Company the excess of any Gross Up Payment made to you
over the payment which would have been sufficient to put you in the same
after-tax position which you would have been in if there was no excise tax
under § 4999 of the Code on any of your payments or benefits described in
this Section 10, and the Company agrees that any such return on one date
will not alter the Company’s obligation to make one, or more than one,
additional Gross Up Payment at any later date to the extent necessary to put
you in the same after-tax position which you would have been in if there was no
excise tax under § 4999 of the Code on any of your payments or benefits
described in this Section 10.


 


The Company affirms and acknowledges that any payments and benefits
that you receive in connection with the Merger will be covered by this
Section 10.


 


(c)   Continued Effect.  This Section 10 will continue in effect
until you agree that all of the Company’s obligations to you under this
Section 10 have been satisfied in full or a court of competent jurisdiction
makes a final determination that the Company has no further obligations to you
under this Section 10, whichever comes first.


 


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11.           Covenants.  In exchange for the remuneration outlined
above, in addition to providing service to the Company as set forth in this
Letter Agreement, you agree to the following covenants:


 


(a)   Confidentiality.  You acknowledge that during your employment,
you will occupy a position of trust and confidence.  Accordingly, you agree that following any termination of your
employment, you will keep confidential any trade secrets and confidential or
proprietary information of the Company which are now known to you or which
hereafter may become known to you as a result of your employment or association
with the Company and will not at any time directly or indirectly disclose any
such information to any person, firm or corporation, or use the same in any way
other than in connection with the business of the Company during, and at all times
after, the termination of your employment. 
For purposes of this Letter Agreement, “trade secrets and confidential or
proprietary information” means information unique to the Company
which has a significant business purpose and is not known or generally
available from sources outside the Company or typical of industry practice, but
will not include any of the foregoing (i) that becomes a matter of public
record or is published in a newspaper, magazine or other periodical available
to the general public, other than as a result of any act or omission of you or
(ii) that is required to be disclosed by any law, regulation or order of any
court or regulatory commission, department or agency; provided that you give
prompt notice of such requirement to the Company to enable the Company to seek
an appropriate protective order or confidential treatment.


 


(b)   Non-Competition.  You further covenant that during the Term
and for the three (3) year period (the “Restricted Period”) following termination
of your employment for Cause or following your termination of employment
without Good Reason, you will not, for yourself or on behalf of any other
person, partnership, company or corporation, directly or indirectly, acquire
any financial or beneficial interest in (except as provided in the next
sentence), be employed by, or own, manage, operate or control any entity which
is primarily engaged in the property and casualty insurance business in the
United States.  Notwithstanding the
preceding sentence, you will not be prohibited from owning less than five
percent (5%) of any publicly traded corporation, whether or not such
corporation is in competition with the Company.


 


(c)   Non-Solicitation of Employees.  You further covenant that during the Term
and (x) during the Restricted Period following termination of your employment
by the Company for Cause or by you without Good Reason, or (y) for the one (1)
year period following the termination of your employment for any other reason,
you will not, directly or indirectly, hire, or cause to be hired by an employer
with whom you may ultimately become associated, any senior executive of the
Company at the time of termination of your employment with the Company (defined
for such purposes to include executives that report directly to you or that
report directly to such executives that report directly to you).


 


(d)   Equitable Relief and Other Remedies.  You acknowledge and agree that the Company’s
remedies at law for a breach or threatened breach of any of the provisions of
this Section 11 would be inadequate and, in recognition of this fact, you
agree that, in the event of such a breach or threatened breach, in addition to
any remedies at law, the Company, without posting any bond, will be entitled to
obtain equitable relief in the form of specific performance, temporary
restraining order, a temporary or permanent injunction or any other equitable
remedy which may then be available.


 


(e)   Reformation.  If it is determined by a court of competent
jurisdiction in any state that any restriction in this Section 11 is
excessive in duration or scope or is unreasonable or unenforceable under the
law of that state, it is the intention of the parties that such restriction may
be modified or amended by the court to render it enforceable to the maximum extent
permitted by the law of that state.


 


(f)    Survival of Provisions.  Without effect as to the survival of other
provisions of this Letter Agreement intended to survive the termination or
expiration of your employment, the obligations 


 


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contained in this
Section 11 will survive the termination or expiration of your employment
with the Company and will be fully enforceable thereafter.


 


12.           Coordination.  With regard to the equity grants, payments
and benefits described in this Letter Agreement (the “Contract Rights”), the
provisions of this Letter Agreement, to the extent that they are more favorable
to you, will control over any provisions to the contrary in any plan, program,
or equity grant applicable to you.  The
Company will not impose any restrictions not contained in this Letter Agreement
on the Contract Rights, and will not condition any future equity grants,
payments or benefits not contemplated by this Letter Agreement upon your
agreement to any additional restrictions on the Contract Rights.  However, nothing will limit the Company’s
discretion to include any new or different terms, conditions or restrictions in
any future equity grant, payment or benefit to you not contemplated by this
Letter Agreement.


 


13.           Representations.  By signing this Letter Agreement where
indicated below, you represent that, except as previously disclosed to the
Company, are not subject to any employment agreement or non-competition
agreement that could subject the Company to any future liability or obligation
to any third party as a result of the execution of this Letter Agreement and
your appointment to the positions which the Company described above.


 


14.           Miscellaneous
Provisions.


 


(a)   This Letter Agreement may not
be amended or terminated without the prior written consent of you and the
Company.


 


(b)   This Letter Agreement may be
executed in any number of counterparts which together will constitute but one
agreement.


 


(c)   This Letter Agreement will be
binding on and inure to the benefit of our respective successors and, in your
case, your heirs and other legal representatives.  If you should die while any amount would still be payable to you
hereunder had you continued to live, all such amounts, unless otherwise
provided herein, will be paid in accordance with the terms of this Letter
Agreement to your devisee, legatee or other designee or, if there is no such
designee, to your estate.  The rights
and obligations described in this Letter Agreement may not be assigned by either
party without the prior written consent of the other party.


 


(d)   All disputes arising under or
related to this Letter Agreement will be settled by arbitration under the
Commercial Arbitration Rules of the American Arbitration Association then in
effect, such arbitration to be held in Minneapolis, Minnesota, as the sole and
exclusive remedy of either party.  Any
judgment on the award rendered by such arbitration may be entered in any court
having jurisdiction over such matters. 
All costs and expenses of such arbitration, including your reasonable
costs and expenses, will be borne by the Company.


 


(e)   All notices under this Letter
Agreement will be in writing and will be deemed effective when delivered in
person, or five (5) days after deposit thereof in the U.S. mail, postage
prepaid, for delivery as registered or certified mail, addressed to the
respective party at the address set forth below or to such other address as may
hereafter be designated by like notice. 
Unless otherwise notified as set forth above, notice will be sent to
each party as follows:


 


You, to:


 


The address listed above or such other
address as is maintained in the Company’s records


 


9

















 


The Company,
to:


 


The St. Paul Travelers Companies, Inc.

385 Washington Street

St. Paul, Minnesota 55102


Attention: 
General Counsel


 


In lieu of personal notice or notice or notice by deposit in the U.S.
mail, a party may give notice by confirmed telegram, telex or fax, which will
be effective upon receipt.


 


(f)    This Letter Agreement will be
governed by and construed and entered in accordance with the laws of the State
of Minnesota without reference to rules relating to conflict of laws.


 


(g)   This Letter Agreement
supersedes the Old Letter Agreement and the letter of understanding dated
November 16, 2003 (as amended on February 11, 2004) from you to the
Board of Directors of The St. Paul. 
This Letter Agreement also supersedes any inconsistent provisions of any
plan or arrangement that would otherwise be applicable to you to the extent
such provisions would limit any rights granted to you hereunder or expand any
restrictions imposed on you hereby.


 


10

















 


This Letter Agreement is intended to be a binding obligation upon both
the Company and yourself.  If this
Letter Agreement correctly reflects your understanding, please sign and return
one copy to John MacColl for the Company’s records.


 


 


	
   

  	
  THE ST. PAUL TRAVELERS COMPANIES, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Leslie B. Disharoon

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Director

  	
   

  



 


The above Letter Agreement correctly reflects our understanding, and I
hereby confirm my agreement to the same.


 


 


	
  Dated as of April 1, 2004

  	
  /s/ Jay S. Fishman

  	
   

  
	
   

  	
  Jay S. Fishman

  	
   

  



 

















 


Exhibit A


 


FULL AND COMPLETE RELEASE


 


I,
                            ,
in consideration for the payment of the severance described in my Letter
Agreement dated
                       ,
2004, for myself and my heirs, executors, administrators and assigns, do hereby
knowingly and voluntarily release and forever discharge The St. Paul Travelers
Companies, Inc. (the “Company”) and its respective predecessors,
successors and affiliates and current and former directors, officers and
employees from any and all claims, actions and causes of action under those
federal, state and local laws prohibiting employment discrimination based on
age, sex, race, color, national origin, religion, disability, veteran or
marital status, sexual orientation or any other protected trait or
characteristic, or retaliation for engaging in any protected activity,
including without limitation, the Age Discrimination in Employment Act of 1967,
29 U.S.C. § 621 et seq., as amended by the Older Workers
Benefit Protection Act, P.L. 101-433, the Equal Pay Act of 1963, 9 U.S.C.
§ 206, et
seq., Title VII of The Civil Rights Act of 1964, as amended, 42
U.S.C. § 2000e et seq., the Civil Rights Act of 1866, 42
U.S.C. § 1981, the Civil Rights Act of 1991, 42 U.S.C. § 1981a, the
Americans with Disabilities Act, 42 U.S.C. § 12101, et seq., the Rehabilitation
Act of 1973, 29 U.S.C. § 791 et seq., the Family and Medical Leave Act
of 1993, 28 U.S.C. §§ 2601 and 2611 et seq., whether KNOWN OR UNKNOWN, fixed
or contingent, which I ever had, now have, or may have, or which my heirs,
executors, administrators or assigns hereafter can, will or may have from the
beginning of time through the date on which I sign this Full and Complete
Release (this “Release”), including without limitation those arising out of
or related to my employment or separation from employment with the Company
(collectively the “Released Claims”).


 


I warrant and represent that I have made no sale, assignment or other
transfer, or attempted sale, assignment or other transfer, of any of the
Released Claims.


 


I fully understand and agree that:


 


1.                                       this Release is
in exchange for severance payment to which I would otherwise not be entitled;


 

















 


2.                                       no rights or
claims are released or waived that may arise after the date this Release is
signed by me;


 


3.                                       I am here
advised to consult with an attorney before signing this Release;


 


4.                                       I have 21 days
from my receipt of this Release within which to consider whether or not to sign
it;


 


5.                                       I have 7 days
following my signature of this Release to revoke the Release; and


 


6.                                       this Release
will not become effective or enforceable until the revocation period of 7 days
has expired.


 


If I choose to revoke this Release, I must do so by notifying the
Company in writing.  This written notice
of revocation must be mailed by U.S. first class mail or by U.S. certified mail
within the 7 day revocation period and addressed as follows:


 


The St. Paul Travelers Companies, Inc.

Attention:  General Counsel

385 Washington Street

St. Paul, Minnesota 55102


 


This Release is the complete understanding between me and the Company
in respect of the subject matter of this Release and supersedes all prior
agreements relating to the same subject matter.  I have not relied upon any representations, promises or
agreements of any kind except those set forth herein in signing this Release.


 


In the event that any provision of this Release should be held to be
invalid or unenforceable, each and all of the other provisions of this Release
will remain in full force and effect. 
If any provision of this Release is found to be invalid or
unenforceable, such provision will be modified as necessary to permit this
Release to be upheld and enforced to the maximum extent permitted by law.


 


This Release is to be governed and enforced under the laws of the State
of Minnesota (except to the extent that Minnesota conflicts of law rules would
call for the application of the law of another jurisdiction).


 


This Release inures to the benefit of the Company and its successors
and assigns.


 


A-2

















 


I have carefully read this Release, fully understand each of its terms
and conditions, and intend to abide by this Release in every respect.  As such, I knowingly and voluntarily sign
this Release.


 


	
   

  	
   

  	
   

  
	
   

  	
  Jay S. Fishman

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
				



 

















 


Exhibit B


 


For ease of reference, the definition of Change in Control in the
Policy is reproduced in its entirety below:


 


(d)           “Change
in Control” means the occurrence of any one of the following events”


 


(i)            individuals who, on February 1, 1999,
constitute the Board (the “Incumbent Directors”) cease for any reason to
constitute at least a majority of the Board, provided that any person becoming
a director subsequent to February 1, 1999, whose election or nomination
for election was approved by a vote of at least two-thirds of the Incumbent
Directors then on the Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a nominee for
director, without written objection to such nomination) shall be an Incumbent
Director; provided,
however, that no individual initially elected or nominated as a
director of the Company as a result of an actual or threatened election contest
(as described in Rule 14a-11 under the Securities Exchange Act of 1934 (the
“Act”)) (“Election Contest”) or any other actual or threatened solicitation of
proxies or consents by or on behalf of any “person” (as such term is defined in
Section 3(a) (9) of the Act) other than the Board (“Proxy Contest”),
including by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest, shall be deemed to be an Incumbent Director;


 


(ii)           any person is or becomes a “beneficial
owner” (as defined in Rule 13d-3 under the Act), directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company’s then outstanding securities eligible to vote for the election
of the Board (the “Company Voting Securities”); provided, however, that the
event described in this paragraph (ii) shall not be deemed to be a Change in
Control of the Company by virtue of any of the following acquisitions:  (A) by the Company or any Subsidiary, (B) by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any Subsidiary, (C) by any underwriter temporarily holding
securities pursuant to an offering of such securities, or (D) pursuant to any
acquisition by Participant or any group of persons including Participant (or
any entity controlled by Participant or any group of persons including Participant);


 


(iii)          the consummation of a merger, consolidation,
statutory share exchange or similar form of corporate transaction involving the
Company or any of its Subsidiaries that requires the approval of the Company’s
stockholders, whether for such transaction or the issuance of securities in the
transaction (a “Reorganization”), or sale or other disposition of all or
substantially all of the Company’s assets to an entity that is not an affiliate
of the Company (a “Sale”), unless immediately following such Reorganization or
Sale:  (A) more than 60% of the total
voting power of (x) the corporation resulting from such Reorganization or Sale
(the “Surviving Company”), or (y) if applicable, the ultimate parent
corporation that directly or indirectly has beneficial ownership of 100% of the
voting securities eligible to elect directors of the Surviving Company (the
“Parent Company”), is represented by Company Voting Securities that were
outstanding immediately prior to such Reorganization or Sale (or, if applicable,
is represented by shares into which such Company Voting Securities were
converted pursuant to such Reorganization or Sale), and such voting power among
the holders thereof is in substantially the same proportion as the voting power
of such Company Voting Securities among the holders thereof immediately prior
to the Reorganization or Sale, (B) no person (other than any employee benefit
plan (or related trust) sponsored or maintained by the Surviving Company or the
Parent Company), is or becomes the beneficial owner, directly or indirectly, of
30% or more of the total voting power of the outstanding voting securities
eligible to elect directors of the Parent Company (or, if there is no Parent
Company, the Surviving Company) and (C) at least a majority of the members of
the board of directors of the Parent Company (or, if there is no Parent
Company, the Surviving Company) following the consummation of the
Reorganization or Sale were Incumbent Directors at the time of the Board’s
approval of the execution of the initial agreement providing for such
Reorganization or Sale (any Reorganization or Sale which 


 

















 


satisfies all of the criteria specified in
(A), (B) and (C) above shall be deemed to be a “Non-Qualifying Transaction”);
or


 


(iv)          the stockholders of the Company approve a
plan of complete liquidation or dissolution of the Company.


 


Notwithstanding the foregoing, a Change in Control of the Company shall
not be deemed to occur solely because any person acquires beneficial ownership
of more than 30% of the Company Voting Securities as a result of the
acquisition of Company Voting Securities by the Company which reduces the
number of Company Voting Securities outstanding; provided that if after such
acquisition by the Company such person becomes the beneficial owner of
additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
Change in Control of the Company shall then occur.


 


B-2