Document:

Exhibit 10.28

 

THE TRAVELERS COMPANIES, INC.

AMENDED AND RESTATED 2004 STOCK INCENTIVE
PLAN

Amended and Restated 2004 Stock Incentive
Plan

 

 

THE TRAVELERS COMPANIES, INC. 
 AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN

 

1.                                      Purpose. The purposes of The Travelers Companies, Inc.
Amended and Restated 2004 Stock Incentive Plan (the “Plan”) are (i) to
attract and retain Employees by providing competitive compensation
opportunities, (ii) to provide Employees with incentive-based compensation
in the form of Company Common Stock, (iii) to attract and compensate
non-employee directors for service as Board and committee members, (iv) to
encourage decision making based upon long-term goals, and (v) to align the
interest of Employees and non-employee directors with that of the Company’s
shareholders by encouraging such persons to acquire a greater ownership
position in the Company.

 

2.                                      Definitions.
Wherever used herein, the following terms shall have the respective meanings
set forth below:

 

“Award” means an award to a Participant made in accordance with the
terms of the Plan.

 

“Board” means the Board of Directors of the Company.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.

 

“Company” means The Travelers Companies, Inc.

 

“Committee” means the Compensation Committee of the Board, or a
subcommittee of that committee, consisting of no less than two directors, all
of whom shall qualify as “independent directors” within the meaning of Rule 303A
of the New York Stock Exchange, as “outside directors” within the meaning of Section 162(m) of
the Code, and as “non-employee directors” within the meaning of Rule 16b-3
under the Exchange Act.

 

“Common Stock” means the common stock of the Company.

 

“Change of Control” means the first to occur of (i) any “person”
within the meaning of Section 14(d) of the Exchange Act, other than
the Company, a subsidiary or any employee benefit plan(s) sponsored by the
Company or any subsidiary, is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of fifty percent (50%) or more
of the then-outstanding Common Stock, other than pursuant to a purchase of
Common Stock from the Company; (ii) individuals who constitute the Board
on the effective date of this Plan, cease for any reason to constitute at least
a majority thereof, provided that any person becoming a director subsequent to
the effective date of this Plan, whose election, or nomination for election by
the Company’s shareholders, was approved by a vote of at least three quarters

 

 

of the directors comprising the Board on the effective date of this
Plan (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
objection to such nomination) shall be, for purposes of this clause (ii),
considered as though such person were a member of the Board on the effective
date of this Plan; (iii) any plan or proposal for the liquidation of the
Company is adopted by the shareholders of the Company; (iv) all or
substantially all of the assets of the Company are sold, liquidated or
distributed (in one or a series of related transactions); or (v) there
occurs a reorganization, merger, consolidation or other corporate transaction
involving the Company (a “Transaction”), in each case, with respect to which
the shareholders of the Company immediately prior to such Transaction do not,
immediately after the Transaction, own more than fifty percent (50%) of the
combined voting power of the Company or other entity resulting from such
Transaction in substantially the same proportion as their ownership of the
voting power of the Company immediately prior to such Transaction.  Notwithstanding the foregoing, for purposes
of Awards hereunder that are subject to the provisions of Section 409A of
the Code and the regulations promulgated thereunder (“Code Section 409A”),
no Change of Control shall be deemed to have occurred upon an event described
in clauses (i) through (v) above that would have the effect of
changing the time or form of payment of such Award unless such event would also
constitute a change in the ownership or effective control of, or a change in
the ownership of a substantial portion of the assets of, the Company for purposes
of Code Section 409A.

 

“Employee” means an employee, including non-employee directors, as
defined in General Instruction A to the Registration Statement on Form S-8
promulgated under the Securities Act of 1933, as amended, or any successor form
or statute, as determined by the Committee.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.

 

“Fair Market Value” means, as of a specified date, one of the following
as determined by the Committee, each of which shall be based on trading prices
of a share of Common Stock on the New York Stock Exchange or on any national
securities exchange on which the shares of Common Stock are then listed, or if
the shares were not traded on such date, then on the next preceding date on
which such shares of Common Stock were traded, all as reported by such source
as the Committee may select: (i) the average of the high and low trading
prices on such date, (ii) the closing price on such date or (iii) the
closing price on the next preceding trading day.

 

 

“ISO” means an incentive stock option as defined in Section 422 of
the Code.

 

“Option Proceeds” means the cash actually received by the Company for
the exercise price in connection with the exercise of a stock option granted
under the Plan or the Prior Plans that is exercised after the effective date of
the Plan plus the tax benefit that could be realized by the Company as a result
of such stock option exercise, which tax benefit shall be determined by multiplying
(a) the amount that is deductible for federal income tax purposes as a
result of such stock option exercise (currently, equal to the amount upon which
the Participant’s withholding tax obligation is calculated) times (b) the
maximum federal corporate income tax rate for the year of exercise. To the
extent a Participant pays the exercise price and/or withholding taxes with
shares of Common Stock, Option Proceeds shall not be calculated with respect to
the amounts so paid with shares.

 

“Participant” means an Employee who is selected by the Committee to
participate in the Plan.

 

“Performance Conditions” may, for purposes of Awards under the Plan,
include one or more of: earnings per share, earnings before interest and tax,
net income, adjusted net income, operating income, stock price, total
shareholder return, market share, return on equity, cash return on equity,
achievement of profit, loss and/or expense ratio, revenue targets, cash flows,
book value, return on assets or return on capital. Such Performance Conditions
may be based on the attainment of levels set for such financial measures with
respect to the Company or any subsidiary, division, business unit, or any
combination thereof and may be set as an absolute measure or relative to a
designated peer group or index of comparable companies. Such Performance
Conditions shall be set and defined by the Committee within the time period
prescribed by Section 162(m) of the Code. Unless specifically
determined by the Committee at the time a Performance Condition is set, the
satisfaction of any Performance Condition shall be determined without regard to
any change in accounting rules which becomes effective following the time
such Performance Condition is set.

 

“Prior Plans” means The St. Paul Companies, Inc. Amended and
Restated 1994 Stock Incentive Plan and the Travelers Property Casualty Corp.
2002 Stock Incentive Plan (including the Travelers Property Casualty Corp.
Compensation Plan for Non-Employee Directors).

 

 

3.                                      Shares Subject to the Plan. Subject to adjustment as
provided in Section 20, the number of shares of Common Stock which shall
be available and reserved for grant of Awards under the Plan shall be
35,000,000. The shares of Common Stock issued under the Plan may come from
authorized and unissued shares or shares purchased in the open market. No
Participant may, in any consecutive thirty-six (36) month period, be granted
Awards of stock options and stock appreciation rights under Sections 7 and 8 of
the Plan, respectively, with respect to more than 3,000,000 shares of Common
Stock or more than 1,000,000 shares of restricted stock under Section 9 of
the Plan, each of which numbers shall be subject to adjustment as provided in Section 20.

 

Shares of Common Stock subject to an Award that expires unexercised,
that is forfeited, terminated or canceled, that is settled in cash or other
forms of property, or otherwise does not result in the issuance of shares of
Common Stock, in whole or in part, shall thereafter again be available for
grant under the Plan. If the exercise price of any stock option is satisfied by
delivering shares of Common Stock to the Company (by tender of such shares or
attestation) or by authorizing the Company to retain shares of Common Stock,
only the number of shares of Common Stock delivered to the Participant net of
shares of Common Stock delivered to the Company (by tender or attestation) or
retained by the Company shall be deemed delivered for purposes of determining
the maximum number of shares of Common Stock available for grant under the
Plan. To the extent any shares of Common Stock subject to an Award are not
delivered to a Participant because such shares are used to satisfy an
applicable tax or other withholding obligations, such shares shall not be
deemed to have been delivered for purposes of determining the maximum number of
shares of Common Stock available for grant under the Plan. Shares of Common
Stock purchased by the Company on the open market using Option Proceeds shall
also be available for grant under the Plan; provided, however, that the
increase in the number of shares of Common Stock available for grant pursuant
to such market purchases shall not be greater than the number that could be
repurchased at Fair Market Value on the date of exercise of the stock option giving
rise to such Option Proceeds. Except as otherwise provided by the Committee,
the provisions of this paragraph shall also apply to any awards granted under
the Prior Plans that are outstanding on the effective date of the Plan. In
addition, the number of shares of Common Stock available for grant under the
Plan shall not be reduced by shares subject to Awards granted upon the
assumption of or in substitution for awards granted by a business or entity
that is merged into or acquired by (or whose assets are acquired by) the
Company.

 

 

4.                                      Administration.

 

4.1                                 Committee
Authority. The Committee shall have full and exclusive power to
administer and interpret the Plan, to grant Awards and to adopt such
administrative rules, regulations, procedures and guidelines governing the Plan
and the Awards as it may deem necessary in its discretion, from time to time.
The Committee’s authority shall include, but not be limited to, the authority
to:

 

(i)                                     determine the type
and timing of Awards to be granted under the Plan;

 

(ii)                                  select Award
recipients and determine the extent of their participation; and

 

(iii)          establish
all other terms, conditions, restrictions and limitations applicable to Awards
and the shares of Common Stock issued pursuant to Awards, including, but not
limited to, those relating to a Participant’s retirement, death,
disability, leave of absence or termination of employment.

 

The Committee’s right to make any decision, interpretation or
determination under the Plan shall be in its sole and absolute discretion.

 

4.2                                 Administration
of the Plan. The administration of the Plan shall be managed by the
Committee. The Committee shall have the power to prescribe and modify, as
necessary, the form of Award document, to correct any defect, supply any
omission or clarify any inconsistency in the Plan and/or in any Award document
and to take such actions and make such administrative determinations that the
Committee deems appropriate in its discretion. Any decision of the Committee in
the administration and interpretation of the Plan, as described herein, shall
be final, binding and conclusive on all parties concerned, including the
Company, its shareholders and subsidiaries and all Participants.

 

4.3                                 Delegation
of Authority. The Committee may at any time delegate to a committee
of the Board or one or more officers of the Company some or all of its
authority over the administration of the Plan, with respect to persons who are
not subject to the reporting requirements of Section 16(a) of the
Exchange Act or “covered employees” described in Section 162(m) of
the Code.

 

 

5.                                      Eligibility. The Committee shall determine which Employees
shall be eligible to receive Awards. No Employee shall have at any time the
right to receive an Award, or having been selected for an Award, to receive any
further Awards.

 

The Committee may also grant stock options, stock appreciation rights,
restricted stock, performance awards or other Awards under the Plan in
substitution for, or in connection with the assumption of, existing options,
stock appreciation rights, restricted stock, performance awards or other awards
granted, awarded or issued by another entity and assumed or otherwise agreed to
be provided for by the Company pursuant to or by reason of a transaction
involving a merger, consolidation, plan of exchange, acquisition of property or
stock, separation, reorganization or liquidation to which the Company or any
subsidiary is a party. The terms and conditions of the substitute Awards may
vary from the terms and conditions set forth in the Plan to the extent the
Committee at the time of the grant may deem appropriate to conform, in whole or
in part, to the provisions of the awards in substitution for which they are
granted.

 

6.                                      Awards. Awards under the Plan may consist of: non-qualified stock
options, ISOs, stock appreciation rights, restricted stock, performance awards
and any other stock-based awards, including deferred stock units.

 

7.                                      Stock Options.

 

7.1                                 Types of
Options. Stock options granted under the Plan may be non-qualified
stock options, ISOs or any other type of stock option permitted under the Code,
as determined by the Committee and evidenced by the document governing the
Award.

 

7.2                                 ISOs.
The terms and conditions of any ISO shall be subject to the provisions of Section 422
of the Code and the terms, conditions, limitations and administrative
procedures established by the Committee. At the discretion of the Committee,
ISOs may be granted to any employee of the Company and its subsidiaries, as
such term is defined in Section 424(f) of the Code (each, a “Subsidiary”).
No ISO may be granted to any Participant who, at the time of such grant, owns
more than ten percent (10%) of the total combined voting power of all classes
of stock of the Company or of any Subsidiary, unless (i) the exercise
price for such ISO is at least one-hundred and ten percent (110%) of the Fair
Market Value of a share of Common Stock on the date the ISO is granted, and (ii) the
date on which such ISO terminates is a date not later than the day preceding
the fifth anniversary of the date on which the ISO is granted. Any Participant
who disposes of shares acquired upon the exercise of an ISO either within two
years

 

 

after the date of grant of such ISO or within one year after the
transfer of such shares to the Participant, shall notify the Company of such
disposition and of the amount realized upon such disposition. The maximum
number of shares of Common Stock available under the Plan for issuance as ISOs
shall be 35,000,000.

 

All stock options granted under the Plan are intended to be
nonqualified stock options, unless the applicable Award document expressly
states that the stock option is intended to be an ISO. If a stock option is
intended to be an ISO, and if for any reason such stock option (or portion thereof)
shall not qualify as an ISO, then, to the extent of such nonqualification, such
stock option (or portion thereof) shall be regarded as a nonqualified stock
option granted under the Plan; provided that such stock option (or portion
thereof) otherwise complies with the Plan’s requirements relating to
nonqualified stock options.

 

7.3                                 Exercise
Price and Period. The Committee shall establish the exercise price,
which price (other than for substitute options pursuant to Section 5)
shall be no less than the Fair Market Value of a share of the Common Stock on
the date of grant. Each stock option may be exercised in whole or in part on
the terms provided in the Award document. The Committee also shall establish
the period during which a stock option is exercisable, provided that in no
event may a stock option be exercisable for a period of more than ten (10) years
from the date of grant, and in no event may a stock option become exercisable
earlier than one year after the date of grant, except in the case of:

 

(i)                                     a Change of
Control if so provided by the Committee;

 

(ii)                                  an earlier date
specifically approved by the Committee to attract a key executive to join the
Company; or

 

(iii)                               a stock option issued as
a substitute option pursuant to Section 5.

 

When a stock option is no longer exercisable, it shall be deemed to
have lapsed or expired.

 

7.4                                 Manner of
Exercise. The exercise price of each share as to which a stock
option is exercised and, if requested, the amount of any federal, state, local
or foreign withholding taxes, shall be paid in full at the time of such
exercise. The exercise of any stock option shall be contingent on and subject
to such payment of the exercise price and withholding taxes, or the arrangement
for the satisfaction of such payments in a manner satisfactory to the
Committee. Such payment shall be made in any of the following forms:

 

 

(i)                                     in cash (including
check, bank draft or money order),

 

(ii)                                  by delivery of shares
of Common Stock owned by the Participant (by tender of such shares or by attestation)
having a Fair Market Value as of the date of exercise equal to the exercise
price for the total number of shares as to which the option is exercised, plus
applicable taxes, if requested, subject to (A) the shares so delivered
being “mature shares” for purposes of the applicable accounting rules then
in effect, or otherwise having such characteristics as are required, if
necessary, in order to avoid adverse accounting consequences to the Company on
account of use of such shares to pay the exercise price and (B) such other
guidelines for the tender of Common Stock as the Committee may establish,

 

(iii)                               if approved by the
Committee in the related Award document or other action by the Committee,
authorization of the Company to retain from the total number of shares of
Common Stock as to which the option is exercised that number of shares of
Common Stock having a Fair Market Value as of the date of exercise equal to the
exercise price for the total number of shares as to which the option is
exercised, plus applicable taxes, if requested, and

 

(iv)                              such other consideration
as the Committee deems appropriate, or by a combination of cash, shares of
Common Stock, retention of shares and such other consideration.

 

The Committee may, with the consent of the Participant, cancel any
outstanding stock option in consideration of a cash payment in an amount not
greater than the excess, if any, of the aggregate Fair Market Value (on the
date of such cancellation) of the shares subject to the stock option over the aggregate
exercise price of such stock option; provided, however, that the Participant’s
consent is not required for such a cancellation pursuant to Section 13
hereof.

 

8.                                      Stock Appreciation Rights. An Award of a stock appreciation
right shall entitle the Participant, subject to terms and conditions determined
by the Committee, to receive upon exercise of the stock appreciation right all
or a portion of the excess of the Fair Market Value of a specified number of
shares of Common Stock as of the date of exercise of the stock appreciation
right over a specified strike price, which price (other than for substitute
stock appreciation rights pursuant to Section 5) shall be no less than the
Fair Market Value of a share of the Common Stock on the date of

 

 

grant of the stock appreciation right or the date of grant of a
previously granted related stock option, as determined by the Committee in its
discretion. A stock appreciation right may be granted in connection with a
previously or contemporaneously granted stock option, or independent of any
stock option. If issued in connection with a previously granted related stock
option, the Committee shall impose a condition that the exercise of the stock
appreciation right cancels the related stock option and exercise of the related
stock option cancels the stock appreciation right, and the other terms of the
stock appreciation right shall be identical in all respects to the terms of the
related stock option except for the medium of payment. Each stock appreciation
right may be exercised in whole or in part on the terms provided in the Award
document. Stock appreciation rights granted independent of any stock option
shall be exercisable for such period as specified by the Committee, but in no
event may stock appreciation rights become exercisable less than one year after
the date of grant, except in the case of:

 

(i)                                     a Change of
Control if so provided by the Committee;

 

(ii)                                  an earlier date
specifically approved by the Committee to attract a key executive to join the
Company; or

 

(iii)                               a stock appreciation
right issued as a substitute stock appreciation right pursuant to Section 5.

 

In addition, in no event may a stock appreciation right be exercisable
for a period of more than ten (10) years. When a stock appreciation right is
no longer exercisable, it shall be deemed to have lapsed or terminated. Except
as otherwise provided in the applicable agreement, upon exercise of a stock
appreciation right, payment to the Participant shall be made in the form of
cash, shares of Common Stock or a combination of cash and shares of Common
Stock as promptly as practicable after such exercise. The Award document may
provide for a limitation upon the amount or percentage of the total
appreciation on which payment (whether in cash and/or shares of Common Stock)
may be made in the event of the exercise of a stock appreciation right. The
Committee may, with the consent of the Participant, cancel any outstanding
stock appreciation right in consideration of a cash payment in an amount not in
excess of the difference between the aggregate Fair Market Value (on the date
of such cancellation) of any shares subject to the stock appreciation right and
the aggregate strike price of such Shares; provided, however, that the
Participant’s consent is not required for such a cancellation in connection
with the purchase of such stock appreciation right pursuant to Section 13
hereof.

 

 

9.                                      Restricted
Stock. Restricted stock may be granted in the form of actual shares of
Common Stock, which shall be evidenced by a certificate with an appropriate
legend, or in uncertificated direct registration form, registered in the name
of the Participant but held by the Company until the end of the restricted
period, or share units, as determined by the Committee. As a condition to the
receipt of an award of restricted stock in the form of actual shares of Common
Stock, a Participant may be required to execute any stock powers, escrow
agreements or other documents as may be determined by the Committee. Any
conditions, limitations, restrictions, vesting and forfeiture provisions shall
be established by the Committee in its discretion. No portion of an Award of
restricted stock may vest as to any of the shares subject to the Award earlier
than one year from the date of grant, except in the case of:

 

(i)                                     a Change of
Control if so provided by the Committee;

 

(ii)                                  death, retirement or
disability if so provided by the Committee; or

 

(iii)                               restricted stock issued
as a substitute Award pursuant to Section 5.

 

The Committee may, on behalf of the Company, approve the purchase by
the Company of any shares subject to an Award of restricted stock, to the
extent vested, for an amount equal to the aggregate Fair Market Value of such
shares on the date of purchase. Awards of restricted stock may provide the
Participant with dividends or dividend equivalents (pursuant to Section 17)
and voting rights, if in the form of actual shares, prior to vesting. With
respect to Awards of restricted stock intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, the Committee shall
establish and administer Performance Conditions in the manner described in Section 162(m) and
Treasury Regulations promulgated thereunder as an additional condition to the
vesting or payment, as applicable, of such Awards.

 

10.                               Performance
Awards. Performance awards may be in the form of performance shares valued
with reference to a share of Common Stock or performance units valued with
reference to an amount of property (including cash) other than shares of Common
Stock. Performance awards may also be granted in the form of any other
stock-based Award. Performance awards shall entitle a Participant to future
payments based upon the attainment of Performance Conditions established in
writing by the Committee. Payment shall be made in cash, shares of Common Stock
or any combination thereof, as determined by the Committee. The Award document
establishing a performance award may establish that a portion of a Participant’s
Award will be paid for performance that exceeds the minimum target but falls
below the maximum target available to the Award. With respect to Awards of
restricted stock intended to qualify as “performance-based compensation” under Section 162(m)

 

 

of the Code, the Committee shall establish and administer Performance
Conditions in the manner described in Section 162(m) and Treasury
Regulations promulgated thereunder as an additional condition to the vesting or
payment, as applicable, of such performance awards. The Award document shall
also provide for the timing of payment, which shall not be earlier than one
year from date of grant, except in the case of:

 

(i)                                     a Change of
Control if so provided by the Committee;

 

(ii)           an
earlier date specifically approved by the Committee to attract a key executive
to join the Company; or

 

(ii)                                  a performance award
issued as a substitute Award pursuant to Section 5.

 

Following the conclusion or acceleration of the period of time
designated for attainment of the Performance Conditions, the Committee shall
determine the extent to which the Performance Conditions have been attained and
shall then cause to be delivered to the Participant (i) a number of shares
of Common Stock equal to the number of performance shares or the value of such
performance units determined by the Committee to have been earned, and/or (ii) cash
equal to the Fair Market Value of such number of performance shares or the
value of performance units, as the Committee shall elect or as shall have been
stated in the applicable Award document. In no event may performance awards be
granted to a single Participant in any 12-month period (i) in respect of
more than 250,000 shares of Common Stock (if the Award is denominated in shares
of Common Stock) or (ii) having a maximum payment with a value greater
than $10,000,000 (if the Award is denominated in other than shares of Common
Stock).

 

11.                               Other
Stock-Based Awards. The Committee may issue unrestricted shares of
Common Stock, or other awards denominated in Common Stock (including but not
limited to phantom stock and deferred stock units), to Participants, alone or
in tandem with other Awards, in such amounts and subject to such terms and
conditions as the Committee shall from time to time in its sole discretion
determine. With respect to such Awards intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, the Committee shall
establish and administer Performance Conditions in the manner described in Section 162(m) and
Treasury Regulations promulgated thereunder as an additional condition to the
vesting and payment of such Awards. In no event may other stock-based Awards
described in this Section 11 be granted to a single Participant in respect
of more than 250,000 shares of Common Stock in any 12-month period. The terms
and conditions of any such other stock-based Awards subject to time-based
restrictions on vesting will be limited as specified in Section 9 for
Awards of restricted stock.

 

 

12.                               Award
Documents. Each Award under the Plan shall be evidenced by an Award
document (which may consist of a term sheet or an agreement, and may be
provided in electronic form) setting forth the terms and conditions, as
determined by the Committee, which shall apply to such Award, in addition to
the terms and conditions specified in the Plan. The Committee may, in its
discretion, place terms in the Award documents that provide for the
acceleration of any time periods relating to the exercise or realization of any
Awards so that such Awards may be exercised or realized in full on or before a
date fixed by the Committee, in connection with a Change of Control.

 

13.                               Change of
Control. The Committee may, in its discretion, at the time an Award
is made hereunder or at any time prior to, coincident with or after the time of
a Change of Control:

 

(i)            provide
for the purchase of such Awards, upon the Participant’s consent, for an amount
of cash equal to the amount which could have been obtained upon the exercise or
realization of such rights had such Awards been currently exercisable or
payable, provided that the Participant’s consent shall not be required if the
Committee takes such action in connection with the consummation of a Change of
Control;

 

(ii)           make
such adjustment to the Awards then outstanding as the Committee deems
appropriate to reflect such transaction or change; and/or

 

(iii)          cause
the Awards then outstanding to be assumed, or new rights substituted therefore,
by the surviving corporation in such Change of Control.

 

The Committee may, in its discretion, include such further provisions
and limitations in any Award document as it may deem equitable and in the best
interests of the Company.

 

14.                               Withholding.
The Company and its subsidiaries shall have the right to deduct from any
payment to be made pursuant to the Plan, or to require prior to the issuance or
delivery of any shares of Common Stock or the payment of cash under the Plan,
any taxes (whether federal, state, local or foreign) to be withheld therefrom.
The Committee may, in its discretion, permit a Participant to elect to satisfy
such withholding obligation by any of the methods pursuant to which the
exercise price of a stock option may be paid pursuant to Section 7. Any
satisfaction of tax obligations through the withholding of shares may only be
up to the statutory minimum tax rate. Any fraction of a share of Common Stock
required to satisfy such obligation shall be disregarded and the amount due
shall instead be paid in cash to the Participant.

 

 

15.                               Transferability.
Except as provided in this Section, during the lifetime of a Participant to
whom an Award is granted, only that Participant (or that Participant’s legal
representative in the case of disability) may exercise a stock option or stock
appreciation right, or receive payment with respect to restricted stock, a
performance award or any other Award. The Committee may permit (on such terms,
conditions and limitations as it determines), an Award of restricted stock,
stock options, stock appreciation rights, performance shares or performance
units or other Awards to be transferred or transferable to the extent
permissible by law and, in the case of an ISO, to the extent permissible under Section 422
of the Code. Other than as stated in the preceding sentence, no Award may be
assigned, alienated, pledged, attached, sold or otherwise transferred or
encumbered by a Participant otherwise than by will or by the laws of descent
and distribution, and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void and unenforceable
against the Company.

 

16.                               Deferrals
and Settlements. The Committee may require or permit Participants to
elect to defer the issuance of shares or the settlement of Awards in cash under
such rules and procedures as it may establish under the Plan. It may also
provide that deferred settlements include the payment or crediting of interest
or dividend equivalents on the deferral amounts. Any such rules or
procedures shall comply with the requirements of Code Section 409A,
including those with respect to the time when a deferral election may be made,
the period of the deferral and the events that would result in the payment of
the deferred amount.

 

17.                               Dividends
and Dividend Equivalents. An Award (including without limitation a
stock option or stock appreciation right) may, if so determined by the
Committee, provide the Participant with the right to receive dividend payments
or dividend equivalent payments with respect to Common Stock subject to the
Award (both before and after the Common Stock subject to the Award is earned,
vested or acquired), which payments may be either made currently or credited to
an account for the Participant, and may be settled in cash or Common Stock, as
determined by the Committee. Any such settlements, and any such crediting of
dividends or dividend equivalents or reinvestment in shares of Common Stock,
may be subject to such conditions, restrictions and contingencies as the
Committee shall establish, including the reinvestment of such credited amounts
in Common Stock equivalents. To the extent any stock option or stock
appreciation right Award is intended to avoid the application of Code Section 409A,
the right to any dividend equivalent payment in connection therewith shall not
be contingent, directly or indirectly, upon the exercise of the related stock
option or stock appreciation right.

 

 

18.                               No Right to
Awards or Employment. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as giving a
Participant the right to continue in the employ of the Company or its
subsidiaries. Further, the Company and its subsidiaries expressly reserve the
right at any time to dismiss a Participant without any liability, or any claim
under the Plan, except as expressly provided herein or in any Award document
entered into hereunder.

 

19.                               Rights as a
Shareholder. Unless the Committee determines otherwise, a
Participant shall not have any rights as a shareholder with respect to shares
of Common Stock covered by an Award until the date the Participant becomes the
holder of record with respect to such shares. No adjustment will be made for
dividends or other rights for which the record date is prior to such date,
except as provided in Section 17.

 

20.                               Adjustment
of and Changes in Common Stock. In the event of any equity
restructuring (within the meaning of Financial Accounting Standard No. 123
(revised 2004), the Committee shall cause there to be made a substitution or
adjustment, as it determines to be equitable in order to prevent a dilution or
enlargement of rights relative to other shareholders of Common Stock, to the
number and kind of shares of Common Stock or other securities issued or
reserved for issuance pursuant to the Plan and to outstanding Awards (including
but not limited to the number and kind of shares of Common Stock or other
securities to which such Awards are subject, and the exercise or strike price
of such Awards) to the extent such other Awards would not otherwise
automatically adjust in the equity restructuring; provided, in each case, that
with respect to ISOs, no such adjustment shall be authorized to the extent that
such adjustment would cause such options to violate Section 422(b) of
the Code or any successor provision; provided further, that no such adjustment
shall be authorized under this Section to the extent that such adjustment
would cause an Award to be subject to adverse tax consequences under Section 409A
of the Code. In the event of a change in corporate capitalization other than an
equity restructuring, which may include a merger, consolidation, or any other
business combination (within the meaning of Financial Accounting Standard No. 141),
or any partial or complete liquidation of the Company, such substitutions or
adjustments described in the foregoing sentence may be made as determined to be
equitable by the Committee to prevent dilution or enlargement of rights
relative to other shareholders of Common Stock. In either case, any such
substitution or adjustment shall be conclusive and binding for all purposes of
the Plan. Unless otherwise determined by the Committee, the number of shares of
Common Stock subject to an Award shall always be a whole number. In no event
shall an outstanding stock option or stock appreciation right be amended for
the sole purpose of decreasing the exercise price or strike price thereof,
except in accordance with Section 21 of the Plan.

 

 

21.                               Amendment;
Repricing. The Board may amend, suspend or terminate the Plan or any
portion thereof at any time, provided that (i) no amendment shall be made
without shareholder approval if such approval is necessary in order for the
Plan to continue to comply with the rules of the New York Stock Exchange
or if such approval is necessary in order for the Company to avoid being denied
a tax deduction under Section 162(m) of the Code, and (ii) no
amendment, suspension or termination may adversely affect any outstanding Award
without the consent of the Participant to whom such Award was made. Except for
adjustments pursuant to Section 20, in no event may any stock option or
stock appreciation right granted under the Plan be amended to decrease the
exercise price or strike price thereof, as the case may be, or be cancelled in
conjunction with the grant of any new stock option or stock appreciation right
with a lower exercise price or strike price, as the case may be, or otherwise
be subject to any action that would be treated, for accounting purposes or
under the rules of the New York Stock Exchange, as a “repricing” of such
stock option or stock appreciation right, unless such amendment, cancellation
or action is approved by the Company’s shareholders in accordance with
applicable law and rules of the New York Stock Exchange.

 

22.                               Government
and Other Regulations. The obligation of the Company to settle
Awards in Common Stock shall be subject to all applicable laws, rules, and
regulations, and to such approvals by governmental agencies as may be required.
Notwithstanding any terms or conditions of any Award to the contrary, the
Company shall be under no obligation to offer to sell or to sell and shall be
prohibited from offering to sell or selling any shares of Common Stock pursuant
to an Award unless such shares have been properly registered for sale pursuant
to the Securities Act of 1933 with the Securities and Exchange Commission or
unless the Company has received an opinion of counsel, satisfactory to the
Company, that such shares may be offered or sold without such registration
pursuant to an available exemption therefrom and the terms and conditions of
such exemption have been fully complied with. The Company shall be under no
obligation to register for sale under the Securities Act of 1933 any of the
shares of Common Stock to be offered or sold under the Plan. If the shares of
Common Stock offered for sale or sold under the Plan are offered or sold
pursuant to an exemption from registration under the Securities Act of 1933,
the Company may restrict the transfer of such shares and may legend the Common
Stock certificates representing such shares in such manner as it deems
advisable to ensure the availability of any such exemption.

 

23.                               Relationship
to Other Benefits. No payment under the Plan shall be taken into
account in determining any benefits under any pension, retirement, profit
sharing, group insurance or other benefit plan of the Company or any subsidiary
or affiliate of the Company except as otherwise specifically provided in such
other plan.

 

24.                               Governing
Law. The Plan shall be construed and its provisions enforced and
administered in accordance with the laws of the State of Minnesota applicable
to contracts made and performed wholly within such state by residents thereof.

 

 

25.                               Effective
Date. The original version of this Plan became effective on July 28,
2004 and this amendment and restatement of the Plan is effective on December 13,
2006. Subject to earlier termination pursuant to Section 21, the Plan
shall have a term often (10) years from its effective date.

 

26.                               Foreign
Employees. Awards may be granted to Participants who are foreign
nationals or employed outside the United States, or both, on such terms and
conditions different from those applicable to Awards to Participants employed
in the United States as may, in the judgment of the Committee, be necessary or
desirable in order to recognize differences in local law or tax policy. The
Committee also may impose conditions on the exercise or vesting of Awards in
order to minimize the Company’s obligation with respect to tax equalization for
Employees on assignments outside their home country.

 

27.                               Compliance
with Code Section 409A.

 

27.1         Separation from Service. If any amount shall be payable with
respect to any Award hereunder as a result of a Participant’s termination of
employment or other service and such amount is subject to the provisions of
Code Section 409A, then notwithstanding any other provision of this Plan,
a termination of employment or other service will be deemed to have occurred
only at such time as the Participant has experienced a “separation from service”
as such term is defined for purposes of Code Section 409A.

 

27.2         Timing of Payment to a Specified Employee.  If any amount shall be payable with respect
to any Award hereunder as a result of a Participant’s “separation from service”
at such time as the Participant is a “specified employee” and such amount is
subject to the provisions of Code Section 409A, then notwithstanding any
other provision of this Plan, no payment shall be made, except as permitted
under Code Section 409A, prior to the first day of the seventh (7th)
calendar month beginning after the Participant’s separation from service (or
the date of his or her earlier death). The Company may adopt a specified
employee policy that will apply to identify the specified employees for all
deferred compensation plans subject to Code Section 409A; otherwise,
specified employees will be identified using the default standards contained in
the regulations under Code Section 409A.Exhibit 10.29

 

THE TRAVELERS DEFERRED COMPENSATION PLAN

FOR NON-EMPLOYEE DIRECTORS (the “Plan”)

(Amended and Restated January 1, 2009)

 

Preamble

 

The Plan was amended and restated with respect to
deferral of director compensation for services rendered after December 31,
2004, in order to satisfy the requirements of Section 409A of the Internal
Revenue Code of 1986, as amended (“Section 409A of the Code”).  Vested amounts earned and deferred by
directors under the Plan for services performed in calendar year 2004 will
remain subject to the terms of the Plan as in effect for periods prior to January 1,
2005.  (A reference copy of the Plan as
in effect on October 3, 2004, with respect to periods of service prior to January 1,
2005, is attached hereto as Exhibit A.) 
The Plan was amended and restated effective December 1, 2004, to
conform the Plan to the requirements imposed by Section 409A and to
preserve the grandfathered status of vested amounts earned and deferred with
respect to services performed prior to January 1, 2005.  The Plan is hereby amended and restated
effective January 1, 2009, in order to make certain additional revisions
to conform the Plan to the requirements of the final regulations promulgated
under Section 409A of the Code, issued April 10, 2007, and related
guidance issued under Section 409A of the Code.

 

The Plan is intended to meet the requirements of
paragraph (2), (3) and (4) of Section 409A(a) of the Code
with respect to amounts that are deferred or become vested on or after January 1,
2005, and the terms and provisions of the Plan applicable to such amounts
should be interpreted and applied in a manner consistent with such
requirements, including the regulations and other guidance issued under Section 409A
of the Code.

 

Section 1.                                               Eligibility.  Each
member of the Board of Directors (the “Board”) of The Travelers Companies, Inc.
(the “Company”) or one of its subsidiaries, if so designated by the Board, who
is not an employee of the Company or any of its subsidiaries (an “Eligible
Director”) is eligible to participate in the Plan.

 

Section 2.                                               Administration.  The
Plan shall be administered, construed and interpreted by the Board.  Pursuant to such authorization, the Board
shall have the responsibility for carrying out the terms of the Plan.  To the extent permitted under the securities
laws applicable to compensation plans including, without limitation, the
requirements of Section 16(b) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), or the Code, the Nominating and Governance
Committee of the Board, or a subcommittee of the Nominating and Governance
Committee, may exercise the discretion granted to the Board under the Plan,
provided that the composition of such committee or subcommittee shall satisfy
the requirements of Rule 16b-3 under the Exchange Act, or any successor rule or
regulation.  The Board or the Nominating
and Governance Committee may also designate a plan administrator to manage the
record keeping and other routine administrative duties under the Plan.  In the absence of the appointment of a plan
administrator, the officer of the Company having direct responsibility for
compensation and benefits shall be the plan administrator.

 

 

Section 3.                                  Deferral
Eligible Amounts.

 

(a)                                  Annual Cash Compensation.  An Eligible Director shall be allowed to
defer any director compensation otherwise payable in cash to an Eligible
Director for services rendered during the calendar year, including cash
compensation attributable to any annual retainer, committee chair or vice-chair
fees, additional fees, meeting fees or other cash compensation (“Annual Cash
Compensation”).  Such deferral shall take
the form of units of Company common stock (“Common Stock Units”) determined as
provided in Section 5(a).

 

(b)                                 Annual Deferred Stock Awards.  An Eligible Director shall be allowed to
defer the payment due with respect to any deferred stock units that have been
awarded to the Eligible Director (“Annual Deferred Stock Awards”) under The
Travelers 2004 Stock Incentive Plan, or any successor thereto (the “Stock
Incentive Plan”), provided that such deferral election shall not apply to any
Common Stock Units credited as a result of an election to defer Annual Cash
Compensation under Section 3(a) of this Plan or Common Stock Units
awarded thereon as dividend equivalent units under the terms of this Plan.  Other than the terms specifically set forth
in the Plan applicable to Annual Deferred Stock Awards, Annual Deferred Stock
Awards shall be governed by the terms of the Stock Incentive Plan and any award
agreement issued pursuant thereto.

 

Section 4.                                  Election to
Defer.

 

(a)                                  Time of Election.

 

(i)                                     Prior
to the beginning of the calendar year, an Eligible Director may elect to defer
Annual Cash Compensation by directing that such amounts that otherwise would
have been payable for services rendered during such calendar year shall be
credited to a deferred compensation account (the “Director’s Account”).  A separate Director’s Account may be
established for the deferrals of Annual Cash Compensation in each calendar
year.  Under a valid election, such
Director’s Account shall be payable in accordance with Section 6(b) below.  Any person who becomes an Eligible Director
during the calendar year, and who has not been eligible to participate in this
Plan (or any other plan required to be aggregated with this Plan under Section 409A
of the Code or the regulations thereunder) at any time during the 24-month
period ending on the date he or she most recently becomes eligible to
participate, may elect, within thirty (30) days after he or she becomes
eligible to participate to defer the Annual Cash Compensation payable for
services performed after the election is made, subject to any prorating of
compensation eligible for deferral that may be required under Section 409A
of the Code.

 

(ii)                                  As
soon as practicable prior to the beginning of a calendar year in which a grant
of an Annual Deferred Stock Award may be made, an Eligible Director may elect
to defer payment due with respect to such Annual Deferred Stock Award in
accordance with Section 6(b) below.

 

2

 

(b)                                 Form and Duration of Election.  An election to defer shall be made by written
notice executed by the Eligible Director and filed with the Secretary of the
Company, which election shall be irrevocable for the calendar year to which it
relates (or the remaining portion thereof in the case of an election filed
during the calendar year by a new Eligible Director).

 

Section 5.                                  The Director’s
Account.  Annual Cash Compensation
that an Eligible Director has elected to defer under the Plan shall be credited
to the Director’s Account as Common Stock Units as follows:

 

(a)                                  As
of the date any Annual Cash Compensation would otherwise be payable in cash to
an Eligible Director, there shall be credited to the Director’s Account a
number of Common Stock Units (full and fractional units to three decimal
places) determined by dividing the Annual Cash Compensation he or she would
otherwise have received in cash but for an election to defer under this Plan by
the Fair Market Value of a share of Company common stock as determined for this
purpose by the Compensation Committee pursuant to the Stock Incentive Plan.

 

(b)                                 As
of the first business day after the end of each calendar quarter, there shall
be credited to each Director’s Account a number of Common Stock Units (full and
fractional units to three decimal places) determined by dividing the cash
dividends that would have been paid on a number of shares of common stock of
the Company equal to the number of Common Stock Units (disregarding fractional
shares) credited to the Director’s Account as of the dividend record date, if
any, occurring during such calendar quarter as if such shares of common stock
had been shares of issued and outstanding common stock on such record date by
the Fair Market Value of a share of Company common stock as determined for this
purpose by the Compensation Committee pursuant to the Stock Incentive Plan.

 

(c)                                  An
Eligible Director shall not have any interest in common stock of the Company as
a result of Common Stock Units being credited to the Director’s Account until
such common stock is distributed in accordance with the Plan.

 

(d)                                 Common
Stock Units credited to the Director’s Account as a result of deferrals,
dividend equivalents or other awards shall be awarded exclusively from and
pursuant to the Stock Incentive Plan.  To
the extent not inconsistent with the terms of the Plan, the Common Stock Units
shall be subject to the terms of the Stock Incentive Plan.

 

3

 

Section 6.                                  Distribution
from Accounts.

 

(a)                                  Form of Election.

 

(i)                                     For
deferral of compensation for services performed prior to January 1, 2005,
an Eligible Director must have already filed with the Secretary of the Company
an initial election with respect to the time and method of distribution of the
Director’s Account with his or her first opportunity to file a deferral
election under the Plan as in effect prior to the amendment and restatement of
the Plan effective January 1, 2005.

 

(ii)                                  For
deferral of compensation for services performed after December 31, 2004,
including Annual Deferred Stock Awards vesting after December 31, 2004, an
Eligible Director must file with the Secretary of the Company an election with
respect to the time and method of distribution of the Director’s Account and
Annual Deferred Stock Awards with the deferral election made pursuant to Section 4(a) of
the Plan.

 

(b)                                 Time and Method of Distribution.  An Eligible Director may elect to receive
payment of the Director’s Account, or payment of Annual Deferred Stock Awards,
in one lump sum payment or in a number of approximately equal annual
installments (provided the payout period does not exceed 15 years).  With respect to the Director’s Account, an
Eligible Director may elect that the lump-sum payment or the first installment
shall be paid as of:

 

(i)                                     the
first business day of any calendar year subsequent to the date the Annual Cash
Compensation would otherwise be payable, as specified by the Director;

 

(ii)                                  six
months following the cessation of his or her service as a director of the
Company; or

 

(iii)                               the
earlier of (i) or (ii).

 

With respect to an Annual Deferred Stock Award, an
Eligible Director may elect that the lump sum payment or the first installment
be paid as of either (x) the date of payment after termination of service
on the Board called for under the award agreement issued in connection with the
Annual Deferred Stock Award, or (y) the first business day of any calendar
year subsequent to such date.

 

Subsequent installments shall be paid as of the first
business day of each succeeding annual installment period until the entire
amount credited to the Director’s Account or all Annual Deferred Stock Awards
shall have been paid.  Each installment
shall equal a number of whole shares of common stock of the Company determined
by dividing the number of Common Stock Units credited to the applicable
Director’s Account or deferred stock units issued under the Annual Deferred
Stock Award by the number of remaining installments, including the current
installment. A cash payment will be made with the final installments for any
fractional Common Stock Unit or fractional deferred stock unit under the Annual
Deferred Stock Award.

 

4

 

Any lump-sum payment will equal a number of whole
shares of common stock of the Company equal to the number of Common Stock Units
credited to the Director’s Account or deferred stock units under the Annual
Deferred Stock Award credited to the Eligible Directors.  A cash payment will be made for any
fractional Common Stock Unit or fractional deferred stock unit under the Annual
Deferred Stock Award.

 

(c)                                  Adjustment of Method of Distribution (Pre-2005
Deferrals).  With respect
to amounts vested prior to January 1, 2005, and deferred by an Eligible
Director under the Plan for services rendered prior to January 1, 2005,
and only with respect to such amounts, including any earnings thereon (the “Pre-2005
Deferrals”), an Eligible Director, in accordance with the terms of the Plan as
in effect prior to October 3, 2004, may at any time file another written
election with the Secretary of the Company to change the date and/or method of
distribution of the balance of his or her Director’s Account or Annual Deferred
Stock Awards attributable to such Pre-2005 Deferrals.  An election under this Section 6(c) to
change the date and/or method of distribution will be effective only if it is
filed with the Secretary of the Company at least one (1) year before the
earlier of the date on which the Eligible Director terminates service on the
Board, or the payment date specified with respect to the Director’s Account
pursuant to Section 6(b)(i).  With
respect to Pre-2005 Deferrals, and only with respect to such amounts in the
event an Eligible Director suffers a severe financial hardship outside the
control of such Eligible Director, as determined by the Governance Committee,
the Eligible Director may elect to advance or defer the date of distribution of
his or her Pre-2005 Deferrals, or change the method of distribution thereof, in
accordance with the terms of the Plan as in effect prior to October 3,
2004.

 

(d)                                 Change of Control (Pre-2005 Deferrals).  With respect to Pre-2005 Deferrals, upon a “Change
of Control” (as defined in the Stock Incentive Plan ), the full balance of each
Director’s Account attributable to Pre-2005 Deferrals shall be distributable on
the earlier of the date six months and one day following the “Change of Control”
or the distribution date(s) previously elected by an Eligible Director, in
accordance with the terms of the Plan as in effect prior to October 3,
2004.

 

Section 7.                                  Distribution
on Death.  If an Eligible
Director dies before the full balance of the Director’s Account and all Annual
Deferred Stock Awards that have been deferred have been distributed to the
Eligible Director, the balance shall be paid (or commence or continue,
depending upon the timing of the Director’s death and whether payments have
previously commenced) within ninety (90) days following such Director’s death,
in accordance with the method of payment elected by the Eligible Director.  Such balance shall be paid in the following
order:  (a) to the beneficiary
designated in writing by such Eligible Director; (b) if no beneficiary
designation has been made, or the designated beneficiary shall have predeceased
the Eligible Director and no further beneficiary designation has been made,
then to the surviving spouse of the Eligible Director; and (c) if the
Eligible Director has no surviving spouse, then to the estate of the Eligible
Director.

 

5

 

Section 8.                                  Miscellaneous.

 

(a)                                  A
Director’s Account shall also be credited with Common Stock Units attributable
to deferred stock units previously credited to his or her account under The St.
Paul Companies, Inc. Deferred Stock Plan for Non-Employee Directors or the
Travelers Property Casualty Corp. Compensation Plan for Non-Employee Directors,
and the administration of such amounts hereinafter shall be governed by the
terms of this Plan as in effect for vested amounts earned and deferred prior to
January 1, 2005 (see Exhibit A).

 

(b)                                 The
right of an Eligible Director to receive any amount in the Director’s Account
or payable pursuant to any Annual Deferred Stock Award that has been deferred
under the Plan shall not be transferable or assignable by such Eligible
Director, except by will or by the laws of descent and distribution, and,
except to the extent otherwise permitted by law, no part of such amount shall
be subject to attachment or other legal process.

 

(c)                                  Except
as otherwise set forth herein and as required to reserve shares of common stock
for issuance pursuant to the terms hereof, the Company shall not be required to
reserve or otherwise set aside funds for the payment of its obligations
hereunder.  The Company shall make
available as and when required a sufficient number of shares of common stock to
meet the requirements arising under the Plan. 
Such shares shall be issued under and pursuant to the Stock Incentive
Plan.

 

(d)                                 The
establishment and maintenance of, or allocation and credits to, the Director’s
Account or the deferral of Annual Deferred Stock Awards shall not vest in the
Eligible Director or his beneficiary any right, title or interest in and to any
specific assets of the Company.  An
Eligible Director shall not have any dividend or voting rights or any other
rights of a shareholder (except as expressly set forth in Section 5(b) with
respect to dividends and as provided in Section 8(h) below) until the
shares of common stock are distributed pursuant to the Plan.  The rights of an Eligible Director to receive
payments under this Plan shall be no greater than the right of an unsecured
general creditor of the Company.

 

(e)                                  Notwithstanding
any other provision hereof, if, at the time of termination of service as a
director, the total balance of an Eligible Director’s Account and Annual
Deferred Stock Awards deferred under the Plan is less than $10,000, such
balance shall be paid in full on the first day of the calendar quarter
following such termination of service.

 

(f)                                    The
Plan shall continue in effect until terminated by the Board.  The Board may at any time amend or terminate
the Plan; provided, however, that (i) no amendment or termination shall
impair the rights of an Eligible Director with respect to amounts then credited
to the Director’s Account or with respect to any Annual Deferred Stock Award
deferred under the Plan; (ii) no amendment shall become effective without
approval of the shareholders of the Company if such shareholder approval is
required to enable the Plan to satisfy applicable state or Federal statutory or
regulatory requirements, or the rules of the New York Stock Exchange; and (iii) no
amendment or termination shall accelerate any payment under the Plan except as
permitted under Section 409A of the Code.

 

6

 

(g)                                 Each
Eligible Director participating in the Plan will receive an annual statement
indicating the number of shares of common stock or Common Stock Units credited
to the Director’s Account and the number of deferred stock units issued under
Annual Deferred Stock Awards that are being deferred under the Plan, as of the
end of the preceding calendar year.

 

(h)                                 If
adjustments are made to outstanding shares of common stock as a result of stock
dividends, stock splits, recapitalizations, mergers, consolidations and similar
transactions, an appropriate adjustment shall be made in the number of shares
of common stock or Common Stock Units credited to the Director’s Account and
the number of deferred stock units issued under Annual Deferred Stock Awards
deferred under the Plan.

 

(i)                                     The
validity, construction, interpretation, administration and effect of the Plan
and of its rules and regulations, and rights relating to the Plan, shall
be determined solely in accordance with the laws of the State of Minnesota,
without regard to the conflicts of laws provisions thereof.

 

(j)                                     All
claims and disputes between an Eligible Director and the Company arising out of
the Plan shall be submitted to arbitration in accordance with the then current
arbitration policy of the Company. 
Notice of demand for arbitration shall be given in writing to the other
party and shall be made within a reasonable time after the claim or dispute has
arisen.  The award rendered by the
arbitrator shall be final, and judgment may be entered upon it in accordance
with applicable law in any court having jurisdiction thereof.  The provisions of this Section 8(j) shall
be specifically enforceable under applicable law in any court having
jurisdiction thereof.

 

(k)                                  If
any term or provision of this Plan or the application thereof to any person or
circumstances shall, to any extent, be invalid or unenforceable, then the
remainder of the Plan, or the application of such term or provision to persons
or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision hereof
shall be valid and be enforced to the fullest extent permitted by applicable
law.

 

(l)                                     If
a termination of service on the Board does not result in a separation from
service under Section 409A of the Code, distributions under the Plan that
are otherwise determined by reference to separation from service on the Board
will instead be determined by reference to separation from service as defined
under Section 409A of the Code.

 

7

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