Document:

Exhibit 10.29

 

 

THE TRAVELERS BENEFIT EQUALIZATION PLAN

 

(As Amended and Restated Effective as of January 1, 2016)

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I INTRODUCTION
    	
1
    
	
1.1
    	
Plan;   Purpose
    	
1
    
	
1.2
    	
Non-Qualified   “Top-Hat” Plan
    	
1
    
	
1.3
    	
Plan   Document
    	
1
    
	
1.4
    	
Effective   Date of Document
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE II DEFINITIONS AND   CONSTRUCTION
    	
2
    
	
2.1
    	
Definitions
    	
2
    
	
2.2
    	
Forum   Selection and Choice of Law
    	
4
    
	
 
    	
 
    	
 
    
	
ARTICLE III PARTICIPATION
    	
5
    
	
3.1
    	
Participation
    	
5
    
	
 
    	
 
    	
 
    
	
ARTICLE IV SUPPLEMENTAL   BENEFITS
    	
5
    
	
4.1
    	
Supplement   Benefits
    	
5
    
	
4.2
    	
Derivation   of Supplemental Benefits
    	
5
    
	
4.3
    	
Time   and Form of Payment
    	
6
    
	
4.4
    	
Earnings   Crediting for Accounts
    	
8
    
	
4.5
    	
Special   Rules
    	
9
    
	
 
    	
 
    	
 
    
	
ARTICLE V DISTRIBUTIONS   AFTER DEATH
    	
9
    
	
5.1
    	
Survivor   Benefits Prior to Benefit Commencement Dates
    	
9
    
	
5.2
    	
Payment   After Benefit Commencement Dates
    	
10
    
	
5.3
    	
Beneficiary   Designation
    	
10
    
	
5.4
    	
No   Other Survivor Benefits
    	
10
    
	
 
    	
 
    	
 
    
	
ARTICLE VI CONTRACTUAL   OBLIGATIONS AND FUNDING
    	
10
    
	
6.1
    	
Payment   of Benefits
    	
10
    
	
6.2
    	
Corporate   Transactions
    	
10
    
	
6.3
    	
Funding
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE VII AMENDMENT AND   TERMINATION OF PLAN
    	
11
    
	
7.1
    	
Right   to Amend or Terminate
    	
11
    
	
7.2
    	
Limits   on Effect of Amendment or Termination
    	
12
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII ADMINISTRATION/CLAIMS   PROCEDURES
    	
12
    
	
8.1
    	
Administration
    	
12
    
	
8.2
    	
Correction   of Errors And Duty to Review Information
    	
13
    
	
8.3
    	
Claims   Procedure
    	
13
    
	
8.4
    	
Indemnification
    	
14
    
	
8.5
    	
Exercise   of Authority
    	
14
    
	
8.6
    	
Telephonic   or Electronic Notices and Transactions
    	
14
    
	
 
    	
 
    	
 
    
	
ARTICLE IX MISCELLANEOUS
    	
14
    
	
9.1
    	
Nonassignability
    	
14
    
	
9.2
    	
Withholding
    	
15
    
	
9.3
    	
Successors   of Travelers
    	
15
    
	
9.4
    	
Employment   Not Guaranteed
    	
15
    
	
9.5
    	
Gender,   Singular and Plural
    	
15
    
	
9.6
    	
Captions
    	
15
    
	
9.7
    	
Validity
    	
15
    
	
9.8
    	
Waiver   of Breach
    	
15
    
	
9.9
    	
Notice
    	
15
    
	
9.10
    	
Facility   of Payment
    	
15
    
	
 
    	
 
    	
 
    
	
APPENDIX A EXECUTIVE SAVINGS   PLUS
    	
1
    

 

i

 

THE TRAVELERS BENEFIT EQUALIZATION PLAN

 

ARTICLE I

 

INTRODUCTION

 

1.1                               PLAN; PURPOSE.  THE TRAVELERS BENEFIT EQUALIZATION PLAN is sponsored by The Travelers Companies, Inc. to attract high-quality executives and to provide eligible executives with the additional benefits they would have received under the Retirement Plan but for the limits imposed on the compensation that can be taken into account under the Retirement Plan (Code § 401(a)(17)), the limits imposed on the benefits accrued and payable under the Retirement Plan (Code § 415(b)), or the reduction in the compensation base under the Retirement Plan as a result of an election to reduce compensation and make elective deferrals under a nonqualified deferred compensation plan of the Company or an Affiliate.

 

The Plan was initially adopted effective January 1, 1976 as The St. Paul Companies, Inc. Excess Benefit Plan, and has been amended and restated from time to time thereafter.  Effective January 1, 2005, the Plan was amended to “freeze” the Executive Savings Plan component of the Plan (which now appears in Appendix A).  Effective January 1, 2009, the Plan was amended and restated to bring the Plan into full documentary compliance with Code § 409A, and also to reflect the merger of the Travelers Benefit Equalization Plan with and into the Plan.  From January 1, 2005 to its restatement effective January 1, 2009, the Plan was operated in good faith compliance with Code § 409A.

 

Participants in the Plan who are not Active Participants at any time on or after January 1, 2005 — which is the effective date of Code § 409A — are intended to be “grandfathered” and thus exempt from the application of Code § 409A.  The rights of such grandfathered Participants will be determined in accordance with the provisions of the Plan in effect prior to January 1, 2005, as such terms may be amended in a manner that preserves “grandfather” status under Code § 409A.

 

1.2                               NON-QUALIFIED “TOP-HAT” PLAN.

 

1.2.1                     ERISA Status.  The Plan is a “top-hat” plan — that is, an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of ERISA §§ 201(2), 301(a)(3) and 401(a)(1), and therefore is exempt from Parts 2, 3 and 4 of Title I of ERISA.

 

1.2.2                     Compliance with Code § 409A.  The Plan also is a nonqualified deferred compensation plan that is intended to meet the requirements of paragraph (2), (3) and (4) of Code § 409A.  The terms and provisions of the Plan should be interpreted and applied in a manner consistent with such requirements, including the regulations and other guidance issued under Code § 409A.

 

1.3                               PLAN DOCUMENT.

 

1.3.1                     Plan Documents.  The Plan consists of this document, any appendix to this document and any document that is expressly incorporated by reference into this document.

 

1.3.2                     Modifications by Employment or Similar Agreement.  The Company or an Affiliate may be a party to an employment or similar agreement with a Participant, the terms of which may enhance or modify in some respect the benefits provided under this Plan, including, but not necessarily limited to, an enhancement to or modification of the benefit amount, payment forms and/or other rights and features of the Plan.  The Plan consists only of this document and the core documents referenced in Sec. 1.3.1. Accordingly, any contractual rights that a Participant may have to any enhancement or modification called for under an employment or similar agreement are rights that derive from such agreement and not directly from the Plan.  Nonetheless, the Plan will be applied in a manner that takes into account any enhancements or modifications called for under an enforceable employment or similar agreement as if such provisions were part of the Plan; provided that, no change can be made to the Plan by means of an employment or similar agreement that would not have been allowed by means of an amendment to the Plan (for example, an amendment inconsistent with Code § 409A).

 

1.4                               EFFECTIVE DATE OF DOCUMENT.  The Plan (as amended and restated in this document) is effective January 1, 2016, to apply to accruals on and after that date, and also to accruals prior to that date with respect to any Participant (or Beneficiary) who has not commenced payment of his/her benefits under the Plan.

 

 

ARTICLE II

 

DEFINITIONS AND CONSTRUCTION

 

2.1                               DEFINITIONS.

 

2.1.1                     “Account” means a hypothetical record-keeping account to which the value of a Participant’s Excess Benefit is credited following Separation from Service to ultimately derive the Supplemental Benefit.

 

2.1.2                     “Administrative Committee” means the committee chartered by the Company to execute the Company’s duties and responsibility as administrator of the Company’s qualified and non-qualified deferred compensation plans.

 

2.1.3                     “Actuarial Equivalent” means a benefit having the same value as the benefit which it replaces, determined using the actuarial assumptions or factors specified in the Plan, or if no assumptions or factors are specified, using the assumptions or factors used for the most comparable purpose under the Retirement Plan.

 

2.1.4                     “Affiliate” means any business entity that is required to be aggregated and treated as one employer with the Company under Code § 414(b) or (c) (and for purposes of determining whether a Separation from Service has occurred, a standard of “at least 80 percent” will be used to identify an Affiliate under Code § 414(b) and (c) notwithstanding the default standard of “at least 50 percent” found in Treas. Reg. § 1.409A-1(h)(3)).

 

2.1.5                     “Beneficiary” means a person or persons designated as such pursuant to Sec. 5.3.

 

2.1.6                     “Benefit Commencement Date” means the date on which a Supplemental Benefit is paid in the form of a lump-sum, or starts to be paid in the form of an annuity or in installments.

 

2.1.7                     “Benefits Investment Committee” means the committee chartered by the Company to manage and invest the assets of the Company’s qualified and non-qualified deferred compensation plans.

 

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

 

2.1.9                     “Code” means the Internal Revenue Code of 1986, as amended.

 

2.1.10              “Company” means The Travelers Companies, Inc.

 

2.1.11              “Domestic Partner” means a person of the same or opposite sex who is not a Spouse if, with respect to such person, a Participant has on file with the Company (and has not terminated) an affidavit attesting that one of the following requirements is satisfied:

 

(a)                                 Such person is recognized as legally joined in a civil union with a Participant by the laws of the state where the relationship is formed (and is not legally separated from such Participant); or

 

(b)                                 All of the following conditions are satisfied:

 

(1)                                 The Participant and the other person have a long-term, intimate, committed relationship with each other, which is demonstrated to be one of mutual caring, affection, and responsibility for each other’s common welfare;

 

(2)                                 The Participant and the other person hold themselves out as in a relationship similar to marriage;

 

(3)                                 The Participant and the other person intend to continue their relationship with each other indefinitely;

 

(4)                                 The Participant and the other person are not married to anyone else; and further (i) at least six months has elapsed since the divorce of either from a prior spouse or the death of a prior spouse, and (ii) at least six months has elapsed since the Participant notified the Company that a previous domestic partnership has ended;

 

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(5)                                 The Participant and the other person are each other’s sole domestic partner;

 

(6)                                 The Participant and the other person are at least age eighteen (18), and both are legally capable to enter into a contract;

 

(7)                                 The Participant and the other person are not related by blood closer than permitted by marriage law in their state of residence;

 

(8)                                 The Participant and the other person share a principal residence and have lived together for at least the six-consecutive-month period immediately prior to the date the Participant files the domestic partner affidavit;  and

 

(9)                                 The Participant and the other person are jointly responsible to each other for basic living expenses.

 

2.1.12              “Eligible Employee” means any Employee of the Company or an Affiliate (while it is an Affiliate) who is:

 

(a)                                 A participant in the Retirement Plan; and

 

(b)                                 A Highly Compensated Employee (as defined in the Retirement Plan).

 

The Company, in its sole and absolute discretion, may determine that an Employee described above will not be an Eligible Employee.

 

The Plan is intended to cover only those Employees who are in a select group of management or highly compensated employees within the meaning of ERISA §§ 201(2), 301(a)(3) and 401(a)(1); and, accordingly, if any interpretation is issued by the Department of Labor that would exclude any Employee from satisfying that requirement, such Employee immediately will cease to be an Eligible Employee.

 

2.1.13              “Employee” means any common-law employee of the Company or an Affiliate (while it is an Affiliate).

 

2.1.14              “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

2.1.15              “Excess Benefit” means the value calculated under the applicable provisions of Sec. 4.2.1 to generally reflect the benefits lost under the Retirement Plan as a result of certain tax-law limits, and which is used to derive the Supplemental Benefit payable under this Plan.

 

2.1.16              “Normal Retirement Age” means age sixty-five (65).

 

2.1.17              “Participant” means Active Participant or Inactive Participant.  An “Active Participant” is described in Article III; and an “Inactive Participant” is any former Active Participant who has not yet received (or deemed to have received) full payment of his/her Supplemental Benefit under Plan.

 

2.1.18              “Plan” means The Travelers Benefit Equalization Plan.

 

2.1.19              “Plan Year” means the calendar year.

 

2.1.20              “Preserved Legacy Travelers Supplemental Benefit” means the supplemental benefit that would have been payable to a participant under the Travelers Benefit Equalization Plan if he/she had terminated employment on December 31, 2004; provided that, if on such date a participant would have been entitled to an enhanced early retirement benefit, this benefit will be calculated as if the Participant were entitled instead to a normal retirement benefit.

 

2.1.21              “Retirement Plan” means The Travelers Pension Plan.

 

2.1.22              “Separation from Service” means that the Company and the Participant anticipate that the Participant will perform no future services (as an employee or a contractor) for the Company and its Affiliates or that the level of services (as an employee or contractor) the Participant will perform for the Company and its Affiliates will permanently decrease to twenty percent (20%) or less of the average level of services over the immediately preceding thirty-six (36) month period (or the full period of services if the Participant has been providing services to the Company or an Affiliate for less than thirty-six (36) months).  In the event of a bona fide leave of absence, a

 

3

 

Separation from Service will be deemed to have occurred on the date that is six (6) months (or in the case of a disability leave, the maximum duration of the leave under the Company’s policies in effect at the time the disability leave begins (the “maximum disability leave period”), provided, however, that the maximum disability leave period may not exceed twenty-nine (29) months) following the start of such leave, provided that, if the Participant has a statutory or contractual right to return to active employment that extends beyond the end of such six (6) month period or the maximum disability leave period, the Separation from Service will be deemed to have occurred upon the expiration of such statutory or contractual right, and if the individual has a Termination of Employment during such six (6) month period or the maximum disability leave period, the Separation from Service will be deemed to have occurred on such Termination of Employment.  A “disability” leave for this purpose means an absence due to a medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six (6) months, where such impairment causes the Participant to be unable to perform the duties of his/her position of employment or any substantially similar position.

 

Whether a Separation from Service occurs in the case of a corporate transaction may be affected by the provisions of Sec. 6.2.

 

2.1.23              “Specified Employee” means an Employee who at any time during the twelve-month period ending on the identification date was a “key employee” as defined under Code § 416(i) (applied in accordance with the regulations thereunder, but without regard to paragraph (5) thereof).

 

The Company may adopt a Specified Employee Identification Policy which specifies the identification date, the effective date of any change in the key employee group, compensation definition and other variables that are relevant in identifying Specified Employees, and which may include an alternative method of identifying Specified Employees consistent with the regulations under Code § 409A.  In the absence of any such policy or policy provision, for purposes of the above, the “identification date” is each December 31st, and an Employee who satisfies the above conditions will be considered to be a “Specified Employee” from April 1st following the identification date to March 31st of the following year, and the compensation and other variables, and special rules for corporate events and special rules relating to nonresident aliens, that is necessary in identifying Specified Employees will be determined and applied in accordance with the defaults specified in the regulations under Code § 409A.  Any Specified Employee Identification Policy will apply uniformly to all nonqualified deferred compensation plans subject to Code § 409A that are maintained by the Company or an Affiliate.

 

2.1.24              “Spouse” means a person of the same or opposite sex who is recognized by the laws of the state or country where the relationship is formed as being legally joined with the Participant in a marriage (this may include a common-law marriage in those states that recognize common-law marriage, but it does not include a domestic partnership or civil union), provided that acceptable proof of marriage has been submitted to the Company by the Participant (and a former Spouse may be treated as a current Spouse to the extent provided in a domestic relations order).  Status as a  “Spouse” is determined as of the date for which such status is relevant under the terms of the Plan, and any government action or decision that results in any retroactive reclassification of any person as being or not being a Spouse will be recognized under the Plan only prospectively from the effective date of such governmental action or decision.

 

2.1.25              “Supplemental Benefit” means the benefit payable to a Participant under the provisions of the Plan.

 

2.1.26              “Termination of Employment” means that the common-law employer-employee relationship has ended between the individual and the Company and its Affiliates, as determined under the employment policies and practices of the Company (including by reason of voluntary or involuntary termination, retirement, death, expiration of and failure to return from a recognized leave of absence, or otherwise).  A Termination of Employment does not occur merely as a result of transfer of employment from one Affiliate to another Affiliate, or from the Company to an Affiliate or from an Affiliate to the Company.

 

2.1.27              “Valuation Date” means any date on which trading occurs on the New York Stock Exchange.

 

2.2                               FORUM SELECTION AND  CHOICE OF LAW.  If there is ever a dispute arising under or relating to the Plan that is not required to be submitted to arbitration as provided in Sec. 8.3.3, that dispute must be submitted to the United States District Court for the District of Minnesota, provided that court has jurisdiction.  By participating in the Plan, or by asserting an entitlement to any right or benefit under the Plan, each Participant or Beneficiary consents to the exercise of personal jurisdiction over him or her by the United States District Court for the District of Minnesota, and waives any argument that that forum is not a convenient forum in which to resolve the lawsuit.  This Plan is governed by ERISA, and state law is generally preempted.  To the extent state law applies, the Plan is governed by the laws of the State of Minnesota, without giving effect to its conflict of law rules.

 

4

 

ARTICLE III

 

PARTICIPATION

 

3.1                               PARTICIPATION.

 

3.1.1                     Active Participants.  All Eligible Employees will be Active Participants, and enrollment is not required to participate in the Plan.

 

3.1.2                     End of Active Participation and Participation.  An Active Participant will continue as an Active Participant until the earlier of the following:

 

(a)                                   The date he/she ceases to be an Eligible Employee (for any reason, including Separation from Service); or

 

(b)                                   The date on which the Plan is terminated and liquidated pursuant to Sec. 7.2.2.

 

A Participant will continue as a Participant until having received a full distribution of the benefit due under the Plan.

 

ARTICLE IV

 

SUPPLEMENTAL BENEFITS

 

4.1                               SUPPLEMENT BENEFITS.  A Participant’s Supplemental Benefit will be derived from his/her Excess Benefit and/or Preserved Legacy Travelers Supplemental Benefit as determined under Sec. 4.2, and will be paid at the time and in the form provided under Sec. 4.3.

 

4.2                               DERIVATION OF SUPPLEMENTAL BENEFITS.

 

4.2.1                     Excess Benefit.  A Participant’s Supplemental Benefit will be derived from his/her Excess Benefit, which is determined as follows:

 

(a)                                 Cash Balance Only Participant.  If the Participant is a “Cash Balance Participant” (as defined below) and is not described in (b) or (c), his Excess Benefit is a single lump-sum amount payable equal to A minus B, where:

 

“A” =                 The balance that would have been in the Participant’s Cash Balance Account under the Retirement Plan if credits had been determined without regard to:

 

(i)                                     The limit on compensation taken into account under the Retirement Plan under Code § 401(a)(17); and

 

(iii)                               The exclusion of amounts deferred by the Participant under The Travelers Deferred Compensation Plan (or other non-qualified deferred compensation plan maintained or previously maintained by the Company or Affiliate) from the compensation base used in determining the benefit accrued and payable under the Retirement Plan.

 

“A” will also include the difference, if any, between the lump-sum benefit that would be payable under the Retirement Plan without regard to the benefit limits of Code § 415(b) and the lump-sum benefit actually payable under the Plan.

 

“B” =                 The actual balance of the Participant’s Cash Balance Account under the Retirement Plan.

 

A Participant is a “Cash Balance Participant” for this purpose if he/she has a Cash Balance Accrued Benefit under the Retirement Plan.

 

(b)                                 Grandfathered Traditional Formula Only Participant - Retirement Eligible.  If the Participant is a “Grandfathered Traditional Formula Participant” (as described below) and is not described in (a), and he/she is entitled to an immediate commencement annuity under the Retirement Plan (or would be so

 

5

 

                                                entitled if he/she had a Termination of Employment), his/her Excess Benefit is an immediate single life annuity equal to A minus B, where:

 

“A” =                 The immediate single life annuity that would be payable under the Retirement Plan (including any early commencement subsidies that would be payable at that point) if such benefit had been determined without regard to:

 

(i)                                     The limit on compensation taken into account under the Retirement Plan under Code § 401(a)(17);

 

(ii)                                  The limit on the benefits payable under the Retirement Plan under Code § 415(b); and

 

(iii)                               The exclusion of amounts deferred by the Participant under The Travelers Deferred Compensation Plan (or other non-qualified deferred compensation plan maintained or previously maintained by the Company or Affiliate) from the compensation base used in determining the benefit accrued and payable under the Retirement Plan.

 

“B” =                 The actual immediate single life annuity under the Retirement Plan.

 

A Participant is a “Grandfathered Traditional Formula Participant” for this purpose if he/she has a Grandfathered Traditional Formula Accrued Benefit under the Retirement Plan.

 

(c)                                  Grandfathered Traditional Formula Only Participant - Not Retirement Eligible.  If the Participant is a “Grandfathered Traditional Formula Participant” (as described in (b)) and is not described in (a), but is not entitled to an immediate commencement annuity under the Retirement Plan (and would not be so entitled if he had a Termination of Employment), his/her Excess Benefit is a deferred single life annuity starting as of first day of the month following his/her Normal Retirement Age, equal to A minus B, where:

 

“A” =                 The deferred single life annuity that would be paid under the Retirement Plan if such benefit had been determined without regard to:

 

(i)                                     The limit on compensation taken into account under the Retirement Plan under Code § 401(a)(17);

 

(ii)                                  The limit on the benefits payable under the Retirement Plan under Code § 415(b); and

 

(iii)                               The exclusion of amounts deferred by the Participant under The Travelers Deferred Compensation Plan (or other non-qualified deferred compensation plan maintained or previously maintained by the Company or Affiliate) from the compensation base used in determining the benefit accrued and payable under the Retirement Plan.

 

“B” =                 The actual deferred single life annuity under the Retirement Plan.

 

(d)                                 Cash Balance and Grandfathered Traditional Formula Participant.  If the Participant is described in both (a) and (b), or (a) and (c), his/her Excess Benefit is the combination of the two.

 

4.2.2                     Special Rule for Legacy Travelers Participants.  In the case of a Legacy Travelers Participant, his/her Supplemental Benefit will also include his/her Preserved Legacy Travelers Supplemental Benefit.

 

4.3                               TIME AND FORM OF PAYMENT.

 

4.3.1                     Time of Payment.  A Participant’s Supplemental Benefit will be paid (or start to be paid) at the following time:

 

(a)                                 Immediately Payable Benefits.  With respect to a Supplement Benefit derived from an Excess Benefit determined under Sec. 4.2.1(a) (for a Cash Balance Participant) or under Section 4.2.1(b) (for a Grandfathered Traditional Formula Participant entitled to an immediate commencement annuity), the first payroll date in the seventh (7th) month following the date of the Participant’s Separation from Service.

 

6

 

(b)                                 Deferred Benefits.  With respect to a Supplemental Benefit derived from an Excess Benefit determined under Sec. 4.2.1(c) (for a Grandfathered Traditional Formula Participant entitled to a deferred commencement annuity), the later of:

 

(i)                                     The first payroll date in the seventh (7th) month following the date of the Participant’s Separation from Service; or

 

(ii)                                  If the Participant has at least one but less than ten (10) Years of Service, the first payroll date in the month after the month in which the Participant attains age sixty-two (62), or, if the Participant has ten (10) or more Years of Service, the first payroll date in the month after the month in which the Participant attains age fifty-five (55).

 

(c)                                  Preserved Legacy Benefits.  With respect to a Supplemental Benefit derived from a Preserved Legacy Travelers Supplemental Benefit, the later of:

 

(i)                                     The first payroll date in the seventh (7th) month following the date of the Participant’s Separation from Service; or

 

(ii)                                  The first payroll date in the month after the month in which the Participant attains age fifty-five (55).

 

(d)                                 For purposes of determining the time of payment in this Sec. 4.3.1 (and not for purposes of determining the value of the Excess Benefit under Sec. 4.2.1), the entitlement to an immediate or deferred benefit under the Retirement Plan, as referenced in Sec. 4.2.1(b) or Sec. 4.2.1(c), will be determined in accordance with the provisions of the Retirement Plan in effect immediately prior to September 1, 2014.  For that reason, the Retirement Plan amendment that first becomes effective for Benefit Commencement Dates on or after September 1, 2014 will not accelerate the timing of any Excess Benefit under this Plan.

 

The above payment timing rules are intended to prevent any Specified Employee (and other Participants) from receiving a payment due to his/her Separation from Service prior to the first payroll date in the seventh (7th) month following the date of his/her Separation from Service, except in the case of an intervening death of the Participant as provided in Article V.

 

Any payment may be delayed if necessary for administrative reasons, at the sole discretion of the Company, to a later date within the calendar year or, if later, to the fifteenth (15th) day of the third calendar month following the Benefit Commencement Date.

 

4.3.2                     Form of Payment.  A Participant’s Supplemental Benefit will be paid in the following form:

 

(a)                                 General Rule (Other Than Preserved Legacy Benefits).  If the value of the Excess Benefit as of the applicable measurement date is fifty-thousand dollars ($50,000) or less, the Supplemental Benefit derived from such Excess Benefit) will be paid in the form of a single lump-sum payment; otherwise, it will be paid in the form of ten (10) annual installments, determined under Sec. 4.3.4.

 

The “value” of an Excess Benefit for this purpose is the sum of the Excess Benefit determined under Section 4.2.1(a) (for a Cash Balance Participant) as of the applicable measurement date, and the Actuarial Equivalent lump-sum value of the Excess Benefit determined under Sec. 4.2.1(b) or (c) (for a Grandfathered Traditional Formula Participant) as of the applicable measurement date.  Actuarial Equivalence for this purpose will be determined using the Applicable Interest Rate and Applicable Mortality Table then in effect under the Retirement Plan.

 

The “applicable measurement date” for this purpose is the date of Separation from Service (or later date selected for administrative convenience by the Company) or, in the case of an Excess Benefit determined under Sec. 4.2.1(c) (for a Grandfathered Traditional Formula Participant entitled to a deferred commencement annuity), such later date specified in Sec. 4.3.1(b)(ii).

 

(b)                                 Preserved Legacy Travelers Supplement Benefits.  The Supplemental Benefit derived from a Preserved Legacy Travelers Supplemental Benefit will be paid in accordance with the payment election made by the Participant with respect thereto prior to December 31, 2006.  If a Participant failed to file a timely election, he/she will be deemed to have elected to receive his/her entire Preserved Legacy Travelers Supplement Benefit as a life contingent annuity.

 

7

 

A Participant who elects a life contingent annuity (or who is defaulted into a life contingent annuity) may elect to receive either of the following:

 

(i)                                     A single life annuity — that is, a monthly annuity payable to the Participant for life, with the last payment being the payment for the month in which the individual dies; or

 

(ii)                                  A joint and survivor annuity with a survivor percentage of 50%, 75% or 100% - that is, a monthly annuity payable to the Participant for life, with the provision that, if the Participant’s joint annuitant survives the Participant, a monthly annuity payable to such joint annuitant for life equal to fifty percent (50%), seventy-five percent (75%) or one-hundred percent (100%), as elected by the Participant, of the monthly annuity previously payable to the Participant.

 

Each life contingent annuity will have a value that is the Actuarial Equivalent of the value of each other life contingent annuity, with Actuarial Equivalence determined using the Applicable Interest Rate and Applicable Mortality Table.

 

Notwithstanding the above, if a Participant is receiving or is scheduled to receive annuity payments of a Preserved Legacy Travelers Supplemental Benefit and the Actuarial Equivalent value of the remaining annuity payments is five-thousand dollars ($5,000) or less (or, if smaller, the limit then in effect under Code § 402(g)), the Company may, in its sole discretion, provide for the cash-out of the remaining annuity payments in the form of a lump-sum payment to the Participant. The amount of such lump-sum payment will equal the Actuarial Equivalent value of the remaining annuity payments, and will be paid only if the payment would result in a distribution of the Participant’s entire benefit under this Plan (and the Participant is not entitled to any further benefit under any other plan that is required to be aggregated with this Plan under Treas. Reg. § 1.409A-1(c)(2)).  This cash-out provision will apply to Participants who terminate employment both before and after the addition of this cash-out provision effective January 1, 2012.

 

4.3.3                     Deposit Into Bookkeeping Account.  The value of an Excess Benefit as determined under Sec. 4.3.2(a) as of the applicable measurement date will be credited to an Account maintained on behalf of the Participant on, or as soon as administratively practicable after, the applicable measurement date, which Account will be adjusted for earnings credits in the manner provided in Sec. 4.4.

 

Accounts are for bookkeeping purposes only and the maintenance of Accounts will not require any segregation of assets of the Company or any Affiliate.  Neither the Company nor any Affiliate will have any obligation whatsoever to set aside funds for the Plan or for the benefit of any Participant or Beneficiary, and no Participant or Beneficiary will have any rights to any amounts that may be set aside other than the rights of an unsecured general creditor of the Company or Affiliate that employs (or employed) the Participant.

 

4.3.4                     Determination of Installment Payments.  If a Supplemental Benefit is paid in the form of annual installments, the first annual installment amount will be established by dividing the balance of the Account as of the Benefit Commencement Date, or an earlier date selected for administrative convenience by the Company, by ten (10), and each subsequent installment will be determined by dividing the remaining balance of the Account as of the scheduled installment date, or an earlier date selected for administrative convenience by the Company, by the number of remaining installments (including the installment to be made at that time).

 

Each installment payment will be treated as a separate payment for purposes of Code § 409A.

 

4.4                               EARNINGS CREDITING FOR ACCOUNTS.

 

4.4.1                     Earnings Credits for Bookkeeping Accounts.  Accounts will be adjusted (increased or decreased) as of each Valuation Date to reflect earnings credits as determined hereunder.

 

Earnings credits will be determined based on the performance of one or more investment options deemed to be available under the Plan.

 

The Company, in its sole discretion, will determine the investment options that will be available as benchmarks for determining the earnings credit, which may include mutual funds, common or commingled investment funds, group annuity contracts or any other investment option deemed appropriate by the Company, and may include a fund that is deemed to invest in common stock of the Company.  The Company may at any time and from time to time add to, remove from or substitute the investment options deemed to be available under the Plan.

 

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A Participant (or Beneficiary following the death of the Participant) will be allowed on a hypothetical basis to direct the investment of his Account among the investment options available under the Plan. Hypothetical investment directions may be given with such frequency as is deemed appropriate by the Company, and must be made in such percentage or dollar increments, in such manner and in accordance with such rules as may be prescribed for this purpose by the Company (including by means of a voice response or other electronic system under circumstances so authorized by the Company).  If an investment option has a loss, the earnings credit attributable to such investment option will serve to reduce the Account; similarly, if an investment option has a gain, the earnings credit attributable to such investment option will serve to increase the Account.  If the Participant fails to elect an investment option, the earnings credit will be based on such “default” investment option as may be selected for this purpose by the Company.

 

Earnings credits (both increase and reductions) will be reflected through the date of payment.

 

4.4.2                     Hypothetical Investments.  All investment directions of a Participant or Beneficiary will be on a “hypothetical” basis for the sole purpose of establishing the earnings credit for his/her Account — that is, the Account will be adjusted for earnings credits as if the Account were invested pursuant to the investment directions of the Participant or Beneficiary, but actual investments need not be made pursuant to such directions.  However, the Company, in its sole discretion and without any obligation, may direct that investments be made per the investment directions of Participants and Beneficiaries in order to hedge the liability of the Company and its Affiliates.

 

4.5                               SPECIAL RULES.

 

4.5.1                     Supplemental Benefit Conditioned on Vesting.  A Participant will be entitled to a Supplemental Benefit only if he/she is vested in and entitled to a pension under the Retirement Plan.

 

4.5.2                     No Duplicative Benefits.  In no event will any benefits be payable under this Plan that would duplicate benefits that become payable under any other non-qualified retirement plan maintained by the Company or any Affiliate based upon the same period of service for the Company or Affiliate.

 

4.5.3                     Benefits Due Only for Time in Eligible Group.  If a Participant ceases to be an Eligible Employee prior to his/her actual Separation from Service (for example, if the Company removes the Employee as an Eligible Employee), the Excess Benefit of a Participant under Sec. 4.2 will be calculated as if the Participant had a Separation from Service as of the date he/she ceased to be an Eligible Employee.

 

ARTICLE V

 

DISTRIBUTIONS AFTER DEATH

 

5.1                               SURVIVOR BENEFITS PRIOR TO BENEFIT COMMENCEMENT DATES.

 

5.1.1                     Entitlement to a Survivor Benefit.  A Survivor Benefit determined in accordance with this Sec. 5.1 will be payable to the Beneficiary of a Participant if:

 

(a)                                 The Participant is vested in a pension under the Retirement Plan; and

 

(b)                                 The Participant dies before his/her Benefit Commencement Date.

 

If a Participant dies before he/she is vested in a pension under the Retirement Plan, no Survivor Benefit will be payable under the Plan.

 

5.1.2                     Survivor Benefit Attributable to Cash Balance Supplemental Benefit.  The Survivor Benefit attributable to an Excess Benefit determined under Sec. 4.2.1(a) (for a Cash Balance Participant) will be a lump-sum payment in an amount equal to such Excess Benefit, which will be paid to the Participant’s Beneficiary within ninety (90) days following the death of the Participant.

 

5.1.3                     Survivor Benefit Attributable to Grandfathered Traditional Formula Supplemental Benefit.  The Survivor Benefit attributable to an Excess Benefit determined under Sec. 4.2.1(b) or (c) (for a Grandfathered Traditional Formula Participant) will be a lump-sum payment in an amount equal to the applicable percentage of the Actuarial Equivalent lump-sum value of the Excess Benefit determined under Sec. 4.2.1(b) or (c), which will be paid to the Participant’s Beneficiary within ninety (90) days following the death of the Participant.

 

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The “applicable percentage” for this purpose is fifty percent (50%), unless the Participant then has full (100%) survivor protection in place under the Retirement Plan, in which case the applicable percentage will be one-hundred percent (100%).

 

Actuarial Equivalence for this purpose will be determined using the Applicable Interest Rate and Applicable Mortality Table.

 

5.1.4                     Survivor Benefit Attributable to Legacy Travelers Preserved Supplemental Benefit.  The Survivor Benefit attributable to a Legacy Travelers Preserved Supplemental Benefit will equal the survivor benefit determined under the Retirement Plan for the comparable pension benefit on which the Legacy Travelers Preserved Supplemental Benefit was derived under this Plan.

 

5.2                               PAYMENT AFTER BENEFIT COMMENCEMENT DATES.  If a Participant dies after his/her Benefit Commencement Date, any remaining balance in his/her Account will be paid to the Participant’s Beneficiary in a single lump-sum payment within ninety (90) days after the death of the Participant.  If the Participant was receiving an annuity attributable to an Excess Benefit or Preserved Legacy Travelers Supplemental Benefit at the time of his/her death, the form of annuity will determine whether any payments remain payable following the death of the Participant.

 

5.3                               BENEFICIARY DESIGNATION.

 

5.3.1                     General Rule.  Any Survivor Benefit will be paid to the Participant’s designated Beneficiary.  A Participant may designate any person (natural or otherwise, including a trust) as his/her Beneficiary to receive any Survivor Benefit payable under the Plan, and may change or revoke a designation previously made without the consent of any Beneficiary.

 

5.3.2                     Form and Method of Designation.  A Beneficiary designation must be made on such form and in accordance with such rules as may be prescribed for this purpose by the Company. A Beneficiary designation will be effective (and will revoke all prior designations) if it is received by the Company (or if sent by mail, the post-mark of the mailing is) prior to the date of death of the Participant.  The Company may rely on the latest Beneficiary designation on file (or if an effective designation is not on file may direct that payment be made pursuant to the default provision of the Plan) and will not be liable to any person making claim for such payment under a subsequently filed designation or for any other reason.

 

5.3.3                     Default Designation.  If a Beneficiary designation is not on file for a Participant,  or if no designated Beneficiary survives the Participant, the Participant’s Beneficiary will be deemed to be the first of the following categories applicable to the Participant:

 

(a)           Surviving Spouse or Domestic Partner; or if none,

 

(b))          Participant’s estate.

 

5.4                               NO OTHER SURVIVOR BENEFITS.  No survivor benefits are payable to anyone with respect to a Participant except as provided in Sec. 5.1 or Sec. 5.2.

 

ARTICLE VI

 

CONTRACTUAL OBLIGATIONS AND FUNDING

 

6.1                               PAYMENT OF BENEFITS.  Benefits payable under the Plan will be the responsibility of, and paid by, the Company; provided that, the Company, in its sole discretion, may transfer its obligations with respect to one or more Participants to an Affiliate.  Such transfer may occur at any time, including in connection with a corporate transaction described in Sec. 6.2.  If the Company transfers its obligations with respect to a Participant to an Affiliate other than in connection with a corporate transaction, the Company will retain secondary liability for the payment of such benefit under the Plan.

 

6.2                               CORPORATE TRANSACTIONS.  In the event of a sale of the stock to an unrelated buyer, or a disposition by means of a forward or reverse merger involving an unrelated buyer, where an employer ceases as a result of the transaction to be an Affiliate, for any individual who remains employed with the employer after it ceases to be an Affiliate, the transaction will not be deemed to constitute a Separation from Service and benefits thereafter will be 

 

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paid in accordance with the terms of the Plan or,  if applicable, the successor plan established by the buyer or an affiliate in a manner consistent with Code § 409A.

 

In the event of a sale of substantial assets (such as a location or division, or substantially all assets of a trade or business) of the Company or an Affiliate to an unrelated buyer, the Company and the buyer may agree to transfer the contractual obligation and liability for benefits with respect to any individual who becomes an employee of the buyer or an affiliate of the buyer upon the closing or in connection with such transaction.  In such case, the transaction will not be deemed to constitute a Separation from Service and benefits thereafter will be paid in accordance with the terms of the Plan or a successor plan established by the buyer or an affiliate in a manner consistent with Code § 409A.

 

6.3                               FUNDING.

 

6.3.1                     Establishment and Funding of Rabbi Trust.  The Company may, in its sole and absolute discretion, establish a “rabbi” trust to serve as a funding vehicle for benefits payable under the Plan.  Neither the Company nor any Affiliate will have any obligation to establish such a trust, or to fund such trust if established.

 

The above notwithstanding, neither the Company nor any Affiliate will transfer or contribute any funds during any “restricted period,” as defined in Code § 409A(b)(3)(B), to any rabbi trust established under this Section 6.3.1.  If any funds are transferred or contributed during a restricted period and the Company certifies in writing that such transfer or contribution was disallowed under this provision, the funds will be deemed to have been transferred or contributed under a mistake of fact and will be returned to the Company or the Affiliate, along with any earnings allocable to such funds, regardless of whether the rabbi trust’s terms establish it as revocable or irrevocable.

 

Any rabbi trust hereby established may be revocable if so established under the terms of the trust.  The assets of any rabbi trust hereby established will not be held or transferred outside of the United States, and the trust will not have any other feature that would result in a transfer of property being deemed to have occurred under Code § 409A (for example, there will be no funding obligation or restrictions on assets in connection with a change in financial health of the Company or any Affiliate).

 

Any rabbi trust used to fund benefits payable under this Plan may be used to fund benefits payable under any other non-qualified deferred compensation plan maintained by the Company or any Affiliate.

 

6.3.2                     Effect on Benefit Obligations.  The establishment and funding of a rabbi trust will not affect the obligations of the Company under Sec. 6.1, except that such obligations with respect to any Participant or Beneficiary will be offset to the extent that payments actually are made from the trust to such Participant or Beneficiary.  In the case of any transfer of benefit obligations and liabilities under Sec. 6.2, the parties may arrange for a transfer of assets to a rabbi trust maintained by the buyer or an affiliate of the buyer.

 

ARTICLE VII

 

AMENDMENT AND TERMINATION OF PLAN

 

7.1                               RIGHT TO AMEND OR TERMINATE.

 

7.1.1                     Amendment.  The Company may amend the Plan at any time and for any reason by action of the following:

 

(a)                                 Board of Directors.  The Board (or its Compensation Committee) can adopt any amendment to the Plan, and the following amendments are reserved exclusively to the Board (or its Compensation Committee): (i) Any amendment that has a negative annual cost impact to the Company of more than $5,000,000; or (ii) Any amendment that is required to be adopted by the Board (or its Compensation Committee) by law or regulation, or under the terms of the charter documents of the Company.

 

(b)                                 Chief Executive Officer.  The Chief Executive Officer of the Company can adopt any amendment that is not reserved to the Board (or its Compensation Committee) (that is, any amendment that has a negative annual cost impact to the Company of $5,000,000 or less).  The Chief Executive Officer, in his/her sole and absolute discretion, can determine the cost impact of an amendment, and the validity of amendment will not be open to challenge if based upon a good faith determination of the cost impact made by the Chief Executive Officer.

 

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(c)                                  Persons with Delegated Authority. The Board or its Compensation Committee, and the Chief Executive Officer, by resolution or written action, can delegate the amendment authority vested in such person or body to any other person, committee or body.

 

7.1.2                     Termination.  The Company may terminate the Plan at any time and for any reason by action of the Board or its Compensation Committee.

 

7.1.3                     Delayed Timing of Amendment or Termination Effective Under Code § 409A.  The Company, acting pursuant to Sec. 7.1.1, generally will determine the effective date of any amendment to the Plan.  However, if Code § 409A requires a delayed effective date (for example, if an amendment changes a deferral rule in a way that must be delayed for twelve (12) months), then the amendment will be effective as of the later of the date determined by the Company or the earliest effective date allowed under Code § 409A.

 

The Company generally will determine the effective date of a termination of the Plan.

 

7.2                               LIMITS ON EFFECT OF AMENDMENT OR TERMINATION.

 

7.2.1                     No Negative Effect on Accrued Benefit.  An amendment or termination of the Plan may not have the effect of reducing the overall benefit attributable to the period prior to amendment or termination and payable to the Participant under the Retirement Plan or this Plan.  This will not prohibit an amendment that reduces or eliminates the benefit accrued and payable under this Plan and shifts the liability for such benefit to another nonqualified retirement plan maintained by the Company or an Affiliate, or any successor, or to the Retirement Plan, or an amendment that is required by law or for which the failure to adopt the amendment would have adverse tax consequences to the Participants affected by such amendment (as determined by the Company).

 

7.2.2                     Liquidation Terminations.  The Company may terminate the Plan and provide for the acceleration and liquidation of all benefits remaining due under the Plan pursuant to Treas. Reg. § 1.409A-3(j)(4)(ix). If such a termination and liquidation occurs, all accruals under the Plan will be discontinued (and all Active Participants will cease to be Active Participants) as of the termination date established by the Company, and benefits remaining due will be paid in a lump-sum at the time specified by the Company as part of the action terminating the Plan and consistent with Treas. Reg. § 1.409A-3(j)(4)(ix).

 

7.2.3                     Other Terminations.  The Company may terminate the Plan other than pursuant to Treas. Reg. § 1.409A-3(j)(4)(ix).  In the event of such other termination, all accruals under the Plan will be discontinued (and all Active Participants will cease to be Active Participants), but all benefits remaining payable under the Plan will be paid at the same time and in the same form as if the termination had not occurred — that is, the termination will not result in any acceleration of any distribution under the Plan.

 

ARTICLE VIII

 

ADMINISTRATION/CLAIMS PROCEDURES

 

8.1                               ADMINISTRATION.

 

8.1.1                     Administration.  The Company is the administrator of the Plan with the authority to control and manage the operation and administration of the Plan and to make all decisions and determinations incident thereto.  Action on behalf of the Company as administrator will be taken by the following:

 

(a)                                 The Administrative Committee.  The Administrative Committee of the Company is responsible for determining Eligible Employees under the Plan, and is responsible for all matters relating to the overall and day-to-day administration of the Plan, and the selection and monitoring of non-investment service providers (including the selection of recordkeeper) with respect to the Plan.

 

(b)                                 The Investment Committee.  The Investment Committee of the Company is responsible for all investment matters relating to the Plan, including the selection of the funds available for hypothetical investments by Participants and Beneficiaries, the actual investment of assets that may be (but are not required to be) set aside to hedge liabilities resulting from the Plan, and actual investment of any rabbi trust assets if such a trust is established and funded, including the selection and monitoring of investment providers (including the trustee of any rabbi trust).

 

(c)                                  Delegates.  The Administrative Committee and Investment Committee each will have the authority to delegate, from time to time, responsibilities under the Plan to such person or persons as it deems advisable, and may revoke such delegation of responsibility.  Any action by the person exercising such delegated responsibility will have the same force and effect as if such action was taken by the Company.

 

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8.1.2                     Third-Party Service Providers.  The Company may from time to time contract with or appoint a recordkeeper or other third-party service provider for the Plan.  Any such recordkeeper or other third-party service provider will serve in a non-discretionary capacity and will act in accordance with directions given and/or procedures established by the Company.

 

8.1.3                     Rules of Procedure.  The Company may establish, adopt or revise such rules and regulations as it may deem necessary or advisable for the administration of the Plan.

 

8.2                               CORRECTION OF ERRORS AND DUTY TO REVIEW INFORMATION.

 

8.2.1                     Correction of Errors.  Errors may occur in the operation and administration of the Plan.  The Company reserves the right to cause such equitable adjustments to be made to correct for such errors as it considers appropriate (including adjustments to Participant or Beneficiary pension statements), which will be final and binding on the Participant or Beneficiary.

 

8.2.2                     Participant Duty to Review Information.  Each Participant and Beneficiary has the duty to promptly review any information that is provided or made available to the Participant or Beneficiary and that relates in any way to the operation and administration of the Plan or his/her payment elections under the Plan and to notify the Company of any error made in the operation or administration of the Plan that affects the Participant or Beneficiary within thirty (30) days of the date such information is provided or made available to the Participant or Beneficiary (for example, the date the information is sent by mail or the date the information is provided or made available electronically).

 

If the Company is notified of an alleged error within the thirty (30) day time period, the Company will investigate and either correct the error or notify the Participant or Beneficiary that it believes that no error occurred. If the Participant or Beneficiary is not satisfied with the correction (or the decision that no correction is necessary), he/she will have sixty (60) days from the date of notification of the correction (or notification of the decision that no correction is necessary), to file a formal claim under the claims procedures under Sec. 8.3.

 

8.3                               CLAIMS PROCEDURE.

 

8.3.1                     Claims.  If a Participant or Beneficiary does not feel as if he has received full payment of the benefit due to such person under the Plan, or if a Participant or Beneficiary feels that an error has been made with respect to his/her benefit and has filed a claim pursuant to Sec. 8.2.2, the Participant or Beneficiary may file a written claim with the Company setting forth (i) the determination being appealed under Sec. 8.2.2, or (ii) the nature of the benefit claimed, the amount thereof, and the basis for claiming entitlement to such benefit.  If the Participant alleged error and an appeal was filed under this Sec. 8.3.1 pursuant to Sec. 8.2.2, then neither the Participant nor any Beneficiary may file a formal claim under this Sec. 8.3.1 seeking a second review of the same error (including the impact of that error on benefits claimed to be due under the Plan).  The Administrator will determine the validity of the claim and communicate a decision to the claimant promptly and, in  any event, not later than ninety (90) days after the date of the claim. The claim may be deemed by the claimant to have been denied for purposes of further review described below in the event a decision is not furnished to the claimant within such ninety (90) day period.  If additional information is necessary to make a determination on a claim, the claimant will be advised of the need for such additional information within forty-five (45) days after the date of the claim.  The claimant will have up to one hundred and eighty (180) days to supplement the claim information, and the claimant will be advised of the decision on the claim within forty-five (45) days after the earlier of the date the supplemental information is supplied or the end of the one hundred and eighty (180) day period.

 

A claim for benefits which is denied will be denied by written notice.  The written notice will set forth the specific reason or reasons for the denial, including a specific reference to any provisions of the Plan (including any internal rules, guidelines, protocols, criteria, etc.) on which the denial is based, a description of any additional material or information that is necessary to process the claim, and an explanation of the procedure for further reviewing the denial of the claim.

 

8.3.2                     Appeals.  Within sixty (60) days after the receipt of a denial on a claim, a claimant or his authorized representative may file a written request for review of such denial.  Such review will be undertaken by the Administrator and will be a full and fair review.  The claimant will have the right to review all pertinent documents.  The Administrative Committee will issue a decision not later than sixty (60) days after receipt of a request for review from a claimant unless special circumstances, such as the need to hold a hearing, require a longer period of time, in which case a decision will be rendered as soon as possible but not later than one hundred and twenty (120) days after receipt of the claimant’s request for review.  The Administrative Committee’s decision will be in writing and will include specific reasons for the decision and include specific reference to any provisions of the Plan

 

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on which the decision is based.  The Administrative Committee will decide all claims and its decision on appeal will be final and binding subject to Sec. 8.3.3.  Following the claims procedures through to completion is a condition of filing an arbitration action described under Sec. 8.3.3.

 

8.3.3                     Arbitration.  Any dispute involving or relating to this Plan that is not resolved through the claims procedures must be settled by arbitration in accordance with the Travelers Employment Arbitration Policy.  Notice of demand for arbitration must be made in writing to the opposing party and to the American Arbitration Association within the shorter of (i) one (1) year after the claimant’s appeal has been finally decided under the claims procedures set forth in Sec. 8.3.1 and 8.3.2 or (ii) two (2) years from the date of the last act, omission, or other wrong giving rise to the dispute. The decision of the arbitrator(s) will be final and may be enforced in any court of competent jurisdiction.

 

The arbitrator(s) may award reasonable fees and expenses to the prevailing party in any dispute hereunder and will award reasonable fees and expenses in the event that the arbitrator(s) find that the losing party acted in bad faith or with intent to harass, hinder or delay the prevailing party in the exercise of its rights in connection with the matter under dispute.

 

8.3.4                     Participant Responsible for Timely Action Under Code § 409A.  The Participant will be solely responsible for taking prompt actions in the event of disputed payments as necessary to avoid any adverse tax consequences under Code § 409A, even if action is required to be taken under Code § 409A in a more timely manner than is required under the claims procedures of this Sec. 8.3.

 

8.4                               INDEMNIFICATION.  The Company and its Affiliates jointly and severally agree to indemnify and hold harmless, to the extent permitted by law, each director, officer, and employee against any and all liabilities, losses, costs, or expenses (including legal fees) of whatsoever kind and nature that may be imposed on, incurred by, or asserted against such person at any time by reason of such person’s services in the administration of the Plan, but only if such person did not act dishonestly, or in bad faith, or in willful violation of the law or regulations under which such liability, loss, cost, or expense arises.

 

8.5                               EXERCISE OF AUTHORITY. The Company, its Chief Executive Officer, the Administrative Committee and Investment Committee and any other person who has authority with respect to the management, administration or investment of the Plan may exercise that authority in its/his/her full discretion.  This discretionary authority includes, but is not limited to, the authority to make any and all factual determinations and interpret all terms and provisions of this document (or any other document established for use in the administration of the Plan) relevant to the issue under  consideration.  The exercise of authority will be binding upon all persons; and it is intended that the exercise of authority be given deference in arbitration, and that it not be overturned or set aside in arbitration unless found to be arbitrary and capricious.

 

8.6                               TELEPHONIC OR ELECTRONIC NOTICES AND TRANSACTIONS.  Any notice that is required to be given under the Plan to a Participant or Beneficiary, and any action that can be taken under the Plan by a Participant or Beneficiary (including distribution, consents, etc.), may be by means of voice response or other electronic system to the extent so authorized by the Company.

 

ARTICLE IX

 

MISCELLANEOUS

 

9.1                               NONASSIGNABILITY.

 

9.1.1                     General Rule Prohibiting Assignment.  A Participant or Beneficiary may not assign, alienate, pledge, hypothecate, or otherwise transfer any of the rights or benefits to which the Participant or Beneficiary is entitled under the Plan, except as allowed under Sec. 9.1.2.  The Participant or Beneficiary’s rights and benefits in this Plan shall be exempt from the claims of the Participant or Beneficiary’s creditors or any other claimants, and shall be exempt from all orders, decrees, levies, garnishments, and executions to the fullest extent allowed by law, except as provided in Sec. 9.1.2.

 

9.1.2                     Domestic Relations Orders.  The Plan will comply with any court order purporting to divide the benefits payable under this Plan pursuant to a state’s domestic relations laws to the extent permitted under Code § 409A.  However, such court order will be deemed to only apply to such amounts that actually become payable to a Participant under the terms of this Plan (and will not create a separate interest in favor of the alternate payee).

 

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9.2                               WITHHOLDING.  A Participant must make appropriate arrangements with the Company or Affiliate for satisfaction of any federal, state or local income tax withholding requirements, Federal Insurance Contributions Act (“FICA”) tax requirements, or other employee tax requirements applicable to the accrual or payment of benefits under the Plan.  In the absence of an agreed upon alternative arrangement, the Company or Affiliate, in its sole discretion, may provide for withholding and tax payments in such manner as it deems appropriate and determines to be consistent with Code § 409A, including, without limitation, by a reduction of benefits due and payable under the Plan or a reduction of other amounts payable to the Participant (unrelated to the Plan).

 

In the case of any FICA tax due on amounts required to be taken into account as wages as of the  resolution date defined in Treas. Reg. § 1.3121(v)(2)-1(e)(4), if other wages payable to the Participant are not sufficient to cover his/her portion of such taxes, the Company or Affiliate, in its sole discretion, may accelerate the Participant’s benefit to the extent necessary to pay the FICA taxes due on such wages, as well as to pay the income tax at source on such wages imposed under Code § 3401 and the corresponding withholding provisions of applicable state or local tax laws as a result of the payment of such wages, and to pay the additional income tax at source on wages attributable to the pyramiding Code § 3401 wages and taxes in a manner consistent with Treas. Reg. § 1.409A-3(j)(4)(vi); provided that, the total payment accelerated under this Sec. 9.2 shall not exceed the aggregate of the FICA taxes due and the income tax withholding related to such FICA taxes.  The amount accelerated hereunder will reduce the amount credited to the Participant’s Account under Sec. 4.3.3.

 

9.3                               SUCCESSORS OF TRAVELERS.  The rights and obligations of the Company under the Plan will inure to the benefit of, and will be binding upon, the successors and assigns of the Company.

 

9.4                               EMPLOYMENT NOT GUARANTEED.  Nothing contained in the Plan nor any action taken hereunder will be construed as a contract of employment or as giving any Participant any right to continued employment with the Company or an Affiliate.

 

9.5                               GENDER, SINGULAR AND PLURAL.  All pronouns and any variations thereof will be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require.  As the context may require, the singular may be read as the plural and the plural as the singular.

 

9.6                               CAPTIONS.  The captions of the articles, paragraphs and sections of this document are for convenience only and will not control or affect the meaning or construction of any of its provisions.

 

9.7                               VALIDITY.  In the event any provision of the Plan is held invalid, void or unenforceable, the same will not affect, in any respect whatsoever, the validity of any other provisions of the Plan.

 

9.8                               WAIVER OF BREACH.  The waiver by the Company of any breach of any provision of the Plan will not operate or be construed as a waiver of any subsequent breach by that Participant or any other Participant.

 

9.9                               NOTICE.  Any notice or filing required or permitted to be given to the Company or the Participant under this Agreement will be sufficient if in writing and hand-delivered, or sent by registered or certified mail, in the case of the Company, to the principal office of the Company, directed to the attention of the Company, and in the case of the Participant, to the last known address of the Participant indicated on the employment records of the Company.  Such notice will be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.  Notices to the Company may be permitted by electronic communication according to specifications established by the Company.

 

9.10                        FACILITY OF PAYMENT.  When a Participant or the Beneficiary is under legal disability, or in the opinion of the Company is in any way incapacitated so as to be unable to manager his/her financial affairs, the Company may cause payments to be paid to the Participant’s or Beneficiary’s legal representative for the Participant’s or Beneficiary’s benefit, or the Company may cause payments to be applied for the benefit of the Participant or Beneficiary, in any manner that it may determine.

 

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APPENDIX A

 

EXECUTIVE SAVINGS PLUS

 

The Plan contained an Executive Savings Plus component (the “ESP”) prior to January 1, 2005, which provided participants the ability to make elective deferrals of amounts in excess of the maximum deferral amounts permitted for a participant under the Company’s qualified defined contribution plan by reason of the limitations imposed by Code §§ 401(a)(17), 402(g), and 415.

 

The ESP was closed to further deferrals effective January 1, 2005, pursuant to an amendment to the Plan. The provisions of this Appendix A apply with respect to deferrals made under the ESP prior to January 1, 2005, with respect to any Active Participant in the Plan on or after January 1, 2005.  With respect to any other Participant (that is, any Participant who was not an Active Participant on or after January 1, 2005), this Appendix will not apply; rather, his/her rights will be determined in accordance with the ESP provisions of the Plan in effect prior to January 1, 2005, as such terms may be amended in a manner that preserves “grandfather” status under Code § 409A.

 

A.1                             Definitions.  Capitalized terms not otherwise defined in this Appendix A have the meaning ascribed to such terms in the main Plan.

 

(a)                                 “ESP Account” means a recordkeeping account to which a Participant’s ESP Deferrals, Excess Matching Credits and certain supplemental credits were recorded.

 

(b)                                 “Excess Deferrals” means the elective deferrals made under the ESP by a Participant prior to January 1, 2005.

 

(c)                                  “Excess Matching Credits” means the credit under the ESP on behalf of a Participant prior to January 1, 2005, to reflect the amount of matching contributions that would have been contributed to the Participant’s matching allocation account under the Company’s qualified defined contribution plan for the calendar year if the limitations under Code Sections 401(a)(17), 402(g) and 415 were disregarded, minus the amount of matching contributions actually made to his matching allocation account under the Company’s qualified defined contribution plan for the calendar year.

 

A.2          Participant Accounts.

 

The Company will maintain the following recordkeeping ESP Accounts for each Participant:

 

(a)                                 An Excess Deferral Account to reflect a balance attributable to ESP Deferrals;

 

(b)                                 An Excess Matching Credit Account to reflect a balance attributable to Excess Matching Credits.

 

(c)                                  An Economy Supplemental Account to reflect certain supplemental credits for certain Economy employees that were credited prior to January 1, 1997.  Such supplemental credits were equal to the amount by which supplemental contributions under The St. Paul Companies, Inc. Savings Plus Plan were reduced due to applicable limits under the Code for a calendar year.

 

A Participant or Beneficiary may elect to have his or her Account adjusted based on the performance of one or more investment options deemed to be available under the Plan.  The Company, acting through its Employee Benefits Investment Committee, will determine the investment options that will be made available under the ESP, which may include mutual funds, common or commingled investment funds, group annuity, deposit administration or separate account contracts issued by an insurance company, a self-directed brokerage account option or any other investment option deemed appropriate by the Company.  The Company, acting through the Investment Committee, may at any time and from time to time add to or remove from the investment options under the ESP.

 

A.3                             Vesting.  A Participant will at all times be fully vested in his Excess Deferral Account.  A Participant is vested in his/her Excess Matching Contribution Account and Economy Supplemental Account  to the same extent that he/she is vested in the comparable account under the Travelers 401(k) Savings Plan (or a successor plan).

 

A.4          Distribution of Benefits.

 

(a)                                 $50,000 or Less.  If a Participant’s ESP Account balance is $50,000 or less as of his/her Separation from Service, the Participant’s vested Account balance will be distributed in a single lump sum on the 

 

A-1

 

first day of the seventh (7th) month after the month in which the Participant has a Separation from Service.

 

(b)                                 More than $50,000.  If a Participant’s vested ESP Account balance exceeds $50,000 as of the date of his/her Separation from Service, the Participant’s vested Account balance will be paid to him in ten (10) annual installments, commencing on the first day of the seventh (7th) month after the month in which the Participant has a Separation from Service.

 

A.5                             Death Benefit.  Any undistributed vested ESP benefit remaining at the time of a Participant’s death will be distributed to the Participant’s designated beneficiary after the Company determines that a survivor benefit is payable under the Plan — that is, the date the Company is provided with the documentation necessary to establish the fact of death of the Participant and the identity and entitlement of the Beneficiary.  The Participant’s ESP Account will be paid in a lump sum, based upon the value of the Participant’s ESP Account as of the close of the last day on which the major stock exchanges were open on or immediately prior to the date of payment; provided however, that if an installment payout to the Participant has already commenced at the time of the Participant’s death with respect to a given ESP Account, the installment payout will continue in accordance with the originally elected schedule.

 

A.6                             Beneficiary Designation.  Unless a Participant otherwise designates, in the manner prescribed by the Company, the Beneficiary to whom the undistributed balance of the Participant’s vested ESP Account will be paid in the event of his/her death will be the same as the Participant has designated, or in the absence of a valid designation hereunder, as is otherwise applicable with respect to the Participant under the Travelers 401(k) Savings Plan.  The Company’s good faith distribution based on his actual knowledge of the existence of a Participant’s beneficiaries will be conclusive and binding on all beneficiaries of a Participant.  Notwithstanding any provision of the Travelers 401(k) Savings Plan to the contrary, a Participant may designate any beneficiary or beneficiaries under the ESP and may revoke any previous designations without the consent of the Participant’s Spouse.

 

A-2Exhibit 10.36

 

TRAVELERS
 STOCK OPTION GRANT NOTIFICATION AND AGREEMENT

 

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

 

	
Participant:
    	
 
    	
“NAME”
    	
 
    	
Grant Date:
    	
 
    	
“GRANT DATE”
    
	
Number of Shares:
    	
 
    	
“GRANTED”
    	
 
    	
Grant Price:
    	
 
    	
$“GRANT PRICE”
    
	
Expiration Date:
    	
 
    	
“EXPIRATION DATE”
    	
 
    	
Vesting Date:
    	
 
    	
3 years from Grant Date
    

 

1.                                      Grant of Option. This option is granted pursuant to The Travelers Companies, Inc. 2014 Stock Incentive Plan, as it may be amended from time to time (the “Plan”), by The Travelers Companies, Inc. (the “Company”) to you (the “Participant”) as an employee of the Company or an affiliate of the Company (together, the “Travelers Group”). The Company hereby grants to the Participant as of the Grant Date a non-qualified stock option (the “Option”) to purchase the number of shares set forth above of the Company’s common stock, no par value (“Common Stock”), at an option price per share (the “Grant Price”) set forth above, pursuant to the Plan, as it may be amended from time to time, and subject to the terms, conditions, and restrictions set forth herein, including, without limitation, the conditions set forth in Section 5.

 

2.                                      Terms and Conditions. The terms, conditions, and restrictions applicable to the Option are specified in the Plan and this grant notification and agreement, including Exhibits A and B (the “Award Agreement”). The terms, conditions and restrictions in the Plan include, but are not limited to, provisions relating to amendment, vesting, cancellation, and exercise, all of which are hereby incorporated by reference into this Award Agreement to the extent not otherwise set forth herein.

 

By accepting the Option, the Participant acknowledges receipt of the prospectus dated February 2, 2016 and any applicable prospectus supplements thereto (together, the “Prospectus”) and that he or she has read and understands the Prospectus.

 

The Participant understands that the Option and all other incentive awards are entirely discretionary and that no right to receive an award exists absent a prior written agreement with the Company to the contrary. The Participant also understands that the value that may be realized, if any, from the Option is contingent, and depends on the future market price of the Common Stock, among other factors. The Participant further confirms his or her understanding that the Option is intended to promote employee retention and stock ownership and to align participants’ interests with those of shareholders. Additionally, the Participant understands that the Option is subject to vesting conditions and will be cancelled if the vesting or other conditions are not satisfied. Thus, the Participant understands that (a) any monetary value assigned to the Option in any communication regarding the Option is contingent, hypothetical, or for illustrative purposes only, and does not express or imply any promise or intent by the Company to deliver, directly or indirectly, any certain or determinable cash value to the Participant; (b) receipt of the Option or any incentive award in the past is neither an indication nor a guarantee that an incentive award of any type or amount will be made in the future, and that absent a written agreement to the contrary, the Company is free to change its practices and policies regarding incentive awards at any time; and (c) vesting may be subject to confirmation and final determination by the Company’s Board of Directors or its Compensation Committee (the “Committee”) that the vesting conditions have been satisfied.

 

The Participant shall have no rights as a stockholder of the Company with respect to any shares covered by the Option unless and until the Option vests, is properly exercised and shares of Common Stock are issued.

 

3.                                      Vesting. The Option shall vest in full and become exercisable on the Vesting Date set forth above, provided the Participant remains continuously employed within the Travelers Group. The Option shall in all events expire on the tenth (10th) anniversary of the Grant Date set forth above. If the Participant has a termination of, or leave from active employment prior to exercise or expiration of the Option, the Participant’s rights are determined under the Option Rules of Exhibit A.

 

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4.                                      Exercise of Option. The Option may be exercised in whole or in part by the Participant after the Vesting Date (or the date provided pursuant to Exhibit A) upon notice to the Company together with provision for payment of the Grant Price and applicable withholding taxes. Such notice shall be given in the manner prescribed by the Company and shall specify the date and method of exercise and the number of shares being exercised. The Participant acknowledges that the laws of the country in which the Participant is working at the time of grant or exercise of the Option (including any rules or regulations governing securities, foreign exchange, tax, or labor matters) or Company accounting or other policies dictated by such country’s political or regulatory climate, may restrict or prohibit any one or more of the stock option exercise methods described in the Prospectus, that such restrictions may apply differently if the Participant is a resident or expatriate employee, and that such restrictions are subject to change at any time. The Committee may suspend the right to exercise the Option during any period for which (a) there is no registration statement under the Securities Act of 1933, as amended, in effect with respect to the shares of Common Stock issuable upon exercise of the Option, or (b) the Committee determines, in its sole discretion, that such suspension would be necessary or advisable in order to comply with the requirements of (i) any applicable federal securities law or rule or regulation thereunder; (ii) any rule of the New York Stock Exchange or other self-regulatory organization; or (iii) any other federal or state law or regulation (an “Option Exercise Suspension”). To the extent the vested and exercisable portion of the Option remains unexercised as of the close of business on the date the Option expires (the Expiration Date or such earlier date that is the last date on which the Option may be exercised under the Option Rules of Exhibit A if the Participant’s employment with the Travelers Group has ended), that portion of the Option will be exercised without any action by the Participant in accordance with Section 7.5 of the Plan if the Fair Market Value of a share of Common Stock on that date is at least $0.01 greater than the Grant Price, the exercise will result in Participant receiving at least one incremental share, and no Option Exercise Suspension is then in effect.

 

5.                                      Grant Conditioned on Principles of Employment Agreement.

 

By entering into this Award Agreement, the Participant shall be deemed to have confirmed his or her agreement to be bound by the Company’s Principles of Employment Agreement in effect on the date immediately preceding the Grant Date (the “POE Agreement”), as published on the Company’s intranet site or previously distributed in hard copy to the Participant. Furthermore, by accepting the Option, the Participant agrees that the POE Agreement shall supersede and replace the form of Principles of Employment Agreement contained or referenced in any Prior Equity Award (as defined below) made by the Company to the Participant, and, accordingly, such Prior Equity Award shall become subject to the terms and conditions of the POE Agreement.

 

6.                                      Acceptance of Exhibits A and B. The Participant agrees to be bound by the terms of the Option Rules set forth in Exhibits A and B (“Option Rules”).

 

7.                                      Acceptance of and Agreement to Non-Solicitation and Confidentiality Conditions. In consideration for the award of Options under this Award Agreement, the Participant agrees that the Option is conditioned upon Participant’s compliance with the following non-solicitation and confidentiality conditions (the “Non-Solicitation Conditions” and the “Confidentiality Conditions,” respectively):

 

(a)                                 The Company and the Participant understand, intend and agree that the Non-Solicitation Conditions of this Section 7 are intended to protect the Travelers Group and other participants in the Plan against the Participant soliciting its employees and/or its business during the twelve (12) month period (the “Restricted Period”) following the date of the Participant’s termination of employment with the Travelers Group (whether voluntary or involuntary) as reflected on the Travelers Group’s books and records (the “Termination Date”), while recognizing that after the Termination Date the Participant is still permitted to compete with the Travelers Group subject to the restrictions set forth below. Nothing in this Section 7 is intended to limit any of the Travelers Group’s rights or claims as to any future employer of the Participant.

 

(b)                                 Non-Solicitation of Employees. The Participant acknowledges that the Travelers Group sustains its operations and the goodwill of its clients, customers, policyholders, producers, agents and brokers (its “Customers”) through its employees. The Travelers Group has made significant investment in its employees and their ability to establish and maintain relationships with each

 

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other and with the Travelers Group’s Customers in order to further its operations and cultivate goodwill. The Participant acknowledges that the loss of the Travelers Group’s employees could adversely affect its operations and jeopardize the goodwill that has been established through these employees, and that the Travelers Group therefore has a legitimate interest in preventing the solicitation of its employees. During the Restricted Period, the Participant will not, directly or indirectly, seek to recruit or solicit, attempt to influence or assist, participate in, or promote the solicitation of, or otherwise attempt to adversely affect the employment of any person who was or is employed by the Travelers Group at any time during the last three months of the Participant’s employment or during the Restricted Period. Without limiting the foregoing restriction, the Participant shall not, on behalf of himself or herself or any other person, hire, employ or engage any such person and shall not engage in the aforesaid conduct through a third party for the purpose of colluding to avoid the restrictions in this Section 7. Without limiting the generality of the restrictions under this Section, by way of example, the restrictions under this Section shall prohibit the Participant from (i) interviewing a Travelers Group employee, (ii) communicating in any manner with a Travelers Group employee in connection with a current or future employment opportunity outside of the Travelers Group, (iii) identifying Travelers Group employees to potentially be solicited or hired, (iv) providing information or feedback regarding Travelers Group employees seeking employment with the Participant’s subsequent employer and/or (v) otherwise assisting or participating in the solicitation or hiring of a Travelers Group employee. However, the Non-Solicitation Conditions do not preclude the Participant from directing a third party (including but not limited to employees of his/her subsequent employer or a search firm) to broadly solicit, recruit, and hire individuals, some of whom may be employees of the Travelers Group, provided that the Participant does not direct such third party specifically to target employees of the Travelers Group generally or specific individual employees of the Travelers Group.

 

(c)                                  Non-Solicitation of Business. The Participant acknowledges that by virtue of his or her employment with the Travelers Group, he or she may have developed relationships with and/or had access to Confidential Information (as defined below) about the Travelers Group’s Customers and is, therefore, capable of significantly and adversely impacting existing relationships that the Travelers Group has with them. The Participant further acknowledges that the Travelers Group has invested in its and the Participant’s relationship with its Customers and the goodwill that has been developed with them and therefore has a legitimate interest in protecting these relationships against solicitation and/or interference by the Participant for a reasonable period of time after the Participant’s employment with the Travelers Group ends. If, after the Termination Date, the Participant accepts a position as an employee, consultant or contractor with a “Competitor” (as defined below), then, during the Restricted Period, the Participant will not, directly or indirectly, solicit, interfere with or attempt to influence any Customer of the Travelers Group to discontinue business with the Travelers Group and/or move existing or future business of the Travelers Group elsewhere. This restriction applies with respect to any business of any current or prospective client, customer or policyholder of the Travelers Group (i) on which the Participant, or anyone reporting directly to him or her, worked or was actively engaged in soliciting or servicing or (ii) about which the Participant gained access to Confidential Information (as defined below) during the Participant’s employment with the Travelers Group. In addition to the foregoing restriction, the Participant agrees not to be personally involved in the negotiation, competition for, solicitation or execution of any individual book roll over(s) or other book of business transfer arrangements involving the transfer of business away from the Travelers Group, at any time during the twenty-four month period following the Termination Date (the “Enhanced Restricted Period”). The Participant may, at any time after the Termination Date, broadly direct a third party (including but not limited to employees of his/her subsequent employer) to negotiate, compete for, solicit and execute such book roll over(s) or other book of business transfer arrangements, provided that (i) the Participant is not personally involved in such activities and (ii) the Participant does not direct such third party specifically to target business of the Travelers Group. As used herein, “Competitor” shall include any business enterprise or organization, including, without limitation, agents, brokers and producers, that engages in, owns or controls a significant interest in any entity that engages in the sale of products and/or performance of services of the type sold or performed by the Travelers Group and/or provides advice relating to such products and services.

 

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

 

(e)                                  Notwithstanding anything herein to the contrary, if the Participant breaches any of the Non-Solicitation Conditions of this Section 7, then the Restricted Period (or the Enhanced Restricted Period, if applicable) will be extended until the date that is 12 months (or 24 months , in the case of a breach under Section 7(c) with respect to the restrictions applicable during the Enhanced Restricted Period) after the date of the Participant’s last breach of such Non-Solicitation Conditions.

 

(f)                                   The Participant agrees not to, either during or after his or her employment, use, publish, make available, or otherwise disclose, except for benefit of the Travelers Group in the course of such employment, any technical or confidential information (“Confidential Information”) developed by, for, or at the expense of the Travelers Group, or assigned or entrusted to the Travelers Group, unless such information is generally known outside of the Travelers Group. Confidential Information includes, but is not limited to, non-public information such as: internal information about the Travelers Group’s business, such as financial, sales, marketing, claim, technical and business information, including profit and loss statements, business/marketing strategy and “Trade Secrets” (as defined below); client, customer, policyholder, insured person, claimant, vendor, consultant and agent information, including personal information such as social security numbers and medical information; legal advice obtained; product and system information; and any compilation of this information or employee information obtained as part of the Participant’s responsibilities at the Travelers Group.  Nothing herein should be construed as prohibiting the Participant from sharing information concerning the Participant’s own wages (or the wages of another employee, if voluntarily disclosed by that employee) or other terms and conditions of employment, or for purposes of otherwise pursuing the Participant’s legal rights.  Nothing herein is intended to prohibit or restrict the Participant from (i) filing a complaint with, making disclosures to, communicating with or participating in an investigation or proceeding conducted by any governmental agency (including the United States Equal Employment Opportunity Commission and the Securities and Exchange Commission), (ii) pursuing the Participant’s legal rights related to Participant’s employment with the Company or (iii) engaging in activities protected by applicable laws or regulations. Notwithstanding the foregoing, the Travelers Group does not authorize the waiver of, or disclosure of information covered by, the attorney-client privilege or attorney work product doctrine or any other privilege or protection belonging to the Travelers Group.  As used herein, “Trade Secrets” shall include information relating to the Travelers Group and its affiliates that is protectable as a trade secret under applicable law, including, without limitation, and without regard to form:  technical or non-technical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, business and strategic plans, product plans, source code, software, unpublished patent applications, customer proposals or pricing information or a list of actual or potential customers or suppliers which is not commonly known by or available to the public and which information derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use. In addition, the Participant will keep at all times subject to the Travelers Group’s control and will deliver to or leave with the Travelers Group all written and other materials in any form or medium (including, but not limited to, print, tape, digital, computerized and electronic data, parts, tools, or equipment) containing such technical or Confidential Information upon termination of the Participant’s employment. The Participant also agrees to cooperate to remedy any unauthorized use of such information and not to violate any Travelers Group policy regarding same. The Participant agrees that all records, reports, notes, compilations, or other recorded matter, and copies or reproductions thereof, relating to the Travelers Group’s operations, activities, Confidential Information, or business, made or received by the Participant during the Participant’s employment with any member(s) of the Travelers Group are, and shall be, the property of the Travelers Group exclusively, and the Participant will

 

4

 

keep the same at all times subject to the Travelers Group’s control and will deliver or leave with the Travelers Group the same at the termination of the Participant’s employment.

 

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

 

(h)                                 During the Restricted Period or any extension thereof, the Participant shall notify any subsequent employer of his or her obligations under this Award Agreement prior to commencing employment. During the Restricted Period or any extension thereof, the Participant will provide the Company and his or her prior manager at the Travelers Group fourteen (14) days’ advance written notice prior to becoming associated with and/or employed by any person or entity or engaging in any business of any type or form, with such notice including the identity of the prospective employer or business, the specific division (if applicable) for which the Participant will be performing services and the title or position to be assumed by the Participant. The Participant must provide a copy of such notice to the Company’s Employee Services Unit by email, facsimile or regular mail as follows:

 

Email:            4-ESU@travelers.com

 

Fax:                       1.866.871.4378 (U.S. and Canada)

001.866.871.4378 (Europe)

 

Mail:                   The Travelers Companies, Inc.

Employee Services Unit

385 Washington Street

Mail Code: 9275-SB02L

St. Paul, MN USA 55102

 

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

 

8.                                      Forfeiture of Option Awards.

 

(a)                                 Participant’s Agreement. The Participant expressly acknowledges that the terms of Section 7 and this Section 8 are material to this Agreement and reasonable and necessary to protect the legitimate interests of the Travelers Group, including without limitation, the Travelers Group’s Confidential Information, trade secrets, customer and supplier relationships, goodwill and loyalty, and that any violation of these Non-Solicitation Conditions or Confidentiality Conditions by the

 

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Participant would cause substantial and irreparable harm to the Travelers Group and other Participants in the Plan. The Participant further acknowledges and agrees that:

 

(i)            The receipt of the Option constitutes good, valuable and independent consideration for the Participant’s acceptance of and compliance with the provisions of the Award Agreement, including the forfeiture and repayment provision of subsection 8(b) below and the Non-Solicitation Conditions and Confidentiality Conditions of Section 7 above, and the amendment of Prior Equity Award provisions of subsection 7(i), 8(f) and Section 18, below.

 

(ii)           The Participant’s rights with respect to the Option are conditioned on his or her compliance with the POE Agreement at all times after acceptance of the POE Agreement in accordance with Sections 5 and 16 hereunder.

 

(iii)          The scope, duration and activity restrictions and limitations described in this Agreement are reasonable and necessary to protect the legitimate business interests of the Travelers Group. The Participant acknowledges that all restrictions and limitations relating to the Restricted Period will apply regardless of the reason the Participant’s employment ends. The Participant further agrees that any alleged claims the Participant may have against the Travelers Group do not excuse the Participant’s obligations under this Award Agreement.

 

(b)                                 Forfeiture and Repayment Provisions. The Participant agrees that, prior to the Termination Date and during the Restricted Period (or the Enhanced Restricted Period, as applicable), if the Participant breaches the Non-Solicitation Conditions, the Confidentiality Conditions and/or the POE Agreement, in addition to all rights and remedies available to the Travelers Group at law and in equity (including without limitation those set forth in the Option Rules for involuntary termination), the Participant will immediately forfeit any portion of the Option under this Award Agreement that has not otherwise been previously forfeited under the Award Rules in Exhibit A and that has not yet been paid, exercised, settled or vested. The Company may also require repayment from the Participant of any and all compensatory value that the Participant received for the last twelve (12) months of his or her employment and through the end of the Restricted Period (or the Enhanced Restricted Period, as applicable) from this Option or any Prior Equity Awards (including without limitation the gross amount of any Common Stock distribution or cash payment made to the Participant upon the vesting, distribution, exercise, or settlement of any such awards and/or any consideration in excess of such gross amounts received by the Participant upon the sale or transfer of the Common Stock acquired through vesting, distribution, exercise, or settlement of any such awards). The Participant will promptly pay the full amount due upon demand by the Company, in the form of cash or shares of Common Stock at current Fair Market Value.

 

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

 

(d)                                 Option Rules. The Option Rules provide a right to payment, subject to certain conditions, following the Participant’s Termination Date if the Participant meets the Retirement Rule which, among other conditions, may require that the Participant not engage in any activities that compete with the business operations of the Travelers Group through the settlement or exercise date of the Option (such non-compete condition may extend beyond the Restricted Period). The remedies for a violation of such non-compete conditions are specified in the Option Rules and are in addition to any remedies of the Travelers Group under this Section 8.

 

(e)                                  Severability. If any court determines that any of the terms and conditions of Section 7 or this Section 8 are invalid or unenforceable, the remainder of the terms and conditions shall not

 

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thereby be affected and shall be given full effect, without regard to the invalid portions. If any court determines that any of the terms and conditions are unenforceable because of the duration of such terms and conditions or the area covered thereby, such court shall have the power to reduce the duration or area of such terms and conditions and, in their reduced form, the terms and conditions shall then be enforceable and shall be enforced.

 

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

 

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

 

9.                                      Consent to Electronic Delivery. In lieu of receiving documents in paper format, the Participant agrees, to the fullest extent permitted by law, to accept electronic delivery of any documents that the Company desires or may be required to deliver (including, but not limited to, prospectuses, prospectus supplements, grant or award notifications and agreements, account statements, annual and quarterly reports, and all other agreements, forms and communications) in connection with this and any other prior or future incentive award or program made or offered by the Company or its predecessors or successors. Electronic delivery of a document to the Participant may be via a Company e-mail system or by reference to a location on a Company intranet site to which the Participant has access.

 

10.                               Administration. The Company’s Compensation Committee or its designee administers the Plan and this Award Agreement and has the authority to interpret any ambiguous or inconsistent terms in its sole discretion. The Participant’s rights under this Award Agreement are expressly subject to the terms and conditions of the Plan and to any guidelines the Compensation Committee or its designee adopts from time to time. The interpretation and construction by the Compensation Committee or its designee of the Plan and this Award Agreement, and such rules and regulations as the Compensation Committee or its designee may adopt for purposes of administering the Plan and this Award Agreement, will be final and binding upon the Participant.

 

11.                               Entire Agreement/Amendment/Survival/Assignment. The terms, conditions and restrictions set forth in the Plan and this Award Agreement constitute the entire understanding between the parties hereto regarding the Option and supersede all previous written, oral, or implied understandings between the parties hereto about the subject matter hereof. This Award Agreement may be amended by a subsequent writing (including e-mail or electronic form) agreed to between the Company and the Participant. Section headings herein are for convenience only and have no effect on the interpretation of this Award Agreement. The provisions of the Award Agreement that are intended to survive the Termination Date of a Participant, specifically including Sections 7 and 8 hereof, shall survive such date. The Company may assign this Award Agreement and its rights and obligations hereunder to any current or future member of the Travelers Group.

 

12.                               No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment with the Travelers Group for a fixed duration of time. The

 

7

 

employment relationship is “at will,” which affords the Participant or the Travelers Group the right to terminate the relationship at any time for any reason or no reason not otherwise prohibited by applicable law. The Travelers Group retains the right to decrease the Participant’s compensation and/or benefits, transfer or demote the Participant or otherwise change the terms or conditions of the Participant’s employment with the Travelers Group. The Option granted hereunder will not form part of the Participant’s regular employment compensation and will not be considered in calculating any statutory benefits or severance pay due to the Participant.

 

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

 

14.                               Transfer Restrictions. The Participant may not sell, assign, transfer, pledge, encumber or otherwise alienate, hypothecate or dispose of the Option or his or her right under the Option to receive shares of Common Stock, except as otherwise provided in the Prospectus.

 

15.                               Conflict. In the event of a conflict between the Plan and the Award Agreement the Plan terms shall govern.

 

16.                               Acceptance and Agreement by the Participant; Forfeiture upon Failure to Accept. By accepting this Option, the Participant agrees to be bound by the terms, conditions, and restrictions set forth in the Plan, this Award Agreement, and the Travelers Group’s policies, as in effect from time to time, relating to the Plan. The Participant’s rights under the Option will lapse ninety (90) days from the Grant Date, and the Option will be forfeited on such date if the Participant does not accept the Award Agreement by such date. For the avoidance of doubt, the Participant’s failure to accept the Award Agreement shall not affect his or her continuing obligations under any other agreement between any member(s) of the Travelers Group and the Participant.

 

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

 

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

 

19.                               Personal Data. The Participant understands that the Company and other members of the Travelers Group hold certain personal information about the Participant, which may include, without limitation, information such as his or her name, home address, telephone number, gender, date of birth, salary, nationality, job title, social insurance number or other such tax identity number and details of all awards or other entitlement to shares of common stock awarded, cancelled, exercised, vested, unvested or outstanding in his or her favor (“Personal Data”).

 

The Participant understands that in order for the Company to process the Participant’s Option and maintain a record of Options under the Plan, the Company shall collect, use, transfer and disclose

 

8

 

Personal Data within the Travelers Group electronically or otherwise, as necessary for the implementation and administration of the Plan including, in the case of a social insurance number, for income reporting purposes as required by law. The Participant further understands that the Company may transfer Personal Data, electronically or otherwise, to third parties, including but not limited to such third parties as outside tax, accounting, technical and legal consultants when such third parties are assisting the Company or other members of the Travelers Group in the implementation and administration of the Plan. The Participant understands that such recipients may be located within the jurisdiction of residence of the Participant, or within the United States or elsewhere and are subject to the legal requirements in those jurisdictions applicable to those organizations, for example, lawful requirements to disclose personal information such as the Personal Data to government authorities in those countries. The Participant understands that the employees of the Travelers Group and third parties performing work related to the implementation and administration of the Plan shall have access to the Personal Data as is necessary to fulfill their duties related to the implementation and administration of the Plan. By accepting the Option, the Participant consents, to the fullest extent permitted by law, to the collection, use, transfer and disclosure, electronically or otherwise, of his or her Personal Data by or to such entities for such purposes and the Participant accepts that this may involve the transfer of Personal Data to a country which may not have the same level of data protection law as the country in which this Award Agreement is executed. The Participant confirms that if the Participant has provided or, in the future, will provide Personal Data concerning third parties including beneficiaries, the Participant has the consent of such third party to provide their Personal Data to the Travelers Group for the same purposes.

 

The Participant understands that he or she may, at any time, request to review the Personal Data and require any necessary amendments to it by contacting the Company in writing. Additionally, the Participant may always elect to forgo participation in the Plan or any other award program.

 

9

 

EXHIBIT A

 

OPTION RULES
 TO TRAVELERS’ STOCK OPTION GRANT NOTIFICATION AND AGREEMENT

 

When you leave the Travelers Group

 

References to “you” or “your” are to the Participant. “Termination Date” is defined in Section 7(a) of the Award Agreement and means the date of the termination of your employment with the Travelers Group (whether voluntary or involuntary) as reflected on the books and records of the Travelers Group.

 

If you terminate your employment or if there is a break in your employment, your Option may be cancelled before the end of the vesting period and the vesting and exercisability of your Option may be affected.

 

The provisions in the chart below apply to Options granted under the Plan. Depending upon your employment jurisdiction upon the Grant Date, special rules may apply for vesting, payment, exercise and exercisability of your Option in cases of termination of employment if you satisfy certain age and years of service requirements (“Retirement Rule”), as set forth in “Retirement Rule” below. Participants based in countries outside the United States on the Grant Date or in California immediately prior to the Termination Date should refer to Exhibit B for special rules that apply. For the avoidance of doubt, the applicable vesting terms for your Option pursuant to Exhibits A and B shall be based on your employment jurisdiction on the Grant Date.

 

If any Option exercisability period set forth in the chart below or under “Retirement Rule” below would otherwise expire during an Option Exercise Suspension, the Option shall remain exercisable for a period of 30 days after the Option Exercise Suspension (as defined in Section 4 of the Award Agreement) is lifted by the Company (but no later than the original option expiration date, which is the tenth (10th) anniversary of the Grant Date).

 

	
If You:
    	
 
    	
Here’s What Happens to Your Options:
    
	
Terminate employment or your employment is   terminated by the Travelers Group for any reason other than due to death or   disability (but you do not meet the Retirement Rule)
    	
 
    	
Vesting stops and unvested options are cancelled   effective on the Termination Date. You may exercise your vested options for   up to 90 days after the Termination Date but no later than the original   option expiration date; provided, however, that if your employment is   terminated for cause or gross misconduct (as determined by the Company in its   sole discretion) or you voluntarily terminated your employment where grounds   for involuntary termination for gross misconduct or for cause existed (as   determined by the Company in its sole discretion at the time of or following   your termination of employment) you may not exercise vested options at any   time after the Termination Date.
    
	
Become disabled (as defined under the Travelers   Group’s applicable long-term disability plan or policy covering disabilities   in your employment jurisdiction)
    	
 
    	
Options continue to vest on schedule through an   approved disability leave. Upon the earlier of the (i) Termination Date   or (ii) the first anniversary of the commencement of your approved   disability leave, your unvested options will vest, and you may exercise your   options for up to one year from such date, but no later than the original   option expiration date.
    
	
Take an approved personal leave of absence   approved by the Travelers Group under its Personal Leave Policy, if   applicable
    	
 
    	
For the first three months of an approved personal   leave, vesting continues. If the approved leave exceeds three months, vesting   is suspended until
    

 

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you return to work with the Travelers Group and   remain actively employed for 30 calendar days, after which time vesting will   be restored retroactively. Vested options may be exercised during approved   leave, but no later than the original option expiration date. If you   terminate employment for any reason during the first year of an approved   leave, the termination of employment provisions will apply. If the leave   exceeds one year, all options will be cancelled immediately.
    
	
Are on an approved family leave, medical leave,   dependent care leave, military leave, or other statutory leave of absence or   notice leave (including, without limitation, “garden leave” but not including   any period corresponding to pay in lieu of notice, severance pay or other   monies on account of the cessation of your employment)
    	
 
    	
Options will continue to vest on schedule, and you   may exercise vested options during the leave but no later than the original   option expiration date.
    
	
Die while employed or following employment while   your option is still outstanding
    	
 
    	
Options fully vest upon death. Your estate may   exercise options for up to one year from the date of death but no later than   the original option expiration date.
    

 

Retirement Rule

 

If, as of your Termination Date, you are at least (i) age 65, (ii) age 62 with one or more full years of service, or (iii) age 55 with 10 or more full years of service, then you meet the “Retirement Rule.”

 

The Retirement Rule will not apply to your Option or any Prior Equity Award if you were involuntarily terminated for gross misconduct or for cause (as determined by the Company in its sole discretion) or you voluntarily terminated your employment where grounds for involuntary termination for gross misconduct or for cause existed (as determined by the Company in its sole discretion at the time of or following your termination of employment). If you retire and do not meet the Retirement Rule, you will be considered to have resigned.

 

	
If You:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Meet the Retirement Rule (subject to   Exhibit B if applicable)
    	
 
    	
Unvested options fully vest on the Termination Date.   Vested options may be exercised for up to three years from the Termination   Date, but no later than the original option expiration date, provided that   you do not engage in any activities that compete with the business operations   of the Travelers Group (as determined by the Company in its sole discretion),   including, but not limited to, working for another insurance company engaged   in the property casualty insurance business as either an employee or   independent contractor. You are not subject to this non-compete provision if   you are terminated involuntarily or if you are employed in any state where   state law prohibits such non-compete provisions, but you remain subject to   Sections 7 and 8 of the Award Agreement, and the POE Agreement.
    
    When you exercise any options subject to the   Retirement Rule, your exercise will represent and constitute your certification   to the Company that you have not engaged in any activities that compete with   the business operations of the Travelers Group since your Termination Date. You   may be required to provide the Company with other evidence of your compliance   with the Retirement Rule as the Company may require. In the event that   you are
    

 

11

 

	
 
    	
 
    	
determined to have engaged in competitive activities   while receiving the benefit of continued vesting pursuant to the Retirement   Rule (other than following an involuntary termination), any outstanding   portion of the Option will be immediately forfeited and any portion of the   Option previously paid to you will be subject to recoupment by the Company in   accordance with Section 8(f) of the Award Agreement.
    

 

EXHIBIT B

 

Special Rules Applicable to Participants Based in Certain Jurisdictions

 

Terms and Conditions

 

This Exhibit B includes additional and/or alternative terms and conditions that govern the Option granted to the Participant under The Travelers Companies, Inc. 2014 Stock Incentive Plan (the “Plan”) if the Participant is employed in one of the jurisdictions listed below on the Grant Date or on the Termination Date if the Participant is employed in California immediately prior to such Termination Date. Capitalized terms used but not defined in this Exhibit B are defined in the Plan and/or Award Agreement and have the meanings set forth therein. To the extent that this Exhibit B is applicable to the Participant (based on the Participant’s place of employment on the Grant Date or on the Termination Date if the Participant is employed in California immediately prior to such Termination Date), the provisions set forth in this Exhibit B will apply to the Participant and will supersede the corresponding provisions set forth in the Award Agreement with respect to the Participant.

 

Notifications

 

This Exhibit B also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to the Participant’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective jurisdictions as of January 2016. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Participant should not rely on the information noted in this Exhibit B as the only source of information relating to the consequences of the Participant’s participation in the Plan because the information may be out of date by the time the Participant’s Option hereunder is exercised.

 

In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation, and the Company is not in a position to assure the Participant of a particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s jurisdiction may apply to the Participant’s situation.

 

Finally, the Participant understands that if he or she is a citizen or resident of a jurisdiction other than the one in which the Participant is currently working, transfers employment after the Grant Date, or is considered a resident of another jurisdiction for local law purposes, the information contained herein may not apply to the Participant, and the Company shall, in its discretion, determine to what extent the terms and conditions contained herein shall apply.

 

*   *   *

 

12

 

Brazil

 

·                  References in the Award Agreement and Exhibit A thereto to the POE Agreement (and related obligations thereunder) will not apply to the Participant.

 

·                  The automatic Option exercise provision set forth in the last sentence of Section 4 of the Award Agreement and in Section 7.5 of the Plan will not apply to the Participant.

 

·                  The non-solicitation restrictions in Section 7(c) of the Award Agreement shall not apply with respect to any prospective clients of the Company who are not current clients of the Company while the Participant maintains an employment relationship with the Company.

 

·                  Section 12 of the Award Agreement shall be revised to read as follows:

 

·                  12. No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment with the Travelers Group. Nothing contained herein shall be deemed to give the Participant the right to be retained in the service of the Travelers Group or to interfere with the right of the Travelers Group to terminate the employment of the Participant at any time.

 

·                  Section 18 of the Award Agreement shall be revised to provide that the venue for any disputes related to the Award Agreement shall be in a court of law based in Brazil, at the city where the participant renders his/her services.

 

·                  The provisions in Exhibit A related to the Retirement Rule shall be inapplicable to the Participant. Accordingly, upon the Participant’s termination of employment for any reason other than due to death or Disability (regardless of whether the Participant meets the Retirement Rule), vesting of the Option will cease and all outstanding unvested Options will be cancelled effective on the Termination Date.

 

·                  The provisions in Exhibit A related to disability shall be inapplicable to the Participant for so long as the Participant remains employed by the Travelers Group.  Accordingly, a disabled Participant who remains employed by the Travelers Group shall be treated as a continuing employee in all respects for purposes of vesting and other rights with respect to the Option.

 

13

 

California

 

·                  If the Participant is employed in the State of California immediately prior to the Termination Date, then Sections 7(b) and 7(c) of the Award Agreement shall be restated to read as follows:

 

7(b)                          Non-Solicitation of Employees. The Participant acknowledges that the Travelers Group sustains its operations and the goodwill of its clients, customers, policyholders, producers, agents and brokers (its “Customers”) through its employees. The Travelers Group has made significant investment in its employees and their ability to establish and maintain relationships with each other and with the Travelers Group’s Customers in order to further its operations and cultivate goodwill. The Participant acknowledges that the loss of the Travelers Group’s employees could adversely affect its operations and jeopardize the goodwill that has been established through these employees, and that the Travelers Group therefore has a legitimate interest in preventing the solicitation of its employees.  Accordingly, the Participant hereby agrees that during the Restricted Period, the Participant will not, directly or indirectly, seek to recruit or solicit, attempt to influence or assist, participate in, or promote the solicitation of the employment of any person who was or is employed by the Travelers Group at any time during the last three months of the Participant’s employment or during the Restricted Period. The Participant shall not engage in the aforesaid conduct through a third party for the purpose of colluding to avoid the restrictions in this Section 7(b). Without limiting the generality of the restrictions under this Section 7(b), by way of example, the restrictions under this Section shall prohibit the Participant from (i) initiating communications with a Travelers Group employee in connection with a current or future employment opportunity outside of the Travelers Group, (ii) identifying Travelers Group employees to potentially be solicited, and/or (iii) otherwise assisting or participating in the solicitation of a Travelers Group employee.

 

Notwithstanding the foregoing, the Non-Solicitation Conditions do not preclude the Participant from directing a third party (including but not limited to employees of his/her subsequent employer or a search firm) to broadly solicit, recruit, and hire individuals, some of whom may be employees of the Travelers Group, provided, that the Participant does not direct such third party specifically to solicit employees of the Travelers Group generally or specific individual employees of the Travelers Group.

 

7(c)                           Non-Solicitation of Business. The Participant acknowledges that by virtue of his or her employment with the Travelers Group, he or she may have had access to Trade Secrets and/or Confidential Information (as defined in Section 7(f)) about the Travelers Group’s Customers and is, therefore, capable of significantly and adversely impacting existing relationships that the Travelers Group has with them. The Participant further acknowledges that the Travelers Group has invested in its and the Participant’s relationship with its Customers and the goodwill that has been developed with them and therefore has a legitimate interest in protecting these relationships against Participant’s use of Trade Secrets and/or Confidential Information to solicit Customers and/or otherwise interfere with these customer relationships. If, after the Termination Date, the Participant accepts a position as an employee, consultant or contractor with a “Competitor” (as defined below), then the Participant will not utilize Trade Secrets and/or Confidential Information to directly or indirectly, solicit, interfere with or attempt to influence any Customer of the Travelers Group to discontinue business with the Travelers Group and/or move existing or future business of the Travelers Group elsewhere. This restriction applies with respect to any business of any current or prospective client, customer or policyholder of the Travelers Group on which the Participant gained access to Trade Secrets and/or Confidential Information during the Participant’s employment with the Travelers Group. In addition to the foregoing restriction, the Participant agrees not to utilize Trade Secrets and/or Confidential Information in the negotiation, competition for, solicitation or execution of any individual book roll over(s) or other book of business transfer arrangements involving the transfer of business away from the Travelers Group. As used herein, “Competitor” shall include any business enterprise or organization, including, without limitation, agents, brokers and producers, that engages in, owns or controls a significant interest in any entity that engages in the sale of products and/or performance of services of the type sold or performed by the Travelers Group and/or provides advice relating to such products and services.

 

14

 

Canada

 

·                  References in the Award Agreement and Exhibit A thereto to the POE Agreement (and related obligations thereunder) will not apply to the Participant.

 

·                  Section 12 of the Award Agreement shall be revised to read as follows:

 

12.                               No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment with the Travelers Group. Nothing contained herein shall be deemed to give the Participant the right to be retained in the service of the Travelers Group or to interfere with the right of the Travelers Group to terminate the employment of the Participant at any time.

 

15

 

India

 

·                  References in the Award Agreement and Exhibit A thereto to the POE Agreement (and related obligations thereunder) will not apply to the Participant.

 

·                  To the extent that the Company elects to enforce the forfeiture and repayment provisions under Section 8(b) of the Award Agreement by re-acquiring shares of Common Stock held by the Participant, the Company will pay nominal consideration, as determined at the discretion of the Company, for such shares and/or obtain approval from the Reserve Bank of India, to the extent required under applicable law.

 

·                  Section 18 of the Award Agreement shall be revised to read as follows:

 

18                                  Governing Law and Forum for Disputes. The Award Agreement shall be legally binding and shall be executed and construed and its provisions enforced and administered in accordance with the laws of the State of Minnesota. Any dispute, claim or controversy arising under, out of, or in connection with or in relation to this Award Agreement or the Plan, or any breach, termination or validity thereof, shall be finally determined and adjudicated through arbitration by a sole arbitrator located in Mumbai, India. The arbitration proceedings shall be conducted in accordance with the SIAC Rules in effect at the time of arbitration, and judgment upon the award may be entered in any court having jurisdiction thereof or having jurisdiction over the parties or their assets. It is mutually agreed that the written decision of the arbitrator shall be valid, binding, final and non-appealable. To the extent permitted by law, the arbitrator’s fees and expenses will be borne equally by each party. In the event that an action is brought to enforce the provisions of this Award Agreement or the Plan pursuant to this Section 18, each party shall pay its own attorneys’ fees and expenses regardless of whether there is a prevailing party in the opinion of the arbitrator deciding such action or the court in which any such arbitration award is entered. Without prejudice to the rights of the Company under this Section, if the Participant breaches, or proposes to breach the provisions of this Award Agreement or Plan, the Company and the Travelers Group shall be entitled, in addition to all other remedies such party may have, to a temporary, preliminary or permanent injunction or other appropriate equitable relief to restrain any such breach without showing or proving any actual damage to the non-breaching party from any court having competent jurisdiction over either party.

 

16

 

Republic of Ireland

 

·                  References in the Award Agreement and Exhibit A thereto to the POE Agreement (and related obligations thereunder) will not apply to the Participant.

 

·                  Section 12 of the Award Agreement shall be revised to read as follows:

 

12.                               No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment with the Travelers Group for a definite period of time. The Travelers Group retains the right to decrease the Participant’s compensation and/or benefits, transfer or demote the Participant or otherwise change the terms or conditions of the Participant’s employment with the Travelers Group, subject to applicable Irish law and the terms of the Participant’s employment contract.

 

·                  Section 18 of the Award Agreement shall be revised to provide that the venue for any disputes related to the Award Agreement shall be in a court of law based in the Republic of Ireland. In all other respects, the regular provisions set forth in Section 18 of the Award Agreement (including with respect to Minnesota governing law) shall apply.

 

·                  Further to the provisions as set out in Section 19 of the Award Agreement, the Travelers Group agrees that it will comply with the provisions of the Data Protection Act 1988 together with the Data Protection (Amendment) Act 2003 (collectively, the “Irish DPA Act”). The Participant consents to the Company, the Travelers Group and any other third parties as described in Section 19 processing and transferring their personal data (as defined in the Irish DPA Act), outside of the European Economic Area even where the country or territory in question does not maintain adequate data protection standards.

 

·                  The provisions in Exhibit A related to the Retirement Rule shall be inapplicable to the Participant. Accordingly, upon the Participant’s termination of employment for any reason other than due to death or Disability (regardless of whether the Participant meets the Retirement Rule), vesting of the Option will cease and all unvested portions of the Option will be cancelled effective on the Termination Date and you will be permitted to exercise your vested options for up to 90 days after the Termination Date but no later than the original Option expiration date.

 

17

 

United Kingdom

 

·                  References in the Award Agreement and Exhibit A thereto to the POE Agreement (and related obligations) will not apply to the Participant.

 

·                  The Restricted Period, as defined in Section 7(a) of the Award Agreement, will include any period during which the Participant is placed on “garden leave.”

 

·                  The restrictions under Section 7(b) of the Award Agreement related to non-solicitation of employees shall only apply with respect to employees with whom the Participant had material dealings during the 12 months preceding the date of the Participant’s termination of employment with the Travelers Group, and such restrictions shall not apply with respect to any secretarial or administrative assistant employees of the Travelers Group.

 

·                  The “Enhanced Restricted Period” defined under Section 7(c) of the Award Agreement shall be limited to 12 months following the Termination Date (i.e., the same duration as the normal Restricted Period). Additionally, under Section 7(c) of the Award Agreement:

 

(i)                                     the restrictions relating to recruiting or solicitation of, interference with, attempting to influence or otherwise affecting any client, customer, policyholder or agent of the Travelers Group shall be limited to such clients, customers, policyholders or agents with which the Participant had material dealings within the 12 months preceding the Termination Date; and

 

(ii)                                  the references to “business” (aside from references to “book of business”) shall be limited to business activities with which the Participant was materially involved during the 12 months preceding the Termination Date.

 

·                  Section 12 of the Award Agreement shall be replaced with the following:

 

12.                               No Right to Employment. The Participant agrees that nothing in this Award Agreement constitutes a contract of employment or guarantees employment with any member of the Travelers Group for a fixed duration of time. Each member of the Travelers Group retains the right to decrease the Participant’s compensation and/or benefits, transfer or demote the Participant or otherwise change the terms or conditions of the Participant’s employment with the Travelers Group, subject to applicable law and the terms of the Participant’s employment contract. Upon termination of the Participant’s employment (for whatever reason) the Participant will have no rights as a result of this Award Agreement or any alleged breach of this Award Agreement or otherwise to any compensation under or in respect of any shares, share options, restricted stock units, long-term incentive plans or any other profit sharing scheme in which the Participant may participate or have received grants or allocations on or before the date on which the Participant’s employment terminates. Any rights which the Participant may have under such schemes will be exclusively governed by the rules of such schemes from time to time.

 

·                  Section 18 of the Award Agreement shall be revised to provide that the venue for any disputes related to the Award Agreement shall be the Courts of England and Wales. In all other respects, the regular provisions set forth in Section 18 of the Award Agreement (including with respect to Minnesota governing law) shall apply.

 

·                  Further to the provisions as set out in Section 19 of the Award Agreement, the Travelers Group agrees that it will comply with the provisions of the Data Protection Act 1998 (the “Act”). The Participant consents to the Company, the Travelers Group and any other third parties as described in Section 19 processing and transferring their personal data (as defined in the Act), outside of the European Economic Area even where the country or territory in question does not maintain adequate data protection standards.

 

·                  In the event a Participant becomes disabled the language under “Here’s What Happens to Your Options” in Exhibit A shall be replaced with the following:

 

18

 

Options continue to vest on schedule through an approved disability leave.  If you are disabled for 12 continuous months, your unvested Options will vest immediately, and you may exercise Options for up to one year from your Termination Date, but no later than the original Option expiry date.  You are considered “disabled” if you are disabled for employment purposes and will be presumed disabled if you qualify for a long-term disability benefit.

 

·                  The provisions in Exhibit A related to the Retirement Rule shall be inapplicable to the Participant. Accordingly, upon the Participant’s termination of employment for any reason other than due to death or Disability (regardless of whether the Participant meets the Retirement Rule), vesting of the Option will cease and all unvested portions of the Options will be cancelled effective on the Termination Date and you will be permitted to exercise your vested options for up to 90 days after the Termination Date but no later than the original Option expiration date.

 

·                  The provisions in Exhibit A related to disability shall be inapplicable to the Participant for so long as the Participant remains employed by the Travelers Group.  Accordingly, a disabled Participant who remains employed by the Travelers Group shall be treated as a continuing employee in all respects for purposes of vesting and other rights with respect to the Option.

 

19

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