Document:

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                                                                   Exhibit 10.13

                         EXECUTIVE EMPLOYMENT AGREEMENT

      EMPLOYMENT AGREEMENT (the "Agreement") dated as of March 7, 2002, between
Travelers Property Casualty Corp., a Connecticut corporation (the "Company"),
and Robert I. Lipp (the "Executive") shall be effective upon the initial public
offering ("IPO") of the common stock of the Company (the "Effective Date").

                               W I T N E S S E T H

      WHEREAS, the Company desires to employ the Executive as Chairman and
Chief Executive Officer of the Company;

      WHEREAS, the Company and the Executive desire to enter into the
Agreement as to the terms of his employment by the Company;

      NOW THEREFORE, in consideration of the foregoing, of the mutual promises
contained herein and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

      1.    POSITION/DUTIES.

      (a)   During the Employment Term (as defined in Section 2 below), the
Executive shall serve as the Chairman and Chief Executive Officer of the
Company. In this capacity the Executive shall have such duties, authorities and
responsibilities commensurate with the duties, authorities and responsibilities
of persons in similar capacities in similarly sized companies and such other
duties and responsibilities as the Board of Directors of the Company (the
"Board") shall designate that are consistent with the Executive's position as
Chairman and Chief Executive Officer of the Company.

      (b)   During the Employment Term, the Executive shall devote substantially
all of his business time (excluding periods of vacation and other approved
leaves of absence) in the performance of his duties with the Company, provided
the foregoing will not prevent the Executive from (i) participating in
charitable, civic, educational, professional, community or industry affairs or
serving on the board of directors or advisory boards of other companies;
provided, however, that the Executive shall not serve as a director on more than
three boards of directors or advisory boards of other for profit companies or
with regard to any competitive company without the prior written approval of the
Board, and (ii) managing his and his family's personal investments so long as
such activities in the aggregate do not materially interfere with his duties
hereunder.

      (c)   The Board shall take such action as may be necessary to appoint or
elect the Executive as a member of the Board as of the Effective Date.
Thereafter, during the Employment Term, the Board shall nominate the Executive
for re-election as a member of the Board at the expiration of his then current
term.
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      2.    EMPLOYMENT TERM. The Executive's term of employment under this
Agreement shall be for a term commencing on the Effective Date and ending on the
fifth anniversary of the Effective Date (the "Employment Term"), subject to
earlier termination as provided in Section 7, below. Without limiting the
foregoing, in the event that Citigroup does not distribute its remaining
interest in the Company (the "Distribution") by June 1, 2003, either the Company
or the Executive may elect to terminate the Employment Term on or prior to
December 31, 2003 by written notice to the other.

      3.    BASE SALARY. The Company agrees to pay the Executive a base salary
(the "Base Salary") at an annual rate of not less than $600,000, payable in
accordance with the regular payroll practices of the Company, but not less
frequently than monthly. The Executive's Base Salary shall be subject to annual
review by the Board (or a committee thereof) and may be increased, but not
decreased, from time to time by the Board. Furthermore, upon the Distribution,
the Board shall review the Executive's salary for increases such that it is
commensurate with the base salaries of persons in similar capacities in
similarly sized public companies. No increase to Base Salary shall be used to
offset or otherwise reduce any obligations of the Company to the Executive
hereunder or otherwise. The base salary as determined herein from time to time
shall constitute "Base Salary" for purposes of this Agreement.

      4.    BONUS. During the Employment Term, the Executive shall be eligible
to participate in the Company's bonus and other incentive compensation plans and
programs for the Company's senior executives at a level commensurate with his
position. The Executive shall have the opportunity to earn an annual bonus
measured against objective financial criteria to be determined by the Board (or
a committee thereof) in accordance with the Company's bonus and other incentive
compensation plans and programs under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code").

      5.    STOCK OPTIONS.

      (a)   INITIAL OPTION GRANT. The Board or the committee of the Board (the
"Committee") appointed to administer the Company's stock incentive plan (the
"Stock Incentive Plan") shall award the Executive, immediately prior to the
initial sales offer with regard to the IPO, an option under the Stock Incentive
Plan (the "Option") to purchase shares of the Company's common stock (the
"Common Stock") equal to $80,000,000 divided by the exercise price. The exercise
price shall be the price at which shares of Common Stock are initially offered
to purchasers in the IPO. Subject to accelerated vesting as set forth in this
Agreement, the Option shall vest (i) as to one-fifth of the shares of Common
Stock subject to the Option on the earlier of (x) the date which is 18 months
after the date of the grant or (y) the later of the Distribution or the first
anniversary of the Effective Date and (ii) as to one-fifth of the shares of
Common Stock subject to the Option on the second anniversary of the Effective
Date and each anniversary thereafter (with the last tranche vesting on the day
prior to the fifth anniversary of the Effective Date), conditioned upon
Executive's continued employment with the Company as of each vesting date. The
Option shall be for a term of 10 years and in the event of any termination of
employment shall remain exercisable thereafter for two years after such

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termination, but in no event beyond the stated 10-year term. Notwithstanding any
provision to the contrary in this Agreement or in any equity compensation,
benefit or other plan or prospectus, there will be no accelerated vesting of the
Option upon retirement, resignation or any other event, prior to the
Distribution except as provided in (b) below. Following the Distribution, there
will be no accelerated vesting of the Option upon the Executive's retirement
prior to the third anniversary of the IPO, unless the Option is accelerated as
provided in (b) below. Except as provided in this paragraph, the Option shall
vest upon the Executive's "retirement" as such term is defined in the Stock
Incentive Plan or individual grants thereunder. Vested shares of the Option
shall remain exercisable for at least two years after such retirement, but in no
event beyond the stated 10-year term. The agreement evidencing the Option shall
reflect the provisions of this Section 5(a), including, without limitation, the
vesting schedule set forth herein.

      (b)   ACCELERATION EVENTS The Option will be fully vested and immediately
exercisable in the event that there is no Distribution by June 1, 2003 and,
between such date and December 31, 2003, the Executive's employment is
terminated by the Company without Cause or the Executive resigns for any reason.
In addition, the Option shall be fully vested and immediately exercisable in the
event that (x) the Executive's employment is terminated by the Company without
Cause or the Executive voluntarily terminates his employment for Good Reason,
(y) the Executive dies or becomes Disabled or a Change in Control (as defined in
the Stock Incentive Plan) occurs or (z) the Employment Term expires on the fifth
anniversary of the Effective Date. Upon the foregoing events the Option shall
remain exercisable for at least two years but in no event beyond the ten-year
term.

      (c)   DISCRETIONARY GRANTS. In addition to the Option, at the sole
discretion of the Committee, the Executive shall be eligible for additional
annual grants of stock options and other equity awards.

      (d)   TRANSFERABILITY. The Option may be transferred, in whole or in part,
to a Family Member (as defined under the Securities Act of 1933, as amended or
Securities Act Form S-8). A Family Member who is a transferee of the Option
shall not be eligible to receive a reload stock option upon the exercise of the
Option.

      (e)   REGISTRATION. At all times during and after the Employment Term, the
Company shall maintain registrations on Form S-8 and/or another applicable form.

      6.    EMPLOYEE BENEFITS.

      (a)   BENEFIT PLANS. The Executive shall be entitled to participate in any
employee benefit plan of the Company including, but not limited to, equity,
pension, thrift, profit sharing, medical coverage, education, or other
retirement or welfare benefits that the Company has adopted or may adopt,
maintain or contribute to for the benefit of its senior executives at a level
commensurate with his positions. Except as otherwise provided herein, the
Executive's prior service with Citigroup shall be recognized for eligibility and
vesting purposes under any of the Company's or its affiliates' equity
compensation and benefit plans, including, but not limited

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to, being classified as a "retiree." Except as otherwise provided in this
Agreement, any vesting under the Company's equity compensation and benefit plans
shall be subject to and in accordance with the terms of the applicable plan or
program.

      (b)   VACATIONS. The Executive shall be entitled to an annual paid
vacation in accordance with the Company's policy applicable to senior
executives, but in no event less than four weeks per calendar year (as prorated
for partial years and accrued, but not used, with respect to prior years), which
vacation may be taken at such times as the Executive elects with due regard to
the needs of the Company.

      (c)   PERQUISITES. The Company shall provide to the Executive, at the
Company's cost, all perquisites to which other senior executives of the Company
are generally entitled to receive and such other perquisites which are suitable
to the character of the Executive's position with the Company and adequate for
the performance of his duties hereunder. To the extent legally permissible, the
Company shall not treat such amounts as income to the Executive.

      (d)   BUSINESS AND ENTERTAINMENT EXPENSES. Upon presentation of
appropriate documentation, the Executive shall be reimbursed in accordance with
the Company's expense reimbursement policy for all reasonable and necessary
business and entertainment expenses incurred in connection with the performance
of his duties hereunder.

      (e)   OFFICE SPACE/TRAVEL.

            (i)   During the Employment Term, the Company shall provide the
      Executive with suitable, furnished offices (and staff) in New York and/or
      Connecticut for use in connection with the business of the Company.

            (ii)  The parties recognize that, for security purposes, it will be
      necessary for the Executive to travel by private aircraft for business and
      personal purposes and shall make appropriate arrangements with regard
      thereto. The Company shall fully gross up for tax purposes any deemed
      income to the Executive arising pursuant to use of such aircraft for
      business purposes, so that the economic benefit is the same to the
      Executive as if such use was provided on a non-taxable basis to the
      Executive.

      7.    TERMINATION. The Executive's employment and the Employment Term
shall terminate on the first of the following to occur:

      (a)   DISABILITY. Upon 30 days written notice by the Company to the
Executive of termination due to Disability, while the Executive remains
Disabled, but only after the Executive has been Disabled and unable to perform
his material duties for at least six consecutive months. For purposes of this
Agreement, "Disability" or "Disabled" shall be determined in accordance with the
terms and procedures of the Company's applicable Long Term Disability Plan,
except with respect to any termination of employment provision contained
therein.

      (b)   DEATH. Automatically on the date of death of the Executive.

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      (c)   CAUSE. Immediately upon written notice by the Company to the
Executive of a termination for Cause, provided that such notice is given within
90 days after the discovery of the Cause event by the Chairman of the Audit
Committee of the Board or Chairman of the Compensation Committee of the Board.
"Cause" shall mean (i) the willful misconduct of the Executive with regard to
the Company that is materially injurious to the Company, provided, however, that
no act or failure to act on the Executive's part shall be considered "willful"
unless done, or omitted to be done, by the Executive not in good faith and
without reasonable belief that his action or omission was in the best interests
of the Company; (ii) the willful and continued failure of the Executive to
attempt to substantially perform the Executive's duties with the Company (other
than any such failure resulting from incapacity due to physical or mental
illness) which failure is not remedied within 15 business days of written notice
from the Company specifying the details thereof; or (iii) the conviction of the
Executive of (or the pleading by the Executive of nolo contendere to) any felony
(other than traffic related offenses or as a result of vicarious liability).

      Notwithstanding the foregoing, following the Distribution, the Executive
shall not be deemed to have been terminated for Cause without (i) advance
written notice provided to the Executive not less than 14 days prior to the date
of termination setting forth the Company's intention to consider terminating the
Executive, including a statement of the date of termination and the specific
detailed basis for such consideration for Cause; (ii) an opportunity of the
Executive, together with his counsel, to be heard before the Board during the 14
day period ending on the date of termination; (iii) a duly adopted resolution of
the Board, after such opportunity, stating that in accordance with the
provisions of the next to the last sentence of this Section 7(c), that the
actions of the Executive constituted Cause and the basis thereof; and (iv) a
written determination provided by the Board setting forth the acts and omissions
that form the basis of such termination of employment. Any determination by the
Board hereunder shall be made by the affirmative vote of at least a two-thirds
majority of the members of the Board (other than the Executive). Any purported
termination of employment of the Executive by the Company following the
Distribution which does not meet each and every substantive and procedural
requirement of this Section 7 shall be treated for all purposes under this
Agreement as a termination of employment without Cause.

      (d)   WITHOUT CAUSE. Upon written notice by the Company to the Executive
of an involuntary termination without Cause, other than for death or Disability.

      (e)   GOOD REASON. Upon written notice by the Executive to the Company of
a termination for Good Reason. "Good Reason" shall mean, without the express
written consent of the Executive, the occurrence of any of the following events
unless such events are fully corrected in all material respects by the Company
within 30 days following written notification by the Executive to the Company
that he intends to terminate his employment hereunder for one of the reasons set
forth below:

            (i)   any reduction or diminution (except temporarily during any
      period of Disability) in the Executive's then titles or positions, or a
      material reduction or

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      diminution in the Executive's then authorities, duties or responsibilities
      or reporting requirements with the Company, including but not limited to a
      failure to elect the Executive to the Board or removal of the Executive
      from the Board; or

            (ii)  a material breach by the Company of any provisions of this
      Agreement, including, but not limited to, any reduction in any part of the
      Executive's then compensation (including Base Salary) or benefits or any
      failure to timely pay any part of Executive's compensation (including Base
      Salary and bonus, if any) or to provide the benefits contemplated herein;
      or

            (iii) the failure of the Company to obtain and deliver to the
      Executive a satisfactory written agreement from any successor to the
      Company to assume and agree to perform this Agreement.

      (f)   WITHOUT GOOD REASON. Upon written notice by the Executive to the
Company of the Executive's voluntary termination of employment without Good
Reason (which the Company may, in its sole discretion, make effective earlier
than any notice date).

      (g)   NO DISTRIBUTION BY JUNE 1, 2003. The Employment Term may be
terminated by either party as provided in Section 2 in the event that there is
no Distribution by June 1, 2003.

      8.    CONSEQUENCES OF TERMINATION.

      (a)   DISABILITY. Upon such termination, the Company shall pay or provide
the Executive (i) any unpaid Base Salary through the date of termination and any
accrued vacation; (ii) any unpaid bonus as declared or, if not then declared, as
determined by the Board in good faith, with respect to the performance year
ending preceding the date of termination; (iii) reimbursement for any
unreimbursed expenses incurred through the date of termination; (iv) a pro-rata
portion of the Executive's bonus for the performance year in which the
Executive's termination occurs (determined by multiplying the amount the
Executive would have received had employment continued through the end of the
performance year, as determined by the Board in good faith, by a fraction, the
numerator of which is the number of days during the performance year of
termination that the Executive is employed by the Company and the denominator of
which is 365); and (v) all other payments, benefits or fringe benefits to which
the Executive may be entitled under the terms of any applicable compensation
arrangement or benefit, equity or fringe benefit plan or program or grant or
this Agreement (collectively, "Accrued Benefits"). If the Executive's employment
should be terminated pursuant to Section 7(a), the numerator in the calculation
of the pro-rata portion of the Executive's bonus under Section 8(a)(iv) shall
exclude any period during which the Executive is classified by the Company as an
inactive employee.

      (b)   DEATH. In the event the Employment Term ends on account of the
Executive's death, the Executive's estate shall be entitled to any Accrued
Benefits.

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      (c)   TERMINATION FOR CAUSE OR WITHOUT GOOD REASON, ETC. If the
Executive's employment should be terminated (v) by the Company for Cause, or (w)
by the Executive without Good Reason, or (x) upon expiration of the Employment
Term on the fifth anniversary of the Effective Date, or (y) upon Executive's
retirement or (z) pursuant to Section 7(g), the Company shall pay to the
Executive any Accrued Benefits (other than those described in Sections 8(a)(ii)
and (iv) if the Executive's employment is terminated by the Company for Cause).

      (d)   TERMINATION WITHOUT CAUSE OR FOR GOOD REASON AFTER DISTRIBUTION.
Except as provided in Section 8(e) below, if the Executive's employment by the
Company is terminated at any time after the consummation of the Distribution,
but prior to the fifth anniversary of the Effective Date (x) by the Company
other than for Cause or (y) by the Executive for Good Reason, the Company shall
pay or provide the Executive with (i) Accrued Benefits; and (ii) shall pay to
the Executive a lump sum in cash within 30 days of the date of termination in an
amount equal to the product of (A) the sum of (1) the Base Salary and (2) the
highest annual bonus paid or payable to the Executive for the three performance
years prior to the date of termination (or such lesser number of performance
years as shall actually have been completed prior to the date of termination)
multiplied by (B) two. For purposes of the foregoing, no bonus paid or payable
with respect to performance years beginning before January 1, 2002 shall be
taken into account for purposes of determining the lump sum payment payable
pursuant to this Section 8(d).

      (e)   TERMINATION WITHOUT CAUSE OR FOR GOOD REASON IMMEDIATELY PRIOR TO OR
FOLLOWING A CHANGE OF CONTROL WHICH OCCURS AFTER DISTRIBUTION. If the
Executive's employment by the Company is terminated (x) by the Executive for any
reason (whether with or without Good Reason) during the period beginning on the
six-month anniversary of a Change in Control which occurs after Distribution (as
defined in the Stock Incentive Plan) and ending 60 days thereafter, (y) by the
Company without Cause or by the Executive for Good Reason at any time during the
period beginning on the date of the Change in Control which occurs after
Distribution and ending on the second anniversary of the Change in Control or
(z) by the Company without Cause or by the Executive for Good Reason at any time
during the period beginning on the later of (A) the date six months prior to a
Change in Control or (B) the date of the Distribution and ending immediately
prior to the Change in Control, then the Company shall pay or provide the
Executive with (i) Accrued Benefits and (ii) shall pay to the Executive a lump
sum in cash within 30 days of the date of termination in an amount equal to the
product of (A) the sum of (1) the Base Salary in effect immediately prior to
termination and (2) the highest annual bonus paid or payable to the Executive
for the three performance years prior to the date of termination (or such lesser
number of performance years as shall actually have been completed prior to the
date of termination) multiplied by (B) three. Payments and benefits provided
under this Section 8(e) shall be in lieu of the payments and benefits provided
under Section 8(d) and, to the extent any amounts are paid or provided under
Section 8(d), payments and benefits provided under this Section 8(e) shall be
offset or reduced. For purposes of the foregoing, no bonus paid or payable with
respect to performance years beginning before January 1, 2002 shall be taken
into account for purposes of determining the lump sum payment payable pursuant
to this Section 8(e).

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      (f)   Any termination payments made and benefits provided under this
Agreement to the Executive shall be in lieu of any termination or severance
payments or benefits for which the Executive may be eligible under any of the
plans, policies or programs of the Company or its affiliates.

      9.    RELEASE. Any and all payments made and benefits provided under this
Agreement to the Executive upon termination of employment including but not
limited to, those referenced in subparagraphs 5(b) or paragraph 8 shall be
contingent upon the full execution of a general release of all claims by the
Executive against the Company and its affiliates in a form substantially in the
form of Exhibit A hereto and mutually agreed upon by the Executive and the
Company. Accrued Benefits other than those described in Sections 8(a)(ii) and
(iv) shall not be contingent on the execution of such release.

      10.   EXCISE TAX. In the event that the Executive becomes entitled to
payments and/or benefits which would constitute "parachute payments" within the
meaning of Section 280G(b)(2) of the Code, the provisions of Exhibit B shall
apply.

      11.   NO ASSIGNMENTS.

      (a)   This Agreement is personal to each of the parties hereto. Except as
provided in Section 11(b) below, no party may assign or delegate any rights or
obligations hereunder without first obtaining the written consent of the other
party hereto.

      (b)   The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company and any successor to
its business and/or assets, which assumes and agrees to perform this Agreement
by operation of law, or otherwise.

      (c)   This Agreement shall inure to the benefit of and be enforceable by
the Executive and his personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would still be payable to him hereunder
had he continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to his devisee,
legatee or other designee or, if there is no such designee, to his estate.

      12.   NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given (i) on the date of delivery if delivered by hand,
(ii) on the date of transmission, if delivered by confirmed facsimile, (iii) on
the first business day following the date of deposit if delivered by guaranteed
overnight delivery service, or (iv) on the fourth business day following

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the date delivered or mailed by United States registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:

            If to the Executive:

            At the address (or to the facsimile number) shown on the records of
            the Company

            If to the Company:

            Travelers Property Casualty Corp.
            1 Tower Square
            Hartford, Connecticut 06183
            Attention: Corporate Secretary
            Facsimile: 860.277.8123

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

      13.   (a) CONFIDENTIALITY. The Executive acknowledges that in his
employment hereunder he will occupy a position of trust and confidence. The
Executive shall not, except as in good faith deemed necessary or desirable by
the Executive to perform his duties hereunder, or as required by applicable law
or legal process, without limitation in time or until such information shall
have become public or known in the Company's industry other than by the
Executive's unauthorized disclosure, disclose to others or use, whether directly
or indirectly, any Confidential Information regarding the Company. "Confidential
Information" shall mean information about the Company, its subsidiaries and
affiliates, and their respective employees, clients and customers that is not
disclosed by the Company for financial reporting purposes and that was learned
by the Executive in the course of his employment by the Company, including
(without limitation) any proprietary knowledge, trade secrets, data, formulae,
information and client and customer lists and all papers, resumes, and records
(including computer records) of the documents containing such Confidential
Information.

      (b)   NON-SOLICITATION OF EMPLOYEES. The Executive recognizes that he
possesses and will possess confidential information about other employees of the
Company relating to their education, experience, skills, abilities, compensation
and benefits, and inter-personal relationships with customers of the Company.
The Executive recognizes that the information he possesses and will possess
about these other employees is not generally known, is of substantial value to
the Company in developing its business and in securing and retaining customers,
and has been and will be acquired by him because of his business position with
the Company. The Executive agrees that, during the Employment Term and for the
one year period thereafter, he will not, directly or indirectly, solicit or
recruit any non-administrative or non-clerical employee of the Company whose W-2
earnings for the immediately preceding calendar year were $200,000 or above for
the purpose of being employed by him or by any competitor of the Company on
whose behalf he is acting as an agent, representative or employee.

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      (c)   NON-SOLICITATION OF CUSTOMERS. The Executive recognizes that he
possesses and will possess confidential and proprietary business information
about customers of the Company and that the customer information he possesses
and will possess is not generally known, is of substantial value to the Company
in developing its business and securing and retaining customers, and will be
acquired by him because of his business position with the Company. The Executive
agrees that, during the Employment Term and for the one-year period thereafter,
he will not personally solicit or induce any customers of the Company with whom
he had contact during his employment with the Company to divert any portion of
its business with the Company to another person or entity or direct that such
customers be targeted for diversion as a result of (i) his prior relationship
with them on behalf of the Company or (ii) an effort targeted primarily at
customers of the Company.

      (d)   EQUITABLE RELIEF AND OTHER REMEDIES. The Executive acknowledges and
agrees that the Company's remedies at law for a breach or threatened breach of
any of the provisions of this Section would be inadequate and, in recognition of
this fact, the Executive agrees that, in the event of such a breach or
threatened breach, in addition to any remedies at law, the Company, without
posting any bond, shall be entitled to obtain equitable relief in the form of
specific performance, temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available.

      (e)   REFORMATION. If it is determined by a court of competent
jurisdiction in any state that any restriction in this Section 13 is excessive
in duration or scope or is unreasonable or unenforceable under the laws of that
state, it is the intention of the parties that such restriction may be modified
or amended by the court to render it enforceable to the maximum extent permitted
by the law of that state.

      (f)   SURVIVAL OF PROVISIONS. Without effect as to the survival of other
provisions of this Agreement intended to survive the termination or expiration
of the Executive's employment, the obligations contained in this Section 13
shall survive the termination or expiration of the Executive's employment with
the Company and shall be fully enforceable thereafter.

      14.   COORDINATION. With regard to the equity grants, payments and
benefits described in this Agreement (the "Contract Rights") the provisions of
this Agreement, to the extent that they are more favorable to the Executive
(other than accelerated vesting upon the Executive's retirement prior to the
third anniversary of the IPO),shall control over any provisions to the contrary
in any plan, program, or equity grant applicable to the Executive. The Company
shall not impose any restrictions not contained in this Agreement on the
Contract Rights, and shall not condition any future equity grants, payments, or
benefits not contemplated by this Agreement upon the Executive's agreement to
any additional restrictions on the Contract Rights. However, nothing shall limit
the Company's discretion to include any new or different terms, conditions, or
restrictions in any future equity grant, payment or benefit to the Executive not
contemplated by this Agreement.

      15.   ATTORNEY'S FEES.

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      (a)   In the event of any dispute arising out of or under this Agreement
or the Executive's employment with the Company and the arbitrator determines
that the Executive has prevailed on the issues in the arbitration, the Company
shall, upon presentment of appropriate documentation, promptly, at the
Executive's election, pay or reimburse the Executive for all reasonable legal
and other professional fees, costs of arbitration and other expenses incurred in
connection therewith by the Executive.

      (b)   The Company shall promptly pay the Executive's reasonable costs of
entering into this Agreement, including the reasonable fees and expenses of his
counsel.

      (c)   The Company shall gross up for tax purposes any deemed income to the
Executive arising pursuant to the payments provided under this Section 15, so
that the economic benefit is the same to the Executive as if such payments were
provided on a non-taxable basis to the Executive. Payments pursuant to this
Section 15 shall be made on a current ongoing basis.

      16.   SECTION HEADINGS. The section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.

      17.   SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity of unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

      18.   COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instruments.

      19.   ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement, other than injunctive relief under Section 13(d)
hereof, shall be settled exclusively by arbitration, conducted before a single
arbitrator in New York, New York in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association then
in effect. The decision of the arbitrator will be final and binding upon the
parties hereto. Judgment may be entered on the arbitrator's award in any court
having jurisdiction. Nothing herein shall limit either the right of the Company
or the Executive to seek injunctive relief in a court of applicable
jurisdiction.

      20.   INDEMNIFICATION. In addition to any other rights of indemnification
of the Executive, the Company hereby covenants and agrees to promptly indemnify
the Executive (or, in the event of his death, his heirs, executors,
administrators or legal representatives) and hold him harmless to the fullest
extent permitted by law against and in respect to any and all actions, suits,
proceedings, claims, demands, judgments, costs, expenses (including attorney's
fees), penalties, fines, settlements, losses, and damages resulting from, or in
connection with, the Executive's employment with, and serving as a director of,
the Company, including but not limited to as an officer and director of any
subsidiary or as a fiduciary of any employee benefit

                                       11
<PAGE>
plan. The Company, within 10 days of presentation of invoices, shall advance to
the Executive reimbursement of all legal fees and disbursements reasonably
incurred by the Executive in connection with any potentially indemnifiable
matter; provided, however, that to the extent required by applicable law, in
order to receive such advanced fees and disbursements, the Executive must first
sign an undertaking reasonably satisfactory to the Company that he will promptly
repay the Company all advanced fees and disbursements in the event it is finally
determined in accordance with law that the Executive cannot be indemnified for
the matter at issue under applicable law. The burden of proving that
indemnification of the Executive is not permissible at law shall be on the
Company.

      21.   LIABILITY INSURANCE. The Company shall cover the Executive under
directors and officers liability insurance both during and, while potential
liability exists (but no less than six years), after the term of this Agreement
in the same amount and to the same extent, if any, as the Company covers its
other officers and directors.

      22.   MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer or director as may be
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. This Agreement together with all exhibits hereto sets
forth the entire agreement of the parties hereto in respect of the subject
matter contained herein. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New York without regard to its conflicts of law
principles.

      23.   FULL SETTLEMENT. Except as set forth in this Agreement, the
Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
circumstances, including without limitation, set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obliged to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement, nor shall the
amount of any payment hereunder be reduced by any compensation earned by the
Executive as a result of employment by another employer.

      24.   REPRESENTATIONS.

      (a)   The Company represents and warrants that there is no legal or other
impediment or limitation to the Company's performance of its obligations.

      (b)   The Executive represents and warrants to the Company that he has the
legal right to enter into this Agreement and to perform all of the obligations
on his part to be performed

                                       12
<PAGE>
hereunder in accordance with its terms and that he is not a party to any
agreement or understanding, written or oral, which could prevent him form
entering into this Agreement or performing all of his obligations hereunder.

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.

                                    TRAVELERS PROPERTY CASUALTY CORP.

                                    By:
                                       --------------------------------
                                    Title:
                                          -----------------------------

                                    ROBERT I. LIPP

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

                                       13
<PAGE>
                                    EXHIBIT A

                                 FORM OF RELEASE

      Agreement and General Release ("Release"), by and between
Robert I. Lipp ( "your" or "you") and Travelers Property Casualty
Corp. ("TAPCO").

1.    Pursuant to your Employment Agreement with TAPCO dated as of March 7, 2002
      ("Employment Agreement"), your [termination/retirement] will be effective
      at the close of business on ___________, 200_ ("Termination or Retirement
      Date").

2.    You agree that as of the Effective Date of this Agreement (defined in
      Paragraph 15) you will resign as an officer, director, or member of any
      internal and any outside directorships, memberships, or other affiliations
      in which you participate as a representative of TAPCO [to the extent not
      remaining in such capacity].

3.    Following your Termination or Retirement Date you will receive information
      as to COBRA elections from the COBRA administrator for certain benefits
      (i.e., medical and dental) that you may wish to continue.

4.    In consideration for the payments and benefits provided under the
      Employment Agreement upon your [termination/retirement] pursuant to
      Sections 5(b) and 8 of the Employment Agreement, you, on your behalf, and
      on behalf of your agents, assignees, attorneys, heirs, executors, and
      administrators (collectively referred to as "Releasors"), covenant not to
      sue and release TAPCO, its past and present parents, affiliates,
      successors, assigns, subsidiaries, divisions, and related business
      entities (collectively referred to as the "Company") and its or their
      current or former officers, directors, shareholders, employees, agents and
      representatives (collectively referred to as "Releasees") from any and all
      liability, claims, demands, actions, causes of action, suits, grievances,
      debts, sums of money, controversies, agreements, promises, damages, pay,
      bonus, stock, stock options, costs, expenses, attorneys' fees, and
      remedies of any type that Releasors may have by reason of any matter,
      cause, act or omission including, but not limited to, those arising out of
      or in connection with your employment with or separation from the Company.
      This covenant not to sue and general release shall apply to all disputes,
      claims, liens, injuries and damages, whether known or unknown, occurring
      at any time on or before the Effective Date of this Agreement and
      includes, but is not limited to, a full release of:

      -     any claims under Title VII of the Civil Rights Act of 1964, the Age
            Discrimination in Employment Act of 1967, the Rehabilitation Act of
            1973, the Civil Rights Act of 1866, the Americans with Disabilities
            Act of 1990, the Employee Retirement Income Security Act of 1974,
            the Civil Rights Act of 1991, the Equal Pay Act of 1963, the Family
            and Medical Leave Act of 1993, the Fair Labor Standards Act of 1938,
            the Older Workers Benefit Protection Act of 1990, the Occupational
            Safety and Health Act of 1970, the Worker Adjustment and Retraining
            Notification
<PAGE>
            Act of 1989, the New York State Human Rights Law, the New York City
            Human Rights Ordinance, and the Connecticut Human Rights and
            Opportunities Law, and

      -     any other federal, state, or local statute or regulation regarding
            employment, employment discrimination, termination of employment,
            retaliation, equal opportunity, and wage and hour.

      You specifically understand that you are releasing, among other claims,
      claims based on age, race, color, sex, sexual orientation or preference,
      marital status, religion, national origin, citizenship, veteran status,
      disability, and any other legally protected categories as well as other
      compensation-related claims. This also includes a release of any claims
      for breach of contract, any tortious act or other civil wrong, attorneys'
      fees, and all compensation and benefit claims including without limitation
      claims concerning salary, bonus, and any awards, grants or purchases under
      any equity and incentive compensation plan or program including but not
      limited to Capital Accumulation Plan or similar plan, and any separation
      pay plan maintained by the Company or any of its affiliates or
      subsidiaries. You acknowledge that this release is intended to include,
      without limitation, all claims known or unknown that you have or may have
      against the Company and Releasees through the Effective Date of this
      Agreement, including but not limited to those which arise out of or relate
      to your employment with or separation from the Company. Notwithstanding
      anything herein, you expressly reserve and do not release (a) your rights
      under any applicable pension plan or any other employee benefit plan
      (other than any equity compensation plan), under any vacation or sick
      leave policy or under COBRA, (b) your vested rights to any equity under
      any equity compensation plan, (c) claims arising after the Effective Date
      of this Agreement, or with respect to the enforcement of this Agreement,
      (d) your rights of indemnification or contribution to which you were
      entitled immediately prior to the Termination or Retirement Date under the
      Company's By-laws, the Company's Certificate of Incorporation or otherwise
      with regard to your service as an officer or director of the Company or
      your service as a fiduciary with regard to any employee benefit plan,
      including, without limitation, pursuant to Section 20 of the Employment
      Agreement, (e) your rights as a stockholder or (f) your rights under
      Sections 10 and 21 of the Employment Agreement.

5.    In consideration of the covenants and undertakings set forth herein, the
      Company hereby covenants not to sue and releases you from liability for
      any and all acts or omissions including but not limited to, those
      occurring during or in connection with your employment with or separation
      from the Company or as a stockholder of the Company. This covenant not to
      sue and general release shall apply to all disputes, claims, liens,
      injuries and damages, whether known or unknown, occurring at any time on
      or before the Effective Date of this Agreement. This release and covenant
      not to sue shall not apply to any breach of this Agreement or any claims
      against you by the Company for any debt or credit obligations including
      but not limited to any insurance, loan, mortgage, or credit card debt owed
      by you to the Company.

                                       2
<PAGE>
6.    (a)   You represent that you have not and will not file, directly or
            indirectly, any claims against the Company or the Releasees in any
            court, administrative agency, or arbitration, concerning any claims
            released herein.

      (b)   In the event that you have filed, directly or indirectly, claims
            against the Company or Releasees in any forum which are released
            herein, you agree to notify James Michener, Esq., Travelers Property
            Casualty Corp., 1 Tower Square, Hartford, Connecticut 06183, and to
            withdraw with prejudice any such claims before signing this
            Agreement. You acknowledge and agree that you are not eligible to
            receive the payments and benefits set forth in Section 5(b) or 8 of
            the Employment Agreement prior to such withdrawal.

7.    To the extent permitted by applicable law, you agree not to participate or
      assist in any action, complaint, charge, claim, or proceeding against the
      Company or the Releasees of any kind on behalf of any other person or
      entity (except pursuant to a court order, in response to a valid subpoena,
      or as requested by the Company or its attorneys) with regard to matters
      relating to your period of employment with the Company. You further agree
      that you will not seek or accept any award, judgment or settlement from
      any source or proceeding against the Company or the Releasees with respect
      to any claim or right arising from any act, omission, transaction, or
      occurrence through the Effective Date of this Agreement released herein.

8.    Nothing contained in this Agreement is intended to prohibit or restrict
      you from providing truthful information concerning your employment or the
      Company's business activities to any government, regulatory or
      self-regulatory agency.

9.    Subject to your reasonable business commitments, you agree to reasonably
      cooperate with the Company and its counsel with regard to any past,
      present, or future legal matters which relate to or arise out of the
      business you conducted on behalf of the Company. You will be entitled to
      your reasonable actual out-of-pocket expenses incurred in connection with
      providing such cooperation, including reasonable travel and reasonable
      attorneys' fees, following submission of appropriate documentation.

10.   The terms of this Agreement are not an admission of liability or
      wrongdoing by either you or the Company.

11.   You agree to return to the Company all documents, correspondence,
      memoranda, disks, audio or video tapes, written and other files, notes,
      manuals, handbooks, and account records (whether stored electronically or
      otherwise) in your possession, including but not limited to Confidential
      Information as defined in your Employment Agreement, upon the execution of
      this Agreement. Your "possession" includes any person or entity to whom
      you may have given such information other than in connection with the
      performance of your duties for the Company.

                                       3
<PAGE>
12.   Except with respect to Paragraph 4 above, the invalidity or
      unenforceability of any provision of this Agreement shall have no effect
      upon and shall not impair the validity or enforceability of any other
      provision of this Agreement.

13.   This Agreement shall be governed by the laws of the State of New York
      (regardless of conflict of laws principles) as to all matters including
      without limitation validity, construction, effect, performance, and
      remedies.

14.   You acknowledge that: (i) you have read and understand each of the
      provisions of this Agreement; (ii) you have consulted with an attorney
      prior to executing this Agreement; (iii) you have been given twenty-one
      (21) days from your receipt of this Agreement to review it and to consider
      your decision to sign it; (iv) you are entering into this Agreement of
      your own free will; and (v) this Agreement is not intended to be a
      prospective waiver of claims arising after the Effective Date of this
      Agreement.

15.   This Agreement shall not become effective or enforceable until eight (8)
      days following its execution by you ("Effective Date") during which time
      you or the Company may revoke this Agreement by notifying James Michener,
      Esq., at the address above, in writing.

16.   Notwithstanding anything in this Agreement, the provisions in your
      Employment Agreement which are intended to survive termination of your
      Employment Agreement, including but not limited to those contained in
      Section 13 thereof, shall survive and continue in full force and effect.

Travelers Property Casualty Corp.         Agreed to and accepted by:

--------------------------------------    --------------------------------------
By: [Name]                                Robert I. Lipp

--------------------------------------    --------------------------------------
Date                                      Date

                                       4
<PAGE>
                                    EXHIBIT B

                               GROSS-UP PROVISIONS

      (a)   Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that the Executive shall become entitled to
payments and/or benefits provided by this Agreement or any other amounts in the
"nature of compensation" (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company or any affiliate, any
person whose actions result in a change of ownership or effective control of the
Company covered by Section 280G(b)(2) of the Code or any person affiliated with
the Company or such person) as a result of such change in ownership or effective
control of the Company (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.

      (b)   Subject to the provisions of paragraph (c), all determinations
required to be made under this Exhibit B, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by a nationally
recognized accounting firm (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. The Accounting Firm shall
be jointly selected by the Company and the Executive and shall not, during the
two years preceding the date of its selection, have acted in any way on behalf
of the Company or its affiliated companies. If the Company and the Executive
cannot agree on the firm to serve as the Accounting Firm, then the Company and
the Executive shall each select a nationally recognized accounting firm and
those two firms shall jointly select a nationally recognized accounting firm to
serve as the Accounting Firm. All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Exhibit B, shall be paid by the Company to the Executive within five days
of the receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise Tax on the
Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
paragraph (c) hereof and the Executive thereafter is required to make a payment
of any Excise Tax, the Accounting Firm shall
<PAGE>
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.

      (c)   The Executive shall notify the company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which he or she gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:

            (i)   give the Company any information reasonably requested by the
      Company relating to such claim,

            (ii)  take such action in connection with contesting such claim as
      the Company shall reasonably request in writing from time to time,
      including, without limitation, accepting legal representation with respect
      to such claim by an attorney reasonably selected by the Company,

            (iii) cooperate with the Company in good faith in order effectively
      to contest such claim, and

            (iv)  permit the Company to participate in any proceedings relating
      to such claim; provided, however, that the Company shall bear and pay
      directly all costs and expenses (including additional interest and
      penalties) incurred in connection with such contest and shall indemnify
      and hold the Executive harmless, on an after-tax basis, for any Excise Tax
      or income tax (including interest and penalties with respect thereto)
      imposed as a result of such representation and payment of costs and
      expenses. Without limitation on the foregoing provisions of this paragraph
      (c), the Company shall control all proceedings taken in connection with
      such contest and, at its sole option, may pursue or forego any and all
      administrative appeals, proceedings, hearings and conferences with the
      taxing authority in respect of such claim and may, at its sole option,
      either direct the Executive to pay the tax claimed and sue for a refund or
      contest the claim in any permissible manner, and the Executive agrees to
      prosecute such contest to a determination before any administrative
      tribunal, in a court of initial jurisdiction and in one or more appellate
      courts, as the Company shall determine; provided, however, that if the
      Company directs the Executive to pay such claim and sue for a refund, the
      Company shall advance the amount of such payment to the Executive, on an
      interest-free basis and shall indemnify and hold the Executive harmless,
      on an after-tax basis, from any Excise Tax or income tax (including
      interest or penalties with respect thereto) imposed with respect to such
      advance or with respect to any imputed income with respect to such
      advance; and further provided the Executive shall not be required by the
      Company to

                                       2
<PAGE>
      agree to any extension of the statute of limitations relating to the
      payment of taxes for the taxable year of the Executive with respect to
      which such contested amount is claimed to be due unless such extension is
      limited solely to such contested amount. Furthermore, the Company's
      control of the contest shall be limited to issues with respect to which a
      Gross-Up Payment would be payable hereunder and the Executive shall be
      entitled to settle or contest, as the case may be, any other issue raised
      by the Internal Revenue Service or any other taxing authority.

      (d)   If, after the receipt by the Executive of an amount advanced by the
Company pursuant to paragraph (c) hereof, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of paragraph (c) hereof) promptly
pay to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to paragraph (c) hereof,
a determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.

      (e)   If, pursuant to regulations issued under Section 280G or 4999 of the
Code, the Company and the Executive were required to make a preliminary
determination of the amount of an excess parachute payment and thereafter a
redetermination of the Excise Tax is required under the applicable regulations,
the parties shall request the Accounting Firm to make such redetermination. If
as a result of such redetermination an additional Gross-Up Payment is required,
the amount thereof shall be paid by the Company to the Executive within five
days of the receipt of the Accounting Firm's determination. If the
redetermination of the Excise Tax results in a reduction of the Excise Tax, the
Executive shall take such steps as the Company may reasonably direct in order to
obtain a refund of the excess Excise Tax paid. If the Company determines that
any suit or proceeding is necessary or advisable in order to obtain such refund,
the provisions of paragraph (c) hereof relating to the contesting of a claim
shall apply to the claim for such refund, including, without limitation, the
provisions concerning legal representation, cooperation by the Executive,
participation by the Company in the proceedings and indemnification by the
Company. Upon receipt of any such refund, the Executive shall promptly pay the
amount of such refund to the Company. If the amount of the income taxes
otherwise payable by the Executive in respect of the year in which the Executive
makes such payment to the Company is reduced as a result of such payment, the
Executive shall, no later than the filing of his income tax return in respect of
such year, pay the amount of such tax benefit to the Company. In the event there
is a subsequent redetermination of the Executive's income taxes resulting in a
reduction of such tax benefit, the Company shall, promptly after receipt of
notice of such reduction, pay to the Executive the amount of such reduction. If
the Company objects to the calculation or recalculation of the tax benefit, as
described in the preceding two sentences, the Accounting Firm shall make the
final determination of the appropriate amount. The Executive shall not be
obligated to pay to the Company the amount of any further tax

                                       3
<PAGE>
benefits that may be realized by him or her as a result of paying to the Company
the amount of the initial tax benefit.

                                       4<PAGE>
                                                                 EXHIBIT (10.12)

                              RETIREMENT AGREEMENT

                  THIS AGREEMENT (this "Agreement") is made and entered into as
of this 28th day of January, 2002, by and between BADGER METER, INC., a
corporation organized and existing under the laws of the State of Wisconsin
("Company"), and ROBERT D. BELAN, an individual resident of the State of
Wisconsin ("Belan"):

                                   WITNESSETH:

                  WHEREAS, Belan has been employed by the Company and currently
holds the position of Executive Vice President; and

                  WHEREAS, Belan desires to continue in the employ of the
Company, but to retire from employment with the Company on September 30, 2002
(the "Retirement Date"); and

                  WHEREAS, Belan and the Company are currently parties to a
certain Key Executive Employment and Severance Agreement, dated as of August 16,
1999 (the "KEEP"); and

                  WHEREAS, Belan is willing to continue as an Executive Vice
President of the Company until the Retirement Date, and to agree not to compete
with the Company for the period set forth below.

                  NOW, THEREFORE, in consideration for the mutual promises
contained herein, the parties, intending to be legally bound, agree as follows:

1. Employment Until Retirement Date; Duties. During the period from the date of
this Agreement until the Retirement Date (the "Employment Period"), Belan shall
be employed by the Company as an Executive Vice President and shall perform such
duties as the Company's Board of Directors ("Board") and/or President may
reasonably assign to him from time to time. Without limiting the generality of
the foregoing, Belan shall generally assist in the smooth and orderly transition
of: (i) his current duties and responsibilities to the appropriate individuals
within the Company and (ii) Company customer and vendor relationships to the
appropriate individuals within the Company. Belan shall report directly to the
Company's President. Belan will continue to be a member of the Company's
Executive Committee.

2. Compensation and Benefits During the Employment Period. During the Employment
Period, Belan shall be entitled to receive the following compensation and other
benefits:

         (a) Belan's base salary shall be at an annual rate identical to his
         current base salary of $285,000.

         (b) Belan shall be entitled to participate in the Company's Long-Term
         Management Incentive Plan ("LTIP") in the same manner as other Company
         officers. Belan shall be entitled to participate in the Company's
         short-term incentive plan (maximum potential of 60% of annual base
         salary) in the same manner as other Company officers, except that any
         amount Belan may be entitled to receive under the short-term incentive
         plan shall be equitably prorated based upon that portion of calendar
         year 2002 that Belan is actually employed by the Company.

         (c) Belan shall continue to be eligible to participate in any Company
         health insurance plan that is made available by the Company to its
         officers generally.

         (d) Belan shall continue to be eligible to participate in any Company
         pension, retirement or similar plan made available by the Company to
         its officers generally; provided, however, that Belan shall not be
         entitled to receive any additional stock options under any Company
         stock option plan.

         (e) Belan shall continue to receive Company-paid term life insurance
         under the Company's current group term life insurance plan in a face
         amount equal to $427,500, which is 150% of Belan's annual base salary.

                                       29

<PAGE>

         (f) Belan shall continue to be eligible for long-term disability
         insurance coverage, pursuant to which the benefits, paid on a monthly
         basis, would be in an amount equal to sixty percent (60%) of Belan's
         monthly base salary, provided that Belan continues to pay the premiums
         associated with such long-term disability insurance coverage.

         (g) Belan shall be entitled to receive such number of weeks of vacation
         (equitably adjusted for the period of employment) consistent with the
         number of weeks of vacation that Belan was entitled to during the
         calendar year 2001; provided, however, that Belan shall use all of his
         earned vacation prior to the Retirement Date.

         (h) Belan shall be entitled to continue to use and occupy his current
         office.

         (i) Belan's KEEP shall remain in full force and effect, although the
         KEEP shall automatically terminate in accordance with its terms and
         without the need for any action on the part of any party on October 1,
         2002, since Belan will on that date no longer be an employee of the
         Company. In the event that a Change of Control (as that term is defined
         in the KEEP) occurs on or before September 30, 2002, the terms and
         conditions of such KEEP shall govern the parties hereto, and shall
         supercede any conflicting or contradictory provision contained herein.

         (j) Belan shall be entitled to reimbursement in accordance with the
         then prevailing Company policy for any reasonable and necessary
         business expenses incurred by him in connection with the performance of
         his duties hereunder upon submission of appropriate documentation.

         (k) Belan will continue to participate in the Company's Officers'
         Voting Trust on terms consistent with those made available to other
         officers of the Company.

3. Benefits After Retirement Date. After the Retirement Date, Belan shall be
entitled to receive the following benefits from the Company:

         (a) Belan will be eligible to participate in the Company's retiree
         health plan (including prescription drugs) until he is eligible for
         Medicare coverage (currently at age 65) and thereafter in the Company's
         health plan for retirees on Medicare and over age 65, subject to the
         same terms and conditions applicable to other participants generally.
         Belan's spouse will similarly be eligible to participate in such
         Company health plan until she is eligible for Medicare coverage and
         thereafter as the current spouse (including surviving spouse) of an
         eligible retiree over age 65, subject to the same terms and conditions
         applicable to other participants generally. To the extent consistent
         with law, the Company, upon reasonable request or as required, will
         confirm the health plan coverage available to Belan and/or his spouse
         to any third party, including without limitation, any health care
         provider or third party administrator. If other group health coverage
         is available to Belan or his spouse, then Belan and/or his spouse, as
         the case may be , will not be eligible to participate in the Company's
         retiree health plan. As a retiree, Belan and his current spouse will
         receive credit for eighteen (18) years of service, which will partially
         offset the premiums required to be paid by retirees under such retiree
         health plan.

         (b) The Company will pay to Belan (or his beneficiary) a non-qualified
         supplemental retirement benefit in an amount which is designed to place
         Belan in the same position that he would be in if he had an additional
         five (5) years of credited service under the Company's defined benefit
         pension plan ("Pension Plan"), at the same compensation as that earned
         in 2001.

         (c) In addition to the non-qualified supplemental retirement benefit
         provided under (b) above, the Company shall also pay Belan (or his
         beneficiary) an additional non-qualified supplemental retirement
         benefit of $1,187.50 per month for the 10-year period commencing
         October 1, 2002, and ending on September 30, 2012.

         (d) On and after the Retirement Date, Belan will no longer be entitled
         to participate in the Company's group term life insurance program, but
         may, subject to the terms and conditions of the then existing group
         term life insurance policy, convert his pre-Retirement Date life
         insurance coverage to individual coverage.

         (e) Belan shall be entitled to exercise his rights under the
         Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
         ("COBRA") to continue dental insurance coverage after the Retirement
         Date upon payment of the required premiums and compliance with the
         provisions of COBRA.

         (f) Belan shall have the same right that has been made available to
         other retired Company officers under the Company's Officers' Voting
         Trust to pay off any outstanding loans from the Company as of the
         Retirement Date over a three (3) year period.

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<PAGE>

         (g) Belan shall continue to enjoy all of his vested rights under one or
         more Company Plans as provided in Paragraph 5 hereof.

4. Material Breach By Belan; Consequences. In the event Belan breaches this
Agreement in a material way and such material breach continues, after written
notice from the Company to Belan and a reasonable opportunity for him to cure,
then the Company shall have the right to terminate this Agreement upon written
notice to Belan and Belan shall not be entitled to any compensation under this
Agreement from and after such date of termination. Under all other
circumstances, the compensation and fringe benefits payable to Belan hereunder
shall be paid, except that the compensation and fringe benefits payable to Belan
pursuant to Paragraph 2 above shall terminate upon his death.

5. Other Benefits. Nothing in this Agreement shall affect the rights of Belan or
the Company under any profit-sharing plan, pension plan, insurance plan or other
benefit plan of the Company (individually a "Plan" and collectively "Plans") in
which Belan participates or receives benefits, or under the KEEP; provided,
however, that Belan's participation in the Company's employee deferred
compensation program, in the LTIP or in any other Plan as an employee shall
cease as of the Retirement Date. On the Retirement Date, all outstanding stock
options granted by the Company to Belan under one or more Company stock option
plans and held by Belan on that date shall fully vest. Belan shall be entitled
to exercise all outstanding stock options in effect as of the Retirement Date
and granted to him under one or more Company stock option plans at any time, or
from time to time, through September 30, 2004; provided, however, that Belan's
exercise of any such stock option is subject in all cases to the express terms
of any governing Company stock option plan and applicable stock option
agreement.

6. No Assignment of Benefits. Unless ordered by a court of competent
jurisdiction, Belan shall have no right to assign or transfer the right to
receive any benefits hereunder, and in the event of any attempted assignment or
transfer, whether voluntary or involuntary, other than pursuant to an order of a
court of competent jurisdiction, the Company shall have no further liability
hereunder.

7. Taxes. The Company shall deduct from all payments made hereunder any
applicable federal, state, or local taxes required by law to be withheld from
such payments.

8. Covenant Not To Compete.

         (a) Belan covenants and agrees that during the Employment Period and
         for a period of two (2) years thereafter, neither he nor any of his
         affiliates (including, but not limited to, any corporation (other than
         the Company), partnership, limited liability company, firm or other
         entity in which he or they own in the aggregate two percent (2%) or
         more of any class of equity securities) will:

                  (i) Directly or indirectly engage in, continue or carry on the
                  business of the design, manufacture and/or sale of flow
                  measurement and control products, including, but not limited
                  to, water meters and associated systems, wastewater meters,
                  industrial meters, small valves and instrumentation related to
                  any of the foregoing meters, or any business substantially
                  similar thereto, including owning or controlling any financial
                  interest in any person, corporation, partnership, limited
                  liability company, firm or other business entity which
                  competes with or is engaged in or carries on any aspect of
                  such business or any business substantially similar thereto.

                  (ii) Consult with, advise or assist in any way, whether or not
                  for consideration, any person, corporation, partnership,
                  limited liability company, firm or other business entity which
                  is now, becomes or may become a competitor of the Company in
                  any material respect, including, but not limited to:
                  advertising or otherwise endorsing the products of any such
                  competitor; soliciting customers or otherwise serving as an
                  intermediary for any such competitor; loaning money or
                  rendering any other form of financial assistance to or
                  engaging in any business transaction with any such competitor
                  on other than on an arms' length basis.

                  (iii) Sell, assign or otherwise transfer, whether or not for
                  consideration, any customer lists, product specifications or
                  designs, internal memoranda, bills, receipts or any other form
                  of business records or documents or other materials in any
                  form (tangible or intangible) concerning the Company's
                  business.

                  (iv) Disclose or cause to be disclosed to any person,
                  corporation, partnership, limited liability company, firm or
                  other business entity, any of the trade secrets, techniques,
                  formulae or processes relating to the Company's business or
                  any other information about the confidential affairs of such
                  business (including information about its customers and
                  employees) the secrecy of which is of value to the Company.

                                       31
<PAGE>

                  (v) Engage in any practice the purpose of which is to evade
                  the provisions of this covenant not to compete or commit any
                  act which is detrimental to the successful continuation of the
                  Company's business.

         (b) The parties agree that the geographic scope of this covenant not to
         compete shall extend worldwide.

         (c) The parties agree that the Company may sell, assign or otherwise
         transfer this covenant not to compete, in whole or in part, to any
         person, corporation, limited liability company, firm or other business
         entity that purchases all or any part of the Company's business.

         (d) In the event of any breach of this covenant not to compete, the
         parties recognize that the remedies at law will be inadequate and that
         the Company shall be entitled to equitable remedies (including an
         injunction) and other such relief as a court of competent jurisdiction
         may deem appropriate.

         (e) In the event a court of competent jurisdiction determines that the
         provisions of this covenant not to compete are excessively broad as to
         duration, geographic scope, prohibited activities or otherwise, the
         parties agree that this covenant not to compete shall be reduced or
         curtailed to the extent necessary to render it enforceable.

9. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed as follows:

                  If to Belan:

                           Robert D. Belan
                           106 W. Vintage Drive
                           Mequon, WI  53092

                  If to the Company:

                           Badger Meter, Inc.
                           Attention:  President
                           4545 West Brown Deer Road
                           Milwaukee, Wisconsin 53233

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

10. Entire Agreement. Except for the KEEP, this Agreement supersedes all prior
agreements or understandings between the parties with respect to the services to
be provided by Belan to the Company and represents the entire agreement among
the parties hereto with respect to such matter, and there are no agreements,
representations or warranties with respect to the matters provided for herein
other than those set forth herein.

11. Headings. The headings set forth in this Agreement are provided for
convenience only and shall not be considered a part of, or employed in the
construction of, this Agreement.

12. Successors. This Agreement shall be binding upon and inure to the benefit of
any successors and assigns of the Company. The term "successor" as used herein
shall include any person, firm, corporation, or other business entity which at
any time, by merger, consolidation, purchase or otherwise, acquires all or
substantially all of the Company's capital stock, assets or business.

13. Amendment. This Agreement may not be released, discharged, abandoned,
changed or amended in any manner except by a written instrument signed by the
parties hereto.

14. Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the internal law of the State of Wisconsin.

                                       32
<PAGE>

15. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of such together will
constitute one and the same instrument.

16. Waiver. No waiver by any party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

                  IN WITNESS WHEREOF, this Agreement has been executed effective
as of the day and year first above written.

BADGER METER, INC.
("Company")

By:                                                                       (SEAL)
   -------------------------------------    -------------------------------
    James L. Forbes                         Robert D. Belan ("Belan")
    Chairman and Chief Executive Officer

                                       33

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