Document:

Exhibit
10.2

 

ST. PAUL TRAVELERS

EXECUTIVE OFFICER
CAPITAL ACCUMULATION PROGRAM

RESTRICTED
STOCK AWARD NOTIFICATION AND AGREEMENT

 

	
  Participant:

  	
   

  	
  Grant Date:

  
	
  Number of Shares:

  	
   

  	
   

  
	
   

  	
   

  	
  Vesting Date:

  

 

1.  Grant of Restricted Stock. This restricted stock award (“Award”)
is granted pursuant to the St. Paul Travelers Companies, Inc. 2004 Stock
Incentive Plan (the “Plan”), by The St. Paul Travelers Companies, Inc. (the “Company”)
to you, an employee (the “Participant”). 
The Company hereby grants to the Participant an Award of the number of
shares of restricted Company common stock, no par value (“Common Stock”) 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.

 

2. Terms and Conditions.
The terms, conditions, and restrictions applicable to the Award are specified
in this award notification and agreement, the Plan, the prospectus dated
September 15, 2004 (titled “Your St. Paul Travelers Capital Accumulation
Program”), and any applicable prospectus supplement (together, the “Prospectus”).  The terms, conditions and restrictions in the
Prospectus include, but are not limited to, provisions relating to amendment,
vesting, and cancellation, all of which are hereby incorporated by reference
into this award notification and agreement to the extent not otherwise set
forth herein. The terms, conditions and restrictions in this award notification
and agreement, the Prospectus, and the Plan constitute the Award agreement
between the Participant and the Company (“Agreement”). By accepting the Award,
the Participant acknowledges receipt of the Prospectus and that he or she has
read and understands the Prospectus.

 

The Participant
understands that the Award 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 Award 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 Award is intended to promote
employee retention and stock ownership and to align employees’ interests with
those of shareholders, is subject to vesting conditions and will be canceled if
vesting conditions are not satisfied. 
Thus, Participant understands that (a) any monetary value assigned to
the Award in any communication regarding the Award 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 Award 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 a committee of the Board that conditions to vesting have been
satisfied.

 

3.
Transfer Restrictions and  Vesting.  The shares
of Common Stock of the Award are subject to the transfer restrictions set forth
in the Prospectus including, without limitation that the Participant may not
sell, assign, transfer, pledge, encumber or otherwise alienate, hypothecate or
dispose of any of the Award shares until these restrictions lapse.  The Award shall vest in full, and the
restrictions shall terminate on the Award shares, on the Vesting Date set forth
above, provided the Participant remains continuously employed by the Company or
one of its subsidiaries, and any other terms and conditions are satisfied.
Shares of Common Stock will be delivered to the Participant as soon as
practicable after the Award has vested.

 

4. Termination of, and Breaks in,
Employment.  The terms
and conditions set forth on Exhibit A hereto shall apply with respect to
terminations of, and breaks in, employment.

 

5. Consent to Electronic Delivery. In lieu of receiving
documents in paper format, the Participant agrees, to the fullest extent
permitted by law, to accept electronic delivery of any documents that the
Company may  desire or be required to
deliver (including, but not limited to, prospectuses, prospectus supplements,
grant or award notifications and agreements, account statements, annual and
quarterly reports, and all other forms or 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 or
internet site to which Participant has access.

 

6. Administration. In
administering the Plan, or to comply with applicable legal, regulatory, tax, or
accounting requirements, it may be necessary for the Company or the subsidiary
employing the Participant to transfer certain Participant data to the Company,
its subsidiaries, outside service providers, or governmental agencies.  By accepting this Award, the Participant
consents, to the fullest extent permitted by law, to the use and transfer,
electronically or otherwise, of his or her personal data to such entities for
such purposes.

 

7. Entire Agreement; No Right to
Employment. The Agreement constitutes the entire
understanding between the parties hereto regarding the Award and supersedes all
previous written, oral, or implied understandings between the parties hereto
about the subject matter hereof.  Nothing
contained herein, in the Plan, or in the Prospectus shall confer upon the
Participant any rights to continued employment or employment in any particular
position, at any specific rate of compensation, or for any particular period of
time.

 

8. Arbitration; Conflict.  Any disputes under this Agreement shall be
resolved by arbitration in accordance with the Company’s arbitration policies.
In the event of a conflict between the Plan and this grant notification and
agreement, or the terms, conditions, and restrictions of the Award as specified
in the Prospectus, the Plan shall control.

 

9. Acceptance and Agreement by
Participant. By signing below, or by accepting this agreement
in an electronic format prescribed by the Company, Participant accepts the
Award and agrees to be bound by the terms, conditions, and restrictions set
forth in the Prospectus, the Plan, this notification and agreement, and the
Company’s policies, as in effect from time to time, relating to the Plan

 

	
  THE ST. PAUL TRAVELERS
  COMPANIES, INC

  	
   

  	
  PARTICIPANT’S ACCEPTANCE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Its duly authorized officer

  	
   

  	
  Participant’s Signature

  

 

2

 

EXHIBIT A

 

To St.
Paul Travelers Executive Officer Capital Accumulation Program Restricted Stock
Award Notification and Agreement

 

When
you leave the Company

 

References to “you” or “your”
are to the Participant

 

If you terminate your
employment or if there’s a break in your employment, your Awards may be
canceled before the end of the vesting term and the vesting of your Awards may
be affected.

 

The provisions in the
chart below apply to Awards made under the Plan. Additional rules for vesting
apply in cases of termination if you satisfy certain age and years of service
requirements (“Retirement Rule”) set forth below.

 

	
  If you:

  	
   

  	
  Here’s what happens to Your Restricted Shares:

  
	
  Resign, or retire (and do not
  meet the Retirement Rule)

  	
   

  	
  Vesting stops, and outstanding
  unvested restricted shares will be cancelled on the termination date.

  
	
   

  	
   

  	
   

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

  	
   

  	
  During the first 12 months of approved disability,
  outstanding unvested restricted share Awards will continue to vest on
  schedule. If you are still on an approved disability after 12 months, all
  outstanding unvested restricted share Awards will vest immediately and the
  shares will be distributed to you as soon as practical thereafter.

  
	
   

  	
   

  	
   

  
	
  Take an approved personal leave
  of absence

  	
   

  	
  The vesting of
  outstanding unvested restricted share Awards will continue during the first
  three months of an approved personal leave of absence. Once the approved
  leave of absence exceeds three months, vesting is suspended until you return
  to work and remain actively employed for 30 calendar days thereafter at which
  time vesting will be restored retroactively. If you terminate employment during
  the leave for any reason, the applicable termination provisions will apply.
  If leave exceeds one year, all restricted share Awards will be canceled.

  
	
   

  	
   

  	
   

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

  	
   

  	
  Outstanding unvested
  restricted share Awards will continue to vest while you are on an approved
  leave.

  
	
   

  	
   

  	
   

  
	
  Die

  	
   

  	
  Outstanding unvested
  restricted share Awards will vest immediately and the shares will be
  distributed to your estate as soon as practical thereafter.

  
	
   

  	
   

  	
   

  
	
  Are terminated involuntarily
  other than under the Company’s applicable separation pay plan, or any
  successor or comparable arrangement.

  	
   

  	
  Vesting stops and all
  outstanding unvested restricted share Awards are cancelled on the termination
  date.

  

 

3

 

	
  Are terminated
  involuntarily under the Company’s applicable separation pay plan or any
  successor or comparable arrangement

  	
   

  	
  For an Award granted
  under CAP, on the termination date, the Base Shares (as defined below), and a
  pro-rated portion of the Premium Shares (as defined below), will vest, and
  the shares will be distributed to you as soon as practicable thereafter. The
  pro-rated portion of the Premium Shares that will vest is calculated based on
  the number of days worked in the vesting period divided by the total number
  of days in the vesting period. All remaining unvested Premium Shares will be
  forfeited on the termination date. 

   

  As used herein, (i)
  “Base Shares” means the number of shares of restricted Common Stock granted
  to you that is equal to twenty-five percent (25%) of the pre-tax value of
  your discretionary annual cash incentive divided by the fair market value of
  the Common Stock on the date of the grant; and (ii) “Premium Shares” means
  the Base Shares multiplied by 11.1%.

  

 

Retirement
Rule

 

If, as of your
termination date, you are at least (i) age 65, (ii) age 62 with one or more
full years of service, or (iii) age 55 with 10 or more full years of service,
then you meet the “Retirement Rule.”  If
you are terminated under the Company’s applicable separation pay plan or any
successor or comparable arrangement, if any, your termination date for purposes
of determining whether you qualify under the Retirement Rule is your last day
of active employment with the Company.

 

The Retirement Rule does
not apply if you were involuntarily terminated for gross misconduct or for
cause.  If you retire and do not meet the
Retirement Rule, you will be considered to have resigned

 

If you:

 

	
  Meet the Retirement
  Rule

  	
   

  	
  Outstanding unvested
  restricted share Awards will continue to vest and the shares will be
  distributed at the end of the vesting period for each Award, provided that
  you do not engage in any activities that compete with the business operations
  of the Company. 

   

  If you meet the
  Retirement Rule and are terminated involuntarily, you are not subject to this
  competition provision, and outstanding restricted share Awards will vest and
  the shares will be distributed as soon a practicable following the
  termination date.

  

 

Before restricted shares
are issued to you, you will be asked to certify to the Company that you have
not engaged in any activities that compete with the business operations of the
Company since you retired, and provide such other evidence as the Company may
require. The purpose of the special Retirement Rule is to allow those employees
who leave the Company for lifestyle reasons associated with retirement to
continue to vest in their outstanding restricted share Awards, and this purpose
is not served in those situations where an employee “retires” and then competes
with the Company.

 

Notes
to the termination provisions

 

•                  In
any instance where the vesting of restricted stock Award extends past the
termination of your employment, either pursuant to the terms of the grant or by
action of a Committee of the Company’s Board of Directors, your Award will be
canceled if, in the determination of the Committee, you engage in conduct that:

 

•                  Is
in material competition with the Company’s business operations or

•                  Breaches
your duty of loyalty or is materially injurious to the Company, monetarily or
otherwise.

 

The Company may change
the provisions or the policies described in the termination provisions above at
any time.  The Company may specify other
actions that may result in the cancellation of your Award for events that occur
either while you are still employed or after your employment terminates.

 

4Exhibit 10.3

 

	
  

  	
  St. Paul
  Travelers

  385 Washington Street

  St. Paul, MN 55102-1396

  651-310-7911 TEL

  www.stpaultravelers.com

  

 

 

April 27, 2005

 

 

William Heyman

1111 Park Avenue, Apt# 9C

NY, NY 10128

 

Dear Bill:

 

The purpose of this letter agreement (“Letter Agreement”) is to confirm
our respective understandings and agreements regarding your waiver of rights
and agreement to certain terms under The St. Paul Companies, Inc. Amended and
Restated Special Severance Policy (the “Policy”) in exchange for consideration
from The St. Paul Travelers Companies, Inc. (the “Company”), as set forth in
this Letter Agreement.

 

I.                                         PAYMENT
TERMS

 

For purposes of this Letter Agreement and the
Policy, it is agreed that (a) there has been a Change in Control for purposes
of the Policy, and (b) you would be entitled to receive severance benefits
under the Policy if you had a Qualifying Termination (as defined under the
Policy) and signed a Release and Separation Agreement.  In exchange for your waiver of rights under
the Policy and agreement to the terms of this Letter Agreement, the Company
agrees to pay and provide: (i) a cash payment of One
Million Eight Hundred Fifty One Thousand Six Hundred Sixty Nine Dollars
($1,851,669), less applicable withholdings (the “Cash Payment”); and (ii)
excise tax treatment pursuant to Section 4(a) of and Exhibit A to the
Policy [the combination of (i) and (ii) referred to
as the “Benefits”].  If the Internal
Revenue Code would otherwise impose an excise tax on the Cash Payment because
the payment is considered an “excess parachute payment,” the Company shall
provide a gross-up payment to offset the excise tax.  However, if the Cash Payment would not be
subject to the excise tax if it were reduced by less than 10% of the portion
that would be treated as an “excess parachute payment” under the Internal
Revenue Code, then the Cash Payment shall be reduced to the maximum amount that
could be paid without giving rise to the excise tax.  Payment will be made within 20 days of the
date this Letter Agreement is executed by both parties.

 

II.                                     WAIVER
OF RIGHTS

 

As a material inducement for Company to
provide the consideration set forth in Section I of this Letter Agreement,
you have agreed to waive any rights you may have had under the Policy.  You acknowledge that the consideration is
good and valuable consideration in exchange for this Letter Agreement.

 

 

III.                                 SEPARATION
OF EMPLOYMENT

 

A.                                    Covenants
Not to Solicit/Interfere.  As
further material inducement for Company to enter into this Letter Agreement,
you agree that if your employment with Company terminates prior to April 2,
2008, you will be subject to the following restrictive covenants:

 

You acknowledge and agree that, by virtue of opportunities derived from
your access to confidential information and employment with Company, you are
capable of significantly and adversely impacting the existing relationships of
Company with its clients, customers, policyholders, vendors, consultants,
employees, and/or agents.  You acknowledge
that Company has a legitimate interest in protecting these relationships
against solicitation and/or interference by you for a reasonable period of time
following the date on which you leave the Company (“Separation Date”).  Accordingly, the parties agree that the
covenants described in this Section and its subparts shall apply for a
duration of twelve (12) months following the Separation Date (“the Restricted
Period”).  You acknowledge and agree that
the covenants described in this Section and its subparts are expressly
intended to protect and preserve the legitimate business interests and goodwill
of Company.  You acknowledge that the
Cash Payment received includes fair consideration for these covenants.  You further acknowledge and agree that your
breach of this Section and its subparts will cause Company irreparable
injury and damage that cannot be reasonably or adequately compensated by
monetary damages.  You, therefore,
expressly agree that Company shall be entitled to injunctive or other equitable
relief in order to prevent a breach of this Section and its subparts, in
addition to such other remedies as are legally available to Company.  You will expressly waive the claim that
Company has an adequate remedy at law.

 

1.                                       Solicitation
of Employees.  You shall not,
without the prior written consent of Company, at any time during the Restricted
Period, directly or indirectly, solicit, participate in or promote the
solicitation of, interfere with, attempt to influence or otherwise affect the
employment of any person who was or is employed by any Company on the
Separation Date or thereafter or, on behalf of you or any other person, hire,
employ or engage any such person.  You
further agree that, during such time, if a person who is employed by Company contacts
you about prospective employment, you will inform such person that you cannot
discuss the matter, unless and until consent of Company has been obtained.  For purposes of this subsection, requests for
consent must be delivered via facsimile to John Clifford, the Senior Vice
President of Human Resources for the Company (or his successor), with the
original sent via certified mail to Kenneth F. Spence, III, Executive Vice
President and General Counsel for the Company (or his successor).

 

2

 

2.                                       Solicitation of and/or Interference with Existing
Commercial Relationships. 
You shall not, without the prior written consent of Company, at any time
during the Restricted Period, directly or indirectly, solicit any person or
entity, who or that, as of the Separation Date, was or is a client, customer,
policyholder, vendor, consultant or agent of any Company, to discontinue
business with Company, and/or move that business elsewhere or otherwise change
an existing customer relationship with Company. 
You further agree that, during such time, if such a client, customer,
policyholder, vendor, consultant or agent contacts you about discontinuing
business with Company, and/or moving that business elsewhere, or otherwise
changing an existing commercial relationship with Company, you will inform such
client, customer, policyholder, vendor, consultant or agent that you cannot
discuss the matter without notifying Company. 
Prior to any discussion of the matter, you are obligated to notify
Company of the name of the person who made the contact, the customer,
policyholder, vendor, consultant or agent with whom the person is affiliated,
and the nature and the date of the contact. After notifying Company of the
contact, you must receive written consent from Company before discussing the
matter with such client, customer, policyholder, vendor, consultant or
agent.  For purposes of this subsection,
notification and requests for consent must be delivered via facsimile to the
current Executive Vice President of the business unit for which you worked as
of the Separation Date, with the original sent via certified mail to Kenneth F.
Spence, III, Executive Vice President and General Counsel for the Company (or
his successor).

 

IV.                                SATISFACTION
OF OBLIGATIONS

 

The Consideration to be provided under Section I
of this Letter Agreement is in satisfaction of, and not in addition to,
payments otherwise provided under the Policy or any other Company severance
plan or contractual agreement under which you could assert that Company is obligated
to provide benefits, for a period extending three (3) years from the date this
Letter Agreement is executed.

 

V.                                    MISCELLANEOUS
PROVISIONS

 

A.                                   Amendment or Termination.  This Letter Agreement may not be amended or
terminated without the prior written consent of you and Company.

 

B.                                     Execution.  This Letter Agreement may be executed in any
number of counterparts that together shall constitute but one agreement.  However, the Letter Agreement shall not be
effective until it has been executed by both parties.

 

3

 

C.                                     Assignment.  The rights and obligations described in this
Letter Agreement may not be assigned by either party without the prior written
consent of the other party, except that Company may assign its rights or
delegate its obligations to any direct or indirect wholly owned subsidiary of
The St. Paul Travelers Companies, Inc., without your consent.  This Letter Agreement shall be binding on and
inure to the benefit of our respective successors and, in your case, your heirs
and other legal representatives.

 

D.                                    Release.  In consideration of the payments contemplated
herein, you will execute a release in its customary form, releasing Company
from all claims arising from your employment through the date on which you sign
this Letter Agreement.

 

E.                                      Arbitration; Governing Law.  Any controversy or claim between Company and
you arising out of this Letter Agreement will be resolved by binding
arbitration in the State of Minnesota using the Laws of the State of Minnesota
in accordance with the Arbitration Rules of the American Arbitration
Association. Any judgment on the award rendered by the arbitration(s) may be
entered in any court having jurisdiction over such matters.

 

If you are in agreement with the terms of this letter, please indicate
that acceptance by signing below. Keep one original for your files and return
the other to me. To the extent that the content of this letter conflicts in any
way with previous written or oral communication between you, me or any other
representatives of The St. Paul Travelers Companies, Inc., the content of this
letter will control and take precedence over such previous communication.

 

 

	
  Entered into this 29th day of April, 2005.

  	
   

  
	
   

  	
   

  
	
  WILLIAM HEYMAN

  	
  THE ST. PAUL TRAVELERS

  COMPANIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
     /s/ William H. Heyman

  	
   

  	
  By:

  	
     /s/ John P. Clifford

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
     SVP – HR

  	
   

  
	
   

  	
   

  	
     4/29/05

  
					

 

4

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