SPC Benefit Equalization Plan

Exhibit 10.27


THE ST. PAUL COMPANIES, INC.

BENEFIT EQUALIZATION PLAN

2001 REVISION

Table of Contents Page


ARTICLE I GENERAL DESCRIPTION 1

Sec. 1.1 Name 1

Sec. 1.2 Plan Type 1

Sec. 1.3 Plan Background 1

Sec. 1.4 Participating Employers 1

Sec. 1.5 Effective Date 1

ARTICLE II MISCELLANEOUS DEFINITIONS 2

Sec. 2.1 Administrator 2

Sec. 2.2 Code 2

Sec. 2.3 Change In Control 2

Sec. 2.4 Company 2

Sec. 2.5 Effective Date 2

Sec. 2.6 ERISA 2

Sec. 2.7 ERP Compensation 2

Sec. 2.8 Excess Deferrals 3

Sec. 2.9 Excess Deferral Account 3

Sec. 2.10 Excess Matching Contribution Account 3

Sec. 2.11 Excess Matching Contributions 3

Sec. 2.12 Executive Retirement Plan 4

Sec. 2.13 Executive Savings Plus 4

Sec. 2.14 Highly Compensated Employee 4

Sec. 2.15 Participant 4

Sec. 2.16 Participating-Employer 4

Sec. 2.17 Plan 4

Sec. 2.18 Retirement Plan 4

Sec. 2.19 Savings Plus Plan 4

Sec. 2.20 Stock Ownership Plan 4

Sec. 2.21 Termination of Employment 5

Sec. 2.22 Trust 5

Sec. 2.23 Trustee 5

ARTICLE III EXECUTIVE RETIREMENT BENEFITS 6

Sec. 3.1 Normal Retirement Benefit 6

Sec. 3.2 Early Retirement Benefit 7

Sec. 3.3 Deferred Vested Retirement Benefit 9

Sec. 3.4 Charge for Preretirement Survivor Protection 9

Sec. 3.5 Grandfathered Benefit Formulas Under Predecessor Plans 9

Sec. 3.6 Benefits Accrued Under the USF&G Retirement Plan 10

Sec. 3.7 Cash Balance Plan Participants 10

Sec. 3.8 Cash Balance Retiree Health Account 11

ARTICLE IV DISTRIBUTION OF EXECUTIVE RETIREMENT PLAN BENEFITS 12

Sec. 4.1 Distributions of Benefits of Participants 12

Sec. 4.2 Death Benefits 12

Sec. 4.3 Imputed Earnings 14

Sec. 4.4 Actuarially Equivalent Present Value 15

Sec. 4.5 Benefit Commencement Date 15

Sec. 4.6 Installment Payment Date 15

Sec. 4.7 Computation of Installment Payments 16

Sec. 4.8 Beneficiary Designation 16

ARTICLE V EXECUTIVE SAVINGS PLUS BENEFITS 18

Sec. 5.1 Participant Accounts 18

Sec. 5.2 Imputed Earnings 18

Sec. 5.3 Investment of Trust Fund 18

Sec. 5.4 Vesting 18

Sec. 5.5 Economy Supplemental Contributions 18

ARTICLE VI DISTRIBUTION OF EXECUTIVE SAVINGS PLUS BENEFITS 19

Sec. 6.1 Distribution of Benefits 19

Sec. 6.2 Death Benefits 19

Sec. 6.3 Beneficiary Designation 19

Sec. 6.4 Installment Payment Date 19

Sec. 6.5 Computation of Installment Payments 20

ARTICLE VII ADMINISTRATION OF THE PLAN 21

Sec. 7.1 Administrator 21

Sec. 7.2 Amendment and Termination 21

Sec. 7.3 No Employment Rights Created 21

Sec. 7.4 Payments 21

Sec. 7.5 Non-Assignability of Benefits 22

Sec. 7.6 Status of Plan 22

Sec. 7.7 Applicable Law 22

Sec. 7.8 Number and Gender 22

ARTICLE I

GENERAL DESCRIPTION


Sec. 1.1 Name . The name of the plan set forth herein is " The St Paul Companies, Inc. Benefit Equalization Plan." It is sometimes referred to herein as the " Plan." The Plan is comprised of two parts: (a) The " Executive Retirement Plan" or " ERP," which supplements the benefits provided under the Retirement Plan. (b)" Executive Savings Plus" or " ESP," which supplements the benefits provided under the Savings Plus Plan and the Stock Ownership Plan.

Sec. 1.2 Plan Type . The Plan is intended to be (and will be construed and administered as) an unfunded employee pension benefit plan. The Plan is maintained by the Participating Employers primarily for the purposes of providing deferred compensation for a select group of management or highly compensated employees. The Plan is intended to be exempt from the provisions of Parts 2 through 4 of Subtitle B of Title I of ERISA and from Title IV of ERISA by operation of sections 201(2), 302(a)(3), 401(a)(1) and 4021(b)(6) thereof. The Plan is not intended to qualify under Code section 401(a).


Sec. 1.3 Plan Background . Effective as of January 1, 1976, the Company established The St. Paul Companies, Inc. Excess Benefit Plan for the purpose of providing supplemental benefits to participants in the Retirement Plan and The St. Paul Companies, Inc. Profit Sharing Plan whose benefits under those plans were limited by operation of Code section 415. The Plan was amended and restated effective January 1, 1987 to take into account new limitations on the benefits which could be provided under the Retirement Plan and the Savings Plus Plan (which is the successor to the Profit Sharing Plan). In conjunction with the amendment, the name of the Plan was changed to " The St. Paul Companies, Inc. Benefit Equalization Plan" and a Trust was established for the purpose of holding contributions made pursuant to the terms of the Plan.


Effective January 1, 1990 the Company established The St. Paul Companies, Inc. Savings Plus Preferred Stock Ownership Fund (the " Preferred Stock Fund" ) to provide matching contributions with respect to participant contributions under the Savings Plus Plan. The Preferred Stock Fund and The St. Paul Companies, Inc. Stock Ownership Plan were merged effective December 31, 1997 to create the Stock Ownership Plan. The ESP portion of the Plan provides certain supplemental benefits to Participants whose matching contributions under the Stock Ownership Plan are limited by operation of certain restrictions under the Code.


Sec. 1.4 Participating Employers . This Plan applies to each employer that maintains the Retirement Plan or the Savings Plus Plan or both such plans, as the case may be.


Sec. 1.5 Effective Date . Except as specifically provided herein, the 2001 Revision of the Plan is applicable in determining all benefits payable on or after January 1, 2001.


ARTICLE II

MISCELLANEOUS DEFINITIONS


The following terms, when used in the Plan have the meanings set forth in this Article:

Sec. 2.1 Administrator . " Administrator" means the person appointed by the Company in accordance with the provisions of Section 7.1.


Sec. 2.2 Code . " Code" means the Internal Revenue Code of 1986, as amended from time to time.


Sec. 2.3 Change In Control . " Change in Control" of the Company shall mean a change in control of a nature that would be required to be reported (assuming such event has not been " previously reported" ) in response to Item 1(a) of the Current Report on Form 8-K, as in effect on December 1, 1987 pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the " 1934 Act" ); provided that without limitation, such a Change in Control shall be deemed to have occurred at such time as (i) any " person" (within the meaning of Section 14(d) of the 1934 Act, other than the Company or any employee benefit plan(s) sponsored by the Company or a subsidiary) is or becomes the " beneficial owner" (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% or more of the combined voting power of the Company' s outstanding securities ordinarily having the right to vote at elections of directors; or (ii) individuals who constitute the Board of Directors of the Company on December 1, 1987 cease for any reason to constitute at least a majority thereof; provided that any person becoming a director subsequent to December 1, 1987 whose election, or nomination for election by the Company' s shareholders, was approved by a vote of at least three quarters of the directors comprising the Board of Directors of the Company on December 1, 1987 (either by a specific vote or by approval of the proxy statement of the Company is named as a nominee for director, without objection to such nomination) shall be, for purposes of this clause (ii), considered as though such person were a member of the Board of Directors of the Company on December 1, 1987.


Sec. 2.4 Company . " Company" means The St. Paul Companies, Inc. or any successor thereto.


Sec. 2.5 Effective Date . The " Effective Date" of the Plan is January 1, 1976, the date as of which the Plan was established.

Sec. 2.6 ERISA . " ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time.

Sec. 2.7 ERP Compensation . " ERP Compensation" with respect to a Participant for a calendar year means the Participant' s compensation for the calendar year within the meaning of the Retirement Plan but disregarding the limit under Code section 401(a)(17), increased by the amount of the Participant' s Excess Deferrals under this Plan for that year and by the amount of any deferred bonus under an annual bonus plan. For purposes of the


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preceding sentence, a deferred bonus under an annual bonus plan will be included in ERP Compensation at the time such bonus would have been payable to the Participant in the absence of the deferral; provided that the portion of the bonus that is mandatorily deferred (including the nonvested portion of such mandatorily deferred bonus), if any, will be included in ERP Compensation at the same time that the remaining portion of such annual bonus was payable (or would have been payable but for a voluntary deferral election with respect to such portion of the annual bonus). Except as provided in the preceding sentence, ERP Compensation shall not include any deferred bonus (or any investment earnings attributable to such deferred bonus) at the time such deferred bonus vests or becomes payable to the Participant in accordance with the terms of the annual bonus plan or such Participant' s deferral election. In addition, ERP Compensation does not include long-term incentive bonuses, regardless of when paid. The Administrator, in its sole discretion, may adopt rules, uniformly applied among similarly situated Participants, for purposes of including within the definition of ERP Compensation for any calendar year, the amount of base salary or compensation that, but for the Participant' s election to defer the receipt of such amount, would have been payable to the Participant during the calendar year in question.


Sec. 2.8 Excess Deferrals . " Excess Deferrals" for a calendar year with respect to a person who satisfies the eligibility conditions set forth in Section 2.15(b)(1) through (3) for such calendar year means the amount that would have been contributed as pre-tax contributions to his account under the Savings Plus Plan for the calendar year pursuant to his irrevocable compensation reduction election under the Savings Plus Plan if the limitations under Code Sections 401(a)(17), 402(g) and 415 were disregarded, minus the amount of pre-tax contributions actually made to his account under the Savings Plus Plan for the calendar year. A person who does not satisfy all of the eligibility requirements of Section 2.15(b)(1) through (3) of the Plan for a calendar year shall not have any Excess Deferrals credited to his Excess Deferral Account for such calendar year.

Sec. 2.9 Excess Deferral Account . " Excess Deferral Account" with respect to a Participant means the account established on his behalf pursuant to Sec. 5.1(a).


Sec. 2.10 Excess Matching Contribution Account . " Excess Matching Contribution Account" with respect to a Participant means the account established on his behalf pursuant to Sec. 5.1(b).


Sec. 2.11 Excess Matching Contributions . " Excess Matching Contributions" for a calendar year with respect to a person who satisfies the eligibility conditions set forth in Section 2.15(b)(1) through (3) for such calendar year means the amount of matching contributions that would have been contributed to his matching allocation account under the Stock Ownership Plan for the calendar year if the limitations under Code Sections 401(a)(17), 401(m), 402(g) and 415 were disregarded, minus the amount of matching contributions actually made to his matching allocation account under the Stock Ownership Plan for the calendar year. A person who does not satisfy all of the eligibility requirements of Section 2.15(b)(1) through (3) of the Plan for a calendar year shall not have any Excess


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Matching Contributions credited to his Excess Matching Contribution Account for such calendar year.

Sec. 2.12 Executive Retirement Plan . " Executive Retirement Plan" or " ERP" means the portion of the Plan which supplements benefits under the Retirement Plan.

Sec. 2.13 Executive Savings Plus . " Executive Savings Plus" or " ESP" means the portion of the Plan which supplements benefits under the Savings Plus Plan and the Stock Ownership Plan.


Sec. 2.14 Highly Compensated Employee . A person is a " Highly Compensated Employee" if he is a highly compensated employee (as defined in Code section 414(q)) as in effect for the applicable year.

Sec. 2.15 Participant . " Participant" means: (a) For purposes of the ERP, any individual who (1) is a participant in the Retirement Plan, (2) is a Highly Compensated Employee and (3) is entitled to a benefit pursuant to ERP which has not yet been paid in full; and

(b) For purposes of ESP, any individual who for a calendar year (1) participates in the Savings Plus Plan, (2) is designated, or is a member of a class of employees of a Participating Employer designated, as eligible to participate in ESP from time to time by the Company' s Sr. Vice President, Human Resources, and (3) makes an irrevocable compensation reduction election for such calendar year under the Savings Plus Plan and ESP before the first day of such calendar year (or, if later, within 30 days after such person was first hired by a Participating Employer). A person who has an Account balance under ESP shall remain an ESP Participant until the entire balance of his Account is distributed.


Sec. 2.16 Participating-Employer . " Participating Employer" means the Company and each other employer which participates in the Retirement Plan, the Savings Plus Plan, or the Stock Ownership Plan.

Sec. 2.17 Plan . " Plan" means The St. Paul Companies, Inc. Benefit Equalization Plan, as from time to time amended or restated.


Sec. 2.18 Retirement Plan . " Retirement Plan" means The St. Paul Companies, Inc. Employees' Retirement Plan as in effect from time to time.


Sec. 2.19 Savings Plus Plan . " Savings Plus Plan" means The St. Paul Companies. Inc. Savings Plus Plan as in effect from time to time.


Sec. 2.20 Stock Ownership Plan . " Stock Ownership Plan" means The St. Paul Companies, Inc. Stock Ownership Plan as in effect from time to time.


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Sec. 2.21 Termination of Employment . The " Termination of Employment" of an employee for purposes of the Plan shall be deemed to occur upon his resignation, discharge, retirement, death, or the authorized extension or extensions thereof, failure to return to work when duly called following a temporary layoff, or upon the happening of any other event or circumstance which, under the policy of his Participating Employer, as in effect from time to time, results in the termination of the employer-employee relationship; provided, however, that a Termination of Employment shall not be deemed to occur upon a transfer between any combination of Participating Employers. Notwithstanding the foregoing, for purposes of processing distributions under the Executive Savings Plus, if a Participant' s Termination of Employment is not reflected in the payroll report for any payroll period ending in the month in which such Termination of Employment occurred, the Participant' s Termination of Employment shall be deemed to occur in the next following month.

Sec. 2.22 Trust . " Trust" means The St. Paul Companies, Inc. Benefit Equalization Plan Trust implemented to provide benefits under the Plan.


Sec. 2.23 Trustee . " Trustee" means the one or more individuals, banks or trust companies who at the relevant time has or have been appointed by the Company to act as Trustee of the Trust.


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ARTICLE III

EXECUTIVE RETIREMENT BENEFITS


Sec. 3.1 Normal Retirement Benefit .

(a) Regular Benefit . Upon the normal retirement of a Participant, as determined under the Retirement Plan, the Participant shall be entitled to a benefit under this Plan in an amount equal to his pension determined in accordance with the provisions of the Retirement Plan, subject to the following:

(1) The benefit will be based on his ERP Compensation.

(2) The benefit will be determined without regard to the limitations of Code section 415.

(3) The benefit will he determined without regard to any limitations on grandfathered benefit formulas under predecessor plans, as referred to Sec. 3.5. (4) The benefit will be reduced by the actual amount of the benefit to which he or, in the event of his death, his spouse or other beneficiary or annuitant is entitled under the Retirement Plan.


The benefit determined under this subsection (a) shall be expressed in the form of a single life annuity commencing on the Participant' s Benefit Commencement Date.

(b) Retirement Plan Formula Change Benefit (Retirement Eligibility January 1, 1989) . A Participant described in (a) is also entitled to a Retirement Plan formula change benefit pursuant to this subsection (b) if he is a " Highly Compensated Employee" and he was eligible as of January 1, 1989 to terminate employment and immediately commence receiving a monthly retirement benefit under the Retirement Plan. The Retirement Plan formula change benefit shall be the amount in (1), less the amount in (2):

(1) An amount equal to the amount of benefit to which the Participant would have been entitled under the Retirement Plan if the Retirement Plan benefit formula in effect on December 31, 1988 had remained in effect until the date of the Participant' s Termination of Em ...