Exhibit 10.08
THE TRAVELERS INC.
CAPITAL ACCUMULATION PLAN
as amended to May 16, 1994
SECTION 1. Purpose of the Plan.
The name of this plan is THE TRAVELERS INC. CAPITAL ACCUMULATION PLAN
(the "Plan"). The purpose of the Plan is to enable THE TRAVELERS INC. (the
"Company") and its Subsidiaries to attract, retain and motivate officers
and other key employees, to compensate them for their contributions to the
growth and profits of the Company and to encourage ownership of stock in
the Company on the part of such personnel. The Plan provides incentives to
participating officers and other key employees which are linked directly to
increases in stockholder value and will therefore inure to the benefit of
all stockholders of the Company.
SECTION 2. Definitions.
For purposes of the Plan, the following terms shall be defined as set
forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Cause" means termination by the Company or a Subsidiary of a
Participant's employment upon (i) the willful and continued failure by such
Participant to substantially perform his duties with the Company or a
Subsidiary (other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to such Participant by the Board, which demand
specifically identifies the manner in which the Board believes that such
Participant has not substantially performed his duties, or (ii) the willful
engaging by a Participant in conduct which is demonstrably and materially
injurious to the Company or a Subsidiary, monetarily or otherwise. For
purposes of this Subsection, no act, or failure to act, on a Participant's
part shall be deemed "willful" unless done, or omitted to be done, by such
Participant not in good faith and without reasonable belief that his action
or omission was in the best interest of the Company or a Subsidiary.
(c) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(d) "Committee" means the Nominations and Compensation Committee of
the Board, appointed by the Board from among its members and shall consist
of not less than three members thereof who are and shall remain Committee
members only so long as they remain "disinterested persons" as defined in
Rule 16b-3 under the Securities Exchange Act of 1934, as amended.
(e) "Disability" means permanent and total disability as determined
under the Company's long- term disability plan.
(f) "Eligible Employee" means an employee of the Company or any
Subsidiary as described in Section 3.
(g) "Options" mean non-qualified stock options to purchase shares
of Stock which are not incentive stock options under Section 422A of the
Code and which are granted under Section 6 herein.
(h) "Participant" means an Eligible Employee selected by the
Committee, pursuant to the Committee's authority in Section 7, to receive
an award of Restricted Stock.
(i) "Related Employment" means the employment of an individual by
an employer which is neither the Company nor a Subsidiary provided (i) such
employment is undertaken by the individual at the request of the Company or
a Subsidiary, (ii) immediately prior to undertaking such employment, the
individual was an officer or employee of the Company or a Subsidiary, or
was engaged in Related Employment as herein defined and (iii) such
employment is recognized by the Committee, in its sole discretion, as
Related Employment for purposes of this Plan. The death or Disability of
an individual during a period of Related Employment as herein defined shall
be treated, for purposes of this Plan, as if the death or onset of
Disability had occurred while the individual was an officer or employee of
the Company or a Subsidiary.
(j) "Restricted Stock" means an award of shares of Stock that is
subject to the restrictions set forth in Section 5.
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(k) "Retirement" means retirement of a Participant from active
employment with the Company or any Subsidiary with a full and unreduced
pension benefit under an approved retirement program of the Company or a
Subsidiary.
(l) "Stock" means the common stock of the Company.
(m) "Subsidiary" means any corporation (other than the Company) 50%
or more of the total combined voting power of all classes of stock of which
is owned, directly or indirectly, by the Company.
SECTION 3. Eligibility and Participation.
Officers and other key employees of the Company or its Subsidiaries
who are responsible for or contribute to the management, growth and/or
profitability of the Company or its Subsidiaries shall be eligible to
participate in the Plan. The Participants under the Plan shall be selected
from time of time by the Committee, in its sole discretion, from among
Eligible Employees.
SECTION 4. Amount and Form of Awards.
(a) Awards under the Plan shall be determined by the Committee in
its discretion. Awards will be made in lieu of cash payment of a
percentage of the Participant's annual compensation and will be granted at
such time as the Committee may in its sole discretion determine, and the
Committee may also in its sole discretion provide for alternative methods
for grants of awards. A Participant will receive such award in Restricted
Stock or, alternatively, and, if so elected by the Participant and
determined by the Committee pursuant to Section 6, a portion of such award
may be received in Options.
(b) The maximum number of shares of Stock which may be issued under
the Plan, either as Restricted Stock or pursuant to the exercise of
Options, shall be not more than 31,000,000 shares of Stock, subject to
adjustment as provided in Section 8, and such shares may be authorized but
unissued shares, or previously issued shares reacquired by the Company, or
both. In the event Restricted Stock is forfeited, or an outstanding Option
is terminated, expires or is canceled, prior to the end of the period
during which the restrictions on Restricted Stock expire, or the Options
can be exercised, the shares of Stock called for by such award of
Restricted Stock or the unexercised portion of the Option award will become
available for future awards.
SECTION 5. Restricted Stock.
(a) The number of shares of Restricted Stock awarded to a
Participant under the Plan will be determined by a formula or formulas
approved by the Committee. In order to reflect the impact of the
restrictions on the value of the Restricted Stock, as well as the
possibility of forfeiture of Restricted Stock, the fair market value of
Stock shall be discounted at a rate of 25% in determining the number of
shares of Restricted Stock to be awarded. The Committee may, where it
deems appropriate, and in its sole discretion, provide for an alternative
discount rate. For purpose of this Plan, the fair market value of Stock
for an award will be the average of the Stock's closing prices on the
Composite Tape of the New York Stock Exchange for the five trading days
prior to the date of the award. The dollar value of an award will be
divided by the discounted market value to determine the number of shares of
Restricted Stock in an award. The value of fractional shares will be paid
in cash.
(b) A Participant shall not have any rights with respect to an
award, unless or until such Participant has executed an agreement
evidencing the award (a "Restricted Stock Award Agreement") and has
delivered a fully executed copy thereof to the Company, within a period of
60 days after the date of the award (or such shorter period after the date
of the award as the Committee may specify). Each Participant who is awarded
Restricted Stock may, but need not, be issued a stock certificate in
respect of such shares of Restricted Stock. A "book entry" (i.e., a
computerized or manual entry) shall be made in the records of the Company
to evidence an award of shares of Restricted Stock to a Participant where
no certificate is issued in the name of the Participant. Such Company
records shall, absent manifest error, be binding on the Participants. Each
certificate, if any, registered in the name of a Participant shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such award, substantially in the following form:
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"The transferability of the certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) of The Travelers Inc.
Capital Accumulation Plan and a Restricted Stock Award
Agreement entered into between the registered owner and The
Travelers Inc. Copies of such Plan and Agreement are on
file in the offices of The Travelers Inc."
The Committee shall require that any stock certificate issued in the
name of a Participant evidencing shares of Restricted Stock be held in the
custody of the Company until the restrictions thereon shall have lapsed,
and that, as a condition of such issuance of a certificate for Restricted
Stock, the Participant shall have delivered a stock power, endorsed in
blank, relating to the shares covered by such certificate.
(c) The shares of Restricted Stock awarded pursuant to this Section
5 shall be subject to the following restrictions and conditions:
(i) Subject to the provisions of the Plan and the Restricted
Stock Award Agreements, during the two-year period (together with any
extensions thereof approved as provided herein) commencing on the date
of the award (the "Restricted Period"), the Participant shall not be
permitted to sell, transfer, pledge or assign shares of Restricted
Stock awarded under the Plan. The Committee may, in its sole
discretion, (x) initially provide for an alternative Restricted Period
or alter the two-year Restricted Period for a previously granted award
(provided that the Committee may not extend the Restricted Period for
a previously granted award without the Participant's written consent),
(y) during any extension of such Restricted Period, provide for
alternative restrictions (provided that nothing contained in this
clause shall grant the Committee any additional powers under the Plan
with respect to awards granted to or to be granted to persons who are
subject to Section 16 of the Securities Exchange Act of 1934, as
amended), and (z) provide for the lapse of any such restrictions in
installments and accelerate or waive any such restrictions in whole or
in part based on such factors and such circumstances as the Committee
may determine, in its sole discretion, including, but not limited to,
the Participant's Retirement, termination, death or Disability.
(ii) Unless the Committee in its sole discretion shall determine
otherwise at or prior to the time of the grant of any award, the
Participant shall have the right to direct the vote of his shares of
Restricted Stock during the Restricted Period, in accordance with
paragraph (e) of this Section 5. The Participant shall have the right
to receive any regular dividends on such shares of Restricted Stock.
The Committee shall in its sole discretion determine the Participant's
rights with respect to extraordinary dividends on the shares of
Restricted Stock.
(iii) Certificates for shares of Restricted Stock shall be
delivered to the Participant promptly after, and only after, the
Restricted Period shall expire (or such earlier time as the
restrictions may lapse in accordance with paragraph (c)(i) of this
Section 5) without forfeiture in respect of such shares of Restricted
Stock.
(d) Subject to the provisions of paragraph (c)(i) of this Section
5, the following provisions shall apply to a Participant's shares of
Restricted Stock prior to the end of the Restricted Period (including
extensions and Related Employment):
(i) Upon the death or Disability of a Participant, the
restrictions on his or her Restricted Stock shall immediately lapse.
(ii) If a Participant voluntarily terminates employment or if a
Participant is involuntarily terminated for Cause, such Participant
shall forfeit his or her Restricted Stock.
(iii) If a Participant is involuntarily terminated without cause
or retires from employment, but does not fall within the definition of
Retirement, such Participant shall forfeit his or her Restricted Stock
and receive in return, without interest, a cash payment equal to the
portion of his or her annual compensation that had been paid in the
form of such forfeited Restricted Stock.
(iv) If a Participant whose total annual compensation is less
than $100,000 terminates employment upon Retirement, he or she shall
receive his or her Restricted Stock upon completion of the Restricted
Period. If a Participant whose total annual compensation equals
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or exceeds $100,000 terminates employment upon Retirement, he or she
shall receive, in the sole discretion of the Committee, either (A) his
or her Restricted Stock upon the completion of the Restricted Period,
or (B) a cash payment equal to the portion of his or her annual
compensation that had been paid in the form of Restricted Stock,
without interest.
(e) Unless the Committee in its sole discretion shall determine
otherwise at or prior to the time of the grant of any award, during the
Restricted Period the shares of Restricted Stock shall be voted by the
Company's senior administrative officer in charge of administering the
Plan, or such other person as the Committee may designate (the "Plan
Administrator"), and the Plan Administrator shall vote such shares in
accordance with instructions received from Participants (unless to do so
would constitute a violation of the Plan Administrator's fiduciary duties).
Shares as to which no instructions are received shall be voted by the Plan
Administrator proportionately in accordance with instructions received from
Participants in the Plan (unless to do so would constitute a violation of
the Plan Administrator's fiduciary duties).
SECTION 6. Election of Options.
(a) At the time a Participant is notified of his or her award of
Restricted Stock under the Plan, the Committee in its sole discretion may
permit such Participant to elect to receive up to a maximum of one-third
(1/3) of his or her award in the form of Options. The Committee in its
sole discretion shall determine the number of Options to be awarded in lieu
of each share of Restricted Stock given up and may alter the maximum
percentage of Restricted Stock which may be exchanged for Options. Such
election shall be made within a period of 60 days after the grant of the
Option (or such shorter period after the date of the award as the Committee
may specify). In the absence of such an election, the award will be paid
entirely in shares of Restricted Stock.
(b) Options will be granted with an exercise price equal to the
fair market value of Stock, which will be the average of the Stock's
closing prices on the Composite Tape of the New York Stock Exchange on the
five trading days prior to the grant date. The Committee in its discretion
shall determine the expiration date of the Options, provided that in no
event shall the expiration date be later than ten years from the date of
the award. Options granted under the Plan shall vest pursuant to a
schedule determined by the Committee, in its sole discretion, prior to the
Participant's election to receive Options.
(c) Recipients of Options shall enter into a stock option agreement
with the Company, in such form as the Committee shall determine, which
agreement shall set forth, among other things, the exercise price of the
Option, the term of the Option and provisions regarding exercisability of
the Option granted thereunder.
(d) Options are not transferable other than by will or the laws of
descent and distribution or pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act. During the lifetime of the Participant the Options may be
exercised only by the Participant.
(e) An Option shall not be exercisable unless payment in full is
made for the shares being acquired thereunder at the time of exercise; such
payment shall be made (A) in United States dollars by cash or check, or (B)
in lieu thereof, unless the Committee shall in its sole discretion
determine otherwise, by tendering to the Company Stock owned by the person
exercising the Option (or owned by the person exercising the Option and his
or her spouse, jointly) and acquired more than six months prior to such
tender, including shares of Restricted Stock awarded hereunder at least six
months prior to such tender, and having a fair market value equal to the
cash exercise price applicable to such Option, such fair market value to be
determined in such reasonable manner as may be provided for from time to
time by the Committee or as may be required in order to comply with or to
conform to the requirements of any applicable or relevant laws or
regulations, or (C) by a combination of United States dollars and Stock as
aforesaid.
(f) An Option shall not be exercisable unless the person exercising
the Option has been, at all times during the period beginning with the date
of grant of the Option and ending on the date of such exercise, an officer
or employee of the Company or a Subsidiary, except that:
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(i) if such person shall cease to be an officer or employee of
the Company or a Subsidiary solely by reason of a period of Related
Employment, he or she may, during such period of Related Employment,
exercise the Option as if he or she continued to be such an officer or
employee; or
(ii) if such person shall cease to be such an officer or employee
on account of an involuntary termination of employment (other than
death or Disability) or on account of voluntary termination of
employment (other than pursuant to Retirement), while holding an
Option which has not expired and has not been fully exercised, such
person may before the expiration of thirty (30) days after such
termination (but in no event after the Option has expired under the
provisions of Section 6(b) hereof) exercise the Option with respect to
any shares as to which he or she could have exercised the Option on
the date he or she terminated employment, except that the Committee
may in its sole discretion refuse to permit a person who has
voluntarily terminated his or her employment or who has been
involuntarily terminated with Cause to exercise any Options after the
date of termination; or
(iii) if such person shall cease to be such an officer or employee
by reason of death or Disability while holding an Option which has not
expired and has not been fully exercised, such person (or in the case
of death, his or her executors, administrators, heirs or distributees,
as the case may be) may exercise the Option (but in no event after the
Option has expired under the provisions of Section 6(b) hereof) with
respect to any shares as to which such person could have exercised the
Option on the date he or she ceased to be such an officer or employee;
or
(iv) if such person shall cease to be such an officer or employee
by reason of Retirement while holding an Option which has not expired
and has not been fully exercised, such person at any time within three
years of the date he or she ceased to be such an officer or employee
(but in no event after the Option has expired under the provisions of
Section 6(b) hereof), may exercise the Option with respect to any
shares as to which he or she could have exercised the Option on the
date he or she ceased to be such an officer or employee; or
(v) if within 30 days of his termination of employment for any
reason, any person to whom an Option has been granted shall die or
become disabled (as may be determined by the Board in its sole and
absolute discretion) holding an Option which has not been fully
exercised, he or she or his or her executors, administrators, heirs or
distributees, as the case may be, and, at any time within one year
after the date of such event (but in no event after the Option has
expired under the provisions of Section 6(b) hereof), may exercise the
Option with respect to any shares as to which such person could have
exercised his Option at the time of his or her death or disability; or
(vi) notwithstanding the foregoing provisions of this Section
6(f), the Committee shall have the authority, on a case by case basis,
in its sole and absolute discretion, to extend for a period of up to
two (2) years following the termination of employment of an optionee
the period of vesting determined by the Committee prior to the
Participant's election to receive Options and the period of
exercisability, provided such extension complies with Section 6(b).
(g) If an Option is exercised by a Participant, then, at the
discretion of the committee administering the Company's Stock Option Plan,
the Participant may receive a replacement or reload option under such Stock
Option Plan in accordance with the provisions of such plan.
(h) If the exercise price of an Option is paid by delivery of a
number of shares of Restricted Stock, then the Participant shall receive,
in connection with the exercise, an equal number of identically restricted
shares of Stock; the remaining shares of Stock issued upon such exercise
shall contain any applicable restrictions that are set forth in the
Participant's stock option agreement and shall otherwise be unrestricted.
In such event, the fair market value of shares of Restricted Stock
delivered or withheld, for purposes of this Plan, shall not take into
account the restrictions on such shares.
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SECTION 7. Administration.
The Plan shall be administered by the Committee which shall be
appointed by the Board and which shall serve at the pleasure of the Board.
The Committee shall have the power and authority to grant Restricted
Stock or Options to Participants, pursuant to the terms of the Plan.
In particular, the Committee shall have the authority:
(i) to select those employees of the Company and its
Subsidiaries who are Eligible Employees;
(ii) to determine whether and to what extent Restricted Stock or
Options are to be granted to Participants hereunder;
(iii) to determine the number of shares of Stock to be covered by
each such award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder; and
(v) to determine the terms and conditions, not inconsistent with
the terms of the Plan, which shall govern all written instructions
evidencing the Options and Restricted Stock.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it
shall, from time to time, deem advisable; to interpret the terms and
provisions of the Plan and any award issued under the Plan; and to
otherwise supervise the administration of the Plan. All decisions made by
the Committee pursuant to the provisions of the Plan shall be final and
binding on all persons, including the Company and the Participants.
SECTION 8. Adjustments upon a Change in Common Stock.
In the event of any change in the outstanding Stock of the Company by
reason of any stock split, stock dividend, recapitalization, merger,
consolidation, reorganization, combination or exchange of shares or other
similar event if such change equitably requires an adjustment in the number
or kind of shares that may be issued under the Plan pursuant to Section
4(b), or in the number or kind of shares subject to, or the option price
per share under, any outstanding Option which has been granted to any
Participant, such adjustment shall be made by the Committee and shall be
conclusive and binding for all purposes of the Plan. In no event shall the
excess of the aggregate fair market value of the Stock subject to the
Options immediately after any substitution, exchange or adjustment over the
aggregate option price for such Stock be more than the excess of the
aggregate fair market value of all of the Stock subject to the Option
immediately before any such substitution, exchange or adjustment over the
aggregate option price of such Stock nor shall the adjusted Option give the
holder thereof any additional benefits he did not have under the old
Option.
SECTION 9. Amendment and Termination.
The Plan may be amended or terminated at any time and from time to
time by the Board, but no amendment which increases the aggregate number of
shares of Stock which may be issued pursuant to the Plan (except as
provided in Section 8) shall be effective unless and until the same is
approved by the stockholders of the Company. Neither an amendment to the
Plan nor the termination of the Plan shall adversely affect any right of
any Participant with respect to any Restricted Stock or Option theretofore
granted without such Participant's written consent.
SECTION 10. General Provisions.
(a) The Committee may require each person purchasing shares
pursuant to an Option to represent and agree with the Company in writing
that such person is acquiring the shares without a view to distribution
thereof. The certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restriction on transfer.
All certificates for shares of Stock delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations,
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and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed, and any applicable Federal or
state securities law, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.
(b) Nothing contained in the Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements
may be either generally applicable or applicable only in specific cases.
The adoption of the Plan shall not confer upon any employee of the Company
or any Subsidiary any right to continued employment with the Company or a
Subsidiary, as the case may be, nor shall it interfere in any way with the
right of the Company or a Subsidiary to terminate the employment of any of
its employees at any time.
(c) No member of the Board or the Committee, nor any officer or
employee of the Company acting on behalf of the Board or the Committee,
shall be personally liable for any action, determination, or interpretation
taken or made in good faith with respect to the Plan, and all members of
the Board or the Committee and each and any officer or employee of the
Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such
action, determination or interpretation.
(d) A Participant's rights and interest under the Plan may not be
assigned or transferred in whole or in part either directly or by operation
of law or otherwise (except in the event of a Participant's death)
including, but not by way of limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy or in any other manner and no such right or
interest of any Participant in the Plan shall be subject to any obligation
or liability of such Participant.
(e) The Company and its Subsidiaries shall have the right to deduct
from any payment made under the Plan any federal, state or local income or
other taxes required by law to be withheld with respect to such payment.
It shall be a condition to the obligation of the Company to issue Stock
upon the lapse of restrictions on Restricted Stock or upon exercise of an
Option that the Participant (or any beneficiary or person entitled to
exercise the Option) pay to the Company, upon its demand, such amount as
may be requested by the Company for the purpose of satisfying any liability
to withhold federal, state or local income or other taxes. If the amount
requested is not paid, the Company may refuse to issue shares. Unless the
Committee shall in its sole discretion determine otherwise, payment for
taxes required to be withheld may be made in whole or in part by an
election by a Participant, in accordance with rules adopted by the
Committee from time to time (A) to have the Company withhold Stock
otherwise issuable pursuant to the Plan having a fair market value equal to
such tax liability and/or (B) to tender to the Company shares of Stock
owned by the person exercising the option and acquired more than six months
prior to such tender (excluding shares of Restricted Stock awarded
hereunder) and having a fair market value equal to such tax liability, such
fair market value (in the case of clause (A) or (B)), to be determined in
such reasonable manner as may be provided for from time to time by the
Committee or as may be required in order to comply with or to conform to
the requirements of any applicable or relevant laws or regulations.
SECTION 11. Effective Date of Plan.
The Plan shall be effective on the date it is adopted by the Board,
subject to the approval of stockholders.
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